Document:

Exhibit
10.1

LIMITED LIABILITY COMPANY
OPERATING AGREEMENT

OF

HRTV, LLC

THIS OPERATING AGREEMENT of HRTV, LLC, a Delaware
limited liability company (the “Company”), is entered into as of March 4, 2007
by and between CHURCHILL DOWNS INCORPORATED, a Kentucky corporation (“CDI”), CD
HRTV HC, LLC, a Delaware limited liability company and a wholly owned
subsidiary of CDI (“CDI Sub”), MAGNA ENTERTAINMENT CORP., a Delaware
corporation (“MEC”) and MEC HRTV HOLDCO LLC, a Delaware limited liability
company and a wholly owned subsidiary of MEC (“MEC Sub”).  (Unless otherwise indicated, each term used
in this Agreement with initial capital letters shall have the meaning ascribed
to it in Article 12.)

For and in consideration of the mutual promises
contained herein, and for other good and valuable consideration, the receipt
and sufficiency of which are acknowledged by the parties, CDI, CDI Sub, MEC and
MEC Sub desiring to be legally bound agree as follows:

ARTICLE 1

FORMATION

1.1          Formation and Name.

[a]            The Members enter into and form the
Company as a limited liability company in accordance with the Act.

[b]            The name of the Company shall be
HRTV, LLC.

1.2          Term.  The “Term” of the Company shall commence on
the date first above written and shall continue as set forth in Section
8.2.  Notwithstanding the immediately
preceding sentence, the Company shall not conduct the Business or otherwise
engage in the activities referenced in Section 1.3 until the Closing.

1.3          Purpose and Scope.

[a]           Within the meaning and for purposes
of the Act, the purpose and scope of the Company shall be the conduct of the
Business, and in connection with conducting the Business, shall include any
lawful action or activity permitted to a limited liability company under the
Act.

[b]           The Company will:

[i]            Acquire or lease all of the assets
used or useful in the operation of HRTV.

[ii]           Operate the business of HRTV.

Collectively, [i] and [ii] are referred to
herein as the “Business.”

1.4          Principal Office.  The Company shall have a single “Principal
Office.”  The Principal Office initially
shall be located in Arcadia, California at Santa Anita Park, and may thereafter
be changed from time to time by approval of the Board of Managers upon notice
to the Members.

1.5          Delaware Office and Agent.  The Company shall maintain a Delaware
registered office and agent for service of process as required by the Act.  In the event the registered agent ceases to
act as such for any reason or the registered office shall change, the Board of
Managers shall promptly designate a replacement registered agent or file a
notice of change of address, as the case may be, in each case as required by
the Act.

1.6          Admission of Members and Additional Members.

[a]           Upon execution of this Agreement each
of CDI Sub and MEC Sub is admitted as a Member.

[b]           Additional Members may be admitted as
Members from time to time, with the approval of the Board of Managers and with
such changes to this Agreement as agreed to by CDI, CDI Sub, MEC and MEC
Sub.  The Capital Commitment (as well as
the timing of required capital contributions in respect thereof) and Allocation
Percentage of each Additional Member shall be determined by approval of the
Board of Managers and set forth on Schedule A. 
The Allocation Percentage of each Additional Member shall dilute the
Allocation Percentages of the previously admitted Members in proportion to
their respective Allocation Percentages as in effect immediately prior to such
dilution.

[c]           A Person shall not be admitted as an
Additional Member prior to the execution by such Person of a counterpart of
this Agreement (including Schedule A, as updated to reflect such Person’s
Interest).

[d]           Notwithstanding the foregoing
provisions of this Section 1.6, the provisions of Article 7 shall apply with
regard to the admission of Substitute Members.

[e]           CDI and MEC shall work together to
recruit mutually agreed-upon Third Parties (such as horsemen, breeders and
other industry participants) to become Additional Members of the Company.  In the event CDI and MEC are successful in
recruiting mutually agreed-upon Additional Members, CDI Sub and MEC Sub will be
diluted on a pro rata basis.

1.7          Names and Contact Information of the Members.  Set forth below the name of each Member on
Schedule A shall be appropriate contact information for such Member (including
such Member’s mailing address as well as the name or title of an individual to
whom notices and other correspondence should be directed).  Each Member shall promptly provide the
Company with the information required to be set forth for such Member on
Schedule A and shall thereafter promptly notify the Company of any change to
such information.

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1.8          Additional Documents.  The Board of Managers shall cause to be
executed, filed, recorded, published, or amended any documents, as the Board of
Managers in their reasonable discretion determine to be necessary or advisable,
(x) in connection with the formation, operation, Dissolution, winding-up, or
Termination of the Company pursuant to applicable law or (y) to otherwise give
effect to the terms of this Agreement. 
The terms and provisions of each document described in the preceding
sentence shall be initially established and shall be amended as necessary to
cause such terms and provisions to be consistent with the terms and provisions
of this Agreement.

1.9          Title to Property.  Title to all Company property shall be held
in the name of the Company; provided, however, that publicly traded securities
may be held in “street name” or through a similar arrangement with a reputable
financial institution.

ARTICLE 2

CAPITALIZATION

2.1          Capital Commitments.

[a]           Initial Capital Commitments.  The Company shall be owned initially fifty
percent (50%) by CDI Sub and fifty percent (50%) by MEC Sub.  Each of CDI Sub and MEC Sub will make initial
capital contributions in the amounts and at such times as set forth on Schedule
A.  In addition, as of the Closing MEC
and MEC Sub will directly or indirectly contribute and/or lease certain
property to the Company as more fully described in the Asset Transfer and
Contribution Agreement.  All Capital
Commitments shall be made such that each of MEC Sub and CDI Sub contributes
fifty percent (50%) of the aggregate value contributed to the Company, except
as may otherwise be set forth in this Agreement or agreed between MEC Sub and
CDI Sub.

[b]           Increased Capital Commitments.  MEC Sub shall have additional Capital
Commitments as set forth on Schedule B. 
Each of CDI Sub and MEC Sub shall have additional Capital Commitments as
set forth on Schedule B-1.

[c]           Rights Covenant. 
Upon execution of this Agreement, CDI Sub and MEC Sub contribute or
cause to be contributed and/or license or cause to be licensed to the Company
their respective rights (including such rights as held by their Affiliates) as
set forth on Schedule 5 of the Business Plan subject to the contractual
obligations existing as of the date hereof as set forth on Schedule C.

[d]           Expiration of Commitments.  CDI Sub and MEC Sub will not be obligated to
fund any additional Capital Commitment for the Company after December 31, 2009
(other than any defaulted Capital Commitments prior to such date).

2.2     Capital Contributions.  Except to the extent set forth on Schedule 5
of the Business Plan, set forth in the Asset Transfer and Contribution
Agreement or otherwise agreed by the Members after the date of this Agreement,
all capital contributions shall be in cash.

[a]           Capital Contributions in Respect of Initial Capital Commitments.  Concurrently with its execution of this
Agreement, each Member shall make a capital

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contribution
equal to its initial Capital Commitment required upon execution of this
Agreement as set forth in Schedule A. 
Thereafter each Member shall make a capital contribution at the times
and in the amounts equal to its further initial Capital Commitments as set
forth in Schedule A.

[b]           Capital Contributions in Respect of Increased Capital Commitments.  The Members shall make capital contributions
in respect of, and in proportion to, any increase in their Capital Commitments
pursuant to Section 2.1(b).

2.3          Limitation on Capital Contributions.  Except as specifically provided in this
Article 2 or Section 3.5(c), no Person shall be permitted or required to make a
contribution to the capital of the Company.

2.4          Penalties for Failure to Make Required Contributions.  In the event that a Member fails to timely
make a capital contribution as required pursuant to this Agreement (a “Defaulting
Member”), the following provisions shall be applicable:

[a]           The non-Defaulting Member shall have
the right (but not the obligation) to make the capital contribution in lieu of
the Defaulting Member.  In such event,
the Interest and Allocation Percentage of the non-Defaulting Member in the
Company shall be proportionately increased, and the Interest and Allocation
Percentage of the Defaulting Member proportionately decreased, as appropriate
to reflect the additional capital contribution by the non-Defaulting
Member.  If the default is then cured by
the Defaulting Member, as permitted under this Agreement, the Defaulting Member
shall have the Interests and Allocation Percentages of the Defaulting Member
and the non-Defaulting Member reinstated to where they were prior to the
default with an appropriate distribution to the non-Defaulting Member of the
capital contribution made in lieu of the Defaulting Member.

[b]           Such Defaulting Member shall be
subject to any and all penalties and remedies available at law or equity, as
selected by the members of the Board of Managers who are not appointed by the
Defaulting Member.

2.5          Withdrawal and Return of Capital.  No Member may withdraw any portion of its
Capital Contribution or Capital Account balance.  Except as provided in Section 2.4[a] and in
Articles 4 and 8, no Member shall be entitled to the return of such Member’s
Capital Contribution, a distribution in respect of such Member’s Capital
Account balance, or any other distribution in respect of such Member’s
Interest.

2.6          Loans to the Company.  No Member shall be required to lend any money
to the Company or to guaranty any Company indebtedness.

2.7          Interest on Capital.  No Member shall be entitled to interest on
such Member’s Capital Contribution, Capital Account balance, or share of
unallocated Profits.

2.8          Limitation of Liability; Return of Certain
Distributions.

[a]           Except as otherwise required by applicable
law, a Member shall have no personal liability for the debts and obligations of
the Company.

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[b]           A Member that receives a distribution
in violation of this Agreement or that is required to be returned to the
Company under applicable law shall return such distribution within thirty (30)
days after demand therefor by any Member. 
The Company may, with the approval of the Board of Managers, elect to
withhold from any distributions otherwise payable to a Member amounts due to
the Company from such Member.

[c]           Nothing in this Section 2.8
shall be applied to release any Member from (i) its obligation to make
capital contributions or other payments specifically required under this
Agreement or (ii) its obligations pursuant to any contractual relationship
between the Company and such Member acting in a capacity other than as a Member
(including, for example, as a borrower or independent contractor).

2.9          Contributed Property.  With respect to any property contributed by a
Member to the Company, such Member shall provide to the Company any information
reasonably requested by the Company for purposes of determining the Company’s
tax basis in such property.

2.10        Seconded Personnel.  MEC and CDI shall agree on their respective
personnel to be seconded or transferred to the Company and the terms
thereof.  Schedule 1 of the Business Plan
sets forth the organizational chart of the Company, including the names of
certain personnel who are expected to fill various positions and several open
positions for which no candidates have yet been identified by the Members.  CDI and MEC intend to second the personnel
listed on Schedule 1 of the Business Plan immediately upon Closing and CDI and
MEC shall cooperate in good faith to determine whether they mutually agree in
the future to transfer such employees to the Company instead of seconding them
to the Company.  On or before the tenth
(10th) day of
each month, each of CDI and MEC will bill the Company for the Employee Costs
incurred by CDI and MEC during the immediately preceding month for its
employees seconded to the Company, prorated as appropriate for any employees
seconded on a less than full time basis. 
The Company shall promptly pay to CDI and MEC the amount set forth in
such bills.

ARTICLE 3

PROFITS AND LOSSES

3.1          Allocations of Company Profits and Losses.

[a]           General Allocation Provisions.

[i]            Hypothetical Liquidation.  The items of income, expense, gain and loss
of the Company comprising Profits or Losses for a fiscal year shall be
allocated among the Members in a manner that will, as nearly as possible, cause
the Capital Account balance of each Member at the end of such fiscal year to
equal the excess (which may be negative) of:

[A]          the hypothetical distribution (if any)
that such Member would receive if, on the last day of the fiscal year, (i) all
Company assets, including cash, were sold for cash equal to their Fair Market
Values, taking into account any adjustments thereto for such fiscal year, (ii)
all Company liabilities were satisfied in cash according to their terms
(limited, with respect to each nonrecourse liability, to the Fair Market Value

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of the assets securing
such liability), and (iii) the net proceeds thereof (after satisfaction of such
liabilities) were distributed in full pursuant to Section 8.3[d]; over

[B]           the sum of (x) the amount, if any,
which such Member is obligated to contribute to the capital of the Company, (y)
such Member’s share of the Company Minimum Gain determined pursuant to Treasury
Regulation Section 1.704-2(g), and (z) such Member’s share of Member Minimum
Gain determined pursuant to Treasury Regulation Section 1.704-2(i)(5), all
computed immediately prior to the hypothetical sale described above.

[ii]           Determination of Items Comprising Allocations.

[A]          In the event that the Company has Profit
for a fiscal year,

[1]           for any Member as to whom the
allocation under Section 3.1(a)(i) would reduce its Capital Account, such
allocation shall be comprised of a proportionate share of each of the Company’s
items of expense or loss entering into the computation of Profit for such
fiscal year; and

[2]           the allocation for all other Members
shall be comprised of a proportionate share of each Company item of income,
gain, expense and loss entering into the computation of Profit for such fiscal
year (other than the portion of each Company item of expense and loss, if any,
that is allocated in (ii)(A)(1) above).

[B]           In the event that the Company has
Loss for a fiscal year,

[1]           for any Member as to whom the
allocation under Section 3.1(a)(i) would increase its Capital Account, such
allocation shall be comprised of a proportionate share of the Partnership’s
items of income and gain entering into the computation of Loss for such fiscal
year; and

[2]           the allocation for all other Members
shall be comprised of a proportionate share of each Company item of income,
gain, expense and loss entering into the computation of Loss for such fiscal
year (other than the portion of each Company item of income and gain, if any,
that is allocated in (ii)(B)(1) above).

[b]           Allocation Adjustments Required to Comply With Section 704(b) of the
Code.

[i]            Limitation on Allocation of Losses.  There shall be no allocation of Losses to any
Member to the extent that such allocation would create a negative balance in
the Member’s Capital Account (or increase the amount by which the Member’s
Capital Account balance is negative) unless such allocation would be treated as
valid under Section 704(b) of the Code. 
Any Losses that, pursuant to the preceding sentence, cannot be allocated
to a Member shall be reallocated to the other Members (but only to the extent
that such other Members can be allocated Losses without violating the
requirements of the preceding sentence) in proportion to their respective
Allocation Percentages.

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[ii]           Qualified Income Offset. 
If in any Fiscal Year a Member receives (or is reasonably expected to
receive) a distribution, or an allocation or adjustment to the Member’s Capital
Account, that creates a negative balance in such Account (or increases the
amount by which the balance in such Account is negative), there shall be
allocated to the Member such items of Company income or gain as are necessary
to satisfy the requirements of a “qualified income offset” within the meaning
of Treasury Regulation Section 1.704-1(b).

[iii]          Member
Nonrecourse Deductions. 
In accordance with the provisions of Treasury Regulation Section 1.704-2(i),
each item of Member Nonrecourse Deduction shall be allocated among the Members
in proportion to the economic risk of loss that the Members bear with respect
to the nonrecourse liability of the Company to which such item of Member
Nonrecourse Deduction is attributable.

[iv]          Minimum
Gain Chargeback.  This
Section 3.1(b)(iv) hereby incorporates by reference the “minimum gain
chargeback” provisions of Treasury Regulation Section 1.704-2.  In general, upon a reduction of the Company’s
Minimum Gain, the preceding sentence shall require that items of income and
gain be allocated among the Members in a manner that reverses prior allocations
of Nonrecourse and Member Nonrecourse Deductions as well as reductions in the
Members’ Capital Account balances resulting from distributions that,
notwithstanding Section 3.2, are allocable to increases in the Company’s
Minimum Gain.  Subject to the provisions
of Section 704 of the Code and the Treasury Regulations thereunder, if the
Board of Managers determine at any time that operation of such “minimum gain
chargeback” provisions likely will not achieve such a reversal by the
conclusion of the liquidation of the Company, such Members shall adjust the
allocation provisions of this Section 3.1 as necessary to accomplish that
result.

[v]           Allocations Subsequent to Certain Allocation Adjustments.  Any special allocations of items of Profit or
Loss pursuant to Section 3.1(b)(i) or (ii) shall be taken into account in
computing subsequent allocations pursuant to Section 3.1(a) so that, for
each Member, the net amount of any such special allocations and all allocations
pursuant to Section 3.1(a) shall, to the extent possible and taking into
account any adjustments previously made pursuant to Section 3.1(g), be equal to
the net amount that would have been allocated to such Member pursuant to the
provisions of Section 3.1(a) without application of Section 3.1(b)(i) or
(ii).

[c]           Book - Tax Accounting Disparities.  If Company property is reflected in the
Capital Accounts of the Members at a value that differs from the adjusted tax
basis of such property (whether because such property was contributed to the
Company by a Member or because of a revaluation of the Members’ Capital
Accounts under Treasury Regulation Section 1.704-1(b)), allocations of
depreciation, amortization, income, gain or loss with respect to such property
shall be made among the Members in a manner which takes such difference into
account in accordance with Code Section 704(c) and the Treasury
Regulations issued thereunder.

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[d]           Allocations in Event of Transfer.  If an Interest is Transferred in accordance
with this Agreement, allocations of Profits and Losses as between the
transferor and transferee shall be made using any method selected by the Board
of Managers and permitted under Section 706 of the Code.

[e]           Adjustment to Capital Accounts for Distributions of Property.  If property distributed in kind is reflected
in the Capital Accounts of the Members at a book value that differs from the
Fair Market Value of such property at the time of distribution, the difference
shall be treated as Profit or Loss on the sale of the property and shall be
allocated among the Members in accordance with the provisions of this Section
3.1.

[f]            Tax Credits and Similar Items.  Any tax credits or similar items not
allocable pursuant to Section 3.1(a) through (e) shall be allocated to the
Members in proportion to their respective Allocation Percentages.  Notwithstanding the preceding sentence, if
Company expenditures that give rise to tax credits also give rise to Member
Nonrecourse Deductions, the tax credits attributable to such expenditures shall
be allocated in accordance with Treasury Regulation Section 1.704-1(b)(4)(ii).

[g]           Reallocation of Certain Losses.  To the extent that: (i) Losses which
otherwise would have been allocated to a Member under this Section 3.1 were
allocated to one or more other Members pursuant to Section 3.1(b)(i) or any
other provision of this Agreement that prohibits the allocation to a Member of
Losses which would reduce such Member’s Capital Account balance below a
specified amount; (ii) such allocation has not been reversed pursuant to the
subsequent operation of Section 3.1(b)(v) or this Section 3.1(g); and (iii) the
Member thereafter returns a distributed amount as required under Section 2.8 or
otherwise makes a contribution to the capital of the Company, the Capital
Accounts of the Members shall be adjusted in connection with such return or
contribution (to the extent of the value thereof) to effect a reallocation, in
reverse order, of such Losses to the Member. 
The foregoing adjustment shall be made in an equitable manner on a going
forward basis, without amending any prior tax return that has already been
filed.

3.2          Compliance with Regulations.  In allocating gains, losses and other items,
the Company shall comply with the applicable provisions of the Treasury
Regulations under Section 704 of the Code.

3.3          Allocation of Liabilities.  Solely for purposes of determining the
Members’ respective shares of the nonrecourse liabilities of the Company within
the meaning of Treasury Regulation Section 1.752-3(a)(3), each Member’s
interest in Company Profits shall be equal to the ratio that such Member’s
Allocation Percentage bears to the aggregate Allocation Percentages of the
Members.

3.4          Modifications to Preserve Underlying Economic
Objectives. 
If, in the opinion of counsel to the Company, there is a change in the
Federal income tax law (including the Code as well as the Treasury Regulations,
rulings, and administrative practices thereunder) which makes it necessary or
prudent to modify the allocation provisions of this Article 3 in order to
preserve the underlying economic objectives of the Members as reflected in this
Agreement, the Board of Managers shall make the minimum modification necessary
to achieve such purpose.

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3.5          Withholding Taxes.

[a]           The Company shall withhold taxes from
distributions to, and allocations among, the Members to the extent required by
law (as determined by the Board of Managers in their reasonable
discretion).  Except as otherwise
provided in this Section 3.5, any amount so withheld by the Company with
regard to a Member shall be treated for purposes of this Agreement as an amount
actually distributed to such Member pursuant to Section 4.1.  An amount shall be considered withheld by the
Company if, and at the time, remitted to a governmental agency without regard
to whether such remittance occurs at the same time as the distribution or
allocation to which it relates; provided, however, that an amount actually
withheld from a specific distribution or designated by the Board of Managers as
withheld from a specific allocation shall be treated as if distributed at the
time such distribution or allocation occurs.

[b]           To the extent that operation of
Section 3.5(a) would create a negative balance in a Member’s Updated
Capital Account or increase the amount by which such Updated Capital Account
balance is negative, the amount of the deemed distribution shall instead be
treated as a loan by the Company to such Member, which loan shall be payable
upon demand by the Company and shall bear interest at a floating rate equal to
the prime rate as announced from time to time by the Bank, compounded daily.

[c]           In the event that the Board of
Managers determine in their reasonable discretion that the Company lacks
sufficient cash available to pay withholding taxes in respect of a Member, one
or more of the Members may, in their sole and absolute discretion (but only
with the consent of the Board of Managers), make a loan or capital contribution
to the Company to enable the Company to pay such taxes.  Any such loan shall be full-recourse to the
Company and shall bear interest at a floating rate equal to the prime rate as
announced from time to time by the Bank, compounded daily.  Notwithstanding any provision of this
Agreement to the contrary, any loan (including interest accrued thereon) or
capital contribution made to the Company by a Member pursuant to this
Section 3.5(c) shall be repaid or returned as promptly as is reasonably
possible.

[d]           Each Member hereby agrees to
indemnify the Company and the other Members for any liability they may incur
for failure to properly withhold taxes in respect of such Member; moreover,
each Member hereby agrees that neither the Company nor any other Member shall
be liable for any excess taxes withheld in respect of such Member’s Interest
and that, in the event of overwithholding, a Member’s sole recourse shall be to
apply for a refund from the appropriate governmental authority.

[e]           Taxes withheld by third parties from
payments to the Company shall be treated as if withheld by the Company for
purposes of this Section 3.5.  Such
withholding shall be deemed to have been made in respect of all the Members in
proportion to their respective allocative shares under this Article 3 of
the underlying items of Profit to which such third party payments are
attributable.  In the event that the Company
receives a refund of taxes previously withheld by a third party from one or
more payments to the Company, the economic benefit of such refund shall be
apportioned among the Members in a manner 

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reasonably
determined by the Board of Managers to offset the prior operation of this
Section 3.5(e) in respect of such withheld taxes.

[f]            In the event that the Company is
required to recognize income or gain for income tax purposes under Section 684
of the Code (or a similar provision of State or local law) in respect of an
in-kind distribution to a Member, then, solely for such income tax purposes, to
the maximum extent permitted by applicable law (as determined by the Board of
Managers in their reasonable discretion), the income or gain shall be allocated
entirely to such Member.

3.6          Special Loss Allocations.
The allocable share of Losses of MEC Sub for any quarter will be increased by
the amount of Additional MEC Capital related to such quarter.

ARTICLE 4

DISTRIBUTIONS

4.1          Operating Distributions.  Except as otherwise provided in this
Agreement, distributions prior to the Dissolution of the Company shall be made
in accordance with this Section 4.1 and each Member actually receiving amounts
pursuant to a specific distribution by the Company shall receive a pro rata
share of each item of cash or other property of which such distribution is
constituted (based upon such Member’s Allocation Percentage).

[a]           Mandatory Tax Distributions.

[i]            The Company shall distribute to each
Member, not later than 90 days after the close of each Fiscal Year, an amount
of cash equal to the sum of the following.

[A]          The product of the
Tax Percentage for such Fiscal Year and such Member’s allocated share of the
Company’s net long-term capital gain (as defined in Section 1222(7) of the Code)
for such Fiscal Year as shown on the Company’s Federal income tax return
(subject to the modification described in Section 4.1(a)(iii)); and

[B]           The product of the
Tax Percentage for such Fiscal Year and such Member’s allocated share of the
Company’s net ordinary income and net short-term capital gain (as defined in
Section 1222(5) of the Code) for such Fiscal Year as shown on the Company’s
Federal income tax return (subject to the modification described in Section
4.1(a)(iii)).

[ii]           For purposes of this Section 4.1(a):
(x) the “Tax Percentage” with respect to each specific item of net long-term
capital gain shall be the highest blended Federal and State marginal income tax
rate applicable to such specific item of net long-term capital gain
recognized by a corporation doing business, in the State with the highest
marginal corporate income tax rate applicable to items of net long-term capital
gain; and (y) the “Tax Percentage” with respect to items of net ordinary income
and net short-term capital gain shall be the highest blended Federal and State
marginal income tax rate applicable to ordinary income recognized by a
corporation doing business, in the State with the highest marginal corporate
income tax rate applicable to items of ordinary

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income.  In all cases, the highest marginal income tax
rate shall be the highest statutory rate applicable to the specific type of
income or gain in question and shall be determined without regard to phaseouts
of deductions or similar adjustments; moreover, a corporate franchise tax
imposed in lieu of an income tax shall be treated as an income tax.  The Board of Managers, acting in their
reasonable discretion, may adjust the determination of Tax Percentages pursuant
to this Section 4.1(a)(ii): (x) as necessary to ensure that the distribution
required to be made to each Member pursuant to Section 4.1(a)(i) for any Fiscal
Year is not less than such Member’s actual Federal and State income tax
liability in respect of allocations made to such Member by the Company for such
Fiscal Year; or (y) to reflect any city or other local income tax to which any
Member or Members may be subject; provided, however, that the Tax Percentage
with regard to a particular type of income or gain shall in all events be the
same percentage for all Members.

[iii]          For purposes of calculating the
Company’s net income and gain under clause (i), above, there shall be
disregarded any items of loss, expense or deduction the ultimate deductibility
of which may, in respect of any Member or equityholder of a Member, be subject
to limitation under Section 67 of the Code.

[iv]          For purposes of determining whether
the Company has satisfied its distribution obligation under Section 4.1(a)(i),
all cash distributions made during a Fiscal Year shall be treated as distributions
made pursuant to Section 4.1(a)(i) in respect of such Fiscal Year (except to
the extent that such distributions were required to satisfy the obligations of
the Company under Section 4.1(a)(i) in respect of one or more prior Fiscal
Years, in which case such distributions shall be treated as having been made
pursuant to Section 4.1(a)(i) in respect of such prior Fiscal Year or Years).

[v]           At the election of the Board of
Managers, no distribution shall be required pursuant to Section 4.1(a)(i) in respect
of any Fiscal Year if the Company does not have the funds necessary to make the
distributions.

[b]           Certain Mandatory Distributions. If on December 31,
2009, there are funds contributed by the Members pursuant to Schedule A which
have not been expended by the Company, then, after provision for all current
obligations or liabilities of the Company incurred prior to December 31, 2009,
the Board of Managers shall make cash distributions in the amounts and in the
order under [i], [ii] and [iii] below:

[i]            First, to pay the aggregate unpaid
lease payments owed by the Company through December 31, 2009 under the
Equipment Lease only with respect to assets acquired by the lessor thereunder
after the date of this Agreement;

[ii]           Next, to MEC Sub in the amount of the
aggregate Additional MEC Capital; and

[iii]          Next, to the Members in proportion to
their Allocation Percentages until CDI Sub has received an amount which
provides CDI Sub with a return of its Capital Contributions contributed by CDI
Sub prior to December 31, 2009 plus a 33

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1/3% rate of
return calculated on an annual compounded basis from the date the Capital
Contribution is made on the outstanding amounts thereof.

[c]           Certain Optional Distributions.  If on any date after December 31, 2009, the
Company does not have an Actual Cash Flow Deficiency when measured on a last
twelve month basis, the Board of Managers may elect thereafter to make cash
distributions in the amounts and in the order under [i], [ii], [iii] and [iv]
below:

[i]            First, to pay the aggregate unpaid
lease payments owed by the Company through the date of such distribution under
the Equipment Lease only with respect to assets acquired by the lessor
thereunder after the date of this Agreement, to the extent not previously paid
under Section 4.1 [b];

[ii]           Next, to the Members in proportion to
their Allocation Percentages until CDI Sub has received an amount which
provides CDI Sub with a return of its Capital Contributions contributed by CDI
Sub prior to December 31, 2009 plus a 33 1/3% rate of return calculated on an
annual compounded basis from the date the Capital Contribution is made on the
outstanding amounts thereof, to the extent not previously paid under Section
4.1[b];

[iii]          Next, $17,000,000 plus the amount of
any Additional MEC Capital to MEC Sub, to the extent not previously paid under
Section 4.1(b); and

[iv]          Next, to the Members in proportion to
their respective Allocation Percentages.

[d]           Discretionary Distributions. In addition to the
distributions provided for in Section 4.1[a], Section 4.1[b] and Section
4.1[c], the Board of Managers may cause the Company to distribute cash or
property to the Members, in proportion to the Members’ respective Allocation
Percentages, at such times and in such amounts as the Board of Managers shall
determine.

4.2          Liquidating Distributions.  Notwithstanding the provisions of
Section 4.1, cash or property of the Company available for distribution
upon the Dissolution of the Company (including cash or property received upon
the sale or other disposition of assets in anticipation of or in connection
with such Dissolution) shall be distributed in accordance with the provisions
of Section 8.3.

4.3          Limitation on Distributions.  No distribution shall be made to a Member
pursuant to Section 4.1 if and to the extent that such distribution would: (i)
create a negative balance in the Updated Capital Account of such Member or
increase the amount by which such Updated Capital Account balance is negative;
(ii) cause the Company to be insolvent; (iii) render the Member liable for a
return of such distribution under applicable law; or (iv) result in a Member
receiving rights with respect to Television Rights or Broadband and Mobile
Rights it did not contribute to the Company.

 12

4.4          No
Right to Distributions of Property.  Except as otherwise provided in this
Agreement, a Member shall have no right to require that distributions to such
Member consist of any specific item or items of property.

ARTICLE 5

MANAGEMENT
AND ADMINISTRATION

5.1          Management
Powers and Authority of the Board of Managers.  Except as otherwise specifically provided in
this Agreement:

[a]           The Company and its
business shall be managed, controlled and operated exclusively by the Board of
Managers consisting of four (4) Managers, who shall be the “managers” of the
Company within the meaning Section 18-101(10) of the Act and shall have all of
the powers and authority in respect of the Company permitted to managers under
the Act;

[b]           CDI Sub and MEC Sub
shall each appoint two (2) Managers to serve on the Board of Managers who shall
be the same managers appointed to the TrackNet board of managers and shall be
employees of CDI and MEC, respectively; provided that no such appointee may be
the chairman of either CDI or MEC.

[c]           MEC Sub shall have
the right to designate the first chairperson who shall serve until December 31,
2008.  After December 31, 2008, the
chairperson of the Board of Managers shall rotate annually between a Manager
designated by CDI Sub and a Manager designated by MEC Sub, unless the party
with the right to designate the chairperson agrees otherwise.  The chairperson shall preside at meetings of
the Board of Managers and Members, but the chairperson will be a non-executive
position and will not have any operational or management duties.

5.2          Management and Operations.  The Company shall generally conduct its
business as follows:

[a]           All actions taken
and decisions made by the Board of Managers must be approved unanimously by all
members of the Board of Managers.  In
taking such actions and making such decisions, the Board of Managers and each
member thereof shall act in their sole and absolute discretion, except as
otherwise expressly stated in this Agreement. 
The Board of Managers shall make all decisions that are customarily made
by a board of directors of a corporation and shall authorize the management of
the Company to operate the Company in accordance with the terms set forth in
this Agreement.  Notwithstanding the
foregoing, any action by the Company related to a claimed breach of the Asset
Transfer and Contribution Agreement may be authorized by the two members of the
Board of Managers appointed by CDI Sub.

[b]           The Board of Managers shall each year
approve an annual operating budget and annual capital budget (the 2007 annual
budgets will commence May 1, 2007, with calendar year budgets thereafter).  Any modification to the annual operating
budget or annual capital budget must be approved by the Board of Managers.  The operating budget for 2007, 2008 and 2009
is set forth as Schedules 2 and 2-1 of the Business Plan.  The capital budget for 

 13
 

2007, 2008 and
2009 is set forth as Schedule 2-2 of the Business Plan.  The approval of the Board of Managers shall
be required for any Discretionary Expenditures.

