CONSTRUCTION LOAN TERM SHEET Gulfstream Park and The Meadows Gulfstream Construction Loan

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Exhibit 99.2

EXECUTION COPY

CONSTRUCTION LOAN TERM SHEET

Gulfstream Park and The Xxxxxxx

Gulfstream Construction Loan


BORROWER:		GULFSTREAM PARK RACING ASSOCIATION, INC. (the "Gulfstream Borrower"), the owner of the Gulfstream Property and the Aventura Lands (in each case as hereinafter defined). The Gulfstream Borrower shall not be permitted to assign its obligations under the Gulfstream Construction Loan Agreement or The Xxxxxxx Construction Loan Agreement (in each case as hereinafter defined).
GUARANTOR:		The Xxxxxxx Borrower (as hereinafter defined).
LENDER:		MI DEVELOPMENTS INC. ("MID") or a subsidiary (the "Gulfstream Lender").
LOAN:		A non-revolving construction loan available by way of progress draw advances upon the satisfaction of customary terms and conditions, including the provision of a borrower's certificate certifying, among other things, the status of any cost overruns and the remaining cost-to-completion, and supporting third-party documentation (the "Gulfstream Construction Loan"). No progress draw advances will be permitted under the Gulfstream Construction Loan after completion of construction of the Gulfstream Facilities (as hereinafter defined) (for greater certainty, excluding the Gulfstream FF&E (as hereinafter defined)).
AMOUNT:		$115 million, plus accrued interest and the Gulfstream Lender's expenses and closing costs. All advances under the Gulfstream Construction Loan, up to an aggregate amount of $115 million, together with all accrued interest and the Gulfstream Lender's expenses and closing costs, are referred to herein as the "Gulfstream Loan Amount". All dollar amounts used herein are stated in U.S. dollars. All uses herein of the word "including" shall be deemed to mean "including without limitation".


CLOSING:		December 9, 2004 (the "Gulfstream Closing Date").
PURPOSE:		To fund the reconstruction of the Gulfstream Park Race Track ("Gulfstream") clubhouse/grandstand facility and backstretch and related site works (collectively, the "Gulfstream Facilities"), excluding the furniture, fixtures, equipment, machinery and all process related additions to the building (collectively, "Gulfstream FF&E") relating to the Gulfstream Facilities.
		The lands forming part of the Gulfstream racetrack operations and existing site works comprise approximately 214.8 acres (being comprised of approximately 129.1 acres that are currently being used as part of the racetrack operations and approximately 85.7 acres that the Gulfstream Borrower is contemplating using for a mixed-use development (the "Mixed-Use Lands")) and have a building area of approximately 350,000 square feet for the Clubhouse and Grandstand plus approximately 240,000 square feet for the Backstretch. Such lands, together with all improvements now or hereafter made thereon, are defined herein as the "Gulfstream Property".
CONSTRUCTION PLANS:		The Gulfstream Borrower covenants to the Gulfstream Lender that the Gulfstream Facilities shall be reconstructed by the Gulfstream Borrower as set forth in Attachment A (the "Gulfstream Construction Plans"), with such further changes as shall be agreed to in writing between the Gulfstream Borrower and the Gulfstream Lender. No further advances under the Gulfstream Construction Loan shall be permitted for so long as any cost overruns are outstanding, and the Gulfstream Borrower shall promptly fund, at its own cost and expense, all cost overruns such that the principal amount yet to be advanced under the Gulfstream Construction Loan shall at no time be less than the remaining cost to complete the Gulfstream Facilities.
TERM:		Ten years from the Gulfstream Facilities Completion Date (the "Gulfstream Maturity Date"), with no extension or renewal rights.
INTEREST RATE:		All advances under the Gulfstream Construction Loan Agreement (including advances in respect of the Gulfstream Lender's fees, expenses and closing costs in respect of the Gulfstream Construction Loan Agreement), together with all interest accrued thereon, shall bear interest at the rate of (a) from the date of the initial advance until the Gulfstream Facilities Completion Date, a floating rate equal to 2.55% above MID's notional per annum cost of LIBOR borrowing under its floating rate credit facility, compounded monthly, and (b) from and after the Gulfstream Facilities Completion Date until the Gulfstream Maturity Date, a fixed rate of 10.5% per annum, compounded semi-annually.


PAYMENTS OF PRINCIPAL AND INTEREST:		Principal and interest (together with accrued interest) in respect of the Gulfstream Construction Loan shall, subject to the repayment deferral contemplated below, be payable monthly in advance in 12 equal blended monthly installments per annum of principal and interest without demand from and after the Gulfstream Repayment Commencement Date.
		Payment of principal and interest payable under the Gulfstream Construction Loan Agreement by the Gulfstream Borrower shall commence on January 1, 2008 (the "Gulfstream Repayment Commencement Date").
		For purposes of the Gulfstream Construction Loan Agreement, the "Gulfstream Facilities Completion Date" is defined as the first day of the month following the earliest of (a) the date on which the Gulfstream Facilities are opened to the public for business, (b) the date that is four (4) months following completion of construction of the Gulfstream Facilities (for greater certainty, excluding the Gulfstream FF&E), and (c) January 31, 2006.
		A sample calculation of the aggregate annual repayments in respect of the Gulfstream Construction Loan, including the interest and principal repayment deferral and the unamortized principal amount (the "Gulfstream Unamortized Amount") as of each payment date, is set forth in Attachment C-1. The parties acknowledge and agree that the calculations set forth in Attachment C-1 and Attachment C-2 are representative calculations only.
		The Gulfstream interest and principal loan payment for each month of the term following the Gulfstream Repayment Commencement Date shall be equal to the amount necessary to fully amortize the Gulfstream Loan Amount based on a 25-year amortization period commencing on the Gulfstream Facilities Completion Date, but with no payments until the Gulfstream Repayment Commencement Date, at a fixed rate of interest of 10.5% per annum, compounded semi-annually.


		On the Gulfstream Maturity Date, the Gulfstream Borrower shall pay to the Gulfstream Lender the entire amount then owing under the Gulfstream Construction Loan (including (without duplication) all accrued and unpaid interest, fees and other amounts owing, and the Gulfstream Unamortized Amount) as of such date.
PRE-PAYMENTS:		The Gulfstream Borrower shall have no right to pre-pay or otherwise repay the amounts owing under the Gulfstream Construction Loan Agreement except as set forth below under the headings "Gulfstream Pre-Payment Right" and "General Pre-Payment Right".
SECURITY:		The Gulfstream Borrower shall grant the Gulfstream Lender a first-ranking security interest, mortgage and charge over its fee simple interest in the Gulfstream Property and the Aventura lands of approximately 33.2 acres (net of 6 acres that the Gulfstream Borrower is transferring to the City of Aventura) (the "Aventura Lands") (the Gulfstream Property and the Aventura Lands being collectively defined herein as the "Gulfstream Mortgaged Lands").
		The Gulfstream Borrower shall also grant the Gulfstream Lender a first-ranking security interest, mortgage and charge over all of its assets and personal property, including the Gulfstream FF&E (subject to any purchase money security interests granted to lenders or vendors up to a maximum amount of $12.5 million in the aggregate for purposes only of acquiring the Gulfstream FF&E) and including all after-acquired property, but excluding all licenses and permits, which first-ranking security interest, mortgage and charge shall be evidenced by (a) a general security agreement (the "Gulfstream General Security Agreement") and (b) a general assignment of leases, rents, financing and sales agreements, where applicable (the "Gulfstream General Assignment").


		Magna Entertainment Corp. ("MEC") shall provide to the Gulfstream Lender a negative pledge over the shares of the Gulfstream Borrower (the "Gulfstream Borrower Share Negative Pledge").
		In return for guarantee and indemnity fees paid by the Gulfstream Borrower to The Xxxxxxx Borrower in the amount of $287,500 (the "Gulfstream Guarantee Fee"), The Xxxxxxx Borrower shall enter into a guarantee and indemnity in favour of the Gulfstream Lender ("The Xxxxxxx Borrower's Gulfstream Guarantee and Indemnity") in respect of the fulfillment by the Gulfstream Borrower of all of its obligations (whether direct or indirect, absolute or contingent, matured or not) under the Gulfstream Construction Loan Agreement. As security for its obligations under The Xxxxxxx Borrower's Gulfstream Guarantee and Indemnity, The Xxxxxxx Owner (as hereinafter defined) shall grant the Gulfstream Lender a second-ranking interest, mortgage and charge over its fee simple interest in The Xxxxxxx Property (as hereinafter defined) (The Xxxxxxx Property and the Gulfstream Mortgaged Lands being collectively defined herein as the "Mortgaged Lands"), and The Xxxxxxx Operator (as hereinafter defined) shall grant the Gulfstream Lender a second-ranking interest, mortgage and charge over all of its assets and personal property, including The Xxxxxxx FF&E (as hereinafter defined) (subject to any purchase money security interests granted to lenders or vendors up to a maximum amount of $12.5 million in the aggregate for purposes only of acquiring The Xxxxxxx FF&E) and including all after-acquired property, but excluding all licenses and permits. All of the foregoing second-ranking interests shall (a) rank second only to the security granted to The Xxxxxxx Lender and (b) be subject to the terms of the Additional Financing Inter-Creditor Agreement (as hereinafter defined), if entered into. In addition, The Xxxxxxx Borrower shall covenant not to pledge any licenses or permits held by it to any third party.
		All security interests, mortgages and charges contemplated herein shall be granted subject to customary "Permitted Encumbrances" (which term shall be defined in the definitive documentation).


		Security documents shall include, without limitation, the following security documents:
		(a)		a deed of trust and mortgage recorded against title to the Gulfstream Property and the Aventura Lands;
		(b)		the Gulfstream General Security Agreement;
		(c)		the Gulfstream General Assignment;
		(d)		specific assignments of the Gulfstream Borrower's interest in all of its material contracts, intellectual property, plans, drawings, agreements, permits and approvals (collectively, the "Gulfstream Material Documents"), where permitted; provided that if the assignment of any Gulfstream Material Document is not permitted, the Gulfstream Borrower shall use its commercially reasonable efforts to obtain all consents and waivers necessary to assign to the Gulfstream Lender such Gulfstream Material Document and further agrees that if such consents and waivers are not obtained, such Gulfstream Material Document shall be held by the Gulfstream Borrower for the benefit of and in trust for the Gulfstream Lender;
		(e)		an assignment of property insurance in an amount satisfactory to the Gulfstream Lender, designating the Gulfstream Lender as a first loss payee and an additional insured;
		(f)		the Gulfstream Borrower Share Negative Pledge;
		(g)		The Xxxxxxx Borrower's Gulfstream Guarantee and Indemnity, secured by a second-ranking interest over each of the documents listed below as items (a) — (f) under the heading "The Xxxxxxx Construction Loan — Security" (with all of the foregoing second-ranking interests (i) ranking second only to the security granted to The Xxxxxxx Lender and (ii) being subject to the terms of the Additional Financing Inter-Creditor Agreement, if entered into), together with a covenant of The Xxxxxxx Borrower not to pledge any licenses or permits held by it to any third party;
		(h)		related UCC financing statements; and
		(i)		such other documents as are usual and customary in similar transactions and requested by the Gulfstream Lender and its counsel, acting reasonably.


