Zayat Stables' Counterclaims Against Lender MGG

COMMONWEALTH OF KENTUCKY
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FAYETTE CIRCUIT COURT
DIVISION 9
CIVIL ACTION NO. 20-CI-00248
Electronically Filed
MGG INVESTMENT GROUP LP PLAINTIFF
v.
ZAYAT STABLES, LLC and AHMED ZAYAT DEFENDANTS
ANSWER TO AMENDED COMPLAINT, AFFIRMATIVE DEFENSES,

AND COUNTERCLAIMS OF ZAYAT STABLES, LLC
Zayat Stables, LLC (“Zayat Stables”), by and through counsel, for its Answer and
Affirmative Defenses to the Amended Complaint of MGG Investment Group LP (“MGG”) (pp. 1
– 38) and its Counterclaims against MGG (pp. 38 – 72), states as follows:
FIRST DEFENSE
The Amended Complaint fails to state a cause of action against Zayat Stables and should
be dismissed.
SECOND DEFENSE
1. Zayat Stables admits the averments in Paragraph 1 of the Amended Complaint.
2. Zayat Stables denies the averments in Paragraph 2 of the Amended Complaint.
5. Zayat Stables denies the averments in Paragraph 5 of the Amended Complaint
relating to the purported sales and the characterization of the sales therein. Zayat Stables admits
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the remaining averments that Zayat Stables in Paragraph 5 of the Amended Complaint.
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6. In response to Paragraph 6 of the Amended Complaint, Zayat Stables states that the
loan agreement speaks for itself and thus denies such averments to the extent that they are
inconsistent with the referenced agreement.
8. In response to Paragraph 8 of the Amended Complaint, Zayat Stables admits that
MGG brought the referenced claims but denies the validity or factual basis for these claims. Zayat
Stables denies the remaining averments in Paragraph 8 of the Amended Complaint.
9. Zayat Stables is without knowledge or information sufficient to form a belief as to
the truth of the averments in Paragraph 9 regarding Plaintiff MGG’s status and location. In
response to the averments in Paragraph 9 of the Amended Complaint regarding the Loan
Documents, Zayat Tables states that the Loan Documents speak for themselves and thus denies
such averments to the extent that they are inconsistent with the Loan Documents.
the truth of the averments in Paragraph 17 of the Amended Complaint.
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the Court has subject matter jurisdiction.
28. In response to Paragraph 28 of the Amended Complaint, Zayat Stables admits the
Court has personal jurisdiction over Zayat Stables and that Zayat Stables has transacted business
in the Commonwealth of Kentucky but denies that it has committed unlawful acts or acts that
caused injury in the Commonwealth.
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venue is proper as to the claims against it. Zayat Stables denies the remaining averments in
Paragraph 29 of the Amended Complaint.
37. Zayat Stables states that the AP Purchase Agreement speaks for itself and thus
denies the averments in Paragraph 37 of the Amended Complaint to the extent they are inconsistent
with the AP Purchase Agreement.
43. Zayat Stables states that the Member Pledge Agreement speaks for itself and thus
denies the averments in Paragraph 43 of the Amended Complaint to the extent they are inconsistent
with the Member Pledge Agreement. Zayat Stables admits the remaining averments in Paragraph
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43 of the Amended Complaint.
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44. Zayat Stables states that the Zayat AP Breeding Rights Transfer Document speaks
for itself and thus denies the averments in Paragraph 44 of the Amended Complaint to the extent
they are inconsistent with the Zayat AP Breeding Rights Transfer Document. Zayat Stables is
without knowledge or information sufficient to form a belief as to the truth of the averments
regarding the knowledge of Joanna Zayat, Justin Zayat, Ashley Zayat, Benjamin Zayat, and Emma
Zayat as alleged in Paragraph 44 of the Amended Complaint. Zayat Stables admits the remaining
averments in Paragraph 44 of the Amended Complaint.
45. Zayat Stables states that the Zayat AP Breeding Rights Transfer Confirmation
speaks for itself and thus denies the averments in Paragraph 45 of the Amended Complaint to the
extent they are inconsistent with the Zayat AP Breeding Rights Transfer Confirmation. Zayat
Stables admits the remaining averments in Paragraph 45 of the Amended Complaint.
48. Zayat Stables states that the Financing Agreement speaks for itself and thus denies
the averments in Paragraph 48 of the Amended Complaint to the extent they are inconsistent with
the Financing Agreement.
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the Financing Agreement. Zayat Stables denies the remaining averment in Paragraph 57 of the
Amended Complaint.
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63. The averments in paragraph 63 of the Amended Complaint are legal conclusions to
which no response is required.
which no response is required. To the extent that a response is required, Zayat Stables is without
knowledge or information sufficient to form a belief as to the truth of the averments in Paragraph
65. Zayat Stables states that the First Amendment to the Financing Agreement speaks
for itself and thus denies the averments in Paragraph 65 of the Amended Complaint to the extent
they are inconsistent with the First Amended to the Financing Agreement.
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66. Zayat Stables states that the Pledge and Security Agreement speaks for itself and
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thus denies the averments in Paragraph 66 of the Amended Complaint to the extent they are
inconsistent with the Pledge and Security Agreement.
71. Zayat Stables admits that the sales referenced in Paragraph 71 of the Amended
Complaint occurred but denies the characterization as improper.
72. Zayat Stables admits that the sales referenced in Paragraph 72 of the Amended
Complaint occurred but denies the characterization as improper.
74. Zayat Stables admits that a Liquidation Plan was presented to MGG as alleged in
Paragraph 74 of the Amended Complaint. Zayat Stables denies the remaining averments in
75. Zayat Stables states that the appraisal speaks for itself and thus denies the averments
in Paragraph 75 of the Amended Complaint to the extent they are inconsistent with the appraisal.
Zayat Stables denies the remaining averments in Paragraph 75 of the Amended Complaint.
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which no response is required. To the extent that a response is required, Zayat Stables denies the
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EL KABEIR was sold on or around September 20, 2017 to Yeomanstown Stud. Zayat Stables
denies the remaining averments in Paragraph 77 of the Amended Complaint.
which no response is required. Zayat Stables denies the remaining averments in Paragraph 79 of
the Amended Complaint.
81. Zayat Stables states that the Loan Documents speak for themselves and thus denies
the Loan Documents. Zayat Stables denies that MGG first learned of the sale of EL KABEIR as
averred in Paragraph 81 of the Amended Complaint. Zayat Stables denies the remaining averments
in Paragraph 81 of the Amended Complaint.
AMERICAN CLEOPATRA was sold on or around November 15, 2017 to Hill ‘N’ Dale for $1.3
million. Zayat Stables denies the remaining averments in Paragraph 82 of the Amended Complaint.
84. The averments in Paragraph 84 of the Amended Complaint regarding the location
of the sale of AMERICAN CLEOPATRA are legal conclusions to which no response is required.
In response to Paragraph 84 of the Amended Complaint, Zayat Stables admits that AMERICAN
CLEOPATRA was entered in an auction at Fasig-Tipton in Lexington, Kentucky and did not sell
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in the auction ring. Zayat Stables denies the remaining averments in Paragraph 84 of the Amended
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Complaint.
which no response is required. Zayat Stables denies the remaining averments in Paragraph 85 of
the Loan Documents. Zayat Stables denies that MGG only learned of the sale of AMERICAN
CLEOPATRA in January 2020 as averred in Paragraph 87 of the Amended Complaint. Zayat
AMERICAN CLEOPATRA was pregnant with a foal sired by UNCLE MO at the time of her sale
to Hill ‘N’ Dale. Zayat Stables denies the remaining averments in Paragraph 88 of the Amended
Complaint.
91. Zayat Stables denies the averments in Paragraph 91 on the Amended Complaint.
all nine of the breeding rights to AMERICAN PHAROAH were sold between December 2018 and
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June 2019 for a total of $3.3 million. Zayat Stables denies the remaining averments in Paragraph
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94. In response to Paragraph 94 of the Amended Complaint, Zayat Stables admits Justin
Zayat executed the bill of sale and assignment and denies the remaining averments on the grounds
that the documents speak for themselves.
97. The averments in Paragraph 97 of the Amended Complaint are legal conclusions to
100. In response to Paragraph 100 of the Amended Complaint, Zayat Stables admits
Benjamin Zayat executed the bill of sale and assignment and denies the remaining averments on
the grounds that the documents speak for themselves.
Ashley Zayat executed the bill of sale and assignment and denies the remaining averments on the
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grounds that the documents speak for themselves.
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Emma Zayat executed the bill of sale and assignment and denies the remaining averments on the
Joanne Zayat executed the bill of sale and assignment and denies the remaining averments on the
Joanne Zayat executed the bill of sale and assignment and denies the remaining averments on the
105. In response to Paragraph 105 of the Amended Complaint, Zayat Stables states that
the referenced documents speak for themselves and thus denies the averments in Paragraph 105 of
the Amended Complaint to the extent they are inconsistent with the documents. In response to
paragraph 105 of the Amended Complaint, Zayat Stables admits that the Transfer Confirmation
was signed by Ashford Stud’s CFO, Frank Phelan, and admits that the AP Purchase Agreement
and Bill of Sale were signed on behalf of Orpendale by Michael Ryan. Zayat Stables is without
knowledge or information sufficient form a belief as to the truth of the characterization if the
relationship of Coolmore Stud, Ashford Stud, and Coolmore America or the knowledge of those
entities. Zayat Stables denies the remaining averments in Paragraph 105 of the Amended
Complaint.
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108. The averments in Paragraph 108 of the Amended Complaint are legal conclusions
to which no response is required.
the Amended Complaint to the extent they are inconsistent with the documents. Zayat Stables
its breeding interests in LEMOONA were sold on or around March 6, 2019 to Flintshire Farm and
Brad Sears for $150,000. Zayat Stables denies the remaining averments in Paragraph 111 of the
Amended Complaint.
112. Zayat Stables admits the averment in Paragraph 112 of the Amended Complaint.
113. The averments in paragraph 113 of the Amended Complaint are legal conclusions
to which no response is required. Zayat Stables denies the remaining averments in Paragraph 113
of the Amended Complaint.
115. Zayat Stables states that the appraisal speaks for itself and thus denies the averments
in Paragraph 115 of the Amended Complaint to the extent they are inconsistent with the appraisal.
Zayat Stables denies the remaining averments in Paragraph 115 of the Amended Complaint.
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denies that MGG only learned of the sale of LEMOONA in January 2020 as averred in Paragraph
116 of the Amended Complaint. Zayat Stables denies the remaining averments in Paragraph 116
denies that MGG only learned of the sale of AMANDREA in January 2020 as averred in Paragraph
the Partial Release Agreement speaks for itself and thus denies the averments in Paragraph 124 of
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the Amended Complaint to the extent they are inconsistent with the Partial Release Agreement.
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the Partial Release Agreement speaks for itself and thus denies the averments in Paragraph 125 of
the Amended Complaint to the extent they are inconsistent with the Partial Release Agreement.
Zayat Stables admits that it transferred to MGG the $800,000 in sale proceeds it received from
Orpendale in exchange for 50% of SOLOMINI.
on or around December 3, 2019, 100% of SOLOMINI was sold for $250,000 to McMahon
Thoroughbreds. Zayat Stables denies the remaining averments in Paragraph 126 of the Amended
Complaint.
the truth of the averments in paragraph 127 of the Amended Complaint as SOLOMINI was being
managed by Coolmore.
denies that MGG only learned of the sale of SOLOMINI in January 2020 as averred in Paragraph
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the Financing Agreement speaks for itself and thus denies the averments in Paragraph 135 of the
Amended Complaint to the extent they are inconsistent with the Financing Agreement. Zayat
the Financing Agreement speaks for itself and thus denies the averments in Paragraph 136 of the
Amended Complaint to the extent they are inconsistent with the Financing Agreement. Zayat
Stables admits that it failed to pay the principal installment of the term loan on September 30, 2019
as alleged in Paragraph 136 of the Amended Complaint.
Ahmed Zayat visited MGG’s offices on or about October 24, 2019. Zayat Stables states that the
Loan Documents speak for themselves and thus denies the averments in Paragraph 138 of the
Amended Complaint to the extent they are inconsistent with the Loan Documents. Zayat Stables
139. Zayat Stables states that the Notice of Default speaks for itself and thus denies the
averments in Paragraph 139 of the Amended Complaint to the extent they are inconsistent with
the Notice of Default.
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the Loan Documents.
Justin Zayat sent MGG a Liquidation Plan on or about December 12, 2019. Zayat Stables denies
the remaining averments in Paragraph 145 of the Amended Complaint.
MGG asked Zayat Stables to sell certain assets on or about December 18, 2019. Zayat Stables
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at some point Ahmed Zayat gave permission to Aisling Duignan to speak with MGG. Zayat Stables
is without knowledge or information sufficient to form a belief as to the truth of the remaining
158. Zayat Stables states that Ahmed Zayat’s January 12, 2020 email speaks for itself
and thus denies the averments in Paragraph 158 of the Amended Complaint to the extent they are
inconsistent with the email.
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inconsistent with the email. Zayat Stables denies the remaining averments in Paragraph 163 of the
Amended Complaint.
EL KABEIR was sold on or around September 20, 2017 to Yeomanstown Stud. Zayat Stables
denies any allegation or implication that it did not continue to own breeding rights to EL KABEIR
after the sale in 2017.
inconsistent with the email. Zayat Stables denies the remaining averments in Paragraph 167 of the
Amended Complaint.
171. Zayat stables admits the averments in Paragraph 171 of the Amended Complaint.
172. Zayat stables admits the averments in Paragraph 172 of the Amended Complaint.
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173. With respect to the averments in Paragraph 173 of the Amended Complaint, Zayat
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Stables incorporates its responses to Paragraphs 1-172 of the Amended Complaint.
176. In response to Paragraph 176 of the Amended Complaint, Zayat Stables admits it
failed to make certain payments under the Loan Agreements and denies the remaining averments.
failed to make certain payments under the Loan Agreements and denies the remaining averments..
sold the nine breeding rights to AMERICAN PHAROAH for $3.3 million and denies the
remaining averments in Paragraph 185 of the Amended Complaint.
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Ahmed Zayat sent Exhibit I to MGG on or around December 12, 2019. Zayat Stables denies the
remaining averments in Paragraph 190 of the Amended Complaint.
191. Zayat Stables states that the Liquidation Plan speaks for itself and thus denies the
the Liquidation Plan. Zayat Stables denies the remaining averments in Paragraph 191 of the
Amended Complaint.
sold the nine breeding rights to AMERICAN PHAROAH for $3.3 million and deny the remaining
it sold some Equine Collateral to third parties as allowed by the Financing Agreement and denies
it sold some Equine Collateral to third parties as allowed by the Financing Agreement and denies
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it failed to make certain payments required by the Loan Documents. Zayat Stables denies the
remaining averment in Paragraph 196 of the Amended Complaint.
the truth of the averments in Paragraph 202 of the Amended Complaint regarding the knowledge
of others.
the bills of sale and assignment were signed by members of the Zayat Family and that Zayat Stables
sold the Zayat AP Breeding Rights. Zayat Stables denies the remaining averments in Paragraph
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212. Zayat Stables states that the Zayat AP Breeding Rights Transfer Document and the
Zayat AP Breeding Rights Transfer Confirmation speak for themselves and thus denies the
the Zayat AP Breeding Rights Transfer Document and the Zayat AP Breeding Rights Transfer
Confirmation.
213. Zayat Stables states that the AP Purchase Agreement and the AMERICAN
PHAROAH bill of sale speak for themselves and thus denies the averments in Paragraph 213 of
the Amended Complaint to the extent they are inconsistent with the AP Purchase Agreement and
the AMERICAN PHAROAH bill of sale. Zayat Stables is without knowledge or information
sufficient to form a belief as to the truth of the remaining averments in Paragraph 213 of the
Amended Complaint.
it sold the Zayat AP Breeding Rights and Zayat Stables denies the remaining averments in
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to which no response is required. To the extent a response is required, Zayat Stables denies the
219 – 236. Counts V and VI have been dismissed by the Court and therefore require no
Answer from Zayat Stables.
on or around November 15, 2017 Zayat Stables sold its interest in AMERICAN CLEOPATRA to
Hill ‘N’ Dale for $1.3 million. Zayat Stables denies the remaining averments in Paragraph 240 of
to which no response is required. To the extent that a response is required, Zayat Stables denies
the averments in Paragraph 242 of the Amended Complaint.
the truth of the averments regarding the location of AMERICAN CLEOPATRA in Paragraph 243
of the Amended Complaint. Zayat Stables denies the remaining averments in Paragraph 243 of the
Amended Complaint.
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245. Paragraph 245 of the Amended Complaint requires no response from Zayat Stables.
on or around November 15, 2017 Zayat Stables sold its interest in AMERICAN CLEOPATRA to
Hill ‘N’ Dale for $1.3 million. Zayat Stables denies the remaining averments in Paragraph 248 of
the truth of the averments regarding the location of AMERICAN CLEOPATRA in Paragraph 251
of the Amended Complaint. Zayat Stables denies the remaining averments in Paragraph 251 of the
Amended Complaint.
253. Zayat Stables states that the replevin claim speaks for itself and thus denies the
the replevin claim.
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on or around December 29, 2018 Zayat Stables sold Zayat AP Breeding Rights Nos. 1 and 2 to
LNJ Foxwoods for $750,000. Zayat Stables denies the remaining averments in Paragraph 259 of
262. In response to Paragraph 262 of the Amended Complaint, Zayat Stables is without
knowledge or information sufficient to form a belief as to the truth of the averments regarding the
current possession of Zayat AP Breeding Rights Nos. 1 and 2. Zayat Stables admits that LNJ
Foxwoods took possession of Zayat AP Breeding Rights Nos. 1 and 2 and denies the remaining
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on or around December 29, 2018 Zayat Stables sold Zayat AP Breeding Rights Nos. 1 and 2 to
LNJ Foxwoods for $750,000. Zayat Stables denies the remaining averments in Paragraph 268 of
current possession of Zayat AP Breeding Rights Nos. 1 and 2. Zayat Stables admits that LNJ
Foxwoods took possession of Zayat AP Breeding Rights Nos. 1 and 2 and denies the remaining
the replevin claim.
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between March 26, 2019 and June 5, 2019 the Zayat AP Breeding Rights Nos. 3-9 were sold to
Orpendale in 7 sales for $2.55 million. Zayat Stables denies the remaining averments in Paragraph
current possession of Zayat AP Breeding Rights Nos. 3-9. Zayat Stables admits that Orpendale
took possession of Zayat AP Breeding Rights Nos. 3-9 and denies the remaining averments in
285. In response to Paragraph 285 of the Amended Complaint, Zayat Stables admits the
Zayat AP Breeding Rights were transferred to Zayat Stables. Zayat Stables is without knowledge
or information sufficient to form a belief as to the truth of the remaining averments in Paragraph
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between March 26, 2019 and June 5, 2019 the Zayat AP Breeding Rights Nos. 3-9 were sold to
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Orpendale in 7 sales for $2.55 million. Zayat Stables denies the remaining averments in Paragraph
current possession of Zayat AP Breeding Rights Nos. 3-9. Zayat Stables admits that Orpendale
took possession of Zayat AP Breeding Rights Nos. 3-9 and denies the remaining averments in
the replevin claim.
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297. Zayat Stables states that the Loan Documents speaks for themselves and thus denies
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the Loan Documents.
on or around March 6, 2019 Zayat Stables sold its interests in LEMOONA to Flintshire Farm and
Brad Sears for $150,000. Zayat Stables denies the remaining averments in Paragraph 298 of the
Amended Complaint.
Zayat Stables sold its interests in LEMOONA for $150,000. Zayat Stables denies the remaining
304 - 325. Counts XIV and XV were voluntarily dismissed and therefore require no Answer
from Zayat Stables.
326 - 343. Counts XVI and XVII were voluntarily dismissed and therefore require no Answer
from Zayat Stables.
344. With respect to the averments in Paragraph 344 of the Amended Complaint, Zayat Stables
incorporates its responses to Paragraphs 1-343 of the Amended Complaint.
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on or around December 3, 2019 Zayat Stables sold a 50% ownership stake in SOLOMINI to
McMahon Thoroughbreds for $250,000. Zayat Stables denies the remaining averments in
current possession of the 50% ownership stake in SOLOMINI. Zayat Stables admits that
McMahon Thoroughbreds took possession of the 50% ownership stake in SOLOMINI and denies
on or around December 3, 2019 Zayat Stables sold a 50% ownership stake in SOLOMINI to
McMahon Thoroughbreds for $250,000. Zayat Stables denies the remaining averments in
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current possession of the 50% ownership stake in SOLOMINI. Zayat Stables admits that
McMahon Thoroughbreds took possession of the 50% ownership stake in SOLOMINI and denies
the replevin claim.
to which no response is required. To the extent a response is required, Zayat Stables denies the
averments in Paragraph 363 of the Amended Complaint with regard to a declaratory judgment
against it.
364. In response to Paragraph 364 of the Amended Complaint, Zayat Stables denies
there is an actual and justiciable controversy giving rise to a claim for declaratory judgment against
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it.
