$250,000,000 REVOLVING CREDIT FACILITY

                                CREDIT AGREEMENT

                                  by and among

                 CHURCHILL DOWNS INCORPORATED, as the Borrower,

                                       and

                           THE GUARANTORS PARTY HERETO

                                       and

                             THE BANKS PARTY HERETO

                                       and

                    PNC BANK, NATIONAL ASSOCIATION, As Agent,

                                       and

                  CIBC OPPENHEIMER CORP., As Syndication Agent.

                                       and

                BANK ONE, KENTUCKY, N.A., As Documentation Agent



                           Dated as of April 23, 1999



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                                TABLE OF CONTENTS

Section                                                                     Page

                                      - i -
1.    CERTAIN DEFINITIONS......................................................1
   1.1   Certain Definitions...................................................1
   1.2   Construction.........................................................24
     1.2.1    Number; Inclusion...............................................24
     1.2.2    Determination...................................................24
     1.2.3    Agent's Discretion and Consent..................................25
     1.2.4    Documents Taken as a Whole......................................25
     1.2.5    Headings........................................................25
     1.2.6    Implied References to this Agreement............................25
     1.2.7    Persons.........................................................25
     1.2.8    Modifications to Documents......................................25
     1.2.9    From, To and Through............................................26
     1.2.10   Shall; Will.....................................................26
   1.3   Accounting Principles................................................26

2.    REVOLVING CREDIT AND SWING LOAN FACILITIES..............................26
   2.1   Commitments..........................................................26
     2.1.1    Revolving Credit Loans..........................................26
     2.1.2    Swing Loans.....................................................27
   2.2   Nature of Banks' Obligations with Respect to Revolving Credit Loans..27
   2.3   Commitment Fees......................................................27
   2.4   Revolving Credit Loan Requests; Swing Loan Requests..................28
     2.4.1    Revolving Credit Loan Requests..................................28
     2.4.2    Swing Loan Requests.............................................29
   2.5   Making Revolving Credit Loans and Swing Loans........................29
     2.5.1    Making Revolving Credit Loans...................................29
     2.5.2    Making Swing Loans..............................................29
   2.6   Revolving Credit Notes and Swing Loan Note...........................30
     2.6.1    Revolving Credit Notes..........................................30
     2.6.2    Swing Loan Note.................................................30
   2.7   Voluntary Reduction of Commitment....................................30
   2.8   Letter of Credit Subfacility.........................................31
     2.8.1    Issuance of Letters of Credit...................................31
  
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                                TABLE OF CONTENTS

Section                                                                     Page


     2.8.2    Letter of Credit Fees...........................................31
     2.8.3    Disbursements, Reimbursement....................................32
     2.8.4    Repayment of Participation Advances.............................33
     2.8.5    Documentation...................................................33
     2.8.6    Determinations to Honor Drawing Requests........................34
     2.8.7    Nature of Participation and Reimbursement Obligations...........34
     2.8.8    Indemnity.......................................................35
     2.8.9    Liability for Acts and Omissions................................36
   2.9   Borrowings to Repay Swing Loans......................................36

3.    INTEREST RATES..........................................................37
   3.1   Revolving Credit Interest Rate Options...............................37
     3.1.2    Rate Quotations.................................................37
   3.2   Interest Periods.....................................................38
     3.2.1    Amount of Borrowing Tranche.....................................38
     3.2.2    Renewals........................................................38
   3.3   Interest After Default...............................................38
     3.3.1    Letter of Credit Fees, Interest Rate............................38
     3.3.2    Other Obligations...............................................38
     3.3.3    Acknowledgment..................................................38
   3.4   Euro-Rate Unascertainable; Illegality; Increased Costs; Deposits Not
         Available............................................................39
     3.4.1    Unascertainable.................................................39
     3.4.2    Illegality; Increased Costs; Deposits Not Available.............39
     3.4.3    Agent's and Bank's Rights.......................................39
   3.5   Selection of Interest Rate Options...................................40

4.    PAYMENTS40
   4.1   Payments.............................................................40
   4.2   Pro Rata Treatment of Banks..........................................41
   4.3   Interest Payment Dates...............................................41
   4.4   Voluntary Prepayments................................................41
     4.4.1    Right to Prepay.................................................41
     4.4.2    Replacement of a Bank...........................................42
     4.4.3    Change of Lending Office........................................43

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                                TABLE OF CONTENTS

Section                                                                     Page


   4.5   Additional Compensation in Certain Circumstances.....................43
     4.5.1    Increased Costs or Reduced Return Resulting from Taxes, Reserves,
              Capital Adequacy Requirements, Expenses, Etc....................43
     4.5.2    Indemnity.......................................................44
   4.6   Settlement Date Procedures...........................................45

5.    REPRESENTATIONS AND WARRANTIES..........................................45
   5.1   Representations and Warranties.......................................45
     5.1.1    Organization and Qualification..................................46
     5.1.2    Capitalization and Ownership....................................46
     5.1.3    Subsidiaries....................................................46
     5.1.4    Power and Authority.............................................46
     5.1.5    Validity and Binding Effect.....................................47
     5.1.6    No Conflict.....................................................48
     5.1.7    Litigation......................................................48
     5.1.8    Title to Properties.............................................48
     5.1.9    Financial Statements............................................48
     5.1.10   Use of Proceeds; Margin Stock; Section 20 Subsidiaries..........49
     5.1.11   Taxes...........................................................50
     5.1.12   Consents and Approvals..........................................50
     5.1.13   No Event of Default; Compliance with Instruments................50
     5.1.14   Patents, Trademarks, Copyrights, Licenses, Etc..................51
     5.1.15   Security Interests..............................................51
     5.1.16   Mortgage Liens..................................................52
     5.1.17   Status of the Pledged Collateral................................52
     5.1.18   Insurance.......................................................52
     5.1.19   Compliance with Laws............................................53
     5.1.20   Material Contracts; Burdensome Restrictions.....................53
     5.1.21   Investment Companies; Regulated Entities........................53
     5.1.22   Plans and Benefit Arrangements..................................53
     5.1.23   Employment Matters..............................................55
     5.1.24   Environmental Matters...........................................55
     5.1.25   Senior Debt Status..............................................56
     5.1.26   Full Disclosure.................................................57

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                                TABLE OF CONTENTS

Section                                                                     Page


     5.1.27   Year 2000.......................................................57
     5.1.28   Solvency........................................................57
   5.2   Updates to Schedules.................................................57

6.    CONDITIONS OF LENDING AND ISSUANCE OF LETTERS OF CREDIT.................58
   6.1   First Loans and Letters of Credit....................................58
     6.1.1    Officer's Certificate...........................................58
     6.1.2    Secretary's Certificate.........................................58
     6.1.3    Delivery of Loan Documents......................................59
     6.1.4    Closing Date Compliance Certificate.............................59
     6.1.5    Opinion of Counsel..............................................59
     6.1.6    Legal Details...................................................59
     6.1.7    Payment of Fees.................................................59
     6.1.8    Environmental Audit.............................................60
     6.1.9    Consents........................................................60
     6.1.10   Officer's Certificate Regarding MACs and Litigation.............60
     6.1.11   No Violation of Laws............................................60
     6.1.12   No Actions or Proceedings.......................................60
     6.1.13   Insurance Policies; Certificates of Insurance; Endorsements.....61
     6.1.14   Title Insurance.................................................61
     6.1.15   Filing Receipts; Lien Search Results............................61
     6.1.16   Administrative Questionnaire....................................61
     6.1.17   Payoff of Existing Credit Agreement.............................62
     6.1.18   Acquisition Closing.............................................62
     6.1.19   Solvency Certificate............................................62
   6.2   Each Additional Loan or Letter of Credit.............................62

7.    COVENANTS...............................................................63
   7.1   Affirmative Covenants................................................63
     7.1.1    Preservation of Existence, Etc..................................63
     7.1.2    Payment of Liabilities, Including Taxes, Etc....................63
     7.1.3    Maintenance of Insurance........................................64
     7.1.4    Maintenance of Properties and Leases............................65
     7.1.5    Maintenance of Patents, Trademarks, Etc.........................65

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Section                                                                     Page


     7.1.6    Visitation Rights...............................................65
     7.1.7    Keeping of Records and Books of Account.........................65
     7.1.8    Plans and Benefit Arrangements..................................66
     7.1.9    Compliance with Laws............................................66
     7.1.10   Use of Proceeds.................................................66
     7.1.11   Further Assurances..............................................66
     7.1.12   Subordination of Intercompany Loans.............................66
     7.1.13   Delivery of Environmental and Real Estate Documents After
              Closing.........................................................67
     7.1.14   Consent or Acknowledgment Relating to Pledge of Anderson
              Park, Inc. Stock................................................67
     7.1.15   Recordation of Florida Mortgage.................................67
   7.2   Negative Covenants...................................................68
     7.2.1    Indebtedness....................................................68
     7.2.2    Liens...........................................................69
     7.2.3    Guaranties......................................................70
     7.2.4    Loans and Investments...........................................70
     7.2.5    Liquidations, Mergers, Consolidations, Acquisitions.............71
     7.2.6    Dispositions of Assets or Subsidiaries..........................73
     7.2.7    Affiliate Transactions..........................................73
     7.2.8    Subsidiaries, Partnerships and Joint Ventures...................74
     7.2.9    Continuation of or Change in Business...........................74
     7.2.10   Plans and Benefit Arrangements..................................74
     7.2.11   Fiscal Year.....................................................75
     7.2.12   Issuance of Stock...............................................75
     7.2.13   Changes in Organizational Documents.............................75
     7.2.14   Changes in Acquisition Documents................................76
     7.2.15   Margin Stock....................................................76
     7.2.16   Other Agreements................................................76
     7.2.17   Maximum Total Leverage Ratio....................................76
     7.2.18   Maximum Senior Leverage Ratio...................................77
     7.2.19   Minimum Interest Coverage Ratio.................................77
     7.2.20   Minimum Net Worth...............................................77
     7.2.21   Minimum Fixed Charge Coverage Ratio.............................78

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                                TABLE OF CONTENTS

Section                                                                     Page


   7.3   Reporting Requirements...............................................78
     7.3.1    Quarterly Financial Statements..................................78
     7.3.2    Annual Financial Statements.....................................78
     7.3.3    Certificate of the Borrower.....................................79
     7.3.4    Notice of Default...............................................79
     7.3.5    Notice of Litigation............................................79
     7.3.6    Certain Events..................................................79
     7.3.7    Other Reports and Information...................................80
     7.3.8    Notices Regarding Plans and Benefit Arrangements................80

8.    DEFAULT 82
   8.1   Events of Default....................................................82
     8.1.1    Payments Under Loan Documents...................................82
     8.1.2    Breach of Warranty..............................................82
     8.1.3    Breach of Negative Covenants or Visitation Rights...............82
     8.1.4    Breach of Other Covenants.......................................82
     8.1.5    Defaults in Other Agreements or Indebtedness....................83
     8.1.6    Other Material Obligations......................................83
     8.1.7    Final Judgments or Orders.......................................83
     8.1.8    Loan Document Unenforceable.....................................83
     8.1.9    Uninsured Losses; Proceedings Against Assets....................84
     8.1.10   Notice of Lien or Assessment....................................84
     8.1.11   Insolvency......................................................84
     8.1.12   Events Relating to Plans and Benefit Arrangements...............84
     8.1.13   Cessation of Business...........................................85
     8.1.14   Change of Control...............................................85
     8.1.15   Involuntary Proceedings.........................................85
     8.1.16   Voluntary Proceedings...........................................86
   8.2   Consequences of Event of Default.....................................86
     8.2.1    Events of Default Other Than Bankruptcy, Insolvency or
              Reorganization Proceedings......................................86
     8.2.2    Bankruptcy, Insolvency or Reorganization Proceedings............86
     8.2.3    Set-off.........................................................87
     8.2.4    Suits, Actions, Proceedings.....................................87

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                                TABLE OF CONTENTS

Section                                                                     Page


     8.2.5    Application of Proceeds; Collateral Sharing.....................87
     8.2.6    Other Rights and Remedies.......................................88
   8.3   Notice of Sale.......................................................89

9.    THE AGENT...............................................................89
   9.1   Appointment..........................................................89
   9.2   Delegation of Duties.................................................89
   9.3   Nature of Duties; Independent Credit Investigation...................89
   9.4   Actions in Discretion of Agent; Instructions From the Banks..........90
   9.5   Reimbursement and Indemnification of Agent by the Borrower...........90
   9.6   Exculpatory Provisions; Limitation of Liability......................91
   9.7   Reimbursement and Indemnification of Agent by Banks..................92
   9.8   Reliance by Agent....................................................92
   9.9   Notice of Default....................................................93
   9.10  Notices..............................................................93
   9.11  Banks in Their Individual Capacities.................................93
   9.12  Holders of Notes.....................................................93
   9.13  Equalization of Banks................................................94
   9.14  Successor Agent......................................................94
   9.15  Agent's Fee..........................................................95
   9.16  Availability of Funds................................................95
   9.17  Calculations.........................................................95
   9.18  Beneficiaries........................................................95

10.   MISCELLANEOUS...........................................................96
   10.1  Modifications, Amendments or Waivers.................................96
     10.1.1   Increase of Commitment; Extension of Expiration Date............96
     10.1.2   Extension of Payment; Reduction of Principal, Interest or Fees;
              Modification of Terms of Payment................................96
     10.1.3   Release of Collateral or Guarantor..............................96
     10.1.4   Miscellaneous...................................................96
   10.2  No Implied Waivers; Cumulative Remedies; Writing Required............97
   10.3  Reimbursement and Indemnification of Banks by the Borrower; Taxes....97
   10.4  Holidays.............................................................98

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                                TABLE OF CONTENTS

Section                                                                     Page


   10.5  Funding by Branch, Subsidiary or Affiliate...........................98
     10.5.1   Notional Funding................................................98
     10.5.2   Actual Funding..................................................99
   10.6  Notices..............................................................99
   10.7  Severability.........................................................99
   10.8  Governing Law.......................................................100
   10.9  Prior Understanding.................................................100
   10.10 Duration; Survival..................................................100
   10.11 Successors and Assigns..............................................100
   10.12 Confidentiality.....................................................102
     10.12.1  General........................................................102
     10.12.2  Sharing Information With Affiliates of the Banks...............102
   10.13 Counterparts........................................................102
   10.14 Agent's or Bank's Consent...........................................103
   10.15 Exceptions..........................................................103
   10.16 CONSENT TO FORUM; WAIVER OF JURY TRIAL..............................103
   10.17 Tax Withholding Clause..............................................104
   10.18 Joinder of Guarantors...............................................105
   10.19 Joinder of a New Bank...............................................105
   10.20 Terms and Conditions Prior to The PMW Lien Consent Date.............106


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                                      - x -
                         LIST OF SCHEDULES AND EXHIBITS

SCHEDULES

SCHEDULE 1.1(A)         -    VARIABLE PRICING AND FEES BASED ON LEVERAGE RATIO
SCHEDULE 1.1(B)         -    COMMITMENTS OF BANKS AND ADDRESSES FOR NOTICES
SCHEDULE 1.1(P)(1)      -    PERMITTED LIENS
SCHEDULE 1.1(P)(2)      -    PERMITTED CASH INVESTMENTS
SCHEDULE 5.1.1          -    QUALIFICATIONS TO DO BUSINESS
SCHEDULE 5.1.2          -    CAPITALIZATION
SCHEDULE 5.1.3          -    SUBSIDIARIES
SCHEDULE 5.1.8          -    OWNED AND LEASED REAL PROPERTY
SCHEDULE 5.1.11         -    AGREEMENTS WITH RESPECT TO TAXES
SCHEDULE 5.1.12         -    CONSENTS AND APPROVALS
SCHEDULE 5.1.14         -    PATENTS, TRADEMARKS, COPYRIGHTS, LICENSES, ETC.
SCHEDULE 5.1.17         -    PARTNERSHIP AGREEMENTS; LLC AGREEMENTS
SCHEDULE 5.1.18         -    INSURANCE POLICIES
SCHEDULE 5.1.20         -    MATERIAL CONTRACTS
SCHEDULE 5.1.22         -    EMPLOYEE BENEFIT PLAN DISCLOSURES
SCHEDULE 5.1.24         -    ENVIRONMENTAL DISCLOSURES
SCHEDULE 7.1.13         -    OUTSTANDING SURVEYS AND ENVIRONMENTAL REPORTS
SCHEDULE 7.2            -    FINANCIAL COVENANT LEVELS
SCHEDULE 7.2.1          -    PERMITTED INDEBTEDNESS
SCHEDULE 7.2.4          -    RESTRICTED INVESTMENTS ON THE CLOSING DATE

EXHIBITS

EXHIBIT 1.1(A)          -    ASSIGNMENT AND ASSUMPTION AGREEMENT
EXHIBIT 1.1(B)          -    BANK JOINDER
EXHIBIT 1.1(G)(1)       -    GUARANTOR JOINDER
EXHIBIT 1.1(G)(2)       -    GUARANTY AGREEMENT
EXHIBIT 1.1(I)(1)       -    INDEMNITY
EXHIBIT 1.1(I)(2)       -    INTERCOMPANY SUBORDINATION AGREEMENT
EXHIBIT 1.1(M)          -    MORTGAGE
EXHIBIT 1.1(P)(1)       -    PATENT, TRADEMARK AND COPYRIGHT SECURITY AGREEMENT
EXHIBIT 1.1(P)(2)       -    PLEDGE AGREEMENT
EXHIBIT 1.1(R)          -    REVOLVING CREDIT NOTE
EXHIBIT 1.1(S)(1)       -    SECURITY AGREEMENT
EXHIBIT 1.1 (S)(2)      -    SWING LOAN NOTE
EXHIBIT 2.4.1           -    REVOLVING CREDIT LOAN REQUEST

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<PAGE>


EXHIBIT 2.4.2           -    SWING LOAN REQUEST
EXHIBIT 6.1.4           -    CLOSING DATE COMPLIANCE CERTIFICATE
EXHIBIT 6.1.5           -    OPINION OF COUNSEL
EXHIBIT 7.2.5           -    ACQUISITION COMPLIANCE CERTIFICATE
EXHIBIT 7.3.3           -    QUARTERLY COMPLIANCE CERTIFICATE
EXHIBIT 10.20(A)        -    LETTER TO PMW REQUESTING AMENDMENT TO THE PMW 
                             ACQUISITION CONSENT (AND CONSENT TO LIENS)
EXHIBIT 10.20(B)        -    ACKNOWLEDGMENT ON THE PMW LIEN CONSENT DATE
EXHIBIT 10.20(C)        -    OPINION OF GREENBERG TRAURIG, P.A. ON PMW LIEN 
                             CONSENT DATE


                                       36
<PAGE>






                                CREDIT AGREEMENT

        THIS CREDIT  AGREEMENT  is dated as of April 23, 1999 and is made by and
among CHURCHILL DOWNS  INCORPORATED,  a Kentucky  corporation (the  "Borrower"),
each of the  Guarantors  (as  hereinafter  defined),  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  Borrower has  requested  the Banks to provide a revolving
credit facility to the Borrower in an aggregate  principal  amount not to exceed
$250,000,000 with a $10,000,000 sublimit for letters of credit and a $10,000,000
sublimit for swing loans to be provided by the Agent; and

        WHEREAS,  the revolving  credit facility shall be used to repay existing
indebtedness, to finance acquisitions and for general corporate purposes; 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:

                      Acknowledgment shall have the meaning assigned to such 
term in Section 10.20.

                      Acquisition shall mean the mergers of CR Acquisition into
Calder and the merger of TP  Acquisition  into Tropical and the cancellation  of
shares of Calder and  Tropical  and  issuance of new shares in favor of CDMC and
the  other  transactions  pursuant to and  in  accordance  with the terms of the
Acquisitions Documents.

                      Acquisition Compliance Certificate shall have the meaning
assigned to such term in Section 7.2.5.

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                      Acquisition  Documents  shall  mean  the  Stock  Purchase 
Agreement and  the Merger  Agreement  and  the  SPA   Amendment  and  all  other
agreements, closing documents and other instruments, certificates  or  documents
delivered or contemplated to be delivered thereunder or in connection therewith,
as the  same may  be supplemented or  amended  from time to  time in  accordance
herewith.

                      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.

                      Agent's   Fee  shall  have  the   meaning   assigned  to 
that  term  in Section 9.15.

                      Agent's  Letter  shall  have  the meaning assigned to that
term in Section 9.15.

                      Agreement  shall  mean this Credit Agreement, as the same 
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 5.1.9((i)).

                      Applicable Commitment Fee Rate shall mean the  percentage
rate  per  annum  based on  the Leverage Ratio then in effect  according to the
Applicable  Pricing Grid below the heading  "Commitment  Fee." The  Applicable 
Commitment  Fee  Rate shall be  computed in accordance  with the  parameters set
forth on the Applicable Pricing Grid.

                      Applicable Margin shall mean, as applicable:

                      (A)   the percentage spread to be added to Base Rate under
the Base Rate Option  based  on the  Leverage  Ratio  then in  effect  according
to the Applicable Pricing Grid below the heading "Base Rate Spread", or

                      (B)   the percentage spread to be added to Euro-Rate under
the Euro-Rate  Option  based on the Leverage  Ratio then in effect  according to
the Applicable Pricing Grid below the heading "Euro-Rate Spread."

