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EXHIBIT 10.1

OPERATING AGREEMENT

OF

LAYFIELD ENERGY, LLC

DATED:  DECEMBER 19, 2007

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OPERATING AGREEMENT
OF
LAYFIELD ENERGY, LLC

THIS OPERATING AGREEMENT (the “Agreement”), dated this 19th day of December
2007, is adopted by and between all Members listed in Exhibit A to this
Agreement, and Layfield Energy, LLC, a Nevada limited liability company (the
“Company”).

ARTICLE I. FORMATION

1.1           Organization. The Members have organized the Company as a Nevada
limited liability company pursuant to the provisions of the Act.  The Members
agree that it is in the best interest of the Company to change its
organizational status to a C-Corporation before December 31, 2007 and that this
Agreement shall remain in full force and effect until such change takes
place.  The Members agree that such C-Corporation will follow as similar as
possible a structure as established in this Operating Agreement.

THE MEMBERSHIP INTEREST OF ANY MEMBER IN THE COMPANY IS SUBJECT TO THE
RESTRICTIONS ON TRANSFER AND OTHER TERMS AND CONDITIONS SET FORTH IN ARTICLE XI
OF THIS AGREEMENT. THE MEMBERSHIP INTERESTS HAVE BEEN ACQUIRED BY THE MEMBERS
FOR INVESTMENT ONLY AND HAVE NOT BEEN REGISTERED UNDER ANY STATE SECURITIES LAWS
OR UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED. NEITHER THE
MEMBERSHIP INTERESTS NOR ANY PART THEREOF MAY BE OFFERED FOR SALE, PLEDGED,
HYPOTHECATED, SOLD, ASSIGNED OR TRANSFERRED AT ANY TIME EXCEPT IN COMPLIANCE
WITH THE TERMS AND CONDITIONS OF ARTICLE XI OF THIS AGREEMENT.

1.2           Agreement; Effect of Inconsistencies with Act. For and in
consideration of the mutual covenants herein contained and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Members and the Company hereby agree to the terms and
conditions of this Agreement, as it may from time to time be amended according
to its terms. It is the express intention of the parties that this Agreement
shall be the sole source of agreement of the parties, and, except to the extent
a provision of this Agreement expressly incorporates federal income tax rules by
reference to sections of the Code or Regulations or is expressly prohibited or
ineffective under the Act, this Agreement shall govern, even when inconsistent
with, or different than, the provisions of the Act or any other law or rule. To
the extent any provision of this Agreement is prohibited or ineffective under
the Act, this Agreement shall be considered amended to the smallest degree
possible in order to make the Agreement effective under the Act. In the event
the Act is subsequently amended or interpreted in such a way to make any
provision of this Agreement that was formerly invalid valid, such provision
shall be considered to be valid from the effective date of such interpretation
or amendment. The Members shall be entitled to rely on the provisions of this
Agreement, and the Members shall not be liable to the Company for any action or
refusal to act taken in good faith reliance on the terms of this Agreement. The
Members hereby agree that the duties and obligations imposed on the Members as
such shall be those set forth in this Agreement, which is intended to govern the
relationship between the Company and the Members, notwithstanding any provision
of the Act or common law to the contrary.

1.3           Name. The name of the Company shall be as set forth in Exhibit A
and all business of the Company shall be conducted under that name with such
variations and changes as the Members deem necessary, but in any case, only to
the extent permitted by applicable law.

1.4           Term. The term of the Company shall be perpetual and shall not
expire except in accordance with the provisions of Article XI of this Agreement
and in accordance with the Act.

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1.5           Registered Agent and Office. The Company’s registered agent and
the registered office shall be as set forth in Exhibit A. The Members may, from
time to time, change the registered agent or office through appropriate filings
with the Nevada Secretary of State. In the event the registered agent ceases to
act as such for any reason or the registered office shall change, the Members
shall promptly designate a replacement registered agent or file a notice of
change of address as the case may be.

1.6           Principal Office. The principal office of the Company shall be
located as set forth in Exhibit A. The Company may locate its place of business
and registered office at any other place or places, as the Members may from time
to time deem advisable.

ARTICLE II. BUSINESS PURPOSE

2.1           The purpose of the Company is to engage in any lawful act or
activity for which a limited liability company may be formed under the Act.

ARTICLE III. NAME AND ADDRESS OF INITIAL MEMBERS

3.1           The names and addresses of the initial Members are as set forth in
Exhibit A.

ARTICLE IV. MANAGEMENT

4.1           Management -General. The overall business and affairs of the
Company shall be managed by the Managers, working under direction and authority
of the Board of Directors as set forth in Exhibit A (the “Board”). Except for
situations or matters in which the approval of the Members is expressly required
by this Agreement or the non-waiveable provisions of the Act, the Managers shall
manage and control the business affairs and properties of the Company, make all
decisions regarding those matters, and perform any and all other acts or
activities customary or incident to the management of the Company’s business.
The Managers shall act in good faith and in a manner that the Managers
reasonably believe to be in the best interests of the Company and its Members.
The Managers may delegate to any Person such powers and responsibilities as the
Managers may deem appropriate for the efficient operation of the business of the
Company.  Such persons will include co-Chief Executive Officers as described in
Article 4.5.  The name and place of residence of each Manager is set forth in
Exhibit A.  A vote of the Members holding a majority of the capital interests in
the Company, as set forth in Exhibit C, as amended from time to time, shall
elect so many Managers as the Members determine, but no fewer than three.

4.2           Management Powers and Responsibilities. Without limiting the
generality of Section 4.1, and subject to any limitations in this Agreement, the
Managers shall have the power and authority, on behalf of the Company:

(a)    to open accounts in the name of the Company with banks and other
financial institutions, and designate and remove from time to time, at the
discretion of the Managers, all signatories on such bank accounts;

(b)    to execute on behalf of the Company all instruments and documents
including, without limitation, checks, drafts, notes and other negotiable
instruments, mortgages or deeds of trust, security agreements, financing
statements, documents providing for the acquisition, mortgage or disposition of
the Company’s Property, assignments, bills of sale, leases and any other
instruments or documents necessary to conduct the business of the Company;

(c)            to collect and receive all revenue, income and profits derived
from the operation of the Company’s business, and to disperse Company funds for
Company purposes to those Persons entitled to receive the same in accordance
with this Agreement;

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(d)            within the ordinary course of the Company’s business, to acquire,
manage, hold, lease sell, exchange and otherwise dispose of real, personal or
mixed Property, or interests therein, upon such terms and conditions as the
Managers deem to be in the best interest of the Company;

(e)            to pay, on behalf of the Company, any organizational expenses
incurred in the organization of the Company;

(f)            to make all reasonable and necessary expenditures with respect to
the Property of the Company as the Managers deem to be in the best interest of
the Company;

(g)            to invest any Company funds temporarily in time deposits,
short-term governmental obligations, commercial paper or other investments;

(h)            to pay all taxes, licenses or assessments of whatever kind or
nature imposed upon or against the Company, and for such purposes to file such
returns and do all such other acts or things as may be deemed necessary or
advisable by the Managers;

(i)             to purchase commercial general liability insurance and such
other insurance coverage as the Board shall determine to be necessary or
desirable to insure the Members or to protect the Company’s assets;

(j)             to employ, engage or contract with Persons in the operation and
management of the Company’s business;

(k)            to employ accountants, legal counsel, consultants or other
experts to perform services for the Company and to compensate them from Company
funds;

(l)            to institute, prosecute, defend, settle, compromise and dismiss
claims, lawsuits or other judicial or administrative proceedings, involving an
amount in controversy of less than $50,000, brought by or on behalf of, or
against the Company or the Members in connection with activities arising out of,
or connected with, or incidental to this Agreement or the business of the
Company; provided, however, that the Managers shall provide to the Board each
calendar quarter or more often as requested by any Member, a description of any
claim, lawsuit or judicial or administrative proceeding where the amount in
controversy exceeds $10,000; and provided further that any Member may notify the
Manager of a strategic interest in any claim, lawsuit or proceeding involving an
amount in controversy of less than $50,000, in which case the institution,
prosecution, defense, settlement, compromise or dismissal of the claim, lawsuit
or proceeding and the engagement of legal counsel in connection therewith shall
be subject to Section 4.6 below; and

(m)           to do and perform all other acts as may be necessary or
appropriate to the conduct of the Company’s business.

