Document:

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                                                                  Exhibit 10.22

                            STOCK PURCHASE AGREEMENT

                  This Stock Purchase Agreement (this "AGREEMENT") is made as of
June 27, 2001, by and between Magna Entertainment Corp., a Delaware corporation
("BUYER"), and Arthur L. McFadden, an individual ("SELLER").

                                    RECITALS

                  1. Seller is the owner of the Premises and the sole
stockholder of MKC Acquisition Co., an Oregon corporation (the "ACQUIRED
COMPANY"), which owns and operates a greyhound dog racing and pari-mutuel
wagering business known as Multnomah Greyhound Park;

                  2. Seller desires to sell, and Buyer desires to purchase, all
of the issued and outstanding shares (the "Shares") of capital stock of the
Acquired Company for the consideration and on the terms set forth in this
Agreement; and

                  3. Seller desires to lease to Buyer, and Buyer desires to
lease from Seller, the Premises for the consideration and on the terms set forth
in the Lease Agreement.

                                    AGREEMENT

                  The parties, intending to be legally bound, hereby agree as
follows:

1.       DEFINITIONS

                  For purposes of this Agreement, the following terms have the
meanings specified or referred to in this Section 1:

                  "ACQUIRED COMPANY" -- as defined in the Recitals.

                  "ACQUISITION LENDER INDEBTEDNESS" -- the indebtedness
evidenced by (a) the promissory notes in the amounts of $2,850,000 from Seller
to each of the Acquisition Lenders and (b) the promissory notes in the amounts
of $300,000 from the Acquired Company to each of the Acquisition Lenders.

                  "ACQUISITION LENDERS" -- each of Multnomah Kennel Club, Inc.,
an Oregon corporation, and R.D. and Joan Dale Hubbard Foundation, a Texas
non-profit corporation, and their respective successors and assigns.

                  "AFFILIATE" -- as to any Person, each Person directly or
indirectly controlling or controlled by such Person. For purposes of this
definition, the term "control" (including the terms "controlling," "controlled
by" and "under common control with") means the possession, direct or indirect,
of the power to direct or cause the direction of the management and policies of
a Person, whether through ownership of voting securities or otherwise.

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                  "APPLICABLE CONTRACT" -- any Contract (a) under which the
Acquired Company has or may acquire any rights, (b) under which the Acquired
Company has or may become subject to any obligation or liability, or (c) by
which the Acquired Company, or any of the assets owned or used by it, is or may
become bound.

                  "APPROVAL" -- any approval, authorization, consent, license,
permit, qualification or registration, or any waiver of the foregoing, to be
obtained from, or any notice, statement, or other communication to be filed with
or delivered to, any Governmental Body or any other Person, pursuant to any
Legal Requirement or any Contract.

                  "AUDITOR" -- as defined in Section 2.5(a)(iii).

                  "BALANCE SHEETS" -- as defined in Section 3.4.

                  "BUYER" -- as defined in the first paragraph of this
Agreement.

                  "BUYER DISCLOSURE LETTER" -- the disclosure letter delivered
by Buyer to Seller concurrently with the execution and delivery of this
Agreement.

                  "BUYER FINANCIAL STATEMENTS" -- as defined in Section 4.4.

                  "BUYER SEC DOCUMENTS" -- as defined in Section 4.4.

                  "BUYER SHARES" -- that number of shares of Class A Subordinate
Voting Stock, par value $0.01 per share, of Buyer having an aggregate value
equal to $2,000,000, based on the average of the closing prices for such shares
on the Nasdaq National Market over the 20-trading day period ending on the date
three business days prior to the Closing Date.

                  "BUYER'S KNOWLEDGE" -- Buyer will be deemed to have knowledge
of a particular fact or other matter if any individual who is serving as a
director or senior executive officer of Buyer is actually aware of such fact or
other matter.

                  "CLEANUP" -- as defined in the definition of Environmental,
Health and Safety Liabilities.

                  "CLOSING" -- as defined in Section 2.3.

                  "CLOSING DATE" -- the date and time as of which the Closing
actually takes place.

                  "COMMISSION" -- the Oregon Racing Commission.

                  "COMMON STOCK" -- as defined in Section 3.3.

                  "COMPETE" -- as defined in Section 5.10(a).

                  "CONTEMPLATED TRANSACTIONS" -- all of the transactions
contemplated by this Agreement, including:

                  (a)      the sale of the Shares by Seller to Buyer;

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                  (b)      the execution, delivery and performance of the Lease
                           Agreement relating to the Premises by the parties
                           thereto;

                  (c) the performance by Buyer and Seller of their respective
covenants and obligations under this Agreement; and

                  (d) Buyer's acquisition and ownership of the Shares and
exercise of control over the Acquired Company.

                  "CONTRACT" -- any agreement, contract, obligation, promise, or
undertaking (whether written or oral and whether express or implied) that is
legally binding.

                  "CURRENT ASSETS"-- cash and cash equivalents, accounts
receivable, inventory and prepaid expenses of the Acquired Company.

                  "CURRENT LIABILITIES" -- accounts payable, accrued expenses,
including all Taxes accrued, and all other liabilities of the Acquired Company
with a maturity of less than 365 days from the date of determination.

                  "DAMAGES" -- as defined in Section 10.2.

                  "DEPOSIT" -- as defined in Section 2.2.

                  "DISCLOSURE LETTER" -- the disclosure letter delivered by
Seller to Buyer concurrently with the execution and delivery hereof, for all
purposes dated and effective as of the date hereof.

                  "ENCUMBRANCE" -- any charge, claim, community property
interest, condition, equitable interest, lien, option, pledge, security
interest, right of first refusal, or restriction of any kind, including any
restriction on use, voting, transfer, receipt of income, or exercise of any
other attribute of ownership.

                  "ENVIRONMENT" -- soil, land surface or subsurface strata,
surface waters (including navigable waters, ocean waters, streams, ponds,
drainage basins, and wetlands), groundwaters, drinking water supply, stream
sediments, ambient air (including indoor air), plant and animal life, and any
other environmental medium or natural resource.

                  "ENVIRONMENTAL, HEALTH AND SAFETY LIABILITIES" -- any cost,
damages, expense, liability, obligation, or other responsibility arising from or
under Environmental Law or Occupational Safety and Health Law and consisting of
or relating to:

                  (a) any environmental, health, or safety matters or conditions
(including on-site or off-site contamination, occupational safety and health,
and regulation of chemical substances or products);

                  (b) fines, penalties, judgments, awards, settlements, legal or
administrative proceedings, damages, losses, claims, demands and response,
investigative, remedial, or inspection costs and expenses;

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                  (c) financial responsibility for cleanup costs or corrective
action, including any required investigation, cleanup, removal, containment, or
other remediation or response actions ("CLEANUP") (whether or not such Cleanup
has been required or requested by any Governmental Body or any other Person) and
for any natural resource damages; or

                  (d) any other required compliance, corrective, investigative,
or remedial measures.

The terms "removal," "remedial," and "response action" include the types of
activities covered by the United States Comprehensive Environmental Response,
Compensation, and Liability Act, 42 U.S.C. Section 9601 et seq., as amended.

                  "ENVIRONMENTAL LAW" -- any Legal Requirement that requires or
relates to:

                  (a) advising appropriate authorities, employees, and the
public of intended or actual releases of pollutants or hazardous substances or
materials, violations of discharge limits, or other prohibitions and of the
commencements of activities, such as resource extraction or construction, that
could have significant impact on the Environment;

                  (b) preventing or reducing to acceptable levels the release of
pollutants or hazardous substances or materials into the Environment;

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

                  (d) assuring that products are designed, formulated, packaged,
and used so that they do not present unreasonable risks to human health or the
Environment when used or disposed of;

                  (e) protecting resources, species, or ecological amenities;

                  (f) reducing to acceptable levels the risks inherent in the
transportation of hazardous substances, pollutants, oil, or other potentially
harmful substances;

                  (g) cleaning up pollutants that have been released, preventing
the Threat of Release, or paying the costs of such clean up or prevention; or

                  (h) making responsible parties pay private parties, or groups
of them, for damages done to their health or the Environment, or permitting
self-appointed representatives of the public interest to recover for injuries
done to public assets.

                  "ERISA" -- the Employee Retirement Income Security Act of 1974
or any successor law, and regulations and rules issued pursuant to that act or
any successor law.

                  "FACILITIES" -- any real property, leaseholds, or other
interests currently owned, leased or operated by the Acquired Company, and any
buildings, plants, structures, or equipment (including motor vehicles, tank
cars, and rolling stock) currently or formerly owned, leased or operated by the
Acquired Company.

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                  "FINAL WORKING CAPITAL" -- as defined in Section 2.5(b).

                  "FINAL WORKING CAPITAL STATEMENT" -- as defined in Section
2.5(a)(iv).

                  "GAAP" -- generally accepted United States accounting
principles, applied on a basis consistent with the basis on which the Balance
Sheets and the other financial statements referred to in Section 3.4 were
prepared.

                  "GAMING SHARES" -- as defined in Section 5.11(b).

                  "GOVERNMENTAL BODY" -- any:

                  (a) nation, state, county, city, town, village, district, or
other jurisdiction of any nature;

                  (b) federal, state, local, municipal, foreign, or other
government;

                  (c) governmental or quasi-governmental authority of any nature
(including any governmental agency, branch, department, official, or entity and
any court or other tribunal);

                  (d)      multi-national organization or body; or

                  (e) body exercising, or entitled to exercise, any
administrative, executive, judicial, legislative, police, regulatory, or taxing
authority or power of any nature.

                  "HAZARDOUS ACTIVITY" -- the distribution, generation,
handling, importing, management, manufacturing, processing, production,
refinement, Release, storage, transfer, transportation, treatment, or use
(including any withdrawal or other use of groundwater) of Hazardous Materials
in, on, under, about, or from the Facilities or any part thereof into the
Environment, and any other act, business, operation, or thing that increases the
danger, or risk of danger, or poses an unreasonable risk of harm to persons or
property on or off the Facilities, or that may affect the value of the
Facilities or the Acquired Company.

                  "HAZARDOUS MATERIALS" -- any waste or other substance that is
listed, defined, designated, or classified as, or otherwise determined to be,
hazardous, radioactive, or toxic or a pollutant or a contaminant under or
pursuant to any Environmental Law, including any admixture or solution thereof,
and specifically including petroleum and all derivatives thereof or synthetic
substitutes therefor and asbestos or asbestos-containing materials.

                  "INDEMNIFIED PERSONS" -- as defined in Section 10.2.

                  "INTELLECTUAL PROPERTY ASSETS" -- as defined in Section 3.22.

                  "INTERIM BALANCE SHEET" -- as defined in Section 3.4.

                  "IRC" -- the Internal Revenue Code of 1986 or any successor
law, and regulations issued by the IRS pursuant to the Internal Revenue Code of
1986 or any successor law.

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                  "IRS" -- the United States Internal Revenue Service or any
successor agency, and, to the extent relevant, the United States Department of
the Treasury.

                  "LEASE AGREEMENT" -- as defined in Section 7.4.

                  "LEGAL REQUIREMENT" -- any Order and any Governmental Body's
constitution, law, ordinance, principle of common law, regulation, statute, or
treaty.

                  "LONG-TERM LIABILITIES" -- all liabilities and obligations of
the Acquired Company other than Current Liabilities.

                  "MARKS" -- as defined in Section 3.22(a)(i).

                  "MATERIAL CONTRACT" -- as defined in Section 3.17(a).

                  "NET TAX BENEFIT" -- as defined in Section 10.6(b).

                  "NON-COMPETITION PERIOD" -- as defined in Section 5.10(a).

                  "OBJECTION NOTICE" -- as defined in Section 2.5(a)(ii).

                  "OCCUPATIONAL SAFETY AND HEALTH LAW" -- any Legal Requirement
designed to provide safe and healthful working conditions and to reduce
occupational safety and health hazards, and any program, whether governmental or
private (including those promulgated or sponsored by industry associations and
insurance companies), designed to provide safe and healthful working conditions.

                  "ORDER" -- any award, decision, injunction, judgment, order,
demand, requirement, ruling, subpoena, or verdict entered, issued, made, or
rendered by any Governmental Body or by any arbitrator.

                  "ORDINARY COURSE OF BUSINESS" -- an action taken by a Person
will be deemed to have been taken in the "Ordinary Course of Business" only if
such action is consistent with the past practices of such Person and is taken in
the ordinary course of the normal day-to-day operations of such Person.

                  "ORGANIZATIONAL DOCUMENTS" -- (a) the articles or certificate
of incorporation and the bylaws or code of regulation of a corporation; (b) any
charter or similar document adopted or filed in connection with the creation,
formation, or organization of a Person; and (c) any amendment to any of the
foregoing.

                  "PERSON" -- any individual, corporation (including any
non-profit corporation), general or limited partnership, limited liability
company, joint venture, estate, trust, association, organization, labor union,
or other entity or Governmental Body.

                  "PLAN" -- as defined in Section 3.13(a).

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                  "POST-CLOSING PERIOD" -- all taxable periods of the Acquired
Company beginning after the Closing Date.

                  "PRE-CLOSING PERIOD" -- all taxable periods of the Acquired
Company ending on or before the Closing Date.

                  "PRELIMINARY WORKING CAPITAL STATEMENT" -- as defined in
Section 2.5(a)(i).

                  "PREMISES" -- the real property and the buildings thereon
owned by Seller on which Multnomah Greyhound Park is presently operated, as such
property shall be more particularly described in the Lease Agreement.

                  "PROCEEDING" -- any action, arbitration, audit, hearing,
investigation, litigation, proceeding, inquiry or suit (whether civil, criminal,
administrative, investigative, or informal) commenced, brought, conducted, or
heard by or before, or otherwise involving, any Governmental Body or arbitrator.

                  "PURCHASE PRICE" -- as defined in Section 2.2.

                  "PURCHASE PRICE ADJUSTMENT" -- as defined in Section 2.5(b).

                  "REGISTRATION RIGHTS AGREEMENT" -- the registration rights
agreement executed and delivered by Seller and Buyer on the Closing Date,
substantially in the form attached hereto as Exhibit 7.4(c), as such agreement
may thereafter be amended, amended and restated, supplemented or otherwise
modified from time to time.

                  "RELATED PERSON" -- with respect to a particular individual:

                  (a) each other member of such individual's Family;

                  (b) any Person that is directly or indirectly controlled by
such individual or one or more members of such individual's Family;

                  (c) any Person in which such individual or members of such
individual's Family hold (individually or in the aggregate) a Material Interest;
and

                  (d) any Person with respect to which such individual or one or
more members of such individual's Family serves as a director, officer, partner,
executor, or trustee (or in a similar capacity).

                  With respect to a specified Person other than an individual:

                  (a) any Person that directly or indirectly controls, is
directly or indirectly controlled by, or is directly or indirectly under common
control with such specified Person;

                  (b) any Person that holds a Material Interest in such
specified Person;

                  (c) each Person that serves as a director, officer, partner,
executor, or trustee of such specified Person (or in a similar capacity);

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                  (d) any Person in which such specified Person holds a Material
Interest;

                  (e) any Person with respect to which such specified Person
serves as a general partner or a trustee (or in a similar capacity); and

                  (f) any Related Person of any individual described in clause
(b) or (c).

                  For purposes of this definition, (a) the "FAMILY" of an
individual includes (i) the individual, (ii) the individual's spouse and former
spouses, (iii) any other natural person who is related to the individual or the
individual's spouse within the second degree, and (iv) any other natural person
who resides with such individual, and (b) "MATERIAL INTEREST" means direct or
indirect beneficial ownership (as defined in Rule 13d-3 under the Securities
Exchange Act of 1934) of voting securities or other voting interests
representing at least 50% of the outstanding voting power of a Person or equity
securities or other equity interests representing at least 50% of the
outstanding equity securities or equity interests in a Person.

                  "RELEASE" -- any spilling, leaking, emitting, discharging,
depositing, escaping, leaching, dumping, or other releasing into the
Environment, whether intentional or unintentional.

                  "REPAIR LIABILITIES" -- as defined in Section 5.11(a).

                  "REPRESENTATIVE" -- with respect to a particular Person, any
director, officer, employee, agent, consultant, advisor, or other representative
of such Person, including legal counsel, accountants, and financial advisors.

                  "SEC" -- the federal Securities and Exchange Commission.

                  "SECTION 338(H)(10) ELECTION" -- as defined in Section
11.1(a).

                  "SECTION 338(H)(10) ELECTION TAX RETURNS" -- as defined in
Section 11.1(a).

                  "SECURITIES ACT" -- the Securities Act of 1933 or any
successor law, and regulations and rules issued pursuant to that act or any
successor law.

                  "SELLER" -- as defined in the first paragraph of this
Agreement.

                  "SELLER'S KNOWLEDGE" -- Seller will be deemed to have
knowledge of a particular fact or other matter if Seller or any individual who
is serving as a director or senior executive officer of the Acquired Company is
actually aware of such fact or other matter.

                  "SHARES" -- as defined in the Recitals of this Agreement.

                  "STRADDLE PERIOD" -- as defined in Section 11.2(a).

                  "STRADDLE PERIOD TAX LIABILITY" -- as defined in Section
11.2(a).

                  "SUBCHAPTER S ELECTION" -- the election under Section 1362(a)
of the IRC, and under any similar provisions of state, local or foreign law.

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                  "SUBSIDIARY" -- with respect to any Person (the "OWNER"), any
corporation or other Person of which securities or other interests having the
power to elect a majority of that corporation's or other Person's board of
directors or similar governing body, or otherwise having the power to direct the
business and policies of that corporation or other Person (other than securities
or other interests having such power only upon the happening of a contingency
that has not occurred), are held by the Owner or one or more of its
Subsidiaries.

                  "TAX" -- any tax (including any income tax, capital gains tax,
value-added tax, sales tax, property tax, gift tax, or estate tax), levy,
assessment, tariff, duty (including any customs duty), deficiency, or other fee,
and any related charge or amount (including any fine, penalty, interest, or
addition to tax), imposed, assessed, or collected by or under the authority of
any Governmental Body or payable pursuant to any tax-sharing agreement or any
other Contract relating to the sharing or payment of any such tax, levy,
assessment, tariff, duty, deficiency, or fee.

                  "TAX CONTROVERSY" -- any audit, contest, claim, proceeding or
inquiry with respect to Taxes, or items of income, gain, loss, deduction and
credit, of the Acquired Company.

                  "TAX RETURN" -- any return (including any information return),
report, statement, schedule, notice, form, or other document or information
filed with or submitted to, or required to be filed with or submitted to, any
Governmental Body in connection with the determination, assessment, collection,
or payment of any Tax or in connection with the administration, implementation,
or enforcement of or compliance with any Legal Requirement relating to any Tax.

                  "TERRITORY" -- as defined in Section 5.10(a).

                  "THREAT OF RELEASE" -- a substantial likelihood of a Release
that may require action in order to prevent or mitigate damage to the
Environment that may result from such Release.

                  "THREATENED" -- a claim, Proceeding, dispute, action, Order,
or other matter will be deemed to have been "Threatened" if any demand or
statement has been made (orally or in writing) or any notice has been given
(orally or in writing), or if any other event has occurred or any other
circumstances exist, that would lead a prudent Person to conclude that such a
claim, Proceeding, dispute, action, or other matter is likely to be asserted,
commenced, taken, or otherwise pursued in the future.

                  "TRADE SECRETS" -- as defined in Section 3.22(a)(v).

                  "TREASURY REGULATION" -- with respect to any referenced
provision, such provision of the regulations of the United States Department of
the Treasury or any successor provision.

                  "WORKING CAPITAL" -- as of any date, the amount determined by
subtracting Current Liabilities, as of such date, from Current Assets, as of
such date, as calculated in accordance with GAAP consistently applied.

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2.       SALE AND TRANSFER OF SHARES; CLOSING

2.1      SHARES

         Subject to the terms and conditions of this Agreement, at the Closing,
Seller will sell and transfer the Shares to Buyer, and Buyer will purchase the
Shares from Seller.

2.2      PURCHASE PRICE

(a)      The purchase price for the Shares will be $5,971,548, payable
         $3,971,548 in cash and the remainder in Buyer Shares (the "PURCHASE
         PRICE"). Buyer shall pay the cash portion of the Purchase Price in
         installments as follows:

                  (i) Buyer shall pay to Seller upon execution hereof $50,000 in
         immediately available funds (the "DEPOSIT") as a good faith deposit of
         a portion of the Purchase Price; and

                  (ii) On the Closing Date, Buyer shall pay to Seller in
         immediately available funds the remaining $3,921,548 of the cash
         portion of the Purchase Price.

         (b) Seller shall be entitled to retain the Deposit in full if:

                  (i) Seller terminates this Agreement pursuant to Section
         9.1(a);

                  (ii) Buyer terminates this Agreement pursuant to Section
         9.1(b), solely upon a failure of any or all of the conditions set forth
         in Section 7.3 (Consents) (provided that such failure is due solely to
         a condition, defect or characteristic of Buyer which is reasonably
         within its control), Section 7.5 (No Proceedings), Section 7.7 (No
         Prohibition), Section 7.8 (Approvals) (provided that, in the case of a
         failure of the condition set forth in Section 7.8(b), such failure is
         due solely to a condition, defect or characteristic of Buyer which is
         reasonably within its control), Section 7.9(a) (Portland Meadows Lease,
         Etc.), Section 7.10 (Title Insurance), or Section 7.11 (No Injunction);

                  (iii) Seller terminates this Agreement pursuant to Section
         9.1(c), upon a failure of any condition set forth in Section 8.1
         (Accuracy of Representations), Section 8.2 (Buyer's Performance),
         Section 8.3 (Additional Documents), or Section 8.6 (No Claim Regarding
         Buyer Shares);

                  (iv) the parties terminate this Agreement pursuant to Section
         9.1(d); or

                  (v) Seller terminates this Agreement pursuant to Section
         9.1(e).

         If Seller is not entitled to retain the Deposit in full pursuant to the
         foregoing sentence, Seller shall promptly and fully refund such amount
         to Buyer in immediately available funds.

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2.3      CLOSING

                  The purchase and sale (the "CLOSING") provided for in this
Agreement will take place at the offices of Seller's counsel at 425 Columbia
Park Building, 1099 SW Columbia Street, Portland, Oregon, at 10:00 a.m. (local
time) on the later of (i) October 26, 2001 or (ii) the date that is five
business days following the satisfaction of all conditions precedent to Closing
listed in Section 7 and Section 8, or at such other time and place as the
parties may agree. Subject to the provisions of Section 9, failure to consummate
the purchase and sale provided for in this Agreement on the date and time and at
the place determined pursuant to this Section 2.3 will not result in the
termination of this Agreement and will not relieve any party of any obligation
under this Agreement.

2.4      CLOSING OBLIGATIONS

         At the Closing:

             (a) Seller will deliver to Buyer:

                  (i) certificate(s) representing the Shares, duly endorsed (or
accompanied by duly executed stock powers) for transfer to Buyer;

                  (ii) a certificate executed by Seller to the effect that each
of Seller's representations and warranties in this Agreement was accurate in all
respects as of the date of this Agreement and is accurate in all respects as of
the Closing Date as if made on the Closing Date (giving full effect to any
supplements to the Disclosure Letter that were delivered by Seller to Buyer
prior to the Closing Date in accordance with Section 5.5); and

                  (iii) all other items required to be delivered to Buyer by
Seller pursuant to the terms of Section 7; and

             (b) Buyer will deliver to Seller:

                  (i) $3,921,548 in immediately available funds by wire transfer
to the account specified by Seller;

                  (ii) a certificate representing the Buyer Shares;

                  (iii) a certificate executed by Buyer to the effect that each
of Buyer's representations and warranties in this Agreement was accurate in all
respects as of the date of this Agreement and is accurate in all respects as of
the Closing Date as if made on the Closing Date (giving full effect to any
supplements to the Buyer Disclosure Letter that were delivered by Buyer to
Seller prior to the Closing Date in accordance with Section 6.3); and

                  (iv) all other items required to be delivered to Seller by
Buyer pursuant to the terms of Section 8.

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         2.5      POST-CLOSING ADJUSTMENT OF PURCHASE PRICE

                  (a) (i) Within 30 calendar days after the Closing Date, Seller
shall cause to be prepared and delivered to Buyer a draft statement of the
Working Capital as of the Closing Date (the "PRELIMINARY WORKING CAPITAL
STATEMENT").

                           (ii) If Buyer has any objections to the Preliminary
         Working Capital Statement, it will deliver a written notice describing
         in reasonable detail its objections to Seller within 30 calendar days
         after delivery of the Preliminary Working Capital Statement (the
         "OBJECTION NOTICE"). If Buyer does not deliver an Objection Notice to
         Seller as provided in this paragraph, the Preliminary Working Capital
         Statement shall constitute the Final Working Capital Statement.

                           (iii) If Buyer timely delivers an Objection Notice,
         Buyer and Seller will use their reasonable efforts to resolve any
         objections set forth in the Objection Notice. If a final resolution is
         not obtained within 14 calendar days after delivery of the Objection
         Notice to Seller, a certified public accounting firm mutually agreeable
         to Buyer and Seller (the "AUDITOR") will resolve any remaining such
         objections. The Auditor shall, upon a review of the Preliminary Working
         Capital Statement and consideration of Buyer's objections thereto,
         resolve any such objections that have not been resolved by Buyer and
         Seller, revise the Preliminary Working Capital Statement (which, as so
         revised, shall constitute the Final Working Capital Statement),
         determine the Purchase Price Adjustment (if any), and communicate the
         foregoing to Buyer and Seller in writing as promptly as reasonably
         practical following the date of its receipt of such dispute. The
         Auditor's determination of the amount of the Purchase Price Adjustment
         will be final and binding upon Buyer and Seller, absent manifest error.
         Buyer and Seller will each cooperate fully with the Auditor and will
         share equally in the payment of all fees of the Auditor incurred in the
         resolution of such objections.

                           (iv) If Buyer and Seller resolve any objections
         without resort to the Auditor, the Preliminary Working Capital
         Statement will be revised as appropriate to reflect such resolution and
         will constitute the Final Working Capital Statement. The statement of
         Working Capital as of the Closing Date finally determined in accordance
         with this Section 2.5(a) (the "FINAL WORKING CAPITAL STATEMENT") will
         be conclusive and binding upon the parties hereto.

