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EXHIBIT 10.6  

EXECUTION COPY  

 MAGNA ENTERTAINMENT CORP.

as Borrower  

– and –  

THE GUARANTORS SET FORTH

ON THE SIGNATURE PAGES HEREOF

as Guarantors  

– and –  

BANK OF MONTREAL, ACTING THROUGH ITS

CHICAGO LENDING OFFICE

as Lender  

– and –  

BANK OF MONTREAL, ACTING THROUGH ITS

CHICAGO LENDING OFFICE

as Agent  

– and –  

BMO NESBITT BURNS, A DIVISION OF BANK OF MONTREAL

as Arranger  

AMENDED AND RESTATED

CREDIT AGREEMENT  

Dated as of June 2, 2003  

 
 

TABLE OF CONTENTS    
    

	 
	 	 
	 	Page

	ARTICLE 1.

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

ARTICLE 2.

CREDIT FACILITY
	2.1.	 	Establishment of Credit Facility	 	21
	2.2.	 	Revolving Nature of Operating Facility	 	21
	2.3.	 	Repayment under Credit Facility	 	22
	2.4.	 	Mandatory Repayment from Public Offerings	 	22
	2.5.	 	Voluntary Reduction in Aggregate Commitment	 	23
	2.6.	 	Extension of Credit Facility	 	23
	2.7.	 	Increase in Aggregate Commitment	 	24
	

ARTICLE 3.

GENERAL PROVISIONS RELATING TO THE CREDIT FACILITY
	3.1.	 	Advances	 	25
	3.2.	 	Selection of Interest Periods	 	26
	3.3.	 	Rollover and Conversion	 	26
	3.4.	 	Payments Generally	 	26
	3.5.	 	Disturbance of Libor Market	 	27
	3.6.	 	Change in Circumstances	 	27
	3.7.	 	Illegality	 	29
	3.8.	 	Indemnity	 	29
	3.9.	 	Proceedings in Respect of Claims	 	30
	3.10.	 	Evidence of Indebtedness	 	32
	3.11.	 	Several Obligations	 	33
	

ARTICLE 4.

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

 

	

ARTICLE 5.

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

ARTICLE 6.

REPRESENTATIONS AND WARRANTIES
	6.1.	 	Representations and Warranties	 	37
	6.2.	 	Survival of Representations and Warranties	 	43
	

ARTICLE 7.

COVENANTS
	7.1.	 	Affirmative Covenants	 	43
	7.2.	 	Negative Covenants	 	48
	7.3.	 	Environmental Matters	 	50
	

ARTICLE 8.

CONDITIONS PRECEDENT
	8.1.	 	Conditions Precedent to Closing	 	51
	8.2.	 	Conditions Precedent to Advances	 	53
	

ARTICLE 9.

EVENTS OF DEFAULT AND REMEDIES
	9.1.	 	Events of Default	 	53
	9.2.	 	Remedies Upon Default	 	56
	9.3.	 	Distributions	 	56
	

ARTICLE 10.

GUARANTY
	10.1.	 	Guaranty	 	57
	10.2.	 	Guaranty Absolute	 	57
	10.3.	 	Waiver	 	58
	10.4.	 	Continuing Guaranty; Assignments	 	58
	10.5.	 	Subrogation	 	59
	

ARTICLE 11.

THE AGENT AND THE ADMINISTRATION OF THE CREDIT FACILITY
	11.1.	 	Appointment and Authorization	 	59
	11.2.	 	Duties and Obligations of Agent	 	60
	11.3.	 	Prompt Notice to the Lenders	 	61
	11.4.	 	Agent's Authority to Deal with Borrower	 	61
	11.5.	 	Dealings by Borrower with Agent	 	61
	11.6.	 	Independent Credit Decisions	 	61
	11.7.	 	Indemnification	 	62
	11.8.	 	Successor Agent	 	62
	11.9.	 	Action by and Consent of Lenders; Waiver and Amendments	 	62
	11.10.	 	Funding of Advances	 	63
	11.11.	 	Remittance of Payments	 	64
	11.12.	 	Redistribution of Payments	 	64
	11.13.	 	Notification of Default	 	65
	11.14.	 	Taking and Enforcement of Remedies	 	65
	11.15.	 	Adjustments to Reflect Rateable Portions	 	66
	 	 	 	 	 

ii

 

	11.16.	 	No Partnership	 	66
	

ARTICLE 12.

GENERAL
	12.1.	 	Reliance and Non-Merger	 	66
	12.2.	 	Confidentiality	 	67
	12.3.	 	No Set-Off by the Borrower	 	67
	12.4.	 	Employment of Experts	 	67
	12.5.	 	Reliance by the Lenders	 	67
	12.6.	 	Notices	 	67
	12.7.	 	Time	 	68
	12.8.	 	Further Assurances	 	68
	12.9.	 	Assignment	 	69
	12.10.	 	Exchange of Information	 	71
	12.11.	 	Counterparts	 	71
	12.12.	 	Entire Agreement	 	71
	12.13.	 	Liability of Arranger	 	71
	

SCHEDULE 1.1.8

Applicable Margin and Stand-by Fee	
 	

 
	

SCHEDULE 1.1.18

Borrowing Notice	
 	

 
	

SCHEDULE 1.1.61

Lender's Commitments	
 	

 
	

SCHEDULE 7.1.13

Form of Compliance Certificate	
 	

 
	

SCHEDULE 12.9.4

Assignment and Assumption Agreement	
 	

 

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        THIS AMENDED AND RESTATED CREDIT AGREEMENT is dated as of June 2, 2003 

AMONG:

MAGNA ENTERTAINMENT CORP., as Borrower 

— and — 

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

— and —

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

— and —

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

— and — 

BMO NESBITT BURNS, a division of Bank of Montreal, as Arranger 

RECITALS:  

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

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

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

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

 
 
 

ARTICLE 1.
  INTERPRETATION    
    

1.1.    Definitions  

	

	For
the purposes of this Agreement:

	1.1.1.
	"Acquisition" means any transaction or series of transactions, consummated after May 1, 2002, by which the Borrower or any of
its Subsidiaries, directly or indirectly, by means of a take-over bid, tender offer, amalgamation, merger, purchase of assets, purchase of shares or otherwise (a) acquires any
ongoing business or all or substantially all of the assets of any Person engaged in any ongoing business, (b) acquires beneficial ownership (as defined in Rule 13d-3
promulgated under the Securities Exchange Act of 1934, as amended) of securities of a Person engaged in any ongoing business representing more than 10%
of the ordinary voting power for the election of directors or other governing position if the business and affairs of such Person are managed by a board of directors or other governing body, or
(c) acquires beneficial ownership (as defined in Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as amended)
of more than 10% of the ownership interest in any Person engaged in any ongoing business that is not managed by a board of directors or other governing body;

	1.1.2.
	"Advance" means any utilization of the Credit Facility by the Borrower (other than by way of Rollover or Conversion of a Loan
already outstanding), whether by way of advance of a Base Rate Loan, Libor Loan or L/C Loan;

	1.1.3.
	"Affiliate" means, in respect of any corporation, any Person which, directly or indirectly, controls or is controlled by or is under
common control with the corporation; and for the purpose of this definition, "control" (including, with correlative meanings, the terms  "controlled by" and
"under common control with") means the power to direct, or cause to be directed, the
management and policies of a corporation whether through the ownership of voting shares, by contract or otherwise;

	1.1.4.
	"Agent" means Bank of Montreal, in its capacity as administrative agent hereunder or any successor agent as provided in
section 11.8;

	1.1.5.
	"Aggregate Commitment" means, until April 30, 2003, $100,000,000, and, thereafter, $50,000,000 subject to all permanent
reductions effected from time to time pursuant to sections 2.4, 2.5 or 3.7, and subject to any increase effected pursuant to section 2.7, and inclusive of any L/C Loan outstanding
pursuant to section 4.1.

	1.1.6.
	"Agreement" means this agreement and the Disclosure Letter and all schedules attached to this agreement or to the Disclosure Letter,
in each case as they may be amended or supplemented from time to time; the expressions "hereof",  "herein", "hereto", "hereunder",  "hereby" and similar expressions refer to this Agreement as a whole (including the Disclosure Letter) and not to any particular
article, section,
schedule or other portion hereof, and the expression "article" and "section" followed by a number or by
a number and letter, and "schedule" followed by a letter, mean and refer to the specified article or section of or schedule to this Agreement, as
applicable, except as otherwise specifically provided herein;

	1.1.7.
	"Applicable Law" means, in respect of any Person, property, transaction or event, all applicable laws, statutes, rules,
by-laws and regulations, and all applicable official directives, orders, judgments and decrees of Governmental Bodies but solely to the extent they have the force of law (and, in the case
of section 3.6 only, whether or not having the force of law but otherwise binding on such Person or such Person's property); 

2

 
	1.1.8.
	"Applicable Margin" means the margins expressed as a rate per annum set forth in Schedule 1.1.8 corresponding to the ratio of
(i) Total Funded Debt less cash reflected on the Borrower's consolidated balance sheet to (ii) EBITDA (measured on a rolling four quarter basis) as calculated on May 1, 2002 and
at the beginning of each Fiscal Quarter thereafter;

	1.1.9.
	"Assignment Agreement" has the meaning attributed to such term in section 12.9.4;

	1.1.10.
	"Audited Financial Statements" means the audited consolidated financial statements of the Borrower for the Fiscal Year ended
December 31, 2001;

	1.1.11.
	"Banking Day" means a day on which (i) for all purposes other than in connection with a Libor Loan, banks are generally open
for business in each of Toronto, Ontario, New York, New York, Chicago, Illinois and Los Angeles, California; and (ii) in connection with a Libor Loan, banks are generally open for
business and on which dealings in foreign currency and exchange between banks may be carried on in each of Toronto, Ontario, New York, New York, Chicago, Illinois, Los Angeles,
California and London, England and on which dealings in U.S. dollar deposits are transacted in the London interbank market;

	1.1.12.
	"Bank of Montreal" means Bank of Montreal, acting through its Chicago lending office, or any other appropriate lending office in
the United States of America designated thereby;

	1.1.13.
	"Base Rate" means, for any day, the annual rate of interest equal to the greater of (i) the rate which the Agent establishes
at its principal office in Chicago, Illinois as the reference rate of interest in order to determine interest rates it will charge on such day for commercial loans in U.S. dollars made to its
customers in the United States of America and which it refers to as its "Base Rate", and (ii) the Federal Funds Effective Rate on such day plus 1% per annum, such rate to be adjusted
automatically and without the necessity of any notice to the Borrower upon each change to such rate;

	1.1.14.
	"Base Rate Loan" means, at any time, any Loan which is outstanding at such time and in respect of which interest is to be
calculated based on the Base Rate;

	1.1.15.
	"BNS Filings" means the filings under the Uniform Commercial Code recorded on March 7, 1994 against Gulfstream Park
(evidencing a security interest in all personal property of Gulfstream Park) in favour of The Bank of Nova Scotia;

	1.1.16.
	"Borrower" means Magna Entertainment Corp., a corporation existing under the laws of Delaware, and its successors and permitted
assigns;

	1.1.17.
	"Borrowing Date" means any Banking Day on which an Advance is made, or is to be made in accordance with a request of the Borrower;

	1.1.18.
	"Borrowing Notice" means a notice substantially in the form of Schedule 1.1.18; 

3

 
	1.1.19.
	"Branch of Account" means the Agent's main branch located at Chicago, Illinois, or such other branch of the Agent located in the
United States of America as the Agent may designate in writing to the Borrower at least 30 days prior to the redesignation of such Branch of Account;

	1.1.20.
	"Capital Expenditures" means, for any period, those expenditures of the Borrower or any Subsidiary made in connection with the
purchase, lease, license, acquisition, erection, development, improvement, maintenance or construction of property of or by such Person (including any such property acquired pursuant to a Capital
Lease Obligation) or any other expenditures, in all cases, which are required to be capitalized on the balance sheet of the Borrower or such Subsidiary in accordance with GAAP;

	1.1.21.
	"Capital Lease Obligations" means the obligations of the Borrower or any Subsidiary to pay rent or other amounts under a lease of
(or other agreement conveying the right to use) real or personal property, which obligations are required to be classified and accounted for as a capital lease on a balance sheet of such Person under
GAAP and, for purposes of this Agreement, the amount of such obligations shall in each case be the capitalized amount thereof, determined in accordance with GAAP;

	1.1.22.
	"CERCLA" means the Comprehensive Environmental Response, Compensation and Liability Act of 1980, including the rules and
regulations promulgated thereunder, as the same may be amended from time to time;

	1.1.23.
	"Change in Control" means any event which results in Magna International Inc., The Stronach Trust, Frank Stronach and any
member of his immediate family and their heirs and personal representatives in the aggregate being the beneficial holder, directly or indirectly, of less than 51% of the votes attaching to all Voting
Interests of the Borrower;

	1.1.24.
	"Closing Date" means the date on which this Agreement is executed and delivered by the parties hereto;

	1.1.25.
	"Comerica Filings" means the filings under the Uniform Commercial Code recorded on December 28, 1998 against MI Racing
(evidencing a security interest in all personal property of MI Racing) in favour of Comerica Bank;

	1.1.26.
	"Company" means, collectively, the Borrower and all of its Subsidiaries;

	1.1.27.
	"Contingent Liabilities" at any time means the amount of all indebtedness and liabilities, contingent or otherwise, of any other
Person at such time,

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

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

4

 

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

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

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

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

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

	1.1.28.
	"Conversion" means, in respect of any Loan, the conversion of the method for calculating interest or fees on such Loan from one
method to another, and includes a conversion to or from a Libor Loan;

	1.1.29.
	"Conversion Date" means, in respect of any Loan, the Banking Day on which a Conversion thereof is made;

	1.1.30.
	"Core Line of Business" means the ownership or operation of racetracks and pari-mutuel wagering activities, including
(i) horse racing, (ii) dog racing, (iii) off-track betting facilities, (iv) account wagering and other gaming activities including, without limitation, slot
machine and video lottery terminals, (v) a racetrack and casino complex currently under development in Austria, (vi) any food and beverage operations, sports bar operations, technology
services, entertainment, the ownership and management of real estate and/or other activities, whether or not listed in section 6.1.1, associated with or ancillary or related to (i), (ii),
(iii), (iv) and/or (v), above, including the ownership or operation of horse or dog training and boarding centres, arenas and restaurants, and (vii) the ownership and operation of two
golf courses, one of which is located in Aurora, Ontario and the second of which is located in Oberwaltersdorf, Austria, and all operations related thereto;

	1.1.31.
	"Credit Facility" means the revolving credit facility made available to the Borrower by the Lenders pursuant to section 2.1;

5

 
	1.1.32.
	"Default" means any event which, but for the lapse of time, giving of notice or both, would constitute an Event of Default and, for
greater certainty, includes for purposes of this Agreement other than section 8.2.3 hereof, any event relating to Subordinated Debt which would, but for the lapse of time, giving of notice or
both, enable the holders of Subordinated Debt to accelerate the maturity of the Subordinated Debt;

	1.1.33.
	"Disclosure Letter" means the letter of even date herewith prepared and signed by the Borrower and delivered to the Agent
simultaneously with the execution hereof;

	1.1.34.
	"EBITDA" means, for any Person in any period, Net Income of such Person for such period:

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

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

 

	1.1.35.
	"Environmental Laws" means all Applicable Laws with respect to environmental, public health or safety matters, including without
limitation, federal, state and local environmental statutes, regulations, ordinances, codes and by-laws relating to the protection and conservation of the environment (including the indoor
environment);

	1.1.36.
	"Environmental Orders" includes applicable orders, decisions or the like rendered by any Governmental Body under or pursuant to any
Environmental Laws;

	1.1.37.
	"Environmental Permits" includes all permits, certificates, approvals and licences issued by and registrations with any
Governmental Body pursuant to or required under any Environmental Laws or Environmental Orders;

	1.1.38.
	"Environmental Reports" means the reports listed on Schedule 1.1.38 of the Disclosure Letter;

	1.1.39.
	"ERISA" means the Employee Retirement Income Security Act of 1974, as amended;

	1.1.40.
	"ERISA Affiliate" means (1) any corporation which is a member of the same controlled group of corporations (within the
meaning of section 414(b) of the Internal Revenue Code) as the Borrower; (2) any trade or business (whether or not incorporated) which is under common control (within the meaning of
section 414(c) of the Internal Revenue Code) with the Borrower; and (3) a member of the same affiliated service group (within the meaning of section 414(m) of the Internal Revenue
Code) as the Borrower, any corporation described in clause (1) above or any trade or business described in clause (2) above; or (4) any other Person which is required to be
aggregated with the Borrower pursuant to regulations promulgated under section 414(o) of the Internal Revenue Code;

	1.1.41.
	"Event of Default" has the meaning attributed to such term in section 9.1; 

6

 
	1.1.42.
	"Excluded Taxes" means in relation to the Agent or any Lender, (a) those Taxes which are imposed or levied on or measured by
or determined by reference to the overall net income, profits, gross receipts, net worth or capital of the Agent or any Lender or any of its applicable lending offices, and all franchise taxes, taxes
on doing business or taxes measured by capital or net worth imposed on the Agent or any Lender or any of its applicable lending offices pursuant to the laws of the jurisdiction in which the Agent or
Lender, as applicable, is organized or resident or in which the Agent's or Lender's principal office or applicable lending office is located, and (b) without limiting the generality of the
foregoing, all franchise taxes, taxes on doing business or taxes measured by net income, capital, profits, gross receipts or net worth imposed on the Agent or any Lender or any of its applicable
lending offices, whether collected by withholding or otherwise, as a result of the Agent or such Lender (i) carrying on a trade or business in the United States of America or having a
permanent establishment in the United States of America, (ii) being organized under the laws of the United States of America or any political subdivision thereof,
(iii) being or being deemed to be resident in the United States of America for income tax purposes, or (iv) not dealing at arm's length (as defined for the purposes of the
Internal Revenue Code) with the Borrower, or which would not have been imposed had such Person satisfied a relevant authority that such Person was not a person mentioned in clause (i), (ii),
(iii) or (iv) above;

	1.1.43.
	"Federal Funds Effective Rate" means, for any day, the annual rate of interest equal to the weighted average of the rates on
overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers, as published for such day (or, if such day is not a Banking Day, for the next
preceding Banking Day) by the Federal Reserve Bank of New York, or if such rate is not so published for any day which is a Banking Day, the average of the quotations for such day on such
transactions received by the Agent from three United States of America federal funds brokers of recognized standing selected by it;

	1.1.44.
	"Fiscal Year" means the fiscal year of the Borrower, being January 1 to December 31;

	1.1.45.
	"Fiscal Quarter" means a period of three consecutive months ending on March 31, June 30, September 30 or
December 31, as the case may be, of each Fiscal Year;

	1.1.46.
	"GAAP" means, at any time, accounting principles generally accepted in the United States of America as recommended by the
Financial Accounting Standards Board, applied on a consistent basis;

	1.1.47.
	"Fraudulent Transfer Laws" has the meaning attributed to such term in section 10.1.3;

	1.1.48.
	"Guaranteed Obligations" has the meaning attributed to such term in section 10.1.1;

	1.1.49.
	"Guarantors" means, collectively, the guarantors set forth on the signature pages hereof and any other Relevant Subsidiary (other
than the Santa Anita Subsidiaries and the Lone Star Subsidiaries) that executes and delivers a Guaranty and, in the singular, any one of them;

	1.1.50.
	"Guaranty" means the guaranty set forth in Article 10; 

7

  

	1.1.51.
	"Governmental Body" means any government, parliament, legislature, or any regulatory authority, agency, commission or board of any
government, parliament or legislature, or any court or (without limitation to the foregoing) any other law, regulation or rule-making entity (including, without limitation, any central
bank, fiscal or monetary authority or authority regulating banks), having jurisdiction in the relevant circumstances over a Person or such Person's property, or any Person acting under the authority
of any of the foregoing (including, without limitation, any arbitrator and the Racing and Gambling Regulatory Authorities);

	1.1.52.
	"Hazardous Substance" means any flammable explosives, radon, radioactive materials, asbestos, urea formaldehyde foam insulation,
polychlorinated biphenyls, petroleum and petroleum products, methane, hazardous materials, hazardous wastes, hazardous or toxic substances or related materials as defined in CERCLA, the Hazardous
Materials Transportation Act, as amended (49 U.S.C. Sections 1801, et seq.), RCRA, Articles 15 and 27 of the New York State Environmental Conservation Law or any other
applicable Environmental Law and in the regulations adopted pursuant thereto;

	1.1.53.
	"Interest Period" means, with respect to each Libor Loan, the period selected by the Borrower in accordance with the provisions
hereof and being of a duration of one, two or three months or such other period as the Agent (with the consent of all of the Lenders) may agree to from time to time, commencing on the Borrowing Date,
Rollover Date or Conversion Date (as the case may be) of such Loan;

	1.1.54.
	"Internal Revenue Code" means the Internal Revenue Code of 1986, as amended, including the regulations and published
interpretations and rulings thereunder;

	1.1.55.
	"Laurel and Pimlico Facility" means term credit facilities and a revolving credit facility provided by Mercantile-Safe
Deposit and Trust Company in favour of Laurel Racing Association Limited Partnership and Pimlico Racing Association Inc. collectively having a principal amount outstanding at any time of not
greater than $34,797,010, and includes any renewal or refinancing of any such facility provided the indebtedness thereof is not increased thereby above $34,797,010;

	1.1.56.
	"Laurel and Pimlico L/C" means the letters of credit dated November 27, 2002 issued by Bank of Montreal in favour of
Joseph LLC and Karin LLC in connection with the acquisition of Laurel Racing Association Limited Partnership and Pimlico Racing Association Inc., as the same may be extended or
renewed from time to time;

	1.1.57.
	"L/C Lender" means Bank of Montreal and its successors and permitted assigns in such capacity;

	1.1.58.
	"L/C Limit" means $40,000,000, as such amount is permanently reduced from time to time pursuant to sections 2.4, 2.5 or 3.7
or increased pursuant to section 2.7;

	1.1.59.
	"L/C Loan" means any Letter of Credit issued under Article 4;

	1.1.60.
	"Lenders" means, collectively, Bank of Montreal together with any financial institutions which become parties hereto pursuant to
section 12.9 and their respective successors and permitted assigns, and, in the singular, any one of them; 

8

 
	1.1.61.
	"Lender's Commitment" means, with respect to each Lender, the amount set forth opposite the name of such Lender in
Schedule 1.1.61 (and, in the case of Bank of Montreal, subject to footnote (1) of Schedule 1.1.61), in each case subject to such Lender's Rateable Portion of all permanent
reductions effected from time to time pursuant to sections 2.4, 2.5 or 3.7 or such Lender's Rateable Portion of all increases effected from time to time pursuant to section 2.7;

	1.1.62.
	"Letter of Credit" means a letter of credit or letter of guaranty issued by the L/C Lender in accordance with the provisions
hereof;

	1.1.63.
	"Letter of Credit Agreement" has the meaning attributed to such term in section 4.7;

	1.1.64.
	"Letter of Credit Fee" means, at any time, in respect of each Letter of Credit, a fee calculated on the basis of the actual number
of days in the year for the period from the date of issuance thereof to the Maturity Date thereof, payable in advance in quarterly instalments (except that the first such instalment shall be in
respect of the period from the date the Letter of Credit is issued to the last day of the then current Fiscal Quarter), at the rate per annum equal to the Applicable Margin for Libor Loans in effect
at the time such instalment is payable, such fee to be adjusted automatically upon each change to such fee in accordance with section 4.4;

	1.1.65.
	"Libor" means, in respect of a particular Libor Loan and Interest Period, the rate of interest per annum, calculated on the basis
of a year of 360 days, equal to the arithmetic mean, rounded upwards to the nearest whole multiple of one-sixteenth of one percent (if already not such a multiple), of the rates
which appear on the Telerate Page 3750 on the Dow Jones Telerate Service as of 11:00 a.m. (London time) on the day which is two Banking Days prior to the first day of such
Interest Period or, if such rate is not available at such time, the arithmetic mean, rounded upwards to the nearest whole multiple of one-sixteenth of one percent (if already not such a
multiple), of the interest rates, calculated on the basis of a year of 360 days, which, subject to section 3.5, the Agent has determined at or about 11:00 a.m. (London time) on
the day which is two Banking Days prior to the first day of such Interest Period as being the rate at which the leading banks in the London interbank eurocurrency market would offer the Agent for
placing U.S. dollar deposits in an amount approximately equal to the amount of the particular Libor Loan for substantially the same number of days as such Interest Period for delivery on the
first day of such Interest Period;

	1.1.66.
	"Libor Loan" means, at any time, any Loan which is outstanding at such time in U.S. dollars and in respect of which interest
is to be calculated based on Libor;

	1.1.67.
	"Lien" means any mortgage, lien, pledge, assignment, charge, security interest, lease intended as security, title retention
agreement, statutory right reserved in any Governmental Body, registered lease of real property, hypothec, levy, execution, seizure, attachment, garnishment or other similar encumbrance;

	1.1.68.
	"Loan" means, at any time, the principal amount of all Obligations then outstanding under the Credit Facility pursuant to the same
availment option, and,

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

9

 

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

 

	1.1.69.
	"Loan Documents" means this Agreement and each Letter of Credit Agreement, and "Loan
Document" means any one of them;

	1.1.70.
	"Lone Star Lease" means the amended and restated lease between MEC Lone Star, L.P. and Grand Prairie Sports Facilities
Development Corporation, Inc. as the same may be amended, supplemented or replaced from time to time;

	1.1.71.
	"Lone Star Security" means the security interests granted by MEC Lone Star, L.P. in favour of Grand Prairie Sports
Facilities Development Corporation, Inc. under the Lone Star Lease and under the security agreement between MEC Lone Star, L.P. and Grand Prairie Sports Facilities Development
Corporation, Inc., and any amendment or replacement of any such security;

	1.1.72.
	"Lone Star Subsidiaries" means, collectively, MEC Lone Star, L.P., its general partner, MEC Texas Racing, Inc., and
its limited partner, Racetrack Holdings, Inc., MEC Texas Concessions, LLC and Texas Extreme Skatepark, LLC and, in the singular, any one of them;

	1.1.73.
	"Majority Lenders" means, at any time, the Lenders which are owed principal amounts under the Credit Facility aggregating at least
51% of all Loans outstanding under the Credit Facility or, if no Loans are then outstanding under the Credit Facility, the Lenders having at least 51% of the Aggregate Commitment at such time;

	1.1.74.
	"Material Adverse Change" means any material adverse change in the business, condition (financial or otherwise), operations,
properties, assets, liabilities or prospects of the Company, taken as a whole;

	1.1.75.
	"Material Adverse Effect" means a material adverse effect on (a) the business, condition (financial or otherwise),
operations, properties, assets, liabilities or prospects of the Company, taken as a whole, or (b) the ability of the Borrower or any Guarantor to perform its Obligations under any Loan Document
to which it is or is to be a party;

	1.1.76.
	"Material Authorization" means any approval, permit, licence or similar authorization from, and any filing or registration with,
any Governmental Body required by the Borrower or any Material Subsidiary to carry on its Core Line of Business as presently carried on by it (including, without limitation, all environmental and
other permits, licenses and other authorizations required for the Borrower and each Material Subsidiary to carry on its Core Line of Business in accordance with Applicable Laws and further including,
without limitation, all licensing requirements of the Racing and Gambling Regulatory Authorities in relation to the Borrower or any Material Subsidiary) in each jurisdiction in which it does so where
the failure to have such approval, permit, licence, authorization, filing or registration could reasonably be expected to have a Material Adverse Effect;

	1.1.77.
	"Material Subsidiaries" means, collectively, the Guarantors, the Santa Anita Subsidiaries and the Lone Star Subsidiaries and, in
the singular, any one of them;

	1.1.78.
	"Maturity Date" means the last day of an Interest Period or Letter of Credit term (as applicable); 

10

 
	1.1.79.
	"Net Income" of a Person for any period means the consolidated net income of such Person during such period after taxes, but before
extraordinary items and unusual items (provided that pro forma earnings from Permitted Acquisitions incorporated in accordance with section 1.13 and net gains from sales of real
estate held for sale or development and excess racetrack lands shall be included), all as determined in accordance with GAAP. In addition, there shall be included in Net Income all net income of such
Person on a consolidated basis from investments in accordance with the equity method of accounting;

	1.1.80.
	"Obligations" means all indebtedness (including any operating account debit balances in favour of any Lender), liabilities and
other obligations of the Borrower and Guarantors to the Lenders or any of them hereunder and of the Borrower and Guarantors under any other Loan Document (including any amendments or supplements
thereto), whether actual or contingent, direct or indirect, matured or not, now existing or arising hereafter and includes, without limitation, all unpaid principal, interest, fees and other amounts
payable by the Borrower and Guarantors to the Lenders hereunder or under any other Loan Document;

	1.1.81.
	"Officer's Certificate" means, unless otherwise provided herein, in respect of the Borrower, a certificate signed by any one of the
Chair of the Board, the President, the Chief Financial Officer, the Secretary or any Vice President of the Borrower;

	1.1.82.
	"Permitted Acquisition" means an Acquisition by the Borrower (i) that has received approval of the board of directors of the
Borrower, (ii) that is within the Borrower's then current Core Line of Business, and (iii) in the case of the Acquisition of a racetrack business either (a) the acquired racetrack
business is then in operation and generating positive EBITDA from operations, or (b) the aggregate cash outlay for such Acquisition does not exceed $10,000,000; or (c) if at the time of
such Acquisition the Borrower utilizes less than 25% of the net cash proceeds from its first public markets transaction in 2002 for all Acquisitions made in reliance on this proviso and the
pro forma ratio of Total Funded Debt (measured as at the end of the immediately preceding Fiscal Quarter based on the consolidated financial statements of the Borrower) to EBITDA (measured for
the period comprising the immediately preceding Fiscal Quarter and the three Fiscal Quarters immediately preceding such preceding Fiscal Quarter on the consolidated financial statements of the
Borrower) of the Borrower (measured on a consolidated basis) shall not be greater than 2.50:1.00, in each case, calculated after giving effect to each such Acquisition in accordance with
section 7.1.17;

	1.1.83.
	"Permitted Debt" means (i) the Credit Facility; (ii) unsecured trade and other accounts payable incurred in the
ordinary course of business for the purpose of carrying on the same; (iii) the Santa Anita Facility; (iv) indebtedness under interest rate or currency hedging agreements entered into for
the purpose of managing interest rate and currency risks of the Borrower or any Material Subsidiary and not for speculative purposes; (v) indebtedness of the Borrower to any of its Material
Subsidiaries or of any Material Subsidiary to the Borrower or any other Material Subsidiary; (vi) indebtedness owing under, and not exceeding the amounts permitted to be outstanding under and
secured by, Permitted Encumbrances and extensions, renewals or replacements of any Debt permitted under this clause (vi) provided the principal amount of such indebtedness thereunder or
security therefor is not thereby increased beyond the original principal amount of such Debt; (vii) unsecured vendor-take-back indebtedness not exceeding $50,000,000 in
the aggregate; (viii) the approximately $12 million of unsecured vendor-take-back indebtedness outstanding on the date hereof; (ix) indebtedness in an
aggregate amount not exceeding $125,000,000, provided that such indebtedness is incurred or assumed in connection with the acquisition of new assets (whether or not a Permitted Acquisition), and, in
each such case, the recourse of such indebtedness is limited (either contractually or structurally) to the assets being financed or acquired; (x) unsecured indebtedness in an aggregate amount
not exceeding $5,000,000; (xi) indebtedness of a Subsidiary which becomes a Material Subsidiary after May 1, 2002; (xii) indebtedness under letters of credit, performance bonds,
instalment insurance and insurance premium financing contracts, and similar instruments in respect of land transfer tax claims, land development charges, gaming permits and other obligations of the
Borrower or its Subsidiaries incurred in the ordinary course of business; (xiii) the Lone Star Lease; (xiv) indebtedness of up to $6,000,000 in aggregate that may become due to the
Estate of John K. Cooke in connection with the acquisition of Laurel Racing Association Limited Partnership, Pimlico Racing Association, Inc. and certain of their Affiliates; and
(xv) Subordinated Debt; 

11

 
	1.1.84.
	"Permitted Encumbrances" means:

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

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

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

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

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

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

12

 

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

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

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

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

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

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

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

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

	(o)
	the
Santa Anita Security and the Lone Star Security;

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

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

13

 

	(r)
	the
granting by the Borrower or a Subsidiary in the ordinary course of its business of any lease, sub-lease, tenancy or right of occupancy to any person in respect of real
property owned or leased by the Borrower or a Subsidiary;

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

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

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

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

	(w)
	security
granted in support of the Laurel and Pimlico L/C; and

	(x)
	any
other Lien which the Lenders approve in writing as a Permitted Encumbrance;

 

	1.1.85.
	"Person" means any individual, partnership, limited partnership, limited liability company, joint venture, syndicate, sole
proprietorship, company or corporation with or without share capital, unincorporated association, trust, trustee, executor, administrator or other legal or personal representative, Governmental Body
or any other legal entity;