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it has not made certain required payments to MGG. Zayat Stables denies the remaining averments
in Paragraph 368 of the Amended Complaint.
it has not made some scheduled payments to MGG. Furthermore, in response to Paragraph 369 of
the Amended Complaint, Zayat Stables admits it has sold some of the Equine Collateral. Zayat
the Financing Agreement and Pledge and Security Agreement speak for themselves and thus
denies such averments to the extent they are inconsistent with the Financing Agreement and Pledge
and Security Agreement. Zayat Stables denies the remaining averments in Paragraph 371 of the
Amended Complaint.
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the Financing Agreement and Pledge and Security Agreement speak for themselves and thus
denies such averments to the extent they are inconsistent with the Financing Agreement and Pledge
and Security Agreement. Zayat Stables denies the remaining averments in Paragraph 376 of the
Amended Complaint.
377. Zayat Stables denies all averments in the Amended Complaint not expressly
admitted in this Answer.
THIRD DEFENSE
The plaintiff’s claims are barred, in whole or in part, because the agreements on which the
claims are based are unenforceable under the doctrines of fraud, duress, or unconscionability.
FOURTH DEFENSE
The plaintiff’s claims are barred, in whole or in part, because the agreements (or terms
thereof as applied and/or used by the plaintiff) on which the claims are based would result in an
unenforceable penalty or forfeiture.
FIFTH DEFENSE
The plaintiff’s claims are barred, in whole or in part, because the plaintiff fraudulently
induced Zayat Stables to enter into the agreements on which the claims are based and never
intended to fully perform its obligations under those agreements.
SIXTH DEFENSE
The plaintiff’s claims are barred, in whole or in part, because the plaintiff itself failed to
fully perform under the agreements on which the claims are based.
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SEVENTH DEFENSE
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The plaintiff’s claims are barred, in whole or in part, by the equitable doctrines of estoppel,
waiver, or unclean hands.
EIGHTH DEFENSE
The plaintiff’s claims are barred, in whole or in part, by the doctrine of in pari delicto.
NINTH DEFENSE
The plaintiff’s claims are barred, in whole or in part, because the plaintiff has committed
wrongdoings that disqualify it from obtaining relief. For example, the plaintiff has engaged in
willful, reckless, commercially unreasonable, and/or unconscionable conduct, including, but not
limited to, seeking to deprive Zayat Stables of loan commitments, damaging Zayat Stables’
business interests and reputation, and impairing the collateral securing the loan.
TENTH DEFENSE
The plaintiff’s claims are barred, in whole or in part, based on the terms of the agreements
on which the claims are based.
ELEVENTH DEFENSE
The plaintiff’s claims are barred, in whole or in part, based on the plaintiff’s breach of the
express and/or implied terms of the agreements on which the claims are based.
TWELFTH DEFENSE
The plaintiff’s claims are barred, in whole or in part, based on the plaintiff’s breach of the
implied covenant of good faith and fair dealing.
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THIRTEENTH DEFENSE
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The plaintiff’s claim of fraud is barred because it is duplicative of its contract claim and
relates solely to acts or omissions undertaken in performance of the agreements on which the
plaintiff’s claims are based.
FOURTEENTH DEFENSE
The plaintiff’s claims are barred, in whole or in part, because any damage suffered by the
plaintiff is the result of the plaintiff’s own actions or conduct.
FIFTEENTH DEFENSE
The plaintiff’s claims are barred, in whole or in part, because any damage suffered by the
plaintiff is the result of actions or conduct engaged in by third parties and not by Zayat Stables.
SIXTEENTH DEFENSE
The plaintiff’s claims are barred, in whole or in part, because they are based on events or
acts that were caused solely, or contributed to, by intervening or superseding circumstances beyond
Zayat Stables’ control.
SEVENTEENTH DEFENSE
The plaintiff’s claims are barred, in whole or in part, because the plaintiff failed to mitigate
damages, if any.
EIGHTEENTH DEFENSE
The plaintiff’s claims for monetary damages are barred, in whole or in part, because the
value of the collateral exceeded any amounts owed pursuant to the agreements on which the
plaintiff’s claims are based.
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NINETEENTH DEFENSE
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The plaintiff’s claims for monetary damages are barred, in whole or in part, because any
deficiency resulting from the sale of the collateral is a result of impairment by the acts of the
plaintiff.
TWENTIETH DEFENSE
deficiency resulting from the sale of the collateral is a result of impairment by the acts and/or
omissions of third parties.
TWENTY-FIRST DEFENSE
The plaintiff’s claims are barred, in whole or in part, under the doctrines of impossibility
and/or impracticability of performance.
TWENTY-SECOND DEFENSE
deficiency resulting from the sale of the collateral is a result of superseding or intervening causes.
TWENTY-THIRD DEFENSE
If the plaintiff prevails on any claims asserted against Zayat Stables, Zayat Stables is
entitled to set off all amounts owed by the plaintiff or for which the plaintiff may be liable to Zayat
Stables against any amounts claimed by the plaintiff.
RESERVATION OF DEFENSES
Zayat Stables reserves the right to assert and rely on such other applicable affirmative
defense(s) as may become available or apparent during discovery, including all of those provided
for under CR 8.03. Zayat Stables further reserves the right to amend its answer or counterclaims
accordingly.
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PRAYER FOR RELIEF
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WHEREFORE, Defendants pray for judgment as follows:
A. For a trial by jury on all issues so triable;
B. That the plaintiff take nothing by reason of the Amended Complaint or any
claims alleged in it;
C. That the Amended Complaint and each cause of action asserted in it be
dismissed with prejudice as to Zayat Stables;
D. That Zayat Stables recover its costs, expenses, and attorneys’ fees incurred
in this action; and
E. That the Court grant such other and further relief to Zayat Stables as it may
deem just and proper.
COUNTERCLAIMS
Zayat Stables, LLC (“Zayat Stables”), by and through counsel, for its counterclaims against
MGG Investment Group LP (“MGG”), states as follows:
BACKGROUND
1. Zayat Stables is a prominent thoroughbred racing operation that has had much
success at the racetrack. In efforts to build on that success, Zayat Stables borrowed money to invest
in additional thoroughbred horses, as it has done for several years. It has a stable of over 70 horses
with significant value.
2. In 2016, just off the success of Triple Crown and Breeders Cup Classic winner
AMERICAN PHAROAH, Zayat Stables looked to further capitalize on its success and grow its
business. It was courted by respected names in investment banking and private equity for a
potentially monumental equity deal to continue its trajectory of growth. However, due to the timing
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of these negotiations, Zayat Stables needed a bridge financing option. MGG, a fledgling
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investment group who, upon information and belief, had an interest in expanding its portfolio
(including in alternative spaces like equine) was introduced to Zayat Stables as a potential
financing option.
3. On or around the summer of 2016, MGG and Zayat Stables commenced
negotiations regarding a short-term loan. In those negotiations, Zayat Stable was clear that a
minimum commitment of capital and freedom from restrictions on operations were essential to its
success. While it appeared that MGG was committed to honoring Zayat Stables’ requests,
including in the term sheet agreed on by the parties, MGG’s commitments turned out to be nothing
but a false front.
4. Upon information and belief, MGG employed a pattern of deception to lock Zayat
Stables into a loan written to fail. Relying on exclusivity provisions to cut off other investment
talks, MGG handcuffed Zayat Stables. With Zayat Stables’ senior debt maturing in just a month,
and with its founder and principal out of the country during the illness and death of his father,
MGG crammed terms down Zayat Stables’ throat that did not resemble the deal struck.
5. From day one of the loan, MGG overreached and interfered with Zayat Stables’
operations. Even with no defaults, it cried “wolf” at every turn—all the while making clear that it
did not understand the industry it was invested in or the collateral securing its loan.
6. In 2017, MGG refused to fund draw requests, relax overbearing monitoring
practices, or extend needed capital to Zayat Stables. MGG’s true intent, pattern of deception, and
bad faith was made clear when Kevin Griffin, CEO, told Zayat Stables that MGG “never intended
to” fund the full capital commitment.
7. MGG’s misconduct was perhaps most clear in Fall 2017 when it overcharged Zayat
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Stables’ nearly $1 million just before a pivotal time in the year—the Keeneland September sales—
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indeed, just when Zayat Stables needed the promised capital most.
8. In 2018, MGG falsely claimed default with respect to Equine Collateral, despite
receiving daily email updates about the collateral’s status. The alleged “defaults” were anything
but, and they only demonstrated MGG’s willful and oppressive dealings and its gross lack of any
understanding of the horseracing industry or the collateral securing its loan.
9. As a result of the oppressive terms and willful acts of MGG, by Fall 2019 Zayat
Stables faced significant liquidity issues and failed to make a required payment to MGG. Zayat
Stables almost immediately began working with MGG to find a solution through an orderly
liquidation of assets, meeting directly with Kevin Griffin and his colleagues.
10. While MGG professed to be working out any issues with Zayat Stables and towards
a repayment plan, upon information and belief, in reality it was misleading Zayat Stables and
merely gathering exhibits for its lawsuit. In fact, while MGG encouraged Zayat Stables to continue
raising capital—thus causing Zayat Stables to expend valuable time and resources and risk its
reputation in reliance on MGG’s dealings—MGG had already seized Zayat Stables’ bank
accounts and would file its lawsuit a few days later.
11. If MGG was truly interested in helping both MGG and Zayat Stables as it has
claimed in its filings and recovering maximum value for the collateral, MGG’s averments could
have stopped at a simple breach of contract action. That could have been sufficient to protect its
rights. Instead, MGG filed a one-sided Complaint and “Emergency” Motion on the eve of the
Eclipse Awards (one of the thoroughbred industry’s biggest non-racing events) designed to tarnish
Zayat Stables’ reputation and unfairly and willfully prejudice Zayat Stables. MGG refused to fund
the liquidation of the assets (as suggested by a junior lender) or to seal the Complaint in order to
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protect the value of the Equine Collateral. It then filed an Amended Complaint alleging baseless
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claims against numerous prominent members of the horse industry and adding all of Ahmed
Zayat’s immediate family as Defendants, including his minor children.
12. In the Amended Complaint, MGG makes far-reaching allegations of “fraud” and
“concealment,” but it omits facts showing that Zayat Stables went out of its way to work with
MGG to find a commercially reasonable solution. Upon information and belief, MGG’s claims of
“fraud” are merely a pretext to gain leverage over the named individuals because MGG failed to
obtain a personal guaranty for the loan.
13. Based on the course of conduct of MGG and the statements of its CEO, Kevin
Griffin, MGG wrote a sham loan based on a pattern of deceptive, reckless, and oppressive
conduct—a loan written to fail. MGG’s conduct in this litigation is no surprise given MGG’s
willful and bad faith conduct both before and after the loan was signed. Accordingly, Zayat Stables
brings the counterclaims as stated herein.
THE PARTIES
AND JURISDICTION
14. Zayat Stables is a limited liability company organized under the laws of Delaware
with a principal place of business at 401 Hackensack Avenue, 7th Floor, Hackensack, New Jersey
07601.
15. Upon information and belief, MGG is a limited partnership organized under the
laws of the state of Delaware, with a principal place of business as stated in paragraph 9 of the
Amended Complaint. MGG is a private equity firm with a principal place of business in New York,
New York.
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16. This Court has subject matter jurisdiction because such jurisdiction is not vested in
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another court of this Commonwealth and the amount in controversy, including with respect to the
counterclaims, exceeds $5,000.00.
17. This Court has personal jurisdiction over MGG because it has consented to such
jurisdiction.
18. Venue is proper in this Court because MGG has consented to litigating this dispute
in this Court.
AVERMENTS COMMON
TO ALL COUNTS
Zayat Stables’ Success
19. Zayat Stables first entered thoroughbred racing in 2005 and quickly found success
on the racetrack. Since 2005, Zayat Stables has ranked among the top five owners in North
America seven times, including #1 in 2008 and 2015. Zayat Sables has also been the leading owner
at some of North America’s most prestigious race meets, including Del Mar and Saratoga.
20. Zayat Stables won its first Eclipse Award in 2014. It won its first Classic races in
2015, with homebred champion AMERICAN PHAROAH. As a result, Zayat Stables was honored
with awards as 2015’s Outstanding Owner and Outstanding Breeder by the industry at the Eclipse
Awards.
21. Horses raced by Zayat Stables include 19 Breeders’ Cup contenders, 13 Grade I
winners, and six Eclipse Award winners. In a span of just six years, Zayat Stables campaigned a
Kentucky Derby winner, three Kentucky Derby runners-up, and another Kentucky Derby favorite.
In 2015, after winning the Breeders’ Cup Classic, Zayat Stables’ AMERICAN PHAROAH
became the first horse ever to win the Triple Crown and the Breeders’ Cup Classic—the “Grand
Slam” of thoroughbred racing.
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MGG’s Formation and Lending Strategies
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22. MGG was launched in 2015 to focus on direct lending to middle and lower-middle
markets.
23. MGG started with a $200 million commitment from McCourt Global that provided
the working capital to support operations, infrastructure, and resources, as well as initial lending.
24. According to its website, MGG touts itself as being a “Trusted Private Lending
Partner” offering “bespoke financing solutions to mid-size and growing companies.” MGG now
claims to have “deep expertise across varied industries,” including experience with a “$30mm first
lien term loan against a portfolio of equine assets.”
25. Upon information and belief, prior to its relationship with Zayat Stables MGG had
no experience in equine lending or the equine industry.
26. MGG’s commitment of $35 million to Zayat Stables, if carried out, would have
constituted 17.5% of its initial commitment from McCourt and likely over 20% of its initial
available lending capital.
27. At the time of the negotiations with Zayat Stables, MGG had invested in less than
15 other companies.
28. MGG focuses much of its efforts on middle market companies who are distressed
or have limited options for funding so that it can command significantly higher rates and yield
premium over the loan indices. In addition, MGG focuses on direct lending to middle market
companies because there is less competition with other lenders in the underserved middle market.
29. MGG’s lending strategy focuses on isolating potential lenders by serving as the
sole lender, removing banks and other lenders from the process, and taking its loans “off the
street.”
30. MGG takes pride in obtaining exclusivity in order to be in a strong position to meet
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its lending criteria. In reality, MGG obtains exclusivity to hamstring potential borrowers and
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obtain above market rates written to maximize MGG’s return.
31. In its first years of operation, MGG charged yields well above market rates. For
example, while middle market indices were yielding between 600 and 800 basis points, MGG was
charging spreads of between 1000 and 1200 basis points.
32. The practice of obtaining high premiums by focusing on lenders with few
alternatives or creating situations with no alternatives is one followed by Griffin throughout his
career, as he has described his strategy as focusing on situations “where borrowers need an
alternative to the capital markets” with the “key” for him being able to “set the terms.”
33. Griffin also takes great pride in claiming that has never had a loan with a loss since
he started taking responsibility for deals in 2007, while also claiming to have originated, structured,
or invested in more than $5 billion of transactions.
Summer 2016: MGG Negotiates a Sham Loan with Zayat Stables
34. In 2016, Zayat Stables was exploring multiple deals for significant equity
investments. After meeting with respected names in investment banking such as Goldman Sachs,
Deutsche Bank, and Morgan Staley, Zayat Stables hired Piper Jaffray in connection with a $250
million equity raise. Zayat Stables’ plan was to continue to expand and grow the breeding and
other aspects of its business.
35. Zayat Stables in fact had potential equity deals on the table, including with CVC
Capital Partners and Trilantic Capital Partners. On or around May 2016, and after months of due
diligence, Zayat Stables had a term sheet from CVC. On or around August 2016, Zayat Stables
would also have a term sheet from Trilantic.
36. As Zayat Stables worked towards an equity deal, it determined that it would need
interim debt financing to continue its trajectory of growth. Through Piper Jaffray, Zayat Stables
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was introduced to MGG as a viable bridge lender. Upon information and belief, MGG in turn was
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seeking to expand its portfolio at the time and had expressed interest in the equine sector.
37. From around March to June of 2016, the parties discussed Zayat Stables’ business
plan (including the capital requirements thereof) and a potential deal. From the beginning, Zayat
Stables made clear that it was critical to have at least $35 million in committed capital as essential
to executing its business plan.
38. On or around June 1, 2016, Len Sheer (of Piper Jaffray) provided MGG’s first draft
of a term sheet to Zayat Stables. Mr. Sheer explained in his cover email to the Zayats: “Your father
has another feather in his cap as attached is the first ever debt proposal for an equine portfolio from
a financial institution that isn’t a bank. It’s for $35MM gentlemen with no equity dilution.”
39. Zayat Stables requested changes to many of the terms proposed because they would
cripple Zayat Stables’ ability to conduct business and were not consistent with the stated needs of
Zayat Stables. For example, for Zayat, it was critical that the company have (i) flexibility in its
operations, (ii) the absence of interference or restrictions on operations by MGG, and (iii) a
waterfall arrangement that allowed for liquidity by prioritizing Zayat’s more pressing financial
obligations (e.g. first priority was horse operating expenses, second priority was an interest reserve
account for interest payments ) above more long term obligations (e.g. fifth priority was for paying
down the current outstanding balance independent of scheduled amortization payments, sixth was
for capital expenditures of the business)Zayat Stables told MGG that these points were critical due
to the nature of the business of buying and selling thoroughbred horses.
40. Given that Zayat Stables’ senior debt was maturing in August 2016, the deal with
MGG was supposed to close in the first week of July 2016. Zayat Stables had not paid certain
vendors at this time and its operations had slowed, partly because MGG wanted Zayat Stables’
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collateral frozen until the loan closed and was demanding a significant up-front payment for
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MGG’s costs in even considering the loan.
41. From around June 9 to June 13, 2016, the proposed terms changed to become more
favorable and acceptable to Zayat Stables. On or around June 9, 2016, MGG sent Zayat Stables a
revised term sheet in an attempt to accommodate some of Zayat Stables’ requests, including the
waterfall arrangement.
42. Upon information and belief, MGG knew at the time that Zayat Stables’ senior debt
was maturing in August 2016.
43. Upon information and belief, MGG was intentionally dragging the process out to
get more favorable terms—terms that would not even resemble the business deal initially struck.
44. On or around June 14, 2016, the parties had a final term sheet. Zayat Stables was
required to pay $150,000.00 to MGG at that time.
45. In the term sheets proposed by MGG, and a recurring deal point for MGG, was that
Zayat Stables indefinitely cease discussions with other potential lenders and deal exclusively with
MGG:
46. Upon information and belief, MGG was intentionally requiring such exclusivity to
lock Zayat Stables in, delay closing, and then cram down terms Zayat Stables would not be able
to resist due to its operations being practically halted and its senior debt maturing. Additionally,
during negotiations, Ahmed Zayat’s father became ill, requiring Mr. Zayat to leave the country
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from July 18 to July 26, 2016. After Mr. Zayat’s father passed away, he was observing mourning
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and not back in the country until August 3, 2016. Upon information and belief, MGG used this
event to further its scheme of forcing a sham loan upon Zayat Stables.
47. MGG’s negotiating strategy was a classic bait-and-switch. Leading up to late July
2016 when the loan finally closed, there were various changes to the deal struck in the original
term sheet with MGG. While Zayat Stables was waiting to close, MGG sent an approximately
350-page draft loan agreement with many terms that had nothing to do with how Zayat Stables’
business functioned.
48. For example, in place of the sophisticated waterfall negotiated were mandatory
prepayments to MGG based upon splits from sales of stallions. Zayat Stables would later find out
that these complicated covenants and restrictions, as interpreted and willfully expanded upon by
MGG, resulted in the exact restrictions on business that Zayat Stables said it could not bear.
49. Upon information and belief, MGG acted fraudulently and in bad faith by stating it
would make certain commitments under the loan without ever having the intent to fund the loan
in the full commitments. Kevin Griffin, CEO of MGG, would later tell Zayat Stables that MGG
“never intended” to actually fund the full loan commitment to Zayat Stables.
50. Upon information and belief, MGG knew or should have known at all relevant
times that Zayat Stables had potential deals on the table regarding an equity partner and investment,
which would have allowed Zayat Stables to implement its long-term business plan.
Zayat Stables Signed the Financing Agreement Based Upon