[c]           The Company shall
receive fees collected by TrackNet to help cover the costs of producing and
distributing television and other video (the “Television Fees”).  In connection with approving the annual
budgets, the Board of Managers shall consult with TrackNet to determine the
amount to be charged as Television Fees. 
The Television Fees shall be reviewed on an annual basis by the Board of
Managers.

[d]           The approval of the
Board of Managers shall be required for (i) the appointment of the Chief
Executive Officer (who may be the same as the chief executive officer of
TrackNet), the Chief Financial Officer and any employee or consultant who will
earn total compensation in a year in excess of $50,000, whether hired by the
Company or seconded to the Company, and (ii) any increase in Employee Costs for
any employee, whether such employee has been seconded to or is employed by the
Company.

[e]           The approval of the
Board of Managers shall be required for any contract obligating the Company in
an amount greater than $50,000 or without a ninety (90) day right of
termination.

[f]            The approval of the
Board of Managers shall be required for any contract entered into by the
Company for the distribution of HRTV by any means (including without limitation
cable or satellite).

[g]           The approval of the
Board of Managers shall be required for any television content acquisition
agreement entered into by the Company and for any agreement between the Company
and TrackNet.

[h]           The approval of the
Board of Managers shall be required for any expansion of the scope of the
Business of the Company.

[i]            The approval of the
Board of Managers shall be required for the initiation or settlement of any
litigation.

[j]            The approval of the
Board of Managers shall be required for any acquisitions or dispositions of
significant assets or businesses or the formation of any partnerships or joint
ventures.

5.3          Management
Team. 
The Company shall have a full time management team that is separate from
its Members headed by such officers as determined by the Board of Managers and
shall operate in accordance with the parameters set by the Board of
Managers.  In addition to executing the
tasks identified above in Section 1.3(b), the Company’s management team shall
also be responsible for such other tasks as determined by the Board of
Managers.

5.4          Managers’ Power to Bind the Company.

[a]           Notwithstanding any
provision of this Agreement to the contrary, any contract, agreement, deed,
lease, note or other document or instrument executed on behalf of 

 14
 

the Company by
two officers of the Company shall be deemed to have been duly executed; no
Member’s or Manager’s signature shall be required in connection with the
foregoing and Third Parties shall be entitled to rely upon the aforesaid power
to bind the Company without otherwise ascertaining that the requirements of
this Agreement have been satisfied.

[b]           The Company is
authorized to file with any governmental entity, on behalf of itself and the
Members, a certificate or similar instrument that evidences the power of any
two officers to bind the Company as set forth in the preceding paragraph (a).

5.5          Duties to the Company.

[a]           A Member shall not
utilize any assets of the Company other than for the exclusive benefit of the
Company, a purpose reasonably related to protecting such Member’s Interest (in
a manner not inconsistent with the interests of the Company), or to comply with
the requirements of applicable law.

[b]           The Managers shall
devote to the Company such time, effort and attention as shall be reasonably
necessary to ensure that the Company and its business are diligently and
prudently managed.

5.6          Officers.  The Board of Managers may appoint, replace
and remove, from time to time, Company officers, who shall otherwise serve in
office until the next succeeding December 31 and to whom the Board of Managers
shall delegate such powers, authority and duties in respect of the Company as
the Board of Managers shall determine consistent with this Agreement.

5.7          Manager and Member Expenses.

[a]           General.  Except as otherwise provided in Section 2.10
or this Section 5.7, neither CDI, MEC nor any Member shall be reimbursed for
expenses incurred on behalf of, or otherwise in connection with, the
Company.  Any reimbursement paid by a
third party for expenses actually reimbursed by the Company shall be retained
by (or paid over by the recipient thereof to) the Company.

[b]           Managers.  Managers shall be reimbursed for expenses
incurred on behalf of the Company only with the approval of the Board of
Managers.

5.8          Tax Matters Partner.

[a]           General.  The Tax Matters Partner is hereby designated
the “tax matters partner” of the Company within the meaning of
Section 6231(a)(7) of the Code. 
Except to the extent specifically provided in the Code or the Treasury
Regulations (or the laws of other relevant taxing jurisdictions), the Tax
Matters Partner (after receiving the approval of the Board of Managers) shall
have exclusive authority to act for or on behalf of the Company with regard to
tax matters, including the authority to make (or decline to make) any available
tax elections.

 15
 

[b]           Partnership Classification for Tax Purposes.  Except to the extent otherwise required by
applicable law (disregarding for this purpose any requirement that can be
avoided through the filing of an election or similar administrative procedure),
the Tax Matters Partner shall cause the Company to take the position that the
Company is a “partnership” for Federal, State and local income tax purposes and
shall cause to be filed with the appropriate tax authorities any elections or
other documents necessary to give due legal effect to such position.  A Member shall not file (and represents that
it has not filed) any income tax election or other document that is
inconsistent with the Company’s position regarding its classification as a “partnership”
for applicable Federal, State and local income tax purposes.

[c]           Notice of Inconsistent Treatment of Company
Item.  No Member shall
file a notice with the United States Internal Revenue Service under
Section 6222(b) of the Code in connection with such Member’s intention to
treat an item on such Member’s Federal income tax return in a manner which is
inconsistent with the treatment of such item on the Company’s Federal income
tax return unless such Member has, not less than thirty (30) days prior to the
filing of such notice, provided the Tax Matters Partner with a copy of the
notice and thereafter in a timely manner provides such other information
related thereto as the Tax Matters Partner shall reasonably request.

[d]           Notice of Settlement Agreement.  Any Member entering into a settlement
agreement with the United States Department of the Treasury which concerns a
Company item shall notify the Tax Matters Partner of such settlement agreement
and its terms within 60 days after the date thereof.

5.9          Records and Financial Statements; Compliance with
Laws

[a]           The Company shall
maintain true and proper books, records, reports, and accounts in accordance
with generally accepted principles and practices of accounting consistently
applied, in which shall be entered all transactions of the Company.  The Company shall also maintain all schedules
referenced in this Agreement and shall update such schedules promptly upon
receipt of new information relating thereto, subject to the approval of the
Board of Managers.  Copies of such books,
records, reports, accounts and schedules shall be located at the Principal
Office and shall be available to any Member for inspection and copying, upon at
least two business days’ notice, during reasonable business hours; provided,
however, that items of highly confidential Company information may be withheld
from a Member to the extent reasonably necessary to protect Company interests
as determined by the Board of Managers in their reasonable discretion.

[b]           Within forty-five
(45) days after the end of each Fiscal Year, the Company shall furnish to each
Member the following, which shall be audited by a firm of independent certified
public accountants approved by the Board of Managers: (i) a balance sheet of
the Company, (ii) an income statement of the Company, (iii) a statement of cash
flows of the Company, and (iv) the Capital Account balance of each Member.  In addition, within sixty (60) days after the
end of each Fiscal Year, the Company shall supply all information reasonably
necessary to enable the Members to prepare their Federal and State income tax
returns and (upon request therefor) to comply with other reporting requirements
imposed 

 16
 

by law.  Within twenty (20) days after the end of each
quarter, the Company shall furnish to each Member the following, which shall be
unaudited but prepared in accordance with generally accepted accounting
principles and practices consistently applied: (i) a balance sheet of the
Company, (ii) an income statement of the Company, (iii) a statement of cash
flows of the Company, and (iv) the Capital Account balance of each Member.

[c]           The Company shall
conduct its Business in compliance with applicable laws and shall provide such
information, and shall grant to the Members and their attorneys, accountants
and other representatives such access to the books, records, other information
and personnel of the Company, as is reasonably necessary for the Members to
comply with applicable laws, including without limitation, the securities laws
in general and the Sarbanes-Oxley Act of 2002 in particular.

5.10        Valuation of Company Assets and Interests.

[a]           General.  In the event that the fair market value of a
Company asset or Interest must be determined for purposes of this Agreement,
such value shall be determined by the Board of Managers, acting in good faith.

[b]           Dispute.  In the event that the Board of Managers is
unable to determine such value, the matter shall be submitted for determination
to a qualified Third Party valuation expert acceptable to the Board of
Managers.

[c]           Binding Effect.  The value of any Company asset or Interest
determined pursuant to this Section 5.10 shall be binding upon the Company and
the Members and shall establish the “Fair Market Value” of such asset or Interest
for all purposes under this Agreement.

5.11        Removal
or Resignation of Managers.   A Manager may be removed for any reason upon
the notice of such removal by the Member appointing such Manager and may
voluntarily resign as a Manager upon providing thirty (30) days advance written
notice of such resignation to the Board of Managers.

5.12        Vacancies.  A vacancy in the Board of Managers caused by
the removal, resignation or Permanent Incapacity of a Manager shall be filled
by the Member who originally appointed the Manager.

5.13        Meetings of the Board of Managers.

[a]           Meetings of the
Board of Managers may be called by any Manager. 
Any such meeting shall be held at a reasonable time and place on not
less than two (2) days notice, which notice shall include an agenda of items to
be considered at the meeting.  Reasonable
accommodation shall be made for any Manager who elects to attend a meeting via
telephonic or similar means pursuant to which all Persons attending the meeting
can hear one another.  Minutes of the
meeting shall be prepared at the direction of the Board of Managers.

[b]           Any action of the
Board of Managers may be taken by written consent of all the Managers.

 17
 

5.14        Acquisition of Television Rights.

[a]           The Company shall
grant TrackNet the exclusive right to acquire Television Rights and Broadband
and Mobile Rights from Third Parties worldwide for use by the Company worldwide
or by any sublicensee approved by the Board of Managers until December 31,
2009.  The Members may jointly agree to
earlier terminate or extend this exclusive grant of rights, in their sole
discretion.

[b]           TrackNet shall, on
behalf of the Company, collect Television Fees from Third Parties and remit
such fees to the Company.

ARTICLE 6

REPRESENTATIONS,
WARRANTIES AND COVENANTS

6.1          Other Ventures and Activities.

[a]           Each Member
acknowledges that the other Members and their respective Affiliates are
involved in other business, financial, investment and professional activities
other than the Business and activities within the scope of Section 1.3(b).  Except as specifically set forth in Section
5.5: (i) neither the Company, CDI, MEC nor the Members shall have any
right by virtue of this Agreement or the existence of the Company in and to
such ventures or activities or to the income or profits derived therefrom; and
(ii) the Members and their Affiliates shall have no duty or obligation to
make any reports to the Members or the Company with respect to any such
ventures or activities.

[b]           The Members
acknowledge that a Member may be prohibited from taking action for the benefit
of the Company: (i) due to confidential information acquired or
obligations incurred in connection with a permitted outside activity under this
Section 6.1; or (ii) in connection with activities undertaken prior
to the date of such Member’s admission to the Company.  No Person shall be liable to the Company,
CDI, MEC or any Member for any failure to act for the benefit of the Company in
consequence of a prohibition described in the preceding sentence.

[c]           For so long as a
Member shall have licensed its Television Rights in the Territory to the
Company, such Member (and CDI and MEC in the case of CDI Sub and MEC Sub, as
applicable) shall not, directly or indirectly, own, manage, operate, join, have
an interest in, control or participate in the ownership, management, operation
or control of, or be otherwise connected in any manner with, any corporation,
limited liability company, partnership or other business entity which: (i)
engages in the exploitation of such Member’s (and CDI’s and MEC’s in the case
of CDI Sub and MEC Sub, as applicable) Television Rights in the Territory, or
(ii) engages in the business of operating a television network in the Territory
primarily focused on horse racing; in the case of each of (i) and (ii) above,
other than the ownership of less than five percent (5%) of the equity interests
of any publicly traded entity.  The above
noncompete provision applies even in the event the Television Rights become
nonexclusive to the Company pursuant to Schedule 5 of the Business Plan;
provided that nothing herein shall prohibit (i) any party from exploiting its
Broadband and Mobile Rights as permitted under this Agreement, or (ii) any
party from licensing its Television 

 18
 

Rights on a
non-exclusive basis to any Third Party in the event such Television Rights are
no longer exclusively licensed to the Company. 
Notwithstanding any other provision herein, CDI or MEC may each,
directly or indirectly, own up to thirty three and one third percent (33 1/3%)
of the equity interests in RTN and such ownership shall not be deemed a breach
or violation of this Section 6.1[c].

6.2          Confidentiality.  All information provided to the Members or
their Affiliates by or on behalf of the Company or a Member concerning the
business or assets of the Company or any Member or its Affiliates in connection
with the activity of the Company shall be deemed strictly confidential and
shall not, without the prior consent of the Board of Managers, be
(i) disclosed to any Person (other than a Member, CDI or MEC) or
(ii) used by a Member other than for a Company purpose or a purpose
reasonably related to protecting such Member’s Interest or the business of such
Member (in either case in a manner not inconsistent with the interests of the
Company).  The Board of Managers consent
to the disclosure by each Member of Company information to such Member’s
accountants, attorneys and similar advisors bound by a duty of
confidentiality.  The foregoing
requirements of this Section 6.2 shall not apply to a Member with regard
to any information that is currently or becomes: (i) required to be
disclosed pursuant to applicable law, including the rules and regulations of
the Securities and Exchange Commission or the rules of Nasdaq, the Toronto
Stock Market or any other stock market on which securities of a Member, CDI or
MEC are listed (but only to the extent of such requirement); (ii) required
to be disclosed in order to protect such Member’s Interest (but only to the
extent of such requirement and only after consultation with the Board of
Managers); (iii) publicly known or available in the absence of any
improper or unlawful action on the part of such Member; or (iv) known or
available to such Member other than through or on behalf of the Company or a
Member.  For purposes of this
Section 6.2, Company information provided by one Member to another shall
be deemed to have been provided on behalf of the Company.  The Company and the Board of Managers shall
similarly refrain from disclosing any confidential information furnished by a
Member pursuant to this Section 6.2.

6.3          Disclosures.  Each Member shall furnish to the Company upon
request any information with respect to such Member reasonably determined by
the Board of Managers to be necessary or convenient for the formation,
operation, Dissolution, winding-up, or Termination of the Company, and any such
information which is confidential shall be treated as such by the Company and
the Members.

6.4          Certain Member Representations and Covenants.

[a]           Each Member hereby
represents that, with respect to its Interest: 
(i) it is acquiring or has acquired such Interest for purposes of
investment only, for its own account (or a trust account if such Member is a
trustee), and not with a view to resell or distribute the same or any part
thereof; and (ii) no other Person has any interest in such Interest or in
the rights of such Member under this Agreement (other than a shareholder or
other owner of an interest in the Member by virtue thereof or a spouse having a
community property or similar interest under applicable law.)  Each Member also represents that it has the
business and financial knowledge and experience necessary to acquire its
Interest on the terms contemplated herein and that it has the ability to bear
the risks of such investment (including 

 19
 

the risk of
sustaining a complete loss of all its capital contributions) without the need
for the investor protections provided by the registration requirements of the
Securities Act.

[b]           Except to the extent
set forth in a notice provided to the Company, each Member hereby represents
that allocations, distributions and other payments to such Member by the
Company are not subject to tax withholding under the Code.  Each Member shall promptly notify the Company
in the event that any allocation, distribution or other payment previously
exempt from such withholding becomes or is anticipated to become subject
thereto.

[c]           Each Member
acknowledges that certain provisions of this Agreement (including Sections 6.1
and 9.1) have the effect of limiting the fiduciary duties or obligations of
some or all Members to the Company and the other Members under applicable
law.  Each Member hereby represents that
it has carefully considered and fully understands each such provision and has
made an informed decision to consent thereto.

[d]           Each Member hereby
represents that: (i) it is a corporation or limited liability company validly
existing and in good standing under the laws of its jurisdiction of
incorporation or formation and has all requisite power and authority to own,
lease and use its assets and carry on its business as and in the places where
such assets are owned, leased or used or such business is conducted; (ii) it
has full corporate or limited liability company power and authority to enter
into this Agreement and consummate the transactions contemplated hereby and
this Agreement and the other documents contemplated by this Agreement have been
duly authorized by all requisite corporate or limited liability company action
of such Member, have been duly executed and delivered by such Member and
constitute the valid and binding obligation of such Member enforceable in
accordance with their terms; and (iii) it is and shall be during the Term in
compliance with all material laws, statutes, rules or regulations applicable to
such Member or its assets or business and it shall not be under indictment or
grand jury subpoena with respect to any criminal investigation pursuant to
which it has been identified as a target.

6.5          Avoidance of Publicly Traded Partnership Status.

[a]           Except to the extent
otherwise set forth in a notice provided to the Company, each Member hereby
represents that at least one of the following statements with respect to such
Member is true and will continue to be true throughout the period during which
such Member holds an Interest:

[i]            Such Member is not
a partnership, grantor trust or S corporation for Federal income tax purposes;

[ii]           With regard to each
Beneficial Owner of such Member, the principal purposes for the establishment
and/or use of such Member do not include avoidance of the one hundred (100)
partner limitation set forth in Treasury Regulation Section 1.7704-1(h)(1)(ii);
or

[iii]          With regard to each
Beneficial Owner of such Member, not more than 75 percent of the value of such
Beneficial Owner’s interest in such Member is attributable to such Member’s
Interest.

 20
 

[b]           In the event that a
Member’s representation pursuant to Section 6.5(a) shall at any time fail to be
true, or the information set forth in a notice provided by such Member to the
Company pursuant to Section 6.5(a) shall change, such Member shall promptly
(and in any event within 10 days) notify the Company of such fact and shall
promptly thereafter deliver to the Company any information regarding such
Member and its Beneficial Owners reasonably requested by counsel to the Company
for purposes of determining the number of the Company’s “partners” within the
meaning of Treasury Regulation Section 1.7704-1(h).

[c]           Each Member
acknowledges that the Board of Managers will rely upon such Member’s
representations, notices and other information as set forth in this Section 6.5
for purposes of determining whether proposed Transfers of Interests may cause
the Company to be treated as a “publicly traded partnership” within the meaning
of Section 7704 of the Code and that failure by a Member to satisfy its
obligations under this Section 6.5 may cause the Company to be treated as a
corporation for Federal, State or local tax purposes.

6.6          Shared Services.  MEC shall share the services of certain MEC
personnel with the Company as identified and described on Schedule 1-1 of the
Business Plan.

6.7          CDI Guaranty; MEC Guaranty.

[a]           CDI hereby
absolutely and unconditionally guarantees to the Company, MEC and MEC Sub,
their respective successors and permitted assigns, the due prompt and punctual
performance of all obligations of, and the prompt payment when due at all times
hereafter of any and all amounts owed by, CDI Sub under this Agreement
(including any extensions, modifications and amendments hereof) to the Company,
MEC or MEC Sub (the “CDI Sub Obligations”). 
Each of the Company, MEC and MEC Sub shall have the right of immediate
recourse against CDI for full and immediate performance or payment of the CDI
Sub Obligations at any time after the CDI Sub Obligations, or any part thereof,
have not been performed or paid in full when due.  This is a guaranty of payment, not of
collection, and CDI therefore agrees and acknowledges that the Company, MEC and
MEC Sub shall not be obligated, prior to seeking recourse against or receiving
payment from CDI, to take any of the following actions (although any of the
Company, MEC or MEC Sub may, at its option, do so in whole or in part) all of
which CDI hereby unconditionally waives: 
[i] take any steps whatsoever to collect from CDI Sub or file any claim
of any kind against CDI Sub, take any steps whatsoever to accept, perfect a
security interest in, or foreclosure or realize on, collateral security, if
any, securing or for payment of the CDI Sub Obligations or any guaranty of the
CDI Sub Obligations; or [ii] in any other respect exercise diligence in
collecting or attempting to collect any of the CDI Sub Obligations by any
means.  CDI unconditionally and irrevocably
waives each and every defense which, under principles of guaranty or surety
law, would operate to impair or diminish the liability of CDI to the Company,
MEC or MEC Sub hereunder.  CDI
unconditionally waives: [i] any subrogation to the rights of the Company, MEC
or MEC Sub against CDI Sub until all of the CDI Sub Obligations have been
satisfied in full; and [ii] any acceptance of this guaranty.  This guaranty by CDI is personal to the
Company, MEC and MEC Sub and cannot be assigned without the express written
approval of CDI, which may be withheld in CDI’s sole discretion.

 21
 

[b]           MEC hereby
absolutely and unconditionally guarantees to the Company, CDI and CDI Sub,
their respective successors and permitted assigns, the due prompt and punctual
performance of all obligations of, and the prompt payment when due at all times
hereafter of any and all amounts owed by, MEC Sub under this Agreement
(including any extensions, modifications and amendments hereof) to the Company,
CDI or CDI Sub (the “MEC Sub Obligations”). 
Each of the Company, CDI and CDI Sub shall have the right of immediate
recourse against MEC for full and immediate performance or payment of the MEC
Sub Obligations at any time after the MEC Sub Obligations, or any part thereof,
have not been performed or paid in full when due.  This is a guaranty of payment, not of
collection, and MEC therefore agrees and acknowledges that the Company, CDI and
CDI Sub shall not be obligated, prior to seeking recourse against or receiving
payment from MEC, to take any of the following actions (although any of the
Company, CDI or CDI Sub may, at its option, do so in whole or in part) all of
which MEC hereby unconditionally waives: 
[i] take any steps whatsoever to collect from MEC Sub or file any claim
of any kind against MEC Sub, take any steps whatsoever to accept, perfect a
security interest in, or foreclose or realize on, collateral security, if any,
securing or for payment of the MEC Sub Obligations or any guaranty of the MEC
Sub Obligations; or [ii] in any other respect exercise diligence in collecting
or attempting to collect any of the MEC Sub Obligations by any means.  MEC unconditionally and irrevocably waives
each and every defense which, under principles of guaranty or surety law, would
operate to impair or diminish the liability of MEC to the Company, CDI or CDI
Sub hereunder.  MEC unconditionally
waives:  [i] any subrogation to the
rights of the Company, CDI or CDI Sub against MEC Sub until all of the MEC Sub
Obligations have been satisfied in full; and [ii] any acceptance of this
guaranty.  This guaranty by MEC is
personal to the Company, CDI and CDI Sub and cannot be assigned without the
express written approval of MEC, which may be withheld in MEC’s sole
discretion.

6.8          Marketing.  Any marketing or advertising by either CDI or
MEC, or their respective advance deposit wagering businesses, on or with
respect to HRTV must be approved by the Board of Managers.  CDI and MEC intend to market or advertise
their respective advance deposit wagering businesses on HRTV (i) in a
substantially similar manner, in a substantially similar volume and on
substantially similar terms, and (ii) in a manner substantially similar to the
past practices of XpressBet, in all cases, without creating the impression that
either CDI or MEC, or its advance deposit wagering business, is the sole or
primary party or advance deposit wagering business associated with HRTV.  For purposes of example only, neither CDI or
MEC may brand its advance deposit wagering business as the “official” or “preferred”
advance deposit wagering business of HRTV (nor request or permit any
commentators on HRTV to suggest it) and neither party may place graphics on the
screen during programming advertising their advance deposit wagering business,
unless expressly agreed to in advance by the Board of Managers.

6.9          Ownership.  Each of CDI and MEC agrees to directly or
indirectly beneficially own all of the ownership interests in CDI Sub and MEC
Sub, respectively.

 

 22

ARTICLE 7

TRANSFERS
AND WITHDRAWALS

7.1          Transfers of Interests.

[a]           Prior to December 31, 2009, a Member
shall not Transfer all or any portion of its Interest without the prior consent
of the Board of Managers, which consent may be withheld in the Board of
Managers’ sole and absolute discretion. 
After December 31, 2009, a Member may Transfer all or any portion of it
Interest to a Third Party subject to the following:

[i]            The Member (the “Offering Member”)
desiring to Transfer all or any portion of it Interest to a Third Party (the “Offered
Interest”) must provide written notice of the terms and conditions of such
proposed Transfer including the identity of the proposed transferee (the “Offer
Notice”) to the other Member (the “Nonselling Member”).  The Nonselling Member shall have a period of
thirty (30) days after receipt of the Offer Notice (the “Option Period”) to
notify the Offering Member in writing of its election to purchase the Offered
Interest for the same price and on the same terms and conditions as set forth
in the Offer Notice.  If the Nonselling
Member exercises this option to purchase the Offered Interest, the Nonselling
Member and the Offering Member shall enter into an agreement of purchase and
sale within thirty (30) days.  If the
Nonselling Member fails to respond within the Option Period, it shall be deemed
to have elected not to purchase the Offered Interest.  If the Nonselling Member does not timely
exercise the option to purchase the Offered Interest or otherwise declines to
purchase the Offered Interest, the Offering Member shall be free to sell the
Offered Interest to the proposed Third Party at the price and upon terms no
less favorable to the Offering Member than those set forth in the Offer Notice,
so long as such sale is consummated within ninety (90) days from the close of
the Option Period.  If the Offered
Interest is not sold within such ninety (90) day period, the Offered Interest
shall again be subject to the provisions of this Section.

[ii]           If the Offering Member sells its
Interest to the Third Party, the Nonselling Member may elect to require the
Offering Member to require the Third Party to acquire the Interest of the
Nonselling Member under the same terms and conditions (adjusted, as
appropriate, in the event the Members have different Allocation Percentages)
and as part of the same transaction as set forth in the Offer Notice, which
election must be made by the Nonselling Member within the Option Period.

[b]           Unless admitted as a Member in
accordance with the provisions of this Agreement, the transferee of all or any
portion of an Interest shall not be a Member, but instead shall be subject to
the provisions of Section 7.4.

[c]           In connection with each Transfer of
an Interest:  (i) the transferor and
transferee shall execute and deliver to the Company a written instrument of
transfer in form and substance reasonably satisfactory to the Board of Managers
and (ii) the transferee shall execute and deliver to the Company a written
instrument pursuant to which the transferee

 23
 

assumes all
obligations of the transferor associated with the transferred Interest and
otherwise agrees to comply with the terms and provisions of this Agreement.

[d]           In connection with each Transfer, the
transferring Member shall provide to the Company either: (i) an opinion of
counsel to such transferring Member satisfactory in form and substance to
counsel for the Company with respect to the matters referred to in
Section 7.1(j); or (ii) sufficient information to allow counsel to the
Company to make a determination that the proposed Transfer will not result in
any of the consequences referred to in Section 7.1(j).

[e]           In the event of any Transfer which
results in multiple ownership of a Member’s Interest, the Board of Managers may
require that one or more trustees or nominees be designated to represent all or
a portion of the Interest transferred for the purpose of receiving all notices
which may be given and all payments which may be made under this Agreement and
for the purpose of exercising all rights of the transferees under this
Agreement.

[f]            In the event a Member Transfers (or
proposes to Transfer) all or any portion of its Interest, all reasonable legal
and other out-of-pocket expenses incurred by the Company on account of the
Transfer (or proposed Transfer) shall be paid by such Member.  Following the effective date of any Transfer,
the transferor and transferee shall be jointly and severally liable for all
such expenses.

[g]           Except as otherwise specifically
provided in this Agreement or with the consent of the Board of Managers, all
economic attributes of a transferor Member’s Interest (such as the Member’s
Capital Commitment, Capital Contribution, Allocation Percentage, Capital
Account balance, and obligation to return distributions or make other payments
to the Company) shall carry over to a transferee in proportion to the
percentage of the Interest so transferred.

[h]           Once all other conditions to the
Transfer of a Member’s Interest have been satisfied, such Transfer shall be
effective as of: (x) the Close of Business on the last day of the next ending
fiscal quarter of the Company; or (y) such other time as shall be jointly
selected by the Board of Managers, the transferor and the transferee.

[i]            Notwithstanding any provision of
this Agreement to the contrary, a Member or Withdrawn Member shall not, by
virtue of having Transferred all or any portion of its Interest, be relieved of
any obligations arising under this Agreement; provided, however, that a Member
or Withdrawn Member shall be relieved of such obligations to the extent that:
(x) such relief is approved by the Board of Managers (which approval may be
withheld by the Board of Managers in their sole and absolute discretion); and
(y) such obligations are assumed by another Member or Person admitted to the
Company as a Substitute Member.

[j]            Notwithstanding any provision of
this Agreement to the contrary, there shall be no Transfer of an Interest
unless such Transfer will not: (i) give rise to a requirement that the
Company register under the Securities Act; (ii) otherwise subject the
Company, a Member, or any equityholder, member, director, officer, or employee
of a Member to additional regulatory requirements under Federal, State, local or
foreign law, compliance with

 24
 

which would
subject the Company or such other Person to material expense or burden (unless
each such affected Person consents to such Transfer); (iii) constitute a
transaction effected through an “established securities market” within the
meaning of Treasury Regulation Section 1.7704-1(b) or otherwise
cause the Company to be a “publicly traded partnership” within the meaning of
Section 7704 of the Code; (iv) effect a termination of the Company
under Section 708 of the Code (but only if such termination would result
in material adverse consequences to the Company or any Member under Federal,
state or local law); or (v) violate any law, regulation or other
governmental rule, or result in a violation thereof by the Company, a Member,
or any equityholder, member, director, officer, or employee of a Member.

[k]           Any Transfer in violation of this
Article 7: (i) shall be null and void as against the Company and the
other Members; and (ii) shall not be recognized or permitted by, or duly
reflected in the official books and records of, the Company.  The preceding sentence shall not be applied
to prevent the Company from enforcing any rights it may have in respect of a
transferee arising under this Agreement or otherwise (including any rights
arising under Section 10.8).

[l]            Solely for purposes of this Article 7
(other than Section 7.1(g)), an Interest shall be deemed to include any
Derivative Company Interest held, issued or created by a Member, Assignee or
other Person.

7.2          Withdrawal/Removal of a Member.

[a]           A Member shall not withdraw from the
Company or otherwise elect to cease to be a Member without the approval of the
Board of Managers.

[b]           A Member shall not be removed from
the Company without its consent.

7.3          Procedures Following Member Withdrawal/Removal.  A Member that withdraws or is removed from
the Company (including via a deemed withdrawal) in accordance with the
provisions of Section 7.2 or otherwise ceases to be a member of the
Company under the Act (each a “Withdrawal Event” and a “Withdrawn Member”)
shall be treated as an Assignee and, accordingly, shall have the rights and
obligations of an Assignee as described in Section 7.4.  Subject to the preceding sentence, a
Withdrawn Member shall not be entitled to any redemption of its Interest,
distribution or payment in connection with its Withdrawal Event or otherwise in
consequence of its status as a Withdrawn Member.

7.4          Status of Assignees.

[a]           Notwithstanding any provision of this
Agreement to the contrary, an Assignee shall not be admitted to the Company as
a Substitute Member without the consent of the Board of Managers, which consent
may be withheld in the Board of Managers’ sole and absolute discretion.

[b]           All rights and privileges associated
with an Assignee interest in the Company shall be derived solely from the
Member interest of which such rights and privileges were previously a component
part.  No Assignee shall hold, by virtue
of such Assignee’s

 25
 

interest in
the Company, any rights and privileges that were not specifically transferred
to such Assignee by the prior holder of such interest.  No Member, Assignee or other rights or
privileges arising under this Agreement or the Act shall apply with respect to
a notional or constructive interest in the Company, without regard to whether
such interest constitutes a Derivative Company Interest.

[c]           Subject to Section 3.1(d), an
Assignee that holds an interest in the Company shall be entitled to receive the
allocations attributable to such interest pursuant to Article 4, to receive the
distributions attributable to such interest pursuant to Articles 4 and 8, and
to Transfer such interest in accordance with the terms of this Article 7.  Notwithstanding the preceding sentence, the
Company and the Members shall incur no liability for allocations and distributions
made in good faith to a transferor until a valid written instrument of Transfer
has been received by the Company and recorded on its books and the effective
time of the Transfer has passed.

