$50,000,000 REVOLVING CREDIT FACILITY

                                CREDIT AGREEMENT

                                  by and among

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

                                       and

                             THE BANKS PARTY HERETO

                                       and

                    PNC BANK, NATIONAL ASSOCIATION, As Agent

                           Dated as of June ___, 1998









                                 Page 52 of 195

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                                                     TABLE OF CONTENTS
                                                                            PAGE

1.  CERTAIN DEFINITIONS........................................................1
  1.1      Certain Definitions.................................................1
  1.2      Construction.......................................................16
           1.2.1    Number; Inclusion.........................................16
           1.2.2    Determination.............................................16
           1.2.3    Agent's Discretion and Consent............................17
           1.2.4    Documents Taken as a Whole................................17
           1.2.5    Headings..................................................17
           1.2.6    Implied References to this Agreement......................17
           1.2.7    Persons...................................................17
           1.2.8    Modifications to Documents................................17
           1.2.9    From, To and Through......................................17
           1.2.10   Shall; Will...............................................18
           1.2.11   Consolidated Financial Information........................18
  1.3      Accounting Principles..............................................18

2.  REVOLVING CREDIT FACILITY.................................................18
  2.1   Revolving Credit Commitments..........................................18
  2.2   Nature of Banks' Obligations with Respect to Revolving Credit Loans...19
  2.3   Non Usage Fees.....................................................19
  2.4   Revolving Credit Activation Fee....................................20
  2.5   Revolving Credit Loan Requests.....................................20
  2.6   Making Revolving Credit Loans......................................20
  2.7   Revolving Credit Notes.............................................21
  2.8   Use of Proceeds....................................................21
  2.9   Letter of Credit Subfacility.......................................21
        2.9.1    Issuance of Letters of Credit................................21
        2.9.2    Letter of Credit Fees........................................21
        2.9.3    Disbursements, Reimbursement.................................22
        2.9.4    Repayment of Participation Advances..........................23
        2.9.5    Documentation................................................23
        2.9.6    Determinations to Honor Drawing Requests.....................23
        2.9.7    Nature of Participation and Reimbursement Obligations........24
        2.9.8    Indemnity....................................................25
        2.9.9    Liability for Acts and Omissions.............................25
  2.10  Extension by Banks of the Expiration Date.............................26
        2.10.1   Requests; Approval by All Banks..............................26
        2.10.2   Approval by Required Banks...................................26

3.  SWING LINE LOANS..........................................................27
  3.1   Swing Line Credit Facility............................................27
        3.1.1    Interest.....................................................27
        3.1.2    Principal....................................................27
        3.1.3    Swing Line Note..............................................27
        3.1.4    Conditions for Swing Line Loans..............................28

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        3.1.5.   General Provisions Regarding Payments of Swing Line Loans....28
        3.1.6    Limitation...................................................29
  3.2      Use of Proceeds....................................................29

4.  INTEREST RATES............................................................29
  4.1      Interest Rate Options..............................................29
        4.1.1    Revolving Credit Interest Rate Options.......................30
  4.2      Swing Line Loan Interest Rate......................................30
  4.3      Interest Periods...................................................30
        4.3.1    Amount of Borrowing Tranche..................................31
        4.3.2    Termination Before Expiration Date...........................31
        4.3.3    Renewals.....................................................31
  4.4   Interest After Default................................................31
        4.4.1    Letter of Credit Fees, Interest Rate.........................31
        4.4.2    Other Obligations............................................31
        4.4.3    Acknowledgment...............................................31
  4.5   Euro-Rate Unascertainable; Illegality; Increased Costs; Deposits
        Not Available.........................................................32
        4.5.1    Unascertainable..............................................32
        4.5.2    Illegality; Increased Costs; Deposits Not Available..........32
        4.5.3    Agent's and Banks' Rights....................................32
  4.6   Selection of Interest Rate Options....................................33

5.  PAYMENTS..................................................................33
  5.1   Payments..............................................................33
  5.2   Pro Rata Treatment of Banks...........................................33
  5.3   Interest Payment Dates................................................34
  5.4   Voluntary Prepayments.................................................34
        5.4.1    Right to Prepay..............................................34
        5.4.2    Replacement of a Bank........................................35
        5.4.3    Change of Lending Office.....................................36
  5.5   Required Prepayments..................................................36
        5.5.1    Sale of Assets...............................................36
        5.5.2    Application Among Interest Rate Options......................36
  5.6   Additional Compensation in Certain Circumstances......................37
        5.6.1    Increased Costs or Reduced Return Resulting from Taxes,
                 Reserves, Capital, Adequacy Requirements, Expenses, Etc......37
        5.6.2    Indemnity....................................................38

6.  REPRESENTATIONS AND WARRANTIES............................................38
  6.1   Representations and Warranties........................................38
        6.1.1    Organization and Qualification...............................38
        6.1.2    Capitalization and Ownership.................................39
        6.1.3    Subsidiaries.................................................39
        6.1.4    Power and Authority..........................................39
        6.1.5    Validity and Binding Effect..................................39
        6.1.6    No Conflict..................................................40
        6.1.7    Litigation...................................................40

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

7.  CONDITIONS OF LENDING AND ISSUANCE OF LETTERS OF CREDIT...................48
  7.1   First Loans and Letters of Credit.....................................48
        7.1.1    Officer's Certificate........................................48
        7.1.2    Secretary's Certificate......................................48
        7.1.3    Delivery of Loan Documents...................................49
        7.1.4    Opinion of Counsel...........................................49
        7.1.5    Legal Details................................................49
        7.1.6    Payment of Fees..............................................49
        7.1.7    Consents.....................................................49
        7.1.8    Officer's Certificate Regarding MACs.........................50
        7.1.9    No Violation of Laws.........................................50
        7.1.10   No Actions or Proceedings....................................50
        7.1.11   Insurance Policies; Certificates of Insurance; Endorsements..50
        7.1.12   Administrative Questionnaire.................................50
  7.2   Each Additional Loan or Letter of Credit..............................50

8.  COVENANTS.................................................................51
  8.1   Affirmative Covenants.................................................51
        8.1.1    Preservation of Existence, Etc...............................51
        8.1.2    Payment of Liabilities, Including Taxes, Etc.................51
        8.1.3    Maintenance of Insurance.....................................52
        8.1.4    Maintenance of Properties and Leases.........................52
        8.1.5    Maintenance of Patents, Trademarks, Etc......................52
        8.1.6    Visitation Rights............................................52
        8.1.7    Keeping of Records and Books of Account......................53
        8.1.8    Plans and Benefit Arrangements...............................53
        8.1.9    Compliance with Laws.........................................53
        8.1.10   Use of Proceeds..............................................53

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

9.  DEFAULT...................................................................65
  9.1   Events of Default.....................................................65
        9.1.1    Payments Under Loan Documents................................65
        9.1.2    Breach of Warranty...........................................65
        9.1.3    Breach of Negative Covenants or Visitation Rights............66
        9.1.4    Breach of Other Covenants....................................66
        9.1.5    Defaults in Other Agreements or Indebtedness.................66
        9.1.6    Other Material Obligations...................................66
        9.1.7    Final Judgments or Orders....................................66
        9.1.8    Loan Document Unenforceable..................................67
        9.1.9    Uninsured Losses; Proceedings Against Assets.................67
        9.1.10   Notice of Lien or Assessment.................................67
        9.1.11   Insolvency...................................................67
        9.1.12   Events Relating to Plans and Benefit Arrangements............68
        9.1.13   Cessation of Business........................................68
        9.1.14   Change of Control............................................68
        9.1.15   Involuntary Proceedings......................................68
        9.1.16   Voluntary Proceedings........................................69

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  9.2   Consequences of Event of Default......................................69
        9.2.1    Events of Default Other Than Bankruptcy, Insolvency or
                 Reorganization Proceedings............................... ...69
        9.2.2    Bankruptcy, Insolvency or Reorganization Proceedings.........69
        9.2.3    Set-off......................................................70
        9.2.4    Suits, Actions, Proceedings..................................70
        9.2.5    Application of Proceeds......................................70
        9.2.6    Other Rights and Remedies....................................71
  9.3   Reasonable Notice.....................................................71

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

11.  MISCELLANEOUS............................................................78
  11.1  Modifications, Amendments or Waivers..................................78
        11.1.1   Increase of Commitment; Extension or Expiration Date.........78
        11.1.2   Extension of Payment; Reduction of Principal Interest or Fees;
                 Modification of Terms of Payment.............................78
        11.1.3   Miscellaneous................................................78
  11.2  No Implied Waivers; Cumulative Remedies; Writing Required.............79
  11.3  Reimbursement and Indemnification of Banks by the Borrowers; Taxes....79
  11.4  Holidays..............................................................80
        11.5.1   Notional Funding.............................................80
        11.5.2   Actual Funding...............................................80
  11.6  Notices...............................................................81
  11.7  Severability..........................................................81
  11.8  Governing Law.........................................................81
  11.9  No Prior Understanding................................................82
  11.10 Duration; Survival....................................................82
  11.11 Successors and Assigns................................................82
  11.12 Confidentiality.......................................................84
        11.12.1  General......................................................84

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        11.12.2   Sharing Information With Affiliates of the Banks............84
  11.13 Counterparts..........................................................84
  11.14 Agent's or Bank's Consent.............................................85
  11.15 Exceptions............................................................85
  11.16 CONSENT TO FORUM; WAIVER OF JURY TRIAL................................85
  11.17 Tax Withholding Clause................................................86
  11.18 Joinder of New Subsidiaries...........................................87
  11.19 No Joint Venture......................................................87
  11.20 Indemnification.......................................................87
  11.21 Survival of Covenants.................................................88
  11.22 No Course of Dealing..................................................88
  11.23 Time of the Essence...................................................88
  11.25 Further Assurances....................................................88
  11.26 Incorporation by Reference............................................88
  11.27 Entire Agreement......................................................88
  11.28 Joint and Several Liability; Certain Limitations......................88
  11.30 Acknowledgment........................................................89




                         LIST OF SCHEDULES AND EXHIBITS

SCHEDULES

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

SCHEDULE 1.1(P)    -    PERMITTED LIENS

SCHEDULE 6.1.1     -    QUALIFICATIONS TO DO BUSINESS

SCHEDULE 6.1.2     -    CAPITALIZATION

SCHEDULE 6.1.3     -    SUBSIDIARIES

SCHEDULE 6.1.8     -    OWNED AND LEASED REAL PROPERTY

SCHEDULE 6.1.11    -    AGREEMENTS WITH RESPECT TO TAXES

SCHEDULE 6.1.12    -    CONSENTS AND APPROVALS

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

SCHEDULE 6.1.15    -    INSURANCE POLICIES

SCHEDULE 6.1.17    -    MATERIAL CONTRACTS


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SCHEDULE 6.1.19    -    EMPLOYEE BENEFIT PLAN DISCLOSURES

SCHEDULE 6.1.21    -    ENVIRONMENTAL DISCLOSURES

SCHEDULE 8.2.1     -    PERMITTED INDEBTEDNESS

EXHIBITS

EXHIBIT 1.1(A)     -    ASSIGNMENT AND ASSUMPTION AGREEMENT

EXHIBIT 1.1(G)(1)  -    JOINDER AGREEMENT

EXHIBIT 1.1(I)(1)  -    INDEMNITY

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

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

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

EXHIBIT 1.1(R)     -    REVOLVING CREDIT NOTES

EXHIBIT 1.1(S)     -    SWING LINE NOTE

EXHIBIT 2.5        -    LOAN REQUEST

EXHIBIT 3.1.4      -    REQUEST FOR SWING LINE LOAN

EXHIBIT 7.1.4      -    OPINION OF COUNSEL

EXHIBIT 8.2.5      -    ACQUISITION COMPLIANCE CERTIFICATE

EXHIBIT 8.3.3      -    QUARTERLY COMPLIANCE CERTIFICATE



                                 Page 59 of 195

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                                CREDIT AGREEMENT

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

                                   WITNESSETH:

         WHEREAS,  the Borrowers have requested the Banks to provide a revolving
credit facility to the Borrowers in an aggregate  principal amount not to exceed
$50,000,000  including a swing line credit  facility in an  aggregate  principal
amount not to exceed $10,000,000 which is a part of, and does not increase, that
revolving credit facility; and

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

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

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

                             1. CERTAIN DEFINITIONS

         1.1      CERTAIN DEFINITIONS.

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

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

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

                  AGREEMENT  shall  mean  this Credit  Agreement, as  it may  be
 supplemented or amended
                                 Page 60 of 195
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from time to time, including all schedules and exhibits.

                  ANNUAL STATEMENTS shall have the meaning assigned to that term
in Section 6.1.9(i).

                  ASSIGNEE BANK shall have the meaning  assigned to such term in
Section 2.10.2.

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

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

                  BANK TO BE TERMINATED  shall have the meaning assigned to that
term in Section 2.10.2.

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

                  BASE NET WORTH  shall  mean  Forty Five  Million  One  Hundred
Eighty Eight Thousand Dollars ($45,188,000.00).

                  BASE RATE shall mean the interest rate per annum most recently
designated  and  announced  publicly  from  time  to time  by the  Agent  at its
Principal  Office as its then prime rate,  which rate may not be the lowest rate
then being charged commercial borrowers by the Agent, minus 1/2%.

                  BASIS POINT shall mean 0.01%.

                  BASE RATE OPTION shall mean  the  Revolving Credit  Base Rate 
Option.
                  BENEFIT  ARRANGEMENT  shall  mean  at any  time  an  "employee
benefit  plan," within the meaning of Section 3(3) of ERISA,  which is neither a
Plan nor a  Multiemployer  Plan and which is maintained,  sponsored or otherwise
contributed to by any member of the ERISA Group.

                  BORROWERS   shall   mean    collectively,    Churchill   Downs
Incorporated,  a corporation  organized and existing under the laws of the State
of Kentucky,  Churchill Downs Management  Company,  a corporation  organized and
existing  under the laws of the State of Kentucky,  Churchill  Downs  Investment
Company,  a corporation  organized  and existing  under the laws of the State of
Kentucky,  Racing Corporation of America,  Ellis Park Race Course, Inc., and any
other  Person  which joins this  Agreement  as a Borrower  after the date hereof
pursuant to Section 11.18.

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


                                 Page 62 of 195

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

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

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

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

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

                  COMMITMENT  PERIOD shall mean the period beginning on the date
hereof and extending to the Expiration Date.

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

                  CONSOLIDATED  DIVIDENDS for any Period of determination  shall
mean the aggregate Dividends of the Borrowers for the period determined,  EXCEPT
THAT  any  Dividends  paid by one Loan  Party to  another  Loan  Party  shall be
excluded.

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

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

                  CONSOLIDATED  FUNDED DEBT as of an date of determination shall
mean the consolidated Indebtedness of the Borrowers,  consolidated in accordance
with GAAP,  except that  obligations  of the Borrowers not exceeding  $3,000,000
under outstanding pari-mutuel tickets that are payable with respect to races run
not more  than  one year  prior  to the  date of  determination  (the  "Excluded
Amount") shall not be included

                                 Page 62 of 195

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in Consolidated Funded Debt. The balance of all obligations of all or any of the
Borrowers with respect pari-mutuel tickets other than the Excluded Amount  shall
be included in Consolidated Funded Debt.

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

                  CONSOLIDATED  TANGIBLE  NET WORTH shall mean as of any date of
determination total stockholders' equity less intangible assets of the Borrowers
on a  consolidated  basis  as  of  such  date  determined  and  consolidated  in
accordance with GAAP.

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

                  DEFAULT RATE shall  mean an  annual rate equal to two percent 
(2%) PLUS the Base Rate in effect from time to time.
                  DIVIDEND shall mean any amount  declared or paid, or set apart
by any  Borrower  for the  purpose of  payment  of,  (a) any  dividend  or other
distribution  on or in  respect  of any  shares of any  class of any  Borrower's
capital stock, or (b) the purchase,  retirement,  reacquisition or redemption of
any shares of any class of any Borrower's capital stock, or (c) any distribution
by way of reduction of capital,  or (d) any other  distribution on or in respect
of any shares of any class of any Borrower's capital stock.

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

                  DRAWING  DATE shall have the meaning  assigned to that term in
Section 2.9.3.2.

                  EBIT shall mean for any Person for any Period of determination
shall mean (i) that Person's net income before tax PLUS that Person's 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.

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

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

<PAGE>


                                 Page 63 of 195



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

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

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

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



                  EURO-RATE shall mean, with respect to the Loans comprising any
Borrowing Tranche to which the Euro-Rate Option applies for any Interest Period,
the interest rate per annum  determined by the Agent by dividing (the  resulting
quotient rounded upwards, if necessary,  to the nearest 1/100th of 1% per annum)
(i) the rate of interest  determined by the Agent in  accordance  with its usual
procedures (which determination shall be conclusive absent manifest error) to be
the average of the London interbank offered rates for U.S. Dollars quoted by the
British Bankers' Association as set forth on Dow Jones Markets Service (formerly
known as  Telerate)  (or  appropriate  successor  or,  if the  British  Bankers'
Association  or its  successor  ceases to  provide  such  quotes,  a  comparable
replacement  determined  by the Agent)  display page 3750 (or such other display
page on the Dow Jones Markets  Service Systems as may replace display page 3750)
two (2) Business Days prior to the first day of such Euro-Rate  Interest  Period
for an amount  comparable to such Borrowing  Tranche and having a borrowing date
and a maturity  comparable to such  Euro-Rate  Interest  Period by (ii) a number
equal to 1.00 minus the Euro- Rate Reserve Percentage. The Euro-Rate may also be
expressed by the following formula:

                  Average of London  interbank  offered  rates  quoted by BBA as
                  shown  on  Dow  Jones  Markets   Service   display  page  3750
                  ASSOCIATION  OR  APPROPRIATE  SUCCESSOR  
                  Euro-Rate  =  1.00 - Euro-Rate Reserve Percentage

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


                                 Page 64 of 195

<PAGE>



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

                  EURO-RATE  MARGIN  shall  mean the  percentage  rate per annum
added to the  Euro-Rate to determine  the interest  rate per annum under Section
4.1.1(ii)  in  accordance  with the  table  set out in  Section  4.1.1(ii).  The
Euro-Rate  Margin shall be  determined as of and effective as of the due date of
the Borrowers'  quarterly  financial  statements for the first three quarters of
each of the fiscal  quarters in each fiscal year and on the sooner of the actual
delivery of the Annual  Statements or 120 days after the Borrowers'  fiscal year
end.

                  EURO-RATE OPTION shall mean the Revolving Credit Euro-Rate
Option.

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

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

                  EXPIRATION  DATE shall  mean,  with  respect to the  Revolving
Credit Commitments and the Swing Line Commitment, June ___, 2000.

                  EXTENDING BANK shall have the meaning assigned to such term in
Section 2.10.2.

                  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.

                                 Page 65 of 195


<PAGE>

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

                  GOVERNMENTAL ACTS shall have the meaning assigned to that term
in Section 2.9.8.

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

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

                  HISTORICAL  STATEMENTS shall have the meaning assigned to that
term in Section 6.1.9(i).

                  INDEBTEDNESS shall mean, as to any Person at any time, any and
all  indebtedness,  obligations  or liabilities  (whether  matured or unmatured,
liquidated or unliquidated, direct or indirect, absolute or contingent, or joint
or  several)  of such  Person for or in respect  of: (i)  borrowed  money,  (ii)
amounts  raised  under  or  liabilities  in  respect  of any  note  purchase  or
acceptance  credit  facility,  (iii)  reimbursement  obligations  (contingent or
otherwise)  under any letter of credit,  currency swap agreement,  interest rate
swap, cap,  collar or floor agreement or other interest rate management  device,
(iv) any other  transaction  (including  forward  sale or  purchase  agreements,
capitalized  leases,  operating leases that are so called synthetic leases,  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,  accrued  expenses,  deferred
revenue  related to the annual running of the Kentucky  Derby,  obligations  not
exceeding $3,000,000 under outstanding pari-mutuel tickets that are payable with
respect  to races  not more  than  one year  prior to the date of  determination
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.


                                 Page 66 of 195

<PAGE>



                  INTERCOMPANY    SUBORDINATION    AGREEMENT    shall   mean   a
Subordination  Agreement  among the Loan Parties in the form attached  hereto as
EXHIBIT 1.1(I)(2).

                  INTEREST  PERIOD shall have the meaning  assigned to such term
in Section 4.3.

                  INTEREST RATE OPTION shall mean any Euro-Rate Option or Base 
Rate Option.

                  INTERIM  STATEMENTS  shall have the  meaning  assigned to that
term in Section 6.1.9(i).

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

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

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

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

                  LETTER OF CREDIT shall have the meaning  assigned to that term
in Section 2.9.1.

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

                  LETTER OF CREDIT FEE shall have the  meaning  assigned to that
term in Section 2.9.2.

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

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

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

                                 Page 67 of 195

<PAGE>




                  LOAN PARTIES shall mean the Borrowers.

                  LOAN  REQUEST  shall  have the  meaning  given to such term in
Section 2.5.

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

                  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 its  Indebtedness,  or (d) impairs  materially  or could  reasonably  be
expected to impair  materially the ability of the Agent or any of the Banks,  to
the extent permitted, to enforce their legal remedies pursuant to this Agreement
or any other Loan Document.

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

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

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

                  NON USAGE FEES shall mean the fees referred to in Section 2.3.

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

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

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

                                 Page 68 of 195
<PAGE>



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

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

                  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 8.2.5.

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

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

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

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

                           (v)     other  interests  in  partnerships,  limited 
liability companies, or other entities not to exceed the amount of $10,000,000  
in the aggregate.

                  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;

<PAGE>
                                 Page 69 of 195


                           (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  landlord 
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;

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

                           (vii) Liens on  property  leased by any Loan Party or
Subsidiary  of  a  Loan  Party  under  capital  and  operating  leases securing
obligations of such Loan Party or Subsidiary to the lessor under such leases;

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

                          (ix)    Purchase Money Security Interests, capitalized
lease  financing, and  operating  lease  financing  to the extent of so-called 
"synthetic  leasing,"  PROVIDED that the aggregate  amount of loans and deferred
payments secured by such Purchase Money Security Interests  and lease  financing
shall  not  exceed  $5,000,000  in the aggregate  (excluding for the purpose of
this  computation any loans or deferred payments secured by Liens described on  
SCHEDULE 1.1(P)); and

                           (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
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;

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

              
                   Page 70 of 195
<PAGE>



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

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

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

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

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

                  PRINCIPAL  OFFICE  shall mean the main  banking  office of the
Agent in Louisville, Kentucky.

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

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

                  PURCHASE  MONEY  SECURITY   INTEREST  shall  mean  Liens  upon
tangible  personal  property securing loans to any Loan Party or Subsidiary of a
Loan  Party or  deferred  payments  by such  Loan  Party or  Subsidiary  for the
purchase of such tangible personal property.

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

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

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

                                 Page 71 of 195

<PAGE>



                  REGULATION U shall mean Regulation U, T, G or X as promulgated
by the Board of Governors of the Federal Reserve System, as amended from time to
time.
                  REIMBURSEMENT  OBLIGATION  shall have the meaning  assigned to
such term in Section 2.9.3.2.

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

                  REQUEST  FOR  SWING  LINE  LOAN  shall  mean a duly  completed
Request for a Swing Line Loan in the form of EXHIBIT 3.1.4.

                  REQUIRED BANKS shall mean

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

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

                  REVOLVING  CREDIT  ACTIVATION FEE shall mean the fees referred
to in Section 2.4.

                  REVOLVING CREDIT BASE RATE OPTION shall mean the option of the
Borrowers to have Revolving Credit Loans bear interest at the rate and under the
terms and conditions set forth in Section 4.1.1(i).

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

                                 Page 72 of 195

<PAGE>



                  REVOLVING CREDIT EURO-RATE OPTION shall mean the option of the
Borrowers to have Revolving Credit Loans bear interest at the rate and under the
terms and conditions set forth in Section 4.1.1(ii).

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

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

                  REVOLVING FACILITY USAGE shall mean at any time the sum of the
Revolving Credit Loans outstanding and the Letters of Credit Outstanding.

                  REVOLVING LINE OF CREDIT shall mean the sums advanced or to be
advanced by the Banks to the Borrower for the purposes described in Section 2.8.

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

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

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

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

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

                                 Page 73 of 195

<PAGE>



                  SUBSIDIARY SHARES shall have the meaning assigned to that term
in Section 6.1.3.

                  SWING  LINE  COMMITMENT  PERIOD  shall mean the period of time
from the date of this Agreement through the Expiration Date.

