##### 



Exhibit-10.22
 OPERATING AGREEMENT
OF
KYKUIT RESOURCES, LLC
 THIS OPERATING AGREEMENT th KYKUIT RESOURCES, LLC,
 RECITALS
  NOW, THEREFORE,
 SECTION 1
DEFINITIONS
  SECTION 2
FORMATION
 Name KYKUIT RESOURCES, LLC
 Organization Exhibit A
 Purpose Exhibit B




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Members Exhibit C Exhibit C Exhibit C Exhibit C
 Statutory Agent
 Principal Office
 Title to Property
 Term
 No State Law Partnership.
 2




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SECTION 3
MEMBERS
 Liability of Members
 Meetings of Members
 Notice and Record Date of Meetings
 Quorum provided
 3




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Voting
 Action by Members Without a Meeting
 SECTION 4
MANAGEMENT
 Management
 Voting by Members
 4




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(i)
    
    amending the Companys Operating Agreement or other governing
documents;(ii)
    
    altering or changing the rights, privileges, preferences or
limitations of the Membership Interests;(iii)
    
    creating or issuing a senior class or series of membership
interests of the Company;(iv)
    
    increasing or decreasing the number of Managers;(v)
    
    merging or consolidating with another business or company;(vi)
    
    directly or indirectly adopting any plan or arrangement for the
bankruptcy, reorganization, dissolution or liquidation of the Company,
including the method of distribution thereunder;(vii)
    
    selling, transferring, exchanging or otherwise disposing of
all or substantially all of the Companys assets;(viii)
    
    borrowing money or incur an obligation in excess of Five Hundred Thousand
Dollars ($500,000.00);(ix)
    
    authorizing, approving or entering into any agreement to act as
a primary obligor, or to serve as a guarantor, surety or co-obligor with
respect to the indebtedness of any other party, or to borrow money from
third-party lenders;(x)
    
    disposing of the goodwill of the Company; and/or(xi)
    
    doing any other act that would make it impossible to carry on
the ordinary business of the Company.
 Compensation
 Other Business Interests of Members
 Officers.
 5




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Reliance on Acts of Members or Officers
 SECTION 5
CONTRIBUTIONS, COMMITMENTS AND LOANS
 Capital Contributions
 (a)
    
    Member Capital Contributions. Each Member agrees to
make contributions to the capital of the company in cash from time to time
payable in United States Dollars, as follows:
 (i)
    
    Initial Capital Contributions. Each
Member shall contribute to the Company, as such Members Initial
Capital Contribution, the amounts described in Exhibit C
attached hereto;(ii)
    
    Additional Capital Contributions.
Within thirty (30) days after a Payment Notice from the Managing
Member, each Member shall contribute to the Company additional Capital
Contributions in an amount equal to its pro rata share of anticipated
Operating Expenses as determined by the Managing Member in its sole
discretion.
 (b)
    
    Funding Mechanics. The amount of each Capital
Contribution shall be specified by the Company in a written Payment Notice
delivered to each member at least thirty (30) days prior to the date that the
amount due. Capital Contributions shall be made by wire transfer or
immediately available funds to the account specified in the applicable Payment
Notice
 6




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or by such other method as the Managing Member specifies in such Payment
Notice.
 5.2
    
    Defaulting Member.
 (a)
    
    Default. If any Member fails to make, when due, any
portion of a Capital Contribution required to be contributed by such Member
pursuant to this Agreement or to make any other payment required to be made by
it hereunder when required to be made, then the Company shall promptly provide
written notice of such failure to such Member. If such Member fails to make
such Capital Contribution (a Capital Deficiency) or such other payment (the
Payment Deficiency) within ten (10) business days after receipt of such
notice, then, for so long as such Member fails to make such Capital
Contribution or such other payment, such Member shall be deemed a Defaulting
Member and, in addition to the other remedies provided in this Agreement, the
remedies set forth below shall apply. Election of any one or more of the
following remedies shall not preclude the subsequent use of any other remedy
specified below or otherwise available to a non-defaulting party.(b)
    
    Suspension of Rights. The Managing Member may upon
written notice to the Defaulting Member suspend all of the Defaulting Members
rights granted by this Agreement until the default is cured, without prejudice
to the right of the non-defaulting Members to continue to enforce the
obligations of the Defaulting Member previously accrued or thereafter accruing
under this Agreement. The rights of the Defaulting Member that may be
suspended hereunder at the election of the Managing Member shall include
without limitation, the right to receive information as to any operation of the
Company during the period of such default, the right to Vote on any matter, and
the right to receive distribution pursuant to this Agreement.(c)
    
