Document:

Blueprint

 

Exhibit 10.1

 

HORIZON ENERGY ACQUISITION, LLC

 

SUBSCRIPTION AGREEMENT

 

To the
Undersigned Purchaser:

 

Horizon
Energy Acquisition, LLC, a Delaware limited liability company (the
“Company”), hereby
confirms to you, as the undersigned purchaser identified in this
Subscription Agreement (this “Agreement”), the
following:

 

1.

Sale and Purchase of Limited Liability
Company Interest.

 

The
Company has been formed under the laws of the State of Delaware and
has proposed to enter into a Limited Liability Company Agreement
with you, in substantially the form provided to you
separately, with such
modifications as may be mutually agreed upon prior to execution
thereof and as the same may be modified in accordance with the
terms of any subsequent amendment thereto (the “Company Agreement”).
Capitalized terms used herein without definition have the meanings
set forth in the Company Agreement.

 

Subject
to the terms and conditions of this Agreement and in reliance upon
your representations and warranties:

 

(a) the
Company agrees to sell to you, and you irrevocably subscribe for
and agree to purchase from the Company, the number of Units set
forth on your signature page attached hereto (represented,
collectively, by the “Interests”);
and

 

(b) the
Company agrees that you shall be admitted as a Member, upon the
terms and conditions, and in consideration of your agreement to be
bound by the terms and provisions of the Company Agreement and this
Agreement, with a Capital Commitment in the amount set forth on
your signature page attached hereto which shall be due at Closing
(as defined below).

 

Subject
to the terms and conditions hereof and of the Company Agreement,
your obligation to subscribe and pay for your Interests at the time
contemplated therein shall be complete and binding upon the
execution and delivery of this Agreement.

 

2.

Execution of Company
Agreement.

 

You
hereby agree to become a party to, to be bound by, and to comply
with the provisions of the Company Agreement. To that end, prior to
Closing (as defined below), you shall execute and deliver to the
Company an executed signature page, in counterpart, to the Company
Agreement, which shall be deemed an original and, together with all
other counterparts, shall constitute one and the same
instrument.

 

3.

Capital
Contributions.

 

Subsequent to your
funding of your initial Capital Contribution, there are no future
Capital Contributions expected.

 

4. 

Acquisition and Development of Certain Assets.

 

You
hereby acknowledge and agree that, upon consummation of the
transactions contemplated hereby, the Company shall utilize your
and the other purchasers’ Capital Contributions to acquire a
new 3D seismic survey, offshore in the North Sea in the United
Kingdom and as consideration to own interests in oil and gas
licenses.

 

 

 

-1-

 

 

5.

Closing.

 

5.1             The
closing and effectiveness (the “Closing”)
of the sale to you, and the subscription for and purchase by you,
of the Interests, and your admission as a Member, shall take place
on such date and at such time as the Company shall designate
following your full execution of this Agreement and the
satisfaction of the conditions set forth in Sections 5.2 and 5.3
(the “Closing
Date”).

 

5.2 Your
obligation to consummate the transactions described herein is
subject to the satisfaction of the following
conditions:

 

(a) the
Company Agreement shall have been duly authorized, executed and
delivered by all parties thereto (other than you) and shall be in
full force and effect;

 

(b) the
Company’s representations and warranties being accurate and
true in all material respects as of the Closing Date (unless as of
a specific date therein in which case they shall be accurate and
true as of such date);

 

(c) the
performance in all material respects of all obligations, covenants
and agreements of Company that are required to be performed at or
prior to the Closing Date; and

 

5.3 The
Company’s obligation to consummate the transactions described
herein is subject to the satisfaction of the following
conditions:

 

(a) your
representations and warranties being accurate and true in all
material respects as of the Closing Date (unless as of a specific
date therein in which case they shall be accurate and true as of
such date);

 

(b) your
performance in all material respects of all obligations, covenants
and agreements that are required to be performed by you at or prior
to the Closing Date;

 

(c) you
shall have delivered, or caused to be delivered, your Capital
Contribution to the Company, by wire transfer of immediately
available funds, to an account designated by the Company in writing
to you; and

 

6.

Termination.

 

6.1             Termination.
Subject to the provisions of Section 6.2, this Agreement may be
terminated at any time prior to the Closing Date by any of the
following:

 

(a) by
the mutual written agreement of the Company and both of
you;

 

(b) by
the Company, by written notice to you, if there has been a material
violation or breach of any of your covenants or agreements made
herein, or if any representation or warranty of yours contained
herein is materially inaccurate or misleading or, following the use
of reasonable efforts by the Company, the Closing is not effected
by March 15, 2019; or

 

(c) by
you, by written notice to the Company, if there has been a material
violation or breach of any of the Company’s covenants or
agreements made herein, or if any representation or warranty of the
Company contained herein is materially inaccurate or misleading or,
following the use of reasonable efforts by the Company, the Closing
is not effected by March 15, 2019.

 

6.2 Effect
of Termination. If this
Agreement shall be terminated as provided in Section 6.1, then this
Agreement shall forthwith become void and there shall be no
continuing obligation on the part of the parties; provided, that no
party shall be relieved of any liability as a result of a breach of
any of such party’s representations, warranties, covenants or
agreements contained herein.

 

 

 

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7.

Representations and Warranties of the
Company.

 

7.1             The
Representations and Warranties.
The Company represents and warrants that each of the following
statements shall be true and correct as of the Closing
Date:

 

(a) Formation
and Standing. The Company is
duly formed and validly existing as a limited liability company
under the laws of the State of Delaware and, subject to applicable
law, has all requisite limited liability company power and
authority to carry on its business as proposed to be conducted in
the Company Agreement.

 

(b) Authorization
of Agreement, etc. The
execution and delivery of this Agreement and the Company Agreement
have been authorized by all necessary action on behalf of the
Company and this Agreement and the Company Agreement, when executed
and delivered by the Company, are legal, valid and binding
obligations of the Company, enforceable against the Company in
accordance with their terms.

 

(c) Compliance
with Laws and Other Instruments. The execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby will not
conflict with or result in any violation of or default under any
provision of the Company Agreement, or any agreement or other
instrument to which the Company is a party or by which it or any of
its properties is bound, or any permit, franchise, judgment,
decree, statute, order, rule or regulation applicable to the
Company or its business or properties.

 

(d) Offer
of Interests. Neither the
Company nor anyone acting on its behalf has taken or will take any
action that would subject the issuance and sale of the Interests to
the registration requirements of the Securities Act of 1933, as
amended (the “Securities
Act”).

 

7.2 Survival
of Representations and Warranties. All representations and warranties made by the
Company in Section 7.1 shall survive the execution and delivery of
this Agreement, any investigation at any time made by you or on
your behalf and the issue and sale of
Interests.

 

8.

Representations and Warranties of the
Purchaser.

 

8.1             The
Representations and Warranties.
As to yourself only, you represent and warrant to the Company and
each other Person who is, or in the future becomes, a Member, that
each of the following statements shall be true and correct as of
the Closing Date:

 

(a) Representation
of Investment Experience and Ability to Bear
Risk. You (i) are knowledgeable
and experienced with respect to the financial, tax and business
aspects of the ownership of the Interests and of the business
contemplated by the Company and are capable of evaluating the risks
and merits of purchasing the Interests and, in making a decision to
proceed with this investment, have not relied upon any
representations, warranties or agreements, other than those set
forth in this Agreement and the Company Agreement, if any, and (ii)
can bear the economic risk of an investment in the Company for an
indefinite period of time, and can afford to suffer the complete
loss thereof.

 

(b) Accredited
Investor. You are an accredited
investor within the meaning of Rule 501(a) of Regulation D
promulgated under the Securities Act.

 

 

 

-3-

 

 

(c) The
Interests have not been and will not be registered under the
Securities Act, and may not be offered or sold within the United
States or to, or for the account or benefit of, U.S. persons except
in accordance with the registration requirements of the Securities
Act or pursuant to an exemption from such registration
requirements. You hereby agree that any disposition of the
Interests, including the transactions contemplated hereunder, and
irrespective of whether the Interests are certificated, shall
include the following legend:

 

“THE
LIMITED LIABILITY COMPANY INTERESTS OF THE COMPANY (THE
“INTERESTS”) HAVE NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”)
OR ANY STATE SECURITIES LAWS OR THE LAWS OF ANY OTHER NATION OR
JURISDICTION AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED UNLESS
THE SAME HAVE BEEN INCLUDED IN AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY
HAS BEEN RENDERED TO THE COMPANY THAT AN EXEMPTION FROM
REGISTRATION UNDER APPLICABLE SECURITIES LAWS IS
AVAILABLE.

 

IN
ADDITION, TRANSFER OR OTHER DISPOSITION OF THE INTERESTS IS
RESTRICTED AS PROVIDED IN THE LIMITED LIABILITY COMPANY AGREEMENT
OF THE COMPANY.”

 

(d) Transfers
and Transferability. You
understand and acknowledge that the Interests have not been
registered under the Securities Act or any state securities laws
and are being offered and sold in reliance upon exemptions provided
in the Securities Act and state securities laws for transactions
not involving any public offering and, therefore, cannot be resold
or transferred unless they are subsequently registered under the
Securities Act and such applicable state securities laws or unless
an exemption from such registration is available. You also
understand that the Company does not have any obligation or
intention to register the Interests for sale under the Securities
Act, any state securities laws or of supplying the information
which may be necessary to enable you to sell Interests; and that
you have no right to require the registration of the Interests
under the Securities Act, any state securities laws or other
applicable securities regulations. You also understand that sales
or transfers of Interests are further restricted by the provisions
of the Company Agreement.

