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Exhibit 10.2

 
 

    MAGNA ENTERTAINMENT CORP.
  
    and
  
    2076862 ONTARIO INC.
  
    and
  
    GREAT CANADIAN GAMING CORPORATION    
    

	 

	 

 
 

SHARE PURCHASE AGREEMENT
  
    August 16, 2005    
    

	 

Lang Michener LLP  

 
 

TABLE OF CONTENTS    
    

	 
	 	Page

	PART 1 INTERPRETATION	 	2
	 	DEFINITIONS	 	2
	 	SCHEDULES	 	6
	 	PERSONAL INFORMATION	 	7
	 	INTERPRETATION	 	7
	PART 2 PURCHASE AND SALE	 	8
	 	PURCHASE AND SALE	 	8
	 	PURCHASE PRICE	 	8
	 	PAYMENT OF THE PURCHASE PRICE	 	8
	 	CLOSING DATE BALANCE SHEET	 	9
	 	WORKING CAPITAL ADJUSTMENT	 	10
	 	NO EFFECT ON OTHER RIGHTS	 	10
	 	GUARANTEE RELATED TO PURCHASER	 	11
	PART 3 REPRESENTATIONS AND WARRANTIES REGARDING THE PURCHASED COMPANIES	 	11
	 	SURVIVAL	 	19
	PART 4 REPRESENTATIONS AND WARRANTIES REGARDING THE VENDOR	 	20
	 	SURVIVAL	 	21
	PART 5 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER AND GUARANTOR	 	21
	 	PURCHASER	 	21
	 	GUARANTOR	 	22
	 	SURVIVAL	 	23
	PART 6 PURCHASER'S CONDITIONS PRECEDENT	 	23
	 	PURCHASER'S CONDITIONS	 	23
	 	WAIVER	 	25
	PART 7 VENDOR'S CONDITIONS PRECEDENT	 	25
	 	VENDOR'S CONDITIONS	 	25
	 	WAIVER	 	26
	PART 8 CONDITION FOR THE BENEFIT OF ALL PARTIES	 	26
	PART 9 COVENANTS	 	27
	 	CONDUCT OF BUSINESS	 	27
	 	ACCESS FOR INVESTIGATION	 	29
	 	NO WAIVER	 	29
	 	EXCLUSIVE DEALINGS	 	29
	 	SIMULCAST AGREEMENTS	 	29
	 	FUTURE AGREEMENTS	 	30
	 	SHAREHOLDER LOANS	 	31
	 	MANTINI NOTE	 	31
	 	JURAVINSKI NOTE	 	31
	 	TERMINATION AND SEVERANCE	 	31
	 	CONFIDENTIALITY	 	32
	 	TAX RETURNS	 	32
	PART 10 CLOSING	 	33
	 	CLOSING DATE AND LOCATION	 	33

 

	 
	 	 

	 	VENDOR'S CLOSING DOCUMENTS	 	33
	 	PURCHASER'S CLOSING DOCUMENTS	 	34
	PART 11 TERMINATION	 	34
	 	TERMINATION RIGHTS	 	34
	 	COMPETITION ACT EXTENSION	 	35
	 	DESTRUCTION OR LOSS	 	35
	 	EFFECT OF TERMINATION	 	36
	PART 12 INDEMNITIES	 	36
	 	INDEMNIFICATION OF PURCHASER	 	36
	 	INDEMNIFICATION OF VENDOR	 	37
	 	LIMITATIONS	 	37
	 	REDUCTIONS AND SUBROGATION	 	37
	 	EXCLUSIVE REMEDY	 	38
	 	INDEMNIFICATION PROCEDURES FOR THIRD PARTY CLAIMS	 	38
	PART 13 GENERAL	 	39
	 	PUBLIC NOTICES	 	39
	 	PUBLIC DISCLOSURE	 	39
	 	EXPENSES	 	39
	 	TIME	 	39
	 	NOTICES	 	40
	 	GOVERNING LAW	 	41
	 	SEVERABILITY	 	41
	 	ENTIRE AGREEMENT	 	41
	 	FURTHER ASSURANCES	 	41
	 	ENUREMENT	 	 
	 	ASSIGNMENT	 	 

SCHEDULES  

Schedule
3.1(a) – Organization and Good Standing

Schedule 3.1(b) – Capitalization and Share Ownership of ORI

Schedule 3.1(d) – Consents and Approvals

Schedule 3.1(e) – Financial Statements

Schedule 3.1(k) – Encumbrances

Schedule 3.1(l) – Leased Assets

Schedule 3.1(n) – Bank Accounts and Powers of Attorney

Schedule 3.1(o) – Real Property

Schedule 3.1(p) – Material Contracts

Schedule 3.1(u) – Employees

Schedule 3.1(v) – Workers' Compensation

Schedule 3.1(w) – Union Contracts

Schedule 3.1(x) – Litigation

Schedule 3.1(y) – Insurance

Schedule 3.1(cc) – Required Authorizations

Schedule 3.1(ee) – Permits and Licences

Schedule 3.1(ll) – Environmental Matters

Schedule 3.1(mm) – Intellectual Property

Schedule 5.1(f) – Approvals of Purchaser

Schedule 5.2(f) – Approvals of Guarantor 

ii

SHARE PURCHASE AGREEMENT  

	 THIS AGREEMENT is dated as of August 16, 2005,
	
 	

 
	AMONG:	MAGNA ENTERTAINMENT CORP., a Delaware corporation with an address located at 337 Magna Drive, Aurora, Ontario L4G 7K1
	
 	

 
	 	(the "Vendor")
	
 	

 
	AND:	2076862 ONTARIO INC., an Ontario corporation with an address located at 350 – 13775 Commerce Parkway, Richmond, British Columbia V6N 2V4
	
 	

 
	 	(the "Purchaser")
	
 	

 
	AND:	GREAT CANADIAN GAMING CORPORATION, a British Columbia company with an address located at 350 – 13775 Commerce Parkway, Richmond, British Columbia V6N 2V4
	
 	

 
	 	(the "Guarantor")
	
 	

 
	WHEREAS:	 
	
 	

 
	(A)	The Vendor owns directly, and after the Pre-Closing Reorganization, will own indirectly, all of the issued and outstanding shares of ORI;
	
 	

 
	(B)	ORI owns all of the issued and outstanding shares of Holdings;
	
 	

 
	(C)	Holdings owns and operates the Flamboro Downs racetrack in West Flamborough, Ontario;
	
 	

 
	(D)	The Vendor has agreed to sell to the Purchaser and the Purchaser has agreed to purchase from the Vendor the ORI Shares; and
	
 	

 
	(E)	The Purchaser is a wholly-owned subsidiary of the Guarantor and the Guarantor has agreed to guarantee certain of the obligations of the Purchaser.

 

NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of one dollar and the premises and mutual agreements and covenants herein contained
(the receipt and adequacy of such consideration being mutually acknowledged by each Party), the Parties covenant and agree as follows: 

 
 

PART 1
  INTERPRETATION    
    

Definitions  

1.1       In
this Agreement the following words and phrases will have the following meanings: 

	(a)
	"affiliate" means an affiliate as such term is defined in the Corporations Act;

	(b)
	"Agreement in Principle" means the letter agreement between the Vendor and the Purchaser dated July 6, 2005 concerning the
subject matter hereof;

	(c)
	"Assets" means all property or assets of any nature or kind, whether real or personal, tangible or intangible, and includes any
interest therein of the Purchased Companies, including the CRF Receivable (if any);

	(d)
	"Authorization" means, with respect to any Person, any order, permit, approval, consent, waiver, licence or similar authorization of
any Governmental Entity having jurisdiction over the Person, including any municipal or other approvals required to be granted before a Governmental Entity provides an authorization;

	(e)
	"Business" means the business carried on, directly or indirectly, by ORI relating to the ownership and operation of the Flamboro Downs
horse racetrack;

	(f)
	"Business Day" means any day which main branches of HSBC Bank Canada in Vancouver, British Columbia and Toronto, Ontario are both open
for business;

	(g)
	"Closing", "Closing Time", "Closing
Date" means 11:00 a.m. (Toronto Time) on September 30, 2005, or such other time or date as may be agreed upon in writing by the Parties;

	(h)
	"Closing Date Balance Sheet" means the consolidated balance sheet of ORI disclosing, as at the Closing Date, the consolidated assets
and liabilities of ORI and will also include a statement of the Closing Date Working Capital;

	(i)
	"Closing Date Working Capital" means, as at the Closing Date, the difference, if any, between (i) the consolidated current
assets (including cash) of ORI, and (ii) the consolidated current liabilities (excluding the current portion of long-term indebtedness and interest accrued thereon) of ORI; 

2

 

	(j)
	"Commissioner" has the meaning set out in §8.1;

	(k)
	"Competition Act" means the Competition Act (Canada) in effect at the date of this
Agreement;

	(l)
	"Confidential Information" means all materials and information, in whatever form provided by a Party, relating to such Party's
business, finances, operations, strategic planning, research and development activities, forecasts, products, designs, systems, improvements, processes, firmware, technical specifications, flowcharts,
notes, data, memoranda, know-how, purchasing, trade secrets, as well as any materials and information which, from the circumstances in which they are made available to the other Party, in
good faith ought to be treated as confidential or proprietary, but will not include any information that is disclosed that the Party who has received such information or who does not own such
information can prove: (i) is publicly available at the time of disclosure or development, or becomes publicly available after disclosure or development, through no fault of the receiving
Party; (ii) was developed by agents or employees of the receiving or non-owning Party independently of, and without knowledge of or reliance on, the disclosed information;
(iii) is obtained by the receiving or non-owing Party outside of the performance of obligations or the enjoyment of its rights hereunder without any violation of the rights of the
other Party; or (iv) was rightfully in the receiving or non-owning Party's possession before the time of disclosure, if such information was not obtained in confidence;

	(m)
	"Corporations Act" means the Business Corporations Act (Ontario) in effect at the date
of this Agreement;

	(n)
	"CRF Receivable" means any amounts owing by the OLGC to any of the Purchased Companies in respect of the capital renewals fund pursuant
to the terms of the Site Holder's Agreement;

	(o)
	"Deposit" means the US$3,000,000.00 paid by the Purchaser to the Vendor pursuant to the provisions of the Agreement in Principle and
held by the Vendor's solicitors pursuant to the Escrow Agreement;

	(p)
	"Dispute Period" has the meaning set out in §2.5;

	(q)
	"Employees" means all individuals who are full-time, part-time or temporary employees or individuals engaged on
contract to provide employment or similar services in respect of each of the Purchased Companies;

	(r)
	"Encumbrance" means any lien, claim, charge, pledge, hypothecation, security interest, mortgage, title retention agreement, option or
encumbrance of any nature or kind whatsoever;

	(s)
	"Environmental Laws" means all applicable international, federal, provincial, state, municipal and local treaties, conventions, laws,
statutes, ordinances, by-laws, codes, regulations, and all policies, guidelines, standards, orders, directives, decisions, in each case, rendered or promulgated by any Governmental Entity
and having the force of law, relating to fisheries, health and safety, the protection or preservation of the environment or the manufacture, processing, distribution, use, treatment, storage,
disposal, discharge, transport or handling of Hazardous Substances; 

3

 

	(t)
	"Escrow Agreement" means the agreement between the Purchaser, the Guarantor, the Vendor and the Vendor's Solicitors dated
July 16, 2005 relating to the Deposit;

	(u)
	"Financial Statements" means the consolidated audited financial statements of ORI for the years ended December 31, 2004 and
2003, the unaudited consolidated financial statements of ORI for the six months ended June 30, 2005 and 2004, copies of which are attached as Schedule 3.1(e);

	(v)
	"Flamboro" means Flamboro Downs Limited, a corporation continued under the Canada Business Corporations
Act;

	(w)
	"Flamboro Downs" means the horse racetrack operated by ORI and its affiliates at West Flamborough, Ontario;

	(x)
	"Flamboro Shares" means all of the issued and outstanding shares of Flamboro;

	(y)
	"Governmental Entity" means (i) any international, multinational, national, federal, provincial, state, municipal, local or
other governmental or public department, central bank, court, commission, board, bureau, agency or instrumentality, domestic or foreign, (ii) any subdivision or authority of any of the
foregoing, or (iii) any quasi-governmental or private body, in each case, having jurisdiction on behalf of any nation, province, territory, state or other geographic subdivision thereof and
exercising any regulatory, judicial, legislative, expropriation or taxing authority, and for greater certainty specifically includes the Commissioner, Canadian Pari-Mutuel Agency, the
Ontario Racing Commission, the OLGC, the Alcohol and Gaming Commission of Ontario and the Gaming Policy and Enforcement Branch of the Ministry of Public Safety and Solicitor General of British
Columbia;

	(z)
	"Guarantor Racetracks" has the meaning set out in §9.6(a);

	(aa)
	"Hazardous Substances" means contaminants, pollutants, dangerous substances, liquid wastes, industrial wastes, hauled liquid wastes,
toxic substances, hazardous wastes, hazardous materials, or hazardous substances as defined in or pursuant to any Environmental Law by or to which the Business, the Assets or a Purchased Company is or
are bound or subject;

	(bb)
	"Holdings" means Flamboro Downs Holdings Limited, a corporation incorporated under the Corporations Act;

	(cc)
	"Holdings Shares" means all of the issued and outstanding shares of Holdings;

	(dd)
	"Income Tax Act" means the Income Tax Act (Canada) in effect on the date
of this Agreement; 

4

 

	(ee)
	"Intellectual Property" has the meaning set out in §3.1(mm);

	(ff)
	"Juravinski Note" means the promissory note dated October 18, 2002 and issued by ORI in favour of Charles Juravinski and
Margaret Juravinski;

	(gg)
	"Mantini Note" means the promissory note dated October 18, 2002 issued by ORI in favour of 1180554 Ontario Limited;

	(hh)
	"Material Contracts" means those commitments, contracts, instruments, leases and other agreements, oral or written, entered into by a
Purchased Company or by which a Purchased Company is bound which have total payment obligations on the part of a Purchased Company which exceed C$100,000.00 or which have total annual payment
obligations on the part of a Purchased Company which exceed C$50,000.00 and are for a term of or in excess of one year;

	(ii)
	"MEC Holdings" means MEC Holdings (Canada) Inc., a corporation incorporated under the  Canada Business Corporations Act and a wholly-owned subsidiary of the Vendor;

	(jj)
	"Notice of Objection" has the meaning set out in §2.5;

	(kk)
	"OLGC" means the Ontario Lottery and Gaming Corporation;

	(ll)
	"ORI" means Ontario Racing Inc., an Ontario corporation, and its successor resulting from the Pre-Closing
Reorganization;

	(mm)
	"ORI Debt" means all outstanding indebtedness owing by ORI to MEC Holdings;

	(nn)
	"ORI Shares" means all of the issued and outstanding shares of ORI;

	(oo)
	"Party" means any party to this Agreement and "Parties" mean all of them together;

	(pp)
	"Person" includes an individual, corporation, limited liability corporation, unlimited liability company, body corporate, partnership,
limited partnership, joint venture, association, trust or unincorporated organization or any trustee, executor, administrator or other legal representative thereof or any other entity (including a
Governmental Entity);

	(qq)
	"Pre-Closing Reorganization" means the reorganization of the Purchased Companies to be undertaken by the Vendor and the
Purchased Companies prior to Closing and substantially in the form disclosed in writing to the Purchaser and Guarantor on the date hereof;

	(rr)
	"Purchase Price" means the amount set forth in §2.2; 

5

 

	(ss)
	"Purchased Companies" means, before the effective time of the Pre-Closing Reorganization, ORI, Holdings and Flamboro, and
after the completion of the Pre-Closing Reorganization means ORI;

	(tt)
	"Purchaser's Solicitors" means Lang Michener LLP;

	(uu)
	"Shareholder Loans" means any and all amounts owing to the Vendor or its affiliates (other than ORI or Holdings) from any of the
Purchased Companies;

	(vv)
	"Shares" means all of the issued and outstanding shares of the Purchased Companies;

	(ww)
	"Simulcast Agreement" has the meaning set out in §9.5;

	(xx)
	"Site Holder's Agreement" means the prescribed lottery scheme site holder facilities agreement between the Ontario
Lottery Corporation, predecessor to the OLGC, and Holdings dated as of May 3, 1999; and

	(yy)
	"Vendor's Solicitors" means Osler, Hoskin & Harcourt LLP. 

Schedules  

1.2       The
following are the schedules to, and form an integral part of, this Agreement: 

Schedule 3.1(a) – Organization and Good Standing

Schedule 3.1(b) – Capitalization and Share Ownership of ORI

Schedule 3.1(d) – Consents and Approvals

Schedule 3.1(e) – Financial Statements

Schedule 3.1(k) – Encumbrances

Schedule 3.1(l) – Leased Assets

Schedule 3.1(n) – Bank Accounts and Powers of Attorney

Schedule 3.1(o) – Real Property

Schedule 3.1(p) – Material Contracts

Schedule 3.1(u) – Employees

Schedule 3.1(v) – Workers' Compensation

Schedule 3.1(w) – Union Contracts

Schedule 3.1(x) – Litigation

Schedule 3.1(y) – Insurance

Schedule 3.1(cc) – Required Authorizations

Schedule 3.1(ee) – Permits and Licences

Schedule 3.1(ll) – Environmental Matters

Schedule 3.1(mm) – Intellectual Property

Schedule 5.1(f) – Approvals of Purchaser

Schedule 5.2(f) – Approvals of Guarantor 

6

 

Personal Information  

1.3       Personal
information that has been removed or excluded from any schedule in accordance with the Personal Information Protection and Electronic Documents
Act or any other applicable laws respecting the protection of privacy, along with a concordance which permits any identifiers in the relevant schedule to be attributed to a
corresponding individual, will be provided to the Purchaser on the Closing Date. For purposes of the schedules in respect of which personal information applies, the personal information provided to
the Purchaser in accordance with this §1.3 shall be deemed to be included in such schedules. 

Interpretation  

1.4       For
the purposes of this Agreement, except as otherwise expressly provided herein: 

	(a)
	"this
Agreement" means this Agreement, including the Schedules hereto, as it may from time to time be supplemented or amended;

	(b)
	the
words "herein", "hereof" and "hereunder" and other words of similar import refer to this Agreement as a whole and not to any particular Part, clause, subclause or other
subdivision or Schedule;

	(c)
	the
singular of any term includes the plural and vice versa and the use of any term is equally applicable to any gender and where applicable to a body corporate;

	(d)
	the
word "including" is not limiting (whether or not non-limiting language such as "without limitation" or "but not limited to" or other words of similar import are used
with reference thereto);

	(e)
	all
accounting terms not otherwise defined in this Agreement have the meanings assigned to them in accordance with generally accepted accounting principles applicable in Canada,
applied on a consistent basis with prior years;

	(f)
	the
phrase "to the best of the knowledge of the Vendor" or phrases of similar import means to the actual knowledge of the senior officers of the Vendor after making due enquiries of
the Purchased Companies to enable the Vendor to make the statement or disclosure;

	(g)
	a
reference to a Part is to a Part of this Agreement, and the symbol § followed by a number or some combination of numbers and letters refers to the section, paragraph,
subparagraph, clause or subclause of this Agreement so designated;

	(h)
	the
headings to the Parts and clauses of this Agreement are inserted for convenience only and do not form a part of this Agreement and are not intended to interpret, define or
limit the scope, extent or intent of this Agreement or any provision hereof; 

7

 

	(i)
	any
reference to a corporate entity includes and is also a reference to any corporate entity that is a successor to such entity; and

	(j)
	the
representations, warranties, covenants and agreements contained in this Agreement will not merge at the Closing and will continue in full force and effect from and after the
Closing Date for the applicable period set out in this Agreement. 

 
 

PART 2
  PURCHASE AND SALE    
    

Purchase and Sale  

2.1       The
Purchaser agrees to purchase the ORI Shares from the Vendor or (after completion of the Pre-Closing Reorganization) an affiliate thereof and the Vendor agrees to sell
or (after completion of the Pre-Closing Reorganization) cause its affiliate to sell all (and not less than all) of the ORI Shares to the Purchaser and the Purchaser agrees to pay
the Purchase Price on the terms and conditions hereinafter set forth. 

Purchase Price  

2.2       The
consideration (the "Purchase Price") payable by the Purchaser to or at the direction of the Vendor for the ORI Shares is the amount equal to: 

	(a)
	US$23,600,000.00,
plus

	(b)
	C$50,000,000.00,
minus

	(c)
	the
principal amount outstanding and interest accrued on the Juravinski Note on the Closing Date, plus

	(d)
	the
amount, if any, of the Closing Date Working Capital (whether positive or negative). 

Payment of the Purchase Price  

2.3       The
Purchaser will: 

	(a)
	at
the Closing Time, pay to, or at the direction of, the Vendor by wire transfer on account of the Purchase Price the amount, as calculated under
§2.2(a), (b) and (c), less the amount of the Deposit; and

	(b)
	after
the Closing Time, pay the balance of the Purchase Price, if any, in accordance with §2.11. 

8

 

Closing Date Balance Sheet  

2.4       As
soon as practicable, and in any event not later than 45 days following the Closing Date, Ernst & Young LLP will deliver to the Vendor and the Purchaser the
Closing Date Balance Sheet. The Closing Date Balance Sheet will be prepared in accordance with Canadian generally accepted accounting principles, consistent with the accounting principles and methods
used by ORI and Holdings in preparing their respective balance sheets dated December 31, 2004. The fees and expenses of Ernst & Young LLP for preparing the Closing Date Balance
Sheet will be paid by ORI and Holdings. 

2.5       Following
the receipt thereof, the Purchaser will have a period of 10 Business Days (the "Dispute Period") to review and provide any objections to the Closing Date
Balance Sheet. The Purchaser must notify the Vendor in writing (the "Notice of Objection") if it has any objections to the Closing Date Balance Sheet within the Dispute Period. However, in no
event will there be grounds for dispute of the Closing Date Balance Sheet unless the aggregate of amounts so disputed exceeds C$250,000.00. If there are such grounds, then the Notice of Objection
containing a detailed statement of the basis of each of the Purchaser's objections and each amount in dispute must be delivered within the Dispute Period. The Vendor will provide reasonable access,
upon request, to the Purchaser and their auditors, to all work papers of the Vendor, the auditors of ORI, accounting books and records and the appropriate personnel to verify the accuracy,
presentation and other matters relating to the preparation of the Closing Date Balance Sheet. 

2.6       If
the Purchaser delivers a Notice of Objection, the Parties will work expeditiously and in good faith in an attempt to resolve such objections within 15 Business Days
following the date of delivery of the Notice of Objection. Failing resolution of any objection to the Closing Date Balance Sheet raised by the Purchaser, the dispute will be submitted for
determination to an independent firm of chartered accountants mutually agreed to by the Vendor and the Purchaser (and, failing such agreement between the Vendor and the Purchaser within a further
period of 10 Business Days, such independent firm of chartered accountants will be PricewaterhouseCoopers LLP, or if such firm is unable to act, KPMG LLP). The determination of
such firm of chartered accountants will be final and binding upon the Parties and will not be subject to appeal, absent manifest error. Such firm of chartered accountants are deemed to be acting as
experts and not as arbitrators. 

2.7       If
the Purchaser does not deliver a Notice of Objection within the Dispute Period, the Purchaser is deemed to have accepted and approved the Closing Date Balance Sheet and such
Closing Date Balance Sheet will be final, conclusive and binding upon the Parties, and will not be subject to appeal. 

2.8       If
the Purchaser delivers a Notice of Objection, and the issues raised therein are resolved or determined pursuant to §2.6, then the Parties will revise the Closing Date
Balance Sheet to reflect the final resolution or final determination of such objections under §2.6 within two Business Days following such final resolution or determination. Such
revised Closing Date Balance Sheet (as adjusted) will be final, conclusive and binding upon the Parties, and will not be subject to appeal, absent manifest error. The Vendor will cause their
auditors to review and report on such revised Closing Date Balance Sheet within 10 Business Days of receipt and upon completion of such review, will deliver the Closing Date Balance Sheet to
the Purchaser together with the auditor's report on such review. 

9

 

2.9       Except
for the fees and expenses of Ernst & Young LLP incurred in connection with the preparation of the Closing Date Balance Sheet, which will be paid by ORI and
Holdings, the Vendor and the Purchaser will each bear its own fees and expenses, including the fees and expenses of their respective auditors, in objecting to or reviewing, as the case may be, the
Closing Date Balance Sheet. In the case of a dispute and the retention of a firm of chartered accountants to determine such dispute, the costs and expenses of such firm of chartered accountants will
be borne equally by the Vendor and the Purchaser. However, the Vendor and the Purchaser will each bear its own costs in presenting their respective cases to such firm of chartered accountants. 

2.10     The
Parties agree that the procedure set forth in this Part 2 for resolving disputes with respect to the Closing Date Balance Sheet is the sole and exclusive method of
resolving such disputes. This Part 2 will not prohibit any Party from instigating litigation to compel specific performance of this Part 2 or to enforce the determination of the
independent firm of chartered accountants. Further, no dispute may be based upon the application of GAAP chosen by ORI. 

Working Capital Adjustment  

2.11     The
Purchase Price for the ORI Shares will be adjusted based upon the Closing Date Balance Sheet that is accepted or deemed accepted by the Parties as follows: if the Closing Date
Working Capital is: 

	(a)
	positive,
then the Purchase Price will be increased by such positive amount, the Deposit will be released to the Vendor and the Purchaser will pay such positive amount to the Vendor;
or

	(b)
	negative,
then the Purchase Price will be reduced by such negative amount and an amount equal to such reduction will be paid to the Purchaser out of the Deposit (with any balance
remaining in the Deposit to be promptly released to the Vendor) and, if the Deposit is insufficient for that purpose, by the Vendor with respect to the balance. 

        All
payments made under this section will be made within five Business Days of the Closing Date Balance Sheet becoming final, conclusive and binding upon the Parties, together with
interest at the rate of 6% per year calculated from the Closing Date to the date of payment. 

No Effect on Other Rights  

2.12     The
determination of the Purchase Price in accordance with the provisions of this Part 2 will not limit or affect any other rights or causes of action either the Purchaser or
the Vendor may have with respect to the representations, warranties, covenants and indemnities in its favour contained in this Agreement. 

10

  

Guarantee Related to Purchaser  

2.13 In order to induce the Vendor to enter into this Agreement, the Guarantor hereby absolutely, irrevocably and unconditionally
guarantees to the Vendor, its successors and assigns, the full performance and observation of all the terms, covenants, conditions, provisions and agreements to be performed or observed by the
Purchaser with respect to this Agreement and all instruments and agreements contemplated hereby, including the full payment when due of all amounts owed to any Vendor pursuant to the terms of this
Agreement or any instrument of agreement contemplated hereby. Such guarantee will be as primary obligor and not merely as surety. The Guarantor hereby waives acceptance, diligence, presentment, demand
of payment, filing of claims with a court in the event of insolvency or bankruptcy of the Purchaser, any right to require a proceeding first against the Purchaser, protest, notice and all demands
whatsoever. The Guarantor agrees to pay any and all costs and expenses (including reasonable fees and disbursements of counsel) incurred by the Vendor in enforcing any rights under this section. 

 
 

PART 3
  REPRESENTATIONS AND WARRANTIES REGARDING THE PURCHASED COMPANIES    
    

3.1   In order to induce the Purchaser and the Guarantor to enter into and consummate the transactions contemplated by this Agreement, the
Vendor represents and warrants (except to the extent qualified herein) to the Purchaser and the Guarantor that: 

	(a)
	Organization and Good Standing — Each of the Purchased Companies is duly incorporated and validly
existing, and up-to-date with respect to the filing of annual reports under the Corporations Act, and has all the necessary corporate power, authority and capacity to own its
Assets and to carry on Business as it is currently conducted. Each of the Purchased Companies is qualified, licensed or registered to carry on business in the jurisdictions set out in Schedule 3.1(a);

	(b)
	Capitalization — The authorized and issued share capital of the Purchased Companies, together
with the names of each shareholder and the number, class and kind of Shares outstanding, is as set forth on Schedule 3.1(b);

	(c)
	Absence of Options — The ORI Shares will, as at the Closing Date, represent all of the issued and
outstanding shares in the capital of ORI and no Person has any agreement, right or option, present or future, contingent, absolute or capable of becoming an agreement, right or option or which with
the passage of time or the occurrence of any event could become an agreement, right or option:

	(i)
	to
require a Purchased Company to issue any further or other shares in its capital or any other security convertible or exchangeable into shares in its capital or to
convert or exchange any securities into or for shares in its capital;

	(ii)
	for
the issue or allotment of any unissued shares in the capital of a Purchased Company; or 

11

 

	(iii)
	to
acquire any Shares;

	(d)
	No Conflict — Except for the consents, approvals and waivers described in Schedule 3.1(d), the
execution and delivery of and performance by the Vendor of this Agreement:

	(i)
	does
not and will not constitute or result in a material violation or material breach of, or conflict with, or allow any other Person to exercise any rights under, any
of the terms or provisions of the articles or by-laws of the Purchased Companies;

	(ii)
	does
not and will not constitute or result in a material breach or material violation of, or conflict with, or allow any Person to exercise any rights under, any of the
terms or provisions of any Material Contracts to which a Purchased Company is a party;

	(iii)
	does
not and will not result in a material breach of, or cause the termination or revocation of, any Authorization held by a Purchased Company or necessary to the
ownership of the ORI Shares or the operation of the Business; and

	(iv)
	does
not and will not result in a material violation of any law or judgment, decree, order or award of any Governmental Entity;

	(e)
	Financial Statements — The Financial Statements attached as Schedule 3.1(e) have been prepared in
accordance with Canadian generally accepted accounting principles. The Financial Statements present fairly the consolidated financial position of ORI as at the respective dates thereof and the results
of the operations and the changes in ORI's financial position for the respective periods then ending;

	(f)
	Bankruptcy — Neither Purchased Company has made an assignment in favour of its creditors or a
proposal in bankruptcy to its creditors or any class thereof, and no petition for a receiving order has been presented in respect of it. Neither Purchased Company has initiated proceedings with
respect to a compromise or arrangement with its creditors, or for its winding-up, liquidation or dissolution. No receiver or interim receiver has been appointed in respect of a Purchased
Company or the Assets and no execution or distress has been levied on any of the Assets, nor have proceedings been commenced in respect of any of the foregoing;

	(g)
	Absence of Undisclosed Liabilities — Except to the extent reflected or reserved against in the
Financial Statements or incurred in the ordinary course of the business of the Purchased Companies, since June 30, 2005, the Purchased Companies do not have any material outstanding
indebtedness or any material liabilities or obligations (whether accrued, absolute, contingent or otherwise) and, except for such liabilities which may be contemplated hereunder or which the Purchaser
approves before being incurred, any liabilities or obligations incurred in the ordinary course of business since June 30, 2005 will not have had a materially adverse effect on the consolidated
financial condition of ORI as at the Closing Date; 

12

 

	(h)
	Absence of Changes — Since June 30, 2005 there have not been:

	(i)
	any
changes in the condition or operations of the Business, Assets or financial affairs of the Purchased Companies which are, individually or in the aggregate,
materially adverse; or

	(ii)
	any
damage, destruction or loss, labour unrest or other event, development or condition, of any character (whether or not covered by insurance) which is not generally
known or which has not been disclosed to the Purchaser, or which to the knowledge of the Vendor, may materially adversely affect the Business or Assets of the Purchased Companies;

	(i)
	Accuracy of Records — All material financial transactions of the Purchased Companies have been
accurately recorded in the books and records of the Purchased Companies for the periods noted therein and such books and records fairly present the financial position and the affairs of the Purchased
Companies for the periods noted therein;

	(j)
	Absence of Unusual Transactions — Except as contemplated herein or as disclosed in the Financial
Statements or approved in writing by the Purchaser, neither of the Purchased Companies has, since June 30, 2005:

	(i)
	transferred,
assigned, sold or otherwise disposed of any material Assets shown or reflected in the Financial Statements or cancelled any material debts or claims except
in each case in the ordinary course of business;

	(ii)
	issued
or sold any shares in its capital or any warrants, bonds, debentures or other corporate securities or issued, granted or delivered any right, option or other
commitment for the issue of any such or other securities;

	(iii)
	discharged
or satisfied any Encumbrances, or paid any obligation or liability (fixed or contingent), other than current liabilities or the current portion of long term
liabilities disclosed in the Financial Statements or current liabilities incurred since the date thereof in the ordinary course of business;

	(iv)
	declared
or made any payment of any dividend or other distribution in respect of any of their shares other than in the ordinary course, nor have they purchased,
redeemed, subdivided, consolidated, or reclassified any of their shares;

	(v)
	entered
into any material transaction not in the ordinary course of business;

	(vi)
	mortgaged,
pledged, subjected to any lien, granted an option or a security interest in respect of or otherwise encumbered any material Assets or property, whether real
or personal and whether tangible or intangible; or

	(vii)
	authorized
or agreed or otherwise have become committed to do any of the foregoing; 

13

 

	(k)
	Title to Assets — The Purchased Companies own all of the Assets (whether real, personal or mixed,
and whether tangible or intangible) that they purport to own including all the Assets reflected as being owned by the Purchased Companies in their financial books and records. The Purchased Companies
have legal and beneficial ownership and have good and marketable title to all such Assets, free and clear of all Encumbrances except for Encumbrances shown in Schedule 3.1(k);

	(l)
	Leased Assets — Schedule 3.1(l) sets forth a list of all material equipment and other personal
property leases. All rental or other payments required to be paid pursuant to such leases, licences, agreements or other documentation relating thereto have been duly paid and there is not otherwise
any material default in meeting the obligations thereunder;

	(m)
	Collectability of Accounts Receivable — The accounts receivable and other debts due to the
Purchased Companies shown in the Financial Statements or arising after the date thereof have been recorded by the Purchased Companies in accordance with their usual accounting practices consistent
with prior periods. The reserve taken for doubtful or bad debtor accounts is consistent with the accounting procedures used by the Purchased Companies in previous fiscal periods.

