Document:

EXHIBIT: 10.16

 

AML COMMUNICATIONS, INC.

EMPLOYMENT AGREEMENT

 

This Employment Agreement (“Agreement”) is made and entered into as of
June 18, 2004 (the “Effective Date”) by and between AML Communications,
Inc., a Delaware corporation (“Company”) and Dr. Franco Sechi (the
“Executive”), based on the following facts:

 

A.                                   Executive
was a founder of Microwave Power, Inc., a California corporation (“MPI”).

 

B.                                     Company,
a subsidiary of the Company, the Executive and MPI have entered into an
Agreement of Merger (“Merger Agreement”) to which the form of this Employment
Agreement is attached as Exhibit C.

 

C.                                     Company
desires to employ Executive as an employee.

 

Based on the foregoing facts and circumstances and for good and
valuable consideration, Company and Executive agree as follows:

 

1.                                       Employment.

 

1.1                                 Company
hereby employs Executive at its location in Santa Clara, California, on a full
time basis to perform duties as Company and Executive shall agree and as may be
reasonably assigned by the President or the Board of Directors of Company
consistent therewith.

 

1.2                                 Executive
shall perform his duties on a full time basis and shall render  his services to the Company in a faithful,
diligent and competent manner.

 

1.3                                 Unless
sooner terminated pursuant to the provisions of this Agreement, Company shall
employ Executive commencing on the Effective Date which term shall continue
until the second year anniversary of the Effective Date (the “Initial Term”);
provided however this Agreement shall be automatically renewed on the second
anniversary of the Effective Date unless either party gives notice otherwise at
lease 90 days prior to such anniversary of the Effective Date.  This Agreement may be sooner terminated as
provided herein.

 

1.4                                 The
term of employment shall be terminated by the death or disability of
Executive.  Disability shall mean the
inability of Executive to provide the services specified in this Section 1
for a period of four (4) consecutive months. 
In the event of termination pursuant to this Section 1.4, Company
shall pay to Executive (or  his estate):
(a) any accrued Base Salary as of the termination date to the extent not
theretofore paid; (b) any accrued vacation pay as of the termination date to
the extent not theretofore paid; and (c) any unreimbursed business expenses of
Executive.

 

1.5                                 In
the event that the employment of Executive is terminated by the Company without
Cause, the Company shall pay to Executive: 
(a) any accrued Base Salary as of the termination date to the extent not
theretofore paid; (b) any accrued vacation pay as of the termination date to
the extent not theretofore paid; (c) any unreimbursed business expenses of
Executive; and (d) if such termination occurs during the Initial Term,  his salary from such termination date until
the end of the Initial Term  (the
“Severance Compensation”).  The
Executive shall have no obligation to seek employment and there shall be no
offset of the Severance Compensation. 
The Severance Compensation is the only amount which Executive shall
receive in the event Executive’s employment is terminated without Cause.

 

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1.6                                 As
used in this Agreement, the term “Cause” shall mean and refer to a belief by
Company, founded upon fair and honest reasons, that good cause exists for
Executive’s termination including, but not limited to, a good faith belief that
any of the following events have taken place:

 

(a)                                  the
breach of this Agreement, after written notice specifying the breach and the
failure of Executive to cure such breach within 30 days of the receipt of such
written notice;

 

(b)                                 the
commission of any unlawful job related act or wrongful act involving moral
turpitude by Executive;

 

(c)                                  the
refusal or failure of Executive to perform his duties as an employee of the
Company consistent with this Agreement, so long as the Company shall have first
given Executive a written notice specifying the refusal or failure, and
Executive shall have failed to cure such refusal or failure within 30 days of
the receipt of such written notice;

 

(d)                                 continuing
insubordination by Executive for a period of more than 7 days after written
notice specifying such insubordination with respect to the direction of
Executive by the President or the Board of Directors of the Company;

 

1.7                                 In
the event of termination for Cause or voluntary termination by Executive,
Company shall pay to Executive (a) any accrued Base Salary as of the
termination date to the extent not theretofore paid; (b) any accrued vacation
pay as of the termination date to the extent not theretofore paid; and (c) any
unreimbursed business expenses of Executive.

