BRIDGE LOAN AGREEMENT

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Exhibit 10.4

MAGNA ENTERTAINMENT CORP.
as Borrower

 — and —

THE GUARANTORS SET FORTH
ON THE SIGNATURE PAGES HEREOF
as Guarantors

 — and —

MID ISLANDI SF., ACTING
THROUGH ITS ZUG BRANCH
as Lender

BRIDGE LOAN AGREEMENT

Dated as of July 22, 2005

TABLE OF CONTENTS

ARTICLE 1
INTERPRETATION

1.1		Definitions		4
1.2		Gender and Number		26
1.3		Certificate of the Lender as to Rates, etc.		26
1.4		Invalidity, etc.		26
1.5		Headings, etc.		27
1.6		Governing Law		27
1.7		Attornment		27
1.8		Judgment Currency		27
1.9		References		27
1.10		Currency		28
1.11		This Agreement to Govern		28
1.12		Generally Accepted Accounting Principles		28
1.13		Computation of Time Periods		28
1.14		Actions on Days Other Than Banking Days		28
1.15		Oral Instructions		28
1.16		Incorporation of Schedules		29

ARTICLE 2
BRIDGE LOAN

2.1		Establishment of Bridge Loan		29
2.2		Non-Revolving Nature of Bridge Loan		30
2.3		Voluntary Repayments		30
2.4		Mandatory Repayment		30
2.5		Voluntary Reduction in Aggregate Commitment		31

ARTICLE 3
GENERAL PROVISIONS RELATING TO THE BRIDGE LOAN

3.1		Advances		31
3.2		Payments Generally		32
3.3		Illegality		32
3.4		Indemnity		32
3.5		Proceedings in Respect of Claims		33
3.6		Evidence of Indebtedness		35

ARTICLE 4
ADDITIONAL CONDITIONS PRECEDENT TO ADVANCES
UNDER TRANCHE 2 AND TRANCHE 3

4.1		Tranche 2 Conditions		35
4.2		Tranche 3 Conditions		36

ARTICLE 5
INTEREST AND FEES

5.1		Interest Rate		37
5.2		Calculation and Payment of Interest		39
5.3		Fees		40
5.4		Payment of Costs and Expenses		40

ARTICLE 6
REPRESENTATIONS AND WARRANTIES

6.1		Representations and Warranties		41
6.2		Survival of Representations and Warranties		55

ARTICLE 7
COVENANTS

7.1		Affirmative Covenants		55
7.2		Negative Covenants		66
7.3		Environmental Matters		71
7.4		The Meadows		72

ARTICLE 8
CONDITIONS PRECEDENT

8.1		Conditions Precedent to Closing		73
8.2		Conditions Precedent to Advances		82

ARTICLE 9
EVENTS OF DEFAULT AND REMEDIES

9.1		Events of Default		83
9.2		Remedies Upon Default		86
9.3		Distributions		87

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ARTICLE 10
GENERAL

10.1		Reliance and Non-Merger		87
10.2		Confidentiality		87
10.3		No Set-Off		88
10.4		Employment of Experts		88
10.5		Reliance by Lender		88
10.6		Notices		88
10.7		Further Assurances		92
10.8		Assignment		92
10.9		Disclosure of Information to Potential Permitted Lender Assignees		93
10.10		Right to Cure		93
10.11		Forbearance by the Lender Not a Waiver		93
10.12		Waiver of Statute of Limitations and Other Defenses		93
10.13		Relationship		93
10.14		Time of Essence		94
10.15		Service of Process/Venue		94
10.16		Jury Trial Waiver		94
10.17		Final Agreement/Modification		94
10.18		Continuing Agreement		95
10.19		No Third Party Beneficiaries		95
10.20		No Brokers		95
10.21		Execution in Counterparts		95
10.22		Contribution by Guarantors with Respect to Obligations.		95
10.23		Successors and Assigns Bound; Joint and Several Liability; Agents; and Captions		96
10.24		Loss of Borrower Note		96
10.25		Acknowledgment		97
10.26		Certain Provisions relating to The Meadows Guarantors		97

SCHEDULE A — Borrowing Notice

SCHEDULE B — Form of Interest Rate Election

SCHEDULE C — Properties and Prior Mortgages

SCHEDULE D — Environmental Reports

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LOAN AGREEMENT

        THIS AGREEMENT made as of the 22^nd day of July, 2005.

