Document:

Exhibit
10.1

 

AGREEMENT

 

This Agreement (the
“Agreement”) is entered into as of April 11, 2003 by Durus Capital Mangement,
LLC (“Durus”), Scott Sacane (“Sacane, and together with Durus and any other
persons or entities with which he may constitute a group, the “Sacane Group”)
and Aksys, Ltd., a Delaware corporation (the “Company”).

 

WHEREAS, the Sacane Group
is currently the beneficial owner of 5,238,248 shares of the Company’s Common
Stock, which represents about 19.5% of the shares outstanding.

 

WHEREAS, Mr. Sacane is
the managing member of Durus and holds voting power and dispositive power over
any shares of Common Stock beneficially owned by Durus.

 

WHEREAS, the Company’s
Rights Agreement provides that any person or group which is the beneficial
owner of 15% or more of the outstanding Common Stock shall be deemed to be an
Acquiring Person (as defined in the Rights Agreement), unless the so-called
“inadvertent acquisition” exception is applicable.

 

WHEREAS, the purpose of
this Agreement is to set forth the terms and conditions on which the
inadvertent acquisition exception under the Rights Agreement will apply to the
Sacane Group’s position in the Common Stock.

 

NOW, THEREFORE, in
consideration of the premises and the mutual agreements set forth in this Agreement,
the parties hereby agree as follows:

 

1.                                      For
so long as the Sacane Group is in compliance with the terms of this Agreement,
the Sacane Group shall not be deemed an Acquiring Person under the Company’s
Rights Agreement:

 

(a)                                  As
soon as practicable, and in any event no later than the second anniversary of
the date of this Agreement, Sacane shall take any and all actions necessary to
cause the beneficial ownership of the Sacane Group to be less than 15%, whether
such percentage reduction in beneficial ownership occurs through divestments of
Common Stock by the Sacane Group or otherwise.

 

(b)                                 The
Sacane Group shall refrain from acquiring any additional shares of Common Stock
until such time as its percentage beneficial ownership shall be less than 15%
(and thereafter the beneficial ownership of the Sacane Group shall not exceed
15% without the prior written consent of the Company’s board of directors,
which consent may be granted or withheld in the board’s sole discretion).

 

(c)                                  Sacane
and Durus represent and warrant that (1) the first and second recitals of this
Agreement are true and correct, (2) the Sacane Group crossed the 15% beneficial
ownership threshold under the Rights Agreement inadvertently, and (3) the
shares of Common Stock beneficially owned by the Sacane Group are and will be
held in the ordinary course of business

 

 

and are not and
will not be held for the purpose of or with the effect of changing or
influencing the control of the Company.

 

2.                                       This
Agreement may be executed in one or more counterparts.  Facsimile signatures to this Agreement shall
be treated in all manner and respects as an original contract with the same
binding legal effect as if it were an original signed version delivered in person.  This Agreement shall be governed by and
construed in accordance with the internal laws of the State of Delaware.

 

*      *       *       *       *

 

2

 

IN WITNESS WHEREOF, the
parties hereto have executed this Agreement as of the date first written above.

 

 

	
   

  	
  AKSYS, LTD.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
    /s/ William
  C. Dow

  	
   

  
	
   

  	
  William C. Dow

  	
   

  
	
   

  	
  Chief Executive Officer

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
    /s/ Scott
  Sacane

  	
   

  
	
   

  	
  SCOTT SACANE

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  DURUS CAPITAL
  MANAGEMENT, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
    /s/ Scott
  Sacane

  	
   

  
	
   

  	
  Scott Sacane

  	
   

  
	
   

  	
  Managing Partner and Authorized
  Signatory

  

 

3Exhibit 4(a)

 

 

 

CHURCHILL DOWNS INCORPORATED

 

 

$100,000,000

 

 

Floating Rate Senior Secured Notes due March 31,
2010

 

 

 

NOTE PURCHASE AGREEMENT

 

 

 

Dated April 3, 2003

 

 

 

 

TABLE OF CONTENTS

 

(Not a part of the Agreement)

 

	
  SECTION

  	
   

  	
  HEADING

  
	
   

  	
   

  	
   

  
	
  SECTION 1.

  	
   

  	
  AUTHORIZATION OF NOTES

  
	
   

  	
   

  	
   

  
	
  SECTION 2.

  	
   

  	
  SALE AND PURCHASE OF NOTES

  
	
   

  	
   

  	
   

  
	
  SECTION 3.

  	
   

  	
  CLOSING

  
	
   

  	
   

  	
   

  
	
  SECTION 4.

  	
   

  	
  CONDITIONS TO CLOSING

  
	
   

  	
   

  	
   

  
	
  Section 4.1.

  	
   

  	
  Representations
  and Warranties

  
	
  Section 4.2.

  	
   

  	
  Performance; No
  Default

  
	
  Section 4.3.

  	
   

  	
  Compliance
  Certificates

  
	
  Section 4.4.

  	
   

  	
  Opinions of Counsel

  
	
  Section 4.5.

  	
   

  	
  Purchase
  Permitted by Applicable Law, etc.

  
	
  Section 4.6.

  	
   

  	
  Sale of Other
  Notes

  
	
  Section 4.7.

  	
   

  	
  Guarantee Agreement

  
	
  Section 4.8.

  	
   

  	
  Collateral and Other
  Documents

  
	
  Section 4.9.

  	
   

  	
  Collateral Sharing
  Agreement

  
	
  Section 4.10.

  	
   

  	
  Perfection of Liens

  
	
  Section 4.11.

  	
   

  	
  Discharge of
  Existing Liens

  
	
  Section 4.12.

  	
   

  	
  Bank Credit
  Agreement

  
	
  Section 4.13.

  	
   

  	
  Payment of Special
  Counsel Fees

  
	
  Section 4.14.

  	
   

  	
  Private
  Placement Number

  
	
  Section 4.15.

  	
   

  	
  Changes in
  Corporate Structure

  
	
  Section 4.16.

  	
   

  	
  Proceedings and
  Documents

  
	
   

  	
   

  	
   

  
	
  SECTION 5.

  	
   

  	
  REPRESENTATIONS AND
  WARRANTIES OF THE COMPANY

  
	
   

  	
   

  	
   

  
	
  Section 5.1.

  	
   

  	
  Organization;
  Power and Authority

  
	
  Section 5.2.

  	
   

  	
  Authorization,
  etc.

  
	
  Section 5.3.

  	
   

  	
  Disclosure

  
	
  Section 5.4.

  	
   

  	
  Organization and
  Ownership of Shares of Subsidiaries; Affiliates

  
	
  Section 5.5.

  	
   

  	
  Financial
  Statements

  
	
  Section 5.6.

  	
   

  	
  Compliance with
  Laws, Other Instruments, etc.

  
	
  Section 5.7.

  	
   

  	
  Governmental
  Authorizations, etc.

  
	
  Section 5.8.

  	
   

  	
  Litigation;
  Observance of Agreements, Statutes and Orders

  
	
  Section 5.9.

  	
   

  	
  Taxes

  
	
  Section 5.10.

  	
   

  	
  Title to
  Property; Leases

  
	
  Section 5.11.

  	
   

  	
  Licenses,
  Permits, etc.

  
	
  Section 5.12.

  	
   

  	
  Compliance with
  ERISA

  

 

i

 

	
  Section 5.13.

  	
  Private
  Offering by the Obligors

  
	
  Section 5.14.

  	
  Use of
  Proceeds; Margin Regulations

  
	
  Section 5.15.

  	
  Existing
  Indebtedness; Future Liens

  
	
  Section 5.16.

  	
  Foreign Assets
  Control Regulations, etc.

  
	
  Section 5.17.

  	
  Status under Certain
  Statutes

  
	
  Section 5.18.

  	
  Environmental
  Matters

  
	
  Section 5.19.

  	
  Collateral Documents

  
	
  Section 5.20.

  	
  Solvency

  
	
  Section 5.21.

  	
  Ranking of Notes

  
	
   

  	
   

  
	
  SECTION 6.

  	
  REPRESENTATIONS OF
  THE PURCHASER

  
	
   

  	
   

  
	
  Section 6.1.

  	
  Purchase for
  Investment

  
	
  Section 6.2.

  	
  Source of Funds

  
	
   

  	
   

  
	
  SECTION 7.

  	
  INFORMATION AS TO
  COMPANY

  
	
   

  	
   

  
	
  Section 7.1.

  	
  Financial and
  Business Information

  
	
  Section 7.2.

  	
  Officer’s
  Certificate

  
	
  Section 7.3.

  	
  Inspection

  
	
   

  	
   

  
	
  SECTION 8.

  	
  PREPAYMENT OF THE
  NOTES

  
	
   

  	
   

  
	
  Section 8.1.

  	
  Required
  Prepayments

  
	
  Section 8.2.

  	
  Optional
  Prepayments

  
	
  Section 8.3.

  	
  Change in Control

  
	
  Section 8.4.

  	
  Allocation of
  Partial Prepayments

  
	
  Section 8.5.

  	
  Maturity;
  Surrender, etc.

  
	
  Section 8.6.

  	
  Purchase of Notes

  
	
   

  	
   

  
	
  SECTION 9.

  	
  AFFIRMATIVE COVENANTS

  
	
   

  	
   

  
	
  Section 9.1.

  	
  Compliance with
  Law

  
	
  Section 9.2.

  	
  Insurance

  
	
  Section 9.3.

  	
  Maintenance of
  Properties

  
	
  Section 9.4.

  	
  Payment of Taxes
  and Claims

  
	
  Section 9.5.

  	
  Corporate
  Existence, etc.

  
	
  Section 9.6.

  	
  Form of Guaranties;
  Subsequent Guarantors

  
	
  Section 9.7.

  	
  Further Assurances

  
	
  Section 9.8.

  	
  Subordination of
  Intercompany Loans

  
	
  Section 9.9.

  	
  Recordation of
  Calder Mortgage

  
	
   

  	
   

  
	
  SECTION 10.

  	
  NEGATIVE COVENANTS

  
	
   

  	
   

  
	
  Section 10.1.

  	
  Transactions
  with Affiliates

  
	
  Section 10.2.

  	
  Merger,
  Consolidation, etc.

  
	
  Section 10.3.

  	
  Liens

  
	
  Section 10.4.

  	
  Minimum
  Consolidated Net Worth

  
	
  Section 10.5.

  	
  Certain Ratios

  

 

ii

 

	
  Section 10.6.

  	
  Subsidiary Debt
  Limitation

  
	
  Section 10.7.

  	
  Restricted
  Investments

  
	
  Section 10.8.

  	
  Sale of Assets

  
	
  Section 10.9.

  	
  Nature of
  Business

  
	
   

  	
   

  
	
  SECTION 11.

  	
  EVENTS OF DEFAULT

  
	
   

  	
   

  
	
  SECTION 12.

  	
  REMEDIES ON
  DEFAULT, ETC

  
	
   

  	
   

  
	
  Section 12.1.

  	
  Acceleration

  
	
  Section 12.2.

  	
  Other Remedies

  
	
  Section 12.3.

  	
  Rescission

  
	
  Section 12.4.

  	
  No Waivers or
  Election of Remedies, Expenses, etc.

  
	
   

  	
   

  
	
  SECTION 13.

  	
  REGISTRATION;
  EXCHANGE; SUBSTITUTION OF NOTES

  
	
   

  	
   

  
	
  Section 13.1.

  	
  Registration of
  Notes

  
	
  Section 13.2.

  	
  Transfer and
  Exchange of Notes

  
	
  Section 13.3.

  	
  Replacement of
  Notes

  
	
   

  	
   

  
	
  SECTION 14.

  	
  PAYMENTS
  ON NOTES

  
	
   

  	
   

  
	
  Section 14.1.

  	
  Place of
  Payment

  
	
  Section 14.2.

  	
  Home Office
  Payment

  
	
   

  	
   

  
	
  SECTION 15.

  	
  EXPENSES, ETC.

  
	
   

  	
   

  
	
  Section 15.1.

  	
  Transaction
  Expenses

  
	
  Section 15.2.

  	
  Survival

  
	
   

  	
   

  
	
  SECTION 16.

  	
  SURVIVAL OF
  REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT

  
	
   

  	
   

  
	
  SECTION 17.

  	
  AMENDMENT AND
  WAIVER

  
	
   

  	
   

  
	
  Section 17.1.

  	
  Requirements

  
	
  Section 17.2.

  	
  Solicitation of
  Holders of Notes

  
	
  Section 17.3.

  	
  Binding Effect,
  etc.

  
	
  Section 17.4.

  	
  Notes Held by
  Company, etc.

  
	
   

  	
   

  
	
  SECTION 18.

  	
  NOTICES

  
	
   

  	
   

  
	
  SECTION 19.

  	
  REPRODUCTION OF
  DOCUMENTS

  
	
   

  	
   

  
	
  SECTION 20.

  	
  CONFIDENTIAL
  INFORMATION

  

 

iii

 

	
  SECTION 21.

  	
  SUBSTITUTION OF
  PURCHASER

  
	
   

  	
   

  
	
  SECTION 22.

  	
  MISCELLANEOUS

  
	
   

  	
   

  
	
  Section 22.1.

  	
  Successors and
  Assigns

  
	
  Section 22.2.

  	
  Payments Due on
  Non-Business Days

  
	
  Section 22.3.

  	
  Severability

  
	
  Section 22.4.

  	
  Construction

  
	
  Section 22.5.

  	
  Counterparts

  
	
  Section 22.6.

  	
  Governing Law

  
	
   

  	
   

  
	
  Signature

  	
   

  

 

iv

 

	
  SCHEDULE A

  	
  —

  	
  Information
  Relating to Purchasers

  
	
   

  	
   

  	
   

  
	
  SCHEDULE B

  	
  —

  	
  Defined Terms

  
	
   

  	
   

  	
   

  
	
  SCHEDULE 4.11

  	
  —

  	
  Liens to be
  Discharged

  
	
   

  	
   

  	
   

  
	
  SCHEDULE 5.4

  	
  —

  	
  Subsidiaries of
  the Company and Ownership of Subsidiary Stock

  
	
   

  	
   

  	
   

  
	
  SCHEDULE 5.5

  	
  —

  	
  Financial
  Statements

  
	
   

  	
   

  	
   

  
	
  SCHEDULE 5.8

  	
  —

  	
  Certain
  Litigation

  
	
   

  	
   

  	
   

  
	
  SCHEDULE 5.11

  	
  —

  	
  Patents, etc.

  
	
   

  	
   

  	
   

  
	
  SCHEDULE 5.15

  	
  —

  	
  Existing
  Indebtedness

  
	
   

  	
   

  	
   

  
	
  SCHEDULE 10.7

  	
  —

  	
  Existing
  Investments

  
	
   

  	
   

  	
   

  
	
  EXHIBIT 1

  	
  —

  	
  Form of Floating
  Rate Senior Secured Note due March 31, 2010

  
	
   

  	
   

  	
   

  
	
  EXHIBIT 2

  	
  —

  	
  Form of
  Guarantee Agreement

  
	
   

  	
   

  	
   

  
	
  EXHIBIT 4.4(a)

  	
  —

  	
  Form of Opinion
  of Special Counsel for the Company

  
	
   

  	
   

  	
   

  
	
  EXHIBIT 4.4(b)

  	
  —

  	
  Form of Opinion
  of Special Counsel for the Purchasers

  
	
   

  	
   

  	
   

  
	
  EXHIBIT 4.9

  	
  —

  	
  Form of
  Collateral Sharing Agreement

  
	
   

  	
   

  	
   

  
	
  EXHIBIT 9.8

  	
  —

  	
  Intercompany
  Subordination Agreement

  
	
   

  	
   

  	
   

  
	
  EXHIBIT 9.9

  	
  —

  	
  Negative Pledge
  Agreement

  

 

v

 

CHURCHILL DOWNS INCORPORATED

700 Central Avenue

Louisville, Kentucky  40208

 

FLOATING RATE SENIOR SECURED
NOTES DUE MARCH 31, 2010

 

Dated as of

April 3, 2003

 

TO EACH OF THE PURCHASERS
LISTED IN
  THE ATTACHED SCHEDULE A:

 

Ladies and Gentlemen:

 

Churchill
Downs Incorporated, a Kentucky corporation (the “Company”), agrees with you
as follows:

 

SECTION 1.           AUTHORIZATION
OF NOTES.

 

The Company will
authorize the issue and sale of $100,000,000 aggregate principal amount of its
Floating Rate Senior Secured Notes due March 31, 2010 (the “Notes”,
such term to include any such notes issued in substitution therefor pursuant to
Section 13 of this Agreement or the Other Agreements (as hereinafter
defined)).  The Notes shall be
substantially in the form set out in Exhibit 1, with such changes
therefrom, if any, as may be approved by you and the Company.  Certain capitalized terms used in this
Agreement are defined in Schedule B; references to a “Schedule” or an
“Exhibit” are, unless otherwise specified, to a Schedule or an Exhibit attached
to this Agreement.  The Notes shall bear
interest from the date of issue at a floating rate equal to the Adjusted LIBOR
Rate from time to time, payable quarterly on the last day of each March, June,
September and December in each year (commencing June 30, 2003) and at
maturity (each such date being referred to as an “Interest Payment Date”) and
to bear interest on overdue principal (including any overdue required or
optional prepayment of principal) and LIBOR Breakage Amount, if any, and (to
the extent legally enforceable) on any overdue installment of interest at the
Default Rate, whether by acceleration or otherwise, until paid.

 

Interest on the Notes
shall be computed for the actual number of days elapsed on the basis of a year
consisting of 360 days.

 

The Adjusted LIBOR Rate
shall be determined by the Company, and notice thereof shall be given to the
holders of the Notes, together with such information as the holders of the
Notes may reasonably request for verification (including in all events, a
facsimile transmission of the relevant screen and calculations), on the second
Business Day preceding each Interest Period. 
In the event that the holders of more than 50% in aggregate principal
amount of the outstanding

 

 

Notes do not concur with
such determination by the Company, as evidenced by notice to the Company by
such holders within ten (10) Business Days after receipt by such holders
of the notice delivered by the Company pursuant to the previous sentence, the
determination of Adjusted LIBOR Rate shall be made by the holders of the Notes,
in accordance with the provisions of this Agreement and shall be conclusive and
binding absent manifest error.

 

SECTION 2.           SALE
AND PURCHASE OF NOTES.