REPRESENTATIONS AND WARRANTIES:	Customary representations and warranties (including customary qualifiers for knowledge and materiality) for transactions of this nature, relating to the Gulfstream Borrower, and, where applicable, The Xxxxxxx Borrower, and the business of such entities, including with respect to organization and qualification, financial statements, authorization, execution and delivery, validity and enforceability of agreements, and compliance with laws and regulatory requirements, including environmental laws and regulatory requirements, governmental approvals and consents, title to properties, zoning and development approvals, material contracts, insurance adequacy, no conflict with agreements or charter provisions, capitalization, litigation and other actions pending or threatened, taxes, margin stock, subsidiaries, solvency, ERISA, employment and labour regulations, environmental conditions and potential and existing environmental liabilities, no undisclosed liabilities, full disclosure, no affiliate transactions (save as disclosed), sufficiency of assets to carry on business, no defaults and no material adverse change. The Gulfstream Borrower will also represent and warrant that all material assets (including real property and licenses), contracts, and other documents necessary to conduct the business of the Gulfstream Borrower (a) have been assigned, pledged, mortgaged or otherwise encumbered as security for the Gulfstream Borrower's obligations under the Gulfstream Construction Loan Agreement and/or (b) are subject to the negative pledges described above. The Gulfstream Lender will provide customary lender representations and warranties.
COVENANTS:	Customary for transactions of this nature, relating to the Gulfstream Borrower and The Xxxxxxx Borrower, including the following:
	(a)	compliance with all applicable laws and regulatory requirements, including (i) all racing and gaming laws and regulatory requirements and (ii) all environmental laws and regulatory requirements and accepted environmental practices;


		(b)		maintenance in good standing of all licenses and permits;
		(c)		an agreement not to pledge any licenses or permits held by the Gulfstream Borrower to any third party;
		(d)		maintenance of satisfactory insurance;
		(e)		notification of default or Event of Default or of regulatory proceedings, litigation, environmental conditions and actual or potential environmental liabilities;
		(f)		provision of financial and other information including monthly, quarterly and annual financial statements (prepared in accordance with GAAP), operating and capital budgets, and status reports on construction activity operations, outlining amounts spent to date and amounts remaining to be spent to complete the development of such lands and any other materials or information reasonably requested by the Gulfstream Lender;
		(g)		submission of an application or applications for preliminary and final governmental approvals in respect of construction plans for the Gulfstream Facilities;
		(h)		allowing the Gulfstream Lender a reasonable period of time to review any future applications referred to in clause (g) above prior to the submission thereof;
		(i)		ensuring that the applications referred to in clause (g) above are in accordance with the terms of the Gulfstream Construction Plans, as the same may be modified with the approval of the Gulfstream Lender, and have been approved by the Gulfstream Lender, and obtaining the approval of the Gulfstream Lender of such applications to the extent the scope, form and substance or terms thereof are inconsistent or otherwise not in accordance with the provisions of construction plan that has been approved by the Gulfstream Lender;
		(j)		environmental reporting;
		(k)		payment of taxes and other governmental charges;


		(l)		inspection of properties, books and records; audit rights;
		(m)		use of proceeds;
		(n)		compliance with material contracts and restrictions on amendment or termination thereof without the Gulfstream Lender's consent; and
		(o)		diligently pursuing and taking all necessary action to obtain, including attending all meetings with governmental authorities and diligently responding to any requests of such governmental authorities, the approval of the applications referred to under clause (g) above.
		The Gulfstream Construction Loan Agreement will also include other covenants, customary for loans of this nature, in relation to the Gulfstream Borrower and The Xxxxxxx Borrower including restrictions and limitations on: guarantees, liens, mergers and other corporate reorganization transactions, acquisitions and dispositions, change of control, loans and investments, restricted payments, distributions and dividends, investment and transactions with affiliates, incurrence of indebtedness (other than indebtedness approved by the Gulfstream Lender in respect of the Gulfstream FF&E and/or The Xxxxxxx FF&E), including capital leases, synthetic leases and sale-leaseback transactions, change in business and ERISA. Certain covenants will be subject to negotiated exceptions and baskets.
		Each of the Gulfstream Borrower and The Xxxxxxx Borrower (as guarantor of the Gulfstream Construction Loan) will promptly seek and obtain from the racing and gaming regulatory bodies that have jurisdiction over the Gulfstream Borrower and The Xxxxxxx Borrower, as applicable, all necessary approvals and/or consents with respect to the Gulfstream Construction Loan Agreement and related security documents. The Gulfstream Borrower and The Xxxxxxx Borrower will keep the Gulfstream Lender apprised of the current status of the approval / consent process. In the event that such approvals and/or consents are not obtained within 120 days of the first advance under the Gulfstream Construction Loan, the Gulfstream Lender will have the right (exercisable in its sole and absolute discretion) to immediately terminate the Gulfstream Construction Loan Agreement. In addition, if the regulatory bodies determine that they will not provide all necessary approvals and/or consents, the Gulfstream Construction Loan Agreement will immediately terminate. In either event, on such termination the Gulfstream Borrower will immediately pay to the Gulfstream Lender the Gulfstream Loan Amount (including (and without duplication) all accrued and unpaid interest, fees, expenses and closing costs and other amounts owing and the Gulfstream Unamortized Amount as of such date), together with the Gulfstream Make-Whole Amount (as hereinafter defined).


	The Gulfstream Construction Loan Agreement will also contain a covenant on the part of the Gulfstream Borrower not to enter into any transactions other than in the ordinary course of the Gulfstream Borrower's business and in connection with the development of the Gulfstream Property and/or the Aventura Lands.
RESTRICTED PAYMENTS:	Without in any way limiting the generality of the restrictions and limitations to be contained within the covenants referenced above under the heading "Covenants", for so long as the Gulfstream Construction Loan or the Gulfstream Borrower's The Xxxxxxx Guarantee and Indemnity remains outstanding the covenants thereunder will, among other things, prohibit the Gulfstream Borrower from undertaking the following without the express prior written consent of the Gulfstream Lender in its sole and absolute discretion:
	(a)	making any payments on, in respect of or arising under or in connection with any indebtedness pari passu with or subordinated to the Gulfstream Construction Loan or indebtedness owed to any affiliate, including any indebtedness owing to a shareholder or a subsidiary (other than the Gulfstream Lender or The Xxxxxxx Lender), other than payments of interest due and owing where the making of such payments will not result in a default or an Event of Default under the Gulfstream Construction Loan Agreement;
	(b)	making any loans to third parties or affiliates;
	(c)	redeeming, purchasing or otherwise retiring or canceling any securities (including any warrants, options or rights to acquire securities, "Securities");


		(d)		creating any sinking fund or entering into any analogous arrangement whereby cash is set aside or segregated for the payment of any indebtedness, other than the Gulfstream Construction Loan, or for the acquisition of any equity securities of the Gulfstream Borrower;
		(e)		issuing any Securities containing any mandatory or fixed payment obligations of any kind, whether dividend or premium or otherwise;
		(f)		declaring or paying any dividends, unless (A) all of the Gulfstream Restricted Payment Release Conditions (as hereinafter defined) have been satisfied, and (B) such declaration or payment of dividends will not result in the Gulfstream Borrower committing a default under the Gulfstream Loan Construction Agreement;
		(g)		making investments, subject to exceptions for cash equivalents and other arm's length investments in amounts and pursuant to terms acceptable to the Gulfstream Lender, acting reasonably;
		(h)		paying any management, consulting or similar fee, or comparable payment, (i) to any affiliate or other related party (other than the Gulfstream Lender or The Xxxxxxx Lender) or (ii) outside of the ordinary course of the Gulfstream Borrower's business as of the closing date of the Gulfstream Construction Loan; and
		(i)		entering into any transactions with any affiliate for the purposes of undertaking indirectly any transaction or activity that is otherwise prohibited by this restriction.


		For the purposes hereof, the "Gulfstream Restricted Payment Release Conditions" means: (i) The Xxxxxxx Excess Cash Sweep Termination Date (as hereinafter defined) has been reached, (ii) the outstanding debt of the Gulfstream Borrower (together with the outstanding debt of The Xxxxxxx Borrower if The Xxxxxxx Construction Loan is in place) compared to the earnings before interest, taxes, depreciation and amortization ("EBITDA") of the Gulfstream Borrower (together with the EBITDA of The Xxxxxxx Borrower if The Xxxxxxx Construction Loan is in place) does not exceed a ratio of 4:1, (iii) at the time of the making of the restricted payment, or after giving effect thereto, no default or Event of Default, or an event that through the passage of time or the giving of notice, or both, would become an Event of Default, shall have occurred and be continuing, and (iv) the distribution of the restricted payment does not cause the sum of all restricted payments made by the Gulfstream Borrower (including the desired payment) to exceed an amount equal to 50% of cumulative net income of the Gulfstream Borrower (determined in accordance with GAAP) since the Gulfstream Facilities Completion Date less 100% of losses since such date.
		Notwithstanding the foregoing, the Gulfstream Lender agrees that the following types of payments will not be deemed to be restricted payments subject to the above restrictions: (a) payments to MID, the Gulfstream Lender or The Xxxxxxx Lender (including any amounts paid to The Xxxxxxx Lender in respect of the Gulfstream Borrower's obligations under the Gulfstream Borrower's The Xxxxxxx Guarantee and Indemnity); (b) the distribution by the Gulfstream Borrower to MEC of the initial advance made to the Gulfstream Borrower under the Gulfstream Construction Loan, which initial advance will be an amount equal to the amount paid by MEC with respect to the reconstruction of the Gulfstream Facilities prior to the closing of the Gulfstream Construction Loan plus the out-of-pocket fees and costs payable by the Gulfstream Borrower or MEC in connection with entering into the Gulfstream Construction Loan; (c) the Gulfstream Guarantee Fee; and (d) provided that at the time of the making of such payment, or after giving effect thereto, no default or Event of Default, or an event that through the passage of time or the giving of notice, or both, would become an Event of Default, shall have occurred and be continuing, payments to MEC for (i) management fees in the ordinary course of business and consistent with past practice and (ii) the reimbursement of additional amounts paid by MEC from time to time with respect to the reconstruction of the Gulfstream Facilities, provided that all such amounts were incurred in accordance with the Gulfstream Construction Plans and with the terms of the Gulfstream Construction Loan Agreement.