	1.1.86.
	"Plan" means an employee benefit plan defined in section 3(3) of ERISA in respect of which the Borrower or any ERISA
Affiliate is, or within the immediately preceding six years was, an "employer" as defined in section 3(5) of ERISA;

	1.1.87.
	"Purchase Money Security Interest" means any Lien given, assumed or arising by operation of law to provide or secure, or to provide
the obligor with funds to pay, the whole or any part of the consideration for the acquisition of property where the principal amount of the obligation secured by such Lien (i) is not in excess
of the cost to the obligor of the property encumbered thereby and (ii) is secured only by the property being acquired by the obligor, and includes the renewal or refinancing of any such Lien
upon the same property provided that the indebtedness secured and the security therefor are not increased thereby;

	1.1.88.
	"Racing and Gambling Regulatory Authorities" means the racing and gambling regulatory authorities in each state where the Borrower
or any Material Subsidiary maintain racetracks and/or carry on business, including (without limitation) the California Horse Racing Board, the Division of Pari-Mutual Wagering within the
Florida Department of Business and Professional Regulation, the Pennsylvania Harness Racing Commission and the Nevada Gaming Commission; 

14

 
	1.1.89.
	"Rateable Portion" means in respect of each Lender at any time the proportion that its Lender's Commitment at such time bears to
the Aggregate Commitment at such time;

	1.1.90.
	"Real Property" has the meaning attributed to such term in section 6.1.9;

	1.1.91.
	"Registration Statement" means the registration statement of the Borrower dated November 15, 2001 on
Form S-1 (No. 333-70520), as amended to and including April 4, 2002, and related prospectuses for the registration of securities of the Borrower under the  Securities Act of 1933, as
amended;

	1.1.92.
	"Regulation U" means Regulation U of the Board of Governors of the Federal Reserve System, in effect from time to
time;

	1.1.93.
	"Release" means any spill, deposit, disposal, addition, emission, discharge, leak or other release;

	1.1.94.
	"Relevant Subsidiary" means at any time, a Subsidiary of the Borrower that is incorporated, existing and carries on business in the
United States of America (a) having assets with an aggregate net book value in excess of 10% of the aggregate net book value of the total assets of the Borrower, determined on a
consolidated basis, including such Subsidiary (in each case, determined as of the last day of the most recent fiscal quarter of such Person), or (b) having EBITDA in excess of 10% of EBITDA of
the Borrower, determined on a consolidated basis, including such Subsidiary (in each case, for the four consecutive Fiscal Quarters most recently ended), in the case of each of (a) and (b), as
shown in an Officer's Certificate delivered pursuant to section 7.1.17 or (c) as may be designated by the Borrower in its sole discretion as a Relevant Subsidiary by written notice
provided to the Agent (whether or not it is incorporated, existing and carries on business in the United States of America); provided, however, the Subsidiaries listed on Schedule 1.1.94
of the Disclosure Letter (and their successors and assigns), for purposes hereof, shall each be deemed to always be a Relevant Subsidiary, and provided further that MEC Holdings (USA) Inc.
shall not be a Relevant Subsidiary;

	1.1.95.
	"Replacement Cost" means, with respect to any property or asset, the cost of repairing, replacing or reinstating such property or
asset with materials of like kind and quality and for like occupancy (where applicable) on the same or a similar site, in accordance with the requirements of any applicable municipal
by-laws and without deduction for depreciation;

	1.1.96.
	"Reportable Event" means any of the events described in section 4043 of ERISA;

	1.1.97.
	"Restricted Payment" shall mean, with respect to any Person, any payment by such Person (i) of any dividends on any of its
equity securities, (ii) on account of, or for the purpose of setting apart any property for a sinking or other analogous fund for, the purchase, redemption, retirement or other acquisition of
any of its equity securities or any warrants, options or rights to acquire any such shares, or the making by such Person of any other distribution in respect of any of its equity securities,
(iii) of any principal of or interest or premium on or of any amount in respect of a sinking or analogous fund or defeasance fund for any indebtedness of such Person ranking in right of payment
subordinate to any liability of such Person under the Loan Documents, (iv) of any principal of or interest or premium on or of any amount in respect of a sinking or analogous fund or defeasance
fund for any indebtedness of such Person to a shareholder of such Person or to an Affiliate of a shareholder of such Person, (v) of any management, consulting or similar fee or any bonus
payment or comparable payment, or by way of gift or other gratuity, to any Affiliate of such Person or to any director or officer of any such Affiliate, or (vi) any loan to any director,
officer or employee of the Borrower or of any Affiliate of the Borrower; provided that payments of rent and payments for goods and services rendered in the ordinary course of business shall not be
Restricted Payments; 

15

 
	1.1.98.
	"Rollover" means, in respect of a Libor Loan, the continuation of such Loan or any portion thereof for a succeeding Interest Period
in accordance with the provisions hereof;

	1.1.99.
	"Rollover Date" means, in respect of a Libor Loan, a Banking Day on which a Rollover of all or a portion of such Loan is made;

	1.1.100.
	"Santa Anita Facility" means (i) the term loan credit agreement dated as of November 15, 1999 and (ii) the
revolving credit agreement dated as of November 1, 2001 between Los Angeles Turf Club, Incorporated and Wells Fargo Bank, National Association, collectively having a principal amount
outstanding at any time of not greater than $85,000,000, and includes any renewal or refinancing of any such facility provided the indebtedness thereof or security therefor is not increased thereby;

	1.1.101.
	"Santa Anita Security" means the security documents and guaranties securing and supporting the Santa Anita Facility, and includes
any amendment or replacement of any such security or guaranty provided the property subject thereto or security interest in relation thereto is not increased;

	1.1.102.
	"Santa Anita Subsidiaries" means, collectively, The Santa Anita Companies, Inc. and Los Angeles Turf Club, Incorporated
and, in the singular, either one of them;

	1.1.103.
	"Securities Acts" means both the Securities Act of 1933, as amended, and the  Securities Exchange Act of 1934, as amended, and the respective rules and regulations promulgated thereunder;

	1.1.104.
	"Securities Commission" means the Securities and Exchange Commission of the United States of America, or other Governmental
Body in replacement thereof;

	1.1.105.
	"Subordinated Debt" means, collectively, up to $75,000,000 principal amount of 7.25% convertible subordinated notes due
December 15, 2009 issued by the Borrower, and up to $150,000,000 principal amount of 8.55% convertible subordinated notes due June 15, 2010 issued by the Borrower pursuant to a purchase
agreement dated May 20, 2003 with Bank Austria Creditanstalt AG and under an indenture dated as of the date hereof with The Bank of New York, each as the same may be amended or modified
from time to time on the terms approved by the Majority Lenders; provided that amendments and modifications relating solely to administrative matters need only be approved by the Agent;

	1.1.106.
	"Subsidiary" means, with respect to any Person at any time, any Person of which at least a majority of the votes attaching to
Voting Interests are at the time, directly or indirectly, owned by such Person;

	1.1.107.
	"Taxes" means all taxes of any kind or nature whatsoever including, without limitation, income taxes, sales or value-added taxes,
goods and services or use taxes, levies, imposts, stamp taxes, royalties, duties, and all fees, deductions, charges and withholdings imposed, levied, collected, withheld or assessed as of
May 1, 2002 or at any time thereafter, by any Governmental Body of or within the United States of America or any other jurisdiction whatsoever having power to tax, together with
penalties, fines, additions to tax and interest thereon; 

16

 
	1.1.108.
	"Termination Date" means October 10, 2003, or such earlier date as the entire balance of the Loans under the Credit
Facility may become due hereunder, whether by acceleration or otherwise; or, in each case, such later date to which the Credit Facility has been extended pursuant to section 2.6;

	1.1.109.
	"Total Funded Debt" of any Person at any particular time means the aggregate (without duplication) of the following amounts with
respect to such Person determined on a consolidated basis at such time:

	(a)
	indebtedness
for money borrowed and indebtedness represented by notes payable and drafts accepted representing extensions of credit (including, as regards any note or draft issued at
a discount, the face amount of such note or draft);

	(b)
	all
obligations (whether or not with respect to the borrowing of money) which are evidenced by bonds, debentures, notes or other similar instruments or not so evidenced but which
would be considered to be indebtedness for borrowed money in accordance with GAAP;

	(c)
	all
indebtedness for borrowed money upon which interest charges are customarily paid;

	(d)
	Capital
Lease Obligations and all other indebtedness issued or assumed as full or partial payment for property or services or by way of capital contribution; and

	(e)
	any
Contingent Liability relating to an obligation of a type referred to in (a) to (d) above, 

including
(without limitation) the aggregate of all Loans at such time; provided that Subordinated Debt, trade payables, expenses accrued in the ordinary course of business, customer advance payments
and deposits received in the ordinary course of business shall not constitute funded debt; 

	1.1.110.
	"Total Interest Expense" of any Person for any period means the aggregate amount of:

	(a)
	interest
(including amortization of original issue discount on any indebtedness and stamping fees on bankers' acceptances);

	(b)
	dividends
on securities calculated on the basis of a fixed or floating sum or percentage or by reference to a fixed or floating sum or percentage; and

	(c)
	all
but the principal component of rental payments in respect of Capital Lease Obligations, 

accrued,
whether paid or not, by such Person during such period, determined on a consolidated basis in accordance with GAAP. For the purpose of this definition, (i) interest on Subordinated
Debt, and (ii) amounts payable under or receivable pursuant to interest rate hedging arrangements (including interest swap arrangements) in respect of which no default has occurred and is
continuing shall, without duplication, be taken into account in calculating Total Interest Expense; 

17

  

	1.1.111.
	"U.S. dollars" means lawful money of the United States of America; and

	1.1.112.
	"Voting Interests" means shares of capital stock issued by a corporation (or other equivalent ownership interests in any other
Person), the holders of which are ordinarily, in the absence of contingencies, entitled to vote for the election of directors (or persons performing similar functions) of such Person, even if the
right so to vote has been suspended by the happening of such a contingency. 

1.2.    Gender and Number  

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

1.3.    Certificate of the Agent as to Rates, etc.  

        A certificate of the Agent on behalf of the Lenders certifying the amount of the Applicable Margin, the Letter of Credit Fee, the Base Rate, the Federal Funds
Effective Rate or Libor at any particular time in respect of any Loan made or maintained or to be made or maintained by the Lenders or any of them hereunder shall be prima
facie evidence thereof. No provision hereof shall be construed so as to require the Agent or any Lender to issue a certificate at any particular time. 

1.4.    Invalidity, etc.  

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

1.5.    Headings, etc.  

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

1.6.    Governing Law  

        Except as otherwise specifically provided, the Loan Documents shall be governed by and construed in accordance with the laws of the State of New York. 

1.7.    Attornment  

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

18

 

1.8.    Judgment Currency  

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

1.9.    Waiver of Jury  

        The Borrower, each Guarantor, the Agent, the Arranger and the Lenders hereby irrevocably waive all right to trial by jury in any action, proceeding or
counterclaim (whether based in contract, tort or otherwise) arising out of or relating to any of the Loan Documents, the transactions contemplated hereby, the Advances or any actions by the Agent, the
Arranger or any Lender in the negotiation, administration, performance or enforcement thereof. 

1.10.    References  

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

1.11.    Currency  

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

1.12.    This Agreement to Govern  

        If there is any inconsistency between the terms of this Agreement and the terms of any other Loan Document, or if any matter set forth in a Letter of Credit
Agreement or Letter of Credit is otherwise addressed herein, the provisions hereof shall prevail. 

19

 

1.13.    Generally Accepted Accounting Principles  

        Except as otherwise specifically provided herein, all accounting terms shall be applied and construed in accordance with GAAP (including, without limitation,
determining the amount of any Contingent Liability). For the purpose of determining compliance with the financial covenants set forth in section 7.1.18, unless expressly provided to the
contrary or unless the Agent (with the consent of the Majority Lenders) otherwise agrees at the request of the Borrower, all computations shall be calculated on a consolidated basis, and for the
purposes of including the operating results from any Acquisition on a pro forma basis for the financial covenants set out in section 7.1.18, the Borrower shall include such operating
results in determining compliance with the financial covenants in good faith, making such adjustments, assumptions and changes necessary to reflect differences in accounting policies or principles
which are permitted or required to be made to pro forma financial statements pursuant to the Securities Acts, and the rules and regulations promulgated thereunder, including
Regulation S-X. 

1.14.    Determination of Amount of Loans  

        For the purpose of determining the amount of Loans or any Loan at any time, there shall be deemed to be outstanding and advanced in addition to amounts
outstanding and directly advanced, without duplication and without affecting other provisions hereof regarding the basis for the calculation of interest or fees, the maximum amount of all contingent
liabilities of the Lenders pursuant to Letters of Credit then outstanding. 

1.15.    Computation of Time Periods  

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

1.16.    Actions on Days Other Than Banking Days  

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

1.17.    Oral Instructions  

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

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1.18.    Incorporation of Schedules  

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

Schedule 1.1.8      Applicable
Margin and Stand-by Fee 

Schedule 1.1.18    Borrowing
Notice 

Schedule 1.1.61    Lender's
Commitments 

Schedule 7.1.13    Form
of Compliance Certificate 

Schedule 12.9.4    Assignment
and Assumption Agreement 

 
 

ARTICLE 2.
  CREDIT FACILITY    
    

2.1.    Establishment of Credit Facility  

	2.1.1.
	Subject
to the terms and conditions of this Agreement, the Lenders hereby severally establish a revolving credit facility (the "Credit Facility") in favour of the Borrower in
accordance with their respective Lender's Commitments.

	2.1.2.
	The
Credit Facility shall be available, at the option of the Borrower, by way of Advances of: (i) Base Rate Loans in U.S. dollars; (ii) Libor Loans in
U.S. dollars; and (iii) Letters of Credit in U.S. dollars.

	2.1.3.
	Notwithstanding
any other provision of this Agreement, no Lender shall be obligated to make its Rateable Portion of any Advance (and the Borrower shall not request any Advance to
be made) to the extent that on any relevant Borrowing Date, after giving effect to any Advance requested: (i) the aggregate principal amount of such Lender's Rateable Portion of all Loans under
the Credit Facility would exceed its Lender's Commitment at such time; or (ii) the aggregate principal amount of all Loans under the Credit Facility would exceed the Aggregate Commitment at
such time.

	2.1.4.
	The
Credit Facility is to be used for general corporate purposes of the Borrower and its Subsidiaries, including for purposes of financing Permitted Acquisitions, Capital
Expenditures and working capital needs.

	2.1.5.
	At
no time shall the aggregate amount of all Loans outstanding under the Credit Facility exceed the Aggregate Commitment. 

2.2.    Revolving Nature of Operating Facility  

        The Borrower may, until the Termination Date, increase or decrease the Obligations under the Credit Facility by making drawdowns, repayments and further drawdowns
up to the Aggregate Commitment from time to time. The Aggregate Commitment and each of the Lender's Commitments shall be reduced to nil on the Termination Date, and the Borrower shall repay to the
Agent for the account of the Lenders on the Termination Date all amounts then outstanding under the Credit Facility. 

21

 

2.3.    Repayment under Credit Facility  

        The Borrower may from time to time (without premium or penalty) on any Banking Day repay to the Agent for the account of the Lenders, Loans or portions thereof
under the Credit Facility, provided that any such repayment (i) if Bank of Montreal is the only Lender hereunder (a) shall be in an amount of at least $100,000 and any greater amount
shall be an integral multiple of $10,000 and (b) shall be effected on the same Banking Day on which notice in writing is provided to the Agent if received prior to 12:00 noon (Chicago time) or
on the next succeeding Banking Day if not received by such time, in either case, such notice, once given, shall be irrevocable and binding upon the Borrower, or (ii) if Bank of Montreal is not
the only Lender hereunder, (x) shall be in an amount of at least $1,000,000 and any greater amount shall be an integral multiple of $100,000, and (y) shall only be effected on at least
three Banking Days' notice in writing to the Agent which notice, once given, shall be irrevocable and binding upon the Borrower, and (iii) any repayment of a Libor Loan other than on the
Maturity Date applicable thereto, pursuant to either clause (i) or (ii) of this section 2.3, shall be subject to the payment of the expenses payable pursuant to
section 3.8. Any repayments made under this section 2.3 shall not reduce any Lender's Commitment or the Aggregate Commitment. 

2.4.    Mandatory Repayment from Public Offerings  

	2.4.1.
	Subject
to section 2.4.2, all net cash proceeds (after giving effect to underwriters' commissions, discounts and payment of offering-related expenses, including (without
limitation) underwriters' fees and expenses, Securities Commission filing fees, stock exchange listing fees and fees and disbursements of counsel to the Borrower and, if paid by the Borrower,
underwriters), up to the lesser of (i) $75,000,000 and (ii) the amount of all Obligations then outstanding, of each public offering of debt or equity completed by the Borrower (excluding
the proceeds of the Borrower's first public markets transaction in 2002) shall be paid to the Agent for the account of the Lenders for application against such of the Obligation's outstanding under
the Credit Facility as shall reasonably be determined by the Borrower; provided, however, such proceeds shall not be applied to any L/C Loans or, at the Borrower's option, Libor Loans, until the
Maturity Date applicable thereto and, until such application, the proceeds allocated for such purpose shall be held by the Agent for the account of the Lenders and invested on behalf of the Borrower
in an interest-bearing investment (or investments) as security for the repayment of future indebtedness of the Borrower under such L/C Loan or Libor Loan, with interest earned thereon, if any, to be
paid to the Borrower on repayment of such Loans. The amount of such application so made shall be permanent and irrevocable and each Lender's Commitment shall be reduced rateably.

	2.4.2.
	On
any Banking Day which is at least 45 days prior to the closing of any such offering, the Borrower may in writing request the consent of the Lenders for it to retain all
or part of such proceeds in lieu of remitting such proceeds to the Agent for the account of the Lenders otherwise required pursuant to section 2.4.1. The decision of each Lender in this regard
shall be made in its sole discretion. The Agent shall forthwith provide a copy of such request to each Lender. Each Lender shall notify the Agent as to whether it consents to such request within
15 days of receipt thereof. If any Lender does not provide such notice within such time, such Lender shall be deemed to have not consented to such request. On the earlier of (i) the
Banking Day next following the date on which the Agent is in receipt of notices from all Lenders; and (ii) the second Banking Day following the last day for receipt by the Agent of such
notices, the Agent shall give written notice to the Borrower and each of the Lenders, with respect to each Lender, whether such Lender has consented to the request. If all the Lenders consent to any
such request, the proceeds from the offering in respect of which such request was made shall be retained by the Borrower and not remitted to the Agent for the account of the Lenders. If any Lender
(for purposes of this section 2.4.2, each a "Non-Consenting Lender") does not so consent (or is deemed to not so consent), the Borrower may elect to have one or more substitute
Lenders (arranged by the Borrower at its expense) assume the Lender's Commitment of such Non-Consenting Lender pursuant to section 12.9.4 (other than clause (a) thereof).
Such assignment shall be made without recourse to, warranty by (except as to title) or expense to the assigning Lender except with respect to past acts of such Lender. If the full amount of the
Lender's Commitment of the Non-Consenting Lender is not so assumed, the Borrower shall pay to the Agent such Non-Consenting Lender's 

22

 

remaining
Rateable Portion of the Borrower's net cash proceeds referred to in section 2.4.1 for the account of the Non-Consenting Lender, for application against the
unassumed portion of the Non-Consenting Lender's Rateable Portion of the Loans outstanding under the Credit Facility; provided, however, such payment shall not be applied to any L/C Loans
or, at the Borrower's option, Libor Loans, until the Maturity Date applicable thereto and, until such application, the proceeds allocated for such purpose shall be held by the Agent for the account of
the Lenders and invested on behalf of the Borrower in an interest-bearing investment (or investments) as security for the repayment of future indebtedness of the Borrower under such L/C Loan or Libor
Loan, with interest earned thereon, if any, to be paid to the Borrower on repayment of such Loans. The amount of such application so made shall be permanent and irrevocable and upon all such Loans
outstanding having been prepaid in accordance with the foregoing, the Lender's Commitment of such Non-Consenting Lender which has not been assigned pursuant to section 12.9.4 shall
be cancelled and reduced by the amount of the principal prepayment hereunder (or commitment reduction). 

2.5.    Voluntary Reduction in Aggregate Commitment  

        The Borrower shall have the right at any time and from time to time, by giving at least two Banking Days' notice to the Agent which notice, once given, shall be
irrevocable and binding upon the Borrower, to reduce the then applicable Aggregate Commitment to a lower amount which is not less than the principal amount of all Obligations then outstanding under
the Credit Facility. Such notice shall specify the amount of the reduction, which shall be in an integral multiple of $1,000,000. The amount of any such reduction so made by the Borrower shall be
permanent and irrevocable and each Lender's Commitment shall be reduced rateably. 

2.6.    Extension of Credit Facility  

        On any Banking Day which is at least 60 days prior to the Termination Date, the Borrower may request that the Termination Date be extended to the date
which is 364 days after the date on which its extension request delivered hereunder is accepted by the Lenders pursuant to this section 2.6. The decision of each Lender in this regard
shall be made in its sole discretion. The Agent shall forthwith provide a copy of such extension request to each Lender. Each Lender shall notify the Agent as to whether it consents to the extension
request within 30 days of receipt of a copy from the Agent. If any Lender does not provide such notice within such time, such Lender shall be deemed to have refused such extension. On the
earlier of (i) the Banking Day next following the date on which the Agent is in receipt of notices from all Lenders; and (ii) the second Banking Day following the last day for receipt by
the Agent of such notices, the Agent shall give written notice to the Borrower and to each of the Lenders advising, with respect to each Lender, whether such Lender has consented to the extension. If
all of the Lenders consent to any such request, the Termination Date shall be extended to the date which is 364 days thereafter. If any Lender (for purposes of this section 2.6, each a
"Non-Consenting Lender") elects not to so extend the Termination Date (or is deemed to not so elect), the Borrower may elect to have one or more substitute Lenders (arranged by the
Borrower at its expense) assume the Lender's Commitment of such Non-Consenting Lender pursuant to section 12.9.4 (other than clause (a) thereof). Such assignment shall be
made without recourse to, warranty by (except as to title) or expense to the assigning Lender except with respect to past acts of such Lender. If the full amount of the Lender's Commitment of the
Non-Consenting Lender is not so assumed, the Borrower may elect to prepay the Non-Consenting Lender's Rateable Portion of the Loans outstanding under the Credit Facility on, in
respect of any (a) Base Rate Loan, any day; (b) Libor Loans, the applicable Interest Period end dates or such other date provided the Borrower pays all amounts payable in connection with
such prepayment pursuant to section 3.8; and (c) L/C Loans, the applicable Maturity Dates. Upon all such Loans outstanding having been prepaid in accordance with the foregoing, the
Lender's Commitment of such Non-Consenting Lender shall be cancelled and reduced to zero. If (x) the Termination Date has been extended pursuant hereto, and (y) there remains
any Non-Consenting Lender whose Lender's Commitment has not been assumed or whose Rateable Portion of the Loans outstanding under the Credit Facility have not been prepaid, the Lender's
Commitment of such Non-Consenting Lender shall be cancelled and reduced to zero on the old Termination Date and such Non-Consenting Lender's Rateable Portion of the Loans
outstanding under the Credit Facility, together with accrued interest, shall be repaid in full, in each case, on the old Termination Date. 

23

 

2.7.    Increase in Aggregate Commitment  

        On a Banking Day which is at least 60 days prior to the Termination Date, the Borrower may request that the Aggregate Commitment be increased in an amount
of at least $10,000,000 and any greater amount shall be an integral multiple of $1,000,000. The decision of each Lender in this regard shall be made at its sole discretion. The Agent shall forthwith
provide a copy of such increase request to each Lender. Each Lender shall notify the Agent as to whether it consents to the increase request within 15 days of receipt of a copy from the Agent,
the amount of such increase such consenting Lender agrees to underwrite (up to its Rateable Portion) and, if such Lender is willing to underwrite an amount in excess of its Rateable Portion of the
requested increase, the amount of such excess. If any Lender does not provide such notice within such time, such Lender shall be deemed to have refused such increase. On the earlier of (i) the
Banking Day next
following the date on which the Agent is in receipt of notices from all Lenders; and (ii) the second Banking Day following the last day for receipt by the Agent of such notices, the Agent shall
give written notice to the Borrower and to each of the Lenders advising, with respect to each Lender, whether such Lender has consented to the increase and the amount of such increase such consenting
Lender has agreed to underwrite. The Agent shall have the sole discretion to allocate to Lenders willing to underwrite more than their Rateable Portion of the requested increase any amounts that other
Lenders are not willing to underwrite. If Lenders consent to increase the Aggregate Commitment by the amount requested, subject as hereinafter provided, the Aggregate Commitment shall be increased by
the amount set forth in the request in proportion to each Lender's Rateable Portion if all Lenders agree to the full amount of the requested increase, or otherwise in such proportion as may be
determined by the Agent in its sole discretion. Prior to any increase in the Aggregate Commitment becoming effective, the parties hereto shall enter into an agreement amending the terms of this
Agreement (and any agreement delivered pursuant hereto) to give effect to such increase and to incorporate such changes as the Lenders and Borrower may agree. If the Borrower and all Lenders are
unable to agree to such changes (each disagreeable Lender for purposes of this section 2.7, a "Non-Consenting Lender"), or if any Lender (for purposes of this section 2.7,
each also a "Non-Consenting Lender") does not consent (or is deemed to not so consent) to the full amount of the increase request as aforesaid, the Borrower may elect to have one or more
substitute Lenders (arranged by the Borrower at its expense) assume the Lender's Commitment of such Non-Consenting Lender pursuant to section 12.9.4 (other than clause (a)
thereof). Such assignment shall be made without recourse to, warranty by (except as to title) or expense to the assigning Lender except with respect to past acts of such Lender. If the full amount of
the Lender's Commitment of the Non-Consenting Lender is not so assumed, the Borrower, at its option, shall either (a) withdraw its request for such increase and pay all the Agent's
and Lenders' reasonable costs and expenses incurred to consider such request, or (b) pay to the Agent for the account of the Non-Consenting Lender, in an amount equal to, and for
application against, the unassumed portion of the Non-Consenting Lender's Rateable Portion of the Loans outstanding under the Credit Facility; provided, however, such payment shall not be
applied to any L/C Loans or, at the Borrower's option, Libor Loans, until the Maturity Date applicable thereto and, until such application, the proceeds allocated for such purpose shall be held by the
Agent for the account of the Lenders and invested on behalf of the Borrower in an interest-bearing investment (or investments) as security for the repayment of future indebtedness of the Borrower
under such L/C Loan or Libor Loan, with interest earned thereon, if any, to be paid to the Borrower on repayment of such Loans. The amount of such prepayment so made shall be permanent and irrevocable
and upon all such Loans outstanding having been prepaid in accordance with the foregoing, the Lender's Commitment of such Non-Consenting Lender shall be cancelled and reduced to zero. The
Borrower shall not be entitled to make more than one request for an increase in the Aggregate Commitment in any Fiscal Quarter and any request made but withdrawn after the Agent provides the Lender
with a copy of the request pursuant to clause (a) of this section 2.7 shall constitute a request for such purposes. 

24

 
 
 

ARTICLE 3.
  GENERAL PROVISIONS RELATING TO THE CREDIT FACILITY    
    

3.1.    Advances  

	3.1.1.
	Each
request by the Borrower for an Advance under the Credit Facility shall be made by the delivery of a duly completed and executed Borrowing Notice to the Agent at its Branch of
Account:

	3.1.1.1.
	in
the case of Advances by way of Base Rate Loans on any proposed Borrowing Date, (i) if Bank of Montreal is the only Lender hereunder and the amount of such Advance is
less than $1,000,000, not later than 10:00 a.m. (Chicago time) on such proposed Borrowing Date (provided, if the Borrowing Notice is not received by Bank of Montreal by such time, the Advance
will be made on the next succeeding Banking Day), or (ii) if the amount of such Advance is $1,000,000 or more, or if Bank of Montreal is not the only Lender hereunder, not later than
10:00 a.m. (Chicago time) on the first Banking Day prior to the proposed Borrowing Date; and

	3.1.1.2.
	in
the case of Advances by way of L/C Loans or Libor Loans, not later than 10:00 a.m. (Chicago time) on the third Banking Day prior to the proposed Borrowing Date.

	3.1.2.
	Any
notice in respect of a proposed Advance shall be irrevocable and binding on the Borrower.

	3.1.3.
	If
Bank of Montreal is the only Lender hereunder, all Advances (other than Advances by way of Letters of Credit) shall be in an amount of at least $100,000 and any greater amount
shall be an integral multiple of $10,000, otherwise such Advances shall be in an amount of at least $1,000,000 and any greater amount shall be an integral multiple of $100,000. 

25

 

3.2.    Selection of Interest Periods  

        Notwithstanding any other provision hereof: 

	3.2.1.
	the
Borrower may not select any Interest Period in respect of a Loan under the Credit Facility with a Maturity Date which is later than the Termination Date; and

	3.2.2.
	the
number of Interest Periods in effect at any time shall not exceed ten in the aggregate. 

3.3.    Rollover and Conversion  

	3.3.1.
	Subject
to the terms and conditions of this Agreement and provided that no declaration has been made by the Agent under section 9.2, the Borrower may from time to time
request that a Loan or any portion thereof be rolled over or converted to another form of Loan in accordance with the provisions hereof.

	3.3.2.
	The
Borrower shall repay to the Agent for the account of the Lenders the full Libor Loan on the Maturity Date of the Interest Period applicable thereto, in accordance with the
provisions hereof governing repayment and prepayment, unless such Loan shall be rolled over or converted to another form of Loan on such Maturity Date in accordance with the provisions hereof.

	3.3.3.
	Each
request by the Borrower for a Rollover or Conversion shall be made by the delivery of a duly completed and executed Borrowing Notice to the Agent at the Branch of Account, and
the provisions of section 3.1 shall apply to the Rollover or Conversion as if such Rollover or Conversion were an Advance, except that the Borrower shall not be required to make (and shall not
otherwise be deemed to have made, renewed or repeated) any representation or warranty in connection with any Rollover or Conversion.

	3.3.4.
	Each
Rollover or Conversion of a Libor Loan shall be made effective as of the Maturity Date of the Interest Period applicable thereto.

	3.3.5.
	If
the Borrower does not deliver a Borrowing Notice at or before the time required by section 3.1.1 and, in the case of a Libor Loan, fails to pay to the Agent for the
account of the Lenders the principal amount thereof on the Maturity Date of the relevant Interest Period, the Borrower shall be deemed to have requested a Conversion of such Loan to a Base Rate Loan,
and all of the provisions hereof applicable to Base Rate Loans shall apply thereto.

	3.3.6.
	A
Rollover or Conversion shall not constitute a repayment of the relevant Loan but shall result in a change in the basis of calculation of interest or fees (as the case may be) for
such Loan, in accordance with the provisions hereof. 

3.4.    Payments Generally  

        All payments in respect of the Credit Facility (in respect of principal, interest, fees or otherwise) shall be made by the Borrower to the Agent no later than
2:00 p.m. (Chicago time) on the due date thereof to the account specified therefor by the Agent at its Branch of Account or to such other accounts in the United States of America as may
be specified by the Agent to the Borrower from time to time. Any payments received after such time shall be considered for all purposes as having been made on the next following Banking Day unless the
Agent otherwise agrees in writing. All payments shall be made by way of immediately available funds. 

26

 

3.5.    Disturbance of Libor Market  

        Notwithstanding any other provision hereof, if at any time prior to the commencement of an Interest Period in respect of any proposed Libor Loan, any Lender
determines in good faith (which determination shall be conclusive and binding), and provides a certificate to the Agent with respect to such determination, that with respect to such Libor Loan: 

	3.5.1.
	Libor
will not adequately and fairly reflect the cost to such Lender of funding such Libor Loan for the relevant Interest Period, or

	3.5.2.
	deposits
in U.S. dollars are not available to such Lender in the London interbank market in sufficient amounts in the ordinary course of business, or

	3.5.3.
	by
reason of circumstances affecting the London interbank market, adequate and fair means do not exist for ascertaining Libor for the relevant Interest Period; 

then
the Agent shall forthwith give notice of such determination to the Borrower and each of the other Lenders, and from and after the date of commencement of such Interest Period and for so long as
such conditions shall continue to exist, the Borrower shall not have the right to obtain such Libor Loan from such Lender, and the Borrowing Notice received by the Agent in respect of such Libor Loan
shall, in respect of the Rateable Portion of such Lender, be deemed to be a request of the Borrower for a Base Rate Loan under the Credit Facility. 

