Document:

QuickLinks
 -- Click here to rapidly navigate through this document

        Exhibit 10.4

 
 

GUARANTEE    
    

GUARANTEE
AGREEMENT made the 18th day of October, 2002 by MAGNA ENTERTAINMENT CORP., a corporation incorporated under the laws of the
State of Delaware (the "Guarantor") to and in favour of CHARLES JURAVINSKI and MARGARET JURAVINSKI, on joint account, with right of survivorship, of the
City of Hamilton, in the Province of Ontario (collectively, the "Creditor"). 

RECITALS:

	A.
	Pursuant
to a share purchase agreement made as of February 5, 2002 among the Creditor, Flamboro Downs Holdings Limited, Flamboro Downs Limited and 1180554 Ontario Limited
("1180554") (the "Original Share Purchase Agreement"), the Creditor agreed to sell, assign and transfer to 1180554 and 1180554 agreed to purchase the
Purchased Shares and the Business of the Acquired Companies and the property and assets owned or leased by the Acquired Companies, all as more particularly defined and set forth in the Original Share
Purchase Agreement;

	B.
	The
Original Share Purchase Agreement was amended by an amending agreement among the parties dated March 15, 2002 (the "First Amending
Agreement"), an amending agreement among the parties dated March 28, 2002 (the "Second Amending Agreement"), and a
waiver, acknowledgment and amending agreement among the parties made as of May 3, 2002 (the "Third Amending Agreement");

	C.
	The
Original Share Purchase Agreement was further amended by an acknowledgement and amending agreement made as of June 4, 2002 among the parties to the Original Share Purchase
Agreement and Ontario Racing Inc. (the "Purchaser") and the Guarantor (the "Fourth Amending Agreement"), and a letter amending agreement dated
October 9, 2002 (the "Fifth Amending Agreement"), (the Original Share Purchase Agreement, as so amended by the First Amending Agreement, the
Second Amending Agreement, the Third Amending Agreement, the Fourth Amending Agreement, and the Fifth Amending Agreement is hereinafter referred to as the "Share Purchase
Agreement");

	D.
	Capitalized
terms used but not defined herein shall have the respective meanings ascribed to them in the Share Purchase Agreement.

	E.
	Pursuant
to the Share Purchase Agreement, a portion of the Purchase Price for the Purchased Shares was satisfied on Closing by delivery by the Purchaser to the Creditor of a promissory
note dated the 18th day of October, 2002 (the "Promissory Note"); 

 

	F.
	Pursuant
to the Share Purchase Agreement and the Promissory Note, the Guarantor is required to unconditionally guarantee the due and punctual payment and performance of all debts and
liabilities, present or future, direct or indirect, absolute or contingent, matured or not, at any time owing by the Purchaser to the Creditor arising out of or relating to the Promissory Note;

	G.
	Accordingly,
the Guarantor enters into this Guarantee Agreement for the purpose of unconditionally guaranteeing the due and punctual payment and performance of the obligations of the
Purchaser to and in favour of the Creditor; 

NOW
THEREFORE IN CONSIDERATION of the sum of TEN DOLLARS ($10.00) and other good and valuable consideration as set out in the Share Purchase Agreement, the receipt and sufficiency of which are
acknowledged, the Guarantor agrees with the Creditor as follows: 

1.     Guaranteed Obligations  

The
Guarantor irrevocably and unconditionally guarantees the due and punctual payment and performance of all debts and liabilities, present or future, direct or indirect, absolute or contingent,
matured or not, at any time owing by the Purchaser to the Creditor arising out of or relating to the Promissory Note, as amended, modified, supplemented, restated or replaced from time to time,
including all reasonable legal and other costs, charges and expenses payable thereunder (collectively, the "Guaranteed Obligations"); and if the Purchaser shall at any time fail to fully and
faithfully perform and discharge the Guaranteed Obligations, the Guarantor shall itself perform and discharge the Guaranteed Obligations. The foregoing covenant and obligation of the Guarantor is
absolute, present and continuing and is in no way conditional or contingent on any event, circumstance, action or omission which might in any way discharge a guarantor or surety. 

2.     Right to Immediate Payment  

The
Creditor shall not be bound to seek or exhaust its recourse against the Purchaser or any other persons or to realize on any security it may hold in respect of the Guaranteed Obligations before
being entitled to payment from the Guarantor under this Agreement and the Guarantor renounces all benefits of discussion and division. 