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<PAGE>

The  Applicable  Margin shall be computed in accordance  with the parameters set
forth on the Applicable Pricing Grid.

                      Applicable Pricing Grid shall mean:

                      (i)   Schedule 1.1(A)(1)  prior to the  Covenant/Pricing 
Modification Date and

                      (ii)  Schedule 1.1(A)(2) on and after the Covenant/Pricing
Modification Date.

                      Assignment shall have the meaning assigned to such term in
Section 10.20.

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

                      Bank  Joinder  shall mean a joinder in the form of Exhibit
1.1(B) pursuant  to which a New Bank  may  join  this  Agreement  and the  other
Loan Documents after the date hereof.

                      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 the sum of $55,000,000, plus an 
amount equal to Fifty  Percent (50%) of  the  consolidated  net  income  of  the
Borrower and its consolidated  Subsidiaries  for every year after  fiscal  year 
1998 in which net income was earned (as opposed to a net loss) plus One Hundred
Percent (100%) of the proceeds from any public and/or private  offering  and/or 
sale of any common and/or  preferred  stock and/or other equity security, and/or
any  note, debenture,  or other security  convertible,  in whole or in part, to
common  and/or  preferred  stock and/or  other  equity  security  (each of the 
foregoing  referred to as an "Equity Offering") , net of expenses,  commissions 
and  fees associated  with such sale (the "Net  Equity  Proceeds")  during  the 
period  from  December  31,  1998 through the date of determination.

                      Base Rate shall mean the greater of (i) the interest rate
per annum announced  from  time to time by the Agent at its  Principal Office as

                                       39
<PAGE>


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% per annum.

                      Base Rate Option shall mean the option of the Borrower to
have Revolving  Credit  Loans  bear  interest  at the rate and  under the  terms
and conditions set forth in Section 3.1(i).

                      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.

                      Borrower  shall  mean  Churchill  Downs  Incorporated, a 
corporation  organized  and  existing  under  the  laws  of  the Commonwealth of
Kentucky.

                      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 Limitation shall mean (i) $125,000,000 prior to
the  PMW  Lien  Consent  Date,  and (ii)  the  aggregate of the Revolving Credit
Commitments on and after the PMW Lien Consent Date.

                      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  Borrower  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.

                      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 Pittsburgh,  Pennsylvania  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.

                      Calder  shall  mean Calder  Race Course, Inc., a  Florida 
corporation.

                      Calder  Mortgage  shall  mean Mortgage with respect to the
Real Property owned by Calder . Calder  shall  execute the Calder  Mortgage  and
deliver  such  Calder  Mortgage  to the  Agent on the  Closing  Date in a form 
sufficient for recordation  and the Agent may thereafter at any time record such
Mortgages at any time pursuant to Section 7.1.15.

                      CDMC  shall  mean  Churchill  Downs Management Company, a 
Kentucky corporation, and wholly owned subsidiary of the Borrower.

                                       40
<PAGE>


                      Closing  Date  shall mean  the  Business  Day on which the
first Loan shall be made, which shall be April 23 1999.

                      Closing Date Compliance Certificate shall have the meaning
assigned to such term in Section 6.1.4.

                      Closing  Fees shall mean the fees  referred to in Sections
2.3.

                      Collateral  shall   mean the  Pledged  Collateral, the UCC
Collateral,  the  Intellectual  Property  Collateral   and   the   Real Property
Collateral.

                      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 aggregate of its 
Revolving  Credit  Commitment and,  in  the  case of  the  Agent, its Swing Loan
Commitment,  and Commitments  shall mean the aggregate of the Revolving  Credit 
Commitments  and Swing Loan Commitment of all of the Banks.

                      Commitment  Fee  shall  have the  meaning assigned to that
term in Section 2.3.

                      Compliance Certificate shall have the meaning assigned to 
such term in Section 7.3.3.

                      Consolidated   EBIT   for   any   Period  shall  mean  the
consolidated EBIT of all of the Loan Parties for that period,  consolidated  in 
accordance  with  GAAP. The  EBIT  of  the  Excluded  Subsidiaries  shall not be
included  in  Consolidated EBIT.

                      Consolidated  EBITDA   for   any   Period  shall  mean the
consolidated EBITDA of all of the Loan  Parties for that period,  consolidated 
in  accordance  with GAAP.  The  EBITDA  of  the  Excluded  Subsidiaries  shall 
not be  included  in Consolidated EBITDA.

                      Consolidated  Fixed  Charges shall mean for any period of 
determination the  consolidated  Fixed  Charges of all of the Loan  Parties  for
that  period, consolidated  in  accordance  with  GAAP.  The  Fixed  Charges  of
the  Excluded Subsidiaries shall not be included in Consolidated Fixed Charges.

                      Consolidated  Senior  Indebtedness  as  of  any   date  of
determination   shall  mean  the  Consolidated   Total  Indebtedness  less any  
Subordinated  Indebtedness outstanding as of such date.

                      Consolidated   Total  Indebtedness   as  of  any  date of
determination shall mean  the  consolidated  Indebtedness of the  Loan  Parties,
consolidated  in  accordance with  GAAP,  except  that   obligations of the Loan

                                       41
<PAGE>

Parties 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
Total Indebtedness. The balance of all  obligations  of the Loan  Parties  with 
respect to  pari-mutuel tickets other than the Excluded Amount shall be included
in   Consolidated   Total  Indebtedness.  The  Indebtedness  of  the  Excluded  
Subsidiaries  shall  not be included in Consolidated Total Indebtedness.

                      Consolidated   Interest   Expense  for  any   period   of
determination   shall  mean   the   interest  expense   of the Loan Parties on a
consolidated   basis  for such period  determined and consolidated in accordance
with  GAAP. The  interest  expense of  the  Excluded  Subsidiaries  shall not be
included in  Consolidated  Interest Expense.

                      Consolidated  Net  Worth   shall  mean  as of  any date of
determination total stockholders' equity  of the  Borrower and its  Subsidiaries
as of such  date determined and consolidated in accordance with GAAP.

                      Consolidated  Rent  Expense shall  mean for  any period of
determination the total  expenses  of the Loan Parties on a  consolidated  basis
during such period,  determined and  consolidated  in accordance  with GAAP, for
rent and/or other amounts under all real and personal property operating leases.
The  rent expense  of  the  Excluded  Subsidiaries  shall  not  be  included in 
Consolidated Rent Expense.

                      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 clause (ii) above),
and (iv) any other consideration given or obligation incurred by any of the Loan
Parties in connection therewith.

                      Contamination shall mean the presence or release or threat
of release of Regulated  Substances  in, on,  under or  emanating to or from the
Property,  which  pursuant  to  Environmental  Laws  requires   notification or
reporting  by any of the Loan Parties to an Official Body, or which pursuant to
Environmental Laws requires  the  investigation,  cleanup, removal, remediation,
containment, abatement of or other response  action  by any of the Loan  Parties
or  which  otherwise  constitutes  a  violation by  any of the Loan  Parties of 
Environmental  Laws or for which  any of the Loan Parties  could be  potentially
liable.

                      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
any of the Loan Parties at its sole discretion.

                                       42
<PAGE>

                      Covenant/Pricing  Modification Date  shall  be the date on
which the Borrower  receives  Net Equity  Proceeds  from issuing  securities  in
an Equity Offering in an amount equal to or exceeding $60,000,000.

                      CR Acquisition shall mean CR Acquisition  Corp., a Florida
corporation, and a wholly  owned  subsidiary  of CDMC which  shall  merge into  
Calder on the Closing  Date.  All of  the shares  of  capital  stock  of  Calder
outstanding immediately  prior to such  merger shall be canceled  and new shares
shall be issued in favor of CDMC.  CDMC  shall  own all of the  shares of stock 
of Calder immediately after such merger.

                      Documentation Agent shall mean Bank One Kentucky, N.A. The
Documentation  Agent  shall have no  obligations  or duties in its  capacity  as
Documentation Agent.

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

                      Drawing Date shall have the meaning assigned to that term 
in Section 2.8.3.2.

                      EBIT for any Person for any period of determination shall
mean the  sum of  that Person's net income,  interest  expense  and  income tax
expense,  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
by  any Person or Official  Body setting  forth a cause of  action for  personal
injury or property damage,  natural resource damage,  contribution or indemnity 
for  response  costs,  civil  or  administrative  penalties,  criminal  fines or
penalties, or declaratory  or equitable relief  arising under any Environmental 
Law  or  any  order,  notice  of  violation,  citation,  subpoena,  request for 
information or other written notice or demand of any type issued by an Official
Body  pursuant to any  Environmental
Law.

                      Environmental Law shall mean all federal, state, local and
Laws and any consent decrees, settlement agreements, judgments or orders issued
by or entered into with an Official Body pertaining or relating to:(i) pollution
or  pollution  control;  (ii)  protection  of human  health or the  environment;
(iii)  employee safety in the workplace;  (iv)  the presence,  use,  management,
generation, manufacture,    processing,    extraction,   treatment,   recycling,
refining, reclamation, labeling, transport,  storage,  collection, distribution,
disposal or release  or threat of release  of  Regulated  Substances;  (v) the 
presence  of Contamination;  (vi) the  protection of endangered  or threatened  
species;  and (vii) the protection of Environmentally Sensitive Areas.

                                       43
<PAGE>

                      Environmentally Sensitive Area shall mean (i) any wetland 
as defined by applicable  Environmental  Laws;  (ii) any area  designated  as a 
coastal  zone pursuant to applicable  Laws, including Environmental  Laws; (iii)
any area of historic or  archeological significance or scenic area as defined or
designated by applicable Laws,  including  Environmental  Laws; (iv) habitats of
endangered
species or  threatened  species as  designated  by  applicable  Laws,  including
Environmental  Laws;  or (v) a floodplain  or other flood hazard area as defined
pursuant to any applicable Laws.

                      Equity  Offering  shall  have the meaning assigned to such
term in the definition of Base Net Worth.

                      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 Borrower 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  Borrower, are treated as a single  employer under Section 414
of the Internal Revenue Code.

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

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

The Euro-Rate  shall be adjusted with respect to any 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  Borrower of the  Euro-Rate as  determined  or adjusted in
accordance  herewith,  which  determination  shall be conclusive absent manifest
error.

                                       44
<PAGE>

                      Euro-Rate Option shall mean the option of the Borrower to
have Revolving  Credit  Loans  bear  interest  at the rate and under  the  terms
and conditions set forth in Section 3.1(ii).

                      Euro-Rate Reserve Percentage shall mean as of any day 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   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 8.1 and referred to therein as an "Event of Default."

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

                      Excluded Subsidiaries shall mean any Excluded Entity which
is a Subsidiary of the Borrower.  The Excluded Subsidiaries on the Closing Date 
are  Hoosier   Park, L.P.,   Anderson  Park,  Inc. and   Charlson    Broadcast
Technologies LLC.

                      Expiration  Date  shall   mean,  with   respect   to  the 
Commitments, April 23, 2004.

                      Existing Credit Agreement  shall mean that certain Credit 
Agreement  dated   as  of   September 16, 1998,   among  the  Borrower,  certain
Subsidiaries of the Borrower, PNC Bank, as agent and the banks party thereto.

                       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.

                                       45
<PAGE>

                     Fixed  Charge  Coverage  Ratio  shall  mean  the  ratio of
Consolidated EBITDA to Consolidated  Fixed Charges, in each instance computed as
of the end of each quarter for the four quarters then ended.

                      Fixed Charges  shall mean for any period of determination,
the sum of  interest expense, income taxes, scheduled principal installments on 
Indebtedness  with  maturities  greater  than  one  year (as  adjusted   for 
prepayments),  dividend payments,  scheduled  payments under capital  leases and
non-financed  capital expenditures for such period.

                      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 2.8.8.

                      Guarantor   shall   mean  CDMC,  a   Kentucky corporation,
Churchill Downs Investment  Company, a Kentucky corporation,  Racing Corporation
Of America, a Delaware  corporation,  Ellis Park Race Course,  Inc.,  a Kentucky
corporation,  Calder  and  Tropical, each of whom has executed this Agreement on
the date hereof and each other Person which joins this  Agreement as a Guarantor
after the date hereof pursuant to Section 10.18.

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

                      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.

                      Guaranty Agreement shall mean the Guaranty and Suretyship
Agreement in substantially the form of Exhibit  1.1(G)(2) executed and delivered
by each of the Guarantors to the Agent for the benefit of the Banks.

                      Historical  Statements  shall  have  the  meaning assigned
to that term in Section 5.1.9((i)).

                      IHRC shall mean the Indiana Horse Racing Commission.

                      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

                                       46
<PAGE>


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 and  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 and accrued
expenses  and  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.

                      Intellectual  Property  Collateral  shall  mean all of the
property described in the Patent, Trademark and Copyright Security Agreement or
the Patent, Trademark and Copyright Security Agreement--Calder and Tropical.

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

                      Interest   Coverage   Ratio  shall  mean  the  ratio  of
Consolidated EBIT plus Consolidated  Rent  Expense to the sum of  Consolidated 
Interest  Expense  plus Consolidated  Rent  Expense,  in each  instance computed
as of the end of each quarter for the four quarters then ended.

                                       47
<PAGE>

                      Interest Period shall mean the period of time selected by 
the  Borrower  in  connection  with  (and  to apply to) any election  permitted 
hereunder by the Borrower  to have  Revolving Credit Loans bear  interest  under
the  Euro-Rate Option.  Subject to the last sentence of this  definition,  such 
period shall be (i) one Month if Borrower  selects the Euro-Rate  Option during 
the Syndications Period and (ii) one, two, three or six Months (or twelve (12) 
months if a twelve (12) month  Euro-Rate  is then  available to the Banks and is
selected  by the Borrower,  however the Banks are under no obligation whatsoever
to make a twelve (12) month Interest Period  available to the Borrower,  if such
rate is not then available  to the Banks) if Borrower  selects  the  Euro-Rate  
Option  after the Syndications  Period has ended.  Such  Interest  Period  shall
commence  on the effective  date of such Interest  Rate Option,  which shall be 
(i) the Borrowing Date if the Borrower is requesting new Loans, or (ii) the date
of renewal of or conversion to the Euro-Rate  Option if the Borrower is renewing
or   converting  to  the Euro-Rate  Option   applicable   to  outstanding Loans.
Notwithstanding the second sentence  hereof: (A) any Interest Period which would
otherwise  end  on a  date which is not a Business  Day shall be extended to the
next succeeding Business Day unless such Business Day falls in the next calendar
month,  in  which  case  such Interest  Period shall end on the next preceding 
Business Day, and (B) the Borrower  shall not  select,  convert  to or renew an 
Interest Period for any portion of the Loans that would end after the Expiration
Date.

                      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 5.1.9((i)).

                      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.

                      IRP Provider  shall have the meaning assigned to such term
in the definition of Permitted Liens.

                      Kawasaki    Leasing   shall   mean  Kawasaki   Leasing
International, Inc., which has made a  $88,000,000  loan to Calder and Tropical
as more fully  described in the Stock Purchase Agreement.

                      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,  bond,  judgment, authorization or
approval,  lien or award of or settlement agreement with any Official Body.

                                       48
<PAGE>

                      Letter of Credit shall have the meaning assigned to that 
term in Section 2.8.1.

                      Letter of Credit Borrowing shall have the meaning assigned
to such term in Section 2.8.3.4.

                      Letter of Credit  Fee shall have  the meaning assigned to 
that term in Section 2.8.2.

                      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 and Letter of Credit Borrowings.

                      Leverage  Ratio  shall have the meaning  assigned to such
term in Section 7.2.17.

                      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).

                      LLC Interests shall have the meaning given to such term in
Section 5.1.3.

                      Loan  Documents  shall  mean  this  Agreement, the Agent's
Letter,  the  Guaranty  Agreement, the Indemnity, the Intercompany Subordination
Agreement, the Mortgages, the Notes, the Patent Trademark and Copyright Security
Agreement, the Patent,  Trademark and Copyright Security  Agreement--Calder  and
Tropical, the Pledge Agreement, the Security Agreement, and any other agreements
(including assignments  of rents,  subordination  or non-disturbance  agreements
and  other  agreements related  to  the Real Property Collateral),  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 Borrower and the Guarantors.

                      Loan Request  shall have the meaning given to such term in
Section 2.4.1.

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

                                       49
<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  the  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.

                      Merger  Agreement  shall mean shall mean the Agreement and
Plan  of  Merger, dated  as  of  April 22, 1999, by and among Borrower, CDMC, CR
Acquisition, TP  Acquisition,  Calder,  Tropical  and the  Seller,  pursuant  to
which (i) CR Acquisition  shall  merge  into  Calder  and TP  Acquisition  shall
merge  into Tropical,  (ii) all of the  shares  of  capital  stock of  Tropical
and  Calder  outstanding  immediately prior to such merger shall be canceled and
new shares of Calder and Tropical  shall be issued in favor of CDMC,  and (iii)
CDMC shall own all of the shares of stock of  Calder  and  Tropical  immediately
after  such mergers.

                      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.

                      Mortgages   shall  mean the Mortgages in substantially the
form of Exhibit  1.1(M)  executed and delivered by each of the  applicable  Loan
Parties with  respect to each of the parcels of Owned Real  Property  Collateral
to the Agent for the  benefit of the  Banks.  The  Mortgage with  respect to the
Real Property in Florida will not be recorded on the Closing Date, but the Agent
may record such Mortgage at any time pursuant to Section 7.1.15 .

                      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  Borrower 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 Borrower 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.

                                       50
<PAGE>

                      Net  Equity Proceeds  shall have the meaning  assigned to 
such term in the definition of Base Net Worth.

                      New Bank shall have the  meaning  assigned to such term in
Section 10.19.

                      Notes shall mean the Revolving Credit Notes and the Swing
Loan Note.

                      Notices shall have the meaning assigned to that term in 
Section 10.6.

                      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, 
board,  bureau,  central  bank,  commission,  department  or instrumentality of
either, or any court,  tribunal, grand jury or arbitrator, in each case whether
foreign or domestic.

                      Owned  Real  Property shall mean the real estate owned by
the Loan Parties and listed on Schedule 5.1.8.

                      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 2.8.3.4.

                      Partnership Interests shall have the meaning given to such
term in Section 5.1.3.

                      Patent, Trademark and  Copyright Security Agreement shall 
mean the Patent, Trademark and Copyright Security Agreement in substantially the
form of  Exhibit 1.1(P)(1)  executed  and delivered by each of the Loan Parties
other than Calder and Tropical to the Agent for the benefit of the Banks.

                      Patent, Trademark and Copyright Security Agreement--Calder
and Tropical shall  mean  the  Patent,   Trademark  and  Copyright   Security   
Agreement  in substantially the form of Exhibit 1.1(P)(1) executed and delivered
by Calder and Tropical to the Agent for the benefit of the Banks.

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

                      Permitted Acquisitions  shall have the meaning assigned to
such term in Section 7.2.5.
                                       51
<PAGE>

                      Permitted  Interest  Rate Protection Agreement shall have 
the meaning assigned to such term in Section 7.2.1((x)).

                      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 Schedule
1.1(P)(2) (the  demand  deposits,  time  deposits,  or  certificates  of deposit
maturing  within one  year, and cash investments of the  Excluded  Subsidiaries 
shall not be included on Schedule  1.1(P)(2))  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.

                      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;

                             (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,  not in  excess of
the aggregate amount due thereunder,  or to secure statutory  obligations,  or 
surety, appeal, indemnity, performance or other similar bonds required in the 
ordinary course of business;
                                       52
<PAGE>

                             (v) Encumbrances consisting of zoning restrictions,
easements or other  restrictions on the use of real property  (including but not
limited to the easement  contemplated  by the  Acquisition  Documents),  none of
which materially impairs the use of such property or the value thereof, and none
of which is violated in any material respect by existing or proposed  structures
or land use;

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

                             (vii) Liens,  security  interests and mortgages for
the benefit of any  individual  Bank (each an "IRP  Provider")  which  provides
a  Permitted Interest Rate  Protection  Agreement  (each a "Permitted  Secured 
Interest Rate Protection  Agreement")  between one or more of the Loan  Parties 
and such Bank, provided  that any such Liens  shall be pari passu with the Liens
securing   the  Indebtedness  hereunder,  subject to the  collateral  agency and
sharing  provisions  contained  in  Section 8.2.5.  The  parties to a "Permitted
Secured  Interest Rate Protection Agreement" shall state in the documentation 
governing such agreement that such  agreement  is  intended  to be a  "Permitted
Secured  Interest  Rate Protection  Agreement" hereunder, and upon doing so such
agreement  shall be treated as a "Permitted  Secured  Interest Rate  Protection
Agreement" for all purposes hereunder and under each of the other Loan Documents
and such agreement shall be entitled to share in the collateral security as more
fully provided for herein and therein;

                             (viii)  Assets  leased  under  capitalized  leases
described in and permitted under Section 7.2.1((iv));

                             (ix)   Purchase Money Security Interests described
in and permitted under Section 7.2.1((iii));

                             (x) The  following,  (A) if the  validity or amount
thereof is being contested in good faith by appropriate and lawful  proceedings
diligently conducted so long as levy and execution thereon have been stayed and
continue to be stayed 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 in the aggregate,  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 provided
               that,  notwithstanding any such reserves,  the Loan Parties shall
               pay any Liens  related to recording or related  taxes  (including
               documentary  stamp taxes or intangible  taxes),  immediately upon
               the  existence  of any Event of Default or  immediately  upon the
               request of the Agent if the Agent has  recorded or is recording a
               Mortgage on such realty;

                                       53
<PAGE>

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

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

                      (4)    Liens  resulting  from  final  judgments  or orders
               described in Section 8.1.6; and


                             (x) Any Lien existing on the date of this Agreement
and  described   on  Schedule  1.1(P)(1),  or  any lien filed solely against the
Excluded Subsidiaries  (and not the Loan  Parties), provided that the  principal
amount secured  thereby is not hereafter  increased,  and no  additional  assets
become subject to such Lien.

