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Proc-Type: 2001,MIC-CLEAR
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<SEC-DOCUMENT>0000940397-04-000178.txt : 20040902
<SEC-HEADER>0000940397-04-000178.hdr.sgml : 20040902
<ACCEPTANCE-DATETIME>20040902134943
ACCESSION NUMBER:		0000940397-04-000178
CONFORMED SUBMISSION TYPE:	8-K/A
PUBLIC DOCUMENT COUNT:		4
CONFORMED PERIOD OF REPORT:	20040902
ITEM INFORMATION:		Financial Statements and Exhibits
FILED AS OF DATE:		20040902
DATE AS OF CHANGE:		20040902

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			CHURCHILL DOWNS INC
		CENTRAL INDEX KEY:			0000020212
		STANDARD INDUSTRIAL CLASSIFICATION:	SERVICES-RACING, INCLUDING TRACK OPERATION [7948]
		IRS NUMBER:				610156015
		STATE OF INCORPORATION:			KY
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		8-K/A
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-01469
		FILM NUMBER:		041013289

	BUSINESS ADDRESS:	
		STREET 1:		700 CENTRAL AVE
		CITY:			LOUISVILLE
		STATE:			KY
		ZIP:			40208
		BUSINESS PHONE:		5026364400

	MAIL ADDRESS:	
		STREET 1:		700 CENTRAL AVENUE
		STREET 2:		700 CENTRAL AVENUE
		CITY:			LOUIVILLE
		STATE:			KY
		ZIP:			40208
</SEC-HEADER>
<DOCUMENT>
<TYPE>8-K/A
<SEQUENCE>1
<FILENAME>cd8ka90204.htm
<TEXT>
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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=3>UNITED STATES<br>
SECURITIES AND EXCHANGE COMMISSION<br>WASHINGTON, DC 20549 </FONT></H1>

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<A NAME=A003></A>
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=4>FORM 8-K/A </FONT><br>
<FONT FACE="Times New Roman, Times, Serif" SIZE=2>(Amendment No. 1)</font></H1>

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<A NAME=A004></A>
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=3>CURRENT REPORT PURSUANT<br>
TO SECTION 13 OR 15(D) OF THE <br>SECURITIES EXCHANGE ACT OF 1934 </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Date
of report (Date of earliest event reported): August 31, 2004 </FONT></P>

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<A NAME=A007></A>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Churchill Downs
Incorporated</b></font><br>

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<p align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Exact Name of
Registrant as Specified in Its Charter) </FONT></P>

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<A NAME=A009></A>
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Kentucky </FONT></H1>

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<A NAME=A010></A>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(State or Other
Jurisdiction of Incorporation) </FONT></P>

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<A NAME=A011></A>
<H1 ALIGN=left><FONT FACE="Times New Roman, Times, Serif" SIZE=4>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0-1469&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 61-0156015 </FONT></H1>

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<br>
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Commission File Number)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;(IRS Employer Identification No.)</font><br>

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<A NAME=A012></A>
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;700 Central Avenue<br>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Louisville, Kentucky&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;  40208
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     <HR ALIGN=LEFT WIDTH=100% SIZE=1 NOSHADE>(Address of Principal Executive Offices)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (Zip Code)

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<A NAME=A014></A>
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(502)636-4400 </FONT></H1>

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     <HR ALIGN=LEFT WIDTH=100% SIZE=1 NOSHADE>

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<A NAME=A015></A>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(Registrant&#146;s
Telephone Number, Including Area Code) </FONT></P>

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     <HR ALIGN=LEFT WIDTH=100% SIZE=1 NOSHADE>

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<A NAME=A016></A>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(Former Name or Former
Address, if Changed Since Last Report) </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Check
the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the
filing obligation of the registrant under any of the following provisions (<I>see
</I>General Instruction A.2. below): </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;|_|
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;|_| Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;|_|
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b)) </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;|_|
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c)) </FONT></P>







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<A NAME=A017></A>
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Explanatory Note</b></font></p>

<P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2> This report on Form 8-K/A related to Churchill
Downs Incorporated's report on Form 8-K filed September 2, 2004 is being filed to include herewith
exhibits 2.1, 2.2 and 2.3.</font></p>

<A NAME=A019></A>
<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Item 9.01 Financial
Statements and Exhibits.</B> </FONT></H1>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(c)&nbsp;&nbsp;&nbsp;&nbsp;
          Exhibits. </FONT></P>


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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>2.1 </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Asset Purchase Agreement dated August 31, 2004 among Churchill Downs Incorporated,<B>
</B>on behalf of a wholly owned subsidiary to be formed, Fair Grounds Corporation, a
Louisiana corporation and debtor-in-possession, and for the sole purpose of the provisions
set forth in &sect;11 of the Asset Purchase Agreement, Churchill Downs Incorporated, a
Kentucky corporation. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>2.2 </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Letter Agreement dated August 31, 2004 between Churchill Downs Incorporated and Louisiana
Horsemen&#146;s Benevolent and Protective Association 1993, Inc., and acknowledged by Fair
Grounds Corporation. </FONT></TD>
</TR>
</TABLE>
<BR>
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>2.3 </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Global Term Sheet among Churchill Downs Incorporated,  Fair Grounds Corporation,  Ben S. Gravolet,  Finish
         Line Management Corp. and Bryan G. Krantz.</font></TD>
</tr>
</table>
<br>
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>99.1* </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
 Press release dated September 1, 2004 issued by Churchill Downs Incorporated.</font></td></tr>
</table>
<p align=left><FONT FACE="Times New Roman, Times, Serif" SIZE=2>*Previously filed.</font></p>


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<A NAME=A020></A>
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>SIGNATURES </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned hereunto duly authorized. </FONT></P>


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     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="TOP">
     <TD width=40%><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD width=60%><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>CHURCHILL DOWNS INCORPORATED<BR><BR></b></FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">September 2, 2004</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><u>&nbsp;/s/ Michael E. Miller&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u><br>
Michael E. Miller<br>Executive Vice President and Chief Financial<br>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Officer<br>
(Principal Financial and Accounting Officer)</FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD></TR>
</TABLE>


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</TEXT>
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<DOCUMENT>
<TYPE>EX-2.1
<SEQUENCE>2
<FILENAME>cd8ka90204ex21.htm
<DESCRIPTION>ASSET PURCHASE AGREEMENT
<TEXT>
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<p align=right><FONT FACE="Times New Roman, Times, Serif" SIZE=2>EXHIBIT 2.1</FONT></P>
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<A NAME=A001></A>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>ASSET PURCHASE AGREEMENT</B> </FONT></P>

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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>THIS
ASSET PURCHASE AGREEMENT </B>(the &#147;Agreement&#148;) is made and entered into as of the
___ day of August, 2004, by and between (i) <B>Churchill Downs Incorporated</B>, on behalf of a
wholly owned subsidiary to be formed (&#147;Buyer&#148;), (ii) <B>Fair Grounds Corporation</B>, a
Louisiana corporation and debtor-in-possession (&#147;Seller&#148;), and (iii) for the
sole purpose of the provisions set forth in &sect;11, <B>Churchill Downs Incorporated</B>, a
Kentucky corporation (&#147;Churchill&#148;). Buyer and Seller are each a
&#147;Party&#148; and collectively, the &#147;Parties.&#148; </FONT></P>

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<A NAME=A002></A>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Recitals</B> </FONT></P>

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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Seller
is the owner and operator of the Fair Grounds Race Course, a thoroughbred racetrack and
gaming facility (&#147;Racetrack&#148;), which is comprised of approximately 145 acres of
real property, together with the grandstands and clubhouse buildings, dirt and turf
tracks, stables, offices and support facilities located thereon. Seller is also the owner
or leasehold owner of several off-track betting facilities associated with the Racetrack.
Seller is engaged in the conduct of the thoroughbred racing business and related
activities conducted under the racing and gaming licenses and permits issued to the Seller
and other businesses and activities related or incidental thereto (all such businesses and
activities as are now being conducted by the Seller are referred to herein collectively as
the &#147;Business&#148;). </FONT></P>

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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Seller
filed a voluntary petition (the &#147;Petition&#148;) for reorganization relief pursuant
to Chapter 11 of Title 11 of the United States Code, 11 U.S.C. &sect;101 <U>et</U> <U>seq</U>. as
amended (the &#147;Bankruptcy Code&#148;), in the United States Bankruptcy Court for the
Eastern District of Louisiana (the &#147;Bankruptcy Court&#148;) on August 15, 2003 (the
&#147;Filing Date&#148;) initiating a Chapter 11 case styled In Re: Fair Grounds
Corporation, Debtor, United States Bankruptcy Court for the Eastern District of Louisiana,
Case No.: 03-16222, Section A (the &#147;Bankruptcy Case&#148;). Seller has operated and
is operating the Business in the ordinary and usual course as a debtor-in-possession (as
defined in &sect; 1101 of the Bankruptcy Code) as authorized by &sect;&sect; 1107 and 1108
of the Bankruptcy Code since the Filing Date. </FONT></P>

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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Louisiana Horsemen&#146;s Benevolent and Protective Association 1993, Inc.
(&#147;LHBPA&#148;) is the owner of claims, rights and interests against Seller which have
been asserted in the matter styled <U>Louisiana Horsemen&#146;s Benevolent and Protective
Association 1993, Inc. v. Fair Grounds Corporation et al.</U>, Case No. 411-508, Division
&#147;F&#148;, Nineteenth Judicial District Court, Parish of East Baton Rouge, State of
Louisiana (including any and all past, present and future proceedings in any court related
to such case, &#147;State Court Case&#148;) in which LHBPA has obtained a judgment against
Seller entered on March 24, 2004 in the principal amount of $64,620,645.26, plus judicial
interest accrued through August 14, 2003 in the amount of $25,281,289.05, plus additional
judicial interest continuing to accrue on the principal amount of the judgment at the
legal rate from August 15, 2003 until paid, plus all costs of court (the
&#147;Judgment&#148;). The Judgment is presently the subject of an appeal as well as the
Annulment Action. </FONT></P>

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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant
to &sect; 363 of the Bankruptcy Code and under a confirmed Plan of Reorganization, Seller
is selling substantially all of the assets of Seller free and clear of all Liens, claims,
interests and encumbrances, except as expressly provided herein. </FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.&nbsp;&nbsp;&nbsp;&nbsp;
          Definitions. </FONT></P>

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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Acquired
Assets</U>&#148; means all of the assets of Seller, other than the Excluded Assets, <U>including</U>
all of Seller&#146;s (a) Owned Real Property and Leased Real Property, (b) tangible
personal property (such as machinery, equipment, inventory, furniture, automobiles,
trucks, tractors, trailers and tools), (c) Intellectual Property, goodwill associated
therewith, licenses and sublicenses granted and obtained with respect thereto (including
any trade names or other intellectual property not owned by Seller but used or useful in
the Business), and rights thereunder, remedies against infringements thereof, and rights
to protection of interests therein under the laws of all jurisdictions, (d) leases,
subleases and rights thereunder, (e) agreements, contracts, indentures, mortgages,
instruments, Liens, guaranties, other similar arrangements, and rights thereunder, (f)
notes, (g) securities (such as the capital stock in each of the Seller&#146;s
Subsidiaries), (h) Cash held by Seller on account of or for another party, including
without limitation amounts due to horsemen for purses, stakes or awards (excluding any
cash not so held but which could be available to pay the Judgment) (i) Claims, causes of
action, choses in action, rights of recovery, rights of set off, and rights of recoupment
(including any such item relating to the payment of taxes), (j) the accounts receivable
due from Finish Line Management Corp. and the proceeds thereof, (k) franchises, approvals,
permits, licenses, orders, registrations, certificates, variances, and similar rights
obtained from governments and governmental agencies, (l) any and all employee records,
books, accounts, files, correspondence, credit and sales records, supplier lists, product
service records, equipment and parts lists, operating records, operating, safety and
maintenance manuals, engineering design plans, blueprints and as-built plans,
specifications, engineering drawings, procedures and similar items of Seller relating to
the Acquired Assets, including books of account, all customer lists, billing records and
other customer correspondence relating to the Business, any confidential information,
environmental compliance and regulatory information, all regulatory filings and other
books and records provided or utilized by Seller in connection with the operation of the
Business; including files, documents, correspondence, lists, plats, architectural plans,
drawings, and specifications, creative materials, advertising and promotional materials,
studies, reports, and other printed or written documents, reports, records, instruments or
materials, (m) any and all prepaid expenses, retainers, customer advances and deposits and
security deposits of Seller relating to the Business and claims for refunds and rights to
offset in respect thereof, (n) any and all of the rights, claims or causes of action of
Seller against a third party arising out of transactions occurring prior to the Closing
Date and relating to the Acquired Assets, the operation of the Business, the Assumed
Liabilities or Assumed Contracts, whether choate or inchoate, known or unknown, including
without limitation Avoidance Actions (provided, however, that Avoidance Actions under 11
U.S.C. &sect;&sect;544, 547 and 548 against parties who are not insiders as defined in 11
U.S.C. &sect;101(31) shall be waived and released as of the Closing Date), (o)
Seller&#146;s telephone and telecopy numbers, websites, email addresses and post office
boxes, (p) all insurance benefits, including rights and proceeds, arising from or relating
to the Acquired Assets or the Assumed Liabilities prior to the Closing, (q) any and all
goodwill associated with the Business, and (r) any and all business plans and projections,
records of sales, customer and vendor lists, files, and papers used in (or for the benefit
of) the Business. </FONT></P>

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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Actual
Cure Amount</U>&#148; shall have the meaning set forth in Section 2(h)(ii) of this Agreement. </FONT></P>

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<A NAME=A003></A>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>2 </FONT></P>


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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Annulment
Action</U>&#148; shall mean that certain lawsuit entitled &#147;Fair Grounds Corporation v.
Louisiana Horsemen&#146;s Benevolent and Protective Association 1993, Inc. et al.&#148;
bearing proceedings number 519,941 on the docket of the 19th Judicial District Court for
the Parish of East Baton Rouge, State of Louisiana, which inter alia seeks the annulment
of the Judgment in the State Court Case. </FONT></P>

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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Assumed
Administrative Expense Claims</U>&#148; shall mean administrative expense claims arising prior
to the Closing Date which Buyer and Seller agree in writing that Seller shall pay from a
reserve from the Purchase Price. </FONT></P>

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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Assumed
Contracts</U>&#148; shall mean any written contract, agreement, real or personal property
lease, commitment, understanding or instrument that relates to the Business or the
Acquired Assets and which is specifically listed on <U>Schedule 1</U> attached hereto. The
Parties agree that not later than the date other qualified bids are due under the Plan of
Reorganization, Buyer may modify <U>Schedule 1</U> from time to time at Buyer&#146;s discretion.
Notwithstanding the foregoing in no event may Assumed Contracts include any contract,
agreement, real or personal property lease, commitment, understanding or instrument
included in Excluded Assets. </FONT></P>

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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Assumed
Liabilities</U>&#148; means only those liabilities and obligations of Seller arising after the
Closing Date (or such other effective date as shall be set forth in the Plan of
Reorganization) under the Assumed Contracts, liabilities with respect to Cash held by
Seller on account of or for another party, including without limitation amounts due to
horsemen for purses, stakes or awards (in any case limited to the amount of such Cash
delivered to Buyer), and as set forth on <U>Schedule 2.</U> </FONT></P>

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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Avoidance
Actions</U>&#148; means any claim or cause of action created upon the filing of the Bankruptcy
Case for the avoidance of any pre-petition transfer of Property of the Estate or the
Debtor pursuant to 11&nbsp;U.S.C. &sect;&sect;&nbsp;544, 547, 548, 550, and 551. </FONT></P>

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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Bankruptcy
Case</U>&#148; has the meaning set forth in the recitals above. </FONT></P>

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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Bankruptcy Code</U>&#148;
has the meaning set forth in the recitals above. </FONT></P>

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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Bankruptcy
Court</U>&#148; has the meaning set forth in the recitals above. </FONT></P>

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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Bankruptcy Rules</U>&#148;
means the Federal Rules of Bankruptcy Procedure 1001-9036, and all rules adopted by the
Bankruptcy Court. </FONT></P>

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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Business</U>&#148;
has the meaning set forth in the recitals above. </FONT></P>

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<P  ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Business
Day</U>&#148; means a day other than a Saturday, Sunday or other day on which commercial banks
are authorized or required to close under the laws of the United States or the State of
Louisiana. </FONT></P>

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<P  ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Buyer</U>&#148;
has the meaning set forth in the preface above. </FONT></P>

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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Cash</U>&#148;
means cash, cash equivalents (including marketable securities, short term investments,
uncollected checks, bank accounts, certificates of deposit and treasury bills) </FONT></P>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>3 </FONT></P>


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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>calculated in accordance with GAAP
applied on a basis consistent with the preparation of Seller&#146;s financial statements. </FONT></P>

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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Claims</U>&#148;
means any action, cause of action, demand, claim, Proceeding or investigation. </FONT></P>

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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Closing</U>&#148;
has the meaning set forth in &sect;2(f) below. </FONT></P>

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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Closing</U>
Date&#148; has the meaning set forth in &sect;2(f) below. </FONT></P>

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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Code</U>&#148;
means the Internal Revenue Code of 1986, as amended. </FONT></P>