                  (b) If the Working Capital shown on the Final Working Capital
Statement (the "FINAL WORKING CAPITAL") is greater than $0, the Purchase Price
shall be increased by one dollar for every dollar by which the Final Working
Capital exceeds such amount (the "PURCHASE PRICE INCREASE"), and Buyer shall pay
to Seller an amount in cash equal to the Purchase Price Increase by wire
transfer of immediately available funds to such account or accounts specified by
Seller. To the extent the Final Working Capital is less than $0, the Purchase
Price shall be reduced by one dollar for every dollar by which the Final Working
Capital is less than such amount (the "PURCHASE PRICE REDUCTION"), and Seller
shall pay to Buyer an amount in cash equal to the Purchase Price Reduction by

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wire transfer of immediately available funds to such account or accounts
specified by Buyer. Whichever is applicable of the Purchase Price Increase and
the Purchase Price Reduction is referred to herein as the "PURCHASE PRICE
ADJUSTMENT." The Purchase Price Adjustment, if any, shall be paid, within (i)
seven days of the determination of the Final Working Capital Statement, if such
Final Working Capital Statement is determined in accordance with Section
2.5(a)(iii) or Section 2.5(a)(iv), or (ii) the 45th day after delivery to Buyer
of the Preliminary Working Capital Statement, if the Final Working Capital
Statement is determined in accordance with Section 2.5(a)(ii).

3.       REPRESENTATIONS AND WARRANTIES OF SELLER

         Seller represents and warrants to Buyer as follows:

         3.1 ORGANIZATION AND GOOD STANDING

                  (a) PART 3.1 of the Disclosure Letter contains a complete and
accurate list of the Acquired Company's name, jurisdiction of incorporation,
other jurisdictions in which it is authorized to do business, and capitalization
(including the identity of each stockholder and the number of shares held by
each). The Acquired Company is a corporation duly organized, validly existing
and active on the records of the Corporation Division of the Office of the
Secretary of State of the State of Oregon, with full corporate power and
authority to conduct its business as it is now being conducted, to own or use
the properties and assets that it purports to own or use, and to perform all its
obligations under Applicable Contracts. Neither the Acquired Company's ownership
or use of the properties owned or used by it, nor the nature of the activities
conducted by it, requires qualification to do business as a foreign corporation
under the laws of any state or other jurisdiction.

                  (b) Seller has delivered to Buyer copies of the Organizational
Documents of the Acquired Company, as currently in effect.

         3.2 AUTHORITY; NO CONFLICT

                  (a) This Agreement constitutes the legal, valid, and binding
obligation of Seller, enforceable against Seller in accordance with its terms,
except as the enforceability may be limited by the application of bankruptcy,
insolvency, moratorium or similar laws affecting the rights of creditors
generally or judicial limits on the right of specific performance. Seller has
the absolute and unrestricted right, power, authority, and capacity to execute
and deliver this Agreement and to perform its obligations under this Agreement.

                  (b) Except as set forth in PART 3.2 of the Disclosure Letter,
neither the execution and delivery of this Agreement nor the consummation or
performance of any of the Contemplated Transactions will, directly or indirectly
(with or without notice or lapse of time):

                         (i) contravene, conflict with, or result in a violation
of (A) any provision of the Organizational Documents of the Acquired Company, or
(B) any resolution adopted by the board of directors or the stockholder of the
Acquired Company;

                                       13
<PAGE>

                         (ii) to Seller's Knowledge, contravene, conflict with,
or result in a violation of, or give any Governmental Body or other Person the
right to challenge any of the Contemplated Transactions or to exercise any
remedy or obtain any relief under, any Legal Requirement to which the Acquired
Company or Seller, or any of the assets owned or used by the Acquired Company,
may be subject;

                         (iii) to Seller's Knowledge, contravene, conflict with,
or result in a violation of any of the terms or requirements of, or give any
Governmental Body the right to revoke, withdraw, suspend, cancel, terminate, or
modify, any Approval that is held by Seller or the Acquired Company or that
otherwise relates to the business of, or any of the assets owned or used by, the
Acquired Company;

                         (iv) cause any of the assets owned by the Acquired
Company to be reassessed or revalued by any taxing authority or other
Governmental Body;

                         (v) contravene, conflict with, or result in a violation
or breach of any provision of, or give any Person the right to declare a default
or exercise any remedy under, or to accelerate the maturity or performance of,
or to cancel, terminate, or modify, any Applicable Contract; or

                         (vi) result in the imposition or creation of any
Encumbrance upon or with respect to any of the assets owned or used by the
Acquired Company.

Except as set forth in PART 3.2 of the Disclosure Letter, neither Seller nor the
Acquired Company is or will be required to give any notice to or obtain any
Approval from any Person in connection with the execution and delivery of this
Agreement or the consummation or performance of any of the Contemplated
Transactions.

         3.3 CAPITALIZATION

                  (a) The total authorized equity securities of the Acquired
Company consist of 1,000 shares of common stock, without par value (the "COMMON
STOCK"), of which 100 shares are issued and outstanding on the date hereof. As
of the Closing Date, there will be 259 shares of Common Stock issued and
outstanding, all of which will constitute the Shares. Seller is the record and
beneficial owner and holder of all shares of Common Stock outstanding on the
date hereof and will be the record and beneficial owner and holder of the Shares
on the Closing Date, in each case free and clear of all Encumbrances, subject
only to restrictions as to marketability imposed by securities laws.

                  (b) No legend or other reference to any purported Encumbrance
appears upon any certificate representing the Shares, except for a legend
relating to the restricted nature of the Shares under federal and state
securities laws. All of the Shares have been duly authorized and validly issued
and are fully paid and nonassessable. Except as set forth in PART 3.3(b) of the
Disclosure Letter, there are no Contracts relating to the issuance, sale, or
transfer of Common Stock or any other equity securities (including convertible
notes or other instruments convertible into Common Stock or right to acquire
Common Stock) of the Acquired Company, or pursuant to which the Acquired Company
has granted any option, warrant or other right to any Person to acquire shares
of Common Stock or any other securities of, or equity interests in,

                                       14
<PAGE>

the Acquired Company. None of the outstanding equity securities or other
securities of the Acquired Company was issued in violation of the Securities Act
or any other Legal Requirement. Except as set forth in PART 3.3(b) of the
Disclosure Letter, the Acquired Company does not own, or have any Contract to
acquire, any equity securities or other securities of any Person or any direct
or indirect equity or ownership interest in any other business. PART 3.3(b) of
the Disclosure Letter sets forth for each entity listed thereon, to Seller's
Knowledge for each such entity which is not a Subsidiary of the Acquired
Company, its name, type of entity, the jurisdiction and date of its
incorporation or organization, its authorized capital stock, the number and type
of its issued and outstanding shares of capital stock, the current ownership of
such shares, any preemptive rights with respect thereto, any options, warrants,
convertible securities or other rights, agreements, arrangements or commitments
of any character relating to the capital stock of such entity or obligating such
entity to issue or sell any shares of its capital stock or any other equity
interests, and any stockholders agreements to which the Acquired Company is a
party with respect thereto.

         3.4 FINANCIAL STATEMENTS

                  (a) Seller has delivered to Buyer: (i) balance sheets of the
Acquired Company as at December 31 in each of the years 1998, 1999 and 2000
(including the notes thereto, the "BALANCE SHEETS"), and the related statements
of income, changes in stockholders' equity, and cash flow for each of the fiscal
years then ended, together with the report thereon of Brandt & Horstmann, P.C.,
independent certified public accountants, including in each case the notes
thereto, and (ii) an unaudited balance sheet of the Acquired Company as at March
31, 2001 (the "INTERIM BALANCE SHEET") and the related unaudited statements of
income, changes in stockholders' equity, and cash flow for the three months then
ended, including in each case the notes thereto.

                  (b) The Balance Sheets and the Interim Balance Sheet fairly
present the financial condition and the results of operations, changes in
stockholders' equity, and cash flow of the Acquired Company as at the respective
dates of and for the periods referred to in such financial statements, all in
accordance with GAAP, subject, in the case of the Interim Balance Sheet, to
normal recurring year-end adjustments (the effect of which will not,
individually or in the aggregate, be materially adverse) and the absence of
notes (that, if presented, would not differ materially from those included in
the Balance Sheets); the financial statements referred to in this Section 3.4
reflect the consistent application of such accounting principles throughout the
periods involved, except as disclosed in the notes to such financial statements.
No financial statements of any Person are required by GAAP to be included in the
financial statements of the Acquired Company, other than those included.

         3.5 BOOKS AND RECORDS

         The books of account, records of corporate proceedings and other
records of the Acquired Company, true, correct and complete copies of which have
been provided to Buyer, are complete and correct in all material respects and
have been maintained in accordance with sound business practices, including the
maintenance of an adequate system of internal controls. The records of corporate
proceedings of the Acquired Company contain accurate and complete records of all
material actions taken by the stockholder and the Board of Directors of the

                                       15
<PAGE>

Acquired Company. At the Closing, all of those books and records will be in the
possession of the Acquired Company.

         3.6 TITLE TO PROPERTIES; ENCUMBRANCES

                  (a) PART 3.6 of the Disclosure Letter contains a complete and
accurate list of all real property, leaseholds, or other interests therein owned
by the Acquired Company. Seller has delivered or made available to Buyer copies
of the deeds and other instruments (as recorded) by which the Acquired Company
acquired such real property and interests, and copies of all title insurance
policies, opinions, abstracts, and surveys in the possession of Seller or the
Acquired Company and relating to such property or interests. The Acquired
Company owns (with good and marketable title in the case of real property,
subject only to liens for property taxes and governmental assessments not yet
delinquent or payable, zoning and land use laws, and claims, liens, rights of
way, easements, and other encumbrances of record, none of which would prohibit
or make materially more expensive the operation of the Premises as a greyhound
racetrack consistent with its historical use) all the properties and assets
(whether real, personal, or mixed and whether tangible or intangible) presently
located in the facilities owned or operated by the Acquired Company, including
all of the properties and assets reflected in the Balance Sheets and the Interim
Balance Sheet (except for the Premises and those assets held under capitalized
leases disclosed or not required to be disclosed in PART 3.6 or PART 3.17(a) of
the Disclosure Letter and personal property sold since the date of the Balance
Sheets and the Interim Balance Sheet, as the case may be, in the Ordinary Course
of Business), and all of the properties and assets purchased or otherwise
acquired by the Acquired Company since the date of the Interim Balance Sheet
(except for personal property acquired and sold since the date of the Interim
Balance Sheet in the Ordinary Course of Business and consistent with past
practice).

                  (b) All material properties and assets reflected in the
Balance Sheets and the Interim Balance Sheet are free and clear of all
Encumbrances and are not, in the case of real property, subject to any rights of
way, building use restrictions, exceptions, variances, reservations, or
limitations of any nature except, with respect to all such properties and
assets: (i) mortgages or security interests shown on the Balance Sheets or the
Interim Balance Sheet as securing specified liabilities or obligations, with
respect to which no default (or event that, with notice or lapse of time or
both, would constitute a default) exists, (ii) mortgages or security interests
incurred in connection with the purchase of property or assets after the date of
the Interim Balance Sheet (such mortgages and security interests being limited
to the property or assets so acquired), with respect to which no default (or
event that, with notice or lapse of time or both, would constitute a default)
exists, (iii) liens for current taxes not yet due, and (iv) with respect to real
property (A) minor imperfections of title, if any, none of which is substantial
in amount, materially detracts from the value or impairs the use of the property
subject thereto, or impairs the operations of the Acquired Company, (B) zoning
laws and other land use restrictions that do not impair the present or
anticipated use of the property subject thereto and (C) claims, liens, rights of
way, easements and other encumbrances of record. To Seller's Knowledge, all
buildings, plants, and structures owned or used by the Acquired Company lie
wholly within the boundaries of the real property owned or leased by the
Acquired Company and do not encroach upon the property of, or otherwise conflict
with the property rights of, any other Person.

                                       16
<PAGE>

         3.7 CONDITION AND SUFFICIENCY OF ASSETS

         To Seller's Knowledge, the buildings, plants, structures, and equipment
of the Acquired Company are structurally sound, are in good operating condition
and repair, and are adequate for the uses to which they are being put, and none
of such buildings, plants, structures, or equipment is in need of maintenance or
repairs except for ordinary, routine maintenance and repairs that are not
material in nature or cost. The building, plants, structures, and equipment of
the Acquired Company are sufficient for the continued conduct of the Acquired
Company's business after the Closing in substantially the same manner as
conducted prior to the Closing.

         3.8 ACCOUNTS RECEIVABLE

         All accounts receivable of the Acquired Company that are reflected on
the Balance Sheets or the Interim Balance Sheet or on the accounting records of
the Acquired Company as of the Closing Date (collectively, the "ACCOUNTS
RECEIVABLE") represent or will represent valid obligations arising from sales
actually made or services actually performed in the Ordinary Course of Business.
Unless paid prior to the Closing Date, the Accounts Receivable are or will be as
of the Closing Date, to Seller's Knowledge, current and collectible net of the
respective reserves shown on the Balance Sheets or the Interim Balance Sheet or
on the accounting records of the Acquired Company as of the Closing Date (which
reserves are adequate and calculated consistent with past practice and, in the
case of the reserve as of the Closing Date, will not represent a greater
percentage of the Accounts Receivable as of the Closing Date than the reserve
reflected in the Interim Balance Sheet represented of the Accounts Receivable
reflected therein and will not represent a material adverse change in the
composition of such Accounts Receivable in terms of aging). PART 3.8 of the
Disclosure Letter contains a complete and accurate list of all Accounts
Receivable as of the date of the Interim Balance Sheet, which list sets forth
the aging of such Accounts Receivable.

         3.9 INVENTORY

         All inventory of the Acquired Company, whether or not reflected in the
Balance Sheets or the Interim Balance Sheet, consists of a quality and quantity
usable and salable in the Ordinary Course of Business, except for obsolete items
and items of below-standard quality, all of which have been written off or
written down to net realizable value in the Balance Sheets or the Interim
Balance Sheet or on the accounting records of the Acquired Company as of the
Closing Date, as the case may be. All inventories not written off have been
priced at the lower of cost or market on a first in, first out basis. The
quantities of each item of inventory are not excessive, but are reasonable in
the present circumstances of the Acquired Company.

         3.10 NO UNDISCLOSED LIABILITIES

         Except as set forth in PART 3.10 of the Disclosure Letter, the Acquired
Company has no material liabilities or obligations of any nature (whether known
or unknown and whether absolute, accrued, contingent, or otherwise) except for
Current Liabilities and Long-Term Liabilities reflected or reserved against in
the Interim Balance Sheet and Current Liabilities incurred in the Ordinary
Course of Business since the date thereof.

                                       17
<PAGE>

         3.11 TAXES

                  (a) The Acquired Company has filed or caused to be filed (on a
timely basis since March 9, 1998) all Tax Returns that are or were required to
be filed by or with respect to it, either separately or as a member of a group
of corporations, pursuant to applicable Legal Requirements. Seller has delivered
to Buyer copies of, and PART 3.11 of the Disclosure Letter contains a complete
and accurate list of, all such Tax Returns relating to income or franchise taxes
filed since March 9, 1998. The Acquired Company has paid, or made provision for
the payment of, all Taxes that have or may have become due pursuant to those Tax
Returns or otherwise, or pursuant to any assessment received by Seller or the
Acquired Company, except such Taxes, if any, as are listed in PART 3.11 of the
Disclosure Letter and are being contested in good faith and as to which adequate
reserves (determined in accordance with GAAP) have been provided in the Balance
Sheets and the Interim Balance Sheet.

                  (b) No United States federal or state income Tax Returns of
the Acquired Company have been audited by the IRS or relevant state tax
authorities. There have been no adjustments to the United States federal income
Tax Returns filed by the Acquired Company or any group of corporations including
the Acquired Company for any taxable years. Neither Seller nor the Acquired
Company (i) has given or been requested to give waivers or extensions (or is or
would be subject to a waiver or extension given by any other Person) of any
statute of limitations relating to the payment of Taxes of the Acquired Company
or for which the Acquired Company may be liable, or (ii) has received any notice
from any Governmental Body in respect of any Tax or Tax Return.

                  (c) The charges, accruals, and reserves with respect to Taxes
on the books of the Acquired Company are adequate (determined in accordance with
GAAP) and are at least equal to the Acquired Company's liability for Taxes.
There exists no proposed Tax assessment against the Acquired Company, except as
disclosed in the Balance Sheets or in PART 3.11 of the Disclosure Letter. No
consent to the application of Section 341(f)(2) of the IRC has been filed with
respect to any property or assets held, acquired, or to be acquired by the
Acquired Company. All Taxes that the Acquired Company is or was required by
Legal Requirements to withhold or collect have been duly withheld or collected
and, to the extent required, have been paid to the proper Governmental Body or
other Person.

                  (d) All Tax Returns filed by (or that include on a
consolidated basis) the Acquired Company are true, correct, and complete. There
is no Tax sharing agreement that will require any payment by the Acquired
Company after the date of this Agreement.

         3.12 NO MATERIAL ADVERSE CHANGE

         Except as set forth in PART 3.12 of the Disclosure Letter, since the
date of the Interim Balance Sheet, there has not been any material adverse
change in the business, operations, properties, prospects, assets, or condition
of the Acquired Company, and no event has occurred or circumstance exists that
may result in such a material adverse change.

                                       18
<PAGE>

         3.13 EMPLOYEE BENEFITS

                  (a) As used in this Section 3.13, the following terms have the
meanings set forth below.

                  "COMPANY OTHER BENEFIT OBLIGATION" means an Other Benefit
Obligation owed, adopted, or followed by the Acquired Company or an ERISA
Affiliate of the Acquired Company.

                  "COMPANY PLAN" means all Plans of which the Acquired Company
or an ERISA Affiliate of the Acquired Company is or was a Plan Sponsor, or to
which the Acquired Company or an ERISA Affiliate of the Acquired Company
otherwise contributes or has contributed within the past 5 years, or in which
the Acquired Company or an ERISA Affiliate of the Acquired Company otherwise
participates or has participated within the past 5 years. All references to
Plans are to Company Plans unless the context requires otherwise.

                  "ERISA AFFILIATE" means, with respect to the Acquired Company,
any other person that, together with such company, would be treated as a single
employer under IRC Section 414.

                  "MULTI-EMPLOYER PLAN" has the meaning given in ERISA Section
3(37)(A).

                  "OTHER BENEFIT OBLIGATIONS" means all obligations,
arrangements, or customary practices, whether or not legally enforceable, to
provide benefits, other than salary, as compensation for services rendered, to
present or former directors, employees, or agents, other than obligations,
arrangements, and practices that are Plans. Other Benefit Obligations include
consulting agreements under which the compensation paid does not depend upon the
amount of service rendered, sabbatical policies, severance payment policies, and
fringe benefits within the meaning of IRC Section 132.

                  "PBGC" means the Pension Benefit Guaranty Corporation, or any
successor thereto.

                  "PENSION PLAN" has the meaning given in ERISA Section 3(2)(A).

                  "PLAN" has the meaning given in ERISA Section 3(3).

                  "PLAN SPONSOR" has the meaning given in ERISA Section
3(16)(B).

                  "QUALIFIED PLAN" means any Plan that meets or purports to meet
the requirements of IRC Section 401(a), other than Multi-Employer Plans.

                  "TITLE IV PLANS" means all Pension Plans that are subject to
Title IV of ERISA, 29 U.S.C. Section 1301 et seq., other than Multi-Employer
Plans.

                  "VEBA" means a voluntary employees' beneficiary association
under IRC Section 501(c)(9).

                                       19
<PAGE>

                 (b)

                         (i) PART 3.13(b)(i) of the Disclosure Letter contains a
complete and accurate list of all Company Plans and Company Other Benefit
Obligations and identifies as such all Company Plans that are Qualified Plans or
Multi-Employer Plans.

                         (ii) PART 3.13(b)(ii) of the Disclosure Letter sets
forth, for each Multi-Employer Plan, as of its last valuation date, the amount
of potential withdrawal liability of the Acquired Company and the Acquired
Company's other ERISA Affiliates, calculated according to information made
available pursuant to ERISA Section 4221(e).

                         (iii) PART 3.13(b)(iii) of the Disclosure Letter sets
forth a calculation of the liability of the Acquired Company for post-retirement
benefits other than pensions, made in accordance with Financial Accounting
Statement 106 of the Financial Accounting Standards Board, regardless of whether
the Acquired Company is required by this Statement to disclose such information.

                         (iv) PART 3.13(b)(iv) of the Disclosure Letter sets
forth the financial cost of all obligations owed under any Company Plan or
Company Other Benefit Obligation that is not subject to the disclosure and
reporting requirements of ERISA.

                  (c) Seller have delivered to Buyer, or will deliver to Buyer
within ten days of the date of this Agreement:

                         (i) all documents that set forth the terms of each
Company Plan and Company Other Benefit Obligation and of any related trust,
including (A) all plan descriptions and summary plan descriptions of Company
Plans for which Seller or the Acquired Company are required to prepare, file,
and distribute plan descriptions and summary plan descriptions, and (B) all
summaries and descriptions furnished to participants and beneficiaries regarding
Company Plans and Company Other Benefit Obligations for which a plan description
or summary plan description is not required;

                         (ii) all personnel, payroll, and employment manuals and
policies;

                         (iii) all collective bargaining agreements pursuant to
which contributions have been made or obligations incurred (including both
pension and welfare benefits) by the Acquired Company and the ERISA Affiliates
of the Acquired Company, and all collective bargaining agreements pursuant to
which contributions are being made or obligations are owed by such entities;

                         (iv) a written description of any Company Plan or
Company Other Benefit Obligation that is not otherwise in writing;

                         (v) all registration statements filed with respect to
any Company Plan;

                                       20
<PAGE>

                         (vi) all insurance policies purchased by or to provide
benefits under any Company Plan;

                         (vii) all contracts with third party administrators,
actuaries, investment managers, consultants, and other independent contractors
that relate to any Company Plan or Company Other Benefit Obligation;

                         (viii) all reports submitted within the four years
preceding the date of this Agreement by third party administrators, actuaries,
investment managers, consultants, or other independent contractors with respect
to any Company Plan or Company Other Benefit Obligation;

                         (ix) the Form 5500 filed in each of the most recent
three plan years with respect to each Company Plan, including all schedules
thereto and the opinions of independent accountants;

                         (x) all notices that were given by the Acquired Company
or any ERISA Affiliate of the Acquired Company or any Company Plan to the IRS,
the PBGC, or any participant or beneficiary, pursuant to statute, within the
four years preceding the date of this Agreement, including notices that are
expressly mentioned elsewhere in this Section 3.13;

                         (xi) all notices that were given by the IRS, the PBGC,
or the Department of Labor to the Acquired Company, any ERISA Affiliate of the
Acquired Company, or any Company Plan within the four years preceding the date
of this Agreement; and

                         (xii) with respect to Qualified Plans, the most recent
determination letter for each such Plan of the Acquired Company.

                  (d) Except as set forth in PART 3.13(d) of the Disclosure
Letter:

                         (i) The Acquired Company has performed all of its
obligations under all Company Plans and Company Other Benefit Obligations. The
Acquired Company has made appropriate entries in its financial records and
statements for all obligations and liabilities under such Plans and Obligations
that have accrued but are not due.

                         (ii) No statement, either written or oral, has been
made by the Acquired Company to any Person with regard to any Plan or Other
Benefit Obligation that was not in accordance with the Plan or Other Benefit
Obligation and that could have an adverse economic consequence to the Acquired
Company or to Buyer.

                         (iii) The Acquired Company, with respect to all Company
Plans and Company Other Benefits Obligations, is, and each Company Plan and
Company Other Benefit Obligation is, in full compliance with ERISA, the IRC, and
other applicable Legal Requirements including the provisions of such Legal
Requirements expressly mentioned in this Section 3.13, and with any applicable
collective bargaining agreement.

                                       21
<PAGE>

                              (A) No transaction prohibited by ERISA Section 406
and no "prohibited transaction" under IRC Section 4975(c) have occurred with
respect to any Company Plan for which Acquired Company would have any liability.

                              (B) Neither Seller nor Acquired Company has any
liability to the IRS with respect to any Plan, including any liability imposed
by Chapter 43 of the IRC.

                              (C) All filings required by ERISA and the IRC as
to each Plan have been timely filed, and all notices and disclosures to
participants required by either ERISA or the IRC have been timely provided.

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

                         (iv) Each Company Plan can be terminated within thirty
days, without payment of any additional contribution or amount and without the
vesting or acceleration of any benefits promised by such Plan.

                         (v) No event has occurred or circumstance exists that
could result in a material increase in premium costs of Company Plans and
Company Other Benefit Obligations that are insured, or a material increase in
benefit costs of such Plans and Obligations that are self-insured.

                         (vi) Other than claims for benefits submitted by
participants or beneficiaries, no claim against, or legal proceeding involving,
any Company Plan or Company Other Benefit Obligation is pending or, to Seller's
Knowledge, is Threatened.

                         (vii) No Company Plan is a Title IV Plan, a plan
subject to IRC Section 412 or a VEBA.

                         (viii) Each Qualified Plan of the Acquired Company is
qualified in form and operation under IRC Section 401(a); each trust for each
such Plan is exempt from federal income tax under IRC Section 501(a). No event
has occurred or circumstance exists that will or could give rise to
disqualification or loss of tax-exempt status of any such Plan or trust.

                         (ix) Neither the Acquired Company nor any ERISA
Affiliate of the Acquired Company has ever established, maintained, or
contributed to or otherwise participated in, or had an obligation to maintain,
contribute to, or otherwise participate in, any Multi-Employer Plan.

                         (x) Neither the Acquired Company nor any ERISA
Affiliate of the Acquired Company has withdrawn from any Multi-Employer Plan
with respect to which there is any outstanding liability as of the date of this
Agreement. No event has occurred or circumstance exists that presents a risk of
the occurrence of any withdrawal from, or

                                       22
<PAGE>

the participation, termination, reorganization, or insolvency of, any
Multi-Employer Plan that could result in any liability of either the Acquired
Company or Buyer to a Multi-Employer Plan.

                         (xi) Neither the Acquired Company nor any ERISA
Affiliate of the Acquired Company has received notice from any Multi-Employer
Plan that it is in reorganization or is insolvent, that increased contributions
may be required to avoid a reduction in plan benefits or the imposition of any
excise tax, or that such Plan intends to terminate or has terminated.

                         (xii) No Multi-Employer Plan to which the Acquired
Company or any ERISA Affiliate of the Acquired Company contributes or has
contributed is a party to any pending merger or asset or liability transfer or
is subject to any proceeding brought by the PBGC.

                         (xiii) Except to the extent required under ERISA
Section 601 et seq. and IRC Section 4980B, the Acquired Company does not provide
health or welfare benefits for any retired or former employee nor is it
obligated to provide health or welfare benefits to any active employee following
such employee's retirement or other termination of service.

                         (xiv) The Acquired Company has the right to modify and
terminate benefits to retirees (other than pensions) with respect to both
retired and active employees.

                         (xv) Seller and the Acquired Company have complied with
the provisions of ERISA Section 601 et seq. and IRC Section 4980B.

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

                         (xvii) The consummation of the Contemplated
Transactions will not result in the payment, vesting, or acceleration of any
benefit.

