LOAN
AGREEMENT
THIS
AGREEMENT made as of
the 12
th day of
September, 2007.
BETWEEN:
MAGNA
ENTERTAINMENT CORP. ,
a corporation incorporated
under the laws of the State of Delaware
(hereinafter called the
“ Borrower ”),
OF THE FIRST
PART,
- and -
MID
ISLANDI SF.,
a partnership formed under
the laws of Iceland,
acting through its Zug
branch
(hereinafter called the
“ Lender ”),
OF THE SECOND
PART,
- and -
PACIFIC
RACING ASSOCIATION,
a corporation incorporated
under the laws of the State of California
- and -
MEC LAND
HOLDINGS (CALIFORNIA) INC.,
a corporation incorporated
under the laws of the State of California
(hereinafter collectively
called the “ Golden Gate
Fields
Guarantors ”),
OF THE THIRD
PART,
- and -
THE SANTA
ANITA COMPANIES, INC.,
a corporation incorporated
under the laws of the State of Delaware
- and -
1
LOS
ANGELES TURF CLUB, INCORPORATED,
a corporation incorporated
under the laws of the State of California
(hereinafter collectively
called the “ Santa Anita
Guarantors
”),
OF THE FOURTH
PART,
- and -
GULFSTREAM
PARK RACING ASSOCIATION, INC.
a corporation incorporated
under the laws of the State of Florida
(hereinafter called the
“ Gulfstream Guarantor ”),
OF THE FIFTH
PART,
- and -
GPRA
THOROUGHBRED TRAINING CENTER INC. ,
a corporation incorporated
under the laws of the State of Delaware
(hereinafter called the
“ Palm Meadows Training
Guarantor
”),
OF THE SIXTH
PART,
- and -
MEC
DIXON, INC.,
a corporation incorporated
under the laws of the State of Delaware
(hereinafter called the
“ Dixon Guarantor ”),
OF THE SEVENTH
PART,
- and -
MEC
HOLDINGS (USA) INC.
a corporation incorporated
under the laws of the State of Delaware
-
and —
2
SUNSHINE
MEADOWS RACING, INC.
a corporation incorporated
under the laws of the State of Delaware
(hereinafter collectively
called the “ Ocala Guarantors ”),
OF THE EIGHTH
PART,
- and -
THISTLEDOWN, INC.
a corporation incorporated
under the laws of the State of Ohio
(hereinafter called the
“ Thistledown Guarantor ”),
OF THE NINTH
PART,
- and -
MEC
MARYLAND INVESTMENTS INC.,
a corporation incorporated
under the laws of the State of Delaware
- and -
30000 MARYLAND
INVESTMENTS LLC,
a limited liability
company formed under the laws of the State of Delaware
(hereinafter collectively
called the “ AmTote
Guarantors
”),
OF THE TENTH
PART.
NOW
THEREFORE THIS AGREEMENT WITNESSES that, in consideration of the covenants and
agreements herein contained, and in reliance on the individual
creditworthiness of the Borrower and each of the Guarantors based
on the representations, warranties and covenants of the Borrower
and each of the Guarantors contained herein, the parties hereto
agree as follows:
ARTICLE
1
INTERPRETATION
1.1
Definitions
For the purposes of this
Agreement:
“ Acquisition
” means any transaction or series of transactions by which
the Borrower or any of its Subsidiaries, directly or indirectly, by
means of a take-over bid, tender offer, amalgamation, merger,
purchase of assets, purchase of shares or otherwise
(a) acquires any ongoing business or all or substantially all
of the assets of any Person engaged in any ongoing business,
(b) acquires beneficial ownership (as defined in
Rule 13d-3 promulgated under the Securities Exchange
Act of 1934 , as amended) of securities of a Person engaged in
any ongoing business representing more than 10% of the ordinary
voting power for the election of directors or other governing
position if the business and affairs of such Person are managed by
a board of directors or other governing body, or (c) acquires
beneficial ownership (as defined in
Rule 13d-3 promulgated under the Securities Exchange
Act of 1934 , as amended) of more than 10% of the ownership
interest in any Person engaged in any ongoing business that is not
managed by a board of directors or other
governing body;
3
“ Advance
” has the meaning ascribed thereto in
Section 4.1(a);
“ Affiliate
” means, in respect of any Person, any other Person which,
directly or indirectly, controls or is controlled by or is under
common control with such Person; and for the purpose of this
definition, “ control ” (including, with
correlative meanings, the terms “ controlled by
” and “ under common control with ”) means
the power to direct, or cause to be directed, the management and
policies of a Person whether through the ownership of voting
shares, by contract or otherwise, but for greater certainty
excluding therefrom the Lender and its Subsidiaries other than MEC
and its Subsidiaries;
“ Agreement
” means this agreement and the Disclosure Schedule and all
schedules attached to this agreement or to the Disclosure Schedule,
in each case as they may be amended or supplemented from time to
time; the expressions “ hereof ”, “
herein ”, “ hereto ”, “
hereunder ”, “ hereby ” and similar
expressions refer to this Agreement as a whole (including the
Disclosure Schedule) and not to any particular article, Section,
schedule or other portion hereof, and the expressions “
article ” and “ Section ” followed
by a number or by a number and letter, and “ Schedule
” followed by a letter, mean and refer to the specified
article or Section of or schedule to this Agreement, as applicable,
except as otherwise specifically provided herein;
“ Allocable
Amount ” has the meaning ascribed thereto in
Section 9.22;
“ AmTote
Guarantee Fee ” has the meaning ascribed thereto in
Section 7.2(q)(lix);
“ AmTote
Guarantees and Indemnities ” has the meaning ascribed
thereto in Section 7.2(q)(lix);
“ AmTote
Guarantors ” means, collectively, MEC Maryland
Investments Inc. and 30000 Maryland Investments LLC,
and “ AmTote Guarantor ” means any one
of them;
“ Applicable
Law ” means, in respect of any Person, property,
transaction or event, all applicable laws, statutes, rules, by-laws
and regulations, and all applicable official directives, orders,
judgments and decrees of Governmental Bodies but solely to the
extent they have the force of law (and, in the case of
Section 3.3 only, whether or not having the force of law but
otherwise binding on such Person or such Person’s
property);
“ Approved Sales
Contract ” means an agreement of purchase and sale
between the Borrower and/or one or more of its Subsidiaries, as
vendor, and one or more other Persons, as purchaser, in respect of
the sale of any of the assets and/or real property of the Borrower
and/or its Subsidiaries (as applicable), provided that such
contract shall contemplate an anticipated closing date of no later
than the Maturity Date, and further provided that such contract
shall be in form and substance (including, without limitation, as
to all conditions precedent contained therein) satisfactory to the
Lender in its sole and absolute discretion; for greater certainty,
this definition relates soley to Section 4.1(a) of this
Agreement;
“ Assignment of
Holdback Agreement ” has the meaning ascribed thereto in
Section 7.2(q)(iv);
“ Audited
Financial Statements ” means the audited consolidated
financial statements of the Borrower for the Fiscal Year ended
December 31, 2006;
“ Banking Day
” means a day on which banks are generally open for business
in each of Toronto, Ontario, Zug, Switzerland and London,
England;
“ Blocked Persons
List ” has the meaning ascribed thereto in
Section 5.1(cc);
“ BMO ”
means Bank of Montreal, and its successors and assigns under the
BMO Credit Agreement;
“ BMO Credit
Agreement ” means the amended and restated credit
agreement made as of July 22, 2005 among the Borrower, as
borrower, BMO, as agent and lender, and others, as has been and may
be further amended and restated from time to time, provided that
the principal amount outstanding at any time under the BMO Credit
Agreement as so amended or restated shall not exceed $60,000,000,
and includes any renewal or refinancing of any such
4
agreement or the
indebtedness owing thereunder provided that the principal amount of
such renewed or refinanced indebtedness does not exceed $60,000,000
and security therefor is not increased thereby;
“ BMO
Intercreditor Agreement ” means the intercreditor
agreement made as of even date herewith between the Lender, the
Borrower and Bank of Montreal, as the same may be amended or
restated from time to time;
“ Borrower
” means Magna Entertainment Corp., a corporation existing
under the laws of Delaware, and its successors and permitted
assigns;
“ Borrower
General Security Agreement ” has the meaning ascribed
thereto in Section 7.2(q)(i);
“ Borrower
Restructuring Plan ” means the plan approved and adopted
by the Borrower’s board of directors as of the Closing Date
to restructure the Borrower and its Subsidiaries and to revise the
business plan of the Borrower and its Subsidiaries, including any
amendments, revisions or modifications thereto (provided that any
such amendments, revisions or other modifications shall be in form,
scope and terms satisfactory to the Lender in its sole and absolute
discretion);
“
Borrower’s and Guarantors’ California Agent
” means the Newport Beach office of Sherry Meyerhoff
Hanson & Crance LLP, or such other firm or firms of
solicitors or agents in the State of California as are appointed by
the Borrower from time to time and notice of which is provided to
the Lender;
“
Borrower’s and Guarantors’ Counsel ” means
Osler Hoskin Harcourt LLP, or such other firm or firms of
solicitors or counsel as are appointed by the Borrower from time to
time and notice of which is provided to the Lender;
“
Borrower’s and Guarantors’ Florida Agent ”
means the Miami office of Akerman Senterfitt, or such other firm or
firms of solicitors or agents in the State of Florida as are
appointed by the Borrower from time to time and notice of which is
provided to the Lender;
“
Borrower’s and Guarantors’ Local Agents ”
means, collectively the Borrower’s and Guarantor’s
California Agent, the Borrower’s and Guarantor’s
Florida Agent and the Borrower’s and Guarantor’s
New York Agent;
“
Borrower’s and Guarantors’ New York and
Delaware Agent ” means the New York office of
O’Melveny & Myers LLP, or such other firm or
firms of solicitors or agents in the State of New York as are
appointed by the Borrower from time to time and notice of which is
provided to the Lender;
“ Borrower
Incorporation Documents ” has the meaning ascribed
thereto in Section 5.1(i);
“ Borrowing
Date ” means any Banking Day on which an Advance is made,
or is to be made, in accordance with a request of
the Borrower;
“ Borrowing
Notice ” means a notice substantially in the form of
Schedule A;
“ Bridge Loan
” means the secured non-revolving bridge loan made available
to the Borrower by the Lender pursuant to
Section 2.1;
“ Capital
Expenditures ” means, for any period, for any Person
those expenditures made in connection with the purchase, lease,
license, acquisition, erection, development, improvement or
construction of property of or by such Person (including any such
property acquired pursuant to a Capital Lease Obligation) or any
other expenditures, in all cases, which in accordance with GAAP are
classified as capital expenditures; provided, however, that such
term shall not include those expenditures (“ Maintenance
Capital Expenditures ”) that are (a) required to
sustain the capacity level or useful life of existing operating
facilities or (b) required or lawfully imposed under any
Environmental Law or Safety Law, or by any
Governmental Body;
“ Capital Lease
Obligations ” means the obligations of the Borrower or
any Subsidiary to pay rent or other amounts under a lease of
(or other agreement conveying the right to use) real or
personal property, which obligations are
5
required to be classified
and accounted for as a capital lease on a balance sheet of such
Person under GAAP and, for purposes of this Agreement, the amount
of such obligations shall in each case be the capitalized amount
thereof, determined in accordance with GAAP;
“Cash
Equivalents” means short-term issued guaranteed deposits
or certificates of deposit with recognized financial institutions,
bonds or similar obligations carrying the full faith and credit of
the United States of America or any state thereof or any
agency or instrumentality of any of the foregoing unconditionally
backed by such credit and other similar investments acceptable to
the Lender in its sole discretion;
“ CERCLA
” means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 , including the rules
and regulations promulgated thereunder, as the same may be amended
from time to time;
“ Claim
” has the meaning ascribed thereto in
Section 3.4(a);
“ Closing
Date ” means the date on which this Agreement is executed
and delivered by the parties hereto;
“ Collateral
” means, collectively, all of the undertaking, property and
assets of the Borrower and the Guarantors subject to the Security,
or intended to be subject to the Security;
“ Combined
” means, in relation to any financial results or financial
statements of a group of entities, the combined financial results
or financial statements of such group of entities (including their
respective subsidiaries), calculated and prepared in accordance
with GAAP;
“ Company
” means, collectively, the Borrower and all of its
Subsidiaries;
“ Commitment
Fee ” has the meaning ascribed thereto in
Section 4.3(a);
“ Commitment Fee
Payment Date ” has the meaning ascribed thereto in
Section 4.3(a);
“ Compliance
Certificate ” has the meaning ascribed thereto in
Section 6.1(l)(i);
“ Contingent
Liabilities ”, at any time, means the amount of all
indebtedness and liabilities, contingent or otherwise, of any other
Person at such time,
(i)
guaranteed, directly or
indirectly, in any manner by the Borrower or any Subsidiary
including, without limitation, (A) by procuring the issue of
letters of credit or other similar instruments for the benefit of
that other Person, (B) by endorsement of bills of exchange
(otherwise than for collection or deposit in the ordinary course of
business), or (C) by the other Person assigning debts of the
Borrower or any Subsidiary (whether or not represented by an
instrument) with recourse to the Borrower or
any Subsidiary;
(ii)
in effect guaranteed, directly
or indirectly, by the Borrower or any Subsidiary through an
agreement, contingent or otherwise:
(A)
to purchase such indebtedness
or liabilities or to advance or supply funds for the payment or
purchase of such indebtedness or liabilities;
(B)
to purchase, sell or lease
(as lessee or lessor) property, products, materials or
supplies or to purchase or sell services in circumstances where the
primary purpose of such agreement was to provide funds to the
debtor to enable the debtor to make payment of such indebtedness or
liabilities or to provide goods or services to the debtor to enable
it to satisfy other liabilities, regardless of the delivery or
non-delivery of the property, products, materials or supplies or
the provision or non-provision of the services, including take or
pay or throughput agreements; or
(C)
to make any loan, advance,
capital contribution to or other investment in the other Person for
the purpose of assuring a minimum equity, asset base, working
capital or other balance sheet condition at any date or to provide
funds for the payment of any liability, dividend or return of
capital; or
6
(iii)
secured by any Lien upon
property owned by the Borrower or any Subsidiary, even though
neither the Borrower nor any Subsidiary has assumed or become
liable for the payment of such indebtedness or liabilities,
provided that, if neither the Borrower nor any Subsidiary has
assumed or become liable for such assumption, such indebtedness
shall be deemed to be an amount equal to the lesser of (A) the
amount of such indebtedness and liabilities and (B) the book
value of such property.
