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Exhibit 10.4

MAGNA ENTERTAINMENT CORP.

as Borrower

 — and —

THE GUARANTORS SET FORTH

ON THE SIGNATURE PAGES HEREOF

as Guarantors

 — and —

MID ISLANDI SF., ACTING

THROUGH ITS ZUG BRANCH

as Lender

 
 

BRIDGE LOAN AGREEMENT    
    

Dated as of July 22, 2005

 
 

TABLE OF CONTENTS    
    

ARTICLE 1

INTERPRETATION

	1.1	 	Definitions	 	4
	1.2	 	Gender and Number	 	26
	1.3	 	Certificate of the Lender as to Rates, etc.	 	26
	1.4	 	Invalidity, etc.	 	26
	1.5	 	Headings, etc.	 	27
	1.6	 	Governing Law	 	27
	1.7	 	Attornment	 	27
	1.8	 	Judgment Currency	 	27
	1.9	 	References	 	27
	1.10	 	Currency	 	28
	1.11	 	This Agreement to Govern	 	28
	1.12	 	Generally Accepted Accounting Principles	 	28
	1.13	 	Computation of Time Periods	 	28
	1.14	 	Actions on Days Other Than Banking Days	 	28
	1.15	 	Oral Instructions	 	28
	1.16	 	Incorporation of Schedules	 	29

ARTICLE 2

BRIDGE LOAN

	2.1	 	Establishment of Bridge Loan	 	29
	2.2	 	Non-Revolving Nature of Bridge Loan	 	30
	2.3	 	Voluntary Repayments	 	30
	2.4	 	Mandatory Repayment	 	30
	2.5	 	Voluntary Reduction in Aggregate Commitment	 	31

ARTICLE 3

GENERAL PROVISIONS RELATING TO THE BRIDGE LOAN

	3.1	 	Advances	 	31
	3.2	 	Payments Generally	 	32
	3.3	 	Illegality	 	32
	3.4	 	Indemnity	 	32
	3.5	 	Proceedings in Respect of Claims	 	33
	3.6	 	Evidence of Indebtedness	 	35

 
ARTICLE 4

ADDITIONAL CONDITIONS PRECEDENT TO ADVANCES

UNDER TRANCHE 2 AND TRANCHE 3

	4.1	 	Tranche 2 Conditions	 	35
	4.2	 	Tranche 3 Conditions	 	36

ARTICLE 5

INTEREST AND FEES

	5.1	 	Interest Rate	 	37
	5.2	 	Calculation and Payment of Interest	 	39
	5.3	 	Fees	 	40
	5.4	 	Payment of Costs and Expenses	 	40

ARTICLE 6

REPRESENTATIONS AND WARRANTIES

	6.1	 	Representations and Warranties	 	41
	6.2	 	Survival of Representations and Warranties	 	55

ARTICLE 7

COVENANTS

	7.1	 	Affirmative Covenants	 	55
	7.2	 	Negative Covenants	 	66
	7.3	 	Environmental Matters	 	71
	7.4	 	The Meadows	 	72

ARTICLE 8

CONDITIONS PRECEDENT

	8.1	 	Conditions Precedent to Closing	 	73
	8.2	 	Conditions Precedent to Advances	 	82

ARTICLE 9

EVENTS OF DEFAULT AND REMEDIES

	9.1	 	Events of Default	 	83
	9.2	 	Remedies Upon Default	 	86
	9.3	 	Distributions	 	87

2

 
ARTICLE 10

GENERAL

	10.1	 	Reliance and Non-Merger	 	87
	10.2	 	Confidentiality	 	87
	10.3	 	No Set-Off	 	88
	10.4	 	Employment of Experts	 	88
	10.5	 	Reliance by Lender	 	88
	10.6	 	Notices	 	88
	10.7	 	Further Assurances	 	92
	10.8	 	Assignment	 	92
	10.9	 	Disclosure of Information to Potential Permitted Lender Assignees	 	93
	10.10	 	Right to Cure	 	93
	10.11	 	Forbearance by the Lender Not a Waiver	 	93
	10.12	 	Waiver of Statute of Limitations and Other Defenses	 	93
	10.13	 	Relationship	 	93
	10.14	 	Time of Essence	 	94
	10.15	 	Service of Process/Venue	 	94
	10.16	 	Jury Trial Waiver	 	94
	10.17	 	Final Agreement/Modification	 	94
	10.18	 	Continuing Agreement	 	95
	10.19	 	No Third Party Beneficiaries	 	95
	10.20	 	No Brokers	 	95
	10.21	 	Execution in Counterparts	 	95
	10.22	 	Contribution by Guarantors with Respect to Obligations.	 	95
	10.23	 	Successors and Assigns Bound; Joint and Several Liability; Agents; and Captions	 	96
	10.24	 	Loss of Borrower Note	 	96
	10.25	 	Acknowledgment	 	97
	10.26	 	Certain Provisions relating to The Meadows Guarantors	 	97

SCHEDULE
A — Borrowing Notice 

SCHEDULE
B — Form of Interest Rate Election 

SCHEDULE
C — Properties and Prior Mortgages 

SCHEDULE
D — Environmental Reports 

3

 
 

LOAN AGREEMENT  
    

        THIS AGREEMENT made as of the 22nd day of July, 2005. 

BETWEEN: 

MAGNA ENTERTAINMENT CORP.,

a corporation incorporated under the laws of the

State of Delaware 

(hereinafter
called the "Borrower"), 

OF
THE FIRST PART, 

— and — 

MID ISLANDI SF.,

a partnership formed under the laws of Iceland,

acting through its Zug branch 

(hereinafter
called the "Lender"), 

OF
THE SECOND PART, 

— and — 

MEC PENNSYLVANIA RACING, INC.,

a corporation incorporated under the laws of the

Commonwealth of Pennsylvania 

— and — 

WASHINGTON TROTTING ASSOCIATION, INC.,

a corporation incorporated under the laws of the

State of Delaware 

— and — 

MOUNTAIN LAUREL RACING, INC.,

a corporation incorporated under the laws of the

State of Delaware 

(hereinafter
collectively called "The Meadows Guarantors"), 

OF
THE THIRD PART, 

— and — 

 

PACIFIC RACING ASSOCIATION,

a corporation incorporated under the laws of the

State of California 

— and — 

MEC LAND HOLDINGS (CALIFORNIA) INC.,

a corporation incorporated under the laws of the

State of California 

(hereinafter
collectively called the "Golden Gate Fields Guarantors"), 

OF
THE FOURTH PART, 

— and — 

THE SANTA ANITA COMPANIES, INC.,

a corporation incorporated under the laws of the

State of Delaware 

— and — 

LOS ANGELES TURF CLUB, INCORPORATED,

a corporation incorporated under the laws of the

State of California 

(hereinafter
collectively called the "Santa Anita Guarantors"), 

OF
THE FIFTH PART, 

— and — 

GULFSTREAM PARK RACING ASSOCIATION, INC.

a corporation incorporated under the laws of the

State of Florida 

(hereinafter
called the "Gulfstream Guarantor"), 

OF
THE SIXTH PART, 

— and — 

GPRA THOROUGHBRED TRAINING CENTER INC.,

a corporation incorporated under the laws of the

State of Delaware 

(hereinafter
called the "Palm Meadows Training Guarantor"), 

OF
THE SEVENTH PART, 

— and — 

2

 

SLRD THOROUGHBRED TRAINING CENTER, INC.,

a corporation incorporated under the laws of the

State of Delaware 

(hereinafter
called the "San Luis Rey Downs Guarantor"), 

OF
THE EIGHTH PART, 

— and — 

MEC DIXON, INC.,

a corporation incorporated under the laws of the

State of Delaware 

(hereinafter
called the "Dixon Guarantor"), 

OF
THE NINTH PART, 

— and — 

SUNSHINE MEADOWS RACING INC.

a corporation incorporated under the laws of the

State of Delaware 

(hereinafter
called the "Ocala Guarantor" and together

with The Meadows Guarantors, the Golden Gate Fields Guarantors,

the Santa Anita Guarantors, the Gulfstream Guarantor,

the Palm Meadows Training Guarantor, the San Luis Rey Downs Guarantor and

the Dixon Guarantor, collectively, the "Guarantors"

and each individually a "Guarantor"), 

OF
THE TENTH PART. 

3

 

        NOW THEREFORE THIS AGREEMENT WITNESSES that, in consideration of the covenants and agreements herein contained, and in reliance on the
individual creditworthiness of the Borrower and each of the Guarantors based on the representations, warranties and covenants of the Borrower and each of the Guarantors contained herein, the parties
hereto agree as follows: 

 
 

ARTICLE 1 
  INTERPRETATION  
    

1.1   Definitions  

        For the purposes of this Agreement: 

"Acquisition" means any transaction or series of transactions by which the Borrower or any of its Subsidiaries, directly or indirectly, by means of a
take-over bid, tender offer, amalgamation, merger, purchase of assets, purchase of shares or otherwise (a) acquires any ongoing business or all or substantially all of the assets of
any Person engaged in any ongoing business, (b) acquires beneficial ownership (as defined in Rule 13d-3 promulgated under the Securities
Exchange Act of 1934, as amended) of securities of a Person engaged in any ongoing business representing more than 10% of the ordinary voting power for the election of
directors or other governing position if the business and affairs of such Person are managed by a board of directors or other governing body, or (c) acquires beneficial ownership
(as defined in Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as amended) of more than 10% of the
ownership interest in any Person engaged in any ongoing business that is not managed by a board of directors or other governing body; 

"Advance" means any utilization of the Bridge Loan Facility by the Borrower; 

"Affiliate" means, in respect of any Person, any other Person which, directly or indirectly, controls or is controlled by or is under common control
with such Person; and for the purpose of this definition, "control" (including, with correlative meanings, the terms "controlled
by" and "under common control with") means the power to direct, or cause to be directed, the management and policies of a Person
whether through the ownership of voting shares, by contract or otherwise, but for greater certainty excluding therefrom the Lender and its Subsidiaries other than MEC and its Subsidiaries; 

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

4

 

"Allocable Amount" has the meaning ascribed thereto in Section 10.22; 

"Amtote" has the meaning ascribed thereto in Section 7.2(f); 

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

"Audited and Unaudited Financial Statements" means the audited consolidated financial statements of the Borrower for the Fiscal Year ended
December 31, 2004 and the unaudited consolidated financial statements of the Borrower for the Fiscal Quarter ended March 31, 2005; 

"Banking Day" means a day on which banks are generally open for business in each of Toronto, Ontario, New York, New York, Miami, Florida,
Los Angeles, California, Philadelphia, Pennsylvania and/or Chicago, Illinois, and with respect to notices, determinations or payments of Fixed Rate Advances to which LIBOR applies, London, England; 

"Base Rate" means, for any day, the annual rate of interest equal to the greater of (i) the rate which Bank of Montreal establishes at its
principal office in Chicago, Illinois as the reference rate of interest in order to determine interest rates it will charge on such day for commercial loans in U.S. dollars made to its
customers in the United States of America and which it refers to as its "Base Rate", and (ii) the Federal Funds Effective Rate on such day plus 1% per annum, such rate to be adjusted
automatically and without the necessity of any notice to the Borrower upon each change to such rate; 

"Blocked Persons List" has the meaning ascribed thereto in Section 6.1(cc); 

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

"BMO Credit Agreement" means the amended and restated credit agreement made as of July 22, 2005 among the Borrower, as borrower, BMO, as agent
and lender, and others, as the same may be amended and restated from time to time, provided that the principal amount outstanding at any time under the BMO Credit Agreement as so amended or restated
shall not exceed $50,000,000, and includes any renewal or refinancing of any such agreement or the indebtedness owing thereunder provided that the principal amount of such renewed or refinanced
indebtedness does not exceed $50,000,000 and security therefor is not increased thereby; 

"BMO Intercreditor Agreement" means the intercreditor agreement made as of even date herewith between the Lender, the Borrower and Bank of Montreal, as
the same may be amended or restated from time to time; 

5

 

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

"Borrower General Security Agreement" has the meaning ascribed thereto in Section 8.1(h)(ii); 

"Borrower's and Guarantors' California Agent" means the Newport Beach office of Sherry Meyerhoff Hanson & Crance LLP, or such other
firm or firms of solicitors or agents in the State of California as are appointed by the Borrower from time to time and notice of which is provided to the Lender; 

"Borrower's and Guarantors' Counsel" means Osler Hoskin Harcourt LLP, or such other firm or firms of solicitors or counsel as are appointed by
the Borrower from time to time and notice of which is provided to the Lender; 

"Borrower's and Guarantors' Florida Agent" means the Miami office of Akerman Senterfitt, or such other firm or firms of solicitors or agents in the
State of Florida as are appointed by the Borrower from time to time and notice of which is provided to the Lender; 

"Borrower's and Guarantors' Local Agents" means, collectively the Borrower's and Guarantor's California Agent, the Borrower's and Guarantor's Florida
Agent, Borrower's and Guarantor's Oklahoma Agent, and the Borrower's and Guarantor's Pennsylvania Agent; 

"Borrower's and Guarantors' New York and Delaware Agent" means the New York office of O'Melveny & Myers LLP, or such other
firm or firms of solicitors or agents in the State of New York as are appointed by the Borrower from time to time and notice of which is provided to the Lender; 

"Borrower's and Guarantors' Oklahoma Agent" means the Oklahoma City office of Crowe & Dunlevy, or such other firm or firms of solicitors or
agents in the State of Oklahoma as are appointed by the Borrower from time to time and notice of which is provided to the Lender; 

"Borrower's and Guarantors' Pennsylvania Agent" means the Pittsburg office of Eckert Seamans Cherin & Mellott, LLC, or such other firm or
firms of solicitors or agents in the Commonwealth of Pennsylvania as are appointed by the Borrower from time to time and notice of which is provided to the Lender; 

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

"Borrower Note" has the meaning ascribed thereto in Section 8.1(h)(i); 

"Borrower Recapitalization Plan" means the plan approved and adopted by the Borrower's board of directors to recapitalize the Borrower and its
Subsidiaries and to revise the business plan for the Borrower and its Subsidiaries, and which shall be in form, scope and terms satisfactory to the Lender in its sole and absolute discretion; 

6

 

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

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

"Bridge Loan" means the secured non-revolving Bridge Loan made available to the Borrower by the Lender pursuant to Section 2.1; 

"Capital Expenditures" means, for any period, for any Person those expenditures made in connection with the purchase, lease, license, acquisition,
erection, development, improvement, maintenance or construction of property of or by such Person (including any such property acquired pursuant to a Capital Lease Obligation) or any other
expenditures, in all cases, which in accordance with GAAP are classified as capital expenditures; 

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

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

"CERCLA" means the Comprehensive Environmental Response, Compensation and Liability Act of 1980,
including the rules and regulations promulgated thereunder, as the same may be amended from time to time; 

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

"Closing Arrangement Fee" has the meaning ascribed thereto in Section 5.3(b); 

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

"Collateral" means, collectively, all of the undertaking, property and assets of the Borrower and the Guarantors subject to the Security, or intended to
be subject to the Security; 

"Combined" means, in relation to any financial results or financial statements of a group of entities, the combined financial results or financial
statements of such group of entities (including their respective subsidiaries), calculated and prepared in accordance with GAAP; 

7

 

"Company" means, collectively, the Borrower and all of its Subsidiaries; 

"Commitment Fee" has the meaning ascribed thereto in Section 5.3(a); 

"Commitment Fee Payment Date" has the meaning ascribed thereto in Section 5.3(a); 

"Compliance Certificate" has the meaning ascribed thereto in Section 7.1(l)(i); 

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

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

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

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

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

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

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

8

 

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

"Core Line of Business" means the ownership or operation of racetracks and pari-mutuel wagering activities, as described in the
Form 10-K filed by the Borrower for the year ended December 31, 2004, and including (i) thoroughbred and harness horse racing, (ii) dog racing,
(iii) off-track betting facilities, (iv) account wagering and other gaming activities including, without limitation, slot machine and video lottery terminals, (v) a
racetrack and casino complex in Austria, (vi) any food and beverage operations, sports bar operations, technology services, entertainment, the ownership and management of real estate and/or
other activities, associated with or ancillary or related to (i), (ii), (iii), (iv) and/or (v), above, including the ownership or operation of horse or dog training and boarding
centres, arenas and restaurants, and (vii) the ownership and operation of two golf courses, one of which is located in Aurora, Ontario and the second of which is located in Oberwaltersdorf,
Austria, and all operations related thereto; 

"Default" means any event which, but for the lapse of time, giving of notice or both, would constitute an Event of Default and, for greater certainty,
includes for purposes of this Agreement, any event relating to Subordinated Debt which would, but for the lapse of time, giving of notice or both, enable the holders of Subordinated Debt to accelerate
the maturity of the Subordinated Debt; 

"Disclosure Schedule" means the disclosure schedule as of the Closing Date prepared and executed by the Borrower; 

"Dixon Guarantee and Indemnity" has the meaning ascribed thereto in Section 8.1(h)(xxxiv); 

"Dixon Guarantee Fee" has the meaning ascribed thereto in Section 8.1(h)(xxxiv); 

"Dixon Property" means the lands and premises designated as the Dixon Property in Schedule C hereto; 

"EBITDA" means, for any Person in any period, Net Income of such Person for such period: 

	(a)
	increased
by the sum of (without duplication) (i) income tax expense for such period, (ii) interest expense for such period, (iii) depreciation and amortization
expense for such period, (iv) non-cash losses incurred during such period, in each case to the extent such amounts were included in the calculation of Net Income of such Person for
such period; 

9

 

	(b)
	decreased
by all cash payments during such period relating to losses that were added back to Net Income of such Person under clause (a)(iv) above in determining EBITDA
in any prior period; and

	(c)
	decreased
by such net gains from sales of real estate held for sale or development and excess racetrack lands which were included in the calculation of Net Income of such Person for
such period; 

"Environment" means soil, land, surface and subsurface strata, surface waters, groundwaters, drinking water supply, stream sediments, ambient air
(including air in buildings, natural or man-made structures), all layers of the atmosphere, all inorganic and organic matter and living organisms (including humans), all natural resources
and the interacting natural systems that include the foregoing listed components; 

"Environmental Consent" means any consent, approval, permit, licence, order, filing, authorization, exemption, registration, ratification, permission,
waiver, reporting or notice requirement and any other related agreement or communications whatsoever issued, granted or given or otherwise made available by or under the authority of any Governmental
Authority regarding environmental matters or under any Environmental Law; 

"Environmental Damages" means all claims, judgments, damages, losses, penalties, liabilities (including strict liability), fines, charges, costs and
expenses, including costs of investigation, remediation, defense, settlement and reasonable attorneys' fees and expenses and reasonable consultants' fees, that are incurred at any time as a result of
the existence of any Hazardous Materials at, on, upon, about or beneath any of the Properties or migrating or threatening to migrate to or from any such real property, or arising from any
investigation, proceeding or remediation of any location at which the Borrower and/or any Guarantor, any predecessor in title or any employees, agents, contractors or subcontractors of the Borrower
and/or any Guarantor or any predecessor in title, or any third persons at any time occupying or present on any of the Properties, are alleged to have directly or indirectly disposed of Hazardous
Materials or arising in any manner whatsoever in violation of Environmental Laws; 

"Environmental Disclosure" means the text of the Environmental Reports, in each case including the attachments thereto but excluding the underlying
documents referred to in the Environmental Reports; 

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

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

10

 

	(ii)
	preventing
or reducing to acceptable levels the presence of or Release of Hazardous Materials in or into the Environment;

	(iii)
	reducing
the quantities, preventing the Release or minimizing the hazardous characteristics of wastes that are generated;

	(iv)
	protecting
the Environment, including regulating, limiting or restricting Releases of Hazardous Materials and protecting resources, species, or visual or ecological
amenities;

	(v)
	the
transportation, use and disposal of Hazardous Materials or other potentially harmful substances;

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

	(vii)
	making
responsible Persons or polluting Persons pay private parties or third parties, or groups of them, for damages done to their health or the Environment or
permitting representatives of the public to recover for injuries done to public assets or to obtain any other remedies whatsoever; 

        and
includes all Environmental Consents; 

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

	(i)
	any
environmental or safety matter or condition (including the presence, use, generation, manufacture, disposal or transport of Hazardous Materials, on-site
or off-site contamination, safety or health matters, noise, odour, nuisance or the regulation of any Hazardous Material);

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

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

"Environmental Reports" has the meaning ascribed thereto in Section 7.1(p); 

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

11

  

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

"ESA" has the meaning ascribed thereto in Section 7.1(p); 

"Event of Default" has the meaning attributed to such term in Section 9.1; 

"Excluded Taxes" means, in relation to the Lender, (a) those Taxes which are imposed or levied on or measured by or determined by reference to
the overall net income, profits, gross receipts, net worth or capital of the Lender or any of its branches, and all franchise taxes, taxes on doing business or taxes measured by capital or net worth
imposed on the Lender or any of its applicable branches pursuant to the laws of the jurisdiction in which the Lender is organized or resident or in which the Lender's principal office or applicable
branch is located, and (b) without limiting the generality of the foregoing, all franchise taxes, taxes on doing business or taxes measured by net income, capital, profits, gross receipts or
net worth imposed on the Lender or any of its branches, whether collected by withholding or otherwise, as a result of the Lender (i) carrying on a trade or business in the United States
of America or having a permanent establishment in the United States of America, (ii) being organized under the laws of the United States of America or any political subdivision
thereof, (iii) being or being deemed to be resident in the United States of America for income tax purposes, or (iv) not dealing at arm's length (as defined for the
purposes of the Internal Revenue Code) with the Borrower, or which would not have been imposed had such Person satisfied a relevant authority that such Person was not a person mentioned in
clause (i), (ii), (iii) or (iv) above; 

"Federal Funds Effective Rate" means, for any day, the annual rate of interest equal to the weighted average of the rates on overnight federal funds
transactions with members of the Federal Reserve System arranged by federal funds brokers, as published for such day (or, if such day is not a Banking Day, for the next preceding Banking Day)
by the Federal Reserve Bank of New York, or if such rate is not so published for any day which is a Banking Day, the average of the quotations for such day on such transactions received by BMO
from three United States of America federal funds brokers of recognized standing selected by it; 

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

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

"Fixed Rate Advance" has the meaning ascribed thereto in Section 5.1(a)(ii); 

12

 

"Flamboro Guarantee and Indemnity" has the meaning ascribed thereto in Section 7.1(ff); 

"Flamboro Guarantors" has the meaning ascribed thereto in Section 7.1(ff); 

"Floating Rate Advance" has the meaning ascribed thereto in Section 5.1(a)(i); 

"GAAP" means, at any time, generally accepted accounting principles in effect from time to time in the United States of America as recommended by
the Financial Accounting Standards Board, applied on a consistent basis; 

"Golden Gate Fields General Security Agreement" has the meaning ascribed thereto in Section 8.1(h)(xxv); 

"Golden Gate Fields Guarantee and Indemnity" has the meaning ascribed thereto in Section 8.1(h)(xxv); 

"Golden Gate Fields Guarantee Fee" has the meaning ascribed thereto in Section 8.1(h)(xxv); 

"Golden Gate Fields Guarantors' Environmental Indemnity" has the meaning ascribed thereto in Section 8.1(h)(xxv); 

"Golden Gate Fields Property" means the lands and premises designated as the Golden Gate Fields Property in Schedule C hereto; 

"Golden Gate Fields Second Mortgage" has the meaning ascribed thereto in Section 8.1(h)(xv); 

"Golden Gate Fields Security" has the meaning ascribed thereto in Section 8.1(h)(xviii); 

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

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

"Guarantors" means, collectively, The Meadows Guarantors, the Golden Gate Fields Guarantors, the Santa Anita Guarantors, the Gulfstream Guarantor, the
Palm Meadows Training Guarantor, the San Luis Rey Downs Guarantor, the Dixon Guarantor, and the Ocala Guarantor, and, in the singular, any one of them; 

13

 

"Guarantor Payment" has the meaning ascribed thereto in Section 10.22; 

"Gulfstream and Aventura Properties" means the lands and premises designated as the Gulfstream Property and the Aventura Property in
Schedule C hereto; 

"Gulfstream Construction Loan Agreement" means the loan agreement made between Gulfstream Park Racing Association Inc., as borrower, the Lender,
as lender, and others, made as of December 9, 2004 and amended and restated as of July 22, 2005, as the same may be amended or restated from time to time; 

"Gulfstream Guarantee and Indemnity" has the meaning ascribed thereto in Section 8.1(h)(xxxi); 

"Gulfstream Guarantee Fee" has the meaning ascribed thereto in Section 8.1(h)(xxxi); 

"Hazardous Activity" shall include the distribution, generation, handling, importing, management, manufacturing, processing, production, refinement,
release, storage, transfer, transportation, treatment or use (including any withdrawal or other use of contaminated groundwater) of Hazardous Materials in, on, under, about and from any of the
Properties or any part thereof and any other act, business or operation that poses a material risk of harm to Persons or property on or off the Properties; 

"Hazardous Material" shall mean any solid, liquid, gas, odour, heat, vibration, radiation or combination of any of them that may have an adverse effect
on the Environment, and includes all wastes, pollutants, contaminants and each hazardous, toxic, radioactive, noxious, flammable, corrosive or caustic matter or substance, including any substance,
material or waste which is or is expected to be regulated by any Governmental Authority and including any material, substance or waste which is defined as a "contaminant" or "pollutant" or as
"hazardous", "toxic", "harmful" or "dangerous" under any provision of any Environmental Law or Safety Law, and including petroleum, petroleum products, asbestos, asbestos-containing material, urea
formaldehyde and polychlorinated biphenyls; 

"Indebtedness" has the meaning ascribed thereto in Section 8.1(h); 

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

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

"Intercreditor Agreements" means, collectively, the BMO Intercreditor Agreement and the Wells Fargo Subordination Agreement, and, in the singular, any
one of them; 

"Interest Period" means, for each Fixed Rate Advance, a period commencing, (i) in the case of the initial Interest Period for such Advance, on
the date of such Advance; and (ii) in the case of any subsequent Interest Period for such Advance, on the last day of the immediately preceding Interest Period applicable thereto and ending, in
either case, on the last day of such period as shall be selected by the Borrower pursuant to the provisions below. If any Advance is a Floating Rate Advance at any time, and is changed to a Fixed Rate
Advance pursuant to the provisions hereof, the initial Interest Period for such Advance after such change shall commence on the date of such change. Except as provided in the next following sentence,
the duration of each such Interest Period shall be, subject to availability for the Lender, one, two or three months, as the Borrower may select in the applicable Borrowing Notice or Interest Rate
Election. No Interest Period may be selected that conflicts, in the opinion of the Lender, with the repayment requirements set out in Article 5; 

14

 

"Interest Rate Election" means a notice, substantially in the form of Schedule B, given by the Borrower electing to change from one type of
Advance to another type of Advance or to continue a Fixed Rate Advance for a further Interest Period; 

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

"Judgment Currency" has the meaning ascribed thereto in Section 1.8; 

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

"Lender's California Agent" means the Los Angeles office of Hogan & Hartson LLP, or such other firm or firms of solicitors or agents in
the State of California as are appointed by the Lender from time to time and notice of which is provided to the Borrower and the Guarantors; 

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

"Lender's Delaware Agent" means the Wilmington office of Pepper Hamilton LLP, or such other firm or firms of solicitors or agents in the State of
Delaware as are appointed by the Lender from time to time and notice of which is provided to the Borrower and the Guarantors; 

"Lender's Florida Agent" means the Miami office of Stearns Weaver Miller Weissler Alhadeff & Sitterson, P.A., or such other firm or firms of
solicitors or agents in the State of Florida as are appointed by the Lender from time to time and notice of which is provided to the Borrower and the Guarantors; 

"Lender's New York Agent" means the New York office of Davies Ward Phillips & Vineberg LLP, or such other firm or firms of
solicitors or agents in the State of New York as are appointed by the Lender from time to time and notice of which is provided to the Borrower and the Guarantors; 

"Lender's Oklahoma Agent" means the Oklahoma City office of Spradling, Kennedy & McPhail, L.L.P., or such other firm or firms of
solicitors or agents in the State of Oklahoma as are appointed by the Lender from time to time and notice of which is provided to the Borrower and the Guarantors; 

15

 

"Lender's Pennsylvania Agent" means the Pittsburgh office of Pepper Hamilton LLP, or such other firm or firms of solicitors or agents in the
State of Pennsylvania as are appointed by the Lender from time to time and notice of which is provided to the Borrower and the Guarantors; 

"LIBOR" means, for any Fixed Rate Advance for which LIBOR applies, the rate of interest per annum for deposits in US Dollars in the London interbank
market for the period of any such Fixed Rate Advance and in an amount approximately equal to the Fixed Rate Advance, calculated on the basis of a year of 360 days, equal to the arithmetic mean,
rounded upwards to the nearest whole multiple of one-sixteenth of one percent (if already not such a multiple), of the rates which appear on the Telerate Page 3750 on the
Dow Jones Telerate Service (or any replacement page) as of 11:00 a.m. (London time) on the day which is two Banking Days prior to the first day of the relevant Interest Period; 

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

"Loan" means, at any time, the principal amount of all Obligations then outstanding under the Bridge Loan; 

"Loan Amount" means the aggregate of the principal amount of the Bridge Loan, being comprised of (i) the principal amount of $50,000,000 made
available pursuant to Tranche 1; (ii) the principal amount of $25,000,000 made available pursuant to Tranche 2; and (iii) the principal amount of $25,000,000 made available
pursuant to Tranche 3, as the same may be reduced from time to time in accordance with the terms hereof; 

"Loan Documents" means, collectively, this Agreement and the Security and "Loan Document" means any one
of them; 

"Material Adverse Change" means a material adverse change in the business, condition (financial or otherwise), operations, properties, assets,
liabilities or prospects of the Borrower (taken as a whole together with all of its Subsidiaries on a consolidated basis) or any Guarantor or of any of the Properties; 

"Material Adverse Effect" means material adverse effect on (a) the business, condition (financial or otherwise), operations, properties, assets,
liabilities or prospects of the Borrower (taken as a whole together with all of its Subsidiaries on a consolidated basis) or any of the Guarantors or any of the Properties, or (b) the ability
of the Borrower or any of the Guarantors to perform its Obligations under any Loan Document to which it is or is to be a party, or (c) the rights and remedies of the Lender under the Agreement
or any of the other Loan Documents or the Intercreditor Agreements, or (d) the Lender's security interest in the Collateral or the perfection or priority thereof; 

"Material Agreements" means: (i) contracts, agreements, commitments or other documents materially affecting the use, development, construction
and/or operation of any of the Properties (including without limitation all leases of the Properties); and (ii) any contract, agreement, commitment or other document by which the Borrower or
any of its Subsidiaries is bound, the default under or the termination of which could reasonably be expected to result in a Material Adverse Effect; 

16

 

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

"Meadows Guarantors" means, collectively, MEC Pennsylvania Racing, Inc., Washington Trotting Association, Inc. and Mountain Laurel
Racing, Inc.; 

"Mortgages" means, collectively, the Golden Gate Fields Second Mortgage, The Meadows First Mortgage and the Santa Anita Third Mortgage; and, in the
singular, any one of them; 

"Mortgaged Properties" means, collectively, the Golden Gate Fields Property, The Meadows Property and the Santa Anita Property; and, in the singular,
any one of them; 

"Net Income" of a Person for any period means the consolidated net income of such Person during such period after taxes, but before extraordinary items
and unusual items, all as otherwise determined in accordance with GAAP. In addition, there shall be included in Net Income all net income of such Person on a consolidated basis from investments in
accordance with the equity method of accounting; 

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

"Ocala Guarantee and Indemnity" has the meaning ascribed thereto in Section 8.1(h)(xxxv); 

"Ocala Guarantee Fee" has the meaning ascribed thereto in Section 8.1(h)(xxv); 

"Ocala Property" means the lands and premises designated as the Ocala Property in Schedule C hereto; 

"Occupancy Agreements" has the meaning ascribed thereto in Section 6.1(nn); 

"Officer's Certificate" means, unless otherwise provided herein, in respect of the Borrower, a certificate signed by any one of the Chair of the Board,
the President, the Chief Financial Officer or the Secretary; 

17

 

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

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

"Palm Meadows Training Guarantee and Indemnity" has the meaning ascribed thereto in Section 8.1(h)(xxxii); 

"Palm Meadows Training Guarantee Fee" has the meaning ascribed thereto in Section 8.1(h)(xxxii); 

"Permitted Debt" means (i) the Bridge Loan; (ii) the Santa Anita Senior Facility; (iii) the BMO Credit Agreement; (iv) the
Remington Construction Loan Agreement; (v) the Gulfstream Construction Loan Agreement; (vi) indebtedness owing under, and not exceeding the amounts permitted to be outstanding under and
secured by, Permitted Encumbrances and extensions, renewals or replacements of any indebtedness permitted under this clause (vi) provided the principal amount of such indebtedness
thereunder or security therefor is not thereby increased beyond the original principal amount of such indebtedness; (vii) unsecured trade and other accounts payable incurred in the ordinary
course of business, including the Construction (as defined in the Remington Construction Loan Agreement) and the Reconstruction (as defined in the Gulfstream Construction Loan
Agreement), for the purpose of carrying on the same; (viii) indebtedness under interest rate or currency hedging agreements entered into for the purpose of managing interest rate and currency
risks of the Borrower or any of its Subsidiaries and not for speculative purposes; (ix) indebtedness under letters of credit, performance bonds, instalment insurance and insurance premium
financing contracts, and similar instruments in respect of land transfer tax claims, land development charges, gaming permits and other obligations of the Borrower or its Subsidiaries incurred in the
ordinary course of business; (x) indebtedness of up to $6,000,000 in aggregate that may become due to the Estate of John K. Cooke in connection with the acquisition of The Maryland Jockey Club;
(xi) the obligation to pay $18,312,000 plus accrued interest on the exercise of either the put or call option for the remaining minority interest in The Maryland Jockey Club; (xii) the
Subordinated Debt; (xiii) unsecured intercompany indebtedness of the Borrower to any of its Subsidiaries or of any of the Subsidiaries to the Borrower, provided that such unsecured intercompany
indebtedness is existing as of the date hereof or is entered into on customary terms and in the ordinary course of the Borrower's cash management activities consistent with past practice;
(xiv) indebtedness of up to $200,000,000 with respect to the redevelopment of The Meadows Property, provided that the recourse of the holder of such indebtedness is limited contractually to the
assets being financed and the Additional Financing Inter-Creditor Agreement (as defined in the Gulfstream Construction Loan Agreement) is executed and delivered to the Lender prior to the
incurrence of such indebtedness; (xv) other obligations and indebtedness (including Capital Lease Obligations and Contingent Liabilities) existing on the date hereof and relating to
Subsidiaries which are not Guarantors, and all of which are disclosed in the Audited and Unaudited Financial Statements including the notes thereto, in the aggregate amount of approximately
$183,000,000 (which amount includes indebtedness denominated in foreign currencies and is therefore subject to fluctuation from time to time due to exchange rate fluctuations); and (xvi) other
obligations and indebtedness (including
Capital Lease Obligations and Contingent Liabilities) of up to $5,000,000 in the aggregate, provided that none of such other obligations and indebtedness is secured by any of the Properties; 

18

 

"Permitted Encumbrances" means any: 

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

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

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

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

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

19

 

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

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

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

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

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

	(xi)
	Liens
granted by the Borrower to any Guarantor or by any Guarantor to the Borrower or any other Guarantor;

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

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

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

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

20

 

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

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

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

	(xix)
	Liens
existing on assets of any Person at the time such Person becomes a Subsidiary, provided that (i) such Lien was not created in contemplation of such Person
becoming a Subsidiary, and (ii) such Lien does not encumber any assets other than the assets subject to such Lien at the time such Person becomes a Subsidiary;

	(xx)
	other
Liens incidental to the conduct of the business or the ownership of the assets of the Borrower or any Subsidiary that (i) were not incurred in connection
with borrowed money, (ii) do not in the aggregate materially impair the use of the assets subject to the Lien in the operation of such business, and (iii) do not secure obligations
aggregating in excess of $1,000,000;

	(xxi)
	the
Liens granted pursuant to the Security;

	(xxii)
	any
registered Lien existing as of June 1, 2005 and is disclosed in the title insurance commitments issued in respect of the Mortgaged Properties in connection
with this Agreement;

	(xxiii)
	Purchase
Money Security Interests existing as of the Closing Date;

	(xxiv)
	Purchase
Money Security Interests incurred after the Closing Date in connection with the purchase of new assets permitted hereunder up to an aggregate of $15,000,000;
and

	(xxv)
	any
other Lien which the Lender approves in writing as a Permitted Encumbrance; 

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

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

21

 

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

"proceeding" has the meaning ascribed thereto in Section 6.1(p); 

"Properties" means all lands and premises identified in Schedule C hereto; 

"Purchase Money Security Interest" means any Lien given, assumed or arising by operation of law to provide or secure, or to provide the obligor with
funds to pay, the whole or any part of the consideration for the acquisition of property where the principal amount of the obligation secured by such Lien (i) is not in excess of the cost to
the obligor of the property encumbered thereby and (ii) is secured only by the property being acquired by the obligor, and includes the renewal or refinancing of any such Lien upon the same
property provided that the indebtedness secured and the security therefor are not increased thereby; 

"Racing and Gambling Regulatory Authorities" means the racing and gambling regulatory authorities in each state where the Borrower or any Guarantor
(or any of their respective Subsidiaries) maintains racetracks and/or carries on business, including (without limitation) the California Horse Racing Board, the Division of
Pari-Mutuel Wagering within the Florida Department of Business and Professional Regulation, the State Harness Racing Commission of Pennsylvania, the Oklahoma Horse Racing Commission and
the Nevada Gaming Commission; 

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

"Remington Borrower" means Remington Park, Inc.; 

"Remington Escrow Agreement" means the escrow agreement dated as of July 26, 2005 among the Lender, the Remington Borrower and the Guarantors
(as defined in the Remington Construction Loan Agreement); 

"Remington Property" means the lands and premises designated as the Remington Property in Schedule C hereto; 

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

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

22

 

"Replacement Cost" means, with respect to any property or asset, the cost of repairing, replacing or reinstating such property or asset with materials
of like kind and quality and for like occupancy (where applicable) on the same or a similar site, in accordance with the requirements of any applicable municipal by-laws and without
deduction for depreciation; 

"Reportable Event" means any of the events described in Section 4043 of ERISA; 

"Safety Consent" shall mean any consent, approval, permit, licence, Order, filing, authorization, exemption, registration, ratification, permission,
waived reporting requirement or waived notice requirement and any related agreement or communication whatsoever issued, granted, given or otherwise made available by or under the authority of any
Governmental Body regarding health or safety matters or under any Safety Law; 

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

"San Luis Rey Downs Guarantee and Indemnity" has the meaning ascribed thereto in Section 8.1(h)(xxxiii); 

"San Luis Rey Downs Guarantee Fee" has the meaning ascribed thereto in Section 8.1(h)(xxxiii); 

"San Luis Rey Downs Property" means the lands and premises designated as the San Luis Rey Downs Property in Schedule C hereto; 

"Santa Anita General Security Agreement" has the meaning ascribed thereto in Section 8.1(h)(xxviii); 

"Santa Anita Guarantee and Indemnity" has the meaning ascribed thereto in Section 8.1(h)(xxviii); 

"Santa Anita Guarantee Fee" has the meaning ascribed thereto in Section 8.1(h)(xxviii); 

"Santa Anita Property" means the lands and premises designated as the Santa Anita Property in Schedule C hereto; 

"Santa Anita Property Environmental Indemnity" has the meaning ascribed thereto in Section 8.1(h)(xi); 

"Santa Anita Security" has the meaning ascribed thereto in Section 8.1(h)(x); 

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

23

 

"Santa Anita Senior Security" means the security documents and guaranties securing and supporting the Santa Anita Senior Facility, and includes any
amendment or replacement of any such security or guarantee provided the property subject thereto or security interest in relation thereto is not increased; 

"Santa Anita Third Assignment of Licences and Permits" has the meaning ascribed thereto in Section 8.1(h)(x); 

"Santa Anita Third Assignment of Material Agreements" has the meaning ascribed thereto in Section 8.1(h)(ix); 

"Santa Anita Third Assignment of Rents and Leases" has the meaning ascribed thereto in Section 8.1(h)(viii); 

"Santa Anita Third Mortgage" has the meaning ascribed thereto in Section 8.1(h)(vii); 

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

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

"Security" has the meaning ascribed thereto in Section 8.1(h); 

"SHRCP Approval" has the meaning ascribed thereto in Section 7.1(dd); 

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

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

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

24

 

"Termination Date" means August 31, 2006 or such earlier date as the entire balance of the Loans under the Bridge Loan may become due hereunder,
whether by acceleration or otherwise; 

"The Maryland Jockey Club" means, collectively, Laurel Racing Association Limited Partnership, Pimlico Racing Association, Inc. and certain of
their Affiliates; 

"The Meadows General Security Agreement" has the meaning ascribed thereto in Section 8.1(h)(xxiv)(D); 

"The Meadows Assignment of Material Agreements" has the meaning ascribed thereto in Section 8.1(h)(xxiv)(C); 

"The Meadows Assignment of Rents and Leases" has the meaning ascribed thereto in Section 8.1(h)(xxiv)(B); 

"The Meadows First Mortgage" has the meaning ascribed thereto in Section 8.1(h)(xxiv)(A); 

"The Meadows Guarantee Fee" has the meaning ascribed thereto in Section 8.1(h)(xxiii); 

"The Meadows Guarantee and Indemnity" has the meaning ascribed thereto in Section 8.1(h)(xxiii); 

"The Meadows Guarantors' Environmental Indemnity" has the meaning ascribed thereto in Section 8.1(h)(xxiv)(E); 

"The Meadows Property" means the lands and premises designated as The Meadows Property in Schedule C hereto; 

"The Meadows Security" has the meaning ascribed thereto in Section 8.1(h)(xxiv)(D); 

"The Meadows Security Conditions" has the meaning ascribed thereto in Section 5.1(e); 

"Threat of Release" shall mean a reasonable likelihood of a Release that may require action in order to prevent or mitigate damage to the Environment
that may result from such Release; 

"Tranche 1" has the meaning ascribed thereto in Section 2.1(e); 

"Tranche 2" has the meaning ascribed thereto in Section 2.1(e); 

"Tranche 2 Arrangement Fee" has the meaning ascribed thereto in Section 5.3(b); 

25

 

"Tranche 2 Conditions" has the meaning ascribed thereto in Section 4.1; 

"Tranche 3" has the meaning ascribed thereto in Section 2.1(e); 

"Tranche 3 Arrangement Fee" has the meaning ascribed thereto in Section 5.3(b); 

"Tranche 3 Conditions" has the meaning ascribed thereto in Section 4.2; 

"Unutilized Amount" has the meaning ascribed thereto in Section 5.3(a); 

"U.S. dollars" means lawful money of the United States of America; 

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

"Wells Fargo Subordination Agreement" means the subordination agreement made as of even date herewith between the Lender and Wells Fargo, as the same
may be amended or restated from time to time. 

1.2   Gender and Number  

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

1.3   Certificate of the Lender as to Rates, etc.  

        A certificate of the Lender certifying the amount of the Base Rate or the Federal Funds Effective Rate at any particular time in respect of any Loan made or
maintained or to be made or maintained by the Lender hereunder shall be prima facie evidence thereof. No provision hereof shall be construed so as to
require the Lender to issue a certificate at any particular time. 

1.4   Invalidity, etc.  

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

26

  

1.5   Headings, etc.

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

1.6   Governing Law

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

1.7   Attornment

        Each
of the parties hereto irrevocably and unconditionally submits and attorns, for itself and its property, to the non-exclusive jurisdiction of any court of the State of
New York or federal court of the United States of America sitting in the County and State of New York, and any appellate court therefrom for all matters arising out of or in
connection with this Agreement or any of the other Loan Documents to which it is a party, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and
unconditionally agrees that all claims in respect of any such action or proceeding may be heard in any such State of New York court or, to the extent permitted by law, in such federal court.
Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Agreement shall affect any right that any party may otherwise have to bring any action or proceeding relating to this Agreement or any of the other Loan Documents in
the courts of any jurisdiction. 

1.8   Judgment Currency

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

1.9   References

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

27

 

1.10 Currency

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

1.11 This Agreement to Govern

        If
there is any inconsistency between the terms of this Agreement and the terms of any other Loan Document, the provisions hereof shall prevail. 

1.12 Generally Accepted Accounting Principles

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

1.13 Computation of Time Periods

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

1.14 Actions on Days Other Than Banking Days

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

1.15 Oral Instructions

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

28

 

1.16 Incorporation of Schedules

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

	Schedule A	 	Borrowing Notice
	Schedule B	 	Form of Interest Rate Election
	Schedule C	 	Properties and Prior Mortgages
	Schedule D	 	Environmental Reports

 
 

ARTICLE 2 
  BRIDGE LOAN  
    

2.1   Establishment of Bridge Loan

	(a)
	Subject
to the terms and conditions of this Agreement, the Lender hereby establishes in favour of the Borrower a secured non-revolving bridge loan of up to the principal
amount of $100,000,000 (the "Bridge Loan"), available in three tranches on the terms and conditions set out herein:

	(b)
	All
Advances shall be made in Dollars.

	(c)
	The
Bridge Loan is to be used for general corporate purposes of the Borrower and its Subsidiaries, provided that such usage shall at all times be consistent with the Borrower
Recapitalization Plan.

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

	(e)
	During
the period from the Closing Date to the first Banking Day on or after October 15, 2005, the maximum principal amount of the Bridge Loan that shall be available to the
Borrower shall be $50,000,000 ("Tranche 1"). On the first Banking Day on or after October 15, 2005, the maximum principal amount of the
Bridge Loan that shall be available to the Borrower shall be increased by a further $25,000,000 ("Tranche 2"), subject to the satisfaction of the
Tranche 2 Conditions set out in Section 4.1 for a total principal availability as of such date of $75,000,000. On the first Banking Day on or after January 15, 2006, the
maximum principal amount of the Bridge Loan that shall be available to the Borrower shall be increased by a further $25,000,000 ("Tranche 3"),
subject to the Tranche 3 Conditions set out in Section 4.2, for a total principal availability as of such date of $100,000,000. For greater certainty, the Borrower is not required
to draw down a Tranche or any portion thereof upon its first day of availability nor by the date that the next successive Tranche is available, availability of all Tranches being, without duplication,
cumulative. The failure of the Borrower to draw down any particular Tranche (or any portion thereof) before the next Tranche availability (or the next following thereafter in the case of
Tranche 1) shall not terminate the Borrower's right to such undrawn Tranche or portion thereof provided all conditions precedent to such Tranche have been satisfied within the time prescribed. 

29

 

2.2   Non-Revolving Nature of Bridge Loan

        The
Bridge Loan is a non-revolving facility and any portion of the Loan that is repaid shall reduce the Loan Amount and may not be re-borrowed. 

2.3   Voluntary Repayments

        Subject
to LIBOR contract maturity dates with respect to any Fixed Rate Advance, the Borrower may from time to time (without premium or penalty) on any Banking Day repay to the Lender
the Loan or any portion thereof, provided that any such repayment (a) shall be in an amount of at least $1,000,000 and any greater amount shall be an integral multiple of $100,000 and
(b) shall be effected on at least ten Banking Days notice in writing to the Lender; provided that such notice, once given, shall be irrevocable and binding upon the Borrower. The Loan Amount
shall be automatically and permanently reduced by the amount of any such repayment. 

2.4   Mandatory Repayment

	(a)
	The
Loans shall be repaid in the following amounts and circumstances:

	(i)
	in
the event that the outstanding principal amount of the Loan at any time shall exceed the Loan Amount at such time, the Borrower shall forthwith make a repayment on
account of the Loan such that, after giving effect to such repayment, the aggregate principal amount of the Loan outstanding will be not more than the Loan Amount;

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

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

	(B)
	asset
sales by the Borrower or any of its Subsidiaries out of the ordinary course of business consistent with past practice (which ordinary course of business includes
the sale of individual residential lots at market prices) but, in any event, of any sale or other disposition of any of its real property or other assets specified in the Intercreditor Agreements;

	(C)
	any
issue of securities by the Borrower (except those in respect of the Borrower's long term incentive plan) or any of its Subsidiaries or borrowing of monies, other
than Permitted Debt, by the Borrower of any of its Subsidiaries; or 

30

 

	(D)
	any
expropriation or condemnation of the whole or any part of its real property or other assets specified in the Intercreditor Agreements, 

an
amount equal to such net proceeds shall be applied in accordance with the Intercreditor Agreements to repay one or more of (i) the Loan, (ii) the indebtedness under the BMO Credit
Agreement and (iii) the indebtedness under the Santa Anita Senior Facility; and 

	(iii)
	in
full on the Termination Date.