         3.14 COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTAL AUTHORIZATIONS

                  (a) Except as set forth in PART 3.14 of the Disclosure Letter:

                         (i) the Acquired Company is, and at all times since
March 9, 1998 has been, in compliance in all respects with each Legal
Requirement that is or was applicable to it or to the conduct or operation of
its business or the ownership or use of any of its assets, except for violations
and failures to comply that would not, individually or in the aggregate, have a
material adverse effect on the business, operations, assets, condition, or
prospects of the Acquired Company and

                                       23
<PAGE>

                         (ii) the Acquired Company has not received, at any time
since March 9, 1998, any notice or other communication (whether oral or written)
from any Governmental Body or any other Person regarding (A) any actual,
alleged, possible, or potential violation of, or failure to comply with, any
Legal Requirement, or (B) any actual, alleged, possible, or potential obligation
on the part of the Acquired Company to undertake, or to bear all or any portion
of the cost of, any remedial action of any nature.

                  (b) PART 3.14 of the Disclosure Letter contains a complete and
accurate list of each Approval that is held by the Acquired Company or that
otherwise relates to the business of, or to any of the assets owned or used by,
the Acquired Company. Each Approval listed or required to be listed in PART 3.14
of the Disclosure Letter is valid and in full force and effect. Except as set
forth in PART 3.14 of the Disclosure Letter:

                         (i) the Acquired Company is, and at all times since
March 9, 1998 has been, in compliance in all material respects with all of the
terms and requirements of each Approval identified or required to be identified
in PART 3.14 of the Disclosure Letter;

                         (ii) to Seller's Knowledge, no event has occurred or
circumstance exists that may (with or without notice or lapse of time) (A)
constitute or result directly or indirectly in a violation of or a failure to
comply with any term or requirement of any Approval listed or required to be
listed in PART 3.14 of the Disclosure Letter, or (B) result directly or
indirectly in the revocation, withdrawal, suspension, cancellation, or
termination of, or any modification to, any Approval listed or required to be
listed in PART 3.14 of the Disclosure Letter;

                         (iii) the Acquired Company has not received, at any
time since March 9, 1998, any notice or other communication (whether oral or
written) from any Governmental Body or any other Person regarding (A) any
actual, alleged, possible, or potential violation of or failure to comply with
any term or requirement of any Approval, or (B) any actual, proposed, possible,
or potential revocation, withdrawal, suspension, cancellation, termination of,
or modification to any Approval; and

                         (iv) all applications required to have been filed for
the renewal of the Approvals listed or required to be listed in PART 3.14 of the
Disclosure Letter have been duly filed on a timely basis with the appropriate
Governmental Bodies, and all other filings required to have been made with
respect to such Approvals have been duly made on a timely basis with the
appropriate Governmental Bodies.

The Approvals listed in PART 3.14 of the Disclosure Letter collectively
constitute all of the Approvals necessary to permit the Acquired Company to
lawfully conduct and operate its business in the manner it currently conducts
and operates such business and to permit the Acquired Company to own and use its
assets in the manner in which it currently owns and uses such assets.

         3.15 LEGAL PROCEEDINGS; ORDERS

                  (a) Except as set forth in PART 3.15 of the Disclosure Letter,
there is no pending Proceeding:

                                       24
<PAGE>

                         (i) that has been commenced by or against the Acquired
Company or that otherwise relates to any of the assets owned or used by the
Acquired Company; or

                         (ii) to Seller's Knowledge, that challenges, or that
may have the effect of preventing, delaying, making illegal, or otherwise
interfering with, any of the Contemplated Transactions.

To Seller's Knowledge: (1) no such Proceeding has been Threatened and (2) no
event has occurred or circumstance exists that may give rise to or serve as a
basis for the commencement of any such Proceeding. Seller has delivered to Buyer
copies of all pleadings, correspondence, and other documents relating to each
Proceeding listed in PART 3.15 of the Disclosure Letter. The Proceedings listed
in PART 3.15 of the Disclosure Letter will not have a material adverse effect on
the business, operations, assets, condition, or prospects of the Acquired
Company.

                  (b) Except as set forth in PART 3.15 of the Disclosure Letter:

                         (i) to Seller's Knowledge, there is no Order to which
the Acquired Company, or any of the assets owned or used by the Acquired
Company, is subject;

                         (ii) Seller is not subject to any Order that relates to
the business of, or any of the assets owned or used by, the Acquired Company;
and

                         (iii) to Seller's Knowledge, no officer, director,
agent, or employee of the Acquired Company is subject to any Order that
prohibits such officer, director, agent, or employee from engaging in or
continuing any conduct, activity, or practice relating to the business of the
Acquired Company.

                  (c) Except as set forth in PART 3.15 of the Disclosure Letter:

                         (i) the Acquired Company is, and at all times since
March 9, 1998 has been, in full compliance with all of the terms and
requirements of each Order to which it, or any of the assets owned or used by
it, is or has been subject; and

                         (ii) the Acquired Company has not received, at any time
since March 9, 1998, any notice or other communication (whether oral or written)
from any Governmental Body or any other Person regarding any actual, alleged,
possible, or potential violation of, or failure to comply with, any term or
requirement of any Order to which the Acquired Company, or any of the assets
owned or used by the Acquired Company, is or has been subject.

         3.16 ABSENCE OF CERTAIN CHANGES AND EVENTS

         Except as set forth in PART 3.16 of the Disclosure Letter, since the
date of the Interim Balance Sheet, and except as expressly contemplated or
permitted by this Agreement, the Acquired Company has conducted its business
only in the Ordinary Course of Business and there has not been any:

                                       25
<PAGE>

                  (a) grant of any registration rights in respect of the Common
Stock; purchase, redemption, retirement, or other acquisition by the Acquired
Company of any shares of the Common Stock; or declaration or payment of any
dividend or other distribution or payment in respect of shares of the Common
Stock;

                  (b) amendment to the Organizational Documents of the Acquired
Company;

                  (c) payment or increase by the Acquired Company of any
bonuses, salaries, or other compensation to any stockholder, director, officer,
or (except in the Ordinary Course of Business) employee or entry into any
employment, severance, or similar Contract with any director, officer, or
employee;

                  (d) adoption of, or increase in the payments to or benefits
under, any profit sharing, bonus, deferred compensation, savings, insurance,
pension, retirement, or other employee benefit plan for or with any employees of
the Acquired Company (including any Company Plans, as defined in Section 3.13);

                  (e) damage to or destruction or loss of any asset or property
of the Acquired Company, whether or not covered by insurance, materially and
adversely affecting the properties, assets, business, financial condition, or
prospects of the Acquired Company, taken as a whole;

                  (f) entry into, termination of, or receipt of notice of
termination of (i) any license, distributorship, dealer, sales representative,
joint venture, credit, or similar agreement, or (ii) any Contract or transaction
involving a total remaining commitment by or to the Acquired Company of at least
$10,000;

                  (g) sale (other than sales of inventory in the Ordinary Course
of Business), lease, or other disposition of any asset or property of the
Acquired Company or mortgage, pledge, or imposition of any lien or other
Encumbrance on any material asset or property of the Acquired Company, including
the sale, lease, or other disposition of any of the Intellectual Property
Assets;

                  (h) cancellation or waiver of any claims or rights with a
value to the Acquired Company in excess of $10,000;

                  (i) material change in the accounting methods used by the
Acquired Company; or

                  (j) agreement, whether oral or written, by the Acquired
Company to do any of the foregoing.

         3.17 CONTRACTS; NO DEFAULTS

                  (a) PART 3.17(a) of the Disclosure Letter contains a complete
and accurate list, and Seller has delivered to Buyer true and complete copies,
of (the "MATERIAL CONTRACTS"):

                                       26
<PAGE>

                         (i) each Applicable Contract that involves performance
of services or delivery of goods or materials by the Acquired Company of an
amount or value in excess of $25,000;

                         (ii) each Applicable Contract that involves performance
of services or delivery of goods or materials to the Acquired Company of an
amount or value in excess of $25,000;

                         (iii) each Applicable Contract that involves
expenditures or receipts of the Acquired Company in excess of $25,000;

                         (iv) each collective bargaining agreement and other
Applicable Contract to or with any labor union or other employee representative
of a group of employees;

                         (v) each joint venture, partnership, and other
Applicable Contract (however named) involving a sharing of profits, losses,
costs, or liabilities by the Acquired Company with any other Person;

                         (vi) each Applicable Contract containing covenants that
in any way purport to restrict the business activity of the Acquired Company or
any Affiliate of the Acquired Company or limit the freedom of the Acquired
Company or any Affiliate of the Acquired Company to engage in any line of
business or to compete with any Person;

                         (vii) each power of attorney that is currently
effective and outstanding;

                         (viii) each Applicable Contract entered into other than
in the Ordinary Course of Business that contains or provides for an express
undertaking by the Acquired Company to be responsible for consequential damages;

                         (ix) each written warranty, guaranty, and or other
similar undertaking with respect to contractual performance extended by the
Acquired Company other than in the Ordinary Course of Business; and

                         (x) each amendment, supplement, and modification
(whether oral or written) in respect of any of the foregoing.

Part 3.17(a) of the Disclosure Letter sets forth reasonably complete details
concerning such Material Contracts, including the parties thereto.

                  (b) Except as set forth in PART 3.17(b) of the Disclosure
Letter:

                         (i) to Seller's Knowledge, each Material Contract is in
full force and effect and is valid and enforceable in accordance with its terms;

                         (ii) the Acquired Company is, and at all times since
March 9, 1998 has been, in compliance in all material respects with the
applicable terms and requirements of each Material Contract under which the
Acquired Company has or had any obligation

                                       27
<PAGE>

                               or liability or by which the Acquired Company or
any of the assets owned or used by the Acquired Company is or was bound;

                         (iii) to Seller's Knowledge, each other Person that has
or had any obligation or liability under any Material Contract under which the
Acquired Company has or had any rights is, and at all times since March 9, 1998
has been, in compliance in all material respects with the applicable terms and
requirements of such Material Contract;

                         (iv) no event has occurred or circumstance exists that
(with or without notice or lapse of time) may materially contravene or conflict
with, or result in a material violation or breach of, or give the Acquired
Company or other Person the right to declare a default or exercise any remedy
under, or to accelerate the maturity or performance of, or to cancel, terminate,
or modify, any Material Contract;

                         (v) the Acquired Company has not given to or received
from any other Person, at any time since March 9, 1998, any notice or other
communication (whether oral or written) regarding any actual, alleged, possible,
or potential violation or breach of, or default under, any Material Contract;
and

                         (vi) the Applicable Contracts have been entered into
without the commission of any act alone or in concert with any other Person, or
any consideration having been paid or promised, that is or would be in violation
of any Legal Requirement.

         3.18 INSURANCE

                  (a) Seller has delivered to Buyer:

                         (i) true and complete copies of all policies of
insurance to which the Acquired Company is a party or under which the Acquired
Company, or any director of the Acquired Company, in his or her capacity as a
director of the Acquired Company, is or has been covered at any time within the
two years preceding the date of this Agreement;

                         (ii) true and complete copies of all pending
applications for policies of insurance; and

                         (iii) any statement by the auditor of the Acquired
Company's financial statements with regard to the adequacy of such entity's
coverage or of the reserves for claims.

                  (b) PART 3.18(b) of the Disclosure Letter describes:

                         (i) any self-insurance arrangement by or affecting the
Acquired Company, including any reserves established thereunder;

                         (ii) any contract or arrangement, other than a policy
of insurance, for the transfer or sharing of any risk by the Acquired Company;
and

                                       28
<PAGE>

                         (iii) all obligations of the Acquired Company to third
parties with respect to insurance (including such obligations under leases and
service agreements) and identifies the policy under which such coverage is
provided.

                  (c) Except as set forth on PART 3.18(c) of the Disclosure
Letter:

                         (i) All policies to which the Acquired Company is a
party or that provide coverage to Seller, the Acquired Company, or any director
or officer of the Acquired Company:

                              (A) are valid, outstanding, and enforceable;

                              (B) are issued by an insurer that is financially
sound and reputable;

                              (C) to Seller's Knowledge, taken together, provide
adequate insurance coverage for the assets and the operations of the Acquired
Company for all risks to which the Acquired Company are normally exposed;

                              (D) to Seller's Knowledge, are sufficient for
compliance with all Legal Requirements and Contracts to which the Acquired
Company is a party or by which any of them is bound;

                              (E) will continue in full force and effect
following the consummation of the Contemplated Transactions; and

                              (F) do not provide for any retrospective premium
adjustment or other experience-based liability on the part of the Acquired
Company.

                         (ii) Neither Seller nor Acquired Company has received
(A) any refusal of coverage or any notice that a defense will be afforded with
reservation of rights, or (B) any notice of cancellation or any other indication
that any insurance policy is no longer in full force or effect or will not be
renewed or that the issuer of any policy is not willing or able to perform its
obligations thereunder.

                         (iii) The Acquired Company has paid all premiums due,
and has otherwise performed all of its obligations, under each policy to which
the Acquired Company is a party or that provides coverage to the Acquired
Company or director or officer thereof.

                         (iv) The Acquired Company has given notice to the
insurer of all claims that may be insured thereby.

         3.19 ENVIRONMENTAL MATTERS

         Except as set forth in PART 3.19 of the Disclosure Letter:

                  (a) The Acquired Company is, and at all times has been, in
material compliance with, and has not been and is not in violation of or liable
under, any Environmental

                                       29
<PAGE>

Law. Neither Seller nor the Acquired Company has any basis to expect, nor has
either of them received, any alleged, actual or Threatened Order, citation,
directive, inquiry, summons, warning, notice, or other communication from (i)
any Governmental Body or private citizen acting in the public interest, (ii) the
current or prior owner or operator of any Facilities, or (iii) any other Person
or entity, that relates to Hazardous Activity, Hazardous Materials or to any
alleged, actual or potential violation or failure to comply with any
Environmental Law, or of any alleged, actual, potential or Threatened obligation
to undertake or bear the cost of any Environmental, Health, and Safety
Liabilities with respect to any of the Facilities, or with respect to any
property (A) at or to which Hazardous Materials were generated, manufactured,
refined, transferred, imported, used, or processed by the Acquired Company, (B)
from which Hazardous Materials have been transported, treated, stored, handled,
transferred, disposed, recycled, or received, or (C) to which Hazardous
Materials generated, manufactured, refined, transferred, imported, used, or
processed by the Acquired Company have been transported, treated, stored,
handled, transferred, disposed, recycled, or received.

                  (b) To Seller's Knowledge, there are no pending or Threatened
claims, Encumbrances, or other restrictions of any nature, resulting from any
Environmental, Health, and Safety Liabilities or arising under or pursuant to
any Environmental Law, with respect to or affecting any of the Facilities.

                  (c) The Acquired Company has no Environmental, Health, and
Safety Liabilities with respect to the Facilities or with respect to any other
properties and assets (whether real, personal, or mixed) in which the Acquired
Company has or had an interest.

                  (d) Except for household materials or products being used in
negligible amounts according to their stated, lawful and ordinary purpose, there
are no Hazardous Materials present on or in the Environment at the Facilities,
including any Hazardous Materials contained in barrels, above or underground
storage tanks, landfills, land deposits, dumps, equipment (whether moveable or
fixed) or other containers, either temporary or permanent, and deposited or
located in land, water, sumps, or any other part of the Facilities or such
adjoining property, or incorporated into any structure therein or thereon.
Neither Seller, the Acquired Company, nor to Seller's Knowledge, any other
Person, has permitted or conducted, or is aware of, any Hazardous Activity
conducted with respect to the Facilities or any other properties or assets
(whether real, personal, or mixed) in which the Acquired Company has or had an
interest except in full compliance with all applicable Environmental Laws.

                  (e) Except for household materials or products being used in
negligible amounts according to their stated, lawful and ordinary purpose, there
has been no Release or, to Seller's Knowledge, Threat of Release of any
Hazardous Materials at or from the Facilities.

                  (f) Seller has delivered to Buyer true and complete copies and
results of any reports, studies, analyses, tests, or monitoring possessed or
initiated by Seller or the Acquired Company pertaining to Hazardous Materials or
Hazardous Activities in, on, or under the Facilities, or concerning compliance
by Seller, the Acquired Company, or any other Person for whose conduct they are
or may be held responsible, with Environmental Laws.

                                       30
<PAGE>

         3.20 EMPLOYEES

                  (a) PART 3.20 of the Disclosure Letter contains a complete and
accurate list of the following information for each employee or director of the
Acquired Company, including each employee on leave of absence or layoff status:
employer; name; job title; current compensation paid or payable and any change
in compensation since January 1, 2000; vacation accrued; and service credited
for purposes of vesting and eligibility to participate under the Acquired
Company's pension, retirement, profit-sharing, thrift-savings, deferred
compensation, stock bonus, stock option, cash bonus, employee stock ownership
(including investment credit or payroll stock ownership), severance pay,
insurance, medical, welfare, or vacation plan, other employee pension benefit
plan or employee welfare benefit plan, or any other employee benefit or director
plan (including any Company Plan, as defined in Section 3.13).

                  (b) No employee or director of the Acquired Company is a party
to, or is otherwise bound by, any agreement or arrangement, including any
confidentiality, noncompetition, or proprietary rights agreement, between such
employee or director and any other Person ("PROPRIETARY RIGHTS AGREEMENT") that
in any way adversely affects or will affect (i) the performance of his duties as
an employee or director of the Acquired Company, or (ii) the ability of the
Acquired Company to conduct its business, including any Proprietary Rights
Agreement with Seller or the Acquired Company by any such employee or director.
To Seller's Knowledge, no officer or other key employee of the Acquired Company
intends to terminate his employment with the Acquired Company.

                  (c) PART 3.20 of the Disclosure Letter also contains a
complete and accurate list of the following information for each retired
employee or director of the Acquired Company, or their dependents, receiving
benefits or scheduled to receive benefits in the future: name, pension benefit,
pension option election, retiree medical insurance coverage, retiree life
insurance coverage, and other benefits.

         3.21 LABOR RELATIONS; COMPLIANCE

         Except as set forth in PART 3.21 of the Disclosure Letter, the Acquired
Company has not been or is a party to any collective bargaining or other labor
Contract since March 9, 1998. Since March 9, 1998, there has not been, there is
not presently pending or existing, and there is not Threatened: (a) any strike,
slowdown, picketing, work stoppage, or employee grievance process, (b) any
Proceeding or Order against or affecting the Acquired Company relating to the
alleged violation of any Legal Requirement pertaining to labor relations or
employment matters, including any charge or complaint filed by an employee or
union with the National Labor Relations Board, the Equal Employment Opportunity
Commission, or any comparable Governmental Body, organizational activity, or
other labor or employment dispute against or affecting the Acquired Company or
its premises, or (c) any application for certification of a collective
bargaining agent. To Seller's Knowledge, no event has occurred or circumstance
exists that could provide the basis for any work stoppage or other labor
dispute. There is no lockout of any employees by the Acquired Company, and no
such action is contemplated by the Acquired Company. The Acquired Company has
complied in all material respects with all Legal Requirements relating to
employment, equal employment opportunity, nondiscrimination, immigration, wages,
hours, benefits, collective bargaining, the payment of social security and

                                       31
<PAGE>

similar taxes, occupational safety and health, and plant closing. The Acquired
Company is not liable for the payment of any compensation, damages, taxes,
fines, penalties, or other amounts, however designated, for failure to comply
with any of the foregoing Legal Requirements.

         3.22 INTELLECTUAL PROPERTY

                  (a) INTELLECTUAL PROPERTY ASSETS -- The term "INTELLECTUAL
PROPERTY ASSETs" includes:

                         (i) the names "MULTNOMAH KENNEL CLUB", "MULTNOMAH
GREYHOUND PARK", "ABIQUOR", BRINDLES" AND "BEST BET", all other fictional
business names, trading names, registered and unregistered trademarks, service
marks, and applications currently used by the Acquired Company (collectively,
"MARKS");

                         (ii) the internet domain names
"multnomahgreyhoundpark.com" and "ez2winmgp.com";

                         (iii) all patents, patent applications, and inventions
and discoveries that may be patentable;

                         (iv) all copyrights in both published works and
unpublished works; and

                         (v) all know-how, trade secrets, confidential
information, customer lists, software, technical information, data, process
technology, plans, drawings, and blue prints (collectively, "TRADE SECRETS");

owned, used, or licensed by the Acquired Company as licensee or licensor.

                  (b) KNOW-HOW NECESSARY FOR THE BUSINESS -- The Intellectual
Property Assets are all those necessary for the operation of the Acquired
Company's business as it is currently conducted. The Acquired Company is the
owner of all right, title, and interest in and to each of the Intellectual
Property Assets, has the right to use without payment to a third party all of
the Intellectual Property Assets, and on the Closing Date will own such
Intellectual Property Assets free and clear of all Encumbrances and other
adverse claims.

                  (c) TRADEMARKS

                         (i) PART 3.22(c) of Disclosure Letter contains a
complete and accurate list and summary description of all Marks, including any
registrations of such Marks. The Acquired Company is the owner of all right,
title, and interest in and to each of the Marks, and on the Closing Date will
own such Marks free and clear of all Encumbrances and other adverse claims.

                         (ii) All Marks that have been registered with the
United States Patent and Trademark Office are currently in compliance with all
formal legal requirements (including the timely post-registration filing of
affidavits of use and incontestability and renewal

                                       32
<PAGE>

applications), are valid and enforceable, and are not subject to any maintenance
fees or taxes or actions falling due within ninety days after the Closing Date.

                         (iii) No Mark has been or is now involved in any
opposition, invalidation, or cancellation and, to Seller's Knowledge, no such
action is Threatened with the respect to any of the Marks.

                         (iv) To Seller's Knowledge, there is no potentially
interfering trademark or trademark application of any third party.

                         (v) No Mark is infringed or, to Seller's Knowledge, has
been challenged or threatened in any way. None of the Marks used by the Acquired
Company infringes or is alleged to infringe any trade name, trademark, or
service mark of any third party.

                         (vi) All products and materials containing a Mark bear
the proper federal registration notice where permitted by law.

         3.23 CERTAIN PAYMENTS

         Since March 9, 1998, neither the Acquired Company nor any director,
officer, agent, or employee of the Acquired Company, or to Seller's Knowledge
any other Person associated with or acting for or on behalf of the Acquired
Company, has directly or indirectly (a) made any contribution, gift, bribe,
rebate, payoff, influence payment, kickback, or other payment to any Person,
private or public, regardless of form, whether in money, property, or services
(i) to obtain favorable treatment in securing business, (ii) to pay for
favorable treatment for business secured, (iii) to obtain special concessions or
for special concessions already obtained, for or in respect of the Acquired
Company or any Related Person of the Acquired Company, or (iv) in violation of
any Legal Requirement, (b) established or maintained any fund or asset that has
not been recorded in the books and records of the Acquired Company.

         3.24 DISCLOSURE

                  (a) No representation or warranty of Seller in this Agreement
and no statement in the Disclosure Letter omits or will omit to state a material
fact necessary to make the statements herein or therein, in light of the
circumstances in which they were made, not misleading.

                  (b) No notice or supplement to the Disclosure Letter given
pursuant to Section 5.5 will contain any untrue statement or omit to state a
material fact necessary to make the statements therein or in this Agreement, in
light of the circumstances in which they were made, not misleading.

                  (c) There is no fact known to Seller that has specific
application to the Acquired Company (other than general economic or industry
conditions) and that materially adversely affects or, as far as Seller can
reasonably foresee, materially threatens, the assets, business, prospects,
financial condition, or results of operations of the Acquired Company that has
not been or will not be set forth in this Agreement or the Disclosure Letter.

                                       33
<PAGE>

         3.25 RELATIONSHIPS WITH RELATED PERSONS

         Except as set forth in PART 3.25 of the Disclosure Letter, neither
Seller nor any Related Person of Seller or of the Acquired Company has or has
had any interest in any property (whether real, personal, or mixed and whether
tangible or intangible) used in or pertaining to the Acquired Company's
business. Except as set forth in PART 3.25 of the Disclosure Letter, neither
Seller nor any Related Person of Seller or of the Acquired Company is, or has
owned (of record or as a beneficial owner) an equity interest or any other
financial or profit interest in, a Person that has (i) had business dealings or
a material financial interest in any transaction with the Acquired Company, or
(ii) engaged in competition with the Acquired Company with respect to any line
of the products or services of the Acquired Company in any market presently
served by the Acquired Company. Except as set forth in PART 3.25 of the
Disclosure Letter, neither Seller nor any Related Person of Seller or of the
Acquired Company is a party to any Contract with, or has any claim or right
against, the Acquired Company.

         3.26 SUBCHAPTER S ELECTION

                  (a) Continuously since its incorporation, the Acquired Company
has had in effect, and the Acquired Company will have in effect up to and
including the day before the Closing Date, a valid Subchapter S Election, and
neither Seller nor the Acquired Company has taken any action or failed to take
any action that would result in the termination, revocation or disqualification
of the Acquired Company's Subchapter S Election (other than due to the
Contemplated Transactions and the automatic termination of the Acquired
Company's Subchapter S Election resulting therefrom).

                  (b) No debt instrument of the Acquired Company will be
recharacterized as a second class of stock. No debt obligation (i) will
constitute equity or otherwise result in the holder being treated as the owner
of stock under the general principles of federal tax law and (ii) was created
with a principal purpose to contravene the requirement that all outstanding
shares of stock have identical rights to distributions and liquidation proceeds
or contravene the limitation on eligible shareholders.

                  (c) The Acquired Company has only one class of equity
outstanding (within the meaning of Section 1361(b)(1)(D) of the IRC) and all
outstanding shares of stock have identical rights to distributions and
liquidation proceeds.

                  (d) The Acquired Company has not, in the past 10 taxable
years, (1) acquired assets from another corporation in a transaction in which
the Acquired Company's Tax basis for the acquired assets was determined, in
whole or in part, by reference to the Tax basis of the acquired assets (or any
other property) in the hands of the transferor or (2) acquired the stock of any
corporation which is a qualified subchapter S subsidiary.

         3.27 INVESTMENT INTENT OF SELLER

                  (a) Seller represents and warrants to Buyer that he is
acquiring the Buyer Shares for his own account, for investment purposes only,
and not with a view to their distribution within the meaning of Section 2(11) of
the Securities Act, except as permitted under the Securities Act and applicable
state securities laws pursuant to registration or an exemption

                                       34
<PAGE>

therefrom and except that Seller may pledge the Buyer Shares to a bona fide
pledgee in order to secure indebtedness for money borrowed by Seller in
connection with his prior acquisition of the Acquired Company; PROVIDED that
such pledgee (i) is a "bank" as defined in Section 3(a)(2) of the Securities Act
or a savings and loan association or other institution described in Section
3(a)(5)(A) of the Securities Act and (ii) agrees not to dispose of the Buyer
Shares except as permitted under the Securities Act and applicable state
securities laws pursuant to registration or an exemption therefrom.

