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Exhibit 10.10


 
 

FIRST AMENDMENT
  TO STOCK PURCHASE AGREEMENT    
    


        This FIRST AMENDMENT TO STOCK PURCHASE AGREEMENT (this "First
Amendment") is dated as of July 26, 2006 and entered into by and between MAGNA ENTERTAINMENT CORP., a Delaware corporation
("Seller"), and PA MEADOWS, LLC, a Delaware limited liability company ("Purchaser"), and is made
with reference to that certain Stock Purchase Agreement, dated as of November 8, 2005 (the "Purchase Agreement"), by and between Seller
and Purchaser. Capitalized terms used herein without definition shall have the same meanings herein as set forth in the Amended Purchase Agreement (as defined below). 


 
 

RECITALS    
    


        WHEREAS, as a result of further negotiations between Seller and Purchaser since the signing of the Purchase
Agreement, Seller and Purchaser have decided to amend the terms of the Purchase Agreement by entering into this First Amendment in order to, (i) reduce the Purchase Price for the Shares from
$225,000,000 to $200,000,000, (ii) reduce the Holdback Amount from $39,000,000 to $25,000,000, (iii) permit the payment of the Purchase Price in the form of two notes, a Tranche A
Note for $175,000,000 and a Tranche B Note for $25,000,000 and (iv) amend other provisions of the Purchase Agreement as set forth in the Amended Purchase Agreement; 


        NOW, THEREFORE, in consideration of the premises and the agreements, provisions and covenants herein contained, the parties hereto agree
as follows: 



 Section 1. AMENDMENT OF PURCHASE AGREEMENT  




        As of the date hereof, the Purchase Agreement and the exhibits thereto shall be and are hereby amended and modified to read in their entirety as set forth in
Annex A hereto (as set forth in such Annex A, the "Amended Purchase Agreement"), and as
so amended are hereby ratified, approved and confirmed in each and every respect. The parties hereto agree and acknowledge that the schedules to the Purchase Agreement delivered on November 8,
2005 shall be the schedules to the
Amended Purchase Agreement, and Seller has delivered a certificate as of the date hereof to Purchaser in accordance with Section 8.03(b) of the Amended Purchase Agreement related to
such schedules. 



 Section 2. MISCELLANEOUS  




         2.1    Fees and
Expenses.    Except as otherwise expressly provided in the Amended Purchase Agreement, all costs and expenses, including, without limitation, fees and
disbursements of counsel, financial advisors and accountants, incurred in connection with this First Amendment and the transactions contemplated hereby shall be paid by the party incurring such costs
and expenses. 







 

         2.2    Notices.    All
notices, requests, claims, demands and other communications hereunder shall be made as set forth in Section 11.02 of the Amended Purchase Agreement. 


         2.3    Public
Announcements.    Unless otherwise required by applicable law or stock exchange requirements, no party to this First Amendment shall make any public
announcements in respect of this First Amendment or the transactions contemplated hereby or otherwise communicate with any news media without prior consent of the other party, and the parties will
cooperate as to the timing and contents of any such announcement. Seller and Purchaser acknowledge that OCM HoldCo LLC and Seller will be making filings with the Securities and Exchange
Commission and each of Seller and Purchaser agrees to cooperate in reviewing and providing any comments on such submissions in a timely fashion. 


         2.4    Headings.    The
headings contained in this First Amendment are for reference purposes only and shall not affect in any way the meaning or interpretation of this First Amendment. 



         2.5    Severability.    If
any term or other provision of this First Amendment is invalid, illegal or incapable of being enforced by any rule of law or public policy, all other conditions and provisions of this First Amendment
shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner adverse to any party. Upon such
determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this First Amendment so as to effect the
original intent of the parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the greatest
extent possible. 


         2.6    Assignment.    This
First Amendment shall not be assigned by operation of law or otherwise, except that prior to the Closing, Purchaser, without the consent of Seller, but with at least 10 Business Days' prior
written notice, may transfer or cause to be transferred all of the equity interests of Purchaser to a wholly owned direct or indirect subsidiary of Cannery Casino Resorts, LLC, a Nevada limited
liability company. 


         2.7    No Third-Party
Beneficiaries.    This First Amendment is for the sole benefit of the parties hereto and their permitted assigns and, except as otherwise expressly
provided in the Amended Purchase Agreement, nothing herein, express or implied, is intended to or shall confer upon any other Person or entity any legal or equitable right, benefit or remedy of any
nature whatsoever under or by reason of this First Amendment. 



         2.8    Amendment.    This
First Amendment may not be amended or modified except by an instrument in writing signed by Seller and Purchaser. 


         2.9    Governing Law; Jurisdiction; Service of
Process.    This First Amendment shall be governed by, and construed in accordance with, the laws of the State of New York. Seller and Purchaser
hereby agree and consent to the exclusive jurisdiction of, and service of process and venue in, the United States District Court for the Southern District of New York and the courts of
the State of New York located in the County of New York, State of New York and waives any objection with respect thereto, for the purpose of any action, suit or proceeding arising
out of or relating to this First Amendment. 


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         2.10    WAIVER OF JURY
TRIAL.    EACH OF PURCHASER AND SELLER HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM (WHETHER BASED
ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS FIRST AMENDMENT OR THE ACTIONS OF PURCHASER OR SELLER IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT THEREOF. 


         2.11    Counterparts.    This
First Amendment may be executed in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all of
which taken together shall constitute one and the same agreement. 


         2.12    Specific
Performance.    The parties hereto agree that irreparable damage would occur in the event any provision of this First Amendment was not performed in
accordance with the terms hereof and that the parties shall be entitled to specific performance of the terms hereof, in addition to any other remedy at law or equity. 


         2.13    Prevailing
Party.    The prevailing party or parties in any arbitration, mediation, court action, or other adjudicative proceeding arising out of or relating to
this First Amendment shall be reimbursed by the party or parties who do not prevail for their reasonable attorneys, accountants and experts fees and for the costs of such proceeding. 


        [The remainder of page intentionally left blank.]


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        IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above. 



	 	 	PA MEADOWS, LLC
	
 	
 	

By:	

/s/        
 Name:

Title:
	
 	
 	
MAGNA ENTERTAINMENT CORP.
	
 	
 	

By:	

/s/        
 Name:

Title: Authorized Signatory
	
 	
 	

By:	

/s/        
 Name:

Title: Authorized Signatory


















 



 
 

STOCK PURCHASE AGREEMENT    
    




dated
November 8, 2005 


between



MAGNA
ENTERTAINMENT CORP. 


and
PA MEADOWS, LLC 







 






 
 
 

TABLE OF CONTENTS    
    



	 
	 	Page
	 	 

	 ARTICLE I — DEFINITIONS	 	1
	 	 SECTION 1.01	 	Certain Defined Terms	 	1
	 ARTICLE II — PURCHASE AND SALE	 	10
	 	 SECTION 2.01	 	Purchase and Sale	 	10
	 	 SECTION 2.02	 	Purchase Price	 	10
	 	 SECTION 2.03	 	Closing	 	10
	 ARTICLE III — REPRESENTATIONS AND WARRANTIES OF SELLER	 	11
	 	 SECTION 3.01	 	Incorporation and Authority of Seller	 	11
	 	 SECTION 3.02	 	Organization, Authority and Qualification of the Companies	 	11
	 	 SECTION 3.03	 	Capital Stock of the Companies; Ownership of the Shares	 	12
	 	 SECTION 3.04	 	Subsidiaries	 	12
	 	 SECTION 3.05	 	No Conflict	 	14
	 	 SECTION 3.06	 	Consents and Approvals	 	15
	 	 SECTION 3.07	 	Financial Information, Books and Records	 	15
	 	 SECTION 3.08	 	No Undisclosed Liabilities	 	16
	 	 SECTION 3.09	 	Conduct in the Ordinary Course; Absence of Certain Changes, Events and Conditions	 	16
	 	 SECTION 3.10	 	Litigation	 	17
	 	 SECTION 3.11	 	Compliance with Applicable Laws	 	18
	 	 SECTION 3.12	 	Environmental Matters	 	18
	 	 SECTION 3.13	 	Title to Assets; Real Property	 	20
	 	 SECTION 3.14	 	Intellectual Property Rights	 	22
	 	 SECTION 3.15	 	Insurance	 	22
	 	 SECTION 3.16	 	Employee Benefit Matters	 	23
	 	 SECTION 3.17	 	Labor Matters	 	26
	 	 SECTION 3.18	 	Taxes	 	27
	 	 SECTION 3.19	 	Material Contracts	 	29
	 	 SECTION 3.20	 	Racing License	 	31





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	 	 SECTION 3.21	 	Suppliers	 	31
	 	 SECTION 3.22	 	Books and Records	 	31
	 	 SECTION 3.23	 	Brokers	 	31
	 	 SECTION 3.24	 	Racing Days	 	31
	 	 SECTION 3.25	 	Related Parties	 	32
	 ARTICLE IV — REPRESENTATIONS AND WARRANTIES OF PURCHASER	 	32
	 	 SECTION 4.01	 	Incorporation and Authority of Purchaser	 	32
	 	 SECTION 4.02	 	No Conflict	 	33
	 	 SECTION 4.03	 	Consents and Approvals	 	33
	 	 SECTION 4.04	 	Investment Purpose	 	33
	 	 SECTION 4.05	 	Financing	 	34
	 	 SECTION 4.06	 	Brokers	 	34
	 	 SECTION 4.07	 	Specified Investors; Cannery Casino Resorts	 	34
	 ARTICLE V — ADDITIONAL AGREEMENTS	 	34
	 	 SECTION 5.01	 	Conduct of Business Prior to the Closing	 	34
	 	 SECTION 5.02	 	Access to Information	 	35
	 	 SECTION 5.03	 	Books and Records	 	36
	 	 SECTION 5.04	 	Governmental Approvals and Consents; Application Fee; Closing Conditions	 	36
	 	 SECTION 5.05	 	Confidentiality	 	41
	 	 SECTION 5.06	 	Use of Magna Name	 	42
	 	 SECTION 5.07	 	Investigation	 	43
	 	 SECTION 5.08	 	Limited Non-Compete	 	43
	 	 SECTION 5.09	 	Remediation	 	44
	 	 SECTION 5.10	 	No Negotiation	 	45
	 	 SECTION 5.11	 	Title	 	45
	 	 SECTION 5.12	 	Further Action	 	45
	 	 SECTION 5.13	 	Excluded Items	 	46
	 	 SECTION 5.14	 	Estoppels	 	46



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	 	 SECTION 5.15	 	Cooperation in Preparation of Alternative Application	 	46
	 	 SECTION 5.16	 	Financial Statements	 	46
	 	 SECTION 5.17	 	Separation	 	48
	 	 SECTION 5.18	 	Notification	 	48
	 	 SECTION 5.19	 	Environmental Report	 	48
	 	 SECTION 5.20	 	XpressBet Matters	 	48
	 	 SECTION 5.21	 	[Reserved]	 	48
	 	 SECTION 5.22	 	Phase I	 	48
	 	 SECTION 5.23	 	Slot Machine Taxes	 	49
	 ARTICLE VI — EMPLOYEE MATTERS	 	49
	 	 SECTION 6.01	 	Arrangements; Payroll Obligations	 	49
	 	 SECTION 6.02	 	Benefit Plans and Transferred Employee Related Obligations	 	49
	 	 SECTION 6.03	 	Intentionally Omitted	 	50
	 	 SECTION 6.04	 	Intentionally Omitted	 	50
	 	 SECTION 6.05	 	Employee Benefits Indemnity	 	50
	 	 SECTION 6.06	 	Third-Party Claims	 	51
	 	 SECTION 6.07	 	Survival	 	51
	 ARTICLE VII — TAX MATTERS	 	51
	 	 SECTION 7.01	 	Indemnity	 	51
	 	 SECTION 7.02	 	Returns and Payments	 	52
	 	 SECTION 7.03	 	Refunds	 	53
	 	 SECTION 7.04	 	Contests	 	53
	 	 SECTION 7.05	 	Time of Payment	 	54
	 	 SECTION 7.06	 	Cooperation and Exchange of Information	 	55
	 	 SECTION 7.07	 	Conveyance Taxes	 	55
	 	 SECTION 7.08	 	Miscellaneous	 	55
	 ARTICLE VIII — CONDITIONS TO CLOSING	 	56
	 	 SECTION 8.01	 	Conditions to Obligations of All Parties	 	56





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	 	 SECTION 8.02	 	Conditions to Obligations of Seller	 	57
	 	 SECTION 8.03	 	Conditions to Obligations of Purchaser	 	58
	 ARTICLE IX — INDEMNIFICATION	 	60
	 	 SECTION 9.01	 	Survival	 	60
	 	 SECTION 9.02	 	Indemnification by Purchaser	 	61
	 	 SECTION 9.03	 	Indemnification by Seller	 	63
	 	 SECTION 9.04	 	Indemnification Procedures, Etc	 	66
	 	 SECTION 9.05	 	Payments	 	69
	 ARTICLE X — TERMINATION, AMENDMENT AND WAIVER	 	69
	 	 SECTION 10.01	 	Termination	 	69
	 	 SECTION 10.02	 	Effect of Termination	 	70
	 	 SECTION 10.03	 	Waiver	 	71
	 ARTICLE XI — GENERAL PROVISIONS	 	71
	 	 SECTION 11.01	 	Expenses; Pro-rations	 	71
	 	 SECTION 11.02	 	Notices	 	72
	 	 SECTION 11.03	 	Public Announcements	 	73
	 	 SECTION 11.04	 	Headings	 	73
	 	 SECTION 11.05	 	Severability	 	73
	 	 SECTION 11.06	 	Entire Agreement	 	73
	 	 SECTION 11.07	 	Assignment	 	73
	 	 SECTION 11.08	 	No Third-Party Beneficiaries	 	74
	 	 SECTION 11.09	 	Amendment	 	74
	 	 SECTION 11.10	 	Governing Law; Jurisdiction; Service of Process	 	74
	 	 SECTION 11.11	 	WAIVER OF JURY TRIAL	 	74
	 	 SECTION 11.12	 	Counterparts	 	74
	 	 SECTION 11.13	 	Specific Performance	 	74
	 	 SECTION 11.14	 	Prevailing Party	 	74




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EXHIBITS  



	Exhibit 1.01A	 	Form of Note Agreement
	Exhibit 1.01B	 	Meadows Facility
	Exhibit 1.01C	 	MEC Items
	Exhibit 1.01D	 	Off-Track Betting Facilities
	Exhibit 1.01E	 	Racing Services Agreement
	Exhibit 1.01F	 	XpressBet Amendments
	Exhibit 5.11	 	Title Commitment
	Exhibit 5.13	 	Excluded Items
	Exhibit 8.02(g)	 	Form of Opinion of Purchaser Parties' Counsel
	Exhibit 8.03(j)	 	Form of Opinion of Seller Parties' Counsel




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        STOCK PURCHASE AGREEMENT, dated November 8, 2005 (this "Agreement"), between MAGNA ENTERTAINMENT CORP., a Delaware corporation
("Seller"), and PA MEADOWS, LLC, a Delaware limited liability company ("Purchaser"). 


        WHEREAS,
Seller owns (a) all the issued and outstanding shares of common stock of MEC Pennsylvania Racing, Inc., a Pennsylvania corporation
("MECPenn"), (b) all the issued and outstanding shares of common stock of Mountain Laurel Racing, Inc., a Delaware corporation
("MLR"), and (c) all the issued and outstanding shares of common stock of Washington Trotting Association, Inc., a Delaware corporation
("WTA") (MECPenn, MLR and WTA being collectively referred to herein as the "Companies," and each individually as a
"Company," and the issued and outstanding shares of common stock of the Companies being referred to herein collectively as the
"Shares"); and 


        WHEREAS,
Seller wishes to sell to Purchaser, and Purchaser wishes to purchase from Seller, the Shares upon the terms and subject to the conditions set forth herein; 


        NOW,
THEREFORE, in consideration of the premises and of the mutual agreements and covenants hereinafter set forth, Seller and Purchaser hereby agree as follows: 


ARTICLE I

DEFINITIONS  


        SECTION 1.01 Certain Defined Terms. (a) As used in this Agreement, the following terms shall have the
following meanings: 


        "Action"
means any claim, action, suit, arbitration, inquiry, proceeding or investigation by or before any Governmental Authority. 


        "Affiliate"
of a specified Person means a Person that, directly or indirectly, through one or more intermediaries, Controls, is Controlled By or is Under
Common Control With, such specified Person, including such specified Person's Subsidiaries. 


        "Business
Day" means any day that is not a Saturday, a Sunday or other day on which banks are required or authorized by law to be closed in the City of
Toronto or the City of Los Angeles. 


        "Code"
or "Internal Revenue Code" means the Internal Revenue Code of 1986, as amended. 


        "Commission"
means the Pennsylvania Harness Racing Commission established by the Pennsylvania Act. 


        "Company
Disclosure Schedule" means the Disclosure Schedule dated as of the date hereof delivered to Purchaser by Seller. 


        "Consummation
Date" shall have the meaning assigned to such term in the Note Agreement. 


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        "Control"
(including the terms "Controlled By" and "Under Common Control With") means the
possession, directly or indirectly or as a trustee or executor (in each case, acting in a fiduciary capacity), of the power to direct or cause the direction of the management or policies of a
Person, whether through the ownership of voting securities, as trustee or executor (in each case, acting in a fiduciary capacity), by contract or credit arrangement or otherwise. 



        "Employee"
means those Persons employed by the Companies and Subsidiaries immediately prior to the Closing, including those employees on any authorized leave
of absence, including, without limitation, vacation, disability (work-related or otherwise) or sick leave, whether or not such employees return to active employment with any Company
or Subsidiary. 


        "Encumbrance"
means a pledge, lien, security interest, mortgage, charge, adverse claim of ownership or use, option, right of way, right of first refusal or
other encumbrance of any kind. 



        "ERISA"
means the Employee Retirement Income Security Act of 1974, as amended. 


        "ERISA
Affiliate" shall have the meaning assigned to such term in the Note Agreement. 


        "Escrow
Agreement" shall have the meaning ascribed to such term in the Holdback Agreement. 


        "Exchange
Act" means the Securities Exchange Act of 1934, as amended, and any successor law and regulations issued pursuant thereto. 



        "Excluded
Subsidiaries" means Allegheny Harness Racing Association, Inc., Allegheny Thoroughbred Racing Association, Inc. and
20002 Delaware Inc. 


        "GAAP"
means United States generally accepted accounting principles in effect from time to time applied consistently throughout the
period involved. 


        "Gaming
Act" means the Pennsylvania Race Horse Development and Gaming Act, as amended, and any rules or regulations promulgated thereunder. 


        "Gaming
Board" means the Pennsylvania Gaming Control Board established by the Gaming Act. 



        "Governmental
Authority" means any government, any governmental or government-appointed entity, department, commission, board, agency, regulatory authority
or instrumentality, and any court, tribunal, or judicial body, whether federal, state, local or foreign, or any arbitral body, including, without limitation, the Commission and the
Gaming Board. 


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        "Governmental
Order" means any order, writ, judgment, injunction, decree, stipulation, determination or award entered by or with any
Governmental Authority. 


        "Gulfstream
Loan Agreement" means the Amended and Restated Loan Agreement dated July 22, 2005 by and among Gulfstream Park Racing
Association, Inc., MID Islandi SF, MECPenn, MLR, WTA, Remington Park, Inc. and GPRA Thoroughbred Training Center, Inc., as amended, restated or modified from time
to time. 


        "Holdback
Agreement" means the Holdback Agreement by and between Seller and Purchaser, substantially in the form attached to the Note Agreement as
Exhibit H, as it may be amended from time to time. 


        "Holdback
Documents" means the Holdback Agreement, the Escrow Agreement, the Escrow Security (as defined in the Holdback Agreement), any other
documents entered into in replacement or substitution thereof and any other documents or instruments executed and delivered in connection therewith. 


        "HSR
Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations
promulgated thereunder. 


        "Intellectual
Property Rights" means all (a) patent and patent applications, (b) trademarks, service marks, logos, trade dress, trade names and
corporate names and registrations and applications for registration thereof, including without limitation, the name "The Meadows", (c) copyrights, whether registered or unregistered, and
registrations and applications for registration thereof and (d) trade secrets, formulas, inventions, invention disclosures, computer software and other proprietary business and intellectual
property rights that have been in the last three years or are employed in the conduct of the business of the Companies and the Subsidiaries as it is now being conducted, but excluding the
Magna Name. 


        "IRS"
means the Internal Revenue Service of the United States. 


        "knowledge
of Seller" or "Seller's knowledge" means the actual knowledge of Drew Shubeck, David Wiegmann, Michael Jeannot, Tom
Hodgson, Brian Budden, Andrew Staniusz and Scott Daruty or such other knowledge that such applicable person should reasonably have acquired through the performance of his job in accordance with
his duties. 


        "Law"
or "Laws" means any statute, law, ordinance, regulation, rule, code, order, other requirement or rule of law of any
country or any state, province, locality, region or area therein, or any other jurisdiction. 


        "Lease"
means the Lease Agreement, dated as of July 22, 2003, as modified by that certain Lease Renewal, dated as of July 30, 2004, as further
modified by that certain Lease Renewal, dated as of March 3, 2005 by and between MEC Penn, as tenant, and D. Fuchs Enterprises, LLC, as landlord. 


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        "Liabilities"
means any and all debts, liabilities and obligations of any kind, character or nature whatsoever, whether accrued or fixed, known or unknown,
asserted or unasserted, absolute or contingent, matured or unmatured, secured or unsecured or determined or determinable, including, without limitation, those arising under any Law (excluding any
Environmental Law), Action or Governmental Order and those arising under any contract, agreement, arrangement, commitment, guarantee or undertaking. 


        "Losses"
of a Person means any and all claims, actions or causes of action, assessments, losses, damages, deficiencies, liabilities, costs, awards, judgments
and expenses (including reasonable legal and expert fees and expenses, interest, penalties, and all reasonable amounts paid in investigation, defense or settlement of any of the foregoing) suffered or
incurred by such Person. 


        "Material
Adverse Effect" means any circumstance, change in, or effect on any Company or Subsidiary that is or would reasonably be expected to be materially
adverse to the business, assets, condition (financial or otherwise), or the results of operations of the Companies and the Subsidiaries, taken as a whole, and taking into account the prospects of
obtaining and maintaining a Conditional Category 1 license and a Category 1 license under the Gaming Act and developing a casino on the Real Property (it being understood that
such taking into account of such prospects shall in no event be interpreted as any Company or any Subsidiary being required to be qualified or licensed to conduct any gaming operations in any
jurisdiction on or prior to the Closing Date); provided, however, that "Material Adverse Effect" shall not include any circumstance, change in
or effect on any Company or any Subsidiary directly or indirectly arising out of or attributable to (a) changes or effects in the financial or securities markets or the regulatory conditions or
the economy in general that generally affect the gaming industry or the industries in which the Companies and their respective Subsidiaries operate, (b) any actions taken or omitted to be taken
by Seller or the Companies or any Subsidiary pursuant to the terms of this Agreement or any actions taken by Purchaser or (c) any effects resulting solely from the announcement of the
transactions contemplated by this Agreement. 


        "Meadows
Facility" means the racetrack facility, buildings, improvements, land and other assets located on the land described on
Exhibit 1.01B hereto. 


        "MEC
Items" means those items as set forth on Exhibit 1.01C. 


        "MID
Bridge Loan Agreement" means the Bridge Loan Agreement dated July 22, 2005 by and among Seller, MECPenn, MLR, WTA and MID Islandi SF, as amended,
restated or modified from time to time. 


        "MID
Loan Documents" means the Magna Loan Documents (as defined in the Note Agreement). 


        "Note
Agreement" means that certain Post-Closing and Note Issuance Agreement dated on or about the Closing Date among Purchaser in its capacity
as purchaser hereunder and borrower thereunder, certain Affiliates of Purchaser, Seller in its capacity as seller hereunder and agent thereunder, and the holders of the Tranche A Note and
Tranche B Note party thereto from time to time, substantially in the form attached hereto as Exhibit 1.01A, as it may be amended from time to time. 


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        "Note
Documents" shall have the meaning assigned to such term in the Note Agreement. 


        "OTB
Facilities" means the off track betting facilities identified on Exhibit 1.01D hereto. 


        "Pennsylvania
Act" means the Pennsylvania Race Horse Industry Reform Act, as amended, and the rules and regulations of the Commission
promulgated thereunder. 


        "Permits"
means all permits, licenses, franchises, approvals, authorizations, registrations, certificates, variances and similar rights obtained, or required
to be obtained, from Governmental Authorities (other than Environmental Permits). 


        "Person"
means an individual, corporation, partnership, joint venture, limited liability company, person (including, without limitation, a "person" as
defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended), trust, association or another entity. 


        "Post-Closing
Period" means any Tax period beginning after the Closing Date. 


        "Pre-Closing
Period" means any Tax period ending on or before the Closing Date. 


        "Purchaser
Disclosure Schedule" means the Disclosure Schedule dated as of the date hereof delivered to Seller by Purchaser. 



        "Purchaser
Material Adverse Effect" means any circumstance, change in, or effect on Purchaser that is or would reasonably be expected to be materially
adverse to the business, assets, condition (financial or otherwise), or the results of operations of Purchaser, taken as a whole and taking into account the prospects of obtaining and maintaining a
Conditional Category 1 license and a Category 1 license under the Gaming Act and developing a casino on the Real Property (it being understood that such taking into account of
such prospects shall in no event be interpreted as Purchaser being required to be qualified or licensed to conduct any gaming operations in any jurisdictions on or prior to the Closing Date);
provided, however, that "Purchaser Material Adverse Effect" shall not include any circumstance, change in or effect on Purchaser directly or
indirectly arising out of or attributable to (a) changes or effects in the financial or securities markets or the regulatory conditions or the economy in general that generally affect the
gaming industry or the industries in which Purchaser operates, (b) any actions taken or omitted to be taken by Purchaser pursuant to the terms of this Agreement or any actions taken by Seller
or (c) any effects resulting solely from the announcement of the transactions contemplated by this Agreement. 


        "Purchaser
Note Developments" shall have the meaning assigned to such term in the Note Agreement. 


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        "Purchaser's
Accountants" means Piercy Bowler Taylor & Kern. 


        "Racing
Services Agreement" means the Racing Services Agreement by and between Affiliates of Purchaser and Seller in the form attached hereto as
Exhibit 1.01E, as it may be amended from time to time. 



        "Real
Property" means the real property owned, leased or subleased by any Company or any Subsidiary, together with all buildings, structures and facilities
located thereon. 


        "Reference
Balance Sheet Date" means December 31, 2004. 


        "Reference
Balance Sheet" means with respect to the Companies and their Subsidiaries the audited combined balance sheet of the Companies and their
Subsidiaries dated as of December 31, 2004, a copy of which is set forth in Section 3.07 of the Company Disclosure Schedule, including the notes and schedules thereto. 



        "Regulation S-X"
means Regulation S-X promulgated by the Securities and Exchange Commission. 


        "Repayment
Date" means the date on which (i) Purchaser shall have paid the Tranche A Note in cash in full in accordance with its terms and
(ii) the Holdback Documents shall have been executed and delivered in accordance with Section 3.2 of the Note Agreement in replacement of the Tranche B Note. 


        "Seller
Note Certificate Date" shall have the meaning assigned to such term in the Note Agreement. 


        "Seller
Note Developments" shall have the meaning assigned to such term in the Note Agreement. 


        "Seller
Notes" means the Tranche A Note and the Tranche B Note. 


        "Seller's
Accountants" means Ernst & Young, L.L.P. 


        "Specified
Funds" means the two funds that own, as of the date hereof, all of the indirect non-voting interest in Purchaser. 



        "Specified
Investor" means each Person that owns as of the date hereof a 5% or greater partnership interest in the Specified Funds (other than the principals
of Purchaser's equity sponsor and other than any owners of Millennium Gaming, Inc. (including without limitation Mr. William Paulos and Mr. William Wortman)). 


        "Stock
Transfer" shall have the meaning assigned to such term in the Note Agreement. 


        "Stock
Transfer Trigger Date" shall mean the earlier of (i) the date on which any of the events set forth in clauses (i)-(vi) of
Section 3.10(a) of the Note Agreement occurs or (ii) the date any remedies under Section 8.2(c) of the Note Agreement may be exercised by Seller. 


6







 

        "Subsidiary"
or "Subsidiaries" means any and all corporations, partnerships, joint ventures and other entities Controlled By any
Company, directly or indirectly through one or more intermediaries other than the Excluded Subsidiaries. As of the date hereof, Subsidiaries of Companies are set forth on Section 3.04(a) of the
Company Disclosure Schedule and shall, for the sake of clarity, include MECRacing and exclude the Excluded Subsidiaries. All references to "Subsidiary" or "Subsidiaries" herein including any reference
to any Company's Subsidiary or "its Subsidiaries" or "their Subsidiaries" (referring to any Company's Subsidiaries) shall exclude the Excluded Subsidiaries. 


