<PAGE>

                                                                    EXHIBIT 3(6)

                               OPERATING AGREEMENT

                                       OF

                           ANAGRAM INTERNATIONAL, LLC

                       A Nevada Limited Liability Company

<PAGE>

                               OPERATING AGREEMENT

                                       OF

                           ANAGRAM INTERNATIONAL, LLC

                       A Nevada Limited Liability Company

                                Table of Contents

<TABLE>
<CAPTION>
                                                                            Page
<S>                                                                         <C>
ARTICLE I    OFFICES.....................................................     1
     1.1      Principal Office...........................................     1

ARTICLE II   PURPOSE.....................................................     1
     2.1      Purpose....................................................     1

ARTICLE III  CAPITAL.....................................................     1
     3.1      Initial Capital............................................     1
     3.2      Capital Accounts...........................................     2
     3.3      Federal Income Tax Elections...............................     3
     3.4      Invested Capital...........................................     3
     3.5      Interest...................................................     3
     3.6      Additional Capital Contribution............................     3
     3.7      Membership Interest........................................     4

ARTICLE IV   MEMBERS.....................................................     4
     4.1      Powers.....................................................     4
     4.2      Salaries to Members........................................     4
     4.3      Other Ventures.............................................     5
     4.4      General Restrictions.......................................     5
     4.5      Action by the Members; Meetings; Quorum; Majority..........     5
     4.6      Action By Written Consent..................................     5
     4.7      Place of Meetings of Members...............................     6
     4.8      Annual Meetings............................................     6
     4.9      Annual Meetings; Notice....................................     6
     4.10     Special Meetings...........................................     6
     4.11     Waiver of Notice...........................................     6
     4.12     Adjourned Meetings And Notice Thereof......................     7
     4.13     Delegation of Authority To Members and Managers............     7
     4.14     Admission of New Members...................................     7
     4.15     Member Loans...............................................     7
</TABLE>

                                        i

<PAGE>

<TABLE>
<S>                                                                          <C>
     4.16     Deadlock...................................................     7

ARTICLE V    TRANSFER OF MEMBERS' INTERESTS..............................     8
     5.1      Transfer of Members' Interests.............................     8
     5.2      No Transfer Permitted Under Certain Circumstances..........     9
     5.3      Right of First Refusal.....................................     9
     5.4      Authority of the Company to Purchase Interest..............    12
     5.5      Representations and Warranties of the Members..............    12
     5.6      Transferee's Invested Capital..............................    13

ARTICLE VI   MANAGERS....................................................    13
     6.1      Election...................................................    13
     6.2      Removal, Resignation and Vacancies.........................    13
     6.3      Managers' Powers...........................................    14
     6.4      Bank Accounts..............................................    14

ARTICLE VII  PROFITS AND LOSSES..........................................    14
     7.1      Net Profits and Losses.....................................    14
     7.2      Allocations of Deductions..................................    15
     7.3      Special Allocations........................................    15
     7.4      Curative Allocations.......................................    16
     7.5      Federal Income Tax.........................................    17

ARTICLE VIII DISTRIBUTIONS...............................................    17
     8.1      Operating Distributions....................................    17
     8.2      Payment of Member Loans....................................    17
     8.3      Distribution on Dissolution and Liquidation................    17

ARTICLE IX   ACCOUNTING AND RECORDS......................................    17
     9.1      Records and Accounting.....................................    17
     9.2      Access to Accounting Records...............................    18
     9.3      Annual Tax Information.....................................    18
     9.4      Reports to Members.........................................    18

ARTICLE X    TERM........................................................    18

ARTICLE XI   DISSOLUTION OF THE COMPANY AND TERMINATION OF A
             MEMBER'S INTEREST...........................................    18
     11.1     Dissolution................................................    18
     11.2     Death of a Member; Continuation............................    19
     11.3     Option To Purchase Deceased Member's Interest..............    19
     11.4     Bankruptcy.................................................    19
</TABLE>

                                       ii

<PAGE>

<TABLE>
<S>                                                                          <C>
ARTICLE XII  TRUST MEMBERS...............................................    20
     12.1     Trustee Liability..........................................    20
     12.2     Status of Successor Trustees as Members....................    20

ARTICLE XIII INDEMNIFICATION.............................................    20
     13.1     Indemnity..................................................    20
     13.2     Indemnity for Actions By or In the Right of the Company....    21
     13.3     Indemnity If Successful....................................    21
     13.4     Expenses...................................................    21
     13.5     Advance Payment of Expenses................................    21
     13.6     Other Arrangements Not Excluded............................    22

ARTICLE XIV  MISCELLANEOUS PROVISIONS....................................    22
     14.1     Complete Agreement.........................................    22
     14.2     Amendments.................................................    22
     14.3     Applicable Law.............................................    23
     14.4     Headings...................................................    23
     14.5     Severability...............................................    23
     14.6     Expenses...................................................    23
     14.7     Heirs, Successors and Assigns..............................    23
     14.8     Execution..................................................    23
     14.9     Power of Attorney..........................................    23
</TABLE>

                                       iii

<PAGE>

                               OPERATING AGREEMENT

                                       OF

                           ANAGRAM INTERNATIONAL, LLC

                       A Nevada Limited Liability Company

         This Operating Agreement is made and entered into as of the 24th day of
October 1994 by and between the undersigned Members of Anagram International,
LLC.

                                    ARTICLE I
                                     OFFICES

1.1      Principal Office

         The principal office of Anagram International, LLC (the "Company")
shall be 7700 Anagram Drive, Minneapolis, Minnesota 55344. The Members may
change said principal office at any time from one location to another.

                                   ARTICLE II
                                     PURPOSE

2.1      Purpose

         The purpose of the Company shall be to serve as a holding company for
companies that distribute products. Any business beyond the business described
herein shall require the unanimous written consent of the Members.

                                   ARTICLE III
                                     CAPITAL

3.1      Initial Capital

         The initial capital of the Company shall be the sums of cash or the
agreed fair market value of the property or services (or combination of cash,
property and services) contributed to the Company by the Members in such amounts
or value as are set out opposite the name of each of the Members on Schedule A
attached hereto and incorporated herein by this reference which shall be amended
from time to time by the Managers to reflect a current list of the names and
addresses of each current member. A transfer of any Membership Interest (as
defined herein) shall not be effective until it has been recorded in the records
of the Company.

<PAGE>

3.2      Capital Accounts

         Capital Accounts shall be established on the Company's books
representing the Members' respective capital contributions to the Company. The
term "Capital Account" shall mean the capital account maintained for such Member
in accordance with the following provisions:

                  (a)      Each Member's Capital Account shall be increased by:

                           (1) The amount of the Member's cash or in-kind
                  capital contributions to the Company pursuant to Section 3.1
                  above;

                           (2) The fair market value of any property contributed
                  by the Member to the Company (net of liabilities secured by
                  any such contributed property that the Company is considered
                  to assume or take subject to for purposes of Section 752 of
                  the Internal Revenue Code of 1986, as amended from time to
                  time [the "Code"]);

                           (3) The amount of Net Profits (or items thereof)
                  allocated to the Member pursuant to Article VII below; and

                           (4) Any other increases required by the regulations
                  promulgated by the U.S. Department of the Treasury under the
                  Code, and as may be amended from time to time ("Regulations").
                  If Section 704(c) of the Code applies to property contributed
                  by a Member to the Company, then the Members' Capital Accounts
                  shall be adjusted in accordance with Regulations Section
                  1.704-1(b)(2)(iv)(g).