MGG’s Sham “Commitments” to Fund Zayat Stables’ Business
51. The loan closed on July 26, 2016, with a Financing Agreement executed by the
parties (who included Zayat Stables, MGG, and its affiliates participating in the loan). Zayat
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Stables incurred an approximately $1.6 million expense on the $25 million loan draw, which
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included MGG’s fees and expenses.
52. Under the Financing Agreement, Zayat Stables pledged its assets as collateral. The
primary assets of Zayat Stables consisted of Equine Collateral in the form of thoroughbred
bloodstock, stallion shares, and breeding rights—valued by an appraiser selected by MGG as part
of its due diligence process for the loan.
53. Under the Financing Agreement, MGG committed to loan money to Zayat Stables
in the aggregate amount of $35,000,000, divided into an “Effective Date Term Loan Commitment”
of $25,000,000 and a “Delayed Draw Term Loan Commitment” of $10,000,000.
54. The aggregate amount of $35,000,000 reflected the total amount discussed in
negotiations and in the signed term sheet. While the Delayed Draw provisions included
discretionary language, MGG at all times prior to execution assured Zayat Stables that it would be
available. At no time did MGG ever state to Zayat Stables that it would never make the Delayed
Draw available and fund the full amount of $35,000,000 as contemplated by the negotiations and
Zayat Stables’ business plan.
55. The proceeds of the loan were to be used to refinancing existing indebtedness, fund
the acquisition of additional equine assets, and for working capital of Zayat Stables and fees and
expenses related to the loan.
56. The loans were in the name of Zayat Stables and were not personally guaranteed
by Ahmed Zayat or any other person.
Performance Under the Loan Documents and MGG’s Bad Faith
57. Following the execution of the loan documents, Zayat Stables began meeting its
payment obligations immediately, with interest payments made beginning on August 31, 2016.
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58. Zayat Stables then made payments every month for 37 consecutive months. Over
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this three-year period, Zayat Stables paid MGG and its affiliates over $10,500,000 in interest.
During that same time period, Zayat Stables also made payments toward the principal in excess of
$5,500,000.
59. In total, Zayat Stables has made payments of $16,117,766 in principal,
amortization, and interest to MGG.
60. While MGG is quick to accuse Zayat Stables of “fraud” at its first missed payment,
MGG has failed to advise the Court of its own willful misconduct and bad faith throughout the
time Zayat Stables was attempting to comply with its obligations and run its business, despite
interference from MGG.
In September 2016, Zayat Stables drew $5 million on the loan, giving further indication that MGG
intended to provide the full $35 million and had not already decided to never do so.
61. On November 11, 2016, Zayat Stables notified MGG that Piper Jaffray was
launching a refinancing initiative. At this early stage in dealings with MGG, Zayat Stables was
optimistic about its business, the value of its assets, and its “EquineOne” business plan. Upon
information and belief, MGG knew or should have known at all relevant times that Zayat Stables’
was continuing discussions regarding potential equity deals to grow its business and implement its
long-term business plan.
62. In December 2016, however, MGG demonstrated that it would continue ratcheting
up control over and monitoring of Zayat Stables. At or around this time, MGG equired a
compliance “certificate” with cumbersome procedures and reporting that Zayat Stables believed
were beyond those contemplated by the agreement and unnecessary and that distracted from Zayat
Stables’ core business.
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63. In January 2017, Zayat Stables asked MGG to relax some of these procedures,
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including the highly restrictive prepayment terms on asset sales, to better meet Zayat Stables’
liquidity needs. Zayat Stables also asked MGG to make an additional $5 million available as a
revolving facility—which would still meet MGG’s LTV requirements and be repaid from two-
year-old sales in April.
64. At a meeting at MGG’s offices on or around January 31, 2017, Zayat Stables gave
a presentation explaining current business performance and strategies, the strength of the racing
and breeding industries, and the favorable environment for MGG’s collateral at the time. Kevin
Griffin, the CEO of MGG, in turn pressed Zayat Stables on its “true cash needs” and asked what
would happen if MGG could not provide for them. Mr. Griffin also announced to Zayat Stables
that that MGG “never intended” to actually fund the full commitment to Zayat Stables.
65. During this same time period, Zayat Stables also asked for an extension and a fifty
percent (50%) payment reduction while it searched for financing that better suited its needs. MGG
was well aware that its loan was to be part of a wider capital raising strategy by Zayat Stables that
would eventually take MGG out.
66. MGG denied the draw of $5 million but agreed that Zayat Stables’ 50% split on
sales could be paid on two payments. Nonetheless, the refusal to loan funds caused a severe cash
crunch for Zayat Stables, and Zayat Stables was forced to sell inventory that should have been its
crop of thoroughbreds for the year.
67. Around September 2017, Zayat Stables again asked for a $5 million
disbursement—primarily for use at the September yearling sale at Keeneland. MGG again denied
the request, and Zayat Stables was forced to try and purchase horses on credit terms with
Keeneland.
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68. In late 2017 and early 2018, in conjunction with the sale of the thoroughbred
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SOLOMINI, MGG provided an invoice for a required paydown in the amount of $800,000. It also
included on the invoice a $1,500,000 amortization payment. Upon review, Zayat Stables noted
that the additional amortization payment should not have been included and further discovered
that MGG had overcharged Zayat Stables in the amount of $914,765.63 in 2017. (See Jan. 2, 2018
e-mail exchange between D. Joella, A. Berkowitz, attached as Exhibit 1.)
69. This overpayment of nearly one million dollars was discovered after the
September and November Sales at Keeneland and the October Sale at Fasig-Tipton when yearlings
and breeding stock are purchased—further depriving Zayat Stables of significant capital to invest
in additional bloodstock.
70. MGG also mistook its own incompetence for wrongdoing by Zayat Stables over
the course of the loan. For example, on January 23, 2018, MGG asked Zayat Stables about the
status of a list of Equine Collateral. A day later, Zayat Stables provided an update that appeared to
be satisfactory to MGG. On January 24, 2018, MGG asked for an update on horses it claimed were
missing from its Equineline.com updates.
71. Equineline is the industry’s premiere online service for comprehensive reporting
on thoroughbred pedigrees, race records, mare produce records and sire reports, as well as a host
of other services. Real time updates on thoroughbred horses throughout the industry are tracked
through the site. MGG was provided its own access to Zayat Stables’ Equiline account and could
track the status of horses daily.
72. Zayat Stables responded almost immediately, saying a list would be provided when
someone was back in the office and review records to ensure reporting was accurate.
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73. MGG immediately responded by arguing: “There’s 21 horses listed below that
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sound like they are no longer collateral. This should be more of a priority than that.” (D. Joella
Email, Jan. 24, 2018, 1:57 p.m., Email Thread attached as Exhibit 2) In response to Mr. Joella’s
email, Zayat Stables explained the nature of the Equine Collateral and that it was “beyond
sufficient” for the current loan. As explained, the most important factor is the quality of the horses
held, not the number: “Horses get injured and some have layup sand some retire. Some we simply
give away because they are of zero value and only overhead for the company.” (Ex. 2, J. Zayat
Email to D. Joella, Jan. 24, 2018 2:04 p.m.)
74. MGG responded:
You’re not getting it. The list of horses below represents 21 defaults
of your loan agreement with us. Any time a horse is bought / sold
(or any other Equine Agreement) we’re required to be notified
ASAP, with a maximum of five days. This is far from the first time
I’ve told you and / or Andy this.
More importantly, those 21 horses represent $5.5mm of appraised
value of which we have not received our 40% mandatory
prepayment (based on whatever you sold them for). Given these
sales happened as far back as November (really?!?) and you’ve
certainly received proceeds, that constitutes a payment default
since you and Andy didn’t let us know and arrange for payment on
either of the two succeeding monthly interest bills as we’ve done in
the past. Principal payment defaults have no grace period and
constitute an Event of Default without any notice from MGG.
(Ex 2, D. Joella Email to J. Zayat, Jan. 24, 2018 7:13 p.m. (emphasis added.)) Mr. Joella continued
to review other events which he believed were “defaults” and hurled accusations at Zayat Stables.
(Id.)
75. Zayat Stables promptly explained the facts to MGG:
Dane,
Calm down. I disagree with everything you are saying from A to Z.
All horses that were sold were entered in the public sales and you
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and Felix were notified about when they were entered. Equineline
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sends notices every single sale and their results right after. I am
not at all telling you that all the 21 horses were sold. In fact, from
memory less than 1/2 I can’t give you half information. I simply
don’t have all the information in front of me.
I am happy to discuss this all in Friday with you. There is no
reason to escalate this or put the panic button on! I am more than
confident after our conversation you will understand it all.
Let me know on Friday when works for you.
Justin
(Ex. 2, J. Zayat Email to D. Joella, Jan. 24, 2018 7:35 p.m. (emphasis added).)
76. On January 26, 2018, Zayat Stables proceeded to give MGG a comprehensive
spreadsheet addressing all 38 horses MGG had asked about. Zayat Stables explained to MGG that
the 38 horses were either still in training; publicly claimed or sold or sold by the majority control
partner (not Zayat Stables); or injured, retired, or dead. All activity would be reported timely on
quarterly reports, and MGG received daily email updates from Equineline in addition to having
independent access to the portal at any time. (J. Zayat Email to D. Joella, Jan. 26, 2018 11:19
a.m., attached as Exhibit 3.) Zayat Stables also had to explain that MGG’s split of any sales
proceeds was not yet due anyway due to the timing of the sales, not to mention that the crop of
horses serving as collateral had increased substantially in value.
77. With respect to another falsely claimed “default,” MGG complained that Zayat
Stables had entered into an equine agreement that prohibited its disclosure to MGG with respect
to SOLOMINI. However, Zayat Stables provided the agreement in question to MGG before it
was signed, and MGG did not protest. As Zayat Stables explained, “without confidentiality
provisions, it’s almost impossible for us to make any stallion deals in this industry. It is unclear to
me why this is even getting brought up.” (Ex. 3, J. Zayat Email to D. Joella, Jan. 26, 2018 11:19
a.m.)
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78. Following these email exchanges, MGG was forced to acknowledge that there were
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not in fact any defaults, and MGG did not pursue any of the alleged defaults any further. Even
though MGG acknowledged the mistakes, the damage was already done, as Zayat Stables had
already overpaid MGG and had been unable to use that cash for its acquisitions of additional
horses, thereby creating a long-spiraling domino effect on its previously highly successful business
model which depends highly on purchasing the correct mix of horses for training.
79. However, MGG continued its pattern of claiming defaults when none occurred
throughout the course of the loan and even into this litigation, only further evidencing its inability
to understand its own loan or collateral and its continual imposition of restrictions and constraints
on Zayat Stables.
80. For example, MGG claims that Zayat Stables concealed the sales of certain horses
that MGG only learned about immediately before filing this action in January 2020. Not only were
these sales disclosed to MGG verbally, via Equineline, or in writing (with most being disclosed
through more than one of these means), a number of them were widely reported in industry press
and known to the public at large:
Am. Allegedly
Public Notice
Compl. Concealed Sale
Advertised prominently on myracehorse.com and its
⁋⁋ 119–123 AMANDREA
social media sites.1
AMERICAN Publicly offered for sale at Fasig-Tipton November 2017
⁋⁋ 82–87
CLEOPATRA Sale
1
See e.g. Oct. 28, 2019 Facebook post “Now Available in the MyRacehorse Stable: Amandrea”
found at https://www.facebook.com/myracehorse/videos/2974056629288917/, last visited Mar. 20, 2020;
https://myracehorse.com/app/?fbclid=IwAR0VPFcAghsH5BsT74YVrEjCwNWKH-
fvG43DzDmC2MDwXTHAqliyl097oeg#/singleHorseView/256, last visited Mar. 20, 2020.)
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https://www.bloodhorse.com/horse-
864CAFBE-038F-48F0-8D70-BC064900B90D : 000055 of 000114