 

You
represent and warrant further that you have no contract,
understanding, agreement or arrangement with any person to sell or
transfer or pledge to such person or anyone else any of the
Interests for which you hereby subscribe (in whole or in part); and
you represent and warrant that you have no present plans to enter
into any such contract, undertaking, agreement or
arrangement.

 

You
understand that, subject to Section 12.1(a) of the Company
Agreement, the Interests cannot be sold or transferred without
Board Approval and Member Approval, which approval may be withheld
in their sole and absolute discretion and which approval will be
withheld if any such transfer could cause the Company to become
subject to regulation under federal law as an investment company or
would subject the Company to adverse tax consequences or adverse
consequences under ERISA.

 

You
understand that there is no public market for the Interests; any
disposition of the Interests may result in unfavorable tax
consequences to you.

 

You are
aware and acknowledge that, because of the substantial restrictions
on the transferability of the Interests, it may not be possible for
you to liquidate your investment in the Company readily, even in
the case of an emergency.

 

(e) Residence.
You maintain your domicile or principal place of business at the
address shown in the signature page of this Agreement and you are
not merely transient or temporarily resident
there.

 

 

 

-4-

 

 

(f) Awareness
of Risks; Taxes. You represent
and warrant that you are aware (i) that the Company has no
operating history; (ii) that the Interests involve a substantial
degree of risk of loss of your entire investment and that there is
no assurance of any income from your investment; (iii) that any
federal, state, or foreign income tax benefits which may be
available to you may be lost through the adoption of new laws or
regulations, to changes to existing laws and regulations and to
changes in the interpretation of existing laws and regulations; and
(iv) any disposition of Interests may result in unfavorable tax
consequences to you. You further represent that you are relying
solely on your own conclusions or the advice of your own counsel or
investment representative with respect to tax aspects of any
investment in the Company.

 

(g) Power,
Authority; Valid Agreement. (i)
You have all requisite power and authority to execute, deliver and
perform your obligations under this Agreement and the Company
Agreement and to subscribe for and purchase or otherwise acquire
your Interests; (ii) your execution of this Agreement and the
Company Agreement has been authorized by all necessary corporate or
other action on your behalf; and (iii) this Agreement and the
Company Agreement are each valid, binding and enforceable against
you in accordance with their respective terms.

 

(h) No
Conflict; No Violation. The
execution and delivery of this Agreement and the Company Agreement
by you and the performance of your duties and obligations hereunder
and thereunder (i) do not and will not result in a breach of any of
the terms, conditions or provisions of, or constitute a default
under (A) any charter, bylaws, trust agreement, partnership
agreement or other governing instrument applicable to you, (B) (1)
any indenture, mortgage, deed of trust, credit agreement, note or
other evidence of indebtedness, or any lease or other agreement or
understanding, or (2) any license, permit, franchise or
certificate, in either case to which you or any of your affiliates
is a party or by which you or any of them is bound or to which your
or any of their properties are subject; (ii) do not require any
authorization or approval under or pursuant to any of the
foregoing; and (iii) do not violate any statute, regulation, law,
order, writ, injunction or decree to which you or any of your
affiliates is subject.

 

8.2 Survival
of Representations and Warranties. All representations and warranties made by you
in Section 8.1 of this Agreement shall survive the execution and
delivery of this Agreement, as well as any investigation at any
time made by or on behalf of the Company and the issue and sale of
Interests.

 

8.3 Reliance.
You acknowledge that your representations, warranties,
acknowledgments and agreements in this Agreement will be relied
upon by the Company in determining your suitability as a purchaser
of Interests.

 

8.4 Further
Assurances. You agree to
provide, if requested, any additional information that may be
requested or required to determine your eligibility to purchase the
Interests.

 

9.

General Contractual
Matters.

 

9.1             Amendments
and Waivers. This Agreement may
be amended and the observance of any provision hereof may be waived
(either generally or in a particular instance and either
retroactively or prospectively) only with the written consent of
you and the Company.

 

9.2 Assignment.
You agree that neither this Agreement nor any rights which may
accrue to you hereunder may be transferred or
assigned.

 

9.3 Notices.
All notices, requests, demands and other communications hereunder
shall be in writing and shall be deemed to have been duly given to
any party when delivered by hand, when mailed, first-class postage
prepaid, or when emailed, (a) if to you, to you at the physical or
email address set forth below your signature, or to such other
address as you shall have furnished to the Company in writing, and
(b) if to the Company, to Horizon Energy Acquisition, LLC, 2458
167th
Street, Fairfield, IA 52556,
Attn: Jonathan Rudney, or to such other address or addresses,
as the Company shall have furnished to you in writing, provided
that any notice to the Company (a) shall be effective only if and
when received by the Company and (b) shall not be delivered by
email.

 

 

 

-5-

 

 

9.4 GOVERNING
LAW. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF DELAWARE WITHOUT REGARD TO PRINCIPLES OF CONFLICT
OF LAWS (EXCEPT INSOFAR AS AFFECTED BY THE SECURITIES OR
“BLUE SKY” LAWS OF THE STATE OR SIMILAR JURISDICTION IN
WHICH THE OFFERING DESCRIBED HEREIN HAS BEEN MADE TO
YOU).

 

9.5 Submission
to Jurisdiction. Each party
irrevocably consents and agrees that any legal action or proceeding
with respect to this Agreement and any action for enforcement of
any judgment in respect thereof may be brought in the courts of the
State of Delaware or the United States federal courts for the State
of Delaware, and, by execution and delivery of this Agreement, each
party hereby submits to and accepts for itself and in respect of
its property, generally and unconditionally, the exclusive
jurisdiction of the aforesaid courts and appellate courts from any
appeal thereof. Each party hereby irrevocably waives any objection
which it may now or hereafter have to the laying of venue of any of
the aforesaid actions or proceedings arising out of or in
connection with this Agreement brought in the courts referred to
above and hereby further irrevocably waives and agrees not to plead
or claim in any such court that any such action or proceeding
brought in any such court has been brought in an inconvenient
forum. Nothing in this section shall be deemed to constitute a
submission to jurisdiction, consent or waiver with respect to any
matter not specifically referred to herein.

 

9.6 Waiver
of Trial by Jury. TO THE EXTENT
PERMITTED BY APPLICABLE LAW, EACH PARTY HERETO HEREBY IRREVOCABLY
WAIVES ALL RIGHT OF TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM, ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT
OR ANY MATTER ARISING HEREUNDER.

 

9.7 Descriptive
Headings. The descriptive
headings in this Agreement are for convenience of reference only
and shall not be deemed to alter or affect the meaning or
interpretation of any provision of this
Agreement.

 

9.8 Entire
Agreement. This Agreement
contains the entire agreement of the parties with respect to the
subject matter of this Agreement, and there are no representations,
covenants or other agreements except as stated or referred to
herein.

 

9.9 Counterparts.
This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original and all of which taken together
shall constitute one and the same instrument.

 

9.10 Circular
230 Notice. To ensure
compliance with Treasury Department Circular 230, you are hereby
notified that:

 

(a) any
discussion of Federal tax issues in this Agreement is not intended
or written to be used, and cannot be used, by a Member for the
purpose of avoiding penalties that may be imposed on such Member
under the Code;

 

(b) any
such discussion is written to support the promotion or marketing of
the transactions or matters addressed in this Agreement;
and

 

(c) each
Member should seek advice based on its particular circumstances
from and independent advisor.

 

 

 

If
you are in agreement with the foregoing, please sign the enclosed
counterpart of this Agreement and return such counterpart of this
Agreement to the Company.

 

 

 

 

-6-

 

 

 

HORIZON ENERGY ACQUISITION, LLC

 

By:
/s/ Jonathan B.
Rudney

       Jonathan
B. Rudney

       Chief
Executive Officer

 

 

The
foregoing Subscription Agreement is hereby agreed by the
undersigned on this 25 day of February, 2019.

 

 

Petro River Oil Corporation

 

By: /s/ Scot
Cohen

      Scot Cohen, Executive
Chairman

      55
Fifth Ave., Suite 1702

      New
York, NY 10003

      Email address:
scot@icofund.com

 

Capital
Contribution:       
$400,000

 

Total Units:
                 
    145.454

 

 

 

 

-7-Blueprint

Exhibit
10.2

 

 

 

HORIZON
ENERGY ACQUISITION, LLC

 

 

Limited Liability Company
Agreement

 

February 1, 2019

 

 

 

 

 

 

THE UNITS CREATED BY THIS LIMITED LIABILITY COMPANY AGREEMENT HAVE
NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), OR UNDER ANY
OTHER APPLICABLE SECURITIES LAWS, AND MAY NOT BE TRANSFERRED OR
RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES ACT AND SUCH OTHER
APPLICABLE SECURITIES LAWS PURSUANT TO EFFECTIVE REGISTRATION OR AN
EXEMPTION THEREFROM. IN ADDITION, SUCH UNITS MAY NOT BE SOLD,
TRANSFERRED, ASSIGNED OR HYPOTHECATED, IN WHOLE OR IN PART, EXCEPT
AS PROVIDED IN ARTICLE XII OF THIS AGREEMENT. ACCORDINGLY, THE
HOLDERS OF SUCH INTERESTS SHOULD BE AWARE THAT THEY MAY BE REQUIRED
TO BEAR THE RISKS OF THEIR RESPECTIVE INVESTMENTS IN SUCH INTERESTS
FOR AN INDEFINITE PERIOD OF TIME.

