Document:

Exhibit 10.2

NEITHER THIS WARRANT NOR THE  SECURITIES  ISSUABLE UPON EXERCISE OF THIS WARRANT
HAVE  BEEN  REGISTERED  UNDER  THE  SECURITIES  ACT OF  1933,  AS  AMENDED  (THE
"SECURITIES  ACT"),  OR ANY STATE  SECURITIES  LAW,  AND THIS  WARRANT  AND SUCH
SECURITIES MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS THE SAME
ARE  REGISTERED  AND QUALIFIED IN  ACCORDANCE  WITH THE  SECURITIES  ACT AND ANY
APPLICABLE  STATE  SECURITIES  LAWS,  OR IN THE  OPINION OF  COUNSEL  REASONABLY
SATISFACTORY TO THE CORPORATION,  SUCH  REGISTRATION AND  QUALIFICATION  ARE NOT
REQUIRED.

                           WARRANT TO PURCHASE SHARES
                      OF COMMON STOCK OF CUBIC ENERGY, INC.

                                              Issue Date: ______________________

         THIS CERTIFIES THAT, for value received,  Tauren  Exploration,  Inc., a
Texas corporation  ("Holder"),  is entitled,  subject to the provisions and upon
the terms and conditions hereinafter set forth, to subscribe for and purchase up
to Fifty Thousand (50,000) Shares, as adjusted pursuant to the provisions hereof
(the "Number"),  of the fully paid and  nonassessable  Common Stock,  Five Cents
($0.05) par value, of CUBIC ENERGY,  INC., a Texas corporation (the "Company" or
the  "Corporation"),  for a price per Share equal to Seventy  Cents ($0.70) (the
"Exercise Price").  The Number and Exercise Price shall be subject to adjustment
as hereafter provided.

         Certain terms not otherwise  defined herein have the meanings set forth
in Section 4.5 hereof.

         1. Term. Subject to the provisions of this Warrant,  the purchase right
represented  by this Warrant is  exercisable,  in whole or in part,  at any time
from the date written  above,  from time to time until  November 9, 2009, @ 5:00
p.m., CST.

         2. Method of Exercise.  The purchase right  represented by this Warrant
may be  exercised  by the  Holder  hereof,  in whole or in part and from time to
time,  by the  surrender  of this  Warrant  (with the  notice of  exercise  form
attached  hereto as  Exhibit A duly  executed)  at the  principal  office of the
Company and by the payment to the Company,  by check or by wire transfer,  of an
amount equal to the then applicable  Exercise Price per Share  multiplied by the
number of Shares then being  purchased.  The person or persons in whose  name(s)
any certificate(s)  representing  Shares shall be issuable upon exercise of this
Warrant  shall be deemed to have become the holder(s) of record of, and shall be
treated for all  purposes  as the record  holder(s)  of, the Shares  represented
thereby (and such Shares shall be deemed to have been issued)  immediately prior
to the  close of  business  on the date or dates  upon  which  this  Warrant  is
exercised  and the then  applicable  Exercise  Price  paid.  In the event of any
exercise of the rights represented by this Warrant,  certificates for the Shares
of Common Stock so purchased  shall be delivered to the person(s)  designated on
the notice of exercise as soon as possible  and in any event  within  twenty-one

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(21) days after  receipt  of such  notice  and  payment  of the then  applicable
Exercise Price and, unless this Warrant has been fully  exercised or expired,  a
new Warrant  representing  the portion of the Shares,  if any,  with  respect to
which this Warrant shall not then have been  exercised and  containing  the same
terms and  conditions  of this  Warrant  shall  also be issued to the  person(s)
designated on the notice of exercise as soon as possible and in any event within
such twenty-one (21) day period.

         3. Stock  Fully  Paid;  Reservation  of Shares.  All Shares that may be
issued upon the  exercise of the rights  represented  by this  Warrant,  and all
shares into which such Shares are convertible will, upon issuance, be fully paid
and  nonassessable,  and free from all taxes,  liens and charges with respect to
the issue thereof.  During the period within which the rights represented by the
Warrant may be  exercised,  the Company  will at all times have  authorized  and
reserved  for the  purpose of issuance  upon  exercise  of the  purchase  rights
evidenced  by this  Warrant,  a  sufficient  number of Shares to provide for the
exercise in full of the unexercised rights represented by this Warrant.

         4.  Adjustment of Exercise  Price and Number of Shares.  The Number and
the Exercise Price shall be subject to adjustment from time to time as set forth
in this Section 4.

                  4.1 Stock Dividends,  Subdivisions and Combinations. If at any
time the Company shall:

                           (i) take a record of the holders of its Common  Stock
for the  purpose of  entitling  them to receive a dividend  payable in, or other
distribution of, additional Shares of Common Stock,

                           (ii) Subdivide its outstanding Shares of Common Stock
into a larger number of Shares of such Common Stock, or

                           (iii) combine its outstanding  Shares of Common Stock
into a smaller number of Shares of such Common Stock,

then the  Exercise  Price shall be adjusted to equal the product of the Exercise
Price in effect  immediately  prior to such event  multiplied  by a fraction the
numerator of which is equal to the number of Shares of Common Stock  Outstanding
immediately prior to the adjustment and the denominator of which is equal to the
number of Shares of Common Stock Outstanding immediately after such adjustment.

                  4.2  Adjustment to Number.  At the time the Exercise  Price is
adjusted,   the  Number  shall  also  be  adjusted  by  multiplying  the  Number
immediately  prior to the adjustment by a fraction the numerator of which is the
Exercise Price  immediately prior to the adjustment and the denominator of which
is the adjusted Exercise Price.

                  4.3  Conversion,  Reorganization,   Reclassification,  Merger,
Consolidation  or Disposition of Assets.  In case the Company shall convert into
another form of entity,  reorganize  its capital,  reclassify its capital stock,

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consolidate  or merge with or into another  entity (where the Company is not the
surviving  entity or where there is any change  whatsoever  in, or  distribution
with respect to, the Outstanding Common Stock of the Company), or sell, transfer
or otherwise  dispose of all or  substantially  all of its  property,  assets or
business  to  another  entity  and,  pursuant  to the terms of such  conversion,
reorganization,   reclassification,  merger,  consolidation  or  disposition  of
assets,  (i)  ownership  interests or shares of common stock of the successor or
acquiring  entity or of the Company (if it is the surviving  entity) or (ii) any
cash,  ownership  interests,  shares of stock or other securities or property of
any nature  whatsoever  (including  warrants or other  subscription  or purchase
rights) in addition to or in lieu of ownership  interests or common stock of the
successor  or  acquiring  entity  ("Other  Property")  are to be  received by or
distributed  to the  holders  of Common  Stock of the  Company  who are  holders
immediately  prior to such  transaction,  then the Holder of this Warrant  shall
have the right thereafter to receive,  upon exercise of this Warrant, the number
of ownership  interests or shares of common stock of the  successor or acquiring
entity or of the Company,  if it is the  surviving  entity,  and Other  Property
receivable   upon  or  as  a   result   of  such   conversion,   reorganization,
reclassification,  merger, consolidation or disposition of assets by a holder of
the  number of Shares of Common  Stock for which  this  Warrant  is  exercisable
immediately  prior to such event.  In such event,  the aggregate  Exercise Price
otherwise  payable for the Shares of Common Stock issuable upon exercise of this
Warrant shall be allocated  among the shares of common stock and Other  Property
receivable  as a result of such  conversion,  reorganization,  reclassification,
merger,  consolidation  or disposition of assets in proportion to the respective
fair  market  values  of such  shares of common  stock  and  Other  Property  as
determined  in good  faith by the Board of  Directors  of the  Company.  For the
purposes of this  Section 4,  "ownership  interests or shares of common stock of
the  successor or acquiring  entity"  shall  include  partnership  units of such
entity of any class,  stock of such  entity of any class,  both of which are not
preferred  as  to   redemption,   and  shall  also  include  any   evidences  of
indebtedness,  partnership units,  shares of stock or other securities which are
convertible into or exchangeable for any such partnership units or stock, either
immediately  or upon the  arrival  of a  specified  date or the  happening  of a
specified event,  and any warrants,  options or other rights to subscribe for or
purchase any such partnership  units or stock. The foregoing  provisions of this
Section  4.3  shall  similarly  apply to the  successive  conversions,  mergers,
consolidations or dispositions of assets.

                  4.4 Other  Provisions  Applicable  to  Adjustments  Under this
Section.  The  following  provisions  shall  be  applicable  to the  adjustments
provided  for pursuant to this Section 4: (a) When  Adjustment  To Be Made.  The
adjustments  required by this  Section 4 shall be made  whenever and as often as
any specified event requiring such an adjustment shall occur. For the purpose of
any such adjustment, any specified event shall be deemed to have occurred at the
close of business on the date of its occurrence.

                           (b) Fractional  Interests.  In computing  adjustments
under this Section 4,  fractional  interests in Common Stock shall be taken into
account to the nearest one-one hundredth (1/100th) of a Share.

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<PAGE>

                           (c) When  Adjustment  Not  Required.  If the  Company
shall  take a record of the  holders  of its  Common  Stock for the  purpose  of
entitling them to receive a dividend or  distribution to which the provisions of
Section 4.1 would apply,  but shall,  thereafter and before the  distribution to
stockholders  thereof,  legally abandon its plan to pay or deliver such dividend
or  distribution,  then thereafter no adjustment  shall be required by reason of
the taking of such  record and any such  adjustment  previously  made in respect
thereof shall be rescinded and annulled.

                           (d)  Independent  Application.  Except  as  otherwise
provided  herein,  all  subsections  of this  Section 4 are  intended to operate
independently of one another (but without duplication).  If an event occurs that
requires the application of more than one subsection, all applicable subsections
shall be given independent effect without duplication.