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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Confirmation
Date</U>&#148; means the date of the Confirmation Order. </FONT></P>

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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Confirmation Order</U>&#148;
has the meaning set forth in &sect;3(b) below. </FONT></P>

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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Deposit</U>&#148;
has the meaning set forth in &sect;2(d) below. </FONT></P>

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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Disclosure
Letter</U>&#148; shall mean that certain Disclosure Letter delivered to Buyer and other
potential bidders by Seller on or before July 21, 2004, the purpose of which is to
disclose certain matters related to this Agreement and which is acceptable to Buyer, in
its sole discretion. </FONT></P>

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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Environmental,
Health and Safety Requirements</U>&#148; means all Legal Requirements, including but not
limited to federal, state, local and foreign statutes, regulations, and ordinances
concerning health and safety, and pollution or protection of the environment, including
without limitation all those relating to the presence, use, production, generation,
management, handling, transportation, treatment, storage, disposal, distribution,
labeling, testing, processing, discharge, release, threatened release, control, cleanup,
response to or remediation of any hazardous materials, hazardous substances, hazardous
waste, solid waste, petroleum or petroleum products, pollutant, contaminant or other
regulated material or substance. </FONT></P>

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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Environmental,
Health and Safety Liabilities</U>&#148; means any cost, claims, damages, expense, liability,
obligation or other responsibility arising from under any Environmental, Health and Safety
Requirements or any Environmental Laws. </FONT></P>

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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Environmental
Laws</U>&#148; has the meaning set forth in &sect;3(q) below. </FONT></P>

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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>ERISA</U>&#148;
means the Employee Retirement Income Security Act of 1974, as amended. </FONT></P>

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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Estate</U>&#148;
means the estate created by the filing of the Bankruptcy Case on the Filing Date, pursuant
to 11 U.S.C.&nbsp;&sect;&nbsp;541. </FONT></P>

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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Excluded
Assets</U>&#148; means Seller&#146;s (a) corporate charter, qualifications to conduct business
as a foreign corporation, arrangements with registered agents relating to foreign
qualifications, taxpayer and other identification numbers, seals, minute books, stock
transfer books, blank stock certificates, and other documents relating to the
organization, maintenance, </FONT></P>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>4 </FONT></P>


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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>and existence of Seller as a
corporation, (b) rights under this Agreement, (c) Cash and accounts receivable (other than
Cash held by Seller on account of or for another party, including without limitation
amounts due to horsemen for purses, stakes or awards, and the accounts receivable and
proceeds thereof due from Finish Line Management Corp.), (d) interest in the State Claim,
(e) non-assignable Permits, (f) the Annulment Action and any and all causes of action
arising out of facts alleged or proven in the Annulment Action or as a result of the
annulment or reversal of the Judgment or the decision of the Louisiana Supreme Court in
the State Court Case and (g) those certain Assets set forth on <U>Schedule 3</U> attached hereto. </FONT></P>

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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Excluded
Liabilities</U>&#148; means all liabilities other than Assumed Liabilities. </FONT></P>

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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Filing
Date</U>&#148; has the meaning set forth in the recitals above. </FONT></P>

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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>GAAP</U>&#148;
means United States generally accepted accounting principles as in effect from time to
time. </FONT></P>

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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Governmental
Entity</U>&#148; means any federal, state, municipal or local court, legislature, governmental
agency, commission or regulatory authority or instrumentality. </FONT></P>

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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Income
Tax</U>&#148; means any federal, state, local, or foreign income tax, including any interest,
penalty, or addition thereto, whether disputed or not. </FONT></P>

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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Intellectual
Property</U>&#148; means all ideas and tangible expressions thereof which belong to Seller
worldwide and includes without limitation all patents, patentable inventions, trademarks,
trade names, service marks, copyrights, copyrightable material, software, trade secrets
and franchises. </FONT></P>

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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Knowledge</U>&#148;
an individual will be deemed to have &#147;Knowledge&#148; of a particular fact or other
matter if: </FONT></P>

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     <P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          such individual is actually aware of such fact or other matter; or </FONT></P>

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     <P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          a prudent individual could be expected to discover or otherwise become aware of
          such fact or other matter in the course of conducting a reasonably comprehensive
          investigation concerning the existence of such fact or other matter. </FONT></P>

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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Seller
will be deemed to have &#147;Knowledge&#148; of a particular fact or other matter if any
living individual who is serving, or who has since 1994 served, as a director or officer
of Seller (or in any similar capacity) has, or at any time had, Knowledge of such fact or
other matter. </FONT></P>

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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Leased
Real Property</U>&#148; means, as set forth in <U>Schedule 4</U> attached hereto, all leasehold or
subleasehold estates and other rights to use or occupy any land, buildings, structures,
improvements, fixtures or other interest in real property which is used in the Business. </FONT></P>

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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Legal
Requirements</U>&#148; shall mean any federal, state, local, municipal, foreign, international
or other administrative order, constitution, law, ordinance, common law, regulations,
statute or treaty. </FONT></P>

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<A NAME=A006></A>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>5 </FONT></P>


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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>LHBPA</U>&#148;
has the meaning set forth in the recitals above. </FONT></P>

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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Liens</U>&#148; means
any claim, pledge, option, charge, hypothecation, easement, security interest,
right-of-way, encroachment, mortgage, deed of trust, covenant, restriction, reservation,
agreement of record or other encumbrance. </FONT></P>

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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Multiemployer
Plan</U>&#148; has the meaning set forth in ERISA &sect;3(37). </FONT></P>

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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>OTB&#146;s</u>&#148;
means Seller&#146;s off-track betting operations located in St. Bernard, Elmwood, LaPlace,
Thibodaux, Metairie, and Gretna, Louisiana and any other location of Seller designated by
Buyer. </FONT></P>

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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Order</U>&#148;
means an order entered by the Bankruptcy Court in the Bankruptcy Case. </FONT></P>

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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Ordinary
Course of Business</U>&#148; means the ordinary course of business consistent with the conduct
of Seller&#146;s Business since August 15, 2003. </FONT></P>

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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Owned
Real Property</U>&#148; means, as set forth in <U>Schedule 5</U> attached hereto, all land, together
with all buildings, structures, improvements and fixtures located thereon, and all
easements, servitudes and other rights and interests appurtenant thereto, owned by Seller
or any of its Subsidiaries. </FONT></P>

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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Party</U>&#148;
and &#147;<U>Parties</U>&#148; have the meaning set forth in the preface above. </FONT></P>

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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Permits</U>&#148;
shall mean any and all licenses, franchises, permits, certificates, consents or other
authorization or approval granted, given or otherwise made available by or under the
authority of any Governmental Entity or pursuant to any Legal Requirement. </FONT></P>

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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Permitted
Encumbrance</U>&#148; means: (a) Liens for real estate Taxes that are not yet due or payable;
(b) any laws, regulations or ordinances (including zoning) adopted or imposed by any
Governmental Entity; (c) all easements, servitudes, rights of way, covenants and
restrictions, in each case of record; (d) as to any lease, any Lien encumbering, attaching
to or otherwise affecting solely the interest of the lessor thereunder and not the
interest of the lessee thereunder; provided that the lien holder has executed a
non-disturbance agreement in favor of Seller; and (e) any liens, claims, alienations,
encumbrances or other matters listed in schedule B-2 to any title policy accepted by Buyer
at Closing. The Acquired Assets shall only be subject to those Permitted Encumbrances
described in Section (d) of the Disclosure Letter as required by &sect;3(d) of this
Agreement. </FONT></P>

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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Person</U>&#148;
means an individual, a partnership, a corporation, an association, a limited liability
company, a joint stock company, a trust, a joint venture, an unincorporated organization,
or a governmental entity (or any department, agency, or political subdivision thereof). </FONT></P>

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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Petition</U>&#148;
has the meaning set forth in the recitals above. </FONT></P>

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<A NAME=A007></A>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>6 </FONT></P>


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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Plan
of Reorganization</U>&#148; means the plan proposed pursuant to Chapter 11 of Title&nbsp;11 of
the Bankruptcy Code which provides for the transactions contemplated herein, attached as
Exhibit B hereto. </FONT></P>

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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Proceeding</U>&#148;
means any action, arbitration, audit, hearing, investigation, litigation, or suit (whether
civil, criminal, administrative, investigative or informal) commenced, brought, conducted,
or heard by or before, or otherwise involving any Governmental Entity or arbitrator. </FONT></P>

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<P ><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Property
of the Estate</U>&#148; has the meaning assigned to it under
11&nbsp;U.S.C.&nbsp;&sect;&nbsp;541. </FONT></P>

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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Purchase
Price</U>&#148; has the meaning set forth in &sect;2(c) below. </FONT></P>

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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Seller</U>&#148;
has the meaning set forth in the preface above. </FONT></P>

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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>State
Claim</U>&#148; shall mean the third party demand asserted by Seller against the State of
Louisiana in the State Court Case. </FONT></P>

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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Subsidiary</U>&#148;
means any entity with respect to which a specified Person (or a Subsidiary thereof) owns
or has the power to vote 50% or more of the equity interests in such entity having general
voting power to participate in the election of the governing body of such entity,
including, with respect to Seller, those entities listed in Section (s) of the Disclosure
Letter. </FONT></P>

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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Tax</U>&#148;
means any federal, state, local or foreign income, gross receipts, license, payroll,
employment, excise, severance, stamp, occupation, premium, windfall profits, environmental
(including taxes under Code &sect; 59A), custom duties, capital stock, franchise, profits,
withholding, social security (or similar), unemployment, disability, real property,
intangible property, personal property, sales, use, transfer, registration, value added,
alternative or add-on minimum, estimated, or other government tax or charge of any kind
whatsoever, including any interest, penalty, or addition thereto, whether disputed or not. </FONT></P>

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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Tax
Return</U>&#148; means any return, declaration, report, claim for refund, or information
return or statement relating to Taxes, including any schedule or attachment thereto, and
including any amendment thereof. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->
<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Threatened</U>&#148;
shall mean with respect to a claim, Proceeding, dispute, or other matter that a demand or
statement has been made (orally or in writing) or notice has been given (orally or in
writing), or another event has occurred or other circumstances exist, that would lead a
prudent Person to conclude that such a claim, Proceeding, dispute, or other matter is
likely to be asserted, commenced, taken or otherwise pursued in the future. </FONT></P>

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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Transfer
Taxes</U>&#148; shall have the meaning specified in &sect;6(e) below. </FONT></P>

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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>WARN
Act</U>&#148; means the Worker Adjustment and Retraining Notification Act of 1988, as amended,
and any successor or similar state or local law, and the rules and regulations thereunder
and under any successor or similar state or local law. </FONT></P>

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<A NAME=A008></A>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>7 </FONT></P>


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<p><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Basic Transaction</U>.</FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Purchase and Sale of Assets</U>. On and subject to the terms and conditions of this
          Agreement, Buyer agrees to purchase from Seller, and Seller agrees to sell,
          assign, transfer, convey and deliver to Buyer, all of the Acquired Assets at the
          Closing for the consideration specified below in this &sect;2. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Assumption of Liabilities</U>. On and subject to the terms and conditions of this
          Agreement, Buyer agrees to assume and become responsible for all of the Assumed
          Liabilities at the Closing. Buyer will not assume or have any responsibility,
          however, with respect to any other obligation or liability of Seller not
          included within the definition of Assumed Liabilities. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Purchase Price</U>. Buyer agrees to pay to Seller an amount equal to Forty-Seven
          Million Dollars ($47,000,000) (the &#147;Purchase Price&#148;), adjusted as
          contemplated by Section 2(e). The Purchase Price shall be delivered at Closing
          as follows: (i) $46,000,000 via wire transfer of immediately available funds
          from Buyer to Seller (less a reserve of $___________ (the &#147;Reserve&#148;)
          retained by Buyer to fund Actual Cure Amounts (hereinafter defined) and less any
          reserve established by mutual written agreement of Buyer and Seller to pay
          Assumed Administrative Expense Claims), and (ii) wire transfer of the Deposit in
          the amount of $1,000,000 by Escrow Agent (hereinafter defined) to Seller. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Deposit</U>. Prior to execution of this Agreement by all Parties hereto, Buyer shall
          have deposited with Bank One, NA or other bank acceptable to Buyer and Seller
          (&#147;Escrow Agent&#148;) via wire transfer, the Deposit in the amount of
          $1,000,000 which shall either be applied to the Purchase Price, returned to
          Buyer or forfeited to Seller as provided herein. The Deposit shall be held by
          Escrow Agent pursuant to the terms of the Escrow Agreement attached hereto as
          <U>Exhibit C</U>. All interest on the Deposit shall be paid to Buyer. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Other Closing Adjustments</U>. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          The Purchase Price shall be adjusted at Closing for real estate taxes and
          assessments, which shall be prorated as of the Closing Date on the basis of the latest available rates and valuations furnished for the Owned
Real Property by the taxing authorities. Further, all water, sewer and other utility bills
that are required by the utility operators to be paid current in order to allow Buyer to
open an account in Buyer&#146;s name for such utility shall be prorated as of the Closing
Date. </FONT>


<BR>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Purchase Price shall be reduced by the Transfer Taxes and the aggregate of Actual Cure Amounts, as more particularly defined
herein which are not paid by Seller at the Closing with respect to Assumed Contracts, and
Buyer shall apply such reduction in the Purchase Price to the payment of the Transfer
Taxes and Actual Cure Amounts to the extent of such reduction in the Purchase Price. </FONT>

<BR>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          The Purchase Price shall be reduced by the amount of obligations or liabilities
          accrued but not yet paid or payable as such accrual relates to obligations or liabilities  relating to Assumed Contracts prior to the Closing Date and Buyer</FONT></P>

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<A NAME=A009></A>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>8 </FONT></P>


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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>shall apply such reduction in the
Purchase Price to the payment of such obligations or liabilities to the extent of such
reduction in Purchase Price.</font></P>


<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>The Closing</U>. The closing of the transactions contemplated by this Agreement (the
          &#147;Closing&#148;) shall take place at the offices of Lemle &amp; Kelleher,
          L.L.P., 601 Poydras Street, in New Orleans, Louisiana commencing at 10:00 a.m.
          local time no later than ten (10) days following the satisfaction or waiver of
          all conditions to the obligations of the Parties to consummate the transactions
          contemplated hereby (other than conditions with respect to actions the
          respective Parties will take at the Closing itself) or such other date as the
          Parties may mutually determine (the &#147;Closing Date&#148;) <U>provided</U>, <U>however</U>,
          that the Closing Date shall be no later than October 15, 2004. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Deliveries at the Closing</U>. At the Closing, (i) Seller will deliver to Buyer the
          various certificates, instruments, and documents referred to in &sect;7(a)
          below; (ii) Buyer will deliver to Seller the various certificates, instruments,
          and documents referred to in &sect;7(b) below; (iii) Seller will execute,
          acknowledge (if appropriate), and deliver to Buyer, deeds, assignments and such
          other instruments of sale, transfer, conveyance, and assignment as Buyer and its
          counsel or the title company insuring title to the Owned Real Property
          reasonably may request; (iv) Buyer will execute, acknowledge (if appropriate),
          and deliver to Seller an assumption and such other instruments of assumption as
          Seller and its counsel or the title company insuring title to the Owned Real
          Property reasonably may request; and (v) Buyer will deliver to Seller the
          consideration specified in &sect;2(c) above to be delivered at Closing. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Assumption of Certain Leases and Contracts</U>. The Plan of Reorganization provides
          for the assumption by Buyer and assignment by Seller to Buyer, effective upon
          the Closing, of the Assumed Contracts identified as such in the Plan of
          Reorganization subject to and upon the following terms and conditions: </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          On the Closing Date Seller shall assign to Buyer the Assumed Contracts with
          assumption and assignment of such Assumed Contracts
having first been authorized and approved by the Bankruptcy Court pursuant to the
Confirmation Order pursuant to &sect;365 of the Bankruptcy Code. The Assumed Contracts
will be set forth on <U>Schedule 1</U> and identified thereon by the date of the Assumed
Contracts (if available), the other party to the contract or lease and the address of such
party. <U>Schedule 1</U> shall also set forth the amounts necessary to cure defaults under each
of such Assumed Contracts as determined by Seller based on Seller&#146;s books and
records, which amounts are to be paid by Seller to the appropriate party to the Assumed
Contract at or before the Closing (each such amount, an &#147;Expected Cure Amount&#148;).
Buyer, in its discretion, may amend <U>Schedule 1</U> (by delivery of a written notice to Seller)
between the date hereof and the date other qualified bids are due under the Plan of
Reorganization to remove any Assumed Contract and/or to add any contract, agreement,
lease, commitment, understanding or instrument which Buyer desires to constitute an
Assumed Contract and which is not included in Excluded Assets (each contract, agreement,
lease, commitment, understanding or instrument added to the list of Assumed Contracts, an
&#147;Additional Assumed Contract&#148;). </FONT></P>

<BR>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          Notwithstanding anything to the contrary contained in &sect;2(h)(i), if there
          exists on the Closing Date any default related to an Assumed Contract,</FONT></P>

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<A NAME=A011></A>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>9 </FONT></P>


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<P ALIGN=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Seller shall be responsible  for any amounts to be cured
pursuant toss.365(c) of the Bankruptcy  Code (the &#147;Actual
Cure Amount&#148;) as a condition to the assumption and assignment of such Assumed
Contract except with respect to any cure amount owed to Video Services Inc. which
obligation shall be assumed by Buyer. </FONT></p>

