MEMBERSHIP AND OPERATING AGREEMENT As part of this LLC we are offering a total of 1,000 memberships in this exciting new business. Once 80% of the memberships are sold a stable will be formed and we will start buying and racing horses. All LLC memberships will be sold on a first come, first served basis. Each membership is equivalent to a 1/10th of 1% ownership interest of the LLC. There will be three different membership levels but an individual may also buy shares equal to any number between 1 and 29. The maximum number of shares that may be owned by any one individual is 29. Standard membership $ 299 Elite membership* $ 2,990 Premier membership** $ 8,671 * 10 Equivalent memberships with the additional benefits of: Access to Elite member area of the web site Priority access to the winners circle pictures ** 29 Equivalent memberships (maximum allowed for any one member) with the additional benefits of: Position on the board of the stable (honorary title only with no voting rights) with semiannual financial updates Licensing option Annual meeting with the trainer(s) Access to Elite member area of the web site Priority access to the winners circle pictures No LLC ownership interest can be transferred or sold without the permission of the sole manger, Harness America, Inc. Costs of Operation and Business Structure There will be no additional future costs to the members outside of their initial membership investment. . The business will be formed as an Illinois Limited Liability Company and all of the costs of operating the LLC and its stable will be covered out of the earnings of the horses owned by the business. This business is being formed in accordance with Regulation D (Rule 504) of the Federal Securities Act and it is not registered with any Federal Governmental authority. The initial memberships that are collected to form the stable will be used as follows (all figures are estimates other than the initial business setup cost): Purchase of horses $276,000 Initial business setup costs (Benchmark Professional) 5,000 Operating cash 18,000 Total Memberships received $299,000 It is anticipated that it will take three or more months to purchase all of the horses and during the time the funds are kept in the business they will be maintained in an operating cash account. Once the horses begin to race 80% of the earnings of the LLC will be used to cover the ongoing costs of the stable. All money earned by the horses will be deposited with Harness America, Inc. (manager) for the LLC and then a 20% payment will be made back to the individual stable each month. In addition Harness America, Inc. will make the payments to all of the trainers and to Benchmark Professional Services, Inc. for the management costs. Harness America, Inc. will be the sole manager for the manager- managed LLC running the stable and be responsible for all of the management of the LLC’s operation. It is understood that the manager or its associates will also have similar stables to the one being offered here and that any and all conflicts of interest that may occur through associations with this management organization or others are acceptable to the members. The manager will have responsibility for the payment of all cash costs except for stakes fees, insurance, other than day to day veterinary bills, business taxes, licensing costs, mailing costs, business start up and closing costs, any taxes due on behalf of the LLC or its members and any extraordinary costs associated with the stable. These additional costs will be paid out of the operating funds of the LLC other than taxes due on behalf of the members which are their personal responsibility. As excess funds are accumulated additional horses will be purchased as the manager deems necessary. At the end of each of the first three years 5% of the initial investment of each member will be returned. Upon disposal of the assets in the final year of operation, all of the funds of the business (net of a $5,000 business closing cost) will be returned to the members based on their ownership percentage. In addition to paying all the bills and managing the operation the manager will have sole responsibility and authority for all purchases and sales of any of the assets of the LLC. The manager has exclusive management rights with regard to any and all aspects of the LLC operation and any assets it owns. The manager will also have the sole authority to determine the trainers and others members involved in the operation of the LLC. The manager has the right to delegate any and all responsibilities as deemed necessary by the manager. Individual members, other than the manger, (regardless of their number of memberships owned) will have no authority or involvement in any decision of the LLC and its stable operation. It is anticipated that in either the third or the fourth year of operation all of the LLC’s assets will be sold and the remaining proceeds will be returned to the members. While we are hopeful that the stable will actually be profitable over the four year period there is no guarantee of this. It is expected that the business will lose money in its first year or two of operation, due mostly to the depreciation that can be taken on the horses. Keep in mind that the results of a prior racing operation do not guarantee similar results in another racing operation. The maximum number of memberships that any individual can own is 29. Other than the manager it is not expected that individuals will be licensed in the states where the horses are racing. While efforts will be made to have the majority of the horses race in the area that the stable is formed, this will not always be the case. There is no obligation by the manager to have the horses race in one jurisdiction and should licensing requirements change in a given state all horses may be moved to another area in order to avoid prohibitive costs. It is planned that no licensing will be needed in any jurisdictions for anyone other than the manager. However, each member’s personal information will be provided to the jurisdictions in which the LLC races for information purposes. No member information will be given to any other organization unless required for racing or licensing purposes. Membership in the LLC does not provide for any benefits to other organizations. It also does not provide membership to any other affiliated stable other than the one you are joining, membership to the Untied States Trotting Association (USTA), free access to the race tracks or OTB’s, free admission to the racetracks or OTB’s, access to the backstretch or paddock area of the racetracks or access to the trainers and horses. Your membership card will provide you with access to the winners circle for the win photo. Based on the number of people at the track on any given day this may be restricted on a first come first served basis depending upon the amount of room available. Should any legal dispute arise during the course of this business it is agreed that it will be resolved through arbitration in the State of Illinois. In order to settle any dispute it is also the right of the manager to return the initial investment to a member as full settlement of any dispute. This alternative is solely at the manager’s discretion and will only occur with the manager’s approval. If you are referred by someone to our organization please make sure to note their name and address at the bottom of your application so that we can give credit to that person under our Refer A Friend program. Each owner will need to fill out a membership application and as part of the terms of this membership and operating agreement you will need to certify that you are at least 19 years of age and that your net worth is equal to at least 10 times the amount of you membership request. In addition you will need to certify that you have read this membership and operating agreement and are aware that this is a non-registered security under Regulation D (Rule 504) of the Federal Securities Act. Please be sure to review the four year financial pro forma and it explanation before finalizing any investment decision. The membership application must be signed (receipt of an e-mail application will assume the signature has taken place) and will be used as verification that the membership and operating agreement has been read and agreed to by you.