 

Subject to the terms and
conditions of this Agreement, the Company will issue and sell to you and you
will purchase from the Company, at the Closing provided for in Section 3,
Notes in the principal amount specified opposite your name in Schedule A
at the purchase price of 100% of the principal amount thereof.  Contemporaneously with entering into this
Agreement, the Company is entering into separate Note Purchase Agreements (the “Other
Agreements”) identical with this Agreement with each of the other
purchasers named in Schedule A (the “Other Purchasers”), providing for the
sale at such Closing to each of the Other Purchasers of Notes in the principal
amount specified opposite its name in Schedule A.  Your obligation hereunder, and the
obligations of the Other Purchasers under the Other Agreements, are several and
not joint obligations, and you shall have no obligation under any Other
Agreement and no liability to any Person for the performance or nonperformance
by any Other Purchaser thereunder.

 

The performance and
payment of all obligations of the Company hereunder and under the Notes and the
other Financing Agreements shall be guaranteed by the Guarantors pursuant to
the Guarantee Agreement, substantially in the form of Exhibit 2
hereto.  The Company and the Guarantors
are referred to, individually, as an “Obligor” and, collectively, as the “Obligors.”  The obligations of the Obligors under and
pursuant to the Financing Agreements shall be secured by the Collateral
Documents.

 

SECTION 3.           CLOSING.

 

The sale and purchase of
the Notes to be purchased by you and the Other Purchasers shall occur at the
offices of Chapman and Cutler, 111 West Monroe Street, Chicago, Illinois 60603
at 11:00 a.m. Chicago time, at a closing (the “Closing”) on April 3,
2003 or on such other Business Day thereafter on or prior to April 10,
2003 as may be agreed upon by the Company and you and the Other
Purchasers.  At the Closing the Company
will deliver to you the Notes to be purchased by you in the form of a single
Note (or such greater number of Notes in denominations of at least $250,000 as
you may request) dated the date of the Closing and registered in your name (or
in the name of your nominee), against delivery by you to the Company or its
order of immediately available funds in the amount of the purchase price
therefor by wire transfer of immediately available funds for the account of the
Company to account number 644357279 — Churchill Downs Private
Placement — at Bank One, NA, 416 West Jefferson Street, Louisville,
Kentucky  40202, ABA/Routing
#083 000 137.  If at the
Closing the Company shall fail to tender such Notes to you as provided above in
this Section 3, or any of the conditions specified in Section 4 shall
not have been fulfilled to your satisfaction, you shall, at your election, be
relieved of all 

 

2

 

further obligations under
this Agreement, without thereby waiving any rights you may have by reason of
such failure or such nonfulfillment.

 

SECTION 4.           CONDITIONS
TO CLOSING.

 

Your obligation to
purchase and pay for the Notes to be sold to you at the Closing is subject to
the fulfillment to your satisfaction, prior to or at the Closing, of the
following conditions:

 

Section 4.1.              Representations and Warranties.  The representations and warranties of the
Obligors in the Financing Agreements shall be correct when made and at the time
of the Closing.

 

Section 4.2.              Performance; No Default.  Each Obligor shall have performed and
complied with all agreements and conditions contained in the Financing
Agreements required to be performed or complied with by it prior to or at the
Closing, and after giving effect to the issue and sale of the Notes (and the
application of the proceeds thereof as contemplated by Section 5.14), no
Default or Event of Default shall have occurred and be continuing.  No Obligor shall have entered into any
transaction since the date of the Memorandum that would have been prohibited by
Section 10 hereof had such Section applied since such date.

 

Section 4.3.              Compliance Certificates.

 

(a)           Officer’s Certificate.  Each Obligor shall have delivered to you an
Officer’s Certificate, dated the date of the Closing, certifying that the
conditions specified in Sections 4.1, 4.2 and 4.15 have been fulfilled.

 

(b)           Secretary’s Certificate.  Each Obligor shall have delivered to you a
certificate certifying as to the resolutions attached thereto and other
corporate proceedings relating to the authorization, execution and delivery of
the Financing Agreements.

 

Section 4.4.              Opinions of Counsel.  You shall have received opinions in form and
substance satisfactory to you, dated the date of the Closing (a) from
Wyatt Tarrant & Combs, LLP, counsel for the Obligors, substantially in the
form and covering the matters set forth in Exhibit 4.4(a) and covering
such other matters incident to the transactions contemplated hereby as you or
your counsel may reasonably request (and the Company hereby instructs its
counsel to deliver such opinion to you) and (b) from Chapman and Cutler,
your special counsel in connection with such transactions, substantially in the
form set forth in Exhibit 4.4(b) and covering such other matters incident
to such transactions as you may reasonably request.

 

Section 4.5.              Purchase Permitted by Applicable
Law, etc.  On the date of the
Closing your purchase of Notes shall (i) be permitted by the laws and
regulations of each jurisdiction to which you are subject, without recourse to
provisions (such as Section 1405(a)(8) of the New York Insurance Law)
permitting limited investments by insurance companies without restriction as to
the character of the particular investment, (ii) not violate any
applicable law or regulation (including, without limitation, Regulation T,
U or X of the Board of Governors of the Federal Reserve System) and
(iii) not subject you to any tax, penalty or liability under or pursuant
to any 

 

3

 

applicable law or
regulation, which law or regulation was not in effect on the date hereof.  If requested by you, you shall have received
an Officer’s Certificate certifying as to such matters of fact as you may
reasonably specify to enable you to determine whether such purchase is so
permitted.

 

Section 4.6.              Sale of Other Notes.  Contemporaneously with the Closing, the
Company shall sell to the Other Purchasers, and the Other Purchasers shall
purchase, the Notes to be purchased by them at the Closing as specified in
Schedule A.

 

Section
4.7.              Guarantee
Agreement.  Each Purchaser
shall have received a counterpart of the Guarantee Agreement, duly executed and
delivered by each of the Guarantors, and the Guarantee Agreement shall be in
full force and effect.

 

Section
4.8.              Collateral
and Other Documents.  The
Collateral Agent, on behalf of the Banks and the holders from time to time of
the Notes pursuant to the Collateral Sharing Agreement, shall have received the
Collateral Documents, which shall, in each case, be in form and substance
satisfactory to the Purchasers.  Each
Collateral Document shall be in full force and effect on the date of Closing.

 

Section
4.9.              Collateral
Sharing Agreement.  The
Banks, each of the Purchasers and the Collateral Agent shall have executed and
delivered (and the Company shall have executed and delivered a consent and
agreement to) the Collateral Sharing Agreement, substantially in the form of
Exhibit 4.9, and the Collateral Sharing Agreement shall be in full force and
effect.

 

Section
4.10.            Perfection
of Liens.  All actions
necessary to perfect the Liens of the Collateral Agent in the Collateral to be
granted on or prior to the date of Closing (including, without limitation, the
filing of all appropriate financing statements, the registration of all
Collateral Documents where necessary, the recording of all appropriate
documents with public officials and the payment of all fees and taxes in
relation thereto) shall have been taken in accordance with the provisions of
the Collateral Documents.

 

Section
4.11.            Discharge
of Existing Liens.  All
actions necessary to discharge the Liens set out in Schedule 4.11 on the
Collateral shall have been taken in accordance with the provisions of the
Collateral Documents.

 

Section
4.12.            Bank
Credit Agreement.  Each of
the Purchasers shall have received a copy of the Bank Credit Agreement and each
of the other agreements and instruments executed in connection therewith
certified as true and correct by the Senior Financial Officer on behalf of the
Company.

 

Section
4.13.            Payment
of Special Counsel Fees. 
Without limiting the provisions of Section 15.1, the Company shall have
paid on or before the Closing the reasonable fees, charges and disbursements of
the Purchasers’ special United States counsel referred to in Section 4.4(b) to
the extent reflected in a statement of such counsel rendered to the Company at
least one Business Day prior to the Closing.

 

4

 

Section 4.14.            Private Placement Number.  A Private Placement Number issued by
Standard & Poor’s CUSIP Service Bureau (in cooperation with the Securities
Valuation Office of the National Association of Insurance Commissioners) shall
have been obtained for the Notes.

 

Section 4.15.            Changes in Corporate Structure.  No Obligor shall have changed its
jurisdiction of incorporation or been a party to any merger or consolidation
and shall not have succeeded to all or any substantial part of the liabilities
of any other Person, at any time following the date of the most recent
financial statements referred to in Schedule 5.5.

 

Section 4.16.            Proceedings and Documents.  All corporate and other proceedings in
connection with the transactions contemplated by the Financing Agreements and
all documents and instruments incident to such transactions shall be
satisfactory to you and your special counsel, and you and your special counsel
shall have received all such counterpart originals or certified or other copies
of such documents as you or they may reasonably request.

 

SECTION 5.           REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

 

The Company represents
and warrants to you that:

 

Section 5.1.              Organization; Power and Authority.  Each Obligor is a corporation or limited
liability company duly organized, validly existing and in good standing under
the laws of its jurisdiction of incorporation or formation, as applicable, and
is duly qualified as a foreign corporation or limited liability company, as
applicable, and is in good standing in each jurisdiction in which such
qualification is required by law, other than those jurisdictions as to which
the failure to be so qualified or in good standing could not, individually or
in the aggregate, reasonably be expected to have a Material Adverse
Effect.  Each Obligor has the corporate
(or other) power and authority to own or hold under lease the properties it
purports to own or hold under lease, to transact the business it transacts and
proposes to transact, to execute and deliver the Financing Agreements to which
it is a party and to perform the provisions hereof and thereof.

 

Section 5.2.              Authorization, etc.  The Financing Agreements have been duly
authorized by all necessary corporate or other action on the part of the
Obligors, and the Financing Agreements constitute, and upon execution and
delivery thereof each Note will constitute, a legal, valid and binding
obligation of each Obligor party thereto enforceable against each Obligor party
thereto in accordance with its terms, except as such enforceability may be
limited by (i) applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors’ rights
generally and (ii) general principles of equity (regardless of whether
such enforceability is considered in a proceeding in equity or at law).

 

Section 5.3.              Disclosure.  The Company, through its agent, Banc One
Capital Markets, Inc., delivered to you and each Other Purchaser a copy of a
Private Placement Memorandum, dated February 2003 (the “Memorandum”), relating to
the transactions contemplated hereby. 
The Memorandum fairly describes, in all material respects, the general
nature of the business and principal properties of the Company and its
Subsidiaries.  This Agreement, the
Memorandum and the financial statements listed in Schedule 5.5, taken as a
whole, do not contain any untrue 

 

5

 

statement of a material
fact or omit to state any material fact necessary to make the statements
therein not misleading in light of the circumstances under which they were
made.  Since December 31, 2002,
there has been no change in the financial condition, operations, business,
properties or prospects of the Company or any Subsidiary except changes that
individually or in the aggregate could not reasonably be expected to have a
Material Adverse Effect.  There is no
fact known to the Company that could reasonably be expected to have a Material
Adverse Effect that has not been set forth herein or in the Memorandum.

 

Section 5.4.              Organization and Ownership of
Shares of Subsidiaries; Affiliates. 
(a) Schedule 5.4 contains (except as noted therein) complete
and correct lists of the Company’s (i) Subsidiaries (including which
Subsidiaries are Obligors), showing, as to each Subsidiary, the correct name
thereof, the jurisdiction of its organization, and the percentage of shares of
each class of its capital stock or similar equity interests outstanding owned
by the Company and each other Subsidiary, (ii) Affiliates, other than
Subsidiaries, and (iii) directors and senior officers.

 

(b)           All of the outstanding shares of
capital stock or similar equity interests of each Subsidiary shown in
Schedule 5.4 as being owned by the Company and its Subsidiaries have been
validly issued, are fully paid and nonassessable and are owned by the Company
or another Subsidiary free and clear of any Lien not permitted by the Financing
Agreements (except as otherwise disclosed in Schedule 5.4).

 

(c)           Each Subsidiary identified in
Schedule 5.4 is a corporation or other legal entity duly organized,
validly existing and in good standing under the laws of its jurisdiction of
organization, and is duly qualified as a foreign corporation or other legal
entity and is in good standing in each jurisdiction in which such qualification
is required by law, other than those jurisdictions as to which the failure to
be so qualified or in good standing could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.  Each such Subsidiary has the corporate or
other power and authority to own or hold under lease the properties it purports
to own or hold under lease and to transact the business it transacts and
proposes to transact.

 

(d)           No Subsidiary is a party to, or
otherwise subject to, any legal restriction or any agreement (other than this
Agreement, the agreements listed on Schedule 5.4 and customary limitations
imposed by corporate or other entity
law statutes) restricting the ability of such Subsidiary to pay dividends out
of profits or make any other similar distributions of profits to the
Company or any of its Subsidiaries that owns outstanding shares of capital
stock or similar equity interests of such Subsidiary.

 

Section 5.5.              Financial Statements.  The Company has delivered to each Purchaser
copies of the financial statements of the Company and its Subsidiaries listed
on Schedule 5.5. All of said financial statements (including in each case
the related schedules and notes) fairly present in all material respects the
consolidated financial position of the Company and its Subsidiaries as of the
respective dates specified in such Schedule and the consolidated results of
their operations and cash flows
for the respective periods so specified and have been prepared in accordance
with GAAP consistently applied throughout the periods involved except as set
forth in the notes thereto (subject, in the case of any interim financial
statements, to normal year-end adjustments).

 

6

 

Section 5.6.              Compliance with Laws, Other
Instruments, etc.  The
execution, delivery and performance by the Obligors of the Financing Agreements
will not (i) contravene, result in any breach of, or constitute a default
under, or result in the creation of any Lien (except pursuant to the Financing
Agreements) in respect of any property of the Company or any Subsidiary under, any indenture,
mortgage, deed of trust, loan, purchase or credit agreement, lease, corporate
charter or by-laws, or any other agreement or instrument to which the Company
or any Subsidiary is bound or by which the Company or any Subsidiary or any of
their respective properties may be bound or affected, (ii) conflict with
or result in a breach of any of the terms, conditions or provisions of any
order, judgment, decree, or ruling of any court, arbitrator or Governmental
Authority applicable to the Company or any Subsidiary or (iii) violate any
provision of any statute or other rule or regulation of any Governmental
Authority applicable to the Company or any Subsidiary.

 

Section 5.7.              Governmental Authorizations, etc.  Except for the recording or filing of the
applicable Collateral Documents with the applicable Governmental Authority and
except for any consents, approvals or authorizations that have been or, prior to the date of Closing will have been,
obtained, no consent, approval or authorization of, or registration, filing or
declaration with, any Governmental Authority is required in connection with the
execution, delivery or performance by the Obligors of the Financing
Agreements.  Notwithstanding anything to
the contrary in this Agreement or the other Financing Agreements to the
contrary, the parties to this Agreement and the other Financing Agreements
acknowledge that (i) the transfer, assignment, change of ownership or
interest, foreclosure or realization on any of the Collateral or the stock of
Churchill Downs Management Company and (ii) any transfer, assignment, or
change of ownership or interest in any pari-mutuel permits or licenses, must
comply with applicable law, which may require prior approval by the Florida
Division of Pari-Mutuel Wagering or comparable Governmental Authority in the
applicable State.

 

Section 5.8.              Litigation; Observance of
Agreements, Statutes and Orders. 
(a) Except as disclosed in Schedule 5.8, there are no actions,
suits or proceedings pending or, to the knowledge of the Company, threatened
against or affecting the Company or any Subsidiary or any property of the
Company or any Subsidiary in any court or before any arbitrator of any kind or
before or by any Governmental Authority that, individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect.

 

(b)           Neither the Company nor any
Subsidiary is in default under any term of any agreement or instrument to which
it is a party or by which it is bound, or any order, judgment, decree or ruling
of any court, arbitrator or Governmental Authority or is in violation of any
applicable law, ordinance, rule or regulation (including without limitation
Environmental Laws) of any Governmental Authority, which default or violation,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.

 

Section 5.9.              Taxes.  The Company and its Subsidiaries have filed
all tax returns that are required to have been filed in any jurisdiction, and
have paid all taxes shown to be due and payable on such returns and all other
taxes and assessments levied upon them or their properties, assets, income or
franchises, to the extent such taxes and assessments have become due and
payable and before they have become delinquent, except for any taxes and
assessments (i) the 

 

7

 

amount of which is not
individually or in the aggregate Material or (ii) the amount,
applicability or validity of which is currently being contested in good faith
by appropriate proceedings and with respect to which the Company or a
Subsidiary, as the case may be, has established adequate reserves in accordance
with GAAP.  The Company knows of no
basis for any other tax or assessment that could reasonably be expected to have
a Material Adverse Effect.  The charges,
accruals and reserves on the books of the Company and its Subsidiaries in
respect of Federal, state or other taxes for all open fiscal periods are
adequate.  The Federal income tax
liabilities of the Company and its Subsidiaries have been determined by the
Internal Revenue Service and paid for all fiscal years up to and including the
fiscal year ended December 31, 1998.

 

Section 5.10.            Title to Property; Leases.  The Company and its Subsidiaries have good
and sufficient title to their respective properties, that, individually or in
the aggregate, are Material, including all such properties reflected in the
most recent audited balance sheet referred to in Section 5.5 or purported
to have been acquired by the Company or any Subsidiary after said date (except
as sold or otherwise disposed of in the ordinary course of business), in each
case free and clear of Liens prohibited by this Agreement.  All leases that individually or in the
aggregate are Material are valid and subsisting and are in full force and
effect in all material respects.

 

Section 5.11.            Licenses, Permits, etc.  Except as disclosed in Schedule 5.11,

 

(a)           the Company and its Subsidiaries own
or possess all licenses, permits, franchises, authorizations, patents,
copyrights, service marks, trademarks and trade names, or rights thereto, that
individually or in the aggregate are Material, without known conflict with the
rights of others;

 

(b)           to the best knowledge of the Company,
no product of the Company infringes in any Material respect any license,
permit, franchise, authorization, patent, copyright, service mark, trademark,
trade name or other right owned by any other Person; and

 

(c)           to the best knowledge of the Company,
there is no Material violation by any Person of any right of the Company or any
of its Subsidiaries with respect to any patent, copyright, service mark,
trademark, trade name or other right owned or used by the Company or any of its
Subsidiaries.

 

Section 5.12.            Compliance with ERISA.  (a) The Company and each ERISA Affiliate
have operated and administered each Plan in compliance with all applicable laws
except for such instances of noncompliance as have not resulted in and could
not reasonably be expected to result in a Material Adverse Effect.  Neither the Company nor any ERISA Affiliate
has incurred any liability pursuant to Title I or IV of ERISA or the
penalty or excise tax provisions of the Code relating to employee benefit plans
(as defined in section 3 of ERISA), and no event, transaction or condition
has occurred or exists that could reasonably be expected to result in the
incurrence of any such liability by the Company or any ERISA Affiliate, or in
the imposition of any Lien on any of the rights, properties or assets of the
Company or any ERISA Affiliate, in either case pursuant to Title I or IV
of ERISA or to such penalty or excise tax provisions or to 

 

8

 

section 401(a)(29)
or 412 of the Code, other than such liabilities or Liens as would not be
individually or in the aggregate Material.

