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Exhibit 10.1  


March 31,
2006 


Mr. W.
Thomas Hodgson

48 Stonecliffe Crescent

Aurora, Ontario

L4G 7Z6 


Dear
Tom: 


        Reference
is made to our recent conversations concerning your departure as President and Chief Executive Officer and as a director of Magna Entertainment Corp. ("MEC") and our
agreements, which are as follows: 



	1.
	Effective
March 31, 2006 (the "Officer Resignation Date"), you will resign as President and Chief Executive Officer and as a director of MEC and as an officer and/or
director of all subsidiaries of MEC or its affiliates for which you serve in such capacities.



	2.
	Following
the Officer Resignation Date, you will remain as an employee of MEC for a two-month transition period. Effective May 31, 2006 (the "Employee
Resignation Date"), you will resign as an employee of MEC. You agree that on the Employee Resignation Date you shall execute and deliver the release in the form of
Schedule A attached hereto.



	3.
	You
shall be entitled to receive your Base Salary of US$300,000 and Guaranteed Bonus of US$200,000 annually up to and including the Employee Resignation Date. You acknowledge that you
have received such Guaranteed Bonus up to and including December 31, 2005 so that you are only entitled to such Guaranteed Bonus for the period from January 1, 2006 to March 31,
2006 (the "2006 First Quarter Bonus") and for the period from April 1, 2006 to May 31, 2006 (the "2006 Second Quarter Partial Bonus"). Notwithstanding the terms of your
employment agreement dated March 22, 2005 (your "Employment Agreement"), you shall receive prompt payment of the full amount of the 2006 First Quarter Bonus and the 2006 Second Quarter Partial
Bonus, respectively, in cash from MEC at the same time that senior executives of MEC are paid their bonuses for the first quarter of 2006 and second quarter of 2006, respectively. 











	4.
	The
amount of 13,086 shares (your "Incentive Stock") of MEC Class A Subordinate Voting Stock ("Class A Stock"), being the amount of your Guaranteed Bonus that is
payable to you in Class A Stock during 2005, shall vest and be released to you on December 1, 2006.



	5.
	Notwithstanding
the terms of your incentive stock option agreements with MEC dated March 7, 2005 and March 21, 2005, your options to purchase 300,000 shares of
Class A Stock (your "Options") shall remain in full force and effect, shall vest on their current schedule, and shall be exercisable at any time up to and including the Expiration Date
(as defined in your stock option agreements) and without application of the terms of sections 2.2(b) through (f) of those agreements. However, in the event that you become
employed by, a director of, or a consultant to, any entity that competes, directly or indirectly, with MEC or any of its subsidiaries prior to the vesting of any Options, such non-vested
Options will be cancelled (all vested Options will be unaffected and remain in-force as set-out above).



	6.
	You
agree that you shall not sell, transfer or otherwise dispose of or trade any securities of MEC (including, without limitation, your Incentive Stock and your Options) before
December 1, 2006. Without limiting the foregoing, you acknowledge that it is your responsibility to be familiar with and comply with your obligations under insider trading laws and similar
securities laws.



	7.
	Upon
you having delivered on the Employee Resignation Date the executed release as provided in paragraph 2 above, MEC shall promptly pay to you a retiring allowance of
US$500,000 as full and final settlement of all amounts owing to you by MEC or its affiliates as a result of your employment with MEC and its subsidiaries, including all amounts owing to you under your
employment agreement with MEC (subject only to paragraph 8 below), which amount shall be paid to you in a lump sum (net of all usual deductions).



	8.
	As
soon as reasonably practicable following the Employee Resignation Date, you shall submit a final expense report or reports for all outstanding expenses which you have incurred on
behalf of MEC or any of its subsidiaries in accordance with typical practice and which have not previously been reimbursed. All such expenses shall be reimbursed to you by MEC promptly following
receipt of such expense report(s). In addition, promptly following execution of this agreement and submission of supporting invoices, MEC shall pay to you the amount of up to CDN$10,000 as partial
reimbursement for your legal expenses in connection with your departure from MEC.



	9.
	MEC
shall continue to maintain on your behalf your current benefits (excluding life and disability coverage) for a period of twelve (12) months commencing on the Employee
Resignation Date. Your current life and disability coverage shall be maintained for a period of not less than the period required by applicable statute. 