3.     Payment on Demand  

The
liability of the Guarantor shall be payable immediately upon written demand showing evidence that the Purchaser is in default under the Promissory Note and such demand shall be conclusively deemed
to have been effectually made and given when an envelope containing such demand, addressed to the Guarantor at the address of the Guarantor set out below, or at such other address as the Guarantor may
from time to time designate to the Creditor in writing, is posted by registered mail, postage prepaid, or delivered to the Guarantor. 

2

 

        Address
of Guarantor: 

        337
Magna Drive

        Aurora,
Ont.

        L4G 7K2 

        Attention:
General Counsel and Chief Executive Officer 

4.     Statement of Accounts  

Any
account settled or stated by or between the Creditor and the Purchaser, or if any such account has not been so stated or settled prior to any demand for payment, any account stated by the Creditor
shall, in the absence of manifest error, be accepted by the Guarantor as conclusive evidence that the amount of the Guaranteed Obligations so settled or stated is due and payable by the Purchaser to
the Creditor. 

5.     Liability Absolute  

The
liability of the Guarantor shall be absolute and unconditional irrespective of: 

	(a)
	the
invalidity, unenforceability or illegality, in whole or in part, of any agreements, instruments or other documents held by the Creditor to create, represent or evidence any
Guaranteed Obligations;

	(b)
	any
defence, counterclaim or right of set-off available to the Purchaser, save and except for such right or rights of set-off available to the Purchaser as
specifically provided for in the Promissory Note;

	(c)
	any
change in the name, objects, capital, constating documents or by-laws of the Purchaser;

	(d)
	any
amalgamation, merger or re-organization of the Purchaser or, if a partnership, of the partnership, including, without limitation, by reason of the death, retirement or
admission for membership of any partners (in which case this Agreement shall apply to the corporation or partnership, as the case may be, resulting or continuing therefrom); or

	(e)
	any
other circumstance which might otherwise constitute, in whole or in part, a defence available to, or a discharge of, the Guarantor, the Purchaser or any other persons, firms or
corporations in respect of the Guaranteed Obligations or the liability of the Guarantor. 

3

 

6.     Continuing Nature and Reinstatement  

This
Agreement is a continuing guarantee and shall apply to and secure payment of all Guaranteed Obligations and any ultimate unpaid balance thereof. This Agreement shall be reinstated if at any time
any payment of any Guaranteed Obligation is rescinded or must otherwise be returned by the Creditor upon the insolvency, bankruptcy or reorganization of the Purchaser or for any other reason
whatsoever, all as though such payment had not been made. 

7.     Liquidation, Bankruptcy, etc.  

In
the event of any liquidation, winding up or bankruptcy of the Purchaser (whether voluntary or compulsory) or in the event that the Purchaser shall make a bulk sale of any of its assets within the
bulk transfer provisions of any applicable legislation or any composition with creditors or scheme of arrangement, the Creditor shall have the right to rank in priority to the Guarantor for its claim
in respect of the
Guaranteed Obligations and to receive all dividends or other payments in respect thereof until its claim has been paid in full, all without prejudice to its claim against the Guarantor who shall
continue to be liable for any remaining unpaid balance of the Guaranteed Obligations. In the event of any valuation or retention by the Creditor of any securities, such valuation or retention shall
not, as between the Creditor and the Guarantor, be considered payment, satisfaction or reduction of any Guaranteed Obligations. 

8.     Waiver of Subrogation Rights  

In
the event that the Creditor receives any payments on account of the liability of the Guarantor, the Guarantor shall not have, and waives to the extent required, all rights to claim repayment from
or against the Purchaser and any other guarantors and all rights to be subrogated to any rights of the Creditor, until the Guaranteed Obligations have been paid in full. 

9.     Entire Agreement  

There
are no representations, conditions, agreements or understandings with respect to this Agreement or affecting the liability of the Guarantor other than as set out or referred to in this
Agreement, the Share Purchase Agreement, the Promissory Note and the collateral documents contained or described within the Promissory Note. 

10.   Additional Security  

This
Agreement is in addition and without prejudice to any security of any kind (including, without limitation, any guarantees, whether or not in the same form as this Agreement) held by the Creditor. 

4

 

11.   Further Assurances  

The
Guarantor shall from time to time upon the reasonable request of the Creditor, execute and deliver, under seal or otherwise, all such further agreements, instruments and documents and do all such
further acts and things as the Creditor may reasonably require and as may be reasonably necessary to give effect to the transaction contemplated by this Agreement. 