	(n)
	Bank Accounts and Powers of Attorney — Schedule 3.1(n) is a correct and complete list showing
(i) the name of each bank in which Holdings has an account or safe deposit box and the names of all Persons authorized to draw on the account or to have access to the safe deposit box, and
(ii) the names of all Persons holding powers of attorney from each of the Purchased Companies. Copies of such powers of attorney, if any, have been provided to the Purchaser;

	(o)
	Real Property — Schedule 3.1(o) contains accurate descriptions of all real property in respect of
which each of the Purchased Companies holds an interest, whether freehold, leasehold or otherwise. All of such property is zoned under the applicable zoning laws of the municipality in which it is
located for the present use of such property by the Business and, to the knowledge of the Vendor, there are no plans, notices of intent or pending bylaws by a Governmental Entity which, if
implemented, would materially affect the use of such property by the Business as currently conducted or adversely affect the Vendor's ability, in any material way, to construct planned improvements
thereon. Neither the Vendor nor any of the Purchased Companies has received any written notice or is aware of any material facts or circumstances relating to such properties, related to any actual or
proposed condemnation, expropriation or dedication proceeding which have not been disclosed to the Purchaser and which might, if disclosed, be reasonably expected to materially affect the use of such
property by the Business as currently conducted. None of the Purchased Companies is a party to or bound by any leases of real property other than those referred to in Schedule 3.1(o) and, to the
knowledge of the Vendor, all interests held whether as owner or as lessee are free and clear of all Encumbrances except for Encumbrances that would not have a material adverse effect on the Business
as currently conducted and the Encumbrances set out in Schedule 3.1(k). All rental and other payments required to be paid under such leases have been duly paid and there is not otherwise any material
default (other than payments) in meeting its obligations under any such lease; 

14

 

	(p)
	Material Contracts — To the best of the knowledge of the Vendor, all Material Contracts are set
out in Schedule 3.1(p) and are valid and subsisting and no material default exists in respect thereof;

	(q)
	Juravinski Note — The principal amount outstanding under the Juravinski Note as at the Closing
Date, inclusive of all rights of set-off thereunder will be $44,194,000.00;

	(r)
	Shareholder Loans — At the Closing Date there will be no Shareholder Loans outstanding;

	(s)
	Directors — At the Closing Date, no amounts will be due or owing to any of the members of the
board of directors of any Purchased Company as a result of such member's resignation or removal;

	(t)
	Respective Horsepeople's Entitlement — The amounts set aside in the Distribution Account for the
Respective Horsepeople's Entitlement (as both terms are defined in the Site Holder's Agreement), are sufficient for the applicable Purchased Company to meet its obligations under
§5.2 of the Site Holder's Agreement and the Respective Horsepeople's Covenant (as that term is defined in the Site Holder's Agreement);

	(u)
	Employees — Schedule 3.1(u) contains a complete and accurate list of the Employees, together with
their age or range of ages, date of hire, title or classification, current wages, salaries or hourly rate of pay, benefits, vacation entitlement, commissions and bonus or other material compensation
paid since the beginning of the most recently completed fiscal year or payable to each such Employee. Except as disclosed in Schedule 3.1(u), neither of the Purchased Companies is a party to any
written or oral contract, agreement or other commitment, with any Employee other than contracts of indefinite duration which are terminable by such Purchased Company without cause on reasonable notice
as determined in accordance with applicable law. The Vendor is not aware of the intention of any Employee, who is an executive or senior officer, to terminate his or her employment. Schedule 3.1(u)
lists the Employees of each of the Purchased Companies who:

	(i)
	have
been absent continually from work for a period in excess of one month, as well as the reason for their absence, including all employees on disability (whether
short-term or long-term);

	(ii)
	are
in receipt of workers' compensation benefits on account of their employment by a Purchased Company;

	(iii)
	are
on an authorized unpaid leave of absence (including maternity or parental leave or unpaid sick leave) from a Purchased Company; 

15

 

	(iv)
	are
on lay-off from Holdings with an existing right of recall pursuant to the applicable collective agreement; or

	(v)
	are
entitled to post-retirement or other benefits provided through a benefit program sponsored by a Purchased Company or in which a Purchased Company
participates;

	(v)
	Workers' Compensation — Except as described in Schedule 3.1(v) (and except for claims by
employees under workers' compensation legislation which, if adversely determined, would not, either individually or in the aggregate, have a material adverse effect or rating assessment
(for purposes of workers' compensation legislation) in respect of Holdings), there are no complaints, claims or charges pending or outstanding or, to the best of the knowledge of the Vendor,
anticipated, nor are there any orders, decisions, directions or convictions currently registered or outstanding by any tribunal or agency against or in respect of either of the Purchased Companies
under or in respect of any workers' compensation legislation. Schedule 3.1(v) lists all employees in respect of whom a Purchased Company has been advised by the Workers' Compensation Board that such
employees are in receipt of benefits under workers' compensation legislation. There are no appeals pending before the Workers' Compensation Board involving a Purchased Company and all levies,
assessments and penalties made against a Purchased Company pursuant to workers' compensation legislation have been paid;

	(w)
	Union Contracts — Except as described in Schedule 3.1(w), the Purchased Companies have not
entered into any collective agreement with any labour union or employee association or conducted any negotiations with any labour union or employee association with respect to any future collective
agreement;

	(x)
	Litigation — To the best of the knowledge of the Vendor, other than as set forth in Schedule
3.1(x), there is no action, suit, litigation, arbitration proceeding, proceeding, investigation or claim before a Governmental Entity, including appeals and applications for review, in progress,
threatened or pending against the Purchased Companies which would materially and adversely affect the Assets, Business or financial condition of the Purchased Companies;

	(y)
	Insurance — To the best of the knowledge of the Vendor, the Purchased Companies maintain
insurance in force against loss on such assets, against such risks, in such amounts and to such limits as is in accordance with prudent business practices prevailing in its business. Particulars of
all insurance maintained by each of the Purchased Companies are set forth in Schedule 3.1(y);

	(z)
	Copies of Agreements — True and complete copies of all mortgages, leases, agreements,
instruments, licenses, permits, authorizations and other documents, as applicable, and specifically listed in Schedule 3.1(l), Schedule 3.1(o) and Schedule 3.1(p) have been delivered to the Purchaser; 

16

 

	(aa)
	Withholding — All amounts required to be withheld by each of the Purchased Companies from their
respective employees' salaries and to be paid to any governmental body under any statute have been withheld and paid to the extent due;

	(bb)
	Corporate Records — The Purchased Companies have kept the records required to be kept by the
Corporations Act and such records are complete and accurate in all material respects, and contain all minutes of all meetings and resolutions of directors and shareholders;

	(cc)
	Required Authorizations — To the knowledge of the Vendor, there is no requirement to make any
filing with, give any notice to, or obtain any authorization of any Governmental Entity as a condition to the lawful completion of the transactions contemplated by this Agreement, except for the
filings, notifications and authorizations set out in §8.1 and Schedule 3.1(cc) or that solely relate to the Purchaser or the business carried on by the Purchaser before Closing;

	(dd)
	Site Holder's Agreement — The Site Holder's Agreement is in good standing and ORI has received
no written notice as of the date hereof that such agreement will not be renewed on October 6, 2005 in accordance with its terms;

	(ee)
	Permits and Licences — To the knowledge of the Vendor, each of the Purchased Companies holds all
material authorizations, approvals, orders, licenses, permits or consents issued by any Governmental Entity in connection with the conduct and operation of the Business as it is currently conducted
and the ownership, leasing or use of their respective Assets as the same are now owned, leased, used conducted or operated, neither of the Purchased Companies is in material breach of or in default
under any of the terms or conditions thereof, and all such material authorizations, approvals, orders, licences, permits and consents issued by a Governmental Entity are listed in Schedule 3.1(ee);

	(ff)
	Tax Filings and Payments — Each of the Purchased Companies:

	(i)
	has
duly filed in a timely manner:

	(A)
	all
federal and provincial income tax returns and election forms and the tax returns of any other jurisdiction required to be filed and all such returns and forms are
true, complete and accurate in all material respects and the amounts of tax payable shown in all federal and provincial income tax returns to be prepared by the Vendor pursuant to
§9.14 will be correct; and

	(B)
	all
returns, reports, and information required to be filed with any Governmental Entity with respect to sales tax, property tax, property transfer tax, and every other
tax (by whatever name) that any Purchased Company is required to file and all such returns, reports, and information are true, complete and accurate in all material respects; 

17

 

	(ii)
	has
paid all taxes due (including all federal, provincial and local taxes, assessments or other imposts in respect of its income or Assets and all other taxes described
in §(i)(B)), and all interest and penalties thereon with respect to the applicable Purchased Company, for all previous years and all required quarterly instalments due for the current
fiscal year have been paid; and

	(iii)
	has
withheld all amounts required to be withheld by any Purchased Company pursuant to any taxing laws to which it is subject, and has remitted all such amounts,
including all interest and penalties thereon, to the relevant Governmental Entity;

	(gg)
	Additional Tax Matters — Except as previously disclosed, none of the Purchased Companies has:

	(i)
	during
the past 10 years, made any election under §85 of the Income Tax Act with respect to the acquisition or disposition of any Assets; or

	(ii)
	during
the past 10 years, made any election under §83 of the Income Tax Act with respect to the payment out of its capital dividend account of
Holdings;

	(hh)
	GST — With respect to the goods and services tax ("GST") under the  Excise Tax Act (Canada):

	(i)
	the
Purchased Companies are registered for GST purposes;

	(ii)
	none
of the Purchased Companies has any deferred obligations or liabilities under any section of the Excise
Tax Act (Canada);

	(iii)
	all
GST required to be collected by each Purchased Company has been collected and all GST amounts required to be remitted to the Receiver General for Canada, and all
interest and penalties related thereto have been remitted; and

	(iv)
	all
GST returns and reports of each Purchased Company required by law to be filed have been filed in a timely manner and are true, correct, complete and accurate in all
material respects;

	(ii)
	Pre-Closing Reorganization — To the best of the knowledge of the Vendor, the
Pre-Closing Reorganization will not in and of itself result in any additional or accelerated material liability for income tax or any other tax described in
§(ff)(i)(B), nor in the material decrease in the tax cost of any asset (other than shares or debts issued by a Purchased Company and held by another Purchased Company), nor in any
tax loss or tax credit carry forwards, nor in any other tax asset, of any Purchased Company;

	(jj)
	Indebtedness to Vendor — Except for the payment of salaries and other compensation payable in
the ordinary course and reimbursement for out-of-pocket expenses in the ordinary course, and except for Shareholder Loans, indebtedness between the Purchased Companies and
amounts disclosed in the Financial Statements and the Schedules, none of the Purchased Companies is indebted to the Vendor or any of its directors, officers or employees, or any affiliate or associate
(as such term is defined in the Corporations Act) thereof; 

18

 

	(kk)
	Conduct of Business — To the knowledge of the Vendor, none of the Purchased Companies is
conducting its Business in contravention, in any material respect, of any Material Contract, law or regulation or direction of any Governmental Entity;

	(ll)
	Environmental Matters —

	(i)
	to
the knowledge of the Vendor, each of the Purchased Companies and the Business has been and is, operated in material compliance with all applicable Environmental Laws;
and

	(ii)
	the
Vendor has provided or made available to the Purchaser true and complete copies of all environmental audits, evaluations, assessments, studies or tests relating to
the Purchased Companies and the Business and Assets of the Business that, to its knowledge, exist and which, for greater certainty, are described in Schedule 3.1(ll); and

	(mm)
	Intellectual Property — Schedule 3.1(mm) sets forth a complete list of all registrations and
applications for registration of trade-marks, patents, copyrights, industrial designs and any other intellectual property registrations and applications for registration and all material, unregistered
intellectual property used in the Business (the "Intellectual Property") as well as all material licences relating to the Intellectual Property. The Purchased Companies own or are licensed to
use the Intellectual Property and has not transferred, assigned or encumbered the Intellectual Property or its interests therein in any way. The Purchased Companies do not have and does not use any
trade names, design marks or trade-marks (whether registered or unregistered) other than those shown in Schedule 3.1(mm). 

Survival  

3.2   The representations and warranties set out in §3.1 will survive the Closing and the payment of the Purchase Price
and, notwithstanding the Closing and the payment of the Purchase Price, and notwithstanding the waiver of any condition by the Purchaser, will continue in full force and effect for the benefit of the
Purchaser for a period of two years from the Closing Date, except for those representations and warranties in: 

	(a)
	§3.1(ff) to
(ii) inclusive, which will continue in full force and effect for the benefit of the Purchaser until 30 days after the last date upon which
all rights of appeal or objections have expired with respect to an assessment or reassessment may be made by the relevant Governmental Entity relating to such representations and warranties in respect
of any return, report or information filed by a Purchased Company with respect to any period up to and including Closing, and

	(b)
	§3.1(b) and
(c) which will have no time limitation. 

19

  

 
 

PART 4
  REPRESENTATIONS AND WARRANTIES REGARDING THE VENDOR    
    

4.1   In order to induce the Purchaser to enter into and consummate the transactions contemplated by this Agreement, the Vendor represents
and warrants to the Purchaser that: 

	(a)
	Organization and Status — The Vendor is a corporation duly incorporated and organized and is
validly existing under, the laws of its applicable jurisdiction and is up-to-date in the filing of all corporate returns under the laws of that jurisdiction;

	(b)
	Corporate Power — The Vendor has all necessary power and authority to own, directly or (after the
Pre-Closing Reorganization) indirectly, and dispose of the ORI Shares, to enter into this Agreement and the contracts, agreements and instruments required by this Agreement to be delivered
by it, and to perform its obligations hereunder and thereunder;

	(c)
	Authority — The Vendor has taken all necessary action (or will have taken all necessary
action by the Closing Date) to authorize the execution and delivery of this Agreement and the contracts, agreements and instruments required to be delivered by it, and to perform its obligation
hereunder or thereunder. The Vendor has due and sufficient right and authority to enter into this Agreement on the terms and conditions set forth and to transfer or cause to be transferred the legal
and beneficial title and ownership of the ORI Shares to the Purchaser;

	(d)
	Residency of the Vendor — MEC Holdings, which at Closing will be the owner of the ORI Shares, is
not a "non-resident" of Canada within the meaning of §116 of the Income Tax Act;

	(e)
	Agreement Valid — This Agreement has been duly executed by the Vendor and (assuming due execution
and delivery by the other Parties) constitutes a valid and binding obligation of the Vendor and the Vendor is not a party to, bound by or subject to any indenture, mortgage, lease, agreement,
instrument, statute, regulation, order, judgment, decree or law which would be violated, contravened or breached by, or under which any default would occur as a result of, the execution and delivery
by the Vendor of this Agreement or the performance by the Vendor of any of the terms hereof;

	(f)
	Ownership of the ORI Shares — At the Closing Time, MEC Holdings will be the registered and
beneficial owner of the ORI Shares, with good and marketable title thereto, free and clear of all Encumbrances, and will have the exclusive right to dispose of the ORI Shares as provided in this
Agreement. None of the ORI Shares is subject to (i) any right permitting a Person other than the Purchaser to acquire the ORI Shares or which in any way limits or restricts the transfer to the
Purchaser of the ORI Shares other than the transfer restrictions (if any) in its articles and bylaws; or (ii) any voting trust, pooling agreement, shareholder agreement, voting agreement
or other contract, arrangement or understanding with respect to the voting of the ORI Shares (or any of them). On completion of the transactions contemplated in this Agreement, the Purchaser
will have good title to the ORI Shares, free and clear of all Encumbrances other than Encumbrances granted by the Purchaser; and 

20

 

	(g)
	Bankruptcy.    The Vendor has not made an assignment in favour of its creditors or a proposal in bankruptcy to its creditors
or any class thereof, and no petition for a receiving order has been presented in respect of it. It has not initiated proceedings with respect to a compromise or arrangement with its creditors or for
its winding up, liquidation or dissolution. No receiver or interim receiver has been appointed in respect of it or any of its undertakings, property or assets (including the Shares) and no execution
or distress has been levied on any of its undertakings, property or assets, nor have any proceedings been commenced in connection with any of the foregoing. 

Survival  

4.2   The representations and warranties set out in §4.1 will survive the Closing and the payment of the Purchase Price
and, notwithstanding the Closing and the payment of the Purchase Price, and notwithstanding the waiver of any condition by the Purchaser, will continue in full force and effect for the benefit of the
Purchaser for a period of two years from the Closing Date, except for those representations and warranties in §4.1(f) which will have no time limitation. 

 
 

PART 5
  REPRESENTATIONS AND WARRANTIES OF THE PURCHASER AND GUARANTOR    
    

Purchaser  

5.1   In order to induce the Vendor to enter into and to consummate the transactions contemplated by this Agreement, the Purchaser and the
Guarantor jointly and severally represent and warrant to the Vendor that: 

	(a)
	Organization and Good Standing — The Purchaser is a company duly incorporated, validly existing
and is up-to-date in the filing of all corporate returns under the laws of its jurisdiction of incorporation;

	(b)
	Authority Relative to this Agreement — The Purchaser has all necessary corporate power, authority
and capacity to acquire the ORI Shares and to perform its obligations hereunder. The execution and delivery of this Agreement has been duly authorized by all necessary corporate action on the part of
the Purchaser and this Agreement has been duly executed and delivered by the Purchaser and constitutes a valid and binding obligation of the Purchaser;

	(c)
	Investment Canada — To the best of their knowledge, the Purchaser is a "Canadian" within the
meaning of the Investment Canada Act (Canada);

	(d)
	Financial Ability — The Purchaser has cash on hand or access to cash held by or available to the
Guarantor in amounts sufficient to enable it to pay the Purchase Price including any adjustments and all other costs and expenses in connection with the consummation of the transactions contemplated
by this Agreement; 

21

 

	(e)
	No Conflicts — The Purchaser is not a party to, bound or affected by or subject to any indenture,
mortgage, lease, agreement, obligation or instrument, article or by-law provision or statute, regulation, order or judgement, which would be violated, breached by, or under which default
would occur or an Encumbrance would be created as a result of the execution and delivery of, or the performance of obligations under, this Agreement or any agreement to be entered under the terms of
this Agreement; and

	(f)
	Approvals — No authorization, approval, order, licence, permit or consent of any stock exchange,
over-the-counter market or Governmental Entity and no registration, declaration or filing by the Purchaser with any such Governmental Entity, other than the Authorizations in
§8.1 and Schedule 5.1(f), is required in order for the Purchaser:

	(i)
	to
enter into this Agreement and consummate the transactions contemplated by this Agreement;

	(ii)
	to
execute and deliver all of the documents and instruments to be delivered by the Purchaser under this Agreement;

	(iii)
	to
duly perform and observe the terms and provisions of this Agreement; and

	(iv)
	to
render this Agreement legal, valid, binding and enforceable. 

Guarantor  

5.2   In order to induce the Vendor to enter into and to consummate the transactions contemplated by this Agreement, the Purchaser and the
Guarantor jointly and severally represent and warrant to the Vendor that: 

	(a)
	Organization and Good Standing — The Guarantor is a company duly incorporated, validly existing
and in good standing with respect to the filing of annual reports under the Business Corporations Act (British
Columbia);

	(b)
	Authority Relative to this Agreement — The Guarantor has all necessary corporate power, authority
and capacity to perform its obligations hereunder. The execution and delivery of this Agreement has been duly authorized by all necessary corporate action on the part of the Guarantor and this
Agreement has been duly executed and delivered by the Guarantor and constitutes a valid and binding obligation of the Guarantor;

	(c)
	Investment Canada — To the best of their knowledge, the Guarantor is a "Canadian" within the
meaning of the Investment Canada Act (Canada); 

22

 

	(d)
	Financial Ability — The Guarantor has cash on hand or firm commitments from lenders in amounts
sufficient to enable it to pay the Purchase Price including any adjustments and all other costs and expenses in connection with the consummation of the transactions contemplated by this Agreement;

	(e)
	No Conflicts — The Guarantor is not a party to, bound or affected by or subject to any material
indenture, mortgage, lease, agreement, obligation or instrument, article or by-law provision or statute, regulation, order or judgement, which would be violated, breached by, or under
which default would occur or an Encumbrance would be created as a result of the execution and delivery of, or the performance of obligations under, this Agreement or any agreement to be entered under
the terms of this Agreement; and

	(f)
	Approvals — No authorization, approval, order, licence, permit or consent of any stock exchange,
over-the-counter market or Governmental Entity and no registration, declaration or filing by the Guarantor with any such governmental authority, regulatory body or agency, or
court, other than the Authorizations in §8.1 and Schedule 5.2(f), is required in order for the Guarantor:

	(i)
	to
enter into this Agreement and consummate the transactions contemplated by this Agreement;

	(ii)
	to
execute and deliver all of the documents and instruments to be delivered by the Guarantor under this Agreement;

	(iii)
	to
duly perform and observe the terms and provisions of this Agreement; and

	(iv)
	to
render this Agreement legal, valid, binding and enforceable. 

Survival  

5.3   The representations and warranties of the Purchaser and Guarantor contained in §5.1 and §5.2 will
survive the Closing and the purchase of the ORI Shares and, notwithstanding the Closing, the representations and warranties of the Purchaser and Guarantor will continue in full force and effect for
the benefit of the Vendor for two years from the Closing Date. 

 
 

PART 6
  PURCHASER'S CONDITIONS PRECEDENT    
    

Purchaser's Conditions  

6.1   The obligations of the Purchaser to complete the purchase of the ORI Shares are subject to the satisfaction of, or compliance with, at
or before the Closing Time, each of the following conditions precedent: 

23

 

	(a)
	Authorizations — The Authorizations set out in Schedule 3.1(cc) will have been obtained in
writing by the Purchaser and the Guarantor before the Closing Date; and the Vendor will use its reasonable best efforts to assist the Purchaser and the Guarantor in obtaining all such required
Authorizations;

	(b)
	Truth and Accuracy of Representations of the Vendor and Compliance with Covenants at
Closing — The representations and warranties of the Vendor made in Part 3 and Part 4 will be true and correct, in all
material respects, at the Closing and with the same effect as if made at and as of the Closing (except as such representations and warranties may be affected by the occurrence of events or
transactions expressly contemplated and permitted by this Agreement) and, to that effect, the Purchaser will have received from the Vendor a certificate certifying that the respective representations
and warranties contained therein are true and correct as at the Closing Date;

	(c)
	Mantini Note — The Mantini Note will have been paid and cancelled and all security granted in
respect of the Mantini Note will have been released;

	(d)
	Management Agreements — Any agreements providing for the payment of management and other fees by
any of the Purchased Companies to the Vendor will have been terminated at no cost to such Purchased Company;

	(e)
	Performance of Obligations — Each of the Vendor and the Purchased Companies will have performed
and complied with, in all material respects, all the obligations, covenants and agreements to be performed and complied with (except as such obligations, covenants and agreements may be affected by
the occurrence of events or transactions expressly contemplated and permitted by this Agreement) by each of them;

	(f)
	Absence of Injunctions — No injunction or restraining order of any court or administrative
tribunal of competent jurisdiction will be in effect prohibiting the transactions contemplated by this Agreement and no action or proceeding will have been instituted or be pending before any court or
administrative tribunal to restrain or prohibit the transactions between the Parties contemplated by this Agreement;

	(g)
	Corporate Proceedings — All corporate proceedings to be taken in connection with the transactions
contemplated by this Agreement will be satisfactory in form and substance to the Purchaser, acting reasonably, and the Purchaser will have received copies of all instruments and other evidence as it
reasonably requests in order to establish the consummation of such transactions and the taking of all necessary corporate proceedings in connection therewith;

	(h)
	No Legal Action — No material action or proceeding will be pending against any Party (other than
the Purchaser) in any jurisdiction, to enjoin, restrict or prohibit any of the transactions contemplated by this Agreement or the right of the Purchaser to conduct the Business after Closing on
substantially the same basis as it was conducted before Closing; 

24

 

	(i)
	Termination of Pledge — The pledge of the ORI Shares in favour of MEC Holdings will have been
terminated; and

	(j)
	Pre-Closing Reorganization — the Vendor will implement the Pre-Closing
Reorganization in accordance with §9.9. 

Waiver  

6.2   The conditions set forth in this Part 6 are for the exclusive benefit of the Purchaser and may be waived by the Purchaser in
writing in whole or in part on or before the Closing Date. Notwithstanding any such waiver, the completion of the purchase and sale contemplated by this Agreement by the Purchaser will not prejudice
or affect in any way the rights of the Purchaser in respect of the warranties, representations and covenants of the Vendor in this Agreement. 

 
 

PART 7
  VENDOR'S CONDITIONS PRECEDENT    
    

Vendor's Conditions  

7.1   The obligations of the Vendor to complete the sale of the ORI Shares will be subject to the satisfaction of, or compliance with, at or
before the Closing Time, each of the following conditions precedent: 

	(a)
	Authorizations — All Authorizations set out in Schedule 3.1(cc) will have been obtained in
writing by the Purchaser and the Guarantor before the Closing Date;

	(b)
	Truth and Accuracy of Representations of the Purchaser at Closing — The representations and
warranties of the Purchaser and Guarantor made in Part 5 will be true and correct, in all material respects, at Closing and with the same effect as if made at and as of Closing (except as such
representations and warranties may be affected by the occurrence of events or transactions expressly contemplated and permitted by this Agreement) and, to that effect, the Vendor will have received
from the Purchaser and the Guarantor certificates executed by the Purchaser and the Guarantor certifying that the representations and warranties of the Purchaser set forth in Part 5 are true
and correct as at the Closing Date;

	(c)
	Performance of Obligations — The Purchaser will have performed and complied with, in all material
respects, all the obligations, covenants and agreements (except as such obligations, covenants and agreements may be affected by the occurrence of events or transactions expressly contemplated and
permitted by this Agreement) to be performed and complied with by it;

	(d)
	Juravinski Note — The Vendor will have obtained a release from the holders of the Juravinski Note
in respect of its obligations arising thereunder, in form and substance satisfactory to the Vendor, acting reasonably or, failing that, the Vendor will have obtained an indemnity from the Purchaser
and the Guarantor in respect of the Vendor's obligations arising under the Juravinski Note; 

25

 

	(e)
	Absence of Injunctions — No injunction or restraining order of any court or administrative
tribunal of competent jurisdiction are in effect prohibiting the transactions contemplated by this Agreement and no action or proceeding will have been instituted or be pending before any court or
administrative tribunal to restrain or prohibit the transactions between the Parties contemplated by this Agreement; and

	(f)
	Corporate Proceedings — All corporate proceedings to be taken in connection with the transactions
contemplated by this Agreement will be satisfactory in form and substance to the Vendor, acting reasonably, and the Vendor will have received copies of all instruments and other evidence as it
reasonably requests in order to establish the consummation of such transactions and the taking of all necessary corporate proceedings in connection therewith. 

Waiver  

7.2   The conditions set forth in this Part 7 are for the exclusive benefit of the Vendor and may be waived by the Vendor in writing
in whole or in part on or before the Closing Date. Notwithstanding any such waiver, completion of the purchase and sale contemplated by this Agreement by the Vendor will not prejudice or affect in any
way the rights of the Vendor in respect of the warranties and representations of the Purchaser set forth in this Agreement. 

 
 

PART 8
  CONDITION FOR THE BENEFIT OF ALL PARTIES    
    

8.1   The obligations of the Parties to complete the purchase and sale of the ORI Shares will be subject to the condition that either: 

	(a)
	the
Commissioner of Competition (the "Commissioner") shall have issued an Advance Ruling Certificate pursuant to §102 of the Competition Act with respect to the
transactions contemplated under this Agreement, or

	(b)
	the
Commissioner shall have waived, pursuant to §113(c) of the Competition Act the obligation to notify and supply information under Part IX of the
Competition Act and shall have issued confirmation that she does not intend, at that time, to make an application under §92 of the Competition Act in respect of the transactions
contemplated under this Agreement, or

	(c)
	the
Parties shall each have filed all notices and information required under Part IX of the Competition Act, and either 

26

 

	(i)
	the
Commissioner shall have issued confirmation that she does not intend, at that time, to make an application under §92 of the Competition Act in respect of
the transactions contemplated under this Agreement, or

	(ii)
	the
applicable waiting period under §123 of the Competition Act will have expired without the Commissioner having advised the parties that she intends to
make an application under §92 of the Competition Act in respect of the transactions contemplated under this Agreement. 

 
 

PART 9
  COVENANTS    
    

Conduct of Business  

9.1   Until the Closing Date, except as otherwise contemplated under this Agreement including to enable the Vendor and the Purchased
Companies to effect the Pre-Closing Reorganization, the Vendor (unless otherwise agreed to in writing by the Purchaser) will cause each of the Purchased Companies (as the case may
be) to: 

	(a)
	Conduct Business in Ordinary Course — Conduct the Business in the ordinary course thereof,
including the payment of all current liabilities and accounts in the ordinary course, and not negotiate or execute any new Material Contracts or terminate, cancel or modify any existing Material
Contracts;

	(b)
	Amalgamations — Not amalgamate, merge or consolidate with or acquire or agree to acquire all or
substantially all of the shares or assets of any Person, not to acquire or lease or agree to acquire or lease any business operations or any equity interests in any other Person, not to acquire or
agree to acquire any legal or beneficial interest in any real property or not to occupy, lease, manage or control or agree to occupy, lease, manage, or control any property or facility except for such
transactions which, in the aggregate, would involve amounts less than C$50,000.00 and are made in the ordinary course;

	(c)
	Non-Arm's Length Transactions — Not enter into any non-arm's length
transaction other than in the ordinary course of Business;

	(d)
	Liabilities — Not incur any liability, obligation, indebtedness or other commitment (whether
accrued, absolute, contingent or otherwise, and whether due or to become due), other than unsecured current liabilities, obligations, indebtedness and commitments incurred in the ordinary course of
the Business;

	(e)
	No Dividends — Not declare, set aside or pay any dividend or make any other distribution with
respect to any of the Shares, or redeem, repurchase or otherwise acquire, directly or indirectly any of the Shares;

	(f)
	No Drawing — Not draw any amounts in respect of the CRF Receivables; 

27

 

	(g)
	Amtote Agreement — Extend the term of the agreement between Amtote Canada Inc. and
Holdings dated August 7, 1997 to November 15, 2005, not materially alter the provisions of that agreement (without the prior consent of the Guarantor, in its sole discretion), or enter
into any agreement for the provision of totalisator services;

	(h)
	No Compromises — Not enter into any compromise or settlement of any litigation, proceeding, or
government investigation relating to the Business or any of the assets thereof;

	(i)
	No Increases — Not make any drawings in order to pay amounts outstanding under the Shareholder
Loans or increase the compensation of employees of either of the Purchased Companies, or any increase in any compensation or bonus payable to any officer, employee, consultant or agent thereof, or
make any loan to, or engage in any transaction with, any employee, officer or director of either of the Purchased Companies;

	(j)
	No Accounting Changes — Not make any change to the accounting or tax practices followed by any of
the Purchased Companies;

	(k)
	No Breach — Subject to §11.1, not take any action which, if effected before the date
of this Agreement, would constitute a breach of any representation, warranty, covenant or other obligation of the Vendor in this Agreement;

	(l)
	Continue Insurance — Continue in force all existing policies of insurance presently maintained by
the Purchased Companies, and will report all claims or known circumstances or events which may give rise to a claim to its insurers under the insurance policies in a due and timely manner and to
provide copies of those reports to the Purchaser;

	(m)
	Pay Liabilities — Pay and discharge all liabilities or obligations of the Purchased Companies in
the ordinary course of Business consistent with past business practice;

	(n)
	Preserve Business — preserve intact the Business and the Assets, operations and affairs of the
Purchased Companies and carry on the business and the affairs of the Purchased Companies;

	(o)
	Necessary Steps — take all actions, steps and proceedings that are necessary or desirable to
approve or authorize, or to validly and effectively undertake, the execution and delivery of this Agreement and the completion of the transactions contemplated by this Agreement; and

	(p)
	Provide Reasonable Assistance — after the Closing Date provide reasonable assistance to the
Purchaser in respect of any inquiries, investigations or other matters relating to the Authorizations set out in Schedule 3.1(cc). 

28

 

Access for Investigation  

9.2   The Vendor will permit, and will cause the Purchased Companies to permit, the Purchaser and its employees, agents, professional and
other representatives between the date hereof and the Closing Date, to have reasonable access during normal business hours to the premises and to the books, accounts, records and other data of the
Purchased Companies (including all corporate, accounting and tax records and any electronic or computer accessed data), to the Assets and senior management of the Purchased Companies necessary for the
Purchaser to gain an understanding of the data, business and affairs of the Purchased Companies and the Vendor will cause the Purchased Companies to furnish, and require that the principal bankers,
appraisers, independent auditors and other advisors of the Purchased Companies furnish to the Purchaser such responses to inquiries, financial and operating data and other information with respect to
the business and Assets of the Purchased Companies as the Purchaser will from time to time reasonably request to enable confirmation of the matters warranted in Part 3 and Part 4. 

No Waiver  

9.3   No investigations made by or on behalf of the Purchaser will have the effect of waiving, diminishing the scope of, or otherwise
affecting any representation or warranty made under this Agreement. 

Exclusive Dealings  

9.4   Until September 30, 2005, the Vendor will not, and will cause the Purchased Companies not to, take any action, directly or
indirectly, to encourage, initiate or engage in discussions or negotiations with, or enter into an agreement, or provide any information to, any Person, other than the Purchaser and its designated and
authorized representative, concerning any sale, transfer or assignment of the ORI Shares or any portion of the Business. Until September 30, 2005, the Vendor will notify the Purchaser promptly
if any such discussions or negotiations are sought or if any proposal for a sale, transfer or assignment of the Shares or any portion of the Business is received. 

Simulcast Agreements  

9.5   On the Closing Date, the Purchaser will cause ORI to enter into agreements with the Vendor under which: 

	(a)
	the
Vendor and its affiliates will be entitled to receive and display the simulcast signals from, and lawfully collect wagers on, all races conducted at Flamboro Downs, at or via any
or all of (i) the Vendor's directly or indirectly lawfully operated wagering venues, including racetracks, off-track betting facilities and account wagering services and
(ii) the Vendor's secondary recipients' lawfully operated wagering venues, including racetracks, off-track betting facilities and account wagering services; and

	(b)
	the
Vendor, or such of the Vendor's affiliates designated by the Vendor from time to time, will become the exclusive distributor of racing content from Flamboro Downs to all wagering
venues outside of North America. 

