BRIDGE LOAN AGREEMENT

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Exhibit 10.4

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 July 22, 2005

TABLE OF CONTENTS

ARTICLE 1
INTERPRETATION

1.1		Definitions		4
1.2		Gender and Number		26
1.3		Certificate of the Lender as to Rates, etc.		26
1.4		Invalidity, etc.		26
1.5		Headings, etc.		27
1.6		Governing Law		27
1.7		Attornment		27
1.8		Judgment Currency		27
1.9		References		27
1.10		Currency		28
1.11		This Agreement to Govern		28
1.12		Generally Accepted Accounting Principles		28
1.13		Computation of Time Periods		28
1.14		Actions on Days Other Than Banking Days		28
1.15		Oral Instructions		28
1.16		Incorporation of Schedules		29

ARTICLE 2
BRIDGE LOAN

2.1		Establishment of Bridge Loan		29
2.2		Non-Revolving Nature of Bridge Loan		30
2.3		Voluntary Repayments		30
2.4		Mandatory Repayment		30
2.5		Voluntary Reduction in Aggregate Commitment		31

ARTICLE 3
GENERAL PROVISIONS RELATING TO THE BRIDGE LOAN

3.1		Advances		31
3.2		Payments Generally		32
3.3		Illegality		32
3.4		Indemnity		32
3.5		Proceedings in Respect of Claims		33
3.6		Evidence of Indebtedness		35

ARTICLE 4
ADDITIONAL CONDITIONS PRECEDENT TO ADVANCES
UNDER TRANCHE 2 AND TRANCHE 3

4.1		Tranche 2 Conditions		35
4.2		Tranche 3 Conditions		36

ARTICLE 5
INTEREST AND FEES

5.1		Interest Rate		37
5.2		Calculation and Payment of Interest		39
5.3		Fees		40
5.4		Payment of Costs and Expenses		40

ARTICLE 6
REPRESENTATIONS AND WARRANTIES

6.1		Representations and Warranties		41
6.2		Survival of Representations and Warranties		55

ARTICLE 7
COVENANTS

7.1		Affirmative Covenants		55
7.2		Negative Covenants		66
7.3		Environmental Matters		71
7.4		The Meadows		72

ARTICLE 8
CONDITIONS PRECEDENT

8.1		Conditions Precedent to Closing		73
8.2		Conditions Precedent to Advances		82

ARTICLE 9
EVENTS OF DEFAULT AND REMEDIES

9.1		Events of Default		83
9.2		Remedies Upon Default		86
9.3		Distributions		87

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ARTICLE 10
GENERAL

10.1		Reliance and Non-Merger		87
10.2		Confidentiality		87
10.3		No Set-Off		88
10.4		Employment of Experts		88
10.5		Reliance by Lender		88
10.6		Notices		88
10.7		Further Assurances		92
10.8		Assignment		92
10.9		Disclosure of Information to Potential Permitted Lender Assignees		93
10.10		Right to Cure		93
10.11		Forbearance by the Lender Not a Waiver		93
10.12		Waiver of Statute of Limitations and Other Defenses		93
10.13		Relationship		93
10.14		Time of Essence		94
10.15		Service of Process/Venue		94
10.16		Jury Trial Waiver		94
10.17		Final Agreement/Modification		94
10.18		Continuing Agreement		95
10.19		No Third Party Beneficiaries		95
10.20		No Brokers		95
10.21		Execution in Counterparts		95
10.22		Contribution by Guarantors with Respect to Obligations.		95
10.23		Successors and Assigns Bound; Joint and Several Liability; Agents; and Captions		96
10.24		Loss of Borrower Note		96
10.25		Acknowledgment		97
10.26		Certain Provisions relating to The Meadows Guarantors		97

SCHEDULE A — Borrowing Notice

SCHEDULE B — Form of Interest Rate Election

SCHEDULE C — Properties and Prior Mortgages

SCHEDULE D — Environmental Reports

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LOAN AGREEMENT

         THIS AGREEMENT made as of the 22 ^nd day of July, 2005.