12.   Successors, Assigns and Governing Law  

This
Agreement shall enure to the benefit of and be binding upon the respective heirs, legal representatives, successors and assigns of the Guarantor and the Creditor and shall be governed by and
construed in accordance with the laws of the Province of Ontario. The Guarantor irrevocably submits to the jurisdiction of the courts of Ontario in any action or proceeding arising out of or relating
to this Agreement but nothing shall prevent the Creditor from enforcing this Agreement or any related judgment against the Guarantor in any other jurisdiction. 

        SIGNED,
SEALED AND DELIVERED at Toronto, Ontario, this 18th day of October, 2002. 

	 	 	MAGNA ENTERTAINMENT CORP.
	

 	
 	

Per:	
 	

 Name: Edward C. Hannah

Title: Vice-President and General Counsel
	 	 	 	 	I have authority to bind the Corporation.

5

QuickLinks

GUARANTEEQuickLinks
 -- Click here to rapidly navigate through this document

        Exhibit 10.5

	

 	 	Magna Entertainment Corp.

 337 Magna Drive

Aurora, Ontario,

Canada L4G 7K1

Tel (905) 726-7002

Fax (905) 726-2596

PRIVATE & CONFIDENTIAL  

March 28,
2003 

Mr. Roman
Doroniuk

22 Walmer Road

Suite 804

Toronto, Ont. M5R 2W5 

Dear
Roman: 

 
 

Re: Employment with Magna Entertainment Corp.  
    

Upon
acceptance by you, this letter will confirm the terms and conditions of your employment with Magna Entertainment Corp. (the "Corporation"), as follows: 

	1.
	Position:    You are appointed as Chief Operating Officer of the Corporation, reporting to the President and Chief Executive
Officer and the Chairman of the Corporation. You acknowledge that due to the nature of your position and job responsibilities, you will be expected to engage in extensive business travel. You will
devote substantially all of your business time, energy and skill to the performance of your duties for the Corporation.

	2.
	Base Salary:    You shall receive a Base Salary of US$400,000 per annum (less statutorily required deductions), payable in
arrears in equal instalments in accordance with the Corporation's standard payroll practices. Your Base Salary will be reviewed annually in accordance with the Corporation's standard practices.

	3.
	Incentive Bonus:    In addition to your Base Salary, you shall receive a guaranteed bonus of US$600,000 per annum (less
statutorily required deductions) (the "Guaranteed Bonus"), payable quarterly in arrears in equal installments in accordance with the Corporation's standard practices, pro-rated for any
partial years. Prior to the end of 2003, you and the Corporation will attempt to settle upon a mutually agreeable profit sharing arrangement, whereby you will receive a percentage of the net profits
of the Corporation (the "Profit Sharing Bonus"). In the event the Profit Sharing Bonus is so determined and agreed upon, thereafter you shall receive the Profit Sharing Bonus.

	4.
	Benefits:    During your employment by the Corporation, you will be entitled to:

	(a)
	participate
in all group benefit programs generally applicable to executive employees of the Corporation from time to time;

	(b)
	four
(4) weeks vacation in respect of each completed twelve (12) month period in accordance with the Corporation's policy, to be taken at such time or times as are
mutually convenient to you and the Corporation, but not payment in lieu thereof; and

	(c)
	reimbursement
for all reasonable business expenses incurred on behalf of the Corporation in carrying out your duties, in accordance with the Corporation's policies from time to time,
but excluding automobile operating costs.

	5.
	Options:    Subject to the express approval of the Compensation Committee of the Board of Directors of the Corporation and
compliance with all applicable laws, the Corporation shall grant you options to 

 

purchase
300,000 shares of Class A Subordinate Voting Stock of the Corporation at an exercise price per share which is equal to the closing trading price of the shares on the trading day
immediately preceding the date that the options are granted. Subject to the approval of the Compensation Committee, the options will have a term of ten years from date of grant and will vest
one-fifth on the date of grant and an additional one-fifth on each of the first four anniversaries of the date of grant. The grant of options will be subject to you entering
into a Stock Option Agreement with the Corporation in the standard form used by the Corporation from time to time for employee stock option grants under the Corporation's Long-Term
Incentive Plan. Should your employment with the Corporation terminate, the term of your options shall be reduced as provided in the Stock Option Agreement referred to above. Such options shall be
subject to all other terms and conditions set forth in the Stock Option Agreement referred to above and/or in the Corporation's Long-Term Incentive Plan. Upon receipt of an executed copy
of this Agreement, we will place this matter before the Compensation Committee of the Board of Directors of the Corporation at the earliest reasonable opportunity. 