 

(b)           The present value of the aggregate
benefit liabilities under each of the Plans (other than Multiemployer Plans),
determined as of the end of such Plan’s most recently ended plan year on the
basis of the actuarial assumptions specified for funding purposes in such
Plan’s most recent actuarial valuation report, did not exceed the aggregate
current value of the assets of such Plan allocable to such benefit
liabilities.  The term “benefit
liabilities” has the meaning specified in section 4001 of ERISA
and the terms “current value” and “present value” have the meanings
specified in section 3 of ERISA.

 

(c)           The Company and its ERISA Affiliates
have not incurred withdrawal liabilities (and are not subject to contingent
withdrawal liabilities) under section 4201 or 4204 of ERISA in respect of
Multiemployer Plans that individually or in the aggregate are Material.

 

(d)           The expected post-retirement benefit
obligation (determined as of the last day of the Company’s most recently ended
fiscal year in accordance with Financial Accounting Standards Board Statement
No. 106, without regard to liabilities attributable to continuation coverage
mandated by section 4980B of the Code) of the Company and its Subsidiaries
is not Material.

 

(e)           The execution and delivery of this
Agreement and the issuance and sale of the Notes hereunder will not involve any
transaction that is subject to the prohibitions of section 406 of ERISA or
in connection with which a tax could be imposed pursuant to section 4975(c)(1)(A)-(D)
of the Code.  The representation by the
Company in the first sentence of this Section 5.12(e) is made in reliance
upon and subject to the accuracy of your representation in Section 6.2 as
to the sources of the funds used to pay the purchase price of the Notes to be
purchased by you.

 

Section 5.13.            Private Offering by the Obligors.  Neither an Obligor nor anyone acting on its
behalf has offered the Notes, the Guarantee Agreement or any similar securities
for sale to, or solicited any offer to buy any of the same from, or otherwise
approached or negotiated in respect thereof with, any Person other than you,
the Other Purchasers and not more than thirty-five (35) other
Institutional Investors, each of which has been offered the Notes and the Guarantee
Agreement at a private sale for investment. 
Neither an Obligor nor anyone acting on its behalf has taken, or will
take, any action that would subject the issuance or sale of the Notes or the
Guarantee Agreement to the registration requirements of Section 5 of the
Securities Act.

 

Section 5.14.            Use of Proceeds; Margin Regulations.  The Company will apply the proceeds of the
sale of the Notes to reduce existing bank Indebtedness and for general
corporate purposes including acquisitions and capital expenditures.  No part of the proceeds from the sale of the
Notes hereunder will be used, directly or indirectly, for the purpose of buying
or carrying any margin stock within the meaning of Regulation U of the
Board of Governors of the Federal Reserve System (12 CFR 207), or for
the purpose of buying or carrying or trading in any securities under such
circumstances as to involve an Obligor in a violation of Regulation X of said
Board (12 CFR 224) or to involve any broker or dealer in a violation
of Regulation T of said Board (12 CFR 220).  Margin stock does not constitute more than 1.00% of the value of
the 

 

9

 

consolidated assets of
the Company and its Subsidiaries, and the Company does not have any present
intention that margin stock will constitute more than 1.00% of the value of
such assets.  As used in this Section,
the terms “margin
stock” and “purpose of buying or carrying” shall have
the meanings assigned to them in said Regulation U.

 

Section 5.15.            Existing Indebtedness; Future Liens.  (a) Schedule 5.15 sets forth a
complete and correct list of all outstanding Indebtedness of the Company and
its Subsidiaries as of December 31, 2002, since which date there has been
no Material change in the amounts, interest rates, sinking funds, installment
payments or maturities of the Indebtedness of the Company or its Subsidiaries
with the exception of the payment in full and replacement of the Existing PNC
Facility with the facilities described in the Bank Credit Agreement.  Neither the Company nor any Subsidiary is in
default and no waiver of default is currently in effect, in the payment of any
principal or interest on any Indebtedness of the Company or such Subsidiary and
no event or condition exists with respect to any Indebtedness of the Company or
any Subsidiary that would permit (or that with notice or the lapse of time, or
both, would permit) one or more Persons to cause such Indebtedness to become
due and payable before its stated maturity or before its regularly scheduled
dates of payment.

 

(b)           Except as disclosed in
Schedule 5.15, neither the Company nor any Subsidiary has agreed or
consented to cause or permit in the future (upon the happening of a contingency
or otherwise) any of its property, whether now owned or hereafter acquired, to
be subject to a Lien not permitted by the Financing Agreements.

 

Section 5.16.            Foreign Assets Control Regulations,
etc.  Neither the sale of the
Notes by the Company hereunder nor its use of the proceeds thereof will violate
the Trading with the Enemy Act, as amended, or any of the foreign assets
control regulations of the United States Treasury Department (31 CFR, Subtitle
B, Chapter V, as amended) or any enabling legislation or executive order
relating thereto.  Without limiting the
foregoing, neither the Company nor any of its Subsidiaries (a) is or will
become a person whose property or interests in property are blocked pursuant to
Section 1 of Executive Order 13224 of September 23, 2001 Blocking
Property and Prohibiting Transactions With Persons Who Commit, Threaten to
Commit, or Support Terrorism (66 Fed. Reg. 49079 (2001)) or (b) engages or
will engage in any dealings or transactions, or be otherwise associated, with
any such person.  The Company and its
Subsidiaries are in compliance, in all material respects, with the Uniting and
Strengthening America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism (USA Patriot Act of 2001). 
No part of the proceeds from the sale of the Notes hereunder will be
used, directly or indirectly, for any payment to any governmental official or
employee, political party, official of a political party, candidate for
political office or anyone else acting in an official capacity, in order to
obtain, retain or direct business or obtain any improper advantage, in
violation of the United States Foreign Corrupt Practices Act of 1977, as
amended.

 

Section 5.17.            Status under Certain Statutes.  Neither the Company nor any Subsidiary is an
“investment company” registered or required to be registered under the
Investment Company Act of 1940, as amended, or is subject to regulation under
the Public Utility Holding Company Act of 1935, as amended, the ICC Termination
Act of 1995, as amended, or the Federal Power Act, as amended.

 

10

 

Section 5.18.            Environmental Matters.  Neither the Company nor any Subsidiary has
knowledge of any claim or has received any notice of any claim, and no
proceeding has been instituted raising any claim against the Company or any of
its Subsidiaries or any of their respective real properties now or formerly
owned, leased or operated by any of them or other assets, alleging any damage
to the environment or violation of any Environmental Laws, except, in each
case, such as could not reasonably be expected to result in a Material Adverse
Effect.  Except as otherwise disclosed
to you in writing:

 

(a)           neither the Company nor any
Subsidiary has knowledge of any facts which would give rise to any claim,
public or private, of violation of Environmental Laws or damage to the
environment emanating from, occurring on or in any way related to real
properties now or formerly owned, leased or operated by any of them or to other
assets or their use, except, in each case, such as could not reasonably be
expected to result in a Material Adverse Effect;

 

(b)           neither the Company nor any of its
Subsidiaries has stored any Hazardous Materials on real properties now or
formerly owned, leased or operated by any of them or has disposed of any Hazardous
Materials in a manner contrary to any Environmental Laws in each case in any
manner that could reasonably be expected to result in a Material Adverse
Effect; and

 

(c)           all buildings on all real properties
now owned, leased or operated by the Company or any of its Subsidiaries are in
compliance with applicable Environmental Laws, except where failure to comply
could not reasonably be expected to result in a Material Adverse Effect.

 

Section
5.19.            Collateral
Documents.  The Collateral
Documents will create a valid first priority Lien in and to the Collateral in
favor of the Collateral Agent, subject to no Liens except to the extent
permitted by this Agreement and the Collateral Documents.

 

Section
5.20.            Solvency.

 

(a)           Assets Greater Than Liabilities.  The fair value of the business and assets of
the Obligors, taken as a whole on a consolidated basis, exceeds, as of, and
immediately after giving effect to the transactions consummated on the date of
the Closing, the liabilities of the Obligors, taken as a whole on a
consolidated basis, as of such time.

 

(b)           Meeting Liabilities.  Immediately after giving effect to the
transactions contemplated by the Financing Agreements, neither the Company nor
any Guarantor:

 

(i)            will be engaged in any business or
transaction, or about to engage in any business or transaction, for which its
assets would constitute unreasonably small capital (within the meaning of the
Uniform Fraudulent Transfer Act, the Uniform Fraudulent Conveyance Act and
section 548 of the Bankruptcy Code, in each case, of the United States of
America); or

 

11

 

(ii)           will be unable to pay its debts as
such debts mature.

 

(c)           Intent. 
Neither the Company nor any Guarantor is entering into any Financing
Agreement with any intent to hinder, delay, or defraud either current creditors
or future creditors of the Company or any Guarantor.

 

Section
5.21.            Ranking
of Notes.  The Company’s
obligations under the Financing Agreements will, upon issuance of the Notes,
rank at least pari passu, without preference or priority, with all of its
other outstanding senior secured Indebtedness. 
Each Guarantor’s obligations under the Guarantee Agreement will, upon
issuance thereof, rank at least pari passu, without preference or priority,
with all of such Guarantor’s other outstanding senior secured Indebtedness.

 

SECTION 6.           REPRESENTATIONS OF THE PURCHASER.

 

Section 6.1.              Purchase for Investment.  You represent that you are an “accredited
investor” within the meaning of Rule 501 under the Securities Act and you
are purchasing the Notes for your own account or for one or more separate
accounts maintained by you or for the account of one or more pension or trust
funds and not with a view to the distribution thereof, provided that the disposition
of your or their property shall at all times be within your or their
control.  You understand that the Notes
have not been registered under the Securities Act and may be resold only if
registered pursuant to the provisions of the Securities Act or if an exemption
from registration is available, except under circumstances where neither such
registration nor such an exemption is required by law, and that the Company is
not required to register the Notes.

 

Section 6.2.              Source of Funds.  You represent that at least one of the
following statements is an accurate representation as to each source of funds
(a “Source”)
to be used by you to pay the purchase price of the Notes to be purchased by you
hereunder:

 

(a)           the Source is an “insurance company
general account” (as the term is defined in the United States Department of
Labor’s Prohibited Transaction Exemption (“PTE”) 95-60) in respect of which the
reserves and liabilities (as defined by the annual statement for life insurance
companies approved by the National Association of Insurance Commissioners (the “NAIC Annual
Statement”)) for the general account contract(s) held by or on
behalf of any employee benefit plan together with the amount of the reserves
and liabilities for the general account contract(s) held by or on behalf of any
other employee benefit plans maintained by the same employer (or affiliate
thereof as defined in PTE 95-60) or by the same employee organization in the
general account do not exceed 10% of the total reserves and liabilities of the
general account (exclusive of separate account liabilities) plus surplus as set
forth in the NAIC Annual Statement filed with your state of domicile; or

 

(b)           the Source is a separate account that
is maintained solely in connection with your fixed contractual obligations
under which the amounts payable, or credited, to any employee benefit plan (or
is related trust) that has any interest in such separate 

 

12

 

account (or to any
participant or beneficiary of such plan (including an annuitant)) are not
affected in any manner by the investment performance of the separate account;
or

 

(c)           the Source is either (i) an
insurance company pooled separate account, within the meaning of PTE 90-1
or (ii) a bank collective investment fund, within the meaning of
PTE 91-38 and, except as you have disclosed to the Company in writing
pursuant to this clause (c), no employee benefit plan or group of plans
maintained by the same employer or employee organization beneficially owns more
than 10% of all assets allocated to such pooled separate account or collective
investment fund; or

 

(d)           the Source constitutes assets of an
“investment fund” (within the meaning of Part V of PTE 84-14 (the “QPAM
Exemption”)) managed by a “qualified professional asset manager” or
“QPAM” (within the meaning of Part V of the QPAM Exemption), no employee
benefit plan’s assets that are included in such investment fund, when combined
with the assets of all other employee benefit plans established or maintained
by the same employer or by an affiliate (within the meaning of
section V(c)(1) of the QPAM Exemption) of such employer or by the same
employee organization and managed by such QPAM, exceed 20% of the total client
assets managed by such QPAM, the conditions of Part I(c) and (g) of the
QPAM Exemption are satisfied, neither the QPAM nor a Person controlling or
controlled by the QPAM (applying the definition of “control” in
section V(e) of the QPAM Exemption) owns a 5% or more interest in the
Company and (i) the identity of such QPAM and (ii) the names of all
employee benefit plans whose assets are included in such investment fund have
been disclosed to the Company in writing pursuant to this clause (d); or

 

(e)           the Source constitutes assets of a
“plan(s)” (within the meaning of Section IV of PTE 96-23 (the “INHAM
Exemption”) managed by an “in-house asset manager” or INHAM” (within
the meaning of Part IV of the INHAM exemption), the conditions of Part I(a),
(g) and (h) of the INHAM Exemption are satisfied, neither the INHAM nor a
Person controlling or controlled by the INHAM (applying the definition of
“control” in Section IV(h) of the INHAM Exemption) owns a 5% or more interest
in the Company and (i) the identity of such INHAM and (ii) the name(s) of the employee
benefit plan(s) whose assets constitute the Source have been disclosed to the
Company in writing pursuant to this clause (e); or

 

(f)            the Source is a governmental plan;
or

 

(g)           the Source is one or more employee
benefit plans, or a separate account or trust fund comprised of one or more
employee benefit plans, each of which has been identified to the Company in
writing pursuant to this clause (g); or

 

(h)           the Source does not include assets of
any employee benefit plan, other than a plan exempt from the coverage of ERISA.

 

13

 

As used in this Section
6.2, the terms “employee benefit plan,” “governmental plan,” and “separate
account” shall have the respective meanings assigned to such terms in section 3
of ERISA.

 

SECTION 7.           INFORMATION AS TO COMPANY.

 

Section 7.1.              Financial and Business Information.  The Company shall deliver to each holder of
Notes that is an Institutional Investor:

 

(a)           Quarterly Statements — within 60 days
after the end of each quarterly fiscal period in each fiscal year of the
Company (other than the last quarterly fiscal period of each such fiscal year),
duplicate copies of:

 

(i)            a
consolidated balance sheet of the Company and its Subsidiaries as at the end of
such quarterly fiscal period, and

 

(ii)           consolidated
statements of income, changes in shareholders’ equity and cash flows of the
Company and its Subsidiaries for such quarter and (in the case of the second
and third quarters) for the portion of the fiscal year ending with such quarterly
fiscal period,

 

setting forth in each
case in comparative form the figures for the corresponding periods in the
previous fiscal year, all in reasonable detail, prepared in accordance with
GAAP applicable to quarterly financial statements generally, and certified by a
Senior Financial Officer as fairly presenting, in all material respects, the
financial position of the companies being reported on and their results of
operations and cash flows, subject to changes resulting from year-end
adjustments, provided that delivery within the time period specified
above of copies of the Company’s Quarterly Report on Form 10-Q prepared in
compliance with the requirements therefor and filed with the Securities and
Exchange Commission shall be deemed to satisfy the requirements of this
Section 7.1(a);

 

(b)           Annual Statements — within 105 days after
the end of each fiscal year of the Company, duplicate copies of:

 

(i)            a
consolidated balance sheet of the Company and its Subsidiaries, as at the end
of such fiscal year, and

 

(ii)           consolidated
statements of income, changes in shareholders’ equity and cash flows of the
Company and its Subsidiaries, for such fiscal year,

 

setting forth in each
case in comparative form the figures for the previous fiscal year, all in
reasonable detail, prepared in accordance with GAAP, and accompanied by an
opinion thereon of Price Waterhouse Coopers LLP or other independent certified
public accountants of recognized national standing, which opinion shall state
that such financial statements present fairly, in all material respects, the
financial position of the companies being reported upon and their results of
operations and cash flows and have been 

 

14

 

prepared in conformity
with GAAP, and that the examination of such accountants in connection with such
financial statements has been made in accordance with generally accepted
auditing standards, and that such audit provides a reasonable basis for such
opinion in the circumstances, provided that the delivery within the time
period specified above of the Company’s Annual Report on Form 10-K for such
fiscal year (together with the Company’s annual report to shareholders, if any,
prepared pursuant to Rule 14a-3 under the Exchange Act) prepared in
accordance with the requirements therefor and filed with the Securities and
Exchange Commission, shall be deemed to satisfy the requirements of this
Section 7.1(b);

 

(c)           SEC and Other Reports — promptly upon
their becoming available, one copy of (i) each financial statement,
report, notice or proxy statement sent by the Company or any Subsidiary to
public securities holders generally, and (ii) each regular or periodic
report, each registration statement (without exhibits except as expressly
requested by such holder), and each prospectus and all amendments thereto filed
by the Company or any Subsidiary with the Securities and Exchange Commission
and of all press releases and other statements made available generally by the
Company or any Subsidiary to the public concerning developments that are
Material;

 

(d)           Notice of Default or Event of Default or other
Designated Event — promptly, and in any event within ten days
after a Responsible Officer becoming aware of the existence of any Default or
Event of Default or that any Person has given any notice or taken any action
with respect to (i) a claimed default hereunder or that any Person has
given any notice or taken any action with respect to a claimed default of the
type referred to in Section 11(f) or (ii) any claimed default under
the Bank Credit Agreement or (iii) any termination or reduction of the
aggregate commitment of the Lenders (as defined in the Bank Credit Agreement)
under the Bank Credit Agreement, a written notice specifying the nature and period
of existence thereof and what action the Company is taking or proposes to take
with respect thereto;

 

(e)           ERISA Matters — promptly, and in any event
within ten days after a Responsible Officer becoming aware of any of the
following, a written notice setting forth the nature thereof and the action, if
any, that the Company or an ERISA Affiliate proposes to take with respect
thereto:

 

(i)            with
respect to any Plan, any reportable event, as defined in section 4043(b)
of ERISA and the regulations thereunder, for which notice thereof has not been
waived pursuant to such regulations as in effect on the date hereof; or

 

(ii)           the
taking by the PBGC of steps to institute, or the threatening by the PBGC of the
institution of, proceedings under section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Plan, or the
receipt by the Company or any ERISA Affiliate of a notice from a Multiemployer
Plan that such action has been taken by the PBGC with respect to such
Multiemployer Plan; or

 

15

 

(iii)          any
event, transaction or condition that could result in the incurrence of any
liability by the Company or any ERISA Affiliate pursuant to Title I or IV of
ERISA or the penalty or excise tax provisions of the Code relating to employee
benefit plans, or in the imposition of any Lien on any of the rights,
properties or assets of the Company or any ERISA Affiliate pursuant to Title I
or IV of ERISA or such penalty or excise tax provisions, if such liability or
Lien, taken together with any other such liabilities or Liens then existing,
could reasonably be expected to have a Material Adverse Effect;

 

(f)            Notices from Governmental Authority —
promptly, and in any event within 30 days of receipt thereof, copies of any
notice to the Company or any Subsidiary from any Federal or state Governmental
Authority relating to any order, ruling, statute or other law or regulation
that could reasonably be expected to have a Material Adverse Effect;

 

(g)           Partial Release Certificate — concurrently
with the delivery thereof to the Collateral Agent under the Collateral Sharing
Agreement, a copy of each Partial Release Certificate delivered pursuant to the
Collateral Sharing Agreement; and

 

(h)           Requested Information — with reasonable
promptness, such other data and information relating to the business,
operations, affairs, financial condition, assets or properties of the Company
or any of its Subsidiaries or relating to the ability of the Company to perform
its obligations hereunder (including, without limitation thereof, any
information or data required to be delivered pursuant to the Bank Credit
Agreement) and under the Notes as from time to time may be reasonably requested
by any such holder of Notes.