        "Tax"
or "Taxes" means any and all U.S. federal, state, local or foreign taxes, fees, levies, duties, tariffs, imposts,
and other charges of any kind (together with any and all interest, penalties, additions to tax and additional amounts imposed with respect thereto) imposed by any government or taxing authority or
amount owing to any party relating to Taxes arising under any Tax law or agreement (including any joint venture or partnership agreement), including, without limitation: taxes or other charges on or
with respect to income, franchises, windfall or other profits, gross receipts, property, sales, use, capital stock, payroll, employment, social security, workers' compensation, unemployment
compensation, or net worth; taxes or other charges in the nature of excise, withholding, ad valorem, stamp, transfer, value added, or gains taxes; license, registration and documentation fees; and
customs duties, tariffs and similar charges, whether disputed or not and including any obligations to indemnify or otherwise assume or succeed to the Tax liability of any other Person. 


        "Tax
Return" means any return, declaration, report, claim for refund, form of other information or return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendments thereof. 


        "Tranche A
Note" means the Tranche A Junior Notes issued by Purchaser on the Closing Date pursuant to the Note Agreement in an aggregate
principal amount of $175,000,000, as it may be amended or replaced from time to time in accordance with the Note Agreement. 


        "Tranche B
Note" means the Tranche B Junior Notes issued by Purchaser on the Closing Date pursuant to the Note Agreement in an aggregate
principal amount of $25,000,000, as it may be amended or replaced from time to time in accordance with the Note Agreement. 



        "Transaction
Documents" means this Agreement, the Racing Services Agreement, the XpressBet Amendments and the Holdback Documents. 


        "XpressBet
Amendments" means the XpressBet Lease Amendment, XpressBet Wagering Agreement Amendment and the XpressBet Banking Agreement Amendment. 


7







 

        "XpressBet
Banking Agreement Amendment" means the First Amendment to the letter agreement regarding Pennsylvania account wageror bank accounts, dated as of
October 5, 2005, by and between WTA and MLR, on the one hand, and XpressBet, Inc., on the other hand, substantially in the form attached hereto as Exhibit 1.01F-1. 


        "XpressBet
Lease Amendment" means the First Amendment to the Lease Agreement, dated July 15, 2005, by and between MECPenn and XpressBet, Inc.,
substantially in the form attached hereto as Exhibit 1.01F-2. 


        "XpressBet
Wagering Agreement Amendment" means the First Amendment to the Advanced Account Wagering and Services Agreement, effective as of July 15,
2005 and dated as of August 9, 2005, by and between WTA and MLR, on the one hand, and XpressBet, Inc., on the other hand, substantially in the form attached hereto as
Exhibit 1.01F-3. 



	(b)
	Each
of the following terms is defined in the section set forth opposite such terms below: 







	Term 
	 	Section

	2004 Audited Balance Sheet	 	5.16(b)
	2005 Audited Financial Statements	 	5.16(a)
	2006 Interim Financial Statements	 	5.16(a)
	2005 Quarterly Financial Statements	 	5.16(a)
	Action Notice	 	8.03(m)
	Agreement	 	Preamble
	Applicable Date	 	9.02(a)
	Applicable Local Authorities	 	9.03(a)
	Alternative Scenario	 	5.04(c)(i)
	Annual Applicable Amount	 	9.03
	Assets	 	3.13(a)
	Benefit Plans	 	3.16(a)
	CERCLA	 	3.12(c)
	Claim Notice	 	9.04(a)
	Closing	 	2.03(a)
	Closing Date	 	2.03(a)
	COBRA	 	6.02(c)
	Commission Approval	 	8.01(c)
	Company; Companies	 	Recitals
	Company Employees	 	6.01
	Company Financial Statements	 	3.07(a)
	Company Interim Financial Statements	 	3.07(a)
	Company Plans	 	3.16(a)
	Confidentiality Agreement	 	5.05(a)
	Contest	 	7.04(b)
	Election	 	7.08(a)
	Employee Agreements	 	3.16(a)
	Environmental Actions	 	3.12(c)
	Environmental Laws	 	3.12(c)
	Environmental Permits	 	3.12(c)




8







 


	Term 
	 	Section

	Excluded Items	 	5.13
	Existing Stock	 	5.06(b)
	Former Subsidiaries	 	3.04(d)
	Fundamental Representations	 	9.01
	Gaming Application	 	5.04(c)(i)
	Gaming Application Fee	 	5.04(d)
	Hazardous Materials	 	3.12(c)
	Indemnified Party	 	9.04(a)
	Indemnifying Party	 	9.04(a)
	Insured Exception	 	5.11(c)
	lease	 	3.19(a)
	Local Applicable Date	 	9.03(a)
	Local Share Assessment Losses	 	9.03(a)
	Local Tax Assessment Date	 	9.03(a)
	Magna Name	 	5.06(a)
	Material Contracts	 	3.19(a)
	MEC Health Plan	 	6.02(a)
	MECPenn	 	Recitals
	MECPenn Common Stock	 	3.03(a)
	MECRacing	 	3.20
	MLR	 	Recitals
	MLR Common Stock	 	3.03
	Multiemployer Plans	 	3.16(a)
	Non-Competition Covenant	 	5.08(a)
	Non-Competition Period	 	5.08(a)
	Other Purchaser Materials	 	5.04(e)
	Paddock Refurbishment	 	3.13(e)
	Pension Survival Period	 	9.03(a)(viii)
	Permitted Exceptions	 	3.13(a)
	Phase I	 	5.22
	Proposed Development	 	3.13(e)
	Purchaser's Notice	 	5.11(c)
	Purchase Price	 	2.02
	Purchaser	 	Preamble
	Purchaser Application Materials	 	5.04(e)
	Purchaser Developments	 	8.02(b)
	Qualified Plans	 	3.16(h)
	Releases	 	3.12(c)
	Replacement Trigger	 	5.04(d)
	RCRA	 	3.12(c)
	Seller	 	Preamble
	Seller Developments	 	8.03(b)
	Shares	 	Recitals
	Specified Notes	 	5.01(c)
	Survey	 	5.11(a)




9







 


	Term 
	 	Section

	Tax Adjusted Local Share Assessment Losses	 	9.03(a)
	Tax Benefit	 	9.03(a)
	Terminating Purchaser's Breach	 	10.01(d)
	Terminating Seller's Breach	 	10.01(c)
	Title Commitment	 	5.11(a)
	Title Company	 	5.11(a)
	Title Objection	 	5.11(b)
	Title Policy	 	8.03(k)
	Transaction Scenario	 	5.04(c)(i)
	Transferred Employees	 	6.01
	True-Up	 	9.03(a)
	WTA	 	Recitals
	WTA Common Stock	 	3.03




ARTICLE II

PURCHASE AND SALE  


        SECTION 2.01 Purchase and Sale. Upon the terms and subject to the conditions set forth in this Agreement, Seller agrees to
sell to Purchaser, and Purchaser agrees to purchase from Seller, on the Closing Date, the Shares. 


        SECTION 2.02
Purchase Price. The aggregate purchase price for the Shares (and the limited non-compete set forth in
Section 5.08) shall be $200,000,000 (the "Purchase Price"), of which (i) $175,000,000 shall be paid with the issuance of the Tranche A Note to
Seller or its permitted designee in accordance with the Note Agreement on the Closing Date as provided in Section 2.03(c) and (ii) $25,000,000 shall be paid with the issuance of the
Tranche B Note to Seller or its permitted designee in accordance with the Note Agreement on the Closing Date as provided in Section 2.03(c) (in each case together with the
execution and delivery of each of the other Note Documents). Within 30 days after Closing, Seller will provide Purchaser with an allocation of the Purchase Price (less the $2,000,000 allocated
pursuant to Section 5.08 hereof) among MECPenn, MLR, WTA and the Subsidiaries for approval, such approval not to be unreasonably withheld. The allocation shall be adjusted by the parties to
reflect any payments made under the Seller Notes in a manner consistent with the initial allocation. The parties agree that the allocation determined under this Section 2.02 shall be binding
and the parties shall not take a position that is inconsistent with such allocation in any matter. 


        SECTION 2.03
Closing. (a) Subject to the terms and conditions of this Agreement, the sale and purchase of the Shares contemplated hereby shall
take place at a closing (the "Closing") to be held at 10:00 a.m., New York time, no later than two Business Days after the last of the conditions to
Closing set forth in Sections 8.01, 8.02 and 8.03 has been satisfied or waived (other than conditions which, by their nature, are to be satisfied on the Closing Date). The Closing will
occur at the offices of O'Melveny & Myers LLP, 7 Times Square, New York, New York, or at such other time or on such other date or at such other place as Seller and
Purchaser may mutually agree upon in writing (the day on which the Closing takes place being the "Closing Date"). 


10







 

        (b)   At
the Closing, Seller shall deliver or cause to be delivered to Purchaser stock certificates evidencing the Shares duly endorsed in blank or accompanied by stock powers
duly executed in blank, in proper form for transfer and with all required stock transfer tax stamps affixed. 


        (c)   At
the Closing, against delivery of the stock certificates evidencing the Shares, Purchaser shall deliver to Seller or its permitted designee in accordance with the Note
Agreement (i) the executed Tranche A Note in an aggregate principal amount equal to $175,000,000 and (ii) the executed Tranche B Note in an aggregate principal amount equal
to $25,000,000, in each case together with the other Note Documents executed by each party thereto (other than Seller). 


ARTICLE III

REPRESENTATIONS AND WARRANTIES OF SELLER  


        Seller represents and warrants to Purchaser as of the date hereof (other than such representations and warranties as are made as of another date)
as follows: 


        SECTION 3.01
Incorporation and Authority of Seller. Seller is a corporation duly incorporated, validly existing and in good standing under the laws of
Delaware. Seller is duly qualified as a foreign corporation to do business in each jurisdiction where the character of its properties owned, operated or leased or the nature of its activities as
currently conducted makes such qualification necessary, except for such failures to be so qualified that would not have a Material Adverse Effect. Seller has all necessary corporate power and
authority to enter into this Agreement and the other Transaction Documents to which Seller is a party, to carry out its obligations hereunder and thereunder and to consummate the transactions
contemplated hereby or thereby. The execution and delivery by Seller of this Agreement and any other Transaction Document to which Seller is a party, the performance by Seller of its obligations
hereunder and thereunder and the consummation by Seller of the transactions contemplated hereby and thereby have been duly authorized by all requisite corporate action on the part of Seller. This
Agreement has been duly executed and delivered by Seller, and (assuming due authorization, execution and delivery by Purchaser) this Agreement constitutes a legal, valid and binding obligation of
Seller enforceable against it in accordance with its terms, subject to the effect of any applicable bankruptcy, reorganization, insolvency, moratorium or similar laws affecting creditors' rights
generally and subject, as to enforceability, to the effect of general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). When each
Transaction Document to which Seller is or will be a party has been duly executed and delivered by Seller (assuming due authorization, execution and delivery by each other party thereto), such
Transaction Document will constitute a legal and binding obligation of Seller enforceable against it in accordance with its terms, subject to the effect of any applicable bankruptcy, reorganization,
insolvency, moratorium or similar laws affecting creditors' rights generally and subject, as to enforceability, to the effect of general principles of equity (regardless of whether such enforceability
is considered in a proceeding in equity or at law). 


11









   
        SECTION 3.02    Organization, Authority and Qualification of the Companies.    Each Company is a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of incorporation and has all necessary corporate power and authority to own, operate or lease the properties and assets now
owned, operated or leased by it and to carry on its business as it has been and is currently conducted. Section 3.02 of the Company Disclosure Schedule sets forth each jurisdiction in which
each Company is licensed or qualified to do business, and each Company is duly licensed or qualified to do business and is in good standing in each jurisdiction in which the properties owned or leased
by it or the operation of its business as currently conducted makes such licensing or qualification necessary, except as set forth on Section 3.02 of the Company Disclosure Schedule and except
for such failures which would not have a Material Adverse Effect. All corporate actions taken by each Company in connection with this Agreement and the other Transaction Documents will be duly
authorized on or prior to the Closing, and none of the Companies has taken any such action that conflicts with, constitutes a default under or results in a violation of any provision of its
Certificate of Incorporation (or Articles of Incorporation) or By-laws. True, complete and correct copies of the Certificate of Incorporation and By-laws
(or similar organizational documents) of each Company, each as in effect on the date hereof, have been delivered by Seller to Purchaser. 


        SECTION 3.03    Capital
Stock of the Companies; Ownership of the Shares.    (a) The authorized capital stock of MECPenn
consists of 1,000 shares of common stock, par value $1.00 per share ("MECPenn Common Stock"), the authorized capital stock of MLR consists of 10,000 shares
of common stock, no par value ("MLR Common Stock"), and the authorized capital stock of WTA consists of 10,000 shares of common stock, no par value
("WTA Common Stock"). As of the date hereof, 100 shares of MECPenn Common Stock, 100 shares of MLR Common Stock and 100 shares of WTA Common Stock are
issued and outstanding, all of which have been validly authorized and are validly issued, fully paid and nonassessable. None of the Shares was issued in violation of any preemptive rights. There are
no options, warrants, convertible securities or other rights, agreements, arrangements or commitments of any character relating to the capital stock of any Company or obligating Seller or any Company
to issue or sell any shares of capital stock of, or any other interest in, any Company. Except as set forth in Section 3.03 of the Company Disclosure Schedule or except as may arise from the
MID Loan Documents or the Note Documents, there are no outstanding contractual obligations of any Company to repurchase, redeem or otherwise acquire any shares of its common stock or to provide funds
to, or make any investment (in the form of a loan, capital contribution or otherwise) in, any other Person. Except as disclosed in Section 3.03 of the Company Disclosure Schedule, the
Shares constitute all the issued and outstanding capital stock of the Companies and are owned of record and beneficially solely by Seller free and clear of all Encumbrances (other than the
Encumbrances contemplated by the MID Loan Documents or the Note Documents). 


        (b)   Upon
consummation of the transactions contemplated by this Agreement and registration of the Shares in the name of Purchaser in the respective stock records of the
Companies, Purchaser, assuming it shall have purchased the Shares for value in good faith and without notice of any adverse claim, will own all the issued and outstanding capital stock of each Company
free and clear of all Encumbrances (other than the Encumbrances contemplated by the MID Loan Documents or the Note Documents), assuming the release of the Encumbrances disclosed in Section 3.03
of the Company Disclosure Schedule, and the Shares will be fully paid and nonassessable. There are no voting trusts, stockholder agreements, proxies or other agreements or understandings in effect
with respect to the voting or transfer of any of the Shares. 


12







 

        SECTION 3.04    Subsidiaries.    (a) Section 3.04(a)
of the Company Disclosure Schedule sets forth a true and
complete list of all Subsidiaries, listing for each Subsidiary its name, type of entity, the jurisdiction and date of its incorporation or organization, its authorized capital stock, partnership
capital or equivalent, the number and type of its issued and outstanding shares of capital stock, partnership interests or similar ownership interests and the current ownership of such shares,
partnership interests or similar ownership interests. All such shares, partnership interests or similar ownership interests have been validly authorized and are validly issued, fully paid and
nonassessable. None of such shares, partnership interests or similar ownership interests was issued in violation of any preemptive rights. There are no options, warrants, convertible securities or
other rights, agreements, arrangements or commitments of any character relating to the shares, partnership interests or similar ownership interests of any Subsidiary or obligating any Company or
Subsidiary to issue or sell any shares, partnership interests or similar ownership interests of, or any other interest in, any Subsidiary. Except as set forth in Section 3.04 of the Company
Disclosure Schedule or except as may arise from the MID Loan Documents or the Note Documents, there are no outstanding contractual obligations of any Subsidiary to repurchase, redeem or otherwise
acquire any of its shares, partnership interests or similar ownership interests or to provide funds to, or make any investment (in the form of a loan, capital contribution or otherwise) in, any
other Person. Except as disclosed in Section 3.04(a) of the Company Disclosure Schedule, the shares, partnership interests or similar ownership interests set forth in Section 3.04(a) of
the Company Disclosure Schedule constitute all the issued and outstanding shares, partnership interests or similar ownership interests of the Subsidiaries and are owned of record and beneficially
solely by the Company or Companies indicated on Section 3.04(a) of the Company Disclosure Schedule, free and clear of all Encumbrances (other than the Encumbrances contemplated by the MID Loan
Documents or the Note Documents). 


        (b)   Except
as set forth on Section 3.04(b) of the Company Disclosure Schedule, other than the Subsidiaries, there are no other corporations, partnerships, joint
ventures, associations or other entities in which any Company owns, of record or beneficially, any direct or indirect equity or other interest or any right (contingent or otherwise) to acquire the
same. Except as set forth on Section 3.04(b) of the Company Disclosure Schedule, other than the Subsidiaries, none of the Companies is a member of (nor is any part of the business of
Company and its Subsidiaries as currently conducted on the date of this Agreement conducted through) any partnership. Except as set forth in Section 3.04(b) of the Company Disclosure Schedule,
none of the Companies is a participant in any joint venture or similar arrangement. 


        (c)   Each
Subsidiary that is a corporation: (i) is a corporation duly organized and validly existing under the laws of its jurisdiction of incorporation,
(ii) has all necessary power and authority to own, operate or lease the properties and assets owned, operated or leased by such Subsidiary and to carry on its business as it has been and is
currently conducted by such Subsidiary, and (iii) is duly licensed or qualified to do business and is in good standing in each jurisdiction in which the properties owned or leased by it or the
operation of its business makes such licensing or qualification necessary or desirable, except as set forth in Section 3.04(c) of the Company Disclosure Schedule and except for such failures
which would not have a Material Adverse Effect. Each Subsidiary that is not a corporation: (i) is duly organized and validly existing under the laws of its jurisdiction of organization,
(ii) has all necessary power and authority to own, operate or lease the properties and assets owned, operated or leased by such Subsidiary and to carry on its business as it has been and is
currently conducted by such Subsidiary and (iii) is duly licensed or qualified to do business and is in good standing in each jurisdiction in which the properties owned or leased by it or the
operation of its business makes such licensing or qualification necessary or desirable, except as set forth in Section 3.04(c) of the Company Disclosure Schedule and except for such failures
which would not have a Material Adverse Effect. Section 3.04(c) of the Company Disclosure Schedule sets forth each jurisdiction in which each Subsidiary is licensed or qualified to do business.
All corporate or entity actions taken by each Subsidiary in connection with this Agreement and the other Transaction Documents will be duly authorized on or prior to the Closing, and none of the
Subsidiaries has taken any such action that conflicts with, constitutes a default under or results in a violation of any provision of its Certificate of Incorporation (or Articles of
Incorporation) or By-laws (or similar organizational documents). True, complete and correct copies of the Certificate of Incorporation and By-laws (or similar
organizational documents) of each Subsidiary, each as in effect on the date hereof, have been delivered by Seller to Purchaser. 


13







 

        (d)   Section 3.04(d)
of the Company Disclosure Schedule sets forth a true and complete list of any and all former Subsidiaries of the Companies or the Subsidiaries
(the "Former Subsidiaries"). Neither of the Former Subsidiaries has engaged in or conducted any business or transactions or entered into any material contracts or
agreements. Each of the Former Subsidiaries was dissolved in accordance with the laws of the State of Delaware, and at the time of dissolution, all Liabilities of the Former Subsidiaries were
satisfied by Seller, and Seller has received confirmation from the applicable Governmental Authorities that the entities have been dissolved in accordance with applicable Law and that all Tax
Liabilities have been satisfied. 


        SECTION 3.05    No
Conflict.    The execution, delivery and performance by Seller of this Agreement and the other Transaction
Documents to which Seller is or will be a party do not and will not (a) violate, conflict with or result in the breach of any provision of the Certificate of Incorporation or
By-laws (or similar organizational documents) of Seller, the Companies or any Subsidiary, (b) assuming that all consents, approvals, authorizations and other actions
described in Section 3.06 have been obtained and all filings and notifications listed in Section 3.06 of the Company Disclosure Schedule have been made, conflict with or violate, or give
any Governmental Authority the right to challenge the transactions contemplated by this Agreement or any other Transaction Document to which Seller is a party, or to exercise any remedy or obtain any
relief under, any Law or Governmental Order, including without limitation any state takeover or similar statute or regulation, applicable to Seller, the Companies or any Subsidiary or
(c) assuming that all consents, approvals, authorizations and other actions described in Section 3.06 have been obtained and all filings and notifications listed in Section 3.06
of the Company Disclosure Schedule have been made, except as set forth in Section 3.05(c) of the Company Disclosure Schedule, conflict with, result in any breach of, constitute a default
(or event which with the giving of notice or lapse of time, or both, would become a default) under, require any consent or provision of notice under, or give to others any rights of
termination, amendment, acceleration, suspension, revocation or cancellation of, or result in the creation of any Encumbrance on any of the Shares or on any of the assets or properties of Seller, the
Companies or any Subsidiary (other than the Encumbrances contemplated by the MID Loan Documents or the Note Documents) pursuant to, any (i) Material Contract, (ii) any Permit under which
the consequences of a default or termination would have a Material Adverse Effect or (iii) any Environmental Permit. 


14







 

        SECTION 3.06    Consents
and Approvals.    The execution and delivery by Seller of this Agreement and any other Transaction
Document to which Seller is a party do not or will not, and the performance by Seller of this Agreement and any other Transaction Document to which Seller is a party will not, require any consent,
approval, authorization or other action by, or filing with or notification to, any Governmental Authority, except (a) the notification requirements of the HSR Act, (b) as described in
Section 3.06 of the Company Disclosure Schedule, and (c) as may be necessary as a result of any facts or circumstances relating solely to Purchaser. Except for the consent of MID Islandi
SF in connection with the MID Bridge Loan Agreement, the Gulfstream Loan Agreement and the documents related thereto, the execution and delivery by Seller of this Agreement and any other Transaction
Document contemplated hereby to which Seller is a party do not or will not, and the performance by Seller of this Agreement and any Transaction Document to which Seller is a party will not, require
the consent, approval or authorization of the shareholders of Seller. 


        SECTION 3.07    Financial
Information, Books and Records.    (a) True, complete and correct copies of the audited combined
balance sheet of the Companies and their Subsidiaries as of December 31, 2004 and the audited combined financial statements for each of the two fiscal years ended as of December 31, 2003
and 2002 and the related audited combined statements of income and cash flows of the Companies and their Subsidiaries, together with all related notes and schedules thereto
(the "Company Financial Statements") and (B) the combined statement of income of the Companies and their Subsidiaries for the 9 month period ending
September 30, 2005 (the "Company Interim Financial Statements") have been delivered by Seller to Purchaser. The Company Financial Statements and the Company
Interim Financial Statements (i) were prepared in accordance with the books of account and other financial records of the Companies and the Subsidiaries, (ii) present fairly the
financial condition and results of operations of the Companies and the Subsidiaries as of the dates thereof or for the periods covered thereby, (iii) have been prepared in accordance with GAAP,
applied on a basis consistent with the past practices of Seller and the Companies and (iv) include all adjustments (consisting only of normal recurring accruals) that are necessary for a fair
presentation of the financial condition of the Companies and the Subsidiaries and the results of the operations of the Companies and the Subsidiaries as of the dates thereof or for the periods covered
thereby. To the extent delivered prior to the Closing Date, the financial statements delivered pursuant to Section 5.16, when delivered (i) will be prepared in accordance with the books
of account and other financial records of the Companies and the Subsidiaries, (ii) will present fairly the financial condition and results of operations of the Companies and the Subsidiaries as
of the dates thereof or for the periods covered thereby, (iii) will have been prepared in accordance with GAAP, applied on a basis consistent with the past practices of Seller and the Companies
and (iv) will include all adjustments (consisting only of normal recurring accruals) that are necessary for a fair presentation of the financial condition of the Companies and the Subsidiaries
and the results of the operations of the Companies and the Subsidiaries as of the dates thereof or for the periods covered thereby. 


15







 

        (b)   The
books of account and other financial records of the Companies and the Subsidiaries: (i) reflect all items of income and expense and all assets and Liabilities
required to be reflected therein in accordance with GAAP applied on a basis consistent with the past practices of the Companies and the Subsidiaries, respectively and (ii) are in all material
respects complete and correct, and do not contain or reflect any material inaccuracies or discrepancies. The Companies and the Subsidiaries maintain a system of internal accounting controls sufficient
to provide reasonable assurances that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP. 


        (c)   All
accounts receivable of the Companies and the Subsidiaries, whether reflected on the Company Financial Statements or otherwise, represent sales actually made in the
ordinary course of business or finance charges imposed in the ordinary course of business related to such sales. The allowance for possible losses as reflected on the Company Financial Statements as
of and for the period ended on the Reference Balance Sheet Date was adequate as of such date and was calculated consistent with past practice. 


        SECTION 3.08    No
Undisclosed Liabilities.    To the knowledge of Seller, except as set forth in Section 3.08 of the
Company Disclosure Schedule and except under the Note Documents, there are no Liabilities of any Company or any Subsidiary, other than Liabilities (a) reflected or reserved against on the
Reference Balance Sheet and (b) incurred since the date of the Reference Balance Sheet in the ordinary course of the business, consistent with the past practice, of the Companies and
the Subsidiaries. 


        SECTION 3.09    Conduct
in the Ordinary Course; Absence of Certain Changes, Events and Conditions.    Since the Reference Balance
Sheet Date, except as disclosed in Section 3.09 of the Company Disclosure Schedule and except for entry into the Note Documents, and the MID Forbearance Agreement, the business of the Companies
and the Subsidiaries has been conducted in the ordinary course and consistent with past practice. As amplification and not limitation of the foregoing, except as disclosed in Section 3.09 of
the Company Disclosure Schedule and except for entry into the Note Documents and the MID Forbearance Agreement, since the Reference Balance Sheet Date until the date hereof, neither the Companies nor
any Subsidiary has: 



	(a)
	changed
any Company's or Subsidiary's authorized or issued shares of capital stock, partnership interests or similar ownership interests; granted any option or right to purchase any
such shares, partnership interests or similar ownership interests; issued any security convertible into such shares, partnership interests or similar ownership interests; granted any registration
rights; or purchased, redeemed, retired, or otherwise acquired any such shares, partnership interests or similar ownership interests;



	(b)
	other
than as described in Section 5.01(c) or Section 8.03(p), declared, set aside or paid any dividend or made any distribution with respect to any Company's or
Subsidiary's shares of capital stock, partnership interests or similar ownership interests (whether in cash or in kind); 



16







 



	(c)
	amended
the organizational documents of any Company or Subsidiary;



	(d)
	paid
or increased any material bonuses, salaries, or other compensation to any stockholder, director, officer, or (except in the ordinary course of business) employee or entered into
any material employment, severance, or similar Material Contract with any director, officer, or employee;



	(e)
	adopted,
or materially increased the payments to or benefits under, any profit sharing, deferred compensation, savings, insurance, pension, retirement, or other employee benefit plan
for or with any employees of any Company or Subsidiary;



	(f)
	suffered
any damage to or destruction or loss of any asset or property of any Company or Subsidiary not covered by insurance and in excess of $100,000;



	(g)
	entered
into, amended, extended, terminated, or received notice of termination of, or acceleration of obligations under, (i) any license, lease, distributorship, dealer, sales
representative, joint venture, partnership, credit, collective bargaining, indemnification or similar agreement, or (ii) any contract, agreement or transaction involving a total remaining
commitment by or to any Company or Subsidiary of at least $100,000;



	(h)
	sold,
leased, or otherwise disposed of any material asset or property of any Company or Subsidiary or mortgaged, pledged, or suffered the imposition of any Encumbrance on any material
asset or property of any Company or Subsidiary, including the sale, lease, or other disposition of any material Intellectual Property Rights;



	(i)
	committed
to make any capital expenditures, in excess of $1,000,000 in the aggregate for the period from the Reference Balance Sheet Date until September 30, 2005, or in excess
of $500,000 in the aggregate for the period from October 1, 2005 until the Closing Date, in each case except as set forth on the Reference Balance Sheet;



	(j)
	compromised,
canceled, waived or released any claims or rights with a value to any Company or Subsidiary in excess of $100,000;



	(k)
	made
any material change in the accounting methods used by the Companies or the Subsidiaries at the time of preparation of the Reference Balance Sheet;



	(l)
	made
any material election with respect to Taxes affecting any Company or Subsidiary or settlement or compromise affecting any Company or Subsidiary of any material Tax liability
or refund;



	(m)
	suffered
any Material Adverse Effect; or



	(n)
	entered
into any agreement to do any of the foregoing. 




        SECTION 3.10    Litigation.    Except
as set forth in Section 3.10 of the Company Disclosure Schedule, there are no Actions
pending or, to the knowledge of Seller, threatened against or by either any Company or Subsidiary or affecting any of their respective assets or properties (or by or against Seller or any
Affiliate thereof and relating to the Companies and the Subsidiaries), which involve a claim or potential claim or group of related claims of liability in excess of $25,000 or which seek or would seek
to restrain or enjoin any activities of any Company or Subsidiary or to impose any criminal or civil penalties or sanctions on any Company or any Subsidiary. Except as set forth in Section 3.10
of the Company Disclosure Schedule, none of the Companies or Subsidiaries nor any of their assets or properties is subject to any Governmental Order, nor, to the knowledge of Seller, are there any
such Governmental Orders threatened to be imposed by any Governmental Authority. 