 

 

-1-

 

TABLE OF CONTENTS

 

 

ARTICLE I..

FORMATION AND TERM
  

ARTICLE II. 

PURPOSE AND POWERS OF THE COMPANY 

ARTICLE III. 

UNITS 

ARTICLE IV.

MEMBERS

ARTICLE V.

MANAGEMENT     

ARTICLE VI.

COMPANY CAPITAL   

ARTICLE VII.

CAPITAL ACCOUNTS; ALLOCATIONS  

ARTICLE VIII.

DISTRIBUTIONS  

ARTICLEI X.

RECORDS AND REPORTS    

ARTICLE X.

TAX MATTERS  

ARTICLE XI .

LIMITED LIABILITY AND
INDEMNIFICATION  

ARTICLE XII.

RESTRICTIONS ON TRANSFERS; PURCHASE
RIGHTS  

ARTICLE XIII.

REPRESENTATIONS AND
WARRANTIES  

ARTICLE XIV.

TERMINATION AND LIQUIDATION OF THE
COMPANY

ARTICLE XV.

COVENANTS  

ARTICLE XVI.

MISCELLANEOUS 

 

Schedules

 

Schedule A

Members

Schedule B

Definitions

Schedule C

Board
of Managers

Schedule D

Key
Officers

 

 

 

-2-

 

 

LIMITED LIABILITY COMPANY AGREEMENT

 

OF

 

HORIZON ENERGY ACQUISITION, LLC

 

This Limited Liability Company Agreement (this
“Agreement”)
of Horizon Energy Acquisition, LLC, a Delaware limited liability
company (the “Company”),
is entered into effective as of February 1, 2019 (the
“Effective
Date”) by the Company, on
the one hand, and the members set forth on Schedule A
attached hereto and made part of (the
“Members”).
Capitalized terms used herein and not otherwise defined have the
meanings set forth on Schedule B
attached hereto and made part
of.

 

Background

 

WHEREAS, the Company was formed as a limited liability
company pursuant to the Delaware Limited Liability Company Act (as
amended from time to time, the “LLC
Act”) on September 19,
2018;

 

WHEREAS, the Members have entered into Subscription
Agreements, each dated on or before February 15, 2019, to subscribe
for Units (as hereinafter defined) of the Company;
and

 

WHEREAS, the parties hereto are entering into this
Agreement to provide for their respective rights and obligations as
Members of the Company.

 

NOW
THEREFORE, in consideration of
the mutual promises contained herein and other good and valuable
consideration, the receipt and sufficiency of which is
acknowledged, the parties hereto hereby agree as
follows:

 

ARTICLE
I

FORMATION AND
TERM

 

Section
1.1 Formation.

 

(a) The
Company was formed as a limited liability company pursuant to the
LLC Act on September 19, 2018

 

(b) Each
Person identified on Schedule A as a Member is admitted as a Member
of the Company with his/hers/its Percentage Interest set forth
opposite such Person’s name on Schedule A.

 

(c) The
name, mailing address and email address of each Member is listed on
Schedule A.

 

(d) Limited
liability company interests, as defined by the LLC Act, shall be
represented by, and shall be referred to in this Agreement as
“Units”.
The number of Units held by each Member is listed on Schedule
A.

 

(e) The
Chief Executive Officer of the Company is hereby designated as an
authorized Person, within the meaning of the LLC Act, to execute,
deliver and file, or cause the execution, delivery and filing of,
all certificates, notices or other instruments (and any amendments
and/or restatements thereof) required or permitted by the LLC Act
to be filed in the office of the Secretary of State of the State of
Delaware.

 

Section
1.2 Name.
The name of the Company is Horizon Energy Acquisition,
LLC.

 

Section
1.3 Principal
Business Office.
The principal place of business of the Company shall be located at
a location as designated by the Board (as hereinafter
defined).

 

 

-3-

 

 

Section
1.4 Term.
The term of the Company commenced on the date of its formation and
shall continue perpetually unless the Company is dissolved pursuant
to Article XIV, which dissolution shall be carried out
pursuant to the LLC Act and the provisions of this Agreement. The
existence of the Company as a separate legal entity shall continue
until the cancellation of the Company’s Certificate of
Formation as provided in the LLC Act.

 

Section
1.5 Registered
Agent and Office.
The Company’s registered agent in Delaware is Harvard
Business Services, Inc., 16192 Coastal Highway, Lewes Delaware
19958.

 

Section
1.6 Qualification
in Other Jurisdictions.
The Chief Executive Officer shall cause the Company to be
qualified, formed or registered under assumed or fictitious name
statutes or similar laws in any jurisdiction in which the Company
transacts business and such qualification, formation or
registration is necessary or appropriate for the transaction of
such business.

 

ARTICLE II

PURPOSE
AND POWERS OF THE COMPANY

 

 

Section
2.1 Purpose.
The purpose of the Company is to engage in any lawful act or
activity for which limited liability companies may be formed under
the LLC Act, including the
acquisition of seismic data, exploration, exploitation and
development of oil and natural gas properties and prospects
internationally, and to engage in such other activities incidental
or ancillary thereto as the Board deems necessary or advisable, all
upon the terms and conditions set forth in this
Agreement.

 

Section
2.2 Powers.
Subject to all of the provisions of this Agreement, the Company
shall have the power and is hereby authorized to take any and all
actions necessary, convenient, or incidental to the purpose of the
Company, including the following:

 

(a) acquire
by purchase, lease, contribution of property or otherwise, own,
hold, sell, convey, transfer or dispose of any real or personal
property which may be necessary, convenient or incidental to the
accomplishment of the purposes of the Company;

 

(b) operate,
purchase, maintain, finance, improve, own, sell, convey, assign,
mortgage, lease or demolish or otherwise dispose of any real or
personal property which may be necessary, convenient or incidental
to the accomplishment of the purposes of the Company;

 

(c) borrow
money and issue evidences of indebtedness in furtherance of any or
all of the purposes of the Company, and secure the same by
mortgage, pledge or other lien on the assets of the
Company;

 

(d) invest
any funds of the Company pending distribution or payment of the
same pursuant to the provisions of this Agreement;

 

(e) prepay
in whole or in part, refinance, recast, increase, modify or extend
any indebtedness of the Company and, in connection therewith,
execute any extensions, renewals or modifications of any mortgage
or security agreement securing such indebtedness;

 

(f) enter
into, perform and carry out contracts of any kind, including,
without limitation, contracts with any Person affiliated with a
Member, necessary to, in connection with, convenient to, or
incidental to the accomplishment of the purposes of the
Company;

 

(g) employ
or otherwise engage employees, managers, contractors, advisors,
attorneys and consultants and pay reasonable compensation for such
services;

 

(h) enter
into partnerships, limited liability companies, trusts,
associations, corporations or other ventures with other Persons in
furtherance of the purposes of the Company; and

 

 

 

-4-

 

 

(i) do
such other things and engage in such other activities as may be
necessary, convenient or incidental to the conduct of the business
of the Company, and have and exercise all of the powers and rights
conferred upon limited liability companies formed pursuant to the
LLC Act.

 

 

ARTICLE III

UNITS

 

 

Section
3.1 Units. 
The ownership of the Company shall be divided into Units, each
having the preferences, limitations, and rights as set forth
herein. Each Member’s
ownership interest in the Company shall be represented by the Units
held by such Member. The name, present mailing address, initial
Capital Account balance, number of Units held and the Percentage
Interest of each Member is set forth on Schedule A, as amended
from time to time.

 

(a) Except
as otherwise required by law, the Units shall have voting rights
equal to one vote per Unit.

 

(b) On
and as of the Effective Date, a total of 1,000 Units shall be
issued by the Company to the Members.

 

 

ARTICLE IV

MEMBERS

 

Section
4.1 Members.
Each Member’s name, mailing address, number of Units owned
and Percentage Interest as in effect from time to time shall be
listed on Schedule A. The Chief Executive Officer or other
designated Officer shall be required to update Schedule A from time
to time as necessary to accurately reflect changes in address,
Units owned and/or Percentage Interests. Any amendment to Schedule
A made to reflect an action taken in accordance with this Agreement
shall not be deemed an amendment to this Agreement. Any reference
in this Agreement to Schedule A shall be deemed a reference to
Schedule A as amended and in effect from time to time.

 

Section
4.2 Powers
of Members.
The Members shall have the power to exercise only those rights and
powers granted to the Members pursuant to the express terms of this
Agreement. Members shall not have the authority to bind the Company
by virtue of their status as Members.

 

Section
4.3 Member
Interests.
Units and the limited liability company interests represented
thereby shall for all purposes be personal property. Except as set
forth herein, no Member shall have any interest in specific Company
assets or property.

 

Section
4.4 Partition.
Each Member waives any and all rights that it may have to maintain
an action for partition of the Company or its
property.

 

Section
4.5 Resignation.
A Member shall cease to be a Member at the time such Member ceases
to own any Units.

 

Section
4.6 Member
Meetings.

