Document:

Exhibit 10.1

 

SUBSCRIPTION AGREEMENT

TO:                                                                            Magna Entertainment Corp. (the “Company”)

RE:                                                                              Subscription for Class A Subordinate Voting
Stock

Date:                                                                    September 13, 2007

1.                                       Fair Enterprise Limited (the “Subscriber”) hereby irrevocably subscribes for (the “Subscription”) and agrees to purchase from the Company
shares (the “Shares”) of Class A Subordinate
Voting Stock of the Company, par value of US$0.01 per share (“Class A Stock”), with an aggregate purchase price of
US$20,000,000 (the “Purchase Price”).  The
number of Shares issuable to the Subscriber, and, therefore, the purchase price
of each Share, will be determined by dividing US$20,000,000 by the greater
of:  (i) 90% of the volume weighted
average price of Class A Stock on NASDAQ for the consecutive five trading day
period, commencing on the first full day of trading of Class A Stock on NASDAQ
immediately following the public disclosure of the Subscription and the Company’s
restructuring plan (the “Plan”)
and (ii) US$1.91, being 100% of the volume weighted average price of Class A
Stock on NASDAQ for the five trading days of Class A Stock on NASDAQ
immediately prior to the public disclosure of the Subscription and the
Plan.  In the event that the number of
shares issuable to the Subscriber would result in the issuance of a fractional
Share, the Company reserves the right to round down such number of Shares
issuable to the Subscriber to the closest full Share.

2.                                       Following receipt by the Subscriber of the
notice provided for in Section 5 below, the Subscriber shall promptly pay the
full amount of the Purchase Price in cash or by wire transfer of immediately
available funds to an account in the United States designated in writing by the
Company.  Upon payment by the Subscriber
of the Purchase Price, the Company shall promptly deliver certificates
evidencing the Shares to the Subscriber.

3.                                       By executing this Subscription Agreement, the
Subscriber represents and warrants to the Company (and acknowledges that the
Company is relying thereon) that:

(a)                                  the execution, delivery and performance of
this Subscription Agreement by the Subscriber has been duly authorized by all
necessary corporate action, and the Subscriber has full power and authority to
enter into this Subscription Agreement and to perform its obligations
hereunder.  This Subscription Agreement
constitutes the valid and legally binding obligation of the Subscriber and is
enforceable against the Subscriber in accordance with its terms, except as may
be limited by bankruptcy, insolvency or other laws affecting the enforcement of
creditors’ rights 

   
 

generally
and subject to the qualification that equitable remedies may only be granted in
the discretion of a court of competent jurisdiction;

(b)                                 it is authorized to consummate the purchase
of the Shares;

(c)                                  it understands and acknowledges that the
Shares have not been and will not be registered under the United States
Securities Act of 1933, as amended (the “U.S. Securities Act”),
or any state securities laws, and that the offer and sale of Securities to it
is being made in reliance on a private placement exemption available under the
U.S. Securities Act;

(d)                                 it is acquiring the Shares for its own
account and it is not acquiring the Shares with a view to any resale,
distribution or other disposition of the Shares in violation of United States
federal or applicable state securities laws;

(e)                                  it understands that the Shares are “restricted
securities” within the meaning of Rule 144(a)(3) under the U.S. Securities
Act and that if it decides to offer, sell, pledge or otherwise transfer any of
the Shares, such Shares may be offered, sold, pledged or otherwise transferred
only in transactions that are either registered under an effective registration
statement under the U.S. Securities Act or exempt from or not subject to
registration under the U.S. Securities Act, and in each case in accordance with
any applicable securities laws of any state of the United States and upon the
provision of a legal opinion of counsel of recognized standing, satisfactory to
the Company, acting reasonably, to the effect that the sale of such Shares is
not required to be registered under the U.S. Securities Act;

(f)                                    it understands and acknowledges that the
certificate representing the Shares sold, and all certificates issued in
exchange for or in substitution of such certificate, will bear the following
legend (together with the additional legend required by the Toronto Stock
Exchange) upon the original issuance of the Shares and until the legend is no
longer required under applicable requirements of the U.S. Securities Act:

THIS
SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT
BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT FILED UNDER SAID ACT AND ANY APPLICABLE STATE
SECURITIES LAWS, EXCEPT FOR TRANSACTIONS THAT ARE EXEMPT FROM OR NOT SUBJECT TO
SUCH REGISTRATION REQUIREMENTS.  A LEGAL
OPINION OF COUNSEL WITH RESPECT TO SUCH EXEMPTION MUST BE DELIVERED BY THE
SECURITY HOLDER.

 2
 

(g)                                 it has had access to
such information and has had the opportunity to ask questions of, and receive
answers from, the officers of the Company concerning the Company and its subsidiaries as it has
considered necessary in connection with its investment decision to acquire the
Shares;

(h)                                 it is a resident of Jersey and the address
stated below its signature is its principal place of business;

(i)                                     it is permitted under the laws of Jersey to
acquire the Shares without the Company being required to take any action to
register or qualify the offer or sale of the Shares under such laws, or file
any notice or take any other proceeding under such laws, or become subject to
any periodic reporting or continuous disclosure obligations under such laws;

(j)                                     it acknowledges that it has not been advised by
the Company of any tax consequences of any jurisdiction, if any, of owning,
holding or disposing of the Shares and it has been advised to, and has had the
opportunity to, obtain independent advice in that regard;

(k)                                  the jurisdiction in which the undersigned
Subscriber received and accepted the offer to purchase the Shares is the
address stated below its signature; and

(l)                                     it has such knowledge and experience in
financial and business matters as to be capable of evaluating the merits and
risks of its investment in the Shares and is able to bear the economic risks
of, and withstand the complete loss of, such investment.

4.                                       By executing this Subscription Agreement, the
Company represents and warrants to the Subscriber (and acknowledges that the
Subscriber is relying thereon) that:

(a)                                  the Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware.  The Certificate of
Incorporation of the Company in effect at the time the Shares are purchased
authorizes the Company to issue up to 310,000,000 shares of Class A Stock, of
which, as of the date hereof, 49,259,999  shares of
Class A Stock are issued and outstanding;

(b)                                 the Company has adopted the Plan and has
arranged, conditional upon the Subscription and certain other requirements, $80
million of bridge financing from MID Islandi sf., acting through its Zug
Branch;

(c)                                  the execution, delivery and performance of
this Subscription Agreement by the Company has been duly authorized by all
necessary corporate action, and the Company has full power and authority to
enter into this Subscription Agreement and to perform its obligations
hereunder.  This Subscription Agreement
constitutes the valid and legally binding obligation of the Company and is
enforceable against the Company in 

 3
 

accordance
with its terms, except as may be limited by bankruptcy, insolvency or other
laws affecting the enforcement of creditors’ rights generally and subject to
the qualification that equitable remedies may only be granted in the discretion
of a court of competent jurisdiction;

(d)                                 except as set forth in Schedule A attached
hereto:  (i) no consents, authorizations,
approvals or further documentation of any kind whatsoever is required to be
obtained by the Company from, or provided by the Company or (ii) no filings of
any kind whatsoever is required to be provided by the Company to any person or
governmental/regulatory body in connection with (A) the execution, delivery or
performance of this Subscription Agreement by the Company or (B) the issuance
of the Shares to the Subscriber;

(e)                                  the execution and delivery of this
Subscription Agreement by the Company and the performance by the Company of its
obligations hereunder do not and will not contravene or breach the certificate
of incorporation or by-laws of the Company;

(f)                                    the offer and sale of Securities by it is
being made in reliance on a private placement exemption available under the
U.S. Securities Act;

(g)                                 the Shares, when issued in accordance with
the terms of this Subscription Agreement, will be validly issued, fully paid
and non-assessable; and

(h)                                 the Company’s annual report on Form 10-K for
the fiscal year ended December 31, 2006, filed with the U.S. Securities and
Exchange Commission (the “Commission”) on
March 28, 2007, and all documents filed with the Commission thereafter (the “Disclosure Documents”), when they became effective or were
filed with the Commission, as the case may be, conformed in all material
respects to the requirements of the U.S. Securities Act or the U.S. Securities
Exchange Act of 1934 (the “Exchange Act”),
as applicable, and the rules and regulations of the Commission thereunder, and
such documents, when they became effective or were so filed, as the case may
be, in the case of a registration statement which became effective under the
Securities Act, did not contain an untrue statement of a material fact required
to be stated therein, or in the case of other documents filed under the U.S.
Securities Act or the Exchange Act, did not contain an untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.

5.                                       The Company covenants that, it shall prepare,
file and diligently pursue all necessary consents, approvals and
authorizations, and make such necessary filings, as are required to be obtained
under applicable law with respect to this Subscription Agreement or the
transactions contemplated hereby, all as outlined in Section 4(d) above.  The Subscriber covenants that it shall
cooperate with the 

 4
 

Company
and make all commercially reasonable efforts to obtain such consents,
approvals, authorizations or make such filings. The Company and the Subscriber
further agree that their respective obligations to issue the Shares and pay the
Purchase Price shall be conditional upon the execution and delivery by the
Company and MID Islandi sf., acting through its Zug Branch, of the loan
agreement documenting the bridge financing that is to be provided to facilitate
the implementation of the Plan.  At such
time as (i) all such consents, approvals and authorizations have been obtained
by the Company and all such filings have been made by the Company and (ii) the
execution and delivery of the loan agreement documenting the bridge financing
as contemplated in the preceding sentence has occurred, the Company shall
promptly notify the Subscriber of same.

6.                                       Each party hereto acknowledges that the
representations, warranties and agreements made by it herein are made with the
intention that they may be relied upon by the other party. The parties further
agree that the representations, warranties and agreements shall survive the
purchase and sale of the Shares and shall continue in full force and effect
notwithstanding any subsequent disposition by the Subscriber of the
Shares.  This Subscription Agreement
shall be binding upon and shall inure to the benefit of the parties hereto,
their respective successors, assigns and legal representatives.

7.                                       The Subscriber acknowledges that the Company
shall publicly disclose the Subscription and the material terms of this
Subscription Agreement contemporaneously with 
or promptly following its execution. 
The Subscriber irrevocably authorizes the Company, to the extent legally
required to do so, to publicly file this Subscription Agreement with any
securities regulatory authority and to produce this Subscription Agreement or a
copy hereof to any interested party in any administrative or legal proceeding
or official inquiry with respect to the matters covered hereby.

8.                                       This Subscription Agreement is made under and
shall be governed by and construed in accordance with the laws of the State of
New York without giving effect to any principles of conflicts of law thereof
which would result in the application of the laws of any other
jurisdiction.  The parties each hereby
consents to the non-exclusive jurisdiction of the state courts of New York and
the United States District Court for the Southern District of New York.  Accordingly, with respect to any such court
action, each party (a) submits to the personal jurisdiction of such courts; (b)
consents to service of process; and (c) waives any other requirement (whether
imposed by statute, rule of court, or otherwise) with respect to personal
jurisdiction or service of process.

9.                                       This Subscription Agreement may be executed
in two or more counterparts, all of which taken together shall constitute one
instrument.  The parties shall be
entitled to rely on delivery of a facsimile copy of this Subscription
Agreement, and acceptance by the Company of a facsimile copy of this
Subscription Agreement and execution thereby shall create a legal, valid and
binding agreement between the undersigned and the Company in accordance with the
terms hereof.

 5
 

10.                                 All notices, requests, demands and other
communications hereunder shall be in writing and shall be delivered in person
or transmitted by facsimile transmission or similar means of recorded
electronic communication addressed as follows:

If to Magna Entertainment Corp.:

	
  

  	
  Magna Entertainment Corp.

  
	
   

  	
  337 Magna Drive

  
	
   

  	
  Aurora, Ontario
  L4G 7K1

  
	
   

  	
  Attention:

  	
  William G. Ford, Senior Legal Counsel

  
	
   

  	
  Fax No.:

  	
  (905) 726-7448

  
	
   

  	
   

  	
   

  
	
   

  	
  with a copy to:

  
	
   

  	
   

  
	
   

  	
  Osler, Hoskin
  & Harcourt LLP

  
	
   

  	
  1 First Canadian
  Place

  
	
   

  	
  Toronto, Ontario
  M5X 1B8

  
	
   

  	
   

  
	
   

  	
  Attention:

  	
  Jean Fraser

  
	
   

  	
  Fax No.:

  	
  (416) 362-2111

  
	
   

  	
   

  	
   

  
	
  If
  to Fair Enterprise Limited:

  
	
   

  	
   

  	
   

  
	
   

  	
  c/o
  EFG Trust Company Limited

  
	
   

  	
  P.O. Box 641

  
	
   

  	
  1 Seaton Place

  
	
   

  	
  St. Helier

  
	
   

  	
  Jersey JE4 8YJ

  
	
   

  	
   

  
	
   

  	
  Attention:

  	
  Jennifer
  Le Chevalier

  
	
   

  	
  Fax No.:

  	
  44
  4534 605605

  
	
   

  	
   

  	
   

  
	
   

  	
  with a copy to:

  
	
   

  	
   

  
	
   

  	
  Miller Thomson LLP

  
	
   

  	
  Barristers &
  Solicitors

  
	
   

  	
  Suite 5800

  
	
   

  	
  40 King Street West

  
	
   

  	
  Toronto, Ontario  M5H 3S1

  
	
   

  	
   

  
	
   

  	
  Attention:

  	
  John
  M. Campbell

  
	
   

  	
  Fax No.:

  	
  (416) 595-8695

  

 

11.                               This Subscription Agreement constitutes the entire agreement between
the Subscriber and the Company and supersedes any prior understandings,
agreements or representations by or between the Subscriber and the Company with
respect to the subject matter hereof.

 6
 

12.                                 This Subscription Agreement may not be
changed, and any of the terms, covenants, representations, warranties and
conditions cannot be waived, except pursuant to an instrument in writing signed
by the Company and the Subscriber or, in the case of a waiver, by the party
waiving compliance.

13.                                 If
any term, provision, agreement, covenant or restriction of this Subscription
Agreement is held by a court of competent jurisdiction or other authority
to  be invalid, void or unenforceable,
the remainder of the terms, provisions, agreements, covenants and restrictions
of this Subscription Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party hereto. 
Upon such a determination, the parties shall negotiate in good faith to
modify this Subscription Agreement so as to effect the original intent of the
parties as closely as possible in a 
reasonably acceptable manner in order that the transactions contemplated
hereby may be consummated as originally contemplated to the fullest extent
possible.

14.                                 All
reasonable fees, expenses and closing costs incurred by the Subscriber in
connection with the Subscription, including legal, accounting and other
professional fees, expenses and closing costs shall be for the account of the
Company, and shall be paid by the Company to the Subscriber promptly following
receipt of an invoice therefor.

 7
 

15.                                 Accepted
and agreed to this          day of
September, 2007.

	
  

  	
  SUBSCRIBER:

  
	
   

  	
   

  
	
   

  	
  FAIR ENTERPRISE LIMITED

  

 

	
  By: 

  	
            /s/
  Jennifer Le Chevalier

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
  Address:

  	
  Fair Enterprise Limited 

  c/o EFG Trust Company 

  Limited 

  P.O. Box 641 

  1 Seaton Place St. Helier 

  Jersey JE4 8YJ 

  Attn: Jennifer Le Chevalier

  
				

 

 

	
  

  	
  COMPANY:

  
	
   

  	
   

  
	
   

  	
  MAGNA ENTERTAINMENT CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
  By: 

  	
            /s/
  Blake Tohana

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
  By: 

  	
            /s/
  William Ford

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
				

 

 8

Exhibit A

Consents, Authorizations, Approvals, Further Documentation and Filings

1.                                       Nasdaq:  Notification Form:  Change in the Number of Shares Outstanding
Required to be filed no later than ten calendar days after issuance of the
Shares.