                           (e) No Impairment.  The Corporation  will not through
any  conversion,  reorganization,  transfer  of assets,  consolidation,  merger,
dissolution,  issue or sale of securities or any other voluntary  action,  avoid
the  observance or  performance  of any of the terms to be observed or performed
hereunder by the  Corporation  but will at all times in good faith assist in the
carrying  out of all the  provisions  of this Section 4 and in the taking of all
such  action  as may be  necessary  or  appropriate  in  order  to  protect  the
conversion  rights  of the  Holder  against  impairment.  Without  limiting  the
generality of the foregoing,  the  Corporation (i) will not permit the par value
of any Shares of Common Stock at the time  receivable  upon the exercise of this
Warrant to exceed  the  Exercise  Price then in effect,  (ii) will take all such
action as may be  necessary or  appropriate  in order that the  Corporation  may
validly and legally issue fully paid nonassessable Shares of Common Stock on the
exercise of this  Warrant,  and (iii) will not take any action which  results in
any  adjustment  of the  Exercise  Price if the total number of Shares of Common
Stock  issuable after the action upon the exercise of this Warrant and all other
warrants, options and other rights to acquire Common Stock will exceed the total
number  of  Shares  of  Common  Stock  then   authorized   by  the  Articles  of
Incorporation  of the  Corporation  and  available for the purpose of issue upon
such exercise.

                           (f)   Certificate   as  to   Adjustments.   Upon  the
occurrence of each  adjustment  or  readjustment  of the Exercise  Price and the
Number pursuant to this Section 4, the Corporation at its expense shall promptly
compute such  adjustment or readjustment in accordance with the terms hereof and
furnish  to  the  Holder  a  certificate   setting  forth  such   adjustment  or
readjustment  and  showing in detail the facts  upon  which such  adjustment  or
readjustment is based,  including a statement of (i) the consideration  received
or to be received by the Corporation for any additional  Stock issued or sold or
deemed to have been  issued,  (ii) the  number  of Shares of Common  Stock  then
outstanding  or deemed to be  outstanding,  and (iii) the Exercise Price and the
Number in effect  immediately  prior to such issue or sale and as  adjusted  and
readjusted on account thereof, showing how each was calculated.  The Corporation
shall, as promptly as practicable  following its receipt of the written request,
but in any event  within ten (10)  Business  Days after  receipt of such written
request,  of the Holder  furnish or cause to be  furnished  to the Holder a like
certificate  setting  forth (i) the  Exercise  Price  and  Number at the time in
effect, showing how each was calculated, and (ii) the number of Shares of Common
Stock and the  amount,  if any,  of other  property  which at the time  would be
received upon the exercise of this Warrant.

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<PAGE>

                           (g)  Notices  of  Record  Date.  In the  event of any
taking by the  Corporation of a record of the holders of any class of securities
for the purpose of determining  the holders  thereof who are entitled to receive
any dividend  (other than a cash  dividend  which is the same as cash  dividends
paid in previous quarters) or other distribution, or any right to subscribe for,
purchase  or  otherwise  acquire  any  Shares of stock of any class or any other
securities or property,  or to receive any other right,  the  Corporation  shall
mail to the Holder at least ten (10) days prior to the date specified therein, a
notice  specifying  the date on which  any such  record  is to be taken  for the
purpose of such dividend or distribution.

                           (h) Common Stock Reserved.  The Corporation  shall at
all times reserve and keep available out of its  authorized but unissued  Common
Stock  such  number  of Shares  of  Common  Stock as shall  from time to time be
sufficient to effect the exercise of this Warrant.

                  4.5 Definitions.  The following terms shall have the following
meanings,  which meanings shall be equally applicable to the singular and plural
forms of such terms:

                  "Business  Day"  means  any day which is not a  Saturday  or a
Sunday or a public  holiday or a day on which banks are required or permitted to
close under the laws of the State of Texas.

                  "Common  Stock"  means the one  class of  Common  Stock of the
Company, Five Cents ($0.05) par value.

                  "Company or  Corporation"  shall mean Cubic  Energy,  Inc.,  a
Texas corporation.

                  "Exercise  Price"  shall  have the  meaning  set  forth at the
beginning of this Warrant.

                  "Holder" means the holder of this Warrant from time to time.

                  "Issue Date" shall have the meaning set forth at the beginning
of this Warrant.

                  "Number"  shall have the meaning set forth at the beginning of
this Warrant.

                  "Outstanding"  shall mean,  when used with reference to Common
Stock, at any date as of which the number of Shares thereof is to be determined,
all issued  Shares of Common  Stock,  except Shares then owned or held by or for
the  account of the Company or any  subsidiary  thereof,  and shall  include all
Shares   issuable  in  respect  of  outstanding   script  or  any   certificates
representing fractional interests in Shares of Common Stock.

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<PAGE>

                  "Person"  shall  mean  a  corporation,   an   association,   a
partnership,  a  limited  liability  company,  a  joint  venture,  a  trust,  an
organization,  a business, an individual,  a government or political subdivision
thereof, a governmental agency or any other legal entity.

                  "Securities  Act" shall mean the  Securities  Act of 1933,  as
amended,  or any similar federal  statute,  and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.

                  "Share" shall mean a share of  authorized  Common Stock of the
Company.

                  "Warrant  Expiration Date" shall have the meaning set forth in
Section 1.

         5.  Fractional  Shares.  The Company may elect not to issue  fractional
Shares in  connection  with any exercise  hereunder.  If the Company  makes such
election,  in lieu of such  fractional  Shares  the  Company  shall  make a cash
payment  therefor  upon the basis of the then fair market value as determined by
the Board of Directors of the Company.

         6.  Modification and Waiver.  This Warrant and any provision hereof may
be changed,  waived,  discharged or terminated  only by an instrument in writing
signed by the party against which enforcement of the same is sought.

         7.  Notices.  Any notice  which is  required or  permitted  to be given
pursuant  hereto shall be given in the manner  provided in the Investors  Rights
Agreement.

         8. Binding Effect on Successors. This Warrant shall be binding upon any
entity succeeding the Company by conversion, merger or consolidation, and all of
the obligations of the Company relating to the Shares issuable upon the exercise
of this Warrant shall survive the exercise and  termination  of this Warrant and
all of the  covenants  and  agreements  herein and in such other  documents  and
instruments  of the Company  shall inure to the  benefit of the  successors  and
assigns of the Holder.  The Company  will,  at the time of the  exercise of this
Warrant,  in whole or in part,  upon request of the Holder but at the  Company's
expense,  acknowledge  in writing  its  continuing  obligation  to the Holder in
respect to any rights to which the Holder  shall  continue to be entitled  after
such exercise in accordance with this Warrant; provided, that the failure of the
Holder to make any such request  shall not affect the  continuing  obligation of
the Company to the Holder in respect of such rights.

         9. Descriptive  Headings.  The descriptive  headings of the sections of
this Warrant are inserted for  convenience  only and do not constitute a part of
this Warrant.

         10.  Governing  Law.  This Warrant  shall be construed  and enforced in
accordance with, and the rights of the parties shall be governed by, the laws of
the State of Texas.

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         IN  WITNESS  WHEREOF,  the  undersigned,  being  duly  authorized,  has
executed  and  delivered  this  Warrant as of this day and year set forth at the
beginning of this Warrant.

                                                        CUBIC ENERGY, INC.

                                                        ________________________
                                                        By:
                                                        Its:

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<PAGE>

                                    Exhibit A

                             NOTICE OF EXERCISE FORM

                         (To be executed upon partial or
                     full exercise of the attached Warrant)

         The  undersigned  registered  Holder of the within Warrant  irrevocably
exercises the attached Warrant for and purchases ______________ Shares of Common
Stock of Cubic Energy,  Inc. (the "Company") and herewith makes payment therefor
in the amount of $____________, all at the price and on the terms and conditions
specified  in  the  attached  Warrant,  and  requests  that  a  certificate  (or
_________________  certificates in denominations of ____________ Shares) for the
Shares of Common Stock of the Company hereby  purchased be issued in the name of
and delivered to (choose one):

         (a) the undersigned, or

         (b) ______________, whose address is __________________

and,  if such  Shares of Common  Stock do not  include  all the Shares of Common
Stock issuable as provided in the attached  Warrant,  that a new Warrant of like
tenor  for the  number  of  Shares  of  Common  Stock of the  Company  not being
purchased hereunder be issued in the name of and delivered to (choose one):

(c) the undersigned, or

(d) ________________, whose address is
_________________________________________________

                                          By:___________________________________
                                             (Signature of Holder exactly how it
                                              appears on the Warrant)

Dated:________________

                                       8Exhibit 10.1

                                COMPANY AGREEMENT
                                -----------------

                                       OF
                                       --

                            Bluestone Capital, L.L.C.
                            -------------------------

                        A TEXAS LIMITED LIABILITY COMPANY

                         EFFECTIVE AS OF AUGUST 25, 2006

THE MEMBERSHIP  INTERESTS HAVE NOT BEEN  REGISTERED  UNDER THE SECURITIES ACT OF
1933, AS AMENDED,  OR ANY APPLICABLE  STATE  SECURITIES ACTS. SUCH INTERESTS ARE
BEING ACQUIRED FOR INVESTMENT ONLY, AND MAY NOT BE SOLD, PLEDGED,  HYPOTHECATED,
DONATED OR OTHERWISE  TRANSFERRED  IN THE ABSENCE OF AN  EFFECTIVE  REGISTRATION
UNDER SUCH ACTS OR AN OPINION OF COUNSEL  SATISFACTORY  TO THE COMPANY THAT SUCH
REGISTRATION  IS NOT REQUIRED WITH RESPECT TO THE PROPOSED  DISPOSITION  THEREOF
AND THAT SUCH  DISPOSITION  WILL NOT CAUSE THE LOSS OF THE EXEMPTION  UPON WHICH
THE  ISSUER  RELIED  IN  SELLING  THESE  MEMBERSHIP  INTERESTS  TO THE  ORIGINAL
PURCHASER THEREOF.

THE MEMBERSHIP INTERESTS AND THE TRANSFER THEREOF ARE SUBJECT TO QUALIFICATIONS,
LIMITATIONS  AND  RESTRICTIONS  SET  FORTH IN THIS  COMPANY  AGREEMENT,  AND THE
MEMBERSHIP  INTERESTS  SHALL NOT BE  TRANSFERRED  UPON THE BOOKS OF THE  COMPANY
UNTIL THE TERMS AND CONDITIONS OF THIS AGREEMENT HAVE BEEN FULLY COMPLIED WITH.