For purposes hereof, a
Person shall not be deemed to have a Contingent Liability if it is
the co-maker of the primary obligation and shall have one
Contingent Liability if it has guaranteed the obligations of more
than one primary obligor with respect to the same primary
obligation;
“ Core Line of
Business ” means the ownership or operation of racetracks
and pari-mutuel wagering activities, as described in the
Form 10-K filed by the Borrower for the year ended
December 31, 2006, and including (i) thoroughbred and
harness horse racing, (ii) off-track betting facilities,
(iii) account wagering and other gaming activities including,
without limitation, slot machine and video lottery terminals,
(iv) a racetrack and casino complex in Austria, and
(v) any food and beverage operations, sports bar operations,
content distribution, technology and media services, entertainment,
the ownership and management of real estate and/or other
activities, associated with or ancillary or related to (i), (ii),
(iii) and/or (iv), above, including the ownership or operation
of horse training and boarding centres, arenas and
restaurants;
“ Default
” means any event which, but for the lapse of time, giving of
notice or both, would constitute an Event of Default and, for
greater certainty, includes for purposes of this Agreement, any
event relating to Subordinated Debt which would, but for the lapse
of time, giving of notice or both, enable the holders of
Subordinated Debt to accelerate the maturity of the
Subordinated Debt;
“ Disclosure
Schedule ” means the disclosure schedule as of the
Closing Date prepared and executed by the Borrower;
“ Dixon First
Assignment of Material Agreements ” has the meaning
ascribed thereto in Section 7.2(q)(xxxiv);
“ Dixon First
Assignment of Rents and Leases ” has the meaning ascribed
thereto in Section 7.2(q)(xxxiii);
“ Dixon First
General Security Agreement ” has the meaning ascribed
thereto in Section 7.2(q)(xxxv);
“ Dixon First
Mortgage ” has the meaning ascribed thereto in
Section 7.2(q)(xxxii);
“ Dixon Guarantee
and Indemnity ” has the meaning ascribed thereto in
Section 7.2(q)(lvi);
“ Dixon Guarantee
Fee ” has the meaning ascribed thereto in
Section 7.2(q)(lvi);
“ Dixon
Property ” means the lands and premises designated as the
Dixon Property in Schedule B hereto;
“ Dixon Property
Environmental Indemnity ” has the meaning ascribed
thereto in Section 7.2(q)(xxxvi);
“ Dixon
Security ” has the meaning ascribed thereto in
Section 7.2(q)(xxxv);
“ EBITDA
” means, for any Person in any period, Net Income of
such Person for such period:
(a)
increased by the sum of
(without duplication) (i) income tax expense for such period,
(ii) interest expense for such period, (iii) depreciation
and amortization expense for such period, (iv) non-cash losses
incurred during such period, in each case to the extent such
amounts were included in the calculation of Net Income of such
Person for such period;
(b)
decreased by all cash payments
during such period relating to losses that were added back to Net
Income of such Person under clause (a)(iv) above in
determining EBITDA in any prior period; and
7
(c)
decreased by such net gains
from sales of real estate held for sale or development and excess
racetrack lands which were included in the calculation of Net
Income of such Person for such period;
“ Environment
” means soil, land, surface and subsurface strata, surface
waters, groundwaters, drinking water supply, stream sediments,
ambient air (including air in buildings, natural or man-made
structures), all layers of the atmosphere, all inorganic and
organic matter and living organisms (including humans), all natural
resources and the interacting natural systems that include the
foregoing listed components;
“ Environmental
Consent ” means any consent, approval, permit, licence,
order, filing, authorization, exemption, registration,
ratification, permission, waiver, reporting or notice requirement
and any other related agreement or communications whatsoever
issued, granted or given or otherwise made available by or under
the authority of any Governmental Authority regarding environmental
matters or under any Environmental Law;
“ Environmental
Damages ” means all claims, judgments, damages, losses,
penalties, liabilities (including strict liability), fines,
charges, costs and expenses, including costs of investigation,
remediation, defense, settlement and reasonable attorneys’
fees and expenses and reasonable consultants’ fees, that are
incurred at any time as a result of the existence of any Hazardous
Materials at, on, upon, about or beneath any of the Properties or
migrating or threatening to migrate to or from any such real
property, or arising from any investigation, proceeding or
remediation of any location at which the Borrower and/or any
Guarantor, any predecessor in title or any employees, agents,
contractors or subcontractors of the Borrower and/or any Guarantor
or any predecessor in title, or any third persons at any time
occupying or present on any of the Properties, are alleged to have
directly or indirectly disposed of Hazardous Materials or arising
in any manner whatsoever in violation of
Environmental Laws;
“ Environmental
Disclosure ” means the text of the Environmental Reports,
in each case including the attachments thereto but excluding the
underlying documents referred to in the Environmental
Reports;
“ Environmental
Laws ” means any Applicable Law that requires or
relates to:
(i)
notifying appropriate
authorities, employees or the public of the presence of or intended
or actual Releases of Hazardous Materials or violations of
discharge limits or other prohibitions or of the commencement of
activities, such as resource extraction or construction, that could
have an impact on the Environment;
(ii)
preventing or reducing to
acceptable levels the presence of or Release of Hazardous Materials
in or into the Environment;
(iii)
reducing the quantities,
preventing the Release or minimizing the hazardous characteristics
of wastes that are generated;
(iv)
protecting the Environment,
including regulating, limiting or restricting Releases of Hazardous
Materials and protecting resources, species, or visual or
ecological amenities;
(v)
the transportation, use and
disposal of Hazardous Materials or other potentially harmful
substances;
(vi)
remediating Hazardous Materials
that have been Released or are in the Environment, preventing the
Threat of Release or paying the costs of such
remediation; or
(vii)
making responsible Persons or
polluting Persons pay private parties or third parties, or groups
of them, for damages done to their health or the Environment or
permitting representatives of the public to recover for injuries
done to public assets or to obtain any other remedies
whatsoever;
and includes all
Environmental Consents;
“ Environmental
or Safety Liability ” means any Loss arising from, under,
or in connection with any of the following:
8
(i)
any environmental or safety
matter or condition (including the presence, use, generation,
manufacture, disposal or transport of Hazardous Materials, on-site
or off-site contamination, safety or health matters, noise, odour,
nuisance or the regulation of any Hazardous Material);
(ii)
responsibility, financial or
otherwise, under any Environmental Law or Safety Law for clean-up
costs or corrective action, including any clean-up, removal,
containment, monitoring or other remediation or response actions
required by any Environmental Law or Safety Law (whether or not
such actions have been required or requested by any Governmental
Authority or any other Person) and for any natural resource
damages; or
(iii)
any other compliance,
corrective, remedial or other measure or cost required or lawfully
imposed under any Environmental Law or Safety Law;
“ Environmental
Reports ” has the meaning ascribed thereto in
Section 6.1(p);
“ ERISA
” means the Employee Retirement Income Security Act of
1974 , as amended;
“ ERISA
Affiliate ” means (1) any corporation which is a
member of the same controlled group of corporations (within the
meaning of Section 414(b) of the Internal Revenue Code) as the
Borrower; (2) any trade or business (whether or not
incorporated) which is under common control (within the meaning of
Section 414(c) of the Internal Revenue Code) with the
Borrower; and (3) a member of the same affiliated service
group (within the meaning of Section 414(m) of the Internal
Revenue Code) as the Borrower, any corporation described in
clause (1) above or any trade or business described in
clause (2) above; or (4) any other Person which is
required to be aggregated with the Borrower pursuant to regulations
promulgated under Section 414(o) of the Internal
Revenue Code;
“ ESA ”
has the meaning ascribed thereto in Section 6.1(p);
“ Event of
Default ” has the meaning attributed to such term in
Section 8.1;
“ Excluded
Taxes ” means, in relation to the Lender, (a) those
Taxes which are imposed or levied on or measured by or determined
by reference to the overall net income, profits, gross receipts,
net worth or capital of the Lender or any of its branches, and all
franchise taxes, taxes on doing business or taxes measured by
capital or net worth imposed on the Lender or any of its applicable
branches pursuant to the laws of the jurisdiction in which the
Lender is organized or resident or in which the Lender’s
principal office or applicable branch is located, and
(b) without limiting the generality of the foregoing, all
franchise taxes, taxes on doing business or taxes measured by net
income, capital, profits, gross receipts or net worth imposed on
the Lender or any of its branches, whether collected by withholding
or otherwise, as a result of the Lender (i) carrying on a
trade or business in the United States of America or having a
permanent establishment in the United States of America,
(ii) being organized under the laws of the United States
of America or any political subdivision thereof, (iii) being
or being deemed to be resident in the United States of America
for income tax purposes, or (iv) not dealing at arm’s
length (as defined for the purposes of the Internal Revenue
Code) with the Borrower, or which would not have been imposed had
such Person satisfied a relevant authority that such Person was not
a person mentioned in clause (i), (ii),
(iii) or (iv) above;
“ Fair Enterprise
Investment ” has the meaning ascribed thereto in
Section 7.1(f);
“ First
Arrangement Fee” has the meaning ascribed thereto in
Section 4.3(b);
“ Fiscal
Quarter ” means a period of three consecutive months
ending on March 31, June 30, September 30 or
December 31, as the case may be, of each
Fiscal Year;
“ Fiscal Year
” means the fiscal year of the Borrower, being January 1
to December 31;
“ GAAP
” means, at any time, generally accepted accounting
principles in effect from time to time in the United States of
America as recommended by the Financial Accounting Standards Board,
applied on a consistent basis;
9
“ Golden Gate
Fields General Security Agreement ” has the meaning
ascribed thereto in Section 7.2(q)(xxiv);
“ Golden Gate
Fields Guarantee and Indemnity ” has the meaning ascribed
thereto in Section 7.2(q)(xxiv);
“ Golden Gate
Fields Guarantee Fee ” has the meaning ascribed thereto
in Section 7.2(q)(lx);
“ Golden Gate
Fields Guarantors’ Environmental Indemnity ” has
the meaning ascribed thereto in
Section 7.2(q)(xxiv);
“ Golden Gate
Fields Property ” means the lands and premises designated
as the Golden Gate Fields Property in
Schedule B hereto;
“ Golden Gate
Fields Second Mortgage ” has the meaning ascribed thereto
in Section 7.2(q)(xvi);
“ Golden Gate
Fields Security ” has the meaning ascribed thereto in
Section 7.2(q)(xix);
“ Governmental
Body ” means any government, parliament, legislature, or
any regulatory authority, agency, commission or board of any
government, parliament or legislature, or any court or (without
limitation to the foregoing) any other law, regulation or
rule-making entity (including, without limitation, any central
bank, fiscal or monetary authority or authority regulating banks),
having jurisdiction in the relevant circumstances over a Person or
such Person’s property, or any Person acting under the
authority of any of the foregoing (including, without limitation,
any arbitrator and the Racing and Gambling Regulatory
Authorities);
“ Guarantor
Incorporation Documents ” has the meaning ascribed
thereto in Section 5.1(j);
“ Guarantors
” means, collectively, (i) the Golden Gate Fields
Guarantors, (ii) the Santa Anita Guarantors, (iii) the
Gulfstream Guarantor, (iv) the Palm Meadows Training
Guarantor, (v) the Dixon Guarantor, (vi) the Ocala
Guarantors, (vii) the Thistledown Guarantor and
