Exhibit 10.1


 


EXECUTION COPY


 


 


MAGNA ENTERTAINMENT CORP.

as Borrower


 


- and -


 


THE GUARANTORS SET FORTH

ON THE SIGNATURE PAGES HEREOF

as Guarantors


 


- and -


 


MID ISLANDI SF., ACTING

THROUGH ITS ZUG BRANCH

as the Lender


 


 










 


DEBTOR-IN-POSSESSION CREDIT AGREEMENT


 










 


Dated as of March 6, 2009


 





















 


TABLE OF CONTENTS


 


	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE 1 INTERPRETATION

  	
  5

  
	
   

  	
   

  	
   

  
	
  1.1

  	
  Definitions

  	
  5

  
	
  1.2

  	
  Gender and Number

  	
  25

  
	
  1.3

  	
  Invalidity, etc.

  	
  25

  
	
  1.4

  	
  Headings, etc.

  	
  25

  
	
  1.5

  	
  Governing Law

  	
  25

  
	
  1.6

  	
  Submission to Jurisdiction

  	
  26

  
	
  1.7

  	
  Judgment Currency

  	
  26

  
	
  1.8

  	
  References

  	
  27

  
	
  1.9

  	
  Currency

  	
  27

  
	
  1.10

  	
  Conflict of Terms

  	
  27

  
	
  1.11

  	
  Generally Accepted Accounting Principles

  	
  27

  
	
  1.12

  	
  Computation of Time Periods

  	
  27

  
	
  1.13

  	
  Actions on Days Other Than Banking Days

  	
  27

  
	
  1.14

  	
  Oral Instructions

  	
  28

  
	
  1.15

  	
  No Strict Construction

  	
  28

  
	
  1.16

  	
  Incorporation of Schedules

  	
  28

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE 2 DIP CREDIT COMMITMENT

  	
  28

  
	
   

  	
   

  	
   

  
	
  2.1

  	
  Establishment of DIP Credit Commitment

  	
  28

  
	
  2.2

  	
  Use of Proceeds

  	
  29

  
	
  2.3

  	
  Non-Revolving Nature of DIP Credit Commitment

  	
  29

  
	
  2.4

  	
  Pre-Payment

  	
  29

  
	
  2.5

  	
  Mandatory Repayment

  	
  29

  
	
  2.6

  	
  Voluntary Reduction in DIP Credit Commitment

  	
  30

  
	
  2.7

  	
  Payments Generally

  	
  31

  
	
  2.8

  	
  Tax Matters

  	
  31

  
	
  2.9

  	
  Single Advance

  	
  32

  
	
  2.10

  	
  Super-Priority Nature of Obligations and the Lender’s Liens

  	
  32

  
	
  2.11

  	
  Payment of Obligations

  	
  33

  
	
  2.12

  	
  No Discharge; Survival of Claims

  	
  33

  
	
  2.13

  	
  Release

  	
  33

  
	
  2.14

  	
  Waiver of any Priming Rights

  	
  34

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE 3 GENERAL PROVISIONS RELATING TO
  THE DIP CREDIT COMMITMENT

  	
  34

  
	
   

  	
   

  	
   

  
	
  3.1

  	
  Advances

  	
  34

  
	
  3.2

  	
  Advance Payments

  	
  34

  
	
  3.3

  	
  Illegality

  	
  35

  
	
  3.4

  	
  Indemnity

  	
  35

  
	
  3.5

  	
  Evidence of Indebtedness

  	
  35

  



 


i





















 


TABLE OF CONTENTS

(Continued)


 


	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE 4 INTEREST AND FEES

  	
  36

  
	
   

  	
   

  	
   

  
	
  4.1

  	
  Interest Rate

  	
  36

  
	
  4.2

  	
  Calculation and Payment of Interest

  	
  36

  
	
  4.3

  	
  Fees

  	
  36

  
	
  4.4

  	
  Payment of Costs and Expenses

  	
  37

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE 5 SECURITY, ETC.

  	
  38

  
	
   

  	
   

  	
   

  
	
  5.1

  	
  Liens

  	
  38

  
	
  5.2

  	
  Priority of Claim

  	
  39

  
	
  5.3

  	
  Security Interest

  	
  39

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE 6 REPRESENTATIONS AND WARRANTIES

  	
  39

  
	
   

  	
   

  	
   

  
	
  6.1

  	
  Representations and Warranties

  	
  39

  
	
  6.2

  	
  Survival of Representations and Warranties

  	
  49

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE 7 COVENANTS

  	
  49

  
	
   

  	
   

  	
   

  
	
  7.1

  	
  Affirmative Covenants

  	
  49

  
	
  7.2

  	
  Negative Covenants

  	
  57

  
	
  7.3

  	
  Environmental Matters

  	
  61

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE 8 CONDITIONS PRECEDENT

  	
  62

  
	
   

  	
   

  	
   

  
	
  8.1

  	
  Conditions Precedent to Closing

  	
  62

  
	
  8.2

  	
  Conditions Precedent to Advances

  	
  63

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE 9 EVENTS OF DEFAULT AND REMEDIES

  	
  65

  
	
   

  	
   

  	
   

  
	
  9.1

  	
  Events of Default

  	
  65

  
	
  9.2

  	
  Remedies Upon Default

  	
  68

  
	
  9.3

  	
  Distributions

  	
  69

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE 10 GENERAL

  	
  69

  
	
   

  	
   

  	
   

  
	
  10.1

  	
  Reliance and Non-Merger

  	
  69

  
	
  10.2

  	
  Confidentiality

  	
  70

  
	
  10.3

  	
  No Set-Off

  	
  70

  
	
  10.4

  	
  Employment of Experts

  	
  70

  
	
  10.5

  	
  Reliance by the Lender

  	
  70

  
	
  10.6

  	
  Notices

  	
  71

  
	
  10.7

  	
  Further Assurances

  	
  72

  



 


ii





















 


TABLE OF CONTENTS

(Continued)


 


	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  10.8

  	
  Assignment

  	
  72

  
	
  10.9

  	
  Disclosure of Information to Potential Permitted Lender Assignees

  	
  73

  
	
  10.10

  	
  Right to Cure

  	
  73

  
	
  10.11

  	
  Forbearance by the Lender Not a Waiver

  	
  73

  
	
  10.12

  	
  Waiver of Statute of Limitations and Other Defenses

  	
  74

  
	
  10.13

  	
  Relationship

  	
  74

  
	
  10.14

  	
  Time of Essence

  	
  74

  
	
  10.15

  	
  Jury Trial Waiver

  	
  74

  
	
  10.16

  	
  Final Agreement/Modification

  	
  75

  
	
  10.17

  	
  Continuing Agreement

  	
  75

  
	
  10.18

  	
  No Third Party Beneficiaries

  	
  75

  
	
  10.19

  	
  No Brokers

  	
  75

  
	
  10.20

  	
  Execution in Counterparts

  	
  75

  
	
  10.21

  	
  Successors and Assigns Bound; Joint and Several Liability; Agents;
  and Captions

  	
  75

  
	
  10.22

  	
  Loss of Borrower Note

  	
  76

  
	
  10.23

  	
  Acknowledgment

  	
  76

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE 11 CONTINUING GUARANTY

  	
  76

  
	
   

  	
   

  	
   

  
	
  11.1

  	
  Guaranty

  	
  76

  
	
  11.2

  	
  Rights of the Lender

  	
  77

  
	
  11.3

  	
  Certain Waivers

  	
  77

  
	
  11.4

  	
  Obligations Independent

  	
  78

  
	
  11.5

  	
  Subrogation

  	
  78

  
	
  11.6

  	
  Termination; Reinstatement

  	
  78

  
	
  11.7

  	
  Subordination

  	
  78

  
	
  11.8

  	
  Stay of Acceleration

  	
  79

  
	
  11.9

  	
  Contribution by the Guarantors

  	
  79

  
	
   

  	
   

  	
   

  
	
  SCHEDULE A — Borrowing Notice

  	
   

  
	
   

  	
   

  
	
  SCHEDULE B — Budget

  	
   

  
	
   

  	
   

  
	
  SCHEDULE C — Disclosure Schedule

  	
   

  
	
   

  	
   

  
	
  SCHEDULE D — Interim Order

  	
   

  



 


iii





















 


THIS AGREEMENT is
entered into as of March 6, 2009, between


 


MAGNA ENTERTAINMENT CORP.,


a corporation incorporated under the laws of the State of Delaware, as
a debtor-in-possession (hereinafter called the “Borrower”),


 


- and -


 


MID ISLANDI SF.,


a partnership formed under the laws of Iceland, acting through its Zug
branch (hereinafter called the “Lender”),


 


- and -


 


PACIFIC RACING ASSOCIATION,


a corporation incorporated under the laws of the State of California,
as a debtor-in-possession,


 


- and -


 


MEC LAND HOLDINGS (CALIFORNIA) INC.,


a corporation incorporated under the laws of the State of California,
as a debtor-in-possession (together with Pacific Racing Association,
hereinafter collectively called the “Golden
Gate Fields Guarantors”),


 


- and -


 


THE SANTA ANITA COMPANIES, INC.,


a corporation incorporated under the laws of the State of Delaware, as
a debtor-in-possession


 


- and -


 


LOS ANGELES TURF CLUB, INCORPORATED,


a corporation incorporated under the laws of the State of California,
as a debtor-in-possession (together with the Santa Anita Companies, Inc.,
hereinafter collectively called the “Santa
Anita Guarantors”),


 


- and -


 


SOUTHERN MARYLAND AGRICULTURAL ASSOCIATION,


a joint venture of PRINCE GEORGE’S
RACING, INC.  and SOUTHERN MARYLAND RACING, INC., each a
corporation incorporated under the laws of the State of Maryland, as a
debtor-in-possession (hereinafter called the “Bowie
Guarantor”),


 


- and -


 





















 


LAUREL
RACING ASSOC., INC.,


a corporation
formed under the laws of the State of Maryland, as a debtor-in-possession,


 


- and -


 


LAUREL
RACING ASSOCIATION LIMITED PARTNERSHIP


a partnership
formed under the laws of the State of Maryland, as a debtor-in-possession,
acting through its general partner, LAUREL
RACING ASSOC., INC. (together with Laurel Racing Assoc., Inc.,
hereinafter collectively called the “Laurel
Guarantor”),


 


- and -


 


PIMLICO RACING ASSOCIATION, INC.,


a corporation incorporated under the laws of the State of Maryland, as
a debtor-in-possession,


 


- and -


 


MARYLAND JOCKEY CLUB, INC.,


a corporation incorporated under the laws of the State of Maryland, as
a debtor-in-possession,


 


- and -


 


THE MARYLAND JOCKEY CLUB OF BALTIMORE CITY,
INC.,


a corporation incorporated under the laws of the State of Maryland, as
a debtor-in-possession (together with Pimlico Racing Association, Inc. and
Maryland Jockey Club, Inc., hereinafter collectively called the “Pimlico Guarantors”),


 


- and -


 


SOUTHERN MARYLAND RACING, INC.,


a corporation incorporated under the laws of the State of Delaware, as
a debtor-in-possession (hereinafter called the “Maryland Racing Guarantor”),


 


- and -


 


THISTLEDOWN, INC.


a corporation incorporated under the laws of the State of Ohio, as a
debtor-in-possession (hereinafter called the “Thistledown
Guarantor”),


 


- and -


 


2





















 


MEC MARYLAND INVESTMENTS, INC.,


a corporation incorporated under the laws of the State of Delaware, as
a debtor-in-possession,


 


- and -


 


AMTOTE INTERNATIONAL, INC.,


a corporation incorporated under the laws of the State of Delaware, as
a debtor-in-possession,


 


- and -


 


30000 MARYLAND INVESTMENTS LLC,


a limited liability company formed under the laws of the State of
Delaware, as a debtor-in-possession (together with MEC Maryland Investments
Inc., and AmTote International, Inc., hereinafter collectively called the “AmTote Guarantors”),


 


- and -


 


GULFSTREAM PARK RACING ASSOCIATION, INC.,


a corporation incorporated under the laws of the State of Florida, as a
debtor-in-possession (hereinafter called the “Gulfstream
Guarantor”),


 


- and -


 


GPRA COMMERCIAL ENTERPRISES, INC.,


a corporation incorporated under the laws of the State of Florida, as a
debtor-in-possession,


 


- and -


 


GPRA THOROUGHBRED TRAINING CENTER, INC.,


a corporation incorporated under the laws of the State of Delaware, as
a debtor-in-possession (together with GPRA Commercial Enterprises, Inc.,
hereinafter collectively called the “Palm
Meadows Training Guarantor”),


 


- and -


 


MEC DIXON, INC.,


a corporation incorporated under the laws of the State of Delaware, as
a debtor-in-possession (hereinafter called the “Dixon  Guarantor”),


 


- and -


 


3





















 


SUNSHINE MEADOWS RACING, INC.


a corporation incorporated under the laws of the State of Delaware, as
a debtor-in-possession,


 


- and -


 


MEC HOLDINGS (USA) INC.,


a corporation incorporated under the laws of the State of Delaware, as
a debtor-in-possession (together with Sunshine Meadows Racing, Inc., the “Ocala Guarantors”),


 


- and -


 


REMINGTON PARK, INC.,


a corporation incorporated under the laws of the State of Oklahoma, as
a debtor-in-possession (hereinafter called the “Remington Guarantor”),


 


- and -


 


PRINCE GEORGE’S RACING, INC.,


a corporation incorporated under the laws of the State of Maryland, as
a debtor-in-possession (hereinafter called the “Prince George Guarantor”),


 


(the Golden Gate Fields Guarantors, the Santa Anita Guarantors, the
Bowie Guarantor, the Laurel Guarantor, the Pimlico Guarantors, the Maryland
Racing Guarantor, the Thistledown Guarantor, the Amtote Guarantors, the
Gulfstream Guarantor, the Palm Meadows Training Guarantor, the Dixon Guarantor,
the Ocala Guarantors, the Remington Guarantor and the Prince George Guarantor,
hereinafter collectively called the “Initial Guarantors”)


 


W
I  T  N  E  S  S  E  T  H:


 


WHEREAS, on March 6,
2009 (the “Petition Date”), the
Borrower and the Initial Guarantors (collectively, the “Debtors”) commenced Chapter 11 Case
Nos. 09-10720 (MFW) and 09-10724 (MFW) through 09-10746 (MFW) as
administratively consolidated at Chapter 11 Case No. 09-10720 (MFW)
(each a “Chapter 11 Case” and
collectively, the “Chapter 11 Cases”)
by filing separate voluntary petitions for reorganization under
Chapter 11, 11 U.S.C. 101 et seq.
(the “Bankruptcy Code”), with
the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”).  The Borrower and the Initial Guarantors
continue to operate their businesses and manage their properties as debtors and
debtors-in-possession pursuant to Sections 1107(a) and 1108 of the
Bankruptcy Code;


 


WHEREAS, prior to
the Petition Date, the Lender provided financing to the Borrower pursuant to
that certain Credit Agreement, dated as of December 1, 2008, among the
Borrower, the other credit parties signatory thereto, and the Lender (as
amended, modified or supplemented through the Petition Date, the “Pre-Petition Loan Agreement”), and that
certain Bridge Loan Agreement, dated as of September 12, 2007, among the
Borrower, the Lender, and


 


4





















 


the guarantors specified therein (as amended, modified or supplemented,
the “Bridge Loan Agreement”);


 


WHEREAS, the
Borrower has requested that the Lender provide a senior secured, superpriority
credit facility to the Borrower of up to SIXTY-TWO MILLION FIVE HUNDRED
THOUSAND Dollars ($62,500,000) in the aggregate to fund the working
capital requirements of the Debtors and for other purposes permitted under this
Agreement during the pendency of the Chapter 11 Cases;


 


WHEREAS, the Lender
is willing to make certain Post-Petition loans and other extensions of credit
to the Borrower of up to such amount upon the terms and conditions set forth
herein;


 


WHEREAS, each
Guarantor is willing to guarantee all the obligations of the Borrower to the
Lender under this Agreement;


 


WHEREAS, each of the
Borrower and each Guarantor has agreed to secure all the Obligations under the
DIP Credit Documents by granting to the Lender a security interest in and Lien
upon substantially all their existing and after-acquired personal and real
property; and


 


WHEREAS, the
Borrower and each Guarantor acknowledges that they each will receive
substantial direct and indirect benefits by reason of the making of loans and
other financial accommodations to the Borrower as provided in this Agreement;


 


NOW THEREFORE,
in consideration of the premises and the mutual covenants and agreements herein
contained, and for other good and valuable consideration the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:


 


ARTICLE 1


 


INTERPRETATION


 


1.1                                                                               Definitions


 


For the purposes of this Agreement:


 


“Accounts” shall have the
meaning set forth in Article 9 of the UCC;


 


“Acquisition” means any
transaction or series of transactions by which the Borrower or any of its
Subsidiaries, directly or indirectly, by means of a take-over bid, tender
offer, amalgamation, merger, purchase of assets, purchase of shares or
otherwise (a) acquires any ongoing business or all or substantially all of
the assets of any Person engaged in any ongoing business, (b) acquires
beneficial ownership (as defined in Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as
amended) of securities of a Person engaged in any ongoing business representing
more than 10% of the ordinary voting power for the election of directors or
other governing position if the business and affairs of such Person are managed
by a board of directors or other governing body, or (c) acquires
beneficial ownership (as defined in Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as
amended) of more than 10% of the ownership


 


5





















 


interest in any Person engaged in any ongoing business that is not
managed by a board of directors or other governing body;


 


“Additional Guarantors” means any
Subsidiary of the Borrower that executes and delivers a guaranty agreement in
form and substance reasonably satisfactory to the Lender that specifies that it
is a DIP Credit Document;


 


“Advances” mean,
collectively, the Tranche 1 Advances and the Tranche 2 Advances;


 


“Affiliate” means, in
respect of any Person, any other Person which, directly or indirectly, controls
or is controlled by or is under common control with such Person; and for the
purpose of this definition, “control”
(including, with correlative meanings, the terms “controlled by” and “under
common control with”) means the power to direct, or cause to be
directed, the management and policies of a Person whether through the ownership
of voting shares, by contract or otherwise, but for greater certainty the
Lender and its Subsidiaries other than Borrower and its Subsidiaries shall be
deemed not to be Affiliates of Borrower and its Subsidiaries;


 


“Aggregate Payments” has
the meaning ascribed thereto in Section 11.9;


 


“Agreement” means this
agreement and the Disclosure Schedule and all schedules attached to this
agreement or to the Disclosure Schedule, in each case as they may be amended or
supplemented from time to time; the expressions “hereof”, “herein”,
“hereto”, “hereunder”, “hereby” and similar expressions refer to this Agreement as a
whole (including the Disclosure Schedule) and not to any particular article,
Section, schedule or other portion hereof, and the expressions “article” and “Section” followed by a number or by a number and letter, and “Schedule” followed by a letter, mean and
refer to the specified article or Section of or schedule to this
Agreement, as applicable, except as otherwise specifically provided herein;


 


“Alternative Interest Rate”
means for any day the Prime Rate for such day, plus
1,100 basis points (11%);


 


“Applicable Law” means, in
respect of any Person, property, transaction or event, all applicable laws,
statutes, rules, by-laws and regulations, and all applicable official
directives, orders, judgments and decrees of Governmental Bodies but solely to
the extent they have the force of law (and, in the case of Section 3.3
only, whether or not having the force of law but otherwise binding on such
Person or such Person’s property);


 


“Arrangement Fee” has the
meaning ascribed thereto in Section 4.3(a);


 


“Arrangement Fee Payment Date”
has the meaning ascribed thereto in Section 4.3(a);


 


“Asset Sale” has the
meaning ascribed thereto in Section 9.1(g)(iv);


 


“Banking Day” means a day
on which banks are generally open for business in each of New York, New York,
Toronto, Ontario, Zug, Switzerland and London, England;


 


“Bankruptcy Code” has the
meaning ascribed thereto in the recitals to this Agreement;


 


“Bankruptcy Court” has the
meaning ascribed thereto in the recitals to this Agreement;


 


6




















 


“Bid Procedures Motion”
means a motion filed in the Bankruptcy Court no later than March 9, 2009,
seeking approval, among other things, for procedures governing the sale of the
Debtors’ assets, including approval of the Purchase Agreement as a “stalking horse”
agreement;


 


“Bid Procedures Order” has
the meaning ascribed thereto in Section 9.1(g)(iii);


 


“Blocked Persons List” has
the meaning ascribed thereto in Section 6.1(aa)


 


“BMO” means Bank of
Montreal, and its successors and assigns under the BMO Credit Agreement;


 


“BMO Credit Agreement”
means the amended and restated credit agreement made as of July 22, 2005
among the Borrower, as borrower, BMO, as agent and lender, and others, as has
been and may be further amended and restated from time to time, provided that
the principal amount outstanding at any time under the BMO Credit
Agreement as so amended or restated shall not exceed $40,000,000, and includes
any renewal or refinancing of any such agreement or the indebtedness owing
thereunder provided that the principal amount of such renewed or refinanced
indebtedness does not exceed $40,000,000 and security therefor is not increased
thereby;


 


“Borrower” means Magna
Entertainment Corp., a corporation existing under the laws of Delaware, and its
successors and permitted assigns;


 


“Borrower Incorporation Documents”
has the meaning ascribed thereto in Section 6.1(i);


 


“Borrower Note” has the
meaning ascribed thereto in Section 8.2(h);


 


“Borrowing Date” means any
Banking Day on which an Advance is made, or is to be made, in accordance with a
request of the Borrower;


 


“Borrowing Notice” means a
notice substantially in the form of Schedule A;


 


“Bridge Loan Agreement”
has meaning ascribed thereto in the recitals to this Agreement;


 


“Budget” means a six (6) month
budget reflecting projected cash receipts, operating disbursements, payroll
disbursements, non-operating disbursements and cash balances, prepared by the
Borrower and attached hereto as Schedule B, as may be amended, updated or
supplemented from time to time by the Borrower with the prior written consent
of the Lender which consent to be in the Lender’s sole discretion;


 


“Canadian Proceedings”
means any plenary or ancillary proceedings relating to the Borrower or  any of its Subsidiaries commenced in Canada;


 


“Capital Expenditures”
means, for any period, for any Person those expenditures made in connection
with the purchase, lease, license, acquisition, erection, development,
improvement or construction of property of or by such Person (including any
such


 


7

















 


property acquired pursuant to a Capital Lease Obligation) or any other
expenditures, in all cases, which in accordance with GAAP are classified as
capital expenditures; provided, however, that such term shall not include those
expenditures (“Maintenance Capital
Expenditures”) that are (a) required to sustain the capacity
level or useful life of existing operating facilities or (b) required or
lawfully imposed under any Environmental Law or Safety Law, or by any
Governmental Body;


 


“Capital Lease Obligations”
means the obligations of the Borrower or any Subsidiary to pay rent or other
amounts under a lease of (or other agreement conveying the right to use) real
or personal property, which obligations are required to be classified and
accounted for as a capital lease on a balance sheet of such Person under GAAP
and, for purposes of this Agreement, the amount of such obligations shall in
each case be the capitalized amount thereof, determined in accordance with GAAP;


 


“Carve-Out Amount” has the
meaning given to the term “Carve-Out” set forth in the Interim Order and the
Final Order;


 


“Carve-Out Expenses” has
the meaning set forth in the Interim Order and the Final Order;


 


“Cash Equivalents” means
short-term issued guaranteed deposits or certificates of deposit with
recognized financial institutions, bonds or similar obligations carrying the
full faith and credit of the United States of America or any state thereof or
any agency or instrumentality of any of the foregoing unconditionally backed by
such credit and other similar investments acceptable to the Lender in its sole
discretion;


 


“Chapter 11 Case” and
“Chapter 11 Cases” have the
respective meanings assigned to them in the recitals to this Agreement;


 


“Chattel Paper” shall have
the meaning set forth in Article 9 of the UCC;


 


“Claim” has the meaning
ascribed thereto in Section 3.4(a);


 


“Closing Date” means the
date on which this Agreement is executed and delivered by the parties hereto;


 


“Collateral” means all
Accounts, Chattel Paper, Commercial Tort Claims, Documents, Equipment,
Fixtures, Goods, General Intangibles, Instruments, Inventory, Investment
Property (including, without limitation, Equity Interests in Subsidiaries),
Pledged Deposits, Supporting Obligations, and Other Collateral, wherever
located, in which the Borrower or any Guarantor now has or hereafter acquires
any right or interest, and the proceeds (including Stock Rights), insurance
proceeds and products thereof, together with all books and records, customer
lists, credit files, computer files, programs, printouts and other computer
materials and records related thereto. 
Notwithstanding anything to the contrary contained in this definition,
Collateral shall not include (i) rights under governmental licenses,
authorizations or any other asset of the Borrower or any Guarantor, to the
extent and for so long as the grant of a security interest therein is
prohibited by Applicable Law, (ii) any intent-to-use trademark or service
mark application prior to the filing of a statement or use or amendment to
allege use, or any other intellectual property, to the extent that Applicable
Law prohibits the creation of a security interest or would otherwise result in
the loss of rights from the creation of such security interest or from the
assignment of such rights upon the occurrence and


 


8

















 


continuance of an Event of Default, (iii) with respect to any
Equity Interests in any Foreign Subsidiary with respect to which any one or
more of the Borrower and a Guarantor directly owns or controls more than 50% of
such Foreign Subsidiary’s issued and outstanding Voting Interests, the excess
over 65% of all of the Voting Interests in such Foreign Subsidiary (iv) with
respect to any Domestic Subsidiary which is a disregarded entity for U.S.
federal income tax purposes which is the direct parent of a Foreign Subsidiary,
the excess over 65% of all of the Voting Interests in such Domestic Subsidiary;
or (v) with respect to any Additional Guarantor, contractual rights to the
extent and for so long as the grant of a security interest therein pursuant
hereto would violate the terms of the agreement under which such contractual
rights arise or exist to the extent such prohibition is enforceable under
Applicable Law and not created in contemplation of any security interest;


 


“Commercial Tort Claims”
means those certain currently existing commercial tort claims of the Borrower
or any Guarantor, including each commercial tort claim specifically described
in the Disclosure Schedule;


 


“Committee” means the
official committee of unsecured creditors formed in the Chapter 11 Cases;


 


“Commitment Fee” has the
meaning ascribed thereto in Section 4.3(b);


 


“Commitment Fee Payment Date”
has the meaning ascribed to such term in Section 4.3(b);


 


“Compliance Certificate”
has the meaning ascribed thereto in Section 7.1(k)(i);


 


“Contingent
Liabilities”, at any time, means the amount of all indebtedness
and liabilities, contingent or otherwise, of any other Person at such
time,


 


(i)            guaranteed, directly or indirectly, in any
manner by the Borrower or any Subsidiary including, without limitation by way
of, (A) procuring the issue of letters of credit or other similar
instruments for the benefit of that other Person, (B) endorsement of bills
of exchange (otherwise than for collection or deposit in the ordinary course of
business), or (C) the other Person assigning debts of the Borrower or any
Subsidiary (whether or not represented by an instrument) with recourse to the
Borrower or any Subsidiary;


 


(ii)           in effect guaranteed, directly or
indirectly, by the Borrower or any Subsidiary through an agreement, contingent
or otherwise:


 


(A)          to purchase such indebtedness or liabilities
or to advance or supply funds for the payment or purchase of such indebtedness
or liabilities;


 


(B)           to purchase, sell or lease (as lessee or
lessor) property, products, materials or supplies or to purchase or sell
services in circumstances where the primary purpose of such agreement was to
provide funds to the debtor to enable the debtor to make payment of such
indebtedness or liabilities or to provide goods or services to the debtor to
enable it to satisfy other liabilities, regardless of the delivery or
non-delivery of the property, products,


 


9

















 


materials or supplies or the provision or non-provision of the
services, including take or pay or throughput agreements; or


 


(C)           to make any loan, advance, capital
contribution to or other investment in the other Person for the purpose of
assuring a minimum equity, asset base, working capital or other balance sheet
condition at any date or to provide funds for the payment of any
liability, dividend or return of capital; or


 


(iii)          secured by any Lien upon property owned by
the Borrower or any Subsidiary, even though neither the Borrower nor any
Subsidiary has assumed or become liable for the payment of such indebtedness or
liabilities; provided that, if neither the Borrower nor any Subsidiary has
assumed or become liable for such assumption, such indebtedness shall be deemed
to be an amount equal to the lesser of (A) the amount of such indebtedness
and liabilities and (B) the book value of such property.