    Suit for Damages. The Company may sue the Defaulting
Member to collect any Capital Deficiency or Payment Deficiency, plus interest
accruing thereon from the date of default until the date of collection at the
Default Rate. Nothing herein shall prevent any Member or the Company from
suing any Defaulting Member to collect consequential damages accruing to such
Member or the Company as a result of the default.(d)
    
    Dilution. The Managing Member may upon written notice
to all Members, give each non-defaulting Member the right to contribute (or
cause the Company to contribute) his/her pro rata share of the Capital
Deficiency as additional Capital Contribution to the Company. If one or more
non-defaulting Members elect not to make the additional Capital Contribution,
the remaining Members (other than the Defaulting Member)
 7




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shall be given the opportunity to make an additional Capital Contribution in
an amount equal to his/her pro rata share of the shortfall. In the event
that the Managing Member exercises the right under this Section 5.2(e), then
at the election of the Managing Member, either (1) the Defaulting Members
ownership interest in the Company shall be diluted on a pro rata basis, and
the ownership interest of any non-defaulting Member who contributes
additional Capital Contribution shall increase in proportion to that
Members additional Capital Contribution, or (2) the Defaulting Members
ownership interest in the Company shall not be diluted, but instead the
Defaulting Member shall forego its right to receive any distributions from
the Company until such time as the distributions that the Defaulting Member
would have been entitled to receive but for the default equal three hundred
percent (300%) of Capital Deficiency, and the non-defaulting Members who
make additional Capital Contributions shall be entitled to receive three
hundred percent (300%) of the amount of his/her additional Capital
Contribution.(e)
    
    Costs and Attorneys Fees. In the event any party
brings legal proceedings to enforce any financial obligation of a Member
hereunder, the prevailing Member in such action shall be entitled to recover
all court costs, costs of collection, and reasonable attorneys fees, which the
lien provided for herein shall also secure.(f)
    
    Rights Cumulative. No right, power or remedy
conferred upon the Managing Member or the Company in this Section 5.2 shall be
exclusive, and each such right, power or remedy shall be cumulative and in
addition to every other right, power or remedy whether conferred in this
Section 5.2 or now or hereafter at law or in equity or by statute or
otherwise. No course of dealing between the Managing Member and any
Defaulting Member and no delay in exercising any right, power or remedy
conferred in this Section 5.2 or now or hereafter existing at law or in equity
or by statute or otherwise shall operate as a waiver or otherwise prejudice
any such right, power or remedy.(g)
    
    Lien on Units. Each Member grants to the other Members
a lien upon his/her Units to secure performance of each Members payment
obligations hereunder.
 Public Offering
 No Interest on Capital Contributions
 8




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Return of Capital Contributions
 Capital Accounts
 Loans by Members
 SECTION 6
ALLOCATIONS AND DISTRIBUTIONS
OF PROFITS AND LOSSES
 Allocations of Profits
 Allocation of Losses
 Distribution of Cash Flow
 Allocation and Distribution to New Members and Assignees
 SECTION 7
TAXES
 Method of Accounting For Tax Purposes
 9




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Tax Matters Member
 SECTION 8
TRANSFERS OF UNITS AND WITHDRAWALS OF MEMBERS
 Permitted Transfers
 Transfer or Sale of Units
 (i)
    
    The Transfer will not require registration of the Units under any federal or
state securities laws;(ii)
    
    The transferee delivers to the Company a written instrument agreeing to be
bound by the terms of this Agreement;(iii)
    
    The Transfer will not result in the termination of the Company pursuant to
Code Section 708, or otherwise;(iv)
    
    The Transfer will not result in the Company being subject to the Investment
Company Act of 1940, as amended;(v)
    
    The transferor or the transferee delivers the following information to the
Company: (i) the transferees taxpayer identification number; and (ii) the transferees
initial tax basis in the transferred Membership Interest; and(vi)
    
    The transferor complies with provisions set forth in Section 8.3 hereof.
  10




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8.3
    
    Right of First Refusal.
 (a)
    