(viii) the AmTote Guarantors, and, in the singular, any one
of them;
“ Guarantor
Payment ” has the meaning ascribed thereto in
Section 9.22;
“ Gulfstream
Construction Loan Agreement ” means the Third Amended and
Restated Gulfstream Park Loan Agreement made as of
December 22, 2006 between Gulfstream Park Racing
Association Inc., as borrower, the Lender, as lender, and
others, as the same may be amended or restated from time
to time;
“ Gulfstream
Guarantee and Indemnity ” has the meaning ascribed
thereto in Section 7.2(q)(liv);
“ Gulfstream
Guarantee Fee ” has the meaning ascribed thereto in
Section 7.2(q)(liv);
“ Hazardous
Activity ” shall include the distribution, generation,
handling, importing, management, manufacturing, processing,
production, refinement, release, storage, transfer, transportation,
treatment or use (including any withdrawal or other use of
contaminated groundwater) of Hazardous Materials in, on, under,
about and from any of the Properties or any part thereof and any
other act, business or operation that poses a material risk of harm
to Persons or property on or off the Properties;
10
“ Holdback
Agreement ” means the agreement dated November 14,
2006 between the Borrower and PA Meadows, LLC in respect of
certain holdback amounts arising in connection with a stock
purchase agreement dated November 8, 2005 between the
Borrower, as vendor, and PA Meadows, LLC,
as purchaser;
“ Hazardous
Material ” shall mean any solid, liquid, gas, odour,
heat, vibration, radiation or combination of any of them that may
have an adverse effect on the Environment, and includes all wastes,
pollutants, contaminants and each hazardous, toxic, radioactive,
noxious, flammable, corrosive or caustic matter or substance,
including any substance, material or waste which is or is expected
to be regulated by any Governmental Authority and including any
material, substance or waste which is defined as a “
contaminant ” or “ pollutant ” or
as “ hazardous ”, “ toxic ”,
“ harmful ” or “ dangerous ”
under any provision of any Environmental Law or Safety Law, and
including petroleum, petroleum products, asbestos,
asbestos-containing material, urea formaldehyde and polychlorinated
biphenyls;
“
Indebtedness ” has the meaning ascribed thereto in
Section 7.2(q);
“ Indemnified
Person ” has the meaning ascribed thereto in
Section 3.4(a);
“ Indemnifying
Party ” has the meaning ascribed thereto in
Section 3.4(a);
“ Intercreditor
Agreements ” means, collectively, the BMO Intercreditor
Agreement and the Wells Fargo Subordination Agreement, and, in the
singular, any one of them;
“ Interest
Period ” means a period commencing, (i) in the case
of the initial Interest Period for the first Advance, on the date
of such Advance; and (ii) in the case of any subsequent
Interest Period, on the last day of the immediately preceding
Interest Period and ending, in either case, on the 30
th day of
such period;
“ Interest
Rate ” has the meaning ascribed thereto in
Section 4.1(a)(i);
“ Internal
Revenue Code ” means the Internal Revenue Code of
1986 , as amended, including the regulations and published
interpretations and rulings thereunder;
“ Judgment
Currency ” has the meaning ascribed thereto in
Section 1.7;
“ Lender
” means MID Islandi sf., a partnership formed under the laws
of Iceland, acting through its Zug Branch, and its successors and
permitted assigns;
“ Lender’s
California Agent ” means the Los Angeles office of
Hogan & Hartson LLP, or such other firm or firms of
solicitors or agents in the State of California as are appointed by
the Lender from time to time and notice of which is provided to the
Borrower and the Guarantors;
“ Lender’s
Costs” has the meaning ascribed thereto in
Section 4.4;
“ Lender’s
Counsel ” means Davies Ward Phillips &
Vineberg LLP, or such other firm or firms of solicitors or
counsel as are appointed by the Lender from time to time and notice
of which is provided to the Borrower and
the Guarantors;
“ Lender’s
Delaware Agent ” means the Wilmington office of Pepper
Hamilton LLP, or such other firm or firms of solicitors or
agents in the State of Delaware as are appointed by the Lender from
time to time and notice of which is provided to the Borrower and
the Guarantors;
“ Lender’s
Florida Agent ” means the Miami office of Stearns Weaver
Miller Weissler Alhadeff & Sitterson, P.A., or such other
firm or firms of solicitors or agents in the State of Florida as
are appointed by the Lender from time to time and notice of which
is provided to the Borrower and the Guarantors;
11
“ Lender’s
New York Agent ” means the New York office of
Davies Ward Phillips & Vineberg LLP, or such other
firm or firms of solicitors or agents in the State of New York
as are appointed by the Lender from time to time and notice of
which is provided to the Borrower and
the Guarantors;
“ LIBOR
” means the one-month rate of interest per annum for deposits
in US Dollars in the London interbank market, calculated on the
basis of a year of 360 days, equal to the arithmetic mean of
the rates which appear on the Telerate Page 3750 on the
Dow Jones Telerate Service (or any replacement page) as
of 11:00 a.m. (London time) on the day which is two Banking
Days prior to the first day of the relevant Interest
Period;
“ Lien
” means any mortgage, lien, pledge, assignment by way of
security, charge, security interest, lease intended as security,
title retention agreement, statutory right reserved in any
Governmental Body, registered lease of properties, hypothec, levy,
execution, seizure, attachment, garnishment or other similar
encumbrance;
“ Loan
” means, at any time, the principal amount of all Obligations
then outstanding under the Bridge Loan;
“ Loan Amount
” means the maximum principal amount available under the
Bridge Loan, as the same may be reduced from time to time in
accordance with the terms hereof;
“ Loan
Documents ” means, collectively, this Agreement and the
Security and “ Loan Document ” means any one
of them;
“ MID ”
means MI Developments Inc. and its successors and permitted
assigns;
“ Maintenance
Capital Expenditure ” has the meaning ascribed thereto in
the definition of Capital Expenditure;
“ Material
Adverse Change ” means a material adverse change in the
business, condition (financial or otherwise), operations,
properties, assets, liabilities or prospects of the Borrower (taken
as a whole together with all of its Subsidiaries on a consolidated
basis) or any Guarantor or of any of
the Properties;
“ Material
Adverse Effect ” means material adverse effect on
(a) the business, condition (financial or otherwise),
operations, properties, assets, liabilities or prospects of the
Borrower (taken as a whole together with all of its Subsidiaries on
a consolidated basis) or any of the Guarantors or any of the
Properties, or (b) the ability of the Borrower or any of the
Guarantors to perform its Obligations under any Loan Document to
which it is or is to be a party, or (c) the rights and
remedies of the Lender under the Agreement or any of the other Loan
Documents or the Intercreditor Agreements, or (d) the
Lender’s security interest in the Collateral or the
perfection or priority thereof;
“ Material
Agreements ” means: (i) contracts, agreements,
commitments or other documents materially affecting the use,
development, construction and/or operation of any of the Properties
(including without limitation all leases of the Properties); and
(ii) any contract, agreement, commitment or other document by
which the Borrower or any of its Subsidiaries is bound, the default
under or the termination of which could reasonably be expected to
result in a Material Adverse Effect;
“ Material
Authorization ” means any approval, permit, licence,
order, consent or similar authorization from, and any filing,
registration, qualification or recording with, any Governmental
Body, domestic or foreign, required by the Borrower or any of its
Subsidiaries, the absence of which could reasonably be expected to
result in a Material Adverse Effect;
“ Maturity
Date ” means May 31, 2008;
“ Mortgages
” means, collectively, the Golden Gate Fields Second
Mortgage, the Santa Anita Third Mortgage, the Ocala Second
Mortgage, the Dixon First Mortgage and the Thistledown First
Mortgage; and, in the singular, any one of them;
“ Mortgaged
Properties ” means, collectively, the Golden Gate Fields
Property, the Santa Anita Property, the Ocala Property, the Dixon
Property and the Thistledown Property, and, in the singular, any
one of them;
12
“ Net Income
” of a Person for any period means the consolidated net
income of such Person during such period after taxes, but before
extraordinary items and unusual items, all as otherwise determined
in accordance with GAAP. In addition, there shall be included in
Net Income all net income of such Person on a consolidated basis
from investments in accordance with the equity method
of accounting;
“ Note Assignment
Agreement ” means the MEC assignment of Tranche A
Junior Notes and Tranche B Junior Notes made as of
July 26, 2006 by the Borrower in favour of the Lender, as
amended to the date hereof;
“ Obligations
” means all indebtedness, liabilities and other obligations
of the Borrower and Guarantors to the Lender under any other Loan
Document (including any amendments or supplements thereto), whether
actual or contingent, direct or indirect, matured or not, now
existing or arising hereafter and includes, without limitation, all
unpaid principal, interest, fees, costs and other amounts payable
by the Borrower and Guarantors to the Lender hereunder or under any
other Loan Document;
“ Ocala Guarantee
and Indemnity ” has the meaning ascribed thereto in
Section 7.2(q)(lvii);
“ Ocala Guarantee
Fee ” has the meaning ascribed thereto in
Section 7.2(q)(xxiv);
“ Ocala
Guarantors ” means, collectively, MEC Holdings
(USA) Inc., and Sunshine Meadows Racing Inc., and “
Ocala Guarantor ” means any one
of them;
“ Ocala
Property ” means the lands and premises designated as the
Ocala Property in Schedule B hereto;
“ Ocala Property
Environmental Indemnity ” has the meaning ascribed
thereto in Section 7.2(q)(xxviii);
“ Ocala Second
Assignment of Material Agreements ” has the meaning
ascribed thereto in Section 7.2(q)(xxvi);
“ Ocala Second
Assignment of Rents and Leases” has the meaning ascribed
thereto in Section 7.2(q)(xxv);
“ Ocala Second
General Security Agreement ” has the meaning ascribed
thereto in Section 7.2(q)(xxvii);
“ Ocala Second
Mortgage ” has the meaning ascribed thereto in
Section 7.2(q)(xxiv);
“ Ocala
Security ” has the meaning ascribed thereto in
Section 7.2(q)(xxvii);
“ Occupancy
Agreements ” has the meaning ascribed thereto in
Section 5.1(nn);
“ Officer’s
Certificate ” means, unless otherwise provided herein, in
respect of the Borrower, a certificate signed by any one of the
Chair of the Board, the Chief Executive Officer, the Chief
Financial Officer or the Secretary;
“ Official
Body ” means any national government or government of any
political subdivision thereof or any parliament, legislature,
council, agency, authority, board, bureau, central bank,
commission, department or instrumentality thereof, or any court,
tribunal, grand jury, mediator or arbitrator, whether foreign or
domestic or any non-governmental regulating body, to the extent
that the rules, regulations and orders of such body have the force
of law;
“ Organizational
Documents ” has the meaning ascribed thereto in
Section 5.1(j);
“ Original Bridge
Loan Agreement ” means the bridge loan agreement made as
of July 22, 2005, among the Borrower, as borrower, the Lender,
as lender, and the guarantors specified therein, as guarantors, as
amended, which agreement was terminated as of December 22,
2006 upon the full repayment of all amounts owing
thereunder;
“ Palm Meadows
Training Guarantee and Indemnity ” has the meaning
ascribed thereto in Section 7.2(q)(lv);
“ Palm Meadows
Training Guarantee Fee ” has the meaning ascribed thereto
in Section 7.2(q)(lv);
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“ Permitted
Debt ” means (i) the Bridge Loan; (ii) the
Santa Anita Senior Facility; (iii) the BMO Credit Agreement;
(iv) the SunTrust Credit Agreement; (v) the Remington
Construction Loan Agreement; (vi) the Gulfstream Construction
Loan Agreement; (vii) indebtedness of GPRA Commercial
Enterprises Inc. relating to a loan agreement among,
inter alia, Keybank National Association, as principal lender,
and The Village at Gulfstream Park, LCC, as borrower, where such
indebtedness is non-recourse to the Borrower and the Gulfstream
Guarantor and arises under the May 1, 2005 limited liability
company agreement, as amended, by which The Village at Gulfstream