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 —

MEC PENNSYLVANIA RACING, INC.,
a corporation incorporated under the laws of the
Commonwealth of Pennsylvania

— and —

WASHINGTON TROTTING ASSOCIATION, INC.,
a corporation incorporated under the laws of the
State of Delaware

— and —

MOUNTAIN LAUREL RACING, INC.,
a corporation incorporated under the laws of the
State of Delaware

(hereinafter collectively called " The Meadows Guarantors "),

OF THE THIRD 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 FOURTH PART,

— and —

THE SANTA ANITA COMPANIES, INC.,
a corporation incorporated under the laws of the
State of Delaware

— and —

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 FIFTH 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 SIXTH 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 SEVENTH PART,

— and —

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SLRD THOROUGHBRED TRAINING CENTER, INC.,
a corporation incorporated under the laws of the
State of Delaware

(hereinafter called the " San Luis Rey Downs Guarantor "),

OF THE EIGHTH PART,

— and —

MEC DIXON, INC.,
a corporation incorporated under the laws of the
State of Delaware

(hereinafter called the " Dixon Guarantor "),

OF THE NINTH PART,

— and —

SUNSHINE MEADOWS RACING INC.
a corporation incorporated under the laws of the
State of Delaware

(hereinafter called the " Ocala Guarantor " and together
with The Meadows Guarantors, the Golden Gate Fields Guarantors,
the Santa Anita Guarantors, the Gulfstream Guarantor,
the Palm Meadows Training Guarantor, the San Luis Rey Downs Guarantor and
the Dixon Guarantor, collectively, the " Guarantors "
and each individually a " Guarantor "),

OF THE TENTH PART.

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         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;

" Advance " means any utilization of the Bridge Loan Facility by the Borrower;

" 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;

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" Allocable Amount " has the meaning ascribed thereto in Section 10.22;

" Amtote " has the meaning ascribed thereto in Section 7.2(f);

" 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);

" Audited and Unaudited Financial Statements " means the audited consolidated financial statements of the Borrower for the Fiscal Year ended December 31, 2004 and the unaudited consolidated financial statements of the Borrower for the Fiscal Quarter ended March 31, 2005;

" Banking Day " means a day on which banks are generally open for business in each of Toronto, Ontario, New York, New York, Miami, Florida, Los Angeles, California, Philadelphia, Pennsylvania and/or Chicago, Illinois, and with respect to notices, determinations or payments of Fixed Rate Advances to which LIBOR applies, London, England;

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

" Blocked Persons List " has the meaning ascribed thereto in Section 6.1(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 the same may be 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 $50,000,000, and includes any renewal or refinancing of any such agreement or the indebtedness owing thereunder provided that the principal amount of such renewed or refinanced indebtedness does not exceed $50,000,000 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;

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" 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 8.1(h)(ii);

" 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, Borrower's and Guarantor's Oklahoma Agent, and the Borrower's and Guarantor's Pennsylvania 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's and Guarantors' Oklahoma Agent " means the Oklahoma City office of Crowe & Dunlevy, or such other firm or firms of solicitors or agents in the State of Oklahoma as are appointed by the Borrower from time to time and notice of which is provided to the Lender;

" Borrower's and Guarantors' Pennsylvania Agent " means the Pittsburg office of Eckert Seamans Cherin & Mellott, LLC, or such other firm or firms of solicitors or agents in the Commonwealth of Pennsylvania 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 6.1(i);

" Borrower Note " has the meaning ascribed thereto in Section 8.1(h)(i);

" Borrower Recapitalization Plan " means the plan approved and adopted by the Borrower's board of directors to recapitalize the Borrower and its Subsidiaries and to revise the business plan for the Borrower and its Subsidiaries, and which shall be in form, scope and terms satisfactory to the Lender in its sole and absolute discretion;

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" 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, maintenance or construction of property of or by such Person (including any such property acquired pursuant to a Capital Lease Obligation) or any other expenditures, in all cases, which in accordance with GAAP are classified as capital expenditures;

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

"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 Arrangement Fee" has the meaning ascribed thereto in Section 5.3(b);

" 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;

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

" Commitment Fee " has the meaning ascribed thereto in Section 5.3(a);

" Commitment Fee Payment Date " has the meaning ascribed thereto in Section 5.3(a);

" Compliance Certificate " has the meaning ascribed thereto in Section 7.1(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

(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.