17







 

        SECTION 3.11    Compliance
with Applicable Laws.    (a) Except as set forth in Section 3.11(a) of the Company
Disclosure Schedule, since April 5, 2001, no Company or Subsidiary has violated or failed to comply with any statute, law, regulation, rule, or Governmental Order of any Governmental Authority
applicable to its business or operations as currently being conducted in any respect that would have a material effect to the detriment of the business or operations of the Companies and Subsidiaries.
The conduct of the business of each Company and Subsidiary as currently being conducted is in conformity with all federal, state and local governmental and regulatory requirements applicable to its
business and operations, except where such nonconformities would not have a material effect to the detriment of the business or operations of the Companies and Subsidiaries. No Company or Subsidiary,
or any officer or agent thereof, has made any illegal or improper payment to, or provided any illegal or improper benefit or inducement for, any government official, supplier, customer or other person
in an attempt to influence any person to take or refrain from taking any action relating to any Company or Subsidiary, except where such illegal or improper payment, benefit or inducement would not
have a material effect to the detriment of the business or operations of the Companies and the Subsidiaries. 


        (b)   Each
Company and Subsidiary has all material Permits required to own and use its assets and to conduct its business as now being conducted. Each such Permit is set forth
on Section 3.11(b) of the Company Disclosure Schedule and is valid and in full force and effect. Each Company and Subsidiary is in compliance with all such Permits and no Company or Subsidiary
is in default under any such Permit or has received any notice of violation or noncompliance or claim of default with respect thereto, except where such noncompliance, default or the effect of receipt
of such notice would not, individually or in the aggregate, have a Material Adverse Effect. 


        SECTION 3.12    Environmental
Matters.    (a) Except as disclosed in Section 3.12 of the Company Disclosure
Schedule: (i) to Seller's knowledge, the Companies and the Subsidiaries are, and have been since April 5, 2001, in material compliance with all applicable Environmental Laws and have
obtained and are, and have been since April 5, 2001, in compliance with all required Environmental Permits, which are set forth on Section 3.12 of the Company Disclosure Schedule, and
are valid and in full force and effect; (ii) there are no Environmental Actions pending or threatened in writing against any of Seller, the Companies or Subsidiaries with respect to the
business or operations of the Companies or Subsidiaries or the Real Property; (iii) to Seller's knowledge, no Hazardous Materials have been released into the environment by any of the Companies
or Subsidiaries on any of the Real Property except as authorized under Environmental Law and no condition exists that would require investigation or remediation under any Environmental Law;
(iv) to Seller's knowledge, there are no underground storage tanks at any facilities owned or operated by any Company or Subsidiary; (v) to Seller's knowledge, all underground storage
tanks maintained at such facilities are in good working order, do not leak into soil or groundwater, and are in compliance with Environmental Laws or for which there is any pending or threatened
action seeking to require remediation or clean up; (vi) to Seller's knowledge, none of such facilities contains any asbestos or polychlorinated biphenyls; (vii) to Seller's knowledge,
none of the Companies nor any Subsidiary has sent Hazardous Materials to a disposal location owned or operated by a third party that requires remediation or clean up or for which there is any pending
or threatened Action seeking to require remediation or clean up; and (viii) Seller has provided Purchaser with copies of any and all written environmental assessment or audit reports generated
within the last three years and in the possession of Seller or their respective attorneys, agents or consultants, that relate to the business of the Companies and the Subsidiaries or the Real
Property. Except as disclosed in Section 3.12 of the Company Disclosure Schedule, Seller, the Companies and the Subsidiaries have not received since April 5, 2001 any written notice of
any actual, alleged or potential noncompliance with, liability under, or claimed violation of, any Environmental Laws, including without limitation, from any government agency or prosecutor, from any
private citizen acting in the public interest or from any prior owner or operator of the Real Property, and, to the knowledge of Seller, there has not occurred and there does not exist any event or
condition which would cause noncompliance with, liability under, or violation of, any Environmental Laws. Except as disclosed in Section 3.12 of the Company Disclosure Schedule, Seller, the
Companies and the Subsidiaries have not received any notice of violation or noncompliance or claim of default with respect to any Environmental Permit. 


18







 

        (b)   Purchaser
acknowledges that (i) the representations and warranties contained in Section 3.05 (as it relates to Environmental Permits) and this
Section 3.12 are the only representations and warranties being made with respect to compliance with or liability under Environmental Laws or with respect to any environmental matter, including
natural resources, related in any way to the Companies, the Subsidiaries or the Real Property or to this Agreement or its subject matter, and (ii) no other representation contained in this
Agreement shall apply to any such matters and no other representation or warranty, express or implied, is being made with respect thereto. 



	(c)
	For
purposes of this Agreement: 





"CERCLA"
means the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended. 


"Environmental
Actions" means any and all Actions arising out of, or related to the presence, Release or threatened Release of any Hazardous Materials, including Actions
alleging common law liability arising out of, or related to the presence, Release or threatened Release of any Hazardous Materials. 


"Environmental
Laws" means any civil and criminal Laws, rules, Permits or Governmental Orders relating to or addressing pollution or protection of the environment, public
health or safety, including, without limitation, those relating to the presence, use, production, processing, generation, handling, labeling transportation, treatment, storage, disposal, distribution,
testing, processing, Release, threatened Release or discharge, investigation, control, exposure or cleanup of Hazardous Materials, wastes, substances, storm water or waste water. 




19







 


"Environmental
Permits" means any permit, approval, identification number, license or other authorization obtained, or required of any Company or Subsidiary to be
obtained, under any Environmental Law. 


"Hazardous
Materials" means (a) any petroleum, petroleum products, by-products or breakdown products, radioactive materials, asbestos-containing
materials, urea formaldehyde foam, heavy metals or polychlorinated biphenyls, (b) any waste, chemical, material or substance defined or regulated as toxic or hazardous under any applicable
Environmental Law or (c) anything that is a "hazardous substance" pursuant to CERCLA or any similar applicable state law, anything that is a "solid waste" or "hazardous waste" pursuant to RCRA
or any similar applicable state law or any "pesticide," "pollutant," "contaminant," "toxic chemical" or "noise." 


"RCRA"
means the Resource Conservation and Recovery Act, as amended. 


"Release"
means any release, spill, emission, leaking, dumping, injection, pouring, deposit, discharge, dispersal, leaching or migration of a Hazardous Material into the
environment (including ambient air, surface water, ground water, land surface or subsurface strata) or within any building, structure or facility. 





        SECTION 3.13    Title
to Assets; Real Property.    (a) Except as set forth in Section 3.13(a) of the Company
Disclosure Schedule, and excluding the Real Property, each Company and Subsidiary has good and marketable title to, or valid leasehold interests in, all the tangible personal properties and personal
assets used by it or located on its premises that are material to the conduct of its business or which are shown on the Company Financial Statements (collectively, the
"Assets"), except for such as are no longer useful in the conduct of its business or as have been disposed of in the ordinary course of business. All such assets and
properties (including leasehold interests) are free and clear of Encumbrances except for (i) Encumbrances that would not unreasonably interfere with the use or operation of the Assets;
(ii) liens for taxes not yet due or being contested in good faith by appropriate procedures and for which there are adequate reserves on the books; (iii) mechanics, carriers, workmen's,
repairmen's or other like liens arising or incurred in the ordinary course of business for amounts that are not delinquent and which are not, individually or in the aggregate, material to the business
of the Companies and the Subsidiaries, (iv) in the case of Assets other than Real Property, liens arising under original purchase price conditional sales contracts and equipment leases with
third parties entered into in the ordinary course of business, (v) any Encumbrances for the obligations of third party lessors, (vi) those items set forth in Section 3.13(a) of
the Company Disclosure Schedule, or (vii) Encumbrances contemplated by the MID Loan Documents or the Note Documents (the "Permitted Exceptions"). The Real
Property will be free and clear of all monetary Encumbrances as of the Closing, other than Encumbrances contemplated by the MID Loan Documents or the Note Documents. Seller has no knowledge of any
matters that would affect the marketability of title of the Real Property other than as set forth on the applicable Title Policy. 


20







 

        (b)   Section 3.13(b)
of the Company Disclosure Schedule lists: (i) the street address of each parcel of Real Property; (ii) if such property is owned by
any Company or Subsidiary, the owner of such property; (iii) if such property is leased or subleased by any Company or Subsidiary as lessee, the landlord under the lease, the rental amount
currently being paid, and the expiration of the term of such lease or sublease; and (iv) the current use of such property. Seller has delivered or made available to Purchaser true, complete and
correct copies of any leases affecting the Real Property. 


        (c)   As
is the case with most harness racing facilities of the age of the Meadows Facility, most of the Assets are old and need periodic repair and replacement. Nevertheless,
to Seller's knowledge, as of the date hereof and as of the Closing (subject to Seller Developments in the latter case) (i) all of the material equipment, inventory and other items of tangible
property and assets included in the Assets are at such times in a condition sufficient for the operation of the business currently being conducted at the Real Property and (ii) each material
building or material improvement on any of the Real Property is at such times in a condition sufficient for the operation of the business currently being conducted at the Real Property. 


        (d)   To
the knowledge of Seller, the real property improvements at the Real Property, and the current use and operation thereof, are in compliance with and authorized by
applicable zoning and other land use regulations and none of Seller, the Companies or the Subsidiaries has received any written notice that any Governmental Authority or other Person considers any of
the Real Property, or the improvements thereat, to violate any such regulations. There is no Action pending or, to the knowledge of Seller, threatened: (i) to take all or any portion of the
Real Property or the improvements through eminent domain, (ii) to modify the zoning or other governmental rules or restrictions applicable to the use or development of the Real Property or
improvements, or (iii) that would reasonably be expected to have a material adverse effect on the ownership or leasehold interest in the Real Property. There is no Action brought with respect
to the Real Property, pending against Seller, the Companies or the Subsidiaries, or as to which Seller has knowledge, or, to the knowledge of Seller, threatened, that would have a Material Adverse
Effect on the value, use, development or occupancy of the Real Property, other than Actions that are general in nature concerning the Gaming Act or not based upon land, zoning, use or Laws related to
the ownership and development of real property interests. The Companies and the Subsidiaries are permitted by the appropriate Governmental Authorities to occupy the Meadows Facility. 


        (e)   Immediately
following the consummation of the transactions contemplated by this Agreement, either a Company or a Subsidiary, as the case may be, will continue to own, or
lease, under valid and subsisting leases, or otherwise retain its respective interest in the Assets without incurring any material penalty or other adverse consequence, including, without limitation,
any material increase in rentals, royalties, or licenses or other fees imposed as a result of, or arising from the consummation of the transactions contemplated by this Agreement, and, except as
otherwise contemplated in the Racing Services Agreement, collectively, the Companies and the Subsidiaries will have all of the assets and rights that are necessary and sufficient for the conduct of
the business of the Companies and the Subsidiaries in substantially the same manner as currently conducted. Except as otherwise contemplated in the Racing Services Agreement, immediately following the
Closing, either a Company or a Subsidiary, as the case may be, shall own and possess all documents, books, records, agreements, contracts, Permits, warranties, plans, specifications, drawings,
customer lists, supplier lists and financial data of any sort used in the conduct of the business of the Companies and the Subsidiaries as currently conducted. 


21







 

        (f)    Seller
acknowledges that it intended, and that Purchaser intends, to (i) develop a portion of the owned Real Property located in North Strabane Township in the
Commonwealth of Pennsylvania with a casino and certain uses ancillary thereto (the "Proposed Development") and (ii) refurbish the paddock area currently
located on such property (the "Paddock Refurbishment"). None of Seller, the Companies or any Subsidiary has received any written notice from a Governmental
Authority indicating that either the Proposed Development or the Paddock Refurbishment will be prohibited by any Governmental Authority, Law or Environmental Law or challenged by any
Governmental Authority. 


        (g)   The
Real Property is connected to adequate sanitary sewer, storm sewer, water, electricity, gas, telephone and all other utilities and services necessary for the current
use of the Real Property in accordance with all applicable Laws of any Governmental Authority having or claiming jurisdiction thereover and to the knowledge of Seller, there has not occurred any event
or condition which would result in termination of such connections. There is to the knowledge of Seller, no present or threatened ban or moratorium on new connections or additional flows to the sewage
treatment plant serving the Real Property. 


        SECTION 3.14    Intellectual
Property Rights.    The Companies and the Subsidiaries each have good, valid and marketable title to,
or the right to use, all Intellectual Property Rights. To the knowledge of Seller, all current and former employees of the Companies and the Subsidiaries have assigned to each, respectively, all
Intellectual Property Rights that such employees have created while in the scope of their employment with each, respectively, including, without limitation, copyrights in works made for hire and
patents, except where failure to assign such Intellectual Property Rights could not reasonably be expected to materially impair the ability of the Companies or the Subsidiaries to continue to obtain
free of charge the benefits of such Intellectual Property Rights. Section 3.14 of the Company Disclosure Schedule lists each registered Intellectual Property Right owned by the Companies and
the Subsidiaries. The Company Disclosure Schedule lists each material contract, license and agreement with respect to Intellectual Property Rights pursuant to which any of the Companies or the
Subsidiaries has granted any Person the right to reproduce, distribute, market or exploit Intellectual Property Rights. There is no Action, pending, or to Seller's knowledge, threatened that
challenges the validity of ownership or use of any Intellectual Property Rights of the Companies and the Subsidiaries. To Seller's knowledge, no third party's operations or products infringe on the
Intellectual Property Rights in any material respect. To Seller's knowledge, neither the Companies' nor any Subsidiary's operations and products infringe in any material respect on the intellectual
property rights of any other Person. Seller, the Companies and the Subsidiaries have not received since April 5, 2001 any written claim of infringement with respect to any Intellectual Property
Rights used by the Companies or the Subsidiaries. 


        SECTION 3.15    Insurance.    Section 3.15
of the Company Disclosure Schedule sets forth a complete list of all material
insurance policies (including policies providing property, casualty, liability and workers' compensation coverage and bond and surety arrangements) with respect to which any Company or Subsidiary is a
party, a named insured or otherwise the beneficiary of coverage (together with the policy owner, limit and premium for each such policy). Such coverage or similar insurance coverage has been
maintained with respect to the Companies and the Subsidiaries at all times in the past three years. With respect to each such insurance policy: (a) such policy is in full force and effect;
(b) no Company or Subsidiary, nor Seller, nor, to the knowledge of Seller, any other party to such policy is in material breach or default thereunder and all premiums due are currently paid,
and no event has occurred which, with or without notice or the lapse of time, would constitute such a material breach or default, or permit termination, modification or acceleration under such policy;
(c) no party to such policy has repudiated any material provision thereof; and (d) none of Seller, any Company or any Subsidiary has received any written notice that such policy has been
or will be cancelled or terminated or will not be renewed on substantially the same terms. 


22







 

        SECTION 3.16    Employee
Benefit Matters.    (a) Section 3.16(a) of the Company Disclosure Schedule lists
(i) each employee benefit plan, program, arrangement and contract (including, without limitation, any "employee benefit plan" as defined in Section 3(3) of ERISA) maintained, contributed
to or sponsored by any Company or any Subsidiary excluding Multiemployer Plans (the "Benefit Plans"), (ii) all Benefit Plans as to which any Company or
Subsidiary is or was the "administrator" or "plan sponsor," as those terms are defined in Section 3 of ERISA, without regard to whether or not such Plan is an ERISA plan, at any time within the
past three years (the "Company Plans"), (iii) all material employment, termination, severance or other contracts or agreements (including, without
limitation, collective bargaining agreements and other labor union agreements), in respect of any Employee, to which a Company or a Subsidiary is a party or, with respect to which, a Company or a
Subsidiary has any obligation (collectively, the "Employee Agreements") and (iv) any multiemployer plans (as defined in Section 3 (37) of
ERISA), pursuant to which Seller, a Company or a Subsidiary contributes, or has an obligation to contribute, in respect of any Employee, former employee, officer or director of the Companies or
Subsidiaries (together with any multiemployer plans to which Seller, a Company or a Subsidiary has contributed, or had an obligation to contribute, since April 5, 2001, the
"Multiemployer Plans"). Section 3.16(a) of the Disclosure Schedule identifies which Benefit Plans are Company Plans and Multiemployer Plans and, for each
Multiemployer Plan, sets forth, to the extent such information is in the possession of Seller, a Company or a Subsidiary, the amount of potential withdrawal liability of the Companies as of its last
valuation date. 


        (b)   Seller
has made available to Purchaser a copy of (i) the most recent three annual reports (Form 5500) filed with the IRS, including all schedules and
attachments thereto for each Benefit Plan, (ii) a copy of each Benefit Plan, (iii) if applicable, each trust agreement relating to such Benefit Plan, (iv) the most recent summary
plan description for each Benefit Plan for which a summary plan description is required and the most recent summaries and descriptions furnished to participants regarding Company Plans for which a
summary plan description is not required, (v) the most recent determination letter, if any, issued by the IRS with respect to any Benefit Plan qualified under Section 401(a) of the
Internal Revenue Code, (vi) all Company personnel and employment manuals and policies, (vii) all collective bargaining agreements pursuant to which contributions are being made or
obligations are owed by a Company or Subsidiary, (viii) all registration statements filed with respect to any Company Plan, (ix) all insurance policies purchased by or to provide
benefits under any Company Plan, (x) all contracts with third party administrators, actuaries, investment managers, consultants, and other independent contractors that relate to any Company
Plan, (xi) all reports submitted within the three years preceding the date of this Agreement by third party administrators, actuaries, investment managers, consultants, or other independent
contractors with respect to any Company Plan, and all such reports in the possession of Seller, a Company or a Subsidiary relating to a Multiemployer Plan, (xii) all notices that were given by
any Company or any Subsidiary with respect to any Company Plan, or by any Company Plan, to the IRS or the PBGC pursuant to statute, within the three years preceding the date of this Agreement,
including notices that are expressly mentioned elsewhere in this Section 3.16, (xiii) all notices that were given by the IRS, the PBGC, or the Department of Labor to a Company or a
Subsidiary with respect to any Company Plan if such notice could result in material liability to a Company, a Subsidiary or to any Company Plan, within the three years preceding the date of this
Agreement, and (xiv) all other material correspondence with any Governmental Authority relating to any Benefit Plan. 


23







 

	(c)
	No
Benefit Plan is subject to Title IV of ERISA. 




        (d)   Seller
has made available to Purchaser (i) copies of all material employment agreements with officers of the Companies and the Subsidiaries; (ii) copies of
all material severance agreements, programs and policies of the Companies and the Subsidiaries with or relating to the Employees; and (iii) copies of all material plans, programs, agreements
and other arrangements of the Companies and the Subsidiaries with or relating to the Employees which contain change in control provisions. 


        (e)   Except
as provided in Section 3.16(e) of the Company Disclosure Schedule or as otherwise required by Law, no Company Plan provides retiree medical or retiree life
insurance benefits to any person. 


        (f)    Set
forth in Section 3.16(f) of the Company Disclosure Schedule is a true and complete list of all individuals employed by the Companies or any Subsidiary as of
the date hereof that receive annual salary and wages in excess of $100,000 annually, the position of and base compensation payable to each such individual and bonus, deferred or contingent
compensation and other like benefits paid or payable in 2004 to each such individual. 


        (g)   Seller,
each Company and each Subsidiary has complied in all material respects with the provisions of each Benefit Plan, with ERISA, the Code and other applicable Laws,
and has timely made all contributions and other payments required by and due under the terms of each Benefit Plan and each Multiemployer Plan. To the knowledge of Seller, all Companies and
Subsidiaries have made appropriate entries in their financial records and financial statements for all obligations and liabilities of such Companies and Subsidiaries under such Benefit Plans that have
accrued but are not yet due. To the knowledge of Seller, no Action is pending or threatened with respect to any Multiemployer Plan or the assets of any Multiemployer Plan (other than claims for
benefits in the ordinary course). No Action is pending or, to the knowledge of Seller, threatened with respect to any Benefit Plan or the assets of any Benefit Plan (other than claims for benefits in
the ordinary course) and, to the knowledge of Seller, no fact or event exists that could give rise to any such Action. There are no audits, inquiries or proceedings pending or, to the knowledge of
Seller, threatened by any Governmental Authority against any Benefit Plan. 


24









  





        (h)   Each Benefit Plan that is intended to be qualified under Section 401(a) of the Code (collectively, the "Qualified Plans") has timely
received a favorable determination letter from the IRS stating that the Qualified Plan is so qualified and each trust established in connection with any Qualified Plan which is intended to be exempt
from federal income taxation under Section 501(a) of the Code has received a determination letter from the IRS that it is exempt, and, to the knowledge of Seller, no fact or event has occurred
since the date of such determination letter or letters from the IRS to adversely affect the qualified status of any such Qualified Plan or the exempt status of any such trust. 



	(i)
	Except
as set forth in Section 3.16(i) of the Disclosure Schedule:



	(i)
	To
Seller's knowledge, no transaction prohibited by ERISA § 406 and no "prohibited transaction" under Code Section 4975 has occurred with respect to any
Benefit Plan that would be expected to have a Material Adverse Effect.



	(ii)
	To
Seller's Knowledge, all filings required by ERISA and the Code as to each Company Plan have been timely filed and all notices and disclosures to participants required by ERISA or
the Code have been timely provided.



	(iii)
	All
contributions and payments made or accrued with respect to all Benefit Plans are deductible under Code Section 162 or Section 404. No amount or any asset of any
Benefit Plan is subject to tax as unrelated business taxable income.



	(iv)
	Each
Company Plan that is not a Qualified Plan can be terminated within thirty days, without payment of any additional contribution or amount and without the vesting or acceleration
of any benefits promised by such Company Plan.



	(v)
	To
the knowledge of Seller, no event has occurred or circumstance exists that could result in a material increase in premium costs of the Company Plans that are insured, or a material
increase in benefit costs of such Company Plans that are self-insured.



	(vi)
	No
accumulated funding deficiency, whether or not waived, exists with respect to any Benefit Plan, and no event has occurred or circumstance exists that may result in an accumulated
funding deficiency as of the last day of the current plan year of any such Benefit Plan.



	(vii)
	No
Company or Subsidiary has withdrawn or partially withdrawn from any Multiemployer Plan with respect to which there is any outstanding liability as of the date of the Agreement.
To the knowledge of Seller, no event has occurred or circumstance exists, including but not limited to the transactions contemplated by this Agreement, that presents a risk of the occurrence of any
withdrawal from, or the termination, reorganization, or insolvency of, any Multiemployer Plan that could result in any liability of either Company, any Subsidiary or Purchaser to a
Multiemployer Plan.



	(viii)
	No
Company or Subsidiary has received notice from any Multiemployer Plan that it is in reorganization or is insolvent, that increased contributions may be required to avoid a
reduction in plan benefits or the imposition of any excise Tax, or that such plan intends to terminate or has terminated. 






25







 


	(ix)
	To
the knowledge of Seller, no Multiemployer Plan to which either Company or any Subsidiary contributes, or has contributed since April 5, 2001, immediately preceding the date
hereof is a party to any pending merger or asset or liability transfer or is subject to any proceeding brought by the PBGC.



	(x)
	No
payment that is owed or may become due to any director, officer, Employee, or agent of either Company or Subsidiary will be non-deductible to such Company or Subsidiary
or subject to tax under Code Section 280G or Section 4999; nor will either Company or Subsidiary be required to "gross up" or otherwise compensate any such Person because of the
imposition of any excise tax on a payment to such person.



	(xi)
	The
consummation of the transactions contemplated by this Agreement will not result in the payment, vesting, or acceleration of any benefit, except as may be required by a Qualified
Plan pursuant to Section 411(d)(3) of the Code.



	(xii)
	No
event has occurred that could result in any material liability of either any Company or any Subsidiary as the result of it being treated, together with one or more other Persons,
as a single employer under Code Section 414 or similar provisions of ERISA. 





        SECTION 3.17    Labor Matters.    Except
as set forth on Section 3.17 of the Company Disclosure Schedule:
(a) there are no material Actions or controversies pending or, to the knowledge of Seller, threatened, between any Company or Subsidiary and any of the Employees or former employees of the
Companies or the Subsidiaries, and, to the knowledge of Seller, there is no event or condition which would reasonably be expected to give rise to any such Action or controversy; (b) no Company
or Subsidiary is a party to any collective bargaining agreement or other labor union contract applicable to Persons employed thereby, and to Seller's knowledge, currently there are no organization
campaigns, petitions or other unionization activities seeking recognition of a collective bargaining unit which could affect any Company or Subsidiary; (c) during the past five years, there
have been no unfair labor practice complaints pending against any Company or Subsidiary before the National Labor Relations Board; (d) during the past five years, there have been no strikes,
slowdowns, work stoppages, lockouts, or, to Seller's knowledge, threats thereof, by or with respect to any employees of any Company or Subsidiary; (e) neither the Companies nor any Subsidiaries
have breached, in any material respect, or otherwise failed to comply, in any material respect, with the provisions of any collective bargaining or union contract and there are no grievances
outstanding against the Companies or Subsidiaries under any such agreement or contract; (f) neither the Companies nor any Subsidiaries are parties to, or otherwise bound by, any Governmental
Order, consent decree with, or citation by, any Governmental Authority relating to employees or employment practices; (g) there is no charge or proceeding with respect to a violation of any
occupational safety or health standards that has been asserted or is now pending or, to Seller's knowledge, threatened with respect to the Companies or Subsidiaries; and (h) there is no charge
of discrimination in employment or employment practices, for any reason, including, without limitation, age, gender, race, religion or other legally protected category, which has been asserted or is
now pending or, to Seller's knowledge, threatened before the United States Equal Employment Opportunity Commission or any other Governmental Authority. The relations of WTA and MLR with owners
and trainers who have participated in racing at the Meadows Facility within the past year are satisfactory, and, to the knowledge of Seller, there is no event or condition that would reasonably be
expected to materially affect adversely such relations as a whole. Except as set forth in Section 3.17 of the Company Disclosure Schedule, the persons employed in the XpressBet, Inc.
business are employees of XpressBet, Inc. and have no employment relationship with any of the Companies or Subsidiaries nor are any such persons entitled to payment from any Company or any
Subsidiary for services performed. 


26







 

        SECTION 3.18    Taxes.    (a) Except
as set forth in Section 3.18 of the Company Disclosure Schedule: (i) all
Tax Returns in respect of Taxes required to be filed with respect to the Companies and each Subsidiary (including the consolidated federal income tax return of Seller and any state Tax Return that
includes the Companies or any Subsidiary on a consolidated or combined basis) have been timely filed; (ii) all Taxes owing with respect to the assets, operations, and activities of the
Companies and each Subsidiary have been timely paid; (iii) all such Tax Returns are true, complete and correct in all material respects; (iv) no adjustment relating to such Tax Returns
has been proposed by any Tax authority (insofar as either relates to the activities or income of the Companies or any Subsidiary or could result in Liability of the Companies or any Subsidiary on the
basis of joint and/or several liability) and, to the knowledge of Seller, no basis exists for any such adjustment; (v) there are no pending or, to the knowledge of Seller, threatened Actions or
proceedings for the assessment or collection of Taxes against the Companies or any Subsidiary or (insofar as either relates to the activities or income of the Companies or any Subsidiary or could
result in Liabilities of the Companies or any Subsidiary on the basis of joint and/or several liability) any corporation that was included in the filing of a Tax Return with Seller on a consolidated
or combined basis; (vi) no claim has been made by a Tax authority in a jurisdiction where Tax Returns are not filed by or on behalf of the Companies or any Subsidiary that a Company or a
Subsidiary is or may be subject to taxation by that jurisdiction; (vii) from and after January 1, 2001, the Companies and each Subsidiary (other than any such Subsidiary which is not a
partnership) have been and continue to be a member of the affiliated group (within the meaning of Section 1504(a)(1) of the Code) with which Seller files a consolidated Tax Return, and
has not been includible in any other consolidated Tax Return for any taxable period for which the statute of limitations has not expired; (viii) all Tax Returns filed with respect to Tax years
of the Companies and each Subsidiary through the Tax year ended 2001 have been examined and closed or are Tax Returns with respect to which the applicable period for assessment under applicable law,
after giving effect to extensions or waivers, has expired; and (ix) there are no Encumbrances for Taxes (other than Taxes not yet due and payable) upon any of the assets of the Companies or
any Subsidiary. 


        (b)   Except
as disclosed with reasonable specificity in Section 3.18 of the Company Disclosure Schedule, there are no outstanding waivers or agreements extending the
statute of limitations for any period with respect to any Tax to which the Companies or any Subsidiary may be subject. 


