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Exhibit 10.27

 
 

SECOND AMENDMENT TO LEASE AGREEMENT    
    

        THIS SECOND AMENDMENT TO LEASE AGREEMENT (this "Second Amendment") is made as of December             , 2003 by
and between
BAY MEADOWS MAIN TRACK INVESTORS, LLC, a. Delaware limited liability company ("Landlord"), as the successor-in-interest to Bay Meadows Land Company, LLC, a Delaware
limited liability company, f/k/a PW Acquisitions IV, LLC ("BMLC") and BAY MEADOWS OPERATING COMPANY LLC, a Delaware limited liability company ("Tenant"). 

 
 

RECITALS    
    

        A.    BMLC and Tenant entered into that certain Lease dated as of November 17, 2000 (the "Lease"), for that certain
parcel of real property (the "Land") together with the horse racing facility and associated improvements (the "Main Track Improvements"), located in San
Mateo County, California (as more particularly described and defined in the Lease, collectively, the "Premises"). 

        B.    BMLC
and Tenant entered into that certain Amendment to Lease Agreement dated as of December             , 2002 (the "First Amendment"), whereby certain
terms and provisions of the Lease were amended or restated as more particularly set forth therein. 

        C.    Landlord
and Tenant desire further to amend the Lease on the terms provided in this Second Amendment. All initially capitalized terms used but not otherwise defined in
this Amendment shall have the meanings assigned to such terms in the Lease. 

        NOW,
THEREFORE, in consideration of the covenants set forth herein, Landlord and Tenant agree to amend the terms and provisions of the Lease, as amended by the First Amendment, as
follows: 

 
 

AGREEMENT    
    

        1.    Definitions: Term.    Sections 1(a) and (b) of the Lease, as amended by Paragraph 1 of the
First Amendment, are hereby deleted and restated in their entirety as follows: 

"(a)    For
the purposes of this Lease, the term shall commence on the Commencement Date (as defined in Paragraph (b) below) and terminate on the Expiration Date
(as defined in Paragraph (b) below). 

(b)    The
term of the Lease shall commence on the date hereof (the "Commencement Date") and shall end on December 31, 2004 (such date, or any prior date
when this Lease has been terminated pursuant to the terms hereof, shall be hereinafter referred to as the "Expiration Date"). 

(c)    Tenant
hereby acknowledges and agrees that neither Tenant nor any of Tenant's affiliates has any "right of first offer", "right of first refusal" or any other right or interest to
extend the term of the Lease or to otherwise acquire any interest in the Premises." 

1

 

        2.    Rent.    Section
2 of the Lease (as amended by Paragraph 2 of the First Amendment) is hereby deleted and restated in
its entirety as follows: 

"2.    Rent.    For
each Lease Year, Tenant shall pay to Landlord at Landlord's address for notices in Section 21 below, or to such other person
or at such place as Landlord may direct by written notice from time to time, without demand, set-off or deduction: 

	Lease Year
 
	 	Annual Rent

	Commencement Date to December 31, 2001	 	$	1.00
	January 1, 2002 to December 31, 2002	 	$	1.00
	January 1, 2003 to December 31, 2003	 	$	3,250,000
	January 1, 2004 to December 31, 2004	 	$	4,000,000

        Rent
payable for any calendar year during the term of this Lease shall be due and payable in advance on January 1 of any such calendar year. Landlord acknowledges that
concurrently with the rent payment due on January 1, 2003, Tenant paid and reimbursed Landlord for real property taxes previously paid by Landlord with respect to the Premises the sum of Six
Hundred Ninety Thousand Three Hundred Sixty Eight Dollars ($690,368) representing property taxes paid by Landlord through December 31, 2002. Landlord and Tenant acknowledge that pursuant to
Section 5(a) of the Lease, Landlord and Tenant are each responsible for 50% of the Real Estate Taxes on the Land and the Main Track Improvements constituting a portion of the Premises." 

        3.    Artwork.    Pursuant
to that certain Bill of Sale dated April 1, 2001, Tenant acquired all of Landlord's right, title and
interest in and to the certain artwork and other items as set forth in Exhibit B attached to the Lease (as such artwork exists on the date of this Second Amendment, the
"Artwork"). Landlord shall have the right to reacquire the Artwork at the expiration or other termination of the Lease. In the event Landlord desires so to reacquire the
Artwork, Landlord shall (a) obtain at Landlord's cost an appraisal of the fair market value of the Artwork by an appraiser selected by Landlord and approved by Tenant in the exercise of its
reasonable judgment, and (b) within ten (10) business days following the receipt of such appraisal, elect to purchase from Tenant the Artwork for a cash purchase price equal to the determined
fair market value payable within ten (10) business days of such election. 