EVENTS OF DEFAULT:	Customary for transactions of this nature, to include, without limitation:
	(a)	non-payment of principal, interest and fees when due;
	(b)	cross-default on other indebtedness of the Gulfstream Borrower, The Xxxxxxx Borrower, and/or their respective subsidiaries, if any;
	(c)	breach of affirmative covenant (including a breach of the covenant of completion and/or covenant to promptly pay cost overruns as set forth above under the heading "Construction Plans");
	(d)	breach of negative covenant;
	(e)	breach of representation or warranty;
	(f)	a loss of any racing and/or gaming license held by the Gulfstream Borrower or The Xxxxxxx Borrower;
	(g)	change in corporate structure without the Gulfstream Lender's approval, not to be unreasonably withheld;
	(h)	a change of control of the Gulfstream Borrower or The Xxxxxxx Borrower;
	(i)	voluntary or involuntary bankruptcy, insolvency or winding up by the Gulfstream Borrower, The Xxxxxxx Borrower or MEC;
	(j)	unsatisfied judgments against the Gulfstream Borrower and/or The Xxxxxxx Borrower;
	(k)	unenforceability or invalidity of the Gulfstream Construction Loan Agreement documents or any of the associated security documents;
	(l)	material adverse change in the assets, liabilities, business, financial condition or prospects of the Gulfstream Borrower, and/or The Xxxxxxx Borrower, in the opinion of the Gulfstream Lender, acting reasonably;


	(m)	environmental liability of, or an action against, the Gulfstream Borrower and/or The Xxxxxxx Borrower, which could reasonably be expected to have a material adverse effect on (i) the Mortgaged Lands or (ii) the Gulfstream Borrower and/or The Xxxxxxx Borrower;
	(n)	a default under, or termination of, material contracts or joint venture agreements which, subject to certain exceptions to be determined by the Gulfstream Lender, could reasonably be expected to have a material adverse effect on the Gulfstream Borrower and/or The Xxxxxxx Borrower; and/or
	(o)	a breach of affirmative or negative covenant, representation or warranty of The Xxxxxxx Borrower under The Xxxxxxx Borrower's Gulfstream Guarantee and Indemnity.
	The Events of Default will be subject, in certain cases, to customary grace periods satisfactory to the Gulfstream Lender, acting reasonably. Upon acceleration, the Gulfstream Loan Amount and The Xxxxxxx Loan Amount (in each case, including (and without duplication) all accrued and unpaid interest, fees, expenses, closing costs and other amounts owing, and the Gulfstream Unamortized Amount and The Xxxxxxx Unamortized Amount as of such date) and the General Pre-Payment Make-Whole Amount shall become due and payable.
CONDITIONS PRECEDENT:	Customary for transactions of this nature, including the Gulfstream Lender's and its legal counsel's satisfaction in form, scope and substance, in their sole discretion (unless otherwise indicated), with:
	(a)	receipt of all approvals with respect to both the Gulfstream Construction Loan and The Xxxxxxx Construction Loan set forth in this term sheet under the heading "Approvals";
	(b)	an executed amendment to the Bank of Montreal credit facility with MEC that makes all changes necessary to permit the transactions contemplated by this term sheet, including the elimination of the existing negative pledge in favour of Bank of Montreal over the Gulfstream Property;


		(c)		opinions with respect to such matters as may be reasonably required by the Gulfstream Lender or its counsel with respect to the Gulfstream Borrower and The Xxxxxxx Borrower;
		(d)		execution and delivery of a construction loan agreement and other formal documentation giving effect to the terms and conditions and security hereof and such other matters as the Gulfstream Lender may reasonably require;
		(e)		delivery of certified copies of constating documents, operating agreements, by-laws and resolutions of the Gulfstream Borrower and The Xxxxxxx Borrower, authorizing the credit facilities and other transactions contemplated hereby;
		(f)		no default or Event of Default having occurred;
		(g)		no litigation, regulatory or other proceeding shall have been commenced seeking to restrict the Gulfstream Borrower and/or The Xxxxxxx Borrower from completing the transactions contemplated hereby;
		(h)		the Gulfstream Borrower and/or The Xxxxxxx Borrower shall have received all necessary regulatory, shareholder or other approvals and consents, made all necessary filings and given all necessary notices with respect to the transactions contemplated hereby;
		(i)		satisfactory due diligence review by the Gulfstream Lender, including with respect to environmental reports and ability to rely upon such reports, environmental and other approvals, title to properties and assets and legal matters;
		(j)		delivery of copies of material contracts (including all construction contracts);
		(k)		satisfactory assessment of all environmental conditions relating to the Mortgaged Lands and all other past or present real property of the Gulfstream Borrower, its subsidiaries and any related development company and actual or potential environmental liabilities of the Gulfstream Borrower, its subsidiaries and any related development company including those relating to the Mortgaged Lands, including any appropriate insurance;


	(l)	no material adverse change in the assets, liabilities, business, financial condition or prospects of the Gulfstream Borrower and The Xxxxxxx Borrower, in each case in the opinion of the Gulfstream Lender, acting reasonably;
	(m)	completion of all security filings under UCC and real property registrations;
	(n)	provision of title insurance policies with respect to the Mortgaged Lands for the benefit of the Gulfstream Lender with such endorsements from the title insurer as the Gulfstream Lender shall reasonably determine, which confirm (A) the adequacy of the legal description of the Mortgaged Lands, (B) that the Gulfstream Lender has a first lien position against the Gulfstream Mortgaged Lands and a second lien position against The Xxxxxxx Property, (C) the validity and effectiveness of any such lien on the exercise by the Gulfstream Lender of its rights and remedies in the event of a default under the Gulfstream Construction Loan Agreement, together with an endorsement to the Gulfstream Lender's title insurance policy to confirm that the title insurance will continue to be effective following the platting of any of the Mortgaged Lands; and
	(o)	delivery of The Xxxxxxx Borrower's Gulfstream Guarantee and Indemnity.
EXPENSES:	All reasonable fees, expenses and closing costs incurred by the Gulfstream Lender in connection with the Gulfstream Construction Loan Agreement, the security to be granted in connection therewith and the Gulfstream Lender's due diligence, including legal, accounting, environmental and other professional fees, expenses and closing costs shall be for the account of the Gulfstream Borrower, and (a) where such amounts are incurred prior to the Gulfstream Facilities Completion Date, shall form part of the advances made by the Gulfstream Lender to the Gulfstream Borrower under the Gulfstream Construction Loan Agreement and (b) where such amounts are incurred on and after the Gulfstream Facilities Completion Date, shall be paid by the Gulfstream Borrower to the Gulfstream Lender promptly following receipt of an invoice therefor.


INDEMNITY:		Each of the Gulfstream Borrower and The Xxxxxxx Borrower shall indemnify the Gulfstream Lender, its directors, officers, employees, affiliates, agents and representatives against all claims, actions, suits, costs, losses, damages and liabilities arising from or relating to the transactions contemplated by the Gulfstream Construction Loan Agreement and related documentation and which arise out of or relate to: (i) environmental matters; (ii) breach by the Gulfstream Borrower and/or The Xxxxxxx Borrower of any of their respective representations, warranties or covenants set forth in the Gulfstream Construction Loan Agreement and related documentation; (iii) any acts or omissions of the Gulfstream Borrower and/or The Xxxxxxx Borrower or any agent or contractor thereof; and (iv) the business of the Gulfstream Borrower and/or The Xxxxxxx Borrower.
AUTHORIZATION:		The Gulfstream Lender is authorized to file UCC financing statements against the Gulfstream Borrower and The Xxxxxxx Borrower upon execution of this term sheet.
THE XXXXXXX CONSTRUCTION LOAN
BORROWER:		MEC PENNSYLVANIA RACING, INC. ("The Xxxxxxx Owner"), the owner of The Xxxxxxx Property, and WASHINGTON TROTTING ASSOCIATION, INC. and MOUNTAIN LAUREL RACING, INC. (collectively, "The Xxxxxxx Operator") (The Xxxxxxx Owner and The Xxxxxxx Operator being referred to herein collectively as "The Xxxxxxx Borrower"). Each entity comprising The Xxxxxxx Borrower shall have joint and several liability for all of the obligations contemplated hereunder. The Xxxxxxx Borrower shall not be permitted to assign its obligations under The Xxxxxxx Construction Loan Agreement or the Gulfstream Construction Loan Agreement.
GUARANTOR:		The Gulfstream Borrower.
LENDER:		MID or a subsidiary ("The Xxxxxxx Lender").


LOAN:	A non-revolving construction loan available by way of progress draw advances upon the satisfaction of customary terms and conditions, including the provision of a borrower's certificate certifying, among other things, the status of any cost overruns and the remaining cost-to-completion, and third party supporting documentation ("The Xxxxxxx Construction Loan").
	No progress draw advances will be permitted under The Xxxxxxx Construction Loan unless and until The Xxxxxxx Lender has provided written notice to The Xxxxxxx Borrower that:
	(a)	The Xxxxxxx Lender has (i) received and reviewed (to its satisfaction, acting reasonably) a copy of the document pursuant to which The Xxxxxxx Borrower has been awarded a conditional license to conduct slot machine operations at The Xxxxxxx Facilities or (ii) determined in its sole and absolute discretion that it is satisfied that such conditional license shall be awarded to The Xxxxxxx Borrower;
	(b)	The Xxxxxxx Lender will enter into the Additional Financing Inter-Creditor Agreement (as hereinafter defined); and
	(c)	The Xxxxxxx Lender is satisfied, acting reasonably, that The Xxxxxxx Borrower and the Gulfstream Borrower have received from the racing and gaming regulatory bodies that have jurisdiction over The Xxxxxxx Borrower and the Gulfstream Borrower (as guarantor of The Xxxxxxx Construction Loan), as applicable, all necessary approvals and/or consents with respect to The Xxxxxxx Construction Loan, together with all necessary approvals and/or consents with respect to the Gulfstream Construction Loan.
	No progress draw advances will be permitted under The Xxxxxxx Construction Loan after completion of construction of The Xxxxxxx Facilities (for greater certainty, excluding The Xxxxxxx FF&E).