	6.
	MEC Share Investment:    The Corporation requires that you accumulate and maintain an investment in Class A Subordinate
Voting Stock ("MEC Common Shares") as a condition of your employment. As a minimum, you agree to accumulate over each of the three fiscal years commencing January 1, 2004, that number of MEC
Common Shares which is calculated by dividing (i) one-third (1/3) of your after tax total cash compensation for each of those three fiscal years (the calculation of
after tax compensation shall be determined by deducting US$150,000 and then giving effect to income tax at a deemed 50% tax rate), by (ii) the average closing trading price for MEC Common
Shares on The Nasdaq National Market for MEC Common Shares over each such year. 

Subsequent
to this three year period, you will annually maintain that number of MEC Common Shares which is calculated by dividing (i) one-third (1/3) of the
after-tax total cash compensation for the three most recent fiscal years (the calculation of after-tax total cash compensation shall be determined by deducting US$450,000 and
then giving effect to income tax at a deemed 50% tax rate), by (ii) the average trading price on the Nasdaq National Market for MEC Common Shares over such three year period. 

Evidence
of your ownership of the required number of MEC Common Shares must be produced each year, commencing in February 2005 for the fiscal year ending December 31, 2004 in order to
obtain payment of any remaining unpaid balance of your Guaranteed Bonus or Profit Sharing Bonus (as the case may be) for the previous fiscal year. You may accumulate such MEC Common Shares in advance
at your discretion and may use MEC Common Shares which are already owned by you to satisfy such requirement. 

	7.
	Termination:    Your employment and this agreement, including all benefits provided for under this Agreement, will terminate
on: (a) the acceptance by the Corporation of your voluntary resignation; (b) at the Corporation's option, your disability for an aggregate of six (6) months or more in any twenty
four (24) month period, subject to any statutory requirement to accommodate such disability; (c) your death; (d) at the Corporation's option, if a License (as defined in
Section 9) is denied to you or revoked from you in accordance with section 9, or (e) your dismissal for just cause or by reason of your breach of the terms of this Agreement. 

Otherwise,
you may, at any time for any reason, terminate your employment and this agreement by providing the Corporation with six (6) months' prior written notice of intention to terminate.
The Corporation may elect to terminate your employment, at any time for any reasons, by paying you as follows: 

	(i)
	if
such termination occurs prior to January 6, 2004, a retiring allowance of US$250,000 (less statutorily required deductions) either in a lump sum within thirty
(30) days of the day of termination or monthly in arrears in three (3) equal instalments commencing thirty (30) days after the day of termination; and

	(ii)
	if
such termination occurs on or after January 6, 2004, a retiring allowance of US$500,000 (less statutorily required deductions) either in a lump sum within
thirty (30) days of the day of termination or monthly in arrears in six (6) equal instalments commencing thirty (30) days after the day of termination. 

2

 

If
your employment is terminated pursuant to this paragraph, the Corporation shall maintain on your behalf the benefits referred to in paragraph 4(a) for a period of not less than the
period required by applicable statute. 

In
the event that you breach the provisions of paragraph 8, the payment of any further amounts under this Agreement will immediately cease. 

The
termination provisions set forth above in this section 7 represent all severance pay entitlement, notice of termination or pay in lieu thereof, salary, bonuses, and other remuneration and
benefits payable or otherwise provided to you in respect of your employment by the Corporation or any affiliated or related companies (collectively, the "MEC Group"). 

	8.
	Other Terms:    You hereby acknowledge as reasonable and agree that you shall abide by the following terms and conditions:

	(a)
	Technology, Know-How, Inventions, Patents:    That all designs, devices and inventions and horse-racing or gaming
industry related improvements and ideas, made or conceived by you resulting from your access to the business of the MEC Group, shall be the exclusive property of the MEC Group, and you and your estate
agree to take all necessary steps to ensure that such property rights are protected.

	(b)
	Confidentiality:    You shall keep confidential at all times during and after your employment, all information (including
proprietary or confidential information) about the business and affairs of or belonging to any member of the MEC Group or their respective customers or suppliers ("Confidential Information"),
including information which, though technically not trade secrets, the dissemination or knowledge whereof might prove prejudicial to any of them, but excluding information in the public domain. In
addition, if requested at any time, you shall immediately execute a separate form of Employee Confidentiality Agreement in the Corporation's standard form as a condition of your continued employment.
You shall be permitted to disclose any Confidential Information if you are required by law to do so.