 

(a) Meetings
of Members, for such business as may be stated in the notice of the
meeting, may be held at such date, time and place as may be
determined by the Board. The Chairman of the Board (the
“Chairman”)
shall preside over all meetings of the Members; provided that if
the Chairman is not available, the members of the Board present may
designate one of the Members present to preside over the meeting.
Members holding at least five percent (5%) of the then outstanding
Units may request a meeting of the Members by delivering a written
request therefore to the Chairman or the Chief Executive Officer
setting forth the purpose for which such meeting is requested to be
called. The Person receiving such request shall schedule a meeting
of the Members within thirty (30) days after the receipt of such
request by notice delivered in accordance with
Section 4.9.

 

 

-5-

 

 

Section
4.7 Voting.

 

(a) Each
Member entitled to vote in accordance with the terms of this
Agreement may vote in person or by proxy. The Members shall be
entitled to vote only on the matters specifically set forth in this
Agreement, on such other matters, if any, as may be determined by
the Board, and as provided by the LLC Act or other applicable law.
Unless otherwise provided for by this Agreement, all matters to be
decided by the Members shall be decided by a majority Member
vote.

 

Section
4.8 Quorum.
Except as otherwise provided by law, the presence, in person or by
proxy, of at least two (2) Members representing a majority of the
then outstanding Units shall constitute a quorum at all meetings of
the Members. In case a quorum shall not be present at any meeting,
Members holding a majority of the Units represented thereat, in
person or by proxy, shall have the power to adjourn the meeting
from time to time, without notice other than announcement at the
meeting, until the requisite amount of Members shall be present. At
any such adjourned meeting at which a quorum shall be represented,
any business may be transacted that might have been transacted at
the meeting as originally noticed.

 

Section
4.9 Notice
of Meetings.
Written notice, stating the place, date, time and purpose of the
meeting, shall be given to each Member, at such Member’s
address as it appears on the records of the Company, not less than
ten (10) calendar days prior to the date of the meeting (except
that notice to any Member may be waived in writing by such
Member).

 

Section
4.10 Action
Without a Meeting.
Any action required or permitted to be taken at any meeting of
Members may be taken without a meeting, without prior notice and
without a vote, if a consent in writing, setting forth the action
so taken, shall be signed by Members holding not less than the
aggregate number of outstanding Units necessary to authorize or
take such action at a meeting at which all Members entitled to vote
thereon were present and voted.

 

Section
4.11 Telephonic
Meetings.
The Members may hold meetings by means of conference telephone or
similar communications equipment by means of which all Members
participating in the meeting can hear and speak to one
another.

 

Section
4.12 Minutes.
All decisions and resolutions of the Members shall be reported in
the minutes of its meetings, which shall state the date, time and
place of the meeting (or the date of the written consent in lieu of
a meeting), the Members present at the meeting, the resolutions put
to a vote (or the subject of a written consent), and the results of
such voting (or written consent). The minutes of all meetings of
the Members shall be kept at the principal office of the
Company.

 

                     

ARTICLE V

MANAGEMENT

 

Section
5.1 Board
of Managers.

 

(a) Powers.
The business and affairs of the Company shall be managed by and
under the direction of a Board comprised of three (3) Managers to
be elected, designated or appointed by the Members (together the
“Board”).
As long as Petro River Oil Corp. (“Petro”)
is a member of the Company, Petro shall have the right to appoint
one (1) Manager. Except as otherwise set forth in this Agreement,
the Board shall have the power to do any and all acts necessary,
convenient or incidental to or for the furtherance of the purposes
described herein, including all powers, statutory or
otherwise.

 

 

 

 

-6-

 

 

(b) Number;
Appointment. The initial
Managers shall be the following:

 

(i) Jonathan
Rudney (“Rudney”)

(ii) Stephen
Brunner

(iii) Scot
Cohen (Petro representative)

 

Each Manager elected, designated or appointed shall hold office
until his or her successor is elected or until such Manager’s
earlier death, resignation or removal.

 

(c) Removal
and Resignation of Managers. A
Manager may be removed only by Member Approval. Any Manager may
resign from the Board by submitting his or her resignation in
writing to the Chairman or the Chief Executive Officer. Such
resignation shall become effective upon its submission or at any
later time specified in such resignation.

 

(d) Vacancies.
If a vacancy is created in the Board by the death, disability,
retirement, resignation or removal of any Manager, the vacancy
shall be filled by Member Approval.

 

(e) Chairman.
The Chairman shall be a Manager designated by the Board. The
initial Chairman shall be Rudney. The Chairman shall preside at all
meetings of the Board. In the event of the absence or disability of
the Chairman, any other Manager of the Company designated by the
Board shall preside at all meetings of the Board and shall exercise
all other powers and authority of the Chairman. The Chairman shall
have no general executive powers, and he or she shall only have and
exercise such further powers and duties as may be conferred upon,
or assigned to, him or her by the Board.

 

(f) Meetings
of the Board. The Board may
hold meetings, both regular and special, within or outside the
State of Delaware. Except as provided in this paragraph, regularly
scheduled meetings of the Board may be held without additional
notice at such time and at such place as shall from time to time be
determined by the Board. Special meetings of the Board may be
called by the Chairman or the Chief Executive Officer or any
Manager at any time. A special meeting shall be held at such time
and place as may be designated by the person or persons calling the
meeting. The person or persons calling such special meeting shall
cause such notice of the meeting and of its purpose to be given to
each Manager, and such notice shall be given in writing by mail,
email or personal delivery.

 

(g) Quorum;
Acts of the Board. At all
meetings of the Board, the presence of two Managers, one of which
is Rudney or his successor, shall constitute a quorum for the
transaction of business. For all Board voting purposes, each
Manager shall have one vote. If a quorum shall not be present at
any meeting of the Board, the Managers present at such meeting may
adjourn the meeting from time to time, without notice other than an
announcement at the meeting, until a quorum shall be present. Any
action required or permitted to be taken at any meeting of the
Board or of any committee thereof may be taken without a meeting
and without prior notice if all members of the Board or committee,
as the case may be, consent thereto in writing, and the writing or
writings are filed with the minutes of proceedings of the Board or
committee.

 

(h) Committees.
The Board may establish a compensation committee, an audit
committee and such other committees as it may determine from time
to time.

 

(i) Budgets.
Not less than annually, the Board shall approve a budget for the
Company, which will include operating, capital and general and
administrative categories and such other components as are
determined by the Board. An initial capital expenditure budget for
the first twelve (12) months of operation
(“Initial Capex
Budget”) will also be
provided and agreed by the Board on or before the Effective
Date.

 

 

-7-

 

 

(j) Actions
Requiring Unanimous Board Approval. Notwithstanding anything in this Agreement to
the contrary, the Company shall not take any of the actions set
forth below without unanimous Board Approval:

 

(i) subject
to the restrictions set forth under Section 16.10, amending
this Agreement;

 

(ii) effecting
an initial public offering of securities of the Company or its
subsidiaries or registering any securities with the
SEC;

 

(iii) repurchasing,
authorizing or issuing any equity interests (including
equity-linked securities) in the Company, other than Units and
Units pursuant to this Agreement;

 

(iv) incurring
or guarantying any indebtedness or other capital (excluding trade
debt incurred in the ordinary course of business) in excess of
$100,000;

 

(v) permitting
Grapevine Energy, LLC (“Grapevine”)
to incur indebtedness pursuant to that certain Reimbursement
Agreement between the Company and Grapevine dated February 15,
2019;

 

(vi) acquiring
or selling assets outside of the normal course of
business;

 

(vii) entering
into or amending any Material Contract;

 

(viii) loaning
money;

 

(ix) commencing
or settling any material litigation;

 

(x) removing
any of the officers of the Company;

 

(xi) entering
into or amending employment agreements or adopting or amending any
employee benefit, compensation or welfare plans;

 

(xii) entering
into transactions with Affiliates not provided for in this
Agreement;

 

(xiii) materially
modifying any Company budget;

 

(xiv) approving
or entering into any Liquidation Event, except pursuant to a
Drag-Along Transaction;

 

(xv) changing
the Company’s principal line of business or engaging in
activities not consistent with such principal line of
business;

 

(xix) acquiring or divesting
any oil and gas property of a material nature;

 

(xx)
forming any subsidiary of the Company or entering into any
partnership or joint venture (excluding entering into standard form
joint operating agreements in the ordinary course of business);
and

 

(xxi)
effecting any voluntary change in tax classification.

 

 

 

-8-

 

 

(k) Telephonic
Meetings. Members of the Board
may participate in meetings of the Board by means of telephone
conference or similar communications equipment that allows all
persons participating in the meeting to hear and speak to each
other, and such participation in a meeting shall constitute
presence in person at the meeting. If all the participants are
participating by telephone conference or similar communications
equipment, the meeting shall be deemed to be held at the principal
place of business of the Company.

 

(l) Compensation
of Managers; Expenses. Each
Manager shall be entitled to such reasonable compensation as the
Board shall determine for his or her service on the Board, for his
or her attendance at meetings of the Board and any of its
committees, for his or her expenses incident thereto, and for his
or her service to the Company. No such payment shall preclude any
Manager from serving the Company or any Affiliate thereof in any
other capacity and receiving compensation
therefore.

 

(m) Managers
as Agents. To the extent of
their powers set forth in this Agreement, the Managers are agents
of the Company for the purpose of the Company’s business, and
the actions of the Managers taken in accordance with such powers
set forth in this Agreement shall bind the
Company.