        The
agreements in this §9.5(a) and (b) will be for a 10-year term and otherwise on industry standard terms and conditions. 

29

  

Future Agreements  

9.6            Subject
to §9.7, following the Closing Date the Guarantor and the Vendor will enter into good faith negotiations for the purpose of entering into agreements under which: 

(a)    affiliates
of the Guarantor that operate horse racetracks, including ORI, (collectively, the "Guarantor Racetracks"), will be entitled to receive and display the simulcast signals
from, and lawfully collect wagers on, all races conducted at all racetracks owned or operated by the Vendor and its affiliates or via any or all of (i) the Guarantor Racetracks' lawfully
operated wagering facilities and account wagering venues and (ii) the Guarantor Racetracks secondary recipients' lawfully operated wagering venues, including racetracks, off-track
betting facilities and account wagering venues, at reasonable rates, having regard to the rates charged by the Vendor under similar agreements concerning the same simulcast signals; 

(b)    the
Vendor and its affiliates will be entitled to receive and display the simulcast signals from, and lawfully collect wagers on, all races conducted at any or all of the Guarantor
Racetracks at or via any or all of (i) the Vendor's directly or indirectly lawfully operated wagering venues, including racetracks, off-track betting facilities and account wagering
services and (ii) the Vendor's secondary recipients' lawfully operated wagering venues, including racetracks, off-track betting facilities and account wagering services at
reasonable rates, having regard to the rates charged by the Guarantor Racetracks under similar agreements for the same simulcast signals; 

(c)    the
Guarantor Racetracks, other than ORI, will appoint the Vendor, or such of the Vendor's affiliates designated by Vendor from time to time, as the exclusive distributor of the horse
racing content originating from the Guarantor Racetracks, other than ORI, to all locations outside of North America, including, racetracks, off-track betting facilities and account
wagering services; and 

(d)    each
of the Guarantor Racetracks will change its totalisator service provider to an entity designated by the Vendor, provided such entity is able to offer pricing and service levels,
offerings and features that, in the reasonable opinion of the Guarantor, in their entirety are the same or better than those offered by a Guarantor Racetrack's existing totalisator service provider. 

9.7            The
obligations of the Guarantor and the Vendor under §9.6: 

(a)    will
be subject to any such proposed agreement not resulting in the Guarantor, a Guarantor Racetrack or the Vendor or any of its affiliates, respectively, breaching any
pre-existing contractual obligations; and 

(b)    will:

(i)    be
subject to the receipt of the consent of any applicable horsemen's groups and other applicable Governmental Entity and, the Guarantor and the Vendor will use their commercially
reasonable efforts (including the Guarantor causing the Guarantor Racetracks to use their commercially reasonable efforts) to obtain such consents; and 

30

 

(ii)    in
any event, terminate on March 31, 2006, regardless of whether any such agreements are entered into. 

Shareholder Loans  

9.8            Notwithstanding
anything to the contrary contained in this Agreement, each of the Purchased Companies will be permitted to pay and discharge all liabilities or obligations to the
Vendor and its affiliates in respect of any of the Shareholder Loans at any time and from time to time from the date of this Agreement to the Closing Date. 

Pre-Closing Reorganization  

9.9            Notwithstanding
anything to the contrary contained in this Agreement, the Vendor will, and will cause the Purchased Companies to do all such things and take all such actions as may
be necessary or desirable for the purpose of enabling the Vendor and the Purchased Companies to implement and effect the transactions contemplated by the Pre-Closing Reorganization, and
the Vendor will not materially vary the form of the Pre-Closing Reorganization without the prior approval of the Purchaser, acting reasonably, before it is implemented. 

Mantini Note  

9.10            Notwithstanding
anything to the contrary contained in this Agreement, ORI will be permitted to do all such things and take all such actions as are required to pay and discharge the
principal amounts owing under and interest accrued, or that may accrue in the future, on the Mantini Note and attend to the discharge of all security obligations related thereto, provided that such
payment and discharge shall not result in the application of §80 of the Income Tax Act thereto. 

Juravinski Note  

9.11    The
Vendor will use its commercially reasonable efforts to obtain a full and final release from the holders of the Juravinski Note in respect of the Vendor's obligations arising
thereunder, including in its capacity as guarantor. Each of the Purchaser and the Guarantor will use its commercially reasonable efforts to assist the Vendor in obtaining such release, including by
delivery of a substitute guaranty and assumption of the obligations of the Vendor under the Juravinski Note. In the event that such release is not obtained on or before the Closing Date, the Purchaser
and the Guarantor will indemnify and save harmless the Vendor from and against all claims which may be made or brought against the Vendor in connection with its obligations arising under the
Juravinski Note. 

Termination and Severance  

	9.12
	(a)    Subject
to §9.12(b), from and after the Closing Time, the Purchaser and the Guarantor will be solely responsible for all notices of termination,
severance costs and other liabilities and obligations and any employment benefits under any employee benefit program in respect of or relating to any employee's service with any of the Purchased
Companies; and 

31

 
	

	(b)    the
Vendor shall be solely responsible for all notices of termination, severance costs and other liabilities and obligations in respect of
the former employment relationship between Richard Jacob and Holdings. 

Confidentiality  

9.13            Until
the Closing Time and, in the event of the termination of this Agreement without consummation of the transactions contemplated by this Agreement, thereafter, 

(a)    the
Purchaser and the Guarantor will keep strictly confidential the Confidential Information of the Business, the Purchased Companies and the Vendor, and will not disclose or use such
Confidential Information for any purpose whatsoever other than to evaluate the benefits to be received by the Purchaser from the purchase of the ORI Shares, and will after the Closing Time, keep
strictly confidential the Confidential Information of the Vendor, and 

(b)    the
Vendor will, and will cause the Purchased Companies to, keep strictly confidential the Confidential Information of the Purchaser and Guarantor. 

If
this Agreement is terminated, promptly after such termination all documents, work papers and other written material obtained from a party in connection with this Agreement and not theretofore made
public (including all copies and photocopies thereof), will be promptly returned to the party that provided such material. 

Tax Returns  

9.14    All
federal and provincial income tax returns for the Purchased Companies not required to have been filed before the date of this Agreement for any period ending on or before the
Closing Time will be prepared by the Vendor on a timely basis at the Vendor's expense, and the Purchaser shall provide the Vendor with such access to the books, records and other information of the
Purchased Companies and otherwise cooperate with the Vendor as is reasonably required for this purpose and file such returns on a timely basis. The Vendor will afford the Purchaser a reasonable
opportunity to review all such tax returns prior to their being finalized. The amount of tax payable in each such return when so filed will be correct and all such tax returns when so prepared will
be, to the best of the Vendor's knowledge, true and complete and accurate in all material respects. 

32

 
 
 

PART 10
  
    CLOSING    
    

Closing Date and Location  

10.1            The
transactions contemplated by this Agreement will be completed at 11:00 a.m. (Eastern time) on the Closing Date at the offices of Lang Michener LLP,
Suite 2500 - 181 Bay Street, Toronto, Ontario, solicitors for the Purchaser, or at such other time or at such other location as may be mutually agreed upon in writing
by the Parties. 

Vendor's Closing Documents  

10.2            On
the Closing Date, the Vendor will deliver, or cause to be delivered, the following documents: 

(a)    the
share certificates representing the ORI Shares issued in the name of MEC Holdings, duly endorsed for transfer to the Purchaser; 

(b)    for
ORI, a certified copy of (i) its articles and by-laws, and (ii) the resolutions of its directors authorizing the transfer of the ORI Shares to the
Purchaser; 

(c)    a
certified copy of the register of shareholders of ORI showing MEC Holdings as the registered owner of the ORI Shares; 

(d)    the
share certificates registered in the name of the Purchaser representing the ORI Shares; 

(e)    a
copy of the Simulcast Agreement, executed by the Vendor; 

(f)    a
copy of the release in favour of the applicable Purchased Companies from 1180554 Ontario Limited (being the holder of the Mantini Note) or evidence of Substitute Security
(as defined therein) having been put in place in accordance with the Mantini Note; 

(g)    a
certificate of status of ORI; 

(h)    a
certificate executed by the Vendor certifying that the conditions in §7.1 have been satisfied; 

(i)    duly
signed resignations of any of the directors or officers of ORI designated by the Purchaser; 

(j)    releases,
in form and substance satisfactory to the Purchaser and the Vendor, acting reasonably, executed by the Vendor in favour of ORI releasing it from any and claims and
liabilities whatsoever which the Vendor ever had or may have against it for or by reason of any matter up to the Closing, excepting claims under this Agreement and other agreements entered into by the
Parties on the Closing Date; 

33

 

(k)    releases,
in form and substance satisfactory to the Purchaser and the Vendor, acting reasonably, executed by each of the directors and officers of each of the Purchased Companies in
favour of and releasing each of the Purchased Companies from any and claims and liabilities whatsoever which such director or officer, as the case may be, ever had or may have against it for or by
reason of any matter up to the Closing; 

(l)    corporate
minute books and all other books and records of each of the Purchased Companies; 

(m)    the
corporate seal, if any, for each of the Purchased Companies; and 

(n)    such
other documents and instruments, other than those set out above, as may be reasonably requested by the Purchaser's Solicitors in order to complete the transactions set out in
this Agreement. 

Purchaser's Closing Documents  

10.3            On
the Closing Date, the Purchaser will deliver, or cause to be delivered, the following documents: 

(a)    certificate
of the Purchaser described in §6.1(b); 

(b)    certificate
of status of the Purchaser and the Guarantor; 

(c)    a
copy of the Simulcast Agreement executed by ORI; 

(d)    a
guarantee in favour of the holders of the Juravinski Note under which the Purchaser and the Guarantor agree to assume the Vendor's obligations arising thereunder or, in the
alternative, an indemnity by the Purchaser and the Guarantor in favour of the Vendor in respect of the Vendor's obligations arising under the Juravinski Note; and 

(e)    such
other documents and instruments, other than those set out in above, as may be reasonably requested by the Vendor's Solicitors in order to complete the transactions set out in
this Agreement. 

 
 

PART 11
  
    TERMINATION    
    

Termination Rights  

11.1            This
Agreement may, by notice in writing given before or on the Closing Date, be terminated: 

(a)    by
mutual consent of the Vendor and the Purchaser; 

34

 

(b)    by
the Purchaser if any of the conditions in Part 6 other than §6.1(a) have not been satisfied at or before Closing and the Purchaser has not waived such
condition at or before Closing; 

(c)    by
the Vendor if any of the conditions in Part 7 have not been satisfied at or before Closing and the Vendor has not waived such condition at or before Closing; or 

(d)    by
either Party if the Closing has not occurred on or before September 30, 2005, or such later date as the Parties agree to in writing, unless the Closing has not occurred by
such date because the Party seeking to terminate this Agreement has failed to perform any one or more of its material obligations or covenants under this Agreement to be performed at or before
Closing. 

Notwithstanding
any other provision of this Agreement, the Purchaser will not be permitted to terminate this Agreement or otherwise assert that it is under no obligation to complete the purchase of
the ORI Shares under this Agreement as a result of the failure to satisfy the conditions in Part 6 unless forthwith and, in any event, before the Closing Date, the Purchaser has provided to the
Vendor a written notice specifying in reasonable detail, breaches of covenants, representations and warranties or other matters which the Purchaser is asserting as the basis for the
non-fulfilment of the applicable condition or termination right, as the case may be. If any such notice is delivered by the Purchaser, provided that the Vendor is proceeding diligently to
cure such matter and such matter is capable of being cured, the Purchaser may not terminate this Agreement as a result thereof until the later of September 30, 2005 and the expiration of
60 days from the date that such notice is delivered, and then only if such matter has failed to be cured by the Vendor. (For greater certainty, in the event that such matter is cured
within the time period referred, this Agreement may not be terminated as a result of the cured breach.). 

Competition Act Extension  

11.2            Notwithstanding
any other provision of this Part 11, no party may terminate this Agreement as a result of the failure to satisfy the condition in Part 8 until
March 31, 2006. If the condition in Part 8 has not been satisfied prior to September 30,
2005, the Closing will be 5 Business Days after that condition has been satisfied, provided that all other conditions, covenants and deliveries set out in this Agreement have been satisfied. 

Destruction or Loss  

11.3            If
before the Closing, any of the Assets or part of the Business is lost, damaged or destroyed and such loss, damage or destruction has a material adverse effect on the Business,
then the Purchaser, subject to the terms of this §11.3, may either: 

(a)    terminate
this Agreement and be repaid the Deposit; or 

(b)    require
the Vendor to reduce the Purchase Price by the amount of the replacement cost of the Assets or Business which were lost, damaged or destroyed less the amount of any proceeds
of insurance payable as a result of the occurrence. 

35

 

Notwithstanding
the terms of §11.3(a) and §11.3(b) above, in the event the Vendor has insurance in place in respect of any such loss, damage or destruction, then
the Purchaser will not be entitled to exercise its rights as described in §11.3(a) and §11.3(b) above for a period of six months and the Vendor will have the
benefit of such six-month period to repair any such loss, damage or destruction. In the event the Vendor is not able, during such six-month period, to restore the Business or
the Assets to substantially the same form as before any such loss, damage or destruction, the Purchaser may terminate this Agreement in accordance with §11.3(a) or exercise its
rights, as applicable, under §11.3(b). In the event the Vendor is able, during such six-month period, to restore the Business or the Assets to substantially the same
form as before any such loss, damage or destruction, then the Purchaser will not be entitled to exercise its rights as described in §11.3(a) and §11.3(b) above
and Closing will be deferred until such time as such repairs have been made. 

Effect of Termination  

11.4            Each
Party's right of termination under this Part is in addition to any other rights it may have under this Agreement or otherwise, and the exercise of a right of termination will
not be an election of remedies. Nothing in this Part limits or affects any other rights or causes of action any Party may have with respect to the representations, warranties, covenants and
indemnities in its favour contained in this Agreement. If a Party waives compliance with any of the conditions, obligations or covenants contained in this Agreement, the waiver will be without
prejudice to any of its rights of termination in the event of non-fulfillment, non-observance or non-performance of any other condition, obligation or covenant in
whole or in part. 

11.5            If
this Agreement is terminated pursuant to any provision of §11.1, all obligations of the Parties under this Agreement will terminate, except that: 

(a)    each
Party's obligations whereby their terms would survive termination; and 

(b)    if
this Agreement is terminated by a Party because of a breach of this Agreement by the other Party or because a condition for the benefit of the terminating Party has not been
satisfied because the other Party has failed to perform any of its obligations or covenants under this Agreement which are reasonably capable of being performed or caused to be performed by such
Party, the terminating Party's right to pursue all legal remedies will survive such termination unimpaired. 

 
 

PART 12
  
    INDEMNITIES    
    

Indemnification of Purchaser  

12.1            The
Vendor covenants and agrees with the Purchaser and Guarantor to indemnify the Purchaser and Guarantor against all liabilities, claims, demands, actions, causes of action,
damages, losses, costs and expenses (including reasonable legal fees) ("Claims") suffered or incurred by the Purchaser, Guarantor or any Purchased Company, directly or indirectly, by reason of or
arising out of: 

36

 

(a)    a
breach of any representations or warranties on the part of the Vendor in Part 3 and Part 4 of this Agreement; or 

(b)    a
breach of any agreement, term or covenant on the part of the Vendor made or to be observed or performed under this Agreement; 

provided
that such Claim is made within 24 months of the Closing Date, save and except for 

(i)    any
Claims arising out of or concerning a breach of those representations or warranties in §3.1(ff) to (hh), which such Claim must be made within the limits set out
in §3.2(a), and 

(ii)    any
Claims arising out of or concerning a breach of those representations or warranties in §3.1(b) and (c) and §4.1(f), which will have
no time limit on when a Claim can be made. 

Indemnification of Vendor  

12.2            The
Purchaser and the Guarantor jointly covenant and agree to indemnify the Vendor against all Claims suffered or incurred by the Vendor, directly or indirectly, by reason of or
arising out of: 

(a)    a
breach of any representations or warranties on the part of the Purchaser or Guarantor in Part 5 of this Agreement; or 

(b)    a
breach of any agreement, term or covenant on the part of the Purchaser or Guarantor made or to be observed or performed under this Agreement; 

provided
that such Claim is made within 24 months of the Closing Date. 

Limitations  

12.3            Notwithstanding
the provisions of this Part 12, the indemnification obligations of each of the Parties will be subject to the following limitations: (a) a Party will
not have any liability under this Part 12 unless the individual Claim exceeds C$50,000.00; (b) a Party will not have any liability under this Part 12 until the aggregate of such
Claims exceeds C$500,000.00; (c) a Party's total liability will not exceed 10% of the Purchase Price; and (d) a Party will not be liable for any special, indirect, consequential,
punitive or aggravated damages, including damages for loss of profit. 

Reductions and Subrogation  

12.4            If
the amount of any Claim suffered by an indemnified party at any time after the making of an indemnity payment is reduced by: 

(a)    any
net tax benefit to the indemnified party; or 

37

 

(b)    any
recovery, settlement or otherwise under or pursuant to any insurance coverage, or pursuant to any claim, recovery, settlement or payment by or against any other Person, 

the
amount of such reduction (less any costs, expenses or premiums incurred in connection therewith), together with interest thereon from the date of payment thereof at a rate of 6%, will promptly be
repaid by the indemnified party to the indemnifying party. Upon making a full indemnity payment, the indemnifying party will, to the extent of such indemnity payment, be subrogated to all rights of
the indemnified party against any third party in respect of the claim to which the indemnity payment relates. 

Exclusive Remedy  

12.5            The
rights of indemnity set forth in this Part 12 are the sole and exclusive remedy of each Party in respect of any misrepresentation, incorrectness in or breach of any
representation or warranty, or breach of covenant, by the other Party under this Agreement. Accordingly, the Parties waive, from and after the Closing, any and all rights, remedies and claims that one
Party may have against the other, whether at law, under any statute or in equity, or otherwise directly or indirectly, relating to the provisions of this Agreement or the transactions contemplated by
this Agreement other than those than as expressly provided for in this Part 12 and other than those arising with respect to any fraud or wilful misconduct. 

Indemnification Procedures for Third Party Claims  

12.6            In
the case of Claims made by a third party with respect to which indemnification is sought: 

(a)    the
Party seeking indemnification (the "Indemnified Party") will give prompt notice, and in any event within 15 days, to the other Party (the "Indemnifying
Party") of any such Claims made upon it; 

(b)    the
Indemnifying Party will have the right, by notice to the Indemnified Party given not later than 30 days after receipt of the notice described in
§12.6(a), to assume the control of the defence, compromise or settlement of the Claim, provided that such assumption will, by its terms, be without cost to the Indemnified Party and
provided further that the Indemnifying Party will have acknowledged in writing its obligation to indemnify the Indemnified Party in accordance with the terms contained in this Part 12 in
respect of that Claim; 

(c)    upon
the assumption of control of any Claim by the Indemnifying Party as set out in §12.6(b), the Indemnifying Party will diligently proceed with the defence,
compromise or settlement of the Claim at its sole expense, including if necessary, employment of counsel reasonably satisfactory to the Indemnified Party and, in connection therewith, the Indemnified
Party will co-operate fully, but at the expense of the Indemnifying Party with respect to any out-of-pocket expenses incurred, to make available to the Indemnifying
Party all pertinent information and witnesses under the Indemnified Party's control, make such assignments and take such other steps as in the opinion of counsel for the Indemnifying Party are
reasonably necessary to enable the Indemnifying Party to conduct such defence. The Indemnified Party will also have the right to participate in the negotiation, settlement or defence of any Claim at
its own expense; 

38

 

(d)    the
final determination of any Claim pursuant to this Section, including all related costs and expenses, will be binding and conclusive upon the Parties as to the validity or
invalidity, as the case may be of such Claim against the Indemnifying Party; and 

(e)    if
the Indemnifying Party does not assume control of a Claim as permitted in §12.6(b), the obligation of the Indemnifying Party to indemnify the Indemnified Party
in respect of such Claim will terminate if the Indemnified Party settles such Claim without the consent of the Indemnifying Party. 

 
 

PART 13
  
    GENERAL    
    

Public Notices  

13.1            The
Parties agree that all notices to third parties and all other publicity concerning the transactions contemplated by this Agreement will be jointly planned and
co-ordinated and no Party will act unilaterally in this regard without the prior approval of the others, such approval not to be unreasonably withheld. 

Public Disclosure  

13.2            Before
and after Closing, none of the Parties will disclose the terms of this Agreement, except as reasonably required for income tax purposes or as otherwise may be required by law
including all securities laws and applicable stock exchange rules and policies. Notwithstanding the foregoing, in the case of any public filing of this Agreement under applicable securities laws the
Parties will use reasonable efforts to jointly plan and coordinate such filings. 

Expenses  

13.3            Except
as otherwise provided in this Agreement, all costs and expenses incurred in connection with the preparation of this Agreement and the transactions contemplated by this
Agreement will be paid by the Party incurring such expenses. The Purchaser and the Guarantor shall, upon request by the Vendor, promptly reimburse the Vendor for all fees and expenses of
Ernst & Young LLP and any other costs and expenses incurred by the Vendor and its affiliates in connection with the preparation, translation and delivery of the financial statements of
ORI for the six months ended June 30, 2005 and 2004, respectively. The fees and expenses required to be paid in connection with the Competition Act filings contemplated by this Agreement shall
be paid by the Purchaser and the Guarantor. 

Time  

13.4            Time
will be of the essence hereof. 

39

   Notices  

13.5            Any
notice or other writing required or permitted to be given hereunder or for the purposes hereof will be sufficiently given if delivered to the Party to whom it is given or, if
mailed, by prepaid registered mail addressed to such Party at: 

	(a)
	if
to the Purchaser: 

2076862 Ontario Inc.

350 - 13775 Commerce Parkway

Richmond, British Columbia

V6V 2V4 

Attention:
Anthony Martin, President 

with
a copy to the Purchaser's Solicitors: 

Lang
Michener LLP

1500 - 1055 West Georgia Street

Vancouver, British Columbia

V6E 4N7 

Attention:
Desmond Balakrishnan 

	(b)
	if
to the Guarantor: 

Great
Canadian Gaming Corporation

350 - 13775 Commerce Parkway

Richmond, British Columbia

V6V 2V4 

Attention:
Anthony Martin, President 

with
a copy to Lang Michener LLP at the address set forth in §(a) 

	(c)
	if
to the Vendor: 

Magna
Entertainment Corp.

337 Magna Drive

Aurora, Ontario

L4G 7K1 

Attention:
W. Thomas Hodgson 

with
a copy to the General Counsel at the address set forth in §(c) above 

40

 

with
a copy to the Vendor's Solicitors: 

Osler,
Hoskin & Harcourt LLP

P.O. Box 50

1 First Canadian Place

Toronto, Ontario

M5X 1B8 

Attention:
Emmanuel Pressman 

or
at such other address as the Party to whom such writing is to be given will have last notified the Party giving the same in the manner provided in this clause. Any notice mailed will be deemed to
have been given and received on the fifth business day next following the date of its mailing unless at the time of mailing or within five business days thereafter there occurs a postal interruption
which could have the effect of delaying the mail in the ordinary course, in which case any notice will only be effectively given if actually delivered. Any notice delivered to the Party to whom it is
addressed will be deemed to have been given and received on the business day next following the day it was delivered. 

Governing Law  

13.6            This
Agreement will be governed by and construed in accordance with the law of the Province of Ontario and the Parties submit and attorn to the jurisdiction of the courts of the
Province of Ontario. 

Severability  

13.7            If
a court of other tribunal of competent jurisdiction determines that any one or more of the provisions contained in this Agreement is invalid, illegal or unenforceable in any
respect in any jurisdiction, the validity, legality and enforceability of such provision or provisions will not in any way be affected or impaired thereby in any other jurisdiction and the validity,
legality and enforceability of the remaining provisions contained herein will not in any way be affected or impaired thereby, unless in either case as a result of such determination this Agreement
would fail in its essential purpose. 

Entire Agreement  

13.8            This
Agreement and the Escrow Agreement constitute the entire agreement between the Parties and supersedes all prior agreements and understandings, oral or written, including the
Agreement in Principle, by and between any of the Parties with respect to the subject matter hereof. 

Further Assurances  

13.9            The
Parties will with reasonable diligence, do all such things and provide all such reasonable assurances as may be required to consummate the transactions contemplated by this
Agreement, and each Party will provide such further documents or instruments required by the other Party as may be reasonably necessary or desirable to give effect to the purpose of this Agreement and
carry out its provisions whether before or after the Closing Date. 

41

 
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42

Enurement  

13.10            This
Agreement and each of the terms and provisions hereof will enure to the benefit of and be binding upon the Parties and their respective heirs, executors, administrators,
personal representatives, successors and assigns. The rights and obligations of the Purchaser, may be assigned in writing by the Purchaser, in whole or in part, to one or more corporations which are
associates, as defined in the Corporations Act, or are subsidiaries of the Purchaser. 

Assignment  

13.11            No
Party may assign this Agreement or any rights or obligations under this Agreement without the prior written consent of the other Party, provided however that the Vendor may
assign any or all of its rights and obligations under this Agreement or under any document or instrument to be executed and delivered by the Vendor as contemplated herein, in whole or in part, to any
affiliate for the purpose of giving effect to the transactions contemplated by the Pre-Closing Reorganization. 

Counterparts  

13.12            This
Agreement may be executed in as many counterparts as may be necessary or by facsimile and each such counterpart agreement or facsimile so executed are deemed to be an original
and such counterparts and facsimile copies together will constitute one and the same instrument. 

IN WITNESS WHEREOF the Parties have duly executed this Agreement as of the day and year first above written. 

	MAGNA ENTERTAINMENT CORP.	 
	
 Per:	

/s/ Signed
 Authorized Signatory	

 
	
 Per:	

/s/ Signed
 Authorized Signatory	

 
	

 	

 	

 
	2076862 ONTARIO INC.	 
	
 Per:	

/s/ Signed
 Authorized Signatory	

 
	

 	

 	

 
	GREAT CANADIAN GAMING CORPORATION	 
	
 Per:	

/s/ Signed
 Authorized Signatory

	

 

QuickLinks

MAGNA ENTERTAINMENT CORP. and 2076862 ONTARIO INC. and GREAT CANADIAN GAMING CORPORATION

SHARE PURCHASE AGREEMENT August 16, 2005

TABLE OF CONTENTS

PART 1 INTERPRETATION

PART 2 PURCHASE AND SALE

PART 3 REPRESENTATIONS AND WARRANTIES REGARDING THE PURCHASED COMPANIES

PART 4 REPRESENTATIONS AND WARRANTIES REGARDING THE VENDOR

PART 5 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER AND GUARANTOR

PART 6 PURCHASER'S CONDITIONS PRECEDENT

PART 7 VENDOR'S CONDITIONS PRECEDENT

PART 8 CONDITION FOR THE BENEFIT OF ALL PARTIES

PART 9 COVENANTS

PART 10 CLOSING

PART 11 TERMINATION

PART 12 INDEMNITIES

PART 13 GENERALQuickLinks
 -- Click here to rapidly navigate through this document

Exhibit 10.3  

 
 

AMENDED AND RESTATED LOAN AGREEMENT
  (Reconstruction of Gulfstream Park, Florida)    
    

        
July 22, 2005 

 
 
 

TABLE OF CONTENTS    
    

	ARTICLE 1

ARTICLE DEFINITIONS
	
 	
 	

 	
 	

 
	1.1	 	Definitions	 	3
	1.2	 	Time	 	20
	1.3	 	Calculation of Interest and Fees	 	20
	1.4	 	Currency	 	20
	1.5	 	Governing Law	 	20
	1.6	 	Inconsistencies	 	20
	1.7	 	Non-Business Days	 	20
	1.8	 	Late Payments	 	21
	1.9	 	Accounting Terms	 	21
	1.10	 	Interpretation Not Affected by Headings, Etc.	 	21
	1.11	 	Rules of Construction	 	21
	1.12	 	Severability	 	22
	1.13	 	References to Remington Loan Agreement	 	22
	1.14	 	Schedules	 	22
	
ARTICLE 2

THE LOAN
	
 	
 	

 	
 	

 
	2.1	 	Loan Amount	 	22
	2.2	 	Advances	 	23
	2.3	 	Holdbacks	 	23
	2.4	 	Holdback Advances	 	23
	2.5	 	Advance Payments	 	24
	2.6	 	Evidences of Advances	 	24
	2.7	 	Termination	 	25
	2.8	 	Term	 	25
	2.9	 	Cost Consultant	 	25
	
ARTICLE 3

PAYMENTS AND INTEREST
	
 	
 	

 	
 	

 
	3.1	 	Repayment	 	26
	3.2	 	Limitation on Prepayment	 	26
	3.3	 	[Intentionally Blank]	 	26
	3.4	 	Prepayment	 	26
	3.5	 	Interest	 	27
	3.6	 	Unwinding Costs	 	28
	3.7	 	Application of Expropriation Proceeds	 	28
	3.8	 	Interest on Fees and Other Charges	 	28
	3.9	 	[Intentionally Blank]	 	28
	3.10	 	Costs, Expenses, Etc.	 	28
	3.11	 	Maximum Interest Rate	 	29

i

 

	3.12	 	Payments Free of Withholding Taxes	 	30
	3.13	 	Concurrent Exercise of Prepayment Rights	 	31
	
ARTICLE 4

ADVANCES UNDER THE LOAN
	
 	
 	

 	
 	

 
	4.1	 	First Advance	 	31
	4.2	 	Subsequent Advances	 	36
	
ARTICLE 5

SECURITY FOR LOAN
	
 	
 	

 	
 	

 
	5.1	 	General	 	41
	5.2	 	Right to Substitute Security for the Aventura Property	 	46
	5.3	 	Development of the Mixed-Use Property	 	46
	5.4	 	Alternative Gaming	 	47
	5.5	 	Meadows Additional Financing	 	47
	
ARTICLE 6

REPRESENTATIONS AND WARRANTIES
	
 	
 	

 	
 	

 
	6.1	 	Borrower's and Guarantors' Representations and Warranties	 	49
	6.2	 	Survival of Borrower's and Guarantors' Representations	 	61
	6.3	 	Lender's Representations and Warranties	 	61
	
ARTICLE 7

AFFIRMATIVE COVENANTS
	
 	
 	

 	
 	

 
	7.1	 	Covenants	 	62
	
ARTICLE 8

NEGATIVE COVENANTS
	
 	
 	

 	
 	

 
	8.1	 	Negative Covenants	 	74
	
ARTICLE 9

EVENTS OF DEFAULT; ACCELERATION OF INDEBTEDNESS
	
 	
 	

 	
 	

 
	9.1	 	Events of Default	 	81
	9.2	 	Acceleration; Remedies	 	85
	9.3	 	Waiver of Certain Rights	 	85
	
ARTICLE 10

MISCELLANEOUS
	
 	
 	

 	
 	

 
	10.1	 	Reliance and Non-Merger	 	86
	10.2	 	Confidentiality	 	87
	10.3	 	No Set-Off	 	87
	10.4	 	Employment of Experts	 	87
	10.5	 	Reliance by Lender	 	87
	10.6	 	Notices	 	88

ii

 

	10.7	 	Further Assurances	 	90
	10.8	 	Assignment	 	90
	10.9	 	Disclosure of Information to Potential Permitted Lender Assignees	 	91
	10.10	 	Right to Cure	 	91
	10.11	 	Forbearance by the Lender Not a Waiver	 	91
	10.12	 	Waiver of Statute of Limitations and Other Defenses	 	91
	10.13	 	Relationship and Indemnity	 	92
	10.14	 	Time of Essence	 	92
	10.15	 	Service of Process/Venue	 	92
	10.16	 	Jury Trial Waiver	 	93
	10.17	 	Final Agreement/Modification	 	93
	10.18	 	Continuing Agreement	 	93
	10.19	 	No Third Party Beneficiaries	 	93
	10.20	 	Appointment of Administrative Agent	 	94
	10.21	 	No Brokers	 	94
	10.22	 	Execution in Counterparts	 	94
	10.23	 	Contribution by Guarantors with Respect to Indebtedness	 	94
	10.24	 	Successors and Assigns Bound; Joint and Several Liability and Agents	 	95
	10.25	 	Loss of Gulfstream Note	 	95
	10.26	 	Acknowledgment	 	95
	10.27	 	Certain Provisions Relating to The Meadows Guarantors	 	96
	10.28	 	Operation of Agreement Relating to the Remington Guarantor	 	96

iii

 
 

AMENDED AND RESTATED LOAN AGREEMENT  
    

        THIS AMENDED AND RESTATED LOAN AGREEMENT made as of the 22nd day of July, 2005. 

BETWEEN:

GULFSTREAM PARK RACING ASSOCIATION, INC.,

a corporation incorporated under the laws of the

State of Florida 

(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 

(hereinafter
called "MEC Pennsylvania" or "The Meadows Owner"), 

OF
THE THIRD PART, 

— and — 

WASHINGTON TROTTING ASSOCIATION, INC.,

a corporation incorporated under the laws of the

State of Delaware 

(hereinafter
called "Washington Trotting"), 

OF
THE FOURTH PART, 

 
— and — 

MOUNTAIN LAUREL RACING, INC.,

a corporation incorporated under the laws of the

State of Delaware 

(hereinafter
called "Mountain Laurel"), 

OF
THE FIFTH PART, 

REMINGTON PARK, INC.,

a corporation incorporated under the laws of the

State of Oklahoma 

(hereinafter
called the "Remington 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 Guarantor"). 

OF
THE SEVENTH PART 

WITNESSES
THAT: 

        WHEREAS
pursuant to the Loan Agreement made as of December 9, 2004 (the "Original Loan Agreement") between the Borrower, as
borrower, the Lender, as lender, and MEC Pennsylvania, Washington Trotting and Mountain Laurel, as guarantors, the Lender agreed to make the Loan available to the Borrower; 

        AND
WHEREAS the parties hereto acknowledge and agree that $50,917,810 is currently outstanding on account of principal (including capitalized interest) in respect of the Loan; 

        AND
WHEREAS the Remington Guarantor, the Palm Meadows Guarantor and MEC have agreed to provide additional guarantees in respect of the Loans and security for such guarantees; 

        AND
WHEREAS the parties hereto have agreed to amend and restate the Original Loan Agreement in order to give effect to the matters referred to in the preceding recital on the terms and
conditions of this Agreement. 