                      Permitted Secured Interest Rate Protection Agreement shall
have the meaning assigned to such term in the definition of Permitted Lien.

                      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.

                      Pledge   Agreement   shall  mean  the  Pledge Agreement in
substantially  the  form of Exhibit 1.1(P)(2) executed  and delivered by each of
the  Loan  Parties to  the Agent for the benefit of the Banks pursuant to which 
such   Loan  Parties  shall pledge their ownership interests in, Churchill Downs
Investment Company,  Racing Corporation  Of America,  Ellis Park Race  Course,  
Inc.  (and CDMC,  Calder and Tropical upon satisfaction of the conditions on the
PMW Lien Consent Date) and each other  Subsidiary  acquired by the Loan Parties 
after the date hereof whose stock is to be pledged pursuant to this Agreement.

                                       54
<PAGE>

                      Pledged  Collateral  shall  mean  the property of the Loan
Parties in which security interests are to be granted under the Pledge 
Agreement.

                      PMW shall mean the Division of Pari Mutuel Wagering in the
State of Florida.

                      PMW Acquisition Consent shall have the meaning assigned to
such term in Section 6.1.9.

                      PMW Consent Amendment shall have the meaning assigned to 
such term in Section 10.20.

                      PMW Letter shall have the meaning assigned to such term in
Section 10.20.

                      PMW Lien Consent Date shall have the meaning assigned to 
such term in Section 10.20.

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

                      Potential 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.

                      Principal Office shall mean the main banking office of the
Agent in Pittsburgh, Pennsylvania.

                      Prior Security Interest shall mean a valid and enforceable
perfected first-priority  security  interest under the Uniform  Commercial Code 
in the UCC Collateral and the Pledged Collateral  which is subject only to Liens
for taxes not yet due and payable to the extent such  prospective  tax  payments
are given priority by statute or Purchase Money Security Interests as permitted
hereunder.

                      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 anyLoan 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.

                                       55
<PAGE>

                      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  (excluding   the  Swing  Loan  Commitment)  bears to the Commitments
(excluding the Swing Loan Commitments) of all of the Banks.

                      Real  Property  shall  mean, collectively,  the Owned Real
Property and any leased real property of the Loan Parties or their Subsidiaries.

                      Real Property Collateral shall mean each of the parcels of
owned  real  property   listed  on  Schedule 5.1.8 except  as set forth on such
Schedule.

                      Recorded  Mortgages  shall  mean  each  of the  Mortgages,
except   for  the   Calder  Mortgage, but if the Calder Mortgage is subsequently
recorded, Recorded Mortgage shall include  such  Calder  Mortgage  on and  after
the date of such recordation.

                      Regulated Substances shall mean, without limitation, any
substance, material or waste, regardless of its form or nature, defined under
Environmental Laws  as  a  "hazardous  substance,"  "pollutant,"  "pollution," 
"contaminant," "hazardous or toxic substance," "extremely hazardous  substance,"
"toxic chemical,"  "toxic   substance,"  "toxic  waste,"  "hazardous  waste," 
"special handling waste," "industrial waste," "residual waste," "solid waste," 
"municipal waste," "mixed waste," "infectious waste," "chemotherapeutic  waste,"
"medical waste," or  "regulated  substance"  or any other  material,  substance 
or waste,  regardless of  its form  or nature,  which  otherwise is regulated by
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 2.8.3.2.

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

                      Required Banks shall mean

                      (i)....if there are no Loans, Reimbursement Obligations or
Letter of Credit Borrowings outstanding, Banks whose Commitments (excluding the 
Swing Loan Commitments) aggregate at least 51% of the Commitments (excluding the
Swing Loan 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  (excluding  the Swing  Loans),  Reimbursement Obligations  and

                                      56
<PAGE>

Letter of Credit Borrowings of such Banks then outstanding  aggregates at least 
51% of the total  principal amount of all of  the  Loans  (excluding  the  Swing
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.

                      Required  Environmental  Notices  shall mean all  notices,
reports, plans, forms or other filings which  pursuant to  Environmental   Laws,
Required Environmental  Permits or at the  request or  direction of an Official 
Body  either must be   submitted to an Official Body or which otherwise must be
maintained.

                      Required  Environmental  Permits  shall  mean all permits,
licenses, bonds, consents, programs, approvals or authorizations  required under
Environmental  Laws to own,  occupy or maintain the Property or which otherwise 
are  required for  the  operations  and  business  activities of the Borrower or
Guarantors.

                      Restricted  Investments  shall mean  all of the  following
with respect to any Person,  including any Excluded  Subsidiary or other Person:
(i)  investments  or  contributions  by  any  of  th   Loan Parties directly or 
indirectly in or to the  capital of or other  payments to or for the benefit of
such  Person, (ii) loans  by any of the  Loan Parties  directly or indirectly to
such Person, (iii) guaranties by any of the Loan Parties directly or  indirectly
of the  obligations  of such Person, or (iv) other  obligations,  contingent or
otherwise,  of any of the Loan Parties to or for the benefit of such Person.

                      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.

                      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  Borrower  
pursuant to Section 2.1.1, 2.8.3 or 2.9.

                      Revolving   Credit   Notes   shall   mean collectively and
Revolving Credit  Note shall mean  separately all the  Revolving Credit Notes of
the Borrower 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.

                                       57
<PAGE>

                      Revolving Facility Usage shall mean at any time the sum of
the Revolving  Credit Loans  outstanding,  Swing Loans  outstanding, the Letters
of   Credit   Outstanding,   Reimbursement   Obligations  and  Letter of Credit
Borrowings.

                      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. 

                      Security Agreement shall   mean the Security Agreement in 
substantially  the form  of Exhibit 1.1(S)(1) executed  and delivered by each of
the Loan Parties to the Agent for the benefit of the Banks.

                      Seller  shall  mean   KE   Acquisition   Corp., a  Florida
corporation which is the seller under the Stock Purchase Agreement.

                      Settlement  Date  shall  mean   with respect to each Swing
Loan, five (5) days  following the Borrowing  Date for such Loan (if such day is
a Business Day and if not,  the next  succeeding  Business  Day) and any other 
Business  Day on  which  the  Agent  elects to  effect  settlement   pursuant to
Section 4.6.

                      Shares  shall have the  meaning  assigned  to that term in
Section 5.1.2.

                      SNDA  shall  have the  meaning  assigned  to such  term in
Section 10.20.

                      Solvent  shall  mean,  with   respect  to any Person on a 
particular date, that on such date (i) the fair value of the  property  of such 
Person is greater  than  the total  amount of  liabilities,  including, without
limitation,  contingent   liabilities,  of such  Person, (ii) the  present  fair
saleable value of the assets of such  Person is not less than the  amount  that 
will be  required  to pay the probable  liability  of such  Person on its debts 
as they  become  absolute and matured, (iii) such Person is able to realize upon
its assets and pay its debts and other liabilities, contingent  obligations  and
other  commitments as they mature in the normal  course of  business,  (iv) such
Person does not intend to, and does not  believe  that it will,  incur  debts or
liabilities   beyond    such   Person's  ability  to  pay   as  such  debts and
liabilities    mature,    and  (v)  such  Person is not engaged in business or a
transaction,  and is not about to engage in business or a transaction, for which
such Person's property would constitute unreasonably small capital  after giving
due  consideration  to the  prevailing practice  in the  industry in which such
Person is  engaged.  In  computing  the amount  of  contingent  liabilities  at 
any time, it is intended  that  such liabilities  will be computed at the amount
which,  in  light  of all the facts and  circumstances  existing  at such  time,
represents  the  amount  that can reasonably  be expected to become an actual or
matured liability.

                      SPA Amendment shall mean the Amendment to Stock Purchase
Agreement, dated   as  of  April 19, 1999,  by   and   among   Borrower,  CDMC,
CR  Acquisition,  TP Acquisition, Calder, Tropical and the Seller

                                       58
<PAGE>

                      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.
                      Stock  Purchase  Agreement  shall mean the Stock Purchase
Agreement and joint  escrow  instructions  dated as of January  21, 1999, by and
between  the  Borrower  and the  Seller,  as  amended  by the  SPA  Amendment, 
including   the  schedules  and  exhibits   thereto and  any  amendments  or  
supplements thereof, pursuant to which CR Acquisition  shall  merge into  Calder
and TP  Acquisition shall merge into Tropical pursuant to the Merger Agreement.

                      Subordinated Indebtedness shall have the meaning assigned 
to such term in Section 7.2.1((vi)).

                      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  more  
than 50% of the  limited liability company interests are 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 5.1.3.

                      Swing Loan Commitment shall mean PNC Bank's commitment to 
make  Swing  Loans to the  Borrower  pursuant  to  Section  2.1.2 hereof in an 
aggregate principal amount up to $10,000,000.

                      Swing  Loan   Note shall  mean the Swing Loan Note of the
Borrower in favor of PNC  Bank in the  form of  Exhibit  1.1(S)(2)  evidencing 
the   Swing   Loans,  together  with  all   amendments,  extensions,  renewals,
replacements,  refinancings or refundings thereof in whole or in part.

                      Swing  Loan  Request  shall mean a request for Swing Loans
made in accordance with Section 2.4.2 hereof.

                                       59
<PAGE>

                      Swing Loans shall mean collectively   and Swing Loan shall
mean  separately  all   Swing  Loans or  any Swing Loan made by PNC Bank to the 
Borrower pursuant to Sections 2.1.2 and 2.4.2 hereof.

                      Syndication Agent shall mean CIBC Oppenheimer Corp.  The 
Syndication   Agent  shall  have  no  obligations or  duties in its capacity as
Syndication Agent.

                      Syndications  Period  shall  mean  th   period between the
Closing Date and the earlier of the following  dates:  (a) the date on which the
Revolving Credit Commitment of PNC Bank has been reduced below $35,000,000, or 
(b) the date which is ninety (90) days after the Closing Date.

                      TP Acquisition shall mean TP Acquisition  Corp., a Florida
corporation, and a wholly  owned  subsidiary  of CDMC which shall merge into 
Tropical on the Closing Date. All of the shares  of  capital  stock of  Tropical
outstanding immediately prior to such merger  shall be  canceled  and new shares
shall be issued in favor of CDMC.  CDMC shall own all of the shares of stock of
Tropical immediately after such merger.

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

                      Tropical  shall  mean  Tropical  Park,  Inc., a  Florida
corporation.

                      UCC Collateral shall mean the property of the Loan Parties
in which security interests are to be granted under the Security Agreement.

                      Uniform Commercial Code shall have the meaning assigned to
that term in Section 5.1.15.

               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


                                       60
<PAGE>

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;

                      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;

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                      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"; and

                      1.2.10  Shall; Will.

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

               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 7.2  [Negative  Covenants]  (and all  defined  terms used in the
definition  of any  accounting  term used in Section  7.2 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 5.1.9((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  7.2 based upon the  Borrower's  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 Borrower's financial statements at that time.

                 2. REVOLVING CREDIT AND SWING LOAN FACILITIES

               2.1     Commitments.

                      2.1.1   Revolving Credit Loans.

               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 Borrower 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:

               (i) the aggregate amount of Revolving Credit Loans from such Bank
shall not exceed

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                      (A)....50% of such Bank's Revolving Credit Commitment less
such Bank's Ratable Share of the Letters of Credit Outstanding prior to the PMW
Lien Consent Date, and

                      (B)....such Bank's Revolving Credit Commitment minus such 
Bank's Ratable Share of the Letters of Credit Outstanding on and after the PMW
Lien Consent Date, and



               (ii) the Revolving  Facility Usage shall not exceed the Borrowing
Limitation

                      .

Within  such limits of time and amount and  subject to the other  provisions  of
this  Agreement,  the Borrower may borrow,  repay and reborrow  pursuant to this
Section 2.1.1.

                      2.1.2   Swing Loans.

               Subject to the terms and conditions hereof and relying upon the
representations  and  warranties  herein set forth,  and in order to  facilitate
loans and repayments  between  Settlement  Dates,  PNC Bank agrees to make swing
loans (the "Swing Loans") to the Borrower at any time or from time to time after
the date hereof to, but not  including,  the  Expiration  Date,  in an aggregate
principal  amount  up to but not in  excess  of  $10,000,000  (the  "Swing  Loan
Commitment"),  provided  that (i) the aggregate  principal  amount of PNC Bank's
Swing  Loans  and the  Revolving  Credit  Loans of all the Banks at any one time
outstanding shall not exceed the Borrowing Limitation of all the Banks, and (ii)
the Revolving Facility Usage shall not exceed the Borrowing  Limitation.  Within
such  limits of time and amount  and  subject  to the other  provisions  of this
Agreement,  the Borrower may borrow, repay and reborrow pursuant to this Section
2.1.2.

               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  2.1.1  [Revolving  Credit  Loan
Requests] in  accordance  with its Ratable  Share.  The aggregate of each Bank's
Revolving Credit Loans  outstanding  hereunder to the Borrower at any time shall
never exceed the amount  specified in clause (i) of Section 2.1. 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 Borrower 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 hereunder on or after the Expiration Date.

               2.3     Commitment Fees.

               Accruing  from the date hereof  until the  Expiration  Date,  the
Borrower  agrees  to  pay to  the  Agent  for  the  account  of  each  Bank,  as
consideration  for  such  Bank's  Revolving  Credit  Commitment   hereunder,   a

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nonrefundable  commitment  fee (the  "Commitment  Fee") equal to the  Applicable
Commitment  Fee Rate (computed on the basis of a year of 365 or 366 days, as the
case may be, and actual days  elapsed) on the average daily  difference  between
the amount of (i) such Bank's  Revolving  Credit  Commitment (it is acknowledged
that such Revolving Credit  Commitment is not reduced during the period prior to
the PMW Lien  Consent  Date for purposes of  computing  the  Commitment  Fees by
reason of the  limitations  on  borrowing  during such period  described  in the
definition of "Borrowing  Limitation") as the same may be constituted  from time
to time and the (ii) the sum of such Bank's Revolving Credit Loans (for purposes
of this  computation,  PNC Bank's  Swing  Loans  shall be deemed to be  borrowed
amounts  under its Revolving  Credit  Commitment)  outstanding  plus its Ratable
Share of Letters of Credit Outstanding.  All Commitment Fees shall be payable in
arrears on the first Business Day of each April, July, October and January after
the date hereof and on the Expiration Date or upon acceleration of the Notes.

               2.4     Revolving Credit Loan Requests; Swing Loan Requests.

                      2.4.1   Revolving Credit Loan Requests.

               Except as otherwise provided herein, the Borrower 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 3.2 [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 2.4.1 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 integral  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.

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<PAGE>

                      2.4.2   Swing Loan Requests.

               Except as otherwise provided herein, the Borrower may from time  
to time prior to the Expiration Date request PNC Bank to make Swing Loans by
delivery to PNC Bank not later than 12:00 Noon, Pittsburgh time, on the proposed
Borrowing Date of a duly completed  request therefor  substantially in the form 
of Exhibit 2.4.2  hereto or a request  by  telephone  immediately  confirmed  in
writing by letter,  facsimile or telex (each, a "Swing 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 Swing Loan Request shall be irrevocable and shall
specify the proposed Borrowing Date and the principal amount of such Swing Loan,
which shall be not less than $100,000 and in integral amounts of $100,000.

               2.5     Making Revolving Credit Loans and Swing Loans.

                      2.5.1   Making Revolving Credit Loans.

               The Agent shall, promptly after receipt by it of a Loan Request
pursuant to Section 2.4.1 [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  2.1.2  [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 6.2 [Each  Additional
Loan],  fund such  Revolving  Credit Loans to the  Borrower 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 9.16 [Availability of Funds].  Disbursements of,
and  payments  of  principal  with  respect  to  Revolving  Credit  Loans may be
evidenced by notations of the Agent on its electronic data processing equipment.
The aggregate  amount of all  disbursements  of Revolving  Credit Loans made and
shown on the  Agent's  electronic  data  processing  equipment,  over all of the
payments of principal  made by the Borrower to the Agent and recorded on Agent's
electronic  data  processing  equipment  shall be prima  facie  evidence  absent
manifest  error of the  outstanding  principal  balance due under the  Revolving
Credit Note.

                      2.5.2   Making Swing Loans.

               PNC Bank shall, after receipt by it of a Swing Loan Request 
pursuant to Section  2.4.2,  fund  such  Swing  Loan to the  Borrower  in U.S. 
Dollars  and immediately  available  funds at the  Principal  Office on the 
Borrowing  Date.


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<PAGE>

Disbursements  of, and payments of principal  with respect to Swing Loans may be
evidenced  by  notations  of the PNC  Bank  on its  electronic  data  processing
equipment.  The aggregate  amount of all  disbursements  of Swing Loans made and
shown on the PNC Bank's  electronic data processing  equipment,  over all of the
payments of principal made by the Borrower and recorded on PNC Bank's electronic
data  processing  equipment  shall be prima facie  evidence  of the  outstanding
principal balance due under the Swing Loan Note absent manifest error.

               2.6     Revolving Credit Notes and Swing Loan Note.

                      2.6.1   Revolving Credit Notes.

               The  Obligation  of the  Borrower 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.

                      2.6.2   Swing Loan Note.

               The  obligation  of the Borrower to repay the unpaid principal
amount of the Swing Loans made to it by PNC Bank together  with interest thereon
shall be evidenced by a demand promissory note of the Borrower dated the Closing
Date in substantially the form attached hereto as Exhibit 1.1(S)(2) payable to
the order of PNC Bank in a face amount equal to the Swing Loan Commitment.

               2.7     Voluntary Reduction of Commitment.

               The Borrower may make voluntary reductions in the amount of the
Revolving  Credit  Commitments  of all the Banks after the  satisfaction  of all
conditions  provided in Section 6 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 and in whole integral multiples of 
$1,000,000;

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

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

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<PAGE>

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

                             (v) on the date provided in the Borrower's  notice
of voluntary  reduction given in accordance with this Section,  the 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) the Borrower shall make any  prepayments 
required in connection with any requested  oluntary  reduction of the  Revolving
Credit Commitments and such prepayment shall be subject to Sections 4.4 and 4.5.

               2.8     Letter of Credit Subfacility.

                      2.8.1   Issuance of Letters of Credit.

                      Borrower 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
2.7, 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 providing 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 Borrowing Limitation.

                      2.8.2   Letter of Credit Fees.

                      The Borrower shall pay (i) to the Agent for the ratable  
account of the Banks a fee (the "Letter of Credit Fee") at a rate per annum 
equal to Applicable Margin  governing Loans under the Euro-Rate Option (computed
on the basis of a year of 360 days and  actual  days  elapsed),  and (ii) to the
Agent for its own account a fronting fee equal to 1/8 % per annum (computed on
the basis of a year of 360 days and actual days elapsed),  which fees shall be 
computed on the daily average Letters of Credit Outstanding and shall be payable
quarterly in arrears

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<PAGE>

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
Borrower  shall also pay to the Agent for the Agent's  sole  account the Agent's
then in effect customary fees and  administrative  expenses payable with respect
to the Letters of Credit as the Agent may generally charge or incur from time to
time in  connection  with the  issuance,  maintenance,  modification  (if  any),
assignment or transfer (if any),  negotiation,  and administration of Letters of
Credit.

                      2.8.3   Disbursements, Reimbursement.

                             2.8.3.1  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.

                             2.8.3.2 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 Borrower.  Provided that it shall have received such
notice,  the Borrower 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 Borrower  fails 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 Borrower 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  6.2 [Each 
Additional  Loan]  other than any notice  requirements.  Any notice  given by
the  Agent  pursuant  to this  Section  2.8.3.2  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 such notice.

                             2.8.3.3  Each Bank shall  upon any notice  pursuant
to  Section  2.8.3.2  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  2.8.3.4)  each
be deemed to have made a Revolving Credit Loan under the Base Rate Option to the
Borrower 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 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

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any Bank to effect such payment on such date shall not relieve such Bank from
its obligation under this Section 2.8.3.3.