                  SWING LINE  CREDIT  FACILITY  shall  mean the credit  facility
established in Section 3 of this Agreement.
                  SWING LINE COMMITMENT at any time of determination  shall mean
the LESSER of (a) the dollar  amount of the  aggregate of the  Revolving  Credit
Commitments  of all of the  Banks  MINUS  the sum of (1) the  aggregate  maximum
available  drawings  under  all  Letters  of  Credit  outstanding,  and  (2) the
aggregate  principal of all  Revolving  Credit  Loans,  in each case at the time
determined, or (b) Ten Million Dollars ($10,000,000).

                 SWING LINE OF CREDIT shall mean the Swing Line Credit Facility.

                  SWING LINE LENDER shall mean PNC Bank, National Association 
and its permitted successors and assigns.

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

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

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

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

                  UNMATURED DEFAULT shall mean any event or condition which with
notice,  passage of time or a determination  by the Agent or the Required Banks,
or any combination of the foregoing, would constitute an Event of Default.

   1.2   CONSTRUCTION.

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

                                 Page 74 of 195
<PAGE>


         1.2.1         NUMBER; INCLUSION.

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

        1.2.2          DETERMINATION.

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

        1.2.3          AGENT'S DISCRETION AND CONSENT.

        whenever  the Agent or the Banks are granted the right  herein to act in
its or their sole discretion or to grant or withhold consent such right shall be
exercised in good faith;

        1.2.4          DOCUMENTS TAKEN AS A WHOLE.

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

        1.2.5          HEADINGS.

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

        1.2.6          IMPLIED REFERENCES TO THIS AGREEMENT.

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

        1.2.7          PERSONS.

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

        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;

                                 Page 75 of 195
<PAGE>



        1.2.9          FROM, TO AND THROUGH.

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

         1.2.10        SHALL; WILL.

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

         1.2.11        CONSOLIDATED FINANCIAL INFORMATION.

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

   1.3   ACCOUNTING PRINCIPLES.

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

                          2. REVOLVING CREDIT FACILITY

   2.1   REVOLVING CREDIT COMMITMENTS.

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

              
                   Page 76 of 195


<PAGE>



   2.2   NATURE OF BANKS' OBLIGATIONS WITH RESPECT TO REVOLVING CREDIT LOANS.

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

   2.3   NON USAGE FEES.

   Accruing from the date hereof until the Expiration  Date, the Borrowers agree
to pay to the Agent for the account of each Bank,  on a PRO RATA  basis,  on the
first  Business  Day of each  July,  October,  January  and April so long as the
Revolving Credit Facility is in effect, a Non Usage Fee (the "Non Usage Fee") in
an amount equal to the average unused amount of the aggregate  Revolving  Credit
Commitments  multiplied by the applicable fee percentage based on the applicable
level in accordance  with the table set forth below.  Such average unused amount
shall  be  the  amount  by  which  the  average  principal  balance  of  amounts
outstanding  under the Revolving Credit Notes  (including the maximum  available
drawings under outstanding  Letters of Credit) and the amounts outstanding under
the Swing  Line Note  beginning  on the date  hereof,  for each  July,  October,
January and April, is less than the maximum amount available under the Revolving
Credit Facility.  Such fee shall be determined by the Agent effective  quarterly
as of the due date of the  Borrowers'  quarterly  financial  statements  for the
first three  quarters of each of the fiscal  quarters in each fiscal year and on
the sooner of the actual delivery of the Annual Statements or 120 days after the
Borrowers'  fiscal  year  end.  The Non  Usage  Fee  shall be  payable  upon the
Borrower's  receipt of the Agent's  invoice for such  amount.  Such fee shall be
calculated on the basis of the number of days in the  particular  quarter on the
assumption that an entire year's interest is earned in 360 days, as the case may
be.

<TABLE>
<S>                         <C>                       <C>                      <C>                        <C>
                            LEVEL I                   LEVEL II                 LEVEL III                  LEVEL IV

BASIS FOR NON               IF THE RATIO OF THE       IF THE RATIO OF THE      IF THE RATIO OF THE        IF THE RATIO OF THE
-------------               -------------------       -------------------      -------------------        -------------------
USAGE FEE                   BORROWERS' TOTAL          BORROWERS' TOTAL         BORROWERS' TOTAL           BORROWERS' TOTAL
---------                   ----------------          ----------------         ----------------           ----------------
                            CONSOLIDATED              CONSOLIDATED             CONSOLIDATED               CONSOLIDATED
                            ------------              ------------             ------------               ------------
                            FUNDED DEBT TO            FUNDED DEBT TO           FUNDED DEBT TO             FUNDED DEBT TO
                            --------------            --------------           --------------             --------------
                            THE BORROWERS'            THE BORROWERS'           THE BORROWERS'             THE BORROWERS'
                            --------------            --------------           --------------             --------------
                            CONSOLIDATED              CONSOLIDATED             CONSOLIDATED               CONSOLIDATED
                            ------------              ------------             ------------               ------------
                            EBITDA  IS <1.0           EBITDA IS = OR           EBITDA IS = OR>            EBITDA IS = OR
                            ---------------           --------------           ---------------            --------------
                                                      > 1.0 AND <1.5           1.5 AND <2.0               > 2.0
                                                      --------------           ------------               -----
THEN THE FEE                12.5 BASIS POINTS         12.5 BASIS POINTS        17.5 BASIS POINTS          22.5 BASIS POINTS
PERCENTAGE IS               -----------------         -----------------        -----------------          -----------------
</TABLE>


                                 Page 77 of 195

<PAGE>


   2.4   REVOLVING CREDIT ACTIVATION FEE.

   The Borrowers agree to pay to the Agent for the account of each Bank on a PRO
RATA basis, as  consideration  for such Bank's Revolving  Credit  Commitment,  a
one-time  nonrefundable  activation  fee of $25,000  payable on the day that the
Borrowers' usage under the Revolving Credit first is greater than $20,000,000.

   2.5   REVOLVING CREDIT LOAN REQUESTS.

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

   2.6   MAKING REVOLVING CREDIT LOANS.

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

                                 Page 78 of 195

<PAGE>



   2.7   REVOLVING CREDIT NOTES.

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

   2.8   USE OF PROCEEDS.

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

   2.9   LETTER OF CREDIT SUBFACILITY.

         2.9.1        ISSUANCE OF LETTERS OF CREDIT.

         Borrowers  may  request  the  issuance  of a letter of  credit  (each a
"Letter of Credit") on behalf of itself or another Loan Party by  delivering  to
the Agent a completed  application  and  agreement for letters of credit in such
form as the Agent may  specify  from time to time by no later than  10:00  a.m.,
Pittsburgh time, at least three (3) Business Days, or such shorter period as may
be agreed to by the Agent,  in advance of the proposed  date of  issuance.  Each
Letter of Credit  shall be  either a  Standby  Letter of Credit or a  Commercial
Letter of Credit.  Subject to the terms and conditions hereof and in reliance on
the  agreements of the other Banks set forth in this Section 2.9, the Agent will
issue a Letter of Credit  provided  that each Letter of Credit  shall (A) have a
maximum maturity of twelve (12) months from the date of issuance,  and (B) in no
event expire later than ten (10) Business Days prior to the Expiration  Date and
provided  further  that in no event shall (i) the Letters of Credit  Outstanding
exceed, at any one time, $2,000,000 or (ii) the Revolving Facility Usage exceed,
at any one time, the Revolving Credit Commitments.

         2.9.2        LETTER OF CREDIT FEES.

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

         2.9.3        DISBURSEMENTS, REIMBURSEMENT.

                                 Page 80 of 195


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

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

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

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

                                 Page 80 of 195

<PAGE>

         2.9.4        REPAYMENT OF PARTICIPATION ADVANCES.

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

                      2.9.4.2     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 2.9.4.1  in  reimbursement of a
payment  made  under  the Letter of Credit or interest or fee thereon, each Bank
shall, on demand of the Agent, forthwith  return to the Agent the  amount of its
Ratable Share of any amounts so returned by the Agent plus interest thereon from
the date such demand is made to the date such amounts are  returned by such Bank
to the Agent,  at a rate per annum equal to the Federal Funds  Effective Rate in
effect from time to time.

         2.9.5        DOCUMENTATION.

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

         2.9.6        DETERMINATIONS TO HONOR DRAWING REQUESTS.

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

         2.9.7        NATURE OF PARTICIPATION AND REIMBURSEMENT OBLIGATIONS.

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

                                 Page 81 of 195

<PAGE>



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

                      (ii)  the failure of any Loan Party or any other Person to
comply, in connection with a Letter  of Credit  Borrowing,  with the  conditions
set forth in Section 2.1 [Revolving  Credit Commitments], 2.5 [Revolving  Credit
Loan  Requests],  2.6 [Making  Revolving  Credit Loans] or 7.2 [Each  Additional
Loan] or as otherwise set forth in this Agreement for the making 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 2.9.3;

                      (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);

                      (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 o
inaccurate in any respect even if the Agent has been notified thereof;

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

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

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

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

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

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

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

                                 Page 82 of 195


<PAGE>



         2.9.8        INDEMNITY.

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

         2.9.9        LIABILITY FOR ACTS AND OMISSIONS.

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

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

   2.10  EXTENSION BY BANKS OF THE EXPIRATION DATE.

                                 Page 83 of 195


<PAGE>

         2.10.1       REQUESTS; APPROVAL BY ALL BANKS.

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

         2.10.2       APPROVAL BY REQUIRED BANKS.

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

                               3. SWING LINE LOANS

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

   3.1   SWING LINE CREDIT FACILITY.

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

                                 Page 84 of 195


<PAGE>



         3.1.1        INTEREST.

         Swing Line Loans shall bear interest  (calculated  on the basis that an
entire  year's  interest is earned in 360 days as the case may be) from the date
of each such Swing Line Loan  until  repaid at an annual  rate equal to the Base
Rate. After maturity,  whether by acceleration or scheduled maturity, until paid
in full,  or when and so long as there shall exist any uncured Event of Default,
Swing Line Loans shall bear interest at the  applicable  Default Rate.  Interest
with  respect to the  principal of a Swing Line Loan shall be due and payable to
the Swing Line Lender on the date the  principal  of that Swing Line Loan is due
and payable, and on the Expiration Date.

         3.1.2        PRINCIPAL.

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

         3.1.3        SWING LINE NOTE.

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

         3.1.4        CONDITIONS FOR SWING LINE LOANS.

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

         3.1.5.       GENERAL PROVISIONS REGARDING PAYMENTS OF SWING LINE LOANS.

                                 Page 85 of 195

<PAGE>



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

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

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


         3.1.6        LIMITATION.

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

   3.2   USE OF PROCEEDS.

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

                                 Page 86 of 195

<PAGE>



                                4. INTEREST RATES

   4.1   INTEREST RATE OPTIONS.

   The  Borrowers  shall pay  interest  in  respect  of the  outstanding  unpaid
principal  amount of the  Revolving  Credit Loans at the rate or rates per annum
selected by it from the Base Rate  Option or Euro- Rate Option set forth  below,
it being  understood  that,  subject to the  provisions of this  Agreement,  the
Borrowers may select  different  Interest  Rate Options and  different  Interest
Periods  to  apply  simultaneously  to the  Revolving  Credit  Loans  comprising
different  Borrowing  Tranches and may convert to or renew one or more  Interest
Rate  Option  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  five  (5)  Borrowing  Tranches  in the  aggregate  among  all of the
Revolving Credit Loans.  Each Borrowing  Tranche shall bear interest at the same
Interest Rate Option.  If at any time the designated rate applicable to any Loan
made by any Bank exceeds such Bank's  highest  lawful rate, the rate of interest
on such Bank's Loan shall be limited to such Bank's highest lawful rate.

         4.1.1        REVOLVING CREDIT INTEREST RATE OPTIONS.

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

                      (i)   REVOLVING CREDIT BASE RATE OPTION:   A  fluctuating 
rate per annum (computed on the basis of an assumed year of 360 days, and actual
days  elapsed)  equal  to  the  Base  Rate,  such  interest  rate  to  change  
automatically  from  time  to  time  effective  as of the effective date of each
 change in the Base Rate; or

                      (ii)  REVOLVING CREDIT EURO-RATE OPTION:  A rate per annum
(computed on the basis of an assumed  year of 360 days and actual days  elapsed)
equal to the  applicable Euro-Rate for the Interest  Period  properly  selected
for the Revolving  Credit Loan or Loans,  PLUS the applicable  Euro-Rate  Margin
determined in accordance with the following table:

                                 Page 87 of 195


<PAGE>

<TABLE>

<S>                         <C>                       <C>                      <C>                        <C>
                            LEVEL I                   LEVEL II                 LEVEL III                  LEVEL IV

BASIS FOR EURO-RATE         If the ratio of the       If the ratio of the      If the ratio of the        If the ratio of the
MARGIN                      Borrowers' Total          Borrowers' Total         Borrowers' Total           Borrowers' Total
                            Consolidated              Consolidated             Consolidated               Consolidated
                            Funded Debt to the        Funded Debt to           Funded Debt to the         Funded Debt to the
                            Borrowers'                the Borrowers'           Borrowers'                 Borrowers'
                            Consolidated              Consolidated             Consolidated               Consolidated
                            EBITDA is less            EBITDA is equal          EBITDA is equal to         EBITDA is equal
                            than 1.0                  to or greater than       or greater than 1.5        to or greater than
                                                      1.0 but less than        but less than 2.0          2.0
                                                      1.5
THEN THE EURO-RATE          50 Basis Points           62.5 Basis Points        87.5 Basis Points          100 Basis Points
MARGIN IS

</TABLE>

   4.2   SWING LINE LOAN INTEREST RATE.

         The Borrowers shall pay interest in respect of the  outstanding  unpaid
principal  amount of the Swing  Line  Loans  outstanding  from time to time at a
fluctuating rate per annum (computed on the basis of an assumed year of 360 days
and actual days  elapsed)  equal to the Base Rate,  such interest rate to change
automatically  from  time to time  effective  as of the  effective  date of each
change in the Base Rate.

   4.3   INTEREST PERIODS.

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

         4.3.1        AMOUNT OF BORROWING TRANCHE.

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

         4.3.2        TERMINATION BEFORE EXPIRATION DATE.

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

         4.3.3        RENEWALS.

                                 Page 88 of 195

<PAGE>




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

   4.4   INTEREST AFTER DEFAULT.

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

         4.4.1        LETTER OF CREDIT FEES, INTEREST RATE.

         The  Letter  of  Credit  Fees and the rate of  interest  for each  Loan
otherwise  applicable  pursuant  to Section  2.9.2  [Letter  of Credit  Fees] or
Section 4.1 [Interest  Rate Options],  respectively,  shall be increased by 2.0%
per annum; and

         4.4.2        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 Revolving Credit Base Rate Option plus an additional 2% per annum from
the time such Obligation becomes due and payable and until it is paid in full.

         4.4.3        ACKNOWLEDGMENT.

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

   4.5   EURO-RATE UNASCERTAINABLE; ILLEGALITY; INCREASED COSTS; DEPOSITS NOT
         AVAILABLE.

         4.5.1        UNASCERTAINABLE.

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

         4.5.2        ILLEGALITY; INCREASED COSTS; DEPOSITS NOT AVAILABLE.

   If,  after the date of this  Agreement,  the  Agent  shall  determine  (which
determination shall be final and conclusive) that any enactment, promulgation or

                                 Page 89 of 195


<PAGE>



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

         4.5.3        AGENT'S AND BANKS' RIGHTS.

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

   4.6   SELECTION OF INTEREST RATE OPTIONS.

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

                                 Page 90 of 195


<PAGE>

                                   5. PAYMENTS

   5.1 PAYMENTS.

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

   5.2   PRO RATA TREATMENT OF BANKS.

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

   5.3   INTEREST PAYMENT DATES.

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

   5.4   VOLUNTARY PREPAYMENTS.

                                 Page 91 of 195

<PAGE>


         5.4.1        RIGHT TO PREPAY.

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

                      (i)   at any time with respect  to  any Loan to which the 
Base Rate Option applies,

                      (ii)  on the last day of the  applicable  Interest Period
with respect to Loans to which a Euro-Rate Option applies,

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

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

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

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

                      (z)   the total principal amount of such prepayment, whic
shall not be less than $100,000.00.

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

         5.4.2        REPLACEMENT OF A BANK.

         In the event any Bank (i) gives  notice  under  Section 4.5  [Euro-Rate
Unascertainable,  Etc.] or Section 5.6.1 [Increased Costs,  Etc.], (ii) does not
fund  Revolving  Credit Loans because the making of such Loans would  contravene
any Law  applicable to such Bank,  (iii) does not approve any action as to which

                                 Page 92 of 195

<PAGE>



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

         5.4.3        CHANGE OF LENDING OFFICE.

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

   5.5   REQUIRED PREPAYMENTS.

         5.5.1        SALE OF ASSETS.

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

                                 Page 93 of 195

<PAGE>




         5.5.2        APPLICATION AMONG INTEREST RATE OPTIONS.

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

   5.6   ADDITIONAL COMPENSATION IN CERTAIN CIRCUMSTANCES.

         5.6.1        INCREASED COSTS OR REDUCED RETURN RESULTING FROM TAXES, 
                      RESERVES, CAPITAL ADEQUACY REQUIREMENTS, EXPENSES, ETC.

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

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

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

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

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

                                 Page 94 of 195

<PAGE>




         5.6.2        INDEMNITY.

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

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

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

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

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

                        6. REPRESENTATIONS AND WARRANTIES

   6.1 REPRESENTATIONS AND WARRANTIES.

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

         6.1.1        ORGANIZATION AND QUALIFICATION.

         Each  Loan  Party  and  each   Subsidiary  of  each  Loan  Party  is  a
corporation,  partnership or limited liability  company duly organized,  validly
existing  and  in  good  standing  under  the  laws  of  its   jurisdiction   of
organization.  Each Loan  Party and each  Subsidiary  of each Loan Party has the

                                 Page 95 of 195

<PAGE>




lawful  power to own or lease its  properties  and to engage in the  business it
presently  conducts or proposes to conduct.  Each Loan Party and each Subsidiary
of each Loan Party is duly  licensed or qualified  and in good  standing in each
jurisdiction  listed on SCHEDULE 6.1.1 and in all other  jurisdictions where the
property owned or leased by it or the nature of the business transacted by it or
both makes such licensing or qualification necessary.

         6.1.2        CAPITALIZATION AND OWNERSHIP.

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

         6.1.3        SUBSIDIARIES.

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

         6.1.4        POWER AND AUTHORITY.

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

         6.1.5        VALIDITY AND BINDING EFFECT.

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

         6.1.6        NO CONFLICT.


                                 Page 96 of 195


<PAGE>



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

         6.1.7        LITIGATION.

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

         6.1.8        TITLE TO PROPERTIES.

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

         6.1.9        FINANCIAL STATEMENTS.

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

                                 Page 97 of 195

<PAGE>




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

         6.1.10       USE OF PROCEEDS; MARGIN STOCK; SECTION 20 SUBSIDIARIES.

                      6.1.10.1                GENERAL.

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

                      6.1.10.2                MARGIN STOCK.

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

                      6.1.10.3                SECTION 20 SUBSIDIARIES.

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

         6.1.11       TAXES.

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

                                 Page 98 of 195


<PAGE>



         6.1.12       CONSENTS AND APPROVALS.

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

         6.1.13       NO EVENT OF DEFAULT; COMPLIANCE WITH INSTRUMENTS.

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

         6.1.14       PATENTS, TRADEMARKS, COPYRIGHTS, LICENSES, ETC.

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

         6.1.15       INSURANCE.

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

         6.1.16       COMPLIANCE WITH LAWS.

         The Loan  Parties  and  their  Subsidiaries  are in  compliance  in all
material respects with all applicable Laws (other than  Environmental Laws which

                                 Page 99 of 195

<PAGE>



are  specifically  addressed in Section  6.1.21  [Environmental  Matters] in all
jurisdictions  in  which  any  Loan  Party or  Subsidiary  of any Loan  Party is
presently or will be doing business  except where the failure to do so would not
constitute a Material Adverse Change.

         6.1.17       MATERIAL CONTRACTS; BURDENSOME RESTRICTIONS.

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

         6.1.18       INVESTMENT COMPANIES; REGULATED ENTITIES.

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

         6.1.19       PLANS AND BENEFIT ARRANGEMENTS.

         Except as set forth on SCHEDULE 6.1.19:

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

                                Page 101 of 195


<PAGE>

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

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

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

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

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

         6.1.20       EMPLOYMENT MATTERS.

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

                                Page 101 of 195


<PAGE>

         6.1.21       ENVIRONMENTAL MATTERS.

         Except as disclosed on SCHEDULE 6.1.21:

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

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

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

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

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

                                Page 102 of 195

<PAGE>




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

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

         6.1.22       SENIOR DEBT STATUS.

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

         6.1.23       EMPLOYEE BENEFIT PLANS.

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

         6.1.24       FULL DISCLOSURE.

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

                                Page 103 of 195

<PAGE>




         6.1.25       YEAR 2000.

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

   6.2   UPDATES TO SCHEDULES.

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


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

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

   7.1   FIRST LOANS AND LETTERS OF CREDIT.

   On the Closing Date:

         7.1.1        OFFICER'S CERTIFICATE.

         The  representations  and  warranties  of  each  of  the  Loan  Parties
contained in Section 6 and in each of the other Loan Documents shall be true and
accurate on and as of the Closing Date with the same

                                 Page 104 of 195

<PAGE>



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 Unmatured  Default shall
have occurred and be continuing or shall exist;  and there shall be delivered to
the  Agent  for the  benefit  of each  Bank a  certificate  of each of the  Loan
Parties,  dated the  Closing  Date and  signed by the Chief  Executive  Officer,
President or Chief Financial  Officer of each of the Loan Parties,  to each such
effect.

         7.1.2        SECRETARY'S CERTIFICATE.

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

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

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

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

         7.1.3        DELIVERY OF LOAN DOCUMENTS.

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

         7.1.4        OPINION OF COUNSEL.

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

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

                                Page 105 of 195

<PAGE>

         7.1.5        LEGAL DETAILS.

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

         7.1.6        PAYMENT OF FEES.

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

         7.1.7        CONSENTS.

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

         7.1.8        OFFICER'S CERTIFICATE REGARDING MACS.

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

         7.1.9        NO VIOLATION OF LAWS.

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

         7.1.10       NO ACTIONS OR PROCEEDINGS.

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

                                 Page 106 of 195


<PAGE>




         7.1.11     INSURANCE POLICIES; CERTIFICATES OF INSURANCE; ENDORSEMENTS.

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

         7.1.12       ADMINISTRATIVE QUESTIONNAIRE.

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

   7.2   EACH ADDITIONAL LOAN OR LETTER OF CREDIT.

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

   7.3 SPECIAL POST CLOSING  DELIVERY.  The Borrowers  shall  deliver  certified
copies of their Articles of Incorporation  and By-Laws  effective as of June 19,
1998 to the Banks by June 29, 1998.

                                  8. COVENANTS

   8.1   AFFIRMATIVE COVENANTS.

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


                                 Page 107 of 195

<PAGE>



         8.1.1        PRESERVATION OF EXISTENCE, ETC.

         Each Loan Party  shall,  and shall cause each of its  Subsidiaries  to,
maintain its legal  existence as a corporation,  limited  partnership or limited
liability  company and its license or  qualification  and good  standing in each
jurisdiction  in which its  ownership  or lease of property or the nature of its
business  makes such  license or  qualification  necessary,  except as otherwise
expressly permitted in Section 8.2.5 [Liquidations, Mergers, Etc.].

         8.1.2        PAYMENT OF LIABILITIES, INCLUDING TAXES, ETC.

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

         8.1.3        MAINTENANCE OF INSURANCE.

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

         8.1.4        MAINTENANCE OF PROPERTIES AND LEASES.

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


                                 Page 108 of 195

<PAGE>




         8.1.5        MAINTENANCE OF PATENTS, TRADEMARKS, ETC.

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

         8.1.6        VISITATION RIGHTS.

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

         8.1.7        KEEPING OF RECORDS AND BOOKS OF ACCOUNT.

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

         8.1.8        PLANS AND BENEFIT ARRANGEMENTS.

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


                                 Page 109 of 195

<PAGE>



         8.1.9        COMPLIANCE WITH LAWS.

         Each of the Borrowers shall and shall cause each of its Subsidiaries to
comply with all  applicable  Laws,  including  all  Environmental  Laws,  in all
respects, PROVIDED that it shall not be deemed to be a violation of this Section
8.1.9 if any  failure  to  comply  with  any Law  would  not  result  in  fines,
penalties,  remediation  costs,  other similar  liabilities or injunctive relief
which in the aggregate would constitute a Material Adverse Change.