 

2.                                       Compensation
and Expenses.

 

2.1                                 As
compensation for all services rendered by Executive to Company, Executive shall
receive an annual salary of $113,000 (the “Base Salary”), paid on the regular
pay dates of Company during the period of his employment.  In addition, Executive shall receive a 10%
of Base salary as bonus upon achieving goals of financial performance agreed
annually by the Company and the Executive. Executive may also be eligible for
corporate bonuses as determined in the sole discretion of the Chief Executive
Officer or the Board of Directors of Company.

 

2.2                                 On
each of the first and second anniversary of the Effective Date, and if
Executive is employed by the Company at that time, Company shall grant to
Executive incentive stock options under the Company’s Stock Incentive Plan, a
copy of which is attached hereto as Exhibit A, to purchase 25,000 shares of the
Company’s common stock, vesting over a three year period.  The terms and conditions of such incentive
stock options shall be set forth on the Company’s standard form stock option
agreement.  Any non-renewal of this
Agreement or a termination of Executive’s employment without Cause shall
constitute “normal retirement” for purposes of Executive’s stock option
agreement.

 

2.3                                 Upon
presentation of properly completed expense statements on the Company’s expense
report forms, Company shall pay or reimburse Executive for all reasonable
expenses incurred or paid by his during his employment pursuant to this
Agreement.  As used in this
Section 2.3, the term “reasonable” shall mean that such expenses are
consistent with those of executives in comparable positions with the Company.

 

2.4                                 Executive
shall be entitled to the same benefits as other executives in comparable
positions with the Company, including paid vacation and such other benefits as
Company in its sole discretion provides. 
For purposes of determining the level of benefits, Executive shall be
credited with Executive’s years of service with MPI.  In addition, Executive shall receive $200 per month for
Executive’s Medicare premium.

 

2

 

3.                                       Restrictive
Covenants.

 

3.1                                 Introductory
Facts.

 

(a)                                  Executive
was President and a major shareholder of MPI which was acquired by the Company
pursuant to the Merger Agreement (the “Acquisition”).  Executive received 
495,904 shares of the Company’s common stock as consideration for such
acquisition.  In conjunction with the Acquisition,
the Company acquired all of MPI’s assets, including its goodwill.  Executive acknowledges that MPI was engaged
in the business of building microwave power amplifiers (the “Business”).  Executive further acknowledges that MPI has
customers throughout the United States, Japan, the European Union, China and
Korea and that the production, promotion, marketing and sales of the Business
was conducted in the United States, Japan, the European Union, China and Korea.

 

(b)                                 The
covenants set forth herein are an integral part of the consideration for the
transactions contemplated by the Merger Agreement and the Company would not
enter into the Merger Agreement but for Executive entering into an employment
agreement containing the covenants set forth in Section 3 of this
Agreement (the “Covenants”).  Executive
acknowledges that his receipt of consideration for the Acquisition contemplated
by the Merger Agreement is adequate consideration for Executive entering into
this Agreement and the Covenants set forth herein.  Executive further acknowledges that Executive’s entry into this
Agreement and the Covenants set forth herein are a required part of the
Acquisition contemplated by the Merger Agreement.  The Covenants are intended to protect the goodwill of MPI’s Business.  Executive acknowledges and agrees that the
sale of all of his shares in MPI as part of the Acquisition constituted a “sale
of goodwill” as defined by California Business & Professions Code
§ 16601. As such, Executive acknowledges and agrees that the Covenant Not
to Compete set forth in Section 3.2 below is exempt from the restriction
set forth in California Business & Professions Code § 16600.

 