	(b)
	The
repayments referred to in items (A) to (D) inclusive of Section 2.4(a)(ii) shall be made as promptly as practicable (and in any
event within three Banking Days) following the receipt by any of the Borrower and/or its Subsidiaries of the net proceeds referred to therein. Upon the repayment of the principal amount of the Loan or
interest pursuant to Section 2.4(a), the Loan Amount shall be permanently reduced by an amount equal to the principal paid.

	(c)
	For
the purposes of this Section 2.4(c), net proceeds from any sale or other transaction referred to herein means the proceeds (including any cash received in respect of
non-cash proceeds (including any cash payments received by way of deferred payment of principal pursuant to a note or instalment receivable or purchase price adjustment receivable or
otherwise, but excluding any interest payments) but only as and when received) received by the Borrower and/or any of its Subsidiaries therefrom net of all reasonable professional fees, brokers fees
paid on an arm's-length market basis, filing fees, commissions, sales tax and other direct costs and expenses of such transaction, together with, where applicable, in respect of any sale or other
disposition of assets, the amounts necessary to repay or otherwise satisfy all Permitted Encumbrances (other than security under the BMO Credit Agreement or the Santa Anita Senior Facility) attaching
to such assets ranking in priority to the Security. 

2.5   Voluntary Reduction in Aggregate Commitment

        The
Borrower shall have the right at any time and from time to time, by giving at least 10 Banking Days' notice to the Lender, which notice, once given, shall be irrevocable and
binding upon the Borrower, to reduce the then applicable Loan Amount to a lower amount that is not less than the principal amount of the Loan then outstanding. Such notice shall specify the amount of
the reduction, which shall be in an integral multiple of $1,000,000. The amount of any such reduction so made by the Borrower shall be permanent and irrevocable and the Loan Amount shall be reduced
accordingly. 

 
 

ARTICLE 3 
  GENERAL PROVISIONS RELATING TO THE BRIDGE LOAN

3.1   Advances  

        Each request by the Borrower for an Advance under the Bridge Loan shall be made by the delivery of a duly completed and executed Borrowing Notice to the Lender on
the fifth Banking Day prior to the proposed Borrowing Date. Any notice in respect of a proposed Advance shall be irrevocable and binding on the Borrower. All Advances shall be in an amount of at least
$500,000 and any greater amount shall be an integral multiple of $50,000. 

31

 

3.2   Payments Generally  

        All payments in respect of the Bridge Loan (in respect of principal, interest, fees or otherwise) shall be made by the Borrower to the Lender no later than
2:00 p.m. (Toronto time) on the due date thereof to the account specified therefor by the Lender from time to time. Any payments received after such time shall be considered for all purposes as
having been made on the next following Banking Day unless the Lender otherwise agrees in writing. All payments shall be made by way of immediately available funds. 

3.3   Illegality  

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

3.4   Indemnity  

	(a)
	The
Borrower and each of the Guarantors (each, an "Indemnifying Party") shall indemnify the Lender and its officers, directors and
employees (each, an "Indemnified Person") and shall hold each of them harmless from and against any and all losses, liabilities, damages, claims and
reasonable costs and out-of-pocket expenses (including reasonable legal fees on a solicitor and his own client basis) (in each case, a
"Claim") that may be incurred by or asserted as a result of a claim by any third party or awarded in favour of a third party against any of them, in
each case, arising out of, related to, or in connection with, or by reason of (i) the transactions contemplated hereby, (ii) any Acquisition undertaken by the Borrower or any of its
Subsidiaries, or (iii) any Environmental Law, including (A) the claim of any Lien thereunder, (B) the presence of any Hazardous Substance affecting any Properties or any adjacent
real estate to the Properties, or (C) the Release by the Borrower or a Subsidiary of any Hazardous Substance into the environment. Notwithstanding the foregoing provisions of this
Section 3.4(a), an Indemnifying Party shall not be obligated to indemnify an Indemnified Person under this Section 3.4(a) for any Claim to the extent that such Claim
is solely attributable to:

	(i)
	the
gross negligence, fraud, wilful misconduct or wilful illegal acts of any Indemnified Person;

	(ii)
	the
failure on the part of any Indemnified Person to perform any of its material covenants or obligations contained in any Loan Document to which it is a party, or a
representation or warranty made by any Indemnified Person under the Loan Documents to which it is a party or in any certificate or other document delivered by any Indemnified Person pursuant hereto or
in connection with any Loan Document being found to be false or incorrect in any material respect so as to make it materially misleading when made; 

32

 

	(iii)
	the
Claim of any Indemnified Person for expenses which such Indemnified Person is obligated to bear hereunder; or

	(iv)
	a
Claim to the extent arising from the act of offering, selling, disposing or transferring by any Indemnified Person of all or part of its interest in the Loan
Documents.

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

3.5   Proceedings in Respect of Claims  

	(a)
	If
a Claim is made against an Indemnified Person as to which an Indemnifying Party may have an indemnification obligation under Section 3.4(a), such Indemnified Person
shall notify the Indemnifying Party of the Claim; provided that the failure to provide such notice promptly shall not release the Indemnifying Party from any of its obligations to indemnify unless
(and only to the extent) such failure shall prevent the Indemnifying Party from contesting, or materially and adversely affects the ability of the Borrower to conduct a contest of, such Claim.

	(b)
	The
Indemnified Person shall be entitled, in its discretion, to require the Indemnifying Party to prosecute, at the Indemnifying Party's own cost and expense, the entire defence of
such Indemnified Person against any Claim by a third party for which such Indemnified Person is indemnified under Section 3.4(a). In addition, upon delivery by the Indemnifying Party to
such Indemnified Person of a written acknowledgement of the Indemnifying Party's obligations to indemnify such Indemnified Person in accordance with the terms of this Agreement in respect of such
Claim, the Indemnifying Party shall be entitled, at its own expense, to participate in, and, to the extent that the Indemnifying Party desires, to assume and control the defence thereof through its
own counsel (who shall be subject to the reasonable approval of the Indemnified Person); provided, however, that if the Indemnifying Party is controlling any proceedings, the Indemnifying Party
shall keep such Indemnified Person fully apprised of the status of such proceedings and shall provide such Indemnified Person with all information with respect to such proceedings as such Indemnified
Person shall reasonably request. The Indemnifying Party must indicate its election to assume such defence by written notice to the Indemnified Person within 30 days following receipt of the
Indemnified Person's notice of the Claim, or in the case of a third party Claim which requires a shorter time for response then within such shorter period as specified in the Indemnified Person's
notice of Claim, provided that such Indemnified Person has given the Indemnifying Party notice thereof. The Indemnified Person may participate at its own expense and with its own counsel (provided
that all Indemnified Persons shall use the same counsel) in any proceeding conducted by the Indemnifying Party in accordance with the foregoing; provided the Indemnifying Party shall in any event
remain liable hereunder in respect of the Claim. The Indemnifying Party shall not be entitled to assume and control (but may, at its own expense, participate in) the defence of any such Claim
if and to the extent that: 

33

 

	(i)
	in
the reasonable opinion of such Indemnified Person acting in good faith,

	(A)
	such
proceeding involves any risk of imposition of criminal liability on such Indemnified Person; or

	(B)
	such
proceeding involves any risk of impairment to the reputation of the Indemnified Person in any material respect; or

	(C)
	the
control of such action, suit or proceeding would, involve an actual or potential conflict of interest, such that it is advisable for such Indemnified Person to be
represented by separate counsel; or

	(ii)
	such
proceeding involves Claims not fully indemnified by the Indemnifying Party which the Indemnifying Party and the Indemnified Person have been unable to sever from
the indemnified Claim(s). 

        Notwithstanding
the first paragraph of this Section 3.5(b), in any of the circumstances set out in Section 3.5(b)(i) or (ii), the Indemnified Person
shall be entitled to assume the defence of such Claim with counsel selected by it (provided that all Indemnified Parties shall use the same counsel) and the reasonable fees and
out-of-pocket expenses of such counsel shall be borne by the Indemnifying Party; provided, that the Indemnifying Party shall in any event remain liable hereunder in respect of
the indemnified Claim. 

	(c)
	Except
in the circumstances described in Section 3.5(b)(i)(C), the Indemnifying Party may enter into any settlement or other compromise with respect to any Claim in
respect of which it has an indemnity payment obligation under Section 3.5(a) without the prior written consent of the Indemnified Person, except in the case of a settlement involving an
admission of liability of such Indemnified Person, in which case the prior written consent of the Indemnified Person shall be obtained, provided that if such Indemnified Person withholds its consent
to such settlement and the required admission of liability of such Indemnified Person is not in favour of a Governmental Body other than a court, would not give rise to the imposition of any penalty
or sanction against the Indemnified Person by any Governmental Body, is not in respect of any criminal liability and would not otherwise impair the reputation of the Indemnified Person in any material
respect, the maximum amount of liability of the Indemnifying Party to the Indemnified Person with respect to such Claim shall not exceed the amount of the proposed settlement rejected by such
Indemnified Person. Unless an Event of Default shall have occurred and be continuing, no Indemnified Person shall enter into any settlement or other compromise with respect to any Claim for which the
Indemnifying Party has in writing agreed to fully indemnify under Section 3.5(a) without the prior written consent of the Indemnifying Party, which consent may be withheld in the
Borrower's sole discretion, unless such Indemnified Person waives its right to be indemnified under Section 3.5(a), with respect to such Claim. 

34

 

	(d)
	Each
Indemnified Person shall supply the Indemnifying Party with such information and documents reasonably requested by the Indemnifying Party as are necessary or advisable for the
Indemnifying Party to participate in any action, suit or proceeding to the extent permitted above, and the Indemnifying Party shall reimburse the Indemnified Person for the reasonable costs and
out-of-pocket expenses of supplying such information and documents, all within a reasonable period of time following the Indemnifying Party's request therefor.

	(e)
	Upon
payment in full of any Claim pursuant to Section 3.5(a) to or on behalf of an Indemnified Person, the Indemnifying Party, without any further action, shall
be subrogated to any and all claims that such Indemnified Person may have relating thereto (other than claims in respect of insurance policies maintained by such Indemnified Person at its own
expense). Each Indemnified Person agrees, at the Indemnifying Party's reasonable request and expense, to give such further assurances or agreements and to otherwise cooperate with the Indemnifying
Party to enable the Indemnifying Party to vigorously pursue such claims.

	(f)
	Any
amount payable to an Indemnified Person pursuant to Section 3.5(a) shall be paid to such Indemnified Person within 30 days of the receipt (or deemed
receipt) by the Indemnifying Party of a written request therefor from such Indemnified Person, accompanied by a written statement describing in reasonable detail the basis for such indemnity and the
computation of the amount so payable; provided that payment of an indemnity in respect of a third party Claim need not be made until payment is due, whether by compromise, settlement, court
proceedings, arbitration or otherwise, from the Indemnified Person in respect of such third party Claim. 

3.6   Evidence of Indebtedness  

        The Lender shall maintain and keep accounts showing the amount of all Loans advanced by the Lender, from time to time and the dates thereof and the interest, fees
and other charges accrued thereon or applicable thereto from time to time, and all payments of principal (including prepayments), interest and fees and other payments made by the Borrower
to the Lender from time to time under the Bridge Loan. Such accounts maintained by the Lender shall be prima facie evidence of the matters recorded
therein. 

 
 

ARTICLE 4 
  ADDITIONAL CONDITIONS PRECEDENT TO ADVANCES
  UNDER TRANCHE 2 AND TRANCHE 3  
    

4.1   Tranche 2 Conditions  

        Without derogating from the provisions of Sections 3.1 and 8.2, the Borrower shall only be entitled to advances under Tranche 2 if the
following conditions (the "Tranche 2 Conditions") shall have been satisfied as of the first Banking Day on or after October 15,
2005: 

	(a)
	Borrower Recapitalization Plan:    The Borrower has established to the satisfaction of the Lender, in its sole discretion,
that the Borrower is in compliance with, can reasonably be expected to be able to implement, and is using commercially reasonable efforts to implement, the Borrower Recapitalization Plan taking into
account, among other things, the Tranche 2 Conditions set forth below in subsections (b), (c) and (d); 

35

 

	(b)
	Asset Sales:    The Borrower has established to the satisfaction of the Lender that the Borrower has sold, or is actively
pursuing the sale of, a minimum of four of the assets listed as being intended for disposal in the Borrower Recapitalization Plan within the time frames included therein, with aggregate budgeted net
proceeds before debt repayment of not less than $50,000,000;

	(c)
	Gaming Transaction:    The Borrower has established to the satisfaction of the Lender that the Borrower has implemented a
process to actively pursue and execute a gaming transaction with one or more reputable gaming companies, including by retaining the advisory services of a gaming consultant acceptable to the Lender,
acting reasonably;

	(d)
	Operations:    The Borrower has established to the satisfaction of the Lender that the Borrower's EBITDA (excluding asset
impairment writedowns and gains and losses on asset sales and irrespective of any changes in the Borrower's accounting policies after the Closing Date) for the third quarter of 2005 is no worse than
negative $22,000,000; and

	(e)
	Tranche 2 Arrangement Fee:    The Lender shall have received payment in full of the Tranche 2 Arrangement Fee.

4.2   Tranche 3 Conditions

        Without
derogating from the provisions of Sections 3.1 and 8.2, the Borrower shall only be entitled to advances under Tranche 3 if the following conditions
(the "Tranche 3 Conditions") shall have been satisfied as of the first Banking Day on or after January 15, 2006: 

	(a)
	Section 4.1 Conditions:    The conditions set out in Section 4.1 shall have been satisfied or waived by the
Lender;

	(b)
	Borrower Recapitalization Plan:    The Borrower has established to the satisfaction of the Lender, in its sole discretion,
that the Borrower is in compliance with, can reasonably be expected to be able to implement, and is using commercially reasonable efforts to implement, the Borrower Recapitalization Plan taking into
account, among other things, the associated milestones set forth below in subsections (c) and (d);

	(c)
	Asset Sales:    The Borrower has (a) sold, or has entered into an agreement of purchase and sale with respect to,
assets that has resulted, or will result, in a repayment under and permanent reduction of the Bridge Loan of not less than $25,000,000 and (b) established to the satisfaction of the Lender that
the Borrower has sold, or is actively pursuing the sale of, assets listed as being intended for disposal in the Borrower Recapitalization Plan within the time frames included therein, with aggregate
budgeted net proceeds before debt repayment of not less than $100,000,000 (which will include proceeds of sale achieved as part of the Tranche 2 Conditions and represent a requirement for an
additional $50,000,000 above the amount required pursuant to the Asset Sales with respect to Tranche 2 Conditions set out in Section 4.1(b)); 

36

 

	(d)
	Operations:    The Borrower has established to the satisfaction of the Lender that the Borrower's EBITDA (excluding asset
impairment writedowns and gains and losses on asset sales and irrespective of any changes in the Borrower's accounting policies after the Closing Date) for the fourth quarter of 2005 is no worse than
negative $11,000,000; and

	(e)
	Tranche 3 Arrangement Fee:    The Lender shall have received payment in full of the Tranche 3 Arrangement Fee.

 
 

ARTICLE 5 
  INTEREST AND FEES

5.1   Interest Rate  

	(a)
	Subject
to Sections 5.1(e), (f) and (g), at the option of the Borrower, Advances under the Loan shall bear interest from time to time at:

	(i)
	a
floating rate per annum (each such Advance being referred to as a "Floating Rate Advance") equal to the greater of:
(A) the Base Rate, as announced from time to time, plus 550 bps per annum and (B) 9% (with interest in each case payable monthly in arrears); or

	(ii)
	a
fixed rate per annum (each such Advance being referred to as a "Fixed Rate Advance") equal to the greater of:
(A) LIBOR plus 650 bps and (B) 9%, subject to: (I) minimum amounts of US$10,000,000; (II) not more than five separate Interest Periods outstanding with respect to
Fixed Rate Advances at any one time; and (III) each Interest Period with respect to separate Fixed Rate Advance is not to exceed the applicable Interest Period or extend beyond the Termination
Date as the case may be (with interest in each case payable at maturity of each separate Fixed Rate Advance).

	(b)
	Each
Advance shall initially be the type of Advance specified in the applicable Borrowing Notice and shall bear interest at the rate applicable to such type of Advance (determined as
provided in Section 5.1(a) until (i) in the case of a Fixed Rate Advance, the end of the initial Interest Period applicable thereto as specified in the applicable Borrowing
Notice; or (ii) in the case of any Floating Rate Advance, the date on which such Advance is repaid in full or is changed to a Fixed Rate Advance pursuant to and to the extent permitted or
required by Section 5.1(d). 

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	(c)
	Each
Interest Rate Election shall be made on five (5) Banking Days' prior notice, in each case, not later than 11:00 a.m. (local time) by the Borrower to Lender. Each
Interest Rate Election shall be given substantially in the form of Schedule B hereto and shall be irrevocable and binding upon the Borrower. Subject to
Sections 5.1(e) and (f), if the Borrower fails to deliver an Interest Rate Election to the Lender within five (5) Banking Days prior to the expiration of any
Interest Period for any outstanding Fixed Rate Advance as provided in this Section 5.1(c), such Fixed Rate Advance shall continue as a Fixed Rate Advance with an Interest Period of
30 days.

	(d)
	Each
conversion of an Advance to another type of Advance shall be made on five (5) Banking Days' prior notice, in each case, not later than 11:00 a.m. (local time) by
the Borrower to Lender, shall be given in the form of an Interest Rate Election and shall otherwise be made in accordance with and subject to this Article, provided that any outstanding Fixed Rate
Advance may not be converted to a Floating Rate Advance unless and until the expiration of the Interest Period applicable to such outstanding Fixed Rate Advance.

	(e)
	Unless
SHRCP Approval is obtained and all applicable registrable Security being provided by The Meadows Guarantors hereunder is registered in the Commonwealth of Pennsylvania within
75 days of the Closing Date (collectively, "The Meadows Security Conditions"), the interest rate on the Loan will, on the 75th day
following the Closing Date, be increased by 100 basis points per annum until such time as The Meadows Security Conditions are met.

	(f)
	If
any Obligations are not paid when due or an Event of Default has occurred and is continuing, all amounts owing or deemed to be owing hereunder, whether in respect of principal,
interest, fees, expenses or otherwise, both before and after judgment, and in the case of expenses from the dates such expenses are invoiced to the Borrower, shall bear interest at a rate per annum
determined on a daily basis that is equal to 15% per annum, in each case calculated on the basis of the actual number of days elapsed and on the basis of a year of 365 or 366 days, as
the case may be. Such interest shall accrue from day to day, be payable in arrears on demand and shall be compounded monthly on the last Banking Day of each calendar month.

	(g)
	If
the Lender determines, in good faith, which determination shall be final, conclusive and binding upon the Borrower, and notifies the Borrower that (i) by reason of
circumstances affecting financial markets inside or outside Canada, the United States or Europe, as the case may be, deposits of U.S. Dollars are unavailable to the Lender in the London
interbank market, (ii) adequate and fair means do not exist for ascertaining the interest rate for a Fixed Rate Advance on the basis provided in the definition of LIBOR, or (iii) by
reason of a change since the date of this Agreement in any applicable law or governmental regulation, guideline or order or in the interpretation thereof by any Official Body affecting the Lender, or
any relevant financial market, LIBOR no longer represents the effective cost to the Lender of making or maintaining a Fixed Rate Advance for a relevant interest period or other relevant period, then: 

38

 

	(i)
	the
right of the Borrower to select a Fixed Rate Advance shall be suspended until the Lender determines that the circumstances causing such suspension no longer exist
and the Lender so notifies the Borrower;

	(ii)
	if
no Fixed Rate Advance is outstanding, any applicable Borrowing Notice requesting a Fixed Rate Advance shall be deemed to be a request for a Floating Rate Advance;

	(iii)
	if
any Fixed Rate Advance is outstanding to the Borrower, it and all other Fixed Rate Advances shall become Floating Rate Advances on the last day of the then current
Interest Period applicable thereto (or on such earlier date as may be required to comply with any Applicable Law); and

	(iv)
	if
any of the circumstances in Section 5.1(g) shall occur, the Borrower and the Lender shall, following the giving of notice by the Lender under this
Section 5.1 (g), endeavour to determine an alternative basis, which may, if such parties agree, include (without limitation) alternative rates of interest, alternative Interest Periods,
alternative currencies or any combination thereof, for Fixed Rate Advances. If the Borrower and the Lender are unable to agree on such alternative basis within a period of 30 days from the date
of such notice by the Lender (provided that in any event such period shall not extend beyond the last day specified for giving a Borrowing Notice in respect of any Fixed Rate Advance then outstanding
or three Banking Days before any repayment date required under Applicable Law, as the case may be), and the Borrower has not elected to convert any outstanding Fixed Rate Advances to Floating Rate
Advances, the Lender shall determine an interest rate and specify an Interest Period (not exceeding one month) in respect of each Fixed Rate Advance then outstanding, which interest rate shall
be the cost to the Lender (as certified by the Lender to the Borrower) of funding any such Advance for the Interest Period so specified from such sources as it may reasonably select and the
amount of any such Advance shall bear interest at the rate so determined. The provisions of this Section 5.1(g) shall apply only for so long as the circumstances in
Section 5.1(g) shall exist. 

5.2   Calculation and Payment of Interest

	(a)
	Interest
on Floating Rate Advances shall accrue from day to day, both before and after default, demand, maturity and judgment, shall be calculated on the basis of the actual number of
days elapsed and on the basis of a year of 365 or 366 days, as the case may be, and shall be payable to the Lender in U.S. dollars in arrears on the first Banking Day of each
month. For greater certainty, where the rate of interest is changed, for a Floating Rate Advance, interest shall be charged for the day on which such change is effective on the basis of the new rate. 

39

 

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

5.3   Fees

	(a)
	Commitment Fee.    The Borrower shall pay to the Lenders on the third Banking Day following the end of each Fiscal Quarter
and on the Termination Date (each a "Commitment Fee Payment Date"), in arrears, a non-refundable commitment fee
(the "Commitment Fee") equal to 1% per annum of the amount, if any, by which the Loan Amount (assuming that all Tranches are available to the
Borrower, irrespective of whether that is actually the case, but taking into account any repayments or cancellations that have been made by the Borrower in accordance with the terms hereunder) exceeds
the amount of the Loan (the "Unutilized Amount") on each day in such Fiscal Quarter or the part thereof ending on the Termination Date, as
applicable. The Commitment Fee on any Commitment Fee Payment Date shall be payable in respect of the period from and including the Closing Date or the preceding Commitment Fee Payment Date, as the
case may be, to but excluding the next Commitment Fee Payment Date, and shall be calculated on a daily basis on the Unutilized Amount on each day during such period on the basis of the number of days
elapsed and a year of 365 or 366 days, as the case may be.

	(b)
	Arrangement Fee.    The Borrower shall pay to the Lender: (i) on the Closing Date an arrangement fee
(the "Closing Arrangement Fee") of $1,000,000, being 2% of the Tranche 1 Loan Amount; (ii) on the date, if any, on which all or
part of Tranche 2 is made available to the Borrower, an arrangement fee (the "Tranche 2 Arrangement Fee") of $500,000, being 2% of
the Tranche 2 Loan Amount; and (iii) on the date, if any, on which all or part of Tranche 3 is made available to the Borrower, an arrangement fee
(the "Tranche 3 Arrangement Fee") of $500,000, being 2% of the Tranche 3 Loan Amount. 

5.4   Payment of Costs and Expenses

        Whether
or not the Borrower takes advantage of the Bridge Loan, the Borrower shall pay to the Lender, on demand, the following costs and expenses: 

	(a)
	all
reasonable costs and out-of-pocket expenses of the Lender in connection with the preparation, negotiation and execution of the Loan Documents, the
Intercreditor Agreements, any actual or proposed amendment or modification hereof or thereof or any waiver hereunder or thereunder and all instruments supplemental or ancillary thereto and all
reasonable documented due diligence expenses incurred in connection therewith;

	(b)
	all
reasonable costs and out-of-pocket expenses of the Lender in connection with obtaining advice as to the rights and responsibilities of the Lender under the
Loan Documents and the Intercreditor Agreements; and

	(c)
	all
reasonable costs and out-of-pocket expenses of the Lender in connection with the defence, establishment, protection or enforcement of any of the rights or
remedies of the Lender under the Loan Documents or the Intercreditor Agreements including, without limitation, all costs and expenses of establishing the validity and enforceability of, or of
collection of amounts owing under, any of the Loan Documents or the Intercreditor Agreements and all reasonable costs and expenses of any receiver or receiver-manager appointed by the Lender or any of
the Lender or by a court in connection with the enforcement of the Loan Documents or the Intercreditor Agreements; 

40

 

including,
without limitation, all of the reasonable fees and disbursements of counsel and other advisors to the Lender, its agents, and any such receiver or receiver-manager, on a full indemnity
basis, incurred in connection therewith, including all sales, goods and services or value-added taxes payable by any of them on all such costs, expenses and compensation. 

 
 

ARTICLE 6 
  REPRESENTATIONS AND WARRANTIES

6.1   Representations and Warranties

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

	(a)
	Incorporation and Status.    Each of the Borrower and the Guarantors is duly incorporated, formed or organized, as the case
may be, and validly existing under the laws of its jurisdiction of incorporation, formation or organization, as the case may be, and has the power and capacity to own its properties and assets and to
carry on its business as presently carried on by it or as contemplated hereunder to be carried on by it. Each of the Guarantors is wholly-owned by the Borrower. The Borrower does not carry on any
material business other than the Core Line of Business. None of the Guarantors carries on any business other than the Core Line of Business and other than the ownership or operation of casinos,
hotels, resorts, card clubs, sports bars, restaurants and theatres, all of which activities are associated with or ancillary or related to the Core Line of Business, and the ownership and management
of a portfolio of real estate properties held for development or sale. Except where the failure to have such Material Authorization could not reasonably be expected to have a Material Adverse Effect,
the Borrower and each Guarantor holds all Material Authorizations necessary to own or lease, as applicable, each Property or Properties owned or leased by it or to carry on its Core Line of Business
(including, without limitation, all environmental and other permits, licences and other authorizations required for the Borrower and each Guarantor to own or lease such Property or Properties or to
carry on its Core Line of Business in accordance with Applicable Law and further including, without limitation, all licensing requirements of the Racing and Gambling Regulatory Authorities in relation
to the Borrower or any Guarantor) in each jurisdiction in which it does so, all of which are in good standing; 

41

  

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

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

        (d)   No Contravention.    The execution and delivery of each of the Loan Documents, to which is a party and the
performance by each of the Borrower and the Guarantors of its obligations thereunder (i) do not and will not contravene, breach or result in any default under (A) the articles,
by-laws, constating documents or other organizational documents of the Borrower or any Guarantor, (B) any Material Authorization, (C) any Applicable Law, except where the
failure to comply with such Applicable Law could not reasonably be expected to have a Material Adverse Effect, or (D) any Material Agreement, (ii) do not and will not oblige the Borrower
or any of its Subsidiaries to grant any Lien to any Person other than the Lender, and (iii) do not and will not result in or permit the acceleration of the maturity of any indebtedness,
liability or obligation of the Borrower or any Guarantor under any mortgage, lease, agreement or other legally binding instrument of or affecting the Borrower or any Guarantor; 

        (e)   No Consents Required.    Other than the SHRCP Approval and filings with the Securities Commission, no Material
Authorization is required in connection with (i) the execution, delivery or performance of any of the Loan Documents to which it is a party by the Borrower or any Guarantor, (ii) the
creation of the Security, and (iii) the perfection of such Security; 

        (f)    Enforceability.    Each of the Loan Documents constitutes, or upon execution and delivery will constitute, a
valid and binding obligation of the Borrower and each Guarantor which is a party to it, enforceable against it in accordance with its terms, subject only to the qualifications set out in the opinion
of the Borrower's and Guarantors' Local Agents delivered pursuant to Section 8.1(f)(iv); 

        (g)   Financial Statements.

	(i)
	The
Audited and Unaudited Financial Statements have been prepared in accordance with GAAP and present fairly the financial position and results of operations of the
Borrower and its Subsidiaries on a consolidated basis as of the dates indicated and for the periods specified; and

	(ii)
	The
Lender has been furnished with a copy of the unaudited internally prepared consolidated financial statements of the Borrower and each of the Guarantors dated as of
and at the end of the most recently completed fiscal quarter. Such internally prepared consolidated financial statements of the Borrower and each of the Guarantors fairly present the financial
condition of the Borrower and each of the Guarantors as at such date in conformity with generally accepted accounting principles applied on a consistent basis (save and except for the reflection of
the value of the assets of the Borrower and each of the Guarantors at their market value instead of their cost as reflected in the notes to such financial statements) and there has been no Material
Adverse Change since the date of such statements; 

42

 

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

        (i)    Borrower Organizational Documents.    A true and complete copy of the certificate of formation, certificate of
authority to transact business and by-laws of the Borrower and all other documents creating and relative to the organization of the Borrower (collectively, the
"Borrower Incorporation Documents") have been made available to the Lender. There are no other agreements, oral or written, among any of the
shareholders of the Borrower relating to the Borrower. The Borrower Incorporation Documents are in full force and effect, and are binding upon and enforceable in accordance with their terms. No breach
exists under the Borrower Incorporation Documents and no act has occurred and no condition exists which, with the giving of notice or the passage of time would constitute a breach under the Borrower
Incorporation Documents; 

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

        (k)   Authorized Capital.    The authorized capital of the Borrower consists of 310,000,000 Class A
Subordinate Voting Stock, par value of $0.01 per share, of which 48,892,971 were issued and outstanding as at June 30, 2005, and 90,000,000 shares of Class B stock, par
value of $0.01 per share, of which 58, 466,056 were issued and outstanding. 

The
authorized capital of the Gulfstream Guarantor consists of 13,040 common shares of which 11,232 common shares are duly issued and outstanding as fully paid and
non-assessable. The beneficial holder of such outstanding shares is as follows: 

43

 

	Beneficial Holder 
	 	Class of Shares
	 	Number of Shares

	Magna Entertainment Corp.	 	Common	 	11,232

The
authorized capital of the Palm Meadows Training Guarantor consists of 10,000 common shares of which 100 common shares are duly issued and outstanding as fully paid and
non-assessable. The beneficial holder of such outstanding shares is as follows: 

	Beneficial Holder 
	 	Class of Shares
	 	Number of Shares

	Magna Entertainment Corp.	 	Common	 	100

The
authorized capital of Pacific Racing Association consists of 100,000 common shares of which 69,347 common shares are duly issued and outstanding as fully paid and
non-assessable. The beneficial holder of such outstanding shares is as follows: 

	Beneficial Holder 
	 	Class of Shares
	 	Number of Shares

	Magna Entertainment Corp.	 	Common	 	69,347

The
authorized capital of MEC Land Holdings (California) Inc. consists of 1000 common shares of which 100 common shares are duly issued and outstanding as fully paid and
non-assessable. The beneficial holder of such outstanding shares is as follows: 

	Beneficial Holder 
	 	Class of Shares
	 	Number of Shares

	Magna Entertainment Corp.	 	Common	 	100

The
authorized capital of MEC Pennsylvania Racing, Inc. consists of 1,000 common shares of which 100 common shares are duly issued and outstanding as fully paid and
non-assessable. The beneficial holder of such outstanding shares is as follows: 

44

 

	Beneficial Holder 
	 	Class of Shares
	 	Number of Shares

	Magna Entertainment Corp.	 	Common	 	100

The
authorized capital of Washington Trotting Association, Inc. consists of 10,000 common shares of which 100 common shares are duly issued and outstanding as fully paid and
non-assessable. The beneficial holder of such outstanding shares is as follows: 

	Beneficial Holder 
	 	Class of Shares
	 	Number of Shares

	Magna Entertainment Corp.	 	Common	 	100

The
authorized capital of Mountain Laurel Racing, Inc. consists of 10,000 common shares of which 100 common shares are duly issued and outstanding as fully paid and
non-assessable. The beneficial holder of such outstanding shares is as follows: 

	Beneficial Holder 
	 	Class of Shares
	 	Number of Shares

	Magna Entertainment Corp.	 	Common	 	100

The
authorized capital of The Santa Anita Companies, Inc. consists of 10,000 common shares of which 1,100 common shares are duly issued and outstanding as fully paid and
non-assessable. The beneficial holder of such outstanding shares is as follows: 

*    1,100 shares are pledged to Wells Fargo pursuant to the Santa Anita Senior Facility

	Beneficial Holder 
	 	Class of Shares
	 	Number of Shares

	Magna Entertainment Corp.*	 	Common	 	1,100

The
authorized capital of Los Angeles Turf Club, Incorporated consists of 1,000 common shares of which 25 common shares are duly issued and outstanding as fully paid and
non-assessable. The beneficial holder of such outstanding shares is as follows: 

*    25 Common shares are pledged to Wells Fargo pursuant to the Santa Anita Senior Facility

45

 

	Beneficial Holder 
	 	Class of Shares
	 	Number of Shares

	Magna Entertainment Corp.*	 	Common	 	25

The
authorized capital of the San Luis Rey Downs Guarantor consists of 10,000 common shares of which 100 common shares are duly issued and outstanding as fully paid and
non-assessable. The beneficial holder of such outstanding shares is as follows: 

	Beneficial Holder 
	 	Class of Shares
	 	Number of Shares

	Magna Entertainment Corp.	 	Common	 	100

The
authorized capital of the Dixon Guarantor consists of 10,000 common shares of which 100 common shares are duly issued and outstanding as fully paid and non-assessable.
The beneficial holder of such outstanding shares is as follows: 

	Beneficial Holder 
	 	Class of Shares
	 	Number of Shares

	Magna Entertainment Corp.	 	Common	 	100

The
authorized capital of the Ocala Guarantor consists of 10,000 common shares of which 100 common shares are duly issued and outstanding as fully paid and non-assessable.
The beneficial holder of such outstanding shares is as follows: 

	Beneficial Holder 
	 	Class of Shares
	 	Number of Shares

	Magna Entertainment Corp.	 	Common	 	100

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

46

 

        (m)  Solvency.    The Borrower and each of the Guarantors is solvent, able to pay its debts as such debts become
due, taking into account the Borrower Recapitalization Plan has capital sufficient to carry on its businesses and transactions and all businesses and transactions in which it is about to engage, and
the value of its property at a fair valuation is greater than the sum of its debts. Neither the Borrower nor any of the Guarantors will be rendered insolvent by the execution and delivery to the
Lender of the Loan Documents or by the transactions contemplated thereunder, and no: (i) assignment for the benefit of the creditors of any of them; (ii) appointment of a receiver for
any of them or for the property of any of them; or (iii) bankruptcy, reorganization, or liquidation proceeding, is pending or threatened (whether voluntary or involuntary) or has been
instituted by or against any of them; 

        (n)   Consideration.    The Loan Documents were executed and delivered by the Borrower and the Guarantors to the
Lender in good faith and in exchange for a reasonably equivalent value without any intent to hinder, delay or defraud any creditor of the Borrower or any of the Guarantors; 

        (o)   Affiliate Transactions.    Other than the transactions contemplated hereby and the transactions contemplated in
the Remington Construction Loan Agreement and the Gulfstream Construction Loan Agreement, since the date of the Unaudited Financial Statements, neither the Borrower nor any of the Guarantors has
entered into any transaction or agreement with any Affiliate which is not the Borrower or a Guarantor; 

        (p)   No Litigation.    There is no court, administrative, regulatory or similar proceeding (whether civil,
quasi-criminal, or criminal), arbitration or other dispute settlement procedure; investigation or enquiry by any Governmental Body, or any similar matter or proceeding (collectively
"proceedings") against or involving the Borrower or any Guarantor (whether in progress or threatened), which, if determined adversely to the Borrower or
any Guarantor, could reasonably be expected to have a Material Adverse Effect or which purports to affect the legality, validity and enforceability of any Loan Document to which the Borrower or any of
the Guarantors is a party; to the Borrower's knowledge, no such proceedings are threatened or contemplated by any Governmental Body or other Person; to the Borrower's knowledge, no event has occurred
which could reasonably be expected to give rise to any such proceedings; and there was no judgment, decree, injunction, rule, award or order of any Governmental Body outstanding against the Borrower
or any of the Guarantors which has had, or could reasonably be expected to have, a Material Adverse Effect; 

        (q)   No Default.    Neither the Borrower nor any Guarantor is in default or breach under any Applicable Law or under
any Material Agreement, or under the terms and conditions relating to any Material Authorizations, and there exists no state of facts which, after notice or the passage of time or both, would
constitute such a default or breach; in all cases where such default or breach could reasonably be expected to result in a Material Adverse Effect; and there are no proceedings in progress, pending or
threatened which could reasonably be expected to result in the revocation, cancellation, suspension or any adverse modification of any Material Authorization; 

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

47

 

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

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

        (u)   Material Assets.    The Borrower and each of the Guarantors owns or licenses or otherwise has legally
enforceable rights to use, under validly existing agreements use all material assets (including all real property, patents, licences, trademarks, trade names, trade secrets, service marks, copyrights
and all rights with respect thereto), contracts, and other documents necessary to conduct their businesses as now conducted and that (a) all such assets (other than permits and licences) have
been assigned, pledged, mortgaged or otherwise encumbered pursuant to the Security and (b) all permits and licences are subject to a negative pledge; provided that the names "Palm Meadows" and
"Dixon Downs" are owned by MEC and, within 90 days of the Closing Date, each of the Palm Meadows Guarantor and the Dixon Guarantor will enter into a respective perpetual
royalty-free exclusive licence agreement with MEC with respect to the applicable name; 

        (v)   Material Agreements.    The list of Material Agreements included on the Disclosure Schedule (as the same
may be supplemented and amended from time to time) constitutes all of the Material Agreements now in existence for the Borrower and the Guarantors. Neither the Borrower nor the Guarantors nor, to the
best knowledge of the Borrower and the Guarantors, any other party thereto, is in breach of or in default of any material obligation thereunder except those in respect of which the Borrower has
advised the Lender in writing from time to time and of which the Lender has indicated in writing its satisfaction. To the best knowledge of the Borrower and the Guarantors, the Material Agreements are
in good standing and no event has occurred which, with the passage of time or the giving of notice or both, would constitute an event of default under any of the Material Agreements; 

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

48

 

        (x)   ERISA.    (i) the Borrower and its ERISA Affiliates are in compliance in all material respects with all
applicable provisions of ERISA which would result in any material liability accruing to the Borrower or its ERISA Affiliates, (ii) neither the Borrower nor any ERISA Affiliate has violated any
provision of any Plan, (iii) no Reportable Event has occurred and is continuing with respect to any Plan initiated by the Borrower or any ERISA Affiliate, (iv) the Borrower and all ERISA
Affiliates have met their minimum funding requirements under ERISA with respect to each Plan, and (v) each Plan was able to fulfill its current benefit obligations as they come due in
accordance with the Plan documents; 

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

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

        (aa) Foreign Ownership.    Neither the Borrower nor any of the Guarantors is or will be a "foreign corporation",
"foreign partnership", "foreign trust", "foreign estate", "foreign person", "affiliate" of a "foreign person" or a "United States intermediary" of a "foreign person" within the meaning of the
IRC, Sections 897 and 1445, the Foreign Investments in Real Property Tax Act of 1980, the International
Foreign Investment Survey Act of 1976, the Agricultural Foreign Investment Disclosure Act of 1978, or the regulations
promulgated pursuant to such Acts or any amendments to such Acts; 

        (bb) Other Regulations.    Neither the Borrower nor any Guarantor is subject to regulation under the  Investment Company Act of 1940, the Public Utility Holding Company Act of 1935, the  Federal Power Act, the Interstate Commerce Act, any state public
utilities code or to any other law,
regulation, rule, limitation or restriction of a Governmental Body limiting its ability to incur indebtedness; 

        (cc) USA Patriot Act.    Neither the Borrower nor any of the Guarantors nor any Affiliate thereof, is identified in
any list of known or suspected terrorists published by any United States government agency (individually, as each such list may be amended or supplemented from time to time, referred to as a
"Blocked Persons List") including, without limitation, (i) the annex to Executive Order 13224 issued on September 23, 2001 by the
President of the United States and (ii) the Specially Designated Nationals List published by the United States Office of Foreign Assets Control; 

49

 

        (dd) No Agreement to Sell Assets; Reorganizations.    Except as specifically set forth in the Borrower
Recapitalization Plan, neither the Borrower nor any of its Subsidiaries has any legal obligation, absolute or contingent, to any Person or entity to sell any of its assets (including real and personal
property), except in the ordinary course of business consistent with past practice; or to effect any merger, consolidation or other reorganization of the Borrower or any of its Subsidiaries with any
other Person or entity or to enter into any agreement with respect thereto; 

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

        (ff)  Licences and Permits.    Except for Permitted Encumbrances, neither the Borrower nor any of its Subsidiaries
has pledged any licences or permits, held by it or any of its Subsidiaries, to a third party; 

        (gg) Title.    Subject only to Permitted Encumbrances, the Borrower and (where applicable) each Guarantor is the
absolute beneficial owner of and has good and marketable title in fee simple to, or has a good and marketable leasehold interest in, all of the Properties, details of which are set forth in
Schedule C hereto. The Disclosure Schedule contains an accurate and complete list of the municipal addresses of all Properties. The Borrower and (where applicable) each Guarantor is the
beneficial owner, lessee or licensee, as the case may be, of all of its other real and personal property and has good title thereto, or other applicable interest therein, free and clear of any Liens
other than Permitted Encumbrances; 

        (hh) Improvements.    The present use of each Property complies, and the future use of each Property will comply,
in all material respects, with all: (a) applicable legal and contractual requirements with regard to the use, occupancy, construction and operation thereof, including, without limitation, all
zoning, subdivision, environmental, flood hazard, fire safety, health, handicapped facilities, building and other laws, ordinances, codes, regulations, orders and requirements of any governmental
agency, including the Gulfstream Development Agreement applicable thereto; (b) applicable in respect of each Property building, occupancy and other permits, licences and approvals; and
(c) declarations, easements, rights-of-way, covenants, conditions and restrictions of record applicable in respect of each Property; 

50

 

        (ii)   Properties Access.    The Properties are accessible through all current access points, each of which connects
or, upon the completion of the contemplated development of the Properties will connect, directly to a fully improved and dedicated road accepted for maintenance and public use by the Governmental Body
having jurisdiction; 

        (jj)   Utilities.    All utility services necessary and sufficient for the construction, use or operation of each of
the Properties (now and as contemplated by the Borrower and the Guarantors in the future) are currently connected or, upon the completion of the contemplated development of the Gulfstream
Property, will be connected, at the boundary of the applicable Property directly to lines owned by the applicable utility and lying in dedicated roads, including water, storm, sanitary sewer, gas,
electric and telephone facilities; 

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

        (ll)   Flood Hazards/Wetlands.    None of the Properties is situated in an area designated as having special flood
hazards as defined by the Flood Disaster Protection Act of 1973, as amended, or as wetlands by any Governmental Body having jurisdiction over any of the
Properties; 

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

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

51

 

	(ii)
	neither
the Borrower nor any of the Guarantors has received, or has knowledge of any threatened, Order, notice, citation, directive, inquiry, summons or warning,
verbal, written or otherwise, or any other written communication from: (A) any Governmental Body or private citizen, whether acting or purporting to act in the public interest or otherwise;
(B) the current or prior owner, occupant or operator of any of the Properties; or (C) any other Person to whom any of the Borrower and any of the Guarantors could be reasonably held
liable, of any actual or potential violation or failure to comply with any Environmental Law or Safety Law or of any actual or potential obligation to undertake or bear the cost of any Environmental
or Safety Liability, including with respect to any Hazardous Activity;

	(iii)
	the
Borrower and each of the Guarantors has obtained all material Environmental Consents and Safety Consents and has obtained or is in the process of obtaining all
non-material Environmental Consents and Safety Consents, in each case as required for their use and operation of the Real Property and all such obtained Environmental Consents and Safety
Consents are in good standing and the Borrower and each of the Guarantors is in compliance with all terms and conditions of such Environmental Consents and Safety Consents;

	(iv)
	there
are no pending or, to the knowledge of the Borrower or any of the Guarantors, threatened, claims, encumbrances or restrictions of any nature resulting from or
constituting any material Environmental or Safety Liability or arising under or pursuant to any Environmental Law or Safety Law affecting the Borrower or any of the Guarantors or any of the Properties
or offsite location;

	(v)
	to
the knowledge of the Borrower and each of the Guarantors, there is no material amount of Hazardous Materials present at, near or from any of the Properties, including
any Hazardous Materials contained in barrels, aboveground or underground storage tanks, landfills, land deposits, surface impoundments, dumps, equipment (whether movable or fixed) or other containers,
either temporary or permanent, and deposited or located in land, water, sumps, containment ponds or any other part of any facility or incorporated into any structure therein or thereon except in the
ordinary course of business consistent with past practice and for which all necessary environmental disclosures have been made to Governmental Authorities;

	(vi)
	to
the knowledge of the Borrower and each of the Guarantors, there has been no material Release or Threat of Release of any Hazardous Materials at or from any location
where any Hazardous Materials were generated, manufactured, refined, transferred, produced, imported, used, processed, transported, stored, handled, treated, disposed, recycled or received from the
Borrower and/or any of the Guarantors; 

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

	(viii)
	to
the knowledge of the Borrower and each of the Guarantors, none of the Properties contains any wetlands or other sensitive, endangered or protected areas or species
or flora or fauna including any that would materially impede the Construction (as defined in the Remington Construction Loan Agreement) or the Gulfstream Reconstruction (as defined in
the Gulfstream Construction Loan Agreement) and/or any currently proposed development of the Palm Meadows Training Center Property;

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

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

	(xi)
	to
the knowledge of the Borrower and each of the Guarantors, none of the Borrower, and/or any of the Guarantors has assumed the liability of any other Person or entity
for, and none of the foregoing has agreed to indemnify any other Person or entity against, claims arising out of the Release of Hazardous Materials into the Environment other than on or from the
Properties or other claims under Environmental Laws and Safety Laws other than claims with respect to the Properties;

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

53

 

	(xiii)
	the
Borrower and each of the Guarantors are not aware of any material conflicts or disagreements between any Governmental Authorities and the Borrower and each of the
Guarantors with respect to environmental matters; and

	(xiv)
	the
Borrower and each of the Guarantors do not intend as at the date of this Agreement to decrease in any material way the resources available to any Subsidiaries to
address issues under Environmental Laws or Safety Laws; 

        (nn) Occupancy Agreements.    The list of all of the existing material leases, agreements to lease, licences and
other forms of occupancy agreements affecting any of the Properties (collectively, the "Occupancy Agreements") included on the Disclosure Schedule
constitutes all of the Occupancy Agreements that are material to the Borrower, the Guarantors and the Properties. To the best knowledge of the Borrower and/or the Guarantors, the Occupancy Agreements
are in good standing and none of the parties thereto is in default of any material obligation thereunder except those in respect of which the Borrower has advised the Lender in writing from time to
time and of which the Lender has indicated in writing its satisfaction; 

        (oo) Casualty.    Except for the Construction (as defined in the Remington Construction Loan Agreement and
the Reconstruction (as defined in the Gulfstream Construction Loan Agreement), there is no damage or destruction to any part of the Properties by fire or other casualty that has not been
repaired; 

        (pp) Liens on Collateral.    The Security creates in favour of the Lender valid and perfected mortgage liens and
security interests in or on the Collateral, subject only to Permitted Encumbrances; and 

        (qq) Disclosure.    All information provided to the Lender relating to the financial condition, business, affairs
and prospects of the Borrower and the Subsidiaries (other than financial projections), consisting of those documents and materials made available for review by the Borrower and referenced in binders
of materials compiled by the Borrower to assist the Lender and the Lender's counsel in connection with their due diligence review (but, for greater certainty, excluding any work product of the Lender
or the Lender's counsel), together with any information set out in the Disclosure Schedule, was true, accurate and complete in all material respects and omits no material fact necessary to make such
information not misleading in light of the circumstances under which such information was provided. All information (other than financial projections) furnished or made available by the Borrower
and/or any of the Guarantors to the Lender to induce the Lender to enter into or maintain this Agreement is true, accurate and complete in all material respects and does not omit to state any material
fact. All financial projections furnished or made available by the Borrower and/or any of the Guarantors to the Lender have been prepared in good faith, on the basis of all known facts and using
reasonable assumptions and the Borrower and each of the Guarantors believes such projections to be fair and reasonable and neither the Borrower nor any of the Guarantors has any knowledge or
information which would materially adversely affect such financial projections. The Borrower and each of the Guarantors has disclosed in the Disclosure Schedule everything to which it has knowledge
regarding the business, operations, property, financial condition, or business prospects of itself, and each of the Properties which could result in a Material Adverse Change. 

54

 

6.2                   Survival of Representations and Warranties  

        All representations and warranties of the Borrower and the Guarantors in this Agreement, the Loan Documents and all representations and warranties in any
certificate delivered by the Borrower pursuant hereto and thereto, shall survive execution of the Loan Documents and the making of the Loan, and may be relied upon by the Lender as being true and
correct with effect as of the date given (either initially or as brought down) until the Loan is fully and irrevocably paid, notwithstanding any investigation made at any time by the Lender or on its
behalf, including, without limitation, the due diligence review referred to in Section 6.1(qq). Without derogating from the foregoing, the representations and warranties of the Borrower and
each of the Guarantors set out in Section 6.1(mm) shall survive the payment and performance of the Indebtedness, liabilities and obligations of the Borrower under, and the termination
and release by the Lender of, this Agreement and the other Loan Documents. 