3.6.    Change in Circumstances  

        If the introduction of or any change in any Applicable Law relating to any Lenders, or any change in the interpretation or application thereof by any Governmental
Body or compliance by any Lenders with any request or direction of any Governmental Body: 

	3.6.1.
	subjects
such Lender to, or causes the withdrawal or termination of a previously granted exemption with respect to, any Taxes or changes the basis of taxation of payments due to
such Lender or increases any existing Taxes on payments of the Obligations (other than, in each case, Excluded Taxes);

	3.6.2.
	imposes,
modifies or deems applicable any incremental reserve, liquidity, cash margin, capital, special deposit, deposit insurance or assessment, or any other regulatory or similar
requirement against assets held by, or deposits in or for the account of, or loans by, or any other acquisition of funds for loans by, such Lender;

	3.6.3.
	imposes
any Taxes (other than Excluded Taxes) on reserves or deemed reserves in respect of the undrawn portion of such Lender's Rateable Portion of the Credit Facility;

	3.6.4.
	imposes
on such Lender or requires there to be maintained by such Lender any capital adequacy or additional capital requirement (including, without limitation, a requirement which
affects such Lender's allocation of capital resources to its obligations) in respect of such Lender's obligations hereunder or imposes any other condition or requirement with respect to the
maintenance by such Lender of a contingent liability with respect to any Letter of Credit issued by it hereunder; or 

27

 

	3.6.5.
	imposes
on such Lender any other condition or requirement with respect to this Agreement or the Credit Facility (other than Excluded Taxes); 

and
such occurrence has the effect of: 

	3.6.6.
	increasing
the cost to such Lender of agreeing to make or making, maintaining or funding the Credit Facility, any Advance, any Loan or any portion thereof;

	3.6.7.
	reducing
the amount of the Obligations;

	3.6.8.
	directly
or indirectly reducing the effective return to such Lender under this Agreement or on its overall capital as a result of entering into this Agreement or as a result of any
of the transactions or obligations contemplated by this Agreement (other than a reduction resulting from the imposition of an Excluded Tax, including, without limitation a higher rate of income tax or
capital tax being imposed on such Lender's overall income or assets); or

	3.6.9.
	causing
such Lender to make any payment or to forego any interest, fees or other return on or calculated by reference to any sum received or receivable by such Lender hereunder; 

then
such Lender shall, within 90 days of such Lender actually becoming aware of such increased cost, provide notice thereof to the Agent (with such notice being accompanied by a certificate of
the Lender stating that the Lender is entitled to claim an amount under this section 3.6 in accordance with the terms hereof, setting forth the amount necessary to compensate such Lender, a
detailed explanation of the circumstances giving rise to the request of compensation and a description of the methodology used by the Lender calculating such amounts), and the Agent shall in each case
forthwith advise the Borrower accordingly and provide a copy of such certificate to the Borrower, and the Borrower shall, within 30 days of receipt of such certificate from such Lender, pay to
the Agent for the account of such Lender additional amounts sufficient to fully compensate such Lender for the increased cost set out in such certificate whether as a lump sum(s) or as an increase in
the Applicable Margin, as appropriate; provided, however, that a Lender claiming additional amounts under this section 3.6 agrees to use reasonable efforts (consistent with its legal and
regulatory restrictions) to designate a different applicable lending office if the making of such a designation would avoid the need for, or materially reduce the amount of, such increased cost that
may thereafter accrue and would not, in the reasonable judgment of such Lender, be otherwise commercially disadvantageous to such Lender. If a Lender is not able to obviate its requirement for
compensation under this section 3.6 by designating a different applicable lending office, the Borrower may elect within such 30-day period to have one or more substitute Lenders
(arranged by the Borrower at its expense) assume, and the Lender shall promptly after receipt of notice of such election assign, its rights and obligations under this Agreement and the other Loan
Documents to such other Person chosen by the Borrower in accordance with section 12.9.4 (other than clause (a) thereof) and provided that all principal,
interest and other amounts owing hereunder are paid in full to such Lender, and all of the Lenders' costs and expenses are reimbursed for such assignment, if such assignment would allow the Borrower,
either at that time or in the reasonably foreseeable future, to avoid having to pay such amounts. Such assignment shall be made without recourse to, warranty by (except as to title) or expense to the
assigning Lender except with respect to past acts of such Lender. No claim for compensation may be made by a Lender under this section 3.6 unless such Lender is also claiming such compensation
from a majority of its most creditworthy customers with credit facilities and loans outstanding thereunder similar to the Credit Facility and Loans outstanding hereunder against whom it is entitled to
make such claim. The above-referenced certificate as to the amount of such increased cost, submitted to the Borrower by the Agent on behalf of such Lender, shall be prima
facie evidence of the amount of compensation required to be paid hereunder by the Borrower to the Agent for the account of such Lender. 

28

 

3.7.    Illegality  

        If the introduction of or change to any present or future Applicable Law, or any change in the interpretation or application thereof by any Governmental Body,
shall make it unlawful for any Lender to make or maintain any Loan or any relevant portion thereof or to give effect to its obligations in respect of such Loan as contemplated hereby, such Lender may,
by notice to the Borrower and to the Agent, declare that its obligations hereunder in respect of such Loan shall be terminated, and thereupon, subject as hereinafter provided in this
section 3.7, the Borrower shall prepay to such Lender forthwith (or at the end of such period to which the Lender shall in its discretion have agreed) all of the Obligations to such Lender in
respect of such Loan including all amounts payable in connection with such prepayment pursuant to section 3.8. If there are any types of Loans hereunder that are not so affected, the Borrower
may by notice in writing to the Agent convert the Loans which are affected into one of the types of Loans that are not so affected. Any repayments made under this section 3.7 shall not reduce
any Lender's Commitment or Aggregate Commitment; provided, however, at its option, the Borrower may permanently and irrevocably reduce or terminate (as the case may be) the Lender's Commitment of any
such Lender on the giving of such notice (and, for greater certainty, no other Lender shall be responsible therefor) and the Aggregate Commitment shall be reduced by the amount and at the time of any
prepayment so made. 

3.8.    Indemnity  

	3.8.1.
	The
Borrower shall indemnify each of the Agent and the Lenders and its officers, directors and employees (each, an "Indemnified Person") and shall hold each of them harmless from
and against any and all losses, liabilities, damages, claims and reasonable costs and out-of-pocket expenses (including reasonable legal fees on a solicitor and his own client
basis) (in each case, a "Claim") that may be incurred by or asserted as a result of a claim by any third party or awarded in favour of a third party against any of them, in each case, arising out of,
related to, or in connection with, or by reason of (a) the transactions contemplated hereby, (b) any Acquisition undertaken by the Borrower or any of its Subsidiaries, or (c) any
Environmental Law, including (i) the assertion of any Lien thereunder, (ii) the presence of any Hazardous Substance affecting any Real Property or any adjacent real estate, or
(iii) the Release by the Borrower or a Subsidiary of any Hazardous Substance into the environment. Notwithstanding the foregoing provisions of this section 3.8.1, the Borrower shall not
be obligated to indemnify an Indemnified Person under this section 3.8.1 for any Claim to the extent that such Claim is attributable to:

	3.8.1.1.
	the
gross negligence, fraud, wilful misconduct or wilful illegal acts of any Indemnified Person;

	3.8.1.2.
	the
failure on the part of any Indemnified Person to perform any of its material covenants or obligations contained in any Loan Document to which it is a party, or a
representation or warranty made by any Indemnified Person under the Loan Documents to which it is a party or in any certificate or other document delivered by any Indemnified Person pursuant hereto or
in connection with any Loan Document being found to be false or incorrect in any material respect so as to make it materially misleading when made; 

29

  

	3.8.1.3.
	any
Claim of any Lender against any defaulting Lender or any Claim of any Indemnified Person for expenses which such Indemnified Person is obligated to bear hereunder;

	3.8.1.4.
	any
Claim to the extent arising from the act of offering, selling, disposing or transferring by any Indemnified Person of all or part of its interest in the Loan Documents, other
than to the extent resulting from the Borrower compelling such transfer to a substitute Lender under sections 2.4, 2.6 or 2.7;

	3.8.1.5.
	to
the extent resulting from the failure of the Agent to distribute, in accordance with the terms of any Loan Document, any amounts received and to be distributed by it
thereunder, to the extent the Borrower has satisfied all of its obligations in connection therewith; or

	3.8.1.6.
	any
Claim of the Agent arising from the act or process of syndicating or selling interests in respect of any of the Loans or Loan Documents, except to the extent such Claim
arises from any information provided or failed to be provided by the Borrower to any Indemnified Person.

	3.8.2.
	In
addition to any other indemnity contained herein or in any other Loan Document, the Borrower shall indemnify each Lender for all losses, damages, liabilities and reasonable
costs and out-of-pocket expenses (including, without limitation, any such loss, damage, liability, reasonable cost or out-of-pocket expense sustained by
such Lender in connection with the liquidation or re-employment in whole or in part of deposits or funds borrowed or acquired by it to make its Rateable Portion of any Libor Loan), which
such Lender may sustain or incur: (i) if for any reason a utilization does not occur on a date specified therefor in any Borrowing Notice, (ii) if the Borrower fails to give any notice
required to be given by it hereunder, in the manner and at the time specified herein, (iii) if for any reason any payment of any Libor Loan, or any portion thereof, occurs on a date which is
not a Maturity Date in respect thereof, or (iv) as a consequence of any other default by the Borrower to repay any Obligations when required by the terms of this Agreement; provided that each
Lender shall use its commercially reasonable efforts to mitigate its loss, damage, liability, cost and expense attributable to such events and the Borrower's obligation to make payments hereunder will
be reduced by the amount earned by each Lender in mitigating its loss, damage, liability, cost or expense. A certificate of the relevant Lender setting forth the amounts necessary to indemnify such
Lender in respect of such losses, damages, liabilities, reasonable costs or out-of-pocket expenses shall be prima facie evidence
of the amounts owing under this section 3.8.2.

	3.8.3.
	The
Borrower's obligations and indemnification under this section 3.8 shall survive the payment and satisfaction of all Obligations and the termination of this Agreement.
The Agent and the Lenders shall hold the benefit of this indemnity in trust for those indemnified parties who are not parties to this Agreement. 

3.9.    Proceedings in Respect of Claims  

	3.9.1.
	If
a Claim is made against an Indemnified Person as to which the Borrower may have an indemnification obligation under section 3.8.1, such Indemnified Person shall notify
the Borrower of the Claim; provided that the failure to provide such notice promptly shall not release the Borrower from any of its obligations to indemnify unless (and only to the extent) such
failure shall prevent the Borrower from contesting, or materially and adversely affects the ability of the Borrower to conduct a contest of, such Claim. 

30

 

	3.9.2.
	The
Indemnified Person shall be entitled, in its discretion, to require the Borrower to prosecute, at the Borrower's own cost and expense, the entire defence of such Indemnified
Person against any Claim by a third party for which such Indemnified Person is indemnified under section 3.8.1. In addition, upon delivery by the Borrower to such Indemnified Person of a
written acknowledgement of the Borrower's obligations to indemnify such Indemnified Person in accordance with the terms of this Agreement in respect of such Claim, the Borrower shall be entitled, at
its own expense, to participate in, and, to the extent that the Borrower desires, to assume and control the defence thereof through its own counsel (who shall be subject to the reasonable approval of
the Indemnified Person); provided, however, that if the Borrower is controlling any proceedings, the Borrower shall keep such Indemnified Person fully apprised of the status of such proceedings and
shall provide such Indemnified Person with all information with respect to such proceedings as such Indemnified Person shall reasonably request. The Borrower must indicate its election to assume such
defence by written notice to the Indemnified Person within 30 days following receipt of Indemnified Person's notice of the Claim, or in the case of a third party Claim which requires a shorter
time for response then within such shorter period as specified in the Indemnified Person's notice of Claim, provided that such Indemnified Person has given the Borrower notice thereof. The Indemnified
Person may participate at its own expense and with its own counsel (provided that all Indemnified Parties shall use the same counsel) in any proceeding conducted by the Borrower in accordance with the
foregoing; provided the Borrower shall in any event remain liable hereunder in respect of the Claim. The Borrower shall not be entitled to assume and control (but may, at its own expense, participate
in) the defence of any such Claim if and to the extent that:

	3.9.2.1.
	in
the reasonable opinion of such Indemnified Person acting in good faith,

	3.9.2.1.1.
	such
proceeding involves any risk of imposition of criminal liability on such Indemnified Person; or

	3.9.2.1.2.
	such
proceeding involves any risk of impairment to the reputation of the Indemnified Person in any material respect; or

	3.9.2.1.3.
	the
control of such action, suit or proceeding would involve an actual or potential conflict of interest, such that it is advisable for such Indemnified Person to be
represented by separate counsel; or

	3.9.2.2.
	such
proceeding involves Claims not fully indemnified by the Borrower which the Borrower and the Indemnified Person have been unable to sever from the indemnified Claim(s). 

Notwithstanding
the first paragraph of this section 3.9.2, in any of the circumstances set out in sections 3.9.2.1 or 3.9.2.2, the Indemnified Person shall be entitled to assume
the defence of such Claim with counsel selected by it (provided that all Indemnified Parties shall use the same counsel) and the reasonable fees and out-of-pocket expenses of
such counsel shall be borne by the Borrower; provided, that the Borrower shall in any event remain liable hereunder in respect of the indemnified Claim. 

31

 

	3.9.3.
	Except
in the circumstances described in section 3.9.2.1.3, the Borrower may enter into any settlement or other compromise with respect to any Claim in respect of which it
has an indemnity payment obligation under section 3.8.1 without the prior written consent of the Indemnified Person, except in the case of a settlement involving an admission of liability of
such Indemnified Person, in which case the prior written consent of the Indemnified Person shall be obtained, provided that if such Indemnified Person withholds its consent to such settlement and the
required admission of liability of such Indemnified Person is not in favour of a Governmental Body other than a court, would not give rise to the imposition of any penalty or sanction against the
Indemnified Person by any Governmental Body, is not in respect of any criminal liability and would not otherwise impair the reputation of the Indemnified Person in any material respect, the maximum
amount of liability of the Borrower to the Indemnified Person with respect to such Claim shall not exceed the amount of the proposed settlement rejected by such Indemnified Person. Unless an Event of
Default shall have occurred and be continuing, no Indemnified Person shall enter into any settlement or other compromise with respect to any Claim for which the Borrower has in writing agreed to fully
indemnify under section 3.8.1 without the prior written consent of the Borrower, which consent may be withheld in the Borrower's sole discretion, unless such Indemnified Person waives its right
to be indemnified under section 3.8.1, with respect to such Claim.

	3.9.4.
	Each
Indemnified Person shall supply the Borrower with such information and documents reasonably requested by the Borrower as are necessary or advisable for the Borrower to
participate in any action, suit or proceeding to the extent permitted above, and the Borrower shall reimburse the Indemnified Person for the reasonable costs and out-of-pocket
expenses of supplying such information and documents, all within a reasonable period of time following the Borrower's request therefor.

	3.9.5.
	Upon
payment in full of any Claim pursuant to section 3.8.1 to or on behalf of an Indemnified Person, the Borrower, without any further action, shall be subrogated to
any and all claims that such Indemnified Person may have relating thereto (other than claims in respect of insurance policies maintained by such Indemnified Person at its own expense). Each
Indemnified Person agrees, at the Borrower's reasonable request and expense, to give such further assurances or agreements and to otherwise cooperate with the Borrower to enable the Borrower to
vigorously pursue such claims.

	3.9.6.
	Any
amount payable to an Indemnified Person pursuant to section 3.8 shall be paid to such Indemnified Person within 30 days of the receipt (or deemed receipt) by the
Borrower of a written request therefor from such Indemnified Person, accompanied by a written statement describing in reasonable detail the basis for such indemnity and the computation of the amount
so payable; provided that payment of an indemnity in respect of a third party Claim need not be made until payment is due, whether by compromise, settlement, court proceedings, arbitration or
otherwise, from the Indemnified Person in respect of such third party Claim. 

3.10.    Evidence of Indebtedness  

        The Agent shall maintain and keep, at its Branch of Account, accounts showing the amount of all Loans advanced by each of the Lenders, from time to time and the
dates thereof and the interest, fees and other charges accrued thereon or applicable thereto from time to time, and all payments of principal (including prepayments), interest and fees and other
payments made by the Borrower to the Agent from time to time under the Credit Facility. Such accounts maintained by the Agent on behalf of itself and each of the Lenders shall be  prima facie evidence of
the matters recorded therein. 

32

 

3.11.    Several Obligations  

        The obligations of each Lender under this Agreement are several. No Lender shall be responsible for any failure or alleged failure on the part of any other Lender
to duly perform its obligations under the terms of this Agreement or any Loan Document, nor shall the obligations of the Borrower to any Lender be diminished or affected by any failure or alleged
failure on the part of any other Lender to duly perform its obligations under the terms of this Agreement or any Loan Document. 

 
 

ARTICLE 4.
  LETTERS OF CREDIT    
    

4.1.    Procedures Relating to Letters of Credit  

	4.1.1.
	Each
Letter of Credit shall be issued by the L/C Lender in its name as an L/C Loan.

	4.1.2.
	Notwithstanding
any other provision hereof, the Borrower may not request the issuance of any Letter of Credit having a term which would extend beyond the Termination Date.

	4.1.3.
	At
no time shall the aggregate amount of all Letters of Credit outstanding under the Credit Facility exceed the L/C Limit. 

4.2.    Reimbursement  

	4.2.1.
	The
Borrower unconditionally and irrevocably authorizes the L/C Lender to pay the amount of any demand made on the L/C Lender under and in accordance with the terms of any Letter
of Credit on request without requiring proof of the Borrower's agreement that the amount so demanded was due and notwithstanding that the Borrower may dispute the validity of any such demand or
payment.

	4.2.2.
	The
Borrower shall reimburse the L/C Lender on request for any amounts paid by it from time to time as contemplated by section 4.2.1 and, without limiting the foregoing, the
Borrower shall indemnify and save the L/C Lender harmless on demand from and against any and all other losses (including lost profits), costs, damages, expenses, claims, demands or liabilities which
it may suffer or incur arising in any manner whatsoever in connection with the making of any such payments as contemplated by section 4.2.1 (including, without limitation, in connection with
proceedings to restrain the L/C Lender from making, or to compel the L/C Lender to make, any such payment). 

4.3.    L/C Lender Not Liable  

	4.3.1.
	The
L/C Lender shall not have any responsibility or liability for, or duty to inquire into, the authorization, execution, signature, endorsement, correctness, genuineness or legal
effect of any certificate or other document presented to the L/C Lender pursuant to any Letter of Credit other than to ensure that any request for payment under a Letter of Credit is in compliance
with the terms thereof and the Borrower fully and unconditionally assumes all risks with respect to the same and, without limiting the generality of the foregoing, all risks of the acts or omissions
of any beneficiary of any Letter of Credit with respect to the use by any beneficiary of any Letter of Credit provided the L/C Lender complied with the terms of such Letter of Credit. The L/C Lender
shall not be responsible: 

33

 

	4.3.1.1.
	for
the validity of certificates or other documents delivered under or in connection with any Letter of Credit that appear on their face to be in order, even if such certificates
or other documents should in fact prove to be invalid, fraudulent or forged provided the L/C Lender complied with the terms of such Letter of Credit;

	4.3.1.2.
	for
errors, omissions, interruptions or delays in transmission or delivery of any messages by mail, cable, telegraph, telefax or otherwise, whether or not they are in code;

	4.3.1.3.
	for
errors in translation or for errors in interpretation of technical terms or for errors in the calculation of amounts demanded under any Letter of Credit;

	4.3.1.4.
	for
any failure or inability of the L/C Lender or any other Person to make payment under any Letter of Credit as a result of any Applicable Law or by reason of any control or
restriction rightfully or wrongfully exercised by any Person asserting or exercising governmental or paramount powers; or

	4.3.1.5.
	for
any other consequences arising in respect of a failure by the L/C Lender to honour a Letter of Credit due to causes beyond the control of the L/C Lender; 

and
none of the above shall affect or impair any of the rights or powers of the Lenders hereunder or the obligations of the Borrower under section 4.2.2. In furtherance and not in limitation of
the foregoing provisions, it is agreed that any payment made by the L/C Lender in good faith under and in accordance with the terms of a Letter of Credit shall be binding upon the Borrower and shall
not result in any liability of the Agent or any of the Lenders to the Borrower and shall not lessen the obligations of the Borrower under section 4.2.2. 

	4.3.2.
	Notwithstanding
the provisions of this section 4.3, the Borrower shall not be responsible for, and the L/C Lender shall not be relieved of responsibility for, any wilful
misconduct, gross negligence, fraud or illegal acts of the L/C Lender or the failure of the L/C Lender to comply with the terms of a Letter of Credit. 

4.4.    Letter of Credit Fees  

        The Borrower shall pay the Letter of Credit Fee to the L/C Lender in advance in quarterly instalments (except that the first such instalment shall be in respect
of the period from the date the Letter of Credit is issued to the last day of the then current Fiscal Quarter) for the period from and including the date of issuance of the Letter of Credit to and
including the stated expiry date thereof, on an amount equal to the stated amount of the Letter of Credit, with the first such payment due and payable on the date of issuance of the applicable Letter
of Credit. Upon a change to the Letter of Credit Fee for any Fiscal Quarter, occurring as a result of an adjustment to the Applicable Margin for Libor Loans for such Fiscal Quarter, the Letter of
Credit Fee shall be retroactively adjusted to the first day of the then current Fiscal Quarter (or, in the case of the first instalment in respect of the applicable Letter of Credit Fee, to the date
of issuance of the Letter of Credit). Where there has been an adjustment to the Applicable Margin for Libor Loans, then on the date on which the next instalment in respect of the Letter of Credit Fee
is due and payable or if no such fee is payable, within 10 Business Days of the receipt of notice from one party to the other requesting payment, or refund of an overpayment, of a Letter of Credit
Fee: (i) the L/C Lender shall pay to the Borrower an amount equal to any overpayment by the Borrower in respect of the Letter of Credit Fee for the then current Fiscal Quarter, or
(ii) the Borrower shall pay to the L/C Lender an amount equal to any underpayment by the Borrower in respect of the Letter of Credit Fee for the then current Fiscal Quarter, as
the case may be. If the Letter of Credit is drawn, in whole or in part, is withdrawn or otherwise ceases to have effect (other than due to an Event of Default) prior to its stated expiry date, the L/C
Lender shall reimburse the Borrower for any overpaid Letter of Credit Fee within 30 days of such occurrence. If an Event of Default has occurred and is continuing at the time of such early
expiry, the amount of such overpaid Letter of Credit Fee shall be paid by the L/C Lender to the Agent to be applied thereby in accordance with section 9.3. 

34

 

4.5.    Overdue Amounts  

        Without limiting any other provision of this Agreement, if the Borrower shall fail to reimburse the L/C Lender in respect of any payments made by the L/C Lender
under a Letter of Credit as contemplated in section 4.2.2, the L/C Lender may at any time thereafter notify the Agent (which shall thereupon deliver a similar notice to each of the Lenders
which has a Lender's Commitment) of such failure and such notification shall be deemed to have been delivery of a Borrowing Notice in the amount of such payments on and subject to the terms hereof.
Each Lender that has a Lender's Commitment shall forthwith credit the account of the L/C Lender with such Lender's Rateable Portion of such payments, the amount of such payments shall be deemed to
constitute a Base Rate Loan made by the Lenders under the Credit Facility and which is outstanding, and, without limiting the terms and conditions applicable to such Base Rate Loan, shall be due and
payable when a Base Rate Loan is due and payable in accordance with the provisions hereof. 

4.6.    Acceleration  

        Upon the Agent making a declaration under section 9.2, the maximum amount of the contingent liability of the L/C Lender under any Letter of Credit which is
then outstanding shall immediately become due and payable notwithstanding that the L/C Lender has not at such date been required to make payment under any such Letter of Credit. Any such amount
deposited with the L/C Lender shall be held by the L/C Lender and invested on behalf of the Borrower in an interest-bearing investment (or investments) as security for the repayment of future
indebtedness of the Borrower to the L/C Lender in respect of Letters of Credit which are drawn down pending the expiry of all outstanding Letters of Credit. 

4.7.    Conflict  

        Each Letter of Credit shall be subject to the L/C Lender's customary letter of credit terms and procedures from time to time in effect and shall be in a form
acceptable to the L/C Lender. The Borrower shall execute and deliver such standard form applications, agreements, indemnities, bonds and other assurances as the L/C Lender may reasonably require from
time to time with respect to Letters of Credit (each, a "Letter of Credit Agreement"). A Letter of Credit shall in no event contain provisions requiring the L/C Lender to satisfy itself, prior to
payment thereunder, as to any conditions for a drawing thereunder other than the presentation of prescribed documents. If the provisions set forth in the L/C Lender's customary letter of credit
documentation set forth terms beyond or inconsistent with that set forth herein, the provisions of this Agreement in respect thereof shall prevail. Notwithstanding the foregoing, if there is any
inconsistency between the terms of a Letter of Credit Agreement, this Agreement and the Uniform Customs and Practice for Documentary Credits as most recently published by the International Chamber of
Commerce (the "ICP") or The International Standby Practices as most recently approved by the International Chamber of Commerce Banking Commission (the "ISP"), then the terms of the UCP or ISP, as
applicable, shall prevail to the extent of the inconsistency. 

35

  

 
 

ARTICLE 5.
  INTEREST AND FEES    
    

5.1.    Interest Rates  

	5.1.1.
	Base
Rate Loans shall bear interest at the Base Rate plus the Applicable Margin.

	5.1.2.
	Libor
Loans shall bear interest at Libor plus the Applicable Margin. 

5.2.    Calculation and Payment of Interest  

	5.2.1.
	Interest
on Base Rate Loans shall accrue from day to day, both before and after default, demand, maturity and judgment, shall be calculated on the basis of the actual number of
days elapsed and on the basis of a year of 365 or 366 days, as the case may be, and shall be payable to the Agent for the account of the Lenders in U.S. dollars in arrears on the first
Banking Day of each month. For greater certainty, where the rate applicable to a Base Rate Loan is changed, interest shall be charged for the day on which such change is effective on the basis of the
new rate.

	5.2.2.
	Interest
on Libor Loans shall accrue from day to day, both before and after default, demand, maturity and judgement, shall be calculated on the basis of the actual number of days
elapsed and on the basis of a year of 360 days, and shall be payable to the Agent for the account of the Lenders in U.S. dollars in arrears on the last day of the relevant Interest
Period. 

5.3.    Stand-by Fee  

        The Borrower shall pay to the Agent for the account of the Lenders on the third Banking Day following the end of each Fiscal Quarter, in arrears, a
stand-by fee on the amount, if any, by which the Aggregate Commitment exceeds the amount of the Loans outstanding under the Credit Facility on each day in such Fiscal Quarter equal to the
rate per annum set out in Schedule 1.1.8 corresponding to the ratio of Total Funded Debt to EBITDA as calculated at the beginning of such Fiscal Quarter (and based on a year of 365 or
366 days, as the case may be). 

5.4.    Payment of Costs and Expenses  

        Whether or not the Borrower takes advantage of the Credit Facility, the Borrower shall pay to the Agent, for itself and, if applicable, each of the Lenders, on
demand the following costs and expenses: 

	5.4.1.
	all
reasonable costs and out-of-pocket expenses of the Agent in connection with the preparation, negotiation and execution of the Loan Documents, any actual
or proposed amendment or modification hereof or thereof or any waiver hereunder or thereunder and all instruments supplemental or ancillary thereto and all reasonable documented due diligence expenses
incurred in connection therewith;

	5.4.2.
	all
reasonable costs and expenses of the Agent in connection with obtaining advice as to the rights and responsibilities of the Agent and any of the Lenders under the Loan
Documents; and 

36

 

	5.4.3.
	all
reasonable costs and expenses of the Agent and Lenders in connection with the defence, establishment, protection or enforcement of any of the rights or remedies of the Agent or
any of the Lenders under the Loan Documents including, without limitation, all costs and expenses of establishing the validity and enforceability of, or of collection of amounts owing under, any of
the Loan Documents and all reasonable costs and expenses of any receiver or receiver-manager appointed by the Agent or any of the Lenders or by a court in connection with the enforcement of the Loan
Documents; 

including,
without limitation, all of the reasonable fees and disbursements of counsel to the Agent, the Lenders and any such receiver or receiver-manager, on a solicitor and his own client basis,
incurred in connection therewith, and all proper and reasonable compensation paid to any counsel, accountant or other expert retained or employed by the Agent pursuant hereto and including all sales,
goods and services or value-added taxes payable by any of them on all such costs, expenses and compensation. 

5.5.    Interest on Overdue Amounts  

        If any Obligations are not paid when due or an Event of Default has occurred and is continuing, all amounts owing or deemed to be owing hereunder, whether in
respect of principal, interest, fees, expenses or otherwise, both before and after judgment, and in the case of expenses from the dates such expenses are invoiced to the Borrower, shall bear interest
at a rate per annum determined on a daily basis that is equal to the Base Rate plus (in each case) 2% per annum, in each case calculated on the basis of the actual number of days elapsed and on the
basis of a year of 365 or 366 days, as the case may be. Such interest shall accrue from day to day, be payable in arrears on demand and shall be compounded monthly on the last Banking Day of
each calendar month. For the purpose of this section, "Banking Day" shall have the meaning given to such term in clause (i) of section 1.1.11. 