AMOUNT:		$77 million, plus accrued interest and The Xxxxxxx Lender's expenses and closing costs. All advances under The Xxxxxxx Construction Loan, up to an aggregate amount of $77 million, together with all accrued interest and The Xxxxxxx Lender's expenses and closing costs, are referred to herein as "The Xxxxxxx Loan Amount".
CLOSING:		The parties will use commercially reasonable efforts to execute and deliver the definitive documents relating to The Xxxxxxx Construction Loan no later than February 28, 2005. Such definitive documents will be in the same form as the definitive documents with respect to the Gulfstream Construction Loan, together with such changes as are necessary to reflect the terms and conditions in this term sheet relating to The Xxxxxxx Construction Loan.
PURPOSE:		To fund the reconstruction of The Xxxxxxx Race Track ("The Xxxxxxx") clubhouse/grandstand facility/slot facility and related site works (collectively, "The Xxxxxxx Facilities"), excluding the furniture, fixtures, equipment, machinery and all process related additions to the building (collectively, "The Xxxxxxx FF&E") relating to The Xxxxxxx Facilities.
		The lands forming part of The Xxxxxxx racetrack operations and existing site works comprise approximately 154 acres, and have a building area of approximately 200,000 square feet. Such lands, together with all improvements now or hereafter made thereon, are defined herein as "The Xxxxxxx Property".
CONSTRUCTION PLANS:		The Xxxxxxx Borrower covenants to The Xxxxxxx Lender that The Xxxxxxx Facilities shall be reconstructed by The Xxxxxxx Borrower as set forth in Attachment B ("The Xxxxxxx Construction Plans"), with such further changes as shall be agreed to in writing between The Xxxxxxx Borrower and The Xxxxxxx Lender. No further advances under The Xxxxxxx Construction Loan shall be permitted for so long as any cost overruns are outstanding, and The Xxxxxxx Borrower shall promptly fund, at its own cost and expense, all cost overruns such that the principal amount yet to be advanced under The Xxxxxxx Construction Loan shall at no time be less than the remaining cost to complete The Xxxxxxx Facilities.


TERM:		Ten years from The Xxxxxxx Facilities Completion Date ("The Xxxxxxx Maturity Date"), with no extension or renewal rights.
INTEREST RATE:		All advances under The Xxxxxxx Construction Loan Agreement (including advances in respect of The Xxxxxxx Lender's fees, expenses and closing costs in respect of The Xxxxxxx Construction Loan Agreement), together with all interest accrued thereon, shall bear interest at the rate of (a) from the date of the initial advance until The Xxxxxxx Facilities Completion Date, a floating rate equal to 2.55% above MID's notional per annum cost of LIBOR borrowing under its floating rate credit facility, compounded monthly, and (b) from and after The Xxxxxxx Facilities Completion Date until The Xxxxxxx Maturity Date, a fixed rate of 10.5% per annum, compounded semi-annually.
PAYMENTS OF PRINCIPAL AND INTEREST:		Principal and interest (together with accrued interest) in respect of The Xxxxxxx Construction Loan shall, subject to the repayment deferral contemplated below, be payable monthly in advance in 12 equal blended monthly installments per annum of principal and interest without demand from and after The Xxxxxxx Repayment Commencement Date.
		Payment of principal and interest payable under The Xxxxxxx Construction Loan Agreement by The Xxxxxxx Borrower shall commence on January 1, 2008 ("The Xxxxxxx Repayment Commencement Date").
		For purposes of The Xxxxxxx Construction Loan Agreement, "The Xxxxxxx Facilities Completion Date" is defined as the first day of the month following the earliest of (a) the date on which The Xxxxxxx Facilities are opened to the public for business, (b) the date that is four (4) months following completion of construction of The Xxxxxxx Facilities (for greater certainty, excluding The Xxxxxxx FF&E), and (c) fifteen (15) months after The Xxxxxxx Borrower has been awarded a conditional license to conduct slot machine operations at The Xxxxxxx Facilities.


		A sample calculation of the aggregate annual repayments in respect of The Xxxxxxx Construction Loan, including the interest and principal repayment deferral and the unamortized principal amount ("The Xxxxxxx Unamortized Amount") as of each payment date, is set forth in Attachment C-2.
		The Xxxxxxx interest and principal loan payment for each month of the term following The Xxxxxxx Repayment Commencement Date shall be equal to the amount necessary to fully amortize The Xxxxxxx Loan Amount based on a 25-year amortization period commencing on The Xxxxxxx Facilities Completion Date, but with no payments until The Xxxxxxx Repayment Commencement Date, at a fixed rate of interest of 10.5% per annum, compounded semi-annually.
		On The Xxxxxxx Maturity Date, The Xxxxxxx Borrower shall pay to The Xxxxxxx Lender the entire amount then owing under The Xxxxxxx Construction Loan (including (without duplication) all accrued and unpaid interest, fees and other amounts owing, and The Xxxxxxx Unamortized Amount) as of such date.
PRE-PAYMENTS:		The Xxxxxxx Borrower shall have no right to pre-pay or otherwise repay the amounts owing under The Xxxxxxx Construction Loan Agreement except as set forth below under the headings "The Xxxxxxx Excess Cash Flow Sweep" and "General Pre-Payment Right".
SECURITY:		The Xxxxxxx Owner shall grant The Xxxxxxx Lender a first-ranking security interest, mortgage and charge over its fee simple interest in The Xxxxxxx Property.
		The Xxxxxxx Operator shall grant The Xxxxxxx Lender a first-ranking security interest, mortgage and charge over all of its assets and personal property, including The Xxxxxxx FF&E (subject to any purchase money security interests granted to lenders or vendors up to a maximum amount of $12.5 million in the aggregate for purposes only of acquiring The Xxxxxxx FF&E) and including all after-acquired property, but excluding all licenses and permits, which first-ranking security interest, mortgage and charge shall be evidenced by (a) a general security agreement ("The Xxxxxxx General Security Agreement") and (b) a general assignment of leases, rents, financing and sales agreements, where applicable ("The Xxxxxxx General Assignment").


		MEC shall provide to The Xxxxxxx Lender a negative pledge over the shares of The Xxxxxxx Borrower ("The Xxxxxxx Borrower Share Negative Pledge").
		In return for guarantee and indemnity fees paid by The Xxxxxxx Borrower to the Gulfstream Borrower in the amount of $192,500 (the "The Xxxxxxx Guarantee Fee"), the Gulfstream Borrower shall enter into a guarantee and indemnity in favour of The Xxxxxxx Lender (the "Gulfstream Borrower's The Xxxxxxx Guarantee and Indemnity") in respect of the fulfillment by The Xxxxxxx Borrower of all of its obligations (whether direct or indirect, absolute or contingent, matured or not) under The Xxxxxxx Construction Loan Agreement. As security for its obligations under the Gulfstream Borrower's The Xxxxxxx Guarantee and Indemnity, the Gulfstream Borrower shall grant The Xxxxxxx Lender a second-ranking interest, mortgage and charge over its fee simple interest in the Gulfstream Mortgaged Lands and a second-ranking interest, mortgage and charge over all of its assets and personal property, including the Gulfstream FF&E (subject to any purchase money security interests granted to lenders or vendors up to a maximum amount of $12.5 million in the aggregate for purposes only of acquiring the Gulfstream FF&E) and including all after-acquired property, but excluding all licenses and permits. All of the foregoing second-ranking interests shall rank second only to the security granted to the Gulfstream Lender. In addition, the Gulfstream Borrower shall covenant not to pledge any licenses or permits held by it to any third party.
		Security documents shall include, without limitation, the following security documents:
		(a)		a deed of trust and mortgage recorded against title to The Xxxxxxx Property;
		(b)		The Xxxxxxx General Security Agreement;
		(c)		The Xxxxxxx General Assignment;


		(d)		specific assignments of The Xxxxxxx Borrower's interest in all of its material contracts, intellectual property, plans, drawings, agreements, permits and approvals (collectively, "The Xxxxxxx Material Documents"), where permitted; provided that if the assignment of any of The Xxxxxxx Material Documents is not permitted, The Xxxxxxx Borrower shall use its commercially reasonable efforts to obtain all consents and waivers necessary to assign to The Xxxxxxx Lender such of The Xxxxxxx Material Documents and further agrees that if such consents and waivers are not obtained, such of The Xxxxxxx Material Documents shall be held by The Xxxxxxx Borrower for the benefit of and in trust for The Xxxxxxx Lender;
		(e)		an assignment of property insurance in an amount satisfactory to The Xxxxxxx Lender, designating The Xxxxxxx Lender as a first loss payee and an additional insured;
		(f)		The Xxxxxxx Borrower Share Negative Pledge;
		(g)		the Gulfstream Borrower's The Xxxxxxx Guarantee and Indemnity by the Gulfstream Borrower, secured by a second-ranking interest over each of the documents listed above as items (a) — (f) under the heading "Gulfstream Facility — Security" (with all of the foregoing second-ranking interests ranking second only to the security granted to the Gulfstream Lender), together with a covenant of the Gulfstream Borrower not to pledge any licenses or permits held by it to any third party;
		(h)		related UCC financing statements; and
		(i)		such other documents as are usual and customary in similar transactions and requested by The Xxxxxxx Lender and its counsel, acting reasonably.
		All of the security granted in respect of The Xxxxxxx Property, The Xxxxxxx FF&E and the cash flow of The Xxxxxxx Operator shall be subject to the Additional Financing Inter-Creditor Agreement, if entered into.