        4.    FF&E
and Main Track Improvements.    Tenant acknowledges that pursuant to Section 33 of the Lease, all of the Main Track
Improvements, including but not limited to all barn facilities and stalls, are and shall remain the property of Landlord upon the termination of the Lease. Tenant further acknowledges and agrees that
(i) all furniture, fixtures and equipment ("FF&E") associated with the Premises and the use and operation thereof as permitted and contemplated by Section 4(a) of the Lease, including,
but not limited to the items identified on Schedule 1 and all replacements and additions thereto and all shares of Tenant in NOTWINC attributable to Bay Meadows (thereafter Bay Meadows interest
in NOTWINC shall not exceed that of Golden Gate Fields) and (ii) any and all rights in the name "Bay Meadows", including all fictional business names, trade names, registered and
unregistered trademarks, service marks and applications, including the URL and domain name www.baymeadows.com (collectively "Marks") shall be conveyed and transferred to
Landlord by Tenant or any affiliate of Tenant holding interests in FF&E and Marks, including Bay Meadows Catering, a California corporation, as appropriate, without representation or warranty of any
kind by Bill of Sale or Assignment. Upon and as a condition of such transfer, Tenant shall receive from Landlord consideration in cash or other readily available funds equal to the then "book" value
of such FF&E. In addition to the foregoing, Landlord shall also have the right to acquire the liquor license associated with the operation of Bay Meadows for its fair market value in cash payable at
the time of payment for the FF&E as provided above, and Tenant agrees to reasonably cooperate with Landlord in connection with the transfer of such liquor license so as not to interrupt any ongoing
business operations at Bay Meadows. 

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        5.    Continued
Cooperation.    Tenant and Landlord acknowledge and agree that a material consideration for this Second Amendment is the
agreement by Landlord, on the one hand, and Tenant (on behalf of itself and its affiliates, Pacific Racing Association and Magna Entertainment Corp.), on the other, to cooperate in the
operation of Golden Gate Fields and Bay Meadows Race Course on the terms and conditions set forth in Exhibit "A" attached hereto. 

        6.    Necessary
and Elective Improvements.    During the term of the Lease, Landlord and Tenant shall each pay 50% of such capital
improvements to the Premises as are necessary to cause its operations to be licensed for a race meet by the CHRB and to be conducted in a safe manner for its employees and customers, other than
routine maintenance and repairs, which are otherwise Tenant's responsibility under the Lease. Such necessary capital improvements shall be made at the direction of Tenant by such contractor as is
selected by Tenant and reasonably approved by Landlord. It is acknowledged by Tenant and Landlord that there may be certain other improvements of an elective nature that Tenant cannot be expected to
make because the term of the Lease expires on December 31, 2004 but that may be appropriate in the event the Premises are to be used as a racing facility beyond 2004. At present, such elective
improvements are the pavement of certain portions of the parking lot, fire suppression for certain IT equipment, and remedial work on the roof. If Tenant desires to undertake any such elective
improvements and such improvements are approved in writing by Landlord, Tenant, in the event the Lease is not extended beyond 2004, shall be reimbursed for the full actual cost of such elective
improvements. In addition to the foregoing, Tenant agrees to cooperate reasonably with Landlord in connection with such additional capital improvements as Landlord shall request to the Premises upon
notification to Tenant, which additional capital improvements shall be made at the sole cost and expense of Landlord and in a manner so as not to interfere with the operation of the Premises or with
Tenant's quiet enjoyment thereof. 

        7.    Gaming
Initiatives.    Landlord and Tenant acknowledge that it is in the best interest of both Landlord and Tenant to cooperate in
the pursuit of the Gaming Revenue Act of 2004 (the "Initiative"). Subject to the terms of the existing agreement between the proponents of the Initiative, including Landlord and Tenant,
Landlord and Tenant each agree for the benefit of the other and their affiliates (i) to cooperate with one another in an effort to have the Initiative approved in its present form and
(ii) not to take any action either directly or through others to hinder or interfere with the potential rights and benefits either Landlord or Tenant (or its affiliates) may have under
the Initiative. 