                             2.8.3.4 With respect to any  unreimbursed  drawing
that is not  converted  into Revolving Credit Loans under the Base Rate Option 
to the Borrower in whole or in part as contemplated by Section  2.8.3.2, because
of the Borrower's  failure to satisfy the  conditions  set forth in Section 6.2
[Each  Additional  Loan] other than any notice  requirements  or for any other 
reason,  the Borrower  shall be deemed to have  incurred  from the Agent a  
borrowing  (each 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  2.8.3.3 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 2.8.3.

                      2.8.4   Repayment of Participation Advances.

                             2.8.4.1 Upon (and only upon) receipt by the Agent
for its account of immediately available  funds from the Borrower (i) in   
reimbursement  of any payment made by the Agent under the Letter of Credit  with
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.

                             2.8.4.2 If the Agent is required at any time to
return to any Loan Party,  or 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 2.8.4.1 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.

                      2.8.5   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 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

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following  any Loan Party's  instructions  or those  contained in the Letters of
Credit or any modifications, amendments or supplements thereto.

                      2.8.6   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.

                      2.8.7   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 2.8.3, as a result of a drawing under a Letter of Credit, and the 
Obligations of the Borrower 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 2.8 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 Borrower 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 2.1.1 [Revolving Credit Commitments], 2.4.1
[Revolving Credit Loan Requests], 2.4 [Making  Revolving  Credit Loans] or 6.2 
[Each  Additional Loan] or as otherwise set forth in this Agreement for the
making of a Revolving  Credit Loan, it being acknowledged that such conditions
are not required for the making of a Letter of Credit Borrowing and the 
obligation of the Banks to make Participation  Advances under Section 2.8.3;

                            (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);

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                             (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
Potential 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.

                      2.8.8   Indemnity.

                      In addition to amounts payable as provided in Section 9.5
[Reimbursement  of Agent by  Borrower,  Etc.],  the  Borrower  hereby  agrees 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 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) the wrongful  dishonor by the Agent
of a proper  demand for payment made under any Letter of Credit,  except if such
dishonor resulted from 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").

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                      2.8.9   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 Borrower or any Bank.

               2.9     Borrowings to Repay Swing Loans.

               PNC  shall  five (5)  Business  Days  after a Swing  Loan is made
demand  repayment of such Swing Loan,  and may, at its option at any other time,
demand  repayment  of such the Swing  Loans,  and upon any such demand each Bank
shall make a  Revolving  Credit Loan in an amount  equal to such Bank's  Ratable
Share of the aggregate principal amount of such outstanding Swing Loan, plus, if
PNC so  requests,  accrued  interest  thereon,  provided  that no Bank  shall be
obligated in any event to make Revolving Credit Loans in excess of its Revolving
Credit  Commitment.  Revolving  Credit  Loans  made  pursuant  to the  preceding
sentence shall bear interest at the Base Rate Option and shall be deemed to have
been properly  requested in accordance  with Section 2.4.1 without regard to any

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of the requirements of that provision or other provisions of the Agreement.  PNC
shall provide  notice to the Banks (which may be telephonic or written notice by
letter,  facsimile  or telex) that such  Revolving  Credit  Loans are to be made
under this Section 2.9 and of the  apportionment  among the Banks, and the Banks
shall be unconditionally  obligated to fund such Revolving Credit Loans (whether
or not the conditions specified in Section 6 are then satisfied) by the time PNC
so requests, which may be on the Business Day that the Banks receive such notice
from PNC.

                                3. INTEREST RATES

               3.1     Revolving Credit Interest Rate Options.

           Swing Loans shall bear interest at the interest rate set forth in the
Agent's  Letter.  The Borrower shall pay interest in respect of the  outstanding
unpaid principal amount of the Loans as selected by it from the Base Rate Option
or Euro-Rate Option set forth below applicable to the Loans, it being understood
that,  subject to the  provisions  of this  Agreement,  the  Borrower may select
different  Interest  Rate  Options  and  different  Interest  Periods  to  apply
simultaneously  to the 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 Loans. 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.  The Borrower  shall have the right to select from the following  Interest
Rate Options applicable to the Revolving Credit Loans (subject to the provisions
in Section 2.9 regarding Swing Loans):

                             (i) Base Rate Option: A fluctuating  rate per annum
(computed on the basis of a year of 365 or 366 days, as the case may be, and 
actual days  elapsed)  equal to the  Base  Rate  plus  the  Applicable  Margin, 
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) Euro-Rate  Option: A rate per annum (computed 
on the basis of a year of 360 days and actual days elapsed) equal to the
Euro-Rate plus the Applicable Margin. 

                      3.1.2   Rate Quotations.

           The Borrower may call the Agent on or before the date on which a Loan
Request is to be delivered to receive an indication of the rates then in effect,
but it is acknowledged that such projection shall not be binding on the Agent or
the Banks nor affect the rate of interest which thereafter is actually in effect
when the election is made.


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               3.2     Interest Periods.

               At any time when the Borrower shall select, convert to or renew a
Euro-Rate Option, the Borrower 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 an Interest  Period during which such
Interest Rate Option shall apply.  Notwithstanding the preceding  sentence,  the
following  provisions shall apply to any selection of, renewal of, or conversion
to a Euro-Rate Option:

                      3.2.1   Amount of Borrowing Tranche.

                 each Borrowing Tranche of Euro-Rate Loans shall be in integral
multiples of $100,000 and not less than $500,000;

                      3.2.2   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.

               3.3     Interest After Default.

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

                      3.3.1   Letter of Credit Fees, Interest Rate.

                the Letter of Credit Fees and the rate of interest for each Loan
otherwise  applicable  pursuant  to Section  2.8.2  [Letter  of Credit  Fees] or
Section 3.1 [Interest  Rate Options],  respectively,  shall be increased by 2.0%
per annum; and

                      3.3.2   Other Obligations.

                 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 applicable
under the 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.

                      3.3.3   Acknowledgment.

             The Borrower acknowledges that the increase in rates referred to in
this Section 3.3 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 Borrower upon demand by Agent.

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

                      3.4.1   Unascertainable.

          If on any date on which a Euro-Rate would otherwise be determined, the
Agent shall have determined that:

                             (i)     adequate and reasonable means do not exist 
for ascertaining such Euro-Rate, or (ii) a contingency  has occurred  which 
materially  and  adversely  affects the London interbank  eurodollar  market 
relating to the Euro-Rate, the Agent shall have the rights specified in Section.
3.4.3.

                      3.4.2  Illegality; Increased Costs; Deposits Not
                             Available.

                      If at any time any Bank shall have determined that:

                             (i) the making,  maintenance or funding of any Loan
to which a Euro-Rate  Option applies has been made  impracticable or unlawful by
compliance by such Bank in good  faith with any Law or any  interpretation  or 
application  thereof by any Official  Body or with  any  request  or  directive
of any such  Official  Body (whether or not having the force of Law), or

                             (ii) such  Euro-Rate  Option will not  adequately 
and fairly reflect the cost to such Bank of the establishment or maintenance of
any such Loan, or

                             (iii) after making all reasonable efforts, deposits
of the relevant  amount in Dollars for the relevant  Interest Period for a Loan 
to which a Euro-Rate Option applies, respectively, are not available to such 
Bank with respect to such Loan, or to banks generally, in the interbank 
eurodollar market,

then the Agent shall have the rights specified in Section 3.4.3.

                      3.4.3   Agent's and Bank's Rights.

            In the case of any event specified in Section 3.4.1 above, the Agent
shall promptly so notify the Banks and the Borrower thereof,  and in the case of
an event  specified in Section 3.4.2 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

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given by the Agent,  or (B) such Bank,  in the case of such notice given by such
Bank,  to allow the Borrower 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 3.4.1 and the Borrower has 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 3.4.2, the Borrower shall, subject to the
Borrower's  indemnification  Obligations under Section 4.5.2 [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 4.4  [Voluntary  Prepayments].  Absent due notice  from the  Borrower 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.

               3.5     Selection of Interest Rate Options.

               If the Borrower fails 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 3.2 [Interest  Periods],  the Borrower  shall be
deemed  to have  converted  such  Borrowing  Tranche  to the Base  Rate  Option,
commencing upon the last day of the existing Interest Period.

                                  4. PAYMENTS

               4.1     Payments.

               All payments and  prepayments to be made in respect of principal,
interest,  Commitment Fees,  Closing Fees, Letter of Credit Fees, Agent's Fee or
other fees or amounts due from the Borrower  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 account of PNC Bank with  respect to
the Swing  Loans and for the ratable  accounts of the Banks with  respect to the
Revolving Credit 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


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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." The
Borrower  shall  pay  all  outstanding  Loans,   interest  on  Loans  and  other
Obligations on the Expiration Date.

               4.2     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  Borrower  with  respect to
principal,  interest,  Commitment Fees,  Closing Fees, Letter of Credit Fees, or
other  fees  (except  for the  Agent's  Fee) or  amounts  due from the  Borrower
hereunder to the Banks with respect to the Loans,  shall  (except as provided in
Section 3.4.3 [Agent's and Bank's  Rights] in the case of an event  specified in
Section 3.4 [Euro-Rate Unascertainable;  Etc.], 4.4.2 [Replacement of a Bank] or
4.5 [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.  Notwithstanding
any of the foregoing, each borrowing or payment or prepayment by the Borrower of
principal,  interest,  fees or other  amounts from the Borrower  with respect to
Swing Loans shall be made by or to PNC Bank according to Section 2.

               4.3     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  April,  July,
October and January  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.  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).

               4.4     Voluntary Prepayments.

                             4.4.1   Right to Prepay.

            The Borrower shall have the right at its option from time to time to
prepay the Loans in whole or part without premium or penalty (except as provided
in Section  4.4.2 below or in Section 4.5  [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 $100,000 and in integers of $100,000,

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                             (ii) daily at any time with  respect to any Swing
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 $100,000,

                             (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 Borrower desires to prepay any part of the Loans, it shall
provide a prepayment  notice to the Agent by 1:00 p.m.,  Pittsburgh time, on the
date of  prepayment of the Swing Loans or at least one (1) Business Day prior to
the  date of  prepayment  of the  Revolving  Credit  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 Swing Loans and Revolving Credit Loans; and

               (z)....the  total  principal  amount  of such  prepayment,
                      which  shall  not be less  than  the  amounts  set  forth 
                      in this Section.

            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 3.4.3 [Agent's and Bank's rights], if the Borrower prepays a
Loan but fails to specify the applicable Borrowing Tranche which the Borrower is
prepaying,  the  prepayment  shall be applied (i) first to Swing 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 Borrower's  Obligation to indemnify
the Banks under Section 4.5.2 [Indemnity].

                      4.4.2   Replacement of a Bank.

             In the event any Bank (i) gives notice under Section 3.4 [Euro-Rate
Unascertainable,  Etc.] or Section 4.5.1 [Increased Costs,  Etc.], (ii) does not
fund  Revolving  Credit Loans because the making of such Loans would  contravene
any Law  applicable to such Bank, or (iii) becomes  subject to the control of an
Official Body (other than normal and customary  supervision),  then the Borrower


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shall have the right at its 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 (x) receipt of such Bank's  notice under  Section
3.4 [Euro-Rate Unascertainable,  Etc.] or 4.5.1 [Increased Costs, Etc.], (y) the
date such Bank has failed to fund  Revolving  Credit Loans because the making of
such Loans would  contravene  Law  applicable to such Bank, or (z) the date such
Bank became subject to the control of an Official Body, as applicable;  provided
that the Borrower shall also pay to such Bank at the time of such prepayment any
amounts   required  under  Section  4.5  [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  9.14  [Successor  Agent] and
provided that all Letters of Credit have expired or been  terminated or replaced
and all Swing Loans have been repaid or assumed by the Agent's successor.

                      4.4.3   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 3.4.2 [Illegality, Etc.]
or 4.5.1 [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 in this Section
4.4.3 shall  affect or postpone  any of the  Obligations  of the Borrower or any
other  Loan  Party or the  rights  of the  Agent or any  Bank  provided  in this
Agreement.

               4.5     Additional Compensation in Certain Circumstances.

                      4.5.1  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  Borrower  of principal,  interest,  Commitment  Fees, or other
amounts due from the Borrower hereunder or under the Notes (except for taxes on 
the overall net income of such Bank),

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<PAGE>

                             (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

                             (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 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 Borrower 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. Such amount shall be due and payable by
the Borrower to such Bank ten (10) Business Days after such notice is given.

                      4.5.2   Indemnity.

            In addition to the compensation required by Section 4.5.1 [Increased
Costs,  Etc.],  the Borrower 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 Borrower to revoke (expressly,
by later inconsistent notices or otherwise) in whole or part any Loan Requests 
under Section 2.4.1  [Revolving Credit Loan  Requests] or Section 3.2 [Interest
Periods] or notice  relating to prepayments under Section 4.4 [Voluntary
Prepayments], or

                             (iii) default by the Borrower in the  performance  
or observance of any covenant or condition  contained in this Agreement or any 
other Loan Document,  including

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any failure of the Borrower to pay when due (by  acceleration  or otherwise) any
principal, interest, Commitment Fee or any other amount due hereunder.

               If any Bank sustains or incurs any such loss or expense, it shall
from time to time notify the Borrower 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 Borrower to such Bank
ten (10) Business Days after such notice is given.

               4.6     Settlement Date Procedures.

               In order to minimize the transfer of funds  between the Banks and
the Agent, the Borrower may borrow,  repay and reborrow Swing Loans and PNC Bank
may make Swing Loans as provided in Section 2.1.2 and otherwise hereunder during
the period between Settlement Dates. Not later than 10:00 a.m., Pittsburgh time,
on each  Settlement  Date, the Agent shall notify each Bank of its Ratable Share
of the total of the Revolving Credit Loans and the Swing Loans (each a "Required
Share") as of the opening of business on such  Settlement  Date.  Prior to 11:00
a.m., Pittsburgh time, on such Settlement Date, each Bank shall pay to the Agent
the amount equal to the difference  between its Required Share and its Revolving
Credit  Loans as of the  opening of business on such  Settlement  Date,  and the
Agent  shall  pay to each Bank its  Ratable  Share of all  payments  made by the
Borrower  to the Agent with  respect to the  Revolving  Credit  Loans as of such
date.  The Agent may at its option effect  settlement on any other Business Day.
These settlement procedures are established solely as a matter of administrative
convenience,  and nothing  contained in this Section 4.6 shall relieve the Banks
of their  obligations  to fund  Revolving  Credit  Loans on dates  other  than a
Settlement  Date  pursuant to Section 2. The Agent may at any time at its option
for any reason whatsoever require each Bank to pay immediately to the Agent such
Bank's Ratable Share of the outstanding Revolving Credit Loans and each Bank may
at any time require the Agent to pay  immediately to such Bank its Ratable Share
of all payments  made by the borrower to the Agent with respect to the Revolving
Credit Loans.

                       5. REPRESENTATIONS AND WARRANTIES

               5.1     Representations and Warranties.

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

                      5.1.1   Organization and Qualification.

                     Each Loan Party and each Subsidiary of each Loan Party is a
corporation,  partnership or limited liability company duly formed or organized,

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as  applicable,  validly  existing  and in good  standing  under the laws of its
jurisdiction of formation or  organization,  as applicable.  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 5.1.1
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.

                      5.1.2   Capitalization and Ownership.

          The authorized capital stock of the each of the Loan Parties (referred
to herein as the "Shares") are issued and  outstanding  as indicated on Schedule
5.1.2.  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 5.1.2.

                      5.1.3   Subsidiaries.

               Schedule 5.1.3 states the name of each of the Subsidiaries of the
Guarantors,  its  jurisdiction of formation,  its authorized  capital stock, the
issued and outstanding  shares  (referred to herein as the "Subsidiary  Shares")
and the  owners  thereof if it is a  corporation,  its  outstanding  partnership
interests  (the  "Partnership  Interests")  if  it  is  a  partnership  and  its
outstanding limited liability company interests,  interests assigned to managers
thereof and the voting rights  associated  therewith (the "LLC Interests") if it
is a limited  liability  company.  Each  Guarantor  and each  Subsidiary of such
Guarantor has good and valid title to all of the Subsidiary Shares,  Partnership
Interests  and LLC  Interests it purports to own, free and clear in each case of
any Lien. All Subsidiary  Shares,  Partnership  Interests and LLC Interests have
been validly issued, and all Subsidiary Shares are fully paid and nonassessable.
All capital contributions and other consideration required to be made or paid in
connection with the issuance of the Partnership Interests and LLC Interests have
been made or paid,  as the case may be. There are no options,  warrants or other
rights outstanding to purchase any such Subsidiary Shares, Partnership Interests
or LLC Interests except as indicated on Schedule 5.1.3.

                      5.1.4   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.

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                      5.1.5   Validity and Binding Effect.

                             5.1.5.1 Loan Documents.

         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.

                             5.1.5.2 Acquisitions Documents.

               The Acquisition Documents have been duly and validly executed and
delivered  by the Loan  Parties,  and  constitute  the legal,  valid and binding
obligations of such parties,  enforceable  against them in accordance with their
respective  terms,  except to the extent that  enforceability  may be limited by
bankruptcy,  insolvency,  reorganization,   moratorium  or  other  similar  laws
affecting  the  enforceability  of  creditors'  rights  generally  or by laws or
judicial decisions limiting the right of specific performance.  To the knowledge
of the Loan Parties:  (i) the  Acquisition  Documents have been duly and validly
executed and delivered by the Seller and (ii)  constitute  the legal,  valid and
binding  obligations of the Seller,  enforceable  against it in accordance  with
their respective terms,  except to the extent that enforceability may be limited
by  bankruptcy,  insolvency,  reorganization,  moratorium  or other similar laws
affecting  the  enforceability  of  creditors'  rights  generally  or by laws or
judicial decisions limiting the right of specific performance.  The Borrower has
delivered  to the Agent for delivery to the Banks a true and correct copy of the
Acquisition  Documents and any amendments,  waivers and other documents executed
in  connection  therewith,  and  there  has been no other  amendment,  waiver or
modification of the Acquisition Documents. All representations and warranties of
the  Borrower  and,  to the  best of the  Borrower's  knowledge,  of the  Seller
contained  in the  Acquisition  Documents  are true and correct in all  material
respects. The transactions have closed (which closing occurs simultaneously with
the closing  hereunder)  under the Acquisition  Documents and (i) CR Acquisition
has merged into Calder and TP Acquisition has merged into Tropical,  (ii) All of
the shares of capital stock of Tropical and Calder outstanding immediately prior
to such merger have been  canceled  and new shares of Calder and  Tropical  have
been issued in favor of CDMC,  and (iii) CDMC owns all of the shares of stock of
Calder and  Tropical  and such shares are free of all Liens or claims.  CDMC The
assets of  Calder  and  Tropical  are free and  clear of all  Liens  except  for
Permitted Liens.

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<PAGE>

                      5.1.6   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 articles or certificate of
incorporation,   bylaws,   certificate  of  limited   partnership,   partnership
agreement,  certificate of formation,  limited  liability  company  agreement 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 (other
than Liens granted under the Loan Documents).

                      5.1.7   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.

                      5.1.8   Title to Properties.

                             5.1.8.1 Loan Parties and Subsidiaries.

             The real property owned or leased by each Loan Party (including the
properties acquired under the Acquisition Documents) and each Subsidiary of each
Loan Party  (other than the  Excluded  Subsidiaries)  is  described  on Schedule
5.1.8.  Each Loan Party and each  Subsidiary  of each Loan Party (other than the
Excluded  Subsidiaries)  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.

                      5.1.9   Financial Statements.

                             (i)  Historical  Statements of Loan Parties other 
than Calder and Tropical.  The Borrower has delivered to the Agent copies of its
audited consolidated  year-end

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financial  statements  for and as of the end of the three (3) fiscal years ended
December 31, 1998 (the "Annual Statements" or the "Historical Statements").  The
Historical Statements were compiled from the books and records maintained by the
Borrower's  management,  are correct and complete in all  material  respects and
fairly  represent the consolidated  financial  condition of the Borrower and its
Subsidiaries  (other than Calder and Tropical) 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.

                             (ii) Historical Statements of Calder and Tropical. 
The Borrower has delivered to the Agent copies of the audited  consolidated 
year-end financial  statements of Calder and  Tropical  for and as of the end of
the three (3) fiscal  years ended December 31, 1998 (the "Calder  Statements").
To the  knowledge of the Borrower the Calder Statements were compiled from the
books and records maintained by the management  of Calder and  Tropical,  are
correct and  complete in all  material respects and fairly represent the 
consolidated financial condition of Calder and Tropical 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.

                             (iii) Accuracy of Financial Statements. Neither the
Borrower nor any Subsidiary of the Borrower (other than Calder and Tropical) has
any liabilities, contingent or otherwise,  or forward or long-term commitments 
that are not 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 Borrower or any  Subsidiary  of the  Borrower  
(other than Calder and  Tropical) which may cause a Material  Adverse  Change.  
To the  knowledge of the Borrower, neither  Calder nor Tropical has any 
liabilities,  contingent or otherwise,  or forward or long-term commitments that
are not disclosed in the Calder Statements or in the notes thereto, and except 
as disclosed therein there are no unrealized or anticipated losses from any 
commitments of Calder or Tropical which may cause a Material  Adverse Change.
Since December 31, 1998, no Material Adverse Change has occurred.

