Exhibit 10.4

MEC LETTERHEAD

As of [September •], 2007

Mr. Thomas Hodgson

Senior Partner & Chairman

Greenbrook Capital Partners Inc.

20 Eglinton Ave. West, Suite 1400

Toronto, Ontario

P.O. Box 2003

M4R 1K8

Dear Tom:

Consulting Agreement with Magna Entertainment Corp. (“MEC”)

Further to our discussions, MEC wishes to retain Greenbrook Capital Partners
Inc. (together with its employees, the “Consultant”) to provide consulting
services to assist MEC and its subsidiaries with the adoption and implementation
of a restructuring plan (the “Project”).  The overall objective of the Project
is to eliminate the MEC debt and underperforming / loss operations.  The terms
and conditions of the consulting arrangement would be as follows:

1.                                       Consultant.  The Consultant will
provide its Senior Partner & Chairman, Mr. Thomas Hodgson (the “Designated
Consultant”), to carry out the Consultant’s obligations under this agreement. 
The Consultant’s use of any other employee or consultant other than the
Designated Consultant to perform the consulting services in respect of the
Project is subject to the prior written authorization of MEC.  The Consultant
acknowledges that due to the nature of the Project, the Designated Consultant
will be expected to engage in extensive business travel.

2.                                       Fees.  MEC will pay the Consultant an
annual fee of US$500,000 per annum, exclusive of GST (“Base Fee”), payable in
monthly instalments.  Invoices should be rendered on a monthly basis in arrears
and include GST and provincial taxes where applicable.

In addition to the Base Fee set out above, and provided that the Consultant has
complied with its obligations hereunder, the Consultant will be entitled to
receive performance fees, calculated and payable as follows:

·                  following the receipt by MEC of an aggregate minimum of
US$250 million of

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proceeds (net of all third-party commissions, selling expenses and other costs,
“Proceeds”) from asset sales and/or equity raises conducted in accordance with
the Project, the Consultant will be entitled to receive US$125,000 (being 0.05%
of US$250 million), payable within 30 days of the date on which the Consultant
has delivered an invoice therefor following MEC’s receipt of such aggregate
Proceeds;

·                  on the next US$250 million of Proceeds (or part thereof)
received by MEC from asset sales and/or equity raises conducted in accordance
with the Project, the Consultant will be entitled to receive 0.1% of such
incremental amount, payable within 30 days of the date on which the Consultant
has delivered an invoice therefor following MEC’s receipt of such incremental
Proceeds;

·                  on any further incremental Proceeds above US$500 million
received by MEC from asset sales and/or equity raises conducted in accordance
with the Project, the Consultant will be entitled to receive 0.2% of such
incremental amount (for certainty, that amount above US$500 million), payable
within 30 days of the date on which the Consultant has delivered an invoice
therefor following MEC’s receipt of such further incremental Proceeds;

·                  provided, however, that for the purposes of these
calculations of the performance fees, the Proceeds received by MEC from any
equity issued to MI Developments Inc. or Fair Enterprise Limited will be deemed
to be reduced by 60%.

For greater certainty, provided that this agreement is in effect at the time
that MEC enters into any transaction that results in MEC receiving the Proceeds
referred to above, the Consultant will be entitled to receive the relevant
performance fees (with such performance fees being paid at the time specified
above) regardless of whether this agreement is in effect at the time that MEC
receives the Proceeds.

3.                                       Stock Options.  Subject to the express
approval of the Board of Directors of MEC and any regulatory bodies having
jurisdiction (including the consent of the Toronto Stock Exchange to the listing
of the underlying shares), and subject to the Designated Consultant entering
into a stock option agreement with MEC in the standard form contemplated by the
Corporation’s 2003 Incentive Stock Option Plan, MEC will grant the Designated
Consultant options to purchase 250,000 Class A Subordinate Voting Shares of MEC
(each an “MEC Share”) at an exercise price per MEC Share which is equal to one
hundred per cent (100%) of the last sale price of an MEC Share on the Toronto
Stock Exchange on the trading day prior to the date of MEC Board approval of the
stock option grant; provided, however, that the Designated Consultant
acknowledges and agrees that the timing and pricing of the grant of its options
will be subject to all applicable securities law restrictions.  Such options
will be exercisable by the Designated Consultant only in accordance with the
terms and conditions set forth in the stock option agreement referred to above. 
Upon receipt of an executed copy of this agreement, MEC will place this matter

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before the MEC Board for review pursuant to the terms of this paragraph 3.