         8.1.10       USE OF PROCEEDS.

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

         8.1.11       SUBORDINATION OF INTERCOMPANY LOANS.

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

   8.2   NEGATIVE COVENANTS.

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

         8.2.1        INDEBTEDNESS.

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

                      (i)   Indebtedness under the Loan Documents;

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

                      (iii) Indebtedness  secured  by  Purchase  Money  Security
Interests,  capitalized  lease  financing, and operating  lease financing to the
extent of so-called  "synthetic leasing,"  PROVIDED  THAT the  aggregate  amount
of loans and deferred payments secured by such Purchase Money Security Interests
and lease financing shall not exceed  $5,000,000  in  the  aggregate  (excluding
for the purpose of this computation any loans or deferred  payments  secured  by
Liens  described  on  Schedule 1.1(P) and  any Indebtedness incurred by Hoosier 
Park, LP or Anderson Park, Inc.); and

                                Page 110of 195


<PAGE>



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

         8.2.2        NO LIENS; NEGATIVE PLEDGE.

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

         8.2.3        GUARANTIES.

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

         8.2.4        LOANS AND INVESTMENTS.

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

                      (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 or transactions not prohibited
 by Section 8.2.5; and

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


                                 Page 111 of 195

<PAGE>



         8.2.5        LIQUIDATIONS, MERGERS, CONSOLIDATIONS, ACQUISITIONS.

         Each of the Loan  Parties  shall  not,  and shall not permit any of its
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 (meaning more than 662/3%) of the assets,  capital stock or
ownership interests of any other Person, PROVIDED THAT

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

         (2) any Loan Party may merge, consolidate or acquire by purchase, lease
or  otherwise,  (A)  such  all or  substantially  all of the  capital  stock  or
ownership  interests of another Person or (B) such all or  substantially  all of
the 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 capital stock 
or ownership interests in such Person which is a  Controlling  Interest,  such 
Person shall execute a Joinder Agreement and join this  Agreement  as a Borrower
pursuant to Section 11.18 [Joinder of New Subsidiaries] on or before the date of
such  Permitted Acquisition;

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

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

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

If the total  consideration  to be paid in connection  with any  transaction  is
funded  from the  proceeds of the Loans and exceeds  $7,500,000,  the  Borrowers
shall demonstrate that it shall be in compliance with the covenants contained in
Sections  8.2.14  through  8.2.16 after  giving  effect to such  transaction  by
delivering  at  least  five  (5)  Business  Days  prior  to such  transaction  a
certificate  in the form of EXHIBIT 8.2.5  evidencing  such  compliance  and PRO
FORMA  financial  statements  of  the  Borrowers  and  such  Person  as if  such
acquisition  had occurred,  and the actual  Financial  Statements of such Person
used by the Borrowers to create EXHIBIT 8.2.5;

If any Loan Party acquires a Controlling  Interest in a Person with the proceeds
of the Loans  then such  Person  shall  become a Borrower  under this  Agreement
unless such transaction is otherwise a Permitted Investment;

                                 Page 112 of 195

<PAGE>





Notwithstanding  any other  provisions of this Section 8.2.5,  (i) no Loan Party
shall be restricted or  prohibited  under this Section 8.2.5 from  purchasing or
acquiring any Permitted  Investment,  and (ii) any Loan Party may acquire all or
substantially all or less than all or substantially  all of the assets,  capital
stock or ownership  interests of another Person so long as Loan proceeds are not
used for such purchase  PROVIDED THAT in the event that the total  consideration
paid in connection with such transaction exceeds $7,500,000, the Borrowers shall
demonstrate  that it shall be in  compliance  with the  covenants  contained  in
Sections  8.2.14  through  8.2.16 after  giving  effect to such  acquisition  by
delivery  at least  five  (5)  Business  Days  prior  to such  acquisition  of a
certificate  in the form of Exhibit 8.2.5  evidencing  such  compliance  and PRO
FORMA  financial  statements  of  the  Borrowers  and  such  Person  as if  such
acquisition  had occurred,  and the actual  financial  statements of such Person
used to create Exhibit 8.2.5.

         8.2.6        DISPOSITIONS OF ASSETS OR SUBSIDIARIES.

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

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

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

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

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

         8.2.7        AFFILIATE TRANSACTIONS.

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

                                 Page 113 of 195

<PAGE>



         8.2.8        SUBSIDIARIES, PARTNERSHIPS AND JOINT VENTURES.

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

         8.2.9        NO MATERIAL CHANGE IN BUSINESS.

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

         8.2.10       PLANS AND BENEFIT ARRANGEMENTS.

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

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

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

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

                      (iv)  permit the aggregate actuarial present value of all
benefit liabilities (whether or not  vested)  under  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 Multi-
employer  Plan  that  the  Borrowers  or any  member of  the ERISA  Group may be
required   to  make under any agreement relating to such Multiemployer Plan, or
any Law pertaining thereto;

                                 Page 114 of 195

<PAGE>



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

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

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

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

         8.2.11       FISCAL YEAR.

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

         8.2.12       ISSUANCE OF STOCK.

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


         8.2.13       CHANGES IN ORGANIZATIONAL DOCUMENTS.

         On or after June 19,  1998,  each of the Loan  Parties  shall not,  and
shall  not  permit  any  of its  Subsidiaries  to,  amend  in  any  respect  its
certificate of incorporation  (including any provisions or resolutions  relating
to capital  stock),  by-laws,  certificate of limited  partnership,  partnership
agreement,  certificate of formation,  limited  liability  company  agreement or
other  organizational  documents  without  providing at least ten (10)  calendar
days'  prior  written  notice to the Agent and the Banks and,  in the event such
change  would be  adverse  to the Banks as  determined  by the Agent in its sole
discretion, obtaining the prior written consent of the Required Banks.


                                 Page 115 of 195

<PAGE>



         8.2.14       MAXIMUM RATIO OF FUNDED DEBT TO EBITDA.

         The Loan Parties shall not permit the ratio of Consolidated Funded Debt
as of the last day of each of the  Borrowers'  fiscal  quarter  to  Consolidated
EBITDA for the four fiscal quarters ending on that date to exceed 2.75 to 1. For
purposes of this covenant, EBITDA shall include the rolling four quarter results
of any entity  being  acquired  by the  Borrowers  if such  entity will become a
Borrower hereunder.

         8.2.15       INTEREST COVERAGE RATIO.

         The Loan Parties shall not permit the ratio of Consolidated EBIT to the
sum of Consolidated Interest Expense plus Consolidated  Dividends,  in each case
for the four fiscal  quarters  ending on the last day of each of the  Borrowers'
fiscal quarters to be less than 2.5 to 1.

         8.2.16       MINIMUM TANGIBLE NET WORTH.

         The Loan Parties shall not permit the  Consolidated  Tangible Net Worth
to be less than the Base Net Worth PLUS an amount equal to Fifty  Percent  (50%)
of the  Borrowers'  Consolidated  net income  cumulatively  for every year after
fiscal year 1997, PLUS  Seventy-Five  Percent (75%) of the net proceeds from any
public and/or private  offering and/or sale of any common and/or preferred stock
and/or other equity  security,  and/or any note,  debenture,  or other  security
convertible,  in whole or in part, to common and/or preferred stock and/or other
equity security.


         8.2.17       MARGIN STOCK.

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

         8.2.18       OTHER AGREEMENTS.

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

   8.3   REPORTING REQUIREMENTS.

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


                                 Page 116 of 195
<PAGE>



         8.3.1        QUARTERLY FINANCIAL STATEMENTS.

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

         8.3.2        ANNUAL FINANCIAL STATEMENTS.

         As soon as available  and in any event within one hundred  twenty (120)
days after the end of each fiscal year of the Borrowers, financial statements of
the Borrowers  consisting of a consolidated  balance sheet as of the end of such
fiscal year, and related consolidated statements of income, stockholders' equity
and cash flows for the  fiscal  year then  ended for all of the  Borrowers  on a
consolidated  basis,  all in reasonable  detail and setting forth in comparative
form the  financial  statements  as of the end of and for the  preceding  fiscal
year, 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.

         8.3.3        CERTIFICATE OF THE BORROWER.

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

         8.3.4        NOTICE OF DEFAULT.

         Promptly  after  any  officer  of  any  Loan  Party has learned of the 
occurrence of an Event of Default

                                 Page 117 of 195

<PAGE>



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

         8.3.5        NOTICE OF LITIGATION.

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

         8.3.6        CERTAIN EVENTS.

         Written notice to the Agent:

                      (i) at least sixty (60) calendar days prior thereto,  with
respect  to  any  proposed  sale or transfer of assets pursuant to Section 8.2.
(iv), and

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

         8.3.7        OTHER REPORTS AND INFORMATION.

         Promptly upon their becoming available to the Borrower:

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

                      (ii)  any reports, notices or proxy statements generally 
distributed by the Borrowers to  its  stockholders  on a date no later than 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 Borrowers 
with the Securities and Exchange Commission,

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

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


                                 Page 118 of 195

<PAGE>



         8.3.8        NOTICES REGARDING PLANS AND BENEFIT ARRANGEMENTS.

                      8.3.8.1                  CERTAIN EVENTS

                      Promptly  upon becoming aware of the occurrence  thereof, 
notice (including the nature of the event and,  when  known,  any action  taken 
or threatened by the Internal Revenue Service or the PBGC with respect thereto)
of:

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

                            (ii) any Prohibited Transaction which could subject 
the Borrowers or any other member of the ERISA Group to a civil penalty assessed
pursuant to Section 502(i) of ERISA or a tax  imposed  by  Section  4975 of the 
Internal Revenue Code in connection  with  any  Plan,  any  Benefit  Arrangement
or  any  trust  created thereunder,

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

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

                            (v) any cessation of operations (by the Borrowers or
any  othe   member of  the  ERISA Group) at  a  facility  in  the  circumstances
described in Section 4062(e) of ERISA,

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

                            (vii) a failure by the Borrowers or any other membe
of the ERISA Group to make a payment to a Plan required to avoid imposition of 
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.

                                 Page 119 of 195

<PAGE>




                 8.3.8.2  NOTICES OF INVOLUNTARY TERMINATION AND ANNUAL REPORTS.

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

                      8.3.8.3 NOTICE OF VOLUNTARY TERMINATION.

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

                                   9. DEFAULT

   9.1 EVENTS OF DEFAULT.

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

         9.1.1        PAYMENTS UNDER LOAN DOCUMENTS.

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

         9.1.2        BREACH OF WARRANTY.

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


                                 Page 120 of 195

<PAGE>



         9.1.3        BREACH OF NEGATIVE COVENANTS OR VISITATION RIGHTS.

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

         9.1.4        BREACH OF OTHER COVENANTS.

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

         9.1.5        DEFAULTS IN OTHER AGREEMENTS OR INDEBTEDNESS.

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

         9.1.6        OTHER MATERIAL OBLIGATIONS.

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

         9.1.7        FINAL JUDGMENTS OR ORDERS.

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

         9.1.8        LOAN DOCUMENT UNENFORCEABLE.

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

                                Page 121 of 195

<PAGE>

         9.1.9        UNINSURED LOSSES; PROCEEDINGS AGAINST ASSETS.

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

         9.1.10       NOTICE OF LIEN OR ASSESSMENT.

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

         9.1.11       INSOLVENCY.

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

         9.1.12       EVENTS RELATING TO PLANS AND BENEFIT ARRANGEMENTS.

         Any of the following occurs:  (i) any Reportable Event, which the Agent
determines in good faith constitutes  grounds for the termination of any Plan by
the PBGC or the  appointment  of a trustee to  administer or liquidate any Plan,
shall  have  occurred  and be  continuing;  (ii)  proceedings  shall  have  been
instituted or other action taken to terminate any Plan, or a termination  notice
shall  have  been  filed  with  respect  to any Plan;  (iii) a trustee  shall be
appointed to administer  or liquidate any Plan;  (iv) the PBGC shall give notice
of its intent to  institute  proceedings  to  terminate  any Plan or Plans or to
appoint a trustee to administer  or liquidate any Plan;  and, in the case of the
occurrence of (i), (ii), (iii) or (iv)

                                 Page 122 of 195

<PAGE>



above,  the Agent  determines  in good faith  that the amount of the  Borrowers'
liability is likely to exceed 10% of its  Consolidated  Tangible Net Worth;  (v)
the  Borrowers  or any  member  of the  ERISA  Group  shall  fail  to  make  any
contributions when due to a Plan or a Multiemployer  Plan; (vi) the Borrowers or
any other  member of the ERISA  Group  shall make any  amendment  to a Plan with
respect to which  security is  required  under  Section 307 of ERISA;  (vii) the
Borrowers or any other member of the ERISA Group shall  withdraw  completely  or
partially from a Multiemployer Plan; (viii) the Borrowers or any other member of
the ERISA Group shall  withdraw  (or shall be deemed  under  Section  4062(e) of
ERISA to withdraw) from a Multiple  Employer Plan; or (ix) any applicable Law is
adopted,  changed  or  interpreted  by any  Official  Body  with  respect  to or
otherwise   affecting  one  or  more  Plans,   Multiemployer  Plans  or  Benefit
Arrangements  and,  with respect to any of the events  specified  in (v),  (vi),
(vii),  (viii)  or  (ix),  the  Agent  determines  in good  faith  that any such
occurrence  would be reasonably  likely to materially  and adversely  affect the
total enterprise represented by the Borrowers and the other members of the ERISA
Group;

         9.1.13       CESSATION OF BUSINESS.

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

         9.1.14       CHANGE OF CONTROL.

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

         9.1.15       INVOLUNTARY PROCEEDINGS.

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

         9.1.16       VOLUNTARY PROCEEDINGS.

                                 Page 123 of 195

<PAGE>



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

   9.2   CONSEQUENCES OF EVENT OF DEFAULT.

         9.2.1        EVENTS OF DEFAULT OTHER THAN BANKRUPTCY, INSOLVENCY OR 
                      REORGANIZATION PROCEEDINGS.

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

         9.2.2        BANKRUPTCY, INSOLVENCY OR REORGANIZATION PROCEEDINGS.

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

         9.2.3        SET-OFF.

         If an Event of Default shall occur and be continuing,  any Bank to whom
any  Obligation  is owed by any Loan  Party  hereunder  or under any other  Loan
Document or any participant of such Bank which has agreed in writing to be bound
by the  provisions  of Section  10.13  [Equalization  of Banks] and any  branch,
Subsidiary or Affiliate of such Bank or participant  anywhere in the world shall
have the right,  in addition to all other rights and  remedies  available to it,
without notice to such Loan Party, to set-off

                                 Page 124 of 195

<PAGE>



against  and  apply to the then  unpaid  balance  of all the Loans and all other
Obligations  of the Borrowers and the other Loan Parties  hereunder or under any
other Loan  Document  any debt owing to, and any other  funds held in any manner
for the  account  of,  the  Borrowers  or such  other Loan Party by such Bank or
participant or by such branch,  Subsidiary or Affiliate,  including all funds in
all deposit accounts (whether time or demand, general or special,  provisionally
credited or finally credited,  or otherwise) now or hereafter  maintained by the
Borrowers or such other Loan Party for its own account (but not including  funds
held in custodian or trust accounts or the "Horseman's  Account") with such Bank
or participant or such branch,  Subsidiary or Affiliate.  Such right shall exist
whether  or not any Bank or the Agent  shall  have made any  demand  under  this
Agreement or any other Loan Document, whether or not such debt owing to or funds
held for the account of the Borrowers or such other Loan Party is or are matured
or unmatured and  regardless of the existence or adequacy of any Guaranty or any
other security, right or remedy available to any Bank or the Agent; and

         9.2.4        SUITS, ACTIONS, PROCEEDINGS.

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

         9.2.5        APPLICATION OF PROCEEDS.

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

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

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

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

         9.2.6        OTHER RIGHTS AND REMEDIES.


                                 Page 125 of 195

<PAGE>



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

   9.3   REASONABLE NOTICE.

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

                                  10. THE AGENT

   10.1 APPOINTMENT.

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

   10.2  DELEGATION OF DUTIES.

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

   10.3  NATURE OF DUTIES; INDEPENDENT CREDIT INVESTIGATION.

   The Agent shall have no duties or responsibilities except those expressly set
forth in this Agreement and no implied covenants,  functions,  responsibilities,
duties,  obligations,  or  liabilities  shall be read  into  this  Agreement  or
otherwise exist. The duties of the Agent shall be mechanical and  administrative
in nature;  the Agent shall not have by reason of this  Agreement a fiduciary or
trust  relationship  in respect  of any Bank;  and  nothing  in this  Agreement,
expressed or implied,  is intended to or shall be so construed as to impose upon
the Agent any  obligations in respect of this Agreement  except as expressly set
forth herein.  Without limiting the generality of the foregoing,  the use of the
term "agent" in this  Agreement  with  reference to the Agent is not intended to
connote any  fiduciary or other implied (or express)  obligations  arising under
agency doctrine of any applicable Law. Instead, such term is used merely as a

                                 Page 126 of 195

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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.

   10.4  ACTIONS IN DISCRETION OF AGENT; INSTRUCTIONS FROM THE BANKS.

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

   10.5  REIMBURSEMENT AND INDEMNIFICATION OF AGENT BY THE BORROWER.

   The  Borrowers  unconditionally  agree to pay or reimburse the Agent and hold
the Agent  harmless  against (a)  liability  for the  payment of all  reasonable
out-of-pocket costs, expenses and disbursements,  including fees and expenses of
counsel appraisers and environmental  consultants,  incurred by the Agent (i) in
connection with the development,  negotiation, preparation, printing, execution,
administration,  syndication,  interpretation  and performance of this Agreement
and the other Loan Documents, (ii) relating to any requested amendments, waivers
or consents  pursuant to the  provisions  hereof,  (iii) in connection  with the
enforcement  of this  Agreement  or any other Loan  Document  or  collection  of
amounts due hereunder or thereunder or the proof and  allowability  of any claim
arising under this Agreement or any other Loan  Document,  whether in bankruptcy
or  receivership   proceedings  or  otherwise,   and  (iv)  in  any  workout  or
restructuring  or in connection with the protection,  preservation,  exercise or
enforcement  of any of the terms hereof or of any rights  hereunder or under any
other  Loan  Document  or in  connection  with any  foreclosure,  collection  or
bankruptcy proceedings, and (b) all liabilities,  obligations,  losses, damages,
penalties,  actions,  judgments,  suits, costs, expenses or disbursements of any
kind or nature  whatsoever  which may be imposed  on,  incurred  by or  asserted
against the Agent,  in its  capacity as such,  in any way relating to or arising
out of this Agreement or any

                                 Page 127 of 195

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other Loan  Documents or any action  taken or omitted by the Agent  hereunder or
thereunder,  PROVIDED THAT the Borrowers  shall not be liable for any portion of
such liabilities,  obligations,  losses, damages, penalties, actions, judgments,
suits,  costs,  expenses or  disbursements  if the same results from the Agent's
gross  negligence  or willful  misconduct,  or if the  Borrowers  were not given
notice of the subject claim and the  opportunity  to  participate in the defense
thereof,  at its expense  (except that the Borrowers  shall remain liable to the
extent such  failure to give notice does not result in a loss to the  Borrower),
or if the same results from a compromise  or settlement  agreement  entered into
without the consent of the Borrower,  which shall not be unreasonably  withheld.
In the event of a suspected  Material  Adverse  Change,  the Borrowers  agree to
reimburse and pay all reasonable  out-of-pocket  expenses of the Agent's regular
employees  and  agents  engaged to perform  audits of the Loan  Parties'  books,
records and business properties.

   10.6  EXCULPATORY PROVISIONS; LIMITATION OF LIABILITY.

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

   10.7  REIMBURSEMENT AND INDEMNIFICATION OF AGENT BY BANKS.


                                 Page 128 of 195

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

   10.8  RELIANCE BY AGENT.

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

   10.9  NOTICE OF DEFAULT.

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

   10.10              NOTICES.

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

                                 Page 129 of 195

<PAGE>




   10.11              BANKS IN THEIR INDIVIDUAL CAPACITIES.

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

   10.12              HOLDERS OF NOTES.

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

   10.13              EQUALIZATION OF BANKS.

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

                                 Page 130 of 195

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   10.14              SUCCESSOR AGENT.

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

   10.15              AVAILABILITY OF FUNDS.

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

   10.16              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

                                 Page 131 of 195

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due to the Banks under this  Agreement.  In the event an error in computing  any
amount payable to any Bank is made,  the Agent,  the Borrowers and each affected
Bank shall,  forthwith  upon discovery of such error,  make such  adjustments as
shall be required to correct such error, and any  compensation  therefor will be
calculated at the Federal Funds Effective Rate.

   10.17              BENEFICIARIES.

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

                                11. MISCELLANEOUS

   11.1  MODIFICATIONS, AMENDMENTS OR WAIVERS.

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

         11.1.1       INCREASE OF COMMITMENT; EXTENSION OR EXPIRATION DATE.

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

         11.1.2       EXTENSION OF PAYMENT; REDUCTION OF PRINCIPAL INTEREST OR
                      FEES; MODIFICATION OF TERMS OF PAYMENT.

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


                                 Page 132 of 195

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         11.1.3       MISCELLANEOUS.

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

   11.2  NO IMPLIED WAIVERS; CUMULATIVE REMEDIES; WRITING REQUIRED.

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

   11.3 REIMBURSEMENT AND INDEMNIFICATION OF BANKS BY THE BORROWERS; TAXES.

   The Borrowers jointly and severally agree  unconditionally upon demand to pay
or  reimburse  to each Bank  (other than the Agent,  as to which the  Borrowers'
Obligations are set forth in Section 10.5  [Reimbursement and Indemnification of
Agent by the Borrower]) and to save such Bank harmless against (i) liability for
the payment of all reasonable  out-of-pocket  costs,  expenses and disbursements
(including fees and expenses of counsel for each Bank except with respect to (a)
and (b) below),  incurred by such Bank (a) in connection with the administration
and interpretation of this Agreement,  and other instruments and documents to be
delivered  hereunder,  (b)  relating  to any  amendments,  waivers  or  consents
pursuant to the provisions  hereof,  (c) in connection  with the  enforcement of
this  Agreement  or any other  Loan  Document,  or  collection  of  amounts  due
hereunder or thereunder or the proof and allowability of any claim arising under
this Agreement or any other Loan Document, whether in bankruptcy or receivership
proceedings  or  otherwise,  and  (d)  in any  workout  or  restructuring  or in
connection with the protection,  preservation, exercise or enforcement of any of
the terms hereof or of any rights  hereunder or under any other Loan Document or
in connection with any  foreclosure,  collection or bankruptcy  proceedings,  or
(ii)  all  liabilities,   obligations,   losses,  damages,  penalties,  actions,
judgments,  suits,  costs,  expenses  or  disbursements  of any  kind or  nature
whatsoever  which may be imposed on, incurred by or asserted  against such Bank,
in its capacity as such, in any way relating to or arising out of this Agreement
or any  other  Loan  Documents  or any  action  taken or  omitted  by such  Bank
hereunder or thereunder, PROVIDED that the Borrowers shall not be liable for any
portion of such liabilities,  obligations,  losses, damages, penalties, actions,
judgments, suits, costs, expenses or

                                 Page 133 of 195

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

   11.4  HOLIDAYS.

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

   11.5  FUNDING BY BRANCH, SUBSIDIARY OR AFFILIATE.

         11.5.1       NOTIONAL FUNDING.

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

         11.5.2       ACTUAL FUNDING.


                                 Page 134 of 195

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

   11.6  NOTICES.

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

   11.7  SEVERABILITY.

   The  provisions  of this  Agreement  are  intended  to be  severable.  If any
provision of this Agreement shall be held invalid or  unenforceable  in whole or
in part in any jurisdiction,  such provision shall, as to such jurisdiction,  be
ineffective to the extent of such invalidity or unenforceability  without in any
manner   affecting  the  validity  or   enforceability   thereof  in  any  other
jurisdiction or the remaining provisions hereof in any jurisdiction.

   11.8  GOVERNING LAW.

   Each Letter of Credit and Section 2.9 [Letter of Credit Subfacility] shall be
subject to the Uniform  Customs  and  Practice  for  Documentary  Credits  (1993
Revision),  International  Chamber of Commerce  Publication No. 500, as the same
may be revised or amended from time to time, and to the extent not  inconsistent
therewith,  the internal laws of the  Commonwealth of Kentucky without regard to
its conflict

                                 Page 135 of 195

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of laws  principles  and the balance of this  Agreement  shall be deemed to be a
contract  under the Laws of the  Commonwealth  of Kentucky  and for all purposes
shall be governed by and construed and enforced in accordance  with the internal
laws of the  Commonwealth  of Kentucky  without  regard to its  conflict of laws
principles.