<PAGE>

                                TABLE OF CONTENTS

ARTICLE I.  FORMATION..........................................................1

   1.1.    FORMATION...........................................................1
   1.2.    PRINCIPAL PLACE OF BUSINESS.........................................1
   1.3.    REGISTERED AGENT OFFICE.............................................1
   1.4.    TERM................................................................1
   1.5.    PURPOSE.............................................................1

ARTICLE II.  RIGHTS AND DUTIES OF MANAGERS.....................................2

   2.1.    MANAGEMENT OF COMPANY VESTED IN THE MANAGERS........................2
   2.2.    CERTAIN POWERS OF MANAGERS..........................................2
   2.3.    LIABILITY FOR CERTAIN ACTS..........................................2
   2.4.    MEMBERS AND MANAGERS HAVE NO EXCLUSIVE DUTY TO COMPANY..............3
   2.5.    AUTHORITY OF MANAGERS TO DEAL WITH AFFILIATES.......................3
   2.6.    RESIGNATION AND REMOVAL OF MANAGERS.................................3
   2.7.    COMPENSATION AND FEES...............................................3

ARTICLE III.  RIGHTS AND OBLIGATIONS OF MEMBERS................................3

   3.1.    LIMITATION OF MEMBERS' LIABILITIES..................................3
   3.2.    NO CONTROL OF BUSINESS OR RIGHT TO ACT FOR COMPANY..................4
   3.3.    PRIORITY AND RETURN OF CAPITAL......................................4
   3.4.    MEETINGS OF THE COMPANY; VOTING RIGHTS..............................4
   3.5.    POWERS RESERVED TO THE MEMBERS......................................5

ARTICLE IV.  COMPANY BOOKS AND RECORDS; AMENDMENT OF AGREEMENT;
POWER OF ATTORNEY..............................................................6

   4.1.    AMENDMENT OF AGREEMENT..............................................6
   4.2.    BOOKS AND RECORDS, ACCOUNTING, REPORTS, TAX ELECTIONS...............6

ARTICLE V.  CONTRIBUTIONS TO THE COMPANY; CAPITAL ACCOUNTS;
SECURITIES MATTERS.............................................................7

   5.1.    INITIAL CAPITAL CONTRIBUTIONS.......................................7
   5.2.    ADDITIONAL CONTRIBUTIONS; ADDITIONAL UNITS; PREEMPTIVE RIGHTS.......7
   5.3.    FAILURE TO CONTRIBUTE ADDITIONAL CONTRIBUTIONS......................8
   5.4.    CAPITAL ACCOUNTS....................................................8
   5.5.    SECURITIES MATTERS..................................................8

ARTICLE VI.  ALLOCATIONS, DISTRIBUTIONS........................................8

   6.1.    ALLOCATIONS OF PROFITS AND LOSSES...................................8
   6.2.    SPECIAL ALLOCATIONS.................................................9
   6.3.    DISTRIBUTIONS......................................................11

ARTICLE VII.  TRANSFERABILITY.................................................11

   7.1.    GENERAL............................................................11
   7.2.    TRANSFERS NOT REQUIRING PRIOR CONSENT..............................11
   7.3.    VOLUNTARY TRANSFER PROCEDURE.......................................12
   7.4.    PURCHASE PRICE.....................................................13
   7.5.    REMEDIES...........................................................13
   7.6.    EFFECT OF TRANSFER OF INTEREST.....................................13

ARTICLE VIII.  ADMISSION AND WITHDRAWAL OF MEMBERS............................14

   8.1.    ADMISSION OF MEMBERS...............................................14
   8.2.    WITHDRAWAL OF MEMBERS..............................................14

ARTICLE IX.  WINDING UP AND TERMINATION.......................................14

                                       i

<PAGE>

   9.1.    EVENTS REQUIRING WINDING UP........................................14
   9.2.    WINDING UP, LIQUIDATION AND DISTRIBUTION OF ASSETS.................15
   9.3     RETURN OF CONTRIBUTION NONRECOURSE TO MEMBERS......................15

ARTICLE X.  MISCELLANEOUS.....................................................16

   10.1.   NOTICE.............................................................16
   10.2.   WAIVER OF NOTICE...................................................16
   10.3.   AUTHORITY TO BIND THE COMPANY......................................16
   10.4.   WAIVER OF ACTION FOR PARTITION.....................................16
   10.5.   INDEMNIFICATION BY COMPANY.........................................16
   10.6.   CONSTRUCTION.......................................................16
   10.7.   ARTICLES AND OTHER HEADINGS........................................16
   10.8.   SEVERABILITY.......................................................17
   10.9.   APPLICATION OF TEXAS LAW...........................................17
   10.10.  DISREGARDED ENTITY TAX TREATMENT INTENDED IF ONE MEMBER............17
   10.11.  PARTNERSHIP TAX TREATMENT INTENDED IF MORE THAN ONE MEMBER;
           TAX ADMINISTRATIVE MATTERS.........................................17
   10.12.  NO PARTNERSHIP INTENDED FOR NON-TAX PURPOSES.......................17

CERTIFICATION.................................................................18

EXHIBIT A    MEMBER CAPITAL CONTRIBUTIONS.....................................19
---------    ----------------------------

EXHIBIT B    SERVICING AGREEMENT..............................................20
---------    -------------------

                                       ii
<PAGE>

     This Company Agreement of BLUESTONE CAPITAL, LLC is adopted by the Managers
and the undersigned  Members, for the purpose of forming and operating BLUESTONE
CAPITAL,  LLC as a Texas limited liability company, and the undersigned Managers
and Members do each mutually acknowledge and agree as follows:

                                   DEFINITIONS
                                   -----------

     The following terms used in this Company Agreement shall have the following
meanings unless otherwise expressly provided herein:

     (i) "Agreement" shall mean this Company Agreement,  as originally executed,
and as  amended  from  time to time  in  writing,  including  all  exhibits  and
schedules hereto, which concerns the conduct of the business of the Company.

     (ii) "Capital  Account" shall mean the Capital Account  maintained for each
Member in accordance with Section 5.4.

     (iii) "Capital  Contribution" shall mean any contribution to the capital of
the Company in cash or property by a Member whenever made.

     (iv)  "Certificate  of Formation"  shall mean the  Certificate of Formation
filed  with the Texas  Secretary  of State for the  purpose  of  organizing  the
Company, as the same may be amended or restated from time to time.

     (v) "Code" shall mean the Internal  Revenue  Code of 1986,  as amended,  or
corresponding provisions of subsequent superseding federal revenue laws.

     (vi) "Company"  shall mean Bluestone  Capital,  LLC, the Company  organized
pursuant to the Certificate of Formation and this Agreement.

     (vii) "Deficit Capital Account" shall mean with respect to any Member,  the
deficit  balance,  if any, in such Member's Capital Account as of the end of the
taxable year, after giving effect to the following adjustments:

          (a) credit to such  Capital  Account  any amount  which such Member is
     obligated to restore  under  Section  1.704-1(b)(2)(ii)(c)  of the Treasury
     Regulations,  as well as any addition  thereto pursuant to the next to last
     sentence of Sections  1.704-2(g)(1) and (i)(5) of the Treasury Regulations,
     after  taking  into  account  thereunder  any  changes  during such year in
     company minimum gain (as determined in accordance  with Section  1.704-2(d)
     of the Treasury  Regulations)  and in the minimum gain  attributable to any
     member  nonrecourse debt (as determined under Section  1.704-2(i)(3) of the
     Treasury Regulations); and

          (b) debit to such  Capital  Account  the items  described  in Sections
     1.704-1(b)(2)(ii)(d)(4), (5) and (6) of the Treasury Regulations.

                                      iii

<PAGE>

This  definition  of Deficit  Capital  Account is  intended  to comply  with the
provisions of Treasury Regulations Section 1.704-1(b)(2)(ii)(d) and 1.704-2, and
will be interpreted consistently with those provisions.

     (viii)  "Distributable  Cash"  shall  mean all  cash,  revenues  and  funds
received by the Company from Company operations,  including from the sale of any
asset to the extent not  reinvested in replacement  assets,  less the sum of the
following to the extent paid or set aside by the Company:  (a) all principal and
interest  payments  on  indebtedness  of the  Company and all other sums paid to
lenders; (b) all cash expenditures  incurred incident to the purchase or sale of
any asset and the normal operation of the Company's business;  (c) reimbursement
of expenses and payment of compensation to any Manager; and (d) such Reserves as
the Managers deem reasonably  necessary to the proper operation of the Company's
business.

     (ix)  "Entity"  shall mean any general  partnership,  limited  partnership,
limited liability company,  corporation,  joint venture,  trust, business trust,
cooperative or association.

     (x) "Fair Market  Value" shall mean,  on the date such Fair Market Value is
to be determined,  the excess of the value of all of the Company's  assets minus
all of the Company's liabilities. For purposes of determining Fair Market Value,
(a) no value  shall be  placed on the  goodwill  or name of the  Company  or the
office records, files,  statistical data or any similar intangible assets of the
Company not normally reflected in the Company's  accounting  records,  (b) there
shall be taken into  consideration  any related  items of income  earned but not
received,  expenses incurred but not yet paid,  liabilities fixed or contingent,
prepaid expenses to the extent not otherwise  reflected in the books of account,
and the value of options or  commitments  to  purchase  securities  pursuant  to
agreements  entered into on or prior to the valuation date, (c) determination of
value of any publicly-traded  security or bond, shall be the most recent closing
sale price quoted for such  security on the exchange on which it is traded,  (d)
determination  of the value of other  securities  shall be based on all relevant
factors,  including  without  limitation,   type  of  security,   marketability,
restrictions  on  disposition,  and current  financial  position  and  operating
results, (e) the value of real estate shall be deemed to be the most recent fair
market  value of such  real  estate as  determined  by a real  estate  appraiser
selected by the Managers;  and (f) as to the liabilities and any other assets of
the Company,  the book value  carried on the books of the Company in  accordance
with Generally  Accepted  Accounting  Principles,  consistent with the Company's
past practice.

     (xi) "Fiscal Year" shall mean the Company's fiscal year, which shall end on
December 31, of each year.