	10.
	MEC's
obligations to indemnify you pursuant to its by-laws shall continue in effect in respect of all your activities as a director, officer and employee of MEC and its
subsidiaries, and MEC shall continue to cover you under its directors' and officers' insurance policies in respect of your service as an officer or director of MEC and its subsidiaries (including,
without limitation, with respect to any claims made against you or losses or expenses incurred by you in connection with the litigation brought by Greenlight Capital, Inc. against MI
Developments Inc. ("MID")). For greater certainty, MEC acknowledges that you shall be entitled to reimbursement for all reasonable counsel fees and disbursements in connection with your
representation by counsel of your choice (subject to approval by MEC, acting reasonably) as a witness, party or potential witness or party in any shareholder litigation involving MEC or MID.



	11.
	You
acknowledge and agree that you are still subject to, and shall abide by, your obligations as set forth in paragraph 8 of your Employment Agreement.



	12.
	You
agree to promptly execute and provide to MEC all documents reasonably requested by MEC and its affiliates to evidence your resignation as a director and/or officer of MEC and
its affiliates.



	13.
	Except
as already agreed, and except as required by any applicable law, regulation or stock exchange rule, neither you nor MEC shall make any public announcement or issue any press
release with respect to your resignation as a director and officer of, and your departure from, MEC without the prior written consent of the other. Prior to either party making any public announcement
or press release, such party shall provide the other party with a reasonable opportunity to comment on said public announcement or press release.



	14.
	Upon
you having delivered on the Employee Resignation Date the executed release as provided in paragraph 2 above, MEC shall enter into a consulting agreement with you
substantially in the form attached hereto as Schedule B. You shall be entitled to retain the laptop computer and blackberry communications device that you are
presently using for so long as you are acting as a consultant to MEC, although you shall arrange and pay for your own service provider contract for your blackberry communications device.



	15.
	You
hereby acknowledge and agree that this letter agreement, including without limitation Schedule A, supersedes all previous agreements between
you and MEC and its affiliates, whether oral or written, including without limitation your employment agreement. 













        If
you are in agreement with the foregoing, would you kindly execute a duplicate copy of this letter where indicated and return the same to me. 


Yours
truly, 



	 
	 	 

	
 Frank Stronach

Chairman	 	 
	
 Agreed:	
 	

 
	
 Date: March 31, 2006	
 	

 
	 	 	
 W. Thomas Hodgson











 
 

Schedule A
  Release and Resignation  
    


To:    Magna
Entertainment Corp. and its affiliates 


        Having
resigned as an officer and/or director of Magna Entertainment Corp. and its affiliates (collectively, "MEC"), in each case, effective March 31, 2006, I hereby resign as an
employee of Magna Entertainment Corp. effective May 31, 2006. 



I
hereby agree: 



	(i)
	to,
and do hereby, release MEC, its officers, directors and employees, its associates and affiliates (including, without limitation, MI Developments Inc.) and its
shareholders, directors, officers, employees and agents and the respective successors and assigns of all such persons and corporations (collectively described as the "Corporation") of and from all
liabilities, damages, actions, causes of action, claims (including, without limitation, any claim under the Ontario Employment Standards Act) and demands, costs or expenses (including, without
limitation, lawyers' fees), agreements, deferred compensation, provisions and covenants, of any nature or kind now accrued, arising out of any employment relationship with the Corporation and the
cessation thereof;



	(ii)
	that
the release contained herein shall be binding on my heirs, executors, administrators, personal representatives and assigns;



	(iii)
	not
to make any claim or to commence or maintain any action or proceeding against any other person or corporation who might claim contribution, indemnity or relief
over from the Corporation with respect to the subject matter of this release, excepting only any rights enforced in respect of directors' and officers' liability under policies of insurance
for such;



	(iv)
	at
any time hereafter, except with the consent of MEC or as required by law, not to disclose any confidential information concerning the business and affairs of the
Corporation and its customers and suppliers, including its trade secrets and confidential or proprietary information to which I have been exposed during the term of my employment with MEC; and



	(v)
	nothing
in this release affects my rights:



	(a)
	under
my letter agreement with MEC dated March 31, 2006, relating to my departure from MEC;



	(b)
	under
the stock option agreements dated March 7, 2005 and March 21, 2005 and the Performance Share Unit Award Agreement dated as of April 1, 2005;



	(c)
	to
be indemnified and held harmless by MEC and to the benefit of coverage under any directors' and officers' insurance policy in respect of any claim that may be made against me
respecting any act or thing arising from my having served as a director or officer of MEC and its affiliates; and



	(d)
	as
a shareholder of MEC. 










	
  DATED this 31st day of May, 2006.
	
 	

 W. Thomas Hodgson









 
 

Schedule B
  Form of Consulting Agreement  
    


[Letterhead
of Magna Entertainment Corp.] 