REPRESENTATIONS AND WARRANTIES:	Customary representations and warranties (including customary qualifiers for knowledge and materiality) for transactions of this nature, relating to The Xxxxxxx Borrower, and, where applicable, the Gulfstream Borrower, and the business of such entities, including with respect to organization and qualification, financial statements, authorization, execution and delivery, validity and enforceability of agreements, and compliance with laws and regulatory requirements, including environmental laws and regulatory requirements, governmental approvals and consents, title to properties, zoning and development approvals, material contracts, insurance adequacy, no conflict with agreements or charter provisions, capitalization, litigation and other actions pending or threatened, taxes, margin stock, subsidiaries, solvency, ERISA, employment and labour regulations, environmental conditions and potential and existing environmental liabilities, no undisclosed liabilities, full disclosure, no affiliate transactions (save as disclosed), sufficiency of assets to carry on business, no defaults and no material adverse change. The Xxxxxxx Borrower will also represent and warrant that all material assets (including real property and licenses), contracts and other documents necessary to conduct the business of The Xxxxxxx Borrower (a) have been assigned, pledged, mortgaged or otherwise encumbered as security for The Xxxxxxx Borrower's obligations under The Xxxxxxx Construction Loan Agreement and/or (b) are subject to the negative pledges described above. The Xxxxxxx Lender will provide customary lender representations and warranties.
COVENANTS:	Customary for transactions of this nature, relating to The Xxxxxxx Borrower and the Gulfstream Borrower, including the following:
	(a)	compliance with all applicable laws and regulatory requirements, including (i) all racing and gaming laws and regulatory requirements and (ii) all environmental laws and regulatory requirements and accepted environmental practices;
	(b)	maintenance in good standing of all licenses and permits;


		(c)		an agreement not to pledge any licenses or permits held by The Xxxxxxx Borrower to any third party;
		(d)		maintenance of satisfactory insurance;
		(e)		notification of default or Event of Default or of regulatory proceedings, litigation, environmental conditions and actual or potential environmental liabilities;
		(f)		provision of financial and other information including monthly, quarterly and annual financial statements (prepared in accordance with GAAP), operating and capital budgets, and status reports on construction activity operations, outlining amounts spent to date and amounts remaining to be spent to complete the development of such lands and any other materials or information reasonably requested by The Xxxxxxx Lender;
		(g)		submission of an application or applications for preliminary and final governmental approvals in respect of construction plans for The Xxxxxxx Facilities;
		(h)		allowing The Xxxxxxx Lender a reasonable period of time to review any future applications referred to in clause (g) above prior to the submission thereof;
		(i)		ensuring that the applications referred to in clause (g) above are in accordance with the terms of The Xxxxxxx Construction Plans, as the same may be modified with the approval of The Xxxxxxx Lender, and have been approved by The Xxxxxxx Lender, and obtaining the approval of The Xxxxxxx Lender of such applications to the extent the scope, form and substance or terms thereof are inconsistent or otherwise not in accordance with the provisions of construction plan that has been approved by the Gulfstream Lender;
		(j)		environmental reporting;
		(k)		payment of taxes and other governmental charges;
		(l)		inspection of properties, books and records; audit rights;


	(m)	use of proceeds;
	(n)	compliance with material contracts and restrictions on amendment or termination thereof without The Xxxxxxx Lender's consent; and
	(o)	diligently pursuing and taking all necessary action to obtain, including attending all meetings with governmental authorities and diligently responding to any requests of such governmental authorities, the approval of the applications referred to under clause (g) above.
	The Xxxxxxx Construction Loan Agreement will also include other covenants, customary for loans of this nature, in relation to The Xxxxxxx Borrower and the Gulfstream Borrower, including restrictions and limitations on: guarantees, liens, mergers and other corporate reorganization transactions, acquisitions and dispositions, change of control, loans and investments, restricted payments, distributions and dividends, investment and transactions with affiliates, incurrence of indebtedness (other than indebtedness approved by The Xxxxxxx Lender in respect of The Xxxxxxx FF&E and/or the Gulfstream FF&E), including capital leases, synthetic leases and sale-leaseback transactions, change in business and ERISA. Certain covenants will be subject to negotiated exceptions and baskets.
	The Xxxxxxx Construction Loan Agreement will also contain a covenant on the part of The Xxxxxxx Borrower not to enter into any transactions other than in the ordinary course of The Xxxxxxx Borrower's business and in connection with the development of The Xxxxxxx Property.
RESTRICTED PAYMENTS:	Without in any way limiting the generality of the restrictions and limitations to be contained within the covenants referenced above under the heading "Covenants", for so long as The Xxxxxxx Construction Loan or The Xxxxxxx Borrower's Gulfstream Guarantee and Indemnity remains outstanding the covenants thereunder will, among other things, prohibit The Xxxxxxx Borrower from undertaking the following without the express prior written consent of The Xxxxxxx Lender in its sole and absolute discretion:


		(a)		making any payments on, in respect of or arising under or in connection with any indebtedness pari passu with or subordinated to The Xxxxxxx Construction Loan or indebtedness owed to any affiliate, including any indebtedness owing to a shareholder or a subsidiary (other than the Gulfstream Lender or The Xxxxxxx Lender), other than payments of interest due and owing where the making of such payments will not result in a default or an Event of Default under The Xxxxxxx Construction Loan Agreement;
		(b)		making any loans to third parties or affiliates;
		(c)		redeeming, purchasing or otherwise retiring or canceling any Securities;
		(d)		creating any sinking fund or entering into any analogous arrangement whereby cash is set aside or segregated for the payment of any indebtedness, other than The Xxxxxxx Construction Loan, or for the acquisition of any equity securities of The Xxxxxxx Borrower;
		(e)		issuing any Securities containing any mandatory or fixed payment obligations of any kind, whether dividend or premium or otherwise;
		(f)		declaring or paying any dividends, unless (A) all of The Xxxxxxx Restricted Payment Release Conditions (as hereinafter defined) have been satisfied, and (B) such declaration or payment of dividends will not result in The Xxxxxxx Borrower committing a default under The Xxxxxxx Loan Construction Agreement;
		(g)		making investments, subject to exceptions for cash equivalents and other arm's length investments in amounts and pursuant to terms acceptable to The Xxxxxxx Lender, acting reasonably;
		(h)		paying any management, consulting or similar fee, or comparable payment, (i) to any affiliate or other related party (other than The Xxxxxxx Lender or the Gulfstream Lender) or (ii) outside of the ordinary course of The Xxxxxxx Borrower's business as of the closing date of The Xxxxxxx Construction Loan; and


		(i)		entering into any transactions with any affiliate for the purposes of undertaking indirectly any transaction or activity that is otherwise prohibited by this restriction.
		For the purposes hereof, "The Xxxxxxx Restricted Payment Release Conditions" means: (i) if entered into, the loan from the Third Party Senior Lender (as hereinafter defined) in respect of The Xxxxxxx Additional Financing (as hereinafter defined) has been repaid in full and all security in respect thereof has been released, (ii) The Xxxxxxx Excess Cash Flow Sweep Termination Date has been reached, (iii) the outstanding debt of The Xxxxxxx Borrower (together with the outstanding debt of the Gulfstream Borrower if the Gulfstream Construction Loan is in place) compared to the EBITDA of The Xxxxxxx Borrower (together with the EBITDA of the Gulfstream Borrower if the Gulfstream Construction Loan is in place) does not exceed a ratio of 4:1, (iv) at the time of the making of the restricted payment, or after giving effect thereto, no default or Event of Default, or an event that through the passage of time or the giving of notice, or both, would become an Event of Default, shall have occurred and be continuing, and (v) the distribution of the restricted payment does not cause the sum of all restricted payments made by The Xxxxxxx Borrower (including the desired payment) to exceed an amount equal to 50% of cumulative net income of The Xxxxxxx Borrower (determined in accordance with GAAP) since The Xxxxxxx Facilities Completion Date less (A) 100% of losses since such date and (B) all amounts paid by The Xxxxxxx Borrower in respect of The Xxxxxxx Excess Cash Flow Sweep (as hereinafter defined) and in respect of any excess cash flow sweep pursuant to the arrangements with the Third Party Senior Lender.
		Notwithstanding the foregoing, The Xxxxxxx Lender agrees that the following types of payments will not be deemed to be restricted payments subject to the above restrictions: (a) payments to MID, The Xxxxxxx Lender or the Gulfstream Lender (including any amounts paid to the Gulfstream Lender in respect of the Gulfstream Borrower's obligations under the Gulfstream Borrower's The Xxxxxxx Guarantee and Indemnity); (b) The Xxxxxxx Guarantee Fee; and (c) provided that at the time of the making of such payment, or after giving effect thereto, no default or Event of Default, or an event that through the passage of time or the giving of notice, or both, would become an Event of Default, shall have occurred and be continuing, payments to MEC for (i) management fees in the ordinary course of business and consistent with past practice and (ii) the reimbursement of amounts paid by MEC from time to time with respect to the reconstruction of The Xxxxxxx Facilities, provided that all such amounts were incurred in accordance with The Xxxxxxx Construction Plans and with the terms of The Xxxxxxx Construction Loan Agreement.


THE XXXXXXX EXCESS CASH FLOW SWEEP:		From and including The Xxxxxxx Facilities Completion Date to and including The Xxxxxxx Excess Cash Flow Sweep Termination Date, The Xxxxxxx Borrower shall be required to pay ("The Xxxxxxx Excess Cash Flow Sweep") to The Xxxxxxx Lender, on or before the 10th business day following the delivery by The Xxxxxxx Borrower to The Xxxxxxx Lender of financial statements for each applicable fiscal quarter, an amount equal to 75% of The Xxxxxxx Excess Cash Flow (as hereinafter defined) for application against the outstanding principal amount of The Xxxxxxx Construction Loan.
		For the purposes hereof:
		"The Xxxxxxx Excess Cash Flow Sweep Termination Date" shall be the date upon which The Xxxxxxx Borrower has repaid an amount in respect of The Xxxxxxx Construction Loan such that the aggregate principal amount owing under The Xxxxxxx Construction Loan and the Gulfstream Construction Loan as of such date is equal to the Deemed Aggregate Principal Amount as of such date.
		The "Deemed Aggregate Principal Amount" shall mean the aggregate of the amounts that would have been owing under The Xxxxxxx Construction Loan and the Gulfstream Construction Loan had both such Construction Loans been made on The Xxxxxxx Facilities Completion Date, based on a 25-year amortization schedule commencing on The Xxxxxxx Facilities Completion Date, and such that no interest was deferred or accrued under such Construction Loans.