     (xii) "Initial Capital Contribution" shall mean the initial contribution to
the capital of the Company pursuant to this Agreement.

     (xiii)  "Manager"  and  "Managers"  As  used  in this  Agreement  the  term
"Manager" shall mean each  individual  Manager of the Company from time to time.
The term  "Managers"  shall  refer (i) to the Manager of the Company at any time
when  the  Company  has one (1)  Manager  and (ii)  collectively,  to all of the
Managers  of the Company at any time when the  Company  has  multiple  Managers.
Initially,  the  Company  shall  have  one  Manager,  which  shall  be  Mortgage
Assistance Corp., a Texas corporation.

                                       iv

<PAGE>

     (xiv)  "Member"  shall  mean  any  person  that  signs in  person  or by an
attorney-in-fact,  or otherwise is a party to the Agreement at the time that the
Company is formed and is  identified as a Member in the Agreement and any Person
who is  subsequently  admitted as a Member in the Company in accordance with the
Texas Act and the  Agreement,  until  such  time as such  Person  withdraws,  is
removed, or is otherwise no longer a Member of the Company.

     (xv)  "Membership  Interest"  shall mean a Member's  entire interest in the
Company,  including  such Member's  right to participate in the decisions of the
Members,  as reflected by the ratio of such  Member's  Units to the aggregate of
the Units of all Members.

     (xvi) "Net  Profits" and "Net Losses"  shall mean the income,  gain,  loss,
deductions and credits of the Company in the aggregate or separately  stated, as
appropriate,  determined under the Company's adopted method of accounting at the
close of each Fiscal Year.

     (xvii) "Offer" shall have the meaning  ascribed to such term in Section 7.3
hereof.

     (xviii) "Offered  Interest" shall have the meaning ascribed to such term in
Section 7.3 hereof.

     (xix)  "Percentage  of  Interest"  means,  for  a  Member,  the  percentage
equivalent of a fraction, the numerator of which is the number of Units owned by
such Member and the  denominator  of which is the total number of Units owned by
all Members.

     (xx) "Persons" shall mean any individuals,  partnerships, limited liability
companies, corporations, trusts, business trusts, real estate investment trusts,
estates and other associations or business entities.

     (xxi) "Reserves"  shall mean, with respect to any fiscal period,  funds set
aside or  amounts  allocated  during  such  period to  reserves  which  shall be
maintained in amounts deemed  sufficient by the Managers for working capital and
to pay taxes, insurance, debt service or other costs or expenses incident to the
ownership or operation of the Company's business.

     (xxii) "Securities Acts" shall mean the Securities Act of 1933 or any other
applicable state securities laws.

     (xxiii)  "Selling  Member"  shall mean any Member  who sells,  assigns,  or
otherwise  transfers  for  consideration,  all or any  portion  of a  Membership
Interest.

     (xiv) "Texas Act" shall mean the Texas Limited  Liability Company Law, part
of the Texas Business Organizations Code, as amended.

     (xxv) A "Transfer"  of all or any part of a Membership  Interest  means any
type  of  disposition  of any  right,  title  or  interest  whatsoever  in  such

                                       v

<PAGE>

Membership  Interest,  voluntarily  or  involuntarily,  directly or  indirectly,
including without limitation any sale, exchange, assignment,  encumbrance, grant
of security interest, pledge,  hypothecation,  gift, transfer by trust, transfer
by will or intestate succession, or other disposition whatsoever.

     (xxvi)  "Transferring  Person" shall have the meaning ascribed to such term
in Section 7.3.

     (xxvii) "Treasury Regulations" shall mean the proposed, temporary and final
regulations  promulgated  under the Code in effect as of the date of filing  the
Certificate  of  Formation  and the  corresponding  sections of any  regulations
subsequently issued that amend or supersede such regulations.

     (xxviii) "Units" shall mean equity ownership in the Company  represented by
membership units ("Units").  The Company may issue such total number of Units as
the Managers shall determine, and may issue partial Units.

                              ARTICLE I. FORMATION
                              --------------------

         1.1.  Formation.  On August 25,  2006,  the Company was  organized as a
Texas  limited  liability  company by execution and delivery of  Certificate  of
Formation to the Texas Secretary of State in accordance with the Texas Act.

         1.2.  Principal  Place Of Business.  The principal place of business of
the Company shall be located 2614 Main Street,  Dallas, Texas 75226. The Company
at any time may change the location of such  principal  office and may have such
other offices,  either within or without the State of Texas,  as the Members may
designate or as the business of the Company may require.

         1.3.  Registered Agent Office. The initial registered agent is Mortgage
Assistance Corporation and the address of the initial registered agent office of
the Company is 2614 Main Street,  Dallas,  Texas  75226.  The  registered  agent
office  and  the  registered  agent  may be  changed  from  time  to time by the
Managers,  with the consent of the Members,  filing the prescribed form with the
Texas Secretary of State.

         1.4.  Term.  The existence of the Company  shall be  perpetual,  unless
terminated or dissolved as set forth herein.

         1.5. Purpose.  The Company may conduct or promote any lawful businesses
or purposes for which limited  liability  companies  may be organized  under the
Texas  Act.  The  Company  shall  possess  and may  exercise  all the powers and
privileges necessary or convenient to the conduct,  promotion,  or attainment of
the businesses or purposes of the Company.

                                       1
<PAGE>

                    ARTICLE II. RIGHTS AND DUTIES OF MANAGERS
                    -----------------------------------------

         2.1.  Management of Company  Vested in the  Managers.  The business and
affairs  of the  Company  shall be  managed by the  Managers.  The  consent of a
majority  in  number  of the  Managers  then-serving  shall  be  the  act of the
Managers.  The  Managers  shall  direct,  manage and control the business of the
Company  to the  best of their  ability.  Except  for  situations  in which  the
approval  of the  Members  is  expressly  required  herein  and as  specifically
provided in Section 3.5, the  Managers  shall have full and complete  authority,
power and  discretion  to: (i) manage and  control  the  business,  affairs  and
property of the Company; (ii) make all decisions regarding the business, affairs
and property of the Company;  and (iii)  perform any and all other acts incident
to the  management of the Company's  business  subject to the provisions of this
Agreement.  Subject to the  limitations  in the preceding  sentence,  the right,
power,  and  authority  of the  Managers  pursuant  to this  Agreement  shall be
liberally  construed to encompass all acts and activities in which a Company may
engage under the Texas Act.

         2.2. Certain Powers of Managers. Without limiting the generality of the
provisions set forth in Section 2.1 above, the Managers shall have the power to
act on behalf of the Company:

                  (a) To enter into and execute,  on behalf of the Company,  all
agreements,  contracts, instruments and related documents in connection with the
Company's  business,  on  such  terms  as  the  Managers,  in  their  reasonable
discretion, deem to be in the best interests of the Company.

                  (b) To carry out the business of the Company.

                  (c) To acquire and enter into,  on behalf of the Company,  any
contract of insurance,  which the Managers  reasonably deem necessary and proper
for the protection of the Company, for the conservation of its property,  or for
any purpose beneficial to the Company.

                  (d) To employ  persons  (including  affiliates of any Manager,
subject to the restrictions on compensation to such affiliates set forth in this
Agreement)  in the  operation  of the  Company,  on  such  terms  and  for  such
compensation as the Managers shall reasonably determine.

                  (e) To employ attorneys,  accountants,  consultants,  brokers,
and other outside entities or individuals  (including affiliates of any Manager,
subject to the restrictions on compensation to such affiliates set forth in this
Agreement) on behalf of the Company.

                  (f) To pay, collect,  compromise,  arbitrate,  resort to legal
action for or otherwise adjust claims or demands of or against the Company.

                  (g) To sell  assets to another  investor  as well as  maintain
servicing  and/or obtain other  incentives as deemed in the best interest of the
company.

         2.3.  Liability for Certain Acts. Each Manager shall perform its duties
as a Manager in good faith,  in a manner  reasonably  believed to be in the best
interest of the Company, and with such care as an ordinarily prudent person in a
like position would use under similar circumstances.  If any Manager so performs

                                       2
<PAGE>

the duties as a Manager,  it shall not have any  liability by reason of being or
having  been a  Manager.  No  Manager  shall be liable to the  Company or to any
Member for any loss or damage sustained by the Company or any Member, unless the
loss or damage shall have been the result of fraud,  deceit,  gross  negligence,
willful misconduct or a wrongful taking by such Manager.

         2.4.  Members and  Managers  Have No  Exclusive  Duty to  Company.  The
Managers,  and  affiliates of the Managers,  shall not be required to manage the
Company as their sole and  exclusive  function  and each  Member and Manager and
their  affiliates  may have  other  business  interests  and may engage in other
activities  in addition to those  relating to the  Company,  including  business
interests or other  activities  that  directly  compete with the business of the
Company.

         2.5. Authority of Managers to Deal with Affiliates. Any Manager may, on
behalf of the Company, contract with any person, firm or corporation, including,
without limitation,  any of the Members,  any entity in which any of the Members
or any Manager has a direct or indirect  interest and any  affiliated or related
corporation or other entity,  for the  performance of any and all services which
may at any time be  necessary,  proper,  convenient or advisable to carry on the
business of the Company;  provided that any such  transaction  shall be effected
only on terms  competitive  with those that may be  obtained  from  unaffiliated
persons.  Any goods or services  provided by  affiliates to the Company shall be
pursuant  to a written  contract  which sets forth the goods and  services to be
provided and the compensation to be paid.

         2.6.  Resignation  and Removal of  Managers.  Any Manager may resign by
giving thirty (30) days prior written notice to the Members.  Any Manager may be
removed by the  unanimous  vote of all of the Members.  The Members shall by the
unanimous  vote of all Members then elect a successor  Manager to begin  serving
simultaneously  with the resignation or removal of any Manager.  The Members may
increase or decrease (but not below one (1)) the number of Managers constituting
all of the Managers of the Company.