 

Section 7.2.              Officer’s Certificate.  Each set of financial statements delivered
to a holder of Notes pursuant to Section 7.1(a) or Section 7.1(b)
hereof shall be accompanied by a certificate of a Senior Financial Officer
setting forth:

 

(a)           Covenant Compliance — the information
(including detailed calculations) required in order to establish whether the
Company was in compliance with the requirements of Section 10.4 through
Section 10.8 hereof, inclusive, during the quarterly or annual period
covered by the statements then being furnished (including with respect to each
such Section, where applicable, the calculations of the maximum or minimum
amount, ratio or percentage, as the case may be, permissible under the terms of
such Sections, and the calculation of the amount, ratio or percentage then in
existence); and

 

(b)           Event of Default — a statement that such
officer has reviewed the relevant terms hereof and has made, or caused to be
made, under his or her supervision, a review of the transactions and conditions
of the Company and its Subsidiaries from the beginning of the quarterly or
annual period covered by the statements then being furnished to the date of the
certificate and that such review shall not have disclosed the existence during
such period of any condition or event that constitutes a Default or an Event of
Default or, if any such condition or event existed or exists (including,
without 

 

16

 

limitation, any such
event or condition resulting from the failure of the Company or any Subsidiary
to comply with any Environmental Law), specifying the nature and period of
existence thereof and what action the Company shall have taken or proposes to
take with respect thereto.

 

Section 7.3.              Inspection.  The Company shall permit the representatives
of each holder of Notes that is an Institutional Investor:

 

(a)           No Default — if no Default or Event of
Default then exists, at the expense of such holder and upon reasonable prior
notice to the Company, to visit the principal executive office of the Company,
to discuss the affairs, finances and accounts of the Company and its
Subsidiaries with the Company’s senior officers, and (with the consent of the
Company, which consent will not be unreasonably withheld) its independent
public accountants, and (with the consent of the Company, which consent will
not be unreasonably withheld) to visit the other offices and properties of the
Company and each Subsidiary, all at such reasonable times and as often as may
be reasonably requested in writing; provided, however, that no such visits
shall occur during the two week period preceding, or on the day of, the running
of the (i) Kentucky Derby or (ii) Breeder’s Cup, if the Breeder’s Cup
is to be held at Churchill Downs; and

 

(b)           Default — if a Default or Event of Default
then exists, at the expense of the Company, to visit and inspect any of the
offices or properties of the Company or any Subsidiary, to examine all their
respective books of account, records, reports and other papers, to make copies
and extracts therefrom, and to discuss their respective affairs, finances and
accounts with their respective senior officers and independent public
accountants (and by this provision the Company authorizes said accountants to
discuss the affairs, finances and accounts of the Company and its
Subsidiaries), all at such times and as often as may be requested.

 

SECTION 8.           PREPAYMENT OF THE NOTES.

 

Section 8.1.              Required Prepayments.  Except as otherwise provided in this
Section 8 and in Section 12.1 and pursuant to the application or
offer of application of amounts on the Notes pursuant to the Collateral Sharing
Agreement, the Notes are not subject to mandatory prepayments of
principal.  The entire outstanding
principal amount of the Notes, together with all accrued and unpaid interest
thereon shall be due and payable on March 31, 2010.

 

Section 8.2.              Optional Prepayments.  The Company may, at its option, upon notice
as provided below, prepay on any Interest Payment Date on or after, but not
prior to, March 31, 2004, all, or any part of, the Notes, in an amount not
less than 10% of the aggregate principal amount of the Notes then outstanding
in the case of a partial prepayment, at 100% of the principal amount so
prepaid, together with interest accrued thereon to the date of such
prepayment.  The Company will give each
holder of Notes written notice of each optional prepayment under this
Section 8.2 not less than 30 days and not more than 60 days prior to the
Interest Payment Date fixed for such prepayment.  Each such notice shall specify such date, the aggregate principal
amount of the Notes to be prepaid on such date, the principal amount of each 

 

17

 

Note held by such holder
to be prepaid (determined in accordance with Section 8.4), and the
interest to be paid on the prepayment date with respect to such principal
amount being prepaid.

 

Section 8.3.              Change in Control.

 

(a)           Notice of Change in Control or Control Event.  The Company will, within five (5) Business
Days after any Responsible Officer has knowledge of the occurrence of any
Change in Control or Control Event, give written notice of such Change in
Control or Control Event to each holder of Notes unless notice in respect of
such Change in Control (or the Change in Control contemplated by such Control
Event) shall have been given pursuant to Section 8.3(b).  If a Change in Control has occurred, such
notice shall contain and constitute an offer to prepay the Notes as described in
Section 8.3(c) hereof and shall be accompanied by the certificate described in
Section 8.3(f).

 

(b)           Conditions to Company Action.  The Company will not take any action that
consummates or finalizes a Change in Control unless at least fifteen (15) days
prior to such action it shall have given to each holder of Notes written notice
containing and constituting an offer to prepay Notes as described in Section
8.3(c), accompanied by the certificate described in Section 8.3(f).

 

(c)           Offer to Prepay Notes.  The offer to prepay Notes contemplated by
paragraphs (a) and (b) of this Section 8.3 shall be an offer to prepay, in
accordance with and subject to this Section 8.3, all, but not less than
all, the Notes held by each holder (in this case only, “holder” in respect of
any Note registered in the name of a nominee for a disclosed beneficial owner
shall mean such beneficial owner) on a date specified in such offer (the “Proposed
Prepayment Date”) which shall be the next Interest Payment Date
which is at least 15 days after the date of the notice of prepayment.

 

(d)           Acceptance.  A holder of Notes may accept the offer to prepay made pursuant to
this Section 8.3 by causing a notice of such acceptance to be delivered to
the Company at least five (5) Business Days prior to the Proposed
Prepayment Date.  A failure by a holder
of Notes to respond to an offer to prepay made pursuant to this Section 8.3
shall be deemed to constitute a rejection of such offer by such holder.

 

(e)           Prepayment.  Prepayment of the Notes to be prepaid pursuant to this
Section 8.3 shall be at 100% of the principal amount of the Notes together
with accrued and unpaid interest thereon. 
The prepayment shall be made on the Proposed Prepayment Date.

 

(f)            Officer’s Certificate.  Each offer to prepay the Notes pursuant to
this Section 8.3 shall be accompanied by a certificate, executed by the Senior
Financial Officer of the Company and dated the date of such offer,
specifying:  (i) the Proposed Prepayment
Date; (ii) that such offer is made pursuant to this Section 8.3; (iii) the
principal amount of each Note offered to be prepaid; (iv) the interest that
would be due on each Note offered to be prepaid, accrued to the Proposed
Prepayment Date; (v) that the conditions of this Section 8.3 have been
fulfilled; and (vi) in reasonable detail, the nature and date or proposed date
of the Change in Control.

 

18

 

(g)           Certain Definitions.  “Change in Control” shall be deemed to
have occurred if any person (as such term is used in Section 13(d) and
Section 14(d)(2) of the Exchange Act as in effect on the date of the
Closing) or related persons constituting a group (as such term is used in
Rule 13d-5 under the Exchange Act), other than a group including, and
under the general supervision of, the Excluded Group:

 

(i)            become
the “beneficial owners” (as such term is used in Rule 13d-3 under the
Exchange Act as in effect on the date of the Closing), directly or indirectly,
of more than 50% of the total voting power of all classes then outstanding of
the voting stock or membership or other equity interests of the Company, or

 

(ii)           acquire
after the date of the Closing (x) the power to elect, appoint or cause the
election or appointment of at least a majority of the members of the board of
directors of the Company, through beneficial ownership of the capital stock of
the Company or otherwise, or (y) all or substantially all of the properties and
assets of the Company.

 

“Control Event”
means:

 

(i)            the
execution by the Company or an Affiliate of any agreement or letter of intent
with respect to any proposed transaction or event or series of transactions or
events which, individually or in the aggregate, may reasonably be expected to
result in a Change in Control,

 

(ii)           the
execution of any written agreement which, when fully performed by the parties
thereto, would result in a Change in Control, or

 

(iii)          the
making of any written offer by any person (as such term is used in
Section 13(d) and Section 14(d)(2) of the Exchange Act as in effect
on the date of the Closing) or related persons constituting a group (as such
term is used in Rule 13d-5 under the Exchange Act as in effect on the date of
the Closing) to the holders of the outstanding equity of the Company, which
offer, if accepted by the requisite number of holders, would result in a Change
in Control.

 

“Excluded Group”
means and includes Duchossois Industries, Inc. and its Affiliates and
Brad M. Kelley and his Affiliates.

 

(h)           All calculations contemplated in this
Section 8.3 involving the capital stock or other equity interest of any
Person shall be made with the assumption that all convertible securities of
such Person then outstanding and all convertible securities issuable upon the
exercise of any warrants, options and other rights outstanding at such time
were converted at such time and that all options, warrants and similar rights
to acquire shares of capital stock or other equity interest of such Person were
exercised at such time.

 

Section 8.4.              Allocation
of Partial Prepayments.  In
the case of each partial prepayment of the Notes pursuant to Section 8.2, the
principal amount of the Notes to be prepaid shall be 

 

19

 

allocated among all of
the Notes at the time outstanding in proportion, as nearly as practicable, to
the respective unpaid principal amounts thereof.

 

Section 8.5.              Maturity;
Surrender, etc.  In the case
of each prepayment of Notes pursuant to this Section 8, the principal
amount of each Note to be prepaid shall mature and become due and payable on
the date fixed for such prepayment, together with interest on such principal
amount accrued to such date.  From and
after such date, unless the Company shall fail to pay such principal amount
when so due and payable, together with the interest, as aforesaid, interest on
such principal amount shall cease to accrue. 
Any Note paid or prepaid in full shall be surrendered to the Company and
cancelled and shall not be reissued, and no Note shall be issued in lieu of any
prepaid principal amount of any Note.

 

Section 8.6.              Purchase
of Notes.  The Company will
not and will not permit any Affiliate controlled directly or indirectly, by the
Company to purchase, redeem, prepay or otherwise acquire, directly or
indirectly, any of the outstanding Notes except upon the payment or prepayment
of the Notes in accordance with the terms of this Agreement and the Notes.  The Company will promptly cancel all Notes
acquired by it or any Affiliate pursuant to any payment, prepayment or purchase
of Notes pursuant to any provision of this Agreement and no Notes may be issued
in substitution or exchange for any such Notes.

 

SECTION 9.           AFFIRMATIVE COVENANTS.

 

The Company covenants
that so long as any of the Notes are outstanding:

 

Section 9.1.              Compliance
with Law.  The Company will,
and will cause each of its Subsidiaries to, comply with all laws, ordinances or
governmental rules or regulations to which each of them is subject, including,
without limitation, Environmental Laws, and will obtain and maintain in effect
all licenses, certificates, permits, franchises and other governmental
authorizations necessary to the ownership of their respective properties or to
the conduct of their respective businesses, in each case to the extent
necessary to ensure that non-compliance with such laws, ordinances or
governmental rules or regulations or failures to obtain or maintain in effect
such licenses, certificates, permits, franchises and other governmental
authorizations could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.

 

Section 9.2.              Insurance.  The Company will, and will cause each of its
Subsidiaries to, maintain, with financially sound and reputable insurers,
insurance with respect to their respective properties and businesses against
such casualties and contingencies, of such types, on such terms and in such
amounts (including deductibles, co-insurance and self-insurance, if adequate
reserves are maintained with respect thereto) as is customary in the case of
Persons of established reputations engaged in the same or a similar business
and similarly situated.

 

Section 9.3.              Maintenance
of Properties.  The Company
will, and will cause each of its Subsidiaries to, maintain and keep, or cause
to be maintained and kept, their respective properties in good repair, working
order and condition (other than ordinary wear and tear), so that the business
carried on in connection therewith may be properly conducted at all times, provided
that this Section shall not prevent the Company or any Subsidiary from
discontinuing the operation

 

20

 

and the maintenance of
any of its properties if such discontinuance is desirable in the conduct of its
business and the Company has concluded that such discontinuance could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.

 

Section 9.4.              Payment
of Taxes and Claims.  The
Company will, and will cause each of its Subsidiaries to, file all tax returns
required to be filed in any jurisdiction and to pay and discharge all taxes
shown to be due and payable on such returns and all other taxes, assessments,
governmental charges, or levies imposed on them or any of their properties,
assets, income or franchises, to the extent such taxes and assessments have
become due and payable and before they have become delinquent and all claims
for which sums have become due and payable that have or might become a Lien on
properties or assets of the Company or any Subsidiary, provided that neither the
Company nor any Subsidiary need pay any such tax or assessment or claim if
(i) the amount, applicability or validity thereof is contested by the
Company or such Subsidiary on a timely basis in good faith and in appropriate
proceedings, and the Company or a Subsidiary has established adequate reserves
therefor in accordance with GAAP on the books of the Company or such Subsidiary
or (ii) the nonpayment of all such taxes and assessments in the aggregate
could not reasonably be expected to have a Material Adverse Effect.

 

Section 9.5.              Corporate
Existence, etc.  The Company
will at all times preserve and keep in full force and effect its corporate or
limited liability company existence. 
Subject to Sections 10.2 and 10.8, the Company will at all times
preserve and keep in full force and effect the corporate or limited liability
company existence of each of its Subsidiaries and all rights and franchises of
the Company and its Subsidiaries unless, in the good faith judgment of the
Company, the termination of or failure to preserve and keep in full force and
effect such corporate or limited liability company existence, right or
franchise could not, individually or in the aggregate, have a Material Adverse
Effect.

 

Section 9.6.              Form
of Guaranties; Subsequent Guarantors.  (a) The Company covenants that it shall not cause or permit
any Subsidiary to deliver any Guaranty or any Collateral, in each case,
securing obligations of the Company or any other Subsidiary in respect of the
Bank Credit Agreement unless any such Guaranty or additional Collateral is in
favor of the Collateral Agent under the Collateral Sharing Agreement.

 

(b)           The Company covenants that if, at any
time after the date of this Agreement, any Subsidiary shall enter into a
Guaranty in respect of the Bank Credit Agreement or any other Indebtedness of
the Company, or otherwise become directly or indirectly liable for, all or any
part of the Indebtedness under, or in respect of, the Bank Credit Agreement,
the Company will cause each such Subsidiary contemporaneously with entering
into any such Guaranty or becoming directly or indirectly liable in respect of
such Indebtedness (and in any event within 30 days thereafter), to execute
and deliver to the holders of the Notes (a) a joinder agreement to the
Guarantee Agreement, which joinder agreement is to be substantially in the form
of Exhibit A to the Guarantee Agreement, and to remain obligated in respect
thereof at all times thereafter; (b) an opinion of independent counsel for
such Person with respect to the Guarantee Agreement and such joinder agreement
which counsel and opinion shall be reasonably acceptable to the Required
Holders and, in each case, not materially different or broader in scope than
those delivered at Closing with respect to the initial Guarantors.

 

21

 

Section 9.7.              Further
Assurances.  Each Obligor
shall, from time to time, at its expense, (i) take such steps as may be
necessary and/or appropriate to faithfully preserve and protect the Lien in
favor of the Collateral Agent, for the benefit of holders pursuant to and
subject to the terms of the Collateral Sharing Agreement, on and security
interest in the Collateral more fully described in the Collateral Documents as
a continuing first priority perfected Lien, subject only to Permitted Liens,
(ii) shall do such other acts and things as the Required Holders in their
sole discretion may deem reasonably necessary or advisable from time to time in
order to preserve, perfect and protect the Liens granted under the Collateral
Documents and to exercise and enforce its rights and remedies thereunder with
respect to the Collateral, and (iii) as property is acquired and as
required by the other provisions of this Agreement, enter into additional
documents from time to time in the form of the Collateral Documents (except as
to the applicable Obligor and the property subject thereto) and take such other
steps to grant and perfect first priority Liens on those assets to the
Collateral Agent, for the benefit of the holders pursuant to and subject to the
Collateral Sharing Agreement.

 

Section 9.8.              Subordination
of Intercompany Loans.  Each
Obligor shall cause any intercompany Indebtedness, and loans or advances owed
by any Obligor to any other Obligor to be subordinated pursuant to the terms of
the Intercompany Subordination Agreement substantially in the form of
Exhibit 9.8 hereto.

 

Section 9.9.              Recordation
of Calder Mortgage.  The
Company acknowledges and agrees that in the event the Calder Mortgage has not
been previously recorded as contemplated under the Credit Agreement, the
Required Holders hereunder shall have the right to direct the Collateral Agent
to record the Calder Mortgage.  The
Company shall cause the appropriate Obligors to take all such steps as the
Collateral Agent or the Required Holders request and shall otherwise cooperate
in connection with the recordation of the Calder Mortgage and (i) to
obtain title insurance in favor of the Collateral Agent and the other parties
subject to the Collateral Sharing Agreement in an amount not less than the
appraised value of the property covered by the Calder Mortgage (which the
Obligors shall be required to pay for) and (ii) if a Default or Event of
Default then exists, or if a Default or Event of Default shall occur after such
recordation of the Calder Mortgage, the Obligors shall pay (or reimburse the
Required Holders for) all documentary stamp taxes, intangible asset taxes and
other fees and expenses associated with such recordation.

 

SECTION 10.         NEGATIVE COVENANTS.