2.                                       U.S. Securities and Exchange Commission:  Filing of 
Form 8-K within four business days of execution of Subscription
Agreement pursuant to Item 1.01 Entry into a Material Definitive Agreement and
Item 3.02 Unregistered Sales of Equity Securities.  A copy of the Subscription Agreement will be
filed as an exhibit.  The same Form 8-K
will contain a copy of the press release announcing entry into the Subscription
Agreement, in satisfaction of the Company’s obligations under Regulation FD.

3.                                       Toronto Stock Exchange:  Notification to the Toronto Stock Exchange
(the “TSX”) of a transaction involving the issuance of securities and
requesting acceptance of the notice for filing and requesting the additional
listing of securities, accompanied by Form 11 “Private Placement — Regular
Filing”;  application for exemption from
the securityholder approval requirements of Section 604 of the TSX Company
Manual and issuance of press release as required thereby at least 5 business
days prior to closing; and notification to the TSX on Form 1 “Change in
Outstanding and Reserved Securities” within 10 days after the end of the month
in which the closing occurs.

4.                                       Canadian Securities Commissions:  Filing of Material Change Report and related
press release forthwith, together with filing of the Subscription Agreement as
a material contract.

5.                                       Racing and Gaming Authorities:

Pre-Issuance
Approvals

Oklahoma
Horse Racing Commission

Texas Racing Commission

Post-Issuance
Approvals

Pennsylvania Harness Racing
Commission (notification within 10 calendar days of issuance)

Notifications

Florida
Division of Pari-Mutuel Wagering (within 20 calendar days of issuance)

Nevada Gaming Control Board (within 5
business days of SEC filing)Exhibit 10.2

MAGNA ENTERTAINMENT CORP.

as Borrower

— and —

THE GUARANTORS SET FORTH

ON THE SIGNATURE PAGES HEREOF

as Guarantors

— and —

MID ISLANDI SF., ACTING

THROUGH ITS ZUG BRANCH

as Lender

BRIDGE LOAN AGREEMENT

Dated as of September 12, 2007

TABLE OF CONTENTS

ARTICLE 1

INTERPRETATION

	
  1.1

  	
  Definitions

  	
   

  	
  3

  
	
  1.2

  	
  Gender and Number

  	
   

  	
  20

  
	
  1.3

  	
  Invalidity, etc.

  	
   

  	
  20

  
	
  1.4

  	
  Headings, etc.

  	
   

  	
  20

  
	
  1.5

  	
  Governing Law

  	
   

  	
  20

  
	
  1.6

  	
  Attornment

  	
   

  	
  20

  
	
  1.7

  	
  Judgment Currency

  	
   

  	
  20

  
	
  1.8

  	
  References

  	
   

  	
  20

  
	
  1.9

  	
  Currency

  	
   

  	
  21

  
	
  1.10

  	
  This Agreement to Govern

  	
   

  	
  21

  
	
  1.11

  	
  Generally Accepted Accounting Principles

  	
   

  	
  21

  
	
  1.12

  	
  Computation of Time Periods

  	
   

  	
  21

  
	
  1.13

  	
  Actions on Days Other Than Banking Days

  	
   

  	
  21

  
	
  1.14

  	
  Oral Instructions

  	
   

  	
  21

  
	
  1.15

  	
  Incorporation of Schedules

  	
   

  	
  21

  
	
   

  	
  ARTICLE
  2

  BRIDGE LOAN

  	
   

  	
   

  
	
  2.1

  	
  Establishment of Bridge Loan

  	
   

  	
  22

  
	
  2.2

  	
  Non-Revolving Nature of Bridge Loan

  	
   

  	
  22

  
	
  2.3

  	
  Pre-Payment

  	
   

  	
  22

  
	
  2.4

  	
  Mandatory Repayment

  	
   

  	
  22

  
	
  2.5

  	
  Voluntary Reduction in Aggregate Commitment

  	
   

  	
  23

  
	
   

  	
  ARTICLE
  3

  GENERAL PROVISIONS RELATING TO THE BRIDGE LOAN

  	
   

  	
   

  
	
  3.1

  	
  Advances

  	
   

  	
  24

  
	
  3.2

  	
  Payments Generally

  	
   

  	
  24

  
	
  3.3

  	
  Illegality

  	
   

  	
  24

  
	
  3.4

  	
  Indemnity

  	
   

  	
  24

  
	
  3.5

  	
  Proceedings in Respect of Claims

  	
   

  	
  25

  
	
  3.6

  	
  Evidence of Indebtedness

  	
   

  	
  26

  
	
   

  	
  ARTICLE
  4

  INTEREST AND FEES

  	
   

  	
   

  
	
  4.1

  	
  Interest Rate

  	
   

  	
  27

  
	
  4.2

  	
  Calculation and Payment of Interest

  	
   

  	
  28

  
	
  4.3

  	
  Fees

  	
   

  	
  28

  
	
  4.4

  	
  Payment of Costs and Expenses

  	
   

  	
  28

  
	
   

  	
  ARTICLE
  5

  REPRESENTATIONS AND WARRANTIES

  	
   

  	
   

  
	
  5.1

  	
  Representations and Warranties

  	
   

  	
  30

  
	
  5.2

  	
  Survival of Representations and Warranties

  	
   

  	
  39

  
	
   

  	
  ARTICLE
  6

  COVENANTS

  	
   

  	
   

  
	
  6.1

  	
  Affirmative Covenants

  	
   

  	
  40

  

 

 

	
  6.2

  	
  Negative Covenants

  	
   

  	
  47

  
	
  6.3

  	
  Environmental Matters

  	
   

  	
  51

  
	
   

  	
  ARTICLE
  7

  CONDITIONS PRECEDENT

  	
   

  	
   

  
	
  7.1

  	
  Conditions Precedent to Closing

  	
   

  	
  52

  
	
  7.2

  	
  Conditions Precedent to Advances

  	
   

  	
  53

  
	
   

  	
   

  	
   

  	
   

  
	
  8.1

  	
  Events of Default

  	
   

  	
  62

  
	
  8.2

  	
  Remedies Upon Default

  	
   

  	
  64

  
	
  8.3

  	
  Distributions

  	
   

  	
  64

  
	
   

  	
  ARTICLE
  9

  GENERAL

  	
   

  	
   

  
	
  9.1

  	
  Reliance and Non-Merger

  	
   

  	
  64

  
	
  9.2

  	
  Confidentiality

  	
   

  	
  64

  
	
  9.3

  	
  No Set-Off

  	
   

  	
  65

  
	
  9.4

  	
  Employment of Experts

  	
   

  	
  65

  
	
  9.5

  	
  Reliance by Lender

  	
   

  	
  65

  
	
  9.6

  	
  Notices

  	
   

  	
  65

  
	
  9.7

  	
  Further Assurances

  	
   

  	
  68

  
	
  9.8

  	
  Assignment

  	
   

  	
  68

  
	
  9.9

  	
  Disclosure of Information to Potential Permitted
  Lender Assignees

  	
   

  	
  68

  
	
  9.10

  	
  Right to Cure

  	
   

  	
  68

  
	
  9.11

  	
  Forbearance by the Lender Not a Waiver

  	
   

  	
  68

  
	
  9.12

  	
  Waiver of Statute of Limitations and Other Defenses

  	
   

  	
  69

  
	
  9.13

  	
  Relationship

  	
   

  	
  69

  
	
  9.14

  	
  Time of Essence

  	
   

  	
  69

  
	
  9.15

  	
  Service of Process/Venue

  	
   

  	
  69

  
	
  9.16

  	
  Jury Trial Waiver

  	
   

  	
  69

  
	
  9.17

  	
  Final Agreement/Modification

  	
   

  	
  70

  
	
  9.18

  	
  Continuing Agreement

  	
   

  	
  70

  
	
  9.19

  	
  No Third Party Beneficiaries

  	
   

  	
  70

  
	
  9.20

  	
  No Brokers

  	
   

  	
  70

  
	
  9.21

  	
  Execution in Counterparts

  	
   

  	
  70

  
	
  9.22

  	
  Contribution by Guarantors with Respect to
  Obligations.

  	
   

  	
  70

  
	
  9.23

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

  	
   

  	
  71

  
	
  9.24

  	
  Loss of Borrower Note

  	
   

  	
  71

  
	
  9.25

  	
  Acknowledgment

  	
   

  	
  71

  
	
  SCHEDULE
  A — Borrowing Notice

  	
   

  	
   

  
	
  SCHEDULE
  B — Properties and Prior Mortgages

  	
   

  	
   

  
	
  SCHEDULE
  C — Environmental Reports

  	
   

  	
   

  

 

LOAN AGREEMENT

THIS AGREEMENT made as of the 12th day
of September, 2007.

BETWEEN:

MAGNA
ENTERTAINMENT CORP.,

a corporation incorporated under
the laws of the State of Delaware

(hereinafter called the “Borrower”),

OF THE FIRST PART,

- and -

MID ISLANDI SF.,

a
partnership formed under the laws of Iceland,

acting through its Zug branch

(hereinafter called the “Lender”),

OF THE SECOND PART,

- and -

PACIFIC RACING
ASSOCIATION,

a corporation incorporated under
the laws of the State of California

- and -

MEC LAND
HOLDINGS (CALIFORNIA) INC.,

a corporation incorporated under
the laws of the State of California

(hereinafter
collectively called the “Golden Gate

Fields
Guarantors”),

OF THE THIRD PART,

- and -

THE SANTA ANITA
COMPANIES, INC.,

a corporation incorporated under
the laws of the State of Delaware

- and -

 1
 

LOS ANGELES TURF
CLUB, INCORPORATED,

a corporation incorporated under
the laws of the State of California

(hereinafter
collectively called the “Santa Anita

Guarantors”),

OF THE FOURTH PART,

- and -

GULFSTREAM PARK
RACING ASSOCIATION, INC.

a corporation incorporated under
the laws of the State of Florida

(hereinafter called the “Gulfstream Guarantor”),

OF THE FIFTH PART,

- and -

GPRA
THOROUGHBRED TRAINING CENTER INC.,

a corporation incorporated under
the laws of the State of Delaware

(hereinafter
called the “Palm Meadows Training

Guarantor”),

OF THE SIXTH PART,

- and -

MEC
DIXON, INC.,

a corporation incorporated under
the laws of the State of Delaware

(hereinafter called the “Dixon Guarantor”),

OF THE SEVENTH PART,

- and -

MEC HOLDINGS
(USA) INC.

a corporation incorporated under
the laws of the State of Delaware

- and —

 2
 

SUNSHINE MEADOWS
RACING, INC.

a corporation incorporated under
the laws of the State of Delaware

(hereinafter collectively called the “Ocala Guarantors”),

OF THE EIGHTH PART,

- and -

THISTLEDOWN, INC.

a corporation incorporated under
the laws of the State of Ohio

(hereinafter called the “Thistledown Guarantor”),

OF THE NINTH PART,

- and -

MEC MARYLAND
INVESTMENTS INC.,

a corporation incorporated under
the laws of the State of Delaware

- and -

30000 MARYLAND
INVESTMENTS LLC,

a limited liability company
formed under the laws of the State of Delaware

(hereinafter
collectively called the “AmTote

Guarantors”),

OF THE TENTH PART.

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

ARTICLE 1

INTERPRETATION

1.1          Definitions

For the purposes of this Agreement:

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

 3
 

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

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

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

“Allocable Amount” has the
meaning ascribed thereto in Section 9.22;

“AmTote Guarantee Fee” has
the meaning ascribed thereto in Section 7.2(q)(lix);

“AmTote Guarantees and Indemnities”
has the meaning ascribed thereto in Section 7.2(q)(lix);

“AmTote Guarantors” means,
collectively, MEC Maryland Investments Inc. and 30000 Maryland
Investments LLC, and “AmTote Guarantor”
means any one of them;

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

“Approved Sales Contract”
means an agreement of purchase and sale between the Borrower and/or one or more
of its Subsidiaries, as vendor, and one or more other Persons, as purchaser, in
respect of the sale of any of the assets and/or real property of the Borrower
and/or its Subsidiaries (as applicable), provided that such contract shall
contemplate an anticipated closing date of no later than the Maturity Date, and
further provided that such contract shall be in form and substance (including,
without limitation, as to all conditions precedent contained therein)
satisfactory to the Lender in its sole and absolute discretion; for greater
certainty, this definition relates soley to Section 4.1(a) of this
Agreement;

“Assignment of Holdback Agreement”
has the meaning ascribed thereto in Section 7.2(q)(iv);

“Audited Financial Statements”
means the audited consolidated financial statements of the Borrower for the
Fiscal Year ended December 31, 2006;

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

“Blocked Persons List” has
the meaning ascribed thereto in Section 5.1(cc);

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

“BMO Credit Agreement”
means the amended and restated credit agreement made as of July 22, 2005
among the Borrower, as borrower, BMO, as agent and lender, and others, as has
been and may be further amended and restated from time to time, provided that
the principal amount outstanding at any time under the BMO Credit Agreement as
so amended or restated shall not exceed $60,000,000, and includes any renewal
or refinancing of any such 

 4
 

agreement or the indebtedness owing thereunder provided that the
principal amount of such renewed or refinanced indebtedness does not exceed
$60,000,000 and security therefor is not increased thereby;

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

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

“Borrower General Security Agreement”
has the meaning ascribed thereto in Section 7.2(q)(i);

“Borrower Restructuring Plan”
means the plan approved and adopted by the Borrower’s board of directors as of
the Closing Date to restructure the Borrower and its Subsidiaries and to revise
the business plan of the Borrower and its Subsidiaries, including any
amendments, revisions or modifications thereto (provided that any such
amendments, revisions or other modifications shall be in form, scope and terms
satisfactory to the Lender in its sole and absolute discretion);

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

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

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

“Borrower’s and Guarantors’ Local
Agents” means, collectively the Borrower’s and Guarantor’s
California Agent, the Borrower’s and Guarantor’s Florida Agent and the Borrower’s
and Guarantor’s New York Agent;

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

“Borrower Incorporation Documents”
has the meaning ascribed thereto in Section 5.1(i);

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

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

“Bridge Loan” means the
secured non-revolving bridge loan made available to the Borrower by the Lender
pursuant to Section 2.1;

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

“Capital Lease Obligations”
means the obligations of the Borrower or any Subsidiary to pay rent or other
amounts under a lease of (or other agreement conveying the right to use)
real or personal property, which obligations are 

 5
 

required to be classified and accounted for as a capital lease on a
balance sheet of such Person under GAAP and, for purposes of this Agreement,
the amount of such obligations shall in each case be the capitalized amount
thereof, determined in accordance with GAAP;

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

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

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

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

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

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

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

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

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

“Compliance Certificate”
has the meaning ascribed thereto in Section 6.1(l)(i);