	(c)
	Conflict of Interest:    You shall not, without the prior consent of the Corporation, which consent will not be unreasonably
withheld, engage in any business activities, either through yourself or through immediate family member(s), which may place you in an actual or apparent conflict of interest with your duty to act, at
all times, in the best interests of the Corporation. The Corporation acknowledges that your current participation on the Boards of Directors of the corporations listed below shall not, based on their
current business activities, violate this paragraph.

	a.
	The
Forzani Group 
	b.
	Scican

	c.
	Summit
Vision 
	d.
	Capri
Films

	(d)
	Non-Competition:    During the term of your employment with the Corporation and for a period of six
(6) months after the cessation of your employment, you shall not, directly or indirectly, in any capacity, compete with the business of the Corporation or of any member of the MEC Group in
respect of which you have had access to proprietary or confidential information, or solicit the employees thereof.

	(e)
	Non-Solicitation:    During the term of your employment with the Corporation and for a period of twelve
(12) months after the termination of your employment, you shall not, directly or indirectly, in relation to any horse racing or gaming related venture you undertake or participate in, solicit,
attempt to solicit, call upon, or accept the business of any firm, person or company who is or was a customer, client, or supplier of the Corporation or any member of the MEC Group or otherwise
solicit, attempt to solicit, or communicate in any way with employees of the Corporation or any member of the MEC Group for the purpose of having such employees employed or in any way engaged by
another person, firm, corporation, or other entity.

	9.
	Licensing:    You acknowledge that (i) the Corporation's core businesses are in highly regulated industries and that
the Corporation, its officers and senior management are each generally required to apply for and be granted a license ("License") in order for the Corporation to be legally permitted to carry on its
core 

3

 

businesses;
(ii) if the Corporation has been granted the right the carry on business in a jurisdiction, such right may be revoked if the jurisdiction, for any reason, revokes a License formerly
granted to an officer or senior management of the Corporation. Accordingly, you acknowledge that if a License were denied to you or an existing License were revoked from you, the interests of the
Corporation would be prejudiced. 

	10.
	Start Date:    Your employment with the Corporation shall commence on April 1, 2003, or such earlier date as may be
agreed upon by the parties.

	11.
	Assignability:    The Corporation, in its sole discretion, acting reasonably, may assign this Agreement to any other member
of the MEC Group without your prior consent. It is acknowledged that any such assignment shall be a comparable role on substantially similar terms as contained in this Agreement. Upon completion of
such assignment, the Corporation shall be automatically released from any obligation, liability or responsibility under this Agreement.

	12.
	Severability:    In the event that a court of competent jurisdiction determines that any portion of this Agreement is in
violation of any statute or public policy, then only the portions of this Agreement which violate such statute or public policy shall be stricken, and all portions of this Agreement which do not
violate any statute or public policy shall continue in full force and effect. Furthermore, any court order striking any portion of this Agreement shall modify the stricken terms as narrowly as
possible to give as much effect as possible to the intentions of you and the Corporation in entering into this Agreement.

	13.
	Governing Law:    This Agreement and the legal relations hereby created between you and the Corporation shall be governed by
and construed under and in accordance with the laws of the Province of Ontario (and the laws of Canada applicable therein), without regard to conflicts of laws principles. You hereby attorn to the
jurisdiction of the courts of Ontario.

	14.
	Modifications:    This Agreement shall not be modified by any oral agreement, express or implied, and all modifications
hereof shall be in writing and signed by you and the Corporation. Failure to insist upon strict compliance with any of the terms, covenants, or conditions hereof shall not be deemed a waiver of such
term, covenant or condition. 

If
the terms of employment as set out in this agreement are acceptable to you, please sign and date three copies of this agreement in the place indicated and return two fully signed copies to the
attention of Sam Sniderman at the address for the Corporation first listed above by April 18, 2003, after which time, if not so signed and returned, this agreement shall become null and void
and of no effect. Upon execution by you, this agreement replaces any prior written or oral employment contract or other agreement concerning remuneration between you and the Corporation or any member
of the MEC Group, including without limitation the employment agreement between you and Magna International Inc. dated December 19, 2002. 

Yours
very truly, 

Jim
McAlpine

President & Chief Executive Officer 

*
* * * * 

I
hereby accept the terms and conditions set out above and acknowledge that this agreement contains all of the terms and conditions of my employment with Magna Entertainment Corp. and that no other
terms, conditions or representations other than those within this letter form part of this agreement. I also confirm that I am not 

4

 

subject
to any restrictions (contractual or otherwise) arising from my former employment which would prevent or impair me in carrying out my duties and functions with the Corporation. 

	

	
 	

	Date	 	Roman Doroniuk

5

QuickLinks

Re: Employment with Magna Entertainment Corp.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00055-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00055-of-00352.parquet"}]]