                  (b) Each Member's Capital Account shall be decreased by:

                           (1) The amount of Net Losses allocated to the Member
                  pursuant to Article VII below;

                           (2) All amounts paid or distributed to the Member
                  pursuant to Article VIII hereof; other than amounts required
                  to be treated as a payment for property or services under the
                  Code;

                           (3) The fair market value of any property distributed
                  in kind to the Member (net of any liabilities secured by such
                  distributed property that such Member is considered to assume
                  or take subject to for purposes of Section 752 of the Code);
                  and

                           (4) Any other decreases required by the Regulations.

                           Before decreasing a Member's Capital Account (as
         described above) with respect to the distribution of any property to
         such Member, all Members' accounts shall be adjusted to reflect the
         manner in which the unrealized income, gain, loss, and deduction
         inherent in such property (that has not been previously reflected in
         the Members' Capital Accounts) would be allocated among the Members if
         there were a taxable disposition of such property by the Company on the
         date of distribution, in accordance with Regulations Section
         1.704-1(b)(2)(iv)(e).

                                        2

<PAGE>

                  (c) In determining the amount of any liability for purposes of
         Sections 3.2(a) and 3.2(b) hereof, there shall be taken into account
         Code Section 752(c) and any other applicable provisions of the Code and
         any Regulations promulgated thereunder.

                  (d) Members' Capital Accounts shall be adjusted in accordance
         with, and upon the occurrence of an event described in Regulations
         Section 1.704-1(b)(2)(iv)(f), including the addition of new Members
         pursuant to Section 4.14 hereof or the receipt of additional capital
         contributions pursuant to Section 3.6 hereof, to reflect a revaluation
         of the Company's assets on the Company's books. Such adjustments to the
         Members' Capital Accounts shall be made in accordance with Regulations
         Section 1.704-1(b)(2)(iv)(g) for allocations of depreciation,
         depletion, amortization and gain or loss with respect to such revalued
         property.

                  (e) All provisions of this Agreement relating to the
         maintenance of Capital Accounts are intended to comply with Regulations
         Section 1.704-1(b), and shall be interpreted and applied in a manner
         consistent with such Regulations. The Members shall make any
         appropriate modifications in the event unanticipated events might
         otherwise cause this Agreement not to comply with Regulations Section
         1.704-1(b).

3.3      Federal Income Tax Elections

         The Company may make all elections for federal income tax purposes,
including but not limited to an election, pursuant to Code Section 754, to
adjust the basis of the Company's assets under Code Sections 734 or 743. In the
event an election pursuant to Code Section 754 is made by the Company, upon the
adjustment to the basis of the Company's assets, the Members' Capital Accounts
shall be adjusted in accordance with the requirements of Regulation Section
1.704-1(b)(2)(iv)(m).

3.4      Invested Capital

         The "Invested Capital" of a Member shall be the sum of any cash
contributed by said Member to the Company, and the fair market value of any
property contributed by said Member to the Company, less the amount of any
liabilities of such Member assumed by the Company or which are secured by
property contributed by such Member to the Company. In the event the Company's
assets are revalued pursuant to Section 3.2(d) hereof resulting in an adjustment
to the Members' Capital Accounts, the Members' "Invested Capital" shall, for
purposes of this Agreement, be deemed to be each Member's respective Capital
Account balance immediately after such revaluation.

3.5      Interest

         No interest shall be paid or credited to the Members on their Capital
Accounts or upon any undistributed profits left on deposit with the Company.

3.6      Additional Capital Contribution

         In no event shall any Member be required to make an additional
contribution to the Company. However, the Members authorize the Company to
receive additional capital contributions and the Company may solicit such
contributions from the Members in an amount authorized by the Members (the
"Amount Solicited"). The Company shall send a notice of solicitation to all the
Members, and

                                       3

<PAGE>

each Member wishing to make an additional capital contribution (a "Contributing
Member") shall so notify the Company in writing within three (3) days after
delivery of the notice, indicating the amount such Member offers to contribute
(the "Offer to Contribute"). Unless the Members otherwise agree, if Contributing
Members' Offers to Contribute exceed the Amount Solicited, each Contributing
Member shall be entitled to contribute the proportion of the Amount Solicited
that such Contributing Member's Invested Capital, determined immediately before
the solicitation for capital contributions, bears to the Invested Capital of all
the Contributing Members. If the Contributing Members do not make Offers to
Contribute the entire Amount Solicited, the Company may, at its option, elect to
accept the Offers to Contribute it has received or reject such Offers to
Contribute and cancel the solicitation.

3.7      Membership Interest

         The "Membership Interest" of a Member shall be such Member's right in
the profits and losses of the Company and the right to receive distributions of
the Company's assets. Membership Interest is equivalent to a Member's Invested
Capital.

                                   ARTICLE IV
                                     MEMBERS

4.1      Powers

         Subject to the provisions of the Articles of Organization, this
Operating Agreement and the provisions of the Nevada Revised Statutes ("NRS"),
all powers shall be exercised by or under the authority of, and the business and
affairs of the Company shall be controlled by, the Managers. Without prejudice
to such general powers, but subject to the same limitations, it is hereby
expressly declared that the Members shall have the following powers:

                  (a) To select and remove all Managers of the Company,
         prescribe such powers and duties for them as may be consistent with
         law, with the Articles of Organization or this Operating Agreement, fix
         their compensation, and require from them security for faithful
         service.

                  (b) To change the principal office of this Company from one
         location to another; to fix and locate from time to time one or more
         subsidiary offices of the Company; and to designate any place for the
         holding of any Members' meeting or meetings.

4.2      Salaries to Members

         The Company shall have authority to pay to any Member a reasonable
salary for said Member's services to the Company. It is understood that the
salary paid to any Member under the provisions of this Section shall be
determined without regard to the income of the Company and shall be considered
as an operating expense of the Company and shall be deducted as an expense item
in determining the net profits and losses of the Company.

4.3      Other Ventures

         It is expressly agreed that the Members, or any of them, may engage in
other business ventures of every nature and description, whether or not in
competition with the Company, independently or

                                       4

<PAGE>

with others, and neither the Company nor the Members shall have any rights in
and to any independent venture or activity or the income or profits derived
therefrom.

4.4      General Restrictions

         No Member or Manager, as described in Article VI hereof, shall have the
right, power or authority to do any of the following acts without the prior
written consent of all the Members:

                  (a) expend or use any Company money or property except upon
         the account of and for the benefit of the Company;

                  (b) mortgage, lease, pledge, or otherwise dispose of all, or
         substantially all, of the assets of the Company, other than in the
         ordinary course of business;

                  (c) pledge any of the Company's credit or property for other
         than Company purposes;

                  (d) compromise, settle, or release any debt due the Company
         except upon full payment thereof or except in the ordinary course of
         business;

                  (e) assign the Company's property in trust for creditors or on
         the assignee's promise to pay the debts of the Company;

                  (f) confess a judgment against the Company, the Company's
         property, or any of the Members;

                  (g) dispose of any of the goodwill of the Company business; or

                  (h) do any other act which would make it impossible to carry
         on the ordinary business of the Company.