 


For purposes hereof, a Person shall not be deemed to have a Contingent
Liability if it is the co-maker of the primary obligation and shall have one
Contingent Liability if it has guaranteed the obligations of more than one
primary obligor with respect to the same primary obligation;


 


“Contributing Guarantors”
has the meaning ascribed thereto in Section 11.9;


 


“Core Line of Business”
means the ownership or operation of racetracks and pari-mutuel wagering
activities, as described in the Form 10-K filed by the Borrower for the
year ended December 31, 2007, and including (i) thoroughbred and
harness horse racing, (ii) off-track betting facilities, (iii) account
wagering and other gaming activities including, without limitation, poker, slot
machines and video lottery terminals, (iv) a racetrack and casino complex
in Austria, and (v) any food and beverage operations, sports bar
operations, content acquisition and distribution, technology and media
services, entertainment, the ownership and management of real estate and/or
other activities, associated with or ancillary or related to (i), (ii), (iii) and/or
(iv), above, including the ownership or operation of horse training and
boarding centers, arenas and restaurants;


 


“Debtors” has the meaning
ascribed thereto in the recitals to this Agreement;


 


“Default” means any event
or circumstance which, with the giving of notice, the lapse of time, or both,
would (if not cured or otherwise remedied during such time) constitute an Event
of Default;


 


“Default Rate” means a
rate per annum determined on a daily basis that is equal to the Interest Rate
payable pursuant to Section 4.1(a), as applicable, plus 200 basis points (2%) per annum,
in each case calculated on the basis of the actual number of days elapsed and
on the basis of a year of 365 or 366 days, as the case may be;


 


“Deposit Accounts” has the
meaning ascribed to it in Article 9 of the UCC;


 


10

















 


“DIP Administrative Claim”
means an allowed superpriority administrative expense claim in a Bankruptcy
Case under Section 364(c)(1) of the Bankruptcy Code, having priority
over all administrative expenses of the kind specified in, or ordered pursuant
to, Sections 105, 326, 330, 331, 503(b), 506(c), 507(a), 507(b) or
726 or any other provisions of the Bankruptcy Code;


 


“DIP Credit Amount” means,
collectively, the DIP Tranche 1 Credit Amount and the DIP Tranche 2
Credit Amount;


 


“DIP Credit Commitment”
means, collectively, the DIP Tranche 1 Credit Commitment and the DIP
Tranche 2 Credit Commitment;


 


“DIP Credit Documents”
means, collectively, this Agreement, the Borrower Note, each Guaranty
Agreement, each Pledge and Security Agreement and each other document or
agreement that specifies, with the approval of the Lender, that it is a DIP
Credit Document under this Agreement, and “DIP
Credit Document” means any one of them;


 


“DIP Credit Facility”
means the priority senior secured loans in an aggregate principal amount equal
to the DIP Credit Amount, and all DIP Credit Documents;


 


“DIP Liens” means
perfected Liens on the Collateral of the Borrower and the Initial Guarantors granted
pursuant to Section 364(c)(2), (c)(3) and (d) of the Bankruptcy
Code and shall include Interim DIP Liens under and as defined in the Interim
Order;


 


“DIP Tranche 1 Credit Amount”
means on any day of determination, the aggregate of the principal amount of the
Tranche 1 Advances;


 


“DIP Tranche 2 Credit Amount”
means on any day of determination, the aggregate of the principal amount of the
Tranche 2 Advances;


 


“DIP Tranche 1 Credit Commitment”
means the commitment of the Lender to make Tranche 1 Advances hereunder,
reduced from time to time pursuant to Sections 2.5 and 2.6.  The initial amount of the Lender’s DIP
Tranche 1 Credit Commitment is $13,400,000; provided, subject to the terms
of the Interim Order, that $700,000 of such commitment will be used solely to
reimburse the Lender for its legal fees in connection with the DIP Credit
Facility;


 


“DIP Tranche 2 Credit Commitment”
means the commitment of the Lender to make Tranche 2 Advances hereunder,
reduced from time to time pursuant to Sections 2.5 and 2.6.  The initial amount of the Lender’s DIP
Tranche 2 Credit Commitment is $49,100,000;


 


“DIP Tranche 1 Unutilized Amount”
means, as of any date of determination, the amount by which the then applicable
DIP Tranche 1 Credit Commitment exceeds the DIP Tranche 1 Credit
Amount on such day;


 


“DIP Tranche 2 Unutilized Amount”
means, as of any date of determination, the amount by which the then applicable
DIP Tranche 2 Credit Commitment exceeds the DIP Tranche 2 Credit
Amount on such day;


 


“Disclosure Schedule”
means the disclosure schedule as of the Closing Date prepared and executed by
the Borrower and the Guarantors attached hereto as Schedule C;


 


11

















 


“Documents” has the
meaning ascribed to it in Article 9 of the UCC;


 


“Domestic Subsidiary”
means a Subsidiary organized under the laws of a jurisdiction located in the
United States of America;


 


“Effect of Bankruptcy”
means, with respect to any contractual obligation, contract or agreement to
which the Borrower or any of its Subsidiaries is a party, any default or other
legal consequences arising on account of the commencement or the filing of the
Chapter 11 Cases, as applicable (including the implementation of any
stay), or the rejection of any such contractual obligation, contract or
agreement with the approval of the Bankruptcy Court if required under
applicable Law.


 


“Employee Plan” means an
employee benefit plan defined in Section 3(3) of ERISA in respect of
which the Borrower or any ERISA Affiliate is, or within the immediately
preceding six years was, an “employer” as defined in Section 3(5) of
ERISA, other than a Multiemployer Plan;


 


“Environment” means soil,
land, surface and subsurface strata, surface waters, groundwaters, drinking water
supply, stream sediments, ambient air (including indoor air), all layers of the
atmosphere, all natural resources and the interacting natural systems that
include the foregoing listed components;


 


“Environmental Consent”
means, with respect to the property and operations of the Borrower or any
Guarantor, any consent, approval, permit, license, order, filing,
authorization, exemption, registration, ratification, permission or waiver that
is issued, granted or given by or under the authority of any Governmental Body
regarding environmental matters or under any Environmental Law;


 


“Environmental
Laws” means any Applicable Law that requires or relates to:


 


(i)            notifying appropriate authorities,
employees or the public of the presence of or intended or actual Releases of
Hazardous Materials or violations of discharge limits or other prohibitions or
of the commencement of activities, such as resource extraction or construction,
that could have an impact on the Environment;


 


(ii)           minimizing pollution or protecting the
Environment, including regulating, limiting or restricting the storage,
handling, use, emissions, discharges or Releases of Hazardous Materials;


 


(iii)          the transportation, use and disposal of
Hazardous Materials;


 


(iv)          remediating Hazardous Materials that have
been Released or are in the Environment, preventing the Threat of Release or
paying the costs of such remediation; or


 


(v)           making responsible Persons or polluting
Persons pay private parties or third parties, or groups of them, for damages
done to their health or the Environment or permitting representatives of the
public to recover for 


 


12

















 


injuries done to public assets or to obtain any other remedies
whatsoever, in each case, as a result of a Release or violation of
Environmental Law;


 


and includes all Environmental Consents;


 


“Environmental
or Safety Liability” means any Loss arising from, under, or in
connection with any of the following:


 


(i)            any environmental or safety matter or
condition (including the presence, use, generation, manufacture, disposal or
transport of Hazardous Materials, on-site or off-site contamination associated
with a Release of Hazardous Materials;


 


(ii)           responsibility, financial or otherwise,
under any Environmental Law or Safety Law for clean-up costs or corrective
action, including any clean-up, removal, containment, monitoring or other
remediation or response actions required by any Environmental Law or Safety Law
(whether or not such actions have been required or requested by any
Governmental Body or any other Person) and for any natural resource damages; or


 


(iii)          any other compliance, corrective, remedial or
other measure or cost required or lawfully imposed under any Environmental Law
or Safety Law;


 


“Equipment” has the
meaning ascribed to it in Article 9 of the UCC;


 


“Equity Interests” means
shares of capital stock, partnership interests, membership interests in a
limited liability company, beneficial interests in a trust or other equity
ownership interests in a Person, and any warrants, options or other rights
entitling the holder thereof to purchase or acquire any such equity interest;


 


“ERISA” means the Employee Retirement Income Security Act of 1974,
as amended;


 


“ERISA Affiliate” means (1) any
corporation which is a member of the same controlled group of corporations
(within the meaning of Section 414(b) of the Internal Revenue Code)
as the Borrower; (2) any trade or business (whether or not incorporated)
which is under common control (within the meaning of Section 414(c) of
the Internal Revenue Code) with the Borrower; and (3) a member of the same
affiliated service group (within the meaning of Section 414(m) of the
Internal Revenue Code) as the Borrower, any corporation described in
clause (1) above or any trade or business described in clause (2) above;
or (4) any other Person which is required to be aggregated with the
Borrower pursuant to regulations promulgated under Section 414(o) of
the Internal Revenue Code;


 


“Event of Default” has the
meaning ascribed thereto in Section 9.1;


 


“Excluded Claims” has the
meaning ascribed to thereto in Section 2.13;


 


“Fair Share” has the
meaning ascribed thereto in Section 11.9;


 


13

















 


“Fair Share Contribution Amount”
has the meaning ascribed thereto in Section 11.9;


 


“Fees” means the
Arrangement Fee and the Commitment Fee;


 


“Final Order” means the
order of the Bankruptcy Court entered in the Chapter 11 Cases after a
final hearing under Bankruptcy Rule 4001(c)(2) or such other procedures
as approved by the Bankruptcy Court, which order shall be substantially in the
form of the Interim Order or otherwise reasonably satisfactory in form and
substance to the Lender, and from which no appeal or motion to reconsider has
been timely filed, or if timely filed, such appeal has been stayed, dismissed
or denied unless the Lender waives such requirement, together with all
extensions, modifications and amendments thereto, in form and substance
satisfactory to the Lender;


 


“Fiscal Month” means the
period ending on the last calendar day of each calendar month of each Fiscal
Year;


 


“Fiscal Quarter” means a
period of three consecutive months ending on March 31, June 30, September 30
or December 31, as the case may be, of each Fiscal Year;


 


“Fiscal Year” means the
fiscal year of the Borrower, being January 1 to December 31;


 


“Fixtures” has the meaning
ascribed to it in Article 9 of the UCC;


 


“Foreign Subsidiary” means
a Subsidiary that is a controlled foreign corporation (as defined in Section 957
of the Internal Revenue Code);


 


“Funding Guarantor” has
the meaning ascribed thereto in Section 11.9;


 


“GAAP” means, at any
time, generally accepted accounting principles in effect from time to time in
the United States of America, applied on a consistent basis;


 


“General Intangibles” has
the meaning ascribed to it in Article 9 of the UCC;


 


“Goods” has the meaning
ascribed to it in Article 9 of the UCC;


 


“Governmental Body” means
any government, parliament, legislature, or any regulatory authority, agency,
commission or board of any government, parliament or legislature, or any court
or (without limitation to the foregoing) any other law, regulation or
rule-making entity (including, without limitation, any central bank, fiscal or
monetary authority or authority regulating banks), having jurisdiction in the
relevant circumstances over a Person or such Person’s property, or any Person
acting under the authority of any of the foregoing (including, without
limitation, any arbitrator and the Racing and Gambling Regulatory Authorities);


 


“Guarantor Incorporation Documents”
has the meaning ascribed thereto in Section 6.1(j);


 


14
















 


“Guarantors” means the Initial Guarantors and the Additional
Guarantors;


 


“Guaranty,” with respect to the Initial Guarantors, means the
Initial Guaranty, and with respect to the Additional Guarantors means the
Guaranty Agreement executed by any such Additional Guarantor;


 


“Guaranty Agreement” means a guaranty in form and substance
reasonably satisfactory to the Lender executed by an Additional Guarantor;


 


“Gulfstream Construction Loan
Agreement” means the Third Amended and Restated Gulfstream Park Loan
Agreement made as of December 22, 2006 between Gulfstream Park Racing
Association Inc., as borrower, the Lender, as lender, and others, as the same
has been and may be amended or restated from time to time;


 


“Hazardous Activity” shall
include the distribution, generation, handling, importing, management,
manufacturing, processing, production, refinement, Release, storage, transfer,
transportation, treatment or use (including any withdrawal or other use of
contaminated groundwater) of Hazardous Materials in, on, under, about and from
any real property or any part thereof;


 


“Hazardous Material” means
any material, substance or waste, whether solid, liquid, or gas, that is
defined, regulated or otherwise characterized as a “contaminant” or “pollutant”
or as “hazardous”, “toxic”, “harmful”
or “dangerous” under, or for which
standards of care are imposed by, any provision of any Environmental Law or
Safety Law, and including petroleum, petroleum products, asbestos,
asbestos-containing material, urea formaldehyde and polychlorinated biphenyls;


 


“Indebtedness” of any
Person means without duplication (a) all indebtedness of such Person for
borrowed money, (b) all obligations of such Person evidenced by notes,
bonds, debentures or similar instruments or which bear interest, (c) all
reimbursement and all obligations with respect to letters of credit, bankers’
acceptances, surety bonds and performance bonds, whether or not matured, (d) all
indebtedness for the deferred purchase price of property or services, other
than trade payables incurred in the ordinary course of business, (e) all
indebtedness of such Person created or arising under any conditional sale or
other title retention agreement with respect to property acquired by such
Person (even though the rights and remedies of the seller or lender under such
agreement in the event of default are limited to repossession or sale of such
property), (f) all Capital Lease Obligations of such Person, (g) all
obligations of such Person to purchase, redeem, retire, defease or otherwise
acquire for value any Equity Interests of such Person, valued, in the case of
redeemable preferred stock, at the greater of its voluntary or involuntary
liquidation preference plus
accrued and unpaid dividends, (h) all Indebtedness of the type referred to
above secured by (or for which the holder of such Indebtedness has an existing
right, contingent or otherwise, to be secured by) any Lien upon or in property
(including Accounts and General Intangibles) owned by such Person, even though
such Person has not assumed or become liable for the payment of such
Indebtedness and (i) all Contingent Liabilities of such Person with
respect to any of the obligations described in clauses (a) through (h) above;


 


“Indemnified Person” has
the meaning ascribed thereto in Section 3.4(a);


 


“Indemnifying Party” has
the meaning ascribed thereto in Section 3.4(a);


 


“Initial Guarantors” has the meaning
ascribed thereto in the recitals to this Agreement;


 


“Initial Guaranty” has the meaning
ascribed thereto in Section 11.1;


 


“Instruments” has the
meaning ascribed thereto in Article 9 of the UCC;


 


“Interest Period” means a
period commencing, (i) in the case of the initial Interest Period for any
Advance, on the date of such Advance; and (ii) in the case of any


 


15

















 


subsequent Interest Period, on the last day of the immediately
preceding Interest Period and ending, in either case, on the 30th day of such
period;


 


“Interest Rate” has the
meaning ascribed thereto in Section 4.1(a);


 


“Interim Order” means the
order of the Bankruptcy Court entered in the Chapter 11 Cases after an
interim hearing, substantially in the form attached hereto as Schedule D
or such other form as reasonably satisfactory to the Lender together with all
extensions, modifications, and amendments thereto that are reasonably
satisfactory to the Lender;


 


“Internal Revenue Code”
means the Internal Revenue Code of 1986,
as amended, including the regulations and published interpretations and rulings
thereunder;


 


“Inventory” has the
meaning ascribed to it in Article 9 of the UCC;


 


“Investment Property” has
the meaning ascribed to it in Article 9 of the UCC;


 


“Judgment Currency” has
the meaning ascribed thereto in Section 1.7;


 


“Lender” means MID Islandi
sf., a partnership formed under the laws of Iceland, acting through its Zug
Branch, and its successors and permitted assigns;


 


“Lender’s Costs” has the
meaning ascribed thereto in Section 4.4;


 


“Lender’s Counsel” means
Davies Ward Phillips & Vineberg LLP and Sidley Austin LLP, or such
other firm or firms of solicitors or counsel as are appointed by the Lender
from time to time and notice of which is provided to the Borrower and the
Guarantors;


 


“LIBOR” means the
one-month rate of interest per annum for deposits in US Dollars in the London
interbank market, calculated on the basis of a year of 360 days, equal to
the rate which appears on the Reuters Screen LIBOR01 Page (or any
replacement page) as of 11:00 a.m. (London time) on the day which is two
Banking Days prior to the first day of the relevant Interest Period;


 


“Lien” means any mortgage,
lien, pledge, assignment by way of security, charge, security interest, lease
intended as security, title retention agreement, statutory right reserved in
any Governmental Body, registered lease of properties, hypothec, levy,
execution, seizure, attachment, garnishment or other similar encumbrance;


 


“Material Adverse Change”
means a material adverse change (other than a change resulting from the Effect
of Bankruptcy) in the business, condition (financial or otherwise), operations,
properties, assets, liabilities or prospects of the Borrower (taken as a whole
together with all its Subsidiaries on a consolidated basis) or any Guarantor;


 


“Material Adverse Effect”
means material adverse effect, (other than a change resulting from the Effect
of Bankruptcy), on (a) the business, condition (financial or otherwise),
operations, properties, assets, liabilities or prospects of the Borrower (taken
as a whole together with all of its Subsidiaries on a consolidated basis) or
any of the Guarantors, or


 


16

















 


(b) the ability of the Borrower or any of the Guarantors to
perform its obligations under any DIP Credit Document to which it is a party,
or (c) the rights and remedies of the Lender under this Agreement or any
other DIP Credit Document, or (d) the DIP Liens or any Liens created under
any other DIP Credit Document or the perfection or priority thereof;


 


“Material Agreements”
means any contract, agreement, commitment or other document by which the
Borrower or any of its Subsidiaries is bound, the default under or the
termination of which could reasonably be expected to result in a Material
Adverse Effect;


 


“Material Authorization”
means any approval, permit, license, order, consent or similar authorization
from, and any filing, registration, qualification or recording with, any
Governmental Body, domestic or foreign, required by the Borrower or any of its
Subsidiaries, the absence of which could reasonably be expected to result in a
Material Adverse Effect;


 


“Maturity Date” means the
earliest of (i) six (6) months from the date hereof, (ii) 45 days
after the date on which the Chapter 11 Cases were filed with the Bankruptcy
Court if by such date no Final Order has been entered, (iii) the
acceleration of all or any portion of the Obligations pursuant to Section 9.2,
(iv) the effective date of a confirmed plan of reorganization, provided,
however, that, in connection with subsection (i) above, the
Maturity Date will be automatically extended for one month in the event that a
chapter 11 plan has been confirmed by the Bankruptcy Court, but not yet
consummated;


 


“MID” means MI
Developments Inc. and its successors and permitted assigns;


 


“Multiemployer Plan” means
a multiemployer plan as defined in Section 4001(a)(3) of ERISA;


 


“Non-Excluded Taxes” has
the meaning ascribed thereto in Section 2.8;


 


“Obligations” means all
indebtedness, liabilities and other obligations of the Borrower and Guarantors
to the Lender under any DIP Credit Document (including any amendments or
supplements thereto), whether fixed or contingent, direct or indirect, matured
or not, now existing or arising hereafter and includes, without limitation, all
unpaid principal, interest, fees, costs and other amounts payable by the
Borrower and Guarantors to the Lender hereunder or under any other DIP Credit
Document;


 


17

















 


“Officer’s Certificate”
means, unless otherwise provided herein, in respect of the Borrower, a
certificate signed by any one of the Chair of the Board, the Chief Executive
Officer, the Chief Financial Officer or the Secretary;


 


“Official Body” means any
national government or government of any political subdivision thereof or any
parliament, legislature, council, agency, authority, board, bureau, central
bank, commission, department or instrumentality thereof, or any court,
tribunal, grand jury, mediator or arbitrator, whether foreign or domestic or
any non-governmental regulating body, to the extent that the rules, regulations
and orders of such body have the force of law;


 


“Orders” means the Final
Order and the Interim Order, collectively;


 


“Organizational Documents”
has the meaning ascribed thereto in Section 6.1(j);


 


“Other Collateral” means
any property of the Borrower and the Guarantors, not included within the
defined terms Accounts, Chattel Paper, Commercial Tort Claims, Documents,
Equipment, Fixtures, General Intangibles, Instruments, Inventory, Investment
Property and Pledged Deposits, including, without limitation, all cash on hand,
letter-of-credit rights, letters of credit, Stock Rights and Deposit Accounts
or other deposits (general or special, time or demand, provisional or final)
with any bank or other financial institution, it being intended that the
Collateral include all personal property of the Borrower and the Guarantors,
and in the case of any Additional Guarantor, such other property as agreed to
between the Lender and such Additional Guarantor;


 


“PBGC” means the Pension
Benefit Guaranty Corporation established pursuant to Section 4002 of
ERISA, or any successor thereto;


 


“Permitted Debt” means (i) the
Obligations; (ii) the Pre-Petition MID Secured Loans; (iii) the
Pre-Petition Third Party Secured Loans; (iv) unsecured trade and other
accounts payable incurred in the ordinary course of business for the purpose of
carrying on the same including the “Construction” (as defined in the Remington
Construction Loan Agreement) and the “Reconstruction” (as defined in the
Gulfstream Construction Loan Agreement); (v) unsecured intercompany
indebtedness of the Borrower to any of the Guarantors or of any of the
Guarantors to the Borrower, provided that such unsecured intercompany
indebtedness is entered into on customary terms and in the ordinary course of
the Borrower and (vi) Indebtedness contemplated by the Budget;


 


“Permitted Lender Assignee”
has the meaning ascribed thereto in Section 10.8;


 


“Permitted
Liens” means any:


 


	
  (i)

  	
   

  	
  Liens for taxes, assessments or governmental charges or levies
  incurred in the ordinary course of business that are not yet due and payable
  or the validity of which is being actively and diligently contested in good
  faith by the Borrower or a Subsidiary, as the case may be, in respect of
  which the Borrower or a Subsidiary has established on its books adequate
  reserves therefor, and for which any enforcement proceedings, if commenced,
  have been stayed or for which payment has been made in accordance with
  (vii) below;

  



 


18

















 


	
  (ii)

  	
   

  	
  rights reserved to or vested in any Governmental Body by the terms of
  any lease, license, franchise, grant or permit, or by any statutory
  provision, to terminate the same, to take action which results in an
  expropriation, or to require annual or other periodic payments as a condition
  to the continuance thereof;

  
	
   

  	
   

  	
   

  
	
  (iii)

  	
   

  	
  construction, mechanics’, workers’, repairers’, carriers’,
  warehousemen’s and materialmen’s Liens and Liens in respect of vacation pay,
  workers’ compensation, social security, old age pension, employment insurance
  or similar statutory obligations, provided the obligations secured by such
  Liens are not yet due and payable and, in the case of construction Liens,
  which have not yet been filed or for which the Borrower or a Subsidiary has
  not received written notice of a Lien or for which a construction lien has
  been filed and the Borrower or a Subsidiary is contesting such Lien
  diligently and in good faith;

  
	
   

  	
   

  	
   

  
	
  (iv)

  	
   

  	
  Liens arising from court or arbitral proceedings which have been commenced
  or are pending, provided that the claims secured thereby are being contested
  in good faith by the Borrower or a Subsidiary; any execution thereon has been
  stayed and continues to be stayed; and such Liens do not materially impair
  the use of the property in the business of the Borrower or the Subsidiary, as
  the case may be;

  
	
   

  	
   

  	
   

  
	
  (v)

  	
   

  	
  good faith deposits made in the ordinary course of business to secure
  the performance of bids, tenders, contracts (other than for the repayment of
  borrowed money), leases, surety, customs, performance bonds and other similar
  obligations;

  
	
   

  	
   

  	
   

  
	
  (vi)

  	
   

  	
  deposits to secure public or statutory obligations or in connection
  with any matter giving rise to a Lien described in (iii) above;

  
	
   

  	
   

  	
   

  
	
  (vii)

  	
   

  	
  deposits of cash or securities in connection with any appeal, review
  or contestation of any Lien or any matter giving rise to a Lien described in
  (i) or (iv) above;

  
	
   

  	
   

  	
   

  
	
  (viii)

  	
   

  	
  minor title defects or irregularities, minor encroachments, zoning
  laws and ordinances, easements, servitudes, party wall agreements, licenses,
  rights of way, restrictions that run with the land, leases, municipal by-laws
  and regulations or other similar encumbrances or privileges in respect of any
  owned or leased real property (including without limitation, easements,
  rights of way and agreements for sewers, trains, gas and water mains or
  electric conduits, poles, wires and cable) which in the aggregate do not
  materially impair the use of such property by the Borrower or a Subsidiary,
  as the case may be, in the operation of its business, and which are not
  violated in any material respect by existing or proposed structures or land
  use;

  



 


19

















 


	
  (ix)

  	
   

  	
  security given by the Borrower or a Subsidiary to a public utility or
  any Governmental Body, when required by such utility or Governmental Body in
  connection with the operations of the Borrower or a Subsidiary, as the case
  may be, in the ordinary course of its business, which singly or in the
  aggregate do not materially impair the use of the asset concerned in the
  operation of the business of the Borrower or the Subsidiary, as the case may
  be;

  
	
   

  	
   

  	
   

  
	
  (x)

  	
   

  	
  the reservation in any original grants from the Crown of any land or
  interest therein and statutory exceptions to title;

  
	
   

  	
   

  	
   

  
	
  (xi)

  	
   

  	
  Liens granted by the Borrower to any Guarantor or by any Subsidiary
  of the Borrower to the Borrower or any other Guarantor;

  
	
   

  	
   

  	
   

  
	
  (xii)

  	
   

  	
  any Lien, other than a construction Lien, payment of which has been
  provided for by deposit with the Lender of an amount in cash, or the
  obtaining of a surety bond or letter of credit satisfactory to the Lender,
  sufficient in either case to pay or discharge such Lien or upon other terms
  satisfactory to the Lender;

  
	
   

  	
   

  	
   

  
	
  (xiii)

  	
   

  	
  any Lien securing Permitted Debt, unless same is by definition
  unsecured;

  
	
   

  	
   

  	
   

  
	
  (xiv)

  	
   

  	
  assignments of insurance provided to landlords (or their mortgagees)
  pursuant to the terms of any lease and Liens or rights reserved in or
  exercised under any lease and any statutory or common law rights of landlords
  for rent or compliance with the terms of such lease;

  
	
   

  	
   

  	
   

  
	
  (xv)

  	
   

  	
  rights and interests created by notice registered by any
  transportation authority with respect to proposed roads or highways which do
  not materially impair the use of properties owned or leased by the Borrower
  or a Subsidiary in the operation of the business of the Borrower or a
  Subsidiary;

  
	
   

  	
   

  	
   

  
	
  (xvi)

  	
   

  	
  the granting by the Borrower or any Subsidiary in the ordinary course
  of its business consistent with past practice of any lease, sub-lease,
  tenancy or right of occupancy to any Person in respect of properties owned or
  leased by the Borrower or a Subsidiary;

  
	
   

  	
   

  	
   

  
	
  (xvii)

  	
   

  	
  applicable municipal by-laws, development agreements, subdivision
  agreements, site plan agreements, zoning laws and building restrictions which
  do not in the aggregate materially adversely affect the current use of the
  property affected thereby and provided that the same have been complied with
  in all material respects;

  
	
   

  	
   

  	
   

  
	
  (xviii)

  	
   

  	
  any attachment or judgment Lien not constituting an Event of Default;

  
	
   

  	
   

  	
   

  
	
  (xix)

  	
   

  	
  adequate protection and substitute Liens granted pursuant to the
  Orders or any other order of the Bankruptcy Court after notice and hearing;

  



 


20

















 


	
  (xx)

  	
   

  	
  the
  Liens granted pursuant to this Agreement or any other DIP Credit Document on
  the Collateral;

  
	
   

  	
   

  	
   

  
	
  (xxi)

  	
   

  	
  any
  other Lien which the Lender approves in writing as a Permitted Lien; or

  
	
   

  	
   

  	
   

  
	
  (xxiii)

  	
   

  	
  Liens
  represented by the Carve-Out Amount;

  



 


“Permitted Variance” means,
with respect to the Budget, for any calendar month, the product of (x) the
aggregate amount of the Budget for such calendar month and (y) 10%, in the
aggregate;


 


“Person” means any
individual, partnership, limited partnership, limited liability company, joint
venture, syndicate, sole proprietorship, company or corporation with or without
share capital, unincorporated association, trust, trustee, executor,
administrator or other legal or personal representative, Governmental Body or
any other legal entity;


 


“Petition Date” has the
meaning ascribed thereto in the recitals to this Agreement;


 


“Pledge and Security Agreement” means a
pledge and security agreement in form and substance reasonably satisfactory to
the Lender executed by an Additional Guarantor;


 


“Pledged Deposits” means
all time deposits of money (other than Deposit Accounts and Instruments),
whether or not evidenced by certificates, which the Borrower or any Guarantor
may from time to time designate as pledged to the Lender as security for any
Obligations, and all rights to receive interest on said deposits;


 


“PNC Credit Agreement”
means the PNC Credit Agreement, dated as of November 27, 2002 between the
Borrower and PNC Bank, National Association or a predecessor thereof, existing
on the date hereof;


 


“Post-Petition” means the
time period beginning immediately upon the filing of the Chapter 11 Cases;


 


“Post-Petition Indebtedness”
means any or all Indebtedness of the Borrower incurred after the filing of the
Chapter 11 Cases;


 