 

Section
5.2 Duties
of Managers.
Except as provided in this Agreement, in exercising their rights
and performing their duties under this Agreement, the Managers
shall have fiduciary duties limited to good faith and fair
dealing.

 

Section
5.3 Officers;
Designation. The officers of the Company shall be chosen by
the Board. Any number of offices may be held by the same person.
The initial officers of the Company are listed on
Schedule
D. Each officer shall hold
office until his or her successor is elected and qualified or until
such officer’s earlier death, resignation or removal. Any
officer may resign at any time by submitting his or her resignation
in writing to the Chief Executive Officer or the Chairman. The
Board may fix the compensation of those officers appointed pursuant
to subsections (a) through (d) of this Section 5.3 as the
Board may reasonably deem appropriate, and it may award additional
compensation to any officer, agent or employee of the Company for
any year or years based upon the performance of that person during
any such period, the success of the operations of the Company
during any such period or any other reason deemed appropriate.
Unless the Board shall otherwise direct, the Chief Executive
Officer or his delegate shall fix the compensation of all other
officers, agents or employees of the Company. Any officer, agent or
employee elected or appointed by the Board may be removed at any
time, with or without cause, by the affirmative vote of a majority
of the Board without prejudice to the rights, if any, under
separate agreements between the Company and such person;
provided
that the initial officers set forth
on Schedule D
may be removed only with Board
Approval. All other officers, agents and employees shall hold
office at the pleasure of the appropriate appointing authority and
may be removed at any time, with or without cause, by the authority
that appointed such officer, agent or employee or by the Board. Any
vacancy occurring in any office of the Company shall be filled by
the appropriate appointing authority for such office provided in
this Section 5.3.

 

(a) Chief
Executive Officer. The Board
shall appoint a Chief Executive Officer. The initial Chief
Executive Officer shall be Rudney and he shall have general
executive powers concerning all the operations and business of the
Company. The Chief Executive Officer shall have and exercise such
further powers and duties as may be conferred upon, or assigned to,
him or her by the Board, and he or she may delegate to any other
officer such executive and other powers and duties as he or she
deems advisable. In the event of the absence or disability of the
Chief Executive Officer, the President or any other officer of the
Company designated by the Board shall exercise all other powers and
authority of the Chief Executive Officer.

 

(b) President.
The Board may appoint a President. The President shall have general
executive powers, and he or she shall have and exercise such
further powers and duties as may be conferred upon, or assigned to,
him or her by the Board or the Chief Executive Officer, if
any.

 

(c) Senior
Officers. The Board may appoint
one or more senior officers of the Company, any of whom may be
designated as executive, senior, group or administrative vice
presidents or given any other descriptive titles. Each senior
officer shall have and exercise such powers and duties as may be
conferred upon, or assigned to, him or her by the Board or the
Chief Executive Officer, if any.

 

 

 

-9-

 

 

(d) Secretary;
Assistant Secretaries. The
Board shall appoint a Secretary. The Secretary shall act as
secretary of all meetings of the Board, and he or she shall keep
minutes of all such meetings. He or she shall give such notice of
the meetings as is required by this Agreement. He or she shall be
the custodian of the minute book and all other general company
records. He or she shall be the custodian of the Company seal, if
any, and shall have the power to affix and attest the same, and he
or she may delegate such power to one or more officers, employees
or agents of the Company. He or she shall have and exercise such
further powers and duties as may be conferred upon, or assigned to,
him or her by the Board or the Chief Executive Officer. The Board
or the Chief Executive Officer may appoint one or more Assistant
Secretaries who shall assist the Secretary in the performance of
his or her duties. At the direction of the Secretary or in the
event of his or her absence or disability, an Assistant Secretary
shall perform the duties of the Secretary. Each Assistant Secretary
shall have and exercise such further powers and duties as may be
conferred upon, or assigned to, him or her by the Board, the Chief
Executive Officer or the Secretary.

 

(e) Other
Officers. The Board, the Chief
Executive Officer or the delegate of either of them may appoint or
hire such additional officers of the Company, who may be designated
as vice presidents, assistant vice presidents, officers, assistant
officers, or given any other descriptive titles, and may hire such
additional employees as it, he or she may deem necessary or
desirable to transact the business of the Company, and the Board,
the Chief Executive Officer or such delegate may establish the
conditions of employment of any of the persons mentioned above and
may fix their compensation and dismiss them. Such persons shall,
respectively, have and exercise such powers and duties as pertain
to their several offices or as may be conferred upon, or assigned
to, them by the appropriate appointing
authority.

 

(f) Officers
as Agents. The officers, to the
extent of their powers set forth in this Agreement or otherwise
vested in them by action of the Board not inconsistent with this
Agreement, are agents of the Company for the purpose of the
Company’s business and the actions of the officers taken in
accordance with such powers shall bind the
Company.

 

(g) Duties
of Officers. Each officer shall
have fiduciary duties of loyalty and care analogous to that of
officers of business corporations organized under the General
Corporation Law of the State of Delaware.

 

Section
5.4 Conversion
to Corporation.
Notwithstanding anything to the contrary in this Agreement, upon
the occurrence of a Conversion Event, the Board shall have the
right to direct the Company to become a state law corporation. The
Members agree that if the Board directs the Company to become a
state law corporation they will take all actions necessary to
incorporate the Company under such state law and by such
transactions as the Board may determine. The Board agrees to use
commercially reasonable efforts to accomplish such conversion in a
manner which results in a tax-free event to the Members, or if a
tax-free characterization cannot be so accomplished, to accomplish
such conversion in a manner which minimizes adverse tax
consequences to the Members. In addition, the conversion will be
accomplished so as to result in the issuance to the Members of
capital stock of the resulting corporation of respective classes
and amounts that will replicate the respective economic rights and
priorities of the Members, and have terms and conditions not less
favorable to the Members as the exchanged Interests.

ARTICLE
VI

COMPANY CAPITAL

 

Section
6.1 Capital
Commitments.
In connection with the execution and delivery hereof, each Member
shall make an initial Capital Contribution to the Company in the
amount set forth in Schedule A.

 

Section
6.2 Future
Capital Contributions.
It is not the current intention to require future Capital
Contributions from the Members.

 

 

-10-

 

 

Section
6.3 Additional
Capital Contributions. No additional Capital Contributions will be
required unless suggested by the Board and unanimously agreed to by
the Members. In such event, the Board may make a non-mandatory
Capital Contribution call (the “Additional Capital
Contribution Call”) on
the Members at such time as it is approved by all Members. The
request will be made pro rata based upon each Member’s
respective ownership of Units. In such event, if a Member chooses
not to fund such an Additional Capital Contribution Call (the
“Non-Participating
Member”) then the
participating Members shall be issued additional Units pro rata to
their respective Percentage Interests and such Non-Participating
Member shall be subject to a dilution of its Percentage Interest.
Such additional issuance and dilution shall be based on a fair
market value determination of the Units, determined by the
Board. A Non-Participating
Member shall have no obligation to make any requested Additional
Capital Contribution Call and, other than dilution as described
herein, a Non-Participating Member will not suffer any penalty for
electing not to participate in an Additional Capital Contribution
Call.

 

Section
6.4 Status
of Capital Contributions.
No Member shall receive any interest, salary or drawing with
respect to such Member’s Capital Contributions or Capital
Account or otherwise in such Person’s capacity as a Member
and no Member shall be entitled to the return of any part of its
Capital Contributions, except as otherwise specifically provided in
this Agreement with respect to allocations and
distributions.

 

Section
6.5 Use
of Proceeds.
Initial Capital Contributions shall be used by the Company to
prosecute operations of the Mid North Sea High 3D Survey in the
United Kingdom North Sea.

 

                      

ARTICLE
VII

CAPITAL ACCOUNTS;
ALLOCATIONS

 

Section
7.1 Capital
Accounts. An individual capital account shall be
established and maintained for each Member (each, a
“Capital
Account”).

 

(a) The
Capital Account of each Member shall be maintained in accordance
with the following provisions:

 

(i) To
such Member’s Capital Account there shall be credited the
amount of Capital Contributions made by such Member to the Company,
the amount of liabilities of the Company assumed by such Member or
to which property distributed to such Member pursuant to any
provision of this Agreement was subject, and Profits allocated to
such Member under Section 7.2.

 

(ii) From
such Member’s Capital Account there shall be debited the
amount of cash and the Gross Asset Value of any Company assets
transferred to such Member in a distribution pursuant to any
provision of this Agreement, the amount of liabilities of the
Member assumed by the Company or to which property contributed by
the Member to the Company was subject, and Losses allocated to such
Member under Section 7.2.

 

(b) The
Capital Accounts of all Members shall be determined and maintained
in accordance with the principles of Treasury Regulations
Section 1.704-1(b)(2)(iv) at all times throughout the full
term of the Company and shall be interpreted in a manner consistent
with such Treasury Regulations. Accordingly, the Board is
authorized to make any other adjustments to the Capital Accounts so
that the Capital Accounts and allocations thereto comply with said
Section of the Treasury Regulations; provided
that such adjustments do not have a
material adverse effect on any Member.