3

 

        8.    General
and Miscellaneous. 

(a)    Representations and Warranties.    Tenant represents to Landlord that (i) the person or persons signatory to this
Amendment have full power and authority to bind Tenant, and (ii) the execution and delivery of this Amendment and the performance of Tenant's obligations hereunder do not and shall not result
in the violation of Tenant's organizational documents or any material contract or agreement to which tenant is a party. Landlord represents to Tenant that (i) the person or persons signatory to
this Amendment have full power and authority to bind Landlord, and (ii) the execution and delivery of this Amendment and the performance of Landlord's obligations hereunder do not and shall not
result in the violation of Landlord's organizational documents or any material contract or agreement to which Landlord is a party. 

(b)    Ratification.    Except as modified herein and by the First Amendment, the Lease remains unchanged and is in full force and
effect. 

(c)    Counterparts.    This Amendment may be executed in counterparts, each of which shall constitute an original, but all together
shall be deemed to be one agreement. 

(d)    Severability.    Any provision of this Amendment which a court of competent jurisdiction shall determine to be invalid, void
or illegal shall in no way affect, impair or invalidate any other provision hereof and all such other provisions shall remain in full force and effect. 

(e)    Applicable Law.    This Amendment shall be governed by and construed in accordance with the laws of the State
of California. 

(f)    No Recordation.    Neither this Amendment, nor a short form thereof, shall be recorded. 

(g)    Reaffirmation.    Except as specifically amended hereby, the Lease is and shall remain in full force and effect; and to the
extent that there are any inconsistencies between the provisions of this Amendment and the Lease, the provisions hereof shall control. 

(Remainder
of Page Intentionally Blank; Signature Page Follows) 

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        IN
WITNESS WHEREOF, this Amendment is effective as of the date first written above. 

	 LANDLORD:	 	TENANT:
	
 	

 	
 	

 	

 
	 BAY MEADOWS MAIN TRACK INVESTORS, LLC, a Delaware limited liability company	 	BAY MEADOWS OPERATING COMPANY LLC, a Delaware limited liability company
	
 	

 	
 	

 	

 
	 	 	 	By:	Magna Entertainment Corp., a Delaware corporation
	
 	

 	
 	

 	

 
	By:	 	 	By:	 
	 	
	 	 	

	
 	

 	
 	

 	

 
	Name:	 	 	Name:	 
	 	
	 	 	

	
 	

 	
 	

 	

 
	Title:	 	 	Title:	 
	 	
	 	 	

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EXHIBIT A
  
    COOPERATION AGREEMENT    
    

        1.    The
obligations described in Paragraphs 5 and 6 below (collectively, the "Cooperation Agreement") will take effect on January 1, 2005, but only in the event
that (a) the Lease term is not extended beyond December 31, 2004, and (b) Landlord has not defaulted in any of its obligations under the Lease and failed to cure such default
within the applicable cure period, if any. 

        2.    The
Cooperation Agreement will have a term of three (3) years commencing January 1, 2005. 

        3.    The
Golden Gate Fields obligations (as described in Paragraph 5 below) will be binding upon Tenant and its affiliates Pacific Racing Association and Magna
Entertainment Corp. ("MEC"); provided, however, that such obligations will be binding only so long as Landlord, its affiliates and/or its successors and assigns are satisfying the Bay Meadows
obligations (as described in Paragraph 6 below). Any successor or assign of Tenant or MEC with respect to Golden Gate Fields shall be required to assume (to the extent applicable)
the Golden Gate Fields obligations. The Golden Gate Fields obligations will run in favor of Landlord, its affiliates, and its successors and assigns, but only for so long as the Bay Meadows
obligations are being satisfied. 

        4.    The
Bay Meadows obligations (as described in Paragraph 6 below) will be binding upon Landlord and its affiliates; provided, however, that such obligations
will be binding only so long as Tenant and its affiliates are satisfying the Golden Gate Fields obligations (as provided in Paragraph 5 below). Any successor or assign of Landlord shall
be required to assume the Bay Meadows obligations. The Bay Meadows obligations will run in favor of Tenant, its affiliates, and their successors and assigns, but only for so long as the Golden Gate
Fields obligations are being satisfied. 