   11.9  NO PRIOR UNDERSTANDING.

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

   11.10              DURATION; SURVIVAL.

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

   11.11              SUCCESSORS AND ASSIGNS.

         (i) This Agreement shall be binding upon and shall inure to the benefit
of the Banks, the Agent,  the Loan Parties and their  respective  successors and
assigns,  except that none of the Loan Parties may assign or transfer any of its
rights and Obligations  hereunder or any interest herein.  Each Bank may, at its
own cost, make assignments of or sell  participations  in all or any part of its
Commitments  and the Loans  made by it to one or more  banks or other  entities,
subject  to the  consent  of the  Borrowers  and the Agent  with  respect to any
assignee,  such consent not to be  unreasonably  withheld,  PROVIDED THAT (1) no
consent of the Borrowers shall be required (A) if an Event of Default exists and
is continuing,  or (B) in the case of an assignment by a Bank to an Affiliate of
such Bank,  and (2) any assignment by a Bank to a Person other than an Affiliate
of such Bank may not be made in amounts  less than the lesser of  $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 duly  executed  and  delivered  Assignment  and
Assumption Agreement,  the assignee shall have, to the extent of such assignment
(unless otherwise provided therein),  the same rights,  benefits and obligations
as it would have if it had been a  signatory  Bank  hereunder,  the  Commitments
shall be adjusted  accordingly,  and upon  surrender of any Note subject to such
assignment,

                                 Page 136 of 195

<PAGE>



the Borrowers  shall execute and deliver a new Note to the assignee in an amount
equal to the amount of the Revolving Credit  Commitment  assumed by it and a new
Revolving  Credit Note to the assigning Bank in an amount equal to the Revolving
Credit Commitment retained by it hereunder. Any Bank which assigns any or all of
its Commitment or Loans to a Person other than an Affiliate of such Bank and not
the  Borrowers  shall pay to the Agent a service fee in the amount of  $3,500.00
for each assignment. In the case of a participation,  the participant shall only
have the rights specified in Section 9.2.3 [Set-off] (the  participant's  rights
against such Bank in respect of such  participation to be those set forth in the
agreement executed by such Bank in favor of the participant relating thereto and
not to include  any voting  rights  except  with  respect to changes of the type
referenced in Sections 11.1.1 [Increase of Commitment,  Etc.], 11.1.2 [Extension
of Payment,  Etc.], all of such Bank's  obligations  under this Agreement or any
other Loan Document shall remain unchanged,  and all amounts payable by any Loan
Party  hereunder or thereunder  shall be determined as if such Bank had not sold
such participation.

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

         (ii) Any assignee or participant  which is not  incorporated  under the
Laws of the United  States of America or a state  thereof  shall  deliver to the
Borrowers and the Agent the form of certificate  described in Section 11.17 [Tax
Withholding  Clause] relating to federal income tax  withholding.  Each Bank may
furnish any  publicly  available  information  concerning  any Loan Party or its
Subsidiaries  and  any  other  information  concerning  any  Loan  Party  or its
Subsidiaries  in the  possession of such Bank from time to time to assignees and
participants  (including  prospective assignees or participants),  PROVIDED THAT
such assignees and  participants  agree to be bound by the provisions of Section
11.12 [Confidentiality].

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


                                 Page 137 of 195

<PAGE>



   11.12              CONFIDENTIALITY.

         11.12.1      GENERAL.

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

         11.12.2      SHARING INFORMATION WITH AFFILIATES OF THE BANKS.

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

   11.13              COUNTERPARTS.

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

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


                                 Page 138 of 195

<PAGE>


   11.14              AGENT'S OR BANK'S CONSENT.

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

   11.15              EXCEPTIONS.

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

   11.16              CONSENT TO FORUM; WAIVER OF JURY TRIAL.
                      -------------------------------------- 

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

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

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

                                 Page 139 of 195

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WRITING,  AND THIS WAIVER SHALL APPLY TO ANY  SUBSEQUENT  AMENDMENTS,  RENEWALS,
SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT,  THE REVOLVING CREDIT NOTES, THE
SWING LINE NOTE OR THE OTHER LOAN  DOCUMENTS.  IN THE EVENT OF LITIGATION,  THIS
AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

   11.17              TAX WITHHOLDING CLAUSE.

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

   11.18              JOINDER OF NEW SUBSIDIARIES.

   Any Subsidiary of the Borrowers which is required to join this Agreement as a
Borrower  pursuant  to Section  8.2.5  [Liquidations,  Mergers,  Consolidations,
Acquisitions] and/or 8.2.8 [Subsidiaries, Partnerships and Joint Ventures] shall
execute and deliver to the Agent (i) a Joinder  Agreement in  substantially  the
form attached hereto as EXHIBIT  1.1(G)(1)  pursuant to which it shall join as a
Borrower  each of the  documents to which the  Borrowers  are parties;  and (ii)
documents in the forms described in

                                 Page 140 of 195

<PAGE>



Section 7.1 [First  Loans and  Letters of Credit]  modified  as  appropriate  to
relate to such Subsidiary. The Loan Parties shall deliver such Joinder Agreement
to the Agent within five (5) Business  Days after the date of the filing of such
Subsidiary's  articles of incorporation if the Subsidiary is a corporation,  the
date of the filing of its certificate of limited  partnership if it is a limited
partnership  or the date of its  organization  if it is an entity  other  than a
limited  partnership  or  corporation,  or the  closing  date of an  acquisition
agreement in the case of a Permitted Acquisition.

   11.19              NO JOINT VENTURE.

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

   11.20              INDEMNIFICATION.

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

   11.21              SURVIVAL OF COVENANTS.

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

   11.22              NO COURSE OF DEALING.

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

   11.23              TIME OF THE ESSENCE.

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


                                 Page 141 of 195

<PAGE>



   11.25              FURTHER ASSURANCES.

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

   11.26              INCORPORATION BY REFERENCE.

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

   11.27              ENTIRE AGREEMENT.

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

   11.28              JOINT AND SEVERAL LIABILITY; CERTAIN LIMITATIONS.
   The obligations of all of the Loan Parties under the Loan Documents are joint
and several, PROVIDED THAT the obligations of each Borrower OTHER THAN Churchill
Downs  Incorporated,  and each  Subsidiary  that becomes a Borrower  pursuant to
Section 11.18 shall be limited to an amount not to exceed the GREATER of (1) the
aggregate benefit received by such Borrower and/or  Subsidiary;  (2) ninety-five
percent (95%) of the net worth of that Borrower and/or Subsidiary on the date it
becomes a party to this Agreement;  or (3) ninety-five  percent (95%) of the net
worth of that Borrower  and/or  Subsidiary as of the date of an Event of Default
leading to the  exercise  of remedies by the Banks.  The  foregoing  limitations
shall not be applicable to Churchill Downs Incorporated, whose obligations shall
not be limited.

   11.30              ACKNOWLEDGMENT.

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

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

                                 Page 142 of 195

<PAGE>




                                     CHURCHILL DOWNS INCORPORATED


                                     By \S\ROBERT L. DECKER
                                     Title: SR V.P. FINANCE & DEVELOPMENT & CEO
                                     Date: JUNE 17, 1998


                                     CHURCHILL DOWNS MANAGEMENT COMPANY


                                     By \S\ROBERTL. DECKER
                                     Title: TREASURER
                                     Date: JUNE 17, 1998


                                     CHURCHILL DOWNS INVESTMENT COMPANY


                                     By \S\ROBERTL. DECKER
                                     Title: PRESIDENT
                                     Date: June 17, 1998


                                     RACING CORPORATION OF AMERICA


                                     By\S\ ROBERT L. DECKER
                                     Title: TREASURER
                                     Date: JUNE 17, 1998



                                 Page 143 of 195

<PAGE>




                                     ELLIS PARK RACE COURSE, INC.


                                     By\S\ROBERT L. DECKER
                                     Title: TREASURER
                                     Date: JUNE 17, 1998


                                     PNC BANK, NATIONAL ASSOCIATION,
                                     individually and as Agent


                                     By\S\SUSAN C. SNYDER
                                     Title: VICE PRESIDENT
                                     Date: JUNE 17,1998


                                     BANK ONE, KENTUCKY, NA


                                     By\S\H JOSEPH BRENNER
                                     Title: SENIOR VICE PRESIDENT
                                     Date: JUNE 17, 1998


                                     STAR BANK, NA

                                     By\S\RICHARD W NELTNER
                                     Title: VICE PRESIDENT
                                     Date: JUNE 18,1998


                                Page 144 of 195
<PAGE>



                                 EXHIBIT 1.1(A)


                              ASSIGNMENT AGREEMENT

   This is an Assignment Agreement (this "Agreement") dated as of _______, ____,
among PNC BANK,  NATIONAL  ASSOCIATION,  a  _________________________,  as Agent
under the Credit Agreement  referenced below (the "Agent") , as one of the Banks
under that  Credit  Agreement  (the  "Assignor")  and  _____________________,  a
___________ [corporation] [national banking association].

   1.  DEFINITIONS.  Terms used and not  otherwise  defined  in this  Assignment
Agreement shall have the meanings given them in the Credit Agreement dated as of
June ___, 1998,  among Churchill  Downs  Incorporated,  a Kentucky  corporation,
Churchill  Management  Company,   Churchill  Downs  Investment  Company,  Racing
Corporation  of  America,  Ellis  Park  Race  Course,  Inc.  (collectively,  the
"Borrowers" and each individually a "Borrower"), PNC Bank, National Association,
as Agent and PNC Bank,  National  Association,  Bank One, Kentucky,  NA and Star
Bank , NA (collectively the "Banks" and each individually a "Bank") (as the same
may be  amended,  modified  and/or  restated  from  time to  time,  the  "Credit
Agreement").

   2.  ASSIGNMENT.  The Assignor  hereby  assigns to [INSERT NAME OF ASSIGNEE IN
FULL]  (the  "Assignee")  all of  its  rights,  and  delegates  to the  Assignee
obligations,  under the Loan Documents as a "Bank" but only to the extent of the
"Assignee's Commitment Amount" as provided in this Agreement.

   3. ASSIGNEE'S COMMITMENT AMOUNT. The Assignee's Commitment Amount assigned in
this  Agreement is  _____________________  Dollars  ($_______).  The  Assignee's
resulting Commitment
Percentage is _______ percent (___%).

   4. OTHER BANKS.  The remaining  Commitment  Amount of the Assignor  resulting
after  the  assignment  to the  Assignee  under  this  Assignment  Agreement  is
____________________   Dollars   ($_________)   and  the  resulting   Commitment
Percentage of the Assignor is __________  percent (___%). The Commitment Amounts
of the  following  Banks  and their  respective  Commitment  Percentages  are as
follows following the assignment provided in this Assignment Agreement:

   BANK
   COMMITMENT AMOUNT                     COMMITMENT PERCENTAGE

   ---------------------                      $-----------
                      -------%

   ---------------------                      $-----------
                      -------%

   ---------------------                      $-----------
                      -------%

   5.  ASSIGNEE'S  RIGHTS AND  OBLIGATIONS  UNDER LOAN  DOCUMENTS.  The Assignee
shall, by virtue of this Assignment Agreement,  be entitled to all of the rights
of a "Bank" under the Credit Agreement and the


                                Page 145 of 195
<PAGE>



other Loan  Documents,  and have all of the  obligations  of a "Bank"  under the
Credit  Agreement  and the other Loan  Documents,  to the same extent and to the
same effect as if the Assignee had actually signed the Credit  Agreement and the
other Loan Documents.

   6. NOTICES.  Any notice hereunder to the Assignee,  the Assignor or the Agent
shall be in writing and, if delivered by hand shall be deemed to have been given
when delivered; if delivered by facsimile (and facsimile is otherwise authorized
in the Credit Agreement as a manner of communicating the notice) shall be deemed
to have been given when sent; and if mailed,  shall be deemed to have been given
two (2) days after the date when sent by registered or certified  mail,  postage
prepaid,  and  addressed  to the  Assignee,  the  Assignor or the Agent at their
respective addresses shown below, or at such other address as either of them may
by written notice to the other have  designated as its address for such purpose.
The addresses for notice purposes are as follows:

If to the Agent:      PNC Bank, National Association
                      Citizens Plaza
                      Louisville, Kentucky 40296
                      ATTN: ____________________
                      Facsimile No. (502) 581-2302

With a copy to:       Charles R. Keeton, Esq.
                      Brown, Todd & Heyburn PLLC
                      400 W. Market Street, 32nd Floor
                      Louisville, Kentucky 40202-3363
                      Facsimile No. (502) 581-1087

If to the Assignor:         ______________________________
                      ==============================
                      ------------------------------
                      Facsimile No.: ______________

With a copy to:       ______________________________
                      ==============================
                      ------------------------------
                      Facsimile No.:_______________

If to the Assignee:         ______________________________
                      ==============================
                      ------------------------------
                      Facsimile No.: ______________


With a copy to:       ______________________________
                      ==============================
                      ------------------------------
                      Facsimile No.:_______________


                                Page 146 of 195
<PAGE>





   7. PAYMENT OF SERVICING  FEE. The Assignee  shall pay a servicing  fee to the
Agent in the amount of Three Thousand Five Hundred Dollars ($3,500.00)  together
with execution and delivery of this Assignment.

   8.    MISCELLANEOUS.

         (a) This Assignment Agreement and all of the other Loan Documents shall
be  construed  as  contracts  made  under  and  governed  by  the  laws  of  the
Commonwealth  of Kentucky,  without  regard to its conflicts of laws rules.  All
obligations of the Assignee and the rights of the Agent expressed  herein or any
of the other Loan  Documents  shall be in addition to and not in  limitation  of
those provided by applicable law.

         (b) This Agreement and the other Loan  Documents  constitute the entire
agreement of the parties with respect to the subject  matter hereof and thereof.
No change,  modification,  addition or termination  of this  Agreement  shall be
enforceable  unless in writing and signed by the party against whom  enforcement
is sought.

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

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

         (e) THE ASSIGNEE  CONSENTS TO ONE OR MORE ACTIONS BEING  INSTITUTED AND
MAINTAINED IN THE JEFFERSON  COUNTY,  KENTUCKY,  CIRCUIT COURT AND/OR THE UNITED
STATES  DISTRICT  COURT FOR THE WESTERN  DISTRICT  OF  KENTUCKY  (AT THE AGENT'S
DISCRETION) TO ENFORCE THIS ASSIGNMENT AGREEMENT AND/OR ONE OR MORE OF THE OTHER
LOAN  DOCUMENTS,  AND WAIVE ANY  OBJECTION TO ANY SUCH ACTION BASED UPON LACK OF
PERSONAL OR SUBJECT MATTER  JURISDICTION OR IMPROPER VENUE.  THE ASSIGNEE AGREES
THAT ANY PROCESS OR OTHER LEGAL  SUMMONS IN  CONNECTION  WITH ANY SUCH ACTION OR
PROCEEDING  MAY BE SERVED BY MAILING A COPY  THEREOF BY CERTIFIED  MAIL,  OR ANY
SUBSTANTIALLY  SIMILAR FORM OF MAIL,  ADDRESSED TO IT AS PROVIDED IN PARAGRAPH 6
OF THIS  ASSIGNMENT  AGREEMENT.  THE  ASSIGNEE  ALSO  AGREES  THAT IT SHALL  NOT
COMMENCE OR  MAINTAIN  ANY ACTION IN ANY COURT,  ADMINISTRATIVE  AGENCY OR OTHER
TRIBUNAL OTHER THAN THE JEFFERSON COUNTY, KENTUCKY,  CIRCUIT COURT OR THE UNITED
STATES DISTRICT COURT FOR THE WESTERN  DISTRICT OF KENTUCKY WITH RESPECT TO THIS
ASSIGNMENT AGREEMENT,  ANY OTHER OF THE LOAN DOCUMENTS,  ANY OF THE TRANSACTIONS
PROVIDED  FOR OR  CONTEMPLATED  IN ANY OF THE LOAN  DOCUMENTS,  OR ANY  CAUSE OF
ACTION OR  ALLEGED  CAUSE OF ACTION  ARISING  OUT OF OR IN  CONNECTION  WITH ANY
DEBTOR AND CREDITOR  RELATIONSHIP  BETWEEN THE BORROWER AND THE AGENT AND/OR THE
LENDERS THAT MAY EXIST FROM TIME TO TIME.


                                Page 147 of 195
<PAGE>



         (f)  The  Assignee  acknowledges  that it has  received  a copy of this
Assignment Agreement and each of the other Loan Documents,  as fully executed by
the parties thereto. The Assignee further acknowledges that it (a) has READ THIS
ASSIGNMENT  AGREEMENT AND THE OTHER LOAN  DOCUMENTS OR HAS CAUSED SUCH DOCUMENTS
TO BE EXAM INED BY THE ASSIGNEE'S REPRESENTATIVES OR ADVISORS; (b) is thoroughly
familiar with the transactions contemplated in this Assignment Agreement and the
other Loan  Documents;  and (c) has had the opportunity to ask such questions to
representatives  of the Agent,  the Assignor,  the Borrowers and the Guarantors,
and  receive  answers  thereto,  concerning  the  terms  and  conditions  of the
transactions  contemplated  in this  Assignment  Agreement  and the  other  Loan
Documents as each deems  necessary in connection with its decision to enter into
this Assignment Agreement.

         (g) THE AGENT, THE ASSIGNOR AND THE ASSIGNEE AFTER CONSULTING OR HAVING
HAD  THE  OPPORTUNITY  TO  CONSULT  WITH  COUNSEL,  KNOWINGLY,  VOLUNTARILY  AND
INTENTIONALLY  WAIVE ANY RIGHT EITHER OF THEM MAY HAVE TO A TRIAL BY JURY IN ANY
LITIGATION  BASED UPON OR ARISING OUT OF THIS ASSIGNMENT  AGREEMENT OR ANY OTHER
LOAN  DOCUMENT OR ANY COURSE OF CONDUCT,  DEALING,  STATEMENTS  (WHETHER ORAL OR
WRITTEN),  OR ACTIONS OF EITHER OF THEM. NEITHER THE AGENT, THE ASSIGNOR NOR THE
ASSIGNEE SHALL SEEK TO CONSOLIDATE,  BY COUNTERCLAIM OR OTHERWISE, ANY ACTION IN
WHICH A JURY  TRIAL HAS BEEN  WAIVED  WITH ANY OTHER  ACTION  WHICH A JURY TRIAL
CANNOT BE OR HAS NOT BEEN WAIVED.  THESE  PROVISIONS SHALL NOT BE DEEMED TO HAVE
BEEN MODIFIED IN ANY RESPECT OR RELINQUISHED  BY EITHER THE AGENT,  THE ASSIGNOR
OR THE ASSIGNEE EXCEPT BY A WRITTEN INSTRUMENT EXECUTED BY ALL OF THEM.

   IN WITNESS WHEREOF, the Agent, the Assignor and the Assignee have signed this
Assignment  Agreement as of the date set out in the preamble hereto but actually
on the date(s) set forth below.

                                     PNC BANK, National Association
                                     
                                     By
                                     Title:
                                     Date:

                                     [NAME OF ASSIGNOR]

                                     By
                                     Title:
                                     Date:

                                     [NAME OF ASSIGNEE]

                                     By
                                     Title:
                                     Date:


                                Page 148 of 195
<PAGE>




                            CONSENT BY THE BORROWERS

                 (TO BE INCLUDED AS AND WHEN REQUIRED UNDER SECTION 11.11 
                           OF THE CREDIT AGREEMENT.]

   Churchill Downs Incorporated,  Churchill Downs Management Company,  Churchill
Downs  Investment  Company,  Racing  Corporation  of America and Ellis Park Race
Course,  Inc.,  each  acknowledge  notice  of  and  consents  to  the  foregoing
Assignment.

                                     CHURCHILL DOWNS INCORPORATED

                                     By

                                     Title:

                                     Date:


                                     CHURCHILL DOWNS MANAGEMENT COMPANY


                                     By

                                     Title:

                                     Date:


                                     CHURCHILL DOWNS INVESTMENT COMPANY

                                     By

                                     Title:

                                     Date:



                                Page 149 of 195

<PAGE>



                                     RACING CORPORATION OF AMERICA


                                     By

                                     Title:

                                     Date:


                                     ELLIS PARK RACE COURSE, INC.


                                     By

                                     Title:

                                     Date:



                                Page 150 of 195


<PAGE>



                                EXHIBIT 1.1(G)(1)


                                JOINDER AGREEMENT

   This is a Joinder Agreement dated as of [MONTH,  DAY], [YEAR] among CHURCHILL
DOWNS INCORPORATED, a Kentucky Corporation, each of the BORROWERS (as defined in
the Credit Agreement defined below (as the same may be amended,  modified and/or
restated from time to time,  the "Credit  Agreement")),  [NAME OF NEWLY ACQUIRED
SUBSIDIARY]  a  __________   corporation   (hereinafter   referred  to  as  "New
Subsidiary"),  the BANKS (as  defined  in the Credit  Agreement),  and PNC BANK,
NATIONAL  ASSOCIATION,  in its  capacity  as agent of the Banks under the Credit
Agreement and this Joinder Agreement  (hereinafter  referred to in such capacity
as the "Agent").

                                    RECITALS

   A. The  Borrowers  have  requested  the Banks to provide a  revolving  credit
facility  to the  Borrowers  in an  aggregate  principal  amount  not to  exceed
$50,000,000  including a swing line of credit facility in an aggregate principal
amount not to exceed $10,000,000 which is a part of, and does not increase, that
revolving credit facility (the "Revolving Line of Credit").

   B. The  Revolving  Line of Credit  shall be used for  general  corporate  and
working capital  purposes as well as the acquisition of property,  equipment and
other entities.

   C. The Banks are willing to provide  such  Revolving  Line of Credit upon the
terms and conditions  hereinafter  set forth in the Credit  Agreement (as herein
defined and as the same may be amended,  modified  and/or  restated from time to
time).

   D. Among other things,  Section 8.2.5 of the Credit  Agreement  provides that
the Borrowers are prohibited  from  acquiring all of the ownership  interests in
another  Person,  substantially  all of the  assets  of  another  Person or of a
business or division of another  Person  unless the  Borrowers  satisfy  certain
requirements  listed  under  Paragraph   8.2.5(2),   including  the  requirement
contained  in Sub-  paragraph  8.2.5  (2)(i)  that such Person  shall  execute a
Joinder  Agreement  and join the  Credit  Agreement  as a Borrower  pursuant  to
Section  11.18  [Joinder  of New  Subsidiaries]  on or  before  the date of such
Acquisition.

   E. The Borrowers now seek to satisfy the  requirements set forth in Paragraph
8.2.5(2) so that the Borrowers  shall be allowed to acquire all of the ownership
interests in another Person,  substantially  all of the assets of another Person
or of a business  or  division  of  another  Person in order to  effectuate  the
acquisition of [NAME OF NEW SUBSIDIARY].

   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. JOINDER.  Pursuant to the  requirements  of Section  8.2.5  [Liquidations,
Mergers,  Consolidations,  Acquisitions]  and/or  Section  8.2.8  [Subsidiaries,
Partnerships  and Joint Ventures] and Section 11.18 [Joinder of New Subsidiary],
the New  Subsidiary  hereby  executes and delivers  this  Agreement to the Agent
pursuant to which the New Subsidiary will join as a Borrower each of the 
documents to which the Borrowers are parties.

                                Page 151 of 195
<PAGE>


   2. TIMING. The Loan Parties shall deliver to the Agent this Joinder Agreement
and all other  Agreements  required  by the Agent as set forth in the  preceding
paragraph, within five (5) Business Days (a) after the date of the filing of the
New  Subsidiary's   articles  of  incorporation  if  the  New  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 (b) the  closing  of an
acquisition  agreement,  bill of sale,  instrument of transfer or other document
evidencing  the  acquisition  of the New  Subsidiary  in the case of a Permitted
Acquisition.

   4.    MISCELLANEOUS.

         (a) ENTIRE  AGREEMENT.  This  Agreement  and the other  Loan  Documents
constitute  the entire  agreement  of the  parties  with  respect to the subject
matter hereof and thereof. No change,  modification,  addition or termination of
this Agreement  shall be  enforceable  unless in writing and signed by the party
against whom enforcement is sought.

         (b) DEFINITIONS.  Terms used and not otherwise  defined in this Joinder
Agreement shall have the meanings given to them in the Credit Agreement dated as
of June ___, 1998 among Churchill Downs Incorporated, Churchill Downs Management
Company,  Churchill Downs  Investment  Company,  Racing  Corporation of America,
Ellis Park Race Course,  Inc. and the Banks (as defined  therein),  and restated
from time to time, the "Credit  Agreement").  Any reference  to"Loan  Documents"
refers  to each  and  every  agreement,  instrument  and  document  executed  in
conjunction with the Loan Documents,  whether at the time of, or some time after
the Credit Agreement.

         (b) BENEFIT.  This  Agreement  shall be binding upon and shall inure to
the  benefit  of the  Banks,  the  Agent  and the  Buyer  and  their  respective
successors and assigns.

         (c)  WAIVER.  No waiver of the  provisions  hereof  shall be  effective
unless in writing  and signed by the party to be charged  with such  waiver.  No
waiver shall be deemed a continuing  waiver or a waiver in respect of any breach
or default,  whether of a similar or a different  nature,  unless  expressly  so
stated in writing.