                  (b) Seller understands that: (i) the Buyer Shares have not
been registered under the Securities Act or any state securities laws and are
being offered and sold in reliance on an exemption from the registration
requirements of the Securities Act; (ii) Buyer is issuing the Buyer Shares in
reliance upon, among other things, the representations and warranties of Seller
contained in this Section 3.27 in concluding that such issuance is exempt from
registration under Section 4(2) of the Securities Act and comparable exemptions
from qualification under state securities laws; (iii) the Buyer Shares may not
be transferred or resold except as permitted under the Securities Act and
applicable state securities laws pursuant to registration or an exemption
therefrom; (iv) the certificate evidencing the Buyer Shares will bear a legend
to the effect that they have not been registered under the Securities Act and
may be transferred or resold only in compliance with the Securities Act and
applicable state securities laws.

                  (c) Seller is an "accredited investor" (as such term is
defined in Rule 501 of Regulation D of the Securities Act). Seller can afford to
bear the economic risk of holding the unregistered Buyer Shares for an
indefinite period of time and can afford to suffer the complete loss of Seller's
investment in the Buyer Shares. Seller's knowledge and experience in financial
and business matters is such that Seller is capable of evaluating the risk of
the investment in the Buyer Shares, and Seller acknowledges that he has had
access to such financial and other information, and has been afforded the
opportunity to ask such questions of representatives of Buyer (and receive
answers thereto), as Seller has deemed necessary in connection with his decision
to acquire and hold the Buyer Shares, and that no representations or warranties,
express or implied, are being made by Buyer with respect to Buyer or the Buyer
Shares, other than those expressly set forth herein. In evaluating the merits
and risks of an investment in Buyer Shares, Seller has and will rely upon the
advice of his own legal counsel, tax advisors and/or investment advisors.

         3.28 BROKERS OR FINDERS

         Seller and its Representatives have incurred no obligation or
liability, contingent or otherwise, for brokerage or finders' fees or agents'
commissions or other similar payment in connection with this Agreement.

4.       REPRESENTATIONS AND WARRANTIES OF BUYER

         Buyer represents and warrants to Seller as follows:

4.1      ORGANIZATION AND GOOD STANDING

         Buyer is a corporation duly organized, validly existing, and in good
standing under the laws of the State of Delaware, with full corporate power and
authority to conduct its

                                       35
<PAGE>

business as it is now being conducted, to own and use the properties and
assets that it purports to own or use and to perform all of its obligations
under this Agreement.

4.2      AUTHORITY; NO CONFLICT

                  (a) This Agreement constitutes the legal, valid, and binding
obligation of Buyer, enforceable against Buyer in accordance with its terms,
except as enforceability may be limited by the application of bankruptcy,
insolvency, moratorium or similar laws affecting the rights of creditors
generally or judicial limits on the right of specific performance. Buyer has the
absolute and unrestricted right, power, and authority to execute and deliver
this Agreement and to perform its obligations under this Agreement. The
execution, delivery and performance by Buyer of its obligations under this
Agreement and all other agreements contemplated hereby have been duly and
validly authorized by all necessary corporate action and will not result in any
breach or violation of the Certificate of Incorporation, Bylaws, resolutions
adopted by the board of directors or the stockholders of Buyer or material
agreements by which Buyer is subject or bound.

                  (b) Except as set forth in PART 4.2(b) of the Buyer Disclosure
Letter, neither the execution and delivery of this Agreement by Buyer nor the
consummation or performance of any of the Contemplated Transactions by Buyer
will give any Person or Governmental Body the right to prevent, delay, or
otherwise interfere with any of the Contemplated Transactions pursuant to:

                         (i) any provision of Buyer's Organizational Documents;

                         (ii) any resolution adopted by the board of directors
or the stockholders of Buyer;

                         (iii) any Legal Requirement to which Buyer may be
subject; or

                         (iv) any Contract to which Buyer is a party or by which
Buyer may be bound.

4.3      CAPITALIZATION

                  (a) The authorized capital stock of Buyer consists of
310,000,000 shares of Class A Subordinate Voting Stock, par value $0.01 per
share ("BUYER CLASS A STOCK"), and 90,000,000 shares of Class B Stock, par value
$0.01 per share ("BUYER CLASS B STOCK"). As of April 30, 2001, 17,975,341 shares
of Buyer Class A Stock and 58,466,056 shares of Buyer Class B Stock were issued
and outstanding. None of the outstanding equity securities of Buyer were issued
in violation of the Securities Act or any other Legal Requirement. Except as
disclosed on PART 4.3 of the Buyer Disclosure Letter or in the Buyer SEC
Documents, there are no options, warrants, convertible securities or other
rights, agreements, arrangements or commitments of any character relating to the
capital stock of Buyer or obligating Buyer to issue or sell any shares of
capital stock of, or any other interest in, Buyer.

                  (b) At the Closing, the Buyer Shares will be duly authorized
and validly issued and fully paid and nonassessable. Upon Buyer's delivery to
Seller of one or more

                                       36
<PAGE>

certificates representing the Buyer Shares at Closing, and upon Seller's
delivery to Buyer of the consideration therefor as contemplated by this
Agreement, Seller will acquire the Buyer Shares free and clear of all liens,
claims and Encumbrances of any kind, other than (i) transfer restrictions or
requirements under this Agreement and applicable securities laws and (ii) any
liens, claims and Encumbrances created or allowed to exist by Seller. Buyer's
execution, delivery and performance of this Agreement will not result in the
creation or imposition of any lien, charge, or encumbrance on, or security
interest in, any of the Buyer Shares or Buyer's property.

4.4      FINANCIAL STATEMENTS

         Buyer has made available to Seller each statement, report, registration
statement (with the prospectus in the form filed pursuant to Rule 424(b) of the
Securities Act) and other filing filed with the SEC by Buyer since January 1,
2000 (collectively, the "BUYER SEC DOCUMENTS"). As of their respective filing
dates, the Buyer SEC Documents complied in all material respects with the
requirements of the Securities Act. None of the Buyer SEC Documents contained
any material misstatement, or omitted to state a material fact required to be
stated therein or necessary in order to make the statements made therein, in the
light of the circumstances under which they were made, not misleading, except in
each case to the extent corrected by a subsequently filed Buyer SEC Document.
Except as set forth in PART 4.4 of the Buyer Disclosure Letter, the financial
statements of Buyer, including the related notes, included in the Buyer SEC
Documents (the "BUYER FINANCIAL STATEMENTS") were complete and correct in all
material respects as of their respective dates, and complied as to form in all
material respects with applicable accounting requirements and with the published
applicable SEC rules and regulations as of their respective dates.

4.5      NO MATERIAL ADVERSE CHANGE

         Except as disclosed on PART 4.5 of the Buyer Disclosure Letter, since
March 31, 2001, there has not been any material adverse change in the business,
operations, properties, assets or condition of Buyer and its Subsidiaries, and
no event has occurred or circumstance exists that may result in such a material
adverse change, excluding any changes which are attributable to (a)
circumstances, conditions or events generally affecting the industries in which
Buyer and its Subsidiaries operate; (b) the development, operation, acquisition
or disposition of horseracing and any other businesses, consistent with past
practices of Buyer and its Subsidiaries; or (c) the potential or actual
acquisition, disposition, development or operation of New York City Off-Track
Betting Corporation.

4.6      CERTAIN PROCEEDINGS

         There is no pending Proceeding that has been commenced against Buyer or
its properties, assets, operations or business interests and that challenges, or
may have the effect of preventing, delaying, making illegal, or otherwise
interfering with, any of the Contemplated Transactions. To Buyer's Knowledge, no
such Proceeding has been Threatened.

                                       37
<PAGE>

4.7      INVESTMENT INTENT OF BUYER

                  (a) Buyer represents and warrants to Seller that it is
acquiring the Shares for its own account, for investment purposes only, and not
with a view to their distribution within the meaning of Section 2(11) of the
Securities Act, except as permitted under the Securities Act and applicable
state securities laws pursuant to registration or an exemption therefrom. Buyer
understands that: (i) the Shares have not been registered under the Securities
Act or any state securities laws and are being offered and sold in reliance on
an exemption from the registration requirements of the Securities Act; (ii)
Seller is selling the Shares in reliance upon, among other things, the
representations and warranties of Buyer contained in this Section 4.7 in
concluding that such sale is exempt from registration under the Securities Act
and applicable state securities laws; (iii) the Shares may not be transferred or
resold except as permitted under the Securities Act and applicable state
securities laws pursuant to registration or an exemption therefrom; (iv) the
certificate evidencing the Shares bears a legend to the effect that they have
not been registered under the Securities Act and may be transferred or resold
only in compliance with the Securities Act and applicable state securities laws.

                  (b) Buyer is an "accredited investor" (as such term is defined
in Rule 501 of Regulation D of the Securities Act). Buyer can afford to bear the
economic risk of holding the unregistered Shares for an indefinite period of
time and can afford to suffer the complete loss of Buyer's investment in the
Shares. Buyer's knowledge and experience in financial and business matters is
such that Buyer is capable of evaluating the risk of the investment in the
Shares, and Buyer acknowledges that it has had access to such financial and
other information, and has been afforded the opportunity to ask such questions
of Seller and representatives of the Acquired Company (and receive answers
thereto), as Buyer has deemed necessary in connection with its decision to
acquire and hold the Shares, and that no representations or warranties, express
or implied, are being made by Seller with respect to Seller or the Shares, other
than those expressly set forth herein. In evaluating the merits and risks of an
investment in the Shares, Buyer has and will rely upon the advice of its own
legal counsel, tax advisors and/or investment advisors.

4.8      BROKERS OR FINDERS

         Buyer and its Representatives have incurred no obligation or liability,
contingent or otherwise, for brokerage or finders' fees or agents' commissions
or other similar payment in connection with this Agreement.

4.9      COMPLIANCE WITH LEGAL REQUIREMENTS

         Except as disclosed on PART 4.9 of the Buyer Disclosure Letter, Buyer
is in compliance in all material respects with each Legal Requirement that is or
was applicable to it or to the conduct or operation of its business or the
ownership or use of any of its assets, except for violations and failures to
comply that would not, individually or in the aggregate, have a material adverse
effect on the business, operations, assets, condition, or prospects of Buyer. No
event has occurred or circumstance exists that may (with or without notice or
lapse of time) constitute or result in a violation by Buyer of, or a failure on
the part of Buyer to comply with, any Legal Requirement.

                                       38
<PAGE>

4.10     CONTRACTS; NO DEFAULT

         Buyer is in compliance in all material respects with the applicable
terms and requirements of each material Contract under which it has or had any
obligation or liability or by which it or any of the assets owned or used by it
is or was bound.

4.11     DISCLOSURE

                  (a) No representation or warranty of Buyer in this Agreement
and no statement in the Buyer Disclosure Letter omits to state a material fact
necessary to make the statements herein or therein, in light of the
circumstances in which they were made, not misleading.

                  (b) No notice or supplement to the Buyer Disclosure Letter
given pursuant to Section 6.3 will contain any untrue statement or omit to state
a material fact necessary to make the statements therein or in this Agreement,
in light of the circumstances in which they were made, not misleading.

                  (c) There is no fact known to Buyer that has specific
application to Buyer (other than general economic or industry conditions) and
that materially adversely affects or currently materially threatens, the assets,
business, prospects, financial condition, or results of operations of Buyer that
has not been set forth in this Agreement or the Buyer Disclosure Letter.

5.       COVENANTS OF SELLER

         5.1      ACCESS AND INVESTIGATION

                  Between the date of this Agreement and the Closing Date,
Seller will, and will cause the Acquired Company and its Representatives to: (a)
afford Buyer and its Representatives and prospective lenders and their
Representatives (collectively, "BUYER'S ADVISORS") full and free access during
normal business hours to the Acquired Company's personnel, properties (including
subsurface testing), contracts, books and records, and other documents and data,
(b) furnish Buyer and Buyer's Advisors with copies of all such contracts, books
and records, and other existing documents and data as Buyer may reasonably
request, and (c) furnish Buyer and Buyer's Advisors with such additional
financial, operating, and other data and information as Buyer may reasonably
request. Buyer shall provide Seller with copies of the results from any test
performed on Seller's or the Acquired Company's property.

         5.2      OPERATION OF THE BUSINESSES OF THE ACQUIRED COMPANY

                  Between the date of this Agreement and the Closing Date,
Seller will, and will cause the Acquired Company to:

                      (a) conduct the business of the Acquired Company only in
the Ordinary Course of Business;

                      (b) use its commercially reasonable best efforts to
preserve intact the current business organization of the Acquired Company, keep
available the services of the

                                       39
<PAGE>

current officers, employees, and agents of the Acquired Company, and maintain
the relations and good will with suppliers, customers, landlords, creditors,
employees, agents, and others having business relationships with the Acquired
Company;

                      (c) confer with Buyer concerning operational matters of a
material nature;

                      (d) otherwise report periodically to Buyer concerning the
status of the business, operations, and finances of the Acquired Company; and

                      (e) refrain from entering into any extension or amendment
of any Material Contract without the prior written consent of Buyer, which
consent shall not be unreasonably withheld.

         5.3      NEGATIVE COVENANT

                  Except as otherwise expressly permitted by this Agreement,
between the date of this Agreement and the Closing Date, Seller will not, and
will cause the Acquired Company not to, without the prior written consent of
Buyer, take any affirmative action, or fail to take any reasonable action within
his or its control, as a result of which any of the changes or events listed in
Section 3.16 is likely to occur.

         5.4      REQUIRED APPROVALS

                  As promptly as practicable after the date of this Agreement,
Seller will, and will cause the Acquired Company to, use best efforts to assist
Buyer, at Buyer's sole cost and expense, in making all filings required by Legal
Requirements to be made in order to consummate the Contemplated Transactions and
to permit Buyer to operate the business of the Acquired Company in such manner
as conducted by Seller and as contemplated by Buyer (including all filings with
the Commission); PROVIDED that any and all such filings shall be made effective
only as of the Closing. Between the date of this Agreement and the Closing Date,
Seller will, and will cause the Acquired Company to: (a) cooperate with Buyer
with respect to all filings that Buyer elects to make or is required by Legal
Requirements to make in connection with the Contemplated Transactions, and (b)
cooperate with Buyer in obtaining all Approvals identified in Section 4.2
(including taking all actions requested by Buyer to obtain the approval of the
Commission with respect to the Contemplated Transactions).

         5.5      NOTIFICATION

                  Between the date of this Agreement and the Closing Date,
Seller will promptly notify Buyer in writing if Seller or the Acquired Company
becomes aware of any fact or condition that causes or constitutes a breach of
any of Seller's representations and warranties as of the date of this Agreement,
or if Seller or the Acquired Company becomes aware of the occurrence after the
date of this Agreement of any fact or condition that would (except as expressly
contemplated by this Agreement) cause or constitute a breach of any such
representation or warranty had such representation or warranty been made as of
the time of occurrence or discovery of such fact or condition. Should any such
fact or

                                       40
<PAGE>

condition occurring or discovered after delivery of the Disclosure Letter
require any change in the Disclosure Letter if the Disclosure Letter were dated
the date of the occurrence or discovery of any such fact or condition, Seller
will promptly deliver to Buyer a supplement to the Disclosure Letter specifying
such change. During the same period, Seller will promptly notify Buyer of the
occurrence of any breach of any covenant of Seller in this Section 5 or of the
occurrence of any event that may make the satisfaction of the conditions in
Section 7 impossible or unlikely.

         5.6      PAYMENT OF INDEBTEDNESS

                  (a) Except as expressly provided in this Agreement, Seller
will cause all indebtedness owed to the Acquired Company by Seller or any
Related Person of Seller to be paid in full prior to Closing.

                  (b) Prior to the Closing, Seller will cause the Acquired
Company to pay in full all Long-Term Liabilities of the Acquired Company that
are outstanding as of the Closing Date, including all Long-Term Liabilities
identified on the Balance Sheets and the Interim Balance Sheet; PROVIDED that
(i) all indebtedness of Seller to the Acquisition Lenders will be paid in full
by Seller contemporaneously with the Closing and (ii) indebtedness of the
Acquired Company to Seller in the amount of $3,663,954 will be cancelled prior
to the Closing, and 159 shares of Common Stock will be issued to Seller in lieu
thereof, all of which shall be considered Shares for all purposes hereof.

         5.7      NO NEGOTIATION

                  Until such time, if any, as this Agreement is terminated
pursuant to Section 9, Seller will not, and will cause the Acquired Company and
its Representatives not to, directly or indirectly solicit, initiate, encourage,
or in any way participate in any inquiries or proposals from, discuss or
negotiate with, provide any non-public information to, or consider the merits of
any unsolicited inquiries or proposals from, any Person (other than Buyer)
relating to any transaction involving the sale of the business or assets (other
than in the Ordinary Course of Business) of the Acquired Company, or any of the
Common Stock or other securities of the Acquired Company, or any merger,
consolidation, business combination, or similar transaction involving the
Acquired Company.

         5.8      BEST EFFORTS

         Between the date of this Agreement and the Closing Date, Seller will
use its commercially reasonable best efforts to cause the conditions in Sections
7 and 8 to be satisfied.

         5.9      TRANSFER RESTRICTION

                  Except as otherwise set forth in Section 3.27(a) hereof,
Seller covenants and agrees that, for the 120-day period from and after the
Closing Date, it will not: (i) sell, assign, transfer, pledge, mortgage, convey
or otherwise dispose of or encumber (each, a "TRANSFER") any of the Buyer Shares
or any interest therein or (ii) agree to so Transfer any of the Buyer Shares or
any interest therein. All Transfers or purported Transfers of the Buyer Shares
in violation of the terms of this Agreement shall be void and of no effect, and
Buyer shall not be required to enter any such Transfer on its books or otherwise
register such Transfer. The certificates evidencing the Buyer Shares shall bear
an appropriate legend referring to this Agreement and the foregoing restrictions
on Transfer.

                                       41
<PAGE>

         5.10     NON-COMPETITION

                  (a) As an inducement for Buyer to enter into this Agreement,
Seller agrees that for a period commencing on the Closing Date and ending on the
seventh anniversary thereof (the "NON-COMPETITION PERIOD"), except with Buyer's
prior written consent, Seller shall not, directly or indirectly, engage or
invest in, finance, manage, operate, assist, control or join, or participate in
the engagement or investment in, or finance, management, operation, assistance
or control of, any business or activity in any part of the Territory (as
hereinafter defined) which, directly or indirectly, Competes (as hereinafter
defined) with the Acquired Company. For purposes of this Section 5.10, a
business or organization shall be deemed to "COMPETE" with the Acquired Company
if such business or organization (i) owns or operates a dog or horse racing
track; (ii) conducts gambling or gaming operations (such as owning or operating
a casino or slot machines); and/or (iii) conducts pari-mutuel dog or horse
racing wagering operations, whether at a racetrack (including both wagering on
live races and on simulcast races), an off-track betting facility, or through
any other means. For purposes of this Section 5.10, the term "TERRITORY" means
an area comprising the states of Oregon and Washington and the province of
British Columbia.

                  (b) Nothing contained in this Section 5.10 shall prevent
Seller from owning, directly or indirectly, (i) up to 5% of the securities of
any Person which Competes with the Acquired Company, so long as such securities
are registered under Section 12(b) or 12(g) of the Securities Exchange Act of
1934 or (ii) the off-track betting facility currently owned and operated by
Seller in downtown Portland, Oregon.

                  (c) Seller and Buyer agree that the time, scope, geographic
area and other provisions of this Section 5.10 have been specifically negotiated
by sophisticated commercial parties with the benefit of legal counsel and agree
that (i) all such provisions are reasonable under the circumstances of the
Contemplated Transactions; (ii) all such provisions are given as an integral and
essential part of the Contemplated Transactions; and (iii) but for the covenants
of Seller contained in this Section 5.10, Buyer would not have entered into or
consummated the Contemplated Transactions.

                  (d) Seller and Buyer agree that any breach of the provisions
of this Section 5.10 by Seller will result in irreparable injury to Buyer, that
the remedy at law alone will be an inadequate remedy for such breach and that,
in addition to any other remedy it may have, Buyer shall be entitled to enforce
the specific performance of this Section 5.10 by Seller through both temporary
and permanent injunctive relief without the necessity of proving actual damages,
but without limitation of Buyer's right to damages and any and all other
remedies available to Buyer, such injunctive relief being in addition to, and
not in lieu of, such other remedies.

                  (e) If a court of competent jurisdiction shall determine that
any covenant contained in this Section 5.10 is unenforceable by reason of its
extending for too great a period of time or over too great a geographical area
or by reason of its being too extensive in any other respect, it shall be
interpreted to extend only over the maximum period of time for which it may be
enforceable and/or over the maximum geographical area as to which it may be
enforceable and/or to the maximum extent in all other respects as to which it
may be enforceable, all as determined by such court in such action. The
existence of any claim or cause of action that

                                       42
<PAGE>

Seller may have against Buyer or any of its Affiliates shall not constitute a
defense or bar to the enforcement of any of the provisions of this Section 5.10.

         5.11     BEAVERTON BEST BET; GAMING SHARES

                  (a) As between Seller, Buyer, and the Acquired Company, Seller
shall be and remain liable for, and shall pay, any and all costs and expenses of
the Acquired Company relating to deferred maintenance or repair obligations
(collectively, the "REPAIR LIABILITIES") at the premises leased to the Acquired
Company pursuant to the lease agreement dated as of March 14, 1989 between
Multnomah Kennel Club, Inc., predecessor in interest to the Acquired Company
under such lease, and Grace Restaurant Company.

                  (b) Seller shall cause the Acquired Company to use
commercially reasonable best efforts to sell effective at Closing all 11,000
shares of issued and outstanding capital stock of Gaming Insurance International
Ltd. (formerly known as AGTOA Insurance Company Ltd.) held by the Acquired
Company (together with any other shares issued in respect thereof, the "GAMING
SHARES") and to accept any reasonable offer therefor. If Seller has used such
efforts and has not caused the Acquired Company to sell the Gaming Shares
effective at Closing, Buyer shall cause the Acquired Company to use commercially
reasonable best efforts to sell all of the Gaming Shares after the Closing and
to accept any reasonable offer therefor. If the Gaming Shares are sold for more
than $295,179 (the "BOOK VALUE"), the sales proceeds shall be distributed as
follows: (i) first, cash in an amount equal to the Book Value shall be retained
by Buyer; (ii) second, any remainder shall be paid to Seller in an amount equal
to, and as a reimbursement of, the aggregate amounts expended by Seller for
Repair Liabilities; and (iii) third, any remainder shall be retained by Buyer.
If the Gaming Shares can only be sold for less than the Book Value, all of the
sales proceeds shall be paid to Buyer, and (A) Seller shall not be required to
pay to Buyer the difference between the Book Value and the sales price of the
Gaming Shares and (B) Buyer shall have no liability or obligation to reimburse
Seller for amounts expended by Seller for Repair Liabilities, which shall be and
remain at Seller's sole cost and expense.

6.       COVENANTS OF BUYER

         6.1      APPROVALS OF GOVERNMENTAL BODIES

         As promptly as practicable after the date of this Agreement, Buyer
will, and will cause each of its Related Persons to, at Buyer's sole cost and
expense, make all filings required by Legal Requirements to be made by them to
consummate the Contemplated Transactions and to permit Buyer to operate the
business of the Acquired Company in such manner as conducted by Seller and as
contemplated by Buyer (including all filings with the Commission). Between the
date of this Agreement and the Closing Date, Buyer will, and will cause each
Related Person to, cooperate with Seller with respect to all filings that Seller
is required by Legal Requirements to make in connection with the Contemplated
Transactions, and cooperate with Seller in obtaining all Approvals identified in
PART 3.2 of the Disclosure Letter; PROVIDED that Buyer shall not be required to
dispose of, or suffer any material adverse change in, any portion of its
business, operations, properties or assets in order to obtain any Approval.

                                       43
<PAGE>

         6.2      BEST EFFORTS

                  Except as set forth in the proviso to Section 6.1, between the
date of this Agreement and the Closing Date, Buyer will use its commercially
reasonable best efforts to cause the conditions in Sections 7 and 8 to be
satisfied.

         6.3      NOTIFICATION

                  Between the date of this Agreement and the Closing Date, Buyer
will promptly notify Seller in writing if Buyer becomes aware of any fact or
condition that causes or constitutes a breach of any of Buyer's representations
and warranties as of the date of this Agreement, or if Buyer becomes aware of
the occurrence after the date of this Agreement of any fact or condition that
would (except as expressly contemplated by this Agreement) cause or constitute a
breach of any such representation or warranty had such representation or
warranty been made as of the time of occurrence or discovery of such fact or
condition. Should any such fact or condition occurring or discovered after
delivery of the Buyer Disclosure Letter require any change in the Buyer
Disclosure Letter if the Buyer Disclosure Letter were dated the date of the
occurrence or discovery of any such fact or condition, Buyer will promptly
deliver to Seller a supplement to the Buyer Disclosure Letter specifying such
change. During the same period, Buyer will promptly notify Seller of the
occurrence of any breach of any covenant of Buyer in this Section 6 or of the
occurrence of any event that may make the satisfaction of the conditions in
Section 8 impossible or unlikely.

7.       CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE

         Buyer's obligation to purchase the Shares and to take the other actions
required to be taken by Buyer at the Closing is subject to the satisfaction, at
or prior to the Closing, of each of the following conditions (any of which may
be waived in writing by Buyer, in whole or in part):

         7.1      ACCURACY OF REPRESENTATIONS

                  Each of Seller's representations and warranties in this
Agreement must have been accurate in all material respects as of the date of
this Agreement, and must be accurate in all material respects as of the Closing
Date as if made on the Closing Date, without giving effect to any supplement to
the Disclosure Letter.

         7.2      SELLER'S PERFORMANCE

                  (a) Each of the covenants and obligations that Seller is
required to perform or to comply with pursuant to this Agreement at or prior to
the Closing must have been duly performed and complied with in all material
respects.

                  (b) Each document required to be delivered pursuant to Section
2.4(a) must have been delivered.

                                       44
<PAGE>

         7.3      CONSENTS

                  Each of the Approvals identified in PART 3.2 of the Disclosure
Letter, and each Approval identified in Section 4.2 (and all other Approvals
required for Buyer and Seller to consummate the Contemplated Transactions and
required for Buyer to operate the business of the Acquired Company as
contemplated by Buyer), must have been obtained and must be in full force and
effect.