<BR>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Except as set forth in &sect;2(h)(ii), Buyer shall reasonably cooperate with Seller in helping Seller carry its burden to show adequate
assurance of Buyer&#146;s future performance with respect to the Assumed Contracts </FONT></p>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Allocation of Purchase Price</U>. Seller and Buyer shall negotiate in good faith an
          allocation of the Purchase Price among the Acquired Assets, consistent with the
          requirements of the Code and any and all regulations relating thereto. At the
          Closing, Buyer and Seller shall agree to an allocation of the Purchase Price
          among the Acquired Assets which shall be attached as Exhibit A and shall be
          binding upon Buyer and Seller for all federal and state income tax purposes such
          that Buyer and Seller shall each file their federal and state income tax returns
          on the basis of such allocation and neither Buyer nor Seller shall take a tax
          position inconsistent with such allocation. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Interest in and Control of the State Claim</U>. The State Claim is included within
          the Excluded Assets. Seller shall retain full and complete control of the State
          Claim, including without limitation the litigation of the State Claim, the
          retention of counsel to pursue the State Claim, the settlement of the State
          Claim and any other matter relating to the State Claim, all of which shall be
          conducted at the sole cost, risk and expense of Seller. Buyer hereby grants
          Seller full power and authority to take any action with respect to the State
          Claim without the consent of Buyer. Buyer agrees and acknowledges that Seller
          owes Buyer no duty or obligation of any kind in connection with the State Claim
          and/or Seller&#146;s exercise of control over the State Claim. Seller may
          dismiss the State Claim with or without prejudice for any reason without the
          consent of Buyer, and Buyer acknowledges and agrees that in such event it will
          have no claim of any kind whatsoever against Seller. Seller represents and
          warrants that no attorney or other party has any interest of any kind in the
          State Claim other than claims and lien rights pertaining to legal fees. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Non-Prosecution of Avoidance Actions</U>. Notwithstanding Buyer&#146;s acquisition
          of the Avoidance Actions, Avoidance Actions under 11 U.S.C. &sect;&sect; 544,
          547 and 548 against parties who are not insiders as defined in 11 U.S.C. &sect;
          101(31) shall be waived and released as of the Closing Date. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Representations and Warranties of Seller</U>. Seller represents and warrants to
          Buyer that the statements contained in this &sect;3 are correct and complete as
          of the date of this Agreement and will be correct and complete as of the Closing
          Date (as though made then and as though the Closing Date were substituted for
          the date of this Agreement throughout this &sect;3), except as set forth in the
          Disclosure Letter. The Disclosure Letter will be arranged in paragraphs
          corresponding to the lettered and numbered paragraphs contained in this &sect;3. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Organization of Seller</U>. Seller and each of its Subsidiaries is a corporation,
          limited liability company, or other entity, as applicable, duly organized,
          validly existing, and in good standing under the laws of the jurisdiction of its
          incorporation. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Minor Center" FSL="Default" -->
<A NAME=A012></A>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>10 </FONT></P>


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<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Authorization of Transaction</U>. Subject to the entry of an Order of the Bankruptcy
          Court (in form and substance acceptable to the Buyer) confirming the Plan of
          Reorganization (&#147;Confirmation Order&#148;), Seller has full power and
          authority (including full corporate power and authority) to execute and deliver
          this Agreement and to perform its obligations hereunder. Subject to the entry of
          the Confirmation Order, this Agreement constitutes the valid and legally binding
          obligation of Seller, enforceable against it in accordance with its terms and
          conditions. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Noncontravention</U>. Subject to the entry of the Confirmation Order, the consent of
          the Louisiana State Racing Commission and the Louisiana State Gaming Control
          Board, and except as set forth on Schedule 3(c), no filing with, and no permit,
          authorization, consent or approval of, any Governmental Entity or other third
          party is necessary for the consummation by Seller of the transactions
          contemplated by this Agreement. Subject to the entry of the Confirmation Order
          and except as set forth in Section (c) of the Disclosure Letter, neither the
          execution and the delivery of this Agreement, nor the consummation of the
          transactions contemplated hereby (including the assignments and assumptions
          referred to in &sect;2 above), will (i) violate any constitution, statute,
          regulation, rule, injunction, judgment, order, decree, ruling, charge, or other
          restriction of any government, governmental agency, or court to which Seller and
          its Subsidiaries are subject or any provision of the charter or bylaws of Seller
          or any of its Subsidiaries or (ii) conflict with, result in a breach of,
          constitute a default under, result in the acceleration of, create in any party
          the right to accelerate, terminate, modify, or cancel, or require any notice
          under any agreement, contract, lease, license, instrument, or other arrangement
          to which Seller or any of its Subsidiaries is a party or by which it is bound or
          to which any of its or their assets are subject (or result in the imposition of
          any Lien upon any of such assets), except where the violation, conflict, breach,
          default, acceleration, termination, modification, cancellation, failure to give
          notice, or Lien would not have a material adverse effect on the financial
          condition of Seller and its Subsidiaries taken as a whole or on the ability of
          the Parties to consummate the transactions contemplated by this Agreement. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Title to Properties; Encumbrances; Sufficiency of Assets</U>. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          As of the Closing, Seller shall transfer to Buyer with full warranty of title
          and with all other legal warranties (A) good and
valid record and merchantable title to the Owned Real Property or a good and valid
leasehold interest in all of the Leased Real Property, free and clear of any and all
Liens, claims, interests and encumbrances pursuant to 11 U.S.C. &sect; 363 provided that
the Owned Real Property and Leased Real Property may be subject to the Permitted
Encumbrances described in Section (d) of the Disclosure Letter (the &#147;Real Property
Permitted Encumbrances&#148;), and (B) good and valid merchantable title to all of the
Acquired Assets, other than the Owned Real Property and Leased Real Property, free and
clear of any and all Liens, claims, interests and encumbrances, pursuant to 11 U.S.C.
&sect; 363 (in the case of Leased Real Property, subject to the terms and conditions of
the leases). </FONT></p>

<BR>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          Except as set forth in Section (d) of the Disclosure Letter, the Acquired Assets
          (A) constitute all of the assets, tangible and
intangible, corporeal and incorporeal, of any nature whatsoever, necessary to operate the
Business in the manner presently operated by Seller and its Subsidiaries, (B) include all
of the operating assets of </FONT></p>

<BR>

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<A NAME=A013></A>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>11 </FONT></P>


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<P ALIGN=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Seller and its Subsidiaries related to the Business, and (C) to the extent of the accounts
receivable included therein, represent valid obligations arising from sales or services
actually made or performed by Seller or its Subsidiaries in the Ordinary Course of
Business and as of the Closing Date will be current and collectible subject to no contest,
claim, defense or right of setoff by the account debtor thereunder in any material amount. </FONT></p>

<BR>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          Except as set forth in Section (d) of the Disclosure Letter, the Owned Real
          Property and the Leased Real Property are not subject
to any rights of way, building use restrictions, exceptions, variances, reservations or
limitations of any nature except (x) minor imperfections of title, if any, none of which
detracts from the value or impairs the use of the property subject thereto or impairs the
operation of Seller, (y) zoning laws and other land use restrictions that do not impair
the contemplated use of the property subject thereto, and (z) the Real Property Permitted
Encumbrances. All buildings, plants and structures owned by Seller lie wholly within the
boundaries of the Owned Real Property, have adequate access to public roads without
crossing the property of a third party and do not encroach upon the property of, or
otherwise conflict with the property rights of, any third Person, except for the Real
Property Permitted Encumbrances. </FONT></p>

<BR>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Books and Records</U>. The books of account and other financial records, information
          and data of Seller and its Subsidiaries related to the Business, all of which
          have been made available to Buyer, are correct in all material respects and
          represent actual, bona fide transactions and have been maintained in accordance
          with sound business practices, including the maintenance of an adequate system
          of internal controls. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Compliance with Legal Requirements; Permits</U>. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          Except as set forth in Section (f)(i) of the Disclosure Letter: (A) Each of
          Seller and its Subsidiaries is and has been in compliance
in all material respects with each Legal Requirement and Permit applicable to it or to the
conduct of the Business or the ownership or use of the Acquired Assets; (B) no event has
occurred or circumstance exists that (with or without notice or lapse of time) (x) may
constitute or result in a violation by Seller or any of its Subsidiaries of, or a failure
on the part of Seller or any of its Subsidiaries to comply with, any Legal Requirement or
Permit related to the Business in any material respect or (y) may give rise to any
obligation on the part of Seller or any of its Subsidiaries to undertake, or to bear all
or any portion of the cost of, any remedial action of any nature; and (C) Seller and its
Subsidiaries have not received any notice or other communication from any Governmental
Entity or any other Person regarding (x) any actual, alleged, possible or potential
violation of, or failure to comply with, in any material respect, any Legal Requirement or
Permit related to the Business, or (y) any actual, alleged, possible or potential
obligation on the part of Seller or any of its Subsidiaries to undertake, or to bear all
or any portion of the cost of, any remedial action of any nature. </FONT></p>

<BR>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          Section (f)(ii) of the Disclosure Letter sets forth all of the material Permits
          necessary to permit Seller and its Subsidiaries
to lawfully conduct and operate the Business in the manner they currently conduct and
operate the Business and to permit them to own and use their assets in the manner in which
they currently own and use such assets. All such Permits are currently in full force and
effect. All applications </FONT></p>

<BR>

<!-- MARKER FORMAT-SHEET="Head Minor Center" FSL="Default" -->
<A NAME=A014></A>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>12 </FONT></P>


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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
required  to have been filed for the  renewal of the  Permits  listed or
required to be listed in Section (f)(ii) of the Disclosure Letter have been duly filed on a timely
basis with the appropriate Governmental Entities, and all other filings required to have
been made with respect to such Permits have been duly made on a timely basis with the
appropriate Governmental Entities. </FONT></P>

<BR>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Legal Proceedings; Orders</U>. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          Except for the Bankruptcy Case and as disclosed in Section (g)(i) of the
          Disclosure Letter, there is no pending or to Seller&#146;s
Knowledge Threatened Proceeding: (A) that has been commenced by or against Seller or its
Subsidiaries related to the Business or that otherwise relates to or may affect the
Business, or any of the assets owned or used by Seller or its Subsidiaries related to the
Business; or (B) that challenges, or may have the effect of preventing, delaying, making
illegal or interfering with any of the transactions contemplated by this Agreement. </FONT></P>

<BR>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          Except as disclosed in Section (g)(ii) of the Disclosure Letter, as relates to
          the Business: (A) there is no Order to which Seller,
its Subsidiaries, the Business or any of their assets is subject; (B) each of Seller and
its Subsidiaries is, and at all times has been, in full compliance with all of the terms
and requirements of each Order related to the Business to which it, or any of its assets,
is or has been subject; and (C) Seller and its Subsidiaries have not received at any time
any notice or other communication from any Governmental Entity or any other Person
regarding any actual, alleged, possible or potential violation of, or failure to comply
with, any term or requirement of any Order to which Seller, its Subsidiaries, or any of
their assets or the Business is or has been subject. </FONT></P>

<BR>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Taxes</U>. Except as disclosed in Section (h) of the Disclosure Letter: </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          Seller and each of its Subsidiaries has filed all Tax Returns that it was
          required to file. All such Tax Returns were correct
and complete in all respects. All Taxes owed by Seller or any of its Subsidiaries (whether
or not shown on any Tax Return) have been paid, including any Taxes of any other Person
owed by Seller or any of its Subsidiaries under Treasury Regulation 1.1502-6 or any
similar provision of state, local or foreign law, or as a successor or transferee, by
contract or otherwise. None of the Seller and any of its Subsidiaries currently is the
beneficiary of any extension of time within which to file any Tax Return. No claim has
been made by an authority in a jurisdiction where Seller or any of its Subsidiaries do not
file Tax Returns that they may be subject to taxation by that jurisdiction. There are no
security interests or liens on any of the assets of Seller or any of its Subsidiaries that
arose in connection with the failure (or alleged failure) to pay any Tax. </FONT></P>

<BR>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          Seller and each of its Subsidiaries has withheld and paid all Taxes required to
          have been withheld and paid in connection with
amounts paid or owing to any employee, independent contractor, creditor, stockholder, or
other third party. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Employees; Employee Benefit Plans</U>. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Minor Center" FSL="Default" -->
<A NAME=A015></A>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>13 </FONT></P>


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<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          Section (i)(i) of the Disclosure Letter sets forth as of the date hereof, a list
          of all full and part time employees of Seller
and its Subsidiaries (including contract employees and each employee on leave of absence
or layoff status), showing (A) name, (B) title, (C) summary of job description, (D) date
of hire, (E) whether hourly or salaried employee, (F) current salary or wage rate, (G)
sick and vacation leave that is accrued but unused, (H) any obligation or understanding
with such employee to make any severance or other payments to such employee upon
termination of his or her employment and (I) a description of any employment agreement. </FONT></P>

<BR>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          To the Knowledge of Seller, no officer, director, agent, employee, consultant or
          contractor of Seller or its Subsidiaries is bound
by any contract, agreement or understanding that purports to limit the ability of such
officer, director, agent, employee, consultant or contractor (A) to engage in or continue
or perform any conduct, activity, duties or practice relating to the Business or (B) to
assign to Seller or its Subsidiaries or to any other Person any rights to any invention,
improvement, or discovery. To the Knowledge of Seller, no former or current employee of
Seller or its Subsidiaries is a party to, or is otherwise bound by, any contract,
agreement or understanding that in any way adversely affected, affects or will affect the
ability of Seller, its Subsidiaries, or Buyer to conduct the Business as heretofore
carried on by Seller and its Subsidiaries. </FONT></P>

<BR>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          Section (i)(iii) of the Disclosure Letter contains a complete and accurate list
          of the following benefit plans that are maintained
or contributed to by the Seller and its Subsidiaries: (i) &#147;employee pension benefit
plans&#148; as defined in Section 3(2) of ERISA (&#147;Pension Plans&#148;); (ii)
&#147;employee welfare benefit plans&#148; as defined in Section 3(1) of ERISA
(&#147;Welfare Plans&#148;); and (iii) all other agreements, commitments, understandings,
policies, obligations, arrangements or practices, whether written or unwritten,
(&#147;Other Plans&#148;) that (A) are maintained or contributed to by Seller or its
Subsidiaries or any other corporation or trade or business controlled by, controlling or
under common control with Seller or its Subsidiaries (within the meaning of Section 414 of
the Code or Section 4001(a)(14) or 4001(b) of ERISA) (an &#147;ERISA Affiliate&#148;), and
(B) provide benefits, or describe policies or procedures applicable to any current or
former director, officer, employee, agent or service provider of Seller or any ERISA
Affiliate, or the dependents of any thereof. The Pension Plans, Welfare Plans and Other
Plans are referred to individually and collectively as the &#147;Benefit Plans.&#148; The
Seller has delivered to Buyer (1) true, complete and correct copies of each Benefit Plan
(or, in the case of any unwritten Benefit Plan, a description thereof), (2) the most
recent annual report on Form 5500 with respect to each Benefit Plan, if any such report
was required, (3) the most recent summary plan description for each Benefit Plan for which
such summary plan description is required. Except as set forth in Section (i)(iii) of the
Disclosure Letter the consummation of the transactions contemplated by this Agreement will
not result in the vesting of, acceleration of, or obligation to pay, any benefit. </FONT></P>

<BR>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          Except as set forth in Section (i)(iv) of the Disclosure Letter, (A) each
          Pension Plan that purports to satisfy Code Section 401(a) is qualified in form and operation under Code Section 401(a), and each trust
          relating to each such Pension Plan is exempt from federal income tax under Code
          Section 501(a), (B) </FONT></p>

          <BR>

<!-- MARKER FORMAT-SHEET="Head Minor Center" FSL="Default" -->
<A NAME=A016></A>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>14 </FONT></P>


<!-- MARKER PAGE="sheet: 14; page: 14" -->
<HR SIZE=5 COLOR=GRAY NOSHADE>

<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
neither the Seller or its Subsidiaries nor any ERISA Affiliate  sponsors,
contributes
to, or is required to contribute to a defined benefit plan as defined in Section 3(35) of
ERISA or to a Multiemployer Plan, (C) there are no facts or circumstances concerning the
Benefit Plans that may give rise to any liability of Seller, its Subsidiaries, or Buyer
under Title IV of ERISA, (D) no event has occurred or circumstance exists that presents a
risk of the occurrence of any withdrawal from, or the termination, reorganization, or
insolvency of, any Multiemployer Plan that could result in any liability of Seller or its
Subsidiaries to a Multiemployer Plan, and (E) no Employee Benefit Plan provides retiree
health benefits other than group health plan continuation coverage under Part 6 of Title I
of ERISA and Section 4980B of the Code. </FONT></P>

<BR>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          No transaction prohibited by ERISA Section 406 and no &#147;prohibited
          transaction&#148; under Section 4975(c) of the Code has occurred
with respect to any Pension Plan. The Seller and its Subsidiaries are in compliance with
the continuation coverage provisions of Part 6 of Title I of ERISA and Section 4980B of
the Code. </FONT></P>