2

 

        NOW THEREFOR 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 
  ARTICLE DEFINITIONS  
    

1.1   Definitions  

        As used herein, unless otherwise herein expressly provided, the following capitalized terms shall have the respective meanings set forth below: 

"Additional Financing" means the financing, if any, required by the Meadows Guarantors in connection with the redevelopment of The Meadows Property,
including the costs associated with a slots gaming licence, authorized gaming machines, and furniture, fixtures and equipment relating thereto, up to a maximum amount of Two Hundred Million Dollars
($200,000,000) plus accrued interest and lender expenses; 

"Additional Financing Inter-Creditor Agreement" has the meaning ascribed thereto in Section 5.5; 

"Additional Guarantors" means, collectively, the Remington Guarantor and the Palm Meadows Guarantor; 

"Additional Security" has the meaning ascribed thereto in Section 5.1; 

"Additional Title Policy" has the meaning ascribed thereto in Section 4.2(n)(x); 

"Administrative Agent" has the meaning ascribed thereto in Section 10.20; 

"Advance" means the First Advance and any Subsequent Advances (including a Holdback Advance); 

"Affiliate" shall mean, with respect to any Person, each Person that controls, is controlled by or is under common control with such Person or any
Affiliate of such Person; provided, however, that in no case shall any Administrative Agent or any Lender be deemed to be an Affiliate of the Borrower or any Guarantor for purposes of this Agreement.
For the purpose of this definition, "control" of a Person shall mean the possession, directly or indirectly, of the power to direct or cause the
direction of its management or policies, whether through the ownership of voting securities, by contract or otherwise; 

"Allocable Amount" has the meaning ascribed thereto in Section 10.23; 

"Applicable Legal Requirement" means any Governmental Rule which could be reasonably expected to be generally followed by any Person with operations
comparable to those which are or have been conducted by any of the Borrower and/or any of the Guarantors, as applicable, or to any of the operations now or previously conducted at any of the
Properties and/or The Meadows Property, as applicable; 

3

 

"Approvals and Consents" means, collectively, the Gulfstream Loan OHRC Approval, the Remington Loan OHRC Approval, the Gulfstream Loan Zoo Consent and
the Remington Loan Zoo Consent; 

"Architect" means BRPH Company — Engineers, Inc., or such other Person acceptable to the Lender, acting
reasonably, who is engaged in architectural work and who is a member or licensee in good standing of the Florida Association of the American Institute of Architects or any successor thereto; 

"Aventura Lands" means the lands of approximately 39.2 acres, in the City of Aventura, Miami-Dade County, Florida, legally described
on Schedule A; 

"Aventura Property" means the Aventura Lands, and all improvements now or hereafter located on the Aventura Lands, together with all tangible and
intangible property of the Borrower now or hereafter owned or leased by the Borrower in connection with the Aventura Lands or the improvements now or hereafter thereon; 

"Aventura Property Purchase and Sale Agreement" means the agreement of purchase and sale between the Borrower, as vendor, and the City of Aventura, as
purchaser, in respect of six acres of the Aventura Property; 

"Bankruptcy Code" has the meaning ascribed thereto in Section 9.1(e); 

"Base Rate" means, for any day, the annual rate of interest equal to the greater of (i) the rate which the Bank of Montreal establishes at its
principal office in Toronto, Ontario 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 Canada 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; 

"Borrower" means Gulfstream Park Racing Association, Inc. and its successors and permitted assigns; 

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

"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 and the Guarantors 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 and Guarantors from time to time and notice of which is provided to the Lender; 

4

 

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

"Borrower's and Guarantors' Pennsylvania Agent" means the Pittsburgh 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 and Guarantors from time to time and notice of which is provided to the Lender; 

"Business Day" means a day other than a Saturday, Sunday or other day on which commercial banks are authorized or obligated to close under the laws of
the United States of America or the State of Florida; 

"Capital Expenditures" means, for any Person during any period, the aggregate amount of all expenditures of such Person for fixed or capital assets made
during such period which, in accordance with GAAP, are classified as capital expenditures; 

"Capitalized Interest Tranche" has the meaning ascribed thereto in the Remington Loan Agreement; 

"Capital Lease Obligations" means the obligations of the Borrower 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; 

"Closing Date" means July 26, 2005; 

"Collateral" shall mean, collectively, all of the undertaking, property and assets of the Borrower, the Guarantors and MEC subject to the Encumbrances,
or intended to be subject to the Encumbrances, created by the Security; 

"Combined" means, in relation to any financial results or financial statements of the Borrower, the Remington Guarantor and the Palm Meadows Guarantor,
the combined financial results or financial statements of the Borrower, the Remington Guarantor and the Palm Meadows Guarantor, calculated and prepared in accordance with GAAP; 

"Compliance Certificate" has the meaning attributed thereto in Section 7.1(d)(i)(B); 

5

 

"Construction Contracts" means all contracts entered into by the Borrower or its agents with Persons for the supply by such Persons of construction
services or materials for the Reconstruction or any part thereof or services or materials related thereto, including, without limitation, the Suitt Stipulated Lump Sum Contract and the Ranger
Construction Stipulated Lump Sum Contract; 

"Construction Costs" means all costs and expenses properly paid or due for the development, design, and construction of the Gulfstream Facilities or any
part thereof as part of the Reconstruction and the financing of same (but excluding all costs and expenses relating to the development, design and construction of the racing surfaces and
excluding the Gulfstream FF&E), including, without limiting the generality of the foregoing: 

	(i)
	payments
made to general contractors, trade contractors and/or subcontractors and material suppliers pursuant to contracts relating directly to the construction and
lease-up of the Reconstruction;

	(ii)
	on-site
costs incurred by or on behalf of the Borrower, including the cost of full-time on-site employees;

	(iii)
	reasonable
professional and consulting fees and expenses such as architectural, engineering, leasing, surveying, design, legal and accounting fees and expenses;

	(iv)
	costs
of building permits, water and sewer connection or usage fees, municipal levies, hydro fees and other similar expenses, temporary utilities, traffic signalization
and landscaping;

	(v)
	all
expenses relating to construction insurance, necessary surety and other performance bonds;

	(vi)
	underwriting
and financing fees, including letters of credit, standby fees, commitment fees, hedging fees and other finance placement costs; and

	(vii)
	interest
at the rate applicable from time to time on the principal amount outstanding hereunder for the payment of those items listed in
clauses (i) through (vi) of this definition to the end of the previous month; 

"Cost Consultant" has the meaning ascribed thereto in Section 2.9; 

"Cost Retainer" has the meaning ascribed thereto in Section 3.10; 

"Costs" has the meaning ascribed thereto in Section 3.10; 

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

"EBITDA" means the earnings of a Person for any period before interest, taxes, depreciation and amortization for such Person, in each case, determined
on a consolidated basis; 

6

 

"Employee Benefit Plan" shall mean any employee benefit plan within the meaning of section 3(3) of ERISA maintained or contributed to by
the Borrower or any Guarantor or any ERISA Affiliate, other than a Multiemployer Plan; 

"Encumbrance" means any mortgage, lien (statutory or otherwise), pledge, assignment by way of security, charge, preference, priority, security interest,
lease intended as security, title retention agreement, statutory right reserved in any Governmental Authority, registered lease of real property, hypothecation, deposit arrangement or other security
arrangement of any kind; 

"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 (i) 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 and/or The Meadows Property or migrating or threatening to migrate to or from any of the
Properties or the Meadows Properties, or (ii) arise from any investigation, Proceeding or remediation of any of the Properties or the Meadows Properties (or any adjacent property to
which any such Hazardous Materials may have migrated) in connection with any allegation that any Person directly or indirectly disposed of Hazardous Materials therein, thereon or thereunder or 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 Legal Requirement 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; 

7

 

	(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 chemical substance or product);

	(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 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(w); 

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

8

 

"ERISA Affiliate" means any Person which is treated as a single employer with the Borrower or any Guarantor under Section 414 of the IRC; 

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

"Excess Cash Flow" has the meaning ascribed thereto in the Remington Loan Agreement; 

"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 Business 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 Business Day, the average of the quotations for such day on such transactions received by an
agent for the Lender from three United States of America federal funds brokers of recognized standing selected by it; 

"First Advance" has the meaning ascribed thereto in Section 4.1; 

"First Advance Date" has the meaning ascribed thereto in Section 4.1(a); 

"GAAP" means, at any time, generally accepted accounting principles in effect from time to time in the United States of America as applied in a
consistent manner from period to period; 

"Governmental Authority" means (a) any nation, state, county, city, town, borough, village, district or other jurisdiction; (b) any
federal, state, local, municipal, foreign or other government; (c) any governmental or quasi-governmental authority of any nature (including any agency, branch, department, board, commission,
court, tribunal or other entity exercising governmental or quasi-governmental power); (d) any body exercising, or entitled or purporting to exercise, any administrative, executive, judicial,
legislative, regulatory or taxing authority or power, including the Federal Deposit Insurance Corporation, the Federal Reserve Board, the Comptroller of the Currency, any central bank, fiscal,
monetary or any comparable authority; or (e) any official of the foregoing; 

"Governmental Authorizations" means any permit (including a building permit), licence, registration, approval (including a development or zoning
approval or variance or a platting or land subdivision approval), finding of suitability, authorization, plan, directive, order, consent, exemption, waiver, consent order or consent decree of or from,
or notice to, action by or filing with, any Governmental Authority; 

"Governmental Rule" means any applicable federal, state, provincial, regional, local, municipal, foreign or other law, treaty, constitution, statute,
regulation, by-law, common law, principle of common law, code, ordinance, policy, circular, guideline, rule, Order or any other instrument, declaration or statement of a Governmental
Authority provided that if the same does not have the force of law, it is generally expected to be complied with by those to whom it is addressed by the authority enacting or responsible for
implementing the same; 

9

 

"Guarantees and Indemnities" means, collectively, the Remington Guarantee and Indemnity, the Palm Meadows Guarantee and Indemnity, the Meadows Guarantee
and Indemnity, and the MEC Guarantee and Indemnity; 

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

"Guarantor Payment" has the meaning ascribed thereto in Section 10.23; 

"Guarantors" means, collectively, The Meadows Guarantors and the Additional Guarantors; 

"Gulfstream/Aventura Mortgage" has the meaning ascribed thereto in Section 5.1(b); 

"Gulfstream/Aventura Properties" means, collectively, the Gulfstream Property and the Aventura Property; 

"Gulfstream/Aventura Title Policy" has the meaning ascribed thereto in Section 4.1(r); 

"Gulfstream Development Agreement" means the construction agreement, dated March 3, 2002, between the City of Hallandale Beach and the Borrower,
relating to the development of the Gulfstream Property; 

"Gulfstream Facilities" has the meaning ascribed thereto in the second recital of the Original Loan Agreement; 

"Gulfstream Facilities Completion Date" means the first day of the month following the earliest of: (i) the date on which the Gulfstream
Facilities are to be opened to the public for business; (ii) the date that is four (4) months following completion of construction of the Gulfstream Facilities (for greater
certainty, excluding the Gulfstream FF&E), as determined by the Lender, acting reasonably; and (iii) January 31, 2006; 

"Gulfstream FF&E" means the furniture, fixtures, equipment, machinery and all process related additions to the building relating to the Gulfstream
Facilities; 

"Gulfstream Lands" means the lands comprised of approximately 214.8 acres (including the Mixed-Use Lands) and having a building area
of approximately 350,000 square feet for the clubhouse and grandstand plus approximately 240,000 square feet for the backstretch, upon which the Gulfstream Facilities are
to be reconstructed, located in Broward County and Miami-Dade County, Florida, and legally described on Schedule E; 

"Gulfstream Loan OHRC Approval" means the approval of the OHRC required to permit the Remington Guarantor to enter into the Loan Documents to be
provided by it and to perform its obligations thereunder, in form and on terms satisfactory to the Lender acting reasonably; 

10

   
        "Gulfstream Maturity Date" has the meaning ascribed thereto in Section 2.8; 

        "Gulfstream Note" has the meaning ascribed thereto in Section 5.1(a); 

        "Gulfstream Property" means the Gulfstream Lands, and all improvements (including without limitation the Gulfstream Facilities) now or
hereafter located on the Gulfstream Lands, together with all tangible and intangible property of the Borrower now or hereafter owned or leased by the Borrower in connection with the Gulfstream Lands
or the improvements now or hereafter thereon; 

        "Gulfstream Repayment Commencement Date" has the meaning ascribed thereto in Section 3.1; 

        "Gulfstream Restricted Payment Release Conditions" has the meaning ascribed thereto in Section 8.1(u); 

        "Gulfstream Loan Zoo Trust Consent" means the consent of the Zoo Trust required to permit the Remington Guarantor to enter into Loan
Documents to be provided by it and to perform its obligations thereunder, in form and on terms satisfactory to the Lender, acting reasonably; 

        "H.15 Statistical Release" has the meaning ascribed thereto in Section 3.4; 

        "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 and/or The Meadows Property 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 and/or The
Meadows Property; 

        "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; 

        "Holdback Advance" has the meaning ascribed thereto in Section 2.4; 

        "Indebtedness" has the meaning ascribed thereto in Section 5.1; 

        "Independent Investment Banker" has the meaning ascribed thereto in Section 3.4; 

11

 

        "Interest Date" means (i) where the Interest Rate is being determined with reference to LIBOR, the last day of each one month LIBOR
period used in determining the Interest Rate and (ii) in all other cases, the last Business Day of each calendar month; 

        "Interest Rate" means: (a) from the date of the First Advance until the Gulfstream Facilities Completion Date, a floating rate
equal to 2.55% above MID's notional per annum cost of one month LIBOR borrowings under its principal floating rate credit facility (as designated by MID from time to time) to the extent that
MID is able to determine such rate under its floating rate credit facility, and otherwise 2.55% above MID's notional per annum cost of Base Rate borrowings under its floating rate credit facility, in
each case, compounded monthly and (b) from and after the Gulfstream Facilities Completion Date until the Gulfstream Maturity Date, a fixed rate of 10.5% per annum, compounded
semi-annually; 

        "IRC" means the Internal Revenue Code of 1986, as amended; 

        "JV Ground Lease" has the meaning ascribed thereto in Section 5.3; 

        "JV Inter-Creditor Agreement" has the meaning ascribed thereto in Section 5.3; 

        "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 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 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 Oklahoma Agent" means the Oklahoma City office of Spradling, Kennedy & McPahil 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; 

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

        "Lender's Pre-Advance Expenses" means all reasonable and documented fees and charges, including legal fees and disbursements,
closing costs, recording and notary fees and any other similar matters pertinent thereto incurred by the Lender and/or its advisors in connection with this Agreement and/or the Loan Documents on or
prior to the date of the First Advance; 

12

 

        "LIBOR" has the meaning ascribed thereto in the documentation governing MID's principal floating rate credit facility referred to in the
definition of "Interest Rate"; 

        "Loan" has the meaning ascribed thereto in Section 2.1; 

        "Loan Amount" means the principal amount made available by way of Advances to a maximum of One Hundred and Fifteen Million Dollars
($115,000,000), as such principal amount may be increased through the capitalization of interest in accordance with and subject to the terms hereof and as a result of deemed Advances in respect of
Costs; 

        "Loan Documents" means, collectively, this Agreement, the Security and all other documents and agreements delivered pursuant hereto and
thereto; 

        "Loss" means any liability, cost, damage, Environmental Damage, loss, obligation, claim, action, suit, fine, penalty, judgment, award,
legal or administrative proceeding, other Proceeding, demand or response, remedial or inspection cost or expense, amount paid in settlement, interest thereon or expense (including reasonable and
documented legal or consulting fees, court costs and other out-of-pocket expenses incurred by or on behalf of the Lender in investigating, preparing or defending the
foregoing); 

        "Margin Stock" has the meaning ascribed thereto in Section 6.1(mm); 

        "Material Adverse Change" means any material adverse change in the business, condition (financial or otherwise), operations, performance,
properties or prospects of the Borrower or of any Guarantor, or of any of the Properties, or The Meadows Property; 

        "Material Adverse Effect" means an event, occurrence or condition which has a material adverse effect on (i) the business, assets,
operations, liabilities, prospects or financial or other condition of the Borrower and/or any of the Guarantors, (ii) the ability of the Borrower to complete the Reconstruction,
(iii) the ability of the Remington Guarantor to complete the Remington Construction, (iv) the ability of the Borrower and/or any of the Guarantors and/or MEC to pay the Indebtedness or
perform any of its obligations in accordance with the terms of this Agreement and the other Loan Documents, (v) the rights and remedies of the Administrative Agent or any Lender under this
Agreement or the other Loan Documents, (vi) the value of the Collateral, or (vii) the Lender's security interests in the Collateral or the perfection or priority of such security
interests; 

        "Material Agreements" means: (i) the Remington Construction Contracts; (ii) the Remington Development Agreement;
(iii) the Aventura Property Purchase and Sale Agreement; (iv) the Construction Contracts; (v) the Gulfstream Development Agreement; (vi) the Remington Lease;
(vii) the agreements and other documents disclosed by the Borrower or a Guarantor as Material Agreements in either (A) the Disclosure Schedule or (B) in writing to the Lender at
any time as provided in Section 6.1(o); (viii) other contracts, agreements, commitments or other documents materially affecting the use, development, leasing, construction and/or
operation of any of the Properties and/or The Meadows Property; and (ix) any contract, agreement, commitment or other document, the default under or the termination of which could reasonably be
expected to result in a Material Adverse Change; 

13

 

        "Meadows Guarantee and Indemnity" has the meaning ascribed thereto in Section 5.1(h); 

        "MEC" means Magna Entertainment Corp., a corporation incorporated and subsisting under the laws of the State of Delaware, and its
successors and permitted assigns; 

        "MEC Bridge Loan Agreement" means the loan agreement made as of July 22, 2005 between,  inter alia, MEC, as borrower, and the Lender, as lender, as the same may
be amended or restated from time to time; 

        "MEC Guarantee and Indemnity" has the meaning ascribed thereto in Section 5.1(n); 

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

        "MID" means MI Developments Inc., a corporation incorporated under the laws of the Province of Ontario; 

        "Mixed-Use Lands" means the lands of approximately 85.7 acres, forming part of the Gulfstream Lands, as more
particularly described on Schedule B-1 of the Mixed-Use Property Pre-Development Agreement, that the Borrower proposes to develop for a mixed-use
development; 

        "Mixed-Use Property" means the Mixed-Use Lands, and all improvements now or hereafter located on the
Mixed-Use Lands, together with all tangible and intangible property of the Borrower now or hereafter owned or leased by the Borrower in connection with the Mixed-Use Lands or
the improvements now or hereafter thereon; 

        "Mixed-Use Property Pre-Development Agreement" means the pre-development management agreement, dated
April 2, 2004, by and between the Borrower, as owner, and Forest City Commercial Group, Inc., as developer; 

        "Mortgages" means, collectively, the Remington Second Mortgage, the Gulfstream/Aventura Mortgage, the Palm Meadows Training Center
Mortgage and The Meadows Second Mortgage; 

        "Multiemployer Plan" means any multiemployer plan within the meaning of section 3(37) of ERISA maintained or contributed to
by the Borrower, any Guarantor or any ERISA Affiliate; 

        "Net Debt" of a Person means, at any time, the Debt of such Person and its subsidiaries at such time determined in accordance with GAAP
(including, for greater certainty, indebtedness and liabilities in respect of capital leases and similar obligations) less the aggregate of cash and Cash Equivalents of such Person at such time to
which such Person has the sole and unrestricted right. For greater certainty, cash and Cash Equivalents of a Person shall exclude purse accounts and pooled or co-mingled cash or Cash
Equivalents unless Net Debt is being determined on a Combined basis, in which case pooled or co-mingled cash or Cash Equivalents which are solely those of Persons included in the
calculation of Combined Net Debt shall not be excluded; 

14

 

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

        "OHRC" means the Oklahoma Horse Racing Commission; 

        "Order" means any order, injunction, judgment, decision, decree, ruling, assessment or arbitration award of any Governmental Authority or
arbitrator; 

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

        "Original Loan Agreement" has the meaning ascribed thereto in the first recital hereto; 

        "Original Security" has the meaning ascribed thereto in Section 5.1; 

        "Palm Meadows Guarantee and Indemnity" has the meaning ascribed thereto in Section 5.1(l); 

        "Palm Meadows Guarantor" means GPRA Thoroughbred Training Center, Inc., and its successors and permitted assigns; 

        "Palm Meadows Training Center Lands" means the lands legally described on Schedule D; 

        "Palm Meadows Training Center Mortgage" has the meaning ascribed thereto in Section 5.1(m)(i); 

        "Palm Meadows Training Center Property" means the Palm Meadows Training Center Lands and all improvements now or hereinafter located on
the Palm Meadows Training Center Lands, together with all tangible and intangible property now or hereafter owned or leased by the Palm Meadows Guarantor in connection with the Palm Meadows Training
Center Lands or the improvements now and hereafter thereon; 

        "Permitted Encumbrances" means the encumbrances set out in Schedule C hereto, any Purchase Money Security Interests in respect of
the Properties up to a maximum aggregate amount (together with any Purchase Money Security Interests in respect of the Properties disclosed on Schedule C) of $12,500,000, and any other
encumbrances from time to time permitted by the Lender, in its sole and absolute discretion, in respect of any of the Properties and/or The Meadows Property; 

        "Permitted Lender Assignee" has the meaning ascribed hereto in Section 10.6; 

15

 

        "Person" means and includes an individual, a partnership, a corporation (including a business trust), a joint stock company, an
unincorporated association, a limited liability company, a limited liability partnership, a joint venture, a trust or other entity or a Governmental Authority; 

        "Plans", in relation to the Reconstruction, has the meaning ascribed thereto in Section 7.1(h) and, in relation to the
Remington Construction, has the meaning ascribed thereto in the Remington Loan Agreement; 

        "Pre-Payment Amount" has the meaning ascribed thereto in Section 3.4; 

        "Pre-Payment Date" has the meaning ascribed thereto in Section 3.4; 

        "Pre-Payment Make-Whole Amount" has the meaning ascribed thereto in Section 3.4; 

        "Pre-Payment Notice" has the meaning ascribed thereto in Section 3.4; 

        "Proceeding" means any action, arbitration, audit, claim, hearing, investigation, litigation or suit (whether civil, criminal,
administrative, judicial or investigative, whether formal or informal, whether public or private) commenced, brought, conducted or heard by or before, or otherwise involving, any Governmental
Authority or arbitrator; 

        "Properties" means, collectively, the Gulfstream/Aventura Properties, the Remington Property and the Palm Meadows Training Centre Property
and "Property" means any one of the Properties; 

        "Purchase Money Obligation" means any indebtedness, liability or obligation representing any unpaid part of, or incurred or assumed to pay
or refinance the whole or any part of, the cost of acquisition of any property or asset acquired by the Borrower intended to be used in carrying on the business of the Borrower and any expenditures
made for fixed improvements thereto, if such borrowing is incurred or assumed within 24 months after the acquisition of such property or asset or the making of such expenditures, as the case
may be, including Capital Lease Obligations; 

        "Purchase Money Security Interest" means any Encumbrance to secure a Purchase Money Obligation, provided that: (i) the Encumbrance
attaches solely to the property or asset acquired or purchased (excluding any acquired or purchased equity securities) and fixed improvements thereto; (ii) at the time of acquisition of such
property or asset, the aggregate principal amount remaining unpaid on all Purchase Money Obligations secured by such Encumbrance on such property or assets whether or not assumed by the Borrower does
not exceed an amount equal to the total purchase price of such property or assets; and (iii) such Purchase Money Obligations shall have been incurred within the limitations of this Agreement,
together with any renewals or replacements of any such Encumbrances on such property or asset, provided that the amount secured by such renewal or replacement Encumbrance does not increase above the
original amount secured; 

16

 

        "Ranger Construction Stipulated Lump Sum Contract" means the stipulated lump sum contract (AIA A101-1997 Edition),
dated April 2004, between the Borrower and Ranger Construction South, a member of Vecellio Group, Inc.; 

        "Reconstruction" has the meaning ascribed thereto in the second recital hereof; 

        "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; 

        "Relevant Entities" shall mean the Borrower and each Guarantor; 

        "Remaining Term" has the meaning ascribed thereto in Section 3.4; 

        "Remington Construction" means the "Construction" as defined in the Remington Loan
Agreement; 

        "Remington Construction Contracts" means "Construction Contracts" as defined in the
Remington Loan Agreement; 

        "Remington Development Agreement" has the meaning ascribed thereto in the Remington Loan Agreement; 

        "Remington Facilities" has the meaning ascribed thereto in the Remington Loan Agreement; 

        "Remington Facilities Completion Date" has the meaning ascribed thereto in the Remington Loan Agreement; 

        "Remington Guarantee and Indemnity" has the meaning ascribed thereto in Section 5.1(j); 

        "Remington Guarantor" means Remington Park, Inc., and its successors and permitted assigns; 

        "Remington Lands" means the lands legally described on Schedule B; 

        "Remington Lease" means the lease agreement dated June 12, 1986 between the Trustees of the Zoo Trust, as lessor, and Oklahoma
Racing Associates (a predecessor in interest of the Remington Guarantor), as lessee, as assigned to the Remington Guarantor by agreement dated April 15, 1988, pursuant to which the
Borrower has leased the Remington Lands; 

        "Remington Loan Agreement" means the loan agreement made as of July 22, 2005 among the Remington Guarantor, as borrower, the
Lender, as lender, and the Borrower, the Palm Meadows Guarantor and MEC, as guarantors, as the same may hereafter be further amended or restated from time to time; 

17

 

        "Remington Loan OHRC Approval" means the OHRC Approval as defined in the Remington Loan Agreement; 

        "Remington Loan Zoo Consent" means the Zoo Consent as defined in the Remington Loan Agreement; 

        "Remington Property" means the Remington Guarantor's leasehold interest in the Remington Lands, and all improvements (including without
limitation the Remington Facilities) now or hereafter located on the Remington Lands, together with all tangible and intangible property of the Remington Guarantor now or hereafter owned or leased by
the Remington Guarantor in connection with the Remington Lands or the improvements now or hereafter thereon; 

        "Remington Repayment Commencement Date" shall have the meaning ascribed thereto in the Remington Loan Agreement; 

        "Remington Second Mortgage" shall have the meaning ascribed thereto in Section 5.1(k); 

        "Reportable Event" has the meaning given to that term under ERISA and applicable regulations thereunder; 

        "Request for Advance" means each request for an Advance under the Loan to be submitted by the Borrower in a form acceptable to the Lender; 

        "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 Authority regarding health or safety matters or under any Safety Law; 

        "Safety Law" shall mean any Applicable Legal Requirement 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; 

        "Securities" has the meaning ascribed thereto in Section 8.1(u)(ii); 

        "Security" has the meaning ascribed thereto in Section 5.1; 

        "Specified Loan Amount" means any time (i) prior to the Gulfstream Repayment Commencement Date, the principal amount of One Hundred
and Fifteen Million Dollars ($115,000,000) and (ii) on and after the Gulfstream Repayment Commencement Date, the aggregate principal amount of the Loan then outstanding exclusive of the amount
of capitalized interest at such time and any portion of such principal amount representing deemed Advances on account of Costs as reasonably determined by the Lender; 

        "Subsequent Advance Date" means the date as defined in Section 4.2(a); 

18

 

        "Subsequent Advances" has the meaning ascribed thereto in Section 4.2; 

        "Substitute Aventura Security" has the meaning ascribed thereto in Section 5.2; 

        "Substitute Meadows Security" has the meaning ascribed thereto in Section 5.5; 

        "Suitt Stipulated Lump Sum Construction Contract" means the stipulated lump sum contract (AIA A101 - 1997
Edition), dated August 2004, between Gulfstream Park Racing Association, Inc. and Suitt Construction Company, Inc.; 

        "Taxes" has the meaning ascribed thereto in Section 3.12(a); 

        "The Meadows FF&E" means the furniture, fixtures, equipment, machinery and all process-related additions to the building to be constructed
in accordance with redevelopment of The Meadows Property referred to in the definition of "Additional Financing"; 

        "The Meadows Guarantors" means, collectively, Washington Trotting, MEC Pennsylvania and Mountain Laurel; 

        "The Meadows Lands" means the lands of approximately 154 acres and having a building area of approximately
200,000 square feet, in the Township of North Strabane, County of Washington, Commonwealth of Pennsylvania, legally described on Schedule F; 

        "The Meadows Operating Lease" means the lease, dated April 5, 2001, between The Meadows Owner (then known as Ladbroke Pennsylvania
Racing, Inc.), as lessor, and The Meadows Operators, as lessees, in respect of The Meadows Property; 

        "The Meadows Operators" means, collectively, Washington Trotting and Mountain Laurel; 

        "The Meadows Property" means The Meadows Lands, and all improvements now or hereafter located on The Meadows Lands, together with all
tangible and intangible property of any of the Meadows Guarantors now or hereafter owned or leased by any of The Meadows Guarantors in connection with The Meadows Lands or the improvements now or
hereafter thereon; 

        "The Meadows Second Mortgage" has the meaning ascribed thereto in Section 5.1(i)(i); 

        "The Meadows Security" has the meaning ascribed thereto in Section 5.1; 

        "The Meadows Title Policy" has the meaning ascribed thereto in Section 4.1(s); 

        "Third Party Senior Lender" has the meaning ascribed thereto in Section 5.5; 

        "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 Release; 

19

 

        "Title Company" has the meaning ascribed thereto in Section 4.1(r); 

        "Title Policies" means, collectively, the Gulfstream/Aventura Title Policy, The Meadows Title Policy and the Additional Title Policy; 

        "Unmatured Event of Default" has the meaning ascribed thereto in Section 9.1; and 

        "Voluntary Pre-Payment Notice" has the meaning ascribed thereto in Section 3.4; and 

        "Zoo Trust" means the Oklahoma City Zoological Trust. 

1.2   Time  

        All references in this Agreement and each of the other Loan Documents to a time of day shall mean Miami time, unless otherwise indicated. 

1.3   Calculation of Interest and Fees  

        All calculations of interest and fees under this Agreement and the other Loan Documents for any period (a) shall include the first day of such period and,
provided that payment is received by Lender, as the case may be, by 11:00 a.m. on the due date for payment, shall exclude the last day of such period and (b) shall be calculated on the
basis of a year of 360 days for actual days elapsed. At the written request of the Borrower, the Lender shall advise the Borrower of the floating rate of the Interest Rate in effect from time
to time prior to the Gulfstream Facilities Completion Date. 

1.4   Currency  

        All dollar amounts expressed herein shall refer to the lawful currency of the United States of America. 

1.5   Governing Law  

        This Agreement shall be in accordance with and governed by the laws of the State of Florida and the laws of the United States of America applicable
therein, without reference to conflict of interest rules. 

1.6   Inconsistencies  

        In the event of any inconsistency or conflict between the terms of this Agreement and the terms of any of the Security, the terms of this Agreement shall govern. 

1.7   Non-Business Days  

        Whenever any payment to be made hereunder shall be stated to be due or any action is required to be taken hereunder on a day which is not a Business Day, such
payments shall be made or such action shall be taken, as the case may be, on the next succeeding Business Day and in the case of the payment of any monetary amount, such extension of time shall in
such case be included for the purpose of computation of interest payable hereunder. 

20

 

1.8   Late Payments  

        If any payment on a Business Day required to be made hereunder by the Borrower is made after 11:00 a.m., such payment shall be deemed to have been made on
the next Business Day. 

1.9   Accounting Terms  

        All accounting terms not specifically defined herein shall be construed in accordance with GAAP and, except as otherwise provided herein, all financial data and
statements submitted pursuant to this Agreement shall be prepared and all financial calculations shall be made in accordance with such principles. 

1.10 Interpretation Not Affected by Headings, Etc.  

        The division of this Agreement into Articles, Sections, Subsections, Paragraphs and Subparagraphs and the insertion of headings and an index are for convenience
of reference only and shall not affect the construction or interpretation of this Agreement. The terms "this Loan Agreement", "this Agreement", "hereof", "herein", and "hereunder" and similar
expressions refer, in respect of any period or action prior to the Closing Date, to the Original Agreement, and in respect of a period or action on or after the Closing Date, to this Amended and
Restated Loan Agreement, and not to any particular Article, Section, Subsection, Paragraph or Subparagraph or other portion hereof and include any agreement or instrument supplementary or ancillary
hereto. 

1.11 Rules of Construction  

        Words importing the singular number only shall include the plural and vice versa. Words importing the use of any
gender shall include all genders. Words importing Persons shall include firms and corporations and vice versa. The words "include", "includes" and
"including" shall be deemed to be followed by the phrase "without limitation". The word "will" shall be construed to have the same meaning and effect as the word "shall". Unless the context requires
otherwise (a) any definition of or reference to any agreement, instrument or other document herein (including this Agreement) shall be construed as referring to such agreement, instrument or
other document as from time to time amended, supplemented, restated or otherwise modified (subject to any restrictions on such amendments, supplements, restatements or modifications set forth herein),
(b) any reference herein to any Person shall be construed to include such Person's successors and permitted assigns, (c) unless otherwise expressly stated, all references in these
Provisions to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, these Provisions, but all such references elsewhere in
this Agreement shall be construed to refer to this Agreement apart from these Provisions, (d) any reference to any law or regulation herein shall, unless otherwise specified, refer to such law
or regulation as amended, modified or supplemented from time to time and (e) the words "asset" and "property" shall be construed to have the same meaning and effect and to refer to any and all
tangible and intangible assets and properties, including cash, securities, accounts and contract rights. 

21

  

1.12 Severability  

        In the event that one or more of the provisions contained in this Agreement shall be invalid, illegal or unenforceable in any respect under any applicable law,
the validity, legality or enforceability of the remaining provisions hereof shall not be affected or impaired thereby; provided, however, that if any provision contained herein which materially
affects the ability of the Borrower to perform its obligations hereunder and under the Security or materially affects the validity, value or enforceability of this Agreement or the Security shall be
invalid, illegal or unenforceable, the Lender may, by written notice to the Borrower, elect to terminate its obligation to make any Advances hereunder. Each of the provisions of this Agreement is
hereby declared to be separate and distinct. 