         7.4      ADDITIONAL DOCUMENTS

                  Each of the following documents must have been delivered to
Buyer:

                  (a) a lease agreement, dated the Closing Date, in the form
attached hereto as Exhibit 7.4(a), duly executed by Seller (the "LEASE
AGREEMENT");

                  (b) written resignations of all of the directors of the
Acquired Company;

                  (c) the Registration Rights Agreement, duly executed by
Seller;

                  (d) evidence in form and substance satisfactory to Buyer of
the termination and release of the pledge of the Shares and the Gaming Shares to
the Acquisition Lenders;

                  (e) all payoff and termination documentation relating to the
Acquisition Lender Indebtedness, together with termination statements under the
applicable Uniform Commercial Code and any and all other documents or
instruments necessary or appropriate to release all Encumbrances securing the
Acquisition Lender Indebtedness or other obligations of Seller or the Acquired
Company thereunder, in each case in form and substance satisfactory to Buyer;

                  (f) evidence in form and substance satisfactory to Buyer of
the termination of the existing lease agreement between Seller and the Acquired
Company;

                  (g) an agreement in form and substance satisfactory to Buyer,
duly executed by Seller in recordable form, prohibiting use of the Premises as a
greyhound racing facility without the prior written consent of Buyer and its
successors and assigns until the earliest to occur of the following:

                         (i) termination of the Lease Agreement due solely to
default by Buyer thereunder;

                         (ii) removal of the grandstand, kennels and related dog
racing improvements from the Premises; or

                         (iii) failure by Buyer during any calendar year to run
at least one day of live horse or dog racing in the State of Oregon; and

                                       45
<PAGE>

                  (h) such other documents as Buyer may reasonably request for
the purpose of (i) evidencing the accuracy of any of Seller's representations
and warranties, (ii) evidencing the performance by Seller of, or the compliance
by Seller with, any covenant or obligation required to be performed or complied
with by Seller, (iii) evidencing the satisfaction of any condition referred to
in this Section 7, or (iv) otherwise facilitating the consummation or
performance of any of the Contemplated Transactions.

         7.5      NO PROCEEDINGS

                  Since the date of this Agreement, there must not have been
commenced or Threatened against Buyer, or against any Affiliate of Buyer, any
Proceeding or Order (a) involving any challenge to, or seeking damages or other
relief in connection with, any of the Contemplated Transactions, or (b) that may
have the effect of preventing, delaying, making illegal, or otherwise
interfering with any of the Contemplated Transactions.

         7.6      NO CLAIM REGARDING STOCK OWNERSHIP OR SALE PROCEEDS

                  There must not have been made or Threatened by any Person any
claim asserting that such Person (a) is the holder or the beneficial owner of,
or has the right to acquire or to obtain beneficial ownership of, any stock of,
or any other voting, equity, or ownership interest in, the Acquired Company, or
(b) is entitled to all or any portion of the Purchase Price payable for the
Shares.

         7.7      NO PROHIBITION

                  Neither the consummation nor the performance of any of the
Contemplated Transactions, nor operation of the business of the Acquired Company
by Buyer as contemplated by Buyer, will, directly or indirectly (with or without
notice or lapse of time), materially contravene, or conflict with, or result in
a material violation of, or cause Buyer or any Affiliate of Buyer to suffer any
material adverse consequence under, (a) any applicable Legal Requirement, or (b)
any Legal Requirement that has been published, introduced, or otherwise formally
proposed by or before any Governmental Body.

         7.8      APPROVALS

                  (a) Buyer's Board of Directors must have authorized the
consummation and performance of the Contemplated Transactions.

                  (b) Buyer must have received written confirmation from the
Commission or other controlling legal authority adequate to Buyer (i) stating
that Buyer will have the continuing right to conduct live greyhound racing and
to maintain simulcast rights at the Facilities or at alternate premises in
compliance with current Oregon law and (ii) approving the Contemplated
Transactions to the extent required by applicable Legal Requirements. Buyer
acknowledges that under current Oregon law, a racetrack operator must run a live
race meet in order to have simulcast rights at its racetrack facilities.

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<PAGE>

         7.9      PORTLAND MEADOWS LEASE, ETC.

                  Buyer or an Affiliate of Buyer shall have (a) consummated a
lease of the real estate upon which the Portland Meadows racetrack is located,
and such lease shall not have been terminated by either party by reason of the
environmental condition of the property; (b) qualified for horserace
simulcasting in the State of Oregon; and (c) obtained a thoroughbred racing
license from the Commission.

         7.10     TITLE INSURANCE

                  Buyer shall have received an ALTA extended leasehold coverage
title insurance policy, in form and substance satisfactory to Buyer, issued by a
title insurance company selected by Buyer and insuring Buyer's leasehold
interest in the Premises in an amount satisfactory to Buyer, subject only to
such exceptions as are acceptable to Buyer and containing such endorsements as
are requested by Buyer. Buyer shall bear all expenses incurred in connection
with obtaining the title policy.

         7.11     NO INJUNCTION

                  There must not be in effect any Legal Requirement or any
injunction that (a) prohibits the issuance of the Buyer Shares by Buyer to
Seller and (b) has been adopted or issued, or has otherwise become effective, or
of which Buyer has become aware, after the date of this Agreement.

8.       CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO CLOSE

         Seller's obligation to sell the Shares and to take the other actions
required to be taken by Seller at the Closing is subject to the satisfaction, at
or prior to the Closing, of each of the following conditions (any of which may
be waived in writing by Seller, in whole or in part):

         8.1      ACCURACY OF REPRESENTATIONS

                  Each of Buyer's representations and warranties in this
Agreement must have been accurate in all material respects as of the date of
this Agreement and must be accurate in all material respects as of the Closing
Date as if made on the Closing Date.

         8.2      BUYER'S PERFORMANCE

                  (a) Each of the covenants and obligations that Buyer is
required to perform or to comply with pursuant to this Agreement at or prior to
the Closing must have been performed and complied with in all material respects.

                  (b) Buyer must have delivered each of the documents required
to be delivered by, and made each of the payments required to be made by, Buyer
pursuant to Section 2.4(b).

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<PAGE>

         8.3      ADDITIONAL DOCUMENTS

                  Buyer must have caused the following documents to be delivered
to Seller:

                         (a) such other documents as Seller may reasonably
request for the purpose of (i) evidencing the accuracy of any representation or
warranty of Buyer, (ii) evidencing the performance by Buyer of, or the
compliance by Buyer with, any covenant or obligation required to be performed or
complied with by Buyer, (iii) evidencing the satisfaction of any condition
referred to in this Section 8, or (iv) otherwise facilitating the consummation
of any of the Contemplated Transactions; and

                         (b) the Registration Rights Agreement, duly executed by
Buyer.

         8.4      NO INJUNCTION

                  There must not be in effect any Legal Requirement or any
injunction that (a) prohibits the sale of the Shares by Seller to Buyer, and (b)
has been adopted or issued, or has otherwise become effective, or of which
Seller has become aware, after the date of this Agreement.

         8.5      NO PROCEEDINGS

                  Since the date of this Agreement, there must not have been
commenced or Threatened against Seller any Proceeding or Order (a) involving any
challenge to, or seeking damages or other relief in connection with, any of the
Contemplated Transactions, or (b) that may have the effect of preventing,
delaying, making illegal, or otherwise interfering with any of the Contemplated
Transactions.

         8.6      NO CLAIM REGARDING BUYER SHARES

                  There must not have been made or Threatened by any Person any
claim asserting that such Person is the holder or the beneficial owner of, or
has the right to acquire or to obtain beneficial ownership of, the Buyer Shares.

         8.7      NO PROHIBITION

                  Neither the consummation nor the performance of any of the
Contemplated Transactions will, directly or indirectly (with or without notice
or lapse of time), materially contravene, or conflict with, or result in a
material violation of, or cause Seller to suffer any material adverse
consequence under, (a) any applicable Legal Requirement, or (b) any Legal
Requirement that has been published, introduced, or otherwise formally proposed
by or before any Governmental Body.

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<PAGE>

9.       TERMINATION

         9.1      TERMINATION EVENTS

                  This Agreement may be terminated upon notice:

                         (a) prior to the Closing, by either Buyer or Seller if
a material breach of any provision of this Agreement has been committed by the
other party and such breach has not been waived;

                         (b) by Buyer, if any of the conditions in Section 7 has
not been satisfied as of the Closing Date or if satisfaction of such a condition
is or becomes impossible (other than through the failure of Buyer to comply with
its obligations under this Agreement) and Buyer has not waived such condition on
or before the Closing Date;

                         (c) by Seller, if any of the conditions in Section 8
has not been satisfied as of the Closing Date or if satisfaction of such a
condition is or becomes impossible (other than through the failure of Seller to
comply with its obligations under this Agreement) and Seller has not waived such
condition on or before the Closing Date;

                         (d) prior to the Closing, by mutual consent of Buyer
and Seller; or

                         (e) by either Buyer or Seller if the Closing has not
occurred (other than through the failure of any party seeking to terminate this
Agreement to comply fully with its obligations under this Agreement) on or
before December 31, 2001, or such later date as the parties may agree upon.

         9.2      EFFECT OF TERMINATION

                  (a) Except as otherwise set forth in Section 9.2(b), each
party's right of termination under Section 9.1 is in addition to any other
rights it may have under this Agreement or otherwise, and the exercise of a
right of termination will not be an election of remedies. If this Agreement is
terminated pursuant to Section 9.1, all further obligations of the parties under
this Agreement will terminate, except that the obligations in Section 2.2(b) and
the obligations in Sections 12.1 and 12.3 will survive; PROVIDED, HOWEVER, that,
except as otherwise set forth in Section 9.2(b), if this Agreement is terminated
by a party because of the breach of the Agreement by the other party or because
one or more of the conditions to the terminating party's obligations under this
Agreement is not satisfied as a result of the other party's failure to comply
with its obligations under this Agreement, the terminating party's right to
pursue all legal remedies will survive such termination unimpaired.

                  (b) Seller shall have no further right to pursue any legal or
equitable remedies upon termination of this Agreement other than retention of
the Deposit, if permitted pursuant to the terms hereof, and retention of the
Deposit, if permitted pursuant to the terms hereof, shall serve as his exclusive
remedy for termination hereunder. The parties acknowledge that the actual
damages incurred by Seller as a result of termination, if any, would be
difficult to determine and therefore agree that retention of the Deposit, if

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<PAGE>

permitted pursuant to the terms hereof, constitutes reasonable compensation in
lieu of any such actual damages, shall be in the nature of liquidated damages,
and shall not constitute a penalty.

10.      INDEMNIFICATION; REMEDIES

         10.1     SURVIVAL; RIGHT TO INDEMNIFICATION NOT AFFECTED BY KNOWLEDGE

         All representations, warranties, covenants, and obligations in this
Agreement, the Disclosure Letter, any supplement to the Disclosure Letter, the
Buyer Disclosure Letter, any supplement to the Buyer Disclosure Letter, the
certificate delivered pursuant to Section 2.4(a)(ii), and any other certificate
or document delivered pursuant to this Agreement will survive the Closing.
Except as otherwise expressly set forth herein, the right to indemnification,
payment of Damages or other remedy based on such representations, warranties,
covenants, and obligations will not be affected by any investigation conducted
with respect to, or any knowledge acquired (or capable of being acquired) at any
time, whether before or after the execution and delivery of this Agreement or
the Closing Date, with respect to the accuracy or inaccuracy of or compliance
with, any such representation, warranty, covenant, or obligation.

         10.2     INDEMNIFICATION AND PAYMENT OF DAMAGES BY SELLER

                  Seller will indemnify and hold harmless Buyer, the Acquired
Company, and their respective Representatives, stockholders, controlling
persons, and Affiliates (collectively, the "INDEMNIFIED PERSONS") for, and will
pay to the Indemnified Persons the amount of, any loss, liability, claim, damage
(including incidental and consequential damages), expense (including costs of
investigation and defense and reasonable attorneys' fees) or diminution of
value, whether or not involving a third-party claim (collectively, "DAMAGES"),
arising, directly or indirectly, from or in connection with:

                  (a) any breach of any representation or warranty made by
Seller in this Agreement (after giving effect to any supplement to the
Disclosure Letter), the Disclosure Letter, any supplement to the Disclosure
Letter, or any other certificate or document delivered by Seller pursuant to
this Agreement;

                  (b) any breach by Seller of any covenant or obligation of
Seller in this Agreement, other than breaches of covenants to be performed or
complied with by Seller on or prior to the Closing Date and of which Seller
notifies Buyer pursuant to Section 5.5;

                  (c) any claim based upon, resulting from or arising out of (i)
Taxes relating to a Pre-Closing Period, and (ii) any Straddle Period Tax
Liability, but in each case only to the extent that the amount of any such claim
or claims exceed the amount of the reserve (if any) for such Taxes (other than
deferred taxes) reflected on the Balance Sheets or the Interim Balance Sheet;

                  (d) any Proceeding pending or Threatened prior to the Closing
Date or relating to any action taken or omitted to be taken prior to the Closing
Date, including without

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<PAGE>

limitation any employee claims and the Proceedings disclosed in PART 3.15 of the
Disclosure Letter, whether or not apparently settled;

                  (e) any claim by any Person for brokerage or finder's fees or
commissions or similar payments based upon any agreement or understanding
alleged to have been made by any such Person with Seller or the Acquired Company
(or any Person acting on their behalf) in connection with any of the
Contemplated Transactions; and

                  (f) any claim by any Person based upon, resulting from or
arising out of any Repair Liabilities.

         Except as otherwise expressly set forth herein, the remedies provided
in this Section 10.2 will not be exclusive of or limit any other remedies that
may be available to Buyer or the other Indemnified Persons. As set forth in
clauses (a) and (b) above, if the Contemplated Transactions are consummated,
Buyer will be deemed to have waived its rights with respect to (a) any breach of
any representation or warranty in this Agreement which is disclosed in a
supplement to the Disclosure Letter or (b) any breach of any covenant which is
to be performed or complied with by Seller on or prior to the Closing Date and
of which Seller notifies Buyer pursuant to Section 5.5.

         10.3 INDEMNIFICATION AND PAYMENT OF DAMAGES BY SELLER -- ENVIRONMENTAL
MATTERS

         In addition to the provisions of Section 10.2, Seller will indemnify
and hold harmless Buyer, the Acquired Company, and the other Indemnified Persons
for, and will pay to Buyer, the Acquired Company, and the other Indemnified
Persons the amount of, any Damages (including Cleanup costs) arising, directly
or indirectly, from or in connection with:

                  (a) any Environmental, Health, and Safety Liabilities arising
out of or relating to: (i) (A) the ownership, operation, or condition at any
time on or prior to the Closing Date of the Facilities or (B) any Hazardous
Materials or other contaminants that were present on the Facilities at any time
on or prior to the Closing Date; or (ii) (A) any Hazardous Materials or other
contaminants that were, or were allegedly, generated, transported, stored,
treated, Released, or otherwise handled by Seller or the Acquired Company at any
time on or prior to the Closing Date, or (B) any Hazardous Activities that were,
or were allegedly, conducted by Seller or the Acquired Company; or

                  (b) any bodily injury (including illness, disability, and
death), personal injury, property damage (including trespass, nuisance, wrongful
eviction, and deprivation of the use of real property), or other damage of or to
any Person, including any employee or former employee of Seller or the Acquired
Company, in any way arising from or allegedly arising from any Hazardous
Activity conducted or allegedly conducted with respect to the Facilities or the
operation of the Acquired Company prior to the Closing Date, or from Hazardous
Material that was (i) present or suspected to be present on or before the
Closing Date on or at the Facilities (or present or suspected to be present on
any other property, if such Hazardous Material emanated or allegedly emanated
from any of the Facilities and was present or suspected to be present on any of
the Facilities on or prior to the Closing Date) or (ii) Released by Seller or
the Acquired

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<PAGE>

Company or any other Person for whose conduct they are or may be held
responsible, at any time on or prior to the Closing Date.

         Seller will be entitled to control any Cleanup, any related Proceeding,
and, except as provided in the following sentence, any other Proceeding with
respect to which indemnity may be sought under this Section 10.3. The procedure
described in Section 10.8 will apply to any claim solely for monetary damages
relating to a matter covered by this Section 10.3. A claim with respect to this
Section 10.3 may be made at any time on or before December 31, 2004.

         10.4     INDEMNIFICATION AND PAYMENT OF DAMAGES BY BUYER

         Buyer will indemnify and hold harmless Seller and his Representatives,
and will pay to Seller and his Representatives the amount of any Damages
arising, directly or indirectly, from or in connection with (a) any breach of
any representation or warranty made by Buyer in this Agreement (after giving
effect to any supplement to the Buyer Disclosure Letter), the Buyer Disclosure
Letter, any supplement to the Buyer Disclosure Letter, or any other certificate
or document delivered by Buyer pursuant to this Agreement, (b) any breach by
Buyer of any covenant or obligation of Buyer in this Agreement, other than
breaches of covenants to be performed or complied with by Buyer on or prior to
the Closing Date and of which Buyer notifies Seller pursuant to Section 6.3; or
(c) any claim by any Person for brokerage or finder's fees or commissions or
similar payments based upon any agreement or understanding alleged to have been
made by such Person with Buyer (or any Person acting on its behalf) in
connection with any of the Contemplated Transactions. As set forth in clauses
(a) and (b) above, if the Contemplated Transactions are consummated, Seller will
be deemed to have waived its rights with respect to (a) any breach of any
representation or warranty in this Agreement which is disclosed in a supplement
to the Buyer Disclosure Letter or (b) any breach of any covenant which is to be
performed or complied with by Buyer on or prior to the Closing Date and of which
Buyer notifies Seller pursuant to Section 6.3.

         10.5     TIME LIMITATIONS

         If the Closing occurs, Seller will have no liability (for
indemnification or otherwise) with respect to any representation or warranty, or
covenant or obligation to be performed and complied with on or prior to the
Closing Date, other than those in Sections 3.3, 3.4, 3.10, 3.13, and 3.19,
unless, on or before June 30, 2003 Buyer notifies Seller of a claim specifying
the factual basis of that claim in reasonable detail to the extent then known by
Buyer; a claim with respect to Section 3.4, 3.10, 3.13, or 3.19, or a claim for
indemnification or reimbursement not based upon any representation or warranty
or any covenant or obligation to be performed and complied with prior to the
Closing Date, may be made at any time on or before December 31, 2004; a claim
with respect to Section 3.3 may be made at any time without limitation. If the
Closing occurs, Buyer will have no liability (for indemnification or otherwise)
with respect to any representation or warranty, or covenant or obligation to be
performed and complied with prior to the Closing Date, other than those in
Section 4.3, unless on or before June 30, 2003 Seller notifies Buyer of a claim
specifying the factual basis of that claim in reasonable detail to the extent
then known by Seller; a claim with respect to Section 4.3 may be made at any
time without limitation.

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<PAGE>

         10.6     LIMITATIONS ON AMOUNT -- SELLER

                  (a) Seller will have no liability (for indemnification or
otherwise) with respect to the matters described in clause (a) or, to the extent
relating to any failure to perform or comply prior to the Closing Date, clause
(b) of Section 10.2 until the total of all Damages with respect to such matters
exceeds $20,000 (and if the total of all Damages exceeds $20,000, then Seller
will be liable for all Damages, including the first $20,000). However, this
Section 10.6 will not apply to any breach of any of Seller's representations and
warranties of which Seller had knowledge at any time prior to the date on which
such representation and warranty is made or any intentional breach by Seller of
any covenant or obligation, and Seller will be liable for all Damages with
respect to such breaches.

                  (b) Any amounts payable by Seller pursuant to Section 10.2(c)
shall be adjusted as follows. The Indemnified Persons shall reimburse Seller an
amount equal to the present value amount of the net reduction in any year in the
liability for Taxes of the Indemnified Persons or any member of a consolidated
or combined tax group of which the Indemnified Persons are, or were at any time,
part, which reduction will be realized (either through the reduction of a Tax
liability or the increase of a Tax loss or credit) with respect to any period
after the Closing Date and which reduction would not have been realized but for
the amounts paid (or any audit adjustment or deficiency with respect thereto, if
applicable) in respect of a loss, or amounts paid by the Indemnified Party
pursuant to this paragraph (a "NET TAX BENEFIT"). The present value amount of
the Net Tax Benefit shall be determined by: (i) using a discount rate equal to
the mid-term applicable federal rate in effect on the date by which the payment
subject to the Net Tax Benefit adjustment is due, (ii) discounting back to the
date by which the payment subject to the Net Tax Benefit adjustment is due and
(iii) using reasonable assumptions regarding the date (or dates) on which such
Net Tax Benefit will be realized, which assumptions must be verified by the
Auditor if requested by Seller. Buyer agrees to provide Seller or his
Representative with assistance and such documents and records reasonably
requested by them that are relevant to their ability to determine when a Net Tax
Benefit will be realized, including but not limited to copies of Tax Returns,
estimated tax payments, schedules, and related supporting documents.

         10.7     LIMITATIONS ON AMOUNT -- BUYER

         Buyer will have no liability (for indemnification or otherwise) with
respect to the matters described in clause (a) or, to the extent relating to any
failure to perform or comply prior to the Closing Date, clause (b) of Section
10.4 until the total of all Damages with respect to such matters exceeds $20,000
(and if the total of all Damages exceeds $20,000, then Buyer will be liable for
all Damages, including the first $20,000). However, this Section 10.7 will not
apply to any breach of any of Buyer's representations and warranties of which
Buyer had knowledge at any time prior to the date on which such representation
and warranty is made or any intentional breach by Buyer of any covenant or
obligation, and Buyer will be liable for all Damages with respect to such
breaches.

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<PAGE>

         10.8     PROCEDURE FOR INDEMNIFICATION -- THIRD PARTY CLAIMS

                  (a) Promptly after receipt by an indemnified party under
Section 10.2, 10.4, or (to the extent provided in the last paragraph of Section
10.3) Section 10.3 of notice of the commencement of any Proceeding against it,
such indemnified party will, if a claim is to be made against an indemnifying
party under such Section, give notice to the indemnifying party of the
commencement of such claim, but the failure to notify the indemnifying party
will not relieve the indemnifying party of any liability that it may have to any
indemnified party, except to the extent that the indemnifying party demonstrates
that the defense of such action is prejudiced by the indemnified party's failure
to give such notice.

                  (b) If any Proceeding referred to in Section 10.8(a) is
brought against an indemnified party and it gives notice to the indemnifying
party of the commencement of such Proceeding, the indemnifying party will,
unless the claim involves Taxes, be entitled to participate in such Proceeding
and, to the extent that it wishes (unless (i) the indemnifying party is also a
party to such Proceeding and the indemnified party determines in good faith that
joint representation would be inappropriate, or (ii) the indemnifying party
fails to provide reasonable assurance to the indemnified party of its financial
capacity to defend such Proceeding and provide indemnification with respect to
such Proceeding), to assume the defense of such Proceeding with counsel
satisfactory to the indemnified party and, after notice from the indemnifying
party to the indemnified party of its election to assume the defense of such
Proceeding, the indemnifying party will not, as long as it diligently conducts
such defense, be liable to the indemnified party under this Section 10 for any
fees of other counsel or any other expenses with respect to the defense of such
Proceeding, in each case subsequently incurred by the indemnified party in
connection with the defense of such Proceeding, other than reasonable costs of
investigation.

                  (c) If the indemnifying party assumes the defense of a
Proceeding, (i) it will be conclusively established for purposes of this
Agreement that the claims made in that Proceeding are within the scope of and
subject to indemnification; (ii) no compromise or settlement of such claims may
be effected by the indemnifying party without the indemnified party's consent
unless (A) there is no finding or admission of any violation of Legal
Requirements or any violation of the rights of any Person and no effect on any
other claims that may be made against the indemnified party, and (B) the sole
relief provided is monetary damages that are paid in full by the indemnifying
party; and (iii) the indemnified party will have no liability with respect to
any compromise or settlement of such claims effected without its consent. If
notice is given to an indemnifying party of the commencement of any Proceeding
and the indemnifying party does not, within ten days after the indemnified
party's notice is given, give notice to the indemnified party of its election to
assume the defense of such Proceeding, the indemnifying party will be bound by
any determination made in such Proceeding or any compromise or settlement
effected by the indemnified party.

                  (d) Notwithstanding the foregoing, if an indemnified party
determines in good faith that there is a reasonable probability that a
Proceeding may adversely affect it or its Affiliates other than as a result of
monetary damages for which it would be entitled to indemnification under this
Agreement, the indemnified party may, by notice to the indemnifying party,
assume the exclusive right to defend, compromise, or settle such Proceeding, but
the

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<PAGE>

indemnifying party will not be bound by any determination of a Proceeding so
defended or any compromise or settlement effected without its consent (which may
not be unreasonably withheld).

                  (e) The parties hereby consent to the non-exclusive
jurisdiction of any court in which a Proceeding is brought against any
indemnified party for purposes of any claim that an indemnified party may have
under this Agreement with respect to such Proceeding or the matters alleged
therein, and agree that process may be served on the indemnifying party with
respect to such a claim anywhere in the world.

         10.9     PROCEDURE FOR INDEMNIFICATION -- OTHER CLAIMS

         A claim for indemnification for any matter not involving a third-party
claim may be asserted by notice to the party from whom indemnification is
sought.

11.      POST-CLOSING COVENANTS OF BUYER AND SELLER

         11.1     SECTION 338(h)(10) ELECTION

                  (a) At Buyer's option, Seller will join Buyer in making an
election under Section 338(h)(10) of the IRC (and any corresponding elections
under state, local, or foreign tax law) (collectively a "SECTION 338(h)(10)
ELECTION") with respect to the purchase and sale of the Shares. Seller and Buyer
shall each provide to the other all necessary information to permit the Section
338(h)(10) Election to be made. Seller and Buyer shall, as promptly as
practicable following the Closing Date, take all actions necessary and
appropriate to effect and preserve a timely Section 338(h)(10) Election,
including filing IRS Form 8023 and all such other forms, returns, elections,
schedules, attachments, and other documents as may be required in connection
with the Section 338(h)(10) Election (collectively, the "SECTION 338(h)(10)
ELECTION TAX RETURNS"). No later than thirty (30) days prior to the last date on
which the Section 338(h)(10) Election must be filed, Seller will prepare and
deliver to Buyer a copy of all Section 338(h)(10) Election Tax Returns. Seller
will file, or cause to be filed, all Section 338(h)(10) Election Tax Returns.
Seller will pay any Tax attributable to the making of a Section 338(h)(10)
Election.

                  (b) If the Section 338(h)(10) Election is made, Buyer and
Seller agree that they will allocate the Purchase Price and the liabilities of
the Acquired Company (plus other relevant items) to the assets of the Acquired
Company and the non-competition provision set forth in Section 5.10 for all
purposes (including Tax and financial accounting) in a manner consistent with
the fair market values of such assets consistent with Treasury Regulation under
Sections 338 and 1060 and comparable provisions under state, local and foreign
law. Buyer, the Acquired Company and Seller will file all Tax Returns (including
amended returns and claims for refund) and information reports in a manner
consistent with such agreed upon values.