<BR>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          The Benefit Plans are in compliance in all respects with the applicable
          provisions of ERISA, the Code and all other Legal Requirements.  All reports, returns, notices, descriptions and similar documents with respect
          to the Benefit Plans required by ERISA, the Code or other applicable Legal
          Requirements to be filed with any Governmental Entity or distributed to any
          Benefit Plan participant or beneficiary have been duly and timely filed or
          distributed. There are no investigations by any Governmental Entity or other
          claims (except claims for benefits payable in the normal operation of the
          Benefit Plans), or suits or proceedings against or involving any Benefit Plan. </FONT></P>

          <BR>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Labor Disputes; Compliance</U>. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          Seller and each Subsidiary of Seller have complied in all material respects with
          all Legal Requirements relating to employment
practices, terms and conditions of employment, equal employment opportunity,
nondiscrimination, immigration, wages, hours, benefits, collective bargaining and other
requirements, the payment of social security and similar taxes and occupational safety and
health. Neither Seller nor any Subsidiary of Seller is liable for the payment of any
taxes, fines, penalties or other amounts, however designated, for failure to comply with,
or a breach of, any of the foregoing Legal Requirements. </FONT></P>

<BR>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          Except as provided in Section (j)(ii) of the Disclosure Letter, each of Seller
          and its Subsidiaries has not been, and is not now,
a party to any collective bargaining agreement or other labor contract, and since January
1, 2004, there has not been, there is not presently pending or existing, and to
Seller&#146;s Knowledge there is not Threatened, any strike, slowdown, picketing, work
stoppage or employee grievance process involving Seller or any Subsidiary of Seller. No
event has occurred or circumstance exists that could provide the basis for any work
stoppage or other labor dispute, and there is not pending or, to Seller&#146;s Knowledge,
Threatened against or affecting Seller or its Subsidiaries any Proceeding relating to the
alleged violation of any Legal Requirement pertaining to labor relations or employment
matters, including any charge or complaint filed with the National Labor Relations Board,
the Equal Employment Opportunity Commission </FONT></P>

<BR>

<!-- MARKER FORMAT-SHEET="Head Minor Center" FSL="Default" -->
<A NAME=A017></A>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2> 15 </FONT></P>


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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>or any  other  Governmental  Entity,  and  there is no organizational
activity or other labor dispute against or affecting Seller or any Subsidiary of Seller or
their respective facilities. </FONT></P>

<BR>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Intellectual Property Rights</U>. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          Section (k)(i) of the Disclosure Letter contains a complete and accurate list,
          to the extent possible, of all Intellectual Property
Rights of Seller and its Subsidiaries, and Seller has delivered to Buyer accurate and
complete copies of all contracts, agreements, licenses or understandings relating to the
Intellectual Property Rights, except for any license implied by the sale of a product and
perpetual, paid-up licenses for commonly available Software programs with a value of less
than $1,000 per unit or license under which Seller is the licensee. There are no
outstanding and, to Seller&#146;s Knowledge, no Threatened Proceedings, disputes or
disagreements with respect to any such contract, agreement, license or understanding. </FONT></P>

<BR>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          Except as set forth in Section (k)(ii) of the Disclosure Letter, the
          Intellectual Property Rights listed in Section (k)(i) of
the Disclosure Letter are all those necessary for the operation of the Business as it is
currently conducted, provided, however, Seller does not represent that the foregoing are
adaptable for use by Buyer in the Business. Seller and its Subsidiaries are the owners or
licensees of all right, title and interest in and to each of such Intellectual Property
Rights, free and clear of any and all Liens and Encumbrances, and they have the right to
use without payment to a third party all of such Intellectual Property Rights, other than
in respect of licenses listed in Section (k)(ii) of the Disclosure Letter. </FONT></P>

<BR>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Contracts; No Defaults.</U> </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          Section (l)(i) of the Disclosure Letter contains an accurate and complete list
          (including the parties to the contracts, agreements
or understandings), and Seller has delivered to Buyer accurate and complete copies, of all
contracts, agreements, leases, licenses, understandings and arrangements related to the
Business, each written warranty, guaranty and/or other similar undertaking with respect to
contractual performance by Seller or any Subsidiary of Seller related to the Business
(other than in the Ordinary Course of Business), and each amendment, supplement and
modification (whether oral or written) in respect of any of the foregoing. </FONT></P>



<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          Except as set forth in Section (l)(ii) of the Disclosure Letter, each contract,
          agreement, lease, license, understanding and arrangement
to which Seller or any Subsidiary of Seller is a party is in full force and effect and is
valid and enforceable in accordance with its terms; and to the Knowledge of Seller, will
not upon completion or performance thereof have a material adverse affect on the Business
or the assets or the business to be conducted by Buyer with the Acquired Assets. </FONT></P>



<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          Except as set forth in Section (l)(iii) of the Disclosure Letter, (A) Seller and
          its Subsidiaries and to the Knowledge of Seller
each other Person that has or had any obligation or liability under any contract,
agreement, lease, license, understanding and arrangement to which Seller or its
Subsidiaries is a party, is and </FONT></P>

<BR>

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<A NAME=A018></A>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>16 </FONT></P>


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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
has been in compliance in all material respects
with all applicable terms and requirements thereof and there are no renegotiations,
attempts to renegotiate or outstanding rights to renegotiate any of the same; (B) no event
has occurred or circumstance exists that (with or without notice or lapse of time) may
contravene, conflict with or result in a breach of, or give Seller, any Subsidiary of
Seller or other Person the right to declare a default or exercise any remedy under, or to
accelerate the maturity or performance of, or payment under, or to cancel, terminate or
modify, any of the same; (C) no event has occurred or circumstance exists under or by
virtue of any of the same that (with or without notice or lapse of time) would cause the
creation of any Liens affecting any of the Acquired Assets; and (D) Seller and its
Subsidiaries have not given to or received from any other Person any notice or other
communication (whether oral or written) regarding any actual, alleged, possible or
potential violation or breach of, or default under, any such contract, agreement, lease,
license, understanding and arrangement. </FONT></P>



<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Insurance</U>. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          Section (m) of the Disclosure Letter lists all insurance policies of Seller or
          any Subsidiary of Seller relating to the Business,
the Acquired Assets and employees of Seller or any Subsidiary of Seller engaged in the
Business prior to the Closing Date. All such insurance policies (A) are outstanding and
enforceable, (B) are issued by one or more financially sound and reputable insurers, (C)
taken together, provide adequate insurance coverage for the Acquired Assets, the Business
and the operations of Seller and its Subsidiaries until the Closing Date, and (D) are
sufficient for compliance with all Legal Requirements and any contract, agreement, lease,
license, understanding and arrangement included in the Acquired Assets to which Seller or
any Subsidiary of Seller is a party. Seller and its Subsidiaries have paid all premiums
due through the date of Closing, and has otherwise performed all of their obligations,
under each such insurance policy, and Seller and its Subsidiaries have given notice to the
applicable insurer of all claims that may be insured thereby. </FONT></P>

<BR>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          Seller and its Subsidiaries have not received (A) any refusal of coverage or any
          notice that a defense will be afforded with reservation
of rights, or (B) any notice of cancellation or any other indication that any policy of
insurance is no longer in full force or effect or that the issuer of any policy of
insurance is not willing or able to perform its obligations thereunder. </FONT></P>

<BR>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(n)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Related Party Transactions</U>. Except as set forth in Section (n) of the Disclosure
          Letter, to Seller&#146;s Knowledge, no employee, director or officer of Seller
          or any Subsidiary of Seller or any shareholder of Seller or member of the
          immediate family of any of the same has any direct or indirect ownership
          interest in any firm or corporation with which Seller or any Subsidiary of
          Seller is affiliated or with which Seller or any Subsidiary of Seller has a
          business relationship, or any firm or corporation that competes with Seller or
          any Subsidiary of Seller, except that employees, officers or directors of Seller
          and shareholders of Seller and members of their immediate families may own stock
          in publicly traded companies that may compete with Seller. Except as set forth
          in Section (n) of the Disclosure Letter, no member of the immediate family of
          any officer or director of Seller or its Subsidiaries or of a shareholder </FONT></P>

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<A NAME=A020></A>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>17 </FONT></P>


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<!-- MARKER FORMAT-SHEET="Para Flush" FSL="Default" -->
<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>of Seller is directly or indirectly
interested in any contract, agreement, lease, license, understanding and arrangement to
which Seller is a party. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(o)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Financial Statements</U>. Seller has delivered to Buyer: (i) an audited consolidated
          balance sheet of Seller and its Subsidiaries at and as of October 31, 2003
          including the notes thereto, and the related audited consolidated statements of
          income, changes in shareholders&#146; equity and cash flows for the fiscal year
          then ended, including in each case the notes thereto, and (ii) an unaudited
          consolidated balance sheet of Seller and its Subsidiaries at and as of April 30,
          2004 and the related unaudited statements of income, changes in
          shareholders&#146; equity, and cash flows for the six (6) months then ended,
          including in the case of the audited financial statements the notes thereto as
          qualified by the Report of the Independent Auditor contained therein. Such
          financial statements (the &#147;Financial Statements&#148;) fairly present the
          consolidated financial condition and the results of operations, changes in
          shareholders&#146; equity and cash flows of Seller and its Subsidiaries in all
          material respects at and as of the respective dates and for the periods referred
          to in such Financial Statements, all in accordance with GAAP, except with
          respect to the unaudited balance sheet and unaudited statements of income,
          changes in shareholders&#146; equity, and cash flows, the absence of footnotes
          and normal recurring year-end adjustments. Further, Seller shall deliver to
          Buyer when filed with the Bankruptcy Court all monthly operating statements for
          the Business filed in the Bankruptcy Case (and if not required to be filed in
          the Bankruptcy Case, such monthly operating statements in any case) from the
          date of this Agreement through and until the Closing. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(p)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Absence of Undisclosed Liabilities</U>. Except as and to the extent reflected or
          specifically reserved against on the unaudited consolidated balance sheet of
          Seller and its Subsidiaries at and as of April 30, 2004 or as set forth in
          Section (p) of the Disclosure Letter, Seller and its Subsidiaries have no
          liabilities or obligations (whether accrued, absolute, contingent, unliquidated
          or otherwise, whether due or to become due, whether known or unknown, and
          regardless of when asserted) arising out of transactions or events heretofore
          entered into, or any action or inaction, or state of facts existing, with
          respect to or based upon transactions or events heretofore occurring, except
          liabilities which have arisen after April 30, 2004 in the Ordinary Course of
          Business (none of which is a liability for breach of contract, breach of
          warranty, violation of Legal Requirements, tort, infringement, claim or lawsuit)
          or which will arise in connection with the rejection of contracts that will not
          form a part of the Assumed Contracts. In any event, however, the sale
          contemplated herein shall be free and clear of all Liens, claims, and
          encumbrances pursuant to 11 U.S.C. &sect; 363. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(q)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Environmental Matters</U>. Except as set forth in Section (q) of the Disclosure
          Letter, (i) Neither Seller nor any Subsidiary of Seller has received written
          notice from any Governmental Entity or has any Knowledge that it or the Owned
          Properties or Leased Properties is not in compliance in all material respects
          with all Permits and with all Environmental, Health and Safety Requirements and
          with all other applicable federal, state and local laws and regulations in
          effect on the date hereof relating to pollution or the environment, including,
          but not limited to the Comprehensive Environmental Response, Compensation and
          Liability Act, 42 U.S.C. 9601, et seq., the Resource Conservation and Recovery
          Act, 42 U.S.C. 6901 et seq., the Clean Water Act, 33 U.S.C. Section 1251 et
          seq., the Clean Air Act, 42 U.S.C. Section 7401 et seq., and all other laws and
          regulations relating to emissions, spills, leaks, discharges, releases or
          threatened releases of any &#147;hazardous substance,&#148; &#147;solid
          waste&#148; or </FONT></P>

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<A NAME=A021></A>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>18 </FONT></P>


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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#148;hazardous  waste,&#148; as defined  therein,  as well as
relating to any other regulated
substance or material, pollutant, contaminant, petroleum and petroleum products, natural
gas or synthetic gas, special nuclear or by-product material, as defined by the Atomic
Energy Act of 1954, 42 U.S.C. Section 3011 et seq., and the regulations promulgated
thereto and &#147;hazardous chemicals&#148;, as defined in 29 C.F.R. Part 1910 or
otherwise relating to the manufacture, possession, distribution, use, treatment, storage,
disposal, transport or handling of such material (such laws and regulations being
hereinafter referred to as &#147;Environmental Laws&#148;); and (ii) neither Seller nor
any Subsidiary of Seller has been charged with, convicted of, or to Seller&#146;s
Knowledge, investigated for any violation, or is in violation of any Environmental Laws by
any Governmental Entity with respect to the Acquired Assets or the Business. To
Seller&#146;s Knowledge, there are no Environmental, Health and Safety Liabilities and no
environmental condition exists on any portion of the Acquired Assets that would likely
give rise to any Environmental, Health and Safety Liabilities or a material claim that
Seller is in violation of any Environmental Laws. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(r)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Compliance with the Bankruptcy Code and Bankruptcy Rules</U>. The Confirmation Order
          and all Orders related thereto have been entered in accordance with all
          applicable provisions of the Bankruptcy Code, Bankruptcy Rules, and Local Rules
          after proper, timely, and adequate notice to all parties entitled to notice
          pursuant to all applicable provisions of the Bankruptcy Code, Bankruptcy Rules,
          and Local Rules unless otherwise directed by Order of the Bankruptcy Court.
          Notwithstanding that the sale herein occurs pursuant to a Confirmation Order,
          the sale shall be as under 11 U.S.C. &sect; 363 and the Buyer shall be afforded
          all protections provided therein including but not limited to 11 U.S.C.
          &sect;&sect; 363(f) and (m). The Confirmation Order shall include a finding that
          the Buyer is a good faith purchaser for purposes of the provisions of 11 U.S.C.
          &sect; 363(m). </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(s)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Subsidiaries</U>. Seller does not have any ownership interest in any other
          corporation, partnership, joint venture or other entity except as set forth in
          Section (s) of the Disclosure Letter. Section (s) of the Disclosure Letter sets
          forth for each Subsidiary of Seller (i) its name and jurisdiction of
          incorporation or formation, (ii) the number of shares of authorized stock of
          each class of its capital stock or other authorized interests, (iii) the number
          of issued and outstanding shares of each class of its capital stock or other
          interests outstanding, and (iv) its directors and officers or persons in
          equivalent roles. Each Subsidiary is an entity, duly organized, validly existing
          and in good standing under the laws of its jurisdiction. Each Subsidiary is duly
          authorized to conduct business and is in good standing under the laws of each
          jurisdiction where such qualification is required. Each Subsidiary has full
          entity power and authority and all licenses, permits, and authorizations
          necessary to carry on business in which it is engaged and to own and use the
          properties owned and used by it. Seller has delivered to Buyer correct and
          complete copies of the articles of incorporation and bylaws or equivalent entity
          documents of each Subsidiary (as amended to date). All of the outstanding shares
          of capital stock or other ownership interests of each Subsidiary are validly
          issued and outstanding and are fully paid and nonassessable and all of such
          shares and interests are wholly owned by Seller directly, free and clear of all
          Liens. There is outstanding no subscription, option, warrant, call or commitment
          of any character relating to or any instruments that can be converted into
          shares of the capital stock or ownership interests of any Subsidiary. The minute
          books (containing the records of meetings of the stockholders, the board of
          directors, and any committees of the board of directors), the stock certificate
          books, and the stock record books or </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Minor Center" FSL="Default" -->
<A NAME=A022></A>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>19 </FONT></P>


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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>equivalent  entity  books of each  Subsidiary  delivered  to Buyer are correct and  complete.  None of the
Subsidiaries is in default under or
in violation of any provision of its articles of incorporation or bylaws or other
organizational documents. Neither Seller nor its Subsidiaries controls directly or
indirectly or has any direct or indirect equity participation in any corporation,
partnership, trust, or other business association which is not a Subsidiary. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(t)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Certain Claims</U>. Seller has listed any and all known holders of claims (as
          defined in the Bankruptcy Code) against Seller in the schedules, as amended,
          filed by Seller in the Bankruptcy Case and has provided any and all holders of
          such claims proper and timely notice of the Plan of Reorganization and the
          related disclosure statement. Seller has provided proper and adequate notice to
          all parties who hold claims against Seller (or who Seller reasonably believes
          might assert claims against Seller) of (i) the commencement of the Bankruptcy
          Case, (ii) the date by which proofs of claim must be filed with respect to
          prepetition claims against Seller, and (iii) the Plan of Reorganization and the
          deadline to object with respect thereto. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(u)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Disclosure</U>. No representation or warranty of Seller in this Agreement and no
          statement contained in any certificate or other instrument furnished or to be
          furnished to Buyer hereunder contains or will contain any untrue statement of
          material fact or omits or will omit to state any material fact necessary to make
          the statements herein or therein, in light of the circumstances in which they
          were made, not misleading. Promptly after becoming aware of the same, Seller
          shall supplement or amend the Disclosure Letter with respect to any matter
          hereafter arising which, if existing, occurring or known by them at the date of
          this Agreement would have been required to be set forth or described in the
          Disclosure Letter and shall provide prompt written notice to Buyer regarding the
          same. In the event Seller makes such a supplemental disclosure, Buyer shall be
          entitled to review the facts pertaining thereto and may terminate this Agreement
          by so notifying Seller within ten (10) Business Days after receipt of such
          supplemental disclosure and, if Buyer so elects, Buyer shall be entitled to the
          return of its Deposit plus all accrued interest thereon. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Representations and Warranties of Buyer</U>. Buyer represents and warrants to Seller
          that the statements contained in this &sect;4 are correct and complete as of the
          date of this Agreement and will be correct and complete as of the Closing Date
          (as though made then and as though the Closing Date were substituted for the
          date of this Agreement throughout this &sect;4). </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Organization of Buyer</U>. Buyer is a corporation duly organized, validly existing,
          and in good standing under the laws of the Commonwealth of Kentucky. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Authorization of Transaction</U>. Buyer has full corporate power and authority to
          execute and deliver this Agreement and to perform its obligations hereunder.
          This Agreement constitutes the valid and legally binding obligation of Buyer,
          enforceable in accordance with its terms and conditions. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Noncontravention</U>. Subject to the entry of the Confirmation Order, and the
          consents of the Louisiana State Racing Commission, the Louisiana State Gaming
          Control Board and the City of New Orleans, no filing with, and no permit,
          authorization, consent or approval of, any Governmental Entity is necessary for
          the consummation by Buyer of the </FONT></P>