“Pre-Petition” means the
time period ending immediately prior to the filing of the Chapter 11
Cases;


 


“Pre-Petition Indebtedness”
means all Indebtedness of the Borrower or any Initial Guarantor outstanding on
the Petition Date immediately prior to the filing of the Chapter 11 Cases
other than Indebtedness under the Pre-Petition Loan Agreement;


 


“Pre-Petition Loan Agreement”
has the meaning ascribed thereto in the recitals to this Agreement;


 


“Pre-Petition Loan Documents”
has the meaning assigned to the term “2008 Loan Documents” in the Pre-Petition
Loan Agreement;


 


“Pre-Petition MID Secured Loans”
means (i) Indebtedness under the Bridge Loan Agreement, (ii) Indebtedness
under the Pre-Petition Loan Agreement, (iii) Indebtedness


 


21

















 


under the Remington Construction Loan Agreement; and (iv) Indebtedness
under the Gulfstream Construction Loan Agreement;


 


“Pre-Petition Third Party Secured
Loans” means loans under the following agreements:  (i) the BMO Credit Agreement, (ii) the
PNC Credit Agreement, (iii) the SunTrust Credit Agreement, (iv) the
Santa Anita Senior Facility, (v) the existing credit agreement dated March 5,
2004 between Borrower’s Austrian subsidiary MEC Grunstucksentwicklungs GmbH and
Raiffeinsenlandebank Niederosterreich-Wein AG, as amended in December 2007,
and (vi) the loan agreement among, inter alia,
Keybank National Association, as principal lender, and The Village
at Gulfstream Park, LCC, as borrower, where such indebtedness is
non-recourse to the Borrower and the Gulfstream Guarantor (as defined in the
Bridge Loan Agreement) and arises under the May 1, 2005 limited liability
company agreement, as amended, by which The Village at Gulfstream Park,
LLC, was formed;


 


“Prime Rate” means for any
day, a variable rate of interest, per annum, most recently published in The Wall Street Journal as the “prime
rate.”  The Prime Rate shall adjust daily
and automatically without notice to the Borrower.  If more than one Prime Rate is published in The Wall Street Journal for a day, the
highest of such Prime Rates shall be used. 
If The Wall Street Journal
is no longer published or ceases to publish the Prime Rate, the Lender may
substitute another publication publishing the Prime Rate, reasonably acceptable
to the Lender.  If Prime Rates are no
longer generally published or are limited, regulated or administered by a
Governmental Body, the Lender may substitute another rate approximating the
Prime Rate;


 


“Prior Lender” means the
lender under the Pre-Petition Loan Agreement;


 


“proceedings” has the
meaning ascribed thereto in Section 6.1(n);


 


“Purchase Agreement” means
the purchase agreement dated March 5, 2009 by and among Magna
Entertainment Corp., Gulfstream Park Racing Association, Inc., GPRA
Commercial Enterprises, Inc., GPRA Thoroughbred Training Center, Inc.,
MEC Land Holdings (California) Inc., MEC Maryland Investments, Inc., MEC
Texas Racing, Inc., Pacific Racing Association, Racetrack Holdings, Inc.,
30000 Maryland Investments LLC, XpressBet, Inc. and MI Developments Inc.;


 


“Racing and Gambling Regulatory
Authorities” means the racing and gambling regulatory authorities in
each state where the Borrower or any Guarantor (or any of their respective
Subsidiaries) maintains racetracks and/or carries on business, including
(without limitation) the California Horse Racing Board and the Maryland Racing
Commission;


 


“Register” has the meaning
ascribed thereto in Section 10.8(b);


 


“Registered Advance” has
the meaning ascribed thereto in Section 10.8(b);


 


“Regulation U” means
Regulation U of the Board of Governors of the Federal Reserve System, in
effect from time to time;


 


22

















 


“Release” means any
release, spill, emission, leaking, pumping, pouring, dumping, emptying,
injection, deposit, disposal, discharge, dispersal, leaching or migration or
other movement on, into or through the Environment or on, into, through, over
or out of any property;


 


“Released Claims” has the
meaning ascribed thereto in Section 2.13;


 


“Released Parties” has the
meaning ascribed thereto in Section 2.13;


 


“Releasing Parties” has
the meaning ascribed thereto in Section 2.13;


 


“Remington Construction Loan
Agreement” means the loan agreement made as of July 22, 2005
between Remington Park, Inc., as borrower, the Lender, as lender, and
others, as the same has been and may be amended or restated from time to time;


 


“Reportable Event” means
an event described in Section 4043(c) of ERISA with respect to an
Employee Plan as to which the 30-day notice requirement has not been waived by
PBGC, other than an event described in Section 4043(c)(10) of ERISA;


 


“Safety Consent” means any
consent, approval, permit, license, order, filing, authorization, exemption,
registration, ratification or permission granted or given by or under the authority
of any Governmental Body regarding health or safety matters or under any Safety
Law;


 


“Safety Law” means any
Applicable Law designed to provide safe or healthy conditions for the public or
workers and to reduce safety or health hazards for the public or workers and
includes all Safety Consents;


 


“Sale Order” has the
meaning ascribed thereto in Section 9.1(g)(iv);


 


“Santa Anita Senior Facility”
means the term loan credit agreement dated as of October 8, 2004 between
The Santa Anita Companies, Inc. and Wells Fargo Bank, National
Association, together with all guaranties and collateral security therefor, as
amended as of the Closing Date, having a principal amount outstanding
at any time of not greater than $75,000,000, and includes any renewal or refinancing
of any such facility provided the indebtedness thereof or security therefor is
not increased thereby;


 


“Securities Acts” means
both the Securities Act of 1933,
as amended, and the Securities Exchange Act
of 1934, as amended, and the respective rules and regulations
promulgated thereunder;


 


“Securities Commission”
means the Securities and Exchange Commission of the United States of America,
or other Governmental Body in replacement thereof;


 


“Shareholder Claims” has
the meaning ascribed thereto in Section 2.14;


 


“Stock Rights” means any
securities, dividends or other distributions and any other right or property
which the Borrower or any Guarantor shall receive or shall become entitled to
receive for any reason whatsoever with respect to, in substitution for or in
exchange for


 


23

















 


any securities or other ownership interests in a corporation,
partnership, joint venture or limited liability company constituting Collateral
and any securities, any right to receive securities and any right to receive
earnings, in which the Borrower or any Guarantor now has or hereafter acquires
any right, issued by an issuer of such securities;


 


“Subordinated Debt” means,
collectively, up to $75,000,000 principal amount of 7.25% convertible
subordinated notes due December 15, 2009 issued by the Borrower pursuant
to an indenture dated December 2, 2002, and up to $150,000,000 principal
amount of 8.55% convertible subordinated notes due June 15, 2010 issued by
the Borrower pursuant to an indenture dated June 2, 2003, each with the
Bank of New York, and each as the same may be amended or modified from time to
time on the terms approved by the Lender;


 


“Subsidiary” means, with
respect to any Person at any time, any Person of which at least a
majority of the votes attaching to Voting Interests are at the time,
directly or indirectly, owned by such Person;


 


“SunTrust Credit Agreement”
means the loan and security agreement made as of May 11, 2007 among AmTote
International, Inc., as borrower, and SunTrust, as lender, as has been and
may be further amended and restated from time to time, provided that the
principal amount outstanding at any time under the SunTrust Credit
Agreement as so amended or restated shall not exceed $4.5 million, and includes
any renewal or refinancing of any such agreement or the indebtedness owing
thereunder provided that the principal amount of such renewed or refinanced
indebtedness does not exceed $4.5 million and security therefor is not
increased thereby;


 


“Supporting Obligation”
has the meaning ascribed thereto in Article 9 of the UCC;


 


“Taxes” means all taxes of
any kind or nature whatsoever including, without limitation, income taxes,
sales or value-added taxes, goods and services or use taxes, levies, imposts,
stamp taxes, royalties, duties, and all fees, deductions, charges and
withholdings imposed, levied, collected, withheld or assessed as of May 1,
2002 or at any time thereafter, by any Governmental Body of or within the
United States of America or any other jurisdiction whatsoever having power to
tax, together with penalties, fines, additions to tax and interest thereon;


 


“Termination Date” means
the date on which the latest of (a) the Maturity Date, (b) all the
Advances have been indefeasibly repaid in full in cash, (c) all other
Obligations under the Agreement and the other DIP Credit Documents have been
completely discharged, and (d) the Borrower shall not have any further
right to borrow any monies under this Agreement, shall have occurred;


 


“Threat of Release” means
a reasonable likelihood of a Release that could require action in order to
prevent or mitigate damage to the Environment that may result from such
Release;


 


“Tranche 1 Advance”
has the meaning ascribed to such term in Section 2.1(a);


 


24
















 


“Tranche 2 Advance”
has the meaning ascribed to such term in Section 2.1(a);


 


“Tranche 1 Arrangement Fee”
has the meaning ascribed thereto in Section 4.3(a);


 


“Tranche 2 Arrangement Fee”
has the meaning ascribed thereto in Section 4.3(a);


 


“UCC” means the Uniform Commercial Code
as the same may, from time to time, be enacted and in effect in the State of
New York; provided, that to the extent that the UCC is used to define
any term herein or in any DIP Credit Document and such term is defined
differently in different Articles or Divisions of the UCC, the definition of
such term contained in Article or Division 9 shall govern; provided, further,
that in the event that, by reason of mandatory provisions of law, any or all of
the attachment, perfection or priority of, or remedies with respect to the
Lender’s Lien on any Collateral is governed by the Uniform Commercial Code as
enacted and in effect in a jurisdiction other than the State of New York or any
similar provisions under Canadian law, the term “UCC”
shall mean the Uniform Commercial Code as enacted and in effect in such other
jurisdiction solely for purposes of the provisions thereof relating to such
attachment, perfection, priority or remedies and for purposes of definitions
related to such provisions;


 


“Unaudited Financial Statements”
means the unaudited consolidated financial statements of the Borrower for the
Fiscal Quarter ended December 31, 2008;


 


“Unutilized Amount” means,
on any day of determination, the sum of the DIP Tranche 1 Unutilized
Amount and the DIP Tranche 2 Unutilized Amount;


 


“US Dollars” means lawful
money of the United States of America; and


 


“Voting Interests” means
shares of capital stock issued by a corporation (or other equivalent ownership
interests in any other Person), the holders of which are ordinarily, in the
absence of contingencies, entitled to vote for the election of directors (or
Persons performing similar functions) of such Person, even if the right so to
vote has been suspended by the happening of such a contingency.


 


1.2                                                                               Gender and Number


 


Words importing the singular include the plural and vice versa and
words importing gender include all genders.


 


1.3                                                                               Invalidity, etc.


 


Each of the provisions contained in any DIP Credit Document is distinct
and severable and the invalidity, illegality or unenforceability of any such
provision or part thereof under Applicable Law or otherwise shall not affect
the validity or enforceability of any other provision of such DIP Credit
Document or any other DIP Credit Document. 
Without limiting the generality of the foregoing, if any amounts on
account of interest or fees or otherwise payable by the Borrower or the
Guarantors to the Lender hereunder exceed the maximum amount recoverable under
Applicable Law, the amounts so payable hereunder shall be reduced to the
maximum amount recoverable under Applicable Law.


 


1.4                                                                               Headings, etc.


 


The division of a DIP Credit Document into articles, Sections and
clauses, the inclusion of a table of contents and the insertion of headings are
for convenience of reference only and shall not affect the construction or
interpretation of such DIP Credit Document.


 


1.5                                                                               Governing Law


 


This Agreement shall be governed by and construed in accordance with
the laws of the State of New York applicable to contracts wholly to be
performed within such State, subject to applicable provisions of the Bankruptcy
Code.


 


25

















 


1.6                                                                               Submission to Jurisdiction


 


THE LENDER, THE BORROWER AND EACH GUARANTOR HEREBY CONSENTS AND AGREES
THAT THE BANKRUPTCY COURT SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND
DETERMINE ANY CLAIMS OR DISPUTES BETWEEN THE BORROWER AND THE INITIAL GUARANTORS,
ON THE ONE HAND, AND THE LENDER, ON THE OTHER HAND, PERTAINING TO THIS
AGREEMENT OR ANY OF THE OTHER DIP LOAN DOCUMENTS OR TO ANY MATTER ARISING OUT
OF OR RELATING TO THIS AGREEMENT OR ANY OF THE OTHER DIP LOAN DOCUMENTS; PROVIDED,
THAT THE LENDER, THE BORROWER AND THE INITIAL GUARANTORS ACKNOWLEDGE THAT ANY
APPEALS FROM THE BANKRUPTCY COURT MAY HAVE TO BE HEARD BY A COURT OTHER
THAN THE BANKRUPTCY COURT; PROVIDED, FURTHER, THAT, SUBJECT TO
RECEIVING PRIOR APPROVAL FROM THE BANKRUPTCY COURT AUTHORIZING SUCH ACTION,
NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE THE LENDER
FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO
REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO
ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF THE LENDER.  THE LENDER, THE BORROWER AND THE INITIAL GUARANTORS
EXPRESSLY SUBMIT AND CONSENT IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR
SUIT COMMENCED IN ANY SUCH COURT, AND THE LENDER, THE BORROWER AND THE INITIAL GUARANTORS
HEREBY WAIVE ANY OBJECTION THAT SUCH PERSON MAY HAVE BASED UPON LACK OF
PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS AND HEREBY
CONSENT TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED
APPROPRIATE BY SUCH COURT.  THE LENDER,
THE BORROWER AND THE INITIAL GUARANTORS HEREBY WAIVE PERSONAL SERVICE OF THE
SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND
AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE
MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO SUCH PERSON AT THE ADDRESS
SET FORTH IN SECTION 10.6 OF THIS AGREEMENT AND THAT SERVICE SO MADE SHALL
BE DEEMED COMPLETED UPON THE EARLIER OF SUCH PERSON’S ACTUAL RECEIPT THEREOF OR
THREE (3) DAYS AFTER DEPOSIT IN THE UNITED STATES MAILS, PROPER POSTAGE
PREPAID.


 


1.7                                                                               Judgment Currency


 


All amounts to be paid pursuant to this Agreement shall be payable when
due in U.S. dollars, in the full amount due, without deduction for any
variation in any rate of exchange (as defined below).  Each party hereto hereby agrees to indemnify
the other parties hereto against any loss incurred by any of them as a result
of any judgment or order being given or made for the amount due hereunder and
such judgment or order being expressed and paid in a currency (the “Judgment Currency”) other than U.S. dollars
and as a result of any variation as between (a) the rate of exchange
at which the amount in U.S. dollars is converted into the Judgment
Currency for the purpose of such judgment or order and (b) the rate of
exchange at which such party is then able to purchase U.S. dollars with
the amount of the Judgment Currency actually received by it.  The term “rate of exchange” shall include any
premiums and costs of exchange 


 


26

















 


payable in connection with the purchase of, or conversion into, the
relevant currency with or from U.S. dollars.


 


1.8                                                                               References


 


Except as otherwise specifically provided, reference in any DIP Credit
Document to any contract, agreement or any other instrument (including, without
limitation, any other DIP Credit Document) shall be deemed to include
references to the same as varied, amended, restated, supplemented or replaced
from time to time and reference in any DIP Credit Document to any enactment,
including without limitation, any statute, law, by-law, regulation, ordinance
or order, shall be deemed to include references to such enactment as
re-enacted, amended or extended from time to time.


 


1.9                                                                               Currency


 


Except as otherwise specifically provided herein, all monetary amounts
in this Agreement are stated in U.S. dollars.


 


1.10                                                                        Conflict of Terms


 


Except as otherwise provided in this Agreement or any of the other DIP
Credit Documents by specific reference to the applicable provisions of this
Agreement, and subject to the immediately following sentence, if any provision
contained in this Agreement conflicts with any provision in any of the other
DIP Credit Documents, the provision contained in this Agreement shall govern
and control.  Notwithstanding the
foregoing, if any provision in this Agreement or any other DIP Credit Document
conflicts with any provision in the Interim Order or Final Order, the provision
in the Interim Order or Final Order shall govern and control.


 


1.11                                                                        Generally Accepted Accounting Principles


 


Except as otherwise specifically provided herein, all accounting terms
shall be applied and construed in accordance with GAAP (including, without
limitation, determining the amount of any Contingent Liability).


 


1.12                                                                        Computation of Time Periods


 


Except as otherwise specifically provided herein, in the computation of
a period of time from a specified date to a later specified date, the word “from” means “from and including” and the words “to” and “until”
each mean “to but excluding”.


 


1.13                                                                        Actions on Days Other Than Banking Days


 


Except as otherwise specifically provided herein, where any payment is
required to be made or any other action is required to be taken on a particular
day and such day is not a Banking Day and, as a result, such payment cannot be
made or action cannot be taken on such day, then this Agreement shall be deemed
to provide that such payment shall be made or such action shall be taken on the
first Banking Day after such day and interest and fees shall be calculated
accordingly.  If the payment of any
amount is deferred for any period under this 


 


27

















 


Section, then such period shall, unless otherwise provided herein, be
included for purposes of the computation of any interest or fees payable
hereunder.


 


1.14                                                                        Oral Instructions


 


Notwithstanding any other provision herein regarding the delivery of
notices, including Borrowing Notices, by the Borrower, the Lender shall in its
sole discretion be entitled to act upon the oral instructions of the Borrower,
or any Person reasonably believed by the Lender to be a Person authorized by
the Borrower to give instructions, regarding any request for an Advance.  All such oral instructions shall be
at the risk of the Borrower and must be confirmed in writing by the
Borrower on the same Banking Day as the verbal instruction is given.  The Lender shall not be responsible for any
error or omission in such instructions or in the performance thereof except in
the case of gross negligence, willful misconduct, fraud or illegal acts by the
Lender or any of its officers, directors, employees, agents or representatives.


 


1.15                                                                        No Strict Construction.


 


The parties hereto 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 hereto and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any provisions of this Agreement.


 


1.16                                                                        Incorporation of Schedules


 


The following schedules annexed hereto shall, for all purposes hereof,
form part of this Agreement:


 


	
  Schedule A

  	
  Borrowing Notice

  
	
  Schedule B

  	
  Budget

  
	
  Schedule C

  	
  Disclosure Schedule

  
	
  Schedule D

  	
  Interim Order

  



 


ARTICLE 2




DIP CREDIT COMMITMENT


 


2.1                                                                               Establishment of DIP Credit Commitment


 


(a)                                  Subject
to the terms and conditions set forth herein, the Lender agrees to make non
revolving loans (each, a “Tranche 1
Advance” and, collectively, the “Tranche 1
Advances”) to the Borrower from time to time on any Banking Day
during the period from the entry of the Interim Order to the Maturity Date in
an aggregate principal amount that will not result in the DIP Tranche 1
Credit Amount exceeding the Lender’s DIP Tranche 1 Credit Commitment.


 


(b)                                 Subject
to the terms and conditions set forth herein, the Lender agrees to make non
revolving loans (each, a “Tranche 2
Advance” and, collectively, the “Tranche 2
Advances”) to the Borrower from time to time on any Banking Day
during the period from the 


 


28

















 


entry of the
Final Order to the Maturity Date in an aggregate principal amount that will not
result in the DIP Tranche 2 Credit Amount exceeding the Lender’s DIP
Tranche 2 Credit Commitment.


 


(c)                                  All
Advances shall be made in US Dollars.


 


(d)                                 At
no time shall the amount of the DIP Credit Amount exceed the DIP Credit
Commitment available to the Borrower at such time.


 


(e)                                  Advances
will be made to the Borrower on a monthly basis in accordance with, and subject
to compliance with, the Budget, subject to the Permitted Variance.


 


2.2                                                                               Use of Proceeds


 


Amounts available under the DIP Credit Facility will be used solely
for, in each case only to the extent specified in the Budget, subject to the
applicable Permitted Variance, payment of (i) Post-Petition operating expenses
and other working capital and financing requirements of the Borrower and its
Subsidiaries, (ii) capital call contributions required to be paid by the
Borrower and its Subsidiaries, (iii) Capital Expenditures, (iv) fees,
costs and expenses associated with the DIP Credit Facility, (v) other
payments as reflected in the Budget, and (vi) other costs and expenses of
administration of the Chapter 11 Cases.


 


2.3                                                                               Non-Revolving Nature of DIP Credit Commitment


 


The DIP Credit Facility is a non-revolving facility and any portion of
the DIP Credit Commitment that is drawn shall reduce the DIP Credit Commitment
and may not be re-borrowed.


 


2.4                                                                               Pre-Payment


 


The Borrower may from time to time (without premium or penalty) on any
Banking Day prepay to the Lender all or any portion of the DIP Credit Amount,
provided that any such repayment (a) shall be in an amount of
at least $500,000 (or if less, the outstanding DIP Credit Amount) and any
greater amount shall be an integral multiple of $50,000, (b) shall be
effected on at least 5 Banking Days notice in writing to the Lender;
provided that such notice, once given, shall be irrevocable and binding upon
the Borrower, and (c) shall be accompanied by payment of all accrued and
unpaid interest, owing as of such date on the principal amount so prepaid.  The principal amount of the DIP Credit Amount
shall be automatically and permanently reduced by the principal amount of any
such repayment.


 


2.5                                                                               Mandatory Repayment


 


(a)                                  The
DIP Credit Amount shall be repaid in the following amounts and circumstances:


 


(i)            in the event that the outstanding principal
amount of the DIP Credit Amount at any time shall exceed the then effective DIP
Credit Commitment at such time, the Borrower shall forthwith make a repayment
on account of the DIP Credit Amount such that, after giving effect to such 


 


29

















 


repayment, the aggregate principal amount of the DIP Credit Amount
outstanding will be not more than the DIP Credit Commitment;


 


(ii)           upon the receipt by the Borrower or any of
its Subsidiaries of the net proceeds of:


 


(A)          insurance claims in excess of $1,000,000 in
the aggregate during the term of this Agreement, other than proceeds of claims
under business interruption insurance, in respect of any of the assets and
undertaking of the Borrower or any of its Subsidiaries, unless such proceeds
are used for repairs or reconstruction of damaged properties (as approved by
the Lender, acting reasonably),


 


(B)           asset and/or real property sales by the
Borrower or any of its Subsidiaries out of the ordinary course of business
consistent with past practice (which ordinary course of business includes the
sale of individual residential lots at market prices), and


 


(C)           any expropriation or condemnation of the
whole or any part of its real property or other assets,


 


an amount equal to 100% of such net proceeds shall be applied to repay
the DIP Credit Amount until such amount is reduced to zero (0) and then to
reduce the Unutilized Amount; and


 


(iii)          on the Maturity Date.


 


(b)                                 The
repayments referred to in items (A) and (B)  of Section 2.5(a)(ii) shall
be made as promptly as practicable (and in any event within 3 Banking Days)
following the receipt by any of the Borrower and/or its Subsidiaries of the net
proceeds referred to therein.  Upon the
repayment of the principal amount of the DIP Credit Amount pursuant to Section 2.5(a),
the DIP Credit Amount shall be permanently reduced by an amount equal to the
principal paid.


 


(c)                                  For
the purposes of this Section 2.5, net proceeds from any sale or other
transaction referred to herein means the proceeds (including any cash received
in respect of non-cash proceeds (including any cash payments received by way of
deferred payment of principal pursuant to a note or installment receivable or
purchase price adjustment receivable or otherwise, but excluding any interest
payments) but only as and when received) received by the Borrower and/or any of
its Subsidiaries therefrom net of all reasonable professional fees, brokers
fees paid on an arm’s-length market basis, filing fees, commissions, sales tax
and other direct costs and expenses of such transaction, together with, where
applicable, in respect of any sale or other disposition of assets, the amounts
necessary to repay or otherwise satisfy all Permitted Liens attaching to such
assets ranking in priority to the DIP Liens or any Lien created under any other
DIP Credit Document or arising by virtue of this Agreement.


 


2.6                                                                               Voluntary Reduction in DIP Credit Commitment


 


The Borrower shall have the right at any time and from time to
time, by giving at least 5 Banking Days’ notice to the Lender, which
notice, once given, shall be irrevocable and 


 


30

















 


binding upon the Borrower, to reduce the DIP Credit Commitment then in
effect.  Such notice shall specify the
amount of the reduction, which shall be in an integral multiple of
$250,000.  The amount of any such
reduction so made by the Borrower shall be permanent and irrevocable and the
DIP Credit Commitment shall be reduced accordingly.


 


2.7                                                                               Payments Generally


 


All payments in respect of the DIP Credit Commitment (in respect of
principal, interest, fees or otherwise) shall be made by the Borrower to the
Lender no later than 1:00 p.m. (New York time) on the due date thereof to
the account specified therefor by the Lender from time to time.  Any payments received after such time shall
be considered for all purposes as having been made on the next following
Banking Day unless the Lender otherwise agrees in writing.  All payments shall be made by way of
immediately available funds.


 


2.8                                                                               Tax Matters


 


(a)                                  Each
party to this Agreement agrees to treat the DIP Credit Commitment as debt for
all tax purposes.  All payments made by,
or on account of any obligation of, the Borrower pursuant to the DIP Credit
Commitment shall be made free and clear of, and without deduction or
withholding for or on account of, any present or future income, stamp or other
taxes, levies, imposts, duties, charges, fees, deductions, withholdings or
similar charges, and all liabilities with respect thereto, now or hereafter
imposed, levied, collected, withheld or assessed by the United States or any
political subdivision or taxing authority thereof or therein, excluding (i) net
income taxes and franchise taxes (imposed in lieu of net income taxes) imposed
on the Lender as a result of a present or former connection between the Lender
and the United States or any political subdivision or taxing authority thereof
or therein (other than any such connection arising solely from the Lender
having executed, delivered or performed its obligations or receive a payment
under, or enforced, this Agreement), (ii) any branch profits tax under the
Internal Revenue Code, and (iii) any United States withholding tax that is
attributable to the Lender’s failure to comply with Section 2.8(b).  If any such non-excluded taxes, levies,
imposts, duties, charges, fees deductions or withholdings (“Non-Excluded Taxes”) are required to be
withheld from any amounts payable to the Lender hereunder, (i) the amounts
so payable to the Lender shall be increased as necessary so that after making
all such required withholdings and deductions in respect of any such
Non-Excluded Taxes, and all payments of, or (if not yet paid) liability for,
any such assessments or levies in respect of any such Non-Excluded Taxes, in
each case including Non-Excluded Taxes imposed or asserted on or attributable
to amounts payable under this Section 2.8, the Lender receives an amount
equal to the sum it would have received had no such withholdings, deductions,
assessments or levies been made and (ii) the Borrower or Guarantor, as
applicable, shall timely pay the full amount deducted to the relevant taxation
authority or other authority in accordance with applicable laws.  Whenever any Non-Excluded Taxes are payable
by the Borrower, as promptly as possible thereafter the Borrower shall send to
the Lender a certified copy of an original official receipt received by the
Borrower showing payment thereof.  If the
Borrower fails to pay any Non-Excluded Taxes when due to the appropriate taxing
authority or fails to remit to the Lender the required receipts or other
required documentary evidence, the Borrower shall indemnify the Lender for any
incremental taxes, interest or penalties that may become payable by the Lender
as a result of any such failure.  The
agreements in this section shall survive the termination of this Agreement and
the payment of the DIP Credit Commitment.


 


31

















 


(b)                                 The
Lender (including any assignee) shall deliver to the Borrower on or prior to
the date a payment is to be made to the Lender under this Agreement or promptly
upon learning that any documentation described in this section expired or became
obsolete, at the reasonable written request of the Borrower, two accurate and
complete duly signed copies of Internal Revenue Service Form W-9 or
W-8BEN, as applicable, or any successor applicable form.


 


2.9                                                                               Single Advance


 


All Advances to the Borrower and all of the other Obligations of the
Borrower arising under this Agreement and the other DIP Credit Documents shall
constitute one general obligation of the Borrower secured, until the
Termination Date, by all the Collateral.


 


2.10                                                                        Super-Priority Nature of Obligations and the
Lender’s Liens


 


(a)                                  The
priority of the DIP Liens on the Collateral of the Borrower and the Initial
Guarantors shall be set forth in the Interim Order and the Final Order.


 


(b)                                 All
Obligations shall constitute administrative expenses of the Borrower and the Initial
Guarantors in the Chapter 11 Cases, with administrative priority and
senior secured status under Sections 364(c) and 364(d) of the
Bankruptcy Code.  Subject to the
Carve-Out Amount, such administrative claim shall have priority over all other
costs and expenses of the kinds specified in, or ordered pursuant to,
Sections 105, 326, 328, 330, 331, 503(b), 506(c), 507(a), 507(b), 546(c),
726, 1114 or any other provision of the Bankruptcy Code or otherwise, and shall
at all times be senior to the rights of the Borrower and the Initial Guarantors,
the estates of Borrower and the Initial Guarantors, and any successor trustee
or estate representative in the Chapter 11 Cases or any subsequent
proceeding or case under the Bankruptcy Code. 
The Liens granted to the Lender on the Collateral of the Borrower and
the Initial Guarantors, and the priorities accorded to the Obligations of the
Borrower and the Initial Guarantors shall have the priority and senior secured
status afforded by Sections 364(c) and 364(d)(l) of the
Bankruptcy Code, all as more fully set forth in the Interim Order and Final
Order.