 
 

ARTICLE 7
  COVENANTS  
    

7.1   Affirmative Covenants  

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

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

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

        (c)   Use of Proceeds.    Use the proceeds of the Loans only as authorized in Section 2.1 hereof and subject
to the terms and provisions of the Loan Documents and for no other purpose, without the Lender's prior written consent, in the Lender's sole discretion. Except as expressly permitted herein, no
portion of the proceeds of the Loans shall be used by the Borrower to pay any amounts to any Affiliate, and in no event shall any amounts be paid in any manner that might cause the borrowing or the
application of such proceeds to violate Regulation G, Regulation U, Regulation T or Regulation X or any other regulation of the Board of Governors of the Federal
Reserve System or to violate the Securities Acts; 

55

   
        (d)   Hold Disbursements in Trust.    Other than the proceeds of the Loan that will be used for the purposes set
forth herein, the Borrower will receive and hold in trust for the Lender all advances made hereunder directly to the Borrower and the Borrower will not apply the same for any other purposes; 

        (e)   Implementation of Borrower Recapitalization Plan.    The Borrower will use all commercially reasonable efforts
to implement the Borrower Recapitalization Plan; 

        (f)    Corporate Existence.    The Borrower shall maintain in good standing its corporate existence under the laws of
the State of Delaware and qualify and remain duly qualified to do business and own property in each jurisdiction in which such qualification is necessary in view of, and to carry on, its Core Line of
Business in a commercially reasonable manner in accordance with past practice, and each Guarantor shall maintain in good standing its corporate existence under the laws of the jurisdiction of its
incorporation and qualify and remain duly qualified to do business and own property in each jurisdiction in which such qualification is necessary in view of its business and operations; 

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

        (h)   Compliance with Applicable Law, Material Agreements, etc.    (i) Except where any such failure could not
reasonably be expected to have a Material Adverse Effect, comply with (A) the requirements of all Applicable Laws, with all obligations, which, if contravened, could give rise to a Lien (other
than a Permitted Encumbrance) over any of the Collateral, and with all insurance policies required to be maintained under Section 7.1(q), and (B) all Material Agreements to
which it is a party or by which it or its properties are bound; (ii) except where any such changes could not reasonably be expected to have a Material Adverse Effect, obtain the Lender's prior
written consent (not to be unreasonably withheld) before making, permitting or allowing any material amendments or other material changes to, or the termination of, any Material Agreement
(excluding leases of space in respect of the Properties of less than two thousand, five hundred (2,500) square feet) or any other agreement affecting the Security, except pursuant to an
ordinary course renewal thereof consistent with past practice; (iii) notify the Lender of any default by any party with respect to such Material Agreements and take all commercially reasonable
steps to cure any such default; (iv) obtain the Lender's prior written consent before entering into any agreement containing any provision which would be violated or breached by the performance
of its obligations hereunder or under the Loan Documents or under any instrument or document delivered or to be delivered by it hereunder or in connection herewith, or which would violate or breach
any provision hereunder or under the Loan Documents or under any instrument or document delivered or to be delivered by it hereunder or in connection herewith; and (v) obtain the Lender's prior
written consent before making any material amendments to its constating documents; 

        (i)    Payment of Obligations.    Subject to the right to contest legitimate disputes, and subject, where applicable
to the provisos in Section 7.1(u), pay and discharge, or cause to be paid and discharged, all its indebtedness and obligations to other Persons promptly in accordance with normal terms
and practices of its businesses, before they shall become in default, as well as all lawful claims for labour, materials and supplies which otherwise, if unpaid, might become a lien or charge upon its
properties or any part thereof; 

56

 

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

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

        (l)    Books and Records; Reporting.    Keep and maintain (and provide the Lender and its representatives and
agents with reasonable access and copies of same if so requested by the Lender) at all times at the Borrower's address (in the case of the Borrower) or at each Guarantor's address
(in the case of the Guarantors), or at the Borrower's address, or at such other place as the Lender may approve in writing, complete and accurate books of accounts and records adequate to
reflect the results of the operation of each of the Properties, any financial statements required to be provided to the Lender pursuant to any of the Mortgages, and copies of all written contracts,
correspondence, and other documents affecting any of the Properties. Without limiting the foregoing, the Borrower and each Guarantor agrees to deliver the following to the Lender, in duplicate: 

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

57

 

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

	(B)
	demonstrating
in reasonable detail compliance (or, as the case may be, non-compliance) at the end of the relevant Fiscal Quarter or Fiscal Year, as applicable, with
the covenants contained in Section 7.1(o);

	(C)
	confirming
that no distributions, dividends, transfers, loans or other payments have been made by the Borrower or the Guarantors in contravention of this Agreement; and

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

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

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

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

	(B)
	as
soon as available and in any event within 40 days after the end of each Fiscal Quarter of the Borrower and the Guarantors, a copy of the unaudited financial statements of
the Borrower and each Guarantor for such Fiscal Quarter;

	(C)
	as
soon as available and in any event within 90 days after the end of the Fiscal Year of the Borrower and the Guarantors, a copy of the audited annual financial statements for
the Fiscal Year just ended of the Borrower and unaudited for each of the Guarantors fairly presenting the financial condition and the results of the operations of the Borrower and each Guarantor,
including, without limitation, a balance sheet, an income statement and such additional reasonable information as the Lender may reasonably request from time to time;

	(D)
	as
soon as practicable and in any event not later than 40 days after the commencement of each Fiscal Year of the Borrower and the Guarantors, projected financial statements for
the following Fiscal Year, including in each case, projected balance sheets, statements of income and retained earnings and statements of cash flow of the Borrower and the Guarantors, all in
reasonable detail and in any event to include projected operating and capital budgets; and 

58

 

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

	(iii)
	within
40 days after the end of each Fiscal Quarter (or more often if requested by the Lender), the Borrower shall submit to the Lender a detailed
written statement of the status of any remediation activities in respect of the Properties (I) required under each of the Environmental Reports, to comply with Environmental Laws or
(II) requested by the Lender in respect of the Properties, acting reasonably, including, without limitation, a statement as to remediation work performed to date and remediation work remaining
to be completed and, in addition, within one month after the end of each third of a calendar year, commencing with the third of a calendar year ending April 30, 2005, the Borrower shall submit
to the Lender, if requested, an update prepared by a consultant reasonably satisfactory to the Lender of (x) each of the Environmental Reports or (y) the most recent update provided to
comply herewith, including in such update the amounts expended during such period; 

        (m)  Reporting Requirements re Borrower Recapitalization Plan.    The Borrower shall deliver to the Lender:
(i) a completed consolidated 2006 business plan of the Borrower, including detail by business unit (and covering not less than 2 years), by no later than December 15, 2005
and (ii) reasonably detailed monthly progress reports on the 15th day of each month with respect to the Borrower Recapitalization Plan and, once prepared, the completed
consolidated 2006 business plan of the Borrower. The monthly progress reports shall include (i) monthly financial statements, including up-to-date cash flow forecasts,
summary of capital expenditures incurred in the month, revised or amended budgets, etc., (ii) an updated marketing plan for the asset sales set out in the Borrower Recapitalization Plan,
including expected dates for retaining sales agents/brokers, distributing sales materials, receiving offers, executing documentation and closing and summaries of offers and expressions of interest
received, etc., (iii) an updated status report on the conditions set forth in Article 4, and (iv) such other information as the Lender requests, acting reasonably; 

59

 

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

        (o)   Financial Covenants.    The Santa Anita Guarantors, on a Combined basis, must maintain EBITDA (before
inter-company fees), calculated on a rolling 12-month basis at the end of each Fiscal Quarter, of not less than $11 million; and, commencing with the Fiscal Quarter ending on
December 31, 2005, the Golden Gate Fields Guarantors, on a Combined basis, must maintain EBITDA (before inter-company fees), calculated on a rolling 12-month basis at the end of
each Fiscal Quarter, of not less than $4 million. Notwithstanding paragraph (c) of the definition of EBITDA, all net gains from the sale of real estate which were included in the
calculation of Net Income will be deducted from EBTIDA for purposes of performing any calculations required by this Section 7.1(o); 

        (p)   Required Remediation and Environmental Actions.    The Borrower shall provide the Lender, within 90 days
of the Closing Date, with a Phase I Environmental Site Assessment ("ESA") report or Phase I ESA Update report prepared by a qualified
consultant (with reliance thereon expressly extended to the Lender) for each of the Golden Gate Property and The Meadows Property. In the event that any of the Phase I ESA reports or
Phase I ESA Update reports recommend further investigations, all work related to such investigations is to be undertaken by the Borrower and led by the Guarantors and completed by a qualified
consultant with a report in relation to the investigations at each of the Golden Gate Property and The Meadows Property to be delivered to the Lender (with reliance thereon expressly extended to the
Lender) within 180 days of the Closing Date. All Phase I ESA reports, Phase I ESA Update reports and reports regarding further investigations hereunder shall be defined as the
"Initial ESAs". The Borrower or the Guarantors hereby agree to complete (within a reasonable period of time following the date of receipt of the Initial ESAs) the remediation actions recommended to be
taken in the Environmental Reports with respect to the Golden Gate Property and The Meadows Property in the Environmental Reports and not heretofore undertaken which, if not undertaken, would be
reasonably likely to have a Material Adverse Effect. The term "Environmental Reports" means collectively the environmental reports referred to in
Schedule D, and any updates or addenda thereto if and to the extent approved by the Lender in writing along with a reliance letter relating thereto addressed to the Lender in form and
substance satisfactory to the Lender. In connection with such required remediation actions, the Borrower or the Guarantors shall obtain an update to the applicable Environmental Report as and when
requested by the Lender, acting reasonably, reporting as to the remediation work undertaken and confirming that the remaining environmental conditions are in conformity with Environmental Laws. In
connection with each update to an Environmental Report, the Borrower or the Guarantors shall obtain a reliance letter relating thereto addressed to the Lender in form and substance reasonably
satisfactory to the Lender and shall deliver such updates and reliance letters to the Lender. The Borrower and the Guarantors covenant that any soils or other materials that are removed in connection
with any remediation of any of the Properties shall be disposed of in conformity with requirements of law at a location other than any of the Properties; 

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

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

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

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

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

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

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

        (t)    Preserve Security.    The Borrower and each of the Guarantors shall upon reasonable request in writing by the
Lender do, observe and perform all matters and things reasonably within its powers necessary or expedient to be done, observed or performed for the purpose of maintaining and preserving the security
interest of the Lender as provided for herein and in the Security as valid security, perfected in the manner contemplated hereby and in the Security; 

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        (u)   Defense of Collateral.    The Borrower and the Guarantors shall pay when due all obligations, lawful claims or
demands with respect to each of the Properties which, if unpaid, might result in, or permit the creation of, any Lien on such Property, including but not limited to all lawful claims for labour,
materials and supplies; provided that the Borrower or the applicable Guarantor shall have the right to contest any such claim so long as the Borrower or such Guarantor posts a bond acceptable to the
Lender to protect the Lender's interest in such Property, and, in general, do or cause to be done everything necessary to fully preserve the rights and interests of the Lender under this Agreement and
the other Loan Documents in respect of such Property. The Borrower and the Guarantors shall at all times defend the Lender's interest in and to the Properties, and the priority position of said
interest subject to the Permitted Encumbrances, against any and all claims of any Person adverse to the Lender. The Borrower and the Guarantors shall take all actions reasonably deemed necessary or
appropriate by the Lender to give effect to the Lender's priority of interests contemplated by this Agreement and the other Loan Documents; 

        (v)   Maintenance of the Properties.    Subject to work done in connection with the Construction (as defined
in and permitted by the Remington Construction Loan Agreement) and the Reconstruction (as defined in and permitted by the Gulfstream Construction Loan Agreement), the Borrower and the
Guarantors shall keep the Properties, including all buildings and improvements now or hereafter situated thereon, and all equipment owned by them and material to the operation of any of the
Properties, in good condition subject to reasonable wear and tear, not commit or permit any waste thereof, make all necessary or advisable repairs, replacements and improvements and subject to  force majeure, and complete and restore promptly and in good workmanlike manner any building, improvements or other items of any of the real property
that may be damaged, or destroyed, and subject to the right to contest legitimate disputes, pay when due all costs incurred therefor; 

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

        (x)   Notice of Default.    The Borrower and each of the Guarantors shall promptly provide the Lender with a copy of
all written notices and reports received or delivered by the Borrower or such Guarantor (including notices of default) under any of the Organizational Documents, Occupancy Agreements, Construction
Contracts or Material Agreements or any other agreement providing for the borrowing of money or other extension of credit, and notices of violations of Applicable Law received by the Borrower or any
of the Guarantors relating to any of the Properties that might have a Material Adverse Effect, including, without limitation, all racing and/or gaming licenses. The Borrower shall furnish, or cause to
be furnished, to the Lender, immediately upon becoming aware of the existence of an Event of Default or any Unmatured Event of Default, written notice of the existence of any such event or the
existence of any such condition; 

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

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

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

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

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

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

	(v)
	any
Default or Event of Default; 

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

        (aa) Surveys.    After the recording of any subdivision, plan of subdivision or small-scale planned development
with respect to any of the Properties, the Borrower and the Guarantors shall obtain and deliver to the Lender, at the Borrower's and Guarantors' expense, in a form reasonably acceptable to the Lender:
(i) an updated plan of survey for such Property showing such Property as so subdivided; and (ii) an endorsement to the Lender's title insurance policy confirming the new legal
description created by said subdivision and affirmative insurance that the Mortgage in respect of such Property continues to encumber such Property, as subdivided and newly described; 

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

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

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        (dd) SHRCP Approval.    Each of The Meadows Guarantors and the Borrower covenants that it will promptly seek the
approval of the State Harness Racing Commission of Pennsylvania under 58 Pa. Code Section 185.22 in respect of The Meadows Guarantors' Guarantee and Indemnity and all Security and
granted by The Meadows Guarantors to the Lender hereunder (the "SHRCP Approval"), and further covenants that it will not take any act
(or omit to take any act) that disqualifies any of The Meadows Guarantors from applying, obtaining, maintaining or receiving a license under the Pennsylvania Race Horse Development and Gaming
Act, 4 Pa. C.S.A. Sections 1101-1904 (2004) or related regulations as in effect from time to time; 

        (ee) Separateness of Guarantors.    Each of the Guarantors shall: 

	(i)
	maintain
books and records and, if a Guarantor providing a secured guarantee hereunder, bank accounts, separate from those of any other Person and maintain separate
financial statements, except that it may also be included in consolidated financial statements of its Affiliate;

	(ii)
	except
for the Dixon Guarantor and the Ocala Guarantor, be, and at all times hold itself out to the public and all other Persons as, a separate legal entity and correct
any known misunderstandings regarding its existence as a separate legal entity;

	(iii)
	pay
the salaries of its own employees, if any, and maintain a sufficient number of employees in light of its contemplated business operations;

	(iv)
	except
for the Dixon Guarantor and the Ocala Guarantor, use its own stationary, invoices and cheques;

	(v)
	file
its own tax returns with respect to itself (or consolidated tax returns, if applicable) as may be required under applicable law;

	(vi)
	except
as contemplated by the Loan Documents, and except for the Dixon Guarantor and the Ocala Guarantor, not commingle or permit to be commingled its funds or other
assets with those of any other Person;

	(vii)
	maintain
its assets in such a manner that it is not costly or difficult to segregate, ascertain or identify its individual assets from those of any other Person;

	(viii)
	except
as contemplated by the Loan Documents, the Gulfstream Construction Loan Agreement and the Remington Construction Loan Agreement, not guarantee or otherwise
hold itself or its assets out to be responsible or available for the debts or obligations of any Person, including any Affiliate;

	(ix)
	except
for the Dixon Guarantor and the Ocala Guarantor, conduct business in its own name; 

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	(x)
	within
60 days of the Closing Date, have and maintain at least one director and at least one officer different from the directors and officers of the Borrower and
the other Guarantors;

	(xi)
	hold
separate annual shareholder meetings (or adopt written resolutions in lieu thereof where permitted under applicable corporate law), with a copy of such
minutes and/or resolutions delivered to the Lender;

	(xii)
	hold
separate quarterly and annual Board of Directors meetings (or adopt written resolutions in lieu thereof where permitted under applicable corporate law),
with a copy of such minutes and/or resolutions delivered to the Lender; and

	(xiii)
	maintain
adequate capital in light of its contemplated business operations; 

        (ff)  Sale of Flamboro Downs.    In the event that the closing of the proposed sale of the Flamboro Downs racetrack
to Great Canadian Gaming Corporation does not take place within 120 days of the Closing Date, or at any time such transaction is terminated or abandoned by any of the parties thereto, the
Borrower will cause Ontario Racing Inc., Flamboro Downs Holdings Limited and Flamboro Downs Limited (collectively, the "Flamboro Guarantors"),
each a wholly-owned Subsidiary of the Borrower, to forthwith execute and deliver to the Lender an unsecured guarantee and indemnity (the "Flamboro Guarantee and
Indemnity") in respect of the Indebtedness, in form and substance satisfactory to the Lender, acting reasonably, and shall pay to such guarantors a guarantee fee in an amount
satisfactory to the Lender, acting reasonably; and in such event, the definition of "Security" herein shall thereafter include the Flamboro Guarantee and the definition of "Guarantors" herein shall
thereafter include the Flamboro Guarantors; and 

        (gg) Remington Property.    Until the escrow conditions set out in the Remington Escrow Agreement have been
satisfied, the Borrower shall deliver to the Lender all reporting, notification and financial information in respect of the Remington Borrower that the Remington Borrower would have been required to
deliver pursuant to the terms of the Remington Construction Loan Agreement had the Remington Construction Loan Agreement not been made subject to the Remington Escrow Agreement. 

7.2   Negative Covenants  

        The Borrower and each of the Guarantors covenants and agrees with the Lender that, except as expressly permitted under this Agreement and the other Loan
Documents, it shall not, nor shall it permit any of its respective Subsidiaries to, from and after the Closing Date until the Loan (including interest thereon) and all fees and expenses to be paid by
the Borrower to the Lender hereunder are paid in full: 

        (a)   Encumber Property.    Create, grant, assume or suffer to exist any Lien upon any of its or their properties or
assets, other than Permitted Encumbrances and Liens arising in connection with financial assistance permitted by Section 7.2(h); 

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        (b)   Capital Expenditures.    Without the Lender's prior written approval, exercisable in the Lender's sole
discretion, incur or commit or agree to incur any Capital Expenditures, or any lienable work to be done to or for the benefit of any of the Properties, except for (i) in accordance with the
Borrower Recapitalization Plan, (ii) the Construction (as defined in and permitted by the Remington Construction Loan Agreement), (iii) the Reconstruction (as defined in
and permitted by the Gulfstream Construction Loan Agreement) and (iv) emergency repairs; 

        (c)   Transactions with Affiliates.    Repay any existing indebtedness or liabilities owed to, or otherwise enter
into any transaction or agreement with, any Affiliate (or any corporation which, after the transaction in question becomes effective, would become an Affiliate), other than the Lender and its
Affiliates (other than the Borrower and its Subsidiaries), or permit any of its Subsidiaries to enter into any such transaction, other than (i) with an Affiliate which is the Borrower or a
Guarantor, (ii) where such transaction constitutes the purchase, sale or lease of assets or the purchase or provision of services, in each case in the ordinary course of business consistent
with past practice and either (A) such transaction is conducted on commercially reasonable terms and conditions, or (B) if such transaction relates to sharing facilities or personnel
among the Borrower and one or more of its Affiliates, the related costs are allocated on a reasonable basis or (iii) where the repayment is of unsecured intercompany indebtedness that is
Permitted Debt and has been established in the ordinary course of the Borrower's cash management process consistent with past practice; 

        (d)   Amalgamations, etc.    Except as specifically set forth in the Borrower Recapitalization Plan, enter into any
transaction (including by way of reorganization, consolidation, amalgamation, liquidation, transfer, sale or otherwise) whereby the Borrower or any of its Subsidiaries, all or any other material
portion of the undertaking, property and assets of the Borrower or any of its Subsidiaries, would become the property of any other Person; 

        (e)   Change in Ownership of Subsidiaries.    Except as specifically set forth in the Borrower Recapitalization Plan,
sell or otherwise transfer or dispose of any shares in the capital stock of any Subsidiary, or any warrants, rights or options to acquire such stock, or permit any Subsidiary to issue, sell or
otherwise transfer or dispose of any shares in its capital stock or the capital stock of any Subsidiary or any warrants, rights or options to acquire such stock except to the Borrower or any
Subsidiary; 

        (f)    Investments; Acquisitions.    Engage directly or indirectly in any business activity unrelated to its Core Line
of Business, or purchase or otherwise acquire or make any investment in any properties or assets, or permit or otherwise undertake any Acquisitions; provided, however, that the Borrower may
(i) make investments in Cash Equivalents in amounts and pursuant to terms acceptable to the Lender, acting reasonably, and (ii) increase its investment in Amtote
International, Inc. ("Amtote") at a cost not to exceed $7 million on the condition that the shares of the Borrower's Subsidiary that owns
Amtote will be pledged to the Lender as first ranking security; 

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        (g)   Restricted Payments:    Without in any way limiting the generality of the restrictions and limitations
contained within the covenants referenced in this Agreement, for so long as the Loan and/or any Guarantees and Indemnities delivered in connection therewith remains outstanding, the Borrower and each
of its Subsidiaries (except for the Gulfstream Guarantor, the Palm Meadows Training Guarantor and the Remington Borrower, which entities shall be permitted to make restricted payments in accordance
with and subject to the provisions set forth in the Gulfstream Construction Loan Agreement and the Remington Construction Loan Agreement) is prohibited from undertaking the following without the
express prior written consent of the Lender in its sole and absolute discretion: 

	(i)
	making
any payments on, in respect of or arising under or in connection with any indebtedness pari passu with or
subordinated to the Loan or indebtedness owed to any Affiliate, including any indebtedness owing to a shareholder or a Subsidiary (other than the Lender), other than payments of interest due and owing
where the making of such payments will not result in an Unmatured Event of Default or an Event of Default under this Agreement; provided, however, that the Borrower may make payments of principal on
its existing unsecured indebtedness in favour of MEC Grundstucksentwicklungs GmbH and Fontana Betelligungs AG;

	(ii)
	making
any loans to third parties or Affiliates; provided, however, that the Borrower and its Subsidiaries may enter into unsecured intercompany indebtedness that is
Permitted Debt pursuant to clause (xiii) of the definition thereof;

	(iii)
	redeeming,
purchasing or otherwise retiring or cancelling for consideration any securities (including any warrants, options or rights to acquire securities,
"Securities"), excluding conversion of the Subordinated Debt into equity of the Borrower in accordance with its terms;

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

	(v)
	except
for issuances of the Borrower's Class A Subordinate Voting Stock, issuing any Securities containing any mandatory or fixed payment obligations of any kind,
whether dividend or premium or otherwise;

	(vi)
	declaring
or paying any dividends, other than in the case of the Borrower as required by the Borrower's certificate of incorporation;

	(vii)
	paying
any management, consulting or similar fee, or comparable payment outside of the ordinary course of business consistent with past practice (which past practice
the Lender acknowledges includes the payment of management fees to the Borrower by its Subsidiaries of up to 2.5% of the gross revenues of such Subsidiary); and

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

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        (h)   Debt.    Directly or indirectly, incur, assume or suffer to exist any indebtedness (including Capital
Lease Obligations and Contingent Liabilities) or enter into any guarantees, hypothecation, contracts or other agreements which would make the Borrower or such Subsidiary liable for any indebtedness
(including Capital Lease Obligations and Contingent Liabilities) or expense other than (i) Permitted Debt or (ii) indebtedness arising in connection with financial assistance permitted
by Section 7.2(i); 

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

        (j)    Disposition of Assets.    Sell, assign, transfer, convey, lease or otherwise alienate or dispose of any assets
or properties, or any interest therein (financial or management) whether legal or equitable (or agree to do any of the foregoing), outside of the ordinary course of business consistent with
past practice, without the prior written consent of the Lender; except that the Borrower or any Guarantor may (i) sell, lease or consign assets or properties contemplated for sale in the
Borrower Recapitalization Plan or that constitutes real property held for sale or development or constitutes excess racetrack lands, provided that, in all cases, the proceeds therefrom are used to pay
off debt in accordance with Section 2.4 and (ii) transfer, abandon, surrender or otherwise dispose of any non-material fixtures, equipment, machinery, tools,
implements, facilities and appliances which may have become worn out, unserviceable, obsolete, unsuitable or unnecessary in the conduct of their businesses; 

        (k)   ERISA.    Following the Closing Date, (i) Adopt or institute any Employee Benefit Plan that is an
employee pension benefit plan within the meaning of Section 3(2) of ERISA, (ii) take any action which will result in the partial or complete withdrawal, within the meanings of
Sections 4203 and 4205 of ERISA, from a Multiemployer Plan except in the case of a closure of the businesses or facilities of an ERISA Affiliate, (iii) engage or permit any Person
to engage in any non-exempt transaction prohibited by Section 406 of ERISA or Section 4975 of the IRC involving any Employee Benefit Plan or Multiemployer Plan which would
subject Borrower, any of the Guarantors or any ERISA Affiliate to any tax, penalty or other liability including a liability to indemnify, (iv) incur or allow to exist any accumulated funding
deficiency (within the meaning of Section 412 of the IRC or Section 302 of ERISA), except for any funding deficiencies that relate to a Multiemployer Plan caused by a third party (other
than an Affiliate of the Borrower), (v) fail to make full payment when due of all amounts due as contributions to any Employee Benefit Plan or Multiemployer Plan, (vi) fail to comply
with the requirements of Section 4980B of the IRC or Part 6 of Title I(B) of ERISA, (vii) adopt any amendment to any Employee Benefit Plan which would require the posting
of security pursuant to Section 401(a)(29) of the IRC or (viii) permit any ERISA Affiliate to do any of the things referred to in items (i) to (vii) above,
where singly or cumulatively, the above could be reasonably likely to have a Material Adverse Effect; 

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

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

        (n)   Licences and Permits:    Pledge any licences or permits, held by it or any of its Subsidiaries, to any third
party, other than licences or permits in respect of The Meadows Property on terms acceptable to the Lender in accordance with the Additional Financing (as such term is defined in the Gulfstream
Construction Loan Agreement); 

        (o)   Occupancy Agreements.    Enter into, nor permit to be entered into Occupancy Agreements for any space which
constitutes any material part of the Properties or any of them without the prior written approval of the Lender, acting reasonably, other than stall agreements, horsemen's quarters and leases for
operations such as blacksmiths and veterinarians on market terms and consistent with past practice; 

        (p)   Use.    Use or develop a Property for any purposes other than as contemplated under the Gulfstream Development
Agreement, the Gulfstream Construction Contracts (as defined in the Gulfstream Construction Loan Agreement), the Remington Construction Contracts (as defined in the Remington
Construction Loan Agreement) and other permitted related purposes. Neither the Borrower nor any of the Guarantors shall permit a Property or any portion thereof to be converted or take any preliminary
actions which could lead to a conversion to condominium or cooperative form of ownership until such time as the Loan is paid in full, together with all interest thereon; 

        (q)   Property Manager.    Enter into any property management agreement in respect of any of the Properties without
the Lender's prior written consent; 

        (r)   No Commingling Funds.    Commingle any assets or funds of the Guarantors (other than the Dixon Guarantor and
the Ocala Guarantor) with assets or funds of any of its shareholders, members, partners, principals, Affiliates or any other Person; 

        (s)   Subordinated Debt.    The Borrower shall not redeem any Subordinated Debt (other than by conversion into equity
of the Borrower, in accordance with its terms) or otherwise create or become subject to any obligation to make any unscheduled repayment of principal on, or repurchase of, the Subordinated Debt; and 

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

7.3   Environmental Matters  

        (a)   The
Borrower and each of the Guarantors shall maintain, for itself and its Subsidiaries, a system to ensure and monitor continued compliance with Environmental Laws,
which shall include reviews of such compliance, and the maintenance, in all material respects, of environmental documents and records relating to their respective businesses as required by
Environmental Law. 

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

        (c)   The
Borrower and each of the Guarantors covenants and agrees that it and each Subsidiary shall not cause or permit a Release of any Hazardous Substance except in
compliance, in all material respects, with Environmental Laws or that would not reasonably be expected to lead to material liability under Environmental Laws against the Borrower or a Subsidiary. 

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

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

        (f)    The
Borrower and each of the Guarantors shall provide the Lender with an environmental audit report (which shall include a report arising from an environmental site
assessment, investigation, compliance audit or environmental review) with respect to any real property or an update of such audit (i) upon the written request of the Lender documenting its
reasonable opinion that the Borrower or any Guarantor may not be in material compliance with this Section 7.3; (ii) if such audit is required by any Governmental Body or (iii) if
an Event of Default relating to an environmental matter has occurred, and the Lender has made a reasonable written request to the Borrower for such audit or update to address the Event of Default
within 60 days after such request, and all such audits or updates thereof shall be at the Borrower's expense. 

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        (g)   If
the Borrower, any Guarantor or any Subsidiary (i) receives notice that any violation of any Environmental Law may have been committed or is about to be
committed by it, (ii) receives notice that any administrative or judicial complaint or order has been filed or is about to be filed against it alleging violations of any Environmental Law or
requiring it to take any action in connection with the release of Hazardous Substances into the environment, or (iii) receives any notice from a Governmental Body or other Person alleging that
the Borrower or any Guarantor may be liable or responsible for any Environmental or Safety Liability, in each case where the ultimate liability of the Borrower and/or any of the Guarantors or any
Subsidiary which may arise from such notice could reasonably be expected to have a Material Adverse Effect, the Borrower shall, and shall cause each Subsidiary to, provide the Lender with a copy of
such notice within five days of receipt thereof. The Borrower and each of the Guarantors shall, and shall cause each Subsidiary to, also provide to the Lender, as soon as practicable after it becomes
available, a copy of any environmental audit report (including any report arising from an environmental site assessment, investigation, compliance audit or environmental review), including any report
required to be submitted to any Governmental Body. If any such report estimates the cost of any clean-up or remedial action, including any approved by a Governmental Body, to be in excess
of $500,000, the Borrower and each of the Guarantors shall, and shall cause each Subsidiary to, provide evidence satisfactory to the Lender, acting reasonably, of disbursements made from time to time
to effect and complete such clean-up or remedial action, including within such time as may be prescribed by a Governmental Body. The Borrower and each of the Guarantors shall, and shall
cause each Subsidiary to, provide written evidence to the Lender, including a report which the Lender shall expressly be entitled to rely on, confirming the completion of the clean-up or
remediation of a site with a cost in excess of $500,000, including any investigations and monitoring. 

        (h)   The
Borrower shall, and shall cause each Subsidiary to, permit the Lender and its authorized employees, representatives and agents, at reasonable times and during normal
business hours and at the Borrower's own cost, upon giving reasonable notice, to visit, inspect and investigate (including intrusive investigations)any real property where the Lender, in its
reasonable opinion, believes that the Borrower or any Subsidiary may not be in compliance with Section 7.3(g). 

7.4   The Meadows  

        In the event that the Lender, The Meadows Guarantors and the Third Party Senior Lender (as defined in the Gulfstream Construction Loan Agreement) are
unable to negotiate and enter into the Additional Financing Inter-Creditor Agreement (as defined in the Gulfstream Construction Loan Agreement) within the specified time period set out in
Section 5.5 of the Gulfstream Construction Loan Agreement, The Meadows Guarantors may, within the time period prescribed in, and on the terms and conditions set forth in, the Gulfstream
Construction Loan Agreement, substitute The Meadows Security with Substitute Meadows Security (as defined in the Gulfstream Construction Loan Agreement). Notwithstanding anything else herein
contained, The Meadows Guarantors' Environmental Indemnity shall remain in full force and effect following any substitution for The Meadows Security. 

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ARTICLE 8

CONDITIONS PRECEDENT  

8.1   Conditions Precedent to Closing  

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

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

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

	(c)
	the
Loan Documents, all in form and substance satisfactory to the Lender, shall have been executed and delivered to the Lender;

	(d)
	the
Intercreditor Agreements, in form and substance satisfactory the Lender, shall have been executed and delivered by all parties thereto;

	(e)
	the
BMO Credit Agreement shall have been amended in form and substance satisfactory to the Lender, in its sole discretion, to provide for this Agreement and to provide for an
extension of the term of the credit facility therein such that it expires no earlier than July 31, 2006;

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

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

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

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

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

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

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

	(iii)
	an
Officer's Certificate dated the Closing Date confirming Sections 8.1(a), 8.1(b) and 8.1(c);

	(iv)
	opinions
of each of the Borrower's and Guarantors' New York and Delaware Agent, the Borrower's and Guarantors' Florida Agent, the Borrower's and Guarantors'
Pennsylvania Agent and the Borrower's and Guarantors' California Agent addressed to the Lender, the Lender's Agent and, as applicable, the Lender's Florida Agent, the Lender's Pennsylvania Agent, the
Lender's California Agent, the Lender's Delaware Agent, or the Lender's New York Agent, which shall be similar, mutatis mutandis, to opinions
provided to the Lender in connection with the initial advance under the Gulfstream Construction Loan Agreement and which shall be acceptable, in form and substance, to the Lender, acting reasonably;

	(v)
	opinions
of each of the Lender's Florida Agent, the Lender's Pennsylvania Agent and the Lender's California Agent, addressed to the Lender, which shall be similar,  mutatis mutandis, to opinions provided to the
Lender in connection with the initial advance under the Gulfstream Construction Loan Agreement and which
shall be acceptable, in form and substance, to the Lender, acting reasonably;

	(vi)
	the
Disclosure Schedule;

	(vii)
	the
Borrower Recapitalization Plan; and

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

	(g)
	the
Lender shall have received payment in full of (i) all reasonable invoiced fees and reimbursable out-of-pocket expenses payable by the Borrower on or
prior to the Closing Date in respect of this Agreement or under any other Loan Document, including payment of all reasonable fees, disbursements and out-of-pocket expenses of
counsel to the Lender and (ii) the Closing Arrangement Fee. For greater certainty, the Lender acknowledges that such amounts may be paid to the Lender by the Borrower using proceeds from the
initial Advance; 

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	(h)
	as
evidence of, and security for, the Loan and all other obligations, liability and indebtedness of the Borrower hereunder and under the other Loan Documents, both present and future
(the "Indebtedness"), the Borrower shall have delivered to the Lender, in form satisfactory to the Lender and its counsel:

	(i)
	a
grid promissory note in the amount of One Hundred Million Dollars ($100,000,000.00) from the Borrower in favour of the Lender
(the "Borrower Note");

	(ii)
	a
perfected Encumbrance in all personal property of the Borrower now owned and hereafter acquired (including, licences and permits), in each case to the extent
permitted by Applicable Law (with a negative pledge provided where a pledge is not permitted by Applicable Law) pursuant to a general security agreement from the Borrower to the Lender
(the "Borrower General Security Agreement");

	(iii)
	a
specific assignment of all inter-company loans between the Borrower and its Subsidiaries;

	(iv)
	a
specific assignment to the Lender of the policies of insurance referred to in Section 6.1(ee) and the proceeds thereof, together with
endorsements thereof in form and terms satisfactory to the Lender reflecting the Lender as a loss payee or additional insured, as applicable;

	(v)
	share
pledges, where permitted by Applicable Law, or negative pledges if share pledges are not permitted by Applicable Law or have previously been pledged pursuant to
Permitted Debt, in respect of the shares of each of the Guarantors;

	(vi)
	negative
pledges in respect of the shares of each of the Subsidiaries of the Borrower other than the Guarantors (subject to any existing pledges pursuant to Permitted
Debt);

	(vii)
	a
perfected third priority Encumbrance on the Santa Anita Property pursuant to a mortgage of even date with this Agreement from the Santa Anita Guarantors in favour of
the Lender (the "Santa Anita Third Mortgage");

	(viii)
	a
third priority assignment of rents and leases generated by the use and occupancy of the Santa Anita Property pursuant to an assignment of rents and lessor's
interest in the Occupancy Agreements relating to the Santa Anita Property of even date with this Agreement from the Santa Anita Guarantors to the Lender (the "Santa
Anita Third Assignment of Rents and Leases");

	(ix)
	a
third general assignment of the Santa Anita Guarantors' interest in the Material Agreements relating to the Santa Anita Property, where permitted; provided that if
the assignment of any such Material Agreements is not permitted, the Santa Anita Guarantors shall use is commercially reasonable efforts to obtain all consents and waivers necessary to assign to the
Lender such Material Agreement and further agrees that if such consents and waivers are not obtained, such Material Agreement shall be held by the Santa Anita Guarantors for the benefit of and in
trust for the Lender (the "Santa Anita Third Assignment of Material Agreements"); 

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	(x)
	a
perfected third priority Encumbrance in all personal property of the Santa Anita Guarantors now owned and hereafter acquired (excluding licenses and permits), in each
case to the extent permitted by Applicable Law, and a negative pledge in respect of all such personal property (excluding licenses and permits), pursuant to a general security agreement from the Santa
Anita Guarantors to the Lender (the "Santa Anita General Security Agreement"), it being acknowledged and agreed that the Santa Anita Third
Mortgage, the Santa Anita Third Assignment of Rents and Leases, the Santa Anita Third Assignment of Material Agreements and the Santa Anita Third General Security Agreement (collectively, the
"Santa Anita Security") is security for the Indebtedness, and not as security for the Santa Anita Guarantee and Indemnity;

	(xi)
	the
environmental indemnity agreement in respect of the Santa Anita Property, from the Santa Anita Guarantors in favour of the Lender
(the "Santa Anita Property Environmental Indemnity");

	(xii)
	related
UCC financing statements;

	(xiii)
	a
specific assignment to the Santa Anita Guarantors of the policies of insurance in respect of the Santa Anita Property and the proceeds thereof, together with
endorsements thereof in form and terms satisfactory to the Lender reflecting the Lender as a loss payee or additional insured, as applicable;

	(xiv)
	any
other collateral or security described in this Agreement or in any of the other Loan Documents, and such other assignments, mortgages, security agreements and
undertakings relating to the Santa Anita Property and other documentation in support thereof as the Lender and its counsel shall reasonably require;

	(xv)
	a
perfected second priority Encumbrance on the Golden Gate Fields Property pursuant to a mortgage of even date with this Agreement from the Golden Gate Fields
Guarantors in favour of the Lender (the "Golden Gate Fields Second Mortgage");

	(xvi)
	a
second priority assignment of rents and leases generated by the use and occupancy of the Golden Gate Fields Property pursuant to an assignment of rents and lessor's
interest in the Occupancy Agreements relating to the Golden Gate Fields Property of even date with this Agreement from the Golden Gate Fields Guarantors to the Lender
(the "Golden Gate Fields Second Assignment of Rents and Leases"); 

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	(xvii)
	a
second general assignment of the Golden Gate Fields Guarantors' interest in the Material Agreements relating to the Golden Gate Fields Property, where permitted;
provided that if the assignment of any such Material Agreements is not permitted, the Golden Gate Fields Guarantors shall use is commercially reasonable efforts to obtain all consents and waivers
necessary to assign to the Lender such Material Agreement and further agrees that if such consents and waivers are not obtained, such Material Agreement shall be held by the Golden Gate Fields
Guarantors for the benefit of and in trust for the Lender (the "Golden Gate Fields Second Assignment of Material Agreements");

	(xviii)
	a
perfected second priority Encumbrance in all personal property of the Golden Gate Fields Guarantors now owned and hereafter acquired (excluding licences and
permits), in each case to the extent permitted by Applicable Law, and a negative pledge in respect of all such personal property (excluding licences and permits), pursuant to a general security
agreement from the Golden Gate Fields Guarantors to the Lender (the "Golden Gate Fields Second General Security Agreement"), it being
acknowledged and agreed that the Golden Gate Fields Second Mortgage, the Golden Gate Fields Second Assignment of Rents and Leases, the Golden Gate Fields Second Assignment of Material Agreements and
the Golden Gate Fields Second General Security Agreement (collectively, the "Golden Gate Fields Security") is security for the Indebtedness, and not as
security for the Golden Gate Fields Guarantee and Indemnity;

	(xix)
	the
environmental indemnity agreement in respect of the Golden Gate Fields Property, from the Golden Gate Fields Guarantors in favour of the Lender
(the "Golden Gate Fields Property Environmental Indemnity");

	(xx)
	related
UCC financing statements;

	(xxi)
	a
specific assignment to the Golden Gate Fields Guarantors of the policies of insurance relating to the Golden Gate Fields Property and the proceeds thereof, together
with endorsements thereof in form and terms satisfactory to the Lender reflecting the Lender as a loss payee or additional insured, as applicable;

	(xxii)
	any
other collateral or security described in this Agreement or in any of the other Loan Documents, and such other assignments, mortgages, security agreements and
undertakings relating to the Golden Gate Fields Property and other documentation in support thereof as the Lender and its counsel shall reasonably require;" 

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	(xxiii)
	in
consideration of the guarantee and indemnity fees paid by the Borrower to The Meadows Guarantor in the amount of $19,800 (the "The
Meadows Guarantee Fee"), the direct and indirect financial and other support that the Borrower has provided, and such direct and indirect financial and other support as the
Borrower intends in the future to provide, to The Meadows Guarantors, and in order to induce the Lender to enter into this Agreement, the guarantee and indemnity ("The Meadows
Guarantee and Indemnity") of The Meadows Guarantors, under which The Meadows Guarantors unconditionally guarantee the payment and performance of the Indebtedness outstanding
from time to time, as well as interest and other amounts owing hereunder or under the other Loan Documents, and the performance of all other obligations of the Borrower under the Loan and the Loan
Documents;

	(xxiv)
	as
security for The Meadows Guarantee and Indemnity:

	(A)
	a
perfected first priority Encumbrance on The Meadows Property pursuant to a mortgage of even date with this Agreement from The Meadows Guarantors in favour of the Lender
("The Meadows First Mortgage");

	(B)
	a
first priority assignment of rents and leases generated by the use and occupancy of The Meadows Property pursuant to an assignment of rents and lessor's interest in the Occupancy
Agreements relating to The Meadows Property of even date with this Agreement from The Meadows Guarantors to the Lender (the "The Meadows Assignment of Rents and
Leases");

	(C)
	a
first general assignment of The Meadows Guarantors' interest in the Material Agreements relating to The Meadows Guarantors Property, where permitted; provided that if the assignment
of any such Material Agreements is not permitted, The Meadows Guarantors shall use their commercially reasonable efforts to obtain all consents and waivers necessary to assign to the Lender such
Material Agreement and further agrees that if such consents and waivers are not obtained, such Material Agreement shall be held by The Meadows Guarantors for the benefit of and in trust for the Lender
(the "The Meadows Assignment of Material Agreements");

	(D)
	a
perfected first priority Encumbrance in all personal property of The Meadows Guarantors now owned and hereafter acquired (excluding licenses and permits), in each case to the extent
permitted by Applicable Law, and a negative pledge respect of all such personal property (excluding licenses and permits), pursuant to a general security agreement of even date with this Agreement
from The Meadows Guarantors to the Lender (the "The Meadows General Security Agreement") (The Meadows Mortgage, The Meadows Assignment of
Rents and Leases, The Meadows Assignment of Material Agreements and The Meadows Assignment General Security Agreement being referred to herein, collectively, as the "The
Meadows Security"); 

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	(E)
	the
environmental indemnity agreement in respect of The Meadows Guarantors Property, of even date with this Agreement, from The Meadows Guarantors in favour of the Lender
("The Meadows Guarantors' Environmental Indemnity");

	(F)
	related
UCC financing statements;

	(G)
	a
specific assignment to The Meadows Guarantors of the policies of insurance relating to The Meadows Property and the proceeds thereof, together with endorsements thereof in form and
terms satisfactory to the Lender reflecting the Lender as a loss payee or additional insured, as applicable;

	(H)
	any
other collateral or security described in this Agreement or in any of the other Loan Documents, and such other assignments, mortgages, security agreements and undertakings
relating to The Meadows Property and other documentation in support thereof as the Lender and its counsel shall reasonably require; 

All
of the items of security referred to in this Section 8.1(h)(xxiv) shall be in priority to the same types of security provided by The Meadows Guarantors to the Lender as security for their
liabilities and obligations under their guarantee and indemnity in respect of the Gulfstream Loan Construction Agreement. The obligations of The Meadows Guarantors under The Meadows Guarantors'
Guarantee and Indemnity will not be operative unless the SHRCP Approval has been obtained; 

	(xxv)
	in
consideration of the guarantee and indemnity fees paid by the Borrower to the Golden Gate Fields Guarantors in the amount of $32,500
(the "Golden Gate Fields Guarantee Fee"), the direct and indirect financial and other support that the Borrower has provided, and such direct and
indirect financial and other support as the Borrower intends in the future to provide, to the Golden Gate Fields Guarantors, and in order to induce the Lender to enter into the Agreement, the
guarantee and indemnity (the "Golden Gate Fields Guarantee and Indemnity") of the Golden Gate Fields Guarantors, under which the Golden Gate
Fields Guarantors unconditionally guarantee the payment and performance of the Indebtedness outstanding from time to time, as well as interest and other amounts owing hereunder or under the other Loan
Documents and the performance of all other obligations of the Borrower under the Loan and the Loan Documents; 

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	(xxvi)
	related
UCC financing statements;

	(xxvii)
	any
other collateral or security described in this Agreement or in any of the other Loan Documents, and such other assignments, mortgages, security agreements and
undertakings relating to the Golden Gate Fields Property and other documentation in support thereof as the Lender and its counsel shall reasonably require;"

	(xxviii)
	in
consideration of the guarantee and indemnity fees paid by the Borrower to the Santa Anita Guarantors in the amount of $13,200
(the "Santa Anita Guarantee Fee"), the direct and indirect financial and other support that the Borrower has provided, and such direct and
indirect financial and other support as the Borrower intends in the future to provide, to the Santa Anita Guarantors, and in order to induce the Lender to enter into the Agreement, the guarantee and
indemnity (the "Santa Anita Guarantee and Indemnity") of the Santa Anita Guarantors, under which the Santa Anita Guarantors unconditionally
guarantee the payment and performance of the Indebtedness outstanding from time to time, as well as interest and other amounts owing hereunder or under the other Loan Documents and the performance of
all other obligations of the Borrower under the Loan and the Loan Documents;

	(xxix)
	related
UCC financing statements;

	(xxx)
	any
other collateral or security described in this Agreement or in any of the other Loan Documents, and such other assignments, mortgages, security agreements and
undertakings relating to the Santa Anita Property and other documentation in support thereof as the Lender and its counsel shall reasonably require;"

	(xxxi)
	in
consideration of the guarantee and indemnity fees paid by the Borrower to the Gulfstream Guarantor in the amount of $20,500
(the "Gulfstream Guarantee Fee"), the direct and indirect financial and other support that the Borrower has provided, and such direct and
indirect financial and other support as the Borrower intends in the future to provide, to the Gulfstream Guarantor, and in order to induce the Lender to enter into the Agreement, the guarantee and
indemnity (the "Gulfstream Guarantee and Indemnity") of the Gulfstream Guarantor, under which the Gulfstream Guarantor unconditionally guarantees
the payment and performance of the Indebtedness outstanding from time to time, as well as interest and other amounts owing hereunder or under the other Loan Documents, and the performance of all other
obligations of the Borrower under the Loan and the Loan Documents; 

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	(xxxii)
	in
consideration of the guarantee and indemnity fees paid by the Borrower to the Palm Meadows Training Guarantor in the amount of $3,500
(the "Palm Meadows Training Guarantee Fee"), the direct and indirect financial and other support that the Borrower has provided, and such direct
and indirect financial and other support as the Borrower intends in the future to provide, to the Palm Meadows Training Guarantor, and in order to induce the Lender to enter into the Agreement, the
guarantee and indemnity (the "Palm Meadows Training Guarantee and Indemnity") of the Palm Meadows Training Guarantor under which the Palm Meadows
Training Guarantor unconditionally guarantees the payment and performance of the Indebtedness outstanding from time to time, as well as interest and other amounts owing hereunder or under the other
Loan Documents, and the performance of all other obligations of the Borrower under the Loan and the Loan Documents, such guarantee and indemnity to be limited to the value of the Palm Meadows Training
Guarantor's membership interest in Palm Meadows Estates, LLC;

	(xxxiii)
	in
consideration of the guarantee and indemnity fees paid by the Borrower to the San Luis Rey Downs Guarantor in the amount of $2,300
(the "San Luis Rey Downs Guarantee Fee"), the direct and indirect financial and other support that the Borrower has provided, and such direct and
indirect financial and other support as the Borrower intends in the future to provide, to the San Luis Rey Downs Guarantor, and in order to induce the Lender to enter into the Agreement, the guarantee
and indemnity (the "San Luis Rey Downs Guarantee and Indemnity") of the San Luis Rey Downs Guarantor, under which the San Luis Rey Downs
Guarantor unconditionally guarantees the payment and performance of the Indebtedness outstanding from time to time, as well as interest and other amounts owing hereunder or under the other Loan
Documents, and the performance of all other obligations of the Borrower under the Loan and the Loan Documents;

	(xxxiv)
	in
consideration of the guarantee and indemnity fees paid by the Borrower to the Dixon Guarantor in the amount of $5,200 (the "Dixon
Guarantee Fee"), the direct and indirect financial and other support that the Borrower has provided, and such direct and indirect financial and other support as the Borrower
intends in the future to provide, to the Dixon Guarantor, and in order to induce the Lender to enter into the Agreement, the guarantee and indemnity (the "Dixon
Guarantee and Indemnity") of the Dixon Guarantor, under which the Dixon Guarantor unconditionally guarantees the payment and performance of the Indebtedness outstanding from
time to time, as well as interest and other amounts owing hereunder or under the other Loan Documents, and the performance of all other obligations of the Borrower under the Loan and the Loan
Documents; 

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	(xxxv)
	in
consideration of the guarantee and indemnity fees paid by the Borrower to the Ocala Guarantor in the amount of $3,000 (the "Ocala
Guarantee Fee"), the guarantee and indemnity (the "Ocala Guarantee and Indemnity") of Ocala Guarantor, under which Ocala
Guarantor unconditionally guarantees the payment and performance of the Indebtedness outstanding from time to time, as well as interest and other amounts owing hereunder or under the other Loan
Documents, and the performance of all other obligations of the Borrower under the Loan and the Loan Documents; and

	(xxxvi)
	any
other collateral or security described in this Agreement or in any of the other Loan Documents, and such other assignments, mortgages, security agreements and
undertakings relating to any of the Properties and other documentation in support thereof as the Lender and its counsel shall reasonably require; 

The
security set out above in this Section 8.1(h) (except the Borrower Note) is herein called the "Security"; 

	(i)
	the
Lender shall have received, at the expense of the Borrower, a loan title insurance policy and evidence of zoning compliance (in the form of a zoning endorsement to the
title insurance policy) in respect of each of the Mortgaged Properties, all in form, scope and substance satisfactory the Lender; and

	(j)
	all
documents and instruments shall have been properly registered, recorded and filed in all places which, searches shall have been conducted in all jurisdictions which, and
deliveries of all consents, approvals, acknowledgements, undertakings, non-disturbance agreements, directions, negotiable documents of title and other documents and instruments to the
Lender shall have been made which, in the opinion of the Lender's counsel, are desirable or required to make effective the Security created or intended to be created in favour of the Lender to ensure
the perfection and the intended priority of the Security. 