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

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

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

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

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

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

 6
 

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

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

“Core Line of Business”
means the ownership or operation of racetracks and pari-mutuel wagering
activities, as described in the Form 10-K filed by the Borrower for the
year ended December 31, 2006, and including (i) thoroughbred and harness
horse racing, (ii) off-track betting facilities, (iii) account
wagering and other gaming activities including, without limitation, slot
machine and video lottery terminals, (iv) a racetrack and casino complex
in Austria, and (v) any food and beverage operations, sports bar
operations, content distribution, technology and media services, entertainment,
the ownership and management of real estate and/or other activities, associated
with or ancillary or related to (i), (ii), (iii) and/or (iv), above, including
the ownership or operation of horse training and boarding centres, arenas and
restaurants;

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

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

“Dixon First Assignment of Material
Agreements” has the meaning ascribed thereto in
Section 7.2(q)(xxxiv);

“Dixon First Assignment of Rents and
Leases” has the meaning ascribed thereto in
Section 7.2(q)(xxxiii);

“Dixon First General Security
Agreement” has the meaning ascribed thereto in
Section 7.2(q)(xxxv);

“Dixon First Mortgage” has
the meaning ascribed thereto in Section 7.2(q)(xxxii);

“Dixon Guarantee and Indemnity”
has the meaning ascribed thereto in Section 7.2(q)(lvi);

“Dixon Guarantee Fee” has
the meaning ascribed thereto in Section 7.2(q)(lvi);

“Dixon Property” means the
lands and premises designated as the Dixon Property in
Schedule B hereto;

“Dixon Property Environmental
Indemnity” has the meaning ascribed thereto in
Section 7.2(q)(xxxvi);

“Dixon Security” has the
meaning ascribed thereto in Section 7.2(q)(xxxv);

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

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

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

 7
 

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

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

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

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

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

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

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

(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:

 8
 

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

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

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

“Environmental Reports” has
the meaning ascribed thereto in Section 6.1(p);

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

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

“ESA” has the meaning
ascribed thereto in Section 6.1(p);

“Event of Default” has the
meaning attributed to such term in Section 8.1;

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

“Fair Enterprise Investment”
has the meaning ascribed thereto in Section 7.1(f);

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

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

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

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

 9
 

“Golden Gate Fields General Security
Agreement” has the meaning ascribed thereto in
Section 7.2(q)(xxiv);

“Golden Gate Fields Guarantee and
Indemnity” has the meaning ascribed thereto in
Section 7.2(q)(xxiv);

“Golden Gate Fields Guarantee Fee”
has the meaning ascribed thereto in Section 7.2(q)(lx);

“Golden Gate Fields Guarantors’
Environmental Indemnity” has the meaning ascribed thereto in
Section 7.2(q)(xxiv);

“Golden Gate Fields Property”
means the lands and premises designated as the Golden Gate Fields Property in
Schedule B hereto;

“Golden Gate Fields Second Mortgage”
has the meaning ascribed thereto in Section 7.2(q)(xvi);

“Golden Gate Fields Security”
has the meaning ascribed thereto in Section 7.2(q)(xix);

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

“Guarantor Incorporation Documents”
has the meaning ascribed thereto in Section 5.1(j);

“Guarantors” means,
collectively, (i) the Golden Gate Fields Guarantors, (ii) the Santa
Anita Guarantors, (iii) the Gulfstream Guarantor, (iv) the Palm Meadows
Training Guarantor, (v) the Dixon Guarantor, (vi) the Ocala
Guarantors, (vii) the Thistledown Guarantor and (viii) the AmTote
Guarantors, and, in the singular, any one of them;

“Guarantor Payment” has the
meaning ascribed thereto in Section 9.22;

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

“Gulfstream Guarantee and Indemnity”
has the meaning ascribed thereto in Section 7.2(q)(liv);

“Gulfstream Guarantee Fee”
has the meaning ascribed thereto in Section 7.2(q)(liv);

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

 10
 

“Holdback Agreement” means
the agreement dated November 14, 2006 between the Borrower and PA
Meadows, LLC in respect of certain holdback amounts arising in connection
with a stock purchase agreement dated November 8, 2005 between the
Borrower, as vendor, and PA Meadows, LLC, as purchaser;

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

“Indebtedness” has the
meaning ascribed thereto in Section 7.2(q);

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

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

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

“Interest Period” means a
period commencing, (i) in the case of the initial Interest Period for the
first Advance, on the date of such Advance; and (ii) in the case of any
subsequent Interest Period, on the last day of the immediately preceding
Interest Period and ending, in either case, on the 30th day of such period;

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

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

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

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

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

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

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

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

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

 11
 

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

“LIBOR” means the one-month
rate of interest per annum for deposits in US Dollars in the London interbank
market, calculated on the basis of a year of 360 days, equal to the
arithmetic mean of the rates which appear on the Telerate Page 3750 on the
Dow Jones Telerate Service (or any replacement page) as of
11:00 a.m. (London time) on the day which is two Banking Days prior to the
first day of the relevant Interest Period;

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

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

“Loan Amount” means the
maximum principal amount available under the Bridge Loan, as the same may be
reduced from time to time in accordance with the terms hereof;

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

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

“Maintenance Capital Expenditure”
has the meaning ascribed thereto in the definition of Capital Expenditure;

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

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

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

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

“Maturity Date” means
May 31, 2008;

“Mortgages” means,
collectively, the Golden Gate Fields Second Mortgage, the Santa Anita Third
Mortgage, the Ocala Second Mortgage, the Dixon First Mortgage and the
Thistledown First Mortgage; and, in the singular, any one of them;

“Mortgaged Properties”
means, collectively, the Golden Gate Fields Property, the Santa Anita Property,
the Ocala Property, the Dixon Property and the Thistledown Property, and, in
the singular, any one of them;

 12
 

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

“Note Assignment Agreement”
means the MEC assignment of Tranche A Junior Notes and Tranche B
Junior Notes made as of July 26, 2006 by the Borrower in favour of
the Lender, as amended to the date hereof;

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

“Ocala Guarantee and Indemnity”
has the meaning ascribed thereto in Section 7.2(q)(lvii);

“Ocala Guarantee Fee” has
the meaning ascribed thereto in Section 7.2(q)(xxiv);

“Ocala Guarantors” means,
collectively, MEC Holdings (USA) Inc., and Sunshine Meadows
Racing Inc., and “Ocala Guarantor”
means any one of them;

“Ocala Property” means the
lands and premises designated as the Ocala Property in
Schedule B hereto;

“Ocala Property Environmental
Indemnity” has the meaning ascribed thereto in
Section 7.2(q)(xxviii);

“Ocala Second Assignment of Material
Agreements” has the meaning ascribed thereto in
Section 7.2(q)(xxvi);

“Ocala Second Assignment of Rents and
Leases” has the meaning ascribed thereto in
Section 7.2(q)(xxv);

“Ocala Second General Security
Agreement” has the meaning ascribed thereto in
Section 7.2(q)(xxvii);

“Ocala Second Mortgage” has
the meaning ascribed thereto in Section 7.2(q)(xxiv);

“Ocala Security” has the
meaning ascribed thereto in Section 7.2(q)(xxvii);

“Occupancy Agreements” has
the meaning ascribed thereto in Section 5.1(nn);

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

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

“Organizational Documents”
has the meaning ascribed thereto in Section 5.1(j);

“Original Bridge Loan Agreement”
means the bridge loan agreement made as of July 22, 2005, among the
Borrower, as borrower, the Lender, as lender, and the guarantors specified
therein, as guarantors, as amended, which agreement was terminated as of
December 22, 2006 upon the full repayment of all amounts owing thereunder;

“Palm Meadows Training Guarantee and
Indemnity” has the meaning ascribed thereto in
Section 7.2(q)(lv);

“Palm Meadows Training Guarantee Fee”
has the meaning ascribed thereto in Section 7.2(q)(lv);

 13
 

“Permitted Debt” means
(i) the Bridge Loan; (ii) the Santa Anita Senior Facility;
(iii) the BMO Credit Agreement; (iv) the SunTrust Credit Agreement;
(v) the Remington Construction Loan Agreement; (vi) the Gulfstream
Construction Loan Agreement; (vii) indebtedness of GPRA Commercial
Enterprises Inc. relating to a loan agreement among, inter alia,
Keybank National Association, as principal lender, and The Village at
Gulfstream Park, LCC, as borrower, where such indebtedness is non-recourse to
the Borrower and the Gulfstream Guarantor and arises under the May 1, 2005
limited liability company agreement, as amended, by which The Village at
Gulfstream Park, LLC, was formed; (viii) indebtedness of MEC
Grundstucksentwicklungs GmbH and Fontana Betelligungs AG existing on the
date hereof; (ix) indebtedness of certain non-guarantor entities to
Mercantile-Safe Deposit and Trust existing on the date hereof; (x) the
lease between a non-guarantor entity and an entity associated with the City of
Grand Prairie, pursuant to which Lone Star Park is operated;
(xi) indebtedness owing under, and not exceeding the amounts permitted to
be outstanding under and secured by, Permitted Encumbrances and extensions,
renewals or replacements of any indebtedness permitted under this clause;
(xii) provided the principal amount of such indebtedness thereunder or
security therefor is not thereby increased beyond the original principal amount
of such indebtedness; (xiii) unsecured trade and other accounts payable
incurred in the ordinary course of business for the purpose of carrying on the
same including the “Construction”
(as defined in the Remington Construction Loan Agreement) and the “Reconstruction” (as defined in the
Gulfstream Construction Loan Agreement); (xiv) indebtedness under interest
rate or currency hedging agreements entered into for the purpose of managing
interest rate and currency risks of the Borrower or any of its Subsidiaries and
not for speculative purposes; (xv) indebtedness under letters of credit,
performance bonds, instalment insurance and insurance premium financing
contracts, and similar instruments in respect of land transfer tax claims, land
development charges, gaming permits and other obligations of the Borrower or
its Subsidiaries incurred in the ordinary course of business; (xvi) the
obligation to pay $18,312,650 plus accrued interest on the exercise of either
the put or call option for the remaining minority interest in The Maryland
Jockey Club; (xvii) the Subordinated Debt; (xviii) unsecured
intercompany indebtedness of the Borrower to any of its Subsidiaries or of any
of the Subsidiaries to the Borrower, provided that such unsecured intercompany
indebtedness is existing as of the date hereof or is entered into on customary
terms and in the ordinary course of the Borrower’s cash management activities
consistent with past practice; (xix) other obligations and indebtedness
(including Capital Lease Obligations (other than that listed in item (iv)
of this definition) and Contingent Liabilities, but excluding item (xiii)
listed in this definition) existing on the date hereof and relating to
Subsidiaries which are not Guarantors, and all of which are disclosed in the
Audited and Unaudited Financial Statements including the notes thereto, in the
aggregate amount of not more than $2,000,000 (which amount includes
indebtedness denominated in foreign currencies and is therefore subject to
fluctuation from time to time due to exchange rate fluctuations); and
(xx) other obligations and indebtedness (including Capital Lease
Obligations and Contingent Liabilities) of up to $5,000,000 in the aggregate,
provided that none of such other obligations and indebtedness is secured by any
of the Properties;

“Permitted Encumbrances”
means any:

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

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

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

 14
 

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

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

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

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

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

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

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

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

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

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

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

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

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

(xvii)       applicable municipal by-laws, development agreements, subdivision
agreements, site plan agreements, zoning laws and building restrictions which
do not in the aggregate materially adversely affect the current 

 15
 

use of the property affected thereby and provided that the same have
been complied with in all material respects;

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

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

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

(xxi)         the Liens granted pursuant to the Security;

(xxii)        any registered Lien existing as of
September 12, 2007 that is disclosed in the title insurance commitments
issued in respect of the Mortgaged Properties in connection with this
Agreement;

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

(xxiv)      Purchase Money Security Interests incurred after
the Closing Date in connection with the purchase of new assets permitted
hereunder up to an aggregate of $5,000,000; and

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

“Permitted Lender Assignee”
has the meaning ascribed thereto in Section 9.8;

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

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

“Pre-Payment Amount” has
the meaning ascribed thereto in Section 2.3;

“proceeding” has the
meaning ascribed thereto in Section 5.1(p);

“Project Financing Assets”
has the meaning ascribed thereto in Section 4.1(a);

“Properties” means all
lands and premises identified in Schedule B hereto;

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

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

 16
 

Wagering within the Florida Department of Business and Professional
Regulation, the State Harness Racing Commission of Pennsylvania, the Oklahoma
Horse Racing Commission and the Nevada Gaming Commission;

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

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

“Release and Termination Agreement”
means the release and termination agreement made as of November 14, 2006
between the Lender, MEC Pennsylvania Racing, Inc., Washington Trotting
Association, Inc., Mountain Laurel Racing, Inc., the Borrower and PA
Meadows, LLC.

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

“Remington Borrower” means
Remington Park, Inc.;

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

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

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

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

“Santa Anita General Security
Agreement” has the meaning ascribed thereto in
Section 7.2(q)(xi);

“Santa Anita Guarantee and Indemnity”
has the meaning ascribed thereto in Section 7.2(q)(li);

“Santa Anita Guarantee Fee”
has the meaning ascribed thereto in Section 7.2(q)(li);

“Santa Anita Property”
means the lands and premises designated as the Santa Anita Property in
Schedule B hereto;

“Santa Anita Property Environmental
Indemnity” has the meaning ascribed thereto in
Section 7.2(q)(xii);

“Santa Anita Security” has
the meaning ascribed thereto in Section 7.2(q)(xi);

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

“Santa Anita Third Assignment of
Material Agreements” has the meaning ascribed thereto in
Section 7.2(q)(x);

“Santa Anita Third Assignment of Rents
and Leases” has the meaning ascribed thereto in
Section 7.2(q)(ix);

 17
 

“Santa Anita Third Mortgage”
has the meaning ascribed thereto in Section 7.2(q)(viii);

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

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

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

“Security” has the meaning
ascribed thereto in Section 7.2(q);

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

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

“SunTrust” means SunTrust
Bank, and its successors and assigns under the SunTrust Credit Agreement;

“SunTrust Credit Agreement”
means the loan and security agreement made as of May 11, 2007 among
AmTote, as borrower, and SunTrust, as lender, as may be amended from time
to time;

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

“Termination Date” means:
(i) the earlier of the Maturity Date; and (ii) such earlier date as
the entire balance of the Loans under the Bridge Loan may become due hereunder,
whether by acceleration or otherwise;

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

“Thistledown First Assignment of
Material Agreements” has the meaning ascribed thereto in
Section 7.2(q)(l);

“Thistledown First Assignment of Rents
and Leases” has the meaning ascribed thereto in
Section 7.2(q)(xlix);

“Thistledown First General Security
Agreement” has the meaning ascribed thereto in
Section 7.2(q)(li);

“Thistledown First Mortgage”
has the meaning ascribed thereto in Section 7.2(q)(xlviii);

“Thistledown Guarantee Fee”
has the meaning ascribed thereto in Section 7.2(q)(lviii);

“Thistledown Guarantee and Indemnity”
has the meaning ascribed thereto in Section 7.2(q)(lviii);

“Thistledown Guarantor”
means Thistledown, Inc.;

“Thistledown Property”
means the lands and premises designed as the Thistledown Property in
Schedule B hereto;

“Thistledown Property Environmental
Indemnity” has the meaning ascribed thereto in
Section 7.2(q)(xliv);

 18
 

“Thistledown Security” has
the meaning ascribed thereto in Section 7.2(q)(xliii);

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

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

“Unaudited Financial Statements”
means the unaudited consolidated financial statements of the Borrower for the
Fiscal Quarter ended June 30, 2007;

“Unutilized Amount” has the
meaning ascribed thereto in Section 4.3(a);

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

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

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

 19

1.2                               Gender and Number

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

1.3                               Invalidity, etc.

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

1.4                               Headings, etc.

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

1.5                               Governing Law

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

1.6                               Attornment

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

1.7                               Judgment Currency

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

1.8                               References

Except as otherwise specifically provided,
reference in any Loan Document to any contract, agreement or any other
instrument (including, without limitation, any other Loan Document) shall be
deemed to include references to the same as varied, amended, restated,
supplemented or replaced from time to time and reference in any Loan Document
to any 

 20
 

enactment, including without
limitation, any statute, law, by-law, regulation, ordinance or order, shall be
deemed to include references to such enactment as re-enacted, amended or
extended from time to time.