        5.    The
Golden Gate Fields obligations shall consist of the following: 

A.    During
the time that Bay Meadows is operating its live meet, Golden Gate Fields shall make its facility available for off-track stabling and training, but only on the condition that
Golden Gate Fields receives its historical relative portion of the available stabling and training funds, or other comparable consideration. 

B.    Subject
to the approval of the TOC, Golden Gate Fields shall cooperate in the pooling of purse funds on a year-round basis. 

C.    MEC
shall use best efforts to cause racetracks owned by it to continue to import and display the audio-visual signal on races conducted at Bay Meadows, including on its account
wagering system, in a manner as was done during calendar year 2003. 

D.    At
the option of Bay Meadows while conducting a live meet, Golden Gate Fields acting as an off-track wagering facility shall reasonably cooperate (at no out-of-pocket cost to
Golden Gate Fields) in any promotion carried out by Bay Meadows to promote attendance and wagering at Golden Gate Fields. 

1

 

E.    Subject
to approval of the TOC, Bay Meadows and Golden Gate Fields shall continue to cooperate with each other in the maintenance of year round Horsemen's Accounts. 

        6.    The
Bay Meadows obligations shall consist of the following: 

A.    During
the time that Golden Gate Fields is operating its live meet, Bay Meadows shall make its facility available for off-track stabling and training, but only on the condition
that Bay Meadows receives its historical relative portion of the available stabling and training funds, or other comparable consideration. 

B.    Subject
to the approval of the TOC, Bay Meadows shall cooperate in the pooling of purse funds on a year-round basis. 

C.    Bay
Meadows shall permit the totalisator hub for Northern California to continue to be located at Bay Meadows. 

D.    Bay
Meadows shall at all times use its best efforts to import into or cause to be imported into California and display the audio-visual signal on races conducted at racetracks owned by
MEC to at least the same extent as was the case in the 2003 calendar year, including advocating importation and display of such races to the TOC to the extent practicable. 

E.    At
the option of Golden Gate Fields while conducting a live meet, Bay Meadows acting as an off-track wagering facility shall reasonably cooperate (at no out-of-pocket
cost to Bay Meadows) in any promotion carried out by Golden Gate Fields to promote attendance and wagering at Bay Meadows. 

F.    Subject
to approval of the TOC, Bay Meadows and Golden Gate Fields shall continue to cooperate with each other in the maintenance of year round Horsemen's Accounts. 

G.    Bay
Meadows shall provide on a non-exclusive basis the audio-visual signal from Bay Meadows races to an affiliate of Golden Gate Fields for the purpose of account wagering in a
manner consistent with historical practice. 

        7.    The
obligations under the Cooperation Agreement shall not include on either racetrack an obligation to continue to share employees. 

        8.    Bay
Meadows and Golden Gate Fields (including MEC) shall cooperate with one another in any future industry wide effort on the part of the California thoroughbred tracks,
the TOC, CTT and CTBA to bring additional gaming activities or revenues to race tracks in California, including from slot machines or similar gaming, and shall not take any action detrimental to the
other in connection with any such California industry wide effort. 

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SCHEDULE 1
  
    FURNITURE, FIXTURES AND EQUIPMENT    
    

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QuickLinks

SECOND AMENDMENT TO LEASE AGREEMENT

RECITALS

AGREEMENT

EXHIBIT A COOPERATION AGREEMENT

SCHEDULE 1 FURNITURE, FIXTURES AND EQUIPMENTExhibit 10.29

	 	 	Magna Entertainment Corp.
	
 	
 	

 
	 	 	337 Magna Drive

Aurora, Ontario,

Canada L4G 7K1

Tel (905) 726-2462

Fax (905) 726-7167

PRIVATE & CONFIDENTIAL

July 1,
2003 

Mr. Blake
Tohana

68 Killdeer Crescent

Toronto, Ontario M4G 2W8 

Dear
Blake: 

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 Executive Vice-President and Chief Financial Officer of the Corporation, to
perform the duties assigned to you from time to time by the Chief Executive Officer of the Corporation or his designee. You shall carry out your day-to-day duties from the
Corporation's head office in Aurora, Ontario. 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 CDN$300,000 (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 CDN$125,000 (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 calendar year 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 and not the Guaranteed
Bonus. 