(c)                                  Executive,
together with the other selling shareholders, have owned and controlled MPI and
Executive has intimate knowledge of the Trade Secrets and Confidential
Information (as defined below) of MPI. In addition, as an executive of the
Company, Executive will be provided or will develop certain Trade Secrets and
Confidential Information of the Company.  All such Trade Secrets and Confidential Information shall be owned
exclusively by the Company following the date hereof.  “Confidential Information” is non-public information pertaining
to the Business of MPI being transferred to the Company, which has been known
to Executive as a result of his ownership interest in and employment of MPI and
information about the Company which is provided to Executive or other employees
or agents of the Company by the Company, or developed by Executive or other
employees or agents of the Company in the scope of their employment or agency,
and obtained by Executive as a result of employment.  To the fullest extent consistent with the foregoing and permitted
by law, Confidential Information also (a) includes, without limitation, the
terms of this Agreement, any and all data or information relating to the
Business as conducted by MPI, financial affairs of MPI, information not
generally known to the public concerning the identity of MPI’s customers and
prospective customers, needs of MPI’s customers, MPI’s product specifications,
names of key employees of MPI, future development of the business of MPI and
the Company, MPI’s methods of operation, MPI’s marketing techniques, MPI’s sale
prices and profit margins, MPI’s business plans, MPI’s financial statements,
MPI’s personnel data, and MPI’s business projections, and (b) does not include
matters which constitute Trade Secrets. The term “Trade Secrets” shall have the
broadest meaning as defined by applicable law Notwithstanding anything to the
contrary above in this subsection (c), Executive may use any technical or
scientific know-how of Executive solely in a manner which is not competitive
with the Company or AML Holdings, LLC, provided that such use will not cause
the Company or AML Holdings, LLC to lose or waive any of its rights in or to
any Confidential Information or Trade Secrets but so long as Executive uses the
know-how in a manner which maintains its confidentiality such use shall not
constitute a loss or waiver.

 

3

 

(d)                                 MPI’s
sales occur throughout the United States and in many foreign countries.  If the Covenants were limited to the State
of California, its scope would not be sufficient to protect the interests of
the Company.

 

These introductory facts are a part of the Covenants and shall be used
in construing and interpreting it. 
Based on the foregoing facts, Executive agrees as set forth in this
Section 3.

 

3.2                                 Covenant
Not to Compete.

 

During the term of employment with the Company and for a period of two
years after the termination of employment with the Company, Executive will not,
directly or indirectly (including in association with his family members or
relatives), as an employee, sole proprietor, partner, equity holder, officer,
director, agent, consultant or other advisor, member or otherwise, carry on any
activities competitive with the Company with respect to the Business in the
United States, Japan, the European Union, China and Korea.

 

3.3.                              Covenant
Not to Solicit Customers.

 

During the term of employment with the Company and for a period of two
years after the termination of employment with the Company, Executive will not,
other than for or on behalf of the Company, solicit, approach or sell any
products or services competitive with the Business to any customer on the list
of customers of MPI attached as Exhibit B and incorporated by reference;
such list to be amended from time to time by the Company to include new
customers.  For avoidance of doubt,
nothing contained in this Section 3 shall prohibit Executive from
providing consulting services to customers of MPI in fields or product lines
other than the Business.

 

3.4                                 Covenant
Not to Disclose or Use Confidential Information & Trade Secrets.

 

During the term of employment with the Company and for the longest
period permitted by applicable law, Executive will not disclose or use for the
benefit of himself or any other person or entity, other than the Company or its
designees, any Trade Secret or Confidential Information of MPI or the Company,
except as otherwise known to the public at the time of such use, or except to
the extent that such Confidential Information or Trade Secret constitutes a
general body of knowledge about the Business.

 

3.5                                 Covenant
Against Derogatory Remarks and Interference.

 

During the term of employment with the Company and for a period of two
years after the termination of employment with the Company, Executive will not,
directly or indirectly, as an employee, sole proprietor, partner, shareholder,
officer, director, agent, consultant or other advisor, member or otherwise,
make any derogatory comments concerning the business of the Company.

 

3.6                                 Irreparable
Injury.

 

Executive acknowledges that the violation by Executive of any of the
provisions of Sections 3.2, 3.3, 3.4 and 3.5 of this Agreement will result in
irreparable injury to the Company and that the Company shall be entitled to (i)
the issuance of a temporary restraining order, (ii) a preliminary injunction
and (iii) a permanent injunction to prohibit either the continuation or another
breach of Sections 3.2, 3.3, 3.4 or 3.5 of this Agreement.

 

4

 

3.7                                 Monetary
Damages.

 

Notwithstanding any provision of this Agreement, the Company may seek and
obtain monetary damages according to proof for any breach of the Covenants by
Executive.

 

3.8                                 Inventions.

 

All inventions (including any contribution, improvement, ideas and
discoveries, whether or not subject to patent protection) made by Executive during
his employment by the Company, and which are related to the business of the
Company, shall belong to the Company. 
Executive shall promptly disclose such inventions to the Company and
perform all actions reasonably requested by the Company in support of his
invention and of the ownership thereof by the Company.