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<A NAME=A024></A>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>20 </FONT></P>


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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>transactions
contemplated by this Agreement. Subject to the entry of the Confirmation Order and except as shall be cured or
          resolved by, or not exist as of, the Closing, neither the execution and the
          delivery of this Agreement, nor the consummation of the transactions
          contemplated hereby by Buyer (including the assignments and assumptions referred
          to in &sect;2 above), will (i) violate any constitution, statute, regulation,
          rule, injunction, judgment, order, decree, ruling, charge, or other restriction
          of any government, governmental agency, or court to which Buyer or Churchill is
          subject or any provision of its charter or bylaws or (ii) conflict with, result
          in a breach of, constitute a default under, result in the acceleration of,
          create in any party the right to accelerate, terminate, modify, or cancel, or
          require any notice under any agreement, contract, lease, license, instrument, or
          other arrangement to which Buyer is a party or by which it is bound or to which
          any of its assets is subject. </FONT></P>

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     <P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Buyer&#146;s Financial Standing</U>. Buyer has the financial resources necessary to
          consummate the transactions contemplated by this Agreement. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Pre-Closing Covenants</U>. The Parties agree as follows with respect to the period
          between the date hereof and the Closing. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>General</U>. Each of the Parties will use its reasonable best efforts to take all
          action and to do all things necessary in order to consummate and make effective
          the transactions contemplated by this Agreement (including satisfaction, but not
          waiver, of the closing conditions set forth in &sect;7 below). </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Notices and Consents</U>. Each of the Parties will (and Seller will cause each of
          its Subsidiaries to and Buyer will cause Churchill to) give any notices to, make
          any filings with, and use its reasonable best efforts to obtain any
          authorizations, consents, and approvals of governments and governmental agencies
          in connection with the matters referred to in &sect;3(c) and &sect;4(c) above. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Operation of Business</U>. Seller shall not (and will not cause or permit any of its
          Subsidiaries to) engage in any practice, take any action, or enter into any
          transaction outside the Ordinary Course of Business, except as may be approved
          by the Bankruptcy Court after notice and a hearing or as required to perform the
          obligations set forth in this Agreement. Seller shall (and shall cause its
          Subsidiaries to), from the date hereof through and until the Closing, use
          commercially reasonable efforts to maintain and preserve the condition, value
          and goodwill of the Business and the Acquired Assets. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Full Access</U>. Seller will (i) permit (and will cause each of its Subsidiaries to
          permit) representatives of Buyer to have full access at all reasonable times,
          and in a manner so as not to interfere with the normal business operations of
          Seller and its Subsidiaries, to the Acquired Assets and all books, records
          (including tax records), contracts, and documents of or pertaining to Seller and
          its Subsidiaries. Seller will promptly furnish Buyer with such financial and
          operating data and other information with respect to the Business and the
          Acquired Assets as Buyer may from time to time reasonably request. For purposes
          of this Agreement, Buyer will treat and hold as such any confidential
          information it receives from Seller and its Subsidiaries in the course of the
          reviews contemplated by this &sect;5(d) (except any disclosure required by law
          or order of court or other governmental agency, or the rules and regulations of </FONT></P>

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<A NAME=A027></A>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>21 </FONT></P>


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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>the Securities and Exchange  Commission or the Nasdaq Stock  Market),  will not use any of the  confidential
information except in connection with this Agreement, and, if this Agreement is terminated for any reason whatsoever, will
return to Seller and its Subsidiaries all tangible embodiments (and all copies) of the
confidential information which are in its possession. Notwithstanding anything to the
contrary contained in this Section 5(d), in no event shall Seller be required to provide
(i) materials that would result in a waiver of the attorney client privilege with respect
to the State Court Case, the State Claim, or the Annulment Action, (ii) attorney work
product, or (iii) materials that are subject to confidentiality agreements with third
parties unless Buyer first obtains the consent of such third parties to the disclosure of
said materials. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Notice of Developments</U>. Each Party will give prompt written notice to the other
          Party of any material adverse development causing a breach of any of its own
          representations and warranties. No disclosure by any Party pursuant to this
          &sect;5(e), however, shall be deemed to amend or supplement the Disclosure
          Letter or to prevent or cure any misrepresentation or breach of warranty except
          as provided in &sect;3(u). </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Matters Related to the Bankruptcy Case</U>. Seller will not assume or reject any
          executory contracts and/or unexpired leases of nonresidential real property of
          the Seller or any Seller Subsidiary without Buyer&#146;s written approval.
          Seller will not, nor will Seller permit any of its Subsidiaries to, sell,
          assign, mortgage or encumber any of the Acquired Assets, incur any indebtedness,
          or enter into executory contracts or leases of nonresidential real property or
          of personal property other than in the Ordinary Course of Business, and
          otherwise, only with the approval of the Bankruptcy Court. Seller will not
          object to, settle, dismiss, or compromise any claim related to the Acquired
          Assets, the Assumed Contracts, or the Assumed Liabilities without Buyer&#146;s
          written consent and if Buyer directs Seller to file an objection to any such
          claim or to dispute the amount of any such claim, Seller will be obligated to do
          so and will file such objection in Seller&#146;s name. </FONT></P>

<P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U> Additional Covenants.</U></FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Submission for Court Approval</U>. As promptly as practicable after the date hereof,
          Seller and Buyer shall jointly prepare and Seller shall submit (i) this
          Agreement and (ii) the Plan of Reorganization (which will provide, among other
          things, for the purchase of the Acquired Assets and the assumption of the
          Assumed Liabilities) and shall request entry of the Confirmation Order. Buyer
          shall cooperate with Seller in obtaining entry of the Confirmation Order, and
          Seller shall use its reasonable best efforts to obtain entry of the Confirmation
          Order and shall deliver to Buyer copies of pleadings, motions, notices,
          statements, schedules, applications, reports and other papers to be filed with
          the Bankruptcy Court relating to the process of the confirmation of the Plan of
          Reorganization. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Adequate Assurances</U>. Buyer covenants and agrees to cooperate with Seller in
          connection with the furnishing of information pertaining to the satisfaction of
          the requirement of adequate assurances of future performances as required under
          &sect;365(f)(2)(B) of the Bankruptcy Code. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Employees</U>. Buyer agrees that prior to the Closing it shall offer jobs to a
          sufficient number of current full-time employees of Seller so as not to trigger
          any </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Minor Center" FSL="Default" -->
<A NAME=A028></A>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>22 </FONT></P>


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 <P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>WARN Act  liabilities  in respect of Seller.  Nothing  herein shall  obligate Buyer to employ any of
Seller&#146;s employees for any
particular length of time following the Closing. Seller shall, effective as of the
Closing, terminate all of its employees. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Further Assurances</U>. Subject to the terms and conditions of this Agreement, each
          of the parties hereto shall (and Buyer shall cause Churchill to and Seller shall
          cause its Subsidiaries to) use commercially reasonable efforts to take, or cause
          to be taken, all action, and to do, or cause to be done, all things reasonably
          necessary, proper or advisable under applicable laws and regulations to
          consummate and make effective the sale of the Acquired Assets in accordance with
          this Agreement, including using commercially reasonable efforts to ensure timely
          satisfaction of the conditions precedent to each party&#146;s obligations
          hereunder. Neither Seller, on the one hand, nor Buyer, on the other hand, shall,
          without the prior written consent of the other party, take any action which
          would reasonably be expected to prevent or materially impede, interfere with or
          delay the transactions contemplated by this Agreement. From time to time on or
          after the Closing Date, Seller shall, at its own expense, execute and deliver
          such documents to Buyer as Buyer may reasonably request in order to more
          effectively vest in Buyer Seller&#146;s title to the Acquired Assets. From time
          to time after the date hereof, Buyer shall, at its own expense, execute and
          deliver such documents to Seller as Seller may reasonably request in order to
          more effectively consummate the sale of the Acquired Assets and the assumption
          and assignment of the Assumed Liabilities and the Assumed Contracts in
          accordance with this Agreement. Neither the foregoing nor any other provision of
          this Agreement shall in any way impact or alter, or impose any standard of
          review upon, or be deemed to do any of the same, with respect to any
          determination or decision to be made by Buyer in its sole discretion with
          respect to the conditions set forth in Section 7(a) hereof as expressly set
          forth therein. Seller owns the net receivables related to simulcasting up to the
          date of Closing and is responsible for the net payables with respect thereto
          which exist the day before Closing, and Seller and Buyer shall cooperate with
          any settlements related thereto. Notwithstanding any other provision contained
          in this Agreement, the Seller shall retain the net video poker revenue for
          September, 2004 (even if it is paid after October 15, 2004) and it will pay the
          taxes and purse amounts associated therewith, and Buyer shall retain the net
          video poker revenue for the entire month of October, 2004 and will pay the taxes
          and purse amounts associated therewith. Buyer and Seller shall exchange mutual
          releases as contemplated in the global term sheet executed by Buyer on or about
          August 29, 2004. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Transfer Taxes</U>. All excise, sales, use, transfer, value added, registration,
          stamp, recording, documentary, conveyance, franchise, transfer, gains and
          similar taxes, levies, charges and recording, filing and other fees
          (collectively, &#147;Transfer Taxes&#148;) incurred in connection with the
          transactions contemplated by this Agreement, if any, shall be paid by Seller.
          Seller shall, at its own expense, timely pay and file all necessary tax returns
          and other documentation with respect to all such Transfer Taxes and, if required
          by applicable law, Buyer shall join in the execution of any tax returns and
          other documentation at Seller&#146;s request. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Name Change</U>. Seller agrees that at the Closing, or as soon as practicable
          thereafter (but in no event later than one (1) Business Day after the Closing
          Date), Seller will change its name and will not use the corporate names
          &#147;Fair Grounds&#148; or &#147;Fair Grounds Corporation&#148; or any name
          similar thereto in any business activity except as necessary for the
          administration of the Bankruptcy Case. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Minor Center" FSL="Default" -->
<A NAME=A029></A>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>23 </FONT></P>


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<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Due Diligence Responses</U>. Seller shall promptly respond in writing to the due
          diligence requests or inquiries made in writing by Buyer or its representatives. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Business Monitoring</U>. On and after the date hereof until the Closing, Seller
          shall permit Buyer to have not more than four (4) executive personnel on site at
          the Owned Real Property in suitable office space. Such executive personnel shall
          be permitted to inspect the premises and monitor its operations and the
          operations of the Business to assure that the Business is being operated in the
          Ordinary Course of Business. Seller shall cooperate in good faith with Buyer and
          use its best efforts to prevent the occurrence of any acts outside the Ordinary
          Course of Business which could be adverse to Buyer&#146;s operation of the
          Business after the Closing. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Notice of Closing</U>. If Buyer believes that the Closing will occur prior to the
          end of Seller&#146;s 2004-2005 race meet, Buyer will use its best efforts to
          notify Seller thereof at least sixty (60) days before the expected Closing Date. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Conditions to Obligation to Close</U>. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Conditions to Obligation of Buyer</U>. The obligation of Buyer to consummate the
          transactions to be performed by it in connection with the Closing is subject to
          satisfaction of the following conditions: </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          the Bankruptcy Court shall have approved the Plan of Reorganization attached
          hereto as <U>Exhibit B</U> (together with any modifications
or amendments thereto approved by Buyer) and the transactions contemplated thereby (which
shall be the transaction contemplated by this Agreement) and entered the Confirmation
Order (and such Order shall be final and nonappealable) in form and substance satisfactory
to Buyer and no party shall have filed a Notice of Appeal and obtained an Order staying
the effect of the Confirmation pending appeal which stay has not been lifted or otherwise
terminated; the Confirmation Order and all Orders related thereto shall have been entered
in accordance with all applicable provisions of the Bankruptcy Code, Bankruptcy Rules, and
Local Rules of the Bankruptcy Court (the &#147;Local Rules&#148;) after proper, timely,
and adequate notice to all parties entitled to notice pursuant to all applicable
provisions of the Bankruptcy Code, Bankruptcy Rules, and Local Rules unless otherwise
directed by Order of the Bankruptcy Court; notwithstanding that the sale contemplated
herein shall be approved and authorized by the Confirmation Order, the sale shall be as
under 11 U.S.C. &sect;363 and the Buyer shall be afforded all protections provided therein
including but not limited to 11 U.S.C. &sect;&sect;363(f) and (m); the Confirmation Order
shall include a finding that the Buyer is a good faith purchaser for purposes of the
provisions of 11 U.S.C. &sect; 363(m); </FONT></P>

<BR>

<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
 there shall not be any injunction, judgment, order, decree or ruling in effect preventing consummation of any of the transactions contemplated by this Agreement;</font></P>

<BR>

<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
on or before the Closing Date, there shall not have occurred any material
               destruction or significant change to the Acquired Assets of Seller</FONT></P>

<BR>

<!-- MARKER FORMAT-SHEET="Head Minor Center" FSL="Default" -->
<A NAME=A030></A>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>24 </FONT></P>


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<HR SIZE=5 COLOR=GRAY NOSHADE>


<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>

taken as a whole, whether or not insured (Seller shall be obligated to give Buyer notice of any
of the same as soon as possible after the occurrence thereof); </FONT></P>

<BR>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
each of the Assumed Contracts shall have been assigned by Seller and assumed by Buyer pursuant to 11 U.S.C. &sect;365; </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" FSL="Default" -->
<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Buyer may waive any condition
specified in this &sect;7(a) if it executes a writing so stating at or prior to the
Closing. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Conditions to Obligation of Seller</U>. The obligation of Seller to consummate the
          transactions to be performed by it in connection with the Closing is subject to
          satisfaction of the following conditions: </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          the Bankruptcy Court shall have approved the Plan of Reorganization attached
          hereto as <U>Exhibit B</U> (together with any modifications
or amendments thereto approved by Seller) and the transactions contemplated thereby and
entered the Confirmation Order and no party has filed a Notice of Appeal and obtained an
Order staying the effect of the Confirmation pending appeal which stay has not been lifted
or otherwise terminated; </FONT></P>

<BR>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          there shall not be any injunction, judgment, order, decree or ruling in effect
          preventing consummation of any of the transactions contemplated by this Agreement; </FONT></P>

<BR>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          Buyer shall have performed and complied with all of its covenants hereunder in
          all material respects through the Closing; </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          Buyer shall have delivered to Seller a certificate to the effect that each of
          the conditions specified above in &sect;7(b)(ii) and (iii) is satisfied in all respects;</FONT></P>


<!-- MARKER FORMAT-SHEET="Para Flush" FSL="Default" -->
<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Seller may waive any condition
specified in this &sect;7(b) if Seller executes a writing so stating at or prior to the
Closing. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent"  -->
     <P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Termination</U>. </FONT></P>

     <P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Permitted Termination</U>.</FONT></p>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          This Agreement may, prior to or at the Closing, be terminated by written consent
          of Seller and Buyer. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          If any of the conditions set forth in &sect;7(a)(i) or &sect;7(b)(i) have not
          been met on or before October 1, 2004, this Agreement will
automatically terminate without further action by either Buyer or Seller unless otherwise
agreed by Buyer and Seller. </FONT></P>

<BR>

<!-- MARKER FORMAT-SHEET="Head Minor Center" FSL="Default" -->
<A NAME=A033></A>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>25 </FONT></P>


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<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          If the conditions set forth in &sect;7(a)(ii), (iii) or (iv) have not been met
          on or prior to October 15, 2004, Buyer may terminate
this Agreement by written notice to Seller. </FONT></P>

<BR>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          If the condition set forth in &sect;7(b)(ii) has not been met on or prior to
          October 15, 2004, Seller may terminate this Agreement
by written notice to Buyer. </FONT></P>

<BR>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          If the Closing has not occurred on or before October 15, 2004, unless extended
          by agreement of the parties, this Agreement shall
terminate, but subject to and without affecting in any way any rights or claims any party
to this Agreement may have against any other party to this Agreement for breach of this
Agreement, including any claim for the remedy of specific performance and injunction for
breach of this Agreement. </FONT></P>