4.3           Members.

(a)            Liability. The liability of the Members shall be limited as
provided under the laws of the Act.

(b)           Power to Bind the Company. Members that are not Managers shall
take no part whatever in the control, management, direction or operation of the
Company’s affairs and shall have no power to bind the Company.  No Member or
group of Members acting in their individual capacity, separate and apart from
action as Members of the Company pursuant to this Agreement, shall have the
authority to bind the Company to any third party with respect to such
matter.  The Managers may from time to time seek advice from the Members, but
they need not accept such advice, and at all times the Managers shall have the
exclusive right to control and manage the Company.

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(c)            No Member shall be an agent of any other Member of the Company
solely by reason of being a Member.

(d)           Members Who Are Not Individuals. Each Member who is an artificial
entity or otherwise not an individual hereby represents and warrants to the LLC
and each Member that such Member is:

(i) duly incorporated or formed (as the case may be),

(ii) validly existing and in good standing under the laws of the jurisdiction of
its incorporation or formation, and

(iii) has full power and authority to execute and deliver this Agreement and to
perform its obligations hereunder.

(e)            Reimbursement. The Company shall reimburse Members for all
reasonable direct out-of-pocket expenses incurred by them in managing the
Company.

4.4           Other Activities by Managers and Members. The duty of the Managers
and Members to act on behalf of the Company shall be non-exclusive. The Managers
shall not be required to devote full-time attention to the business of the
Company and may have other business interests and may engage in other activities
in addition to those relating to the Company provided that the Managers will
manage and operate the business of the Company separately from the Managers’
other business interests. Neither the Company nor any Member shall have any
right, by virtue of this Agreement, to share or participate in such other
investments or other activities of the Managers or Members or to the income or
proceeds derived therefrom.

4.5           CEO. Subject to the approval of the Board, the Managers shall
appoint a CEO or co-CEOs of the Company who shall be compensated by the Company.
The initial co-CEOs shall serve in such capacity until resignation or removal by
action of a majority of the Board. The co-CEOs shall report to the Managers and
shall supervise, administer and manage the day-to-day business affairs of the
Company. John Layfield and Neil Reithinger shall be appointed co-CEOs upon
execution of this Agreement.  The co- CEOs shall have the initial
responsibilities described below:

Roles of Co-CEOs
John Layfield
 
Neil Reithinger
-
Promotions
 
-
Domestic Sales
-
Marketing
 
-
Manufacturing
-
Web Strategy
 
-
Product Formulation
-
Oversight of Managers
 
-
Corporate Finance
-
Assist with Domestic Sales
 
-
Accounting & Operations
-
International Sales
 
-
Assist with International Sales
-
Work closely with Neil Reithinger
 
-
Work closely with John Layfield

In addition to such responsibilities, the co-CEOs such mutually agree to
allocate such other responsibilities between each of them including the
following:

(a)            effectuate this Agreement and the regulations and decisions of
the Members and the Board of Directors;

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(b)            direct and supervise the day-to-day operations of the Company;

(c)            within parameters set by a majority vote of the Board, establish
such charges for services and products of the Company as may be necessary to
provide adequate income for the efficient operation of the Company;

(d)            within the budget established by the Board, set and adjust wages
and rates of pay for all personnel of the Company and shall appoint, hire and
dismiss all personnel and regulate their hours of work;

(e)            set and adjust reimbursable rates and costs to be paid to the
Members by the Company when such Member or its staff is engaged in Company
business;

(f)            keep the Board, the Managers and Members advised in all matters
pertaining to the day-to-day operations of the Company, the services rendered,
the products provided, operating income and expenses, the financial position of
the Company, and, to this end, the CEO shall prepare and submit a report to the
Board at each regular meeting and at other times as may be directed by the
Board;

(g)           within parameters set by the Managers, execute on behalf of the
Company all instruments and documents, including checks, drafts, notes and other
negotiable instruments and deposit the same into bank accounts approved by the
Managers;

(h)            specifically refer all issues of a legal nature that arise in the
operation of the Company’s business immediately to legal counsel approved by the
Board, so as not to compromise the position of the Company, Members or Board;

(i)             refer all claims potentially covered by the Company’s insurance
policies so as to not jeopardize insurance coverage on any such claims; and

(j)             do and perform all other authorized acts as may be approved by
the Board and as are necessary or appropriate to the conduct of the Company’s
business.

4.6           Consultants.   The Company shall hire or contract with such
consultants as necessary to efficiently operate the business.

4.7           Liability for Certain Acts. Each Manager shall exercise its
business judgment in managing the business, operations and affairs of the
Company. Unless fraud, deceit, gross negligence, willful or wanton misconduct, a
wrongful taking by the Manager, or a breach of the Manager’s fiduciary duty,
shall be proved by a non-appealable court order, judgment, decree or decision,
the Manager shall not be liable or obligated to the Company or Members for any
mistake of fact or judgment or for the doing of any act or the failure to do any
act by the Manager in conducting the business, operations and affairs of the
Company, which may cause or result in any loss or damage to the Company or its
Members. The Manager does not, in any way, guarantee the return of the Members’
Capital Contributions or a profit for the Members from the operations of the
Company. The Manager shall not be responsible to any Members because of a loss
of their investments or a loss in operations, unless the loss shall have been
the result of fraud, deceit, gross negligence, willful or wanton misconduct, a
wrongful taking by the Manager, or a breach of the Manager’s fiduciary duty,
provided as set forth in this Section 4.6. The Manager shall incur no liability
to the Company or to any of the Members as a result of engaging in any other
business or venture.

4.8           Resignation. The Managers and the CEO of the Company may resign at
any time by giving written notice to the Board. The resignation of the Manager
or CEO shall take effect upon receipt of notice thereof or at such later time as
shall be specified in such notice; and, unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make it effective. The
resignation of a Manager who is also a Member shall not affect the Manager’s
rights as a Member and shall not constitute a withdrawal of the Member.

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4.9           Removal. The Managers may be removed at any time by the
affirmative vote of the Members holding no less than sixty-six percent (66%) of
the Membership Interests of the Company. The CEO may be removed at any time upon
the majority vote of the Board. The removal of the Manager who is also a Member
shall not affect the Manager’s rights as a Member and shall not constitute a
withdrawal of the Member.

4.10         Compensation of Manager. The Managers shall be reimbursed all
reasonable out-of-pocket expenses incurred in managing the Company and may be
entitled to reasonable compensation for rendering services commensurate with the
value of such services.

ARTICLE V. BOARD OF DIRECTORS

5.1           Number and Tenure. The Board shall initially consist of not less
than three or more than five (5) persons initially (each a “Director”). The
names of the initial Directors are set forth in Exhibit A. The number of
directors may be fixed or changed by a majority of the existing Directors of the
Board, subject to limitations imposed by law.  Subject to the limitations
imposed by law or contained herein, the business and affairs of the Company
shall be managed and all corporate powers shall be exercised by or under the
ultimate direction of the Board.   Decisions of the Board shall be made by
majority vote, with each member of the Board exercising one vote. In order to
constitute a quorum, at least one representative of each Member must be present
during Board meetings. Directors need not be residents of the State of Nevada.

5.2           Chairman of the Board. One of the Directors serving on the Board
shall serve as Chairperson. The Chairperson shall preside over all Board
meetings. In the event of a deadlock concerning an issue to be resolved by the
Board, the Chairperson shall cast the deciding vote.  Initially, John Layfield
shall serve as the Chairperson.