 

The Company covenants
that so long as any of the Notes are outstanding:

 

Section 10.1.            Transactions
with Affiliates.  The Company
will not and will not permit any Subsidiary to enter into directly or
indirectly any transaction (including without limitation the purchase, lease,
sale or exchange of properties of any kind or the rendering of any service)
with any Affiliate (other than the Company or another Subsidiary), except in
the ordinary course and pursuant to the reasonable requirements of the
Company’s or such Subsidiary’s business and upon fair and reasonable terms no
less favorable to the Company or such Subsidiary than would be obtainable in a
comparable arm’s-length transaction with a Person not an Affiliate.

 

22

 

Section 10.2.            Merger,
Consolidation, etc.  The
Company shall not, and shall not permit any Subsidiary to, consolidate with or
merge with any other Person or convey, transfer or lease all or substantially
all of its assets in a single transaction or series of transactions to any
Person (except that (i) any Subsidiary may consolidate with or merge with,
or convey, transfer or lease all or substantially all of its assets in a single
transaction or series of transactions to, the Company or any other Obligor which
is a Wholly-Owned Subsidiary and (ii) any Subsidiary which is not an
Obligor may consolidate with or merge with, or convey, transfer or lease all or
substantially all of its assets in a single transaction or series of
transactions to, the Company or any other Wholly-Owned Subsidiary, provided,
that, in any such case described in clauses (i) or (ii) above, (1) in
the case of any such transaction involving the Company, the Company shall be
the surviving or continuing corporation and (2) immediately after giving
effect to such transaction, no Default or Event of Default shall have occurred
and be continuing) unless:

 

(a)           in the case of any such transaction
involving an Obligor, the successor formed by such consolidation or the
survivor of such merger or the Person that acquires by conveyance, transfer or
lease all or substantially all of the assets of such Obligor as an entirety, as
the case may be, shall be a solvent corporation or limited liability company
organized and existing under the laws of the United States or any State thereof
(including the District of Columbia), and, if an Obligor is not such
corporation or limited liability company, (i) such corporation or limited
liability company shall have executed and delivered to each holder of any Notes
its assumption of the due and punctual performance and observance of each
covenant and condition of the Financing Agreements of such Obligor and
(ii) shall have caused to be delivered to each holder of any Notes an
opinion of nationally recognized independent counsel, or other independent
counsel reasonably satisfactory to the Required Holders, to the effect that all
agreements or instruments effecting such assumption are enforceable in
accordance with their terms and comply with the terms hereof; and

 

(b)           in all cases, immediately after
giving effect to such transaction, no Default or Event of Default shall have
occurred and be continuing.

 

No such conveyance,
transfer or lease of substantially all of the assets of an Obligor shall have
the effect of releasing such Obligor or any successor corporation that shall
theretofore have become such in the manner prescribed in this Section 10.2
from its liability under the Financing Agreements.  This Section 10.2 shall not prohibit any Disposition of
assets of the Company or any Subsidiary permitted by Section 10.8.

 

Section 10.3.            Liens.  The Company will not, and will
not permit any Subsidiary to, cause or permit to exist, or agree or consent to
cause or permit to exist in the future (upon the happening of a contingency or
otherwise), any of the properties of the Company or any such Subsidiary which
constitutes Collateral, whether now owned or hereafter acquired, to be subject
to any Lien except Permitted Liens.  The
Company will not let the property subject to the Calder Mortgage be subject to
any liens prohibited by the Negative Pledge Agreement prior to the recordation,
if any, of the Calder Mortgage.

 

23

 

The Company will not, and
will not permit any Subsidiary to, cause or permit to exist, or agree or
consent to cause or permit to exist in the future (upon the happening of a
contingency or otherwise), any of the properties of the Company or any such
Subsidiary which does not constitute Collateral, whether now owned or hereafter
acquired, to be subject to a Lien (unless it makes or causes to be made,
effective provisions whereby the Notes and the Financing Agreements will be
equally and ratably secured with any and all other obligations thereby secured,
such security to be pursuant to an agreement reasonably satisfactory to the
Required Holders) except:

 

(a)           Liens for taxes or other governmental
charges (i) not at the time delinquent or (ii) if not payable at such
time, payable thereafter without penalty or (iii) being contested in good
faith by appropriate proceedings and, in each case, for which it maintains
adequate reserves in accordance with GAAP;

 

(b)           Liens arising in the ordinary course
of business (such as (A) Liens of carriers, warehousemen, mechanics and
materialmen and other similar Liens imposed by law and (B) Liens incurred
in connection with workers’ compensation, unemployment compensation and other
types of social security (excluding Liens arising under ERISA which Liens are
subject to clause (a) above) or in connection with surety bonds, bids,
performance bonds and similar obligations) for sums not overdue or being
contested in good faith by appropriate proceedings and not involving any
deposits or advances or borrowed money or the deferred purchase price of property
or services, and, in each case, for which it maintains adequate reserves;

 

(c)           Liens existing on the date of Closing
and described in Schedule 5.15; and

 

(d)           Liens resulting from judgments
arising in connection with court proceedings, unless such judgments are
discharged or stayed pending appeal within 30 days, or are discharged
within 30 days after the expiration of any such stay;

 

(e)           other Liens incidental to the conduct
of the business of the Company or a Subsidiary or the ownership of its property,
including leases, subleases, easements, rights of way, restrictions, minor
defects or irregularities in title and other similar Liens (including, without
limitation, Liens arising from precautionary UCC financing statement filings
regarding operating leases entered into in the ordinary course of business),
which Liens were not incurred in connection with the borrowing of money and do
not, in any case or in the aggregate, materially detract from the value of such
property;

 

(f)            Liens securing Indebtedness of a
Subsidiary owing to the Company or to any other Subsidiary which is an Obligor;

 

(g)           Liens on property (or any improvement
thereon) acquired or constructed by the Company or any Subsidiary after the
date of the Closing to secure Indebtedness of the Company or such Subsidiary
incurred in connection with such acquisition or construction, provided
that

 

24

 

(i)            no such Lien shall extend to or
cover any property other than the property (or improvement thereon) being
acquired or constructed, or proceeds thereof and, if required by the terms of
the instrument originally creating such Lien, other property which is an
improvement to or is acquired for specific use in connection with such acquired
or constructed property (or improvement thereon) or which is real property
being improved by such acquired or constructed property (or improvement
thereon),

 

(ii)           the amount of Indebtedness secured by
any such Lien shall not exceed the lesser of (A) the cost to the Company
or such Subsidiary of the property (or improvement thereon) so acquired or
constructed and (B) the fair market value (as determined in good faith by
one or more senior officers of the Company) of such property (or improvement
thereon), determined at the time of such acquisition or at the time of
substantial completion of such construction, and

 

(iii)          such Lien shall be created
concurrently with or within 180 days after such acquisition or the substantial
completion of such construction.

 

(h)           Liens existing on property of a
Person immediately prior to its being consolidated with or merged into the
Company or a Subsidiary or its becoming a Subsidiary, provided that

 

(i)            no such Lien shall have been created
or assumed in contemplation of such consolidation or merger or such Person’s
becoming a Subsidiary, and

 

(ii)           each such Lien shall extend solely to
the property of the Person consolidated with or merged into the Company or a
Subsidiary or that becomes a Subsidiary and, if required by the terms of the instrument
originally creating such Lien other property which is an improvement to or is
acquired for specific use in connection with such property (or improvement
thereon).

 

(i)            any Lien renewing, extending or
replacing Liens permitted by subsection (c) above, provided that (i) the
principal amount of the Indebtedness secured is not increased or the maturity thereof reduced,
(ii) such Lien is not extended to any other property, and (iii)
immediately after such extension, renewal, or refunding, no Default or Event of
Default would exist; and

 

(j)            any Lien (other than a Lien
permitted under clause (a) through clause (i) above) securing any
Indebtedness of the Company or any Subsidiary, which Debt is permitted
hereunder including each of Sections 10.5(a), (b) and (c).

 

Section 10.4.            Minimum
Consolidated Net Worth.  The
Company will not, at any time, permit Consolidated Net Worth to be less than
the sum of

 

(a)           $180,000,000 plus

 

25

 

(b)           an aggregate amount equal to 50% of
Consolidated Net Earnings (excluding 100% of any net losses) for each completed
fiscal quarter of the Company beginning with the fiscal quarter ending
March 31, 2003.

 

Section 10.5.            Certain Ratios.  (a) The Company will not, as
of the last day of each fiscal quarter of the Company, permit the ratio of
Consolidated Funded Debt to Consolidated Operating Cash Flow for the
immediately preceding period of four (4) fiscal quarters (taken as a
single accounting period) at such time to exceed 3.50 to 1.00.

 

(b)           The Company will not permit, as of
the last day of each quarterly fiscal period, the ratio of Consolidated
Earnings Available for Fixed Charges to Consolidated Fixed Charges for the
immediately preceding period of four (4) fiscal quarters (taken as a single
accounting period) to be less than 1.75 to 1.00.

 

(c)           The Company will not at any time
permit Priority Debt to exceed 20% of Consolidated Net Worth.

 

Section 10.6.            Subsidiary
Debt Limitation.  The Company will not at any time permit any
Subsidiary to, directly or indirectly, create, incur, assume, guarantee, have
outstanding, or otherwise become or remain directly or indirectly liable with
respect to, any Indebtedness other than:

 

(a)           Indebtedness of a Subsidiary
outstanding on the date of Closing (including, without limitation,
Indebtedness  in respect of the
Financing Agreements and under the Bank Credit Agreement) and, except in the
case of the Indebtedness in respect of the Financing Agreements, any extension,
renewal or refunding thereof, provided that the principal amount thereof is not
increased;

 

(b)           Indebtedness of a Subsidiary owed to
the Company or a Wholly-Owned Subsidiary which is a Guarantor; and

 

(c)           Indebtedness of a Subsidiary in
addition to that otherwise permitted by the foregoing provisions, provided,
that on the date the Subsidiary incurs or otherwise becomes liable with respect
to any such additional Indebtedness and immediately after giving effect
thereto, no Default or Event of Default exists, including under
Section 10.5(c).

 

Section 10.7.            Restricted
Investments.  The Company
will not, and will not permit its Subsidiaries to, make any Investments other
than the following:

 

(a)           Investments in property to be used in
the ordinary course of business of the Company and/or its Subsidiaries;

 

(b)           Investments (i) in current
assets arising from the sale of goods and services in the ordinary course of
business of the Company and/or its Subsidiaries and (ii) consisting of
advances to employees of the Company or any Subsidiary to meet 

 

26

 

normal and customary
business, travel and similar expenses incurred by such employees in the
ordinary course of business;

 

(c)           Investments existing as of the date
hereof and described on Schedule 10.7;

 

(d)           Investments in or advances to one or
more Subsidiaries or any Person that concurrently with such Investment becomes
a Subsidiary;

 

(e)           Investments in certificates of
deposit and banker’s acceptances with final maturities of one year or less
issued by U.S. commercial banks having capital and surplus in excess of U.S.
$100,000,000 (or its equivalent) and whose long-term unsecured debt is rated at
least “A2” by Moody’s or at least “A” by S&P;

 

(f)            Investments in commercial paper with
a minimum rating of “A1” or “P1” by either S&P or Moody’s respectively, and
maturing not more than 270 days from the date acquired;

 

(g)           Investments in United States
Governmental Securities with a maturity, in each case, of one year or less;

 

(h)           Investments in Repurchase Agreements;

 

(i)            Investments in tax exempt state or
municipal general obligation bonds rated “AA” or better by S&P, “Aa2” or
better by Moody’s or an equivalent rating by any other credit rating agency of
recognized national standing, provided that such obligations mature
within 365 days from the date of acquisition thereof; and

 

(j)            other Investments not to exceed at
any time, in the aggregate, 20% of the Consolidated Net Worth.

 

For the purposes of this
Agreement, an Investment shall be valued at the lesser of (i) cost or
(ii) the value at which such Investment is shown on the books of the
Company or any Subsidiary in accordance with GAAP (as of the most recent fiscal
quarter end).

 

Section 10.8.            Sale
of Assets.  In addition to,
and not in limitation of, any restrictions contained in any other Financing
Agreements regarding the Disposition of any property or assets, the Company
will not, and will not permit any Subsidiary to Dispose of any property or
assets, except:

 

(a)           the Company or any Subsidiary may
sell, in each case, in the ordinary course of business (i) inventory or
(ii) equipment, fixtures, supplies, materials or other tangible assets no
longer required in the operation of the business of the Company or any
Subsidiary or that are obsolete;

 

27

 

(b)           (i) any Subsidiary may Dispose
of its assets to the Company or a Wholly-Owned Subsidiary which is a Guarantor
and/or (ii) any Disposition that is pursuant to Section 10.2 and
satisfies the requirements thereof; and

 

(c)           the Company or any Subsidiary may
Dispose of its assets so long as, immediately after giving effect to such
proposed Disposition:

 

(i)            the consideration for such assets
represents the fair market value of such assets (as determined in good faith by
the Company’s senior officers) at the time of such Disposition;

 

(ii)           the net book value of all assets so
Disposed of by the Company and its Subsidiaries under this clause (c)
during the prior 12 months does not exceed 15% of Consolidated Total Assets
determined at the time of such proposed Disposition; and

 

(iii)          no Default or Event of Default shall
exist;

 

provided, however, if
after any Disposition, the net book value of all assets Disposed of (other than
Dispositions pursuant to (a) and (b) above) during the prior 12 months exceeds
such 15% of Consolidated Total Assets, the Company shall, within 365 days of
the date of such Disposition, apply the proceeds (net of reasonable expenses
(the “Net
Proceeds”)) from such Disposition (or such portion thereof as is necessary
to cause compliance with the provisions of this Section 10.8(c)) to
(x) acquire capital assets (a “Property Reinvestment Application”) or
(y) reduce Indebtedness of the Company or its Subsidiaries, which
Indebtedness is not subordinate to the Notes (and, if and to the extent that
any such payment is in respect of a revolving credit facility, such payment
shall permanently reduce the availability thereof to the extent of such
payment, subject, in the case of the Bank Credit Agreement, to the application
of such amounts in accordance with the Collateral Sharing Agreement).

 

For
purposes of this Section 10.8(c):

 

(i)            “Disposition” means the sale, lease,
transfer or other disposition of property, and “Dispose of” and “Disposed of”  each
has a corresponding meaning to Disposition; and

 

(ii)           Calculation of Net Book Value.  The net book value of any assets
shall be determined as of the respective date of Disposition of those assets.

 

The holders acknowledge
that the Collateral Agent under the Collateral Sharing Agreement is authorized
to release the lien of the Collateral Documents and/or the obligations of a
Guarantor under the Guarantee Agreement in respect of Dispositions permitted
hereunder pursuant to and in accordance with the terms and provisions of the
Collateral Sharing Agreement provided that no Default or Event of
Default shall exist at the time of or immediately after giving effect to any 

 

28

 

such release of property
or Guarantor and provided, further, that such release of property and/or
Guarantor is simultaneously effectuated with respect to the Bank Credit
Agreement.

 

Nothing contained in this
Section 10.8 shall prevent the Company or any Subsidiary from conducting
its revenue producing activities in the ordinary course of its respective
businesses, including, but not limited to, the (i) leasing or licensing of
parking facilities, banquet facilities, boxes, suites or other facilities to
the patrons of the Company and its Subsidiaries (collectively, the “Patrons”),
(ii) granting of personal suite licenses to Patrons, (iii) granting
of licenses to Patrons to use space in the “marquee village” and other similar
facilities, (iv) the sale, license or use for a fee of simulcast signals,
trademarks, copyrights, and other similar assets, and (v) prepaying and/or
forgiving any amounts owed under, or cancelling the bonds issued or the lease
entered into in connection with, the Master Plan Bond Transaction.

 

Section 10.9.            Nature
of Business.  The
Company will not, and will not permit any of the Subsidiaries to, engage in any
business, if as a result, when taken as a whole, the general nature of the
businesses in which the Company and the Subsidiaries are engaged would be
substantially changed from the general nature of the business in which the
Company and the Subsidiaries are engaged in on the date of this Agreement
(which shall include the activities described in the last sentence of
Section 10.8) except that the Company and any Subsidiary may own or lease
and operate video lottery terminals and other forms of alternative gaming, in
each case, in connection with live or simulcast horse racing and pari mutuel
wagering, and may own and/or operate or may be party to a joint venture with
respect to a hotel located on the Company’s property in Louisville, Kentucky at
700 Central Avenue.

 

SECTION 11.         EVENTS OF DEFAULT.