    If a Member (the Transferor) receives a bona fide offer (the
Transferee Offer) from any other Person (the Transferee) to purchase all or
any portion of or any interest or rights in the Members Units (the
Transferors Interest), then prior to any Transfer the Transferor shall give
written notice to all other Members containing each of the following:
 (i)
    
    The Transferees identity;(ii)
    
    A true and complete copy of the Transferees
Offer; and(iii)
    
    The Transferors Offer (the Offer) to sell
the Transferors Units to all other Members other than the Transferor
(individually, a Remaining Member, and collectively, the Remaining
Members) for a total price equal to the price set forth in the
Transferees Offer (the Transfer Purchase Price), which shall be
payable on the terms of payment set forth in the Transferees Offer,
subject to the provisions of this Section.
 (b)
    
    The Offer shall be and remain irrevocable for a period ending
at 11:59 p.m. local time at the Companys principal office on the thirtieth
(30th) day following the date the Transfer Notice is given by the
Transferor to the Remaining Member(s) (the Offer Period). At any time during
the Offer Period, a Remaining Member may accept the Offer by notifying the
Transferor in writing (the Acceptance Notice) that the Remaining Member
intends to purchase all, but not less than all, of the Transferors Interest.
If two (2) or more Remaining Members desire to accept the Offer, then, in the
absence of an Agreement between or among them, each such Remaining Member shall
purchase the Transferors Interest in the proportion that his/her respective
percentage of Unit Ownership bears to the total percentages of all of the
Remaining Members who desire to accept the offer. If any Remaining Member(s)
accepts the Offer, then the Acceptance Notice shall fix a closing date (the
Transfer Closing Date) for the purchase, which date shall not be earlier than
ten (10) or more than ninety (90) days after the expiration of the Offer.(c)
    
    If any Remaining Member accepts the Offer, then the Transfer
Purchase Price shall be paid on the Transfer Closing Date, in accordance with
the payment terms set forth in the Transferee Offer unless otherwise agreed by
the parties involved in the transaction.(d)
    
    If no Remaining Member accepts the Offer within the time and in
the manner specified in this Section, then the Transferor may, for a period of
 11




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sixty (60) days after the expiration of the Offer Period (the Free Transfer
Period), Transfer the Transferors Interest to the Transferee, for the same
or greater price and on the same terms and conditions as set forth in the
Transfer Notice. The Transfer shall be subject, however, to the conditions
of Transfer set forth in Section 8.2 hereof. If the Transferor does not
Transfer the Transferors Interest within the Free Transfer Period, then the
Transferors right to Transfer the Transferors Interest pursuant to this
Section, shall cease and terminate.(e)
    
    Any Transfer by the Transferor after the last day of the Free
Transfer Period or without strict compliance with the terms, provisions, and
conditions of this Section and other terms, provisions, conditions of this
Agreement, shall be null and void and of no force or effect.(f)
    
    Notwithstanding, anything contained in Section 8.2 to the
contrary, if (i) the Transferor gives the Transferee the right to become a
Member in the Company; and (ii) the Remaining Members holding fifty-one percent
(51%) or more of the Units then being held by all Remaining Members agree in
writing to the Transferee becoming a Member, which consent may be withheld by
the Remaining Members and their sole and unreviewable discretion, with or
without cause; and (iii) the Transferee executes and delivers such documents as
the Remaining Members and the Company may require to make the Transferee a
party to this Agreement; and (iv) the Transfer to the Transferee otherwise
strictly complies with the terms, provision, and conditions of this Section and
other terms, provisions, and conditions of this Agreement, including, but
without limitation the Conditions of Transfer, then the Transferee shall become
and the Remaining Members shall admit, the Transferee as a Member of the
Company. Any Person who becomes a Member as a result of an assignment of a
Membership Interest shall assume all of the obligations of the assignor,
including liabilities unknown to the assignee at the time the assignee became a
Member.(g)
    
    Each Member hereby acknowledges the reasonableness of the
prohibition contained in this Section 8.3 in view of the purpose of the Company
and the relationship of the Members. The Transfer of any Membership Right or
Membership Interest in violation of the prohibition contained in Section 8.3
hereof shall be deemed invalid, null and void, and of no force or effect. Any
Person to whom a Membership Right is attempted to be transferred in violation
of this Section shall not be entitled to vote on matters coming before the
Members, participate in the management of the Company, act as an agent of the
Company, received Distributions from the Company, or have any other rights in
or with respect to the Membership Right.
 Requirements for Effectiveness of Transfer
 12