 
 

ARTICLE 6.
  REPRESENTATIONS AND WARRANTIES    
    

6.1.    Representations and Warranties  

        The Borrower represents and warrants to the Agent on behalf of the Lenders as follows: 

	6.1.1.
	Incorporation and Status.    Each of the Borrower and the Material Subsidiaries is duly incorporated, formed or organized,
as the case may be, and validly existing under the laws of its jurisdiction of incorporation, formation or organization, as the case may be, and has the power and capacity to own its properties and
assets and to carry on its business as presently carried on by it or as contemplated hereunder to be carried on by it. As of May 1, 2002, the Borrower did not carry on any material business
other than its ownership of the Subsidiaries and the other investments set out in section 6.1.26. As of May 1, 2002, none of the Material Subsidiaries carried on any business other than
the Core Line of Business and other than the ownership or operation of casinos, hotels, resorts, card clubs, sports bars, restaurants and theatres, all of which activities are associated with or
ancillary or related to the Core Line of Business, and the ownership and management of a portfolio of real estate properties held for development or sale. As of May 1, 2002, the Borrower and
each Material Subsidiary held all Material Authorizations, all of which were in good standing on such date;

	6.1.2.
	Power and Capacity.    Each of the Borrower and the Guarantors has the power and capacity to enter into each of the Loan
Documents to which it is a party and to do all acts and things as are required or contemplated hereunder or thereunder to be done, observed and performed by it; 

37

 

	6.1.3.
	Due Authorization.    Each of the Borrower and the Guarantors has taken all necessary action to authorize the execution,
delivery and performance of each of the Loan Documents to which it is a party;

	6.1.4.
	Registration Statement.    At May 1, 2002, the Registration Statement complied in all material respects with the
applicable provisions of the Securities Acts and did not contain an untrue statement of a material fact and did not omit to state any material fact required to be stated therein or necessary in order
to make the statements therein not misleading in light of the circumstances under which they were made;

	6.1.5.
	No Unanimous Shareholder Agreement.    There is no unanimous shareholder agreement with respect to any Material Subsidiary
that is not directly or indirectly wholly-owned by the Borrower which restricts, in whole or in part, the powers of the directors of the Material Subsidiary to manage or supervise the business and
affairs of the Material Subsidiary;

	6.1.6.
	No Contravention.    The execution and delivery of each of the Loan Documents and the performance by each of the Borrower
and the Guarantors of its obligations thereunder (i) do not and will not contravene, breach or result in any default under (a) the articles, by-laws, constating documents or
other organizational documents of the Borrower or any Guarantor, (b) any Material Authorization or Applicable Law, or (c) any material mortgage, lease, agreement or other legally binding
instrument to which the Borrower or a Material Subsidiary was, as of May 1, 2002, a party or by which the Borrower or Material Subsidiary or any of its properties or assets were bound as of
such date, (ii) will not oblige the Borrower or any Material Subsidiary to grant any Lien to any Person other than the Lenders, and (iii) will not result in or permit the acceleration of
the maturity of any material indebtedness, liability or obligation of the Borrower or any Material Subsidiary under any mortgage, lease, agreement or other legally binding instrument of or affecting
the Borrower or any Material Subsidiary;

	6.1.7.
	No Consents Required.    Other than filings with the Securities Commission, no Material Authorization is required in
connection with the execution, delivery or performance of any of the Loan Documents by the Borrower or any Guarantor;

	6.1.8.
	Enforceability.    Each of the Loan Documents constitutes, or upon execution and delivery will constitute, a valid and
binding obligation of the Borrower and each Guarantor which is a party to it enforceable against it in accordance with its terms, subject only to the qualifications set out in the opinion of
Borrower's counsel delivered pursuant to section 8.1.4.5;

	6.1.9.
	Title.    Subject only to Permitted Encumbrances and except as otherwise disclosed in writing by the Borrower to the
Agent, the Borrower and (where applicable) each Material Subsidiary is the absolute beneficial owner of and has good and marketable title in fee simple to, or has a good and marketable leasehold
interest to, all of the real property, in each case, necessary to permit the operation of its Core Line of Business in the ordinary course where the failure to so own or lease such real property could
reasonably be expected to have a Material Adverse Effect (collectively, the "Real Property"). As of May 1, 2002, Schedule 6.1.9 of the Disclosure Letter contained an accurate and
complete list of the municipal addresses of all Real Property owned or leased by the Borrower and each Material Subsidiary. As of May 1, 2002, the Borrower and (where applicable) each Material
Subsidiary was the beneficial owner, lessee or licensee, as the case may be, of all of its other real and personal property and has good title thereto, or other applicable interest therein, free and
clear of any Liens other than Permitted Encumbrances, in each case, necessary to permit the operation of its Core Line of Business in the ordinary course where the failure to have any such interest in
such property could reasonably be expected to have a Material Adverse Effect; 

38

 

	6.1.10.
	Zoning and Other Matters Relating to Real Property.    All buildings and other structures located on the Real Property
and the operation and maintenance thereof, as operated and maintained on May 1, 2002, were in compliance on May 1, 2002, in all material respects, with all Applicable Laws relating to
zoning and land use; none of such buildings or other structures encroaches upon any land not owned or leased by the Borrower or a Material Subsidiary; there are no restrictive covenants or Applicable
Laws which in any way restrict or prohibit the use of such Real Property, buildings or structures for the purposes for which they were being used on May 1, 2002; on May 1, 2002 there
were no expropriation or similar proceedings, actual or threatened, of which the Borrower or any Material Subsidiary has received notice against any of such Real Property or any part thereof, in all
cases, where the existence and continuance of any such non-compliance, encroachment, restriction or proceeding could reasonably be expected to have a Material Adverse Effect;

	6.1.11.
	Financial Statements.

	6.1.11.1.
	The
Audited Financial Statements have been prepared in accordance with GAAP and present fairly the financial position and results of operations of the Borrower and its
Subsidiaries on a consolidated basis as of the dates indicated and for the periods specified;

	6.1.11.2.
	The
pro forma financial information, including the notes thereto, included in the Registration Statement have been prepared in accordance with applicable requirements of
the Securities Acts. The assumptions used in preparing such pro forma financial statements provide a reasonable basis for presenting the significant effects directly attributable to the
transactions or events described therein, the related pro forma adjustments give appropriate effect to those assumptions, and the pro forma columns therein reflect a proper application
of those adjustments to the corresponding historical financial statement amounts;

	6.1.12.
	Non-Arm's Length Transactions.    Except as described in the Registration Statement, or as set forth in
Schedule 6.1.12 of the Disclosure Letter or as disclosed in writing by the Borrower to the Agent, since the date of the last financial statements delivered to the Agent prior to May 1,
2002, neither the Borrower nor any of its Material Subsidiaries has entered into any transaction or agreement with any Affiliate which is not the Borrower or a Material Subsidiary;

	6.1.13.
	No Litigation.    Except as described in the Registration Statement, or as set forth in Schedule 6.1.13 of the
Disclosure Letter or as disclosed in writing by the Borrower to the Agent, there is no: court, administrative, regulatory or similar proceeding (whether civil, quasi-criminal, or criminal);
arbitration or other dispute settlement procedure; investigation or enquiry by any Governmental Body; or any similar matter or proceeding (collectively "proceedings") against or involving the Borrower
or any Material Subsidiary (whether in progress or threatened) which, if determined adversely to the Borrower or Material Subsidiary, could reasonably be expected to have a Material Adverse Effect or
which purports to affect the legality, validity and enforceability of any Loan Document; to the Borrower's knowledge, no such proceedings are threatened or contemplated by any Governmental Body or
other Person; and, to the Borrower's knowledge, no event has occurred which could reasonably be expected to give rise to any such proceedings and, as of May 1, 2002, there was no judgment,
decree, injunction, rule, award or order of any Governmental Body outstanding against the Borrower or any of its Material Subsidiaries which has had, or could reasonably be expected to have, a
Material Adverse Effect; 

39

 

	6.1.14.
	No Default.    Except as described in the Registration Statement, as at May 1, 2002 neither the Borrower nor any
Material Subsidiary was in default or breach under any Applicable Law or under any material agreement, commitment or obligation or under the terms and conditions relating to any Material
Authorizations which could reasonably be expected to have a Material Adverse Effect and, except as disclosed in writing by the Borrower to the Agent, there exists no state of facts which, after notice
or the passage of time or both, would constitute such a default or breach; and, as of May 1, 2002, there were no proceedings in progress, pending or threatened which could reasonably be
expected to result in the revocation, cancellation, suspension or any adverse modification of any Material Authorization;

	6.1.15.
	Books and Records.    The Borrower and each of its Subsidiaries (i) makes and keeps accurate books and records and
(ii) maintains internal accounting controls that provide reasonable assurance that (A) transactions are executed in accordance with management's authorization, and
(B) transactions are recorded as necessary to permit preparation of its financial statements and to maintain accountability for its assets;

	6.1.16.
	No Labour Disturbance.    Except as disclosed in the Registration Statement or as disclosed in writing by the Borrower to
the Agent, no labour disturbance by the employees of the Company or by any horse owners or trainers exists or, to the knowledge of the Company, is imminent, in each case, that could reasonably be
expected to have a Material Adverse Effect;

	6.1.17.
	Taxes.    Except as would not reasonably be expected to have a Material Adverse Effect, the Borrower and its Material
Subsidiaries have accurately prepared and timely filed all federal, state, provincial and other tax returns that are required to be filed by them and have paid or made provision for the payment of all
Taxes except those Taxes that are being disputed in good faith by appropriate proceedings for which the Borrower or any Material Subsidiary has established on its books reserves considered by it to be
adequate therefor, and including, without limitation, all Taxes that the Borrower or any Material Subsidiary is obligated to withhold from amounts owing to employees, creditors and third parties, with
respect to the periods covered by such tax returns (whether or not such amounts are shown as due on any tax return). No deficiency assessment with respect to a proposed adjustment of the Borrower's or
any Material Subsidiary's federal, state, provincial or other Taxes is pending or, to the knowledge of the Borrower or any Material Subsidiary, threatened. As of May 1, 2002, there was no tax
Lien, whether imposed by any federal, state, provincial or other taxing authority, outstanding against the assets, properties or business of the Borrower or any Material Subsidiary other than
Permitted Encumbrances;

	6.1.18.
	Material Subsidiaries.    Schedule 6.1.18 of the Disclosure Letter sets out an accurate and complete list of the
name and jurisdiction of incorporation of each Material Subsidiary of the Borrower as of May 1, 2002. As of May 1, 2002, except as disclosed in writing by the Borrower to the Agent on or
prior to May 1, 2002, no Person had any agreement, right or option to acquire any shares or securities convertible into or other rights to acquire, shares in the capital stock of any Material
Subsidiary. The Borrower had no Subsidiary on May 1, 2002 (other than Subsidiaries existing on May 1, 2002 whose registered and principal office is located outside the
United States of America) having (a) total assets with an aggregate net book value in excess of 10% of the aggregate net book value of the total assets of the Borrower determined on a
consolidated basis, including such Subsidiary (in each case, determined as of the last day of the most recent fiscal quarter of such Person), or (b) EBITDA in excess of 10% of EBITDA of the
Borrower determined on a consolidated basis, including such Subsidiary (in each case, for the four consecutive Fiscal Quarters most recently ended), other than the Santa Anita Subsidiaries, MEC
Holdings (USA) Inc., any Subsidiary that has provided a Guaranty or a Subsidiary that has become a Relevant Subsidiary within the previous 15 Banking Days; 

40

 

	6.1.19.
	Environmental Laws.    Except for matters identified in the Environmental Reports, the Registration Statement or in
Schedule 6.1.19 of the Disclosure Letter, as of May 1, 2002 the operation of the business of the Borrower and the Material Subsidiaries was in compliance in all material respects with
all Environmental Laws and Environmental Orders. Further, as of May 1, 2002, there were no facts known by the Borrower which are likely to give rise to a notice of non-compliance
with any Environmental Laws or Environmental Orders in any material respect in respect of such business;

	6.1.20.
	Environmental Permits.    Except for matters identified in the Environmental Reports, the Registration Statement, as set
forth in Schedule 6.1.19 of the Disclosure Letter or where the absence of an Environmental Permit would not have a Material Adverse Effect on the Borrower, as of May 1, 2002 all
Environmental Permits necessary or required for the operation of the Core Line of Business of the Borrower and the Material Subsidiaries had been obtained;

	6.1.21.
	Hazardous Substances.    Except for matters identified in the Environmental Reports, the Registration Statement or as set
forth in Schedule 6.1.19 of the Disclosure Letter, as of May 1, 2002, the Real Property did not contain any Hazardous Substances, including any that were or are located in storage
vessels or that have been Released into the environment on, near, to or from any Real Property, to the extent that any such matter could reasonably be expected to result in a Material Adverse Effect
to the Borrower or a Material Subsidiary;

	6.1.22.
	Waste.    Except for matters identified in the Environmental Reports, the Registration Statement or in
Schedule 6.1.19 of the Disclosure Letter, as of May 1, 2002 the Borrower had not used any of its facilities or permitted them to be used to generate, manufacture, refine, treat,
transport, store, handle, dispose of, transfer, produce, process or recycle waste, and as of May 1, 2002, the Real Property had not been used by the Borrower or a Subsidiary as a landfill or
waste disposal site, except in compliance in all material respects with all Environmental Laws and Environmental Orders nor had it engaged in off-site disposal as of May 1, 2002
that could reasonably be expected to result in any material liability to the Borrower or any Material Subsidiary;

	6.1.23.
	Environmental Convictions.    Except for matters identified in the Environmental Reports, the Registration Statement or
in Schedule 6.1.19 of the Disclosure Letter, as of May 1, 2002 the Borrower had never been convicted of an offence for non-compliance with any Environmental Laws or
Environmental Orders;

	6.1.24.
	Environmental Notice.    Except for matters identified in the Environmental Reports, the Registration Statement or in
Schedule 6.1.19 of the Disclosure Letter, as of May 1, 2002 the Borrower had not received any notice, whether in writing or verbally, from a Governmental Body, nor did it have knowledge
as of May 1, 2002 after due inquiry of any facts which could give rise to any notice from a Governmental Body being issued, that the Borrower is responsible for a federal, state, provincial,
municipal or local clean-up site or corrective action under any Environmental Laws or Environmental Orders where such action could reasonably be expected to have a cost in excess of
$5,000,000; 

41

 

	6.1.25.
	Environmental Records.    Except for matters identified in the Environmental Reports or the Registration Statement or
Schedule 6.1.19 of the Disclosure Letter, as of May 1, 2002 the Borrower had maintained its environmental records, in all material respects, in the manner and for the time periods
required by Environmental Laws and Environmental Orders and as of May 1, 2002 except for the work and investigations identified in the Environmental Reports or the Registration Statement or
Schedule 6.1.19 of the Disclosure Letter, had not conducted any environmental audit of its business, including the Real Property, which has resulted in the completion of a report describing
issues that are material to the Borrower. For the purposes of this section 6.1.25, an environmental audit shall include, without limitation, any evaluation, assessment or study performed,
including at the request of or on behalf of a Governmental Body;

	6.1.26.
	Investments.    As of May 1, 2002, the Borrower had no loans to or investments in any Person in excess of
$1,000,000, nor has it given any guarantee or incurred any liability in connection with the indebtedness of any Person in excess of $1,000,000, in each case, other than in connection with the Santa
Anita Facility, as described in the Registration Statement or in Schedule 6.1.26 of the Disclosure Letter or, in the case of the Borrower, to a Material Subsidiary, or in the case of a Material
Subsidiary, to the Borrower or any other Material Subsidiary;

	6.1.27.
	ERISA.    Except as set out in Schedule 6.1.27 of the Disclosure Letter or as otherwise disclosed in writing by
the Borrower to the Agent, as at May 1, 2002 (a) the Borrower and its ERISA Affiliates were, to their knowledge as at May 1, 2002, in compliance in all material respects with all
applicable provisions of ERISA which would result in any material liability accruing to the Borrower or its ERISA Affiliates, (b) neither the Borrower nor any ERISA Affiliate had violated any
provision of any Plan, (c) to their knowledge as at May 1, 2002, no Reportable Event had occurred and was continuing with respect to any Plan initiated by the Borrower or any ERISA
Affiliate, (d) to their knowledge as at May 1, 2002, the Borrower and all ERISA Affiliates had met their minimum funding requirements under ERISA with respect to each Plan, and
(e) each Plan was able to fulfill its current benefit obligations as they come due in accordance with the Plan documents;

	6.1.28.
	Investment Company.    Neither the Borrower nor any Material Subsidiary is an "investment company", or an "affiliated
person" of, or "promoter" or "principal underwriter" for, an "investment company", as such term is defined in the Investment Company Act of 1940, as amended; provided that with respect to "affiliated
persons" this representation is made to the knowledge of the Borrower, without any investigation, with respect to the holders of publicly traded securities of the Borrower and as to the holders of
publicly traded securities of Magna International Inc. Neither the making of any Advances, nor the issuance of any Letters of Credit, nor the application of the proceeds or repayment thereof by
the Borrower, nor the consummation of the other transactions contemplated hereby, will violate any provision of such Act or any rule, regulation or order of the Securities Commission thereunder;

	6.1.29.
	Margin Regulations.    The Borrower is not engaged, nor will it engage, principally or as one of its primary activities,
in the business of extending credit for the purpose of "purchasing" or "carrying" any "margin stock" within the respective meanings of each of the quoted terms under Regulation U; 

42

 

	6.1.30.
	Comerica Filings and BNS Filings.    Neither the Borrower nor any of its Subsidiaries has any indebtedness outstanding
which is secured by either the Comerica Filings or the BNS Filings; and

	6.1.31.
	Disclosure.    As of May 1, 2002, all information provided to the Agent relating to the financial condition,
business, affairs and prospects of the Borrower and the Subsidiaries (other than financial projections), consisting of those documents and materials made available for review by the Borrower and
referenced in a binder of materials compiled by Torys LLP in connection with their due diligence review on behalf of Bank of Montreal (but, for greater certainty, excluding any work product of
Torys LLP) which was forwarded to the Borrower under cover of a memo dated March 20, 2002 from Torys to the Borrower, together with any information set out in the Registration Statement
and the Disclosure Letter, was true, accurate and complete in all material respects and omits no material fact necessary to make such information not misleading in light of the circumstances under
which such information was provided. As of May 1, 2002, all financial projections provided by the Borrower to the Agent was prepared in good faith, on the basis of all known facts and using
reasonable assumptions and, as of such date, the Borrower believed such projections to be fair and reasonable. 

6.2.    Survival of Representations and Warranties  

        The Borrower acknowledges and agrees that the representations and warranties made by it in this Article 6 shall be deemed to be repeated on the last day of
each Fiscal Quarter, with the same effect as if such representations and warranties had been made and given on and as of such day, notwithstanding any investigation made at any time by the Agent or
any of the Lenders or on their behalf, including, without limitation, the due diligence review referred to in section 6.1.31; except that if any such representation and warranty is specifically
given as of any particular date or particular period of time and relates only to such date or period of time, then such representation and warranty shall continue to be given as at such date or for
such period of time. 

 
 

ARTICLE 7.
  COVENANTS    
    

7.1.    Affirmative Covenants  

        So long as any Loan remains outstanding or so long as the Borrower has the right to utilize the Credit Facility, and unless the Agent on behalf of the Lenders
otherwise consents in writing, the Borrower covenants and agrees that, with effect from May 1, 2002: 

	7.1.1.
	Punctual Payment.    The Borrower shall pay or cause to be paid all Obligations falling due hereunder on the dates and in
the manner specified herein;

	7.1.2.
	Conduct of Business.    The Borrower shall, and shall take all necessary corporate action to cause each Material
Subsidiary to, do or cause to be done all things necessary or desirable to maintain its corporate existence in its present jurisdiction of incorporation, to maintain its corporate power and capacity
to own its properties and assets, and to carry on its Core Line of Business in a commercially reasonable manner in accordance with past practice;

	7.1.3.
	Preservation of Material Authorizations.    The Borrower shall, and shall take all necessary corporate action to cause
each Material Subsidiary to, preserve, maintain in effect at all times and at all times comply with all Material Authorizations except where the failure to preserve and maintain a Material
Authorization could not reasonably be expected to have a Material Adverse Effect; 

43

 

	7.1.4.
	Compliance with Applicable Law and Contracts.    The Borrower shall, and shall take all necessary corporate action to
cause each Material Subsidiary to (a) comply with the requirements of all Applicable Law, and all obligations which, if contravened, could give rise to a Lien (other than a Permitted
Encumbrance) over any of the Real Property, and all insurance policies, non-compliance with which could, singly or in the aggregate, be reasonably expected to have a Material Adverse
Effect, and (b) comply with all contracts (including leases of Real Property) to which it is a party or by which it or its properties are bound and, with respect to leases of Real Property,
(i) keep such leases in full force and effect and not allow such leases to lapse or be terminated other than in the ordinary course of business or any rights to renew such leases to be
forfeited or cancelled other than in the ordinary course of business, and (ii) notify the Agent of any default by any party with respect to such leases and take all commercially reasonable
steps to cure any such default, in each case under clause (b) of this section 7.1.4, except to the extent that the failure to do so could not reasonably be expected to have a Material
Adverse Effect;

	7.1.5.
	Accounting Methods and Financial Records.    The Borrower shall, and shall take all necessary corporate action to cause
each Material Subsidiary to, maintain a system of accounting which is established and administered in accordance with GAAP and keep adequate records and books of account in which accurate and complete
entries shall be made in accordance with such accounting principles reflecting all transactions required to be reflected by such accounting principles;

	7.1.6.
	Maintenance of Real Property.    The Borrower shall, and shall take all necessary corporate action to cause each Material
Subsidiary to, maintain the Real Property owned or leased by it in good repair, working order and condition in accordance with past practice (reasonable wear and tear excepted) and from time to time
make or cause to be made all necessary and appropriate repairs, renewals and replacements thereto except, in each case, where the failure to maintain such Real Property could not, singly or in the
aggregate, reasonably be expected to have a Material Adverse Effect;

	7.1.7.
	Maintenance of Insurance.    The Borrower shall maintain on behalf of itself and the Material Subsidiaries, or shall take
all necessary corporate action to cause the Material Subsidiaries to maintain, insurance with responsible and reputable insurance companies or associations in such amounts and covering such risks as
is usually carried by companies engaged in similar businesses and owning similar properties in the same general areas in which the Borrower or such Material Subsidiary operates; provided, however,
that the Borrower and its Material Subsidiaries may self-insure to the same extent as other companies engaged in similar businesses and owning similar properties in the same general areas
in which the Borrower or such Material Subsidiary operates and to the extent consistent with prudent business practice;

	7.1.8.
	Payment of Taxes.    The Borrower shall, and shall take all necessary corporate action to cause each Material Subsidiary
to:

	7.1.8.1.
	pay
and discharge all Taxes payable by it; 

44

  

	7.1.8.2.
	withhold
and collect all Taxes required to be withheld and collected by it and remit such Taxes to the appropriate Governmental Body at the time and in the manner required; and

	7.1.8.3.
	pay
and discharge all obligations incidental to any trust imposed upon it by statute which, if unpaid, might become a Lien (other than a Permitted Encumbrance) upon any of its
Real Property; 

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

	7.1.9.
	Inspections.    The Borrower shall permit each of the Agent and its authorized employees, representatives and agents at
reasonable times and during normal business hours, upon giving reasonable notice, to discuss, or meet at the head office of the Borrower to discuss, with senior management of the Borrower, the
businesses, property, financial condition and prospects of the Borrower and its Material Subsidiaries;

	7.1.10.
	Notice of Litigation and Other Matters.    The Borrower shall, as soon as practicable after it shall become aware of the
same, give notice to the Agent and the Lenders of the following events:

	7.1.10.1.
	the
commencement of any action, proceeding, arbitration or investigation against or in any other way relating adversely to the Borrower or any of its Material Subsidiaries or
any of their respective properties, assets or businesses by any Person (including any Governmental Body) which, if adversely determined, could singly or when aggregated with all other such actions,
proceedings, arbitrations and investigations reasonably be expected to have a Material Adverse Effect;

	7.1.10.2.
	any
insurance claim made by the Borrower or any of its Material Subsidiaries in excess of $5,000,000;

	7.1.10.3.
	any
development which has had or could reasonably be expected to have a Material Adverse Effect; and

	7.1.10.4.
	any
Default or Event of Default; 

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

	7.1.11.
	Quarterly Reports.    The Borrower shall, as soon as practicable and in any event within 60 days after the end of
each Fiscal Quarter (other than the Fiscal Quarter ending in December) of each Fiscal Year deliver to the Agent a quarterly report for such Fiscal Quarter consisting of consolidated unaudited
financial statements for the Borrower (in each case as at the end of such Fiscal Quarter and the portion of the Fiscal Year through the end of such Fiscal Quarter) in the form of the quarterly
financial statements filed or, if not yet filed, required to be filed, with the Securities Commission; 

45

 

	7.1.12.
	Annual Financial Statements.    The Borrower shall, as soon as practicable and in any event within 120 days after
the end of each Fiscal Year, deliver to the Agent the annual audited consolidated financial statements of the Borrower, in the form of the annual financial statements filed or, if not yet filed,
required to be filed with the Securities Commission;

	7.1.13.
	Certificate of the Borrower.    The Borrower shall deliver or cause to be delivered to the Agent, together with the
report and financial statements in sections 7.1.11 and 7.1.12, a certificate of the Borrower in the form attached hereto as Schedule 7.1.13 duly executed by the Chief Financial
Officer or Controller thereof certifying (i) that such financial statements were prepared in accordance with GAAP (subject to normal year-end adjustments in the case of interim
unaudited financial statements) and fairly present the financial position and results of operations of the Borrower on a consolidated basis for the period and as at the date thereof, (ii) that
no Default or Event of Default has occurred hereunder or, if any Default or Event of Default has occurred, specifying the relevant particulars and the period of existence thereof and the action taken,
being taken or proposed to be taken by or on behalf of the Borrower or any Material Subsidiary with respect thereto, (iii) demonstrating in reasonable detail compliance (or, as the case may be,
non-compliance) at the end of the relevant Fiscal Quarter or Fiscal Year with the covenants contained in section 7.1.18 and, in each case, where a Material Adverse Change has
occurred, specifying the relevant particulars, the period of existence and the action taken, being taken or proposed to be taken by or on behalf of the Borrower with respect thereto;

	7.1.14.
	Public Information.    The Borrower shall from time to time deliver to the Agent copies of all reports, financial
statements, information or proxy circulars and other information sent by the Borrower to its shareholders at the same time as the Borrower sends such material to its shareholders and the Borrower
shall deliver to the Agent copies of all registration statements, prospectuses, press releases, material change reports and similar disclosure documents filed by the Borrower with any securities
regulatory authority (including the Securities Commission) or stock exchange, provided that if any such reports or disclosures are filed on a confidential basis, then the Borrower shall not be
required to deliver the same to the Agent until such time as they are no longer filed on a confidential basis;

	7.1.15.
	Other Financial Information.    As soon as practicable following a request therefor from the Agent on behalf of the
Lenders, the Borrower shall furnish to the Agent such other financial information as the Agent on behalf of the Lenders may reasonably request from time to time;

	7.1.16.
	Covenant to Guarantee Obligations.    At the expense of the Borrower, to the extent permitted by law, within 15 Banking
Days after such time as any new direct or indirect Relevant Subsidiaries of the Borrower (other than the Lone Star Subsidiaries) are formed or acquired or any existing Subsidiary of the Borrower
becomes a Relevant Subsidiary (other than the Santa Anita Subsidiaries), the Borrower shall cause such Relevant Subsidiary to duly execute and deliver to the Agent an agreement, in form and substance
satisfactory to the Agent binding it to the provisions of Article 10 of this Agreement, whereby such Relevant Subsidiary guarantees the Borrower's Obligations under the Loan Documents
substantively on the terms of the Guaranty. Notwithstanding the foregoing, if the Relevant Subsidiary is not wholly-owned by the Borrower or its wholly-owned Subsidiaries, the Borrower will only be
required to cause such Relevant Subsidiary to comply with this section 7.1.16 if and to the extent it may do so under Applicable Law and under applicable contractual obligations without the
consent of the other shareholders of such Relevant Subsidiary (or their respective nominees on the board of directors or similar managing body of such Relevant Subsidiary). Concurrently with the
delivery of such agreement, the Borrower will deliver to the Agent a signed copy of a favorable opinion, addressed to the Agent and the Lenders, of counsel to the Borrower as to such guaranty being
the legal, valid and binding obligation of the Relevant Subsidiary party thereto, enforceable in accordance with its terms and as to such other matters as were addressed in the opinion of the
Borrower's counsel delivered pursuant to section 8.1.4.5, and subject only to the qualifications set out in such opinion and to any other qualifications which in the reasonable opinion
of the Borrower's counsel are required by law; 

46

 

	7.1.17.
	Covenant Regarding Permitted Acquisitions.    Within 30 days after the closing of a Permitted Acquisition, the
Borrower shall provide the Agent and Lender with an Officer's Certificate:

	(a)
	confirming
that such Acquisition was a Permitted Acquisition;

	(b)
	attaching
a true and complete copy of the purchase (or equivalent) agreement for such Acquisition, and all written amendments thereto or waivers of any material provision or condition
thereof;

	(c)
	attaching
true and complete copies of the financial statements relied on, if any, by the Borrower or the Material Subsidiary, as applicable, in entering such agreement;

	(d)
	whether
the entity being acquired will constitute a Relevant Subsidiary or, if not, the basis for such determination; and

	(e)
	confirming
the manner in which the Borrower is including the results from the operations of such Acquisition for purposes of the financial covenants set forth in section 7.1.18
and confirming such inclusion is in compliance with section 1.13;

	7.1.18.
	Financial Covenants.    The Borrower shall maintain the following ratios (measured on a consolidated basis) as at the end
of each Fiscal Quarter:

	7.1.18.1.
	Total Funded Debt to EBITDA.    The ratio of (i) Total Funded Debt less cash reflected on the Borrower's
consolidated balance sheet to (ii) EBITDA shall not be greater than 3.50:1.00;

	7.1.18.2.
	Total Interest Coverage.    The ratio of (i) EBITDA less Taxes and maintenance Capital Expenditures, and as
adjusted for working capital changes, to (ii) Total Interest Expense shall be no less than 1.70:1.00; and 

For
the purposes of this section 7.1.18, (i) Total Funded Debt shall be measured as at the end of the applicable Fiscal Quarter based on the consolidated financial statements of the
Company and calculated in accordance with GAAP, and (ii) EBITDA, maintenance Capital Expenditures, Taxes, working capital changes and Total Interest Expense shall be measured for the period
comprising the applicable Fiscal Quarter and the three Fiscal Quarters immediately preceding such Fiscal Quarter based on the consolidated financial statements of the Company and calculated in
accordance with GAAP; 

47

 

	7.1.19.
	Comerica Filings and BNS Filings.    The Borrower shall take commercially reasonable steps to cause each of the Comerica
Filings and the BNS Filings to be discharged in due course and neither the Borrower nor any of its Subsidiaries shall incur, create or assume any indebtedness in favour of any Person which is secured
by the Comerica Filings or the BNS Filings; and

	7.1.20.
	Notice of Payment to Holders of Subordinated Debt.    The Borrower will give the Agent at least ten Business Days' notice
prior to sending any notice of redemption to holders of Subordinated Debt or otherwise creating or becoming subject to any obligation to make an unscheduled repayment of principal on or repurchase of
the Subordinated Debt. 

7.2.    Negative Covenants  

        So long as any Loan remains outstanding or so long as the Borrower has the right to utilize the Credit Facility, and unless the Agent on behalf of the Lenders
otherwise consents in writing, the Borrower covenants and agrees that it and each Material Subsidiary shall not from and after May 1, 2002: 

	7.2.1.
	Encumber Property.    Create, grant, assume or suffer to exist any Lien upon any of its properties or assets, or upon any
of the property and assets of any Material Subsidiary, other than Permitted Encumbrances and Liens arising in connection with financial assistance permitted by section 7.2.8;

	7.2.2.
	Capital Expenditures.    Incur or commit or agree to incur any Capital Expenditure unless (i) such Capital
Expenditure is in respect of the Core Line of Business carried on by the Borrower or any Subsidiary or in respect of any real estate owned by the Borrower or any Subsidiary on the date of this
Agreement and (a) was included in a budget delivered to the Agent, or (b) has been approved by the board of directors of the Borrower or a Material Subsidiary, as applicable, or
(ii) such Capital Expenditure is approved in writing by the Agent on behalf of the Lenders;

	7.2.3.
	Non-Arm's Length Transactions.    Repay any existing indebtedness or liabilities owed to, or otherwise enter
into any transaction or agreement with, any Affiliate (or any corporation which, after the transaction in question becomes effective, would become an Affiliate), or permit any Material Subsidiary to
enter into any such transaction, other than (a) with an Affiliate which is the Borrower or a Material Subsidiary or (b) where such repayment (or the indebtedness giving rise thereto) or
transaction is approved by the board of directors of the Borrower or (c) where such transaction constitutes the purchase, sale or lease of assets or the purchase or provision of services, in
each case in the ordinary course of business and either (x) such transaction is conducted on commercially reasonable terms and conditions, or (y) if such transaction relates to sharing
facilities or personnel among the Borrower and one or more of its Affiliates, the related costs are allocated on a reasonable basis;

	7.2.4.
	Amalgamations, etc.    Enter into any transaction (including by way of reorganization, consolidation, amalgamation,
liquidation, transfer, sale or otherwise) whereby the Borrower or all or any other material portion of the undertaking, property and assets of the Borrower would become the property of any other
Person or permit any Material Subsidiary to enter into any such transaction, other than in the case of the Borrower, a Material Subsidiary, or in the case of a Material Subsidiary, the Borrower or any
other Material Subsidiary or, in the case of any such amalgamation, the continuing corporation resulting therefrom; 

48

 

	7.2.5.
	Unrelated Business.    Other than investments set out in section 6.1.26 or acquisitions or other ventures
having an aggregate cost (on a consolidated basis) of not greater than $5,000,000 (inclusive of any indebtedness, contingent or otherwise, assumed or incurred in connection therewith), engage directly
or indirectly in any business activity, or purchase or otherwise acquire any properties or assets, in each case unrelated to its Core Line of Business;

	7.2.6.
	Restricted Payments.    The Borrower will not, and will not permit any Material Subsidiary to, declare, pay or make, or
agree to declare, pay or make, directly or indirectly, any Restricted Payment, except (a) the Borrower may declare and pay dividends with respect to its equity securities payable solely in
additional equity securities, (b) any Material Subsidiary may make Restricted Payments to the Borrower or any Material Subsidiary and any wholly-owned Material Subsidiary may redeem or
repurchase its own equity securities, (c) the Borrower or any Material Subsidiary may make Restricted Payments pursuant to and in accordance with employee share purchase loans, stock option
plans (including individual plans), profit sharing plans and/or other benefit plans, employee incentives and performance obligations for directors, officers, management, employees or consultants of
the Borrower and its Material Subsidiaries, (d) the Borrower or any Material Subsidiary may make Restricted Payments for the purposes of employee and executive recruitment and relocation,
(e) the Borrower or any Material Subsidiary may make payments in respect of indebtedness as set forth in clause (v) of the definition of Permitted Debt, (f) the Borrower or any
Material Subsidiary may make any payment in respect of or relating to indebtedness or a transaction permitted by section 7.2.3; and (g) the Borrower may make payments in respect of or
relating to Subordinated Debt in accordance with the terms of such Subordinated Debt until such time as the Agent notifies the Borrower of the occurrence of a Default or an Event of Default or, after
such notice only if the Agent acknowledges in writing that such Default or Event of Default is no longer continuing;

	7.2.7.
	Debt.    Create, incur, assume or suffer to exist, any indebtedness other than Permitted Debt or indebtedness arising in
connection with financial assistance permitted by section 7.2.8;

	7.2.8.
	Financial Assistance.    Provide financial assistance, either directly or indirectly, by means of a guarantee, provision
of security or otherwise to any Person, except for Permitted Debt or Permitted Encumbrances and any other obligations which the Borrower may enter into in favour of the Lenders and except for
(i) financial assistance in an amount which does not exceed $5,000,000 in the aggregate, (ii) financial assistance given by the Borrower to a Material Subsidiary, or by a Material
Subsidiary to the Borrower or any other Material Subsidiary, and (iii) financial assistance given to a Subsidiary in connection with either a Permitted Acquisition or an acquisition or
investment not prohibited by this Agreement;

	7.2.9.
	Disposition of Assets.    In any Fiscal Year, sell, lease, consign or otherwise dispose of, or agree to sell, lease,
consign or otherwise dispose of, any assets or property except that the Borrower or any Material Subsidiary may (i) sell, lease or consign assets or properties in the ordinary course of
business from time to time; (ii) sell, lease or consign real property (other than Real Property) held for sale or development and excess racetrack lands; (iii) transfer, abandon,
surrender or otherwise dispose of any fixtures, equipment, machinery, tools, implements, facilities and appliances which may have become worn out, unserviceable, obsolete, unsuitable or unnecessary in
the conduct of their businesses; and (iv) sell or otherwise dispose of any Subsidiary (other than a Material Subsidiary unless the sale or other disposition thereof is in accordance with
section 7.2.10) with negative EBITDA determined, on a consolidated basis, for the four consecutive fiscal quarters most recently ended; 

49

 

	7.2.10.
	Change in Ownership of Material Subsidiaries.    Sell or otherwise dispose of any shares in the capital stock of any
Material Subsidiary, or any warrants, rights or options to acquire such stock or permit any Material Subsidiary to issue, sell or otherwise dispose of any shares in its capital stock or the capital
stock of any other Material Subsidiary or any warrants, rights or options to acquire such stock except to the Borrower or another Material Subsidiary; and

	7.2.11.
	Acquisitions.    Permit or otherwise undertake any Acquisition (other than a Permitted Acquisition) without the prior
written consent of the Agent (on behalf of the Majority Lenders). 