        (c)   (i)
Section 3.18 of the Company Disclosure Schedule lists all income, franchise and similar Tax Returns (federal, state, local and foreign) filed with respect to
each of the Companies and the Subsidiaries for taxable periods ended on or after January 1, 2001, indicates for which jurisdictions Tax Returns have been filed on the basis of a unitary group,
indicates the most recent income, franchise or similar Tax Return for each relevant jurisdiction for which an audit has been completed or the statute of limitations has lapsed and indicates all Tax
Returns that currently are the subject of audit; (ii) Seller has delivered to Purchaser copies of all federal, state and foreign income, franchise and similar Tax Returns, examination reports,
and statements of deficiencies assessed against or agreed to by the Companies or any Subsidiary since January 1, 2001; (iii) Section 3.18 of the Company Disclosure Schedule lists
all closing agreements and Tax rulings received (and all such agreements and rulings that, since January 1, 2001, have been requested) from any Tax authority with respect to the
Companies or any Subsidiary. None of the Companies or Subsidiaries or their respective Affiliates, has received a Tax opinion with respect to any transaction relating to a Company or a Subsidiary
other than a transaction in the ordinary course of business. Seller has delivered to Purchaser copies of all pro forma federal income Tax Returns of the Subsidiaries, prepared in connection
with Seller's or any other consolidated federal income Tax Return, accompanied by a schedule reconciling the items in the pro forma Tax Return to the items as included in the consolidated Tax
Return for all taxable years ending on or after January 1, 2001. 


27







 

        (d)   Except
as disclosed with reasonable specificity in Section 3.18 of the Company Disclosure Schedule, each of the Companies and Subsidiaries have withheld and paid
each Tax required to have been withheld and paid in connection with amounts paid or owing to any employee, independent contractor, creditor, shareholder or other party, and complied with all
information reporting and backup withholding requirements, including maintenance of required records with respect thereto. 


        (e)   Except
as disclosed with reasonable specificity in Section 3.18 of the Company Disclosure Schedule, none of the Companies or Subsidiaries is a party to any Tax
allocation, Tax sharing or Tax reimbursement agreement or arrangement with any Person. 



        (f)    Except
as disclosed with reasonable specificity in Section 3.18 of the Company Disclosure Schedule, no Company or Subsidiary will have any taxable income or gain
as a result of prior intercompany transactions that have been deferred and that will be taxed as a result of the changes in ownership contemplated by this Agreement. 


        (g)   Except
as disclosed with reasonable specificity in Section 3.18 of the Company Disclosure Schedule, Purchaser is not required to withhold Tax on the purchase of
the Shares by reason of Section 1445 of the Code. Seller is not a "foreign person" (as that term is defined in Section 1445 of the Code). Except as disclosed with reasonable
specificity in Section 3.18 of the Company Disclosure Schedule, none of the Companies or Subsidiaries has entered into any compensatory agreements with respect to the performance of services
payment under which would result in a nondeductible expense pursuant to Sections 162(m) or 280G of the Code or an excise tax to the recipient of such payment pursuant to
Sections 409A or 4999 of the Code; none of the Companies or Subsidiaries has agreed to make, and none is required to make, any adjustment under Section 481(a) of the Code by
reason of a change in accounting method or otherwise; no Tax asset of a Company or Subsidiary is currently subject to a limitation under Sections 382 or 383 of the Code or similar
provisions of state, local or foreign law; none of the Companies or Subsidiaries has been the "distributing corporation" (within the meaning of Section 355(c)(2) of the Code) with respect to a
transaction described in Section 355 of the Code within the 3-year period ending as of the date of this Agreement; none of the Companies or Subsidiaries has made or is bound by any
election under Section 197 of the Code; none of the Companies or Subsidiaries is a party to any understanding or arrangement described in Section 6662(d)(2)(C)(ii) of the Code, a
"reportable transaction" within the meaning of Treasury Regulations Section 1.6011-4(b) or a "listed transaction" within the meaning of Treasury Regulation
Section 1.6011-4(b)(2). 


28







 

        (h)   Except
as disclosed with reasonable specificity in Section 3.18 of the Company Disclosure Schedule, the amount of the liability for the Companies and Subsidiaries
for unpaid Taxes for all periods ending on or before the date of the most recent Company Financial Statements does not, in the aggregate, exceed the amount of the current liability accruals for Taxes
(excluding reserves for deferred Taxes) solely with respect to the Companies and Subsidiaries as of such date, and the amount of their liability for unpaid Taxes for all periods ending on or before
the Closing Date shall not, in the aggregate, exceed the amount of the current liability accruals for Taxes (excluding reserves for deferred Taxes) as such accruals are reflected on the Company
Financial Statements, as adjusted for transactions through the Closing Date that either (i) occur in the ordinary course of business or (ii) are contemplated by this Agreement. Except as
disclosed with reasonable specificity in Section 3.18 of the Company Disclosure Schedule, no item of income or gain reported for financial purposes in any Pre-Closing Period is
required to be included in taxable income for a Post-Closing Period. 


        SECTION 3.19    Material
Contracts.    (a) Section 3.19(a) of the Company Disclosure Schedule lists each of the
following contracts and agreements of the Companies and the Subsidiaries other than the Note Documents and the MID Forbearance Agreement, (such contracts and agreements, together with all contracts,
agreements, leases and subleases concerning the occupancy, management or operation of any Real Property (including without limitation, brokerage contracts) listed or otherwise disclosed in
Section 3.13(a) or 3.13(b) of the Company Disclosure Schedule to which the Companies or any Subsidiary is a party and all agreements relating to Intellectual Property Rights set forth in
Section 3.14 of the Company Disclosure Schedule, being "Material Contracts"): 




	(i)
	each
contract and agreement for the furnishing of services to or by the Companies, any Subsidiary or otherwise related to the business of the Companies and the Subsidiaries as
currently conducted under the terms of which the Companies or any Subsidiary: (A) is likely to receive, pay or otherwise give consideration of more than $50,000 in the aggregate during the
calendar year ended December 31, 2005, (B) is likely to receive, pay or otherwise give consideration of more than $100,000 in the aggregate over the remaining term of such contract or
(C) cannot be cancelled by the Companies or such Subsidiary without penalty or further payment and without more than 30 days' notice;



	(ii)
	all
broker, distributor, dealer, manufacturer's representative, franchise, agency, sales promotion, market research, marketing consulting and advertising contracts and agreements to
which the Companies or any Subsidiary is a party;



	(iii)
	all
management contracts and contracts with independent contractors or consultants (or similar arrangements) to which the Companies or any Subsidiary is a party and which are
not cancelable without penalty or further payment and without more than 30 days' notice; 




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	(iv)
	all
contracts and agreements relating to indebtedness (including, without limitation, guarantees) of the Companies or any Subsidiary;



	(v)
	all
contracts and agreements with any Government Authority to which any Company or Subsidiary is a party;



	(vi)
	all
contracts or agreements to which any Company or any Subsidiary is a party that provide for, or restrict, (A) the future acquisition or disposition of Assets (other than in
the ordinary course of business and other than anti-assignment provisions) or (B) any merger or business combination;



	(vii)
	all
contracts and agreements that limit or purport to limit the ability of the Companies or any Subsidiary to compete in any line of business or with any Person or in any geographic
area or during any period of time;



	(viii)
	any
contracts or agreements to which any Company or any Subsidiary is a party that provide for any joint venture, partnership or similar arrangement by any Company or
any Subsidiary;



	(ix)
	all
contracts and agreements between or among the Companies or any Subsidiary on the one hand and Seller or any Affiliate of Seller (other than the Companies or any Subsidiary) on
the other hand;



	(x)
	any
collective bargaining contracts or agreement or contracts or agreements with any labor organization, union or association to which any Company or any Subsidiary is a party;



	(xi)
	any
employment agreement involving payments of base cash compensation annually by any Company or Subsidiary in excess of $100,000;



	(xii)
	all
contracts and agreements entered into by any Company or any Subsidiary on or after April 5, 2001 that provide for indemnification by any Company or any Subsidiary with
respect to Liabilities relating to the Real Property or current or former business or operations of the Companies and the Subsidiaries or any of their predecessors or with respect to Liabilities under
any Environmental Laws or for the investigation, remediation or clean-up of any Hazardous Materials; and



	(xiii)
	any
other contract or agreement to which any Company or any Subsidiary is a party under which the consequences of a default or termination would have a Material
Adverse Effect. 





        For
purposes of this Section 3.19 and Sections 3.09, 3.13 and 3.14, the term "lease" shall include any and all leases, subleases,
occupancy agreements, sale/leaseback agreements or similar arrangements. 


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        (b)   Except
as disclosed in Section 3.19(b) of the Company Disclosure Schedule, each Material Contract: (i) is valid and binding on the Companies or a
Subsidiary and is in full force and effect and (ii) upon consummation of the transactions contemplated by this Agreement, except to the extent that any consents set forth in
Section 3.05(c) of the Company Disclosure Schedule are not obtained, shall continue in full force and effect without penalty or other adverse consequence. Neither the Companies nor any
Subsidiary is in breach of, or default under, any Material Contract, and, to the knowledge of Seller, no event or condition has occurred that, with or without notice or lapse of time or both, would
constitute a breach of or default under any Material Contract. 


        (c)   Except
as disclosed in Section 3.19(c) of the Company Disclosure Schedule, to the knowledge of Seller, no other party to any Material Contract is in breach
thereof or breach thereunder. 


        SECTION 3.20    Racing
License.    Each of WTA and MLR has been granted permission to conduct harness racing with
pari-mutuel wagering pursuant to the Pennsylvania Act. MEC Racing Management ("MECRacing") has received permission from the Commission to own and operate the
OTB Facilities pursuant to the Pennsylvania Act, to conduct interstate simulcasting pursuant to the Pennsylvania Act and to conduct intrastate simulcasting pursuant to the Pennsylvania Act, all for
and on behalf of WTA and MLR and pursuant to the licenses held by WTA and MLR. The location and description of each OTB Facility is set forth on Section 3.20 of the Company Disclosure Schedule.
In 2003 and 2004, WTA and MLR have operated race meetings at the Meadows Facility in fulfillment of their respective allocations of racing days by the Commission and their obligations under their
agreement with the Meadows Standardbred Owners' Association. To Seller's knowledge, since April 5, 2001, except as disclosed on Section 3.20 of the Company Disclosure Schedule, no
Company or Subsidiary has: 



	(a)
	falsified
answers or made misrepresentations to the Commission in any document required to be filed under the Pennsylvania Act;



	(b)
	issued
or caused to be issued false or misleading advertisements which would have a Material Adverse Effect;



	(c)
	knowingly
permitted on the grounds or within the enclosure of the Meadows Facility or the OTB Facilities, illegal lotteries, pool selling, touting or bookmaking or any other kind of
illegal gambling which would have a Material Adverse Effect. 




        SECTION 3.21    Suppliers.    To
the knowledge of Seller, no supplier of any Company or Subsidiary intends to cease doing business
with such Company or Subsidiary or materially alter the amount of business it is presently doing with such Company or Subsidiary. 


        SECTION 3.22    Books
and Records.    The minute books and corporate records of each Company and Subsidiary contain, in all
material respects, accurate copies of the minutes of all formal board of directors or shareholder or similar meetings held since April 5, 2001 and of all written consents executed after
April 5, 2001 in lieu of the holding of any such meeting to the extent that such meetings or written consents involve material actions. 


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        SECTION 3.23    Brokers.    No
broker, finder or investment banker is entitled to any brokerage, finder's or other fee or
commission in connection with the transactions contemplated by this Agreement or any other Transaction Document based upon arrangements made by or on behalf of Seller. 


        SECTION 3.24    Racing
Days.    Each of WTA and MLR meets the eligibility requirements of Sections 1302 and 1303 of
the Gaming Act. In each of 2003 and 2004, WTA and MLR conducted live racing at The Meadows for at least 100 days for each license held. In 2005, WTA and MLR are scheduled to conduct at least
100 days of live racing at The Meadows for each license held. To Seller's knowledge, there are no events or circumstances that have occurred or that are planned by Seller or any Company or any
Subsidiary that would, prior to Closing, cause WTA or MLR to cease meeting the eligibility requirements of Sections 1302 and 1303 of the Gaming Act. 


        SECTION 3.25    Related
Parties. 


        (a)   Except
as set forth on Section 3.25 of the Company Disclosure Schedule, and except as may arise from this Agreement or any other Transaction Document or any Note
Documents entered into in connection with the transactions contemplated hereby and except under the MID Loan Documents, since April 5, 2001, neither Seller nor any Affiliate of Seller (other
than the Companies and the Subsidiaries) (a) has or has had any interest in any property (whether real, personal or mixed and whether tangible or intangible) used in or pertaining to the
business or operations of the Companies and the Subsidiaries; (b) is, or has owned (of record or as a beneficial owner), an equity interest or any financial or profit interest or a
Person that has had a material business dealing or a material financial interest in any transaction with the Companies or Subsidiaries; or (c) is a party to any contract with, or has any claim
or right against, the Companies or Subsidiaries that would survive after the Closing Date. 


        (b)   As
of the date hereof, the relationship between WTA and MLR, on the one hand, and XpressBet, Inc., on the other hand, has been formalized to provide for
(i) an agreement for the provision of account wagering services by XpressBet, Inc. to WTA and MLR with respect to WTA's and MLR's Pennsylvania account wagering customers and
(ii) a lease for the premises occupied by XpressBet, Inc. at the Meadows Facility. Such agreement and lease have been approved by the Commission. 


 
 

ARTICLE IV    
    


 
 

REPRESENTATIONS AND WARRANTIES OF PURCHASER    
    


        Purchaser represents and warrants to Seller as of the date hereof (other than such representations and warranties as are made as of another date)
as follows: 


        SECTION 4.01    Incorporation
and Authority of Purchaser.    Purchaser is a limited liability company duly formed, validly
existing and in good standing under the laws of the state of Delaware and has all necessary limited liability company power and authority to enter into this Agreement and the other Transaction
Documents to which Purchaser is a party, to carry out its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution and delivery by
Purchaser of this Agreement and any other Transaction Document to which Purchaser is a party, the performance by Purchaser of its obligations hereunder and thereunder and the consummation by Purchaser
of the transactions contemplated hereby and thereby have been duly authorized by all requisite action on the part of Purchaser. This Agreement has been duly executed and delivered by Purchaser, and
(assuming due authorization, execution and delivery by Seller) constitutes a legal, valid and binding obligation of Purchaser enforceable against Purchaser in accordance with its terms, subject to the
effect of any applicable bankruptcy, reorganization, insolvency, moratorium or similar laws affecting creditors' rights generally and subject, as to enforceability, to the effect of general principles
of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). When each Transaction Document to which Purchaser is a party has been duly executed and
delivered by Purchaser (assuming due authorization, execution and delivery by each other party thereto), such Transaction Document will constitute a legal and binding obligation of Purchaser
enforceable against it in accordance with its terms, subject to the effect of any applicable bankruptcy, reorganization, insolvency, moratorium or similar laws affecting creditors' rights generally
and subject, as to enforceability, to the effect of general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). 


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        SECTION 4.02    No
Conflict.    The execution, delivery and performance by Purchaser of this Agreement and any other Transaction
Document to which Purchaser is or will be a party do not and will not (a) violate or conflict with the certificate of formation or limited liability company agreement (or other similar
applicable documents) of Purchaser, (b) assuming that all consents, approvals, authorizations and other actions described in Section 4.03 have been obtained and all filings and
notifications listed in Section 4.03 of Purchaser Disclosure Schedule have been made, and except as may result from any facts or circumstances relating solely to Seller, conflict with or
violate, or give any Governmental Authority the right to challenge the transactions contemplated by this Agreement or any other Transaction Document to which Seller is a party, or to exercise any
remedy or obtain any relief under, any Law or Governmental Order, including without limitation any state takeover or similar statute or regulation, applicable to Purchaser or (c) assuming that
all consents, approvals, authorizations and other actions described in Section 4.03 have been obtained and all filings and notifications listed in Section 4.03 of Purchaser Disclosure
Schedule have been made, and except as may result from any facts or circumstances relating solely to Seller, result in any breach of, conflict with, or constitute a default (or event which with
the giving of notice or lapse of time, or both, would become a default) under, require any consent or provision of notice under, or give to others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of any Encumbrance on any of the assets or properties of Purchaser pursuant to any material note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument relating to such assets or properties to which Purchaser or any of its subsidiaries is a party or by which any of such assets or properties is bound or
affected, other than Encumbrances contemplated by the MID Loan Documents or the Note Documents. 


        SECTION 4.03    Consents
and Approvals.    The execution and delivery by Purchaser of this Agreement and any other Transaction
Document to which Purchaser is a party do not, and the performance by Purchaser of this Agreement and any other Transaction Document to which Purchaser is a party will not, require any material
consent, approval, authorization or other action by, or filing with or notification to, any Governmental Authority, except (a) as set forth on Section 4.03 of Purchaser Disclosure
Schedule, (b) the notification requirements of the HSR Act, and (c) as may be necessary as a result of any facts or circumstances relating solely to Seller. 


33







 

        SECTION 4.04    Investment
Purpose.    Purchaser is acquiring the Shares solely for the purpose of investment and not with a view
to, or for offer or sale in connection with, any distribution thereof. Purchaser acknowledges that the Shares are not registered under the Securities Act, and that the Shares may not be transferred or
sold except pursuant to the registration provisions of the Securities Act or pursuant to an applicable exemption therefrom and subject to state securities laws and regulations, as applicable. 


        SECTION 4.05    Financing.    Purchaser
has received and has provided to Seller a commitment letter relating to the financing of
the Purchase Price. Purchaser has committed sources that would provide it with sufficient funds to pay the Tranche A Notes on the Consummation Date subject to the conditions contained in such
commitment letter. 


        SECTION 4.06    Brokers.    No
broker, finder or investment banker is entitled to any brokerage, finder's or other fee or
commission in connection with the transactions contemplated by this Agreement or any other Transaction Document based upon arrangements made by or on behalf of Purchaser. 


        SECTION 4.07    Specified
Investors; Cannery Casino Resorts.    There are no more than five Specified Investors. Each Specified
Investor is a qualified purchaser as defined under the Investment Company Act of 1940, as amended. Cannery Casino Resorts, LLC, a Nevada limited liability company, directly or indirectly owns
all of the assets related to the Cannery Casino and Hotel and holds the management rights to the Rampart Casino. 


 
 

ARTICLE V    
    


 
 

ADDITIONAL AGREEMENTS    
    


        SECTION 5.01    Conduct of Business Prior to the Closing.    (a) Unless Purchaser otherwise agrees
in writing and except as otherwise set forth in Section 5.01 of the Company Disclosure Schedule, between the date of this Agreement and the Closing Date, Seller shall cause each Company and
Subsidiary to (i) conduct its business only in the ordinary course and consistent with past practice, (ii) use commercially reasonable efforts to preserve intact the business
organization, assets and prospects of each Company and Subsidiary, subject to the conduct of its business in the ordinary course of business and consistent with past practice, (iii) use
commercially reasonable efforts to keep available to Purchaser the services of the present officers and key employees of each Company and Subsidiary and (iv) use commercially reasonable efforts
to preserve the current relationships of each Company and Subsidiary with its respective customers, suppliers, distributors and other Persons with which each Company and Subsidiary has significant
business relationships. Seller shall cause WTA and MLR to continue to operate race meetings at the Meadows Facility in fulfillment of their respective allocations of racing days by the Commission and
their obligations under their agreement with the Meadows Standardbred Owners' Association. Between the date hereof and the Closing Date, Seller will cause the Companies and the Subsidiaries not to
enter into any contract, agreement or arrangement that would impose any restrictions or requirements on the operation of a gaming operation on the Real Property. 


34







 

        (b)   Between
the date hereof and the Closing Date, Seller shall cause WTA and MLR to apply for allocations of racing days pursuant to Section 207 of the Pennsylvania
Act to conduct race meetings with pari-mutuel wagering in 2006. The number of racing days sought shall be approximately 200 to 215 or such other number of races as WTA, MLR and the Meadows
Standardbred Owners' Association shall agree, provided, that in no event shall the number of racing days be less than the number set forth in Section 1303 of the Gaming Act. Between the date
hereof and the Closing Date, neither the Companies nor any Subsidiary will do any of the things enumerated in the second sentence of Section 3.09 (including, without limitation,
clauses (a) through (n) thereof) to the extent any such thing is within the control of Company and the Subsidiaries, without the prior written consent of Purchaser; provided that the
Companies and the Subsidiaries shall have the right, without the consent of Purchaser, to engage in the activities set forth in Section 5.01 of the Company Disclosure Schedule. 


        (c)   Purchaser
acknowledges that Seller intends to distribute as a dividend or contribute as a capital contribution, or cause the distribution or contribution of, prior to or
at the Closing, (i) amounts owing pursuant to the intercompany accounts between the Companies and the Subsidiaries, on the one hand, and their respective Affiliates (including Seller and its
Affiliates but not including any Company or any Subsidiary), on the other hand, (ii) the Excluded Subsidiaries, and (iii) one or more notes in an aggregate amount no greater than
$25,000,000 (the "Specified Notes"), and that such distribution or contribution will not result in a breach of this Agreement. Purchaser acknowledges that Seller intends to convert
20002 Delaware Inc. into a single member limited liability company and subsequently cause MECPenn to distribute all interest in such limited liability company to Seller as a dividend
prior to Closing. In the event that Magna pays or declares a dividend of the Specified Notes, Magna agrees that it shall, the next Business Day and no later than one Business Day before Closing,
contribute the Specified Notes back to each of the Companies making the respective distribution and causing each of the Companies' net worth to be unaffected by the distribution of the Specified Notes
and the recontribution to the Companies. 


        (d)   Seller
agrees to cause intercompany accounts between Seller or its Affiliates (other than the Companies and Subsidiaries), on the one hand, and the Companies and
Subsidiaries, on the other hand, to be settled prior to Closing. 


        SECTION 5.02    Access
to Information.    From the date hereof until the Closing, Seller shall cause the officers, directors,
employees, agents, representatives, accountants and counsel of each Company and Subsidiary to: (i) afford the officers, employees and authorized agents, accountants, counsel, and
representatives of Purchaser reasonable access, upon reasonable notice and during normal business hours, to (A) the assets (including the Real Property) for inspection and testing
(it being understood that the cost of such inspection and testing shall be borne by Purchaser and any testing that is other than a Phase I testing shall be conducted only after obtaining
the approval of Seller, and Purchaser shall promptly indemnify Seller Indemnified Parties for any Losses in accordance with Article IX hereof arising from injury to person or physical damage to
property incurred by any Company or any Subsidiary as a result of the testing conducted pursuant to this Section 5.02, other than as a result of the gross negligence or willful misconduct of
Company or any Subsidiary and in no event as a result of the discovery of an environmental matter as a result of such testing) and (B) the officers, directors, employees, accountants and other
representatives of Seller and each Company and Subsidiary who have relevant knowledge relating to any Company or Subsidiary; provided,
however, that such access shall not unreasonably interfere with any of the business or operations of any Company or Subsidiary or the duties of any such officer, director,
employee, accountant or other representative, and (ii) promptly furnish to the officers, employees, and authorized agents, accountants, counsel and representatives of Purchaser such financial
and operating data and other information regarding employees, assets, properties, goodwill and business of each Company and Subsidiary as Purchaser may reasonably request. 


35







 

        SECTION 5.03    Books
and Records.    (a) In order to facilitate the resolution of any claims made against or incurred by
Seller prior to the Closing, or for any other reasonable purpose, for a period of five years after the Closing, Purchaser shall (i) retain the books and records (including personnel files) of
the Companies and Subsidiaries relating to periods prior to the Closing in a manner reasonably consistent with the prior practices of the respective Companies and Subsidiaries and (ii) upon
reasonable notice, afford the officers, employees and authorized agents and representatives of Seller reasonable access (including the right to make, at Seller's expense, photocopies), during normal
business hours, to such books and records. 


        (b)   In
order to facilitate the resolution of any claims made by or against or incurred by Purchaser, the Companies or any Subsidiary after the Closing, or for any other
reasonable purpose, for a period of five years following the Closing, Seller shall (i) retain the books and records (including personnel files) of Seller which relate to the Companies and the
Subsidiaries and their operations for periods prior to the Closing and (ii) upon reasonable notice, afford the officers, employees and authorized agents and representatives of Purchaser, the
Companies or any Subsidiary reasonable access (including the right to make, at Purchaser's expense, photocopies), during normal business hours, to such books and records. 


        (c)   Neither
Purchaser nor Seller shall be obligated to provide the other party with access to any books or records (including personnel files) pursuant to this
Section 5.03 where such access would violate any Law or Environmental Law. 


        SECTION 5.04    Governmental
Approvals and Consents; Application Fee; Closing Conditions.    (a) Each party hereto will use
its commercially reasonable efforts to obtain all authorizations, consents, orders and approvals of all Governmental Authorities that may be or become necessary for its execution and delivery of this
Agreement and the performance of its obligations pursuant to this Agreement and any agreement or document contemplated hereby and will cooperate fully with the other party in promptly seeking to
obtain all such authorizations, consents, orders and approvals. Each party hereto agrees to make an appropriate filing of a Notification and Report Form pursuant to the HSR Act with respect to the
transactions contemplated hereby no later than January 15, 2006 and to supply promptly any additional information and documentary material that may be requested pursuant to the HSR Act. The
parties hereto will not willfully and unreasonably take any action that will have the effect of delaying, impairing or impeding the receipt of any required approvals. 


36







 

        (b)   Purchaser
and Seller shall as soon as practicable, but in no event later than 30 days after the date hereof, unless sooner required by the Pennsylvania Act, the
regulations of the Commission or the Commission, together file with the Commission the applications, affidavits (including without limitation the affidavits specified pursuant to Section 204 of
the Pennsylvania Act) and other information required pursuant to the Pennsylvania Act and regulations of the Commission necessary to obtain approval from the Commission for the purchase of the
Companies by Purchaser and for Seller's management of the racing operations of the Meadows Facility under the Racing Services Agreement. In addition, both Purchaser and Seller shall furnish to the
Commission such other information, financial statements and other documentation as the Commission requires concerning Purchaser or Seller or any of their respective Affiliates and will make available
representatives of Purchaser or Seller to meet with the Commission, or its staff, to expedite the ability of the Commission to complete its work and make the determinations required by
Article VIII of this Agreement as expeditiously as practicable. Purchaser and Seller agree to provide formal notice to the Commission of the change of ownership of the Companies within
10 days after the Closing Date. 



	(c)
	Gaming
Application.



	(i)
	Until
the earlier of (A) the Repayment Date and (B) the date of the Stock Transfer, Purchaser and Seller each will use commercially reasonable efforts to promptly make
available or file with the Gaming Board such information as it or its staff may request under the Gaming Act. Purchaser and Seller will, not later than December 20, 2005 (or two weeks
before such other date as the Gaming Board may select for submission of applications so long as filing on such later date does not provide an advantage to other applicants or is otherwise detrimental
to the Companies' application or to their right to timely obtain a Conditional Category 1 license or Category 1 license for gaming from the Gaming Board), file with the Gaming Board the
application for Conditional Category 1 license as required by the Gaming Act (the "Gaming Application"). The Gaming Application will be drafted to reflect
two different scenarios — one in which Purchaser is the operator and owner of the Meadows Facility and the operator of the gaming operations with an Affiliate of
Seller serving as a manager of the racing operations of the Meadows Facility (such scenario, the "Transaction Scenario") and one in which Seller or one or more of its
Affiliates is the operator and owner of the Meadows Facility (the "Alternative Scenario"). In addition, until the earlier of (A) the Repayment Date and
(B) the date of the Stock Transfer, both Purchaser and Seller shall furnish to the Gaming Board such other information, financial statements and other documentation as the Gaming Board requires
concerning Purchaser or Seller and will make available representatives of Purchaser or Seller to meet with the Gaming Board, or its staff, to expedite the ability of the Gaming Board to complete its
work. For the avoidance of doubt, while Purchaser and Seller will both use reasonable efforts to accomplish the matters set forth in this Section and to assemble such application, Purchaser shall be
responsible for all items with respect to the Gaming Application other than the MEC Items. Prior to the Closing Date, Purchaser and Seller agree to discuss with the Gaming Board whether there are any
deficiencies in the MEC Items that have been provided to the Gaming Board in respect of the Gaming Application filed by Purchaser and Seller agrees to use its commercially reasonable efforts to remedy
such deficiencies. Seller agrees that, after the Closing Date and until the earlier of (i) the Repayment Date, and (ii) a Stock Transfer Trigger Date, it shall use its commercially
reasonable efforts to fulfill any requirements related to the MEC Items and any other items requested from Seller by the Gaming Board with respect to the Gaming Application filed by Purchaser. 






37







 


	(ii)
	Each
of Purchaser and Seller agrees to use its best efforts to complete the Gaming Application for submission to the Gaming Board on or before December 20, 2005, and agrees to
have a weekly scheduled telephone call or meeting at which the individuals with responsibility for organizing each of the Purchaser's and Seller's efforts in connection with the filing of the Gaming
Application review and discuss the progress being made to complete the Gaming Application.



	(iii)
	Either
party shall notify the other upon becoming aware that the Gaming Board may consider, identify or support an Action that could jeopardize Seller's ability to obtain a
Conditional Category 1 license or Category 1 license in its own name if Seller continues to pursue a Conditional Category 1 license or a Category 1 license with Purchaser
prior to the Closing Date. Prior to termination of this Agreement, Seller and Purchaser agree not to take any action that could reasonably be expected to impede the consideration of the Gaming
Application for the Transaction Scenario (it being acknowledged that Seller's exercise of its rights under Section 5.15 or under the Note Documents or Seller's or Purchaser's
exercise of rights under Section 10.01 shall not be considered an action that constitutes a breach of the obligations set forth in this sentence). Prior to the earlier of Closing or termination
of this Agreement, Seller and Purchaser agree to use their best efforts, to permit Seller and Purchaser to jointly pursue the Gaming Application for the Transaction Scenario (it being
acknowledged that Seller's exercise of its rights under Section 5.15 or Seller's or Purchaser's exercise of rights under Section 10.01 shall not be considered an action that
constitutes a breach of the obligations set forth in this sentence). Seller agrees to make itself available to participate in meetings, appearances and hearings to assist in the joint efforts of
Seller and Purchaser to pursue the Gaming Application for the Transaction Scenario. 