         11.2     TAX RETURNS; TAX LIABILITIES; ETC.

                  (a) Seller shall prepare and file, or cause to be prepared and
filed, all Tax Returns of the Acquired Company and all IRS Forms K-1 (and
analogous forms required by state law) required to be issued by the Acquired
Company to Seller for Pre-Closing Periods, and

                                       55
<PAGE>

Buyer shall prepare and file, or cause to be prepared and filed, all Tax Returns
of the Acquired Company for Post-Closing Periods and any taxable period of the
Acquired Company that begins before the Closing Date and ends after the Closing
Date (each, a "STRADDLE PERIOD"). Seller shall be liable for (i) all Taxes
imposed on the Acquired Company with respect to Pre-Closing Periods and (ii) all
Tax liabilities of the Acquired Company which are allocable to the pre-closing
portion of a Straddle Period ("STRADDLE PERIOD TAX LIABILITIES"). Buyer shall be
liable for all Taxes not allocated to Seller pursuant to the previous sentence.
The parties shall allocate in good faith any Straddle Period Tax Liability. If
any disagreement about such allocation cannot be resolved within ten days after
one party asserts in writing that such disagreement cannot be resolved, the
Auditor shall act as an arbitrator to resolve such disagreement. The Auditor's
determination with respect to such Straddle Period Tax Liability shall be final
and binding upon the parties, and any fees and expenses related to the
engagement of Auditor shall be shared equally by Buyer and Seller.

                  (b) Any Tax refunds received by Buyer or the Acquired Company
that relate to a Pre-Closing Period shall be paid over to Seller within ten (10)
days after receipt thereof, and any Tax refunds received by Seller that relate
to a Post-Closing Period shall be paid over to Buyer within ten (10) days after
receipt thereof, except in each case to the extent such Tax refund is or will be
accounted for in the Final Working Capital Statement. Any indemnity payable
under this Section 11.2 shall be net of any Tax benefit enjoyed by Buyer, Seller
or the Acquired Company, determined in a manner consistent with Section 10.6(b)
hereof.

                  (c) Buyer shall not amend any Tax Return of the Acquired
Company for which it is primarily responsible without Seller's prior written
consent, which shall not be unreasonably withheld, if the same reasonably could
be expected to affect Seller's liability for Tax in any Pre-Closing Period or
portion thereof. Seller shall not amend any Tax Return of the Acquired Company
for which it is primarily responsible without Buyer's prior written consent,
which shall not be unreasonably withheld, if the same reasonably could be
expected to affect Buyer's or the Acquired Company's liability for Tax in any
Post-Closing Period or portion thereof.

                  (d) After the Closing Date, Seller and Buyer will cooperate
fully, and will cause their respective affiliates to cooperate fully, and will
provide assistance as may reasonably be requested, and cause their respective
affiliates to provide assistance as may reasonably be requested, in connection
with the preparation of any Tax Return, the conduct of any audit or the defense
of any litigation or other proceeding with respect to any Tax liability of the
Acquired Company for any period and shall retain, or shall cause to be retained,
until the expiration of all applicable statutes of limitation, any records or
information that may be relevant to any such Tax Return or audit.

                  (e) (i) Seller shall, at its own expense, control, manage and
be solely responsible for any Tax Controversy pertaining to Tax Returns filed
in, or exclusively relating to, any Pre-Closing Periods and shall have the
exclusive right to settle or contest in his discretion any such Tax Controversy;
PROVIDED, HOWEVER, that, if the same reasonably could be expected to affect the
Acquired Company's liability for Tax in any Post-Closing Period or portion
thereof (A) no settlement or disposition thereof shall be made without Buyer's
prior written consent, which shall not be unreasonably withheld; and (B) Buyer
shall have the right to

                                       56
<PAGE>

attend and participate in, at its own expense, any such Tax Controversy
controlled by Seller pursuant to this Section 11.2(e).

                         (ii) Buyer shall, at its own expense, control, manage
and be solely responsible for any Tax Controversy pertaining to Tax Returns
filed in any Post-Closing Periods, other than those exclusively relating to any
Pre-Closing Periods, and shall have the exclusive right to settle or contest in
its discretion any such Tax Controversy; PROVIDED, HOWEVER, that, if the same
reasonably could be expected to affect Seller's liability for Tax in any
Pre-Closing Period or portion thereof (A) no settlement or disposition thereof
shall be made without Seller's prior written consent, which shall not be
unreasonably withheld; and (B) Seller shall have the right to attend and
participate in, at its own expense, any such Tax Controversy controlled by Buyer
pursuant to this Section 11.2(e).

                  (f) Buyer shall provide Seller, and Seller shall provide
Buyer, with the right, at reasonable times and upon reasonable notice, to have
access to, and to copy and use, any records or information which may be relevant
for the taxable period for which Buyer or Seller, as the case may be, is charged
with payment responsibility for Taxes under this Agreement or otherwise in
connection with the preparation of any Tax Returns, the conduct of any audits,
the defense of any litigation with respect to any Tax liability, the filing of
any claim for a refund of Tax or allowance of any Tax credit, or any judicial or
administrative proceedings relating to liability for Taxes.

                  (g) Seller and Buyer hereby agree that the amount of any
payment made by either party hereto to another party hereto pursuant to this
Section 11.2 shall constitute an adjustment to the Purchase Price.
Notwithstanding any provision in this Agreement to the contrary, the
indemnification obligations in this Article XI, and the representations and
warranties contained in Section 3.11, shall terminate at the close of business
on the 60th day following the expiration of the applicable statute of
limitations with respect to the Tax liabilities in question (giving effect to
any waiver, mitigation or extension thereof).

12.      GENERAL PROVISIONS

         12.1     EXPENSES

         Except as otherwise expressly provided in this Agreement, each party to
this Agreement will bear its respective expenses incurred in connection with the
preparation, execution, and performance of this Agreement and the Contemplated
Transactions, including all fees and expenses of agents, representatives,
counsel, and accountants. Seller will pay for any and all out-of-pocket expenses
incurred by the Acquired Company in connection with this Agreement, including
any legal, accounting, broker and investment banker fees. In the event of
termination of this Agreement, the obligation of each party to pay its own
expenses will be subject to any rights of such party arising from a breach of
this Agreement by the other party.

         12.2     PUBLIC ANNOUNCEMENTS

         Except pursuant to a Legal Requirement or with the prior written
consent of the other party, neither Buyer nor Seller will, nor will allow its
Representatives to, directly or indirectly make any public comment, statement or
communication with respect to, or otherwise

                                       57
<PAGE>

disclose or permit the disclosure of, the Contemplated Transactions or any of
the terms, conditions or other aspects thereof; PROVIDED that, in any event,
Buyer may issue a press release announcing the execution of this Agreement or
the consummation of the Contemplated Transactions without the prior written
consent of Seller. If a Legal Requirement requires such disclosure, the party
under such requirement must first provide to the other party the content of the
disclosure, the reasons that such disclosure is required, the time and place
that the disclosure will be made, and an opportunity to comment upon the form of
such proposed disclosure.

         12.3     CONFIDENTIALITY

         Between the date of this Agreement and the Closing Date, Buyer and
Seller will maintain in confidence, and will cause the directors, officers,
employees, agents, and advisors of Buyer, Seller and the Acquired Company to
maintain in confidence, any information furnished by another party or the
Acquired Company in connection with this Agreement or the Contemplated
Transactions, unless (a) such information is already known to such party or to
others not bound by a duty of confidentiality or such information becomes
publicly available through no fault of such party, (b) the use of such
information is necessary or appropriate in making any filing or obtaining any
Approval required for the consummation of the Contemplated Transactions, or (c)
the furnishing or use of such information is required by or necessary or
appropriate in connection with any Proceedings.

         If the Contemplated Transactions are not consummated, each party will
return or destroy as much of such written information as the other party may
reasonably request. Whether or not the Closing takes place, Seller waives, and
will upon Buyer's request cause the Acquired Company to waive, any cause of
action, right, or claim arising out of the access of Buyer or its
Representatives to any Trade Secrets or other confidential information of the
Acquired Company except for the intentional competitive misuse by Buyer of such
Trade Secrets or confidential information.

         12.4     NOTICES

         All notices, consents, waivers, and other communications under this
Agreement must be in writing and will be deemed to have been duly given when (a)
delivered by hand (with written confirmation of receipt), (b) sent by telecopier
(with written confirmation of receipt), PROVIDED that a copy is mailed by
certified mail, return receipt requested, or (c) when received by the addressee,
if sent by a nationally recognized overnight delivery service (receipt
requested), in each case to the appropriate addresses and telecopier numbers set
forth below (or to such other addresses and telecopier numbers as a party may
designate by notice to the other parties):

                  Seller:    Arthur L. McFadden
                             500 NE Multnomah
                             Suite 200
                             Portland, Oregon 97232
                             Facsimile: 503/239-3886

                                       58
<PAGE>

                             WITH COPIES TO:

                             Allen, Sheridan & Kreitzberg, LLP
                             425 Columbia Park Building
                             1099 SW Columbia Street
                             Portland, Oregon 97201
                             Facsimile:   503/299-6663
                             Attention:   Donna C. Kreitzberg, PC

                             AND:

                             Schwabe, Williamson & Wyatt, P.C.
                             1211 S.W. Fifth Avenue
                             Suite 1800
                             Portland, Oregon 97204
                             Facsimile:   503/796-2900
                             Attention:   William E. Love, Esq.

                  Buyer:     Magna Entertainment Corp.
                             337 Magna Drive
                             Aurora, Ontario
                             Canada L4G 7K1
                             Facsimile:   905/726-7177
                             Attention:   Jim McAlpine

                             WITH COPIES TO:

                             O'Melveny & Myers LLP
                             400 South Hope Street
                             Los Angeles, California 90071-2899
                             Facsimile:   213/430-6407
                             Attention:   Frederick B. McLane, Esq.

                             Magna Entertainment Corp.
                             337 Magna Drive
                             Aurora, Ontario
                             Canada L4G 7K1
                             Facsimile:   905/726-7177
                             Attention:   Ed Hannah, General Counsel

         12.5     SERVICE OF PROCESS

         Process in any action or proceeding seeking to enforce any provision
of, or based on any right arising out of, this Agreement may be served on any
party anywhere in the world.

                                       59
<PAGE>

         12.6     FURTHER ASSURANCES

         The parties agree (a) to furnish upon request to each other such
further information, (b) to execute and deliver to each other such other
documents, and (c) to do such other acts and things, all as the other party may
reasonably request for the purpose of carrying out the intent of this Agreement
and the documents referred to in this Agreement.

         12.7     WAIVER

         The rights and remedies of the parties to this Agreement are cumulative
and not alternative. Neither the failure nor any delay by any party in
exercising any right, power, or privilege under this Agreement or the documents
referred to in this Agreement will operate as a waiver of such right, power, or
privilege, and no single or partial exercise of any such right, power, or
privilege will preclude any other or further exercise of such right, power, or
privilege or the exercise of any other right, power, or privilege. To the
maximum extent permitted by applicable law, (a) no claim or right arising out of
this Agreement or the documents referred to in this Agreement can be discharged
by one party, in whole or in part, by a waiver or renunciation of the claim or
right unless in writing signed by the other party; (b) no waiver that may be
given by a party will be applicable except in the specific instance for which it
is given; and (c) no notice to or demand on one party will be deemed to be a
waiver of any obligation of such party or of the right of the party giving such
notice or demand to take further action without notice or demand as provided in
this Agreement or the documents referred to in this Agreement.

         12.8     ENTIRE AGREEMENT AND MODIFICATION

         This Agreement supersedes all prior agreements (whether written or
oral) between the parties with respect to its subject matter (including the
Letter of Intent between Buyer and Seller dated September 14, 2000, as amended)
and constitutes (along with the documents referred to in this Agreement) a
complete and exclusive statement of the terms of the agreement between the
parties with respect to its subject matter. This Agreement may not be amended
except by a written agreement executed by the party to be charged with the
amendment.

         12.9     DISCLOSURE LETTER AND BUYER DISCLOSURE LETTER

                  (a) The disclosures in the Disclosure Letter and the Buyer
Disclosure Letter, and those in any supplement thereto, must relate only to the
representations and warranties in the Section of the Agreement to which they
expressly relate and not to any other representation or warranty in this
Agreement.

                  (b) In the event of any inconsistency between the statements
in the body of this Agreement and those in the Disclosure Letter or the Buyer
Disclosure Letter (other than an exception expressly set forth as such in the
Disclosure Letter or the Buyer Disclosure Letter, as applicable, with respect to
a specifically identified representation or warranty), the statements in the
body of this Agreement will control.

                                       60
<PAGE>

         12.10    ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS

         Neither party may assign any of its rights under this Agreement without
the prior consent of the other party, except that Buyer may assign any of its
rights under this Agreement to any Subsidiary of Buyer; PROVIDED that,
notwithstanding any such assignment, Buyer shall remain liable for all of its
obligations hereunder. Subject to the preceding sentence, this Agreement will
apply to, be binding in all respects upon, and inure to the benefit of the
successors and permitted assigns of the parties. Nothing expressed or referred
to in this Agreement will be construed to give any Person other than the parties
to this Agreement any legal or equitable right, remedy, or claim under or with
respect to this Agreement or any provision of this Agreement. This Agreement and
all of its provisions and conditions are for the sole and exclusive benefit of
the parties to this Agreement and their successors and assigns.

         12.11    SEVERABILITY

         If any provision of this Agreement is held invalid or unenforceable by
any court of competent jurisdiction, the other provisions of this Agreement will
remain in full force and effect. Any provision of this Agreement held invalid or
unenforceable only in part or degree will remain in full force and effect to the
extent not held invalid or unenforceable.

         12.12    SECTION HEADINGS, CONSTRUCTION

         The headings of Sections in this Agreement are provided for convenience
only and will not affect its construction or interpretation. All references to
"Section" or "Sections" refer to the corresponding Section or Sections of this
Agreement. All words used in this Agreement will be construed to be of such
gender or number as the circumstances require. Unless otherwise expressly
provided, the word "including" does not limit the preceding words or terms.

         12.13    TIME OF ESSENCE

         With regard to all dates and time periods set forth or referred to in
this Agreement, time is of the essence.

         12.14    GOVERNING LAW

         This Agreement will be governed by the laws of the State of Oregon
without regard to conflicts of laws principles.

         12.15    COUNTERPARTS

         This Agreement may be executed in one or more counterparts, each of
which will be deemed to be an original copy of this Agreement and all of which,
when taken together, will be deemed to constitute one and the same agreement.

                  [Remainder of page intentionally left blank]

                                       61
<PAGE>

                  IN WITNESS WHEREOF, the parties have executed and delivered
this Agreement as of the date first written above.

MAGNA ENTERTAINMENT CORP.

By:__________________________________

Name:________________________________

Title:_______________________________

By:__________________________________

Name:________________________________

Title:_______________________________

ARTHUR L. MCFADDEN

_____________________________________

                                      S-1

<PAGE>

                                TABLE OF CONTENTS

                                                                            PAGE
1.    DEFINITIONS.............................................................1

2.    SALE AND TRANSFER OF SHARES; CLOSING...................................10

      2.1      SHARES........................................................10

      2.2      PURCHASE PRICE................................................10

      2.3      CLOSING.......................................................11

      2.4      CLOSING OBLIGATIONS...........................................11

      2.5      POST-CLOSING ADJUSTMENT OF PURCHASE PRICE.....................12

3.    REPRESENTATIONS AND WARRANTIES OF SELLER...............................13

      3.1      ORGANIZATION AND GOOD STANDING................................13

      3.2      AUTHORITY; NO CONFLICT........................................13

      3.3      CAPITALIZATION................................................14

      3.4      FINANCIAL STATEMENTS..........................................15

      3.5      BOOKS AND RECORDS.............................................16

      3.6      TITLE TO PROPERTIES; ENCUMBRANCES.............................16

      3.7      CONDITION AND SUFFICIENCY OF ASSETS...........................17

      3.8      ACCOUNTS RECEIVABLE...........................................17

      3.9      INVENTORY.....................................................17

      3.10     NO UNDISCLOSED LIABILITIES....................................18

      3.11     TAXES.........................................................18

      3.12     NO MATERIAL ADVERSE CHANGE....................................19

      3.13     EMPLOYEE BENEFITS.............................................19

      3.14     COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTAL
               AUTHORIZATIONS................................................24

      3.15     LEGAL PROCEEDINGS; ORDERS.....................................25

      3.16     ABSENCE OF CERTAIN CHANGES AND EVENTS.........................26

      3.17     CONTRACTS; NO DEFAULTS........................................27

      3.18     INSURANCE.....................................................29

      3.19     ENVIRONMENTAL MATTERS.........................................30

      3.20     EMPLOYEES.....................................................31

      3.21     LABOR RELATIONS; COMPLIANCE...................................32

      3.22     INTELLECTUAL PROPERTY.........................................32

      3.23     CERTAIN PAYMENTS..............................................34

<PAGE>

                                TABLE OF CONTENTS
                                   (CONTINUED)

                                                                            PAGE
      3.24     DISCLOSURE....................................................34

      3.25     RELATIONSHIPS WITH RELATED PERSONS............................34

      3.26     SUBCHAPTER S ELECTION.........................................34

      3.27     INVESTMENT INTENT OF SELLER...................................35

      3.28     BROKERS OR FINDERS............................................36

4.    REPRESENTATIONS AND WARRANTIES OF BUYER................................36

      4.1      ORGANIZATION AND GOOD STANDING................................36

      4.2      AUTHORITY; NO CONFLICT........................................36

      4.3      CAPITALIZATION................................................37

      4.4      FINANCIAL STATEMENTS..........................................37

      4.5      NO MATERIAL ADVERSE CHANGE....................................38

      4.6      CERTAIN PROCEEDINGS...........................................38

      4.7      INVESTMENT INTENT OF BUYER....................................38

      4.8      BROKERS OR FINDERS............................................39

      4.9      COMPLIANCE WITH LEGAL REQUIREMENTS............................39

      4.10     CONTRACTS; NO DEFAULT.........................................39

      4.11     DISCLOSURE....................................................39

5.    COVENANTS OF SELLER....................................................40

      5.1      ACCESS AND INVESTIGATION......................................40

      5.2      OPERATION OF THE BUSINESSES OF THE ACQUIRED COMPANY...........40

      5.3      NEGATIVE COVENANT.............................................41

      5.4      REQUIRED APPROVALS............................................41

      5.5      NOTIFICATION..................................................41

      5.6      PAYMENT OF INDEBTEDNESS.......................................41

      5.7      NO NEGOTIATION................................................42

      5.8      BEST EFFORTS..................................................42

      5.9      TRANSFER RESTRICTION..........................................42

      5.10     NON-COMPETITION...............................................42

      5.11     BEAVERTON BEST BET; GAMING SHARES.............................43

                                       ii

<PAGE>

                                TABLE OF CONTENTS
                                   (CONTINUED)

                                                                            PAGE
6.    COVENANTS OF BUYER.....................................................44

      6.1      APPROVALS OF GOVERNMENTAL BODIES..............................44

      6.2      BEST EFFORTS..................................................44

      6.3      NOTIFICATION..................................................45

7.    CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE....................45

      7.1      ACCURACY OF REPRESENTATIONS...................................45

      7.2      SELLER'S PERFORMANCE..........................................45

      7.3      CONSENTS......................................................45

      7.4      ADDITIONAL DOCUMENTS..........................................46

      7.5      NO PROCEEDINGS................................................47

      7.6      NO CLAIM REGARDING STOCK OWNERSHIP OR SALE PROCEEDS...........47

      7.7      NO PROHIBITION................................................47

      7.8      APPROVALS.....................................................47

      7.9      PORTLAND MEADOWS LEASE, ETC...................................47

      7.10     TITLE INSURANCE...............................................48

      7.11     NO INJUNCTION.................................................48

8.    CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO CLOSE...................48

      8.1      ACCURACY OF REPRESENTATIONS...................................48

      8.2      BUYER'S PERFORMANCE...........................................48

      8.3      ADDITIONAL DOCUMENTS..........................................48

      8.4      NO INJUNCTION.................................................49

      8.5      NO PROCEEDINGS................................................49

      8.6      NO CLAIM REGARDING BUYER SHARES...............................49

      8.7      NO PROHIBITION................................................49

9.    TERMINATION............................................................49

      9.1      TERMINATION EVENTS............................................49

      9.2      EFFECT OF TERMINATION.........................................50

10.   INDEMNIFICATION; REMEDIES..............................................50

      10.1     SURVIVAL; RIGHT TO INDEMNIFICATION NOT AFFECTED BY KNOWLEDGE..50

                                      iii

<PAGE>

                                TABLE OF CONTENTS
                                   (CONTINUED)

                                                                            PAGE

      10.2     INDEMNIFICATION AND PAYMENT OF DAMAGES BY SELLER..............51

      10.3     INDEMNIFICATION AND PAYMENT OF DAMAGES BY SELLER--
               ENVIRONMENTAL MATTERS.........................................52

      10.4     INDEMNIFICATION AND PAYMENT OF DAMAGES BY BUYER...............53

      10.5     TIME LIMITATIONS..............................................53

      10.6     LIMITATIONS ON AMOUNT-- SELLER................................53

      10.7     LIMITATIONS ON AMOUNT-- BUYER.................................54

      10.8     PROCEDURE FOR INDEMNIFICATION-- THIRD PARTY CLAIMS............54

      10.9     PROCEDURE FOR INDEMNIFICATION-- OTHER CLAIMS..................56

11.   POST-CLOSING COVENANTS OF BUYER AND SELLER.............................56

      11.1     SECTION 338(h)(10) ELECTION...................................56

      11.2     TAX RETURNS; TAX LIABILITIES; ETC.............................56

12.   GENERAL PROVISIONS.....................................................58

      12.1     EXPENSES......................................................58

      12.2     PUBLIC ANNOUNCEMENTS..........................................58

      12.3     CONFIDENTIALITY...............................................59

      12.4     NOTICES.......................................................59

      12.5     SERVICE OF PROCESS............................................60

      12.6     FURTHER ASSURANCES............................................61

      12.7     WAIVER........................................................61

      12.8     ENTIRE AGREEMENT AND MODIFICATION.............................61

      12.9     DISCLOSURE LETTER AND BUYER DISCLOSURE LETTER.................61

      12.10    ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS............62

      12.11    SEVERABILITY..................................................62

      12.12    SECTION HEADINGS, CONSTRUCTION................................62

      12.13    TIME OF ESSENCE...............................................62

      12.14    GOVERNING LAW.................................................62

      12.15    COUNTERPARTS..................................................62

                                       iv

<PAGE>

                                    EXHIBITS

Exhibit 7.4(a)         Form of Lease Agreement
Exhibit 7.4(c)         Form of Registration Rights Agreement

                                       v

<PAGE>

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

                            STOCK PURCHASE AGREEMENT

                            Dated as of June 27, 2001

                                 By and Between

                               ARTHUR L. MCFADDEN,
                                 an individual,

                                       and

                           MAGNA ENTERTAINMENT CORP.,
                             a Delaware corporation

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------<PAGE>

                                                                   Exhibit 10.23
                                COMMERCIAL LEASE

Date:             June _____, 2001

Between:          Portland Meadows Management, LLC         ("Landlord")
                  805 S.W. Broadway
                  Suite 2020
                  Portland, Oregon 97205

And:              MEC Oregon Racing, Inc.,                 ("Tenant")
                  a Delaware Corporation
                  c/o Magna Entertainment Corp.
                  337 Magna Drive
                  Aurora, Ontario, Canada L46 7K1

         Landlord is the Operator under the terms of the Operating Agreement
described and defined in Section 20.3, and has the authority to sublease its
rights pursuant to section 19 of the Operating Agreement.

         Landlord leases to Tenant and Tenant leases from Landlord the following
described property (the "Premises" or the "Racetrack") on the terms and
conditions stated below:

                             SEE ATTACHED EXHIBIT A

SECTION 1.        OCCUPANCY

         1.1 ORIGINAL TERM. The term of this Lease shall commence May 15, 2001,
and continue through May 15, 2004, unless sooner terminated as hereinafter
provided (the "Original Term").

         1.2 POSSESSION. Tenant's right to possession and obligations under the
Lease shall commence on May 15, 2001. Landlord shall have no liability for
delays in delivery of possession and Tenant will not have the right to terminate
this lease because of delay in delivery of possession.

         1.3 RENEWAL OPTION. If the Lease is not in default at the time the
option is exercised or at the time the renewal term is to commence, Tenant shall
have the option to renew this Lease for one term of one year, as follows:

                  (1) The renewal term shall commence on the day following
expiration of the Original Term.

                  (2) The option may be exercised by written notice to Landlord
given not less than 180 days prior to the last day of the Original Term. The
giving of such

Page 1 - COMMERCIAL LEASE

<PAGE>

notice shall be sufficient to make the Lease binding for the renewal term
without further act of the parties.

                  (3) The terms and conditions of the Lease for the renewal term
shall be identical with the Original Term except that Tenant will have no
further option to renew this Lease.

SECTION  2. RENT

         2.1      BASE RENT. During the original term, Tenant shall pay to
Landlord as base rent the following sums:

                  2.1.1    WAGERING. During each week of the regular Racing
                           Season, for the race meet conducted during that
                           Racing Season, one percent of the Gross Pari-mutuel
                           Wagering at the Premises, including the running of
                           live races at the Racetrack and all simulcast
                           wagering on races run at other locations. This rent
                           shall be payable on the third day of the week
                           following the week during which the wagering
                           occurred. Any unpaid sums due and owing shall be paid
                           by Tenant to Landlord in full no later than five days
                           after the last day of a race meet during each Racing
                           Season at the Racetrack. For purposes of this Lease,
                           Landlord and Tenant intend this provision to be
                           interpreted the same as it has most recently been
                           interpreted under the Operating Agreement.

                  2.1.2    RENT FOR USE OF RACETRACK FACILITIES FOR SPECIAL
                           PURPOSES. Tenant shall have the right to use the
                           Racetrack for special purposes other than conducting
                           horse or animal racing ("Special Purpose"). In such
                           Special Purpose situations, however, the revenue,
                           fees, or income ("Special Income"), if any, received
                           by Tenant from such activities or events shall be
                           subject to payment of a Special Purpose rent by
                           Tenant to Landlord, which shall be determined as
                           follows:

                           2.1.2(a) HORSE RELATED ACTIVITIES BY ANYONE. Tenant
                           shall pay to Landlord a Special Purpose rent equal to
                           one percent of the gross Special Income, but not
                           including revenues from concessions, received by
                           Tenant for any Special Purpose use of the Racetrack
                           by anyone, including Tenant, for all Special Purpose
                           uses that are in any way "horse related" (e.g., horse
                           shows, horse sales, etc.).