Park, LLC, was formed; (viii) indebtedness of MEC
Grundstucksentwicklungs GmbH and Fontana Betelligungs AG
existing on the date hereof; (ix) indebtedness of certain
non-guarantor entities to Mercantile-Safe Deposit and Trust
existing on the date hereof; (x) the lease between a
non-guarantor entity and an entity associated with the City of
Grand Prairie, pursuant to which Lone Star Park is operated;
(xi) indebtedness owing under, and not exceeding the amounts
permitted to be outstanding under and secured by, Permitted
Encumbrances and extensions, renewals or replacements of any
indebtedness permitted under this clause; (xii) provided the
principal amount of such indebtedness thereunder or security
therefor is not thereby increased beyond the original principal
amount of such indebtedness; (xiii) unsecured trade and other
accounts payable incurred in the ordinary course of business for
the purpose of carrying on the same including the “
Construction ” (as defined in the Remington
Construction Loan Agreement) and the “ Reconstruction
” (as defined in the Gulfstream Construction Loan
Agreement); (xiv) indebtedness under interest rate or currency
hedging agreements entered into for the purpose of managing
interest rate and currency risks of the Borrower or any of its
Subsidiaries and not for speculative purposes;
(xv) indebtedness under letters of credit, performance bonds,
instalment insurance and insurance premium financing contracts, and
similar instruments in respect of land transfer tax claims, land
development charges, gaming permits and other obligations of the
Borrower or its Subsidiaries incurred in the ordinary course of
business; (xvi) the obligation to pay $18,312,650 plus accrued
interest on the exercise of either the put or call option for the
remaining minority interest in The Maryland Jockey Club;
(xvii) the Subordinated Debt; (xviii) unsecured
intercompany indebtedness of the Borrower to any of its
Subsidiaries or of any of the Subsidiaries to the Borrower,
provided that such unsecured intercompany indebtedness is existing
as of the date hereof or is entered into on customary terms and in
the ordinary course of the Borrower’s cash management
activities consistent with past practice; (xix) other
obligations and indebtedness (including Capital Lease Obligations
(other than that listed in item (iv) of this definition) and
Contingent Liabilities, but excluding item (xiii) listed in
this definition) existing on the date hereof and relating to
Subsidiaries which are not Guarantors, and all of which are
disclosed in the Audited and Unaudited Financial Statements
including the notes thereto, in the aggregate amount of not more
than $2,000,000 (which amount includes indebtedness denominated in
foreign currencies and is therefore subject to fluctuation from
time to time due to exchange rate fluctuations); and
(xx) other obligations and indebtedness (including Capital
Lease Obligations and Contingent Liabilities) of up to $5,000,000
in the aggregate, provided that none of such other obligations and
indebtedness is secured by any of the Properties;
“ Permitted
Encumbrances ” means any:
(i)
Liens for taxes, assessments or
governmental charges or levies incurred in the ordinary course of
business that are not yet due and payable or the validity of which
is being actively and diligently contested in good faith by the
Borrower or a Subsidiary, as the case may be, in respect of which
the Borrower or a Subsidiary has established on its books reserves
considered by it to be adequate therefor, and for which any
enforcement proceedings, if commenced, have been stayed or for
which payment has been made in accordance with
(vii) below;
(ii)
rights reserved to or vested in
any Governmental Body by the terms of any lease, licence,
franchise, grant or permit, or by any statutory provision, to
terminate the same, to take action which results in an
expropriation, or to require annual or other periodic payments as a
condition to the continuance thereof;
(iii)
construction, mechanics’,
workers’, repairers’, carriers’,
warehousemen’s and materialmen’s Liens and Liens in
respect of vacation pay, workers’ compensation, social
security, old age pension, employment insurance or similar
statutory obligations, provided the obligations secured by such
Liens are not yet due and payable and, in the case of construction
Liens, which have not yet been filed or for which the Borrower or a
Subsidiary has not received written notice of a Lien or for which a
construction lien has been filed and the Borrower or a Subsidiary
is contesting such Lien diligently and in
good faith;
14
(iv)
Liens arising from court or
arbitral proceedings which have been commenced or are pending,
provided that the claims secured thereby are being contested in
good faith by the Borrower or a Subsidiary; any execution thereon
has been stayed and continues to be stayed; and such Liens do not
materially impair the use of the property in the business of the
Borrower or the Subsidiary, as the case may be;
(v)
good faith deposits made in the
ordinary course of business to secure the performance of bids,
tenders, contracts (other than for the repayment of borrowed
money), leases, surety, customs, performance bonds and other
similar obligations;
(vi)
deposits to secure public or
statutory obligations or in connection with any matter giving rise
to a Lien described in (iii) above;
(vii)
deposits of cash or securities
in connection with any appeal, review or contestation of any Lien
or any matter giving rise to a Lien described in (i) or
(iv) above;
(viii)
minor title defects or
irregularities, minor encroachments, zoning laws and ordinances,
easements, servitudes, party wall agreements, licences, rights of
way, restrictions that run with the land, leases, municipal by-laws
and regulations or other similar encumbrances or privileges in
respect of Properties (including without limitation, easements,
rights of way and agreements for sewers, trains, gas and water
mains or electric conduits, poles, wires and cable) which in the
aggregate do not materially impair the use of such property by the
Borrower or a Subsidiary, as the case may be, in the operation of
its business, and which are not violated in any material respect by
existing or proposed structures or land use;
(ix)
security given by the Borrower
or a Subsidiary to a public utility or any Governmental Body, when
required by such utility or Governmental Body in connection with
the operations of the Borrower or a Subsidiary, as the case may be,
in the ordinary course of its business, which singly or in the
aggregate do not materially impair the use of the asset concerned
in the operation of the business of the Borrower or the Subsidiary,
as the case may be;
(x)
the reservation in any original
grants from the Crown of any land or interest therein and statutory
exceptions to title;
(xi)
Liens granted by the Borrower
to any Guarantor or by any Guarantor to the Borrower or any other
Guarantor;
(xii)
any Lien, other than a
construction Lien, payment of which has been provided for by
deposit with the Lender of an amount in cash, or the obtaining of a
surety bond or letter of credit satisfactory to the Lender,
sufficient in either case to pay or discharge such Lien or upon
other terms satisfactory to the Lender;
(xiii)
any Lien securing Permitted
Debt, unless same is by definition unsecured;
(xiv)
assignments of insurance
provided to landlords (or their mortgagees) pursuant to the
terms of any lease and Liens or rights reserved in or exercised
under any lease and any statutory or common law rights of landlords
for rent or compliance with the terms of
such lease;
(xv)
rights and interests created by
notice registered by any transportation authority with respect to
proposed roads or highways which do not materially impair the use
of Properties owned or leased by the Borrower or a Subsidiary in
the operation of the business of the Borrower or
a Subsidiary;
(xvi)
the granting by the Borrower or
any Subsidiary in the ordinary course of its business consistent
with past practice of any lease, sub-lease, tenancy or right of
occupancy to any Person in respect of Properties owned or leased by
the Borrower or a Subsidiary;
(xvii)
applicable municipal by-laws,
development agreements, subdivision agreements, site plan
agreements, zoning laws and building restrictions which do not in
the aggregate materially adversely affect the current
15
use of the property
affected thereby and provided that the same have been complied with
in all material respects;
(xviii)
any attachment or judgment Lien
not constituting an Event of Default;
(xix)
Liens existing on assets of any
Person at the time such Person becomes a Subsidiary, provided that
(i) such Lien was not created in contemplation of such Person
becoming a Subsidiary, and (ii) such Lien does not encumber
any assets other than the assets subject to such Lien at the time
such Person becomes a Subsidiary;
(xx)
other Liens incidental to the
conduct of the business or the ownership of the assets of the
Borrower or any Subsidiary that (i) were not incurred in
connection with borrowed money, (ii) do not in the aggregate
materially impair the use of the assets subject to the Lien in the
operation of such business, and (iii) do not secure
obligations aggregating in excess of $1,000,000;
(xxi)
the Liens granted pursuant to
the Security;
(xxii)
any registered Lien existing as
of September 12, 2007 that is disclosed in the title insurance
commitments issued in respect of the Mortgaged Properties in
connection with this Agreement;
(xxiii)
Purchase Money Security
Interests existing as of the Closing Date;
(xxiv)
Purchase Money Security
Interests incurred after the Closing Date in connection with the
purchase of new assets permitted hereunder up to an aggregate of
$5,000,000; and
(xxv)
any other Lien which the Lender
approves in writing as a Permitted Encumbrance;
“ Permitted
Lender Assignee ” has the meaning ascribed thereto in
Section 9.8;
“ Person
” means any individual, partnership, limited partnership,
limited liability company, joint venture, syndicate, sole
proprietorship, company or corporation with or without share
capital, unincorporated association, trust, trustee, executor,
administrator or other legal or personal representative,
Governmental Body or any other legal entity;
“ Plan
” means an employee benefit plan defined in Section 3(3)
of ERISA in respect of which the Borrower or any ERISA Affiliate
is, or within the immediately preceding six years was, an “
employer ” as defined in Section 3(5)
of ERISA;
“ Pre-Payment
Amount ” has the meaning ascribed thereto in
Section 2.3;
“ proceeding
” has the meaning ascribed thereto in
Section 5.1(p);
“ Project
Financing Assets ” has the meaning ascribed thereto in
Section 4.1(a);
“ Properties
” means all lands and premises identified in
Schedule B hereto;
“ Purchase Money
Security Interest ” means any Lien given, assumed or
arising by operation of law to provide or secure, or to provide the
obligor with funds to pay, the whole or any part of the
consideration for the acquisition of property where the principal
amount of the obligation secured by such Lien (i) is not in
excess of the cost to the obligor of the property encumbered
thereby and (ii) is secured only by the property being
acquired by the obligor, and includes the renewal or refinancing of
any such Lien upon the same property provided that the indebtedness
secured and the security therefor are not increased
thereby;
“ Racing and
Gambling Regulatory Authorities ” means the racing and
gambling regulatory authorities in each state where the Borrower or
any Guarantor (or any of their respective Subsidiaries)
maintains racetracks and/or carries on business, including (without
limitation) the California Horse Racing Board, the Division of
Pari-Mutuel
16
Wagering within the
Florida Department of Business and Professional Regulation, the
State Harness Racing Commission of Pennsylvania, the Oklahoma Horse
Racing Commission and the Nevada Gaming Commission;
“
Regulation U ” means Regulation U of the
Board of Governors of the Federal Reserve System, in effect from
time to time;
“ Release
” shall mean any release, spill, emission, leaking, pumping,
pouring, dumping, emptying, injection, deposit, disposal,
discharge, dispersal, leaching or migration or other movement on,
into or through the Environment or on, into, through, over or out
of any property;
“ Release and
Termination Agreement ” means the release and termination
agreement made as of November 14, 2006 between the Lender, MEC
Pennsylvania Racing, Inc., Washington Trotting
Association, Inc., Mountain Laurel Racing, Inc., the
Borrower and PA Meadows, LLC.