7.3.    Environmental Matters  

	7.3.1.
	The
Borrower shall maintain, for itself and its Material Subsidiaries, a system to ensure and monitor continued compliance with Environmental Laws, which shall include reviews of
such compliance, and the maintenance, in all material respects, of environmental documents and records relating to their respective businesses as required by Environmental Law.

	7.3.2.
	The
Borrower shall comply, and shall take all necessary corporate or other action to cause any of its Material Subsidiaries to comply with all Environmental Laws except where the
failure to do so could not reasonably be expected to have a Material Adverse Effect.

	7.3.3.
	The
Borrower covenants and agrees that it and each Material Subsidiary shall not cause or permit a Release of any Hazardous Substance except in compliance, in all material
respects, with Environmental Laws or that would not reasonably be expected to lead to material liability under Environmental Laws against the Borrower or a Subsidiary.

	7.3.4.
	The
Borrower covenants and agrees that it and each Material Subsidiary shall not knowingly permit, and shall use reasonable commercial efforts to prevent any person, including but
not limited to any invitee, occupant or tenant of or on any Real Property or any part thereof, to engage in any activity (or fail to take action), which is likely to lead to the imposition of material
liability under any Environmental Laws against the Borrower or a Subsidiary which would have a Material Adverse Effect on the Borrower.

	7.3.5.
	The
Borrower shall, and shall take all necessary corporate action to cause each Material Subsidiary to, promptly remove any Hazardous Substance (or if removal is prohibited by any
Environmental Law, the Borrower or applicable Material Subsidiary shall take whatever action is required to ensure compliance with such Environmental Law) from any Real Property (or neighbouring lands
where the Hazardous Substance has come from the Real Property) to the extent required by Environmental Law where the failure to do so could reasonably be expected to have a Material Adverse Effect on
the Borrower or any Material Subsidiary.

	7.3.6.
	The
Borrower shall provide the Agent with an environmental audit report (which shall include a report arising from an environmental site assessment, investigation or environmental
review) with respect to any Real Property or an update of such audit (i) upon the written request of the Agent on behalf of the Lenders documenting its reasonable opinion that the Borrower or
any Material Subsidiary may not be in material compliance with this section 7.3; (ii) if such audit is required by any Governmental Body or (iii) if an Event of Default relating
to an environmental matter has occurred, and the Agent on behalf of the Lenders has made a reasonable written request to the Borrower for such audit or update to address the Event of Default within
60 days after such request, and all such audits or updates thereof shall be at the Borrower's expense. 

50

 

	7.3.7.
	If
the Borrower or any Material Subsidiary (i) receives notice that any violation of any Environmental Law may have been committed or is about to be committed by it,
(ii) receives notice that any administrative or judicial complaint or order has been filed or is about to be filed against it alleging violations of any Environmental Law or requiring it to
take any action in connection with the release of Hazardous Substances into the environment, or (iii) receives any notice from a Governmental Body or other Person alleging that the Borrower or
any Material Subsidiary may be liable or responsible for costs associated with a response to or clean-up of a release of a Hazardous Substance into the environment or any damages caused
thereby, in each case where the ultimate liability of the Borrower or any Material Subsidiary which may arise from such notice could reasonably be expected to have a Material Adverse Effect, the
Borrower shall, and shall take all necessary corporate action to cause each Material Subsidiary to, provide the Agent with a copy of such notice within five days of receipt thereof. The Borrower
shall, and shall take all necessary corporate action to cause each Material Subsidiary to, also provide to the Agent, as soon as practicable after it becomes available, a copy of any environmental
audit report, including any report required to be submitted to any Governmental Body. If any such report estimates the cost of any clean-up or remedial action, including any approved by a
Governmental Body, to be in excess of $5,000,000, the Borrower shall, and shall take all necessary corporate action to cause each Material Subsidiary to, provide evidence satisfactory to the Agent,
acting reasonably, of disbursements made from time to time to effect and complete such clean-up or remedial action, including within such time as may be prescribed by a Governmental Body.
The Borrower shall, and shall take all necessary corporate action to cause each Material Subsidiary to, provide written evidence to the Agent, including a report which the Agent and the Lenders shall
expressly be entitled to rely on, confirming the completion of the clean-up or remediation of a site with a cost in excess of $5,000,000, including any investigations and monitoring.

	7.3.8.
	The
Borrower shall, and shall take all necessary corporate action to cause each Material Subsidiary to, permit the Agent and its authorized employees, representatives and agents,
at reasonable times and during normal business hours and at the Agent's own cost, upon giving reasonable notice, to visit and inspect any Real Property where the Agent or any Lender, in its reasonable
opinion, believes that the Borrower or any Material Subsidiary may not be in compliance with section 7.3.7. 

 
 

ARTICLE 8.
  CONDITIONS PRECEDENT    
    

8.1.    Conditions Precedent to Closing  

        The obligations of the Lenders to make available the Credit Facility or any part thereof to the Borrower are subject to compliance, on or before the Closing Date,
with each of the following conditions precedent (each of which has been satisfied), which conditions precedent are for the sole and exclusive benefit of the Lenders and may be waived in writing by the
Agent (at the direction of the Lenders in their sole discretion): 

	8.1.1.
	the
representations and warranties set out in Article 6 shall be true and correct on the Closing Date as if made on and as of such date; 

51

 

	8.1.2.
	no
Default or Event of Default shall have occurred and be continuing nor shall it be reasonably anticipated that there be any Default or Event of Default immediately after giving
effect to the execution of the Loan Documents;

	8.1.3.
	except
as set forth in Schedule 8.1.3 of the Disclosure Letter, no Material Adverse Change since the date of the Audited Financial Statements will have occurred;

	8.1.4.
	the
Agent shall have received the following in form and substance satisfactory to the Lenders, acting reasonably:

	8.1.4.1.
	an
Officer's Certificate dated the Closing Date certifying that attached thereto are true and correct copies of the following documents, and that such documents are in full force
and effect, unamended:

	8.1.4.1.1.
	the
articles or constating documents of the Borrower and each Guarantor;

	8.1.4.1.2.
	the
by-laws or other organizational documents of the Borrower and each Guarantor;

	8.1.4.1.3.
	a
certificate of incumbency including sample signatures of officers and directors of the Borrower and each Guarantor who have executed any of the Loan Documents or any other
document delivered to the Agent under this Article 8; and

	8.1.4.1.4.
	the
resolutions or other documentation evidencing that all necessary action, corporate or otherwise, has been taken by the Borrower and each Guarantor to authorize the
execution, delivery and performance of the Loan Documents to which it is a party;

	8.1.4.2.
	a
certificate of status, certificate of good standing or similar certificate with respect to the jurisdiction of incorporation of the Borrower and each Guarantor;

	8.1.4.3.
	an
Officer's Certificate dated the Closing Date confirming sections 8.1.2 and 8.1.3;

	8.1.4.4.
	a
three year management financial forecast for the Borrower and its Subsidiaries on a consolidated basis, with detailed quarterly covenant calculations, copies of which have
previously been delivered to the Agent;

	8.1.4.5.
	an
opinion of Borrower's counsel dated the Closing Date in form and substance satisfactory to the Agent and Lenders, acting reasonably;

	8.1.4.6.
	the
Disclosure Letter in form and substance satisfactory to the Agent and Lenders, acting reasonably; and

	8.1.4.7.
	such
other documentation or information as the Agent and the Lenders shall have reasonably requested;

	8.1.5.
	the
Agent and the Lenders shall have received payment in full of all reasonable invoiced fees and reimbursable out-of-pocket expenses payable by the
Borrower on or prior to the Closing Date hereunder or under any other Loan Document, including payment of all reasonable fees, disbursements and out-of-pocket expenses of
counsel to the Agent and the Lenders; and 

52

 

	8.1.6.
	satisfactory
completion of financial, business, legal, regulatory and environmental due diligence by the Agent and the Lenders, including (without limitation), in respect of the
Borrower's refinancing strategy. 

8.2.    Conditions Precedent to Advances  

        The obligation of the Lenders to make any Advances (other than a Rollover or Conversion) is subject to compliance, on or before the relevant Borrowing Date, with
each of the following conditions precedent, which conditions precedent are for the sole and exclusive benefit of the Lenders and may be waived in writing by the Agent (at the direction of the Lenders
in their sole discretion): 

	8.2.1.
	in
respect only of the initial Advance, an Officer's Certificate executed by the Chief Financial Officer or Controller of the Borrower and dated as of the applicable Borrowing Date
in respect of such Advance providing reasonable evidence of compliance by the Borrower of the financial covenants set forth in section 7.1.18;

	8.2.2.
	the
representations and warranties set out in Article 6 shall be true and correct on the relevant Borrowing Date as if made on and as of such date except if any such
representation and warranty is specifically given in respect of a particular date or particular period of time and relates only to such date or period of time, then such representation and warranty
shall be true and correct as of the date given or for the period of time to which it relates;

	8.2.3.
	no
Default or Event of Default shall have occurred and be continuing nor shall it be reasonably anticipated that there will be any Default or Event of Default immediately after
giving effect to the proposed Advance;

	8.2.4.
	no
Material Adverse Change shall have occurred since the Closing Date in the case of the initial Advance and in the case of each subsequent Advance, since the date of the last
Advance;

	8.2.5.
	if
applicable, the Borrower shall have executed and delivered such standard form Letter of Credit Agreements of the L/C Lender as the L/C Lender may require in respect of such
Advance; and

	8.2.6.
	the
Agent shall have received a Borrowing Notice dated as of the relevant Borrowing Date. 

 
 

ARTICLE 9.
  EVENTS OF DEFAULT AND REMEDIES    
    

9.1.    Events of Default  

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

53

 

	9.1.1.
	default
by the Borrower in payment of any principal when due or any interest within three Banking Days after the same becomes due or any other amount within 10 days after
notice of non-payment thereof is received by the Borrower;

	9.1.2.
	default
by the Borrower or any Guarantor in the performance or observance of any covenant, condition or obligation contained in any Loan Document to which it is a party that does
not require the payment of money to the Agent or any Lender and such default continues for a period of 20 days after the earliest of (x) receipt of notice from the Agent of such default,
and (y) knowledge of the existence of such default by one of the chief executive officer, chief financial officer, controller, general counsel or secretary of the Borrower, unless:

	(i)
	such
default is not capable of being cured within such 20 day period;

	(ii)
	the
Borrower is diligently and in good faith advancing to remedy such default; and

	(iii)
	such
default is in fact remedied within 40 days from expiry of the original 20 day cure period;

	9.1.3.
	the
representation and warranty set out in section 6.1.4 hereof is found to be false or incorrect in any material respect so as to make it materially misleading when made or
deemed to have been made or any other representation or warranty made by the Borrower or any Guarantor herein or in any Officer's Certificate or other document delivered to the Agent or any Lender
pursuant hereto or in connection with any Loan Document is found to be false or incorrect in any respect where the consequences of such misrepresentation or breach of warranty could reasonably be
expected to have a Material Adverse Effect;

	9.1.4.
	any
event shall occur or condition shall exist, and shall continue after the applicable grace period, if any, specified in any agreement or instrument relating to any indebtedness
or liability of the Borrower (other than Obligations) and the effect of such event or condition is to accelerate the maturity of such indebtedness or liability of the Borrower or any Material
Subsidiary which is outstanding in an aggregate principal amount exceeding $5,000,000, or any such indebtedness or liability of the Borrower or any Material Subsidiary which is outstanding in an
aggregate principal amount exceeding $5,000,000 shall be declared to be due and payable prior to the stated maturity thereof; provided, in each case, that it shall not be an Event of Default if the
Borrower or applicable Material Subsidiary is diligently contesting such acceleration or declaration in good faith by appropriate proceedings or has fully repaid the indebtedness accelerated or
declared due but it is acknowledged that in such circumstances such acceleration or declaration shall nevertheless be a Default which would enable the Agent to restrict payments to holders of
Subordinated Debt pursuant to section 7.2.6;

	9.1.5.
	the
Borrower admits in writing or by way of a public or press announcement its inability to pay its debts generally as they become due or otherwise acknowledges in writing or by
way of a public or press announcement its insolvency;

	9.1.6.
	the
Borrower institutes any proceeding or takes any corporate action or executes any agreement to authorize its participation in or commencement of any proceeding:

	9.1.6.1.
	seeking
to adjudicate it a bankrupt or insolvent, or 

54

  

	9.1.6.2.
	seeking
liquidation, dissolution, winding up, reorganization, arrangement, protection, relief or composition of it or any of its property or debt or making a proposal or
application with respect to it under any law relating to bankruptcy, insolvency, reorganization or compromise of debts or other similar laws (including, without limitation, any reorganization,
arrangement or compromise of debt under the laws of its jurisdiction of incorporation);

	9.1.7.
	any
proceeding is commenced against or affecting the Borrower:

	9.1.7.1.
	seeking
to adjudicate it a bankrupt or insolvent;

	9.1.7.2.
	seeking
liquidation, dissolution, winding up, reorganization, arrangement, protection, relief or composition of it or any of its property or debt or making a proposal with
respect to it under any law relating to bankruptcy, insolvency, reorganization or compromise of debts or other similar laws (including, without limitation, any reorganization, arrangement or
compromise of debt under the laws of its jurisdiction of incorporation); or

	9.1.7.3.
	seeking
appointment of a receiver, trustee, agent, custodian or other similar official for it or for any substantial part of its properties and assets; and 

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

	9.1.8.
	any
creditor of the Borrower or any other Person shall privately appoint a receiver, trustee or similar official for any substantial part of the Borrower's properties and assets
having a Replacement Cost greater than $10,000,000 and such appointment is not stayed and is not being contested in good faith by appropriate proceedings or, if so contested, such appointment is not
terminated within 45 days from the original date of such appointment; provided, in each case, the Borrower and its Material Subsidiaries remain current on their respective payroll obligations
during such contest;

	9.1.9.
	any
judgment or order for the payment of money in excess of $10,000,000 shall be rendered against the Borrower which remains unsatisfied and (i) executions shall have been
levied on any property of the Borrower by or on behalf of any creditor in reliance on such judgment or order and (ii) there shall be any period during which a stay of enforcement of such
judgment or order, by reason of a pending appeal or otherwise, shall not be in effect;

	9.1.10.
	if,
at any time after execution and delivery thereof, other than by reason of a wilful act or omission of the Agent or any Lender, (i) any Loan Document ceases to be in
full force and effect (unless within fifteen days of notice of the same being given by the Lenders to the Borrower such Loan Document again has full force and effect); (ii) any Loan Document is
declared by a court or tribunal of competent jurisdiction to be null and void; or (iii) the validity or enforceability of any Loan Document is contested by the Borrower; or (iv) the
Borrower denies in writing that it has any or further liability or obligations under any Loan Document (unless, in the case of an event described in (i) or (ii) above, the Borrower is
able to fully remedy such default within a period of 15 days or the event is one for which the Lenders is wholly responsible); 

55

 
	9.1.11.
	except
in connection with a transaction permitted under section 7.2.4, the Borrower or any Guarantor ceases or threatens in writing or by way of public or press
announcement to cease to carry on business in the ordinary course;

	9.1.12.
	there
occurs a Change in Control; or

	9.1.13.
	any
event shall occur or condition shall exist, and shall continue after the applicable grace period, if any, specified in any note or indenture relating to the Subordinated Debt,
and the effect of such event or condition is to enable the holders of Subordinated Debt to accelerate the maturity of the Subordinated Debt (whether or not the Subordinated Debt is accelerated), or
any Subordinated Debt shall be declared to be due and payable or the Borrower shall be required to repurchase any Subordinated Debt prior to the stated maturity thereof. 

9.2.    Remedies Upon Default  

        Upon the occurrence of any Event of Default, subject to any applicable cure period, the Agent may, and at the direction of the Majority Lenders shall, by notice
given to the Borrower: 

	9.2.1.
	declare
the unutilized portion (if any) of the Aggregate Commitment to be terminated (whereupon the Lenders shall not be required to make any further Advances);

	9.2.2.
	declare
all Obligations to be immediately due and payable; and

	9.2.3.
	take
such actions and commence such proceedings as may be permitted at law or in equity at such times and in such manner as the Lenders in their sole discretion may consider
expedient, 

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

9.3.    Distributions  

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

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ARTICLE 10.
  GUARANTY    
    

10.1.    Guaranty  

	10.1.1.
	Each
Guarantor hereby unconditionally and irrevocably guarantees the punctual payment when due, whether at stated maturity, by acceleration or otherwise, of all Obligations of the
Borrower now or hereafter existing under the Loan Documents, whether for principal, interest, fees, expenses or otherwise (such Obligations being such Guarantor's "Guaranteed Obligations"), and agrees
to pay any and all expenses (including reasonable counsel fees and expenses) incurred by the Agent or any Lender in enforcing any rights under such Guaranty.

	10.1.2.
	Without
limiting the generality of the foregoing, each Guarantor's liability shall extend to all amounts that constitute part of the Guaranteed Obligations that would be owed by
the Borrower to the Agent or the Lenders under the Loan Documents but for the fact that they are unenforceable or not allowable due to the existence of a bankruptcy, reorganization or similar
proceeding involving the Borrower.

	10.1.3.
	Notwithstanding
anything contained herein, in any Guaranty, or in any of the other Loan Documents to the contrary, if the obligations of any Guarantor hereunder exceed the
limitations imposed under any Fraudulent Transfer Law, then such obligations of the Guarantor shall be limited to a maximum aggregate amount equal to the largest amount that would not render its
obligations subject to avoidance as a fraudulent transfer or conveyance under Section 548 of Title 11 of the United States Code or any applicable provisions of comparable state law
(collectively, the "Fraudulent Transfer Laws"), in each case after giving effect to all other liabilities of the Guarantor, contingent or otherwise, that are relevant under the Fraudulent Transfer
Laws (specifically excluding, however, any liabilities of the Guarantor in respect of indebtedness to the Borrower or any other Person that is an Affiliate of the Borrower to the extent that such
indebtedness would be discharged in an amount equal to the amount paid by the Guarantor in respect of the Obligations) and after giving effect (as assets) to the value (as determined under the
applicable provisions of the Fraudulent Transfer Laws) of any rights to subrogation, reimbursement, indemnification or contribution of the Guarantor pursuant to Applicable Law or pursuant to the terms
of any agreement. 

10.2.    Guaranty Absolute  

        Each Guarantor guarantees that the Guaranteed Obligations will be paid in accordance with the terms of the Loan Documents, regardless of any law, regulation or
order now or hereafter in effect in any jurisdiction affecting any of such terms or the rights of the Agent or the Lenders with respect thereto. The obligations of each Guarantor under this Guaranty
are independent of the Guaranteed Obligations or any other Obligations of the Borrower or any other Guarantor under the Loan Documents, and a separate action or actions may be brought and prosecuted
against such Guarantor to enforce this Guaranty, irrespective of whether any action is brought against the Borrower or any other Guarantor or whether the Borrower or any other Guarantor is joined in
any such action or actions. The liability of such Guarantor under this Guaranty shall be irrevocable, absolute and unconditional irrespective of, and each Guarantor hereby irrevocably waives to the
extent permitted by applicable law, any defenses it may now or hereinafter have in any way relating to, any or all of the following: 

	(a)
	any
lack of validity or enforceability of any Loan Document or any agreement or instrument relating thereto; 

57

 

	(b)
	any
change in the time, manner or place of payment of, or in any other term of, all or any of the Guaranteed Obligations, or any other amendment or waiver of or any consent to
departure from any Loan Document, including, without limitation, any increase in the Guaranteed Obligations resulting from the extension of additional credit to the Borrower or any of its
Subsidiaries, or otherwise;

	(c)
	any
change, restructuring or termination of the corporate structure or existence of the Borrower or any of its Subsidiaries; or

	(d)
	any
other circumstance or any existence of or reliance on any representation by the Agent or any Lender that might otherwise constitute a defense available to, or a discharge of, the
Borrower, any Guarantor or any other guarantor or surety. 

        This
Guaranty shall continue to be effective or shall be reinstated, as the case may be, if at any time any payment of any of the Guaranteed Obligations made by the Guarantors is
rescinded or must otherwise be returned by the Agent or any Lender upon the insolvency, bankruptcy or reorganization of the Borrower or otherwise, all as though such payment had not been made.
Notwithstanding the foregoing, the Agent
acknowledges on behalf of the Lenders that the guarantees given by Laurel Racing Assoc., Inc., Laurel Racing Association Limited Partnership, Pimlico Racing Association, Inc., and The
Maryland Jockey Club of Baltimore City are given subject to a subordination and intercreditor agreement in favour of Mercantile-Safe Deposit and Trust Company, as the same may be amended,
modified or restated from time to time. 

10.3.    Waiver  

        Each Guarantor hereby waives promptness, diligence, notice of acceptance and any other notice with respect to any of the Guaranteed Obligations and this Guaranty
and any requirement that the Agent or any Lender exhaust any right or take any action against the Borrower or any other Person. Each Guarantor acknowledges that it will receive direct and indirect
benefits from the financing arrangements contemplated by the Loan Documents and that the waiver set forth in this section 10.3 is knowingly made in contemplation of such benefits. 

10.4.    Continuing Guaranty; Assignments  

        This Guaranty is a continuing guaranty and shall (a) remain in full force and effect until the indefeasible payment in full of the Guaranteed Obligations,
(b) be binding upon each Guarantor, its successors and assigns and (c) inure to the benefit of and be enforceable by the Lenders, the Agent and their respective successors and assigns.
Without limiting the generality of the foregoing clause (c), any Lender may assign or transfer all or any portion of its rights and obligations hereunder (including, without limitation, all or
any portion of its Lender's Commitment and the Advances owing to it) to any assignee or transferee pursuant to and in accordance with section 12.9, and such assignee or transferee shall
thereupon become vested with all the benefits in respect thereof granted to such Lender herein or otherwise. 

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10.5.    Subrogation  

        No Guarantor shall exercise any rights that it may now or hereafter acquire against the Borrower or any other Guarantor that arise from the existence, payment,
performance or enforcement of any Guarantor's Obligations under this Agreement or any other Loan Document, including, without limitation, any right of subrogation, reimbursement, exoneration,
contribution or indemnification and any right to participate in any claim or remedy of the Agent or any Lender against the Borrower or any other Guarantor or any collateral, whether or not such claim,
remedy or right arises in equity or under contract, statute or common law, including, without limitation, the right to take or receive from the Borrower or any other Guarantor, directly or indirectly,
in cash or other property or by set-off or in any other manner, payment or security on account of such claim, remedy or right, unless and until all of the Loans and all other amounts
payable under this Guaranty shall have been paid in full in cash and the Aggregate Commitment shall have expired or terminated. If any amount shall be paid to any Guarantor in violation of the
preceding sentence
at any time prior to the payment in full in cash of the Guaranteed Obligations and all other amounts payable under this Guaranty, such amount shall be held in trust for the benefit of the Agent and
the Lenders and shall forthwith be paid to the Agent to be credited and applied to the Guaranteed Obligations and all other amounts payable under this Guaranty, whether matured or unmatured, in
accordance with the terms of the Loan Documents, or to be held as collateral for any Guaranteed Obligations or other amounts payable under this Guaranty thereafter arising. If (i) any Guarantor
shall make payment to the Agent or any Lender of all or any part of the Guaranteed Obligations, and (ii) all of the Guaranteed Obligations and all other amounts payable under this Guaranty
shall be paid in full in cash, the Agent and the Lenders will, at such Guarantor's request and expense, execute and deliver to such Guarantor appropriate documents, without recourse and without
representation or warranty, necessary to evidence the transfer by subrogation to such Guarantor of an interest in the Guaranteed Obligations resulting from such payment by such Guarantor. 

 
 

ARTICLE 11.
  THE AGENT AND THE ADMINISTRATION OF THE CREDIT FACILITY    
    

11.1.    Appointment and Authorization  

	11.1.1.
	Each
Lender hereby irrevocably appoints and authorizes the Agent to be its attorney in its name and on its behalf to exercise such rights or powers granted to such Lender under
this Agreement and the other Loan Documents on the terms hereof and thereof, together with such powers as are reasonably incidental thereto. Each Lender hereby authorizes the Agent to execute, as
agent for and on its behalf, any of the other Loan Documents wherein it is expressly stipulated that the Agent is acting in such capacity, and each Lender agrees to be bound thereby as principal.

	11.1.2.
	As
to any matters not expressly provided for by this Agreement or the Loan Documents (including, without limitation, enforcement thereof), the Agent shall not be required to
exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the instructions of the
Majority Lenders, and such instructions shall be binding upon all of the Lenders. The Agent shall not be required to take any action which exposes the Agent to liability in such capacity, which could
result in the Agent's incurring any costs and expenses not contemplated by this Agreement or which is contrary to this Agreement or Applicable Law.

	11.1.3.
	The
Agent shall have no duties or obligations other than as expressed herein, which duties are solely of a mechanical and administrative nature. Without limiting the generality of
the foregoing, the Agent does not undertake, and the Lenders relieve the Agent from, any implied duties, responsibilities, obligations or functions and there shall not be construed against the Agent
any implied covenants or terms, whether in respect of matters arising prior to, on, or following the date of this Agreement. The relationship between the Agent and the Lenders is that of agent and
principal only, and the Agent shall not have by reason of this Agreement a fiduciary relationship in respect of any Lenders. 

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11.2.    Duties and Obligations of Agent  

        Neither the Agent nor any of its directors, officers, agents or employees (and, for purposes hereof, the Agent shall be deemed to be contracting as agent for and
on behalf of such Persons) shall be liable to any Lender for any action taken or omitted to be taken by it or them under or in connection with this Agreement or any of the other Loan Documents
(whether before, on or after the date of this Agreement) except for its or their own gross negligence or wilful misconduct. Without limiting the generality of the foregoing, the Agent: 

	(a)
	may
assume that there has been no assignment or transfer by any Lender of its rights hereunder unless and until all of the requirements of section 12.9 have been complied with;

	(b)
	may
consult with legal counsel, independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken in good faith by it
in accordance with the advice of such counsel, accountants or experts;

	(c)
	shall
incur no liability under or in respect of this Agreement or any of the other Loan Documents by acting upon any notice, consent, certificate or other instrument or writing (which
may be by facsimile or other means of electronic communication) believed by it to be genuine and signed or sent by the proper party or parties or by acting upon any representation or warranty of the
Borrower made or deemed to be made hereunder or thereunder;

	(d)
	may
assume that no Default or Event of Default has occurred and is continuing unless it has actual knowledge to the contrary;

	(e)
	may
rely as to any matters of fact which might reasonably be expected to be within the knowledge of any Person upon a certificate signed by or on behalf of such Person;

	(f)
	does
not make any warranty or representation to any Lender nor shall it be responsible to any Lender for the accuracy or completeness of the data made available to any of the Lenders
in connection with the negotiation of this Agreement, or for any statements, warranties or representations (whether written or oral) made in or in connection with this Agreement;

	(g)
	shall
not have any duty to ascertain or to enquire as to the performance or observance of any of the terms, covenants or conditions of this Agreement or any of the other Loan
Documents on the part of the Borrower or to inspect the property (including the books and records) of the Borrower or any of its Material Subsidiaries;

	(h)
	shall
be fully justified in failing or refusing to take any action under this Agreement unless it shall first receive such advice or concurrence of the Majority Lenders as it deems
appropriate or it shall first be indemnified to its satisfaction by the Lenders against any and all liability and expense which may be incurred by it by reason of taking or continuing to take such
action; and 

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	(i)
	shall
not be responsible to any Lender for the due execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or any of the other Loan
Documents or any instrument or document furnished pursuant hereto or thereto or for any failure of the Borrower to perform its obligations hereunder. 

11.3.    Prompt Notice to the Lenders  

        The Agent shall provide to the Lenders copies of all information, notices and reports given to the Agent by the Borrower as soon as practicable after receipt of
the same, except information, notices and reports (i) relating solely to the role of Agent hereunder, (ii) distributed directly by the Borrower to the Lenders pursuant to this Agreement,
or (iii) otherwise considered by the Agent to be irrelevant or immaterial to the Lenders or to any particular category or group thereof. 

11.4.    Agent's Authority to Deal with Borrower  

        With respect to its own participation in the Credit Facility, the Agent shall have the same rights and powers under this Agreement as any other Lender and may
exercise the same as though it were not the Agent. The Agent may accept deposits from, lend money to, and generally engage in any kind of business with the Company or any Affiliate of any of them and
any Person which may do business with any of them, all as if the Agent were not the Agent hereunder and without any duties to account therefor to the Lenders or to any other Person. 

11.5.    Dealings by Borrower with Agent  

        Unless otherwise specifically provided herein, the Borrower shall deal with the Agent in lieu of the Lenders for all purposes of this Agreement. The Borrower may
rely, and shall be fully protected in so relying, without any obligation to inquire into the correctness thereof, upon any action taken, notice, direction, waiver, consent, determination,
communication or agreement by the Agent purporting to be on behalf of the Majority Lenders or the Lenders hereunder, as the case may be, any of which shall, as regards the Borrower, be deemed to be an
action, notice, direction, waiver, consent, determination, communication or agreement of the Majority Lenders or the Lenders, as applicable. 

11.6.    Independent Credit Decisions  

        Each Lender acknowledges that it has itself been, and will continue to be, solely responsible for making its own independent appraisal of and investigations into
the financial condition, creditworthiness, condition, affairs, status and nature of the Company. Accordingly, each Lender confirms with the Agent that it has not relied, and will not hereafter rely,
on the Agent (i) to check or enquire on its behalf into the adequacy, accuracy or completeness of any information provided by the Borrower or any other Person under or in connection with this
Agreement or the transactions herein contemplated (whether or not such information has been or is hereafter distributed to such Lender by the Agent), or (ii) to assess or keep under review on
its behalf the financial condition, creditworthiness, condition, affairs, status or nature of the Borrower or any of its Subsidiaries. Except for notices, reports and other documents expressly
required to be furnished to the Lenders by the Agent hereunder, the Agent shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the business,
operations, property, condition (financial or otherwise), prospects or creditworthiness of the Borrower or its Subsidiaries which may come into the possession of the Agent or any of its officers,
directors, employees or agents. Each Lender acknowledges that a copy of this Agreement and each of the other Loan Documents has been made available to it for review and each Lender acknowledges that
it is satisfied with the form and substance of the same. 

61

 

11.7.    Indemnification  

        Each Lender hereby agrees to indemnify the Agent (to the extent not reimbursed by the Borrower), in accordance with its Rateable Portion, from and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever which may be imposed on, incurred by, or asserted
against the Agent at any time (including, without limitation, at any time following repayment in full of all Obligations) in any way relating to or arising out of this Agreement or any of the other
Loan Documents or any action taken or omitted by the Agent hereunder or thereunder or in respect hereof or thereof; provided that no Lender shall be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from the Agent's gross negligence or wilful misconduct. Without limiting the generality
of the foregoing, each Lender agrees to reimburse the Agent promptly upon demand for its Rateable Portion of any out-of-pocket expenses (including counsel fees) incurred by the
Agent in connection with the preservation of any rights of the Agent or the Lenders as against the Borrower under, or the enforcement of, or legal advice in respect of rights or responsibilities
under, this Agreement and the other Loan Documents, to the extent that the Agent is not reimbursed for such expenses by the Borrower. The indemnity in this section 11.7 shall survive the
payment and satisfaction of all Obligations and the termination of this Agreement. 

11.8.    Successor Agent  

        The Agent may, as hereinafter provided, resign at any time by giving 30 days prior written notice thereof to the Lenders and the Borrower. Upon any such
resignation, the Lenders shall have the right to appoint a successor agent (the "Successor Agent") which shall be one of the Lenders. If no Successor Agent shall have been so appointed by the Lenders
and shall have accepted such appointment within 30 days after the retiring Agent's giving of notice of resignation, then the retiring Agent may, on behalf of the Lenders, appoint a Successor
Agent from among the Lenders acceptable to the Borrower acting reasonably. Upon the acceptance of any appointment as Agent hereunder by a Successor Agent, such Successor Agent shall thereupon succeed
to and become vested with all the rights, powers, privileges and duties of the retiring Agent, and the retiring Agent shall thereupon be discharged from its further duties and obligations as Agent
under this Agreement. The retiring Agent shall cooperate with the Successor Agent in the performance of its duties for a reasonable period of time after such resignation. After any retiring Agent's
resignation hereunder as Agent, the provisions of this Article 11 shall continue to enure to its benefit as to any actions taken or omitted to be taken by it while it was Agent hereunder. 

11.9.    Action by and Consent of Lenders; Waiver and Amendments  

	11.9.1.
	Subject
to section 11.9.3, where the terms of this Agreement or any of the other Loan Documents refer to any action to be taken hereunder or thereunder by the Lenders or to
any such action that requires the consent or other determination of the Lenders, the action taken by and the consent or other determination given or made by the Majority Lenders shall, except to the
extent that this Agreement expressly provides to the contrary, constitute the action or consent or other determination of the Lenders herein or therein referred to, and the Agent may exercise its
powers under section 11.1 based upon such action, consent or other determination.