1.9                               Currency

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

1.10                        This Agreement to Govern

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

1.11                        Generally Accepted Accounting Principles

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

1.12                        Computation of Time Periods

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

1.13                        Actions on Days Other Than Banking Days

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

1.14                        Oral Instructions

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

1.15                        Incorporation of Schedules

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

	
   

  	
  Schedule A

  	
   

  	
  Borrowing Notice

  
	
   

  	
  Schedule B

  	
   

  	
  Properties and Prior Mortgages

  
	
   

  	
  Schedule C

  	
   

  	
  Environmental Reports

  

 

 21
 

ARTICLE 2

BRIDGE LOAN

2.1                               Establishment of Bridge Loan

(a)           Subject to the terms and conditions of this Agreement, the
Lender hereby establishes in favour of the Borrower a secured non-revolving
bridge loan in the principal amount of up to $80,000,000, available on the
terms and conditions set out herein.

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

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

(d)           From the Closing Date, the Bridge Loan shall be available
to the Borrower solely for the purposes contemplated in Section 6.1(ee)
hereof and for no other purposes.

2.2                               Non-Revolving Nature of Bridge Loan

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

2.3                               Pre-Payment

(a)           Subject to LIBOR contract maturity dates with respect to
any Advance, the Borrower may from time to time (without premium or penalty) on
any Banking Day repay to the Lender any portion of the Loan, provided that any
such repayment (a) shall be in an amount of at least $500,000 and any
greater amount shall be an integral multiple of $50,000 and (b) shall be
effected on at least ten Banking Days notice in writing to the Lender; provided
that such notice, once given, shall be irrevocable and binding upon the Borrower.
The Loan Amount shall be automatically and permanently reduced by the amount of
any such repayment.

(b)           The Borrower shall also have the right to pre-pay
the entire Loan at any time, provided that the Borrower repays to the Lender
the Loan then outstanding (including, for greater certainty, all accrued and
unpaid interest, fees and other amounts owing as of such date) (the “Pre-Payment
Amount”), and the Borrower cancels any undrawn portion of the Loan. Notice of
such voluntary pre-payment shall be given by the Borrower (which notice
shall be irrevocable when given) to the Lender not later than 10 Banking
Days prior to the date of such pre-payment, specifying the date of such
pre-payment. On receipt of full payment of the Pre-Payment Amount,
the Lender shall promptly execute and deliver a full release of the Security
held by it with respect to the transactions and obligations contemplated
herein, 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 obligation. There shall be no make-whole payment by the
Borrower to the Lender in connection with any pre-payment.

2.4                               Mandatory Repayment

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

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

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

 22
 

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

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

(C)                                any issue of securities (including by way of
incremental debt or equity) by the Borrower (except those in respect of the
Borrower’s long term incentive plan) or any of its Subsidiaries (other than in
connection with the Fair Enterprise Investment), or borrowing of monies, other
than Permitted Debt, by the Borrower of any of its Subsidiaries;

(D)          any expropriation or
condemnation of the whole or any part of its real property or
other assets, an amount equal to 100% of such net proceeds shall be
applied to repay the Loan, subject, to the extent applicable, to the terms of
the BMO Intercreditor Agreement; and

(iii)                               in full on the Termination Date.

(b)           The repayments referred to in items (A) to (D)
inclusive of Section 2.4(a)(ii) shall be made as promptly as practicable
(and in any event within three Banking Days) following the receipt by any
of the Borrower and/or its Subsidiaries of the net proceeds referred to
therein. Notwithstanding the foregoing, the Borrower and/or its Subsidiaries
shall direct all purchasers of the assets and/or real property specified in
Section 2.4(a)(ii)(B) to pay the applicable amount of net proceeds
arising therefrom and due to the Lender pursuant to this Agreement directly to
the Lender. Upon the repayment of the principal amount of the Loan or interest
pursuant to Section 2.4(a), the Loan Amount shall be permanently reduced
by an amount equal to the principal paid.

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

2.5                               Voluntary Reduction in Aggregate Commitment

The Borrower shall have the right
at any time and from time to time, by giving at least ten Banking Days’ notice
to the Lender, which notice, once given, shall be irrevocable and binding upon
the Borrower, to reduce the Loan Amount to a lower amount that is not less than
the principal amount of the Loan then outstanding. Such notice shall specify
the amount of the reduction, which shall be in an integral multiple of
$250,000. The amount of any such reduction so made by the Borrower shall be
permanent and irrevocable and the Loan Amount shall be reduced accordingly.

 23
 

ARTICLE 3

GENERAL PROVISIONS RELATING TO THE BRIDGE LOAN

3.1                               Advances

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

3.2                               Payments Generally

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

3.3                               Illegality

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

3.4                               Indemnity

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

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

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

 24
 

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

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

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

3.5                               Proceedings in Respect of Claims

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

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

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

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

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

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

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

 25
 

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

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

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

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

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

3.6                               Evidence of Indebtedness

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

 26
 

ARTICLE 4

INTEREST AND FEES

4.1                               Interest Rate

(a)                                  Advances under the Loan (each such advance being
referred to as an “Advance”)
shall, subject to Applicable Laws, bear interest from time to time as set
forth herein:

(i)                                     subject to Sections 4.1(a)(ii) and (iii)
herein, from and after the Closing Date, all Advances under the Bridge Loan
shall bear interest at a fixed rate per annum equal to LIBOR plus
1,000 basis points (the “Interest
Rate”);

(ii)                                  from and after December 31, 2007, in the
event that the Borrower and/or its Subsidiaries has not (a) completed
asset and/or real property sales, (b) entered into Approved Sales
Contracts or (c) raised equity (other than the Fair Enterprise
Investment), with aggregate net proceeds of not less than $50,000,000, all
outstanding and any subsequent Advances under the Bridge Loan shall bear
interest at a fixed rate per annum equal to the Interest Rate plus
100 basis points; and

(iii)                               from and after February 29, 2008, in the
event that the Borrower and/or its Subsidiaries has not entered into Approved
Sales Contracts in respect of asset sales yielding aggregate net proceeds
sufficient to repay the Loan Amount in full, all outstanding and any subsequent
Advances under the Loan shall bear interest at a fixed rate per annum equal to
the Interest Rate payable pursuant to Sections 4.1(a)(i) or (ii), as
applicable, plus 100 basis points,

with interest in each case payable at maturity of each separate Advance.
Notwithstanding anything herein contained to the contrary, the Borrower
acknowledges and agrees that asset sales or Approved Sales Contracts relating
to (A) purchases by MID or (B) (i) the Aventura Lands (as defined in
the Gulfstream Construction Loan Agreement), (ii) the Hallandale Lands (as
defined in the Gulfstream Construction Loan Agreement), (iii) the
membership interest in the Gulfstream Park joint venture and/or the ground
lease underlying the Gulfstream Park joint venture and (iv) Remington Park
(collectively, the “Project Financing Assets”),
shall not be applicable in calculating asset sales as contemplated in
Sections 4.1(a)(ii) and (iii) herein.

(b)                                 If any Obligations are not paid when due or an
Event of Default has occurred and is continuing, all amounts owing or deemed to
be owing hereunder, whether in respect of principal, interest, fees, expenses
or otherwise, both before and after judgment, and in the case of expenses from
the dates such expenses are invoiced to the Borrower, shall bear interest at a
rate per annum determined on a daily basis that is equal to the Interest Rate
payable pursuant to Sections 4.1(a)(i), (ii) or (iii), as applicable, plus
300 basis points per annum, in each case calculated on the basis of the
actual number of days elapsed and on the basis of a year of 365 or
366 days, as the case may be. Such interest shall accrue from day to day,
be payable in arrears on demand and shall be compounded monthly on the last
Banking Day of each calendar month.

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

 27
 

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

(ii)                                  if any of the circumstances in Section 4.1(c)
shall occur, the Borrower and the Lender shall, following the giving of notice
by the Lender under this Section 4.1(c), endeavour to determine an
alternative basis, which may, if such parties agree, include (without
limitation) alternative rates of interest, alternative Interest Periods, alternative
currencies or any combination thereof, for Advances. If the Borrower and the
Lender are unable to agree on such alternative basis within a period of
30 days from the date of such notice by the Lender (provided that in any
event such period shall not extend beyond the last day specified for giving a
Borrowing Notice in respect of any Advance then outstanding or three Banking
Days before any repayment date required under Applicable Law, as the case may
be), the Lender shall determine an interest rate and specify an Interest Period
(not exceeding one month) in respect of each Advance then outstanding,
which interest rate shall be the cost to the Lender (as certified by the
Lender to the Borrower) of funding any such Advance for the Interest Period so
specified from such sources as it may reasonably select and the amount of any
such Advance shall bear interest at the rate so determined. The provisions of
this Section 4.1(c) shall apply only for so long as the circumstances in
Section 4.1(c) shall exist.

4.2                               Calculation and Payment of Interest

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

4.3                               Fees

(a)           Commitment Fee.
The Borrower shall pay to the Lender on the last Banking Day of each calendar
month and on the Termination Date (each a “Commitment
Fee Payment Date”), in arrears, a non-refundable commitment fee
(the “Commitment Fee”) equal
to 100 basis points per annum of the amount, if any, by which the Loan
Amount (taking into account any repayments or cancellations that have been made
by the Borrower in accordance with the terms hereunder) exceeds the amount of
the Loan (the “Unutilized Amount”)
on each day in such Fiscal Quarter or the part thereof ending on the
Termination Date, as applicable. The Commitment Fee on any Commitment Fee Payment
Date shall be payable in respect of the period from and including the Closing
Date or the preceding Commitment Fee Payment Date, as the case may be, to but
excluding the next Commitment Fee Payment Date, and shall be calculated on a
daily basis on the Unutilized Amount on each day during such period on the
basis of the number of days elapsed and a year of 365 or 366 days, as the
case may be.

(b)           Arrangement Fees.
The Borrower shall pay to the Lender, on the Closing Date, an arrangement fee
(the “First Arrangement Fee”)
of $2,400,000, being 3% of the Loan Amount. In addition, the Borrower shall pay
to the Lender, on February 29, 2008, an additional arrangement fee
(the “Second Arrangement Fee”)
of 1% of the Loan Amount.

4.4                               Payment of Costs and Expenses

Whether or not the Borrower takes
advantage of the Bridge Loan, the Borrower shall pay to the Lender, on demand,
the following costs and expenses (collectively, the “Lender’s Costs”):

(a)                                  all reasonable costs and out-of-pocket expenses of
the Lender (in the case of solicitors’ costs, on a full indemnity basis)
in connection with the preparation, negotiation and execution of the Loan
Documents, the Intercreditor Agreements, any actual or proposed amendment or
modification hereof or thereof or any waiver hereunder or thereunder and all
instruments supplemental or ancillary thereto and all reasonable documented due
diligence expenses incurred in connection therewith (including any surveys or
appraisals of the Mortgaged Properties reasonably undertaken by the Lender);

 28
 

(b)                                 all reasonable costs and out-of-pocket expenses of
the Lender (in the case of solicitors’ costs, on a full indemnity basis)
in connection with obtaining advice as to the rights and responsibilities of
the Lender under the Loan Documents and the Intercreditor Agreements; and

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

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

 29
 

ARTICLE 5

REPRESENTATIONS AND WARRANTIES

5.1                               Representations and Warranties

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

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

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

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

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

(e)           No Consents Required.
Other than filings with the Securities Commission, no Material Authorization is
required, and no consents, approvals or further documentation of any kind
whatsoever is required to be obtained from, or provided by, any Person in
connection with (i) the execution, delivery or performance of any of 

 30
 

the Loan Documents to which it is
a party by the Borrower or any Guarantor, (ii) the creation of the
Security, and (iii) the perfection of such Security;

(f)            Enforceability.
Each of the Loan Documents constitutes, or upon execution and delivery will
constitute, a valid and binding obligation of the Borrower and each Guarantor
which is a party to it, enforceable against it in accordance with its terms,
subject only to the qualifications set out in the opinion of the Borrower’s and
Guarantors’ Local Agents delivered pursuant to Section 7.2(p)(i);

(g)           Financial Statements.

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

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

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

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

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

(k)           Authorized Capital.
The authorized capital of the Borrower consists of
310,000,000 Class A Subordinate Voting Stock, par value of $0.01 per
share, of which 49,259,999 were issued and outstanding as at 

 31
 

September 1, 2007, and
90,000,000 shares of Class B stock, par value of $0.01 per share, of
which 58,466,056 were issued and outstanding.

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

	
  Beneficial Holder

  	
   

  	
  Class of Shares

  	
   

  	
  Number of Shares

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Magna Entertainment
  Corp.

  	
   

  	
  Common

  	
   

  	
  11,232

  	
   

  

 

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

	
  Beneficial Holder

  	
   

  	
  Class of Shares

  	
   

  	
  Number of Shares

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Magna Entertainment
  Corp.

  	
   

  	
  Common

  	
   

  	
  100

  	
   

  

 

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

	
  Beneficial Holder

  	
   

  	
  Class of Shares

  	
   

  	
  Number of Shares

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Magna Entertainment
  Corp.

  	
   

  	
  Common

  	
   

  	
  69,347

  	
   

  

 

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

	
  Beneficial Holder

  	
   

  	
  Class of Shares

  	
   

  	
  Number of Shares

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Magna Entertainment
  Corp.

  	
   

  	
  Common

  	
   

  	
  100

  	
   

  

 

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

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

	
  Beneficial Holder

  	
   

  	
  Class of Shares

  	
   

  	
  Number of Shares

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Magna Entertainment
  Corp.*

  	
   

  	
  Common

  	
   

  	
  1,100

  	
   

  

 

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

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

	
  Beneficial Holder

  	
   

  	
  Class of Shares

  	
   

  	
  Number of Shares

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Magna Entertainment
  Corp.*

  	
   

  	
  Common

  	
   

  	
  25

  	
   

  

 

 32
 

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

	
  Beneficial Holder

  	
   

  	
  Class of Shares

  	
   

  	
  Number of Shares

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Magna Entertainment
  Corp.