 

 

-11-

 

 

Section
7.2 Profits
and Losses.
Except as provided in Section 7.3 below, the Profits and
Losses of the Company for any Fiscal Year (or other period for
which Profits and Losses must be computed) shall be allocated to
the Members in such manner that the allocations to the Members
hereunder are consistent with the economic arrangement regarding
distributions set forth in Section 8.1 hereof. Except as otherwise
provided in this Agreement, Profits and Losses for any taxable
year, or portion thereof, shall be allocated among the Members in a
manner such that the Capital Account of each Member, immediately
after making such allocation, and after taking into account actual
distributions made during such taxable year, or portion thereof,
is, as nearly as possible, equal (proportionately) to (i) the
distributions that would be made to the Members pursuant to Section
14.2(c)(iii) if the Company were dissolved, its affairs wound up
and its assets sold for cash equal to their Gross Asset Value, all
Company liabilities were satisfied and the net assets of the
Company were distributed to the Members in accordance with Section
14.2(c)(iii) immediately after making such allocation, minus (ii)
such Member’s share of “partnership minimum gain”
(as defined in Treasury Regulations Sections 1.704-2(b)(2) and
1.704-2(d)) and “partner nonrecourse debt minimum gain”
(as defined in Treasury Regulation Section 1.704-2(i)(2)), computed
immediately prior to the hypothetical sale of assets.

 

Section
7.3 Special
Allocation Provisions.

 

(a) Regulatory
Allocations.

 

(i) Notwithstanding
any other provision hereof, no loss or deduction shall be allocated
to a Member’s Capital Account if and to the extent allocation
thereof would create or increase a deficit balance in such account
(reduced for adjustments, allocations, and distributions described
in Treasury Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5),
and (6)), and any such loss or deduction shall be allocated instead
to the other Members’ Capital Accounts to the extent of and
in proportion to the respective positive balances in such accounts.
If any Member unexpectedly receives any adjustment, allocation, or
distribution referred to above that creates or increases a deficit
balance in such Member’s Capital Account or such account
otherwise has a deficit balance, items of income and gain will be
allocated to such Member in an amount and manner sufficient to
eliminate such deficit balance as quickly as possible. This
paragraph is intended to constitute a “qualified income
offset” as defined in Treasury Regulations
Section 1.704-1(b)(2)(ii)(d) and shall be interpreted
consistent with that section.

 

(ii) The
Treasury Regulations promulgated under Code Section 704(b)
relating to the minimum gain chargeback, minimum gain chargeback
with respect to partner nonrecourse debt, allocation of nonrecourse
deductions and the allocation of items of deduction, loss or
expenditure relating to partner nonrecourse debt are hereby
incorporated herein by this reference and shall be applied to the
allocation of Company items of income, gain, loss or deduction in
the manner provided in such Treasury Regulations. However, the
Members do not intend that the “obligation to restore
deficit” described in Treasury Regulations
Section 1.704-1(b)(2)(ii)(c) or any successor provision
thereto be incorporated into this Agreement.

 

(b) Curative
Allocations. If Profits or
Losses or any items thereof are allocated to one or more Members
pursuant to Section 7.3, subsequent allocations thereof will
first be made to the Members (subject to Section 7.3) in a
manner designed to result in each Member having a Capital Account
balance equal to what it would have been had the original
allocation pursuant to Section 7.3 not
occurred.

 

(c) Tax
Allocations; Section 704(c) Allocation.

 

(i) Except
as otherwise provided in this Section 7.3(c), each item of
income, gain, loss, deduction and credit shall be allocated among
the Members in the same manner for U.S. federal income tax purposes
as the correlative item of book income, gain, loss, deduction and
credit is allocated pursuant to Section 7.2 and
Section 7.3(a) and (b) above.

 

(ii) Any
item of Company income gain, loss, deduction or credit attributable
to property contributed to the Company, solely for tax purposes,
shall be allocated among the Members in accordance with the
principles set forth in Code Section 704(c) and the Treasury
Regulations promulgated thereunder so as to take account of any
variation between the adjusted basis of such property to the
Company for federal income tax purposes and its fair market value
at the time such property was contributed to the
Company.

 

 

 

-12-

 

 

(iii) In
the event the Gross Asset Value of any Company asset is adjusted
(pursuant to the definition of Gross Asset Value hereof),
subsequent allocations of income, gain, loss, deduction and credit
with respect to such asset shall take account of any variation
between the adjusted basis of such asset for federal income tax
purposes and its Gross Asset Value in the same manner as under Code
Section 704(c) and the Treasury Regulations promulgated
thereunder as in effect at that time such Gross Asset Value is
adjusted.

 

(iv) Any
elections or other decisions relating to allocations pursuant to
this Section 7.3 shall be made by the Board in any manner that
reasonably reflects the purpose and intention of this
Agreement.

 

Section
7.4 Allocation
Rules.

 

(a) In
the event there is a change in the respective Percentage Interests
of Members during the year, the Profits (or Losses) allocated to
the Members for each Fiscal Year during which there is a change in
the respective Percentage Interests of Members during the year
shall be allocated among the Members in proportion to the
Percentage Interests during such Fiscal Year in accordance with
Code Section 706, using any convention permitted by law and
selected by the Board.

 

(b) For
purposes of determining the Profits, Losses or any other items
allocable to any period, Profits, Losses and any such other items
shall be determined on a daily, monthly or other basis, as
determined by the Board using any method that is permissible under
Code Section 706 and the Treasury Regulations
thereunder.

 

(c) Except
as otherwise provided in this Agreement, all items of Company
income, gain, loss, deduction, credit and any other allocations not
otherwise provided for shall be divided among the Members in the
same proportions as they share Profits and Losses for the Fiscal
Year in question.

 

(d) The
Members are aware of the income tax consequences of the allocations
made by this Article VII and hereby agree to be bound by the
provisions of this Article VII in reporting their shares of
Company income, gain, loss, deduction and credit for income tax
purposes.

                              

ARTICLE VIII 

DISTRIBUTIONS

 

Section
8.1 Distributions
of Available Cash.

 

(a) Prior
to dissolution and liquidation of the Company in accordance with
Article XIV and subject to applicable law and any limitations
contained elsewhere in this Agreement, the Board shall cause the
Company to distribute Available Cash at such times and in such
amounts as it may determine. The amounts available for distribution
will be distributed to the Members pro rata according to their
Percentage Interests; provided that any such distribution shall
take into account any amount distributed to a Member pursuant to
Section 8.2 during the same taxable year.

 

(b) All
amounts required to be withheld pursuant to the Code or any other
provision of federal, state, or local tax law shall be treated as
amounts actually distributed to the affected Members for all
purposes under this Agreement.

 

Section
8.2 Mandatory
Tax Distribution.
The Company shall make distributions of Available Cash in amounts
from time to time such that, prior to April 15 of each calendar
year, each Member has received distributions in aggregate amounts
(for the current Fiscal Year and all prior Fiscal Years) which
equal not less than the sum for the immediately preceding Fiscal
Year and for all prior Fiscal Years of (a) the amount of Profits
allocated to such Member for such Fiscal Years, reduced by the
amount of Losses allocated to such Member for such Fiscal Years,
multiplied by (b) 40%. The Company shall use its commercially
reasonable efforts to cause such distributions to be made in a
manner which permits such Member to use the proceeds of such
distributions to make on a timely basis all required estimated
payments of income taxes in respect of the Profits so allocated to
such Member.

 

Section
8.3 Incorrect
Distributions.
To the extent distributions pursuant to this Article VIII were
incorrectly made, as determined by the financial records of the
Company, the recipients shall promptly repay all incorrect payments
and, to the extent the recipients do not repay all incorrect
payments, the Company shall have the right to set off any current
or future sums owing to such recipients against any such
incorrectly paid amount.

 

 

 

 

Section
8.4 Limitation
on Distributions.

 

(a) No
distribution shall be made to a Member pursuant to this
Article VIII to the extent that such distribution would: (i)
cause the Company to be insolvent, or (ii) render the Member liable
for a return of such distribution under applicable
law.

 

(b) All
such distributions shall be made only to the Persons who, according
to the books and records of the Company, are Members on the actual
date of distribution. Neither the Company nor any Manager shall
incur any liability for making distributions in accordance with
this Article VIII.

 

Section
8.5 Offset.
Any distribution otherwise payable to a Member may be withheld and
offset against any amounts owed by such Member to the Company and
applied or paid against the amounts so owed. Any such offset
amounts will be deemed to have been distributed to such
Member.

 

Section
8.6 Withholding
Taxes.
If the Company is required to withhold any portion of distributions
or allocations to a Member by applicable U.S. federal, state, local
and foreign tax laws, the Company may withhold such amounts and
make such payments to taxing authorities as are necessary to ensure
compliance with such tax laws. If the Company makes any payment to
a taxing authority in respect of a Member hereunder that is not
withheld from actual distributions to the Member, then the Board
may, at its option, (a) require the Member to reimburse the Company
for such withholding; or (b) reduce any subsequent distributions to
such Member by the amount of such withholding. The obligation of a
Member to reimburse the Company for taxes that were required to be
withheld shall continue after such Member Transfers its Units. Each
Member agrees to furnish the Company with any representations and
forms as shall reasonably be requested by the Company to assist it
in determining the extent of, and in fulfilling, any withholding
obligations it may have.