8.2   Conditions Precedent to Advances  

        The obligation of the Lender to make any Advances is subject to compliance, on or before the relevant Borrowing Date, with each of the following conditions
precedent, which conditions precedent are for the sole and exclusive benefit of the Lender and may be waived in writing by the Lender in its sole discretion: 

	(a)
	as
a condition precedent to the Initial Advance only:

	(i)
	the
Lender shall be satisfied, in its sole and absolute discretion, with the CB Richard Ellis appraisal for the Santa Anita Property prepared for Wells Fargo dated
September 10, 2004 in connection with the extension of the Santa Anita Senior Facility;

	(ii)
	the
Lender shall have received and be satisfied, in its sole and absolute discretion, with an appraisal for the Golden Gate Fields Property;

	(iii)
	the
Lender shall have received and be satisfied, in its sole and absolute discretion, with an appraisal for the Gulfstream and Aventura Properties; 

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	(iv)
	the
Lender shall have received and be satisfied, in its sole and absolute discretion, with an appraisal for the Palm Meadows Residential Lands;

	(v)
	the
Lender shall have received and be satisfied, in its sole and absolute discretion, with an appraisal for the San Luis Rey Downs Property;

	(vi)
	the
Lender shall have received and be satisfied, in its sole and absolute discretion, with an appraisal for the Dixon Property; and

	(vii)
	the
Lender shall have received and be satisfied, in its sole and absolute discretion, with an appraisal for the Ocala Property;

	(b)
	the
representations and warranties set out in Section 6.1 hereof shall be true and correct on the relevant Borrowing Date as if made on and as of such date and the Borrower and
the Guarantors shall have delivered a certificate to that effect;

	(c)
	no
Default or Event of Default shall have occurred and be continuing nor shall it be reasonably anticipated that there will be any Default or Event of Default immediately after giving
effect to the proposed Advance;

	(d)
	no
Material Adverse Change shall have occurred since the Closing Date in the case of the initial Advance and in the case of each subsequent Advance, since the date of the last
Advance;

	(e)
	the
Lender shall have received a Borrowing Notice dated at least 5 Banking Days prior to the relevant Borrowing Date (other than with respect to the First Advance, which
Borrowing Notice shall be dated contemporaneously therewith);

	(f)
	the
Lender shall have received monthly progress reports relating to the Borrower Recapitalization Plan, in form and substance satisfactory to the Lender, acting reasonably; and

	(g)
	the
Lender shall have received and be satisfied, in its sole and absolute discretion, with updated environmental reports for each of the Properties owned or leased by the Guarantors
to be delivered pursuant to Section 7.1(p). 

 
 

ARTICLE 9 
  EVENTS OF DEFAULT AND REMEDIES  
    

9.1   Events of Default  

        The occurrence of any of the following events shall constitute an Event of Default: 

	(a)
	default
by the Borrower in payment of (i) any principal when due (including, without limitation, any mandatory prepayments pursuant to Section 2.4)
or (ii) any interest thereon within three Banking Days after the same becomes due or (iii) any other amount hereunder within 10 days after notice of non-payment
thereof is received by the Borrower; 

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

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

	(d)
	any
event shall occur or condition shall exist, and shall continue after the applicable grace period, if any, specified in any agreement or instrument relating to any indebtedness or
liability (including Capital Lease Obligations and Contingent Liabilities) of the Borrower, any Guarantor, and or any Subsidiary of the Borrower or any Guarantor (other than Obligations) and the
effect of such event or condition is to accelerate the maturity of such indebtedness or liability (including Capital Lease Obligations and Contingent Liabilities) of the Borrower, any Guarantor, and
or any Subsidiary of the Borrower or any Guarantor which (except in respect of any such indebtedness or liability to the Lender) is outstanding in an aggregate principal amount exceeding $2,000,000,
or any such indebtedness or liability (including Capital Lease Obligations and Contingent Liabilities) of the Borrower, any Guarantor, and or any Subsidiary of the Borrower or any Guarantor which
(except in respect of any such indebtedness or liability to the Lender) is outstanding in an aggregate principal amount exceeding $2,000,000 shall be declared to be due and payable prior to the stated
maturity thereof; provided, in each case, that it shall not be an Event of Default if the Borrower or applicable Guarantor or applicable Subsidiary is diligently contesting such acceleration or
declaration in good faith by appropriate proceedings or has fully repaid the indebtedness accelerated or declared due; 

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	(e)
	the
Borrower or any Guarantor admits in writing or by way of a public or press announcement its inability to pay its debts generally as they become due or otherwise acknowledges in
writing or by way of a public or press announcement its insolvency;

	(f)
	the
Borrower or any Guarantor institutes any proceeding, or takes any corporate action or executes any agreement, to authorize its participation in or commencement of, or consents to,
acquiesces in, any proceeding:

	(i)
	seeking
to adjudicate it a bankrupt or insolvent, or

	(ii)
	seeking
liquidation, dissolution, winding up, reorganization, arrangement, protection, relief or composition of it or any of its property or debt or making a proposal
or application with respect to it under any law relating to bankruptcy, insolvency, reorganization or compromise of debts or other similar laws (including, without limitation, any reorganization,
arrangement or compromise of debt under the laws of its jurisdiction of incorporation);

	(g)
	any
proceeding is commenced against or affecting the Borrower or any Guarantor:

	(i)
	seeking
to adjudicate it a bankrupt or insolvent;

	(ii)
	seeking
liquidation, dissolution, winding up, reorganization, arrangement, protection, relief or composition of it or any of its property or debt or making a proposal
with respect to it under any law relating to bankruptcy, insolvency, reorganization or compromise of debts or other similar laws (including, without limitation, any reorganization, arrangement or
compromise of debt under the laws of its jurisdiction of incorporation); or

	(iii)
	seeking
appointment of a receiver, trustee, agent, custodian or other similar official for it or for any Property or any substantial part of its properties and assets;
and 

in
each case, such proceeding is not being contested in good faith by appropriate proceedings or, if so contested, remains outstanding, undismissed and unstayed more than 45 days from the
institution of such first mentioned proceeding; provided, in each case, the Borrower and any of the Guarantors remain current on their respective payroll obligations during such contest; 

	(h)
	any
creditor of the Borrower or any other Person shall privately appoint a receiver, trustee or similar official for any Property or any substantial part of the Borrower's properties
and assets having a Replacement Cost greater than $10,000,000 and such appointment is not stayed and is not being contested in good faith by appropriate proceedings or, if so contested, such
appointment is not terminated within 45 days from the original date of such appointment; provided, in each case, the Borrower and any of the Guarantors remain current on their respective
payroll obligations during such contest; 

85

 

	(i)
	any
judgment or order for the payment of money in excess of $10,000,000 shall be rendered against the Borrower or any Guarantor which remains unsatisfied and (i) executions
shall have been levied on any property of the Borrower or any Guarantor by or on behalf of any creditor in reliance on such judgment or order and (ii) there shall be any period during which a
stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect; or

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

	(k)
	except
in connection with a transaction permitted under Section 7.2(d), the Borrower or any Guarantor ceases or threatens in writing or by way of public or press
announcement to cease to carry on business in the ordinary course; or

	(l)
	any
event shall occur or condition shall exist, and shall continue after the applicable grace period, if any, specified in any note or indenture relating to the Subordinated Debt, and
the effect of such event or condition is to enable the holders of Subordinated Debt to accelerate the maturity of the Subordinated Debt (whether or not the Subordinated Debt is accelerated), or any
Subordinated Debt shall be declared to be due and payable or the Borrower shall be required to repurchase any Subordinated Debt prior to the stated maturity thereof; or

	(m)
	a
Material Adverse Change occurs; or

	(n)
	any
event of default shall occur under any other obligation of the Borrower or any of its Subsidiaries to the Lender, including, without limitation, any Event of Default
(as defined in the Gulfstream Construction Loan Agreement and/or the Remington Construction Loan Agreement). 

9.2   Remedies Upon Default  

        Upon the occurrence of any Event of Default, subject to any applicable cure period, the Lender may by notice given to the Borrower: 

	(a)
	declare
the unutilized portion of the Bridge Loan to be terminated (whereupon the Lender shall not be required to make any further Advances);

	(b)
	declare
all Obligations to be immediately due and payable; and

	(c)
	take
such actions and commence such proceedings as may be permitted at law or in equity at such times and in such manner as the Lender in its sole discretion may consider expedient, 

86

 

all
without, except as may be required by Applicable Law, any additional notice, presentment, demand, protest, notice of protest, dishonour or any other action. The rights and remedies of the Lender
hereunder are cumulative and are in addition to and not in substitution for any other rights or remedies provided by Applicable Law. 

9.3   Distributions  

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

 
 

ARTICLE 10 
  GENERAL  
    

10.1 Reliance and Non-Merger  

        All covenants, agreements, representations and warranties of the Borrower made herein or in any other Loan Document or in any certificate or other document signed
by any of its directors or officers and delivered by or on behalf of any of them pursuant hereto or thereto are material, shall be deemed to have been relied upon by the Lender notwithstanding any
investigation heretofore or hereafter made by the Lender or Lender's Counsel or any employee or other representative of any of them and shall survive the execution and delivery of this Agreement and
the other Loan Documents until there are no Loans outstanding and the Lenders shall have no further obligation to make Advances hereunder. For clarity, this Section 10.1 shall in no way affect
the survival of those provisions of this Agreement or any Loan Document which by their terms are stated to survive termination of this Agreement. 

10.2 Confidentiality  

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

87

   10.3 No Set-Off  

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

10.4 Employment of Experts  

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

10.5 Reliance by Lender  

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

10.6 Notices  

        Any notice or other communication required or permitted to be given hereunder shall be in writing and shall be given by facsimile or other means of electronic
communication or by hand-delivery or courier as hereinafter provided. Any such notice, if delivered by courier, shall be deemed to be received on the next Banking Day after the date of
delivery thereof, or if sent by facsimile or other means of electronic communication, shall be deemed to have been received on the day sent if sent prior to 2:00 p.m. (Toronto time) on any
Banking Day or otherwise on the next succeeding Banking Day. Notice of change of address shall also be governed by this Section 10.6. Notices and other communications shall be addressed as
follows: 

	(a)
	if
to the Borrower:

Magna
Entertainment Corp.

337 Magna Drive

Aurora, Ontario

L4G 7K1

Attention:
Chief Financial Officer

And Attention: Legal Department

Facsimile number: (905) 726-7172 

88

 

	(b)
	if
to the Guarantors:

MEC
Pennsylvania Racing, Inc.

Foster Plaza 9

750 Holiday Drive

Pittsburgh, PA

15220

Attention:
Chief Financial Officer

Facsimile number: (724) 229-7518

Washington
Trotting Association Inc.

1209 Orange Street

Wilmington, DE

19801

USA

Attention:
Chief Financial Officer

Facsimile number: (724) 229-7518

Mountain
Laurel Racing, Inc.

1209 Orange Street Wilmington, DE

19801

USA

Attention:
Chief Financial Officer

Facsimile number: (724) 229-7518

Pacific
Racing Association

1100 Eastshore Highway

Albany, CA

94710

Attention:
Chief Financial Officer

Facsimile number: (510) 559-7465

MEC
Land Holdings (California) Inc.

818 West Seventh Street

Los Angeles, CA

90017

Attention:
Chief Financial Officer

Facsimile number: (510) 559-7465 

89

 

	

	The
Santa Anita Companies, Inc.

1209 Orange Street

Wilmington, DE

19801

USA

Attention:
Chief Financial Officer

Facsimile number: (626) 821-1514

Los
Angeles Turf Club, Incorporated

1209 Orange Street

Wilmington, DE

19801

USA

Attention:
Chief Financial Officer

Facsimile number: (626) 821-1514

Gulfstream
Park Racing Association, Inc.

501 South Federal Hwy

Hallandale, FL

33009

USA

Attention:
Chief Financial Officer

Facsimile number: (954) 457-6497

GPRA
Thoroughbred Training Center Inc.

1209 Orange Street

Wilmington, DE

19801

USA

Attention:
Chief Financial Officer

Facsimile number: (954) 457-6497

SLRD
Thoroughbred Training Center, Inc.

1209 Orange Street

Wilmington, DE

19801

USA

Attention:
Chief Financial Officer

Facsimile number: (954) 457-6497 

90

 

	

	MEC
Dixon, Inc.

1209 Orange Street

Wilmington, DE

19801

USA

Attention:
Chief Financial Officer

Facsimile number: (302) 655-5049

Sunshine
Meadows Racing Inc.

1209 Orange Street

Wilmington, DE

19801

USA

Attention:
Chief Financial Officer

Facsimile number: (302) 655-5049

in
each case with a copy to:

Magna
Entertainment Corp.

337 Magna Drive

Aurora, Ontario

L4G 7K1

Attention:
Chief Financial Officer

And Attention: Legal Department

Facsimile number: (905) 726-7172 

	(c)
	if
to the Lender:

MID
Islandi sf. Zug Branch

Baererstrasse 16, CH-6304

Zug Switzerland

Attention:
Thomas Schultheiss

Branch Manager

Facsimile number: +41 41725 2725

with
a copy to:

MI
Developments

455 Magna Drive

Aurora, Ontario

L4G 7A9

Attention:
General Counsel

Facsimile number: (905) 726-2095 

91

 

10.7 Further Assurances  

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

10.8 Assignment  

        The Loan Documents shall enure to the benefit of the Lender, its successors and assigns, and shall be binding upon the Borrower and the Guarantors, and their
respective successors and assigns. Neither the Borrower nor either of the Guarantors shall assign, sell, convey or otherwise transfer any of its rights or obligations under the Loan or the Loan
Documents. The Lender, may assign, sell, convey, grant participations in, pledge, or otherwise transfer all or any part of its rights or obligations under the Loan and the Loan Documents as follows
(each a "Permitted Lender Assignee"): (a) at any time, to any Affiliate of the Lender, without the Borrower's or the Guarantors' consent;
(b) at any time during which an Event of Default has occurred and is continuing, to any third party, without the Borrower's or any Guarantor's consent; and (c) at any time, with the
Borrower's consent, not to be unreasonably withheld. Any Permitted Lender Assignee shall provide written notice to the Borrower and the Guarantors of such assignment and its assumption of the
obligations of the Lender hereunder and thereafter shall be entitled to the performance of all of the Borrower's and the Guarantors' agreements and obligations under the Loan and the Loan Documents
and shall be entitled to enforce all the rights and remedies of the Lender under the Loan Documents, for the benefit of such Permitted Lender Assignee, as fully as if such Permitted Lender Assignee
was herein by name specifically given such rights and remedies. Each of the Borrower and the Guarantors expressly agrees that it will assert no claims or defenses that it may have against the Lender
against any Permitted Lender Assignee, except those specifically available under this Agreement. In the event that the Borrower or any Guarantor shall become directly liable for any additional charges
or levies by any governmental or regulatory authority in consequence of the operation of this Section 10.8, the Borrower shall give the Lender notice thereof and thereafter the Lender shall
indemnify the Borrower or the Guarantor, as applicable, in full for any such charges or levies. The Borrower and the Guarantors shall be given written notice of any such assignment. The Borrower and
the Guarantors shall cooperate with and perform the reasonable requirements of the Permitted Lender Assignee, but the costs and expenses, including reasonable legal fees and disbursements relating
directly to or arising directly out of any such assignment shall not be the expense of the Borrower or the Guarantors. 

92

 

10.9 Disclosure of Information to Potential Permitted Lender Assignees  

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

10.10 Right to Cure  

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

10.11 Forbearance by the Lender Not a Waiver  

        Any forbearance by the Lender in exercising any right or remedy under any of the Loan Documents, or otherwise afforded by Applicable Law, shall not be a waiver of
or preclude the exercise of any right or remedy. The Lender's acceptance of payment of any sum secured by any of the Loan Documents after the due date of such payment shall not be a waiver of the
Lender's right to either require prompt payment when due of all other sums so secured or to declare a default for failure to make prompt payment. The procurement of insurance or the payment of taxes
or other liens or charges by the Lender shall not be a waiver of the Lender's right to accelerate the maturity of the Bridge Loan, nor shall the Lender's receipt of any awards, proceeds or damages
operate to cure or waive the Borrower's or any of the Guarantors' default in payment or sums secured by any of the Loan Documents. With respect to all Loan Documents, only waivers made in writing by
the Lender shall be effective against the Lender. 

10.12 Waiver of Statute of Limitations and Other Defenses  

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

10.13 Relationship  

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

93

 

10.14 Time of Essence  

        Time is of the essence of this Agreement and each of the other Loan Documents and the performance of each of the covenants and agreement contained herein and
therein. 

10.15 Service of Process/Venue  

        The Borrower and each Guarantor hereby consents to service of process, and to be sued, in the State of New York and consents to the jurisdiction of the
state and federal courts where the Properties are located as well as the jurisdiction of all courts from which an appeal may be taken from such courts, for the purpose of any suit, or other proceeding
arising out of any of their obligations hereunder, and expressly waive any and all objections they may have as to venue in any such courts. Further, in the Lender's sole and absolute discretion, suits
to enforce this Agreement or in any way relating to the subject matter of this Agreement may be brought by the Lender in any court located within the State or County where any of the Properties is
located or in the United States District Court having jurisdiction over all or any portion of the Properties. 

10.16 Jury Trial Waiver  

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

10.17 Final Agreement/Modification  

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

94

 

10.18 Continuing Agreement  

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

10.19 No Third Party Beneficiaries  

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

10.20 No Brokers  

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

10.21 Execution in Counterparts  

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

10.22 Contribution by Guarantors with Respect to Obligations.  

        To the extent that any Guarantor shall make a payment (a "Guarantor Payment") under its Guarantee and
Indemnity given in connection with this Agreement, which, taking into account all other Guarantor Payments then previously or concurrently made by any other Guarantor, exceeds the amount which
otherwise would have been paid by or attributable to such Guarantor if each Guarantor had paid the aggregate Obligations satisfied by such Guarantor Payment in the same proportion as such Guarantor's
"Allocable Amount" (as defined below) (as determined immediately prior to such Guarantor Payment) bore to the aggregate Allocable Amounts
of each of the Guarantors as determined immediately prior to the making of such Guarantor Payment, then, following irrevocable payment in full in cash of the Guarantor Payment and the Obligations, and
termination of this Agreement, such Guarantor shall be entitled to receive contribution and indemnification payments from, and be reimbursed by, each other Guarantor for the amount of such excess,  pro rata based upon their respective Allocable Amounts in effect immediately prior to such Guarantor Payment. 

95

 

        As
of any date of determination, the "Allocable Amount" of any Guarantor shall be equal to the maximum amount of the claim which could then be recovered from such Guarantor under its
Guarantee and Indemnity given in connection with this Agreement without rendering such claim voidable or avoidable under Section 548 of Chapter 11 of the Bankruptcy Code or under any
applicable state Uniform Fraudulent Transfer Act, Uniform Fraudulent Conveyance Act or similar statute or common law. 

        This
Section 10.22 is intended only to define the relative rights of the Guarantors, and nothing set forth in this Section 10.22 is intended to or shall impair the
obligations of the Guarantors, jointly and severally, to pay any amounts as and when the same shall become due and payable in accordance with the terms of the respective Guarantees and Indemnity given
by each of them in connection with this Agreement. 

        The
parties hereto acknowledge that the rights of contribution and indemnification hereunder shall constitute assets of the Guarantor or Guarantors to which such contribution and
indemnification is owing. 

        The
rights of the indemnifying Guarantors against other Guarantors under this Section 10.22 shall be exercisable only upon the full and irrevocable payment of the Obligations in
cash and the termination of this Agreement, including, without limitation, the termination of the Loan commitment hereunder. 

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

        The covenants and agreements contained in the Loan Documents shall bind, and the rights thereunder shall inure to, the respective permitted successors and assigns
of the Lender, the Borrower and the Guarantors, subject to the provisions of this Agreement. Subject to Section 10.22, all covenants and agreements of the Borrower and the Guarantors shall be
joint and several. In exercising any rights under the Loan Documents or taking any actions provided for therein, the Lender may act through its employees, agents or independent contractors as
authorized by the Lender. 

10.24 Loss of Borrower Note  

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

96

 

10.25 Acknowledgment  

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

10.26 Certain Provisions relating to The Meadows Guarantors  

        The provisions of this Agreement with respect to each of The Meadows Guarantors, as Guarantors, will not be operative unless approved by The State Harness Racing
Commission of Pennsylvania under 58 Pa. Code Section 185.22. Each of The Meadows Guarantors covenants that they will promptly seek such approval, and further covenants that they will not
take any act (or omit to take any act) that disqualifies them from applying, obtaining, maintaining or receiving a license under the Pennsylvania Race Horse Development and Gaming Act,
4 Pa. C.S.A. Sections 1101-1904 (2004) or related regulations as in effect from time to time. 

        [Intentionally Left Blank]

97

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

	 	 	MAGNA ENTERTAINMENT CORP., as Borrower
	
 	
 	

by:	

/s/ Blake Tohana
	 	 	 	
 Name: Blake Tohana

Title: Executive Vice President and Chief Financial Officer
	
 	
 	

by:	

/s/ Mary Lyn Seymour
	 	 	 	
 Name: Mary Lyn Seymour

Title: Controller
	

 	
 	

 	

We have authority to bind the Corporation.
	

 	
 	

 	

 
	 	 	MEC PENNSYLVANIA RACING, INC.
	
 	
 	

by:	

/s/ Blake Tohana
	 	 	 	
 Name: Blake Tohana

Title: Executive Vice President and Chief Financial Officer
	
 	
 	

by:	

/s/ Mary Lyn Seymour
	 	 	 	
 Name: Mary Lyn Seymour

Title: Controller
	

 	
 	

 	

We have authority to bind the Corporation.

98

 

	 	 	WASHINGTON TROTTING ASSOCIATION, INC.
	
 	
 	

by:	

/s/ Blake Tohana
	 	 	 	
 Name: Blake Tohana

Title: Executive Vice President and Chief Financial Officer
	
 	
 	

by:	

/s/ Mary Lyn Seymour
	 	 	 	
 Name: Mary Lyn Seymour

Title: Controller
	

 	
 	

 	

We have authority to bind the Corporation.
	

 	
 	

 	

 
	 	 	MOUNTAIN LAUREL RACING, INC.
	
 	
 	

by:	

/s/ Blake Tohana
	 	 	 	
 Name: Blake Tohana

Title: Executive Vice President and Chief Financial Officer
	
 	
 	

by:	

/s/ Mary Lyn Seymour
	 	 	 	
 Name: Mary Lyn Seymour

Title: Controller
	

 	
 	

 	

We have authority to bind the Corporation.

99

 

	 	 	PACIFIC RACING ASSOCIATION
	
 	
 	

by:	

/s/ Blake Tohana
	 	 	 	
 Name: Blake Tohana

Title: Executive Vice President and Chief Financial Officer
	
 	
 	

by:	

/s/ Mary Lyn Seymour
	 	 	 	
 Name: Mary Lyn Seymour

Title: Controller
	

 	
 	

 	

We have authority to bind the Corporation.
	

 	
 	

 	

 
	 	 	MEC LAND HOLDINGS (CALIFORNIA) INC.
	
 	
 	

by:	

/s/ Blake Tohana
	 	 	 	
 Name: Blake Tohana

Title: Executive Vice President and Chief Financial Officer
	
 	
 	

by:	

/s/ Mary Lyn Seymour
	 	 	 	
 Name: Mary Lyn Seymour

Title: Controller
	

 	
 	

 	

We have authority to bind the Corporation.

100

 

	 	 	THE SANTA ANITA COMPANIES, INC.
	
 	
 	

by:	

/s/ Blake Tohana
	 	 	 	
 Name: Blake Tohana

Title: Executive Vice President and Chief Financial Officer
	
 	
 	

by:	

/s/ Mary Lyn Seymour
	 	 	 	
 Name: Mary Lyn Seymour

Title: Controller
	

 	
 	

 	

We have authority to bind the Corporation.
	

 	
 	

 	

 
	 	 	LOS ANGELES TURF CLUB, INCORPORATED
	
 	
 	

by:	

/s/ Blake Tohana
	 	 	 	
 Name: Blake Tohana

Title: Executive Vice President and Chief Financial Officer
	
 	
 	

by:	

/s/ Mary Lyn Seymour
	 	 	 	
 Name: Mary Lyn Seymour

Title: Controller
	

 	
 	

 	

We have authority to bind the Corporation.

101

 

	 	 	GULFSTREAM PARK RACING ASSOCIATION, INC.
	
 	
 	

by:	

/s/ Blake Tohana
	 	 	 	
 Name: Blake Tohana

Title: Executive Vice President and Chief Financial Officer
	
 	
 	

by:	

/s/ Mary Lyn Seymour
	 	 	 	
 Name: Mary Lyn Seymour

Title: Controller
	

 	
 	

 	

We have authority to bind the Corporation.
	

 	
 	

 	

 
	 	 	SLRD THOROUGHBRED TRAINING CENTER, INC.
	
 	
 	

by:	

/s/ Blake Tohana
	 	 	 	
 Name: Blake Tohana

Title: Executive Vice President and Chief Financial Officer
	
 	
 	

by:	

/s/ Mary Lyn Seymour
	 	 	 	
 Name: Mary Lyn Seymour

Title: Controller
	

 	
 	

 	

We have authority to bind the Corporation.

102

 

	 	 	MEC DIXON, INC.
	
 	
 	

by:	

/s/ Blake Tohana
	 	 	 	
 Name: Blake Tohana

Title: Executive Vice President and Chief Financial Officer
	
 	
 	

by:	

/s/ Mary Lyn Seymour
	 	 	 	
 Name: Mary Lyn Seymour

Title: Controller
	

 	
 	

 	

We have authority to bind the Corporation.
	

 	
 	

 	

 
	 	 	GPRA THOROUGHBRED TRAINING CENTER, INC.
	
 	
 	

by:	

/s/ Blake Tohana
	 	 	 	
 Name: Blake Tohana

Title: Executive Vice President and Chief Financial Officer
	
 	
 	

by:	

/s/ Mary Lyn Seymour
	 	 	 	
 Name: Mary Lyn Seymour

Title: Controller
	

 	
 	

 	

We have authority to bind the Corporation.

103

 

	 	 	SUNSHINE MEADOWS RACING INC.
	
 	
 	

by:	

/s/ Blake Tohana
	 	 	 	
 Name: Blake Tohana

Title: Executive Vice President and Chief Financial Officer
	
 	
 	

by:	

/s/ Mary Lyn Seymour
	 	 	 	
 Name: Mary Lyn Seymour

Title: Controller
	

 	
 	

 	

We have authority to bind the Corporation.

104

 

	 	 	MID ISLANDI SF., acting through its Zug Branch
	
 	
 	

by:	

/s/ Thomas Schultheiss
	 	 	 	
 Name: Thomas Schultheiss

Title: Branch Manager
	
 	
 	

by:	

/s/ Herta Kessler
	 	 	 	
 Name: Herta Kessler

Title: Branch Manager
	

 	
 	

 	

We have authority to bind the Corporation.

105

QuickLinks

BRIDGE LOAN AGREEMENT

TABLE OF CONTENTS

LOAN AGREEMENT

ARTICLE 1 INTERPRETATION

ARTICLE 2 BRIDGE LOAN

ARTICLE 3 GENERAL PROVISIONS RELATING TO THE BRIDGE LOAN

ARTICLE 4 ADDITIONAL CONDITIONS PRECEDENT TO ADVANCES UNDER TRANCHE 2 AND TRANCHE 3

ARTICLE 5 INTEREST AND FEES

ARTICLE 6 REPRESENTATIONS AND WARRANTIES

ARTICLE 7 COVENANTS

ARTICLE 9 EVENTS OF DEFAULT AND REMEDIES

ARTICLE 10 GENERALQuickLinks
 -- Click here to rapidly navigate through this document

Exhibit 10.5

 
 

MAGNA ENTERTAINMENT CORP.
  as Borrower    
    

 
 

-and-    
    

 
 

THE GUARANTORS SET FORTH
  ON THE SIGNATURE PAGES HEREOF
  as Guarantors
  -and-    
    

 
 

BANK OF MONTREAL, ACTING THROUGH ITS
  CHICAGO LENDING OFFICE
  as Lender    
    

 
 

-and-    
    

 
 

BANK OF MONTREAL, ACTING THROUGH ITS
  CHICAGO LENDING OFFICE
  as Agent    
    

 
 

-and-    
    

 
 

BMO NESBITT BURNS INC., A DIVISION OF BANK OF MONTREAL
  as Arranger    
    

AMENDED AND RESTATED

CREDIT AGREEMENT  

  
 

    Dated as of July 22, 2005    
    

   TABLE OF CONTENTS  

	 
	 	 
	 	 
	 	Page

	ARTICLE 1	 	 
	 	 	INTERPRETATION	 	2
	 	 	1.1	 	Definitions	 	2
	 	 	1.2	 	Gender and Number	 	18
	 	 	1.3	 	Certificate of the Agent as to Rates, etc.	 	18
	 	 	1.4	 	Invalidity, etc.	 	19
	 	 	1.5	 	Headings, etc.	 	19
	 	 	1.6	 	Governing Law	 	19
	 	 	1.7	 	Attornment	 	19
	 	 	1.8	 	Judgment Currency	 	19
	 	 	1.9	 	Waiver of Jury	 	20
	 	 	1.10	 	References	 	20
	 	 	1.11	 	Currency	 	20
	 	 	1.12	 	This Agreement to Govern	 	20
	 	 	1.13	 	Generally Accepted Accounting Principles	 	20
	 	 	1.14	 	Determination of Amount of Loans	 	20
	 	 	1.15	 	Computation of Time Periods	 	21
	 	 	1.16	 	Actions on Days Other Than Banking Days	 	21
	 	 	1.17	 	Oral Instructions	 	21
	 	 	1.18	 	Incorporation of Schedules	 	21
	
ARTICLE 2	
 	

 
	 	 	CREDIT FACILITY	 	21
	 	 	2.1	 	Establishment of Credit Facility	 	21
	 	 	2.2	 	Revolving Nature of Operating Facility	 	22
	 	 	2.3	 	Repayment under Credit Facility	 	22
	 	 	2.4	 	Voluntary Reduction in Aggregate Commitment	 	24
	 	 	2.5	 	Extension of Credit Facility	 	24
	 	 	2.6	 	Increase in Aggregate Commitment	 	25
	
ARTICLE 3	
 	

 
	 	 	GENERAL PROVISIONS RELATING TO THE CREDIT FACILITY	 	26
	 	 	3.1	 	Advances	 	26
	 	 	3.2	 	Selection of Interest Periods	 	26
	 	 	3.3	 	Rollover and Conversion	 	27
	 	 	3.4	 	Payments Generally	 	27
	 	 	3.5	 	Disturbance of Libor Market	 	27
	 	 	3.6	 	Change in Circumstances	 	28
	 	 	3.7	 	Illegality	 	29

i

 
TABLE OF CONTENTS
  (continued) 

	 
	 	 
	 	 
	 	Page

	 	 	3.8	 	Indemnity	 	30
	 	 	3.9	 	Proceedings in Respect of Claims	 	31
	 	 	3.10	 	Evidence of Indebtedness	 	33
	 	 	3.11	 	Several Obligations	 	33
	
ARTICLE 4	
 	

 
	 	 	LETTERS OF CREDIT	 	33
	 	 	4.1	 	Procedures Relating to Letters of Credit	 	33
	 	 	4.2	 	Reimbursement	 	34
	 	 	4.3	 	L/C Lender Not Liable	 	34
	 	 	4.4	 	Letter of Credit Fees	 	35
	 	 	4.5	 	Overdue Amounts	 	35
	 	 	4.6	 	Acceleration	 	36
	 	 	4.7	 	Conflict	 	36
	
ARTICLE 5	
 	

 
	 	 	INTEREST AND FEES	 	36
	 	 	5.1	 	Interest Rates	 	36
	 	 	5.2	 	Calculation and Payment of Interest	 	36
	 	 	5.3	 	Stand-by Fee	 	37
	 	 	5.4	 	Payment of Costs and Expenses	 	37
	 	 	5.5	 	Interest on Overdue Amounts	 	37
	
ARTICLE 6	
 	

 
	 	 	REPRESENTATIONS AND WARRANTIES	 	38
	 	 	6.1	 	Representations and Warranties	 	38
	 	 	6.2	 	Survival of Representations and Warranties	 	44
	
ARTICLE 7	
 	

 
	 	 	COVENANTS	 	44
	 	 	7.1	 	Affirmative Covenants	 	44
	 	 	7.2	 	Negative Covenants	 	48
	 	 	7.3	 	Environmental Matters	 	50
	
ARTICLE 8	
 	

 
	 	 	CONDITIONS PRECEDENT	 	52
	 	 	8.1	 	Conditions Precedent to Closing	 	52
	 	 	8.2	 	Conditions Precedent to Advances	 	54

ii

 
TABLE OF CONTENTS
  (continued) 

	 
	 	 
	 	 
	 	Page

	
ARTICLE 9	
 	

 
	 	 	EVENTS OF DEFAULT AND REMEDIES	 	55
	 	 	9.1	 	Events of Default	 	55
	 	 	9.2	 	Remedies Upon Default	 	57
	 	 	9.3	 	Distributions	 	58
	
ARTICLE 10	
 	

 
	 	 	GUARANTY	 	58
	 	 	10.1	 	Guaranty	 	58
	 	 	10.2	 	Guaranty Absolute	 	59
	 	 	10.3	 	Waiver	 	59
	 	 	10.4	 	Continuing Guaranty; Assignments	 	60
	 	 	10.5	 	Subrogation	 	60
	
ARTICLE 11	
 	

 
	 	 	THE AGENT AND THE ADMINISTRATION OF THE CREDIT FACILITY	 	60
	 	 	11.1	 	Appointment and Authorization	 	60
	 	 	11.2	 	Duties and Obligations of Agent	 	61
	 	 	11.3	 	Prompt Notice to the Lenders	 	62
	 	 	11.4	 	Agent's Authority to Deal with Borrower	 	62
	 	 	11.5	 	Dealings by Borrower with Agent	 	62
	 	 	11.6	 	Independent Credit Decisions	 	63
	 	 	11.7	 	Indemnification	 	63
	 	 	11.8	 	Successor Agent	 	63
	 	 	11.9	 	Action by and Consent of Lenders; Waiver and Amendments	 	64
	 	 	11.10	 	Funding of Advances	 	65
	 	 	11.11	 	Remittance of Payments	 	65
	 	 	11.12	 	Redistribution of Payments	 	66
	 	 	11.13	 	Notification of Default	 	66
	 	 	11.14	 	Taking and Enforcement of Remedies	 	66
	 	 	11.15	 	Adjustments to Reflect Rateable Portions	 	67
	 	 	11.16	 	No Partnership	 	68
	
ARTICLE 12	
 	

 
	 	 	GENERAL	 	68
	 	 	12.1	 	Reliance and Non-Merger	 	68
	 	 	12.2	 	Confidentiality	 	68
	 	 	12.3	 	No Set-Off by the Borrower	 	68
	 	 	12.4	 	Employment of Experts	 	68

iii

 
TABLE OF CONTENTS
  (continued) 

	 
	 	 
	 	 
	 	Page

	 	 	12.5	 	Reliance by the Lenders	 	69
	 	 	12.6	 	Notices	 	69
	 	 	12.7	 	Time	 	70
	 	 	12.8	 	Further Assurances	 	70
	 	 	12.9	 	Assignment	 	70
	 	 	12.10	 	Exchange of Information	 	72
	 	 	12.11	 	Counterparts	 	72
	 	 	12.12	 	Entire Agreement	 	72
	 	 	12.13	 	Liability of Arranger	 	72

iv

        SCHEDULE 1.1.9

Applicable Margin and Stand-by Fee 

        SCHEDULE
1.1.19

Borrowing Notice 

        SCHEDULE
1.1.44

Excluded Subsidiaries 

        SCHEDULE
1.1.66

Lender's Commitments 

        SCHEDULE
6.1.18

Material Subsidiaries 

        SCHEDULE
7.1.13

Form of Compliance Certificate 

        SCHEDULE
12.9.4

Assignment and Assumption Agreement 

        THIS AMENDED AND RESTATED CREDIT AGREEMENT is dated as of July 11, 2005 

	AMONG:	 	 
	
 	
 	
MAGNA ENTERTAINMENT CORP., as Borrower
	
 	
 	

– and –
	
 	
 	
THE GUARANTORS SET FORTH ON THE SIGNATURE PAGES HEREOF, as Guarantors
	
 	
 	

– and –
	
 	
 	
BANK OF MONTREAL, acting through its Chicago lending office, as Lender
	
 	
 	

– and –
	
 	
 	
BANK OF MONTREAL, acting through its Chicago lending office, as Agent
	
 	
 	

– and –
	
 	
 	
BMO NESBITT BURNS INC., a division of Bank of Montreal, as Arranger

RECITALS:  

	A.
	The
Borrower, the Guarantors, the Lender, the Agent and the Arranger entered into a credit agreement made as of May 1, 2002 and an amending agreement as of October 11,
2002 (collectively, the "Original Credit Agreement").

	B.
	The
Borrower, the Guarantors, the Lender, the Agent and the Arranger amended and restated the terms of the Original Credit Agreement pursuant to an amended and restated credit
agreement dated as of December 2, 2002 (the "First Amended and Restated Credit Agreement").

	C.
	The
Borrower, the Guarantors, the Lender, the Agent and the Arranger amended and restated the terms of the First Amended and Restated Credit Agreement pursuant to an amended and
restated credit agreement dated as of June 2, 2003 (the "Second Amended and Restated Credit Agreement").

	D.
	The
Borrower, the Guarantors, the Lender, the Agent and the Arranger amended and restated the terms of the Second Amended and Restated Credit Agreement pursuant to an amended and
restated credit agreement dated as of October 10, 2003 and further amending agreements dated, respectively, as of June 8, 2004, October 14, 2004, December 7, 2004 and
February 18, 2005 (collectively, the "Third Amended and Restated Credit Agreement"). 

 
	E.
	The
parties hereto wish to make further amendments to, and restate the terms of, the Third Amended and Restated Credit Agreement. 

        NOW THEREFORE THIS AGREEMENT WITNESSES that, in consideration of the covenants and agreements herein contained, the parties hereto agree
as follows: 

ARTICLE 1

INTERPRETATION  

1.1   Definitions  

        For the purposes of this Agreement: 

1.1.1    "2003 Registration Statement" means the registration statement of the Borrower dated July 25, 2003 on
Form S-1 (No.333-107368), as amended to and including September 30, 2003, and related prospectus for the registration of securities of the Borrower under the  Securities Act of 1933, as
amended; 

1.1.2    "Acquisition" means any transaction or series of transactions, consummated after May 1, 2002, by which the Borrower or any of
its Subsidiaries, directly or indirectly, by means of a take-over bid, tender offer, amalgamation, merger, purchase of assets, purchase of shares or otherwise (a) acquires any
ongoing business or all or substantially all of the assets of any Person engaged in any ongoing business, (b) acquires beneficial ownership (as defined in
Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as amended) of securities of a Person engaged in any ongoing
business representing more than 10% of the ordinary voting power for the election of directors or other governing position if the business and affairs of such Person are managed by a board of
directors or other governing body, or (c) acquires beneficial ownership (as defined in Rule 13d-3 promulgated under the Securities
Exchange Act of 1934, as amended) of more than 10% of the ownership interest in any Person engaged in any ongoing business that is not managed by a board of directors or other
governing body; 

1.1.3    "Advance" means any utilization of the Credit Facility by the Borrower (other than by way of Rollover or Conversion of a Loan already
outstanding), whether by way of advance of a Base Rate Loan, Libor Loan or L/C Loan; 

1.1.4    "Affiliate" means, in respect of any Person, any other Person which, directly or indirectly, controls or is controlled by or is under
common control with such Person; and for the purpose of this definition, "control" (including, with correlative meanings, the terms  "controlled by" and
"under common control with") means the power to direct, or cause to be directed, the
management and policies of a Person whether through the ownership of voting shares, by contract or otherwise; 

1.1.5    "Agent" means Bank of Montreal, in its capacity as administrative agent hereunder or any successor agent as provided in
section 11.8; 

1.1.6    "Aggregate Commitment" means $50,000,000 subject to all permanent reductions effected from time to time pursuant to
sections 2.3, 2.4 or 3.7, and subject to any increase effected pursuant to section 2.6, and inclusive of any L/C Loan outstanding pursuant to section 4.1. 