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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, 2004, and including (i) thoroughbred and harness horse racing, (ii) dog racing, (iii) off-track betting facilities, (iv) account wagering and other gaming activities including, without limitation, slot machine and video lottery terminals, (v) a racetrack and casino complex in Austria, (vi) any food and beverage operations, sports bar operations, technology services, entertainment, the ownership and management of real estate and/or other activities, associated with or ancillary or related to (i), (ii), (iii), (iv) and/or (v), above, including the ownership or operation of horse or dog training and boarding centres, arenas and restaurants, and (vii) the ownership and operation of two golf courses, one of which is located in Aurora, Ontario and the second of which is located in Oberwaltersdorf, Austria, and all operations related thereto;

" 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 Guarantee and Indemnity " has the meaning ascribed thereto in Section 8.1(h)(xxxiv);

" Dixon Guarantee Fee " has the meaning ascribed thereto in Section 8.1(h)(xxxiv);

" Dixon Property " means the lands and premises designated as the Dixon Property in Schedule C hereto;

" 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;

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(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

(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;

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(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:

(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 7.1(p);

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

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" 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 7.1(p);

" Event of Default " has the meaning attributed to such term in Section 9.1;

" 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;

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

" 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;

" Fixed Rate Advance " has the meaning ascribed thereto in Section 5.1(a)(ii);

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" Flamboro Guarantee and Indemnity " has the meaning ascribed thereto in Section 7.1(ff);

" Flamboro Guarantors " has the meaning ascribed thereto in Section 7.1(ff);

" Floating Rate Advance " has the meaning ascribed thereto in Section 5.1(a)(i);

" 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;

" Golden Gate Fields General Security Agreement " has the meaning ascribed thereto in Section 8.1(h)(xxv);

" Golden Gate Fields Guarantee and Indemnity " has the meaning ascribed thereto in Section 8.1(h)(xxv);

" Golden Gate Fields Guarantee Fee " has the meaning ascribed thereto in Section 8.1(h)(xxv);

" Golden Gate Fields Guarantors' Environmental Indemnity " has the meaning ascribed thereto in Section 8.1(h)(xxv);

" Golden Gate Fields Property " means the lands and premises designated as the Golden Gate Fields Property in Schedule C hereto;

" Golden Gate Fields Second Mortgage " has the meaning ascribed thereto in Section 8.1(h)(xv);

" Golden Gate Fields Security " has the meaning ascribed thereto in Section 8.1(h)(xviii);

" 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 6.1(j);

" Guarantors " means, collectively, The Meadows Guarantors, the Golden Gate Fields Guarantors, the Santa Anita Guarantors, the Gulfstream Guarantor, the Palm Meadows Training Guarantor, the San Luis Rey Downs Guarantor, the Dixon Guarantor, and the Ocala Guarantor, and, in the singular, any one of them;

13

" Guarantor Payment " has the meaning ascribed thereto in Section 10.22;

" Gulfstream and Aventura Properties " means the lands and premises designated as the Gulfstream Property and the Aventura Property in Schedule C hereto;

" Gulfstream Construction Loan Agreement " means the loan agreement made between Gulfstream Park Racing Association Inc., as borrower, the Lender, as lender, and others, made as of December 9, 2004 and amended and restated as of July 22, 2005, as the same may be amended or restated from time to time;

" Gulfstream Guarantee and Indemnity " has the meaning ascribed thereto in Section 8.1(h)(xxxi);

" Gulfstream Guarantee Fee " has the meaning ascribed thereto in Section 8.1(h)(xxxi);

" 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;

" 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 8.1(h);

" 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, for each Fixed Rate Advance, a period commencing, (i) in the case of the initial Interest Period for such Advance, on the date of such Advance; and (ii) in the case of any subsequent Interest Period for such Advance, on the last day of the immediately preceding Interest Period applicable thereto and ending, in either case, on the last day of such period as shall be selected by the Borrower pursuant to the provisions below. If any Advance is a Floating Rate Advance at any time, and is changed to a Fixed Rate Advance pursuant to the provisions hereof, the initial Interest Period for such Advance after such change shall commence on the date of such change. Except as provided in the next following sentence, the duration of each such Interest Period shall be, subject to availability for the Lender, one, two or three months, as the Borrower may select in the applicable Borrowing Notice or Interest Rate Election. No Interest Period may be selected that conflicts, in the opinion of the Lender, with the repayment requirements set out in Article 5;

14

" Interest Rate Election " means a notice, substantially in the form of Schedule B, given by the Borrower electing to change from one type of Advance to another type of Advance or to continue a Fixed Rate Advance for a further Interest Period;

" 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 1.8;

" 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 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;

" 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;

" Lender's Oklahoma Agent " means the Oklahoma City office of Spradling, Kennedy & McPhail, L.L.P., or such other firm or firms of solicitors or agents in the State of Oklahoma as are appointed by the Lender from time to time and notice of which is provided to the Borrower and the Guarantors;