	11.9.2.
	Subject
to section 11.9.3, this Agreement and any other Loan Document may be amended only if the Borrower and the Majority Lenders so agree in writing, any consent under
this Agreement or any other Loan Document shall be given only by the Agent (at the direction of the Majority Lenders) in writing, and any Event of Default may be waived before or after it occurs only
if the Agent (at the direction of the Majority Lenders) so agrees in writing. Any amendment, consent or waiver so made shall be binding upon all of the Lenders. 

62

 

	11.9.3.
	Any
amendment or waiver which changes or relates to:

	(a)
	the
amount or term of the Loan available hereunder or any Lender's Commitment;

	(b)
	the
amount or dates of payment of principal, interest or fees;

	(c)
	the
notice period required for any Advance;

	(d)
	the
amount or dates of payment of any fees;

	(e)
	the
definition of "Majority Lenders"; or

	(f)
	this
section 11.9; 

shall
require the agreement of all of the Lenders and also (in the case of an amendment) of the Borrower. An amendment or waiver which changes or relates to the rights and/or obligations of the Agent
shall also require the agreement of the Agent thereto. 

	11.9.4.
	Any
waiver and any consent by the Agent or any Lenders under any provision of this Agreement or any other Loan Document may be given subject to any conditions thought fit by the
Person giving that waiver or consent. Any waiver or consent shall be effective only in the instance and for the purpose for which it is given. 

11.10.    Funding of Advances  

	11.10.1.
	Upon
receipt of a Borrowing Notice, the Agent shall forthwith notify each Lender of the proposed Borrowing Date, Rollover Date or Conversion Date, as the case may be, the
principal amount of the relevant Advance, Rollover or Conversion, as the case may be, such Lender's Rateable Portion of any Advance, the account of the Agent to be credited by such Lender (if
applicable) and all other relevant particulars thereof (including, in the case of an issuance of a Letter of Credit, the expiry date thereof and the name of the beneficiary thereof).

	11.10.2.
	Each
Lender shall, not later than 11:00 a.m. (Chicago time) on the relevant Borrowing Date, credit the Agent's account specified in the Agent's notice given under this
section 11.10 with such Lender's Rateable Portion of each Advance in immediately available funds. The Agent will, as soon as reasonably practicable after receiving such funds from the Lenders
and upon fulfilment of all applicable conditions set forth in this Agreement, make the full amount of such funds available to the Borrower by crediting the Borrower's account maintained with the Agent
at the Branch of Account (or causing such account to be credited).

	11.10.3.
	Unless
the Agent has been notified by a Lender by 10:00 a.m. (Chicago time) on the proposed Borrowing Date of any Loan requested by the Borrower that such Lender will not
make available to the Agent its Rateable Portion of such Loan, the Agent may assume that such Lender has made such portion of the Loan available to the Agent on the Borrowing Date in accordance with
the provisions hereof and the Agent may, in reliance upon such assumption, make available to the Borrower on such date a corresponding amount. If and to the extent such Lender shall not have so made
its Rateable Portion of a Loan available to the Agent, such Lender agrees to pay to the Agent forthwith on demand such Lender's Rateable Portion of the Loan and all reasonable costs and expenses
incurred by the Agent in connection therewith together with interest thereon (at the rate payable hereunder by the Borrower in respect of such Loan) for each day from the date such amount is made
available to the Borrower until the date such amount is paid to the Agent, provided, however, that notwithstanding such obligation if such Lender fails to so pay, the Borrower shall, without prejudice
to any rights the Borrower may have against such Lender, repay such amount to the Agent forthwith after demand therefor by the Agent. The amount payable to the Agent pursuant hereto shall be as set
forth in a certificate delivered by the Agent to such Lender and the Borrower (which certificate shall contain reasonable details of how the amount payable is calculated) and shall be  prima facie
evidence of the amount owing. If such Lender makes the payment to the Agent required herein, the amount so paid (otherwise than in respect
of interest and such costs, charges and expenses of the Agent) shall constitute such Lender's Rateable Portion of the Loan for purposes of this Agreement. If the Agent has been notified by a Lender
that such Lender will not make available to the Agent its Rateable Portion of any Loan, the Agent shall have no obligation to make available such amount to the Borrower under any provision of this
Agreement or any Loan Document. 

63

 

	11.10.4.
	The
failure of any Lender to fund its Rateable Portion of a Loan shall not relieve any other Lender of its obligation, if any, hereunder to fund its Rateable Portion of the Loan
on the relevant Borrowing Date and nothing in this Agreement shall limit the rights and remedies that the Borrower, the Agent or any Lender may have against a defaulting Lender. 

11.11.    Remittance of Payments  

	11.11.1.
	As
soon as practicable after receipt of any notice of payment by the Borrower hereunder, the Agent shall give notice to each Lender of the amount of the payment to be made to it
on such day and all other relevant particulars of such payment. Subject to section 11.15, as soon as practicable after receipt of any repayment or prepayment of any Loans under the Credit
Facility or any payment of interest or any other amount payable by the Borrower hereunder, the Agent shall remit to each Lender its Rateable Portion of such payment or prepayment and its respective
entitlement, if any, to any other amount payable by the Borrower hereunder.

	11.11.2.
	If
the Agent, on the assumption that it will receive on any particular date a payment of principal, interest or fees hereunder, remits any amount to the relevant Lender and the
Borrower fails to make such payment, each such Lender agrees to repay to the Agent forthwith on demand the amount so received by it together with all reasonable costs and expenses incurred by the
Agent in connection therewith (to the extent not reimbursed by the Borrower) and interest thereon at the rate and calculated in the manner applicable to the Loan in respect of which such payment was
made for each day from the date such amount is remitted to the relevant Lender. The amount payable to the Agent pursuant hereto shall be as set forth in a certificate delivered by the Agent to each
such Lender, which certificate shall be conclusive and binding for all purposes, absent manifest error. 

11.12.    Redistribution of Payments  

        Except as otherwise expressly contemplated in this Agreement, a Lender (a "Remitting Bank") which obtains any payment (whether voluntary, involuntary, by way of
set-off or otherwise) on account of its portion of a Loan which has not been repaid to the other Lender in accordance with their respective Rateable Portions shall, and the Borrower hereby
irrevocably authorizes any such Lender to, remit such payment or portion thereof to the Agent for redistribution to the Lenders in accordance with their respective Rateable Portions. In any such case,
the Remitting Bank, upon such payment by it to the Agent, shall be deemed for all purposes not to have received from the Borrower that payment so remitted to the Agent, and the Lenders (the "Receiving
Bank") receiving such payment or portions thereof upon a redistribution thereof by the Agent shall be deemed for the purposes hereof to have received such payment or portion thereof (as the case may
be) from the Borrower. If all or part of any such payment made by such Remitting Bank shall be recovered by the Borrower from such Remitting Bank, such amount so paid by such Remitting Bank to the
Agent shall forthwith be repaid by the Receiving Bank to the Agent (for the benefit of the Remitting Bank). 

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11.13.    Notification of Default  

        Each Lender shall promptly notify the Agent, and the Agent shall promptly notify each of the Lenders, of any event of which it has actual notice which constitutes
a Default or an Event of Default. The Agent shall not be deemed to have actual notice of the occurrence of a Default or Event of Default unless the Agent has received notice from any of the Lenders or
the Borrower referring to this Agreement, describing the default and stating that the notice is a "Notice of Default". 

11.14.    Taking and Enforcement of Remedies  

	11.14.1.
	Each
of the Lenders hereby acknowledges that, to the extent permitted by Applicable Law, the remedies provided hereunder and under the other Loan Documents to the Lenders are for
the benefit of the Lenders collectively and acting together and not severally and further acknowledges that its rights hereunder and thereunder are to be exercised collectively by the Agent upon the
instructions of the Majority Lenders. Accordingly, notwithstanding any of the provisions contained herein or therein, each of the Lenders hereby covenants and agrees that it shall not be entitled to
take any action with respect to the Credit Facility, including, without limitation, any election of remedies in respect of an Event of Default hereunder, but that any such action shall be taken only
by the Agent upon the instructions of the Majority Lenders as provided herein. Notwithstanding the foregoing, in the absence of instructions from the Majority Lenders (or, to the extent
section 11.9.3 is applicable, all of the Lenders) where the Agent has requested instructions and in its sole opinion the exigencies of the situation warrant such action, the Agent may without
notice to or consent of the Lenders take such action on behalf of the Lenders as it deems appropriate or desirable in the interests of the Lenders. Each of the Lenders further covenants and agrees
that, upon any such instructions being given to the Agent by the Majority Lenders, it shall cooperate fully with the Agent to the extent requested by the Agent in any remedial action hereunder
including, without limitation, the appointment of a receiver and manager to act for their collective benefit. Each Lender covenants and agrees to do all acts and things and to make, execute and
deliver all agreements and other instruments, including, without limitation, any instruments necessary to effect any registrations, so as to fully carry out the intent and purposes of this
section 11.14.1.

	11.14.2.
	Each
Lender hereby covenants and agrees that it has not heretofore sought, taken, accepted or received and shall not hereafter seek, take, accept or receive any security for any
of the obligations and liabilities of the Borrower hereunder or under the other Loan Documents or under any other document, instrument, writing or agreement ancillary hereto or thereto other than such
security as is provided hereunder or thereunder and shall not enter into any agreement with any of the parties hereto or thereto relating in any manner whatsoever to the Credit Facility, unless all of
the Lenders shall at the same time obtain the benefit of any such security or agreement. 

65

  

	11.14.3.
	Each
of the Lenders and the Borrower further covenants and agrees that all proceeds from the exercise of the rights and remedies provided hereunder and under the Loan Documents,
to the extent permitted by Applicable Law, are held for the benefit of all of the Lenders and, after deduction therefrom of all costs of enforcement, shall be shared among the Lenders proportionately
based upon the respective aggregate amounts of the Obligations which are outstanding to each of the Lenders at the relevant time or times of sharing. To the extent any Lender receives or is entitled
to receive any amount hereunder in excess of the amount of the Obligations owed to it hereunder it shall hold such excess in trust on behalf of and for the benefit of the other Lenders entitled
thereto.

	11.14.4.
	Each
of the Lenders agrees with each of the other Lenders that if it exercises any right of set-off in accordance with the provisions hereof (or otherwise pursuant to
Applicable Law) in connection with any Obligations, it shall promptly so advise the Agent and each of the other Lenders and, to the extent permitted by Applicable Law, the Lenders shall share all such
set-offs in accordance with the provisions of section 11.14.3 hereof, provided that none of the Lenders shall be liable hereunder to any of the other Lenders by reason of failure to
exercise or validly exercise any right of set-off or by reason of any restriction upon any such sharing. 

11.15.    Adjustments to Reflect Rateable Portions  

        All Loans outstanding under the Credit Facility shall be maintained as between the Lenders according to their respective Rateable Portions, except to the extent
that the Agent deems any variations therefrom to be immaterial and except that the L/C Lender shall solely be responsible for making L/C Loans. The Agent shall determine all adjustments to amounts
required to be advanced by the Lenders or to amounts of payments to which the respective Lenders are entitled to reflect as nearly as practicable the respective Rateable Portions of the Lenders under
the Credit Facility. 

11.16.    No Partnership  

        Nothing contained in this Agreement and no action taken by the Lenders pursuant hereto shall be deemed to constitute the Lenders a partnership, association, joint
venture or other collective entity. 

 
 

ARTICLE 12.
  GENERAL    
    

12.1.    Reliance and Non-Merger  

        All covenants, agreements, representations and warranties of the Borrower made herein or in any other Loan Document or in any certificate or other document signed
by any of its directors or officers and delivered by or on behalf of either of them pursuant hereto or thereto are material, shall be deemed to have been relied upon by the Agent and each Lender
notwithstanding any investigation heretofore or hereafter made by the Agent, the Lenders or Lender's Counsel or any employee or other representative of any of them and shall survive the execution and
delivery of this Agreement and the other Loan Documents until there are no Loans outstanding and the Lenders shall have no further obligation to make Advances hereunder. For clarity, this
section 12.1 shall in no way affect the survival of those provisions of this Agreement or any Loan Document which by their terms are stated to survive termination of this Agreement. 

66

 

12.2.    Confidentiality  

        Each of the Agent and each of the Lenders will maintain on a confidential basis (except as otherwise permitted hereunder or as required by Applicable Law) all
information relating to the Borrower and its Subsidiaries provided to it hereunder by the Borrower or any of its Subsidiaries; provided, however, that this section 12.2 shall not apply to any
information which (i) was lawfully in the public domain at the time of communication to the Agent or such Lender, (ii) lawfully enters the public domain through no fault of the Agent or
such Lender subsequent to the time of communication to the Agent or such Lender, (iii) was lawfully in the possession of the Agent or such Lender free of any obligation of confidence at the
time of communication to the Agent or such Lender, or (iv) was lawfully communicated to the Agent or such Lender free of any obligation of confidence subsequent to the time of initial
communication to the Agent or such Lender. 

12.3.    No Set-Off by the Borrower  

        The amounts payable by the Borrower hereunder shall be made in full and shall not be subject to any deduction, withholding, set-off or counterclaim by
the Borrower for any reason whatsoever. 

12.4.    Employment of Experts  

        The Agent may, at any time and from time to time, at its cost if not a responsibility of the Borrower in section 5.4, retain and employ legal counsel,
independent accountants and other experts in order to perform or assist it in the performance of its rights and powers under this Agreement or the other Loan Documents and will advise the Borrower at
any time that it elects to do so. 

12.5.    Reliance by the Lenders  

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

12.6.    Notices  

        Any notice or other communication required or permitted to be given hereunder shall be in writing and shall be given by facsimile or other means of electronic
communication or by hand-delivery or courier as hereinafter provided. Any such notice, if delivered by courier, shall be deemed to be received on the next Banking Day after the date of
delivery thereof, or if sent by facsimile or other means of electronic communication, shall be deemed to have been received on the day sent if sent prior to 2:00 p.m. (Chicago time) on any
Banking Day or otherwise on the next succeeding Banking Day. Notice of change of address shall also be governed by this section 12.6. Notices and other communications shall be addressed as
follows: 

67

 

	(a)
	if
to the Borrower or any Guarantor: 

Magna
Entertainment Corp.

337 Magna Drive

Aurora, Ontario

L4G 7K1 

Attention:
Chief Financial Officer

            And Attention: Corporate Secretary

Facsimile number: (905) 726-7172 

	(b)
	if
to the Agent: 

Bank
of Montreal

115 South LaSalle 17W

Chicago, Illinois

60603 

Attention:
Manager, Client Services

Facsimile number: (312) 293-8965 

	(c)
	if
to the Lenders: 

Bank
of Montreal

115 South LaSalle 17W

Chicago, Illinois

60603 

Attention:
Manager, Client Services

Facsimile number: (312) 293-8965 

	(d)
	if
to the Arranger: 

Bank
of Montreal

115 South LaSalle 17W

Chicago, Illinois

60603 

Attention:
Manager, Client Services

Facsimile number: (312) 293-8965 

12.7.    Time  

        Time is of the essence of the Loan Documents. 

12.8.    Further Assurances  

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

68

 

12.9.    Assignment  

	12.9.1.
	This
Agreement and the other Loan Documents shall enure to the benefit of and be binding on the parties hereto and thereto, their respective successors and any assignee or
transferee of some or all of the parties' rights or obligations under this Agreement and the other Loan Documents as permitted under this section 12.9.

	12.9.2.
	The
Borrower shall not assign or transfer all or any part of its rights or obligations under this Agreement or any of the other Loan Documents without the prior written consent of
all of the Lenders, which consent may be arbitrarily withheld and any such assignment or transfer without consent shall be null and void.

	12.9.3.
	Any
Lender (a "Grantor") may grant participations in all or part of its rights and obligations in respect of the Credit Facility and the Loan Documents to any other Person (a
"Participant"), at such times and upon such terms as it may deem fit, without any obligation to obtain any consent of the Borrower, provided in each case that:

	(a)
	the
Grantor shall remain fully liable for all of its obligations and responsibilities hereunder to the same extent as if such participation had not been granted; and

	(b)
	the
Grantor shall administer the participation of the Participant and neither the Participant nor the Borrower shall have any rights against or obligations to, or deal directly with,
each other in respect of the participation of the Participant.

	12.9.4.
	Any
Lender (an "Assignor") may assign or transfer all or part of its rights in respect of the Credit Facility and the Loan Documents to, and may have its corresponding obligations
in respect thereof assumed by any other Lender or any Affiliate of the Assignor or any Person (the "Assignee") at such times and upon such terms as it may deem fit, in each case, but only after
obtaining the prior written consent of the Borrower (which consent shall not be unreasonably withheld or delayed and shall be provided as soon as practicable, and provided further that the Borrower's
consent shall not be required if an Event of Default has occurred and is continuing), provided in each case that:

	(a)
	without
the Borrower's further prior written consent, no such assignment or transfer shall be permitted that would cause the Borrower to be obligated to make any payments under
section 3.5, 3.6 or 3.7 arising on and as at the date of, and as a result of, such assignment or transfer that it was not otherwise obligated to pay to the Assignor on such date or would not be
obligated to pay on such date but for such assignment or transfer;

	(b)
	the
Assignor and the Assignee shall enter into an assignment and assumption agreement (the "Assignment Agreement") substantially in the form of Schedule 12.9.4,
or otherwise in form and substance satisfactory to the Agent and the Assignor, whereby inter alia the Assignee agrees to be bound by this
Agreement and all Loan Documents relating to the obligations of the Lenders in the place and stead of the Assignor to the extent that the rights and obligations of the Assignor shall have been
assigned or transfererred to and assumed by the Assignee, and shall deliver a copy of the Assignment Agreement so executed to the Agent; 

69

 

	(c)
	the
Assignor shall pay to the Agent for the Agent's own account an administrative fee of $3,500 concurrently with the delivery of the Assignment Agreement to the Agent;

	(d)
	the
Agent shall execute the Assignment Agreement and shall notify the Borrower of the proposed Assignee and the rights and obligations to be assigned or transferred to the Assignee.
The Agent and (if the consent of the Borrower to the assignment or transfer is required) the Borrower shall execute and deliver the Assignment Agreement, and the Agent shall then deliver a copy of the
executed Assignment Agreement to the Assignee and the Assignor. The Borrower shall execute and deliver such other assurances as may be reasonably requested by the Agent to confirm the release and
discharge provided for in clause (e) below;

	(e)
	upon
execution of the Assignment Agreement by the Assignor, the Assignee, the Agent and (if the consent of the Borrower to the assignment or transfer is required) the Borrower, the
assignment or transfer to the Assignee shall be effective upon the date provided in the Assignment Agreement, and the Assignee shall thereafter be and be treated as a Lender for all purposes of this
Agreement and the other Loan Documents and shall be entitled to the full benefit hereof and thereof to the extent of such benefits as are assigned or transferred to it by the Assignor and subject to
the obligations of the Assignor to the same extent as if the Assignee were an original party in respect of the rights and obligations assigned or transferred to and assumed by it, and the Assignor in
respect of such assignment or transfer shall be released and discharged accordingly other than in respect of claims of the Borrower or a Guarantor against the Assignor relating to an event or
circumstances arising, existing or occurring prior to such assignment or transfer;

	(f)
	as
soon as practicable after the assignment or transfer shall have become effective the Agent shall prepare and distribute to the Lenders and to the Borrower an amendment to
Schedule 1.1.61 reflecting the adjustments to the Lender's Commitments after such transfer or assignment, to which amendment the Borrower hereby agrees; and

	(g)
	the
Assignee (other than an Assignee that is an Affiliate of the Assignor) of any Loan outstanding hereunder shall be entitled to receive the principal monies and all interest and all
other monies owing under this Agreement in respect thereof free from all equities or rights of set-off or counterclaim between the Borrower and the original Lender or Lenders that advanced
such Loan and any intermediate Person entitled thereto and all Persons may act accordingly.

	12.9.5.
	The
Borrower and each of the Lenders hereby consent to each and every assignment or transfer which may be made on or after the date hereof in accordance with the terms of
section 12.9.4 and to the release and discharge of every Assignor provided for in clause (e) thereof.

	12.9.6.
	Any
assignment, transfer or grant of a participation by a Lender as contemplated by this section 12.9 shall not constitute a repayment by the Borrower to the Grantor or
Assignor, as the case may be, of the assigned, transferred or participated portion of the Credit Facility, nor an Advance to the Borrower by the Assignee or Participant, as the case may be, and the
parties acknowledge that the Borrower's obligations hereunder with respect to the assigned, transferred or participated portion of Loans will continue and not constitute new obligations. 

70

 

12.10.    Exchange of Information  

        Each Lender may provide to any proposed assignee, transferee or participant such information concerning the financial position and the operations of the Company
as, in the opinion of such Lender, may be relevant or useful in connection with the Credit Facility or any portion thereof proposed to be acquired by such assignee, transferee or participant, provided
that each recipient of such information agrees not to disclose such information to any other Person and to be bound by the terms of section 12.2. 

12.11.    Counterparts  

        This Agreement may be signed in any number of counterparts, each of which shall be deemed to be an original, but all such separate counterparts shall together
constitute one and the same instrument. Delivery of an executed counterpart of a signature page to this Agreement by telecopier shall be effective as delivery of a manually executed counterpart of
this Agreement. 

12.12.    Entire Agreement  

        The Loan Documents constitute the entire agreement between the parties hereto pertaining to the matters therein set forth and supersede and replace any prior
understandings or arrangements pertaining to the Credit Facility. There are no warranties, representations or agreements between the parties in connection with such matters except as specifically set
forth or referred to in the Loan Documents. 

12.13.    Liability of Arranger  

        The Borrower, Agent, each Guarantor and each Lender acknowledges and agrees that the Arranger has only acted in an administrative capacity to facilitate the
establishment and/or maintenance of the Credit Facility and has no responsibility to any of them for (a) the adequacy, accuracy, completeness and reasonableness of
any representation, warranty, undertaking, agreement or statement contained in this Agreement or any Loan Document, or (b) any loss, cost, expense, damage or liability suffered or incurred by
any of them; provided, however, that the Arranger shall have the full benefit of any indemnity of the Borrower or Guarantor provided hereunder or under any Loan Document, including (without
limitation) section 3.8 hereof. 

71

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

	 	 	MAGNA ENTERTAINMENT CORP., as Borrower
	

 	
 	

By:	
 	

 Name:

Title:
	

 	
 	

By:	
 	

 Name:

Title:
	

 	
 	
BAY MEADOWS OPERATING COMPANY LLC, as Guarantor, but only with respect to Article 10 and all other provisions related thereto
	

 	
 	

By:	
 	

 Name:

Title:
	

 	
 	

By:	
 	

 Name:

Title:
	

 	
 	
MEC PENNSYLVANIA RACING, INC., as Guarantor, but only with respect to Article 10 and all other provisions related thereto
	

 	
 	

By:	
 	

 Name:

Title:
	

 	
 	

By:	
 	

 Name:

Title:

	

 	
 	
WASHINGTON TROTTING ASSOCIATION, INC., as Guarantor, but only with respect to Article 10 and all other provisions related thereto
	

 	
 	

By:	
 	

 Name:

Title:
	

 	
 	

By:	
 	

 Name:

Title:
	

 	
 	
MOUNTAIN LAUREL RACING, INC., as Guarantor, but only with respect to Article 10 and all other provisions related thereto
	

 	
 	

By:	
 	

 Name:

Title:
	

 	
 	

By:	
 	

 Name:

Title:
	

 	
 	
GULFSTREAM PARK RACING ASSOCIATION, INC., as Guarantor, but only with respect to Article 10 and all other provisions related thereto
	

 	
 	

By:	
 	

 Name:

Title:
	

 	
 	

By:	
 	

 Name:

Title:

	

 	
 	
PACIFIC RACING ASSOCIATION, as Guarantor, but only with respect to Article 10 and all other provisions related thereto
	

 	
 	

By:	
 	

 Name:

Title:
	

 	
 	

By:	
 	

 Name:

Title:
	

 	
 	
MEC LAND HOLDINGS (CALIFORNIA) INC., as Guarantor, but only with respect to Article 10 and all other provisions related thereto
	

 	
 	

By:	
 	

 Name:

Title:
	

 	
 	

By:	
 	

 Name:

Title:
	

 	
 	
PIMLICO RACING ASSOCIATION, INC., as Guarantor, but only with respect to Article 10 and all other provisions related thereto
	

 	
 	

By:	
 	

 Name:

Title:
	

 	
 	

By:	
 	

 Name:

Title:

	

 	
 	
LAUREL RACING ASSOC., INC., as Guarantor, but only with respect to Article 10 and all other provisions related thereto
	

 	
 	

By:	
 	

 Name:

Title:
	

 	
 	

By:	
 	

 Name:

Title:
	

 	
 	
LAUREL RACING ASSOCIATION LIMITED PARTNERSHIP, as Guarantor, but only with respect to Article 10 and all other provisions related thereto
	

 	
 	

By:	
 	

 Name:

Title:
	

 	
 	

By:	
 	

 Name:

Title:
	

 	
 	
THE MARYLAND JOCKEY CLUB OF BALTIMORE CITY, as Guarantor, but only with respect to Article 10 and all other provisions related thereto
	

 	
 	

By:	
 	

 Name:

Title:
	

 	
 	

By:	
 	

 Name:

Title:

	

 	
 	
MARYLAND RACING, INC., as Guarantor, but only with respect to Article 10 and all other provisions related thereto
	

 	
 	

By:	
 	

 Name:

Title:
	

 	
 	

By:	
 	

 Name:

Title:
	

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

 	
 	

By:	
 	

 Name:

Title:
	

 	
 	

By:	
 	

 Name:

Title:
	

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

 	
 	

By:	
 	

 Name:

Title:
	

 	
 	

By:	
 	

 Name:

Title:

	

 	
 	
BMO NESBITT BURNS, a division of Bank of Montreal, as Arranger
	

 	
 	

By:	
 	

 Name:

Title:
	

 	
 	

By:	
 	

 Name:

Title:

 
 

SCHEDULE 1.1.8    
    

 
  Applicable Margin and Stand-by Fee    

        Pricing
will be on the following grid based on calculation of the ratio of (i) Total Funded Debt less cash to (ii) EBITDA: 

	Total Funded Debt less cash to EBITDA(R)
	 	Base Rate
	 	LIBOR
	 	Stand-By Fee

	R<1.5	 	+0.50%	 	+1.50%	 	0.35%
	 	 	
	 	
	 	

	1.5£R<2.0	 	+1.00%	 	+2.00%	 	0.40%
	 	 	
	 	
	 	

	2.0£R<2.5	 	+1.25%	 	+2.25%	 	0.45%
	 	 	
	 	
	 	

	2.5£R<3.0	 	+1.50%	 	+2.50%	 	0.50%
	 	 	
	 	
	 	

	3.0£R<3.5	 	+1.75%	 	+2.75%	 	0.50%
	 	 	
	 	
	 	

	R33.50	 	+2.00%	 	+3.00%	 	0.625%
	 	 	
	 	
	 	

 
 

SCHEDULE 1.1.18    
    

 
  Borrowing Notice    

TO:
Bank of Montreal, as Agent (the "Agent") 

Re:
Magna Entertainment Corp. 

        Reference
is made to an amended and restated credit agreement (the "Credit Agreement") dated as of June 2, 2003 between Magna Entertainment Corp., as Borrower, the Guarantors, the
Lenders, the Agent and the Arranger. All terms used in this Borrowing Notice which are defined in the Credit Agreement have the meanings attributed thereto in the Credit Agreement. 

        The
Borrower hereby requests a Loan as follows: 

	1.	 	Type of Loan:	 	

	

2.	
 	

Amount of Loan:	
 	

	

3.	
 	

Borrowing Date:	
 	

	

4.	
 	

Interest Period or Letter of Credit term, as applicable:	
 	

	

5.	
 	

Payment instructions (if any):	
 	

	

 	
 	

	

6.	
 	

If Rollover or Conversion of another Loan, provide details of other Loan:
	

 	
 	

A.    Rollover or Conversion:	
 	

	

 	
 	

B.    Type of old Loan:	
 	

	

 	
 	

C.    Type of new Loan:	
 	

	

 	
 	

D.    Amount:	
 	

	

 	
 	

E.    Interest Period:	
 	

        All of the representations and warranties of the Borrower in Article 6 of the Credit Agreement are true and correct on the date hereof as if made on and as
of the date hereof except if any such representation and warranty is specifically given in respect of a particular date or particular period of time and relates only to such date or period of time,
then such representation and warranty shall be true and correct as of the date given or for the period of time to which it relates. This statement shall not apply in connection
with any Rollover or Conversion.

        No
Default or Event of Default has occurred and is continuing nor is it reasonably anticipated that any Default or Event of Default will occur immediately after giving effect to the
aforementioned Loan. This statement shall not apply in connection with any Rollover or Conversion.

        Except
as disclosed in writing by the Borrower to the Agent, no Material Adverse Change since the date of the last Advance (or, in the case of the initial Advance, December 31,
2001) has occurred. This statement shall not apply in connection with any Rollover or Conversion.

        DATED
this    •     day of    •    ,    •    . 

	 	 	MAGNA ENTERTAINMENT CORP.
	

 	
 	

By:	
 	

 Name:

Title:
	

 	
 	

By:	
 	

 Name:

Title:

 
 

SCHEDULE 1.1.61    
    

 
 

Lender's Commitments  

	Lenders	 	Lender's Commitment
	Bank of Montreal, through its Chicago lending office(1)	 	$100,000,000

	(1)
	Until
April 30, 2003 and thereafter, $50,000,000. 

 
 

SCHEDULE 7.1.13    
    

 
  Form of Certificate of the Borrower    
    

To:
Bank of Montreal, as Agent

And To: Bank of Montreal, as Lender

                •    {Add all other Lenders} 

        This
certificate is furnished pursuant to section 7.1.13 of that certain amended and restated credit agreement (the "Credit Agreement") dated as of June 2, 2003 between
Magna Entertainment Corp. (the "Borrower"), the Guarantors, the Lenders, the Agent and the Arranger. All terms used in this Officer's Certificate which are defined in the Credit Agreement have the
meanings attributed thereto in the Credit Agreement. 

 
 

MAGNA ENTERTAINMENT CORP. HEREBY CERTIFIES THAT:    

	1.
	It
has complied with all covenants contained in the Credit Agreement, and all of its representations and warranties are repeated as of the last day of the accounting period to which
this certificate relates, with the same effect as if made and given on and as of such day; except that if any such representation and warranty is specifically given in respect of a particular date or
particular period of time and relates only to such date or period of time, then such representation and warranty shall continue to be given as at such date or for such period of time;

	2.
	The
Borrower has no knowledge of the existence of, any Default or Event of Default under the Loan Agreement during or at the end of the accounting period covered by the attached
financial statements or as of the date of this certificate, except as set forth below. 

        Described
below are the exceptions if any to this Paragraph 2 by specifying the relevant particulars and the period of existence thereof and the action taken, being taken or
proposed to be taken by or on behalf of the Borrower or any Material Subsidiary with respect thereto: 

	3.
	The
Borrower has no knowledge of, any Material Adverse Change since the date of the last financial statements delivered to the Agent pursuant to the Credit Agreement, except as set
forth below. 

        Described
below are the exceptions if any to this Paragraph 3 by specifying the relevant particulars and the period of existence thereof and the action taken, being taken or
proposed to be taken by or on behalf of the Borrower with respect thereto: 

	4.
	The
financial statements attached hereto for the [Fiscal Quarter/Fiscal Year] ended
        •        ,        •        were prepared in accordance with GAAP
(subject to normal
year-end adjustments in the case of interim unaudited financial statements) and fairly present the financial position and results of operations of the Borrower on a consolidated basis for
the period and as at the date thereof. 

	5.
	Set
forth below are the calculations of and financial information evidencing the Borrower's compliance with the financial covenants contained in section 7.1.18 of the Credit
Agreement, all of which computations are true, complete and correct:

	(a)
	Total
Funded Debt less cash to EBITDA 

	Total Funded Debt	 	$
	
	 	 	 	 	 	 
	 	Less Cash	 	 	 	 	$
	
	 	 	 
	 	EBITDA	 	 	 	 	$
	
	 	 	 
	 	Ratio	 	 	 	 	$
	
	to 1.00	 	 

	(b)
	Total
Interest Coverage 

	EBITDA	 	$
	
	 	 	 	 	 	 
	 	Less Taxes	 	 	 	 	$
	
	 	 	 
	 	Less Maintenance Cap. Ex.	 	 	 	 	$
	
	 	 	 
	 	Adjust for Working Capital Changes	 	 	 	 	$
	
	 	 	 
	 	Total Interest Expense	 	 	 	 	$
	
	 	 	 
	 	Ratio	 	 	 	 	$
	
	to 1.00	 	 

For
the purposes of this Paragraph 5, Total Funded Debt shall be measured as at the end of the applicable Fiscal Quarter based on the consolidated financial statements of the Company attached
hereto and calculated in accordance with GAAP, and EBITDA, maintenance Capital Expenditures, Taxes, working capital changes and Total Interest Expense shall be measured for the period comprising the
applicable Fiscal Quarter and the three Fiscal Quarters immediately preceding such Fiscal Quarter based on the consolidated financial statements of the Company attached hereto and calculated in
accordance with GAAP. 