<BR>


<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>If
this Agreement is terminated pursuant to the provisions of this &sect;8(a), then the
Deposit, with any interest thereon, will be returned to Buyer and neither Buyer nor Seller
shall have any further obligations or liabilities whatsoever to the other. </FONT></p>
<BR>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Termination Upon Default</U>. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          If Seller shall have made any intentionally and materially incorrect or
          intentionally and materially inaccurate statement in any
of the representations and warranties of Seller set forth in &sect;3(a), &sect;3(b),
&sect;3(d)(i), &sect;3(d)(ii), &sect;3(d)(iii), &sect;3(g), &sect;3(h), &sect;3(i) and
&sect;3(q), or Seller shall have failed to perform and comply with all of its covenants
hereunder in any material respects, on, before, or through the Closing, Buyer may
terminate this Agreement by written notice to Seller and Seller shall pay to Buyer as
allowed administrative expense claims pursuant to &sect;503 of the Bankruptcy Code
Buyer&#146;s actual out-of-pocket expenses (including without limitation, reasonable
attorneys&#146; fees and expenses) incurred in connection with this Agreement from and
after the date that the bidding procedures set forth in the Plan of Reorganization are
sent to prospective bidders up to $500,000 , and the Deposit plus any accrued interest
thereon will be returned to Buyer. It is agreed that Buyer has no adequate remedy at law
for breach of this Agreement by Seller, and Buyer may pursue any and all remedies, at law
or in equity, for such breach, including specific performance and injunction. </FONT></P>

<BR>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          If either (x) the conditions set forth in &sect;7(b)(iii) or (iv) are not met on
          or before the Closing Date and Seller has not waived
such breach, or (y) all conditions set forth in &sect;7(a) have been met and the Closing
Date fails to occur due to Buyer&#146;s failure to close, then Seller may terminate this
Agreement by notice to Buyer and the Deposit shall be paid to Seller as liquidated damages
and settlement in full of any claims Seller may have against Buyer hereunder. Both parties
agree that the damages that would be caused to Seller upon such a breach by a Buyer would
be uncertain and very difficult to ascertain. Buyer and Seller have therefore negotiated
and agreed that the Deposit shall serve as an amount of liquidated damages, and they agree
that the amount of the Deposit is reasonable and not greatly disproportionate to the loss
that might be caused by such a </FONT></P>

<BR>

<!-- MARKER FORMAT-SHEET="Head Minor Center" FSL="Default" -->
<A NAME=A034></A>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>26 </FONT></P>


<!-- MARKER PAGE="sheet: 26; page: 26" -->
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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>

<!-- MARKER FORMAT-SHEET="Para (List) Flush Level 3" FSL="Default" -->
           situation Buyer and Seller agree, each with the advice of counsel, that the amount of the
          Deposit is enforceable liquidated damages and not an unenforceable penalty. </FONT></P>

          <BR>

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     <P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Survival of Representations and Warranties</U>. Except for those representations and
          warranties with respect to which written notice of a breach has been given prior
          to expiration (and as to which Buyer had no knowledge that such representation
          and warranty was false in any material respect when made by Seller), none of the
          representations and warranties of the Parties contained in this Agreement shall
          survive the Closing. </FONT></P>

<P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Miscellaneous</U></FONT></p>.

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Press Releases and Public Announcements</U>. No Party shall issue any press release
          or make any public announcement relating to the subject matter of this Agreement
          prior to the Closing without the prior written approval of the other Party;
          provided, however, that any Party may make any public disclosure it believes in
          good faith is required by applicable law or any listing or trading agreement
          concerning its publicly-traded securities (in which case the disclosing Party
          will use its reasonable best efforts to advise the other Party prior to making
          the disclosure) or file any pleadings or make any statements in the Bankruptcy
          Case related to the enforcement of this Agreement. </FONT></P>

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     <P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>No Third-Party Beneficiaries</U>. This Agreement shall not confer any rights or
          remedies upon any person other than the Parties and their respective successors
          and permitted assigns. </FONT></P>

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     <P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Entire Agreement</U>. This Agreement (including the exhibits, schedules and
          Disclosure Letter referred to herein) constitutes the entire agreement between
          the Parties and supersedes any prior understandings, agreements, or
          representations by or between the Parties, written or oral, to the extent they
          related in any way to the subject matter hereof. </FONT></P>

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     <P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Successions and Assignment</U>. This Agreement shall be binding upon and inure to
          the benefit of the Parties named herein and their respective successors and
          permitted assigns. No Party may assign either this Agreement or any of its
          rights, interests, or obligations hereunder without the prior written approval
          of the other Party; provided that the Buyer may assign all or part of its rights
          and obligations with respect to the Acquired Assets and the Assumed Liabilities
          to one or more of its affiliates (&#147;affiliate&#148; being any entity in
          which Buyer or Churchill owns a majority of the equity interests and/or over
          which either has decisional control). </FONT></P>

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     <P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Risk of Loss</U>. Seller shall bear all risk of loss with respect to the Acquired
          Assets prior to the Closing Date. Seller agrees to continue to carry or cause to
          be carried to the Closing Date the insurance coverage which is presently carried
          relating to the Acquired Assets as set forth on Section (m) of the Disclosure
          Letter. </FONT></P>

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     <P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Counterparts</U>. This Agreement may be executed in one or more counterparts, each
          of which shall be deemed an original but all of which together will constitute
          one and the same instrument. </FONT></P>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>27 </FONT></P>


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     <P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Headings</U>. The section headings contained in this Agreement are inserted for
          convenience only and shall not affect in any way the meaning or interpretation
          of this Agreement. </FONT></P>

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     <P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Notices</U>. All notices, requests, demands, claims, and other communications
          hereunder will be in writing. Any notice, request, demand, claim, or other
          communication hereunder shall be deemed duly given if (and then two Business
          Days after) it is sent by registered or certified mail, return receipt
          requested, postage prepaid, and addressed to the intended recipient as set forth
          below: </FONT></P>


<TABLE BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH=100%>
<TR VALIGN="BOTTOM">
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="TOP">
     <TD WIDTH=20%><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH=20%><FONT FACE="Times New Roman, Times, Serif" SIZE="2">If to Seller:</FONT></TD>
     <TD WIDTH=60%><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Fair Grounds Corporation<BR>1751 Gentilly Blvd.
<br>New Orleans, Louisiana 70119<br>Attn:  Bryan G. Krantz, President<br>Facsimile:  (504) 844-2511</FONT></TD></TR>
<tr valign="top">
        <td>&nbsp;</td>
        </tr>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Copy to:</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">David Sherman<br>Chehardy, Sherman, Ellis, Breslin, Murray, Recile
<br>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&amp;Griffith, LLP<br>P.O. Box 931<br>Metaire, Louisiana 70004-0931<br>
Facsimile:  (504)833-8080</FONT></TD></tr>
<tr valign="top">
        <td>&nbsp;</td>
        </tr>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">And to:</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Jan M. Hayden<br>Heller, Draper, Hayden, Patrick &amp;Horn, L.L.C.
<br>650 Poydras St., Suite 2500<br>New Orleans, Louisiana 70130<br>Facsimile: (504) 522-0949</FONT></TD></tr>
<tr valign="top">
     <th></th>
     <td>&nbsp;</td>
     </tr>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">If to Buyer:</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Churchill Downs Incorporated<br>700 Central Avenue<br>
Louisville, Kentucky 40208<br>Attn: Rebecca C. Reed<br>Facsimile: (502) 636-4439</FONT></TD></tr>
<tr valign="top">
    <th></th>
    <td>&nbsp;</td>
    </tr>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Copy to:</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Wyatt, Tarrant &amp;Combs, LLP<br>
500 West Jefferson Street, Suite 2800<br>Louisville, Kentucky 40202<br>Attn:&nbsp;Robert A. Heath<br>
Facsimile:  (502) 589-0309</FONT></TD></TR>
</TABLE>

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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Any Party may send any notice,
request, demand, claim, or other communication hereunder to the intended recipient at the
address set forth above, using any other means (including personal delivery, expedited
courier, messenger service, telecopy, ordinary mail, or electronic mail), but </FONT></P>

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<A NAME=A036></A>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>28 </FONT></P>


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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>no such notice, request, demand,
claim, or other communication shall be deemed to have been duly given unless and until it
actually is received by the intended recipient. Any Party may change the address to which
notices, requests, demands, claims, and other communications hereunder are to be delivered
by giving the other Party notice in the manner herein set forth. </FONT></P>

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     <P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Governing Law</U>. This Agreement shall be governed by and construed in accordance
          with the domestic laws of the State of Louisiana without giving effect (to the
          extent permitted by law) to any choice or conflict of law provision or rule
          (whether of the State of Louisiana or any other jurisdiction) that would cause
          the application of the laws of any jurisdiction other than the State of
          Louisiana. </FONT></P>

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     <P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Amendments and Waiver</U>. No amendment of any provision of this Agreement shall be
          valid unless the same shall be in writing and signed by Buyer and Seller. No
          waiver by any Party of any default, misrepresentation, or breach of warranty or
          covenant hereunder, whether intentional or not, shall be deemed to extend to any
          prior or subsequent default, misrepresentation, or breach of warranty or
          covenant hereunder or affect in any way any rights arising by virtue of any
          prior or subsequent such occurrence. </FONT></P>

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     <P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Expenses</U>. Except as contemplated by Section 8, each of Buyer and Seller, will
          bear its own costs and expenses (including fees and expenses of attorneys,
          accountants, finders, financial advisors and other professionals) incurred in
          connection with this Agreement and the transactions contemplated hereby. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Construction</U>. The Parties have participated jointly in the negotiation and
          drafting of this Agreement. In the event an ambiguity or question of intent or
          interpretation arises, this Agreement shall be construed as if drafted jointly
          by the Parties and no presumption or burden of proof shall arise favoring or
          disfavoring any Party by virtue of the authorship of any of the provisions of
          this Agreement. Any reference to any federal, state, local, or foreign statute
          or law shall be deemed also to refer to all rules and regulations promulgated
          thereunder, unless the context requires otherwise. The word
          &#147;including&#148; shall mean including without limitation. </FONT></P>

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     <P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Incorporation of Exhibits and Schedules</U>. The Exhibits and Schedules identified
          in this Agreement are incorporated herein by reference and made a part hereof. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->
     <P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Churchill Covenant</U>. Churchill intervenes into this Agreement, and does hereby
          jointly, severally and solidarily irrevocably obligate itself unconditionally
          with Buyer to the performance of all of the obligations of Buyer under this
          Agreement. Churchill&#146;s obligations under this Agreement shall terminate to
          the extent that Buyer&#146;s obligations under this Agreement terminate. </FONT></P>

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     <P ALIGN=CENTER>&curren;&nbsp;&curren;&nbsp;&curren;&nbsp;&curren;</P>

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<A NAME=A037></A>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>29 </FONT></P>
&curren;

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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>IN
WITNESS WHEREOF</B>, the Parties hereto have executed this Agreement as of the date first
above written. </FONT></P>


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<TR VALIGN="BOTTOM">
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="TOP">
     <TD WIDTH=40%><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH=60%><FONT FACE="Times New Roman, Times, Serif" SIZE="2">"BUYER"<BR><BR>
CHURCHILL DOWNS INCORPORATED, on<BR>behalf of a wholly owned subsidiary to be formed<BR><br>
By:<U>&nbsp;&nbsp;/s/ Michael E. Miller&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u><br><br>Name:<u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Michael E. Miller&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u>
<br><br>Title:  Executive Vice President &amp;Chief Financial<br>Officer</FONT></TD></TR>
<TR VALIGN="TOP">
        <TD>&nbsp;</TD>
        </TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">"SELLER"<BR><BR>FAIR GROUNDS CORPORATION<BR>
<BR><BR>
By:<u>&nbsp;&nbsp;/s/ Bryan G. Krantz&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u><br>
Name:&nbsp;&nbsp;<u>&nbsp;&nbsp;Bryan G. Krantz&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U><br>Title:<u>&nbsp;&nbsp;&nbsp;President&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u></font></TD></TR>
<tr valign="top">
        <td>&nbsp;</td>
 </tr>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">"CHURCHILL"<BR><BR>
CHURCHILL DOWNS INCORPORATED<BR><BR>By:<u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Michael E. Miller&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u>
<br><br>Name:<u>&nbsp;&nbsp;Michael E. Miller&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u>
<br><br>Title:&nbsp;&nbsp;&nbsp;Executive Vice President &amp;Chief<br>Financial Officer&nbsp;&nbsp;</FONT></TD></TR>
</TABLE>


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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>30 </FONT></P>


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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Exhibits and schedules to the Asset
Purchase Agreement have been intentionally omitted because they are not material. The
registrant agrees to furnish such omitted exhibits and schedules supplementally to the
Commission upon request. </FONT></P>


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</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-2.2
<SEQUENCE>3
<FILENAME>cd8k90104ex22.htm
<DESCRIPTION>LETTER AGREEMENT
<TEXT>
<HTML>
<HEAD>
<TITLE></TITLE>
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<P ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>EXHIBIT 2.2</FONT></p>
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<A NAME=A001></A>
<p ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=4><B>CHURCHILL DOWNS
INCORPORATED</B> <BR>700 Central Avenue<BR>Louisville, Kentucky 40208 </FONT></P>

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<A NAME=A003></A>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>August 31, 2004 </FONT></P>

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<A NAME=A004></A>
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Louisiana
Horsemen&#146;s Benevolent<BR>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;and Protective Association 1993, Inc.<bR>
1535 Gentilly Boulevard<br>New Orleans, LA 70119<br>Attention: Mr. Oran
Trahan, President </FONT></P>

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<A NAME=A007></A>
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Dear Mr. Trahan: </FONT></P>

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<P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This
will advise you of the desire of Churchill Downs Incorporated and its designee
(&#147;Churchill&#148;) to serve as the Enabling Transaction Partner (&#147;ETP&#148;)
under the &#147;SETTLEMENT AGREEMENT BETWEEN FAIR GROUNDS CORPORATION AND LOUISIANA
HORSEMEN&#146;S BENEVOLENT AND PROTECTIVE ASSOCIATION 1993, INC.&#148; dated August 6,
2004 (the &#147;Settlement Agreement&#148;) subject to the terms set forth herein. </FONT></P>

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<P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
attach for your reference a Global Term Sheet that outlines the terms of the agreement by
and among Fair Grounds Corporation, Ben S. Gravolet (&#147;Gravolet&#148;), Churchill,
Finish Line Management Corp. (&#147;Finish Line&#148;), and Bryan G. Krantz
(&#147;Krantz&#148;) to pursue a consensual amended plan of reorganization (&#147;Amended
Plan&#148;) in form acceptable to all of the parties in the bankruptcy case styled In re:
Fair Grounds Corporation, United States Bankruptcy Court, Case no. 03-16222, Section A and
to the Louisiana Horsemen&#146;s Benevolent And Protective Association 1993, Inc.
(&#147;HBPA&#148;). </FONT></P>

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<P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Churchill
agrees that the Amended Plan contemplated by this letter will have a closing date to occur
on or before October 15, 2004. This letter sets forth the terms and conditions that shall
be incorporated into the Amended Plan and under which Churchill binds itself with the
HBPA. As used herein and unless otherwise defined herein, capitalized terms have the same
meaning set forth in the Settlement Agreement when defined in the Settlement Agreement. </FONT></P>

<P align=right><FONT FACE="Times New Roman, Times, Serif" SIZE=2>1</font></p>
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<P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
light of the foregoing, and with specific reference to paragraph 4.5.2 of the Settlement
Agreement and notwithstanding anything in the Global Term Sheet, the Asset Purchase
Agreement attached thereto (&#147;APA&#148;), or any definitive agreements that may
hereafter be entered into in furtherance thereof, this is to advise the HBPA by this
letter agreement that Churchill has a contract (&#147;Global Term Sheet&#148;) with the
Debtor and other parties (a copy of which is attached hereto for reference); has the
financial ability to close the Enabling Transaction in the manner and to the extent
described in the Global Term Sheet and herein, and proposes to sponsor the Amended Plan
which includes the terms and conditions of the Global Term Sheet and those set forth in
this letter. The obligations of Churchill under the terms of the Amended Plan with respect
to HBPA will vary from the obligations that were to be undertaken by the Enabling
Transaction Partner under the Settlement Agreement. This letter sets forth the differences
between the obligations of the Enabling Transaction Partner and Enabling Transaction
Acquirer under the Settlement Agreement and the terms that Churchill proposes to be
included in the Amended Plan for the benefit of the HBPA. Under the Amended Plan,
Churchill will obligate itself for the performance of the obligations set forth in this
letter agreement and under the Settlement Agreement as set forth below. Churchill will not
be obligated for the performance of any obligations under the Settlement Agreement except
as set forth specifically herein, in the Global Term Sheet and in the Amended Plan. This
letter or the HBPA&#146;s agreement thereto does not in any way change the Settlement
Agreement between Fair Grounds Corporation and the HBPA. The form and substance of the
Amended Plan and the Order confirming the Amended Plan will be subject to the approval of
the HBPA and Churchill. For purposes of reference, paragraph numbers and capitalized terms
referenced below refer to those in the Settlement Agreement. </FONT></P>

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<P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Churchill
agrees to incorporate the reservation of the HBPA&#146;s rights against the State of
Louisiana and any other parties to the Litigation in any release by HBPA that affects the
HBPA&#146;s future rights in the Litigation to the extent such release is included in any
Amended Plan. </FONT></P>