	"The Xxxxxxx Excess Cash Flow" shall mean for the then current fiscal quarter the net income of The Xxxxxxx Borrower, after (a) adding back any non-cash deductions therefrom, including any deductions for deferred, accrued or capitalized interest, depreciation, amortization and extraordinary or unusual losses and (b) deducting any maintenance capital expenditures (which, for greater certainty, (i) shall not include any discretionary capital expenditures but (ii) shall permit capital expenditures up to a maximum annual amount of $4 million for the customary refreshing of existing slot machines) and any amounts paid to the Senior Third Party Lender (as hereinafter defined) in accordance with the Additional Financing Inter-Creditor Agreement (as hereinafter defined).
EVENTS OF DEFAULT:	Customary for transactions of this nature, to include, without limitation:
	(a)	non-payment of principal, interest and fees when due;
	(b)	cross-default on other indebtedness of The Xxxxxxx, the Gulfstream Borrower, and/or their respective subsidiaries, if any;
	(c)	breach of affirmative covenant (including a breach of the covenant of completion and/or covenant to promptly pay cost overruns as set forth above under the heading "Construction Plans");
	(d)	breach of negative covenant;
	(e)	breach of representation or warranty;
	(f)	a loss of any racing and/or gaming license held by the Gulfstream Borrower or The Xxxxxxx Borrower;
	(g)	change in corporate structure without The Xxxxxxx Lender's approval, not to be unreasonably withheld;


		(h)		a change of control of The Xxxxxxx Borrower or the Gulfstream Borrower;
		(i)		voluntary or involuntary bankruptcy, insolvency or winding up by The Xxxxxxx Borrower, the Gulfstream Borrower or MEC;
		(j)		unsatisfied judgments against The Xxxxxxx Borrower and/or the Gulfstream Borrower;
		(k)		unenforceability or invalidity of The Xxxxxxx Construction Loan Agreement documents or any of the associated security documents;
		(l)		material adverse change in the assets, liabilities, business, financial condition or prospects of The Xxxxxxx Borrower and/or the Gulfstream Borrower, in the opinion of The Xxxxxxx Lender, acting reasonably;
		(m)		environmental liability of, or an action against, The Xxxxxxx Borrower and/or the Gulfstream Borrower, which could reasonably be expected to have a material adverse effect on (i) the Mortgaged Lands, or (ii) The Xxxxxxx Borrower and/or the Gulfstream Borrower;
		(n)		a default under, or termination of, material contracts or joint venture agreements which, subject to certain exceptions to be determined by The Xxxxxxx Lender, could reasonably be expected to have a material adverse effect on The Xxxxxxx Borrower and/or the Gulfstream Borrower; and/or
		(o)		a breach of affirmative or negative covenant, representation or warranty of the Gulfstream Borrower under the Gulfstream Borrower's The Xxxxxxx Guarantee and Indemnity.
		The Events of Default will be subject, in certain cases, to customary grace periods satisfactory to The Xxxxxxx Lender, acting reasonably. Upon acceleration, The Xxxxxxx Loan Amount and the Gulfstream Loan Amount (in each case, including (without duplication) all accrued and unpaid interest, fees, expenses, closing costs and other amounts owing, and The Xxxxxxx Unamortized Amount and the Gulfstream Unamortized Amount as of such date) and the General Pre-Payment Make-Whole Amount shall become due and payable.


CONDITIONS PRECEDENT:	Customary for transactions of this nature, including The Xxxxxxx Lender's and its legal counsel's satisfaction in form, scope and substance, in their sole discretion (unless otherwise indicated), with:
	(a)	opinions with respect to such matters as may be reasonably required by The Xxxxxxx Lender or its counsel with respect to The Xxxxxxx Borrower and the Gulfstream Borrower;
	(b)	execution and delivery of a construction loan agreement and other formal documentation giving effect to the terms and conditions and security hereof and such other matters as The Xxxxxxx Lender may reasonably require;
	(c)	delivery of certified copies of constating documents, operating agreements, by-laws and resolutions of the Xxxxxxx Borrowers and the Gulfstream Borrowers, authorizing the credit facilities and other transactions contemplated hereby;
	(d)	no default or Event of Default having occurred;
	(e)	no litigation, regulatory or other proceeding shall have been commenced seeking to restrict The Xxxxxxx Borrower and/or the Gulfstream Borrower from completing the transactions contemplated hereby;
	(f)	The Xxxxxxx Borrower and the Gulfstream Borrower shall have received all necessary regulatory, shareholder or other approvals and consents, made all necessary filings and given all necessary notices with respect to the transactions contemplated hereby;
	(g)	satisfactory due diligence review by The Xxxxxxx Lender, including with respect to environmental reports and ability to rely upon such reports, environmental and other approvals, title to properties and assets and legal matters;


		(h)		delivery of copies of material contracts (including all construction contracts);
		(i)		satisfactory assessment of all environmental conditions relating to the Mortgaged Lands and all other past or present real property of The Xxxxxxx Borrower and/or the Gulfstream Borrower and actual or potential environmental liabilities of The Xxxxxxx Borrower and/or the Gulfstream Borrower, including any appropriate insurance;
		(j)		no material adverse change in the assets, liabilities, business, financial condition or prospects of The Xxxxxxx Borrower and the Gulfstream Borrower, in each case in the opinion of The Xxxxxxx Lender, acting reasonably;
		(k)		completion of all security filings under UCC and real property registrations;
		(l)		provision of title insurance policies with respect to the Mortgaged Lands for the benefit of The Xxxxxxx Lender with such endorsements from the title insurer as The Xxxxxxx Lender shall reasonably determine, which confirm (A) the adequacy of the legal description of the Mortgaged Lands, (B) that The Xxxxxxx Lender has a first lien position against The Xxxxxxx Property and a second lien position against the Gulfstream Mortgaged Lands and (C) the validity and effectiveness of any such lien on the exercise by The Xxxxxxx Lender of its rights and remedies in the event of a default under The Xxxxxxx Construction Loan Agreement, together with an endorsement to The Xxxxxxx Lender's title insurance policy to confirm that the title insurance will continue to be effective following the platting of any of the Mortgaged Lands; and
		(m)		delivery of the Gulfstream Borrower's The Xxxxxxx Guarantee and Indemnity.


EXPENSES:		All reasonable fees, expenses and closing costs incurred by The Xxxxxxx Lender in connection with The Xxxxxxx Construction Loan Agreement, the security to be granted in connection therewith and The Xxxxxxx Lender's due diligence, including legal, accounting, environmental and other professional fees, expenses and closing costs shall be for the account of The Xxxxxxx Borrower, and (a) where such amounts are incurred prior to The Xxxxxxx Facilities Completion Date, shall form part of the advances made by The Xxxxxxx Lender to The Xxxxxxx Borrower under The Xxxxxxx Construction Loan Agreement and (b) where such amounts are incurred on and after The Xxxxxxx Facilities Completion Date, shall be paid by The Xxxxxxx Borrower to The Xxxxxxx Lender promptly following receipt of an invoice therefor.
		In the event that The Xxxxxxx Construction Loan Agreement is (a) terminated in the circumstances described below under the heading "Additional Financing in connection with The Xxxxxxx" or (b) not entered into for any reason other than a breach by The Xxxxxxx Lender of its obligations hereunder, all reasonable fees, expenses and closing costs incurred by The Xxxxxxx Lender in connection with The Xxxxxxx Construction Loan Agreement, the security to be granted in connection therewith and The Xxxxxxx Lender's due diligence, including legal, accounting, environmental and other professional fees, expenses and closing costs shall be paid by The Xxxxxxx Borrower to The Xxxxxxx Lender promptly following receipt of an invoice therefor.
INDEMNITY:		Each of The Xxxxxxx Borrower and the Gulfstream Borrower shall indemnify The Xxxxxxx Lender, its directors, officers, employees, affiliates, agents and representatives against all claims, actions, suits, costs, losses, damages and liabilities arising from or relating to the transactions contemplated by The Xxxxxxx Construction Loan Agreement and related documentation and which arise out of or relate to: (i) environmental matters; (ii) breach by The Xxxxxxx Borrower and/or the Gulfstream Borrower of any of their respective representations, warranties or covenants set forth in The Xxxxxxx Construction Loan Agreement and related documentation; (iii) any acts or omissions of The Xxxxxxx Borrower and/or the Gulfstream Borrower or any agent or contractor thereof; and (iv) the business of The Xxxxxxx Borrower and/or the Gulfstream Borrower.
AUTHORIZATION:		The Xxxxxxx Lender is authorized to file UCC financing statements against The Xxxxxxx Borrower and the Gulfstream Borrower upon execution of this term sheet.


ADDITIONAL TERMS
CROSS-GUARANTEE AND CROSS-COLLATERAL:		The Gulfstream Construction Loan Agreement and The Xxxxxxx Construction Loan Agreement shall be cross-guaranteed by the Gulfstream Borrower and The Xxxxxxx Borrower and cross-collateralized such that a default under either loan agreement shall also constitute a default under the other loan agreement, and such that in the event of such a default by a borrower under either loan agreement, the Gulfstream Lender and The Xxxxxxx Lender shall each be entitled to enforce any component of their respective security.
WITHHOLDING TAXES:		The Gulfstream Borrower and The Xxxxxxx Borrower will not be responsible for any withholding taxes payable in connection with the loan transactions contemplated herein in the event that the Gulfstream Lender and/or The Xxxxxxx Lender are not U.S. entities.
ALTERNATIVE GAMING:		The Gulfstream Lender understands that the Gulfstream Borrower may wish to renovate and/or expand, at the Gulfstream Borrower's expense, the Gulfstream Facilities as contemplated by the Gulfstream Construction Plans in order to accommodate alternative gaming if legalized in the State of Florida. The Gulfstream Lender agrees that it will grant the Gulfstream Borrower any necessary consents under the Gulfstream Construction Loan Agreement and its security to permit such renovation and/or expansion; provided that the Gulfstream Lender is satisfied, acting reasonably, (a) that all necessary alternative gaming licenses, construction permits and other municipal approvals have been received in respect of such renovation and/or expansion, (b) with the terms of any financing required in connection with such renovation and/or expansion, and (c) that such renovation and/or expansion will not adversely impact (i) the ability of the Gulfstream Borrower to continue to meet its obligations under the Gulfstream Construction Loan Agreement, (ii) the structural integrity of the Gulfstream Facilities or (iii) the ability of the Gulfstream Lender to realize on the security held by the Gulfstream Lender.