1.13 References to Remington Loan Agreement  

        All terms defined in Section 1.1 by reference to the Remington Loan Agreement shall have the respective meanings ascribed thereto in the Remington Loan
Agreement even if such agreement shall become null and void by reason of the escrow agreement made as of the Closing Date among the parties thereto. 

1.14 Schedules  

        The following schedules are attached hereto and are incorporated in and are deemed to be an integral part of this Agreement: 

	Schedule A:	 	Legal Description of the Aventura Lands
	Schedule B:	 	Legal Description of the Remington Lands
	Schedule C:	 	Permitted Encumbrances
	Schedule D:	 	Legal Description of the Palm Meadows Training Center Lands
	Schedule E:	 	Legal Description of the Gulfstream Lands
	Schedule F:	 	Legal Description of The Meadows Lands

 
 

ARTICLE 2 
  THE LOAN  
    

2.1   Loan Amount  

        Subject to the terms and conditions of this Agreement, the Lender agrees to lend to the Borrower an amount equal to the Loan Amount
(the "Loan"). The Loan may be used solely for the purpose of financing the Construction Costs and the Lender's Costs as herein contemplated and
for no other purpose. Any Advances made and subsequently repaid may not be reborrowed. 

22

 

2.2   Advances  

        The Borrower shall be entitled to obtain Advances under the Loan upon the following terms and conditions: 

	(a)
	the
Borrower shall have given to the Lender notice of its intention to obtain an Advance in accordance with the provisions of Section 4.1 or 4.2, as the case may be;

	(b)
	Advances
shall not occur more often than twice per month and shall be in amounts which are not less than Two Hundred and Fifty Thousand Dollars ($250,000) each, other than the last
Advance, which may be for a lesser amount and other than Holdback Advances, each of which shall be in an amount of not less than One Hundred Thousand Dollars ($100,000);

	(c)
	the
total of all Advances made hereunder shall not exceed the principal amount of One Hundred and Fifteen Million Dollars ($115,000,000) plus the Costs in respect of which deemed
Advances may be made pursuant to Section 3.10, exclusive of any deemed Subsequent Advances pursuant to which interest accrued and remaining unpaid prior to the Gulfstream Facilities Completion
Date is capitalized to constitute part of the Loan Amount in accordance with this Agreement;

	(d)
	the
Borrower shall have satisfied, on or before the date of the First Advance, the conditions set out in Section 4.1 and have complied with the requirements of this
Section;

	(e)
	the
Borrower shall have satisfied, on or before the date of any Subsequent Advance, the conditions set out in Section 4.2 and shall have complied with the requirements
of this Section for each Subsequent Advance; and

	(f)
	no
Unmatured Event of Default or Event of Default shall have occurred and be continuing; and

	(g)
	no
Advances shall be made subsequent to December 31, 2006. 

2.3   Holdbacks  

        Each Advance (other than a Holdback Advance) shall be subject to a holdback by the Lender in an amount determined by the Lender, acting reasonably, and taking
into account Applicable Legal Requirements, the Construction Contracts and any other construction contracts relating to the Reconstruction, which holdbacks shall be advanced to the Borrower in
accordance with the provisions of Sections 2.2 and 2.4. 

2.4   Holdback Advances  

        Upon notification to the Lender by the Cost Consultant of the expiry of all applicable lien periods that relate to the Reconstruction or any discrete portion of
the Reconstruction or any contract or subcontract relating to the Reconstruction, the Borrower shall be entitled to obtain, as an Advance (herein called a "Holdback
Advance"), the amounts held back pursuant to Section 2.3 in respect of such Reconstruction (or any discrete portion thereof or any contract or subcontract
relating thereto, as applicable) but only upon and in compliance with the following terms and conditions: 

23

 

	(a)
	the
Borrower shall have delivered a Request for Advance at least five Business Days prior to the date of the Holdback Advance which Request for Advance shall reflect compliance with
this Section 2.4 and shall otherwise be complete and acceptable to the Lender;

	(b)
	the
Borrower shall, on or before the date of the Advance in question, have satisfied the conditions set out in Section 4.2 and no Unmatured Event of Default or Event of
Default shall have occurred and be continuing;

	(c)
	there
shall not be any claims for Encumbrances (other than Permitted Encumbrances) registered against title to the applicable Property nor shall the Lender have received notice of any
such claim and the Borrower shall have delivered to the Lender statutory declarations or lien waivers, in form and terms acceptable to the Lender, from all Persons entitled to payment pursuant to the
Construction Contract in question to the effect that, subject to receipt of the holdback amounts in question, they have been fully paid for the work completed to the date thereof and waiving any
rights they may have against the Lender in respect of non-payment for such work to date; and

	(d)
	payment
of a Holdback Advance shall only be made contemporaneously with the payment of another Advance (a "regular Advance") other than another Holdback Advance or a deemed
Advance referred to in Section 3.10; provided that this clause (d) shall not apply to any Holdback Advance to be made after the completion of the Reconstruction. 

2.5   Advance Payments  

        The proceeds of all Advances shall be paid to the Borrower by way of deposit into the Borrower's current account as specified to the Lender in writing from time
to time, provided that the Lender may, upon the direction of the Borrower, pay all or part of such proceeds directly to a third party to the extent of any Construction Costs owed to such party which
are the subject of such Advance. At its discretion, the Lender may make payment of all or part of such proceeds directly to a third party where necessary in order to preserve the priority of the
Security. The Borrower acknowledges that all proceeds advanced hereunder are subject to the terms hereof, including the restrictions set out in Section 8.1(u). 

2.6   Evidences of Advances  

        The Lender shall maintain a book of account evidencing the indebtedness of the Borrower resulting from each Advance made from time to time and the amounts of
principal, interest and other fees payable and paid, and the amount of interest accrued in accordance with the terms hereof, from time to time hereunder. In any legal action or proceeding in respect
of this Agreement, the entries made in such book shall be in the absence of manifest error conclusive evidence of the amounts of the obligations of the Borrower therein recorded. 

24

 

2.7   Termination  

        In addition to the rights of the Lender to terminate this Agreement contained in Section 9.2, the Lender shall have the right to terminate this Agreement
and shall, upon such termination, be under no further obligation to make any Advances pursuant hereto, in the event that the First Advance has not occurred on or prior to December 31, 2004,
whether due to the failure of the Borrower to request the First Advance, to satisfy the conditions set out in Section 4.1 in connection with a request from the Borrower for an Advance, or
otherwise, unless the failure for which is solely attributable to the Lender or its consultants. 

2.8   Term  

        Unless otherwise accelerated pursuant to the Loan Documents (as hereinafter defined), the Loan shall mature on the date on the tenth anniversary date of
the Gulfstream Facilities Completion Date (the "Gulfstream Maturity Date"). 

2.9   Cost Consultant  

        In connection with the transactions contemplated hereunder and under the other Loan Documents, the Lender shall have the right (but not the duty) to employ
such consultants (hereinafter a "Cost Consultant"), as it may deem appropriate from time to time, to (a) review and make recommendations
regarding the work to be performed pursuant to the Construction Contracts, (b) inspect the Gulfstream Property from time to time to ensure that the Gulfstream Facilities are being duly
reconstructed in accordance with the Construction Contracts and the Loan Documents, (c) review and make recommendations regarding any elements of a request for disbursement, (d) obtain
information and documentation respecting the reconstruction of the Gulfstream Facilities, attend meetings respecting the reconstruction of the Gulfstream Facilities and formulate reports for the
Lender pertaining to the reconstruction of the Gulfstream Facilities and (e) perform such other construction-related services with respect to the Gulfstream Property as the Lender from time to
time may require, all solely on behalf of the Lender. The reasonable costs and disbursements of such consultants shall be paid by the Borrower upon demand from the Lender, which demand shall be
accompanied by an invoice from the Cost Consultant or the Lender. Neither the Lender nor any Cost Consultant shall be deemed to have assumed any responsibility to, or be liable to, the Borrower or any
Guarantor with respect to any actions taken or omitted by the Lender or such consultants pursuant to this Section. The Borrower shall be entitled to receive, at its expense, copies of all reports of
the Cost Consultant, but shall not be entitled to rely on any statements or actions of the Cost Consultant or any of the Lender's other consultants. Neither the Cost Consultant nor any other
consultant retained by the Lender shall have the power or authority to grant any consents or approvals or bind the Lender in any manner, absent written confirmation from the Lender of the accuracy of
the information conveyed by such consultant to the Borrower. Any action or determination referred to hereunder as being taken by the Cost Consultant may, at the Lender's election in its sole and
absolute discretion, instead be taken by the Lender. In the event that at any time there shall be no Cost Consultant in place, then all actions or determinations herein specified to be taken or made
by the Cost Consultant shall be taken or made by the Lender. 

25

 
 
 

ARTICLE 3 
  PAYMENTS AND INTEREST  
    

3.1   Repayment  

        Principal and interest (including capitalized interest) in respect of the Loan shall, subject to the repayment deferral contemplated below, be payable monthly in
advance in 12 equal blended monthly instalments per annum of principal and interest (except as otherwise herein provided, based on a 25-year amortization commencing on the
Gulfstream Facilities Completion Date) without demand from and after the Gulfstream Repayment Commencement Date. 

        Without
limiting the generality of Sections 3.4 and 9.2, payment of principal and interest payable under this Agreement by the Borrower shall commence without demand on
January 1, 2007 (the "Gulfstream Repayment Commencement Date"). 

        The
Borrower shall make all payments due hereunder by payments to the Lender at a bank account specified by the Lender from time to time. 

        On
the Gulfstream Maturity Date, the Borrower shall pay to the Lender the entire amount then owing under the Loan (including without duplication, all accrued and unpaid interest, fees
and other amounts owing), and the Gulfstream Unamortized Amount (including any interest accrued and added to principal) as of such date. 

3.2   Limitation on Prepayment  

        The Borrower shall have no right to pre-pay or otherwise repay the amounts owing under this Agreement except in accordance with the provisions of
Section 3.4. 

3.3   [Intentionally Blank]

3.4   Prepayment  

        The Borrower shall have the right to pre-pay the Loan, provided that: (i) the Borrower pays the principal amount of the Loan then outstanding
(together with, but without limitation, all accrued and unpaid interest, fees and other Indebtedness owing, (including any interest capitalized and added to the principal) as of such date)
(the "Pre-Payment Amount") together with the Pre-Payment Make-Whole Amount; and (ii) the Borrower
cancels any undrawn portion of the Loan. Notice of such voluntary pre-payment (a "Pre-Payment Notice") shall be given by
the Borrower (which notice shall be irrevocable when given) to the Lender not later than 30 Business Days prior to the date of such pre-payment, specifying the date of such
pre-payment (the "Pre-Payment Date"). 

26

 

        The
"Pre-Payment Make-Whole Amount" is the amount that, if invested by the Lender on the Pre-Payment
Date for a term equal to the time period from the Pre-Payment Date to the Gulfstream Maturity Date at a rate equal to the U.S. Government Treasury Yield plus 150 basis points
as of the Pre-Payment Date, would yield an amount necessary to provide the Lender with a yield on the Specified Loan Amount such that the aggregate of the Pre-Payment
Make-Whole Amount paid and the earned income would equal the interest that the Lender would have received under the Loan from the Pre-Payment Date to the Gulfstream Maturity
Date. For the purposes hereof, "U.S. Government Treasury Yield" means a rate of interest per annum equal to the weekly average yield to maturity of United States Treasury Notes that have
a constant maturity that corresponds to the remaining term to maturity of the Loan as of the Pre-Payment Date, calculated to the nearest 1/12th of a year
(the "Remaining Term"). The Treasury Yield will be determined as of the third Business Day immediately preceding the Pre-Payment
Date. The weekly average yields of United States Treasury Notes will be determined by reference to the most recent statistical release published by the Federal Reserve Bank of New York
and designated "H.15(519) Selected Interest Rates" or any successor release (the "H.15 Statistical Release"). If the
H.15 Statistical Release sets forth a weekly average yield for United States Treasury Notes having a constant maturity that is the same as the Remaining Term, then the Treasury Yield
will be equal to such weekly average yield. In all other cases, the Treasury Yield will be calculated by interpolation, on a straight-line basis, between the weekly average yields on the
United States Treasury Notes that have a constant maturity closest to and greater than the remaining term and the United States Treasury Notes that have a constant maturity closest to
and less than the Remaining Term (in each case as set forth in the H.15 Statistical Release). Any weekly average yields so calculated by interpolation will be rounded to the nearest
1/100th of 1%, with any figure of 1/200 of 1% or above being rounded upward. If weekly average yields for United States Treasury Notes are not available in the H.15 Statistical Release
or otherwise, then the Treasury Yield will be calculated by interpolation of comparable rates selected by the Independent Investment Banker. For purposes of this Section 3.4,
"Independent Investment Banker" means a primary United States Government securities dealer appointed by the Lender after consultation with the
Borrower. 

        On
receipt of full payment of the Pre-Payment Amount plus the Pre-Payment Make-Whole Amount (plus all costs incurred by the Lender in connection with
such pre-payment), which amounts will be paid together by the Borrower on the date set forth in the Pre-Payment Notice (which date will be no less than 15 days and no
more than 30 days after the date on which the Lender receives the Pre-Payment Notice), the Lender will promptly execute and deliver (or cause the Administrative Agent to
execute and deliver) a full release and discharge of the Security held by them with respect to the transactions and obligations contemplated herein and complete or authorize discharges of all security
filings made in respect of same, but in no event shall such release operate as a release of any indemnities which are stated to survive a termination and/or release of any such security or
obligations. 

3.5   Interest  

        All Advances, including accrued and unpaid interest, fees, expenses and Lender's Costs, shall bear interest, before and after default, at the Interest Rate, with
interest on overdue interest at the rate as was applicable immediately prior to any arrears. 

        Interest
shall accrue daily, be calculated in accordance with Section 1.3 and be due and payable in accordance with Section 3.1; provided, however, that:
(a) any interest payable in respect of the Loan accruing prior to the Gulfstream Repayment Commencement Date shall be capitalized and added to the then outstanding principal amount of the Loan
on each Interest Date, in which event the interest amount so capitalized shall be treated as principal for all purposes; and (b) any interest accruing from and including the Gulfstream
Repayment Commencement Date shall accrue daily, be calculated in accordance with Section 1.3, be compounded semi-annually and be due and payable commencing on the Gulfstream
Repayment Commencement Date, in accordance with the terms set out in Section 3.1. 

27

 

3.6   Unwinding Costs  

        The Borrower shall, from time to time, indemnify the Lender and hold it harmless from and against any and all costs, losses, liabilities or expenses, including
losses of profits, whether on account of interest paid by the Lender to lenders of funds borrowed by it or depositors of funds deposited with it to make or maintain any Advance which it may suffer or
incur as a result of any failure by the Borrower to borrow any funds after requesting an Advance (except where such failure is the result of the refusal of the Lender to make such funds available
where the Borrower is otherwise entitled to borrow such funds hereunder). The obligations of the Borrower under this Section 3.6 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. 

3.7   Application of Expropriation Proceeds  

        Upon the lawful expropriation or condemnation of the whole or any portion of any of the Properties, the proceeds of such expropriation or condemnation, after
deducting amounts required to satisfy the interests of Permitted Encumbrances, up to but not exceeding the amount of the Loan outstanding at the time of the expropriation or condemnation shall be paid
immediately over to the Lender, which shall not be considered a pre-payment. The proceeds of such expropriation or condemnation may be applied by the Lender in repayment of the principal
amount of the Loan then outstanding (without payment of a Pre-Payment Make Whole Amount or otherwise cancelling any undrawn portion of the Loan) in accordance with the provisions hereof. 

3.8   Interest on Fees and Other Charges  

        All fees and other charges or amounts outstanding after demand, maturity, default or judgment owing to the Lender shall bear interest at a rate per annum equal to
the Interest Rate. Such interest shall be determined daily, payable on demand and compounded monthly in arrears on the last day of each calendar month. 

3.9   [Intentionally Blank]

3.10 Costs, Expenses, Etc.  

        The Borrower agrees that all Costs incurred by the Lender, including in connection with the preparation, execution, delivery and amendment of this Agreement, the
Security, any other Loan Documents and/or the Lender's due diligence, including legal, accounting, environmental and other professional fees and expenses, shall be for the account of the Borrower, and
(a) provided that there has not occurred an Event of Default or Unmatured Event of Default which is continuing, and provided that such amounts are incurred prior to the Gulfstream Facilities
Completion Date, shall be deemed for all purposes to have been paid through deemed Advances by the Lender to Borrower under this Agreement and (b) provided that such amounts are incurred on and
after the Gulfstream Facilities Completion Date or prior to such date if an Event of Default has occurred and is continuing, shall be paid by the Borrower to the Lender promptly following receipt of
an invoice therefor. The Borrower further agrees to promptly pay following receipt of an invoice therefore all such reasonable Costs incurred by the Lender, and all such Costs incurred by the Lender
in connection with the underwriting, approval, documentation, modification, workout, collection or enforcement of the Loan or any of the Loan Documents (as applicable), including, without
limitation, all fees and expenses, including attorneys' fees and expenses incurred by the Lender in the interpretation and enforcement of its rights hereunder and under the other Loan Documents,
including the interpretation and enforcement of any of the Construction Contracts by the Lender, and all such Costs shall be included as additional indebtedness bearing interest at the Interest Rate
set forth hereunder and in the Gulfstream Note until paid. For the purposes hereof, "Costs" means all reasonable expenditures and expenses which may be
paid or incurred by or on behalf of the Lender, including repair costs, payments to remove or protect against liens, attorneys' (primary and local) and legal fees and costs (including, but not limited
to, all appellate level and post-judgment proceedings), receivers' fees, appraisers' fees, engineers' fees, accountants' fees, independent consultants' fees (including environmental and
insurance consultants), all reasonable costs and expenses incurred in connection with any of the foregoing, the Lender's out-of-pocket costs and expenses related to any audit
or inspection of the Properties, outlays for documentary and expert evidence, stenographers' charges, documentary transfer and stamp taxes, intangible taxes, escrow fees, publication costs, and costs
(which may be estimates as to items to be expended after entry of an order or judgment) for procuring all such abstracts of title, title searches and examination, title insurance policies, and similar
data and assurances with respect to title as the Lender may deem reasonably necessary either to prosecute any action or to evidence to bidders at any sale of any collateral the true condition of the
title to, or the value of, such collateral. "Costs" shall also include the reasonable fees and expenses of any of the Lender's consultants retained by the Lender pursuant to the terms of this
Agreement. Following the Gulfstream Facilities Completion Date, in the event that the Borrower shall at any time fail to remit payments of any such Costs to the Lender within 30 days of the
Lender's delivery of an invoice therefor, then the Lender reserves the right, at any time(s) in the future, to require the Borrower to deposit with the Lender an amount of cash equal to the
estimated Costs to be incurred by the Lender (a "Cost Retainer") on account of any pending matter which may result in Costs being incurred by the
Lender which the Borrower is responsible to pay to the Lender hereunder. In such an event, the Lender shall have the right to require a Cost Retainer prior to being obligated to take any action
required of the Lender under the Loan Documents. Upon written request from the Borrower, the Lender shall provide to the Borrower an accounting as to the receipt and expenditure of each Cost Retainer
delivered to the Borrower. 

28

 

3.11 Maximum Interest Rate  

        Notwithstanding anything to the contrary contained herein in the event that the Interest Rate exceeds the maximum rate of interest allowed by applicable law, as
amended from time to time, in any interest period during the term of the Loan, only the maximum rate of interest allowed shall then be charged but thereafter in any interest period or periods during
which the rate is less than the maximum rate allowed by applicable law, as amended from time to time, the Interest Rate shall be increased so that the Lender may collect interest in such amount as may
have been charged pursuant to the terms of the Gulfstream Note, but which was not charged because of the limitation imposed by law. It is the intent of the parties hereto that in no event shall the
amount of interest due or payment in the nature of interest payable hereunder exceed the maximum rate of interest allowed by applicable law, as amended from time to time, and in the event any such
payment is paid by the Borrower or received by the Lender, then such excess sum shall be credited as a payment of principal, unless the Borrower shall notify the Lender, in writing, that the Borrower
elects to have such excess sum returned to it forthwith. The Lender may, in determining the maximum rate of interest allowed under applicable law, as amended from time to time, take advantage of:
(i) the rate of interest permitted by Section 655.56, Florida Statutes, by reason of both Section 687.12 Florida Statutes ("Interest rates; parity among licensed lenders or
creditors") and 12 United States Code, Sections 85 and 86, and (ii) any other law, rule, or regulation in effect from time to time, available to the Lender which
exempts the Lender from any limit upon the rate of interest it may charge or grants to Lender the right to charge a higher rate of interest than that allowed by Florida Statutes, Chapter 687. 

29

 

3.12 Payments Free of Withholding Taxes  

	(a)
	All
payments required to be made by the Borrower hereunder shall be made to the Lender free and clear of and without deduction for any and all present and future taxes (other than
income taxes payable by the Lender), withholdings, levies, duties and other governmental charges ("Taxes") with the exception of any Taxes payable by
reason of the Lender or any Permitted Lender Assignee being a non-resident of the United States of America. Upon request by the Lender, the Borrower shall furnish to the Lender a
receipt for any Taxes paid by the Borrower pursuant to this Section 3.12 or, if no Taxes are payable with respect to any payment required to be made by the Borrower hereunder, either a
certificate from each appropriate taxing authority or an opinion of counsel acceptable to the Lender, in either case stating that such payment is exempt from or not subject to Taxes. If any Taxes are
paid or payable by the Lender, other than Taxes which were payable solely by reason of the Lender becoming a non-resident of the United States of America or the assignment by the
Lender, at a time when no demand had been made by the Lender hereunder or, if demand has been made, the time period within which the Borrower must respond to such demand has not expired, of any of its
rights hereunder or under the Security to a Person that was a non-resident of the United States of America, the Borrower will, upon demand by the Lender, and whether or not such
Taxes shall be correctly or legally asserted, indemnify the Lender for such payments, together with any interest, penalties and expenses in connection therewith plus interest thereon at the applicable
rate under the Loan, as the case may be (calculated as if such payments constituted overdue amounts of principal as of the date of making such payments). In the event that any such Taxes paid by the
Lender and reimbursed by the Borrower are incorrectly or illegally asserted, the Lender shall, at the request and expense of the Borrower, cooperate with the Borrower in order to enable the Borrower
to obtain a payment of such Taxes. The obligations of the Borrower under this Section 3.12 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. 

30

  

	(b)
	The
Lender shall indemnify and save the Borrower harmless from and against any Loss arising by reason of the Lender or any Permitted Lender Assignee being a non-resident
of the United States of America, including, without limitation, the loss of any deductions or credits in respect of Taxes relating to interest paid pursuant to this Agreement. 

3.13 Concurrent Exercise of Prepayment Rights

        Notwithstanding
anything to the contrary in Section 3.4, the parties agree that, in the event the Remington Loan Agreement shall be in effect, it is a condition to the exercise by
the Borrower of its prepayment rights under Section 3.4 that the Remington Guarantor exercise its prepayment rights under Section 3.4 of the Remington Loan Agreement concurrently and
that any amounts payable hereunder and thereunder as a result of such concurrent exercise of prepayment rights are due and payable, and are paid, on the same day. 

 
 

ARTICLE 4 
  ADVANCES UNDER THE LOAN  
    

4.1   First Advance

        The
Borrower shall be entitled to obtain the first Advance (herein called the "First Advance") under the Loan upon, and only in compliance
with the following terms and upon satisfaction of the following conditions, all in form and substance satisfactory to the Lender in its sole discretion: 

	(a)
	the
First Advance shall occur upon a date (herein called the "First Advance Date") determined by the Borrower, provided that the
Borrower shall have delivered to the Lender a complete and accurate Request for Advance, which Request for Advance shall reflect compliance by the Borrower with the provisions of this
Section 4.1 and, among other things, shall contain the certificate of a senior officer of the Borrower which shall:

	(i)
	certify
as to the aggregate amount of Construction Costs paid or incurred and payable by the Borrower at the date thereof which are the subject of the Request for
Advance in question;

	(ii)
	show
any construction lien holdback;

	(iii)
	certify
that all such Construction Costs are in accordance with the budget and Plans and that the amount remaining to be advanced under the Loan for the Reconstruction
is not less than the remaining Construction Costs that will be required to achieve completion of the Reconstruction; and

	(iv)
	certify
that, to the best of such Person's knowledge, all construction to the date of the certificate is in material compliance with municipal by-laws, all
other governmental requirements, the issued building permits and the Plans, and that there are no material infractions in respect thereof whatsoever. 

31

 

Such
certificate, as part of the Request for Advance, shall be supported by evidence satisfactory to the Lender, acting reasonably, and, if requested by the Lender, shall be accompanied by receipts,
invoices, where available and where such costs have not yet been paid, or other satisfactory evidence for the payment of all Construction Costs forming part of the Advance requested, which shall be
verified by and acceptable to the Lender. In addition, the Request for Advance shall be accompanied by: (a) copies of all lien waivers or releases for all lienable work performed on the
Gulfstream Property and paid for with the proceeds of the prior disbursement or otherwise (all such waivers or releases to be in such form as is reasonably required by Lender),
(b) copies of all contractor's affidavits as to payment of work to the date and the Borrower's affidavit as to such work as is not covered by the Construction Contracts, each together with
supporting documentation evidencing to the Lender's satisfaction payment of all Construction Costs to date and funded under the Loan, (c) a report in form and content satisfactory to the Lender
from the Cost Consultant, and (d) such other documents supporting the Request for Advance as the Lender may reasonably request; 

	(b)
	the
First Advance shall include an amount equal to the Lender's Pre-Advance Expenses (as determined by the Lender), and the cash portion of such First Advance shall
be in an amount which does not exceed the value of the work in place for the Reconstruction, as determined by the Cost Consultant, provided that the amount remaining to be advanced under the Loan for
the Reconstruction shall never be less than the remaining Construction Costs that will be required to achieve completion of the Reconstruction, as estimated by the Cost Consultant;

	(c)
	the
Borrower shall have made available to the Lender true copies, where available, or otherwise photocopies of all Construction Contracts;

	(d)
	the
Borrower shall have delivered to the Lender: (i) an acknowledgement from Suitt Construction Company, Inc. concerning the status of the Suitt Stipulated Lump Sum
Construction Contract; and (ii) an acknowledgement from Vecellio Group, Inc. concerning the status of the Ranger Stipulated Lump Sum Construction Contract, in each case in form and
substance satisfactory to the Lender;

	(e)
	the
Borrower and The Meadows Guarantors shall have made available to the Lender certified copies of their incorporating documents and shall have delivered to the Lender incumbency
certificates with respect to the officers of the Borrower and the Guarantors signing this Agreement and the Security;

	(f)
	the
Borrower and The Meadows Guarantors shall have delivered to the Lender resolutions authorizing the Loan and any documents to be provided pursuant to the provisions hereof, and all
documents evidencing any necessary corporate action of the Borrower and The Meadows Guarantors certified by appropriate officers thereof; 

32

 

	(g)
	the
representations and warranties set forth in Article 6 shall be true and accurate in all respects as of the date of the First Advance, and the Borrower and The Meadows
Guarantors shall have delivered to the Lender a certificate of senior officers of each of the Borrower and The Meadows Guarantors to the foregoing effect;

	(h)
	the
Borrower and The Meadows Guarantors shall have made available to the Lender true copies of all of the Material Agreements then in existence, all of which shall be satisfactory to
the Lender and its counsel, acting reasonably;

	(i)
	the
Lender shall have received the Original Security, all in form and substance satisfactory to the Lender, and all action required by the Borrower and The Meadows Guarantors to fully
perfect and maintain such Original Security of and upon the assets of the Borrower and The Meadows Guarantors to which it applies shall have been successfully completed, including completion of all
security filings under UCC and real property registrations;

	(j)
	the
Borrower shall have delivered to the Lender a certificate of the Borrower in a form satisfactory to the Lender certifying the good standing of the Borrower (and any other
entities controlled by or otherwise affiliated with the Borrower) under, and the validity and currency in force of, all Permitted Encumbrances and Material Agreements;

	(k)
	the
Lender shall be satisfied, acting reasonably, with the budget for the Reconstruction;

	(l)
	the
Cost Consultant shall have performed an inspection of the Reconstruction and reported to the Lender that the amount of work in place and the cost to complete in respect of the
Reconstruction do not exceed an aggregate of One Hundred and Fifteen Million Dollars ($115,000,000);

	(m)
	the
Borrower shall have made available to the Lender tax certificates in respect of each of the Gulfstream/Aventura Properties, and The Meadows Guarantors shall have made available to
the Lender tax certificates in respect of The Meadows Property, in each case evidencing that all municipal taxes due in respect thereof up to the date of the First Advance have been paid in full;

	(n)
	no
litigation, regulatory or other proceeding shall have been commenced seeking to restrict the Borrower and/or the Guarantors from completing the transactions contemplated hereby;

	(o)
	without
derogating from the Borrower's representations, warranties and covenants herein and under the Loan Documents, the Lender shall be satisfied with: (i) its due diligence
review of the Gulfstream/Aventura Properties, including with respect to environmental reports and ability to rely upon such reports, environmental and other approvals, title to properties and assets
and legal matters; and (ii) its assessment of all environmental conditions relating to the Gulfstream/Aventura Properties and actual or potential environmental liabilities of the Borrower and
its subsidiaries, including any appropriate insurance; 

33

 

	(p)
	in
the opinion of the Lender, no Material Adverse Change shall have occurred;

	(q)
	the
Borrower shall have made available to the Lender copies of paid-up policies evidencing the insurance to be maintained by the Borrower and/or any of The Meadows
Guarantors pursuant to Section 7.1(r);

	(r)
	the
Lender shall have received a title insurance commitment, in from and substance satisfactory to the Lender, committing the title insurer to issue a lender's title insurance policy
(the "Gulfstream/Aventura Title Policy"), in an amount to be determined by the Lender, acting reasonably, from Fidelity National Title Insurance
Company of New York (or any other title company acceptable to the Lender) (the "Title Company"), insuring the Borrower's fee
ownership of the Gulfstream/Aventura Properties, the adequacy of the legal descriptions of the Gulfstream/Aventura Properties, the marketability of title and that the Gulfstream/Aventura Mortgage is a
valid first priority Encumbrances on the Gulfstream/Aventura Properties, free and clear of Encumbrances other than the Permitted Encumbrances and exceptions to title approved in writing by the Lender,
the validity and effectiveness of any such Encumbrances on the exercise by the Lender of its rights and remedies upon the occurrence of an Event of Default under this Agreement, together with an
endorsement to the Lender's title insurance policy to confirm that the title insurance will continue to be effective following the platting of any of the Properties. The Gulfstream/Aventura Title
Policy shall also contain any endorsements required by the Lender;

	(s)
	the
Lender shall have received a title insurance commitment, in form and substance satisfactory to the Lender, committing the title insurer to issue a lender's title insurance policy
("The Meadows Title Policy"), in an amount to be determined by the Lender, acting reasonably, from the Title Company, insuring The Meadows Owner's fee
ownership of The Meadows Property, the adequacy of the legal descriptions of The Meadows Property, the marketability of title and that The Meadows Second Mortgage is a valid second priority
Encumbrance on The Meadows Property, free and clear of Encumbrances and encumbrances other than the Permitted Encumbrances and exceptions to title approved in writing by the Lender, the validity and
effectiveness of any such Encumbrance on the exercise by the Lender of its rights and remedies upon the occurrence of an Event of Default under the Meadows Guarantee and Indemnity. The title policy
shall also contain any endorsements required by the Lender;

	(t)
	the
Borrower shall also have made available to the Lender:

	(A)
	surveys
with respect to the Gulfstream/Aventura Properties certified by independent, duly qualified, Florida Land Surveyors, satisfactory in substance and form to the Lender and the
Lender's Florida Agent; and 

34

 

	(B)
	surveys
with respect to The Meadows Property certified by independent, duly qualified, Pennsylvania Land Surveyors, satisfactory in substance and form to the Lender and the Lender's
Pennsylvania Agent; 

all
of which surveys shall evidence no title defects other than Permitted Encumbrances; 

	(u)
	the
Borrower shall have delivered to the Lender certificates of the Architect or a professional engineer responsible for the design of the Reconstruction in substance and form
satisfactory to the Lender and to the counsel for the Lender (acting reasonably) to the effect that:

	(i)
	such
Architect or professional engineer, as the case may be, is responsible for the preparation of the plans and specifications for the Reconstruction and the
supervision of the Reconstruction in accordance with such plans and specifications;

	(ii)
	the
plans and specifications have been approved by all authorities having jurisdiction and the Reconstruction has been constructed to date substantially in accordance
with such plans and specifications; and

	(iii)
	all
permits, licences or other evidence of authorization required for such Reconstruction to date have been obtained;

	(v)
	the
Reconstruction, to the extent constructed to date, complies in all material respects with all applicable zoning and building by-laws and regulations;

	(w)
	the
Lender shall be satisfied with the zoning and other by-law and regulatory requirements for the Reconstruction;

	(x)
	the
Borrower shall have delivered to the Lender an opinion of the Borrower's and Guarantor's Florida Agent addressed to the Lender, the Lender's Counsel and the Lender's Florida
Agent, in form, scope and substance satisfactory to the Lender and its counsel, acting reasonably;

	(y)
	the
Lender shall have received an opinion of the Lender's Florida Agent, addressed to the Lender, in form, scope and substance satisfactory to the Lender;

	(z)
	the
Borrower shall have delivered to the Lender an opinion of the Borrower's and Guarantors' Pennsylvania Agent, addressed to the Lender, the Lender's Counsel and the Lender's
Pennsylvania Agent, in form, scope and substance satisfactory to the Lender and its counsel, acting reasonably;

	(aa)
	the
Lender shall have received an opinion of the Lender's Pennsylvania Agent, addressed to the Lender, in form, scope and substance satisfactory to the Lender; 

35

 

	(bb)
	all
proceedings to be taken in connection with the transactions contemplated by this Agreement in connection with the First Advance, and all documents incident thereto, shall be
reasonably satisfactory in form and substance to the Lender, and the Borrower shall have provided to or made available to the Lender copies of all documents which the Lender may reasonably request in
connection with the First Advance, said transactions and copies of the records of all corporate proceedings in connection therewith in form and substance reasonably satisfactory to the Lender;

	(cc)
	the
Borrower shall, prior to such Advance and, in accordance with Section 7.1(l), have funded at its own cost and expense, any cost overruns which have been identified
by the Cost Consultant;

	(dd)
	the
Borrower shall have delivered to the Lender a fully executed amendment to the credit facility between Bank of Montreal and MEC that makes all changes necessary to permit the
transactions contemplated by this Agreement, including without limitation, the elimination of the existing negative pledge in favor of the Bank of Montreal over The Meadows Properties; and

	(ee)
	no
Event of Default or Unmatured Event of Default shall have occurred and be continuing or will result from the making of the First Advance. 