         2.7.  Compensation  and Fees.  Each Manager  shall be reimbursed by the
Company for all out of pocket  expenses  incurred by such Manager in furtherance
of performing its obligations to the Company as Manager.  Except as specifically
provided in the Servicing  Agreement (as  described in Section  3.5(c)  herein),
Manager shall receive no compensation  other than reimbursement of out-of-pocket
expenses  incurred by Manager in furtherance of the business of the Company.  No
Manager shall receive any  additional  compensation  except as the Members shall
decide.

                 ARTICLE III. RIGHTS AND OBLIGATIONS OF MEMBERS
                 ----------------------------------------------

         3.1.  Limitation  of  Members'  Liabilities.  Based on the Texas Act, a
Member  shall  not be bound by,  or be  personally  liable  for,  the  expenses,
liabilities  or  obligations  of the Company or the Manager,  and such  Member's
liability  shall be limited  solely to the amount of its Capital  Contributions,
whether or not returned to such Member, together with the undistributed share of

                                       3
<PAGE>

the profits of the Company from time to time credited to such  Member's  Capital
Account  and any money or other  property  wrongfully  paid or  conveyed to such
Member on account of its  Capital  Contribution,  including  but not  limited to
money or property to which creditors were legally entitled,  paid or conveyed to
a Member, and, under certain circumstances, interest on returned capital.

         3.2.  No Control of  Business  or Right to Act for  Company.  No Member
shall have any right or  authority  to act for or bind the Company or to vote on
matters  other  than  the  matters  set  forth  in  this  Agreement,  except  as
specifically required by applicable law.

         3.3.  Priority  and Return of Capital.  Except as provided  herein,  no
Member shall have priority  over any other  Member,  as to the return of Capital
Contributions, Net Profits, Net Losses or distributions.

         3.4. Meetings of the Company; Voting Rights.

                  (a)  Meetings of the Company may be called by the Managers and
shall be called by it upon the written  request of Members with the authority to
vote an aggregate of not less than 49%  Percentage of Interest.  Upon receipt of
such a written  request,  stating  the  purpose  of the  proposed  meeting,  the
Managers shall provide each Member,  within ten (10) days of such request,  with
written notification of a meeting and the purpose of such meeting. Such meetings
shall be held not less than fifteen (15) days or more than sixty (60) days after
the receipt of such request and shall be held at the principal place of business
or principal  executive office of the Company or such other place as the Members
shall unanimously decide.

                  (b)  At  all   meetings   of  the   Company,   any   decision,
determination,  consent,  approval  or  action  by or of the  Members  shall  be
affected by the favorable vote of all of the Members of the Company,  unless the
vote of a  greater  or lesser  number  is  otherwise  required  by the Act,  the
Certificate of Formation or this Agreement.

                  (c) At all meetings of the Company, a Member may vote by proxy
executed in writing by the Member or by a duly authorized attorney-in-fact. Such
proxy shall be filed with the  Company at least one (1) day before the  meeting.
Unless otherwise provided in the proxy, no proxy shall be effective after eleven
(11) months after the date of its execution.

                  (d) Action  required or  permitted to be taken at a meeting of
Members may be taken without a meeting if the action is evidenced by one or more
written consents  describing the action taken, signed by each Member entitled to
vote, and delivered to a Manager for inclusion in the minutes or for filing with
the Company  records.  Action  taken under this  section is  effective  when all
Members entitled to vote have signed a consent,  unless the consent  specifies a
different effective date.

                  (e) When any notice is required  to be given to any Member,  a
waiver of the notice in writing  signed by the person  entitled  to the  notice,
whether before, at, or after the time stated therein, shall be equivalent to the
giving of the notice.

                                       4
<PAGE>

         3.5. Powers Reserved to the Members.  Each of the following  actions on
behalf of the Company shall require the unanimous approval of the Members:

         (a)      the acquisition of any real property in excess of $100,000 per
                  parcel of real estate;

         (b)      the acquisition of any loan or portfolio of loans in excess of
                  $100,000 per loan;

         (c)      the  execution,  on  behalf  of the  Company,  of a  servicing
                  agreement  in the  form of  Exhibit  B,  attached  hereto  and
                  incorporated  herein  by  this  reference,  or  any  amendment
                  thereto,  to service the Initial Loan Portfolio (as defined in
                  Section 5.6 herein) and an additional portfolio of loans owned
                  by  the  Company  (hereinafter  referred  to  as a  "Servicing
                  Agreement").

         (d)      the sale,  exchange or other  disposition of substantially all
                  of the assets of the Company;

         (e)      the  filing  by the  Company  of  any  voluntary  petition  in
                  bakruptcy  or  delivery of any  assignment  for the benefit of
                  creditors;

         (f)      the  lending  of  Company  funds  to  any  person  (except  as
                  otherwise  set forth  herein),  or  obligating  the Company as
                  surety,  guarantor  or  accommodation  party,  except that the
                  Company  shall  be  able to  guarantee  credit  accounts  with
                  suppliers in the ordinary course of business;

         (g)      the  incurrence  of any debt on behalf of the  Company,  other
                  than  trade  debt  incurred  in  the  ordinary  course  of the
                  Company's business;

         (h)      the  investment or  participation  by the Company in any other
                  entity;

         (i)      the merger or consolidation of the Company;

         (j)      the  admission  of new  Members  of  the  Company,  except  as
                  specifically provided in Section 8.1; or

         (k)      the establishment of reserves to help meet anticipated Company
                  expenses  and  the   investment  of  such   reserves   pending
                  utilization.

                                       5
<PAGE>

               ARTICLE IV. COMPANY BOOKS AND RECORDS; AMENDMENT OF
               ---------------------------------------------------
                          AGREEMENT; POWER OF ATTORNEY
                          ----------------------------

         4.1. Amendment of Agreement.

                  (a)  Amendment.  Any  amendment  to  this  Agreement  must  be
approved in writing by all of the Members and by the Managers.

                  (b) Recording of Amendment.  In making any  amendments,  there
shall be prepared and filed for  recordation  by the Managers such documents and
certificates,  if any, as shall be  required to be prepared  and filed under the
Texas Act and under the laws of the other  jurisdictions in which the Company is
then formed or qualified.

         4.2. Books and Records, Accounting, Reports, Tax Elections.

                  (a)  Availability.  At all times  during the  existence of the
Company,  the  Managers  shall  keep or cause to be kept full and true books and
records of account. Such books and records of account shall be maintained at the
principal  place of business of the Company or such other place or places as may
be determined by the Managers from time to time. In addition,  the Company shall
maintain at its  principal  office (i) a current  list of the full name and last
known business  address of each Member set forth in alphabetical  order,  (ii) a
copy of this Agreement and all amendments thereto, together with executed copies
of any powers of attorney  pursuant to which this Agreement or any amendment has
been  executed,  (iii)  copies  of the  Company's  federal,  state and local tax
returns  and  reports,  if any,  for the three (3) most recent  years,  and (iv)
accounting records of the Company. Any Member or his, her or its duly authorized
representative shall have the right to inspect and copy the books and records of
the Company upon reasonable notice during business hours.

                  (b) Financial Reports. The Managers shall cause to be prepared
and  delivered to each Member,  at the expense of the  Company,  such  financial
reports as shall be decided by the Members.

                  (c) Income Tax  Information.  The Managers  shall cause income
tax returns for the Company to be prepared by the Company's accountant and filed
with the appropriate  authorities and shall furnish to each Member within ninety
(90)  days  after  the  close  of the  taxable  year  of the  Company,  all  tax
information with respect to the Company as may be required by the Member for the
preparation of his, her or its individual federal and state tax returns,  at the
expense of the Company.

                  (d)  Accounting  Principles.  The  Company's  books  shall  be
maintained  in  accordance  with  generally   accepted   accounting   principles
determined by the Company's  accountants,  which accounting  principles shall be
consistently applied.

                  (e) Bank Accounts.  The Managers are authorized to open a bank
or  investment  account  for the  Company  and  withdraw  funds  or sign  checks
withdrawing  funds from such bank or investment  account for the sole purpose of
paying all ordinary and  necessary  charges and expenses  incident to or arising
out of the  operations  of  the  Company  in the  ordinary  course  of  business

                                       6
<PAGE>

(including expenses arising out of a Servicing Agreement provided said Servicing
Agreement  has been approved by the Members as required  herein),  and that such
banks and  investment  companies be, and hereby are,  authorized and directed to
honor,  pay and charge to the account of this  Company all checks and orders for
the payment of money so drawn when so signed.  The  Managers are  authorized  to
certify to any bank or other  investment  company a copy of this Section  4.2(e)
and the names and signatures of the Company's Managers authorized to sign checks
as provided in this Section 4.2(e), and such bank or other investment company is
hereby  authorized to rely upon such  certificate  until formally advised of any
changes therein.

           ARTICLE V. CONTRIBUTIONS TO THE COMPANY; CAPITAL ACCOUNTS;
           ----------------------------------------------------------
                               SECURITIES MATTERS
                               ------------------

         5.1.  Initial Capital  Contributions.  Each Member shall contribute the
amount set forth for such Member in Exhibit A, attached hereto and  incorporated
herein,  as his,  her or its Initial  Capital  Contribution.  Exhibit A shall be
revised from time to time as necessary to record all Capital  Contributions  and
all changes in the Company and  ownership of the Company  effected in accordance
with this  Agreement,  and Exhibit A as so revised  shall be  furnished  to each
Member.

         5.2. Additional Contributions; Additional Units; Preemptive Rights.

                  (a)  Unless  approved  by all of the  Members,  no  additional
Capital  Contributions  shall be required from any Members.  Upon such approval,
the  Managers  shall  give  written  notice to each  Member of the amount of any
required additional Capital Contributions,  and each Member shall deliver to the
Company  his,  her or its pro  rata  share  thereof  based  upon  such  Member's
Percentage  of Interest no later than thirty (30) days  following  the date such
notice is given.

                  (b) Unless  approved by the  Members,  the  Company  shall not
offer  additional  Units or any other  interest in the Company for sale to third
parties.  If authorized by the Members,  the purchase price for which additional
Units  shall be  offered  shall be  determined  by the  Members.  Purchasers  of
additional Units pursuant to this paragraph who are not already Members shall be
admitted to the Company as Members in  accordance  with Section 8.1 hereof.  The
Managers are authorized to adjust the  Percentages of Interest of the Members as
appropriate  to reflect the  issuance of  additional  Units.  Exhibit A shall be
revised from time to time as necessary to record all changes in the ownership of
the  Company  affected  in  accordance  with this  section,  and Exhibit A as so
revised shall be furnished to each Member.