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<P align=Justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Churchill
agrees that to the extent the actions contemplated in Sections &#147;2&#148; (including
2.1, 2.2, and 2.3) and section &#147;3&#148; (including 3.1 and 3.1.1) have not been
completed prior to the closing on or before October 15, 2004 as defined in the APA
(&#147;Closing&#148;), that they will become a condition of Closing, except for the
recordation of the Judgment which will not be a condition of Closing (because the Initial
Settlement Amount and Supplemental Settlement Amount will be fully paid in cash in the
amount of $25 million dollars as a condition of Closing to the HBPA and the Amended Plan
will not allow the recordation of the Judgment if the Closing and payments to the HBPA
occur). </FONT></P>

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<P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Paragraph
4.3 of the Settlement Agreement provides in pertinent part as follows: </FONT></P>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;In
the Motion to Dismiss the Bankruptcy Case and pursuant to this Agreement, the Fair Grounds
Corporation/Debtor shall assume and be fully responsible for the payment or satisfaction
of any valid outstanding </FONT>
</TD>
</TR>
</TABLE>
<BR>
<P align=right><FONT FACE="Times New Roman, Times, Serif" SIZE=2>2</font></p>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
administrative,
priority, secured and Unsecured Claims against the Estate in the Bankruptcy Case<U>. The
Fair Grounds, Affiliates and Enabling Transaction Acquirer shall and </U> <U>do hereby
agree to indemnify, defend and hold the HBPA harmless from and against the Claims of </U>
<U>any such claimants and any Claims of Video Services, Inc., Fair Grounds, Affiliates,
and/or </U> <U>Finish Line Management Corp. against the HBPA.</U> </FONT></TD>
</TR>
</TABLE>
<BR>

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<P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Churchill will not agree to be bound
by the underlined terms if it becomes the Enabling Transaction Acquirer or the Enabling
Transaction Partner and will not guarantee payment of claims. However, Churchill will
agree to fund the Amended Plan as set forth in the Global Term Sheet and APA in the amount
of $47 million dollars, as adjusted in the APA. Churchill also agrees that the Amended
Plan and the Confirmation Order will provide as a condition of Closing a cash payment to
the HBPA on proof of claim #77 in the amount of $25 million, to be paid in the manner and
method of payment required by the Settlement Agreement with such payment to occur on or
before October 15, 2004. Further, the Amended Plan will provide for payment of HBPA proof
of claim #105 in like manner to all other undisputed unsecured creditors. </FONT></P>

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<P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As
an alternative to furnishing the indemnities and hold harmless agreements in Section 4.3,
Churchill shall, as a condition to Closing, provide to the HBPA on or before October 1,
2004 (to be held in escrow until Closing if necessary) general releases of all Claims that
Fair Grounds Corporation, Mr. and Mrs. Bryan Krantz, Family Racing Venture, L.L.C.,
Gentilly Gaming, L.L.C., and Finish Line Management Corp. have or may have against the
HBPA or its representatives, attorneys, insurers, board members, employees or related
entities, in form and substance acceptable to the HBPA, which releases and a release by
Video Services, Inc. of such parties must be delivered to HBPA as a condition to the
Closing under the APA on or before October 15, 2004. </FONT></P>

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<P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section
5.1 of the Settlement Agreement provides that on or before October 15, 2004, the
Debtor/Fair Grounds Corporation will pay the HBPA and its attorneys the Initial Settlement
Amount of $23,000,000.00 in immediately available funds. The Amended Plan shall provide
for the payment to the HBPA of twenty-five million ($25,000,000) dollars from the Purchase
Price on or before October 15, 2004 (as contemplated by Section 5.4 of the Settlement
Agreement) and the Debtor shall pay the HBPA all other consideration required to be paid
by the Debtor in the Settlement Agreement. Under the Amended Plan, the HBPA will not
receive a Promissory Note representing the Supplemental Settlement Amount as that amount
will be paid in cash on or before October 15, 2004. Churchill will not guarantee the $25
million payment to the HBPA, but will agree that the Amended Plan and the Confirmation
Order will provide for the $25 million payment to the HBPA on or before October 15, 2004. </FONT></P>

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<P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;With
respect to Paragraph 5.1.6 of the Settlement Agreement, Churchill will not agree, as the
Enabling Transaction Acquirer or Enabling Transaction Partner, to join in </FONT></P>

<p align=right><FONT FACE="Times New Roman, Times, Serif" SIZE=2>3</font></p>
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<P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>the indemnity and defense obligations
provided therein. Under the Amended Plan, however, Churchill shall, as a condition to
Closing, provide to the HBPA (on or before October 1, 2004 and to be held in escrow if
necessary) general releases for the HBPA and its representatives, attorneys, insurers,
board members, employees or related entities of any Claims that Vicki Krantz, Bryan
Krantz, Fair Grounds Corporation, and Finish Line have or may have relating to the
Litigation, settlement thereof, or contesting the manner, method, division, distribution,
or the amount of payment received by them or any horseman derived from the Settlement
Agreement (after making all deductions for expenses of the Litigation, including attorney
fees), all in form and substance acceptable to the HBPA, which releases and releases by
Firal Ryder and James Alexander must be delivered to HBPA as a condition to the Closing
under the APA on or before October 15, 2004. </FONT></P>

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<P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Moreover,
if as a result of the Enabling Transaction or the Amended Plan or any transaction incident
thereto, Churchill acquires any rights or causes of action from the Debtor, VSI or its
shareholders, Finish Line, or from any other person, party or entity that includes a right
or cause of action or Claim by such party against the HBPA and its officers, directors,
managers, employees, members, shareholders, attorneys, agents and representatives,
Churchill will release any such right or cause of action or Claim in favor of HBPA and its
officers, directors, managers, employees, members, shareholders, attorneys, agents and
representatives which release shall be delivered to the HBPA as a condition to the Closing
under the APA on or before October 15, 2004. Such release shall be in form and substance
acceptable to the HBPA. </FONT></P>

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<P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Churchill
will abide by Section 5.1.7 of the Settlement Agreement, which obligation will survive the
Closing. </FONT></P>

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<P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Paragraph
5.2 of the Settlement Agreement provides in pertinent part that if the Fair
Grounds/Enabling Transaction Acquirer receives any Net Recovery from the State Claim, said
Net Recovery shall be shared with the HBPA in the manner set forth in the Settlement
Agreement. Under the Global Term Sheet and pursuant to the Amended Plan, the State Claim
will remain with the Debtor, and accordingly, Churchill will not have an economic interest
or any other interest in that Claim and will have no obligation under paragraph 5.2 of the
Settlement Agreement. As a part of the Amended Plan, however, the Debtor will be required
to share any Net Recovery of the State Claim with the HBPA in the manner set forth in the
Settlement Agreement and to grant a security interest in the State Claim in favor of the
HBPA to secure its obligation to do so. The obligation of the Debtor will survive the
Closing. </FONT></P>

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<P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Paragraph
5.3.1 of the Settlement Agreement provides in pertinent part for the HBPA to receive a
Flip Payment in the event of a Transfer as more fully described therein. Under the Amended
Plan, Churchill shall make the Flip Payment described in </FONT></P>


<p align=right><FONT FACE="Times New Roman, Times, Serif" SIZE=2>4</font></p>

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<P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>paragraph  5.3.1 of the  Settlement  Agreement  if a Transfer by Churchill  occurs
within five (5) years from the date
of the Closing. For purposes of the foregoing provision, a Transfer shall not include a
situation where Churchill Downs Incorporated, as part of a stock sale, asset purchase or
some other business transaction sells control of Churchill Downs Incorporated, except to
the extent the stock or assets of what is currently known as the Fair Grounds Corporation
are spun off or separately sold or transferred in the overall transaction. The Flip
provision shall be binding on the successor of Churchill Downs Incorporated in the event
of the sale of control of Churchill Downs Incorporated. This obligation will survive the
Closing. </FONT></P>

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<P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Paragraph
6.1 of the Settlement Agreement provides for the Enabling Transaction Partner to spend not
less than $750,000.00 in capital improvements to the back stretch of the Racetrack over
the next two years following the Effective Date of the agreement. In lieu of that
agreement, and as a part of the Amended Plan, Churchill agrees to spend not less than $4
million dollars in capital improvements to the back stretch of the Racetrack over the next
two years following the Closing. The capital improvements in 2005 will not be less than $2
million dollars. To implement these expenditures, Churchill will form a Capital
Improvement Committee within one month from the date of Closing which committee shall be
composed of three members selected by the management of Churchill and two members selected
by the HBPA. The purpose of the Committee shall be to identify, prioritize and approve
capital improvements to the backside of the Fair Grounds Racetrack and to be a mechanism
to foster full discussion concerning the ongoing management of the racing program and
backside activities of the Fair Grounds Racetrack. This obligation will survive the
Closing. </FONT></P>

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<P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under
Paragraph 6.2 of the Settlement Agreement, Fair Grounds Corporation/Enabling Transaction
Acquirer covenant to conduct live thoroughbred racing at the Racetrack for a period of not
less than ten (10) years following the Effective Date. In lieu of that agreement, and as a
part of the Amended Plan, Churchill will agree to conduct live thoroughbred racing at the
Racetrack for a period of not less than five (5) years following the Closing. This
obligation will survive the Closing. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent" FSL="Default" -->
<P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
lieu of the Enabling Transaction Acquirer&#146;s obligations under 6.3 of the Settlement
Agreement, and as a part of the Amended Plan, Churchill agrees that for a period of three
(3) years following the Closing, Churchill will not request, sponsor, support or otherwise
seek any legislation, regulatory approval or actions or amendment of the Control Law, the
[Slot Law] or any other law, the effect of which would reduce, diminish or eliminate the
portion of Net Device Revenue or [Slot Revenue] payable to the HBPA or any of its members.
This provision shall not be construed as prohibiting Churchill from opposing any
legislation, regulatory approval or actions or amendment of the Control Law, the [Slot
Law] or any other law, the effect of which would reduce, diminish or eliminate the portion
of Net Device Revenue or [Slot Revenue] payable to </FONT></P>

<p align=right><FONT FACE="Times New Roman, Times, Serif" SIZE=2>5</FONT></P>
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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Churchill or seeking to Change any
such legislation, regulatory approval or actions if it is passed. This obligation will
survive the Closing. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent" FSL="Default" -->
<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Paragraph
7.2 of the Settlement Agreement provides as follows: </FONT></P>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If
the Fair Grounds Corporation/Enabling Transaction Acquirer fails to pay any of the
payments required by this Agreement on or before the applicable due dates, it is expressly
agreed that the HBPA will not release the Fair Grounds Corporation/Enabling Transaction
Acquirer from its obligations under the Litigation or the Judgment, and Fair Grounds
Corporation/Enabling Transaction Acquirer agrees and acknowledges that it will be liable
to the HBPA for the full amount of the unpaid Judgment, notwithstanding anything in this
Agreement to the contrary, and Fair Grounds acknowledges that the Judgment will be final
and deemed allowed in the Bankruptcy Case. </FONT>
</TD>
</TR>
</TABLE>
<BR>

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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Churchill
will not agree to the obligations imposed upon the Enabling Transaction Acquirer in
Paragraph 7.2 of the Settlement Agreement, and Churchill will not be liable for the
Judgment or the Litigation. In lieu of the Enabling Transaction Acquirer&#146;s
obligations under 7.2 of the Settlement Agreement, and as a part of the Amended Plan, the
Global Term Sheet, and the APA, the Amended Plan shall provide the payment to the HBPA of
twenty-five million ($25,000,000) dollars from the Purchase Price on or before October 15,
2004. </FONT></P>

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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Churchill
shall, as a condition to the Closing, provide to the HBPA on or before October 1, 2004 (to
be held in Escrow if necessary) releases and waivers of all claims that Bryan Krantz,
Vicki Krantz and the Fair Grounds, Finish Line Management Corporation, Continental
Advertising, FG Staffing Corporation, Fair Grounds International Ventures, and Family
Racing Ventures have or may have against the HBPA or its attorneys, insurers, board
members, employees or related entities. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent" FSL="Default" -->
<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Churchill
agrees to the provisions in Sections 7.6 of the Settlement Agreement. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent" FSL="Default" -->
<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If
there are any conflicts or inconsistencies between the obligations of Churchill in favor
of the HBPA outlined in this letter and the terms set forth in the Global Term Sheet, or
any other agreements entered into pursuant thereto, this letter agreement will control,
unless Churchill and the HBPA shall have expressly acknowledged and consented to such
other conflicting terms and/or agreements in writing. Churchill will not be obligated for
the performance of any obligations under the Settlement Agreement except as set forth
specifically herein and in the Global Term Sheet. </FONT></P>

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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
understand and agree that your consent or agreement to these terms is expressly
conditioned on Churchill and the Debtor having a closing under a confirmed Amended Plan
that includes all of the provisions set forth above and in the Global Term Sheet and
provides for the payment of $25 million to the HBPA on or before October 15,</FONT></P>

<P ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>6</font></p>
<!-- MARKER PAGE="sheet: 45; page: 45" -->
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<P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2> 2004. In the
event some other party closes with the Debtor on or before October 15, 2004,  the HBPA and Churchill are not bound by this letter agreement.</font></P>

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<P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Moreover,
HBPA and the Debtor (as evidenced by the Debtor&#146;s intervention below) expressly
acknowledge that nothing contained herein or in the Global Term Sheet affects the validity
or enforceability of the Settlement Agreement between the Fair Grounds and the HBPA and
that the same is unaffected by this agreement. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent" FSL="Default" -->
<P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Both
HBPA and Churchill further agree that these terms are personal to the parties hereto and
are not intended to bind or benefit any parties other than Churchill and the HBPA, and
HBPA will only be bound if Churchill closes the Enabling Transaction in the manner and to
the extent described in the Global Term Sheet and herein on or before October 15, 2004,
pursuant to a confirmed Amended Plan. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent" FSL="Default" -->
<P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
HBPA will have the option to terminate this agreement if Churchill is unable to provide
the form of releases and waivers referenced herein by the due dates. Such termination will
be by written notice on or before October 15, 2004 to David Waguespack. </FONT></P>

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<P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
parties adopt by reference herein as being fully applicable to this letter agreement
Sections 8.2, 8.4, 8.5, 8.6, 8.7, 8.9, and 8.11 of the Settlement Agreement. </FONT></P>

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<P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Further,
the waiver by HBPA or Churchill of any default hereunder shall not constitute a waiver of
any other provisions or obligations. </FONT></P>

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<P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Churchill
Downs Incorporated covenants to be jointly and solidarily liable for all obligations of
Churchill hereunder, with any designee of Churchill that may fulfill the obligations under
this letter, the APA or the Global Term Sheet, as may be set forth in the Amended Plan,
which obligation shall survive the Closing. </FONT></P>

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<P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Notwithstanding
anything herein to the contrary, Churchill shall only be obligated hereunder if the
Amended Plan is confirmed by final and nonappealable order of the Bankruptcy Court and
upon the Closing, unless such Closing does not occur after the entry of the final and
nonappealable order confirming the Amended Plan because of a breach of the APA by
Churchill. </FONT></P>

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<P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If
the foregoing agreements are acceptable to the HBPA, please sign a copy of this letter
where indicated below to confirm the approval of the same by the HBPA. </FONT></P>

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<P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No
amendment of any provision of the Settlement Agreement which provision Churchill is
agreeing to perform under this agreement shall bind Churchill, without the prior written
consent of Churchill. </FONT></P>

<p align=right><FONT FACE="Times New Roman, Times, Serif" SIZE=2>7</font></p>
<!-- MARKER PAGE="sheet: 46; page: 46" -->
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<TR VALIGN="BOTTOM">
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="TOP">
     <TD width=40%><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD width=60%><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Sincerely,</font></td></tr>
<tr valign="top">
        <td>&nbsp;</td>
        </tr>
<TR VALIGN="TOP">
     <TD width=40%><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD width=60%><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><b>CHURCHILL DOWNS INCORPORATED</B><BR>
<BR>By:<u>&nbsp;&nbsp;/s/ Michael E. Miller&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u><br>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Michael E. Miller<br>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Executive Vice President &amp;<br>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Chief Financial Officer</FONT></TD></TR>
<tr valign="top">
        <td>&nbsp;</td>
        </tr>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Accepted and Approved:</FONT></TD></TR>
<tr valign="top">
        <td>&nbsp;</td>
        </tr>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">HBPA<br><br>By:<u>&nbsp;&nbsp;&nbsp;/s/ Oran Trahan&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u><br>
Its:<u>&nbsp;&nbsp;&nbsp;President&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u></font></td>
</tr>
</TABLE>



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<P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Fair Grounds Corporation intervenes
herein to expressly acknowledge that nothing contained herein or in the Global Term Sheet
affects the validity or enforceability of the Settlement Agreement between the Fair
Grounds and the HBPA and that the same is unaffected by this agreement. </FONT></P>

<P align=right><FONT FACE="Times New Roman, Times, Serif" SIZE=2>8</font></p>
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     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="TOP">
     <TD width=40%><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD width=60%><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>FAIR GROUNDS CORPORATION</B><BR><br>
By:&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>&nbsp;&nbsp;&nbsp;/s/ Bryan G. Krantz&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </u><br><br>
Title:  Bryan G. Krantz<br>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;President&nbsp;&nbsp;&nbsp;</FONT></TD></TR>
</TABLE>