4.5      Action by the Members; Meetings; Quorum; Majority

         Management of the Company is vested in, and all actions of the Members
are taken by the Members in proportion to their Membership Interests at the time
of the action taken. Except as specifically otherwise provided herein, the
Members vote, approve a matter or take any action by the vote of Members at a
meeting, in person or by proxy, or without a meeting by written consent. For any
meeting of Members, the presence in person or by proxy of Members owning more
than 50% of the outstanding Membership Interests at the time of the action taken
(a "Majority") constitutes a quorum for the transaction of business. Members
vote in proportion to their Membership Interests and an action approved at a
meeting by Members owning more than 50% of the Membership Interests of that
quorum shall be the action of the Members.

4.6      Action By Written Consent

         Except as otherwise provided herein, any action may be taken by the
Members without a meeting if authorized by the written consent of Members
holding at least a Majority. In no instance

                                       5

<PAGE>

where action is authorized by written consent need a meeting of Members be
called or noticed. However, a copy of the action taken by written consent must
be immediately sent to all Members.

4.7      Place of Meetings of Members

         The first meeting of the Members shall be held at the principal office
of the Company set forth in the Articles of Organization. All annual meetings
and special meetings of the Members shall be held at any place designated by the
Members, or, if no such place is designated, then at the principal office of the
Company.

4.8      Annual Meetings

         The annual meeting of the Members shall be held on such date and time
as determined by the Managers.

4.9      Annual Meetings; Notice

         Written notice of each annual meeting signed by a Manager or by such
other person or persons as the Members shall designate, shall be given to each
Member entitled to vote at the meeting, either personally or by mall or other
means of written communication, charges prepaid, addressed to such Member at his
address appearing on the books of the Company or given by him to the Company for
the purpose of notice. If a Member gives no address, notice shall be deemed to
have been given him if sent by mail or other means of written communication
addressed to the place where the principal office of the Company is situated.
All such notices shall be sent to each Member entitled thereto not less than ten
(10) nor more than sixty (60) calendar days before each annual meeting, and
shall specify the place, the day and the hour of such meeting.

4.10     Special Meetings

         Special meetings of the Members, for any purpose or purposes
whatsoever, may be called at any time by a Manager or by Members holding in
excess of twenty percent (20%) of the outstanding Membership Interests. Except
in special cases where other express provision is made by statute, notice of
such special meetings shall be given in the same manner as for annual meetings
of Members. Notices of any special meeting shall specify, in addition to the
place, day and hour of such meetings the purpose or purposes for which the
meeting is called.

4.11     Waiver of Notice

         The transactions of any meeting of the Members, however called and
noticed or wherever held, shall be as valid as though had at a meeting duly held
after regular call and notice, if a quorum be present, and if, either before or
after the meeting, each of the Members not present signs a written waiver of
notice or a consent to holding such meeting or an approval of the minutes
thereof. All such waivers, consents or approvals shall be filed with the records
or made a part of the minutes of the meeting.

                                        6

<PAGE>

4.12     Adjourned Meetings And Notice Thereof

         Any Members' meeting, annual or special, whether or not a quorum is
present, may be adjourned from time to time by the vote of a Majority, present
in person or represented by proxy, but in the absence of a quorum no other
business may be transacted at any such meeting. Other than by announcement at
the meeting at which such adjournment is taken, it shall not be necessary to
give any notice of an adjournment or of the business to be transacted at an
adjourned meeting. However, when any Members' meeting, either annual or special,
is adjourned for thirty (30) days or more, notice of the adjourned meeting shall
be given as in the case of an original meeting.

4.13     Delegation of Authority To Members and Managers

         Any one or more of the Managers or Members may at any time or times,
and for such period as the Members shall determine, be delegated the authority
to determine questions relating to specific areas of the conduct, operation, and
management of the Company. Until such direction or delegation of authority is
made, however, the Members and Managers shall have the authority set forth in
this Article IV and Article VI below and that given them by the Members.

4.14     Admission of New Members

         New Members may be admitted to membership in the Company with the
consent of a Majority (as defined in Section 4.5) of the existing Members. A new
Member must agree to be bound by the terms and provisions of the Articles of
Organization and this Operating Agreement, as amended, and upon admission the
new Member shall have all rights and duties of a Member of this Company.

4.15     Member Loans

         The Members may from time to time approve of a loan by a Member to the
Company. Such loans ("Member Loans") shall be repaid to the lending Member in
accordance with the terms of the instrument or agreement executed in connection
with such Member Loan. Unless by its terms such Member Loan is expressly
subordinated, the Member Loan shall be equal in priority to, and rank pari passu
with, all other secured or unsecured liabilities of the Company, as appropriate.

4.16     Deadlock

                  (a) For purposes of this Agreement, the term "Major Decision"
         shall mean any action (or election not to act) by or on behalf of the
         Company which may have, or which may be anticipated to have, a material
         effect on the business and operation of the Company, including, without
         limitation, any matters materially affecting the ownership, operation,
         development, construction, financing, marketing and sale of any real
         property owned by the Company. Major Decisions shall include, without
         limitation, any contract or related series of contracts having a value
         in excess of Twenty Thousand Dollars ($20,000) and any Member Loans or
         other loans to be obtained by or on behalf of the Company, whether
         secured or unsecured.

                  (b) All Major Decisions shall be subject to the prior approval
         of a majority of the Managers. In the event the Managers are evenly
         divided with respect to a Major Decision and a majority of the Managers
         are unable to agree with respect to a proposed

                                        7

<PAGE>

         course of action concerning such Major Decision, the Managers shall
         immediately call a special meeting ("Election Meeting") pursuant to
         Section 4.10 hereof at which the Managers shall resign and new Managers
         shall be elected.

                  (c) In the event the Members, pursuant to a Majority thereof,
         are unable to elect Managers at the Election Meeting, or any other
         meeting, or elect Managers who continue to be evenly divided with
         respect to a Major Decision, a deadlock (the "Deadlock") shall be
         deemed to exist.

                  (d) For a period of thirty (30) days after a Deadlock occurs,
         a Majority of the Members (the "Offering Members") may, upon written
         notice to the remaining Members (the "Offering Notice"), propose a
         price per each one percent (1%) of outstanding Membership Interests
         (the "Offering Price") at which the Offering Members are willing to
         either (i) sell to the other Members all of the Offering Members'
         Membership Interests or (ii) purchase from the other Members all of
         their Membership Interests, subject to the terms of this Operating
         Agreement. The other Members shall have a period of three (3) days
         after delivery of the Offering Notice in which to elect, by written
         notice to the Offering Members (the "Response Notice") to either (i)
         purchase all of the Membership Interests of the Offering Members at the
         Offering Price or (ii) sell all of their Membership Interests to the
         Offering Members at the Offering Price. Such transaction shall be
         consummated within five (5) days after delivery of the Response Notice
         and the purchase price for the Membership Interests sold or purchased
         shall be payable pursuant to the terms set forth in Section 5.3(c)(ii)
         below.

                  (e) Should a transaction not be consummated pursuant to a
         Response Notice as set forth in Section 4.16(d) above within thirty
         (30) days after a Deadlock occurs, the Deadlock shall then become an
         event of dissolution under Section 11.1 below and the Company shall be
         dissolved pursuant to Article XI of this Operating Agreement.