         (d)  GOVERNING  LAW. The  validity,  construction,  interpretation  and
enforcement of this Agreement  shall be construed in accordance with the laws of
the Commonwealth of Kentucky without regard to its conflict of laws.

         (e) SEVERABILITY. If any provision of this Agreement or its application
shall be deemed invalid,  illegal or unenforceable in any respect, the validity,
construction,  interpretation  and  enforceability of all other  applications of
that provision and of all other provisions and applications  hereof shall not in
any way be affected or impaired.

         (f) FURTHER  ASSURANCES.  From time to time at another  party's request
and without  further  consideration,  the parties shall execute and deliver such
further instruments and documents,  and take such other action as the requesting
party  may  reasonably  request,  in  order to  complete  more  effectively  the
transactions contemplated in this Agreement.


                                Page 152 of 195
<PAGE>



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


                                     CHURCHILL DOWNS INCORPORATED


                                     By 
                                     Title:
                                     Date:


                                     CHURCHILL DOWNS MANAGEMENT COMPANY


                                     By 
                                     Title:
                                     Date:


                                     CHURCHILL DOWNS INVESTMENT COMPANY


                                     By 
                                     Title:
                                     Date:


                                     RACING CORPORATION OF AMERICA


                                     By 
                                     Title:
                                     Date:



                                Page 153 of 195

<PAGE>



                                      ELLIS PARK RACE COURSE, INC.


                                     By
                                     Title:
                                     Date:


                                     [NEW SUBSIDIARY]


                                     By 
                                     Title:
                                     Date:


                                     PNC BANK, NATIONAL ASSOCIATION,
                                     individually and as Agent


                                     By 
                                     Title:
                                     Date:


                                     BANK ONE, KENTUCKY, NA


                                     By 
                                     Title:
                                     Date:


                                     STAR BANK, NA
                                     By 
                                     Title:

                                     Date:


                                Page 154 of 195
<PAGE>



                                EXHIBIT 1.1(I)(1)


ENVIRONMENTAL INDEMNITY AGREEMENT                    PNC BANK


         THIS ENVIRONMENTAL  INDEMNITY AGREEMENT (the "AGREEMENT") is made as of
June ___,  1998,  by  CHURCHILL  DOWNS  INCORPORATED,  a  Kentucky  corporation,
CHURCHILL DOWNS  MANAGEMENT  COMPANY,  a Kentucky  corporation,  CHURCHILL DOWNS
INVESTMENT  COMPANY,  a Kentucky  corporation,  RACING CORPORATION OF AMERICA, a
Delaware  corporation and ELLIS PARK RACE COURSE,  INC., a Kentucky  corporation
(each an "INDEMNITOR",  and collectively,  the  "INDEMNITORS"),  in favor of PNC
BANK,  NATIONAL  ASSOCIATION,  as Agent  (the  "Agent")  for PNC BANK,  NATIONAL
ASSOCIATION,  STAR  BANK,  NA and BANK  ONE,  KENTUCKY,  NA  (collectively,  the
"BANK").

                                    RECITALS

         A. The Bank is extending a revolving credit facility to the Indemnitors
in the original  principal  amount of  $50,000,000  (the  "LOAN")  pursuant to a
Credit  Agreement  executed by the  Indemnitors,  the Agent and the Bank (as the
same may be  amended,  modified  and/or  restated  from time to time,  the "Loan
Agreement");

         B. The Indemnitor  owns certain real property  listed on Schedule 6.1.8
of the Credit Agreement (the "PROPERTY")

         C. To induce the Bank to agree to make the Loan, the  Indemnitors  have
each agreed to enter into this Agreement.


         NOW,  THEREFORE,  in  consideration  of the premises and other good and
valuable  consideration,  the  receipt  and  sufficiency  of  which  are  hereby
acknowledged,  and  intending  to  be  legally  bound,  each  Indemnitor  hereby
covenants, warrants, represents and agrees as follows:

         1. BANK  RIGHTS  UNDER THE  AGREEMENT.  The  Bank's  rights  under this
Agreement  shall be in  addition  to all  rights of the Bank  under  the  Credit
Agreement,  the Revolving  Credit Notes, the Swing Line Notes (as defined in the
Credit  Agreement)  (collectively,  the  "NOTE"),  any  guaranty  or  guarantees
(whether of payment or  performance)  given to the Bank in  connection  with the
Loan and under any other  documents,  instruments  or  agreements  evidencing or
securing  the Loan (the Note,  any such  guaranty or  guarantees  and such other
documents or instruments,  as the same may be amended,  restated and/or modified
from time to time, being herein called the "LOAN DOCUMENTS").  Payments, if any,
by the  Indemnitors  as  required  under  this  Agreement  shall not  reduce the
Indemnitor's  obligations and liabilities  under any of the Loan Documents.  Any
default by the  Indemnitors  under this Agreement  shall,  at the Bank's option,
constitute  a default  and an "Event  of  Default"  under the Note or any of the
other Loan Documents.

         2.  DEFINITIONS.  For purposes of this  Agreement,  the following terms
shall have the following meanings:

         (a)  "ENVIRONMENTAL  LAWS"  means all  federal,  state and local  laws,
regulations,  statutes,  consent orders, judicial decrees,  standards,  permits,
licenses and  ordinances  pertaining  to the  protection  of land,  water,  air,
health,  safety  or the  environment,  whether  now or in  the  future  enacted,
promulgated or issued, including the laws of any state where the Indemnitor owns
real property.

         (b)  "REGULATED   SUBSTANCES"   includes  any  substances,   chemicals,
materials  or  elements  that  are  prohibited,  limited  or  regulated  by  the
Environmental  Laws, or any other substances,  chemicals,  materials or elements
that are defined as  "hazardous" or "toxic," or otherwise  regulated,  under the
Environmental  Laws.  The term  Regulated  Substances  shall  also  include  any
substance, chemical, material or element (i) defined as a "hazardous

                                 Page 155 of 195

<PAGE>



substance"  under the  Comprehensive  Environmental  Response,  Compensation and
Liability Act of 1980 ("CERCLA") (42 U.S.C. ss.ss. 9601, ET SEQ.), as amended by
the Superfund Amendments and Reauthorization Act of 1986, and as further amended
from time to time, and  regulations  promulgated  thereunder;  (ii) defined as a
"regulated  substance"  within  the  meaning  of  Subtitle  I  of  the  Resource
Conservation and Recovery Act (42 U.S.C.  ss.ss.  6991- 6991i),  and regulations
promulgated thereunder;  (iii) designated as a "hazardous substance" pursuant to
Section 311 of the Clean Water Act (33 U.S.C.  ss. 1321),  or listed pursuant to
Section  307 of the Clean  Water Act (33  U.S.C.  ss.  1317);  (iv)  defined  as
"hazardous",  "toxic",  or otherwise  regulated,  under any  Environmental  Laws
adopted  by the state in which the  Property  is  located,  or its  agencies  or
political   subdivisions;   (v)  which  is  petroleum,   petroleum  products  or
derivatives   or   constituents    thereof;    (vi)   which   is   asbestos   or
asbestos-containing   materials;   (vii)   the   presence   of  which   requires
notification,  investigation  or  remediation  under any  Environmental  Laws or
common law;  (viii) the presence of which on the Property causes a nuisance upon
the Property or to adjacent properties or poses or threatens to pose a hazard to
the  health or safety of persons  on or about the  Property;  (ix) which is urea
formaldehyde  foam insulation or urea  formaldehyde  foam  insulation-containing
materials; (x) which is lead base paint or lead base paint-containing materials;
(xi) which are polychlorinated biphenyls or polychlorinated  biphenyl-containing
materials;  (xii) which is radon or radon-containing or producing materials;  or
(xiii) which by any laws of any governmental authority requires special handling
in its collection, storage, treatment, or disposal.

         (c)  "CONTAMINATION"  means the seeping,  spilling,  leaking,  pumping,
pouring, emitting, using, emptying, discharging,  injecting, escaping, leaching,
dumping, disposing,  releasing or the presence of Regulated Substances at, under
or upon the  Property or into the  environment,  or arising from the Property or
migrating to or from the Property,  which may require  notification,  treatment,
response or removal action or remediation under any Environmental Laws.

         3. REPRESENTATIONS AND WARRANTIES. The Indemnitor hereby represents and
warrants that, except as is otherwise set forth on Schedule I attached hereto:

         (a) No  Contamination  is present at, on or under the  Property  and no
Contamination  is being  emitted  from the  Property  onto  any  surrounding  or
adjacent areas.

         (b) All  activities  and  operations  at the Property have been and are
being  conducted in compliance with all  Environmental  Laws, and the Indemnitor
has obtained all permits,  licenses,  consents and approvals  required under the
Environmental Laws for the conduct of operations and activities at the Property,
and all such  permits,  licenses,  consents and  approvals are in full force and
effect.

         (c) The Property has never been used to generate, manufacture,  refine,
transport,  handle,  transfer,  produce, treat, store, dispose of or process any
Regulated  Substances,  except in compliance with all Environmental  Laws and in
such a manner that no Contamination has been released on or under the Property.

         (d) No underground  or aboveground  storage tanks subject to regulation
under any Environmental Laws are, or to the best of the Indemnitor's  knowledge,
after  due  inquiry  and  investigation,  have  been,  located  on or under  the
Property.

         (e) No  measurable  levels of radon or radon  containing  or  producing
products are present in the existing structures on the Property.  If at any time
during the term of the Loan,  measurable  amounts of radon are  detected  in any
structures on the Property,  each Indemnitor hereby agrees, at its sole expense,
to take all actions necessary to reduce such radon gas to acceptable levels.

         (f) No civil,  administrative  or  criminal  proceeding  is  pending or
threatened against the Indemnitor  relating to the condition of or activities at
the Property,  nor has any notice of any violation or potential  liability under
any  Environmental  Laws been received,  nor does any Indemnitor  have reason to
believe  such  notice will be received  or  proceedings  initiated,  nor has any
Indemnitor  entered into any  consent,  decree or judicial  order or  settlement
affecting the Property,  nor has any Indemnitor or the Property been the subject
of any other administrative or judicial order or decree.

         (g) The  Property is not listed or proposed for listing on the National
Priorities  List  pursuant to Section  9605 of CERCLA,  or on the  Comprehensive
Environmental Response,  Compensation and Liability Information System or on any
similar state or local list of environmentally problematic/regulated sites.

                                 Page 156 of 195

<PAGE>




         (h) No portion of the Property  constitutes  wetland or other "water of
the United  States",  flood plain or flood  hazard  area,  or coastal  zone,  as
defined by the applicable Environmental Laws.

         (i) No lien has been  attached to any  revenues or any real or personal
property in the property  owned by any Indemnitor and located in the state where
the Property is located for damages or cleanup, response or removal costs, under
any  Environmental  Laws, or arising from an intentional or unintentional act or
omission  in  violation  thereof by any  Indemnitor,  or any  previous  owner or
operator of the Property.

         (j) No  Contamination  has been discharged or emitted from the Property
into  waters on,  under or adjacent  to the  Property,  or onto lands from which
Regulated Substances might seep, flow or drain into such waters.

         (k) To the best of the  Indemnitors'  knowledge,  after due inquiry and
investigation  except for reports  issued  with  respect to the  Kentucky  Horse
Center, Ellis Park and the Sports Spectrum which have been made available to the
Banks,  no report,  analysis,  study or other  document  prepared  by or for any
person  exists  identifying  that any  Contamination  has been, or currently is,
located upon or under the Property.

         (l) Neither the transaction  contemplated by the Loan Documents nor any
other transaction  involving the sale, transfer or exchange of the Property will
trigger or has triggered any obligation under the  Environmental  Laws to make a
filing,  provide a deed notice,  provide disclosure or take any other action, or
in the event that any such  transaction-triggered  obligation  does arise or has
arisen under any Environmental Laws, all such actions required thereby have been
taken.

         4. ENVIRONMENTAL COVENANTS. Each Indemnitor hereby covenants and agrees
as follows:

         (a) to cause all activities at the Property during the term of the Loan
to be conducted in compliance with all Environmental Laws;

         (b) to provide the Bank with copies of all: (i) correspondence, notices
of violation,  summons,  orders,  complaints or other documents  received by any
Indemnitor,  its  lessees,  sublessees,  occupants  or  assigns,  pertaining  to
compliance with any Environmental  Laws; (ii) reports of previous  environmental
investigations  undertaken at the Property which the Indemnitor knows of, or has
or can obtain possession;  (iii) licenses,  certificates and permits required by
the  Environmental  Laws;  and  (iv)  any  other  information  that the Bank may
reasonably request.

         (c) not to generate, manufacture, refine, transport, transfer, produce,
store, use, process,  treat, dispose of, handle, or in any manner deal with, any
Regulated Substances on any part of the Property, nor permit others to engage in
any such activity on the  Property,  except for (i) those  Regulated  Substances
which are used or present in the ordinary course of the Indemnitor's business in
compliance with all Environmental Laws, are listed on Schedule I attached hereto
and  have  not  been  released  into  the  environment  in such a  manner  as to
constitute  Contamination  hereunder,  and (ii) those Regulated Substances which
are naturally  occurring on the Property,  but only in such naturally  occurring
form;

         (d)  not  to  cause  or  permit,  as a  result  of any  intentional  or
unintentional  act or  omission  on the part of any  Indemnitor  or any  tenant,
subtenant,  occupant  or  assigns,  the  presence  of  Regulated  Substances  or
Contamination on the Property,  except for (i) those Regulated  Substances which
are used or present  in the  ordinary  course of any  Indemnitor's  business  in
compliance with all Environmental Laws, are listed on Schedule I attached hereto
and  have  not  been  released  into  the  environment  in such a  manner  as to
constitute  Contamination  hereunder,  and (ii) those Regulated Substances which
are naturally  occurring on the Property,  but only in such naturally  occurring
form.

         (e) to give notice and a full  description to the Bank immediately upon
the Indemnitor's  acquiring knowledge of any of the following if such results in
Material Adverse Condition:  (i) any and all enforcement,  clean-up,  removal or
other regulatory actions threatened, instituted or completed by any governmental
authority with respect to the  Indemnitor or the Property;  (ii) all claims made
or threatened by any third party against the Indemnitor or the Property relating
to  damage,  contribution,  compensation,  loss or  injury  resulting  from  any
Regulated   Substances  or   Contamination;   and  (iii)  the  presence  of  any
Contamination on, under, from or affecting the Property;


                                 Page 157 of 195

<PAGE>



         (f) to timely comply with any Environmental Laws requiring the removal,
treatment,  storage,  processing,  handling,  transportation or disposal of such
Regulated  Substances or  Contamination  and provide the Bank with  satisfactory
evidence of such compliance;

         (g) to conduct and complete all investigations,  studies,  sampling and
testing,  as well as all remedial,  removal and other actions necessary to clean
up and remove all Contamination  on, under, from or affecting the Property,  all
in accordance with the Environmental Laws; and

         (h) to  continue  to have  all  necessary  licenses,  certificates  and
permits required under the Environmental Laws relating to the Indemnitor and its
Property, facilities, assets and business.

         5.  BANK'S RIGHT TO CONDUCT AN INVESTIGATION.

         (a) The Bank  may,  at any time  and at its  sole  discretion,  without
unreasonably  interfering  with the  Borrowers'  operations  (unless an Event of
Default has occurred in which case without reference to whether or not such will
interfere with the Borrowers'  operations)  commission an investigation into the
presence of Regulated  Substances  or  Contamination  on, from or affecting  the
Property,  or the  compliance  with  Environmental  Laws at, or relating to, the
Property.  Such  an  investigation  performed  by  the  Bank  shall  be  at  the
Indemnitors'  expense if the performance of the  investigation  is commenced (i)
upon the occurrence of a default hereunder or of a default or "Event of Default"
under  the Note or any  other  Loan  Document;  or (ii)  because  the Bank has a
reasonable  belief  that the  Indemnitor  has  violated  any  provision  of this
Agreement. All other investigations performed by the Bank shall be at the Bank's
expense.  In connection with any such  investigation,  each Indemnitor and their
respective  tenants,  subtenants,  occupants and assigns,  shall comply with all
reasonable  requests  for  information  made by the Bank or its  agents  and the
Indemnitors  represent  and warrant that all  responses to any such requests for
information will be correct and complete. The Indemnitors shall provide the Bank
and its agents with rights of access to all areas of the Property and permit the
Bank and its agents to perform testing  necessary or appropriate,  in the Bank's
reasonable judgment, to perform such investigation.

         (b) The Bank is under no duty,  however, to conduct such investigations
of the Property and any such  investigations by the Bank shall be solely for the
purposes of protecting  and  preserving  its rights this  Agreement and the Loan
Documents. No site visit, observation, or testing by the Bank shall constitute a
waiver of any default of the Indemnitors or be characterized as a representation
regarding the presence or absence of Regulated  Substances or  Contamination  at
the Property.  The Bank owes no duty of care to protect the  Indemnitors  or any
third party from the  presence of  Regulated  Substances,  Contamination  or any
other adverse  condition  affecting the Property nor shall the Bank be obligated
to disclose to the Indemnitors or any third party any report or findings made in
connection with any investigation done on behalf of the Bank.

         6.  INDEMNIFICATION.

         Each Indemnitor  covenants and agrees, at its sole cost and expense, to
indemnify,  defend,  protect,  save  and hold  harmless  the Bank and all of its
officers,  directors,  employees and agents,  any  participant  in the Loan, and
their  respective  successors and assigns,  against and from any and all damages
which  may at any time be  imposed  upon,  threatened  against,  incurred  by or
asserted or awarded against the Bank and arising from or out of:

                  (i)  the  Indemnitor's  failure  to  comply  with  any  of the
provisions of this Agreement, including the Indemnitor's breach of any covenant,
representation or warranty contained in this Agreement; or

                  (ii) the enforcement of this Agreement or the assertion by the
Indemnitor of any defense to its obligations hereunder.

         7. SCOPE OF LIABILITY.  The liability  under this Agreement shall in no
way be limited or impaired by (a) any extension of time for performance required
by any of the Loan  Documents;  (b) any sale,  assignment or  foreclosure of the
Note;  (c) the discharge of the Note; (d) any  exculpatory  provisions in any of
the Loan Documents limiting the Bank's recourse;  (e) the accuracy or inaccuracy
of the  representations  and warranties  made by the  Indemnitors,  or any other
obligor under any of the Loan  Documents;  (f) the release of the Indemnitors or
any guarantor or any other person from  performance  or observance of any of the
agreements,  covenants,  terms  or  conditions  contained  in any  of  the  Loan
Documents by operation of law, the Bank's voluntary act or otherwise; or (g) the
release or  substitution,  in whole or in part,  of any security for the Note or
other obligations;  and, in any such case, whether with or without notice to the
Indemnitors  or any  guarantor  or other  person or entity  and with or  without
consideration.

                                 Page 159 of 195

<PAGE>




         8.  PRESERVATION OF RIGHTS.  No delay or omission on the Bank's part to
exercise  any right or power  arising  hereunder  will  impair any such right or
power or be considered a waiver of any such right or power,  nor will the Bank's
action or  inaction  impair  any such  right or power.  The  Bank's  rights  and
remedies  hereunder  are  cumulative  and not  exclusive  of any other rights or
remedies  which the Bank may have under other  agreements,  at law or in equity.
Any representations,  warranties,  covenants or indemnification  liabilities for
breach  thereof  contained  in  this  Agreement  shall  not be  affected  by any
knowledge of, or investigations  performed by, the Bank. Any one or more persons
or entities  comprising  the  Indemnitor,  or any other party  liable upon or in
respect of this  Agreement or the Loan,  may be released  without  affecting the
liability of any party not so released.

         9. ILLEGALITY.  In case any one or more of the provisions  contained in
this Agreement should be invalid,  illegal or unenforceable in any respect,  the
validity,  legality and  enforceability  of the remaining  provisions  contained
herein shall not in any way be affected or impaired thereby.

         10.  CHANGES IN WRITING.  No  modification,  amendment or waiver of any
provision  of this  Agreement  nor consent to any  departure  by the  Indemnitor
therefrom  will be effective  unless made in a writing  signed by the Bank,  and
then such waiver or consent shall be effective only in the specific instance and
for the purpose for which given. No notice to or demand on the Indemnitor in any
case will entitle the Indemnitor to any other or further notice or demand in the
same, similar or other circumstance.

         11.  SUCCESSORS AND ASSIGNS;  SURVIVAL.  This Agreement will be binding
upon  each  of the  Indemnitors  and  their  respective  heirs,  administrators,
successors  and  assigns,  and  will  inure to the  benefit  of the Bank and its
successors and assigns;  PROVIDED,  HOWEVER, that the Indemnitors may not assign
this Agreement in whole or in part without the Bank's prior written  consent and
the Bank at any time may assign this Agreement in whole or in part.

         12.  INTERPRETATION.  In  this  Agreement,  unless  the  Bank  and  the
Indemnitor  otherwise agree in writing, the singular includes the plural and the
plural the singular; references to statutes are to be construed as including all
statutory provisions  consolidating,  amending or replacing the statute referred
to; the word "or" shall be deemed to include  "and/or",  the words  "including",
"includes"  and "include"  shall be deemed to be followed by the words  "without
limitation";  and  references  to  sections  or  exhibits  are to  those of this
Agreement  unless  otherwise  indicated.  Section headings in this Agreement are
included for  convenience  of reference  only and shall not constitute a part of
this Agreement for any other purpose. If this Agreement is executed by more than
one party as  Indemnitor,  the  obligations  of such persons or entities will be
joint and several.

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

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

EACH LOAN PARTY HEREBY AGREES TO WAIVE ITS RIGHT TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION  BASED  UPON OR ARISING  OUT OF THIS  AGREEMENT,  THE  REVOLVING
CREDIT NOTES, THE SWING LINE NOTE OR THE OTHER LOAN DOCUMENTS. THE SCOPE OF THIS
WAIVER IS INTENDED TO BE  ALL-ENCOMPASSING  OF ANY AND ALL DISPUTES  THAT MAY BE
FILED IN ANY COURT  THAT  RELATE  TO THE  SUBJECT  MATTER  OF THIS  TRANSACTION,
INCLUDING,  WITHOUT  LIMITATION,  CONTRACT CLAIMS,  TORT CLAIMS,  BREACH OF DUTY
CLAIMS,  AND ALL  OTHER  COMMON  LAW AND  STATUTORY  CLAIMS.  THE  LOAN  PARTIES
ACKNOWLEDGE  THAT THIS  WAIVER IS A MATERIAL  INDUCEMENT  FOR EACH SUCH PARTY TO
ENTER INTO A BUSINESS RELATIONSHIP,  AND THAT EACH LOAN PARTY HAS ALREADY RELIED
ON THE WAIVER IN ITS RELATED FUTURE  DEALINGS WITH THE OTHERS.  THE LOAN PARTIES
FURTHER  WARRANT AND REPRESENT THAT EACH HAS REVIEWED THIS WAIVER WITH ITS LEGAL
COUNSEL, AND THAT EACH KNOWINGLY AND VOLUNTARILY

                                 Page 159 of 195

<PAGE>



WAIVES IT 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 MODIFICATION 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.

WITNESS the due execution hereof as a document under seal, as of the date first 
written above but actually on the date(s) listed below.

WITNESS / ATTEST:                               CHURCHILL DOWNS INCORPORATED


____________________________________            By _____________________________
                                                                          (SEAL)
Print Name:_________________________            Print
Name:_______________________________

                                                Title:__________________________

                                                CHURCHILL DOWNS MANAGEMENT
                                                COMPANY

____________________________________            By: ____________________________
                                                                          (SEAL)
Print Name: ________________________            Print
Name:_______________________________

                                                Title:__________________________

                                                CHURCHILL DOWNS INVESTMENT
                                                COMPANY

____________________________________            By______________________________
                                                                          (SEAL)

                                 Page 160 of 195

<PAGE>



Print Name:_________________________            Print
Name:_______________________________

                                                Title:__________________________

                                                RACING CORPORATION OF AMERICA


____________________________________            By______________________________
                                                                          (SEAL)
Print Name:_________________________            Print
Name:_______________________________

                                                Title:__________________________


                                                ELLIS PARK RACE COURSE, INC.


____________________________________            By______________________________
                                                                          (SEAL)
Print Name:_________________________            Print
Name:_______________________________

                                                Title:__________________________




                                 Page 161 of 195

<PAGE>



COMMONWEALTH OF KENTUCKY                        )
                                                )        ss:
COUNTY OF JEFFERSON                             )
         On this, the ______ day of June, 1998, before me, a Notary Public,  the
undersigned  officer,  personally  appeared  __________________________________,
known to me (or satisfactorily  proven) to be the  ________________ of Churchill
Downs Incorporated (the "Corporation") and acknowledged that he/she executed the
same in his/her capacity as _______________ on behalf of the Corporation for the
purposes therein contained.