⁋ 133 BODEMEISTER2 racing/articles/236436/bodemeister-sold-to-jockey-club-
of-turkey
https://www.theirishfield.ie/el-kabeir-to-stud-in-ireland-
⁋⁋ 77–81 EL KABEIR
318373/
https://www.bloodhorse.com/horse-
⁋ 133 JUSTIN PHILLIP racing/articles/236528/justin-phillip-sold-to-new-mexico-
farm
https://www.nytbreeders.org/news/2019/12/06/solomini-
⁋⁋ 124–131 SOLOMINI
joins-mcmahons/
81. MGG not only accused Zayat Stables of default during the term of the loan and
fraud now in this civil action based on its purported lack of knowledge of the sales, but it has sued
third-party purchasers based on these same false allegations.
82. For example, MGG filed claims against Yeomanstown Stud seeking repossession
of the thoroughbred stallion EL KABEIR. In its Amended Complaint and its Response to
Yeomanstown Stud’s Motion to Dismiss, MGG claimed that it had a viable action because Zayat
Stables had concealed the sale and MGG only first learned of it in January 2020. (Response at ⁋ 4,
p. 3; id. at p. 19.)
83. Those statements by MGG were false.
84. Attached hereto as Exhibit 4 is an e-mail from Zayat Stables to Dane Joella and
Felix Zhang of MGG in October 2017 regarding the sale of EL KABEIR to Yeomanstown Stud.
(Oct. 24, 2017 10:24 a.m. email from J. Zayat to D. Joella.) The e-mail from Zayat Stables
provided a link to the press release announcing the sale of EL KABEIR, which included a quote
2
Like several of the other sales MGG claimed were defaults, the sale of BODEMEISTER was one
made by the Syndicate Manager, not Zayat Stables, who owns certain breeding rights. Given MGG’s
conduct during the term of the loan and its filings in this case, it is becoming increasingly evident that MGG
does not understand the fundamental difference of ownership of a horse and ownership of breeding rights
or the function and operation of stallion syndicate agreements.
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from Gay O’Callaghan of Yeomanstown Stud that plainly stated, “We are delighted to have
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purchased El Kabeir.” (Id.; copy of press release found at https://www.theirishfield.ie/el-kabeir-
usa-to-stud-in-ireland-318373/ (last visited Mar. 18, 2020) and attached as Exhibit 5.)
85. This pattern of accusing concealment by Zayat Stables continued throughout the
term of the loan and can only be seen as bad faith and oppressive conduct.
86. In addition to issues of cash flow and capital shortages, because of MGG’s bad faith
conduct, managing cash flow and the ever-changing demands of its senior lender became a full-
time job for Zayat Stables that impeded its success.
Zayat Stables’ Financial Constraints and

The Sale of the AMERICAN PHAROAH Breeding Rights
87. As a result of its reduced capital in 2017, its continuing need to sell its crop of
horses because of MGG’s refusal to release needed funds, and other market conditions, Zayat
Stables began to feel financial pressure in mid- to late-2018 and needed additional cash on hand
to continue operations in order to maximize the value of the Equine Collateral and also continue
to meet its debt obligations.
88. While Zayat Stables still desired to complete an equity deal and execute its business
plan, the capital shortages and constraints with MGG in control were beginning to make this a
practical impossibility.
89. As stated by MGG in its Amended Complaint, members of the Zayat family
retained breeding rights to AMERICAN PHAROAH after his sale in 2015. As also acknowledged
by MGG, all of those rights were transferred to Zayat Stables in advance of the MGG loan. This
transfer was made by Zayat Stables at MGG’s request without objection and was confirmed by
Ashford Stud, who held AMERICAN PHAROAH and managed his breeding.
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90. In order to generate cash for its operations and loan obligations, Zayat Stables
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began to sell its nine lifetime breeding rights in a series of six transactions beginning in December
2018 and concluding in June 2019. The total amount for the sale of the nine breeding rights was
$3,300,000.
91. Knowing the media attention AMERICAN PHAROAH’s name would attract,
MGG has highlighted these transactions in its lawsuit and alleged that Ahmed Zayat and his family
members “pocketed” this money, repeating the salacious phrase in the original Complaint, the
Amended Complaint, and other filings.
92. When asked about the sales by MGG, however, Zayat Stables quickly provided its
bank records unequivocally showing that the proceeds from each sale were placed in the Zayat
Stables operating account, not any individual’s “pocket”:
Date Sale Amount of Sale Deposit
Dec. 21, 2018 LBR Nos. 1 and 2 $750,000
Dec. 28, 2018 $200,000
Dec. 31, 2018 $595,0003
March 26, 2019 LBR No. 3 $400,000
March 29, 2019 LBR No. 4 $400,000
April 1, 2019 $845,000
April 14, 2019 LBR Nos. 5 and 6 $700,000
April 15, 2019 $742,000
May 1, 2019 LBR No. 7 $350,000
May 2, 2019 $371,000
June 5, 2019 LBR Nos. 8 and 9 $700,000
3
The deposit amounts reflect the purchase price plus 6% sales tax.
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June 6, 2019 $742,000
Total $3,300,000 $3,495,000
(Compare Am. Compl. ⁋ 196 with Zayat Stables Business Checking Statements from First
Republic Bank, copies attached as Exhibit 6.) This information was provided to MGG prior to the
filing of its original Complaint, yet it is conveniently omitted from MGG’s version of events and
instead accused Zayat family members from personally “pocketing” the funds
93. In fact, Zayat Stables made over $3.5 million in payments to MGG and a junior
lender following the sales of the AMERICAN PHAROAH breeding rights.
94. By 2019, it was clear that MGG would not give Zayat Stables the capital it needed
to operate its business.
95. In August 2019, Zayat Stables hired investment bankers for planned equity raises
in the Asian and American markets. Specifically, Zayat Stables hired FocalPoint Partners in
connection with a $100 million equity raise in the Asian market; Piper Jaffray for a $100 million
raise in the American market; and Janney Montgomery for a $150 million public offering. Upon
information and belief, MGG was aware of these relationships and capital-raising campaigns.
96. One month later, however, Zayat Stables was unable to meet its payment
obligations to MGG. It provided advance notice to MGG of its cash flow issues and ultimately
failed to make its September 30, 2019 payment.
MGG Continues to Mislead Zayat Stables as