4.                                       Expenses.  MEC will reimburse the
Consultant for all reasonable business expenses actually and properly incurred
in carrying out the Project to the extent specifically required by MEC under
this agreement and in accordance with MEC’s expense reimbursement guidelines. 
If the Consultant travels outside of Canada on MEC business, it will be the
Consultant’s responsibility to maintain adequate medical coverage.  The
Consultant will supply original vouchers and receipts to support all expenses,
will itemize such expenses on a standard MEC expense report, and will obtain
advance approval from MEC’s Chief Financial Officer for any individual expense
in excess of US$2,500.

5.                                       Coordination of Services.  The
Consultant will carry out those services needed to complete the Project with the
assistance and under the direction of the MEC Board of Directors (the “Board”). 
The Consultant will liaise with members of MEC management and those other
employees and consultants of MEC and will provide written and verbal reports as
requested by the Board from time to time.  For greater certainty, the Consultant
acknowledges and agrees that MEC will make its own determination of whether to
pursue or consummate any transaction that the Consultant may suggest or
recommend.

6.                                       Term.  This agreement will commence
effective [September] •, 2007 and terminate on [December 12, 2008], unless
terminated earlier in accordance with this paragraph.  This agreement may be
immediately terminated by (i) mutual agreement of the parties or (ii) MEC at any
time in the event the Consultant is in material breach of the provisions of this
agreement, or the Designated Consultant dies or becomes disabled to such an
extent that he is unable to perform services for the Consultant as provided for
in this agreement in any material way.  In addition, MEC may terminate this
agreement at any time by giving the Consultant [thirty (30)] days prior written
notice.

7.                                       Independent Contractors.  The
Consultant is an independent contractor and in no way will the Consultant be
considered as an employee, agent or joint venturer of MEC.  Subject to
coordination with the persons described in paragraph 5, the Consultant will
determine how, where and when it will carry out its consulting services and
other obligations under this agreement.  The Consultant will have no authority
to represent MEC except as a consultant nor to bind it in any way and agrees
that it will not hold itself out as having authority to act for MEC or its
affiliates.

As an independent contractor, the Consultant will not be entitled to any
employment related benefits, including without limitation, any payments under
the Employment Standards Act, 2000 (Ontario).  Upon termination of this
agreement, MEC will only be responsible for paying those fees associated with
the Project up to and including the termination date.  With the exception of
such amounts, the Consultant will have no further claim or cause of action
against MEC for any cause, matter or thing relating to an alleged employment
relationship between the Consultant and MEC,

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including, without limitation, any claim for reasonable notice of termination,
pay in lieu of notice, termination, severance or vacation pay, expenses, bonus
or incentive plan payments, profit sharing, stock options, overtime pay, or
pension entitlements  other than the performance fees and stock options
specifically provided for in this agreement.

8.                                       Licenses and Taxes, etc.  As an
independent contractor, the Consultant will obtain all necessary licenses for
the operation of its consulting business, including a GST registration number
and workers’ compensation number.  The Consultant will also be responsible for
all applicable remittances including, but not limited to, federal and provincial
taxes on its business income, employment insurance, Canada Pension Plan,
workers’ compensation or income tax source deductions for it and its employees. 
MEC will not be responsible for any of the foregoing.

9.                                       Compliance with Privacy Laws:  The
Consultant, including specifically its Senior Partner & Chairman, agrees to
comply with the Canadian Personal Information and Protection of Electronic
Documents Act (“PIPEDA”) and such other Legislation and Regulations pertaining
to privacy of personal information (“Privacy Laws”) with respect to the receipt
and use of personal information relating to MEC’s customers and employees.  The
Consultant further acknowledges that Privacy Law requirements include the need
to:

(a)                                  properly secure such information;

(b)                                 use such information only for the purpose it
was made available;

(c)                                  co-operate with access requests; and

(d)                                 either return or destroy such information
once it is no longer needed for the Project.