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

                             5.1.10.1       General.

                     The Loan Parties intend to use the proceeds of the Loans in
accordance with Section  7.1.10.

                             5.1.10.2       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

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<PAGE>

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.

                             5.1.10.3       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  thirty  (30)  days  thereafter,  Ineligible
Securities being underwritten by a Section 20 Subsidiary.

                      5.1.11  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. Other than as set forth on Schedule  5.1.11,  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.

                      5.1.12  Consents and Approvals.

          Except for the filing of financing statements and the Mortgages in the
state and county  filing  offices,  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 and the Acquisition Documents by any Loan Party or to the knowledge of
the Loan  Parties by the  Seller,  except as listed on Schedule  5.1.12,  all of
which shall have been obtained or made on or prior to the Closing Date except as
otherwise indicated on Schedule 5.1.12.

                      5.1.13  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  or after
consummation  of the  Acquisitions  which  constitutes  an Event of  Default  or
Potential  Default.  None of the Loan  Parties or any  Subsidiaries  of any Loan

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<PAGE>

Party  is in  violation  of (i)  any  term of its  articles  or  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.

                      5.1.14  Patents, Trademarks, Copyrights, Licenses, Etc.

           Each Loan Party and each Subsidiary of each Loan Party (other than an
Excluded  Subsidiary)  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,  registrations,  franchises and permits of each Loan Party
and each  Subsidiary of each Loan Party (other than an Excluded  Subsidiary) are
listed and described on Schedule 5.1.14.

                      5.1.15  Security Interests.

           The Liens and security interests granted to the Agent for the benefit
of the Banks pursuant to the Patent, Trademark and Copyright Security Agreement,
the Patent, Trademark and Copyright Security Agreement--Calder and Tropical, the
Pledge  Agreement and the Security  Agreement in the Collateral  (other than the
Real Property  Collateral)  constitute  and will  continue to  constitute  Prior
Security  Interests  (except for Permitted  Liens) under the Uniform  Commercial
Code as in effect  in each  applicable  jurisdiction  (the  "Uniform  Commercial
Code")  or  other  applicable  Law  entitled  to all the  rights,  benefits  and
priorities  provided by the Uniform Commercial Code or such Law. Upon the filing
of financing  statements  relating to said security interests in each office and
in each jurisdiction  where required in order to perfect the security  interests
described  above,   taking  possession  of  any  stock   certificates  or  other
certificates  evidencing the Pledged  Collateral and  recordation of the Patent,
Trademark  and  Copyright  Security  Agreement  and the  Patent,  Trademark  and
Copyright  Security  Agreement--Calder  and Tropical in the United States Patent
and Trademark Office and United States Copyright Office, as applicable, all such
action as is necessary  or  advisable to establish  such rights of the Agent (as
can be  accomplished  or obtained by such filings or possession)  will have been
taken,  and there will be upon  execution and delivery of the Patent,  Trademark
and Copyright Security Agreement,  the Patent,  Trademark and Copyright Security
Agreement--Calder and Tropical, the Pledge Agreement and the Security Agreement,
such filings and such taking of possession,  no necessity for any further action
in order to  preserve,  protect and continue  such rights,  except the filing of
continuation  statements  with respect to such financing  statements  within six
months  prior to each  five-year  anniversary  of the  filing of such  financing
statements.  All filing  fees and other  expenses in  connection  with each such
action have been or will be paid by the Borrower.

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                      5.1.16  Mortgage Liens.

         The Liens granted to the Agent for the benefit of the Banks pursuant to
the Mortgages  constitute  valid first priority Liens under  applicable law. All
such action as will be necessary  or  advisable  to  establish  such Lien of the
Agent and its priority as described in the  preceding  sentence will be taken at
or prior to the time required for such purpose, and there will be as of the date
of execution and delivery of the  Mortgages no necessity for any further  action
in order to protect,  preserve and continue such Lien and such  priority  except
for the filing of  continuation  statements  to  continue  financing  statements
(filed as fixture  filings) upon the expiration  thereof and for the recordation
of the Calder Mortgage and for the recording of the other Mortgages all of which
recordation of such other  Mortgages has occurred on the Closing Date (or within
one Business Day following  the Closing Date  provided that the title  insurance
policy relating to such Mortgages provides coverage as of the Closing Date based
on pro forma policies delivered and accepted on or before the Closing Date).

                      5.1.17  Status of the Pledged Collateral.

         All the shares of capital stock, Partnership Interests or LLC Interests
included  in the  Pledged  Collateral  to be  pledged  pursuant  to  the  Pledge
Agreement  are or will be upon issuance  validly  issued and  nonassessable  and
owned  beneficially  and of record by the pledgor  free and clear of any Lien or
restriction on transfer,  except as otherwise  provided by the Pledge  Agreement
and  except as the  right of the Banks to  dispose  of the  Shares,  Partnership
Interests or LLC  Interests  may be limited by the  Securities  Act of 1933,  as
amended,  and  the  regulations  promulgated  by  the  Securities  and  Exchange
Commission  thereunder and by applicable  state  securities  laws.  There are no
shareholder,  partnership,  limited  liability  company or other  agreements  or
understandings  with  respect  to  the  shares  of  capital  stock,  Partnership
Interests or LLC  Interests  included in the Pledged  Collateral  except for the
partnership  agreements,  shareholder  agreements and limited  liability company
agreements  described on Schedule  5.1.17.  The Loan Parties have delivered true
and correct copies of such partnership  agreements,  shareholder  agreements and
limited liability company agreements to the Agent.

                      5.1.18  Insurance.

           Schedule 5.1.18 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 bonds or to
reduce the coverage provided  thereby.  Such policies and bonds provide adequate
coverage,  including  coverage for business  interruption,  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.

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<PAGE>

                      5.1.19  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 5.1.24  [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.

                      5.1.20  Material Contracts; Burdensome Restrictions.

         Schedule 5.1.20 lists all contracts relating to the business operations
of each Loan Party and each Subsidiary (other than the Excluded Subsidiaries) of
any Loan Party  requiring  payments to or from the  applicable  Loan Party in an
amount  equal to or  exceeding  $100,000  over the term thereof or the breach of
which could result in a Material Adverse Change,  and all employee benefit plans
and  Labor  Contracts.  All such  material  contracts  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.

                      5.1.21  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
state  statute or  regulation  limiting  its ability to incur  Indebtedness  for
borrowed money.

                      5.1.22  Plans and Benefit Arrangements.

               Except as set forth on Schedule 5.1.22:

                             (i) The Borrower 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 t
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 Borrower or any other  member of the
ERISA  Group.  The  Borrower  and all other members of the ERISA Group have made
when due any and all  payments  required to

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<PAGE>

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  Borrower 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 incurred 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  Borrower's  knowledge, 
each  Multiemployer  Plan  and Multiple Employer Plan is able to pay benefits 
thereunder when due.

                             (iii)  Neither  the  Borrower  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) The aggregate actuarial present value of all 
benefit liabilities (whether or not  vested)  under  each  Plan,  determined  on
a plan  termination  basis,  as disclosed in, and as of the date of, the most 
recent  actuarial  report for such Plan,  does not exceed the  aggregate  fair 
market  value of the assets of such Plan.

                             (vi)  Neither the  Borrower 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 Borrower 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.

                             (vii) To the extent that any Benefit  Arrangement 
is insured,  the Borrower 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  Borrower 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.

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

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                      5.1.23  Employment Matters.

                   Each of the Loan Parties and each of their Subsidiaries is in
compliance with the Labor Contracts 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.  The Borrower has delivered to the Agent true and correct copies of each
of the Labor Contracts.

                      5.1.24  Environmental Matters.

               Except as disclosed on Schedule 5.1.24:

                             (i) None of the Loan Parties has received any 
Environmental  Complaint,  whether directed  or issued to any Loan Party or  
relating  or  pertaining  to any prior owner,  operator or occupant of the 
Property,  and has no reason to believe that it might receive an Environmental
Complaint.

                             (ii) No  activity  of any  Loan  Party  at the  
Property  is  being  or has been conducted  in  material   violation  of  any   
Environmental   Law  or  Required Environmental  Permit and to the  knowledge of
any Loan Party no activity of any prior  owner,  operator or occupant of the  
Property  was  conducted in material violation of any Environmental Law.

                             (iii) There are no material  Regulated  Substances
present  on, in,  under,  or emanating from, or to any Loan Party's  knowledge 
emanating to, the Property or any portion thereof which result in material
Contamination.

                             (iv) Each Loan Party has all Required Environmental
Permits  and all such Required Environmental Permits are in full force and 
effect.

                             (v) Each Loan Party has  submitted  to an  Official
Body and/or  maintains,  as appropriate, all Required Environmental Notices.

                             (vi) No  structures,  improvements,  equipment, 
fixtures,  impoundments,  pits, lagoons or  aboveground or  underground  storage
tanks located on the Property

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contain  or use,  except in  material  compliance  with  Environmental  Laws and
Required Environmental  Permits,  Regulated Substances or otherwise are operated
or maintained except in material compliance with Environmental Laws and Required
Environmental  Permits.  To the  knowledge  of each Loan Party,  no  structures,
improvements, equipment, fixtures, impoundments, pits, lagoons or aboveground or
underground  storage  tanks of  prior  owners,  operators  or  occupants  of the
Property  contained or used,  except in material  compliance with  Environmental
Laws,  Regulated Substances or otherwise were operated or maintained by any such
prior  owner,   operator  or  occupant   except  in  material   compliance  with
Environmental Laws.

                             (vii)   To the knowledge of each Loan Party, no 
facility or site to. which any Loan Party,  either  directly or  indirectly  by 
a third  party,  has sent  Regulated Substances for storage, treatment, disposal
or other management has been or is being operated in violation of  Environmental
Laws or pursuant to Environmental Laws is  identified  or proposed to be 
identified  on any list of contaminated properties or other  properties  which  
pursuant to  Environmental Laws are the subject of an  investigation,  cleanup,
removal,  remediation or  other response action by an Official Body.

                             (viii) No portion of the Property is  identified or
to the knowledge of any Loan Party proposed to be identified on any list of
contaminated  properties or other properties  which  pursuant  to  Environmental
Laws  are  the  subject  of  an investigation or remediation action by an
Official Body, nor to the knowledge of any Loan Party is any property  adjoining
or in the  proximity of the Property identified or proposed to be identified on
any such list.

                             (ix) No portion of the Property constitutes an 
Environmentally Sensitive Area.

                             (x) No lien or other encumbrance authorized by 
Environmental Laws exists against the  Property and none of the Loan Parties has
any reason to believe that such a lien or encumbrance may be imposed.

                            (xi) The Borrower has obtained Phase I Environmental
audits with respect to all material  commercial  properties owned by the Loan 
Parties with the exception of 700 Central  Avenue  which the Borrower  shall  
obtain and deliver  according to Section  7.1.13.  The Loan  Parties'  
representations  as stated in this Section 5.1.24 are based solely on the
Borrower's  actual  knowledge and on such Phase I Environmental audits.

                      5.1.25  Senior Debt Status.

               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  (other  than the
Excluded  Subsidiaries)  which secures  indebtedness or other obligations of any
Person  except  for  Permitted  Liens.  The  Indebtedness  of the  Loan  Parties
hereunder is senior to, or pari passu with, all other  Indebtedness of such Loan
Parties in right of payment.

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                      5.1.26  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,  and none of the  Acquisition
Documents  contains any untrue  statement of a material fact or omits to state a
material  fact  made  by or  relating  to the  Borrower  and  to the  Borrower's
knowledge  Calder and Tropical,  in either such  instance  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.

                      5.1.27  Year 2000.

          The Borrower and its Subsidiaries 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 Borrower or its Subsidiaries (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 is not a
Material Adverse Change.

                      5.1.28  Solvency.

               The Borrower is Solvent.  After giving effect to the transactions
contemplated by the Loan Documents and the Acquisition Documents,  including all
Indebtedness  incurred thereby,  the Liens granted by the Borrower in connection
therewith  and the payment of all fees related  thereto,  the  Borrower  will be
Solvent, determined as of the Closing Date.

               5.2     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 Borrower 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.

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           6. 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:

               6.1     First Loans and Letters of Credit.

               On the Closing Date:

                      6.1.1   Officer's Certificate.

                  The representations and warranties of each of the Loan Parties
contained in Section 5 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  covenants  and  conditions  hereof and
thereof,  no Event of Default or Potential  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.

                      6.1.2   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 the  authorization of 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  articles  or 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 

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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.

                      6.1.3   Delivery of Loan Documents.

                The Guaranty Agreement, Indemnity, Mortgages, Notes, the Patent,
Trademark and  Copyright  Security  Agreement,  Pledge  Agreement,  Intercompany
Subordination Agreement and Security Agreement shall have been duly executed and
delivered  to the  Agent  for  the  benefit  of the  Banks,  together  with  all
appropriate  financing  statements and appropriate stock powers and certificates
evidencing the shares of Pledged Collateral.

                      6.1.4   Closing Date Compliance Certificate.

          The Borrower shall deliver a Compliance Certificate (the "Closing Date
Compliance  Certificate")  showing Indebtedness and other balance sheet items as
of the  Closing  Date  after  giving  effect to the  Acquisition  and income and
expense  items through the four  quarters  ending as of December 31, 1998.  Such
Compliance Certificate shall be in the form of Exhibit 6.1.4.

                       6.1.5   Opinion of Counsel.

            There shall be delivered to the Agent for the benefit of each Bank a
written opinion of Wyatt, Tarrant & Combs and Greenberg Traurig, PA, 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 6.1.5; and

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

                      6.1.6   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.

                      6.1.7   Payment of Fees.

              The Borrower 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 the

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Closing Fees, all other  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.

                      6.1.8   Environmental Audit.
          The Loan Parties shall have delivered copies of existing environmental
audits performed on each parcel of Real Property Collateral, except for the real
estate  located at 700 Central  Avenue.  The Loan Parties  shall comply with the
covenant  in  Section  7.1.13.2  with  respect  to  environmental  reports to be
delivered after the Closing Date.

                      6.1.9   Consents.

         All material consents required to effectuate the transactions under the
Loan Documents and the Acquisition  Documents,  including the consent of the PMW
for  the  Acquisition  (the  "PMW  Acquisition   Consent")  and  the  HSR  Early
Termination  notice referred to in Section 3.3.4 of the Stock Purchase Agreement
and the consent of the IHRC for the pledge by the  Borrower of the stock of CDMC
under the Pledge  Agreement,  each as set forth on Schedule  5.1.12,  shall have
been obtained.

                    6.1.10  Officer's Certificate Regarding MACs and Litigation.

         Since December 31, 1998, no Material Adverse Change or litigation which
could be materially  adverse to the Loan Parties shall have  occurred;  prior to
the Closing Date,  there shall have been no material change in the management of
any Loan Party  (except for  changes in the  management  of Calder and  Tropical
immediately following the Acquisition and the replacement of the general manager
of Ellis Park); 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.

                      6.1.11  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.

                      6.1.12  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.

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                      6.1.13  Insurance Policies; Certificates of Insurance;
                              Endorsements.

          The Loan Parties shall have delivered evidence acceptable to the Agent
that  adequate  insurance in  compliance  with  Section  7.1.3  [Maintenance  of
Insurance]  is in full force and effect and that all  premiums  then due thereon
have been paid,  together  with a certified  copy of each Loan Party's  casualty
insurance policy or policies evidencing coverage satisfactory to the Agent, with
additional  insured,  mortgagee  and lender loss  payable  special  endorsements
attached thereto in form and substance satisfactory to the Agent and its counsel
naming the Agent as additional insured, mortgagee and lender loss payee.

                      6.1.14  Title Insurance.

            The Loan Parties shall deliver a title insurance policy or pro-forma
policies in favor of the Agent for the benefit of the Banks,  in customary  ALTA
current  mortgagee's  form,  and in amounts  agreed upon and  acceptable  to the
Agent,  with premiums paid thereon (except in the case of the Calder  Mortgage),
issued by Commonwealth  Land Title  Insurance  Company and insuring the Recorded
Mortgages as a valid first priority Lien upon the  applicable  Loan Parties' fee
simple title to, or leasehold interest in, the Real Property  Collateral and all
improvements  and  all  appurtenances  thereto  (including  such  easements  and
appurtenances  as may be required  by the Agent),  free and clear of any and all
defects and encumbrances  whatsoever,  subject only to such exceptions as may be
approved in writing by the Agent, with  endorsements  thereto as to such matters
as the Agent may designate. The Loan Parties shall purchase such title insurance
policies on the  Closing  Date for each of the  Mortgages  except for the Calder
Mortgage.  The Loan  Parties  shall  purchase  title  insurance  for the  Calder
Mortgage in accordance with Section 7.1.15

                      6.1.15  Filing Receipts; Lien Search Results.

              The Agent shall have received (1) executed financing statements in
proper  form for filing and  perfecting  the Liens in the UCC  Collateral,  with
copies of all filing  receipts and  acknowledgments  issued by any  governmental
authority  to following  promptly  after the Closing Date and (2) the results of
Lien searches in a form acceptable to the Agent  evidencing that the Liens under
the Loan Documents constitute Prior Security Interests in favor of the Agent for
the benefit of the Banks and, in the case of the Recorded Mortgages, a valid and
perfected  first  priority  Lien in favor of the  Agent for the  benefit  of the
Banks.  The  applicable  Loan Parties shall execute and deliver to the Agent the
Calder  Mortgage each in a form  sufficient  for immediate  recordation  and the
Agent shall at any time be permitted to record such Calder Mortgages pursuant to
Section 7.1.15.

                      6.1.16  Administrative Questionnaire.

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

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                      6.1.17  Payoff of Existing Credit Agreement.

           The Borrower shall prior to or simultaneously with the closing of the
initial Loans  hereunder pay all of the  outstanding  loans,  interest and other
obligations  under the Existing Credit Agreement and shall have delivered to the
Agent a copy of a payoff letter,  in a form  acceptable to the Agent,  signed by
the parties to the  Existing  Credit  Agreement  and  evidencing  the payoff and
termination of such Existing Credit Agreement.

                      6.1.18  Acquisition Closing.

                             6.1.18.1       Closing

             The transactions contemplated by the Acquisition Documents shall be
consummated  simultaneously with the closing of the Loans in accordance with the
terms and conditions of the Acquisition  Documents as heretofore reviewed by the
Banks  without any  amendment or waiver by the Borrower not  consented to by the
Banks.

                             6.1.18.2       Closing Documents.

         The Agent shall have reviewed each of the original executed Acquisition
Documents and the Borrower shall deliver or cause to be delivered within one (1)
Business  Day after the  Closing  Date  true and  correct  copies of each of the
Acquisition Documents to the Agent for the benefit of the Banks.

                             6.1.18.3       Repayment of Kawasaki Indebtedness.

                  The parties to the Acquisition Documents shall have repaid all
outstanding  Indebtedness  of the Seller to Kawasaki  Leasing and terminated (or
assigned to the Agent) all Liens securing such Indebtedness in favor of Kawasaki
Leasing (such  repayment and  termination or assignment may occur on the Closing
Date and  simultaneously  with the closing of the first Loans hereunder) and the
Borrower  shall  have  delivered  to the  Agent  satisfactory  evidence  of such
repayment and termination or assignment.

                             6.1.19  Solvency Certificate.

          The Chief Executive Officer or President or Chief Financial Officer of
the  Borrower   shall  have  delivered  a  certificate  in  form  and  substance
satisfactory  to the  Agent  as to the  capital  adequacy  and  solvency  of the
Borrower after giving effect to the transactions contemplated hereby.

               6.2     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 5 and in the other Loan

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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 Potential  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 Borrower
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.

                                  7. COVENANTS

               7.1     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:

                      7.1.1   Preservation of Existence, Etc.

          Each Loan Party shall, and shall cause each of its Subsidiaries (other
than  the  Excluded   Subsidiaries)  to,  maintain  its  legal  existence  as  a
corporation, limited partnership or limited liability company and its license or
qualification  and good standing in each  jurisdiction in which its ownership or
lease  of  property  or the  nature  of  its  business  makes  such  license  or
qualification  necessary,  except as  otherwise  expressly  permitted in Section
7.2.5 [Liquidations, Mergers, Etc.].

                      7.1.2   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

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made,  but only to the extent that  failure to  discharge  any such  liabilities
would not result in any additional  liability which would adversely  affect to a
material  extent the financial  condition of any Loan Party or Subsidiary of any
Loan Party or which would affect the Collateral,  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  and  provided  that,  notwithstanding  any such  reserve  or
provision,  the Loan Parties  shall pay any due and unpaid  recording or related
taxes (including documentary stamp taxes or intangible taxes),  immediately upon
the  existence  of any Event of Default or  immediately  upon the request of the
Agent if the Agent has recorded or is recording a Mortgage on such realty.