                                       7
<PAGE>

         5.3. Failure to Contribute Additional Contributions.  In the event that
a Member does not contribute  his, her or its portion of the additional  Capital
Contribution  provided  for in  Section  5.2(a)  when due,  then  such  Member's
Membership  Interest  shall be reduced  pro-rata by the proportion of the unpaid
additional  Capital  Contribution of such Member to the aggregate of all Capital
Contributions actually made by such Member pursuant to Section 5.1 and 5.2.

         5.4. Capital Accounts.

                  (a) A Capital  Account will be  maintained  for each Member in
accordance  with Section  1.704-1(b)(2)(iv)  of the Treasury  Regulations.  Each
Member's  Capital  Account will be increased  by: (i) the amount of money or the
fair market value of property  contributed  by such Member to the Company;  (ii)
allocations to each Member of Net Profits;  and (iii) allocations to each Member
of income described in Code Section 705(a)(1)(B).  Each Member's Capital Account
will be decreased by: (a) the amount of money  distributed to each Member by the
Company; (b) the Fair Market Value of property distributed to each Member by the
Company,  net of  liabilities  secured by such  distributed  property  that such
Member is considered to assume or take subject to, pursuant to Code Section 752;
(c)  allocations  to the  Member  for  expenditures  described  in Code  Section
705(a)(2)(B);  (d) allocations to each Member of Net Losses; and (e) allocations
to the  account of such Member of other  Company  losses and  deductions  as set
forth in the Treasury Regulations.

                  (b)  In  the  event  of a  permitted  sale  or  exchange  of a
Membership Interest in the Company,  the Capital Account of the transferor shall
become the  Capital  Account of the  transferee  to the extent it relates to the
transferred  Membership Interest in accordance with Treasury Regulations Section
1.704-1(b)(2)(iv).

                  (c) A Member shall not receive out of the  Company's  property
any part of its  Capital  Contribution  until all  liabilities  of the  Company,
except  liabilities to Members on account of their Capital  Contributions,  have
been paid or there remains property of the Company sufficient to pay them.

         5.5. Securities Matters.  The undersigned Members understand:  (i) that
the Membership Interests evidenced by this Agreement have not been, and will not
be,  registered  under the Securities  Acts because the Company is issuing these
Membership  Interests  in reliance  upon the  exemptions  from the  registration
requirements  of the Securities  Acts; (ii) that the Company has relied upon the
fact that the Membership Interests are to be held by each Member for investment;
and (iii) that exemption from registrations  under the Securities Acts would not
be available if the  Membership  Interests were acquired by a Member with a view
to distribution.

                     ARTICLE VI. ALLOCATIONS, DISTRIBUTIONS
                     --------------------------------------

         6.1. Allocations of Profits and Losses.

                  (a) Except as  provided  in Section  6.2,  Net  Profits of the
Company for each Fiscal Year shall be allocated to each Member in  proportion to
their Percentage of Interests.

                                       8
<PAGE>

                  (b)  Except as  provided  in  Section  6.2,  Net Losses of the
Company for each Fiscal Year shall be allocated to the Members in  proportion to
their Percentage of Interests.

         6.2. Special Allocations.

         Notwithstanding any other provisions of this Agreement to the contrary:

                  (a) No  allocation  of loss,  deduction,  and/or  expenditures
described in Code Section  705(a)(2)(B)  shall be charged to the Capital Account
of any  Member if such  allocation  would  cause  such  Member to have a Deficit
Capital  Account.  The amount of the loss,  deduction and/or  expenditure  which
would have caused a Member to have a Deficit  Capital  Account  shall instead be
charged  to the  Capital  Account  of each  Member  who would not have a Deficit
Capital Account as a result of the allocation, in proportion to their respective
Capital Contributions.

                  (b)  In  the  event  any  Member  unexpectedly   receives  any
adjustments,  allocations,  or  distributions  described in Treasury  Regulation
Section 1.704-1(b)(2)(ii)(d)(4),(5),  or (6), which create or increase a Deficit
Capital  Account  of  such  Member,  then  items  of  Company  income  and  gain
(consisting  of a pro rata  portion  of each item of Company  income,  including
gross income,  and gain for such year and, if necessary,  for subsequent  years)
shall be specially  credited to the Capital  Account of such Member in an amount
and manner  sufficient  to  eliminate,  to the extent  required by the  Treasury
Regulations, the Deficit Capital Account so created as quickly as possible. This
provision  is intended to  constitute  a "qualified  income  offset"  within the
meaning of  Treasury  Regulation  Section  l.704-1(b)(2)(ii)(d)(3)  and shall be
applied and interpreted consistent therewith.

                  (c) In the  event any  Member  would  have a  Deficit  Capital
Account  at the end of any  Fiscal  Year  which is in  excess  of the sum of any
amount that such Member is  obligated to restore to the Company  under  Treasury
Regulations Section 1.704-l(b)(2)(ii)(c) and such Member's share of minimum gain
as defined in Treasury Regulation Section 1.704-2(g)(1),  the Capital Account of
such Member shall be specially  credited with items of Company income (including
gross income) and gain in the amount of such excess as quickly as possible.

                  (d)  Notwithstanding  any other provision of this section 6.2,
if there is a net decrease in the Company's  minimum gain as defined in Treasury
Regulation  Section  1.704-2(d) during a taxable year of the Company,  then each
Member shall be allocated items of income  (including gross income) and gain for
such year (and if necessary for  subsequent  years) equal to that Member's share
of the net decrease in Company  minimum gain. This section 6.2(d) is intended to
comply with the  minimum  gain  chargeback  requirement  of Treasury  Regulation
Section 1.704-2(f) and shall be interpreted  consistently  therewith.  If in any
taxable year that the Company has a net decrease in the Company's  minimum gain,
the minimum gain chargeback requirement would cause a distortion in the economic
arrangement  among the Members and it is not expected that the Company will have
sufficient  other income to correct that  distortion,  the Managers may in their
discretion  (and  shall,  if  requested  to do so by a Member)  seek to have the
Internal  Revenue  Service  waive the minimum gain  chargeback  requirements  in
accordance with Treasury Regulation Section 1.704-2(f)(4).

                                       9
<PAGE>

                  (e)  Items  of  Company  loss,   deduction  and   expenditures
described in Code Section 705(a)(2)(B) which are attributable to any nonrecourse
debt of the Company and are characterized as member nonrecourse deductions under
Treasury  Regulation  Section  1.704-2(i)  shall be  allocated  to the  Members'
Capital Accounts in accordance with Treasury Regulation Section 1.704-2(i).

                  (f)  Beginning  in the first  taxable  year in which there are
allocations of  "nonrecourse  deductions,"  as described in Treasury  Regulation
Section  1.704-2(b),  such  deductions  shall be  allocated  to the  Members  in
accordance  with, and as a part of, the allocations of Company Net Profit or Net
Loss for such period.

                  (g) In  connection  with a  Capital  Contribution  by a new or
existing  Member as  consideration  for one or more Units, or in connection with
the  liquidation  of the Company or a  distribution  of money or other  property
(other  than a de  minimis  amount)  by the  Company  to a  retiring  Member  as
consideration  for one or more Units,  the Capital Accounts of the Members shall
be adjusted to reflect a revaluation of Company  property  including  intangible
assets in accordance with Treasury Regulation Section  1.704-1(b)(2)(iv)(f).  If
under Treasury Regulation Section 1.704-1(b)(2)(iv)(f) Company property that has
been revalued is properly  reflected in the Capital Accounts and on the books of
the Company at a book value that  differs  from the  adjusted  tax basis of such
property,  then  depreciation,  depletion,  amortization  and gain or loss  with
respect to such  property  shall be shared  among the  Members in a manner  that
takes account of the  variation  between the adjusted tax basis of such property
and its book value,  in the same manner as  variations  between the adjusted tax
basis and Fair  Market  Value of property  contributed  to the Company are taken
into account in determining  the Members' shares of tax items under Code Section
704(c).

                  (h) All recapture of income tax deductions resulting from sale
or disposition of Company property shall be allocated to the Members to whom the
deduction that gave rise to such recapture was allocated hereunder to the extent
that such Member is  allocated  any gain from the sale or other  disposition  of
such Company property.

                  (i) Any  credit  or  charge  to the  Capital  Accounts  of the
Members  under  this  section  6.2  shall be taken  into  account  in  computing
subsequent  allocations  of profits  and  losses,  so that the net amount of any
items charged or credited to Capital  Accounts  shall be equal to the net amount
that would have been allocated to the Capital Account of each Member pursuant to
the  provisions  of this  Article if the  special  allocations  required by this
Section 6.2 had not occurred.

                  (j) In accordance with Code Section  704(c)(1)(A) and Treasury
Regulation Section 1.704-3, if a Member contributes  property with a fair market
value that differs from its adjusted basis at the time of contribution,  income,
gain, loss and deductions with respect to the property shall, solely for federal
income tax purposes, be allocated among the Members so as to take account of any
variation  between the  adjusted  basis of such  property to the Company and its
fair market value at the time of contribution.

                                       10
<PAGE>

         6.3. Distributions.

                  (a)  Notwithstanding  anything  herein  to the  contrary,  the
Managers may distribute  available funds on an asset by asset basis or quarterly
basis. If the managing member elects to distribute when an asset is sold, then a
distribution will be made the following month. The priority for "distribution of
proceeds" is as follows:
                  1) Costs to third  parties or Managers  expenses and servicing
                  fees (for all assets)
                  2) Return of capital  contribution  in  proportion to members'
                  contribution for the sold assets.
                  3) Excess  proceeds (or profit) in  proportion to the Members'
                  Percentage of Interest.