 

4.                                       Notices.

 

All notices, requests, consents and other communications required or
permitted to be given hereunder, shall be in writing and shall be given by
commercial courier service providing proof of delivery to the parties at the
following address (and all such notices shall be effective upon receipt):

 

If to the Company:

 

AML Communications, Inc.

1000 Avenida Acaso

Camarillo, CA 93012

Attn: Jacob Inbar

Fax: 805-484-2191

 

with a copy to:

 

Richardson & Patel LLP

10900 Wilshire Blvd. Suite 500

Los Angeles, California  90024

Attention:  Kevin K. Leung

 

If to Executive:

 

Dr. Franco Sechi

3350 Scott Boulevard, Building 25

Santa Clara, CA  95054

 

5.                                       Severability.  If a judicial determination is made that any
of the provisions of this Agreement constitute an unreasonable or otherwise
unenforceable restriction against Executive, said provision shall be rendered
void without rendering unenforceable any other restrictions under this
Agreement.  Moreover, the Company shall
be entitled to recover monetary damages as a result of the breach of any
provision hereof by Executive.  The time
period during which the prohibitions set forth in this Agreement shall apply
shall be tolled and suspended for a period equal to the aggregate quantity of
time during which there is pending litigation over the enforceability or
applicability of this Agreement.

 

6.                                       Indemnification.  Executive hereby agrees to indemnify and
defend the Company and to hold the Company harmless from and against any and
all actual losses, liabilities, damages, deficiencies, costs (including,
without limitation, court costs), and expenses (including, without limitation,
attorneys’ fees) incurred by the Company and arising out of or due to any
breach of any representation, warranty, covenant or agreement of Executive
contained in this Agreement.  The
Company hereby agrees to indemnify and defend Executive and to hold Executive
harmless from and against any and all actual losses, liabilities, damages,

 

5

 

deficiencies, costs (including, without limitation, court costs), and
expenses (including, without limitation, attorneys’ fees) incurred by Executive
and arising out of or due to any breach of any representation, warranty,
covenant or agreement of Company contained in this Agreement.

 

7.                                       Miscellaneous

 

7.1                                 Binding
Effect.  This Agreement shall inure
to the benefit of and shall be binding upon Executive and his personal
representatives, heirs, beneficiaries and assigns and the Company and its
successors and assigns.

 

7.2                                 Governing
Law.  This Agreement shall be deemed
to be made in, and in all respects shall be interpreted, construed and governed
by and in accordance with, the laws of the State of California.

 

7.3                                 Headings.  The section and paragraph headings
contained in this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this Agreement.

 

7.4                                 Counterparts.  This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.

 

7.5                                 Entire
Agreement.  This Agreement is
intended by the parties hereto to be the final expression of their agreement with
respect to the subject matter hereof and is the complete and exclusive
statement of the terms thereof notwithstanding any representation, statement or
agreement to the contrary heretofore made. 
This Agreement may be modified only in writing, signed or initialed by
each of the parties hereto.

 

7.6                                 Gender.  Whenever the context so requires, the gender
of any pronoun shall be deemed to include the other genders.

 

7.7                                 CERTIFICATION
OF EXECUTIVE.  EXECUTIVE CERTIFIES
THAT HE (1) HAS RECEIVED A COPY OF THIS AGREEMENT FOR REVIEW AND STUDY BEFORE
BEING ASKED TO EXECUTE IT; (2) HAS READ THIS AGREEMENT CAREFULLY; (3) HAS HAD
SUFFICIENT OPPORTUNITY BEFORE THE AGREEMENT WAS EXECUTED TO ASK QUESTIONS ABOUT
THE PROVISIONS OF THE AGREEMENT AND RECEIVED SATISFACTORY ANSWERS; (4) HAS HAD
SUFFICIENT OPPORTUNITY BEFORE THE AGREEMENT WAS EXECUTED TO SEEK INDEPENDENT
COUNSEL; (5) HAS RECEIVED A COPY OF THE AGREEMENT; AND
(6) UNDERSTANDS HIS RIGHTS AND OBLIGATIONS UNDER THE AGREEMENT.

 

6

 

IN WITNESS WHEREOF, Executive and Company have executed this Agreement
as of the date stated above.