May 31,
2006 


W.
Thomas Hodgson

48 Stonecliffe Crescent

Aurora, Ontario

L4G 7Z6 


Dear
Tom: 


 
 

Consulting Agreement with Magna Entertainment Corp. ("MEC")  
    


        Further
to our discussions, MEC wishes to retain you (the "Consultant") to provide consulting services to assist MEC and certain of its affiliates with various projects from time
to time as determined by MEC, including without limitation projects relating to MEC's recapitalization plan (collectively, the "Projects"). The general terms and conditions of the consulting
arrangement would be as follows: 


	1.
	Consultant.    The
Consultant shall make himself reasonably available to MEC to carry out his obligations under this agreement. The Consultant
acknowledges that due to the nature of the Projects, the Consultant may be expected to engage in extensive business travel.



	2.
	Fees.    MEC
shall pay the Consultant at the rate of US$2,500 per day or part thereof (it being understood that the number of hours per
month and per week may vary from month-to-month and from week-to-week as determined by MEC). Invoices should be rendered on a monthly basis in arrears
and include GST and provincial taxes where applicable.



	3.
	Expenses.    MEC
shall reimburse the Consultant for all reasonable business expenses actually and properly incurred in carrying out the Projects
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 shall be
the Consultant's responsibility to maintain adequate medical coverage. The Consultant shall supply original vouchers and receipts to support all expenses, shall itemize such expenses on a standard MEC
expense report, and shall obtain advance approval from MEC's Project Coordinator for any individual expense in excess of CDN$5,000. The Consultant shall be based in his own off-site office
and shall be responsible for the expense of all office costs, support services and materials in carrying out his obligations under this agreement.



	4.
	Coordination
of Services.    The Consultant shall carry out those services needed to complete the Project with the assistance and under the
direction of the Project Coordinator or his designees. The Consultant shall provide those written reports required by the Project Coordinator from time to time and shall interact with MEC management
as directed by the Project Coordinator from time to time. The Chairman of MEC, or his designee, shall be the Project Coordinator. 







	5.
	Term.    This
agreement shall commence as of June 1, 2006 and may be terminated (a) by MEC for any reason on thirty
(30) days prior written notice or (b) by the Consultant for any reason on thirty (30) days prior written notice. In addition, this agreement may be immediately terminated by MEC
in the event Consultant is in material breach of the provisions of this agreement.



	6.
	Independent
Contractor.    The Consultant is an independent contractor and in no way shall the Consultant be considered an employee, agent or
joint venturer of MEC. Subject to coordination with the persons designated in paragraph 4, the Consultant shall determine how, where and when he shall carry out his consulting services and
other obligations under this agreement. The Consultant shall have no authority to represent or bind MEC in any way and agrees that he shall not hold himself out as having authority to act for MEC or
its affiliates.



	7.
	Licenses
and Taxes, etc.    As an independent contractor the Consultant shall obtain all necessary licenses for the operation of his consulting
business, including a GST registration number. The Consultant shall also be responsible for all applicable remittances including, but not limited to, federal and provincial taxes on his business
income. MEC shall not be responsible for any of the foregoing.



	8.
	Compliance
with Privacy Laws.    The Consultant 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.







	9.
	Competition.    During
the term of this agreement and for six (6) months following its expiry or termination, you shall not, directly or
indirectly, in any capacity compete with the business of MEC or any of its affiliates in respect of which you have had access to proprietary or confidential information.



	10.
	Confidentiality.    The
Consultant will treat as confidential and will not disclose directly or indirectly at any time during or subsequent to
the conclusion of the Projects any secret or confidential business, financial or other information belonging or relating to MEC or its affiliates or their customers and suppliers. The Consultant will
execute a separate Confidentiality Agreement if requested by MEC.



	11.
	Indemnity.    The
Consultant shall 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 6, 7, 8, 9 and 10 of this agreement. 







	12.
	Governing
Law.    This agreement shall be governed by the laws of the Province of Ontario including all federal laws applicable therein. 




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 the attention of
MEC's Corporate Secretary. 


Yours
very truly, 


MAGNA ENTERTAINMENT CORP.  



	 





	
	 
	Name:

Title:	 
	 	 
	

	

 
	Name:

Title:	 






The
undersigned agrees to the terms and conditions contained in this letter. 



	 





	
	 	

	Date	 	W. Thomas Hodgson













QuickLinks


Schedule A Release and Resignation

Schedule B Form of Consulting Agreement

Consulting Agreement with Magna Entertainment Corp. ("MEC")