  	
   

  	
  Common

  	
   

  	
  100

  	
   

  

 

The authorized capital of MEC Holdings (USA) Inc. consists of
10,000 common shares of which 100 common shares are duly issued and
outstanding as fully paid and non-assessable. The beneficial holder of such
outstanding shares is as follows:

	
  Beneficial Holder

  	
   

  	
  Class of Shares

  	
   

  	
  Number of Shares

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Magna Entertainment
  Corp.

  	
   

  	
  Common

  	
   

  	
  100

  	
   

  

 

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

	
  Beneficial Holder

  	
   

  	
  Class of Shares

  	
   

  	
  Number of Shares

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Magna Entertainment
  Corp.

  	
   

  	
  Common

  	
   

  	
  100

  	
   

  

 

The authorized capital of the Thistledown Guarantor consists of
500 common shares of which 250 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

  	
   

  	
  250

  	
   

  

 

The authorized capital of MEC Maryland 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

  	
   

  

 

30000 Maryland is held by:

	
  Member

  	
   

  	
  Interest

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Magna
  Entertainment Corp.

  	
   

  	
  1

  	
  %

  
	
  MEC Maryland
  Investments, Inc.

  	
   

  	
  99

  	
  %

  

 

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

(m)          Solvency. The
Borrower has not entered into the transactions hereunder or any Loan Document
with the actual intent to hinder, delay or defraud any creditor, and the
Borrower has received reasonably equivalent value in exchange for its
obligations under the Loan Documents. Taking into account the Bridge Loan (and 

 33
 

assuming Advances requested by the Borrower are advanced by the Lender),
the Fair Enterprise Investment and the Borrower Restructuring Plan, the
Borrower and each of the Guarantors is solvent (as such term is used in
all applicable laws relating to bankruptcy, fraudulent transfers and
conveyances), able to pay its debts as such debts become due, has capital
sufficient to carry on its businesses and transactions and all businesses and
transactions in which it anticipates engaging, and the value of its property at
a fair valuation is greater than the sum of its debts. Neither the Borrower nor
any of the Guarantors will be rendered insolvent by the execution and delivery
to the Lender of the Loan Documents or by the transactions contemplated
thereunder, and no: (i) assignment for the benefit of the creditors of any
of them; (ii) appointment of a receiver for any of them or for the
property of any of them; or (iii) bankruptcy, reorganization, or liquidation
proceeding, is pending or threatened (whether voluntary or involuntary) or has
been instituted by or against any of them;

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

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

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

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

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

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

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

 34
 

Guarantor, threatened. There was no tax Lien, whether imposed by any
federal, state, provincial or other taxing authority, outstanding against the
assets, properties or business of the Borrower or any Guarantor other than
Permitted Encumbrances;

(u)           Material Assets.
The Borrower and each of the Guarantors owns or licenses or otherwise has
legally enforceable rights to use, under validly existing agreements, all
material assets (including all real property, patents, licences, trademarks,
trade names, trade secrets, service marks, copyrights and all rights with respect
thereto), contracts, and other documents necessary to conduct their businesses
as now conducted and that (a) all such assets (other than permits and
licences) have been assigned, pledged, mortgaged or otherwise encumbered
pursuant to the Security and (b) all permits and licences are subject to a
negative pledge; provided that the names “Palm
Meadows” and “Dixon Downs”
are owned by MEC and have been licensed to the applicable entity;

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

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

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

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

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

(aa)         Foreign Ownership.
Neither the Borrower nor any of the Guarantors is or will be a “foreign corporation”, “foreign partnership”, “foreign trust”, “foreign estate”, “foreign
person”, “affiliate” of
a “foreign person” or a “United States intermediary” of a “foreign person” within the meaning of the
IRC, Sections 897 

 35
 

and 1445, the Foreign
Investments in Real Property Tax Act of 1980, the International Foreign Investment Survey Act of 1976,
the Agricultural Foreign Investment
Disclosure Act of 1978, or the regulations promulgated pursuant to such
Acts or any amendments to such Acts;

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

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

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

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

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

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

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

(ii)           Properties Access.
The Properties are accessible through all current access points, each of which
connects or, upon the completion of the contemplated development of the
Properties will connect, directly to a fully 

 36
 

improved and dedicated road accepted for maintenance and public use by
the Governmental Body having jurisdiction;

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

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

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

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

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

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

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

 37
 

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

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

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

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

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

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

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

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

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

 38
 

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

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

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

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

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

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

5.2                               Survival of Representations and Warranties

All representations and
warranties of the Borrower and the Guarantors in this Agreement, the Loan
Documents and all representations and warranties in any certificate delivered
by the Borrower pursuant hereto and thereto, shall survive execution of the
Loan Documents and the making of the Loan, and may be relied upon by the Lender
as being true and correct with effect as of the date given (either initially or
as brought down) until the Loan is fully and irrevocably paid, notwithstanding
any investigation made at any time by the Lender or on its behalf, including,
without limitation, the due diligence review referred to in
Section 5.1(qq). Without derogating from the foregoing, the representations
and warranties of the Borrower and each of the Guarantors set out in
Section 5.1(mm) shall survive the payment and performance of the
Indebtedness, liabilities and obligations of the Borrower under, and the
termination and release by the Lender of, this Agreement and the other
Loan Documents.

 39

ARTICLE 6

COVENANTS

6.1          Affirmative Covenants

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

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

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

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

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

(e)           Implementation of Borrower Restructuring Plan and
Use of Specific Asset Sale Proceeds. The Borrower is using and will continue to use all commercially
reasonable efforts to implement the Borrower Restructuring Plan (including the
sale of specific assets by the time periods listed therein); the Borrower and
its Subsidiaries will use the net proceeds from any asset and/or real property
sales in the manner set forth in Section 2.4 hereof, including, without
limitation, by providing directions to the purchasers thereof to pay the
applicable amount of net proceeds arising therefrom and due to the Lender
pursuant to this Agreement directly to the Lender;

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

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

(h)           Compliance with Applicable Law, Material
Agreements, etc. (i) Except
where any such failure could not reasonably be expected to have a Material
Adverse Effect, comply with (A) the requirements of all Applicable Laws,
with all obligations, which, if contravened, could give rise to a Lien (other
than a Permitted Encumbrance) over any of the Collateral, and with all
insurance policies required to be maintained under 6.1(q), and (B) all
Material Agreements to which it is a party or by which it or its properties are
bound; (ii) except where any such changes could not reasonably be expected
to have a Material Adverse Effect, obtain the Lender’s prior written consent
(which consent may be withheld in the Lender’s sole and absolute discretion)
before making, permitting or allowing any material amendments or other material
changes to, or the termination of, any Material Agreement

 40
 

(excluding leases of space in respect of the Properties of less than two
thousand, five hundred (2,500) square feet) or any other agreement
affecting the Security, except pursuant to an ordinary course renewal thereof
consistent with past practice; (iii) notify the Lender of any default by
any party with respect to such Material Agreements and take all commercially
reasonable steps to cure any such default; (iv) obtain the Lender’s prior
written consent before entering into any agreement containing any provision
which would be violated or breached by the performance of its obligations
hereunder or under the Loan Documents or under any instrument or document
delivered or to be delivered by it hereunder or in connection herewith, or
which would violate or breach any provision hereunder or under the Loan
Documents or under any instrument or document delivered or to be delivered by
it hereunder or in connection herewith; and (v) obtain the Lender’s prior
written consent before making any material amendments to its constating
documents;

(i)            Payment of Obligations. Subject to the right to contest legitimate
disputes, and subject, where applicable to the provisos in Section 6.1(u),
pay and discharge, or cause to be paid and discharged, all its
indebtedness and obligations to other Persons promptly in accordance with
normal terms and practices of its businesses, before they shall become in
default, as well as all lawful claims for labour, materials and supplies which
otherwise, if unpaid, might become a lien or charge upon its properties or any
part thereof;

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

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

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

(i)            upon the written request of the Lender, and
contemporaneously with the Fiscal Quarter and Fiscal Year financial statements
required under this Section 6.1(l), a certificate (a “Compliance Certificate”) signed by an
officer of the Borrower and an officer of each Guarantor stating that to the
best of his or her knowledge after having made reasonable inquiry and without
personal liability to such officer:

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

 41
 

(B)           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

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

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

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

(A)          within 60 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 60 days after the end
of each Fiscal Quarter of the Borrower and the Guarantors, a copy of the
unaudited financial statements of the Borrower and each Guarantor for such
Fiscal Quarter;

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

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

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

(iii)          at any time, if requested by the Lender, the Borrower shall submit to
the Lender (A) a detailed written statement of the status of any
remediation activities in respect of the Properties (I) required under
each of the Environmental Reports, to comply with Environmental Laws and/or
(II) requested by the Lender in respect of the Properties, acting
reasonably, including, without limitation, a statement as to remediation work
performed to date and remediation work remaining to be completed, and
(B) an updated report prepared by a consultant reasonably satisfactory to
the Lender of (x) each of the Environmental Reports which contain
recommendations for action by the Borrower and/or (y) the most recent
update provided to comply herewith, including in such update the amounts
expended during such period. In addition, the Borrower will provide to the
Lender

 42
 

copies of all notices or warnings of violations, or potential
violations, of Environmental Laws received by the Borrower within five days of
receipt of such notices or warnings;

(m)          Reporting Requirements re Borrower Restructuring
Plan. The Borrower shall deliver
to the Lender reasonably detailed monthly progress reports on the 30th day of each month with respect to the
Borrower Restructuring Plan, with the first such report to be delivered on
September 30, 2007. The monthly progress reports shall include
(i) monthly financial statements, including up-to-date cash flow
forecasts, summary of capital expenditures incurred in the month and planned,
and revised or amended budgets, (ii) an updated marketing plan for the
asset sales set out in the Borrower Restructuring Plan, including expected
dates for retaining sales agents/brokers, distributing sales materials,
receiving offers, executing documentation and closing and summaries of offers
and expressions of interest received, (iii) a reconciliation of deviations
(if any) from the previously delivered monthly progress report, and
(iv) such other information as the Lender requests, acting reasonably;

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

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

(p)           Required Remediation and Environmental Actions. Upon request of the Lender, the Borrower or the
Guarantors, as applicable, hereby agree to complete the remediation actions
recommended to be taken in the Environmental Reports with respect to the
Mortgaged Properties and not heretofore undertaken which, if not undertaken,
would be reasonably likely to have a Material Adverse Effect. The term “Environmental Reports” means collectively
the environmental reports referred to in Schedule C, and any updates or
addenda thereto if and to the extent approved by the Lender in writing, and any
reports related to the Environment produced internally by the Borrower or by
personnel external to the Borrower, including environmental operation and/or
compliance audits, in each case 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 and/or the
Guarantors shall provide the opportunity to the Lender to independently confirm
that the environmental conditions are in conformity with Environmental Laws, at
the cost of the Borrower, and if the Lender elects not to make such
confirmation, then the Borrower or the Guarantors shall obtain an update to the
applicable Environmental Report as and when requested by the Lender, acting
reasonably, reporting as to the remediation work undertaken and confirming that
the remaining environmental conditions are in conformity with Environmental
Laws. In connection with each update to an Environmental Report, the Borrower
or the Guarantors shall obtain a reliance letter relating thereto addressed to
the Lender in form and substance reasonably satisfactory to the Lender and
shall deliver such updates and reliance letters to the Lender. The Borrower and
the Guarantors covenant that any soils or other materials that are removed in
connection with any remediation of any of the Properties shall be disposed of
in conformity with requirements of law at a location other than any of
the Properties;

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

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

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

 43
 

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

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

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

(s)           Tax Deposits. Upon written direction from the Lender after the occurrence of an
Unmatured Event of Default or an Event of Default which remains uncured, the
Borrower shall immediately commence to deposit with the Lender commencing with
the first interest payment due under the Loan and on the first day of each
month thereafter until the earlier of (i) the date that the Indebtedness
is fully paid and (ii) the Unmatured Event of Default or Event of Default
has been cured, a sum equal to one-twelfth ( 1/12) of
the total annual taxes and assessments (general and special) respecting each of
the Properties and the costs of insurance premiums, based upon the Lender’s
reasonable estimate as to the amount of the taxes, assessments and premiums to
be levied, assessed and incurred (except to the extent, and only to the extent,
that, in respect of the Golden Gate Property and/or the Santa Anita Property,
the Borrower or any Guarantor is making such payments to BMO and/or Wells
Fargo, as the case may be, pursuant to the BMO Credit Agreement and/or the
Santa Anita Senior Credit Facility). The Borrower’s initial deposit shall be
increased by an amount equal to the Lender’s reasonable estimate of the amount
of such taxes and insurance premiums to become owing on the due dates for the
payment of such taxes and insurance premiums less the monthly payments to be
deposited hereunder prior to such due dates. If any such taxes or insurance
premiums relating to each of the Properties are also related to other premises,
the amount of any deposit hereunder shall be based upon the Borrower’s and/or
any Guarantor’s share of the taxes, assessments or insurance premiums, the
Borrower shall apportion the total amount of the taxes, assessments or premiums
levied or assessed as between such other premises and each of the Properties
for the purposes of computing the amount of any deposit hereunder. Such
deposits shall be held without any allowance of interest. Such deposits shall
be used for the payment of such taxes, assessments and insurance premiums on
each of the Properties on the earliest possible date when such payments become
due. If the funds so deposited are insufficient to pay any such taxes,
assessments and insurance premiums for any year when the same shall become due
and payable, the Borrower shall, within 10 Banking Days after receipt of
demand therefor from the Lender, deposit such additional funds as may be
necessary to pay such taxes, assessments and insurance premiums in full. If the
funds so deposited exceed the amount required to pay such taxes, assessments
and insurance premiums for the year, the excess shall be applied on a
subsequent deposit or deposits. Said deposits shall be kept in a separate,
non-interest bearing account created by and in the name of the Lender. Upon the
occurrence of an Unmatured Event of Default or an Event of Default, the Lender
may, at its option, without being required to do so, apply any monies at the
time on deposit pursuant to this Section 6.1(s) on any of the
Indebtedness, in such order and manner as the Lender may elect. When the
Indebtedness has been fully paid, any remaining deposits shall be paid to the
Borrower. A security interest within the
meaning of the Uniform Commercial Code of the state in which the Borrower is
organized as a legal entity is hereby granted to the Lender in and to any
monies at any time on deposit pursuant to this Section 6.1(s), as
additional security for the Indebtedness. Such funds shall be
applied by the Lender for the purposes made hereunder and shall not be subject
to the direction or control of the Borrower. The Lender shall not be liable for
any failure to apply the funds so deposited hereunder to the payment of any
particular taxes, assessments and insurance premiums unless the Borrower, while
not in default hereunder, shall have requested the Lender in writing to make
application of such funds to the payment of the particular taxes, assessments
or premiums for payment of which they were deposited, accompanied by the bills
for such taxes, assessments or premiums. The Lender shall not be liable for any
act or omission taken in good faith or pursuant to the instruction of any
party, but shall be liable only for gross negligence or wilful misconduct;

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

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

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

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

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

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

(i)            the commencement of any action, proceeding,
arbitration or investigation against or in any other way relating adversely to
the Borrower or any of the Guarantors or any of their respective properties,
assets or businesses by any Person (including any Governmental Body) which, if

 45
 

adversely determined, could singly or when aggregated with all other
such actions, proceedings, arbitrations and investigations reasonably be
expected to have a Material Adverse Effect;