 

	
  “Company”

  	
  “Executive”

  
	
   

  	
   

  
	
  AML Communications,

  a Delaware corporation

  	
  By:

  	
  /s/ Dr. Franco Sechi

  
	
   

  	
   

  	
  Dr. Franco Sechi

  
	
   

  	
   

  
	
  By:

  	
  /s/ Jacob Inbar

  	
   

  	
   

  
	
   

  	
  Jacob Inbar

  	
   

  
	
   

  	
  President and Chief Executive Officer

  	
   

  
					

 

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EXHIBIT A

 

STOCK INCENTIVE PLAN

 

8

 

EXHIBIT B

 

CUSTOMER LIST

 

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Exhibit 4.1    
    

	 	 	MI Developments Inc.
	

 	
 	

377 Magna Drive

Aurora, Ontario, Canada L4G 7A9

Tel (905) 726-7026

Fax (905) 726-2596

March 10,
2004 

PRIVATE & CONFIDENTIAL

Mr. Brian
Tobin

159 Echo Drive

Ottawa, Ontario

K1S 1M9 

Dear
Brian: 

	Re:
	Employment with MI Developments Inc.  

        This letter will confirm that the following shall be the terms and conditions of your employment with MI Developments Inc. (the "Corporation"), as follows: 

        1.    Position:    Subject to the approval of the Board of Directors (the "Board") of the
Corporation, as of the Effective Date, you are appointed as the Chief Executive Officer of the Corporation reporting to the Chairman and the Board. As a representative of the Corporation, and subject
to your election by the shareholders of the Corporation's subsidiary, Magna Entertainment Corp. ("MEC"), and/or your appointment by the Directors of MEC, the Corporation will ask MEC to make you a
director of MEC and Vice-Chairman of MEC's Board of Directors. 

        2.    Base Salary:    Your Base Salary shall be US $500,000 per annum for fiscal 2004 and
subsequent fiscal years (less statutorily required deductions), payable in arrears in accordance with the Corporation's standard payroll practices. 

        3.    Annual Bonus:    In addition to your Base Salary, you shall receive an Annual Bonus
(inclusive of all entitlement to vacation pay, whether vacation is taken or not in any period, and less statutorily required deductions) in an amount equal to: 

          (i)  for
fiscal 2004, the greater of (a) US$700,000 per annum; and (b) nine-tenths of one percent (0.9%) of the net profits before income tax of
the Corporation for fiscal 2004 (excluding Magna Entertainment Corp.); and 

         (ii)  for
fiscal 2005 and subsequent fiscal years, the greater of (a) US$700,000 per annum; and (b) a percentage of the net profits before income tax of the
Corporation for each such fiscal year (including Magna Entertainment Corp.), such percentage to be mutually agreed upon on or before December 31, 2004; provided that, no mutual agreement shall
be required in the event the Corporation proposes a percentage of net profits which, based on the then current business plan for fiscal 2005, is expected to result in a bonus equivalent to or greater
than that paid or payable in respect to fiscal 2004. 

        Net
profits before income tax of the Corporation for the purposes of this agreement shall be determined and paid in accordance with the stated policies prescribed by the Corporation,
from time to time, in its sole discretion. The Corporation's fiscal year currently runs from January 1 to December 31 of each calendar year. 

 

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

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

        (b)   four
(4) weeks vacation in respect of each completed twelve (12) month period of employment during the term of this agreement, 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 and documented 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 other than the standard mileage charge approved by the Corporation from time to time. 

        5.    Automobile:    During your employment by the Corporation, the Corporation will lease for
your use (or reimburse to you the lease costs of) an automobile that is manufactured by and a brand name of a U.S. domestic automaker (such as a Cadillac or Lincoln). The Corporation will also pay all
reasonable servicing and other maintenance costs for that automobile. You will be responsible for insurance on the automobile as well as day-to-day operating costs such as oil
and gas expenses. 

        6.    Moving Expenses:    The Corporation will reimburse you for your reasonable moving
expenses to move your home from Ottawa, Ontario to Toronto, Ontario upon submission to the Corporation of invoices for those expenses. 