 

An “Event of Default” shall
exist if any of the following conditions or events shall occur and be
continuing:

 

(a)           the Company defaults in the payment
of any principal or LIBOR Breakage Amount, if any, on any Note when the same
becomes due and payable, whether at maturity or at a date fixed for prepayment
or by declaration or otherwise; or

 

(b)           the Company defaults in the payment
of any interest on any Note for more than five Business Days after the same
becomes due and payable; or

 

(c)           the Company defaults in the
performance of or compliance with any term contained in Section 10; or

 

(d)           an Obligor defaults in the
performance of or compliance with any term contained herein or in any other
Financing Agreement (other than those referred to in paragraphs (a), (b)
and (c) of this Section 11) and such default is not remedied within
30 days after the earlier of (i) a Responsible Officer obtaining
actual knowledge of such default and (ii) the Company receiving written
notice of such default from any holder of a Note (any such written notice to be
identified as a “notice of default” and to refer specifically to this paragraph
(d) of Section 11); or

 

29

 

(e)           any representation or warranty made
in writing by or on behalf of an Obligor or by any officer of an Obligor in any
Financing Agreement or in any writing furnished in connection with the
transactions contemplated hereby or thereby proves to have been false or
incorrect in any material respect on the date as of which made; or

 

(f)            (i) the Company or any
Subsidiary is in default (as principal or as guarantor or other surety) in the
payment of any principal of or premium or make-whole amount (including any
LIBOR breakage amount) or interest on any Indebtedness that is outstanding in
an aggregate principal amount of at least $15,000,000 beyond any period of
grace provided with respect thereto (a “Monetary Default”), or (ii) the
Company or any Subsidiary is in default in the performance of or compliance
with any term of any evidence of any Indebtedness in an aggregate outstanding
principal amount of at least $15,000,000 or of any mortgage, indenture or other
agreement relating thereto or any other condition exists, and as a consequence
of such default or condition such Indebtedness has become, or has been
declared, due and payable before its stated maturity or before its regularly
scheduled dates of payment, or (iii) as a consequence of the occurrence or
continuation of any event or condition (other than the passage of time or the
right of the holder of Indebtedness to convert such Indebtedness into equity
interests), (x) the Company or any Subsidiary has become obligated to
purchase or repay Indebtedness before its regular maturity or before its
regularly scheduled dates of payment in an aggregate outstanding principal
amount of at least $15,000,000, or (y) as a result of a Monetary Default,
one or more Persons have the right to require the Company or any Subsidiary so
to purchase or repay such Indebtedness; or

 

(g)           the Company or any Subsidiary
(i) is generally not paying, or admits in writing its inability to pay,
its debts as they become due, (ii) files, or consents by answer or
otherwise to the filing against it of, a petition for relief or reorganization
or arrangement or any other petition in bankruptcy, for liquidation or to take
advantage of any bankruptcy, insolvency, reorganization, moratorium or other
similar law of any jurisdiction, (iii) makes an assignment for the benefit
of its creditors, (iv) consents to the appointment of a custodian,
receiver, trustee or other officer with similar powers with respect to it or
with respect to any substantial part of its property, (v) is adjudicated
as insolvent or to be liquidated, or (vi) takes corporate action for the
purpose of any of the foregoing; or

 

(h)           a court or governmental authority of
competent jurisdiction enters an order appointing, without consent by the
Company or any of its Subsidiaries, a custodian, receiver, trustee or other
officer with similar powers with respect to it or with respect to any
substantial part of its property, or constituting an order for relief or
approving a petition for relief or reorganization or any other petition in
bankruptcy or for liquidation or to take advantage of any bankruptcy or
insolvency law of any jurisdiction, or ordering the dissolution, winding-up or
liquidation of the Company or any of its Subsidiaries, or any such petition
shall be filed against the Company or any of its Subsidiaries and such petition
shall not be dismissed within 60 days; or

 

30

 

(i)            a final judgement or judgements (for
the payment of money aggregating at least $15,000,000 net of insurance coverage
in respect of any such judgement or judgements provided that (i) the
insurer has acknowledged in writing its obligation to satisfy any such judgment
and (ii) such insurer is solvent and has a long term unsecured debt rating
which is investment grade) are rendered against one or more of the Company and
its Subsidiaries and which judgements are not, within 60 days after entry
thereof, bonded, discharged or stayed pending appeal; or

 

(j)            if (i) any Plan shall fail to
satisfy the minimum funding standards of ERISA or the Code for any plan year or
part thereof or a waiver of such standards or extension of any amortization
period is sought or granted under section 412 of the Code, (ii) a
notice of intent to terminate any Plan shall have been or is reasonably
expected to be filed with the PBGC or the PBGC shall have instituted
proceedings under ERISA section 4042 to terminate or appoint a trustee to
administer any Plan or the PBGC shall have notified the Company or any ERISA
Affiliate that a Plan may become a subject of any such proceedings,
(iii) the aggregate “amount of unfunded benefit liabilities” (within the
meaning of section 4001(a)(18) of ERISA) under all Plans, determined in
accordance with Title IV of ERISA, shall exceed $15,000,000, (iv) the
Company or any ERISA Affiliate shall have incurred or is reasonably expected to
incur any liability pursuant to Title I or IV of ERISA or the penalty or excise
tax provisions of the Code relating to employee benefit plans, (v) the
Company or any ERISA Affiliate withdraws from any Multiemployer Plan, or
(vi) the Company or any Subsidiary establishes or amends any employee
welfare benefit plan that provides post-employment welfare benefits in a manner
that would increase the liability of the Company or any Subsidiary thereunder;
and any such event or events described in clauses (i) through (vi) above,
either individually or together with any other such event or events, could
reasonably be expected to have a Material Adverse Effect; or

 

(k)           the Guarantee Agreement or any
Collateral Document shall cease to be in full force and effect for any reason
whatsoever (except for releases pursuant to and in accordance with the
Collateral Sharing Agreement), including, without limitation, a determination
by any Governmental Authority or court that such Guarantee Agreement or
Collateral Document is invalid, void or unenforceable in any material respect
or any party thereto shall contest or deny the validity or enforceability of
any of its obligations under such Guarantee Agreement or Collateral Document.

 

As used in
Section 11(j), the terms “employee benefit plan” and “employee
welfare benefit plan” shall have the respective meanings assigned to
such terms in section 3 of ERISA.

 

SECTION 12.         REMEDIES ON DEFAULT, ETC.

 

Section 12.1.            Acceleration.  (a) If an Event of Default with respect
to the Company described in paragraph (g) or (h) of Section 11 (other than
an Event of Default described in clause (i) of paragraph (g) or described in
clause (vi) of paragraph (g) by virtue of the fact that such clause encompasses
clause (i) of paragraph (g)) has occurred, all the Notes then outstanding shall
automatically become immediately due and payable.

 

31

 

(b)           If any other Event of Default has
occurred and is continuing, the Required Holders may at any time at its or
their option, by notice or notices to the Company, declare all the Notes then
outstanding to be immediately due and payable.

 

(c)           If any Event of Default described in
paragraph (a) or (b) of Section 11 has occurred and is continuing, any
holder of Notes at the time outstanding affected by such Event of Default may
at any time, at its option, by notice or notices to the Company, declare all
the Notes held by it to be immediately due and payable.

 

Upon any Note’s becoming
due and payable under this Section 12.1, whether automatically or by
declaration, such Note will forthwith mature and the entire unpaid principal
amount of such Note, plus (i) all accrued and unpaid interest thereon and
(ii) the LIBOR Breakage Amount determined in respect of such principal
amount (to the full extent permitted by applicable law), shall all be
immediately due and payable, in each and every case without presentment, demand,
protest or further notice, all of which are hereby waived.  The Company acknowledges, and the parties
hereto agree, that each holder of a Note has the right to maintain its
investment in the Notes free from repayment by the Company (except as herein
specifically provided for), and that the provision for payment of a LIBOR
Breakage Amount by the Company in the event that the Notes are prepaid or are
accelerated as a result of an Event of Default, is intended to provide
compensation for the deprivation of such right under such circumstances.

 

Section 12.2.            Other
Remedies.  If any Default or
Event of Default has occurred and is continuing, and irrespective of whether
any Notes have become or have been declared immediately due and payable under
Section 12.1, the holder of any Note at the time outstanding may proceed
to protect and enforce the rights of such holder under or pursuant to any
Financing Agreement or by an action at law, suit in equity or other appropriate
proceeding, whether for the specific performance of any agreement contained
herein or in any Note, or for an injunction against a violation of any of the
terms hereof or thereof, or in aid of the exercise of any power granted hereby
or thereby or by law or otherwise.

 

Section 12.3.            Rescission.  At any time after any Notes have been
declared due and payable pursuant to clause (b) or (c) of
Section 12.1, the Required Holders, by written notice to the Company, may
rescind and annul any such declaration and its consequences if (a) the Company
has paid all overdue interest on the Notes, all principal of and LIBOR Breakage
Amount, if any, on any Notes that are due and payable and are unpaid other than
by reason of such declaration, and all interest on such overdue principal and
LIBOR Breakage Amount, if any, and (to the extent permitted by applicable law)
any overdue interest in respect of the Notes, at the Default Rate, (b) all
Events of Default and Defaults, other than non-payment of amounts that have
become due solely by reason of such declaration, have been cured or have been
waived pursuant to Section 17, and (c) no judgment or decree has been
entered for the payment of any monies due pursuant hereto or to the Notes.  No rescission and annulment under this
Section 12.3 will extend to or affect any subsequent Event of Default or
Default or impair any right consequent thereon.

 

Section 12.4.            No Waivers or Election of Remedies,
Expenses, etc.  No course of
dealing and no delay on the part of any holder of any Note in exercising any
right, power or remedy shall 

 

32

 

operate as a waiver
thereof or otherwise prejudice such holder’s rights, powers or remedies.  No right, power or remedy conferred by this
Agreement or by any Note upon any holder thereof shall be exclusive of any
other right, power or remedy referred to herein or therein or now or hereafter
available at law, in equity, by statute or otherwise.  Without limiting the obligations of the Company under Section 15,
the Company will pay to the holder of each Note on demand such further amount
as shall be sufficient to cover all costs and expenses of such holder incurred
in any enforcement or collection under this Section 12, including, without
limitation, reasonable attorneys’ fees, expenses and disbursements.

 

SECTION 13.         REGISTRATION; EXCHANGE; SUBSTITUTION OF
NOTES.

 

Section 13.1.            Registration
of Notes.  The Company shall
keep at its principal executive office a register for the registration and
registration of transfers of Notes.  The
name and address of each holder of one or more Notes, each transfer thereof and
the name and address of each transferee of one or more Notes shall be
registered in such register.  Prior to
due presentment for registration of transfer, the Person in whose name any Note
shall be registered shall be deemed and treated as the owner and holder thereof
for all purposes hereof, and the Company shall not be affected by any notice or
knowledge to the contrary.  The Company
shall give to any holder of a Note that is an Institutional Investor promptly
upon request therefor, a complete and correct copy of the names and addresses
of all registered holders of Notes.

 

Section 13.2.            Transfer
and Exchange of Notes.  Upon
surrender of any Note at the principal executive office of the Company for
registration of transfer or exchange (and in the case of a surrender for
registration of transfer, duly endorsed or accompanied by a written instrument
of transfer duly executed by the registered holder of such Note or its attorney
duly authorized in writing and accompanied by the address for notices of each
transferee of such Note or part thereof), the Company shall execute and
deliver, at the Company’s expense (except as provided below), one or more new
Notes (as requested by the holder thereof) in exchange therefor, in an
aggregate principal amount equal to the unpaid principal amount of the
surrendered Note.  Each such new Note
shall be payable to such Person as such holder may request and shall be
substantially in the form of Exhibit 1. 
Each such new Note shall be dated and bear interest from the date to
which interest shall have been paid on the surrendered Note or dated the date
of the surrendered Note if no interest shall have been paid thereon.  The Company may require payment of a sum
sufficient to cover any stamp tax or governmental charge imposed in respect of
any such transfer of Notes.  Notes shall
not be transferred in denominations of less than $250,000, provided that if necessary
to enable the registration of transfer by a holder of its entire holding of
Notes, one Note may be in a denomination of less than $250,000.  Any transferee of a Note, or purchaser of a
participation therein, shall, by its acceptance of such Note be deemed to make
the same representations to the Company regarding the Note or participation as
you and the Other Purchasers have made pursuant to Section 6, provided
that such entity may (in reliance upon information provided by the Company,
which shall not be unreasonably withheld) make a representation to the effect
that the purchase by such entity of any Note will not constitute a non-exempt
prohibited transaction under section 406(a) of ERISA.

 

33

 

Notwithstanding anything
contained in this Section 13.2 or in this Agreement to the contrary, the
Company shall not be required to effect any transfer of any Note to any
Competitor at any time during which no Event of Default exists.

 

Section 13.3.            Replacement
of Notes.  Upon receipt by
the Company of evidence reasonably satisfactory to it of the ownership of and
the loss, theft, destruction or mutilation of any Note (which evidence shall
be, in the case of an Institutional Investor, notice from such Institutional
Investor of such ownership and such loss, theft, destruction or mutilation),
and

 

(a)           in the case of loss, theft or
destruction, of indemnity reasonably satisfactory to the Company (provided
that if the holder of such Note is, or is a nominee for, an original Purchaser
or another holder of a Note with a minimum net worth of at least $20,000,000 at
the time of such loss, theft or destruction, such Person’s own unsecured
agreement of indemnity shall be deemed to be satisfactory), or

 

(b)           in the case of mutilation, upon
surrender and cancellation thereof,

 

the Company at its own
expense shall execute and deliver, in lieu thereof, a new Note, dated and
bearing interest from the date to which interest shall have been paid on such
lost, stolen, destroyed or mutilated Note or dated the date of such lost,
stolen, destroyed or mutilated Note if no interest shall have been paid
thereon.

 

SECTION 14.         PAYMENTS
ON NOTES.

 

Section 14.1.            Place
of Payment.  Subject to
Section 14.2, payments of principal, LIBOR Breakage Amount, if any, and
interest becoming due and payable on the Notes shall be made in New York, New
York at the principal office of Bank One NA in such jurisdiction.  The Company may at any time, by notice to
each holder of a Note, change the place of payment of the Notes so long as such
place of payment shall be either the principal office of the Company in such
jurisdiction or the principal office of a bank or trust company in such
jurisdiction.

 

Section 14.2.            Home
Office Payment.  So long as
you or your nominee shall be the holder of any Note, and notwithstanding
anything contained in Section 14.1 or in such Note to the contrary, the
Company will pay all sums becoming due on such Note for principal, LIBOR
Breakage Amount, if any, and interest by the method and at the address
specified for such purpose below your name in Schedule A, or by such other
method or at such other address as you shall have from time to time specified
to the Company in writing for such purpose, without the presentation or
surrender of such Note or the making of any notation thereon, except that upon
written request of the Company made concurrently with or reasonably promptly
after payment or prepayment in full of any Note, you shall surrender such Note
for cancellation, reasonably promptly after any such request, to the Company at
its principal executive office or at the place of payment most recently
designated by the Company pursuant to Section 14.1.  The Company will afford the benefits of this
Section 14.2 to any Institutional Investor that is the direct or indirect
transferee of any Note purchased by you under this Agreement and that has made
the same agreement relating to such Note as you have made in this
Section 14.2.

 

34

 

SECTION 15.         EXPENSES, ETC.

 

Section 15.1.            Transaction
Expenses.  Whether or not the
transactions contemplated hereby are consummated, the Company will pay all
costs and expenses (including reasonable attorneys’ fees of one special counsel
and, if reasonably required, local or other counsel) incurred by you and each
Other Purchaser or holder of a Note in connection with such transactions and in
connection with any amendments, waivers or consents under or in respect of this
Agreement or the Notes or any other Financing Agreement (whether or not such
amendment, waiver or consent becomes effective), including, without
limitation:  (a) the costs and
expenses incurred in enforcing or defending (or determining whether or how to
enforce or defend) any rights under this Agreement or the Notes or any other
Financing Agreement or in responding to any subpoena or other legal process or
informal investigative demand issued in connection with this Agreement or the
Notes or any other Financing Agreement, or by reason of being a holder of any
Note, (b) the costs and expenses, including financial advisors’ fees,
incurred in connection with the insolvency or bankruptcy of the Company or any
Subsidiary or in connection with any work-out or restructuring of the
transactions contemplated hereby and by the Notes, and (c) the reasonable
costs and expenses incurred in connection with the initial filing of this
Agreement, all related documents and financial information, all subsequent
annual and interim filings of documents and financial information related
hereto with the Securities Valuation Office of the National Association of
Insurance Commissioners or any successor organization succeeding to the
authority thereof.  The Company will
pay, and will save you and each other holder of a Note harmless from, all
claims in respect of any fees, costs or expenses, if any, of brokers and
finders (other than those retained by you).

 

Section 15.2.            Survival.  The obligations of the Company under this
Section 15 will survive the payment or transfer of any Note, the
enforcement, amendment or waiver of any provision of the Financing Agreements,
and the termination of any Financing Agreement.

 

SECTION 16.         SURVIVAL OF REPRESENTATIONS AND
WARRANTIES; ENTIRE AGREEMENT.

 

All representations and
warranties contained herein shall survive the execution and delivery of the
Financing Agreements, the purchase or transfer by you of any Note or portion
thereof or interest therein and the payment of any Note, and may be relied upon
by any subsequent holder of a Note, regardless of any investigation made at any
time by or on behalf of you or any other holder of a Note.  All statements contained in any certificate
or other instrument delivered by or on behalf of the Company pursuant to the
Financing Agreements shall be deemed representations and warranties of the
Company under this Agreement.  Subject
to the preceding sentence, the Financing Agreements embody the entire agreement
and understanding between you and the Company and supersede all prior
agreements and understandings relating to the subject matter hereof.

 

SECTION 17.         AMENDMENT AND WAIVER.

 

Section 17.1.            Requirements.  This Agreement and the Notes may be amended,
and the observance of any term hereof or of the Notes may be waived (either
retroactively or 

 

35

 

prospectively), with (and
only with) the written consent of the Company and the Required Holders, except
that (a) no amendment or waiver of any of the provisions of
Section 1, 2, 3, 4, 5, 6 or 21 hereof, or any defined term (as it is used
therein), will be effective as to you unless consented to by you in writing,
and (b) no such amendment or waiver may, without the written consent of
the holder of each Note at the time outstanding affected thereby,
(i) subject to the provisions of Section 12 relating to acceleration
or rescission, change the amount or time of any prepayment or payment of
principal of, or reduce the rate or change the time of payment or method of
computation of interest or of the LIBOR Breakage Amount on, the Notes,
(ii) change the percentage of the principal amount of the Notes the
holders of which are required to consent to any such amendment or waiver, or
(iii) amend any of Sections 8, 11(a), 11(b), 12, 17 or 20.

 

Section 17.2.            Solicitation
of Holders of Notes.

 

(a)           Solicitation.  The Company will provide each holder of the Notes (irrespective
of the amount of Notes then owned by it) with sufficient information,
sufficiently far in advance of the date a decision is required, to enable such
holder to make an informed and considered decision with respect to any proposed
amendment, waiver or consent in respect of any of the provisions hereof or of
the Notes.  The Company will deliver
executed or true and correct copies of each amendment, waiver or consent
effected pursuant to the provisions of this Section 17 to each holder of
outstanding Notes promptly following the date on which it is executed and
delivered by, or receives the consent or approval of, the requisite holders of
Notes.

 

(b)           Payment. 
The Company will not directly or indirectly pay or cause to be paid any
remuneration, whether by way of supplemental or additional interest, fee or
otherwise, or grant any security, to any holder of Notes as consideration for
or as an inducement to the entering into by any holder of Notes of any waiver
or amendment of any of the terms and provisions hereof or of the Notes unless
such remuneration is concurrently paid, or security is concurrently granted, on
the same terms, ratably to each holder of Notes then outstanding whether or not
such holder consented to such waiver or amendment.

 

Section 17.3.            Binding
Effect, etc.  Any amendment
or waiver consented to as provided in this Section 17 applies equally to
all holders of Notes and is binding upon them and upon each future holder of
any Note and upon the Company without regard to whether such Note has been
marked to indicate such amendment or waiver. 
No such amendment or waiver will extend to or affect any obligation,
covenant, agreement, Default or Event of Default not expressly amended or waived
or impair any right consequent thereon. 
No course of dealing between the Company and the holder of any Note nor
any delay in exercising any rights under any Financing Agreement shall operate
as a waiver of any rights of any holder of such Note.  As used herein, the term “this Agreement” and references thereto
shall mean this Agreement as it may from time to time be amended or
supplemented.