BETWEEN:

MAGNA ENTERTAINMENT CORP.,
a corporation incorporated under the laws of the
State of Delaware

(hereinafter called the "Borrower"),

OF THE FIRST PART,

— and —

MID ISLANDI SF.,
a partnership formed under the laws of Iceland,
acting through its Zug branch

(hereinafter called the "Lender"),

OF THE SECOND PART,

— and —

MEC PENNSYLVANIA RACING, INC.,
a corporation incorporated under the laws of the
Commonwealth of Pennsylvania

— and —

WASHINGTON TROTTING ASSOCIATION, INC.,
a corporation incorporated under the laws of the
State of Delaware

— and —

MOUNTAIN LAUREL RACING, INC.,
a corporation incorporated under the laws of the
State of Delaware

(hereinafter collectively called "The Meadows Guarantors"),

OF THE THIRD PART,

— and —

PACIFIC RACING ASSOCIATION,
a corporation incorporated under the laws of the
State of California

— and —

MEC LAND HOLDINGS (CALIFORNIA) INC.,
a corporation incorporated under the laws of the
State of California

(hereinafter collectively called the "Golden Gate Fields Guarantors"),

OF THE FOURTH PART,

— and —

THE SANTA ANITA COMPANIES, INC.,
a corporation incorporated under the laws of the
State of Delaware

— and —

LOS ANGELES TURF CLUB, INCORPORATED,
a corporation incorporated under the laws of the
State of California

(hereinafter collectively called the "Santa Anita Guarantors"),

OF THE FIFTH PART,

— and —

GULFSTREAM PARK RACING ASSOCIATION, INC.
a corporation incorporated under the laws of the
State of Florida

(hereinafter called the "Gulfstream Guarantor"),

OF THE SIXTH PART,

— and —

GPRA THOROUGHBRED TRAINING CENTER INC.,
a corporation incorporated under the laws of the
State of Delaware

(hereinafter called the "Palm Meadows Training Guarantor"),

OF THE SEVENTH PART,

— and —

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SLRD THOROUGHBRED TRAINING CENTER, INC.,
a corporation incorporated under the laws of the
State of Delaware

(hereinafter called the "San Luis Rey Downs Guarantor"),

OF THE EIGHTH PART,

— and —

MEC DIXON, INC.,
a corporation incorporated under the laws of the
State of Delaware

(hereinafter called the "Dixon Guarantor"),

OF THE NINTH PART,

— and —

SUNSHINE MEADOWS RACING INC.
a corporation incorporated under the laws of the
State of Delaware

(hereinafter called the "Ocala Guarantor" and together
with The Meadows Guarantors, the Golden Gate Fields Guarantors,
the Santa Anita Guarantors, the Gulfstream Guarantor,
the Palm Meadows Training Guarantor, the San Luis Rey Downs Guarantor and
the Dixon Guarantor, collectively, the "Guarantors"
and each individually a "Guarantor"),

OF THE TENTH PART.

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        NOW THEREFORE THIS AGREEMENT WITNESSES that, in consideration of the covenants and agreements herein contained, and in reliance on the individual creditworthiness of the Borrower and each of the Guarantors based on the representations, warranties and covenants of the Borrower and each of the Guarantors contained herein, the parties hereto agree as follows:

ARTICLE 1
INTERPRETATION

1.1   Definitions

        For the purposes of this Agreement:

"Acquisition" means any transaction or series of transactions by which the Borrower or any of its Subsidiaries, directly or indirectly, by means of a take-over bid, tender offer, amalgamation, merger, purchase of assets, purchase of shares or otherwise (a) acquires any ongoing business or all or substantially all of the assets of any Person engaged in any ongoing business, (b) acquires beneficial ownership (as defined in Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as amended) of securities of a Person engaged in any ongoing business representing more than 10% of the ordinary voting power for the election of directors or other governing position if the business and affairs of such Person are managed by a board of directors or other governing body, or (c) acquires beneficial ownership (as defined in Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as amended) of more than 10% of the ownership interest in any Person engaged in any ongoing business that is not managed by a board of directors or other governing body;

"Advance" means any utilization of the Bridge Loan Facility by the Borrower;

"Affiliate" means, in respect of any Person, any other Person which, directly or indirectly, controls or is controlled by or is under common control with such Person; and for the purpose of this definition, "control" (including, with correlative meanings, the terms "controlled by" and "under common control with") means the power to direct, or cause to be directed, the management and policies of a Person whether through the ownership of voting shares, by contract or otherwise, but for greater certainty excluding therefrom the Lender and its Subsidiaries other than MEC and its Subsidiaries;

