Exhibit 10.2
FIRST
AMENDING AGREEMENT IN
RESPECT OF THE BRIDGE LOAN
AGREEMENT
THIS FIRST AMENDING
AGREEMENT , made as of the 23 rd day of May,
2008
BETWEEN:
MAGNA ENTERTAINMENT
CORP. ,
a corporation
incorporated under the laws of the
State of
Delaware
(hereinafter called the “
Borrower ”),
OF THE FIRST
PART,
- and -
MID ISLANDI SF.
,
a partnership formed
under the laws of Iceland,
acting through its Zug
branch
(hereinafter called the “
Lender ”),
OF THE SECOND
PART,
- and -
PACIFIC RACING
ASSOCIATION ,
a corporation
incorporated under the laws of the
State of
California
- and -
MEC LAND HOLDINGS
(CALIFORNIA) INC. ,
a corporation
incorporated under the laws of the
State of
California
(hereinafter collectively called the
“ Golden Gate
Fields
Guarantors ”),
OF THE THIRD
PART,
- and -
THE SANTA ANITA COMPANIES,
INC. ,
a corporation
incorporated under the laws of the
State of
Delaware
- and -
LOS ANGELES TURF CLUB,
INCORPORATED ,
a corporation
incorporated under the laws of the
State of
California
(hereinafter collectively called the
“ Santa Anita
Guarantors
”),
OF THE FOURTH
PART,
- and -
GULFSTREAM PARK RACING
ASSOCIATION, INC. ,
a corporation
incorporated under the laws of the
State of
Florida
(hereinafter called the “
Gulfstream Guarantor ”),
OF THE FIFTH
PART,
- and -
GPRA THOROUGHBRED TRAINING
CENTER INC. ,
a corporation
incorporated under the laws of the
State of
Delaware
(hereinafter called the “ Palm
Meadows Training
Guarantor
”),
OF THE SIXTH
PART,
- and -
MEC DIXON, INC.
,
a corporation
incorporated under the laws of the
State of
Delaware
(hereinafter called the “ Dixon
Guarantor ”),
OF THE SEVENTH
PART,
- and -
MEC HOLDINGS (USA)
INC. ,
a corporation
incorporated under the laws of the
State of
Delaware
- and -
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SUNSHINE MEADOWS RACING,
INC. ,
a corporation
incorporated under the laws of the
State of
Delaware
(hereinafter
collectively called the “ Ocala
Guarantors
”),
OF THE EIGHTH PART,
- and -
THISTLEDOWN,
INC. ,
a corporation
incorporated under the laws of the
State of
Ohio
(hereinafter called the “
Thistledown Guarantor ”),
OF
THE NINTH PART,
- and -
MEC MARYLAND INVESTMENTS
INC. ,
a
corporation incorporated under the laws of the
State of
Delaware
- and -
30000 MARYLAND INVESTMENTS
LLC ,
a limited liability
company formed under the laws
of the State of Delaware
(hereinafter collectively called the “
AmTote
Guarantors ”) (the Golden Gate Fields Guarantors,
the Santa Anita Guarantors, the Gulfstream
Guarantor, the Palm Meadows Training Guarantor,
the Dixon Guarantor, the Ocala Guarantors, the
Thistledown Guarantor, and the AmTote
Guarantors hereinafter collectively called the
“ Guarantors ”),
OF
THE TENTH PART.