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

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

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

(v)           any Default or Event of Default;

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

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

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

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

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

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

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

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

(iv)          except for the Dixon Guarantor and the Ocala Guarantors, 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;

 46
 

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

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

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

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

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

(xi)           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

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

(ee)         Availability. All requests for Advances shall be consistent (to be determined by
the Lender in its sole and absolute discretion) with the Borrower Restructuring
Plan and the weekly cash flow forecast reports that the Borrower is required to
deliver to the Lender and MID and used solely to fund: (i) operations;
(ii) mandatory payments of principal or interest and costs, fees and
expenses due and owing to the Lender under this Agreement and/or any other
loans or credit facilities provided by the Lender to the Borrower and/or its
Subsidiaries, including, without limitation, the Gulfstream Construction Loan
Agreement and the Remington Construction Loan Agreement; (iii) mandatory
payments of interest in connection with Permitted Debt, provided that the
making of any such payment is not prohibited by this Agreement and shall not
result in an Unmatured Event or Default or an Event of Default under this
Agreement; (iv) Maintenance Capital Expenditures; and (v) Capital
Expenditures required pursuant to the terms of the joint venture arrangements
with Forest City Enterprises, Inc. and Caruso Affiliated;

(ff)           Fair Enterprise Investment. The Borrower shall close the Fair Enterprise
Investment as soon as possible after the date hereof and, in any event, on or
prior to October 31, 2007. The Borrower hereby covenants that net proceeds
raised from the Fair Enterprise Investment shall be applied in a manner
consistent (to be determined by the Lender in its sole and absolute discretion)
with the Borrower Restructuring Plan and the weekly cash flow forecast reports
that the Borrower is required to deliver to the Lender and MID, and that no
further Advances shall be requested or made hereunder until all such proceeds
have been exhausted;

(gg)         Appraisals. The Borrower shall deliver to the Lender, as soon as reasonably
practicable following the date hereof, updated appraisals, in form and
substance reasonably satisfactory to the Lender, for the Santa Anita Property,
the Golden Gate Fields Property and Gulfstream Park; and

(hh)         Interest Rate Increases. To the extent that either of the Interst rate
increases contemplated in Sections 4.1(a)(ii) or (iii) has occurred, the
Borrower shall use, and shall cause its Subsidiaries to use, commercially
reasonable efforts to provide such additional security as the Lender, in its
sole and absolute discretion, requests.

6.2          Negative Covenants

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

 47
 

(a)           Encumber Property. Create, grant, assume or suffer to exist any Lien
upon any of its or their properties or assets, other than Permitted
Encumbrances and Liens arising in connection with financial assistance
permitted by Section 6.2(h);

(b)           Capital Expenditures. Without the Lender’s prior written approval,
exercisable in the Lender’s sole discretion, incur or commit or agree to incur
any Capital Expenditures, or any lienable work to be done to or for the benefit
of any of the Properties, except (i) in accordance with the Borrower
Restructuring Plan, (ii) as required pursuant to the terms of the joint
venture arrangements with Forest City Enterprises, Inc. and Caruso
Affiliated, and (iii) emergency repairs;

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

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

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

(f)            Investments; Acquisitions. Engage directly or indirectly in any business
activity unrelated to its Core Line of Business, or purchase or otherwise
acquire or make any investment in any properties or assets, or permit or
otherwise undertake any Acquisitions; provided, however, that the Borrower may
make investments in Cash Equivalents in amounts and pursuant to terms
acceptable to the Lender, acting reasonably;

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

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

 48
 

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

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

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

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

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

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

(viii)        entering into any transactions with any Affiliate for the purposes of
undertaking indirectly any transaction or activity that is otherwise prohibited
by this Section 6.2(g);

(h)           Debt.
Directly or indirectly, incur, assume or suffer to exist any indebtedness
(including Capital Lease Obligations and Contingent Liabilities) or enter into
any guarantees, hypothecation, contracts or other agreements which would make
the Borrower or such Subsidiary liable for any indebtedness (including Capital
Lease Obligations and Contingent Liabilities) or expense other than
(i) Permitted Debt or (ii) indebtedness arising in connection with
financial assistance permitted by Section 6.2(i);

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

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

(k)           ERISA.
Following the Closing Date, (i) adopt or institute any Employee Benefit
Plan that is an employee pension benefit plan within the meaning of
Section 3(2) of ERISA, (ii) take any action which will result in the
partial or complete withdrawal, within the meanings of Sections 4203 and 4205
of ERISA, from a Multiemployer Plan except in the case of a closure of the
businesses or facilities of an ERISA Affiliate, (iii) engage or permit any
Person to engage in any non-exempt transaction prohibited by Section 406
of ERISA or Section 4975 of the IRC involving any Employee Benefit Plan or
Multiemployer Plan which would subject Borrower, any of the

 49
 

Guarantors or any ERISA Affiliate to any tax, penalty or other liability
including a liability to indemnify, (iv) incur or allow to exist any
accumulated funding deficiency (within the meaning of Section 412 of the
IRC or Section 302 of ERISA), except for any funding deficiencies that
relate to a Multiemployer Plan caused by a third party (other than an Affiliate
of the Borrower), (v) fail to make full payment when due of all amounts
due as contributions to any Employee Benefit Plan or Multiemployer Plan,
(vi) fail to comply with the requirements of Section 4980B of the IRC
or Part 6 of Title I(B) of ERISA, (vii) adopt any amendment to any
Employee Benefit Plan which would require the posting of security pursuant to
Section 401(a)(29) of the IRC or (viii) permit any ERISA Affiliate to
do any of the things referred to in items (i) to (vii) above, where
singly or cumulatively, the above could be reasonably likely to have a Material
Adverse Effect;

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

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

(n)           Licences and Permits. Pledge any licences or permits, held by it or any
of its Subsidiaries, to any third party;

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

(p)           Material Agreements. Enter into, nor permit to be entered into, any
new Material Agreements without the prior written consent of the Lender, which
consent may be withheld by the Lender in its sole and absolute discretion,
except for any Material Agreement directly related to a gaming transaction or
other strategic initiative contemplated by the Borrower Restructuring Plan;

(q)           Use.
Use or develop a Mortgaged Property for any purposes other than as contemplated
under the Gulfstream Development Agreement, the Gulfstream Construction
Contracts (as defined in the Gulfstream Construction Loan Agreement), the
Remington Construction Contracts (as defined in the Remington Construction
Loan Agreement) and other permitted related purposes. Neither the Borrower nor
any of the Guarantors shall permit a Mortgaged 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;

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

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

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

 50
 

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

6.3          Environmental Matters

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

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

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

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

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

(f)            The Borrower and each of the Guarantors shall
provide the Lender with an environmental audit report (which shall include a
report arising from an environmental site assessment, investigation, compliance
audit or environmental review) with respect to any real property or an update
of such audit (i) upon the written request of the Lender documenting its
reasonable opinion that the Borrower or any Guarantor may not be in material
compliance with this Section 6.3; (ii) if such audit is required by
any Governmental Body or (iii) if an Event of Default relating to an environmental
matter has occurred, and the Lender has made a reasonable written request to
the Borrower for such audit or update to address the Event of Default within
60 days after such request, and all such audits or updates thereof shall
be at the Borrower’s expense.

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

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Guarantors shall, and shall cause each Subsidiary to, provide evidence
satisfactory to the Lender, acting reasonably, of disbursements made from time
to time to effect and complete such clean-up or remedial action, including
within such time as may be prescribed by a Governmental Body. The Borrower and
each of the Guarantors shall, and shall cause each Subsidiary to, provide
written evidence to the Lender, including a report which the Lender shall
expressly be entitled to rely on, confirming the completion of the clean-up or
remediation of a site with a cost in excess of $500,000, including any
investigations and monitoring.

(h)           The Borrower shall, and shall cause each Subsidiary to, permit the
Lender and its authorized employees, representatives and agents, at reasonable
times and during normal business hours and at the Borrower’s own cost, upon
giving reasonable notice, to visit, inspect and investigate (including
intrusive investigations)any real property where the Lender, in its reasonable
opinion, believes that the Borrower or any Subsidiary may not be in compliance
with Section 6.3(g).

ARTICLE 7

CONDITIONS PRECEDENT

7.1          Conditions Precedent to Closing

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

(a)           the representations and warranties set out in Section 5.1 shall be
true and correct in all material respects on the Closing Date as if made on and
as of such date;

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

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

(d)           an amendment to the Gulfstream Construction Loan Agreement, in form and
substance satisfactory to the Lender, in its sole and absolute discretion,
shall have been executed and delivered by the parties thereto, which amendment
shall provide as follows:

(i)            the Borrower shall be added as a guarantor
thereunder;

(ii)           the borrower and all the guarantors thereunder (which shall include,
without limitation, the Borrower) shall covenant to (A) use all
commercially reasonable efforts to implement the Borrower Restructuring Plan
(including the sale of specific assets by the time periods listed therein), and
direct any applicable asset sales proceeds as required under the Gulfstream
Construction Loan Agreement, and (B) reduce the indebtedness owing under
the Gulfstream Construction Loan Agreement by an amount of not less than
$100,000,000 by the Maturity Date; and

(iii)          as consideration for the foregoing, the Lender (as lender under the
Gulfstream Construction Loan Agreement), shall (A) waive payment of any make-whole
amount owing in respect of repayments made under the Gulfstream Construction
Loan Agreement by the Maturity Date and (B) agree to adjust the
amortization schedule for the Gulfstream Construction Loan Agreement at such
time as, prior to the Maturity Date, $100,000,000 of the loan thereunder has
been repaid, provided that (i) repayments by or on behalf of the borrower
thereunder shall first be applied to Tranche 2 (as such term is
defined in the Gulfstream Construction Loan Agreement), then to repayment of
Tranche 3 (as such term is defined in the Gulfstream Construction
Loan Agreement, and then to repayment of Tranche 1 (as such term is
defined in the Gulfstream Construction Loan Agreement) and (ii) at the
time such repayments are received by the Lender, no event of default, nor any
event

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or circumstance, which, with the giving of notice, the lapse of time, or
both, would (if not cured or otherwise remedied during such time)
constitute an event of default, shall exist under the Gulfstream Construction
Loan Agreement or the Remington Construction Loan Agreement;

(e)           each of the Borrower, the Lender and MID shall have received the
approval of their respective board of directors;

(f)            the Lender shall have received an executed
commitment letter or subscription agreement, in form and substance satisfactory
to the Lender, in its sole and absolute discretion, pursuant to which Fair
Enterprise Limited (or an affiliate thereof) commits to providing an
equity investment (the “Fair Enterprise
Investment”) in the Borrower of $20,000,000, which investment has
been agreed to by the Borrower’s board of directors; and

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

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

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

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

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

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

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

(iii)          the Disclosure Schedule;

(iv)          the Borrower Restructuring Plan; and

(v)           such other documentation or information as the Lender shall have
reasonably requested.

7.2          Conditions Precedent to Advances

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

(a)           the representations and warranties set out in Section 5.1 hereof
shall be true and correct on the relevant Borrowing Date as if made on and as
of such date and the Borrower and the Guarantors shall have delivered a
certificate to that effect;

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

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

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

(e)           the Intercreditor Agreements, in form and substance satisfactory to the
Lender, in its sole and absolute discretion, shall have been executed and
delivered by all parties thereto;

(f)            the BMO Credit Agreement shall have ben amended in
form and substance satisfactory to the Lender, in its sole and absolute
discretion, to provide for (i) this Agreement (unless a consent from BMO,
in form and substance satisfactory to the Lender, shall have been received to
provide for this Agreement), and (ii) an extension of the term of the
credit facility therein such that it expires no earlier than
January 31, 2008;

(g)           the Lender shall have received the most recent monthly progress report
relating to the Borrower Restructuring Plan, in form and substance satisfactory
to the Lender, acting reasonably;

(h)           the Lender shall be satisfied, in its sole and absolute discretion, that
substantial progress has been made, and continues to be made, toward closing of
the Fair Enterprise Investment;

(i)            the Lender shall have received and be satisfied,
in its sole and absolute discretion, with updated environmental reports for
each of the Properties owned or leased by the Guarantors to be delivered
pursuant to Section 6.1(p).

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

(k)           as a condition precedent to the first Advance on or following
January 15, 2008, the Lender shall be satisfied, in its sole and absolute
discretion, that that term of the BMO Credit Agreement will be extended such
that the facility thereunder expires no earlier than April 30, 2008
(or that a refinancing of the BMO Credit Agreement has been arranged by
the Borrower on terms satisfactory to the Lender, acting reasonably);

(l)            as a condition precedent to the first Advance on
or following February 29, 2008, the Lender shall have received payment in
full of the Second Arrangement Fee;

(m)          as a condition precedent to the first Advance on or following
October 31, 2007, the Fair Enterprise Investment shall have closed;

(n)           to the extent that the Fair Enterprise Investment has closed, proceeds
therefrom shall have been (i) applied in a manner consistent (to be
determined by the Lender in its sole and absolute discretion) with the Borrower
Restructuring Plan and the weekly cash flow forecast reports that the Borrower
is required to deliver to the Lender and MID and (ii) fully exhausted;

(o)           as a condition precedent to the first Advance that would result in the
Loan exceeding $40,000,000, the Borrower shall have established to the
satisfaction of the Lender, in its sole and absolute discretion, that the
Borrower is in compliance with, can reasonably be expected to be able to
implement, and is using all commercially reasonable efforts to implement, the
Borrower Restructuring Plan;

(p)           as a condition precedent to the initial Advance only, the Lender shall
have received the following in form, scope and substance satisfactory to the
Lender, acting reasonably:

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

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

(q)           as a condition precedent to the initial Advance only, as evidence of,
and security for, the Loan and all other obligations, liability and
indebtedness of the Borrower hereunder and under the other Loan Documents, both
present and future (the “Indebtedness”),
the Borrower shall have delivered to the Lender, in form satisfactory to the
Lender and its counsel:

(i)            a grid promissory note in the amount of Eighty
Million Dollars ($80,000,000) from the Borrower in favour of the Lender
(the “Borrower Note”);

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

(iii)          a second assignment of the right, title and interest of the Borrower in,
to and under the Holdback Agreement of even date with this Agreement from the
Borrower to the Lender, the Borrower and the Lender acknowledging and agreeing
that such Holdback Agreement was assigned by the Borrower in favour of the
Lender pursuant to the Note Assignment Agreement whereby the Ancillary Rights
(as such term is defined in the Note Assignment Agreement) were assigned
by the Borrower in favour of the Lender, it having been acknowledged by PA
Meadows, LLC under the Release and Termination Agreement that Ancillary
Rights under the Note Assignment Agreement included the right, title and
interest of the Borrower in, to and under the Holdback Agreement; provided that
in connection with such assignment, the Borrower shall have complied with all
notice requirements under the Holdback Agreement and shall have obtained all
consents and waivers necessary to assign to the Lender such Holdback Agreement
(the “Assignment of Holdback Agreement”);

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

(v)           a specific assignment to the Lender of the policies of insurance
referred to in Section 5.1(ee) and the proceeds thereof, together
with endorsements thereof in form and terms satisfactory to the Lender
reflecting the Lender as a loss payee or additional insured,
as applicable;

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

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

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

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

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

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

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

(xiii)        related UCC financing statements;