[d]           To the extent otherwise applicable to
the interest in the Company that has been transferred to an Assignee, the
Assignee shall be subject to, and bound by, all of the terms and provisions of
this Agreement that inure to the benefit of the Company or any Member (without
regard to whether such Assignee has executed a written instrument of Transfer as
described in Section 7.4(c) or an assumption of obligations as described in
Section 7.1(c)).  Without limitation on
the preceding sentence, an Assignee that holds an interest in the Company shall
be responsible for any unpaid Capital Commitment and obligation to return
distributions or make other payments to the Company associated with such
interest and shall comply with the provisions of Sections 6.2, 6.3 and 10.14.

[e]           Solely to the extent necessary to
give effect to the Assignee rights and obligations set forth in Section 7.4(c)
and (d), an Assignee shall be treated as a Member for purposes of this
Agreement.

[f]            An Assignee shall not, solely by
virtue of its status as such, hold any non-economic rights in respect of the
Company.  Without limitation on the
preceding sentence, an Assignee’s interest in the Company shall not entitle
such Assignee to participate in the management, control or operation of the
Company or its business, act for the Company, bind the Company under agreements
or arrangements with third parties, or vote on Company matters.  An Assignee shall not have any right to
receive or review Company books, records, reports or other information.  An Assignee shall not hold itself out as a
Member in any forum or for any purpose; provided, however, that, to the extent
necessary to maintain consistency with the Company’s income tax returns,
reports, and other filings, an Assignee shall take the position that it is a
Member (or “partner”) solely for income tax purposes.

7.5          Transfers of Racetracks.
 In the event CDI or MEC voluntarily
divests its Control of the racing and wagering activities of Churchill Downs
Racetrack or Arlington Park, in the case of CDI, or Gulfstream Park or Santa
Anita, in the case of MEC (such party, a “Divesting Party”), to a Third Party
who continues to operate such track as a horse racing track, the Divesting
Party shall require, as a condition of the voluntary divestiture, that the
party assuming Control of the racing and wagering activities of such CDI Track
or MEC Track, as the case may be, agree in writing to comply with all terms and
conditions of this Agreement as if the divested

 26
 

track were still a CDI Track or MEC Track, as
the case may be, for the shorter of (i) twenty four months following the
consummation of the divestiture, or (ii) such time as such party assuming
Control permanently ceases to conduct live horse racing at such track.  The provisions of this Section 7.5 shall
apply to all voluntary divestitures of Control, including without limitation,
the sale of a racetrack or of an equity interest in the entity operating the
racetrack, the voluntary termination of a lease, management agreement or other
contractual arrangement, or any other voluntary action that results in a loss
of Control.

ARTICLE 8

DISSOLUTION AND LIQUIDATION

8.1          Dissolving Events.  The Company shall be Dissolved upon the
occurrence of any of the following events:

[a]           Expiration of the Company’s Term;

[b]           Failure of the Company to have at
least one Member;

[c]           Permanent cessation of the Company’s
Business;

[d]           An election to Dissolve the Company
executed by all members of the Board of Managers;

[e]           Any other event which results in a
mandatory Dissolution of the Company under the Act;

[f]            The continuation of a Deadlock of
the Board of Managers or the Members, as applicable, for a period of twelve
(12) consecutive months;

[g]           At the election of a Member when
another Member or its advance deposit wagering business is subject to a Change
of Control Transaction, which election may be made only within the ninety (90)
day period following such event;

[h]           At the election of the other Member,
upon the Bankruptcy, Dissolution or Termination of a Member, which election may
be made only within the ninety (90) day period following such event;

[i]            At the election of the other Member,
if a Member or its Affiliate has materially breached this Agreement or any of
the Auxiliary Agreements or the Business Plan, which election may be made only
within the ninety (90) day period following notice of such event under Section
10.13 and such breach is not cured as provided in Section 10.13 hereof; or

[j]            Dissolution of TrackNet.

8.2          Term and Unwind Provision.  The term of this Agreement shall continue for
so long as the term of the Limited Liability Company Operating Agreement of
TrackNet shall continue (the “Initial Term”), subject to such earlier
termination as the parties may mutually agree or as set forth in this Article
8.  In the event that the Company is
terminated in accordance

 27
 

with the terms hereof within the first five
year period following the execution of this Agreement, then the parties shall
continue to operate the Company for a period of one hundred twenty (120) days
from the date of such termination (the “One Hundred Twenty Day Extension”).  During the One Hundred Twenty Day Extension,
the parties shall arrange for the orderly liquidation of the Company as set
forth in Section 8.3 of this Agreement. 
The Initial Term plus the One Hundred Twenty Day Extension, if
applicable, is the “Term”.

8.3          Winding Up and Liquidation.

[a]           Upon Dissolution of the Company, the
Board of Managers shall promptly wind up the affairs of, liquidate and
Terminate the Company.  In furtherance
thereof, the Board of Managers shall: (i) have all of the administrative and
management rights and powers of the Board of Managers (including the power to
bind the Company); and (ii) be reimbursed for Company expenses it reasonably
incurs.  Following Dissolution, the
Company shall sell or otherwise dispose of assets determined by the Board of
Managers to be unsuitable for distribution to the Members, but shall engage in
no business activities other than the Business except as may be necessary, in
the reasonable discretion of the Board of Managers, to preserve the value of
the Company’s assets during the period of winding-up and liquidation.  In any event, the Board of Managers shall use
its Best Efforts to prevent the period of winding-up and liquidation of the
Company from extending beyond the date which is two (2) years after the Company’s
date of Dissolution.  At the conclusion
of the winding-up and liquidation of the Company, the Board of Managers shall:
(i) designate one Person (who shall be a Member unless the parties otherwise
agree) to hold the books and records of the Company (and to make such books and
records available to the Members on a reasonable basis) for not less than six
years following the Termination of the Company under the Act; and (ii) execute,
file and record, as necessary, a certificate of termination or similar document
to effect the Termination of the Company under the Act and other applicable
laws.

[b]           Distributions to the Members in
liquidation may be made in cash or in kind, or partly in cash and partly in
kind, as determined by the Board of Managers, provided, however, the rights
granted to the Company by the Members under Section 2.1(c) shall terminate and
vest in the contributing Member. 
Distributions in kind shall be valued at Fair Market Value as determined
by the Board of Managers in accordance with the provisions of Section 5.10 and
shall be subject to such conditions and restrictions as may be necessary or
advisable in the reasonable discretion of the Board of Managers to preserve the
value of the property so distributed or to comply with applicable law.

[c]           The Profits and Losses of the Company
during the period of winding-up and liquidation shall be allocated among the
Members in accordance with the provisions of Article 3.  If any property is to be distributed in kind,
the Capital Accounts of the Members shall be adjusted with regard to such
property in accordance with the provisions of Section 3.1(e).

[d]           Upon Dissolution, the assets of the
Company (including proceeds from the sale or other disposition of any assets
during the period of winding-up and liquidation) shall be applied as follows:

 28
 

[i]            First, to repay any indebtedness of
the Company, whether to third parties or the Members, in the order of priority
required by law; provided that with respect to the aggregate unpaid lease
payments under the Equipment Lease only with respect to assets acquired by the
lessor thereunder after the date of this Agreement and only to the extent not
previously paid under Section 4.1[b] or Section 4.1[c] (for avoidance of doubt,
MEC Additional Capital is not “indebtedness”);

[ii]           Next, to the Members in proportion to
their Allocation Percentages until CDI Sub has received an amount which
provides CDI Sub with a return of its Capital Contributions contributed by CDI
Sub prior to December 31, 2009 plus a 33 1/3% rate of return calculated on an
annual compounded basis from the date the Capital Contribution is made on the
outstanding amounts thereof, to the extent not previously paid under Section
4.1[b] or Section 4.1[c];

[iii]          Next, $17,000,000 plus the amount of
any Additional MEC Capital to MEC Sub, to the extent not previously paid under
Section 4.1[b] or Section 4.1[c]; and

[iv]          Next, to the Members in proportion to
their respective Allocation Percentages.

[e]           Except as otherwise specifically
provided in this Agreement, a Member shall have no liability to the Company or
to any other Member or to any Third Party in respect of a negative balance in
such Member’s Capital Account during the term of the Company or at the
conclusion of the Company’s Termination.

8.4          Elections to Continue or Discontinue Operations.

[a]           If on December 31, 2009, the Company
does not have an Actual Cash Flow Deficiency when measured on a
last-twelve-month basis, the elections set forth in Sections 8.4(b) and 8.4(c)
shall not apply.  In such event, the
operations of the Company shall continue and all further funding of the Company
as agreed by the Members shall be made in accordance with the Allocation
Percentages.

[b]           If on December 31, 2009, the Company
has an Actual Cash Flow Deficiency when measured on a last-twelve-month basis,
CDI Sub shall have an election to either continue or discontinue its
participation in the operations of the Company, which election shall be made by
giving written notice to MEC on or before February 15, 2010.  (i) If CDI Sub elects to continue its
participation in the operations of the Company, then the operations of the
Company shall continue and all further funding of the Company as agreed by the
Members shall be made in accordance with the Allocation Percentages.  Furthermore, in such event all future
distributions shall be made in accordance with the provisions of Section 4.1(c)
notwithstanding the fact that the Company had an Actual Cash Flow Deficiency
when measured on a last-twelve-month basis. 
(ii) If CDI Sub elects to discontinue its participation in the
operations of the Company, then MEC Sub shall have the election set forth in
Section 8.4(c).

[c]           If CDI Sub elects to discontinue its
participation in the operations of the Company, then MEC Sub shall have an
election to either continue or discontinue the

 29
 

operations of
the Company, which election shall be made by giving written notice to CDI Sub
on or before March 31, 2010.  (i) If MEC
Sub elects to discontinue the operations of the Company, then the Term shall be
deemed to have concluded and the Company shall be Dissolved in accordance with
the provisions of this Agreement.  In
such event, any costs of Dissolution shall be borne equally by the
Members.  (ii) If MEC Sub elects to
continue the operations of the Company, MEC Sub shall thereafter fund 100% of
the costs of the Company.  In such event,
(x) CDI Sub’s Interest and Allocation Percentage will be diluted and MEC Sub’s
Interest and Allocation Percentage will be increased based on the total Capital
Contributions of MEC Sub (excluding Additional MEC Capital) in relation to the
total Capital Contributions of both CDI Sub and MEC Sub (excluding Additional
MEC Capital) taken as a whole from the date of this Agreement and (y) CDI Sub
shall no longer have the right to appoint any Managers to serve on the Board of
Managers, (and any Managers previously appointed by CDI Sub shall be replaced
by MEC Sub appointees), but CDI Sub would have observer status on the Board of
Managers.

ARTICLE 9

LIABILITY AND INDEMNIFICATION

9.1          Liability.  Except as otherwise specifically provided in
this Agreement, no Indemnified Person shall be personally liable for the return
of any contributions made to the capital of the Company by the Members or the
distribution of Capital Account balances. 
Except to the extent that Material Misconduct on the part of an
Indemnified Person shall have given rise to the matter at issue, such
Indemnified Person shall not be liable to the Company or the Members for any
act or omission concerning the Company. 
Without limitation on the preceding sentence, except to the extent that
such action constitutes Material Misconduct, an Indemnified Person shall not be
liable to the Company or to any Member in consequence of voting for, approving,
or otherwise participating in the making of a distribution by the Company
pursuant to Article 4 or 8.  An
Indemnified Person shall not be liable to the Company or the Members for losses
due to the acts or omissions of any independent contractor, employee or other
agent of the Company unless such Indemnified Person was or should have been
directly involved with the selection, engagement or supervision of such Person
and the actions or omissions of such Indemnified Person in connection therewith
constituted Material Misconduct.

9.2          Indemnification.

[a]           Except to the extent that Material
Misconduct on the part of an Indemnified Person shall have given rise to the
matter at issue, the Company shall indemnify and hold such Indemnified Person
harmless from and against any loss, expense, damage or injury suffered or
sustained by such Indemnified Person by reason of any actual or threatened
claim, demand, action, suit or proceeding (civil, criminal, administrative or
investigative) in which such Indemnified Person may be involved, as a party or
otherwise, by reason of its actual or alleged management of, or involvement in,
the affairs of the Company.  This
indemnification shall include, but not be limited to: (i) payment as incurred
of reasonable attorneys fees and other out-of-pocket expenses incurred in investigating
or settling any claim or threatened action (where, in the case of a settlement,
such settlement is approved by the Board of Managers), or incurred in preparing
for, or conducting a defense pursuant to, any proceeding up to and including a
final non-appealable adjudication; (ii) payment of fines,

 30
 

damages or
similar amounts required to be paid by an Indemnified Person; and (iii) removal
of liens affecting the property of an Indemnified Person.

[b]           Indemnification payments shall be
made pursuant to this Section 9.2 only to the extent that the Indemnified
Person is not entitled to receive (or will not in any event receive) from a
third party equal or greater indemnification payments in respect of the same
loss, expense, damage or injury.  In the
event, however, that the Board of Managers determine that an Indemnified Person
would be entitled to receive indemnification payments from the Company but for
the operation of the preceding sentence, the Board of Managers may cause the
Company to advance indemnification payments to the Indemnified Person (with
repayment of such advance to be secured by the Indemnified Person’s right to
receive indemnification payments from the applicable third party).

[c]           As a condition to receiving an
indemnification payment pursuant to this Section 9.2, an Indemnified Person
shall execute an undertaking in form and substance acceptable to the Board of
Managers in their reasonable discretion providing that, in the event it is
subsequently determined that such Person was not entitled to receive such
payment (whether by virtue of such Person’s Material Misconduct or otherwise),
such Person shall return such payment to the Company promptly upon demand
therefor by any Member.

[d]           Notwithstanding the foregoing
provisions of this Section 9.2, the Company shall be under no obligation to
indemnify an Indemnified Person from and against any reduction in the value of
such Person’s interest in the Company that is attributable to losses, expenses,
damages or injuries suffered by the Company or to any other decline in the
value of the Company’s assets.

[e]           The indemnification provided by this
Section 9.2 shall not be deemed to be exclusive of any other rights to which
any Indemnified Person may be entitled under any agreement, as a matter of law,
in equity or otherwise.

9.3          Insurance.

[a]           The Company shall obtain and keep in
force officers and directors liability insurance insuring the officers,
employees and Managers of the Company against claims by third parties as to
their activities for and on behalf of the Company, unless the Board of Managers
determines in good faith that there is sufficient insurance coverage for such
Persons under the separate insurance coverage maintained by CDI and MEC.  The specific coverages, limits of liability
and other terms of such insurance shall be determined by the Board of Managers
in their reasonable discretion.

[b]           The Company shall carry general
business and liability insurance in such form and amounts as are determined
from time to time by the Board of Managers. 
Unless the non-MEC Sub members of the Board of Managers determine
otherwise, MEC shall be obligated to procure such insurance on behalf of the
Company; provided, however, that the Company shall be obligated either to pay
for such insurance directly or to reimburse MEC for MEC’s costs in procuring
such insurance.

 31
 

ARTICLE
10

GENERAL PROVISIONS

10.1        Meetings.  Meetings of the Members may be called by any
Member as well as by the Board of Managers. 
Any such meeting shall be held at a reasonable time and place on not
less than two (2) nor more than sixty (60) days notice, which notice shall
include an agenda of items to be considered at the meeting.  Reasonable accommodation shall be made for
any Member that elects to attend a meeting via telephonic or similar means
pursuant to which all Persons attending the meeting can hear one another.  No action may be taken at a meeting of the
Members without the unanimous vote or consent of all of the Members.  Minutes of the meeting shall be prepared at
the direction of the Board of Managers. 
Except as specifically provided in this Agreement, there shall be no
requirement of annual or periodic meetings of the Members or Board of Managers
within the meaning of the Act.

10.2        Action Without a Meeting of All Members.

[a]           Any action of the Members may be
taken by written consent of all of the Members required for such action under
this Agreement.

[b]            A Member may authorize another
Person to vote or otherwise act on its behalf through a written proxy or power
of attorney.

[c]           In order to facilitate the
determination of whether any action of the Members has been taken by or with
the consent of the requisite number or percentage of the Members under this
Agreement, the Board of Managers may adopt, from time to time upon not less
than ten (10) days notice to the Members, reasonable procedures for
establishing the Members of record entitled to vote, consent or otherwise take
action on any matter; provided, however, that any date as of which Members of
record is determined shall not precede the date of the related action by more
than sixty (60) days.

10.3        Entire Agreement.  This Agreement, together with the Auxiliary
Agreements and the Business Plan, contains the entire understanding among the
Members, CDI and MEC concerning the subject matter thereof and supersedes any
prior written or oral agreement among them respecting the Company and such
matters.  There are no representations,
agreements, arrangements, or understandings, oral or written, among the
Members, CDI and MEC relating to the Company which are not fully expressed in
this Agreement or the Auxiliary Agreements or the Business Plan.

10.4        Amendments.

[a]           Except as otherwise provided in this
Section 10.4, this Agreement may be amended, in whole or in part, only
through a written amendment executed by all of the Members, CDI and MEC.  Each Member, CDI and MEC shall be promptly
notified of any amendment to this Agreement made pursuant to this
Section 10.4.

[b]           Except with regard to amendments
otherwise specifically required under this Agreement, there shall be no
amendment to this Agreement except as authorized by Sections 10.4[a] or
10.4[d].  Without limitation of the
foregoing, and subject to Section 2.1(b),

 32
 

there shall be
no amendment that: (i) increases a Member’s obligation to make capital
contributions to the Company or (ii) imposes personal liability upon a
Member for any debts or obligations of the Company unless, in each case, the
amendment is consented to by such Member.

[c]           An Assignee shall not, solely by
virtue of its status as such, have any right to consent or withhold consent in
respect of an amendment to this Agreement.

[d]           Notwithstanding the foregoing
provisions of this Section 10.4, the Board of Managers may, without the consent
of the other Members, amend this Agreement in any manner determined by the
Board of Managers to be necessary or advisable to reflect the admission of an
Additional Member in accordance with this Agreement, comply with applicable
law, supply a missing term or provision, or resolve an ambiguity in the
existing terms and provisions of this Agreement.  The Board of Managers shall not have the
authority under this Section 10.4(d) to amend this Agreement in a manner that
is materially adverse to any Member; provided, however, that a Member’s right
to object to an amendment pursuant to this Section 10.4(d) on the grounds that
such amendment is materially adverse to such Member shall expire at the Close
of Business on the thirtieth (30th) day following notice to such Member of such
amendment.

10.5        Governing Law.  The interpretation and enforceability of this
Agreement and the rights and liabilities of the Members, CDI and MEC as such
shall be governed by the laws of the State of Delaware as such laws are applied
in connection with limited liability company operating agreements entered into
and wholly performed in Delaware by residents of  Delaware. 
To the extent permitted by the Act and other applicable law, the provisions
of this Agreement shall supersede any contrary provisions of the Act or other
applicable law.

10.6        Severability.  In the event that any provision of this
Agreement is determined to be invalid or unenforceable, such provision shall be
deemed severed from the remainder of this Agreement and replaced with a valid
and enforceable provision as similar in intent as reasonably possible to the
provision so severed, and shall not cause the invalidity or unenforceability of
the remainder of this Agreement.

10.7        Counterparts; Binding upon Members and Assignees.  This Agreement may be executed in any number
of counterparts and, when so executed, all of such counterparts shall
constitute a single instrument binding upon all parties notwithstanding the
fact that all parties are not signatory to the original or to the same
counterpart.  In addition, to the maximum
extent permitted by applicable law and without limitation on any other rights
of the Members or the Company, a non-Member shall become bound as an Assignee
under this Agreement if such Person holds an interest in the Company and seeks
to exercise, assert, confirm or enforce any of its rights as an Assignee under
this Agreement or the Act.

10.8        Survival of Certain Obligations.  Except as specifically provided in this
Agreement, or to the extent specifically approved by the Board of Managers
(which approval may be withheld by the Board of Managers in their sole and
absolute discretion), as applicable, a Member, CDI and MEC shall continue to be
subject to all of its obligations to make capital contributions or other
payments arising under this Agreement (including obligations attributable

 33
 

to a breach of this Agreement), as well as its obligations to maintain
the confidentiality of information pursuant to Section 6.2 and to provide
information pursuant to Section 6.3, without regard to any Transfer of all
or any portion of such Member’s Interest or any event that terminates such
Member’s status as such or the Termination of the Company.  Each Member’s Capital Commitment shall
terminate at the time of the final Termination of the Company under the Act,
but such termination shall not release a Defaulting Member from obligations
arising under Section 2.4.

10.9        No Third Party Beneficiaries.  Except with regard to the Company’s
obligation to Indemnified Persons as set forth in Article 9, the provisions of
this Agreement are not intended to be for the benefit of or enforceable by any
Third Party and shall not give rise to a right on the part of any Third Party
to (i) enforce or demand enforcement of a Member’s Capital Commitment,
obligation to return distributions, or obligation to make other payments to the
Company as set forth in this Agreement or (ii) demand that the Company or the
Board of Managers issue any capital call.

10.10      Notices, Consents, Elections, Etc.  All notices, consents, agreements, elections,
amendments, and approvals provided for or permitted by this Agreement or
otherwise relating to the Company shall be in writing and signed copies thereof
shall be retained with the books of the Company.

[a]           Notice to Members. 
Except as otherwise specifically provided in this Agreement, notice to a
Member shall be deemed duly given upon the earliest to occur of the following:
(i) personal delivery to such Member, to the address set forth on Schedule
A for such Member, or to any other address which such Member has provided to
the Company for purposes of this Section 10.10(a); (ii) the Close of
Business on the third day after being deposited in the United States mail,
registered or certified, postage prepaid and addressed to such Member at the address
set forth on Schedule A for such Member, or at any other address which
such Member has provided to the Company for purposes of this Section 10.10(a);
(iii) the Close of Business on the first business day after being
deposited in the United States with a nationally recognized overnight delivery
service, for next Business Day delivery, with delivery charges prepaid and
addressed as provided in the preceding clause; or (iv) actual receipt by such
Member via any other means (including public or private mail, electronic mail,
facsimile, telex or telegram); provided, however, that notice sent via
electronic mail shall be deemed duly given only when actually received and
opened by the Member to whom it is addressed. 
Notices to CDI shall be provided as set forth above to the address of
CDI Sub.  Notices to MEC shall be
provided as set forth above to the address of MEC Sub.

[b]           Notice to the Company. 
Notice to the Company shall be deemed duly given when clearly identified
as such and duly given to the Board of Managers in accordance with the
procedures set forth in Section 10.10(a).

10.11      No
Usury. 
Notwithstanding any provision of this Agreement to the contrary, the
rate of interest charged by the Company to any Member in connection with an
obligation of the Member to the Company shall not exceed the maximum rate
permitted by applicable law.  To the
extent that any interest otherwise paid or payable by a Member to the Company
shall have been finally adjudicated to exceed the maximum amount permitted by
applicable law, such interest

 34
 

shall be retroactively deemed to have been a required repayment of
principal (and any such amount paid in excess of the outstanding principal
amount shall be promptly returned to the payor Member).

10.12      Dispute
Resolution.

[a]           Forum and Venue. 
Any litigation involving any controversy or claim arising out of or
relating to this Agreement or the Auxiliary Agreements or the Business Plan
shall be brought and prosecuted solely in the Courts of the State of Delaware
or the United States District Court for the District of Delaware sitting in
Wilmington, Delaware, and in such appellate courts having jurisdiction over
appeals from such courts.  The Company,
CDI, CDI Sub, MEC and MEC Sub (i) consent to the exclusive jurisdiction and
venue of the aforesaid courts; (ii) shall not assert forum inconvenience or any
other similar defense to the jurisdiction and venue of such courts; and (iii)
waive the right to trial by jury in any such litigation.  If needed to enforce a decision made by a
court in Delaware, litigation may be commenced and prosecuted in any other
courts having jurisdiction.

[b]           Fees and Costs. 
The prevailing party or parties in any proceeding arising out of or
relating to this Agreement shall be reimbursed by the party or parties who do
not prevail for their reasonable third party or out of pocket attorneys,
accountants and experts fees and related third party or out of pocket expenses
and for the costs of such proceeding. 
The court shall be asked to direct the amounts to be paid and the party
to pay the expenses and costs.  In the
event that two or more parties are deemed liable for a specific amount payable
or reimbursable under this Section 10.12(b), such parties shall be jointly
and severally liable therefor.

10.13      Cure of Breaches.  In the event of any breach by CDI, CDI Sub,
MEC, MEC Sub or the Company of any provision of this Agreement or of any
Auxiliary Agreement or the Business Plan, the party claiming the breach shall
give reasonable notice thereof to the others within a reasonable time after
becoming aware of such breach or such other notice as required under the
Auxiliary Agreement or the Business Plan. 
The alleged breaching party shall have, unless otherwise specifically
provided in this Agreement or such Auxiliary Agreement or the Business Plan, a
period of thirty (30) days from receipt of such notice to cure the alleged
breach; provided that if the alleged breach cannot reasonably be cured within
such period of time, but such breach is susceptible of being cured it shall not
be considered a breach so long as the alleged breaching party has begun and
diligently pursues curing the alleged breach and completes the cure within not
more than an additional thirty (30) days.

10.14      Remedies for Breach of this Agreement.

[a]           General.  Except
as otherwise specifically provided in this Agreement, the remedies set forth in
this Agreement are cumulative and shall not exclude any other remedies to which
a Person may be lawfully entitled.

[b]           Specific Performance. 
Without limiting the rights and remedies otherwise available to the
Company, CDI, MEC or any Member, each Member, CDI and MEC hereby:
(i) acknowledges that the remedy at law for damages resulting from its
default under

 35
 

Article 3, or
Sections 6.1[c], 6.2, 6.3 or 10.14 is inadequate; and (ii) consents to the
institution of an action for specific performance of its obligations in the
event of such a default in accordance with Section 10.12[a] above.

[c]           Exercise of Discretion by the Board of Managers.  In determining what action, if any, shall be
taken against a Member in connection with such Member’s breach of this
Agreement, the Board of Managers shall seek to obtain the best result for the
Company and the non-breaching Members. 
In the event a Member violates the terms of this Agreement, such Member
shall not be entitled to claim that the Company or any of the other Members is
precluded, on the basis of any fiduciary or other duty arising in respect of
such Member’s status as such, from seeking any of the penalties or other remedies
permitted under this Agreement or applicable law.

10.15      Timing.  All dates and times specified in this
Agreement are of the essence and shall be strictly enforced.  Except as otherwise specifically provided in
this Agreement, all actions that occur after the Close of Business on a given
day shall be deemed for purposes of this Agreement to have occurred at 9:00
a.m. on the following day.  In the event
that the last day for the exercise of any right or the discharge of any duty
under this Agreement would otherwise be a day that is not a business day, the
period for exercising such right or discharging such duty shall be extended
until the Close of Business on the next succeeding business day.

10.16      Status Under the Act.
This Agreement is the “limited liability company agreement” of the Company
within the meaning of Section 18-101(7) of the Act.

10.17      Partnership for Tax Purposes.  As set forth in Section 1.1, the Members
hereby form the Company as a limited liability company under the Act.  The Members expressly do not intend hereby to
form a partnership under the laws of any State but intend that the Company
shall be treated as a partnership for tax purposes.

10.18      Miscellaneous.  No failure or delay by any party in
exercising any right, power or privilege under this Agreement shall operate as
a waiver thereof; any actual waiver shall be contained in a writing signed by
the party against whom enforcement of such waiver is sought.  This Agreement shall not be construed for or
against any party by reason of the authorship or alleged authorship of any
provisions hereof or by reason of the status of the respective parties.

10.19      No Grant.  Except as set forth on Schedule 5 of the
Business Plan, each Member and its Affiliates retains and has not granted to the
Company or the other Member or its Affiliates any rights to its intellectual
property or other assets.

10.20      General Usage.  The section headings contained in this
Agreement are for reference purposes only and shall not affect the meaning or
interpretation of this Agreement.  Except
where the context clearly requires to the contrary: (i) all references in this
Agreement to designated Articles are to the designated Articles and other
subdivisions of this Agreement; (ii) instances of gender or entity-specific
usage (e.g., “his” “her” “its” “person” or “individual”) shall not be
interpreted to preclude the application of any provision of this Agreement to
any individual or entity; (iii) the word “or” shall not be applied in its
exclusive sense; (iv) “including” shall mean “including, without limitation”;
(v) references to laws, regulations and

 36
 

other governmental rules, as well as to contracts, agreements and other
instruments, shall mean such rules and instruments as in effect at the time of
determination (taking into account any amendments thereto effective at such
time without regard to whether such amendments were enacted or adopted after
the effective date of this Agreement) and shall include all successor rules and
instruments thereto; (vi) references to “$” or “dollars” shall mean the lawful
currency of the United States; (vii) references to “Federal” or “federal” shall
be to laws, agencies or other attributes of the United States (and not to any
State or locality thereof); (viii) the meaning of the terms “domestic” and “foreign”
shall be determined by reference to the United States; (ix) references to “days”
shall mean calendar days; references to “business days” shall mean all days
other than Saturdays, Sundays and days that are legal holidays in the State of
Delaware; (x) references to monthly or annual anniversaries shall be to the
actual calendar months or years at issue (taking into account the actual number
of days in any such month or year); and (xi) days, business days and times of
day shall be determined by reference to local time in Wilmington, Delaware.

ARTICLE 11

CERTAIN
MATTERS

11.1        Liabilities.  CDI, CDI Sub and the Company shall not be
liable for any liabilities incurred by HRTV with respect to the period prior to
the consummation of the transactions contemplated in the Asset Transfer and
Contribution Agreement.

11.2        Lease of Assets.
MEC, through its wholly-owned subsidiary Horse Racing TV, Inc., will lease
certain tangible assets related to the Business to the Company under the
Equipment Lease.  In addition, the real
property needed for the conduct of the Business of the Company will be
subleased to the Company by Los Angeles Turf Club, Inc. under the Real Property
Lease.

11.3        Preferred Positioning.  The Company will use Best Efforts to broadcast
live on HRTV as many CDI and MEC Races as possible during the time period in
which the CDI and MEC Races are conducted (i.e., on a live basis rather than
delayed); provided, however, that the Company will not be required to broadcast
live CDI Races at the expense of the live broadcast of MEC Races of greater
quality based on the track groupings outlined in Schedule 3 of the Business
Plan; provided, further, that the Company will not be required to broadcast
live MEC Races at the expense of the live broadcast of CDI Races of greater
quality based on the track groupings outlined in Schedule 3 of the Business
Plan.  Furthermore, the Company will be
required to broadcast live on HRTV a percentage of CDI and MEC Races not less
than the percentage reflected below for the relevant Track Groups, as defined
on Schedule 3 of the Business Plan, based on the current schedule of race meets
conducted by CDI and MEC.  If a racetrack
or Control thereof is sold by MEC or CDI, its races shall no longer be
considered MEC Races or CDI Races for purposes of this Section 11.3 except to
the extent such racetrack continues to be bound by the provisions of this
Agreement pursuant to Section 7.5.

[a]           Group A:          95%

[b]           Group B+:         75%

 37
 

[c]           Group B:           65%

[d]           Group C:           50%

11.4        iTV Product. The
Company shall not (i) develop an iTV product, (ii) acquire an iTV product, or
(iii) co-venture or co-develop an iTV product with a Third Party, without in
the case of (i), (ii) and (iii), approval by the Board of Managers and with
such product branded with the brand of the Company.  The profits, costs and expenses of this
initiative will be borne by the Company. 
Either CDI ADW or XpressBet may make a proposal to the Board of Managers
to provide back office services for the iTV product.  If both CDI ADW and XpressBet make such
proposals, the Board of Managers will select the lowest cost proposals
(assuming both represent a solution of equal quality.)

ARTICLE
12

DEFINITIONS

As used in this Agreement, the following terms shall have the following
meanings:

Act shall
mean the Delaware Limited Liability Company Act, Title 6, Delaware Code Ann.,
Section 18-101 et seq., as amended.