                                    ARTICLE V
                         TRANSFER OF MEMBERS' INTERESTS

5.1      Transfer of Members' Interests

         The Membership Interest of each Member of this Company is personal
property. Except as otherwise provided in this Operating Agreement, the transfer
of a Member's Membership Interest is restricted. The transfer of a Member's
Membership Interest shall include a gift, sale, transfer, assignment,
hypothecation, pledge, encumbrance or any other disposition, whether voluntary
or involuntary, by operation of law or otherwise, including, without limitation,
any transfer occurring upon or by virtue of the bankruptcy or insolvency of a
Member; the appointment of a receiver, trustee or conservator or guardian for a
Member or his property; or pursuant to the will of a Member or the laws of
descent and distribution in the event of a Member's death; pursuant to court
order in the event of divorce, marital dissolution, legal separation or similar
proceedings; or pursuant to any loan or security agreement under which any of
the Member's Membership Interests are pledged or otherwise serve as collateral,
as well as the transfer of any such Membership Interest in the event recourse is
made to such collateral.

                                        8

<PAGE>

         If a Majority of the other Members, other than the Member proposing to
dispose of his Membership Interest ("Transferring Member") and without
considering the Transferring Member's Membership Interest as outstanding in
determining such a Majority, do not approve of a proposed transfer or assignment
by written consent, the transferee of the Member's Membership Interest has no
right to participate in the management of the business and affairs of the
Company or to become a Member. The transferee is only entitled to receive the
share of profits or other compensation by way of income and the return of
contributions, to which the Transferring Member would otherwise be entitled. If
the transfer is approved by a Majority of the other Members of the Company by
written consent, the transferee has all the rights and powers and is subject to
all the restrictions and liabilities of his assignor, has the right to
participate in the management of the business and affairs of the Company and
becomes a substituted Member.

5.2      No Transfer Permitted Under Certain Circumstances

         Notwithstanding any other provision of this Agreement, a Member shall
not transfer all or any part of his Membership Interest if such transfer would
cause the termination of the Company for federal income tax purposes or would
violate any applicable federal or state securities laws.

5.3      Right of First Refusal

         Except as otherwise provided in this Operating Agreement or the laws of
the State of Nevada, no Member shall during the term of this Operating Agreement
transfer all or any portion of his Membership Interest, or any interest therein,
whether now owned or hereafter acquired without first complying with the
requirements of this Operating Agreement, unless such Member shall first give
the Company and, if appropriate hereunder, the other Member(s) the opportunity
to purchase or acquire all or a portion of such Member's interest proposed to be
disposed of in accordance with the following provisions:

                  (a) In the event that any Member shall receive a bona fide
         offer for the transfer of all or part of his Membership Interest (the
         "Proposed Transfer") (the Transferring Member shall have the obligation
         to prove that an offer is bona fide) and desires to accept such offer,
         or in the event that any Member shall otherwise desire to transfer all
         or part of such Member's Membership Interest, the Member shall, prior
         to accepting such offer, give the Managers of the Company written
         notice of intention to make a transfer. Such notice shall set forth the
         name of the proposed transferee(s), the interest proposed to be
         disposed of (the "Offered Interest"), the price, the terms of payment,
         all other material terms of the proposed transaction and shall specify
         a mailing address for purposes of any return notice hereunder. The
         Company shall have the option for a period of ten (10) days from the
         actual receipt of such notice to agree to purchase or acquire all or
         any portion of the Offered Interest, on the same terms as those offered
         to the proposed transferee, subject to Section 5.3(c) hereof. The
         Company may exercise this option to purchase only by giving written
         notice to the Transferring Member.

                  (b) If the Company declines or fails to exercise its option to
         purchase or acquire all or any portion of the Offered Interest pursuant
         to Section 5.3(a) above, or is legally unable to do so, the
         Transferring Member shall give written notice to the other Members
         containing the same information as set forth in the notice given
         pursuant to Section 5.3(a)

                                        9
<PAGE>
      above and further setting forth the Offered Interest that the Company has
      not agreed to purchase or acquire. The Members receiving the notice shall
      in turn have ten (10) days from the actual receipt of such notice to agree
      to purchase or acquire all or any portion of the Offered Interest that the
      Company has not agreed to purchase or acquire, on the same terms and
      conditions as those offered to the proposed transferee, subject to Section
      5.3(c) hereof. The other Members may exercise this option to purchase only
      by giving written notice to the Transferring Member. In the event that
      more than one person has an option to purchase hereunder, such persons may
      exercise such option pro rata in accordance with their respective
      Membership Interests, and if any such person declines or fails to purchase
      his pro rata portion of the Offered Interest, or any portion thereof, the
      other persons having such option shall have the right to purchase that
      portion pro rata in accordance with their respective Membership Interests
      (or otherwise by agreement).

            (c) The terms of any acquisition pursuant to Section 5.3 hereof
      shall be as follows:

                  (1) In the event that a proposed transferee of any Offered
            Interest has offered to acquire such Offered Interest for a
            consideration consisting in whole or in part of assets other than
            cash, cash equivalents or unsecured (other than by the Offered
            Interest) promissory notes, any persons having options to purchase
            or acquire such Offered Interest pursuant to Sections 5.3(a) and
            5.3(b) above shall be deemed to have agreed to purchase or acquire
            such Offered Interest "on the same terms as those offered to the
            proposed transferee" if such persons agree to pay in a lump sum (or
            in cash installments as permitted by Section 5.3(c)(ii)) an amount
            equal to the fair market value of such other form of consideration.
            The fair market value of such other consideration shall be as
            follows:

                        (A) If such other consideration is a security publicly
                  traded in the United States in the over-the-counter market and
                  not on the Nasdaq National Market nor on any national
                  securities exchange, the closing per share bid price for such
                  security on the trading day immediately preceding the day of
                  the closing on the purchase or acquisition of the Offered
                  Interests, as reported by Nasdaq or an equivalent generally
                  accepted reporting service;

                        (B) If such other consideration is a security publicly
                  traded in the United States on the Nasdaq National Market or
                  on a national securities exchange, the per share closing price
                  for such security on the Nasdaq National Market or on the
                  principal stock exchange on which it is listed on the trading
                  day immediately preceding the day of the closing on the
                  purchase or acquisition of the Offered Interests; such closing
                  price being the last reported sale price, or in the case no
                  such reported sale takes place on such day, the average of the
                  reported closing bid and asked prices, in either case in the
                  Nasdaq National Market or on the principal national securities
                  exchange on which the security is then listed;

                        (C) If such other consideration is an asset (other than
                  a security specified in clause (A) or (B) above) having a
                  readily determinable value by

                                       10

<PAGE>

                  reference to a generally accepted published reporting source
                  or service, the last sale price for such asset reported by
                  such source or service during the trading day immediately
                  preceding the day of the closing on the purchase or
                  acquisition of the Offered Interests; or

                        (D) In all other cases, the appraised value of such
                  other consideration will be determined by a qualified
                  independent appraiser selected by the mutual agreement of the
                  Transferring Member on the one hand and a Majority of the
                  other Member(s) on the other hand. In such event, a copy of
                  the notice of intent to make a disposition shall be sent to
                  each other Member at the same time as such notice is sent to
                  the Company. In the event that the Members cannot mutually
                  agree on an appraiser within fifteen (15) days after the
                  notice of intent to make a disposition is actually received by
                  the Company, a qualified appraiser shall be appointed by the
                  American Arbitration Association in Las Vegas, Nevada. The
                  appraised value of such other consideration shall be final and
                  binding on all parties hereto. All costs associated with such
                  an appraisal, including without limitation appraisal fees and
                  the fees of the American Arbitration Association, if any,
                  shall be paid by the Transferring Member. The time period set
                  forth herein shall be tolled until the Company actually
                  receives a copy of the appraiser's report, in accordance with
                  the notice provisions hereof, a copy of which report shall
                  accompany all notices given by the Transferring Member.