“ Remington
Construction Loan Agreement ” means the loan agreement
made as of July 22, 2005 between Remington Park, Inc., as
borrower, the Lender, as lender, and others, as the same may be
amended or restated from time to time;
“ Remington
Borrower ” means Remington Park, Inc.;
“ Replacement
Cost ” means, with respect to any property or asset, the
cost of repairing, replacing or reinstating such property or asset
with materials of like kind and quality and for like occupancy
(where applicable) on the same or a similar site, in accordance
with the requirements of any applicable municipal by-laws and
without deduction for depreciation;
“ Reportable
Event ” means any of the events described in
Section 4043 of ERISA;
“ Safety
Consent ” shall mean any consent, approval, permit,
licence, order, filing, authorization, exemption, registration,
ratification, permission, waived reporting requirement or waived
notice requirement and any related agreement or communication
whatsoever issued, granted, given or otherwise made available by or
under the authority of any Governmental Body regarding health or
safety matters or under any Safety Law;
“ Safety Law
” shall mean any Applicable Law designed to provide safe or
healthy conditions for the public or workers and to reduce safety
or health hazards for the public or workers and includes all Safety
Consents;
“ Santa Anita
General Security Agreement ” has the meaning ascribed
thereto in Section 7.2(q)(xi);
“ Santa Anita
Guarantee and Indemnity ” has the meaning ascribed
thereto in Section 7.2(q)(li);
“ Santa Anita
Guarantee Fee ” has the meaning ascribed thereto in
Section 7.2(q)(li);
“ Santa Anita
Property ” means the lands and premises designated as the
Santa Anita Property in Schedule B hereto;
“ Santa Anita
Property Environmental Indemnity ” has the meaning
ascribed thereto in Section 7.2(q)(xii);
“ Santa Anita
Security ” has the meaning ascribed thereto in
Section 7.2(q)(xi);
“ Santa Anita
Senior Facility ” means the term loan credit agreement
dated as of October 8, 2004 between The Santa Anita
Companies, Inc. and Wells Fargo Bank, National Association,
together with all guaranties and collateral security therefor, as
amended as of the Closing Date, having a principal amount
outstanding at any time of not greater than $75,000,000, and
includes any renewal or refinancing of any such facility provided
the indebtedness thereof or security therefor is not increased
thereby;
“ Santa Anita
Third Assignment of Material Agreements ” has the meaning
ascribed thereto in Section 7.2(q)(x);
“ Santa Anita
Third Assignment of Rents and Leases ” has the meaning
ascribed thereto in Section 7.2(q)(ix);
17
“ Santa Anita
Third Mortgage ” has the meaning ascribed thereto in
Section 7.2(q)(viii);
“ Second
Arrangement Fee ” has the meaning ascribed thereto in
Section 4.3(b);
“ Securities
Acts ” means both the Securities Act of 1933 , as
amended, and the Securities Exchange Act of 1934 , as
amended, and the respective rules and regulations promulgated
thereunder;
“ Securities
Commission ” means the Securities and Exchange Commission
of the United States of America, or other Governmental Body in
replacement thereof;
“ Security
” has the meaning ascribed thereto in
Section 7.2(q);
“ Subordinated
Debt ” means, collectively, up to $75,000,000 principal
amount of 7.25% convertible subordinated notes due
December 15, 2009 issued by the Borrower pursuant to an
indenture dated December 2, 2002, and up to $150,000,000
principal amount of 8.55% convertible subordinated notes due
June 15, 2010 issued by the Borrower pursuant to an indenture
dated June 2, 2003, each with the Bank of New York, and
each as the same may be amended or modified from time to time on
the terms approved by the Lender;
“ Subsidiary
” means, with respect to any Person at any time, any Person
of which at least a majority of the votes attaching to Voting
Interests are at the time, directly or indirectly, owned by
such Person;
“ SunTrust
” means SunTrust Bank, and its successors and assigns under
the SunTrust Credit Agreement;
“ SunTrust Credit
Agreement ” means the loan and security agreement made as
of May 11, 2007 among AmTote, as borrower, and SunTrust, as
lender, as may be amended from time to time;
“ Taxes
” means all taxes of any kind or nature whatsoever including,
without limitation, income taxes, sales or value-added taxes, goods
and services or use taxes, levies, imposts, stamp taxes, royalties,
duties, and all fees, deductions, charges and withholdings imposed,
levied, collected, withheld or assessed as of May 1, 2002 or
at any time thereafter, by any Governmental Body of or within the
United States of America or any other jurisdiction whatsoever
having power to tax, together with penalties, fines, additions to
tax and interest thereon;
“ Termination
Date ” means: (i) the earlier of the Maturity Date;
and (ii) such earlier date as the entire balance of the Loans
under the Bridge Loan may become due hereunder, whether by
acceleration or otherwise;
“ The Maryland
Jockey Club ” means, collectively, Laurel Racing
Association Limited Partnership, Pimlico Racing
Association, Inc. and certain of their Affiliates;
“ Thistledown
First Assignment of Material Agreements ” has the meaning
ascribed thereto in Section 7.2(q)(l);
“ Thistledown
First Assignment of Rents and Leases ” has the meaning
ascribed thereto in Section 7.2(q)(xlix);
“ Thistledown
First General Security Agreement ” has the meaning
ascribed thereto in Section 7.2(q)(li);
“ Thistledown
First Mortgage ” has the meaning ascribed thereto in
Section 7.2(q)(xlviii);
“ Thistledown
Guarantee Fee ” has the meaning ascribed thereto in
Section 7.2(q)(lviii);
“ Thistledown
Guarantee and Indemnity ” has the meaning ascribed
thereto in Section 7.2(q)(lviii);
“ Thistledown
Guarantor ” means Thistledown, Inc.;
“ Thistledown
Property ” means the lands and premises designed as the
Thistledown Property in Schedule B hereto;
“ Thistledown
Property Environmental Indemnity ” has the meaning
ascribed thereto in Section 7.2(q)(xliv);
18
“ Thistledown
Security ” has the meaning ascribed thereto in
Section 7.2(q)(xliii);
“ Threat of
Release ” shall mean a reasonable likelihood of a Release
that may require action in order to prevent or mitigate damage to
the Environment that may result from such Release;
“ Unmatured Event
of Default ” means any event or circumstance which, with
the giving of notice, the lapse of time, or both, would
(if not cured or otherwise remedied during such time)
constitute an Event of Default;
“ Unaudited
Financial Statements ” means the unaudited consolidated
financial statements of the Borrower for the Fiscal Quarter ended
June 30, 2007;
“ Unutilized
Amount ” has the meaning ascribed thereto in
Section 4.3(a);
“ US Dollars
” means lawful money of the United States of
America;
“ Voting
Interests ” means shares of capital stock issued by a
corporation (or other equivalent ownership interests in any
other Person), the holders of which are ordinarily, in the absence
of contingencies, entitled to vote for the election of directors
(or Persons performing similar functions) of such Person, even
if the right so to vote has been suspended by the happening of such
a contingency; and
“ Wells Fargo
Subordination Agreement ” means the subordination
agreement made as of even date herewith between the Lender and
Wells Fargo Bank, National Association, as the same may be amended
or restated from time to time.
19
1.2
Gender and Number
Words importing the
singular include the plural and vice versa and words
importing gender include all genders.
1.3
Invalidity, etc.
Each of the provisions
contained in any Loan Document is distinct and severable and a
declaration of invalidity, illegality or unenforceability of any
such provision or part thereof by a court of competent jurisdiction
shall not affect the validity or enforceability of any other
provision of such Loan Document or of any other Loan Document.
Without limiting the generality of the foregoing, if any amounts on
account of interest or fees or otherwise payable by the Borrower or
the Guarantors to the Lender hereunder exceed the maximum amount
recoverable under Applicable Law, the amounts so payable hereunder
shall be reduced to the maximum amount recoverable under
Applicable Law.
1.4
Headings, etc.
The division of a Loan
Document into articles, Sections and clauses, the inclusion of a
table of contents and the insertion of headings are for convenience
of reference only and shall not affect the construction or
interpretation of such Loan Document.
1.5
Governing Law
This Agreement shall be
governed by and construed in accordance with the laws of the State
of New York applicable to contracts wholly to be performed
within such State.
1.6
Attornment
Each of the parties hereto
irrevocably and unconditionally submits and attorns, for itself and
its property, to the non-exclusive jurisdiction of any court of the
State of New York or federal court of the United States
of America sitting in the County and State of New York, and
any appellate court therefrom for all matters arising out of or in
connection with this Agreement or any of the other Loan Documents
to which it is a party, or for recognition or enforcement of any
judgment, and each of the parties hereto hereby irrevocably and
unconditionally agrees that all claims in respect of any such
action or proceeding may be heard in any such State of
New York court or, to the extent permitted by law, in such
federal court. Each of the parties hereto agrees that a final
judgment in any such action or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law. Nothing in this Agreement
shall affect any right that any party may otherwise have to bring
any action or proceeding relating to this Agreement or any of the
other Loan Documents in the courts of any jurisdiction.