15

" Lender's Pennsylvania Agent " means the Pittsburgh office of Pepper Hamilton LLP, or such other firm or firms of solicitors or agents in the State of Pennsylvania as are appointed by the Lender from time to time and notice of which is provided to the Borrower and the Guarantors;

" LIBOR " means, for any Fixed Rate Advance for which LIBOR applies, the rate of interest per annum for deposits in US Dollars in the London interbank market for the period of any such Fixed Rate Advance and in an amount approximately equal to the Fixed Rate Advance, calculated on the basis of a year of 360 days, equal to the arithmetic mean, rounded upwards to the nearest whole multiple of one-sixteenth of one percent (if already not such a multiple), of the rates which appear on the Telerate Page 3750 on the Dow Jones Telerate Service (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 aggregate of the principal amount of the Bridge Loan, being comprised of (i) the principal amount of $50,000,000 made available pursuant to Tranche 1; (ii) the principal amount of $25,000,000 made available pursuant to Tranche 2; and (iii) the principal amount of $25,000,000 made available pursuant to Tranche 3, 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;

" 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;

16

" 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;

" Meadows Guarantors " means, collectively, MEC Pennsylvania Racing, Inc., Washington Trotting Association, Inc. and Mountain Laurel Racing, Inc.;

" Mortgages " means, collectively, the Golden Gate Fields Second Mortgage, The Meadows First Mortgage and the Santa Anita Third Mortgage; and, in the singular, any one of them;

" Mortgaged Properties " means, collectively, the Golden Gate Fields Property, The Meadows Property and the Santa Anita Property; and, in the singular, any one of them;

" 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;

" 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 8.1(h)(xxxv);

" Ocala Guarantee Fee " has the meaning ascribed thereto in Section 8.1(h)(xxv);

" Ocala Property " means the lands and premises designated as the Ocala Property in Schedule C hereto;

" Occupancy Agreements " has the meaning ascribed thereto in Section 6.1(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 President, the Chief Financial Officer or the Secretary;

17

" 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 6.1(j);

" Palm Meadows Training Guarantee and Indemnity " has the meaning ascribed thereto in Section 8.1(h)(xxxii);

" Palm Meadows Training Guarantee Fee " has the meaning ascribed thereto in Section 8.1(h)(xxxii);

" Permitted Debt " means (i) the Bridge Loan; (ii) the Santa Anita Senior Facility; (iii) the BMO Credit Agreement; (iv) the Remington Construction Loan Agreement; (v) the Gulfstream Construction Loan Agreement; (vi) indebtedness owing under, and not exceeding the amounts permitted to be outstanding under and secured by, Permitted Encumbrances and extensions, renewals or replacements of any indebtedness permitted under this clause (vi) provided the principal amount of such indebtedness thereunder or security therefor is not thereby increased beyond the original principal amount of such indebtedness; (vii) unsecured trade and other accounts payable incurred in the ordinary course of business, including the Construction (as defined in the Remington Construction Loan Agreement) and the Reconstruction (as defined in the Gulfstream Construction Loan Agreement), for the purpose of carrying on the same; (viii) 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; (ix) 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; (x) indebtedness of up to $6,000,000 in aggregate that may become due to the Estate of John K. Cooke in connection with the acquisition of The Maryland Jockey Club; (xi) the obligation to pay $18,312,000 plus accrued interest on the exercise of either the put or call option for the remaining minority interest in The Maryland Jockey Club; (xii) the Subordinated Debt; (xiii) 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; (xiv) indebtedness of up to $200,000,000 with respect to the redevelopment of The Meadows Property, provided that the recourse of the holder of such indebtedness is limited contractually to the assets being financed and the Additional Financing Inter-Creditor Agreement (as defined in the Gulfstream Construction Loan Agreement) is executed and delivered to the Lender prior to the incurrence of such indebtedness; (xv) other obligations and indebtedness (including Capital Lease Obligations and Contingent Liabilities) 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 approximately $183,000,000 (which amount includes indebtedness denominated in foreign currencies and is therefore subject to fluctuation from time to time due to exchange rate fluctuations); and (xvi) 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;

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" 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;

(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;

19

(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 Lenders, sufficient in either case to pay or discharge such Lien or upon other terms satisfactory to the Lenders;

(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;

20

(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 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 June 1, 2005 and 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 $15,000,000; 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 10.8;

" 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;

21

" 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;

" proceeding " has the meaning ascribed thereto in Section 6.1(p);

" Properties " means all lands and premises identified in Schedule C 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 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;

" 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.;