 


(c)                                  The
DIP Liens and the Lender’s administrative claims under Sections 364(c)(l) and
364(d) of the Bankruptcy Code afforded the Obligations shall also have
priority over any claims arising under Section 506(c) of the
Bankruptcy Code subject and subordinate only to the 


 


32

















 


Carve-Out
Expenses up to the Carve-Out Amount.


 


2.11                                                                        Payment
of Obligations


 


On the Maturity Date, the Lender shall be entitled to immediate payment
of all outstanding Obligations without further application to or order of the
Bankruptcy Court.


 


2.12                                                                        No
Discharge; Survival of Claims


 


The Borrower and the Initial Guarantors agree that (a) the
Obligations hereunder shall not be discharged by the entry of an order
confirming a plan of reorganization in any Chapter 11 Case (and the
Borrower and the Guarantors, pursuant to Section 1141(d)(4) of the
Bankruptcy Code, hereby waive any such discharge) and (ii) the
super-priority administrative claim granted to the Lender pursuant to the
Interim Order and Final Order and described in Section 2.10 and the Liens
granted to the Lender pursuant to the Interim Order and Final Order and described
in Section 2.10 shall not be affected in any manner by the entry of an
order confirming a plan of reorganization in any Chapter 11 Case.


 


2.13                                                                        Release


 


The Borrower and the Initial Guarantors hereby acknowledge, effective
upon entry of the Final Order and subject to the terms thereof, that the
Borrower and the Guarantors or any of their Subsidiaries have no defense,
counterclaim, offset, recoupment, cross-complaint, claim or demand of any kind
or nature whatsoever that can be asserted to reduce or eliminate all or any
part of the Borrower’s or Guarantors’ or any of its Subsidiaries’ liability to
repay the Lender as provided in this Agreement or any other DIP Credit Document
or to seek affirmative relief or damages of any kind or nature from the Lender
in its capacity as Lender.  Subject to
the Orders, the Borrower and the Guarantors, each in their own right on behalf
of their bankruptcy estates, and on behalf of all their successors, assigns,
Subsidiaries and any Affiliates and any Person acting for and on behalf of, or
claiming through them, (collectively, the “Releasing
Parties”), hereby fully, finally and forever release and discharge
the Lender, its Affiliates, and all the Lender’s and its Affiliates’ respective
past and present officers, directors, servants, agents, attorneys, assigns,
heirs, parents, subsidiaries, and each Person acting for or on behalf of any of
them (collectively, the “Released Parties”)
of and from any and all past, present and future actions, causes of action,
demands, suits, claims, liabilities, Liens, lawsuits, adverse consequences,
amounts paid in settlement, costs, damages, debts, deficiencies, diminution in
value, disbursements, expenses, losses and other obligations of any kind or
nature whatsoever (the “Released Claims”),
whether in law, equity or otherwise (including, without limitation, those
arising under Sections 541 through 550 of the Bankruptcy Code and interest
or other carrying costs, penalties, legal, accounting and other professional
fees and expenses, and 


 


33

















 


incidental, consequential and punitive damages, including, without
limitation, those payable to third parties), whether known or unknown, fixed or
contingent, direct, indirect, or derivative, asserted or unasserted, foreseen
or unforeseen, suspected or unsuspected, now existing, hereafter existing or
which may heretofore accrue against any of the Released Parties, whether held
in a personal or representative capacity, and which are based on any act, fact,
event or omission or other matter, cause or thing occurring at or from any
time prior to and including the date hereof in any way, directly or indirectly
arising out of, connected with or relating to this Agreement, any other DIP
Credit Document, the Interim Order, the Final Order or the transactions
contemplated hereby, and all other agreements, certificates, instruments and
other documents and statements (whether written or oral) related to any of the
foregoing.  Notwithstanding anything to
the contrary in this Agreement, Section 2.13 shall not apply and the
Releasing Parties shall not release the Released Parties from any Released
Claims arising from or relating to any suit, claim, cause of action brought or
threatened (i) by any holder of any Equity Interest of the Lender or of
any of its Affiliates in such capacity (“Shareholder
Claims”); and for the avoidance of doubt the term “Affiliate” shall
not include the Borrower or any of its Subsidiaries, and (ii) by a party
other than a Releasing Party as set forth in the Interim Order or the Final
Order in respect of any Pre-Petition MID Secured Loans (collectively with
Shareholder Claims, the “Excluded Claims”).


 


2.14                                                                        Waiver
of any Priming Rights


 


Upon the Closing Date, and on behalf of themselves and their estates,
and for so long as any Obligations shall be outstanding, the Borrower and the Initial
Guarantors hereby irrevocably waive any right, pursuant to Sections 364(c) and
364(d) of the Bankruptcy Code or otherwise, to grant any Lien on any of
the Collateral of the Borrower or the Initial Guarantors of equal or greater
priority than the DIP Liens securing the Obligations, or to approve a claim of
equal or greater priority than the Obligations of the Borrower and the Initial
Guarantors, other than with respect to adequate protection Liens approved by
order of the Bankruptcy Court  in the
Interim Order or the Final Order.


 


ARTICLE 3




GENERAL PROVISIONS RELATING TO THE DIP CREDIT
COMMITMENT


 


3.1                                                                               Advances


 


(a)                                  General. 
Each request by the Borrower for an Advance under the DIP Credit
Commitment shall be made by the delivery of a duly completed and executed
Borrowing Notice to the Lender on the 3rd Banking Day prior to the proposed Borrowing Date
or such shorter time as the Lender may accept. 
Any notice in respect of a proposed Advance shall be irrevocable and
binding on the Borrower.  All Advances
shall be in an amount of at least $250,000 each;


 


(b)                                 Advances. 
All requests for Advances shall be consistent (to be determined by the
Lender in its sole and absolute discretion) with the Budget, subject to the
Permitted Variance.


 


3.2                                                                               Advance Payments


 


The proceeds of all Advances shall be paid to the Borrower by way of
deposit into the Borrower’s current account as specified to the Lender in
writing from time to time, provided that the Lender may, upon the direction of
the Borrower, pay all or part of proceeds in respect of any Advance directly to
a third party to the extent of any amounts owed to such party which are 


 


34

















 


the subject of such Advance.  The
Borrower acknowledges that all proceeds advanced hereunder are subject to the
terms hereof, including the restrictions set out in Section 7.2(g).


 


3.3                                                                               Illegality


 


If the introduction of or change to any present or future Applicable
Law, or any change in the interpretation or application thereof by any
Governmental Body, shall make it unlawful for the Lender to make or maintain
the DIP Credit Commitment or any relevant portion thereof or to give effect to
its obligations in respect of the DIP Credit Commitment as contemplated hereby,
the Lender may, by notice to the Borrower, declare that its obligations
hereunder in respect of the DIP Credit Commitment shall be terminated, and
thereupon, subject as hereinafter provided in this Section 3.3, the
Borrower shall prepay to the Lender forthwith (or at the end of such
period to which the Lender shall in its discretion have agreed) all of the
Obligations to the Lender in respect of the DIP Credit Commitment, including
all amounts payable in connection with such prepayment pursuant to Section 3.4.  Any repayments made under this Section 3.3
shall permanently reduce the DIP Credit Amount.


 


3.4                                                                               Indemnity


 


(a)                                  The
Borrower and each of the Initial Guarantors (each, an “Indemnifying Party”) shall indemnify the
Lender and its Affiliates (other than the Borrower and its Subsidiaries) and
their respective officers, directors and employees (each, an “Indemnified Person”) and shall hold each of
them harmless from and against any and all losses, liabilities, damages, claims
and reasonable costs and out-of-pocket expenses (including reasonable legal
fees on a solicitor and his own client basis, but excluding any Excluded
Claims) (in each case, a “Claim”)
that may be incurred by or asserted as a result of a claim by any Person or
awarded in favor of a Person against any of them, in each case, arising out of,
related to, or in connection with, or by reason of (i) the transactions
contemplated hereby, or (ii) any Environmental Law, including (A) the
claim of any Lien thereunder, (B) the presence of any Hazardous Materials
affecting any owned or leased real property, or (C) the Release by the
Borrower or a Subsidiary of any Hazardous Materials into the environment.  Notwithstanding the foregoing provisions of
this Section 3.4(a), an Indemnifying Party shall not be obligated to
indemnify an Indemnified Person under this Section 3.4(a) for any
Claim to the extent that such Claim is solely attributable to the gross
negligence, fraud, willful misconduct or willful illegal acts of any
Indemnified Person, as determined by a final non-appealable court of competent
jurisdiction.


 


(b)                                 The
obligations and indemnification of the Borrower and each of the Guarantors
under this Section 3.4 shall survive the payment and satisfaction of all
Obligations and the termination of this Agreement.  The Lender shall hold the benefit of this
indemnity in trust for those Indemnified Persons who are not parties to this
Agreement.


 


3.5                                                                               Evidence of Indebtedness


 


The Lender shall maintain and keep accounts showing the amount of all
DIP Credit Amounts advanced or deemed to be advanced by the Lender, from time
to time and the dates thereof and the interest, fees and other charges accrued
thereon or applicable thereto from time to time, and all payments of principal
(including prepayments), interest and fees and other 


 


35

















 


payments made by the Borrower to the Lender from time to time under the
DIP Credit Commitment.  Such accounts
maintained by the Lender shall be prima facie
evidence of the matters recorded therein.


 


ARTICLE 4




INTEREST AND FEES


 


4.1                                                                               Interest Rate


 


(a)                                  From and after the
Closing Date, Advances shall, subject to Applicable Laws, bear interest during
each Interest Period from the date such Advance is made until it is repaid in
full at a rate per annum equal to LIBOR for such Interest Period plus 1,200 basis points (12%) (the “Interest Rate”).  Accrued and unpaid interest on each Advance
calculated at the Interest Rate will be payable on the Maturity Date and on the
date of any prepayment of such Advance under Sections 2.4 and 2.5.


 


(b)                                 If any Obligations are
not paid when due or an Event of Default has occurred and is continuing, all
amounts owing or deemed to be owing hereunder, whether in respect of principal,
interest, fees, expenses or otherwise, both before and after judgment, and in
the case of expenses from the dates such expenses are invoiced to the Borrower,
shall bear interest at the Default Rate. 
Such interest shall accrue from day to day, be payable in arrears on
demand and shall be compounded monthly on the last Banking Day of each calendar
month


 


(c)                                  If LIBOR is no longer
quoted on Reuters and the Lender determines, in good faith, that there is no
reliable means to ascertain LIBOR and notifies the Borrower, then all Advances
shall bear interest at the Alternative Interest Rate until the Lender
determines that the circumstances causing such suspension no longer exist and
the Lender so notifies the Borrower. 
Accrued and unpaid interest on the Advances calculated at the
Alternative Interest Rate will be payable on the Maturity Date and on the date
of any prepayment of any such Advance under Sections 2.4 and 2.5.


 


4.2                                                                               Calculation and Payment of Interest


 


Interest on Advances shall accrue from day to day, both before and
after default, demand, maturity and judgment, shall be calculated on the basis
of the actual number of days elapsed and on the basis of a year of
360 days, and shall be payable to the Lender in arrears on the last day of
the relevant Interest Period.


 


4.3                                                                               Fees


 


(a)                                  Arrangement Fee.  The Borrower shall pay to the Lender (each,
an “Arrangement Fee Payment Date”)
(i) after the entry of the Interim Order, a non-refundable arrangement fee
equal to three percent (3%) of the DIP Tranche 1 Credit Commitment (the “Tranche 1 Arrangement Fee”), to be
paid from the initial Tranche 1 Advance, and (ii) after entry of the
Final Order, a non-refundable arrangement fee equal to
three percent (3%) of the 


 


36

















 


DIP
Tranche 2 Credit Commitment (the “Tranche 2
Arrangement Fee” and together with the Tranche 1 Arrangement
Fee, the “Arrangement Fee”) from
the initial Tranche 2 Advance.


 


(b)                                 Commitment Fee.  The Borrower shall pay to the Lender on the
last Banking Day of each Fiscal Quarter and on the Maturity Date (each a “Commitment Fee Payment Date”) an amount
equal to 1% per annum of Unutilized Amounts on each day in such Fiscal Quarter
or the part thereof ending on the Maturity Date (the “Commitment Fee”). Each Commitment Fee
payable on any Commitment Fee Payment Date shall be payable in respect of the
period from and including the Closing Date or the preceding Commitment Fee
Payment Date, as the case may be, to but excluding the next Commitment Fee
Payment Date, and shall be calculated on a daily basis on the Unutilized Amount
on each day during such period on the basis of the number of days elapsed and a
year of 360 days.


 


4.4                                                                               Payment of Costs and Expenses


 


Whether or not the Borrower takes advantage of the DIP Credit
Commitment, the Borrower shall pay to the Lender, on demand, the following
out-of-pocket costs and expenses (to the extent reasonable and documented)
(collectively, the “Lender’s Costs”):  (i) all fees, costs and expenses (including
the reasonable fees and expenses of all its United States, Canadian and other
counsel, advisors, consultants and auditors) and (ii) all out-of-pocket
fees, costs and expenses, including the reasonable out-of-pocket fees, costs
and expenses of United States, Canadian and other counsel or other advisors
(including appraisers), incurred in connection with the negotiation,
preparation and filing and/or recordation of the DIP Credit Documents, the
Interim Order and the Final Order or incurred in connection with:


 


(a)                                  any
amendment, modification or waiver of, consent with respect to, or termination
of, any of the DIP Credit Documents or advice in connection with the
syndication and administration of the Advances made pursuant hereto or its
rights hereunder or thereunder;


 


(b)                                 any
attempt to enforce any remedies of the Lender against any or all of the
Borrower and the Guarantors or any other Person that may be obligated to the
Lender by virtue of any of the DIP Credit Documents, including any such attempt
to enforce any such remedies in the course of any work-out or restructuring of
the Advances during the pendency of one or more Events of Default;


 


(c)                                  any
workout or restructuring of the Advances during the pendency of one or more
Events of Default; and


 


(d)                                 the
obtaining of approval of the DIP Credit Documents by the Bankruptcy Court;


 


(e)                                  the
preparation and review of pleadings, documents and reports related to any
Chapter 11 Case, any subsequent case under Chapter 7 of the Bankruptcy Code or
any Canadian Proceedings, attendance at meetings, court hearings or conferences
related to any Chapter 11 Case, any subsequent case under Chapter 7 of the
Bankruptcy Code or any Canadian Proceedings, and general monitoring of any
Chapter 11 Case, any subsequent case under Chapter 7 of the Bankruptcy Code or
any Canadian Proceedings;


 


(f)                                    efforts
to (i) monitor the Advances or any of the other Obligations, (ii) evaluate,
observe or assess any of the Borrower and the Guarantors or their respective
affairs, and 


 


37

















 


(iii) verify,
protect, evaluate, assess, appraise, collect, sell, liquidate or otherwise
dispose of any of the Collateral; and


 


(g)                                 including,
as to each of clauses (a) through (f) above, all reasonable and
documented attorneys’ and other professional and service providers’ fees
arising from such services and other advice, assistance or other
representation, including those in connection with any appellate proceedings,
and all expenses, costs, charges and other fees incurred by such counsel or
others in connection with or relating to any of the events or actions described
in this Section 4.4, all of which shall be payable, on demand, by the
Borrower to the Lender.  Without limiting
the generality of the foregoing, such expenses, costs, charges and fees may
include: fees, costs and expenses of accountants, appraisers, investment
bankers, and other consultants and paralegals; court costs and expenses;
photocopying and duplication expenses; court reporter fees, costs and expenses;
long distance telephone charges; air express charges; telegram or telecopy
charges; secretarial overtime charges; and expenses for travel, lodging and
food paid or incurred in connection with the performance of such legal or other
advisory services.


 


ARTICLE 5




SECURITY, ETC.


 


5.1                                                                               Liens


 


(a)                                  The Borrower and each
Initial Guarantor covenant and agree that the DIP Credit Facility and the
Advances and all other Obligations will at all times be secured by the DIP
Liens as set forth in the Interim Order and the Final Order, as applicable.


 


(b)                                 The
DIP Liens on Collateral of the Borrower and the Initial Guarantors will not be
subject to challenge and will attach and become valid and perfected upon entry
of the Interim Order without any requirement of any further action by the
Lender.  Other than the DIP Liens, the
Collateral will be free and clear of all Liens, claims and encumbrances other
than the Permitted Liens.


 


38
















 


5.2                                                                               Priority of Claim


 


The Borrower and each Initial Guarantor covenant and agree that all
obligations of the Borrower under the DIP Credit Facility and all amounts owing
by the Initial Guarantors in respect thereof at all times will constitute
DIP Administrative Claims, subject only to the Carve-Out Expenses.


 


5.3                                                                               Security Interest


 


Each of the Borrower and each Initial Guarantor hereby pledges, assigns
and grants to the Lender a security interest in all the Borrower’s or such
Initial Guarantor’s right, title and interest, whether now owned or hereafter
acquired, in and to the Collateral to secure the prompt and complete payment
and performance of the Obligations.


 


ARTICLE 6


 


REPRESENTATIONS AND WARRANTIES


 


6.1                                                                               Representations and Warranties


 


To induce the Lender to enter into the DIP Credit Documents and to make
the DIP Credit Commitment, the Borrower hereby makes the following
representations and warranties with respect to itself and its Subsidiaries
taken as a whole on a consolidated basis, and each of the Initial Guarantors
hereby makes the following representations and warranties with respect to
itself and its Subsidiaries taken as a whole on a consolidated basis (provided
that certain of the representations and warranties are qualified by the
Disclosure Schedule (as specifically set out therein) delivered by the Borrower
and the Initial Guarantors to the Lender concurrently with the execution by
them of this Agreement):


 


(a)           Incorporation and Status.  Each of the Borrower and the Guarantors is
duly incorporated, formed or organized, as the case may be, and validly
existing under the laws of its jurisdiction of incorporation, formation or
organization, as the case may be, and has the power and capacity to own its
properties and assets and to carry on its business as presently carried on by
it or as contemplated hereunder to be carried on by it.  Each of the Guarantors is directly or
indirectly owned by the Borrower.  None
of the Borrower or the Guarantors carries on any business other than the Core
Line of Business and other than the ownership or operation of casinos, hotels,
resorts, card clubs, sports bars, restaurants and theatres, all of which
activities are associated with or ancillary or related to the Core Line of
Business, and the ownership and management of a portfolio of real estate
properties held for development or sale. 
Except where the failure to have such Material Authorization or good
standing could not reasonably be expected to have a Material Adverse Effect,
the Borrower and each Guarantor hold all Material Authorizations necessary to
own or lease, as applicable, each property owned or leased by it or to carry on
its Core Line of Business in each jurisdiction in which it does so, all of
which are in good standing;


 


(b)           Power and Capacity.  Subject to entry of the Orders, each of the
Borrower and the Guarantors has the power and capacity to enter into each of
the DIP Credit Documents to which it is a party, and to do all acts and things
as are required or contemplated hereunder or thereunder to be done, observed
and performed by it;


 


39

















 


(c)           Due Authorization.  Subject to entry of the Orders, each of the
Borrower and the Guarantors has taken all necessary action to authorize the
execution, delivery and performance of each of the DIP Credit Documents to
which it is a party;


 


(d)           No Contravention.  Upon the entry of the Interim Order (or the
Final Order, when applicable), the execution and delivery of each of the DIP
Credit Documents to which each of the Borrower and each Initial Guarantor is a
party and the performance by each of the Borrower and each Initial Guarantor of
its obligations thereunder (i) do not and will not contravene, breach or
result in any default under (A) the articles, by-laws, constating
documents or other organizational documents of the Borrower or such Initial
Guarantor, (B) any Material Authorization, (C) any Applicable Law,
except where the failure to comply with such Applicable Law could not
reasonably be expected to have a Material Adverse Effect, or (D) any
Material Agreement, (ii) do not and will not oblige the Borrower or any of
its Subsidiaries to grant any Lien Post-Petition to any Person other than the
Lender, and (iii) do not and will not result in or permit the acceleration
of the maturity of any Post-Petition Indebtedness of the Borrower or any Initial
Guarantor;


 


(e)           No Consents Required.  Other than filings with the Securities
Commission and entry of the Interim Order or the Final Order, as applicable, no
Material Authorization is required, and no consents, approvals or further
documentation of any kind whatsoever is required to be obtained from, or
provided by, any Person in connection with (i) the execution, delivery or
performance of any of the DIP Credit Documents to which it is a party by the
Borrower or any Guarantor, (ii) the creation of the DIP Liens, (iii) the
perfection of such DIP Liens, and (iv) in the case of the perfection of Liens
on any Collateral under any Pledge and Security Agreement, the filing of
applicable UCC financing statements or other documents required to be filed or
delivered;


 


(f)            Enforceability.  Each of the DIP Credit Documents constitutes,
or upon execution and delivery will constitute, a valid and binding obligation
of the Borrower and each Guarantor which is a party to it, enforceable against
it in accordance with its terms;


 


(g)           Financial Statements.  The Lender has been furnished with a copy of
the unaudited internally prepared consolidated financial statements of the
Borrower and its Subsidiaries dated as of and at the end of the most
recently completed fiscal quarter.  Such
internally prepared consolidated financial statements of the Borrower and its
Subsidiaries fairly present the financial condition of the Borrower and its Subsidiaries
as at such date in conformity with generally accepted accounting
principles applied on a consistent basis (save and except for the reflection of
the value of the assets of the Borrower and its Subsidiaries at their
market value instead of their cost as reflected in the notes to such financial
statements);


 


(h)           Books and Records.  The Borrower, the Guarantors and each of
their respective Subsidiaries (i) makes and keeps accurate books and
records and (ii) maintains internal accounting controls that provide
reasonable assurance that (A) transactions are executed in accordance with
management’s authorization, and (B) transactions are recorded as necessary
to permit preparation of its financial statements and to maintain
accountability for its assets;


 


(i)            Borrower Organizational Documents.  A true and complete copy of the certificate
of formation, certificate of authority to transact business and by-laws of the
Borrower and all other documents creating and relative to the organization of
the Borrower (collectively, the “Borrower
Incorporation Documents”) have been made available to the
Lender.  To 


 


40

















 


Borrower’s
knowledge, there are no other agreements, oral or written, among any of the
shareholders of the Borrower relating to the Borrower.  The Borrower Incorporation Documents are in
full force and effect, and are binding upon and enforceable in accordance with
their terms.  No breach exists under the
Borrower Incorporation Documents and no act has occurred and no condition
exists which, with the giving of notice or the passage of time would constitute
a breach under the Borrower Incorporation Documents;


 


(j)            Guarantors’ Organizational Documents.  True and complete copies of the certificates
of formation, certificates of authority to transact business, certificates of
formation, articles of incorporation, by-laws and all other documents creating
and relative to the organization of each of the Guarantors (collectively, the “Guarantor Incorporation Documents”) have
been made available to the Lender prior to such entity becoming a Guarantor
hereunder.  There are no other
agreements, oral or written, among any of the shareholders of each of the
Guarantors relating to the Guarantors. 
The Guarantor Incorporation Documents are in full force and effect, and
are binding upon and enforceable in accordance with their terms.  No breach exists under the Guarantor
Incorporation Documents and no act has occurred and no condition exists which,
with the giving of notice or the passage of time would constitute a breach
under the Guarantor Incorporation Documents. 
The Borrower Incorporation Documents and the Guarantor Incorporation
Documents are herein collectively referred to as the “Organizational Documents”;


 


(k)           Authorized Capital.  The authorized capital of the Borrower and
the Initial Guarantors is set forth in the Disclosure Schedule;


 


(l)            Legal Name and Chief Executive Office.  The Borrower and each Initial Guarantor has
advised the Lender in writing of their respective chief executive offices and
places of business.  Except as disclosed
in writing to the Lender prior to becoming a Guarantor, none of the Borrower
nor any of the Guarantors conducts business under any corporate names other
than its legal name, and the Borrower and each of the Guarantors have, in the
past, held themselves out as separate entities and have conducted operations
under their own respective names;


 


(m)          Affiliate Transactions.  Other than the transactions contemplated
hereby and in the Pre-Petition Loan Documents and the transactions contemplated
in the Remington Construction Loan Agreement, the Gulfstream Construction Loan
Agreement and the Bridge Loan Agreement, since the date of the Unaudited
Financial Statements, neither the Borrower nor any of the Guarantors has
entered into any transaction or agreement with any Affiliate which is not the
Borrower or a Guarantor, except in the ordinary course of business consistent
with past practices;


 


(n)           No Litigation.  There is no unstayed court, administrative,
regulatory or similar proceeding (whether civil, quasi-criminal, or criminal),
arbitration or other dispute settlement procedure; investigation or enquiry by
any Governmental Body, or any similar matter or proceeding (collectively “proceedings”) against or involving the
Borrower or any Guarantor (whether in progress or threatened in writing),
which, if determined adversely to the Borrower or any Guarantor, could
reasonably be expected to have a Material Adverse Effect or which purports to
affect the legality, validity and enforceability of any DIP Credit Document to
which the Borrower or any of the Guarantors is a party; to the Borrower’s
knowledge, no such proceedings are threatened or contemplated by any
Governmental Body or other Person; to the Borrower’s knowledge, no event has
occurred which could reasonably be expected to give rise to 


 


41

















 


any such
proceedings; and there was no judgment, decree, injunction, rule, award or
order of any Governmental Body outstanding against the Borrower or any of the
Guarantors which has had, or could reasonably be expected to have, a Material
Adverse Effect, except that no such representation is made with respect to any
Excluded Claim;


 


(o)           No Default. 
Neither the Borrower nor any Guarantor is in default or breach under any
Applicable Law in any material respect or under any Material Agreement, or
under the terms and conditions relating to any Material Authorizations in each
case with respect to which enforcement of remedies is not stayed by means of
the Chapter 11 Cases, and there exists no state of facts which, after notice or
the passage of time or both, would constitute such a default or breach, other
than those defaults arising as a result of an Effect of Bankruptcy; and there
are no unstayed proceedings in progress, pending or threatened which could
reasonably be expected to result in the revocation, cancellation, suspension or
any adverse modification of any Material Authorization;


 


(p)           Default or Event of Default.  No Default or Event of Default has occurred
and is continuing;


 


(q)           No Labor Disturbance.  No labor disturbance by the employees of the
Borrower, or any of its Subsidiaries or by any horse owners or trainers exists
or, to the knowledge of the Borrower, is imminent, in each case, that could
reasonably be expected to have a Material Adverse Effect;


 


(r)            Taxes. 
Except as could not reasonably be expected to have a Material Adverse
Effect, the Borrower and the Guarantors have accurately prepared and timely
filed all federal, state, provincial and other Tax returns and reports that are
required to be filed by them and have paid or made provision for the payment of
all Taxes required to have been paid by them except those Taxes that are being
disputed in good faith by appropriate proceedings for which the Borrower or any
Guarantor has established on its books adequate reserves therefor, and
including, without limitation, all Taxes that the Borrower or any Guarantor is
obligated to withhold from amounts owing to employees, creditors and third
parties, with respect to the periods covered by such tax returns (whether or
not such amounts are shown as due on any tax return).  No unstayed deficiency assessment with
respect to a proposed adjustment of the Borrower’s or any Guarantor’s federal,
state, provincial or other Taxes is pending or, to the knowledge of the
Borrower or any Guarantor, threatened. 
There are no Tax Liens, whether imposed by any federal, state,
provincial or other taxing authority, outstanding against the assets,
properties or business of the Borrower or any Guarantor other than Permitted
Liens;


 


(s)           Material Assets.  The Borrower and each of the Guarantors owns
or licenses or otherwise has legally enforceable rights to use, under validly
existing agreements, all material assets (including all real property, patents,
licenses, trademarks, trade names, trade secrets, service marks, copyrights and
all rights with respect thereto), contracts, and other documents necessary to
conduct their businesses as now conducted;


 


(t)            Material Agreements.  The list of Material Agreements included on
the Disclosure Schedule (as the same may be supplemented and amended from time
to time) constitutes all of the Material Agreements now in existence for the
Borrower and the Guarantors.  Neither the
Borrower nor the Guarantors nor, to the best knowledge of the Borrower and the 


 


42

















 


Guarantors,
any other party thereto, is in breach of or in default of any material
obligation thereunder except those in respect of which the Borrower has advised
the Lender in writing from time to time and of which the Lender has indicated
in writing its satisfaction;


 


(u)           Investments.  Except as disclosed in the Unaudited
Financial Statements, none of the Borrower and its Subsidiaries has loans to or
investments in any Person in excess of $1,000,000, nor have any of them given
any guarantee or incurred any liability in connection with the indebtedness of
any Person in excess of $1,000,000;


 