        (d)   Simultaneously
with the submission of the Gaming Application, Purchaser shall at its cost take such steps as are necessary, including but not limited to the posting of a
letter of credit, the posting of a bond or the payment of a fee, to satisfy any monetary or financial requirements that the Gaming Board may require in conjunction with submission and maintenance of
the Gaming Application (the "Gaming Application Fee"). Until thirty days after the earlier of (i) the date on which this Agreement is terminated prior to
Closing and (ii) the date of the Stock Transfer (the earlier of clause (i) and (ii) being the "Replacement Trigger"), Purchaser shall maintain the Gaming Application Fee.
If (i) the fee is paid by Purchaser in cash to the Gaming Board to satisfy the requirements of the Gaming Board, (ii) a Replacement Trigger occurs, (iii) Seller uses such fee in
furtherance of its application with the Gaming Board after such Replacement Trigger (or to the extent Seller actually receives the benefit of such fee), and (iv) Purchaser executes
documentation in form and substance satisfactory to Seller confirming that Seller is entitled to, and has full rights with respect to, the fee that Purchaser has paid to the Gaming Board and that
Purchaser releases all rights with respect thereto, then Seller shall, to the extent Purchaser does not receive a refund of such fee from the Gaming Board and to the extent Seller receives the benefit
of such fee, reimburse Purchaser for the Gaming Application Fee (but only to the extent Seller receives the benefit of such fee) promptly, and in any event within 30 days of the
occurrence of the circumstances set forth in clauses (i) through (iv) above (or if Seller does not use such fee in furtherance of its application with the Gaming Board but instead
actually receives the benefit of such fee, then within thirty days after receipt by Seller of such benefit). To the extent that Purchaser has not received a refund of its Gaming Application Fee,
Seller agrees to use its commercially reasonable efforts to receive the benefit from the fee should Seller or any Affiliate pursue a gaming license and to reimburse Purchaser in accordance with the
preceding sentence to the extent of the benefit received. To the extent that Seller intends to continue with its application with the Gaming Board after the Replacement Trigger, Seller agrees to use
commercially reasonable efforts to replace within thirty days the Gaming Application Fee theretofore maintained by Purchaser as expeditiously as possible after the Replacement Trigger, and to use its
commercially reasonable efforts in cooperating with Purchaser to cause the withdrawal of such Gaming Application Fee. For the period of up to thirty days after the Replacement Trigger during which
Purchaser maintains a letter of credit to maintain the Gaming Application Fee, Seller agrees to reimburse Purchaser for the letter of credit fee incurred by Purchaser in maintaining such letter of
credit for such 30 day period after the Replacement Trigger (it being understood that such reimbursement obligation shall only apply to the extent the incurrence of such costs resulted
in out of pocket expenditures by Purchaser and equity holders of Purchaser (rather than out of pocket expenditures by any of the Companies or any of their respective Subsidiaries)). 


38







 

        (e)   Upon
the termination of this Agreement for any reason other than consummation of the transactions contemplated by this Agreement, Purchaser and Seller agree to take such
actions as are necessary as soon as possible to amend the Gaming Application to remove the Transaction Scenario. In addition, upon the termination of this Agreement for any reason other than
consummation of the transactions contemplated by this Agreement or, after the Closing, upon the consummation of the Stock Transfer, Purchaser shall permit Seller to use and continue to have submitted
with the Gaming Application all architectural, design and construction plans and any other materials prepared by Purchaser or its agents or consultants (the "Purchaser Application
Materials"); provided, however that Seller agrees to reimburse Purchaser for the reasonable and direct costs incurred by Purchaser with respect to the
Purchaser Application Materials used by Seller (it being understood that such reimbursement obligation shall only apply to the extent the incurrence of such costs resulted in out of pocket
expenditures by Purchaser and equity holders of Purchaser (rather than out of pocket expenditures by any of the Companies or any of their respective Subsidiaries)). Purchaser shall also permit Seller
to use any other plans and materials developed or obtained by Purchaser in connection with the development and construction of the casino or other gaming activities at the Meadows (the "Other
Purchaser Materials"); provided, however, that Seller agrees to reimburse Purchaser for the reasonable and direct costs incurred by Purchaser with respect to the Other Purchaser Materials used by
Seller (it being understood that such reimbursement obligation shall only apply to the extent the incurrence of such costs resulted in out of pocket expenditures by Purchaser and equity holders
of Purchaser (rather than out of pocket expenditures by any of the Companies or any of their respective Subsidiaries)). In addition, Seller acknowledges that it has separate reimbursement obligations
to Purchaser pursuant to a letter dated May 24, 2006 for expenses for other professional services. 


39









  



	(f)
	Upon
the Closing, Purchaser and Seller agree to take such actions as are necessary as soon as possible to amend the Gaming Application to remove the Alternative Scenario. On and after
the Closing Date and until the earlier of (i) the Repayment Date and (ii) a Stock Transfer Trigger Date, Seller agrees to use commercially reasonable efforts to support the application
of Purchaser under the Transaction Scenario and Seller and Purchaser agree to use commercially reasonable efforts to obtain all necessary approvals from Governmental Authorities for MEC Pennsylvania
Racing Services, Inc. to undertake its responsibilities under the Racing Services Agreement. After the Closing Date, Seller agrees to provide Purchaser for filing with the Gaming Board the
information (if any) that Purchaser reasonably considers necessary, or that the Gaming Board requests, in order to qualify Seller as a lender in connection with the Tranche A and
Tranche B Notes, and thereafter, to use its commercially reasonable efforts to obtain the necessary approvals, if any, from the Gaming Board to permit the Tranche A and
Tranche B Notes to remain outstanding in accordance with the terms of the Note Documents.



	(g)
	Seller
and Purchaser shall use commercially reasonable efforts to give all notices to and obtain all consents from all third parties and Governmental Authorities that are described in
Section 3.05(c) or Section 3.06 of the Company Disclosure Schedule and Section 4.03 of Purchaser Disclosure Schedule, including but not limited to the Commission Approval. Seller
and Purchaser agree to consider comments and input from Governmental Authorities and to use commercially reasonable efforts to consider means in which to address such comments and input without
resulting in changing or adversely affecting the economics of the transactions contemplated hereby or the ability of either party to close such transactions.



	(h)
	Without
limiting the generality of the parties' undertakings pursuant to Section 5.04(a) though (g), each of the parties hereto shall use all reasonable efforts to
(i) respond to any inquiries by any Governmental Authority regarding antitrust or other matters with respect to the transactions contemplated by this Agreement or any agreement or document
contemplated hereby, (ii) avoid the imposition of any order or the taking of any action that would restrain, alter or enjoin the transactions contemplated by this Agreement and (iii) in
the event any Governmental Order adversely affecting the ability of the parties to consummate the transactions contemplated by this Agreement or any agreement or document contemplated hereby has been
issued, to have such Governmental Order vacated or lifted.



	(i)
	If
any consent, approval or authorization necessary to preserve any right or benefit under any lease, license, contract, commitment or other agreement or arrangement to which the
Company or any Subsidiary is a party is not obtained prior to the Closing, Seller shall, subsequent to the Closing, cooperate with Purchaser and the Companies in attempting to obtain such consent,
approval or authorization as promptly thereafter as practicable. If such consent, approval or authorization cannot be obtained, Seller shall use its commercially reasonable efforts to provide such
Company or such Subsidiary, as the case may be, with the rights and benefits of the affected lease, license, contract, commitment or other agreement or arrangement for the term thereof, and, if Seller
provides such rights and benefits, such Company or such Subsidiary, as the case may be, shall assume all obligations and burdens thereunder. Seller shall have no obligation under this
Section 5.04(i) after a Stock Transfer Trigger Date. 



40







 



	(j)
	From
the date hereof until the Closing, each party hereto shall, and Seller shall cause each Company and Subsidiary to, use all commercially reasonable efforts to take such actions as
are necessary to expeditiously satisfy the closing conditions set forth in Article VIII hereof. From the Closing Date until the earlier of (i) the Consummation Date and (ii) a
Stock Transfer Trigger Date, (a) Purchaser shall, and Purchaser shall cause each Company and Subsidiary to, use its respective commercially reasonable efforts to take such actions as are
necessary to cause the Consummation Date to occur, including, without limitation, satisfying its lenders with respect to any condition imposed by the Gaming Board in its approval for issuance of the
Conditional Category 1 or Category 1 License to WTA, and (b) Seller shall use its commercially reasonable efforts to cooperate with Purchaser with respect thereto.



	(k)
	[Reserved]



	(l)
	Until
the earlier of (i) the Repayment Date and (ii) the date of the Stock Transfer, all analyses, appearances, meetings, discussions, presentations, memoranda, briefs,
filings, arguments, and proposals made by or on behalf of either party before any Governmental Authority, including the Gaming Board and the Commission, or the staff or regulators of any Governmental
Authority, in connection with the transactions contemplated hereunder (but, for the avoidance of doubt, not including any interactions between Seller, the Companies or the Subsidiaries with
Governmental Authorities in the ordinary course of the conduct of its business operations, any disclosure which is not permitted by law or any disclosure containing confidential information) shall be
disclosed to the other party hereunder in advance of any filing, submission or attendance, it being the intent that the parties will consult and cooperate with one another, and consider in good faith
the views of one another, in connection with any such analyses, appearances, meetings, discussions, presentations, memoranda, briefs, filings, arguments, and proposals. Until the earlier of
(i) the Repayment Date and (ii) the date of the Stock Transfer, each party shall give notice to the other party with respect to any meeting, discussion, appearance or contact with any
Governmental Authority or the staff or regulators of any Governmental Authority, with such notice being sufficient to provide the other party with the opportunity to attend and participate in such
meeting, discussion, appearance or contact.



	(m)
	Notwithstanding
anything in this Agreement to the contrary, the parties agree that at any time after the date which is 14 days prior to the date, if any, identified by the
Gaming Board after which continued pursuit by Seller of a Conditional Category 1 license with Purchaser pursuant to the Gaming Application would jeopardize Seller's ability to obtain a
Conditional Category 1 license or a Category 1 license in its own name, Seller shall not have any obligation during the period of such jeopardy to comply with any of its obligations
under Section 5.04, Section 5.12 and any other provision of this Agreement that would require Seller to directly or indirectly comply with any of its obligations under
Section 5.04 or 5.12; provided, however, if the Closing hereunder is reasonably capable of occurring prior to the date identified by the Gaming Board, then Seller shall continue to
comply with its obligations under Section 5.04 and 5.12 and any other provision of this Agreement that would require Seller to directly or indirectly comply with any of its obligations
under Section 5.04 or 5.12 until such time as Seller terminates the Agreement in accordance with the provisions of Section 10.01(k) hereof. 



41







 





        SECTION 5.05
Confidentiality. (a) The terms of the letter agreement dated September 9, 2005 (the "Confidentiality
Agreement") between Seller and Millennium Management Group, LLC are hereby incorporated herein by reference as if Purchaser were a party thereto and shall continue in full force
and effect until the Repayment Date, at which time such Confidentiality Agreement and the obligations of Purchaser under this Section 5.05 shall terminate;
provided, however, that the Confidentiality Agreement shall terminate only in respect of that portion of the Information (as defined in
the Confidentiality Agreement) exclusively relating to the transactions contemplated by this Agreement. If this Agreement is, for any reason, terminated prior to the Closing or if the Closing occurs
but the Repayment Date does not occur, the Confidentiality Agreement shall continue in full force and effect. 



	(b)
	Prior
to a Stock Transfer Trigger Date, Seller agrees to, and shall cause its agents, representatives, Affiliates, employees, officers and directors to, protect (and not
disclose or provide access to any Person) all confidential information relating to trade secrets, price, customer and supplier lists and pricing and marketing plans with respect to the business of the
Companies and the Subsidiaries and all other information that Seller regards as confidential information as of the date hereof with respect to the business of the Companies and the Subsidiaries as
currently conducted, by using the same degree of care, but no less than a reasonable degree of care, to prevent the unauthorized disclosure or use of such confidential information, as Seller uses to
protect its own confidential information of a like nature; provided, however, that this sentence shall not apply to any information that, at
the time of disclosure, (i) is disclosed by and between Seller and its agents, representatives, Affiliates, employees, officers or directors on a need-to-know basis
(provided that such Persons are bound by a duty of confidentiality), (ii) is available publicly and was not disclosed in breach of this Agreement by Seller or its respective agents,
representatives, Affiliates, employees, officers or directors (provided that information provided to or filed with the Commission or any other Governmental Authority shall not be deemed to be publicly
available by virtue of such filing), or (iii) is required to be disclosed in compliance with Section 5.04 of this Agreement, federal and state laws or regulations or the regulations
governing any national securities exchange or quotation system or is requested by a regulatory body that has authority over Seller or Purchaser (provided that Seller provides prompt notice to
Purchaser of the disclosure requirement and uses its reasonable efforts to disclose only such confidential information as is legally required to be disclosed and exercises reasonable efforts to obtain
assurance that such confidential information will be accorded confidential treatment); provided, further that, so long as the Tranche A Note or Tranche B Note is outstanding, this
Section 5.05(b) shall not apply to the exceptions to confidentiality set forth in Section 10.14 of the Note Agreement. 




        SECTION 5.06
Use of Magna Name. (a) Purchaser hereby acknowledges that all right, title and interest in and to the trade names of Seller, the
names "Magna," "MEC," "XpressBet," and "Call-A-Bet" and all similar or related names and all derivations or acronyms thereof and all trademarks, service marks, trade names,
collective marks, certification marks, trade dress, designs or logos containing or incorporating the foregoing, including registrations and applications for registration thereof (collectively, the
"Magna Name"), are owned exclusively by Seller and its Affiliates (other than the Companies and their Subsidiaries), and that, except as provided in
Section 5.06(b), any and all right of the Companies and the Subsidiaries in the Magna Name shall terminate as of the Closing Date and shall immediately revert back to Seller and its
Affiliates (other than the Companies and their Subsidiaries). On or before the Closing Date, Seller shall take any and all actions necessary to transfer the domain name of "meadowsracing.com" and any
rights associated therewith to an entity designated by Purchaser. To the extent that the transfer is not made prior to the Closing Date, Seller and such entity designated by Purchaser shall enter into
such arrangements as may be reasonably acceptable to each to provide such designee with the right to use the domain name. 


42







 

	(b)
	Purchaser
shall, promptly following the Closing Date, cause each Company and Subsidiary to remove or obliterate the Magna Name from all of its existing stocks of signs, letterheads,
advertisements and promotional materials and other documents and materials ("Existing Stock") or to cease using such Existing Stock. Notwithstanding the foregoing, in the
event that removal or obliteration of the Magna Name from certain items of Existing Stock or the cessation of the use thereof is impracticable, each Company and Subsidiary may use such items of
Existing Stock, so long as a mark or some other designation identifying that each Company or Subsidiary is an Affiliate of Purchaser (and not of Seller) is clearly indicated on such items of
Existing Stock, until such items of Existing Stock is depleted, or a period of three (3) months from the Closing Date, whichever occurs first. Except as expressly provided in this Agreement, no
other right to use the Magna Name is granted by Seller to Purchaser, Companies and Subsidiaries, whether by implication or otherwise.



	(c)
	Purchaser
shall, as soon as practicable after the Repayment Date, but in no event later than 10 Business Days after such date, cause MECPenn, MEC Pennsylvania Food
Service, Inc. and MECRacing to file amended articles of incorporation with the appropriate authorities changing their corporate names to a corporate name that does not contain the word "Magna"
or any Magna Name. 




        SECTION 5.07
Investigation. (a) Purchaser acknowledges and agrees that (i) has made its own inquiry and investigation into, and, based
thereon, has formed an independent judgment concerning, the Companies and Subsidiaries and (ii) it has not, for purposes of entering into this Agreement, relied on any representation or
warranty or other statement or omission of Seller or any of its directors, officers, employees, agents, stockholders, Affiliates, consultants, counsel, accountants, investment bankers or
representatives, other than the representations and warranties contained in this Agreement (including the Exhibits and the Company Disclosure Schedule). 



	(b)
	In
connection with Purchaser's investigation of the Companies and Subsidiaries, Purchaser has received from Seller certain estimates, projections, forecasts, plans and budgets for the
Companies and Subsidiaries, including, without limitation, projected income statement and balance sheet information. Purchaser acknowledges that there are uncertainties inherent in attempting to make
such estimates, projections, forecasts, plans and budgets, that Purchaser is familiar with such uncertainties and that Purchaser is taking full responsibility for making its own evaluation of the
adequacy and accuracy of all estimates, projections, forecasts, plans and budgets so furnished to it. Accordingly, Seller makes no representation or warranty with respect to any estimates,
projections, forecasts, plans or budgets referred to in this Section 5.07, except that they have been prepared in the ordinary course of business consistent with past practice. 



43







 





        SECTION 5.08
Limited Non-Compete. (a) As an inducement for Purchaser to enter into this Agreement and in consideration of the
receipt of $2,000,000 (which amount is included in the Purchase Price), Seller agrees that for a period commencing on the Closing Date and ending on the later of (i) five years from the Closing
Date and (ii) twelve months after the termination of the Racing Services Agreement for any reason (the "Non-Competition Period"), except with
Purchaser's prior written consent, Seller shall not directly or indirectly (including through MEC Pennsylvania Racing Services, Inc.) own or operate a pari-mutuel wagering facility
with expanded gaming within 100 miles of the Meadows Facility (the "Non-Competition Covenant"). Notwithstanding the foregoing, the
Non-Competition Covenant shall not apply (i) to Thistledown (located in North Randall, Ohio) or operation of the Meadows Facility pursuant to the Racing Services Agreement or
(ii) after a Stock Transfer Trigger Date. 



	(b)
	Seller,
for itself and its Affiliates, agrees that a breach or violation of the Non-Competition Covenant shall entitle Purchaser, as a matter of right, to an injunction
issued by any court of competent jurisdiction restraining any further or continued breach of violation of such covenant. Such right to an injunction shall be cumulative, and in addition to, and not in
lieu of, any other remedies to which Purchaser may show itself justly entitled. Further, during any period in which Seller or any of its Affiliates are in breach of the Non-Competition
Covenant, the time period of such covenant shall be extended for an amount of time that Seller or any of its Affiliates are in breach hereof, with the effect that the total duration of the
Non-Competition Covenant shall be the original period plus the actual amount of time that Seller or any of its Affiliates are in breach.



	(c)
	Further,
Seller, for itself and its Affiliates, agrees that the Non-Competition Covenant is appropriate and reasonable when considered in light of the nature and extent of
the business conducted by Purchaser. Seller, for itself and its Affiliates, acknowledges and agrees that: (i) Purchaser would not enter into this Agreement unless Seller, for itself and its
Affiliates, agreed to the Non-Competition Covenant; and (ii) it has read and understands the terms of this Agreement, including, without limitation, the Non-Competition
Covenant, and has been provided the opportunity to discuss this Agreement and such covenant with Purchaser and counsel of its choice and has carefully considered the nature and extent of the
restrictions upon it and the rights and remedies conferred upon Purchaser hereunder. Seller, for itself and its Affiliates, hereby acknowledges and agrees that Purchaser has a legitimate interest in
protecting its business and that the Non-Competition Covenant is reasonable in limitations as to time, scope, geographical area and activity, and is fully required and is no greater than
necessary to protect the legitimate business interests of Purchaser. Seller, for itself and its Affiliates, further agrees that the Non-Competition Covenant is not unduly harsh or
oppressive to Seller, or any of its Affiliates, in curtailing their legitimate efforts to earn a livelihood and does not stifle the inherent skill and experience of Seller, or any of its Affiliates,
or confer a benefit upon Purchaser disproportionate to the detriment to Seller, or any of its Affiliates, or harm in any manner whatsoever the public interest or operate as a bar to the sole means of
support of Seller, or any of its Affiliates.



	(d)
	Seller,
for itself and its Affiliates, agrees that if the Non-Competition Covenant should be held by any Governmental Authority to be void or unenforceable in any
particular area or jurisdiction, then Purchaser and Seller shall consider this Agreement to be modified so as to eliminate that particular area or jurisdiction as to which the
Non-Competition Covenant is held to be void or otherwise enforceable, and as to all other areas and jurisdictions and scope covered by this Agreement, the terms hereof shall remain in full
force and effect as originally written. Further, if the Non-Competition Covenant should be held by any Governmental Authority to be effective in any particular area or jurisdiction or
scope only if said covenant is modified to limit its duration or scope, then Seller and Purchaser shall consider the Non-Competition Covenant to be amended and modified with respect to
that particular area or jurisdiction so as to comply with the order of any Governmental Authority, and as to all other political subdivisions of the United States, the
Non-Competition Covenant shall remain in full force and effect as originally written. 



44







 





        SECTION 5.09
Remediation. Seller hereby agrees that after the Repayment Date it will complete items (1) and (2) on Part D of
NPDES Permit #PA0252905 issued on August 11, 2005 by the Department of Environmental Protection of the Commonwealth of Pennsylvania on or before the deadline for completion specified in
such items, but only to the extent such items are not completed in connection with the backside improvements required by Section 1404 of the Gaming Act. Seller further agrees it will complete
any other matters arising under the NPDES Permit # PA0252905 during the two years on and after the Repayment Date. 


        SECTION 5.10
No Negotiation. Until the earlier of (a) the Closing Date and (b) such time, if any, as this Agreement is terminated
pursuant to this Agreement, Seller will not, and will cause the Companies and the Subsidiaries, and each of their employees, financial advisors, attorneys, accountants and other representatives, not
to directly or indirectly solicit, initiate, or encourage any inquiries or proposals from, discuss or negotiate with, or provide any non-public information to, any Person (other than
Purchaser) relating to any transaction involving the sale of any of the Companies or the Subsidiaries or the Assets (other than sales of Assets in the ordinary course of business) of the Companies or
the Subsidiaries or any of the capital stock of the Company or the Subsidiaries, or any merger, consolidation, business combination, or similar transaction involving the Companies or
the Subsidiaries. 


        SECTION 5.11
Title. 



	(a)
	Seller
has provided Purchaser, for each parcel of owned Real Property, with a title commitment issued by First American Title Insurance Company (the "Title
Company"), in the form attached as Exhibit 5.11 hereto (the "Title Commitment"), together with complete and legible copies of all
recorded documents listed as exceptions. Purchaser shall cause an ALTA survey of the owned Real Property certified in favor of Purchaser, Seller and Title Company
(the "Survey") to be prepared at Purchaser's expense, and Seller shall cooperate with Purchaser in the preparation of the Survey.



	(b)
	At
the Closing, the Title Company shall irrevocably commit to issue (i) an ALTA extended coverage owner's title insurance policy in the form of the Title Commitment for each of
Seller's interests in the owned Real Property containing the endorsements set forth on Exhibit 5.11 hereto and (ii) such other title insurance policy or policies as are required
by the Note Documents. Seller covenants and agrees that it will provide such information and execute such documents as are reasonable and customary as required by the Title Company to issue the
applicable Title Policy in conformity with the Title Commitment. 



45







 



	(c)
	If,
after the date hereof and prior to the Closing, the Title Company revises the Title Commitment to disclose any title exception or the Survey depicts any matter (each, a
"Title Objection"), in each case, that is not a Permitted Exception, then Purchaser may provide written notice of objection to Seller ("Purchaser's
Notice") of such matters within 10 days after receiving written notice of such Title Objection and complete and legible copies of any recorded documents relating thereto. Seller
shall make reasonable efforts to cure each Title Objection included in Purchaser's Notice or to cause the Title Company to eliminate each Title Objection as an exception to the Title Commitment or to
remove it from the Survey. Any Title Objection that is cured or that the Title Company is willing to insure over on terms acceptable to Seller and Purchaser is herein referred to as an
"Insured Exception." The Insured Exceptions shall be deemed to be acceptable to Purchaser. If any Title Objection cannot be cured and the Title Company will not insure
over it on terms acceptable to Seller and Purchaser, then Purchaser shall have a right to terminate this Agreement if such Title Objection would have a Material Adverse Effect. 




        SECTION 5.12
Further Action. Each of the parties hereto shall execute and deliver such documents and other papers and take such further actions as may
be reasonably required to carry out the provisions hereof and give effect to the transactions contemplated by this Agreement. 


        SECTION 5.13
Excluded Items. The parties agree that all assets exclusively related to Seller's account wagering operations
(i.e., XpressBet, Inc. (formerly known as Call-A-Bet)) and all Liabilities associated therewith (the "Excluded Items") have
been or will be transferred to XpressBet, Inc. prior to Closing. Seller will transfer, sell or otherwise dispose of the Excluded Items identified on Exhibit 5.13 prior to the
Closing Date so that none of the Companies or Subsidiaries shall have any direct or indirect ownership in, or any Liability (other than Liability under any agreement by and between any Company or
Subsidiary and XpressBet, Inc.) for, the Excluded Items as of the Closing Date. 


        SECTION 5.14
Estoppels. Prior to the Closing, Seller shall use commercially reasonable efforts to obtain estoppel certificates from third parties
under the leases of Real Property, in a form consistent with the form of any estoppel certificates incorporated into such leases, or has been delivered in the past under such leases. 


        SECTION 5.15
Cooperation in Preparation of Alternative Application. Any time on or after December 1, 2005, upon the request of Seller,
Purchaser shall assist Seller in compiling an application for a Conditional Category 1 license and Category 1 license to conduct slot machine gaming pursuant to the Gaming Act on the
basis that Seller will be submitting such application as the operator and owner of the Meadows Facility, which efforts shall include, without limitation, allowing Seller to use and submit with its
application all Purchaser Application Materials; provided, however that Seller agrees to reimburse Purchaser for the reasonable and direct costs incurred by Purchaser with
respect to the Purchaser Application Materials used by Seller in the event that this Agreement is terminated. 


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        SECTION 5.16
Financial Statements. (a) Seller agrees to prepare, and use its commercially reasonable efforts, including expending additional
funds for expediting fees or similar fees to Seller's Accountants, to cause Seller's Accountants to assist Seller in preparing the following materials in a timely fashion after execution of this
Agreement or, in the case of periods ending on and after the date of this Agreement, in a timely fashion after passage of the ending date for such period: (i) an audited combined balance sheet
of the Companies and their Subsidiaries (excluding the Excluded Subsidiaries) as of December 31, 2005 and the related audited statements of income, equity and cash flows for the year then ended
in compliance with GAAP and meeting all requirements of Regulation S-X (the "2005 Audited Financial Statements"); (ii) unaudited combined
balance sheets of the Companies and their Subsidiaries (excluding the Excluded Subsidiaries) as of March 31, 2005, June 30, 2005 and September 30, 2005 and the related statements
of income, equity and cash flows for the three months, six months and nine months, respectively, then ended in compliance with GAAP and meeting all requirements of Regulation S-X
(taking into account Rule 10-01 thereunder) (the "2005 Quarterly Financial Statements"), together with a SAS 100 review thereof by
Seller's Accountants in a form reasonably satisfactory to Purchaser and Purchaser's Accountants; and (iii) with respect to each fiscal quarter in 2006 ending prior to the Repayment Date and any
shorter period from the prior quarter end to the Repayment Date, an unaudited combined balance sheet of the Companies and their Subsidiaries (excluding, the Excluded Subsidiaries) as of the last day
of each such fiscal quarter or such shorter period and the related statements of income, equity and cash flows for the latest year-to-date period ended as of such day in
compliance with GAAP and meeting all requirements of Regulation S-X (taking into account Rule 10-01 thereunder) (the "2006 Interim
Financial Statements"), together with a SAS 100 review thereon by Seller's Accountants in a form reasonably satisfactory to Purchaser and Purchaser's Accountants. On and after
the Closing and through the Repayment Date, Purchaser agrees to cooperate with Seller and Seller's Accountants in connection with the preparation of any unaudited financial statements for any period
ending on the Repayment Date, or any fiscal quarter ending prior to the Repayment Date. To the extent that Purchaser requires any audited financial statement for any period beginning and ending within
2006 for which an audit has not already been prepared by Seller's Accountant on or prior to the Closing Date, then Seller and Purchaser shall cooperate with Seller's Accountants or such other
accountants as are required, if Seller's Accountants are not able to prepare such financial statements, to prepare audited financial statements for the requested period. 