                  (2) The Company and each of the other Members shall be
            permitted, at its or their option, to purchase all or any portion of
            the Offered Interest in exchange for a promissory note in the
            principal amount of the purchase price payable in not more than
            sixty (60) equal monthly installments of principal and interest with
            interest at the prime rate of interest charged by Bank of America
            Nevada on the closing of the acquisition or purchase plus two
            percent (2%) per annum (or any lower rate offered by the proposed
            transferee) but in any event not in excess of the maximum rate of
            interest then permitted by applicable law. Any such note or notes
            shall be secured by the Offered Interest purchased in exchange
            therefor and shall be prepayable without penalty in whole or in part
            at any time. Prior to the payment in full of any such note or notes,
            no distributions or other payments shall be made directly or
            indirectly by the Company to the remaining Members or any person or
            entities relating to the remaining Members (other than payments
            incurred in the ordinary course of the Company's business) unless
            and to the extent such distributions or other payments are applied
            toward prepayment of such note or notes.

            (d) The purchase of the Offered Interest shall be closed at the time
      specified in the notice from the Transferring Member as the time set for
      the closing of the proposed transfer, but in no event earlier than thirty
      (30) days following the exercise or expiration, as the case may be, of the
      last available option to purchase.

                                       11

<PAGE>

            (e) If all of the Offered Interests are not purchased by the Company
      or the Members, or both, pursuant to the options provided for above, then
      such unpurchased portion of the Offered Interest may, subject to this
      Operating Agreement and applicable laws, be transferred within ten (10)
      days from the date on which the last available option to purchase above
      expires to the person and on the terms specified in the notice of
      intention to make a disposition. Such transferee shall receive and hold
      such Membership Interest subject to all provisions and restrictions of
      this Operating Agreement, except that neither the Company nor any other
      Member shall be required to purchase any of such Membership Interest from
      such transferee or any subsequent transferee pursuant to Section 5.3
      hereof, and except that no such transferee or subsequent transferee shall
      have any rights to purchase any Offered Interest pursuant to this
      Operating Agreement. Any transfer of the Offered Interest after the end of
      such ten (10) day period or any material change in the terms of the
      Proposed Transfer from the terms set forth in the original notice shall
      require a new notice of intention to make a transfer. Any transfer in
      violation of any provision of this Agreement shall be void and ineffectual
      and shall not operate to transfer any interest or title to the purported
      transferee.

            (f) Notwithstanding any other provision hereof to the contrary,
      neither the Company nor any Member will be required to close on the
      purchase or acquisition of any Membership Interest in accordance therewith
      unless the representations and warranties of the Transferring Member shall
      be true and correct in all material respects as of the date of such
      closing, and the Transferring Member shall deliver a certificate to such
      effect to the purchasing parties dated as of the closing date. Any such
      Membership Interest not purchased or acquired as a result of such a breach
      may not be disposed of to the otherwise proposed transferee(s).

            (g) Any notice required to be given in accordance with this section
      shall be hand delivered to the Manager of the Company by hand or via
      overnight courier at the principal office of the Company.

5.4   Authority of the Company to Purchase Interest

      All rights and obligations of the Company to purchase any Membership
Interest of a Member are subject to the restrictions set forth in the statutes
of the State of Nevada, if any, and to such other applicable restrictions as are
now or may hereafter become effective. Any redemption of such Membership
Interest by the Company shall be made only out of funds legally available
therefor.

5.5   Representations and Warranties of the Members

      Each of the Members represents and warrants to the Company and the other
Members with respect to himself as follows:

            (a) Such Member is the lawful owner of and has the full right, power
      and authority to sell, transfer and deliver the Membership Interest of the
      Company set forth next to his name on Schedule A hereto and the sale,
      transfer and delivery of such Membership Interests of the Company in
      accordance therewith will transfer good and marketable title thereto free
      and clear of all liens, encumbrances, claims or rights of third

                                       12

<PAGE>

      parties of every kind and nature whatsoever, subject only to the
      provisions of this Operating Agreement.

            (b) The Membership Interests of the Company owned by such Member as
      set forth on Schedule A hereto have been duly authorized and are fully
      paid and non assessable. There are no existing options, warrants, calls or
      commitments on the part of any Member relating to such Membership
      Interests of the Company which will not be terminated concurrently with
      the execution of this Operating Agreement. No voting agreements or
      restrictions of any kind other than those set forth in this Operating
      Agreement affect the rights of any such Membership Interests of the
      Company or such Member.

            (c) Such Member has the right and power to enter into this Operating
      Agreement, and this Operating Agreement has been fully executed and
      delivered and constitutes the valid and binding obligation of such Member.
      No consent of any person not a party to this Operating Agreement and no
      consent of any governmental authority is required to be obtained on the
      part of such Member in connection with or resulting from the execution or
      performance of this Operating Agreement.

5.6   Transferee's Invested Capital

      In the event a transferee acquires all or part of the Membership Interest
of an existing Member or Members, the transferee's Invested Capital and Capital
Account, for purposes of this Operating Agreement, shall be the Invested Capital
and Capital Account of the transferring Member or Members, with respect to the
Membership Interest acquired by the transferee.

                                   ARTICLE VI
                                    MANAGERS

6.1   Election

      The Members agree that the business of the Company shall be managed by
three (3) Managers. Each Manager of this Company shall be chosen annually by the
Members and each shall hold office until such Manager shall resign or shall be
removed or otherwise disqualified to serve, or the Manager's successor shall be
elected and qualified.

6.2   Removal, Resignation and Vacancies

      The Members may remove any Manager, either with or without cause in
accordance with the terms of this Operating Agreement. Any Manager may resign at
any time by giving written notice to the Members. Any such resignation shall
take effect at the date of the receipt of such notice or at any later time
specified therein; and, unless otherwise specified therein, the acceptance of
such resignation shall not be necessary to make it effective. The Members may
replace any vacancy in the office of any Manager.

                                       13

<PAGE>

6.3   Managers' Powers

      The Managers shall be the chief executives of the Company and each,
individually, shall have the following powers:

            (a) Select and remove all employees, agents and representatives of
      the Company, prescribe such powers and duties for them as may be
      consistent with law, with the Articles of Organization or this Operating
      Agreement, fix their compensation, and require from them security for
      faithful service.

            (b) Conduct, manage and control the affairs and business of the
      Company, and to make such rules and regulations therefor consistent with
      the law, with the Articles of Organization or this Operating Agreement.

            (c) Change the principal office of this Company from one location to
      another; to fix and locate from time to time one or more subsidiary
      offices of the Company; and to designate any place for the holding of any
      Members' meeting or meetings.

            (d) Borrow money and incur indebtedness for the purpose of the
      Company, and to cause to be executed and delivered therefor, in the
      Company name, promissory notes, bonds, and debentures.

            (e) Appoint an executive committee and other committees, and
      delegate to the executive committee any of the powers and authority of the
      Manager in the management of the business and affairs of the Company. The
      Manager, in his discretion, may or may not be a member of an executive
      committee.

6.4   Bank Accounts

      From time to time, the Manager may designate a person or persons, whether
such persons be the Manager or not, to open and maintain one or more bank
accounts; rent safety deposit boxes or vaults; sign checks, written directions,
or other instruments to withdraw all or any part of the funds belonging to the
Company and on deposit in any savings account or checking account; negotiate and
purchase certificates of deposit, obtain access to the Company's safety deposit
box or boxes, and, generally, sign such forms on behalf of the Company as may be
required to conduct the banking activities of the Company.