<P align=right><FONT FACE="Times New Roman, Times, Serif" SIZE=2>9</font></p>

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<FILENAME>cd8k90104ex23.htm
<DESCRIPTION>GLOBAL TERM SHEET
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<p align=right><FONT FACE="Times New Roman, Times, Serif" SIZE=2>EXHIBIT 2.3</font></p>
<A NAME=A001></A>
<P ALIGN=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><U>GLOBAL
TERM SHEET</U></B> </FONT></P>

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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This
global term sheet outlines the terms of the agreement by and among Churchill Downs
Incorporated or its designee (&#147;Churchill&#148;), Fair Grounds Corporation (the
&#147;Debtor&#148;), Ben S. Gravolet (&#147;Gravolet&#148;), Finish Line Management Corp.
(&#147;Finish Line&#148;), and Bryan G. Krantz (&#147;Krantz&#148;) to pursue a consensual
amended plan of reorganization (&#147;Amended Plan&#148;) in form acceptable to all of the
parties in the bankruptcy case styled <I>In re: Fair Grounds Corporation</I>, United
States Bankruptcy Court, Case no. 03-16222, Section A and to consummate other agreements
related thereto as outlined herein. This global term sheet shall be binding upon the
parties hereto upon its execution and be further delineated in definitive documentation
that is acceptable to all of the parties hereto. Nonetheless, this global term sheet is
contingent upon Churchill and LHBPA reaching an agreement on or before August 31, 2004 at
11:59 p.m. for mutually agreeable terms regarding Churchill&#146;s obligations as the
Enabling Transaction Partner under the LHBPA-Debtor Settlement. If Churchill is unable to
obtain this agreement with LHBPA by that time, this global term sheet shall be null and
void and of no effect unless extended by mutual agreement of the parties hereto. </FONT></P>

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<A NAME=A002></A>
<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><U>Fair Grounds:</u></B></FONT></H1>

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<A NAME=A003></A>
<p ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Purchase Price:</B>
$47,000,000. </FONT></P>

<p ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Closing Date:</B>  October 15, 2004. The term &#147;Closing&#147;  shall refer to the closing of all  transactions  described in this global term sheet on the
Closing Date.</FONT></P>

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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Terms and Conditions:</B> The
terms and conditions shall be the same as those set forth in the attached Asset Purchase
Agreement (&#147;APA&#148;) which has been executed by the Debtor and Churchill. </FONT></P>

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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Assets to be Purchased: </B>All
assets owned by the &#147;Debtor&#148; free and clear of all claims, liens, encumbrances
and other interests, except for the State Claim, which shall remain with the Debtor and
the LHBPA as provided hereinafter, and except for the other Excluded Assets as defined in
the APA. Churchill agrees to waive all claims under Chapter 5 of Title 11 of the
Bankruptcy Code upon its acquisition of the Debtor&#146;s assets. </FONT></P>

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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As
part of the Amended Plan, the Debtor will be required to share any Net Recovery (as
defined in the LHBPA-Debtor Agreement) of the State Claim with the LHBPA in the manner set
forth in the LHBPA-Debtor Settlement Agreement and to grant a security interest in the
State Claim in favor of LHBPA to secure its obligation to do so. </FONT></P>

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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>VSI: </B>At the Closing, Churchill
shall assume all obligations of the Debtor and Finish Line to Video Services, Inc.
(&#147;VSI&#148;) relating to video poker at the Debtor&#146;s and/or Finish Line&#146;s
locations and contracts pertaining thereto. Churchill shall be responsible for
consummating an agreement with VSI to acquire its assets or stock at Churchill&#146;s sole
cost and expense. Churchill covenants and agrees that it shall waive any rejection claim
or other claims that VSI has against the Debtor or Finish Line arising from its agreements
with the Debtor and Finish Line and will obtain from VSI and VSI&#146;s shareholders a
release of the Debtor, Finish Line, Mr. and Mrs. Krantz, Family Racing Venture, L.L.C.
(&#147;Family Racing&#148;), Gentilly Gaming, and all other legal entities owned or
controlled by any of the foregoing, together with their respective officers, directors,
managers, employees, members, shareholders, attorneys, agents and representatives, of all
claims, damages, causes of action, etc. relating to video</FONT></P>


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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>poker at the Debtor&#146;s and/or Finish
Line&#146;s locations and contracts pertaining thereto, which release shall be delivered
to the Debtor, Finish Line and Krantz. </FONT></P>

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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>DIP Loan: </B>The terms and
conditions shall be the same as those set forth in the letter from David Waguespack to Jan
Hayden dated July 20, 2004 except that the amount of the DIP loan shall be $3,500,000, no
origination fee shall be charged, and an emergency motion for use of the DIP loan shall be
filed. </FONT></P>

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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Optional Contractual Arrangement
for Licensing Purposes</B>: Churchill shall be entitled, at its sole option, to require
that the Debtor maintain its corporate existence on and after the Closing and enter into a
lease, management agreement, or other contract for no consideration paid to the Debtor
other than that stated in the APA, that would allow the continued operation of the
Debtor&#146;s racing, video poker and other businesses until Churchill is licensed to
conduct such businesses. Any such arrangement shall comply with all state and federal
gaming laws and state racing laws, and shall be at Churchill&#146;s sole cost and expense. </FONT></P>

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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Expense Reimbursement:</B> At the
Closing, Churchill shall waive its $250,000 expense reimbursement claim. </FONT></P>

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<A NAME=A004></A>
<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Gravolet Claim: </FONT></H1>

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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Gravolet&#146;s claims against the
Debtor which were asserted or which could have been asserted in (i) <I>Ben S. Gravolet v.
Fair Grounds Corporation, </I>No. 2000-17002, Civil District Court for the Parish of
Orleans, State of Louisiana, (ii) Proof of Claim No. 115, an unsecured claim in the amount
of $1,679,705.00 plus judicial interest and attorneys fees filed on 7/15/04, and (iii)
Proof of Claim No. 3, a secured claim in the amount of $7,548.28 filed on 8/27/03 shall be
fully and finally compromised, settled and allowed in the amount of $2,000,000 which shall
be paid by the Debtor on October 15, 2004 from the Purchase Price paid to the Debtor. </FONT></P>

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<A NAME=A005></A>
<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Claim of Louisiana
Horsemen&#146;s Benevolent and Protective Association 1993, Inc. (&#147;HBPA&#148;): </FONT></H1>

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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Debtor shall comply with the
terms of the Settlement Agreement Between Fair Grounds Corporation And Louisiana
Horsemen&#146;s Benevolent And Protective Association 1993, Inc. of August 6, 2004
(&#147;Settlement Agreement&#148;) or the Settlement Agreement as modified in writing by
the HBPA and the Debtor. The Debtor shall not file the Amended Plan contemplated herein
unless the HBPA consents to and authorizes such Amended Plan. The Amended Plan shall
guarantee the payment to the HBPA of twenty-five million ($25,000,000) dollars from the
Purchase Price on or before October 15, 2004 and the Debtor shall pay the HBPA all other
consideration required to be paid by the Debtor in the Settlement Agreement. In addition,
the Plan shall recognize and provide to HBPA the terms of any agreement by and between
HBPA and Churchill under which Churchill assumes certain obligations of the Enabling
Transaction Partner under the Settlement Agreement as may be mutually agreed to by HBPA
and Churchill. Nothing herein shall be construed as obligating Churchill to enter into an
agreement with HBPA to assume certain obligations of the Enabling Transaction Partner
under the Settlement Agreement. If such an agreement is not reached by August 31, 2004 or
such later date as may be mutually agreed to by the parties hereto, this global term sheet
shall be null and void and of no</FONT></P>


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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>force and effect whatsoever. The Debtor
will also pay the HBPA proof of claim #105 like all other undisputed unsecured claims. </FONT></P>

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<A NAME=A006></A>
<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Finish Line: </FONT></H1>

<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Purchase Price:</B>   $2.2 million plus amount of the secured debt on Kenner OTB that is owed to First Bank which is not to exceed $4,500,000.</FONT></P>

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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Assets to be Purchased:</B> All
assets owned by Finish Line, including the Kenner OTB facility, free and clear of all
claims, liens, encumbrances and other interests, excluding (1) all Fair Grounds stock, (2)
any operations currently designated on Finish Lines&#146; internal accounting records as
unallocated, (3) the assets listed on the balance sheet as (i) due from MGK in the amount
of $100,000, (ii) officer advances (loans) in the amount of $25,000, (iii) due from
Gabriel in the amount of $1,465.42, (iv) employee advances (loans) in the amount of
$344.68, (v) due from employees in the amount of $5,267.28, (vi) deferred tax &#150;
current in the amount of $73,500, (vii) deferred tax &#150; non-current in the amount of
$186,300, and (4) any other assets designated by Churchill in its sole discretion. In
addition, the remaining cash of Finish Line will be used to establish an escrow account to
pay preclosing ordinary trade expenses of Finish Line with the balance of such account
paid to Churchill within 90 days of closing. The transaction shall not include the vacant
lot on the opposite side of the street used for overflow parking </FONT></P>

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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Pre-closing payments: </B>Prior to
closing, Finish Line shall use its cash to pay its liabilities except for claims owed by
Finish Line to Mr. Krantz or any person related directly or indirectly to Mr. Krantz. This
provision shall not be construed as obligating Churchill to pay any debt or liability of
Finish Line. </FONT></P>

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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Debt Assumption: </B>Churchill
will assume no debt or liabilities of Finish Line. </FONT></P>

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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Forgiveness of Debt:</B> Upon
acquiring the receivable due from Finish Line to the Debtor (&#147;Finish Line
Receivable&#148;), Churchill shall forgive the Finish Line Receivable, the current balance
of which Finish Line represents to be approximately $4,100,000, up to a maximum amount of
$4,500,000. In addition, upon acquiring any claim by Finish Line against the Debtor,
Churchill shall waive any such claim against the Debtor and, upon acquiring any claim by
the Debtor against Finish Line, Churchill shall waive any such claim against Finish Line. </FONT></P>

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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Houma Lease:</B> Churchill shall
agree to lease from Family Racing on a triple net basis the real property and improvements
currently used as the Houma OTB for a term of not less than five (5) years at a monthly
rent of $5,000.00 per month plus an annual CPI adjustment after the second year. The
property to be leased shall consist of the existing Houma OTB building and a reasonable
non-exclusive parking area adjacent to the building, but will not include the second
building site and a non-exclusive parking area adjacent thereto. </FONT></P>

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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Necessary Documentation:</B>
Subject to the execution of definitive and mutually satisfactory legal documentation for
the transaction, including without limitation a definitive asset purchase agreement for
the assets to be purchased which is acceptable to Churchill and Finish Line which shall
contain usual and customary terms, indemnities, representations and warranties, suitable
escrows to insure such </FONT></P>


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<A NAME=A007></A>
<P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>representations
and warranties, and include conditions to
closing such as completion of Churchill&#146;s remaining Finish Line due diligence and
Churchill&#146;s acquiring the Fair Grounds&#146; assets pursuant to the APA. </FONT></P>

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<A NAME=A008></A>
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3><b>Closing Date:</b> At the
Closing. </FONT></p>

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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Optional Contractual Arrangement
for Licensing Purposes</B>: Churchill shall be entitled, at its sole option, to require
that Finish Line maintain its corporate existence on and after the Closing and enter into
a lease, management agreement, or other contract for no consideration paid to Finish Line
other than that stated herein, that would allow the continued operation of Finish
Line&#146;s video poker and other businesses until Churchill is licensed to conduct such
businesses. Any such arrangement shall comply with all state and federal gaming laws and
state racing laws, and shall be at Churchill&#146;s sole cost and expense. </FONT></P>

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<A NAME=A009></A>
<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Krantz: </FONT></H1>

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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At
the Closing, Churchill shall enter into a contractual arrangement with Krantz which shall
include the following key terms: </FONT></P>

<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Titles:</B>  Bryan G. Krantz, Chairperson, Fair Grounds Race Course</FONT></p>

<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Scope of Responsibilities:</B> To be determined and defined in a consulting agreement to be executed at  the Closing.
</FONT></P>

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<A NAME=A010></A>
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Term:</B> Three (3) years. </FONT></P>

<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Bonus:</B>  $300,000,  $100,000  of which is payable  upon  confirmation  of the  Amended  Plan and the  balance  (up to  $300,000  if the  $100,000
installment is not paid for any reason) payable at the Closing.</font></P>

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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Total Annual</B> <B>Consideration:
</B>In the event the Closing occurs, the additional annual compensation to Krantz shall be
as follows: $400,000 per year payable semi-monthly plus Churchill will agree to pay
premiums for hospitalization insurance for Krantz and his family in an amount not to
exceed $10,000 annually. </FONT></P>

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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Releases:</B> At the Closing,
Churchill shall grant the Debtor, Finish Line, Mr. and Mrs. Krantz, Family Racing,
Gentilly Gaming, and all other legal entities owned or controlled by any of the foregoing
(collectively, the &#147;Krantz Interests&#148;), together with their respective officers,
directors, managers, employees, members, shareholders, attorneys, agents and
representatives (collectively with the Krantz Interests, the &#147;Released Parties&#148;)
a general release, releasing, remising and discharging all claims which Churchill has or
may have against any of the Released Parties, including but not limited to claims acquired
by Churchill, except for claims for breach of this term sheet, the definitive
documentation further evidencing this term sheet, or to the extent that the Finish Line
receivable owed to the Debtor exceeds $4,500,000. </FONT></P>

<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In furtherance of this global  agreement,  the Debtor,  Finish Line,  Continental  Advertising,  Family Racing,  Gentilly Gaming,  F.G. Staffing
Services,  Inc., Fair Grounds International  Ventures,  Inc., the Krantz Interests and Krantz agree to waive and release and obtain full waivers
and releases from the</FONT></P>


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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2> Debtor, Finish Line, the Krantz Interests,  and any of their affiliates,
Vicki Krantz, James Alexander,  Firal Ryder, and the Chehardy Law Firm and any
officer, director, member or employee thereof of any and all claims that these persons may
have against Churchill, together with its respective officers, directors, managers,
employees, members, shareholders, attorneys, agents and representatives and the LHBPA
together with its respective officers, directors, managers, employees, members,
shareholders, attorneys, agents and representatives and any horsemen entitled to receive
any portion of the amount paid to the LHBPA stated herein. The Debtor, Finish Line,
Continental Advertising, Family Racing, Gentilly Gaming, F.G. Staffing Services, Inc.,
Fair Grounds International Ventures, Inc., and the Krantz Interests shall provide such
releases in form acceptable to LHBPA by October 1, 2004; Krantz shall provide such other
releases in form acceptable to LHBPA by October 15, 2004. </FONT></P>

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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Both
the Finish Line Proposal and the Krantz Proposal will be subject to and conditioned upon
the confirmation of the Amended Plan by final and nonappealable order on or before October
1, 2004 and occurrence of the Closing under the APA on or before October 15, 2004. </FONT></P>

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<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All
parties hereto acknowledge that this is an all or nothing agreement and that the
obligations of the respective parties hereto are expressly conditioned upon the
consummation of all of the transactions described herein at the Closing. </FONT></P>

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<A NAME=A011></A>
<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>SIGNATURES ON FOLLOWING
PAGE </FONT></H1>


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<P ALIGN=left><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The
foregoing terms and conditions are approved and accepted. </FONT></P>




<TABLE BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH=100%>
<TR VALIGN="BOTTOM">
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="TOP">
     <TD WIDTH=40%><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH=60%><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><b>FAIR GROUNDS CORPORATION</B><BR><br><br>
By:&nbsp;&nbsp;<u>&nbsp;&nbsp;/s/ Bryan G. Krantz&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u><br>
Title:&nbsp;&nbsp;Bryan G. Krantz<br>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;President</FONT></TD></TR>
<tr valign="top">
        <td>&nbsp;</td>
        </tr>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>CHURCHILL DOWNS INCORPORATED</B><BR><br><br>
By:&nbsp;&nbsp;<u>&nbsp;&nbsp;&nbsp;/s/ Michael E. Miller&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U><br>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Michael E. Miller<br>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Exectuvie Vice President &amp;<br>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Chief Financial Officer</FONT></TD></TR>
<tr valign="top">
        <td>&nbsp;</td>
        </tr>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><u>&nbsp;&nbsp;&nbsp;/s/ Bryan G. Krantz&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u>
<br>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Bryan G. Krantz, Individually and on<br>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Behalf of Continential Advertising,<br>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;F.G. Staffing Services, Inc., Fair<br>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Grounds International Ventures, Inc.,<br>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Family Racing Venture, L.L.C.<br>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gentilly Gaming, L.L.C., and the<br>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Krantz Interests</FONT></TD></TR>
<tr valign="top">
        <td>&nbsp;</td>
        </tr>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>FINISH LINE MANAGEMENT CORP.</B><BR><br><br>
By:&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u> &nbsp;&nbsp;&nbsp;/s/ Bryan G. Krantz&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u>    <br>
Title:&nbsp;&nbsp;Bryan G. Krantz<br>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;President<br><br>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>&nbsp;&nbsp;&nbsp;/s/ Ben S. Gravolet&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u>
<br>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Ben S. Gravolet</font></td></tr>
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