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(a)
    
    Preserve the Companys status under the laws of each
jurisdiction in which the Company is qualified, organized or does business
after the Transfer;(b)
    
    Maintain the Companys classification as a partnership for
federal income tax purposes; and(c)
    
    Assure compliance with any applicable state and federal laws
including securities laws and regulations.
 Withdrawal of a Member
 SECTION 9
ASSIGNMENTS AND ADDITIONAL MEMBERS
 Assignment of Units
 Additional Members Exhibit C
 SECTION 10
DISASSOCIATION OF A MEMBER
 Disassociation
 (i)
    
    The withdrawal of the Member;
 13




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(ii)
    
    A Member becoming a Bankrupt Member;(iii)
    
    In the case of a Member who is acting as a Member by virtue of being a trustee
of a trust, the termination of the trust (but not merely the substitution of a new
trustee);(iv)
    
    In the case of a Member that is an organization other than a corporation, the
dissolution and commencement of winding up of the organization;(v)
    
    In the case of a Member that is a corporation, the filing of a certificate of
dissolution, or its equivalent, for the corporation or the revocation of its charter if
not reinstated within ninety (90) days; or(vi)
    
    In the case of a Member who is a natural person, the adjudication of
incompetency or death of the Member.
 Rights of Disassociating Member
 10.3
    
    Optional Buy Out in the Event of the Disassociation of a Member Pursuant to
Section 10.1(i) through (v).
 (a)
    
    In the event of the Disassociation of a Member pursuant to
Section 10.1(i), (ii), (iii), (iv) or (v), then, notwithstanding anything
contained herein to the contrary, the Disassociating Member shall be deemed to
have offered for sale (the Buy Out Offer) to the other Members (individually,
a Remaining Member and collectively, Remaining Members), or at the
Remaining Members election, to the Company, all of the Units owned of record
and beneficially by the Disassociating Member before the event causing the
Disassociation (the Disassociating Members Interest).(b)
    
    The Buy Out Offer shall be and remain irrevocable for a period
ending on the thirtieth (30th) day following the date the Remaining
Members elect to continue the Company (the Buy Out Offer Period). At any
time during the Buy Out Offer Period, a Remaining Member may accept the Buy Out
Offer by notifying the Disassociating Member in writing (the Buy Out
Acceptance) that the Remaining Member intends to purchase all, but not less
than all, of the Disassociating Members Units. If two (2) or more Remaining
Members desire to accept the Buy Out Offer, then, in the absence of an
agreement between or among them, each such Remaining Member shall purchase the
Disassociating Members Units in the proportion that his/her respective
Percentage of Unit Ownership bears to the total Percentages of all of the
Remaining Members who desire to
 14




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accept the Buy Out Offer. Alternatively, the Remaining Members may by a
Vote of the Members elect to cause the Company to purchase the
Disassociating Members Units. If any Remaining Member or the Company
accepts the Buy Out Offer, then the Buy Out Acceptance shall fix a closing
date (the Buy Out Closing Date) for the purchase, which date shall not be
earlier than ten (10) or later than ninety (90) days after the date that the
Buy Out Purchase Price (hereinafter defined) is determined.(c)
    
    If any Remaining Member accepts the Buy Out Offer, then the
Purchase Price for such sale shall be determined pursuant to Section 10.4
hereof (the Buy Out Purchase Price). The Buy Out Purchase Price shall be
paid in accordance with an unsecured promissory note(s) which shall: (i) be
dated as of the Buy Out Closing Date; (ii) provide for payment of the Buy Out
Purchase Price in thirty-six (36) equal monthly installments over a three (3)
year period, (iii) bear interest at a rate of six percent (6%) per annum, which
interest shall be payable monthly at the time installments of principal are due
and payable; and (iv) be subordinated to the Companys payment obligations to
third party lenders. The Disassociated Member agrees to execute such
subordination agreements as the Companys third party lenders may request.(d)
    
    If no Remaining Member accepts the Buy Out Offer, then the
Disassociating Member, upon expiration of the Buy Out Offer Period, shall
thereafter be treated as an unadmitted Assignee.
 Buy Out Purchase Price
 Disassociation Pursuant to Section 10.1(vi)
 SECTION 11
DISSOLUTION AND WINDING UP
 Dissolution
 15