Actual Cash Flow Deficiency
shall mean the amount by which the Company’s expenditures and current payables
exceed cash and cash equivalents for any quarter.  For purposes of clarity, this calculation
will be made at the end of a quarter with respect to such quarter.

Additional MEC Capital
shall have the meaning given it in Schedule B.

Additional Member
shall mean any Person, other than a Substitute Member, admitted to the Company
as a Member after the date first above written.

ADW shall
mean advance deposit wagering.

ADW Content Rights
shall mean solely for purpose of ADW all wagering, audio, video, data and
replay rights related to horse racing or dog racing whether distributed through
the internet, wireless, telephone, satellite, television, broadband, mobile or
video streaming.

Affiliate
shall mean, with respect to any Person, any other Person with regard to which
the Person is directly or indirectly Controlling, Controlled by or commonly
Controlled with.

Agreement
shall mean this Operating Agreement of HRTV, LLC, a Delaware limited liability
company, including all schedules and exhibits hereto, as amended from time to
time in accordance with the terms hereof.

Allocation Percentage
shall mean, for each Member, the percentage specified for such Member on
Schedule A.

 38

Asset Transfer and Contribution
Agreement shall mean the Asset Transfer and Contribution
Agreement of even date herewith between the Company and Horse Racing TV, Inc.,
a wholly-owned subsidiary of MEC, as thereafter amended.

Assignee
shall mean a Person that has acquired all or any portion of an Interest
(including by means of a Transfer permitted under Article 6), but that has not
been admitted as a Member.

Auxiliary Agreements
shall mean the following agreements entered into or to be entered into between CDI
and MEC as provided in this Agreement:

(a)  TrackNet Limited Liability Company Operating
Agreement of even date herewith, as thereafter amended;

(b)  CDI/MEC Content Exchange Agreement; and

(c)  Asset Transfer and Contribution Agreement.

(d)  Any other agreement entered into between CDI
and MEC or by CDI or MEC for the benefit of the other and designated as an
Auxiliary Agreement.

Bank shall
mean the bank selected by the Board of Managers from time to time (or any
successor entity thereto).

Bankruptcy
shall mean, with respect to a Member: (i) an assignment of all or
substantially all of the assets of such Member for the benefit of its creditors
generally; (ii) the commencement of any bankruptcy or insolvency case or
proceeding against such Member which shall continue and remain unstayed and in
effect for a period of 60 consecutive days; (iii) the filing by such
Member of a petition, answer or consent seeking relief under any bankruptcy,
insolvency or similar law; or (iv) the occurrence of any other event that is
deemed to constitute bankruptcy for purposes of the Act.

Beneficial Owner
shall mean, with respect to a Member, any Person that holds an equity interest
in such Member, either directly or indirectly through a nominee or agent or
through one or more intervening entities qualifying as partnerships, grantor
trusts or S corporations, in each case as determined for Federal income tax
purposes.

Best Efforts
shall mean commercially reasonable good faith efforts that a prudent person
would use under similar circumstances without being required to expend an
unreasonable amount of funds when considering the benefit likely to be
attained.

Board of Managers
shall mean the individuals appointed by the Members as the Managers as provided
in this Agreement , taken together or acting unanimously, as appropriate.

Broadband and Mobile Rights
shall mean, other than with respect to ADW, all audio, video, data and replay
rights related to horse racing or dog racing for purposes that are unrelated to
ADW and are distributed through any broadband or mobile technologies, including
the internet, wireless technologies, or any other on-line system or computer
network, now known or hereafter devised. 
For purposes of greater clarity,  an entity
which has been granted a license to Broadband and Mobile Rights (but not ADW
Content Rights) shall not be permitted to present or exploit the Broadband and
Mobile Rights if such presentation or exploitation contains, includes,
references, or is in any way associated with, wagering, or the promotion or
advertising of

 39
 

wagering, in any manner.  By way of example, a website which has been
granted a license to Broadband and Mobile Rights (but not ADW Content Rights)
shall not be permitted to advertise, promote or utilize a click-through to any
ADW platform or service.

Business
shall have the meaning given it in Section 1.3(b).

Business Plan shall
mean the initial business plan adopted and approved by CDI, CDI Sub, MEC, MEC
Sub and the Board of Managers simultaneously with entering into this Agreement,
as thereafter updated, modified or amended by the Board of Managers.

Capital Account
shall mean, for each Member, a separate account that is:

(a)           Increased by: (i) the amount of
such Member’s Capital Contribution and (ii) allocations of Profit to such
Member pursuant to Article 3;

(b)           Decreased by: (i) the amount of
cash distributed to such Member by the Company, (ii) the Fair Market Value
of any other property distributed to such Member by the Company (determined as
of the time of distribution, without regard to Section 7701(g) of the Code, and
net of liabilities secured by such property that the Member assumes or to which
the Member’s ownership of the property is subject) and (iii) allocations
of Loss to such Member pursuant to Article 3;

(c)           Revalued in connection with any event
described in Treasury Regulation Section 1.704-1(b)(2)(iv)(f); and

(d)           Otherwise adjusted so as to conform
to the requirements of Sections 704(b) and (c) of the Code and the
Treasury Regulations issued thereunder.

Capital Commitment
shall mean the cash and personal property committed by CDI Sub and MEC Sub to
be contributed to the Company.

Capital Contribution
shall mean, for any Member, the sum of the net amount of cash and the Fair
Market Value of any other property (determined as of the time of contribution,
without regard to Section 7701(g) of the Code, and net of liabilities
secured by such property that the Company assumes or to which the Company’s
ownership of the property is subject) contributed by such Member to the capital
of the Company.  The term “capital
contribution” (where not capitalized) shall mean any contribution to the
capital of the Company valued in accordance with the rules set forth in the
preceding sentence.  For purposes of this
Agreement, each capital contribution shall be deemed to have been made at the
later of: (i) the Close of Business on the due date of such capital
contribution as determined in accordance with this Agreement; or (ii) the
Close of Business on the date on which such capital contribution is actually
received by the Company.

CDI ADW
shall mean any advance deposit wagering service that is Controlled by CDI.

CDI/MEC Content Exchange
Agreement shall mean the Content Exchange Agreement of
even date herewith between CDI and MEC, as thereafter amended.

 40
 

CDI Premium Content
shall mean with respect to Churchill Downs Racetrack: Kentucky Derby Day,
Kentucky Oaks Day, Stephen Foster Day, Derby Trial Day; with respect to
Arlington Park: Arlington Million Day; with respect to Fair Grounds Race Course:
Louisiana Derby Day, Louisiana Champions Day; and with respect to Calder Race
Course: Summit of Speed Day and Festival of the Sun Day.  CDI may from time to time elect to (i)
replace a CDI Premium Content day with another day, and (ii) designate up to ten
(10) additional days and/or special wagering products as CDI Premium
Content.  Any such election shall take
effect upon the giving of written notice to MEC, and the definition of CDI
Premium Content shall thereafter be deemed amended.

CDI Races
shall mean live horse races conducted at a CDI Track.

CDI Tracks
shall mean race tracks and off track betting facilities Controlled by CDI.

Change of Control Transaction
shall mean with respect to a Person the first to occur of the following events:

(a)  the acquisition by any individual, entity or
group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”)) of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 50% or
more of the then-outstanding voting interests of the Person (the “Outstanding
Voting Interests”);

(b)  the
consummation of a reorganization, merger or consolidation or sale or other
disposition of all or substantially all of the assets of the Person or the
acquisition of assets of another entity (a “Transaction”), in each case, unless
immediately following such Transaction, (i) all or substantially all of the
individuals and entities who were the beneficial owners of the Outstanding
Voting Interests immediately prior to such Transaction beneficially own,
directly or indirectly, more than 50% of the then-outstanding voting interest
of the company resulting from such Transaction (including, without limitation,
an entity which as a result of such transaction owns the Person or all or
substantially all of the Person’s assets either directly or through one or more
subsidiaries) in substantially the same proportions as their ownership,
immediately prior to such Transaction, of the Outstanding Voting Interests,
(ii) no Person (excluding any employee benefit plan (or related trust) of the
subject Person or such entity resulting from such Transaction) beneficially
owns, directly or indirectly, 50% or more of the Outstanding Voting Interests
resulting from such Transaction, except to the extent that such ownership
existed prior to the Transaction, and (iii) at least a majority of the members
of the governing body of the company resulting from such Transaction were
members of the Incumbent Board at the time of the execution of the initial plan
or action of the governing body of the Person providing for such Transaction;
or

(c)  approval by
the equity owners of such Person of a complete liquidation or dissolution of
the Person.

Notwithstanding anything to the contrary contained in
this Agreement, a Change of Control Transaction shall be deemed not to have
occurred as a result of any transaction or group of transactions that result in
direct or indirect voting control of the applicable Person being

 41
 

transferred to any one or more of the Stronach Trust,
Frank Stronach, members of Frank Stronach’s immediate family (i.e. spouse and
children), any of their respective heirs or any subsidiaries or other entities
Controlled by any of the foregoing.

Close of Business
shall mean 5:00 p.m., local time, in Wilmington, Delaware.

Closing shall
mean April 27, 2007, or such other date as the parties to the Asset Transfer
and Contribution Agreement agree.

Code shall
mean the United States Internal Revenue Code of 1986, as amended.

Company
shall mean HRTV, LLC, a Delaware limited liability company.

Control  and derivatives thereof such as “Controlled” or “Controlling”,
shall mean, (i) with respect to any racetrack or off-track betting facility,
the ability to conduct the day-to-day wagering operations of such race track or
facility, directly or through a lease, management agreement or other
contractual arrangement; and (ii) with respect to any Person (including CDI ADW
and XpressBet), (a) the beneficial ownership of 50% or more of the then
outstanding voting interests of the Person, or (b) the power to direct the
principal business management and activities of the Person, whether through
ownership of voting interests, by agreement or otherwise.

Deadlock
shall mean the inability to reach agreement on an issue or matter material to
the Company.

Defaulting Member
shall have the meaning set forth in Section 2.4.

Derivative Company Interest
shall mean any actual, notional or constructive interest in, or right in
respect of, the Company (other than a Member’s total interest in the capital,
profits and management of the Company) that, under Treasury Regulation
Section 1.7704-1(a)(2), is treated as an interest in the Company for
purposes of Section 7704 of the Code. 
Pursuant to the foregoing, “Derivative Company Interest” shall include
any financial instrument that is treated as debt for Federal income tax
purposes and (i) is convertible into or exchangeable for an interest in
the capital or profits of the Company or (ii) provides for one or more
payments of equivalent value.

Discretionary Expenditure
shall mean a capital expenditure or other expenditure that (i) is approved by
the Board of Managers and designated as a Discretionary Expenditure, (ii) is
not budgeted for as of the date hereof, and (iii) represents an expansion in
the capabilities of HRTV in a manner that is not contemplated as of the date
hereof; provided that, for avoidance of doubt, a Discretionary Expenditure
shall not include replacement of existing equipment or other maintenance
capital expenditures.  Any Discretionary
Expenditure shall be funded by the Members when such Discretionary Expenditure
is approved by the Board of Managers in accordance with Schedule B-1.

Dissolution
or Dissolved shall mean, with respect
to a legal entity other than a natural person, that such entity has “dissolved”
within the meaning of the partnership, corporation, limited liability company,
trust or other statute under which such entity was organized.

 42
 

Employee Costs
shall mean the actual cash salary, other cash compensation and other cash
expense directly attributable to an employee, including base salary, bonus,
FICA, FUTA, health benefits, life and disability benefits and retirement
benefits, but specifically shall not include any non-cash compensation such as
equity grants or stock options.

Equipment Lease
shall mean the Asset Lease Agreement between Horse Racing TV, Inc. and the
Company dated as of the Closing, as thereafter amended.

Excess Cash Flow Deficiency
for any quarter shall mean the amount by which the Actual Cash Flow Deficiency
exceeds the Projected Cash Flow Deficiency for that quarter.  For purposes of clarity, this calculation
shall be made at the end of a quarter with respect to such quarter.

Fair Market Value
shall have the meaning set forth in Section 5.10(c).

Fiscal Year
shall mean the period from January 1 through December 31 of each year
(unless otherwise required by law).

GAAP shall
mean United States generally accepted accounting principles, consistently
applied.

HRTV shall mean
the television network operated as of the date hereof under the name of Horse
Racing TV which broadcasts, transmits or displays horse racing and related
activities.

Indemnified Person
shall mean CDI, MEC, each Member and each equityholder, member, director,
officer, employee, or agent of CDI, MEC or a Member.  In addition, “Indemnified Person” shall mean
any Manager or officer of the Company.  A
Person that has ceased to hold a position that previously qualified such Person
as an Indemnified Person shall be deemed to continue as an Indemnified Person
with regard to all matters arising or attributable to the period during which
such Person held such position.

Initial Term
shall have the meaning given to it in Section 8.2.

Interest
shall mean, for each Member, such Member’s rights, duties and interest in
respect of the Company in such Member’s capacity as such (as distinguished from
any other capacity such as employee, debtor or creditor) and shall include such
Member’s right, if any, to vote on Company matters, or receive distributions as
well as such Member’s obligation, if any, to provide services, make capital
contributions or take any other action. 
In the case of an Interest held by an Assignee, such Interest shall be
limited in the manner set forth in Section 7.4.

iTV shall
mean any application which enhances traditional television exploitation by
enabling ADW, provided that such application is limited to cable television
(including traditional television provided by telephone companies) and direct
broadcast satellite service television.

Manager
shall mean each Person listed on Schedule A as such, for so long as such Person
does not become a Removed Manager.

 43
 

Material Misconduct
shall mean, with respect to an Indemnified Person, gross negligence, willful
and material breach of this Agreement, fraud, or the commission of a felony
(except in the case of a felony where the Indemnified Person reasonably
believed that no such felony would occur in consequence of such Indemnified
Person’s action or inaction, as the case may be).  For purposes of the preceding sentence: (i)
an Indemnified Person shall be deemed to have acted in good faith and without
negligence with regard to any action or inaction that is taken in accordance
with the advice or opinion of an attorney, accountant or other expert advisor
so long as such advisor was selected with reasonable care and the Indemnified
Person made a good faith effort to inform such advisor of all the facts
pertinent to such advice or opinion; and (ii) an Indemnified Person’s reliance
upon the truth and accuracy of any written statement, representation or
warranty of a Member shall be deemed to have been reasonable and in good faith
absent such Indemnified Person’s actual knowledge that such statement,
representation or warranty was not, in fact, true and accurate.

MEC Premium Content
shall mean with respect to Gulfstream Park: Donn Handicap Day, Florida Derby
Day, Sunshine Millions Day; with respect to Santa Anita: Santa Anita Handicap
Day, Santa Anita Derby Day, Sunshine Millions Day; with respect to Laurel Park:
Maryland Millions Day, Frank DeFrancis Memorial Day; with respect to Lone Star:
Lone Star Derby Day; and with respect to Pimlico: Preakness Day, Black-eyed
Susan Day.  MEC may from time to time
elect to (i) replace a MEC Premium Content day with another day, and (ii)
designate up to ten (10) additional days and/or special wagering products as
MEC Premium Content.  Any such election
shall take effect upon the giving of written notice to CDI, and the definition
of MEC Premium Content shall thereafter be deemed amended.

MEC Races
shall mean live horse races conducted at a MEC Track.

MEC Tracks
shall mean race tracks and off track betting facilities Controlled by MEC.

Member
shall mean any Person (i) listed on Schedule A as a Member or
(ii) admitted to the Company pursuant to the terms of this Agreement as an
Additional Member or a Substitute Member, but in each case only if such Person
has not become a Withdrawn Member.  A Member
shall not cease to be a Member or lose its non-economic rights in respect
of the Company solely by virtue of having Transferred to one or more Persons
its entire economic interest in the Company. 
Except where the context requires otherwise, a reference in this Agreement
to “the Members” shall mean all of the Members (taken together or acting
unanimously, as appropriate).

Member Nonrecourse Deduction
shall mean an item of loss, expense or deduction attributable to a nonrecourse
liability of the Company for which a Member bears the economic risk of loss
within the meaning of Treasury Regulation Section 1.704-2(i).

Minimum Gain
of the Company shall, as provided in Treasury Regulation Section 1.704-2, mean
the total amount of gain the Company would realize for Federal income tax
purposes if it disposed of all assets subject to nonrecourse liability for no
consideration other than full satisfaction thereof.

 44
 

Nonrecourse Deduction
shall mean an item of loss, expense or deduction (other than a Member
Nonrecourse Deduction) attributable to a nonrecourse liability of the Company
within the meaning of Treasury Regulation Section 1.704-2(b).

Permanent Incapacity
shall mean, with respect to an individual, that such individual suffers a
mental or physical disability which, as of the time of determination, renders
such individual incapable of performing such individual’s duties under this
Agreement and is substantially certain to continue to render such individual
incapable of performing such duties for a continuous period of at least six
months following the date of determination.

Person
shall mean an individual, partnership, corporation, limited liability company,
unincorporated organization, trust, joint venture, governmental agency, or
other entity, whether domestic or foreign.

Point to Point Content Rights
shall mean all wagering, audio, video, data and replay rights related to horse
racing or dog racing for purposes of pari-mutuel wagering at a race track or
other location which constitutes a simulcasting facility (i.e., a race track,
off track betting facility or other fixed “brick and mortar” facility open to
the general public) for use at such receiving location.

Point to Point Simulcasting
shall mean the distribution, transmission or receipt of Point to Point Content
Rights.

Principal Office
shall have the meaning set forth in Section 1.4.

Profit and Loss or Profits and
Losses means, for each taxable year of the Company (or
other period for which Profit or Loss must be computed), the Company’s taxable
income or loss determined in accordance with Code Section 703(a), with the
following adjustments:

(i)            all
items of income, gain, loss, deduction, or credit required to be stated
separately pursuant to Code Section 703(a)(1) shall be included in computing
taxable income or loss;

(ii)           any
tax-exempt income of the Company, not otherwise taken into account in computing
Profit or Loss, shall be included in computing taxable income or loss;

(iii)          any
expenditures of the Company described in Code Section 705(a)(2)(B) (or treated
as such pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(i)) and not
otherwise taken into account in computing Profit or Loss, shall be subtracted
from taxable income or loss;

(iv)          gain
or loss resulting from any taxable disposition of Company property shall be
computed by reference to the adjusted book value of the property disposed of,
notwithstanding the fact that the adjusted book value differs from the adjusted
basis of the property for federal income tax purposes;

(v)           in
lieu of the depreciation, amortization, or cost recovery deductions allowable
in computing taxable income or loss, there shall be taken into account the
depreciation computed based upon the adjusted book value of the asset; and

 45
 

(vi)          notwithstanding
any other provision of this definition, any items which are specially allocated
pursuant to Section 3.1[b] shall not be taken into account in computing Profit
or Loss.

Projected Cash Flow Deficiency
shall mean the amount for any quarter set forth on Schedule 4 of the Business
Plan.

Real Property Lease
shall mean the Real Property Sublease Agreement between Los Angeles Turf Club,
Incorporated and the Company dated as of the Closing, as thereafter amended.

Removed Manager
shall  be a Manager who has been removed
pursuant to Section 5.11 of this Agreement.

RTN shall
mean Racetrack Television Network (dba RTN).

Securities Act
shall mean the United States Securities Act of 1933, as amended, including the
rules and regulations promulgated thereunder.

State shall
mean any constituent state of the United States, as well as the District of
Columbia.

Subscriber
shall mean any home that, through traditional television exploitation,
including by means of UHF and VHF television broadcast, cable television, “over-the-air”
television, subscription television, pay television, pay per view television,
iTV, video on demand television, hotel and other institutional service
television, satellite master antennae television (SMATV), multi-channel
multi-point distribution services television (MMDS), and direct broadcast
satellite service, has the ability to view HRTV.  By way of example, a home which subscribes to
a basic tier of cable television or direct broadcast satellite service
television shall be deemed a Subscriber if such cable television or direct broadcast
satellite service television operator offers HRTV on any tier.

Substitute Member
shall mean a transferee of all or a portion of a Member’s Interest that becomes
a Member and succeeds, to the extent of the Interest transferred, to the rights
and powers and becomes subject to the restrictions and liabilities of the
transferor Member.

Tax Matters Partner
shall mean the Member identified as such, from time to time, by the Members.
The initial Tax Matters Partner shall be CDI Sub, and CDI Sub and MEC Sub shall
alternate serving as the Tax Matters Partner each calendar year.

Tax Percentage
shall have the meaning set forth in Section 4.1(a)(ii).

Television Fees
shall have the meaning set forth in Section 5.2.

Television Rights
shall mean, other than with respect to Point to Point Simulcasting, all audio,
video, data and replay rights related to horse racing or dog racing for
purposes of traditional television exploitation, including by means of UHF and
VHF television broadcast, cable television, “over-the-air” television,
subscription television, pay television, pay per view

 46
 

television, iTV, video on demand television, hotel and
other institutional service television, satellite master antennae television
(SMATV), multi-channel multi-point distribution services television (MMDS), and
direct broadcast satellite service, provided however Television Rights shall
not include Broadband and Mobile Rights.

Term shall
have the meaning set forth in Section  1.2.  Where not capitalized, “term” shall mean the
entire period of the Company’s existence, including any period of winding-up
and liquidation following the Dissolution of the Company pursuant to Article
 8.

Termination
shall mean, with respect to a legal entity other than a natural person, that
such entity has Dissolved, completed its process of winding-up and liquidation,
and otherwise ceased to exist.

Territory
shall mean the United States and whatever additional geographic region, if any,
as the Board of Managers shall determine from time to time.

Third Party shall
mean any person or entity other than CDI, CDI Sub, MEC or MEC Sub, or any
entity Controlled by CDI or MEC, respectively.

TrackNet
shall mean TrackNet Media Group, LLC.

Transfer
shall mean any direct or indirect sale, exchange, transfer, gift, encumbrance,
assignment, pledge, mortgage, hypothecation or other disposition, whether
voluntary or involuntary.

Treasury Regulation
shall mean a regulation issued by the United States Treasury Department and
relating to a matter arising under the Code.

United States
shall mean the United States of America.

Updated Capital Account
shall mean, with respect to a Member, such Member’s Capital Account determined
as if, immediately prior to the time of determination, all of the Company’s
assets had been sold for Fair Market Value and any previously unallocated
Profits or Losses had been allocated pursuant to Article 3.

Withdrawal Event
shall have the meaning set forth in Section 7.3.

Withdrawn Member
shall have the meaning set forth in Section  7.3.

XpressBet
shall mean any advance deposit wagering service that is Controlled by MEC.

 47
 

IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date first above written.

	
  

  	
  CHURCHILL DOWNS INCORPORATED

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  CD HRTV HC, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  MAGNA ENTERTAINMENT CORP.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  MEC HRTV HOLDCO LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

 48

SCHEDULE A

MEMBER INFORMATION

	
  Name and Contact Information

  	
   

  	
  Allocation Percentage

  
	
   

  	
   

  	
   

  
	
  CD HRTV HC, LLC; Attn:
  President 

  700 Central Avenue 

  Louisville, Kentucky 40208

  	
   

  	
  50

  
	
   

  	
   

  	
   

  
	
  MEC HRTV HOLDCO LLC; Attn:
  President 

  337 Magna Drive

  Aurora, Ontario L4G

  7K1 Canada

  	
   

  	
  50

  

 

	
  Initial Capital Commitment

  	
   

  
	
   

  	
   

  
	
  2007

  	
   

  	
  CDI Sub

  	
   

  	
  MEC Sub

  	
   

  
	
  Upon Closing

  	
   

  	
  $

  	
  786,000

  	
   

  	
  $

  	
  786,000

  	
   

  
	
  July 1, 2007

  	
   

  	
  $

  	
  574,000

  	
   

  	
  $

  	
  574,000

  	
   

  
	
  October 1, 2007

  	
   

  	
  $

  	
  599,000

  	
   

  	
  $

  	
  599,000

  	
   

  
	
  January 1, 2008

  	
   

  	
  $

  	
  602,000

  	
   

  	
  $

  	
  602,000

  	
   

  
	
  2008

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  April 1, 2008

  	
   

  	
  $

  	
  636,000

  	
   

  	
  $

  	
  636,000

  	
   

  
	
  July 1, 2008

  	
   

  	
  $

  	
  621,000

  	
   

  	
  $

  	
  621,000

  	
   

  
	
  October 1, 2008

  	
   

  	
  $

  	
  621,000

  	
   

  	
  $

  	
  621,000

  	
   

  
	
  January 1, 2009

  	
   

  	
  $

  	
  652,000

  	
   

  	
  $

  	
  652,000

  	
   

  
	
  2009

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  April 1, 2009

  	
   

  	
  $

  	
  648,000

  	
   

  	
  $

  	
  648,000

  	
   

  
	
  July 1, 2009

  	
   

  	
  $

  	
  648,000

  	
   

  	
  $

  	
  648,000

  	
   

  
	
  October 1, 2009

  	
   

  	
  $

  	
  600,000

  	
   

  	
  $

  	
  600,000

  	
   

  

 

1.  All
quarterly contributions shall be made on the dates listed above.

2.  Any quarterly contributions
or portions thereof which are not needed to fund the Actual Cash Flow
Deficiency of such quarter shall be segregated in a separate bank account of
the Company until needed to fund an Actual Cash Flow Deficiency of a future
quarter or any distributions permitted or required under this Agreement.

 

Capital Contributions required to be made by a Member under this
Schedule shall be due and payable on the date indicated and delinquent amounts
shall bear interest at a floating rate equal to the prime rate as announced
from time to time by the Bank, compounded daily.

 49
 

MANAGERS

William Carstanjen.

Joseph DeFrancis.

James E. Gay.

Michael Neuman.

 50
 

SCHEDULE B

Additional
Capital Commitments

In the event there
is an Excess Cash Flow Deficiency with respect to any quarter beginning with
the Closing through and including the 4th calendar
quarter of 2009, MEC Sub agrees to fund such Excess Cash Flow Deficiency as set
forth below.  If, in accordance with this
Schedule B, additional capital is required from MEC Sub, a capital call notice
will be sent by the Company to MEC Sub specifying the amount and time of the
contribution for such additional capital. 
MEC Sub must make the contribution required by such capital call on the
indicated due date, and delinquent amounts shall bear interest at a floating
rate equal to the prime rate as announced from time to time by the Bank,
compounded daily.  MEC Sub shall solely
contribute additional capital to fund the Excess Cash Flow Deficiency for such
quarter (the “Additional MEC Capital”).

Any Additional MEC
Capital will not alter the Allocation Percentages.

Notwithstanding anything
to the contrary herein, CDI shall not be required to fund any amounts with
respect to Excess Cash Flow Deficiencies.

The Board of Managers may
decline to issue a capital call other than as required under this Schedule or
Schedule B-1 in their sole and absolute discretion.

 51
 

SCHEDULE B-1

Additional
Capital Commitments-Discretionary Expenditures

In the event there
is a Discretionary Expenditure during any quarter, CDI Sub and MEC Sub agree to
fund such Discretionary Expenditure in accordance with their respective
Allocation Percentages when such Discretionary Expenditure is approved by the
Board of Managers.  When, in accordance
with this Schedule B-1, additional capital is required from CDI Sub and MEC
Sub, a capital call notice will be sent by the Company to CDI Sub and MEC Sub
specifying the amount and time of the contribution for such additional
capital.  CDI Sub and MEC Sub must make
the contribution required by such capital call on the indicated due date, and
delinquent amounts shall bear interest at a floating rate equal to the prime
rate as announced from time to time by the Bank, compounded daily.

 52
 

SCHEDULE C

Existing Contractual Obligations

	
   

  	
   

  	
  Date of Expiration

  
	
  Churchill Downs Incorporated

  	
   

  	
   

  	
   

  
	
  ODS Technologies (dba TVG Network)
  — Hoosier

  	
   

  	
  March
  13, 2007

  
	
  ODS Technologies (dba TVG Network)
  — Churchill Downs

  	
   

  	
  March
  14, 2007

  
	
  ODS Technologies (dba TVG Network)
  — Fair Grounds

  	
   

  	
  March
  30, 2007

  
	
  ODS Technologies (dba TVG Network)
  — Arlington

  	
   

  	
  August
  6, 2007

  
	
  ODS Technologies (dba TVG Network)
  — Calder

  	
   

  	
  April
  15, 2008

  
	
  Racing World

  	
   

  	
  April
  15, 2009

  
				

 

	
  Magna Entertainment Corp.

  	
   

  	
   

  	
   

  
	
  RTN

  	
   

  	
  month
  to month

  
	
  Racing World

  	
   

  	
  April
  15, 2009

  

 

The above contractual obligations of CDI and MEC
shall not be renewed or extended after the date of this Agreement, except (i)
Racing World may be extended upon approval of the Board of Managers, and (ii)
RTN may be extended provided that CDI’s Television Rights are carried on RTN
not later than April 27, 2007 on terms and conditions acceptable to the Board
of Managers.

 53Exhibit 10.2

 

LIMITED
LIABILITY COMPANY OPERATING AGREEMENT

OF

TRACKNET
MEDIA GROUP, LLC

THIS OPERATING AGREEMENT of TRACKNET MEDIA GROUP, LLC,
a Delaware limited liability company (the “Company”), is entered into as of
March 4, 2007 by and between CHURCHILL DOWNS INCORPORATED, a Kentucky
corporation (“CDI”), CD CONTENTCO HC, LLC, a Delaware limited liability company
and a wholly owned subsidiary of CDI (“CDI Sub”), MAGNA ENTERTAINMENT CORP., a
Delaware corporation (“MEC”) and MEC CONTENT HOLDCO LLC, a Delaware limited
liability company and a wholly owned subsidiary of MEC (“MEC Sub”).  (Unless otherwise indicated, each term used
in this Agreement with initial capital letters shall have the meaning ascribed
to it in Article 11.)

For and in consideration of the mutual promises
contained herein, and for other good and valuable consideration, the receipt
and sufficiency of which are acknowledged by the parties, CDI, CDI Sub, MEC and
MEC Sub desiring to be legally bound agree as follows:

ARTICLE 1

FORMATION

1.1          Formation
and Name.

[a]           The Members enter into and form the Company as a limited
liability company in accordance with the Act.

[b]           The name of the Company shall be TrackNet Media Group,
LLC.

1.2          Term.  The “Term” of the Company shall commence on
the date first above written and shall continue as set forth in Section 8.2.

1.3          Purpose
and Scope.

[a]           Within the meaning and for purposes of the Act, the
purpose and scope of the Company shall be the conduct of the Business and, in
connection with conducting the Business, shall include any lawful action or
activity permitted to a limited liability company under the Act.

[b]           [i] The Company, as the sole and exclusive agent for CDI,
CDI Sub, MEC and MEC Sub and their Affiliates, will on behalf of CDI, CDI Sub,
MEC and MEC Sub and their Affiliates:

1.                   Conduct the
acquisition of ADW Content Rights from all Third Parties worldwide for ADW
worldwide by CDI ADW and XpressBet.

2.                       Conduct the acquisition of Point
to Point Content Rights from all Third Parties worldwide for Point-to-Point
Simulcasting worldwide by CDI Tracks and MEC Tracks.

3.                   Conduct the
acquisition of Rebate Content Rights from all Third Parties worldwide for
Rebating worldwide by CDI and MEC.

4.                   Sublicense CDI
and MEC ADW Content Rights to Third Parties worldwide for ADW worldwide.

5.                   Sublicense CDI
and MEC Point to Point Content Rights to Third Parties worldwide for
Point-to-Point Simulcasting worldwide.

6.                   Sublicense CDI
and MEC Rebate Content Rights to Third Parties worldwide for Rebating worldwide.

Each of 1-6,
to the extent and at the time permitted by contractual obligations existing as
of the date hereof as set forth on Schedule C.

[ii] The
Company will also:

7.                   Acquire ADW
Content Rights from Third Parties worldwide for resale or sublicensing to Third
Parties worldwide for ADW worldwide.