 

Section
8.7 Distributions
in Kind. A
Member shall have no right to demand and receive any distribution
from the Company in any form other than money. Except as otherwise
provided in this Agreement, each Member actually receiving amounts
pursuant to a specific distribution by the Company shall receive a
pro rata share of each item of cash or property of which such
distribution is constituted (based upon such Member’s share
under this Agreement of the total amount to be included in such
distribution); provided, however, that the Board may vary the
apportionment among the Members of an in-kind distribution as
necessary to avoid the distribution of fractional interests in
securities or other property. Securities or other property
distributed pursuant to this Section 8.7 shall be subject to
such conditions and restrictions as shall be determined by the
Board to be required or appropriate under applicable law or
contractual obligations to which the Company is subject. The
Company shall not, under any provision of this Agreement,
distribute notes or other securities in violation of any securities
or other law.

                     

ARTICLE IX

RECORDS AND
REPORTS

 

Section
9.1 Books
and Records.
The Company shall keep or cause to be kept complete and accurate
books of account and records with respect to the Company’s
business. Each Member and its duly authorized representatives shall
have the right to examine the Company books, records and documents
during normal business hours in a manner determined by the Chief
Executive Officer not to unreasonably interfere with the business
of the Company or the work of its employees; provided, that the
Company, at the discretion of the Board or the Chief Executive
Officer, may keep confidential from the Members, for such period of
time as the Board or the Chief Executive Officer deems reasonable,
any information which the Board or the Chief Executive Officer
reasonably believes to be in the nature of trade secrets or which
the Company is required by law or agreement with a third party to
keep confidential.

 

Section
9.2 Fiscal
Year, Fiscal Quarter. The “Fiscal
Year” of the Company
shall be the calendar year, and each calendar quarter shall be a
fiscal quarter, unless otherwise determined by the
Board.

 

Section
9.3 Minutes.
The proceedings of all meetings of the Members, the Board and any
committee of the Board shall be recorded in the appropriate minute
books provided for this purpose. The minutes of each meeting shall
be signed by the Secretary or other person acting as secretary of
the meeting.

 

 

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Section
9.4 Reports
to Members.

 

(a) The
Company shall provide to all the Members the
following:

 

(i) consolidated
annual financial statements (including an income statement, balance
sheet, cash flow statement and statement of Members’ equity)
prepared in accordance with GAAP, within 120 days of year-end or
such later date agreed to by the Board;

 

(ii) consolidated
annual budget, projected by month, no later than 30 days prior to
the beginning of the Company’s fiscal year; and

 

(iii) customary
notices of any material Company events (e.g.
litigation).

 

(b) Concurrently
with the preparation of tax returns, the Company shall deliver to
each Member and, to the extent necessary, each former Member, a
report setting forth in sufficient detail and in a form prescribed
by applicable tax laws such information relating to the Company and
its activities as shall enable such Member or former Member to
prepare its federal, state, and local income tax returns in
accordance with the laws, rules, and regulations then
prevailing.

ARTICLE X

TAX MATTERS

 

Tax Matters Member; Partnership Representative.

 

(a)            

Designation. Jonathan Rudney is
hereby designated as the Company’s “Partnership
Representative”.

 

(i)
“Partnership Representative” (such Person so
designated, the “PR”) means (i) for
taxable years (or any portion thereof) prior to the effective date
of the Bipartisan Budget Act of 2015 (Pub. L. 114-74)
(“BBA”), the Member
designated by the Manager(s) to serve as the “tax matters
partner” (as defined in section 6231(a)(7) of the Code (as in
effect before amendment by the BBA)), and (ii) for taxable years
(or any portion thereof) for which the provisions of the BBA are
effective, the Person designated by the Manager to serve as the
“partnership representative” (as defined in section
6223(a) of the Code, as amended by the BBA).

 

(ii)
The PR shall continue to serve as PR until the earliest to occur of
the following events: (a) the PR is no longer willing or able to
serve; (b) the PR no longer owns Units, provided that the PR owned
Units as of the time of their appointment; or (c) the
Manager votes to remove the PR. Upon the occurrence of (a), (b), or
(c) above, the Manager shall select a new PR.

 

(b)
Authority.

 

(i) For
taxable years before the effective date of the BBA, the PR shall
have all of the rights, duties, powers and obligations provided for
in sections 6221 through 6232 of the Code (as in effect before
amendment by the BBA) with respect to the Company, subject, in all
cases, to the consent of the Manager.

 

(ii)
For taxable years for which the provisions of the BBA are (or may
be, by election of the PR) effective, all decisions regarding
elections under section 6221(b) of the Code, as amended by the BBA,
shall be made by the PR, subject, in all cases, to the consent of
the Manager. Notwithstanding the Company’s dissolution,
liquidation, or cessation of existence, the PR shall continue to
serve in its capacity as the PR, and provide all services set forth
herein, until the statute of limitations on assessment has expired
with respect to all taxable years of the Company or the
Members.

 

 

 

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(iii)
The PR intends to make an election under Section 6226 of the Code,
as amended by the BBA, to the extent the PR is legally able to do
so or, if not permissible, to take all actions so that, to the
greatest extent possible, no Member shall bear liability for Taxes
imposed on the Company under Section 6225 of the Code, as amended
by the BBA, that such Member would not have been responsible for if
the law in effect on the date hereof continued to remain effective.
Notwithstanding the foregoing, the Manager may, in its sole
discretion, apportion any Taxes imposed on the Company pursuant to
Section 6225 of the Code, as amended by the BBA, among the Members.
The Manager may withhold any amounts apportioned to a Member from
distributions to the Member or require such Member to reimburse the
Company for such amounts. If any Tax is so apportioned to a Member,
such Member’s obligations to the Company with respect to such
Tax and the Company’s rights against such Member shall apply
jointly and severally to such Member and any direct or indirect
transferee of or successor to such Member’s
interest.

 

(iv)
The PR shall be authorized on behalf of the Company to take all
such actions as are necessary to fulfill the PR’s
responsibility to act on behalf of the Company pursuant to Section
6223 of the Code, which actions shall include, but not be limited
to, the authority to meet with representatives of the Internal
Revenue Service (or any other governmental taxing authority) in any
audit or examination (an “audit”) involving the
Company’s income tax returns and the income tax liability of
the Members; agreeing or refusing to extend any applicable statute
of limitations; to resolve any audit of the Company by settlement
and to bind all Members to any such resolution or settlement; to
decline to challenge or contest any or all items raised by the
Internal Revenue Service in any such audit or examination; to make
any decisions regarding payment methods set forth under applicable
Sections of the Code including Sections 6225 and 6226; to enter
into a closing agreement with the Internal Revenue Service (or any
other governmental taxing authority) with respect to any or all
Company items subject of an audit; determine to litigate one or
more proposed adjustments to any Company items subject of an audit
and to select the forum for such litigation to take place; and to
retain appropriate legal counsel, accountants, and/or other service
providers or experts to assist the PR with respect to any audit,
including entering into engagement agreements with such individuals
or entities on behalf of the Company.

 

(v)
Each Member shall provide such cooperation and assistance,
including executing and filing forms or other statements and
providing information about the Member, as is reasonably requested
by the PR to enable the Company to satisfy any applicable tax
reporting or compliance requirements, to make any tax election or
to qualify for an exception from or reduced rate of tax or other
tax benefit or be relieved of liability for any tax.

 

(vi)
Notice to Members.
The PR shall provide notice to Members within a reasonable time
period upon receiving notice of the commencement of any material
audit or examination and thereafter, shall periodically provide
notice to the Members of the status of such audit or examination,
the subject matter thereof, and any resolution with respect to
items contested or resolved pursuant to the audit or
examination.

 

(vii)
Reimbursement. In
furtherance of the duties of the PR described in this Agreement,
the PR shall be reimbursed by the Company for all expenses, costs,
and liabilities expended or incurred by the PR.

 

(viii)
Indemnification.
The Company shall indemnify and hold harmless the PR for all
expenses, including legal and accounting fees, claims, liabilities,
losses, and damages incurred in connection with any administrative
or judicial proceeding with respect to the tax liability of the
Members pertaining to the Company. The payment of all such expenses
shall be made before any distributions are made by the Company to
the Members. No Member shall have any obligation to provide funds
for such purpose. The taking of any action and the incurring of any
expense by the PR in connection with any such proceeding, except to
the extent required by law, is a matter in the sole discretion of
the PR and the provisions on limitations of liability of
Members.

 

 

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ARTICLE XI 

LIMITED
LIABILITY AND INDEMNIFICATION

 

Section
11.1 Limited
Liability.
Except as otherwise provided by the LLC Act, the debts, obligations
and liabilities of the Company, whether arising in contract, tort
or otherwise, shall be solely the debts, obligations and
liabilities of the Company, and no Covered Person shall be
obligated personally for any such debt, obligation or liability of
the Company solely by reason of being a Covered
Person.

 

Section
11.2 Indemnification.
To the fullest extent permitted by applicable law, the Company
shall indemnify and hold harmless any Covered Person, and shall
have authority to indemnify and hold harmless any other Person, or
the estate of any such Covered Person or other Person, from and
against any and all claims and demands whatsoever arising in the
course of such Covered Person’s or other Person’s
actions on behalf of the Company, or such Covered Person or other
Person’s status in relation to the Company; provided,
however, that no indemnification may be made to or on behalf of any
Covered Person or other Person if a judgment or other final
adjudication adverse to such Covered Person or other Person
establishes: (a) that his or her acts were committed in bad faith
or were the result of deliberate dishonesty and were material to
the cause of action so adjudicated, or (b) that he or she
personally gained in fact a financial profit or other advantage to
which he or she was not legally entitled. Neither the amendment nor
repeal of this Section 11.2 shall eliminate or reduce the
effect of this Section 11.2 in respect to any matter
occurring, or any cause of action suit or claim accruing or
arising, prior to such amendment or repeal. This Section 11.2
shall also be applicable to any Covered Person or other Person that
is not a natural person. Any indemnity under this Section 11.2
shall be provided out of and to the extent of Company assets only,
and no Member shall have any personal liability on account
hereof.

