BRIDGE LOAN AGREEMENTBridge Loan Agreement |
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Exhibit 10.2
MAGNA
ENTERTAINMENT CORP.
as Borrower
— and —
THE
GUARANTORS SET FORTH
ON THE SIGNATURE PAGES HEREOF
as Guarantors
— and —
MID
ISLANDI SF., ACTING
THROUGH ITS ZUG BRANCH
as Lender
BRIDGE LOAN AGREEMENT
Dated as of September 12, 2007
TABLE OF CONTENTS
ARTICLE
1
INTERPRETATION
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1.1 |
Definitions |
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3 |
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1.2 |
Gender and Number |
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20 |
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1.3 |
Invalidity, etc. |
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20 |
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1.4 |
Headings, etc. |
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20 |
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1.5 |
Governing Law |
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20 |
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1.6 |
Attornment |
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20 |
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1.7 |
Judgment Currency |
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20 |
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1.8 |
References |
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20 |
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1.9 |
Currency |
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21 |
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1.10 |
This Agreement to Govern |
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21 |
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1.11 |
Generally Accepted Accounting Principles |
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21 |
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1.12 |
Computation of Time Periods |
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21 |
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1.13 |
Actions on Days Other Than Banking Days |
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21 |
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1.14 |
Oral Instructions |
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21 |
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1.15 |
Incorporation of Schedules |
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21 |
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ARTICLE 2 |
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2.1 |
Establishment of Bridge Loan |
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22 |
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2.2 |
Non-Revolving Nature of Bridge Loan |
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22 |
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2.3 |
Pre-Payment |
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22 |
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2.4 |
Mandatory Repayment |
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22 |
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2.5 |
Voluntary Reduction in Aggregate Commitment |
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23 |
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ARTICLE 3 |
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3.1 |
Advances |
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24 |
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3.2 |
Payments Generally |
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24 |
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3.3 |
Illegality |
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24 |
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3.4 |
Indemnity |
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24 |
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3.5 |
Proceedings in Respect of Claims |
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25 |
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3.6 |
Evidence of Indebtedness |
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26 |
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ARTICLE 4 |
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4.1 |
Interest Rate |
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27 |
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4.2 |
Calculation and Payment of Interest |
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28 |
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4.3 |
Fees |
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28 |
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4.4 |
Payment of Costs and Expenses |
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28 |
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ARTICLE 5 |
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5.1 |
Representations and Warranties |
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30 |
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5.2 |
Survival of Representations and Warranties |
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39 |
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ARTICLE 6 |
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6.1 |
Affirmative Covenants |
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40 |
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6.2 |
Negative Covenants |
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47 |
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6.3 |
Environmental Matters |
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51 |
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ARTICLE 7 |
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7.1 |
Conditions Precedent to Closing |
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52 |
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7.2 |
Conditions Precedent to Advances |
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53 |
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8.1 |
Events of Default |
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62 |
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8.2 |
Remedies Upon Default |
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64 |
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8.3 |
Distributions |
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64 |
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ARTICLE 9 |
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9.1 |
Reliance and Non-Merger |
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64 |
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9.2 |
Confidentiality |
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64 |
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9.3 |
No Set-Off |
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65 |
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9.4 |
Employment of Experts |
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65 |
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9.5 |
Reliance by Lender |
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65 |
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9.6 |
Notices |
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65 |
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9.7 |
Further Assurances |
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68 |
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9.8 |
Assignment |
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68 |
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9.9 |
Disclosure of Information to Potential Permitted Lender Assignees |
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68 |
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9.10 |
Right to Cure |
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68 |
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9.11 |
Forbearance by the Lender Not a Waiver |
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68 |
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9.12 |
Waiver of Statute of Limitations and Other Defenses |
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69 |
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9.13 |
Relationship |
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69 |
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9.14 |
Time of Essence |
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69 |
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9.15 |
Service of Process/Venue |
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69 |
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9.16 |
Jury Trial Waiver |
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69 |
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9.17 |
Final Agreement/Modification |
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70 |
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9.18 |
Continuing Agreement |
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70 |
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9.19 |
No Third Party Beneficiaries |
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70 |
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9.20 |
No Brokers |
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70 |
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9.21 |
Execution in Counterparts |
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70 |
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9.22 |
Contribution by Guarantors with Respect to Obligations. |
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70 |
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9.23 |
Successors and Assigns Bound; Joint and Several Liability; Agents; and Captions |
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71 |
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9.24 |
Loss of Borrower Note |
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71 |
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9.25 |
Acknowledgment |
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71 |
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SCHEDULE A — Borrowing Notice |
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SCHEDULE B — Properties and Prior Mortgages |
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SCHEDULE C — Environmental Reports |
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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 -
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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 —
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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;
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“ 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
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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
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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
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