10.                                 Conflict of Interest.  The Consultant may
perform other services for third parties during the term of this agreement,
provided that such activity does not interfere with the efficient and timely
performance of the Project and is not otherwise in competition with, or being
performed on behalf of (directly or indirectly) any person, firm or corporation
operating a similar or competing business to that of MEC and its affiliates.

11.                                 Competition.  In the course of providing
services to MEC, the Consultant will maintain close working relationships with
customers, clients, suppliers, agents and employees of MEC and its affiliates. 
Due to the sensitive nature of the Consultant’s work and the special access the
Consultant will have to MEC and its affiliates’ confidential information, the
Consultant will be in a position to irreparably harm MEC should the Consultant
enter into competition with MEC or its affiliates (directly or indirectly) or
otherwise make use of the specialized knowledge, contacts and connections
obtained while working on the Project.  Accordingly, during the term of this
agreement and for six (6) months following its expiry or termination it is

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understood that the Consultant will not engage in, directly or indirectly, or
perform services for any businesses competitive with or affiliated with a
business competitive with MEC and its affiliates without MEC’s prior written
consent.

The Consultant and the Designated Consultant each agrees that the covenants and
restrictions contained in the preceding paragraph are reasonable and valid in
terms of time, scope of activities and geographic limitations and understands
that they are vital consideration for the purposes of MEC entering into this
agreement.

12.                                 Confidentiality.  The Consultant and its
employees will treat as confidential and will not disclose directly or
indirectly at any time during or subsequent to the conclusion of the Project any
secret or confidential business, financial or other information belonging or
relating to MEC or its affiliates or their customers and suppliers.  If
requested by MEC, the Consultant will execute a separate Confidentiality
Agreement.

13.                                 Indemnity.  MEC will indemnify the
Consultant for any costs, expenses or damages arising from actions undertaken by
the Consultant in good faith in connection with the Project and in accordance
with this agreement pursuant to the terms and conditions of the indemnity
agreement to be entered into by MEC and the Consultant concurrent herewith in
the form attached hereto as Exhibit A.  The Consultant will indemnify MEC for
any costs, expenses or damages arising from the Consultant’s failure to comply
in all material respects with the provisions of paragraphs 7, 8, 9, 10, 11 and
12 of this agreement.

14.                                 Assignment.  The Consultant will not assign,
transfer, subcontract its rights, obligations or interest in this agreement to
any party without the prior written consent of MEC.

15.                                 Severability.  In the event that any
covenant, provision or restriction contained in this Agreement is found to be
void or unenforceable (in whole or in part) by a court of competent
jurisdiction, it will not affect or impair the validity of any other covenant,
provisions or restrictions contained herein, nor will it affect the validity or
enforceability of such provisions in any other jurisdiction or in regard to
other circumstances.  Any covenants, provisions or restrictions found to be void
or unenforceable are declared to be separate and distinct, and the remaining
covenants, provisions and restrictions will remain in full force and effect.

16.                                 Miscellaneous.  This agreement will be
governed by the laws of the Province of Ontario including all federal laws
applicable therein.  The provisions of paragraphs 2, 3, 4, 7, 8, 9, 11, 13, 14,
15 and 16 of this agreement will survive the termination of the agreement.

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If the terms of the consulting agreement set out in this letter are acceptable
to the Consultant, please sign and date three (3) copies of this letter and
return two copies to me.

Yours very truly,

 

 

 

 

 

/s/ Frank Stronach

 

/s/ Jerry Campbell

 

Frank Stronach

 

Jerry Campbell

Chairman

 

Lead Director

 

The undersigned agrees to the terms and conditions contained in this letter on
the     day of [September], 2007, effective as of the date specified above.

Greenbrook Capital Partners Inc.

 

 

 

/s/ Thomas Hodgson

 

 

Thomas Hodgson

 

Senior Partner & Chairman

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EXHIBIT A

FORM OF INDEMNITY AGREEMENT

This Indemnity Agreement (“Agreement”) is made as of                   by and
between Magna Entertainment Corp., a Delaware corporation (the “Company”), and
                  (the “Indemnitee”), a consultant to the Company.