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Procedure for Winding Up and Dissolution
 Articles of Cancellation
 SECTION 12
ACCOUNTING, RECORDS AND BANK ACCOUNTS
 Records to be Maintained
 (i)
    
    A current list of the full names, in alphabetical order, and last known
business or residence address of each Member;(ii)
    
    Copies of the Articles, all amendments thereto, and executed copies of any
powers of attorney pursuant to which the Articles or the amendments have been executed;(iii)
    
    Copies of this Agreement, all amendments hereto, and executed copies of any
powers of attorney pursuant to which this Agreement and such amendments have been
executed;(iv)
    
    Copies of the Companys federal, state, and local income tax returns and
reports, for the three (3) most recent years;(v)
    
    Copies of any financial statements of the Company for the three (3) most recent
years; and(vi)
    
    Any other agreements or documents required by the Act or this Agreement.
 Accounts
 16




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Bank Accounts
 Annual Accounting Period
 SECTION 13
LIABILITY AND INDEMNIFICATION
 General
 SECTION 14
 REPRESENTATIONS AND WARRANTIES
 General.
 Investment Purposes.
 (a)
    
    This Agreement constitutes the legal, valid, and binding
obligation of such Member.
 17




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(b)
    
    Neither the execution, delivery or performance of this
Agreement or the consummation of the transactions contemplated hereby (i) will
conflict with, violate or result in a breach of any of the terms, conditions or
provisions of any law, regulation, order, writ, injunction, decree,
determination or award of any court, any governmental department, board, agency
or instrumentality, domestic or foreign, or any arbitrator, applicable to such
Member or any of such Members affiliates; (ii) will conflict with, violate,
result in a breach of, or constitute a default under any of the terms,
conditions or provisions of any material agreement or instrument to which such
Member or any of that Members affiliates is a party or by which such affiliate
is or may be bound or to which any of its material properties or assets is
subject; (iii) will conflict with, violate, result in a breach or constitute a
default under (whether with notice or lapse of time or both), accelerate or
permit the acceleration of the performance required by, give to others any
material interests or rights or require any consent, authorization or approval
under any indenture, mortgage, lease agreement or instrument to which such
Member or any such Members affiliates is a party or by which such Member or
any of such affiliates is or may be bound; or (iv) will result in the creation
or imposition of any lien upon any of the material properties or assets of such
Member or any of such Members affiliates.(c)
    
    Any registration, declaration or filing with, or consent,
approval, license, permit or other authorization or order by, any governmental
or regulatory authority, domestic or foreign, that is required in connection
with the valid execution, delivery, acceptance and performance by such Member
of this Agreement or the consummation by such Member of any transaction
contemplated hereby has been completed, made or obtained on or before the
effective date of this Agreement.(d)
    
    The Member acknowledges and agrees that: (i) the interest in
the Company hereunder is not registered under the Securities Act of 1933, as
amended, or any state securities laws, and is being issued in reliance upon
federal and state exemptions for transactions not involving any public
offering; (ii) the Membership interests being acquired are subject to
restrictions on transferability and resale and may not be transferred or sold
except as permitted by this Agreement and under the Securities Act of 1993, as
amended, and the applicable state securities laws pursuant to registration or
exception therefrom; (iii) the Member is acquiring said Membership Interest
solely for his/her own account for investment purposes and not with a view to
the distribution thereof; (iv) the Member has either consulted with its own
investment advisor, attorney or accountant about the investment and the
proposed purchase of the Membership Interest and its suitability, or chosen not
to do so, despite the recommendation of that course of action by the Managing
Member, and understands the risk of and other considerations relating got the
purchase
 18




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of the Membership Interest; (v) the Member is knowledgeable and experience
with respect to financial, tax and business aspects of the ownership of the
Membership Interest and of the business contemplated by the Company, and is
capable of evaluating the risks and merits of purchasing said Membership
Interest and is further knowledgeable in making a decision to proceed with
this investment and has not relied upon any representations, warranties or
agreements other than those set forth in this Agreement, if any; (vi) the
Member can bear the economic risk of the proposed investment in the Company
for an indefinite period of time, and could afford to suffer the complete
loss thereof; (vii) each Member acknowledges that the Company has no
operating history, that the Membership Interest involves a substantial
degree of risk of loss and that there is no assurance of any income for each
Members investment and that any federal and/or state income tax benefits
which may be available to a Member may be lost through the adoption of new
laws or regulations, to changes of existing laws, and to changes to the
interpretation of existing laws and regulations; and (viii) each Member is a
sophisticated and accredited investor within the meaning of Rule 501(a) of
the Regulations promulgated under the Securities Act of 1933, as amended,
with knowledge and experience in business and financial matters.
 SECTION 15
MISCELLANEOUS PROVISIONS
 Confidentiality
 SECTION 16
GENERAL PROVISIONS
 Entire Agreement
 Assurances
 19