8.                   Acquire Point to
Point Content Rights from Third Parties worldwide for resale or sublicensing to
Third Parties worldwide for Point to Point Simulcasting worldwide.

9.                   Acquire Rebate
Content Rights from Third Parties worldwide for resale or sublicensing to Third
Parties worldwide for Rebating worldwide.

10.                 Acquire Television Rights from Third
Parties worldwide for use by HRTV Entity worldwide and for redistribution by
the Company to Third Parties outside the Territory.

11.      Provide settlement and
collections for CDI and MEC.

12.      Improve the simulcasting
production of CDI and MEC.

13.                 Conduct due diligence and implement
wagering integrity processes with respect to ADW, Point to Point Simulcasting,
and Rebating.

Collectively 1-13, are referred to herein as
the “Business”.

[c]           CDI may, at its sole cost and expense, form or purchase
CDI ADW.  MEC will provide such
technology and/or services in respect of the formation and operation of CDI ADW
as CDI, in its sole discretion, may reasonably request.  Any services or technology to be provided by
MEC (or any affiliates thereof) shall be provided at a rate that is mutually
agreeable to the parties.

1.4          Principal
Office. 
The Company shall have a single “Principal Office.”  The Principal Office initially shall be
located at Churchill Downs in Louisville, Kentucky (with a satellite office at
Santa Anita Park), and may thereafter be changed from time to time by approval
of the Board of Managers upon notice to the Members.

 2
 

1.5          Delaware
Office and Agent.  The Company shall maintain a Delaware
registered office and agent for service of process as required by the Act.  In the event the registered agent ceases to
act as such for any reason or the registered office shall change, the Board of
Managers shall promptly designate a replacement registered agent or file a
notice of change of address, as the case may be, in each case as required by
the Act.

1.6          Admission
of Members and Additional Members.

[a]           Upon execution of this Agreement each of CDI Sub and MEC
Sub is admitted as a Member.

[b]           Additional Members may be admitted as Members from time to
time, with the approval of the Board of Managers and with such changes to this
Agreement as agreed to by CDI, CDI Sub, MEC and MEC Sub.  The Capital Commitment (as well as the timing
of required capital contributions in respect thereof) and Allocation Percentage
of each Additional Member shall be determined by approval of the Board of
Managers and set forth on Schedule A. 
The Allocation Percentage of each Additional Member shall dilute the
Allocation Percentages of the previously admitted Members in proportion to
their respective Allocation Percentages as in effect immediately prior to such
dilution.

[c]           A Person shall not be admitted as an Additional Member
prior to the execution by such Person of a counterpart of this Agreement
(including Schedule A, as updated to reflect such Person’s Interest).

[d]           Notwithstanding the foregoing provisions of this Section
1.6, the provisions of Article 7 shall apply with regard to the admission of
Substitute Members.

[e]           CDI and MEC shall work together to recruit mutually
agreed-upon Third Parties (such as horsemen, breeders and other industry
participants) to become Additional Members of the Company.  In the event CDI and MEC are successful in
recruiting mutually agreed-upon Additional Members, CDI Sub and MEC Sub will be
diluted on a pro rata basis.

1.7          Names
and Contact Information of the Members.  Set forth below the name of each Member on
Schedule A shall be appropriate contact information for such Member (including
such Member’s mailing address as well as the name or title of an individual to
whom notices and other correspondence should be directed).  Each Member shall promptly provide the Company
with the information required to be set forth for such Member on Schedule A and
shall thereafter promptly notify the Company of any change to such information.

1.8          Additional
Documents.

[a]           The Board of Managers shall cause to be executed, filed,
recorded, published, or amended any documents, as the Board of Managers in
their reasonable discretion determine to be necessary or advisable, (x) in
connection with the formation, operation, Dissolution, winding-up, or
Termination of the Company pursuant to applicable law or (y) to otherwise give
effect to the terms of this Agreement. 
The terms and provisions of each document described in the preceding
sentence shall be initially established and shall be amended 

 3
 

as necessary to cause such terms and
provisions to be consistent with the terms and provisions of this Agreement.

1.9          Title
to Property.  Title to all Company property shall be held
in the name of the Company; provided, however, that publicly traded securities
may be held in “street name” or through a similar arrangement with a reputable
financial institution.

ARTICLE 2

CAPITALIZATION

2.1          Capital
Commitments.

[a]           Initial
Capital Commitments.  The
Company shall be owned initially fifty percent (50%) by CDI Sub and fifty
percent (50%) by MEC Sub.  Each of CDI
Sub and MEC Sub will make initial capital contributions in the amount and at
such times as set forth on Schedule A or such lesser amount as the Board of
Managers may agree.  All Capital
Commitments shall be made such that each of MEC Sub and CDI Sub contributes
fifty percent (50%) of the aggregate value contributed to the Company, except
as may otherwise be agreed between MEC Sub and CDI Sub.  In addition, CDI may lease certain property
to the Company under the Real Property Lease.

[b]           Increased
Capital Commitments.  In
the event the Company revenues are insufficient to allow the Company to be self
funding, any additional capital needs will be determined by the Board of
Managers in accordance with Schedule A.

[c]           Rights
Covenant.  Upon execution of this Agreement,
CDI Sub and MEC Sub contribute or cause to be contributed and/or license or
cause to be licensed to the Company their respective rights (including such
rights as held by their Affiliates) as set forth on Schedule B subject to the
contractual obligations existing as of the date hereof as set forth on Schedule
C.

2.2          Capital
Contributions.  Except to the extent set forth on Schedule B
or otherwise agreed by the Members after the date of this Agreement, all
capital contributions shall be in cash.

[a]           Capital
Contributions in Respect of Initial Capital Commitments.  Within thirty (30) days of execution of this
Agreement, each Member shall make a capital contribution equal to its initial
Capital Commitment as set forth on Schedule A or such lesser amount as the
Board of Managers may agree.

[b]           Capital
Contributions in Respect of Increased Capital Commitments.  The Members shall make capital contributions
in respect of, and in proportion to, any increase in their Capital Commitments
pursuant to Section 2.1(b) and Schedule A.

2.3          Limitation
on Capital Contributions.  Except as specifically provided in this
Article 2 or Section 3.5(c), no Person shall be permitted or required to make a
contribution to the capital of the Company.

 4
 

2.4          Penalties
for Failure to Make Required Contributions.  In the event that a Member fails to timely
make a capital contribution as required pursuant to this Agreement (a “Defaulting
Member”), the following provisions shall be applicable:

[a]           The non-Defaulting Member shall have the right (but not
the obligation) to make the capital contribution in lieu of the Defaulting
Member.  In such event, the Interest and
Allocation Percentage of the non-Defaulting Member in the Company shall be
proportionately increased, and the Interest and Allocation Percentage of the
Defaulting Member proportionately decreased, as appropriate to reflect the
additional capital contribution by the non-Defaulting Member.  If the default is then cured by the
Defaulting Member, as permitted under this Agreement, the Defaulting Member
shall have the Interests and Allocation Percentages of the Defaulting Member
and the non-Defaulting Member reinstated to where they were prior to the
default with an appropriate distribution to the non-Defaulting Member of the
capital contribution made in lieu of the Defaulting Member.

[b]           Such Defaulting Member shall be subject to any and all
penalties and remedies available at law or equity, as selected by the members
of the Board of Managers who are not appointed by the Defaulting Member.

2.5          Withdrawal
and Return of Capital.  No Member may withdraw any portion of its
Capital Contribution or Capital Account balance.  Except as provided in Section 2.4[a] and in
Articles 4 and 8, no Member shall be entitled to the return of such Member’s
Capital Contribution, a distribution in respect of such Member’s Capital
Account balance, or any other distribution in respect of such Member’s
Interest.

2.6          Loans
to the Company.  No Member shall be required to lend any money
to the Company or to guaranty any Company indebtedness.

2.7          Interest
on Capital. 
No Member shall be entitled to interest on such Member’s Capital
Contribution, Capital Account balance, or share of unallocated Profits.

2.8          Limitation
of Liability; Return of Certain Distributions.

[a]           Except as otherwise required by applicable law, a Member
shall have no personal liability for the debts and obligations of the Company.

[b]           A Member that receives a distribution in violation of this
Agreement or that is required to be returned to the Company under applicable
law shall return such distribution within thirty (30) days after demand
therefor by any Member.  The Company may,
with the approval of the Board of Managers, elect to withhold from any distributions
otherwise payable to a Member amounts due to the Company from such Member.

[c]           Nothing in this Section 2.8 shall be applied to
release any Member from (i) its obligation to make capital contributions
or other payments specifically required under this Agreement or (ii) its
obligations pursuant to any contractual relationship between the Company and
such Member acting in a capacity other than as a Member (including, for
example, as a borrower or independent contractor).

 5
 

2.9          Contributed
Property. 
With respect to any property contributed by a Member to the Company,
such Member shall provide to the Company any information reasonably requested
by the Company for purposes of determining the Company’s tax basis in such
property.

2.10        Seconded
Personnel. 
MEC and CDI shall agree on their respective personnel to be seconded or
transferred to the Company and the terms thereof.  Schedule 11 of the Business Plan sets forth
the organizational chart of the Company, including the names of certain
personnel who are expected to fill various positions and several open positions
for which no candidates have yet been identified by the Members.  CDI and MEC intend to second the personnel
listed on Schedule 11 of the Business Plan immediately upon execution of this
Agreement and CDI and MEC shall cooperate in good faith to determine whether
they mutually agree in the future to transfer such employees to the Company
instead of seconding them to the Company. 
On or before the tenth (10th)
day of each month, each of CDI and MEC will bill the Company for the Employee
Costs incurred by CDI and MEC during the immediately preceding month for its
employees seconded to the Company, prorated as appropriate for any employees
seconded on a less than full time basis. 
The Company shall promptly pay to CDI and MEC the amount set forth in
such bills.

ARTICLE 3

PROFITS AND LOSSES

3.1          Allocations
of Company Profits and Losses.

[a]           General
Allocation Provisions.

[i]            Hypothetical Liquidation.  The items of income, expense, gain and loss
of the Company comprising Profits or Losses for a fiscal year shall be
allocated among the Members in a manner that will, as nearly as possible, cause
the Capital Account balance of each Member at the end of such fiscal year to
equal the excess (which may be negative) of:

[A]          the hypothetical distribution (if any)
that such Member would receive if, on the last day of the fiscal year, (i) all
Company assets, including cash, were sold for cash equal to their Fair Market
Values, taking into account any adjustments thereto for such fiscal year, (ii)
all Company liabilities were satisfied in cash according to their terms
(limited, with respect to each nonrecourse liability, to the Fair Market Value
of the assets securing such liability), and (iii) the net proceeds thereof
(after satisfaction of such liabilities) were distributed in full pursuant to
Section 8.3[d]; over

[B]           the sum of (x) the amount, if any,
which such Member is obligated to contribute to the capital of the Company, (y)
such Member’s share of the Company Minimum Gain determined pursuant to Treasury
Regulation Section 1.704-2(g), and (z) such Member’s share of Member Minimum
Gain determined pursuant to Treasury Regulation Section 1.704-2(i)(5), all
computed immediately prior to the hypothetical sale described above.

[ii]           Determination of Items Comprising Allocations.

 6
 

[A]          In the event that the Company has
Profit for a fiscal year,

[1]           for any Member as to whom the
allocation under Section 3.1(a)(i) would reduce its Capital Account, such
allocation shall be comprised of a proportionate share of each of the Company’s
items of expense or loss entering into the computation of Profit for such
fiscal year; and

[2]           the allocation for all other Members
shall be comprised of a proportionate share of each Company item of income,
gain, expense and loss entering into the computation of Profit for such fiscal
year (other than the portion of each Company item of expense and loss, if any,
that is allocated in (ii)(A)(1) above).

[B]           In the event that the Company has
Loss for a fiscal year,

[1]           for any Member as to whom the
allocation under Section 3.1(a)(i) would increase its Capital Account, such
allocation shall be comprised of a proportionate share of the Partnership’s
items of income and gain entering into the computation of Loss for such fiscal
year; and

[2]           the allocation for all other Members
shall be comprised of a proportionate share of each Company item of income,
gain, expense and loss entering into the computation of Loss for such fiscal
year (other than the portion of each Company item of income and gain, if any,
that is allocated in (ii)(B)(1) above).

[b]           Allocation
Adjustments Required to Comply With Section 704(b) of the Code.

[i]            Limitation on Allocation of Losses.  There shall be no allocation of Losses to any
Member to the extent that such allocation would create a negative balance in
the Member’s Capital Account (or increase the amount by which the Member’s
Capital Account balance is negative) unless such allocation would be treated as
valid under Section 704(b) of the Code. 
Any Losses that, pursuant to the preceding sentence, cannot be allocated
to a Member shall be reallocated to the other Members (but only to the extent
that such other Members can be allocated Losses without violating the
requirements of the preceding sentence) in proportion to their respective
Allocation Percentages.

[ii]           Qualified Income Offset.  If in any Fiscal Year a Member receives (or
is reasonably expected to receive) a distribution, or an allocation or
adjustment to the Member’s Capital Account, that creates a negative balance in
such Account (or increases the amount by which the balance in such Account is
negative), there shall be allocated to the Member such items of Company income
or gain as are necessary to satisfy the requirements of a “qualified income
offset” within the meaning of Treasury Regulation Section 1.704-1(b).

[iii]          Member Nonrecourse Deductions.  In accordance with the provisions of Treasury
Regulation Section 1.704-2(i), each item of Member Nonrecourse Deduction
shall be allocated among the Members in proportion to the economic risk of 

 7
 

loss that the Members bear with respect to the nonrecourse liability of
the Company to which such item of Member Nonrecourse Deduction is attributable.

[iv]          Minimum Gain Chargeback.  This Section 3.1(b)(iv) hereby incorporates
by reference the “minimum gain chargeback” provisions of Treasury Regulation
Section 1.704-2.  In general, upon a
reduction of the Company’s Minimum Gain, the preceding sentence shall require
that items of income and gain be allocated among the Members in a manner that
reverses prior allocations of Nonrecourse and Member Nonrecourse Deductions as
well as reductions in the Members’ Capital Account balances resulting from
distributions that, notwithstanding Section 3.2, are allocable to increases in
the Company’s Minimum Gain.  Subject to
the provisions of Section 704 of the Code and the Treasury Regulations
thereunder, if the Board of Managers determine at any time that operation of
such “minimum gain chargeback” provisions likely will not achieve such a
reversal by the conclusion of the liquidation of the Company, such Members
shall adjust the allocation provisions of this Section 3.1 as necessary to
accomplish that result.

[v]           Allocations Subsequent to Certain Allocation
Adjustments.  Any special
allocations of items of Profit or Loss pursuant to Section 3.1(b)(i) or
(ii) shall be taken into account in computing subsequent allocations pursuant
to Section 3.1(a) so that, for each Member, the net amount of any such
special allocations and all allocations pursuant to Section 3.1(a) shall,
to the extent possible and taking into account any adjustments previously made
pursuant to Section 3.1(g), be equal to the net amount that would have been
allocated to such Member pursuant to the provisions of Section 3.1(a)
without application of Section 3.1(b)(i) or (ii).

[c]           Book -
Tax Accounting Disparities. 
If Company property is reflected in the Capital Accounts of the Members
at a value that differs from the adjusted tax basis of such property (whether
because such property was contributed to the Company by a Member or because of
a revaluation of the Members’ Capital Accounts under Treasury Regulation
Section 1.704-1(b)), allocations of depreciation, amortization, income, gain or
loss with respect to such property shall be made among the Members in a manner
which takes such difference into account in accordance with Code
Section 704(c) and the Treasury Regulations issued thereunder.

[d]           Allocations
in Event of Transfer.  If
an Interest is Transferred in accordance with this Agreement, allocations of
Profits and Losses as between the transferor and transferee shall be made using
any method selected by the Board of Managers and permitted under Section 706 of
the Code.

[e]           Adjustment
to Capital Accounts for Distributions of Property.  If property distributed in kind is reflected
in the Capital Accounts of the Members at a book value that differs from the
Fair Market Value of such property at the time of distribution, the difference
shall be treated as Profit or Loss on the sale of the property and shall be
allocated among the Members in accordance with the provisions of this Section
3.1.

[f]            Tax
Credits and Similar Items. 
Any tax credits or similar items not allocable pursuant to Section
3.1(a) through (e) shall be allocated to the Members in proportion 

 8
 

to their respective Allocation
Percentages.  Notwithstanding the
preceding sentence, if Company expenditures that give rise to tax credits also
give rise to Member Nonrecourse Deductions, the tax credits attributable to such
expenditures shall be allocated in accordance with Treasury Regulation Section
1.704-1(b)(4)(ii).

[g]           Reallocation
of Certain Losses.  To the
extent that: (i) Losses which otherwise would have been allocated to a Member
under this Section 3.1 were allocated to one or more other Members pursuant to
Section 3.1(b)(i) or any other provision of this Agreement that prohibits the
allocation to a Member of Losses which would reduce such Member’s Capital
Account balance below a specified amount; (ii) such allocation has not been
reversed pursuant to the subsequent operation of Section 3.1(b)(v) or this
Section 3.1(g); and (iii) the Member thereafter returns a distributed amount as
required under Section 2.8 or otherwise makes a contribution to the capital of
the Company, the Capital Accounts of the Members shall be adjusted in
connection with such return or contribution (to the extent of the value
thereof) to effect a reallocation, in reverse order, of such Losses to the
Member.  The foregoing adjustment shall
be made in an equitable manner on a going forward basis, without amending any
prior tax return that has already been filed.

3.2          Compliance
with Regulations.  In allocating gains, losses and other items,
the Company shall comply with the applicable provisions of the Treasury
Regulations under Section 704 of the Code.

3.3          Allocation
of Liabilities.  Solely for purposes of determining the
Members’ respective shares of the nonrecourse liabilities of the Company within
the meaning of Treasury Regulation Section 1.752-3(a)(3), each Member’s
interest in Company Profits shall be equal to the ratio that such Member’s
Allocation Percentage bears to the aggregate Allocation Percentages of the
Members.

3.4          Modifications
to Preserve Underlying Economic Objectives.  If, in the opinion of counsel to the Company,
there is a change in the Federal income tax law (including the Code as well as
the Treasury Regulations, rulings, and administrative practices thereunder)
which makes it necessary or prudent to modify the allocation provisions of this
Article 3 in order to preserve the underlying economic objectives of the
Members as reflected in this Agreement, the Board of Managers shall make the
minimum modification necessary to achieve such purpose.

3.5          Withholding
Taxes.

[a]           The Company shall withhold taxes from distributions to,
and allocations among, the Members to the extent required by law (as determined
by the Board of Managers in their reasonable discretion).  Except as otherwise provided in this
Section 3.5, any amount so withheld by the Company with regard to a Member
shall be treated for purposes of this Agreement as an amount actually
distributed to such Member pursuant to Section 4.1.  An amount shall be considered withheld by the
Company if, and at the time, remitted to a governmental agency without regard
to whether such remittance occurs at the same time as the distribution or
allocation to which it relates; provided, however, that an amount actually
withheld from a specific distribution or designated by the Board of Managers as
withheld from a specific allocation shall be treated as if distributed at the
time such distribution or allocation occurs.

 9
 

[b]           To the extent that operation of Section 3.5(a) would
create a negative balance in a Member’s Updated Capital Account or increase the
amount by which such Updated Capital Account balance is negative, the amount of
the deemed distribution shall instead be treated as a loan by the Company to
such Member, which loan shall be payable upon demand by the Company and shall
bear interest at a floating rate equal to the prime rate as announced from time
to time by the Bank, compounded daily.

[c]           In the event that the Board of Managers determine in their
reasonable discretion that the Company lacks sufficient cash available to pay
withholding taxes in respect of a Member, one or more of the Members may, in
their sole and absolute discretion (but only with the consent of the Board of
Managers), make a loan or capital contribution to the Company to enable the
Company to pay such taxes.  Any such loan
shall be full-recourse to the Company and shall bear interest at a floating
rate equal to the prime rate as announced from time to time by the Bank,
compounded daily.  Notwithstanding any
provision of this Agreement to the contrary, any loan (including interest
accrued thereon) or capital contribution made to the Company by a Member
pursuant to this Section 3.5(c) shall be repaid or returned as promptly as
is reasonably possible.

[d]           Each Member hereby agrees to indemnify the Company and the
other Members for any liability they may incur for failure to properly withhold
taxes in respect of such Member; moreover, each Member hereby agrees that
neither the Company nor any other Member shall be liable for any excess taxes
withheld in respect of such Member’s Interest and that, in the event of
overwithholding, a Member’s sole recourse shall be to apply for a refund from
the appropriate governmental authority.

[e]           Taxes withheld by third parties from payments to the
Company shall be treated as if withheld by the Company for purposes of this
Section 3.5.  Such withholding shall
be deemed to have been made in respect of all the Members in proportion to
their respective allocative shares under this Article 3 of the underlying
items of Profit to which such third party payments are attributable.  In the event that the Company receives a
refund of taxes previously withheld by a third party from one or more payments
to the Company, the economic benefit of such refund shall be apportioned among
the Members in a manner reasonably determined by the Board of Managers to
offset the prior operation of this Section 3.5(e) in respect of such
withheld taxes.

[f]            In the event that the Company is required to recognize
income or gain for income tax purposes under Section 684 of the Code (or a
similar provision of State or local law) in respect of an in-kind distribution
to a Member, then, solely for such income tax purposes, to the maximum extent
permitted by applicable law (as determined by the Board of Managers in their reasonable
discretion), the income or gain shall be allocated entirely to such Member.

ARTICLE 4

DISTRIBUTIONS

4.1          Operating
Distributions.  Except as otherwise provided in this
Agreement, distributions prior to the Dissolution of the Company shall be made in
accordance with this Section 4.1 and each Member actually receiving amounts
pursuant to a specific distribution by 

 10
 

the Company shall receive a pro rata share of
each item of cash or other property of which such distribution is constituted
(based upon such Member’s Allocation Percentage).

[a]           Mandatory
Tax Distributions.

[i]            The
Company shall distribute to each Member, not later than 90 days after the close
of each Fiscal Year, an amount of cash equal to the sum of the following.

[A]          The
product of the Tax Percentage for such Fiscal Year and such Member’s allocated
share of the Company’s net long-term capital gain (as defined in Section
1222(7) of the Code) for such Fiscal Year as shown on the Company’s Federal
income tax return (subject to the modification described in Section
4.1(a)(iii)); and

[B]           The
product of the Tax Percentage for such Fiscal Year and such Member’s allocated
share of the Company’s net ordinary income and net short-term capital gain (as
defined in Section 1222(5) of the Code) for such Fiscal Year as shown on the
Company’s Federal income tax return (subject to the modification described in
Section 4.1(a)(iii)).

[ii]           For
purposes of this Section 4.1(a): (x) the “Tax Percentage” with respect to each
specific item of net long-term capital gain shall be the highest blended
Federal and State marginal income tax rate applicable to such specific item of
net long-term capital gain recognized by a corporation doing business, in
the State with the highest marginal corporate income tax rate applicable to
items of net long-term capital gain; and (y) the “Tax Percentage” with respect
to items of net ordinary income and net short-term capital gain shall be the
highest blended Federal and State marginal income tax rate applicable to
ordinary income recognized by a corporation doing business, in the State with
the highest marginal corporate income tax rate applicable to items of ordinary
income.  In all cases, the highest
marginal income tax rate shall be the highest statutory rate applicable to the
specific type of income or gain in question and shall be determined without
regard to phaseouts of deductions or similar adjustments; moreover, a corporate
franchise tax imposed in lieu of an income tax shall be treated as an income
tax.  The Board of Managers, acting in
their reasonable discretion, may adjust the determination of Tax Percentages
pursuant to this Section 4.1(a)(ii): (x) as necessary to ensure that the
distribution required to be made to each Member pursuant to Section 4.1(a)(i)
for any Fiscal Year is not less than such Member’s actual Federal and State
income tax liability in respect of allocations made to such Member by the
Company for such Fiscal Year; or (y) to reflect any city or other local income
tax to which any Member or Members may be subject; provided, however, that the
Tax Percentage with regard to a particular type of income or gain shall in all
events be the same percentage for all Members.

[iii]          For
purposes of calculating the Company’s net income and gain under clause (i),
above, there shall be disregarded any items of loss, expense or deduction the
ultimate deductibility of which may, in respect of any Member or equityholder
of a Member, be subject to limitation under Section 67 of the Code.

 11

[iv]          For purposes of determining whether
the Company has satisfied its distribution obligation under Section 4.1(a)(i),
all cash distributions made during a Fiscal Year shall be treated as
distributions made pursuant to Section 4.1(a)(i) in respect of such Fiscal Year
(except to the extent that such distributions were required to satisfy the
obligations of the Company under Section 4.1(a)(i) in respect of one or more
prior Fiscal Years, in which case such distributions shall be treated as having
been made pursuant to Section 4.1(a)(i) in respect of such prior Fiscal Year or
Years).

[v]           At the election of the Board of
Managers, no distribution shall be required pursuant to Section 4.1(a)(i) in
respect of any Fiscal Year if the Company does not have the funds necessary to
make the distributions.

[b]           Discretionary Distributions.
In addition to the distributions provided for in Section 4.1(a), the Board of
Managers may cause the Company to distribute cash or property to the Members,
in proportion to the Members’ respective Allocation Percentages, at such times
and in such amounts as the Board of Managers shall determine.

4.2          Liquidating Distributions.  Notwithstanding the provisions of
Section 4.1, cash or property of the Company available for distribution
upon the Dissolution of the Company (including cash or property received upon
the sale or other disposition of assets in anticipation of or in connection
with such Dissolution) shall be distributed in accordance with the provisions
of Section 8.3.

4.3          Limitation on Distributions.  No distribution shall be made to a Member
pursuant to Section 4.1 if and to the extent that such distribution would: (i)
create a negative balance in the Updated Capital Account of such Member or
increase the amount by which such Updated Capital Account balance is negative;
(ii) cause the Company to be insolvent; (iii) render the Member liable for a
return of such distribution under applicable law; or (iv) result in a Member
receiving rights with respect to ADW Content Rights, Point to Point Content
Rights or Rebate Content Rights it did not contribute to the Company.

4.4          No Right to Distributions of Property.  Except as otherwise provided in this
Agreement, a Member shall have no right to require that distributions to such
Member consist of any specific item or items of property.

ARTICLE 5

MANAGEMENT AND ADMINISTRATION

5.1          Management Powers and Authority of the Board of
Managers. 
Except as otherwise specifically provided in this Agreement:

[a]           The
Company and its business shall be managed, controlled and operated exclusively
by the Board of Managers consisting of four (4) Managers, who shall be the “managers”
of the Company within the meaning Section 18-101(10) of the Act and shall have
all of the powers and authority in respect of the Company permitted to managers
under the Act;

 12
 

[b]           CDI
Sub and MEC Sub shall each appoint two (2) Managers to serve on the Board of
Managers who shall be employees of CDI and MEC, respectively; provided that no
such appointee may be the chairman of either CDI or MEC.

[c]           CDI
Sub shall have the right to designate the first chairperson who shall serve
until December 31, 2008.  After December
31, 2008, the chairperson of the Board of Managers shall rotate annually
between a Manager designated by CDI Sub and a Manager designated by MEC Sub,
unless the party with the right to designate the chairperson agrees
otherwise.  The chairperson shall preside
at meetings of the Board of Managers and Members, but the chairperson will be a
non-executive position and will not have any operational or management duties.

5.2          Wagering Security and Integrity Standards.  Within sixty (60) days of formation, the
management of the Company will provide to the Board of Managers for review and
approval the Wagering Security and Integrity Standards.  The Wagering Security and Integrity Standards
will be revisited and updated by the Board of Managers on an annual basis.

5.3          Management and Operations.  The Company shall generally conduct its
business as follows:

[a]           All
actions taken and decisions made by the Board of Managers must be approved
unanimously by all members of the Board of Managers.  In taking such actions and making such
decisions, the Board of Managers and each member thereof shall act in their
sole and absolute discretion, except as otherwise expressly stated in this
Agreement.  The Board of Managers shall
make all decisions that are customarily made by a board of directors of a
corporation and shall authorize the management of the Company to operate the
Company in accordance with the terms set forth in this Agreement.

[b]           The
Board of Managers shall each year approve an annual operating budget and annual
capital budget (the 2007 annual budgets will commence as of the date of this
Agreement, with calendar year budgets thereafter).  Any modification to the annual operating
budget or annual capital budget must be approved by the Board of Managers.  The initial annual budget is set forth as
Schedules 1 and 1-1 of the Business Plan. 
The capital budget shall be agreed to by the Members within sixty (60)
days of the execution of this Agreement and set forth as Schedule 1-2 of the
Business Plan.

[c]           As
an agent of HRTV Entity, the Company shall use its Best Efforts to collect fees
to help cover the costs of producing and distributing television and other
video (the “Television Fees”) with respect to the ADW Content Rights, Point to
Point Content Rights and Rebate Content Rights it sublicenses to Third Parties
as specifically set forth in this Agreement or the Business Plan or as
otherwise agreed by the Board of Managers. 
In connection with approving the annual budgets, the Board of Managers
after consultation with HRTV Entity shall determine the percentage amount to be
charged as Television Fees to be calculated as a percentage of handle or takeout
or otherwise.  The Television Fees shall
be revisited and updated on an annual basis by the Board of Managers.  The Television Fees for 2007 (for all race
meets commencing after the date hereof but on or prior to November 15, 2007)
are addressed or set 

 13
 

forth on Schedules 2, 3 and 4 of the Business Plan.  The Television Fees will be collected by the
Company on behalf of HRTV Entity and paid over to HRTV Entity.

[d]           The
Board of Managers must approve any modifications to the Wagering Security and
Integrity Standards.

[e]           The
Board of Managers must approve any modifications to the Territory Point to
Point Distribution Policies and Procedures, the Territory ADW Distribution
Policies and Procedures, the Rebate Distribution Policies and Procedures, the Territory
Point to Point Acquisition Policies and Procedures, the Territory ADW
Acquisition Policies and Procedures, the Territory Rebate Acquisition Policies
and Procedures, the Territory Television Acquisition Policies and Procedures,
the Non-Territory Policies and Procedures, and the Policies and Procedures for
Acquiring Territory Content for use Outside the Territory, as set forth in
Schedules 2-10 of the Business Plan.

[f]            The
approval of the Board of Managers shall be required for (i) the appointment of
the Chief Executive Officer (who may be the same as the chief executive officer
of HRTV Entity), the Chief Financial Officer and any employee or consultant who
will earn total compensation in a year in excess of $50,000, whether hired by
the Company or seconded to the Company, and (ii) any increase in Employee Costs
for any employee, whether such employee has been seconded to or is employed by
the Company.

[g]           The
approval of the Board of Managers shall be required for any contract obligating
the Company in an amount greater than $50,000 or without a ninety (90) day
right of termination, in each case other than contracts which are consistent
with the Territory Point to Point Distribution Policies and Procedures, the
Territory ADW Distribution Policies and Procedures, the Rebate Distribution
Policies and Procedures, the Territory Point to Point Acquisition Policies and
Procedures, the Territory ADW Acquisition Policies and Procedures, the
Territory Rebate Acquisition Policies and Procedures, the Territory Television
Acquisition Policies and Procedures, the Non-Territory Policies and Procedures,
and the Policies and Procedures for Acquiring Territory Content for use Outside
the Territory.

[h]           The
approval of the Board of Managers shall be required for the standard form
simulcast agreement used by the Company and any simulcast contract that is not
consistent with the Territory Point to Point Distribution Policies and
Procedures, the Territory ADW Distribution Policies and Procedures, the Rebate
Distribution Policies and Procedures, the Territory Point to Point Acquisition
Policies and Procedures, the Territory ADW Acquisition Policies and Procedures,
the Territory Rebate Acquisition Policies and Procedures, the Territory
Television Acquisition Policies and Procedures, the Non-Territory Policies and
Procedures, and the Policies and Procedures for Acquiring Territory Content for
use Outside the Territory.