2

 

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

1.1.8    "Applicable Law" means, in respect of any Person, property, transaction or event, all applicable laws, statutes, rules,
by-laws and regulations, and all applicable official directives, orders, judgments and decrees of Governmental Bodies but solely to the extent they have the force of law (and, in the case
of section 3.6 only, whether or not having the force of law but otherwise binding on such Person or such Person's property); 

1.1.9    "Applicable Margin" means (i) for Base Rate Loans, 3.00% and (ii) for Libor Loans, 4.00%; 

1.1.10    "Assignment Agreement" has the meaning attributed to such term in section 12.9.4; 

1.1.11    "Audited and Unaudited Financial Statements" means the audited consolidated financial statements of the Borrower for the
Fiscal Year ended December 31, 2002 and the unaudited consolidated financial statements of the Borrower for the Fiscal Quarter ended June 30, 2003; 

1.1.12    "Banking Day" means a day on which (i) for all purposes other than in connection with a Libor Loan, banks are generally open
for business in each of Toronto, Ontario, New York, New York, Chicago, Illinois and Los Angeles, California; and (ii) in connection with a Libor Loan, banks are generally open for
business and on which dealings in foreign currency and exchange between banks may be carried on in each of Toronto, Ontario, New York, New York, Chicago, Illinois, Los Angeles,
California and London, England and on which dealings in U.S. dollar deposits are transacted in the London interbank market; 

1.1.13    "Bank of Montreal" means Bank of Montreal, acting through its Chicago lending office, or any other appropriate lending office in the
United States of America designated thereby; 

1.1.14    "Base Rate" means, for any day, the annual rate of interest equal to the greater of (i) the rate which the Agent establishes
at its principal office in Chicago, Illinois as the reference rate of interest in order to determine interest rates it will charge on such day for commercial loans in U.S. dollars made to its
customers in the United States of America and which it refers to as its "Base Rate", and (ii) the Federal Funds Effective Rate on such day plus 1% per annum, such rate to be adjusted
automatically and without the necessity of any notice to the Borrower upon each change to such rate; 

1.1.15    "Base Rate Loan" means, at any time, any Loan which is outstanding at such time and in respect of which interest is to be calculated
based on the Base Rate; 

1.1.16    "BNS Filings" means the filings under the Uniform Commercial Code recorded on March 7, 1994 against Gulfstream Park
(evidencing a security interest in all personal property of Gulfstream Park) in favour of The Bank of Nova Scotia; 

3

 

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

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

1.1.19    "Borrowing Notice" means a notice substantially in the form of Schedule 1.1.19; 

1.1.20    "Branch of Account" means the Agent's main branch located at Chicago, Illinois, or such other branch of the Agent located in the
United States of America as the Agent may designate in writing to the Borrower at least 30 days prior to the redesignation of such Branch of Account; 

1.1.21    "Capital Expenditures" means, for any period, those expenditures of the Borrower or any Subsidiary made in connection with the
purchase, lease, license, acquisition, erection, development, improvement, maintenance or construction of property of or by such Person (including any such property acquired pursuant to a Capital
Lease Obligation) or any other expenditures, in all cases, which are required to be capitalized on the balance sheet of the Borrower or such Subsidiary in accordance with GAAP; 

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

1.1.23    "CERCLA" means the Comprehensive Environmental Response, Compensation and Liability Act of 1980, including the rules and regulations
promulgated thereunder, as the same may be amended from time to time; 

1.1.24    "Change in Control" means any event which results in MI Developments Inc., The Stronach Trust, Frank Stronach and any member
of his immediate family and their heirs and personal representatives in the aggregate being the beneficial holder, directly or indirectly, of less than 51% of the votes attaching to all Voting
Interests of the Borrower; 

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

1.1.26    "Comerica Filings" means the filings under the Uniform Commercial Code recorded on December 28, 1998 against MI Racing
(evidencing a security interest in all personal property of MI Racing) in favour of Comerica Bank; 

1.1.27    "Company" means, collectively, the Borrower and all of its Subsidiaries, other than the Excluded Subsidiaries; 

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

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

4

 

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

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

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

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

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

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

1.1.29    "Conversion" means, in respect of any Loan, the conversion of the method for calculating interest or fees on such Loan from one
method to another, and includes a conversion to or from a Libor Loan; 

1.1.30    "Conversion Date" means, in respect of any Loan, the Banking Day on which a Conversion thereof is made; 

1.1.31    "Core Line of Business" means the ownership or operation of racetracks and pari-mutuel wagering activities, including
(i) horse racing, (ii) dog racing, (iii) off-track betting facilities, (iv) account wagering and other gaming activities including, without limitation, slot
machine and video lottery terminals, (v) a racetrack and casino complex currently under development in Austria, (vi) any food and beverage operations, sports bar operations, technology
services, entertainment, the ownership and management of real estate and/or other activities, whether or not listed in section 6.1.1, associated with or ancillary or related to
(i), (ii), (iii), (iv) and/or (v), above, including the ownership or operation of horse or dog training and boarding centres, arenas and restaurants, and (vii) the
ownership and operation of two golf courses, one of which is located in Aurora, Ontario and the second of which is located in Oberwaltersdorf, Austria, and all operations related thereto; 

5

 

1.1.32    "Credit Facility" means the senior secured revolving credit facility made available to the Borrower by the Lenders pursuant to
section 2.1; 

1.1.33    "Default" means any event which, but for the lapse of time, giving of notice or both, would constitute an Event of Default and, for
greater certainty, includes for purposes of this Agreement other than section 8.2.2 hereof, any event relating to Subordinated Debt which would, but for the lapse of time, giving of notice or
both, enable the holders of Subordinated Debt to accelerate the maturity of the Subordinated Debt; 

1.1.34    "Designated Assets" means those assets and properties of the Borrower and its Subsidiaries listed in Schedule 1.1.34; 

1.1.35    "Disclosure Letter" means the letter dated May 1, 2002 prepared and signed by the Borrower and delivered to the Agent at the
time of the execution of the original credit agreement made as of May 1, 2002 among the parties; 

1.1.36    "EBITDA" means, for any Person in any period, Net Income of such Person for such period: 

	(a)
	increased
by the sum of (without duplication) (i) income tax expense for such period; (ii) interest expense for such period, (iii) depreciation and amortization
expense for such period, (iv) non-cash losses incurred during such period, and (v) in respect of any Material Subsidiary, intercompany management fees charged by the
Borrower, in each case to the extent such amounts were included in the calculation of Net Income of such Person for such period;

	(b)
	decreased
by all cash payments during such period relating to losses that were added back to Net Income of such Person under clause (a)(iv) above in determining EBITDA
in any prior period; and

	(c)
	decreased
by such net gains from sales of real estate held for sale or development and excess racetrack lands which were included in the calculation of Net Income of such Person for
such period which are in excess of 20% of EBITDA; 

1.1.37    "Environmental Laws" means all Applicable Laws with respect to environmental, public health or safety matters, including without
limitation, federal, state and local environmental statutes, regulations, ordinances, codes and by-laws relating to the protection and conservation of the environment (including the indoor
environment); 

1.1.38    "Environmental Orders" includes applicable orders, decisions or the like rendered by any Governmental Body under or pursuant to any
Environmental Laws; 

1.1.39    "Environmental Permits" includes all permits, certificates, approvals and licences issued by and registrations with any Governmental
Body pursuant to or required under any Environmental Laws or Environmental Orders; 

6

 

1.1.40    "Environmental Reports" means the reports listed on Schedule 1.1.39 of the Disclosure Letter; 

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

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

1.1.43    "Event of Default" has the meaning attributed to such term in section 9.1; 

1.1.44    "Excluded Subsidiary" means the Subsidiaries of the Borrower designated as Excluded Subsidiaries by the Borrower on the date hereof
and listed in Schedule 1.1.44, and thereafter any Subsidiary of the Borrower designated by the Borrower with the prior written approval of the Agent, provided that the Borrower may from
time to time revoke the designation of a Subsidiary of the Borrower as an Excluded Subsidiary if and only if at such time such revocation would not result in a Default; 

1.1.45    "Excluded Taxes" means in relation to the Agent or any Lender, (a) those Taxes which are imposed or levied on or measured by
or determined by reference to the overall net income, profits, gross receipts, net worth or capital of the Agent or any Lender or any of its applicable lending offices, and all franchise taxes, taxes
on doing business or taxes measured by capital or net worth imposed on the Agent or any Lender or any of its applicable lending offices pursuant to the laws of the jurisdiction in which the Agent or
Lender, as applicable, is organized or resident or in which the Agent's or Lender's principal office or applicable lending office is located, and (b) without limiting the generality of the
foregoing, all franchise taxes, taxes on doing business or taxes measured by net income, capital, profits, gross receipts or net worth imposed on the Agent or any Lender or any of its applicable
lending offices, whether collected by withholding or otherwise, as a result of the Agent or such Lender (i) carrying on a trade or business in the United States of America or having a
permanent establishment in the United States of America, (ii) being organized under the laws of the United States of America or any political subdivision thereof,
(iii) being or being deemed to be resident in the United States of America for income tax purposes, or (iv) not dealing at arm's length (as defined for the purposes of the
Internal Revenue Code) with the Borrower, or which would not have been imposed had such Person satisfied a relevant authority that such Person was not a person mentioned in
clause (i), (ii), (iii) or (iv) above; 

1.1.46    "Federal Funds Effective Rate" means, for any day, the annual rate of interest equal to the weighted average of the rates on
overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers, as published for such day (or, if such day is not a Banking Day, for the next
preceding Banking Day) by the Federal Reserve Bank of New York, or if such rate is not so published for any day which is a Banking Day, the average of the quotations for such day on such
transactions received by the Agent from three United States of America federal funds brokers of recognized standing selected by it; 

7

 

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

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

1.1.49    "Fraudulent Transfer Laws" has the meaning attributed to such term in section 10.1.3; 

1.1.50    "GAAP" means, at any time, generally accepted accounting principles in effect from time to time in the United States of
America as recommended by the Financial Accounting Standards Board, applied on a consistent basis; 

1.1.51    "Golden Gate Mortgage" means that certain deed of trust with absolute assignment of rents and leases, security agreement and fixture
filing made on or about October 10, 2003 by MEC Land Holdings (California) Inc. for the benefit of the Agent; 

1.1.52    "Golden Gate Premises" has the meaning attributed to such term in section 6.1.19; 

1.1.53    "Guaranteed Obligations" has the meaning attributed to such term in section 10.1.1; 

1.1.54    "Guarantors" means, collectively, the guarantors set forth on the signature pages hereof and any other Relevant Subsidiary (other
than the Lone Star Subsidiaries) that executes and delivers a Guaranty and, in the singular, any one of them; 

1.1.55    "Guaranty" means the guaranty set forth in Article 10; 

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

1.1.57    "Hazardous Substance" means any flammable explosives, radon, radioactive materials, asbestos, urea formaldehyde foam insulation,
polychlorinated biphenyls, petroleum and petroleum products, methane, hazardous materials, hazardous wastes, hazardous or toxic substances or related materials as defined in CERCLA, the Hazardous
Materials Transportation Act, as amended (49 U.S.C. Sections 1801, et seq.), RCRA, Articles 15 and 27 of the New York State Environmental Conservation Law or any
other applicable Environmental Law and in the regulations adopted pursuant thereto; 

1.1.58    "Interest Period" means, with respect to each Libor Loan, the period selected by the Borrower in accordance with the provisions
hereof and being of a duration of one, two or three months or such other period as the Agent (with the consent of all of the Lenders) may agree to from time to time, commencing on the Borrowing Date,
Rollover Date or Conversion Date (as the case may be) of such Loan; 

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

8

 

1.1.60    "Laurel and Pimlico Facility" means term credit facilities and a revolving credit facility provided by Mercantile-Safe
Deposit and Trust Company in favour of Laurel Racing Association Limited Partnership and Pimlico Racing Association Inc. collectively having a principal amount outstanding at any time of not
greater than $34,007,685, and includes any renewal or refinancing of any such facility provided the indebtedness thereof is not increased thereby above $34,007,685; 

1.1.61    "Laurel and Pimlico L/C" means the letters of credit dated November 27, 2002 issued by Bank of Montreal in favour of
Joseph LLC and Karin LLC in connection with the acquisition of Laurel Racing Association Limited Partnership and Pimlico Racing Association Inc., as the same may be extended or
renewed from time to time; 

1.1.62    "L/C Lender" means Bank of Montreal, and its successors and permitted assigns in such capacity; 

1.1.63    "L/C Limit" means $40,000,000, as such amount is permanently reduced from time to time pursuant to sections 2.4 or 3.7
or increased pursuant to section 2.6; 

1.1.64    "L/C Loan" means any Letter of Credit issued under Article 4; 

1.1.65    "Lenders" means, collectively, Bank of Montreal together with any financial institutions which become parties hereto pursuant to
section 12.9 and their respective successors and permitted assigns, and, in the singular, any one of them; 

1.1.66    "Lender's Commitment" means, with respect to each Lender, the amount set forth opposite the name of such Lender in
Schedule 1.1.66, in each case subject to such Lender's Rateable Portion of all permanent reductions effected from time to time pursuant to sections 2.4 or 3.7 or such Lender's
Rateable Portion of all increases effected from time to time pursuant to section 2.6; 

1.1.67    "Letter of Credit" means a letter of credit or letter of guaranty issued by the L/C Lender in accordance with the provisions hereof; 

1.1.68    "Letter of Credit Agreement" has the meaning attributed to such term in section 4.7; 

1.1.69    "Letter of Credit Fee" means, at any time, in respect of each Letter of Credit, a fee calculated on the basis of the actual number
of days in the year for the period from the date of issuance thereof to the Maturity Date thereof, payable in advance in quarterly instalments (except that the first such instalment shall be in
respect of the period from the date the Letter of Credit is issued to the last day of the then current Fiscal Quarter), at the rate per annum equal to the Applicable Margin for Libor Loans in effect
at the time such instalment is payable, such fee to be adjusted automatically upon each change to such fee in accordance with section 4.4; 

1.1.70    "Libor" means, in respect of a particular Libor Loan and Interest Period, the rate of interest per annum, calculated on the basis of
a year of 360 days, equal to the arithmetic mean, rounded upwards to the nearest whole multiple of one-sixteenth of one percent (if already not such a multiple), of the rates
which appear on the Telerate Page 3750 on the Dow Jones Telerate Service (or any replacement page) as of 11:00 a.m. (London time) on the day which is two Banking Days prior
to the first day of such Interest Period or, if such rate is not available at such time, the arithmetic mean, rounded upwards to the nearest whole multiple of one-sixteenth of one percent
(if already not such a
multiple), of the interest rates, calculated on the basis of a year of 360 days, which, subject to section 3.5, the Agent has determined at or about 11:00 a.m. (London time) on
the day which is two Banking Days prior to the first day of such Interest Period as being the rate at which the leading banks in the London interbank eurocurrency market would offer the Agent for
placing U.S. dollar deposits in an amount approximately equal to the amount of the particular Libor Loan for substantially the same number of days as such Interest Period for delivery on the
first day of such Interest Period; 

9

 

1.1.71    "Libor Loan" means, at any time, any Loan which is outstanding at such time in U.S. dollars and in respect of which interest
is to be calculated based on Libor; 

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

1.1.73    "Loan" means, at any time, the principal amount of all Obligations then outstanding under the Credit Facility pursuant to the same
availment option, and, 

	(a)
	in
the case of a Libor Loan, pursuant to an Advance, Rollover or Conversion made on the same date and having the same Maturity Date; and

	(b)
	in
the case of a Letter of Credit, relating to a single Letter of Credit, in which event the amount of the Loan shall be deemed to be the face amount of the Letter of Credit; 

1.1.74    "Loan Documents" means this Agreement, the Golden Gate Mortgage, the Santa Anita Mortgage and each Letter of Credit Agreement, and  "Loan Document" means any one of
them; 

1.1.75    "Lone Star Lease" means the amended and restated lease between MEC Lone Star, L.P. and Grand Prairie Sports Facilities
Development Corporation, Inc. as the same may be amended, supplemented or replaced from time to time; 

1.1.76    "Lone Star Security" means the security interests granted by MEC Lone Star, L.P. in favour of Grand Prairie Sports Facilities
Development Corporation, Inc. under the Lone Star Lease and under the security agreement between MEC Lone Star, L.P. and Grand Prairie Sports Facilities Development
Corporation, Inc., and any amendment or replacement of any such security; 

1.1.77    "Lone Star Subsidiaries" means, collectively, MEC Lone Star, L.P., its general partner, MEC Texas Racing, Inc., and
its limited partner, Racetrack Holdings, Inc., MEC Texas Concessions, LLC and Texas Extreme Skatepark, LLC and, in the singular, any one of them; 

1.1.78    "Majority Lenders" means, at any time, the Lenders which are owed principal amounts under the Credit Facility aggregating at least
51% of all Loans outstanding under the Credit Facility or, if no Loans are then outstanding under the Credit Facility, the Lenders having at least 51% of the Aggregate Commitment at such time; 

1.1.79    "Material Adverse Change" means any material adverse change in the business, condition (financial or otherwise), operations,
properties, assets, liabilities or prospects of the Company, taken as a whole; 

10

   1.1.80 "Material Adverse Effect" means a material adverse effect on (a) the business, condition (financial or otherwise),
operations, properties, assets, liabilities or prospects of the Company, taken as a whole, or (b) the ability of the Borrower or any Guarantor to perform its Obligations under any Loan Document
to which it is or is to be a party; 

1.1.81 "Material Authorization" means any approval, permit, licence or similar authorization from, and any filing or registration with, any
Governmental Body required by the Borrower or any Material Subsidiary to carry on its Core Line of Business as presently carried on by it (including, without limitation, all environmental and other
permits, licenses and other authorizations required for the Borrower and each Material Subsidiary to carry on its Core Line of Business in accordance with Applicable Laws and further including,
without limitation, all licensing requirements of the Racing and Gambling Regulatory Authorities in relation to the Borrower or any Material Subsidiary) in each jurisdiction in which it does so where
the failure to have such approval, permit, licence, authorization, filing or registration could reasonably be expected to have a Material Adverse Effect; 

1.1.82 "Material Subsidiaries" means, collectively, the Guarantors and the Lone Star Subsidiaries and, in the singular, any one of them; 

1.1.83 "Maturity Date" means the last day of an Interest Period or Letter of Credit term (as applicable); 

1.1.84 "Net Income" of a Person for any period means the consolidated net income of such Person during such period after taxes, but before
extraordinary items and unusual items; provided that pro forma earnings from Permitted Acquisitions incorporated in accordance with section 1.13 and net gains from sales of real
estate held for sale or development and excess racetrack lands shall be included, all as otherwise determined in accordance with GAAP; provided further that, in the case of the Borrower, such net
income for such period of all Subsidiaries of the Borrower which were Excluded Subsidiaries as at the last day of such period shall be excluded. In addition, there shall be included in Net Income all
net income of such Person on a consolidated basis (excluding, in the case of the Borrower, such net income for such period of all Subsidiaries of the Borrower which were Excluded Subsidiaries as at
the last day of such period) from investments in accordance with the equity method of accounting; 

1.1.85 "Obligations" means all indebtedness (including any operating account debit balances in favour of any Lender), liabilities and other
obligations of the Borrower and Guarantors to the Lenders or any of them hereunder and of the Borrower and Guarantors under any other Loan Document (including any amendments or supplements thereto),
whether actual or contingent, direct or indirect, matured or not, now existing or arising hereafter and includes, without limitation, all unpaid principal, interest, fees and other amounts payable by
the Borrower and Guarantors to the Lenders hereunder or under any other Loan Document; 

1.1.86 "Officer's Certificate" means, unless otherwise provided herein, in respect of the Borrower, a certificate signed by any one of the
Chair of the Board, the President, the Chief Financial Officer, the Secretary or any Vice President of the Borrower; 

1.1.87 "Permitted Acquisition" means an Acquisition by the Borrower (i) that has received approval of the board of directors of the
Borrower, (ii) that is within the Borrower's then current Core Line of Business, and (iii) in the case of the Acquisition of a racetrack business either (a) the acquired racetrack
business is then in operation and generating positive EBITDA from operations, or (b) the aggregate cash outlay for such Acquisition does not exceed $10,000,000; 

11

 

1.1.88 "Permitted Debt" means (i) the Credit Facility; (ii) unsecured trade and other accounts payable incurred in the
ordinary course of business for the purpose of carrying on the same; (iii) the Santa Anita Senior Facility; (iv) indebtedness under interest rate or currency hedging agreements entered
into for the purpose of managing interest rate and currency risks of the Borrower or any Material Subsidiary and not for speculative purposes; (v) indebtedness of the Borrower to any of its
Material Subsidiaries or of any Material Subsidiary to the Borrower or any other Material Subsidiary; (vi) indebtedness owing under, and not exceeding the amounts permitted to be outstanding
under and secured by, Permitted Encumbrances and extensions, renewals or replacements of any indebtedness permitted under this clause (vi) provided the principal amount of such
indebtedness thereunder or security therefor is not thereby increased beyond the original principal amount of such indebtedness; (vii) unsecured vendor-take-back
indebtedness not exceeding $50,000,000 in the aggregate; (viii) obligations and indebtedness (including Capital Lease Obligations and Contingent Liabilities) in the aggregate amount of
approximately $78,000,000 in respect of indebtedness (including Capital Lease Obligations and Contingent Liabilities) relating to Subsidiaries which are not Material Subsidiaries and which are
disclosed in the Audited and Unaudited Financial Statements including the notes thereto; (ix) indebtedness (including Capital Lease Obligations and, without duplication, Contingent Liabilities)
in an aggregate amount not exceeding $75,000,000, provided that such indebtedness either: (A) is incurred or assumed in connection with the acquisition of new assets (whether or not a Permitted
Acquisition) and the recourse of the holder of such indebtedness is limited (either contractually or structurally) to the assets being financed or acquired; or (B) consists of financial
assistance permitted by clause 7.2.8(iii); (x) unsecured indebtedness (including Capital Lease Obligations and, without duplication, Contingent Liabilities) in an aggregate amount not
exceeding $5,000,000; (xi) indebtedness (including Capital Lease Obligations and, without duplication, Contingent Liabilities) of a Person which becomes a Material Subsidiary after
October 10, 2003 provided that the recourse of the holder of such indebtedness is limited (either contractually or structurally) to the securities or assets of such Person;
(xii) indebtedness under letters of credit, performance bonds, instalment insurance and insurance premium financing contracts, and similar instruments in respect of land transfer tax claims,
land development charges, gaming permits and other obligations of the Borrower or its Subsidiaries incurred in the ordinary course of business; (xiii) the Lone Star Lease;
(xiv) indebtedness of up to $6,000,000 in aggregate that may become due to the Estate of John K. Cooke in connection with the acquisition of Laurel Racing Association Limited Partnership,
Pimlico Racing Association, Inc. and certain of their Affiliates; and (xv) Subordinated Debt; 

1.1.89 "Permitted Encumbrances" means any: 

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

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

12

 

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

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

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

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

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

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

	(i)
	Purchase
Money Security Interests incurred or assumed in connection with clause (ix) of the definition of Permitted Debt with recourse limited to the asset acquired or
Capital Lease Obligation incurred, or Liens in respect of personal property securing payment obligations up to an aggregate annual amount of $1,000,000;

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

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

13

 

	(l)
	Liens
granted by the Borrower to any Guarantor or by any Guarantor to the Borrower or any other Guarantor;

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

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

	(o)
	the
Santa Anita Senior Security and the Lone Star Security;

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

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

	(r)
	the
granting by the Borrower or a Subsidiary in the ordinary course of its business of any lease, sub-lease, tenancy or right of occupancy to any person in respect of real
property owned or leased by the Borrower or a Subsidiary;

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

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

	(u)
	Liens
existing on assets of any Person at the time such Person becomes a Subsidiary, provided that (i) such Lien was not created in contemplation of such Person becoming a
Subsidiary, and (ii) such Lien does not encumber any assets other than the assets subject to such Lien at the time such Person becomes a Subsidiary;

	(v)
	other
Liens incidental to the conduct of the business or the ownership of the assets of the Borrower or any Subsidiary that (i) were not incurred in connection with borrowed
money, (ii) do not in the aggregate materially impair the use of the assets subject to the Lien in the operation of such business, and (iii) do not secure obligations aggregating in
excess of $1,000,000;

	(w)
	Liens
on the equity or debt securities of Excluded Subsidiaries securing indebtedness limited in recourse to the Excluded Subsidiaries or their securities or assets;

	(x)
	security
granted in support of the Laurel and Pimlico L/C;

	(y)
	the
Liens granted pursuant to the Security Documents; 

14

 

	(z)
	Liens
granted in support of guarantees of the loan made by MID Islandi sf, acting through its Zug branch, to Remington Park, Inc. and Gulfstream Park Racing
Association, Inc. on or about the date hereof; and

	(aa)
	any
other Lien which the Lenders approve in writing as a Permitted Encumbrance; 

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

1.1.91 "Plan" means an employee benefit plan defined in section 3(3) of ERISA in respect of which the Borrower or any ERISA
Affiliate is, or within the immediately preceding six years was, an "employer" as defined in section 3(5) of ERISA; 

1.1.92 "Purchase Money Security Interest" means any Lien given, assumed or arising by operation of law to provide or secure, or to provide
the obligor with funds to pay, the whole or any part of the consideration for the acquisition of property where the principal amount of the obligation secured by such Lien (i) is not in excess
of the cost to the obligor of the property encumbered thereby and (ii) is secured only by the property being acquired by the obligor, and includes the renewal or refinancing of any such Lien
upon the same property provided that the indebtedness secured and the security therefor are not increased thereby; 

1.1.93 "Racing and Gambling Regulatory Authorities" means the racing and gambling regulatory authorities in each state where the Borrower
or any Material Subsidiary maintain racetracks and/or carry on business, including (without limitation) the California Horse Racing Board, the Division of Pari-Mutual Wagering within the
Florida Department of Business and Professional Regulation, the Pennsylvania Harness Racing Commission and the Nevada Gaming Commission; 

1.1.94 "Rateable Portion" means in respect of each Lender at any time the proportion that its Lender's Commitment at such time bears to the
Aggregate Commitment at such time; 

1.1.95 "Real Property" has the meaning attributed to such term in section 6.1.9; 

1.1.96 "Registration Statement" means the registration statement of the Borrower dated November 15, 2001 on
Form S-1 (No. 333-70520), as amended to and including April 4, 2002, and related prospectuses for the registration of securities of the Borrower under the  Securities Act of 1933, as
amended; 

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

1.1.98 "Release" means any spill, deposit, disposal, addition, emission, discharge, leak or other release; 

15

 

1.1.99 "Relevant Subsidiary" means at any time, a Subsidiary of the Borrower (other than an Excluded Subsidiary) that is incorporated,
existing and carries on business in the United States of America (a) having assets with an aggregate net book value in excess of 10% of the aggregate net book value of the total assets
of the Borrower, determined on a consolidated basis, including such Subsidiary (in each case, determined as of the last day of the most recent fiscal quarter of such Person), or
(b) having positive EBITDA in excess of 10% of EBITDA of the Borrower, determined on a consolidated basis, including such Subsidiary (in each case, for the four consecutive Fiscal
Quarters most recently ended) provided that the EBITDA of such Subsidiary is in excess of $500,000, in the case of each of (a) and (b), as shown in an Officer's Certificate delivered
pursuant to section 7.1.17 or (c) as may be designated by the Borrower in its sole discretion as a Relevant Subsidiary by written notice provided to the Agent (whether or not it
is incorporated, existing and carries on business in the United States of America); provided, however, the Subsidiaries listed on Schedule 6.1.18 of this Agreement (and their
successors and assigns), for purposes hereof, shall each be deemed to always be a Relevant Subsidiary, and provided further that MEC Holdings (USA) Inc. shall not be a Relevant Subsidiary; 

1.1.100 "Replacement Cost" means, with respect to any property or asset, the cost of repairing, replacing or reinstating such property or
asset with materials of like kind and quality and for like occupancy (where applicable) on the same or a similar site, in accordance with the requirements of any applicable municipal
by-laws and without deduction for depreciation; 

1.1.101 "Reportable Event" means any of the events described in section 4043 of ERISA; 

1.1.102 "Restricted Payment" shall mean, with respect to any Person, any payment by such Person (i) of any dividends on any of its equity
securities, (ii) on account of, or for the purpose of setting apart any property for a sinking or other analogous fund for, the purchase, redemption, retirement or other acquisition of any of its
equity securities or any warrants, options or rights to acquire any such shares, or the making by such Person of any other distribution in respect of any of its equity securities, (iii) of any
principal of, or interest or premium on, or of any amount in respect of a sinking or analogous fund or defeasance fund for, any indebtedness of such Person ranking in right of payment subordinate to
any liability of such Person under the Loan Documents, (iv) of any principal of, or interest or premium on, or of any amount in respect of a sinking or analogous fund or defeasance fund for, any
indebtedness of such Person to a shareholder of such Person or to an Affiliate of a shareholder of such Person, (v) of any management, consulting or similar fee or any bonus payment or comparable
payment, or by way of gift or other gratuity, to any Affiliate of such Person or to any director or officer of any such Affiliate, or (vi) any loan to any director, officer or employee of the Borrower
or of any Affiliate of the Borrower; provided that payments of rent and payments for goods and services rendered in the ordinary course of business shall not be Restricted Payments; 

1.1.103 "Rollover" means, in respect of a Libor Loan, the continuation of such Loan or any portion thereof for a succeeding Interest Period
in accordance with the provisions hereof; 

1.1.104 "Rollover Date" means, in respect of a Libor Loan, a Banking Day on which a Rollover of all or a portion of such Loan is made; 

1.1.105 "Santa Anita Premises" has the meaning attributed to such term in section 6.1.19; 

1.1.106 "Santa Anita Mortgage" means that certain deed of trust with absolute assignment of rents and leases, security agreement and
fixture filing made on or about October 10, 2003 by The Santa Anita Companies, Inc. for the benefit of the Agent; 

1.1.107 "Santa Anita Senior Facility" means (i) the term loan credit agreement dated as of November 15, 1999 and
(ii) the revolving credit agreement dated as of November 1, 2001 between Los Angeles Turf Club, Incorporated and Wells Fargo Bank, National Association, collectively having a principal
amount outstanding at any time of not greater than $75,000,000, and includes any renewal or refinancing of any such facility provided the indebtedness thereof or security therefor is not increased
thereby; 

16

 

1.1.108 "Santa Anita Senior Security" means the security documents and guaranties securing and supporting the Santa Anita Senior Facility,
and includes any amendment or replacement of any such security or guaranty provided the property subject thereto or security interest in relation thereto is not increased; 

1.1.109 "Santa Anita Subsidiaries" means, collectively, The Santa Anita Companies, Inc. and Los Angeles Turf Club, Incorporated and,
in the singular, either one of them; 

1.1.110 "Secured Properties" means that Golden Gate Premises and the Santa Anita Premises; 

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

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

1.1.113 "Security" means the collateral security constituted by the Golden Gate Mortgage and the Santa Anita Mortgage; 

1.1.114 "Shared Assets" means (i) the Flamboro Properties, (ii) the Lone Star Park Properties; (iii) Maryland Jockey
Club and (iv) Xpress Bet/HRTV and, in each case, any real or personal property in respect thereof. 

1.1.115 "Subordinated Debt" means, collectively, (i) up to $75,000,000 principal amount of 7.25% convertible subordinated notes due
December 15, 2009 issued by the Borrower, and up to $150,000,000 principal amount of 8.55% convertible subordinated notes due June 15, 2010 issued by the Borrower pursuant to a purchase
agreement dated May 20, 2003 with Bank Austria Creditanstalt AG and under an indenture dated as of the date hereof with The Bank of New York, as the same may be amended or modified from
time to time on the terms approved by the Majority Lenders; provided that amendments and modifications relating solely to administrative matters need only be approved by the Agent and (ii) the
Subordinated MID Bridge Facility, as the same may be amended or modified from time to time, provided that any amendments or modifications (other than amendments of a technical or procedural nature)
which would adversely affect the rights of Lender under this Agreement or in respect of the Credit Facility must be approved by the Lender; 

1.1.116 "Subordinated MID Bridge Facility" means the non-revolving secured credit facility due August 31, 2006 for a
maximum principal amount of $100,000,000 provided by MID Islandi sf, a wholly-owned subsidiary of MI Developments Inc. pursuant to a credit agreement dated July 22, 2005 among the
Borrower, the Subsidiaries of the Borrower party thereto as guarantors, and MID Islandi sf, acting through its Zug branch, as the same may be amended or modified from time to time; 

1.1.117 "Subordination Agreements" means, collectively, (i) that certain subordination agreement dated October 10, 2003 among
the Agent, the Lender and Wells Fargo Bank, National Association, as supplemented by a memorandum of subordination agreements, dated as of the date hereof, between such parties and MI
Developments Inc., and (ii) that certain subordination agreement dated July 22, 2005 among the Agent, the Lender, MID Islandi sf and MI Developments Inc., in each case as
same may be amended, restated or supplemented from time to time; 

17

 

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

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

1.1.120 "Termination Date" means July 31, 2006, or such earlier date as the entire balance of the Loans under the Credit Facility
may become due hereunder, whether by acceleration or otherwise; or, in each case, such later date to which the Credit Facility has been extended pursuant to section 2.5; 

1.1.121 "U.S. dollars" means lawful money of the United States of America; 

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

1.1.123 "Wells Fargo Consent" means the amendment and consent between Wells Fargo Bank, National Association and each of the Santa Anita
Subsidiaries dated as of October 10, 2003 pursuant to which, among other things, Wells Fargo Bank, National Association consents to (i) the execution, delivery and performance of the
Guaranties by the Santa Anita Subsidiaries, and (ii) the execution, delivery and performance by The Santa Anita Companies, Inc. of the Santa Anita Mortgage. 

1.2   Gender and Number

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

1.3   Certificate of the Agent as to Rates, etc.

        A
certificate of the Agent on behalf of the Lenders certifying the amount of the Applicable Margin, the Letter of Credit Fee, the Base Rate, the Federal Funds Effective Rate or Libor at
any particular time in respect of any Loan made or maintained or to be made or maintained by the Lenders or any of them hereunder shall be prima facie
evidence thereof. No provision hereof shall be construed so as to require the Agent or any Lender to issue a certificate at any particular time. 

18

 

1.4   Invalidity, etc.

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

1.5   Headings, etc.

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

1.6   Governing Law

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

1.7   Attornment

        Each
of the parties hereto irrevocably and unconditionally submits and attorns, for itself and its property, to the non-exclusive jurisdiction of any court of the State of
New York or federal court of the United States of America sitting in the County and State of New York, and any appellate court therefrom for all matters arising out of or in
connection with this Agreement or any of the other Loan Documents to which it is a party, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and
unconditionally agrees that all claims in respect of any such action or proceeding may be heard in any such State of New York court or, to the extent permitted by law, in such federal court.
Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Agreement shall affect any right that any party may otherwise have to bring any action or proceeding relating to this Agreement or any of the other Loan Documents in
the courts of any jurisdiction. 

1.8   Judgment Currency

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

19

 

1.9   Waiver of Jury

        The
Borrower, each Guarantor, the Agent, the Arranger and the Lenders hereby irrevocably waive all right to trial by jury in any action, proceeding or counterclaim (whether based in
contract, tort or otherwise) arising out of or relating to any of the Loan Documents, the transactions contemplated hereby, the Advances or any actions by the Agent, the Arranger or any Lender in the
negotiation, administration, performance or enforcement thereof. 

1.10 References

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

1.11 Currency

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

1.12 This Agreement to Govern

        If
there is any inconsistency between the terms of this Agreement and the terms of any other Loan Document, or if any matter set forth in a Letter of Credit Agreement or Letter of Credit
is otherwise addressed herein, the provisions hereof shall prevail. 

1.13 Generally Accepted Accounting Principles

        Except
as otherwise specifically provided herein, all accounting terms shall be applied and construed in accordance with GAAP (including, without limitation, determining the amount of
any Contingent Liability). For the purpose of determining compliance with the financial covenants set forth in section 7.1.18 and the calculation of the Applicable Margin, unless
expressly provided to the contrary or unless the Agent (with the consent of the Majority Lenders) otherwise agrees at the request of the Borrower, all computations shall be calculated on a
consolidated basis (but excluding the Excluded Subsidiaries), and for the purposes of including the operating results from any Acquisition on a pro forma basis for the financial
covenants set out in section 7.1.18, the Borrower shall include such operating results in determining compliance with the financial covenants in good faith, making such adjustments, assumptions
and changes necessary to reflect differences in accounting policies or principles which are permitted or required to be made to pro forma financial statements pursuant to the Securities Acts,
and the rules and regulations promulgated thereunder, including Regulation S-X. 

1.14 Determination of Amount of Loans

        For
the purpose of determining the amount of Loans or any Loan at any time, there shall be deemed to be outstanding and advanced in addition to amounts outstanding and directly advanced,
without duplication and without affecting other provisions hereof regarding the basis for the calculation of interest or fees, the maximum amount of all contingent liabilities of the Lenders pursuant
to Letters of Credit then outstanding. 

20

  

1.15 Computation of Time Periods  

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

1.16 Actions on Days Other Than Banking Days  

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

1.17 Oral Instructions  

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

1.18 Incorporation of Schedules  

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

	 	 	Schedule 1.1.19	 	Borrowing Notice
	 	 	Schedule 1.1.44	 	Excluded Subsidiaries
	 	 	Schedule 1.1.66	 	Lender's Commitments
	 	 	Schedule 1.1.34	 	Designated Assets
	 	 	Schedule 6.1.18	 	Material Subsidiaries
	 	 	Schedule 7.1.13	 	Form of Compliance Certificate
	 	 	Schedule 12.9.4	 	Assignment and Assumption Agreement

 
 

ARTICLE 2
  CREDIT FACILITY    
    

2.1   Establishment of Credit Facility  

2.1.1    Subject
to the terms and conditions of this Agreement, the Lenders hereby severally establish a senior secured revolving credit facility (the "Credit Facility") in favour of
the Borrower in accordance with their respective Lender's Commitments. 

21

 

2.1.2    The
Credit Facility shall be available, at the option of the Borrower, by way of Advances of: (i) Base Rate Loans in U.S. dollars; (ii) Libor Loans in
U.S. dollars; and (iii) Letters of Credit in U.S. dollars. 

2.1.3    Notwithstanding
any other provision of this Agreement, no Lender shall be obligated to make its Rateable Portion of any Advance (and the Borrower shall not request any
Advance to be made) to the extent that on any relevant Borrowing Date, after giving effect to any Advance requested: (i) the aggregate principal amount of such Lender's Rateable Portion of all
Loans under the Credit Facility would exceed its Lender's Commitment at such time; or (ii) the aggregate principal amount of all Loans under the Credit Facility would exceed the Aggregate
Commitment at such time. 

2.1.4    The
Credit Facility is to be used for general corporate purposes of the Borrower and its Subsidiaries, including for purposes of financing Permitted Acquisitions, Capital
Expenditures and working capital needs. 

2.1.5    At
no time shall the aggregate amount of all Loans outstanding under the Credit Facility exceed the Aggregate Commitment. 

2.2   Revolving Nature of Operating Facility  

        The Borrower may, until the Termination Date, increase or decrease the Obligations under the Credit Facility by making drawdowns, repayments and further drawdowns
up to the Aggregate Commitment from time to time. The Aggregate Commitment and each of the Lender's Commitments shall be reduced to nil on the Termination Date, and the Borrower shall repay to the
Agent for the account of the Lenders on the Termination Date all amounts then outstanding under the Credit Facility. 

2.3   Repayment under Credit Facility  

2.3.1    The
Borrower may from time to time (without premium or penalty) on any Banking Day repay to the Agent for the account of the Lenders, Loans or portions thereof under the Credit
Facility, provided that any such repayment (i) if Bank of Montreal is the only Lender hereunder (a) shall be in an amount of at least $100,000 and any greater amount shall be an integral
multiple of $10,000 and (b) shall be effected on the same Banking Day on which notice in writing is provided to the Agent if received prior to 12:00 noon (Chicago time) or on the next
succeeding Banking Day if not received by such time, in either case, such notice, once given, shall be irrevocable and binding upon the Borrower, or (ii) if Bank of Montreal is not the only
Lender hereunder, (x) shall be in an amount of at least $1,000,000 and any greater amount shall be an integral multiple of $100,000, and (y) shall only be effected on at least three
Banking Days' notice in writing to the Agent which notice, once given, shall be irrevocable and binding upon the Borrower, and (iii) any repayment of a Libor Loan other than on the Maturity
Date applicable thereto, pursuant to either clause (i) or (ii) of this section 2.3, shall be subject to the payment of the expenses payable pursuant to
section 3.8. Any repayments made under this section 2.3 shall not reduce any Lender's Commitment or the Aggregate Commitment. 

22

 

2.3.2    Subject
to section 2.3.3, all of the net cash proceeds from the direct or indirect sale of any assets and properties of the Borrower or its Subsidiaries other than Designated
Assets or Shared Assets (but including, for greater certainty, the Golden Gate Premises, the shares of Pacific Racing Association or MEC Land Holdings (California) Inc., the Santa Anita
Premises, and the shares of The Santa Anita Companies, Inc. or Los Angeles Turf Club, Incorporated), including any cash received in respect of non-cash proceeds (including any cash
payments received by way of deferred payment of principal pursuant to a note or instalment receivable or purchase price adjustment receivable or otherwise, but excluding any interest payments) but
only as and when received, in each case after giving effect to agents' commissions and sale related expenses (including, without limitation, agents' fees and expenses) up to the amount of all
Obligations then outstanding; provided such net cash proceeds exceed $100,000 shall be paid to the Agent for the account of the Lenders for application against such of the Obligations outstanding
under the Credit Facility as shall be reasonably determined by the Borrower. Subject to section 2.3.3, one half of the net cash proceeds from (i) the sale of the Shared Assets
(ii) insurance proceeds in excess of $1,000,000 to the extent such insurance proceeds are not used for repairs or reconstruction of damaged property as approved by the Agent, acting reasonably,
or (iii) any public offering or private placement of equity by the Borrower (other than to MI Developments Inc.) including any cash received in respect of non-cash proceeds
(including any cash payments received by way of deferred payment of principal pursuant to a note or instalment receivable or purchase price adjustment receivable or otherwise, but excluding any
interest payments) but only as and when received, in each case after giving effect to agents' or underwriters' commissions and offering related expenses (including, without limitation, agents' and
underwriters' fees and expenses, securities commission filing fees, stock exchange listing fees and fees and disbursements of counsel to the Borrower and its Subsidiaries and, if paid by the Borrower,
agents and underwriters), up to the amount of all Obligations then outstanding in excess of $25,000,000, shall be paid to the Agent for the account of the Lenders for application against such of the
Obligations outstanding under the Credit Facility as shall be reasonably determined by the Borrower. Each of the transactions referred to in this section 2.3.2 is hereinafter referred to as a
"Take Out Transaction". The net cash proceeds from any Take Out Transaction shall not be applied to any L/C Loans or, at the Borrower's option, Libor Loans, until the Maturity Date applicable thereto
and, until such application, the proceeds allocated for such purpose shall be held by the Agent for the account of the Lenders and invested on behalf of the Borrower in an interest-bearing investment
(or investments) as security for the repayment of future indebtedness of the Borrower under such L/C Loan or Libor Loan, with interest earned thereon, if any, to be paid to the Borrower on
repayment of such Loans. The amount of such application so made in respect of each Take Out Transaction shall be permanent and irrevocable and each Lender's Commitment shall be reduced rateably. 

2.3.3    On
any Banking Day which is at least 25 days prior to the closing of any Take Out Transaction, the Borrower may in writing request the consent of the Lenders for it to retain
all or part of such proceeds in lieu of remitting such proceeds to the Agent for the account of the Lenders otherwise required pursuant to section 2.3.2. The decision of each Lender in this
regard shall be made in its sole discretion. The Agent shall forthwith provide a copy of such request to each Lender. Each Lender shall notify the Agent as to whether it consents to such request
within 15 days of receipt thereof. If any Lender does not provide such notice within such time, such Lender shall be deemed to have not consented to such request. On the earlier of
(i) the Banking Day next following the date on which the Agent is in receipt of notices from all Lenders; and (ii) the second Banking Day following the last day for receipt by the Agent
of such notices, the Agent shall give written notice to the Borrower and each of the Lenders, with respect to each Lender, whether such Lender has consented to the request. If all the Lenders consent
to any such request, the proceeds from the Take Out Transaction in respect of which such request was made shall be retained by the Borrower and not remitted to the Agent for the account of the
Lenders. If any Lender (for purposes of this section 2.3.3, each a "Non-Consenting Lender") does not so consent (or is deemed to not so consent), the Borrower may
elect to have one or more substitute Lenders (arranged by the Borrower at its expense) assume the Lender's Commitment of such Non-Consenting Lender pursuant to section 12.9.4 (other
than clause (a) thereof). Such assignment shall be made without recourse to, warranty by (except as to title) or expense to the assigning Lender except with respect to past acts of such
Lender. If the full amount of the Lender's Commitment of the Non-Consenting Lender is not so assumed, the Borrower shall pay to the Agent such Non-Consenting Lender's remaining
Rateable Portion of the Borrower's net cash proceeds referred to in section 2.3.2 for the account of the Non-Consenting Lender, for application against the unassumed portion
of the Non-Consenting Lender's Rateable Portion of the Loans outstanding under the Credit Facility; provided, however, such payment shall not be applied to any L/C Loans or, at the
Borrower's option, Libor Loans, until the Maturity Date applicable thereto and, until such application, the proceeds allocated for such purpose shall be held by the Agent for the account of the
Lenders and invested on behalf of the Borrower in an interest-bearing investment (or investments) as security for the repayment of future indebtedness of the Borrower under such L/C Loan or
Libor Loan, with interest earned thereon, if any, to be paid to the Borrower on repayment of such Loans. The amount of such application so made in respect of each Take Out Transaction shall be
permanent and irrevocable and upon all such Loans outstanding having been prepaid in accordance with the foregoing, the Lender's Commitment of such Non-Consenting Lender which has not been
assigned pursuant to section 12.9.4 shall be cancelled and reduced by the amount of the principal prepayment hereunder (or commitment reduction). 

23

 

2.4   Voluntary Reduction in Aggregate Commitment  

        The Borrower shall have the right at any time and from time to time, by giving at least two Banking Days' notice to the Agent which notice, once given, shall be
irrevocable and binding upon the Borrower, to reduce the then applicable Aggregate Commitment to a lower amount which is not less than the principal amount of all Obligations then outstanding under
the Credit Facility. Such notice shall specify the amount of the reduction, which shall be in an integral multiple of $1,000,000. The amount of any such reduction so made by the Borrower shall be
permanent and irrevocable and each Lender's Commitment shall be reduced rateably. 

2.5   Extension of Credit Facility  

        On any Banking Day which is at least 60 days prior to the Termination Date, the Borrower may request that the Termination Date be extended to the date
which is 364 days after the date on which its extension request delivered hereunder is accepted by the Lenders pursuant to this section 2.5. The decision of each Lender in this regard
shall be made in its sole discretion. The Agent shall forthwith provide a copy of such extension request to each Lender. Each Lender shall notify the Agent as to whether it consents to the extension
request within 30 days of receipt of such copy from the Agent. If any Lender does not provide such notice within such time, such Lender shall be deemed to have refused such extension. On the
earlier of: (i) the Banking Day next following the date on which the Agent is in receipt of notices from all Lenders; and (ii) the second Banking Day following the last day for receipt
by the Agent of such notices, the Agent shall give written notice to the Borrower and to each of the Lenders advising, with respect to each Lender, whether such Lender has consented to the extension.
If all of the Lenders consent to any such request, the Termination Date shall be extended to the date which is 364 days thereafter. If any Lender (for purposes of this
section 2.5, each a "Non-Consenting Lender") elects not to so extend the Termination Date (or is deemed to not so elect), the Borrower may elect to have one or more
substitute Lenders (arranged by the Borrower at its expense and which, for greater certainty, may include a Lender) assume the Lender's Commitment of such Non-Consenting Lender pursuant to
section 12.9.4 (other than clause (a) thereof). Such assignment shall be made without recourse to, warranty by (except as to title) or expense to the assigning Lender except with
respect to past acts of such Lender. If the full amount of the Lender's Commitment of the Non-Consenting Lender is not so assumed, the Borrower may elect to prepay the
Non-Consenting Lender's Rateable Portion of the Loans outstanding under the Credit Facility on, in respect of any (a) Base Rate Loan, any day; (b) Libor Loans, the applicable
Interest Period end dates or such other date provided the Borrower pays all amounts payable in connection with such prepayment pursuant to section 3.8; and (c) L/C Loans, the
applicable Maturity Dates. Upon all such Loans outstanding having been prepaid in accordance with the foregoing, the Lender's Commitment of such Non-Consenting Lender shall be cancelled
and reduced to zero. If (x) the Termination Date has been extended pursuant hereto, and (y) there remains any Non-Consenting Lender whose Lender's Commitment has not been
assumed or whose Rateable Portion of the Loans outstanding under the Credit Facility have not been prepaid, the Lender's Commitment of such Non-Consenting Lender shall be cancelled and
reduced to zero on the old Termination Date and such Non-Consenting Lender's Rateable Portion of the Loans outstanding under the Credit Facility, together with accrued interest, shall be
repaid in full, in each case, on the old Termination Date. 

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2.6   Increase in Aggregate Commitment  

        On any Banking Day which is at least 60 days prior to the Termination Date, the Borrower may request that the Aggregate Commitment be increased in an
amount of at least $10,000,000 and any greater amount shall be an integral multiple of $1,000,000. The decision of each Lender in this regard shall be made in its sole discretion. The Agent shall
forthwith provide a copy of such increase request to each Lender. Each Lender shall notify the Agent as to whether it consents to the increase request within 15 days of receipt of a copy from
the Agent, the amount of such increase such consenting Lender agrees to underwrite (up to its Rateable Portion) and, if such Lender is willing to underwrite an amount in excess of its Rateable
Portion of the requested increase, the amount of such excess. If any Lender does not provide such notice within such time, such Lender shall be deemed to have refused such increase. On the earlier of:
(i) the Banking Day next following the date on which the Agent is in receipt of notices from all Lenders; and (ii) the second Banking Day following the last day for receipt by the Agent
of such notices, the Agent shall give written notice to the Borrower and to each of the Lenders advising, with respect to each Lender, whether such Lender has consented to the increase and the amount
of such increase such consenting Lender has agreed to underwrite. The Agent shall have the sole discretion to allocate to Lenders willing to underwrite more than their Rateable Portion of the
requested increase any amounts that other Lenders are not willing to underwrite. If all of the Lenders consent to increase the Aggregate Commitment by the amount requested, subject as hereinafter
provided, the Aggregate Commitment shall be increased by the amount set forth in the request in proportion to each Lender's Rateable Portion if all Lenders agree to the full amount of the requested
increase, or otherwise in such proportion as may be determined by the Agent in its sole discretion. Prior to any increase in the Aggregate Commitment becoming effective, the parties hereto shall enter
into an agreement amending the terms of this Agreement (and any agreement delivered pursuant hereto) to give effect to such increase and to incorporate such changes as the Lenders and Borrower
may agree. If the Borrower and all Lenders are unable to agree to such changes (each disagreeable Lender for purposes of this section 2.6, a "Non-Consenting Lender"), or if any
Lender (for purposes of this section 2.6, each also a "Non-Consenting Lender") does not consent (or is deemed to not so consent) to the full amount of the increase
request as aforesaid, the Borrower may elect to have one or more substitute Lenders (arranged by the Borrower at its expense and which, for greater certainty, may include a Lender) assume the Lender's
Commitment of such Non-Consenting Lender pursuant to section 12.9.4 (other than clause (a) thereof). Such assignment shall be made without recourse to, warranty by
(except as to title) or expense to the assigning Lender except with respect to past acts of such Lender. If the full amount of the Lender's Commitment of the Non-Consenting Lender is not
so assumed, the Borrower, at its option, shall either (a) withdraw its request for such increase and pay all the Agent's and Lenders' reasonable costs and expenses incurred to consider such
request, or (b) pay to the Agent for the account of the Non-Consenting Lender, in an amount equal to, and for application against, the unassumed portion of the
Non-Consenting Lender's Rateable Portion of the Loans outstanding under the Credit Facility; provided, however, such payment shall not be applied to any L/C Loans or, at the Borrower's
option, Libor Loans, until the Maturity Date applicable thereto and, until such application, the proceeds allocated for such purpose shall be held by the Agent for the account of the Lenders and
invested on behalf of the Borrower in an interest-bearing investment (or investments) as security for the repayment of future indebtedness of the Borrower under such L/C Loan or Libor Loan,
with interest earned thereon, if any, to be paid to the Borrower on repayment of such Loans. The amount of such prepayment so made shall be permanent and irrevocable and upon all such Loans
outstanding having been prepaid in accordance with the foregoing, the Lender's Commitment of such Non-Consenting Lender shall be cancelled and reduced to zero. The Borrower shall not be
entitled to make more than one request for an increase in the Aggregate Commitment in any Fiscal Quarter and any request made but withdrawn after the Agent provides the Lenders with a copy of the
request pursuant to clause (a) of this section 2.6 shall constitute a request for such purposes. 

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ARTICLE 3
  GENERAL PROVISIONS RELATING TO THE CREDIT FACILITY    
    

3.1   Advances  

3.1.1    Each
request by the Borrower for an Advance under the Credit Facility shall be made by the delivery of a duly completed and executed Borrowing Notice to the Agent at its Branch of
Account: 

3.1.1.1    in
the case of Advances by way of Base Rate Loans on any proposed Borrowing Date, (i) if Bank of Montreal is the only Lender hereunder and the amount of such Advance is
less than $1,000,000, not later than 10:00 a.m. (Chicago time) on such proposed Borrowing Date (provided, if the Borrowing Notice is not received by Bank of Montreal by such time, the Advance
will be made on the next succeeding Banking Day), or (ii) if the amount of such Advance is $1,000,000 or more, or if Bank of Montreal is not the only Lender hereunder, not later than
10:00 a.m. (Chicago time) on the first Banking Day prior to the proposed Borrowing Date; and 

3.1.1.2    in
the case of Advances by way of L/C Loans or Libor Loans, not later than 10:00 a.m. (Chicago time) on the third Banking Day prior to the proposed Borrowing Date. 

3.1.2    Any
notice in respect of a proposed Advance shall be irrevocable and binding on the Borrower. 

3.1.3    If
Bank of Montreal is the only Lender hereunder, all Advances (other than Advances by way of Letters of Credit) shall be in an amount of at least $100,000 and any greater amount
shall be an integral multiple of $10,000, otherwise such Advances shall be in an amount of at least $1,000,000 and any greater amount shall be an integral multiple of $100,000. 