                           2.1.2(b) NON-HORSE RELATED ACTIVITIES BY ANYONE.
                           Tenant shall pay to Landlord a Special Purpose rent
                           equal to five percent of all the gross Special Income
                           up to $800,000 and three percent of all the gross
                           Special Income above $800,000, including revenues
                           from concessions, received by Tenant for any Special
                           Purpose activities,

Page 2 - COMMERCIAL LEASE

<PAGE>

                           other than horse-related activities as provided in
                           paragraph 2.1.2(a), that are conducted by Tenant or
                           any other person on the Racetrack.

                  2.1.3    PAYMENT OF SPECIAL PURPOSE RENT. All Special Purpose
                           rent shall be paid within 30 days following the
                           receipt by Tenant of the Special Income from the
                           Special Purpose event.

         2.2 ADDITIONAL RENT. All taxes, insurance costs, utility charges that
Tenant is required to pay by this Lease, and any other sum that Tenant is
required to pay to Landlord or third parties shall be additional rent.

         2.3 AUDIT. Not more frequently than once during any Lease year,
Landlord may request an audit of the Gross Pari-mutuel Wagering at the Premises
and all Special Purpose rent by an independent certified public accountant not
previously employed by Landlord or any of its employees, chosen by Tenant from a
list of not fewer than three submitted by Landlord in conjunction with the
request. If Tenant does not make the choice within five days, Landlord may do
so. The auditor shall conduct its audit at the Premises and shall have access to
all of the audit reports made to and/or filed with any state by Tenant and such
other records as may be necessary to accurately determine the amounts required
to be paid by Tenant under this Lease, and shall take such steps as the auditor
deems necessary to make a certified audit. The report shall be final and binding
on both parties, and payments required to make adjustments in rent to conform to
the report shall be made within five days after receipt of the report. The cost
of the audit shall be borne by either or both parties depending on the
difference in percentage rent shown to be due, as follows: less than one percent
(1%) additional due--by Landlord; from one percent (1%) to three percent (3%)
additional due--by Tenant and Landlord equally; over three percent (3%)
additional due--by Tenant. If the audit discloses more than six percent (6%)
additional due Tenant shall pay an underpayment fee equal to 10% of the
additional due.

         2.4 RECORDS. Tenant shall keep proper books of account and other
records pertaining to Gross Pari-mutuel Wagering at the Premises and all Special
Purpose rent and render weekly or monthly statements of Gross Pari-mutuel
Wagering at the Premises and all Special Purpose rent at the time weekly or
monthly payments of rent or Special Purpose rent are due. The books and records
shall be kept or made available at a location reasonably accessible to Landlord,
who may reasonably inspect all such books and records, and copies of Tenant's
federal and state income tax returns for relevant years, at all reasonable times
to verify Tenant's Gross Pari-mutuel Wagering at the Premises and all Special
Purpose rent. Tenant shall submit to Landlord a copy of any report filed by
Tenant with any local, state or federal taxing authority promptly after filing.

         2.5 CONTINUOUS OPERATION. Subject to the provisions of Section 5.2,
Tenant shall occupy the Premises continuously for the purpose stated in this
lease and carry on business during the dates and hours customary in the horse
racing industry as those dates and hours may change from time to time, unless
prevented by factors beyond Tenant's control.

Page 3 - COMMERCIAL LEASE

<PAGE>

         2.6 NO PARTNERSHIP. Landlord is not by virtue of this section a partner
or joint venturer with Tenant in connection with the business carried on under
this Lease, and shall have no obligation with respect to Tenant's debts or other
liabilities, and no interest in Tenant's profits.

SECTION  3. USE OF THE PREMISES.

         3.1 HORSE RACING. The Premises shall be used for the operation of the
Racetrack as a horse racing track and pari-mutuel wagering facility and if
permitted by applicable law, a dog racing track, together with parking,
restaurant, stables, and other related facilities and appurtenant fixtures,
machinery and equipment, and for no other purpose or use without the written
consent of Landlord which consent may be withheld in Landlord's sole discretion.
To facilitate Tenant's use of the Premises, Landlord agrees to reasonably
cooperate, at no out-of-pocket expense to Landlord, in Tenant's application for
a racing license from the State of Oregon Racing Commission. The Premises may
also be used for Special Purposes.

                  3.1.1    Base Rent for use of the Premises as a dog racing
                           track shall be determined and paid according to and
                           consistent with Section 2.1.1.

         3.2 OTHER USES OF FACILITIES. The exclusive right of Tenant to the
utilization of the Racetrack is subject to the rights or easements of public
bodies and utilities to access or utilize portions of the land.

         3.3 RACING DAYS. During each Racing Season while this Lease is in
effect, Tenant agrees to continue live horse racing at the Racetrack and shall
therefore timely apply to the Commission for a license to operate a race meet,
and conduct live horse racing at the Racetrack in compliance with the terms and
requirements of the license. It is understood that the number of actual Racing
days may be reduced because of inclement weather, failure of horsemen to enter
their horses, strikes, action or inaction by the Commission or other factors
beyond Tenant's control.

         3.4 RESTRICTIONS ON USE. In connection with the use of the Premises,
Tenant shall:

                  (1) Subject to Section 5.2, conform to all applicable laws and
regulations of any public authority affecting the Premises and the use, and
correct at Tenant's own expense any failure of compliance created through
Tenant's fault or by reason of Tenant's use, but Tenant shall not be required to
make any structural changes to effect such compliance unless such changes are
required because of Tenant's specific use (as opposed to use of the Premises for
horse racing and pari-mutuel wagering in general).

                  (2) Refrain from any activity that would make it impossible to
insure the Premises against casualty, would increase the insurance rate, or
would prevent Landlord from taking advantage of any ruling of the Oregon
Insurance Rating Bureau, or

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its successor, allowing Landlord to obtain reduced premium rates for long-term
fire insurance policies, unless Tenant pays the additional cost of the
insurance.

                  (3) Refrain from any use inconsistent with past uses (except
as provided in subparagraph (7) below) that would be reasonably offensive to
other tenants or owners or users of neighboring premises or that would tend to
create a nuisance or damage the reputation of the premises.

                  (4) Refrain from loading the electrical system or floors
beyond the point considered safe by a competent engineer or architect selected
by Landlord.

                  (5) Refrain from making any marks on or attaching any sign,
insignia, antenna, aerial, or other device to the exterior or interior walls,
windows, or roof of the premises without the written consent of Landlord, which
consent shall not be unreasonably withheld.

                  (6) Tenant shall not cause or permit any Hazardous Substance
to be spilled, leaked, disposed of, or otherwise released on or under the
Premises. Tenant may use or otherwise handle on the Premises only those
Hazardous Substances typically used or sold in the prudent and safe operation of
the business specified in Section 3.1. Tenant may store such Hazardous
Substances on the Premises only in quantities necessary to satisfy Tenant's
reasonably anticipated needs. Tenant shall comply with all Environmental Laws
and exercise the highest degree of care in the use, handling, and storage of
Hazardous Substances and shall take all practicable measures to minimize the
quantity and toxicity of Hazardous Substances used, handled, or stored on the
Premises. Upon the expiration or termination of this Lease, Tenant shall remove
all Hazardous Substances from the Premises. The term ENVIRONMENTAL LAW shall
mean any federal, state, or local statute, regulation, or ordinance or any
judicial or other governmental order pertaining to the protection of health,
safety or the environment. The term HAZARDOUS SUBSTANCE shall mean any
hazardous, toxic, infectious or radioactive substance, waste, and material as
defined or listed by any Environmental Law and shall include, without
limitation, petroleum oil and its fractions. Notwithstanding anything to the
contrary contained herein, the existing environmental condition of the Premises
as of the date of commencement of this Lease shall not be a violation or breach
of this subsection (6) and, subject to the provisions of Section 5.2 relating to
Landlord's option to pay excess costs, Tenant shall not be required to remedy
the existing environmental problem at the Premises if such remedy will cost in
excess of $600,000 nor shall Tenant be required to remove any Hazardous
Substance which is located on the Premises as of the commencement of this Lease

                  (7) Not permit the Premises to be used for any music concerts
or other performances or concerts by Tenant or any other person or organization.

         3.5 NET PAYMENTS. It is understood that rent payments are "net
payments" to Landlord, and Landlord has no obligation to pay any costs
associated with the Racetrack during the lease period. All costs of an ongoing
nature relating to the Premises, including, without limitation, all real
property taxes, personal property taxes, insurance premiums, maintenance and
repair costs, and utility charges shall be borne entirely by Tenant.

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         3.6 NAME. As long as the Lease remains in effect and live horse racing
continues at the Racetrack, Tenant shall possess the right to use the name
"Portland Meadows". Upon expiration of this Lease and provided that animal
racing does not continue at the Racetrack, Tenant shall retain the right to use
the name "Portland Meadows" as it relates to animal racing or gaming to the
exclusion of Landlord. Landlord shall have the right to use the name "Portland
Meadows" for any other purpose to the exclusion of Tenant.

SECTION  4. CONDITIONS.

         4.1 CONDITIONS PRECEDENT. Notwithstanding any other provisions of this
Lease, this Lease shall not be effective and binding on Landlord and Tenant
unless all of the following conditions are satisfied:

                  4.1.1    Tenant receives approval for a license to operate a
                           race meet during the 2001-2002 Racing Season from the
                           Commission on or before July 31, 2001, to be issued
                           prior to October 1, 2001. If Tenant does not receive
                           approval or issuance of a license as described herein
                           for any reason, Tenant shall cooperate with and
                           assist Landlord in obtaining the necessary approval
                           and issuance of a license to operate a race meet
                           during the 2001-2002 Racing Season.

                  4.1.2    Tenant enters into a satisfactory agreement with the
                           appropriate representatives of the thoroughbred
                           horsemen and quarter horsemen on or before August 15,
                           2001.

SECTION 5.        REPAIRS AND MAINTENANCE

                  5.1 LANDLORD'S OBLIGATIONS. Landlord shall be under no
obligation to make or perform any repairs, maintenance, replacements,
alterations or improvements on the Premises.

                  5.2 TENANT'S OBLIGATIONS. Tenant accepts the Premises in its
"as is" condition, without any obligation on Landlord's part to make any repairs
or improvements; provided, however, that Landlord, and not Tenant, shall be
responsible for any existing environmental condition or violation of law
affecting the Premises as of the date of commencement of the Lease. Tenant shall
operate the Premises in material compliance with all applicable environmental
and other laws and regulations applicable thereto and shall be responsible for
any violations occurring or arising from Tenant's use of Premises during the
term of the Lease. Tenant shall repair and maintain the Premises in accordance
with applicable laws and governmental requirements. In recognition of the fact
that the Landlord contemplates demolishing the racetrack at the end of the Lease
term, Tenant shall not be responsible for maintenance or repair above or beyond
such legal requirements. If the federal Environmental Protection Agency or any
comparable state agency ("EPA") requires capital improvements to the Premises
(or threatens Tenant with the imposition of fines, penalties or enforcement
action if capital improvements are

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not made) the reasonable cost of which capital improvements exceeds $600,000 in
order for Tenant to be able to meet its obligations under this provision,
Tenant, after giving Landlord notice of the capital improvements required by the
EPA and the opportunity to pay the cost of such capital improvements in excess
of $600,000, (which Landlord declines to make), shall have the right to either
(i) terminate the Lease by notice given not less than four and one-half months
prior to the commencement of the next Racing Season in which event the
provisions of Section 19 shall cease, or (ii) terminate the Lease and pay to
Landlord the sum of $1,625,000 in cash (or $3,250,000 in cash if such
termination takes place prior to or during the 2001-2002 Racing Season and
results in a failure by Tenant to comply with the terms of the license issued to
Tenant by the Commission for the 2001-2002 Racing Season) in which event the
provisions of Section 19 shall remain in effect and neither Landlord nor Moyer
will seek to obtain a license to conduct horse or other animal racing. In no
event may Tenant terminate the Lease pursuant to clause (i) of the preceding
sentence if such termination would result in a failure by Tenant to comply with
the terms of the license issued to Tenant by the Commission for the 2001-2002
Racing Season. In the event Tenant terminates this Lease pursuant to such clause
(i), Tenant shall cooperate with Landlord and use Tenant's best efforts (at no
cost or expense to Tenant) to transfer to Landlord the license for the Racing
Season in which the termination occurs, or if the termination does not occur
during the Racing Season, for the next succeeding Racing Season.

         If during the term of this Lease EPA requires any action other than
capital improvements, or assesses or proposes to assess any fine or penalty for
failure of compliance with environmental laws and regulations, for which Tenant
claims it does not have responsibility and for which the prior operator, The New
Portland Meadows, Inc., also denies liability, Landlord shall have the right to
terminate the Lease.

                  5.2.1    If Tenant fails or refuses to make repairs that are
                           required by this Section 5.2, Landlord may make the
                           repairs and charge the actual costs of repairs to
                           Tenant. Such expenditures by Landlord shall be
                           reimbursed by Tenant on demand, together with
                           interest at the rate of 12% per annum if not paid by
                           Tenant within 10 days following notice to Tenant of
                           the expenditure, together with reasonable supporting
                           evidence of the expenditure. Except in an emergency
                           creating an immediate risk of personal injury or
                           property damage, Landlord may not perform repairs
                           which are the obligation of Tenant and charge Tenant
                           for the resulting expense unless at least 10 days
                           before work is commenced, Tenant is given notice in
                           writing outlining with reasonable particularity the
                           repairs required, and Tenant fails within that time
                           to initiate such repairs in good faith. Landlord
                           shall have the right to inspect the Premises at any
                           reasonable time or times to determine the necessity
                           of repair.

SECTION  6. ALTERATIONS.

         6.1 ALTERATIONS PROHIBITED. Tenant shall make no substantial
improvements or alterations on the Premises of any kind without first obtaining
Landlord's written consent, which consent shall not be unreasonably withheld.

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All alterations shall be made in a good and workmanlike manner, and in
compliance with applicable laws and building codes.

         6.2 OWNERSHIP AND REMOVAL OF ALTERATIONS. All improvements and
alterations performed on the Premises by either Landlord or Tenant shall be the
property of Landlord when installed unless the applicable Landlord's consent or
work sheet specifically provides otherwise.

SECTION  7. INSURANCE

         7.1 INSURANCE REQUIRED. Continuously throughout the term of this Lease,
Tenant at Tenant's expense shall keep the building and permanent improvements
upon the Premises insured against fire and other risks covered by a standard
fire and casualty insurance policy with endorsements for replacement cost,
extended coverage and loss of rent. The deductible on such policy(ies) shall not
exceed $100,000. Landlord, Owners, and the bank which holds the first mortgage
or trust deed upon the Premises shall be the primary named insureds on such
policy(ies). Tenant shall provide a certificate of insurance to Landlord
demonstrating Tenant's compliance with these requirements. All terms of such
policy(ies) and the insurance carrier(s) shall be consistent with insurance
practices of the Magna Entertainment Corp. group of companies for similar
facilities, and subject to the reasonable approval of Landlord, prior to
Tenant's occupancy of the Premises and continuously during the term of this
lease. In the event of a fire or casualty loss, Tenant shall be solely
responsible for payment of any deductible amount and any uninsured damage, and
shall indemnify Landlord there from. Tenant shall pay directly to the insurance
carrier or shall reimburse Landlord (if Landlord has paid the premium) all
insurance premiums for insurance coverage of the type required by this Section
7, for the period May 15, 2001 through the date Tenant places its own insurance
pursuant to this Section 7. Notwithstanding payment of the premiums for this
period, any claims made for the period May 15, 2001 through the date of
execution of this Lease shall be made by Landlord as the insured during said
period. Landlord shall be entitled, at its option, to pay for and carry
additional insurance as Landlord deems necessary or desirable.

         Landlord shall have no obligation to provide fire or casualty insurance
for Tenant's trade fixtures, equipment, inventory, or other personal property.
Tenant shall be entitled to obtain and maintain such coverage at its sole
expense.

         7.2 WAIVER OF SUBROGATION. Neither party shall be liable to the other
(or to the other's successors or assigns) for any loss or damage caused by fire
or any of the risks enumerated in a standard fire insurance policy with an
extended coverage endorsement, and in the event of insured loss, neither party's
insurance company shall have a subrogated claim against the other. This waiver
shall be valid only if the insurance policy in question expressly permits waiver
of subrogation or if the insurance company agrees in writing that such a waiver
will not affect coverage under the policies. Each party agrees to use best
efforts to obtain such an agreement from its insurer if the policy does not
expressly permit a waiver of subrogation.

SECTION  8. TAXES; UTILITIES.

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         8.1 PROPERTY TAXES. Tenant shall pay as due all taxes on its personal
property located on the Premises. Tenant shall pay as due all real property
taxes and special assessments , subject to Section 8.2, levied against the
Premises. If such taxes and assessments are levied against a larger parcel that
includes the Premises, the real property taxes and special assessments shall be
prorated between the Premises and the remainder of the parcel based upon the
square footage of each. As used herein, real property taxes includes any fee or
charge relating to the ownership, use, or rental of the Premises, other than
taxes on the net income of Landlord or Tenant. Landlord shall provide a copy of
each statement for real property taxes and special assessments to Tenant within
ten (10) days after Landlord's receipt thereof. Tenant shall pay to Landlord the
full amount of such real property taxes and assessments at least 10 days prior
to the date due. Tenant may elect to pay any taxes and assessments in accordance
with any available installment method.

         8.2 SPECIAL ASSESSMENTS. Except for assessments directly attributable
to or caused by Landlord in connection with any plans for future development of
the Premises (for which Landlord shall bear financial responsibility), if an
assessment for a public improvement is made against the Premises, Landlord may
elect to cause such assessment to be paid in installments, in which case all of
the installments payable with respect to the lease term shall be treated the
same as general real property taxes for purposes of Section 8.1.

         8.3 CONTEST OF TAXES. Tenant shall be permitted to contest the amount
of any tax or assessment as long as such contest is conducted in a manner that
does not cause any risk that Landlord's interest in the Premises will be
foreclosed for nonpayment. Landlord shall cooperate in any reasonable manner
with such contest by Tenant. This provision does not modify, limit or otherwise
affect Tenant's obligation to pay to Landlord the taxes or assessments due in
strict accordance with Section 8.1.

         8.4 PRORATION OF TAXES. Tenant's share of real property taxes and
assessments for the years in which this lease commences or terminates shall be
prorated based on the portion of the tax year that this lease is in effect.

         8.5 NEW CHARGES OR FEES. If a new charge or fee relating to the
ownership or use of the Premises or the receipt of rental therefrom or in lieu
of property taxes is assessed or imposed, then, to the extent permitted by law,
Tenant shall pay such charge or fee. Tenant, however, shall have no obligation
to pay any income, profits, or franchise tax levied on the net income derived by
Landlord from this lease.

         8.6 PAYMENT OF UTILITIES CHARGES. Tenant shall pay when due all charges
for services and utilities incurred in connection with the use, occupancy,
operation, and maintenance of the Premises, including (but not limited to)
charges for fuel, water, gas, electricity, sewage disposal, power,
refrigeration, air conditioning, and telephone.

SECTION  9. DAMAGE AND DESTRUCTION

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         9.1 DAMAGES BY FIRE OR OTHER CASUALTY. Landlord shall have no
obligation to rebuild or restore the Racetrack destroyed in whole or in part by
fire or casualty. Payments of insurance proceeds on the Racetrack shall be the
property of the Landlord; provided, however, that should Landlord elect not to
rebuild or restore the Racetrack, all rights and obligations of the parties
shall cease as of the date of termination, and the insurance proceedS less the
cost of cleanup and other feeS and charges required by law or assessed by any
governmental entity shall be divided equally between Landlord and Tenant.

                  9.1.2    If Landlord elects to rebuild or restore the
                           Racetrack, Landlord shall proceed to restore the
                           Premises to substantially the same form as prior to
                           the damage or destruction. Work shall be commenced as
                           soon as reasonably possible and thereafter shall
                           proceed without interruption except for work
                           stoppages on account of labor disputes and matters
                           beyond Landlord's reasonable control.

SECTION  10. EMINENT DOMAIN

         10.1 PARTIAL TAKING. If a portion of the Premises is condemned and
Section 10.2 does not apply, the Lease shall continue on the following terms:

                  (1) Landlord shall be entitled to all of the proceeds of
condemnation, and Tenant shall have no claim against Landlord as a result of the
condemnation.

                  (2) If a portion of Landlord's property not included in the
Premises is taken, and severance damages are awarded on account of the Premises,
or an award is made for detriment to the Premises as a result of activity by a
public body not involving a physical taking of any portion of the Premises, this
shall be regarded as a partial condemnation to which Section 10.1(1) applies.

         10.2 TOTAL TAKING. If a condemning authority takes all of the Premises
or a portion sufficient to render the continuing operation of a race meet not
feasible, this Lease shall terminate as of the date the title vests in the
condemning authorities and Landlord shall be entitled to all of the proceeds of
condemnation, and Tenant shall have no claim against Landlord as a result of the
condemnation. Nothing herein shall prohibit Tenant from pursuing its own claim
for the value of its subleasehold interest.

         10.3 SALE IN LIEU OF CONDEMNATION. Sale of all or part of the Premises
to a purchaser with the power of eminent domain in the face of a threat or
probability of the exercise of the power shall be treated for the purposes of
this Section 10 as a taking by condemnation.

SECTION  11. LIABILITY AND INDEMNITY.

       11.1  LIENS

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                  (1) Except with respect to activities for which Landlord is
responsible, Tenant shall pay as due all claims for work done on and for
services rendered or material furnished to the Premises, and shall keep the
Premises free from any liens. If Tenant fails to pay any such claims or to
discharge any lien, Landlord may do so and collect the cost as additional rent.
Any amount so added shall bear interest at the rate of 12% per annum from the
date expended by Landlord and shall not constitute a waiver of any right or
remedy which Landlord may have on account of Tenant's default.

                  (2) Tenant may withhold payment of any claim in connection
with a good-faith dispute over the obligation to pay, as long a Landlord's
property interests are not jeopardized. If a lien is filed as a result of
nonpayment, Tenant shall, within ten (10) days after knowledge of the filing,
secure the discharge of the lien or deposit with Landlord cash or sufficient
corporate surety bond or other surety satisfactory to Landlord in an amount
sufficient to discharge the lien plus any costs, attorney fees, and other
charges that could accrue as a result of a foreclosure or sale under the lien.

         11.2 INDEMNIFICATION.

                  (1) By Tenant. Tenant shall indemnify, defend, protect and
hold harmless Landlord and the Premises, from and against any and all claims,
losses, demands, damage, costs or expenses arising from or in connection with
Tenant's use of the Premises, including, without limitation, violation of laws
or regulations as described in Section 5.2 above and with regard to the
Racetrack or the operation of the race meet on the Racetrack or with regard to
any satellite racing facilities, including assuming the defense of any
litigation, all costs related thereto including reasonable attorney's fees on
trial or on an appeal, except for such losses or claims resulting from the
negligent acts of Landlord, and except for claims based upon an event occurring
prior to this Lease.

                  (2) By Landlord. Landlord shall indemnify, defend, protect and
hold harmless Tenant and the Premises, from and against any and all losses,
damage, cost or expense arising from or in connection with claims by the
Environmental Protection Agency or other state of federal authority concerning
the environmental condition of the Property or violation of the laws at the
Premises before commencement of the Lease. Provided, however, that in no event
shall Landlord's indemnity obligation under this Section 11.2 exceed $600,000.

         11.3 LIABILITY INSURANCE. Before going into possession of the Premises,
Tenant shall procure and thereafter during the term of the Lease shall continue
to carry the following insurance at Tenant's costs: commercial general liability
policy (occurrence version) in a responsible company with coverage for bodily
injury and property damage liability, personal and advertising injury liability,
and medical payment with a general aggregate limit of not less than $10,000,000
and a per occurrence limit of not less than $5,000,000. Such insurance shall
cover all risks arising directly or indirectly out of Tenant's activities on or
any condition of the Premises, including, without limitation, any licensee,
concessionaires, or tenants of Tenant, whether or not related to an occurrence
caused or contributed to by Landlord's negligence. Such policy or policies shall
also include products liability coverage insuring Owners and Landlord against
any and all claims of patrons, employees, laborers, or any other person arising
out of merchandise,

Page 11 - COMMERCIAL LEASE

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food, products, or other property sold, served, or prepared by Tenant or
employees, licensees, concessionaires, or tenants of Tenant. Such insurance
shall protect Tenant against the claims of Landlord on account of the
obligations assumed by Tenant under Section 11.2, and shall name Landlord and
Owners, and any persons, firms, or entities designated by Owners or Landlord as
additional insureds. Certificates evidencing such insurance and bearing
endorsements requiring ten (10) days' written notice to Landlord and Owners
prior to any change or cancellation shall be furnished to Landlord prior to
Tenant's occupancy of the property and not less frequently than once per year
thereafter. Tenant shall also maintain worker compensation insurance as required
by law, and employer's liability insurance. Tenant shall pay directly to the
insurance carrier or shall reimburse Landlord (if Landlord has paid the premium)
all insurance premiums for insurance coverage of the type required by this
Section 11, for the period May 15, 2001 through the date Tenant places its own
insurance pursuant to this Section 11. Notwithstanding payment of the premiums
for this period, any claims made for the period May 15, 2001 through the date of
execution of this Lease shall be made by Landlord as the insured during said
period.

SECTION  12. LANDLORD'S RIGHTS AND REPRESENTATIONS

         12.1 NO REPRESENTATIONS. Landlord makes no representations or
warranties of any kind with regard to the condition of the Racetrack (whether
relating to the land, the physical improvements or the equipment). It is
understood that Lessee accepts the Racetrack in its "as-is" condition.

         12.2 ALTERATIONS. Landlord has no on-going commitment or obligation to
Tenant with regard to alterations, improvements, repairs or any other
expenditures relating to the Racetrack or to the operation of any race meet on
the Racetrack. It is understood that the rental payment to the Landlord by the
Tenant is a "net payment" not subject to any charges or set-off.

         12.3 RIGHT TO USE. Landlord does hereby represent that it has the right
to possession and use of the Racetrack under the terms of the Operating
Agreement, subject to the terms and limitations of that Operating Agreement,
except as otherwise expressly noted in the Lease. Landlord covenants that it
will fulfill its obligations under the Operating Agreement. Landlord represents
that it has not pledged its rights under the Operating Agreement nor has Thomas
P. Moyer ("Moyer") pledged his fee interest in the Premises as security for any
obligation. Assuming that Tenant complies with the provisions of this Lease, the
Operating Agreement, any conditions imposed by the Commission and other
applicable laws, rules and regulations, Tenant is entitled to quiet enjoyment
and use of the Racetrack without hindrance from Landlord or anyone claiming by,
through and under Landlord.