WHEREAS the Lender, as lender, the
Borrower, as borrower, and the Guarantors, as guarantors, are
parties to a bridge loan agreement made as of September 12,
2007 (the “ Bridge Loan Agreement ”);
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AND WHEREAS on September 11, 2007,
the Borrower’s Board of Directors approved and adopted a plan
(the “ MEC Debt Elimination Plan ”) (referenced
in the Bridge Loan Agreement as the Borrower Restructuring
Plan) to restructure the Borrower’s balance sheet through the
sale of certain assets and entering into strategic partnerships or
joint ventures to allow the Borrower to substantially eliminate its
debt by December 31, 2008, and to pursue a business plan
focused on achieving sustainable profitability;
AND WHEREAS the
MEC Debt Elimination Plan contemplated the sale of assets
including, without limiting the generality of the foregoing,
certain of those Properties owned by the Borrower that constitute
collateral for the Loan;
AND WHEREAS the
sale of assets under the MEC Debt Elimination Plan has taken longer
than originally contemplated;
AND
WHEREAS on March 31, 2008, the Board of Directors of MI
Developments Inc. (“ MID ”), an affiliate of the
Lender and the controlling shareholder of the Borrower, received a
reorganization proposal on behalf of various shareholders of MID
that would, among other things, alter the relationship between MID
and the Borrower;
AND
WHEREAS the Lender has agreed to amend the Bridge Loan
Agreement to, inter alia : (i) increase the Loan Amount
from $80,000,000 to $110,000,000; (ii) provide that Loan
Amounts borrowed and repaid prior to the date hereof may be
reborrowed; (iii) extend the Maturity Date of the Loan from
May 31, 2008 to August 31, 2008; and (iv) provide
for certain additional arrangement and extension fees, all on the
terms and conditions set out herein;
NOW THEREFORE , in
consideration of the mutual covenants and agreements set forth in
this Agreement and the sum of Ten Dollars ($10.00) paid by each of
the parties hereto to the other and for other good and valuable
consideration (the receipt and sufficiency of which are hereby
acknowledged), the parties hereto covenant and agree as
follows:
1.
Definitions . Unless
otherwise defined herein, all capitalized terms used in this
agreement (this “ Agreement ”) shall have the
respective meanings ascribed to them in the Bridge Loan
Agreement.
2.
Representations and
Warranties . The Borrower and the Guarantors jointly and
severally represent and warrant to and in favour of the Lender,
with the intent that the Lender shall be entitled to rely upon such
representations and warranties in entering into this Agreement and
notwithstanding the completion of the transactions contemplated
herein, that: (i) all of the recitals to this Agreement are
true and complete in all material respects; (ii) except as
specifically qualified in the Disclosure Schedule, all of the
representations and warranties of the Borrower in Article 5 of
the Bridge Loan Agreement are true and correct on the date hereof
as if made on and as of the date hereof; and (iii) there are
no facts, conditions or circumstances that are known to the
Borrower or any of the Guarantors and that may reasonably be
considered relevant to the Lender’s decision to enter into
this Agreement that have not been disclosed in writing to the
Lender.
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3.
Amendments . The
Bridge Loan Agreement is hereby amended as follows:
(a)
by deleting in its entirety the definition of “ Borrower
Restructuring Plan ” and replacing each reference thereto
with “ MEC Debt Elimination Plan ”;
(b)
by adding, in proper alphabetical order, the following definition
of “ Extension Fee ” to Section 1.1 of the
Bridge Loan Agreement:
““ Extension Fee ” has
the meaning ascribed thereto in Subsection 4.3(c)
”;”
(c)
by adding, in proper alphabetical order, the following definition
of “ First Bridge Loan Amending Agreement ” to
Section 1.1 of the Bridge Loan Agreement:
““ First Bridge Loan Amending
Agreement ” means the First Amending Agreement in
respect of the Bridge Loan Agreement between the Lender, as lender,
the Borrower, as borrower, and the Guarantors, as guarantors, made
as of May 23, 2008;”;
(d)
by adding, in proper alphabetical order, the following definition
of “ First Bridge Loan Amending Agreement Security
Amendments ” to Section 1.1 of the Bridge Loan
Agreement:
““ First Bridge Loan Amending
Agreement Security Amendment ” and “
First Bridge Loan Amending Agreement Security
Amendments ” have the meanings ascribed thereto in
Subsection 7.2(s); ”;
(e)
by deleting the definition of “ Maturity Date ”
in Section 1.1 of the Bridge Loan Agreement and replacing it
with the following:
““ Maturity Date ”
means, unless otherwise accelerated in accordance with
Section 2.6, August 31, 2008; ”;
(f)
by adding, in proper alphabetical order, the following definition
of “ MEC Debt Elimination Plan ” to
Section 1.1 of the Bridge Loan Agreement:
““ MEC Debt Elimination Plan
” means the plan approved and adopted by the Borrower’s
Board of Directors as of September 11, 2007 to
restructure the Borrower’s balance sheet through the
sale of certain assets and entering into strategic partnerships or
joint ventures to allow the Borrower to substantially eliminate its
debt by December 31, 2008, and to pursue a business plan
focused on achieving sustainable profitability, including any
amendments, revisions or modifications thereto approved by the
Borrower’s Board of Directors in its sole and absolute
discretion (and provided forthwith in writing to the MID Board of
Directors), provided that for purposes of Subsections 5.1(dd),
6.2(b)(i), 6.2(d), 6.2(e) and 6.2(p) of the Bridge Loan
Agreement, the reference to MEC Debt Elimination
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Plan shall be to the
MEC Debt Elimination Plan existing as of September 11,
2007;”;
(g)
by adding, in proper alphabetical order, the following definition
of “ MJC Subsidiary ” to Section 1.1 of the
Bridge Loan Agreement:
““ MJC Subsidiary
” has the meaning ascribed thereto in Subsection
6.1(jj); ”;
(h)
by deleting the definition of “ Permitted Debt ”
in Section 1.1 of the Bridge Loan Agreement and replacing it
with the following:
““
Permitted Debt ” means (i) the Bridge Loan;
(ii) the Santa Anita Senior Facility; (iii) the BMO
Credit Agreement; (iv) the SunTrust Credit Agreement;
(v) the Remington Construction Loan Agreement; (vi) the
Gulfstream Construction Loan Agreement; (vii) indebtedness of
GPRA Commercial Enterprises Inc. relating to a loan agreement
among, inter alia, Keybank National Association, as principal
lender, and The Village at Gulfstream Park, LCC, as borrower, where
such indebtedness is non-recourse to the Borrower and the
Gulfstream Guarantor and arises under the May 1, 2005 limited
liability company agreement, as amended, by which The Village at
Gulfstream Park, LLC, was formed; (viii) indebtedness of MEC
Grundstucksentwicklungs GmbH and Fontana Betelligungs AG existing
on the date hereof; (ix) indebtedness of the MJC Subsidiaries
to Mercantile-Safe Deposit and Trust existing on the date hereof;
(x) the lease between a non-guarantor entity and an entity
associated with the City of Grand Prairie, pursuant to which Lone
Star Park is operated; (xi) indebtedness owing under, and not
exceeding the amounts permitted to be outstanding under and secured
by, Permitted Encumbrances and extensions, renewals or replacements
of any indebtedness permitted under this clause; provided the
principal amount of such indebtedness thereunder or security
therefor is not thereby increased beyond the original principal
amount of such indebtedness; (xii) unsecured trade and other
accounts payable incurred in the ordinary course of business for
the purpose of carrying on the same including the “
Construction ” (as defined in the Remington
Construction Loan Agreement) and the “ Reconstruction
” (as defined in the Gulfstream Construction Loan Agreement);
(xiii) 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; (xiv) 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; (xv) the obligation to pay
$18,312,650 plus accrued interest on the exercise of either the put
or call option for the remaining minority interest in The Maryland
Jockey Club; (xvi) the Subordinated Debt; (xvii) unsecured
intercompany indebtedness of the Borrower to any of its
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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; (xviii) other obligations and indebtedness (including
Capital Lease Obligations (other than that listed in item
(iv) of this definition) and Contingent Liabilities, but
excluding item ( xii) listed in this definition)
existing on the date hereof and relating to Subsidiaries which are
not Guarantors, and all of which are disclosed in the Audited and
Unaudited Financial Statements including the notes thereto, in the
aggregate amount of not more than $2,000,000 (which amount includes
indebtedness denominated in foreign currencies and is therefore
subject to fluctuation from time to time due to exchange rate
fluctuations); and (xix) 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;”;
(i)
by adding, in proper alphabetical order, the following definition
of “ Reorganization Proposal ” to
Section 1.1 of the Bridge Loan Agreement:
““ Reorganization Proposal
” means that certain proposal received by MID’s
Board
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