[i]            All
simulcast import agreements for ADW Import Content, Point to Point Import
Content and Rebate Import Content, and simulcast export agreements for ADW
Export Content, Point to Point Export Content and Rebate Export Content entered
into pursuant to this Agreement shall not be executed by the Company on its own
behalf, but rather shall be executed by the Company as agent for the applicable
CDI Track(s), MEC Track(s), XpressBet and/or CDI ADW.  All rights and obligations under the
simulcast import agreements and simulcast export 

 14
 

agreements entered into pursuant to this Agreement shall be rights and
obligations of the applicable CDI Track(s), MEC Track(s), XpressBet and/or
CDI/ADW, and shall not be rights or obligations of the Company.

[j]            The
approval of the Board of Managers shall be required for any expansion of the
scope of the Business of the Company.

[k]           The
approval of the Board of Managers shall be required for the initiation or
settlement of any litigation.

[l]            The
approval of the Board of Managers shall be required for any acquisitions or
dispositions of significant assets or businesses or the formation of any
partnerships or joint ventures.

5.4          Content Rights Pricing.  Subject to applicable regulatory approvals,
approvals that may be required from the relevant party’s horsemen’s group and
contractual obligations existing as of the date hereof as set forth on Schedule
C, the pricing parameters set forth in Schedules 2, 3, 4, 5, 6, and 7 of the
Business Plan shall be used to determine pricing for (i) CDI and MEC ADW
Content Rights, CDI and MEC Point to Point Content Rights and CDI and MEC
Rebate Content Rights provided to Third Parties worldwide for ADW, Point to
Point Simulcasting and Rebating worldwide and (ii) ADW Content Rights, Point to
Point Content Rights, and Rebate Content Rights acquired from Third Parties
worldwide for ADW, Point to Point Simulcasting, and Rebating by CDI and MEC
worldwide.

5.5          Simulcast Production.  By September 30, 2007, the management of the
Company will deliver to the Board of Managers for review and approval a plan to
improve the simulcast production of CDI and MEC ADW Content Rights, Point to
Point Content Rights and Rebate Content Rights including through the pooling of
resources, equipment and personnel into the Company.

5.6          Host and Related Fees.

[a]           The
Company shall not be responsible for paying host, source market, or sub-licensing
fees with respect to ADW Content Rights, Point to Point Content Rights, and
Rebate Content Rights it acquires for CDI or MEC.  Notwithstanding the foregoing, the Company,
in connection with the settlement functions described in Section 5.18, may act
as agent for CDI, MEC or their respective racetracks and/or advance deposit
wagering operations in connection with the payment or collection of such fees.

[b]           The
Company shall promptly pay to CDI and MEC, as applicable, any host and source
market fees received by the Company with respect to their respective ADW Export
Content, Point to Point Export Content and Rebate Export Content.

5.7          Management Team.  The Company shall have a full time management
team that is separate from its Members headed by a Chief Executive Officer and
such other officers as determined by the Board of Managers and shall operate in
accordance with the parameters set by the Board of Managers.  In addition to executing the tasks identified
above in Section 1.3(b)(1) 

 15
 

through (13), the Company’s management team shall also be responsible
for such other tasks as determined by the Board of Managers.

5.8          Managers’ Power to Bind the Company.

[a]           Notwithstanding
any provision of this Agreement to the contrary, any contract, agreement, deed,
lease, note or other document or instrument executed on behalf of the Company
by the Chief Executive Officer and another officer of the Company shall be
deemed to have been duly executed; no Member’s or Manager’s signature shall be
required in connection with the foregoing and Third Parties shall be entitled
to rely upon the aforesaid power to bind the Company without otherwise
ascertaining that the requirements of this Agreement have been satisfied.

[b]           The
Company is authorized to file with any governmental entity, on behalf of itself
and the Members, a certificate or similar instrument that evidences the power
of the Chief Executive Officer and another officer to bind the Company as set
forth in the preceding paragraph (a).

5.9          Duties to the Company.

[a]           A
Member shall not utilize any assets of the Company other than for the exclusive
benefit of the Company, a purpose reasonably related to protecting such Member’s
Interest (in a manner not inconsistent with the interests of the Company), or
to comply with the requirements of applicable law.

[b]           The
Managers shall devote to the Company such time, effort and attention as shall
be reasonably necessary to ensure that the Company and its business are
diligently and prudently managed.

5.10        Officers.  The Board of Managers may appoint, replace
and remove, from time to time, Company officers, who shall otherwise serve in
office until the next succeeding December 31 and to whom the Board of Managers
shall delegate such powers, authority and duties in respect of the Company as
the Board of Managers shall determine consistent with this Agreement.

5.11        Manager and Member Expenses.

[a]           General.  Except as otherwise provided in Section 2.10
or this Section 5.11, neither CDI, MEC nor any Member shall be reimbursed for expenses
incurred on behalf of, or otherwise in connection with, the Company.  Any reimbursement paid by a third party for
expenses actually reimbursed by the Company shall be retained by (or paid over
by the recipient thereof to) the Company.

[b]           Managers.  Managers shall be reimbursed for expenses
incurred on behalf of the Company only with the approval of the Board of
Managers.

 16
 

5.12        Tax Matters Partner.

[a]           General.  The Tax Matters Partner is hereby designated
the “tax matters partner” of the Company within the meaning of
Section 6231(a)(7) of the Code. 
Except to the extent specifically provided in the Code or the Treasury
Regulations (or the laws of other relevant taxing jurisdictions), the Tax
Matters Partner (after receiving the approval of the Board of Managers) shall
have exclusive authority to act for or on behalf of the Company with regard to
tax matters, including the authority to make (or decline to make) any available
tax elections.

[b]           Partnership Classification for Tax Purposes.  Except to the extent otherwise required by
applicable law (disregarding for this purpose any requirement that can be
avoided through the filing of an election or similar administrative procedure),
the Tax Matters Partner shall cause the Company to take the position that the
Company is a “partnership” for Federal, State and local income tax purposes and
shall cause to be filed with the appropriate tax authorities any elections or
other documents necessary to give due legal effect to such position.  A Member shall not file (and represents that
it has not filed) any income tax election or other document that is
inconsistent with the Company’s position regarding its classification as a “partnership”
for applicable Federal, State and local income tax purposes.

[c]           Notice of Inconsistent Treatment of Company
Item.  No Member shall
file a notice with the United States Internal Revenue Service under
Section 6222(b) of the Code in connection with such Member’s intention to
treat an item on such Member’s Federal income tax return in a manner which is
inconsistent with the treatment of such item on the Company’s Federal income
tax return unless such Member has, not less than thirty (30) days prior to the
filing of such notice, provided the Tax Matters Partner with a copy of the notice
and thereafter in a timely manner provides such other information related
thereto as the Tax Matters Partner shall reasonably request.

[d]           Notice of Settlement Agreement.  Any Member entering into a settlement
agreement with the United States Department of the Treasury which concerns a
Company item shall notify the Tax Matters Partner of such settlement agreement
and its terms within 60 days after the date thereof.

5.13        Records and Financial Statements; Compliance with
Laws

[a]           The
Company shall maintain true and proper books, records, reports, and accounts in
accordance with generally accepted principles and practices of accounting
consistently applied, in which shall be entered all transactions of the
Company.  The Company shall also maintain
all schedules referenced in this Agreement and shall update such schedules
promptly upon receipt of new information relating thereto, subject to the
approval of the Board of Managers. 
Copies of such books, records, reports, accounts and schedules shall be
located at the Principal Office and shall be available to any Member for
inspection and copying, upon at least two business days’ notice, during
reasonable business hours; provided, however, that items of highly confidential
Company information may be withheld from a Member to the extent reasonably
necessary to protect Company interests as determined by the Board of Managers
in their reasonable discretion.

 17
 

[b]           Within
forty-five (45) days after the end of each Fiscal Year, the Company shall
furnish to each Member the following, which shall be audited by a firm of
independent certified public accountants approved by the Board of Managers: (i)
a balance sheet of the Company, (ii) an income statement of the Company, (iii)
a statement of cash flows of the Company, and (iv) the Capital Account balance
of each Member.  In addition, within
sixty (60) days after the end of each Fiscal Year, the Company shall supply all
information reasonably necessary to enable the Members to prepare their Federal
and State income tax returns and (upon request therefor) to comply with other
reporting requirements imposed by law. 
Within twenty (20) days after the end of each quarter, the Company shall
furnish to each Member the following, which shall be unaudited but prepared in
accordance with generally accepted accounting principles and practices
consistently applied: (i) a balance sheet of the Company, (ii) an income
statement of the Company, (iii) a statement of cash flows of the Company, and
(iv) the Capital Account balance of each Member.

[c]           The
Company shall conduct its Business in compliance with applicable laws and shall
provide such information, and shall grant to the Members and their attorneys,
accountants and other representatives such access to the books, records, other
information and personnel of the Company, as is reasonably necessary for the
Members to comply with applicable laws, including without limitation, the
securities laws in general and the Sarbanes-Oxley Act of 2002 in particular.

5.14        Valuation of Company Assets and Interests.

[a]           General.  In the event that the fair market value of a
Company asset or Interest must be determined for purposes of this Agreement,
such value shall be determined by the Board of Managers, acting in good faith.

[b]           Dispute.  In the event that the Board of Managers is
unable to determine such value, the matter shall be submitted for determination
to a qualified Third Party valuation expert acceptable to the Board of
Managers.

[c]           Binding Effect.  The value of any Company asset or Interest
determined pursuant to this Section 5.14 shall be binding upon the Company and
the Members and shall establish the “Fair Market Value” of such asset or
Interest for all purposes under this Agreement.

5.15        Removal or Resignation of Managers.   A Manager may be removed for any reason upon
the notice of such removal by the Member appointing such Manager and may
voluntarily resign as a Manager upon providing thirty (30) days advance written
notice of such resignation to the Board of Managers.

5.16        Vacancies.  A vacancy in the Board of Managers caused by
the removal, resignation or Permanent Incapacity of a Manager shall be filled
by the Member who originally appointed the Manager.

5.17        Meetings of the Board of Managers.

[a]           Meetings
of the Board of Managers may be called by any Manager.  Any such meeting shall be held at a
reasonable time and place on not less than two (2) days notice, 

 18
 

which notice shall include an agenda of items to be considered at the
meeting.  Reasonable accommodation shall
be made for any Manager who elects to attend a meeting via telephonic or
similar means pursuant to which all Persons attending the meeting can hear one
another.  Minutes of the meeting shall be
prepared at the direction of the Board of Managers.

[b]           Any
action of the Board of Managers may be taken by written consent of all the
Managers.

5.18        Settlement and Collections.
Within one hundred twenty (120) days of formation of the Company, the
management of the Company will provide to the Board of Managers for review a
proposal pursuant to which the Company will provide settlement services to CDI,
MEC and other members of the pari-mutuel industry.  After review and consideration of the
proposal, the Board of Managers shall determine whether or not to accept the
proposal.

ARTICLE 6

REPRESENTATIONS, WARRANTIES AND COVENANTS

6.1          Wagering Security and Integrity Standards.  CDI represents and warrants that it will
cause CDI ADW and the CDI Tracks to comply with the Wagering Security and
Integrity Standards within ninety (90) days after approval of the Wagering
Security and Integrity Standards by the Board of Managers.  MEC represents and warrants that it will
cause XpressBet and the MEC Tracks to comply with the Wagering Security and
Integrity Standards within ninety (90) days after approval of the Wagering
Security and Integrity Standards by the Board of Managers.

6.2          Other Ventures and Activities.

[a]           Each
Member acknowledges that the other Members and their respective Affiliates are
involved in other business, financial, investment and professional activities
other than the Business and activities within the scope of Section 1.3(b).  Except as specifically set forth in Section
5.9: (i) neither the Company, CDI, MEC nor the Members shall have any right
by virtue of this Agreement or the existence of the Company in and to such
ventures or activities or to the income or profits derived therefrom; and
(ii) the Members and their Affiliates shall have no duty or obligation to
make any reports to the Members or the Company with respect to any such ventures
or activities.

[b]           The
Members acknowledge that a Member may be prohibited from taking action for the
benefit of the Company: (i) due to confidential information acquired or
obligations incurred in connection with a permitted outside activity under this
Section 6.2; or (ii) in connection with activities undertaken prior
to the date of such Member’s admission to the Company.  No Person shall be liable to the Company,
CDI, MEC or any Member for any failure to act for the benefit of the Company in
consequence of a prohibition described in the preceding sentence.

6.3          Confidentiality.  All information provided to the Members or
their Affiliates by or on behalf of the Company or a Member concerning the
business or assets of the Company or any Member or its Affiliates in connection
with the activity of the Company shall be deemed strictly confidential and
shall not, without the prior consent of the Board of Managers, be 

 19
 

(i) disclosed to any Person (other than a Member, CDI or MEC) or
(ii) used by a Member other than for a Company purpose or a purpose
reasonably related to protecting such Member’s Interest or the business of such
Member (in either case in a manner not inconsistent with the interests of the
Company).  The Board of Managers consent
to the disclosure by each Member of Company information to such Member’s
accountants, attorneys and similar advisors bound by a duty of
confidentiality.  The foregoing
requirements of this Section 6.3 shall not apply to a Member with regard
to any information that is currently or becomes: (i) required to be
disclosed pursuant to applicable law, including the rules and regulations of
the Securities and Exchange Commission or the rules of Nasdaq, the Toronto
Stock Market or any other stock market on which securities of a Member, CDI or
MEC are listed (but only to the extent of such requirement); (ii) required
to be disclosed in order to protect such Member’s Interest (but only to the
extent of such requirement and only after consultation with the Board of
Managers); (iii) publicly known or available in the absence of any
improper or unlawful action on the part of such Member; or (iv) known or
available to such Member other than through or on behalf of the Company or a
Member.  For purposes of this
Section 6.3, Company information provided by one Member to another shall
be deemed to have been provided on behalf of the Company.  The Company and the Board of Managers shall
similarly refrain from disclosing any confidential information furnished by a
Member pursuant to this Section 6.3.

6.4          Disclosures.  Each Member shall furnish to the Company upon
request any information with respect to such Member reasonably determined by
the Board of Managers to be necessary or convenient for the formation,
operation, Dissolution, winding-up, or Termination of the Company, and any such
information which is confidential shall be treated as such by the Company and
the Members.

6.5          ADW Licenses.  Recognizing that some states require an ADW
platform to be licensed in order to process or accept wagers from residents of
such state and that some states require an ADW platform to enter into a
contract with a racetrack and/or horsemen’s group within such state in order to
obtain a license, CDI and MEC shall each use its Best Efforts to cooperate such
that such licenses for CDI ADW and XpressBet are obtained and, if reasonably
necessary, its Controlled racetracks shall serve as “host” tracks for the other’s
ADW platform.

6.6          Racing Cooperatives.  MEC shall cause the MEC Tracks to withdraw
from any racing cooperative in which any MEC Track is a member at the earliest
practical date following execution of this Agreement and in any event by no
later than June 30, 2007, provided, however, with respect to the Meadows no
later than seven (7) months after the date of this Agreement.  CDI shall cause the CDI Tracks to withdraw
from any racing cooperative in which any CDI Track is a member at the earliest
practical date following execution of this Agreement and in any event by no
later than June 30, 2007.

6.7          Rebate Platform.  CDI and MEC shall cooperate to develop a plan
on or before September 30, 2007 to jointly enter Rebating during 2007.  CDI and MEC shall not conduct Rebating
individually during 2007 without prior approval of the other party.

6.8          Fee Payment.  Each of CDI and MEC acknowledges that it is
directly responsible for and shall pay directly its proportion of any host,
source market or sublicensing fees with respect to ADW Content Rights, Point to
Point Content Rights or Rebate Content Rights 

 20
 

acquired by the Company for CDI or MEC, respectively, and shall
indemnify and hold harmless the Company from and against any damage,
deficiency, loss, action, judgment, cost or expense (including reasonable
attorneys’ fees) arising out of or related to such fees.  For greater clarity, the proportion of host,
source market or sub-licensing fees paid by CDI and MEC will be determined by
the amount of handle wagered through CDI Outlets and MEC Outlets rather than by
CDI and MEC’s Allocation Percentages.

6.9          Florida Alternative Gaming.  MEC covenants that it will not fund or
otherwise support, directly or indirectly, any organization or initiative in
opposition to an Article X Referendum. 
MEC further covenants that it will not make any public statement in
opposition to an Article X Referendum. 
The term “Article X Referendum” shall mean a county-wide referendum
conducted in Miami-Dade County, Florida in accordance with Article X, Section
23 of the Florida Constitution seeking to authorize slot machines at Calder
Race Course and such other pari-mutuel facilities as conducted live racing or
games within Miami-Dade County in calendar years 2002 and 2003.  The covenants of MEC set forth in this
Section 6.9 shall terminate immediately if: (a) Calder Race Course ceases to be
a CDI Track, or CDI or any Affiliate of CDI enters into a definitive sale or
other disposition agreement (including without limitation any option agreement)
which if consummated or exercised will result in Calder Race Course ceasing to
be a CDI Track, or (b) this Agreement terminates for any reason.

6.10        Florida Legislation.  CDI and MEC shall cooperate in proposing a
single bill to the 2007 Florida legislature concerning horse racing industry
issues in the State of Florida that seeks to accomplish the following:  [i] permit thoroughbred horse race tracks
which act as the Hub Distributor to contract with and distribute Point to Point
Content Rights to other pari-mutuel wagering facilities in South Florida ( i.e.
Dade and Broward Counties) including all horse race tracks on a year round
basis, [ii] permit thoroughbred horse race tracks in Florida to conduct live
racing after 7:00 p.m. local Florida time, and [iii] permit the operation of
card rooms at pari-mutuel wagering facilities in Florida including all horse
race tracks on all days, including days on which live pari-mutuel races or
games do not take place and at all times of the day.

6.11        California Import Covenant.

[a]           CDI
and MEC will work together and use Best Efforts to change the existing
California horse racing simulcasting law to eliminate the existing restriction
on the number of simulcast horse races that can be imported into California.

[b]           When
MEC has the two race track votes (Northern and Southern California) regarding
import simulcasting of horse races under California law, (x) MEC will
coordinate with the Company and use its Best Efforts to cause the importing
into California of Point to Point Export Content consisting of a number of
horse races greater than was imported in 2006 (or in the case of Fair Grounds,
in 2005) (prioritized based on the Host Track Groups in Schedule 12 of the
Business Plan but with equal priority within each such Host Track Group), and
(y) MEC will import into California no less than the number of CDI horse races
imported into California during the same period in 2006 (or in the case of Fair
Grounds, in 2005), provided in either case of (x) and (y) there is no
significant change in the race dates, post times or quality of such races.

 21
 

[c]           Schedule
13 of the Business Plan also sets forth certain other policies and procedures
of the Company related to California horse racing.  For purposes of this Section 6.11, the B and
B+ Host Track Groups (as set forth on Schedule 12 of the Business Plan) will be
considered a single Host Track Group.

6.12        Certain Member Representations and Covenants.

[a]           Each
Member hereby represents that, with respect to its Interest:  (i) it is acquiring or has acquired such
Interest for purposes of investment only, for its own account (or a trust account
if such Member is a trustee), and not with a view to resell or distribute the
same or any part thereof; and (ii) no other Person has any interest in
such Interest or in the rights of such Member under this Agreement (other than
a shareholder or other owner of an interest in the Member by virtue thereof or
a spouse having a community property or similar interest under applicable
law.)  Each Member also represents that
it has the business and financial knowledge and experience necessary to acquire
its Interest on the terms contemplated herein and that it has the ability to
bear the risks of such investment (including the risk of sustaining a complete
loss of all its capital contributions) without the need for the investor
protections provided by the registration requirements of the Securities Act.

[b]           Except
to the extent set forth in a notice provided to the Company, each Member hereby
represents that allocations, distributions and other payments to such Member by
the Company are not subject to tax withholding under the Code.  Each Member shall promptly notify the Company
in the event that any allocation, distribution or other payment previously
exempt from such withholding becomes or is anticipated to become subject
thereto.

[c]           Each
Member acknowledges that certain provisions of this Agreement (including
Sections 6.2 and 9.1) have the effect of limiting the fiduciary duties or
obligations of some or all Members to the Company and the other Members under
applicable law.  Each Member hereby
represents that it has carefully considered and fully understands each such
provision and has made an informed decision to consent thereto.

[d]           Each
Member hereby represents that: (i) it is a corporation or limited liability
company validly existing and in good standing under the laws of its
jurisdiction of incorporation or formation and has all requisite power and
authority to own, lease and use its assets and carry on its business as and in
the places where such assets are owned, leased or used or such business is conducted;
(ii) it has full corporate or limited liability company power and authority to
enter into this Agreement and consummate the transactions contemplated hereby
and this Agreement and the other documents contemplated by this Agreement have
been duly authorized by all requisite corporate or limited liability company
action of such Member, have been duly executed and delivered by such Member and
constitute the valid and binding obligation of such Member enforceable in
accordance with their terms; and (iii) it is and shall be during the Term in
compliance with all material laws, statutes, rules or regulations applicable to
such Member or its assets or business and it shall not be under indictment or
grand jury subpoena with respect to any criminal investigation pursuant to
which it has been identified as a target.

 22
 

6.13        Avoidance of Publicly Traded Partnership Status.

[a]           Except
to the extent otherwise set forth in a notice provided to the Company, each
Member hereby represents that at least one of the following statements with
respect to such Member is true and will continue to be true throughout the
period during which such Member holds an Interest:

[i]            Such Member is not a partnership,
grantor trust or S corporation for Federal income tax purposes;

[ii]           With regard to each Beneficial Owner
of such Member, the principal purposes for the establishment and/or use of such
Member do not include avoidance of the one hundred (100) partner limitation set
forth in Treasury Regulation Section 1.7704-1(h)(1)(ii); or

[iii]          With regard to each Beneficial Owner
of such Member, not more than 75 percent of the value of such Beneficial Owner’s
interest in such Member is attributable to such Member’s Interest.

[b]           In
the event that a Member’s representation pursuant to Section 6.13(a) shall at
any time fail to be true, or the information set forth in a notice provided by
such Member to the Company pursuant to Section 6.13(a) shall change, such
Member shall promptly (and in any event within 10 days) notify the Company of
such fact and shall promptly thereafter deliver to the Company any information
regarding such Member and its Beneficial Owners reasonably requested by counsel
to the Company for purposes of determining the number of the Company’s “partners”
within the meaning of Treasury Regulation Section 1.7704-1(h).

[c]           Each
Member acknowledges that the Board of Managers will rely upon such Member’s
representations, notices and other information as set forth in this Section
6.13 for purposes of determining whether proposed Transfers of Interests may
cause the Company to be treated as a “publicly traded partnership” within the
meaning of Section 7704 of the Code and that failure by a Member to satisfy its
obligations under this Section 6.13 may cause the Company to be treated as a corporation
for Federal, State or local tax purposes.

6.14        Acquired ADW Platform.  If CDI or MEC directly or indirectly acquires
5% or more of the ownership interest of an ADW platform or business, any ADW
Content Rights, Point to Point Content Rights, Rebate Content Rights or
Television Rights owned or licensed by the acquired ADW platform or business
(collectively, the “Acquired Rights”) shall be licensed or transferred to the
Company under the terms and conditions of this Agreement such that the Acquired
Rights would be available to both CDI and MEC (and HRTV Entity in the case of
Television Rights) under the same terms and conditions.  If all or any portion of the Acquired Rights
may not be so licensed or transferred to the Company because of contractual
restrictions binding on the acquired ADW platform or business, the acquiring
party shall cause the acquired ADW platform or business, and CDI ADW or
XpressBet, as applicable, to (i) not process or accept any wagers on the
applicable Acquired Rights and (ii) not license or transfer the applicable
Acquired Rights to any Third Party, in each case, until such contractual
restrictions have been eliminated and the Acquired Rights licensed or
transferred to Company.

 23
 

6.15        Permitted Communications.  Neither CDI, CDI Sub, MEC nor MEC Sub shall
make any public statement(s) without prior approval of the other parties with
regard to (i) the Company, or (ii) any other party in connection with any
business venture or proposed business venture between the parties, except as
may be required by law or regulation or the disclosure rules and regulations of
the SEC, NASDAQ or the Toronto Stock Exchange.

6.16        ADW Name.  Without
the prior approval of the Board of Managers, which consent may be withheld in
the Board of Managers’ sole and absolute discretion, neither CDI nor MEC shall
operate its advance deposit wagering business under a name similar to the name
under which the Company or HRTV Entity is now or hereafter operated.  In addition, MEC covenants that on or before
April 27, 2007 MEC will cause Horse Racing TV, Inc. to change its name to a
name that is not similar to “Horse Racing TV” or “HRTV”.

6.17        CDI Guaranty; MEC Guaranty.

[a]           CDI
hereby absolutely and unconditionally guarantees to the Company, MEC and MEC
Sub, their respective successors and permitted assigns, the due prompt and
punctual performance of all obligations of, and the prompt payment when due at
all times hereafter of any and all amounts owed by, CDI Sub under this
Agreement (including any extensions, modifications and amendments hereof) to
the Company, MEC or MEC Sub (the “CDI Sub Obligations”).  Each of the Company, MEC and MEC Sub shall
have the right of immediate recourse against CDI for full and immediate
performance or payment of the CDI Sub Obligations at any time after the CDI Sub
Obligations, or any part thereof, have not been performed or paid in full when
due.  This is a guaranty of payment, not
of collection, and CDI therefore agrees and acknowledges that the Company, MEC
and MEC Sub shall not be obligated, prior to seeking recourse against or
receiving payment from CDI, to take any of the following actions (although any
of the Company, MEC or MEC Sub may, at its option, do so in whole or in part)
all of which CDI hereby unconditionally waives: 
[i] take any steps whatsoever to collect from CDI Sub or file any claim
of any kind against CDI Sub, take any steps whatsoever to accept, perfect a
security interest in, or foreclosure or realize on, collateral security, if
any, securing or for payment of the CDI Sub Obligations or any guaranty of the
CDI Sub Obligations; or [ii] in any other respect exercise diligence in
collecting or attempting to collect any of the CDI Sub Obligations by any
means.  CDI unconditionally and
irrevocably waives each and every defense which, under principles of guaranty
or surety law, would operate to impair or diminish the liability of CDI to the
Company, MEC or MEC Sub hereunder.  CDI
unconditionally waives: [i] any subrogation to the rights of the Company, MEC
or MEC Sub against CDI Sub until all of the CDI Sub Obligations have been
satisfied in full; and [ii] any acceptance of this guaranty.  This guaranty by CDI is personal to the
Company, MEC and MEC Sub and cannot be assigned without the express written
approval of CDI, which may be withheld in CDI’s sole discretion.

[b]           MEC
hereby absolutely and unconditionally guarantees to the Company, CDI and CDI
Sub, their respective successors and permitted assigns, the due prompt and
punctual performance of all obligations of, and the prompt payment when due at
all times hereafter of any and all amounts owed by, MEC Sub under this
Agreement (including any extensions, modifications and amendments hereof) to
the Company, CDI or CDI Sub (the “MEC Sub Obligations”).  Each of the Company, CDI and CDI Sub shall
have the right of immediate recourse against MEC for full and immediate
performance or payment of the MEC Sub 

 24
 

Obligations at any time after the MEC Sub Obligations,
or any part thereof, have not been performed or paid in full when due.  This is a guaranty of payment, not of
collection, and MEC therefore agrees and acknowledges that the Company, CDI and
CDI Sub shall not be obligated, prior to seeking recourse against or receiving
payment from MEC, to take any of the following actions (although any of the
Company, CDI or CDI Sub may, at its option, do so in whole or in part) all of
which MEC hereby unconditionally waives: 
[i] take any steps whatsoever to collect from MEC Sub or file any claim
of any kind against MEC Sub, take any steps whatsoever to accept, perfect a
security interest in, or foreclose or realize on, collateral security, if any,
securing or for payment of the MEC Sub Obligations or any guaranty of the MEC
Sub Obligations; or [ii] in any other respect exercise diligence in collecting
or attempting to collect any of the MEC Sub Obligations by any means.  MEC unconditionally and irrevocably waives
each and every defense which, under principles of guaranty or surety law, would
operate to impair or diminish the liability of MEC to the Company, CDI or CDI
Sub hereunder.  MEC unconditionally
waives:  [i] any subrogation to the
rights of the Company, CDI or CDI Sub against MEC Sub until all of the MEC Sub
Obligations have been satisfied in full; and [ii] any acceptance of this guaranty.  This guaranty by MEC is personal to the
Company, CDI and CDI Sub and cannot be assigned without the express written
approval of MEC, which may be withheld in MEC’s sole discretion.

6.18        Termination.  Each of CDI and MEC agrees to serve notice to
terminate any existing agreement related to ADW Export Content set forth on
Schedule C that has provisions allowing termination by CDI or MEC upon thirty
(30) days notice, at the earliest possible date but in any case by no later
than May 5, 2007.

6.19        Breeders’ Cup.  In the event that any CDI Track or any MEC
Track is host to the Breeders’ Cup Championship Day races, CDI and MEC, as the
case may be, shall cause the applicable CDI Track or MEC Track to include in
its agreement with Breeders’ Cup that the ADW Content Rights, Point to Point
Content Rights and Rebate Content Rights for the Breeders’ Cup Championship Day
races will be licensed and made available to all CDI Outlets and all MEC
Outlets at pricing no less advantageous to the CDI or MEC Outlets than the
pricing provided to a comparable distribution channel of any other Third Party.

6.20        Ownership.  Each of CDI and MEC agrees to directly or
indirectly beneficially own all of the ownership interests in CDI Sub and MEC
Sub, respectively.

ARTICLE 7

TRANSFERS AND WITHDRAWALS

7.1          Transfers of Interests.

[a]           A
Member shall not Transfer all or any portion of its Interest without the prior
consent of the Board of Managers, which consent may be withheld in the Board of
Managers’ sole and absolute discretion.

[b]           Unless
admitted as a Member in accordance with the provisions of this Agreement, the
transferee of all or any portion of an Interest shall not be a Member, but
instead shall be subject to the provisions of Section 7.4.

 25
 

[c]           In
connection with each Transfer of an Interest: 
(i) the transferor and transferee shall execute and deliver to the
Company a written instrument of transfer in form and substance reasonably
satisfactory to the Board of Managers and (ii) the transferee shall execute and
deliver to the Company a written instrument pursuant to which the transferee
assumes all obligations of the transferor associated with the transferred
Interest and otherwise agrees to comply with the terms and provisions of this
Agreement.

[d]           In
connection with each Transfer, the transferring Member shall provide to the
Company either: (i) an opinion of counsel to such transferring Member
satisfactory in form and substance to counsel for the Company with respect to
the matters referred to in Section 7.1(j); or (ii) sufficient information
to allow counsel to the Company to make a determination that the proposed
Transfer will not result in any of the consequences referred to in
Section 7.1(j).

[e]           In
the event of any Transfer which results in multiple ownership of a Member’s
Interest, the Board of Managers may require that one or more trustees or
nominees be designated to represent all or a portion of the Interest
transferred for the purpose of receiving all notices which may be given and all
payments which may be made under this Agreement and for the purpose of
exercising all rights of the transferees under this Agreement.

[f]            In
the event a Member Transfers (or proposes to Transfer) all or any portion of
its Interest, all reasonable legal and other out-of-pocket expenses incurred by
the Company on account of the Transfer (or proposed Transfer) shall be paid by
such Member.  Following the effective
date of any Transfer, the transferor and transferee shall be jointly and
severally liable for all such expenses.

[g]           Except
as otherwise specifically provided in this Agreement or with the consent of the
Board of Managers, all economic attributes of a transferor Member’s Interest
(such as the Member’s Capital Commitment, Capital Contribution, Allocation
Percentage, Capital Account balance, and obligation to return distributions or
make other payments to the Company) shall carry over to a transferee in
proportion to the percentage of the Interest so transferred.