" Remington Escrow Agreement " means the escrow agreement dated as of July 26, 2005 among the Lender, the Remington Borrower and the Guarantors (as defined in the Remington Construction Loan Agreement);

" Remington Property " means the lands and premises designated as the Remington Property in Schedule C hereto;

" 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;

22

" 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;

" San Luis Rey Downs Guarantee and Indemnity " has the meaning ascribed thereto in Section 8.1(h)(xxxiii);

" San Luis Rey Downs Guarantee Fee " has the meaning ascribed thereto in Section 8.1(h)(xxxiii);

" San Luis Rey Downs Property " means the lands and premises designated as the San Luis Rey Downs Property in Schedule C hereto;

" Santa Anita General Security Agreement " has the meaning ascribed thereto in Section 8.1(h)(xxviii);

" Santa Anita Guarantee and Indemnity " has the meaning ascribed thereto in Section 8.1(h)(xxviii);

" Santa Anita Guarantee Fee " has the meaning ascribed thereto in Section 8.1(h)(xxviii);

" Santa Anita Property " means the lands and premises designated as the Santa Anita Property in Schedule C hereto;

" Santa Anita Property Environmental Indemnity " has the meaning ascribed thereto in Section 8.1(h)(xi);

" Santa Anita Security " has the meaning ascribed thereto in Section 8.1(h)(x);

" 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;

23

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

" Santa Anita Third Assignment of Licences and Permits " has the meaning ascribed thereto in Section 8.1(h)(x);

" Santa Anita Third Assignment of Material Agreements " has the meaning ascribed thereto in Section 8.1(h)(ix);

" Santa Anita Third Assignment of Rents and Leases " has the meaning ascribed thereto in Section 8.1(h)(viii);

" Santa Anita Third Mortgage " has the meaning ascribed thereto in Section 8.1(h)(vii);

" 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 8.1(h);

" SHRCP Approval " has the meaning ascribed thereto in Section 7.1(dd);

" 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;

" 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;

24

" Termination Date " means August 31, 2006 or 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;

" The Meadows General Security Agreement " has the meaning ascribed thereto in Section 8.1(h)(xxiv)(D);

" The Meadows Assignment of Material Agreements " has the meaning ascribed thereto in Section 8.1(h)(xxiv)(C);

" The Meadows Assignment of Rents and Leases " has the meaning ascribed thereto in Section 8.1(h)(xxiv)(B);

" The Meadows First Mortgage " has the meaning ascribed thereto in Section 8.1(h)(xxiv)(A);

" The Meadows Guarantee Fee " has the meaning ascribed thereto in Section 8.1(h)(xxiii);

" The Meadows Guarantee and Indemnity " has the meaning ascribed thereto in Section 8.1(h)(xxiii);

" The Meadows Guarantors' Environmental Indemnity " has the meaning ascribed thereto in Section 8.1(h)(xxiv)(E);

" The Meadows Property " means the lands and premises designated as The Meadows Property in Schedule C hereto;

" The Meadows Security " has the meaning ascribed thereto in Section 8.1(h)(xxiv)(D);

" The Meadows Security Conditions " has the meaning ascribed thereto in Section 5.1(e);

" 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;

" Tranche 1 " has the meaning ascribed thereto in Section 2.1(e);

" Tranche 2 " has the meaning ascribed thereto in Section 2.1(e);

" Tranche 2 Arrangement Fee" has the meaning ascribed thereto in Section 5.3(b);

25

" Tranche 2 Conditions " has the meaning ascribed thereto in Section 4.1;

" Tranche 3 " has the meaning ascribed thereto in Section 2.1(e);

" Tranche 3 Arrangement Fee" has the meaning ascribed thereto in Section 5.3(b);

" Tranche 3 Conditions " has the meaning ascribed thereto in Section 4.2;

" Unutilized Amount " has the meaning ascribed thereto in Section 5.3(a);

" U.S. 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, as the same may be amended or restated from time to time.

1.2    Gender and Number

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

1.3    Certificate of the Lender as to Rates, etc.

        A certificate of the Lender certifying the amount of the Base Rate or the Federal Funds Effective Rate at any particular time in respect of any Loan made or maintained or to be made or maintained by the Lender hereunder shall be prima facie evidence thereof. No provision hereof shall be construed so as to require the Lender to issue a certificate at any particular time.

1.4    Invalidity, etc.

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

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1.5    Headings, etc.

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

1.6    Governing Law

        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.

1.7    Attornment

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

1.8    Judgment Currency

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

1.9    References

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

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1.10  Currency

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

1.11  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.