         IN WITNESS WHEREOF, I hereunto set my hand and official seal.

                                                --------------------------------
                                                Notary Public
                                                My commission expires: _________

COMMONWEALTH OF KENTUCKY                        )
                                                )        ss:
COUNTY OF JEFFERSON                             )
         On this, the ______ day of June, 1998, before me, a Notary Public,  the
undersigned  officer,  personally  appeared  __________________________________,
known to me (or satisfactorily  proven) to be the  ________________ of Churchill
Downs  Investment  Company  (the  "Corporation")  and  acknowledged  that he/she
executed  the same in  his/her  capacity  as  _______________  on  behalf of the
Corporation for the purposes therein contained.

         IN WITNESS WHEREOF, I hereunto set my hand and official seal.

                                                --------------------------------
                                                Notary Public
                                                My commission expires: _________




                                 Page 162 of 195

<PAGE>



COMMONWEALTH OF KENTUCKY                        )
                                                )        ss:
COUNTY OF JEFFERSON                             )
         On this, the ______ day of June, 1998, before me, a Notary Public,  the
undersigned  officer,  personally  appeared  __________________________________,
known to me (or  satisfactorily  proven)  to be the  ________________  of Racing
Corporation of America (the "Corporation") and acknowledged that he/she executed
the same in his/her capacity as _______________ on behalf of the Corporation for
the purposes therein contained.

         IN WITNESS WHEREOF, I hereunto set my hand and official seal.

                                                --------------------------------
                                                Notary Public
                                                My commission expires: _________

COMMONWEALTH OF KENTUCKY                        )
                                                )        ss:
COUNTY OF JEFFERSON                             )
         On this, the ______ day of June, 1998, before me, a Notary Public,  the
undersigned  officer,  personally  appeared  __________________________________,
known to me (or satisfactorily  proven) to be the ________________ of Ellis Park
Race Course,  Inc. (the "Corporation") and acknowledged that he/she executed the
same in his/her capacity as _______________ on behalf of the Corporation for the
purposes therein contained.

         IN WITNESS WHEREOF, I hereunto set my hand and official seal.

                                                --------------------------------
                                                Notary Public
                                                My commission expires: _________



                                 Page 163 of 195

<PAGE>



                                    EXHIBIT A

                                LEGAL DESCRIPTION



                                 Page 164 of 195

<PAGE>




                                   SCHEDULE I
                               LIST OF EXCEPTIONS

Section 3.  Exceptions to Representations and Warranties.


















Sections 4(c) and (d).  Exceptions  to Environmental Covenants  Relating  to 
Regulated Substances Used in the Ordinary Course of the Indemnitor's Business.







                                 Page 165 of 195

<PAGE>



                                EXHIBIT 1.1(I)(2)

INTERCOMPANY SUBORDINATION AGREEMENT       PNC BANK

         THIS INTERCOMPANY SUBORDINATION AGREEMENT (this "AGREEMENT") is entered
into as of June _____,  1998,  by and among PNC BANK,  NATIONAL  ASSOCIATION  as
Agent (the "AGENT"), and PNC Bank, National Association, Bank One, Kentucky, NA,
and Star Bank, NA  (collectively,  the "BANKS"),  Churchill Downs  Incorporated,
Churchill Downs Management Company,  Churchill Downs Investment Company,  Racing
Corporation  of  America  and  Ellis  Park  Race  Course,  Inc.  and any  entity
designated as a Borrower after the date of this  Agreement  pursuant to the Loan
Documents   (defined   below)  (  each  a  "BORROWER"  and   collectively,   the
"BORROWERS").  Each Borrower  shall be considered a "CREDITOR"  when acting in a
creditor capacity with respect to a loan to another Borrower.

                                    RECITALS

           The Bank has  established  a  $50,000,000  Credit  Facility  with the
Borrower as evidenced by a Credit Agreement and other agreements all between the
Bank and the  Borrowers  (collectively,  the "LOAN  DOCUMENTS").  Certain of the
Creditors  have extended or are  extending to certain of the  Borrowers  certain
loans,  advances  and  extensions  of credit,  as evidenced by a certain note or
notes  (collectively,  the  "CREDITOR  DOCUMENTS").  The Bank and the  Creditors
hereby desire to set forth the  respective  rights and  obligations  each has as
against the other with respect to the Borrowers.

         NOW,  THEREFORE,  the parties  hereto,  intending to be legally  bound,
hereby agree as follows:

         1.  DEFINITIONS.

         "OBLIGATIONS"   means  all   loans,   advances,   debts,   liabilities,
obligations, covenants and duties owing by the Borrowers to the Bank of any kind
or nature,  present or future, whether or not evidenced by any note, guaranty or
other instrument,  whether arising under any agreement,  instrument or document,
whether  or not for the  payment  of  money,  whether  arising  by  reason of an
extension of credit,  opening of a letter of credit, loan or guarantee or in any
other manner,  whether arising out of overdrafts on deposit or other accounts or
electronic  funds  transfers  (whether  through  automatic  clearing  houses  or
otherwise) or out of the Bank's  non-receipt of or inability to collect funds or
otherwise not being made whole in connection with  depository  transfer check or
other similar arrangements, whether direct or indirect (including those acquired
by assignment or participation),  absolute or contingent,  joint or several, due
or to become  due,  now  existing  or  hereafter  arising,  and any  amendments,
extensions,  renewals  or  increases  and all  costs  and  expenses  of the Bank
incurred  in  the   documentation,   negotiation,   modification,   enforcement,
collection or otherwise in connection  with any of the foregoing,  including but
not limited to reasonable attorneys' fees and expenses.

         "COLLATERAL"  means any  collateral  now or in the future  securing the
Obligations,  including but not limited to claims  against any guarantors of the
Obligations and any collateral securing such guarantees.

         "SUBORDINATED  DEBT"  means any loans,  advances,  debts,  liabilities,
obligations,  covenants  and duties owing by any one or all of the  Borrowers to
any one or all of the  Creditors  of any  kind or  nature,  present  or  future,
whether or not  evidenced  by any note,  guaranty or other  instrument,  whether
arising  under any  agreement,  instrument  or document,  whether or not for the
payment of money,  whether arising by reason of an extension of credit,  loan or
guarantee  or in any other  manner,  whether  direct or  indirect,  absolute  or
contingent,  joint or several,  due or to become due,  now existing or hereafter
arising, whether consisting of principal, interest, expense payments, management
and consulting fees, liquidation costs,  attorneys' fees and costs or otherwise,
and all  whether  arising or  created  pursuant  to the  Creditor  Documents  or
otherwise.

         2.  SUBORDINATION.  Subject to Section 3 hereof,  the  Creditor  hereby
irrevocably  subordinates  and  postpones the payment and the time of payment of
all the  Subordinated  Debt and all claims and demands arising  therefrom to the
Obligations  and  directs  that  the  Obligations  be paid in  full  before  the
Subordinated Debt.

         3. PAYMENTS TO CREDITOR.  Notwithstanding  any other  provision of this
Agreement,  a Borrower shall be entitled to pay and a Creditor shall be entitled
to receive,  so long as no Event of Default or  Unmatured  Default has  occurred
under the Loan  Documents  or would  result  from such  payment,  all  scheduled
payments of interest (at the current  rate set forth in the Creditor  Documents)
and  principal  under the  Subordinated  Debt when due.  No  payments of default
interest  thereon or costs and expenses shall be permitted or made without prior
written  consent of the Bank.  After the occurrence of an Event of Default under
the Loan  Documents and receipt by a Creditor of written notice thereof from the
Bank to a  Creditor,  the  Borrower  shall not make,  and a  Creditor  shall not
receive,  any  direct or  indirect  payments  of  principal,  interest,  fees or
expenses under the Subordinated Debt.

         4.  SECURITY.  No Borrower  shall grant and no Creditor  shall take any
lien on or security  interest in any of the  Borrowers'  property,  now owned or
hereafter acquired or created, without the prior written consent of the Bank.

         5.  STANDBY  LIMITATION.  Notwithstanding  any breach or default by any
Borrower under the Creditor  Documents,  no Creditor shall at any time or in any
manner  foreclose  upon,  take  possession  of, or  attempt  to  realize  on any
Collateral,  or  proceed  in any way to  enforce  any  claims it has or may have
against  any  Borrower  unless  and until the  Obligations  have been  fully and
indefeasibly paid and satisfied in full.

         6.  BANKRUPTCY/PROBATE  OF BORROWER.  In the event a petition or action
for relief shall be filed by or against any of the  Borrowers  under any federal
bankruptcy  statute in effect from time to time, or under any other law relating
to bankruptcy, insolvency, reorganization,  receivership, general assignment for
the benefit of creditors, moratorium, creditor composition, arrangement or other
relief for debtors,  the Bank's claim (secured or unsecured)  against the assets
or estate of any of the Borrowers shall be indefeasibly  paid in full before any
payment is made to any of the Creditors on the Subordinated  Debt,  whether such
payment is in cash,  securities  or any other form of  property  or rights.  The
Obligations  shall include  interest  accruing after the date of commencement of
any case or  proceeding  under  any such  bankruptcy  statute  or  related  law,
regardless of whether the Bank's claim for such interest is allowed in such case
or  proceeding.  The Bank may, in its  discretion,  file a proof of claim for or
collect any of the  Creditors'  claims  first for the benefit of the Bank to the
extent of the unpaid  Obligations  and then for the benefit of the Creditor (but
without creating any duty or

                                 Page 166 of 195


<PAGE>



liability to the Creditor other than to remit to the Creditor distributions,  if
any,  actually received in such proceedings after the Obligations have been paid
and  satisfied  in  full)  directly  from  the  receiver,   trustee,  custodian,
liquidator or representative  of the Borrower's  estate in such proceeding.  The
Borrowers  and the  Creditors  shall  furnish all  assignments,  powers or other
documents  requested by the Bank to  facilitate  such direct  collection  by the
Bank.

         7.  RECEIPT OF PAYMENTS BY CREDITOR.  Should any  Creditor  directly or
indirectly  receive any payment or distribution  not permitted by the provisions
of this Agreement or any Collateral or proceeds  thereof,  prior to the full and
indefeasible  payment and satisfaction of the Obligations and the termination of
all financing  arrangements  between the Bank and the  Borrowers,  such Creditor
will  deliver  the  same  to the  Bank  in the  form  received  (except  for the
endorsement or assignment of the Creditor where  necessary),  for application to
the  Obligations  in such  order  and  manner  as the Bank may  elect.  Until so
delivered, such Creditor shall hold the same, IN TRUST, for the Bank as property
of the Bank,  and shall not  commingle  such property of the Bank with any other
property held by the Creditor. In the event such Creditor fails to make any such
endorsement  or  assignment,  the Bank,  or any of its  officers or employees on
behalf of the Bank, is hereby  irrevocably  authorized in its own name or in the
name of the  Creditor  to make  such  endorsement  or  assignment  and is hereby
irrevocably appointed as the Creditor's attorney-in-fact for those purposes.

         8.  BANK'S RIGHTS.

         (a) Each  Creditor  hereby  consents  that at any time and from time to
time,  without  further  consent of or notice to the Creditor and without in any
manner  affecting,  impairing,  lessening or releasing any of the  provisions of
this Agreement,  the Bank may, in its sole  discretion:  (i) renew,  compromise,
extend, expand, postpone, waive, accelerate, terminate, change the payment terms
of, or otherwise  modify the Obligations or amend,  renew,  replace or terminate
the Loan Documents or any and all other  agreements now or hereafter  related to
the  Obligations;  (ii) extend  credit to the  Borrower in whatever  amount on a
secured  or  unsecured  basis or take  other  support  for the  Obligations  and
exchange,  enforce,  waive, sell, transfer,  collect, adjust or release any such
security or other support or any part thereof;  (iii) apply any and all payments
or proceeds of such  security or other support and in any order or manner as the
Bank, in its discretion, may determine; and (iv) release or substitute any party
liable on the Obligations,  any guarantor of the Obligations, or any other party
providing support for the Obligations.

         (b) This  Agreement  will not be affected,  impaired or released by any
delay or failure of the Bank to exercise any of its rights and remedies  against
any of the Borrowers or any guarantor or under any of the Obligations or against
any Collateral,  by any failure of the Bank to take steps to perfect or maintain
any lien on, or to preserve any rights to, any  Collateral by any  irregularity,
unenforceability  or invalidity of any of the Obligations or any part thereof or
any security or guarantee therefor,  or by any other event or circumstance which
otherwise  might  constitute  a defense  available  to, or a  discharge  of, the
Borrower  or  a  subordinated  creditor.  The  Creditors  hereby  waive  demand,
presentment  for  performance,  protest,  notice of dishonor and of protest with
respect to the  Subordinated  Debt and the  Collateral,  notice of acceptance of
this  Agreement,  notice of the making of any of the  Obligations  and notice of
default under any of the Obligations.

         (c) Nothing in this  Agreement  will  obligate the Bank to grant credit
to, or continue financing arrangements with, the Borrower.

         9. CONTINUING AGREEMENT. This is a continuing agreement and will remain
in full force and effect until all of the  Obligations and all of the Borrowers'
obligations to the Bank have been fully performed and indefeasibly satisfied and
until all the Loan Documents have been terminated.  This Agreement will continue
to be  effective  or will be  reinstated,  as the  case  may be,  if at any time
payment of all or any part of the  Obligations is rescinded or must otherwise be
returned by the Bank upon insolvency,  bankruptcy,  or  reorganization of any of
the Borrowers or otherwise, all as though such payment had not been made.

         10. NO CHALLENGE TO OBLIGATIONS.  Each Creditor agrees that it will not
make any assertion,  claim or argument in any action,  suit or proceeding of any
nature whatsoever in any way challenging the priority, validity or effectiveness
of the Obligations to the Bank.

         11.  DISPOSITION OR RELEASE OF COLLATERAL.

         (a) If at any time or from time to time any Collateral,  or any portion
thereof, is in any manner sold or otherwise transferred,  the Creditors' consent
to such disposition shall be automatically and irrevocably given if the Bank, in
its sole discretion and for any reason, consents to such disposition, and in any
event the  Creditors  shall not be  entitled to receive  any  proceeds  (cash or
non-cash)  of such  disposition  unless  and  until  the  Obligations  have been
indefeasibly paid in full.

         (b) If, at any time and for any reason,  the Bank  releases any lien on
any Collateral,  or any portion  thereof,  the Creditors shall likewise  release
their lien (if any) on the property so released from the Bank's lien.

         12.  ORDER OF  PROCEEDINGS.  Nothing in this  Agreement  is intended to
compel the Bank or the  Creditors at any time to declare any Borrower in default
or compel the Bank to proceed  against or refrain  from  proceeding  against any
Collateral  in any order or manner.  All rights  and  remedies  of the Bank with
respect to the Collateral,  the Borrowers, and any other obligors concerning the
Obligations are cumulative and not alternative.

         13.  REPLACEMENT FINANCING

         (a) The  provisions  hereof shall inure to the benefit of any financial
institution  obtained by the Borrowers to provide  financing for the Borrower in
place of the Bank or to any assignee of the Bank, regardless of whether any such
replacement  lender  provides  its  own  financing  or  succeeds  to the  Bank's
financing by assignment.  If requested by such replacement lender, the Creditors
shall  execute  with  such   replacement   lender  a   subordination   agreement
substantially similar to this Agreement.

         (b)  Each  Creditor  also  agrees  that  as a  prior  condition  of any
assignment  of any of its  interests  under any of the  Creditor  Documents to a
party not  already a  Borrower  under the Loan  Documents,  the  Creditor  shall
require the assignee to acknowledge this Agreement and agree, in writing,  to be
bound by the terms and conditions hereof.

         14.   FINANCING   OF   FIDUCIARY.   In  the  event  of  a   bankruptcy,
reorganization,  other  insolvency  or court  proceeding of any of the Borrowers
commences,  the Bank shall have the option (in its sole and absolute discretion)
to  continue  to  provide  financing  (on terms  acceptable  to the Bank) to the
trustee, other fiduciary, or the Borrower as a debtor-in-possession, if the Bank
deems such financing to be in its best  interests.  The  subordination  and lien
priority  provisions of this  Agreement  shall continue to apply to all advances
made during the pendency of such court proceedings,  so that the Bank shall have
a prior lien on any Collateral created before or during such court proceeding to
secure all Obligations,  whether created before or during such court proceeding.
Each Creditor  hereby waives any right it may have to object to financing by the
Bank during the pendency of such court proceeding and each Creditor's consent to
such financing shall not be required regardless of whether the court supervising
such proceeding  approves,  grants or allows  adequate  protection to any of the
Creditors.

         15.  INVESTIGATION  OF PARTIES.  Each  Creditor  has  entered  into the
Creditor  Documents  with the  Borrower  and the Bank has entered  into the Loan
Documents  with the  Borrower and the  Creditors  and the Bank have entered into
this Agreement each upon its own  independent  investigation,  and each makes no
warranty  or  representation  as to each  other with  respect  to the  financial
condition of the Borrower,  or its ability to repay its loans to the Creditor or
the Bank in the future.  Nothing in this Agreement shall be deemed to constitute
this Agreement as a security or create a joint venture or

                                 Page 167 of 195

<PAGE>



partnership between the Creditors and the Bank for any purpose.

         16. IMPROPER ACTION BY CREDITOR. If any of the Creditors, the Borrowers
or both,  contrary to this Agreement,  make, attempt to or threaten to allow any
Creditor to  exercise  its  remedies  against any  Borrower  under the  Creditor
Documents,  or make any payment or take any action  contrary to this  Agreement,
the Bank may restrain or enjoin such  Creditor and such  Borrower from so doing,
it being  expressly  understood  and agreed by the  Creditors  and the Borrowers
that: (i) the Bank's damages from their actions may at that time be difficult to
ascertain and may be irreparable, and (ii) the Creditors and the Borrowers waive
any defense or claim that the Bank or the Borrowers cannot  demonstrate  damages
or can be made whole by the awarding of damages.

         17.  INDEMNIFICATION  OF BANK. The Creditors  agree to indemnify and to
hold the Bank, its officers,  directors,  agents and employees  harmless for any
and all  losses,  damages,  liabilities,  expenses  and  obligations,  including
attorneys'  fees  and  expenses,  as they  arise,  relating  to  actions  of the
Creditors taken contrary to this Agreement.

         18. NOTICES. All notices, demands,  requests,  consents,  approvals and
other communications required or permitted hereunder must be in writing and will
be effective upon receipt if delivered  personally to such party,  or if sent by
facsimile   transmission  with  confirmation  of  delivery,   or  by  nationally
recognized  overnight courier service, to the address set forth below or to such
other address as any party may give to the other in writing for such purpose:



TO THE BANK:

PNC BANK, NATIONAL ASSOCIATION
500 WEST JEFFERSON STREET
LOUISVILLE, KENTUCKY  40202-2823
ATTENTION: SUSAN C. SNYDER
FACSIMILE NO.: (502) 581-3355

BANK ONE, KENTUCKY, NA
416 WEST JEFFERSON STREET
LOUISVILLE, KY 40202
ATTENTION: H. JOSEPH BRENNER
FACSIMILE:  (502) 566-2367

STAR BANK, NA
425 WALNUT STREET, M.L. 8160
CINCINNATI, OH 45201-1038
ATTENTION: RICHARD W. NELTNER, V.P.
FACSIMILE NO.: (513) 632-2068

TO THE BORROWER AND CREDITOR:

CHURCHILL DOWNS INCORPORATED
700 CENTRAL AVENUE
LOUISVILLE, KENTUCKY  40208
ATTENTION: ROBERT L. DECKER
FACSIMILE NO.: (502) 636-4439

CHURCHILL DOWNS MANAGEMENT COMPANY
700 CENTRAL AVENUE
LOUISVILLE, KY 40208
ATTENTION: ROBERT L. DECKER
FACSIMILE NO.: (502) 636-4439

CHURCHILL DOWNS INVESTMENT COMPANY
700 CENTRAL AVENUE
LOUISVILLE, KY 40208
ATTENTION: ROBERT L. DECKER
FACSIMILE NO.: (502) 636-4439


                                 Page 168 of 195

<PAGE>



RACING CORPORATION OF AMERICA
700 CENTRAL AVENUE
LOUISVILLE, KY 40208
ATTENTION: ROBERT L. DECKER
FACSIMILE NO.: (502) 636-4439

ELLIS PARK RACE COURSE, INC.
700 CENTRAL AVENUE
LOUISVILLE, KY 40208
ATTENTION: ROBERT L. DECKER
FACSIMILE NO.: (502) 636-4439

         19.  PRESERVATION  OF RIGHTS.  No delay or  omission on the part of the
Bank to exercise any right or power arising hereunder will impair any such right
or  power  or be  considered  a  waiver  of  any  such  right  or  power  or any
acquiescence  therein,  nor will the action or  inaction  of the Bank impair any
right or power arising  hereunder.  The Bank's rights and remedies hereunder are
cumulative  and not exclusive of any other rights or remedies which the Bank may
have under other agreements,  at law or in equity.  Nothing in this Agreement is
intended  to modify,  alter,  reduce or impair any rights  which the Bank or the
Creditors  may have  against  the  Borrowers  under  the Loan  Documents  or the
Creditor Documents,  respectively, or under any other agreement between them, or
either of them, and any of the Borrowers.

         20. ILLEGALITY.  In case any one or more of the provisions contained in
this Agreement should be invalid,  illegal or unenforceable in any respect,  the
validity,  legality and  enforceability  of the remaining  provisions  contained
herein shall not in any way be affected or impaired thereby.

- 21. CHANGES IN WRITING. No modification,  amendment or waiver of any provision
of this Agreement nor consent to any departure by the Borrowers or the Creditors
therefrom,  will in any event be  effective  unless the same is in  writing  and
signed by the Bank,  and then such waiver or consent shall be effective  only in
the specific instance and for the purpose for which given.

         22.  ENTIRE  AGREEMENT.  This  Agreement  (including  the documents and
instruments  referred to herein) constitutes the entire agreement and supersedes
all other prior agreements and understandings,  both written and oral, among the
parties with respect to the subject matter hereof.

         23.  COUNTERPARTS.  This  Agreement  may be  signed  in any  number  of
counterpart copies and by the parties hereto on separate  counterparts,  but all
such copies shall constitute one and the same instrument.

         24.  SUCCESSORS  AND ASSIGNS.  This  Agreement will be binding upon and
inure to the  benefit of the  Borrowers,  the  Creditors  and the Bank and their
respective heirs, executors,  administrators,  successors and assigns; PROVIDED,
HOWEVER,  that neither the Borrowers nor the Creditors may assign this Agreement
in whole or in part without the prior  written  consent of the Bank and the Bank
at any time may assign this  Agreement in whole or in part.  No claims or rights
are  intended to be created  hereunder  for the benefit of the  Borrowers or any
alleged third party beneficiary hereof.

         25.  INTERPRETATION.  In this Agreement,  unless the parties  otherwise
agree in writing,  the singular includes the plural and the plural the singular;
words  importing any gender  include the other  genders;  the word "or" shall be
deemed to include  "and/or",  the words  "including",  "includes"  and "include"
shall be deemed to be followed by the words "without limitation",  references to
"Borrowers" and "Creditors"  shall mean each Borrower or Creditor  individually;
references to articles,  sections (or  subdivisions of sections) or exhibits are
to those  of this  Agreement  unless  otherwise  indicated;  and  references  to
agreements  and other  contractual  instruments  shall be deemed to include  all
subsequent  amendments and other modifications to such instruments,  but only to
the extent such  amendments  and other  modifications  are not prohibited by the
terms of this  Agreement.  Section  headings in this  Agreement are included for
convenience  of reference only and shall not constitute a part of this Agreement
for any other  purpose.  If this Agreement is executed by more than one party as
Borrower or by more than one party as Creditor,  the obligations of such persons
or entities will be joint and several.

         26. GOVERNING LAW AND  JURISDICTION.  This Agreement has been delivered
to and accepted by the Bank and will be deemed to be made in the Commonwealth of
Kentucky.  THIS AGREEMENT WILL BE INTERPRETED  AND THE RIGHTS AND LIABILITIES OF
THE PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF
KENTUCKY,  EXCLUDING  ITS  CONFLICT  OF  LAWS  RULES.  EACH  LOAN  PARTY  HEREBY
IRREVOCABLY  CONSENTS TO THE  NONEXCLUSIVE  JURISDICTION OF THE CIRCUIT COURT OF
JEFFERSON  COUNTY AND THE UNITED STATES DISTRICT COURT FOR THE WESTERN  DISTRICT
OF  KENTUCKY,  AND WAIVES  PERSONAL  SERVICE OF ANY AND ALL PROCESS  UPON IT AND
CONSENTS  THAT ALL SUCH SERVICE OF PROCESS BE MADE BY  CERTIFIED  OR  REGISTERED
MAIL DIRECTED TO SUCH LOAN PARTY AT THE ADDRESSES PROVIDED FOR IN SECTION 18 AND
SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED UPON ACTUAL RECEIPT THEREOF.