                                   ARTICLE VII
                               PROFITS AND LOSSES

7.1   Net Profits and Losses

      Subject to the provisions of Section 7.4 hereof the "Net Profits and
Losses" of the Company for any Company taxable year shall be allocated and
credited to the Members' Capital Accounts in proportion to the Invested Capital
of each respective Member as defined in Section 3.4 hereof. The term "Net
Profits and Losses" of the Company shall mean the net income or loss of the
Company, as determined by auditors or accountants employed by the Company, in
accordance with Section 703 of the Code, applied consistently with prior
periods.

                                       14

<PAGE>

7.2   Allocations of Deductions

            (a) Company Nonrecourse Deductions. Except as otherwise required by
      Sections 7.3 and 7.4 below, all Nonrecourse Deductions of the Company for
      any taxable year shall be shared by the Members in proportion to their
      Invested Capital on the last day of such taxable year. The amount of
      Nonrecourse Deductions of the Company shall be determined in accordance
      with Regulations Section 1.704-2(c).

            (b) Member Nonrecourse Deductions. Except as otherwise required by
      Sections 7.3 and 7.4 below, all Member Nonrecourse Deductions of the
      Company for any taxable year shall be allocated in accordance with
      Regulations Section 1.704-2(i)(1). The amount of Member Nonrecourse
      Deductions shall be determined in accordance with Regulations Section
      1.704-2(i)(2).

7.3   Special Allocations

            (a) Qualified Income Offset. Except as provided in Section 7.3(b)
      below, in the event any Member unexpectedly receives any adjustments,
      allocations or distributions described in Section 1.704-1(b)(2)(ii)(d)(4),
      (5) or (6) of the Regulations, items of Company income and gain shall be
      specially allocated to each such Member in an amount and manner sufficient
      to eliminate, to the extent required by the Regulations, the adjusted
      capital account deficit of such Member as quickly as possible.

            (b) Minimum Gain Chargeback. Notwithstanding any other provision of
      this Section 7.3, if there is a net decrease in Company Minimum Gain
      during any Company fiscal year, each Member who would otherwise have an
      adjusted capital account deficit at the end of such year shall be
      specially allocated items of Company income and gain for such year (and,
      if necessary, subsequent years) in an amount and manner sufficient to
      eliminate such Member's adjusted capital account deficits as quickly as
      possible. The items to be so allocated shall be determined in accordance
      with Section 1.704-1(b)(4)(iv)(e) of the Regulations. Notwithstanding any
      other provision of this Section 7.3(b), if there is a net decrease in
      Minimum Gain attributable to Member Nonrecourse Debt during a Company
      Taxable Year, each Member with a share of the Minimum Gain attributable to
      such member Nonrecourse Debt shall be allocated items of income and gain
      for such year (and, if necessary, subsequent years) in accordance with
      Regulations Section 1.704-(i)(4). The items to be so allocated shall be
      determined in accordance with Regulations Section 1.704-2(i). This Section
      7.3(b) is intended to comply with the minimum gain chargeback requirement
      in such sections of the Regulations and shall be interpreted consistently
      therewith.

            (c) Allocation of Remaining Income and Gains on Sale or Other
      Disposition. Except as otherwise required by this Section 7.3., income and
      gains arising from the sale, exchange, transfer or disposition or
      condemnation of all or substantially all of the Company's property shall
      be allocated, for federal income tax purposes, among those who shall be
      Members on the date of such transaction or transactions as follows:

                  (1) If one or more Members has a negative Capital Account
            after such Member's Capital Account is adjusted to reflect any
            allocation of gains under

                                       15

<PAGE>

            Section 7.2(b) above, but before such Member's Capital Account is
            adjusted to reflect any distribution under Section 8.3 below, with
            respect to the disposition to which this Section 7.3 is being
            applied, such income and gains shall be allocated to such Members in
            proportion to their negative Capital Accounts until each such
            Member's Capital Account equals zero.

                  (2) To the extent one or more Member's Capital Account balance
            is less than (i) the total of all Members' Capital Account balances
            times (ii) such Member's Invested Capital in the Company (a "Capital
            Disparity"), such income and gains shall be allocated among such
            Members in proportion to Capital Disparities until all of the
            Members' Capital Accounts are, as nearly as possible, in proportion
            to their Invested Capital.

                  (3) The balance of such income and gains shall be allocated to
            the Members in proportion to their Invested Capital.

            (d) Assignments. In the event of an assignment of a Membership
      Interest (other than an assignment by reason of the death of a Member),
      the assignor's distributive share of Company income, gains, loss,
      deductions and credits and expenditures not deductible in computing its
      taxable income (in respect of the interest so assigned) shall be the share
      of such items attributable to such Membership Interest accruing prior to
      such assignment (based on an interim closing of the books of the Company),
      and the assignee's share shall be the share of such items attributable to
      such Membership Interest after such assignment (based on such interim
      closing).

            (e) Mandatory Section 704(c) Allocations. Notwithstanding the
      foregoing, to the extent that Code Section 704(c), Regulations Sections
      1.704-3 or 1.704-1(b)(2)(iv), or any other regulations which may be
      proposed or promulgated under Code Section 704(c); require allocations of
      Company income, gains, losses or deductions in a manner which is different
      than that set forth above, the provisions of Section 704(c) and the
      regulations thereunder shall control such allocations among the Members.
      In the absence of a contrary agreement among the Members, such items shall
      be allocated in accordance with the "Traditional method with curative
      allocations" set forth in Regulations Section 1.704-3(c) or any successor
      regulation.

7.4   Curative Allocations

      The allocations set forth in Section 7.3(a) and 7.3(b) (the "Regulatory
Allocations") are intended to comply with certain requirements of Regulations
Sections 1.704-l(b), 1.704-2 and 1.704-3, and shall be interpreted and applied
in a manner consistent therewith. Notwithstanding any other provisions of this
Article VII (other than the Regulatory Allocations), the Regulatory Allocations
shall be taken into account in allocating other profits, losses and items of
income, gain, loss and deduction among the Members so that, to the extent
possible, the net amount of such allocations of other profits, losses and other
items in the Regulatory Allocations to each Member shall be equal to the net
amount that would have been allocated to each such Member if the Regulatory
Allocations had not occurred.

                                       16

<PAGE>

7.5   Federal Income Tax

      It is the intent of this Company and its Members that this Company will be
governed by the applicable provisions of Subchapter K, of Chapter 1, of the
Code.

                                  ARTICLE VIII
                                  DISTRIBUTIONS

8.1   Operating Distributions

      The Company's Cash Available For Distribution shall, at such times as the
Managers of the Company deem advisable, be distributed among the Members in
proportion to their respective Membership Interests, as of the date of any such
distribution. The term "Cash Available For Distribution" shall mean the total
cash revenues generated by the Company's operations (including proceeds from the
sale or refinancing of Company assets), less all cash expenditures of the
Company for debt service and operating expenses, and less a reasonable amount
determined by the Company to be set aside for reserves.

8.2   Payment of Member Loans

      Under all circumstances, Member Loans shall be repaid first out of any
Cash Available for Distribution. If a difference exists between the Members in
the amount of Member Loans made to the Company, any Member with more Member
Loans outstanding (in value) than another Member shall receive the first
distributions of any available cash until that Member's Loan is in parity with
the other Member Loans, if any. Thereafter, the Member Loans will be repaid
ratably to the Members with Loans. It is the intention of the Members that
Member Loans will be repaid as cash is available for distribution and may result
in revolving payments to the Members as additional Member Loans are advanced to
the Company.