1.7
Judgment Currency
All amounts to be paid
pursuant to this Agreement shall be payable when due in
U.S. dollars, in the full amount due, without deduction for
any variation in any rate of exchange (as defined below). Each
party hereto hereby agrees to indemnify the other parties hereto
against any loss incurred by any of them as a result of any
judgment or order being given or made for the amount due hereunder
and such judgment or order being expressed and paid in a currency
(the “ Judgment Currency ”) other than
U.S. dollars and as a result of any variation as between
(a) the rate of exchange at which the amount in
U.S. dollars is converted into the Judgment Currency for the
purpose of such judgment or order and (b) the rate of exchange
at which such party is then able to purchase U.S. dollars with
the amount of the Judgment Currency actually received by it. The
term “rate of exchange” shall include any premiums and
costs of exchange payable in connection with the purchase of, or
conversion into, the relevant currency with or from
U.S. dollars.
1.8
References
Except as otherwise
specifically provided, reference in any Loan Document to any
contract, agreement or any other instrument (including, without
limitation, any other Loan Document) shall be deemed to include
references to the same as varied, amended, restated, supplemented
or replaced from time to time and reference in any Loan Document to
any
20
enactment, including
without limitation, any statute, law, by-law, regulation, ordinance
or order, shall be deemed to include references to such enactment
as re-enacted, amended or extended from time
to time.
1.9
Currency
Except as otherwise
specifically provided herein, all monetary amounts in this
Agreement are stated in U.S. dollars.
1.10
This Agreement to
Govern
If there is any
inconsistency between the terms of this Agreement and the terms of
any other Loan Document, the provisions hereof
shall prevail.
1.11
Generally Accepted Accounting
Principles
Except as otherwise
specifically provided herein, all accounting terms shall be applied
and construed in accordance with GAAP (including, without
limitation, determining the amount of any Contingent
Liability).
1.12
Computation of Time
Periods
Except as otherwise
specifically provided herein, in the computation of a period of
time from a specified date to a later specified date, the word
“ from ” means “ from and including
” and the words “ to ” and “
until ” each mean “ to but excluding
”.
1.13
Actions on Days Other Than Banking
Days
Except as otherwise
specifically provided herein, where any payment is required to be
made or any other action is required to be taken on a particular
day and such day is not a Banking Day and, as a result, such
payment cannot be made or action cannot be taken on such day, then
this Agreement shall be deemed to provide that such payment shall
be made or such action shall be taken on the first Banking Day
after such day and interest and fees shall be calculated
accordingly. If the payment of any amount is deferred for any
period under this Section, then such period shall, unless otherwise
provided herein, be included for purposes of the computation of any
interest or fees payable hereunder.
1.14
Oral Instructions
Notwithstanding any other
provision herein regarding the delivery of notices, including
Borrowing Notices, by the Borrower, the Lender shall in its sole
discretion be entitled to act upon the oral instructions of the
Borrower, or any Person reasonably believed by the Lender to be a
Person authorized by the Borrower to give instructions, regarding
any request for an Advance. All such oral instructions shall be at
the risk of the Borrower and must be confirmed in writing by the
Borrower on the same Banking Day as the verbal instruction is
given. The Lender shall not be responsible for any error or
omission in such instructions or in the performance thereof except
in the case of gross negligence, wilful misconduct, fraud or
illegal acts by the Lender or any of its officers, directors,
employees, agents or representatives.
1.15
Incorporation of
Schedules
The following schedules
annexed hereto shall, for all purposes hereof, form part of
this Agreement:
|
|
Schedule A
|
|
Borrowing
Notice
|
|
|
Schedule B
|
|
Properties
and Prior Mortgages
|
|
|
Schedule C
|
|
Environmental
Reports
|
21
ARTICLE
2
BRIDGE
LOAN
2.1
Establishment of Bridge
Loan
(a)
Subject to the terms and conditions of this Agreement, the Lender
hereby establishes in favour of the Borrower a secured
non-revolving bridge loan in the principal amount of up to
$80,000,000, available on the terms and conditions set
out herein.
(b)
All Advances shall be made in US Dollars.
(c)
At no time shall the amount of the Loan exceed the Loan Amount
available to the Borrower at such time.
(d)
From the Closing Date, the Bridge Loan shall be available to the
Borrower solely for the purposes contemplated in
Section 6.1(ee) hereof and for no
other purposes.
2.2
Non-Revolving Nature of Bridge
Loan
The Bridge Loan is a
non-revolving facility and any portion of the Loan that is repaid
shall reduce the Loan Amount and may not
be re-borrowed.
2.3
Pre-Payment
(a)
Subject to LIBOR contract maturity dates with respect to any
Advance, the Borrower may from time to time (without premium or
penalty) on any Banking Day repay to the Lender any portion of the
Loan, provided that any such repayment (a) shall be in an
amount of at least $500,000 and any greater amount shall be an
integral multiple of $50,000 and (b) shall be effected on at
least ten Banking Days notice in writing to the Lender; provided
that such notice, once given, shall be irrevocable and binding upon
the Borrower. The Loan Amount shall be automatically and
permanently reduced by the amount of any
such repayment.
(b)
The Borrower shall also have the right to pre-pay the entire Loan
at any time, provided that the Borrower repays to the Lender the
Loan then outstanding (including, for greater certainty, all
accrued and unpaid interest, fees and other amounts owing as of
such date) (the “Pre-Payment Amount”), and the Borrower
cancels any undrawn portion of the Loan. Notice of such voluntary
pre-payment shall be given by the Borrower (which notice shall be
irrevocable when given) to the Lender not later than
10 Banking Days prior to the date of such pre-payment,
specifying the date of such pre-payment. On receipt of full payment
of the Pre-Payment Amount, the Lender shall promptly execute and
deliver a full release of the Security held by it with respect to
the transactions and obligations contemplated herein, but in no
event shall such release operate as a release of any indemnities
which are stated to survive a termination and/or release of any
such security or obligation. There shall be no make-whole payment
by the Borrower to the Lender in connection with any
pre-payment.
2.4
Mandatory Repayment
(a)
The Loan shall be repaid in the following amounts and
circumstances:
(i)
in the event that the
outstanding principal amount of the Loan at any time shall exceed
the Loan Amount at such time, the Borrower shall forthwith make a
repayment on account of the Loan such that, after giving effect to
such repayment, the aggregate principal amount of the Loan
outstanding will be not more than the Loan Amount;
(ii)
upon the receipt by the
Borrower or any of its Subsidiaries of the net
proceeds of:
22
(A)
insurance claims in excess of
$1,000,000 in the aggregate during the term of this Agreement,
other than proceeds of claims under business interruption
insurance, in respect of any of the assets and undertaking of the
Borrower or any of its Subsidiaries, unless such proceeds are used
for repairs or reconstruction of damaged properties
(as approved by the Lender, acting reasonably);
(B)
asset and/or real property
sales by the Borrower or any of its Subsidiaries out of the
ordinary course of business consistent with past practice (which
ordinary course of business includes the sale of individual
residential lots at market prices);
(C)
any issue of securities
(including by way of incremental debt or equity) by the Borrower
(except those in respect of the Borrower’s long term
incentive plan) or any of its Subsidiaries (other than in
connection with the Fair Enterprise Investment), or borrowing of
monies, other than Permitted Debt, by the Borrower of any of its
Subsidiaries;
(D)
any expropriation or condemnation of the whole or any part of its
real property or other assets, an amount equal to 100% of such
net proceeds shall be applied to repay the Loan, subject, to the
extent applicable, to the terms of the BMO Intercreditor
Agreement; and
(iii)
in full on the Termination
Date.
(b)
The repayments referred to in items (A) to (D) inclusive
of Section 2.4(a)(ii) shall be made as promptly as practicable
(and in any event within three Banking Days) following the
receipt by any of the Borrower and/or its Subsidiaries of the net
proceeds referred to therein. Notwithstanding the foregoing, the
Borrower and/or its Subsidiaries shall direct all purchasers of the
assets and/or real property specified in Section 2.4(a)(ii)(B)
to pay the applicable amount of net proceeds arising therefrom
and due to the Lender pursuant to this Agreement directly to the
Lender. Upon the repayment of the principal amount of the Loan or
interest pursuant to Section 2.4(a), the Loan Amount shall be
permanently reduced by an amount equal to the
principal paid.
(c)
For the purposes of this Section 2.4, net proceeds from any
sale or other transaction referred to herein means the proceeds
(including any cash received in respect of non-cash proceeds
(including any cash payments received by way of deferred payment of
principal pursuant to a note or instalment receivable or purchase
price adjustment receivable or otherwise, but excluding any
interest payments) but only as and when received) received by the
Borrower and/or any of its Subsidiaries therefrom net of all
reasonable professional fees, brokers fees paid on an
arm’s-length market basis, filing fees, commissions, sales
tax and other direct costs and expenses of such transaction,
together with, where applicable, in respect of any sale or other
disposition of assets, the amounts necessary to repay or otherwise
satisfy all Permitted Encumbrances attaching to such assets ranking
in priority to the Security or arising by virtue of
this Agreement.
2.5
Voluntary Reduction in Aggregate
Commitment
The Borrower shall have
the right at any time and from time to time, by giving at least ten
Banking Days’ notice to the Lender, which notice, once given,
shall be irrevocable and binding upon the Borrower, to reduce the
Loan Amount to a lower amount that is not less than the principal
amount of the Loan then outstanding. Such notice shall specify the
amount of the reduction, which shall be in an integral multiple of
$250,000. The amount of any such reduction so made by the Borrower
shall be permanent and irrevocable and the Loan Amount shall be
reduced accordingly.
23
ARTICLE
3
GENERAL
PROVISIONS RELATING TO THE BRIDGE LOAN
3.1
Advances
Each request by the
Borrower for an Advance under the Bridge Loan shall be made by the
delivery of a duly completed and executed Borrowing Notice to the
Lender on the fifth Banking Day prior to the proposed Borrowing
Date. Any notice in respect of a proposed Advance shall be
irrevocable and binding on the Borrower. All Advances shall be in
an amount of at least $500,000.
3.2
Payments Generally
All payments in respect of
the Bridge Loan (in respect of principal, interest, fees or
otherwise) shall be made by the Borrower to the Lender no later
than 2:00 p.m. (Toronto time) on the due date thereof to the
account specified therefor by the Lender from time to time. Any
payments received after such time shall be considered for all
purposes as having been made on the next following Banking Day
unless the Lender otherwise agrees in writing. All payments shall
be made by way of immediately available funds.
3.3
Illegality
If the introduction of or
change to any present or future Applicable Law, or any change in
the interpretation or application thereof by any Governmental Body,
shall make it unlawful for the Lender to make or maintain any Loan
or any relevant portion thereof or to give effect to its
obligations in respect of such Loan as contemplated hereby, the
Lender may, by notice to the Borrower, declare that its obligations
hereunder in respect of such Loan shall be terminated, and
thereupon, subject as hereinafter provided in this
Section 3.3, the Borrower shall prepay to the Lender forthwith
(or at the end of such period to which the Lender shall in its
discretion have agreed) all of the Obligations to the Lender in
respect of such Loan, including all amounts payable in connection
with such prepayment pursuant to Section 3.4. Any repayments
made under this Section 3.3 shall permanently reduce the
Loan Amount.