[h]           Once
all other conditions to the Transfer of a Member’s Interest have been
satisfied, such Transfer shall be effective as of: (x) the Close of Business on
the last day of the next ending fiscal quarter of the Company; or (y) such
other time as shall be jointly selected by the Board of Managers, the
transferor and the transferee.

[i]            Notwithstanding
any provision of this Agreement to the contrary, a Member or Withdrawn Member
shall not, by virtue of having Transferred all or any portion of its Interest,
be relieved of any obligations arising under this Agreement; provided, however,
that a Member or Withdrawn Member shall be relieved of such obligations to the
extent that: (x) such relief is approved by the Board of Managers (which
approval may be withheld by the Board of Managers in their sole and absolute
discretion); and (y) such obligations are assumed by another Member or Person
admitted to the Company as a Substitute Member.

 26
 

[j]            Notwithstanding
any provision of this Agreement to the contrary, there shall be no Transfer of
an Interest unless such Transfer will not: (i) give rise to a requirement
that the Company register under the Securities Act; (ii) otherwise subject
the Company, a Member, or any equityholder, member, director, officer, or
employee of a Member to additional regulatory requirements under Federal, State,
local or foreign law, compliance with which would subject the Company or such
other Person to material expense or burden (unless each such affected Person
consents to such Transfer); (iii) constitute a transaction effected
through an “established securities market” within the meaning of Treasury
Regulation Section 1.7704-1(b) or otherwise cause the Company to be
a “publicly traded partnership” within the meaning of Section 7704 of the
Code; (iv) effect a termination of the Company under Section 708 of
the Code (but only if such termination would result in material adverse
consequences to the Company or any Member under Federal, state or local law);
or (v) violate any law, regulation or other governmental rule, or result
in a violation thereof by the Company, a Member, or any equityholder, member,
director, officer, or employee of a Member.

[k]           Any
Transfer in violation of this Article 7: (i) shall be null and void
as against the Company and the other Members; and (ii) shall not be
recognized or permitted by, or duly reflected in the official books and records
of, the Company.  The preceding sentence
shall not be applied to prevent the Company from enforcing any rights it may
have in respect of a transferee arising under this Agreement or otherwise
(including any rights arising under Section 10.8).

[l]            Solely
for purposes of this Article 7 (other than Section 7.1(g)), an Interest
shall be deemed to include any Derivative Company Interest held, issued or
created by a Member, Assignee or other Person.

7.2          Withdrawal/Removal of a Member.

[a]           A
Member shall not withdraw from the Company or otherwise elect to cease to be a
Member without the approval of the Board of Managers.

[b]           A
Member shall not be removed from the Company without its consent.

7.3          Procedures Following Member Withdrawal/Removal.  A Member that withdraws or is removed from
the Company (including via a deemed withdrawal) in accordance with the
provisions of Section 7.2 or otherwise ceases to be a member of the
Company under the Act (each a “Withdrawal Event” and a “Withdrawn Member”)
shall be treated as an Assignee and, accordingly, shall have the rights and
obligations of an Assignee as described in Section 7.4.  Subject to the preceding sentence, a
Withdrawn Member shall not be entitled to any redemption of its Interest,
distribution or payment in connection with its Withdrawal Event or otherwise in
consequence of its status as a Withdrawn Member.

7.4          Status of Assignees.

[a]           Notwithstanding
any provision of this Agreement to the contrary, an Assignee shall not be
admitted to the Company as a Substitute Member without the consent of the Board
of Managers, which consent may be withheld in the Board of Managers’ sole and
absolute discretion.

 27

[b]           All
rights and privileges associated with an Assignee interest in the Company shall
be derived solely from the Member interest of which such rights and privileges
were previously a component part.  No
Assignee shall hold, by virtue of such Assignee’s interest in the Company, any
rights and privileges that were not specifically transferred to such Assignee
by the prior holder of such interest.  No
Member, Assignee or other rights or privileges arising under this Agreement or
the Act shall apply with respect to a notional or constructive interest in the
Company, without regard to whether such interest constitutes a Derivative
Company Interest.

[c]           Subject
to Section 3.1(d), an Assignee that holds an interest in the Company shall
be entitled to receive the allocations attributable to such interest pursuant
to Article 4, to receive the distributions attributable to such interest
pursuant to Articles 4 and 8, and to Transfer such interest in accordance with
the terms of this Article 7. 
Notwithstanding the preceding sentence, the Company and the Members
shall incur no liability for allocations and distributions made in good faith
to a transferor until a valid written instrument of Transfer has been received
by the Company and recorded on its books and the effective time of the Transfer
has passed.

[d]           To
the extent otherwise applicable to the interest in the Company that has been
transferred to an Assignee, the Assignee shall be subject to, and bound by, all
of the terms and provisions of this Agreement that inure to the benefit of the
Company or any Member (without regard to whether such Assignee has executed a
written instrument of Transfer as described in Section 7.4(c) or an assumption
of obligations as described in Section 7.1(c)). 
Without limitation on the preceding sentence, an Assignee that holds an
interest in the Company shall be responsible for any unpaid Capital Commitment
and obligation to return distributions or make other payments to the Company
associated with such interest and shall comply with the provisions of Sections
6.3, 6.4 and 10.14.

[e]           Solely
to the extent necessary to give effect to the Assignee rights and obligations
set forth in Section 7.4(c) and (d), an Assignee shall be treated as a Member
for purposes of this Agreement.

[f]            An
Assignee shall not, solely by virtue of its status as such, hold any
non-economic rights in respect of the Company. 
Without limitation on the preceding sentence, an Assignee’s interest in
the Company shall not entitle such Assignee to participate in the management,
control or operation of the Company or its business, act for the Company, bind
the Company under agreements or arrangements with third parties, or vote on
Company matters.  An Assignee shall not
have any right to receive or review Company books, records, reports or other
information.  An Assignee shall not hold
itself out as a Member in any forum or for any purpose; provided, however,
that, to the extent necessary to maintain consistency with the Company’s income
tax returns, reports, and other filings, an Assignee shall take the position
that it is a Member (or “partner”) solely for income tax purposes.

7.5          Transfers of Racetracks.  In the event CDI or MEC voluntarily divests
its Control of the racing and wagering activities of Churchill Downs Racetrack
or Arlington Park, in the case of CDI, or Gulfstream Park or Santa Anita, in
the case of MEC (such party, a “Divesting Party”), to a Third Party who
continues to operate such track as a horse racing track, the Divesting Party
shall require, as a condition of the voluntary divestiture, that the party
assuming

 28
 

Control of the racing and wagering activities of such CDI Track or MEC
Track, as the case may be, agree in writing to comply with all terms and
conditions of this Agreement as if the divested track were still a CDI Track or
MEC Track, as the case may be, for the shorter of (i) twenty four months
following the consummation of the divestiture, or (ii) such time as such party
assuming Control permanently ceases to conduct live horse racing at such track.  The provisions of this Section 7.5 shall
apply to all voluntary divestitures of Control, including without limitation,
the sale of a racetrack or of an equity interest in the entity operating the
racetrack, the voluntary termination of a lease, management agreement or other
contractual arrangement, or any other voluntary action that results in a loss
of Control.

ARTICLE 8

DISSOLUTION AND LIQUIDATION

8.1          Dissolving Events.  The Company shall be Dissolved upon the
occurrence of any of the following events:

[a]           Expiration
of the Company’s Term;

[b]           Failure
of the Company to have at least one Member;

[c]           Permanent
cessation of the Company’s Business;

[d]           An
election to Dissolve the Company executed by all members of the Board of
Managers;

[e]           Any
other event which results in a mandatory Dissolution of the Company under the
Act;

[f]            The
continuation of a Deadlock of the Board of Managers or the Members, as
applicable, for a period of twelve (12) consecutive months;

[g]           At
the election of a Member when another Member or its ADW business is subject to
a Change of Control Transaction, which election may be made only within the
ninety (90) day period following such event;

[h]           At
the election of the other Member, upon the Bankruptcy, Dissolution or
Termination of a Member, which election may be made only within the ninety (90)
day period following such event;

[i]            At
the election of the other Member, if a Member or its Affiliate has materially
breached this Agreement or any of the Auxiliary Agreements or the Business Plan,
which election may be made only within the ninety (90) day period following
notice of such event under Section 10.13 and such breach is not cured as
provided in Section 10.13 hereof; or

[j]            Any
other event or circumstance agreed to by the Members.

8.2          Term and Unwind Provision.

 29
 

[a]           The
term of this Agreement shall be until five (5) years after the date of this
Agreement (the “Initial Term”), subject to such earlier termination as the
parties may mutually agree or as set forth in this Article 8.  The Initial Term plus the applicable Twelve
Month Extension or the One Hundred Twenty Day Extension (as defined below) is
the “Term”.

[b]           In
the event that the Company is not extended beyond the Initial Term, then the
parties shall continue to operate the Company and to exchange content pursuant
to the terms hereof and pursuant to the CDI/MEC Content Exchange Agreement for
a period of twelve (12) months after the Initial Term (the “Twelve Month
Extension”).

[c]           In
the event that the Company is Dissolved in accordance with the terms hereof
prior to the expiration of the Initial Term, then the parties shall continue to
operate the Company and to exchange content pursuant to the terms hereof and
pursuant to the CDI/MEC Content Exchange Agreement for a period of one hundred
twenty (120) days from the date of such Dissolution (the “One Hundred Twenty
Day Extension”).  During the One Hundred
Twenty Day Extension, the parties shall arrange for the orderly liquidation of
the Company as set forth in Section 8.3 of this Agreement.

[d]           During
the Twelve Month Extension, the parties shall arrange for the orderly
liquidation of the Company as set forth in Section 8.3 of this Agreement.  During the first three months of the Twelve
Month Period, CDI and MEC will determine who between them will have the
exclusive right of first negotiation for the services of the existing employees
and executives of the Company (i.e. the nonseconded personnel of the Company)
as follows:  MEC will identify one
executive / employee of the Company for whom MEC will have exclusive right of
first negotiation.  Then CDI will
identify two executives / employees of the Company for whom CDI will have
exclusive right of first negotiation. 
Then MEC and CDI will alternate identifying one executive / employee of
the Company for whom either CDI or MEC will have exclusive right of first
negotiation until all the executives / employees of the Company have been so
identified.  CDI and MEC will each then
have the exclusive right as between each other to negotiate the employment by
CDI or MEC, as appropriate, of the identified executives / employees of the
Company until the conclusion of the eighth month of the Twelve Month
Period.  Beginning on the first day of
the ninth month of the Twelve Month Period, either CDI or MEC may attempt to
negotiate the employment of any executive / employee of the Company who has not
yet been retained by either CDI or MEC.

8.3          Winding Up and Liquidation.

[a]           Upon
Dissolution of the Company, the Board of Managers shall promptly wind up the
affairs of, liquidate and Terminate the Company.  In furtherance thereof, the Board of Managers
shall: (i) have all of the administrative and management rights and powers of
the Board of Managers (including the power to bind the Company); and (ii) be reimbursed
for Company expenses it reasonably incurs. 
Following Dissolution, the Company shall sell or otherwise dispose of
assets determined by the Board of Managers to be unsuitable for distribution to
the Members, but shall engage in no business activities other than the Business
except as may be necessary, in the reasonable discretion of the Board of
Managers, to preserve the value of the Company’s assets during the period of
winding-up and liquidation.  In any
event, the Board of Managers shall use its Best Efforts to prevent the period
of winding-up and 

 30
 

liquidation of the Company from extending beyond the date which is two
(2) years after the Company’s date of Dissolution.  At the conclusion of the winding-up and
liquidation of the Company, the Board of Managers shall: (i) designate one
Person (who shall be a Member unless the parties otherwise agree) to hold the
books and records of the Company (and to make such books and records available
to the Members on a reasonable basis) for not less than six years following the
Termination of the Company under the Act; and (ii) execute, file and record, as
necessary, a certificate of termination or similar document to effect the
Termination of the Company under the Act and other applicable laws.

[b]           Distributions
to the Members in liquidation may be made in cash or in kind, or partly in cash
and partly in kind, as determined by the Board of Managers, provided, however,
the rights granted to the Company by the Members under Section 2.1(c) shall
terminate and vest in the contributing Member along with the relevant export
and import agreements entered into by the Company as agent related
thereto.  Distributions in kind shall be
valued at Fair Market Value as determined by the Board of Managers in
accordance with the provisions of Section 5.14 and shall be subject to such
conditions and restrictions as may be necessary or advisable in the reasonable
discretion of the Board of Managers to preserve the value of the property so
distributed or to comply with applicable law.

[c]           The
Profits and Losses of the Company during the period of winding-up and
liquidation shall be allocated among the Members in accordance with the
provisions of Article 3.  If any property
is to be distributed in kind, the Capital Accounts of the Members shall be
adjusted with regard to such property in accordance with the provisions of
Section 3.1(e).

[d]           Upon
Dissolution, the assets of the Company (including proceeds from the sale or
other disposition of any assets during the period of winding-up and
liquidation) shall be applied as follows:

[i]            First, to repay any indebtedness of
the Company, whether to third parties or the Members, in the order of priority
required by law;

[ii]           Next, to any reserves which the Board
of Managers reasonably deems necessary for contingent or unforeseen liabilities
or obligations of the Company (which reserves when they become unnecessary
shall be distributed in accordance with the provisions of clause (iii), below);
and

[iii]          Next, to the Members in proportion to
their respective positive Capital Account balances (after taking into account
all adjustments to the Members’ Capital Accounts required under
Section 8.3(c)).

[e]           Except
as otherwise specifically provided in this Agreement, a Member shall have no
liability to the Company or to any other Member or to any Third Party in
respect of a negative balance in such Member’s Capital Account during the term
of the Company or at the conclusion of the Company’s Termination.

 31
 

ARTICLE 9

LIABILITY AND INDEMNIFICATION

9.1          Liability.  Except as otherwise specifically provided in
this Agreement, no Indemnified Person shall be personally liable for the return
of any contributions made to the capital of the Company by the Members or the
distribution of Capital Account balances. 
Except to the extent that Material Misconduct on the part of an
Indemnified Person shall have given rise to the matter at issue, such
Indemnified Person shall not be liable to the Company or the Members for any
act or omission concerning the Company. 
Without limitation on the preceding sentence, except to the extent that
such action constitutes Material Misconduct, an Indemnified Person shall not be
liable to the Company or to any Member in consequence of voting for, approving,
or otherwise participating in the making of a distribution by the Company
pursuant to Article 4 or 8.  An
Indemnified Person shall not be liable to the Company or the Members for losses
due to the acts or omissions of any independent contractor, employee or other
agent of the Company unless such Indemnified Person was or should have been
directly involved with the selection, engagement or supervision of such Person
and the actions or omissions of such Indemnified Person in connection therewith
constituted Material Misconduct.

9.2          Indemnification.

[a]           Except
to the extent that Material Misconduct on the part of an Indemnified Person
shall have given rise to the matter at issue, the Company shall indemnify and
hold such Indemnified Person harmless from and against any loss, expense,
damage or injury suffered or sustained by such Indemnified Person by reason of
any actual or threatened claim, demand, action, suit or proceeding (civil,
criminal, administrative or investigative) in which such Indemnified Person may
be involved, as a party or otherwise, by reason of its actual or alleged
management of, or involvement in, the affairs of the Company.  This indemnification shall include, but not
be limited to: (i) payment as incurred of reasonable attorneys fees and other
out-of-pocket expenses incurred in investigating or settling any claim or
threatened action (where, in the case of a settlement, such settlement is
approved by the Board of Managers), or incurred in preparing for, or conducting
a defense pursuant to, any proceeding up to and including a final
non-appealable adjudication; (ii) payment of fines, damages or similar amounts
required to be paid by an Indemnified Person; and (iii) removal of liens
affecting the property of an Indemnified Person.

[b]           Indemnification
payments shall be made pursuant to this Section 9.2 only to the extent that the
Indemnified Person is not entitled to receive (or will not in any event
receive) from a third party equal or greater indemnification payments in
respect of the same loss, expense, damage or injury.  In the event, however, that the Board of
Managers determine that an Indemnified Person would be entitled to receive
indemnification payments from the Company but for the operation of the
preceding sentence, the Board of Managers may cause the Company to advance
indemnification payments to the Indemnified Person (with repayment of such
advance to be secured by the Indemnified Person’s right to receive
indemnification payments from the applicable third party).

[c]           As
a condition to receiving an indemnification payment pursuant to this Section
9.2, an Indemnified Person shall execute an undertaking in form and substance

 32
 

acceptable to the Board of Managers in their reasonable discretion
providing that, in the event it is subsequently determined that such Person was
not entitled to receive such payment (whether by virtue of such Person’s
Material Misconduct or otherwise), such Person shall return such payment to the
Company promptly upon demand therefor by any Member.

[d]           Notwithstanding
the foregoing provisions of this Section 9.2, the Company shall be under no
obligation to indemnify an Indemnified Person from and against any reduction in
the value of such Person’s interest in the Company that is attributable to
losses, expenses, damages or injuries suffered by the Company or to any other
decline in the value of the Company’s assets.

[e]           The
indemnification provided by this Section 9.2 shall not be deemed to be
exclusive of any other rights to which any Indemnified Person may be entitled
under any agreement, as a matter of law, in equity or otherwise.

9.3          Insurance.

[a]           The
Company shall obtain and keep in force officers and directors liability
insurance insuring the officers, employees and Managers of the Company against
claims by third parties as to their activities for and on behalf of the
Company, unless the Board of Managers determines in good faith that there is
sufficient insurance coverage for such Persons under the separate insurance
coverage maintained by CDI and MEC.  The
specific coverages, limits of liability and other terms of such insurance shall
be determined by the Board of Managers in their reasonable discretion.

[b]           The
Company shall carry general business and liability insurance in such form and
amounts as are determined from time to time by the Board of Managers.  Unless the non-MEC Sub members of the Board
of Managers determine otherwise, MEC shall be obligated to procure such
insurance on behalf of the Company; provided, however, that the Company shall
be obligated either to pay for such insurance directly or to reimburse MEC for
MEC’s costs in procuring such insurance.

ARTICLE
10

GENERAL PROVISIONS

10.1        Meetings.  Meetings of the Members may be called by any
Member as well as by the Board of Managers. 
Any such meeting shall be held at a reasonable time and place on not
less than two (2) nor more than sixty (60) days notice, which notice shall
include an agenda of items to be considered at the meeting.  Reasonable accommodation shall be made for
any Member that elects to attend a meeting via telephonic or similar means
pursuant to which all Persons attending the meeting can hear one another.  No action may be taken at a meeting of the
Members without the unanimous vote or consent of all of the Members.  Minutes of the meeting shall be prepared at
the direction of the Board of Managers. 
Except as specifically provided in this Agreement, there shall be no
requirement of annual or periodic meetings of the Members or Board of Managers
within the meaning of the Act.

 33
 

10.2        Action Without a Meeting of All Members.

[a]           Any
action of the Members may be taken by written consent of all of the Members
required for such action under this Agreement.

[b]          
A Member may authorize another Person to vote or otherwise act on its behalf
through a written proxy or power of attorney.

[c]           In
order to facilitate the determination of whether any action of the Members has
been taken by or with the consent of the requisite number or percentage of the
Members under this Agreement, the Board of Managers may adopt, from time to
time upon not less than ten (10) days notice to the Members, reasonable
procedures for establishing the Members of record entitled to vote, consent or
otherwise take action on any matter; provided, however, that any date as of
which Members of record is determined shall not precede the date of the related
action by more than sixty (60) days.

10.3        Entire Agreement.  This Agreement, together with the Auxiliary
Agreements and the Business Plan, contains the entire understanding among the
Members, CDI and MEC concerning the subject matter thereof and supersedes any
prior written or oral agreement among them respecting the Company and such
matters.  There are no representations,
agreements, arrangements, or understandings, oral or written, among the
Members, CDI and MEC relating to the Company which are not fully expressed in
this Agreement or the Auxiliary Agreements or the Business Plan.

10.4        Amendments.

[a]           Except
as otherwise provided in this Section 10.4, this Agreement may be amended,
in whole or in part, only through a written amendment executed by all of the
Members, CDI and MEC.  Each Member, CDI
and MEC shall be promptly notified of any amendment to this Agreement made
pursuant to this Section 10.4.

[b]           Except
with regard to amendments otherwise specifically required under this Agreement,
there shall be no amendment to this Agreement except as authorized by Sections
10.4[a] or 10.4[d].  Without limitation
of the foregoing, and subject to Section 2.1(b), there shall be no amendment
that: (i) increases a Member’s obligation to make capital contributions to
the Company or (ii) imposes personal liability upon a Member for any debts
or obligations of the Company unless, in each case, the amendment is consented
to by such Member.

[c]           An
Assignee shall not, solely by virtue of its status as such, have any right to
consent or withhold consent in respect of an amendment to this Agreement.

[d]           Notwithstanding
the foregoing provisions of this Section 10.4, the Board of Managers may,
without the consent of the other Members, amend this Agreement in any manner
determined by the Board of Managers to be necessary or advisable to reflect the
admission of an Additional Member in accordance with this Agreement, comply
with applicable law, supply a missing term or provision, or resolve an
ambiguity in the existing terms and provisions of this Agreement.  The Board of Managers shall not have the
authority under this Section 10.4(d) to amend this Agreement in a manner that
is materially adverse to any Member;

 34
 

provided, however, that a Member’s right to object to an amendment
pursuant to this Section 10.4(d) on the grounds that such amendment is
materially adverse to such Member shall expire at the Close of Business on the
thirtieth (30th) day following notice to such Member of such amendment.

10.5        Governing Law.  The interpretation and enforceability of this
Agreement and the rights and liabilities of the Members, CDI and MEC as such
shall be governed by the laws of the State of Delaware as such laws are applied
in connection with limited liability company operating agreements entered into
and wholly performed in Delaware by residents of  Delaware. 
To the extent permitted by the Act and other applicable law, the
provisions of this Agreement shall supersede any contrary provisions of the Act
or other applicable law.

10.6        Severability.  In the event that any provision of this
Agreement is determined to be invalid or unenforceable, such provision shall be
deemed severed from the remainder of this Agreement and replaced with a valid
and enforceable provision as similar in intent as reasonably possible to the
provision so severed, and shall not cause the invalidity or unenforceability of
the remainder of this Agreement.

10.7        Counterparts; Binding upon Members and Assignees.  This Agreement may be executed in any number
of counterparts and, when so executed, all of such counterparts shall
constitute a single instrument binding upon all parties notwithstanding the
fact that all parties are not a signatory to the original or to the same
counterpart.  In addition, to the maximum
extent permitted by applicable law and without limitation on any other rights
of the Members or the Company, a non-Member shall become bound as an Assignee
under this Agreement if such Person holds an interest in the Company and seeks
to exercise, assert, confirm or enforce any of its rights as an Assignee under
this Agreement or the Act.

10.8        Survival of Certain Obligations.  Except as specifically provided in this
Agreement, or to the extent specifically approved by the Board of Managers
(which approval may be withheld by the Board of Managers in their sole and
absolute discretion), as applicable, a Member, CDI and MEC shall continue to be
subject to all of its obligations to make capital contributions or other
payments arising under this Agreement (including obligations attributable to a
breach of this Agreement), as well as its obligations to maintain the
confidentiality of information pursuant to Section 6.3 and to provide
information pursuant to Section 6.4, without regard to any Transfer of all
or any portion of such Member’s Interest or any event that terminates such
Member’s status as such or the Termination of the Company.  Each Member’s Capital Commitment shall
terminate at the time of the final Termination of the Company under the Act,
but such termination shall not release a Defaulting Member from obligations
arising under Section 2.4.

10.9        No Third Party Beneficiaries.  Except with regard to the Company’s
obligation to Indemnified Persons as set forth in Article 9, the provisions of
this Agreement are not intended to be for the benefit of or enforceable by any
Third Party and shall not give rise to a right on the part of any Third Party
to (i) enforce or demand enforcement of a Member’s Capital Commitment,
obligation to return distributions, or obligation to make other payments to the
Company as set forth in this Agreement or (ii) demand that the Company or the
Board of Managers issue any capital call.

 35
 

10.10      Notices, Consents, Elections, Etc.  All notices, consents, agreements, elections,
amendments, and approvals provided for or permitted by this Agreement or
otherwise relating to the Company shall be in writing and signed copies thereof
shall be retained with the books of the Company.

[a]           Notice to Members.  Except as otherwise specifically provided in
this Agreement, notice to a Member shall be deemed duly given upon the earliest
to occur of the following: (i) personal delivery to such Member, to the
address set forth on Schedule A for such Member, or to any other address which
such Member has provided to the Company for purposes of this Section 10.10(a);
(ii) the Close of Business on the third day after being deposited in the
United States mail, registered or certified, postage prepaid and addressed to
such Member at the address set forth on Schedule A for such Member, or at
any other address which such Member has provided to the Company for purposes of
this Section 10.10(a); (iii) the Close of Business on the first business
day after being deposited in the United States with a nationally recognized
overnight delivery service, for next Business Day delivery, with delivery
charges prepaid and addressed as provided in the preceding clause; or (iv)
actual receipt by such Member via any other means (including public or private
mail, electronic mail, facsimile, telex or telegram); provided, however, that
notice sent via electronic mail shall be deemed duly given only when actually
received and opened by the Member to whom it is addressed.  Notices to CDI shall be provided as set forth
above to the address of CDI Sub.  Notices
to MEC shall be provided as set forth above to the address of MEC Sub.

[b]           Notice to the Company.  Notice to the Company shall be deemed duly
given when clearly identified as such and duly given to the Board of Managers
in accordance with the procedures set forth in Section 10.10(a).

10.11      No
Usury. 
Notwithstanding any provision of this Agreement to the contrary, the
rate of interest charged by the Company to any Member in connection with an
obligation of the Member to the Company shall not exceed the maximum rate
permitted by applicable law.  To the
extent that any interest otherwise paid or payable by a Member to the Company
shall have been finally adjudicated to exceed the maximum amount permitted by applicable
law, such interest shall be retroactively deemed to have been a required
repayment of principal (and any such amount paid in excess of the outstanding
principal amount shall be promptly returned to the payor Member).

10.12      Dispute
Resolution.

[a]           Forum and Venue.  Any litigation involving any controversy or
claim arising out of or relating to this Agreement or the Auxiliary Agreements
or Business Plan shall be brought and prosecuted solely in the Courts of the
State of Delaware or the United States District Court for the District of
Delaware sitting in Wilmington, Delaware, and in such appellate courts having
jurisdiction over appeals from such courts. 
The Company, CDI, CDI Sub, MEC and MEC Sub (i) consent to the exclusive
jurisdiction and venue of the aforesaid courts; (ii) shall not assert forum
inconvenience or any other similar defense to the jurisdiction and venue of
such courts; and (iii) waive the right to trial by jury in any such
litigation.  If needed to enforce a
decision made by a court in Delaware, litigation may be commenced and
prosecuted in any other courts having jurisdiction.

 36
 

[b]           Fees and Costs.  The prevailing party or parties in any
proceeding arising out of or relating to this Agreement shall be reimbursed by
the party or parties who do not prevail for their reasonable third party or out
of pocket attorneys, accountants and experts fees and related third party or
out of pocket expenses and for the costs of such proceeding.  The court shall be asked to direct the
amounts to be paid and the party to pay the expenses and costs.  In the event that two or more parties are
deemed liable for a specific amount payable or reimbursable under this
Section 10.12(b), such parties shall be jointly and severally liable
therefor.

10.13      Cure of Breaches.  In the event of any breach by CDI, CDI Sub,
MEC, MEC Sub or the Company of any provision of this Agreement or of any
Auxiliary Agreement or the Business Plan, the party claiming the breach shall
give reasonable notice thereof to the others within a reasonable time after
becoming aware of such breach or such other notice as required under the
Auxiliary Agreement or the Business Plan. 
The alleged breaching party shall have, unless otherwise specifically
provided in this Agreement or such Auxiliary Agreement or the Business Plan, a
period of thirty (30) days from receipt of such notice to cure the alleged
breach; provided that if the alleged breach cannot reasonably be cured within
such period of time, but such breach is susceptible of being cured it shall not
be considered a breach so long as the alleged breaching party has begun and
diligently pursues curing the alleged breach and completes the cure within not
more than an additional thirty (30) days.

10.14      Remedies for Breach of this Agreement.

[a]           General.  Except as otherwise specifically provided in
this Agreement, the remedies set forth in this Agreement are cumulative and
shall not exclude any other remedies to which a Person may be lawfully
entitled.

[b]           Specific Performance.  Without limiting the rights and remedies
otherwise available to the Company, CDI, MEC or any Member, each Member, CDI
and MEC hereby: (i) acknowledges that the remedy at law for damages
resulting from its default under Article 3, or Sections 6.3, 6.4 or 10.14 is inadequate;
and (ii) consents to the institution of an action for specific performance
of its obligations in the event of such a default in accordance with Section
10.12[a] above.

[c]           Exercise of Discretion by the Board of
Managers.  In determining
what action, if any, shall be taken against a Member in connection with such
Member’s breach of this Agreement, the Board of Managers shall seek to obtain
the best result for the Company and the non-breaching Members.  In the event a Member violates the terms of
this Agreement, such Member shall not be entitled to claim that the Company or
any of the other Members is precluded, on the basis of any fiduciary or other
duty arising in respect of such Member’s status as such, from seeking any of
the penalties or other remedies permitted under this Agreement or applicable
law.

10.15      Timing.  All dates and times specified in this
Agreement are of the essence and shall be strictly enforced.  Except as otherwise specifically provided in
this Agreement, all actions that occur after the Close of Business on a given
day shall be deemed for purposes of this Agreement to have occurred at 9:00
a.m. on the following day.  In the event
that the last day for the exercise of any right or the discharge of any duty
under this Agreement would otherwise be a

 37
 

day that is not a business day, the period for exercising such right or
discharging such duty shall be extended until the Close of Business on the next
succeeding business day.

10.16      Status Under the Act.  This Agreement is the “limited liability
company agreement” of the Company within the meaning of Section 18-101(7) of
the Act.

10.17      Partnership for Tax Purposes.  As set forth in Section 1.1, the Members
hereby form the Company as a limited liability company under the Act.  The Members expressly do not intend hereby to
form a partnership under the laws of any State but intend that the Company
shall be treated as a partnership for tax purposes.

10.18      Miscellaneous.  No failure or delay by any party in
exercising any right, power or privilege under this Agreement shall operate as
a waiver thereof; any actual waiver shall be contained in a writing signed by
the party against whom enforcement of such waiver is sought.  This Agreement shall not be construed for or
against any party by reason of the authorship or alleged authorship of any
provisions hereof or by reason of the status of the respective parties.

10.19      No Grant.  Except as set forth on Schedule B, each
Member and its Affiliates retains and has not granted to the Company or the
other Member or its Affiliates any rights to its intellectual property or other
assets.

10.20      General Usage.  The section headings contained in this
Agreement are for reference purposes only and shall not affect the meaning or
interpretation of this Agreement.  Except
where the context clearly requires to the contrary: (i) all references in this
Agreement to designated Articles are to the designated Articles and other
subdivisions of this Agreement; (ii) instances of gender or entity-specific
usage (e.g., “his” “her” “its” “person” or “individual”) shall not be
interpreted to preclude the application of any provision of this Agreement to
any individual or entity; (iii) the word “or” shall not be applied in its
exclusive sense; (iv) “including” shall mean “including, without limitation”;
(v) references to laws, regulations and other governmental rules, as well as to
contracts, agreements and other instruments, shall mean such rules and
instruments as in effect at the time of determination (taking into account any
amendments thereto effective at such time without regard to whether such
amendments were enacted or adopted after the effective date of this Agreement)
and shall include all successor rules and instruments thereto; (vi) references
to “$” or “dollars” shall mean the lawful currency of the United States; (vii)
references to “Federal” or “federal” shall be to laws, agencies or other
attributes of the United States (and not to any State or locality thereof);
(viii) the meaning of the terms “domestic” and “foreign” shall be determined by
reference to the United States; (ix) references to “days” shall mean calendar
days; references to “business days” shall mean all days other than Saturdays,
Sundays and days that are legal holidays in the State of Delaware; (x) references
to monthly or annual anniversaries shall be to the actual calendar months or
years at issue (taking into account the actual number of days in any such month
or year); and (xi) days, business days and times of day shall be determined by
reference to local time in Wilmington, Delaware.