3.2   Selection of Interest Periods  

        Notwithstanding any other provision hereof: 

3.2.1    the
Borrower may not select any Interest Period in respect of a Loan under the Credit Facility with a Maturity Date which is later than the Termination Date; and 

3.2.2    the
number of Interest Periods in effect at any time shall not exceed ten in the aggregate. 

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3.3   Rollover and Conversion  

3.3.1    Subject
to the terms and conditions of this Agreement and provided that no declaration has been made by the Agent under section 9.2, the Borrower may from time to time
request that a Loan or any portion thereof be rolled over or converted to another form of Loan in accordance with the provisions hereof. 

3.3.2    The
Borrower shall repay to the Agent for the account of the Lenders the full Libor Loan on the Maturity Date of the Interest Period applicable thereto, in accordance with the
provisions hereof governing repayment and prepayment,
unless such Loan shall be rolled over or converted to another form of Loan on such Maturity Date in accordance with the provisions hereof. 

3.3.3    Each
request by the Borrower for a Rollover or Conversion shall be made by the delivery of a duly completed and executed Borrowing Notice to the Agent at the Branch of Account, and
the provisions of section 3.1 shall apply to the Rollover or Conversion as if such Rollover or Conversion were an Advance, except that the Borrower shall not be required to make
(and shall not otherwise be deemed to have made, renewed or repeated) any representation or warranty in connection with any Rollover or Conversion. 

3.3.4    Each
Rollover or Conversion of a Libor Loan shall be made effective as of the Maturity Date of the Interest Period applicable thereto. 

3.3.5    If
the Borrower does not deliver a Borrowing Notice at or before the time required by section 3.1.1 and, in the case of a Libor Loan, fails to pay to the Agent for the
account of the Lenders the principal amount thereof on the Maturity Date of the relevant Interest Period, the Borrower shall be deemed to have requested a Conversion of such Loan to a Base Rate Loan,
and all of the provisions hereof applicable to Base Rate Loans shall apply thereto. 

3.3.6    A
Rollover or Conversion shall not constitute a repayment of the relevant Loan but shall result in a change in the basis of calculation of interest or fees (as the case may
be) for such Loan, in accordance with the provisions hereof. 

3.4   Payments Generally  

        All payments in respect of the Credit Facility (in respect of principal, interest, fees or otherwise) shall be made by the Borrower to the Agent no later
than 2:00 p.m. (Chicago time) on the due date thereof to the account specified therefor by the Agent at its Branch of Account or to such other accounts in the United States of America as
may be specified by the Agent to the Borrower from time to time. Any payments received after such time shall be considered for all purposes as having been made on the next following Banking Day unless
the Agent otherwise agrees in writing. All payments shall be made by way of immediately available funds. 

3.5   Disturbance of Libor Market  

        Notwithstanding any other provision hereof, if at any time prior to the commencement of an Interest Period in respect of any proposed Libor Loan, any Lender
determines in good faith (which determination shall be conclusive and binding), and provides a certificate to the Agent with respect to such determination, that with respect to such Libor Loan: 

3.5.1    Libor
will not adequately and fairly reflect the cost to such Lender of funding such Libor Loan for the relevant Interest Period, or 

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3.5.2    deposits
in U.S. dollars are not available to such Lender in the London interbank market in sufficient amounts in the ordinary course of business, or 

3.5.3    by
reason of circumstances affecting the London interbank market, adequate and fair means do not exist for ascertaining Libor for the relevant Interest Period; 

then
the Agent shall forthwith give notice of such determination to the Borrower and each of the other Lenders, and from and after the date of commencement of such Interest Period and for so long as
such conditions shall continue to exist, the Borrower shall not have the right to obtain such Libor Loan from such Lender, and the Borrowing Notice received by the Agent in respect of such Libor Loan
shall, in respect of the Rateable Portion of such Lender, be deemed to be a request of the Borrower for a Base Rate Loan under the Credit Facility. 

3.6   Change in Circumstances  

        If the introduction of or any change in any Applicable Law relating to any Lenders, or any change in the interpretation or application thereof by any Governmental
Body or compliance by any Lenders with any request or direction of any Governmental Body: 

3.6.1    subjects
such Lender to, or causes the withdrawal or termination of a previously granted exemption with respect to, any Taxes or changes the basis of taxation of payments due to
such Lender or increases any existing Taxes on payments of the Obligations (other than, in each case, Excluded Taxes); 

3.6.2    imposes,
modifies or deems applicable any incremental reserve, liquidity, cash margin, capital, special deposit, deposit insurance or assessment, or any other regulatory or similar
requirement against assets held by, or deposits in or for the account of, or loans by, or any other acquisition of funds for loans by, such Lender; 

3.6.3    imposes
any Taxes (other than Excluded Taxes) on reserves or deemed reserves in respect of the undrawn portion of such Lender's Rateable Portion of the Credit Facility; 

3.6.4    imposes
on such Lender or requires there to be maintained by such Lender any capital adequacy or additional capital requirement (including, without limitation, a requirement which
affects such Lender's allocation of capital resources to its obligations) in respect of such Lender's obligations hereunder or imposes any other condition or requirement with respect to the
maintenance by such Lender of a contingent liability with respect to any Letter of Credit issued by it hereunder; or 

3.6.5    imposes
on such Lender any other condition or requirement with respect to this Agreement or the Credit Facility (other than Excluded Taxes); 

and
such occurrence has the effect of: 

3.6.6    increasing
the cost to such Lender of agreeing to make or making, maintaining or funding the Credit Facility, any Advance, any Loan or any portion thereof; 

3.6.7    reducing
the amount of the Obligations; 

3.6.8    directly
or indirectly reducing the effective return to such Lender under this Agreement or on its overall capital as a result of entering into this Agreement or as a result of any
of the transactions or obligations contemplated by this Agreement (other than a reduction resulting from the imposition of an Excluded Tax, including, without limitation a higher rate of income tax or
capital tax being imposed on such Lender's overall income or assets); or 

28

 

3.6.9    causing
such Lender to make any payment or to forego any interest, fees or other return on or calculated by reference to any sum received or receivable by such Lender hereunder; 

then
such Lender shall, within 90 days of such Lender actually becoming aware of such increased cost, provide notice thereof to the Agent (with such notice being accompanied by a certificate of
the Lender stating that the Lender is entitled to claim an amount under this section 3.6 in accordance with the terms hereof, setting forth the amount necessary to compensate such Lender, a
detailed explanation of the circumstances giving rise to the request of compensation and a description of the methodology used by the Lender calculating such amounts), and the Agent shall in each case
forthwith advise the Borrower accordingly and provide a copy of such certificate to the Borrower, and the Borrower shall, within 30 days of receipt of such certificate from such Lender, pay to
the Agent for the account of such Lender additional amounts sufficient to fully compensate such Lender for the increased cost set out in such certificate whether as a lump sum(s) or as an
increase in the Applicable Margin, as appropriate; provided, however, that a Lender claiming additional amounts under this section 3.6 agrees to use reasonable efforts (consistent with its
legal and regulatory restrictions) to designate a different applicable lending office if the making of such a designation would avoid the need for, or materially reduce the amount of, such increased
cost that may thereafter accrue and would not, in the reasonable judgment of such Lender, be otherwise commercially disadvantageous to such Lender. If a Lender is not able to obviate its requirement
for compensation under this section 3.6 by designating a different applicable lending office, the Borrower may elect within such 30-day period to have one or more substitute Lenders
(arranged by the Borrower at its expense) assume, and the Lender shall promptly after receipt of notice of such election assign, its rights and obligations under this Agreement, the other Loan
Documents and the Subordination Agreements to such other Person chosen by the Borrower in accordance with section 12.9.4 (other than clause (a) thereof) and provided that all
principal, interest and other amounts owing hereunder are paid in full to such Lender, and all of the Lenders' costs and expenses are reimbursed for such assignment, if such assignment would allow the
Borrower, either at that time or in the reasonably foreseeable future, to avoid having to pay such amounts. Such assignment shall be made without recourse to, warranty by (except as to title) or
expense to the assigning Lender except with respect to past acts of such Lender. No claim for compensation may be made by a Lender under this section 3.6 unless such Lender is also claiming
such compensation from a majority of its most creditworthy customers with credit facilities and loans outstanding thereunder similar to the Credit Facility and Loans outstanding hereunder against whom
it is entitled to make such claim. The above-referenced certificate as to the amount of such increased cost, submitted to the Borrower by the Agent on behalf of such Lender, shall be  prima facie
evidence of the amount of compensation required to be paid hereunder by the Borrower to the Agent for the account of such Lender.
 

3.7   Illegality  

        If the introduction of or change to any present or future Applicable Law, or any change in the interpretation or application thereof by any Governmental Body,
shall make it unlawful for any Lender to make or maintain any Loan or any relevant portion thereof or to give effect to its obligations in respect of such Loan as contemplated hereby, such Lender may,
by notice to the Borrower and to the Agent, declare that its obligations hereunder in respect of such Loan shall be terminated, and thereupon, subject as hereinafter provided in this
section 3.7, the Borrower shall prepay to such Lender forthwith (or at the end of such period to which the Lender shall in its discretion have agreed) all of the Obligations to such
Lender in respect of such Loan including all amounts payable in connection with such prepayment pursuant to section 3.8. If there are any types of Loans hereunder that are not so affected, the
Borrower may by notice in writing to the Agent convert the Loans which are affected into one of the types of Loans that are not so affected. Any repayments made under this section 3.7 shall not
reduce any Lender's Commitment or Aggregate Commitment; provided,
however, at its option, the Borrower may permanently and irrevocably reduce or terminate (as the case may be) the Lender's Commitment of any such Lender on the giving of such notice (and, for
greater certainty, no other Lender shall be responsible therefor) and the Aggregate Commitment shall be reduced by the amount and at the time of any prepayment so made. 

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3.8   Indemnity  

3.8.1    The
Borrower shall indemnify each of the Agent and the Lenders and its officers, directors and employees (each, an "Indemnified Person") and shall hold each of them harmless from
and against any and all losses, liabilities, damages, claims and reasonable costs and out-of-pocket expenses (including reasonable legal fees on a solicitor and his own client
basis) (in each case, a "Claim") that may be incurred by or asserted as a result of a claim by any third party or awarded in favour of a third party against any of them, in each case, arising
out of, related to, or in connection with, or by reason of (a) the transactions contemplated hereby, (b) any Acquisition undertaken by the Borrower or any of its Subsidiaries, or
(c) any Environmental Law, including (i) the assertion of any Lien thereunder, (ii) the presence of any Hazardous Substance affecting any Real Property or any adjacent real
estate, or (iii) the Release by the Borrower or a Subsidiary of any Hazardous Substance into the environment. Notwithstanding the foregoing provisions of this section 3.8.1, the Borrower
shall not be obligated to indemnify an Indemnified Person under this section 3.8.1 for any Claim to the extent that such Claim is, or is attributable to: 

3.8.1.1    the
gross negligence, fraud, wilful misconduct or wilful illegal acts of any Indemnified Person; 

3.8.1.2    the
failure on the part of any Indemnified Person to perform any of its material covenants or obligations contained in any Loan Document to which it is a party, or a
representation or warranty made by any Indemnified Person under the Loan Documents to which it is a party or in any certificate or other document delivered by any Indemnified Person pursuant hereto or
in connection with any Loan Document being found to be false or incorrect in any material respect so as to make it materially misleading when made; 

3.8.1.3    a
Claim of any Lender against any defaulting Lender or any Claim of any Indemnified Person for expenses which such Indemnified Person is obligated to bear hereunder; 

3.8.1.4    a
Claim to the extent arising from the act of offering, selling, disposing or transferring by any Indemnified Person of all or part of its interest in the Loan Documents, other
than to the extent resulting from the Borrower compelling such transfer to a substitute Lender under sections 2.5 or 2.6; 

3.8.1.5    to
the extent resulting from the failure of the Agent to distribute, in accordance with the terms of any Loan Document, any amounts received and to be distributed by it
thereunder, to the extent the Borrower has satisfied all of its obligations in connection therewith; or 

3.8.1.6    a
Claim of the Agent arising from the act or process of syndicating or selling interests in respect of any of the Loans or Loan Documents, except to the extent such Claim arises
from any information provided or failed to be provided by the Borrower to any Indemnified Person. 

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3.8.2    In
addition to any other indemnity contained herein or in any other Loan Document, the Borrower shall indemnify each Lender for all losses, damages, liabilities and reasonable costs
and out-of-pocket expenses (including, without limitation, any such loss, damage, liability, reasonable cost or out-of-pocket expense sustained by such
Lender in connection with the liquidation or re-employment in whole or in part of deposits or funds borrowed or acquired by it to make its Rateable Portion of any Libor Loan), which such
Lender may sustain or incur: (i) if for any reason a utilization does not occur on a date specified therefor in any Borrowing Notice; (ii) if the Borrower fails to give any notice
required to be given by it hereunder, in the manner and at the time specified herein; (iii) if for any reason any payment of any Libor Loan, or any portion thereof, occurs on a date which is
not a Maturity Date in respect thereof; or (iv) as a consequence of any other default by the Borrower to repay any Obligations when required by the terms of this Agreement; provided that each
Lender shall use its commercially reasonable efforts to mitigate its loss, damage, liability, cost and expense attributable to such events and the Borrower's obligation to make payments hereunder will
be reduced by the amount earned by each Lender in mitigating its loss, damage, liability, cost or expense. A certificate of the relevant Lender setting forth the amounts necessary to indemnify such
Lender in respect of such losses, damages, liabilities, reasonable costs or out-of-pocket expenses shall be prima facie evidence
of the amounts owing under this section 3.8.2. 

3.8.3    The
Borrower's obligations and indemnification under this section 3.8 shall survive the payment and satisfaction of all Obligations and the termination of this Agreement. The
Agent and the Lenders shall hold the benefit of this indemnity in trust for those indemnified parties who are not parties to this Agreement. 

3.9   Proceedings in Respect of Claims  

3.9.1    If
a Claim is made against an Indemnified Person as to which the Borrower may have an indemnification obligation under section 3.8.1, such Indemnified Person shall notify the
Borrower of the Claim; provided that the failure to provide such notice promptly shall not release the Borrower from any of its obligations to indemnify unless (and only to the extent) such
failure shall prevent the Borrower from contesting, or materially and adversely affects the ability of the Borrower to conduct a contest of, such Claim. 

3.9.2    The
Indemnified Person shall be entitled, in its discretion, to require the Borrower to prosecute, at the Borrower's own cost and expense, the entire defence of such Indemnified
Person against any Claim by a third party for which such Indemnified Person is indemnified under section 3.8.1. In addition, upon delivery by the Borrower to such Indemnified Person of a
written acknowledgement of the Borrower's obligations to indemnify such Indemnified Person in accordance with the terms of this Agreement in respect of such Claim, the Borrower shall be entitled, at
its own expense, to participate in, and, to the extent that the Borrower desires, to assume and control the defence thereof through its own counsel (who shall be subject to the reasonable
approval of the Indemnified Person); provided, however, that if the Borrower is controlling any proceedings, the Borrower shall keep such Indemnified Person fully apprised of the status of such
proceedings and shall provide such Indemnified Person with all information with respect to such proceedings as such Indemnified Person shall reasonably request. The Borrower must indicate its election
to assume such defence by written notice to the Indemnified Person within 30 days following receipt of Indemnified Person's notice of the Claim, or in the case of a third party Claim which
requires a shorter time for response then within such shorter period as specified in the Indemnified Person's notice of Claim, provided that such Indemnified Person has given the Borrower notice
thereof. The Indemnified Person may participate at its own expense and with its own counsel (provided that all Indemnified Parties shall use the same counsel) in any proceeding conducted by the
Borrower in accordance with the foregoing; provided the Borrower shall in any event remain liable hereunder in respect of the Claim. The Borrower shall not be entitled to assume and control
(but may, at its own expense, participate in) the defence of any such Claim if and to the extent that: 

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3.9.2.1    in
the reasonable opinion of such Indemnified Person acting in good faith, 

3.9.2.1.1    such
proceeding involves any risk of imposition of criminal liability on such Indemnified Person; or 

3.9.2.1.2    such
proceeding involves any risk of impairment to the reputation of the Indemnified Person in any material respect; or 

3.9.2.1.3    the
control of such action, suit or proceeding would involve an actual or potential conflict of interest, such that it is advisable for such Indemnified Person to be represented
by separate counsel; or 

3.9.2.2    such
proceeding involves Claims not fully indemnified by the Borrower which the Borrower and the Indemnified Person have been unable to sever from the indemnified Claim(s). 

Notwithstanding
the first paragraph of this section 3.9.2, in any of the circumstances set out in sections 3.9.2.1 or 3.9.2.2, the Indemnified Person shall be entitled to assume
the defence of such Claim with counsel selected by it (provided that all Indemnified Parties shall use the same counsel) and the reasonable fees and out-of-pocket expenses of
such counsel shall be borne by the Borrower; provided, that the Borrower shall in any event remain liable hereunder in respect of the indemnified Claim. 

3.9.3    Except
in the circumstances described in section 3.9.2.1.3, the Borrower may enter into any settlement or other compromise with respect to any Claim in respect of which it
has an indemnity payment obligation under section 3.8.1 without the prior written consent of the Indemnified Person, except in the case of a settlement involving an admission of liability of
such Indemnified Person, in which case the prior written consent of the Indemnified Person shall be obtained, provided that if such Indemnified Person withholds its consent to such settlement and the
required admission of liability of such Indemnified Person is not in favour of a Governmental Body other than a court, would not give rise to the imposition of any penalty or sanction against the
Indemnified Person by any Governmental Body, is not in respect of any criminal liability and would not otherwise impair the reputation of the Indemnified Person in any material respect, the maximum
amount of liability of the Borrower to the Indemnified Person with respect to such Claim shall not exceed the amount of the proposed settlement rejected by such Indemnified Person. Unless an Event of
Default shall have occurred and be continuing, no Indemnified Person shall enter into any settlement or other compromise with respect to any Claim for which the Borrower has in writing agreed to fully
indemnify under section 3.8.1 without the prior written consent of the Borrower, which consent may be withheld in the Borrower's sole discretion, unless such Indemnified Person waives its right
to be indemnified under section 3.8.1, with respect to such Claim. 

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3.9.4    Each
Indemnified Person shall supply the Borrower with such information and documents reasonably requested by the Borrower as are necessary or advisable for the Borrower to
participate in any action, suit or proceeding to the extent permitted above, and the Borrower shall reimburse the Indemnified Person for the reasonable costs and out-of-pocket
expenses of supplying such information and documents, all within a reasonable period of time following the Borrower's request therefor. 

3.9.5    Upon
payment in full of any Claim pursuant to section 3.8.1 to or on behalf of an Indemnified Person, the Borrower, without any further action, shall be subrogated to
any and all claims that such Indemnified Person may have relating thereto (other than claims in respect of insurance policies maintained by such Indemnified Person at its own expense). Each
Indemnified Person agrees, at the Borrower's reasonable request and expense, to give such further assurances or agreements and to otherwise cooperate with the Borrower to enable the Borrower to
vigorously pursue such claims. 

3.9.6    Any
amount payable to an Indemnified Person pursuant to section 3.8 shall be paid to such Indemnified Person within 30 days of the receipt (or deemed receipt)
by the Borrower of a written request therefor from such Indemnified Person, accompanied by a written statement describing in reasonable detail the basis for such indemnity and the computation of the
amount so payable; provided that payment of an indemnity in respect of a third party Claim need not be made until payment is due, whether by compromise, settlement, court proceedings, arbitration or
otherwise, from the Indemnified Person in respect of such third party Claim. 

3.10    Evidence of Indebtedness  

        The Agent shall maintain and keep, at its Branch of Account, accounts showing the amount of all Loans advanced by each of the Lenders, from time to time and the
dates thereof and the interest, fees and other charges accrued thereon or applicable thereto from time to time, and all payments of principal (including prepayments), interest and fees and other
payments made by the Borrower to the Agent from time to time under the Credit Facility. Such accounts maintained by the Agent on behalf of itself and each of the Lenders shall be  prima facie evidence of
the matters recorded therein. 

3.11    Several Obligations  

        The obligations of each Lender under this Agreement are several. No Lender shall be responsible for any failure or alleged failure on the part of any other Lender
to duly perform its obligations under the terms of this Agreement or any
Loan Document, nor shall the obligations of the Borrower to any Lender be diminished or affected by any failure or alleged failure on the part of any other Lender to duly perform its obligations under
the terms of this Agreement or any Loan Document. 

 
 

ARTICLE 4
  LETTERS OF CREDIT    
    

4.1    Procedures Relating to Letters of Credit  

4.1.1    Each
Letter of Credit shall be issued by the L/C Lender in its name as an L/C Loan. 

4.1.2    The
Borrower may not request the issuance of any Letter of Credit having a term which would extend beyond the Termination Date; provided that the L/C Lender may, with the consent of
all Lenders in their sole discretion, issue Letters of Credit having a term which would extend beyond the Termination Date. 

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4.1.3    At
no time shall the aggregate amount of all Letters of Credit outstanding under the Credit Facility exceed the L/C Limit. 

4.2    Reimbursement  

4.2.1    The
Borrower unconditionally and irrevocably authorizes the L/C Lender to pay the amount of any demand made on the L/C Lender under and in accordance with the terms of any Letter of
Credit on request without requiring proof of the Borrower's agreement that the amount so demanded was due and notwithstanding that the Borrower may dispute the validity of any such demand or payment. 

4.2.2    The
Borrower shall reimburse the L/C Lender on request for any amounts paid by it from time to time as contemplated by section 4.2.1 and, without limiting the foregoing, the
Borrower shall indemnify and save the L/C Lender harmless on demand from and against any and all other losses (including lost profits), costs, damages, expenses, claims, demands or liabilities which
it may suffer or incur arising in any manner whatsoever in connection with the making of any such payments as contemplated by section 4.2.1 (including, without limitation, in connection with
proceedings to restrain the L/C Lender from making, or to compel the L/C Lender to make, any such payment). 

4.3    L/C Lender Not Liable  

4.3.1    The
L/C Lender shall not have any responsibility or liability for, or duty to inquire into, the authorization, execution, signature, endorsement, correctness, genuineness or legal
effect of any certificate or other document presented to the L/C Lender pursuant to any Letter of Credit other than to ensure that any request for payment under a Letter of Credit is in compliance
with the terms thereof and the Borrower fully and unconditionally assumes all risks with respect to the same and, without limiting the generality of the foregoing, all risks of the acts or omissions
of any beneficiary of any Letter of Credit with respect to the use by any beneficiary of any Letter of Credit provided the L/C Lender complied with the terms of such Letter of Credit. The L/C Lender
shall not be responsible: 

4.3.1.1    for
the validity of certificates or other documents delivered under or in connection with any Letter of Credit that appear on their face to be in order, even if such certificates
or other documents should in fact prove to be invalid, fraudulent or forged provided the L/C Lender complied with the terms of such Letter of Credit; 

4.3.1.2    for
errors, omissions, interruptions or delays in transmission or delivery of any messages by mail, cable, telegraph, telefax or otherwise, whether or not they are in code; 

4.3.1.3    for
errors in translation or for errors in interpretation of technical terms or for errors in the calculation of amounts demanded under any Letter of Credit; 

4.3.1.4    for
any failure or inability of the L/C Lender or any other Person to make payment under any Letter of Credit as a result of any Applicable Law or by reason of any control or
restriction rightfully or wrongfully exercised by any Person asserting or exercising governmental or paramount powers; or 

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4.3.1.5    for
any other consequences arising in respect of a failure by the L/C Lender to honour a Letter of Credit due to causes beyond the control of the L/C Lender; 

and
none of the above shall affect or impair any of the rights or powers of the Lenders hereunder or the obligations of the Borrower under section 4.2.2. In furtherance and not in limitation of
the foregoing provisions, it is agreed that any payment made by the L/C Lender in good faith under and in accordance with the terms of a Letter of Credit shall be binding upon the Borrower and shall
not result in any liability of the Agent or any of the Lenders to the Borrower and shall not lessen the obligations of the Borrower under section 4.2.2. 

4.3.2    Notwithstanding
the provisions of this section 4.3, the Borrower shall not be responsible for, and the L/C Lender shall not be relieved of responsibility for, any wilful
misconduct, gross negligence, fraud or illegal acts of the L/C Lender or the failure of the L/C Lender to comply with the terms of a Letter of Credit. 

4.4    Letter of Credit Fees  

        The Borrower shall pay the Letter of Credit Fee to the L/C Lender in advance in quarterly instalments (except that the first such instalment shall be in respect
of the period from the date the Letter of Credit is issued to the last day of the then current Fiscal Quarter) for the period from and including the date of issuance of the Letter of Credit to and
including the stated expiry date thereof, on an amount equal to the stated amount of the Letter of Credit, with the first such payment due and payable on the date of issuance of the applicable Letter
of Credit. Upon a change to the Letter of Credit Fee for any Fiscal Quarter, occurring as a result of an adjustment to the Applicable Margin for Libor Loans for such Fiscal Quarter or as a result of
changes to the Second Amended and Restated Credit Agreement provided for in this Agreement, the Letter of Credit Fee shall be retroactively adjusted to the first day of the then current Fiscal Quarter
(or, in the case of the first instalment in respect of the applicable Letter of Credit Fee, to the date of issuance of the Letter of Credit) or the date of this Agreement, as the case may be.
Where there has been an adjustment to the Applicable Margin for Libor Loans, then on the date on which the next instalment in respect of the Letter of Credit Fee is due and payable or if no such fee
is payable, within 10 Banking Days of the receipt of notice from one party to the other requesting payment, or refund of an overpayment, of a Letter of Credit Fee: (i) the L/C Lender
shall pay to the Borrower an amount equal to any overpayment by the Borrower in respect of the Letter of Credit Fee for the then current Fiscal Quarter; or (ii) the Borrower shall pay to the
L/C Lender an amount equal to any underpayment by the Borrower in respect of the Letter of Credit Fee for the then current Fiscal Quarter, as the case may be. If the Letter of Credit is drawn, in
whole or in part, is withdrawn or otherwise ceases to have effect (other than due to an Event of Default) prior to its stated expiry date, the L/C Lender shall reimburse the Borrower for any overpaid
Letter of Credit Fee within 30 days of such occurrence. If an Event of Default has occurred and is continuing at the time of such early expiry, the amount of such overpaid Letter of Credit Fee
shall be paid by the L/C Lender to the Agent to be applied thereby in accordance with section 9.3. 

4.5    Overdue Amounts  

        Without limiting any other provision of this Agreement, if the Borrower shall fail to reimburse the L/C Lender in respect of any payments made by the L/C Lender
under a Letter of Credit as contemplated in section 4.2.2, the L/C Lender may at any time thereafter notify the Agent (which shall thereupon deliver a similar notice to each of the Lenders
which has a Lender's Commitment) of such failure and such notification shall be deemed to have been delivery of a Borrowing Notice in the amount of such payments on and subject to the terms hereof.
Each Lender that has a Lender's Commitment shall forthwith credit the account of the L/C Lender with such Lender's Rateable Portion of such payments, the amount of such payments shall be deemed to
constitute a Base Rate Loan made by the Lenders under the Credit Facility and which is outstanding, and, without limiting the terms and conditions applicable to such Base Rate Loan, shall be due and
payable when a Base Rate Loan is due and payable in accordance with the provisions hereof. 

35

 

4.6    Acceleration  

        Upon the Agent making a declaration under section 9.2, the maximum amount of the contingent liability of the L/C Lender under any Letter of Credit which is
then outstanding shall immediately become due and payable notwithstanding that the L/C Lender has not at such date been required to make payment under any such Letter of Credit. Any such amount
deposited with the L/C Lender shall be held by the L/C Lender and invested on behalf of the Borrower in an interest-bearing investment (or investments) as security for the repayment of future
indebtedness of the Borrower to the L/C Lender in respect of Letters of Credit which are drawn down pending the expiry of all outstanding Letters of Credit. 

4.7    Conflict

        Each
Letter of Credit shall be subject to the L/C Lender's customary letter of credit terms and procedures from time to time in effect and shall be in a form acceptable to the L/C
Lender. The Borrower shall execute and deliver such standard form applications, agreements, indemnities, bonds and other assurances as the L/C Lender may reasonably require from time to time with
respect to Letters of Credit (each, a "Letter of Credit Agreement"). A Letter of Credit shall in no event contain provisions requiring the L/C Lender to satisfy itself, prior to payment thereunder, as
to any conditions for a drawing thereunder other than the presentation of prescribed documents. If the provisions set forth in the L/C Lender's customary letter of credit documentation set forth terms
beyond or inconsistent with that set forth herein, the provisions of this Agreement in respect thereof shall prevail. Notwithstanding the foregoing, if there is any inconsistency between the terms of
a Letter of Credit Agreement, this Agreement and the Uniform Customs and Practice for Documentary Credits as most recently published by the International Chamber of Commerce (the "UCP") or The
International Standby Practices as most recently approved by the International Chamber of Commerce Banking Commission (the "ISP"), then the terms of the UCP or ISP, as applicable, shall prevail
to the extent of the inconsistency. 

 
 

ARTICLE 5
  INTEREST AND FEES    
    

5.1    Interest Rates  

5.1.1    Base
Rate Loans shall bear interest at the Base Rate plus the Applicable Margin. 

5.1.2    Libor
Loans shall bear interest at Libor plus the Applicable Margin. 

5.2    Calculation and Payment of Interest  

5.2.1    Interest
on Base Rate Loans shall accrue from day to day, both before and after default, demand, maturity and judgment, shall be calculated on the basis of the actual number of days
elapsed and on the basis of a year of 365 or 366 days, as the case may be, and shall be payable to the Agent for the account of the Lenders in U.S. dollars in arrears on the first
Banking Day of each month. For greater certainty, where the rate applicable to a Base Rate Loan is changed, interest shall be charged for the day on which such change is effective on the basis of the
new rate. 

36

 

5.2.2    Interest
on Libor Loans shall accrue from day to day, both before and after default, demand, maturity and judgment, shall be calculated on the basis of the actual number of days
elapsed and on the basis of a year of 360 days, and shall be payable to the Agent for the account of the Lenders in U.S. dollars in arrears on the last day of the relevant Interest
Period. 

5.3    Stand-by Fee  

        The Borrower shall pay to the Agent for the account of the Lenders on the third Banking Day following the end of each Fiscal Quarter, in arrears, a
stand-by fee on the amount, if any, by which the Aggregate Commitment exceeds the amount of the Loans outstanding under the Credit Facility on each day in such Fiscal Quarter equal to
0.75% per annum (based on a year of 365 or 366 days, as the case may be). 

5.4    Payment of Costs and Expenses  

        Whether or not the Borrower takes advantage of the Credit Facility, the Borrower shall pay to the Agent, for itself and, if applicable, each of the Lenders, on
demand the following costs and expenses: 

5.4.1    all
reasonable costs and out-of-pocket expenses of the Agent in connection with the preparation, negotiation and execution of the Loan Documents, the Wells
Fargo Consent and the Subordination Agreements, any actual or proposed amendment or modification hereof or thereof or any waiver hereunder or thereunder and all instruments supplemental or ancillary
thereto and all reasonable documented due diligence expenses incurred in connection therewith; 

5.4.2    all
reasonable costs and expenses of the Agent in connection with obtaining advice as to the rights and responsibilities of the Agent and any of the Lenders under the Loan Documents
and the Subordination Agreements; and 

5.4.3    all
reasonable costs and expenses of the Agent and Lenders in connection with the defence, establishment, protection or enforcement of any of the rights or remedies of the Agent or
any of the Lenders under the Loan Documents or the Subordination Agreements including, without limitation, all costs and expenses of establishing the validity and enforceability of, or of collection
of amounts owing under, any of the Loan Documents or the Subordination Agreements and all reasonable costs and expenses of any receiver or receiver-manager appointed by the Agent or any of the Lenders
or by a court in connection with the enforcement of the Loan Documents or the Subordination Agreements; 

including,
without limitation, all of the reasonable fees and disbursements of counsel to the Agent, the Lenders and any such receiver or receiver-manager, on a solicitor and his own client basis,
incurred in connection therewith, including all sales, goods and services or value-added taxes payable by any of them on all such costs, expenses and compensation. 

5.5    Interest on Overdue Amounts  

        If any Obligations are not paid when due or an Event of Default has occurred and is continuing, all amounts owing or deemed to be owing hereunder, whether in
respect of principal, interest, fees, expenses or otherwise, both before and after judgment, and in the case of expenses from the dates such expenses are invoiced to the Borrower, shall bear interest
at a rate per annum determined on a daily basis that is equal to the Base Rate plus (in each case) 2.5% per annum, in each case calculated on the basis of the actual number of days elapsed and
on the basis of a year of 365 or 366 days, as the case may be. Such interest shall accrue from day to day, be payable in arrears on demand and shall be compounded monthly on the last
Banking Day of each calendar month. For the purpose of this section, "Banking Day" shall have the meaning given to such term in clause (i) of section 1.1.11. 

37

 
 
 

ARTICLE 6
  REPRESENTATIONS AND WARRANTIES    
    

6.1    Representations and Warranties  

        The Borrower represents and warrants to the Agent on behalf of the Lenders as follows: 

6.1.1    Incorporation and Status.    Each of the Borrower and the Material Subsidiaries is duly incorporated, formed or organized,
as the case may be, and validly existing under the laws of its jurisdiction of incorporation, formation or organization, as the case may be, and has the power and capacity to own its properties and
assets and to carry on its business as presently carried on by it or as contemplated hereunder to be carried on by it. As of May 1, 2002, the Borrower did not carry on any material business
other than its ownership of the Subsidiaries and the other investments set out in section 6.1.27. As of May 1, 2002, none of the Material Subsidiaries carried on any business other than
the Core Line of Business and other than the ownership or operation of casinos, hotels, resorts, card clubs, sports bars, restaurants and theatres, all of which activities are associated with or
ancillary or related to the Core Line of Business, and the ownership and management of a portfolio of real estate properties held for development or sale. As of May 1, 2002, the Borrower and
each Material Subsidiary held all Material Authorizations, all of which were in good standing on such date; 

6.1.2    Power and Capacity.    Each of the Borrower and the Guarantors has the power and capacity to enter into each of the Loan
Documents and Subordination Agreements to which it is a party, and to do all acts and things as are required or contemplated hereunder or thereunder to be done, observed and performed by it; 

6.1.3    Due Authorization.    Each of the Borrower and the Guarantors has taken all necessary action to authorize the execution,
delivery and performance of each of the Loan Documents and Subordination Agreements to which it is a party; 

6.1.4    Registration Statements.    At May 1, 2002, the Registration Statement and, as of its date, the 2003 Registration
Statement complied in all material respects with the applicable provisions of the Securities Acts and did not contain an untrue statement of a material fact and did not omit to state any material fact
required to be stated therein or necessary in order to make the statements therein not misleading in light of the circumstances under which they were made; 

6.1.5    No Unanimous Shareholder Agreement.    There is no unanimous shareholder agreement with respect to any Material Subsidiary
that is not directly or indirectly wholly-owned by the Borrower which restricts, in whole or in part, the powers of the directors of the Material Subsidiary to manage or supervise the business and
affairs of the Material Subsidiary; 

6.1.6    No Contravention.    The execution and delivery of each of the Loan Documents, the Wells Fargo Consent and the
Subordination Agreements, and the performance by each of the Borrower and the Guarantors of its obligations thereunder (i) do not and will not contravene, breach or result in any default under
(a) the articles, by-laws, constating documents or other organizational documents of the Borrower or any Guarantor, (b) any Material Authorization or Applicable Law, or
(c) any material mortgage, lease, agreement or other legally binding instrument to which the Borrower or a Material Subsidiary was, as of May 1, 2002, a party or by which the Borrower or
Material Subsidiary or any of its properties or assets were bound as of such date, (ii) will not oblige the Borrower or any Material Subsidiary to grant any Lien to any Person other than the
Lenders, and (iii) will not result in or permit the acceleration of the maturity of any material indebtedness, liability or obligation of the Borrower or any Material Subsidiary under any
mortgage, lease, agreement or other legally binding instrument of or affecting the Borrower or any Material Subsidiary; 

38

 

6.1.7    No Consents Required.    Other than filings with the Securities Commission and the Wells Fargo Consent, no Material
Authorization is required in connection with (i) the execution, delivery or performance of any of the Loan Documents, the Wells Fargo Consent or the Subordination Agreements by the Borrower or
any Guarantor; (ii) the creation of the Security in favour of the Agent pursuant to the Golden Gate Mortgage and the Santa Anita Mortgage, and (iii) the perfection of such Security; 

6.1.8    Enforceability.    Each of the Loan Documents constitutes, or upon execution and delivery will constitute, a valid and
binding obligation of the Borrower and each Guarantor which is a party to it enforceable against it in accordance with its terms, subject only to the qualifications set out in the opinion of
Borrower's counsel delivered pursuant to section 8.1.4.5; 

6.1.9    Title.    Subject only to Permitted Encumbrances and except as otherwise disclosed in writing by the Borrower to the Agent,
the Borrower and (where applicable) each Material Subsidiary is the absolute beneficial owner of and has good and marketable title in fee simple to, or has a good and marketable leasehold interest to,
all of the real property including for greater certainty and without limitation the Golden Gate Premises and the Santa Anita Premises, in each case, necessary to permit the operation of its Core Line
of Business in the ordinary course where the failure to so own or lease such real property could reasonably be expected to have a Material Adverse Effect (collectively, the "Real Property"). As of
May 1, 2002, Schedule 6.1.9 of the Disclosure Letter contained an accurate and complete list of the municipal addresses of all Real Property owned or leased by the Borrower and each
Material Subsidiary. As of May 1, 2002, the Borrower and (where applicable) each Material Subsidiary was the beneficial owner, lessee or licensee, as the case may be, of all of its other real
and personal property and has good title thereto, or other applicable interest therein, free and clear of any Liens other than Permitted Encumbrances, in each case, necessary to permit the operation
of its Core Line of Business in the ordinary course where the failure to have any such interest in such property could reasonably be expected to have a Material Adverse Effect; 

6.1.10    Zoning and Other Matters Relating to Real Property.    All buildings and other structures located on the Real Property and
the operation and maintenance thereof, as operated and maintained on May 1, 2002, or, in respect of the Secured Properties, on October 10, 2003, were in compliance on May 1, 2002,
or, in respect of the Secured Properties, on October 10, 2003, in all material respects, with all Applicable Laws relating to zoning and land use; none of such buildings or other structures
encroaches upon any land not owned or leased by the Borrower or a Material Subsidiary; there are no restrictive covenants or Applicable Laws which in any way restrict or prohibit the use of such Real
Property, buildings or structures for the purposes for which they were being used on May 1, 2002; on May 1, 2002 there were no expropriation or similar proceedings, actual or threatened,
of which the Borrower or any Material Subsidiary has received notice against any of such Real Property or any part thereof, or, in respect of the Secured Properties, on October 10, 2003, in all
cases, where the existence and continuance of any such non-compliance, encroachment, restriction or proceeding could reasonably be expected to have a Material Adverse Effect; 

39

 

6.1.11    Financial Statements. 

6.1.11.1    The
Audited and Unaudited Financial Statements have been prepared in accordance with GAAP and present fairly the financial position and results of operations of the Borrower and
its Subsidiaries on a consolidated basis as of the dates indicated and for the periods specified; 

6.1.11.2    The
pro forma financial information, including the notes thereto, included in the Registration Statement were prepared in accordance with applicable requirements of the
Securities Acts. The assumptions used in preparing such pro forma financial statements provided, as at the date of such information, a reasonable basis for presenting the significant effects
directly attributable to the transactions or events described therein, the related pro forma adjustments give appropriate effect to those assumptions, and the pro forma columns therein
reflect a proper application of those adjustments to the corresponding historical financial statement amounts; 

6.1.12    Non-Arm's Length Transactions.    Except as described in the Registration Statement, or as set forth in
Schedule 6.1.12 of the Disclosure Letter or as disclosed in writing by the Borrower to the Agent, since the date of the last financial statements delivered to the Agent prior to May 1,
2002, neither the Borrower nor any of its Material Subsidiaries has entered into any transaction or agreement with any Affiliate which is not the Borrower or a Material Subsidiary; 

6.1.13    No Litigation.    Except as described in the Registration Statement, or as set forth in Schedule 6.1.13 of the
Disclosure Letter or as disclosed in writing by the Borrower to the Agent, there is no: court, administrative, regulatory or similar proceeding (whether civil, quasi-criminal, or criminal);
arbitration or other dispute settlement procedure; investigation or enquiry by any Governmental Body; or any similar matter or proceeding (collectively "proceedings") against or involving the Borrower
or any Material Subsidiary (whether in progress or threatened) which, if determined adversely to the Borrower or Material Subsidiary, could reasonably be expected to have a Material Adverse Effect or
which purports to affect the legality, validity and enforceability of any Loan Document; to the Borrower's knowledge, no such proceedings are threatened or contemplated by any Governmental Body or
other Person; and, to the Borrower's knowledge, no event has occurred which could reasonably be expected to give rise to any such proceedings and, as of May 1, 2002, there was no judgment,
decree, injunction, rule, award or order of any Governmental Body outstanding against the Borrower or any of its Material Subsidiaries which has had, or could reasonably be expected to have, a
Material Adverse Effect; 

6.1.14    No Default.    Except as described in the Registration Statement, as at May 1, 2002 neither the Borrower nor any
Material Subsidiary was in default or breach under any Applicable Law or under any material agreement, commitment or obligation or under the terms and conditions relating to any Material
Authorizations which could reasonably be expected to have a Material Adverse Effect and, except as disclosed in writing by the Borrower to the Agent, there exists no state of facts which, after notice
or the passage of time or both, would constitute such a default or breach; and, as of May 1, 2002, there were no proceedings in progress, pending or threatened which could reasonably be
expected to result in the revocation, cancellation, suspension or any adverse modification of any Material Authorization; 

40

  

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

        6.1.16    No Labour Disturbance.    Except as disclosed in the Registration Statement or as
disclosed in writing by the Borrower to the Agent, no labour disturbance by the employees of the Company or by any horse owners or trainers exists or, to the knowledge of the Company, is imminent, in
each case, that could reasonably be expected to have a Material Adverse Effect; 

        6.1.17    Taxes.    Except as would not reasonably be expected to have a Material Adverse
Effect, the Borrower and its Material Subsidiaries have accurately prepared and timely filed all federal, state, provincial and other tax returns that are required to be filed by them and have paid or
made provision for the payment of all Taxes except those Taxes that are being disputed in good faith by appropriate proceedings for which the Borrower or any Material Subsidiary has established on its
books reserves considered by it to be adequate therefor, and including, without limitation, all Taxes that the Borrower or any Material Subsidiary is obligated to withhold from amounts owing to
employees, creditors and third parties, with respect to the periods covered by such tax returns (whether or not such amounts are shown as due on any tax return). No deficiency assessment with respect
to a proposed adjustment of the Borrower's or any Material Subsidiary's federal, state, provincial or other Taxes is pending or, to the knowledge of the Borrower or any Material Subsidiary,
threatened. As of May 1, 2002, there was no tax Lien, whether imposed by any federal, state, provincial or other taxing authority, outstanding against the assets, properties or business of the
Borrower or any Material Subsidiary other than Permitted Encumbrances; 

        6.1.18    Material Subsidiaries.    Schedule 6.1.18 to this Agreement sets out
an accurate and complete list of the name and jurisdiction of incorporation of each Material Subsidiary of the Borrower as of July 22, 2005. As of July 22, 2005 except as disclosed in
writing by the Borrower to the Agent on or prior to July 22, 2005 no Person had any agreement, right or option to acquire any shares or securities convertible into or other rights to acquire,
shares in the capital stock of any Material Subsidiary. The Borrower had no Subsidiary on (other than Subsidiaries existing on July 22, 2005 whose registered and principal office is located
outside the United States of America) having (a) total assets with an aggregate net book value in excess of 10% of the aggregate net book value of the total assets of the Borrower
determined on a consolidated basis, including such Subsidiary (in each case, determined as of the last day of the most recent fiscal quarter of such Person), or (b) EBITDA in excess of
10% of EBITDA of the Borrower determined on a consolidated basis, including such Subsidiary (in each case, for the four consecutive Fiscal Quarters most recently ended), other than MEC Holdings
(USA) Inc., any Subsidiary that has provided a Guaranty or a Subsidiary that has become a Relevant Subsidiary within the previous 15 Banking Days; 

        6.1.19    Liens.    The Santa Anita Mortgage creates in favour of the Agent a valid and
perfected mortgage lien and security interest over the premises covered thereby (collectively, the "Santa Anita Premises"), subject only to the Santa Anita
Senior Security and Permitted Encumbrances; and the Golden Gate Mortgage creates in favour of the Agent a valid and perfected first mortgage lien over the premises covered thereby (collectively, the
"Golden Gate Premises"), subject to Permitted Encumbrances; 

41

 

        6.1.20    Environmental Laws.    Except for matters identified in the Environmental Reports,
the Registration Statement or in Schedule 6.1.19 of the Disclosure Letter, as of May 1, 2002 the operation of the business of the Borrower and the Material Subsidiaries was in compliance
in all material respects with all Environmental Laws and Environmental Orders. Further, as of May 1, 2002, there were no facts known by the Borrower which are likely to give rise to a notice of
non-compliance with any Environmental Laws or Environmental Orders in any material respect in respect of such business; 

        6.1.21    Environmental Permits.    Except for matters identified in the Environmental
Reports, the Registration Statement, as set forth in Schedule 6.1.19 of the Disclosure Letter or where the absence of an Environmental Permit would not have a Material Adverse Effect on the
Borrower, as of May 1, 2002 all Environmental Permits necessary or required for the operation of the Core Line of Business of the Borrower and the Material Subsidiaries had been obtained; 

        6.1.22    Hazardous Substances.    Except for matters identified in the Environmental Reports,
the Registration Statement or as set forth in Schedule 6.1.19 of the Disclosure Letter, as of May 1, 2002, the Real Property, or in respect of the Secured Properties, as of
October 10, 2003, did not contain any Hazardous Substances, including any that were or are located in storage vessels or that have been Released into the environment on, near, to or from any
Real Property, to the extent that any such matter could reasonably be expected to result in a Material Adverse Effect to the Borrower or a Material Subsidiary; 

        6.1.23    Waste.    Except for matters identified in the Environmental Reports, the
Registration Statement or in Schedule 6.1.19 of the Disclosure Letter, as of May 1, 2002, or in respect of the Secured Properties, as of October 10, 2003, the Borrower had not
used any of its facilities or permitted them to be used to generate, manufacture, refine, treat, transport, store, handle, dispose of, transfer, produce, process or recycle waste, and as of
May 1, 2002, the Real Property, or in respect of the Secured Properties, as of October 10, 2003, had not been used by the Borrower or a Subsidiary as a landfill or waste disposal site,
except in compliance in all material respects with all Environmental Laws and Environmental Orders nor had it engaged in off-site disposal as of May 1, 2002 that could reasonably be
expected to result in any material liability to the Borrower or any Material Subsidiary; 

        6.1.24    Environmental Convictions.    Except for matters identified in the Environmental
Reports, the Registration Statement or in Schedule 6.1.19 of the Disclosure Letter, as of May 1, 2002 the Borrower had never been convicted of an offence for non-compliance
with any Environmental Laws or Environmental Orders; 

        6.1.25    Environmental Notice.    Except for matters identified in the Environmental Reports,
the Registration Statement or in Schedule 6.1.19 of the Disclosure Letter, as of May 1, 2002 the Borrower had not received any notice, whether in writing or verbally, from a Governmental
Body, nor did it have knowledge as of May 1, 2002 after due inquiry of any facts which could give rise to any notice from a Governmental Body being issued, that the Borrower is responsible for
a federal, state, provincial, municipal or local clean-up site or corrective action under any Environmental Laws or Environmental Orders where such action could reasonably be expected to
have a cost in excess of $5,000,000; 

        6.1.26    Environmental Records.    Except for matters identified in the Environmental Reports
or the Registration Statement or Schedule 6.1.19 of the Disclosure Letter, as of May 1, 2002 the Borrower had maintained its environmental records, in all material respects, in the
manner and for the time periods required by Environmental Laws and Environmental Orders and as of May 1, 2002 except for the work and investigations identified in the Environmental Reports or
the Registration Statement or Schedule 6.1.19 of the Disclosure Letter, had not conducted any environmental audit of its business, including the Real Property, which has resulted in the
completion of a report describing issues that are material to the Borrower. For the purposes of this section 6.1.26, an environmental audit shall include, without limitation, any evaluation,
assessment or study performed, including at the request of or on behalf of a Governmental Body; 

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        6.1.27    Investments.    As of May 1, 2002, the Borrower had no loans to or
investments in any Person in excess of $1,000,000, nor had it given any guarantee or incurred any liability in connection with the indebtedness of any Person in excess of $1,000,000, in each case,
other than in connection with the Santa Anita Senior Facility, as described in the Registration Statement or in Schedule 6.1.26 of the Disclosure Letter or, in the case of the Borrower, to a
Material Subsidiary, or in the case of a Material Subsidiary, to the Borrower or any other Material Subsidiary; 

        6.1.28    ERISA.    Except as set out in Schedule 6.1.27 of the Disclosure Letter or as
otherwise disclosed in writing by the Borrower to the Agent, as at May 1, 2002 (a) the Borrower and its ERISA Affiliates were, to their knowledge as at May 1, 2002, in compliance
in all material respects with all applicable provisions of ERISA which would result in any material liability accruing to the Borrower or its ERISA Affiliates, (b) neither the Borrower nor any
ERISA Affiliate had violated any provision of any Plan, (c) to their knowledge as at May 1, 2002, no Reportable Event had occurred and was continuing with respect to any Plan initiated
by the Borrower or any ERISA Affiliate, (d) to their knowledge as at May 1, 2002, the Borrower and all ERISA Affiliates had met their minimum funding requirements under ERISA with
respect to each Plan, and (e) each Plan was able to fulfill its current benefit obligations as they come due in accordance with the Plan documents; 

        6.1.29    Investment Company.    Neither the Borrower nor any Material Subsidiary is an
"investment company", or an "affiliated person" of, or "promoter" or "principal underwriter" for, an "investment company", as such term is defined in the Investment Company Act of 1940, as amended;
provided that with respect to "affiliated persons" this representation is made to the knowledge of the Borrower, without any investigation, with respect to the holders of publicly traded securities of
the Borrower and as to the holders of publicly traded securities of Magna International Inc. Neither the making of any Advances, nor the issuance of any Letters of Credit, nor the application
of the proceeds or repayment thereof by the Borrower, nor the consummation of the other transactions contemplated hereby, will violate any provision of such Act or any rule, regulation or order of the
Securities Commission thereunder; 

        6.1.30    Margin Regulations.    The Borrower is not engaged, nor will it engage, principally
or as one of its primary activities, in the business of extending credit for the purpose of "purchasing" or "carrying" any "margin stock" within the respective meanings of each of the quoted terms
under Regulation U; 

        6.1.31    Comerica Filings and BNS Filings.    Neither the Borrower nor any of its
Subsidiaries has any indebtedness outstanding which is secured by either the Comerica Filings or the BNS Filings; and 

        6.1.32    Disclosure.    As of May 1, 2002, all information provided to the Agent
relating to the financial condition, business, affairs and prospects of the Borrower and the Subsidiaries (other than financial projections), consisting of those documents and materials made available
for review by the Borrower and referenced in a binder of materials compiled by Torys LLP in connection with their due diligence review on behalf of Bank of Montreal (but, for greater certainty,
excluding any work product of Torys LLP) which was forwarded to the Borrower under cover of a memo dated March 20, 2002 from Torys to the Borrower, together with any information set out
in the Registration Statement and the Disclosure Letter, was true, accurate and complete in all material respects and omits no material fact necessary to make such information not misleading in light
of the circumstances under which such information was provided. As of May 1, 2002, all financial projections provided by the Borrower to the Agent was prepared in good faith, on the basis of
all known facts and using reasonable assumptions and, as of such date, the Borrower believed such projections to be fair and reasonable. 