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Rights of Creditors and Third Parties under this Agreement
 Notices
 Specific Performance
 Applicable Law
 Section Titles
 Binding Provisions
 Terms
 20




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Severability
 Conflicts of Interest.
 Counterparts
 Representation
 (a)
    
    The Members have been advised by the Attorneys that a conflict
of interest exists among their individual interest;(b)
    
    The Members have been advised by the Attorneys to seek the
advice of independent legal counsel;
 21




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(c)
    
    The Members have had an opportunity to seek the advice of
independent legal counsel;(d)
    
    The Members have received no representations from the attorneys
about the tax consequences of this Agreement;(e)
    
    The Members have been advised by the Attorneys that this
Agreement may have tax consequences;(f)
    
    The Members have been advised by the Attorneys to seek the
advice of independent tax counsel; and(g)
    
    The Members have had the opportunity to seek the advice of
independent tax counsel.
 SIGNATURES ON FOLLOWING PAGE
 22




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IN WITNESS WHEREOF,
  /s/ Gregory J. OsborneBy: Gregory J. OsborneIts: President and COOEnergy West Resources, Inc./s/ David CerotzkeBy: David A. CerotzkeIts: President/s/ Sam PetrosSam Petros/s/ Richard M. OsborneRichard M. Osborne, Trustee U/T/A 1-13-95
  By:
Its:
    
    TGF Corporation
General Partner
 By:
    
    /s/ Steven A. CalabreseSteven A. Calabrese, President of TGF CorporationR.C. Enterprises & Development, LLC/s/ Eric M. CalabreseBy: Eric M. CalabreseIts: Managing Member
 23




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APPENDIX
       (i)
    
    The Capital Account shall be increased by all Profits allocated to such Person
pursuant to Section 6 hereof.(ii)
    
    The Capital Account shall be decreased by (a) the amount of cash and the fair
market value of all property distributed to such Person by the Company (net of
liabilities securing such distributed property that such Person is considered to assume
or take subject to under Section 752 of the Code), and (b) all Losses allocated to such
Person pursuant to Section 6 hereof.(iii)
    
    The Capital Account shall be credited in the case of an increase or debited in
the case of a decrease to reflect such Persons allocable share of any adjustment to
the adjusted basis of Company assets pursuant to Section 734(b) of the Code to the
extent provided by Section 1.704-1(b)(2)(iv)(m) of the Regulations.(iv)
    
    The Capital Account shall be adjusted in any other manner required by Section
1.704-1(b)(2)(iv) of the Regulations or otherwise, in order to be deemed properly
maintained for federal income tax purposes.(v)
    
    Capital Accounts shall not bear interest.




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(vi)
    
    The Transferee of Units shall succeed to the Capital Account attributable to
the Units transferred.
              (i)
    
    all expenses relating to managing and controlling the business
and affairs of the Company;(ii)
    
    all administrative expenses of the Company, including the cost
of the preparation of the annual audit, financial and tax returns and tax
reports
 ii




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required for Members or the Company, cash management expenses and routine
legal and accounting expenses;(iii)
    
    all costs and expenses incurred in originating, investigating,
selecting, negotiating, acquiring, structuring, financing, operating,
monitoring, disposing of or abandoning the Prospect or transactions that, if
consummated, would be part of the Prospect;(iv)
    
    all third-party expenses in connection with the Prospect,
including any financing, legal, accounting, management and consulting fees or
expenses as well as any administrative expenses of the Prospect;(v)
    
    all premiums, deductibles and other costs associated with
obtaining and maintaining any insurance coverage with respect to the business
and activities of the Company;(vi)
    
    interest on and fees and expenses arising out of all borrowings
made by the Company, including the arranging thereof;(vii)
    
    costs of any litigation, director and/or officer liability or
other insurance and indemnification or extraordinary expense or liability
relating to the affairs of the Company;(viii)
    
    expenses of liquidating the Company;(ix)
    
    registration expenses and any taxes, fees or other governmental
charges levied against the Company and all expenses incurred in connection with
any tax audit, investigation, settlement or review of the Company;(x)
    
    expenses of any meetings of the Member; and(xi)
    
    expenses in connection with the formation and organization of
the Company and any related entities, including any related legal and
accounting fees.
   Exhibit C
 iii