		The Gulfstream Lender further agrees to consider in good faith and act reasonably in reviewing any request from the Gulfstream Borrower to restructure the security held by the Gulfstream Lender in order to accommodate the financing of a renovation and/or expansion of the Gulfstream Facilities to house alternative gaming; provided that (a) the provisos set forth in the immediately preceding paragraph are complied with, (b) nothing herein shall require the Gulfstream Lender to subordinate or postpone its security or impair its value, and (c) all costs reasonably incurred by the Gulfstream Lender in reviewing such request and/or restructuring such security shall be paid for by the Gulfstream Borrower.
MIXED-USE JOINT VENTURE DEVELOPMENT:		The Gulfstream Lender and The Xxxxxxx Lender acknowledge that the Gulfstream Borrower intends to jointly develop the Mixed-Use Lands with a third party. Promptly following written request from the Gulfstream Borrower and The Xxxxxxx Borrower, the parties will use commercially reasonable efforts to negotiate within 90 days an inter-creditor/non-disturbance agreement (the "JV Inter-Creditor Agreement"), on terms satisfactory to the Gulfstream Lender and The Xxxxxxx Lender, in each case acting reasonably, that provides that, upon the Mixed-Use Lands being subdivided from the remainder of the Gulfstream Property, on terms acceptable to the Gulfstream Lender, acting reasonably, the Gulfstream Lender and The Xxxxxxx Lender will subordinate their respective security interests in such Mixed-Use Lands to the joint venture's interest, as tenant, in the 99-year ground lease (the "JV Ground Lease") that the Gulfstream Borrower will be entering into with the joint venture; provided that (a) the Gulfstream Lender and The Xxxxxxx Lender will be granted a first-ranking security interest over (i) the Gulfstream Borrower's (or any affiliate's) interest in the JV Ground Lease and (ii) the Gulfstream Borrower's (or any affiliate's) interest in the joint venture entity, (b) the Gulfstream Lender and The Xxxxxxx Lender shall be satisfied, acting reasonably, that such joint development shall not adversely impact the access to or the structural integrity of the Gulfstream Facilities, (c) the requirement that the tenant under the JV Ground Lease, the Gulfstream Borrower and the Gulfstream Lender and The Xxxxxxx Lender enter into a reciprocal easement agreement, on terms satisfactory to the Gulfstream Lender, acting reasonably, (d) the Gulfstream Lender and The Xxxxxxx Lender shall receive from a reputable title insurance company approved by the Gulfstream Lender and The Xxxxxxx Lender, acting reasonably, such title insurance endorsements as are reasonably requested by the Gulfstream Lender and The Xxxxxxx Lender to insure the continued priority and validity of their security interests under their respective deeds of trust and mortgages in respect of the remaining portion of the Gulfstream Mortgaged Lands, and (e) any financing related to the joint venture shall be on terms subject to the approval of the Gulfstream Lender and The Xxxxxxx Lender, acting reasonably.


RIGHT TO SUBSTITUTE SECURITY FOR THE AVENTURA LANDS:	The Gulfstream Borrower shall have the right at any time to provide substitute security for the Aventura Lands ("Substitute Aventura Security"), provided that (a) the Substitute Aventura Security is either (i) cash or one or more letters of credit drawn on a bank or banks acceptable to the Gulfstream Lender, acting reasonably, or (ii) other property acceptable to the Gulfstream Lender, acting reasonably, (b) the Gulfstream Lender is satisfied, acting reasonably, that the realizable value of the Substitute Aventura Security is not less than the value of the Aventura Lands, and (c) the Gulfstream Borrower pays all costs (including those of the Gulfstream Lender) in connection with such substitution of security. The Gulfstream Lender and the Gulfstream Borrower hereby agree that the value of the Aventura Lands at any time shall be deemed to be the greater of (a) $55 million and (b) the value as determined by the Gulfstream Lender, acting reasonably and based on one or more fair market value appraisals conducted by one or more qualified appraisers determined by the Gulfstream Lender, acting reasonably, at the time of any request to substitute security.
ADDITIONAL FINANCING IN CONNECTION WITH THE XXXXXXX:	The Gulfstream Lender and The Xxxxxxx Lender acknowledge that The Xxxxxxx Borrower will require additional financing (the "Additional Financing") from a third party lender (the "Third Party Senior Lender") in connection with the redevelopment of The Xxxxxxx Facilities (i.e., the costs associated with the gaming license, slot machines, FF&E, etc.) in an amount of approximately $110 million.
	Within 180 days of the Gulfstream Closing Date, The Xxxxxxx Borrower shall provide The Xxxxxxx Lender with a written notice setting out in detail the proposed terms of the Additional Financing, including the proposed amount, term, interest rate, use of proceeds and security in respect of the Additional Financing, which terms shall be subject to approval by The Xxxxxxx Lender and the Gulfstream Lender, acting reasonably.
	The parties will then use commercially reasonable efforts to negotiate within 60 days an inter-creditor/non-disturbance agreement (the "Additional Financing Inter-Creditor Agreement") among themselves and the Third Party Senior Lender, providing that, among other things:
	(a)	the security granted over The Xxxxxxx Property, The Xxxxxxx FF&E and cash flow of The Xxxxxxx Operator to The Xxxxxxx Lender and the Gulfstream Lender will be subordinated to up to a maximum principal amount of $110 million, plus all accrued interest and Third Party Senior Lender expenses, of Additional Financing provided by the Third Party Senior Lender;
	(b)	unless a default under the Additional Financing has occurred and is continuing, there will be no restrictions on cash interest payments to The Xxxxxxx Lender under The Xxxxxxx Construction Loan;
	(c)	unless a default under the Additional Financing has occurred and is continuing, there will be no restrictions on the amounts payable pursuant to The Xxxxxxx Excess Cash Flow Sweep, which amounts for greater certainty shall at all times be paid subsequent to any payments then due to the Third Party Senior Lender under the Additional Financing;


		(d)		any excess cash sweep required of The Xxxxxxx Borrower by the Third Party Senior Lender will be required to be paid after the payment by The Xxxxxxx Borrower to The Xxxxxxx Lender of interest then due and payable under The Xxxxxxx Construction Loan;
		(e)		the Third Party Senior Lender will not be granted any security over any lands or assets of the Gulfstream Borrower;
		(f)		The Xxxxxxx Lender and the Gulfstream Lender will have a right to payout and assume the Additional Financing at any time (whether or not such Additional Financing is then in default) on the terms on which The Xxxxxxx Borrower can repay the Additional Financing (including the payment of any pre-payments or make-whole amounts); and
		(g)		The Xxxxxxx Lender, the Gulfstream Lender and the Third Party Senior Lender will each provide to the others, and be entitled to receive from the others, reciprocal contemporaneous notice of any default or intended enforcement under The Xxxxxxx Construction Loan, the Gulfstream Construction Loan and the Additional Financing.
		The parties agree that The Xxxxxxx Lender and the Gulfstream Lender shall have no obligation to enter into the Additional Financing Inter-Creditor Agreement unless such agreement incorporates the foregoing and is on terms satisfactory to The Xxxxxxx Lender and the Gulfstream Lender, in each case acting reasonably for an arms' length lender and without regard to any shareholder relationship between the lenders and the borrowers.
		In the event that the parties are unable to negotiate and enter into the Additional Financing Inter-Creditor Agreement within the specified time period, The Xxxxxxx Construction Loan Agreement shall terminate, and The Xxxxxxx Borrower may, within a period of 90 days, substitute the security provided by the Xxxxxxx Borrower ("Substitute The Xxxxxxx Security") in respect of the Gulfstream Construction Loan Agreement, provided that (a) the Substitute The Xxxxxxx Security is either (i) cash or one or more letters of credit drawn on a bank or banks acceptable to the Gulfstream Lender, acting reasonably, or (ii) other property acceptable to the Gulfstream Lender, acting reasonably, (b) the Gulfstream Lender is satisfied, acting reasonably, that the realizable value of the Substitute The Xxxxxxx Security is not less than the value of The Xxxxxxx Security, and (c) The Xxxxxxx Borrower pays all costs (including those of the Gulfstream Lender) in connection with such substitution of security.


GULFSTREAM PRE-PAYMENT RIGHT:		If, for any reason, the parties do not reach agreement on the Additional Financing Inter-Creditor Agreement and The Xxxxxxx Borrower does not provide Substitute The Xxxxxxx Security (in each case in accordance with the terms set forth above under the heading "Additional Financing in connection with The Xxxxxxx"), The Xxxxxxx Borrower and the Gulfstream Borrower shall have the right, exercisable for 90 days, to deliver a notice (the "Gulfstream Pre-Payment Notice") to the Gulfstream Lender indicating that the Gulfstream Borrower will be pre-paying the entire amount then owing under the Gulfstream Construction Loan (including (and without duplication) all accrued and unpaid interest, fees and other amounts owing, and the Gulfstream Unamortized Amount, the "Gulfstream Pre-Payment Amount"), plus the Gulfstream Make-Whole Amount (as defined below).
		The "Gulfstream Make-Whole Amount" is the amount equal to the breakage costs which would be incurred by MID (whether or not actually incurred) in pre-paying any financing or in liquidating any deposits which it might have undertaken or placed in connection with the provision of the Gulfstream Construction Loan (provided that, for the purpose of such calculation, the maximum amount of such financing and/or deposits shall be $115 million plus all accrued and unpaid interest, fees, expenses and other amounts then owing under the Gulfstream Construction Loan), assuming that the entire amount of the Gulfstream Construction Loan was fully drawn and is being pre-paid, whether or not this is, in fact, the case.