(v)           ERISA. 
(i) the Borrower and its ERISA Affiliates are in compliance with
all applicable provisions of ERISA, (ii) neither the Borrower nor any
ERISA Affiliate has violated any provision of any Employee Plan, (iii) no
Reportable Event has occurred and is continuing with respect to any Employee
Plan initiated by the Borrower or any ERISA Affiliate, (iv) the Borrower
and all ERISA Affiliates have met their minimum funding requirements under
ERISA with respect to each Employee Plan, and (v) each Employee Plan was
able to fulfill its current benefit obligations as they come due in accordance
with the Employee Plan documents, except to the extent that all events
described in this Section 6.1(v) could not, in each case, be expected
to have a Material Adverse Effect;


 


(w)          Investment Company.  Neither the Borrower nor any Guarantor is an “investment company”, or an “affiliated person” of, or “promoter” or “principal underwriter” for, an “investment company”, as such term is defined in the Investment Company Act of 1940, as
amended; provided that with respect to “affiliated persons” this representation
is made solely to the best knowledge of the Borrower and the best knowledge of
each of the Guarantors, without any investigation, with respect to the holders
of publicly traded securities of the Borrower and provided that no
representation is made herein with respect to Magna International Inc. or MID
and the holders of their securities. 
Neither the making of any Advances, nor the application of the proceeds
or repayment thereof by the Borrower, nor the consummation of the other
transactions contemplated hereby, will violate any provision of such Act or any
rule, regulation or order of the Securities Commission thereunder;


 


(x)            Margin Regulations.  Neither the Borrower nor any Guarantor is
engaged, nor will any of them engage, principally or as one of its primary
activities, in the business of extending credit for the purpose of “purchasing” or “carrying” any “margin stock”
within the respective meanings of each of the quoted terms under Regulation U,
and neither the Borrower nor any of the Guarantors owns margin stock which, in
each case, in the aggregate, would constitute over 25% of the assets of such
Person and no proceeds of the DIP Credit Commitment will be used to purchase or
carry, directly or indirectly, any margin stock or to extend credit, directly
or indirectly, to any Person for the purpose of purchasing or carrying any
margin stock;


 


(y)           Foreign Ownership.  Neither the Borrower nor any of the
Guarantors is or will be a “foreign
corporation”, “foreign partnership”,
“foreign trust”, “foreign estate”, “foreign person”, “affiliate” of a “foreign person” or a “United
States intermediary” of a “foreign
person” within the meaning of the IRC, Sections 897 and 1445,
the Foreign Investments in Real Property Tax
Act of 1980, or the regulations promulgated pursuant to such Acts or
any amendments to such Acts;


 


43

















 


(z)            Other Regulations.  Neither the Borrower nor any Guarantor is subject
to regulation under the Investment Company
Act of 1940, the Federal Power
Act, the Interstate Commerce Act,
any state public utilities code or to any other law, regulation, rule,
limitation or restriction of a Governmental Body limiting its ability to incur
indebtedness;


 


(aa)         USA Patriot Act.  Neither the Borrower nor any of the
Guarantors nor any Affiliate thereof is identified in any list of known or
suspected terrorists published by any United States government agency
(individually, as each such list may be amended or supplemented from time to
time, referred to as a “Blocked Persons List”)
including, without limitation, (i) the annex to Executive Order 13224
issued on September 23, 2001 by the President of the United States and (ii) the
Specially Designated Nationals List published by the United States Office of
Foreign Assets Control, except that no such representation or warranty is made
by the Borrower or any Guarantor with respect to the Lender and its Affiliates
other than the Borrower and the Guarantor;


 


(bb)         No Agreement to Sell Assets; Reorganizations.  Other than sales of assets contemplated by
the Bid Procedures Motion and the Purchase Agreement, as of the Closing Date
neither the Borrower nor any of its Subsidiaries has any legal obligation,
absolute or contingent, to any Person or entity to sell any of its assets
(including real and personal property), except in the ordinary course of
business consistent with past practice; or to effect any merger, consolidation
or other reorganization of the Borrower or any of its Subsidiaries with any
other Person or entity or to enter into any agreement with respect thereto;


 


(cc)         Adequate Insurance.  All of the property of the Borrower and the
Guarantors is insured with good and responsible companies against fire and
other casualties in the same manner and to the same extent as such insurance is
usually carried by Persons carrying on a similar business and owning similar
property located in the same general area as the property owned by the Borrower
or Guarantor, as the case may be, including any owned or leased real property,
and the Borrower and each of the Guarantors maintains or causes to be
maintained with good and responsible insurance companies adequate insurance
against business interruption with respect to the operations of all of such
property and liability on account of damage to Persons or property, including
damage resulting from product liability, and under all applicable workers’
compensation laws, in the same manner and to the same extent as such insurance
is usually carried by Persons carrying on a similar business and owning similar
property;


 


(dd)         Licenses and Permits.  Except for Permitted Liens, neither the
Borrower nor any of its Subsidiaries has pledged any licenses or permits, held by
it or any of its Subsidiaries, to a third party;


 


(ee)         Title. 
Subject only to Permitted Liens, the Borrower and (where applicable)
each Guarantor is the absolute beneficial owner of and has good and marketable
title in fee simple to, or has a good and marketable leasehold interest in, all
of any owned or leased real property material to the business of the Borrower
or any Guarantor;


 


(ff)           Improvements.  The present use of any real property
complies, and the future use of all owned or leased real property material to
the business of the Borrower or any Guarantor will comply, in all material
respects, with all:  (a) applicable
legal and contractual requirements with regard to the use, occupancy,
construction and operation thereof, including, without 


 


44

















 


limitation,
all zoning, subdivision, environmental, flood hazard, fire safety, health,
handicapped facilities, building and other laws, ordinances, codes,
regulations, orders and requirements of any governmental agency; (b) applicable
building, occupancy and other permits, licenses and approvals; and (c) declarations,
easements, rights-of-way, covenants, conditions and restrictions of record; in
each case to the extent that enforcement of remedies is not stayed;


 


(gg)         Real Property Access.  All owned or leased real property material to
the business of the Borrower or any Guarantor is accessible through all current
access points, each of which connects or, upon the completion of the
contemplated development thereof will connect, directly to a fully improved and
dedicated road accepted for maintenance and public use by the Governmental Body
having jurisdiction;


 


(hh)         Utilities. 
All property utility services necessary and sufficient for the
construction, use or operation of each of any owned or leased real property
(now and as contemplated by the Borrower and the Guarantors in the future)
material to the business of the Borrower or any Guarantor are currently
connected at the boundary of any owned or leased real property directly to
lines owned by the applicable utility and lying in dedicated roads, including
water, storm, sanitary sewer, gas, electric and telephone facilities;


 


(ii)           Compliance. 
There are no alleged or asserted violations of law (including, without
limitation, all racing and gaming laws and regulatory requirements), municipal
ordinances, public or private contracts, declarations, covenants, conditions,
or restrictions of record, or other requirements with respect to any owned or
leased real property which if unstayed and enforced could reasonably be
expected to have a Material Adverse Effect. 
None of the buildings or other structures located on any owned or leased
real property encroaches upon any land not leased or owned by the Borrower or
one of the Guarantors, and there are no expropriation or similar proceedings,
actual or threatened, of which the Borrower or any Guarantor has received
written notice, against any owned or leased real property or any part thereof,
in all cases, where the existence and continuance of any encroachment,
expropriation or similar proceedings could reasonably be expected to have a
Material Adverse Effect.  All by-laws,
zoning, licenses, certificates, consents, approvals, rights, permits and
agreements required to enable any owned or leased real property to be used,
operated and occupied in their current and intended manner are being complied
with or have been obtained and are in good standing, or, to the extent that any
have not already been obtained, the same are not yet required and, if not yet
required, the Borrower and the Guarantors have no reason to believe that the
same will not be available prior to the time that the same are so required,
except, in all cases, where the breach or non-performance thereof could not reasonably
be expected to have a Material Adverse Effect. 
All building services required for the proper functioning of any owned
or leased real property have been obtained, except where failure to obtain the
same could not reasonably be expected to have a Material Adverse Effect.  All buildings located on any owned or leased
real property are functioning properly and are fit and suitable for their
intended purpose, except where lack of suitability or failure to function could
not reasonably be expected to result in a Material Adverse Effect;


 


(jj)           Flood Hazards.  To the knowledge of the  Borrower, none of any owned or leased real
property is situated in an area designated as having special flood hazards as
defined by the Flood Disaster Protection Act
of 1973, as amended, and none of the owned or leased real 


 


45

















 


property has
any flood hazards that could reasonably be expected to have a Material Adverse
Effect;


 


(kk)         Environmental Conditions.  Except as disclosed in the Disclosure
Schedule:


 


(i)                                     each of any owned
or leased real property is in material compliance with all applicable
Environmental Laws and all applicable Safety Laws and all operations and
activities on or at each of any owned or leased real property are in
material compliance with all applicable Environmental Laws and all applicable
Safety Laws and to the knowledge of the Borrower and each of the Guarantors,
there are no current facts, circumstances or conditions that are reasonably
likely to materially affect such continued compliance with currently existing
Environmental Laws;


 


(ii)                                  except as would not
reasonably be expected to result in the Borrower incurring material
Environmental and Safety Liability, neither the Borrower nor any of the
Guarantors has received, or has actual knowledge of any threatened, claim,
encumbrance, order, notice, citation, directive, inquiry, summons or warning,
or any other written communication alleging any actual or potential violation
or failure to comply with any Environmental Law or Safety Law or of any actual
or potential obligation to undertake or bear the cost of any Environmental or
Safety Liability, including with respect to any Hazardous Activity from:  (A) any Governmental Body or private
citizen, whether acting or purporting to act in the public interest or
otherwise; (B) the current or prior owner, occupant or operator of any
owned or leased real property; or (C) any other Person to whom any of the
Borrower and any of the Guarantors could be reasonably held liable;


 


(iii)                               except as would not
reasonably be expected to result in the Borrower incurring material
Environmental and Safety Liability, the Borrower and each of the Guarantors has
obtained all material Environmental Consents and Safety Consents and has obtained
or is in the process of obtaining all non-material Environmental Consents and
Safety Consents, in each case as required for their use of and operations at
any owned or leased real property and all such obtained Environmental Consents
and Safety Consents are in good standing and the Borrower and each of the
Guarantors is in compliance with all terms and conditions of such Environmental
Consents and Safety Consents;


 


(iv)                              to the knowledge of the
Borrower and each of the Guarantors, there are no Hazardous Materials present
at, near or from any owned or leased real property at concentrations exceeding
those allowed by Environmental Laws;


 


(v)                                 to the knowledge of
the Borrower and each of the Guarantors, there has been no material Release and
there is no current Threat of Release of any Hazardous Materials at or
from any location where any Hazardous 


 


46

















 


Materials were generated, manufactured, refined, transferred, produced,
imported, used, processed, transported, stored, handled, treated, disposed,
recycled or received from the Borrower and/or any of the Guarantors;


 


(vi)                              to the knowledge of the
Borrower and each of the Guarantors, there are no aboveground or underground
storage tanks in or associated with any owned or leased real property that
would have a Material Adverse Affect on any owned or leased real property;


 


(vii)                           to the knowledge of the
Borrower and each of the Guarantors, no owned or leased real property contains
any wetlands or other sensitive, endangered or protected areas or species or
flora or fauna that would adversely affect the continued use of the land;


 


(viii)                        to the knowledge of the
Borrower and each of the Guarantors, there are no facts or circumstances
at any owned or leased real property that could form the basis for the
assertion of any material Environmental or Safety Liability against the
Borrower and/or any of the Guarantors, including any material Environmental or
Safety Liability arising from current environmental or health and safety
practices;


 


(ix)                                to the knowledge of the
Borrower and each of the Guarantors, neither the Borrower nor any of the
Guarantors has compromised or released any insurance policies, or waived any
rights under insurance policies, that may provide coverage for any
Environmental or Safety Liability, where such compromise, release or waiver
would have a Material Adverse Effect;


 


(x)                                   to the knowledge of
the Borrower and each of the Guarantors, none of the Borrower, and/or any of
the Guarantors has contractually assumed the liability of any other Person or
entity for, and none of the foregoing has agreed to indemnify any other Person
or entity against, claims arising out of the Release of Hazardous Materials
into the Environment other than claims that Borrower and/or each Guarantor
would otherwise be independently liable without regard to such assumption or
indemnity;


 


(xi)                                to the knowledge of the
Borrower and each of the Guarantors, the Borrower and the Guarantors have made
available to the Lender true and complete copies of any and all reports,
studies, analyses, evaluations, assessments or monitoring data which could
reasonably be considered to contain a material fact pertaining to Hazardous
Materials or Hazardous Activities in, on, under or related to any owned or
leased real property, the operations and approval of development of any owned
or leased real property, compliance by the Borrower and each of the Guarantors
with Environmental Laws and Safety Laws or any actual or potential
Environmental or Safety Liability of any of the Subsidiaries;


 


47

















 


(ll)           Casualty. 
There is no damage or destruction to any part of any owned or leased
real property by the Borrower or any Guarantor by fire or other casualty that
has not been, or is in the process of being, repaired or that could reasonably
be expected to have a Material Adverse Effect;


 


(mm)       Disclosure. 
All information provided to the Lender relating to the financial
condition, business and affairs of the Borrower and its Subsidiaries (other
than market data and financial projections) furnished by or on behalf of the
Borrower or any Guarantor, when taken as a whole in connection with this
Agreement, was true, accurate and complete in all material respects and omits
no material fact necessary to make such information not misleading in light of
the circumstances under which such information was provided.  All financial projections furnished or made
available by the Borrower and/or any of the Guarantors to the Lender have been
prepared in good faith, using assumptions believed to be reasonable, and the
Borrower and each of the Guarantors believes such projections to be fair and
reasonable;


 


(nn)         Liens on Collateral.  The DIP Liens are, and in the case of the
Liens on the Collateral pledged under the Pledge and Security Agreement, upon
the filing of applicable UCC financing statements and other documents required
to be filed or delivered to perfect its security interest in such Collateral
will be, valid and perfected liens and security interests in the Collateral of
the Borrower or a Guarantor, as applicable, subject only to Permitted Liens;
and


 


(oo)         Reorganization Matters.


 


(i)            The
Chapter 11 Cases were commenced on the Petition Date in accordance with
applicable law and proper notice thereof and the proper notice for (x) the
motion seeking approval of the DIP Credit Documents and the Interim Order and
Final Order, (y) the hearing for the approval of the Interim Order, and (z) the
hearing for the approval of the Final Order. 
The Borrower and the Initial Guarantors shall give, on a timely basis as
specified in the Interim Order or the Final Order, as applicable, all notices
required to be given to all parties specified in the Interim Order or Final
Order, as applicable;


 


(ii)           After
the entry of the Interim Order, and pursuant to and solely to the extent
permitted in the Interim Order and the Final Order, the Obligations will
constitute allowed administrative expense claims in the Chapter 11 Cases
having priority over all administrative expense claims and unsecured claims
against the Borrower and the Initial Guarantors now existing or hereafter
arising, of any kind whatsoever, including, without limitation, all
administrative expense claims of the kind specified in Sections 105, 326,
330, 331, 503(b), 506(c), 507(a), 507(b), 546(c), 726, 1114 or any other
provision of the Bankruptcy Code or otherwise, as provided under Section 364(c)(l) of
the Bankruptcy Code, subject, as to priority only, to the Carve-Out Expenses up
to the Carve-Out Amount;


 


(iii)          After
the entry of the Interim Order and pursuant to and to the extent provided in
the Interim Order and the Final Order, the Obligations will be secured by a
valid and perfected Lien on all of the Collateral of the Borrower and the Initial
Guarantors having the priority described in the Orders; and


 


(iv)          The
Interim Order (with respect to the period prior to entry of the Final Order) or
the Final Order (with respect to the period on and after entry of 


 


48

















 


the Final Order), as the case may be, is in full force and effect and
has not been modified or amended without the consent of the Lender, in its sole
discretion, or reversed or stayed.


 


6.2                                                                               Survival of Representations and Warranties


 


All representations and warranties of the Borrower and the Initial Guarantors
in this Agreement, the DIP Credit Documents and all representations and
warranties in any certificate delivered by the Borrower pursuant hereto and
thereto, shall survive execution of the DIP Credit Documents and the making of
the Advances, and may be relied upon by the Lender as being true and correct
with effect as of the date given (either initially or as brought down) until
the Termination Date, notwithstanding any investigation made at any time
by the Lender or on its behalf.  Without
derogating from the foregoing, the representations and warranties of the
Borrower and each of the Guarantors shall survive the payment and performance
of the Indebtedness, liabilities and obligations of the Borrower under, and the
termination and release by the Lender of, this Agreement and the other DIP
Credit Documents.


 


ARTICLE 7


 


COVENANTS


 


7.1                                                                               Affirmative Covenants


 


The Borrower and each of the Initial Guarantors covenants and agrees
with the Lender that it shall, and, except where the failure to cause any
Subsidiary could not reasonably be expected to have a Material Adverse Effect,
shall cause its Subsidiaries to, from and after the Closing Date until the DIP
Credit Commitment (including interest thereon) and all fees and expenses to be
paid by the Borrower to the Lender hereunder are paid in full:


 


(a)           Punctual Payment.  The Borrower shall pay or cause to be paid
all Obligations falling due hereunder on the dates and in the manner specified
herein;


 


(b)           Compliance with Agreements.  Carry out all its obligations under this
Agreement and shall use its reasonable efforts to cause the other parties
thereto to do likewise;


 


(c)           Use of Proceeds.  Use the proceeds of the DIP Credit Commitment
only as authorized in Section 2.2 hereof and subject to the terms and
provisions of the DIP Credit Documents and for no other purpose, without the
Lender’s prior written consent.  Except
as expressly permitted herein, no portion of the proceeds of the DIP Credit
Commitment shall be used by the Borrower in any manner that might cause the
borrowing or the application of such proceeds to violate Regulation U,
Regulation T or Regulation X or any other regulation of the Board of
Governors of the Federal Reserve System or to violate the Securities Acts;


 


(d)           Use of Specific Asset Sale Proceeds.  The Borrower and its Subsidiaries will use
the net proceeds from any asset and/or real property sales in the manner set
forth in Section 2.5 hereof and in the Orders, including, without
limitation, by providing directions to the purchasers thereof to pay the
applicable amount of net proceeds arising therefrom and due to the Lender
pursuant to this Agreement directly to the Lender;


 


49

















 


(e)           Corporate Existence.  Except as permitted herein, the Borrower
shall maintain in good standing its corporate existence under the laws of the
State of Delaware and qualify and remain duly qualified to do business and own
property in each jurisdiction in which such qualification is necessary in view
of, and to carry on, its Core Line of Business in a commercially reasonable
manner in accordance with past practice, and each Guarantor shall maintain in
good standing its corporate existence under the laws of the jurisdiction of its
incorporation or organization and qualify and remain duly qualified to do
business and own property in each jurisdiction in which such qualification is
necessary in view of its business and operations, except in each case where failure
to do so could reasonably be expected to have a Material Adverse Effect;


 


(f)            Preservation of Material Authorizations.  Preserve, maintain in effect at all
times and at all times comply in all material respects with all Material
Authorizations;


 


(g)           Compliance with Applicable Law, Material Agreements,
etc.  (i) Except where
any such failure could not reasonably be expected to have a Material Adverse
Effect, comply with (A) the requirements of all Applicable Laws (including
Environmental Laws and Safety Laws), with all obligations, which, if
contravened, could give rise to a Lien (other than a Permitted Lien) over any
of the Collateral, and with all insurance policies required to be maintained
under Section 7.1(r), and (B) all Material Agreements to which it is
a party or by which it or its properties are bound; (ii) except where any
such changes could not reasonably be expected to have a Material Adverse
Effect, obtain the Lender’s prior written consent (which consent may be
withheld in the Lender’s sole and absolute discretion) before making,
permitting or allowing any material amendments or other material changes to, or
the termination of, any Material Agreement; (iii) obtain the Lender’s
prior written consent before entering into any agreement containing any
provision which would be violated or breached by the performance of its
obligations hereunder or under the DIP Credit Documents or under any instrument
or document delivered or to be delivered by it hereunder or in connection
herewith, or which would violate or breach any provision hereunder or under the
DIP Credit Documents or under any instrument or document delivered or to be
delivered by it hereunder or in connection herewith; and (iv) obtain the
Lender’s prior written consent not unreasonably withheld or delayed before
making any material amendments to its constituent documents;


 


(h)           Payment of Obligations.  Subject to the right to contest legitimate
disputes, and subject, where applicable to the provisos in Section 7.1(t) and
as otherwise provided or permitted in the Bankruptcy Code, pay and discharge,
or cause to be paid and discharged, all its indebtedness and obligations to
other Persons in accordance with normal terms and practices of its businesses,
as well as all lawful claims for labor, materials and supplies which otherwise,
if unpaid, might become a lien or charge upon its properties or any part
thereof, in each case if failure to do so would reasonably be expected to
result in a Material Adverse Effect;


 


(i)            Accounting Methods and Financial Records.  Maintain a system of accounting which is
established and administered in accordance with GAAP and keep adequate records
and books of account in which accurate and complete entries shall be made in
accordance with such accounting principles reflecting all transactions required
to be reflected by such accounting principles;


 


50
















 


(j)            Public Information.  The Borrower shall from time to time deliver
to the Lender copies of all reports, financial statements, information or proxy
circulars and other information sent by the Borrower to its shareholders
at the same time as the Borrower sends such material to its shareholders
and the Borrower shall deliver to the Lender copies of all registration
statements, prospectuses, press releases, material change reports and similar
disclosure documents filed by the Borrower with any securities regulatory
authority (including the Securities Commission) or stock exchange, provided
that if any such reports or disclosures are filed on a confidential basis, then
the Borrower shall not be required to deliver the same to the Lender until such
time as they are no longer filed on a confidential basis;


 


(k)           Books and Records; Reporting.  Keep and maintain (and provide the Lender and
its representatives and agents with reasonable access and copies of same if so
requested by the Lender) at all times complete and accurate books of
accounts and records adequate to reflect the results of the operation of each
of any owned or leased real property, any financial statements required to be
provided to the Lender pursuant to any of the Mortgages, and copies of all written
contracts, correspondence, and other documents affecting any owned or leased
real property.  Without limiting the
foregoing, the Borrower and each Initial Guarantor agrees to deliver and cause
each Additional Guarantor to deliver the following to the Lender, in duplicate:


 


(i)            upon the written request of the Lender, and
contemporaneously with the Fiscal Quarter and Fiscal Year financial statements
required under this Section 7.1(l), a certificate (a “Compliance Certificate”) signed by an
officer of the Borrower stating that to the best of his or her knowledge after
having made reasonable inquiry and without personal liability to such officer:


 


(A)          (1) no Default or Event of Default has
occurred and is continuing or (2) if any such Default or Event of Default
has occurred and is continuing, a statement as to the nature and status
thereof, including specifying the relevant particulars and the period of
existence thereof and the action taken, being taken or proposed to be taken by
or on behalf of the Borrower or any Guarantor with respect thereto, and stating
that otherwise no Default or Event of Default has occurred during such Fiscal
Quarter or Fiscal Year, as applicable, which is still continuing; and


 


(B)           in each case where a Material Adverse Change
has occurred, specifying the relevant particulars, the period of existence and
the action taken, being taken or proposed to be taken by or on behalf of the
Borrower of any Guarantor with respect thereto,


 


such certificate to relate to the period from the end of the then last
preceding Fiscal Quarter or Fiscal Year, as applicable, of the Borrower or such
Guarantor in question, to and including the date of such certificate;


 


(ii)           the Borrower and the Guarantors shall
prepare and furnish (or cause to be so prepared and furnished) to the Lender:


 


51

















 


(A)          within 60 days after the end of each
month, an unaudited income statement and a balance sheet for the Borrower and
its Subsidiaries for the preceding month, and such other documentation as the
Lender may reasonably request from time to time certified as true, correct and
complete by the Borrower and its Subsidiaries, as applicable;


 


(B)           as soon as available and in any event within
60 days after the end of each Fiscal Quarter of the Borrower and its
Subsidiaries, a copy of the unaudited financial statements of the Borrower and
its Subsidiaries for such Fiscal Quarter;


 


(C)           as soon as available and in any event within
120 days after the end of the Fiscal Year of the Borrower, a copy of the
audited consolidated annual financial statements for the Fiscal Year just ended
of the Borrower and its Subsidiaries fairly presenting the financial condition
and the results of the operations of the Borrower and its Subsidiaries, including,
without limitation, a balance sheet, an income statement and such additional
reasonable information as the Lender may reasonably request from time to time;


 


(D)          if reasonably requested by the Lender, the
Borrower will allow the Lender to review supporting documentation for all
receipts and expenditures disclosed on any of the aforementioned financial
statements and reports, including, but not limited to, bank statements,
contracts, invoices, copies of checks and general ledgers.  To the extent the Lender reasonably requires
based on adverse or incorrect matters disclosed in the Borrower’s records or
computations, the Lender may audit the accuracy of the Borrower’s records and
computations at any time and the reasonable costs and expenses of any such
audit shall be paid by the Borrower.  If
an Event of Default shall be continuing, the Lender shall be free to conduct
such audits as the Lender may deem reasonably necessary and such shall be paid
for by the Borrower; and


 


(iii)          upon the reasonable written request of the
Lender, the Borrower shall submit to the Lender (A) a detailed written
statement of the status of any remediation activities in respect of any owned
or leased real property required for the Borrower to comply with Environmental
Laws including, without limitation, a statement as to remediation work
performed to date and remediation work remaining to be completed, and (B) an
updated environmental assessment report prepared by a consultant reasonably
satisfactory to the Lender of (x) any of the owned or leased real
properties which contain recommendations for action by the Borrower and/or (y) the
most recent update provided to comply herewith, including in such update the
amounts expended during such period.  In
addition, the Borrower will 


 


52

















 


provide to the Lender copies of all notices or warnings of violations,
or potential violations, of Environmental Laws received by the Borrower within
five days of receipt of such notices or warnings, to the extent such notices or
warnings could reasonably be expected to result in the Borrower incurring
material Environmental Liabilities;


 


(l)            Reporting Requirements.  The Borrower shall deliver to the Lender
reasonably detailed monthly progress reports on the 30th day of each month,
with the first such report to be delivered on April 1, 2009.  The monthly progress reports shall include (i) monthly
financial statements, including up-to-date cash flow forecasts, summary of
capital expenditures incurred in the month and planned, and revised or amended
budgets, (ii) an updated marketing plan for all asset sales, including
expected dates for retaining sales agent/brokers, distributing sales materials,
receiving offers, executing documentation and closing and summaries of any
offers and/or expressions of interest received, (iii) a reconciliation of
deviations (if any) from the previously delivered monthly progress report, and (iv) such
other information as the Lender requests, acting reasonably;


 


(m)          General Reporting Requirements.  The Borrower shall deliver to the Lender and
MID weekly cash flow forecast reports with respect to the Borrower (in form and
substance satisfactory to the Lender, acting reasonably), together with a
reconciliation of deviations (if any) from the previously delivered weekly
report;


 


(n)           Other Financial Information.  As soon as practicable following a request
therefor from the Lender, the Borrower shall furnish to the Lender such other
financial information as the Lender may reasonably request from time to time;


 


(o)           Maintenance of Insurance.  The Borrower shall maintain on behalf of
itself and its Subsidiaries or shall cause its Subsidiaries to maintain,
insurance with responsible and reputable insurance companies or associations in
such amounts and covering such risks as is usually carried by companies engaged
in similar businesses and owning similar properties in the same general areas
in which the Borrower or such Subsidiary operates, with the Lender having
approved the present insurers and insurance; provided, however, that the
Borrower and its Subsidiaries may self-insure to the same extent as other
companies engaged in similar businesses and owning similar properties in the
same general areas in which the Borrower or such Subsidiary operates and to the
extent consistent with prudent business practice;


 


(p)           Payment of Taxes.  The Borrower and each of its Subsidiaries
shall:


 


(i)            pay and discharge all Taxes, duties,
assessments and other liabilities payable by the Borrower or such Subsidiary;


 


(ii)           withhold and collect all Taxes required to
be withheld and collected by it and remit such Taxes to the appropriate
Governmental Body at the time and in the manner required; and


 


(iii)          pay and discharge all obligations incidental
to any trust imposed upon it by statute which, if unpaid, might become a Lien
(other than a Permitted Lien) upon any of its properties;


 


53

















 


except that no such Taxes or obligations need be paid, collected or
remitted if (i) it is being actively and diligently contested in good
faith by appropriate and timely proceedings, (ii) adequate reserves shall
have been set aside therefor on its books, and (iii) such Taxes or
obligation shall not have resulted in a Lien other than a Permitted Lien, for
which any enforcement proceedings, if commenced, shall have been stayed and, in
any event, appropriate security shall have been given, if required, to prevent
the commencement or continuation of proceedings;


 


(q)           Tax Deposits.  Upon written direction from the Lender and
after approval of and pursuant to an order of the Bankruptcy Court after notice
and hearing, after the occurrence of an Default or an Event of Default which
remains uncured, the Borrower shall immediately commence to deposit with the
Lender commencing with the first interest payment due under the DIP Credit
Commitment and on the first day of each month thereafter until the earlier of (i) the
date that the Indebtedness is fully paid and (ii) the Default or Event of
Default has been cured, a sum equal to one-twelfth (1/12) of the total
annual taxes and assessments (general and special) respecting each of any owned
or leased real property and the costs of insurance premiums, based upon the
Lender’s reasonable estimate as to the amount of the taxes, assessments and
premiums to be levied, assessed and incurred (except to the extent, and only to
the extent, that, in respect of the Golden Gate Property and/or the Santa Anita
Property, the Borrower or any Guarantor is making such payments to BMO and/or
Wells Fargo, as the case may be, pursuant to the BMO Credit Agreement and/or
the Santa Anita Senior Credit Facility). 
The Borrower’s initial deposit shall be increased by an amount equal to
the Lender’s reasonable estimate of the amount of such taxes and insurance
premiums to become owing on the due dates for the payment of such taxes and
insurance premiums less the monthly payments to be deposited hereunder prior to
such due dates.  If any such taxes or
insurance premiums relating to each of any owned or leased real property are
also related to other premises, the amount of any deposit hereunder shall be
based upon the Borrower’s and/or any Guarantor’s share of the taxes,
assessments or insurance premiums, the Borrower shall apportion the total
amount of the taxes, assessments or premiums levied or assessed as between such
other premises and each of any owned or leased real property for the purposes
of computing the amount of any deposit hereunder.  Such deposits shall be held without any allowance
of interest.  Such deposits shall be used
for the payment of such taxes, assessments and insurance premiums on each of
any owned or leased real property on the earliest possible date when such
payments become due.  If the funds so
deposited are insufficient to pay any such taxes, assessments and insurance
premiums for any year when the same shall become due and payable, the Borrower
shall, within 10 Banking Days after receipt of demand therefor from the Lender,
deposit such additional funds as may be necessary to pay such taxes,
assessments and insurance premiums in full. 
If the funds so deposited exceed the amount required to pay such taxes,
assessments and insurance premiums for the year, the excess shall be applied on
a subsequent deposit or deposits.  Said
deposits shall be kept in a separate, non-interest bearing account created by
and in the name of the Lender.  Upon the
occurrence of an Default or an Event of Default, the Lender may, at its
option, without being required to do so, apply any monies at the time on
deposit pursuant to this Section 7.1(q) on any of the Indebtedness,
in such order and manner as the Lender may elect.  When the Indebtedness has been fully paid,
any remaining deposits shall be paid to the Borrower.  A security interest within the meaning of the
Uniform Commercial Code of the state in which the Borrower is organized as a
legal entity is hereby granted to the Lender in and to any monies at any
time on deposit pursuant to this Section 7.1(q), as additional security
for the Indebtedness.  Such funds shall
be applied by the Lender for the purposes made hereunder and shall not be
subject to the direction 


 


54

















 


or control of
the Borrower.  The Lender shall not be
liable for any failure to apply the funds so deposited hereunder to the payment
of any particular taxes, assessments and insurance premiums unless the
Borrower, while not in default hereunder, shall have requested the Lender in
writing to make application of such funds to the payment of the particular
taxes, assessments or premiums for payment of which they were deposited,
accompanied by the bills for such taxes, assessments or premiums.  The Lender shall not be liable for any act or
omission taken in good faith or pursuant to the instruction of any party, but
shall be liable only for gross negligence or willful misconduct;


 


(r)            Insurance. 
The Borrower and the Guarantors shall maintain or cause to be maintained
at all times with respect to any owned or leased real property and their
business and operations in respect thereof all customary and prudent insurance,
including, without limitation, all insurance requested by the Lender, acting
reasonably.