4.2   Subsequent Advances

        The
Borrower shall be entitled to obtain subsequent advances of funds (herein called "Subsequent Advances") under the Loan, upon the
following terms and conditions: 

	(a)
	except
with respect to Advances deemed to be made hereunder, Subsequent Advances shall occur not more frequently than twice a month, upon a date (herein called a
"Subsequent Advance Date") determined by the Borrower by way of written notice to the Lender in the form of a Request for Advance given at least five
(5) Business Days prior to the Subsequent Advance Date in question, which Request for Advance shall reflect compliance with this Section 4.2 and, in particular, shall contain the same
form of officer's certificate and supporting documentation as is required for a Request for Advance pursuant to Section 4.1(a) and shall otherwise be complete and acceptable to
the Lender, acting reasonably;

	(b)
	the
amount of any Subsequent Advance shall be in an amount which, together with the aggregate of all previous Advances for the Reconstruction, does not exceed the value of the work in
place for the Reconstruction, as determined by the Cost Consultant, provided that the amount remaining to be advanced under the Loan for the Reconstruction shall never be less than the remaining
Construction Costs that will be required to achieve completion of the Reconstruction, as estimated by the Cost Consultant;

	(c)
	insofar
only as any agreement granting additional security that was not in place at the time of the giving of a previous opinion under Section 4.1 or 4.2(n)(xii) or this
Section is given in favour of the Lender, the Lender shall have. received updated opinions in form, substance and scope satisfactory to the Lender and its counsel to the same effect as the
opinions delivered pursuant to Section 4.1 and, in addition, as to Subsequent Advances made after the Closing Date, 4.2(n)(xii) 

36

 

	(d)
	if
so requested, the Lender shall have received an opinion from counsel to the Borrower and/or the Guarantors in form, substance and scope satisfactory to the Lender and its counsel
confirming the effectiveness, perfection and priority of the Security;

	(e)
	the
Borrower shall, prior to such Advance and in accordance with Section 7.1(i), have funded at its own cost and expense any cost overruns which have been identified by
the Lender or the Cost Consultant;

	(f)
	the
Lender shall have received from the Cost Consultant a report satisfactory to the Lender as to the progress of the Reconstruction as of the Subsequent Advance Date in question;

	(g)
	Subsections 4.1(c), (h), (n), (v) and (w) shall
have been satisfied and shall continue to be true and accurate and in full force and
effect as of the Subsequent Advance Date in question;

	(h)
	the
representations and warranties set forth in Article 6 shall be true and accurate in all respects as of the date of the Subsequent Advance (except as such representations
and warranties may be updated or otherwise modified to reflect any changes consented to in writing by the Lender), and the Borrower and the Guarantors shall have delivered to the Lender a certificate
of senior officers of each of the Borrower and the Guarantors, without personal liability, to the foregoing effect;

	(i)
	from
and after the completion of construction of the Gulfstream Facilities, the Lender will not be required to make any Subsequent Advances, other than Holdback Advances;

	(j)
	the
final Advance for sums due on the Construction Contracts shall be made following completion of the work contemplated thereby to the satisfaction of the Lender and the Cost
Consultant and the furnishing of the following documents to the Lender and the Cost Consultant: (i) all required affidavits from the contractor under the applicable Construction Contracts and
the Borrower, (ii) a certificate from the Architect certifying that the applicable work was completed in accordance with the Plans, (iii) final releases or lien waivers, which may be
subject to payment of a specific amount as provided in Section 713.20(3), Florida Statutes, from all applicable contractors and other lienors (including, without limitation, the lien
rights of the construction contractor), which releases or waivers must be acceptable to the Lender and the Title Company; provided, however, that the Borrower shall obtain and deliver to the Lender a
final unqualified lien waiver from each such party at the time of payment of such specific amount to such party, (iv) a certificate from the Cost Consultant certifying that the applicable work
has been completed in accordance with the Plans (including completion of the final punch list items, which punch list shall be prepared by or on behalf of the Borrower and approved by the Cost
Consultant in its discretion), that all Governmental Rules in respect of the Reconstruction have been satisfied and that direct connection has been made for all utility services to the Gulfstream
Property, (v) a certificate of occupancy for the Reconstruction, any required approval by the Board of Fire Underwriters or its equivalent having jurisdiction over the Gulfstream Property, and
any other approval required by any Governmental Authority to the extent that any such approval is a condition to the lawful use and occupancy of the Gulfstream Property and the opening of same to the
public, (vi) a final certified "as-built" survey of the Gulfstream Property satisfactory to the Lender and the Cost Consultant, and (vii) the final endorsement to the Title
Insurance Policy, reflecting no exceptions from coverage except the Permitted Encumbrances; 

37

 

	(k)
	an
endorsement to each Title Policy (or if any Title Policy is not then issued, a commitment from the Title Company to issue such endorsement) shall have been delivered to the
Lender, increasing the amount of coverage to include the amount of the Advance then requested, which endorsement shall show no exceptions to title other than the Permitted Encumbrances;

	(l)
	no
Event of Default or Unmatured Event of Default shall have occurred and be continuing or will result from the making of the Subsequent Advance;

	(m)
	in
the opinion of the Lender, no Material Adverse Charge shall have occurred since the date of the immediately preceding Advance; and

	(n)
	as
to the first Subsequent Advance made on or after the Closing Date:

	(i)
	[Intentionally Blank];

	(ii)
	the
Borrower, the Guarantors and MEC shall have made available to the Lender certified copies of their incorporating documents and shall have delivered to the Lender
incumbency certificates with respect to the officers of the Borrower, the Guarantors and MEC signing this Agreement and the Additional Security;

	(iii)
	the
Borrower, the Guarantors and MEC shall have delivered to the Lender resolutions authorizing the execution, delivery and performance of this Agreement and the
Additional Security and any documents to be provided pursuant to the provisions hereof, and all documents evidencing any necessary corporate action of the Borrower, the Guarantors and MEC certified by
appropriate officers thereof;

	(iv)
	the
Borrower and the Guarantors shall have made available to the Lender true copies of all of the Material Agreements (other than those delivered pursuant to
Section 4.1(h)), together with the consents and acknowledgements of all parties thereto required by the terms of such Material Agreements (other than the Borrower or the Guarantors, as
applicable), to the grant of the Security in such Material Agreements all of which shall be in form, scope and terms satisfactory to the Lender and its counsel, acting reasonably; 

38

 

	(v)
	the
Lender shall have received the Additional Security to be provided by the Palm Meadows Guarantor and MEC, all in form and substance satisfactory to the Lender, and
all action required by the Palm Meadows Guarantor and MEC to fully perfect and maintain such Additional Security of and upon the assets of the Palm Meadows Guarantor or MEC, as applicable, to which it
applies shall have been successfully completed, including completion of all security filings under UCC and real property registrations;

	(vi)
	the
Borrower shall have delivered to the Lender a certificate of the Borrower in a form satisfactory to the Lender certifying the good standing of the Borrower and the
Additional Guarantors under, and the validity and currency in force of, all Permitted Encumbrances and Material Agreements applicable to the Additional Guarantors;

	(vii)
	the
Additional Guarantors shall have made available to the Lender tax certificates or other documentation reasonably satisfactory to Lender in respect of each of the
Remington Property and the Palm Meadows Training Center Property, evidencing that all municipal taxes and assessments due and payable in respect thereof up to the date of such Advance have been paid
in full;

	(viii)
	without
derogating from the Borrower's and the Guarantors' representations, warranties and covenants herein and under the Loan Documents, the Lender shall be
satisfied with: (i) its due diligence review of the Remington Property and the Palm Meadows Training Center Property, including with respect to environmental reports and ability to rely upon
such reports, environmental and other approvals, title to properties and assets and legal matters and (ii) its assessment of all environmental conditions relating to such Properties and actual
or potential environmental liabilities of Additional Guarantors and their respective subsidiaries, including any appropriate insurance;

	(ix)
	the
Additional Guarantors and the Borrower shall have made available to the Lender copies of paid-up policies evidencing the insurance to be maintained by
the Additional Guarantors pursuant to Section 7.1(r);

	(x)
	the
Lender shall have received a title insurance commitment or commitments, in from and substance satisfactory to the Lender, committing the Title Company to issue a
lender's title insurance policy (the "Additional Title Policy") within 90 days thereafter in an amount to be determined by the Lender,
acting reasonably, from the Title Company, insuring the Remington Guarantor's leasehold and fee interests in the Remington Property and the Palm Meadow Guarantor's fee ownership of the Palm Meadow
Property, the marketability of title, that the Remington Mortgage is a valid second priority Encumbrance on the leasehold and fee ownership interest of the Borrower in respect of the Remington
Property and the Palm Meadows Training Center Mortgage is a valid first priority Encumbrance on the Palm Meadows Training Center Property, in each case, free and clear of Encumbrances other than the
Permitted Encumbrances and exceptions to title approved in writing by the Lender, the validity and effectiveness of any such Encumbrances on the exercise by the Lender of its rights and remedies upon
the occurrence of an Event of Default under this Agreement, together with an endorsement to the Lender's title insurance policy to confirm that the title insurance will continue to be effective
following the platting of the Remington Property and the Palm Meadows Training Center Property. The Title Policy shall also contain any endorsements reasonably required by the Lender; 

39

 

	(xi)
	the
Borrower and the Additional Guarantors shall also have made available to the Lender surveys with respect to the Remington Property and the Palm Meadows Training
Center Property certified by independent, duly qualified, Oklahoma or Florida Land Surveyors, as applicable, satisfactory in substance and form to the Lender and the Lender's Oklahoma Agent and the
Lender's Florida Agent, respectively, all of which surveys shall evidence no title defects other than Permitted Encumbrances or defects which have been insured over by title insurance;

	(xii)
	the
Borrower and the Additional Guarantors shall have delivered to the Lender opinions of each of the Borrower's and Guarantors' Florida Agent, the Borrower's and
Guarantors' Oklahoma Counsel and the Borrower's and Guarantors' Pennsylvania Agent addressed to the Lender, the Lender's Counsel and, as applicable, the Lender's Florida Agent, the Lender's Oklahoma
Agent or the Lender's Pennsylvania Agent in form, scope and substance satisfactory to the Lender and its counsel, acting reasonably, which shall be similar, mutatis
mutandis, to opinions provided to the Lender in connection with the First Advance;

	(xiii)
	the
Lender shall have received reasonably current environmental reports in respect of the Remington Property and the Palm Meadows Training Center Property prepared by
a duly qualified environmental consultant, together with reliance letters addressed to the Lender, all to be in form, scope and terms satisfactory to the Lender, and the Lender shall be satisfied with
such environmental reports, in its sole and absolute discretion;

	(xiv)
	the
Lender shall have received a reasonably current appraisal of the Palm Meadows Training Center Property prepared by a duly qualified property appraiser, indicating
that the value of such Property is not less than Forty-Five Million Dollars ($45,000,000), in form, scope and terms satisfactory to the Lender, in its sole and absolute discretion; 

40

 

	(xv)
	the
Lender's financing commitment for "The Meadows Construction Loan" as referred to in the term sheet dated December 8, 2004 between MEC and the Lender related
to this Agreement shall have been terminated by mutual agreement of all parties thereto; and

	(xvi)
	the
Borrower shall have delivered to the Lender a fully executed amendment to the credit facility between Bank of Montreal and MEC that makes all changes to permit the
transactions contemplated by this Agreement. 

        The
provisions of this Section 4.2(n), insofar as they relate to the Remington Guarantor or its property and assets, shall not be operative unless and until it has obtained
the Remington Loan OHRC Approval. 

 
 

ARTICLE 5 
  SECURITY FOR LOAN  
    

5.1   General  

        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 deliver to the Lender, in form satisfactory to the Lender and its counsel: 

	(a)
	a
promissory note in the amount of One Hundred and Fifteen Million Dollars ($115,000,000) from the Borrower in favor of the Lender (the "Gulfstream
Note");

	(b)
	a
perfected first priority Encumbrance on the Gulfstream/Aventura Properties pursuant to a mortgage of even date herewith from the Borrower in favor of the Lender
(the "Gulfstream/Aventura Mortgage");

	(c)
	a
first priority assignment of rents and leases generated by the use and occupancy of the Gulfstream/Aventura Properties pursuant to an assignment of rents and lessor's interest in
the Occupancy Agreements relating to the Gulfstream Property and the Aventura Property of even date herewith from the Borrower to the Lender;

	(d)
	a
general assignment of the Borrower's interest in the Material Agreements relating to any of the Gulfstream/Aventura Properties, where permitted; provided that if the assignment of
any such Material Agreement is not permitted, the Borrower shall use its 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 Borrower for the benefit of and in trust for the Lender; 

41

  

	(e)
	a
perfected first priority Encumbrance (subject to any Purchase Money Security Interest granted to lenders or vendors up to a maximum amount of Twelve Million and Five Hundred
Thousand Dollars ($12,500,000) in the aggregate for purposes only of acquiring the Gulfstream FF&E) in all personal property of the Borrower now owned and hereafter acquired (excluding licences and
permits), pursuant to a general security agreement of even date herewith from the Borrower to the Lender;

	(f)
	the
environmental indemnity agreement in respect of the Gulfstream/Aventura Properties, from the Borrower in favor of the Lender;

	(g)
	a
negative stock pledge agreement from MEC to the Lender regarding 100% of the issued and outstanding capital stock of the Borrower and each of the Guarantors;

	(h)
	in
return for guarantee and indemnity fees paid at the time of the First Advance by the Borrower to The Meadows Guarantors in the amount of $287,500 the joint and several guarantee
and indemnity (the "Meadows Guarantee and Indemnity") of The Meadows Guarantors, under which The Meadows Guarantors jointly and severally
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, the
completion of the Reconstruction in accordance with the Gulfstream Development Agreement, the Construction Contracts, and such plans and specifications as are approved by the Lender and the
performance of all other obligations of the Borrower under the Loan and the Loan Documents, including the payment of cost overruns pursuant to Section 7.1(l);

	(i)
	as
security for the Meadows Guarantee and Indemnity:

	(i)
	a
perfected second priority Encumbrance on The Meadows Property pursuant to a mortgage of dated as of December 9, 2005 from The Meadows Owner in favor of the
Lender ("The Meadows Second Mortgage");

	(ii)
	a
second 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 dated as of December 9, 2005 from the Borrower to the Lender;

	(iii)
	a
second general assignment, dated as of December 9, 2005, of The Meadows Guarantors interest in the Material Agreements relating to The Meadows Property, where
permitted; provided that if the assignment of any such Material Agreements is not permitted, The Meadows Guarantors shall use its 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; 

42

 

	(iv)
	a
perfected second priority Encumbrance in all personal property of The Meadows Guarantors now owned and hereafter acquired (excluding licences and permits), in each
case to the extent permitted by applicable laws and regulations, and a negative pledge respect of all such personal property (excluding licences and permits), pursuant to a general security agreement
dated as of December 9, 2005 from The Meadows Guarantors to the Lender; and

	(v)
	the
environmental indemnity agreement in respect of The Meadows Property, dated as of December 9, 2005, from The Meadows Guarantors in favour of the Lender; 

All
of the items of security referred to in this Clause (i) shall be subordinate to the same types of security provided by The Meadows Guarantor to the Lender as security for its
liabilities and obligations under the MEC Bridge Loan Agreement; 

	(j)
	in
return for guarantee and indemnity fees to be paid by the Borrower to the Remington Guarantor upon receipt of the Gulfstream Loan OHRC Approval in the amount of $287,500, the
guarantee and indemnity (the "Remington Guarantee and Indemnity") of the Remington Guarantor, under which the Remington 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, the completion of the
Reconstruction in accordance with the Gulfstream Development Agreement, the Construction Contracts, the Plans and the performance of all other obligations of the Borrower under the Loan and the Loan
Documents, including the payment of cost overruns pursuant to Section 7.1(l);

	(k)
	as
security for the Remington Guarantee and Indemnity:

	(i)
	a
perfected second priority Encumbrance on the Remington Guarantor's leasehold interest in the Remington Lands pursuant to a leasehold mortgage of even date herewith
from the Remington Guarantor in favour of the Lender (the "Remington Second Mortgage");

	(ii)
	a
second priority assignment of rents and leases generated by the use and occupancy of the Remington Property pursuant to an assignment of rents and lessor's interest
in the Occupancy Agreements relating to the Remington Property of even date herewith from the Remington Guarantor to the Lender;

	(iii)
	a
second general assignment of the Remington Guarantor's interest in the Material Agreements relating to the Remington Property, where permitted; provided that if the
assignment of any such Material Agreement is not permitted, the Remington Guarantor shall use its 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 Remington Guarantor for the benefit of and in trust for the
Lender; 

43

 

	(iv)
	a
perfected second priority Encumbrance (subject to any Permitted Encumbrances) in all personal property of the Remington Guarantor now owned and hereafter acquired
(excluding licences and permits but including the fee interest of Remington in the Remington Park Race Track clubhouse/grandstand forming part of the Remington Property), pursuant to a general
security agreement of even date herewith from the Remington Guarantor to the Lender and which shall also contain a negative pledge on all of the Remington Guarantor's licences and permits; and

	(v)
	the
environmental indemnity agreement in respect of the Remington Property, of even date herewith, from the Remington Guarantor in favour of the Lender. 

All
of the items of security referred to in this Clause (k) shall be subordinate to the same types of security provided by the Remington Guarantor to the Lender as security for its
liabilities and obligations under the Remington Loan Agreement; 

	(l)
	in
return for guarantee and indemnity fees paid by the Borrower to the Palm Meadows Guarantor in the amount of $57,500 the guarantee and indemnity
(the "Palm Meadows Guarantee and Indemnity") of the Palm Meadows Guarantor, under which the Palm Meadows 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, the completion of the Reconstruction
in accordance with the Gulfstream Development Agreement, the Construction Contracts, and the Plans and the performance of all other obligations of the Borrower under the Loan and the Loan Documents,
including the payment of cost overruns pursuant to Section 7.1(l);

	(m)
	as
security for the Palm Meadows Guarantee and Indemnity:

	(i)
	a
perfected first priority Encumbrance (subject to any Permitted Encumbrances) on the Palm Meadows Training Center Property pursuant to a mortgage of even date herewith
from the Palm Meadows Guarantor in favour of the Lender (the "Palm Meadows Training Center Mortgage");

	(ii)
	a
first priority assignment of rents and leases generated by the use and occupancy of the Palm Meadows Training Center Property pursuant to an assignment of rents and
lessor's interest in the Occupancy Agreements relating to the Palm Meadows Property of even date herewith from the Palm Meadows Guarantor to the Lender; 

44

 

	(iii)
	a
first general assignment of the Palm Meadows Guarantor's interest in the Material Agreements relating to the Palm Meadows Training Center Property, where permitted;
provided that if the assignment of any such Material Agreements is not permitted, the Palm Meadows Guarantor shall use commercially reasonable efforts to obtain all consents and waivers necessary to
assign to the Lender such Material Agreement and if such consents and waivers are not obtained, such Material Agreement shall be held by the Palm Meadows Guarantor for the benefit of and in trust for
the Lender;

	(iv)
	a
perfected first priority Encumbrance in all personal property of the Palm Meadows Guarantor now owned and hereafter acquired (excluding licences and permits), in each
case to the extent permitted by applicable laws and regulations pursuant to a general security agreement of even date herewith from the Palm Meadows Guarantor to the Lender and which shall also
contain a negative pledge on all of the licences and permits held by the Palm Meadows Guarantor; and

	(v)
	the
environmental indemnity agreement in respect of the Palm Meadows Training Property, of even date herewith, from the Palm Meadows Guarantor in favour of the Lender;

	(n)
	the
limited recourse guarantee and indemnity of MEC (the "MEC Guarantee and Indemnity") pursuant to which MEC 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, the completion of the
Reconstruction in accordance with the Gulfstream Development Agreement, the Construction Contracts and the Plans, and the performance of all other obligations of the Borrower under the Loan and the
Loan Documents, including the payment of cost overruns pursuant to Section 7.1(l), together with a stock pledge agreement of even date herewith from MEC to the Lender pursuant to which
MEC pledges 100% of the issued and outstanding capital stock of the Palm Meadows Guarantor;

	(o)
	a
specific assignment to the Lender of the policies of insurance referred to in Section 6.1(nn) and the proceeds thereto, together with endorsement thereof
reflecting the Lender as a loss payee or additional insured, as applicable;

	(p)
	related
UCC financing statements;

	(q)
	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/or The Meadows Property and other documentation in support thereof as the Lender and its counsel shall reasonably require; and 

45

 

	(r)
	such
documents as the Lender, acting reasonably, shall require with respect to the provisions of the Construction Lien Law, Section 713, Florida Statutes and Oklahoma Statutes
§141, et seq for the purpose of preserving the priority of its Security. 

        The
security set out above in this Section 5.1 (except the Gulfstream Note) is herein called the "Security"; all such security set
out above in this Section 5.1 granted by any of the Meadows Guarantors is herein called "The Meadows Security"; the Security provided by the
Borrower and the Meadows Guarantors is herein called the "Original Security" and the Security provided or to be provided by the Remington Guarantor, the
Palm Meadows Guarantor and MEC is herein called the "Additional Security". The Original Security was provided on or before the First Advance Date, the
Additional Security from the Palm Meadows Guarantor will be provided on the Closing Date, and the Security from the Remington Guarantor will be provided upon the receipt of the Gulfstream Loan OHRC
Approval. 

5.2   Right to Substitute Security for the Aventura Property  

        The Borrower shall have the right at any time to provide substitute security for the Aventura Property (the "Substitute Aventura
Security"), provided that (a) the Substitute Aventura Security is either (i) cash or one or more letters of credit drawn on a bank or banks acceptable to the
Lender, acting reasonably, or (ii) other property acceptable to the Lender, acting reasonably, (b) the Lender is satisfied, acting reasonably, that the realizable value of the Substitute
Aventura Security is not less than the value of the Aventura Property, and (c) the Borrower pays all costs and expenses (including those of the Lender) in connection with such substitution of
security. The Lender and the Borrower hereby agree that the value of the Aventura Property at any time shall be deemed to be the greater of (a) Fifty-Five Million Dollars
($55,000,000) and (b) the value as determined by the Lender, acting reasonably and based on one or more fair market value appraisals conducted by one or more qualified appraisers determined by
the Lender, acting reasonably, at the time of any request to substitute security. 

        Notwithstanding
the foregoing, the parties agree that it is a condition to the exercise by the Borrower of its rights under this Section 5.2 that the Borrower exercise its
substitution rights under the equivalent section of the Remington Loan Agreement concurrently and that any amounts payable hereunder and under the equivalent provisions of the Remington Loan Agreement
are due and payable, and are paid, on the same day. 

5.3   Development of the Mixed-Use Property  

        The
Lender acknowledges that the Borrower intends to jointly develop the Mixed-Use Property with a third party. 

        Promptly
following written request from the Borrower, the parties hereto will use commercially reasonable efforts to negotiate within 90 days an
inter-creditor/non-disturbance agreement (the "JV Inter-Creditor Agreement"), on terms satisfactory to the Lender, acting reasonably,
that provides that, upon the Mixed-Use Property being subdivided from the remainder of the Gulfstream Property, on terms acceptable to the Lender, acting reasonably, the Lender will
subordinate its security interest in such Mixed-Use Property to the joint venture's interest, as tenant, in the 99-year ground lease (the "JV
Ground Lease") that the Borrower will be entering into with the joint venture; provided that: (a) the Lender will be granted a second-ranking security interest over:
(i) the Borrower's (or any Affiliate's) interest in the JV Ground Lease; and (ii) the Borrower's (or any Affiliate's) interest in the joint venture entity, (b) the
Lender shall be satisfied, acting reasonably, that such joint development shall not adversely impact the access to or the structural integrity of the Gulfstream Facilities, (c) the requirement
that the tenant under the JV Ground Lease, the Borrower and the Lender enter into a reciprocal easement agreement, on terms satisfactory to the Lender, acting reasonably, (d) the Lender shall
receive from a reputable title insurance company approved by the Lender, acting reasonably, such title insurance endorsements as are reasonably requested by the Lender to insure the continued priority
and validity of its security interest under the Gulfstream/Aventura Mortgage in respect of the remaining portion of the Gulfstream Property, and (e) any financing related to the joint venture
shall be on terms subject to the approval of the Lender, acting reasonably. 

46

 

5.4   Alternative Gaming  

        The Lender understands that the Borrower may wish to renovate and/or expand, at the Borrower's sole cost and expense, the Gulfstream Facilities in order to
accommodate alternative gaming if legalized in the State of Florida. The Lender agrees that it will grant the Borrower any necessary consents under this Agreement and its Security to permit such
renovation and/or expansion; provided that the Lender is satisfied, acting reasonably, (a) that all necessary alternative gaming licences, construction permits and other municipal approvals
have been received in respect of such renovation and/or expansion, (b) with the terms of any financing required in connection with such renovation and/or expansion, and (c) that such
renovation and/or expansion will not adversely impact (i) the ability of the Borrower to continue to meet its obligations under this Agreement, (ii) the structural integrity of the
Gulfstream Facilities and/or (iii) the ability of the Lender to realize on the Security held by the Lender. 

        The
Lender further agrees to consider in good faith and act reasonably in reviewing any request from the Borrower to restructure the Security provided by the Borrower held by the Lender
in order to accommodate the financing of a renovation and/or expansion of the Gulfstream Facilities to house alternative gaming; provided that: (a) the provisos set forth in the immediately
preceding paragraph are complied with; (b) nothing herein shall require the Lender to subordinate or postpone its Security or impair its value; and (c) all costs and expenses reasonably
incurred by the Lender in reviewing such request and/or restructuring such Security shall be paid for by the Borrower. 

5.5   Meadows Additional Financing  

        The Lender acknowledges that The Meadows Guarantors will likely require the Additional Financing from a third party lender
(the "Third Party Senior Lender"). On or prior to July 15, 2006, The Meadows Guarantors shall provide the Lender with a written notice
setting out in detail the proposed terms of the Additional Financing, including the proposed amount, term, interest rate, use of proceeds and security in respect of the Additional Financing, which
terms shall be subject to approval by the Lender, acting reasonably. The Lender will then use commercially reasonable efforts to negotiate within 60 days an
inter-creditor/non-disturbance agreement (the "Additional Financing Inter-Creditor Agreement") with the Third Party Senior Lender,
providing that, among other things: 

47

 

	(a)
	the
Security granted over The Meadows Property, The Meadows FF&E and cash flow of The Meadows Operator to the Lender will be subordinated to up to a maximum principal amount of Two
Hundred Million Dollars $200,000,000 of Additional Financing, plus accrued interest and Third Party Senior Lender expenses, provided by the Third Party Senior Lender;

	(b)
	the
Third Party Senior Lender will not be granted any security over any lands or assets of MEC or any of its subsidiaries other than The Meadows Guarantors which is subject to
security in favour of the Lender or any of it Affiliates;

	(c)
	the
Lender will have a right to pay out and assume the Additional Financing at any time (whether or not such Additional Financing is then in default) on the terms on which The Meadows
Guarantors can repay the Additional Financing (including the payment of any pre-payments or make-whole amounts); and

	(d)
	the
Lender and the Third Party Senior Lender will each provide to the other, and be entitled to receive from the other, reciprocal contemporaneous notice of any default or intended
enforcement under the Loan and the Additional Financing. 

        The
parties agree that the Lender shall have no obligation to enter into the Additional Financing Inter-Creditor Agreement unless such agreement incorporates the foregoing and is on
terms satisfactory to the Lender acting reasonably for an arm's length lender and without regard to any shareholder relationship between the lender and the borrower. 

        In
the event that the Lender and the Third Party Senior Lender are unable to negotiate and enter into the Additional Financing Inter-Creditor Agreement within the time prescribed, The
Meadows Guarantors may, within a period of 90 days from the date that the Lender advises the Borrower and The Meadows Guarantors of the failure of the Lender and the Senior Third Party Lender
to agree to the terms of the Additional Financing Inter-Creditor Agreement, substitute for The Meadows Security (other than the environmental indemnity referred to in
Section 5.1(i)(v) which shall remain in full force and effect) other security (the "Substitute Meadows Security") in respect of
this Agreement, provided that (a) the Substitute Meadows Security is either (i) cash or one or more letters of credit drawn on a bank or banks acceptable to the Lender, acting
reasonably, or (ii) other property acceptable to the Lender, acting reasonably, (b) the Lender is satisfied, acting reasonably, that the realizable value of the Substitute Meadows
Security is not less than the value of The Meadows Security, and (c) The Meadows Guarantors pay all costs (including those of the Lender) in connection with such substitution of The Meadows
Security. 

48

 
 
 

ARTICLE 6 
  REPRESENTATIONS AND WARRANTIES  
    

6.1   Borrower's and Guarantors' 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, its subsidiaries and MEC, and the Guarantors hereby make the following representations and warranties with respect to themselves and their subsidiaries as of the date hereof (provided that
each of the representations and warranties is qualified by the disclosure schedule delivered to the Lender concurrently with the execution of the Original Agreement and the Disclosure Schedule
(as specifically set out therein)): 

	(a)
	Binding Obligation:    The Loan Documents have each been duly authorized, executed and delivered by the Borrower, the
Guarantors and MEC and each constitutes the legally binding obligation of the Borrower, the Guarantors and MEC, as the case may be, enforceable (subject to creditors' rights and equitable remedies)
against the Borrower, the Guarantors and MEC, as the case may be, in accordance with each of their respective terms.

	(b)
	Borrower's and Guarantors' Existence:    The Borrower is a corporation duly formed, validly existing and in good standing
under the laws of the State of Florida and qualified to own its property and assets and to carry on business in the State of Florida, including the business currently carried on by it. The Meadows
Owner is a corporation duly formed, validly existing and in good standing under the laws of the Commonwealth of Pennsylvania and qualified to own its property and assets and to carry on business in
the Commonwealth of Pennsylvania including the business currently carried on by it. Each of The Meadows Operators and MEC is a corporation duly formed, validly existing and in good standing under the
laws of the State of Delaware and qualified to own its property and assets and to carry on business in the State of Delaware, including the business currently carried on by it. The Remington Guarantor
is a corporation duly formed, validly existing and in good standing under the laws of the State of Oklahoma and qualified to own its property and assets and to carry on business in the State of
Oklahoma, including the business currently carried on by it. The Palm Meadows Guarantor is a corporation duly formed, validly existing and in good standing under the laws of the State of Delaware and
qualified to own its property and assets and to carry on business, including the business currently carried on by it.

	(c)
	Authority:    The Borrower, the Guarantors and MEC have full right, power and authority to execute the Loan Documents on
their own behalf and no consents of any third parties are required that have not been obtained.

	(d)
	Business:    The Borrower does not carry on any business other than the ownership, operation, development, finance and
management of the Gulfstream/Aventura Properties, The Meadows Guarantors do not carry on any business other than the ownership, operation, development, finance and management of The Meadows Property,
the Remington Guarantor does not carry on any business other than the ownership, operation, development, finance and management of the Remington Property and the Palm Meadows Guarantor does not carry
on any business other than the ownership, operation, development, finance and management of the Palm Meadows Training Center Property, including, in each case, horseracing and parimutuel gaming and
activities ancillary thereto. The Borrower and each of the Guarantors conduct their business in a reasonable and prudent manner. 

49

 

	(e)
	No Violation:    The execution, delivery and compliance with the terms and provisions of this Agreement and the Loan
Documents by the Borrowers, the Guarantors and MEC will not (i) violate in any material respects any provisions of law or any Applicable Legal Requirements, (ii) require any consent of
any third party not previously obtained or as otherwise set out in Section 6.1(m), or (iii) violate in any material respects or cause a default under any agreement to which the
Borrower, the Guarantors and MEC are a party or by which they will be bound.

	(f)
	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 governing 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 were duly executed and delivered, 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.

	(g)
	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 governing each of the Guarantors and MEC (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 or MEC relating to the Guarantors or MEC. The Guarantor Incorporation Documents were duly executed and delivered, 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". 

50

  

	(h)
	Authorized Capital:    The authorized capital of the Borrower 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 holders of such outstanding shares are as follows: 

	 
	Beneficial Holder 
	 	Class of Shares
	 	Number of Shares

	 	Magna Entertainment Corp.	 	common	 	11,232

The
authorized capital of The Meadows Owner consists of 1,000 Shares of which 100 Shares are duly issued and outstanding as fully paid and non-assessable. The beneficial
holders of such outstanding shares are as follows: 

	 
	Beneficial Holder 
	 	Class of Shares
	 	Number of Shares

	 	Magna Entertainment Corp.	 	n/a	 	100

The
authorized capital of Washington Trotting consists of 1,000 common shares of which 100 common shares are duly issued and outstanding as fully paid and non-assessable. The
beneficial holders of such outstanding shares are as follows: 

	 
	Beneficial Holder 
	 	Class of Shares
	 	Number of Shares

	 	Magna Entertainment Corp.	 	common	 	100

The
authorized capital of Mountain Laurel consists of 1,000 common shares of which 100 common shares are duly issued and outstanding as fully paid and non-assessable. The
beneficial holders of such outstanding shares are as follows: 

	 
	Beneficial Holder 
	 	Class of Shares
	 	Number of Shares

	 	Magna Entertainment Corp.	 	common	 	100

The
authorized capital of the Remington Guarantor consists of 10,000 common shares of which 500 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	 	500

51

 

The
authorized capital of the Palm Meadows 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

	(i)
	Financial Statements:    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 GAAP 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.

