ex10_1.htm


    
      
        

      

    

    EXHIBIT
      10.1

    


    


    OPERATING
      AGREEMENT

    


    OF

    


    LAYFIELD
      ENERGY, LLC

    


    


    DATED:  DECEMBER
      19, 2007


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    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;


    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    


    (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.


    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

    


    (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.


    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

    


    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.


    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

    


    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.


    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

    


    (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.


    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

    


    (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.


    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    


    (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)


    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

    


    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

              	 


      

    

     

     

    25