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

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



                                -Page 169 of 195
<PAGE>




WITNESS the due execution  hereof as a document under seal, as of the date first
written above.

WITNESS / ATTEST:                               BORROWERS:

                                                CHURCHILL DOWNS INCORPORATED



____________________________________            By______________________________
                                                                          (SEAL)
Print Name:_________________________            Print___________________________
Name:_______________________________

                                                Title:__________________________


                                                CHURCHILL DOWNS MANAGEMENT
                                                COMPANY

____________________________________            By______________________________
                                                                          (SEAL)
Print Name: ________________________            Print___________________________

                                                Title:__________________________


                                                CHURCHILL DOWNS INVESTMENT
                                                COMPANY

____________________________________            By______________________________
                                                                          (SEAL)
Print Name:_________________________            Print___________________________
Name:_______________________________

                                                Title:__________________________


                                                RACING CORPORATION OF AMERICA


____________________________________            By______________________________
                                                                          (SEAL)
Print Name:_________________________            Print___________________________
Name:_______________________________

                                                Title:__________________________





                                 Page 170 of 195

<PAGE>



                                                ELLIS PARK RACE COURSE, INC.


____________________________________            By______________________________
                                                                          (SEAL)
Print Name:_________________________            Print___________________________
Name:_______________________________

                                                Title:__________________________

                                                BANKS:

                                                PNC BANK, NATIONAL ASSOCIATION


                                                By______________________________
                                                                          (SEAL)
                                                Print Name:_____________________

                                                Title:__________________________



                                                BANK ONE, KENTUCKY, NA


                                                By______________________________
                                                                          (SEAL)
                                                Print Name:_____________________
                                                Title:__________________________


                                                STAR BANK, NA


                                                By______________________________
                                                                          (SEAL)
                                                Print Name:_____________________

                                                Title:__________________________



                                 Page 171 of 195

<PAGE>



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

                           INVESTMENTS @ JUNE 1, 1998


                           DESCRIPTION                           AMOUNT

CHURCHILL DOWNS INCORPORATED
         Fifth Third - U of L Medical Center Revenue Bonds      $250,000
         Fifth Third - U of L Medical Center Revenue Bonds       500,000
         Fifth Third - U of L Medical Center Revenue Bonds       250,000
         National City Bank - Payroll Sweep                    1,469,000
         National City - Regional Airport Authority              500,000
         Louisville Community Development Bank - CD              100,000
         Commonwealth Bank & Trust - CD                          100,000
                                                              ----------

                     Total Churchill Downs Incorporated       $3,169,000


ELLIS PARK RACE COURSE, INC.
         Citizens Bank of Evansville                              85,407

                     Total Ellis Park Race Course, Inc.           85,407


                              TOTAL COMPANY                    $3,254,407
                                                               ==========





                                 Page 172 of 195

<PAGE>


<TABLE>
<CAPTION>

                   EXHIBIT 1.1(P)(IV) - PERMITTED PARTNERSHIPS
                               AND LLC INVESTMENT

         INVESTMENT                              INVESTOR                       OWNERSHIP INTEREST

<S>                                 <C>                                                        <C>
Kentucky Downs LLC                  Churchill Downs Incorporated                               24%

Equibase Holding Partners,
L.P.                                Churchill Downs Incorporated                               5.5%

EquiSource, L.L.C.                  Churchill Downs Investment Company                         40%

Kentucky Off-Track
Betting (Corporation)               Churchill Downs Incorporated                               25%
                                    Ellis Park Race Course, Inc.                               25%

ODS Technologies, L.P.              Churchill Downs Management Company                         Up to 3.333%

Tracknet LLC                        Churchill Downs Management Company                         40%

Triple Crown Productions,
LLC                                 Churchill Downs Incorporated                               331/3%

Parkland Partners Limited           Churchill Downs Incorporated                               33.1%

</TABLE>


                                 Page 173 of 195

<PAGE>



                                 EXHIBIT 1.1(R)

                        REVOLVING CREDIT PROMISSORY NOTE

$30,000,000.00                                                   June ____, 1998


         FOR VALUE  RECEIVED,  CHURCHILL  DOWNS  INCORPORATED,  CHURCHILL  DOWNS
MANAGEMENT COMPANY,  CHURCHILL DOWNS INVESTMENT  COMPANY,  RACING CORPORATION OF
AMERICA,  and ELLIS PARK RACE  COURSE,  INC.  (collectively,  the  "Borrowers"),
promise to pay to the order of PNC BANK, NATIONAL ASSOCIATION, a national
banking corporation (the "Payee"),  on or before the Expiration Date (as defined
in the Credit Agreement defined below), the lesser of (y) Thirty Million Dollars
($30,000,000.00),  or (z) the unpaid aggregate  principal amount of all advances
made by the Payee to the  Borrowers as  Revolving  Credit Loans under the Credit
Agreement referred to below.

         This Note  evidences  indebtedness  incurred  or to be  incurred by the
Borrowers  under a Revolving  Line of Credit  extended to the  Borrowers  by the
Banks under a Credit  Agreement  (together with all  amendments,  modifications,
supplement,  and/or  restatements  thereof,  the "Credit Agreement") dated as of
June ___, 1998, between the Borrowers,  the Agent, the Bank and the other Banks,
which line of credit is referred to in the Credit  Agreement  as the  "Revolving
Line of Credit." Unless otherwise defined herein, all capitalized and designated
terms  in this  Note  shall  have  the  meanings  given  to  them in the  Credit
Agreement.  The proceeds of the Revolving Credit Note may be advanced and repaid
and  readvanced  until June __, 2000, as provided in the Credit  Agreement.  The
principal  amount of the Revolving Line of Credit  outstanding from time to time
to the Bank under this Note shall be determined  by reference to the  electronic
data  processing  equipment of the Agent on which all Loans under the  Revolving
Line of Credit and all  payments by the  Borrowers  on account of the  Revolving
Line of Credit shall be recorded.  Such  electronic  data  processing  equipment
shall be deemed PRIMA FACIE to be correct as to such  matters,  absent  manifest
error.

         The unpaid  principal  balance of each Revolving Credit Loan shall bear
interest at one or more  Euro-Rates,  determined in  accordance  with the Credit
Agreement for that Revolving Credit Loan for its Interest Period, or at the Base
Rate in the circumstances contemplated in the Credit Agreement.
         The  outstanding  principal  balance of the  aggregate of all Revolving
Credit  Loans from time to time which are not  bearing  interest  at one or more
Euro-Rates shall bear interest at an annual rate equal to the Base Rate, as that
Base Rate may  change  from time to time,  from the date of the first  Revolving
Credit Loan until the entire  principal  balance of the  aggregate  of Revolving
Credit Loans made and not repaid,  and all accrued interest thereon,  shall have
been paid.

         The  Borrowers  shall  pay all  accrued  but  unpaid  interest  on each
Revolving  Credit Loan  bearing  interest at a Euro-Rate  on the last day of its
Interest  Period,  except in the case of Revolving  Credit  Loans with  Interest
Periods of three months or longer,  in which case the Borrower shall pay accrued
but unpaid interest at the end of the first three months of that Interest Period
and  again  on the  90th  day  of  such  Interest  Period,  at 90 day  intervals
thereafter  during such  Interest  Period,  and on the last day of such Interest
Period.  On July 1, 1998, and on the first day of each October,  January,  April
and July  thereafter,  as long as any principal or interest on this Note remains
unpaid, the Borrowers shall pay to the Lender the accrued but unpaid interest on
the outstanding principal of this Note (if any) which is bearing interest at the
Base Rate.

         The  Borrowers  shall pay to the Agent for the  benefit of the Bank the
entire outstanding principal balance of, and all accrued but unpaid interest on,
this Note, on June ___, 2000.

         All payments of principal and interest in respect of this Note shall be
made in lawful  money of the  United  States of America in same day funds at the
office of the Agent located at 500 West Jefferson Street,  Louisville,  Kentucky
40202-2823,  or at such other place as shall be  designated  in writing for such
purpose in accordance with the terms of the Credit Agreement.  Until notified in
writing of the  transfer  of this Note,  the  Borrowers  and the Agent  shall be
entitled  to deem the Payee or such  person  who has been so  identified  by the
transferor in writing to the Borrowers and the Agent as the holder of this Note,

                                 Page 174 of 195

<PAGE>



as the  owner  and  holder of this  Note.  Each of the Payee and any  subsequent
holder of this Note agrees that before disposing of this Note or any part hereof
it will make a  notation  hereon or in its  records  of all  principal  payments
previously  made  hereunder  and of the date to which  interest  herein has been
paid; PROVIDED, HOWEVER, that the failure to make a notation of any payment made
on this Note shall not limit or otherwise affect the obligation of the Borrowers
hereunder with respect to payments of principal or interest on this Note.

         Whenever  any  payment  on this Note shall be stated to be due on a day
which is not a Business Day,  such payment shall be made on the next  succeeding
Business Day and such extension of time shall be included in the  computation of
the  payment of  interest on this Note;  PROVIDED,  HOWEVER,  that if the day on
which any payment  relating to a Euro-Rate Loan is due is not a Business Day but
is a day of the month after which no further  Business Day occurs in such month,
then the due date thereof shall be the next preceding Business Day.

         This Note is subject to  prepayment  at the option of the  Borrowers as
provided in Section 5.4 of the Credit  Agreement and at the option of the Banks,
as provided in Section 5.5 of the Credit Agreement.

         This Note is  subject to  restriction  on  transfer  or  assignment  as
provided in Section 11.11 of the Credit Agreement.

         THE CREDIT  AGREEMENT  AND THIS NOTE SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE COMMONWEALTH
OF KENTUCKY, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.

         Upon the  occurrence of an Event of Default,  the unpaid balance of the
principal  amount of this Note may  become,  or may be  declared  to be, due and
payable in the manner,  upon the conditions and with the effect  provided in the
Credit Agreement.

         The terms of this Note are  subject  to  amendment  only in the  manner
provided in the Credit Agreement.

         No reference  herein to the Credit  Agreement  and no provision of this
Note or the  Credit  Agreement  shall  alter or  impair  the  obligation  of the
Borrowers,  which is absolute  and  unconditional,  to pay the  principal of and
interest on this Note at the place, at the respective times, and in the currency
herein prescribed.

         The  Borrowers  promise to pay all  reasonable  costs and  expenses  of
holder,  including reasonable fees and expenses of counsel. The Borrowers hereby
consent to all renewals and extensions of time at or after the maturity  hereof,
without notice, and hereby waives diligence,  presentment,  protest,  demand and
notice of every kind and,  to the full  extent  permitted  by law,  the right to
plead any statute of limitations as a defense to any demand hereunder.

         IN WITNESS WHEREOF,  the Borrowers have caused this Note to be executed
and  delivered by its duly  authorized  officer,  as of the day and year and the
place first above written.

                                 Page 175 of 195

<PAGE>





                                                CHURCHILL DOWNS INCORPORATED
                                                (a "Borrower")


                                                By _____________________________
                                                Title:__________________________


                                                CHURCHILL DOWNS MANAGEMENT
                                                COMPANY (a "Borrower")


                                                By _____________________________
                                                Title:__________________________



                                                CHURCHILL DOWNS INVESTMENT
                                                COMPANY (a "Borrower")


                                                By _____________________________
                                                Title:__________________________



                                                RACING CORPORATION OF AMERICA
                                                (a "Borrower")


                                                By _____________________________
                                                Title:__________________________



                                                ELLIS PARK RACE COURSE, INC.
                                                (a "Borrower")


                                                By _____________________________
                                                Title:__________________________







                                Page 176 of 195

<PAGE>



                                 EXHIBIT 1.1(R)

                        REVOLVING CREDIT PROMISSORY NOTE

$10,000,000.00                                                   June ____, 1998


     FOR VALUE RECEIVED, CHURCHILL DOWNS INCORPORATED, CHURCHILL DOWNS
MANAGEMENT COMPANY, CHURCHILL DOWNS INVESTMENT COMPANY, RACING
CORPORATION OF AMERICA, and ELLIS PARK RACE COURSE, INC. (collectively, the
"Borrowers"),  promise to pay to the order of STAR BANK, NA, a national  banking
corporation  (the "Payee"),  on or before the Expiration Date (as defined in the
Credit  Agreement  defined  below),  the  lesser  of  (y)  Ten  Million  Dollars
($10,000,000.00),  or (z) the unpaid aggregate  principal amount of all advances
made by the Payee to the  Borrowers as  Revolving  Credit Loans under the Credit
Agreement referred to below.

     This  Note  evidences  indebtedness  incurred  or to  be  incurred  by  the
Borrowers  under a Revolving  Line of Credit  extended to the  Borrowers  by the
Banks under a Credit  Agreement  (together with all  amendments,  modifications,
supplement,  and/or  restatements  thereof,  the "credit Agreement") dated as of
June ___, 1998, between the Borrowers,  the Agent, the Bank and the other Banks,
which line of credit is referred to in the Credit  Agreement  as the  "Revolving
Line of Credit." Unless otherwise defined herein, all capitalized and designated
terms  in this  Note  shall  have  the  meanings  given  to  them in the  Credit
Agreement.  The proceeds of the Revolving Credit Note may be advanced and repaid
and  readvanced  until June __, 2000, as provided in the Credit  Agreement.  The
principal  amount of the Revolving Line of Credit  outstanding from time to time
to the Bank under this Note shall be determined  by reference to the  electronic
data  processing  equipment of the Agent on which all Loans under the  Revolving
Line of Credit and all  payments by the  Borrowers  on account of the  Revolving
Line of Credit shall be recorded.  Such  electronic  data  processing  equipment
shall be deemed PRIMA FACIE to be correct as to such  matters,  absent  manifest
error.

     The unpaid  principal  balance  of each  Revolving  Credit  Loan shall bear
interest at one or more  Euro-Rates,  determined in  accordance  with the Credit
Agreement for that Revolving Credit Loan for its Interest Period, or at the Base
Rate in the circumstances contemplated in the Credit Agreement.

     The outstanding  principal balance of the aggregate of all Revolving Credit
Loans from time to time which are not bearing interest at one or more Euro-Rates
shall bear  interest at an annual rate equal to the Base Rate, as that Base Rate
may change from time to time, from the date of the first  Revolving  Credit Loan
until the entire  principal  balance of the aggregate of Revolving  Credit Loans
made and not repaid, and all accrued interest thereon, shall have been paid.

     The Borrowers  shall pay all accrued but unpaid  interest on each Revolving
Credit Loan  bearing  interest at a  Euro-Rate  on the last day of its  Interest
Period,  except in the case of Revolving  Credit Loans with Interest  Periods of
three months or longer,  in which case the Borrower shall pay accrued but unpaid
interest at the end of the first three months of that Interest  Period and again
on the 90th day of such Interest Period,  at 90 day intervals  thereafter during
such Interest Period,  and on the last day of such Interest  Period.  On July 1,
1998, and on the first day of each October,  January, April and July thereafter,
as long as any principal or interest on this Note remains unpaid,  the Borrowers
shall pay to the  Lender the  accrued  but unpaid  interest  on the  outstanding
principal of this Note (if any) which is bearing interest at the Base Rate.

     The Borrowers shall pay to the Agent for the benefit of the Bank the entire
outstanding  principal  balance of, and all accrued but unpaid interest on, this
Note, on June ___, 2000.

     All  payments of  principal  and  interest in respect of this Note shall be
made in lawful  money of the  United  States of America in same day funds at the
office of the Agent located at 500 West Jefferson Street,  Louisville,  Kentucky
40202-2823,  or at such other place as shall be  designated  in writing for such
purpose in accordance with the terms of the Credit Agreement.  Until notified in
writing of the  transfer  of this Note,  the  Borrowers  and the Agent  shall be
entitled to deem the Payee

                                 Page177 of 195

<PAGE>



or such person who has been so  identified  by the  transferor in writing to the
Borrowers  and the Agent as the holder of this Note,  as the owner and holder of
this Note. Each of the Payee and any subsequent  holder of this Note agrees that
before  disposing of this Note or any part hereof it will make a notation hereon
or in its records of all principal payments previously made hereunder and of the
date to which interest herein has been paid; PROVIDED, HOWEVER, that the failure
to make a notation of any payment made on this Note shall not limit or otherwise
affect the  obligation  of the Borrowers  hereunder  with respect to payments of
principal or interest on this Note.

     Whenever  any payment on this Note shall be stated to be due on a day which
is not a  Business  Day,  such  payment  shall  be made on the  next  succeeding
Business Day and such extension of time shall be included in the  computation of
the  payment of  interest on this Note;  PROVIDED,  HOWEVER,  that if the day on
which any payment  relating to a Euro-Rate Loan is due is not a Business Day but
is a day of the month after which no further  Business Day occurs in such month,
then the due date thereof shall be the next preceding Business Day.

     This Note is  subject  to  prepayment  at the  option of the  Borrowers  as
provided in Section 5.4 of the Credit  Agreement  and at the option of the Bank,
as provided in Section 5.5 of the Credit Agreement.

     This Note is subject to  restriction  on transfer or assignment as provided
in Section 11.11 of the Credit Agreement.

     THE  CREDIT  AGREEMENT  AND THIS NOTE  SHALL BE  GOVERNED  BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE COMMONWEALTH
OF KENTUCKY, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.

     Upon the  occurrence  of an Event of  Default,  the  unpaid  balance of the
principal  amount of this Note may  become,  or may be  declared  to be, due and
payable in the manner,  upon the conditions and with the effect  provided in the
Credit Agreement.

     The terms of this Note are subject to amendment only in the manner provided
in the Credit Agreement.

     No reference  herein to the Credit  Agreement and no provision of this Note
or the Credit  Agreement  shall alter or impair the obligation of the Borrowers,
which is absolute  and  unconditional,  to pay the  principal of and interest on
this Note at the place,  at the  respective  times,  and in the currency  herein
prescribed.

     The Borrowers  promise to pay all reasonable  costs and expenses of holder,
including  reasonable fees and expenses of counsel. The Borrowers hereby consent
to all renewals and extensions of time at or after the maturity hereof,  without
notice, and hereby waives diligence,  presentment, protest, demand and notice of
every kind and,  to the full  extent  permitted  by law,  the right to plead any
statute of limitations as a defense to any demand hereunder.

     IN WITNESS WHEREOF,  the Borrowers have caused this Note to be executed and
delivered by its duly authorized  officer,  as of the day and year and the place
first above written.

                                                CHURCHILL DOWNS INCORPORATED
                                                (a "Borrower")


                                                By _____________________________
                                                Title:__________________________




                                 Page 178 of 195

<PAGE>



                                                CHURCHILL DOWNS MANAGEMENT
                                                COMPANY (a "Borrower")


                                                By _____________________________
                                                Title:__________________________



                                                CHURCHILL DOWNS INVESTMENT
                                                COMPANY (a "Borrower")


                                                By _____________________________
                                                Title:__________________________



                                                RACING CORPORATION OF AMERICA
                                                (a "Borrower")


                                                By _____________________________
                                                Title:__________________________



                                                ELLIS PARK RACE COURSE, INC.
                                                (a "Borrower")
 

                                                By _____________________________
                                                Title:__________________________



                                 Page 179 of 195

<PAGE>



                                 EXHIBIT 1.1(R)

                        REVOLVING CREDIT PROMISSORY NOTE

$10,000,000.00                                                   June ____, 1998


     FOR  VALUE  RECEIVED,   CHURCHILL  DOWNS   INCORPORATED,   CHURCHILL  DOWNS
MANAGEMENT COMPANY,  CHURCHILL DOWNS INVESTMENT  COMPANY,  RACING CORPORATION OF
AMERICA,  and ELLIS PARK RACE  COURSE,  INC.  (collectively,  the  "Borrowers"),
promise to pay to the order of BANK ONE, KENTUCKY, NA, a national banking
corporation  (the "Payee"),  on or before the Expiration Date (as defined in the
Credit  Agreement  defined  below),  the  lesser  of  (y)  Ten  Million  Dollars
($10,000,000.00),  or (z) the unpaid aggregate  principal amount of all advances
made by the Payee to the  Borrowers as  Revolving  Credit Loans under the Credit
Agreement referred to below.

     This  Note  evidences  indebtedness  incurred  or to  be  incurred  by  the
Borrowers  under a Revolving  Line of Credit  extended to the  Borrowers  by the
Banks under a Credit  Agreement  (together with all  amendments,  modifications,
supplement,  and/or  restatements  thereof,  the "credit Agreement") dated as of
June ___, 1998, between the Borrowers,  the Agent, the Bank and the other Banks,
which line of credit is referred to in the Credit  Agreement  as the  "Revolving
Line of Credit." Unless otherwise defined herein, all capitalized and designated
terms  in this  Note  shall  have  the  meanings  given  to  them in the  Credit
Agreement.  The proceeds of the Revolving Credit Note may be advanced and repaid
and  readvanced  until June __, 2000, as provided in the Credit  Agreement.  The
principal  amount of the Revolving Line of Credit  outstanding from time to time
to the Bank under this Note shall be determined  by reference to the  electronic
data  processing  equipment of the Agent on which all Loans under the  Revolving
Line of Credit and all  payments by the  Borrowers  on account of the  Revolving
Line of Credit shall be recorded.  Such  electronic  data  processing  equipment
shall be deemed PRIMA FACIE to be correct as to such  matters,  absent  manifest
error.

     The unpaid  principal  balance  of each  Revolving  Credit  Loan shall bear
interest at one or more  Euro-Rates,  determined in  accordance  with the Credit
Agreement for that Revolving Credit Loan for its Interest Period, or at the Base
Rate in the circumstances contemplated in the Credit Agreement.

     The outstanding  principal balance of the aggregate of all Revolving Credit
Loans from time to time which are not bearing interest at one or more Euro-Rates
shall bear  interest at an annual rate equal to the Base Rate, as that Base Rate
may change from time to time, from the date of the first  Revolving  Credit Loan
until the entire  principal  balance of the aggregate of Revolving  Credit Loans
made and not repaid, and all accrued interest thereon, shall have been paid.

     The Borrowers  shall pay all accrued but unpaid  interest on each Revolving
Credit Loan  bearing  interest at a  Euro-Rate  on the last day of its  Interest
Period,  except in the case of Revolving  Credit Loans with Interest  Periods of
three months or longer,  in which case the Borrower shall pay accrued but unpaid
interest at the end of the first three months of that Interest  Period and again
on the 90th day of such Interest Period,  at 90 day intervals  thereafter during
such Interest Period,  and on the last day of such Interest  Period.  On July 1,
1998, and on the first day of each October,  January, April and July thereafter,
as long as any principal or interest on this Note remains unpaid,  the Borrowers
shall pay to the  Lender the  accrued  but unpaid  interest  on the  outstanding
principal of this Note (if any) which is bearing interest at the Base Rate.

     The Borrowers shall pay to the Agent for the benefit of the Bank the entire
outstanding  principal  balance of, and all accrued but unpaid interest on, this
Note, on June ___, 2000.

     All  payments of  principal  and  interest in respect of this Note shall be
made in lawful  money of the  United  States of America in same day funds at the
office of the Agent located at 500 West Jefferson Street,  Louisville,  Kentucky
40202-2823,  or at such other place as shall be  designated  in writing for such
purpose in accordance with the terms of the Credit Agreement.  Until notified in
writing of the  transfer  of this Note,  the  Borrowers  and the Agent  shall be
entitled to deem the Payee

                                 Page 180 of 195

<PAGE>



or such person who has been so  identified  by the  transferor in writing to the
Borrowers  and the Agent as the holder of this Note,  as the owner and holder of
this Note. Each of the Payee and any subsequent  holder of this Note agrees that
before  disposing of this Note or any part hereof it will make a notation hereon
or in its records of all principal payments previously made hereunder and of the
date to which interest herein has been paid; PROVIDED, HOWEVER, that the failure
to make a notation of any payment made on this Note shall not limit or otherwise
affect the  obligation  of the Borrowers  hereunder  with respect to payments of
principal or interest on this Note.

     Whenever  any payment on this Note shall be stated to be due on a day which
is not a  Business  Day,  such  payment  shall  be made on the  next  succeeding
Business Day and such extension of time shall be included in the  computation of
the  payment of  interest on this Note;  PROVIDED,  HOWEVER,  that if the day on
which any payment  relating to a Euro-Rate Loan is due is not a Business Day but
is a day of the month after which no further  Business Day occurs in such month,
then the due date thereof shall be the next preceding Business Day.

     This Note is  subject  to  prepayment  at the  option of the  Borrowers  as
provided in Section 5.4 of the Credit  Agreement  and at the option of the Bank,
as provided in Section 5.5 of the Credit Agreement.