RECITALS

WHEREAS, the Indemnitee has agreed to serve as a consultant to the Company and
in such capacity will render valuable services to the Company; and

WHEREAS, the Company has investigated the availability and sufficiency of
liability insurance and Delaware statutory indemnification provisions to provide
its directors and officers of, and consultants to, the Company or its
subsidiaries with adequate protection and has concluded that such insurance and
statutory provisions may provide inadequate and unacceptable protection to
certain individuals requested to serve as its directors, officers or
consultants; and

WHEREAS, in order to induce and encourage highly experienced and capable persons
such as the Indemnitee to serve as officers or directors of, or consultants to,
the Company or a subsidiary of the Company, the Board of Directors has
determined, after due consideration and investigation of the terms and
provisions of this Agreement and the various other options available to the
Company and the Indemnitee in lieu hereof, that this Agreement is not only
reasonable and prudent but also necessary to promote and ensure the best
interests of the Company and its stockholders; and

WHEREAS, in recognition of the services of the Indemnitee, and in order to
provide the Indemnitee with specific contractual assurances that indemnification
protection will be available to the Indemnitee, the Company wishes to provide in
this Agreement for indemnification of and advancing of expenses to the
Indemnitee as set forth in this Agreement.

AGREEMENT

NOW, THEREFORE, in consideration of the mutual covenants contained herein and
for other valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Company and the Indemnitee do hereby agree as follows:

1.             Definitions. Whenever used in this Agreement the following words,
unless the context clearly indicates otherwise, shall have the following
meanings:

(a) “Proceeding” includes any threatened, pending or completed claim, action,
suit, proceeding, formal or informal, or alternative dispute resolution
mechanism, or any hearing, inquiry or investigation that the Indemnitee believes
might lead to the institution of any claim, action, suit, proceeding or
alternative dispute resolution mechanism, whether brought before or

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after the date of this Agreement, whether brought in the right of the Company or
otherwise and whether of a civil, criminal, administrative, investigative or
other nature.

(b) “Expenses” include, without limitation, attorneys’ fees, disbursements and
retainers, accounting and witness fees, travel and deposition costs, expenses of
investigations, judicial or administrative Proceedings and appeals, amounts paid
in settlement by or on behalf of the Indemnitee, and any expenses of
establishing the existence of and/or enforcing a right to indemnification,
pursuant to this Agreement or otherwise, including reasonable compensation for
time spent by the Indemnitee in connection with the investigation, defense or
appeal of a Proceeding or action for indemnification for which he or she is not
otherwise compensated by the Company, a subsidiary of the Company, or any third
party.  The term “Expenses” does not include Liabilities.

(c) “Independent Legal Counsel” shall refer to an attorney or firm of attorneys
with recognized expertise in matters of Delaware corporations law and who shall
not have otherwise performed services for the Company or the Indemnitee within
the five years immediately preceding such counsel’s selection pursuant to
Section 5 of this Agreement.

(d) “Liabilities” include, without limitation, judgments, fines, penalties,
excise taxes and other liabilities levied or assessed against the Indemnitee in
connection with any Proceeding.  The term “Liabilities” does not include
Expenses.

(e) “D&O Insurance” means directors’ and officers’ liability insurance.

2.             Agreement to Serve.

The Indemnitee agrees to serve as a consultant to the Company at the will of the
Company pursuant to the terms and conditions of the Indemnitee’s consulting
agreement with the Company executed concurrent herewith.  The indemnification
provisions provided under this Agreement shall continue for Indemnitee even
though Indemnitee may have ceased to be a consultant to the Company at the time
of any Proceeding.