		On receipt of full payment of the Gulfstream Pre-Payment Amount plus the Gulfstream Make-Whole Amount (plus all costs incurred by the Gulfstream Lender in connection with such pre-payment), which amounts will be paid together by the Gulfstream Borrower on the date set forth in the Gulfstream Pre-Payment Notice (which date will be no less than 15 days and no more than 30 days after the date on which the Gulfstream Lender receives the Gulfstream Pre-Payment Notice), the Gulfstream Lender will promptly execute and deliver a full release of all security (save and except any indemnities that are stated to survive any termination or release of such security) held by it with respect to the transactions and obligations contemplated herein.
GENERAL PRE-PAYMENT RIGHT:		In addition to the Gulfstream pre-payment right above, the Gulfstream Borrower (and if The Xxxxxxx Construction Loan Agreement is then in place, The Xxxxxxx Borrower) shall have the right to pre-pay the Gulfstream Construction Loan (and, if The Xxxxxxx Construction Loan Agreement is then in place, The Xxxxxxx Construction Loan), provided that the Gulfstream Borrower pays the Gulfstream Loan Amount (including (and without duplication) all accrued and unpaid interest, fees, expenses, closing costs and other amounts owing, and the Gulfstream Unamortized Amount as of such date) (and, if The Xxxxxxx Construction Loan Agreement is then in place, The Xxxxxxx Borrower pays The Xxxxxxx Loan Amount (including (and without duplication) all accrued and unpaid interest, fees, expenses, closing costs and other amounts owing, and The Xxxxxxx Unamortized Amount as of such date)) in full (the "General Pre-Payment Amount"), together with in each case the General Pre-Payment Make-Whole Amount (as hereinafter defined), and further provided that the Gulfstream Borrower (and, if The Xxxxxxx Construction Loan Agreement is then in place, The Xxxxxxx Borrower) cancels any undrawn portion thereof. Notice of such voluntary pre-payment (a "Voluntary Pre-Payment Notice") shall be given by the Gulfstream Borrower (and, if The Xxxxxxx Construction Loan Agreement is then in place, by The Xxxxxxx Borrower) (which notice shall be irrevocable when given) to the Gulfstream Lender (and, if The Xxxxxxx Construction Loan Agreement is then in place, The Xxxxxxx Lender) not later than 30 business days prior to the date of such pre-payment, specifying the date of such pre-payment (the "Pre-Payment Date").


		The "General Pre-Payment Make-Whole Amount" is the amount that, if invested by the Gulfstream Lender (and, if The Xxxxxxx Construction Loan Agreement is then in place, The Xxxxxxx Lender) on the Pre-Payment Date for a term equal to the time period from the Pre-Payment Date to the Gulfstream Maturity Date (and, if The Xxxxxxx Construction Loan Agreement is then in place, to The Xxxxxxx Maturity Date) at a rate equal to the U.S. Government Treasury Yield plus 150 basis points as of the Pre-Payment Date, would yield an amount necessary to provide the Gulfstream Lender (and, if The Xxxxxxx Construction Loan Agreement is then in place, The Xxxxxxx Lender) with a yield on the entire amount of the applicable Construction Loan (irrespective of the amounts actually drawn) (being $115 million plus (without duplication) all accrued and unpaid interest, fees, expenses, closing costs and other amounts owing under the Gulfstream Construction Loan, in the case of the Gulfstream Construction Loan, and being $77 million plus (without duplication) all accrued and unpaid interest, fees, expenses, closing costs and other amounts owing under The Xxxxxxx Construction Loan, in the case of The Xxxxxxx Construction Loan) such that the aggregate of the make-whole amount paid and the earned income would equal the interest that the Gulfstream Lender would have received under the Gulfstream Construction Loan (and, if The Xxxxxxx Construction Loan Agreement is then in place, The Xxxxxxx Lender would have received under The Xxxxxxx Construction Loan) from the Pre-Payment Date to the respective Maturity Date.
		On receipt of full payment of the General Pre-Payment Amount plus the General Pre-Payment Make-Whole Amount (plus all costs incurred by the Gulfstream Lender and, if The Xxxxxxx Construction Loan Agreement is then in place, The Xxxxxxx Lender, in connection with such pre-payment), which amounts will be paid together by the Gulfstream Borrower (and, if The Xxxxxxx Construction Loan Agreement is then in place, The Xxxxxxx Borrower) on the date set forth in the Voluntary Pre-Payment Notice (which date will be no less than 15 days and no more than 30 days after the date on which the Gulfstream Lender (and, if The Xxxxxxx Construction Loan Agreement is then in place, The Xxxxxxx Lender) receives the Voluntary Pre-Payment Notice), the Gulfstream Lender (and, if The Xxxxxxx Construction Loan Agreement is then in place, The Xxxxxxx Lender) will promptly execute and deliver a full release of all security (save and except any indemnities that are stated to survive any termination or release of such security) held by them with respect to the transactions and obligations contemplated herein.


		For greater clarity, the parties acknowledge that in the event that both the Gulfstream Construction Loan and The Xxxxxxx Construction Loan are then in place, the pre-payment right must be exercised concurrently with respect to both loans.
REPORTING:		The Gulfstream Borrower and The Xxxxxxx Borrower shall provide to the Gulfstream Lender and The Xxxxxxx Lender copies of all business plans, independent slot analyses, appraisals, and other documentation in the possession or control of the Gulfstream Borrower and/or The Xxxxxxx Borrower (and/or any affiliate of the Gulfstream Borrower and/or The Xxxxxxx Borrower) that relates in any way to the Gulfstream Property, The Xxxxxxx Property, the Aventura Lands, or to the businesses to be conducted by the Gulfstream Borrower or The Xxxxxxx Borrower on the Gulfstream Facilities and/or The Xxxxxxx Facilities, including any additional information that may be reasonably requested by the Gulfstream Lender and/or The Xxxxxxx Lender in connection with the foregoing. All costs and expenses related to such reporting shall be apportioned to, and shall form part of, the Gulfstream Loan Amount and The Xxxxxxx Loan Amount (and shall form part of the advances made by the respective lender thereunder), such costs and expenses to be apportioned by the Gulfstream Lender and The Xxxxxxx Lender, each acting reasonably. In addition, the Gulfstream Borrower and The Xxxxxxx Borrower shall provide such on-going reporting, in accordance with and pursuant to the Gulfstream Construction Loan Agreement and The Xxxxxxx Construction Loan Agreement, respectively, as the Gulfstream Lender and The Xxxxxxx Lender may reasonably require.


APPROVALS:		This term sheet shall be subject to the respective approval, in their respective sole discretion, of the board of directors (and of that board's applicable committee of independent directors) of each of MEC (the public company parent of the Gulfstream Borrower and The Xxxxxxx Borrower) and MID (the public company parent of the Gulfstream Lender and The Xxxxxxx Lender).
GOVERNING LAW:		Florida, with respect to the Gulfstream Construction Loan Agreement, the guarantee and indemnity of the Gulfstream Borrower and related security; Pennsylvania, with respect to The Xxxxxxx Construction Loan Agreement, the guarantee and indemnity of The Xxxxxxx Borrower and related security.
CONFIDENTIALITY:		Except as required by law, rule or stock exchange regulation, this term sheet, all discussions relating to its content and all information concerning the parties will be kept strictly confidential.
		[signature page follows]


BINDING EFFECT:		Notwithstanding that the parties hereto intend to negotiate definitive documentation with respect to the transactions contemplated herein, this term sheet constitutes a binding agreement between the parties, subject only to the conditions set forth above under the heading "Approvals".

DATED as of December , 2004:

MI DEVELOPMENTS INC.			MAGNA ENTERTAINMENT CORP.
Per:			Per:

Name:			Name:

Title:			Title:

Per:			Per:

Name:			Name:

Title:			Title:

For itself and for its subsidiaries referenced herein.			For itself and for its subsidiaries referenced herein.

Attachment C-1 — Gulfstream

Schedule of Payments — 10.5%

US$ Million

Year #	Pmt Date	Opening Loan Amount	Loan Payments		Interest on loan amount	Closing Loan Amount	Opening Deferred Interest Receivable	Interest Receivable Payments/ Accruals		Interest on Interest Receivable	Closing Deferred Interest Receivable	Total Amount
1	1-Jan-06	115.0	0.0		—	115.0	—	12.1		—	12.1	127.1
2	1-Jan-07	115.0	0.0		—	115.0	12.1	12.1		1.3	25.4	140.4
3	1-Jan-08	115.0	(12.2	)	10.8	113.6	25.4	(2.7	)	2.4	25.1	138.8
4	1-Jan-09	113.6	(12.2	)	10.7	112.2	25.1	(2.7	)	2.4	24.8	136.9
5	1-Jan-10	112.2	(12.2	)	10.5	110.5	24.8	(2.7	)	2.3	24.4	134.9
6	1-Jan-11	110.5	(12.2	)	10.3	108.7	24.4	(2.7	)	2.3	24.0	132.7
7	1-Jan-12	108.7	(12.2	)	10.1	106.7	24.0	(2.7	)	2.2	23.6	130.2
8	1-Jan-13	106.7	(12.2	)	9.9	104.4	23.6	(2.7	)	2.2	23.1	127.5
9	1-Jan-14	104.4	(12.2	)	9.7	102.0	23.1	(2.7	)	2.1	22.5	124.5
10	1-Jan-15	102.0	(12.2	)	9.4	99.3	22.5	(2.7	)	2.1	21.9	121.2

Notes:

•: schedule prepared on annual basis, payments of interest and principal will be monthly
•: excludes accrued interest and interest on interest, lender's fees, costs and expenses, etc.

Attachment C-2 — The Xxxxxxx

Schedule of Payments — 10.5%

US$ Million

Year #	Pmt Date	Opening Loan Amount	Loan Payments		Interest on loan amount	Closing Loan Amount	Opening Deferred Interest Receivable	Interest Receivable Payments/ Accruals		Interest on Interest Receivable	Closing Deferred Interest Receivable	Total Amount
1	1-Jan-06	77.0	0.0		—	77.0	—	8.1		—	8.1	85.1
2	1-Jan-07	77.0	0.0		—	77.0	8.1	8.1		0.8	17.0	94.0
3	1-Jan-08	77.0	(8.1	)	7.2	76.1	17.0	(1.8	)	1.6	16.8	92.9
4	1-Jan-09	76.1	(8.1	)	7.1	75.1	16.8	(1.8	)	1.6	16.6	91.7
5	1-Jan-10	75.1	(8.1	)	7.0	74.0	16.6	(1.8	)	1.6	16.4	90.3
6	1-Jan-11	74.0	(8.1	)	6.9	72.8	16.4	(1.8	)	1.5	16.1	88.9
7	1-Jan-12	72.8	(8.1	)	6.8	71.4	16.1	(1.8	)	1.5	15.8	87.2
8	1-Jan-13	71.4	(8.1	)	6.6	69.9	15.8	(1.8	)	1.5	15.5	85.4
9	1-Jan-14	69.9	(8.1	)	6.5	68.3	15.5	(1.8	)	1.4	15.1	83.4
10	1-Jan-15	68.3	(8.1	)	6.3	66.5	15.1	(1.8	)	1.4	14.7	81.2

Notes:

•: schedule prepared on annual basis, payments of interest and principal will be monthly
•: excludes accrued interest and interest on interest, lender's fees, costs and expenses, etc.

QuickLinks

Exhibit 99.2

EXECUTION COPY

CONSTRUCTION LOAN TERM SHEET Gulfstream Park and The Xxxxxxx Gulfstream Construction Loan