5.3           Committees of the Board.  The Board may designate one or more
committees to serve at the pleasure of the Board. Each committee shall have and
may exercise any and all powers as are conferred or authorized by the resolution
appointing it. The Board shall have the power at any time to fill vacancies in,
to change the size of membership of, and to discharge any committee.

5.4           Meetings. The Board shall meet on a quarterly basis, or more often
as necessary, at a time and place to be determined by the Members. Any Member,
in its discretion, may call for a meeting of the Board upon ten (10) business
days prior written Notice to the Directors and to all other Members.

5.5           Telephone Meetings. Board representatives may participate in Board
meetings by means of telephone conference or similar communications equipment,
and such participation in a telephone conference shall constitute presence in
person at such meeting.

5.6           Action by Written Consent. Any action required or permitted to be
taken by the Board, either at a meeting or otherwise, may be taken without a
meeting provided that all representatives consent thereto in writing and the
writing or writings are filed with the minutes of proceedings of the Board; and
provided further that written notice of the action to be taken by written
consent will be given to all Members at least 2 business days prior to the
intended effectiveness of any such action.

5.7           Minutes of Meetings. The decisions and resolutions of the Board
will be reported in minutes, which will state the date, time and place of the
meeting (or the date of the written consent in lieu of a meeting), the Board
members present at a meeting, the resolutions put to a vote (or the subject of a
written consent) and the results of such voting (or written consent). The
minutes will be entered in a minute book kept at the principal office of the
Company and a copy of the minutes will be provided to each Member.

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5.8           Business Plan. After soliciting input from the Members, the CEO
shall prepare and submit to the Board (no later than October 1 of each year) for
approval by unanimous vote of the Board an annual business plan (the “Business
Plan”) for the succeeding year consistent with the purpose of the Company as set
forth in Section 2.1. The Board shall review the draft Business Plan and offer
any revisions thereto as promptly as commercially practicable after receipt and
in any event prior to December 1. At a minimum, the Business Plan shall contain:

(a)            the estimated receipts and expenditures (capital, operating and
other) of the Company in sufficient detail to provide an estimate of cash flow,
capital proceeds and other financial requirements of the Company for such year;

(b)            information concerning the strategic direction of the Company;

(c)            strategic and tactical marketing plans and initiatives;

(d)            plans and initiatives to solicit new customers and accounts, and
to retain existing customers and accounts;

(e)            information on an overall Company basis respecting material
proposed changes to the Company’s employee salaries, benefits and policies; and

(f)            such other information or other matters necessary or desirable in
order to inform the Board of the Company’s business and to enable the Board to
make an informed decision with respect to approval of such Business Plan.

After the final Business Plan has been approved by unanimous vote of the Board,
the Managers shall implement the Business Plan. If the Board is not able to
agree on a Business Plan for any year, then, until such time as the Board agrees
on the Business Plan for such year, the Business Plan for the previous year
shall continue to apply to the business and affairs of the Company.

5.9           Dividends. The Board reserves the right to distribute earnings to
the extent the Company is able based on the Company’s growth plans.

ARTICLE VI. RIGHTS AND DUTIES OF THE MEMBERS

6.1           Liability of Members. Each Member’s liability shall be limited as
set forth in the Act and other applicable law. A Member will not personally be
liable for any debts or losses of the Company beyond the Member’s respective
Capital Contributions, except as otherwise provided herein or required by law.

6.2           Indemnification. The Company shall indemnify the Members, and
their respective agents for all costs, losses, liabilities, and damages paid or
accrued in connection with the business of the Company, to the fullest extent
provided or allowed by the laws of the State of Nevada. In addition, upon
written request, the Company may advance costs of defense of any legal
proceeding to the Members or any other agent, prior to the conclusion of the
matter and as such costs are incurred.

6.3           Business Opportunities. Each Member and all affiliates of such
Member may have other business interests and may engage in other activities in
addition to those relating to the Company, including interests in or taking
actions on behalf of one or more entities engaged in activities of a similar
nature to or in competition with the Company or any joint venture, partnership
or other entity in which the Company has a direct or indirect interest.  Each
Member agrees that each other Member and any affiliate thereof may own, operate,
engage in, invest in or possess an interest in any other business venture or
ventures of any nature or description, independently or with others, whether or
not the same is competitive with the purposes of the Company, and neither the
Company nor the other Members shall have any rights by virtue of this Agreement
in and to said independent ventures or to the income or profits derived
therefrom. No Member or affiliate thereof or any of them shall be obligated to
present any particular investment or business opportunity to the Company even if
such opportunity is of a character which, if presented to the Company, could be
taken by the Company, and each of them shall have the right to take for its own
account or for any other person or entity, or to recommend to others any such
particular investment or business opportunity.

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6.4           Company Books. In accordance with Section 9.1 herein, the Chief
Executive Manager shall maintain and preserve, during the term of the Company
and for three (3) years after dissolution, all accounts, books and relevant
Company records. Upon reasonable request, each Member shall have the right,
during ordinary business hours, to inspect and copy such Company documents at
the requesting Member’s expense.

6.5           Voting. Except as otherwise provided in this Agreement, each
Member shall have one vote for each one percent of the Member’s Membership
Interest outstanding. Therefore, the total individual votes for all Members
available to be cast at any one time will be one hundred (100). Fractional
interests shall be rounded to the nearest whole percentage point for voting
purposes, A majority vote consisting of over 50% will be required.

6.6           Priority and Return of Capital. Except as may be expressly
provided elsewhere in this Agreement, no Member shall have priority over any
other Member, either as to the return of Capital Contributions or as to Net
Profits, Net Losses or Distributions; provided, however, that this Section 6.6
shall not apply to operating and other loans (as distinguished from Capital
Contributions and Member loans) which a Member has made to the Company or to
another Member.

6.7           Pledge Restriction. Each Member agrees that no Member shall be
permitted to pledge their Membership Interest as collateral for any loan or
financial obligation without the vote or consent of holders of eighty-five
percent (85%) of the Membership Interests in the Company.

ARTICLE VII. CONTRIBUTIONS

7.1           Initial Contributions. The initial Members shall make the Initial
Capital Contributions described on Exhibit B at the time and on the terms
specified on Exhibit B and shall perform that Member’s Commitment. The value of
the Initial Capital Contributions shall be as set forth on Exhibit B. No
interest shall accrue on any Initial Capital Contribution and the Members shall
not have the right to withdraw or be repaid any Initial Capital Contribution
except as provided in this Agreement.

7.2           Additional Capital Contributions.

(a)            No Member shall be responsible for, or obligated to provide for,
capital requirements and expenses of the Company in excess of their Initial
Capital Contribution.

(b)            Upon the vote of Members holding eighty-five percent (85%) of the
Membership Interests of the Company, the Manager may request Additional Capital
Contributions from each Member by way of written notice stating the amount of
additional funds required, the purpose therefore, and the date upon which
Additional Capital Contributions may be made by each Member. Each Member shall
have the right to make their pro rata share of the Additional Capital
Contribution in accordance with their Membership Interest at the time specified
in such notice. If any Member does not make the full amount of their share of a
requested Additional Capital Contribution within ten (10) days after the
expiration of the time specified in such notice, the Manager shall send a
written notice to each Member specifying the amount not contributed (the
“Non-Contribution Notice”). Each Member shall have the right to make the
Additional Capital Contribution requested from the non-contributing Member on a
pro rata basis in accordance with their Membership Interests or as they
otherwise agree by sending a written notice to the Managers within (5) days of
the Member’s receipt of the Non-Contribution Notice indicating the Member’s
interest to contribute a portion of the non-contributing Member’s Additional
Capital Contribution (the “Portion Notice”). The value of the Membership
Interest for the Additional Capital Contribution made by a Member shall be based
on the lower of the Company’s Net Book Value or its fair market value as
reasonably determined by the Board in its sole discretion immediately preceding
the Additional Capital Contribution. If the Board determines that the Company
needs additional funds, but determines not to request Additional Capital
Contributions, the Board may cause the Company to borrow such funds from any
Person, including any Member, upon such terms and conditions as may be agreed to
at the time. No such loan to the Company from a Member shall be deemed to
constitute a Capital Contribution to the Company and shall not increase the
Capital Account of the Member making the loan.