1.12  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).

1.13  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".

1.14  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.

1.15  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.

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1.16  Incorporation of Schedules

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

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 of up to the principal amount of $100,000,000 (the " Bridge Loan "), available in three tranches on the terms and conditions set out herein:

(b)

All Advances shall be made in Dollars.

(c)

The Bridge Loan is to be used for general corporate purposes of the Borrower and its Subsidiaries, provided that such usage shall at all times be consistent with the Borrower Recapitalization Plan.

(d)

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

(e)

During the period from the Closing Date to the first Banking Day on or after October 15, 2005, the maximum principal amount of the Bridge Loan that shall be available to the Borrower shall be $50,000,000 (" Tranche 1 "). On the first Banking Day on or after October 15, 2005, the maximum principal amount of the Bridge Loan that shall be available to the Borrower shall be increased by a further $25,000,000 (" Tranche 2 "), subject to the satisfaction of the Tranche 2 Conditions set out in Section 4.1 for a total principal availability as of such date of $75,000,000. On the first Banking Day on or after January 15, 2006, the maximum principal amount of the Bridge Loan that shall be available to the Borrower shall be increased by a further $25,000,000 (" Tranche 3 "), subject to the Tranche 3 Conditions set out in Section 4.2, for a total principal availability as of such date of $100,000,000. For greater certainty, the Borrower is not required to draw down a Tranche or any portion thereof upon its first day of availability nor by the date that the next successive Tranche is available, availability of all Tranches being, without duplication, cumulative. The failure of the Borrower to draw down any particular Tranche (or any portion thereof) before the next Tranche availability (or the next following thereafter in the case of Tranche 1) shall not terminate the Borrower's right to such undrawn Tranche or portion thereof provided all conditions precedent to such Tranche have been satisfied within the time prescribed.

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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    Voluntary Repayments

        Subject to LIBOR contract maturity dates with respect to any Fixed Rate Advance, the Borrower may from time to time (without premium or penalty) on any Banking Day repay to the Lender the Loan or any portion thereof, provided that any such repayment (a) shall be in an amount of at least $1,000,000 and any greater amount shall be an integral multiple of $100,000 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.

2.4    Mandatory Repayment

(a)

The Loans 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

(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 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) but, in any event, of any sale or other disposition of any of its real property or other assets specified in the Intercreditor Agreements;

(C)

any issue of securities by the Borrower (except those in respect of the Borrower's long term incentive plan) or any of its Subsidiaries or borrowing of monies, other than Permitted Debt, by the Borrower of any of its Subsidiaries; or

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(D)

any expropriation or condemnation of the whole or any part of its real property or other assets specified in the Intercreditor Agreements,

an amount equal to such net proceeds shall be applied in accordance with the Intercreditor Agreements to repay one or more of (i) the Loan, (ii) the indebtedness under the BMO Credit Agreement and (iii) the indebtedness under the Santa Anita Senior Facility; 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. 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(c), 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 (other than security under the BMO Credit Agreement or the Santa Anita Senior Facility) attaching to such assets ranking in priority to the Security.

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 10 Banking Days' notice to the Lender, which notice, once given, shall be irrevocable and binding upon the Borrower, to reduce the then applicable 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 $1,000,000. The amount of any such reduction so made by the Borrower shall be permanent and irrevocable and the Loan Amount shall be reduced accordingly.

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 and any greater amount shall be an integral multiple of $50,000.

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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;

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(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:

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(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).

        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.

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(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.

ARTICLE 4
ADDITIONAL CONDITIONS PRECEDENT TO ADVANCES
UNDER TRANCHE 2 AND TRANCHE 3

4.1   Tranche 2 Conditions

        Without derogating from the provisions of Sections 3.1 and 8.2, the Borrower shall only be entitled to advances under Tranche 2 if the following conditions (the " Tranche 2 Conditions ") shall have been satisfied as of the first Banking Day on or after October 15, 2005:

(a)

Borrower Recapitalization Plan :    The Borrower has established to the satisfaction of the Lender, in its sole discretion, that the Borrower is in compliance with, can reasonably be expected to be able to implement, and is using commercially reasonable efforts to implement, the Borrower Recapitalization Plan taking into account, among other things, the Tranche 2 Conditions set forth below in subsections (b), (c) and (d);

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(b)