                      7.1.3   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 (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 on the  Collateral  required to be maintained by this
Agreement and the other Loan Documents,  together with a copy of the endorsement
described in the next sentence attached to such certificate and (y) from time to
time a summary  schedule  indicating all insurance then in force with respect to
each of the Loan  Parties.  Such  policies of insurance  shall  contain  special
endorsements,  in form and substance  acceptable  to the Agent,  which shall (i)
specify the Agent as an additional  insured,  mortgagee and lender loss payee as
its  interests  may appear,  with the  understanding  that any  premium  payment
obligation  shall not be imposed upon the Agent as an additional  insured,  (ii)
the insurer will not deny any claim by the Agent  because of any act by the Loan
Parties  or their  failure  to  comply  with the terms  and  conditions  of such
policies,  (iii)  provide a waiver of any  right of the  insurers  to set off or
counterclaim or any other  deduction,  whether by attachment or otherwise,  (iv)
provide that no insurer will exercise any right of subrogation without the prior
written  approval  of the Agent,  which  will not be  unreasonably  withheld  or
delayed,  (v)  provide,  except in the case of public  liability  insurance  and
workmen's compensation insurance, that all insurance proceeds for losses of less
than  $1,000,000  shall be  adjusted  with and  payable to the  applicable  Loan
Parties and that all  insurance  proceeds for losses of $1,000,000 or more shall
be adjusted  with the Loan Parties but with the prior  approval of the Agent and
shall be  payable  to the  Agent,  (vi)  provide  that no  cancellation  of such
policies  for any  reason  (including  non-payment  of  premium)  nor any change
therein shall be effective  until at least thirty (30) days after receipt by the
Agent of written  notice of such  cancellation  or change,  and (vii) be primary
without right of contribution of any other insurance  carried by or on behalf of
any  additional  insureds  with  respect to their  respective  interests  in the

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Collateral.  The applicable  Loan Parties shall notify the Agent promptly of any
occurrence causing a material loss or decline in value of the Collateral and the
estimated (or actual, if available)  amount of such loss or decline.  Any monies
received by the Agent constituting  insurance proceeds or condemnation  proceeds
(pursuant to the Mortgages) shall be handled according to the Mortgages.

                      7.1.4   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.

                      7.1.5   Maintenance of Patents, Trademarks, Etc.

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

                      7.1.6   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  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 Borrower and the Agent with reasonable  notice prior
to any visit or inspection provided, further that so long as no Event of Default
or Potential  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.

                      7.1.7   Keeping of Records and Books of Account.

         The Borrower shall, and shall cause each Subsidiary of the Borrower to,
maintain and keep proper  books of record and account  which enable the Borrower
and its  Subsidiaries to issue financial  statements in accordance with GAAP and
as  otherwise   required  by  applicable   Laws  of  any  Official  Body  having
jurisdiction  over the Borrower 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.

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                      7.1.8   Plans and Benefit Arrangements.

              The Borrower 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 Borrower 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.

                      7.1.9   Compliance with Laws.

             Each Loan Party 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
7.1.9 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.

                      7.1.10  Use of Proceeds.

                         The Loan Parties will use the Letters of Credit and the
proceeds of the Loans only for (i) general  corporate  purposes  and for working
capital, (ii) to finance the acquisition pursuant to the Acquisition  Documents,
(iii)  to  finance  Permitted  Acquisitions,  and (iv) to  repay  and  terminate
Indebtedness  outstanding under the Existing Credit Agreement.  The Loan Parties
shall not use the Letters of Credit or the proceeds of the Loans for any purpose
which contravenes any applicable Law or any provision hereof.

                      7.1.11  Further Assurances.

            Each Loan Party shall, from time to time, at its expense, faithfully
preserve  and  protect the Agent's  Lien on and Prior  Security  Interest in the
Collateral  as a  continuing  first  priority  perfected  Lien,  subject only to
Permitted  Liens,  and shall do such  other  acts and things as the Agent in its
sole  discretion  may deem  necessary or advisable from time to time in order to
preserve,  perfect and protect the Liens granted under the Loan Documents and to
exercise  and enforce its rights and  remedies  thereunder  with  respect to the
Collateral.

                      7.1.12  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.

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                      7.1.13  Delivery of Environmental and Real Estate 
                              Documents After Closing.

                             7.1.13.1       Surveys.

         The Borrower shall deliver surveys of the properties listed on Schedule
7.1.13  within sixty (60) days after the Closing  Date.  Such  reports  shall be
prepared by surveyors  listed on such  Schedule  7.1.13.  Such reports  shall be
reasonably  satisfactory  to the Agent  (taking into  consideration  the surveys
previously  delivered  to  and  accepted  by  the  Agent  with  respect  to  the
properties).  Each survey shall evidence to the  satisfaction  of the Agent that
all of the Real Property Collateral included in the applicable Mortgage is owned
by the Applicable Loan Party free and clear of defects of title, obstructions or
hindrances, except for Permitted Liens.


                             7.1.13.2       Environmental Reports.

             The Borrower shall deliver environmental reports for the properties
listed on Schedule  7.1.13 within sixty (60) days after the Closing  Date.  Such
reports  shall be prepared by  consultants  listed on such  Schedule  7.1.13 and
shall  provide  all  reports  and results of such audit in writing to the Agent.
Such  reports  shall  be  reasonably  satisfactory  to the  Agent  (taking  into
consideration the environmental  reports previously  delivered to the Agent with
respect to the properties). The environmental condition of the Loan Parties' and
their   Subsidiaries'   assets,  as  substantiated  by  such  audit,   shall  be
satisfactory to the Agent in all material respects, each of which shall evidence
to the satisfaction of the Agent that the applicable Loan Party is in compliance
with its warranty in Section 5.1.24.

                      7.1.14  Consent or Acknowledgment Relating to Pledge of 
                              Anderson Park, Inc. Stock.

               The Loan Parties shall use their best efforts with respect to the
matters within their respective control to obtain, within ninety (90) days after
the  Closing  Date (A) the  consent  of the IHRC to the  pledge  of the stock of
Anderson Park,  Inc. by CDMC or (B) the  acknowledgment  by, as applicable,  the
Division  of Pari  Mutuel  Wagering  or IHRC that  such  pledge  (excluding  any
transfers  of such  stock by the Agent or the Banks  after such  pledges  should
become effective) do not require such consent. The Loan Parties shall within ten
(10)  days  after  receiving  such  acknowledgment  or  consent  take all  steps
necessary or  appropriate to pledge,  and grant Prior Security  Interests in the
stock of Anderson Park, Inc. to the Agent for the benefit of the Banks under the
Pledge Agreement.

                      7.1.15  Recordation of Florida Mortgage.

         The Agent may, and at the direction of the Required Banks shall, at any
time after the PMW Lien Consent Date record the Calder  Mortgage and appropriate
UCC fixture  filings and other  financing  statements  related to such  filings,
subject to the terms of this Section  7.1.15.  The Loan  Parties  shall take all
such  steps as the Agent or the  Required  Banks  request  and  shall  otherwise

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cooperate in connection  with the recordation of the Calder Mortgage and related
documents  pursuant to the preceding  sentence,  including  (i) obtaining  title
insurance  for the benefit of the Agent and the Banks in an amount not less than
the appraised  value of the property  covered by such Calder Mortgage (which the
Loan  Parties  shall be  required  to pay  for) and (ii) if an Event of  Default
exists at the time of such  recordation  or if an Event of Default  should occur
following such  recordation,  the Loan Parties shall pay (or reimburse the Agent
for) all  documentary  stamp  taxes,  intangible  asset  taxes or other fees and
expenses  associated  with such  recordation  The Calder  Mortgage each shall be
treated as a "Recorded  Mortgages" for purposes of this Agreement  including the
warranty in Section 5.1.16 relating to the Recorded Mortgages.


               7.2     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:

                      7.2.1   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 of any Excluded Subsidiary in
an amount not to exceed in the aggregate $5,000,000;

                             (ii)    Indebtedness under the Loan Documents;

                             (iii)  Indebtedness secured by any Purchase  Money
 Security  Interests  not exceeding $5,000,000;

                             (iv) Capitalized leases in an amount not exceeding 
$5,000,000;

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

                             (vi) Subordinated Indebtedness ("Subordinated 
Indebtedness") provided that:

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                                            (A)  such Indebtedness is unsecured,

                                            (B)  the    maturity    of    such
Indebtedness (or each installment  thereof if payable in  installments) shall be
on or after the date which is three calendar months after the Expiration Date,

                                            (C)  such Indebtedness is 
subordinated under terms of subordination acceptable to the Agent in its
reasonable discretion,

                                            (D) the Loan Parties shall repay the
Revolving Credit Loans in an amount equal to the amount of such Indebtedness, in
each case on or before the date on which they incur such Indebtedness; and

                                            (E) the Borrower  shall at least ten
(10) Business  Days  before  incurring  such  Indebtedness  deliver  to the  
Agent  a Compliance   Certificate  prepared  on  a  pro-forma  basis  evidencing
to  the satisfaction  of the Agent that the  Borrower  shall be in  compliance 
with its financial and other covenants hereunder after giving effect to such 
Indebtedness and the Borrower shall deliver  copies of the  documentation 
(including  drafts thereof when available) governing such Indebtedness;

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

                             (viii)  Existing  Indebtedness  as set forth on
Schedule  7.2.1  (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 7.2.1;

                             (ix)    Indebtedness secured by any Permitted Lien;
 and

                             (x) Indebtedness under an interest rate protection 
agreement (each a "Permitted Interest  Rate  Protection  Agreement")  provided 
that the sole purpose of such agreement  shall be to  hedge  interest  rate 
fluctuations  hereunder  and such purpose shall not be for speculation and that
the amount of Indebtedness  hedged by such agreement shall not exceed the amount
of Indebtedness hereunder.

                      7.2.2   Liens.

             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 or intangible, 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.

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<PAGE>

                      7.2.3   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 the
Guaranty  Agreement and for other Guaranties entered into in the ordinary course
of business on behalf of a Loan Party or any of its Subsidiaries (subject in the
case of Guaranties on behalf of the Excluded  Subsidiaries  to the limitation on
Restricted  Investments  contained in Section  7.2.4((vii)))  provided that such
other Guaranties do not to exceed  $5,000,000 in the aggregate and are otherwise
permitted hereunder.

                      7.2.4   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, or any other  Restricted  Investment in, any other
Person, or agree, become or remain liable to do any of the foregoing, except:

                             (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;

                             (v)     loans and advances to and Restricted 
Investments in, other Loan Parties;

                             (vi)  Restricted  Investments in Excluded  
Subsidiaries  existing on the Closing Date in the amounts set forth on Schedule 
7.2.4; and

                             (vii)  Restricted  Investments  in  Excluded   
Entities or assets  acquired  from another  Person  other than in the ordinary 
course of  business,  not to exceed $15,000,000 in the aggregate. Any Restricted

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<PAGE>

Investment in an Excluded  Entity existing  on the  Closing  Date and  listed on
Schedule  7.2.4  shall not count towards the $15,000,000 limit to the extent
that such Restricted Investment does not exceed the amount included on Schedule
7.2.4.

                     7.2.5  Liquidations, Mergers, Consolidations, Acquisitions.

             Each of the Loan Parties shall not, and shall not permit any of its
Subsidiaries (other than the Excluded  Subsidiaries) to, dissolve,  liquidate or
wind-up  its  affairs,  or  become a party to any  merger or  consolidation,  or
acquire by purchase,  lease or otherwise all or substantially  all of the assets
or capital stock of any other Person, provided that

          (1)....Any Loan Party may make Permitted Investments;

          (2)....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  provided  that at least ten (10)  Business Days before the date of such
consolidation or merger,  the Loan Parties shall have delivered to the Agent all
of the new Mortgages, amendments to Mortgages, financing statements,  amendments
thereto and other  amendments to the Loan  Documents  and the schedules  thereto
required to reflect such  consolidation  or merger and to perfect or confirm the
Liens of the  Agent  for the  benefit  of the  Banks in the  assets  of the Loan
Parties which are parties thereto, and

           (3)....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(each a "Permitted Acquisition"), provided
that each of the following requirements is met:

                             (i) if the Loan Parties are acquiring the ownership
interests in such Person or its direct or indirect  owners, the  Borrower  shall
elect to treat such Person either as a Loan Party or as an Excluded Entity.  The
Borrower shall comply with the requirements of clause (1) below if the Borrower
elects to treat such Person as a Loan Party and with the  requirements of clause
(2) below if the  Borrower elects to treat such Person as an Excluded Entity.

                                    (1)    Election to Treat Such Person as a 
Loan Party.
                                              (I)    such Person shall execute a
Guarantor  Joinder and join this  Agreement  as a Guarantor  pursuant to Section
10.18  [Joinder  of  Guarantors]  on  or  before  the  date  of  such  Permitted
Acquisition, and
                                              (II)   the Loan Party which
acquires  such  ownership  interests in such Person shall pledge such  ownership
interests to the Agent pursuant to the Pledge  Agreement and Section 10.18 on or
before the date of such Permitted Acquisition, except as provided in clause (IV)
below, and
                                              (III)   such    Person shall grant
Liens in its assets (including stock,  partnership or other ownership  interests
which it holds in its Subsidiaries)  pursuant to the Security  Agreement and the
Pledge Agreement and otherwise comply with Section 10.18 [Joinder of Guarantors]

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<PAGE>

on or before  the date of such  Permitted  Acquisition,  except as  provided  in
clause (IV) below;
                                               (IV) If such Person is engaged
in the business of owning and operating horse racing  businesses or other gaming
operations and applicable  Laws relating to horse racing or gaming  prohibit the
pledge of the ownership interests of such Person or the grant of Liens in one or
more  assets of such  Person  (such  stock and assets  shall be  referred  to as
collectively the "Restricted  Assets"),  such Person and its owners shall not be
obligated  to  grant  Liens in the  Restricted  Assets,  provided  that the Loan
Parties  shall use their best efforts  with respect to the matters  within their
respective  control to obtain,  within  ninety  (90) days after the date of such
Permitted  Acquisition (A) the consent of the applicable regulatory authority to
the pledge or grant of Prior Security Interests in the Restricted Assets, or (B)
the  acknowledgment  by such  regulatory  authority that such pledge or grant of
security  interest does not require such consent.  The  applicable  Loan Parties
shall within ten (10) days after  receiving any such  acknowledgment  or consent
take all steps  necessary or  appropriate  to pledge,  and grant Prior  Security
Interests in, as  applicable,  the  Restricted  Assets  pursuant to the Security
Agreement, the Pledge Agreement and any other applicable Loan Documents.

                                               (2)    Election to Treat Such 
Person as an Excluded Entity.

                                                The Loan Parties shall state in
their Acquisition Compliance Certificate that such Person is to be treated as an
Excluded  Entity and shall  evidence  therein that,  after giving effect to such
Permitted  Acquisition,  the  Loan  Parties  shall  be in  compliance  with  the
limitation on Restricted  Investments in Excluded Entities  contained in Section
7.2.4((vii))(as well as other covenants addressed in such certificate).

                             (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 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  7.2.9
[Continuation of or Change in Business],

                             (iv) no Potential 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  7.2.1,  7.2.4
or 7.2.17  through  7.2.21 after giving  effect to such  Permitted  Acquisition
(including  in such  computation Indebtedness  or other  liabilities  assumed or
incurred in connection with such Permitted  Acquisition) by  delivering at least

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<PAGE>

five (5) Business Days prior to such  Permitted  Acquisition a certificate in 
the form of Exhibit 7.2.5 (each an "Acquisition Compliance Certificate")
evidencing such compliance, and

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

                      7.2.6   Dispositions of Assets or Subsidiaries.

             Each of the Loan Parties shall not, and shall not permit any of its
Subsidiaries (other than Excluded Subsidiaries) 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) 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;

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

                             (iii) any sale,  transfer  or lease of assets,  
excluding  real  estate,  by any wholly owned  Subsidiary of such Loan Party to 
another Loan Party  provided that the Loan Parties comply with the warranties  
relating to perfection of the Liens of the Agent in the Collateral contained 
Sections 5.1.14,  5.1.15 and 5.1.17 and deliver any documentation  required to 
perfect the Liens in such assets at least five (5) Business Days before such
sale, transfer or lease.

                      7.2.7   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 of
any Loan  Party  (including  purchasing  property  or  services  from or selling
property or services to such Affiliate) 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  conditions  which are fully
disclosed to the Agent and is in accordance with all applicable Law.

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<PAGE>

                      7.2.8   Subsidiaries, Partnerships and Joint Ventures.

             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  Guarantor on the
Closing  Date;  (ii) any  Subsidiary  formed or acquired  after the Closing Date
which joins this Agreement as a Guarantor  pursuant to Section 10.18 [Joinder of
Guarantors],  provided  that the  Required  Banks shall have  consented  to such
formation  and  joinder  and  that  such  Subsidiary  and the Loan  Parties,  as
applicable,  shall grant and cause to be perfected  first  priority Liens to the
Agent for the  benefit of the Banks in the assets held by, and stock of or other
ownership    interests    in,    such    Subsidiary,    subject    to    Section
7.2.5(3)(i)(A)(1)(IV),  and (iii) any Subsidiary which the Loan Parties elect to
treat as an Excluded  Entity  pursuant  to Section  7.2.5.  Except as  otherwise
permitted  under this  Agreement,  each of the Loan Parties  shall not become or
agree to (1)  become 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)  become a member  or  manager  of,  or hold a limited
liability company interest in, a limited liability company, except that the Loan
Parties  may be  members  or  managers  of, or hold  limited  liability  company
interests in, other Loan Parties, or (3) become a joint venturer or hold a joint
venture interest in any joint venture.

                      7.2.9   Continuation of or Change in Business.

             Each of the Loan Parties shall not, and shall not permit 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 other
forms of  alternative  gaming  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.

                      7.2.10  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;

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<PAGE>

                             (iv) permit the aggregate actuarial  present  value
of all benefit  liabilities (whether or not vested) under each 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 Borrower  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;

                             (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 Borrower 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 Borrower 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.

                      7.2.11  Fiscal Year.

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

                      7.2.12  Issuance of Stock.

           Each of the Loan Parties other than the Borrower 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,  provided that the Borrower  shall deliver stock powers
and the  original  certificates  evidencing  such new  shares and shall take any
other steps necessary to grant Prior Security  Interests in such shares in favor
of the Agent prior to issuing such shares.

                      7.2.13  Changes in Organizational Documents.

         Except as provided in the next sentence, each of the Loan Parties shall
not, and shall not permit any of its  Subsidiaries  to, amend in any respect its
certificate of incorporation  (including any provisions or resolutions  relating

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to capital  stock),  by-laws,  certificate of limited  partnership,  partnership
agreement,  articles or  certificate  of formation,  limited  liability  company
agreement or other organizational  documents without providing at least ten (10)
calendar  days' prior written  notice to the Agent and, in the event such change
would be materially  adverse to the Banks as determined by the Agent in its sole
discretion,  obtaining  the prior  written  consent of the Required  Banks.  The
Borrower  may  amend  its  articles  of  incorporation  to do  any or all of the
following:  (1) in  connection  with a public  offering of shares of its capital
stock to provide  for an  increase  in the number of  authorized  shares of such
stock or (2) in  connection  with such a public  offering to increase  the total
number of shares issuable as Series 1998 Preferred Stock to reflect the increase
in the number of shares of the Borrower's common stock  outstanding,  and (3) to
be  governed by Section  271B.12-200  to  271B.12-230  of the  Kentucky  Revised
Statutes.

                      7.2.14  Changes in Acquisition Documents.

           The Borrower shall not, and shall not permit any Subsidiary to, amend
or modify any provisions of the Acquisition Documents without providing at least
ten (10) calendar  day's prior written notice to the Agent and the Banks and, in
the event such change would be materially  adverse to the Banks as determined by
the Agent in its sole  discretion,  obtaining the prior  written  consent of the
Required Banks.

                      7.2.15  Margin Stock.

               The Borrower and the other Loan Parties  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.

                      7.2.16  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.

                      7.2.17  Maximum Total Leverage Ratio.

               The Loan Parties shall not permit the ratio of Consolidated Total
Indebtedness  as of the last day of each fiscal quarter to  Consolidated  EBITDA
(the  "Leverage  Ratio")  for the four  fiscal  quarters  ending on that date to
exceed the applicable ratios set forth on Schedule 7.2 as of the dates set forth
on such Schedule under column (1) (titled "Maximum Total Leverage  Ratio").  For
purposes of this covenant, EBITDA shall include the rolling four quarter results
of any entity  being  acquired by the Loan  Parties if such entity will become a
Loan Party hereunder.

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                      7.2.18  Maximum Senior Leverage Ratio.

              The Loan Parties shall not permit the ratio of Consolidated Senior
Indebtedness  as of the last day of each fiscal quarter to  Consolidated  EBITDA
for the four fiscal quarters ending on that date to exceed the applicable ratios
set  forth on  Schedule  7.2 (i) as of the  dates  set  forth  on such  Schedule
provided that:

                      (A)....column (2) (titled "Maximum Senior Leverage Ratio
before Covenant/Pricing Modification Date") shall apply prior to the Covenant/
Pricing Modification Date and

                      (B)....column (3) (titled "Maximum Senior Leverage Ratio 
after Covenant/Pricing   Modification   Date")   shall   apply   on  and   after
the Covenant/Pricing Modification Date.