 38
 

 

ARTICLE 11

DEFINITIONS

As used in this Agreement, the following terms shall have the following
meanings:

Act shall
mean the Delaware Limited Liability Company Act, Title 6, Delaware Code Ann.,
Section 18-101 et seq., as amended.

Additional Member
shall mean any Person, other than a Substitute Member, admitted to the Company
as a Member after the date first above written.

ADW shall
mean advance deposit wagering.

ADW Content Rights
shall mean solely for purposes of ADW all wagering, audio, video, data and
replay rights related to horse racing or dog racing whether distributed through
internet, wireless, telephone, satellite, television, broadband, mobile or
video streaming.

ADW Export Content
shall mean CDI and MEC’s  and their
Affiliates’ ADW Content Rights sold or distributed or sublicensed to Third
Parties.

ADW Import Content
shall mean ADW Content Rights acquired from Third Parties for ADW by CDI ADW
and XpressBet or for sublicensing or other resale to Third Parties.

Affiliate
shall mean, with respect to any Person, any other Person with regard to which
the Person is directly or indirectly Controlling, Controlled by or commonly
Controlled with.

Agreement
shall mean this Operating Agreement of TrackNet Media Group, LLC, a Delaware
limited liability company, including all schedules and exhibits hereto, as
amended from time to time in accordance with the terms hereof.

Allocation Percentage
shall mean, for each Member, the percentage specified for such Member on
Schedule A.

Asset Transfer and Contribution
Agreement shall mean the Asset Transfer and Contribution
Agreement of even date herewith between HRTV Entity and Horse Racing TV, Inc.,
a wholly owned subsidiary of MEC, as thereafter amended.

Assignee
shall mean a Person that has acquired all or any portion of an Interest
(including by means of a Transfer permitted under Article 7), but that has not
been admitted as a Member.

Auxiliary Agreements
shall mean the following agreements entered into or to be entered into between
CDI and MEC as provided in this Agreement:

(a)  HRTV Entity Limited Liability Company
Operating Agreement of even date herewith, as thereafter amended;

(b)  CDI/MEC
Content Exchange Agreement;

(c)  Asset
Transfer and Contribution Agreement;

 39
 

(d)  Any other agreement entered into between CDI
and MEC or by CDI or MEC for the benefit of the other which is designated as an
Auxiliary Agreement.

Bank shall
mean the bank selected by the Board of Managers from time to time (or any
successor entity thereto).

Bankruptcy
shall mean, with respect to a Member: (i) an assignment of all or
substantially all of the assets of such Member for the benefit of its creditors
generally; (ii) the commencement of any bankruptcy or insolvency case or
proceeding against such Member which shall continue and remain unstayed and in
effect for a period of 60 consecutive days; (iii) the filing by such
Member of a petition, answer or consent seeking relief under any bankruptcy,
insolvency or similar law; or (iv) the occurrence of any other event that is
deemed to constitute bankruptcy for purposes of the Act.

Beneficial Owner
shall mean, with respect to a Member, any Person that holds an equity interest
in such Member, either directly or indirectly through a nominee or agent or
through one or more intervening entities qualifying as partnerships, grantor
trusts or S corporations, in each case as determined for Federal income tax
purposes.

Best Efforts
shall mean commercially reasonable good faith efforts that a prudent person
would use under similar circumstances without being required to expend an
unreasonable amount of funds when considering the benefit likely to be
attained.

Board of Managers
shall mean the individuals appointed by the Members as the Managers as provided
in this Agreement , taken together or acting unanimously, as appropriate.

Broadband and Mobile Rights
shall mean, other than with respect to ADW, all audio, video, data and replay
rights related to horse racing or dog racing for purposes that are unrelated to
ADW and are distributed through any broadband or mobile technologies, including
the internet, wireless technologies, or any other on-line system or computer
network, now known or hereafter devised. 
For purposes of greater clarity, an entity which has been granted a
license to Broadband and Mobile Rights (but not ADW Content Rights) shall not
be permitted to present or exploit the Broadband and Mobile Rights if such
presentation or exploitation contains, includes, references, or is in any way
associated with, wagering, or the promotion or advertising of wagering, in any
manner.  By way of example, a website
which has been granted a license to Broadband and Mobile Rights (but not ADW
Content Rights) shall not be permitted to advertise, promote, or utilize a
click-through to any ADW platform or service.

Business
shall have the meaning given it in Section 1.3(b).

Business Plan
shall mean the initial business plan adopted and approved by CDI, CDI Sub, MEC,
MEC Sub and the Board of Managers simultaneously with entering into this Agreement,
as thereafter updated, modified or amended by the Board of Managers.

Capital Account
shall mean, for each Member, a separate account that is:

(a)           Increased by: (i) the amount of
such Member’s Capital Contribution and (ii) allocations of Profit to such
Member pursuant to Article 3;

 40
 

(b)           Decreased by: (i) the amount of
cash distributed to such Member by the Company, (ii) the Fair Market Value
of any other property distributed to such Member by the Company (determined as
of the time of distribution, without regard to Section 7701(g) of the Code, and
net of liabilities secured by such property that the Member assumes or to which
the Member’s ownership of the property is subject) and (iii) allocations
of Loss to such Member pursuant to Article 3;

(c)           Revalued in connection with any event
described in Treasury Regulation Section 1.704-1(b)(2)(iv)(f); and

(d)           Otherwise adjusted so as to conform
to the requirements of Sections 704(b) and (c) of the Code and the
Treasury Regulations issued thereunder.

Capital Commitment
shall mean the cash and personal property committed by CDI Sub and MEC Sub to
be contributed to the Company.

Capital Contribution
shall mean, for any Member, the sum of the net amount of cash and the Fair
Market Value of any other property (determined as of the time of contribution,
without regard to Section 7701(g) of the Code, and net of liabilities
secured by such property that the Company assumes or to which the Company’s
ownership of the property is subject) contributed by such Member to the capital
of the Company.  The term “capital
contribution” (where not capitalized) shall mean any contribution to the
capital of the Company valued in accordance with the rules set forth in the
preceding sentence.  For purposes of this
Agreement, each capital contribution shall be deemed to have been made at the
later of: (i) the Close of Business on the due date of such capital
contribution as determined in accordance with this Agreement; or (ii) the
Close of Business on the date on which such capital contribution is actually
received by the Company.

CDI ADW
shall mean any advance deposit wagering service that is Controlled by CDI.

CDI/MEC Content Exchange
Agreement shall mean the Content Exchange Agreement of
even date herewith between CDI and MEC, as thereafter amended.

CDI Outlets
shall mean CDI Controlled wagering outlets, including CDI ADW and CDI Tracks.

CDI Premium Content
shall mean with respect to Churchill Downs Racetrack: Kentucky Derby Day,
Kentucky Oaks Day, Stephen Foster Day, Derby Trial Day; with respect to
Arlington Park: Arlington Million Day; with respect to Fair Grounds Race
Course: Louisiana Derby Day, Louisiana Champions Day; and with respect to
Calder Race Course: Summit of Speed Day and Festival of the Sun Day.  CDI may from time to time elect to (i)
replace a CDI Premium Content day with another day, and (ii) designate up to
ten (10) additional days and/or special wagering products as CDI Premium
Content.  Any such election shall take
effect upon the giving of written notice to MEC, and the definition of CDI
Premium Content shall thereafter be deemed amended.

 41
 

CDI Premium ADW Content
shall mean the ADW Content Rights with respect to CDI Premium Content,
provided, however, that all video rights with respect to the Kentucky Derby are
excluded.

CDI Premium Point to Point
Content shall mean the Point to Point Content Rights with
respect to CDI Premium Content

CDI Premium Rebate Content
shall mean the Rebate Content Rights with respect to CDI Premium Content,
provided, however, that all video rights with respect to the Kentucky Derby are
excluded.

CDI Tracks
shall mean race tracks and off track betting facilities Controlled by CDI.

Change of Control Transaction
shall mean with respect to a Person the first to occur of the following events:

(a)  the acquisition by any individual, entity or
group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”)) of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 50% or
more of the then-outstanding voting interests of the Person (the “Outstanding
Voting Interests”);

(b)  the consummation of a reorganization, merger
or consolidation or sale or other disposition of all or substantially all of
the assets of the Person or the acquisition of assets of another entity (a “Transaction”),
in each case, unless immediately following such Transaction, (i) all or
substantially all of the individuals and entities who were the beneficial
owners of the Outstanding Voting Interests immediately prior to such
Transaction beneficially own, directly or indirectly, more than 50% of the
then-outstanding voting interest of the company resulting from such Transaction
(including, without limitation, an entity which as a result of such transaction
owns the Person or all or substantially all of the Person’s assets either
directly or through one or more subsidiaries) in substantially the same
proportions as their ownership, immediately prior to such Transaction, of the
Outstanding Voting Interests, (ii) no Person (excluding any employee benefit
plan (or related trust) of the subject Person or such entity resulting from
such Transaction) beneficially owns, directly or indirectly, 50% or more of the
Outstanding Voting Interests resulting from such Transaction, except to the
extent that such ownership existed prior to the Transaction, and (iii) at least
a majority of the members of the governing body of the company resulting from
such Transaction were members of the Incumbent Board at the time of the
execution of the initial plan or action of the governing body of the Person
providing for such Transaction; or

(c)  approval by the equity owners of such Person
of a complete liquidation or dissolution of the Person.

Notwithstanding anything to the contrary contained in
this Agreement, a Change of Control Transaction shall be deemed not to have
occurred as a result of any transaction or group of transactions that result in
direct or indirect voting control of the applicable Person being transferred to
any one or more of the Stronach Trust, Frank Stronach, members of Frank

 42
 

Stronach’s immediate family (i.e. spouse and
children), or any of their respective heirs or any subsidiaries or other
entities Controlled by any of the foregoing.

Close of Business
shall mean 5:00 p.m., local time, in Wilmington, Delaware.

Code shall
mean the United States Internal Revenue Code of 1986, as amended.

Company
shall mean TrackNet Media Group, LLC, a Delaware limited liability company.

Control and
derivatives thereof such as “Controlled” or “Controlling”, shall mean, (i) with
respect to any racetrack or off-track betting facility, the ability to conduct
the day-to-day wagering operations of such race track or facility, directly or
through a lease, management agreement or other contractual arrangement; and
(ii) with respect to any Person (including CDI ADW and XpressBet), (a) the
beneficial ownership of 50% or more of the then outstanding voting interests of
the Person, or (b) the power to direct the principal business management and
activities of the Person, whether through ownership of voting interests, by
agreement or otherwise.

Deadlock shall
mean the inability to reach agreement on an issue or matter material to the
Company.

Defaulting Member
shall have the meaning set forth in Section 2.4.

Derivative Company Interest
shall mean any actual, notional or constructive interest in, or right in
respect of, the Company (other than a Member’s total interest in the capital,
profits and management of the Company) that, under Treasury Regulation
Section 1.7704-1(a)(2), is treated as an interest in the Company for
purposes of Section 7704 of the Code. 
Pursuant to the foregoing, “Derivative Company Interest” shall include
any financial instrument that is treated as debt for Federal income tax
purposes and (i) is convertible into or exchangeable for an interest in
the capital or profits of the Company or (ii) provides for one or more
payments of equivalent value.

Dissolution or Dissolved shall mean, with respect
to a legal entity other than a natural person, that such entity has “dissolved”
within the meaning of the partnership, corporation, limited liability company,
trust or other statute under which such entity was organized.

Employee Costs shall
mean the actual cash salary, other cash compensation, and other cash expense
directly attributable to an employee, including base salary, bonus, FICA, FUTA,
health benefits, life and disability benefits and retirement benefits, but
specifically shall not include any non-cash compensation such as equity grants
or stock options.

Fair Market Value
shall have the meaning set forth in Section 5.14(c).

Fiscal Year
shall mean the period from January 1 through December 31 of each year
(unless otherwise required by law).

 43

GAAP shall
mean United States generally accepted accounting principles, consistently
applied.

HRTV shall
mean the television network operated by the Members pursuant to the Limited
Liability Company Operating Agreement of HRTV Entity which broadcasts, transmits
or displays horse racing and related activities.

HRTV Entity
shall mean HRTV, LLC.

Hub Distributor shall
mean a simulcasting facility which receives Point to Point Content Rights in a
given jurisdiction and has the sole or exclusive responsibility, under the laws
or regulations of that jurisdiction, to redistribute such Point to Point
Content Rights to other simulcasting facilities within that jurisdiction.

iTV shall
mean any application which enhances traditional television exploitation by
enabling ADW, provided that such application is limited to cable television
(including traditional television provided by telephone companies) and direct
broadcast or satellite service television.

Indemnified Person
shall mean CDI, MEC, each Member and each equityholder, member, director,
officer, employee, or agent of CDI, MEC, or a Member.  In addition, “Indemnified Person” shall mean
any Manager or officer of the Company.  A
Person that has ceased to hold a position that previously qualified such Person
as an Indemnified Person shall be deemed to continue as an Indemnified Person
with regard to all matters arising or attributable to the period during which
such Person held such position.

Initial Term
shall have the meaning given to it in Section 8.2.

Interest
shall mean, for each Member, such Member’s rights, duties and interest in
respect of the Company in such Member’s capacity as such (as distinguished from
any other capacity such as employee, debtor or creditor) and shall include such
Member’s right, if any, to vote on Company matters, or receive distributions as
well as such Member’s obligation, if any, to provide services, make capital
contributions or take any other action. 
In the case of an Interest held by an Assignee, such Interest shall be
limited in the manner set forth in Section 7.4.

Manager
shall mean each Person listed on Schedule A as such, for so long as such Person
does not become a Removed Manager.

Material Misconduct
shall mean, with respect to an Indemnified Person, gross negligence, willful
and material breach of this Agreement, fraud, or the commission of a felony
(except in the case of a felony where the Indemnified Person reasonably
believed that no such felony would occur in consequence of such Indemnified
Person’s action or inaction, as the case may be).  For purposes of the preceding sentence: (i)
an Indemnified Person shall be deemed to have acted in good faith and without
negligence with regard to any action or inaction that is taken in accordance with
the advice or opinion of an attorney, accountant or other expert advisor so
long as such advisor was selected with reasonable care and the Indemnified
Person made a good faith effort to inform such advisor of all the facts
pertinent to such advice or opinion; and (ii) an Indemnified Person’s reliance
upon the truth and accuracy of any written statement, representation or
warranty of a Member shall be deemed to have been reasonable and in good

 44
 

faith absent such Indemnified Person’s actual
knowledge that such statement, representation or warranty was not, in fact,
true and accurate.

MEC Outlets
shall mean MEC Controlled wagering outlets, including XpressBet and MEC Tracks.

MEC Premium Content
shall mean with respect to Gulfstream Park: Donn Handicap Day, Florida Derby
Day, Sunshine Millions Day; with respect to Santa Anita: Santa Anita Handicap
Day, Santa Anita Derby Day, Sunshine Millions Day; with respect to Laurel Park:
Maryland Millions Day, Frank DeFrancis Memorial Day; with respect to Lone Star:
Lone Star Derby Day; and with respect to Pimlico: Preakness Day, Black-eyed
Susan Day.  MEC may from time to time
elect to (i) replace a MEC Premium Content day with another day, and (ii)
designate up to ten (10) additional days and/or special wagering products as
MEC Premium Content.  Any such election
shall take effect upon the giving of written notice to CDI, and the definition
of MEC Premium Content shall thereafter be deemed amended.

MEC Premium ADW Content
shall mean the ADW Content Rights with respect to MEC Premium Content,
provided, however, that all video rights with respect to the Preakness are
excluded.

MEC Premium Point to Point
Content shall mean the Point to Point Content Rights with
respect to MEC Premium Content.

MEC Premium Rebate Content
shall mean the Rebate Content Rights with respect to MEC Premium Content,
provided, however, that all video rights with respect to the Preakness are
excluded.

MEC Tracks
shall mean race tracks and off track betting facilities Controlled by MEC.

Member
shall mean any Person (i) listed on Schedule A as a Member or
(ii) admitted to the Company pursuant to the terms of this Agreement as an
Additional Member or a Substitute Member, but in each case only if such Person
has not become a Withdrawn Member.  A
Member shall not cease to be a Member or lose its non-economic rights in
respect of the Company solely by virtue of having Transferred to one or more
Persons its entire economic interest in the Company.  Except where the context requires otherwise,
a reference in this Agreement to “the Members” shall mean all of the Members
(taken together or acting unanimously, as appropriate).

Member Nonrecourse Deduction
shall mean an item of loss, expense or deduction attributable to a nonrecourse
liability of the Company for which a Member bears the economic risk of loss
within the meaning of Treasury Regulation Section 1.704-2(i).

Minimum Gain
of the Company shall, as provided in Treasury Regulation Section 1.704-2, mean
the total amount of gain the Company would realize for Federal income tax
purposes if it disposed of all assets subject to nonrecourse liability for no
consideration other than full satisfaction thereof.

 45
 

Nonrecourse Deduction
shall mean an item of loss, expense or deduction (other than a Member
Nonrecourse Deduction) attributable to a nonrecourse liability of the Company
within the meaning of Treasury Regulation Section 1.704-2(b).

Permanent Incapacity
shall mean, with respect to an individual, that such individual suffers a
mental or physical disability which, as of the time of determination, renders such
individual incapable of performing such individual’s duties under this
Agreement and is substantially certain to continue to render such individual
incapable of performing such duties for a continuous period of at least six
months following the date of determination.

Person
shall mean an individual, partnership, corporation, limited liability company,
unincorporated organization, trust, joint venture, governmental agency, or
other entity, whether domestic or foreign.

Point to Point Content Rights
shall mean all wagering, audio, video, data and replay rights related to horse
racing or dog racing for purposes of pari-mutuel wagering at a race track or
other location which constitutes a simulcasting facility (i.e., a race track,
off track betting facility or other fixed “brick and mortar” facility open to
the general public) for use at such receiving location.

Point to Point Export Content
shall mean CDI and MEC’s and their Affiliates’ Point to Point Content Rights
sold, distributed or sublicensed to Third Parties for Point to Point
Simulcasting.

Point to Point Import Content
shall mean Point to Point Content Rights acquired from Third Parties for use by
CDI and MEC Tracks or for sublicensing or other resale to Third Parties.

Point to Point Simulcasting
shall mean the distribution, transmission or receipt of Point to Point Content
Rights.

Principal Office
shall have the meaning set forth in Section 1.4.

Profit and Loss or Profits and
Losses means, for each taxable year of the Company (or
other period for which Profit or Loss must be computed), the Company’s taxable
income or loss determined in accordance with Code Section 703(a), with the
following adjustments:

(i)            all
items of income, gain, loss, deduction, or credit required to be stated
separately pursuant to Code Section 703(a)(1) shall be included in computing
taxable income or loss;

(ii)           any
tax-exempt income of the Company, not otherwise taken into account in computing
Profit or Loss, shall be included in computing taxable income or loss;

(iii)          any
expenditures of the Company described in Code Section 705(a)(2)(B) (or treated
as such pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(i)) and not
otherwise taken into account in computing Profit or Loss, shall be subtracted
from taxable income or loss;

(iv)          gain
or loss resulting from any taxable disposition of Company property shall be
computed by reference to the adjusted book value of the property disposed of,
notwithstanding

 46
 

the fact that the adjusted book value differs from the
adjusted basis of the property for federal income tax purposes;

(v)           in
lieu of the depreciation, amortization, or cost recovery deductions allowable
in computing taxable income or loss, there shall be taken into account the
depreciation computed based upon the adjusted book value of the asset; and

(vi)          notwithstanding
any other provision of this definition, any items which are specially allocated
pursuant to Section 3.1[b] shall not be taken into account in computing Profit
or Loss.

Real Property Lease shall
mean the Real Property Sublease Agreement which may be entered into between CDI
and the Company, as thereafter amended.

Rebating
shall mean the practice by an entity that conducts ADW of
providing volume based incentives (i) exceeding two percent (2%) of the total
handle wagered through such entity, or (ii) to any ADW customer in excess of
four percent (4%) of the total handle wagered by such ADW customer.

Rebate
Content Rights shall mean all wagering, audio, video,
data, and replay rights related to horse racing or dog racing for purposes of
Rebating.

Rebate
Export Content shall mean CDI and MEC’s and their
Affiliates’ Rebate Content Rights sold or distributed or sublicensed to Third
Parties.

Rebate
Import Content shall mean Rebate Content Rights acquired
from Third Parties for use by CDI and MEC or for sublicensing or other resale
to Third Parties.

Receiving Location shall
mean a simulcast facility which receives Point to Point Content Rights from a
Hub Distributor.

Removed Manager
shall  be a Manager who has been removed pursuant
to Section 5.15 of this Agreement.

Securities Act
shall mean the United States Securities Act of 1933, as amended, including the
rules and regulations promulgated thereunder.

State shall
mean any constituent state of the United States, as well as the District of
Columbia.

Substitute Member
shall mean a transferee of all or a portion of a Member’s Interest that becomes
a Member and succeeds, to the extent of the Interest transferred, to the rights
and powers and becomes subject to the restrictions and liabilities of the
transferor Member.

Tax Matters Partner
shall mean the Member identified as such, from time to time, by the
Members.  The initial Tax Matters Partner
shall be CDI Sub, and CDI Sub and MEC Sub shall alternate serving as the Tax
Matters Partner each calendar year.

 47
 

Tax Percentage
shall have the meaning set forth in Section 4.1(a)(ii).

Television Fees
shall have the meaning set forth in Section 5.3.

Television Rights
shall mean, other than with respect to Point to Point Simulcasting, all audio,
video, data and replay rights related to horse racing or dog racing for
purposes of traditional television exploitation, including by means of UHF and
VHF television broadcast, cable television, “over-the-air” television,
subscription television, pay television, pay per view television, iTV, video on
demand television, hotel and other institutional service television, satellite
master antennae television (SMATV), multi-channel multi-point distribution
services television (MMDS), and direct broadcast satellite service, provided
however Television Rights shall not include Broadband and Mobile Rights.

Term shall
have the meaning set forth in Section  1.2.  Where not capitalized, “term” shall mean the
entire period of the Company’s existence, including any period of winding-up
and liquidation following the Dissolution of the Company pursuant to Article
 8.

Termination
shall mean, with respect to a legal entity other than a natural person, that
such entity has Dissolved, completed its process of winding-up and liquidation,
and otherwise ceased to exist.

Territory
shall mean the United States and Canada and whatever additional geographic
region, if any, as the Board of Managers shall determine from time to time.

Third Party shall
mean any person or entity other than CDI, CDI Sub, MEC or MEC Sub, or any
entity Controlled by CDI or MEC, respectively.

Transfer
shall mean any direct or indirect sale, exchange, transfer, gift, encumbrance,
assignment, pledge, mortgage, hypothecation or other disposition, whether voluntary
or involuntary.

Treasury Regulation
shall mean a regulation issued by the United States Treasury Department and
relating to a matter arising under the Code.

United States
shall mean the United States of America.

Updated Capital Account
shall mean, with respect to a Member, such Member’s Capital Account determined
as if, immediately prior to the time of determination, all of the Company’s
assets had been sold for Fair Market Value and any previously unallocated
Profits or Losses had been allocated pursuant to Article 3.

Wagering Security and Integrity
Standards shall mean those standards approved by the
Board of Managers for the wagering security and integrity operations of the
Company and Third Parties.

Withdrawal Event
shall have the meaning set forth in Section 7.3.

Withdrawn Member
shall have the meaning set forth in Section  7.3.

XpressBet
shall mean any advance deposit wagering service that is Controlled by MEC.

 48
 

IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date first above written.

	
  

  	
  CHURCHILL DOWNS INCORPORATED

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  CD CONTENTCO HC, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MAGNA ENTERTAINMENT CORP.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MEC CONTENT HOLDCO LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 49
 

SCHEDULE
A

MEMBER
INFORMATION

 

	
  Name and Contact Information

  	
   

  	
  Allocation
  Percentage

  	
   

  	
  Initial
  Capital Commitment

  
	
  CD CONTENTCO HC, LLC; Attn:
  President

  700 Central Avenue

  Louisville, Kentucky 40208

  	
   

  	
  50

  	
   

  	
  $300,000

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  MEC
  CONTENT HOLDCO LLC; Attn:

  President 

  337 Magna Drive

  Aurora, Ontario L4G

  7K1 Canada

  	
   

  	
  50

  	
   

  	
  $300,000

  

 

Before the beginning of
each quarter the Board of Managers shall determine the capital needed by the
Company for such quarter and will provide a notice of this determination to
each Member specifying the amount and time of the contribution for such
additional capital (to be borne by CDI Sub and MEC Sub in proportion to their
Allocation Percentages).  Both CDI Sub
and MEC Sub must make the contribution required by such capital call on the
indicated due date, and delinquent amounts shall bear interest at a floating
rate equal to the prime rate as announced from time to time by the Bank,
compounded daily.

 

MANAGERS

William Carstanjen.

Joseph DeFrancis.

James E. Gay

Michael Neuman.

 50
 

SCHEDULE
B

Licensed Rights

A.            From
the date of the Agreement through the end of the Term, each of CDI and MEC and
their Affiliates shall, for all race meets of each of its race tracks that
commence during the Term, (i) exclusively license to the Company under the
terms of the Agreement such track’s ADW Content Rights, Point to Point Content
Rights and Rebate Content Rights, and (ii) grant to the Company the exclusive
right to sublicense such track’s respective ADW Content Rights, Point to Point
Content Rights and Rebate Content Rights, to any Third Party worldwide, or any
direct or indirect sublicensee of a Third Party, in the case of (i) and (ii)
subject to the contractual obligations existing as of the date hereof as set
forth on Schedule C.  For greater clarity
the preceding sentence is not intended to limit the ability of any Member and
its Affiliates to use their own ADW Content Rights, Point to Point Content
Rights and Rebate Content Rights, or use as a permitted licensee the ADW
Content Rights, Point to Point Content Rights or Rebate Content Rights of the
other Member and its Affiliates, (i) with respect to CDI ADW or XpressBet or (ii)
with respect to the CDI Tracks or MEC Tracks, all as more fully set forth in
the CDI/MEC Content Exchange Agreement.

B.            From
the date of the Agreement through the end of the Term, CDI and MEC and their
Affiliates grant and license to the Company the right to conduct the following
activities, as the sole and exclusive agent for CDI and MEC and their
Affiliates, subject to the contractual obligations existing as of the date
hereof as set forth on Schedule C:

1.                   Conduct the
acquisition of ADW Content Rights from all Third Parties worldwide for ADW
worldwide by CDI ADW and XpressBet

2.                       Conduct the acquisition of Point
to Point Content Rights from all Third Parties worldwide for Point-to-Point
Simulcasting worldwide at CDI Tracks and MEC Tracks.

3.                   Conduct the
acquisition of Rebate Content Rights from all Third Parties worldwide for
Rebating worldwide by CDI and MEC.

4.                   Sublicense any
Third Party Point to Point Content Rights, ADW Content Rights or Rebate Content
Rights made available to CDI, MEC or any of their Affiliates.

5.                       Sublicense CDI and MEC ADW
Content Rights to Third Parties worldwide for ADW worldwide.

6.                   Sublicense CDI
and MEC Point to Point Content Rights to Third Parties worldwide for
Point-to-Point Simulcasting worldwide.

7.                   Sublicense CDI
and MEC Rebate Content Rights to Third Parties worldwide for Rebating
worldwide.

8.                       Conduct the acquisition of
Television Rights and Broadband and Mobile Rights from all Third Parties
worldwide for:

a.  use by HRTV Entity worldwide

b.  sublicensing outside the
Territory as the Board of Managers may determine

9.                       Sublicense CDI, MEC and Third
Party Television Rights and Broadband and Mobile Rights to Third Parties
worldwide; provided, however, that each of CDI and MEC shall be permitted to
sublicense directly its own Broadband and Mobile Rights to Third Parties
worldwide.

 51
 

SCHEDULE
C

Existing Contractual Obligations

	
   

  	
   

  	
  Date of Expiration

  
	
  Churchill Downs Incorporated

  	
   

  	
   

  
	
  ODS Technologies (dba TVG Network) — Hoosier

  	
   

  	
  March
  13, 2007

  
	
  ODS Technologies (dba TVG Network) — Churchill Downs

  	
   

  	
  March
  14, 2007

  
	
  ODS Technologies (dba TVG Network) — Fair Grounds

  	
   

  	
  March
  30, 2007

  
	
  ODS Technologies (dba TVG Network) — Arlington

  	
   

  	
  August
  6, 2007

  
	
  ODS Technologies (dba TVG Network) — Calder

  	
   

  	
  April
  15, 2008

  
	
   

  	
   

  	
   

  
	
  New York City OTB

  	
   

  	
  December
  31, 2007

  
	
  Western Region OTB

  	
   

  	
  December
  31, 2007

  
	
  Southern Region OTB

  	
   

  	
  December
  31, 2007

  
	
  Catskills Regional OTB

  	
   

  	
  December
  31, 2007

  
	
  Capital Regional OTB

  	
   

  	
  December
  31, 2007

  
	
  Nassau Regional OTB

  	
   

  	
  December
  31, 2007

  
	
   

  	
   

  	
   

  
	
  Nevada Pari-Mutuel Association

  	
   

  	
  March
  31, 2009

  
	
   

  	
   

  	
   

  
	
  Customary Simulcast Agreements for Fair Grounds’ 2006/2007 Meet

  	
   

  	
  April
  30, 2007

  
					

 

 52
 

 

	
  Magna Entertainment Corp.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Ladbroke Xtra

  	
   

  	
  December 31, 2007

  
	
  SIS

  	
   

  	
  December 31, 2007

  
	
  Admiral Bet
  Shops

  	
   

  	
  August 31, 2007

  
	
  Wettpunk Bet
  Shops

  	
   

  	
  Month to Month

  
	
   

  	
   

  	
   

  
	
  Youbet

  	
   

  	
  30 day notice given
  anytime after May 1, 2007

  
	
  AmericaTAB

  	
   

  	
  April 22, 2007

  
	
  Philly PhoneBet

  	
   

  	
  April 22, 2007

  
	
  Connecticut OTB

  	
   

  	
  April 22, 2007

  
	
   

  	
   

  	
   

  
	
  Customary
  Simulcast Agreements for the following:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Gulfstream
  Park’s 2007 Meet

  	
   

  	
  April 22, 2007

  
	
  Santa Anita
  Park’s 2006-07 Meet

  	
   

  	
  April 22, 2007

  
	
  Golden Gate
  Field’s 2006-07 Meet

  	
   

  	
  February 11, 2007

  
	
  Laurel Park’s
  2006-07 Meet

  	
   

  	
  April 15, 2007

  
	
  Portland
  Meadows’ 2006-07 Meet

  	
   

  	
  May 5, 2007

  
	
  The Meadows
  2006-07 Meet

  	
   

  	
  September 1, 2007

  
	
  Remington Park’s
  2007 Spring Quarterhorse Meet

  	
   

  	
  June 31, 2007

  
	
  Magna Racino

  	
   

  	
  December 31, 2007

  
	
   

  	
   

  	
   

  
	
  CDI and
  MEC

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Racing World

  	
   

  	
  April 15, 2009

  

 

 

The above contractual
obligations of CDI and MEC shall not be renewed or extended after the date of
this Agreement, except Racing World may be extended upon approval of the Board
of Managers.

 53

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