        7.    MID Stock Options:    Subject to the express approval of the Board of Directors of the
Corporation and any regulatory bodies having jurisdiction (including the consent of The Toronto Stock Exchange to the listing of the underlying shares), and subject to you entering into a Stock Option
Agreement with the Corporation in the standard form contemplated by the Corporation's 2003 Incentive Stock Option Plan, the Corporation shall grant you options to purchase 100,000 Class A
Subordinate Voting Shares ("MID Shares") of the Corporation at an exercise price per MID Share which is equal to 100% of the last sale price of an MID Share on The Toronto Stock Exchange on the
trading day prior to the date of MID Board approval of the stock option grant. Such options shall be exercisable by you 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, we will place this matter before the Board of Directors of the Corporation at the earliest reasonable opportunity. 

        8.    MEC Stock Options:    Subject to the express approval of the Corporate Governance, Human
Resources and Compensation Committee of the Board of Directors of MEC (the "MEC Compensation Committee") and compliance with all applicable laws, the Corporation will ask MEC to grant you options to
purchase 100,000 shares of Class A Subordinate Voting Stock of MEC 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 MEC as of the end of the most recently completed quarterly reporting period for
which MEC has publicly announced its results. Subject to the approval of the MEC 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 MEC in the standard form used by MEC from time to time for stock option grants to its non-employee directors under MEC's Long Term Incentive Plan. Should
your directorship with MEC 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 MEC's Long-Term Incentive Plan. Upon receipt of an executed copy of this agreement, the Corporation will ask
MEC to place this matter before the MEC Compensation Committee at the earliest reasonable opportunity. 

2

 

        9.    MID Share Investment:    The Corporation requires that you accumulate and maintain an
investment in MID Shares as a condition of your employment. As a minimum, you agree to accumulate and maintain over each of the three fiscal (calendar) years commencing January 1, 2004, that
number of MID Shares which is calculated by dividing (i) one-third (1/3) of your after-tax total cash compensation over your Base Salary for each of those three years
(the calculation of after-tax total cash compensation shall give effect to income tax at a deemed 50% tax rate) by (ii) the average closing trading price on The Toronto Stock
Exchange for MID Shares over each such year. 

        Subsequent
to this three year period, you will maintain annually that number of MID Shares which is calculated by dividing (i) one-third (1/3) of the
after-tax total cash compensation over your Base Salary for the three most recent fiscal (calendar) years (the calculation of after-tax total cash compensation shall give
effect to income tax at a deemed 50% tax rate), by (ii) the average trading price on The Toronto Stock Exchange for MID Shares over such three year period. 

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

        10.    Conditions for Continued Employment:    It is acknowledged by you that as a condition
of your continued employment you will comply in every respect with the MID Capital Expenditure Guidelines, the MID Health, Safety and Environmental Policy, the MID Corporate Disclosure Policy and the
MID Insider Reporting and Trading Policy, as amended from time to time, together with such other policies as the Corporation may establish and be in effect from time to time. 

        11.    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; or (d) your
dismissal for cause or by reason of your breach of the terms of this agreement. 

        Otherwise,
you may, at any time or for any reason, terminate your employment and this agreement by providing the Corporation with not less than three (3) months prior written
notice of intention to terminate. The Corporation may, at any time and for any reason, terminate your employment and this agreement by providing you with twelve (12) months prior written notice
of intention to terminate. Alternatively, the Corporation may elect to terminate your employment and this agreement immediately by paying you a retiring allowance equivalent to your Base Salary and
Annual Bonus for the full fiscal (calendar) year ending immediately prior to the date of termination (less statutorily required deductions) either in a lump sum within thirty (30) days of the
day of termination or monthly in arrears in twelve (12) equal instalments commencing thirty (30) days after the day of termination. The Corporation may also terminate your employment and
this agreement by providing you a combination of working notice and retiring allowance equivalent to your Base Salary and Annual Bonus for the full fiscal (calendar) year ending immediately prior to
the date of termination. 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. 

        On
termination of this agreement, other than your dismissal for cause or for breach of this agreement under sub-paragraph 11(d), the Corporation will also pay your
Annual Bonus on a prorated basis to the date of termination. 

3

 

        In
the event that you breach the provisions of paragraph 12, the payment of any further amounts under this agreement will immediately cease. Further, the amount paid in each
instalment (including Base Salary and/or Annual Bonus) will be offset by any income earned by you up to a maximum of 50% of such income, during the period you are entitled to receive instalments,
regardless of whether such income is earned from alternate or self-employment. 