3.             Indemnification in Third Party Actions.

The Company shall indemnify the Indemnitee (including the Indemnitee’s spouse,
heirs, estate, executor or personal or legal representatives), and each person
who controls the Indemnitee or who may be liable within the meaning of Section
15 of the Securities Act of 1933, as amended (the “Securities Act”), or Section
20 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), if
the Indemnitee is a party to or threatened to be made a party to or is otherwise
involved in any Proceeding (other than a Proceeding by or in the right of the
Company), by reason of (or arising in part out of) any event or occurrence
related to the fact that the Indemnitee is or was a consultant to the Company,
or is or was serving at the request of the Company as a director, officer,
employee, controlling person, agent or fiduciary of another corporation, limited
liability company, partnership, joint venture, trust, or other enterprise, or by
reason of any actions alleged to have been taken or omitted in such capacity,
against all Expenses and Liabilities actually and reasonably incurred by the
Indemnitee in connection with the defense, settlement, or other disposition of
such a

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Proceeding, to the fullest extent permitted by Delaware law; provided that any
settlement of a Proceeding be approved in writing by the Company.  For purposes
of this Agreement, if the Indemnitee serves as a director, officer, employee,
controlling person, agent or fiduciary of any corporation, limited liability
company, partnership, joint venture, trust or other enterprise that is owned or
controlled, wholly or in part, directly or indirectly, by the Company, the
Indemnitee shall be conclusively presumed to serve in that capacity at the
request of the Company.

4.             Indemnification in Proceedings by or in the Right of the Company.

The Company shall indemnify the Indemnitee (including the Indemnitee’s spouse,
heirs, estate, executor or personal or legal representatives), and each person
who controls the Indemnitee or who may be liable within the meaning of Section
15 of the Securities Act, or Section 20 of the Exchange Act, if the Indemnitee
is a party to or threatened to be made a party to or is otherwise involved in
any Proceeding by or in the right of the Company by reason of (or arising in
part out of) any event or occurrence related to the fact that the Indemnitee is
or was a consultant to the Company, or is or was serving at the request of the
Company as a director, officer, employee, controlling person, agent or fiduciary
of another corporation, limited liability company, partnership, joint venture,
trust or other enterprise, or by reason of any actions alleged to have been
taken or omitted in such capacity, against all Expenses and Liabilities actually
and reasonably incurred by the Indemnitee in connection with the defense,
settlement or other disposition of such a Proceeding, to the fullest extent
permitted by Delaware law.

5.             Conclusive Presumption regarding Standards of Conduct.

(a) The Indemnitee shall be conclusively presumed to have met the relevant
standards of conduct, if any, as defined by Delaware law, for indemnification
pursuant to this Agreement, unless a final determination is made by a court of
competent jurisdiction that the Indemnitee has not met such standards.  For
purposes of this Agreement, the termination of any claim, action, suit, or
proceeding, by judgment, order, settlement (whether with or without court
approval), or conviction, or upon a plea of nolo contendere, or its equivalent,
shall not, of itself, create a presumption that the Indemnitee did not meet any
particular standard of conduct or that a court has determined that
indemnification is not permitted by applicable law.

(b) Notwithstanding the foregoing provisions of Section 5(a) of this Agreement,
in the event of any Proceeding (other than a Proceeding by or in the right of
the Company) in which the claimant alleges or has alleged specific material acts
by the Indemnitee of actual fraud, personal dishonesty, misappropriation, or
breach of the duty of loyalty, in each case for the direct or indirect personal
benefit of the Indemnitee, then the Company may rebut the presumption that the
Indemnitee has met the relevant standards of conduct for indemnification under
this Agreement by obtaining, at its expense, a written opinion of Independent
Legal Counsel, to the effect that, assuming the truth of the facts alleged by
the claimant, the Indemnitee, and all other persons being indemnified by the
Company who are similarly situated in the context of the Proceeding and who have
had a similar involvement in the alleged acts have not met such standards. 
Receipt by the Company of such an opinion shall, accordingly and notwithstanding
the absence of a final determination by a court of competent jurisdiction as
contemplated by Section 5(a) of this Agreement, permit the Company to make a
determination

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that the Indemnitee has not met the relevant standards of conduct, provided that
any such determination is also made with respect to all other persons who, the
opinion states, did not meet such standards.  Neither the receipt of a written
opinion from Independent Legal Counsel nor the making by the Company of a
determination pursuant to this Section 5(b) shall create a presumption that the
Indemnitee did not meet any particular standards of conduct or that the
Indemnitee is not entitled to indemnification under this Agreement or
otherwise.  Nothing herein, however, shall prevent the Company from presenting
such opinion as evidence or the Independent Legal Counsel as a witness in any
court case.