8.3   Distribution on Dissolution and Liquidation

      In the event of the dissolution and liquidation of the Company for any
reason, after the payment of or provision for creditors pursuant to NRS Section
86.521 and other applicable law, the Company's assets shall be distributed among
the Members in accordance with their respective positive Capital Account
balances, in accordance with Regulations Section 1.704-1(b)(2)(ii)(b)(2).

                                   ARTICLE IX
                             ACCOUNTING AND RECORDS

9.1   Records and Accounting

      The books and records of the Company shall be kept, and the financial
position and the results of its operations recorded, in accordance with the
accounting methods elected to be followed by the Company for federal income tax
purposes. The books and records of the Company shall reflect all Company
transactions and shall be appropriate and adequate for the Company's business.
The fiscal year of the Company for financial reporting and for federal income
tax purposes shall be the calendar year.

                                       17

<PAGE>

9.2   Access to Accounting Records

      All books and records of the Company shall be maintained at any office of
the Company or at the Company's principal place of business, or as determined
from time to time by the Company, and each Member, and his duly authorized
representative, shall have access to them at such office of the Company and the
right to inspect and copy them at reasonable times. The Company shall keep all
records required to be kept at the registered office of the Company by Chapter
86 of the NRS at such registered office of the Company.

9.3   Annual Tax Information

      The Managers shall use their best efforts to cause the Company to deliver
to each Member within ninety (90) days after the end of each fiscal year all
information necessary for the preparation of such Member's federal income tax
return.

9.4   Reports to Members

      The Managers shall prepare and deliver to the Members monthly financial
statements. The Company's independent certified public accountant shall prepare
and deliver to the Members, within sixty (60) days after the end of the
applicable period, quarterly and annual financial statements.

                                    ARTICLE X
                                      TERM

10.1  Term

      The term of this Company shall begin on the date the Articles of
Organization are filed with the Nevada Secretary of State and shall continue
until October 23, 2024, unless terminated prior thereto in accordance with the
provisions hereof, by unanimous agreement of the Members or pursuant to Chapter
86 of the NRS.

                                   ARTICLE XI
                         DISSOLUTION OF THE COMPANY AND
                       TERMINATION OF A MEMBER'S INTEREST

11.1  Dissolution

      The Company must be dissolved on the death, insanity, retirement,
resignation, expulsion, bankruptcy or dissolution of a Member or occurrence of
any other event which terminates a Member's continued membership in the Company,
unless the business of the Company is continued by the consent of a Majority of
the remaining Members of the Company. In determining a Majority for purposes of
this Article XI, only Membership Interests of remaining Members shall be
considered to be outstanding.

                                       18

<PAGE>

11.2  Death of a Member; Continuation

      After the death of a Member, if a Majority of the remaining Members
consent to the continuation of the business of the Company, the personal
representative ("Representative") of the deceased Member and, after the
distribution of the deceased Member's estate, the deceased Member's heirs or
legatees, shall immediately succeed to the Membership Interest of the deceased
Member in the Company, subject to the provisions of this Operating Agreement.
During administration of the estate of the deceased Member, such Representative
(and after distribution of the deceased Member's estate, such heirs or legatees)
shall have the same rights and obligations in the Company for the remainder of
the Company's term as the deceased Member would have had, if the deceased Member
had survived. Such rights and obligations shall include, but shall not be
limited to, the conduct of the Company's business and the share in the profits
and losses of the Company.

11.3  Option To Purchase Deceased Member's Interest

      Upon the death of a Member, the Company shall have the option, within 120
days of the Member's date of death, to purchase the deceased Member's Membership
Interest in the Company for an agreed upon price, or if no price can be agreed
upon, the fair market value of such Membership Interest as determined by an
independent qualified appraiser appointed by the Members and the deceased
Member's Representative. If they cannot agree on an appraiser, the Members and
such Representative shall agree on three (3) possible appraisers, place their
names on pieces of paper placed into a hat, and one person chosen by the Members
and such Representative shall, without looking, reach into a hat and pick out
one name who shall be the appraiser. If the Company elects to purchase the
Membership Interest of the deceased Member, it shall pay the agreed price or the
fair market value of such Membership Interest to the deceased Member's
Representative, in cash, within such 120 day period. If the Company does not
purchase the Membership Interest of the deceased Member within such 120 day
period, then all rights to purchase the deceased Member's Membership Interest
pursuant to this Section shall terminate.

11.4  Bankruptcy

      Upon the bankruptcy of a Member (the "Bankrupt Member"), if a Majority of
the remaining Members consent to the continuation of the business of the
Company, the remaining Members shall have the right to purchase the entire
Membership Interest of the Bankrupt Member at a price equal to the fair market
value of such Membership Interest at the time of such bankruptcy, as determined
by an independent qualified appraiser appointed by the Members, including the
Bankrupt Member. If they cannot agree on an appraiser, the Members, including
the Bankrupt Member, shall agree on three (3) possible appraisers, place their
names on pieces of paper placed into a hat, and one person chosen by the Members
shall, without looking, reach into the hat and pick out one name who shall be
the appraiser. A purchase of a Bankrupt Member's Membership Interest shall be an
all cash transaction completed within 120 days after the date the bankruptcy
petition is filed by or against the Bankrupt Member. The Company shall send a
notice of the bankruptcy to all the Members and each Member wishing to purchase
all or part of the Bankrupt Members Membership Interest (a "Purchasing Member")
must so notify all the other Members in writing within twenty (20) days after
delivery of the notice. Unless they agree otherwise, if there is more than one
Purchasing Member, each Purchasing Member may purchase the same proportion of
the Bankrupt Member's Membership Interest as the Membership Interest of that
Purchasing Member bears to the total Membership Interests of all the

                                       19

<PAGE>

Purchasing Members. If no remaining Member wishes to purchase the Bankrupt
Member's Membership Interest, or the Purchasing Members do not actually purchase
the Bankrupt Member's Membership Interest within the time set forth in this
Section 11.4, then all rights to purchase the Bankrupt Member's Membership
Interest pursuant to this Section shall terminate.

                                   ARTICLE XII
                                  TRUST MEMBERS

12.1  Trustee Liability

      When any trustee becomes a Member of this Company, he shall be a Member
not individually but solely as a trustee, in the exercise and under the power
and authority conferred upon and vested in such trustee. Nothing contained in
this Operating Agreement shall be construed as creating any liability on any
such trustee personally to pay any amounts required to be paid hereunder, or to
perform any covenant, either express or implied, contained herein; all such
liability, if any, is hereby expressly waived by the other Members of this
Company. Any liability of any Member which is a trust (whether to the Company or
to any third person) shall be a liability to the full extent of the trust estate
and shall not be a personal liability of any Trustee, grantor or beneficiary of
any trust.

12.2  Status of Successor Trustees as Members

      Any successor trustee or co-trustee of any trust which is a Member shall
be entitled to exercise the same rights and privileges and be subject to the
same duties and obligations as the predecessor trustee. As used in this Article
XII, the term "trustee" shall include any and all such successor trustees.

                                  ARTICLE XIII
                                 INDEMNIFICATION

13.1  Indemnity

      This Company does hereby indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative,
except an action by or in the right of the Company, by reason of the fact that
he is or was a Manager, Member, employee or agent of this Company, or is or was
serving at the request of this Company as manager, director, officer, employee
or agent of another limited liability company or corporation, against expenses,
subject to the provisions of Section 13.4 below, including attorneys' fees,
judgments, fines and amounts paid in settlement actually and reasonably incurred
by him in connection with the action, suit or proceeding if he acted in good
faith and in a manner which he reasonably believed to be in or not opposed to
the best interests of this Company, and, with respect to a criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, does not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best interest
of this Company, and that, with respect to any criminal action or proceeding, he
had reasonable cause to believe that his conduct was unlawful.