Zayat Stables Attempts to Find a Commercially Reasonable Solution
and Raise the Needed Capital to Continue its Business
97. Following the missed payment, Zayat Stables reached out to MGG and began to
work on a commercially reasonable solution so that MGG could be made whole.
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98. Mr. Zayat traveled to MGG’s offices in New York on October 24, 2019, for a
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meeting to discuss a business solution. Thereafter, Zayat Stables began working on a plan to repay
MGG and, at MGG’s direction, prepared a draft liquidation plan that would allow the orderly sale
of the Equine Collateral in a phased manner.
99. The Zayat Stables liquidation plan followed MGG’s request of how to proceed and
was dictated by an outline of MGG’s workout guidance. The plan contemplated selling different
horses at different times based on their age, racing experience, and optimal sales to bring the
highest value for the horses. A copy of the plan was prepared quickly and provided to MGG on
December 12, 2019.
100. On December 18, 2019, Mr. Zayat and Justin Zayat traveled to MGG’s offices to
meet with MGG and discuss the liquidation plan. Thereafter, the parties continued to assess options
to liquidate the Collateral and maximize value—or at least MGG appeared to.
101. In early January 2020, MGG raised concerns about the sales of the breeding rights
to AMERICAN PHAROAH.
102. Zayat Stables provided all information requested of it by MGG and granted MGG
express permission to speak with Ashford Stud to confirm details regarding the sales.
103. Zayat Stables also continued to try to work with MGG to develop a plan of
liquidation. Mr. Zayat personally called Patrick Flynn of MGG on Sunday, January 12, 2020, to
discuss the situation and answer any questions. The next day, Mr. Zayat followed up and again
spoke with MGG. Mr. Zayat asked if there was a “path forward” towards a business solution. Mr.
Flynn responded that he thought there was. Over the next two days, additional discussions ensued,
and the documentation regarding the AMERICAN PHAROAH sales was provided.
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104. On January 16, 2020, Mr. Flynn of MGG notified Zayat Stables that MGG saw a
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path forward towards a business solution. Specifically, MGG proposed a liquidation using the
services of Gatewood Bell of Cromwell Bloodstock and prepared a Cooperation Agreement for
Zayat Stables to sign.
105. Zayat Stables provided the Cooperation Agreement to its counsel, who provided
minimal comments to MGG’s counsel that same day. (Jan. 16, 2020 11:30 p.m. email from J. Vann
to A. Harris, copy attached as Exhibit 7.) As explained by counsel for Zayat Stables’, the
comments focused on ensuring that Zayat Stables was not responsible for the actions of Cromwell
after Zayat Stables ceded control. (Id. (“You will see one common theme is that if Zayat is being
asked to step aside and turnover complete control of Zayat Stable and collateral to Cromwell
(which this agreement clearly does) then he cannot be responsible for the actions of Cromwell.”)
Given the nature of the agreement, the request was a reasonable one.
106. Counsel for Zayat Stables followed up with counsel for MGG the next day (Friday,
January 17) to see if there were any questions about his comments. Counsel for MGG did not
having anything to report from MGG but told counsel for Zayat Stables that he would be in touch
on Sunday or Monday. Counsel for Zayat Stables heard nothing in response to his comments or
proposed revisions on Sunday or Monday. He followed up again on Tuesday, January 21 to discuss
the comments and try to finalize the agreement. (Jan. 21, 2020 2:48 p.m. email from J. Vann to A.
Harris, copy attached as Exhibit 8.)
107. Throughout this time, MGG professed to be working with Zayat Stables towards a
commercially reasonable resolution. MGG stated several times that it saw a “path forward.” In
reliance on MGG’s representations, Ahmed Zayat went on a roadshow in China working towards
a capital raise. Zayat Stables was received positively and was even promised a term sheet for a
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potential $100 million deal. On January 7, 2020, Mr. Flynn reported to Mr. Zayat that MGG’s
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CEO told him he had a “positive conversation” with Mr. Zayat. On January 10, 2020, MGG
described its documentation needs regarding AMERICAN PHAROAH as “basic” and “simple.”
108. On or around January 16, 2020, MGG proposed a solution via the Cooperation
Agreement, but then refused to even respond to the comments or reasonable requests of Zayat
Stables. MGG, however, encouraged Zayat Stables to continue its capital-raising campaign.
109. On January 17, 2020, in reliance on MGG’s representations that it was working
with Zayat Stables, Zayat Stables met with the managing partner of Centre Partners (a leading
middle market private equity firm). On or around that time, MGG told Zayat Stables that it could
represent that it was not in default and to continue negotiating, because, after all, “money talks.”
At the meeting, Centre Partners told Zayat Stables that it would respond by the following Tuesday
with an outline or proposal. However, despite the representations MGG made to Mr. Zayat and
his reliance on those representations, MGG had already seized Zayat Stables’ bank account the
day before. MGG would then rush to court to file its emergency motion for appointment of a
receiver and its original Complaint just a few days later.
110. In retrospect, it is clear that MGG was not working with Zayat Stables in good faith
or in a commercially reasonable manner, but was instead merely gathering information and
exhibits for its lawsuit.
MGG Willfully Turns a Simple Breach of Contract Action into a Soap Opera,
Attacking the Business Reputation of Zayat Stables,
Suing Numerous Innocent Parties, and Impairing the Equine Collateral
111. On January 21, 2019, MGG filed its original Complaint. To protect its rights, MGG
could have filed a simple breach of contract claim alleging a legal obligation, breach of such
obligation, and the amount due under the note. Assuming the Financing Agreement were valid,
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whether Zayat Stables met its payment obligations under it could have been put forth with a simple
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averment of breach as is customarily done in loan default cases.
112. But as usual, MGG took a heavy-handed approach, trying to have the Equine
Collateral sold by fire sale and claiming fraud against multiple individuals. Upon information and
belief, one of the principal reasons for the “fraud” claims is that MGG failed to obtain a personal
guaranty on the loan to Zayat Stables and is desperately trying to fabricate a fraud claim against
individual family members (including those who were minors at the time of the loan in 2016) to
recover in other ways. Upon information and belief, given Kevin Griffin’s public statements in
general about his fund and how it operates, MGG’s motivation in stooping so low is, upon
information and belief, to try to protect Mr. Griffin’s purported perfect record.
113. The approach taken with the Equine Collateral was unnecessary and unreasonable,
especially given that Zayat Stables had already agreed in principle to a liquidation plan with
oversight by MGG’s hand-picked equine consultant, Gatewood Bell. Such a plan would have
allowed for orderly liquidation without the distraction or uncertainty that litigation brings and the
resulting effect on liquidation efforts.
114. Even after the lawsuit was filed, Zayat Stables made the request that the parties
agree to seal the Complaint in order to eliminate marketplace confusion and maximize the value
of the Equine Collateral. MGG refused with no explanation.
115. Instead, MGG carefully selected the timing of its lawsuit and insisted on a hearing
the day before the Eclipse Awards. The media had ample notice of the emergency hearing and was
present, but Zayat Stables was not afforded time to obtain local counsel and defend itself. MGG’s
efforts to litigate with a one-sided story with headline garnering averments and themes were at
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first rewarded, as newspapers and trade publications quickly picked up on the themes of “fraud”
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and secret sales.
116. MGG’s conduct, however, was offensive, unnecessary, and irrevocably and
irretrievably damaged Zayat Stables’ business reputation and the Equine Collateral from which
the loan balance should be satisfied.
117. MGG’s bad faith and reckless conduct almost immediately had an adverse effect
on the value of the Equine Collateral and the ability to liquidate it in a manner that would maximize
its value. As an example, one of the four stories featured in the Thoroughbred Daily News on the
day of the Eclipse Awards focused on the uncertainty in the industry resulting from the court
proceedings. Titled “Zayat Stables in Receivership: What Exactly Does That Mean?”, it only
added to confusion about the Equine Collateral, which could greatly reduce its value in any
liquidation sale with statements like the following:
(a) “[T]he judgment caused reverberations within the Thoroughbred
bloodstock and racing world beyond those felt by Ahmed Zayat and his family.”
(b) “Specifically, questions began to swirl about what would happen to the
Zayat horses at farms or currently training in New York, Florida, California and
Arizona…”
(c) “It appears as if a distinct element of wanting to preserve day-to-day
operations has been written into the order. There is no mention of liquidating assets in the
form of selling horses.”
(See https://www.thoroughbreddailynews.com/zayat-stables-in-receivership-what-exactly-does-
that-mean/, last visited Jan. 26, 2020 (emphasis added).)
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118. Not surprisingly, without any opposition MGG prevailed on its motion and
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convinced the Court to appoint Elizabeth Woodward of Dean Dorton Ford and Allen as receiver
in addition to Gatewood Bell.
119. MGG claimed that a receiver was needed because Zayat Stables’ horses were going
unfed and uncared for, despite the fact that MGG knew well that the horses were under the care of
reputable trainers and that 10 of the horses had raced in the three weeks prior to filing, including
a Grade II stakes win on January 4, 2020.
120. MGG assured the Court that it would properly fund the Receivership, but to date
has failed to adequately do so.
121. In fact, prior to this action being filed, Zayat Stables’ senior lender Cedarview
Capital Management LP proposed an orderly liquidation that would maximize proceeds for both
MGG and Cedarview, as well as Zayat Stables. That proposal involved funding the liquidation
with $3 million in order to allow horses to stay in training, continue to race, and be sold at
appropriate times throughout the sales year. Cedarview would later tell MGG that MGG’s
approach served to minimize MGG’s capital commitment but would also result in the “poorest
possible recovery” from the collateral. (Jan. 22, 2020 10:46 a.m. email from B. Weinstein
(Cedarview) to D. Joella (MGG), copy attached as Exhibit 9.)
122. MGG’s willful and grossly negligent conduct and refusal to adequately fund the
Receivership has forced the Receiver to make decisions that have impaired the collateral and
prevented the Receiver and Zayat Stables from obtaining maximum value for the assets of Zayat
Stables.
123. For example, the Receiver entered five Zayat Stables’ horses in the Fasig-Tipton
Winter Mixed Sale almost immediately upon being appointed. Upon information and belief, the
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Receiver made this decision in whole or in part because she needed to generate cash to fund the
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Receivership.
124. One of the horses entered was the broodmare MEGALICIOUS, who was in foal to
the prominent stallion PAYNTER. Upon information and belief, no reserve or minimum price was
placed on MEGALICIOUS to ensure that she brought a fair value or could be sold later in the year
at a more appropriate time. Instead, she was sold quickly at auction in order to generate necessary
funds for the Receivership. Sold as Hip No. 631 as a supplemental entry, MEGALICIOUS brought
only $6,000, far less than her actual value.
125. Just a month later, during very uncertain times in the financial and equine markets,
a daughter of MEGALICIOUS sold for $650,000 as the top selling two-year old at the Ocala
Breeders’ Sales March Sale. (https://www.obssales.com/2020/03/american-pharoah-filly-tops-
march-sales-first-session/, last visited Mar. 18, 2020.)
126. The Receiver sold MEGALICIOUS and her unborn foal for a total of $6,000 when
just one of her foals sold 100 times that amount weeks later.
127. Zayat Stables is not privy to all of the actions and communications between MGG
and the Receiver but has a reasonable belief that other similar acts are further precluding the
Receiver from obtaining maximum value for Zayat Stables’ assets.
128. In addition to its acts related to the receivership, MGG has taken unwarranted acts
in litigation that have further impaired the collateral and were intended to harass or pressure Zayat
Stables or others.
129. On February 11, 2020, MGG filed an Amended Complaint naming 14 additional
defendants.
130. Nine of those new Defendants were prominent members of the equine industry who
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had purchased horses or interests from Zayat Stables in the normal course over the last three years.
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131. MGG claimed that it had the right to repossess horses or breeding rights from those
defendants despite being clearly barred from doing so by KRS 355.9-320(6), KRS 413.242, and
the federal Food and Security Act.
132. MGG has already had one defendant dismissed by the Court, was forced to dismiss
two voluntarily, and has two motions to dismiss against it pending which it is likely to lose.4
133. MGG had no good faith basis in fact or law for bringing claims against these nine
defendants and, upon information and belief, only did so to try to bring industry pressure on Zayat
Stables or others.
134. The actual result, however, was further confusion and alienation that has further
impaired the value of the collateral by deterring or eliminating potential purchasers of the assets.
135. The other five new defendants were members of the Zayat family, including Ahmed
Zayat’s wife and children.
136. The only involvement of four of these family members is the fact that they were
once owners of breeding rights in AMERICAN PHAROAH, transferred those rights to Zayat
Stables, and then signed bills of sale when Zayat Stables later sold the rights.
137. MGG was aware prior to filing its Complaint that the individual family members
had transferred their interests to Zayat Stables (and, in fact, alleged it in the Complaint) and that
the proceeds from the sales of the breeding rights were deposited into Zayat Stables’ business
accounts, yet MGG alleged that these individuals “pocketed” the proceeds personally.
4
Hill ‘N’ Dale and McMahon Thoroughbreds have both moved for dismissal under the Food and
Security Act. MGG cannot argue in good faith that the Food and Security Act does not apply to the Equine
Collateral, as the Financing Agreement expressly references the Food and Security Act and identifies three
thoroughbred sales companies where the collateral might be sold pursuant to the Food and Security Act.
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138. In addition, no additional facts related to the involvement of the family members
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arose between the filing of the Complaint and Amended Complaint. Rather, the factual assertions
regarding the sales of breeding rights remain exactly the same.
139. Upon information and belief, the Zayat family members were added as defendants
in an effort to harass or pressure Ahmed Zayat and his family and/or out of retaliation for Zayat
Stables opposing MGG’s oppressive conduct and defending its rights.
140. MGG’s actions have prejudiced Zayat Stables and, upon information and belief,
have impaired the value of the collateral to the detriment of both MGG and Zayat Stables.
COUNT I
Fraud in the Inducement
141. The averments set forth in paragraphs 1 through 140 are incorporated by reference
as if fully restated in this paragraph.
142. MGG made material representations to Zayat Stables that MGG actually intended
to commit up to $35 million to fund equine acquisitions and capital expenditures by Zayat Stables
in operating its thoroughbred racing business.
143. Zayat Stables had a term sheet and Financing Agreement that provided for a
“commitment” of up to an aggregate amount of $35 million and based on a realistic loan structure
and payment plan. In summer 2016, Kevin Griffin (CEO of MGG) and Ahmed Zayat discussed
Zayat Stables’ business plan, cashflow, and associated capital needs in doing business with MGG.
144. The full $35 million in capital commitments and loan structure was material to
Zayat Stables and MGG knew or should have known that such fact was material.
145. MGG fraudulently induced Zayat Stables into signing the Term Sheet and granting
MGG exclusivity despite never intending to agree to the terms of the Term Sheet.
146. MGG’s representations were false and known to be made falsely or otherwise made
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recklessly, and they were deceptive in character such that the loan and any “commitments” to loan
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money were an obvious sham. In fact, in a meeting with Zayat Stables at MGG’s offices on or
around January 31, 2017, Mr. Griffin told Zayat Stables that MGG “never intended to” actually
fund the full loan commitment to Zayat Stables.
147. Zayat Stables, acting in reliance on MGG’s material misrepresentations or
omissions, was induced to and did in fact sign the Financing Agreement.
148. As a direct and proximate result of MGG’s fraudulent inducement, Zayat Stables
has suffered substantial damage in an amount to be determined in proceedings before this Court.
COUNT II
Fraudulent Concealment
150. MGG had a duty not to conceal its actual lack of intent to fulfill its “commitments”
to loan money or proposed loan structure to Zayat Stables.
151. MGG, upon information and belief, knew (or should have known) that its lack of
intent to actually fulfill the loan commitments or loan structure was material to Zayat Stables.
152. Zayat Stables, acting in reliance on MGG’s material misrepresentations or
omissions, was induced to and did in fact sign the Term Sheet, the exclusivity provision, and the
Financing Agreement.
153. As a direct and proximate result of MGG’s fraudulent inducement, Zayat Stables
COUNT III
Breach of Financing Agreement
68
4823-0936-3895.v1
864CAFBE-038F-48F0-8D70-BC064900B90D : 000069 of 000114

155. The Financing Agreement is a written agreement between Zayat Stables and MGG.
156. Zayat Stables performed the conditions, covenants, promises and obligations
required under the agreement, except for those conditions, covenants, promises and obligations
that have been made impossible and/or excused by reason of MGG’s conduct.
157. MGG breached the agreement by failing or refusing to advance the full loan
commitments to Zayat Stables, by overcharging Zayat Stables, by depriving Zayat Stables of
necessary capital to carry out its known business plan, by wrongfully claiming defaults and
overreaching under the agreement’s terms and thus interfering in Zayat Stables’ business, by
failing to act in a commercially reasonable manner, and by taking willful and/or grossly negligent
acts that impaired the assets of Zayat Stables that serve as collateral.
158. As a direct and proximate result of MGG’s breach of the agreement, Zayat Stables
COUNT IV
Breach of Covenant of Good Faith and Fair Dealing
160. The Financing Agreement between MGG and Zayat Stables includes implied
covenants of good faith and fair dealing.
161. MGG breached the implied covenant of good faith and fair dealing by, among other
things, committing to loan money for Zayat Stable’s business operations without intent to do so;
unfairly refusing to lend portions of the agreed loan to Zayat Stables; exercising bad faith in the
administration of the loan by, among other things, wrongfully overcharging Zayat Stables,
accusing Zayat Stables of defaulting when there was no default, and harming Zayat Stables’
69
4823-0936-3895.v1
business operations by its bad faith conduct during the term of the agreement; wrongfully using
864CAFBE-038F-48F0-8D70-BC064900B90D : 000070 of 000114

the agreement’s covenants as a means to oppress Zayat Stables and interfere with its business;
intentionally misleading Zayat Stables regarding cure of the alleged payment default when MGG
was merely plotting against Zayat Stables and gathering exhibits for its lawsuit; wrongfully
accusing Zayat Stables of “concealing” alleged breaches and committing fraud, including as a
pretext to gain leverage over persons affiliated with Zayat Stables where MGG failed to obtain a
personal guaranty of the loan; and, by failing to act in a commercially reasonable manner, and by
taking willful and/or grossly negligent acts that impaired the assets of Zayat Stables that serve as
collateral.
162. As a direct and proximate result of Zayat Stables breach of its duties, Zayat Stables
is entitled to damages in an amount to be determined in proceedings before this Court.
COUNT V
Negligence/Impairment of Collateral
164. MGG, as a private equity firm holding itself out to be a “Trusted Private Lending
Partner” offering “bespoke financing solutions to mid-size and growing companies” such as Zayat
Stables, has a duty to act with reasonable care under the circumstances when acting in that capacity
and has a duty to act in a commercially reasonable manner.
165. MGG breached those duties by, among other conduct described in this
counterclaim, acting negligently with respect to the Equine Collateral and willfully taking actions
impairing its value.
166. As a direct and proximate result of MGG’s negligence, Zayat Stables has suffered
70
4823-0936-3895.v1
and, upon information and belief, will continue to suffer substantial damage in an amount to be
864CAFBE-038F-48F0-8D70-BC064900B90D : 000071 of 000114

determined in proceedings before this Court.
COUNT VI
Tortious Interference with Prospective Economic Advantage
168. Zayat Stables had a valid business relationship with Piper Jaffray and other equity
investors and related expectancies of economic advantage during all times relevant hereto.
169. Upon information and belief, during all relevant times, MGG knew or should have
known of these valid expectancies of Zayat Stables.
170. MGG intentionally interfered with those relationships by, among other things,
making false representations of fact to Zayat Stables regarding its willingness to fund a capital
commitment to Zayat Stables, by deliberately using exclusivity to preclude Zayat Stables from
talking to other investors, by making false representations about Zayat Stables or affiliated persons,
by making false representations to Zayat Stables while it was raising capital in Asia, and by
wrongfully filing a civil action alleging “fraud” and “concealment” against Zayat Stables and/or
affiliated persons.
171. MGG’s motive behind the interference was improper because, upon information
and belief, the purpose was to induce Zayat Stables to do business with MGG so that MGG could
grow its portfolio, earn fees in the short term, and expand its alternative investments portfolio in
the equine space.
172. As a direct and proximate result of MGG’s actions, Zayat Stables has suffered harm
to its reputation and business in the form of loss of profits and revenues, in an amount to be proven
71
4823-0936-3895.v1
at trial.
864CAFBE-038F-48F0-8D70-BC064900B90D : 000072 of 000114

PRAYER FOR RELIEF
WHEREFORE, Zayat Stables prays for an award against MGG as follows:
A. For a trial by jury on all issues so triable;
B. For all compensatory, general and/or special damages directly and proximately
resulting from MGG’s wrongful acts in an amount to be determined at trial;
C. For an award of exemplary and/or punitive damages in amount sufficient to punish,
deter, and make an example of MGG as allowed by law;
D. For an award of attorneys’ fees and costs of suit to the extent permitted by law; and
E. Such additional relief as the Court deems just and proper.
72
4823-0936-3895.v1
Respectfully submitted,
864CAFBE-038F-48F0-8D70-BC064900B90D : 000073 of 000114

/s/ Jay E. Ingle
Jay E. Ingle
Patrick F. Estill
Alexander H. Gardner
JACKSON KELLY PLLC
100 West Main Street, Suite 700
Lexington, Kentucky 40507
(859) 255-9500
jingle@jacksonkelly.com
pestill@jacksonkelly.com
alexander.gardner@jacksonkelly.com
Counsel for Zayat Stables, LLC
CERTIFICATE OF SERVICE
I hereby certify that the foregoing was served on this 20th day of March, 2020, in the
following manner:
Via e-mail pursuant to CR 5.02(2):
David T. Royse
david@rrfirm.com
John C. Roach
john@rrrfirm.com
Counsel for Defendant Hill ‘N’ Dale Equine Holdings, Inc.
W. Craig Robertson III

wrobertson@wyattfirm.com
Daniel E. Hitchcock
dhitchcock@wyattfirm.com
Counsel for Plaintiff
Barry D. Hunter
bhunter@fbtlaw.com
Medrith Lee Norman
mnorman@fbtlaw.com
Counsel for Defendant, Bemak, N.V., Ltd.
Ellen Arvin Kennedy

Ellen.kennedy@dinsmore.com
Counsel for Receiver, Elizabeth Z. Woodward
73
4823-0936-3895.v1
E. Kenley Ames
864CAFBE-038F-48F0-8D70-BC064900B90D : 000074 of 000114

kames@elpolaw.com
Greg Parsons
gparsons@stites.com
Counsel for McMahon of Saratoga
Marshall Hixson
mhixson@stites.com
Counsel for McMahon of Saratoga
Via U.S. Mail, first class postage prepaid:
Ahmed Zayat Justin Zayat

598 Warwick Avenue 200 E 62nd Street, Apt. 8D
Teaneck, NJ 07601 New York, NY 10065
Ashley Zayat Benjamin Zayat

598 Warwick Avenue 598 Warwick Avenue
Teaneck, NJ 07601 Teaneck, NJ 07601
Emma Zayat Joanne Zayat

598 Warwick Avenue 598 Warwick Avenue
Teaneck, NJ 07601 Teaneck, NJ 07601
Orpendale Limited Co. LNJ Foxwoods, LLC

d/b/a Coolmore Stud 14 Foxwood Road
Edward Irwin Great Neck, NY 11024
Castlehyde Stud, Castlehyde Fermoy
Co. Cork
P61 TR29 Ireland
Flintshire Farm, LLC Thomas B. Sears a/k/a Brad Sears

Thomas B. Sears, Registered Agent 1201 Bering Drive, Apartment 97
1201 Bering Drive, Apt. 97 Houston, TX 77057
Houston, TX 77057
\s\ Jay E. Ingle