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

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

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

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

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

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benefit of and in trust for the Lender (the “Golden Gate Fields Second Assignment of Material
Agreements”);

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

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

(xxi)        related UCC financing statements;

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

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

(xxiv)      a perfected second priority Encumbrance on the Ocala Property pursuant
to a mortgage of even date with this Agreement from the Ocala Guarantors in
favour of the Lender (the “Ocala Second
Mortgage”);

(xxv)       a second priority assignment of rents and leases generated by the use
and occupancy of the Ocala Property pursuant to an assignment of rents and
lessor’s interest in the Occupancy Agreements relating to the Ocala Property of
even date with this Agreement from the Ocala Guarantors in favour of the Lender
(the “Ocala Second Assignment of Rents
and Leases”);

(xxvi)      a second general assignment of the Ocala Guarantors’ interest in the
Material Agreements relating to the Ocala Property, where permitted; provided
that if the assignment of any such Material Agreements is not permitted, the
Ocala Guarantors shall use 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 Ocala Guarantors for the benefit of and
in trust for the Lender (the “Ocala
Second Assignment of Material Agreements”);

(xxvii)    a perfected second priority Encumbrance in all
personal property of the Ocala Guarantors now owned and hereafter acquired
(excluding licenses and permits), in each case to the extent permitted by
Applicable Law, and a negative pledge in respect of all such personal property
(excluding licenses and permits), pursuant to a general security agreement from
the Ocala Guarantors to the Lender (the “Ocala
Second General Security Agreement”), it being acknowledged and
agreed that the Ocala Second Mortgage, the Ocala Second Assignment of Rents and
Leases, the Ocala Second Assignment of Material Agreements and the Ocala Second
General Security Agreement

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(collectively, the “Ocala Security”)
is security for the Indebtedness, and not as security for the Ocala Guarantee
and Indemnity;

(xxviii)   the environmental indemnity agreement in respect
of the Ocala Property, from the Ocala Guarantors in favour of the Lender
(the “Ocala Property Environmental
Indemnity”);

(xxix)      related UCC financing statements;

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

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

(xxxii)     a perfected first priority Encumbrance on the
Dixon Property pursuant to a mortgage of even date with this Agreement from the
Dixon Guarantor in favour of the Lender (the “Dixon First Mortgage”);

(xxxiii)   a first priority assignment of rents and leases
generated by the use and occupancy of the Dixon Property pursuant to an
assignment of rents and lessor’s interest in the Occupancy Agreements relating
to the Dixon Property of even date with this Agreement from the Dixon Guarantor
in favour of the Lender (the “Dixon
First Assignment of Rents and Leases”);

(xxxiv)   a first general assignment of the Dixon Guarantor’s
interest in the Material Agreements relating to the Dixon Property, where
permitted; provided that if the assignment of any such Material Agreements is
not permitted, the Dixon 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 Dixon Guarantor for
the benefit of and in trust for the Lender (the “Dixon First Assignment of Material Agreements”);

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

(xxxvi)   the environmental indemnity agreement in respect
of the Dixon Property, from the Dixon Guarantor in favour of the Lender
(the “Dixon Property Environmental
Indemnity”);

(xxxvii)   related UCC financing statements;

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

(xxxix)    any other collateral or security described in this Agreement or in any
of the other Loan Documents, and such other assignments, mortgages, security
agreements and undertakings relating to the Dixon

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Property and other documentation in support thereof as the Lender and
its counsel shall reasonably require;

(xl)          a perfected first priority Encumbrance on the Thistledown Property
pursuant to a mortgage of even date with this Agreement from the Thistledown
Guarantor in favour of the Lender (the “Thistledown
First Mortgage”);

(xli)         a first priority assignment of rents and leases generated by the use and
occupancy of the Thistledown Property pursuant to an assignment of rents and
lessor’s interest in the Occupancy Agreements relating to the Thistledown
Property of even date with this Agreement from the Thistledown Guarantor in
favour of the Lender (the “Thistledown
First Assignment of Rents and Leases”);

(xlii)        a first general assignment of the Thistledown Guarantor’s interest in
the Material Agreement relating to the Thistledown Property, where permitted;
provided that if the assignment of any such Material Agreements is not
permitted, the Thistledown 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 Thistledown
Guarantor for the benefit of and in trust for the Lender (the “Thistledown First Assignment of Material Agreements”);

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

(xliv)      the environmental indemnity agreement in respect of the Thistledown
Property, from the Thistledown Guarantor in favour of the Lender (the “Thistledown Property Environmental Indemnity”);

(xlv)        related UCC financing statements;

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

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

(xlviii)    in consideration of the guarantee and indemnity
fees paid by the Borrower to the Golden Gate Fields Guarantors in the amount of
$25,000 (the “Golden Gate Fields
Guarantee Fee”), the direct and indirect financial and other support
that the Borrower has provided, and such direct and indirect financial and
other support as the Borrower intends in the future to provide, to the Golden
Gate Fields Guarantors, and in order to induce the Lender to enter into the
Agreement, the guarantee and indemnity (the “Golden Gate Fields Guarantee and Indemnity”) of the Golden
Gate Fields Guarantors, under which the Golden Gate Fields Guarantors
unconditionally guarantee the payment and performance of the Indebtedness
outstanding from time to time, as well as interest and other

 59
 

amounts owing hereunder or under the other Loan Documents and the
performance of all other obligations of the Borrower under the Loan and the
Loan Documents;

(xlix)       related UCC financing statements;

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

(li)           in consideration of the guarantee and indemnity fees paid by the
Borrower to the Santa Anita Guarantors in the amount of $25,000 (the “Santa Anita Guarantee Fee”), the direct and
indirect financial and other support that the Borrower has provided, and such
direct and indirect financial and other support as the Borrower intends in the
future to provide, to the Santa Anita Guarantors, and in order to induce the
Lender to enter into the Agreement, the guarantee and indemnity (the “Santa Anita Guarantee and Indemnity”) of
the Santa Anita Guarantors, under which the Santa Anita Guarantors
unconditionally guarantee the payment and performance of the Indebtedness
outstanding from time to time, as well as interest and other amounts owing
hereunder or under the other Loan Documents and the performance of all other
obligations of the Borrower under the Loan and the Loan Documents;

(lii)          related UCC financing statements;

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

(liv)         in consideration of the guarantee and indemnity fees paid by the
Borrower to the Gulfstream Guarantor in the amount of $25,000 (the “Gulfstream Guarantee Fee”), the direct and
indirect financial and other support that the Borrower has provided, and such
direct and indirect financial and other support as the Borrower intends in the
future to provide, to the Gulfstream Guarantor, and in order to induce the
Lender to enter into the Agreement, the guarantee and indemnity (the “Gulfstream Guarantee and Indemnity”) of the
Gulfstream Guarantor, under which the Gulfstream Guarantor unconditionally
guarantees the payment and performance of the Indebtedness outstanding from
time to time, as well as interest and other amounts owing hereunder or under
the other Loan Documents, and the performance of all other obligations of the
Borrower under the Loan and the Loan Documents;

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

(lvi)         in consideration of the guarantee and indemnity fees paid by the
Borrower to the Dixon Guarantor in the amount of $15,000 (the “Dixon Guarantee Fee”), the direct and
indirect financial and other support that the Borrower has provided, and such
direct and indirect financial and other support as the Borrower intends in the
future to provide, to the Dixon Guarantor, and in order to induce the

 60
 

Lender to enter into the Agreement, the guarantee and indemnity
(the “Dixon Guarantee and Indemnity”)
of the Dixon Guarantor, under which the Dixon Guarantor unconditionally
guarantees the payment and performance of the Indebtedness outstanding from
time to time, as well as interest and other amounts owing hereunder or under
the other Loan Documents, and the performance of all other obligations of the
Borrower under the Loan and the Loan Documents;

(lvii)        in consideration of the guarantee and indemnity fees paid by the
Borrower to the Ocala Guarantors in the amount of $15,000 (the “Ocala Guarantee Fee”), the guarantee and
indemnity (the “Ocala Guarantee and
Indemnity”) of Ocala Guarantors, under which Ocala Guarantors
unconditionally guarantees the payment and performance of the Indebtedness
outstanding from time to time, as well as interest and other amounts owing
hereunder or under the other Loan Documents, and the performance of all other
obligations of the Borrower under the Loan and the Loan Documents;

(lviii)       in consideration of the guarantee and indemnity
fees paid by the Borrower to the Thistledown Guarantor in the amount of $10,000
(the “Thistledown Guarantee Fee”),
the direct and indirect financial and other support that the Borrower has
provided, and such direct and indirect financial and other support as the
Borrower intends in the future to provide, to the Thistledown Guarantor, and in
order to induce the Lender to enter into the Agreement, the guarantee and
indemnity (the “Thistledown Guarantee
and Indemnity”) of the Thistledown Guarantor, under which the Thistledown
Guarantor unconditionally guarantee the payment and performance of the
Indebtedness outstanding from time to time, as well as interest and other
amounts owing hereunder or under the other Loan Documents and the performance
of all other obligations of the Borrower under the Loan and the
Loan Documents;

(lix)         in consideration of the guarantee and indemnity fees paid by the
Borrower to each of the AmTote Guarantors in the amount of $2,500 (the “AmTote Guarantee Fee”), the direct and
indirect financial and other support that the Borrower has provided, and such
direct and indirect financial and other support as the Borrower intends in the
future to provide, to the AmTote Guarantors, and in order to induce the Lender
to enter into the Agreement, a guarantee and indemnity (the “AmTote Guarantees and Indemnities”) of each
of the AmTote Guarantors, under which the AmTote Guarantors unconditionally
guarantee the payment and performance of the Indebtedness outstanding from time
to time, as well as interest and other amounts owing hereunder or under the
other Loan Documents and the performance of all other obligations of the
Borrower under the Loan and the Loan Documents;

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

The security set out above in this Section 7.2(q) is herein called
the “Security”. All of the
foregoing documents and instruments shall have been properly registered,
recorded and filed in all places which, searches shall have been conducted in
all jurisdictions which, and deliveries of all consents, approvals,
acknowledgements, undertakings, non-disturbance agreements, directions,
negotiable documents of title and other documents and instruments to the Lender
shall have been made which, in the opinion of the Lender’s counsel, are desirable
or required to make effective the Security created or intended to be created in
favour of the Lender to ensure the perfection and the intended priority of
the Security.

 61

ARTICLE 8

EVENTS OF DEFAULT AND REMEDIES

8.1                               Events of Default

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

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

(b)                                 default by the Borrower or any Guarantor in the
performance or observance of any covenant, condition or obligation contained in
any Loan Document to which it is a party that does not require the payment of
money to the Lender, including, without limitation, failure by the Borrower to
use, or cause its Subsidiaries to use, all commercially reasonable efforts to
implement the Borrower Restructuring Plan, and such default continues for a
period of 20 days (or such longer period as the Lender may in its
sole discretion determine) after the earliest of (x) receipt of notice
from the Lender of such default, and (y) knowledge of the existence of
such default by any officer of the Borrower;

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

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

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

 62
 

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

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

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

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

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

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

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

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

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

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

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

(k)                                  except in connection with a transaction permitted
under Section 6.2(d), the Borrower or any Guarantor ceases or threatens in
writing or by way of public or press announcement to cease to carry on business
in the ordinary course; or

(l)                                     any event shall occur or condition shall exist,
and shall continue after the applicable grace period, if any, specified in any
note or indenture relating to the Subordinated Debt, and the effect of such
event or condition is to enable the holders of Subordinated Debt to accelerate
the maturity of the Subordinated Debt

 63
 

(whether or not the Subordinated Debt is accelerated), or any
Subordinated Debt shall be declared to be due and payable or the Borrower shall
be required to repurchase any Subordinated Debt prior to the stated maturity
thereof; or

(m)                               a Material Adverse Change occurs; or

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

8.2                               Remedies Upon Default

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

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

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

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

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

8.3                               Distributions

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

ARTICLE 9

GENERAL

9.1                               Reliance and Non-Merger

All covenants, agreements,
representations and warranties of the Borrower made herein or in any other Loan
Document or in any certificate or other document signed by any of its directors
or officers and delivered by or on behalf of any of them pursuant hereto or
thereto are material, shall be deemed to have been relied upon by the Lender
notwithstanding any investigation heretofore or hereafter made by the Lender or
Lender’s Counsel or any employee or other representative of any of them and
shall survive the execution and delivery of this Agreement and the other Loan
Documents until there are no Loans outstanding and the Lender shall have no
further obligation to make Advances hereunder. For clarity, this
Section 9.1 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.

9.2                               Confidentiality

The Lender will maintain on a
confidential basis (except as otherwise permitted hereunder or as required by
Applicable Law) all information relating to the Borrower and its Subsidiaries
provided to it hereunder by and on behalf of

 64
 

the Borrower or any of its
Subsidiaries or obtained in respect of any diligence conducted in respect
hereof; provided, however, that this Section 9.2 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.

9.3                               No Set-Off

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

9.4                               Employment of Experts

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

9.5                               Reliance by Lender

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

9.6                               Notices

Any notice or other communication
required or permitted to be given hereunder shall be in writing and shall be
given by facsimile or other means of electronic communication or by
hand-delivery or courier as hereinafter provided. Any such notice, if delivered
by courier, shall be deemed to be received on the next Banking Day after the
date of delivery thereof, or if sent by facsimile or other means of electronic
communication, shall be deemed to have been received on the day sent if sent
prior to 2:00 p.m. (Toronto time) on any Banking Day or otherwise on the next
succeeding Banking Day. Notice of change of address shall also be governed by
this Section 9.6. Notices and other communications shall be addressed
as follows:

	
  (a)

  	
   

  	
  if to the Borrower:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Magna Entertainment Corp.

  337 Magna Drive

  Aurora, Ontario

  L4G 7K1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Attention:

  	
   

  	
  Chief Financial Officer, Finance

  
	
   

  	
   

  	
  Facsimile number:

  	
   

  	
  (905) 726-7448

  
	
  (b)

  	
   

  	
  if to the Guarantors:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Pacific Racing Association

  c/o Magna Entertainment Corp.

  337 Magna Drive

  Aurora, Ontario

  L4G 7K1

  

 

 65
 

 

	
  

  	
   

  	
  Attention:

  	
   

  	
  Chief Financial Officer, Finance

  
	
   

  	
   

  	
  Facsimile number:

  	
   

  	
  (905) 726-7448

  
	
   

  	
   

  	
  MEC Land Holdings (California) Inc.

  
	
   

  	
   

  	
  c/o Magna Entertainment Corp.

  337 Magna Drive

  Aurora, Ontario

  L4G 7K1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Attention:

  	
   

  	
  Chief Financial Officer, Finance

  
	
   

  	
   

  	
  Facsimile number:

  	
   

  	
  (905) 726-7448

  
	
   

  	
   

  	
  The Santa Anita Companies, Inc.

  
	
   

  	
   

  	
  c/o Magna Entertainment Corp.

  337 Magna Drive

  Aurora, Ontario

  L4G 7K1

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Attention:

  	
   

  	
  Chief Financial Officer, Finance

  
	
   

  	
   

  	
  Facsimile number:

  	
   

  	
  (905) 726-7448

  
	
   

  	
   

  	
  Los Angeles Turf Club, Incorporated

  
	
   

  	
   

  	
  c/o Magna Entertainment Corp.