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

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

	(b)
	three
(3) weeks vacation in respect of each 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 100,000 shares of Class A Subordinate Voting Stock of the Corporation at an exercise price per share
which is equal to the greater of: (i) the closing trading price of the shares on the trading day immediately preceding the date that the options are granted, and (ii) the net book value
per share of the Corporation as of the end of the most recently completed quarterly reporting period for which the Corporation has publicly announced its results. 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
your annual after tax compensation shall be determined by deducting CDN$150,000 from your actual cash compensation for the fiscal year and then giving effect to income tax at a deemed 50% tax rate),
by (ii) the average closing trading price on The Toronto Stock Exchange for MEC Common Shares over each such year. 

2

 

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 your
after-tax total cash compensation for the three most recent fiscal years (the calculation of your after-tax total cash compensation shall be determined by deducting CDN$450,000
from your actual cash compensation for the three most recent fiscal years and then giving effect to income tax at a deemed 50% tax rate), by (ii) the average trading price on the The Toronto
Stock Exchange 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 that are already owned by you to satisfy such requirement. You may also accumulate MEC Common Shares in your Registered Retirement Savings Plan or your
Registered Education Savings Plan to satisfy such requirement. 

	7.
	Termination:

	(a)
	Your
employment and this Agreement, including all benefits provided for under this Agreement, will terminate without notice or payment in lieu thereof, on (a) the acceptance by
the Corporation of your voluntary resignation, (b) at the Corporation's option, your disability for an aggregate of three (3) months or more in any twelve (12) 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.

	(b)
	Notwithstanding
Paragraph 7(a), you may, at any time, terminate your employment and this Agreement by providing the Corporation with not less than sixty (60) days prior
written notice of intention to terminate. In addition, the Corporation may at any time, for any reason, terminate your employment and this Agreement by providing you with not less than six
(6) months prior written notice of the Corporation's intention to terminate, or may elect to terminate your employment and this Agreement immediately by paying you a severance allowance of
$212,500 (less statutorily required deductions) either in a lump sum within thirty (30) days of the date of termination or monthly, in arrears and without interest, in six (6) equal
instalments commencing thirty (30) days from the date of termination. The Corporation may also terminate your employment and this Agreement by providing you with a combination of advance notice
of less than six (6) months and a severance allowance. In such case, the severance allowance shall equal the severance allowance set forth above, pro-rated based on the amount of
time that elapsed between the date the Corporation notified you of the termination and the effective date of the termination. If your employment is terminated pursuant to this Paragraph 7(b),
the Corporation shall maintain on your behalf the benefits referred to in Paragraph 4(a) for six months, with the exception of disability insurance coverage, which shall terminate upon
the termination of your employment. 

3

 

	(c)
	Upon
termination of this Agreement, the provisions of section 8 shall continue in full force and effect. In the event that you breach the provisions of section 8, the
payment of any further installments of such severance allowance will immediately cease.

	(d)
	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").

	(e)
	Upon
termination of this Agreement, you shall be immediately released from any further obligation to purchase or hold any MEC Common Shares pursuant to section 6.

	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, improvements, inventions 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 cooperate with the Corporation in all
necessary steps it may take to ensure that such property rights are protected.

	(b)
	Confidentiality:    You shall keep confidential at any time during or after your employment, any information (including
proprietary or confidential information) about the business and affairs of, or belonging to, the Corporation or any member of the MEC Group or their respective customers or suppliers, including
information which, though technically not trade secrets, the dissemination or knowledge whereof might prove prejudicial to any of them. This obligation applies only in respect of information which is
not otherwise publicly disclosed. In addition, if requested at any time, you shall execute a separate form of Employee Confidentiality Agreement as a condition of your continued employment.

	(c)
	Non-Competition:    You shall not, during the term of your employment with the Corporation and for a period of
six (6) months after the termination of your employment, 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.

	(d)
	Non-Solicitation:    During the term of your employment with the Corporation and for a period of six
(6) 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 become employed or in any way engaged
by another person, firm, corporation, or other entity. 

4

 

	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 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 manager 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 a date to be mutually agreed upon, but in no event
later than July 28, 2003.

	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 no less favourable to you as those 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 and the Corporation
hereby attorn to the jurisdiction of the courts of Ontario. 

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	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 originals to the
attention of Sam Sniderman at the address for the Corporation first listed above by July 8, 2003. 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. 

Yours
very truly, 

/s/    Jim
McAlpine 

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

	
 	
 	

 
	
 Date	 	
 Blake Tohana

6

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