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7.3           Capital Accounts.

(a)            The Managers shall maintain separate Capital Accounts for each
Member. Each Member’s Capital Account will be increased by (1) the amount of
money contributed by such Member to the Company, including Additional Capital
Contributions; (2) the value, as agreed by the Board, of Property contributed by
such Member to the Company (net of liabilities secured by such contributed
Property that the Company is considered to assume or take subject to under
Section 752 of the Code); and (3) the amount of Net Profits allocated to such
Member. Each Member’s Capital Account will be decreased by (1) the amount of
money distributed to such Member by the Company; (2) the value, agreed by the
Board, of Property distributed to such Member by the Company (net of liabilities
secured by such distributed Property that such Member is considered to assume or
take subject to under Section 752 of the Code); and (3) the amount of Net Losses
allocated to such Member.

(b)            In the event of a permitted sale or exchange of a Membership
Interest in the Company pursuant to the terms of this Agreement, the Capital
Account of the transferor shall become the Capital Account of the transferee to
the extent it relates to the transferred Membership Interest.

(c)            The manner in which Capital Accounts are to be maintained
pursuant to this Section 7.3 is intended to comply with the requirements of Code
Section 704(b) and the Regulations promulgated thereunder and this Agreement
shall be considered amended to the smallest degree possible in order to comply
with Code Section 704(b) and the Regulations thereunder.

(d)            Upon liquidation of the Company (or any Member’s Membership
Interest), liquidating distributions shall be made pursuant to Section 8.3(c).
Liquidation proceeds will be paid as reasonably determined by the Manager.

ARTICLE VIII. ACCOUNTING METHOD, ALLOCATIONS, DISTRIBUTIONS

8.1           Method of Accounting. The Net Profits and/or Net Losses of the
Company shall be determined in accordance with accounting principles applied on
a consistent basis under the method of accounting as set forth in Exhibit A.

8.2           Allocations.

(a)            Net Profits and credits earned by the Company for each Fiscal
Year attributable to the operations of the Company shall be allocated to the
Members in accordance with the Membership Interest identified in Exhibit C and
shall be credited to each Member’s Capital Account (exclusive of credits) in
accordance with the following:

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(i)             First, if the Capital Account of any Member has a negative
balance, Net Profits shall be credited to each Member having a negative Capital
Account balance in an amount equal to the negative Capital Account balance, in
the ratio that the Member’s negative Capital Account balance bears to the
aggregate negative Capital Account balances of the Members having negative
Capital Account balances;

(ii)            Second, if previous cumulative Net Losses have been incurred,
Net Profits will be allocated pro rata in proportion to the amount of cumulative
Net Losses allocated to each Member; and

(iii)           Thereafter, to all Members pro rata in proportion to their
relative Membership Interest in effect as of the effective date of the
allocation, except that for any Fiscal Year which has any changes in the
Membership Interests, the allocation will be calculated using the per share per
day method as provided for in the Code.

(b)            After giving effect to the allocations provided for in the
provisions of this Agreement covering special allocations and curative losses,
all Net Losses of the Company for each Fiscal Year shall be allocated first to
the Members in an amount equal to the Net Profits previously credited to the
Members (and not previously reduced by this Section) and second to all Members
and shall be charged to the Members’ Capital Accounts pro rata in proportion to
their relative Membership Interest in effect as of the effective date of the
allocation, except that for any Fiscal Year which has any changes in the
Membership Interests, the allocation will be calculated using the per share per
day method as provided for in the Code. Notwithstanding the foregoing, in no
event shall any such loss be allocated to a Member, to the extent that it would
result in such Member having a negative Capital Account balance, if any other
Member has a positive Capital Account balance. The foregoing reallocation of
losses to a Member with a positive Capital Account balance shall remain in
effect only until all Members have Capital Account balances of zero. If all
Members have Capital Account balances of zero and any Member has made a loan to
the Company which remains outstanding at the end of any Fiscal Year, net losses
shall be allocated first, on a pro rata basis, to each Member whose loan remains
outstanding up to the aggregate amount of the loan balance.

8.3            Distributions.

(a)            Except as provided in Section 8.3(d) and except as required in
Section 8.3(a)(iii), distributions of Distributable Cash attributable to
operations of the Company shall be made at such time as determined by the Board
and which is not, in the reasonable opinion of the Board, necessary to conduct
the Company’s business. Except as expressly provided herein, no Member shall
have priority over any other Member, either as to distributions or the return of
Capital Contributions other than what is provided by this Section 8.3. All
amounts withheld pursuant to the Code or any provisions of state or local tax
law with respect to any payment or distribution to the Members from the Company
shall be treated as amounts distributed to the relevant Member or Members
pursuant to this Section 8.3. All distributions of Distributable Cash
attributable to operations of the Company shall be made as follows, unless
otherwise agreed to by the Members:

(i)            First, if cumulative Net Profits from inception of the Company
exist at the end of any calendar year, to the Members, in proportion to their
Membership Interests;

(ii)            Second, to all Members pro rata to the amount of Net Profits
allocated to the Members per Section 8.2 net of the distribution made in Section
8.3(a)(i);

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(iii)           Third, to all Members pro rata in proportion to the sums of
their respective Initial Capital Contributions and any Additional Capital
Contributions, until the full amount of all Initial and Additional Capital
Contributions shall have been returned to all Members; and

(iv)           Thereafter, to all Members pro rata in proportion to the relative
Membership Interest they hold, in effect as of the effective date of the
distribution.

(b)            Except as expressly provided in Section 8.3(a) or as a result of
the application of Section 8.4, no distributions which are disproportionate to a
Member’s Membership Interest are permitted without the approval of Members
holding eighty-five percent (85%) of the Membership Interests, and then, only
after the Members take into consideration the potential future impact on
Sections 8.2 and 8.3 and concluding their consideration with a written summary
of the Members’ decision.

(c)            In the event of the liquidation of the Company, distributions to
Members shall be made, after the allocations described in Section 8.2 and to the
extent such distributions were not previously made pursuant to Section 8.3(a),
on a pro rata basis to all Members based on the Membership Interest they hold,
in effect as of the effective date of the distribution.

(d)            No distribution shall be declared and paid unless, after the
distribution is made, the book value of the assets of the Company is in excess
of all liabilities of the Company, except liabilities to Members on account of
their contributions. For any kind of distribution, a Member, irrespective of the
nature of their Capital Contribution, has the right to demand and receive only
cash as compared to demanding the distribution of any specific asset of the
Company.

8.4           Special Allocations.

(a)            Except as otherwise provided in this Agreement, special
allocations will be made as permitted and/or required by the Code.

(b)            Items of income, gain, loss, deduction, credit and tax preference
for state and local income tax purposes shall be allocated to and among the
Members in a manner consistent with the allocation of such items for federal
income tax purposes in accordance with the foregoing provisions of this Article
VIII.