  337 Magna Drive

  Aurora, Ontario

  L4G 7K1

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Attention:

  	
   

  	
  Chief Financial Officer, Finance

  
	
   

  	
   

  	
  Facsimile number:

  	
   

  	
  (905) 726-7448

  
	
   

  	
   

  	
  Gulfstream Park Racing Association, Inc.

  
	
   

  	
   

  	
  c/o Magna Entertainment Corp.

  337 Magna Drive

  Aurora, Ontario

  L4G 7K1

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Attention:

  	
   

  	
  Chief Financial Officer, Finance

  
	
   

  	
   

  	
  Facsimile number:

  	
   

  	
  (905) 726-7448

  
	
   

  	
   

  	
  GPRA Thoroughbred Training Center Inc.

  
	
   

  	
   

  	
  c/o Magna Entertainment Corp.

  337 Magna Drive

  Aurora, Ontario

  L4G 7K1

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Attention:

  	
   

  	
  Chief Financial Officer, Finance

  
	
   

  	
   

  	
  Facsimile number:

  	
   

  	
  (905) 726-7448

  
	
   

  	
   

  	
  MEC Dixon, Inc. 

  	
   

  	
   

  
	
   

  	
   

  	
  c/o Magna Entertainment Corp.

  337 Magna Drive

  Aurora, Ontario

  L4G 7K1

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Attention:

  	
   

  	
  Chief Financial Officer, Finance

  
	
   

  	
   

  	
  Facsimile number:

  	
   

  	
  (905) 726-7448

  
	
   

  	
   

  	
  MEC Holdings (USA) Inc.

  
	
   

  	
   

  	
  c/o Magna Entertainment Corp.

  337 Magna Drive

  Aurora, Ontario

  L4G 7K1

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Attention:

  	
   

  	
  Chief Financial Officer, Finance

  
	
   

  	
   

  	
  Facsimile number:

  	
   

  	
  (905) 726-7448

  

 66
 

 

	
  

  	
   

  	
  Sunshine Meadows Racing Inc.

  
	
   

  	
   

  	
  c/o Magna Entertainment Corp.

  337 Magna Drive

  Aurora, Ontario

  L4G 7K1

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Attention:

  	
   

  	
  Chief Financial Officer, Finance

  
	
   

  	
   

  	
  Facsimile number:

  	
   

  	
  (905) 726-7448

  
	
   

  	
   

  	
  Thistledown, Inc.,

  	
   

  	
   

  
	
   

  	
   

  	
  c/o Magna Entertainment Corp.

  337 Magna Drive

  Aurora, Ontario

  L4G 7K1

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Attention:

  	
   

  	
  Chief Financial Officer, Finance

  
	
   

  	
   

  	
  Facsimile number:

  	
   

  	
  (905) 726-7448

  
	
   

  	
   

  	
  MEC Maryland Investments Inc.

  
	
   

  	
   

  	
  c/o Magna Entertainment Corp.

  337 Magna Drive

  Aurora, Ontario

  L4G 7K1

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Attention:

  	
   

  	
  Chief Financial Officer, Finance

  
	
   

  	
   

  	
  Facsimile number:

  	
   

  	
  (905) 726-7448

  
	
   

  	
   

  	
  30000 Maryland Investments LLC

  
	
   

  	
   

  	
  c/o Magna Entertainment Corp.

  337 Magna Drive

  Aurora, Ontario

  L4G 7K1

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Attention:

  	
   

  	
  Chief Financial Officer, Finance

  
	
   

  	
   

  	
  Facsimile number:

  	
   

  	
  (905) 726-7448

  
	
   

  	
   

  	
  in each case with a copy to:

  
	
   

  	
   

  	
  Magna Entertainment Corp.

  
	
   

  	
   

  	
  337 Magna Drive

  Aurora, Ontario

  L4G 7K1

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Attention:

  	
   

  	
  Chief Financial Officer, Finance

  
	
   

  	
   

  	
  Facsimile number:

  	
   

  	
  (905) 726-4448

  
	
  (c)

  	
   

  	
  if to the Lender:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  MID Islandi sf. Zug Branch

  Baererstrasse 16, CH-6304

  Zug Switzerland

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Attention:

  	
   

  	
  Thomas Schultheiss

  
	
   

  	
   

  	
   

  	
   

  	
  Branch Manager

  
	
   

  	
   

  	
  Facsimile number:

  	
   

  	
  +41 41725 2725

  
	
   

  	
   

  	
  with a copy to:

  	
   

  	
   

  
	
   

  	
   

  	
  MI Developments Inc.

  455 Magna Drive

  Aurora, Ontario

  L4G 7A9

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Attention:

  	
   

  	
  General Counsel

  
	
   

  	
   

  	
  Facsimile number:

  	
   

  	
  (905) 726-2095

  

 

 67
 

9.7                               Further Assurances

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

9.8                               Assignment

The Loan Documents shall enure to
the benefit of the Lender, its successors and assigns, and shall be binding
upon the Borrower and the Guarantors, and their respective successors and
assigns. Neither the Borrower nor either of the Guarantors shall assign, sell,
convey or otherwise transfer any of its rights or obligations under the Loan or
the Loan Documents. The Lender, may assign, sell, convey, grant participations
in, pledge, or otherwise transfer all or any part of its rights or obligations
under the Loan and the Loan Documents as follows (each a “Permitted Lender Assignee”): (a) at
any time, to any Affiliate of the Lender, without the Borrower’s or the
Guarantors’ consent; (b) at any time during which an Event of Default has
occurred and is continuing, to any third party, without the Borrower’s or any
Guarantor’s consent; and (c) at any time, with the Borrower’s consent, not
to be unreasonably withheld. Any Permitted Lender Assignee shall provide
written notice to the Borrower and the Guarantors of such assignment and its
assumption of the obligations of the Lender hereunder and thereafter shall be
entitled to the performance of all of the Borrower’s and the Guarantors’
agreements and obligations under the Loan and the Loan Documents and shall be
entitled to enforce all the rights and remedies of the Lender under the Loan
Documents, for the benefit of such Permitted Lender Assignee, as fully as if
such Permitted Lender Assignee was herein by name specifically given such
rights and remedies. Each of the Borrower and the Guarantors expressly agrees
that it will assert no claims or defenses that it may have against the Lender
against any Permitted Lender Assignee, except those specifically available
under this Agreement. In the event that the Borrower or any Guarantor shall
become directly liable for any additional charges or levies by any governmental
or regulatory authority in consequence of the operation of this
Section 9.8, 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.

9.9                               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.

9.10                        Right to Cure

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

9.11                        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

 68
 

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

9.12                        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.

9.13                        Relationship

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

9.14                        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.

9.15                        Service of Process/Venue

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

9.16                        Jury Trial Waiver

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

 69
 

9.17                        Final Agreement/Modification

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

9.18                        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, incompetence or dissolution of
any of the Borrower or any of the Guarantors).

9.19                        No Third Party Beneficiaries

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

9.20                        No Brokers

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

9.21                        Execution in Counterparts

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

9.22                        Contribution by Guarantors with Respect to
Obligations.

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

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

This 9.22 is intended only
to define the relative rights of the Guarantors, and nothing set forth in this
Section 9.22 is intended to or shall impair the obligations of the
Guarantors, jointly and severally, to pay any amounts as and when the same

 70
 

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 9.22 shall be
exercisable only upon the full and irrevocable payment of the Obligations in
cash and the termination of this Agreement, including, without limitation, the
termination of the Loan commitment hereunder.

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

The covenants and agreements
contained in the Loan Documents shall bind, and the rights thereunder shall
inure to, the respective permitted successors and assigns of the Lender, the
Borrower and the Guarantors, subject to the provisions of this Agreement.
Subject to Section 9.22, all covenants and agreements of the Borrower and
the Guarantors shall be joint and several. In exercising any rights under the
Loan Documents or taking any actions provided for therein, the Lender may act
through its employees, agents or independent contractors as authorized by
the Lender.

9.24                        Loss of Borrower Note

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

9.25                        Acknowledgment

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

 71
 

[Intentionally
Left Blank]

 72
 

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

	
  

  	
   

  	
  MAGNA ENTERTAINMENT CORP., as Borrower

  
	
   

  	
   

  	
  by

  	
   

  	
  /s/ BLAKE
  TOHANA

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Name: Blake Tohana

  Title: Executive Vice President and Chief Financial Officer

  
	
   

  	
   

  	
   

  	
   

  	
  /s/ WILLIAM
  FORD

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Name: William Ford

  Title: Secretary

  
	
   

  	
   

  	
   

  	
   

  	
  We have authority to bind the Corporation.

  
	
   

  	
   

  	
  PACIFIC RACING ASSOCIATION

  
	
   

  	
   

  	
  by

  	
   

  	
  /s/ BLAKE
  TOHANA

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Name: Blake Tohana

  Title: Executive Vice President and Chief Financial Officer

  
	
   

  	
   

  	
   

  	
   

  	
  /s/ WILLIAM
  FORD

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Name: William Ford

  Title: Secretary

  
	
   

  	
   

  	
   

  	
   

  	
  We have authority to bind the Corporation.

  
	
   

  	
   

  	
  MEC LAND HOLDINGS (CALIFORNIA) INC.

  
	
   

  	
   

  	
  by

  	
   

  	
  /s/ BLAKE
  TOHANA

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Name: Blake Tohana

  Title: Executive Vice President and Chief Financial Officer

  
	
   

  	
   

  	
   

  	
   

  	
  /s/ WILLIAM
  FORD

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Name: William Ford

  Title: Secretary

  
	
   

  	
   

  	
   

  	
   

  	
  We have authority to bind the Corporation.

  
	
   

  	
   

  	
  THE SANTA ANITA COMPANIES, INC.

  
	
   

  	
   

  	
  by

  	
   

  	
  /s/ BLAKE
  TOHANA

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Name: Blake Tohana

  Title: Executive Vice President and Chief Financial Officer

  
	
   

  	
   

  	
   

  	
   

  	
  /s/ WILLIAM
  FORD

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Name: William Ford

  Title: Secretary

  
	
   

  	
   

  	
   

  	
   

  	
  We have authority to bind the Corporation.

  
	
   

  	
   

  	
  LOS ANGELES TURF CLUB, INCORPORATED

  
	
   

  	
   

  	
  by

  	
   

  	
  /s/ BLAKE
  TOHANA

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Name: Blake Tohana

  Title: Executive Vice President and Chief Financial Officer

  
	
   

  	
   

  	
   

  	
   

  	
  /s/ WILLIAM
  FORD

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Name: William Ford

  Title: Secretary

  
	
   

  	
   

  	
   

  	
   

  	
  We have authority to bind the Corporation.

  
							

 

 73
 

 

	
  

  	
   

  	
  GULFSTREAM PARK RACING ASSOCIATION, INC.

  
	
   

  	
   

  	
  by

  	
   

  	
  /s/ BLAKE
  TOHANA

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  

  Name: Blake Tohana

  Title: Executive Vice President and Chief Financial Officer

  
	
   

  	
   

  	
   

  	
   

  	
  /s/ WILLIAM
  FORD

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Name: William Ford

  Title: Secretary

  
	
   

  	
   

  	
   

  	
   

  	
  We have authority to bind the Corporation.

  
	
   

  	
   

  	
  MEC HOLDINGS (USA) INC.

  
	
   

  	
   

  	
  by

  	
   

  	
  /s/ BLAKE
  TOHANA

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  

  Name: Blake Tohana

  Title: Executive Vice President and Chief Financial Officer

  
	
   

  	
   

  	
   

  	
   

  	
  /s/ WILLIAM
  FORD

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Name: William Ford

  Title: Secretary

  
	
   

  	
   

  	
   

  	
   

  	
  We have authority to bind the Corporation.

  
	
   

  	
   

  	
  MEC DIXON, INC.

  
	
   

  	
   

  	
  by

  	
   

  	
  /s/ BLAKE
  TOHANA

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  

  Name: Blake Tohana

  Title: Executive Vice President and Chief Financial Officer

  
	
   

  	
   

  	
   

  	
   

  	
  /s/ WILLIAM
  FORD

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Name: William Ford

  Title: Secretary

  
	
   

  	
   

  	
   

  	
   

  	
  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

  
	
   

  	
   

  	
   

  	
   

  	
  /s/ WILLIAM
  FORD

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Name: William Ford

  Title: Secretary

  
	
   

  	
   

  	
   

  	
   

  	
  We have authority to bind the Corporation.

  
	
   

  	
   

  	
  SUNSHINE MEADOWS RACING, INC.

  
	
   

  	
   

  	
  by

  	
   

  	
  /s/ BLAKE
  TOHANA

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  

  Name: Blake Tohana

  Title: Executive Vice President and Chief Financial Officer

  
	
   

  	
   

  	
   

  	
   

  	
  /s/ WILLIAM
  FORD

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Name: William Ford

  Title: Secretary

  
	
   

  	
   

  	
   

  	
   

  	
  We have authority to bind the Corporation.

  
	
   

  	
   

  	
  THISTLEDOWN, INC.

  
	
   

  	
   

  	
  by

  	
   

  	
  /s/ BLAKE
  TOHANA

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  

  Name: Blake Tohana

  Title: Executive Vice President and Chief Financial Officer

  
	
   

  	
   

  	
   

  	
   

  	
  /s/ WILLIAM
  FORD

  	
   

  
	
  

  	
   

  	
   

  	
   

  	
  Name: William Ford

  Title: Secretary

  
	
   

  	
   

  	
   

  	
   

  	
  We have authority to bind the Corporation.

  
										

 

 74
 

 

	
  

  	
   

  	
  MEC MARYLAND INVESTMENTS INC.

  
	
   

  	
   

  	
  by

  	
   

  	
  /s/ BLAKE
  TOHANA

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  

  Name: Blake Tohana

  Title: Executive Vice President and Chief Financial Officer

  
	
   

  	
   

  	
   

  	
   

  	
  /s/ WILLIAM
  FORD

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Name: William Ford

  Title: Secretary

  
	
   

  	
   

  	
   

  	
   

  	
  We have authority to bind the Corporation.

  
	
   

  	
   

  	
  30000 MARYLAND INVESTMENTS LLC

  
	
   

  	
   

  	
  by

  	
   

  	
  /s/ BLAKE
  TOHANA

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  

  Name: Blake Tohana

  Title: Executive Vice President and Chief Financial Officer

  
	
   

  	
   

  	
   

  	
   

  	
  /s/ WILLIAM
  FORD

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Name: William Ford

  Title: Secretary

  
	
   

  	
   

  	
   

  	
   

  	
  We have authority to bind the Corporation.

  
	
   

  	
   

  	
  MID ISLANDI SF., acting through its Zug Branch

  
	
   

  	
   

  	
  by

  	
   

  	
  /s/ THOMAS
  SCHULTHEISS

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  

  Name: Thomas Schultheiss

  Title: Branch Manager

  
	
   

  	
   

  	
   

  	
   

  	
  /s/ PETER
  NIDEROEST

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Name: Peter Nideroest

  Title: Branch Manager

  
	
   

  	
   

  	
   

  	
   

  	
  We have authority to bind the Partnership.

  
											

 

 75

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00129-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00129-of-00352.parquet"}]]