"Agreement" means this agreement and the Disclosure Schedule and all schedules attached to this agreement or to the Disclosure Schedule, in each case as they may be amended or supplemented from time to time; the expressions "hereof", "herein", "hereto", "hereunder", "hereby" and similar expressions refer to this Agreement as a whole (including the Disclosure Schedule) and not to any particular article, Section, schedule or other portion hereof, and the expressions "article" and "Section" followed by a number or by a number and letter, and "Schedule" followed by a letter, mean and refer to the specified article or Section of or schedule to this Agreement, as applicable, except as otherwise specifically provided herein;

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"Allocable Amount" has the meaning ascribed thereto in Section 10.22;

"Amtote" has the meaning ascribed thereto in Section 7.2(f);

"Applicable Law" means, in respect of any Person, property, transaction or event, all applicable laws, statutes, rules, by-laws and regulations, and all applicable official directives, orders, judgments and decrees of Governmental Bodies but solely to the extent they have the force of law (and, in the case of Section 3.3 only, whether or not having the force of law but otherwise binding on such Person or such Person's property);

"Audited and Unaudited Financial Statements" means the audited consolidated financial statements of the Borrower for the Fiscal Year ended December 31, 2004 and the unaudited consolidated financial statements of the Borrower for the Fiscal Quarter ended March 31, 2005;

"Banking Day" means a day on which banks are generally open for business in each of Toronto, Ontario, New York, New York, Miami, Florida, Los Angeles, California, Philadelphia, Pennsylvania and/or Chicago, Illinois, and with respect to notices, determinations or payments of Fixed Rate Advances to which LIBOR applies, London, England;

"Base Rate" means, for any day, the annual rate of interest equal to the greater of (i) the rate which Bank of Montreal establishes at its principal office in Chicago, Illinois as the reference rate of interest in order to determine interest rates it will charge on such day for commercial loans in U.S. dollars made to its customers in the United States of America and which it refers to as its "Base Rate", and (ii) the Federal Funds Effective Rate on such day plus 1% per annum, such rate to be adjusted automatically and without the necessity of any notice to the Borrower upon each change to such rate;

"Blocked Persons List" has the meaning ascribed thereto in Section 6.1(cc);

"BMO" means Bank of Montreal, and its successors and assigns under the BMO Credit Agreement;

"BMO Credit Agreement" means the amended and restated credit agreement made as of July 22, 2005 among the Borrower, as borrower, BMO, as agent and lender, and others, as the same may be amended and restated from time to time, provided that the principal amount outstanding at any time under the BMO Credit Agreement as so amended or restated shall not exceed $50,000,000, and includes any renewal or refinancing of any such agreement or the indebtedness owing thereunder provided that the principal amount of such renewed or refinanced indebtedness does not exceed $50,000,000 and security therefor is not increased thereby;

"BMO Intercreditor Agreement" means the intercreditor agreement made as of even date herewith between the Lender, the Borrower and Bank of Montreal, as the same may be amended or restated from time to time;

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"Borrower" means Magna Entertainment Corp., a corporation existing under the laws of Delaware, and its successors and permitted assigns;

"Borrower General Security Agreement" has the meaning ascribed thereto in Section 8.1(h)(ii);

"Borrower's and Guarantors' California Agent" means the Newport Beach office of Sherry Meyerhoff Hanson & Crance LLP, or such other firm or firms of solicitors or agents in the State of California as are appointed by the Borrower from time to time and notice of which is provided to the Lender;

"Borrower's and Guarantors' Counsel" means Osler Hoskin Harcourt LLP, or such other firm or firms of solicitors or counsel as are appointed by the Borrower from time to time and notice of which is provided to the Lender;

"Borrower's and Guarantors' Florida Agent" means the Miami office of Akerman Senterfitt, or such other firm or firms of solicitors or agents in the State of Florida as are appointed by the Borrower from time to time and notice of which is provided to the Lender;

"Borrower's and Guarantors' Local Agents" means, collectively the Borrower's and Guarantor's California Agent, the Borrower's and Guarantor's Florida Agent, Borrower's and Guarantor's Oklahoma Agent, and the Borrower's and Guarantor's Pennsylvania Agent;

"Borrower's and Guarantors' New York and Delaware Agent" means the New York office of O'Melveny & Myers LLP, or such other firm or firms of solicitors or agents in the State of New York as are appointed by the Borrower from time to time and notice of which is provided to the Lender;