ARTICLE IX.  RECORDS, TAX MATTERS, BANKING

9.1           Books and Records. The Managers, at the expense of the Company,
shall maintain the following books and records at the Company’s principal
office:

(a)            A list of the full name and the last known street address of each
Member, both past and present;

(b)            A copy of the Articles of Organization for the Company, and all
amendments thereto;

(c)            Copies of the currently effective Agreement and all amendments
thereto, copies of any prior Agreement no longer in effect, and copies of any
writings permitted or required with respect to a Member’s obligation to
contribute cash, Property, or services;

(d)            Copies of the Company’s federal, state and local income tax
returns and reports (or the portions of the returns of others showing the
taxable income deductions, gain, loss, and credits of the Company), if any, for
the three most recent years;

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(e)            Copies of the financial statements of the Company, if any, for
the three (3) most recent years;

(f)            Minutes of every meeting of the Board or the Members;

(g)            Any written consents obtained from Members or the Board for
actions taken by the CEO or actions taken by the Members or the Board of
Directors without a meeting; and

(h)            If not set forth in this Agreement, a writing or other data
compilation from which information can be obtained through retrieval devices
into a reasonably usable form setting forth the following:

(i)            The amount of cash and a description and statement of the agreed
value of the other Property or services contributed by the Members and which the
Members have agreed to contribute;

(i)             The times at which or events on the happening of which any
additional Commitments agreed to be made by the Members are to be made;

(ii)            Any right of a Member to receive, or of the Company to make,
distributions to a Member which include a return of all or any part of the
Member’s Capital Contribution or distributions in kind; and

(iii)           Any events upon the happening of which the Company is to be
dissolved and its affairs wound up.

9.2           Bank Accounts. All funds of the Company shall be deposited in the
name of the Company in an account or accounts maintained with such bank or banks
selected by the Managers. Checks shall be drawn upon the Company account or
accounts only for the purposes of the Company and shall be signed by authorized
Persons on behalf of the Company.

ARTICLE X.  SECURITIES LAWS MATTERS

10.1         Representations. Each Member, by executing this Agreement, hereby
represents and warrants to the Company and to each Member that such Member:

(a)            Is aware that the acquisition of their Membership Interest in the
Company has not been registered under the Securities Act of 1933, as amended, or
registered or qualified under the securities laws of any state;

(b)            Is acquiring the Membership Interest in their own name and solely
for their own account (or for a trust account if a trustee) and not for the
account of any other person;

(c)            Is acquiring their Membership Interest for the purpose of
investment only, and not with a view to or for sale in connection with any
distribution of such Membership Interest;

(d)            Understands that any Disposition of their Membership Interest is
limited by this Agreement and in any event may not be effected unless the
Disposition is registered and qualified under applicable securities laws, or is
eligible for an exemption from registration and qualification, and, except as
expressly provided otherwise herein, that no understanding has been made with
regard to registering or qualifying such Membership Interest in the future;

(e)            Understands that any certificate or other document which
evidences their Membership Interest in the Company may bear one or more
restrictive legends stating that the Membership Interest evidenced therein has
not been registered under the Securities Act of 1933, as amended or qualified
under any securities laws;

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(f)             Is capable of evaluating, through their own knowledge and
experience in financial and business matters, the merits and risks of this
investment and of protecting their own interest in connection with this
investment;

(g)            Is able to bear the economic risk of the loss of their Membership
Interest;

(h)            Has not seen or received any advertisement or general
solicitation with respect to the sale of the Membership Interest;

(i)            Acknowledges that the Company has given him the opportunity to
obtain any information and ask questions concerning the Company, Membership
Interest in the Company, and their investment, and to the extent that he or she
availed himself or herself of that opportunity, he or she has received from the
Company satisfactory information and answers; and
 
(j)            Acknowledges that the Company and each Member are relying on the
foregoing representations.

10.2         Compliance with Securities Laws and Other State and Federal Law.
Notwithstanding the other provisions of this Article X, no Member may transfer
their Membership Interest in the Company unless such Member provides to the
remaining Members such evidence and assurances as the remaining Members, may
reasonably request, including but not limited to an opinion of counsel
satisfactory to the Members that the transfer of such Membership Interest:

(a)            Shall not cause a termination of the Company under any applicable
federal or state law;

(b)            Shall not violate any applicable state or federal securities
laws; and

(c)            Shall be accomplished in compliance with the registration
requirements of all applicable state and federal securities law or pursuant to
an applicable exemption there from, and that all such filings or other actions
necessary to effect any such transaction have been undertaken or will have been
undertaken prior to, or concurrent with, the transfer.

ARTICLE XI.  ADMISSION OF ADDITIONAL MEMBERS AND MEMBERSHIP INTEREST TRANSFERS

11.1         Admission of Additional Members. The Members, by unanimous written
consent may admit Additional Members and determine the Capital Contributions
and/or Commitments and the corresponding allocated Membership Interest of such
Additional Members. As a condition of admission, any Additional Member shall
agree to be subject to all the terms and conditions of this Agreement by signing
the original Agreement maintained by the Company.

11.2         Disposition. The Membership Interest of any Member is transferable
either voluntarily or by operation of law, subject to the provisions of this
Article XI. Upon a transfer of a Member’s Membership Interest in compliance with
this Article XI, the transferee shall be admitted as an Additional Member
without further action at the time the transfer is completed, subject to the
condition of admission required by Section 11.1.

11.3         General Restrictions on Transfers.

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(a)            Except as otherwise provided in this Agreement, no Member may,
without the written consent of all Members, Dispose of a Membership Interest in
the Company. For purposes of this Agreement, a transfer of a Membership Interest
in the Company shall include any Disposition of all or a portion of a Membership
Interest in the Company. Any purported Disposition or gift of all or a portion
of a Membership Interest made in violation of this Agreement shall be void as
against the Company and the other Member, and the transferring or gifting Member
shall indemnify and hold the Company and the other Member harmless from and
against any and all loss, damage or expense (including, without limitation, tax
liabilities or loss of tax benefits) incurred or suffered by the Company or
other Member and arising directly or indirectly as a result of any Disposition
or gift, or purported Disposition or gift, in violation of this Article XI.

(b)            Notwithstanding anything in this Agreement to the contrary, a
Disposition shall be void if, in the opinion of counsel to the Company, the
Disposition would:
 
(i)             Cause a termination of the Company under any applicable federal
or state law or deemed termination of the Company under any applicable federal
or state income tax law; or
 
(ii)            Not be accomplished in compliance with the registration
requirements of all applicable state and federal securities laws or pursuant to
an applicable exemption there from.

11.4         Right of First Refusal.

(a)            In the event that a Member (“Selling Member”) desires to Dispose
of all (but not less than all) of its Membership Interest (the “Offered
Interest”) to any Person other than a current Member (the “Offeror”), the
proposed Disposition shall not be permitted unless the Selling Member shall
afford the Company and the other Members a right of first refusal pursuant to
this Section 11.4.

(b)            Before Disposing of its Offered Interest in the Company, the
Selling Member must provide to the Company and other Members at least thirty
(30) days (the “Notice Period”) prior written notice (the “Disposition Notice”)
of its intention to Dispose the Offered Interest. In the Disposition Notice, the
Selling Member shall specify: (i) the price at which the Offered Interest is
proposed to be sold or transferred (the “Offering Price”), which may not consist
of consideration other than cash and/or promissory notes, (ii) the portion of
their Membership Interest to be sold, (iii) the identity of the proposed Offeror
or transferee, and (iv) any other material terms of the proposed Disposition.

(c)            The Managers may elect, on behalf of the Company, within the
first five (5) days of the Notice Period, to purchase the Offered Interest to be
disposed of by the Selling Member at the Offering Price. The terms and
conditions of the purchase by the Company shall be the terms and conditions of
the proposed Disposition as set forth in the Disposition Notice. If the Company
elects not to purchase the Offered Interest, the Company shall notify each
non-selling Member. The notice shall state that the Company did not exercise its
option to purchase the Offered Interest.

(d)            If the Company elects not to purchase the Offered Interest, the
Offered Interest, may be purchased by the non-selling Member on the same terms
and at the same price available to the Company. The non-selling Member must give
written notice to the Disposing Selling Member of the exercise of their option
to purchase the Offered Interest before the expiration of the Notice Period.
Alternatively, each non-selling Member may within the same 30-day period, notify
the Manager of its desire to participate in the sale of that Member’s Membership
Interest on the terms set forth in the Disposition Notice.