Counsel for Zayat Stables, LLC
74
4823-0936-3895.v1
Exhibit 1 - Jan. 2, 2018 e-mail exchange between D. Joella, A. Berkowitz
864CAFBE-038F-48F0-8D70-BC064900B90D : 000075 of 000114

Zayatstables.com Mail FW: Issuer Reminder: Effective 2018/01/02 -> Statement -> Zayat Stables, LLC -> Senior Secured Term Loan 1/23/20, 3:09 PM
864CAFBE-038F-48F0-8D70-BC064900B90D : 000076 of 000114

Jiistiii /-avcit <iuslinâizavai;stables.coni:
FW:Issuer Reminder: Effective 2018/01/02 -> Statement -> Zayat Stables, LLC ->
Senior Secured Term Loan
Justin Zayat <justin@zayatstables.com> Thu, Jan 23, 2020 at 3:08 PM

Draft
Forwarded message
From: Andrew Berkowltz <andrew@zayatstables.com>
Date: Tue, Jan 2, 2018 at 11:59 AM
Subject: FW: Issuer Reminder: Effective 2018/01/02 -> Statement -> Zayat Stables, LLC -> Senior Secured Term
Loan
To: Joseph Vann <Jvann@ctswlaw.com>, Office <office@zayatstables.com>
—Original Message—
From: Dane Joella [mailto:djoella@mgginv.com]
Sent: Tuesday, January 02, 2018 11:58 AM
To: Andrew Berkowitz
Cc: Felix Zhang
Subject: RE: Issuer Reminder: Effective 2018/01/02 -> Statement -> Zayat
Stables, LLC -> Senior Secured Term Loan
Thanks Andy. I'm going to have to walk Kevin through what happened on the
carry over / overpayment in a little more detail when he's back but can
definitely confirm on the Solomini paydown understanding. In general, I
think we were looking to set up a January meeting (I previously sent Justin
the 16-19th, and 23-25th as Kevin's best days)though to touch base more
broadly.
Dane
From: Andrew Berkowitz[mailto:andrew@zayatstables.com]
Sent: Tuesday, January 02,2018 11:50 AM
To: Dane Joella <djoella@mgginv.com>
Cc: Felix Zhang <fzhang@mgginv.com>
Subject: Re:[Extemal] Issuer Reminder: Effective 2018/01/02 ->
Statement -> Zayat Stables, LLC -> Senior Secured Term Loan
Dear Dane,
Yes, we are in receipt of the invoice removing the scheduled amortization

payment. Thank you. We will be wiring payment shortly.
Also, I wanted to confirm our understanding that that we have a carryover

credit now from 2017 principal paydowns(those in excess of the Section 2.03
required quarterly amortization payments)to be credited towards the 2018
required paydowns. We calculate $914,765.63 of overpayment has been made in
https://mail.google.com/mail/u/0?ik=8c3e009c02&vievir=pt&search...%3A1588500733254745612&simpl=%23msg-a%3Ar-81164g8527044294378 Page 1 of 2
Zayatstables.com Mail - FW: Issuer Reminder: Effective 2018/01/02 -> Statement -> Zayat Stables, LLC -> Senior Secured Term Loan 1/23/20, 3:09 PM
2017 which will be applied and credited towards the 2018 scheduled
amortization requirements pursuant to Section 2.03, in addition the $800k
864CAFBE-038F-48F0-8D70-BC064900B90D : 000077 of 000114

Solomini sale paydown being made today which will also be credited and
applied towards the required 2018 amortization payments pursuant to Section
2.03. Kindly confirm this is your understanding as well.
I will let you know as soon as the payment has been wired out.
Best regards,
Andy
To: Andrew Berkowitz
Cc: Felix Zhang
Subject: FW: Issuer Reminder: Effective 2018/01/02 -> Statement -> Zayat
Stables, LLC -> Senior Secured Term Loan
Andy - In case it didn't come through, the updated statement is attached

with just the Solomini sale paydown (no $1.5mm amort) and interest.
Dane
From: Activity-NoReply@markitwso.com [mailto:Activity-NoReply@markitwso.com]
Subject:[Extemal] Issuer Reminder: Effective 2018/01/02 -> Statement ->
Zayat Stables, LLC -> Senior Secured Term Loan
Issuer Reminder: Statement

Effective Date: 1/2/2018
Issuer: Zayat Stables, LLC
Facility: Senior Secured Term Loan
Credit Date: 7/26/2016
Justin Zayat Racing and Stallion Manager, Zayat Stables LLC

Tel: 201-518-1800
|Mobile: 201-835-4229
Justin@zayatstables.com|www.zayatstables.com
https://mail.google.com/mail/u/0?iks8c3e009c02&view=pt&search...%3A1588500733254745612&simpl=%23msg-a%3Ar-8116498527044294378 Page 2 of 2
Exhibit 2 - D. Joella Email, Jan. 24, 2018, 1:57 p.m., Email Thread
864CAFBE-038F-48F0-8D70-BC064900B90D : 000078 of 000114

864CAFBE-038F-48F0-8D70-BC064900B90D : 000079 of 000114
From: Dane Joella <djoella@mgginv.com>
Date: Fri, Jan 26, 2018 at 9:49 AM
Subject: Equine Portfolio Update
To: Justin Zayat <justin@zayatstables.com>, Felix Zhang <fzhang@mgginv.com>
Does it still work if we start at noon? Potentially gives us a few more minutes but I’ve got to head out of the office at
~12:45
_____________________________________________
From: Justin Zayat [mailto:justin@zayatstables.com]
Sent: Thursday, January 25, 2018 7:02 AM
Cc: Ahmed Zayat <jazz@zayatstables.com>; Kevin Griffin <KGriffin@mgginv.com>
Subject: Re: [External] Equine Portfolio Update
1
30 min should be enough time to discuss after you will receive me email. If needed, we can schedule another
call on Monday. I can't do 3:30PM as I will be heading home for Shabbat at that time to head to Synagogue.
864CAFBE-038F-48F0-8D70-BC064900B90D : 000080 of 000114

I was disappointed in your tone in your email. The claims were based on factless information. Just unnecessary
drama like what happened with the amortization payment at the end of last month. I will send you email and it
will all be clear.
Looking forward to talking.
Justin
On Wed, Jan 24, 2018 at 11:56 PM, Dane Joella <djoella@mgginv.com> wrote:
I'm free all morning but that doesn't work for Justin. I can speak after 330 if that works for Justin
Dane Joella | djoella@mgginv.com | 917-370-9399

-------- Original message --------
From: Ahmed Zayat <jazz@zayatstables.com>
Date: 1/24/18 10:41 PM (GMT-05:00)
To: Dane Joella <djoella@mgginv.com>, Justin Zayat <justin@zayatstables.com>
Cc: Kevin Griffin <KGriffin@mgginv.com>
Then what do you propose ? naturally schedule another follow up !!!

Sent: Wednesday, January 24, 2018 10:31 PM
To: Justin Zayat
Cc: Ahmed Zayat (jazz@zayatstables.com); Kevin Griffin
Subject: Re: Equine Portfolio Update
I can speak 1230 to 1 but im not sure that will be enough time
Dane Joella | djoella@mgginv.com | 917-370-9399
-------- Original message --------

From: Justin Zayat <justin@zayatstables.com>
2
Date: 1/24/18 8:46 PM (GMT-05:00)
Cc: "Ahmed Zayat (jazz@zayatstables.com)" <jazz@zayatstables.com>, Kevin Griffin
864CAFBE-038F-48F0-8D70-BC064900B90D : 000081 of 000114

<KGriffin@mgginv.com>
Dane,
I am landing at 7:45am. I want to get to office and get all the breakdown on all the 21 horses and send you an
email so you can have it all in front of you so when we talk we can have an intelligent conversation with all the
facts. I think there is a lot of misunderstanding you are inferring to from my emails, so maybe when you have
all the facts about the 21 horses you will understand. As I told you before majority of the horses were claimed,
given away, and very few numbers were sold in public auction, where proceeds were not received yet.
Everything will be clear. I will promise you that much.
Anytime between 12-2PM for the call.
You will get back very comfortable with your loan.
Best,
Justin
10am Friday?
Dane A. Joella | MGG Investment Group, LP
888 Seventh Avenue[maps.google.com] | 43rd Floor | New York, NY 10106

Office: (212) 356-6104 | Mobile: (917) 370-9399
djoella@mgginv.com

3
Cc: Ahmed Zayat (jazz@zayatstables.com) <jazz@zayatstables.com>; Kevin Griffin <KGriffin@mgginv.com>
864CAFBE-038F-48F0-8D70-BC064900B90D : 000082 of 000114

Dane,
Calm down. I disagree with everything you are saying from A to Z. All horses that were sold were
entered in the public sales and you and felix were notified about when they were entered. Equineline
sends notices every single sale and their results right after. I am not at all telling you that all the 21
horses were sold. In fact, from memory less than 1/2 I can’t give you half information. I simply don’t
have all the information in front of me.
I am happy to discuss this all in Friday with you. There is no reason to escalate this or put the panic
button on! I am more than confident after our conversation you will understand it all.
Let me know on Friday when works for you.
Justin
Justin,
You’re not getting it. The list of horses below represents 21 defaults of your loan agreement with us. Any time a horse is
bought / sold (or any other Equine Agreement) we’re required to be notified ASAP, with a maximum of five days. This is
far from the first time I’ve told you and / or Andy this.
More importantly, those 21 horses represent $5.5mm of appraised value of which we have not received our 40%
mandatory prepayment (based on whatever you sold them for). Given these sales happened as far back as November
(really?!?) and you’ve certainly received proceeds, that constitutes a payment default since you and Andy didn’t let us
know and arrange for payment on either of the two succeeding monthly interest bills as we’ve done in the past.
Principal payment defaults have no grace period and constitute an Event of Default without any notice from MGG.
Please don’t consider this exhaustive, but these are a few other defaults, so we’re on roughly the same page:
1. Czarina – Given her appraised value is greater than $1mm, this is a Material Sale. If the sales price was less than
90% of the appraised value this would’ve required our approval in advance and even if the 90% threshold was exceeded
we still never received subsequent notice and paydown. Further, Equibase lists Czarina as being owned by a partnership
including Ahmed personally (not Zayat Stables) which would be an affiliate transaction which isn’t permitted
2. Goff’s Bloodstock – We’ve talked about this in the past. The $1.3mm loan is not permitted (only have a $100k
basket for purchase money indebtedness) under our agreement. It’s incurrence would have again been a mandatory
paydown of our loan which obviously hasn’t been made
4
3. Solomini – Entering into an Equine Agreement that prohibits its disclosure to MGG is prohibited under our
agreement
864CAFBE-038F-48F0-8D70-BC064900B90D : 000083 of 000114

The attitude that “MGG is covered so I don’t have live by the agreement” seems to have become routine for Zayat
Stables and is the reason why I reached out (without reply) to try to schedule a meeting with you, Ahmed, and Kevin. If
you’re not willing to abide by the agreement, you should find a lender to refinance us.
Lastly, given there’s apparently $5.5mm of assets coming off the books, I’d wouldn’t be that cavalier about thinking
you’ll remain in compliance with the LTV covenant even with the Solomini 50% stake being marked at $2mm – depends
a lot of what you sold them for. We should have our 6 month appraisal update from Pat Payne this week and will revert
on that front.
I’ll discuss with Kevin what next steps are, but in general, I’ve been the member of the MGG team advocating for
flexibility for Zayat Stables and I don’t expect to continue doing that.
Best,
Dane

Cc: Felix Zhang <fzhang@mgginv.com>; Andrew Berkowitz <andrew@zayatstables.com>
Dane,
Andy is away on vacation until the 28th. All NJ jewish schools are on vacation this week Jan 15-28th. I will
come back with you on Friday as I said earlier, thats the earliest I can do. That is as priority as it can get!
On a side note: Our collateral is beyond sufficient and compliant for the current loan size of 26M! There have
been ample upgrades in performances on the track this year since last appraisal. It's not the number of horses,
It's the quality of the horses we are holding. You have zero to worry about. You will be able to see that
yourself! Horses get injured and some have layups and some retire. Some we simply give away because they
are of zero value and only overhead for the company.
Best,
Justin
5
There’s 21 horses listed below that sound like they are no longer collateral. This should be more of a priority than that.
864CAFBE-038F-48F0-8D70-BC064900B90D : 000084 of 000114

Andy, can you take a first cut?
From: Felix Zhang

To: Justin Zayat <justin@zayatstables.com>
Cc: Andrew Berkowitz <andrew@zayatstables.com>; Dane Joella <djoella@mgginv.com>
Subject: RE: [External] Equine Portfolio Update
Justin,
That sounds good. Thanks for the help
Best,
Felix

To: Felix Zhang <fzhang@mgginv.com>
Hey Felix,
Let me get this to you on Friday, I'm in FL today. I’ll be back in office Friday and will research to get you exact
figures. The last list was easy off the top of my head. These were all done in Nov and as recent as last week so I
want to make sure I have all accurate figures.
Thanks,
Justin
Sent from my iPhone
On Jan 24, 2018, at 11:31 AM, Felix Zhang <fzhang@mgginv.com> wrote:
Justin,
Thanks for the update! We just reviewed the equineline list and could you provide some update on the following horses
(missing from equineline vs. our internal list) as well? Thanks!
6
Broodmare
• Czarina
864CAFBE-038F-48F0-8D70-BC064900B90D : 000085 of 000114

• Emmzy
• Empire City (JPN)
• Joanne Jubilation
• Joannie
• Queen Emma
• Red Cognac
• Tamar
Yearlings
• Paynter--Bullet Sister
• Paynter- -Just Keep Singing
• American Pharoah--J Z Now
• Paynter--Red Cognac
3yos + horses in training

• POTN / Joanne Jubilation
• Lady Margaret
• Fast Bullet – Roehoee
• Zoffany / Happy Town
• Confidential
• Perplexed
• My Sweet Stella
• Alpha Team
• Just Been Jammin
Best,
Felix

Sent: Wednesday, January 24, 2018 10:26 AM
To: Felix Zhang <fzhang@mgginv.com>
Gentlemen,
7
Hope all is well. See below:
864CAFBE-038F-48F0-8D70-BC064900B90D : 000086 of 000114

15 Pay Lady- Unfortunately, he died galloping at Winstar. He was uninsured. Sad loss
• Annihilator: He is training at Winstar Farm!
• Benjamin Daniel: His name is Siena Magic, He is also at Winstar Farm. Heading to Todd Pletcher this month.
• Divine Shift: He was retired to a home due to a bowed tendon injury.
• Grammajo: She is training at Eddie Woods. Should head to a trainer in mid march.
• Key to the Nile: He is training at Bob Baffert
• The Lincolnator: He was given away due to injury.
• Lucky Lukie (GB): He is training at Brad Cox
• Mezinka: She is a broodmare and will be bred this coming breeding season.
• Nomee: She is a broodmare and will be bred this coming breeding season.
• One Mo Chance: He was retired to New Vocations.
• Presidential oath: He is training at Bill Mott
• Run Blondie Run: She runs on Thursday at Gulfstream! I like her chances.
• Shlee: She is a broodmare and will be bred this coming breeding season.
• Take Notice: He is training with D. Wayne Lukas about 2-3 weeks from a race.
• Thirtysevenliveson: He was retired to New Vocations.
• Zeesha: He is training at Winstar.
8
864CAFBE-038F-48F0-8D70-BC064900B90D : 000087 of 000114
On Tue, Jan 23, 2018 at 7:13 PM, Felix Zhang <fzhang@mgginv.com> wrote:
Justin,
Hope everything is well. When you get a chance, could you provide some update on the following horses?
Please also let us know if there’s any major update that we missed. Thanks
• 15 Pay Lady
• Annihilator
• Benjamin Daniel
• Divine Shift
• Grammajo
• Key to the Nile
• The Lincolnator
• Lucky Lukie (GB)
• Mezinka
• Nomee
• One Mo Chance
• Presidential oath
• Run Blondie Run
• Shlee
• Take Notice
• Thirtysevenliveson
• Zeesha
Best,
Felix
Felix Zhang | MGG Investment Group, LP
888 Seventh Avenue[maps.google.com] | 43rd Floor | New York, NY 10106

Office: +1 (212) 356-6114 | Mobile: +1 (919) 413-8373
fzhang@mgginv.com
9
--
864CAFBE-038F-48F0-8D70-BC064900B90D : 000088 of 000114