                  (b) The Company shall make a  distribution  to any Member from
Distributable  Cash to the extent that such Member is allocated  income pursuant
to Section 6.1 or Section 6.2 in excess of  distributions  received  pursuant to
Section 6.3(a), in an amount  sufficient to defray federal,  state and local tax
liabilities  of such  Member with  respect to such  excess for the Fiscal  Year,
based  upon  the  then-current  highest  marginal  federal  tax  rate  plus  the
then-current highest marginal state tax rate for the State of Texas.

                          ARTICLE VII. TRANSFERABILITY
                          ----------------------------

         7.1. General. Except as provided herein or as otherwise consented to in
writing  by the  Members,  a  Member  shall  not  Transfer  all or any part of a
Membership Interest. Any purported or attempted Transfer of all or any part of a
Membership  Interest in  violation  of this Article 7 shall be null and void and
the purported  transferee of such invalid Transfer shall not be entitled to have
any interest in the Company  transferred  to such  purported  transferee  on the
books of the Company.

         7.2. Transfers Not Requiring Prior Consent.

                  (a) A Member may, without first obtaining the written consents
required  in Section 7.1 above,  Transfer  by sale or gift all or any  undivided
share of its  Membership  Interest  to any one or more of the  following:  (i) a
partnership,  limited  liability  company or  corporation in which fifty percent
(50%) or more of the capital and profit  interests (in the case of a partnership
or a limited  liability  company) or in which fifty percent (50%) or more of the
capital stock (in the case of a  corporation)  is owned by or for the benefit of
the Member;  (ii) the Member's  partners (if the Member is a  partnership),  the
Member's members (if the Member is a limited liability  company) or the Member's
shareholders  (if the Member is a  corporation);  (iii) the Company;  and (iv) a
Member or Members;  provided  any such  transferee  shall agree in writing to be
bound by the terms and  conditions  of this  Agreement  as they  applied  to the
transferring  Member  on the date of  execution  of this  Agreement  in the same
manner as if the  transferring  Member had retained  ownership of its Membership
Interest  (upon meeting the foregoing  requirements,  such  transferee  shall be
referred to as a "Permitted Transferee").

                                       11
<PAGE>

                  (b) The  Managing  Member may,  without  first  obtaining  the
written  consents  required in Section 7.1,  transfer by sale or gift all or any
undivided share over and above its fifty percent Membership  Interest to a third
party.

         7.3. Voluntary Transfer Procedure.

                  (a) A Member who desires to  Transfer  all or any portion of a
Membership  Interest  (the  "Transferring  Person") to a third party,  except as
permitted  under  Section  7.2,  shall  obtain from such third party a bona fide
written offer to purchase  such  Membership  Interest (the "Offered  Interest"),
stating the terms and  conditions  upon which the purchase is to be made and the
consideration  offered  therefore (the "Offer").  The Transferring  Person shall
give written  notification to the Managers and each of the Members, by certified
mail or personal delivery,  of his, her or its intention to Transfer the Offered
Interest, furnishing to the Managers and each Member a copy of the Offer.

                  (b)  Upon  receipt  of  the  written  notice   required  under
paragraph (a) above, the Company and the Members shall comply with the following
procedure:

                           (i) The Company  shall have thirty (30) days from the
date of delivery of the notice  required  by  paragraph  (a) above to notify the
Transferring Person in writing of the Company's election to redeem all or a part
of the Offered  Interest at the purchase  price set forth in Section 7.4 of this
Agreement, which decision of the Company shall be made by an affirmative vote of
all of the Members.

                           (ii) If the  Company  does not elect to redeem all of
the Offered Interest, the other Members shall have the right, within thirty (30)
days of the date of the notice of  nonelection  by the Company or election as to
less  than all of the  Offered  Interest,  to elect to  purchase  the  remaining
Offered  Interest,  and the Transferring  Person shall sell such interest to the
other Members at the purchase price set forth in Section 7.4 of this  Agreement.
Any Member desiring to acquire any or all of the Offered  Interest shall deliver
to the  Managers  and each of the Members a written  election  to  purchase  the
Offered Interest.

                           (iii) If two or more Members of the Company  elect to
exercise the option to purchase the Offered  Interest then, in the absence of an
agreement  between  them,  each Member  shall have  priority  to  purchase  such
proportion of the available  interest that such Member's  Percentage of Interest
bears to the total Percentage of Interests held by all other Members electing to
purchase.  The portion of the Offered  Interest not purchased on such a priority
basis shall be allocated in one or more successive  allocations to those Members
electing to purchase more than the  proportion of the  Percentage of Interest to
which they have a priority right,  up to the proportion of the Offered  Interest
specified in their respective  notices, in the proportion that the Percentage of
Interests held by each of them bears to the total Percentage of Interest held by
all of them.

                           (iv) If the Company  and the Members do not  exercise
their  rights to  redeem or  purchase,  as the case may be,  all of the  Offered
Interest  pursuant  to the terms  set forth in  Section  7.3(b)(i)  and  Section

                                       12
<PAGE>

7.3(b)(ii)  above,  then the  Transferring  Person shall be free to Transfer the
remaining  part of the Offered  Interest to the bona fide purchaser set forth in
the Offer  under the terms of the  Offer,  subject to the  restrictions  on such
Transfer imposed by this Agreement or any other agreement or by law.

                           (v) If the Company  exercises its right to redeem all
or a part of the Offered  Interest in accordance with Section  7.3(b)(i)  above,
the Transferring  Person shall be obligated to sell such Offered Interest to the
Company. If any or all of the Members exercise their rights to purchase all or a
part of the Offered  Interest in accordance with Section  7.3(b)(ii)  above, the
Transferring  Person shall be  obligated  to sell such Offered  Interest to such
exercising Members. The closing of the Transfer of the Offered Interest from the
Transferring Person to the Company or any Members pursuant to this Section shall
be held at the principal  offices of the Company not later than ninety (90) days
after receipt of notice required by paragraph (a) above.

                  (c) In the  event  of the  Transfer  of all or any part of any
Offered Interest by a Transferring Person to any third party, and as a condition
to recognizing the  effectiveness  and binding nature of any such Transfer,  the
Company may require the Transferring Person or Transferring Person and the third
party, as the case may be, to execute, acknowledge and deliver to the Members or
Managers such instruments of transfer,  assignment and assumption and such other
certificates,  representations and documents, and to perform all such other acts
which the Managers deem necessary or desirable.

         7.4.  Purchase  Price.  The purchase price to be paid to a Transferring
Person for all or any part of such  Transferring  Person's  Membership  Interest
redeemed by the Company or purchased by a Member under  Section  7.3(b) shall be
the lower of (i) the purchase  price set forth in the Offer for such  Membership
Interest,  or (ii) the product of (A) the Percentage of Interest  represented by
the Offered  Interest  multiplied by (B) the Fair Market Value of the Company as
of the date of such redemption or purchase.

         7.5.  Remedies.  The Members  agree that a violation  by any of them of
this Article 7 will cause such damage to the Company and to the other Members as
will be  irreparable  and the  exact  amount  of  which  will be  impossible  to
ascertain. For this reason, the Members agree that the Company shall be entitled
as a matter of right to a decree of  specific  performance  of the terms of this
Article 7 or for  temporary  or  permanent  injunctive  relief from any court of
competent  jurisdiction  restraining  any  attempted  or  purported  Transfer of
interest in the Company in violation of this Article 7. In addition,  any Member
attempting  or purporting to Transfer an interest in the Company in violation of
this Article 7 and the purported  transferee  participating  in the attempted or
purported  Transfer,  shall be jointly and severally liable to reimburse and pay
the  Company  for  any  and all  costs,  fees  and  expenses  including  without
limitation  any  attorneys',  accountants',  and  other  professional  fees  and
expenses  actually  expended or incurred by the Company in  connection  with any
such violation, whether or not litigation ensues. The remedies set forth in this
Section 7.6 shall be  cumulative  and in addition to whatever  other  rights and
remedies the Company and the Members may have to protect their respective rights
in the event of a  violation  of the  provisions  of this  Article 7,  including
without limitation the right to recover damages including actual,  compensatory,
consequential, incidental and punitive damages.

                                       13
<PAGE>

         7.6. Effect of Transfer of Interest.  Upon the Transfer of any interest
in the  Company  in  accordance  with  the  provisions  of this  Article  7, the
transferee of such interest shall own and hold such interest in the Company as a
transferee,  subject  to all the  terms,  conditions,  and  limitations  of this
Agreement,  including without limitation  restriction on any further Transfer of
such interest as provided in this Article 7. Consent to such Transfer  shall not
constitute  consent  to the  admission  of the  transferee  as a  Member  of the
Company. A transferee may become a Member only in accordance with the provisions
of Section 8.1.  Unless a  transferee  is admitted to the Company as a Member in
accordance  with the  provisions  of Section 8.1, such  transferee  shall not be
entitled to any of the rights or benefits of a Member hereunder except the right
to the share of  profits  and losses and  distributions  of assets  based on the
transferee's  Percentage  of Interest.  Without  limiting the  generality of the
preceding  sentence,  such  transferee  shall  have no right  (i) to vote  upon,
approve,  or consent to, any matter  requiring the vote,  approval or consent of
the Members,  or (ii) to receive any information from the Company of the kind to
which Members are entitled, or any other information.

                ARTICLE VIII. ADMISSION AND WITHDRAWAL OF MEMBERS
                -------------------------------------------------

         8.1. Admission of Members.  No additional Member may be admitted to the
Company,  except  upon the prior  written  consent  of and upon such  additional
Member signing, in person or by attorney-in-fact,  or otherwise becoming a party
to this Agreement;  provided,  however,  each Permitted  Assignee (as defined in
Section  7.1)  shall  automatically  be  deemed  to be a Member  of the  Company
regardless of whether or not the Members  consented to said transfer.  No Member
shall have the power to grant a transferee,  and no transferee  shall have,  the
right to become a Member of the Company except as  specifically  provided in the
preceding  sentence.  If a  Member  who is an  individual  dies  or a  court  of
competent jurisdiction adjudges him or her to be incompetent to manage person or
property, the Member's executor, administrator,  guardian, conservator, or other
legal  representative may exercise all of the Member's rights for the purpose of
settling his estate or  administering  his property and shall have any power the
Member had to give his or her assignee a  Percentage  of Interest in Net Profits
and Net  Losses.  Said  assignee  may not be admitted as a Member of the Company
except upon the prior written consent of the Members.