"Borrower's and Guarantors' Oklahoma Agent" means the Oklahoma City office of Crowe & Dunlevy, or such other firm or firms of solicitors or agents in the State of Oklahoma as are appointed by the Borrower from time to time and notice of which is provided to the Lender;

"Borrower's and Guarantors' Pennsylvania Agent" means the Pittsburg office of Eckert Seamans Cherin & Mellott, LLC, or such other firm or firms of solicitors or agents in the Commonwealth of Pennsylvania as are appointed by the Borrower from time to time and notice of which is provided to the Lender;

"Borrower Incorporation Documents" has the meaning ascribed thereto in Section 6.1(i);

"Borrower Note" has the meaning ascribed thereto in Section 8.1(h)(i);

"Borrower Recapitalization Plan" means the plan approved and adopted by the Borrower's board of directors to recapitalize the Borrower and its Subsidiaries and to revise the business plan for the Borrower and its Subsidiaries, and which shall be in form, scope and terms satisfactory to the Lender in its sole and absolute discretion;

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"Borrowing Date" means any Banking Day on which an Advance is made, or is to be made, in accordance with a request of the Borrower;

"Borrowing Notice" means a notice substantially in the form of Schedule A;

"Bridge Loan" means the secured non-revolving Bridge Loan made available to the Borrower by the Lender pursuant to Section 2.1;

"Capital Expenditures" means, for any period, for any Person those expenditures made in connection with the purchase, lease, license, acquisition, erection, development, improvement, maintenance or construction of property of or by such Person (including any such property acquired pursuant to a Capital Lease Obligation) or any other expenditures, in all cases, which in accordance with GAAP are classified as capital expenditures;

"Capital Lease Obligations" means the obligations of the Borrower or any Subsidiary to pay rent or other amounts under a lease of (or other agreement conveying the right to use) real or personal property, which obligations are required to be classified and accounted for as a capital lease on a balance sheet of such Person under GAAP and, for purposes of this Agreement, the amount of such obligations shall in each case be the capitalized amount thereof, determined in accordance with GAAP;

"Cash Equivalents" means short-term issued guaranteed deposits or certificates of deposit with recognized financial institutions, bonds or similar obligations carrying the full faith and credit of the United States of America or any state thereof or any agency or instrumentality of any of the foregoing unconditionally backed by such credit and other similar investments acceptable to the Lender in its sole discretion;

"CERCLA" means the Comprehensive Environmental Response, Compensation and Liability Act of 1980, including the rules and regulations promulgated thereunder, as the same may be amended from time to time;

"Claim" has the meaning ascribed thereto in Section 3.4(a);

"Closing Arrangement Fee" has the meaning ascribed thereto in Section 5.3(b);

"Closing Date" means the date on which this Agreement is executed and delivered by the parties hereto;

"Collateral" means, collectively, all of the undertaking, property and assets of the Borrower and the Guarantors subject to the Security, or intended to be subject to the Security;

"Combined" means, in relation to any financial results or financial statements of a group of entities, the combined financial results or financial statements of such group of entities (including their respective subsidiaries), calculated and prepared in accordance with GAAP;

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"Company" means, collectively, the Borrower and all of its Subsidiaries;

"Commitment Fee" has the meaning ascribed thereto in Section 5.3(a);

"Commitment Fee Payment Date" has the meaning ascribed thereto in Section 5.3(a);

"Compliance Certificate" has the meaning ascribed thereto in Section 7.1(l)(i);

"Contingent Liabilities", at any time, means the amount of all indebtedness and liabilities, contingent or otherwise, of any other Person at such time,

(i)

guaranteed, directly or indirectly, in any manner by the Borrower or any Subsidiary including, without limitation, (A) by procuring the issue of letters of credit or other similar instruments for the benefit of that other Person, (B) by endorsement of bills of exchange (otherwise than for collection or deposit in the ordinary course of business), or (C) by the other Person assigning debts of the Borrower or any Subsidiary (whether or not represented by an instrument) with recourse to the Borrower or any Subsidiary;

(ii)

in effect guaranteed, directly or indirectly, by the Borrower or any Subsidiary through an agreement, contingent or otherwise:

(A)

to purchase such indebtedness or liabilities or to advance or supply funds for the payment or purchase of such indebtedness or liabilities;

(B)

to purchase, sell or lease (as lessee or lessor) property, products, materials or supplies or to purchase or sell services in circumstances where the primary purpose of such agreement was to provide funds to the debtor to enab