        The
foregoing certifications, and the computations and financial statements delivered with this certificate in support hereof, are made and delivered this
        •        day of        •        ,
        •        . 

	 	 	MAGNA ENTERTAINMENT CORP.
	

 	
 	

By:	
 	

 Name:

Title:

SCHEDULE 12.9.4  

Assignment and Assumption Agreement 

ASSIGNMENT AND ASSUMPTION AGREEMENT

    •    

as
Assignor 

— and — 

    •    

as
Assignee 

— and —

BANK OF MONTREAL, ACTING THROUGH ITS

CHICAGO LENDING OFFICE

as
Agent 

— and — 

MAGNA ENTERTAINMENT CORP.

as
Borrower 

ASSIGNMENT AND ASSUMPTION AGREEMENT

Dated
as of    •    ,    •    

ASSIGNMENT AND ASSUMPTION AGREEMENT

        This
Assignment and Assumption Agreement is made as of    •    ,    •    (the "Assignment Date") among
    •    (the "Assignor"), a Lender under the Credit Agreement referred to and defined hereafter,    •    (the "Assignee"), Bank of
Montreal, acting through its Chicago lending office, as Agent (the "Agent") and Magna Entertainment Corp. (the "Borrower"). 

RECITALS:  

        A.    Pursuant to an amended and restated credit agreement dated as of June 2, 2003 (as amended, supplemented and restated from time to time, the
"Credit Agreement") among the Borrower, the Guarantors, the Agent, the Arranger and the financial institutions specified therein as Lenders (collectively, the "Lenders"), the Lenders have provided the
Credit Facility to the Borrower; 

        B.    The
Assignor has agreed to assign and sell to the Assignee    •    % of its right, title and interest in and to the Credit Facility,
including without limitation    •    % of the Loans outstanding thereunder (the "Assigned Interest"), and the Assignee has agreed to accept and purchase the Assigned
Interest and to assume all liabilities and obligations of the Assignor in respect of the Assigned Interest, all effective as of the Assignment Date; 

 

        C.    The
Borrower has requested that the Assignee enter into an agreement pursuant to section 12.9.4 of the Credit Agreement and the Borrower has agreed to acknowledge
the release and assumption of the Assigned Interest hereunder. 

        NOW THEREFORE, in consideration of the foregoing premises, the sum of $10.00 now paid by the Assignor to the Assignee and for other good
and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 

	1.
	Definitions.    All terms defined in the Credit Agreement which appear herein without definition shall have the meanings
attributed thereto in the Credit Agreement.

	2.
	Conveyance of Assigned Interest.    The Assignor hereby assigns, sells, conveys and transfers to the Assignee all of its
undivided interest in and to the Assigned Interest, effective as of the Assignment Date, without recourse, representation or warranty of any kind except as expressly set forth in section 4.1
hereof.

	3.
	Assumption.    The Assignee hereby accepts and purchases the Assigned Interest, effective as of the Assignment Date, and the
Assignee hereby agrees to be bound by the terms and conditions of the Credit Agreement and the other Loan Documents as if it was an original lender and acknowledges and expressly assumes in the name,
place and stead of the Assignor all obligations and liabilities attaching to the Assigned Interest and agrees to perform the terms, conditions and agreements on its part to be performed as a Lender in
respect thereof under the Credit Agreement and the other Loan Documents.

	4.
	Representations of Assignor.

	4.1
	The Assignor hereby represents and warrants and the Borrower hereby acknowledges that:

	4.1.1
	as
of the Assignment Date, the types of Loans outstanding and the outstanding principal amount under the Assigned Interest and interest and fees accrued and unpaid in respect
thereof are as set forth on Schedule "A" hereto; and

	4.1.2
	as
of the Assignment Date, there are no outstanding Borrowing Notices [except as follows:    •    ].
[Note: This Agreement may need to be modified if the Assignment Date occurs during an Interest Period or at such time as a Letter of Credit is
outstanding.]

 

	4.2
	The Assignor hereby represents and warrants to the Assignee that: 
	4.2.1
	the
Assignor has full power and authority and has taken all action necessary to execute and deliver, to perform its obligations under and to consummate the transactions contemplated
by this assignment and assumption agreement and any and all other documents and instruments to be delivered by it in connection with this assignment and assumption agreement; and 

2

 

	4.2.2
	the
Assignor is the sole legal and beneficial owner of the Assigned Interest, and the Assigned Interest is free and clear of any Liens created by the Assignor in respect of the
Assigned Interest.

 

	4.3
	It is understood and agreed that, except for the representations and warranties set forth herein, the assignment and assumption made
hereunder are without recourse to the Assignor and the Assignor makes no further representations or warranties whatsoever, express or implied.

	5.
	Representation of Borrower.    The Borrower hereby consents to the assignment of the Assigned Interest to the Assignee and
represents and warrants that, as of the Assignment Date, no Default or Event of Default has occurred and is continuing.

	6.
	Release by the Borrower.    The Borrower hereby acknowledges the release of the Assignor from all obligations and liabilities
relating to the Assigned Interest in respect of the period from and after the Assignment Date and acknowledges the assumption of all such liabilities and obligations by the Assignee, effective as of
the Assignment Date.

	7.
	Assignor's and Assignee's Commitment.    As of and from the Assignment Date, and after giving effect to the increase in the
Lender's Commitment of the Assignee, the Lender's Commitment of the Assignor and Assignee and the Loans outstanding thereunder shall be as set forth in Schedule "B" hereto.

	8.
	Assignee's Acknowledgement.    The Assignee hereby acknowledges that it has received a copy of the Credit Agreement, the other
Loan Documents and such other documents and information as it has deemed appropriate to make its own credit analysis and determination to enter into this assignment and assumption agreement.

	9.
	Recognition as Lenders.    The parties hereto acknowledge that the Assignee is, by virtue of compliance with, and subject to,
the terms and provisions of section 12.9.4 of the Credit Agreement, as of and from the Assignment Date, a Lender under and as defined in the Credit Agreement for the purposes thereof and for
the purposes of all other Loan Documents.

	10.
	Notice.    The Assignee's address for notice is as follows:    •    .

	11.
	Governing Law.    This assignment and assumption agreement shall be governed by and construed in accordance with the laws of
the State of New York.

	12.
	Enurement.    This assignment and assumption agreement shall enure to the benefit of and be binding upon the parties hereto
and their respective successors and permitted assigns.

	13.
	Counterparts.    This assignment and assumption agreement may be signed in any number of counterparts, each of which shall be
deemed an original, but all such separate counterparts shall constitute one and the same instrument. 

3

 

        IN WITNESS WHEREOF the parties have executed this assignment and assumption agreement under the hands of their proper officers duly
authorized in that behalf as of the date first above written. 

	 	 	[ASSIGNOR], as Assignor
	

 	
 	

Per:	

 
	 	 	 	
 Authorized Signing Officer
	

 	
 	

Per:	

 
	 	 	 	
 Authorized Signing Officer
	

 	
 	
[ASSIGNEE], as Assignee
	

 	
 	

Per:	

 
	 	 	 	
 Authorized Signing Officer
	

 	
 	

Per:	

 
	 	 	 	
 Authorized Signing Officer
	

 	
 	
MAGNA ENTERTAINMENT CORP.
	

 	
 	

Per:	

 
	 	 	 	
 Authorized Signing Officer
	

 	
 	

Per:	

 
	 	 	 	
 Authorized Signing Officer
	

 	
 	
BANK OF MONTREAL, acting through its Chicago lending office, in its capacity as Agent
	

 	
 	

Per:	

 
	 	 	 	
 Authorized Signing Officer
	

 	
 	

Per:	

 
	 	 	 	
 Authorized Signing Officer

4

 
 

Schedule "A"    
    

        [insert type and principal amount of Loans outstanding and interest/fees in relation
thereto]

 
 

Schedule "B"    
    

	Assignor's Commitment and Loans
 
	 	Commitment
	 	Loans

	Lender's Commitment	 	$	•	 	$	•

	Assignee's Commitment and Loans
 
	 	Commitment
	 	Loans

	Lender's Commitment	 	$	•	 	$	•

QuickLinks

TABLE OF CONTENTS

ARTICLE 1. INTERPRETATION

ARTICLE 2. CREDIT FACILITY

ARTICLE 3. GENERAL PROVISIONS RELATING TO THE CREDIT FACILITY

ARTICLE 4. LETTERS OF CREDIT

ARTICLE 5. INTEREST AND FEES

ARTICLE 6. REPRESENTATIONS AND WARRANTIES

ARTICLE 7. COVENANTS

ARTICLE 8. CONDITIONS PRECEDENT

ARTICLE 9. EVENTS OF DEFAULT AND REMEDIES

ARTICLE 10. GUARANTY

ARTICLE 11. THE AGENT AND THE ADMINISTRATION OF THE CREDIT FACILITY

ARTICLE 12. GENERAL

SCHEDULE 1.1.8

Applicable Margin and Stand-by Fee

SCHEDULE 1.1.18

Borrowing Notice

SCHEDULE 1.1.61

Lender's Commitments

SCHEDULE 7.1.13

Form of Certificate of the Borrower

MAGNA ENTERTAINMENT CORP. HEREBY CERTIFIES THAT

Schedule "A"

Schedule "B"QuickLinks
 -- Click here to rapidly navigate through this document

Exhibit 10.7  

EXECUTION COPY  

 
 

REGISTRATION RIGHTS AGREEMENT

 
 

AMONG
  
    MAGNA ENTERTAINMENT CORP.
  
    AND
  
    BANK AUSTRIA CREDITANSTALT AG  
  

          DATED AS OF June 2, 2003  

        REGISTRATION RIGHTS AGREEMENT dated as of June 2, 2003, between Magna Entertainment Corp.,
a Delaware corporation (together with any successor entity, herein referred to as the "Company"), and Bank Austria Creditanstalt AG (the
"Initial Purchaser"). 

        This
Agreement is made pursuant to the Purchase Agreement dated May 20, 2003, between the Company and the Initial Purchaser (the "Purchase
Agreement"). The Initial Purchaser has agreed to purchase from the Company $100,000,000 in aggregate principal amount of the Company's 8.55% Convertible Subordinated Notes due
June 15, 2010 (the "Notes"). The Notes will be convertible into fully paid, nonassessable shares of the Company's Class A Subordinate
Voting Stock, par value $0.01 per share (the "Class A Subordinate Voting Stock"), on the terms, and subject to the conditions, set forth in the
Indenture (as defined herein). To induce the Initial Purchaser to purchase the Notes, the Company has agreed to provide the registration rights set forth in this Agreement pursuant to
Section 6(m) of the Purchase Agreement. 

        The
parties hereby agree as follows: 

        1.    Definitions.    As used in this Agreement, the following capitalized terms shall have the following meanings: 

        Action:    As defined in Section 6(c) hereof. 

        Additional Interest:    As defined in Section 3(a) hereof. 

        Advice:    As defined in Section 4(c)(ii) hereof. 

        Affiliate:    As such term is defined in Rule 405 under the Securities Act. 

        Agreement:    This Registration Rights Agreement. 

        Blue Sky Application:    As defined in Section 6(a) hereof. 

        Broker-Dealer:    Any broker or dealer registered under the Exchange Act. 

        Business Day:    A day other than a Saturday or Sunday or any federal holiday in the
United States or any holiday in the Province of Ontario, Canada. 

        Class A Subordinate Voting Stock:    As defined in the preamble hereto. 

        Closing Date:    The date of this Agreement. 

        Commission:    The Securities and Exchange Commission. 

        Company:    As defined in the preamble hereto. 

        Effectiveness Period:    As defined in Section 2(a)(iii) hereof. 

        Effectiveness Target Date:    As defined in Section 2(a)(ii) hereof. 

 

        Euroclear:    Euroclear, S.A./N.V., as operator of the Euroclear system, and any and all
successors thereto. 

        Exchange Act:    The Securities Exchange Act of 1934, as amended. 

        Filing Deadline:    As defined in Section 2(a)(i) hereof. 

        Holder:    A Person who owns, beneficially or of record, Transfer Restricted Securities. 

        Indemnified Holder:    As defined in Section 6(a) hereof. 

        Indenture:    The Indenture dated as of June 2, 2003, among the Company and The Bank of
New York, as trustee, pursuant to which the Notes are to be issued, as such Indenture is amended, modified or supplemented from time to time in accordance with the terms thereof. 

        Initial Purchaser:    As defined in the preamble hereto. 

        Interest Payment Date:    As defined in the Indenture. For purposes of this Agreement, if no Notes are
outstanding, "Interest Payment Date" shall mean each June 15th and December 15th. 

        Majority of Holders:    Holders holding more than 50% in aggregate principal amount of the Notes
outstanding at the time of determination; provided, however, that, for purposes of this definition, a holder of shares of Class A Subordinate
Voting Stock that constitute Transfer Restricted Securities that were previously issued upon conversion of Notes shall be deemed to hold an aggregate principal amount of Notes (in addition to the
principal amount of Notes held by such holder) equal to the product of (x) the number of such shares of Class A Subordinate Voting Stock held by such holder and (y) the conversion
price, at the time such Notes were converted, as determined in accordance with Article 4 of the Indenture. 

        NASD:    National Association of Securities Dealers, Inc. 

        Notes:    As defined in the preamble hereto. 

        Notice and Questionnaire:    The Selling Securityholder Notice and Questionnaire in substantially the
form attached as Exhibit A hereto. 

        Paying Agent:    As defined in the Indenture. 

        Person:    An individual, partnership, limited liability company, corporation, unincorporated
organization, trust, joint venture or a government or agency or political subdivision thereof. 

        Prospectus:    The prospectus included in a Registration Statement, as amended or supplemented by any
prospectus supplement and by all other amendments thereto, including post-effective amendments, and all material incorporated by reference into such Prospectus. 

2

 

        Purchase Agreement:    As defined in the preamble hereto. 

        Record Holder:    With respect to any Interest Payment Date, each Person who is a Holder on the record
date with respect to such Interest Payment Date. In the case of a Holder of shares of Class A Subordinate Voting Stock issued upon conversion of the Notes, "Record Holder" shall mean each
Person who is a Holder of shares of Class A Subordinate Voting Stock that constitute Transfer Restricted Securities on the June 1st or December 1st
immediately preceding such Interest Payment Date. 

        Registration Default:    As defined in Section 3(a) hereof. 

        Registration Statement:    As defined in Section 2(a)(i) hereof. 

        Rule 144:    Rule 144 promulgated under the Securities Act. 

        Rule 144A:    Rule 144A promulgated under the Securities Act. 

        Securities Act:    The Securities Act of 1933, as amended. 

        Suspension Period:    As defined in Section 4(b)(i) hereof. 

        TIA:    The Trust Indenture Act of 1939, as amended to date, and as in effect on the date the Indenture
is qualified under the TIA. 

        Transfer Restricted Securities:    Each Note and each share of Class A Subordinate Voting Stock
issued upon conversion of Notes until the earliest to occur of: 

        (i)    the
date on which such Note or such share of Class A Subordinate Voting Stock issued upon conversion thereof has been effectively registered for resale under the
Securities Act and disposed of in accordance with the Registration Statement; 

        (ii)    the
date on which such Note or such share of Class A Subordinate Voting Stock issued upon conversion thereof (A) has been transferred in compliance with
Rule 144 or (B) may be sold or transferred pursuant to Rule 144; and 

        (iii)    the
date on which such Note or such share of Class A Subordinate Voting Stock issued upon conversion thereof ceases to be outstanding (whether as a result of
redemption, repurchase and cancellation, conversion or otherwise). 

        Trustee:    The Bank of New York or any successors, as trustee, under the Indenture. 

        Underwritten Registration or Underwritten Offering:    A registration in which securities of the Company
are sold to an underwriter for reoffering to the public. 

        2.    Registration.

        (a)    The
Company shall: 

3

 

        (i)    not
later than 60 days after the Closing Date (the "Filing Deadline"), cause a registration statement to be filed
pursuant to Rule 415 under the Securities Act (the "Registration Statement"), which Registration Statement shall provide for resales of all
Transfer Restricted Securities held by Holders that have provided the information required pursuant to the terms of Section 2(b) hereof; 

        (ii)    use
commercially reasonable efforts to cause the Registration Statement to be declared effective by the Commission as promptly as is practicable, but in no event later
than one hundred and twenty (120) days after the Closing Date (the "Effectiveness Target Date"); and 

        (iii)    use
commercially reasonable efforts to keep the Registration Statement continuously effective, supplemented and amended as required by the provisions of
Section 4(b) hereof to the extent necessary to ensure that: (A) it is available for resales by the Holders of Transfer Restricted Securities entitled to the benefit of this Agreement and
(B) conforms with the requirements of this Agreement and the Securities Act and the rules and regulations of the Commission promulgated thereunder as announced from time to time, for a period
(the "Effectiveness Period") of: 

        (1)    two
years from the date of this Agreement; or 

        (2)    such
shorter period that will terminate on the first date that none of the Notes or the shares of Class A Subordinate Voting Stock issued on conversion of the
Notes are Transfer Restricted Securities; 

provided that, for greater certainty, the Company shall not be obligated to file a prospectus with the securities commission or similar
regulatory authority in any of the provinces or territories of Canada. 

        (b)    The
Company shall, at least twelve (12) Business Days prior to the date on which the Registration Statement becomes effective, provide written notice (which may
be sent and delivered through Euroclear by the Trustee at the request of the Company) to each Holder (which notice shall be accompanied by a copy of a Notice and Questionnaire to be completed by such
Holder) that the Company has filed the Registration Statement pursuant to this Agreement and that the Holder must complete and return the enclosed Notice and Questionnaire in accordance with this
Section 2(b) in order to be named as a selling securityholder in the Registration Statement and Prospectus. Each Holder agrees that if such Holder wishes to sell Transfer Restricted Securities
pursuant to the Registration Statement and Prospectus, it will deliver a Notice and Questionnaire as promptly as practicable upon receipt of such notice from the Company but in no event later than the
second Business Day immediately preceding the date set forth in the Company's written notice as the date on which the Registration Statement is expected to be declared effective by the Commission. Any
Holder that does not complete a Notice and Questionnaire and deliver it to the Company as required above shall not be named as a selling securityholder in the Registration Statement at the time is
declared effective; provided, however, that if a Holder does not receive written notice directly from the Company (or the Trustee on behalf of the Company) as required by this Section 2(b)
within the time period required by this Section 2(b), then, if any such Holder furnishes a Notice and Questionnaire to the Company at least five (5) Business Days prior to any intended
distribution of Transfer Restricted Securities under the Registration Statement, such Holder shall be named in the Registration Statement and the related Prospectus as a selling securityholder by way
of a post-effective amendment to the Registration Statement and a supplement to the Prospectus to be filed in accordance with the provisions of this Section 2(b) below. The Company
shall include in the Registration Statement at the time it is first declared effective, the name of each Holder that provided a Notice and Questionnaire to the Company in accordance with this
Section 2(b), and from and after the date the Registration Statement is initially declared effective, the Company shall use commercially reasonable efforts to file with the Commission,
as promptly as practicable after the date a Notice and Questionnaire is delivered to the Company, if required by this Section 2(b) or by applicable law, a post-effective
amendment to the Registration Statement or prepare and, if required by this Section 2(b) or by applicable law, file a supplement to the related Prospectus or a supplement or
amendment to any document incorporated therein by reference or file any other document required under the Securities Act so that the Holder delivering such Notice and Questionnaire is named as a
selling securityholder in the Registration Statement and the Prospectus in such a manner as to permit such Holder to deliver such Prospectus to purchasers of the Transfer Restricted Securities in
accordance with applicable law. If the Company files a post-effective amendment to the Registration Statement, the Company shall use commercially reasonable efforts to cause such
post-effective amendment to 

4

 

be
declared effective under the Securities Act as promptly as is practicable. Any Holder who, subsequent to the date the Registration Statement is declared effective, provides a Notice and
Questionnaire required by this Section 2(b) pursuant to the provisions of this Section (whether or not such Holder supplied the Notice and Questionnaire at the time the Registration Statement
was declared effective) shall be named as a selling securityholder in the Registration Statement and Prospectus in accordance with the requirements of this Section 2(b); provided, however, that
the Company shall not be obligated to file more than one (1) post-effective amendment or supplement in any twenty-five (25) day period following the date a Notice
and Questionnaire is first delivered to the Company from and after the date the Registration Statement is declared effective for the purpose of naming Holders as selling securityholders who are not
named in such Registration Statement at the time of effectiveness. Each Holder as to which the Registration Statement is being effected agrees to furnish promptly to the Company all information
required to be disclosed in order to make information previously furnished to the Company by such Holder not materially misleading. 

        3.    Additional Interest.

        (a)    If:

        (i)    the
Registration Statement is not filed with the Commission prior to or on the Filing Deadline; 

        (ii)    the
Registration Statement has not been declared effective by the Commission prior to or on the Effectiveness Target Date; 

5

 

        (iii)    subject
to the provisions of Section 4(b)(i) hereof, the Registration Statement is filed and declared effective but, during the Effectiveness Period, thereafter
ceases to be effective or fails to be usable for its intended purpose without being succeeded within three (3) Business Days by a post-effective amendment to the Registration
Statement or within five (5) Business Days by a report filed with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act that cures such failure and, in the
case of a post-effective amendment, is itself, within two (2) Business Days of filing, declared effective; or 

        (iv)    after
the 60th consecutive day in any 90-day period or the 105th day in any 365-day period, as the case may be, of any Suspension Period, the
suspension referred to in Section 4(b)(i) hereof has not been terminated, 

(each
such event referred to in foregoing clauses (i) through (iv), a "Registration Default"), the Company hereby agrees to make
additional payments ("Additional Interest") with respect to the Transfer Restricted Securities to the Record Holders thereof from and including the day
on which the Registration Default occurs to but excluding the day on which the Registration Default has been cured. Additional Interest shall accrue to each Record Holder on the Transfer Restricted
Securities during such period at a rate of 0.5% per annum on the amount of Transfer Restricted Securities (such amount determined as described below). 

        (b)    The
amount of Transfer Restricted Securities shall be determined as follows (x) with respect to the Notes, the aggregate principal amount of all such Notes
outstanding, (y) with respect to the shares of Class A Subordinate Voting Stock into which the Notes have been converted, the aggregate number of such shares of Class A
Subordinate Voting Stock outstanding multiplied by the Conversion Price (as defined in the Indenture) at the time such Notes were converted, and (z) with respect to combinations thereof, the
sum of (x) and (y) for the relevant Transfer Restricted Securities. 

        (c)    All
accrued Additional Interest shall be paid in cash in arrears to Record Holders by the Company on each Interest Payment Date by way of a deposit of immediately
available funds, sufficient to pay such accrued Additional Interest, with the Paying Agent. The rate of accrual of the Additional Interest with
respect to any period shall not exceed 0.5% per annum notwithstanding the occurrence of multiple concurrent Registration Defaults. Following the cure of all Registration Defaults relating to any
Transfer Restricted Securities, the accrual of Additional Interest with respect to such Transfer Restricted Securities shall cease. 

        Additional
Interest shall cease to accrue on any Transfer Restricted Security at the time said security ceases to be a Transfer Restricted Security; provided that all obligations of the
Company to pay Additional Interest accrued prior to such time as set forth in this Section 3 shall survive until such time as all such obligations with respect to such Transfer Restricted
Security have been satisfied in full. 

        The
Additional Interest set forth above shall be the exclusive monetary remedy available to the Holders of Transfer Restricted Securities for Registration Defaults. 

6

 

        4.    Registration Procedures.

        (a)    In
connection with the Registration Statement, the Company shall comply with all the provisions of Section 4(b) hereof and shall use commercially reasonable
efforts to effect such registration to permit the sale of the Transfer Restricted Securities being sold in accordance with the intended method or methods of distribution thereof, and pursuant thereto
and in accordance with Section 2(a) hereof, shall prepare and file with the Commission a Registration Statement relating to the registration on any appropriate form under the Securities Act. 

        (b)    In
connection with the Registration Statement and any Prospectus required by this Agreement to permit the sale or resale of Transfer Restricted Securities, the Company,
at its own expense, shall: 

        (i)    Subject
to any notice by the Company in accordance with this Section 4(b) of the existence of any fact or event of the kind described in
Section 4(b)(iii)(D), use commercially reasonable efforts to keep the Registration Statement continuously effective during the Effectiveness Period; upon the occurrence of any event that would
cause the Registration Statement or the Prospectus contained therein (A) to contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein (in the case of the Prospectus, in light of the circumstances under which they were made) not misleading or (B) to not be effective or usable for the
resale of Transfer Restricted Securities during the Effectiveness Period, file promptly an appropriate amendment to the Registration Statement or a report filed with the Commission pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act, in the case of clause (A), correcting any such misstatement or omission, and, in the case of either clause (A)
or (B), use commercially reasonable efforts to cause such amendment to be declared effective and the Registration Statement and the related Prospectus to become usable for their intended
purposes as soon as practicable thereafter. Notwithstanding the foregoing, the Company may suspend the availability of the Registration Statement, without being required to pay any Additional
Interest, upon
written notice to the Holders (which notice shall be accompanied by an instruction to suspend the use of the Prospectus), for one or more periods not to exceed sixty (60) consecutive days in
any 90-day period, and not to exceed, in the aggregate, one hundred and five (105) days in any 365-day period (each such period, a "Suspension
Period") if: 

        (A)    an
event occurs and is continuing that, in the Company's good faith judgment, would require the Company to make changes in the Registration Statement or the Prospectus
in order that the Registration Statement or the Prospectus does not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make
the statements therein (in the case of the Prospectus, in light of the circumstances under which they were made) not misleading; and 

7

 

        (B)    the
Company reasonably determines that the disclosure of such event at such time would have a material adverse effect on the business of the Company (and its
subsidiaries, if any, taken as a whole). 

        (ii)    Prepare
and file with the Commission such amendments and post-effective amendments to the Registration Statement as may be necessary to keep the
Registration Statement effective during the Effectiveness Period; cause the Prospectus to be supplemented by any required Prospectus supplement, and as so supplemented to be filed pursuant to
Rule 424 under the Securities Act, and to comply fully with the applicable provisions of Rules 424 and 430A under the Securities Act in a timely manner; and comply with the
provisions of the Securities Act with respect to the disposition of all securities covered by the Registration Statement during the applicable period in accordance with the intended method or methods
of distribution by the selling securityholders set forth in the Registration Statement or supplement to the Prospectus. 

        (iii)    Advise
the underwriter(s), if any, and the Holders promptly (but in any event within five (5) Business Days) and, if requested by such Persons, confirm such
advice in writing: 

        (A)    when
the Registration Statement, the Prospectus or any amendment, supplement or post-effective amendment thereto has been filed, and, with respect to the
Registration Statement or any post-effective amendment thereto, when the same has become effective, 

        (B)    of
any request by the Commission for amendments to the Registration Statement or amendments or supplements to the Prospectus or for additional information relating
thereto, 

        (C)    of
the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement under the Securities Act or of the suspension by any state
securities commission of the qualification of the Transfer Restricted Securities for offering or sale in any jurisdiction, or the initiation of any proceeding for any of the preceding purposes, or 

        (D)    of
the existence of any fact or the happening of any event, during the Effectiveness Period, that makes any statement of a material fact made in the Registration
Statement, the Prospectus, any amendment or supplement thereto, or any document incorporated by reference therein untrue, or that requires the making of any additions to or changes in the Registration
Statement or the Prospectus in order to make the statements therein (in the case of the Prospectus, in light of the circumstances under which they were made) not misleading. 

        (iv)    If
at any time the Commission shall issue any stop order suspending the effectiveness of the Registration Statement, or any state securities commission or other
regulatory authority shall issue an order suspending the qualification or exemption from qualification of the Transfer Restricted Securities under state securities or Blue Sky laws, use commercially
reasonable efforts to obtain the withdrawal or lifting of such order at the earliest possible time. 

8

 

        (v)    Furnish
to the Initial Purchaser before filing with the Commission, a copy of the Registration Statement and copies of any Prospectus included therein, which documents
will be subject to the review of the Initial Purchaser, for a period of at least five (5) Business Days, and the Company will not file the Registration Statement or Prospectus to which the
Initial Purchaser shall reasonably object within such five (5) Business Day period without first making revisions that are reasonably acceptable to the Initial Purchaser. The Company shall also
furnish to the Initial Purchaser before filing with the Commission, if reasonably practicable, or otherwise promptly after filing with the Commission, copies of any amendments to the Registration
Statement or supplements to the Prospectus, and shall make the Company's representatives reasonably available for discussion of such amendments or supplements and make such changes in such amendments
or supplements prior to the filing thereof, if reasonably practicable, or prepare and file further amendments or supplements, as the Initial Purchaser may reasonably request (it being understood that
a request to correct a material misstatement or omission is an example of one such reasonable request). 

        (vi)    Make
available at reasonable times for inspection by one or more representatives of the selling Holders (designated in writing by a Majority of Holders whose Transfer
Restricted Securities are included in the Registration Statement), any underwriter participating in any distribution pursuant to the Registration Statement, and any attorney or accountant retained by
such selling Holders or any of the underwriter(s), all financial and other records, pertinent corporate documents and properties of the Company as shall be reasonably necessary to enable them to
exercise any applicable due diligence responsibilities, and cause the Company's officers, directors, managers and employees to supply all information reasonably requested by any such representative or
representatives of the selling Holders, underwriter, attorney or accountant in connection with the Registration Statement after the filing thereof and before its effectiveness; provided, however, that
(A) each such representative of the selling Holders, underwriter(s), attorney or accountant will be required to agree in writing that records and information obtained by it as a result of such
inspections shall be deemed confidential and shall not be used by it as the basis for any market transactions in the securities of the Company unless and until such is made generally available to the
public through no fault of such representative of the selling Holders, underwriter(s), attorney or accountant or a selling Holder, and (B) each selling Holder of such Transfer Restricted
Securities will be required further to agree in writing that it will, upon learning that the disclosure of such records or information is sought in a court of competent jurisdiction, or in connection
with any action, suit or proceeding, give notice to the Company and allow the
Company at its expense to undertake appropriate action to prevent disclosure of the records and information deemed confidential. 

9

 

        (vii)    If
reasonably requested by any selling Holders or the underwriter(s), if any, promptly incorporate in the Registration Statement or Prospectus, pursuant to a
supplement or post-effective amendment if necessary, such information as such selling Holders and underwriter(s), if any, may request to have included therein, including, without
limitation: (A) information relating to the "Plan of Distribution" of the Transfer Restricted Securities, (B) information with respect to the principal amount of Notes or number of
shares of Class A Subordinate Voting Stock being sold to such underwriter(s), (C) the purchase price being paid therefor and (D) any other terms of the offering of the Transfer
Restricted Securities to be sold in such offering; provided, however, that with respect to any information requested for inclusion by a selling Holder, this clause (vii) shall apply only to
such information that relates to the Transfer Restricted Securities to be sold by such selling Holder; and make all required filings of such Prospectus supplement or post-effective
amendment as soon as reasonably practicable after the Company is notified of the matters to be incorporated in such Prospectus supplement or post-effective amendment. 

        (viii)    Furnish
to each selling Holder and each of the underwriter(s), if any, without charge, at least one conformed copy of the Registration Statement, as first filed with
the Commission, and of each amendment thereto (without any documents incorporated by reference therein or exhibits thereto (or exhibits incorporated in such exhibits by reference) unless requested). 

        (ix)    Deliver
to each selling Holder and each of the underwriter(s), if any, without charge, as many copies of the Prospectus (including each preliminary prospectus) and any
amendment or supplement thereto as such Persons may reasonably request; subject to any notice by the Company in accordance with this Section 4(b) of the existence of any fact or event of the
kind described in Section 4(b)(iii)(D), the Company hereby consents to the use of the Prospectus and any amendment or supplement thereto by each of the selling Holders and each of the
underwriter(s), if any, in connection with the offering and the sale of the Transfer Restricted Securities covered by the Prospectus or any amendment or supplement thereto. 

        (x)    If
an underwriting agreement is entered into and the registration is an Underwritten Registration, the Company shall: 

        (A)    upon
request, furnish to each underwriter and, in the case of clause (1), to each selling Holder, in such substance and scope as they may reasonably
request and as are customarily made by issuers to underwriters in primary underwritten offerings, upon the date of closing of any sale of Transfer Restricted Securities in an Underwritten
Registration: 

10

  

        (1)    a
certificate, dated the date of such closing, signed by the Chief Financial Officer of the Company confirming, as of the date thereof, the matters set forth in
Section 6(g) of the Purchase Agreement and such other matters as such parties may reasonably request; 

        (2)    opinions,
each dated the date of such closing, of counsel to the Company (including the Company's general counsel) covering such of the matters as are customarily
covered in legal opinions to underwriters in connection with primary underwritten offerings of securities; and 

        (3)    customary
comfort letters, dated the date of such closing, from the Company's independent accountants (and from any other accountants whose report is contained or
incorporated by reference in the Registration Statement), in the customary form and covering matters of the type customarily covered in comfort letters to underwriters in connection with primary
underwritten offerings of securities; 

        (B)    set
forth in full in the underwriting agreement, if any, indemnification provisions and procedures which provide rights no less protective than those set forth in
Section 6 hereof with respect to all parties to be indemnified by the Company; and 

        (C)    deliver
such other documents and certificates as may be reasonably requested by such parties to evidence compliance with clause (A) above and with any customary
conditions contained in the underwriting agreement or other agreement entered into by the selling Holders pursuant to this clause (x). 