3.4
Indemnity
(a)
The Borrower and each of the Guarantors (each, an “
Indemnifying Party ”) shall indemnify the Lender and
its officers, directors and employees (each, an “
Indemnified Person ”) and shall hold each of them
harmless from and against any and all losses, liabilities, damages,
claims and reasonable costs and out-of-pocket expenses (including
reasonable legal fees on a solicitor and his own client basis)
(in each case, a “ Claim ”) that may be
incurred by or asserted as a result of a claim by any third party
or awarded in favour of a third party against any of them, in each
case, arising out of, related to, or in connection with, or by
reason of (i) the transactions contemplated hereby,
(ii) any Acquisition undertaken by the Borrower or any of its
Subsidiaries, or (iii) any Environmental Law, including
(A) the claim of any Lien thereunder, (B) the presence of
any Hazardous Substance affecting any Properties or any adjacent
real estate to the Properties, or (C) the Release by the
Borrower or a Subsidiary of any Hazardous Substance into the
environment. Notwithstanding the foregoing provisions of this
Section 3.4(a), an Indemnifying Party shall not be obligated
to indemnify an Indemnified Person under this Section 3.4(a)
for any Claim to the extent that such Claim is solely
attributable to:
(i)
the gross negligence, fraud,
wilful misconduct or wilful illegal acts of any Indemnified
Person;
(ii)
the failure on the part of any
Indemnified Person to perform any of its material covenants or
obligations contained in any Loan Document to which it is a party,
or a representation or warranty made by any Indemnified Person
under the Loan Documents to which it is a party or in any
certificate or other document delivered by any Indemnified Person
pursuant hereto or in connection with any Loan Document being found
to be false or incorrect in any material respect so as to make it
materially misleading when made;
24
(iii)
the Claim of any Indemnified
Person for expenses which such Indemnified Person is obligated to
bear hereunder; or
(iv)
a Claim to the extent arising
from the act of offering, selling, disposing or transferring by any
Indemnified Person of all or part of its interest in the
Loan Documents.
(b)
The obligations and indemnification of the Borrower and each of the
Guarantors under this Section 3.4 shall survive the payment
and satisfaction of all Obligations and the termination of this
Agreement. The Lender shall hold the benefit of this indemnity in
trust for those Indemnified Persons who are not parties to
this Agreement.
3.5
Proceedings in Respect of
Claims
(a)
If a Claim is made against an Indemnified Person as to which an
Indemnifying Party may have an indemnification obligation under
Section 3.4(a), such Indemnified Person shall notify the
Indemnifying Party of the Claim; provided that the failure to
provide such notice promptly shall not release the Indemnifying
Party from any of its obligations to indemnify unless
(and only to the extent) such failure shall prevent the
Indemnifying Party from contesting, or materially and adversely
affects the ability of the Borrower to conduct a contest of,
such Claim.
(b)
The Indemnified Person shall be entitled, in its discretion, to
require the Indemnifying Party to prosecute, at the Indemnifying
Party’s own cost and expense, the entire defence of such
Indemnified Person against any Claim by a third party for which
such Indemnified Person is indemnified under Section 3.4(a).
In addition, upon delivery by the Indemnifying Party to such
Indemnified Person of a written acknowledgement of the Indemnifying
Party’s obligations to indemnify such Indemnified Person in
accordance with the terms of this Agreement in respect of such
Claim, the Indemnifying Party shall be entitled, at its own
expense, to participate in, and, to the extent that the
Indemnifying Party desires, to assume and control the defence
thereof through its own counsel (who shall be subject to the
reasonable approval of the Indemnified Person); provided, however,
that if the Indemnifying Party is controlling any proceedings, the
Indemnifying Party shall keep such Indemnified Person fully
apprised of the status of such proceedings and shall provide such
Indemnified Person with all information with respect to such
proceedings as such Indemnified Person shall reasonably request.
The Indemnifying Party must indicate its election to assume such
defence by written notice to the Indemnified Person within
30 days following receipt of the Indemnified Person’s
notice of the Claim, or in the case of a third party Claim which
requires a shorter time for response then within such shorter
period as specified in the Indemnified Person’s notice of
Claim, provided that such Indemnified Person has given the
Indemnifying Party notice thereof. The Indemnified Person may
participate at its own expense and with its own counsel (provided
that all Indemnified Persons shall use the same counsel) in any
proceeding conducted by the Indemnifying Party in accordance with
the foregoing; provided the Indemnifying Party shall in any event
remain liable hereunder in respect of the Claim. The Indemnifying
Party shall not be entitled to assume and control (but may, at
its own expense, participate in) the defence of any such Claim if
and to the extent that:
(i)
in the reasonable opinion of
such Indemnified Person acting in good faith,
(A)
such proceeding involves any
risk of imposition of criminal liability on such Indemnified
Person; or
(B)
such proceeding involves any
risk of impairment to the reputation of the Indemnified Person in
any material respect; or
(C)
the control of such action,
suit or proceeding would involve an actual or potential conflict of
interest, such that it is advisable for such Indemnified Person to
be represented by separate counsel; or
(ii)
such proceeding involves Claims
not fully indemnified by the Indemnifying Party which the
Indemnifying Party and the Indemnified Person have been unable to
sever from the indemnified Claim(s).
25
Notwithstanding the first
paragraph of this Section 3.5(b), in any of the circumstances
set out in Section 3.5(b)(i) or (ii), the Indemnified
Person shall be entitled to assume the defence of such Claim with
counsel selected by it (provided that all Indemnified Parties shall
use the same counsel) and the reasonable fees and out-of-pocket
expenses of such counsel shall be borne by the Indemnifying Party;
provided, that the Indemnifying Party shall in any event remain
liable hereunder in respect of the indemnified Claim.
(c)
Except in the circumstances described in Section 3.5(b)(i)(C),
the Indemnifying Party may enter into any settlement or other
compromise with respect to any Claim in respect of which it has an
indemnity payment obligation under Section 3.5(a) without the
prior written consent of the Indemnified Person, except in the case
of a settlement involving an admission of liability of such
Indemnified Person, in which case the prior written consent of the
Indemnified Person shall be obtained, provided that if such
Indemnified Person withholds its consent to such settlement and the
required admission of liability of such Indemnified Person is not
in favour of a Governmental Body other than a court, would not give
rise to the imposition of any penalty or sanction against the
Indemnified Person by any Governmental Body, is not in respect of
any criminal liability and would not otherwise impair the
reputation of the Indemnified Person in any material respect, the
maximum amount of liability of the Indemnifying Party to the
Indemnified Person with respect to such Claim shall not exceed the
amount of the proposed settlement rejected by such Indemnified
Person. Unless an Event of Default shall have occurred and be
continuing, no Indemnified Person shall enter into any settlement
or other compromise with respect to any Claim for which the
Indemnifying Party has in writing agreed to fully indemnify under
Section 3.5(a) without the prior written consent of the
Indemnifying Party, which consent may be withheld in the
Borrower’s sole discretion, unless such Indemnified Person
waives its right to be indemnified under Section 3.5(a), with
respect to such Claim.
(d)
Each Indemnified Person shall supply the Indemnifying Party with
such information and documents reasonably requested by the
Indemnifying Party as are necessary or advisable for the
Indemnifying Party to participate in any action, suit or proceeding
to the extent permitted above, and the Indemnifying Party shall
reimburse the Indemnified Person for the reasonable costs and
out-of-pocket expenses of supplying such information and documents,
all within a reasonable period of time following the Indemnifying
Party’s request therefor.
(e)
Upon payment in full of any Claim pursuant to Section 3.5(a)
to or on behalf of an Indemnified Person, the Indemnifying
Party, without any further action, shall be subrogated to any and
all claims that such Indemnified Person may have relating thereto
(other than claims in respect of insurance policies maintained by
such Indemnified Person at its own expense). Each Indemnified
Person agrees, at the Indemnifying Party’s reasonable request
and expense, to give such further assurances or agreements and to
otherwise cooperate with the Indemnifying Party to enable the
Indemnifying Party to vigorously pursue
such claims.
(f)
Any amount payable to an Indemnified Person pursuant to
Section 3.5(a) shall be paid to such Indemnified Person within
30 days of the receipt (or deemed receipt) by the
Indemnifying Party of a written request therefor from such
Indemnified Person, accompanied by a written statement describing
in reasonable detail the basis for such indemnity and the
computation of the amount so payable; provided that payment of an
indemnity in respect of a third party Claim need not be made until
payment is due, whether by compromise, settlement, court
proceedings, arbitration or otherwise, from the Indemnified Person
in respect of such third party Claim.
3.6
Evidence of
Indebtedness
The Lender shall maintain
and keep accounts showing the amount of all Loans advanced by the
Lender, from time to time and the dates thereof and the interest,
fees and other charges accrued thereon or applicable thereto from
time to time, and all payments of principal (including
prepayments), interest and fees and other payments made by the
Borrower to the Lender from time to time under the Bridge Loan.
Such accounts maintained by the Lender shall be prima facie
evidence of the matters recorded therein.
26
ARTICLE
4
INTEREST
AND FEES
4.1
Interest Rate
(a)
Advances under the Loan (each
such advance being referred to as an “ Advance
”) shall, subject to Applicable Laws, bear interest from time
to time as set forth herein:
(i)
subject to
Sections 4.1(a)(ii) and (iii) herein, from and after the
Closing Date, all Advances under the Bridge Loan shall bear
interest at a fixed rate per annum equal to LIBOR plus
1,000 basis points (the “ Interest Rate
”);
(ii)
from and after
December 31, 2007, in the event that the Borrower and/or its
Subsidiaries has not (a) completed asset and/or real property
sales, (b) entered into Approved Sales Contracts or
(c) raised equity (other than the Fair Enterprise Investment),
with aggregate net proceeds of not less than $50,000,000, all
outstanding and any subsequent Advances under the Bridge Loan shall
bear interest at a fixed rate per annum equal to the Interest Rate
plus 100 basis points; and
(iii)
from and after
February 29, 2008, in the event that the Borrower and/or its
Subsidiaries has not entered into Approved Sales Contracts in
respect of asset sales yielding aggregate net proceeds sufficient
to repay the Loan Amount in full, all outstanding and any
subsequent Advances under the Loan shall bear interest at a fixed
rate per annum equal to the Interest Rate payable pursuant to
Sections 4.1(a)(i) or (ii), as applicable, plus
100 basis points,
with interest in each case
payable at maturity of each separate Advance. Notwithstanding
anything herein contained to the contrary, the Borrower
acknowledges and agrees that asset sales or Approved Sales
Contracts relating to (A) purchases by MID or (B) (i) the
Aventura Lands (as defined in the Gulfstream Construction Loan
Agreement), (ii) the Hallandale Lands (as defined in the
Gulfstream Construction Loan Agreement), (iii) the membership
interest in the Gulfstream Park joint venture and/or the ground
lease underlying the Gulfstream Park joint venture and
(iv) Remington Park (collectively, the “ Project
Financing Assets ”), shall not be applicable in
calculating asset sales as contemplated in Sections 4.1(a)(ii)
and (iii) herein.
(b)
If any Obligations are not paid
when due or an Event of Default has occurred and is continuing, all
amounts owing or deemed to be owing hereunder, whether in respect
of principal, interest, fees, expenses or otherwise, both before
and after judgment, and in the case of expenses from the dates such
expenses are invoiced to the Borrower, shall bear interest at a
rate per annum determined on a daily basis that is equal to the
Interest Rate payable pursuant to Sections 4.1(a)(i), (ii) or
(iii), as applicable, plus 300 basis points per annum, in each
case calculated on the basis of the actual number of days elapsed
and on the basis of a year of 365 or 366 days, as the case may
be. Such interest shall accrue from day to day, be payable in
arrears on demand and shall be compounded monthly on the last
Banking Day of each calendar month.