	(b)
	Seller
shall, and shall cause the officers, directors, employees, agents, representatives, accountants and counsel of Seller and each Company and Subsidiary to, cooperate with
Purchaser and its financing sources and their respective officers, employees and authorized agents, accountants, counsel and representatives in connection with the obtaining of financing of the
Purchase Price (and any refinancings thereof) (each, a "Financing") and any Securities and Exchange Commission registration process contemplated by a Financing or
any filings otherwise required to be made with the Securities and Exchange Commission by Purchaser, its Affiliates or OCM HoldCo, LLC. Such cooperation shall include, without limitation:
(i) the provision of auditor's consents with respect to the inclusion of the audited combined balance sheet of the Companies and their Subsidiaries (excluding the Excluded Subsidiaries) as of
December 31, 2004 (the "2004 Audited Balance Sheet") and the 2005 Audited Financial Statements in filings and marketing materials; (ii) the provision
of accountant's comfort letters with respect to the 2004 Audited Balance Sheet, 2005 Audited Financial Statements, 2005 Quarterly Financial Statements, the 2006 Interim Financial Statements, financial
data derived from books and records prior to Closing and customary negative assurances with respect to matters relating to the foregoing; (iii) the provision of customary representations to
accountants in connection with audits, reviews and comfort letters; (iv) provision of the unaudited combined balance sheets of the Companies and their Subsidiaries (excluding the Excluded
Subsidiaries) as of March 31, 2004, June 30, 2004 and September 30, 2004 and the related statements of income, equity and cash flows for the three, six and nine months,
respectively, then ended; (v) responding to due diligence requests from financing sources; and (vi) providing customary legal opinions to financing sources. Notwithstanding the
foregoing, Seller shall not be required to provide or prepare audited financial statements for any period prior to January 1, 2006, other than the 2004 Audited Balance Sheet and the 2005
Audited Financial Statements. 



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	(c)
	Purchaser
shall pay for all costs and expenses reasonably incurred by Seller after the Closing as a result of Seller's efforts under the last sentence of Section 5.16(a);
provided that, in the event that the Repayment Date occurs, Seller shall reimburse Purchaser for the first audit requested pursuant to the last sentence of Section 5.16(a) for any period
on or prior to the Repayment Date. Seller shall reimburse Purchaser on the Repayment Date, and if such payment is not made in cash, then Seller or Agent under the Note Agreement shall provide a
direction letter that permits Purchaser to retain a portion of the amount to be paid on the Tranche A Note equal to the reimbursement owed by Seller. To the extent that the reimbursement
obligation is not known until after the Repayment Date, Seller shall pay any reimbursable amount in cash or Purchaser may offset the amount against any amount owed to Seller or its Affiliates under
any Transaction Document. 




        SECTION 5.17
Separation. Seller shall use commercially reasonable efforts to separate the agreement listed on Section 5.17 of the Company
Disclosure Schedule, such that WTA and MLR are licensees of, and responsible for, only those seat licenses allocated as of the date hereof to the Meadows Facility and the OTB Facilities. If such
separation has not occurred prior to the Closing Date, Seller shall indemnify WTA and MLR for any Losses related to sites authorized to use software under the agreement listed on Section 5.17
of the Company Disclosure Schedule other than the Meadows Facility and the OTB Facilities. 


        SECTION 5.18
Notification. Seller and Purchaser shall promptly, and in any event prior to the Closing, notify the other party in writing of all
events, circumstances, facts and occurrences which such party becomes aware of if such events, circumstances, facts and occurrences would reasonably be expected to result in a Purchaser Material
Adverse Effect or a Material Adverse Effect. 


        SECTION 5.19
Environmental Report. Seller shall exercise its best efforts (at no material cost to Seller) to cause the consultant(s) which
issued the Phase I Environmental Site Assessment dated October 28, 2005 prepared by AMEC Earth & Environmental and the Phase I obtained by Seller pursuant to
Section 5.22 to permit Purchaser and any lender providing financing to Purchaser with respect to or secured by any of the Real Property, to rely on such reports to the full extent that
Seller may rely on such reports. 


        SECTION 5.20
XpressBet Matters. Seller shall use commercially reasonable efforts to complete on or before the Closing Date the formalization of the
relationship between WTA and MLR, on the one hand, XpressBet, Inc., on the other hand, to enter into (i) a formal agreement for the provision of banking services by
XpressBet, Inc. to WTA and MLR with respect to the accounts of WTA's and MLR's Pennsylvania account wagering customers and (ii) separate tote structures and service agreements for WTA
and MLR, on the one hand, and XpressBet, Inc., on the other hand. Seller shall seek Commission approval for each of such agreements. 


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        SECTION 5.21  [Reserved]


        SECTION 5.22
Phase I. Seller agrees to cause, at its expense, a Phase I environmental assessment to be conducted by AMEC Earth and
Environmental, Inc. (or other reputable consultant agreed to by Purchaser) on the real property located on Section 5.22 of the Company Disclosure Schedule
(the "Phase I"). Seller shall deliver the Phase I to Purchaser within sixty days after the date hereof. Seller and Purchaser acknowledge that
to the extent a circumstance, event or occurrence is disclosed in the Phase I that, if known by Seller as of the date hereof, would have resulted in Seller's representations in
Section 3.12 being untrue, that such a circumstance, event or occurrence constitutes a Seller Development as defined in Section 8.03(b). 


        SECTION 5.23
Slot Machine Taxes. Seller and Purchaser shall use commercially reasonable efforts to support the interpretation by all relevant
Governmental Authorities that the local share assessment payable by each slot machine licensee under Section 1403(b) of the Gaming Act shall not in any circumstance exceed four percent (4%) of
the gross terminal revenue from slot machines in operation at such licensee's facility, including amounts payable by such licensee in respect of such local share assessment to the State Gaming Fund
established by Section 1403(a) of the Gaming Act and amounts to be paid to any other Governmental Authorities under Section 1403(c). 


ARTICLE VI

EMPLOYEE MATTERS  


        SECTION 6.01 Arrangements; Payroll Obligations. (a) Immediately prior to Closing, all employees of the Company and its
Subsidiaries (other than those listed on Schedule 6.01(a) of the Company Disclosure Schedules, which listed employees are hereinafter referred to as the "Company
Employees") shall be transferred to MEC Pennsylvania Racing Services, Inc. and shall be employees of MEC Pennsylvania Racing Services, Inc. rather than any Company or any
of its Subsidiaries. Such employees who are so transferred shall be referred to as the "Transferred Employees". Seller agrees that Purchaser shall not assume or be
responsible for, and shall be indemnified against, any and all Liabilities related to the Transferred Employees and the transfer of the Transferred Employees to MEC Pennsylvania Racing
Services, Inc., including without limitation, any payroll, vacation, sick leave, severance, WARN Act, COBRA costs or similar amounts. 



	(b)
	Seller
will be responsible under the Racing Services Agreement for the payroll obligations with respect to the Company Employees who are the responsibility of MEC Pennsylvania Racing
Services, Inc. under the Racing Services Agreement (including, without limitation, the satisfaction of all payroll withholding tax obligations) for the Companies and Subsidiaries payable after
the Closing Date. Subject to Section 6.03 and anything to the contrary in the Racing Services Agreement, Seller agrees that Purchaser shall not assume or be responsible for, and shall be
indemnified against, any and all Liabilities related to the Company Employees who are the responsibility of MEC Pennsylvania Racing Services, Inc. under the Racing Services Agreement, including
without limitation, any payroll, vacation, sick leave, severance, WARN Act, COBRA costs, workers compensation or similar amounts. Except with respect to any vacation benefits, Multiemployer Plans and
the MEC Health Plan, the Company Employees do not participate in any Benefit Plans. 



49







 





        SECTION 6.02
Benefit Plans and Transferred Employee Related Obligations. (a) Seller agrees to continue coverage of the Transferred Employees
under its or its Affiliates' employee benefit plans in accordance with their terms and its or its Affiliates' personnel policies on and after the Closing Date. As of the Closing Date, each Company
Employee who was covered by the health plan listed on Section 6.02 of the Company Disclosure Schedule (the "MEC Health Plan") shall cease to be covered by
such health plan. Seller agrees, at its sole cost and expense, to create a separate employee plan in the name of Purchaser to provide to such Company Employees substantially similar benefits to those
provided for under the MEC Health Plan, except in instances where the benefit cannot be replicated because of the different provider. Seller shall remain obligated for any and all benefits and benefit
entitlements under the Benefit Plans that were earned or accrued by any Company Employee or any Transferred Employee or former employees of any Company or Subsidiary on and prior to the Closing Date.
With respect to the Benefit Plans that provide welfare benefits, Seller represents, warrants and agrees that there will be no disruption in the coverage for the Transferred Employees under such
welfare plans as a result of their transfer to MEC Pennsylvania Racing Services, Inc. To the extent that there is a termination in coverage under the MEC Health Plan for the Company Employees
covered thereby as of the Closing Date, Seller represents, warrants and agrees that either it or the applicable insurance carrier, as set forth in the MEC Health Plan, shall remain obligated to
reimburse such Company Employees for eligible health care benefit expenses and services incurred prior to the Closing; provided that such Company Employees' claims for
reimbursement for such expenses and services are delivered to the appropriate party within applicable time limits, as set forth in the MEC Health Plan. An expense or service is deemed to be incurred,
with respect to the MEC Health Plan, when the medical services are performed, and, with respect to plans that provide welfare benefits other than medical or dental benefits, when the event giving rise
to such expense or service occurs. 



	(b)
	Seller
agrees that it shall remain obligated for any expenses or Losses incurred in connection with any claim of an Employee or a former employee of any Company or Subsidiary arising
on or prior to the Closing Date under the workers' compensation laws of any state (a "Workers' Compensation Claim").



	(c)
	Seller
agrees to remain obligated to provide continuation health care coverage, in accordance with Section 4980B of the Code and Sections 601 to 608 of ERISA
("COBRA"), to all Employees or former employees of any Company or Subsidiary and their qualified beneficiaries (i) who incur a qualifying event on or prior to the
Closing Date and (ii) to whom Seller, any Company, or any Subsidiary are, on the Closing Date, (A) providing such continuation coverage or (B) under an obligation to provide such
continuation coverage at the election of the Employee or former employee or his or her qualified beneficiary. 



50













  





        (d)   Seller agrees that it shall be obligated to make contributions on behalf of Companies and Subsidiaries to any Multiemployer Plan in respect of the Company Employees to
the extent set forth in the Racing Services Agreement. 



SECTION 6.03        Intentionally
Omitted. 


SECTION 6.04        Intentionally
Omitted. 


SECTION 6.05        Employee
Benefits Indemnity. 




        (a)   Seller
agrees to indemnify Purchaser against and hold Purchaser harmless from all Losses arising out of: 



        (i)    the
breach of any representation, warranty, covenant or agreement of Seller made in Section 3.16 or Section 3.17 hereof or this Article VI; 


        (ii)   any
and all Liabilities related to, arising out of or associated with the Transferred Employees (including their transfer to MEC Pennsylvania Racing
Services, Inc.); 


        (iii)  any
and all Liabilities arising prior to the Closing under or with respect to employment, working conditions, wages and/or compensation, benefits, claims and all other
matters related to employees, agents and other personnel of the Companies and the Subsidiaries and of Seller and its subsidiaries; and 


        (iv)  any
and all Actions by, and all Liabilities related to, employees or independent contractors of Companies and the Subsidiaries and of Seller and its subsidiaries
arising prior to the Closing, including without limitation, any Actions or Liabilities arising out of any employee benefit plan or arrangement, any Actions or Liabilities for accrued vacation and sick
time of the employees, Seller's, the Companies' or any of their Affiliates' failure to deposit or fund any amounts withheld from employees pursuant to any retirement plan or arrangement or retiree
medical plan or arrangement, or any unfunded retirement plan or arrangement (whether or not payment is currently due under Law) or any obligations to current or former plan participants or
beneficiaries under any plan or arrangement intended to provide benefits to current or former employees of Seller, the Companies or any of their Affiliates. 




        (b)   Purchaser
agrees to indemnify Seller against and hold Seller harmless from all Losses arising out of the breach of any representation, warranty, covenant or agreement of
Purchaser made in this Article VI. 



                SECTION 6.06        Third-Party
Claims. Nothing in this Agreement is intended, or shall be construed, to confer upon any person,
other than the parties hereto and their successors and permitted assigns, any rights or remedies by reason of this Article VI. 


                SECTION 6.07        Survival.
The covenants and agreements of the parties hereto contained in this Article VI shall survive
the Closing and shall remain in full force and effect indefinitely. 


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ARTICLE VII
  
    TAX MATTERS    
    


                SECTION 7.01        Indemnity. (a) Seller agrees to indemnify and hold harmless
Purchaser, the
Companies and each Subsidiary against the following Taxes in excess of the amount, if any, paid on account of Taxes pursuant to Section 15.6.5 of the Racing Services Agreement to the extent
taken into account in determining the payment pursuant to such section, and, except as otherwise provided in Section 7.04, against any loss, damage, liability or expense, including reasonable
fees for attorneys and other outside consultants, incurred in contesting or otherwise in connection with any such Taxes: (i) Taxes imposed on the Companies or any Subsidiary with respect to
taxable periods of such Person ending on or before the Closing Date; (ii) with respect to taxable periods beginning before the Closing Date and ending after the Closing Date, Taxes imposed on
the Companies or any Subsidiary which are allocable, pursuant to Section 7.01(b), to the portion of such period ending on the Closing Date; (iii) Taxes imposed on any member of any
affiliated group with which any of the Companies and the Subsidiaries file or have filed a Tax Return on a consolidated or combined basis that includes the Companies' and the Subsidiaries' taxable
periods ending on or before the Closing Date; and (iv) any and all Taxes of any Person (other than the Companies and the Subsidiaries) imposed on any of the Companies or the Subsidiaries as a
transferee or successor, by contract or pursuant to any Law. Purchaser shall be responsible for and agrees to pay all Taxes and associated expenses not allocated to Seller pursuant to the first
sentence hereof; and Purchaser agrees to indemnify and hold harmless Seller against all such Taxes and expenses. 


        (b)   In
the case of Taxes that are payable with respect to a taxable period that begins before the Closing Date and ends after the Closing Date, the portion of any such Tax
that is allocable to the portion of the period ending on the Closing Date shall be: 



        (i)    in
the case of Taxes that are either (x) based upon or related to income or receipts, or (y) imposed in connection with any sale or other transfer or
assignment of property (real or personal, tangible or intangible) (other than conveyances pursuant to this Agreement, as provided under Section 7.07), deemed equal to the amount which would be
payable if the taxable year ended with the Closing Date; and 


        (ii)   in
the case of Taxes imposed on a periodic basis with respect to the assets of the Companies or any Subsidiary, or otherwise measured by the level of any item, deemed
to be the amount of such Taxes for the entire period (or, in the case of such Taxes determined on an arrears basis, the amount of such Taxes for the immediately preceding period), multiplied by a
fraction the numerator of which is the number of days in the period ending on the Closing Date and the denominator of which is the number of days in the entire period. 




        Purchaser
shall provide Seller for its review and comment any Tax Returns filed by or with respect to any of the Companies or any of the Subsidiaries during the period beginning on the
day after the Closing Date and ending on the earlier of the Repayment Date and the date of the Stock Transfer. 


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        (c)   Any
indemnity payable under this Section 7.01 shall be net of any Tax benefit enjoyed by the applicable indemnified party, determined in a manner consistent with
the last two sentences in Section 9.02(b) or Section 9.03(c) hereof. 



            SECTION 7.02    Returns
and Payments. (a) From the date of this Agreement through and after the Closing Date, Seller
shall prepare and file or otherwise furnish in proper form to the appropriate Governmental Authority (or cause to be prepared and filed or so furnished) in a timely manner all Tax Returns
relating to the Companies and the Subsidiaries that are due on or before or relate to any taxable period ending on or before the Closing Date (and Purchaser shall do the same with respect to
any taxable period ending after the Closing Date). Tax Returns of the Companies and the Subsidiaries not yet filed for any taxable period that begins before the Closing Date shall be prepared in a
manner consistent with past practices employed with respect to the Companies and the Subsidiaries (except to the extent counsel for Seller or the Companies renders a legal opinion that there is no
reasonable basis in law therefor or determines that a Tax Return cannot be so prepared and filed without being subject to penalties). With respect to any Tax Return required to be filed by Purchaser
or Seller with respect to the Companies and the Subsidiaries and as to which an amount of Tax is allocable to the other party under Section 7.01(b), the filing party shall provide the other
party and its authorized representatives with a copy of such completed Tax Return and a statement certifying the amount of Tax shown on such Tax Return that is allocable to such other party pursuant
to Section 7.01(b), together with appropriate supporting information and schedules at least 20 Business Days prior to the due date (including any extension thereof) for the filing of
such Tax Return, and such other party and its authorized representatives shall have the right to review and comment on such Tax Return and statement prior the filing of such Tax Return. 


        (b)   Seller
shall pay or cause to be paid when due and payable all Taxes described in Sections 7.01(a)(i) and 7.01(a)(ii), and Purchaser shall so pay or cause
to be paid Taxes for any taxable period ending after the Closing Date (subject to its right of indemnification from Seller by the date set forth in Section 7.05 for Taxes attributable to
the portion of any Tax period that includes the Closing Date pursuant to Sections 7.01(a) and 7.01(b)). 



            SECTION 7.03    Refunds.
Any Tax refund (including any interest with respect thereto), and any equivalent benefit through a
reduction in tax liability for a post-Closing Date period, relating to the Companies or any Subsidiary for any taxable period prior to the Closing Date shall be the property of Seller, and
if received by Purchaser or the Companies or any Subsidiary shall be paid over to Seller within five Business Days of the earlier of receipt or entitlement thereto;
provided, however, that any Tax benefit obtained by Purchaser, the Companies or any Subsidiary as a result of utilizing any net operating loss
carryforward or other carryforward (which may be subject to adjustments) which is allocable to the Companies or any Subsidiary shall be retained by Purchaser, the Companies or such Subsidiary.
Purchaser shall cause the Companies and the Subsidiaries to elect, where permitted by law, to carry forward any net operating loss, charitable contribution or other item arising after the Closing Date
that could, in the absence of such election, be carried back to a taxable period of the Companies ending on or before the Closing Date in which the Companies are included in a consolidated, combined
or unitary Tax return; provided that, if such election to carry forward an item is not available, any cash refund received by Seller with respect to such carryback shall be paid over to Purchaser
within five Business Days of actual receipt. Purchaser shall, if Seller so requests and at Seller's expense, cause the relevant entity to file for and obtain any refunds or equivalent amounts to which
Seller is entitled under this Section 7.03. Purchaser shall permit Seller to control (at Seller's expense) the prosecution of any such refund claim, and shall cause the relevant entity
to authorize by appropriate power of attorney such persons as Seller shall designate to represent such entity with respect to such refund claim; provided,
however, that Seller shall not take any action in the prosecution of such refund claims that would be materially detrimental to Purchaser, the Companies or the
Subsidiaries (including for this purpose the tax positions of such entities). In the event that any refund or credit of Taxes for which a payment has been made to Seller pursuant to this
Section 7.03 is subsequently reduced or disallowed, Seller shall indemnify and hold harmless the payor for any Tax Liability, including interest and penalties assessed against such payor by
reason of the reduction or disallowance. 


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            SECTION 7.04    Contests.
(a) After the Closing, Purchaser shall promptly notify Seller in writing upon the
commencement of any Tax audit or administrative or judicial proceeding that could affect Seller, and shall also separately notify Seller, in writing, of a proposed assessment or claim in an audit or
administrative or judicial proceeding of Purchaser or of any of the Companies and the Subsidiaries which, if determined adversely to the taxpayer, would be grounds for indemnification under this
Article VII. If Purchaser fails to give Seller prompt notice of an asserted Tax liability as required by this Section 7.04, then (a) if Seller is precluded by the failure to give
notice within 30 days of the commencement of such proceeding from contesting the asserted Tax liability in both the administrative and judicial forums, then Purchaser shall have sole
responsibility for such Tax liability or (b) if Seller is not precluded from contesting but such failure to give notice within 30 days of the commencement of such proceeding results in
detriment to Seller, then any amount that Seller is otherwise required to pay to Purchaser pursuant to Section 7.01 with respect to such liability shall be reduced by the amount of
such detriment. 


        (b)   Seller
may elect to direct, through counsel of its own choosing and at its own expense, any audit, claim for refund and administrative or judicial proceeding involving
any asserted liability with respect to which indemnity may be sought under this Article VII (any such audit, claim for refund or proceeding relating to an asserted tax liability are
referred to herein collectively as a "Contest"). If Seller elects to direct the Contest of an asserted Tax liability, it shall within 30 days of receipt of the
notice of asserted tax liability notify Purchaser of its intent to do so, and Purchaser shall cooperate and shall cause each Subsidiary and any successor to a Subsidiary or its successor to cooperate,
at Seller's expense, in each phase of such Contest. Purchaser also may participate in any such audit or proceeding and, if Seller does not assume the defense of any such audit or proceeding, Purchaser
may defend the same in such manner as it may deem appropriate, including, but not limited to, settling such audit or proceeding after giving five Business Days' prior written notice to Seller setting
forth the terms and conditions of settlement. In the event that issues relating to a potential adjustment for which Seller would be liable are required to be dealt with in the same proceeding as
separate issues relating to a potential adjustment for which Purchaser would be liable, Purchaser shall have the right, at its expense, to control the audit or proceeding with respect to the latter
issues. If Seller chooses to direct the Contest, Purchaser shall promptly empower and shall cause the appropriate Subsidiary or its successor promptly to empower (by power of attorney and such
other documentation as may be appropriate) such representatives of Seller as it may designate to represent Purchaser or the Subsidiary or its successor in the Contest insofar as the Contest involves
an asserted tax liability for which Seller would be liable under this Article VII. If Seller assumes the defense of a Contest, Seller shall not enter into any compromise or agree to settle any
claim pursuant to any Tax audit or proceeding which would adversely affect Purchaser for any taxable year without the written consent of Purchaser, which consent shall not be
unreasonably withheld. 


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            SECTION 7.05    Time
of Payment. Payment by Seller of any amounts due under this Article VII shall be made
(i) at least three Business Days before the due date of the applicable estimated or final Tax Return required to be filed by Purchaser on which is required to be reported income for a period
ending after the Closing Date for which Seller is responsible under Sections 7.01(a) and 7.01(b) and with respect to which Tax must be paid, and (ii) within five Business Days
following an agreement between Seller and Purchaser that an indemnity amount is payable or a "determination" as defined in Section 1313(a) of the Code. If liability under this
Article VII is in respect of costs or expenses other than Taxes, payment by Seller of any amounts due under this Article VII shall be made within five Business Days after the date when
Seller has been notified by Purchaser that Seller has a liability for a determinable amount under this Article VII and is provided with calculations or other materials supporting
such liability. 


            SECTION 7.06    Cooperation
and Exchange of Information. Upon the terms set forth in Section 5.02 of this Agreement,
Seller and Purchaser will provide each other with such cooperation and information as either of them reasonably may request of the other in filing any Tax Return, amended Tax Return or claim for
refund, determining a liability for Taxes or
a right to a refund of Taxes, participating in or conducting any audit or other proceeding in respect of Taxes or making representations to or furnishing information to parties subsequently desiring
to purchase any of the Companies or the Subsidiaries or any part of the business of the Companies and the Subsidiaries from Purchaser. Such cooperation and information shall include providing copies
of relevant Tax Returns or portions thereof, together with accompanying schedules, related work papers and documents relating to rulings or other determinations by Tax authorities. Each of Seller and
Purchaser shall retain all Tax Returns, schedules and work papers, records and other documents in its possession relating to Tax matters of the Companies and the Subsidiaries for each taxable period
first ending after the Closing Date and for all prior taxable periods until the later of (i) the expiration of the statute of limitations of the taxable periods to which such Tax Returns and
other documents relate, without regard to extensions except to the extent notified by the other party in writing of such extensions for the respective Tax periods, or (ii) six years following
the due date (without extension) for such Tax Returns. Any information obtained under this Section 7.6 shall be kept confidential except as may be otherwise necessary in connection with the
filing of Tax Returns or claims for refund or in conducting an audit or other proceeding. 


            SECTION 7.07    Conveyance
Taxes. Seller and Purchaser shall each pay 50% of any real property transfer or gains, sales, use,
transfer, value added, stock transfer, and stamp taxes, any transfer, recording, registration, and other fees, and any similar Taxes which become payable in connection with the transactions
contemplated by this Agreement, and shall file such applications and documents as shall permit any such Tax to be assessed and paid on or prior to the Closing Date in accordance with any available
pre-sale filing procedure. Each party hereto shall execute and deliver all instruments and certificates necessary to enable the other party or parties to comply with the foregoing. 


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            SECTION 7.08    Miscellaneous.
(a) Seller and Purchaser agree to treat all payments made by either of them to or for
the benefit of the other (including any payments to the Companies or any Subsidiary) under this Article VII, under other indemnity provisions of this Agreement and for any misrepresentations or
breaches of warranties or covenants as adjustments to the Purchase Price or as capital contributions for Tax purposes and that such treatment shall govern for purposes hereof. 


        (b)   All
amounts payable under any tax sharing agreement or arrangement between Seller and the Companies or any Subsidiary for any taxable period ending on or prior to the
Closing Date shall be calculated on a basis consistent with that used to date and shall be considered as an intercompany account owing to or from an Affiliate as of the Closing Date for purposes of
Section 5.01(c). Any tax sharing agreement or arrangement between Seller and/or its Affiliates, on the one hand, and the Companies or any Subsidiary, on the other hand, shall be terminated
immediately prior to the Closing and shall have no further effect for any taxable year or period (whether past, present or future) and no additional payments shall be made thereunder in respect of a
redetermination of tax liabilities or otherwise. 


        (c)   Notwithstanding
any provision in this Agreement to the contrary, the obligations of Seller to indemnify and hold harmless Purchaser, the Companies and the Subsidiaries
pursuant to this Article VII, and the representations and warranties contained in Section 3.18, shall terminate at the close of business on the 60th day following the expiration
of the applicable statute of limitations with respect to the Tax liabilities in question (giving effect to any waiver, mitigation or extension thereof). 


        (d)   For
purposes of this Article VII, "Purchaser" and "Seller," respectively, shall include each member of the affiliated group of corporations of which it is
or becomes a member (other than the Companies and the Subsidiaries, except to the extent expressly referenced). 


        (e)   In
the event that Purchaser transfers the Shares back to Seller in satisfaction of the Notes pursuant to Section 3.10 of the Note Agreement, then Seller and
Purchaser shall treat the acquisition of the Shares by Purchaser from Seller as being rescinded for all tax purposes and neither Seller nor Purchaser nor any other Person shall take any position
inconsistent therewith unless otherwise required by a "determination" (as defined in Section 1313(a)(1) of the Code) or by applicable state or local income or franchise tax law. 


 
 

ARTICLE VIII
  
    CONDITIONS TO CLOSING    
    


            SECTION 8.01    Conditions to Obligations of All Parties. The obligations of each party hereto to
consummate the transactions contemplated by this Agreement shall be subject to the fulfillment, at or prior to the Closing, of each of the following conditions: 


        (a)   HSR
Act.    Any waiting period (and any extension thereof) under the HSR Act applicable to the purchase of the Shares
contemplated hereby shall have expired or shall have been terminated; 


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        (b)   No
Order.    No Governmental Authority shall have enacted, issued, promulgated, enforced or entered any Governmental Order which
is in effect and has the effect of making the transactions contemplated by this Agreement illegal, otherwise restraining or prohibiting consummation of such transactions or causing any of the
transactions contemplated hereunder to be rescinded following completion thereof; 


        (c)   Commission
Approvals.    Purchaser and Seller shall have received preliminary approval from the Commission of (i) the
purchase of the Companies by Purchaser and (ii) Seller's management of the racing operations of the Meadows Facility under the Racing Services Agreement (collectively, the
"Commission Approval"), each in form and substance satisfactory to Seller and Purchaser in their reasonable discretion; and 


        (d)   No
Proceeding or Litigation.    No Action shall have been commenced or threatened by or before any Governmental Authority against
either Seller or Purchaser, seeking to restrain or materially and adversely alter the transactions contemplated hereby which is reasonably likely to render it impossible or unlawful to consummate
such transactions. 