Asset Sales :    The Borrower has established to the satisfaction of the Lender that the Borrower has sold, or is actively pursuing the sale of, a minimum of four of the assets listed as being intended for disposal in the Borrower Recapitalization Plan within the time frames included therein, with aggregate budgeted net proceeds before debt repayment of not less than $50,000,000;

(c)

Gaming Transaction :    The Borrower has established to the satisfaction of the Lender that the Borrower has implemented a process to actively pursue and execute a gaming transaction with one or more reputable gaming companies, including by retaining the advisory services of a gaming consultant acceptable to the Lender, acting reasonably;

(d)

Operations :    The Borrower has established to the satisfaction of the Lender that the Borrower's EBITDA (excluding asset impairment writedowns and gains and losses on asset sales and irrespective of any changes in the Borrower's accounting policies after the Closing Date) for the third quarter of 2005 is no worse than negative $22,000,000; and

(e)

Tranche 2 Arrangement Fee :    The Lender shall have received payment in full of the Tranche 2 Arrangement Fee.

4.2    Tranche 3 Conditions

        Without derogating from the provisions of Sections 3.1 and 8.2, the Borrower shall only be entitled to advances under Tranche 3 if the following conditions (the " Tranche 3 Conditions ") shall have been satisfied as of the first Banking Day on or after January 15, 2006:

(a)

Section 4.1 Conditions :    The conditions set out in Section 4.1 shall have been satisfied or waived by the Lender;

(b)

Borrower Recapitalization Plan :    The Borrower has established to the satisfaction of the Lender, in its sole discretion, that the Borrower is in compliance with, can reasonably be expected to be able to implement, and is using commercially reasonable efforts to implement, the Borrower Recapitalization Plan taking into account, among other things, the associated milestones set forth below in subsections (c) and (d);

(c)

Asset Sales :    The Borrower has (a) sold, or has entered into an agreement of purchase and sale with respect to, assets that has resulted, or will result, in a repayment under and permanent reduction of the Bridge Loan of not less than $25,000,000 and (b) established to the satisfaction of the Lender that the Borrower has sold, or is actively pursuing the sale of, assets listed as being intended for disposal in the Borrower Recapitalization Plan within the time frames included therein, with aggregate budgeted net proceeds before debt repayment of not less than $100,000,000 (which will include proceeds of sale achieved as part of the Tranche 2 Conditions and represent a requirement for an additional $50,000,000 above the amount required pursuant to the Asset Sales with respect to Tranche 2 Conditions set out in Section 4.1(b));

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(d)

Operations :    The Borrower has established to the satisfaction of the Lender that the Borrower's EBITDA (excluding asset impairment writedowns and gains and losses on asset sales and irrespective of any changes in the Borrower's accounting policies after the Closing Date) for the fourth quarter of 2005 is no worse than negative $11,000,000; and

(e)

Tranche 3 Arrangement Fee :    The Lender shall have received payment in full of the Tranche 3 Arrangement Fee.

ARTICLE 5
INTEREST AND FEES

5.1    Interest Rate

(a)

Subject to Sections 5.1(e), (f) and (g), at the option of the Borrower, Advances under the Loan shall bear interest from time to time at:

(i)

a floating rate per annum (each such Advance being referred to as a " Floating Rate Advance ") equal to the greater of: (A) the Base Rate, as announced from time to time, plus 550 bps per annum and (B) 9% (with interest in each case payable monthly in arrears); or

(ii)

a fixed rate per annum (each such Advance being referred to as a " Fixed Rate Advance ") equal to the greater of: (A) LIBOR plus 650 bps and (B) 9%, subject to: (I) minimum amounts of US$10,000,000; (II) not more than five separate Interest Periods outstanding with respect to Fixed Rate Advances at any one time; and (III) each Interest Period with respect to separate Fixed Rate Advance is not to exceed the applicable Interest Period or extend beyond the Termination Date as the case may be (with interest in each case payable at maturity of each separate Fixed Rate Advance).

(b)

Each Advance shall initially be the type of Advance specified in the applicable Borrowing Notice and shall bear interest at the rate applicable to such type of Advance (determined as provided in Section 5.1(a) until (i) in the case of a Fixed Rate Advance, the end of the initial Interest Period applicable thereto as specified in the applicable Borrowing Notice; or (ii) in the case of any Floating Rate Advance, the date on which such Advance is repaid in full or is changed to a Fixed Rate Advance pursuant to and to the extent permitted or required by Section 5.1(d).