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6.2   Survival of Representations and Warranties  

        The Borrower acknowledges and agrees that the representations and warranties made by it in this Article 6 shall be deemed to be repeated on the last day of
each Fiscal Quarter, with the same effect as if such representations and warranties had been made and given on and as of such day, notwithstanding any investigation made at any time by the Agent or
any of the Lenders or on their behalf, including, without limitation, the due diligence review referred to in section 6.1.32; except that if any such representation and warranty is specifically
given as of any particular date or particular period of time and relates only to such date or period of time, then such representation and warranty shall continue to be given as at such date or for
such period of time. 

 
 

ARTICLE 7
  COVENANTS    
    

7.1   Affirmative Covenants

        So
long as any Loan remains outstanding or so long as the Borrower has the right to utilize the Credit Facility, and unless the Agent on behalf of the Lenders otherwise consents in
writing, the Borrower covenants and agrees that, with effect from May 1, 2002: 

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

        7.1.2    Conduct of Business.    The Borrower shall, and shall take all necessary corporate
action to cause each Material Subsidiary to, do or cause to be done all things necessary or desirable to maintain its corporate existence, except to the extent otherwise provided under
section 7.2.3, in its present jurisdiction of incorporation, to maintain its corporate power and capacity to own its properties and assets, and to carry on its Core Line of Business in a
commercially reasonable manner in accordance with past practice; 

        7.1.3    Preservation of Material Authorizations.    The Borrower shall, and shall take all
necessary corporate action to cause each Material Subsidiary to, preserve, maintain in effect at all times and at all times comply with all Material Authorizations except where the failure to preserve
and maintain a Material Authorization could not reasonably be expected to have a Material Adverse Effect; 

44

 

        7.1.4    Compliance with Applicable Law and Contracts.    The Borrower shall, and shall take
all necessary corporate action to cause each Material Subsidiary to (a) comply with the requirements of all Applicable Law, and all obligations which, if contravened, could give rise to a Lien
(other than a Permitted Encumbrance) over any of the Real Property, and all insurance policies, the non-compliance with which could, singly or in the aggregate, be reasonably expected to
have a Material Adverse Effect, and (b) comply with all contracts (including leases of Real Property) to which it is a party or by which it or its properties are bound and, with respect to
leases of Real Property (i) keep such leases in full force and effect and not allow such leases to lapse or be terminated other than in the ordinary course of business or any rights to renew
such leases to be forfeited or cancelled other than in the ordinary course of business, and (ii) notify the Agent of any default by any party with respect to such leases and take all
commercially reasonable steps to cure any such default, in each case under clause (b) of this section 7.1.4, except to the extent that the failure to do so could not reasonably be
expected to have a Material Adverse Effect; 

        7.1.5    Accounting Methods and Financial Records.    The Borrower shall, and shall take all
necessary corporate action to cause each Material Subsidiary to, maintain a system of accounting which is established and administered in accordance with GAAP and keep adequate records and books of
account in which accurate and complete entries shall be made in accordance with such accounting principles reflecting all transactions required to be reflected by such accounting principles; 

        7.1.6    Maintenance of Real Property.    The Borrower shall, and shall take all necessary
corporate action to cause each Material Subsidiary to, maintain the Real Property owned or leased by it in good repair, working order and condition in accordance with past practice (reasonable wear
and tear excepted) and from time to time make or cause to be made all necessary and appropriate repairs, renewals and replacements thereto except, in each case, where the failure to maintain such Real
Property could not, singly or in the aggregate, reasonably be expected to have a Material Adverse Effect; 

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

        7.1.8    Payment of Taxes.    The Borrower shall, and shall take all necessary corporate
action to cause each Material Subsidiary to: 

7.1.8.1    pay
and discharge all Taxes payable by it; 

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

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

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

45

 

        7.1.9    Inspections.    The Borrower shall permit each of the Agent and its authorized
employees, representatives and agents at reasonable times and during normal business hours, upon giving reasonable notice, to discuss, or meet at the head office of the Borrower to discuss, with
senior management of the Borrower, the business, property, financial condition and prospects of the Company; 

        7.1.10    Notice of Litigation and Other Matters.    The Borrower shall, as soon as
practicable after it shall become aware of the same, give notice to the Agent and the Lenders of the following events: 

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

7.1.10.2    any
insurance claim made by the Borrower or any of its Material Subsidiaries in excess of $5,000,000; 

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

7.1.10.4    any
Default or Event of Default; 

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

        7.1.11    Quarterly Reports.    The Borrower shall, as soon as practicable and in any event
within 60 days after the end of each Fiscal Quarter (other than the Fiscal Quarter ending in December) of each Fiscal Year deliver to the Agent a quarterly report for such Fiscal Quarter
consisting of consolidated unaudited financial statements for the Borrower (in each case as at the end of such Fiscal Quarter and the portion of the Fiscal Year through the end of such Fiscal
Quarter) in the form of the quarterly financial statements filed or, if not yet filed, required to be filed, with the Securities Commission; 

        7.1.12    Annual Financial Statements.    The Borrower shall, as soon as practicable and in
any event within 120 days after the end of each Fiscal Year, deliver to the Agent the annual audited consolidated financial statements of the Borrower, in the form of the annual financial
statements filed or, if not yet filed, required to be filed with the Securities Commission; 

46

 

        7.1.13    Certificate of the Borrower.    The Borrower shall deliver or cause to be delivered
to the Agent, together with the report and financial statements in sections 7.1.11 and 7.1.12, a certificate of the Borrower in the form attached hereto as Schedule 7.1.13 duly
executed by the Chief Financial Officer or Controller thereof certifying (i) that such financial statements were prepared in accordance with GAAP (subject to normal year-end
adjustments in the case of interim unaudited financial statements) and fairly present the financial position and results of operations of the Borrower on a consolidated basis for the period and as at
the date thereof, (ii) that no Default or Event of Default has occurred hereunder or, if any Default or Event of Default has occurred, specifying the relevant particulars and the period of
existence thereof and the action taken, being taken or proposed to be taken by or on behalf of the Borrower or any Material Subsidiary with respect thereto, (iii) demonstrating in reasonable
detail compliance (or, as the case may be, non-compliance) at the end of the relevant Fiscal Quarter or Fiscal Year with the covenants contained in section 7.1.18 and, in
each case, where a Material Adverse Change has occurred, specifying the relevant particulars, the period of existence and the action taken, being taken or proposed to be taken by or on behalf of the
Borrower with respect thereto; 

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

        7.1.15    Other Financial Information.    As soon as practicable following a request therefor
from the Agent on behalf of the Lenders, the Borrower shall furnish to the Agent such other financial information as the Agent on behalf of the Lenders may reasonably request from time to time; 

        7.1.16    Covenant to Guarantee Obligations.    At the expense of the Borrower, to the extent
permitted by law, within 15 Banking Days after such time as any new direct or indirect Relevant Subsidiaries of the Borrower (other than the Lone Star Subsidiaries) are formed or acquired or
any existing Subsidiary of the Borrower becomes a Relevant Subsidiary, the Borrower shall cause such Relevant Subsidiary to duly execute and deliver to the Agent an agreement, in form and substance
satisfactory to the Agent binding it to the provisions of Article 10 of this Agreement, whereby such Relevant Subsidiary guarantees the Borrower's Obligations under the Loan Documents
substantively on the terms of the Guaranty. Notwithstanding the foregoing, if the Relevant Subsidiary is not wholly-owned by the Borrower or its wholly-owned Subsidiaries, the Borrower will only be
required to cause such Relevant Subsidiary to comply with this section 7.1.16 if and to the extent it may do so under Applicable Law and under applicable contractual obligations without the
consent of the other shareholders of such Relevant Subsidiary (or their respective nominees on the board of directors or similar managing body of such Relevant Subsidiary). Concurrently with
the delivery of such agreement, the Borrower will deliver to the Agent a signed copy of a favorable opinion, addressed to the Agent and the Lenders, of counsel to the Borrower as to such guaranty
being the legal, valid and binding obligation of the Relevant Subsidiary party thereto, enforceable in accordance with its terms and as to such other matters as were addressed in the opinion of the
Borrower's counsel delivered pursuant to section 8.1.4.5, and subject only to the qualifications set out in such opinion and to any other qualifications which in the reasonable opinion
of the Borrower's counsel are required by law; 

        7.1.17    Covenant Regarding Permitted Acquisitions.    Within 30 days after the
closing of a Permitted Acquisition, the Borrower shall provide the Agent and Lender with an Officer's Certificate: 

	(a)
	confirming
that such Acquisition was a Permitted Acquisition; 

47

 

	(b)
	attaching
a true and complete copy of the purchase (or equivalent) agreement for such Acquisition, and all written amendments thereto or waivers of any material provision or
condition thereof;

	(c)
	attaching
true and complete copies of the financial statements relied on, if any, by the Borrower or the Material Subsidiary, as applicable, in entering such agreement;

	(d)
	whether
the entity being acquired will constitute a Relevant Subsidiary or, if not, the basis for such determination; and

	(e)
	confirming
the manner in which the Borrower is including the results from the operations of such Acquisition for purposes of the financial covenants set forth in section 7.1.18
and confirming such inclusion is in compliance with section 1.13; 

        7.1.18    EBITDA Maintenance.    

7.1.18.1    The
Borrower shall maintain an aggregate EBITDA from operations at the Santa Anita Premises calculated on a rolling 12 month basis as at the end of each Fiscal Quarter, of
not less than $11,000,000; and 

7.1.18.2    The
Borrower shall maintain an aggregate EBITDA from operations at the Golden Gate Premises, calculated on a rolling 12 month basis as at the end of each Fiscal Quarter
(provided that such calculation shall commence for the Fiscal Quarter ended on December 31, 2005) of not less than $4,000,000; 

provided
that, in each case, notwithstanding paragraph (c) of the definition of EBITDA, all net gains from the sale of real estate which were included in the calculation of Net Income
will be deducted from EBITDA for purposes of this section 7.1.18; 

        7.1.19    Comerica Filings and BNS Filings.    The Borrower shall take commercially reasonable
steps to cause each of the Comerica Filings and the BNS Filings to be discharged in due course and neither the Borrower nor any of its Subsidiaries shall incur, create or assume any indebtedness in
favour of any Person which is secured by the Comerica Filings or the BNS Filings; and 

        7.1.20    Notice of Payment to Holders of Subordinated Debt.    The Borrower will give the
Agent at least ten Business Days' notice prior to sending any notice of redemption to holders of Subordinated Debt or otherwise creating or becoming subject to any obligation to make an unscheduled
repayment of principal on or repurchase of the Subordinated Debt. 

7.2   Negative Covenants  

        So long as any Loan remains outstanding or so long as the Borrower has the right to utilize the Credit Facility, and unless the Agent on behalf of the Lenders
otherwise consents in writing, the Borrower covenants and agrees that it and each Material Subsidiary shall not from and after May 1, 2002: 

        7.2.1    Encumber Property.    Create, grant, assume or suffer to exist any Lien upon any of
its properties or assets, or upon any of the property and assets of any Material Subsidiary, other than Permitted Encumbrances and Liens arising in connection with financial assistance permitted by
section 7.2.8; 

48

 

        7.2.2    Capital Expenditures.    Incur or commit or agree to incur any Capital Expenditure
unless (i) such Capital Expenditure is in respect of the Core Line of Business carried on by the Borrower or any Subsidiary or in respect of any real estate owned by the Borrower or any
Subsidiary on the date of this Agreement and (a) was included in a budget delivered to the Agent, or (b) has been approved by the board of directors of the Borrower or a Material
Subsidiary, as applicable, or (ii) such Capital Expenditure is approved in writing by the Agent on behalf of the Lenders; 

        7.2.3    Non-Arm's Length Transactions.    Repay any existing indebtedness or
liabilities owed to, or otherwise enter into any transaction or agreement with, any Affiliate (or any corporation which, after the transaction in question becomes effective, would become an
Affiliate), or permit any Material Subsidiary to enter into any such transaction, other than (a) with an Affiliate which is the Borrower or a Material Subsidiary or (b) where such
repayment (or the indebtedness giving rise thereto) or transaction is approved by the board of directors of the Borrower or (c) where such transaction constitutes the purchase, sale or
lease of assets or the purchase or provision of services, in each case in the ordinary course of business and either (x) such transaction is conducted on commercially reasonable terms and
conditions, or (y) if such transaction relates to sharing facilities or personnel among the Borrower and one or more of its Affiliates, the related costs are allocated on a reasonable basis; 

        7.2.4    Amalgamations, etc.    Enter into any transaction (including by way of
reorganization, consolidation, amalgamation, liquidation, transfer, sale or otherwise) whereby the Borrower or all or any other material portion of the undertaking, property and assets of the Borrower
would become the property of any other Person or permit any Material Subsidiary to enter into any such transaction, other than in the case of the Borrower, a Material Subsidiary, or in the case of a
Material Subsidiary, the Borrower or any other Material Subsidiary or, in the case of any such amalgamation, the Borrower is the continuing corporation resulting therefrom; 

        7.2.5    Unrelated Business.    Other than investments set out in section 6.1.27
or acquisitions or other ventures having an aggregate cost (on a consolidated basis) of not greater than $5,000,000 (inclusive of any indebtedness, including Capital Lease Obligations)
contingent or otherwise, assumed or incurred in connection therewith), engage directly or indirectly in any business activity, or purchase or otherwise acquire any properties or assets, in each case
unrelated to its Core Line of Business; 

        7.2.6    Restricted Payments.    Declare, pay or make, or agree to declare, pay or make,
directly or indirectly, any Restricted Payment, except (a) the Borrower may declare and pay dividends with respect to its equity securities payable
solely in additional equity securities, (b) any Material Subsidiary may make Restricted Payments to the Borrower or any Material Subsidiary and any
wholly-owned Material Subsidiary may redeem or repurchase its own equity securities, (c) the Borrower or any Material Subsidiary may make Restricted
Payments pursuant to and in accordance with employee share purchase loans, stock option plans (including individual plans), profit sharing plans and/or other benefit plans, employee incentives and
performance obligations for directors, officers, management, employees or consultants of the Borrower and its Material Subsidiaries, (d) the Borrower or any Material Subsidiary may make
Restricted Payments for the purposes of employee and executive recruitment and relocation, (e) the Borrower or any Material Subsidiary may make payments in respect of indebtedness as set forth
in clause (v) of the definition of Permitted Debt, (f) the Borrower or any Material Subsidiary may make any payment in respect of or relating to indebtedness or a transaction
permitted by section 7.2.3; (g) the Borrower may declare and pay dividends in accordance with its constating or charter documents; and (h) the Borrower may make payments in
respect of or relating to Subordinated Debt in accordance with the terms of such Subordinated Debt until such time as the Agent notifies the Borrower of the occurrence of a Default or an Event of
Default or, after such notice only if the Agent acknowledges in writing that such Default or Event of Default is no longer continuing; 

49

 

        7.2.7    Debt.    Create, incur, assume or suffer to exist, any indebtedness (including
Capital Lease Obligations and Contingent Liabilities) other than Permitted Debt or indebtedness arising in connection with financial assistance permitted by section 7.2.8; 

        7.2.8    Financial Assistance.    Provide financial assistance, either directly or indirectly,
by means of a guarantee, provision of security or otherwise to any Person, except for Permitted Debt or Permitted Encumbrances and any other obligations which the Borrower may enter into in favour of
the Lenders and except for (i) financial assistance in an amount which does not exceed $5,000,000 in aggregate, (ii) financial assistance given by the Borrower or any other Material
Subsidiary, or by an Material Subsidiary to the Borrower or any other Material Subsidiary, and (iii) financial assistance given to a Subsidiary in connection with either a Permitted Acquisition
or an acquisition or investment not prohibited by this Agreement; 

        7.2.9    Disposition of Assets.    In any Fiscal Year, sell, lease, consign or otherwise
dispose of, or agree to sell, lease, consign or otherwise dispose of, any assets or property except that the Borrower or any Material Subsidiary may (i) sell, lease or consign assets or
properties in the ordinary course of business from time to time (provided that any direct or indirect sale of the Golden Gate Premises or the Santa Anita Premises shall be deemed not to be in the
ordinary course of business); (ii) sell, lease or consign real property (other than Real Property) held for sale or development and excess racetrack lands; (iii) transfer, abandon,
surrender or otherwise dispose of any fixtures, equipment, machinery, tools, implements, facilities and appliances which may have become worn out, unserviceable, obsolete, unsuitable or unnecessary in
the conduct of their businesses; and (iv) sell or otherwise dispose of any Subsidiary (other than a Material Subsidiary unless the sale or other disposition thereof is in accordance with
section 7.2.10) with negative EBITDA determined, on a consolidated basis, for the four consecutive fiscal quarters most recently ended; 

        7.2.10    Change in Ownership of Material Subsidiaries.    Sell or otherwise dispose of any
shares in the capital stock of any Material Subsidiary, or any warrants, rights or options to acquire such stock or permit any Material Subsidiary to issue, sell or otherwise dispose of any shares in
its capital stock or the capital stock of any other Material Subsidiary or any warrants, rights or options to acquire such stock except to the Borrower or another Material Subsidiary; 

        7.2.11    Acquisitions.    Permit or otherwise undertake any Acquisition (other than a
Permitted Acquisition) without the prior written consent of the Agent (on behalf of the Majority Lenders); and 

        7.2.12    Excluded Subsidiaries.    After October 10, 2003, invest more than the sum of
(i) $125,000,000, and (ii) the net proceeds of equity offerings completed after October 10, 2003 in Excluded Subsidiaries. 

7.3   Environmental Matters  

7.3.1 The Borrower shall maintain, for itself and its Material Subsidiaries, a system to ensure and monitor continued compliance with
Environmental Laws, which shall include reviews of such compliance, and the maintenance, in all material respects, of environmental documents and records relating to their respective businesses as
required by Environmental Law. 

50

  

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

7.3.3    The
Borrower covenants and agrees that it and each Material Subsidiary shall not cause or permit a Release of any Hazardous Substance except in compliance, in all material respects,
with Environmental Laws or that would not reasonably be expected to lead to material liability under Environmental Laws against the Borrower or a Subsidiary. 

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

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

7.3.6    The
Borrower shall provide the Agent with an environmental audit report (which shall include a report arising from an environmental site assessment, investigation or environmental
review) with respect to any Real Property or an update of such audit (i) upon the written request of the Agent on behalf of the Lenders documenting its reasonable opinion that the Borrower or
any Material Subsidiary may not be in material compliance with this section 7.3; (ii) if such audit is required by any Governmental Body or (iii) if an Event of Default relating
to an environmental matter has occurred, and the Agent on behalf of the Lenders has made a reasonable written request to the Borrower for such audit or update to address the Event of Default within
60 days after such request, and all such audits or updates thereof shall be at the Borrower's expense. 

7.3.7    If
the Borrower or any Material Subsidiary (i) receives notice that any violation of any Environmental Law may have been committed or is about to be committed by it,
(ii) receives notice that any administrative or judicial complaint or order has been filed or is about to be filed against it alleging violations of any Environmental Law or requiring it to
take any action in connection with the release of Hazardous Substances into the environment, or (iii) receives any notice from a Governmental Body or other Person alleging that the Borrower or
any Material Subsidiary may be liable or responsible
for costs associated with a response to or clean-up of a release of a Hazardous Substance into the environment or any damages caused thereby, in each case where the ultimate liability of
the Borrower or any Material Subsidiary which may arise from such notice could reasonably be expected to have a Material Adverse Effect, the Borrower shall, and shall take all necessary corporate
action to cause each Material Subsidiary to, provide the Agent with a copy of such notice within five days of receipt thereof. The Borrower shall, and shall take all necessary corporate action to
cause each Material Subsidiary to, also provide to the Agent, as soon as practicable after it becomes available, a copy of any environmental audit report, including any report required to be submitted
to any Governmental Body. If any such report estimates the cost of any clean-up or remedial action, including any approved by a Governmental Body, to be in excess of $5,000,000, the
Borrower shall, and shall take all necessary corporate action to cause each Material Subsidiary to, provide evidence satisfactory to the Agent, acting reasonably, of disbursements made from time to
time to effect and complete such clean-up or remedial action, including within such time as may be prescribed by a Governmental Body. The Borrower shall, and shall take all necessary
corporate action to cause each Material Subsidiary to, provide written evidence to the Agent, including a report which the Agent and the Lenders shall expressly be entitled to rely on, confirming the
completion of the clean-up or remediation of a site with a cost in excess of $5,000,000, including any investigations and monitoring. 

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7.3.8    The
Borrower shall, and shall take all necessary corporate action to cause each Material Subsidiary to, permit the Agent and its authorized employees, representatives and agents, at
reasonable times and during normal business hours and at the Agent's own cost, upon giving reasonable notice, to visit and inspect any Real Property where the Agent or any Lender, in its reasonable
opinion, believes that the Borrower or any Material Subsidiary may not be in compliance with section 7.3.7. 

 
 

ARTICLE 8
  CONDITIONS PRECEDENT    
    

8.1    Conditions Precedent to Closing  

        The obligations of the Lenders to make available the Credit Facility or any part thereof to the Borrower are subject to compliance, on or before the Closing Date,
with each of the following conditions precedent (each of which has been satisfied), which conditions precedent are for the sole and exclusive benefit of the Lenders and may be waived in writing by the
Agent (at the direction of the Lenders in their sole discretion): 

8.1.1    the
representations and warranties set out in Article 6 shall be true and correct in all material respects on the Closing Date as if made on and as of such date except if any
such representation and warranty is specifically given in respect of a particular date or particular period of time and relates only to such date or period of time, then such representation and
warranty shall be true and correct as of the date given or for the period of time to which it relates; 

8.1.2    no
Default or Event of Default shall have occurred and be continuing nor shall it be reasonably anticipated that there be any Default or Event of Default immediately after giving
effect to the execution of the Loan Documents and the Subordination Agreements; 

8.1.3    no
Material Adverse Change since June 30, 2003 shall have occurred; 

8.1.4    the
Agent shall have received the following in form and substance satisfactory to the Lenders, acting reasonably: 

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

8.1.4.1.1    the
articles or constating documents of the Borrower and each Guarantor; 

8.1.4.1.2    the
by-laws or other organizational documents of the Borrower and each Guarantor; 

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8.1.4.1.3    a
certificate of incumbency including sample signatures of officers and directors of the Borrower and each Guarantor who have executed any of the Loan Documents, the
Subordination Agreements or any other document delivered to the Agent under this Article 8; and 

8.1.4.1.4    the
resolutions or other documentation evidencing that all necessary action, corporate or otherwise, has been taken by the Borrower and each Guarantor to authorize the
execution, delivery and performance of the Loan Documents and Subordination Agreements to which it is a party; 

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

8.1.4.3    an
Officer's Certificate dated the Closing Date confirming sections 8.1.1, 8.1.2 and 8.1.3; 

8.1.4.4    a
three year management financial forecast for the Borrower and its Subsidiaries on a consolidated basis, with detailed quarterly covenant calculations, copies of which have
previously been delivered to the Agent; 

8.1.4.5    an
opinion of counsel to the Borrower and each Guarantor (which may be in-house counsel) dated the Closing Date in form and substance satisfactory to the Agent and
Lenders, acting reasonably; 

8.1.4.6    the
Disclosure Letter; 

8.1.4.7    a
certificate of an officer of MI Developments Inc. certifying that attached thereto are true and correct copies of the following documents and that such documents are in
full force and effect, unamended: 

8.1.4.7.1    the
articles or constating documents of MI Developments Inc. and MID Islandi sf; 

8.1.4.7.2    the
by-laws or other organizational documents of MI Developments Inc. and MID Islandi sf; 

8.1.4.7.3    a
certificate of incumbency including sample signatures of officers and directors of MI Developments Inc. and MID Islandi sf who have executed the Subordination Agreement
to which they are a party; and 

8.1.4.7.4    the
resolutions or other documentation evidencing that all necessary action, corporate or otherwise, has been taken by MI Developments Inc. and MID Islandi sf to
authorize the execution, delivery and performance of the Subordination Agreement to which they are a party; 

8.1.4.8    an
opinion of counsel to MI Developments Inc. and MID Islandi sf dated the Closing Date as to the due authorization, execution and delivery of the Subordination Agreement
to which they are a party, in form and substance satisfactory to the Agent and Lenders, acting reasonably; and 

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8.1.4.9    such
other documentation or information as the Agent and the Lenders shall have reasonably requested; 

8.1.5    the
Agent and the Lenders shall have received payment in full of all reasonable invoiced fees and reimbursable out-of-pocket expenses payable by the Borrower
on or prior to the Closing Date together with the up front fee payable under and pursuant to the fee letter dated July 13, 2005 between the Borrower and the Agent in respect of this Agreement,
hereunder or under any other Loan Document, including payment of all reasonable fees, disbursements and out-of-pocket expenses of counsel to the Agent and the Lenders; 

8.1.6    the
Loan Documents, including without limitation the Golden Gate Mortgage and the Santa Anita Mortgage, all in form and substance satisfactory to the Agent and the Lenders, shall
have been executed and delivered to the Agent and the Lenders, and the Liens created by the Golden Gate Mortgage and the Santa Anita Mortgage shall have been registered and perfected in all
jurisdictions required by the Agent; 

8.1.7    the
Subordination Agreements, all in form and substance satisfactory to the Agent and the Lenders, shall have been executed and delivered to the Agent and the Lenders; 

8.1.8    the
Agent shall have received an originally-executed copy of the Wells Fargo Consent in a form and substance satisfactory to the Agent and the Lenders; 

8.1.9    the
Agent shall have received, at the expense of the Borrower, a loan title insurance policy and evidence of zoning compliance (in the form of a zoning endorsement to the
title insurance policy) in respect of each of the Secured Properties, all in form and substance satisfactory to the Agent and the Lenders; and 

8.1.10    all
documents and instruments shall have been properly registered, recorded and filed in all places which, searches shall have been conducted in all jurisdictions which, and
deliveries of all consents, approvals, acknowledgements, undertakings, non-disturbance agreements, directions, negotiable documents of title and other documents and instruments to the
Agent shall have been made which, in the opinion of the Agent's counsel, are desirable or required to make effective the Security created or intended to be created in favour of the Agent pursuant to
the Golden Gate Mortgage and the Santa Anita Mortgage and to ensure the perfection and the intended priority of the Security. 

The
parties acknowledge and agree that, upon satisfaction of the conditions precedent in this section 8.1, the letters of credit outstanding under the Third Amended and Restated Credit
Agreement shall be deemed to be Letters of Credit hereunder. 

8.2    Conditions Precedent to Advances  

        The obligation of the Lenders to make any Advances (other than a Rollover or Conversion) is subject to compliance, on or before the relevant Borrowing Date, with
each of the following conditions precedent, which conditions precedent are for the sole and exclusive benefit of the Lenders and may be waived in writing by the Agent (at the direction of the
Lenders in their sole discretion): 

8.2.1    the
representations and warranties set out in Article 6 shall be true and correct on the relevant Borrowing Date as if made on and as of such date except if any such
representation and warranty is specifically given in respect of a particular date or particular period of time and relates only to such date or period of time, then such representation and warranty
shall be true and correct as of the date given or for the period of time to which it relates; 

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8.2.2    no
Default or Event of Default shall have occurred and be continuing nor shall it be reasonably anticipated that there will be any Default or Event of Default immediately after
giving effect to the proposed Advance; 

8.2.3    no
Material Adverse Change shall have occurred since the Closing Date in the case of the initial Advance and in the case of each subsequent Advance, since the date of the last
Advance; 

8.2.4    if
applicable, the Borrower shall have executed and delivered such standard form Letter of Credit Agreements of the L/C Lender as the L/C Lender may require in respect of such
Advance; and 

8.2.5    the
Agent shall have received a Borrowing Notice dated as of the relevant Borrowing Date. 

 
 

ARTICLE 9
  EVENTS OF DEFAULT AND REMEDIES    
    

9.1    Events of Default  

        The occurrence of any of the following events shall constitute an Event of Default: 

9.1.1    default
by the Borrower in payment of any principal when due or any interest within three Banking Days after the same becomes due or any other amount within 10 days after
notice of non-payment thereof is received by the Borrower; 

9.1.2    default
by the Borrower or any Guarantor in the performance or observance of any covenant, condition or obligation contained in any Loan Document to which it is a party that does
not require the payment of money to the Agent or any Lender and such default continues for a period of 20 days after the earliest of (x) receipt of notice from the Agent of such default,
and (y) knowledge of the existence of such default by one of the chief executive officer, chief financial officer, controller, general counsel or secretary of the Borrower, unless: 

	(i)
	such
default is not capable of being cured within such 20 day period;

	(ii)
	the
Borrower is diligently and in good faith advancing to remedy such default; and

	(iii)
	such
default is in fact remedied within 40 days from expiry of the original 20 day cure period; 

9.1.3    the
representation and warranty set out in section 6.1.4 hereof is found to be false or incorrect in any material respect so as to make it materially misleading when made or
deemed to have been made or any other representation or warranty made by the Borrower or any Guarantor herein or in any Officer's Certificate or other document delivered to the Agent or any Lender
pursuant hereto or in connection with any Loan Document is found to be false or incorrect in any respect where the consequences of such misrepresentation or breach of warranty could reasonably be
expected to have a Material Adverse Effect; 

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9.1.4    any
event shall occur or condition shall exist, and shall continue after the applicable grace period, if any, specified in any agreement or instrument relating to any indebtedness
or liability (including Capital Lease Obligations and Contingent Liabilities) of the Borrower (other than Obligations) and the effect of such event or condition is to accelerate the maturity of such
indebtedness or liability (including Capital Lease Obligations and Contingent Liabilities) of the Borrower or any Material Subsidiary which is outstanding in an aggregate principal amount exceeding
$2,000,000, or any such indebtedness or liability (including Capital Lease Obligations and Contingent Liabilities) of the Borrower or any Material Subsidiary which is outstanding in an aggregate
principal amount exceeding $2,000,000 shall be declared to be due and payable prior to the stated maturity thereof; provided, in each case, that it shall not be an Event of Default if the Borrower or
applicable Material Subsidiary is diligently contesting such acceleration or declaration in good faith by appropriate proceedings or has fully repaid the indebtedness accelerated or declared due but
it is acknowledged that in such circumstances such acceleration or declaration shall nevertheless be a Default which would enable the Agent to restrict payments to holders of Subordinated Debt
pursuant to section 7.2.6; 

9.1.5    the
Borrower admits in writing or by way of a public or press announcement its inability to pay its debts generally as they become due or otherwise acknowledges in writing or by way
of a public or press announcement its insolvency; 

9.1.6    the
Borrower institutes any proceeding or takes any corporate action or executes any agreement to authorize its participation in or commencement of any proceeding: 

9.1.6.1    seeking
to adjudicate it a bankrupt or insolvent, or 

9.1.6.2    seeking
liquidation, dissolution, winding up, reorganization, arrangement, protection, relief or composition of it or any of its property or debt or making a proposal or
application with respect to it under any law relating to bankruptcy, insolvency, reorganization or compromise of debts or other similar laws (including, without limitation, any reorganization,
arrangement or compromise of debt under the laws of its jurisdiction of incorporation); 

9.1.7    any
proceeding is commenced against or affecting the Borrower: 

9.1.7.1    seeking
to adjudicate it a bankrupt or insolvent; 

9.1.7.2    seeking
liquidation, dissolution, winding up, reorganization, arrangement, protection, relief or composition of it or any of its property or debt or making a proposal with respect
to it under any law relating to bankruptcy, insolvency, reorganization or compromise of debts or other similar laws (including, without limitation, any reorganization, arrangement or compromise of
debt under the laws of its jurisdiction of incorporation); or 

9.1.7.3    seeking
appointment of a receiver, trustee, agent, custodian or other similar official for it or for any substantial part of its properties and assets; and 

in
each case, such proceeding is not being contested in good faith by appropriate proceedings or, if so contested, remains outstanding, undismissed and unstayed more than 45 days from the
institution of such first mentioned proceeding; provided, in each case, the Borrower and its Material Subsidiaries remain current on their respective payroll obligations during such contest; 

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9.1.8    any
creditor of the Borrower or any other Person shall privately appoint a receiver, trustee or similar official for any substantial part of the Borrower's properties and assets
having a Replacement Cost greater than $10,000,000 and such appointment is not stayed and is not being contested in good faith by appropriate proceedings or, if so contested, such appointment is not
terminated within 45 days from the original date of such appointment; provided, in each case, the Borrower and its Material Subsidiaries remain current on their respective payroll obligations
during such contest; 

9.1.9    any
judgment or order for the payment of money in excess of $10,000,000 shall be rendered against the Borrower which remains unsatisfied and (i) executions shall have been
levied on any property of the Borrower by or on behalf of any creditor in reliance on such judgment or order and (ii) there shall be any period during which a stay of enforcement of such
judgment or order, by reason of a pending appeal or otherwise, shall not be in effect; 

9.1.10    if,
at any time after execution and delivery thereof, other than by reason of a wilful act or omission of the Agent or any Lender, (i) any Loan Document ceases to be in full
force and effect (unless 15 fifteen days of notice of the same being given by the Lenders to the Borrower such Loan Document again has full force and effect); (ii) any Loan Document is
declared by a court or tribunal of competent jurisdiction to be null and void; or (iii) the validity or enforceability of any Loan Document is contested by the Borrower; or (iv) the
Borrower denies in writing that it has any or further liability or obligations under any Loan Document (unless, in the case of an event described in (i) or (ii) above, the Borrower is
able to fully remedy such default within a period of 15 days or the event is one for which the Lenders is wholly responsible); 

9.1.11    except
in connection with a transaction permitted under section 7.2.4, the Borrower or any Guarantor ceases or threatens in writing or by way of public or press announcement
to cease to carry on business in the ordinary course; 

9.1.12    there
occurs a Change in Control; or 

9.1.13    any
event shall occur or condition shall exist, and shall continue after the applicable grace period, if any, specified in any note or indenture relating to the Subordinated Debt,
and the effect of such event or condition is to enable the holders of Subordinated Debt to accelerate the maturity of the Subordinated Debt (whether or not the Subordinated Debt is accelerated), or
any Subordinated Debt shall be declared to be due and payable or the Borrower shall be required to repurchase any Subordinated Debt prior to the stated maturity thereof. 

9.2    Remedies Upon Default  

        Upon the occurrence of any Event of Default, subject to any applicable cure period, the Agent may, and at the direction of the Majority Lenders shall, by notice
given to the Borrower: 

9.2.1    declare
the unutilized portion (if any) of the Aggregate Commitment to be terminated (whereupon the Lenders shall not be required to make any further Advances); 

9.2.2    declare
all Obligations to be immediately due and payable; and 

9.2.3    take
such actions and commence such proceedings as may be permitted at law or in equity at such times and in such manner as the Lenders in their sole discretion may consider
expedient, 

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all
without, except as may be required by Applicable Law, any additional notice, presentment, demand, protest, notice of protest, dishonour or any other action. The rights and remedies of the Agent
and the Lenders hereunder are cumulative and are in addition to and not in substitution for any other rights or remedies provided by Applicable Law. 

9.3    Distributions  

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

 
 

ARTICLE 10
  GUARANTY    
    

10.1    Guaranty  

10.1.1    Each
Guarantor hereby unconditionally and irrevocably guarantees the punctual payment when due, whether at stated maturity, by acceleration or otherwise, of all Obligations of the
Borrower now or hereafter existing under the Loan Documents, whether for principal, interest, fees, expenses or otherwise (such Obligations being such Guarantor's "Guaranteed Obligations"), and agrees
to pay any and all expenses (including reasonable counsel fees and expenses) incurred by the Agent or any Lender in enforcing any rights under such Guaranty. 

10.1.2    Without
limiting the generality of the foregoing, each Guarantor's liability shall extend to all amounts that constitute part of the Guaranteed Obligations that would be owed by
the Borrower to the Agent or the Lenders under the Loan Documents but for the fact that they are unenforceable or not allowable due to the existence of a bankruptcy, reorganization or similar
proceeding involving the Borrower. 

10.1.3    Notwithstanding
anything contained herein, in any Guaranty, or in any of the other Loan Documents to the contrary, if the obligations of any Guarantor hereunder exceed the
limitations imposed under any Fraudulent Transfer Law, then such obligations of the Guarantor shall be limited to a maximum aggregate amount equal to the largest amount that would not render its
obligations subject to avoidance as a fraudulent transfer or conveyance under Section 548 of Title 11 of the United States Code or any applicable provisions of comparable state
law (collectively, the "Fraudulent Transfer Laws"), in each case after giving effect to all other liabilities of the Guarantor, contingent or otherwise, that are relevant under the Fraudulent Transfer
Laws (specifically excluding, however, any liabilities of the Guarantor in respect of indebtedness to the Borrower or any other Person that is an Affiliate of the Borrower to the extent that such
indebtedness would be discharged in an amount equal to the amount paid by the Guarantor in respect of the Obligations) and after giving effect (as assets) to the value (as determined
under the applicable provisions of the Fraudulent Transfer Laws) of any rights to subrogation, reimbursement, indemnification or contribution of the Guarantor pursuant to Applicable Law or pursuant to
the terms of any agreement. 

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10.1.4    Each
of the Guarantors respectively acknowledges and confirms that as a Subsidiary of the Borrower it is obtaining material economic and other benefit from the financial and other
accommodations being extended by the Lenders to the Borrower under the Loan Documents, and that, accordingly, it is in its own economic self-interest to grant this Guaranty as a material
inducement to the Lenders. 

10.2    Guaranty Absolute  

        Each Guarantor guarantees that the Guaranteed Obligations will be paid in accordance with the terms of the Loan Documents, regardless of any law, regulation or
order now or hereafter in effect in any jurisdiction affecting any of such terms or the rights of the Agent or the Lenders with respect thereto. The obligations of each Guarantor under this Guaranty
are independent of the Guaranteed Obligations or any other Obligations of the Borrower or any other Guarantor under the Loan Documents, and a separate action or actions may be brought and prosecuted
against such Guarantor to enforce this Guaranty, irrespective of whether any action is brought against the Borrower or any other Guarantor or whether the Borrower or any other Guarantor is joined in
any such action or actions. The liability of such Guarantor under this Guaranty shall be irrevocable, absolute and unconditional irrespective of, and each Guarantor hereby irrevocably waives to the
extent permitted by applicable law, any defenses it may now or hereinafter have in any way relating to, any or all of the following: 

	(a)
	any
lack of validity or enforceability of any Loan Document or any agreement or instrument relating thereto;

	(b)
	any
change in the time, manner or place of payment of, or in any other term of, all or any of the Guaranteed Obligations, or any other amendment or waiver of or any consent to
departure from any Loan Document, including, without limitation, any increase in the Guaranteed Obligations resulting from the extension of additional credit to the Borrower or any of its
Subsidiaries, or otherwise;

	(c)
	any
change, restructuring or termination of the corporate structure or existence of the Borrower or any of its Subsidiaries; or

	(d)
	any
other circumstance or any existence of or reliance on any representation by the Agent or any Lender that might otherwise constitute a defense available to, or a discharge of, the
Borrower, any Guarantor or any other guarantor or surety. 

        This
Guaranty shall continue to be effective or shall be reinstated, as the case may be, if at any time any payment of any of the Guaranteed Obligations made by the Guarantors is
rescinded or must otherwise be returned by the Agent or any Lender upon the insolvency, bankruptcy or reorganization of the Borrower or otherwise, all as though such payment had not been made. 

10.3    Waiver  

        Each Guarantor hereby waives promptness, diligence, notice of acceptance and any other notice with respect to any of the Guaranteed Obligations and this Guaranty
and any requirement that the Agent or any Lender exhaust any right or take any action against the Borrower or any other Person. Each Guarantor acknowledges that it will receive direct and indirect
benefits from the financing arrangements contemplated by the Loan Documents and that the waiver set forth in this section 10.3 is knowingly made in contemplation of such benefits. 

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10.4    Continuing Guaranty; Assignments  

        This Guaranty is a continuing guaranty and shall (a) remain in full force and effect until the indefeasible payment in full of the Guaranteed Obligations,
(b) be binding upon each Guarantor, its successors and assigns and (c) inure to the benefit of and be enforceable by the Lenders, the Agent and their respective successors and assigns.
Without limiting the generality of the foregoing clause (c), any Lender may assign or transfer all or any portion of its rights and obligations hereunder (including, without limitation,
all or any portion of its Lender's Commitment and the Advances owing to it) to any assignee or transferee pursuant to and in accordance with section 12.9, and such assignee or transferee
shall thereupon become vested with all the benefits in respect thereof granted to such Lender herein or otherwise. 

10.5    Subrogation  

        No Guarantor shall exercise any rights that it may now or hereafter acquire against the Borrower or any other Guarantor that arise from the existence, payment,
performance or enforcement of any Guarantor's Obligations under this Agreement or any other Loan Document, including, without limitation, any right of subrogation, reimbursement, exoneration,
contribution or indemnification and any right to participate in any claim or remedy of the Agent or any Lender against the Borrower or any other Guarantor or any collateral, whether or not such claim,
remedy or right arises in equity or under contract, statute or common law, including, without limitation, the right to take or receive from the Borrower or any other Guarantor, directly or indirectly,
in cash or other property or by set-off or in any other manner, payment or security on account of such claim, remedy or right, unless and until all of the Loans and all other amounts
payable under this Guaranty shall have been paid in full in cash and the Aggregate Commitment shall have expired or terminated. If any amount shall be paid to any Guarantor in violation of the
preceding sentence at any time prior to the payment in full in cash of the Guaranteed Obligations and all other amounts payable under this Guaranty, such amount shall be held in trust for the benefit
of the Agent and the Lenders and shall forthwith be paid to the Agent to be credited and applied to the Guaranteed Obligations and all other amounts payable under this Guaranty, whether matured or
unmatured, in accordance with the terms of the Loan Documents, or to be held as collateral for any Guaranteed Obligations or other amounts payable under this Guaranty thereafter arising. If
(i) any Guarantor shall make payment to the Agent or any Lender of all or any part of the Guaranteed Obligations, and (ii) all of the Guaranteed Obligations and all other amounts payable
under this Guaranty shall be paid in full in cash, the Agent and the Lenders will, at such Guarantor's request and expense, execute and deliver to such Guarantor appropriate documents, without
recourse and without representation or warranty, necessary to evidence the transfer by subrogation to such Guarantor of an interest in the Guaranteed Obligations resulting from such payment by such
Guarantor. 

 
 

ARTICLE 11
  THE AGENT AND THE ADMINISTRATION OF THE CREDIT FACILITY    
    

11.1    Appointment and Authorization  

11.1.1    Each
Lender hereby irrevocably appoints and authorizes the Agent to be its attorney in its name and on its behalf to exercise such rights or powers granted to such Lender under
this Agreement, the other Loan Documents and the Subordination Agreements on the terms hereof and thereof, together with such powers as are reasonably incidental thereto. Each Lender hereby authorizes
the Agent to execute, as agent for and on its behalf, any of the other Loan Documents and the Subordination Agreements wherein it is expressly stipulated that the Agent is acting in such capacity, and
each Lender agrees to be bound thereby as principal. 

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11.1.2    As
to any matters not expressly provided for by this Agreement, the other Loan Documents or the Subordination Agreements (including, without limitation, enforcement thereof), the
Agent shall not be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from
acting) upon the instructions of the Majority Lenders, and such instructions shall be binding upon all of the Lenders. The Agent shall not be required to take any action which exposes the Agent to
liability in such capacity, which could result in the Agent's incurring any costs and expenses not contemplated by this Agreement or which is contrary to this Agreement or Applicable Law. 

11.1.3    The
Agent shall have no duties or obligations other than as expressed herein, which duties are solely of a mechanical and administrative nature. Without limiting the generality of
the foregoing, the Agent does not undertake, and the Lenders relieve the Agent from, any implied duties, responsibilities, obligations or functions and there shall not be construed against the Agent
any implied covenants or terms, whether in respect of matters arising prior to, on, or following the date of this Agreement. The relationship between the Agent and the Lenders is that of agent and
principal only, and the Agent shall not have by reason of this Agreement a fiduciary relationship in respect of any Lenders. 

11.2    Duties and Obligations of Agent  

        Neither the Agent nor any of its directors, officers, agents or employees (and, for purposes hereof, the Agent shall be deemed to be contracting as agent for and
on behalf of such Persons) shall be liable to any Lender for any action taken or omitted to be taken by it or them under or in connection with this Agreement, any of the other Loan Documents or the
Subordination Agreements (whether before, on or after the date of this Agreement) except for its or their own gross negligence or wilful misconduct. Without limiting the generality of the foregoing,
the Agent: 

	(a)
	may
assume that there has been no assignment or transfer by any Lender of its rights hereunder unless and until all of the requirements of section 12.9 have been complied with;

	(b)
	may
consult with legal counsel, independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken in good faith by it
in accordance with the advice of such counsel, accountants or experts;

	(c)
	shall
incur no liability under or in respect of this Agreement, any of the other Loan Documents or the Subordination Agreements by acting upon any notice, consent, certificate or
other instrument or writing (which may be by facsimile or other means of electronic communication) believed by it to be genuine and signed or sent by the proper party or parties or by acting upon any
representation or warranty of the Borrower or any of the Guarantors made or deemed to be made hereunder or thereunder;

	(d)
	may
assume that no Default or Event of Default has occurred and is continuing unless it has actual knowledge to the contrary;

	(e)
	may
rely as to any matters of fact which might reasonably be expected to be within the knowledge of any Person upon a certificate signed by or on behalf of such Person;

	(f)
	does
not make any warranty or representation to any Lender nor shall it be responsible to any Lender for the accuracy or completeness of the data made available to any of the Lenders
in connection with the negotiation of this Agreement, or for any statements, warranties or representations (whether written or oral) made in or in connection with this Agreement; 

61

 

	(g)
	shall
not have any duty to ascertain or to enquire as to the performance or observance of any of the terms, covenants or conditions of this Agreement, any of the other Loan Documents
or the Subordination Agreements on the part of the Borrower or any of the Guarantors or to inspect the property (including the books and records) of the Borrower or any of its Material Subsidiaries;

	(h)
	shall
be fully justified in failing or refusing to take any action under this Agreement unless it shall first receive such advice or concurrence of the Majority Lenders as it deems
appropriate or it shall first be indemnified to its satisfaction by the Lenders against any and all liability and expense which may be incurred by it by reason of taking or continuing to take such
action; and

	(i)
	shall
not be responsible to any Lender for the due execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement, any of the other Loan Documents
or the Subordination Agreements or any instrument or document furnished pursuant hereto or thereto or for any failure of the Borrower or any of the Guarantors to perform its obligations hereunder or
thereunder. 