6.             Indemnification of Expenses of Successful Party.  Notwithstanding
any other provision of this Agreement (except for, and subject to, Section
10(c)), to the extent that the Indemnitee has been successful in defense of any
Proceeding or in defense of any claim, issue or matter therein, on the merits or
otherwise, including the dismissal of a Proceeding without prejudice or the
settlement of a Proceeding (with the consent of the Company, which consent shall
not be unreasonably withheld) without an admission of liability, the Indemnitee
shall be indemnified against Expenses actually and reasonably incurred in
connection therewith.

7.             Indemnification for Expenses of a Witness.  Notwithstanding any
other provision of this Agreement, to the extent that Indemnitee is, by reason
of the fact that Indemnitee was a consultant to the Company, or was serving at
the request of the Company as a director, officer, employee, controlling person,
agent or fiduciary of another corporation, limited liability company,
partnership, joint venture, trust or other enterprise, a witness in any
Proceeding, the Indemnitee shall be indemnified against Expenses actually and
reasonably incurred in connection therewith.

8.             Advances of Expenses.  If requested by Indemnitee, the Company
shall, in accordance with this Agreement and within five (5) business days of a
written request by Indemnitee, advance to Indemnitee the Expenses that are
reasonably anticipated to be incurred by Indemnitee and reimburse Indemnitee for
the Expenses that are actually incurred by Indemnitee in connection with any
Proceeding; provided that the Indemnitee shall undertake in writing to repay any
advances if it is conclusively determined by a court of competent jurisdiction
that the Indemnitee is not entitled to indemnification under this Agreement or
otherwise.  The Indemnitee’s obligation to reimburse the Company for advanced
Expenses shall be unsecured and no interest shall be charged thereon.

9.             Partial Indemnification.  If the Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for a portion of
the Expenses or Liabilities actually and reasonably incurred by the Indemnitee
in the investigation, defense, appeal, or settlement of any Proceeding but not,
however, for the total amount of the Indemnitee’s Expenses or Liabilities, the
Company shall nevertheless indemnify the Indemnitee for the portion of Expenses
and Liabilities to which the Indemnitee is entitled.

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10.          Indemnification Procedure; Determination of Right to
Indemnification.

(a) Promptly after receipt by the Indemnitee of notice of the commencement of
any Proceeding, the Indemnitee shall, if a claim in respect thereof is to be
made against the Company under this Agreement, notify the Company of the
commencement thereof in writing.  The omission to so notify the Company will not
relieve it from any liability which it may have to the Indemnitee under this
Agreement except to the extent such failure materially prejudices the Company.

(b) If a claim for indemnification or advances under this Agreement is not paid
by the Company within 30 days of receipt of written notice, the rights provided
by this Agreement shall be enforceable by the Indemnitee in any court of
competent jurisdiction.  The burden of proving by clear and convincing evidence
that indemnification or advances are not appropriate shall be on the Company. 
Neither the failure of the Independent Legal Counsel to have made a
determination prior to the commencement of such action that indemnification or
advances are proper in the circumstances because the Indemnitee has met the
applicable standard of conduct, nor an actual determination by the Independent
Legal Counsel that the Indemnitee has not met the applicable standard of
conduct, shall be a defense to the action or create a presumption that the
Indemnitee has not met the applicable standard of conduct.

 (c) The Indemnitee’s Expenses incurred in connection with any proceeding
concerning his or her right to indemnification or advances in whole or in part
pursuant to this Agreement or otherwise shall also be indemnified by the Company
regardless of the outcome of such a proceeding, unless a court of competent
jurisdiction determines that each of the material assertions made by the
Indemnitee in the proceeding was not made in good faith or was frivolous.