     This Note is subject to  restriction  on transfer or assignment as provided
in Section 11.11 of the Credit Agreement.

     THE  CREDIT  AGREEMENT  AND THIS NOTE  SHALL BE  GOVERNED  BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE COMMONWEALTH
OF KENTUCKY, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.

     Upon the  occurrence  of an Event of  Default,  the  unpaid  balance of the
principal  amount of this Note may  become,  or may be  declared  to be, due and
payable in the manner,  upon the conditions and with the effect  provided in the
Credit Agreement.

     The terms of this Note are subject to amendment only in the manner provided
in the Credit Agreement.

     No reference  herein to the Credit  Agreement and no provision of this Note
or the Credit  Agreement  shall alter or impair the obligation of the Borrowers,
which is absolute  and  unconditional,  to pay the  principal of and interest on
this Note at the place,  at the  respective  times,  and in the currency  herein
prescribed.

     The Borrowers  promise to pay all reasonable  costs and expenses of holder,
including  reasonable fees and expenses of counsel. The Borrowers hereby consent
to all renewals and extensions of time at or after the maturity hereof,  without
notice, and hereby waives diligence,  presentment, protest, demand and notice of
every kind and,  to the full  extent  permitted  by law,  the right to plead any
statute of limitations as a defense to any demand hereunder.

     IN WITNESS WHEREOF,  the Borrowers have caused this Note to be executed and
delivered by its duly authorized  officer,  as of the day and year and the place
first above written.

                                                CHURCHILL DOWNS INCORPORATED
                                                (a "Borrower")


                                                By _____________________________
                                                Title:__________________________



                                 Page 181 of 195

<PAGE>




                                                CHURCHILL DOWNS MANAGEMENT
                                                COMPANY (a "Borrower")


                                                By _____________________________
                                                Title:__________________________



                                                CHURCHILL DOWNS INVESTMENT
                                                COMPANY (a "Borrower")


                                                By _____________________________
                                                Title:__________________________



                                                RACING CORPORATION OF AMERICA
                                                (a "Borrower")


                                                By _____________________________
                                                Title:__________________________


                                                ELLIS PARK RACE COURSE, INC.
                                                (a "Borrower")


                                                By ____________________________
                                                Title:__________________________



                                Page 182 of 195

<PAGE>



                                 EXHIBIT 1.1(S)

                                   SWING LINE
                                 PROMISSORY NOTE

$10,000,000                                                Louisville, Kentucky
                                                          Date: June ____, 1998
                                               Final Maturity:  June ____, 2000

     On or before June ____, 2000, CHURCHILL DOWNS INCORPORATED, CHURCHILL DOWNS
MANAGEMENT COMPANY,  CHURCHILL DOWNS INVESTMENT  COMPANY,  RACING CORPORATION OF
AMERICA,  AND ELLIS  PARK RACE  COURSE,  INC.  (collectively,  the  "Borrowers")
promises to pay to the order of PNC BANK, NATIONAL  ASSOCIATION (the "Agent") at
the principal banking office of PNC Bank, National Association, in Louisville,
Kentucky,  as  agent  for PNC  Bank,  National  Association  (the  "Bank"),  the
outstanding principal sum of Ten Million Dollars ($10,000,000) or so much of the
principal amount of the Swing Line of Credit  represented by this Note as may be
disbursed and  outstanding  by the Bank under the terms of the Credit  Agreement
described below, and to pay interest on the unpaid principal balance outstanding
from time to time until maturity, as herein provided.

     This  Note  evidences  indebtedness  incurred  or to  be  incurred  by  the
Borrowers  under a Swing Line of Credit  extended to the  Borrowers  by the Bank
under a Credit  Agreement  (as the same may be  amended  from time to time,  the
"Credit  Agreement")  dated as of June ____,  1998,  between the Borrowers,  the
Agent, the Bank and the other Banks,  which line of credit is referred to in the
Credit Agreement as the "Swing Line of Credit." Unless otherwise defined herein,
all capitalized and designated  terms in this Note shall have the meanings given
to them in the Credit Agreement. The proceeds of the Swing Line of Credit may be
advanced and repaid and  readvanced  until June ____,  2000,  as provided in the
Credit Agreement.  The principal amount of the Swing Line of Credit  outstanding
from time to time to the Bank under this Note shall be  determined  by reference
to the electronic data processing equipment of the Bank on which all Loans under
the Swing Line of Credit and all  payments  by the  Borrowers  on account of the
Swing  Line of  Credit  shall  be  recorded.  Such  electronic  data  processing
equipment  shall be deemed PRIMA FACIE to be correct as to such matters,  absent
manifest error.

     Principal  of the  outstanding  balances  of Loans  under the Swing Line of
Credit  will be payable as required  in Section  3.1.2 of the Credit  Agreement.
Interest  on the unpaid  portion of the  principal  balance of the Swing Line of
Credit outstanding from time to time, until maturity, whether by acceleration or
otherwise,  will  accrue at an annual rate equal to the Base Rate as provided in
accordance with Section 3.1.1 of the Credit Agreement.  After maturity,  whether
by acceleration or otherwise,  interest on the unpaid  principal  balance of the
Swing Line of Credit will accrue interest at the Default Rate.  Interest will be
calculated on the basis that an entire year's interest is earned in 360 days.

     Accrued interest on the principal of Swing Line Loans outstanding from time
to time will be payable in accordance with Section 3.1.1 of the Credit Agreement
and at  maturity.  Principal  may be  prepaid  only as  provided  in the  Credit
Agreement and any such prepayment shall be applied first to accrued interest and
then to principal installments in inverse order of their maturity.

     A  payment  by  check  or  other  item of  payment  drawn on the Bank or of
immediately   available  funds  shall  be  credited   (conditional   upon  final
collection)  on the same day  received.  A payment  by check  and other  item of
payment drawn on any other bank or financial  institution shall, for the purpose
of determining the outstanding  principal balance and calculating  interest,  be
credited (conditional upon final collection) after allowing one (1) Business Day
for  collection.  Acceptance  by the Bank of any payment which is less than full
payment  of the amount  due and owing or which is not in  immediately  available
funds shall not  constitute a waiver of the Bank's  right to receive  payment in
full at such or at any other time in immediately available funds.

     All  amounts  payable  under the terms of this Note shall be  payable  with
reasonable attorneys' fees

                                 Page 183 of 195

<PAGE>



and without relief from valuation and appraisement laws.

     This Note is issued  pursuant  to, is  entitled  to the  benefit of, and is
subject to the provisions of the Credit  Agreement,  to which  reference is made
hereby for,  among other things,  the  definition  of certain  proper nouns used
herein,  procedures for selecting interest rate options,  and for a statement of
provisions for acceleration of the maturity hereof upon the happening of certain
stated events.

     The rights and remedies  provided in this Note and the Credit Agreement are
cumulative,  are in  addition  to any other  right or remedy of Bank  and/or the
Agent, and may be exercised successively, concurrently or alternatively. Failure
to exercise any such right or remedy shall not operate as a waiver thereof.

     The  Borrowers  and any  endorsers or  guarantors  severally  waive demand,
presentment  for payment and notice of nonpayment of this Note, and each of them
consents to any renewals or  extensions  of the time of payment  hereof  without
notice.

     If more than one party shall  execute this Note,  the term Borrower as used
herein shall mean all parties  signing this Note and each of them,  and all such
parties, shall be the jointly and severally obligated and liable hereunder.

     If any payment is not paid within five (5) days after it first  became due,
or if default  occurs  under the Credit  Agreement  or the Loan  Documents,  the
holder may,  at its option,  after the giving of any notice and the lapse of any
period of grace afforded to Borrowers  thereunder  declare the principal balance
of this Note and all accrued interest immediately due and payable,  irrespective
of the maturity date specified  herein,  with interest  thereon from the date of
such  default at the default  rate  specified  herein,  all without  relief from
valuation or  appraisement  laws,  together  with the Bank's  and/or the Agent's
enforcement expenses as provided in the Credit Agreement.

     This  Note  is  made  under  and  will  be  governed  by  the  laws  of the
Commonwealth of Kentucky.

     The Borrowers,  after  consulting or having had the  opportunity to consult
with counsel,  knowingly,  voluntarily and intentionally waives any right it may
have to a trial by jury in any  litigation  based  upon or  arising  out of this
Note, the Credit Agreement or any related  instrument or agreement or any of the
transactions  contemplated  by this  Note or any  course  of  conduct,  dealing,
statements (whether oral or written),  or actions of either the Borrowers or the
Bank. The Borrowers shall not seek to consolidate, by counterclaim or otherwise,
any action in which a jury trial has been waived with any other  action in which
a jury  trial  cannot be or has not been  waived.  This  provision  shall not be
deemed to have been modified in any respect or  relinquished  by either the Bank
or the Borrowers except by a written instrument executed by it.

     IN WITNESS WHEREOF,  Borrowers have executed this Note as of the date first
hereinabove written.

                                                CHURCHILL DOWNS INCORPORATED
                                                (a "Borrower")


                                                By _____________________________
                                                Title:__________________________


                                 Page 184 of 195

<PAGE>




                                                CHURCHILL DOWNS MANAGEMENT
                                                COMPANY (a "Borrower")


                                                By _____________________________
                                                Title:__________________________
-


                                                CHURCHILL DOWNS INVESTMENT
                                                COMPANY (a "Borrower")


                                                By _____________________________
                                                Title:__________________________


                                                RACING CORPORATION OF AMERICA
                                                (a "Borrower")


                                                By _____________________________
                                                Title:__________________________





                                                ELLIS PARK, INC.
                                                (a "Borrower")


                                                By _____________________________
                                                Title:__________________________





                                 Page 185 of 195
<PAGE>



                                   EXHIBIT 2.5

                                     FORM OF
                          REVOLVING CREDIT LOAN REQUEST

TO:               PNC Bank, National Association as Agent
         Telephone No.:             (412) 762-3627
         Telecopier No.:            (412) 762-8672
         Attention:        Multi-Bank Loan Administration
                           Arlene Ohler

FROM:

RE:               Credit Agreement (the "Credit Agreement") dated as of _____and
                  PNC Bank, National Association, as Agent

     Pursuant to Section 2.04(a) of the Credit Agreement, the undersigned hereby
makes the following Revolving Credit Loan Request:

     1.  This request is for (choose one):

         ____     Revolving Credit Loan

         ____     Conversion of outstanding Euro-Rate Loans to Base Rate

         ____     Conversion of outstanding Base-Rate Loans to Euro-Rate

         ____     Renewal of Euro-Rate election with respect to outstanding Eur
                  -Rate Loans

     2.  Aggregate Principal Amount of Revolving
         Credit Loans Comprising the new Borrowing
         Tranche                                              U.S. $____________

     3.  Proposed Borrowing, Conversion or
         Renewal Date:                                        __________________

     4. Interest Rate Option  Applicable  to the New Borrowing  Tranche  (choose
        one):

                  ____a.     Base Rate Option

                  ____b.     Euro-Rate Option for an Interest Period of (choose
                             one):

                             ____i.     1 month

                             ____ii.    2 months

                             ____iii.   3 months

                             ____iv.    6 months

                             ____v.     9 months

                             ____vi.    12 months


                                 Page 186 of 195

<PAGE>




         5.       If this Revolving Credit Loan Request requests the making of
                  Revolving Credit Loans, as of the date hereof and the date of 
                  making  of  the  Loans: the  representations  and  warranties 
                  contained in Article VI of the Credit  Agreement are and will 
                  be true (except representations and warranties that expressly
                  relate  solely  to  an  earlier  date  or  time,  which  
                  representations  and warranties were  true  on  and as of the 
                  specific  date  referred  to  therein) and, provided, however,
                  that for purposes of this Certificate, in each representation 
                  and warranty in Article VI that makes reference to a Schedule,
                  the  representation  under  this  Certificate  that  such 
                  representation and warranty in Article VI is true on and as of
                  the date hereof shall  take  into  account (i) any subsequent 
                  amendments  to  any  Schedule  referred  to therein, (ii) any 
                  exception contained in a written notice received by the Banks
                  which makes specific reference to the applicable Schedule, or 
                  (iii) any written disclosure made by the Borrower prior to the
                  date  as  f which  such  representation or  warranty is made, 
                  provided that such amendment, exception or disclosure is an
                  amendment, exception or disclosure (a) to which Required Banks
                  have  consented  if  such  amendment, exception  or disclosure
                  amends or waives provisions of this Agreement or is otherwise 
                  required under the terms of the Credit Agreement or(b) which 
                  updates Schedule 6.02(b),(i), (m) or (q); no Event of Default
                  or Potential Default has  occurred and is continuing or shall 
                  exist;  and  the  making of the Loans shall not contravene any
                  Law applicable to the Borrower.

         Capitalized  terms used but not defined  herein shall have the meanings
given to them in the Credit Agreement.

         The undersigned certifies to the accuracy of the foregoing.


                                                By______________________________

                                                Its_____________________________

                                                Date____________________________





                                 Page 187 of 195

<PAGE>



                                  EXHIBIT 7.1.4



                                  502 562-7201

                                                      REPLY TO WRITER AT:  
                                                      Citizens Plaza
                                                      Louisville, KY  40202-2898
                                                      FAX:  502-589-0309
                                                   June 17, 1998

PNC Bank, National Association
500 West Jefferson Street
Louisville, Kentucky  40202

PNC Bank, National Association
One PNC Plaza
249 5th Avenue
Pittsburgh, Pennsylvania  15222

Bank One, Kentucky, N.A.
416 West Jefferson Street
Louisville, Kentucky  40202

Star Bank, NA
425 Walnut Street, M.L.  8160
Cincinnati, Ohio  475201-1038

                  Re:        Churchill  Downs  Incorporated,  Churchill  Downs 
                             Management  Company,  Churchill   Downs  Investment
                             Company,  Racing  Corporation of America and Ellis 
                             Park Race Course, Inc.

Ladies and Gentlemen:

                  We have  acted as  counsel to  Churchill  Downs  Incorporated,
Churchill Downs Management Company,  Churchill Downs Investment Company,  Racing
Corporation  of America  and Ellis Park Race  Course,  Inc.  (collectively,  the
"Borrowers")  in  connection  with the  execution  and  delivery of that certain
Credit  Agreement  of even date  herewith  (the  "Credit  Agreement")  among the
Borrowers,  the Agent (as  defined  in the Credit  Agreement)  and the Banks (as
defined in the Credit  Agreement).  We are  rendering  this opinion  pursuant to
Section 7.1.4 of the Loan  Agreement.  Capitalized  terms not otherwise  defined
herein shall have the meanings assigned to those terms in the Credit Agreement.

                  In  connection  with the  opinions  herein  rendered,  we have
reviewed the following documents and instruments (the "Loan Documents"):

         VI.1The Credit Agreement and all of the attachments thereto;

         VI.2The Revolving Credit Notes; and

         VI.3The Swing Line Note.

                  In  rendering  this  opinion,  in  addition  to the  documents
enumerated above, we have reviewed and examined such documents,  instruments and
other matters which we considered  necessary or  appropriate  for the purpose of
rendering this opinion.  In such review, we have assumed the authenticity of all
documents submitted to us as originals,  the genuineness of all signatures,  the
legal  capacity of natural  persons and the  conformity  to the originals of all
documents  submitted to us as copies.  As to any question of fact material to or
included in this opinion,  we have assumed the accuracy and validity of and have
relied  upon  the  certificates  of  officers  of the  Borrowers  as well as the
certificates and oral  communications of certain public officials.  For purposes
of this opinion,  we have assumed the due authorization,  execution and delivery
of the Loan Documents by the Banks.

                  Whenever the phrase "to our knowledge" or similar  language is
used in this opinion, except as otherwise specifically provided herein, it means
that, in the course of our representation of the Borrowers, no fact came to our 
attention indicating the contrary.


                                 Page 188 of 195

<PAGE>





                  Based upon the  foregoing,  and subject to the  qualifications
and limitations below, we are of the opinion that:

         1.       Churchill  Downs  Incorporated,  Churchill  Downs  Management 
                  Company, Churchill Downs Investment Company, and Ellis Park, 
                  Inc. are corporations validly  existing under the laws of the
                  Commonwealth of Kentucky.

         2. Racing  Corporation  of America is a  corporation  validly  existing
under the laws of the State of Delaware.

         3. The Borrowers  have the requisite  corporate  power and authority to
execute and deliver the Loan Documents,  to perform their respective obligations
under the Loan Documents,  and to carry on their  respective  businesses as they
are presently conducted and to own all the properties presently owned by each of
them, of which we have knowledge.

         4. The Loan Documents have been duly authorized, executed and delivered
by the Borrowers and  constitute  valid and legally  binding  obligations of the
Borrowers, enforceable against the Borrowers in accordance with their respective
terms.

         5. The  execution  and delivery of the Loan  Documents by the Borrowers
and the  performance  and  observance of the terms of the Loan  Documents by the
Borrowers  do not and will not  contravene  any  provision  of  existing  law or
regulation or the Articles or  Certificate  of  Incorporation  or By-Laws of the
Borrowers,  and, to our  knowledge,  will not  conflict  with,  or result in any
breach of the terms, conditions or provisions of, or constitute a default under,
or  result  in or permit  the  creation  or  imposition  of any lien,  charge or
encumbrance  upon  any of the  properties  of the  Borrowers  pursuant  to,  any
indenture,  mortgage  or other  agreement  or  instrument  to  which  any of the
Borrowers are a party or by which any of the Borrowers' assets may be bound.

         6. The execution, delivery and performance of the Loan Documents by the
Borrowers  does  not and  will  not  require  any  consent,  approval,  license,
authorization or order of, any exemption by, or any  registration,  recording or
filing with, any court, administrative agency or other governmental authority.

                  The foregoing opinions are subject to the following additional
qualifications and limitations:

         A. Insofar as this opinion  relates to the  enforceability  of the Loan
Documents,  the enforceability  thereof may be limited by applicable bankruptcy,
reorganization, fraudulent conveyance, moratorium, insolvency, and other similar
laws or  jurisprudence  from  time to time in  effect  affecting  generally  the
enforcement  of creditors  rights and by general  principles of equity  (whether
asserted in an action at law or in equity). Certain rights, remedies and waivers
contained  in  the  Loan  Documents  may  be  limited,  prohibited  or  rendered
ineffective by  application  of laws or  jurisprudence  of the  Commonwealth  of
Kentucky,  but in our opinion such laws or  jurisprudence do not, subject to the
other  qualifications and limitations in our opinion,  render the Loan Documents
invalid as a whole,  and there  exist,  in the Loan  Documents  or  pursuant  to
applicable  law,  adequate  rights,  remedies and  provisions  for the practical
realization  of the  principal  benefits  intended  to be  provided  by the Loan
Documents, except for the economic consequences of any judicial,  administrative
or other procedural delay which may be imposed by, relate to or result from such
laws and judicial decisions.

         B. Our  opinion  expressed  in  paragraph  6 above is not  intended  to
pertain in any way to any consents, authorizations or approvals which any of the
Borrowers  may be  required  to  obtain in order to  comply  with the  covenants
required to be performed by such entity in Section 8 of the Credit Agreement.

         C. We are members of the Bar of the Commonwealth of Kentucky and do not
purport  to  be  experts  on  the  laws  of  any  jurisdiction  other  than  the
Commonwealth  of  Kentucky  and the United  States of America  and we express no
opinion as to the laws of any  jurisdiction  other than those  specified and the
Delaware General  Corporation Law.  Although we are not licensed to practice law
in the State of  Delaware,  we believe  we are  sufficiently  familiar  with the
Delaware  General  Corporation Law to render the opinions  expressed herein with
respect to Racing Corporation of America.

         D. The opinions set forth above with respect to the  enforceability  of
the Loan Documents are qualified to the extent that certain remedial  provisions
of the Loan Documents may be  unenforceable in whole or in part under applicable
law. We express no opinion as to (i) the enforceability of any provision for the
recovery of attorneys' fees,  except to the extent authorized in KRS ss.411.195,
and (ii) the validity or enforceability of any


                                 Page 189 of 195

<PAGE>



provision in the Loan  Documents  (1)  modifying or waiving any  requirement  of
commercial reasonableness, prior notice or right of redemption arising under the
UCC; (2)  purporting to waive  equitable  rights or remedies;  (3) purporting to
waive  any  rights of the  Borrowers  under the Loan  Documents  or any  consent
thereto,  except to the extent that the  Borrowers  may so waive or consent as a
matter of law; (4) purporting to require the payment or  reimbursement  of fees,
costs, expenses or other amounts which are unreasonable in nature or amount; (5)
purporting to limit the right of the Borrowers to alienate or sell their assets;
or (6)  purporting  to waive  the right to a jury  trial or select a  particular
court as the forum for the resolution of disputes.

                  This  opinion  is  for  your  reliance  only  and is not to be
delivered  to, or relied  upon by, any other  party  without  our prior  written
consent. We hereby disclaim any undertaking to update this opinion.

                                                     WYATT, TARRANT & COMBS



RAH/sdm
cc:      Opinions and Standards Group


R:\FINANCE\WP60DOCS\9810Q#2.wpd


                                 Page 190 of 195

<PAGE>



                                  EXHIBIT 8.2.5

                          CHURCHILL DOWNS INCORPORATED
                             ACQUISITION CERTIFICATE
                COVENANT COMPLIANCE CERTIFICATE AS OF ___________


The following  illustrates  compliance with the covenant requirements as defined
in the Credit Agreement (the "Agreement") dated as of ___________ .

<TABLE>

I.  FUNDED DEBT / EBITDA NOT GREATER THAN 2.75/1  (MEASURED
QUARTERLY ON A ROLLING FOUR-QUARTER BASIS)
                                                           CHURCHILL                                    COMBINED
                                                             DOWNS
<S>                                                    <C>                   <C>                   <C>
(a) FUNDED DEBT                                                           +                     =

                                                       -----------------     -----------------     -------------------
(b) EBITDA                                                                +                     =

                                                       -----------------     -----------------     -------------------
CALCULATION (a divided by b) :                                            +                     =

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


II. INTEREST COVERAGE RATIO NOT LESS THAN 2.5/1   (MEASURED QUARTERLY ON
A ROLLING FOUR-QUARTER BASIS)
(a) EBIT                                                                  +                     =

                                                       -----------------     -----------------     -------------------
(b) INTEREST EXPENSE + DIVIDENDS                                          +                     =

                                                       -----------------     -----------------     -------------------
CALCULATION (a divided by b):                                             +                     =

                                                       -----------------     -----------------     -------------------
</TABLE>


III. MINIMUM NET WORTH COVENANT (Measured annually)
 (As defined in the Agreement dated ___________)
--------------------

Churchill Downs Incorporated hereby certifies as of the above date that it is in
compliance  with all  covenants  as  defined  pursuant  to the  Agreement  dated
_______________.  It further  certifies,  to the best of its knowledge,  that no
uncured event of default has occurred.


                                 Page 191 of 195

<PAGE>



Attached     are     copies     of     the      financial      statements     of
______________________utilized in calculating the above covenants.

CHURCHILL DOWNS INCORPORATED

BY: _____________________________

TITLE:___________________________

DATE:____________________________


                                 Page 192 of 195

<PAGE>



                                  EXHIBIT 8.3.3


                          CHURCHILL DOWNS INCORPORATED
                COVENANT COMPLIANCE CERTIFICATE AS OF ___________



The following  illustrates  compliance with the covenant requirements as defined
in the Credit Agreement (the "Agreement") dated as of ___________ .



I.  FUNDED DEBT / EBITDA NOT GREATER THAN 2.75/1  (MEASURED QUARTERLY ON A 
    ROLLING FOUR-QUARTER BASIS)
                                               CHURCHILL DOWNS

(a) FUNDED DEBT
                                     -------------------------------------------
(b) EBITDA
                                     -------------------------------------------
CALCULATION (a divided by b) :

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




II. INTEREST COVERAGE RATIO NOT LESS THAN 2.5/1     (MEASURED QUARTERLY ON A
    ROLLING FOUR-QUARTER BASIS)
(a) EBIT
                                     -------------------------------------------
(b) INTEREST EXPENSE + DIVIDENDS
                                     -------------------------------------------
CALCULATION (a divided by b):
                                     -------------------------------------------



III. MINIMUM NET WORTH COVENANT (Measured annually)
 (As defined in the Agreement dated ___________)      ------------------


Churchill Downs Incorporated hereby certifies as of the above date that it is in
compliance  with all  covenants  as  defined  pursuant  to the  Agreement  dated
_______________.  It further  certifies,  to the best of its knowledge,  that no
uncured event of default has occurred.








                                 Page 193 of 195

<PAGE>


CHURCHILL DOWNS INCORPORATED

BY:______________________________

TITLE:___________________________

DATE:____________________________






                                 Page 194 of 195

<PAGE>