            SECTION 8.02    Conditions
to Obligations of Seller. The obligations of Seller to consummate the transactions contemplated by
this Agreement shall be subject to the fulfillment or waiver, at or prior to the Closing, of each of the following conditions: 


        (a)   Representations
and Warranties; Covenants.    (i) The representations and warranties of Purchaser contained in this Agreement
shall be true and correct as of the date hereof, except as would not have a Purchaser Material Adverse Effect, other than such representations and warranties as are made as of another date, which
shall be true and correct on and as of such date, except as would not have a Purchaser Material Adverse Effect, (ii) the covenants and agreements contained in this Agreement to be complied with
by Purchaser on or before the Closing shall have been complied with in all material respects, and (iii) Seller shall have received a certificate of Purchaser to such effect signed by a duly
authorized officer thereof; 


        (b)   Changes
Since the Date of Signing.    (i) Seller shall have received a certificate of Purchaser (1) indicating which, if
any, representations and warranties of Purchaser contained in this Agreement would not be true and correct if made on the Closing Date, other than such representations and warranties as are made as of
another date, which would not be true and correct on and as of such date and (2) describing the circumstances, if any, which would cause such representations and warranties to not be so true
and correct if made on the Closing Date (or on such other date if made on another date) as a result of events, occurrences or change of circumstances that has occurred since the date of this
Agreement (such circumstances, "Purchaser Developments"), and (ii) if there are such Purchaser Developments that would result in a Purchaser Material Adverse
Effect, Seller shall have the right to not proceed with the Closing; provided, that Purchaser Developments will not constitute a breach of representation or warranty by
Purchaser hereunder whether or not Seller proceeds with the Closing and whether or not the Repayment Date occurs; 



        (c)   Resolutions.    Seller
shall have received a true and complete copy, certified by the Secretary or an Assistant Secretary of
Purchaser (or equivalent officer), of the resolutions, if any, duly and validly adopted by the Board of Directors of Purchaser evidencing its authorization of the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby; 


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        (d)   Incumbency
Certificate.    Seller shall have received a certificate of the Secretary or an Assistant Secretary
(or equivalent officer) of Purchaser certifying the names and signatures of the officers of Purchaser authorized to sign this Agreement and the other documents to be delivered hereunder; 


        (e)   XpressBet
Amendments.    Each party to the XpressBet Amendments (other than XpressBet, Inc.) shall have delivered to Seller
an executed counterpart of each of the XpressBet Amendments; 


        (f)    Racing
Services Agreement.    MECRacing, MECPenn, WTA and MLR shall have delivered to Seller an executed counterpart of the Racing
Services Agreement; 


        (g)   Legal
Opinion.    Seller shall have received from Purchaser's counsel a legal opinion, addressed to Seller and dated the Closing
Date, substantially in the form of Exhibit 8.02(g); and 


        (h)   Note
Documents.    Each party to the Note Documents (other than Seller) shall have executed and delivered each of the Note
Documents and each of the conditions in Sections 4.1 and 4.2 of the Note Agreement shall have been satisfied (or waived in writing by Seller). 


            SECTION 8.03    Conditions
to Obligations of Purchaser. The obligations of Purchaser to consummate the transactions
contemplated by this Agreement shall be subject to the fulfillment or waiver, at or prior to the Closing, of each of the following conditions: 


        (a)   Representations
and Warranties; Covenants.    (i) The representations and warranties of Seller contained in this Agreement shall
be true and correct as of the date hereof, except as would not have a Material Adverse Effect, other than such representations and warranties as are made as of another date, which shall be true and
correct on and as of such date, except as would not have a Material Adverse Effect, (ii) the covenants and agreements contained in this Agreement to be complied with by Seller on or before the
Closing shall have been complied with in all material respects, and (iii) Purchaser shall have received a certificate of Seller to such effect signed by a duly authorized
officer thereof; 


        (b)   Changes
Since the Date of Signing.    (i) Purchaser shall have received a certificate of Seller (1) indicating which, if
any, representations and warranties of Seller contained in this Agreement would not be true and correct if made on the Closing Date other than such representations and warranties as are made as of
another date, which would not be true and correct on and as of such date and (2) describing the circumstances, if any, which would cause such representations and warranties to not be so true
and correct if made on the Closing Date (or on such other date if made on another date) as a result of events, occurrences or change of circumstances that has occurred since the date of this
Agreement (such circumstances, the "Seller Developments"), and (ii) if there are Seller Developments which would result in a Material Adverse Effect, Purchaser
shall have the right to not proceed with the Closing; provided, that Seller Developments will not constitute a breach of representation or warranty by Seller hereunder
whether or not Purchaser proceeds with the Closing and whether or not the Repayment Date occurs; 


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        (c)   Resolutions.    Purchaser
shall have received a true and complete copy, certified by the Secretary or an Assistant Secretary
(or equivalent officer) of Seller, of the resolutions duly and validly adopted by the Board of Directors of Seller evidencing its authorization of the execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby; 


        (d)   Incumbency
Certificate.    Purchaser shall have received a certificate of the Secretary or an Assistant Secretary
(or equivalent officer) of Seller certifying the names and signatures of the officers of Seller authorized to sign this Agreement and the other documents to be delivered hereunder; 



        (e)   Resignations
of Directors.    The members of the Board of Directors of each Company and Subsidiary shall have resigned; 


        (f)    [Reserved]


        (g)   XpressBet
Amendments.    XpressBet, Inc. shall have delivered to Purchaser an executed counterpart of each of the
XpressBet Amendments; 



        (h)   Racing
Services Agreement.    MEC Pennsylvania Racing Services, Inc. shall have delivered to Purchaser an executed
counterpart of the Racing Services Agreement; 


        (i)    FIRPTA.    Seller
shall have provided Purchaser with a certificate pursuant to Treasury Regulations
Sections 1.1445-2(b) that the Seller is not a foreign person under the provisions of the Internal Revenue Code; 


        (j)    Legal
Opinion.    Purchaser shall have received from one or more of Seller's counsel (including internal counsel) one or more
legal opinions, each addressed to Purchaser and dated the Closing Date, substantially in the forms attached hereto as Exhibit 8.03(j); 


        (k)   Title
Insurance.    For each parcel of owned Real Property, the Title Company shall be irrevocably committed to issue an ALTA
extended owner's coverage title insurance policy (each, a "Title Policy") in the form of the relevant Title Commitment insuring fee title in such Real Property, vested in
the applicable Company or Subsidiary, in such amount as shall be reasonably requested by Purchaser, but not in excess of $53,000,000 for the Meadows Facility Real Property, subject only to Permitted
Exceptions and Insured Exceptions and containing such affirmative coverages and endorsements described in Section 5.11; 


        (l)    Employees.    The
Transferred Employees shall no longer be employees of the Companies or the Subsidiaries; 


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        (m)  Gaming
License.    No Governmental Authority shall have enacted, issued, promulgated, enforced or entered any Governmental Order
which is in effect, no Action shall have been commenced by or before any Governmental Authority (provided that if any such Action has been commenced by or before any
Governmental Authority, Purchaser shall have 10 days from receipt of written notice from Seller of such Action to provide a written notice to Seller ("Action
Notice") that it considers such Action to be non-frivolous and that based on such Action it will not close the transaction contemplated hereunder, and if Purchaser does not
provide an Action Notice with respect to such Action within such 10 day period, the commencement or existence of such Action shall not be the basis of a claim for a failure of a condition to
the Purchaser's obligations to consummate the transactions contemplated hereunder) and no Law shall have been enacted or adopted and remain in effect which would have or has had, as applicable, the
effect of (i) having a material and adverse effect on the right of Purchaser to own and control the Companies and the Subsidiaries following completion of the transactions contemplated
hereunder or (ii) having a material adverse effect on the ability of WTA or MLR to obtain a Conditional Category 1 license or Category 1 license under the Gaming Act, or to own or
operate a temporary or permanent facility at the Meadows Facility containing at least 3,000 slot machines no later than March 31, 2007, in each case of clause (i) or (ii)
other than such Laws that would have such material and adverse effect solely due to the bad acts or bad character issues of Purchaser or any of its Affiliates; 



        (n)   MEC
Items.    Seller and Purchaser shall not have received notification from the Gaming Board or its staff that the Gaming
Application filed with the Gaming Board by Purchaser for a Conditional Category 1 license will be subject to being declared or deemed incomplete with respect to the MEC Items and such matters
have not been rectified to the satisfaction of the Gaming Board. 


        (o)   [Reserved]



        (p)   Excluded
Subsidiaries.    Each of the Excluded Subsidiaries shall have been sold or transferred to Seller or any Affiliate of
Seller (other than any Company or any Subsidiary). Seller agrees that neither the Companies nor the Subsidiaries shall retain any Liabilities related to the Excluded Subsidiaries; 


        (q)   Financial
Statements.    Purchaser shall have received the 2005 Audited Financial Statements, the 2005 Quarterly Financial
Statements (accompanied by the SAS 100 review thereon by Seller's Accountants as required by Section 5.16 hereof), and the 2006 Interim Financial Statements (accompanied by the
SAS 100 review thereon by Seller's Accountants as required by Section 5.16 hereof); provided, that with respect to any period from the end of the previous
fiscal quarter to the Closing Date (it being understood that any determination of Closing or Closing Date in this Agreement shall be determined without giving effect to the closing condition
relating to the foregoing deliverables with respect to such interim periods and/or fiscal quarters set forth in this Section 8.03(q)), and if any 2006 fiscal quarter has ended after
45 days prior to the Closing Date, the foregoing deliverables with respect to such interim periods and/or fiscal quarters need not be provided on or prior to the Closing Date, but shall be
provided not later than 45 days after the end of such period; and 


        (r)   Note
Document Conditions.    Each party to the Note Documents (other than the Loan Parties, Parent Entites and OCM AcquisitionCo
(each as defined in the Note Agreement)) shall have executed and delivered each of the Note Documents and each of the conditions in Sections 4.1 and 4.3 of the Note Agreement shall have
been satisfied (or waived in writing by Purchaser). 


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ARTICLE IX
  
    INDEMNIFICATION    
    


            SECTION 9.01    Survival. Subject to the limitations and other provisions of this Agreement, the
representations, warranties, covenants and agreements of the parties contained herein shall survive the Closing and shall remain in full force and effect until the date that is 15 months from
the earlier of the Stock Transfer Trigger Date and the Seller Note Certificate Date; provided, however, (w) that the covenants and
agreements set forth in Sections 5.03, 5.04, 5.05, 5.06, 5.08, 5.09, 5.12, 5.15, 5.16, 5.17 and 5.23 and in Article VI, Article XI and this Article IX shall
remain in full force and effect for the applicable periods specified in the respective Sections or Articles or, if no such period is specified, indefinitely; (x) that the representations and
warranties set forth in Section 3.18 (relating to Taxes) and the agreements in Article VII shall remain in full force and effect as provided in Section 7.08(c); (y) the
representations and warranties set forth in Section 3.12 (relating to environmental matters) shall survive for a period of seven years from the Closing Date; and (z) the representations
and warranties set forth in the 1st, 3rd, and 4th sentences of Section 3.01, Section 3.02, Section 3.03, all of
Section 3.04(a) excluding the 1st sentence and the 1st and 2nd sentences of Section 4.01 (collectively, the
"Fundamental Representations") shall survive indefinitely. Whether or not Purchaser or Seller proceeds to the Repayment Date after the delivery of the Seller Note
Certificate (as defined in the Note Agreement), (i) the Seller Note Developments and the Purchaser Note Developments, as applicable, will not constitute a breach of representation or
warranty by Seller or Purchaser, respectively, hereunder and (ii) any breach of any representation or warranty by Seller made under the Seller Note Certificate will not constitute a breach of
representation or warranty of Seller to the extent (a) not within the knowledge of Seller (or not within what reasonably should have been within the knowledge of Seller) with respect to
facts and circumstances relating to any period after the Closing Date; or (b) resulting from (1) any actions taken or omitted to be taken by Seller, Purchaser or any of their respective
Affiliates in compliance with the terms of the Note Documents or the Transaction Documents or (2) any actions taken or omitted to be taken by or on behalf of any of the Companies
(not within the sole or shared control of the Operator under the Racing Services Agreement) after the Closing Date (other than activities taken or omitted to be taken by Operator under the
Racing Services Agreement) or by or on behalf of Purchaser or any of its Affiliates (other than the Companies). 


            SECTION 9.02    Indemnification
by Purchaser. (a) Purchaser agrees, subject to the other terms and conditions of this
Agreement, to indemnify Seller and its Affiliates and the officers, directors, employees and agents of each of the foregoing (all such Persons being included within the definition of "Seller"
only for purposes of this Section 9.02, Article VI and Article VII) against and hold them harmless from all Losses arising out of (i) the breach of any representation,
warranty, covenant or agreement of Purchaser herein (other than Article VI and Article VII, it being understood that the sole remedy for any such breach thereof shall be pursuant to
Article VI or Article VII respectively, as applicable), (ii) subject to the terms of the Racing Services Agreement, the conduct of the business of each Company and Subsidiary by
Purchaser following the Closing Date and (iii) any employee benefit plan (as defined in Section 3(3) of ERISA) maintained, sponsored or contributed to by Purchaser or any current
or former ERISA Affiliate of Purchaser (other than the Companies and their Subsidiaries), including without limitation any multiemployer plan (as defined in Section 3(37) of ERISA).
Anything in Section 9.01 to the contrary notwithstanding, no claim may be asserted, nor, subject to the last sentence of this Section 9.02(a), may any action be commenced, against
Purchaser for breach of any representation, warranty, covenant or agreement contained herein, unless written notice of such claim or action is received by Purchaser describing in reasonable detail the
facts and circumstances with respect to the subject matter of such claim or action on or prior to the date on which the representation, warranty, covenant or agreement on which such claim or action is
based ceases to survive as set forth in Section 9.01 (the "Applicable Date"), irrespective of whether the subject matter of such claim or action shall have
occurred before or after such date. If a claim or a potential claim arises, Purchaser and Seller shall promptly work in good faith to determine the validity of such claim or potential claim within a
reasonable period of time and if such claim or potential claim is not resolved to both parties' satisfaction within such reasonable period of time, either party may commence legal proceedings to
resolve such claim or potential claim (but in no event (other than as described in the next sentence) after the Applicable Date). If Seller becomes aware of any such claim or potential claim
within ninety days prior to the Applicable Date and promptly gives such written notice thereof as aforesaid on or prior to the Applicable Date, then upon the giving of such notice, Seller and its
Affiliates, or any of them, shall have the right to commence legal proceedings for a period of up to ninety days subsequent to the date of such written notice for the enforcement of their rights under
Section 9.02 with respect to the matters indicated in such notice. 


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        (b)   Payments
by Purchaser pursuant to Section 9.02(a) shall be limited to the amount of any liability or damage that remains after deducting therefrom any Tax benefit
to Seller and any insurance proceeds and any indemnity, contribution or other similar payment recovered by Seller from any third party with respect thereto (it being agreed that Seller will use
its commercially reasonable efforts to recover such proceeds and payments and that, promptly after the realization of any insurance proceeds, indemnity, contribution or other similar payment, Seller
shall reimburse Purchaser for such reduction in Losses for which Seller was indemnified prior to the realization of such reduction of Losses). A Tax benefit to Seller for purposes of this
Section 9.02 shall be reasonably determined by Seller's Accountants as the difference between (i) the amount of federal, state and local Tax Liabilities of Seller and its Affiliates for
the year with respect to which the indemnity payment is made, and (ii) the amount of federal, state and local Tax Liabilities of Seller and its Affiliates for the year with respect to which the
indemnity payment is made but without the effect of event that gave rise to the indemnity payment. Seller shall provide Purchaser with calculations and/or other information reasonably supporting the
determination of the amount of the Tax benefit. 


        (c)   No
claim may be made against Purchaser for indemnification pursuant to Section 9.02(a)(i) (other than breaches and claims under Section 2.03(c)
and the Fundamental Representations) with respect to any individual item of liability or damage arising out of a breach of a representation or warranty of Purchaser or of a covenant or
agreement to be performed by Purchaser prior to the Closing Date, unless the aggregate of all such Losses of Seller with respect to Sections 9.02(a)(i) (other than breaches and claims under
Section 2.03(c) and the Fundamental Representations) shall exceed $1,000,000, and Purchaser shall be required to pay or be liable only for amounts in excess of such aggregate amount.
Seller shall not be indemnified pursuant to Section 9.02(a)(i) with respect to any individual item of liability or damage (other than breaches and claims under Section 2.03(c)
and the Fundamental Representations) if the aggregate of all liabilities and damages of Seller for which Seller has received indemnification pursuant to Sections 9.02(a)(i) shall have
exceeded $20,000,000 (including any amounts paid or payable by Purchaser or any of its Affiliates under the Note Documents to the extent such amounts are liabilities and damages that would have been
payable under Section 9.02(a)(i) (other than breaches and claims under Section 2.03(c) and the Fundamental Representations) but excluding any principal or interest payment under
the Seller Notes and any other amounts paid or payable by Purchaser or any of its Affiliates under the Note Documents with respect to any other liabilities and damages). 


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        (d)   Except
as set forth in this Agreement (including the Exhibits and the Purchaser Disclosure Schedule), the other Transaction Documents and the Note Documents, Purchaser
is not making any representation, warranty, covenant or agreement with respect to the matters contained herein. Anything herein to the contrary notwithstanding and except as set forth in this
Agreement and the Note Documents, no breach of any representation, warranty, covenant or agreement contained herein shall give rise to any right on the part of Seller, after the consummation of the
purchase and sale of the Shares contemplated by this Agreement, to rescind this Agreement or any of the transactions contemplated hereby. 


            SECTION 9.03    Indemnification
by Seller. (a) Seller agrees, subject to the other terms and conditions of this
Agreement, to indemnify Purchaser and its Affiliates and the officers, directors, employees and agents of each of the foregoing (all such Persons being included in the definition of "Purchaser"
only for purposes of this Section 9.03, Article VI and Article VII) against and hold it harmless from all Losses arising out of the following: 



        (i)    the
breach of any representation, warranty, covenant or agreement of Seller herein (other than Article VI and Article VII and Sections 3.16, 3.17
and 3.18, it being understood that the sole remedy for any such breach thereof shall be pursuant to Article VI or Article VII respectively, as applicable); 


        (ii)   any
and all Liabilities related to, arising out of or associated with the Excluded Items or the business or operations of XpressBet, Inc., or any predecessor or
successor (including the Companies and the Subsidiaries but only to the extent that the business or operations of the Companies and the Subsidiaries related to the account wagering business now
conducted by XpressBet, Inc.), prior to, on and after the Closing Date, including, without limitation, any Liabilities related to, arising out of or associated with the formalizing of the
relationship between XpressBet, Inc., Seller, any Company and its Subsidiaries; 


        (iii)  any
and all Liabilities related to, arising out of or associated with the Excluded Subsidiaries or the Former Subsidiaries; 


        (iv)  any
Liability, obligation or responsibility under or related to Environmental Laws, whether such Liability or obligation or responsibility is known or unknown,
contingent or accrued, arising from acts, omissions, conduct or circumstances occurring between April 5, 2001 and the Closing Date; 



63









  




	(v)
	any
Liability, obligation or responsibility under or required by Environmental Law, whether such Liability, obligation or responsibility is known or unknown, contingent
or accrued, arising from acts, omissions, conduct or circumstances occurring prior to April 5, 2001 and the occurrence or existence of which is a violation of Environmental Law existing as of
the Closing Date;



	(vi)
	those
matters set forth in the following Sections of the Company Disclosure Schedules: Schedule 3.05(c) (item (b) only), Schedule 3.10(a) (except
for items (g) and (h) under the headings "Litigation Not Covered by Insurance") and Schedule 3.11(a) (under the heading "OSHA Citation");



	(vii)
	any
liability, obligation or responsibility under the Lease Agreement, including without limitation, (A) base rent payable under the Lease or otherwise to the
landlord thereunder for any period on or prior to the Closing Date; and (B) any penalties, damages or claims assessed by the landlord under the Lease in connection with any default under the
Lease or damage to the premises leased under the Lease; and



	(viii)
	any
withdrawal liability that becomes due and payable to any Multiemployer Plans listed in Schedule 3.16(a) during the period commencing on the Closing Date
and ending on the fifth anniversary of the Closing (the "Pension Survival Period") by the Companies or any of their Subsidiaries; provided, however, that if Operator (as defined in the
Racing Services Agreement) terminates the Racing Services Agreement pursuant to Sections 15.4.3, 15.4.6, 15.4.7 (to the extent that the revocation, suspension, withdrawal or failure of
renewal of any license referenced in Section 15.4.7 is caused by act or omisssion of any Owner (as defined in the Racing Services Agreement) or any of its Affiliates), 15.4.10, or
15.4.12 of the Racing Services Agreement, then the Pension Survival Period shall terminate on the date of termination of Operator's services under the Racing Services Agreement and this indemnity
shall not apply to any withdrawal liability that becomes due and payable to any Multiemployer Plans on and after the date of such termination or as a result of the termination of, or as a result of
any actions or omissions of Owners (as defined in the Racing Services Agreement) or any of their Affiliates that gave rise to the termination of, the Operator's services under the Racing
Services Agreement pursuant to the aforementioned sections of the Racing Services Agreement. 




        Seller
and Purchaser agree that the following amounts will annually be determined and, to the extent claimed by Purchaser and acknowledged by Seller, shall be Agreed Upon Losses
(as defined in the Holdback Agreement), and, to the extent claimed by Purchaser (and to the extent such claim has not become an Agreed Upon Loss or a Non-Loss
(as defined in the Holdback Agreement)), shall be Disputed Losses (as defined in the Holdback Agreement) on each January 31 occurring within five years of the Repayment Date and
on the fifth anniversary of the
Repayment Date (each a "Local Tax Assessment Date") in an amount equal to the lesser of (i) the Maximum Amount then in effect, and (ii) the Annual Applicable Amount. The "Annual
Applicable Amount" for any such date means 50% of the Tax Adjusted ocal Share Assessment Losses (i) with respect to the first January 31 occurring after the Repayment Date, for the
period (if any) from the Repayment Date to the December 31 immediately preceding such January 31, (ii) with respect to any subsequent January 31 occurring prior to
the fifth anniversary of the Repayment Date, for the twelve-month period ending on the immediately preceding December 31 (or, if shorter, for the period commencing on the Repayment Date and
ending on the immediately preceding December 31), and (iii) with respect to the fifth anniversary of the Repayment Date, for the period from the January 1 occurring the day after
the most recent December 31 described in clause (ii) above to such fifth anniversary, as applicable. If North Strabane Township were to change its fiscal year, then the references to
December 31 in the preceding sentence would be to the end of the new fiscal year, and the references to January 31 would be to the month end next succeeding the new fiscal
year end. 


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        The
"Local Share Assessment Losses" for any period means the positive amount, if any, calculated as follows: (i) the local share assessment for such period paid by Purchaser or
WTA to the Applicable Local Authorities pursuant to Section 1403(C)(3) of the Gaming Act, minus (ii) two percent (2%) of the aggregated daily gross terminal revenue from slot
machines in operation at WTA's gaming facility for such period as calculated by the Department of Revenue of the Commonwealth of Pennsylvania minus (iii) the incremental portion, if any, of
such local share assessment for such period paid by Purchaser or WTA to the Applicable Local Authorities pursuant to Section 1403(C)(3) of the Gaming Act which results from a change in law or
regulation, or interpretation thereof or from any other change thereto, in each case that occurs after the end of the first legislative session of the Pennsylvania state legislature following the
Closing Date (the "Local Applicable Date") minus (iv) any Refund received in such period from any Applicable Local Authority; provided, however, that if there is any change to
Section 1403(C)(3) of the Gaming Act or interpretation thereof prior to the Local Applicable Date, then for purposes of calculating the Local Share Assessment Losses, the amount in
clause (i) above shall be the lesser of (a) the amount described in clause (i) above and (b) the minimum annual dollar amount (which amount is currently $10,000,000)
required under such Section 1403(C)(3) after giving effect to any such change (prorated if such period is less than a year), or, if there is no minimum annual amount after giving effect to such
change, then $10,000,000 (prorated if such period is less than a year). 


        The
"Tax Adjusted Local Share Assessment Losses" for any period means the Local Share Assessment Losses for such period net of any Tax Benefits the Companies actually recognize in the
taxable year in which or with which such period ends ("Current Tax Year") that are directly attributable to any Local Share Assessment Losses. For this purpose, the Companies shall be deemed to
recognize a Tax benefit ("Tax Benefit") with respect to a taxable year if, and to the extent that, the Companies' cumulative liability for Taxes through the end of such taxable year, calculated
by excluding any Tax items attributable to the Local Share Assessment Losses from all taxable years, exceeds the Companies' cumulative liability for Taxes through the end of such taxable year,
calculated by taking into account any Tax items attributable to the Local Share Assessment Losses for all taxable years (to the extent permitted by relevant Tax law and treating such Tax items
as the last items claimed for any taxable year). If the relevant income Tax return for the Current Tax Year has not yet been filed when making the cumulative liability for Taxes calculations described
above, Taxes for the Current Tax Year shall be reasonably estimated in those calculations. If an estimate is made pursuant to the previous sentence, once the relevant income Tax return is filed, the
previously estimated calculation shall be finalized, and an appropriate upward or downward adjustment to the Agreed Upon Losses shall be made at the next Local Tax Assessment Date
(the "True-Up") (or if the income Tax return is filed after the final Local Tax Assessment Date and the estimate is finalized after such date, Purchaser will pay to Seller or
Seller will pay to Purchaser, as appropriate, in cash an amount equal to the True Up; provided that in the event Seller owes any True Up amount in cash pursuant to the foregoing provision, Seller
shall be required to pay Purchaser such amount in cash only to the extent that it has previously received cash from Releases (as defined in the Holdback Agreement) that it would not have
received but for the under estimation of taxes that resulted in such True Up amount). The last determination of Tax Benefits shall be for the taxable year following the last taxable year in which
local share assessments attributable to the five year period following the Repayment Date are deducted, and no further adjustments for Tax Benefits shall be made in subsequent taxable years. In no
event shall the cumulative Tax Benefit adjustments exceed the cumulative Local Share Assessment Losses for the five years following the Repayment Date to which the Tax Benefits are attributable. The
parties agree to act in good faith when making the Tax Benefit calculations, to make such calculations treating the Companies as a single taxpayer, and to not take into account any payments made by
the Companies to, or received by the Companies from, any Affiliate of Purchaser (other than the Companies) unless such payments are de minimis. For purposes of this paragraph, the term "Companies"
shall also include MEC Pennsylvania Food Services, Inc., MEC Racing Management, and any other subsidiaries of any of the Companies. 


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        In
the event that Purchaser or any of its Affiliates receives a Refund during or after the sixth year following the Repayment Date, and Seller has borne a portion of the cost of the
local share assessment for the year to which the Refund is attributable because there were Local Share Assessment Losses for such year (other than any such Refund that was deducted pursuant to
clause (iv) of the Local Share Assessment Losses calculation for any period within such five years), Purchaser agrees to give written notice thereof to Seller within five (5) Business
Days of receipt of each Refund and an amount equal to the following will be due from Purchaser to Seller: (a) 50% of the lesser of (i) such Refund amount and (ii) the Local Share
Assessment Losses for the year to which the Refund is attributable, minus (b) any Tax liability to Purchaser related to the portion of the Refund creditable or payable to Seller pursuant to
clause (a) (the "Seller Credit"). If receipt of such Refund occurs following the fifth anniversary of the Repayment Date, Purchaser agrees to pay the Seller Credit to Seller in cash
within fifteen days of receipt of the Refund. 


        Notwithstanding
anything to the contrary contained in this Agreement or any of the other Transaction Documents or any of the Note Documents, Seller's indemnification obligations under
this paragraph with respect to the Annual Applicable Amount shall only reduce the Holdback Amount and under no circumstances is Seller or any of its Affiliates required to pay Purchaser or any of its
Affiliates any cash or any other consideration (other than a reduction in the Maximum Amount to the extent described above). 


        "Applicable
Local Authorities" means North Strabane Township and other local authorities in Pennsylvania that are entitled to the local share assessment paid by Purchaser or WTA pursuant
to Section 1403(C)(3) of the Gaming Act. The term shall also include the Department of Revenue and the Treasury Department of the Commonwealth of Pennsylvania and the Pennsylvania Department of
Economic and Community Development in their capacities or on behalf of the local authorities described in the preceding sentence. 


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        "Refund"
means any rebates, reimbursements, credits, refunds or other relief from any Applicable Local Authority credited to or paid to Purchaser or any of its Affiliates or any grant or
funding paid to Purchaser or any of its Affiliates from any Applicable Local Authority, in each instance, directly related to a local share assessment previously paid by Purchaser or WTA with respect
to the five years following the Repayment Date pursuant to Section 1403(C)(3) of the Gaming Act. To the extent the "Refund" for any period exceeds the excess, if any, of clause (i) of
the definition of Local Share Assessment Losses for such period over the sum of clauses (ii) and (iii) of the definition of Local Share Assessment Losses for such period, then such
excess shall be deemed to be a Refund received in the next period. 


        Anything
in Section 9.01 to the contrary notwithstanding, no claim may be asserted nor, subject to the second to the last sentence of this Section 9.03(a), may any
action be commenced against Seller for breach of any representation, warranty, covenant or agreement contained herein, unless written notice of such claim or action is received by Seller describing in
reasonable detail the facts and circumstances with respect to the subject matter of such claim or action on or prior to the Applicable Date, irrespective of whether the subject matter of such claim or
action shall have occurred before or after such date. If a claim or a potential claim arises, Purchaser and Seller shall promptly work in good faith to determine the validity of such claim or
potential claim within a reasonable period of time and if such claim or potential claim is not resolved to both parties' satisfaction within such reasonable period of time, either party may commence
legal proceedings to resolve such claim or potential claim (but in no event (other than as described in the next sentence) after the Applicable Date). If Purchaser becomes aware of any such
claim or potential claim within ninety days prior to the Applicable Date and promptly gives such written notice thereof as aforesaid on or prior to the Applicable Date, then upon the giving of such
notice, Purchaser and its Affiliates, or any of them, shall have the right to commence legal proceedings for a period of up to ninety days subsequent to the date of such written notice for the
enforcement of their rights under Section 9.03 with respect to the matters indicated in such notice. To the extent that Seller's undertakings set forth in this Section 9.03 may be
unenforceable, Seller shall contribute the maximum amount that it is permitted to contribute under applicable law to the payment and satisfaction of all Losses incurred by Purchaser, the Companies and
the Subsidiaries. 