(e)            If neither the Company nor the non-selling Member shall have
elected to purchase the entire Offered Interest covered by the Disposition
Notice as provided in the foregoing subsections of this Section 11.4, the
Selling Member may sell to Persons other than the Company and the non-selling
Member, provided that any Disposition must be made on the terms and conditions
and to the party specified in the Disposition Notice.

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(f)            Unless otherwise agreed, the closing of any sale of a Membership
Interest shall take place at the Company’s principal office. Once transferred,
the Membership Interest shall be subject to all of the terms and conditions of
this Agreement, and any third party purchaser shall agree to be bound by the
terms and conditions of the Agreement as a condition concurrent with the
transfer of the Membership Interest by signing the original Agreement maintained
by the Company.

11.5         Failure to Fully Exercise Options; Co-Sale.

(a)            If the Company and the non-selling Members do not exercise their
options to purchase the Offered Interest within the period described in this
Agreement (the “Option Period”), then all options of the Company and the
non-selling Members to purchase the Offered Interest, whether exercised or not,
shall terminate, but each Member which has, pursuant to Section 11.4, expressed
a desire to sell its Membership Interests in the transaction (a “Participating
Member”), shall be entitled to do so pursuant to this Section. The Company shall
promptly, on expiration of the Option Period, notify the Selling Member of the
Participating Members wishing to sell. The Selling Member shall use commercially
reasonable efforts to interest the Offeror in purchasing, in addition to the
Offered Interest, the Membership Interests of the Participating Members. If the
Offeror does not wish to purchase, in addition to the Offered Interest, the
Membership Interests made available by the Participating Members, then each
Participating Member and the Selling Member shall be entitled to sell, at the
price and on the terms and conditions set forth in the Disposition Notice, a
portion of the Membership Interests being sold to the Offeror, in the same
proportion as such Selling Member or Participating Member’s ownership of
Membership Interests bears to the aggregate Membership Interests owned by the
Selling Member and the Participating Members. The transaction contemplated by
the Disposition Notice shall be consummated not later than sixty (60) days after
the expiration of the Option Period.

(b)            The proceeds of any sale made by the Selling Member without
compliance with the provisions of this Section 11.5 shall be deemed to be held
in constructive trust in such amount as would have been due the Participating
Members if the Selling Member had complied with this Agreement.

11.6         Drag Along Rights.

(a)            In the event that an offer is made to all the Members of the
Company which provides for the acquisition (either by way of a purchase,
amalgamation, arrangement, corporate reorganization or other means of a merger
or acquisition) by a Qualified Offeror (as defined below), of all (but not less
than all) of the then outstanding Membership Interests upon the same terms and
conditions (including price, if applicable) to all the Members; and the third
party offer has been irrevocably accepted by Members in respect of not less than
sixty-six and two thirds percent (66 2/3%) of the then issued and outstanding
Membership Interests held by all Members, then any Member who has not accepted
the offer (an “Objecting Member”) shall, subject to the provisions of this
Section 11.6, be deemed to have done so upon being notified by such Qualified
Offeror of the names of Members who have irrevocably accepted such offer and the
number of Membership Interests in respect of which they have accepted the offer,
provided that any Selling Member who has accepted such third party offer in
respect of its Membership Interests has first complied with Section 11.4 of this
Agreement. For purposes hereof, a “Qualified Offeror” shall be deemed a Person
which (a) has no affiliation with, is not directly or indirectly materially
owned or controlled by, does not directly or indirectly materially own or
control, and has no interlocking directors with, a Member; (b) is not a material
customer, supplier, distributor or creditor of or to a Member or an Affiliate
thereof; and (c) has not engaged, is not currently engaged, and to such Member’s
knowledge has no present intention to engage, in any material transaction with a
Member within one year before or after the date such offer is made.

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11.7         Termination of Transfer Restrictions. The restrictions on the
transfer of Membership Interests set forth in this Article XI shall terminate
upon the earlier of the following events:

(a)            The sale of all or substantially all of the assets or business of
the Company, by merger, sale of assets or otherwise (except a merger or
consolidation in which the holders of Membership Interests of the Company
immediately prior to such merger or consolidation continue to hold immediately
following such merger or consolidation at least 80% by voting power of the
Membership Interests of the surviving corporation); or

(b)            The closing of the Company’s IPO.

11.8         Insolvency. Upon the insolvency, as hereinafter defined, of any
Member, the Company, or if the Company declines, any Member on a pro rata basis
may, within ninety (90) days after such insolvency, elect to purchase the
Membership Interest of the insolvent Member. The purchase price shall be the
reasonable fair market value of the Company, as determined by the Board in their
sole discretion, multiplied by the Membership Interest to be purchased, and
adjusted for usual and customary discounts for lack of marketability and
minority interest. Any liabilities or indebtedness of the insolvent Member to
the Company or any other Member shall be paid by the insolvent Member at the
closing. A Member shall be deemed to have become insolvent for purposes of this
Section 11.8 if any of the following events shall occur:

(a)            Said Member shall file a voluntary petition in bankruptcy or
shall be adjudicated a bankrupt or insolvent, or shall file any petition or
answer seeking any reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief for himself under the present or any
future federal bankruptcy act or any other present or future applicable federal,
state or other statute or law relating to bankruptcy, insolvency or other relief
for debtors, or shall seek or consent to or acquiesce in the appointment of any
trustee, receiver, conservator or liquidator of said Member or of all or any
substantial part of their properties or their Membership Interest in the Company
(the phrase “acquiesce in the appointment” being deemed to include, without
limitation, failure to file a petition or motion to vacate or to discharge any
order, judgment or decree providing for such appointment within ten (10) days
after such appointment); or

(b)            A court of competent jurisdiction shall enter an order, judgment
or decree approving a petition filed against said Member seeking any
reorganization, arrangement, composition, readjustment, liquidation, dissolution
or similar relief under the present or future applicable federal, state or other
statute or law relating to bankruptcy, insolvency or other relief for debtors,
and said Member shall acquiesce in the entry of such order, judgment or decree
(the phrase “acquiesce in the appointment” being deemed to include, without
limitation, failure to file a petition or motion to vacate or to discharge any
order, judgment or decree within ten (10) days after the entry of such order,
judgment or decree), or such order, judgment or decree shall remain unvacated
and unstayed for an aggregate of ninety (90) days (whether or not consecutive)
from the date of entry thereof, or any trustee, receiver, conservator or
liquidator of said Member or all or any substantial part of their Property or
their Membership Interest in said Company shall be appointed without the consent
or acquiescence of said Member or such appointment shall remain unvacated and
unstayed for an aggregate of ninety (90) days (whether or not consecutive); or

(c)            Said Member shall admit in writing of their inability to pay
their debts as they mature; or

(d)            Said Member shall give notice to any governmental body of
insolvency or pending insolvency; or

(e)            Said Member shall make an assignment of their pro rata share of
the assets and profits of the Company for the benefit of creditors or take any
other similar action for the protection or benefit of creditors.

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ARTICLE XII. DISSOLUTION AND WINDING UP

12.1         Dissolution. The Company shall be dissolved and its affairs wound
up upon the affirmative vote of Members whose capital interest, as defined in
Exhibit C, exceeds 75% or upon any other event causing dissolution of a Limited
Liability Company under the Act.

12.2         Effect of Dissolution. Upon dissolution, the Company shall cease
carrying on its normal business operations. However, the Company will not be
terminated until the winding up of the affairs of the Company is completed and
the Articles of Dissolution have been filed with the Nevada Secretary of State
in accordance with the Act.  Upon dissolution, the Company shall continue for
the purpose of prosecuting and defending suits, actions, proceedings and claims
of any kind or nature by or against it and of enabling it gradually to settle
and close its business, to collect and discharge its obligations, to dispose of
and convey its property, and to distribute its assets, but not for the purpose
of continuing the business for which it was established.