        (xi)    Before
any public offering of Transfer Restricted Securities, cooperate with the selling Holders, the underwriter(s), if any, and their respective counsel in connection
with the registration and qualification of the Transfer Restricted Securities under the securities or Blue Sky laws of such jurisdictions as the selling Holders or underwriter(s), if any, may
reasonably request and do any and all other acts or things necessary or customary to enable the disposition in such jurisdictions of the Transfer Restricted Securities covered by the Registration
Statement; provided, however, that the Company shall not be required (A) to register or qualify as a foreign corporation or a dealer of
securities where it is not now so qualified or to take any action that would subject it to the service of process in any jurisdiction where it is not now so subject or (B) to subject themselves
to taxation in any such jurisdiction if they are not now so subject. 

        (xii)    Cooperate
with the selling Holders and the underwriter(s), if any, to facilitate the timely preparation and delivery of certificates representing Transfer Restricted
Securities to be sold and not bearing any restrictive legends (unless required by applicable securities laws) and enable such Transfer Restricted Securities to be in
such denominations and registered in such names as the Holders or the underwriter(s), if any, may request at least two (2) Business Days before any sale of Transfer Restricted Securities made
by such Holders or underwriter(s). 

11

 

        (xiii)    Subject
to Section 4(b)(i) hereof, if any fact or event contemplated by Section 4(b)(iii)(D) hereof shall exist or have occurred, use commercially
reasonable efforts to prepare a post-effective amendment to the Registration Statement or an amendment or supplement to the related Prospectus or any document incorporated therein by
reference or file any other required document so that, as thereafter delivered to the purchasers of Transfer Restricted Securities, the Prospectus will not contain an untrue statement of a material
fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. 

        (xiv)    Provide
CUSIP, ISIN and Common Code numbers for all Transfer Restricted Securities not later than the effective date of the Registration Statement and provide the
Trustee with certificates for the Notes and any Class A Subordinate Voting Stock issued upon conversion thereof that are in a form eligible for deposit with Euroclear. 

        (xv)    Cooperate
and assist in any filings required to be made with the NASD and in the performance of any due diligence investigation by any underwriter that is required to
be retained in accordance with the rules and regulations of the NASD. 

        (xvi)    Otherwise
use commercially reasonable efforts to comply with all applicable rules and regulations of the Commission and all reporting requirements under the rules and
regulations of the Exchange Act. 

        (xvii)    Cause
the Indenture to be qualified under the TIA not later than the effective date of the Registration Statement required by this Agreement, and, in connection
therewith, cooperate with the Trustee and the holders of Notes to effect such changes to the Indenture as may be required for such Indenture to be so qualified in accordance with the terms of the TIA,
and execute and use commercially reasonable efforts to cause the Trustee thereunder to execute all documents that may be required to effect such changes and all other forms and documents required to
be filed with the Commission to enable such Indenture to be so qualified in a timely manner. 

        (xviii)    Cause
all Transfer Restricted Securities (other than the Notes that have been designated for trading in the PORTALSM Market and may be listed on a
European exchange on or before the date of this Agreement) covered by the Registration Statement to be listed or quoted, as the case may be, on each securities exchange or automated quotation system
on which similar securities issued by the Company are then listed or quoted. 

12

 

        (xix)    Provide
promptly to each Holder, upon written request, each document filed with the Commission pursuant to the requirements of Section 13 and Section 15
of the Exchange Act after the effective date of the Registration Statement. 

        (xx)    Enter
into such customary agreements and take all such other actions, if any, as Holders of at least 25% in aggregate principal amount of the Transfer Restricted
Securities may reasonably request in order to facilitate the disposition of the Transfer Restricted Securities pursuant to the Registration Statement. 

        (c)    Each
Holder agrees by acquisition of a Transfer Restricted Security that, upon receipt of any notice from the Company of the existence of any fact of the kind described
in Section 4(b)(iii)(D) hereof and during any Suspension Period, such Holder will, and will use commercially reasonable efforts to cause any underwriter(s) in an Underwritten Offering to,
forthwith discontinue disposition of Transfer Restricted Securities pursuant to the Registration Statement until: 

        (i)    such
Holder has received copies of the supplemented or amended Prospectus contemplated by Section 4(b)(v) hereof; or 

        (ii)    such
Holder is advised in writing (the "Advice") by the Company (or the Trustee on behalf of the Company) that the use
of the Prospectus may be resumed, and has received copies of any additional or supplemental filings that are incorporated by reference in the Prospectus. 

If
so directed by the Company, each Holder will deliver to the Company (at the Company's expense) all copies, other than permanent file copies then in such Holder's possession, of the Prospectus
covering such Transfer Restricted Securities that was current at the time of receipt of such notice of suspension. 

        5.    Registration Expenses.    All expenses incident to the Company's performance of or compliance with this
Agreement shall be borne by the Company regardless of whether a Registration Statement becomes effective, including, without limitation: 

        (i)    all
registration and filing fees and expenses (including filings made by the Initial Purchaser, Holders or underwriter(s), if any, with the NASD); 

        (ii)    all
fees and expenses of compliance with federal securities and state Blue Sky or securities laws; 

        (iii)    all
expenses of printing (including printing of Prospectuses and certificates for the Class A Subordinate Voting Stock to be issued upon conversion of the
Notes), messenger and delivery services and telephone; 

13

 

        (iv)    all
fees and disbursements of counsel to the Company; 

        (v)    all
application and filing fees in connection with listing (or authorizing for quotation) the Class A Subordinate Voting Stock on a national securities exchange
or automated quotation system pursuant to the requirements hereof; 

        (vi)    all
fees and disbursements of independent certified public accountants of the Company (including the expenses of any special audit and comfort letters required by or
incident to such performance); and 

        (vii)    all
fees and expenses of the Initial Purchaser (including reasonable fees and disbursements of counsel to the Initial Purchaser) in connection with any amendment,
modification or supplement to this Agreement. 

The
Company shall bear its internal expenses (including, without limitation, all salaries and expenses of its officers and employees performing legal, accounting or other duties), the expenses of any
annual audit and the fees and expenses of any Person, including special experts, retained by the Company. The Company shall not be required to pay any fees and disbursements of counsel to the Initial
Purchaser or Holders of Transfer Restricted Securities in connection with the preparation and filing of the Registration Statement or any amendment or supplement thereto, except as specifically
provided herein. 

        6.    Indemnification and Contribution.

        (a)    The
Company shall indemnify and hold harmless each Holder, such Holder's officers and employees and each person, if any, who controls such Holder within the meaning of
the Securities Act (each Holder and each of its respective officers, employees and any such control person being an "Indemnified Holder"), from and
against any loss, claim, damage or liability, joint or several, or any action in respect thereof (including, but not limited to, any loss, claim, damage, liability or action relating to resales of the
Transfer Restricted Securities), to which such Indemnified Holder may become subject, insofar as any such loss, claim, damage, liability or action arises out of, or is based upon: 

        (i)    any
untrue statement or alleged untrue statement of a material fact contained in (A) the Registration Statement or Prospectus or any amendment or supplement
thereto or (B) any blue sky application or other
document or any amendment or supplement thereto prepared or executed by the Company (or based upon written information furnished by or on behalf of the Company expressly for use in such blue sky
application or other document or amendment on supplement) filed in any jurisdiction specifically for the purpose of qualifying any or all of the Transfer Restricted Securities under the securities law
of any state or other jurisdiction (such application or document being hereinafter called a "Blue Sky Application"); or 

        (ii)    the
omission or alleged omission to state therein any material fact required to be stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, 

14

 

and
shall reimburse each Indemnified Holder promptly upon demand for any legal or other expenses reasonably incurred by such Indemnified Holder in connection with investigating or defending or
preparing to defend against any such loss, claim, damage, liability or action as such expenses are incurred; provided, however, that the Company shall
not be liable in any such case to the extent that any such loss, claim, damage, liability or action arises out of, or is based upon, any untrue statement or alleged untrue statement or omission or
alleged omission made in the Registration Statement or Prospectus or amendment or supplement thereto or Blue Sky Application in reliance upon and in conformity with written information furnished to
the Company by or on behalf of any Holder (or its related Indemnified Holder) specifically for use therein or out of the failure by the Indemnified Holder to furnish to any purchaser of its Restricted
Transfer Security of the Prospectus and any supplement or amendment thereto in the form provided to such Indemnified Holder by the Company. The foregoing indemnity agreement is in addition to any
liability that the Company may otherwise have to any Indemnified Holder. 

        (b)    Each
Holder, severally and not jointly, shall indemnify and hold harmless the Company, their respective officers and employees, their respective directors and each
person, if any, who controls the Company within the meaning of the Securities Act, from and against any loss, claim, damage or liability, joint or several, or any action in respect thereof, to which
the Company, or any such director, officer, employee or controlling person may become subject, insofar as any such loss, claim, damage or liability or action arises out of, or is based upon: 

        (i)    any
untrue statement or alleged untrue statement of any material fact contained in the Registration Statement or Prospectus or any amendment or supplement thereto or any
Blue Sky Application; or 

        (ii)    the
omission or the alleged omission to state therein any material fact required to be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, 

but
in each case only to the extent that such untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with written information
furnished to the
Company by or on behalf of such Holder (or its related Indemnified Holder) specifically for use therein, and shall reimburse the Company, and any such director, officer, employee or controlling person
promptly upon demand for any legal or other expenses reasonably incurred by the Company, or any such director, officer, employee or controlling person in connection with investigating or defending or
preparing to defend against any such loss, claim, damage, liability or action as such expenses are incurred. The foregoing indemnity agreement is in addition to any liability that any Holder may
otherwise have to the Company, or any of their respective directors, officers, employees or controlling persons and any such director, officer, employee or controlling person. 

15

 

        (c)    Promptly
after receipt by an indemnified party under subsection (a) or (b) above of notice of any claims or the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party under such subsection, notify each party against whom indemnification is to be sought in writing of
the claim or the commencement thereof (but the failure so to notify an indemnifying party shall not relieve it from any liability which it may have under this Section 6). In case any such claim
or action is brought against any indemnified party, and it notifies an indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate therein, and to the extent
it may elect by written notice delivered to the indemnified party promptly after receiving the aforesaid notice from such indemnified party, to assume the defense thereof with counsel satisfactory to
such indemnified party. Notwithstanding the foregoing, the indemnified party or parties shall have the right to employ its or their own counsel in any such case, but the fees and expenses of such
counsel shall be at the expense of such indemnified party or parties, other than reasonable costs of investigation, unless (i) the employment of such counsel shall have been authorized in
writing by one of the indemnifying parties in connection with the defense of such action, (ii) the indemnifying parties shall not have employed counsel to have charge of the defense of such
action within a reasonable time after notice of commencement of the action or (iii) such indemnified party or parties shall have reasonably concluded that there may be defenses available to it
or them that are different from or additional to those available to one or all of the indemnifying parties (in which case the indemnifying parties shall not have the right to direct the defense of
such action on behalf of the indemnified party or parties), in any of which events the fees and expenses of one counsel selected by all the indemnified parties to represent them all shall be borne by
the indemnifying parties. No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement or compromise of, or consent to the entry of judgment with
respect to, any pending or threatened action in respect of which the indemnified party is or reasonably could have been a party and indemnity or contribution may be or could have been sought hereunder
by the indemnified party (an "Action"), unless such settlement, compromise or judgment (x) includes an unconditional release of the indemnified
party from all liability on claims that are the subject matter of such action and (y) does not include a statement as to or an admission of fault, culpability or a failure to act, by or on
behalf of the indemnified party. No indemnified party shall, without the prior written consent of the indemnifying party, effect any settlement or compromise of, or consent to the entry of judgment
with respect to, any Action. 

        (d)    If
the indemnification provided for in this Section 6 shall for any reason be unavailable or insufficient to hold harmless an indemnified party under
Section 6(a) or 6(b) in respect of any loss, claim, damage or liability (or action in respect thereof) referred to therein, each indemnifying party shall, in lieu of indemnifying such
indemnified party, contribute to the amount paid or payable by such indemnified party as a result of such loss, claim, damage or liability (or action in respect thereof): 

        (i)    in
such proportion as is appropriate to reflect the relative benefits received by the Company from the offering and sale of the Transfer Restricted Securities on the one
hand and a Holder with respect to the sale by such Holder of the Transfer Restricted Securities on the other; or 

        (ii)    if
the allocation provided by clause (6)(d)(i) is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits
referred to in clause 6(d)(i) but also the relative fault of the Company on the one hand and the Holder on the other in connection with the statements or omissions or alleged statements or
alleged omissions that resulted in such loss, claim, damage or liability (or action in respect thereof), as well as any other relevant equitable considerations. 

16

 

The
relative benefits received by the Company on the one hand and a Holder on the other with respect to such offering and such sale shall be deemed to be in the same proportion as the total net
proceeds from the offering of the Notes (before deducting expenses) received by the Company, on the one hand, bear to the total proceeds received by such Holder with respect to its sale of Transfer
Restricted Securities on the other. The relative fault of the parties shall be determined by reference to whether the untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Company on the one hand or the Holders on the other, the intent of the parties and their relative knowledge, access to
information and opportunity to correct or prevent such statement or omission. The Company, and each Holder agree that it would not be just and equitable if the amount of contribution pursuant to this
Section 6(d) were determined by pro rata allocation or by any other method of allocation that does not take into account the equitable considerations referred to in the first sentence of
this Section 6(d). The amount paid or payable by an indemnified party as a result of the loss, claim, damage or liability, or action in respect thereof, referred to above in this
Section 6 shall be deemed to include, for purposes of this Section 6, any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or
defending or preparing to defend any such action or claim. Notwithstanding the provisions of this Section 6, no Holder shall be required to contribute any amount in excess of the amount by
which the total price at which the Transfer Restricted Securities purchased by it were resold exceeds the amount of any damages which such Holder has otherwise been required to pay by reason of any
untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Holders' obligations to contribute as provided in this Section 6(d) are several and not
joint. 

        7.    Rule 144 and 144A.    The Company shall use commercially reasonable efforts to file the reports
required to be filed by it under the Securities Act and the Exchange Act in a timely manner and, if at any time the Company is not required to file such reports, it will, upon the request of any
Holder, make publicly available other information so long as necessary to permit sales of their securities pursuant to Rules 144 and 144A. The Company covenants that it will take such
further action as any Holder may reasonably request, all to the extent required from time to time to enable such Holder to sell Transfer Restricted Securities without registration under the Securities
Act within the limitation of the exemptions provided by Rules 144 and 144A (including the requirements of Rule 144A(d)(4)). Upon the written request of any Holder, the Company
shall deliver to such Holder a written statement as to whether it has complied with such requirements. The Company will provide a copy of this Agreement to prospective purchasers of Notes identified
to the Company by the Initial Purchaser upon written request. 

17

 

        8.    Participation in Underwritten Registrations.    No Holder may participate in any Underwritten Registration
hereunder unless such Holder: 

        (i)    agrees
to sell such Holder's Transfer Restricted Securities on the basis provided in any underwriting arrangements approved by the Persons entitled hereunder to approve
such arrangements; and 

        (ii)    completes
and executes all reasonable questionnaires, powers of attorney, indemnities, underwriting agreements, lock-up letters and other documents required
under the terms of such underwriting arrangements. 

        9.    Selection of Underwriters.    The Holders of Transfer Restricted Securities covered by the Registration
Statement who desire to do so may sell such Transfer Restricted Securities in an Underwritten Offering. In any such Underwritten Offering, the investment banker or investment bankers and manager or
managers that will administer the offering will be selected by a Majority of Holders whose Transfer Restricted Securities are included in such offering; provided,
however, that such investment bankers and managers must be reasonably satisfactory to the Company. 

        10.    Miscellaneous.

        (a)    Remedies.    The Company acknowledges and agrees that any failure by the Company to comply with its obligations
under Section 2 hereof may result in material irreparable injury to the Initial Purchaser or the Holders for which there is no adequate remedy at law, that it will not be possible to measure
damages for such injuries precisely and that, in the event of any such failure, the Initial Purchaser or any Holder may obtain such relief as may be required to specifically enforce the Company's
obligations under Section 2 hereof. The Company further agrees to waive the defense in any action for specific performance that a remedy at law would be adequate. 

        (b)    Adjustments Affecting Transfer Restricted Securities.    The Company shall not, directly or indirectly, take
any action with respect to the Transfer Restricted Securities as a class that would adversely affect the ability of the Holders of Transfer Restricted Securities to include such Transfer Restricted
Securities in a registration undertaken pursuant to this Agreement. 

        (c)    No Inconsistent Agreements.    The Company shall not, on or after the date of this Agreement, enter into any
agreement with respect to its securities that interferes with the rights granted to the Holders in this Agreement or otherwise conflicts with the provisions hereof. In addition, the Company shall not
grant to any of its security holders (other than the holders of Transfer Restricted Securities in such capacity) the right to
include any of its securities in the Registration Statement provided for in this Agreement other than the Transfer Restricted Securities. 

        (d)    Amendments and Waivers.    This Agreement may not be amended, modified or supplemented, and waivers or consents
to or departures from the provisions hereof may not be given, unless the Company has obtained the written consent of a Majority of Holders; provided
that the Company and the Initial Purchaser may amend, modify or supplement this Agreement in any manner that does not adversely affect the Holders. 

18

 

        (e)    Notices.    All notices and other communications provided for or permitted hereunder shall be made in writing
(except if the context expressly permits otherwise) by hand-delivery, first-class mail (registered or certified, return receipt requested), telecopier, or air courier guaranteeing
overnight delivery: 

        (i)    if
to a Holder, at the address set forth on the records of the registrar under the Indenture or the transfer agent of the Class A Subordinate Voting Stock, as the
case may be, or if such notice is to be given by the Trustee on behalf of the Company, through Euroclear; and 

        (ii)    if
to the Company: 

Magna
Entertainment Corp.

337 Magna Drive

Aurora, Ontario, L46 7K1

Canada

Attn: Corporate Secretary

Telephone: (905) 726-2462

Facsimile: (905) 726-7172 

With
a copy to: 

Sidley
Austin Brown & Wood LLP

787 Seventh Avenue

New York, New York, 10019

U.S.A.

Attn: Scott M. Freeman

Telephone: (212) 839-5300

Facsimile: (212) 839-5599 

        All
such notices and communications shall be deemed to have been duly given at: the time delivered by hand, if personally delivered; the time broadcasted and posted by Euroclear, if
delivered by the Trustee on behalf of the Company; five (5) Business Days after being deposited in the mail, postage prepaid, if mailed; when receipt acknowledged, if telecopied; and on the
next Business Day, if timely delivered to an air courier guaranteeing overnight delivery. 

        (f)    Successors and Assigns.    This Agreement shall inure to the benefit of and be binding upon the successors and
assigns of each of the parties, including without limitation and without the need for an express assignment, subsequent Holders of Transfer Restricted Securities; provided,
however, that (i) this Agreement shall not inure to the benefit of or be binding upon a successor or assign of a Holder unless and to the extent such successor or assign
acquired Transfer Restricted Securities from such Holder and (ii) nothing contained herein shall be deemed to permit any assignment, transfer or other disposition of Transfer Restricted
Securities in violation of the terms of the Purchase Agreement or the Indenture. 

19

 

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

        (h)    Securities Held by the Company or its Affiliates.    Whenever the consent or approval of Holders of a specified
percentage of Transfer Restricted Securities is required hereunder, Transfer Restricted Securities held by the Company or its Affiliates shall not be counted in determining whether such consent or
approval was given by the Holders of such required percentage. 

        (i)    Headings.    The headings in this Agreement are for convenience of reference only and shall not limit or
otherwise affect the meaning hereof. 

        (j)    Governing Law.    This Agreement shall be governed by, and construed in accordance with, the law of the State
of New York. 

        (k)    Severability.    If any one or more of the provisions contained herein, or the application thereof in any
circumstance, is held invalid, illegal or unenforceable, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall
not be affected or impaired thereby. 

        (l)    Entire Agreement.    This Agreement is intended by the parties as a final expression of their agreement and
intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto
in respect of the subject matter contained herein. There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein with respect to the registration
rights granted by the Company with respect to the Transfer Restricted Securities. This Agreement supersedes all prior agreements and understandings between the parties with respect to such subject
matter. 

20

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

	 	 	MAGNA ENTERTAINMENT CORP.
	

 	
 	

By:	
 	

 Name:

Title:
	

 	
 	

By:	
 	

 Name:

Title:
	

 	
 	

BANK AUSTRIA CREDITANSTALT AG
	

 	
 	

By:	
 	

 Name:

Title:

  

Exhibit A  

 
 

MAGNA ENTERTAINMENT CORP.
  FORM OF SELLING SECURITYHOLDER NOTICE AND QUESTIONNAIRE

        The undersigned beneficial holder of 8.55% Convertible Subordinated Notes due June 15, 2010 (the "Notes") of Magna Entertainment Corp. (the "Company") or
Class A Subordinate Voting Stock, par value $0.01 per share (the "Class A Subordinate Voting Stock" and, together with the Notes, the "Registrable Securities"), of the Company,
understands that the Company has filed or intends to file with the Securities and Exchange Commission a registration statement on an appropriate form for the registration of the resale under
Rule 415 of the Securities Act (the "Shelf Registration Statement") of the Registrable Securities in accordance with the terms of the Registration Rights Agreement dated as of June 2,
2003 (the "Registration Rights Agreement"), among the Company and the initial purchaser party thereto. A copy of the Registration Rights Agreement is available from the Company upon request at the
address set forth below. 

        Each
beneficial owner of Registrable Securities is entitled to the benefits of the Registration Rights Agreement. In order to sell or otherwise dispose of any Registrable Securities
pursuant to the Shelf Registration Statement, a beneficial owner of Registrable Securities generally will be required to be named as a selling securityholder in the related prospectus, deliver a
prospectus to purchasers of Registrable Securities and be bound by those provisions of the Registration Rights Agreement applicable to such beneficial owner (including certain indemnification
provisions, as described below). Any beneficial owner of Notes wishing to include its Registrable Securities in the Shelf Registration Statement must deliver to the Company a properly completed and
signed selling securityholder Notice and Questionnaire. Beneficial owners that do not complete this Notice and Questionnaire and deliver it to the Company as provided below will not be named as
selling securityholders in the prospectus and therefore will not be permitted to sell any Registrable Securities pursuant to the Shelf Registration Statement. Beneficial owners are encouraged to
complete and deliver this Notice and Questionnaire prior to the effectiveness of the Shelf Registration Statement so that such beneficial owners may be named as selling securityholders in the related
prospectus. Upon receipt of a completed and signed Notice and Questionnaire from a beneficial owner following the effectiveness of the Shelf Registration Statement, the Company will, as promptly as
practicable after such receipt, file such amendments to the Shelf Registration Statement or supplements to the related prospectus as are necessary to permit such beneficial owner to deliver such
prospectus to purchasers of Registrable Securities; provided, however, that the Company shall not be obligated to file more than one (1) post-effective amendment or supplement in
any twenty-five (25) day period following the date a Notice and Questionnaire is first delivered to the Company from and after the date the
Registration Statement is declared effective for the purpose of naming beneficial owners as selling securityholders who are not named in such Registration Statement at the time of effectiveness. 

        Certain
legal consequences arise from being named as a selling securityholder in the Shelf Registration Statement and the related prospectus. Accordingly, holders and beneficial owners
of Registrable Securities are advised to consult their own securities law counsel regarding the consequences of being named or not being named as a selling securityholder in the Shelf Registration
Statement and the related prospectus. 

A-1

 
 
 

NOTICE

        The undersigned beneficial owner (the "selling securityholder") of Registrable Securities hereby gives notice to the Company of its intention to sell or otherwise
dispose of Registrable Securities beneficially owned by it and listed below in Item 3 (unless otherwise specified under Item 3) pursuant to the Shelf Registration Statement. 

        Pursuant
to the Registration Rights Agreement, the undersigned has agreed to indemnify and hold harmless the Company's officers and directors and each person, is any, who controls the
Company within the meaning of either Section 15 of the Securities Act or Section 20 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), from and against certain
losses arising in connection with statements concerning the undersigned made in the Company's Shelf Registration Statement or the related prospectus in reliance upon the information provided in this
Notice and Questionnaire. 

        If
the selling securityholder transfers all or any portion of the Registrable Securities listed in Item 3 below after the date on which such information is provided to the
Company, the selling securityholder agrees to notify the transferee(s) at the time of the transfer of its rights and obligations under this Notice and Questionnaire and the Registration Rights
Agreement. 

        The
undersigned, by signing and returning this Notice and Questionnaire, understands and agrees that it will be bound by the terms and conditions of this Notice and Questionnaire and the
Registration Rights Agreement. The undersigned hereby provides the following information to the Company and represents and warrants that such information is accurate and complete: 

A-2

  

 
 

QUESTIONNAIRE

        Please
respond to every item, even if your response is "none". If you need more space for any response, please attached additional sheets of paper. Please be sure to indicate your name
and the number of the item being responded to on each such additional sheet of paper, and to sign each such additional sheet of paper before attaching it to this Notice and Questionnaire. Please note
that you may be asked to answer additional questions depending on your responses to the following questions. 

	1.	(a)	Full legal name of selling securityholder:
	

 	

 	

	 	(b)	Full legal name of registered Holder (if not the same as (a) above) through which Registrable Securities listed in (3) below are held:
	

 	

 	

	

 	

(c)	

Full legal name of Euroclear participant (if applicable and if not the same as (b) above) through which Registrable Securities listed in (3) below are held.

Name of Broker:

Euroclear No:

Contact Person:

Telephone (including area code):
	

 	

(d)	

Are you a broker-dealer registered pursuant to Section 15 of the Exchange Act?
	

 	

 	

                        Yes
	

 	

 	

                        No
	

 	

(e)	

If your response to Item 1(d) above is "no", are you an "affiliate" of a broker-dealer registered pursuant to Section 15 of the Exchange Act? For the purposes of this Item 1(e), an "affiliate" of a registered broker-dealer shall
include any company that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such broker-dealer, and does not include any individuals employed by such broker-dealer or its
affiliates.
	

 	

 	

                        Yes
	

 	

 	

                        No
	

2.	

 	

Address for notices to selling securityholder:
	

 	

 	

	

 	

 	

	

 	

 	

	 	 	Telephone (including area code):

	 	 	Fax (including area code):

	 	 	Contact Person:

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	3.	 	Beneficial ownership of Registrable Securities:
	 	(a)	Type and Principal Amount of Registrable Securities beneficially owned:
	

 	

 	

	

 	

 	

	 	(b)	CUSIP No(s). of such Registrable Securities beneficially owned:
	

 	

 	

	

 	

 	

	4.	 	Nature of Beneficial Ownership
	 	(a)	If the name of the beneficial owner of the Registrable Securities set forth in your response to Item 1(a) above is that of a limited partnership, state the names of the general partners of such limited
partnership:
	

 	

 	

	

 	

 	

	 	(b)	With respect to each general partner listed in Item 4(a) above who is not a natural person, and is not publicly held, name each shareholder (or holder of partnership interests, if applicable) of such general partner.
If any of these named shareholders are not natural persons or publicly held entities, please provide the same information. This process should be repeated until you reach natural persons or a publicly held
entity.                                        
                                
	

 	

 	

	

 	

 	

	

 	

 	

	

 	

(c)	

Name your controlling shareholder(s) (the "Controlling Entity"). If the Controlling Entity is not a natural person and is not a publicly held entity, name each shareholder of such Controlling Entity. If any one of these named shareholders are not
natural persons or publicly held entities, please provide the same information. This process should be repeated until you reach natural persons or a publicly held entity.

(i) Full legal name of Controlling Entity(ies) or natural person(s) with who have sole or shared voting or dispositive power over Registrable Securities:

	

 	

 	

	

 	

 	

(ii) Business address (including street address)(or residence if no business address), telephone number and facsimile number of such person(s):
	

 	

 	

	

 	

 	

 Telephone (including area code):

Fax (including area code):
	

 	

 	

(iii) Name of shareholders:
	

 	

 	

	

 	

 	

 
	 	 	

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	5.	 	Beneficial ownership of the Company securities owned by the selling securityholder:
	 	 	Except as set forth below in this Item (5), the undersigned is not the beneficial or registered owner of any securities of the Company other than the Registrable Securities listed above in Item 
(3).
	

 	

 	

Type and amount of other securities beneficially owned by the selling securityholder:
	

 	

 	

	

 	

 	

	6.	 	Relationship with the Company:
	 	 	Except as set forth below, neither the undersigned nor any of its affiliates, officers, directors or principal equity holders (5% or more) has held any position or office or has had any other material relationship with
the Company (or its predecessors or affiliates) during the past three years.
	

 	

 	

State any exception here:
	

 	

 	

	

 	

 	

	7.	 	Plan of distribution:
	 	 	Except as set forth below, the undersigned (including its donees or pledgees) intends to distribute the Registrable Securities listed above in Item (3) pursuant to the Shelf Registration Statement only as follows
(if at all). Such Registrable Securities may be sold from time to time directly by the undersigned or, alternatively, through underwriters, broker-dealers or agents. If the Registrable Securities are sold through underwriters, broker-dealers or
agents, the selling securityholder will be responsible for underwriting discounts or commissions or agent's commissions. Such Registrable Securities may be sold in one or more transactions at fixed prices, at prevailing market prices at the time of
sale, at varying prices determined at the time of sale, or at negotiated prices. Such sales may be effected in transactions (which may involve block transactions) (i) on any national securities exchange or quotation service on which the
Registrable Securities may be listed or quoted at the time of sale, (ii) in the over-the-counter market, (iii) in transactions other than on such exchanges or services or in the over-the-counter market or (iv) through the writing of
options. In connection with sales of the Registrable Securities or otherwise, the undersigned may enter into hedging transactions with broker-dealers, which may in turn engage in short sales of the Registrable Securities and deliver Registrable
Securities to close out such short positions, or loan or pledge Registrable Securities to broker — dealers that in turn may sell such securities.
	

 	

 	

State any exceptions here:
	

 	

 	

	

 	

 	

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        The
undersigned acknowledges that it understands its obligation to comply with the provisions of the Securities Act and the Exchange Act and the rules thereunder relating to prospectus
delivery requirements, stock manipulation, particularly Regulation M thereunder (or any successor rules or regulations), in connection with any offering of Registrable Securities pursuant to
the Shelf Registration Statement, and the consequences of failing to take such action. The undersigned agrees that neither it nor any person acting on its behalf will engage in any transaction, or
fail to take such action, in violation of such provisions. 

        The
selling securityholder hereby acknowledges its obligations under the Registration Rights Agreement to indemnify and hold harmless certain persons under certain circumstances as set
forth therein. 

        Pursuant
to the Registration Rights Agreement, the Company has agreed under certain circumstances to indemnify the selling securityholders against certain liabilities. 

        In
accordance with the undersigned's obligation under the Registration Rights Agreement to provide such information as may be required by law for inclusion in the Shelf Registration
Statement, the undersigned agrees to promptly notify the Company of any inaccuracies or changes in the information provided herein that may occur subsequent to the date hereof at any time while the
Shelf Registration Statement remains effective. All notices hereunder and pursuant to the Registration Rights Agreement shall be made in writing at the address set forth below. 

        By
signing below, the undersigned consents to the disclosure of the information contained herein in its answers to items (1) through (6) above and the inclusion of such
information in the Shelf Registration Statement and the related prospectus. The undersigned understands that such information will be relied upon by the Company in connection with the preparation or
amendment of the shelf registration statement and the related prospectus. 

        IN
WITNESS WHEREOF, the undersigned, by authority duly given, has caused this Notice and Questionnaire to be executed and delivered either in person or by its duly authorized agent. 

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	 	 	Dated:
	 	 	Beneficial Owner
	

 	
 	

By:	
 	

 Name:

Title:

PLEASE RETURN THE COMPLETED AND EXECUTED NOTICE AND

QUESTIONNAIRE TO:  

 MAGNA ENTERTAINMENT CORP.

337 Magna Drive

Aurora, Ontario L4G 7K1

Canada

Attention: Corporate Secretary

Telephone: (905) 726-2462

Facsimile: (905) 726-7172  

 with a copy to:  

 SIDLEY AUSTIN BROWN & WOOD LLP

787 Seventh Avenue

New York, New York 10019

U.S.A.

Attention: Scott M. Freeman

Telephone: (212) 839-5300

Facsimile: (212) 839-5599  

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QuickLinks

REGISTRATION RIGHTS AGREEMENT

AMONG MAGNA ENTERTAINMENT CORP. AND BANK AUSTRIA CREDITANSTALT AG

MAGNA ENTERTAINMENT CORP. FORM OF SELLING SECURITYHOLDER NOTICE AND QUESTIONNAIRE

NOTICE

QUESTIONNAIRE

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