(d) With respect to any Proceeding for which indemnification is requested, the
Company will be entitled to participate therein at its own expense and, except
as otherwise provided below, to the extent that it may wish, the Company may
assume the defense thereof, with counsel reasonably satisfactory to the
Indemnitee.  After notice from the Company to the Indemnitee of its election to
assume the defense of a Proceeding, the Company will not be liable to the
Indemnitee under this Agreement for any Expenses subsequently incurred by the
Indemnitee in connection with the defense thereof, other than as provided below.
 The Company shall not settle any Proceeding in any manner that would impose any
penalty or limitation on the Indemnitee without the Indemnitee’s written
consent, which consent shall not be unreasonably withheld.  The Indemnitee shall
have the right to employ his or her own counsel in any Proceeding, but the fees
and expenses of such counsel incurred after notice from the Company of its
assumption of the defense of the Proceeding shall be at the expense of the
Indemnitee, unless (i) the employment of counsel by the Indemnitee has been
authorized by the Company in writing, (ii) the Indemnitee shall have reasonably
requested separate counsel in the conduct of the defense of a Proceeding, or
(iii) the Company shall not in fact have employed counsel to assume the defense
of a Proceeding, in each of which cases the fees and expenses of the
Indemnitee’s counsel shall be advanced by the Company.  The Company shall not be
entitled to assume the defense of any Proceeding brought by or on behalf of the
Company or as

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to which the Indemnitee has concluded that there may be a conflict of interest
between the Company on the one hand and the Indemnitee on the other hand.

11.          Limitations on Indemnification.  No payments pursuant to this
Agreement shall be made by the Company:

(a) To indemnify or advance funds to the Indemnitee for Expenses with respect to
Proceedings initiated or brought voluntarily by the Indemnitee and not by way of
defense, except (i) with respect to Proceedings brought to establish or enforce
a right to indemnification under this Agreement or any other statute or law or
otherwise as required under applicable law, (ii) with respect to Proceedings (or
parts thereof) authorized by the Board, or (iii) as otherwise required under
applicable law, regardless of whether the Indemnitee ultimately is determined to
be entitled to such indemnification or advancement of Expenses;

(b) To indemnify the Indemnitee for any Expenses or Liabilities sustained in any
Proceeding for which payment is actually made to the Indemnitee under a valid
and collectible insurance policy, except in respect of any excess beyond the
amount of payment under such insurance;

(c) If a court of competent jurisdiction finally determines that any
indemnification or advances under this Agreement is not permitted by applicable
law;

(d) To indemnify the Indemnitee for any Expenses or Liabilities sustained in any
Proceeding for an accounting of profits made from the purchase and sale by the
Indemnitee of securities of the Company pursuant to Section 16(b) of the
Securities Exchange Act of 1934 and amendments thereto or similar provisions of
any state statutory law or common law; or

(e) To indemnify the Indemnitee for any Expenses or Liabilities resulting from
the Indemnitee’s conduct which is finally adjudged to have been willful
misconduct, knowingly fraudulent or deliberately dishonest.

12.          Liability Insurance.

(a) The Company hereby covenants and agrees that, as long as the Indemnitee
shall continue to serve as a consultant to the Company and thereafter as long as
the Indemnitee may be subject to any possible Proceeding, the Company, subject
to subsection (c) below, shall promptly obtain and maintain in full force and
effect D&O Insurance in reasonable amounts from established and reputable
insurers.

(b) In all D&O Insurance policies, the Indemnitee shall be named as an insured
in such a manner as to provide the Indemnitee the same rights and benefits as
are accorded to the most favorably insured of the Company’s officers or
directors.

(c) Notwithstanding the foregoing, the Company shall have no obligation to
obtain or maintain D&O Insurance if the Company determines in good faith that
such insurance is not reasonably available, the premium costs for such insurance
are disproportionate to the amount of coverage provided, the coverage provided
by such insurance is so limited by exclusions that

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it provides an insufficient benefit, or the Indemnitee is covered by similar
insurance maintained by a subsidiary of the Company.

13. Indemnification Hereunder Not Exclusive.  The indemnification provided by
this Agreement shall not be deemed exclusive of any other rights to which the
Indemnitee may be entitled under the certificate of incorporation, bylaws, any
agreement, vote of shareholders or disinterested directors, provision of
applicable law, or otherwise, both as to action in the Indemnitee’s official
capacity and as to action in another capacity on behalf of the Company or any
subsidiary of the Company while holding such office.