12.3         Distribution of Assets on Dissolution. Upon the winding up of the
Company, the Company Property shall be distributed:

(a)            To creditors, including any Member if it is a creditor, to the
extent permitted by law, in satisfaction of Company liabilities;

(b)            To all the Members, considering that such distribution may be in
cash or Property or partly in both, as determined by the pro rata interest of
each of the Members.

12.4         Winding Up and Articles of Dissolution. The winding up of the
Company shall be completed when all debts, liabilities and obligations of the
Company have been paid and discharged or reasonably adequate provision therefore
has been made, and all of the remaining Property and assets of the Company have
been distributed to the Members. Upon the completion of winding up of the
Company, Articles of Dissolution shall be executed and filed with the Nevada
Secretary of State in accordance with the Act.

ARTICLE XIII. PROTECTION OF CONFIDENTIAL INFORMATION

13.1         Protection of Confidential Information. Without the express prior
written approval of all Members, each Member agrees to hold in strict confidence
and not to disclose to any Person any Confidential Information (whether during
the term of the Company or after termination of the Member’s association with
the Company).

13.2         Exceptions. Notwithstanding the limitation in Section 13.1 above,
no Member shall be deemed to be in breach of this Article XIII if it discloses
Confidential Information (a) in the course of any legal or regulatory proceeding
pursuant to a lawful demand or if such disclosure is otherwise required by law;
provided, that if a Member receives such demand or otherwise believes it is
compelled by law to disclose Confidential Information sought by such demand or
requirement, such Member shall give notice to the Company and all other Members
so as to afford the Company and/or the other Member(s) an opportunity to contest
the demand or legal requirement, or (b) to a prospective purchaser that requires
such Confidential Information in order to evaluate whether or not to acquire a
Membership Interest pursuant to the terms of this Agreement; provided, that such
prospective purchaser is obligated by a confidentiality agreement with terms
concerning the disclosure and use of Confidential Information at least as
restrictive as those herein, and such Member obtains the prior written consent
of the other Member, which consent shall not be unreasonably withheld or
delayed.

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13.3         Use of Confidential Information. Each Member agrees to use
Confidential Information to perform its obligations and functions under this
Agreement only and for no other purposes. Notwithstanding the foregoing,
information that is developed or otherwise in the possession of a Member and
subsequently transmitted or contributed by such Member to the Company shall
(unless otherwise agreed by such Member) continue to be the Property of such
Member and may (unless otherwise agreed by such Member) continue to be used by
such Member in the conduct of its business.

13.4         Return of Confidential Information. At the dissolution of the
Company or earlier termination of a Member’s Membership Interest, (a) any
Confidential Information that has been received or acquired will remain subject
to the terms of this Article XIII for a period of seven (7) years, and (b) any
documents containing Confidential Information shall either be destroyed by the
Receiving Party or returned to the Company or the Disclosing Party, upon
request.

13.5         Access to Confidential Information. Each Member shall use its
reasonable best efforts to restrict access to the Confidential Information
within its organization only to those employees, officers and directors, and
advisors (“Recipients”) who have a clear need to know the same for the purpose
of this Agreement and operation of the Company, provided that the Receiving
Party advises the Recipients of their obligations under this Article XIII and
guarantees the adherence of such Recipients to the terms of this Article XIII.

13.6         Proprietary Nature of Information. Any and all Confidential
Information disclosed is proprietary and the Disclosing Party reserves full
rights to the Confidential Information, remains the sole owner of the
Confidential Information and does not assign to the Receiving Party any rights
to the Confidential Information.

13.7         Company-Developed Technology.

(a)            The Members agree that in the event the Company, independently or
in combination with a Member, conceives of any new idea, invention or discovery,
excluding any Improvement on Technology licensed to the Company (“Company
Intellectual Property”), shall be owned by the Company and the Members shall
cooperate and do those things as may be required to vest in the Company as its
sole Property all its Company Intellectual Property.

(b)            Each Member shall disclose promptly and fully to the Company all
inventions, improvements or discoveries made, conceived, developed, or first
reduced to practice by the Member, either solely or in collaboration with
others, during the period of the Member’s association with the Company in any
capacity that relate to:
 
(i)             Any products, research or business of the Company or to tasks
assigned to the Member by or on behalf of the Company;
 
(ii)            Any process, method, apparatus or article useful in connection
with the manufacture or development of such products;
 
(iii)           Anything done on the time or with the facilities of the Company;
or
 
(iv)           Any invention and discovery that relates directly or indirectly
to the present or prospective business of the Company.

(c)            Each Member shall assist and cooperate (at the expense of the
Company) with the Company in any controversy or legal or administrative
proceedings involving or relation to Company Intellectual Property or the
registration or protections that might be issued.

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ARTICLE XIV. AMENDMENT

14.1         This Agreement may be amended or modified from time to time only by
a written instrument adopted and executed by the Members. No Member shall have
any vested rights in this Agreement, which may not be modified through an
amendment to this Agreement.

ARTICLE XV. MISCELLANEOUS PROVISIONS

15.1         Entire Agreement. This Agreement represents the entire agreement
between the Members and the Company.

15.2         Rights of Creditors and Third Parties under Operating Agreement.
This Agreement is entered into between the Company and the Members for the
exclusive benefit of the Company, its Members, and their successors and
assignees. This Agreement is expressly not intended for the benefit of any
creditor of the Company or any other Person. Except and only to the extent
provided by applicable statute, no such creditor or third party shall have any
rights under this Agreement or any agreement between the Company and the Members
with respect to any Capital Contribution or otherwise.

15.3         Notices. Any and all notices, designations, consents, offers,
acceptances, or any other communication provided for herein shall be shall be in
writing and shall be considered effective when delivered, if by personal
delivery, upon receipt, if sent by facsimile, which facsimile has been
telephonically confirmed, between the hours of 9:00 a.m. and 5:00 p.m. local
time of the recipient, on a business day, upon delivery, or if not, at 9:00
a.m., local time on the next business day, or upon first attempted delivery
after mailing by certified mail, return receipt requested, postage prepaid,
addressed to the Member’s and/or Company’s address as it appears in the
Company’s records, as appropriate.

Copies of any and all notices made pursuant to this Agreement shall be
delivered:

Trombly Business Law
Attention: Amy M. Trombly
1320 Centre Street, Suite 202
Newton, MA 02459
Facsimile: (617) 243-0066

15.4         Execution of Additional Instruments. Each Member hereby agrees to
execute such other and further statements of interest and holdings,
designations, powers of attorney and other instruments necessary to comply with
any laws, rules or regulations.

15.5         Construction. Whenever the singular number is used in this
Agreement and when required by the context, the same shall include the plural,
and the masculine gender shall include the feminine and neuter genders and vice
versa.

15.6         Headings. The headings in this Agreement are inserted for
convenience only and are in no way intended to describe, interpret, define, or
limit the scope, extent or intent of this Agreement or any provision hereof.

15.7         Waivers. The failure of any party to seek redress for violation of
or to insist upon the strict performance of any covenant or condition of this
Agreement shall not prevent a subsequent act, which would have originally
constituted a violation, from having the effect of an original violation.

15.8         Rights and Remedies Cumulative. The rights and remedies provided by
this Agreement are cumulative and the use of any one right or remedy by any
party shall not preclude or waive the right to use any or all other remedies.
Said rights and remedies are given in addition to any other rights and parties
may have by law, statute, ordinance or otherwise.

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15.9         Severability. If any provision of this Agreement or the application
thereof to any person or circumstance shall be invalid, illegal or unenforceable
to any extent, the remainder of this Agreement and the application thereof shall
not be affected and shall be enforceable to the fullest extent permitted by law.

15.10      Heirs, Successors and Assigns. Each and all of the covenants, terms,
provisions and agreements herein contained shall be binding upon and inure to
the benefit of the parties hereto and, to the extent permitted by this
Agreement, their respective heirs, legal representatives, successors and
assigns.

15.11      Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original but all of which shall constitute one and the
same instrument.