        The
termination provisions set forth above are inclusive of any and all statutory, common law and/or contractual entitlement to severance pay, notice of termination or pay in lieu
thereof, salary, bonuses, automobile allowances, vacation and/or vacation pay and other remuneration and benefits payable or otherwise provided to you in relation to your employment by the Corporation
and the termination of your employment and this agreement. 

        12.    Other Conditions:    You hereby acknowledge as reasonable, in terms of both scope and
duration, and agree that you shall abide by the following terms and conditions: 

           i)    Intellectual Property:    Any and all patents, trade marks, copyrighted works,
inventions, know-how, practices, processes, research materials, software, systems, technology, trade secrets, work methods, computer programs, concepts, data, designs, devices,
discoveries, drawings, formulae, ideas, and improvements and advances therefor (collectively "Intellectual Property") that are either provided to you or that you obtain access to in the course of your
employment are and shall remain the exclusive property of the Corporation. 

        You
agree that any Intellectual Property (whether registrable or not) produced, made, written, or designed by you, either alone or jointly with others, in the course of your employment
or in any way relating to the business of the Corporation and its subsidiaries and affiliates, including Magna Entertainment Corp. and its subsidiaries (collectively the "MID Group"), shall vest in
and be the exclusive property of the Corporation and the MID Group. You further agree that both during your employment and subsequent to your termination of employment, you will promptly and fully
disclose to the Corporation, complete details of any Intellectual Property arising through or in the course of your employment, with the intention that the Corporation and the MID Group shall have
full knowledge of and obtain full ownership of such Intellectual Property. At the Corporation's expense, you agree to cooperate in executing all necessary assignments and other documents and shall
cooperate in all other such acts and things as the Corporation may reasonably require in order to vest such Intellectual Property rights exclusively in the name of the Corporation and the MID Group. 

          ii)    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, the Corporation or any member of the MID 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. 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. 

         iii)    Conflict of Interest:    You shall not 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
and the MID Group. 

          iv)    Non-Competition:    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 any capacity compete with the business of the Corporation
or any member of the MID Group in respect of which you have had access to proprietary or confidential information. 

4

 

           v)    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 (A) 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 MID Group, or (B) solicit, attempt to solicit, or communicate
in any way with employees of the Corporation or any member of the MID Group for the purpose of having such employees employed or in any way engaged by another person, firm, corporation, or other
entity. 

          vi)    Outside Board Positions:    For the first eighteen (18) months of your
employment, you will not act as a director for, or perform in any similar capacity for, more than two entities that are not affiliates of the Corporation. After that eighteen (18) month period,
you will not continue to act as a director, or perform in a similar capacity, for any entity that is not an affiliate of the Corporation without the Chairman's approval. 

        13.    General:    

           i)    Severability:    You acknowledge and agree that should any provision in this agreement
be held to be invalid, void or unenforceable, it shall be declared separate and distinct from the remaining provisions herein, and such remaining provisions shall continue in full force and effect. 

          ii)    Assignability:    This agreement may be assigned by the Corporation with your consent
(such consent not to be unreasonably withheld) to any other member of the MID Group. Upon completion of such assignment, the Corporation shall be automatically released from any obligation, liability
or responsibility under this agreement. 

        14.    Effective Date:    Your employment under the terms of this agreement shall commence on
March 1, 2004. Upon cessation of your employment or other termination of this agreement, paragraph 12 shall continue in full force and effect. 

        If
the terms of employment as set out in this agreement are acceptable to you, please sign and date three copies in the places indicated and return two fully signed copies to the
attention of Edward Hannah, General Counsel of the Corporation, by 5:00 p.m. on March 12, 2004, after which, if not so signed and returned, this agreement shall be withdrawn. Upon
execution by you, this agreement (i) replaces any prior written or oral employment agreement or other agreement concerning remuneration between you and the Corporation or any member of the MID
Group and (ii) will continue to apply to your employment in a similar or other capacity with the Corporation or any member of the MID Group. 

Yours
very truly, 

Frank
Stronach

Chairman 

FS:ga

        I
hereby accept the terms and conditions set out above and acknowledge that this agreement contains all the terms and conditions of my employment with MI Developments Inc. and
that no other terms, conditions or representations other than those within this letter form part of this agreement. 

	
 Date	 	
 Brian V. Tobin

5

QuickLinks

Exhibit 4.1

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