Justin Zayat Racing and Stallion Manager , Zayat Stables
LLC
Tel: 201-518-1800 | Mobile: 201-835-4229
Justin@zayatstables.com | www.zayatstables.com
--
LLC
Tel: 201-518-1800 | Mobile: 201-835-4229
10
Exhibit 3 - J. Zayat Email to D. Joella, Jan. 26, 2018 11:19 a.m.
864CAFBE-038F-48F0-8D70-BC064900B90D : 000089 of 000114

864CAFBE-038F-48F0-8D70-BC064900B90D : 000090 of 000114
Date: Fri, Jan 26, 2018 at 11:19 AM
Subject: Equine Portfolio Update
To: Dane Joella <djoella@mgginv.com>, Felix Zhang <fzhang@mgginv.com>, Kevin Griffin <KGriffin@mgginv.com>
Cc: Ahmed Zayat <Jazz@zayatstables.com>, Glenn Weiss <glenn@zayatstables.com>, Andrew Berkowitz
<andrew@zayatstables.com>
Dear Dane,
As I promised, I am providing along with this email a comprehensive spreadsheet addressing each of the 38
horses you asked about late this past Wednesday in your emails below. The answer to each of your questions
is straightforward as I stated in my previous emails, ie. each of these 38 horses are still in training, or were
either publicly claimed, publicly sold, sold by the majority control partner (not us), injured and then given away
for retirement, or died. This all took place in very recent months, and as we have done so throughout the term
of the loan, all activity was going to be reported timely on quarterly reports.
Your emails are particularly upsetting given you are always given the facts by us in our quarterly reports under
the loan and any other time you ask, but even more, because Zayat Stables has always provided you and
MGG with complete access to EquineLine (and you also receive daily email updates from EquineLine -- in
addition to being able to access the portal independently any time you want).
As for your questions regarding the “sales” of these 38 horses:
Yes, there were “sales”, but only of 14 horses, with sales proceeds of $1,126,166. As you will see on the
spreadsheet, each of these horses were either sold in January 2018 or the 4th quarter of 2017 and therefore
the 40% split is not yet due and will only come due when the proceeds have been paid to Zayat Stables – at
which time Zayat Stables will pay the 40% share to MGG in a timely manner.
As you are aware, Keeneland and Fasig-Tipton take up to 60+ days to send funds to our consignors and then
it takes the consignors another 15-30 days to send out funds and for us to finally receive our proceeds. And
once we receive the funds, the total splits due still need to be adjusted for true net proceeds as has been the
practice since the inception of the loan.
Of the remaining horses, 3 died, 2 were claimed, 7 were injured (and rehabilitating or retired), 8 are still active
and in training and 4 are transitioning to broodmares this upcoming breeding season.
1
All of the detail is on the attached spreadsheet and in the email I already sent you Wednesday. I’m happy to
discuss all of the above with you and answer any and all questions when we speak later today.
As for the collateral base, since last July’s appraisal we had 49 two year olds enter training for what has proven
864CAFBE-038F-48F0-8D70-BC064900B90D : 000091 of 000114

to be a phenomenal crop. Of the 49 horses only 26 have started and of those we had several G1 placed
horses such as Solomini and Zatter as well as numerous stakes horses, Gidu, Irish Territory, Sassy Sienna,
Mojovation, Ezmosh, and Danyelli. We are certain that our assets have increased substantially, I will be happy
to give you plenty of detail during our conversation.
As to your specific references to Czarina, Goff’s Bloodstock and Solomini:

Czarina: Czarina was at all times majority owned by Coolmore, which made all decisions throughout the
horse’s training and co-managed, by Zayat Stables. All publicity regarding the purchase and sale of Czarina
accurately reported the 25%, not 100%, interest of Zayat Stables, as does the Equineline schedule in the
original MGG Security Agreement. So, when she was sold by Coolmore, it was directly arranged and controlled
by Coolmore, owner of 75% of the horse. Our 25% interest was valued at $261,000 of actual proceeds (not a
“material” sale of over $1MM). Somehow you forgot all the information in your possession that we only and
always have owned a 25% interest.
Goff’s Bloodstock: As discussed previously, this was an important overseas acquisition of a prized horse for
which we are paying according to standard terms provided by the Irish auction, no different than any other
stable and the same as we did last year. This will be paid in the ordinary course pursuant to ordinary terms.
Solomini: Zayat Stables provided you a copy of the agreement before it was signed, despite the
confidentiality provision (without confidentiality provisions, it’s almost impossible for us to make any stallion
deals in this industry). It is unclear to me why this is even getting brought up. This honestly makes me
question your motives here.
Also we did respond to your request for a meeting. When you sent the original request I was in Australia for
business and the dates you offered for Kevin’s availability were directly during my younger sibling’s school
vacation. Since my dad and family would be away at that time, my dad offered to meet perhaps earlier or in the
beginning of February as we are now confirmed to do.
Finally, I have been thinking a lot about the year end scheduled amortization “confusion.” Our business was
severely harmed by this “error” as we held back from certain purchasing opportunities and prematurely sold
other horses because of the error in your application of payments and what we were told we owed in
scheduled amortization.
We overpaid you based on our agreement in October and we were still billed incorrectly in December. Did we
accuse you in December of defaulting under the agreement on account of the improper billing and failure to
apply payment properly? Did we insist MGG take immediate responsibility for the mistakes you had made or
that were made on your watch? Obviously, the answer is no, because we want to work together professionally
as borrowers and lenders to share information and work towards a common goal, even if that means we lost
opportunities on account of MGG’s mistakes. It was my lawyer that had to bring the correct loan provisions to
your attention so that MGG could correct its significant mistake.
I hope we can now shift back towards ONLY productive conversations and mutual efforts to deal with real facts
so we can constructively and productively move forward under the loan agreement. There have been so many
improvements in your position over these past 6 months as a lender, both from paydowns from dispositions
that reduced other scheduled amortization and reduced the principal balance even further. And, as our horses
continue to perform remarkably, you will see a nice uptick in the overall value of your collateral when the time
comes for another appraisal once the foals are on the ground and our next crop begins to train.
We can discuss this and the attached spreadsheet on our call later today. I look forward to a productive chat
and I hope your email earlier this week was just an anomaly that we can move past immediately.
Regards,
Justin
--
LLC
2
Tel: 201-518-1800 | Mobile: 201-835-4229
864CAFBE-038F-48F0-8D70-BC064900B90D : 000092 of 000114

--
LLC
Tel: 201-518-1800 | Mobile: 201-835-4229
--
LLC
Tel: 201-518-1800 | Mobile: 201-835-4229
3
Exhibit 4 - mail from Zayat Stables to Dane Joella and
864CAFBE-038F-48F0-8D70-BC064900B90D : 000093 of 000114

Felix Zhang of MGG in October 2017 regarding
the sale of EL KABEIR to Yeomanstown Stud
864CAFBE-038F-48F0-8D70-BC064900B90D : 000094 of 000114
Date: Tue, Oct 24, 2017 at 10:24 AM
Subject: Just a heads up!
Cc: Felix Zhang <fzhang@mgginv.com>, Office <office@zayatstables.com>
Dear Dane,
Hope all is well, excited to share some good news with you.
We were able to finally find a good home for El Kabeir to begin his stud career. He will stand in partnership with us at a
boutique farm in Ireland known as, "Yeomanstown Stud."
There's a lot of rationale behind going to Ireland. As you know he's a son of the late Scat Daddy who while alive was one
of the industry's hottest stallions. El Kabier is now one of Scat Daddy's most accomplished and most desirable sons at
stud.
As we remain partners in the horse we want him to have the best opportunity to achieve success as a stallion. Standing
in Ireland will assist in making that happen because the quality of the mares he will be breeding to there will be of
superior quality compared to the mares he would attract standing here at home at the price range he will stand.
El Kabeir was known to be a versatile horse and a standout on grass just like his sire, Scat Daddy. Scat Daddy during his
racing career had a massive Royal Ascot meet, which to this day helps fuel the European interest in El Kabeir.
https://www.bloodhorse.com/horse-racing/articles/222267/scat-daddy-dominates-royal-ascot
Yeomanstown Stud has a great record of building up their stallions from nothing, most famously with Dark Angel, who
began his career standing for $10k and now is standing at $65k . We want to make sure our equity in EK turns into real
cash (similar strategy as with Prayer For Relief).
I'll give you further details next week as we're in the process right now of working on a budget for them for advertising,
infertility insurance, and quarantine/shipping costs to Ireland.
1
Any questions please just let me know.
Best,
864CAFBE-038F-48F0-8D70-BC064900B90D : 000095 of 000114

Justin
Here is the press release: https://www.theirishfield.ie/el-kabeir-usa-to-stud-in-ireland-318373/
--
LLC
Tel: 201-518-1800 | Mobile: 201-835-4229
--
LLC
Tel: 201-518-1800 | Mobile: 201-835-4229
2
Exhibit 5 - copy of press release found at
864CAFBE-038F-48F0-8D70-BC064900B90D : 000096 of 000114

https://www.theirishfield.ie/el-kabeir-usa-to-stud-in-ireland-318373/
(last visited Mar. 18, 2020)
864CAFBE-038F-48F0-8D70-BC064900B90D : 000097 of 000114
864CAFBE-038F-48F0-8D70-BC064900B90D : 000098 of 000114
864CAFBE-038F-48F0-8D70-BC064900B90D : 000099 of 000114
Exhibit 7 - Jan. 16, 2020 11:30 p.m. email from J. Vann to A. Harris
864CAFBE-038F-48F0-8D70-BC064900B90D : 000100 of 000114

Zayatstables.com Mail - FW; Cooperation Agreement 1/23/20, 5^08 PM
864CAFBE-038F-48F0-8D70-BC064900B90D : 000101 of 000114

Justin Zayat <jiistin@2ayatstables coiti>
FW: Cooperation Agreement

Joseph Vann <jvann@ctswlaw.com> Thu, Jan 16, 2020 at 11:30 PM
To: "Harris, Adam" <Adam.Harris@srz.com>
Cc: Patrick Flynn <PFIynn@mgginv.com>, Ahmed Zayat <jazz@zayatstables.com>,"justin@zayatstables.com"
<justin@zayatstables.com>, "Ragucci, Frederic" <Frederic.Ragucci@srz.com>
I spoke to Ahmed so we can get comments to you this evening as you requested. Zayat is prepared to sign the
Cooperation Agreement with attached changes.
You will see one common theme is that if Zayat is being asked to step aside and turnover complete control of Zayat
Stable and collateral to Cromwell (which this agreement clearly does)then he cannot be responsible for the actions of
Cromwell. To Zayat there have already been prior basis for him to mistrust MGG (such as, among other things, prior
overbilling and overcollection that MGG previously admitted), he cannot now turn over complete control to someone
(Cromwell) he feels is not competent to make the best decisions to maximize the value of the collateral without being
protected from that person's actions in the name and stead of Zayat Stables and also from any deficiency If that
person does not act in a commercially reasonable manner.
We look forward to wrapping this up in the morning.
Regards.
Joseph M. Vann (bio)
Cohen Tauber Spievack & Wagner P.O.
Partners in Your Strategic Vision
420 Lexington Ave., Suite 2400
New York NY 10170-2499
Direct:(212)381-8724
Fax:(212)428-6737
Cell:(917)757-8933
jvann@ctswlaw.com
https;//mail.google.com/mail/u/07ik=8c3e009c02&view=pt&search...msg-f%3A1655948393520042270&simpl=msg-f%3A1655948393520042270 Page 1 of 2
Zayatstables.com Mail - FW: Cooperation Agreement 1/23/20, 5:08 PM
www.ctswlaw.com
864CAFBE-038F-48F0-8D70-BC064900B90D : 000102 of 000114

[Quoted text hiidden]
Cooperation Agreement(00408095-3).docx
68K
https://mail.google.com/mail/u/0?ik=8c3e009c02&view=pt&search...msg-f%3A1655948393520042270&s[mpl=msg-f%3A1655948393520042270 Page 2 of 2
Exhibit 6 - Zayat Stables Business Checking Statements
864CAFBE-038F-48F0-8D70-BC064900B90D : 000103 of 000114

from First Republic Bank
lls a privilege 1<»senxyou *
Statement Period:
BUSINESS ANALYZED CHECKING
864CAFBE-038F-48F0-8D70-BC064900B90D : 000104 of 000114

December 01,2018
December 31,2018
Account Number:
XXX-XXX6-2715
ZAYATSTAHLt:S.IJ.C
Page 3 of9
Account activity
DATH DKSCRII'-IION
AMOUNT
Deposits and Credits(continued)

12/04 RHMOIHDi.l'OSri
$127,449.44
12/12 Dhl'OSri -WIRHI)FUNDS $10,000.00
.lOANNHZAYAT
12/12 RF;M()iH;i)FK)sir $471.16
12/12 RhMO'l F: DHK)SIT

$2,424.78
12/12 RHMOrKDKPOSn-
SLS.OOO.OO
12/12 RHMorHDHmsn $24500.00
12/17 rf:moi f; df:i>()sit

$.L360.()0
12/17 RHMO'i f: df;k)sit

$8..S72..'iO
12/19 rf;m()if:i)f;k)sit S86.62.L7I
12/20 DHIÔSIT WIRHD FUNDS $2.19.0.11.28

W S FARISH I.ANF.S KND FARM
12/21 DFH)SIT-WIRF:D FUNDS $.10,000.00
100000 HQUHSTRiS LTD INC
12/21 df;i»osit-wirf:d funds $60,000.00
DAVID A iJHRNSHN LLC
12/24 rkmotf; DF:i»()sn $68.88
12/24 KF;M()"rF:DF;K)srr $.5,000.00

12/24 rhmoff; DKmsri' $8.4.1.5.00
12/24 rkmotf; DFi'osir $.100,000.(8)
12/28 INIHRNKI IRANSFHR $200,000.00

FROM DDA//XXXXXXX5729 0N 12/28 AT I I Jl
111 riNi vriu:iri. san ibancisco. caliiobnia(wm.ti;l Ui ô2-uoo oh i-Xoo-102-1400

A A .
lls a privilege Id sen'e y(*i *
BUSINESS ANALYZED CHECKING Statement Period:
864CAFBE-038F-48F0-8D70-BC064900B90D : 000105 of 000114

December 01,2018
December 31,2018
Account Number:
XXX.XXX6-2715
ZAYATSTABLKS.LLC
Page 4 of9
Account activity
DAIH DhSCRiniON
AMOUNT
Dcposils and Credits(continued)
12/31 INI HRNKI 'I RANSHKR ^1^3" S595.(X)0.00
FROM l)l)A//XXXXXXX5729()N 12/31 AT08 31
12/3! DHKisrr-wiRHn rinds
$17,675.00
rAm'AI.MKRCHANrSHRViCHS LLC
Total Deposits and Credits
$lji323>26.75
Withdrawals and Debits
12/03 DOMKSTIC WIRK FUNDS DHOIT
$2,077.33-
M(j(i SF HVF:R(iRF;F;N llNr>:VF:RKD MASTKR F
12/03 DOMFS I IC wirf: FUNDS-DFBIT
$6,942.09-
M(i(; CANADA RIND LP
12/03 DOMKSTIC WIRH FUNDS DHBIT
$.382I I.16-
MClC SF HVKRCiRKKN MASTKR FUND CAYMAA
12/03 DOMKSTIC WIRK FUNDS-DKBIT
$28,076.09-
MUG SFKVKRGRKKN UNLHVKRKD FUND LP
12/03 DOMKSTIC WIRK RINDS-DKBri"
.$ I.53.981 .97-
M(iG BVl LIMITKD
12/03 DOMKSTIC WIRK R INDS-DKBCf
$.34,624.20-
M(i(i SF DRAWDOWN MASTKR FUND CAYMANN
12/03 DOMKSTIC WIRK FUNDS-DKBIT
$5,824.02-
100000 M(i(j INSURANCK FUND SKRIF:S IN'I KRKSTS
12/03 DOMKSTIC WIRK FUNDS-DKBD
$23.423..57-
MUG SF DRAWDOWN UNI.KVKRKD FUND LP
12/03 ACH DKBIT
$17,495.00-
AI)VANCKMKRCHSOI7ACHPAYMKN r ID//W046
12/04 ACH DKBIT
$649.00-
InCiiiHi/Aulo U'asc ID//29010139547
12/03 DOMKS riC WIRH FUNDS-DKBi r
$9.0{K).00-
GLKNN WHISS
12/05 DOMKS I IC WIRK FUNDS-DKBIT
$4,000.00
JOANNKZAYAT
12/06 DOMKS nC WIRH FUNDS-DKBIT
$6.0(K).00
.rOANNKZAYA'l
12/06 ACH DKBIT $590.00-
Inllniti/Aulo Lease ID//290I0I I6866
I I I I'INI; SllU-.hl. SAN IIIANCISCD. CALHORNIA Qdl 11. HiL Ol S) 102-1400 OH I-SOO-1<)2-1400
Account Statement V Fikst Rkpublk: Bank
Ilk a privilege U»serve you "
864CAFBE-038F-48F0-8D70-BC064900B90D : 000106 of 000114