For purposes of this  covenant,  EBITDA  shall  include the rolling four quarter
results of any entity  being  acquired  by the Loan  Parties if such entity will
become a Loan Party hereunder.

                      7.2.19  Minimum Interest Coverage Ratio.

           The Loan Parties shall not permit the Interest Coverage Ratio for the
four fiscal  quarters  ending on the last day of each fiscal  quarter to be less
than the ratio set forth on  Schedule  7.2 and as of the dates set forth on such
schedule provided that:

                      (A)    column (5) (titled "Minimum Interest Coverage Ratio
before Covenant/Pricing Modification Date") shall apply prior to the Covenant/
Pricing Modification Date, and

                      (B)    olumn (6) (titled "Minimum Interest Coverage Ratio 
after Covenant/Pricing   Modification   Date")   shall   apply   on  and   after
the Covenant/Pricing Modification Date.


                      7.2.20  Minimum Net Worth.

            The Loan Parties shall not permit their Consolidated Net Worth to be
less than the Base Net Worth.

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                      7.2.21  Minimum Fixed Charge Coverage Ratio.

           The Loan Parties shall not permit the Fixed Charge Coverage Ratio for
the four fiscal  quarters  ending on the last day of each  fiscal  quarter to be
less than the  applicable  ratios set forth on Schedule  7.2 as of the dates set
forth on such Schedule under column (4) (titled  "Minimum Fixed Charge  Coverage
Ratio").

               7.3     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:

                      7.3.1   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 Borrower,  consisting of a consolidated  and
consolidating  balance  sheet as of the end of such  fiscal  quarter and related
consolidated and consolidating  statements of income,  stockholders'  equity and
cash flows for the fiscal quarter then ended for the Loan Parties 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 Borrower 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.

                      7.3.2   Annual Financial Statements.

         As soon as available and in any event within ninety (90) days after the
end of each fiscal year of the  Borrower,  financial  statements of the Borrower
consisting of a consolidated  and  consolidating  balance sheet as of the end of
such fiscal year,  and related  consolidated  and  consolidating  statements  of
income,  stockholders' equity and cash flows for the fiscal year then ended, all
in  reasonable  detail  and  setting  forth in  comparative  form the  financial
statements as of the end of and for the preceding  fiscal year, and certified by
independent  certified  public  accountants  of nationally  recognized  standing
satisfactory  to the Agent.  The  certificate or report of accountants  shall be
free of qualifications (other than any consistency qualification 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.

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                      7.3.3   Certificate of the Borrower.

         Concurrently with the financial statements of the Borrower furnished to
the Agent and to the Banks  pursuant  to  Sections  7.3.1  [Quarterly  Financial
Statements]  and 7.3.2  [Annual  Financial  Statements],  a  certificate  of the
Borrower  signed by the Chief  Executive  Officer,  President or Chief Financial
Officer  of the  Borrower,  in the form of  Exhibit  7.3.3  (each a  "Compliance
Certificate"), to the effect that, except as described pursuant to Section 7.3.4
[Notice of Default],  (i) the  representations  and  warranties  of the Borrower
contained in Section 5 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 Potential  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 7.2 [Negative Covenants].

                      7.3.4   Notice of Default.

                 Promptly after any officer of any Loan Party has learned of the
occurrence of an Event of Default or Potential  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 Potential  Default
and the action which the such Loan Party proposes to take with respect thereto.

                      7.3.5   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 the
Collateral,  involve a claim or series of claims in excess of  $500,000 or which
if adversely determined would constitute a Material Adverse Change.

                      7.3.6   Certain Events.

                  Written notice to the Agent:

                             (i)  within  the  time   limits  set  forth  in  
Section 7.2.13 [Changes  in Organizational  Documents], any amendment to the
organizational documents of any Loan Party; and

                             (ii) at least  fifteen (15)  calendar  days prior  
thereto,  with respect to any change in any Loan Party's  locations from the 
locations set forth in Schedule A to the Security Agreement.

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<PAGE>

                      7.3.7   Other Reports and Information.

                  Promptly upon their becoming available to the Borrower:

                             (i) any  reports,  including  management  letters,
submitted to the Borrower 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 Borrower to its  stockholders  on a date no later
than the 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  Borrower  with  the Securities and Exchange Commission,

                             (iv)  a copy  of any  order  in any  proceeding  
requiring  any  Loan  Party  or Subsidiary  of a Loan  Party to pay a  judgment 
in  excess of  $500,000  in any proceeding  to which the any Loan Party or
Subsidiary of a Loan Party is a party issued by any Official Body, and

                             (v) such other reports and information  (including
management letters submitted to the  Borrower  by  independent  accountants  in
connection  with any annual, interim or special audit) as the Agent may from
time to time reasonably request. The Borrower  shall also notify the Agent  
promptly of the enactment or adoption of any Law which may result in a Material
Adverse Change.

                      7.3.8   Notices Regarding Plans and Benefit Arrangements.

                             7.3.8.1 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 
Borrower 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 Borrower 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,

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<PAGE>

                             (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 Borrower  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  Borrower
or any other member of the ERISA Group) at a facility in the circumstances  
described in Section 4062(e) of ERISA,

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

                             (vii) a failure by the Borrower 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

                             (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.

                             7.3.8.2 Notices of Involuntary Termination and
Annual Reports.

                       Promptly after receipt thereof, copies of (a) all notices
received by the  Borrower  or any other  member of the ERISA Group of the PBGC's
intent to terminate any Plan  administered  or maintained by the Borrower 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 Borrower or any other member of
the ERISA Group, and schedules showing the amounts contributed to each such Plan
by or on behalf of the  Borrower 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 Borrower or any other member of the ERISA Group with the Internal Revenue
Service with respect to each such Plan.

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<PAGE>

                             7.3.8.3 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.

                                   8. DEFAULT

               8.1     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):

                      8.1.1   Payments Under Loan Documents.

             The Borrower 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 when due, 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 (5) calendar days after such interest or other amount becomes due in
accordance with the terms hereof or thereof;

                      8.1.2   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;

                      8.1.3   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 7.1.6 [Visitation Rights] or Section 7.2
Negative Covenants];

                      8.1.4   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 Designated  Officer (as defined below) 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

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Parties  as  determined  by the  Agent in its sole  discretion).  A  "Designated
Officer"  shall be any  officer  who (i)  holds  the  position  of  senior  vice
president or higher, or  vice-president  of finance or treasurer,  or (ii) holds
the office of vice president or higher and serves in the in-house legal staff of
any Loan Party;

                      8.1.5   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;

                      8.1.6   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 Loan Parties 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 Loan Parties in good
faith and by  appropriate  proceedings  and where  failure to cure such  default
would result in the occurrence of a Material Adverse Change.

                      8.1.7   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;

                      8.1.8   Loan Document Unenforceable.

            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 Liens,  security  interests,  rights,  titles,  interests,  remedies,
powers or  privileges  intended  to be created  thereby  (except for any failure
solely  caused by the Agent  for which the Agent is alone  responsible  (such as
failure to file UCC continuation statements which require signature only of, and
may be filed only by, the Agent);

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                      8.1.9   Uninsured Losses; Proceedings Against Assets.

            There shall occur any material uninsured damage to or loss, theft or
destruction  of any of the Collateral in excess of $500,000 or the Collateral 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;

                      8.1.10  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  8.1.10 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 Agent immediately
upon the institution of the proceeding contesting the obligation;

                      8.1.11  Insolvency.

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

                      8.1.12  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  Borrower's  liability  is  likely to exceed  10% of its
Consolidated  Tangible  Net Worth;  (v) the  Borrower or any member of the ERISA
Group shall fail to make any contributions when due to a Plan or a Multiemployer
Plan;  (vi) the  Borrower 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

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of  ERISA;  (vii) the  Borrower  or any other  member of the ERISA  Group  shall
withdraw  completely or partially from a Multiemployer Plan; (viii) the Borrower
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 Borrower and the other members of the ERISA
Group;

                      8.1.13  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 7.2.5
[Liquidations,  Mergers,  Etc.] or 7.2.6,  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;

                      8.1.14  Change of Control.

                             (i) 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 Borrower on the first day of such period shall cease to
constitute a majority of the board of directors of the Borrower;

                      8.1.15  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

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                      8.1.16  Voluntary Proceedings.

         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.

               8.2     Consequences of Event of Default.

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

            If an Event of Default specified under Sections 8.1.1 through 8.1.14
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  Borrower  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  Borrower to, and the Borrower
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 Borrower hereby pledges to the Agent
and the Banks, and grants to the Agent and the Banks a security interest in, all
such cash as  security  for such  Obligations.  Upon the curing of all  existing
Events of Default to the  satisfaction  of the Required  Banks,  the Agent shall
return such cash collateral to the Borrower; and

                      8.2.2   Bankruptcy, Insolvency or Reorganization
 Proceedings.

              If an Event of Default specified under Section 8.1.15 [Involuntary
Proceedings] or 8.1.16 [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 Borrower 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

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                      8.2.3   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  9.13  [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 Borrower 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  Borrower 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 Borrower 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
Borrower or such other Loan Party is or are matured or unmatured and  regardless
of the existence or adequacy of any Collateral,  Guaranty or any other security,
right or remedy available to any Bank or the Agent; and

                      8.2.4   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 8.2, 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

                      8.2.5   Application of Proceeds; Collateral Sharing.

                             8.2.5.1 Application of Proceeds.

                 From and after the date on which the Agent has taken any action
pursuant to this Section 8.2 and until all  Obligations of the Loan Parties have
been paid in full,  any and all proceeds  received by the Agent from any sale or
other disposition of the Collateral, or any part thereof, or the exercise of any
other remedy by the Agent, shall be applied as follows:

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                             (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 realizing on the Collateral or collection of any
Obligations of any of the Loan Parties under any of the Loan Documents, 
including advances made by the Banks or any one of them or the  Agent  for  the
reasonable  maintenance,  preservation, protection or enforcement  of, or
realization  upon, the  Collateral,  including advances  for taxes,  insurance,
repairs and the like and  reasonable  expenses incurred  to  sell or  otherwise
realize  on,  or  prepare  for  sale or  other realization on, any of the 
Collateral;

                             (ii)  second, to the repayment  of all Indebtedness
then due and unpaid (the Indebtedness  in the  following  clauses  (A) and (B)
shall be pari  passu  and amounts shall be paid ratably to the holders thereof):
(A) 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 
(B) of the Loan Parties to any IRP Provider under a Permitted  Secured  Interest
Rate  Protection  Agreement provided by such IRP Provider; and

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

                             8.2.5.2 Collateral Sharing.

                 All Liens granted under each Mortgage, the Patent Trademark and
Copyright  Security  Agreement,  the Patent,  Trademark and  Copyright  Security
Agreement--Calder and Tropical, the Pledge Agreement, and the Security Agreement
and the related collateral security documents shall secure ratably and on a pari
passu basis (i) the  Obligations  in favor of the Agent and the Banks  hereunder
and (ii) the  Indebtedness  incurred by any of the Loan  Parties in favor of any
IRP Provider under a Permitted Secured Interest Rate Protection  Agreement.  The
Agent  under  the  Mortgages,  Security  Agreement,  Pledge  Agreement,  Patent,
Trademark and Copyright Security  Agreement and Patent,  Trademark and Copyright
Security   Agreement--Calder   and  Tropical  and  related  collateral  security
documents  shall be deemed to serve as the  collateral  agent  (the  "Collateral
Agent") for the IRP Provider  thereunder,  provided  that the  Collateral  Agent
shall comply with the  instructions  and  directions  of the Agent (or the Banks
under  this  Agreement  to the  extent  that this  Agreement  or any other  Loan
Documents empowers the Banks to direct the Agent), as to all matters relating to
the  Collateral,  including the  maintenance  and  disposition  thereof.  No IRP
Provider  shall  be  entitled  or have the  power  to  direct  or  instruct  the
Collateral  Agent on any such  matters or to control or direct in any manner the
maintenance or disposition of the Collateral.

                      8.2.6   Other Rights and Remedies.

                      In addition to all of the rights and remedies contained in
this Agreement or in any of the other Loan Documents  (including the Mortgages),
the Agent  shall have all of the rights and  remedies  of a secured  party under
the Uniform  Commercial  Code or  other  applicable  Law,  all of which  rights
and
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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.

               8.3     Notice of Sale.

               Any notice required to be given by the Agent of a sale, lease, or
other  disposition of the Collateral or any other intended  action by the Agent,
if  given  ten  (10)  days  prior  to such  proposed  action,  shall  constitute
commercially reasonable and fair notice thereof to the Borrower.

                                  9. THE AGENT

               9.1     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.

               9.2     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   9.5
[Reimbursement of Agent by Borrower,  Etc.] and 9.6, 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.

               9.3     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

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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.

               9.4     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 9.6
[Exculpatory  Provisions,  Etc.].  Subject to the  provisions of Section 9.6, 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.

               9.5   Reimbursement and Indemnification of Agent by the Borrower.

               The Borrower unconditionally agrees 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

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<PAGE>

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 Borrower 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
Borrower  was not given  notice of the  subject  claim  and the  opportunity  to
participate  in the defense  thereof,  at its expense  (except that the Borrower
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  addition,  if an Event  of  Default  exists  and is
continuing,   the  Borrower   agrees  to  reimburse   and  pay  all   reasonable
out-of-pocket  expenses  of the Agent's  regular  employees  and agents  engaged
periodically to perform audits of the Loan Parties' books,  records and business
properties.

               9.6     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 Potential  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

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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.

               9.7     Reimbursement and Indemnification of Agent by Banks.

               Each Bank agrees to  reimburse  and  indemnify  the Agent (to the
extent not reimbursed by the Borrower and without limiting the Obligation of the
Borrower  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,
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 Borrower and without limiting the Obligation of
the Borrower to do so) in  proportion  to its Ratable  Share for all amounts due
and payable by the Borrower to the Agent in connection with the Agent's periodic
audit of the Loan Parties' books, records and business properties.

               9.8     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.

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               9.9     Notice of Default.

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

               9.10    Notices.

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

               9.11    Banks in Their Individual Capacities.

               With respect to its Revolving  Credit  Commitment,  the Revolving
Credit  Loans 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.

               9.12    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.

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               9.13    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  3.4.3  [Agent's  and  Bank's  Rights],   4.4.2
[Replacement   of  a  Bank]  or  4.5   [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.

               9.14    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 4.4.2
[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 Borrower,  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 Borrower  consents 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 9 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.

   
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               9.15    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")  between the
Borrower and Agent, as amended from time to time.

               9.16    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 Borrower  (whether using its own funds pursuant to this Section 9.16
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 Borrower 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 Borrower 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.

               9.17    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  Borrower  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.

               9.18    Beneficiaries.

               Except as  expressly  provided  herein,  the  provisions  of this
Section 9 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.

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                               10. MISCELLANEOUS

               10.1    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. 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:

                      10.1.1  Increase of Commitment; Extension of Expiration 
Date.

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

                      10.1.2  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,  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;

                      10.1.3  Release of Collateral or Guarantor.

           Except for sales of assets permitted by Section 7.2.6 [Disposition of
Assets or Subsidiaries],  release any Collateral  consisting of capital stock or
other ownership  interests of any Loan Party or its Subsidiary or  substantially
all of the assets of any Loan Party,  any Guarantor from its  Obligations  under
the  Guaranty  Agreement  or any  other  security  for any of the Loan  Parties'
Obligations; or

                      10.1.4  Miscellaneous

               Amend Section 4.2 [Pro Rata Treatment of Banks], 9.6 [Exculpatory
Provisions,  Etc.] or 9.13  [Equalization  of Banks] or this Section 10.1, 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

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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.

               10.2   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.

               10.3 Reimbursement and Indemnification of Banks by the Borrower; 
Taxes.

               The  Borrower  agrees  unconditionally  upon  demand  to  pay  or
reimburse  to each  Bank  (other  than the  Agent,  as to which  the  Borrower's
Obligations  are set forth in Section 9.5  [Reimbursement  of Agent By Borrower,
Etc.]) 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,   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 Borrower 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 Borrower was
not given notice of the subject claim and the  opportunity to participate in the
defense thereof, at its expense (except that the Borrower shall remain liable to
the  extent  such  failure  to give  notice  does  not  result  in a loss to the

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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
Borrower  hereunder by  considering  the usage of one law firm to represent  the
Banks and the Agent if appropriate under the circumstances.  The Borrower agrees
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 Borrower agrees 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.

               10.4    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 3.2  [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.

               10.5    Funding by Branch, Subsidiary or Affiliate.

                      10.5.1  Notional Funding.

         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 10.5 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 Borrower to such other office),
and as a result of such  change,  the  Borrower  would not be under any  greater
financial obligation pursuant to Section 4.5 [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.

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                      10.5.2  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  10.5.2.  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
Borrower  hereunder or require the Borrower to pay any other compensation to any
Bank  (including  any  expenses  incurred  or payable  pursuant  to Section  4.5
[Additional Compensation in Certain Circumstances]) which would otherwise not be
incurred.

               10.6    Notices.

               All   notices,   requests,    demands,   directions   and   other
communications  (as  used in this  Section  10.6,  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.

               10.7    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 any other
jurisdiction or the remaining provisions hereof in any jurisdiction.

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               10.8    Governing Law.

               Each   Letter  of  Credit  and  Section  2.7  [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.

               10.9    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.

               10.10   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 7.1
[Affirmative   Covenants],   7.2  [Negative   Covenants]   and  7.3   [Reporting
Requirements]  herein shall continue in full force and effect from and after the
date  hereof so long as the  Borrower  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  Borrower  contained  herein  relating  to  the  payment  of
principal,   interest,   premiums,   additional  compensation  or  expenses  and
indemnification,  including  those set forth in the Notes,  Section 4 [Payments]
and Sections 9.5 [Reimbursement of Agent by Borrower,  Etc.], 9.7 [Reimbursement
of Agent by Banks,  Etc.] and 10.3  [Reimbursement of Banks by Borrower;  Etc.],
shall survive  payment in full of the Loans,  expiration or  termination  of the
Letters of Credit and termination of the Commitments.

               10.11   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  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  Borrower  and the Agent  with  respect  to any

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assignee,  such consent not to be  unreasonably  withheld,  provided that (1) no
consent of the Borrower  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  $5,000,000  or
the amount of the assigning  Bank's  Commitment.  In the case of an  assignment,
upon  receipt  by the  Agent of the fully  executed  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 Borrower  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 shall
pay to the Agent a service fee in the amount of $3,500 for each  assignment.  In
the  case of a  participation,  the  participant  shall  only  have  the  rights
specified in Section 8.2.3 [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
10.1.1 [Increase of Commitment,  Etc.], 10.1.2 [Extension of Payment,  Etc.], or
10.1.3  [Release of Collateral or  Guarantor]),  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.

                             (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 Borrower and the Agent the form of  certificate  described
in Section 10.17 [Tax  Withholding Clause]  relating to federal income tax 
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  10.12 [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 Borrower 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.

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               10.12   Confidentiality.

                      10.12.1 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 Borrower
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) to assignees and
participants  as contemplated  by Section 10.11,  and prospective  assignees and
participants  (it  being  understood  that  any  such  prospective  assignee  or
participant  receiving such  information  shall be bound by the  confidentiality
provisions like those in Section 10.12.1),  (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  Borrower
shall have consented to such disclosure.

                10.12.2 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 Borrower
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  10.12.1 as if it
were a Bank  hereunder.  Such  Authorization  shall survive the repayment of the
Loans and other Obligations and the termination of the Commitments.

               10.13   Counterparts.

               This Agreement may be executed by different parties hereto on any
number of separate counterparts,  each of which, when so executed and delivered,
shall be an original,  and all such counterparts  shall together  constitute one
and the same instrument.

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               10.14   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.

               10.15   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.

               10.16   CONSENT TO FORUM; WAIVER OF JURY TRIAL.

               EACH LOAN PARTY HEREBY  IRREVOCABLY  CONSENTS TO THE NONEXCLUSIVE
JURISDICTION OF THE CIRCUIT COURT OF JEFFERSON COUNTY,  KENTUCKY, 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 10.6 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,  THE AGENT AND THE BANKS  HEREBY  WAIVE TRIAL BY
JURY IN ANY ACTION, SUIT,  PROCEEDING OR COUNTERCLAIM OF ANY KIND ARISING OUT OF
OR RELATED TO THIS  AGREEMENT,  ANY OTHER LOAN DOCUMENT OR THE COLLATERAL TO THE
FULL  EXTENT  PERMITTED  BY LAW.  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,

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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.

               10.17   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  Borrower 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 Borrower 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 Borrower  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
Borrower  and 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 Borrower 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

                                      140
<PAGE>

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.