ARTICLE XVI. DEFINITIONS

16.1         For purposes of this Agreement, unless the context clearly
indicates otherwise, the following terms shall have the following meanings:

(a)            “Act” means the Nevada Revised Statues, as amended from time to
time.

(b)            “Additional Capital Contributions” means contributions made based
on the Manager’s determination that additional funds are required for operation
of the Company, including capital expenditures and debt service.

(c)            “Additional Member” means a Member other than the initial Members
listed in Exhibit A who has acquired a Membership Interest in the Company.

(d)            “Affiliate” means any corporation or other entity which controls,
is controlled by, or is under common control with a Party. A corporation or
other entity shall be regarded as in control of another corporation or entity if
it owns or directly or indirectly controls more than fifty percent (50%) of the
voting stock or other ownership interest of the other corporation or entity, or
if it possesses, directly or indirectly, the power to direct or cause the
direction of the management and policies of the corporation or other entity or
the power to elect or appoint more than fifty percent (50%) of the members of
the governing body of the corporation or other entity.

(e)            “Agreement” means this Operating Agreement including all
amendments adopted in accordance with this Operating Agreement and the Act.

(f)            “Articles” or “Articles of Organization” means the Articles of
Organization of the Company as properly adopted and amended from time to time by
the Members and filed with the Nevada Secretary of State.

(g)            “Board” or “Board of Directors” means the board established
pursuant to Section 5.1 of this Agreement.

(h)            “Business Plan” means the business plan of the Company to be
prepared by the Manager under the direction of and subject to the approval of
the Board as described in Section 5.8 of this Agreement.

(i)            “Capital Account” means as of any given date, the Capital
Contribution to the Company by a Member as adjusted up to the date in question.

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(j)             “Capital Contribution” means a Member’s Initial Capital
Contribution as provided in Section 7.1 of this Agreement and any Additional
Capital Contribution made by any Member as provided in Section 7.2 of this
Agreement.

(k)            “Code” means the Internal Revenue Code of 1986, as amended from
time to time. All references herein to a section of the Code shall include any
corresponding provision or provisions of succeeding law.

(l)             “Commitment” means the obligation of a Member to make a Capital
Contribution in the future.

(m)           “Company Property” means any Property owned by the Company.

(n)           “Confidential Information” means, without limitation, any and all
information, technical knowledge, know-how, business plans, pricing strategies,
market designs, trade secrets, product specification, product compositions,
data, drawings, sketches, flow sheets, manufacturing processes, quality control
specification, communications of a sensitive or private nature relating to or
useful in connection with the design, construction and/or operation of any of
the Members’ facilities or business, and information that may be learned or
acquired during a due diligence examination of a Member and its books, records
and other assets or during any negotiation or discussion concerning the subject
of this Agreement.

(o)            “Contribution” means any contribution of Property made by or on
behalf of a Member as consideration for a Membership Interest.

(p)            “Disposition” or “Dispose” means as it relates to the Membership
Interest of any Member, any sale, assignment, transfer, exchange, mortgage,
pledge, grant, hypothecation, or other transfer, absolute or as security or
encumbrance (including dispositions by operation of law).

(q)            “Distributable Cash” means all cash, revenues and funds received
by the Company from Company operations, less the sum of the following to the
extent paid or set aside by the Company: (i) all principal and interest payments
on indebtedness of the Company and all other sums paid to lenders; (ii) all cash
expenditures incurred incident to the normal operation of the Company’s
business; (iii) such cash Reserves as the Members deem reasonably necessary to
the proper operation of the Company’s business; and (iv) such amounts as may be
required to satisfy conditions imposed by lenders or other creditors.

(r)            “Distribution” means a transfer of Property to a Member on
account of a Membership Interest as described in Article VIII.

(s)            Reserved.

(t)            “Fiscal Year” means the calendar year ending on December 31 of
any year.

(u)           “Initial Capital Contribution” means the Capital Contribution
agreed to be made by the Members as described in Section 7.1.

(v)           “IPO” means the initial public offering of Membership Interests,
or equity securities into which such Member Interests are converted or for which
such Membership Interests are exchanged, pursuant to an effective registration
statement under the United States Securities Act of 1933, as amended, or
pursuant to the foreign equivalent thereof, resulting in the Company, or the
successor entity to the Company as the case may be, becoming listed on a public
securities exchange.

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(w)           “Manager” or “Managers” means the person described in Section 4.1
or any other person or entity that succeeds him in that capacity. The initial
Managers shall be identified on Exhibit A to this Agreement. References to the
Manager as him, her, it, itself, or other like references shall also, where the
context so requires, be deemed to include the masculine or feminine reference,
as the case may be.

(x)            “Member” means the Members executing this Agreement, any
transferee of a Member, or any Additional Member. At any time there is more than
one Member, the term “Member” shall mean all Members, and any action that may be
taken under this Agreement by the Members may be taken by any Member, provided
that any dispute with respect to any action shall be decided by the Members
holding eighty-five percent (85%) of the Membership Interests of the Company.

(y)           “Membership” means all of the rights of Members including the
right to share in Net Profits, Net Losses and Distributions and the right to
participate in certain management decisions of the Company as identified in this
Agreement.

(z)            “Membership Interest” means the term used to indicate a Member’s
ownership percentage of the Company. The initial Membership Interest of each
Member is set forth on Exhibit C hereof.

(aa)         “Net Book Value” means at any point in time, the sum of all the
assets and liabilities of the Company as recorded in the general ledger.

(bb)         “Net Losses” means for each Fiscal Year, the losses and deductions
of the Company determined in accordance with accounting principles consistently
applied from year to year employed under the method of accounting identified in
the Agreement, and as reported, separately or in the aggregate, as appropriate,
on the Company’s information tax return filed for federal income tax purposes,
plus any expenditures described in the Code.

(cc)          “Net Profits” means for each Fiscal Year, the income and gains of
the Company determined in accordance with accounting principles consistently
applied from year to year employed under the method of accounting identified in
the Agreement, and as reported, separately or in the aggregate, as appropriate,
on the Company’s information tax return filed for federal income tax purposes,
plus any income described in the Code.

(dd)         “Person” means an individual, trust, estate, firm, corporation,
partnership, limited liability company, association or other legal entity.

(ee)         “CEO” means the Chief Executive Officer of the Company to be
appointed by the Manager under the direction and approval of the Board as
described in Section 4.5 of this Agreement.

(ff)          “Property” means any property, real or personal, tangible or
intangible (including goodwill), including money and any legal or equitable
interest in such property, but excluding services and promises to perform
services in the future.

(gg)         This section reserved.

(hh)        “Regulations” means the regulation promulgated or issued by the
Treasury Department under the Code.

(ii)           “Reserves” means funds set aside or amounts allocated during such
period to reserves which shall be maintained in amounts deemed sufficient by the
Manager for working capital, to pay taxes, insurance, debt service or other
costs or expenses incident to the ownership or operation of the Company’s
business or as may be required to satisfy conditions imposed by lenders or other
creditors.

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(jj)            “Tax Matters Partner” means the Person designated to be the Tax
Matters Partner in accordance with Section 9.2 of this Agreement.

(SIGNATURE PAGE FOLLOWS)

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IN WITNESS WHEREOF, this Operating Agreement of Layfield Energy, LLC has been
signed and is effective as of December 19, 2007.
 

 
COMPANY:
     
Layfield Energy, LLC, a Nevada Limited Liability Company
     
By:
/s/ Neil Reithinger
     
Neil Reithinger, Co-Chief Executive Manager
 

 
 

 
MEMBERS:
         
/s/ John Layfield
   
Layfield, Inc.
   
By: John Layfield, Co-Chief Executive Manager
         
/s/ John Sohigian
   
John Sohigian, Manager
         
/s/ Neil Reithinger
   
Baywood International, Inc.
   
By: Neil Reithinger, Co-Chief Executive Manager
 

 
 
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