        (b)   No
claim may be made against Seller for indemnification pursuant to Section 9.03(a)(i) (other than breaches and claims under the Fundamental Representations and
Section 3.12 (as to environmental matters)) with respect to any individual item of liability or damage arising out of a breach of a representation or warranty of Seller or of a covenant
or agreement to be performed by Seller prior to the Closing Date, unless the aggregate of all such Losses of Purchaser with respect to Section 9.03(a)(i) (other than breaches and claims under
the Fundamental Representations and Section 3.12 (as to environmental matters)) shall exceed $1,000,000, and Seller shall be required to pay or be liable only for amounts in excess of
such aggregate amount. Purchaser shall not be indemnified pursuant to Section 9.03(a)(i) with respect to any individual item of liability or damage (other than breaches and claims under the
Fundamental Representations and Section 3.12 (as to environmental matters)) if the aggregate of all liabilities and damages of Purchaser for which Purchaser has received indemnification
pursuant to Section 9.03(a)(i) shall have exceeded $20,000,000 (including any amounts paid or payable by Seller or any of its Affiliates under the Note Documents and the Holdback Documents to
the extent such amounts are liabilities and damages that would have been payable under Section 9.03(a)(i) (other than breaches and claims under Section 3.12 (as to environmental
matters) and the Fundamental Representations) but excluding any amounts paid or payable by Seller or any of its Affiliates under the Note Documents and the Holdback Documents with respect to any other
liabilities and damages). 


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        (c)   Payments
by Seller pursuant to this Section 9.03 and Sections 6.05 and 7.01 shall be limited to the amount of any liability or damage that remains
after deducting therefrom (i) any Tax benefit to Purchaser, (ii) any insurance proceeds and any indemnity, contribution or other similar payment recovered by Purchaser from any third
party with respect thereto (it being agreed that Purchaser will use its commercially reasonable efforts and will cause Companies and Subsidiaries to use their respective commercially reasonable
efforts, to recover such proceeds and payments and that, promptly after the realization of any insurance proceeds, indemnity, contribution or other similar payment, Purchaser shall reimburse Seller
for such reduction in Losses for which Purchaser was indemnified prior to the realization of reduction of such Losses), and (iii) any amount paid pursuant to Section 15.6.5 of the Racing
Services Agreement with respect to the subject matter in dispute to the extent taken into account in determining the payment pursuant to such section. A Tax benefit to Purchaser for purposes of this
Section 9.03 will be reasonably determined by Purchaser's Accountants as the difference between (i) the amount of federal, state and local Tax Liabilities of Purchaser and its Affiliates
(including the Companies and the Subsidiaries) for the year with respect to which the indemnity payment is made, and (ii) the amount of federal, state and local Tax Liabilities of Purchaser and
its Affiliates (including the Companies and the Subsidiaries) for the year with respect to which the indemnity payment is made but without the effect of event that gave rise to the indemnity payment.
Purchaser shall provide Seller with calculations and/or other information reasonably supporting the determination of the Tax benefit. 


        (d)   Except
as set forth in this Agreement (including the Exhibits and the Company Disclosure Schedule), the other Transaction Documents and the Note Documents, Seller is not
making any representation, warranty, covenant or agreement with respect to the matters contained herein. Anything herein to the contrary notwithstanding and except as set forth in this Agreement and
the Note Documents, no breach of any representation, warranty, covenant or agreement contained herein shall give rise to any right on the part of Purchaser, after the consummation of the purchase and
sale of the Shares contemplated hereby, to rescind this Agreement or any of the transactions contemplated hereby. 


        (e)   Seller
and its Affiliates shall have no liability under any provision of this Agreement for any liabilities and damages to the extent that such liabilities and damages
relate to actions taken by Purchaser or its Affiliates, including, without limitation, each Company and Subsidiary, after the Closing Date. 



        (f)    Seller
and its Affiliates shall have no liability under any provision of this Agreement for any liabilities and damages to the extent that such liabilities and damages
are obligations of MEC Pennsylvania Racing Services, Inc. under the Racing Services Agreement to the extent satisfied thereunder. 


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        (g)   Notwithstanding
anything herein or in the Racing Services Agreement to the contrary, (i) prior to the Repayment Date, subject to the next sentence, all of the
indemnification obligations of Seller and its Affiliates under this Agreement (including without limitation under Articles VI, VII and IX hereof) and the Racing Services Agreement
(including without limitation any guaranty obligations of Seller thereunder) shall be deferred, and Purchaser and its Affiliates shall not be able to set off their obligations to Seller and its
Affiliates against such indemnification obligations, until the Repayment Date (and, subject to the next sentence, no such obligations of Seller or any of its Affiliates shall be payable prior to the
Repayment Date) and (ii) on the Repayment Date, to the extent there are Losses agreed to or proven to be payable on or prior to the Repayment Date (pursuant to a final, nonappealable
adjudication) under this Agreement or the Racing Services Agreement, as the case may be, the obligations with respect to any such agreed to or proven Losses shall be satisfied by a reduction of the
Tranche B Note (and thereafter, the Tranche A Note) on the Repayment Date in an amount equal to the aggregate amount of such agreed to or proven Losses. Notwithstanding anything
herein or in the Racing Services Agreement to the contrary, upon the earlier of the date of the Stock Transfer and the completion of all of Seller's rights and remedies under the Note Agreement,
neither Seller nor any of its Affiliates shall have any indemnification obligations under this Agreement (including without limitation under Articles VI, VII and IX hereof) or the Racing
Services Agreement (including without limitation any guaranty obligations of Seller thereunder) other than for Losses, in each case, which have resulted in out-of-pocket
expenditures by Purchaser's equity holders as a result of Seller's breach of representation, warranty or covenant under this Agreement or under the Racing Services Agreement. Nothing in this Agreement
or in any of the Transaction Documents shall limit any rights or claims Seller or any of its Affiliates may have under the Note Documents. Notwithstanding this Section 9.03(g), the procedures
set forth in Section 9.04 shall continue to apply to any claims that arise prior to the Repayment Date. 


        (h)   Notwithstanding
anything herein or in the Racing Services Agreement to the contrary, (i) prior to the earlier of the Repayment Date and the Stock Transfer Trigger
Date, all of the indemnification obligations of Purchaser and its Affiliates under this Agreement (including without limitation under Articles VI, VII and IX hereof) and the Racing
Services Agreement shall be deferred, and Seller and its Affiliates shall not be able to set off their obligations to Purchaser and its Affiliates against such indemnification obligations, until the
earlier of the Repayment Date and the Stock Transfer Trigger Date (and no such obligation of Purchaser or any of its Affiliates shall be payable prior to the earlier of the Repayment Date and
the Stock Transfer Trigger Date) and (ii) on the earlier of the Repayment Date or the Stock Transfer Trigger Date, to the extent that there are Losses agreed to or proven to be payable on or
prior to the Repayment Date or Stock Transfer Trigger Date, as applicable, under this Agreement or the Racing Services Agreement, as the case may be, the obligations shall be paid in cash. Nothing in
this Agreement or in any of the Transaction Documents shall limit any rights or claims Purchaser or any of its Affiliates may have under the Note Documents. 


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SECTION 9.04
Indemnification Procedures, Etc. (a) Each of Purchaser and Seller (for purposes of this Section 9.04(a), an
"Indemnified Party") agrees to give the indemnifying party under Section 6.05, 7.01, 9.02 or 9.03, as applicable (for purposes of this
Section 9.04(a), an "Indemnifying Party") prompt written notice (a "Claim Notice") of any claim, assertion, event or proceeding
by or in respect of a third party of which it has knowledge concerning any liability or damage as to which it may request indemnification under Section 6.05, 7.01, 9.02 or 9.03, as
applicable, provided, however, that no delay on the part of the Indemnified Party in notifying any Indemnifying Party shall relieve the Indemnifying Party from any liability hereunder unless
(and then solely to the extent) the Indemnifying Party thereby is materially prejudiced by the delay. The Indemnifying Party shall have the right to assume, through counsel of its own choosing,
the defense or settlement of any such claim or proceeding at its own expense. If the Indemnifying Party elects to assume the defense of any such claim or proceeding, the Indemnified Party may
participate in such defense, but in such case the expenses of the Indemnified Party shall be paid by it; provided, however, that if there
exists or is reasonably likely to exist a conflict of interest (including, without limitation, if there may be one or more legal or equitable defenses available to the Indemnified Party which are
different from or in addition to those of the Indemnifying Party and representation by the same counsel would be inappropriate due to the actual or potential differences between the parties) that
would make it inappropriate in the reasonable judgment of the Indemnified Party for the same counsel to represent both the Indemnified Party and the Indemnifying Party, then the Indemnified Party
shall be entitled to retain its own counsel, in each jurisdiction for which the Indemnified Party determines counsel is required, at the expense of the Indemnifying Party. With reasonable notice, the
Indemnified Party shall provide the Indemnifying Party with reasonable access to its records and personnel relating to any such claim, assertion, event or proceeding during normal business hours and
shall otherwise cooperate with the Indemnifying Party in the defense or settlement thereof, and the Indemnifying Party shall reimburse the Indemnified Party for all its reasonable
out-of-pocket expenses in connection therewith. If the Indemnifying Party elects to assume the defense of any such claim or proceeding, the Indemnified Party shall not pay, or
permit to be paid, any part of any claim or demand arising from such asserted liability unless the Indemnifying Party consents in writing to such payment or unless the Indemnifying Party, subject to
the penultimate sentence of this Section 9.04(a), withdraws from the defense of such asserted liability or unless a final judgment from which no appeal may be taken by or on behalf of the
Indemnifying Party is entered against the Indemnified Party for such liability. If the Indemnifying Party shall fail to defend, or if after commencing or undertaking any such defense, fails to
prosecute or withdraws from such defense, the Indemnified Party shall have the right to undertake the defense or settlement thereof, at the expense of the Indemnifying Party. If the Indemnified Party
assumes the defense of any such claim or proceeding pursuant to this Section 9.04(a) and proposes to settle such claim or proceeding prior to a final judgment thereon or to forego any
appeal with respect thereto, then the Indemnified Party shall give the Indemnifying Party prompt written notice thereof and the Indemnifying Party shall have the right to participate in the settlement
or assume or reassume the defense of such claim or proceeding. Neither the Indemnified Party nor the Indemnifying Party shall settle any claim or proceeding without the written approval of the
Indemnifying Party (in the case of a settlement by the Indemnified Party) or of the Indemnified Party (in the case of a settlement by the Indemnifying Party), which approval shall not be
unreasonably withheld. 


        (b)   Neither
Seller nor Purchaser shall have any liability to Purchaser or Seller (as defined in Section 9.03(a) and Section 9.02(a), respectively), as
the case may be, under Article VI, Article VII or this Article IX for consequential or punitive damages, except that this Section 9.04(b) shall not limit an
Indemnified Party's right to recover fees or expenses of counsel or reimbursement or indemnity for claims by third parties to the extent otherwise provided for in Article VI, Article VII
or this Article IX and paid or payable by an Indemnified Party. 


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        (c)   Each
of Seller and Purchaser hereby acknowledges and agrees that, from and after the Closing, other than the claims, remedies and other rights of Seller, Purchaser and
their respective Affiliates under the Note Documents, the sole and exclusive remedy of Seller or Purchaser (as defined in Section 9.02(a) and Section 9.03(a), respectively), as
the case may be, against Purchaser or Seller, as the case may be, with respect to any and all claims relating to the subject matter of this Agreement shall be pursuant to the indemnification
provisions set forth in this Article IX and in Article VI and Article VII, except for any claims arising out of fraud and where a party is entitled to seek
injunctive relief because there is no adequate remedy at law. In furtherance of the foregoing, each of Purchaser and Seller hereby waives, on behalf of itself and any other Purchaser or Seller
(as defined in Section 9.02(a) and 9.03(a), respectively), as the case may be, to the fullest extent permitted under applicable law, any and all rights, claims and causes of
action such Purchaser and Seller (or, after the Closing, any Company or Subsidiary), as the case may be, may have against Seller or Purchaser, as the case may be, (other than pursuant to this
Article IX, Article VI, or Article VII, as applicable) relating to the subject matter of this Agreement arising under or based upon any law, rule, regulation, order, judgment or
decree applicable to it or by which any of the properties of it or any of its subsidiaries is bound or affected, subject to the exception set forth in the immediately preceding sentence and subject to
the claims, remedies and other rights of Seller, Purchaser and their respective Affiliates under the Note Documents. Nothing in the forgoing provisions of this Section 9.04(c) shall limit any
rights or claims any party hereto, any Company, any Subsidiary or MEC Pennsylvania Racing Services, Inc. or any of their respective Affiliates may have under the Racing Services Agreement, the
Note Documents, the Holdback Documents, the Equity Commitment Agreement or any agreements related thereto (including any agreements guarantying the obligations under or otherwise lending credit
support to the Holdback Documents or Equity Commitment Agreement). 


        (d)   Each
of Purchaser and Seller agrees that, in the event an Indemnifying Party elects to assume the defense of any claim or proceeding, it will refrain from making any
public announcements in respect of such claim or otherwise communicating with the news media. 


        (e)   Purchaser
and Seller hereby consent to the non-exclusive jurisdiction of any court in which an Action by a third party is brought against any Indemnified
Party for purposes of any claim that an Indemnified Party may have under this Agreement with respect to such Action or the matters alleged therein and agree that process may be served on Purchaser and
Seller with respect to such a claim at the address specified in this Agreement. From and after the Closing, neither the Companies nor the Subsidiaries shall have any Liability to Seller or its
Affiliates for any breaches of the representations, warranties, agreements or covenants of Seller, the Companies or the Subsidiaries set forth herein (other than such agreements and covenants of the
Companies or the Subsidiaries set forth herein to the extent such agreements and covenants are to be performed after the Closing). From and after the Closing, neither Seller nor its Affiliates shall
seek indemnification or contribution from any Company or Subsidiary (including any of its employees or agents) for any such breaches (other than breaches of such agreements and covenants to be
performed after the Closing Date) or in respect of any other payments required to be made by Seller or its Affiliates (other than the Companies or the Subsidiaries) pursuant to this Agreement. Nothing
in the foregoing provisions of this Section 9.04(e) shall limit any rights or claims any party hereto, any Company, any Subsidiary, MEC Pennsylvania Racing Services, Inc. or any of their
respective Affiliates may have under the Racing Services Agreement, the Note Documents, the Holdback Documents, the Equity Commitment Agreement or any agreements related thereto (including any
agreements guarantying the obligations under or otherwise lending credit support to the Holdback Documents or Equity Commitment Agreement). 


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        SECTION 9.05
Payments. Subject to Section 9.03(g), once a Loss is agreed to by the Indemnifying Party or finally adjudicated to be payable
pursuant to Section 6.05, Section 7.01 or this Article IX, the Indemnifying Party shall satisfy its obligations within fifteen (15) Business Days of such final,
nonappealable adjudication by wire transfer of immediately available funds; provided, that during the term of any of the Holdback Documents, if the Indemnifying Party is
Seller and the Losses are covered under the Holdback Documents, then such obligations shall be satisfied in accordance with the provisions of the Holdback Documents. The parties hereto agree that
should an Indemnifying Party not make full payment of any such obligations (other than such obligations described in the proviso set forth in the immediately preceding sentence or in
Section 9.03(g)) within such fifteen (15) Business Day period, any amount payable shall accrue interest, compounded annually, calculated from the date of agreement of the Indemnifying
Party or final, nonappealable adjudication through the date such payment has been made, on the basis of the average of the daily rate of interest publicly announced by Citibank N.A. in
New York, New York from time to time as its base rate from the date of such agreement or such adjudication to the date of such payment. The parties hereto agree that any indemnification
made pursuant to this Agreement (including without limitation any indemnification covered by the Holdback Documents or any indemnification resulting in the reduction of amounts owing under the Seller
Notes) shall be treated as an adjustment to the Purchase Price. 


 
 

ARTICLE X
  
    TERMINATION, AMENDMENT AND WAIVER    
    


        SECTION 10.01 Termination. This Agreement may be terminated at any time prior to the Closing: 



	(a)
	by
the mutual written consent of Seller and Purchaser;



	(b)
	by
Seller if the condition set forth in Section 8.03(n) of this Agreement has not been satisfied or waived by Purchaser by July 31, 2006;



	(c)
	by
Purchaser, upon a material breach of any representation, warranty, covenant or agreement of Seller set forth in this Agreement such that the conditions set forth in
Section 8.03 would not be satisfied or if any representation or warranty of Seller shall have become untrue such that Purchaser would have the right not to proceed with the Closing pursuant to
Section 8.03(b) (a "Terminating Seller's Breach"); provided, however, that if such Terminating
Seller's Breach is curable by Seller through the exercise of its reasonable efforts within 30 days from the date Seller becomes aware thereof and is cured, Purchaser may not terminate this
Agreement pursuant to this Section 10.01(c) solely by reason of such Terminating Seller's Breach; 



72













  





        (d)   by Seller, upon a material breach of any representation, warranty, covenant or agreement of Purchaser set forth in this Agreement such that the conditions set forth in
Section 8.02 would not be satisfied or if any representation or warranty of Purchaser shall have become untrue such that Seller would have the right not to proceed with the Closing pursuant to
Section 8.02(b) (a "Terminating Purchaser's Breach"); provided, however, that if such Terminating
Purchaser Breach is curable by Purchaser through the exercise of its reasonable efforts within 30 days from the date Purchaser becomes aware thereof and is cured, Seller may not terminate this
Agreement pursuant to this Section 10.01(d) solely by reason of such Terminating Purchaser's Breach; 


        (e)   by
Purchaser or Seller in the event that any Governmental Authority shall have issued an order, decree or ruling or taken any other action restraining or enjoining the
transactions contemplated by this Agreement, and such order, decree, ruling or other action shall have become final and nonappealable; 


        (f)    by
Seller, upon receiving an Action Notice from the Purchaser; 


        (g)   [reserved];



        (h)   by
Seller upon failure to submit the Gaming Application to the Gaming Board by December 20, 2005 in accordance with Section 5.04(c) or the failure
by Purchaser to satisfy and continue to satisfy the Gaming Application Fee requirement in accordance with Section 5.04(d); provided, however that if the failure to
submit such Gaming Application is the result of the failure of Seller to make reasonable efforts in accordance with Section 5.04(c), Seller may not terminate pursuant to this
Section 10.01(h); 


        (i)    by
Seller or Purchaser if the condition set forth in Section 8.01(c) of this Agreement has not been satisfied or waived by both Purchaser and Seller by
July 31, 2006; 


        (j)    [reserved];



        (k)   by
Seller, at any time after the date which is 5 Business Days prior to the date, if any, identified by the Gaming Board after which continued pursuit by Seller
of a Conditional Category 1 license with Purchaser pursuant to the Gaming Application would jeopardize Seller's ability to obtain a Conditional Category 1 license or a Category 1
license in its own name; 


        (l)    by
Seller or Purchaser if it reasonably determines that Closing has become impossible due to events or circumstances that have occurred since the date of this Agreement;
provided however that the right to terminate this Agreement under this Section 10.01(l) shall not be available to a party whose failure to fulfill any obligation under this Agreement shall have
been the cause of, or shall have resulted in, the Closing becoming impossible; or 


        (m)  by
Seller or Purchaser if the Closing shall not have occurred prior to July 31, 2006. 


        Time
shall be of the essence in this Agreement. 


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        SECTION 10.02    Effect
of Termination.    In the event of termination of this Agreement in accordance with this Agreement, this
Agreement shall forthwith become void and there shall be no liability on the part of any party hereto (a) except as set forth in Sections 5.04(e), 5.05 and 5.15 and the second,
third and fourth sentences of Section 5.04(d) and Article XI hereof and (b) nothing herein shall relieve any party hereto from liability for any willful breach of any provision
hereof (including, without limitation, Section 5.10). 


        SECTION 10.03    Waiver.    At
any time prior to the Closing, each of the parties hereto may (a) extend the time for the
performance of any of the obligations or other acts of the other party hereto, (b) waive any inaccuracies in the representations and warranties contained herein or in any document delivered
pursuant hereto or (c) waive compliance with any of the agreements or conditions contained herein. Any such extension or waiver shall be valid only if set forth in an instrument in writing
signed by the party to be bound by such extension or waiver, as applicable. Any waiver of any term or condition shall not be construed as a waiver of any subsequent breach or a subsequent waiver of
the same term or condition, or a waiver of any other term or condition, of this Agreement. The failure of any party to assert any of its rights hereunder shall not constitute a waiver of any of
such rights. 


 
 

ARTICLE XI    
    


 
  GENERAL PROVISIONS    
    


        SECTION 11.01    Expenses; Pro-rations. 


        (a)   Except
as otherwise expressly provided herein, all costs and expenses, including, without limitation, fees and disbursements of counsel, financial advisors and
accountants, incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such costs and expenses, whether or not the Closing shall have
occurred. Seller shall pay (i) the cost of the Title Commitments; (ii) the portion of the premium attributable to the standard coverage portion of the Title Policies (excluding the costs
of any endorsements requested by Purchaser, except as are necessary to cure any Title Objection or obtained in connection with an Insured Exception); (iii) Seller's share of the
pro-rations described in this Section 11.01; and (iv) one-half of the HSR filing fee. Purchaser shall pay (i) the portion of the premium attributable to
any endorsements to the Title Policies (except as set forth in the preceding sentence) and the portion of the premium attributable to the "extended coverage" portion of the Title Policies;
(ii) Purchaser's share of the pro-rations described in this Section 11.01; and (iii) one-half of the HSR filing fee. 


        (b)   All
non-delinquent real estate Taxes and assessments on the Real Property will be prorated as of the Closing based on the actual current Tax bill. If the
Closing takes place before the real estate Taxes are fixed for the Tax year in which the Closing occurs, the apportionment of real estate Taxes will be made on the basis of the real estate Taxes for
the immediately preceding Tax year applied to the latest assessed valuation. All delinquent Taxes and all delinquent assessments, if any, on the Real Property will be satisfied at the Closing by
Seller. All supplemental Taxes billed after the Closing for periods prior to the Closing will be paid promptly by Seller. Any Tax refunds received by Purchaser which are allocable to the period prior
to the Closing (less Purchaser's reasonable out-of-pocket costs in connection with any such refund proceedings) will be paid by Purchaser to Seller. 


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        (c)   With
respect to rent and other amounts payable by Seller in connection with any leases, all such rent and other amounts will be prorated as of the Closing. Any
delinquent rent or other payments payable by Seller in connection with the leases will be satisfied at the Closing by Seller. 


        (d)   With
respect to rent and other amounts payable to Seller in connection with any leases, all rents which are actually received by Seller as of the Closing will be
prorated. Delinquent rents and rents not paid by Closing will not be prorated and Seller can continue to collect such rents, provided that Purchaser shall not have the obligation to pursue any Action
or other proceedings in connection therewith. Rents allocable to the period prior to the Closing will be the property of Seller and rents allocable to the period after the Closing will be the property
of Purchaser. 


        (e)   All
pro-rations will be made as of the date of the Closing based on a 365-day year or the number of days in the month during which the Closing
occurs, as applicable. 


        SECTION 11.02    Notices.    All
notices, requests, claims, demands and other communications hereunder shall be in writing and
shall be given or made on the date delivered by hand or by internationally recognized courier service such as Federal Express or by other messenger (or if delivery is refused, upon
presentment), or upon receipt by facsimile transmission (without confirmation), or upon delivery by registered or certified mail (postage prepaid, return receipt requested) to the parties hereto at
the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this Section 11.02): 



	(a)
	if
to Seller: 





Magna
Entertainment Corp.

337 Magna Drive

Aurora, Ontario

L4G 7K1, Canada

Facsimile: 905-726-7177

Attn: CEO/General Counsel 


with
a copy to: 


O'Melveny &
Myers LLP

400 South Hope Street

15th Floor

Los Angeles, CA 90071

Facsimile: 213-430-6407

Attn: Joseph K. Kim, Esq. 




75







 



	(b)
	if
to Purchaser: 



PA
Meadows, LLC

211 North Rampart Blvd.

Las Vegas, Nevada 89115

Facsimile: 702-507-5992

Attn: William Paulos

William Wortman 


with
a copy to: 


Munger,
Tolles & Olson, LLP

355 S. Grand Avenue, 35th Floor

Los Angeles, CA 90071-1560

Facsimile: 213-687-3702

Attn: Sandra Seville-Jones, Esq. 


and
a copy to: 


Santoro,
Driggs, Walch, Kearney, Johnson & Thompson

400 South Fourth Street

Suite 300

Las Vegas, NV 89101

Facsimile: 702-791-1912

Attn: Michael Kearney 





        SECTION 11.03    Public
Announcements.    Unless otherwise required by applicable law or stock exchange requirements, no party to
this Agreement shall make any public announcements in respect of this Agreement or the transactions contemplated hereby or otherwise communicate with any news media without prior consent of the other
party, and the parties will cooperate as to the timing and contents of any such announcement. 


        SECTION 11.04    Headings.    The
headings contained in this Agreement are for reference purposes only and shall not affect in any
way the meaning or interpretation of this Agreement. 


        SECTION 11.05    Severability.    If
any term or other provision of this Agreement is invalid, illegal or incapable of being
enforced by any rule of law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the
transactions contemplated hereby is not affected in any manner adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the
transactions contemplated hereby be consummated as originally contemplated to the greatest extent possible. 


        SECTION 11.06    Entire
Agreement.    This Agreement, the Note Documents and the Transaction Documents constitute the entire
agreement of the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and undertakings, both written and oral, other than the Confidentiality Agreement, between
Seller and Purchaser (or Millennium Management Group, LLC) with respect to the subject matter hereof and except as otherwise expressly provided herein. 


76







 

        SECTION 11.07    Assignment.    This
Agreement shall not be assigned by operation of law or otherwise, except that prior to the
Closing, Purchaser, without the consent of Seller, but with at least 10 Business Days' prior written notice to Seller, may transfer or cause to be transferred all of the equity interests of
Purchaser to a wholly owned direct or indirect subsidiary of Cannery Casino Resorts, LLC, a Nevada limited liability company. 


        SECTION 11.08    No
Third-Party Beneficiaries.    Except as provided in Article IX, this Agreement is for the sole benefit
of the parties hereto and their permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other Person or entity any legal or equitable right, benefit or remedy
of any nature whatsoever under or by reason of this Agreement. 


        SECTION 11.09    Amendment.    This
Agreement may not be amended or modified except by an instrument in writing signed by Seller
and Purchaser. 


        SECTION 11.10    Governing
Law; Jurisdiction; Service of Process.    (a) This Agreement shall be governed by, and construed
in accordance with, the laws of the State of New York. Seller and Purchaser hereby agree and consent to the exclusive jurisdiction of, and service of process and venue in, the
United States District Court for the Southern District of New York and the courts of the State of New York located in the County of New York, State of New York and
waives any objection with respect thereto, for the purpose of any action, suit or proceeding arising out of or relating to this Agreement. 



        SECTION 11.11    WAIVER
OF JURY TRIAL.    EACH OF PURCHASER AND SELLER HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY
ACTION, PROCEEDING, OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE ACTIONS OF PURCHASER OR SELLER IN THE NEGOTIATION,
ADMINISTRATION, PERFORMANCE AND ENFORCEMENT THEREOF. 


        SECTION 11.12    Counterparts.    This
Agreement may be executed in one or more counterparts, and by the different parties hereto
in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement. 



        SECTION 11.13    Specific
Performance.    The parties hereto agree that irreparable damage would occur in the event any provision
of this Agreement was not performed in accordance with the terms hereof and that the parties shall be entitled to specific performance of the terms hereof, in addition to any other remedy at law
or equity. 


        SECTION 11.14    Prevailing
Party.    The prevailing party or parties in any arbitration, mediation, court action, or other
adjudicative proceeding arising out of or relating to this Agreement shall be reimbursed by the party or parties who do not prevail for their reasonable attorneys, accountants and experts fees and for
the costs of such proceeding. 


77







 

        IN
WITNESS WHEREOF, Seller and Purchaser have caused this Agreement to be executed as of the date first written above by their respective officers thereunto duly authorized. 



	 	 	PA MEADOWS, LLC
	 	 	 	 
	 	 	By:	 
 Name:

Title:
	 	 	 	 
	 	 	 	 
	 	 	MAGNA ENTERTAINMENT CORP.
	 	 	 	 
	 	 	By:	 
 Name:

Title:
	 	 	 	 
	 	 	 	 
	 	 	By:	 
 Name:

Title:




S-1











QuickLinks


FIRST AMENDMENT TO STOCK PURCHASE AGREEMENT

RECITALS


STOCK PURCHASE AGREEMENT

TABLE OF CONTENTS


ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF PURCHASER

ARTICLE V

ADDITIONAL AGREEMENTS


ARTICLE VII TAX MATTERS

ARTICLE VIII CONDITIONS TO CLOSING

ARTICLE IX INDEMNIFICATION


ARTICLE X TERMINATION, AMENDMENT AND WAIVER


ARTICLE XI

GENERAL PROVISIONS