 


(s)           Preserve Collateral.  The Borrower and each of the Guarantors shall
upon reasonable request in writing by the Lender do, observe and perform all
matters and things reasonably within its powers necessary or expedient to be
done, observed or performed for the purpose of maintaining and preserving the
DIP Liens and the Liens under each Pledge and Security Agreement, as applicable;


 


(t)            Defense of Collateral.  The Borrower and the Guarantors shall pay
when due all Post-Petition obligations, lawful claims or demands with respect
to each of any owned or leased real property which, if unpaid, might result in,
or permit the creation of, any Lien on such property senior or pari passu to the DIP Liens or the Liens
under each Pledge and Security Agreement, as applicable, including but not
limited to all lawful claims for labor, materials and supplies; provided that
the Borrower or the applicable Guarantor shall have the right to contest any
such claim so long as the Borrower or such Guarantor posts a bond acceptable to
the Lender to protect the Lender’s interest in such property, and, in general,
do or cause to be done everything necessary to fully preserve the DIP Liens and
the Liens under each Pledge and Security Agreement, as applicable, and the rights
of the Lender under this Agreement and the other DIP Credit Documents in
respect of such property.  The Borrower
and the Guarantors shall at all times defend the Lender’s interest in and
to any owned or leased real property, and the priority of the DIP Lien and the
Liens under each Pledge and Security Agreement, as applicable;


 


(u)           Maintenance of Real Property.  To the extent failure to do so could not
reasonably be expected to have a Material Adverse Effect, the Borrower and the
Guarantors shall keep any owned or leased real property, including all
buildings and improvements now or hereafter situated thereon, and all equipment
owned by them and material to the operation of any owned or leased real
property, in good condition subject to reasonable wear and tear, not commit or
permit any waste thereof, make all necessary or advisable repairs, replacements
and improvements and subject to force
majeure, and complete and restore promptly and in good workmanlike
manner any building, improvements or other items of any of the real property
that may be damaged, or destroyed, and subject to the right to contest
legitimate disputes, pay when due all costs incurred therefor;


 


(v)           Material Adverse Change.  Upon the happening of any Material Adverse
Change, the Borrower and/or the Guarantors shall promptly advise the Lender of
such change or event;


 


(w)          Notice of Default.  The Borrower and each of the Guarantors shall
promptly provide the Lender with a copy of all written notices and reports
received or delivered by the 


 


55

















 


Borrower or
such Guarantor (including notices of default) under any of the Organizational
Documents, Material Agreements and notices of violations of Applicable Law
received by the Borrower or any of the Guarantors relating to any owned or
leased real property that might have a Material Adverse Effect, including,
without limitation, all racing and/or gaming licenses;


 


(x)            Notification of Attachment or Other Action.  As soon as it becomes aware of same, the
Borrower and/or each of the Guarantors shall promptly notify the Lender in
writing of any unstayed attachment or other legal process levied or threatened
against any of the Collateral, or the institution of any action, suit or
proceeding by or against the Borrower, any of the Guarantors or any of the
Collateral, or any information received by the Borrower and/or any of the
Guarantors relative to any of the Guarantors and/or the Borrower or any owned
or leased real property which might have a Material Adverse Effect or
constitute a Material Adverse Change;


 


(y)           Notice of Litigation and Other Matters.  The Borrower and the Guarantors shall, as
soon as practicable after any of them shall become aware of the same, give
notice to the Lender of the following events:


 


(i)            the commencement of any action, proceeding,
arbitration or investigation against or in any other way relating adversely to
the Borrower or any of the Guarantors or any of their respective properties,
assets or businesses by any Person (including any Governmental Body) which, if
adversely determined, could singly or when aggregated with all other such
actions, proceedings, arbitrations and investigations reasonably be expected to
have a Material Adverse Effect;


 


(ii)           any actual, pending or, to the knowledge of
the Borrower or any Guarantor, threatened litigation, arbitration or other proceeding
relating to the Borrower or any of the Guarantors or any of their property,
assets or business, including any owned or leased real property, which if
decided adversely could result in a Material Adverse Change;


 


(iii)          any insurance claim made by the Borrower or
any of the Guarantors in excess of $1,000,000;


 


(iv)          any development which has had or could
reasonably be expected to have a Material Adverse Effect; and


 


(v)           any Default or Event of Default


 


specifying, in each case, the relevant particulars thereof and the
period of existence thereof and the action taken, being taken or proposed to be
taken by or on behalf of the Borrower or any Guarantor with respect thereto;


 


(z)            Bankruptcy Matters.  The Borrower and each of the Initial Guarantors
shall provide copies of all pleadings, motions, applications and judicial
information (i) filed by or on behalf of Borrower or any of its
Subsidiaries with the Bankruptcy Court, (ii) provided to any creditors’
committee appointed in the Chapter 11 Cases, at the time such document is filed
with the Bankruptcy Court, or (iii) provided to any creditors’ committee
appointed in the Chapter 11 Cases; provided that the Borrower shall provide the
Lender with drafts of all pleadings, motions 


 


56

















 


and
applications to be filed by or on behalf of the Borrower or any of its
Subsidiaries as soon as practicable in advance of such filing;


 


(aa)         Inspections and Meetings.  The Borrower and each of the Guarantors shall
permit each of the Lender and its authorized employees, representatives and
agents at reasonable times and during normal business hours, upon giving
reasonable notice, to discuss, or meet at the head office of the Borrower
to discuss, with senior management of the Borrower, the business, property,
financial condition and prospects of the Borrower and/or any of the Guarantors
and to inspect any owned or leased real property;


 


(bb)         USA Patriot Act.  The Borrower hereby covenants that until such
time as the Obligations are paid in full, neither it nor any of its
Subsidiaries will take action (or fail to take any action) that would violate
the PATRIOT Act, IEEPA or OFAC and will take all customary and reasonable steps
to ensure that they are in compliance with any orders issued thereunder.  For purposes hereof, “IEEPA” means the International Emergency Economic Power Act, 50 U.S.C.
§ 1701 et. seq., “OFAC” means
the U.S. Department of Treasury’s Office of Foreign Asset Control and “Patriot Act” means the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001
(Public Law 107-56) (The USA PATRIOT Act);


 


(cc)         Additional Guaranty.  The
Borrower shall cause MEC Texas Racing, Inc., Racetrack Holdings, Inc. and
XpressBet, Inc. to, on or before March 16, 2009, execute and deliver to the
Lender a Guaranty Agreement and Pledge and Security Agreement, in each case in
form and substance reasonably satisfactory to the Lender; and


 


(dd)         Asset Sale. The Borrower and the Guarantors shall promptly
commence marketing efforts for the sale of all or substantially all assets (but
not as a whole) of the Borrower, Guarantors and their respective Subsidiaries.


 


7.2                          Negative Covenants


 


The Borrower and each of the Guarantors covenants and agrees with the
Lender that, except as expressly permitted under this Agreement, it shall not,
nor shall it permit any of its respective Subsidiaries to, from and after the
Closing Date until the Termination Date:


 


(a)           Encumber Property.  Create, grant, assume or suffer to exist any
Lien upon any of its or their properties or assets, other than Permitted Liens;


 


(b)           Capital Expenditures.  Without the Lender’s prior written approval,
exercisable in the Lender’s sole discretion, incur or commit or agree to incur any
Capital Expenditures, except (i) in accordance with the Budget approved by
the Lender; (ii) as required pursuant to the terms of the joint venture
arrangements with Forest City Enterprises, Inc. and Caruso Affiliated; and
(iii) emergency repairs and repairs in the ordinary course of business;


 


(c)           Transactions with Affiliates.  Repay any existing indebtedness or
liabilities owed to, or otherwise enter into any transaction or agreement with,
any Affiliate (or any corporation which, after the transaction in question
becomes effective, would become an Affiliate), other than pursuant to the
Interim Order or the Final Order in the case of the Borrower and the Initial
Guarantors, except in the ordinary course of business consistent with past
practice and permitted by an order of the Bankruptcy Court after notice and
hearing;


 


(d)           Amalgamations, etc.  Enter into any transaction (including by way
of reorganization, consolidation, amalgamation, liquidation, transfer, sale or
otherwise) whereby the Borrower or any of its Subsidiaries, all or any other
material portion of the undertaking, property and assets of the Borrower or any
of its Subsidiaries, would become the property of any other Person, except in
the case of the Borrower and the Initial Guarantors as approved by an order of
the Bankruptcy Court after notice and hearing;


 


57

















 


(e)           Change in Ownership of Subsidiaries.  Sell or otherwise transfer or dispose of any
shares in the capital stock of any Subsidiary, or any warrants, rights or
options to acquire such stock, or permit any Subsidiary to issue, sell or
otherwise transfer or dispose of any shares in its capital stock or the capital
stock of any Subsidiary or any warrants, rights or options to acquire such stock
except to the Borrower or any Subsidiary, except in the case of the Borrower
and the Initial Guarantors as approved by an order of the Bankruptcy Court
after notice and hearing;


 


(f)            Investments; Acquisitions.  Engage directly or indirectly in any business
activity unrelated to its Core Line of Business, or purchase or otherwise
acquire or make any investment in any properties or assets, or permit or
otherwise undertake any Acquisitions, except, in the case of the Additional
Guarantors, in cash equivalents in amounts acceptable to the Lender acting
reasonably; provided, however, that the Borrower may make investments in Cash
Equivalents in amounts and pursuant to terms acceptable to the Lender, acting
reasonably, except in the case of the Borrower and the Initial Guarantors as
approved by an order of the Bankruptcy Court after notice and hearing;


 


(g)           Restricted Payments: 
Without in any way limiting the generality of the
restrictions and limitations contained within the covenants referenced in this
Agreement, until the Termination Date the Borrower and each of its Subsidiaries
(except for Gulfstream Park Racing Association Inc., GPRA Thoroughbred Training
Center, Inc., and Remington Park, Inc. which entities shall be
permitted to make restricted payments in accordance with and subject to the
provisions set forth in the Gulfstream Construction Loan Agreement and the
Remington Construction Loan Agreement) is prohibited from undertaking the
following without the express prior written consent of the Lender in its sole
and absolute discretion:


 


(i)            in the case of the Borrower or the Initial
Guarantors, except pursuant to a confirmed reorganization plan and except as
specifically permitted hereunder, make any payment or transfer with respect to
any Lien or Indebtedness incurred or arising prior to the filing of the Chapter
11 Cases that is subject to the automatic stay provisions of the Bankruptcy
Code whether by way of “adequate protection” under the Bankruptcy Code or
otherwise;


 


(ii)           making any loans to third parties or
Affiliates, except intercompany loans by and among the Borrower and its
Subsidiaries (other than any Foreign Subsidiary excluding AmTote Canada, Inc.,
an Ontario corporation) pursuant to a confirmed reorganization plan or in
accordance with the Budget; or


 


(iii)          redeeming, purchasing or otherwise retiring
or cancelling for consideration any securities (including any warrants, options
or rights to acquire securities);


 


(iv)          creating any sinking fund or entering into
any analogous arrangement whereby cash is set aside or segregated for the
payment of any indebtedness, other than the DIP Credit Commitment, or for the
acquisition of any equity securities of the Borrower;


 


(v)           declaring or paying any dividends, except
pursuant to a confirmed reorganization plan or payable to the Borrower or a
Guarantor; or


 


58

















 


(vi)          entering into any transactions with any
Affiliate for the purposes of undertaking indirectly any transaction or
activity that is otherwise prohibited by this Section 7.2(g);


 


(h)           Debt. 
Directly or indirectly, incur, assume or suffer to exist any
Indebtedness other than Permitted Debt;


 


(i)            Financial Assistance.  Provide financial assistance, either directly
or indirectly, by means of a guarantee, provision of security or otherwise to
any Person, except for (i) Permitted Debt or Permitted Liens and any other
obligations which the Borrower may enter into in favor of the Lender, (ii) financial
assistance given by the Borrower to any Guarantor, or by any Guarantor to the
Borrower or any other Guarantor and (iii) financial assistance given to a
Subsidiary in connection with an acquisition or investment expressly permitted
by this Agreement;


 


(j)            Disposition of Assets.  Except pursuant to a confirmed reorganization
plan or except as specifically permitted under the Sale Order, the Bid
Procedures Order or an order of the Bankruptcy Court after notice and hearing,
assign, transfer, convey, lease or otherwise alienate or dispose of any assets
or properties, or any interest therein (financial or management) whether legal
or equitable (or agree to do any of the foregoing), outside of the ordinary
course of business consistent with past practice, without the prior written
consent of the Lender;


 


(k)           ERISA. 
Following the Closing Date, (i) adopt or institute any Employee
Benefit Plan that is an employee pension benefit plan within the meaning of Section 3(2) of
ERISA, (ii) take any action which will result in the partial or complete
withdrawal, within the meanings of Sections 4203 and 4205 of ERISA, from a
Multiemployer Plan except in the case of a closure of the businesses or
facilities of an ERISA Affiliate, (iii) engage or permit any Person to
engage in any non-exempt transaction prohibited by Section 406 of ERISA or
Section 4975 of the IRC involving any Employee Benefit Plan or
Multiemployer Plan which would subject Borrower, any of the Guarantors or any
ERISA Affiliate to any tax, penalty or other liability including a liability to
indemnify, (iv) incur or allow to exist any accumulated funding deficiency
(within the meaning of Section 412s, 430, 431 and 432 of the IRC or
Sections 302, 303, 304 and 305 of ERISA), except for any funding
deficiencies that relate to a Multiemployer Plan caused by a third party (other
than an Affiliate of the Borrower), (v) fail to make full payment when due
of all amounts due as contributions to any Employee Benefit Plan or
Multiemployer Plan, (vi) fail to comply with the requirements of Section 4980B
of the IRC or Part 6 of Title I(B) of ERISA, (vii) adopt
any amendment to any Employee Benefit Plan which would require the posting of
security pursuant to Section 401(a)(29) of the IRC or (viii) permit
any ERISA Affiliate to do any of the things referred to in items (i) to (vii) above,
except to the extent that all events described in the preceding clauses of this
Section 7.2(k) could not, individually or in the aggregate, be
reasonably likely to have a Material Adverse Effect;


 


(l)            Assertion of Certain Claims and Defenses.  To the extent permitted by Applicable Law,
assert in any judicial proceeding any lender liability claim or counterclaim,
the defense of lack of consideration or violation of any applicable usury laws
or any similar legal or equitable defense to the validity or enforceability of
this Agreement or any other DIP Credit Document;


 


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(m)          Sale Leasebacks.  Directly or indirectly, become or remain
liable as lessee or as guarantor or other surety with respect to any lease of any
property (whether real or personal or mixed), whether now owned or hereafter
acquired, (i) which the Borrower or any Guarantor has sold or transferred
or is to sell or transfer to any other Person other than the Borrower or a
Guarantor or (ii) the Borrower or any Guarantor intends to use for
substantially the same purpose as any other property which has been sold or is
to be sold or transferred by the Borrower or any Guarantor to any Person other
than the Borrower or a Guarantor in connection with such lease; and


 


(n)           Material Agreements.  Except, in the case of the Borrower and the
Initial Guarantors, pursuant to a confirmed reorganization plan, enter into,
nor permit to be entered into, any new Material Agreements without the prior
written consent of the Lender, which consent may be withheld by the Lender in
its reasonable discretion;


 


(o)           Use. 
Use or develop any owned or leased real property for any purposes other
than as contemplated under this Agreement, the Gulfstream Development
Agreement, the Gulfstream Construction Contracts (as defined in the Gulfstream
Construction Loan Agreement), the Remington Construction Contracts (as defined
in the Remington Construction Loan Agreement) and other permitted related
purposes.  Neither the Borrower nor any
of the Guarantors shall permit any owned or leased real property or any portion
thereof to be converted or take any preliminary actions which could lead to a
conversion to condominium or cooperative form of ownership until the
Termination Date;


 


(p)           Property Manager.  Except, in the case of the Borrower and the
Initial Guarantors, pursuant to a confirmed reorganization plan or as approved
by an order of the Bankruptcy Court after notice and hearing, enter into any
property management agreement in respect of any owned or leased real property
without the Lender’s prior written consent;


 


(q)           No Commingling Funds.  Except, in the case of the Borrower and the
Initial Guarantors, pursuant to a confirmed reorganization plan or except as
specifically permitted hereunder or pursuant to an order of the Bankruptcy
Court after notice and hearing, commingle any assets or funds of the Guarantors
with assets or funds of any of its shareholders, members, partners, principals,
Affiliates or any other Person, except that the Additional Guarantors may
participate in the cash management arrangement approved pursuant to an order of
the Bankruptcy Court;


 


(r)            Subordinated Debt.  The Borrower shall not redeem any
Subordinated Debt  or otherwise create or
become subject to any obligation to make any unscheduled repayment of principal
on, or repurchase of, the Subordinated Debt;


 


(s)           No Change in Accounting Policies.  Except as required by Applicable Law, there
shall be no changes to accounting policies, practices and calculation methods from
the accounting policies, practices and calculation methods used by the Borrower
and the Guarantors, respectively, as at the date of this Agreement, except
as required under Applicable Law;


 


(t)            Reclamation Claims.  Notify the Lender prior to entering into any
agreement to return any of its assets to any of its creditors for application
against any Pre-Petition Indebtedness, Pre-Petition trade payables or other
Pre-Petition claims under Section 546(h) of the Bankruptcy Code or
allowing any creditor to take any setoff or recoupment against any of its
Pre-Petition Indebtedness, Pre-Petition trade payables or other Pre-Petition
claims based upon any such return pursuant to Section 553(b)(l) of
the Bankruptcy Code or otherwise; and


 


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(u)           Chapter 11 Claims.  Except, in the case of the Borrower and the
Initial Guarantors, for the Carve-Out Expenses up to the Carve-Out Amount,
incur, create, assume, suffer to exist or permit any other super-priority
administrative claim against the Borrower or an Initial Guarantor which is pari passu with or senior to the
claims of the Lender against the Borrower or a Guarantor, except as set forth
in Section 2.10.


 


7.3                          Environmental Matters


 


(a)           The
Borrower and each of the Guarantors shall comply, and shall take all necessary
corporate or other action to cause any of its Subsidiaries to comply with all
Environmental Laws except where the failure to do so could not reasonably be
expected to have a Material Adverse Effect.


 


(b)           The
Borrower and each of the Guarantors covenants and agrees that it and each
Subsidiary shall not knowingly permit, and shall use reasonable commercial
efforts to prevent any person, including but not limited to any invitee,
occupant or tenant of or on real property or any part thereof, to engage in any
activity (or fail to take action), which is likely to lead to the imposition of
any Environmental or Safety Liability against the Borrower or a Subsidiary
which would have a Material Adverse Effect.


 


(c)           The
Borrower and each of the Guarantors shall, and shall take all necessary
corporate action to cause each Subsidiary to, promptly remove any Hazardous
Substance (or if removal is prohibited by any Environmental Law, the Borrower
or applicable Subsidiary shall take whatever action is required to ensure
compliance with such Environmental Law) from any real properties (or
neighboring lands where the Hazardous Substance has come from any owned or
leased real property) to the extent required by Environmental Law where the
failure to do so could reasonably be expected to have a Material Adverse
Effect.


 


(d)           The
Borrower and each of the Guarantors shall provide the Lender with an
environmental assessment report (which shall include a report arising from an
environmental site assessment, investigation or environmental review) with
respect to any real property or an update of such assessment (i) upon the
written request of the Lender documenting its reasonable opinion that the
Borrower or any Guarantor may not be in material compliance with this Section 7.3;
(ii) if such assessment is required by any Governmental Body or (iii) if
an Event of Default relating to an environmental matter has occurred, and the
Lender has made a reasonable written request to the Borrower for such
assessment or update to address the Event of Default within 60 days after
such request, and all such audits or updates thereof shall be at the
Borrower’s expense; provided, the Lender may only request such assessment no
more than once per year absent a continuing Event of Default; provided that,
the Lender will use commercially reasonable efforts to cooperate with the
Borrower to avoid nullifying any applicable privileges in connection with
receipt of otherwise privileged reports.


 


(e)           If
the Borrower, any Guarantor or any Subsidiary (i) receives notice that any
violation of any Environmental Law may have been committed or is about to be
committed by it, (ii) receives notice that any administrative or judicial
complaint or order has been filed or is about to be filed against it alleging
violations of any Environmental Law or requiring it to take any action in
connection with the release of Hazardous Substances into the environment, or (iii) receives
any notice from a Governmental Body or other Person alleging that the Borrower
or any Guarantor may be liable or responsible for any Environmental or Safety
Liability, in each 


 


61

















 


case where the
ultimate liability of the Borrower and/or any of the Guarantors or any
Subsidiary which may arise from such notice could reasonably be expected to
have a Material Adverse Effect, the Borrower shall, and shall cause each
Subsidiary to, provide the Lender with a copy of such notice within five days
of receipt thereof.  The Borrower and
each of the Guarantors shall, and shall cause each Subsidiary to, also provide
to the Lender, within a reasonable period of time after it becomes available, a
copy of any environmental assessment report (including any report arising from
an environmental site assessment, investigation or environmental review),
including any report required to be submitted to any Governmental Body prepared
by or for the Borrower; provided that, the Lender will use commercially
reasonable efforts to cooperate with the Borrower to avoid nullifying any
applicable privileges in connection with receipt of otherwise privileged
reports.


 


(f)            The
Borrower shall, and shall cause each Subsidiary to, permit the Lender and its
authorized employees, representatives and agents, at reasonable times and
during normal business hours and at the Borrower’s own cost, upon giving
reasonable notice, to visit, inspect and investigate (including intrusive
investigations) any real property where the Lender, in its reasonable opinion,
believes that the Borrower or any Subsidiary may not be in compliance with Section 7.3(e);
provided Lender shall first require Borrower to provide such assessment report
pursuant to Section 7.3(d).  If the
Lender undertakes such investigation, it shall use qualified environmental
professionals possessing reasonable levels of insurance (naming, where
appropriate, the Borrower and the Guarantors as additional insured) and, to the
extent practicable, pursuant to commercially reasonable terms and conditions
which require such environmental professionals to indemnify the Borrower and
the Guarantors for losses that arise out of negligence or misconduct by such
environmental professionals or their subcontractors.


 


ARTICLE 8


 


CONDITIONS PRECEDENT


 


8.1                                                                               Conditions Precedent to Closing


 


The obligations of the Lender to make available the DIP Credit
Commitment or any part thereof to the Borrower are subject to compliance, on or
before the Closing Date, with each of the following conditions precedent, which
conditions precedent are for the sole and exclusive benefit of the Lender and
may be waived in writing by the Lender:


 


(a)                                  the representations
and warranties set out in Section 6.1 shall be true and correct in all
material respects on the Closing Date as if made on and as of such date;


 


(b)                                 no Default or Event of
Default shall have occurred and be continuing nor shall it be reasonably
anticipated that there be any Default or Event of Default immediately after
giving effect to the execution of the DIP Credit Documents;


 


(c)                                  this Agreement, in
form and substance satisfactory to the Lender, shall have been executed by the
Borrower and the Initial Guarantors and delivered to the Lender;


 


(d)                                 the Lender shall have
received the following in form, scope and substance satisfactory to the Lender,
acting reasonably:


 


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(i)                                     an Officer’s
Certificate dated the Closing Date certifying that attached thereto are true
and correct copies of the following documents, and that such documents are in
full force and effect, unamended:


 


(A)          the
articles or constating documents of the Borrower and each Guarantor;


 


(B)           the
by-laws or other organizational documents of the Borrower and each Guarantor;


 


(C)           a
certificate of incumbency including sample signatures of officers and directors
of the Borrower and each Guarantor who have executed any of the DIP Credit
Documents, or any other document delivered to the Lender under this Article;
and


 


(D)          the
resolutions or other documentation evidencing that all necessary action,
corporate or otherwise, has been taken by the Borrower and each Guarantor to
authorize the execution, delivery and performance of the DIP Credit Documents
to which it is a party;


 


(ii)                                  a certificate of
status, certificate of good standing or similar certificate with respect to the
jurisdiction of incorporation or formation of the Borrower and each Guarantor;


 


(iii)                               the Disclosure Schedule;
and


 


(iv)                              such other documentation
or information as the Lender shall have reasonably requested;


 


(e)                                  entry by the
Bankruptcy Court of the Interim Order, by no later than 8 days after the
Petition Date;


 


(f)                                    completion and
receipt by the Lender of all documentation in form and substance satisfactory
to the Lender, including receipt of such corporate resolutions, certificates
and other documents as the Lender will reasonably request;


 


(g)                                 entry of all “first
day orders,” including, without limitation, all employee-related orders and
critical vendor orders entered at or about the time of the commencements
of the Chapter 11 Cases, in form and substance reasonably satisfactory to
the Lender; and


 


(h)                                 payment of all closing
costs and fees and all unpaid expenses of the Lender.