 

Section 17.4.            Notes
Held by Company, etc.  Solely
for the purpose of determining whether the holders of the requisite percentage
of the aggregate principal amount of Notes then outstanding approved or
consented to any amendment, waiver or consent to be given under this Agreement
or the Notes, or have directed the taking of any action provided herein or in
the Notes to be taken upon the direction of the holders of a specified
percentage of the aggregate principal 

 

36

 

amount of Notes then
outstanding, Notes directly or indirectly owned by the Company or any of its
Affiliates shall be deemed not to be outstanding.

 

SECTION 18.         NOTICES.

 

All notices and
communications provided for hereunder shall be in writing and sent (a) by
telefacsimile if the sender on the same day sends a confirming copy of such
notice by a recognized overnight delivery service (charges prepaid), or
(b) by registered or certified mail with return receipt requested (postage
prepaid), or (c) by a recognized overnight delivery service (with charges
prepaid).  Any such notice must be sent:

 

(i)            if to you or your nominee, to you or
it at the address specified for such communications in Schedule A, or at
such other address as you or it shall have specified to the Company in writing,

 

(ii)           if to any other holder of any Note,
to such holder at such address as such other holder shall have specified to the
Company in writing, or

 

(iii)          if to the Company, to the Company at
its address set forth at the beginning hereof to the attention of Chief
Financial Officer, or at such other address as the Company shall have specified
to the holder of each Note in writing.

 

Notices under this
Section 18 will be deemed given only when actually received.

 

SECTION 19.         REPRODUCTION OF DOCUMENTS.

 

The Financing Agreements
and all documents relating thereto, including, without limitation,
(a) consents, waivers and modifications that may hereafter be executed,
(b) documents received by you at the Closing (except the Notes
themselves), and (c) financial statements, certificates and other
information previously or hereafter furnished to you, may be reproduced by you
by any photographic, photostatic, microfilm, microcard, miniature photographic
or other similar process and you may destroy any original document so
reproduced.  The Company agrees and
stipulates that, to the extent permitted by applicable law, any such
reproduction shall be admissible in evidence as the original itself in any
judicial or administrative proceeding (whether or not the original is in
existence and whether or not such reproduction was made by you in the regular
course of business) and any enlargement, facsimile or further reproduction of
such reproduction shall likewise be admissible in evidence.  This Section 19 shall not prohibit the
Company or any other holder of Notes from contesting any such reproduction to
the same extent that it could contest the original, or from introducing
evidence to demonstrate the inaccuracy of any such reproduction.

 

SECTION 20.         CONFIDENTIAL INFORMATION.

 

For the purposes of this
Section 20, “Confidential Information” means information delivered to
you by or on behalf of the Company or any Subsidiary in connection with the 

 

37

 

transactions contemplated
by or otherwise pursuant to this Agreement that is proprietary in nature and
that was clearly marked or labeled or otherwise adequately identified when
received by you as being confidential information of the Company or such
Subsidiary, provided
that such term does not include information that (a) was publicly known or
otherwise known to you prior to the time of such disclosure, (b) subsequently
becomes publicly known through no act or omission by you or any Person acting
on your behalf, (c) otherwise becomes known to you other than through
disclosure by the Company or any Subsidiary or (d) constitutes financial statements
delivered to you under Section 7.1 that are otherwise publicly
available.  You will maintain the
confidentiality of such Confidential Information in accordance with procedures
adopted by you in good faith to protect confidential information of third
parties delivered to you, provided that you may deliver or disclose
Confidential Information to (i) your directors, trustees, officers,
employees, agents, attorneys and affiliates (to the extent such disclosure
reasonably relates to the administration of the investment represented by your
Notes), (ii) your financial advisors and other professional advisors who
agree to hold confidential the Confidential Information substantially in
accordance with the terms of this Section 20, (iii) any other holder
of any Note, (iv) any Institutional Investor to which you sell or offer to
sell such Note or any part thereof or any participation therein (if such Person
has agreed in writing prior to its receipt of such Confidential Information to
be bound by the provisions of this Section 20), (v) any Person from
which you offer to purchase any security of the Company (if such Person has
agreed in writing prior to its receipt of such Confidential Information to be
bound by the provisions of this Section 20), (vi) any federal or
state regulatory authority having jurisdiction over you, (vii) the
National Association of Insurance Commissioners or any similar organization, or
any nationally recognized rating agency that requires access to information
about your investment portfolio, or (viii) any other Person to which such
delivery or disclosure may be necessary or appropriate (w) to effect
compliance with any law, rule, regulation or order applicable to you,
(x) in response to any subpoena or other legal process, (y) in
connection with any litigation to which you are a party or (z) if an Event
of Default has occurred and is continuing, to the extent you may reasonably
determine such delivery and disclosure to be necessary or appropriate in the
enforcement or for the protection of the rights and remedies under your Notes
and this Agreement.  Each holder of a
Note, by its acceptance of a Note, will be deemed to have agreed to be bound by
and to be entitled to the benefits of this Section 20 as though it were a
party to this Agreement.  On reasonable
request by the Company in connection with the delivery to any holder of a Note
of information required to be delivered to such holder under this Agreement or
requested by such holder (other than a holder that is a party to this Agreement
or its nominee or any other holder that shall have previously delivered such a
confirmation), such holder will confirm in writing that it is bound by the
provisions of this Section 20.

 

SECTION 21.         SUBSTITUTION OF PURCHASER.

 

You shall have the right
to substitute any one of your Affiliates as the purchaser of the Notes that you
have agreed to purchase hereunder, by written notice to the Company, which
notice shall be signed by both you and such Affiliate, shall contain such
Affiliate’s agreement to be bound by this Agreement and shall contain a
confirmation by such Affiliate of the accuracy with respect to it of the
representations set forth in Section 6. 
Upon receipt of such notice, wherever the word “you” is used in this Agreement
(other than in this Section 21), such word shall be deemed to refer to
such Affiliate in lieu of you.  In the
event that such Affiliate is so 

 

38

 

substituted as a
purchaser hereunder and such Affiliate thereafter transfers to you all of the
Notes then held by such Affiliate, upon receipt by the Company of notice of
such transfer, wherever the word “you” is used in this Agreement (other than in
this Section 21), such word shall no longer be deemed to refer to such
Affiliate, but shall refer to you, and you shall have all the rights of an
original holder of the Notes under this Agreement.

 

SECTION 22.         MISCELLANEOUS.

 

Section 22.1.            Successors
and Assigns.  All covenants
and other agreements contained in this Agreement by or on behalf of any of the
parties hereto bind and inure to the benefit of their respective successors and
assigns (including, without limitation, any subsequent holder of a Note)
whether so expressed or not.

 

Section 22.2.            Payments
Due on Non-Business Days. 
Anything in this Agreement or the Notes to the contrary notwithstanding,
any payment of principal of or LIBOR Breakage Amount or interest on any Note
that is due on a date other than a Business Day shall be made on the next
succeeding Business Day without including the additional days elapsed in the
computation of the interest payable on such next succeeding Business Day.

 

Section 22.3.            Severability.  Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall (to the full extent permitted by
law) not invalidate or render unenforceable such provision in any other
jurisdiction.

 

Section 22.4.            Construction.  Each covenant contained herein shall be
construed (absent express provision to the contrary) as being independent of
each other covenant contained herein, so that compliance with any one covenant
shall not (absent such an express contrary provision) be deemed to excuse
compliance with any other covenant. 
Where any provision herein refers to action to be taken by any Person,
or which such Person is prohibited from taking, such provision shall be
applicable whether such action is taken directly or indirectly by such Person.

 

Section 22.5.            Counterparts.  This Agreement may be executed in any number
of counterparts, each of which shall be an original but all of which together
shall constitute one instrument.  Each
counterpart may consist of a number of copies hereof, each signed by fewer than
all, but together signed by all, of the parties hereto.

 

Section 22.6.            Governing
Law.  This Agreement shall be
construed and enforced in accordance with, and the rights of the parties shall
be governed by, the law of the State of New York  excluding choice-of-law
principles of the law of such State that would require the application of the
laws of a jurisdiction other than such State.

 

*     *     *     *     *

 

39

 

If you are in agreement with the
foregoing, please sign the form of agreement on the accompanying counterpart of
this Agreement and return it to the Company, whereupon the foregoing shall become
a binding agreement between you and the Company.

 

	
   

  	
  Very truly
  yours,

  
	
   

  	
   

  
	
   

  	
  CHURCHILL DOWNS
  INCORPORATED

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By  

  	
  /s/ Michael E.
  Miller

  	
   

  
	
   

  	
   

  	
  Name: Michael E.
  Miller

  
	
   

  	
   

  	
  Title: Chief
  Financial Officer

  
					

 

40

 

	
  Accepted as of
  April    , 2003:

  	
   

  
	
   

  	
   

  
	
   

  	
  CONNECTICUT GENERAL LIFE INSURANCE

  COMPANY

  
	
   

  	
   

  
	
   

  	
  By:

  	
  CIGNA
  Investments, Inc. (authorized agent)

  
	
   

  	
   

  
	
   

  	
   

  	
  By 

  	
   

  	
  /s/ David M.
  Cass

  	
   

  
	
   

  	
   

  	
  Name: David M.
  Cass

  
	
   

  	
   

  	
  Title: Managing
  Director

  

 

 

 

	
  Accepted as of
  April    , 2003:

  	
   

  
	
   

  	
   

  
	
   

  	
  GENERAL ELECTRIC CAPITAL ASSURANCE COMPANY

  
	
   

  	
   

  
	
   

  	
  By:

  	
  GE Asset
  Management Incorporated, its Investment Advisor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By 

  	
   

  	
  /s/ John Endres

  	
   

  
	
   

  	
   

  	
  Name: John
  Endres

  
	
   

  	
   

  	
   

  	
  Title: Vice
  President – Private Investments

  
								

 

E-4.4(a)-2

 

	
  Accepted as of
  April    , 2003:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  EMPLOYERS
  REINSURANCE CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  GE Asset
  Management Incorporated, its Investment Advisor

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By 

  	
   

  	
  /s/ John Endres

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:Vice
  President – Private  

  
	
   

  	
   

  	
   

  	
  Investments

  
								

 

E-4.4(a)-3

 

	
  Accepted as of
  April    , 2003:

  	
   

  
	
   

  	
   

  
	
   

  	
  METROPOLITAN
  LIFE INSURANCE COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By 

  	
   

  	
  /s/ Timothy L.
  Powell

  	
   

  
	
   

  	
   

  	
  Name: Timothy L.
  Powell

  
	
   

  	
   

  	
  Title: Director

  
						

 

E-4.4(a)-4

 

	
  Accepted as of
  April    , 2003:

  	
   

  
	
   

  	
   

  
	
   

  	
  PRINCIPAL LIFE
  INSURANCE COMPANY

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Principal Global
  Investors, LLC, a Delaware limited liability company, its authorized
  signatory

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By

  	
   

  	
  /s/ James C.
  Fifield

  	
   

  
	
   

  	
   

  	
  Name: James C.
  Fifield

  
	
   

  	
   

  	
  Title: Counsel

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By

  	
   

  	
  /s/ Elizabeth D.
  Swanson

  	
   

  
	
   

  	
   

  	
  Name: Elizabeth
  D. Swanson

  
	
   

  	
   

  	
  Title: Counsel

  
								

 

E-4.4(a)-5

 

	
  Accepted as of
  April    , 2003:

  	
   

  
	
   

  	
   

  
	
   

  	
  MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  David L. Babson
  & Company Inc., as Investment Adviser

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By 

  	
   

  	
  /s/ Emeka O.
  Onukwugha

  
	
   

  	
   

  	
  Name: Emeka O.
  Onukwugha

  
	
   

  	
   

  	
  Title: Managing
  Director

  
						

 

E-4.4(a)-6

 

	
  Accepted as of
  April    , 2003:

  	
   

  
	
   

  	
   

  
	
   

  	
  C.M. LIFE
  INSURANCE COMPANY

  
	
   

  	
   

  
	
   

  	
  By:

  	
  David L. Babson
  & Company Inc. as Investment Sub-Adviser

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By 

  	
   

  	
  /s/ Emeka O.
  Onukwugha

  
	
   

  	
   

  	
  Name: Emeka O.
  Onukwugha

  
	
   

  	
   

  	
  Title: Managing
  Director

  

 

E-4.4(a)-7

 

 

	
  Accepted as of
  April    , 2003:

  	
   

  
	
   

  	
   

  
	
   

  	
  MASSMUTUAL ASIA
  LIMITED

  
	
   

  	
   

  
	
   

  	
  By:

  	
  David L. Babson
  & Company Inc. as Investment Adviser

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By 

  	
   

  	
  /s/ Emeka O.
  Onukwugha

  
	
   

  	
   

  	
  Name: Emeka O.
  Onukwugha

  
	
   

  	
   

  	
  Title: Managing
  Director

  

 

E-4.4(a)-8

 

	
  Accepted as of
  April    , 2003:

  	
   

  
	
   

  	
   

  
	
   

  	
  SUNAMERICA LIFE
  INSURANCE COMPANY

  
	
   

  	
   

  
	
   

  	
  By:

  	
  AIG Global
  Investment Corp., investment adviser

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By

  	
   

  	
  /s/ Peter
  DeFazio

  	
   

  
	
   

  	
   

  	
  Name: Peter
  DeFazio

  
	
   

  	
   

  	
  Title: Vice
  President

  
							

 

The other schedules
and other attachments to this agreement, which disclose certain information
responsive to provisions of the agreement or reflect the terms of the
agreement, have been omitted because they are duplicative of information
contained in the agreement and/or are not material. The registrant agrees to
furnish supplementally a copy of any such omitted schedules or other
attachments to the Commission upon request.

 

E-4.4(a)-9

 

Defined Terms

Where the
character or amount of any asset or liability or item of income or expense is
required to be determined or any consolidation or other accounting computation
is required to be made for the purposes of this Agreement, the same shall be
done in accordance with GAAP, to the extent applicable, except where such
principles are inconsistent with the express requirements of this Agreement.

Where any
provision in this Agreement refers to action to be taken by any Person, or
which such Person is prohibited from taking, such provision shall be applicable
whether the action in question is taken directly or indirectly by such Person.

As used herein,
the following terms have the respective meanings set forth below or set forth
in the Section hereof following such term:

“Acceptable Bank” means any bank or trust company
(i) which is organized under the laws of the United States of America or
any State thereof, (ii) which has capital, surplus and undivided profits
aggregating at least $100,000,000, and (iii) whose long-term unsecured debt
obligations (or the long-term unsecured debt obligations of the bank holding
company owning all of the capital stock of such bank or trust company) shall
have been given a rating of “A” or better by S&P, “A2” or better by Moody’s
or an equivalent rating by any other credit rating agency of recognized
national standing.

“Acceptable Broker-Dealer” means any Person other than a natural
person (i) which is registered as a broker or dealer pursuant to the
Exchange Act and (ii) whose long-term unsecured debt obligations shall
have been given a rating of “A” or better by S&P, “A2” or better by Moody’s
or an equivalent rating by any other credit rating agency of recognized
national standing.

“Adjusted LIBOR Rate” shall mean, for any Interest Period,
LIBOR plus
155 basis points.

“Affiliate” means, at any time, and with respect to
any Person, (a) any other Person that at such time directly or indirectly
through one or more intermediaries Controls, or is Controlled by, or is under
common Control with, such first Person, and (b) any Person beneficially
owning or holding, directly or indirectly, 10% or more of any class of voting
or equity interests of the Company or any Subsidiary or any corporation of
which the Company and its Subsidiaries beneficially own or hold, in the
aggregate, directly or indirectly, 10% or more of any class of voting or equity
interests.  As used in this definition, “Control”
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.  Unless the context otherwise clearly
requires, any reference to an “Affiliate” is a reference to an Affiliate
of the Company.

 

E-4.4(a)-10

 

“Bank Credit Agreement” means the Credit Agreement among
(i) the Company, (ii) the Obligors, (iii) the lenders party
thereto (the “Lenders”), (iv) Bank One, Kentucky, NA, as
(a) collateral and administrative agent for the Lenders (in such capacity,
the “Agent”),
(b) swing line lender, and (c) letter of credit issuer, and
(v) PNC Bank, National Association, in its capacity as the Syndication
Agent, as amended, modified or replaced to the extent permitted hereby and by
the Collateral Sharing Agreement.

“Banks” means the initial Lenders and each other
Person that from time to time becomes a lender under the Bank Credit Agreement.

“Business Day” means any day other than a Saturday, a
Sunday or a day on which commercial banks in New York, New York are required or
authorized to be closed and, if the applicable Business Day relates to the
determination of LIBOR, a day on which dealings are carried on in U.S. dollar
deposits in the London interbank market.

“Calder Mortgage” shall mean the Mortgage executed by
Calder Race Course, Inc., a Florida corporation, in favor of the Collateral
Agent with respect to the real property owned by Calder Race Course, Inc.

“Capital Lease” means, at any time, a lease with respect
to which the lessee is required concurrently to recognize the acquisition of an
asset and the incurrence of a liability in accordance with GAAP.

“Closing” is defined in Section 3.

“Code” means the Internal Revenue Code of 1986,
as amended from time to time, and the rules and regulations promulgated
thereunder from time to time.

“Collateral” shall mean all property and assets of
the Company or any Subsidiary which is encumbered by a Lien securing any of the
obligations of any Obligor under any of the Financing Agreements.

“Collateral Agent” shall mean the Collateral Agent under
the Collateral Sharing Agreement and any successor thereto.

“Collateral Documents” shall mean all of the instruments,
documents and agreements pursuant to which any Person grants a Lien on or
security interest in all or any portion of the Collateral, including, without
limitation, those documents referred to in Section 6.25 of the Bank Credit
Agreement, including, without limitation, all pledge and security agreements,
mortgages, assignments, patents, trademarks and copyrights, the Negative Pledge
Agreement, the Intercompany Subordination Agreement, the Collateral Sharing
Agreement and all other documents and instruments executed as security for any
obligations of any Obligor under any Financing Agreement and any other
agreements, documents or instruments guaranteeing or securing any obligations
of any Obligor under any Financing Agreement.

 

E-4.4(a)-11

 

“Collateral Sharing Agreement” means the Collateral Sharing Agreement
dated as of April 3, 2003, as amended, restated or modified from time to
time.

“Company” means Churchill Downs Incorporated, a
Kentucky corporation.

“Competitor” means any Person (including any
Affiliates of such Person) who engages in, conducts, or offers casino games,
card games, table games, keno, bingo, pari-mutuel wagering or other similar
gaming operations, as a material line of business provided, that a Competitor
shall in no event include an Institutional Investor of the type described in
clauses (a) or (c) of the definition of the term “Institutional Investor.”