                                       20

<PAGE>

13.2  Indemnity for Actions By or In the Right of the Company

      This Company does hereby indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of this Company to procure a judgment in its favor by
reason of the fact that he is or was a Member, Manager, employee or agent of
this Company, or is or was serving at the request of this Company as a Member,
Manager, director, officer, employee or agent of another limited liability
company, corporation, partnership, joint venture, trust or other enterprise
against expenses, subject to the provisions of Section 13.4 hereof, including
amounts paid in settlement and attorneys' fees actually and reasonably incurred
by him in connection with the defense or settlement of the actions or suit if he
acted in good faith and in a manner which he reasonably believed to be in or not
opposed to the best interests of this Company. Indemnification may not be made
for any claim, issue or matter as to which such a person has been adjudged by a
court of competent jurisdiction, after exhaustion of all appeals therefrom, to
be liable to this Company or for amounts paid in settlement to this Company,
unless and only to the extent that the court in which the action or suit was
brought or other court of competent jurisdiction determines upon application
that in view of all the circumstances of the case, the person is fairly and
reasonably entitled to indemnity for such expenses as the court deems proper.

13.3  Indemnity If Successful

      To the extent that a Member, Manager, employee or agent of this Company
has been .successful on the merits or otherwise in defense of any action, suit
or proceeding referred to in Sections 13.1 and 13.2, or in defense of any claim,
issue or matter therein, this Company does hereby indemnify such person or
entity against expenses, subject to the provisions of Section 13.4 hereof,
including attorneys' fees, actually and reasonably incurred by him in connection
with the defense.

13.4  Expenses

      Any indemnification under Sections 13.1 and 13.2, unless ordered by a
court or advanced pursuant to Section 13.5 below, must be made by this Company
only as authorized in the specific case upon a determination that
indemnification of the Member, Manager, employee or agent is proper in the
circumstances. The determination must be made:

            (a) By a majority vote of Managers who were not parties to the act,
      suit or proceeding;

            (b) If, pursuant to majority vote, Managers who were not parties to
      the act, suit or proceeding so order, by independent legal counsel in a
      written opinion; or

            (c) If a vote of Managers who were not parties to the act, suit or
      proceeding cannot be obtained, by independent legal counsel in a written
      opinion.

      For purposes of this Section 13.4, each Manager shall have one vote.

13.5  Advance Payment of Expenses

      The expenses of Members and Managers incurred in defending a civil or
criminal action, suit or proceeding shall be paid by this Company as they are
incurred and in advance of the final disposition of

                                       21

<PAGE>

the action, suit or proceeding, upon receipt of an undertaking by or on behalf
of the Member or Manager to repay the amount if it is ultimately determined by a
court of competent jurisdiction that he is not entitled to be indemnified by
this Company. The provisions of this subsection do not affect any rights to
advancement of expenses to which personnel other than Members or Managers may be
entitled under any contract or otherwise by law.

13.6  Other Arrangements Not Excluded

      The indemnification and advancement of expenses authorized in or ordered
by a court pursuant to this Article XIII:

            (a) Does not exclude any other rights to which a person seeking
      indemnification or advancement of expenses may be entitled under the
      Articles of Organization or any agreement, vote of Members or otherwise,
      for either an action in his official capacity or an action in another
      capacity while holding his office, except that indemnification, unless
      ordered by a court pursuant to Section 13.2 above or for the advancement
      of expenses made pursuant to Section 13.5 above, may not be made to or on
      behalf of any Member or Manager if a final adjudication establishes that
      his acts or omissions involved intentional misconduct, fraud or a knowing
      violation of the law and was material to the cause of action.

            (b) Continues for a person who has ceased to be a Member, Manager,
      employee or agent and inures to the benefit of the heirs, executors and
      administrators of such a person.

                                   ARTICLE XIV
                            MISCELLANEOUS PROVISIONS

14.1  Complete Agreement

      This Operating Agreement, and the Articles of Organization, constitute the
complete and exclusive statement of the agreement among the Members with respect
to the subject matter contained therein. This Operating Agreement and the
Articles of Organization replace and supersede all prior agreements by and among
the Members or any of them. This Operating Agreement and the Articles of
Organization supersede all prior written and oral statements and no
representation, statement, or condition or warranty not contained in this
Operating Agreement or the Articles of Organization will be binding on the
Members or be of any force and effect whatsoever.

14.2  Amendments

      This Operating Agreement may be amended by the Members but only at a
special or annual meeting of the Members, not by written consent, and only if
the notice of the intention to amend the Operating Agreement was contained in
the notice of the meeting, or such notice of a meeting is waived by all Members.

                                       22

<PAGE>

14.3  Applicable Law

      This Operating Agreement, and its application, shall be governed
exclusively by its terms and by the laws of the State of Nevada.

14.4  Headings

      The headings in this Operating 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 Operating Agreement or any provisions contained herein.

14.5  Severability

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

14.6  Expenses

      If any litigation or other proceeding is commenced in connection with or
related to this Operating Agreement, the prevailing party shall be entitled to
recover from the losing party all of the incidental costs and reasonable
attorneys' fees, whether or not a final judgment is rendered.

14.7  Heirs, Successors and Assigns

      Each and all of the covenants, terms, provisions and agreements contained
in this Operating Agreement shall be binding upon and inure to the benefit of
the existing Members all new and substituted Members, and their respective
assignees (whether permitted by this Agreement or not), heirs, legal
representatives, successors and assigns.

14.8  Execution

      This Operating Agreement may be executed in counterparts, and when so
executed each counterpart shall be deemed to be an original, and said
counterparts together shall constitute one and the same instrument.

14.9  Power of Attorney

      Each Member, in accepting this Operating Agreement, makes, constitutes and
appoints the Managers and each of them, with full power of substitution, as his,
her, or its attorney-in-fact and personal representative to sign, execute,
certify, acknowledge, file and record the Articles of Organization, and to sign,
execute, certify, acknowledge, file and record all appropriate instruments
amending the Articles of Organization and this Operating Agreement on behalf of
each such Member. In particular, the Manager as attorney-in-fact may sign,
acknowledge, certify, file and record on behalf of each Member such instruments,
agreements and documents which: (1) reflect any amendments to the Articles of
Organization or Operating Agreement; (2) reflect the admission or withdrawal of
a Member; and (3) may otherwise be required of the Company, a Member or by law.
The Power of

                                       23

<PAGE>

Attorney  herein  given by each Member is a durable  power and will  survive the
disability or incapacity of the principal.

      IN WITNESS WHEREOF, this Operating Agreement was adopted by a unanimous
action of the Members of this Company pursuant to a Written Consent dated
October 24, 1994.

                                          MEMBERS:

                                          ANAGRAM INTERNATIONAL, INC.
                                          A Minnesota corporation

                                          By/s/ Jim Plutt
                                            ------------------------------------
                                            Jim Plutt, Secretary

                                          ANAGRAM INTERNATIONAL HOLDINGS, INC.
                                          a Minnesota corporation

                                          By/s/ Jim Plutt
                                            ------------------------------------
                                            Jim Plutt, Secretary