 


8.2                                                                               Conditions Precedent to Advances


 


The obligation of the Lender to make any Advances is subject to
compliance, on or before the relevant Borrowing Date, with each of the following
conditions precedent, which


 


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conditions precedent are for the sole and exclusive benefit of the
Lender and may be waived in writing by the Lender in its sole discretion:


 


(a)                                  (i) if the date of
Advance is 45 days or more after the entering of the Interim Order, the
Bankruptcy Court shall have entered the Final Order on or before the date that
is 45 days after the Petition Date, (ii) the Interim Order or the Final
Order, as the case may be, shall not have been vacated, stayed, reversed,
modified or amended without the Lender’s consent and shall otherwise be in full
force and effect, (iii) a motion for reconsideration of any such order
shall not have been filed and (iv) no appeal of any such order shall have
been timely filed and such order is not in any respect the subject of a stay
pending appeal;


 


(b)                                 the representations
and warranties set out in each DIP Credit Document shall be true and correct on
the relevant Borrowing Date as if made on and as of such date and the Borrower
and the Guarantors shall have delivered a certificate to that effect;


 


(c)                                  no Default or Event
of Default shall have occurred and be continuing immediately before or after
giving effect to the proposed Advance and the Borrower and the Guarantors shall
have delivered a certificate to that effect;


 


(d)                                 no Material Adverse
Change shall have occurred since the Closing Date in the case of the initial
Advance and in the case of each subsequent Advance, since the date of the last Advance
and the Borrower and the Guarantors shall have delivered a certificate to that
effect;


 


(e)                                  the Lender shall have
received a Borrowing Notice dated at least five Banking Days prior to the
relevant Borrowing Date (other than with respect to the First Advance, which
Borrowing Notice shall be dated contemporaneously therewith);


 


(f)                                    no injunction,
order or decree of any court shall prohibit the Lender from making such
Advance;


 


(g)                                 as a condition
precedent to the initial Advance only, the Lender shall have received payment
in full of (i) all reasonable invoiced fees and reimbursable out-of-pocket
expenses payable by the Borrower on or prior to the date of such initial
Advance in respect of this Agreement, including payment of all reasonable fees,
disbursements and out-of-pocket expenses of counsel to the Lender and (ii) the
Tranche 1 Arrangement Fee.  For
greater certainty, the Lender acknowledges that such amounts may be paid to the
Lender by the Borrower using proceeds from the initial Advance;


 


(h)                                 as a condition
precedent to the initial Advance only (or to such subsequent Advance as the
Lender may determine, in its sole and absolute discretion), as evidence of, and
security for, the DIP Credit Commitment and all other obligations, liability
and Indebtedness of the Borrower hereunder and under the other DIP Credit
Documents, both present and future, the Borrower shall have delivered to the
Lender, in form satisfactory to the Lender and its counsel, a promissory note
from the Borrower in favor of the Lender (the “Borrower Note”); and


 


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(i)                                     as a condition
precedent to the initial Advance under the DIP Tranche 2 Credit Commitment
only, the Lender shall have received payment in full of  the
Tranche 2 Arrangement Fee.  For
greater certainty, the Lender acknowledges that such amounts may be paid to the
Lender by the Borrower using proceeds from the initial Advance under the DIP
Tranche 2 Credit Commitment.


 


ARTICLE 9


 


EVENTS OF DEFAULT AND REMEDIES


 


9.1                                                                               Events of Default


 


Notwithstanding the provisions of Section 362 of the Bankruptcy
Code and without notice, application or motion to, hearing before, or order of
the Bankruptcy Court or any notice to the Borrower, and subject to Section 9.2(b),
the occurrence of any one or more of the following events (regardless of the
reason therefor) shall constitute an “Event
of Default” hereunder:


 


(a)                                  default by the
Borrower in payment of (i) any principal when due (including, without
limitation, any mandatory prepayments pursuant to Section 2.5 or (ii) any
interest thereon within three Banking Days after the same becomes due or (iii) any
other amount hereunder within 10 days after notice of non-payment thereof
is received by the Borrower;


 


(b)                                 default by the
Borrower or any Guarantor in the performance or observance of any covenant,
condition or obligation contained in any of the DIP Credit Documents to which
it is a party that does not require the payment of money to the Lender, and
such default continues for a period of 20 days (or such longer period as
the Lender may in its sole discretion determine) after the earliest of (x) receipt
of notice from the Lender of such default, and (y) knowledge of the
existence of such default by any officer of the Borrower;


 


(c)                                  any representation,
warranty, certificate, information or other statement (financial or otherwise)
made, deemed to be made, or furnished by or on behalf of the Borrower or any
Guarantor in, or in connection with, this Agreement or any other DIP Credit
Document (i) that is not or has not been qualified by reference to “material”, “in all material respects” or “Material Adverse Effect”, or any other materiality standard,
shall be found to be false, incorrect, incomplete or misleading in any material
respect when made, deemed to be made, or furnished or (ii) that is or has
been qualified by reference to “material”,
“in all material respects” or “Material Adverse Effect”, or any other
materiality standard, shall be found to be false, incorrect, incomplete or
misleading when made, deemed to be made, or furnished, where, in all such
cases, the consequences of such misrepresentation or breach of warranty could
reasonably be expected to have a Material Adverse Effect;


 


(d)                                 except, in the case of
the Borrower and the Initial Guarantors, for defaults resulting from an Effect
of Bankruptcy and, in the case of the Borrower and all Guarantors, defaults or
breaches under any other agreement, document or instrument entered into either


 


65

















 


(x) Pre-Petition and which is assumed after the Petition Date or
is not subject to the automatic stay provisions of Section 362 of the
Bankruptcy Code, or (y) Post-Petition, that is not cured within any
applicable grace period therefor, and such default or breach (i) that
results from the failure to make any payment when due in respect of any
Indebtedness (other than the Obligations) of the Borrower or any Guarantor in
excess of $1,000,000 in the aggregate (including (x) undrawn committed or
available amounts and (y) amounts owing to all creditors under any
combined or syndicated credit arrangements), or (ii) causes, or permits
any holder of such Indebtedness or a trustee to cause, Indebtedness or a
portion thereof in excess of $1,000,000 in the aggregate to become due prior to
its stated maturity or prior to its regularly scheduled dates of payment, or
cash collateral in respect thereof to be demanded;


 


(e)                                  any judgment or order
for the payment of money in excess of $5,000,000 shall be rendered against the
Borrower or any Guarantor which remains unsatisfied or unstayed and (i) executions
shall have been levied on any property of the Borrower or any Guarantor by or
on behalf of any creditor in reliance on such judgment or order and (ii) (x)
with respect to the Borrower or any Initial Guarantor, there shall be any
period during which a stay of enforcement of such judgment or order, by reason
of a pending appeal or otherwise, shall not be in effect and (y) with respect
to any Additional Guarantor, there shall be any period of more than 30 days
during which a stay of enforcement of such judgment or order, by reason of a
pending appeal or otherwise, shall not be in effect; or


 


(f)                                    if, at any
time after execution and delivery thereof, other than by reason of a willful
act or omission of the Lender, (i) any DIP Credit Document ceases to be in
full force and effect; (ii) any DIP Credit Document is declared by a court
or tribunal of competent jurisdiction to be null and void; (iii) the
validity or enforceability of any DIP Credit Document is contested by the
Borrower or any Guarantor; or (iv) the Borrower or any Guarantor denies in
writing that it has any or further liability or obligations under any DIP
Credit Document or in respect of the Obligations; or


 


(g)                                 any
of the following occurs:


 


(i)            a bid procedures and sale motion, which
motion (x) contemplates the “stalking horse bid” of the Lender or an
Affiliate thereof on the assets described in the Purchase Agreement and (y) is
in form and substance reasonably acceptable to the Lender in its sole
discretion, is not submitted to the Bankruptcy Court on or before March 10,
2009;


 


(ii)           a
bid procedures and sale motion, which motion (x) contemplates the sale of
substantially all of the assets of the Borrower and its Subsidiaries (other
than those assets described in the Purchase Agreement) and (y) is in form and
substance reasonably acceptable to the Lender in its sole discretion, is not
submitted by overnight delivery to the Bankruptcy Court on or before March 18,
2009;


 


(iii)          the
Borrower does not obtain an order of the Bankruptcy Court (the “Bid Procedures Order”), in form and
substance reasonably acceptable to the Lender, approving the bid procedures for
the sale(s) of all or substantially all the assets of the Borrower and its
Subsidiaries on or before the earlier of 3 weeks after the creditors’
committee is formed and April 3, 2009; or


 


(iv)          the Borrower does not obtain, within the
timeframes set forth in the Bid Procedures Order, an order of the Bankruptcy
Court (the “Sale Order”), in form
and substance acceptable to the Lender in its sole discretion, 


 


66

















 


approving the sale(s) of the assets of the Borrower and its
Subsidiaries (the “Asset Sale(s)”)
pursuant to the Bid Procedures Order;


 


(h)                                 Any of the following
occurs in any Chapter 11 Case:


 


(i)            the bringing of a motion, taking of any
action by the Borrower or any Guarantor in any Chapter 11 Case:  (w) to obtain additional financing under
Section 364(c) or (d) of the Bankruptcy Code not otherwise
permitted pursuant to this Agreement; (x) to grant any Lien other than
Permitted Lien upon or affecting any Collateral; (y) except as provided in
the Interim or Final Order, as the case may be, to use cash collateral of the
Lender under Section 363(c) of the Bankruptcy Code without the prior
written consent of the Lender; or


 


(ii)           the entry of an order in any of the
Chapter 11 Cases confirming a plan or plans of reorganization that does
not contain a provision for termination of the DIP Credit Commitment and
repayment in full in cash of all the Obligations under this Agreement on or
before the effective date of such plan or plans; or


 


(iii)          the entry of an order amending,
supplementing, staying, vacating or otherwise modifying the DIP Credit
Documents or the Interim Order or the Final Order without the written consent
of the Lender or the filing by the Borrower or any Guarantor of a motion for
reconsideration with respect to the Interim Order or the Final Order; or


 


(iv)          the Final Order is not entered on or before
the date that is 45 days after the Petition Date; or


 


(v)           the payment of, or application for authority
to pay, any Pre-Petition claim without the Lender’s prior written consent
unless (i) authorized pursuant to the first-day orders approved by the
Bankruptcy Court, (ii) consisting of adequate protection payments approved
by the Bankruptcy Court in the Interim Order or the Final Order, (iii) Pre-Petition
payments reflected in the Budget or (iv) otherwise permitted under this Agreement;
or


 


(vi)          from and after the entry of the Final Order,
the allowance of any claim or claims under Section 506(c) of the
Bankruptcy Code or otherwise against the Lender or any of the Collateral or
against the Prior Lender or any Collateral (as defined in the Pre-Petition Loan
Agreement); or


 


(vii)         the appointment of an interim or permanent
trustee in any Chapter 11 Case or the appointment of a receiver or an
examiner in any Chapter 11 Case with expanded powers to operate or manage
the financial affairs, the business, or reorganization of the Borrower or any
Guarantor; or the sale, without the Lender’s consent, of all or substantially
all the Borrower’s and the Guarantor’s assets either through a sale under Section 363
of the Bankruptcy Code, through a confirmed plan of reorganization in the


 


67

















 


Chapter 11 Cases, or otherwise that does not provide for payment
in full in cash of the Obligations and termination of the DIP Credit
Commitment; or


 


(viii)       the
dismissal of any Chapter 11 Case, or the conversion of any Chapter 11
Case from one under Chapter 11 to one under Chapter 7 of the
Bankruptcy Code or the Borrower or any Guarantor shall file a motion or other
pleading seeking the dismissal of any Chapter 11 Case under Section 1112
of the Bankruptcy Code or otherwise; or


 


(ix)          the entry of an order by the Bankruptcy Court
granting relief from or modifying the automatic stay of Section 362 of the
Bankruptcy Code (x) to allow any creditor to execute upon or enforce a
Lien on any Collateral, or (y) with respect to any Lien of or the granting
of any Lien on any Collateral to any state or local environmental or regulatory
agency or authority, which in either case would have a Material Adverse Effect;
or


 


(x)           the
entry of an order in any Chapter 11 Case avoiding or requiring repayment
of any portion of the payments made on account of the Obligations owing under
this Agreement or the other DIP Credit Documents; or


 


(xi)          the failure of the Borrower or any Guarantor
to perform any of its obligations under the Interim Order or the Final Order;


 


(xii)         the
entry of an order in any of the Chapter 11 Cases granting any other
super-priority claim or Lien equal or superior to the DIP Lien other than
adequate protection Liens approved by the Bankruptcy Court in the Interim Order
or the Final Order; or


 


(xiii)        a
Lien granted on any Collateral in any Pledge and Security Agreement ceases to
be in full force and effect or a perfected Lien ceases to have the priority
contemplated therein.


 


9.2                                                                               Remedies Upon Default


 


(a)                                  If
any Event of Default has occurred and is continuing, the Lender may,
notwithstanding the provisions of Section 362 of the Bankruptcy Code,
without any application, motion or notice to, hearing before, or order from, the
Bankruptcy Court, suspend the DIP Credit Commitment with respect to additional
Advances, whereupon any additional Advances shall be made or incurred in the
Lender’s sole discretion so long as such Default or Event of Default is
continuing.  If any Event of Default has
occurred and is continuing, the Lender may, notwithstanding the provisions of Section 362
of the Bankruptcy Code, without any application, motion or notice to, hearing
before, or order from, the Bankruptcy Court, except as otherwise expressly
provided herein, increase the rate of interest applicable to the DIP Credit
Amount to the Default Rate.


 


(b)                                 If
any Event of Default has occurred and is continuing, the Lender may,
notwithstanding the provisions of Section 362 of the Bankruptcy Code, without
any application, motion or notice to, hearing before, or order from, the
Bankruptcy Court: (i) terminate the DIP Credit Facility with respect to
further Advances; (ii) reduce the DIP Credit Commitment from time to time;
(iii) declare all or any portion of the Obligations, including all or any
portion of any Advance to be forthwith due and payable hereunder (including
under each Guaranty), all without presentment, demand, protest or further
notice of any kind, all of which are expressly waived by


 


68

















 


the Borrower
and each Guarantor; (iv) direct any or all of Borrower and the Guarantors
to sell or otherwise dispose of any or all of the Collateral on terms and
conditions acceptable to the Lender pursuant to Sections 363, 365 and
other applicable provisions of the Bankruptcy Code (and, without limiting the
foregoing, direct the Borrower or any Guarantor to assume and assign any lease
or executory contract included in the Collateral to the Lender’s designees in
accordance with and subject to Section 365 of the Bankruptcy Code), (v) enter
onto the premises of the Borrower or any Guarantor in connection with an
orderly liquidation of the Collateral, or (vi) exercise any rights and
remedies provided to the Lender under the DIP Credit Documents or at law or
equity, including all remedies provided under the UCC; and pursuant to the
Interim Order and the Final Order, the automatic stay of Section 362 of
the Bankruptcy Code shall be modified and vacated to permit the Lender to
exercise their remedies under this Agreement and the DIP Credit Documents,
without further notice, application or motion to, hearing before, or order
from, the Bankruptcy Court, provided, however, notwithstanding
anything to the contrary contained herein, the Lender shall not be permitted to
exercise any remedy (other than those described in clauses (i), (ii) and
(iii) above and, in respect of the Additional Guarantors, other than
clauses (v) and (vi) above) until, in respect of the Borrower and any Initial
Guarantor, after seeking and being granted relief from the automatic stay
pursuant to Section 362 of the Bankruptcy Code and upon 5 Banking Days’
prior written notice to the Borrower or such Initial Guarantor and counsel
approved by the Bankruptcy Court for the Committee, or in the case of any
remedy under clauses (v) or (vi) in respect of any Additional Guarantor, upon 5
Banking Days’ prior written notice to such Additional Guarantor.  Upon the occurrence of an Event of Default
and the exercise by the Lender of its rights and remedies under this Agreement
and the other DIP Credit Documents, the Borrower and each Guarantor shall, to
the extent ordered by the Bankruptcy Court, assist the Lender in effecting a
sale or other disposition of the Collateral upon such terms as are acceptable
to the Lender.


 


9.3                                                                               Distributions


 


During the occurrence and continuance of an Event of Default, all
distributions under or in respect of any DIP Credit Document or the DIP Credit
Commitment shall be held by the Lender on account of the Obligations without
prejudice to any claim by the Lender for any deficiency after such
distributions are received by the Lender, and the Borrower shall remain liable
for any such deficiency.  All such
distributions may be applied to such part of the Obligations as the Lender may
see fit in its sole discretion.  The
Lender may at any time change any such appropriation of any such
distributions or other moneys received by the Lender and may reapply the same
to any other part of the Obligations as the Lender may from time to time in its
sole discretion see fit, notwithstanding any previous application.


 


ARTICLE 10


 


GENERAL


 


10.1                                                                        Reliance and Non-Merger


 


All covenants, agreements, representations and warranties of the
Borrower made herein or in any other any DIP Credit Document or in any
certificate or other document signed by any of its directors or officers and
delivered by or on behalf of any of them pursuant hereto or thereto are
material, shall be deemed to have been relied upon by the Lender
notwithstanding any investigation heretofore or hereafter made by the Lender or
the Lender’s Counsel or any employee or other representative of any of them and
shall survive the execution and delivery of this Agreement and any other DIP
Credit Document until there are no amounts outstanding under


 


69

















 


the DIP Credit Commitment and the Lender shall have no further
obligation to make Advances hereunder. 
For clarity, this Section 10.1 shall in no way affect the survival
of those provisions of this Agreement or any other DIP Credit Document which by
their terms are stated to survive termination of this Agreement.


 


10.2                                                                        Confidentiality


 


The Lender will maintain on a confidential basis (except as otherwise
permitted hereunder or as required by Applicable Law) all information relating
to the Borrower and its Subsidiaries provided to it hereunder by and on behalf
of the Borrower or any of its Subsidiaries or obtained in respect of any
diligence conducted in respect hereof; provided, however, that this Section 10.2
shall not apply to any information which (i) was lawfully in the public
domain at the time of communication to the Lender, (ii) lawfully
enters the public domain through no fault of the Lender subsequent to the time
of communication to the Lender, (iii) was lawfully in the possession of
the Lender free of any obligation of confidence at the time of
communication to the Lender, or (iv) was lawfully communicated to the
Lender free of any obligation of confidence subsequent to the time of initial
communication to the Lender.


 


10.3                                                                        No Set-Off


 


To the fullest extent permitted by law, the Borrower and each of the
Guarantors shall make all payments hereunder regardless of, but without
prejudice to or otherwise releasing the Lender of or from, any liability,
defense or counterclaim, including, without limitation, any defense or
counterclaim based on any law, rule or policy which is now or hereafter
promulgated by any Governmental Body which may adversely affect the Borrower’s
and each of the Guarantor’s obligation to make, or the Lender’s right to
receive, such payments.  The Borrower and
each of the Guarantors grants to the Lender the right to set off all accounts,
credits or balances owed by the Lender to the Borrower and/or any of the
Guarantors against the aggregate amount of principal, interest, fees and other
amounts due hereunder or under any other DIP Credit Document when any such
amount shall become due and payable, whether at maturity, upon acceleration
of maturity thereof or otherwise.


 


10.4                                                                        Employment of Experts


 


The Lender may, at any time and from time to time, at the
Borrower’s cost, retain and employ legal counsel, independent accountants and
other experts in order to perform or assist it in the performance of its rights
and powers under this Agreement or any other DIP Credit Document and will
advise the Borrower at any time that it elects to do so.


 


10.5                                                                        Reliance by the Lender


 


The Lender shall be entitled to rely upon any schedule, certificate,
statement, report, notice or other document or written communication (including
any facsimile, telex or other means of electronic communication) of the
Borrower and the Guarantors believed by it to be genuine and correct.


 


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10.6                                                                        Notices


 


Any notice or other communication required or permitted to be given
hereunder shall be in writing and shall be given by facsimile or other means of
electronic communication or by hand-delivery or courier as hereinafter
provided.  Any such notice, if delivered
by courier, shall be deemed to be received on the next Banking Day after the
date of delivery thereof, or if sent by facsimile or other means of electronic
communication, shall be deemed to have been received on the day sent if sent
prior to 1:00 p.m. (New York time) on any Banking Day or otherwise on the
next succeeding Banking Day.  Notice of
change of address shall also be governed by this Section 10.6.  Notices and other communications shall be
addressed as follows:


 


(a)                                  if to the Borrower or
any Guarantor:


 


	
  Magna
  Entertainment Corp.

  	
   

  
	
  337 Magna
  Drive

  	
   

  
	
  Aurora,
  Ontario

  	
   

  
	
  L4G 7K1

  	
   

  
	
   

  	
   

  
	
  Attention:

  	
  Chief
  Financial Officer, Finance

  
	
  Facsimile
  number:

  	
  (905) 726-7448

  
	
   

  	
   

  
	
  with a copy
  to:

  	
   

  
	
   

  	
   

  
	
  Weil,
  Gotshal & Manges LLP

  	
   

  
	
  767 Fifth Avenue

  	
   

  
	
  New York,
  New York 10153

  	
   

  
	
   

  	
   

  
	
  Attention:

  	
  Brian Rosen

  
	
  Facsimile
  number:

  	
  (212)
  310-8007

  
				



 


(b)                                 if to the Lender:


 


	
  MID Islandi
  sf. Zug Branch

  	
   

  
	
  Baererstrasse
  16, CH-6304

  	
   

  
	
  Zug
  Switzerland

  	
   

  
	
   

  	
   

  
	
  Attention:

  	
  Thomas
  Schultheiss

  
	
   

  	
  Branch
  Manager

  
	
  Facsimile number:

  	
  +41 41725
  2725

  
	
   

  	
   

  
	
  with a copy to:

  	
   

  
	
   

  	
   

  
	
  MI
  Developments Inc.

  	
   

  
	
  455 Magna
  Drive

  	
   

  
	
  Aurora,
  Ontario

  	
   

  
	
  L4G 7A9

  	
   

  
	
   

  	
   

  
	
  Attention:

  	
  General
  Counsel

  
	
  Facsimile
  number:

  	
  (905) 726-2095

  
				



 


71

















 


	
  Sidley
  Austin LLP

  	
   

  
	
  787 Seventh
  Ave

  	
   

  
	
  New York, NY
  10019

  	
   

  
	
   

  	
   

  
	
  Attention:

  	
  Lee
  Attanasio

  
	
  Facsimile
  number:

  	
  (212)
  839-5599

  
			



 


10.7                                                                        Further Assurances


 


Whether before or after the happening of an Event of Default, the
Borrower and each Guarantor shall at its own expense do, make, execute or
deliver, or cause to be done, made, executed or delivered by its Subsidiaries
or other Persons, all such further acts, documents and things in connection
with the DIP Credit Commitment and the DIP Credit Documents as the Lender may
reasonably require from time to time for the purpose of giving effect to the
DIP Credit Documents all within a reasonable period of time following the
request of the Lender.


 


10.8                                                                        Assignment


 


(a)                                  The
DIP Credit Documents shall inure to the benefit of the Lender, its successors
and assigns, and shall be binding upon the Borrower and the Guarantors, and
their respective successors and assigns. 
Neither the Borrower nor any of the Guarantors shall assign, sell,
convey or otherwise transfer any of its rights or obligations under the DIP
Credit Commitment or the DIP Credit Documents. 
The Lender, may assign, sell, convey, grant participations in, pledge,
or otherwise transfer all or any part of its rights or obligations under the
DIP Credit Commitment and the DIP Credit Documents to any Person or Persons
(each a “Permitted Lender Assignee”) at any
time, without the Borrower’s or any Guarantor’s consent.  Any Permitted Lender Assignee shall provide
written notice to the Borrower and the Guarantors of such assignment and its
assumption of the obligations of the Lender hereunder and thereafter shall be
entitled to the performance of all of the Borrower’s and the Guarantors’
agreements and obligations under the DIP Credit Commitment and the DIP Credit
Documents and shall be entitled to enforce all the rights and remedies of the
Lender under the DIP Credit Documents, for the benefit of such Permitted Lender
Assignee, as fully as if such Permitted Lender Assignee was herein by name
specifically given such rights and remedies. 
Each of the Borrower and the Guarantors expressly agrees that it will
assert no claims or defenses that it may have against the Lender against any
Permitted Lender Assignee, except those specifically available under this
Agreement.  In the event that the
Borrower or any Guarantor shall become directly liable for any additional
charges or levies by any governmental or regulatory authority in consequence of
the operation of this Section 10.8, the Borrower shall give the Lender
notice thereof and thereafter the Lender shall indemnify the Borrower or the
Guarantor, as applicable, in full for any such charges or levies.  The Borrower and the Guarantors shall be
given written notice of any such assignment. 
The Borrower and the Guarantors shall cooperate with and perform the
reasonable requirements of the Permitted Lender Assignee, but the costs and
expenses, including reasonable legal fees and disbursements relating directly
to or arising directly out of any such assignment shall not be the expense of
the Borrower or the Guarantors.


 


(b)                                 The
Lender shall, on behalf of the Borrower, maintain or cause to be maintained a
register (the “Register”) on which
it enters the name and address of each Lender and Permitted Lender Assignee as
the registered owner of each Advance (and the principal amount thereof and


 


72

















 


stated
interest thereon) held by such Lender or Permitted Lender Assignee (each, a “Registered Advance”).  Borrower hereby acknowledges and makes the
Registered Advance a registered obligation for United States withholding tax
purposes.  A Registered Advance may be
assigned or sold in whole or in part only by registration of such assignment or
sale on the Register and any assignment or sale of all or part of such
Registered Advance may be effected only by registration of such assignment or
sale on the Register.  Prior to the
registration of the assignment or sale of any Registered Advance, Borrower
shall treat the person in whose name such Registered Advance is registered as
the owner thereof for the purpose of receiving all payments thereon and for all
other purposes.  The Register shall be
conclusive absent manifest error, and the Borrower, Lender and Permitted Lender
Assignees and their agents shall treat each person whose name is recorded as a
holder of the interest described therein for purposes of receiving all payments
thereon and for all other purposes, notwithstanding notice to the
contrary.  The Register shall be
available for inspection by Borrower, Lender and any Permitted Lender Assignee
at any reasonable time and from time to time upon reasonable prior notice.


 


10.9                                                                        Disclosure of Information to Potential Permitted
Lender Assignees


 


The Borrower and the Guarantors agree that the Lender shall have the
right (but shall be under no obligation) to make available to any potential
Permitted Lender Assignee any and all information which the Lender may have
pursuant to the DIP Credit Documents, provided such disclosure is not in
violation of any applicable securities laws, rules or regulations and such
potential Permitted Lender Assignee enters into a typical and customary
confidentiality agreement in favor of the Borrower and the Guarantors.


 


10.10                                                                 Right to Cure


 


The Lender may from time to time, in its sole and absolute discretion
(but shall have no obligation to do so), for the Borrower’s account and
at the Borrower’s expense, pay any amount or do any act required of the
Borrower or a Guarantor hereunder or required under the DIP Credit Documents or
requested by the Lender to preserve, protect, maintain or enforce any DIP
Credit Commitment, any owned or leased real property or any other Collateral,
and which the Borrower or a Guarantor fails to pay or do or cause to be paid or
done, including, without limitation, payment of insurance premiums, taxes or
assessments, warehouse charge, finishing or processing charge, landlord’s
claim, and any other lien upon or with respect to any owned or leased real
property or any other Collateral.  Any
payment made or other action taken by the Lender pursuant to this Section shall
be without prejudice to any right to assert an Event of Default hereunder and
to pursue the Lender’s other rights and remedies with respect thereto.


 


10.11                                                                 Forbearance by the Lender Not a Waiver


 


Any forbearance by the Lender in exercising any right or remedy under
any of the DIP Credit Documents, or otherwise afforded by Applicable Law, shall
not be a waiver of or preclude the exercise of any right or remedy.  The Lender’s acceptance of payment of any sum
secured by any of the DIP Credit Documents after the due date of such payment
shall not be a waiver of the Lender’s right to either require prompt payment
when due of all other sums so secured or to declare a default for failure to
make prompt payment.  The procurement of
insurance or the payment of taxes or other Liens or charges by the Lender shall
not be a waiver of the Lender’s right to accelerate the maturity of the DIP
Credit Commitment, nor shall the


 


73

















 


Lender’s receipt of any awards,
proceeds or damages operate to cure or waive the Borrower’s or any of the
Guarantors’ default in payment or sums secured by any of the DIP Credit
Documents.  With respect to all DIP
Credit Documents, only waivers made in writing by the Lender shall be effective
against the Lender.


 


10.12                                                                 Waiver of Statute of Limitations and Other
Defenses


 


The Borrower and Guarantors hereby waive the right to assert any
statute of limitations or any other defense as a bar to the enforcement of the
lien created by any of the DIP Credit Documents or to any action brought to
enforce any obligation secured by any of the DIP Credit Documents.


 


10.13                                                                 Relationship


 


The relationship between the Lender and the Borrower and the Guarantors
shall be that of creditor-debtor only. 
No term in this Agreement or in the other DIP Credit Documents, nor any
shareholder or other Affiliate relationship between the parties, and no course
of dealing between the parties shall be deemed to create any relationship of
agency, partnership or joint venture or any fiduciary duty by the Lender to any
other party.


 


10.14                                                                 Time of Essence


 


Time is of the essence of this Agreement and each of the other DIP
Credit Document and the performance of each of the covenants and agreement contained
herein and therein.