               10.18   Joinder of Guarantors.

               If a  Subsidiary  of  the  Borrower  is  required  to  join  this
Agreement as a Guarantor pursuant to Section 7.2.8  [Subsidiaries,  Partnerships
and Joint Ventures] or 7.2.5(3)  [Permitted  Acquisitions],  (A) such Subsidiary
shall execute and deliver to the Agent (i) a Guarantor  Joinder in substantially
the form attached hereto as Exhibit 1.1(G)(1) pursuant to which it shall join as
a Guarantor  each of the  documents to which the  Guarantors  are parties;  (ii)
documents  in the forms  described  in Section  6.1 [First  Loans]  modified  as
appropriate  to relate to such  Subsidiary,  including  opinions of counsel with
respect to such Subsidiary;  and (iii) documents  necessary to grant and perfect
Prior  Security  Interests  to the  Agent  for the  benefit  of the Banks in all
Collateral  held by  such  Subsidiary  and in the  ownership  interests  in such
Subsidiary,  and (B) to the extent required under this Agreement, the Loan Party
which holds the ownership  interests in such Subsidiary shall take such steps as
are  necessary to pledge such  interests  pursuant to the Pledge  Agreement  and
grant to the Agent Prior  Security  Interests  therein.  The Loan Parties  shall
deliver such  Guarantor  Joinder and related  documents to the Agent within five
(5) Business Days after the date of the filing of such Subsidiary's  articles of
incorporation if the Subsidiary is a corporation,  the date of the filing of its
certificate of limited partnership if it is a limited partnership or the date of
its  organization  if it is an  entity  other  than  a  limited  partnership  or
corporation  or the closing  date of an  acquisition  agreement in the case of a
Permitted Acquisition.

               10.19   Joinder of a New Bank.

         Any person which is to become a party to this Agreement as a Bank (each
a "New Bank")  pursuant to an increase in  commitments  (and not by  assignment)
shall  execute  and  deliver  to  Agent  a Bank  Joinder  to this  Agreement  in
substantially the form attached hereto as Exhibit 1.1(B)(1).  Upon execution and
delivery of a Bank Joinder (the "Joinder Date"),  such New Bank shall be a party
hereto  and a Bank  under  each of the  Loan  Documents  for all  purposes.  The
Borrower shall repay all outstanding  Revolving Credit Loans under the Base Rate
Option and such  payment may be made  through with new Loans on the Joinder Date
in which case the New Bank and the other Banks shall participate ratably in such
new Loans. The New Bank shall  participate in all Letters of Credit  outstanding
on the Joinder Date. The New Bank shall not participate in any Revolving  Credit
Loans to which the Euro-Rate Option applies which are outstanding on the Joinder
Date. If Borrower should renew after the Joinder Date the Euro-Rate  Option with
respect to Revolving  Credit Loans  existing on such date, the Borrower shall be

                                      141
<PAGE>

deemed to repay the  applicable  Revolving  Credit Loans on the renewal date and
then  reborrow  a  similar  amount  on  such  date so that  the New  Bank  shall
participate  in such  Revolving  Credit Loans after such renewal date.  Schedule
1.1(B) shall be amended and restated on the date of such Bank Joinder to read as
set  forth on the  attachment  to such  Bank  Joinder.  Simultaneously  with the
execution and delivery of such Bank Joinder,  Borrower shall execute a Revolving
Credit  Note and deliver it to such New Bank  together  with  originals  of such
other documents  described in Section 6.1 hereof as such New Bank may reasonably
require.

               10.20   Terms and Conditions Prior to The PMW Lien Consent Date.

                             (1) The  Loan  Parties  have  submitted  to the PMW
that certain letter dated  April  19,  (the "PMW  Letter"),  a copy of which is 
attached  hereto as Exhibit 10.20(A),  requesting,  among other things, that the
PMW agree to amend the PMW  Acquisition  Consent (the "PMW Consent  Amendment")
to provide that thePMW consents to the following transactions under the Loan 
Documents, all as more fully described in the PMW Letter: (i) the grant by 
Calder and Tropical of Liens in their assets to the Agent, (ii) the pledge by 
CDMC of the stock of Calder and Tropical in favor of the Agent, (iii) the pledge
by the Borrower of the stock of CDMC in favor of the  Agent, and (iv) the  grant
of Liens  under  the  Calder Mortgage.  The following  provisions shall apply 
between the date hereof and the Florida PMW Lien Consent Date(as defined below):

                             (i)     Notwithstanding anything herein or in any 
of the Loan Documents to the contrary,

                                    (A)    the Calder Mortgage and assignment of
leases and rents (the  "Assignment") each executed by Calder and dated as of the
Closing Date, the Patent Trademark and Copyright Security  Agreement--Calder and
Tropical  executed by Calder and Tropical and dated as of the Closing Date,  the
subordination  non-disturbance and attornment agreement (the "SNDA") executed by
Tropical and dated as of the Closing Date, and the financing statements executed
by Calder and Tropical  perfecting Liens in their fixtures and personal property
in which Calder and Tropical have granted Liens to the Agent under the Mortgage,
Pledge Agreement and the Security Agreement (the "Financing Statements") and the
certificates  evidencing  the shares of stock of Calder,  Tropical  and CDMC and
related  stock  powers  signed by the owners of such  shares  (collectively  the
"Certificates  and Powers") shall be held by Wyatt Tarrant & Combs,  counsel for
the  Borrower,  in escrow and shall not be effective  until the PMW Lien Consent
Date at which time it shall be released from escrow and shall be effective; and

                                   (B) the grant by Calder and Tropical of Liens
to the Agent for the benefit of the Banks in their respective assets pursuant to
the Security  Agreement  shall not be  effective  (but such grant of Liens shall
become effective automatically on the PMW Lien Consent Date).

                             (ii) The  Borrower's  right to borrow Loans 
hereunder is limited to the amounts set forth in Section 2.1.

                      (2) The "PMW  Lien  Consent  Date"  shall  occur  upon the
satisfaction of each of the following conditions:

                                      142
<PAGE>

                        (a)     The PMW shall have executed and delivered to the
Loan Parties the PMW Consent  Amendment in the form  described in the PMW Letter
and  consenting  to all of the matters  described in the PMW Letter and the Loan
Parties shall have delivered a true and correct copy of the same to the Agent;

                           (b)     Calder, Tropical, CDMC and the Borrower shall
have executed and delivered an acknowledgment (the "Acknowledgment") in the form
of Exhibit 10.20(B) confirming that:

                                   (1)    Wyatt Tarrant & Combs is authorized to
release the Calder Mortgage, the SNDA, the Assignment,  the Patent Trademark and
Copyright Security  Agreement--Calder and Tropical, the Financing Statements and
the Certificates and Powers  (collectively,  the "Escrow Documents") from escrow
and deliver such  documents to the Agent and that the Escrow  Documents each has
become effective,

                              (2)    the grant of Liens in the assets of Calder
and Tropical under the Security Agreement have become effective,

                                    (3)    Schedule A to the Pledge Agreement is
amended  in the form of  Schedule  A  attached  to such  Acknowledgment  and the
Pledged  Collateral  shall  thereafter  include  the stock of CDMC,  Calder  and
Tropical;

                          (c)     The executed Calder Mortgage, SNDA, Assignment
Patent  Trademark  and  Copyright  Security   Agreement--Calder   and  Tropical,
Financing  Statements,  and CDMC Stock each  shall  have been  delivered  to the
Agent;

                          (d)    Greenberg Traurig, P.A. shall have delivered an
opinion  in the form set forth as  Exhibit  10.20(C)  addressing  the  creation,
priority and  perfection of Liens in the assets and stock of Calder and Tropical
and the stock of CDMC under the  Mortgage,  the Pledge  Agreement,  the Security
Agreement and the Patent Trademark and Copyright Security Agreement.


                                      143
<PAGE>


3

                   [SIGNATURE PAGE 1 OF 3 TO CREDIT AGREEMENT]

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

                                            BORROWER:

                                            CHURCHILL DOWNS INCORPORATED



                                            By:  \s\ Robert L. Decker
                                            Title:Executive Vice President
                                                  and CFO


                                            GUARANTORS:

                                            CHURCHILL DOWNS MANAGEMENT COMPANY



                                            By: \s\ Robert L. Decker
                                            Title: Vice President and Treasurer 


                                            CHURCHILL DOWNS INVESTMENT COMPANY



                                            By: \s\ Robert L. Decker
                                            Title: President


                                            RACING CORPORATION OF AMERICA



                                            By: \s\ Robert L. Decker
                                            Title: Treasurer


                                            ELLIS PARK RACE COURSE, INC.



                                            By: \s\ Robert L. Decker
                                            Title: Treasurer

                                      144
<PAGE>

                   [SIGNATURE PAGE 2 OF 3 TO CREDIT AGREEMENT]

                                                   CALDER RACE COURSE, INC.



                                            By: \s\ Robert L. Decker
                                            Title: Vice President and Treasurer


                                            TROPICAL PARK, INC.



                                            By:\s\ Robert L. Decker 
                                            Title: Vice President and Treasurer






                                      145
<PAGE>


                   [SIGNATURE PAGE 3 OF 3 TO CREDIT AGREEMENT]



                                            PNC BANK, NATIONAL ASSOCIATION,
                                            individually and as Agent



                                            By:  \s\ Susan C. Snyder        
                                            Title: Vice President       


                                            BANK ONE, KENTUCKY, NA



                                            By: \s\ H. Joseph Brenner 
                                            Title: Senior Vice President      


                                            CIBC INC.



                                            By: \s\ Dean Decker      
                                            Title: Executive Director
                                               CIBC Oppenheimer Corp., AS AGENT



                                      146

<PAGE>



6

                               SCHEDULE 1.1(A)(1)

             VARIABLE PRICING AND FEES BASED ON LEVERAGE RATIO
       (This grid applies before the Covenant/Pricing Modification Date.)

 Level  Leverage Ratio  Commitment Fee      Base Rate Spread   Euro-Rate Spread
---------------------- ------------------ ------------------- ------------------

   I   Less than 2.0        .25%                  0%                1.00%
           to 1.0
---------------------- ------------------ ------------------- ------------------

        Greater than
        or equal to
  II     2.0 to 1.0         .25%                  0%                1.25%
       but less than
         2.5 to 1.0
---------------------- ------------------ ------------------- ------------------
---------------------- ------------------ ------------------- ------------------

        Greater than
        or equal to
  III    2.5 to 1.0         .25%                  0%                1.50%
       but less than
         3.0 to 1.0
---------------------- ------------------ ------------------- ------------------
---------------------- ------------------ ------------------- ------------------

        Greater than
        or equal to
  IV     3.0 to 1.0         .375%                .25%               1.75%
       but less than
         3.5 to 1.0
---------------------- ------------------ ------------------- ------------------
---------------------- ------------------ ------------------- ------------------

        Greater than
        or equal to
   V     3.5 to 1.0         .375%                .50%               2.00%
       but less than
         4.0 to 1.0
---------------------- ------------------ ------------------- ------------------
---------------------- ------------------ ------------------- ------------------

        Greater than
        or equal to
  VI     4.0 to 1.0         .50%                 .75%               2.25%
       but less than
         4.5 to 1.0
---------------------- ------------------ ------------------- ------------------
---------------------- ------------------ ------------------- ------------------

          Greater than
  VII     or equal to         .50%                1.00%               2.50%
           4.5 to 1.0
-------- ---------------------------------- ------------------- ---------------

        For purposes of  determining  the  Applicable  Margin and the Applicable
Commitment  Fee Rate under this Schedule  1.1(A)(1) and Schedule  1.1(A)(2) when
such schedule goes into effect:

        (a) The Applicable  Margin and the Applicable  Commitment Fee Rate shall
be  determined  on the Closing  Date based on the Leverage  Ratio  computed in a
certificate  in the form of Exhibit  6.1.4 to be  delivered  on the Closing Date
setting forth the Leverage  Ratio for the four  quarters  ending on December 31,
1998.

        (b) The Applicable  Margin and the Applicable  Commitment Fee Rate shall
be recomputed  as of the end of each fiscal  quarter  ending after  December 31,
1998 based on the Leverage Ratio as of such quarter end and at any time that the
Borrower  makes  a  Permitted  Acquisition.  Any  increase  or  decrease  in the
Applicable Margin or the Applicable Commitment Fee Rate computed as of a quarter
end  shall  be  effective  on the  date  on  which  the  Compliance  Certificate
evidencing  such  computation is due to be delivered  under Section  7.3.3.  Any
increase  in  the  Applicable  Margin  or the  Applicable  Commitment  Fee  Rate
resulting from a Permitted  Acquisition shall become effective as of the date of
such  Permitted  Acquisition.  Any  decrease  in the  Applicable  Margin  or the
Applicable  Commitment Fee Rate resulting from a Permitted Acquisition shall not

                                      147
<PAGE>

become effective at the time of such Permitted  Acquisition;  adjustments to the
Applicable Margin and the Applicable  Commitment Fee Rate after the date of such
Permitted  Acquisition shall be made only upon receipt of a quarterly Compliance
Certificate  evidencing  that an adjustment is to be made in accordance with the
first and second sentence of this paragraph.

                                      148

<PAGE>


                               SCHEDULE 1.1(A)(2)

                      VARIABLE  PRICING AND FEES BASED ON  LEVERAGE  RATIO (This
           grid applies on and after the Covenant/Pricing Modification Date.)

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



 Level Leverage Ratio  Commitment Fee      Base Rate Spread   Euro-Rate Spread
----------------------------------------- ------------------- ------------------
----------------------------------------- ------------------- ------------------


   I   Less than 2.0        .25%                  0%                .75%
           to 1.0
----------------------------------------- ------------------- ------------------
----------------------------------------- ------------------- ------------------

        Greater than
        or equal to
  II     2.0 to 1.0         .25%                  0%                1.00%
       but less than
         2.5 to 1.0
----------------------------------------- ------------------- ------------------
----------------------------------------- ------------------- ------------------

        Greater than
        or equal to
  III    2.5 to 1.0         .25%                  0%                1.25%
       but less than
         3.0 to 1.0
----------------------------------------- ------------------- ------------------
----------------------------------------- ------------------- ------------------

        Greater than
        or equal to
  IV     3.0 to 1.0         .25%                  0%                1.50%
       but less than
         3.5 to 1.0
----------------------------------------- ------------------- ------------------
----------------------------------------- ------------------- ------------------

        Greater than
        or equal to
   V     3.5 to 1.0         .375%                .25%               1.75%
       but less than
         4.0 to 1.0
----------------------------------------- ------------------- ------------------
----------------------------------------- ------------------- ------------------

        Greater than
        or equal to
  VI     4.0 to 1.0         .375%                .50%               2.00%
       but less than
         4.5 to 1.0
----------------------------------------- ------------------- ------------------
----------------------------------------- ------------------- ------------------

        Greater than
  VII   or equal to         .50%                 .75%               2.25%
         4.5 to 1.0
----------------------------------------- ------------------- ------------------

                                      149
<PAGE>


                                 SCHEDULE 1.1(B)

                 COMMITMENTS OF BANKS AND ADDRESSES FOR NOTICES

                                   Page 1 of 2



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


                           Amount of Commitment
                              for Revolving
                               Credit Loans                       Swing Loan
            Bank                                 Ratable Share    Commitment
PNC Bank, National Association
Citizens Plaza
500 West Jefferson Street
Louisville, KY  40202-2823
Attention: Susan C. Snyder
Telephone   (502) 581-3980
Telecopy:   (502) 581-3355      $165,000,000      66.000000%       $10,000,000

Bank One, Kentucky, NA
416 West Jefferson Street
Louisville, Kentucky 40202
Attention: H. Joseph Brenner
Telephone   (502) 566-2789
Telecopy:   (502) 566-2367      $50,000,000       20.000000%            $0

CIBC Oppenheimer Corp.
350 South Grand Avenue, Suite 2600
Los Angeles, CA  90071
Attention:  Dean Decker
Phone:      (213)-617-6245
FAX:        (213)-346-0157                                              $0
                                $35,000,000       14.000000%

        Total                   $250,000,000      100.000000%      $10,000,000
                                ============      ==========       ===========

                                      150
<PAGE>


                                 SCHEDULE 1.1(B)

                 COMMITMENTS OF BANKS AND ADDRESSES FOR NOTICES

                                   Page 2 of 2



Part 2 - Addresses for Notices to Borrower and Guarantors:


AGENT

PNC Bank, National Association
Citizens Plaza
500 West Jefferson Street
Louisville, KY  40202-2823
Attention: Susan C. Snyder
Telephone      (502) 581-3980
Telecopy:      (502) 581-3355

PNC Bank, National Association
One PNC Plaza,
249 Fifth Avenue
Pittsburgh, PA  15222-2707
Attention:  Arlene Ohler
Telephone      (412) 762-3627
Telecopy:      (412)-762-8672
BORROWER AND GUARANTORS:

Churchill Downs Incorporated
700 Central Avenue
Louisville, KY  40208
Robert L. Decker
Chief Financial Officer and Executive Vice President
Telephone:   (502)-636-4400
Telecopy:    (502)-636-4439




                                      151
<PAGE>


                                  SCHEDULE 7.2

                            FINANCIAL COVENANT LEVELS

<TABLE>
<CAPTION>

                  (1)          (2)            (3)           (4)           (5)            (6)
                             Maximum        Maximum                     Minimum        Minimum
                              Senior        Senior                      Interest      Interest
                             Leverage      Leverage                     Coverage      Coverage
                              Ratio       Ratio After                    Ratio       Ratio After
               Maximum        Before       Covenant/      Minimum        Before       Covenant/
   Fiscal      Total        Covenant/       Pricing        Fixed       Covenant/       Pricing
Quarter Ended  Leverage      Pricing     Modification      Charge       Pricing     Modification
                 Ratio     Modification      Date         Coverage    Modification      Date
                               Date                        Ratio          Date

<S>               <C>          <C>           <C>              <C>         <C>           <C> 
  12/31/98*       4.75         4.75          4.25           1.00          2.00          2.50

  03/31/99        4.75         4.75          4.25           1.00          2.00          2.50
  06/30/99        4.75         4.75          4.25           1.00          2.00          2.50
  09/30/99        4.75         4.75          4.25           1.00          2.00          2.50
  12/31/99        4.75         4.75          4.25           1.00          2.00          2.50

   3/31/00        4.50         4.50          4.25           1.00          2.00          2.75
   6/30/00        4.50         4.50          4.25           1.00          2.00          2.75
   9/30/00        4.50         4.25          4.25           1.00          2.00          2.75
  12/31/00        4.50         4.25          4.25           1.00          2.00          2.75

   3/31/01        4.50         4.00          4.00           1.10          2.25          3.00
   6/30/01        4.50         4.00          4.00           1.10          2.25          3.00
   9/30/01        4.50         4.00          4.00           1.10          2.25          3.00
  12/31/01        4.50         4.00          4.00           1.10          2.25          3.00

   3/31/02        4.00         3.75          3.75           1.25          2.50          3.00
   6/30/02        4.00         3.75          3.75           1.25          2.50          3.00
   9/30/02        4.00         3.75          3.75           1.25          2.50          3.00
  12/31/02        4.00         3.75          3.75           1.25          2.50          3.00

  03/31/03        4.00         3.50          3.50           1.25          2.75          3.00
  06/30/03        4.00         3.50          3.50           1.25          2.75          3.00
   9/30/03        4.00         3.50          3.50           1.25          2.75          3.00
  12/31/03        4.00         3.50          3.50           1.25          2.75          3.00
</TABLE>

* These required ratio levels apply to covenants measured on the Closing Date in
the Closing Date Compliance  Certificate.  Income and expense items are measured
as of the four  quarters  ending as of December 31, 1998 and balance sheet items
are measured on the Closing Date for purposes of computing such covenants on the
Closing Date.

                                      152


<PAGE>

                  [SIGNATURE PAGE 1 OF 3 TO CREDIT AGREEMENT}


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

                                         BORROWER:

                                         CHUIRCHILL DOWNS INCORPORATED




                                         By:\s\ Robert L. Decker
                                         Title: Executive Vice President and CFO


                                         GUARANTORS;

                                         CHURCHILL DOWN MANAGEMENT
                                         COMPANY




                                         By:\s\ Robert L. Decker
                                         Title: Vice President and Treasurer

                                         CHURCHILL DOWNS INVESTMENT 
                                         COMPANY




                                         By:\s\ Robert L. Decker
                                         Title: President

                                         RACING CORPORATION OF AMERICA




                                         By:\s\ Robert L. Decker
                                         Title: Treasurer

                                         ELLIS PARK RACE COURSE, INC.




                                         By:\s\ Robert L. Decker
                                         Title: Treasurer


                                   153
<PAGE>


                   SIGNATURE PAGE 2 OF 3 TO CREDIT AGREEMENT}


                                         CALDER RACE COURSE, INC.




                                         By:\s\ Robert L. Decker
                                         Title: Vice President and Treasurer


                                         TROPICAL PARK, INC.




                                         By:\s\ Robert L. Decker
                                         Title: Vice President and Treasurer

                                       154
<PAGE>

                   SIGNATURE PAGE 3 OF 3 TO CREDIT AGREEMENT}


                                         PNC BANK, NATIONAL ASSOCIATION,
                                         individually and as Agent




                                         By: \s\ Susan C. Snyder
                                         Title:  Vice President


                                         BANK ONE, KENTUCKY, NA




                                         By: \s\ H. Joseph Brenner
                                         Title: Senior Vice President


                                         CIBC INC.




                                         By: \s\ Dan Decker
                                         Title: Executive Director
                                                CIBC Oppenheimer Corp., AS AGENT

                                       155