(c)
If the Lender determines, in
good faith, which determination shall be final, conclusive and
binding upon the Borrower, and notifies the Borrower that
(i) by reason of circumstances affecting financial markets
inside or outside Canada, the United States or Europe, as the
case may be, deposits of U.S. Dollars are unavailable to the
Lender in the London interbank market, (ii) adequate and fair
means do not exist for ascertaining the interest rate for an
Advance on the basis provided in the definition of LIBOR, or
(iii) by reason of a change since the date of this Agreement
in any applicable law or governmental regulation, guideline or
order or in the interpretation thereof by any Official Body
affecting the Lender, or any relevant financial market, LIBOR no
longer represents the effective cost to the Lender of making or
maintaining an Advance for a relevant interest period or other
relevant period, then:
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(i)
the right of the Borrower to
request an Advance shall be suspended until the Lender determines
that the circumstances causing such suspension no longer exist and
the Lender so notifies the Borrower; and
(ii)
if any of the circumstances in
Section 4.1(c) shall occur, the Borrower and the Lender shall,
following the giving of notice by the Lender under this
Section 4.1(c), endeavour to determine an alternative
basis, which may, if such parties agree, include (without
limitation) alternative rates of interest, alternative Interest
Periods, alternative currencies or any combination thereof, for
Advances. If the Borrower and the Lender are unable to agree on
such alternative basis within a period of 30 days from the
date of such notice by the Lender (provided that in any event such
period shall not extend beyond the last day specified for giving a
Borrowing Notice in respect of any Advance then outstanding or
three Banking Days before any repayment date required under
Applicable Law, as the case may be), the Lender shall determine an
interest rate and specify an Interest Period (not exceeding
one month) in respect of each Advance then outstanding, which
interest rate shall be the cost to the Lender (as certified by
the Lender to the Borrower) of funding any such Advance for the
Interest Period so specified from such sources as it may reasonably
select and the amount of any such Advance shall bear interest at
the rate so determined. The provisions of this Section 4.1(c)
shall apply only for so long as the circumstances in
Section 4.1(c) shall exist.
4.2
Calculation and Payment of
Interest
Interest on Advances shall
accrue from day to day, both before and after default, demand,
maturity and judgment, shall be calculated on the basis of the
actual number of days elapsed and on the basis of a year of
360 days, and shall be payable to the Lender in arrears on the
last day of the relevant Interest Period.
4.3
Fees
(a)
Commitment Fee. The Borrower shall pay to the Lender on the
last Banking Day of each calendar month and on the Termination Date
(each a “ Commitment Fee Payment Date ”), in
arrears, a non-refundable commitment fee (the “
Commitment Fee ”) equal to 100 basis points per
annum of the amount, if any, by which the Loan Amount (taking into
account any repayments or cancellations that have been made by the
Borrower in accordance with the terms hereunder) exceeds the amount
of the Loan (the “ Unutilized Amount ”) on
each day in such Fiscal Quarter or the part thereof ending on the
Termination Date, as applicable. The Commitment Fee on any
Commitment Fee Payment Date shall be payable in respect of the
period from and including the Closing Date or the preceding
Commitment Fee Payment Date, as the case may be, to but excluding
the next Commitment Fee Payment Date, and shall be calculated on a
daily basis on the Unutilized Amount on each day during such period
on the basis of the number of days elapsed and a year of 365 or
366 days, as the case may be.
(b)
Arrangement Fees . The Borrower shall pay to the Lender, on the
Closing Date, an arrangement fee (the “ First
Arrangement Fee ”) of $2,400,000, being 3% of the Loan
Amount. In addition, the Borrower shall pay to the Lender, on
February 29, 2008, an additional arrangement fee
(the “ Second Arrangement Fee ”) of 1% of
the Loan Amount.
4.4
Payment of Costs and
Expenses
Whether or not the
Borrower takes advantage of the Bridge Loan, the Borrower shall pay
to the Lender, on demand, the following costs and expenses
(collectively, the “ Lender’s Costs
”):
(a)
all reasonable costs and
out-of-pocket expenses of the Lender (in the case of
solicitors’ costs, on a full indemnity basis) in connection
with the preparation, negotiation and execution of the Loan
Documents, the Intercreditor Agreements, any actual or proposed
amendment or modification hereof or thereof or any waiver hereunder
or thereunder and all instruments supplemental or ancillary thereto
and all reasonable documented due diligence expenses incurred in
connection therewith (including any surveys or appraisals of the
Mortgaged Properties reasonably undertaken by
the Lender);
28
(b)
all reasonable costs and
out-of-pocket expenses of the Lender (in the case of
solicitors’ costs, on a full indemnity basis) in connection
with obtaining advice as to the rights and responsibilities of the
Lender under the Loan Documents and the Intercreditor
Agreements; and
(c)
all reasonable costs and
out-of-pocket expenses of the Lender (in the case of
solicitors’ costs, on a full indemnity basis) in connection
with the defence, establishment, protection or enforcement of any
of the rights or remedies of the Lender under the Loan Documents or
the Intercreditor Agreements including, without limitation, all
costs and expenses of establishing the validity and enforceability
of, or of collection of amounts owing under, any of the Loan
Documents or the Intercreditor Agreements and all reasonable costs
and expenses of any receiver or receiver-manager appointed by the
Lender or any of the Lender or by a court in connection with the
enforcement of the Loan Documents or the Intercreditor
Agreements;
including, without
limitation, all of the reasonable fees and disbursements of counsel
and other advisors to the Lender, its agents, and any such receiver
or receiver-manager, on a full indemnity basis, incurred in
connection therewith, including all sales, goods and services or
value-added taxes payable by any of them on all such costs,
expenses and compensation.
29
ARTICLE
5
REPRESENTATIONS
AND WARRANTIES
5.1
Representations and
Warranties
To induce the Lender to
enter into the Loan Documents and to make the Loan, the Borrower
hereby makes the following representations and warranties with
respect to itself and its Subsidiaries taken as a whole on a
consolidated basis, and each of the Guarantors hereby makes the
following representations and warranties with respect to itself and
its Subsidiaries taken as a whole on a consolidated basis, as of
the date hereof (provided that certain of the representations and
warranties are qualified by the Disclosure Schedule
(as specifically set out therein) delivered by the Borrower
and the Guarantors to the Lender concurrently with the execution by
them of this Agreement):
(a)
Incorporation and Status. Each of the Borrower and the
Guarantors is duly incorporated, formed or organized, as the case
may be, and validly existing under the laws of its jurisdiction of
incorporation, formation or organization, as the case may be, and
has the power and capacity to own its properties and assets and to
carry on its business as presently carried on by it or as
contemplated hereunder to be carried on by it. Each of the
Guarantors is wholly-owned by the Borrower. The Borrower does not
carry on any material business other than the Core Line of
Business. None of the Guarantors carries on any business other than
the Core Line of Business and other than the ownership or operation
of casinos, hotels, resorts, card clubs, sports bars, restaurants
and theatres, all of which activities are associated with or
ancillary or related to the Core Line of Business, and the
ownership and management of a portfolio of real estate properties
held for development or sale. Except where the failure to have such
Material Authorization could not reasonably be expected to have a
Material Adverse Effect, the Borrower and each Guarantor holds all
Material Authorizations necessary to own or lease, as applicable,
each Property or Properties owned or leased by it or to carry on
its Core Line of Business (including, without limitation, all
environmental and other permits, licences and other authorizations
required for the Borrower and each Guarantor to own or lease such
Property or Properties or to carry on its Core Line of Business in
accordance with Applicable Law and further including, without
limitation, all licensing requirements of the Racing and Gambling
Regulatory Authorities in relation to the Borrower or any
Guarantor) in each jurisdiction in which it does so, all of which
are in good standing;
(b)
Power and Capacity. Each of the Borrower and the Guarantors has
the power and capacity to enter into each of the Loan Documents to
which it is a party, and to do all acts and things as are required
or contemplated hereunder or thereunder to be done, observed and
performed by it;
(c)
Due
Authorization. Each of the Borrower and the Guarantors has
taken all necessary action to authorize the execution, delivery and
performance of each of the Loan Documents to which it is
a party;
(d)
No
Contravention. The execution and delivery of each of the Loan
Documents to which each of the Borrower and the Guarantors is a
party, and the performance by each of the Borrower and the
Guarantors of its obligations thereunder (i) do not and will
not contravene, breach or result in any default under (A) the
articles, by-laws, constating documents or other organizational
documents of the Borrower or any Guarantor, (B) any Material
Authorization, (C) any Applicable Law, except where the
failure to comply with such Applicable Law could not reasonably be
expected to have a Material Adverse Effect, or (D) any
Material Agreement, (ii) do not and will not oblige the
Borrower or any of its Subsidiaries to grant any Lien to any Person
other than the Lender, and (iii) do not and will not result in
or permit the acceleration of the maturity of any indebtedness,
liability or obligation of the Borrower or any Guarantor under any
mortgage, lease, agreement or other legally binding instrument of
or affecting the Borrower or any Guarantor;
(e)
No
Consents Required. Other than filings with the Securities
Commission, no Material Authorization is required, and no consents,
approvals or further documentation of any kind whatsoever is
required to be obtained from, or provided by, any Person in
connection with (i) the execution, delivery or performance of
any of
30
the Loan Documents to
which it is a party by the Borrower or any Guarantor, (ii) the
creation of the Security, and (iii) the perfection of
such Security;
(f)
Enforceability. Each of the Loan Documents constitutes, or upon
execution and delivery will constitute, a valid and binding
obligation of the Borrower and each Guarantor which is a party to
it, enforceable against it in accordance with its terms, subject
only to the qualifications set out in the opinion of the
Borrower’s and Guarantors’ Local Agents delivered
pursuant to Section 7.2(p)(i);
(g)
Financial Statements.
(i)
The Audited and Unaudited
Financial Statements have been prepared in accordance with GAAP and
present fairly the financial position and results of operations of
the Borrower and its Subsidiaries on a consolidated basis as of the
dates indicated and for the periods specified; and
(ii)
The Lender has been furnished
with a copy of the unaudited internally prepared consolidated
financial statements of the Borrower and each of the Guarantors
dated as of and at the end of the most recently completed fiscal
quarter. Such internally prepared consolidated financial statements
of the Borrower and each of the Guarantors fairly present the
financial condition of the Borrower and each of the Guarantors as
at such date in conformity with generally accepted accounting
principles applied on a consistent basis (save and except for the
reflection of the value of the assets of the Borrower and each of
the Guarantors at their market value instead of their cost as
reflected in the notes to such financial statements) and there has
been no Material Adverse Change since the date of such
statements;
(h)
Books and Records. The Borrower, the Guarantors and each of
their respective Subsidiaries (i) makes and keeps accurate
books and records and (ii) maintains internal accounting
controls that provide reasonable assurance that
(A) transactions are executed in accordance with
management’s authorization, and (B) transactions are
recorded as necessary to permit preparation of its financial
statements and to maintain accountability for
its assets;
(i)
Borrower Organizational Documents. A true and complete copy of
the certificate of formation, certificate of authority to transact
business and by-laws of the Borrower and all other documents
creating and relative to the organization of the Borrower
(collectively, the “ Borrower Incorporation Documents
”) have been made available to the Lender. There are no other
agreements, oral or written, among any of the shareholders of the
Borrower relating to the Borrower. The Borrower Incorporation
Documents are in full force and effect, and are binding upon and
enforceable in accordance with their terms. No breach exists under
the Borrower Incorporation Documents and no act has occurred and no
condition exists which, with the giving of notice or the passage of
time would constitute a breach under the Borrower Incorporation
Documents;
(j)
Guarantors’ Organizational Documents. True and complete
copies of the certificates of formation, certificates of authority
to transact business, certificates of formation, articles of
incorporation, by-laws and all other documents creating and
relative to the organization of each of the Guaran