 


10.15                                                                 Jury Trial Waiver


 


THE BORROWER, THE GUARANTORS AND THE LENDER HEREBY WAIVE THEIR
RESPECTIVE RIGHTS TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, OR
RELATED TO, THE SUBJECT MATTER OF THIS AGREEMENT AND THE BUSINESS RELATIONSHIP
THAT IS BEING ESTABLISHED.  THIS WAIVER
IS KNOWINGLY, INTENTIONALLY AND VOLUNTARILY MADE BY THE BORROWER, THE
GUARANTORS AND THE LENDER, THE BORROWER AND EACH GUARANTOR ACKNOWLEDGES THAT
NEITHER THE LENDER NOR ANY PERSON ACTING ON BEHALF OF THE LENDER HAS MADE ANY
REPRESENTATIONS OF FACT TO INCLUDE THIS WAIVER OF TRIAL BY JURY OR HAS TAKEN
ANY ACTIONS WHICH IN ANY WAY MODIFY OR NULLIFY ITS EFFECT.  THE BORROWER, EACH GUARANTOR AND THE LENDER
ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS
RELATIONSHIP, THAT EACH OF THEM HAS ALREADY RELIED ON THIS WAIVER IN ENTERING
INTO THIS AGREEMENT AND THAT EACH OF THEM WILL CONTINUE TO RELY ON THIS WAIVER
IN THEIR RELATED FUTURE DEALINGS.  THE
BORROWER, EACH GUARANTOR AND THE LENDER FURTHER ACKNOWLEDGE THAT THEY HAVE BEEN
REPRESENTED (OR HAVE HAD THE OPPORTUNITY TO BE REPRESENTED) IN THE SIGNING OF
THIS AGREEMENT AND IN THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL.


 


74
















 


10.16                                                                 Final Agreement/Modification


 


This Agreement, together with the other DIP Credit Documents is
intended as the final expression of the agreement among the Borrower, the
Guarantors and the Lender.  All prior
discussions, negotiations and agreements are of no further force and
effect.  This Agreement can be modified
only in writing executed by all parties and the written agreement may not be
contradicted by any evidence of any alleged oral agreement.


 


10.17                                                                 Continuing Agreement


 


This Agreement shall in all respects be a continuing agreement and
shall remain in full force and effect (notwithstanding, without limitation, the
death, incompetence or dissolution of any of the Borrower or any of the
Guarantors).


 


10.18                                                                 No Third Party Beneficiaries


 


This Agreement, the DIP Liens, the Liens granted under the Pledge and
Security Agreement and the other DIP Credit Documents are made for the sole
benefit of the Lender, the Borrower and the Guarantors, and no other party
shall have any legal interest of any kind under or by reason of any of the
foregoing.  Whether or not the Lender
elects to employ any or all the rights, powers or remedies available to it
under any of the foregoing, the Lender shall have no obligation or liability of
any kind to any third party by reason of any of the foregoing or any of the
Lender’s actions or omissions pursuant thereto or otherwise in connection with
this transaction.


 


10.19                                                                 No Brokers


 


Each of the Borrower and the Guarantors, on the one hand, and the
Lender on the other hand, warrants and represents to the other that it has not
employed any broker or agent in connection with the transaction contemplated
hereby.  Each of the Borrower and the
Guarantors, on the one hand, and the Lender on the other hand, shall indemnify
and hold the other harmless from any loss or cost suffered or incurred by it as
a result of any commission owed to any broker or agent claiming a commission
due as a result of representing such party (or any of its Affiliates) with
respect hereto.


 


10.20                                                                 Execution in Counterparts


 


This Agreement may be executed in any number of counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.


 


10.21                                                                 Successors and Assigns Bound; Joint and Several
Liability; Agents; and Captions


 


The covenants and agreements contained in the DIP Credit Documents
shall bind, and the rights thereunder shall inure to, the respective permitted
successors and assigns of the Lender, the Borrower and the Guarantors, subject
to the provisions of this Agreement. 
Subject to Section 10.22, all covenants and agreements of the
Borrower and the Guarantors shall be joint and several.  In exercising any rights under the DIP Credit
Documents or taking any actions


 


75

















 


provided for therein, the
Lender may act through its employees, agents or independent contractors as
authorized by the Lender.


 


10.22                                                                 Loss of Borrower Note


 


Upon notice from the Lender of the loss, theft, or destruction of the
Borrower Note and upon receipt of an indemnity reasonably satisfactory to the
Borrower from the Lender, or in the case of mutilation of the Borrower Note,
upon surrender of the mutilated Borrower Note, the Borrower shall make and deliver
a new note of like tenor in lieu of the then to be superseded Borrower Note.


 


10.23                                                                 Acknowledgment


 


THE BORROWER AND EACH GUARANTOR ACKNOWLEDGES THAT IT HAS THOROUGHLY
READ AND REVIEWED THE TERMS AND PROVISIONS OF THIS AGREEMENT, THE ATTACHED
SCHEDULES AND THE DIP CREDIT DOCUMENTS AND IS FAMILIAR WITH THE TERMS OF SAME;
THAT THE TERMS AND PROVISIONS CONTAINED IN THIS AGREEMENT HAVE BEEN THOROUGHLY
READ BY THE BORROWER AND EACH GUARANTOR AND ARE CLEARLY UNDERSTOOD AND FULLY
AND UNCONDITIONALLY CONSENTED TO BY THE BORROWER AND EACH GUARANTOR.  THE BORROWER AND EACH GUARANTOR HAS HAD FULL
BENEFIT AND ADVICE OF COUNSEL OF ITS SELECTION, IN REGARD TO UNDERSTANDING THE
TERMS, MEANING, AND EFFECTS OF THIS AGREEMENT. 
THE BORROWER AND EACH GUARANTOR FURTHER ACKNOWLEDGES THAT ITS EXECUTION
OF THIS AGREEMENT AND THE DIP CREDIT DOCUMENTS IS DONE FREELY, VOLUNTARILY AND
WITH FULL KNOWLEDGE, AND WITHOUT DURESS, AND THAT IN EXECUTING THIS AGREEMENT
AND THE DIP CREDIT DOCUMENTS, THE BORROWER AND EACH GUARANTOR HAS RELIED ON NO
OTHER REPRESENTATIONS, EITHER WRITTEN OR ORAL, EXPRESS OR IMPLIED, MADE TO IT
BY ANY OTHER PARTY TO THE AGREEMENT; AND THAT THE CONSIDERATION RECEIVED BY THE
BORROWER AND EACH GUARANTOR UNDER THIS AGREEMENT AND THE DIP CREDIT DOCUMENTS
AND HAS BEEN ACTUAL AND ADEQUATE.


 


ARTICLE 11


 


CONTINUING GUARANTY


 


11.1                                                                        Guaranty


 


Each Initial Guarantor hereby absolutely and unconditionally guarantees
(the “Initial Guaranty”), as a guaranty of payment and performance and not
merely as a guaranty of collection, prompt payment when due, whether at stated
maturity, by required prepayment, upon acceleration, demand or otherwise, and
at all times thereafter, any and all of the Obligations, whether for principal,
interest, premiums, fees, indemnities, damages, costs, expenses or otherwise,
of the Borrower to the Lender, arising hereunder and under the other DIP Credit
Documents (including all renewals, extensions, amendments, refinancings and
other modifications thereof and all costs, attorneys’ fees and expenses incurred
by the Lender in


 


76

















 


connection with the collection
or enforcement thereof).  The Lender’s
books and records showing the amount of the Obligations shall be admissible in
evidence in any action or proceeding, and shall be binding upon each Initial Guarantor,
and conclusive for the purpose of establishing the amount of the Obligations in
the absence of manifest error.  This
Initial Guaranty shall not be affected by the genuineness, validity, regularity
or enforceability of the Obligations or any instrument or agreement evidencing
any Obligations, or by the existence, validity, enforceability, perfection,
non-perfection or extent of any collateral therefor, or by any fact or
circumstance relating to the Obligations which might otherwise constitute a
defense to the obligations of any Initial Guarantor under this Initial
Guaranty, and to the fullest extent permitted by law each Guarantor hereby
irrevocably waives any defenses it may now have or hereafter acquire in any way
relating to any or all of the foregoing. 
The obligations of each Initial Guarantor and any Additional Guarantor
are joint and several.


 


11.2                                                                        Rights
of the Lender


 


Each Initial Guarantor consents and agrees that the Lender may, at any
time and from time to time, without notice or demand (other than as required by
Section 9.2 hereof, the Order or applicable bankruptcy law), and without
affecting the enforceability or continuing effectiveness hereof:  (a) amend, extend, renew, compromise,
discharge, accelerate or otherwise change the time for payment or the terms of
the Obligations or any part thereof; (b) take, hold, exchange, enforce,
waive, release, fail to perfect, sell, or otherwise dispose of any security for
the payment of this Initial Guaranty or any Obligations; (c) apply such
security and direct the order or manner of sale thereof as the Lender in its
sole discretion may determine; and (d) release or substitute one or more
of any endorsers or other guarantors (including any other Guarantor) of any of
the Obligations.  Each Initial Guarantor
acknowledges and agrees that this Initial Guaranty is secured in accordance
with the terms of the DIP Credit Documents and that the Lender may exercise its
remedies thereunder in accordance with the terms thereof.  Without limiting the generality of the
foregoing, each Initial Guarantor consents to the taking of, or failure to
take, any action which might in any manner or to any extent vary the risks of
such Initial Guarantor under this Initial Guaranty or which, but for this
provision, might operate as a discharge of such Initial Guarantor.


 


11.3                                                                        Certain
Waivers


 


Each Initial Guarantor waives (a) any defense arising by reason of
any disability or other defense of the Borrower or any other guarantor (including
any other Guarantor), or the cessation from any cause whatsoever (including any
act or omission of the Lender) of the liability of the Borrower; (b) any
defense based on any claim that such Initial Guarantor’s obligations exceed or
are more burdensome than those of the Borrower; (c) any right to proceed
against the Borrower, proceed against or exhaust any security for the
Obligations, or pursue any other remedy in the power of the Lender; (d) any
benefit of and any right to participate in any security now or hereafter held
by the Lender; and (e) to the fullest extent permitted by law, any and all
other defenses or benefits that may be derived from or afforded by applicable
law limiting the liability of or exonerating guarantors or sureties.  Each Initial Guarantor expressly waives all
setoffs and counterclaims and all presentments, demands for payment or
performance, notices of nonpayment or nonperformance, protests, notices of
protest, notices of dishonor and all other notices or demands of any kind or nature
whatsoever with respect to the Obligations, and all notices of acceptance of
this Initial Guaranty or of the existence, creation or incurrence of new or
additional Obligations.


 


77

















 


11.4                                                                        Obligations
Independent


 


The obligations of each Initial Guarantor hereunder are those of
primary obligor, and not merely as surety, and are independent of the
Obligations and the obligations of any other guarantor, and a separate action
may be brought against any guarantor (including any other Guarantor) to enforce
this Initial Guaranty whether or not the Borrower or any other person or entity
is joined as a party.


 


11.5                                                                        Subrogation


 


No Initial Guarantor shall exercise any right of subrogation,
contribution, indemnity, reimbursement or similar rights with respect to any
payments it makes under this Initial Guaranty until all of the Obligations and
any amounts payable under this Initial Guaranty have been indefeasibly paid and
performed in full and the DIP Credit Commitment is terminated.  If any amounts are paid to any Initial
Guarantor in violation of the foregoing limitation, then such amounts shall be
held in trust for the benefit of the Lender and shall forthwith be paid to the
Lender to reduce the amount of the Obligations, whether matured or unmatured.


 


11.6                                                                        Termination;
Reinstatement


 


This Initial Guaranty is a continuing and irrevocable guaranty of all
Obligations now or hereafter existing and shall remain in full force and effect
until all Obligations and any other amounts payable under this Initial Guaranty
are indefeasibly paid in full in cash and the DIP Credit Commitment with
respect to the Obligations is terminated. 
Notwithstanding the foregoing, this Initial Guaranty shall continue in
full force and effect or be revived, as the case may be, if any payment by or
on behalf of the Borrower or any Initial Guarantor is made, or the Lender
exercises its right of setoff, in respect of the Obligations and such payment
or the proceeds of such setoff or any part thereof is subsequently invalidated,
declared to be fraudulent or preferential, set aside or required (including
pursuant to any settlement entered into by the Lender in its discretion) to be
repaid to a trustee, receiver or any other party, in connection with any
proceeding under any debtor relief laws, including the Bankruptcy Code or
otherwise, all as if such payment had not been made or such setoff had not
occurred and whether or not the Lender is in possession of or has released this
Initial Guaranty and regardless of any prior revocation, rescission,
termination or reduction.  Each Initial
Guarantor agrees that it will indemnify the Lender on demand for all reasonable
and documented costs and expenses (including fees and expenses of counsel)
incurred by the Lender in connection with such rescission or restoration,
including any such costs and expenses incurred in defending against any claim
alleging that such payment constituted a preference, fraudulent transfer or
similar payment under any debtor relief laws, including the Bankruptcy Code or
otherwise.  The obligations of the
Initial Guarantors under this paragraph shall survive termination of this
Initial Guaranty.


 


11.7                                                                        Subordination


 


Each Initial Guarantor hereby subordinates the payment of all
obligations and indebtedness of the Borrower or any Guarantor owing to any
Guarantor, whether now existing or hereafter arising, including but not limited
to any obligation of the Borrower to any Guarantor as subrogee of the Lender or
resulting from any Initial Guarantor’s performance under this Initial Guaranty,
to the indefeasible payment in full in cash of all Obligations.  If the Lender so requests, any such


 


78

















 


obligation or indebtedness of
the Borrower or any Guarantor to any Guarantor shall be enforced and
performance received by any Guarantor as trustee for the Lender and the
proceeds thereof shall be paid over to the Lender on account of the
Obligations, but without reducing or affecting in any manner the liability of
any Initial Guarantor under this Initial Guaranty.


 


11.8                                                                        Stay
of Acceleration


 


If acceleration of the time for payment of any of the Obligations is
stayed, in connection with any case commenced by or against any Initial Guarantor
or the Borrower under any debtor relief laws, including the Bankruptcy Code or
otherwise, all such amounts shall nonetheless be payable by each other Initial Guarantor
immediately upon demand by the Lender.


 


11.9                                                                        Contribution
by the Guarantors


 


All Guarantors desire to allocate among themselves (collectively, the “Contributing Guarantors”), in a fair and
equitable manner, their obligations arising under a Guaranty.  Accordingly, in the event any payment or
distribution is made on any date by a Guarantor (a “Funding Guarantor”) under a Guaranty such that its Aggregate
Payments exceeds its Fair Share as of such date, such Funding Guarantor shall
be entitled to a contribution from each of the other Contributing Guarantors in
an amount sufficient to cause each Contributing Guarantor’s Aggregate Payments
to equal its Fair Share as of such date. 
“Fair Share” means, with
respect to a Contributing Guarantor as of any date of determination, an amount
equal to (a) the ratio of (i) the Fair Share Contribution Amount with
respect to such Contributing Guarantor to (ii) the aggregate of the Fair
Share Contribution Amounts with respect to all Contributing Guarantors
multiplied by (b) the aggregate amount paid or distributed on or before
such date by all Funding Guarantors under a Guaranty in respect of the
obligations Guaranteed.  “Fair Share Contribution Amount” means, with
respect to a Contributing Guarantor as of any date of determination, the
maximum aggregate amount of the obligations of such Contributing Guarantor
under a Guaranty that would not render its obligations hereunder or thereunder
subject to avoidance as a fraudulent transfer or conveyance under Section 548
of the Bankruptcy Code or any comparable applicable provisions of state law;
provided, solely for purposes of calculating the Fair Share Contribution Amount
with respect to any Contributing Guarantor for purposes of this Section 11.9,
any assets or liabilities of such Contributing Guarantor arising by virtue of
any rights to subrogation, reimbursement or indemnification or any rights to or
obligations of contribution hereunder shall not be considered as assets or
liabilities of such Contributing Guarantor. 
“Aggregate Payments” means,
with respect to a Contributing Guarantor as of any date of determination, an
amount equal to (1) the aggregate amount of all payments and distributions
made on or before such date by such Contributing Guarantor in respect of a
Guaranty (including in respect of this Section 11.9), minus (2) the
aggregate amount of all payments received on or before such date by such
Contributing Guarantor from the other Contributing Guarantors as contributions
under this Section 11.9.  The
amounts payable as contributions hereunder shall be determined as of the date
on which the related payment or distribution is made by the applicable Funding
Guarantor.  The allocation among
Contributing Guarantors of their obligations as set forth in this Section 11.9
shall not be construed in any way to limit the liability of any Contributing
Guarantor hereunder.  Each Guarantor is a
third party beneficiary to the contribution agreement set forth in this Section 11.9
and a right to receive any Fair Share Contribution Amount shall be deemed an
asset of the Guarantor entitled to such amount. 
By execution and delivery of its Guaranty Agreement each Additional
Guarantor agrees to be bound by the provisions of this Section 11.9 as if it
were a party to this Agreement.


 


79

















 


[Intentionally Left Blank]


 


80
















 


IN WITNESS
WHEREOF this Agreement has been executed by the parties hereto as of the date
first written above.


 


	
   

  	
  MAGNA ENTERTAINMENT CORP.,

  
	
   

  	
  as Borrower

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Blake Tohana

  
	
   

  	
   

  	
  Title:

  	
  Executive Vice President

  
	
   

  	
   

  	
   

  	
  and Chief Financial Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  William Ford

  
	
   

  	
   

  	
  Title:

  	
  Secretary

  



 


S-1

















 


	
   

  	
  PACIFIC RACING ASSOCIATION,

  
	
   

  	
  as a Guarantor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Blake Tohana

  
	
   

  	
   

  	
  Title:

  	
  Executive Vice President

  
	
   

  	
   

  	
   

  	
  and Chief Financial Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  William Ford

  
	
   

  	
   

  	
  Title:

  	
  Secretary

  



 


S-2

















 


	
   

  	
  MEC LAND HOLDINGS (CALIFORNIA)

  
	
   

  	
  INC., as a Guarantor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Blake Tohana

  
	
   

  	
   

  	
  Title:

  	
  Executive Vice President

  
	
   

  	
   

  	
   

  	
  and Chief Financial Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  William Ford

  
	
   

  	
   

  	
  Title:

  	
  Secretary

  



 


S-3

















 


	
   

  	
  THE SANTA ANITA COMPANIES, INC.,

  
	
   

  	
  as a Guarantor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Blake Tohana

  
	
   

  	
   

  	
  Title:

  	
  Executive Vice President

  
	
   

  	
   

  	
   

  	
  and Chief Financial Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  William Ford

  
	
   

  	
   

  	
  Title:

  	
  Secretary

  



 


S-4

















 


	
   

  	
  LOS ANGELES TURF CLUB,

  
	
   

  	
  INCORPORATED, as a Guarantor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Blake Tohana

  
	
   

  	
   

  	
  Title:

  	
  Executive Vice President

  
	
   

  	
   

  	
   

  	
  and Chief Financial Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  William Ford

  
	
   

  	
   

  	
  Title:

  	
  Secretary

  



 


S-5

















 


	
   

  	
  SOUTHERN MARYLAND

  
	
   

  	
  AGRICULTURAL ASSOCIATION,
  a joint

  
	
   

  	
  venture formed under the laws of the State
  of

  
	
   

  	
  Maryland, by its members, PRINCE

  
	
   

  	
  GEORGE’S RACING, INC.
  and

  
	
   

  	
  SOUTHERN MARYLAND RACING, INC.,

  
	
   

  	
  as a Guarantor

  
	
   

  	
   

  
	
   

  	
  BY PRINCE GEORGE’S RACING, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Blake Tohana

  
	
   

  	
   

  	
  Title:

  	
  Executive Vice President, Finance

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  William Ford

  
	
   

  	
   

  	
  Title:

  	
  Secretary

  



 


S-6

















 


	
   

  	
  LAUREL RACING ASSOC., INC,

  
	
   

  	
  as a Guarantor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Blake Tohana

  
	
   

  	
   

  	
  Title:

  	
  Executive Vice President, Finance

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  William Ford

  
	
   

  	
   

  	
  Title:

  	
  Secretary

  



 


S-7

















 


	
   

  	
  LAUREL RACING ASSOCIATION

  
	
   

  	
  LIMITED PARTNERSHIP,
  a partnership

  
	
   

  	
  formed under the laws of the State of Maryland,

  
	
   

  	
  acting through its General Partner, LAUREL

  
	
   

  	
  RACING ASSOC., INC., as a Guarantor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Blake Tohana

  
	
   

  	
   

  	
  Title:

  	
  Executive Vice President, Finance

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  William Ford

  
	
   

  	
   

  	
  Title:

  	
  Secretary

  



 


S-8

















 


	
   

  	
  PIMLICO RACING ASSOCIATION, INC.,

  
	
   

  	
  as a Guarantor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Blake Tohana

  
	
   

  	
   

  	
  Title:

  	
  Executive Vice President, Finance

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  William Ford

  
	
   

  	
   

  	
  Title:

  	
  Secretary

  



 


S-9

















 


	
   

  	
  MARYLAND JOCKEY CLUB, INC., as a

  
	
   

  	
  Guarantor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Blake Tohana

  
	
   

  	
   

  	
  Title:

  	
  Executive Vice President, Finance

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  William Ford

  
	
   

  	
   

  	
  Title:

  	
  Secretary

  



 


S-10

















 


	
   

  	
  THE MARYLAND JOCKEY CLUB OF

  
	
   

  	
  BALTIMORE CITY, INC., as a Guarantor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Blake Tohana

  
	
   

  	
   

  	
  Title:

  	
  Executive Vice President, Finance

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  William Ford

  
	
   

  	
   

  	
  Title:

  	
  Secretary

  



 


S-11

















 


	
   

  	
  SOUTHERN MARYLAND RACING, INC.,

  
	
   

  	
  as a Guarantor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Blake Tohana

  
	
   

  	
   

  	
  Title:

  	
  Executive Vice President

  
	
   

  	
   

  	
   

  	
  and Chief Financial Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  William Ford

  
	
   

  	
   

  	
  Title:

  	
  Secretary

  



 


S-12

















 


	
   

  	
  THISTLEDOWN, INC., as a Guarantor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Blake Tohana

  
	
   

  	
   

  	
  Title:

  	
  Executive Vice President

  
	
   

  	
   

  	
   

  	
  and Chief Financial Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  William Ford

  
	
   

  	
   

  	
  Title:

  	
  Secretary

  



 


S-13

















 


	
   

  	
  MEC MARYLAND INVESTMENTS, INC.,

  
	
   

  	
  as a Guarantor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Blake Tohana

  
	
   

  	
   

  	
  Title:

  	
  Executive Vice President

  
	
   

  	
   

  	
   

  	
  and Chief Financial Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  William Ford

  
	
   

  	
   

  	
  Title:

  	
  Secretary

  



 


S-14
















 


	
   

  	
  AMTOTE INTERNATIONAL, INC., as a

  
	
   

  	
  Guarantor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Blake Tohana

  
	
   

  	
   

  	
  Title:

  	
  Executive Vice President

  
	
   

  	
   

  	
   

  	
  and Chief Financial Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  William Ford

  
	
   

  	
   

  	
  Title:

  	
  Secretary

  



 


S-15

















 


	
   

  	
  30000 MARYLAND INVESTMENTS LLC,

  
	
   

  	
  as a Guarantor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Blake Tohana

  
	
   

  	
   

  	
  Title:

  	
  Executive Vice President

  
	
   

  	
   

  	
   

  	
  and Chief Financial Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  William Ford

  
	
   

  	
   

  	
  Title:

  	
  Secretary

  



 


S-16

















 


	
   

  	
  GULFSTREAM PARK RACING

  
	
   

  	
  ASSOCIATION, INC., as a Guarantor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Blake Tohana

  
	
   

  	
   

  	
  Title:

  	
  Executive Vice President

  
	
   

  	
   

  	
   

  	
  and Chief Financial Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  William Ford

  
	
   

  	
   

  	
  Title:

  	
  Secretary

  



 


S-17

















 


	
   

  	
  GPRA COMMERCIAL ENTERPRISES,

  
	
   

  	
  INC., as a Guarantor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Blake Tohana

  
	
   

  	
   

  	
  Title:

  	
  Executive Vice President

  
	
   

  	
   

  	
   

  	
  and Chief Financial Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  William Ford

  
	
   

  	
   

  	
  Title:

  	
  Secretary

  



 


S-18

















 


	
   

  	
  GPRA THOROUGHBRED TRAINING

  
	
   

  	
  CENTER, INC., as a Guarantor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Blake Tohana

  
	
   

  	
   

  	
  Title:

  	
  Executive Vice President

  
	
   

  	
   

  	
   

  	
  and Chief Financial Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  William Ford

  
	
   

  	
   

  	
  Title:

  	
  Secretary

  



 


S-19

















 


	
   

  	
  MEC DIXON, INC., as a Guarantor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Blake Tohana

  
	
   

  	
   

  	
  Title:

  	
  Executive Vice President

  
	
   

  	
   

  	
   

  	
  and Chief Financial Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  William Ford

  
	
   

  	
   

  	
  Title:

  	
  Secretary

  



 


S-20

















 


	
   

  	
  SUNSHINE MEADOWS RACING, INC., as

  
	
   

  	
  a Guarantor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Blake Tohana

  
	
   

  	
   

  	
  Title:

  	
  Executive Vice President

  
	
   

  	
   

  	
   

  	
  and Chief Financial Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  William Ford

  
	
   

  	
   

  	
  Title:

  	
  Secretary

  



 


S-21

















 


	
   

  	
  MEC HOLDINGS (USA) INC., as a 

  
	
   

  	
  Guarantor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Blake Tohana

  
	
   

  	
   

  	
  Title:

  	
  Executive Vice President

  
	
   

  	
   

  	
   

  	
  and Chief Financial Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  William Ford

  
	
   

  	
   

  	
  Title:

  	
  Secretary

  



 


S-22

















 


	
   

  	
  REMINGTON PARK, INC., as a Guarantor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Blake Tohana

  
	
   

  	
   

  	
  Title:

  	
  Executive Vice President

  
	
   

  	
   

  	
   

  	
  and Chief Financial Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  William Ford

  
	
   

  	
   

  	
  Title:

  	
  Secretary

  



 


S-23

















 


	
   

  	
  PRINCE GEORGE’S RACING, INC., as a

  
	
   

  	
  Guarantor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Blake Tohana

  
	
   

  	
   

  	
  Title:

  	
  Executive Vice President

  
	
   

  	
   

  	
   

  	
  and Chief Financial Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  William Ford

  
	
   

  	
   

  	
  Title:

  	
  Secretary

  



 


S-24

















 


	
   

  	
  MID ISLAND SF., acting through its Zug

  
	
   

  	
  Branch, as Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Thomas Schultheiss

  
	
   

  	
   

  	
  Title:

  	
  Branch Manager

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Peter Nideroest

  
	
   

  	
   

  	
  Title:

  	
  Branch Manager

  



 


S-25
















 


SCHEDULE A


 


Borrowing Notice


 


	
  TO:

  	
   

  	
  MID Islandi sf., acting through its Zug Branch

  
	
   

  	
   

  	
   

  
	
  RE:

  	
   

  	
  Magna Entertainment Corp.

  



 


Reference is made to a loan agreement (the “Debtor-in-Possession Credit Agreement”)
dated as of March 6, 2009 between Magna Entertainment Corp., as Borrower,
the Guarantors and the Lender.  All terms
used in this Borrowing Notice which are defined in the DIP Loan Agreement have
the meanings attributed thereto in the Bridge Loan Agreement.


 


The Borrower hereby requests an Advance as
follows:


 


1.             Amount
of Advance:


 


2.             Borrowing
Date:


 


3.             Payment
instructions (if any):


 


Except as specifically qualified in the
Disclosure Schedule, all of the representations and warranties of the Borrower
in Article 6 of the Debtor-in-Possession Credit Agreement are true and
correct on the date hereof as if made on and as of the date hereof.


 


No Default or Event of Default has occurred and is continuing nor is it
reasonably anticipated that any Default or Event of Default will occur
immediately after giving effect to the aforementioned Advance.


 


A-1

















 


Except as disclosed in writing by the Borrower to the Lender, no
Material Adverse Change since the date of the last Advance (or, in the case of
the initial Advance, the Closing Date) has occurred.


 


DATED this          day of
                        ,
              .


 


	
   

  	
  MAGNA ENTERTAINMENT CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Blake Tohana

  
	
   

  	
   

  	
  Title:

  	
  Executive Vice President

  
	
   

  	
   

  	
   

  	
  and Chief Financial Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  William Ford

  
	
   

  	
   

  	
  Title:

  	
  Secretary

  



 


A-2

















 


SCHEDULE B


 


Budget


 


B-1

















 


SCHEDULE C


 


Disclosure Schedule


 


C-1

















 


SCHEDULE D


 


Interim Order


 


D-1