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(c)

Each Interest Rate Election shall be made on five (5) Banking Days' prior notice, in each case, not later than 11:00 a.m. (local time) by the Borrower to Lender. Each Interest Rate Election shall be given substantially in the form of Schedule B hereto and shall be irrevocable and binding upon the Borrower. Subject to Sections 5.1(e) and (f), if the Borrower fails to deliver an Interest Rate Election to the Lender within five (5) Banking Days prior to the expiration of any Interest Period for any outstanding Fixed Rate Advance as provided in this Section 5.1(c), such Fixed Rate Advance shall continue as a Fixed Rate Advance with an Interest Period of 30 days.

(d)

Each conversion of an Advance to another type of Advance shall be made on five (5) Banking Days' prior notice, in each case, not later than 11:00 a.m. (local time) by the Borrower to Lender, shall be given in the form of an Interest Rate Election and shall otherwise be made in accordance with and subject to this Article, provided that any outstanding Fixed Rate Advance may not be converted to a Floating Rate Advance unless and until the expiration of the Interest Period applicable to such outstanding Fixed Rate Advance.

(e)

Unless SHRCP Approval is obtained and all applicable registrable Security being provided by The Meadows Guarantors hereunder is registered in the Commonwealth of Pennsylvania within 75 days of the Closing Date (collectively, " The Meadows Security Conditions "), the interest rate on the Loan will, on the 75 ^th day following the Closing Date, be increased by 100 basis points per annum until such time as The Meadows Security Conditions are met.

(f)

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 15% 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.

(g)

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 a Fixed Rate 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 a Fixed Rate Advance for a relevant interest period or other relevant period, then:

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(i)

the right of the Borrower to select a Fixed Rate Advance shall be suspended until the Lender determines that the circumstances causing such suspension no longer exist and the Lender so notifies the Borrower;

(ii)

if no Fixed Rate Advance is outstanding, any applicable Borrowing Notice requesting a Fixed Rate Advance shall be deemed to be a request for a Floating Rate Advance;

(iii)

if any Fixed Rate Advance is outstanding to the Borrower, it and all other Fixed Rate Advances shall become Floating Rate Advances on the last day of the then current Interest Period applicable thereto (or on such earlier date as may be required to comply with any Applicable Law); and

(iv)

if any of the circumstances in Section 5.1(g) shall occur, the Borrower and the Lender shall, following the giving of notice by the Lender under this Section 5.1 (g), 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 Fixed Rate 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 Fixed Rate Advance then outstanding or three Banking Days before any repayment date required under Applicable Law, as the case may be), and the Borrower has not elected to convert any outstanding Fixed Rate Advances to Floating Rate Advances, the Lender shall determine an interest rate and specify an Interest Period (not exceeding one month) in respect of each Fixed Rate 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 5.1(g) shall apply only for so long as the circumstances in Section 5.1(g) shall exist.

5.2    Calculation and Payment of Interest

(a)

Interest on Floating Rate 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 365 or 366 days, as the case may be, and shall be payable to the Lender in U.S. dollars in arrears on the first Banking Day of each month. For greater certainty, where the rate of interest is changed, for a Floating Rate Advance, interest shall be charged for the day on which such change is effective on the basis of the new rate.

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(b)

Interest on Fixed Rate 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.

5.3    Fees

(a)

Commitment Fee.     The Borrower shall pay to the Lenders on the third Banking Day following the end of each Fiscal Quarter and on the Termination Date (each a " Commitment Fee Payment Date "), in arrears, a non-refundable commitment fee (the " Commitment Fee ") equal to 1% per annum of the amount, if any, by which the Loan Amount (assuming that all Tranches are available to the Borrower, irrespective of whether that is actually the case, but 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 Fee .    The Borrower shall pay to the Lender: (i) on the Closing Date an arrangement fee (the " Closing Arrangement Fee ") of $1,000,000, being 2% of the Tranche 1 Loan Amount; (ii) on the date, if any, on which all or part of Tranche 2 is made available to the Borrower, an arrangement fee (the " Tranche 2 Arrangement Fee ") of $500,000, being 2% of the Tranche 2 Loan Amount; and (iii) on the date, if any, on which all or part of Tranche 3 is made available to the Borrower, an arrangement fee (the " Tranche 3 Arrangement Fee ") of $500,000, being 2% of the Tranche 3 Loan Amount.

5.4    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:

(a)

all reasonable costs and out-of-pocket expenses of the Lender 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;

(b)

all reasonable costs and out-of-pocket expenses of the Lender 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 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;

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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.

ARTICLE 6
REPRESENTATIONS AND WARRANTIES

6.1    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 estat