“Confidential Information” is defined in Section 20.

“Consolidated Earnings Available for
Fixed Charges”
means, for any period for the Company and its Subsidiaries, the sum of
(i) Consolidated Net Earnings plus (ii) to the extent deducted in
determining Consolidated Net Earnings, (A) Consolidated Fixed Charges and
(B) provisions for federal, state and local income taxes, in each case on
a consolidated basis determined in accordance with GAAP and (C) the
impairment charge deducted from net income of Ellis Park Race Course, Inc. with
respect to the fourth fiscal quarter of 2002.

“Consolidated Fixed Charges” means, with respect to any period, the
sum of (i) Consolidated Interest Expense for such period plus
(ii) Lease Rentals for such period, determined on a consolidated basis for
the Company and its Subsidiaries.

“Consolidated Funded Debt” means as of the date of any
determination thereof, and without duplication, (i) all Indebtedness of
the Company and its Subsidiaries, including the current maturities of long term
Indebtedness but specifically excluding borrowed money under any revolving
credit facility, and (ii) the aggregate principal amount of borrowed money
outstanding under any and all revolving credit facilities of the Company and/or
any Subsidiary measured at its lowest average daily outstanding principal
amount during any thirty consecutive day period within the twelve-month period
immediately preceding the date of determination.

“Consolidated Interest Expense” means, for any period, the interest
expense of the Company and its Subsidiaries (including imputed interest in
respect of Capital Leases), in respect of all Indebtedness, and all debt
discount and expense amortized or required to be amortized in the determination
of Consolidated Net Earnings for such period.

“Consolidated Net Earnings” for any period means the gross revenues
of the Company and its Subsidiaries for such period less all expenses and other
proper charges, determined on a consolidated basis in accordance with GAAP, but
excluding in any event:

                   (a)        any extraordinary gains or losses; and

                   (b)        any equity interest of the Company in the unremitted earnings
of any Person that is not a Subsidiary.

 

E-4.4(a)-12

 

“Consolidated Net Worth” means as of the date of any
determination thereof, the amount of consolidated stockholders equity of the
Company and its Subsidiaries, as determined in accordance with GAAP.

“Consolidated Operating Cash Flow” for any period means the sum of
(a) Consolidated Net Earnings during such period plus (to the extent deducted
in determining Consolidated Net Earnings) (b) Consolidated Interest
Expense, (c) provisions for federal, state and local income taxes, (d) depreciation
and amortization taken during such period and (e) the impairment charge
deducted from net income of Ellis Park Race Course, Inc. with respect to the
fourth fiscal quarter of 2002.  In the event
that any Person (or the assets thereof) is acquired by the Company or any
Subsidiary (whether by merger, consolidation asset or stock acquisition or
otherwise) at any time during the period of calculation, such acquisition shall
be deemed to have been made on the first day of such calculation period.

“Consolidated Total Assets” means, as of the date of any
determination thereof, total assets of the Company and its Subsidiaries
determined on a consolidated basis in accordance with GAAP.

“Default” means an event or condition the
occurrence or existence of which would, with the lapse of time or the giving of
notice or both, become an Event of Default.

“Default Rate” means that rate of interest that is
2.00% per annum plus the Adjusted LIBOR Rate.

“Ellis Park Facility” shall mean the racetrack facility at Henderson,
Kentucky known as “Ellis Park.”

“Environmental Laws” means any and all Federal, state, local,
and foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or
governmental restrictions relating to pollution and the protection of the
environment or the release of any materials into the environment, including but
not limited to those related to hazardous substances or wastes, air emissions
and discharges to waste or public systems.

“ERISA” means the Employee Retirement Income
Security Act of 1974, as amended from time to time, and the rules and
regulations promulgated thereunder from time to time in effect.

“ERISA Affiliate” means any trade or business (whether or
not incorporated) that is treated as a single employer together with the
Company under section 414 of the Code.

“Event of Default” is defined in Section 11.

“Exchange Act” means the Securities Exchange Act of
1934, as amended.

 

E-4.4(a)-13

 

“Existing PNC Facility” means the facilities described in that
certain $250,000,000 Revolving Credit Facility Credit Agreement dated as of
April 23, 1999, by and among the Company, the Subsidiaries party thereto,
PNC Bank, National Association, as Agent, and the Banks party thereto, as the
same has been amended.

“Financing Agreements” means and includes this Agreement, the
Other Agreements, the Notes, the Guarantee Agreement, the Collateral Documents
and any other agreement, certificate and/or instrument executed and or
delivered in connection therewith, each as amended, restated or otherwise
modified from time to time.

“GAAP” means generally accepted accounting
principles as in effect from time to time in the United States of America.

“Governmental
Authority” means

                   (a)        the government of

                    (i)        the United States of America or any State or other political
subdivision thereof, or

                   (ii)        any jurisdiction in which the Company or any Subsidiary
conducts all or any part of its business, or which asserts jurisdiction over
any properties of the Company or any Subsidiary, or

                   (b)        any Person exercising executive, legislative, judicial,
regulatory or administrative functions of, or pertaining to, any such
government.

“Guarantee Agreement” shall mean the Guarantee Agreement dated
as of April 3, 2003 of the Guarantors named therein, as amended or
modified or restated from time to time.

“Guarantor” or “Guarantors” means and includes each
guarantor from time to time under the Guarantee Agreement.

“Guaranty” means, with respect to any Person, any
obligation (except the endorsement in the ordinary course of business of
negotiable instruments for deposit or collection) of such Person guaranteeing
or in effect guaranteeing any Indebtedness, dividend or other obligation of any
other Person in any manner, whether directly or indirectly, including (without
limitation) obligations incurred through an agreement, contingent or otherwise,
by such Person:

                   (a)        to purchase such Indebtedness or obligation or any property
constituting security therefor;

                   (b)        to advance or supply funds (i) for the purchase or
payment of such Indebtedness or obligation, or (ii) to maintain any
working capital or other balance sheet condition or any income statement
condition of any other Person or otherwise to advance or make available funds
for the purchase or payment of such Indebtedness or obligation;

 

E-4.4(a)-14

 

                   (c)        to lease properties or to purchase properties or services primarily
for the purpose of assuring the owner of such Indebtedness or obligation of the
ability of any other Person to make payment of the Indebtedness or obligation;
or

                   (d)        otherwise to assure the owner of such Indebtedness or
obligation against loss in respect thereof.

In any computation
of the Indebtedness or other liabilities of the obligor under any Guaranty, the
Indebtedness or other obligations that are the subject of such Guaranty shall
be assumed to be direct obligations of such obligor.  For the purposes of all computations made under this Agreement, a
Guaranty in respect of any Indebtedness for borrowed money shall be deemed to
be Indebtedness equal to the principal amount of such Indebtedness for borrowed
money which has been guaranteed, and a Guaranty in respect of any other
obligation or liability or any dividend shall be deemed to be an obligation
equal to the maximum aggregate amount of such obligation, liability or
dividend.

“Hazardous Material” means any and all pollutants, toxic or
hazardous wastes or any other substances that might pose a hazard to health or
safety, the removal of which may be required or the generation, manufacture,
refining, production, processing, treatment, storage, handling, transportation,
transfer, use, disposal, release, discharge, spillage, seepage, or filtration
of which is or shall be restricted, prohibited or penalized by any applicable
law (including, without limitation, asbestos, urea formaldehyde foam insulation
and polychlorinated biphenyls).

“holder” means, with respect to any Note, the
Person in whose name such Note is registered in the register maintained by the
Company pursuant to Section 13.1.

“Indebtedness” with respect to any Person means, at any
time, without duplication,

                   (a)        its liabilities for borrowed money and its redemption
obligations in respect of mandatorily redeemable Preferred Stock;

                   (b)        its liabilities for the deferred purchase price of property
acquired by such Person (excluding accounts payable arising in the ordinary
course of business but including all liabilities created or arising under any
conditional sale or other title retention agreement with respect to any such
property);

                   (c)        all liabilities appearing on its balance sheet in accordance
with GAAP in respect of Capital Leases;

                   (d)        all liabilities for borrowed money secured by any Lien with
respect to any property owned by such Person (whether or not it has assumed or
otherwise become liable for such liabilities);

                   (e)        all its liabilities in respect of letters of credit or
instruments serving a similar function issued or accepted for its account by
banks and other financial 

 

E-4.4(a)-15

 

institutions
(whether or not representing obligations for borrowed money) to the extent, in
each case, such letters of credit or instruments have been drawn; and

                    (f)        any Guaranty of such Person with respect to liabilities of a
type described in any of clauses (a) through (e) hereof.

Indebtedness of
any Person shall include all obligations of such Person of the character
described in clauses (a) through (f) to the extent such Person remains
legally liable in respect thereof notwithstanding that any such obligation is
deemed to be extinguished under GAAP.

“INHAM Exemption” is defined in Section 6.2.

“Institutional Investor” means (a) any original purchaser of
a Note, (b) any holder of a Note holding more than 5% of the aggregate
principal amount of the Notes then outstanding, and (c) any bank, trust
company, savings and loan association or other financial institution, any
pension plan, any investment company, any insurance company, any broker or
dealer, or any other similar financial institution or entity, regardless of
legal form.

“Intercompany Subordination
Agreement” shall
mean the subordination agreement among the Obligors in a form attached hereto
as Exhibit 9.8.

“Interest Payment Dates” shall have the meaning set forth in
Section 1, provided that if an Interest Payment Date shall fall on a
day which is not a Business Day, such Interest Payment Date shall be deemed to
be the first Business Day following such Interest Payment Date.

“Interest Period” shall mean each period commencing on the
Closing Date and, thereafter, commencing on an Interest Payment Date and
continuing up to, but not including, the next Interest Payment Date.

“Investments” shall mean all investments, in cash or by
delivery of property made, directly or indirectly in any Person or property,
whether by acquisition of shares of capital stock, indebtedness or other
obligations or securities or by loan, advance, capital contribution or
otherwise.

“Lease Rentals” means, with respect to any period, the
sum of all rentals and other obligations required to be paid during such period
by the Company or any Subsidiary as lessee under all leases of real or personal
property (other than Capital Leases), excluding any amount required to be paid
by the lessee on account of maintenance and repairs, insurance, taxes,
assessments, water rates and similar charges determined in accordance with
GAAP.

“LIBOR” shall mean, for any Interest Period, the
rate per annum (rounded upwards, if necessary, to the next higher one
hundred-thousandth of a percentage point) for deposits in U.S. Dollars for a
90-day period which appears on the Telerate Page 3750 published by the British
Bankers Association or any successor page or source thereto, effective as of
11:00 a.m. (London, England time) two (2) Business Days prior to the beginning
of such Interest Period (or three (3) Business Days prior to the beginning
of the first Interest Period).

 

E-4.4(a)-16

 

“LIBOR Breakage Amount” shall mean any loss, cost or expense
reasonably incurred by any holder of a Note as a result of any payment or
prepayment of any Note on a day other than a regularly scheduled Interest
Payment Date for such Note or at the scheduled maturity (whether voluntary,
mandatory, automatic, by reason of acceleration or otherwise), and any loss or
expense arising from the liquidation or reemployment of funds obtained by it or
from fees payable to terminate the deposits from which such funds were
obtained.  Each holder shall determine
the LIBOR Breakage Amount with respect to the principal amount of its Notes
then being paid or prepaid (or required to be paid or prepaid) by written
notice to the Company setting forth such determination in reasonable detail not
less than one (1) Business Day in the case of any payment required by
Section 12.1.  Each such
determination shall be conclusive absent manifest error.

“Lien” means, with respect to any Person, any
mortgage, lien, pledge, charge, security interest or other encumbrance, or any
interest or title of any vendor, lessor, lender or other secured party to or of
such Person under any conditional sale or other title retention agreement or
Capital Lease, upon or with respect to any property or asset of such Person
(including in the case of stock, stockholder agreements, voting trust
agreements and all similar arrangements).

“Master Plan Bond Transaction” means the transaction through which the
City of Louisville, Kentucky (n/k/a Louisville/Jefferson County Metro
Government) Taxable Industrial Building Revenue Bond, Series 2002
(Churchill Downs Incorporated Project) was issued, as in effect on the date
hereof and without transfer of the obligations thereunder.

“Material” means material in relation to the
business, operations, affairs, financial condition, assets, properties, or
prospects of the Obligors taken as a whole.

“Material Adverse Effect” means a material adverse effect on
(a) the business, operations, affairs, financial condition, assets or
properties of the Obligors taken as a whole, or (b) the ability of an
Obligor to perform its obligations under any Financing Agreement to which it is
a party, or (c) the validity or enforceability of any Financing Agreement.

“Memorandum” is defined in Section 5.3.

“Monetary Default” is defined in Section 11.

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

“Multiemployer Plan” means any Plan that is a “multiemployer
plan” (as such term is defined in section 4001(a)(3) of ERISA).

“NAIC Annual Statement” is defined in Section 6.2.

“Negative Pledge Agreement” means that certain Negative Pledge
Agreement substantially in the form of Exhibit 9.9 hereto.

“Notes” is defined in Section 1.

 

E-4.4(a)-17

 

“Obligor” is defined in Section 2.

“Officer’s Certificate” means a certificate of a Senior
Financial Officer or of any other officer of the Company whose responsibilities
extend to the subject matter of such certificate.

“Other Agreements” is defined in Section 2.

“Other Purchasers” is defined in Section 2.

“Patrons” is defined in Section 10.8.

“PBGC” means the Pension Benefit Guaranty
Corporation referred to and defined in ERISA or any successor thereto.

“Permitted Liens” shall mean and include those Liens which
are permitted to exist under both the Financing Agreements and the Bank Credit
Agreement including, in any event, the Lien of the Collateral Documents provided,
however, that without the prior consent of the Required Holders, “Permitted
Liens” shall not include any Liens permitted to exist under a
Collateral Document as a result of any waiver, amendment or modification by the
Agent or the Lenders under the Bank Credit Agreement.

“Person” means an individual, partnership,
corporation, limited liability company, association, trust, unincorporated
organization, or a government or agency or political subdivision thereof.

“Plan” means an “employee benefit plan” (as
defined in section 3(3) of ERISA) that is or, within the preceding five
years, has been established or maintained, or to which contributions are or,
within the preceding five years, have been made or required to be made, by the
Company or any ERISA Affiliate or with respect to which the Company or any
ERISA Affiliate may have any liability.

“Preferred Stock” means any class of capital stock of a
corporation that is preferred over any other class of capital stock of such
corporation as to the payment of dividends or the payment of any amount upon
liquidation or dissolution of such corporation.

“Priority Debt” means, at any time, the sum of
(i) Indebtedness of the Company secured by Liens (other than the Liens of
the Collateral Documents) not otherwise permitted by clauses (a) through
(i), inclusive, of Section 10.3 plus (but without duplication)
(ii) all Indebtedness of Subsidiaries not otherwise permitted by
clauses (a) or (b) of Section 10.6.

“property” or “properties” means, unless otherwise
specifically limited, real or personal property of any kind, tangible or
intangible, choate or inchoate.

“Property Reinvestment Application” is defined in Section 10.8.

“Proposed Prepayment Date” is defined in Section 8.3.

 

E-4.4(a)-18

 

“PTE” is defined in Section 6.2.

“QPAM Exemption” means Prohibited Transaction Class
Exemption 84-14 issued by the United States Department of Labor.

“Repurchase Agreement” means any written agreement

                   (a)        that provides for (i) the transfer of one or more United
States Governmental Securities in an aggregate principal amount at least equal
to the amount of the Transfer Price (defined below) to the Company or any of
its Subsidiaries from an Acceptable Bank or an Acceptable Broker-Dealer against
a transfer of funds (the “Transfer Price”) by the Company or such
Subsidiary to such Acceptable Bank or Acceptable Broker-Dealer, and (ii) a
simultaneous agreement by the Company or such Subsidiary, in connection with
such transfer of funds, to transfer to such Acceptable Bank or Acceptable
Broker-Dealer the same or substantially similar United States Governmental
Securities for a price not less than the Transfer Price plus a reasonable
return thereon at a date certain not later than 365 days after such transfer of
funds,

                   (b)        in respect of which the Company or such Subsidiary shall have
the right, whether by contract or pursuant to applicable law, to liquidate such
agreement upon the occurrence of any default thereunder, and

                   (c)        in connection with which the Company or such Subsidiary, or an
agent thereof, shall have taken all action required by applicable law or
regulations to perfect a Lien in such United States Governmental Securities.

“Required Holders” means, at any time, the holders of at
least 51% in principal amount of the Notes at the time outstanding (exclusive
of Notes then owned by the Company or any of its Affiliates).

“Responsible Officer” means any Senior Financial Officer and
any other officer of the relevant Obligor with responsibility for the
administration of the relevant portion of the related Financing Agreement.

“S&P” means Standard & Poor’s Ratings
Group, a division of McGraw Hill, Inc.

“Securities Act” means the Securities Act of 1933, as
amended from time to time.

“Senior Financial Officer” means the chief financial officer,
principal accounting officer, treasurer or comptroller of the relevant Obligor.

“Source” is defined in Section 6.2.

“Subsidiary” means, as to any Person, any
corporation, association or other business entity in which such Person or one
or more of its Subsidiaries or such Person and one or more of its Subsidiaries
owns sufficient equity or voting interests to enable it or them (as a group) 

 

E-4.4(a)-19

 

ordinarily, in the absence of contingencies, to elect a majority of the
directors (or Persons performing similar functions) of such Person, and any
partnership or joint venture if more than a 50% interest in the profits or
capital thereof is owned by such Person or one or more of its Subsidiaries or
such Person and one or more of its Subsidiaries (unless such partnership can
and does ordinarily take major business actions without the prior approval of
such Person or one or more of its Subsidiaries).  Unless the context otherwise clearly requires, any reference to a
“Subsidiary” is a reference to a Subsidiary of the Company.

“United States Governmental
Security” means
any direct obligation of, or obligation guaranteed by, the United States of
America, or any agency controlled or supervised by or acting as an
instrumentality of the United States of America pursuant to authority granted
by the Congress of the United States of America, so long as such obligation or
guarantee shall have the benefit of the full faith and credit of the United
States of America which shall have been pledged pursuant to authority granted
by the Congress of the United States of America.

“Wholly-Owned Subsidiary” means, at any time, any Subsidiary one
hundred percent (100%) of all of the equity interests (except directors’
qualifying shares) and voting interests of which are owned by any one or more
of the Company and the Company’s other Wholly-Owned Subsidiaries at such time.

 

E-4.4(a)-20

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