         8.2.  Withdrawal of Members. No Member shall have any right to withdraw
or resign as a Member of the Company prior to the  dissolution and winding up of
the  Company,  except upon a Transfer of all of his,  her or its interest in the
Company in accordance  with the terms and  conditions of Article 7. A Member who
resigns or whose  Membership  Interest is otherwise  terminated  for any reason,
shall not be entitled to receive any  distributions  to which such Member  would
have been entitled had such Member remained a Member. Damages for breach of this
section 8.2 shall be monetary  damages  only and not specific  performance,  and
such damages may be offset  against  distributions  by the Company to which such
Member would otherwise be entitled.

                                       14
<PAGE>

                     ARTICLE IX. WINDING UP AND TERMINATION
                     --------------------------------------

         9.1.  Events  Requiring  Winding Up. The Company shall be wound up upon
the occurrence of any of the following events:

                  (a) Unanimous written consent of the Members; or

                  (b) The  consent  of a  majority  in number  of the  remaining
Members to wind up the  Company  within  ninety  (90) days after the  Company is
wound up in accordance with the Texas Act.

         9.2. Winding Up,  Liquidation and  Distribution of Assets.  If an event
requiring the winding up of the Company  occurs,  the Managers shall wind up the
business of the Company and shall apply or distribute the assets of the Company,
or shall  sell the  assets  of the  Company  and  apply or  distribute  proceeds
thereof, as promptly as practicable and in the following order of priority:

                  (a)  First,  if there  are  sufficient  assets  therefore,  to
creditors of the Company,  including  Members who are  creditors,  to the extent
permitted by law, in  satisfaction  of  liabilities  of the Company  (whether by
payment or the making of reasonable  provision for payment  thereof)  other than
liabilities for distributions to Members;  and if there are insufficient assets,
such claims and  obligations  shall be paid or provided  for  according to their
priority and,  among claims and  obligations of equal  priority,  ratably to the
extent  of  assets  available  therefore;   and  if  there  is  any  contingent,
conditional,  or unmatured debt,  claim,  obligation,  or liability known to the
Company,  a reserve shall be  established  for it in accordance  with law, in an
amount determined by the Managers to be appropriate for such purpose;

                  (b) Second,  to Members in  satisfaction  of  liabilities  for
distributions; and

                  (c) Third, any remaining  assets, to the Members in proportion
to the positive  balances in their respective  Capital  Accounts,  and after all
Capital  Accounts have been reduced to zero, in accordance with their respective
Percentages  of  Interest.  The  Company  may offset  damages for breach of this
Agreement by a Member against the amount otherwise  distributable to such Member
hereunder.

                  (d) At the time final distributions, exclusive of any reserves
for  contingent,  conditional or unmatured  items,  are made in accordance  with
clause (c) above, the Company shall  terminate,  but, if at any time thereafter,
any reserve is released because the Managers determine the need for such reserve
is ended,  then such reserve shall be distributed in accordance  with clause (c)
above.

         9.3. Return of Contribution  Nonrecourse to Members. Except as provided
by law or as expressly provided in this Agreement,  upon winding up, each Member
shall look solely to the assets of the Company for the return of his, her or its

                                       15
<PAGE>

Capital  Contribution.  If the Company  property  remaining after the payment or
discharge of the debts and  liabilities of the Company is insufficient to return
the Capital  Contribution  of one or more Members,  such Member or Members shall
have no recourse against any other Member or the Manager.

                            ARTICLE X. MISCELLANEOUS
                            ------------------------

         10.1.  Notice. Any notice required or permitted to be given pursuant to
the provisions of the Texas Act or this  Agreement  shall be effective as of the
date personally delivered, delivered via facsimile with electronic confirmation,
or delivered via overnight  express mail, or if sent by certified  mail,  return
receipt  requested,  three (3) days after being deposited with the United States
Postal  Service,  prepaid and  addressed to the  intended  recipient at the last
known address as shown in the Company's records.

         10.2.  Waiver of Notice.  Whenever  any notice is  required to be given
under the provisions of the Texas Act or this Agreement,  a waiver  thereof,  in
writing, signed by the person entitled to such notice shall be deemed equivalent
to the giving of such notice.

         10.3. Authority to Bind the Company. Unless authorized to do so by this
Agreement or by the Managers,  no  attorney-in-fact,  employee or other agent of
the Company shall have any power or authority to bind the Company in any way, to
pledge its credit or to render it liable  pecuniary  for any purpose.  No Member
shall have any power or authority to bind the Company unless the Member has been
authorized by the Managers to act as an agent of the Company.

         10.4. Waiver of Action For Partition.  Each Member  irrevocably  waives
any right to maintain an action for  partition  with  respect to the property of
the Company during the term of the Company.

         10.5.  Indemnification By Company. The Company may indemnify any person
who was or is a party defendant or is threatened to be made a party defendant to
any threatened,  pending or completed action, suit or proceeding, whether civil,
criminal,  administrative,  or investigative  (other than 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 the  Company,  or is or was  serving at the request of the
Company,  against  expenses,  including  attorney's fees,  judgments,  fines and
amounts paid in settlement  actually and reasonably  incurred in connection with
such action,  suit or  proceeding if the Managers  determine  that he, she or it
acted  in good  faith  and in a  manner  reasonably  believed  to be in the best
interest of the Company,  and with respect to any criminal action or proceeding,
had no reasonable cause to believe the 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,  shall not in itself create a
presumption  that the  Person  did or did not act in good  faith and in a manner
which was  reasonably  believed to be in the best interest of the Company,  and,
with respect to any  criminal  action or  proceeding,  had  reasonable  cause to
believe the conduct was unlawful.

         10.6.  Construction.  Whenever  the context  requires,  as used in this
Agreement,  the singular shall include the plural and the masculine gender shall
include the feminine and neuter genders, and vice versa.

                                       16
<PAGE>

         10.7.  Articles and Other  Headings.  The Articles and headings in this
Agreement  are for  reference  purposes only and shall not affect the meaning or
interpretation thereof.

         10.8.  Severability.  If any provision of this  Agreement is held to be
invalid, illegal or unenforceable,  the remainder of this Agreement shall not be
affected.

         10.9.  Application of Texas Law. This Agreement will be governed by the
laws of the State of Texas,  without  giving  effect  to its  conflicts  of laws
provisions.

         10.10.  Disregarded Entity Tax Treatment Intended If One Member. At any
time when the  Company  has only one (1)  Member,  the  parties  intend that the
provisions  of  this  Agreement  will  qualify  the  Company  to be  taxed  as a
disregarded entity under the Code and not as a corporation, and the Managers and
each  Member  shall take such action  from time to time as may be  necessary  or
desirable to carry out such  intention.  The Managers may make any tax elections
for the  Company  allowed  under  the Code or the tax laws of any state or other
jurisdiction having taxing jurisdiction over the Company.

         10.11.  Partnership Tax Treatment Intended If More Than One Member; Tax
Administrative  Matters.  At any time when  there is more than one Member of the
Company,  the parties  intend that the provisions of this Agreement will qualify
the  Company  to  be  taxed  as a  partnership  under  the  Code  and  not  as a
corporation,  and the Managers  and Members  shall take such action from time to
time as may be necessary or desirable to carry out such intention.  The Managers
may make any tax  elections  for the Company  allowed  under the Code or the tax
laws of any state or other  jurisdiction  having  taxing  jurisdiction  over the
Company.  The Members  hereby  designate  Mortgage  Assistance  Corp. as the tax
matters partner of the Company  pursuant to Section  6231(a)(7) of the Code. The
person designated tax matters partner shall not take any action  contemplated by
Section 6222 through 6232 of the Code without the approval of the Members.

         10.12. No Partnership  Intended For Non-Tax  Purposes.  The undersigned
Members  have  formed the Company  under the Texas Act,  and as long as there is
more than one Member of the Company such parties  expressly do not intend hereby
to form a partnership  under either the Revised  Uniform  Partnership Act of the
State of Texas nor the Revised Uniform  Limited  Partnership Act of the State of
Texas.  The Members do not intend to be partners one to another,  or partners as
to any third party. To the extent any Member,  by word or action,  represents to
another  person  that any other  Member is a partner  or that the  Company  is a
partnership,  the Member making such wrongful  representation shall be liable to
any other  Member  who  incurs  personal  liability  by reason of such  wrongful
representation.

            [The remainder of this page is intentionally left blank.]

                                       17
<PAGE>

                                  CERTIFICATION

         THE UNDERSIGNED  hereby evidence their adoption and ratification of the
foregoing Company Agreement of Bluestone  Capital,  LLC as of the date indicated
below.

                                        Mortgage Assistance Corp., as Member and
                                        Manager

Date:______________                          By:________________________________
                                             Its:_______________________________
                                             Name:______________________________

                                       18
<PAGE>

                                    EXHIBIT A
                                    ---------

                          MEMBER CAPITAL CONTRIBUTIONS
                          ----------------------------

                              AS OF AUGUST 25, 2006

============================ ======================== ========= ================
          MEMBER               CAPITAL CONTRIBUTION     UNITS    PERCENTAGE OF
                                                                   INTEREST
---------------------------- ------------------------ --------- ----------------
Mortgage Assistance
Corp., a Texas Corporation             None              50            50%
2614 Main Street
Dallas, TX 75226
---------------------------- ------------------------ --------- ----------------
Fiserviss Trustee                   $ 45,000.00         7.41          7.41%
FBO Michael Mullin
P.O. Box 173859
Denver, CO 80217-3859
Fiserviss Tax I.D. #20-
2054042
---------------------------- ------------------------ --------- ----------------
One Source Mortgage
Investments                         $258,610.00         42.59        42.59%
11000 N. Scottsdale Rd.
Suite 121
Scottsdale, AZ 85254
---------------------------- ------------------------ --------- ----------------

             Total                  $303,610.00         100           100%

============================ ======================== ========== ===============

                                       19
<PAGE>

                                    EXHIBIT B
                                    ---------

                               SERVICING AGREEMENT
                               -------------------

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00113-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00113-of-00352.parquet"}]]