	(j)
	Combined Financial Statements:    The Lender has been furnished with a copy of the unaudited internally prepared Combined
financial statements dated as of and at the end of the most recently completed fiscal quarter. Such internally prepared Combined financial statements fairly present the Combined financial condition of
the Borrower and the Additional 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 the Additional 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 Combined statements.

	(k)
	Litigation:    There is no litigation, arbitration or other proceeding or governmental investigation pending or, to the best
of the Borrower's and the Guarantors' knowledge, threatened against or relating to the Borrower or any of the Guarantors or any of their property, assets, or business, including any of the Properties
and/or the Meadows Property, which, if decided adversely, could result in a Material Adverse Change or negatively affect the prospects for repayment of the Loan.

	(l)
	Taxes:    Except as could not be reasonably expected to have a Material Adverse Effect, the Borrower and each Guarantor have
filed all tax returns which are required to be filed, paid all Taxes shown as due thereon or as assessed or reassessed, except to the extent that any assessment or reassessment is being contested
diligently and in good faith, including interest and penalties which are due and payable and have provided adequate reserves for payment of any tax the payment of which is being contested. 

52

 

	(m)
	Governmental Registrations, Approvals, Etc.:    No approval, authorization, consent or other order of, and no designation,
filing, further registration, qualification or recording with, any Governmental Authority, domestic or foreign, is legally required to authorize or is otherwise required in connection with or for the
execution, delivery or performance by the Borrower and/or any of the Guarantors and/or MEC of the Loan Documents, except (i) as have already been obtained, (ii) for the Gulfstream Loan
OHRC Approval (iii) for the Gulfstream Loan Zoo Trust Consent (iv) for the approval referred to in Section 10.27 and (v) except as are otherwise contemplated by the
terms hereof.

	(n)
	Material Assets:    The Borrower and each of the Guarantors owns or has legally enforceable rights to use all material assets
(including real property and licences), contracts, and other documents necessary to conduct its business 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.

	(o)
	Material Agreements:    The Material Agreements referred to in items (i) to (vii)(A) inclusive of
the definition of Material Agreements together with any other Material Agreements disclosed in writing to the Lender from time to time constitute all of the Material Agreements in existence. 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 of the 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.

	(p)
	Title:    The Borrower has good and marketable title in fee simple to the Gulfstream/Aventura Properties free and clear of
any Encumbrance of any nature except Permitted Encumbrances, and The Meadows Owner has good and marketable title in fee simple to The Meadows Property free and clear of any Encumbrance of any nature
except Permitted Encumbrances. The Remington Guarantor has a good and valid leasehold interest to the Remington Lands and has a good and valid ownership interest in the other part of the Remington
Property, in each case, free and clear of any Encumbrance of any nature except Permitted Encumbrances, and the Palm Meadows Guarantor has good and marketable title in fee simple to the Palm Meadows
Training Center Property free and clear of any Encumbrance of any nature except Permitted Encumbrances. No Person or entity has any option to acquire ownership of any of the Properties or The Meadows
Property. 

53

 

	(q)
	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 and/or The Meadows Property (collectively, the "Occupancy Agreements") provided to the Lender in
writing constitutes all of the Occupancy Agreements now in existence. All of the Occupancy Agreements are in good standing and to the best knowledge of the Borrower and/or any of the Guarantors, 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.

	(r)
	By-law Compliance:    All by-laws, zoning, licences, certificates, consents, approvals, rights,
permits and agreements required to enable the Gulfstream Facilities to be reconstructed and to enable the Properties and The Meadows 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 but the same are material, 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. All building services
required for the proper functioning of the Properties and The Meadows Property have been obtained, are functioning properly and are fit and suitable for their intended purpose.

	(s)
	Information 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, and all financial projections furnished or made available by the Borrower and/or any of the Guarantors to the Lender have been prepared based on reasonable assumptions 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 writing
to the Lender everything to which it has knowledge regarding the business, operations, property, financial condition, or business prospects of itself, and each of the Properties and/or The Meadows
Property which could result in a Material Adverse Change.

	(t)
	Improvements:    Except as disclosed to the Lender in writing, the present use of each Property and The Meadows Property
complies, and the future use of each Property and The Meadows 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 Authority, including the Gulfstream Development Agreement and the Remington Development Agreement;
(b) building, occupancy and other permits, licences and approvals; and (c) declarations, easements, rights-of-way, covenants, conditions and restrictions of
record. 

54

 

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

	(v)
	Utilities:    All utility services necessary and sufficient for the construction, use or operation of the Properties and The
Meadows Property (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 or The Meadows Property, as the case may be, directly to lines owned by the applicable utility and lying in dedicated roads,
including water, storm, sanitary sewer, gas, electric and telephone facilities.

	(w)
	Flood Hazards/Wetlands:    None of the Properties nor The Meadows Property 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 Authority having
jurisdiction over any of the Properties and/or The Meadows Property.

	(x)
	Environmental Conditions:    Except as disclosed in the Environmental Disclosure:

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

	(ii)
	neither
the Borrower nor any of the Guarantors has received any, 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 Authority 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 and/or The Meadows Property; 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 in respect of the Properties, The Meadows Property or any adjacent real property; 

55

 

	(iii)
	the
Borrower and each of the Guarantors have obtained all material Environmental Consents and Safety Consents and have obtained or are 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 Properties and the Meadows Property and all such obtained Environmental
Consents and Safety Consents are in good standing and the Borrower and each of the Guarantors are 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 either of the
Properties, The Meadows Property 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 either of the Properties and/or
The Meadows Property, 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 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;

	(vii)
	to
the knowledge of the Borrower and each of the Guarantors, there are no aboveground or underground storage tanks in or associated with either of the Properties
and/or The Meadows Property, that would materially impact any of the Properties and/or The Meadows Property; 

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

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

	(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, neither the Borrower nor any of the Guarantors has assumed the liability of any other Person or entity for,
and has not 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 and/or The
Meadows Property or other claims under Environmental Laws and Safety Laws other than claims with respect to the Properties and/or The Meadows Property;

	(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 and/or The Meadows Property, the operations and approval of development of any of the Properties and/or The Meadows Property, compliance by
the Borrower and any of the Guarantors with Environmental Laws and Safety Laws or any actual or potential Environmental or Safety Liability of any of the Relevant Entities with respect to the
Properties or The Meadows Property;

	(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 regarding environmental matters; and 

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	(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 the Relevant Entities
to address issues under Environmental Laws or Safety Laws.

	(y)
	Taxes/Assessments:    There are no unpaid or outstanding real estate or other taxes or assessments on or against any of the
Properties and/or The Meadows Property or any part thereof which are not overdue. Upon the completion of the Reconstruction, the Tax bills affecting the Gulfstream Property will cover the entire
Gulfstream Property and will not cover or apply to any other property. Neither the Borrower nor any Guarantors have received any written notice of any supplemental Taxes which may be owing or
otherwise assessed which are not overdue.

	(z)
	Eminent Domain:    There is no eminent domain or condemnation proceeding pending or, to the best of the Borrower's knowledge
or any of the Guarantors' knowledge, threatened, relating to any of the Properties, The Meadows Property, or any part thereof.

	(aa)
	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 either of the
Properties and/or The Meadows Property which if enforced would or are likely to result in a Material Adverse Change.

	(bb)
	Employee Benefit Plans:    Neither the Borrower nor any of the Guarantors sponsors any pension plan, as defined in ERISA.

	(cc)
	Labour Controversies:    There are no labour controversies pending or threatened against the Borrower and/or the Guarantors
which, if adversely determined, could result in a Material Adverse Change.

	(dd)
	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.

	(ee)
	Solvency:    The Borrower and each of the Guarantors is solvent, able to pay its debts as such debts become due, has capital
sufficient to carry on its business 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. 

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	(ff)
	Casualty:    Except for the Reconstruction, and the Remington Construction, there is no damage or destruction to any part of
the Properties and/or The Meadows Property by fire or other casualty that has not been repaired.

	(gg)
	No Agreement to Sell Assets:    Except as specifically set forth in the MEC Recapitalization Plan, the Borrower and each of
the Guarantors do not have any legal obligation, absolute or contingent, to any Person or entity to sell any of their assets, 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 the Guarantors with any other Person or entity or to enter into any agreement with respect thereto.

	(hh)
	Business Purpose:    The proceeds of the Loan to the Borrower pursuant to the Loan Documents will be used by the Borrower
solely and exclusively for the proper business purposes set out in Section 2.1. The Borrower is not in the business of extending credit for the purpose of purchasing or carrying margin stock
(within the meaning of Regulation U issued by the Board of Governors of the Federal Reserve System), and no proceeds of any loans and/or advances made by the Lender to or for the benefit of the
Borrower will be used to purchase or carry margin stock or to extend credit to others for the purpose of purchasing or carrying any margin stock.

	(ii)
	Consideration:    The Loan Documents were executed and delivered by the Borrower 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.

	(jj)
	Unmatured Event of Default or Event of Default:    No Unmatured Event of Default or Event of Default has occurred and is
continuing.

	(kk)
	Other Regulations:    Neither the Borrower nor any Guarantor nor MEC 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 Authority limiting its ability to incur indebtedness.

	(ll)
	Patent and Other Rights:    Each of the Borrower and each of the Guarantors owns, licences or otherwise has the full right
to use, under validly existing agreements, all patents, licences, trademarks, trade names, trade secrets, service marks, copyrights and all rights with respect thereto, which are required to conduct
their businesses as now conducted. 

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	(mm)
	Margin Stock:    None of the Borrower nor any of the Guarantors nor MEC 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. The term "Margin Stock" shall have the meaning given to such
term in Regulation U issued by the Board of Governors of the Federal Reserve System.

	(nn)
	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.

	(oo)
	Legal Name:    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;

	(pp)
	USA Patriot Act:    Neither the Borrower, nor any of the Guarantors nor MEC 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.

	(qq)
	Licences and Permits:    Neither the Borrower nor any Guarantor has pledged any licences or permits, held by it or any of
its subsidiaries, to a third party except that the Borrower has provided a negative pledge of its licences and permits to the Lender pursuant to the Remington Loan Agreement.

	(rr)
	Disclosure.    All information provided to the Lender relating to the financial condition, business, affairs and prospects
of the Borrower and the Guarantors (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 writing to the Lender everything to which it has knowledge
regarding the business, operations, property, financial condition, or business prospects of itself, and each of the Properties and the Meadows Property which could result in a Material Adverse Change. 

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6.2   Survival of Borrower's and Guarantors' Representations  

        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. Without derogating from the foregoing, the representations and warranties
of the Borrower and each of the Guarantors set out in Section 6.1(x) 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. 

6.3   Lender's Representations and Warranties  

        The Lender hereby represents and warrants that: (a) this Agreement and the other Loan Documents executed by the Lender have each been duly authorized,
executed and delivered by the Lender and each constitutes the legally binding obligation of the Lender, enforceable against the Lender in accordance with its respective terms; (b) the Lender is
the Zug Branch of a partnership duly formed, validly existing and in good standing under the laws of Iceland; and (c) the Lender has full right, power and authority to execute this Agreement
and those other Loan Documents executed by it on its own behalf and no consents of third parties are required which have not been, or will not be, obtained. 

61

  

 
 

ARTICLE 7 
  AFFIRMATIVE COVENANTS  
    

7.1   Covenants  

        The Borrower and the Guarantors covenant and agree with the Lender that from the date of this Agreement and thereafter 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)
	Payments:    The Borrower shall duly and punctually pay to the Lender all amounts payable by it hereunder when due.

	(b)
	Corporate Existence:    The Borrower shall maintain in good standing its corporate existence under the laws of the State of
Florida 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, The Meadows Owner
shall maintain in good standing its corporate existence under the laws of the Commonwealth of Pennsylvania 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, each of The Meadows Operators and the Palm Meadows Guarantor 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 its business and
operations and the Remington Guarantor shall maintain in good standing its corporate existence under the laws of the State of Oklahoma 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.

	(c)
	Compliance with Laws:    The Borrower and each of the Guarantors shall comply, in all material respects, with all Applicable
Legal Requirements (including environmental laws, rules, regulations and orders and racing and gaming laws, rules, regulations and orders), such compliance to include, without limitation, paying when
due all Taxes, assessments and governmental charges or levies imposed upon it or upon its income or profits or any property belonging to it except to the extent contested in good faith and for which
adequate reserves are maintained.

	(d)
	Books and Records; Reporting:    (i) The Borrower and each of the Guarantors shall 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 MEC'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 and The Meadows Property, any financial statements required to be provided to the Lender pursuant to any
of the Mortgages and copies of all written contracts, correspondence and other documents affecting any of the Properties and/or The Meadows Property. Without limiting the foregoing, the Borrower and
each Guarantor agrees to deliver the following to the Lender, in duplicate: 

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	(A)
	copies
of any notices which any contractor delivers to the Borrower and/or such Guarantor under or pursuant to the Construction Contracts or the Remington Construction Contracts which
relate to (I) the occurrence of any default or event of default or other event that, with the passage of time, giving of notice or both, shall become a default or event of default under any of
the Construction Contracts or the Remington Construction Contracts, as the case may be, (II) any situation or event which might give rise to the payment by the Borrower and/or any of the
Guarantors of liquidated damages or other monetary amounts, (III) an application for planning or development approval relating to any portion of any of the Properties and/or The Meadows
Property, (IV) any matter relating to the design, layout, alignment or realignment, approval or construction of the Gulfstream Facilities, or the Remington Facilities or (V) any matter
relating to the design, layout, approval or construction of utility easements, lines, equipment and infrastructure of any of the Properties and/or The Meadows Property; and

	(B)
	upon
the written request of the Lender, and contemporaneously with the quarterly and year-end financial statements required under Section 7.1(d)(ii), 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:

	(I)
	no
Unmatured Event of Default or Event of Default has occurred and is continuing or 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;

	(II)
	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 

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	(III)
	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 or 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)
	as
soon as available and in any event 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, (I) a copy of the unaudited financial
statements of the Borrower and each Guarantor for such fiscal quarter and (II) a copy of the unaudited Combined financial statements of the Borrower and the Additional Guarantors 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, (I) a copy of the audited (or, in the
case of the Palm Meadows Guarantor (unaudited)) annual financial statements for the fiscal year just ended of the Borrower and 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 and (II) a copy of the unaudited Combined financial statements of the Borrower and the Additional Guarantors, and including the same type of statements and
other information as are contained in the audited financial statements referred to in (I) above;

	(D)
	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 the Reconstruction, including an updated budget, if applicable, detailed information regarding infrastructure improvements and development costs, the status of the Construction Contracts
(and the Borrower's performance thereunder), including detailed information regarding amounts spent or incurred to such date and required to be spent or incurred to complete the Reconstruction
as of the last day of such fiscal quarter, and any other matters reasonably requested by the Lender; 

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	(E)
	as
soon as practicable and in any event not later than 40 days after the commencement of each fiscal year of the Borrower, projected individual and Combined 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 Additional
Guarantors, all in reasonable detail and in any event to include projected operating and capital budgets;

	(F)
	within
40 days after the commencement of each fiscal year of the Borrower and the Additional Guarantors, a business plan for the Borrower and each Additional Guarantor for the
two subsequent fiscal years in form, scope and substance acceptable to the Lender and, in the event that any material change is subsequently proposed to any such business plan, within five days
thereafter, written notice to the Lender providing reasonable details of the proposed change, to be followed as soon as practicable thereafter with a modified business plan reflecting such material
change;

	(G)
	until
the Gulfstream Facilities Completion Date, within 20 days after the end of each calendar month the Borrower will make available to the Lender, and, if requested, provide
a report containing, the following information for such calendar month:

	(I)
	a
detailed cost report;

	(II)
	a
listing of all accounts payable reflecting the aging thereof and identifying those which are to be paid out of any reasonably contemporaneous Advance;

	(III)
	a
listing of all outstanding cheques;

	(IV)
	details
of all monies held to satisfy construction liens; and

	(V)
	any
material adverse changes to the budget for the Gulfstream Facilities, including any increase or decrease thereto which individually or in the aggregate shall exceed
$100,000; 

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	(H)
	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

	(I)
	from
time to time, such other information, financial and otherwise, concerning the Borrower and the Guarantors as the Lender may reasonably request.

	(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 and The Meadows Property (A) required under the Environmental Reports to comply with Environmental Law
or (B) requested by the Lender, 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 August 31, 2005, the Borrower shall submit to the Lender, if
requested, an update prepared by the author of each Environmental Report 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 in respect of remediation during such period.

	(e)
	Additional Information:    Representatives of the Borrower and the Guarantors shall meet regularly with the Lender at the
Lender's request to discuss the status of the Properties and The Meadows Property. In addition, the Borrower and the Guarantors will make financial officers available to discuss with the Lender, upon
reasonable prior notice to the Borrower or the Guarantors, as applicable, the affairs, finances and accounts of the Borrower and the Guarantors and, to the extent the same is relevant to the Loan or
the Security, its Affiliates all at such reasonable times and as often as the Lender may reasonably request. The Borrower and each of the Guarantors shall deliver or make available to the Lender
copies of all business plans, independent authorized gaming analyses, appraisals, and other documentation in the possession or control of the Borrower and/or the Guarantors (and/or any Affiliate of
the Borrower and/or the Guarantors) that relates in any way to the Properties and/or The Meadows Property, or to the businesses to be conducted by the Borrower and/or any of the Guarantors on
Properties and/or The Meadows Property, including any additional information that may be reasonably requested by the Lender (if any) in connection with the foregoing. All costs and expenses
related to such reporting shall be apportioned to, and shall form part of, the Loan Amount and The Meadows Loan Amount (if any) (and shall be deemed to have been advanced by the
respective lender thereunder), such costs and expenses to be apportioned by the Lender acting reasonably. 

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	(f)
	Use of Proceeds:    The Borrower shall use the proceeds of the Loan 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 Loan shall be used by the Borrower to pay any amounts to MEC or 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 and Exchange Act of 1934.

	(g)
	Maintenance of the Properties and The Meadows Property:    Subject to work done in connection with the Reconstruction and the
Remington Construction, the Borrower and the Guarantors shall keep the Properties, and the Meadows Property including all buildings and improvements now or hereafter situated thereon, all equipment
incidental to any of the Properties or The Meadows Property, in good condition subject to reasonable wear and tear, not commit or permit any waste thereof, make all necessary or advisable repairs,
replacements and improvements and complete and restore promptly and in good workmanlike manner any building, improvements or other items of any of the Properties or The Meadows Property which may be
damaged, or destroyed, and pay when due all costs incurred therefor.

	(h)
	Gulfstream Property Operation and Completion:    The Borrower shall at all times remain the operating company for the
Gulfstream Property and will diligently cause to be done all things necessary to carry out to completion the Reconstruction in accordance with plans and specifications therefor as are approved by the
Lender, subject to such changes thereto as the Borrower may consider necessary and the Lender shall have approved, acting reasonably
(the "Plans"), and in accordance with all development and construction agreements related thereto, subject to such changes thereto as the
Borrower may consider necessary and the Lender shall have approved, acting reasonably, with all convenient speed and to complete such construction and development as promptly as reasonably practicable
and substantially in accordance with the Plans and such agreements in each case to the extent amended as aforesaid. Without derogating from the foregoing, all applications for Governmental
Authorizations in respect of the Plans and/or the Reconstruction shall, to the extent that the scope, form and substance or terms thereof are inconsistent or otherwise not in accordance with the
Plans, be submitted to the Lender for its review and approval. 

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	(i)
	Conduct of Reconstruction.    The Reconstruction will be constructed in a good and workmanlike manner by the Borrower using
quality materials in accordance with the plans and specifications approved by the Lender, acting reasonably.

	(j)
	Compliance with Agreements:    The Borrower and each of the Guarantors shall 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.

	(k)
	Notice of Default:    The Borrower and each of the Guarantors shall provide the Lender with a copy of all written notices,
correspondences and reports received or delivered by the Borrower, any Guarantor or MEC in respect of default under any of the Organizational Documents, Occupancy Agreements, Construction Contracts or
Material Agreements and notices of violations of any Governmental Rule received by the Borrower or any of the Guarantors relating to any of the Properties and/or The Meadows Property, including,
without limitation, all racing and/or gaming licences, the Gulfstream Development Agreement and/or any of the Construction Contracts. 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.

	(l)
	Construction Cost Overruns:    The Borrower shall promptly fund, at its own cost and expense, all cost overruns for the
Reconstruction, such that the principal amount yet to be advanced hereunder for the Reconstruction shall not be less than the remaining cost to complete the Reconstruction.

	(m)
	Conduct of Business:    The Borrower and each of the Guarantors shall conduct its business in a reasonable and prudent manner
and, subject to the terms hereof, will take all reasonable steps to maintain and preserve its assets and properties and to maintain full and complete corporate and financial records. Neither the
Borrower nor any of the Guarantors shall engage in any business or activity other than that consistent with past practice or as provided in the MEC Recapitalization Plan and as contemplated hereunder,
which permitted business or activity shall include slots or other forms of alternative gaming permitted in connection with horse racing and parimutuel gaming.

	(n)
	Transactions with Affiliates; Separate and Distinct Business:    The Borrower shall conduct its operations as a separate and
distinct business and shall not, save as may be disclosed in the MEC Recapitalization Plan: (i) enter into any contract or agreement with any shareholder, member, partner, principal or
Affiliate, except upon market terms and conditions that are substantially similar to those that would be available to a similarly situated arm's length third party; (ii) commingle its assets or
funds with the assets or funds of any of its shareholders, members, partners, principals, Affiliates or any other entity; (iii) acquire or own any material assets other than the
Gulfstream/Aventura Properties and such incidental personal property as may be necessary for the operation of the Gulfstream/Aventura Properties; (iv) except in respect of the Remington Loan
Agreement and the MEC Bridge Loan Agreement, suggest that it is responsible for the debts of any third party (including any of its shareholders, members, partners, principals, Affiliates or any other
entity); or (v) fail to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations. 

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	(o)
	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.

	(p)
	Notification of Attachment or Other Action:    The Borrower and 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 and/or The Meadows Property, or the institution of any action, suit or proceeding by or against the
Borrower, any of the Guarantors or any of the Properties and/or The Meadows Property, 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 and/or The Meadows Property, which may adversely affect (i) the Borrower's ability to pay the Indebtedness, (ii) the value of any of the Properties
and/or The Meadows Property or the value, validity or priority of the Lender's security interests granted pursuant to any of the Mortgages and/or any of the other Loan Documents, (iii) any of
the Guarantors' ability to perform under the Guarantees and Indemnities, or (iv) any other rights and remedies of the Lender granted and continued pursuant to the Loan Documents.

	(q)
	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 and The Meadows Property which, if unpaid, might result in, or permit the creation of, any lien or encumbrance on such Property or The Meadows 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 the Property or The Meadows Property, as the case may be, 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. The Borrower and the Guarantors shall at all times defend the Lender's interest in
and to the Properties and The Meadows Property, 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 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. 

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

	(s)
	Taxes and Liabilities:    The Borrower and each Guarantor shall promptly pay when due all Taxes, duties, assessments and
other liabilities, except such taxes, duties, assessments and other liabilities as the Borrower is diligently contesting in good faith and by appropriate proceedings; provided that the Borrower or
such Guarantor has provided for and is maintaining adequate reserves with respect thereto.

	(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.

	(u)
	Payment of Obligations:    Subject to the right to contest legitimate disputes and subject, where applicable, to the provisos
in Section 7.1(q), the Borrower and each Guarantor shall 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.

	(v)
	Hold Disbursements in Trust:    Other than the proceeds of the Loan which 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.

	(w)
	Required Remediation and Environmental Actions:    Upon request of the Lender acting reasonably, the Borrower or an
Additional Guarantor, as applicable, hereby agrees to complete the requested remediation actions recommended to be taken with respect to the Properties in the Environmental Reports and not heretofore
undertaken as described in the Environmental Reports. The term "Environmental Reports" means collectively (i) the Phase I Environmental
Site Assessment and Environmental Compliance Audit in respect of the Gulfstream/Aventura Properties, prepared by Environmental Resources Management, and dated July 10, 2003, and (ii) the
environmental reports referred to in Section 4.2(n)(xiii), 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 shall obtain an update to the applicable
Environmental Report as and when requested by the Lender, acting reasonably, in order to confirm that the Borrower's actions, or Additional Guarantor's in respect of any required remediation aforesaid
are in conformity with Environmental Laws. In connection with each update to an Environmental Report, the Borrower or the Additional Guarantor shall obtain a reliance letter relating thereto addressed
to the Lender in form and substance reasonably satisfactory 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 or The Meadows Property shall be disposed of in conformity with Environmental Laws requirements at a location other than any of the Properties or The Meadows
Property. 

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	(x)
	Surveys:    After the recording of any subdivision, plan of subdivision or small-scale planned development with respect to
any of the Properties or The Meadows Property, 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 or The Meadows Property showing such Property or The Meadows Property as so subdivided; and (ii) an endorsement to the Title
Policies confirming the new legal description created by said subdivision and affirmative insurance that the Mortgage in respect of such Property or The Meadows Property continues to encumber such
Property or The Meadows Property, as subdivided and newly described.

	(y)
	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 the Properties and The Meadows Property and the costs of insurance premiums,
based upon the Lender's reasonable estimate as to the amount of the taxes, assessments and premiums to be levied, assessed and incurred. 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 the Properties and The Meadows Property are also related to other premises, the amount
of any deposit hereunder shall be based upon the Borrower'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 the Properties and The Meadows Property for the purposes of computing the amount of any deposit hereunder. Such deposits shall be held without any
allowance of interest. Such deposits shall be used for the payment of such taxes, assessments and insurance premiums on the Properties and The Meadows Property on the earliest possible date when such
payments become due. If the funds so deposited are insufficient to pay any such taxes, assessments and insurance premiums for any year when the same shall become due and payable, the Borrower shall,
within 10 Business 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 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(y) 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(y), 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. 

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	(z)
	USA Patriot Act:    The Borrower and the Guarantors hereby covenant that until such time as the Indebtedness is paid in full,
they will take no action (nor 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).

	(aa)
	Regulatory Matters:    The Remington Guarantor shall promptly seek and obtain the Approvals and Consents. The Remington
Guarantor shall keep the Lender apprised of the current status of the approval/consent process. In the event that either the Remington Loan OHRC Approval or the Remington Loan Zoo Trust Approval is
not obtained, and the Security to be provided by the Remington Guarantor is not duly registered in all the applicable offices of public record, in each case, on or before October 11, 2005 or
(ii) at any time the OHRC determines that it will not provide the Remington Loan OHRC Approval or, (iii) at any time the Zoo Trust determines that it will not provide the Remington Loan
Zoo Consent, the Lender shall have the right (exercisable in its sole and absolute discretion) to immediately terminate this Agreement. In the event of such termination the Borrower shall immediately
pay to the Lender the Loan Amount (including (and without duplication) all accrued and unpaid interest, fees, expenses and closing costs and other Indebtedness owing as of such date), together
with the Gulfstream Make-Whole Amount. Neither the Borrower nor any Guarantor will take any action which (or fail to take any action the absence of which) would result in the
withdrawal or termination of any Governmental Approval or that would disqualify the Remington Guarantor from applying for, obtaining or receiving all necessary Governmental Authorizations to operate
authorized gaming machines at the Remington Facilities. 

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	(bb)
	Litigation:    If the Borrower or any of the Guarantors becomes aware of any actual, pending or threatened litigation,
arbitration or other proceeding relating to the Borrower, any of the Guarantors, MEC or any of their property, assets or business, including any of the Properties or The Meadows Property which if
decided adversely could result in a Material Adverse Change, the Borrower or such Guarantor shall promptly give notice thereof to the Lender containing reasonable details thereof and the potential
effect thereof.

	(cc)
	Chief Executive Office:    The Borrower and each Guarantor has advised or will advise the Lender in writing of their or
MEC's respective chief executive offices and places of business and changes thereto.

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

	(i)
	maintain
books and records and 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)
	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)
	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, not commingle or permit to be commingled its funds or other assets with those of any other Person; 

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	(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 Remington Loan Agreement and the MEC Bridge 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)
	conduct
business in its own name;

	(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 with minutes thereof delivered to the Lender (or adopt written resolutions in lieu thereof where permitted under
applicable corporate law), with a copy of such minutes and/or resolutions provided 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. 

 
 

ARTICLE 8 
  NEGATIVE COVENANTS  
    

8.1   Negative Covenants

        Except
as expressly permitted under this Agreement and the other Loan Documents, from the date of this Agreement and thereafter until the Loan has been paid in full, the Borrower and the
Guarantors covenant and agree with the Lender as follows: 

	(a)
	Licences and Permits:    Neither the Borrower nor any of the Guarantors shall pledge any of licences or permits, held by it
or any of its subsidiaries, to any third party.

	(b)
	Debt:    Neither the Borrower nor any Guarantor shall, directly or indirectly, incur or suffer to exist any debt or enter
into any guarantees, hypothecation, contracts or other agreements which would make the Borrower or such Guarantor liable for any debt or expense other than (i) Permitted Encumbrances,
(ii) customary trade payables and similar types of obligations that are consistent with past practice and in the ordinary course of the Borrower's or such Guarantor's business, (iii) the
Indebtedness, (iv) indebtedness in respect of the Remington Loan Agreement and the MEC Bridge Loan Agreement and guarantees and security in respect thereof, (v) liabilities for
management fees permitted by Section 8.1(r) and (vi) intercompany indebtedness of the Remington Guarantor to MEC of approximately $900,000 on account of Construction Costs
(as defined in the Remington Loan Agreement) incurred by MEC prior to the Closing Date. 

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	(c)
	Further Encumbrances:    Neither the Borrower nor any of the Guarantors will create, assume or permit to exist any
Encumbrance or security interest with respect to any of the Properties and/or The Meadows Property, or any portion thereof, whether ranking prior to, pari
passu with or subsequent to the Security, other than Permitted Encumbrances without the prior written consent of the Lender.

	(d)
	Transfers:    Neither the Borrower nor any of the Guarantors shall sell, assign, transfer, convey, lease or otherwise
alienate or dispose of any of the Properties and/or The Meadows Property, or any interest therein (financial or management), whether legal or equitable, without the prior written consent of the
Lender.

	(e)
	Change of Control:    There shall not be, nor shall the Borrower and/or any of the Guarantors permit, any issue,
subscription, allotment, cancellation or redemption initiated by the Borrower or any of the Guarantors or, any transfer by sale, assignment, operation of law or other disposition or any redemption
initiated by a holder of shares of the Borrower and/or any of the Guarantors, of all or any part of the shares of the Borrower and/or any of the Guarantors or of any subsidiary corporation of the
Borrower and/or any of the Guarantors or any corporation which is an Affiliate of the Borrower and/or any of the Guarantors, other than the parent company of the Borrower or any of the Guarantors,
having voting rights, whether contingent or direct, nor permit any re-organization or amalgamation in any such case so as to result in any change in the present effective voting control of
the Borrower and/or any of the Guarantors from the Person or Persons holding such voting control at the date of execution of this Agreement (although the effective voting control may vary among those
Persons holding such voting control at the date of execution of this Agreement) without first obtaining the written consent of the Lender in each instance, which consent may be unreasonably or
arbitrarily withheld, notwithstanding any statutory provision or provisions to the contrary. There shall not be deemed to be a change in the present effective voting control if the shares of the
Borrower and/or any of the Guarantors in question are beneficially owned by (a) a company controlled by the Person who beneficially owns such shares at the date of execution of this Agreement
or (b) an Affiliate. Any subsequent change in control shall similarly be subject to the prior written consent of the Lender. The Borrower and each of the Guarantors shall make available to the
Lender or its lawful representatives all its corporate books and records for inspection at all reasonable times, in order to ascertain whether there has been any change in control. 

75

 

	(f)
	Occupancy Agreements:    Neither the Borrower nor any of the Guarantors shall enter into, nor permit to be entered into any
leases, agreements to lease or any other Occupancy Agreements for any space which constitutes any material part of the Properties, The Meadows Property or any of them without the prior written
approval of the Lender, acting reasonably, other than Permitted Encumbrances and stall agreements and leases for operations such as blacksmiths and veterinarians on market terms and consistent with
past practice.

	(g)
	No Amendments:    Neither the Borrower nor any of the Guarantors shall make, permit or allow any material amendments or other
material changes to or terminate the Material Agreements (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 nor make any material amendments to its constating documents, in each case in a manner which would materially
adversely affect the interest of the Lender hereunder or under the Security, in each case, without the prior written consent of the Lender, which shall not be unreasonably withheld. Neither the
Borrower nor the Remington Guarantor shall materially alter or vary the Plans for the Gulfstream/Aventura Properties or the Remington Property approved by the Lender without the prior written consent
of the Lender, not to be unreasonably withheld.

	(h)
	Capital Expenditures:    Neither the Borrower nor any of the Guarantors shall, without the Lender's prior written approval,
exercisable in the Lender's sole discretion, incur any Capital Expenditures or permit any mechanic's lienable work to be done to or for the benefit of any of the Properties except (a) for the
Reconstruction, (b) the Remington Construction, (c) Capital Expenditures in respect of the Properties not to exceed during any fiscal year Five Million Dollars ($5,000,000) in the
aggregate for the Borrower and the Additional Guarantors (including, capital expenditures by the Remington Guarantor during any fiscal year in respect of the Remington Facilities not to exceed One
Million Two Hundred and Fifty Thousand Dollars ($1,250,000) for customary refreshing of existing authorized gaming devices), (d) as disclosed in the Occupancy Agreements approved by the Lender,
(e) for normal repair and maintenance in the ordinary course of business or (f) emergency repairs.

	(i)
	Use:    None of the Borrower nor either of the Additional Guarantors shall use or develop a Property for any purposes other
than as contemplated under the Gulfstream Development Agreement, the Remington Development Agreement, the Construction Contracts, the Remington Construction Contracts and other permitted related
purposes. Neither the Borrower nor either of the Additional 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. 

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	(j)
	Property Manager:    Neither the Borrower nor any of the Guarantors shall enter into any property management agreement in
respect of any of the Properties or the Meadows Property without the Lender's prior written consent.