BUSINESS ANALYZED CHECKING Statement Period:
April0I,20l9-
April30, 2019
Account Number:
XXX.XXX6.2715
ZAYAT STABLES.LI.C
Page 3 of 10
account activity
DATE DESCRIPTION
AMOUNT
Deposit und Credits
U4/0I INTERNET TRANSI ER 2 1iK45.(XK).{KI
l-ROM DDAtfXXXXXXX5729ON04/01 AT II 04
04/01 INTERNET TRANSEER $.1.(XK),()0
FROM DDA#XXXXXXX5729 ON 04/01 AT 11 10
04/01 REMOTE DEPOSIT
$4,890.00
$2,121.25
$2.400.(H>
$2.2(H).0()
04/15 INreHNiri TRANSl KR £(? $742.(KH).(X)

FROM DDA#XXXXXXX57290N 04/15 AT 11.11
04/15 remote: deposit
$21,412.00

$28,896.2!
04/15 remote DEPOSIT
$.1|J«K).(K)

$5,768.00
lOOOOO
$2..5(M).00

.$9.(XX).00

$1,700,987.46
Withdrawals and Debit.s
04/01 DOMESTIC WIRE l-UNDS-DEBIT
$25.0(X).{X)-
JUSTIN ZAYAT
04/01 DOMESTIC WIRE FUNDS-DEBIT
$203(X).{K)-
GLENN WEISS
$46,412.10-
MGG SF DRAWDOWN UNLEVERED FUND LP
I I J r-INI Sim-.lil. SAN lUANClSCO. CAlll tmNIA iJAii I. Il l (415).Iy3-I400 fill l-K0O-J|y2-I4OO
24 llfHIIJ Ai;iOrMAII-.l) UANKINC SVSlhM 1-X00-.Iy2-I407
wvvw.nrslrcpublic.com • MI;MBI-;K I DIC FRB 30a - VIO
Account Statement V First Republic Bank
It s n privilege 1o serve you'
864CAFBE-038F-48F0-8D70-BC064900B90D : 000107 of 000114

Statement Period:
May 01,2019-
May3I,20I9
Account Number:
I o XXX-XXX6.2715
o o
ZAVAT STABLES,LLC
o o 401 HACKENSACK AVK„SUITE 703 At Your Service:
1IACKENSACK.NJ 07601 24-Hour Automated Ranking System
(800)392-1407
nnclosiires 1 1 Page I of9

News from First Republic
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options. By refinancing, you could get out of debt sininer or lower your monthly payment. Know someone with student
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account Summary XXX.XXX6-2715

Beginning Balance -$9.4I2..30- Average Daily Balance $14,786.11
Total Deposits and Credits $939,745.23 Minimum Balance $45,4.18.(2-
Total Withdrawals and Debits $868,867.08- Service Charges $621.12-
Total Checks Paid $54.58730- Interest Earned This Period $0.(N)
Finding Rutuncc $6,878.65 interest Year lo Date $0.(K)
CHECKS PAID * Gap in clicck secpicncv
NUMBER DATE AMOUNT NUMBER DATE AMOUNT
*204.1 05/03 $700.00 2055 05/21 $1,722.83

20.50 05/03 $3362.88 2056 05/15 $467.86
2051 05/21 SI2.440.(K) 2057 05/28 $1,925.(8)
2052 05/21 $16,920.52 2058 05/20 $1,840.(8)
2053 05/21 $10340.25 2059 05/31 $467.86
20.54 05/15 $2_5(H).00
ACCOUNT ACTIVITY
DATE DHSCRimON
AMOUNT
Deposits and Credits

05/02 INTERNET TRANSFER .$.17nXM).(X)
FROM DDA#XXXXXXX.5729 ON 05/02 AT 0«.I0
05/0.1 REMOTE DEPOSIT
,.,$42,505.04.
I I I IMNI: MUl.EI, SAN IRANCISIiO, < Al.irOIIMA 941 I I. I El. (4I S).192-1400 OR I-HUO-39i-I4OO
24 HOUR AUrOMAIEtl BANKI.NC SVSJhM I-S00-.ty2-I407
www.nr.slrcpublic.com- MI-MBFIR l-DIC FRB 30e -5't0
Account Statement V First Rrpuhlk; Bank
ll^ ii privilege to serve you'
864CAFBE-038F-48F0-8D70-BC064900B90D : 000108 of 000114

Statement Period:
June 01,2019-
June30,2019
Account Number:
XXX.XXX6.27I5
ZAYAT STABLKS.I.LC
Pajie 3 of 8
ACCOUNT Activity
DATE DESCRIPTION
AMOUNT
Depasils ami Credils(continued)
06/06
SPRINOCON APgR $742.(KH).(M)
52.405.00
$2,772.01
$25jOI5.02
06/13 Rl-MO'IT DEPOSIT
546.405.(K)
06/13 REMCrni DEPOSIT
$74,415.00
06/17 DEPOSIT-WIRED FUNDS
$30j0(X).(H)
JUSTIN ZAYAT
$3305.24
$10j()I7.25
51.319.00
06/24 DEPOSIT-WIRED FUNDS .57IJ(.3K.(X)

FASIGTIFrON COMPANY INC
06/26 ACH CREDI T
$.357.01
LATC/EATC Hcade IDi?526l8007
$1,124,21334
Withdrawals and Debits
.$5.0(X).00-
JUSTIN 2AYAT
$20.5(X).(K)-
GLENN WEISS
06/03 ACU DEBIT
513(M).00-
BK OF AMER VI/MC/ONLINE PMT ID//CKF968777670POS
06/04 ACH DEBIT
.5649.00-
Infiniii/Aulo lîisc ID#29010)3y547
tl I I'lNLMItl-hl. SAN IMANClSeO. CAIIIOKNIA 1)41 ii. tH (4 1 5) .ty2-t4rX) OU 1-800-392-1400

24 llOUlt AUIOMAIkD HANKINI. SYMliM t-800-3«^2-1407
www.firstrcpublic com • MRMBIlR l"l)ic FRB 30e -yi0
Exhibit 8 - Jan. 21, 2020 2:48 p.m. email from J. Vann to A. Harris
864CAFBE-038F-48F0-8D70-BC064900B90D : 000109 of 000114

864CAFBE-038F-48F0-8D70-BC064900B90D : 000110 of 000114
From: Joseph Vann <jvann@ctsw!aw.com>
Sent: Tuesday, January 21, 2020 2:48 PM
To: Harris, Adam
Cc: Ragucci, Frederic
Subject: RE: Cooperation Agreement
When we spoke Friday you said SRZ had been going back and forth with MGG re comments we provided Thursday
evening and there was nothing yet you could discuss with me. You said you would let me know as soon as there is
something from MGG to discuss and that we would probably speaking Sunday/Monday. Given it is now Tuesday, I
thought it appropriate to reach out to you and see where the matter stands in terms of the comments and speak about
we can finalize the agreement today or tomorrow?
From: Joseph Vann

Sent: Thursday, January 16, 2020 11:30 PM
To: Harris, Adam <Adam.Harris@srz.com>
Cc: Patrick Flynn <PFlynn@mgginv.com>; Ahmed Zayat <jazz@zayatstables.com>; justin@zayatstables.com; Ragucci,
Frederic <Frederic.Ragucci@srz.com>
I spoke to Ahmed so we can get comments to you this evening as you requested. Zayat is prepared to sign the
Cooperation Agreement with attached changes.
You will see one common theme is that if Zayat is being asked to step aside and turnover complete control of Zayat
Stable and collateral to Cromwell (which this agreement clearly does)then he cannot be responsible for the actions of
Cromwell. To Zayat there have already been prior basis for him to mistrust MGG (such as, among other things, prior
overbilling and overcollection that MGG previously admitted), he cannot now turn over complete control to someone
(Cromwell) he feels is not competent to make the best decisions to maximize the value of the collateral without being
protected from that person's actions in the name and stead of Zayat Stables and also from any deficiency if that person
does not act In a commercially reasonable manner.
We look forward to wrapping this up in the morning.
Regards.
Joseph M. Vann (bio)

Cohen Tauber Spievack & Wagner P.O.
Partners in Your Strategic Vision
420 Lexington Ave., Suite 2400

New York NY 10170-2499
Direct:(212) 381-8724
Fax:(212)428-6737
Cell:(917)757-8933
ivann@ctswlaw.com
www.ctswlaw.com
From: Patrick Flynn <PFIvnn(5)mgeinv.com>
To: Ahmed Zayat <iazz@zavatstables.com>: Joseph Vann <jvann(S)ctswlaw.com>: lustin@zavatstablesxom: Harris,
864CAFBE-038F-48F0-8D70-BC064900B90D : 000111 of 000114

Adam <Adam.Harris@srz.com>
Adam Harris
212.756.2256
From: Ahmed Zayat <iazz@zavatstables.com>

Sent: Thursday,January 16, 2020 1:47 PM
To: Patrick Flynn <PFIvnn(5)mgginv.com>
Cc: Joseph Vann <ivann@ctswlaw.com>: iustin(a)zavatstables.com
ICAUTION:This email is from an EXTERNAL source,

Can you please send me the contact info for SRZ for Joe Vann to speak with them.
Thanks
From: Patrick Flynn rmailto:PFIvnn@mQainv.com1

To: Ahmed Zayat
Subject: Cooperation Agreement
Ahmed -as discussed, please review and sign at your soonest convenience. We are anxious to get going and wish to
start today. Thank you.
-Pat
Patrick Flynn
MGG Investment Group LP
One Penn Plaza, 53'^'' Floor, New York, NY 10119
(212)356-6117
| pflvnn(5)mgginv.com
Exhibit 9 - Jan. 22, 2020 10:46 a.m. email from B. Weinstein
864CAFBE-038F-48F0-8D70-BC064900B90D : 000112 of 000114

(Cedarview) to D. Joella (MGG
864CAFBE-038F-48F0-8D70-BC064900B90D : 000113 of 000114
From: Burton Weinstein <bweinstein@cedarviewcapital.com>
Date: January 22, 2020 at 10:46:44 AM EST
Cc: Patrick Flynn <PFIynn@mgginv.com>, Dov Kleiner <DKleiner@kkwc.com>
Subject: Zayat
Dane,
I've been apprised of the complaint and the receivership request and this seems unfortunately like it's
going on a faster track than you and I both discussed Friday at my offices.
It seems the receivership approach that serves to minimize MGG's capital commitment will also result
in the poorest possible recovery.
Would MGG entertain a 3mm DIP that would stabilize operations and allow horses to get to the 2yr
auctions in March and allow for some promising 3yr olds to race which as you know could yield
multiples return on cost and possibly get you a full recovery?
I've been in touch with a potential lender but obviously need your buy in first.
Burton Weinstein
Managing Partner
Cedarview Capital Management, LP
One Penn Plaza, 45th Floor
New York, NY 10119
Phone (212) 375-6002
Fax (212)375-6030
Cell (516)655-3252
bweinstein@cedarviewcapital.com
Cedarview
Capital
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Evans, Beth
From: noreply@kycourts.net
Sent: Friday, March 20, 2020 4:25 PM
To: Ingle, Jay; Evans, Beth
Subject: NEF, (for eFiler) FAYETTE 20-CI-00248, MGG INVESTMENT GROUP LP VS. ZAYAT
STABLES, LLC, ET AL Envelope # 2330498
EXTERNAL MESSAGE
Notice of Electronic Filing
Date and Time of Filing: March 20, 2020 at 4:20PM Eastern
eFiler: INGLE, JAY EDWARD (ATTORNEY FOR DEFENDANT)
Court: FAYETTE (CIRCUIT )
Case Caption: MGG INVESTMENT GROUP LP VS. ZAYAT STABLES, LLC, ET AL
Case Number: 20-CI-00248
Envelope Number: 2330498
Notice has been electronically mailed to:
Ames, E Kenly - kames@elpolaw.com

Kennedy, Ellen - Ellen.Kennedy@Dinsmore.com
Hixson, Marshall - mhixson@stites.com
Robertson, Craig - wrobertson@wyattfirm.com
Ingle, Jay Edward - jingle@jacksonkelly.com
Bullock, Thomas Dulaney - tbullock@bullockcoffman.com
Norman, Medrith - mnorman@fbtlaw.com
Hitchcock, Daniel E. - dhitchcock@wyattfirm.com
Parsons, Gregory Paul - gparsons@stites.com
Heleringer, Robert Leo - helringr@bellsouth.net
Royse, David T - david@rrrfirm.com
The following document(s) were included in this eFiling:

ANSWER AND COUNTERCLAIM: ANSWER TO AMENDED COMPLAINT AND COUNTER CLAIM
EXHIBIT: EXHIBITS 1-9
Additional details: https://kcoj.kycourts.net/efiling/Dashboard/Receipt?caseid=2330498
You may view the document(s) at https://kcoj.kycourts.net/eFilingRetrieval/Home/Package?id=864CAFBE-038F-48F0-

8D70-BC064900B90D
You may file subsequent case matters at https://kcoj.kycourts.net/efiling/Filing/?parentId=2330498
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Zayat Stables' Counterclaims Against Lender MGG

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Zayat Stables' Counterclaims Against Lender MGG

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COMMONWEALTH OF KENTUCKY

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MGG INVESTMENT GROUP LP PLAINTIFF

ZAYAT STABLES, LLC and AHMED ZAYAT DEFENDANTS

ANSWER TO AMENDED COMPLAINT, AFFIRMATIVE DEFENSES,

1. Zayat Stables admits the averments in Paragraph 1 of the Amended Complaint.

2. Zayat Stables denies the averments in Paragraph 2 of the Amended Complaint.

3. Zayat Stables denies the averments in Paragraph 3 of the Amended Complaint.

4. Zayat Stables denies the averments in Paragraph 4 of the Amended Complaint.

5. Zayat Stables denies the averments in Paragraph 5 of the Amended Complaint

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inconsistent with the referenced agreement.

7. Zayat Stables denies the averments in Paragraph 7 of the Amended Complaint.

8. In response to Paragraph 8 of the Amended Complaint, Zayat Stables admits that

Stables denies the remaining averments in Paragraph 8 of the Amended Complaint.

9. Zayat Stables is without knowledge or information sufficient to form a belief as to

17. Zayat Stables is without knowledge or information sufficient to form a belief as to

the truth of the averments in Paragraph 17 of the Amended Complaint.

18. Zayat Stables is without knowledge or information sufficient to form a belief as to

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the truth of the averments in Paragraph 19 of the Amended Complaint.

20. Zayat Stables is without knowledge or information sufficient to form a belief as to

the truth of the averments in Paragraph 20 of the Amended Complaint.

21. Zayat Stables is without knowledge or information sufficient to form a belief as to

the truth of the averments in Paragraph 21 of the Amended Complaint.

22. Zayat Stables is without knowledge or information sufficient to form a belief as to

the truth of the averments in Paragraph 22 of the Amended Complaint.

23. Zayat Stables is without knowledge or information sufficient to form a belief as to

the truth of the averments in Paragraph 23 of the Amended Complaint.

24. Zayat Stables is without knowledge or information sufficient to form a belief as to

the truth of the averments in Paragraph 24 of the Amended Complaint.

25. Zayat Stables is without knowledge or information sufficient to form a belief as to

the truth of the averments in Paragraph 25 of the Amended Complaint.

26. Zayat Stables is without knowledge or information sufficient to form a belief as to

the truth of the averments in Paragraph 26 of the Amended Complaint.

the Court has subject matter jurisdiction.

caused injury in the Commonwealth.

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Paragraph 29 of the Amended Complaint.

30. Zayat Stables is without knowledge or information sufficient to form a belief as to

the truth of the averments in Paragraph 30 of the Amended Complaint.

with the AP Purchase Agreement.

41. Zayat Stables is without knowledge or information sufficient to form a belief as to

the truth of the averments in Paragraph 41 of the Amended Complaint.

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averments in Paragraph 44 of the Amended Complaint.

Stables admits the remaining averments in Paragraph 45 of the Amended Complaint.

46. Zayat Stables is without knowledge or information sufficient to form a belief as to

the truth of the averments in Paragraph 46 of the Amended Complaint.

the Financing Agreement.

the Financing Agreement.

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the Financing Agreement.

the Financing Agreement.

the Financing Agreement.

the Financing Agreement.

the Financing Agreement.

the Financing Agreement.

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the Financing Agreement.

the Financing Agreement.

the Financing Agreement.

the Financing Agreement.