11.3    Prompt Notice to the Lenders  

        The Agent shall provide to the Lenders copies of all information, notices and reports given to the Agent by the Borrower as soon as practicable after receipt of
the same, except information, notices and reports (i) relating solely to the role of Agent hereunder, (ii) distributed directly by the Borrower to the Lenders pursuant to this Agreement,
or (iii) otherwise considered by the Agent to be irrelevant or immaterial to the Lenders or to any particular category or group thereof. 

11.4    Agent's Authority to Deal with Borrower  

        With respect to its own participation in the Credit Facility, the Agent shall have the same rights and powers under this Agreement as any other Lender and may
exercise the same as though it were not the Agent. The Agent may accept deposits from, lend money to, and generally engage in any kind of business with the Company or any Affiliate of any of them and
any Person which may do business with any of them, all as if the Agent were not the Agent hereunder and without any duties to account therefor to the Lenders or to any other Person. 

11.5    Dealings by Borrower with Agent  

        Unless otherwise specifically provided herein, the Borrower shall deal with the Agent in lieu of the Lenders for all purposes of this Agreement. The Borrower may
rely, and shall be fully protected in so relying, without any obligation to inquire into the correctness thereof, upon any action taken, notice, direction, waiver, consent, determination,
communication or agreement by the Agent purporting to be on behalf of the Majority Lenders or the Lenders hereunder, as the case may be, any of which shall, as regards the Borrower, be deemed to be an
action, notice, direction, waiver, consent, determination, communication or agreement of the Majority Lenders or the Lenders, as applicable. 

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   11.6    Independent Credit Decisions  

        Each Lender acknowledges that it has itself been, and will continue to be, solely responsible for making its own independent appraisal of and investigations into
the financial condition, creditworthiness, condition, affairs, status and nature of the Company. Accordingly, each Lender confirms with the Agent that it has not relied, and will not hereafter rely,
on the Agent (i) to check or enquire on its behalf into the adequacy, accuracy or completeness of any information provided by the Borrower or any other Person under or in connection with this
Agreement or the transactions herein contemplated (whether or not such information has been or is hereafter distributed to such Lender by the Agent), or (ii) to assess or keep under review on
its behalf the financial condition, creditworthiness, condition, affairs, status or nature of the Borrower or any of its Subsidiaries. Except for notices, reports and other documents expressly
required to be furnished to the Lenders by the Agent hereunder, the Agent shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the business,
operations, property, condition (financial or otherwise), prospects or creditworthiness of the Borrower or its Subsidiaries which may come into the possession of the Agent or any of its officers,
directors, employees or agents. Each Lender acknowledges that a copy of this Agreement, each of the other Loan Documents the Subordination Agreements and the Wells Fargo Consent has been made
available to it for review and each Lender acknowledges that it is satisfied with the form and substance of the same. 

11.7    Indemnification  

        Each Lender hereby agrees to indemnify the Agent (to the extent not reimbursed by the Borrower), in accordance with its Rateable Portion, from and against
any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever which may be imposed on, incurred by, or
asserted against the Agent at any time (including, without limitation, at any time following repayment in full of all Obligations) in any way relating to or arising out of this Agreement, any of the
other Loan Documents or the Subordination Agreements or any action taken or omitted by the Agent hereunder or thereunder or in respect hereof or thereof; provided that no Lender shall be liable for
any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from the Agent's gross negligence or wilful misconduct.
Without limiting the generality of the foregoing, each Lender agrees to reimburse the Agent promptly upon demand for its Rateable Portion of any out-of-pocket expenses
(including counsel fees) incurred by the Agent in connection with the preservation of any rights of the Agent or the Lenders as against the Borrower under, or the enforcement of, or legal advice in
respect of rights or responsibilities under, this Agreement, the other Loan Documents and the Subordination Agreements, to the extent that the Agent is not reimbursed for such expenses by the
Borrower. The indemnity in this section 11.7 shall survive the payment and satisfaction of all Obligations and the termination of this Agreement. 

11.8    Successor Agent  

        The Agent may, as hereinafter provided, resign at any time by giving 30 days prior written notice thereof to the Lenders and the Borrower. Upon any such
resignation, the Lenders shall have the right to appoint a successor agent (the "Successor Agent") which shall be one of the Lenders. If no Successor Agent shall have been so appointed by the
Lenders and shall have accepted such appointment within 30 days after the retiring Agent's giving of notice of resignation, then the retiring Agent may, on behalf of the Lenders, appoint a
Successor Agent from among the Lenders acceptable to the Borrower acting reasonably. Upon the acceptance of any appointment as Agent hereunder by a Successor Agent, such Successor Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Agent, and the retiring Agent shall thereupon be discharged from its further duties and
obligations as Agent under this Agreement. The retiring Agent shall cooperate with the Successor Agent in the performance of its duties for a reasonable period of time after such resignation. After
any retiring Agent's resignation hereunder as Agent, the provisions of this Article 11 shall continue to enure to its benefit as to any actions taken or omitted to be taken by it while it was
Agent hereunder. 

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11.9    Action by and Consent of Lenders; Waiver and Amendments  

11.9.1    Subject
to section 11.9.3, where the terms of this Agreement, any of the other Loan Documents or the Subordination Agreements refer to any action to be taken hereunder or
thereunder by the Lenders or to any such action that requires the consent or other determination of the Lenders, the action taken by and the consent or other determination given or made by the
Majority Lenders shall, except to the extent that this Agreement expressly provides to the contrary, constitute the action or consent or other determination of the Lenders herein or therein referred
to, and the Agent may exercise its powers under section 11.1 based upon such action, consent or other determination. 

11.9.2    Subject
to section 11.9.3, this Agreement, any other Loan Document and the Subordination Agreements may be amended only if the Borrower and the Majority Lenders so agree in
writing, any consent under this Agreement, any other Loan Document or the Subordination Agreements shall be given only by the Agent (at the direction of the Majority Lenders) in writing, and
any Event of Default may be waived before or after it occurs only if the Agent (at the direction of the Majority Lenders) so agrees in writing. Any amendment, consent or waiver so made shall be
binding upon all of the Lenders. 

11.9.3    Any
amendment or waiver which changes or relates to: 

	(a)
	the
amount or term of the Loan available hereunder or any Lender's Commitment;

	(b)
	the
amount or dates of payment of principal, interest or fees;

	(c)
	the
notice period required for any Advance;

	(d)
	the
amount or dates of payment of any fees;

	(e)
	the
definition of "Majority Lenders";

	(f)
	the
priority or release of the Security; or

	(g)
	this
section 11.9; 

shall
require the agreement of all of the Lenders and also (in the case of an amendment) of the Borrower. An amendment or waiver which changes or relates to the rights and/or obligations of the
Agent shall also require the agreement of the Agent thereto. 

11.9.4    Any
waiver and any consent by the Agent or any Lenders under any provision of this Agreement, any other Loan Document or the Subordination Agreements may be given subject to any
conditions thought fit by the Person giving that waiver or consent. Any waiver or consent shall be effective only in the instance and for the purpose for which it is given. 

64

 

11.10    Funding of Advances  

11.10.1    Upon
receipt of a Borrowing Notice, the Agent shall forthwith notify each Lender of the proposed Borrowing Date, Rollover Date or Conversion Date, as the case may be, the
principal amount of the relevant Advance, Rollover or Conversion, as the case may be, such Lender's Rateable Portion of any Advance, the account of the Agent to be credited by such Lender
(if applicable) and all other relevant particulars thereof (including, in the case of an issuance of a Letter of Credit, the expiry date thereof and the name of the beneficiary thereof). 

11.10.2    Each
Lender shall, not later than 11:00 a.m. (Chicago time) on the relevant Borrowing Date, credit the Agent's account specified in the Agent's notice given under this
section 11.10 with such Lender's Rateable Portion of each Advance in immediately available funds. The Agent will, as soon as reasonably practicable after receiving such funds from the Lenders
and upon fulfilment of all applicable conditions set forth in this Agreement, make the full amount of such funds available to the Borrower by crediting the Borrower's account maintained with the Agent
at the Branch of Account (or causing such account to be credited). 

11.10.3    Unless
the Agent has been notified by a Lender by 10:00 a.m. (Chicago time) on the proposed Borrowing Date of any Loan requested by the Borrower that such Lender will not
make available to the Agent its Rateable Portion of such Loan, the Agent may assume that such Lender has made such portion of the Loan available to the Agent on the Borrowing Date in accordance with
the provisions hereof and the Agent may, in reliance upon such assumption, make available to the Borrower on such date a corresponding amount. If and to the extent such Lender shall not have so made
its Rateable Portion of a Loan available to the Agent, such Lender agrees to pay to the Agent forthwith on demand such Lender's Rateable Portion of the Loan and all reasonable costs and expenses
incurred by the Agent in connection therewith together with interest thereon (at the rate payable hereunder by the Borrower in respect of such Loan) for each day from the date such amount is
made available to the Borrower until the date such amount is paid to the Agent, provided, however, that notwithstanding such obligation if such Lender fails to so pay, the Borrower shall, without
prejudice to any rights the Borrower may have against such Lender, repay such amount to the Agent forthwith after demand therefor by the Agent. The amount payable to the Agent pursuant hereto shall be
as set forth in a certificate delivered by the Agent to such Lender and the Borrower (which certificate shall contain reasonable details of how the amount payable is calculated) and shall be  prima facie
evidence of the amount owing. If such Lender makes the payment to the Agent required herein, the amount so paid (otherwise than in respect
of interest and such costs, charges and expenses of the Agent) shall constitute such Lender's Rateable Portion of the Loan for purposes of this Agreement. If the Agent has been notified by a Lender
that such Lender will not make available to the Agent its Rateable Portion of any Loan, the Agent shall have no obligation to make available such amount to the Borrower under any provision of this
Agreement or any Loan Document. 

11.10.4    The
failure of any Lender to fund its Rateable Portion of a Loan shall not relieve any other Lender of its obligation, if any, hereunder to fund its Rateable Portion of the Loan
on the relevant Borrowing Date and nothing in this Agreement shall limit the rights and remedies that the Borrower, the Agent or any Lender may have against a defaulting Lender. 

11.11    Remittance of Payments  

11.11.1    As
soon as practicable after receipt of any notice of payment by the Borrower hereunder, the Agent shall give notice to each Lender of the amount of the payment to be made to it
on such day and all other relevant particulars of such payment. Subject to section 11.15, as soon as practicable after receipt of any repayment or prepayment of any Loans under the Credit
Facility or any payment of interest or any other amount payable by the Borrower hereunder, the Agent shall remit to each Lender its Rateable Portion of such payment or prepayment and its respective
entitlement, if any, to any other amount payable by the Borrower hereunder. 

65

 

11.11.2    If
the Agent, on the assumption that it will receive on any particular date a payment of principal, interest or fees hereunder, remits any amount to the relevant Lender and the
Borrower fails to make such payment, each such Lender agrees to repay to the Agent forthwith on demand the amount so received by it together with all reasonable costs and expenses incurred by the
Agent in connection therewith (to the extent not reimbursed by the Borrower) and interest thereon at the rate and calculated in the manner applicable to the Loan in respect of which such
payment was made for each day from the date such amount is remitted to the relevant Lender. The amount payable to the Agent pursuant hereto shall be as set forth in a certificate delivered by the
Agent to each such Lender, which certificate shall be conclusive and binding for all purposes, absent manifest error. 

11.12    Redistribution of Payments  

        Except as otherwise expressly contemplated in this Agreement, a Lender (a "Remitting Bank") which obtains any payment (whether voluntary, involuntary, by
way of set-off or otherwise) on account of its portion of a Loan which has not been repaid to the other Lender in accordance with their respective Rateable Portions shall, and the Borrower
hereby irrevocably authorizes any such Lender to, remit such payment or portion thereof to the Agent for redistribution to the Lenders in accordance with their respective Rateable Portions. In any
such case, the Remitting Bank, upon such payment by it to the Agent, shall be deemed for all purposes not to have received from the Borrower that payment so remitted to the Agent, and the Lenders
(the "Receiving Bank") receiving such payment or portions thereof upon a redistribution thereof by the Agent shall be deemed for the purposes hereof to have received such payment or portion
thereof (as the case may be) from the Borrower. If all or part of any such payment made by such Remitting Bank shall be recovered by the Borrower from such Remitting Bank, such amount so paid
by such Remitting Bank to the Agent shall forthwith be repaid by the Receiving Bank to the Agent (for the benefit of the Remitting Bank). 

11.13    Notification of Default  

        Each Lender shall promptly notify the Agent, and the Agent shall promptly notify each of the Lenders, of any event of which it has actual notice which constitutes
a Default or an Event of Default. The Agent shall not be deemed to have actual notice of the occurrence of a Default or Event of Default unless the Agent has received notice from any of the Lenders or
the Borrower referring to this Agreement, describing the default and stating that the notice is a "Notice of Default". 

11.14    Taking and Enforcement of Remedies  

11.14.1    Each
of the Lenders hereby acknowledges that, to the extent permitted by Applicable Law, the remedies provided hereunder, under the other Loan Documents and under the
Subordination Agreements to the Lenders are for the benefit of the Lenders collectively and acting together and not severally and further acknowledges that its rights hereunder and thereunder are to
be exercised collectively by the Agent upon the instructions of the Majority Lenders. Accordingly, notwithstanding any of the provisions contained herein or therein, each of the Lenders hereby
covenants and agrees that it shall not be entitled to take any action with respect to the Credit Facility, including, without limitation, any election of remedies in respect of an Event of Default
hereunder, but that any such action shall be taken only by the Agent upon the instructions of the Majority Lenders as provided herein. Notwithstanding the foregoing, in the absence of instructions
from the Majority Lenders (or, to the extent section 11.9.3 is applicable, all of the Lenders) where the Agent has requested instructions and in its sole opinion the exigencies of the
situation warrant such action, the Agent may without notice to or consent of the Lenders take such action on behalf of the Lenders as it deems appropriate or desirable in the interests of the Lenders.
Each of the Lenders further covenants and agrees that, upon any such instructions being given to the Agent by the Majority Lenders, it shall cooperate fully with the Agent to the extent requested by
the Agent in any remedial action hereunder including, without limitation, the appointment of a receiver and manager to act for their collective benefit. Each Lender covenants and agrees to do all acts
and things and to make, execute and deliver all agreements and other instruments, including, without limitation, any instruments necessary to effect any registrations, so as to fully carry out the
intent and purposes of this section 11.14.1. 

66

 

11.14.2    Each
Lender hereby covenants and agrees that it has not heretofore sought, taken, accepted or received and shall not hereafter seek, take, accept or receive any security for any
of the obligations and liabilities of the Borrower hereunder or under the other Loan Documents or under any other document, instrument, writing or agreement ancillary hereto or thereto other than such
security as is provided hereunder or thereunder and shall not enter into any agreement with any of the parties hereto or thereto relating in any manner whatsoever to the Credit Facility, unless all of
the Lenders shall at the same time obtain the benefit of any such security or agreement. 

11.14.3    Each
of the Lenders and the Borrower further covenants and agrees that all proceeds from the exercise of the rights and remedies provided hereunder, under the Loan Documents and
under the Subordination Agreements, to the extent permitted by Applicable Law, are held for the benefit of all of the Lenders and, after deduction therefrom of all costs of enforcement, shall be
shared among the Lenders proportionately based upon the respective aggregate amounts of the Obligations which are outstanding to each of the Lenders at the relevant time or times of sharing. To the
extent any Lender receives or is entitled to receive any amount hereunder in excess of the amount of the Obligations owed to it hereunder it shall hold such excess in trust on behalf of and for the
benefit of the other Lenders entitled thereto. 

11.14.4    Each
of the Lenders agrees with each of the other Lenders that if it exercises any right of set-off in accordance with the provisions hereof (or otherwise
pursuant to Applicable Law) in connection with any Obligations, it shall promptly so advise the Agent and each of the other Lenders and, to the extent permitted by Applicable Law, the Lenders shall
share all such set-offs in accordance with the provisions of section 11.14.3 hereof, provided that none of the Lenders shall be liable hereunder to any of the other Lenders by
reason of failure to exercise or validly exercise any right of set-off or by reason of any restriction upon any such sharing. 

11.15    Adjustments to Reflect Rateable Portions  

        All Loans outstanding under the Credit Facility shall be maintained as between the Lenders according to their respective Rateable Portions, except to the extent
that the Agent deems any variations therefrom to be immaterial and except that the L/C Lender shall solely be responsible for making L/C Loans. The Agent shall determine all adjustments to amounts
required to be advanced by the Lenders or to amounts of payments to which the respective Lenders are entitled to reflect as nearly as practicable the respective Rateable Portions of the Lenders under
the Credit Facility. 

67

 

11.16    No Partnership  

        Nothing contained in this Agreement and no action taken by the Lenders pursuant hereto shall be deemed to constitute the Lenders a partnership, association, joint
venture or other collective entity. 

ARTICLE 12

GENERAL  

12.1    Reliance and Non-Merger  

        All covenants, agreements, representations and warranties of the Borrower made herein or in any other Loan Document or in any certificate or other document signed
by any of its directors or officers and delivered by or on behalf of either of them pursuant hereto or thereto are material, shall be deemed to have been relied upon by the Agent and each Lender
notwithstanding any investigation heretofore or hereafter made by the Agent, the Lenders or Lender's Counsel or any employee or other representative of any of them and shall survive the execution and
delivery of this Agreement and the other Loan Documents until there are no Loans outstanding and the Lenders shall have no further obligation to make Advances hereunder. For clarity, this
section 12.1 shall in no way affect the survival of those provisions of this Agreement or any Loan Document which by their terms are stated to survive termination of this Agreement. 

12.2    Confidentiality  

        Each of the Agent and each of the Lenders will maintain on a confidential basis (except as otherwise permitted hereunder or as required by Applicable Law) all
information relating to the Borrower and its Subsidiaries provided to it hereunder by and on behalf of the Borrower or any of its Subsidiaries; provided, however, that this section 12.2 shall
not apply to any information which (i) was lawfully in the public domain at the time of communication to the Agent or such Lender, (ii) lawfully enters the public domain through no fault
of the Agent or such Lender subsequent to the time of communication to the Agent or such Lender, (iii) was lawfully in the possession of the Agent or such Lender free of any obligation of
confidence at the time of communication to the Agent or such Lender, or (iv) was lawfully communicated to the Agent or such Lender free of any obligation of confidence subsequent to the time of
initial communication to the Agent or such Lender. 

12.3    No Set-Off by the Borrower  

        The amounts payable by the Borrower hereunder shall be made in full and shall not be subject to any deduction, withholding, set-off or counterclaim by
the Borrower for any reason whatsoever. 

12.4    Employment of Experts  

        The Agent may, at any time and from time to time, at its cost if not a responsibility of the Borrower in section 5.4, retain and employ legal counsel,
independent accountants and other experts in order to perform or assist it in the performance of its rights and powers under this Agreement, the other Loan Documents or the Subordination Agreements
and will advise the Borrower at any time that it elects to do so. 

68

 

12.5    Reliance by the Lenders  

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

12.6    Notices  

        Any notice or other communication required or permitted to be given hereunder shall be in writing and shall be given by facsimile or other means of electronic
communication or by hand-delivery or courier as hereinafter provided. Any such notice, if delivered by courier, shall be deemed to be received on the next Banking Day after the date of
delivery thereof, or if sent by facsimile or other means of electronic communication, shall be deemed to have been received on the day sent if sent prior to 2:00 p.m. (Chicago time) on any
Banking Day or otherwise on the next succeeding Banking Day. Notice of change of address shall also be governed by this section 12.6. Notices and other communications shall be addressed as
follows: 

	 	 	(a)	 	if to the Borrower or any Guarantor:
	
 	
 	

 	
 	

Magna Entertainment Corp.

337 Magna Drive

Aurora, Ontario

L4G 7K1
	
 	
 	

 	
 	

Attention: Chief Financial Officer

And Attention: Corporate Secretary

Facsimile number: (905) 726-7172
	
 	
 	

(b)	
 	

if to the Agent:
	
 	
 	

 	
 	

Bank of Montreal

115 South LaSalle 17W

Chicago, Illinois

60603
	
 	
 	

 	
 	

Attention: Manager, Client Services

Facsimile number: (312) 293-8965
	
 	
 	

(c)	
 	

if to the Lenders:
	
 	
 	

 	
 	

Bank of Montreal

115 South LaSalle 17W

Chicago, Illinois

60603
	
 	
 	

 	
 	

Attention: Manager, Client Services

Facsimile number: (312) 293-8965

69

 

	 	 	(d)	 	if to the Arranger:
	
 	
 	

 	
 	

Bank of Montreal

115 South LaSalle 17W

Chicago, Illinois

60603
	
 	
 	

 	
 	

Attention: Manager, Client Services

Facsimile number: (312) 293-8965

12.7    Time  

        Time is of the essence of the Loan Documents. 

12.8    Further Assurances  

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

12.9    Assignment  

12.9.1    This
Agreement, the other Loan Documents and the Subordination Agreements shall enure to the benefit of and be binding on the parties hereto and thereto, their respective
successors and any assignee or transferee of some or all of the parties' rights or obligations under this Agreement, the other Loan Documents and the Subordination Agreements as permitted under this
section 12.9. 

12.9.2    The
Borrower shall not assign or transfer all or any part of its rights or obligations under this Agreement, any of the other Loan Documents or the Subordination Agreements without
the prior written consent of all of the Lenders, which consent may be arbitrarily withheld and any such assignment or transfer without consent shall be null and void. 

12.9.3    Any
Lender (a "Grantor") may grant participations in all or part of its rights and obligations in respect of the Credit Facility, the Loan Documents and the Subordination
Agreements to any other Person (a "Participant"), at such times and upon such terms as it may deem fit, without any obligation to obtain any consent of the Borrower, provided in each case that: 

	(a)
	the
Grantor shall remain fully liable for all of its obligations and responsibilities hereunder to the same extent as if such participation had not been granted; and

	(b)
	the
Grantor shall administer the participation of the Participant and neither the Participant nor the Borrower shall have any rights against or obligations to, or deal directly with,
each other in respect of the participation of the Participant. 

12.9.4    Any
Lender (an "Assignor") may assign or transfer all or part of its rights in respect of the Credit Facility, the Loan Documents and the Subordination Agreements to, and
may have its corresponding obligations in respect thereof assumed by any other Lender or any Affiliate of the Assignor or any Person (the "Assignee") at such times and upon such terms as it may
deem fit, in each case, but only after obtaining the prior written consent of the Borrower (which consent shall not be unreasonably withheld or delayed and shall be provided as soon as practicable,
and provided further that the Borrower's consent shall not be required if an Event of Default has occurred and is continuing), provided in each case that: 

70

 

	(a)
	without
the Borrower's further prior written consent, no such assignment or transfer shall be permitted that would cause the Borrower to be obligated to make any payments under
section 3.5, 3.6 or 3.7 or any withholdings under the Internal Revenue Code arising on and as at the date of, and as a result of, such assignment or transfer that it was not
otherwise obligated to pay to the Assignor on such date or would not be obligated to pay on such date but for such assignment or transfer;

	(b)
	the
Assignor and the Assignee shall enter into an assignment and assumption agreement (the "Assignment Agreement") substantially in the form of Schedule 12.9.4,
or otherwise in form and substance satisfactory to the Agent and the Assignor, whereby inter alia the Assignee agrees to be bound by the
Subordination Agreements, this Agreement, and all other Loan Documents relating to the obligations of the Lenders in the place and stead of the Assignor to the extent that the rights and obligations
of the Assignor shall have been assigned or transferred to and assumed by the Assignee, and shall deliver a copy of the Assignment Agreement so executed to the Agent;

	(c)
	the
Assignor shall pay to the Agent for the Agent's own account an administrative fee of $3,500 concurrently with the delivery of the Assignment Agreement to the Agent;

	(d)
	the
Agent shall execute the Assignment Agreement and shall notify the Borrower of the proposed Assignee and the rights and obligations to be assigned or transferred to the Assignee.
The Agent and (if the consent of the Borrower to the assignment or transfer is required) the Borrower shall execute and deliver the Assignment Agreement, and the Agent shall then deliver a copy
of the executed Assignment Agreement to the Assignee and the Assignor. The Borrower shall execute and deliver such other assurances as may be reasonably requested by the Agent to confirm the release
and discharge provided for in clause (e) below;

	(e)
	upon
execution of the Assignment Agreement by the Assignor, the Assignee, the Agent and (if the consent of the Borrower to the assignment or transfer is required) the Borrower,
the assignment or transfer to the Assignee shall be effective upon the date provided in the Assignment Agreement, and the Assignee shall thereafter be and be treated as a Lender for all purposes of
this Agreement, the other Loan Documents and the Subordination Agreements and shall be entitled to the full benefit hereof and thereof to the extent of such benefits as are assigned or transferred to
it by the Assignor and subject to the obligations of the Assignor to the same extent as if the Assignee were an original party in respect of the rights and obligations assigned or transferred to and
assumed by it, and the Assignor in respect of such assignment or transfer shall be released and discharged accordingly other than in respect of claims of the Borrower or a Guarantor against the
Assignor relating to an event or circumstances arising, existing or occurring prior to such assignment or transfer;

	(f)
	as
soon as practicable after the assignment or transfer shall have become effective the Agent shall prepare and distribute to the Lenders and to the Borrower an amendment to
Schedule 1.1.66 reflecting the adjustments to the Lender's Commitments after such transfer or assignment, to which amendment the Borrower hereby agrees; and 

71

 

	(g)
	the
Assignee (other than an Assignee that is an Affiliate of the Assignor) of any Loan outstanding hereunder shall be entitled to receive the principal monies and all interest and all
other monies owing under this Agreement in respect thereof free from all equities or rights of set-off or counterclaim between the Borrower and the original Lender or Lenders that advanced
such Loan and any intermediate Person entitled thereto and all Persons may act accordingly. 

12.9.5    Any
assignment, transfer or grant of a participation by a Lender as contemplated by this section 12.9 shall not constitute a repayment by the Borrower to the Grantor or
Assignor, as the case may be, of the assigned, transferred or participated portion of the Credit Facility, nor an Advance to the Borrower by the Assignee or Participant, as the case may be, and the
parties acknowledge that the Borrower's obligations hereunder with respect to the assigned, transferred or participated portion of Loans will continue and not constitute new obligations. 

12.10    Exchange of Information  

        Each Lender may provide to any proposed assignee, transferee or participant such information concerning the financial position and the operations of the Company
as, in the opinion of such Lender, may be relevant or useful in connection with the Credit Facility or any portion thereof proposed to be acquired by such assignee, transferee or participant, provided
that each recipient of such information agrees not to disclose such information to any other Person and to be bound by the terms of section 12.2. 

12.11    Counterparts  

        This Agreement may be signed in any number of counterparts, each of which shall be deemed to be an original, but all such separate counterparts shall together
constitute one and the same instrument. Delivery of an executed counterpart of a signature page to this Agreement by telecopier shall be effective as delivery of a manually executed counterpart of
this Agreement. 

12.12    Entire Agreement  

        The Loan Documents constitute the entire agreement between the parties hereto pertaining to the matters therein set forth and supersede and replace any prior
understandings or arrangements pertaining to the Credit Facility. There are no warranties, representations or agreements between the parties in connection with such matters except as specifically set
forth or referred to in the Loan Documents. 

12.13    Liability of Arranger  

        The Borrower, Agent, each Guarantor and each Lender acknowledges and agrees that the Arranger has only acted in an administrative capacity to facilitate the
establishment and/or maintenance of the Credit Facility and has no responsibility to any of them for (a) the adequacy, accuracy, completeness and reasonableness of any representation, warranty,
undertaking, agreement or statement contained in this Agreement, any Loan Document or the Subordination Agreements, or (b) any loss, cost, expense, damage or liability suffered or incurred by
any of them; provided, however, that the Arranger shall have the full benefit of any indemnity of the Borrower or Guarantor provided hereunder or under any other Loan Document, including (without
limitation) section 3.8 hereof. 

72

 
        [Intentionally Left Blank]

73

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

	 	 	MAGNA ENTERTAINMENT CORP., as Borrower
	
 	
 	

By:	

 Name:

Title:
	
 	
 	

By:	

 Name:

Title:
	
 	
 	
BAY MEADOWS OPERATING COMPANY LLC, as Guarantor, but only with respect to Article 10 and all other provisions related thereto
	
 	
 	

By:	

 Name:

Title:
	
 	
 	

By:	

 Name:

Title:
	
 	
 	
PACIFIC RACING ASSOCIATION, as Guarantor, but only with respect to Article 10 and all other provisions related thereto
	
 	
 	

By:	

 Name:

Title:
	
 	
 	

By:	

 Name:

Title:

	
 	
 	
MEC LAND HOLDINGS (CALIFORNIA) INC., as Guarantor, but only with respect to Article 10 and all other provisions related thereto
	
 	
 	

By:	

 Name:

Title:
	
 	
 	

By:	

 Name:

Title:
	
 	
 	
THE SANTA ANITA COMPANIES, INC., as Guarantor, but only with respect to Article 10 and all other provisions related thereto
	
 	
 	

By:	

 Name:

Title:
	
 	
 	

By:	

 Name:

Title:
	
 	
 	
LOS ANGELES TURF CLUB, INCORPORATED, as Guarantor, but only with respect to Article 10 and all other provisions related thereto
	
 	
 	

By:	

 Name:

Title:
	
 	
 	

By:	

 Name:

Title:

	
 	
 	
BANK OF MONTREAL, acting through its Chicago lending office, as Lender
	
 	
 	

By:	

 Name:

Title:
	
 	
 	

By:	

 Name:

Title:
	
 	
 	
BANK OF MONTREAL, acting through its Chicago lending office, as Agent
	
 	
 	

By:	

 Name:

Title:
	
 	
 	

By:	

 Name:

Title:
	
 	
 	
BMO NESBITT BURNS INC., a division of Bank of Montreal, as Arranger
	
 	
 	

By:	

 Name:

Title:
	
 	
 	

By:	

 Name:

Title:

 
 

SCHEDULE 1.1.19
  
    Borrowing Notice    

TO:    Bank
of Montreal, as Agent (the "Agent") 

           Re:
Magna Entertainment Corp. 

        Reference
is made to an amended and restated credit agreement (the "Credit Agreement") dated as of July 22, 2005 between Magna Entertainment Corp., as Borrower, the
Guarantors, the Lenders, the Agent and the Arranger. All terms used in this Borrowing Notice which are defined in the Credit Agreement have the meanings attributed thereto in the Credit Agreement. 

        The
Borrower hereby requests a Loan as follows: 

	1.	 	Type of Loan:	 	

	
 2.	
 	

Amount of Loan:	
 	

	
 3.	
 	

Borrowing Date:	
 	

	
 4.	
 	

Interest Period or Letter of Credit term, as applicable:	
 	

	
 5.	
 	

Payment instructions (if any):	
 	

	
 	
 	

 	
 	

	
 6.	
 	

If Rollover or Conversion of another Loan, provide details of other Loan:
	
 	
 	

A.    Rollover or Conversion:	
 	

	
 	
 	

B.    Type of old Loan:	
 	

	
 	
 	

C.    Type of new Loan:	
 	

	
 	
 	

D.    Amount:	
 	

	
 	
 	

E.    Interest Period:	
 	

        All
of the representations and warranties of the Borrower in Article 6 of the Credit Agreement are true and correct on the date hereof as if made on and as of the date hereof
except if any such representation and warranty is specifically given in respect of a particular date or particular period of time and relates only to such date or period of time, then such
representation and warranty shall be true and correct as of the date given or for the period of time to which it relates. This statement shall not apply in connection with any
Rollover or Conversion.

 

        No
Default or Event of Default has occurred and is continuing nor is it reasonably anticipated that any Default or Event of Default will occur immediately after giving effect to the
aforementioned Loan. This statement shall not apply in connection with any Rollover or Conversion.

        Except
as disclosed in writing by the Borrower to the Agent, no Material Adverse Change since the date of the last Advance (or, in the case of the initial Advance,
October 10, 2003) has occurred. This statement shall not apply in connection with any Rollover or Conversion.

        DATED
this    •     day of    •    ,    •    . 

	 	 	MAGNA ENTERTAINMENT CORP.
	
 	
 	

By:	

 Name:

Title:
	
 	
 	

By:	

 Name:

Title:

2

 
 

SCHEDULE 1.1.44    
    

 
 

Excluded Subsidiaries    

AUSTRIA 

MEC
Projektentwicklungs AG 

FEX
ÖKO Faserverarbeitungs-GmbH 

MEC
Grundstücksentwicklungs GmbH 

Gemeinnützige
Wohnungsgesellschaft "SDP" Gesellschaft mit beschränkter Haftung 

Fontana
Beteiligungs AG 

MARYLAND 

Maryland
Ventures, LLC (Maryland)

Maryland Racing, Inc. (Delaware)

Laurel Racing Association Inc. (Maryland)

Laurel Racing Association Limited Partnership (Maryland)

Prince George's Racing, Inc. (Maryland)

Pimlico Racing Association, Inc. (Maryland)

The Maryland Jockey Club of Baltimore City, Inc. (Maryland)

Southern Maryland Racing, Inc. (Maryland)

Maryland-Virginia Racing Circuit, Inc. (Maryland)

Maryland OTB Facilities, LLC (Maryland)

New Maryland OTB Facilities, LLC (Maryland)

Southern Maryland Agricultural Association (Maryland) 

PENNSYLVANIA 

MEC
Pennsylvania Racing, Inc. (Pennsylvania)

MEC Pennsylvania Food Service, Inc. (Pennsylvania)

Allegheny Harness Racing Association, Inc. (Delaware)

Allegheny Thoroughbred Racing Association, Inc. (Delaware)

2002 Delaware Inc. (Delaware)

Mountain Laurel Racing, Inc. (Delaware)

Washington Trotting Association, Inc. (Delaware) 

FLORIDA 

Gulfstream
Park Racing Association, Inc. 

OKLAHOMA 

Remington
Park, Inc. 

Note: MEC Racing Management General Partnership (Pennsylvania), carrying on business as a network of Off-Track Betting Facilities ('OTB's') in Pennsylvania, is not
an Excluded Subsidiary.

 
 

SCHEDULE 1.1.66    
    

 
 

Lender's Commitments  

	Lenders 
	 	Lender's Commitment
 

	Bank of Montreal, through its Chicago lending office	 	$50,000,000

 
 

SCHEDULE 1.1.34    
    

 
 

Designated Assets  

Meadows
Properties and any real or personal property in respect thereof 

Colonial
Downs Management Contract 

Palm
Meadows Residential Development Land and any real or personal property in respect thereof 

Thistledown
Properties and any real or personal property in respect thereof 

Portland
Meadows Properties and any real or personal property in respect thereof 

Great
Lakes Downs Properties and any real or personal property in respect thereof 

San
Luis Rey Downs Properties and any real or personal property in respect thereof 

Magna
Golf Course and any real or personal property in respect thereof 

Fontana
Golf Course and Residential Properties and any real or personal property in respect thereof 

Dixon
Properties and any real or personal property in respect thereof 

Ocala
Properties and any real or personal property in respect thereof 

Gulfstream
Properties and any real or personal property in respect thereof 

Remington
Properties and any real or personal property in respect thereof 

 
 

SCHEDULE 6.1.18    
    

 
 

Material Subsidiaries    

	Business Unit 
	 	Legal Entities
 

	Santa Anita	 	1) The Santa Anita Companies, Inc. (Delaware)
	 	 	2) Los Angeles Turf Club Incorporated (California)
	
 Golden Gate	
 	

1) Pacific Racing Association (California)
	 	 	2) MEC Land Holdings (California) Inc.
	
 Bay Meadows	
 	

1) Bay Meadows Operating Company LLC (Delaware)
	
 Meadows (OTB operations)	
 	

1) MEC Racing Management General Partnership (Pennsylvania)
	
 Lone Star Park	
 	

1) Racetrack Holdings, Inc. (Delaware)
	 	 	2) MEC Texas Concessions, LLC (Texas)
	
 Xpress Bet/HRTV	
 	

 

 
 

SCHEDULE 7.1.13
  
    Form of Certificate of the Borrower    
    

	To:	 	Bank of Montreal, as Agent
	And To:	 	Bank of Montreal, as Lender
	 	 	•    {Add all other Lenders}

        This
certificate is furnished pursuant to section 7.1.13 of that certain amended and restated credit agreement (the "Credit Agreement") dated as of July 22, 2005
between Magna Entertainment Corp. (the "Borrower"), the Guarantors, the Lenders, the Agent and the Arranger. All terms used in this Officer's Certificate which are defined in the Credit
Agreement have the meanings attributed thereto in the Credit Agreement. 

MAGNA ENTERTAINMENT CORP. HEREBY CERTIFIES THAT: 

	1.
	It
has complied with all covenants contained in the Credit Agreement, and all of its representations and warranties are repeated as of the last day of the accounting period to which
this certificate relates, with the same effect as if made and given on and as of such day; except that if any such representation and warranty is specifically given in respect of a particular date or
particular period of time and relates only to such date or period of time, then such representation and warranty shall continue to be given as at such date or for such period of time;

	2.
	The
Borrower has no knowledge of the existence of, any Default or Event of Default under the Credit Agreement during or at the end of the accounting period covered by the attached
financial statements or as of the date of this certificate, except as set forth below. 

        Described
below are the exceptions if any to this Paragraph 2 by specifying the relevant particulars and the period of existence thereof and the action taken, being taken or
proposed to be taken by or on behalf of the Borrower or any Material Subsidiary with respect thereto: 

	3.
	The
Borrower has no knowledge of, any Material Adverse Change since the date of the last financial statements delivered to the Agent pursuant to the Credit Agreement, except as set
forth below. 

        Described
below are the exceptions if any to this Paragraph 3 by specifying the relevant particulars and the period of existence thereof and the action taken, being taken or
proposed to be taken by or on behalf of the Borrower with respect thereto: 

	4.
	The
financial statements attached hereto for the [Fiscal Quarter/Fiscal Year]
ended             , were prepared in accordance with GAAP (subject to normal year-end adjustments in the case of interim unaudited financial
statements) and fairly present the financial position and results of operations of the Borrower on a consolidated basis for the period and as at the date thereof. 

 
	5.
	Set
forth below are the calculations of and financial information evidencing the Borrower's compliance with the financial covenants contained in section 7.1.18 of the Credit
Agreement, all of which computations are true, complete and correct: 

	 	 	(a)	 	EBITDA for last 12 months for Santa Anita:	 	

	
 	
 	

(b)	
 	

EBITDA for last 12 months (pro rated from January 1, 2005 if applicable) for Golden Gate:	
 	

        The
foregoing certifications, and the computations and financial statements delivered with this certificate in support hereof, are made and delivered this
             day of                         ,
             . 

	 	 	MAGNA ENTERTAINMENT CORP.
	
 	
 	

By:	

 Name:

Title:

2

SCHEDULE 12.9.4
  Assignment and Assumption Agreement 

ASSIGNMENT AND ASSUMPTION AGREEMENT  

    •   

as Assignor

— and —

    •   

as Assignee

— and — 

 
 

BANK OF MONTREAL, ACTING THROUGH ITS
  CHICAGO LENDING OFFICE    
    

as
Agent

— and — 

 
 

MAGNA ENTERTAINMENT CORP.
  
    as Borrower    

ASSIGNMENT AND ASSUMPTION AGREEMENT  

Dated as of    •    ,    •  
 ASSIGNMENT AND ASSUMPTION AGREEMENT  

        This Assignment and Assumption Agreement is made as of    •    ,    •    
(the "Assignment Date") among    •    (the "Assignor"), a Lender under the Credit Agreement referred to and defined hereafter,
    •    (the "Assignee"), Bank of Montreal, acting through its Chicago lending office, as Agent (the "Agent") and Magna Entertainment Corp.
(the "Borrower"). 

RECITALS:  

	A.
	Pursuant
to an amended and restated credit agreement dated as of July 22, 2005 (as amended, supplemented and restated from time to time, the "Credit Agreement") among the
Borrower, the Guarantors, the Agent, the Arranger and the financial institutions specified therein as Lenders (collectively, the "Lenders"), the Lenders have provided the Credit Facility to the
Borrower;

	B.
	The
Assignor has agreed to assign and sell to the Assignee    •    % of its right, title and interest in and to the Credit Facility, including without
limitation    •    % of the Loans outstanding thereunder (the "Assigned Interest"), and the Assignee has agreed to accept and purchase the Assigned Interest and
to assume all liabilities and obligations of the Assignor in respect of the Assigned Interest, all effective as of the Assignment Date; 

 
	C.
	The
Borrower has requested that the Assignee enter into an agreement pursuant to section 12.9.4 of the Credit Agreement and the Borrower has agreed to acknowledge the release
and assumption of the Assigned Interest hereunder. 

        NOW THEREFORE, in consideration of the foregoing premises, the sum of $10.00 now paid by the Assignor to the Assignee and for other good
and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 

	6.
	Definitions.    All terms defined in the Credit Agreement which appear herein without definition shall have the meanings
attributed thereto in the Credit Agreement.

	7.
	Conveyance of Assigned Interest.    The Assignor hereby assigns, sells, conveys and transfers to the Assignee all of its
undivided interest in and to the Assigned Interest, effective as of the Assignment Date, without recourse, representation or warranty of any kind except as expressly set forth in section 4.1
hereof.

	8.
	Assumption.    The Assignee hereby accepts and purchases the Assigned Interest, effective as of the Assignment Date, and the
Assignee hereby agrees to be bound by the terms and conditions of the Credit Agreement, the other Loan Documents and the Subordination Agreements as if it was an original lender and acknowledges and
expressly assumes in the name, place and stead of the Assignor all obligations and liabilities attaching to the Assigned Interest and agrees to perform the terms, conditions and agreements on its part
to be performed as a Lender in respect thereof under the Credit Agreement, the other Loan Documents and the Subordination Agreements.

	9.
	Representations
of Assignor. 

        4.1       The Assignor hereby represents and warrants and the Borrower hereby acknowledges that: 

4.1.1    as
of the Assignment Date, the types of Loans outstanding and the outstanding principal amount under the Assigned Interest and interest and fees accrued and unpaid in respect
thereof are as set forth on Schedule "A" hereto; and 

4.1.2    as
of the Assignment Date, there are no outstanding Borrowing Notices [except as follows:
    •    ]. [Note: This Agreement may need to be modified if the Assignment Date occurs during
an Interest Period or at such time as a Letter of Credit is outstanding.]

        4.2       The Assignor hereby represents and warrants to the Assignee that: 

4.2.1    the
Assignor has full power and authority and has taken all action necessary to execute and deliver, to perform its obligations under and to consummate the transactions contemplated
by this assignment and assumption agreement and any and all other documents and instruments to be delivered by it in connection with this assignment and assumption agreement; and 

4.2.2    the
Assignor is the sole legal and beneficial owner of the Assigned Interest, and the Assigned Interest is free and clear of any Liens created by the Assignor in respect of the
Assigned Interest. 

2

 

        4.3    It is understood and agreed that, except for the representations and warranties set forth herein, the assignment and
assumption made hereunder are without recourse to the Assignor and the Assignor makes no further representations or warranties whatsoever, express or implied. 

	10.
	Representation of Borrower.    The Borrower hereby consents to the assignment of the Assigned Interest to the Assignee and
represents and warrants that, as of the Assignment Date, no Default or Event of Default has occurred and is continuing.

	11.
	Release by the Borrower.    The Borrower hereby acknowledges the release of the Assignor from all obligations and liabilities
relating to the Assigned Interest in respect of the period from and after the Assignment Date and acknowledges the assumption of all such liabilities and obligations by the Assignee, effective as of
the Assignment Date.

	12.
	Assignor's and Assignee's Commitment.    As of and from the Assignment Date, and after giving effect to the increase in the
Lender's Commitment of the Assignee, the Lender's Commitment of the Assignor and Assignee and the Loans outstanding thereunder shall be as set forth in Schedule "B" hereto.

	13.
	Assignee's Acknowledgement.    The Assignee hereby acknowledges that it has received a copy of the Credit Agreement, the
other Loan Documents and the Subordination Agreements and such other documents and information as it has deemed appropriate to make its own credit analysis and determination to enter into this
assignment and assumption agreement.

	14.
	Recognition as Lenders.    The parties hereto acknowledge that the Assignee is, by virtue of compliance with, and subject to,
the terms and provisions of section 12.9.4 of the Credit Agreement, as of and from the Assignment Date, a Lender under and as defined in the Credit Agreement for the purposes thereof and for
the purposes of all other Loan Documents.

	15.
	Notice.    The Assignee's address for notice is as follows:    •    .

	16.
	Governing Law.    This assignment and assumption agreement shall be governed by and construed in accordance with the laws of
the State of New York.

	17.
	Enurement.    This assignment and assumption agreement shall enure to the benefit of and be binding upon the parties hereto
and their respective successors and permitted assigns.

	18.
	Counterparts.    This assignment and assumption agreement may be signed in any number of counterparts, each of which shall be
deemed an original, but all such separate counterparts shall constitute one and the same instrument. 

3

 

        IN WITNESS WHEREOF the parties have executed this assignment and assumption agreement under the hands of their proper officers duly
authorized in that behalf as of the date first above written. 

	 	 	[ASSIGNOR], as Assignor
	
 	
 	

Per:	

/s/ Signed
 Authorized Signing Officer
	
 	
 	

Per:	

/s/ Signed
 Authorized Signing Officer
	
 	
 	
[ASSIGNEE], as Assignee
	
 	
 	

Per:	

/s/ Signed
 Authorized Signing Officer
	
 	
 	

Per:	

/s/ Signed
 Authorized Signing Officer
	
 	
 	
MAGNA ENTERTAINMENT CORP.
	
 	
 	

Per:	

/s/ Signed
 Authorized Signing Officer
	
 	
 	

Per:	

/s/ Signed
 Authorized Signing Officer
	
 	
 	
BANK OF MONTREAL, acting through its Chicago lending office, in its capacity as Agent
	
 	
 	

Per:	

/s/ Signed
 Authorized Signing Officer
	
 	
 	

Per:	

/s/ Signed
 Authorized Signing Officer

4

 
 

Schedule "A"    
    

 
 

[insert type and principal amount of Loans outstanding and interest/fees in relation thereto]

 
 

Schedule "B"    
    

	Assignor's Commitment and Loans 
	 	Commitment
	 	Loans

	Lender's Commitment	 	$	•	 	$	•

	 

	Assignor's Commitment and Loans 
	 	Commitment
	 	Loans

	Lender's Commitment	 	$	•	 	$	•

QuickLinks

MAGNA ENTERTAINMENT CORP. as Borrower

and

THE GUARANTORS SET FORTH ON THE SIGNATURE PAGES HEREOF as Guarantors -and

BANK OF MONTREAL, ACTING THROUGH ITS CHICAGO LENDING OFFICE as Lender

and

BANK OF MONTREAL, ACTING THROUGH ITS CHICAGO LENDING OFFICE as Agent

and

BMO NESBITT BURNS INC., A DIVISION OF BANK OF MONTREAL as Arranger

Dated as of July 22, 2005

ARTICLE 2 CREDIT FACILITY

ARTICLE 3 GENERAL PROVISIONS RELATING TO THE CREDIT FACILITY

ARTICLE 4 LETTERS OF CREDIT

ARTICLE 5 INTEREST AND FEES

ARTICLE 6 REPRESENTATIONS AND WARRANTIES

ARTICLE 7 COVENANTS

ARTICLE 8 CONDITIONS PRECEDENT

ARTICLE 9 EVENTS OF DEFAULT AND REMEDIES

ARTICLE 10 GUARANTY

ARTICLE 11 THE AGENT AND THE ADMINISTRATION OF THE CREDIT FACILITY

SCHEDULE 1.1.19 Borrowing Notice

SCHEDULE 1.1.44

Excluded Subsidiaries

SCHEDULE 1.1.66

Lender's Commitments

SCHEDULE 1.1.34

Designated Assets

SCHEDULE 6.1.18

Material Subsidiaries

SCHEDULE 7.1.13 Form of Certificate of the Borrower

BANK OF MONTREAL, ACTING THROUGH ITS CHICAGO LENDING OFFICE

MAGNA ENTERTAINMENT CORP. as Borrower

Schedule "A"

[insert type and principal amount of Loans outstanding and interest/fees in relation thereto]

Schedule "B"

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