14. Contribution.  Subject to Section 9, if the indemnification provided for
hereunder for any reason is held by a court of competent jurisdiction to be
unavailable to the Indemnitee in respect of any Expenses or Liabilities referred
to therein, then the Company, in lieu of indemnifying the Indemnitee thereunder,
shall contribute to the amount paid or payable by the Indemnitee as a result of
such Expenses or Liabilities (i) in such proportion as is appropriate to reflect
the relative benefits received by the Company and the Indemnitee, or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company and
the Indemnitee in connection with the action or inaction that resulted in such
Expenses or Liabilities, as well as any other relevant equitable considerations.

15. Successors and Assigns.  This Agreement shall be binding upon, and shall
inure to the benefit of the Indemnitee and his or her heirs, executors,
administrators, and assigns, and the Company and its successors and assigns. 
The Company shall require and cause any successor (whether direct or indirect,
by purchase, merger, consolidation, or otherwise) to all, substantially all, or
a substantial part, of the Company’s business or assets or both, by written
agreement in form and substance satisfactory to Indemnitee, expressly to assume
and agree to perform this Agreement in the same manner and to the same extent
that the Company would be required to perform if no such succession had taken
place.

16. Severability.  Each and every paragraph, sentence, term and provision of
this Agreement is separate and distinct so that if any paragraph, sentence,
term, or provision hereof shall be held to be invalid or unenforceable for any
reason, such invalidity or unenforceability shall not affect the validity or
enforceability of any other paragraph, sentence, term or provision hereof.  To
the extent required, any paragraph, sentence, term, or provision of this
Agreement may be modified by a court of competent jurisdiction to preserve its
validity and to provide the Indemnitee with the broadest possible
indemnification permitted under Delaware law.

17. Scope.  The Company intends to indemnify the Indemnitee hereunder to the
fullest extent permitted by Delaware law.  In the event of any change after the
date of this Agreement in any applicable law, statute or rule that expands the
right of the Company to indemnify a director, officer, employee, controlling
person, agent or fiduciary, it is the intent of the parties hereto that the
Indemnitee shall enjoy by this Agreement the greater benefits afforded by such
change.  Upon any change in any applicable law, statute or rule that narrows the
right of the Company to indemnify a director, officer, employee, controlling
person, agent or fiduciary, such change, to the extent not otherwise required by
such law, statute or rule to be applied to this Agreement, shall have no effect

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on this Agreement or the parties’ rights and obligations hereunder except as set
forth in Section 11(a) hereof

18. Savings Clause.  If this Agreement or any paragraph, sentence, term, or
provision hereof is invalidated on any ground by any court of competent
jurisdiction, the Company shall nevertheless indemnify the Indemnitee as to any
Expenses, judgments, fines, penalties, or excise taxes incurred with respect to
any Proceeding to the full extent permitted by any applicable paragraph,
sentence, term, or provision of this Agreement that has not been invalidated or
by any other applicable provision of Delaware law.

19. Governing Law.  This Agreement shall be construed as a whole and in
accordance with its fair meaning.  Headings are for convenience only and shall
not be used in construing meaning.  This Agreement shall be governed and
interpreted in accordance with the laws of the State of Delaware, without regard
to conflicts of laws principles.

20. Amendments.  No amendment, waiver, modification, termination, or
cancellation of this Agreement shall be effective unless in writing signed by
the party against whom enforcement is sought.  The indemnification rights
afforded to the Indemnitee hereby are contract rights and may not be diminished,
eliminated, or otherwise affected by amendments to the certificate of
incorporation, bylaws or by other agreements, including D&O Insurance policies.

21. Counterparts.  This Agreement may be executed in one or more counterparts,
all of which shall be considered one and the same agreement and shall become
effective when one or more counterparts have been signed by each party and
delivered to the other.

22. Notices.  Any notice required to be given under this Agreement to the
Company shall be directed to the Company at its principal executive offices, 337
Magna Drive, Aurora, Ontario, Canada L4G 7K1, Attention: Legal Department, and
to the Indemnitee at the address indicated below or to such other address as
either shall designate in writing.

[signature page follows]

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IN WITNESS WHEREOF, the parties have executed this Indemnity Agreement as of the
date first written above.

INDEMNITEE:

 

 

 

 

 

 

 

 

Name:

 

 

Address:

 

 

 

 

 

 

 

 

MAGNA ENTERTAINMENT CORP.

 

 

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

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