	(k)
	No Commingling:    Except as specifically contemplated hereby, neither the Borrower nor any Guarantor shall commingle any
assets or funds related to the Properties or The Meadows Property with assets or funds of any of its shareholders, principals, Affiliates or any other entity.

	(l)
	No Change in Nature of Business:    Neither the Borrower nor any Guarantor shall make any material change in the nature of
its business carried on as of the date hereof.

	(m)
	No Mergers, Consolidations, Sales:    Neither the Borrower nor any Guarantor shall be a party to any merger, consolidation or
exchange of ownership interests, or purchase or otherwise acquire all or substantially all of the assets or stock of any class of, or any membership, partnership or joint venture interest in, any
other Person or entity, or sell, transfer, convey or lease all or any substantial part of its assets, or sell or assign, with or without recourse, any receivables.

	(n)
	No Change in Ownership:    Neither the Borrower nor any Guarantor shall permit any Person or entity to become a shareholder
of it or permit any of its shareholders to assign, transfer, pledge, hypothecate or sell any interest in it. If requested by the Lender, the Borrower and each Guarantor shall provide the Lender at
reasonable intervals with a corporate certificate that no such change of ownership has occurred during the preceding period.

	(o)
	ERISA:    Neither the Borrower nor any Guarantor nor any ERISA Affiliate shall (A) adopt or institute any Employee
Benefit Plan that is an employee pension benefit plan within the meaning of section 3(2) of ERISA, (B) 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, (C) 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 the Borrower, any Guarantor or any ERISA Affiliate to any tax, penalty or other liability, including a liability to indemnify, (D) 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), (E) fail to make full payment when due of all amounts due as contributions to any Employee Benefit Plan or Multiemployer Plan,
(F) fail to comply with the requirements of section 4980B of the IRC or Part 6 of Title I(B) of ERISA, or (G) adopt any amendment to any Employee Benefit Plan which
would require the posting of security pursuant to section 401(a)(29) of the IRC, where singly or cumulatively, the above could be reasonably likely to have a Material Adverse Effect. 

77

 

	(p)
	Other Agreements:    Neither the Borrower nor any Guarantor shall enter into any agreement containing any provision which
would be violated or breached by the performance of its obligations hereunder 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 hereof or of any such instrument or document.

	(q)
	Assertion of Certain Claims and Defenses:    To the extent permitted by Applicable Legal Requirements, neither the Borrower
nor any of the Guarantors shall 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.

	(r)
	Compensation and Fees; Disbursements:    Neither the Borrower nor any Guarantor shall pay to any Affiliates or other related
party (other than the Lender) of the Borrower, any of the Guarantors or MEC any compensation or fees for services rendered (including, without limitation any management, consulting or similar fees, or
comparable payment); provided that each of the Borrower and the Additional Guarantors may incur and accrue liabilities for management fees to MEC which, in the aggregate, shall not exceed, in any
fiscal year, 2.5% of the Combined gross revenues of the Borrower and the Additional Guarantors for such fiscal year; provided that no payment may be made in respect of such management fees unless at
the time of the making of such payment, and after giving effect thereto, (i) the ratio of the Combined Net Debt to trailing four quarter Combined EBITDA of the Borrower and the Additional
Guarantors does not exceed, and for prior four consecutive fiscal quarters such ratio has not exceeded, 3:1; and (ii) no Unmatured Event of Default or Event of Default or event of default or
unmatured event of default under the Remington Loan Agreement has occurred and is continuing.

	(s)
	Loans, Advances, Guaranties, Dividends, Distributions:    Except as expressly permitted hereunder, neither the Borrower nor
any of the Guarantors shall lend or advance money or credit to any Person or entity or purchase or repurchase (or agree, contingently or otherwise, to do so) the indebtedness of, or assume,
guarantee (directly or indirectly or by an instrument having the effect of assuming another's payment or performance of any obligation or capability of so doing, or otherwise), or endorse or otherwise
become liable, directly or indirectly, with respect to the obligations, stock or dividends of any Person or entity.

	(t)
	Investments; Acquisitions:    Neither the Borrower nor any Guarantor may 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 or any Guarantor may make investments in Cash Equivalents in amounts and pursuant
to terms acceptable to the Lender, acting reasonably. 

78

 

	(u)
	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, the Remington Guarantee and Indemnity, the Palm Meadows Guarantee and Indemnity and/or the MEC Guarantee and Indemnity remains
outstanding, each of the Borrower and the Additional Guarantors 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, without limitation, 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 Event of Default or an unmatured event of default or event of default under the Remington
Loan Agreement;

	(ii)
	redeeming,
purchasing or otherwise retiring or cancelling any securities (including any warrants, options or rights to acquire securities,
"Securities");

	(iii)
	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;

	(iv)
	issuing
any Securities containing any mandatory or fixed payment obligations of any kind, whether dividend or premium or otherwise;

	(v)
	declaring
or paying any dividends, provided that this provision shall not prohibit and there shall be permitted the declaration and payment of a single annual dividend
to MEC by the Borrower and each of the Additional Guarantors in each year within 60 days after the delivery to the Lender of the audited financial statements referred to in
Section 7.1(d)(ii)(C) for the immediately preceding fiscal year if, at the time of such declaration and payment, and after giving effect thereto, all of the Gulfstream Restricted
Payment Release Conditions have been satisfied;

	(vi)
	paying
any management, consulting or similar fee, or comparable payment, (A) to any Affiliate or other related party (other than the Lender) or
(B) outside of the ordinary course of the Borrower's or such Additional Guarantor's business as of the Closing Date and consistent with past practice (it being acknowledged that the
Remington Guarantor has entered into a consulting agreement with Ingenus Management and Consulting with respect to the Remington gaming facility); and 

79

 

	(vii)
	entering
into any transactions with any Affiliates for the purposes of entering into any transaction or activity that is otherwise prohibited by this
Section 8.1(u). 

For
the purposes hereof, the "Gulfstream Restricted Payment Release Conditions" means: (i) the Remington Repayment Commencement Date has
occurred, (ii) the Capitalized Interest Tranche has been repaid in full subsequent to the later of the Remington Facilities Completion Date and the Gulfstream Facilities Completion Date
pursuant to the provisions of Section 3.3 of the Remington Loan Agreement, (iii) at the time of the declaring and making of a payment referred to in clause (v) above
(a "restricted payment"), and after giving effect thereto, the ratio of outstanding Combined Net Debt of the Borrower and the Additional Guarantors to such entities' trailing four quarter
Combined EBITDA does not exceed 4:1, (iv) at the time of the declaring and making of the restricted payment, and after giving effect thereto, no Event of Default or Unmatured Event of Default
or event of default or unmatured event of default under the Remington Loan Agreement shall have occurred and be continuing, and (v) the distribution of the restricted payment does not cause the
sum of (A) all restricted payments made by the Borrower and the Additional Guarantors (including the desired payment) and (B) all repayments made on account of the Capitalized Interest
Tranche pursuant to Section 3.3 of the Remington Loan Agreement to exceed an amount equal to (I) 40% of the Combined Excess Cash Flow of the Borrower and the Additional Guarantors since
the Remington Facilities Completion Date, (II) provided that, at the time of the declaring and making of the restricted payment, and after giving effect thereto, the ratio of the Combined Net
Debt of the Borrower and the Additional Guarantors to such entities' trailing four quarter Combined EBITDA does not exceed, and for the prior four consecutive fiscal quarters such ratio has not
exceeded, 3:1, 60% of the Combined Excess Cash Flow of the Borrower and the Additional Guarantors since the Remington Facilities Completion Date or (III) provided that, at the time of the
declaring and making of the restricted payment, and after giving effect thereto, the ratio of the Combined Net Debt of the Borrower and the Additional Guarantors to such entities' trailing four
quarter Combined EBITDA does not exceed, and for the prior four fiscal quarters such ratio has not exceeded, 2:1, 85% of the Combined Excess Cash Flow of the Borrower and the Additional Guarantors
since the Remington Facilities Completion Date. 

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Notwithstanding
the foregoing, the Lender agrees that the following types of payments will not be deemed to be restricted payments subject to the above restrictions: (a) payments to MID or the
Lender (including any amounts paid to the Lender in respect of: (i) the Borrower's obligations under the guarantees and indemnities provided by it under the Remington Loan Agreement or the MEC
Bridge Loan Agreement; (ii) the Remington Guarantor's obligations under the guarantees and indemnities provided by it under this Agreement; (iii) the Palm Meadows Guarantor's obligations
under the guarantees and indemnities provided by it under this Agreement, the Remington Loan Agreement or the MEC Bridge Loan Agreement; (iv) The Meadows Guarantors' obligations under this
Agreement or the MEC Bridge Loan Agreement; and/or (v) MEC's obligations under guarantees and indemnities provided by it under this Agreement and the Remington Loan Agreement); (b) the
distribution by the Borrower to MEC of the First Advance, which was an amount equal to the amount paid by MEC with respect to the Reconstruction prior to the closing of the Loan plus
out-of-pocket fees and costs payable by the Borrower or MEC in connection with entering into the Loan; (c) the distribution by the Remington Guarantor to MEC of the
initial advance made to the Remington Guarantor under the Remington Loan Agreement, which initial advance will be an amount equal to the amount paid by MEC (either for its account or for the account
of the Remington Guarantor) with respect to the Remington Construction prior to the Closing Date plus the out-of-pocket fees and costs payable by the Remington Guarantor or MEC
in connection with entering into the Remington Loan Agreement; (d) guarantee fees paid to the Borrower, the Remington Guarantor, the Palm Meadow Guarantor or The Meadows Guarantors pursuant to
this Agreement, the Remington Loan Agreement or the MEC Bridge Loan Agreement; and (e) provided that at the time of the making of such payment, and after giving effect thereto, no Unmatured
Event of Default or Event of Default or event of default or unmatured event of default under the Remington Loan Agreement, shall have occurred and be continuing, payments to MEC for the reimbursement
of additional amounts paid by MEC from time to time with respect to the Reconstruction or the Remington Construction, provided that all such amounts were incurred in accordance with the Plans and with
the terms of this Agreement or the Remington Loan Agreement, as applicable. 

 
 

ARTICLE 9 
  EVENTS OF DEFAULT; ACCELERATION OF INDEBTEDNESS  
    

9.1   Events of Default

        The
occurrence or existence of any one or more of the following shall constitute an "Event of Default" hereunder: 

	(a)
	Non-Payment:    Default by the Borrower in payment of (i) any principal when due including, without
limitation, any mandatory repayments pursuant to Section 3.7 or (ii) any interest thereon within three Business Days after the same becomes due or (iii) any other amount
hereunder within 10 days after notice of non-payment thereof is received by the Borrower;

	(b)
	Defaults:    Default by the Borrower, any Guarantor or MEC 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, any Guarantor or MEC; or 

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	(c)
	Representations and Warranties:    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 or MEC 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; or

	(d)
	Cross Default:    (i) The Borrower or a Guarantor fails to make any payment beyond the applicable grace period with
respect thereto, if any (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise) in respect of any indebtedness (other than indebtedness to the Lender), having an
aggregate principal amount of not less than Two Million Dollars ($2,000,000); or (ii) the Borrower, any Guarantor or MEC fails to make any payment beyond the applicable grace period with
respect thereto, if any, whether by scheduled maturity, required prepayment, acceleration, demand or otherwise in respect of any indebtedness to the Lender (other than the Indebtedness); or
(iii) the applicable Person in (i) or (ii) fails to observe or perform any other conditions relating to any such indebtedness, or any other event occurs, the effect of which
default or other event causes or permits the holder or holders of such indebtedness (or a trustee or agent on behalf of such holder or holders) to cause, with the giving of notice if required,
such indebtedness to become due or to be repurchased, prepaid, defeased or redeemed (automatically or otherwise), or an offer to repurchase, prepay, defease or redeem such indebtedness to be made,
prior to its stated maturity; or

	(e)
	Insolvency, Voluntary Proceedings:    The Borrower, any Guarantor and/or MEC shall (i) apply for or consent to the
appointment of a receiver, trustee, liquidator or custodian of itself or of all or a substantial part of its property, (ii) or make application for or seek relief or protection of itself or for
the benefit of their creditors under any of the sections, chapters or provisions of Title 11 of the United States Code, 11 U.S.C. §§ 101 et. seq.
(the "Bankruptcy Code"), (iii) be unable, or admit in writing its inability, to pay its debts generally as they mature, (iv) make a
general assignment for the benefit of itself or any of its creditors, (v) be dissolved or liquidated in full or in part, (vi) become insolvent (as such term may be defined or
interpreted under any applicable statute), (vii) commence a voluntary case or other Proceeding seeking liquidation, reorganization or other relief with respect to itself or its debts under any
bankruptcy, insolvency or other similar law now or hereafter in effect or consent to any such relief or to the appointment of or taking possession of its property by any official in an involuntary
case or other Proceeding commenced against it, or (viii) take any action for the purpose of effecting any of the foregoing; or 

82

 

	(f)
	Involuntary Proceedings:    Proceedings for the appointment of a receiver, trustee, conservator, liquidator or custodian of
the Borrower, any Guarantor, and/or MEC or of all or a substantial part of the property thereof, or an involuntary case or other Proceedings seeking liquidation, reorganization, dissolution,
compromise, moratorium, protection, stay of proceedings of creditors or other relief with respect to the Borrower, any Guarantor, and/or MEC or the debts thereof under any bankruptcy, insolvency or
other similar law now or hereafter in effect shall be commenced and such Proceeding is not contested or shall not be dismissed or discharged within 45 days of commencement, provided that if an
order, decree or judgment is granted or entered (whether or not entered or subject to appeal) against any of the Borrower, any Guarantor, and/or MEC in the interim, such 45-day grace
period will cease to apply and provided further that if the Borrower, any Guarantor, and/or MEC files an answer admitting the material allegations of a petition filed against it in any such
Proceeding, such 45-day grace period will cease to apply; or

	(g)
	Judgments:    (i) One or more judgments, Orders, decrees or arbitration awards requiring the Borrower and/or any of
the Guarantors to pay an aggregate amount of One Million Dollars ($1,000,000) or more shall be rendered against the Borrower and/or any of the Guarantors in connection with any single or related
series of transactions, incidents or circumstances and the same shall not be satisfied, vacated or stayed within 15 Business Days from the date of entry thereof and, if stayed, within such
period the same has not been appealed and stayed during such appeal; provided that if enforcement and/or realization Proceedings are commenced in respect thereof, such 15 Business Day grace
period shall cease to apply; (ii) any judgment, writ, assessment, warrant of attachment, tax lien or execution or similar process shall be issued or levied against a substantial part of the
Property of any Loan Party which judgment is not stayed and dismissed or satisfied within 15 Business Days after issue or levy; or (iii) any other judgments, Orders, decrees, arbitration
awards, writs, assessments, warrants of attachment, tax liens or executions or similar processes which, alone or in the aggregate, could be reasonably expected to have a Material Adverse Effect are
rendered, issued or levied; or

	(h)
	Loan Documents:    Any Loan Document or any material term thereof shall cease to be, or be asserted by the Borrower and/or
any Guarantor and/or MEC not to be, a legal, valid and binding obligation of the Borrower and/or any of the Guarantors and/or MEC enforceable in accordance with its terms; or

	(i)
	Security:    Any Encumbrance intended to be created by any Security shall at any time be invalidated, subordinated or
otherwise cease to be in full force and effect, for whatever reason, or any Encumbrance purported to be created by any Security shall cease to be, or shall be asserted by the Borrower and/or any of
the Guarantors and/or MEC not to be, a valid (except as expressly otherwise provided in such Security or any other Loan Documents) perfected Encumbrance in the Collateral covered thereby with the
priority contemplated herein; or 

83

 

	(j)
	Employee Benefit Plans:    Any Reportable Event which constitutes grounds for the termination of any Employee Benefit Plan by
the Borrower or any ERISA Affiliate of the Borrower or for the appointment of a trustee by the Borrower or any ERISA Affiliate of the Borrower to administer any Employee Benefit Plan shall occur, or
any Employee Benefit Plan shall be terminated within the meaning of Title IV of ERISA or a trustee shall be appointed by the Borrower or any ERISA Affiliate of the Borrower to administer any Employee
Benefit Plan; or

	(k)
	Change of Control:    Any change of control shall occur with respect to the Borrower and/or any Guarantor; or

	(l)
	Material Adverse Effect:    Any event, occurrence or condition which, in the opinion of the Lender, has had a Material
Adverse Effect; or

	(m)
	Default under Material Agreement:    A default or event of default, or any event or circumstance not yet constituting an
event of default which, with the giving of any notice or the lapse of any period of time or both, would become an event of default on the part of the Borrower or any Guarantor, shall occur and be
continuing under any Material Agreement; provided that other than in respect of the Material Agreements referred to in items (i) to (vii)(A) of the definition of Material
Agreements, after giving effect to applicable grace periods under such other Material Agreements, the default or event of default under such other Material Agreements could be reasonably expected to
have a Material Adverse Effect, unless within 30 days thereof, such event of default has been cured or such Material Agreement is replaced by an agreement in form and substance, and with a
party, satisfactory to the Lender; or

	(n)
	Termination of Material Contract:    Any Material Agreement or any consent given thereunder shall cease to be in full force
and effect, or any party to a Material Agreement states that such Material Agreement is no longer in full force and effect; provided that other than in respect of the Material Agreement referred to in
items (i) to (vii)(A) of the definition of Material Agreements, the cessation, default or repudiation of such other Material Agreement has had or could be reasonably
expected to have a Material Adverse Effect, unless within 30 days thereof such Material Agreement is replaced by an agreement in form and substance, and with a party, satisfactory to the
Lender; or

	(o)
	Termination of Racing and/or Gaming Licences:    Any racing and/or gaming licences held by the Borrower or any of the
Guarantors or any consent or approval given thereunder shall cease to be in full force and effect or shall be materially and adversely changed or altered, provided that where such termination, change
or alteration is capable of being cured and the Borrower is using all commercially reasonable efforts to so cure, the Borrower shall have up to 30 days to so cure; or 

84

  

	(p)
	Delivery of Security:    The Borrower and/or any of the Guarantors and/or MEC shall have failed to deliver to the Lender on
the applicable date the Security required to be delivered pursuant to Section 5.1; or

	(q)
	Defaults of the Guarantors or MEC:    While the Guarantees and Indemnities are in effect, any Guarantor thereunder or MEC
shall fail to observe or perform any covenant, obligation, condition or agreement contained in such Guarantee and Indemnity and such failure shall continue for 30 days; or

	(r)
	Guarantee:    Any of the Guarantees and Indemnities or any material term thereof shall cease to be, or be asserted by the
applicable Guarantors or MEC not to be, a legal, valid and binding obligation of such Guarantors or MEC, enforceable in accordance with its terms, other than in the case of The Meadows Guarantee and
Indemnity terminating in accordance with its terms; or

	(s)
	Termination of Remington Lease:    The Remington Lease shall be terminated as a result of the Zoo Trust exercising its
discretionary termination rights thereunder. 

As
used herein and in the other Loan Documents, the term "Unmatured Event of Default" means any of the foregoing events described in this
Section 9.1 which, if a notice were given or a cure or grace period expired, would become an Event of Default hereunder. 

9.2   Acceleration; Remedies  

        Upon the occurrence of an Event of Default, unless the Lender elects to waive such default in its sole and absolute discretion: (i) the Loan Amount
including without duplication, all accrued and unpaid interest, fees, expenses, closing costs and other Indebtedness owing; and (ii) the Pre-Payment Make-Whole Amount
shall become immediately due and payable without notice to the Borrower and the Lender shall be entitled to all of the rights and remedies provided in the Loan Documents or at law or in equity. Each
remedy provided in the Loan Documents is distinct and cumulative of all other rights or remedies under the Loan Documents or afforded by law or equity, and may
be exercised concurrently, independently, or successively, in any order whatsoever. Upon the occurrence of an Event of Default, the Lender shall be entitled to remain in possession of the Property or
any other collateral pledged to secure any obligation of the Borrower to the Lender, and to collect the rents therefrom and the Borrower shall and hereby consents thereto. 

9.3   Waiver of Certain Rights  

        The Borrower and each of the Guarantors hereby waives each of the following, to the fullest extent permitted by law: 

	(a)
	any
defence based upon:

	(i)
	the
unenforceability or invalidity of all or any part of the Loan, the Security, any of the Guarantees and Indemnities, or any other Loan Document, or any failure of the
Lender to take proper care or act in a commercially reasonable manner in respect of the Security or any collateral subject to the Security, including in respect of any disposition of the Collateral or
any set-off of the Borrower's or a Guarantor's bank deposits against the Loan; 

85

 

	(ii)
	any
act or omission of the Borrower or any other Persons, including the Guarantors or MEC, that directly or indirectly results in the discharge or release of the
Borrower or any other Person or any of the Loan or any Security; or

	(iii)
	any
Guarantor's or MEC's present or future method of dealing with the Borrower or any Security (or any Collateral subject to the Security) or any other
guarantee for the Loan;

	(b)
	any
right (whether now or hereafter existing) to require any Guarantor or MEC, as a condition to the enforcement of any of the Guarantees and Indemnity:

	(i)
	to
accelerate the Loan or proceed and exhaust any recourse against the Borrower or any other Person;

	(ii)
	to
realize on any Security that it holds;

	(iii)
	to
marshal the assets of the Borrower or any Guarantees and Indemnity; or

	(iv)
	to
pursue any other remedy that the Borrower or any of the Guarantors or MEC may not be able to pursue itself and that might limit or reduce the Borrower's, a
Guarantor's or MEC's burden;

	(c)
	presentment,
demand, protest and notice of any kind including, without limitation, notices of default and notice of acceptance of any Guarantee and Indemnity;

	(d)
	all
suretyship defences and rights of every nature otherwise available under Florida, Pennsylvania or Oklahoma law or other applicable laws; and

	(e)
	all
other rights and defences (legal or equitable) the assertion or exercise of which would in any way diminish the liability of the Guarantors or MEC under the Guarantees and
Indemnities. 

 
 

ARTICLE 10 
  MISCELLANEOUS  
    

10.1 Reliance and Non-Merger  

        All covenants, agreements, representations and warranties of the Borrower or any Guarantor or MEC 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. 

86

 

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, the Guarantors and MEC and their respective Subsidiaries provided to it hereunder by and on behalf of the Borrower, any of the Guarantors or MEC or obtained in respect of any diligence
conducted in respect hereof; provided, however, that this Section 10.2 shall not apply to any information which (i) was lawfully in the public domain at the time of communication to the
Lender, (ii) lawfully enters the public domain through no fault of the Lender subsequent to the time of communication to the Lender, (iii) was lawfully in the possession of the Lender
free of any obligation of confidence at the time of communication to the Lender, or (iv) was lawfully communicated to the Lender free of any obligation of confidence subsequent to the time of
initial communication to the Lender. 

10.3 No Set-Off  

        To the fullest extent permitted by law, the Borrower and each Guarantor shall make all payments under the Loan Documents 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 Authority which may adversely affect the Borrower's or such Guarantor's obligation to make, or the Lender's right to receive, such payments. The Borrower and
each Guarantor grants to the Lender the right to set off all accounts, credits or balances owed by the Lender to the Borrower or such Guarantor, as applicable, 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 or the other Loan Documents 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, any Guarantor or MEC believed by it to be genuine and correct. 

87

 

10.6 Notices  

        Any notice or other communication which may be or is required to be given or made pursuant to this Agreement shall be deemed to have been sufficiently and
effectively given if signed by or on behalf of the party giving notice and sent by either personal service or paid registered mail to the party for which it is intended at its address as follows: 

	(a)
	if
to the Borrower, at: 

Gulfstream
Park Racing Association, Inc.

901 South Federal Highway

Hallandale Beach, Florida

33009-7199 

	 
	 	 
	 	 

	 	 	Fax:	 	954-457-6497
	 	 	Attention:	 	President
	 	 	 	 	 
	 	 	with a copy to:
	 	 	 	 	 
	 	 	Magna Entertainment Corp.

337 Magna Drive

Aurora, Ontario

L4G 7K1
	 	 	 	 	 
	 	 	Fax:	 	905-726-7448
	 	 	Attention:	 	Legal Department

	(b)
	if
to the Lender, at: 

MID
Islandi sf. Zug Branch

Baarerstrasse 16, CH-6304 Zug Switzerland 

	 
	 	 
	 	 

	 	 	Fax:	 	+41 41 725 27 25
	 	 	Attention:	 	Thomas Schultheiss, Branch Manager
	 	 	 	 	 
	 	 	with a copy to:
	 	 	 	 	 
	 	 	MI Developments Inc.

455 Magna Drive

Aurora, Ontario, CANADA L4G 7A9
	 	 	 	 	 
	 	 	Fax:	 	905-726-2095
	 	 	Attention:	 	General Counsel

	(c)
	if
to a Meadows Guarantor, at: 

P.O. Box 499

Meadow Lands

Pennsylvania 1543 

	 
	 	 
	 	 

	 	 	Fax:	 	724-229-7578
	 	 	Attention:	 	President

88

 

	(d)
	if
to the Remington Guarantor, at: 

One
Remington Place

Oklahoma City

Oklahoma 73111 

	 
	 	 
	 	 

	 	 	Fax:	 	405-425-3297
	 	 	Attention:	 	General Manager

	(e)
	if
to the Palm Meadows Guarantor, at: 

Palm
Meadows Thoroughbred Training Facility

8898 Lyons Road

Boynton Beach, FL 33437 USA 

	 
	 	 
	 	 

	 	 	Fax:	 	561.731.3905
	 	 	Attention:	 	Chief Financial Officer
	 	 	 	 	 
	 	 	in each case, with a copy to:
	 	 	 	 	 
	 	 	Magna Entertainment Corp.

337 Magna Drive

Aurora, Ontario

L4G 7K1
	 	 	 	 	 
	 	 	Attention:	 	Legal Department
	 	 	Fax:	 	905-726-7448

        Any
notice or communication which may or is required to be given or made shall be made or given as herein provided or to such other address or in care of such other officer as a party
may from time to time advise to the other parties hereto by notice in writing as aforesaid. The date of receipt of any such notice shall be the date of delivery of such notice if served personally or,
if mailed as aforesaid, shall be deemed to be the fifth (5th) Business Day next following the date of such mailing. If at the date of any such mailing or on or before the third (3rd) Business Day
thereafter there is a general interruption in the operation of the postal service in the United States of America which does or is likely to delay delivery by mail of such notice, to the extent
possible, shall be served personally. 

89

 

10.7 Further Assurances  

        Whether
before or after the happening of an Event of Default, the Borrower and each Guarantor shall at its own expense do, make, execute or deliver, or cause to be done, made, executed
or delivered by its Subsidiaries or other Persons, all such further acts, documents and things in connection with the 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 any 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 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. 

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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, a Guarantor or MEC hereunder or required under the Loan Documents or requested by the Lender to preserve, protect, maintain
or enforce the Loan, any of the Properties and/or The Meadows Property or any other Collateral, and which the Borrower, a Guarantor or MEC 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
and/or The Meadows Property or any other Collateral. Any payment made or other action taken by the Lender pursuant to this Section shall be without prejudice to any right to assert an Event of Default
hereunder and to pursue the Lender's other rights and remedies with respect thereto. 

10.11 Forbearance by the Lender Not a Waiver  

        Any forbearance by the Lender in exercising any right or remedy under any of the 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 Loan, nor shall the Lender's receipt of any awards, proceeds or damages operate to
cure or waive the Borrower's, any of the Guarantors' or MEC's 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. 

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10.13 Relationship and Indemnity  

        The relationship between the Lender and the Borrower, the Guarantors and MEC 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. 

        To
the fullest extent permitted by law, the Borrower and the Guarantors hereby agree to indemnify, protect, hold harmless and defend the Lender, its successors, assigns and members,
shareholders, directors, officers, employees, and agents from and against any and all losses, damages, costs, expenses (including reasonable attorneys' fees (including, but not limited to, all
appellate level and post-judgment proceedings)), claims, proceedings, penalties, fines and other sanctions arising from or relating to the transactions contemplated by this Agreement and
the other Loan Documents, and which arise out of or relate to (a) environmental matters, (b) breach by the Borrower and/or the Guarantors of any of their respective representations,
warranties or covenants set forth in this Agreement and the other Loan Documents, (c) any acts or omissions of the Borrower and/or the Guarantors or any agent or contractor thereof, and
(d) the business of the Borrower and/or the Guarantors. Upon written request by an indemnitee, the Borrower and the Guarantors will undertake, at their own costs and expense, on behalf of such
indemnitee, using counsel satisfactory to the indemnitee in such indemnitee's reasonable discretion, the defense of any legal action or proceeding whether or not such indemnitee shall be a party and
for which such indemnitee is entitled to be indemnified pursuant to this Section. At the Lender's option, the Lender may, at the Borrower's and/or the Guarantors' expense, prosecute or defend any
action involving the priority, validity or enforceability of the Mortgages. The obligations of the Borrower and the Guarantors under this Section 10.13 shall survive the payment and performance
of the Indebtedness, liabilities and obligations of the Borrower and the Guarantors under, and the termination and release by the Lender of, this Agreement and the other Loan Documents. 

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 Florida and consents to the jurisdiction of the state and
federal courts where any of the Properties is 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 portion of the real
property included in any of the Properties is located or in the United States District Court having jurisdiction over all or any portion of the real property included in any of the Properties. 

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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 ACKNOWLEDGE 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, MEC and the
Lender. All prior discussions, negotiations and agreements are of no further force and effect. This Agreement can be modified only in writing executed by all parties and the written agreement may not
be contradicted by any evidence of any alleged oral agreement. 

10.18 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, any of the Guarantors or MEC). 

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, the Guarantors and MEC 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. 

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   10.20 Appointment of Administrative Agent

        The
Lender may, at its discretion, following written notice to the Borrower, appoint and authorize an administrative agent (an "Administrative
Agent") to act as its agent hereunder and under the other Loan Documents with such powers as are expressly delegated to such Administrative Agent by the terms of such
appointment, together with such other powers as are reasonably incidental thereto but subject always to the terms of this Agreement. Any such Administrative Agent may resign at any time by giving
10 days' prior written notice thereof to the Borrower and the Lender, and the Administrative Agent may be removed at any time with or without cause by the Lender. Upon any such resignation or
removal, the Lender shall have the right to appoint a successor Administrative Agent. 

10.21 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. 

10.22 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. 

10.23 Contribution by Guarantors with Respect to Indebtedness

        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 Indebtedness 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 Indebtedness, 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. 

        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. 

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        This
Section 10.23 is intended only to define the relative rights of the Guarantors, and nothing set forth in this Section 10.23 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 10.23 shall be exercisable only upon the full and irrevocable payment of the Indebtedness in
cash and the termination of this Agreement, including, without limitation, the termination of the Loan commitment hereunder. 

        All
references in this Section 10.23 to a Guarantor or the Guarantors shall be deemed to include MEC. 

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

        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 10.23, 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. 

10.25 Loss of Gulfstream Note

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

10.26 Acknowledgment

        THE
BORROWER AND EACH GUARANTOR ACKNOWLEDGE THAT THEY HAVE THOROUGHLY READ AND REVIEWED THE TERMS AND PROVISIONS OF THIS AGREEMENT, THE ATTACHED SCHEDULES AND THE LOAN DOCUMENTS AND ARE
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 HAVE HAD FULL BENEFIT AND ADVICE OF COUNSEL OF THEIR SELECTION IN REGARD TO UNDERSTANDING THE TERMS,
MEANING, AND EFFECTS OF THIS AGREEMENT. THE BORROWER AND EACH GUARANTOR FURTHER ACKNOWLEDGE THAT THEIR 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 HAVE RELIED ON NO OTHER REPRESENTATIONS, EITHER WRITTEN OR ORAL, EXPRESS OR
IMPLIED, MADE TO THEM 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 HAS BEEN ACTUAL AND
ADEQUATE. 

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10.27 Certain Provisions Relating to The Meadows Guarantors

        To
the extent that the provisions set forth herein amend the rights and obligations of The Meadows Guarantor from those set forth in the Original Loan Agreement, such amendments will not
be operative unless approved by The State Harness Racing Commission of Pennsylvania under 58 Pa. Code Section 185.22; provided, however, that the obligations of The Meadows Guarantors
set forth in the Original Loan Agreement shall continue in full force and effect until such approval is obtained. 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. 

10.28 Operation of Agreement Relating to the Remington Guarantor

        The
provisions of this Agreement with respect to the Remington Guarantor and its execution of this Agreement, and the Security provided by the Remington Guarantor will not be operative
or effective unless and until it has obtained the Remington Loan OHRC Approval. The Remington Guarantor covenants that it will promptly seek such approval, and further covenants that it will not take
any act (or omit to take any act) that disqualifies it from applying, obtaining, maintaining or receiving a license under the Oklahoma Race Horsing
Act and the terms of the Order granting Conditional Organizational Licenses for 2005 or related regulations as in effect from time to time. 

96

 

        IN
WITNESS WHEREOF, the parties hereto have executed this Agreement or have caused the same to be executed by their duly authorized representatives as of the date first above written. 

	 	 	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.
	

 	
 	

 	

 
	 	 	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.
	

 	
 	

 	

 
	 	 	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.
	

 	
 	

 	

 
	 	 	 	 

97

 

	 	 	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.
	

 	
 	

 	

 
	 	 	REMINGTON PARK, 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.
	

 	
 	

 	

 
	 	 	 	 

98

 

	 	 	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

99

QuickLinks

AMENDED AND RESTATED LOAN AGREEMENT (Reconstruction of Gulfstream Park, Florida)

TABLE OF CONTENTS

AMENDED AND RESTATED LOAN AGREEMENT

ARTICLE 1 ARTICLE DEFINITIONS

ARTICLE 2 THE LOAN

ARTICLE 3 PAYMENTS AND INTEREST

ARTICLE 4 ADVANCES UNDER THE LOAN

ARTICLE 5 SECURITY FOR LOAN

ARTICLE 6 REPRESENTATIONS AND WARRANTIES

ARTICLE 7 AFFIRMATIVE COVENANTS

ARTICLE 8 NEGATIVE COVENANTS

ARTICLE 9 EVENTS OF DEFAULT; ACCELERATION OF INDEBTEDNESS

ARTICLE 10 MISCELLANEOUS

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