         12.4 UTILITIES. All utilities and other payments related to the
Racetrack shall be the obligation of the Lessee, pro-rated as of May 15, 2001.

         12.5 GOLF COURSE LEASE. The rights to the golf course facility inside
the Racetrack oval shall remain with Landlord. The lessee of the golf course
shall retain the

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rights granted to it under the Golf Course Lease for the period
May 15, 2001 through October 1, 2001. The Landlord will cause to be paid to the
Tenant the proportion of the utilities utilized by the golf course as specified
in the Golf Course Lease. Tenant shall have an easement over the golf course
property for reasonable racing purposes (e.g. walking horses from the barn over
to the track). Landlord shall have an easement over the Racetrack for reasonable
purposes for use by customers, vendors and employees (e.g., parking areas to
golf course). It is understood that the golf course operator may use the dump
and refuse facilities of Tenant available at the Racetrack, and that Tenant will
be responsible for damages to golf course property resulting from acts of Tenant
or other Racing-related parties acting with Tenant's consent. After expiration
of the Golf Course Lease, Tenant shall have control and use of Racetrack infield
subject to all other terms and conditions of this Lease.

         12.6 ESTOPPEL CERTIFICATE. Either party will, within twenty (20) days
after notice from the other, execute and deliver to the other party a
certificate stating whether or not this Lease has been modified and is in full
force and effect and specifying any modifications or alleged breaches by the
other party. The certificate shall also state the amount of monthly base rent,
the dates to which rent has been paid in advance, and the amount of any security
deposit or prepaid rent. Failure to deliver the certificate within the specified
time shall be conclusive upon the party from whom the certificate was requested
that the Lease is in full force and effect and has not been modified except as
represented in the notice requesting the certificate.

SECTION  13. ASSIGNMENT AND SUBLETTING.

         No part of the Premises may be assigned, mortgaged, or subleased, nor
may a right of use of any portion of the property be conferred on any third
person by any other means, without the prior written consent of Landlord. This
provision shall apply to all transfers by operation of law. If Tenant is a
corporation or partnership, this provision shall apply to any transfer of a
majority voting interest in stock or partnership interest of Tenant. No consent
in one instance shall prevent the provision from applying to a subsequent
instance. Landlord shall consent to a transaction covered by this provision when
withholding such consent would be unreasonable in the circumstances.
Notwithstanding any provisions to the contrary contained in this Lease, this
Lease may be assigned, or the Premises may sublet, in whole or in part, without
the consent of Landlord, to any corporation into or with which Tenant may be
merged or consolidated or to any corporation or other entity which shall be an
affiliate of Tenant, or to a corporation which may be merged or consolidated
into or with Tenant.

         For purpose of this section an "affiliate" of Tenant shall mean any
corporation which, directly or indirectly, controls or is controlled by or is
under common control with, Tenant. For this purpose, "control" shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such corporation, whether through
the ownership of voting securities or by contract or otherwise.

         Tenant shall have the right to pledge its leasehold interest as
security in connection with corporate level financing by Magna Entertainment
Corporation and/or its

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affiliates of its race track facilities, but only in conjunction with a pledge
of interests in facilities in addition to the Premises, provided the
lender/pledgee agrees in writing delivered to Landlord to assume all of the
responsibilities and perform all of the obligations of Tenant under this Lease
in the event the lender forecloses its security interest. Tenant shall
indemnify, defend, and hold harmless Landlord, Thomas P. Moyer, and their
employees, officers, directors, agents, personal representatives, successors,
and assigns from and against any and all claims, demands, actions, causes of
action or any other matter related to or arising out of Tenant's actions or
inactions in any way connected with this Section 13.

SECTION  14. LEASE FEE.

         Tenant shall pay to Landlord the sum of $12,500 on or before the 15th
day of each month during the term of this Lease as a fee for Landlord's
agreement to enter into this Lease, provided, however, that any payments due for
the period between May 15, 2001 and the date of execution of this Lease shall be
paid within five business days following execution of this Lease.

SECTION  15. DEFAULT

         The following shall be events of default:

         15.1 DEFAULT IN RENT. Failure of Tenant to pay any rent or other charge
within ten (10) days following notice that it is due. During any 12-month
period, Lessee shall be entitled to only two notices pursuant to this Section
15.1.

         15.2 DEFAULT IN OTHER COVENANTS. Failure of Tenant to comply with any
term or condition or fulfill any obligation of the lease (other than the payment
of rent or other charges) within twenty (20) days after written notice by
Landlord specifying the nature of the default with reasonable particularity. If
the default is of such a nature that it cannot be completely remedied within the
20-day period, this provision shall be complied with if Tenant begins correction
of the default within the 20-day period and thereafter proceeds with reasonable
diligence and in good faith to effect the remedy as soon as practicable.

         15.3 INSOLVENCY. Insolvency of Tenant; an assignment by Tenant for the
benefit of creditors; the filing by Tenant of a voluntary petition in
bankruptcy; an adjudication that Tenant is bankrupt or the appointment of a
receiver of the properties of Tenant; the filing of any involuntary petition of
bankruptcy and the failure of Tenant to secure a dismissal of the petition
within thirty (30) days after filing; attachment of or the levying of execution
on the leasehold interest (except to the extent made by a lender/pledgee
described in Section 13) and failure of Tenant to secure discharge of the
attachment or release of the levy of execution within ten (10) days shall
constitute a default. If Tenant consists of two or more individuals or business
entities, the events of default specified in this Section 14.3 shall apply to
each individual unless within ten (10) days after an event of default occurs,
the remaining individuals produce evidence satisfactory to Landlord that they
have unconditionally acquired the interest of the one

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causing the default. If the lease has been assigned, the events of default so
specified shall apply only with respect to the one then exercising the rights of
Tenant under the Lease.

SECTION  16. REMEDIES ON DEFAULT

         16.1 TERMINATION. In the event of a default the Lease may be terminated
at the option of Landlord by written notice to Tenant. Whether or not the Lease
is terminated by the election of Landlord or otherwise, Landlord shall be
entitled to recover damages from Tenant for the default, and Landlord may
reenter, take possession of the Premises, and remove any persons or property by
legal action or by self-help with the use of reasonable force and without
liability for damages and without having accepted a surrender.

         16.2 RELETTING. Following reentry or abandonment, Landlord may relet
the Premises and in that connection may make any suitable alterations or
refurnish the Premises, or both, or change the character or use of the Premises,
but Landlord shall not be required to relet for any use or purpose other than
that specified in the Lease or which Landlord may reasonably consider injurious
to the Premises, or to any tenant that Landlord may reasonably consider
objectionable. Landlord may relet all or part of the Premises, alone or in
conjunction with other properties, for a term longer or shorter than the term of
this Lease, upon any reasonable terms and conditions, including the granting of
some rent-free occupancy or other rent concession.

         16.3 DAMAGES. In the event of termination or retaking of possession
following default, Landlord shall be entitled to recover immediately, without
waiting until the due date of any future rent or until the date fixed for
expiration of the lease term, the following amounts as damages:

                  (1) The loss of rental from the date of default until a new
tenant is, or with the exercise of reasonable efforts could have been, secured
and paying rent.

                  (2) The reasonable costs of reentry and reletting including,
without limitation, the cost of any cleanup, refurbishing, removal of Tenant's
property and fixtures, costs incurred under Section 16.5, or any other expense
occasioned by Tenant's default including, but not limited to, any remodeling or
repair costs, attorney fees, court costs, broker commissions, and advertising
costs.

                  (3) Any excess of the value of the rent and all of Tenant's
other obligations under this Lease over the reasonable expected return from the
Premises for the period commencing on the earlier of the date of trial or the
date the Premises are relet, and continuing through the end of the term reduced
by any rent in excess of such reasonable expected return actually received on
reletting. The present value of future amounts will be computed using a discount
rate equal to the prime loan rate of major Oregon banks in effect on the date of
trial.

         16.4 RIGHT TO SUE MORE THAN ONCE. Landlord may sue periodically to
recover damages during the period corresponding to the remainder of the lease
term, and no action for damages shall bar a later action for damages
subsequently accruing.

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         16.5 LANDLORD'S RIGHT TO CURE DEFAULTS. If Tenant fails to perform any
obligation under this lease, Landlord shall have the option to do so after
thirty (30) days' written notice to Tenant. All of Landlord's expenditures to
correct the default shall be reimbursed by Tenant on demand with interest at the
rate of 12% per annum from the date of expenditure by Landlord. Such action by
Landlord shall not waive any other remedies available to Landlord because of
default.

         16.6 REMEDIES CUMULATIVE. The foregoing remedies shall be in addition
to and shall not exclude any other remedy available to Landlord under applicable
law.

SECTION  17. SURRENDER AT EXPIRATION

         17.1 CONDITION OF PREMISES. Upon expiration of the Lease term or
earlier termination on account of default, Tenant shall deliver all keys to
Landlord and surrender the Premises in condition required by Section 5.2 of this
Lease. If termination is on account of default, the Premises shall also be broom
clean. Alterations constructed by Tenant with permission from Landlord shall not
be removed or restored to the original condition unless the terms of permission
for the alteration so require. Depreciation and wear from ordinary use for the
purpose for which the Premises are leased shall be excepted but repairs for
which Tenant is responsible shall be completed to the latest practical date
prior to such surrender. Tenant's obligations under this section shall be
subordinate to the provisions of Section 9 relating to destruction.

         17.2     FIXTURES

                  (1) All fixtures placed upon the Premises during the term,
other than Tenant's trade fixtures, shall, at Landlord's option, become the
property of Landlord.

                  (2) Prior to expiration or other termination of the Lease term
Tenant shall remove all furnishings, furniture, and trade fixtures that remain
its property. If Tenant fails to do so, this shall be an abandonment of the
property, and Landlord may retain the property and all rights of Tenant with
respect to it shall cease or, by notice in writing given to Tenant within twenty
(20) days after removal was required, Landlord may elect to hold Tenant to its
obligation of removal. If Landlord elects to require Tenant to remove, Landlord
may effect a removal and place the property in public storage for Tenant's
account. Tenant shall be liable to Landlord for the cost of removal,
transportation to storage, and storage, with interest at the legal rate on all
such expenses from the date of expenditure by Landlord. Any right of Tenant to
remove property from the Premises shall be subject to Landlord's entitlement to
assert a landlord's lien as provided by Oregon statute.

         17.3     HOLDOVER

                  (1) If Tenant does not vacate the Premises at the time
required, Landlord shall have the option to treat Tenant as a tenant from month
to month, subject to all of the provisions of this lease except the provisions
for term and renewal and at a rental rate equal to 150 percent of the rent last
paid by Tenant during the original term, or

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to eject tenant from the Premises and recover damages caused by wrongful
holdover. Failure of Tenant to remove its fixtures, furniture, furnishings, or
trade fixtures that Tenant is required to remove under this Lease shall
constitute failure to vacate to which this section shall apply if the property
not removed will substantially interfere with occupancy of the Premises by
another tenant or with occupancy by Landlord for any purpose including
preparation for a new tenant.

                  (2) If a month-to-month tenancy results from a holdover by
Tenant under this Section 17.3, the tenancy shall be terminable at the end of
any monthly rental period on written notice from Landlord given not less than
ten (10) days prior to the termination date which shall be specified in the
notice. Tenant waives any notice that would otherwise be provided by law with
respect to a month-to-month tenancy.

SECTION  18. MISCELLANEOUS

         18.1 NONWAIVER. Waiver by either party of strict performance of any
provision of this Lease shall not be a waiver of or prejudice the party's right
to require strict performance of the same provision in the future or of any
other provision.

         18.2 ATTORNEY FEES. If any arbitration, suit, or action is instituted
to interpret or enforce the provisions of this Lease, to rescind this Lease, or
otherwise with respect to the subject matter of this Lease, the party prevailing
on an issue shall be entitled to recover with respect to such issue, in addition
to costs, reasonable attorney fees incurred in preparation or in prosecution or
defense of such arbitration, suit, or action as determined by the arbitrator or
trial court, and if any appeal is taken from such decision, reasonable attorney
fees as determined on appeal.

         18.3 NOTICES. All notices and other communications under this Lease
must be in writing and shall be deemed to have been given if delivered
personally, sent by facsimile (with confirmation), mailed by certified mail, or
delivered by an overnight delivery service (with confirmation) to the parties to
the following addresses or facsimile numbers (or at such other address or
facsimile number as a party may designate by like notice to the other parties):

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To Landlord:

         Portland Meadows Management, LLC
         805 SW Broadway
         Suite 2020
         Portland, Oregon 97205

         Facsimile No. (503) 241-1999

With a copy to:

         Alan M. Laster
         621 SW Morrison
         Suite 300
         Portland, Oregon 97205

         Facsimile No. (503) 241-7007

To Tenant:

         MEC Oregon Racing, Inc.
         c/o Magna Entertainment Corp.
         337 Magna Drive
         Aurora, Ontario, Canada L46 7K1

         Attention: Jim McAlpine and Ed Hannah

         Facsimile No. (905) 726-7177

With a copy to:

         Scott Daruty
         Magna Entertainment Corp.
         285 West Huntington Drive
         Arcadia, California 91007

         Facsimile No. (626) 821-1540

Any notice or other communication shall be deemed to be given (a) on the date of
personal delivery, (b) at the expiration of the third day after the date of
deposit in the United States mail, or (c) on the date of confirmed delivery by
facsimile or overnight delivery service.

         18.4 SUCCESSION. Subject to the above-stated limitations on transfer of
Tenant's interest, this Lease, including, without limitation the provisions of
Section 19, shall be binding on and inure to the benefit of the parties and
their respective successors and assigns.

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         18.5 RECORDATION. This Lease shall not be recorded without the written
consent of Landlord. However, Tenant may record a memorandum of this Lease
against Moyer's fee interest in the Premises, and Moyer agrees to execute such
documentation as is reasonably necessary in connection with such recordation.
Upon the expiration or earlier termination of this Lease, Tenant shall record
the documentation necessary to release Moyer's fee interest in the Premises from
the lien of the recorded memorandum of this Lease other than the provisions of
Section 19.

         18.6 ENTRY FOR INSPECTION. Landlord shall have the right to enter upon
the Premises at any time to determine Tenant's compliance with this Lease, to
make necessary repairs to the building or to the Premises, or to show the
Premises to any prospective tenant or purchaser, and in addition shall have the
right, at any time during the last two (2) months of the term of this lease and
subject to Section 19, to place and maintain upon the Premises notices for
leasing or selling of the Premises.

         18.7 INTEREST ON RENT AND OTHER CHARGES.Any rent or other payment
required of Tenant by this Lease shall, if not paid within ten (10) days after
it is due, bear interest at the rate of 12% per annum (but not in any event at a
rate greater than the maximum rate of interest permitted by law) from the due
date until paid. In addition, if Tenant fails to make any rent or other payment
required by this Lease to be paid to Landlord within five days after it is due,
Landlord may elect to impose a late charge of five (5) cents per dollar of the
overdue payment to reimburse Landlord for the costs of collecting the overdue
payment. Tenant shall pay the late charge upon demand by Landlord. Landlord may
levy and collect a late charge in addition to all other remedies available for
Tenant's default, and collection of a late charge shall not waive the breach
caused by the late payment.

         18.9 TIME OF ESSENCE. Time is of the essence of the performance of each
of Tenant's obligations under this lease.

         18.10 ENTIRE AGREEMENT. This Lease (including the documents and
instruments referred to in this Lease) constitutes the entire agreement and
understanding of the parties with respect to the subject matter of this Lease
and supersedes all prior understandings and agreements, whether written or oral,
between the parties with respect to such subject matter.

         18.11 AMENDMENTS. This Lease may be amended only by an instrument in
writing executed by all the parties, including "Moyer" which writing must refer
to this Lease.

         18.12 CONSTRUCTION. The captions used in this Lease are provided for
convenience only and shall not affect the meaning or interpretation of any
provision of this Lease. All references in this Lease to "Section" or "Sections"
without additional identification refer to the Section or Sections of this
Lease. All words used in this Lease shall be construed to be of such gender or
number as the circumstances require.

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Whenever the words "include" or "including" are used in this Lease, they shall
be deemed to be followed by the words "without limitation".

         18.13 COUNTERPARTS. This Lease may be executed in counterparts, each of
which will be considered an original and all of which together will constitute
one and the same agreement.

         18.14 FURTHER ASSURANCES. Each party agrees (a) to execute and deliver
such other documents and (b) to do and perform such other acts and things, as
any other party may reasonably request, in order to carry out the intent and
accomplish the purposes of this LEASE.

         18.15 GOVERNING LAW. This Lease shall be governed by and construed in
accordance with the laws of the State of Oregon, without regard to
conflict-of-laws principles.

         18.16 BROKER'S OR FINDER'S FEES. Landlord and Tenant each represents
and warrants that such party has engaged no broker and has not agreed to pay any
finder's fee in connection with this Lease and shall not have any obligations to
any third person with regard thereto.

         18.17 WASTE/COMPLIANCE WITH LAWS. Subject to Section 5.2, both Tenant
and Landlord promise and agree that there shall be no waste committed on the
Racetrack facilities and that all parties hereto shall comply with all governing
laws, ordinances, rules and regulations.

         18.18 LANDLORD'S ACCESS. Landlord and Landlord's agents shall have the
right to enter the Racetrack at reasonable times for the purpose of inspecting
the property, showing the same to prospective purchasers, or for such other
reasons that Landlord deems necessary or desirable, provided that such entry
does not interfere with the operation of the race meet by Tenant.

         18.19 NO THIRD-PARTY BENEFICIARIES. Nothing in this Lease, express or
implied, is intended or shall be construed to confer on any person, other than
the parties to this Lease, any right, remedy, or claim under or with respect to
this Lease.

SECTION  19. RIGHTS OF FIRST REFUSAL

         19.1  RIGHT OF FIRST REFUSAL TO PURCHASE

         (1) Should Landlord desire to offer its interest in the Operating
Agreement for sale or should Landlord receive a bona fide offer from any third
party to purchase Landlord's interest in the Operating Agreement which Landlord
desires to accept, Landlord shall before making or accepting such offer notify
Tenant in writing of all of the terms and conditions thereof, and Landlord shall
not agree to sell its interest in the Operating Agreement unless Landlord shall
first offer in writing to sell its interest in the Operating Agreement to Tenant
upon the same terms and conditions. Upon receipt of

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any such notice and offer, Tenant shall have thirty (30) days thereafter within
which to accept the same. Should Tenant fail to accept any such offer within
said thirty (30) day period, Landlord shall be free to sell its interest in the
Operating Agreement upon the same terms and conditions offered to Tenant without
further notice to Tenant. Should Landlord, after having made such offer to
Tenant as above-described, fail to sell its interest in the Operating Agreement
upon the same terms and conditions offered to Tenant, Landlord shall give Tenant
notice in the manner set forth above of any further or different offers made or
received by Landlord for the purchase of its interest in the Operating Agreement
and shall first offer to sell the same to Tenant upon the same terms and
conditions before making or accepting any such further or different offer.

         (2) Should the Owners desire to offer the Premises or the Premises
together with property adjoining the Premises (said Premises or said Premises
together with property adjoining the Premises being hereinafter in this Section
19 referred to as the "Property") for sale as an animal racetrack or should the
Owners receive a bona fide offer from any third party to purchase the Property
as an animal racetrack which the Owners desire to accept, Thomas P. Moyer
("Moyer") shall not agree to sell his ownership interest in the Property unless
the Owners shall first offer in writing to sell the Property to Tenant upon the
same terms and conditions. Upon receipt of any such notice and offer, Tenant
shall have thirty (30) days thereafter within which to accept the same. Should
Tenant fail to accept any such offer within said thirty (30) day period Owners
shall be free to sell his interest in the Property upon the same terms and
conditions offered to Tenant without further notice to Tenant. Should the
Owners, after having made such offer to Tenant as above-described, fail to sell
the Property upon the same terms and conditions offered to Tenant, Moyer shall
give Tenant notice in the manner set forth above of any further or different
offers made or received by the Owners for the purchase of the Property and Moyer
shall not agree to sell his ownership interest in the Property unless the Owners
shall first offer in writing to sell the Property to Tenant upon the same terms
and conditions.

         (3) Anything to the contrary contained in this Section 19.1
notwithstanding, the foregoing right of first refusal for Tenant to purchase the
Property or Landlord's interest in the Operating Agreement shall not be
triggered by (and Tenant shall not have the first right to purchase the Property
or Landlord's interest in the Operating Agreement) a transfer of Moyer's
interest in the Property or Landlord's interest in the Operating Agreement to an
entity controlled by Landlord or Moyer or to an immediate family member of
Landlord or Moyer, i.e., a parent, sibling, spouse, or child of Landlord or
Moyer, except that such transferee shall take title to Moyer's interest in the
Property or the Landlord's interest in the Operating Agreement subject to
Tenant's rights under this Section 19.

         19.2  RIGHT OF FIRST REFUSAL TO LEASE

         (1) Should Landlord desire to sublease the Property as an animal
racetrack or receive a bona fide offer from any third party to sublease the
Property as an animal racetrack for a term commencing after the termination or
expiration of this Lease or of any extensions or renewals thereof which Landlord
desires to accept, Landlord shall, before making or accepting such offer, notify
Tenant in writing of all of the terms and

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conditions thereof and shall first offer in writing to sublease the Property to
Tenant upon the same terms and conditions. Upon receipt of any such notice and
offer from Landlord, Tenant shall have thirty (30) days thereafter within which
to accept the same. Should Tenant fail to accept any such offer within said
thirty (30) day period, Landlord shall be free to sublease the Property upon the
same terms and conditions offered to Tenant without further notice to Tenant.
Should Landlord, after having made such offer to Tenant as above-described, fail
to sublease the Property upon the same terms and conditions offered to Tenant,
Landlord shall give Tenant notice in the manner set forth above of any further
or different offers made or received by Landlord for the sublease of the
Property and shall first offer to sublease the same to Tenant upon the same
terms and conditions before making or accepting any such further or different
offer.

         (2) Should the Owners (whether after the termination of the Operating
Agreement or otherwise) desire to lease the Property as an animal racetrack or
receive a bona fide offer from any third party to lease the Property as an
animal racetrack for a term commencing after the termination or expiration of
this Lease or of any extensions or renewals thereof which the Owners desire to
accept, Moyer shall not agree to lease the Property unless the Owners shall
first offer in writing to lease the Property to Tenant upon the same terms and
conditions. Upon receipt of any such notice and offer from the Owners, Tenant
shall have thirty (30) days thereafter within which to accept the same. Should
Tenant fail to accept any such offer within said thirty (30) day period, Moyer
shall be free to lease the Property upon the same terms and conditions offered
to Tenant without further notice to Tenant. Should the Owners, after having made
such offer to Tenant as above-described, fail to lease the Property upon the
same terms and conditions offered to Tenant, Moyer shall give Tenant notice in
the manner set forth above of any further or different offers made or received
by the Owners for the lease of the Property and Moyer shall not agree to lease
the Property unless the Owners shall first offer in writing to lease the
Property to Tenant upon the same terms and conditions.

         19.3  LANDLORD'S USE

         Landlord and Moyer agree that they will not themselves directly or
indirectly conduct animal racing on the Property without first offering Tenant
the opportunity to sublease the Property under the terms and conditions of this
Lease, including the term, provided that the Base Rent under Section 2.1 and the
Lease Fee under Section 14 shall be 150 percent of the amounts set forth in this
Lease.

         19.4  SURVIVAL.

         The terms of this Section 19 shall survive the expiration of the term
of this Lease, as such term may be extended pursuant to Section 1.3, for a
period of 20 years.

SECTION  20. DEFINITIONS

         20.1 "OWNERS": The multiple owners of the fee interest in the land
underlying the Racetrack.

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         20.2 "RACETRACK": The horse racing facilities commonly referred to as
Portland Meadows located at 1001 North Schmeer Road, Portland, Oregon, 97217,
constituting approximately100 acres, as depicted on Exhibit A attached hereto,
together with all improvements, fixtures and personal property located on the
premises and used in the operation of the Racetrack other than those items
removed by the prior Racetrack operator prior to May 16, 2001. The Racetrack
includes the racing oval, backside barn area, grandstand area and parking
facilities, but excludes the following: (i) the acreage south of Schmeer Road,
(ii) the property owned by WGS, (iii) the two cellular towers currently leased
to other parties, each of which may continue to be operated by others provided
that such operation does not interfere with Lessee's simulcast signal or other
operations at the Racetrack, and (iv) from May 1, 2001 through October 1, 2001,
the infield portion of the Racetrack which Lessor may lease again to Donna
Jensen or an entity owned or controlled by her for the purpose of operating a
golf course, as provided in Section 12.5, provided that the provisions of such
lease concerning mutual ingress and egress and noninterference with Racetrack
operations shall be subsantially the same as the provisions of Lessor's prior
seasonal leases of the infield area. The Racetrack may also be referred to
herein as the "Premises".

         20.3 "OPERATING AGREEMENT": Fourth Amendment and Restatement of
Operating Agreement dated March 13, 1984 between Owners and Landlord's
predecessor in interest, a copy of which is incorporated herein by reference as
Exhibit "B". It is understood that Exhibit B supercedes an earlier Operating
Agreement and amendments thereto.

         20.4 "GOLF COURSE LEASE": That lease agreement dated October 4, 1989
between Oregon Racing, Inc. and ESJ, Ltd., a copy of which is incorporated
herein by reference as Exhibit "D". Landlord has succeeded to all rights of
Oregon Racing, Inc.

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         under the Golf Course Lease.

         20.5 "COMMISSION":  The Oregon Racing Commission.

         20.6 "GROSS PARI-MUTUEL WAGERING": This refers to all wagering at the
Racetrack relating to the running of live races at the Racetrack and all
simulcast wagering on races run at other locations.

         20.7 "RACING SEASON": The period of time commencing on or about October
of each year and ending on or about May of the following year as such season may
be modified by the Commission from time to time.

SECTION  21. GUARANTY

         As a condition and an inducement to Landlord to enter into this Lease,
Magna Entertainment Corporation, a Delaware corporation, has this day delivered
to Landlord its Guaranty of this Lease in the form attached hereto as Exhibit
"C".

                                      LANDLORD:

                                      Portland Meadows Management, LLC.

                                      By: __________________________________
                                      Its: _______________________________

                                      TENANT:

                                      MEC Oregon Racing, Inc.,
                                      a Delaware Corporation

                                      By: _________________________________
                                      Its: _______________________________

                                      By: _________________________________
                                      Its: _______________________________

         Thomas P. Moyer hereby represents that he owns a fee interest in the
Premises and agrees to the provisions of Section 18.5, Section 19, and the third
sentence of Section 12.3 of this Lease.

                                      ------------------------------
                                      Thomas P. Moyer

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