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(i)
    
    All items of income, gain, loss, deduction, or credit required to be stated
separately pursuant to Code Section 703(a)(1) shall be included in computing taxable
income or loss;(ii)
    
    Any tax-exempt income of the Company, not otherwise taken into account in
computing Profit or Loss, shall be included in computing taxable income or loss;(iii)
    
    Any expenditures of the Company described in Code Section 705(a)(2)(B) [or
treated as such pursuant to Regulation Section 1.704-1(b)(2)(iv)(i)] and not otherwise
taken into account in computing Profit or Loss, shall be subtracted from taxable income
or loss;(iv)
    
    Gain or loss resulting from any taxable disposition of Company property shall
be computed by reference to the adjusted book value of the property disposed of,
notwithstanding the fact that the adjusted book value differs from the adjusted basis
of the property for federal income tax purposes;(v)
    
    In lieu of the depreciation, amortization, or cost recovery deduction allowable
in computing taxable income or loss, there shall be taken into account the depreciation
computed based upon the adjusted book value of the asset; and(vi)
    
    Notwithstanding any other provision of this definition, any items which are
specifically allocated pursuant to Section 6 hereof shall not be taken into account in
computing Profit or Loss.
    iv




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Exhibit C
  v




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EXHIBIT A
 Organization/Registration of Limited Liability Company




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EXHIBIT B
 Purchase and Sale Agreement




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EXHIBIT C
 INITIAL
    
    
    
    
    
    ACTUAL
    
    EFFECTIVE UNIT
    
    PERCENTAGE OF UNITCAPITAL
    
    ACTUAL UNIT
    
    PERCENTAGE OF
    
    OWNERSHIP FOR HEMUS
    
    OWNERSHIP FOR HEMUSMEMBERS
    
    CONTRIBUTION
    
    OWNERSHIP
    
    UNIT OWNERSHIP
    
    PARTICIPATING WELLS1
    
    PARTICIPATING WELLS1John D. Oil and Gas Co.
    
    $
    200,000
    
    
    
    40
    
    
    
    40
    %
    
    
    30
    
    
    
    30
    %8500 Station Street, #345
Mentor, OH 44060Energy West Resources, Inc.
    
    $
    133,500
    
    
    
    26.7
    
    
    
    26.7
    %
    
    
    20
    
    
    
    20
    %1 1st Avenue South
Great Falls, MT 59403Sam Petros
    
    $
    33,250
    
    
    
    6.65
    
    
    
    6.65
    %
    
    
    5
    
    
    
    5
    %10474 Broadview Road
Broadview Hts., OH 44147Richard M. Osborne,
    
    $
    83,250
    
    
    
    16.65
    
    
    
    16.65
    %
    
    
    12.5
    
    
    
    12.5
    %Trustee U/T/A 1-13-95
8500 Station Street, #113
Mentor, OH 44060CCAG Limited Partnership
    
    $
    25,000
    
    
    
    5
    
    
    
    5
    %
    
    
    3.75
    
    
    
    3.75
    %1110 Euclid Avenue, #300
Cleveland, OH 44115R.C. Enterprises & Development, LLC
    
    $
    25,000
    
    
    
    5
    
    
    
    5
    %
    
    
    3.75
    
    
    
    3.75
    %1110 Euclid Avenue, #300
Cleveland, OH 44115Total
    
    $
    500,000
    
    
    
    100
    
    
    
    100
    %
    
    
    75
    
    
    
    75
    %
 
 1
    
    Kykuit Resources, LLC intends on entering into a Joint
Venture Agreement with Hemus whereby Hemus will have the right to participate
in the ownership, operation and development of the Prospect on a 25% basis.
The above columns entitled Effective Unit Ownership for Hemus Participating
Wells and the Percentage of Unit Ownership for Hemus Participating Wells
reflect the effective ownership of each Member for those operations of the
Company in which Hemus opts to participate on a 25% basis.