 

Section
11.3 Expenses.
To the fullest extent permitted by applicable law, the Company
shall reimburse reasonable expenses (including reasonable legal
fees) incurred by a Covered Person (and shall be authorized to
reimburse such expenses of any other Person entitled to
indemnification under Section 11.2) in defending any claim,
demand, action, suit or proceeding prior to the final disposition
of such claim, demand, action, suit or proceeding upon receipt by
the Company of an undertaking by or on behalf of the Covered Person
to repay such amount if it shall be determined that the Covered
Person is not entitled to be indemnified as authorized in
Section 11.2.

 

Section
11.4 Insurance.
The Company may purchase and maintain insurance, to the extent and
in such amounts as the Board shall deem reasonable or appropriate,
on behalf of Covered Persons and such other Persons as the Board
shall determine, against any liability that may be asserted against
or expenses that may be incurred by any such Person in connection
with the activities of the Company or such indemnities, regardless
of whether the Company would have the power to indemnify such
Person against such liability under the provisions of this
Agreement.

 

ARTICLE
XII

RESTRICTIONS ON TRANSFERS; PURCHASE
RIGHTS

 

Section
12.1 Transfers
Generally; Reasonableness of Restrictions.

 

(a) Notwithstanding
anything to the contrary contained herein, no Member may Transfer
any Units pursuant to this Article XII without prior Board
Approval; provided that, subject to Section 12.1(b), any Member may
Transfer its Units to the following without Board Approval and
Member Approval and without compliance with Section
12.3:

 

(i) such
Member’s spouse, parent, siblings, descendants (including
adoptive relationships and stepchildren) and the spouses of each
such natural persons (collectively, “Family
Members”);

 

(ii) a
trust under which the distribution of Units may be made only to
such Member and/or any Family Member of such Member;

 

 

 

-16-

 

 

(iii) a
charitable remainder trust, the income from which will be paid to
such Member during his life;

 

(iv) a
corporation, partnership or limited liability company, the
stockholders, partners or members of which are only such Member
and/or Family Members of such Member,

 

(v) by
will or by the laws of intestate succession, to such Member’s
executors, administrators, testamentary trustees, legatees or
beneficiaries; or

 

(vi) to
any Person in connection with a Drag-Along Transaction, Liquidation
Event, Tag-Along Transaction; otherwise in accordance with the
provisions of this Agreement.

 

(b) To
be valid, any Transfer of Units or interest therein must satisfy
the following conditions:

 

(i) the
Transfer must be in compliance with the terms of this
Agreement;

 

(ii) the
transferor must deliver to the Company written evidence of a valid
Transfer under the terms of this Agreement and a written agreement
of the transferee (other than an existing Member) to join and be
bound by the terms of this Agreement;

 

(iii) the
Transfer must comply with applicable federal and state securities
laws; and

 

(iv) if
the Transfer is the kind described in Section 12.1(a)(i) through
(v), the transferring Member shall agree to remain bound by Section
15.1.

 

(c) Each
Member hereby acknowledges the reasonableness of the restrictions
in this Article XII in view of the purposes of the Company and
the relationship of the Members. The Transfer of any Units in
violation of the prohibition contained in this Article XII
shall be deemed invalid, null and void, and of no force or effect.
Any Person to whom Units are attempted to be Transferred in
violation of this Article XII shall not be entitled to become
a Member, to vote on matters coming before the Members, participate
in the management of the Company, act as an agent of the Company,
receive distributions from the Company, or have any other rights in
or with respect to the Units.

 

Section
12.2 Effect
of Transfer; Admission as a Member. Upon the Transfer of any Units in accordance
with the terms of this Agreement, the transferee of the Units (the
“Permitted
Transferee”) shall become
a Member. Any Member who shall have Transferred all of his/her/its
Units shall automatically cease to be a Member.

 

Section
12.3 Right
of First Refusal.

 

(a) If
at any time a Member (an “Offering
Member”) desires to
voluntarily Transfer all or any portion of such Member’s
Units (the “Offered
Units”) to a Third Party
Transferee (excluding a Transfer permitted by Section 12.1(a)(i)
through (vi)), the Offering Member shall deliver to each Member a
written notice (the “Offer
Notice”) specifying all
of the material terms of the proposed sale (the
“Offer”),
including the purchase price (the “Unit Purchase
Price”) for which the
Offering Member proposes to sell the Offered Units, the identity of
the proposed Third Party Transferee, and any copies of any
agreement or documents to be executed or delivered in connection
with the proposed sale, if available at that
time.

 

 

-17-

 

 

(b)  Each
Member shall have thirty (30) days from the date the Offer Notice
is given in which to notify the Offering Member whether it elects
to purchase all of its pro rata share of the Offered Units upon the
terms and conditions contained in the Offer Notice;
provided,
that no Member shall be required to pay consideration other than
cash and if the Offer Notice provides for non-cash consideration,
each Member shall have the option to pay cash equal to the fair
market value of the non-cash consideration set forth in the Offer
Notice. If any Member elects to purchase, such election shall be
irrevocable and the closing, including payment in full, shall occur
not later than thirty (30) days after the election notice is given
at the Company’s principal office or at a place otherwise
agreed upon by the parties to the transaction.

 

(c) After
the completion of the procedures in Section 12.3(a) and (b),
if the Members do not elect to purchase, in the aggregate, all of
the Offered Units within the 30-day period described in
Section 12.3(b), the Offering Member shall have the right
during the ensuing 60-day period to sell to a Third Party
Transferee, on terms no more favorable to the Third Party
Transferee than the terms set forth in the Offer Notice, the
remaining Offered Units. If the proposed sale is not completed
within the ensuing 60-day period prescribed in this
Section 12.3(c), the Offering Member shall be required, before
Transferring the Offered Units, to re-offer the Units or interests
to the Company as set forth in Section 12.3(a) and
(b).

 

(d) Upon
consummation of any sale by an Offering Member to a Third Party
Transferee as permitted by this Section 12.3, the Offering
Member shall promptly notify the Company as to the circumstances,
including the date of the sale and the Unit Purchase Price, of such
sale.

 

Section
12.4 Drag-Along
Transaction

 

(a)
If any Member or Members holding, individually or
in the aggregate, at least fifty percent (50%) of the then issued
and outstanding Units (“Dragging
Member”), desires or
desire to Transfer all of its or their Units to a Third Party
Transferee, then the Dragging Member may demand that all other
holders of Units, other than the Dragging Member, sell their Units
along with the Dragging Member (“Drag-Along
Transaction”). The
Company shall send a notice to each Member setting forth the terms
and conditions of any Drag-Along Transaction and each Member hereby
agrees that it shall sell all of its respective Units to such Third
Party Transferee on the terms and conditions set forth in the
notice of the Drag-Along Transaction, and such other terms as are
customary for similar transactions, including representations and
warranties with respect to title to the Units, free and clear of
Liens, and other matters and indemnification with respect thereto.
The terms to be received by the non-Dragging Members will be no
less favorable than those received by the Dragging
Members.

 

Section
12.5 Tag-Along
Transaction. If any
Member or Members holding, individually or in the aggregate, at
least thirty three and one third percent (33 1/3%) of the then
issued and outstanding Units, desires or desire to Transfer any of
its or their Units to a Third Party Transferee, then the other
Members shall have the option exercisable by written notice given
to the transferor and the transferee to include in the sale certain
of its Units in place of the Units held by the transferor that
would otherwise be sold to the transferee
(“Tag-Along
Transaction”). Any Member
who exercises this option shall have the right to include its Units
on a proportionate basis.

ARTICLE
XIII 

REPRESENTATIONS AND
WARRANTIES

 

Section
13.1 Representations
and Warranties of the Members.
Each Member represents and warrants to the Company and to each
other Member as follows:

 

(a) Such
Member is an “accredited Member” as defined in
Regulation D of the Securities Act.

 

(b) Such
Member has been provided an opportunity to ask questions regarding
this investment of, and receive answers from, representatives of
the Company. Such Member has made its own decision to invest in the
Company and has not relied on any advice regarding its decision
from the Company, or any Officer or other representative of the
Company. Such Member acknowledges that it has not considered any
estimates, projections, or other forward-looking statements as to
the future performance or results of operations of the Company that
have been provided to it as facts, that it is not relying upon them
as guarantees of future performance or results of operations of the
Company, and that the Company’s actual results may differ
materially from any such estimates, projections, and
forward-looking statements.

 

 

 

-18-

 

 

(c) Such
Member has such knowledge and experience in financial affairs that
he/she/it is capable of evaluating the merits and risks of
investing in the Company. Such Member’s financial position is
such that he/she/it can afford the economic risk of holding its
interest in the Company for an indefinite period of time, and it
can afford to suffer the complete loss of its
investment.

 

(d) Such
Member is acquiring an interest in the Company for its own account
and not with a view to or for distribution or resale to any other
Person. Such Member acknowledges that the offer and sale of an
interest in the Company to it has not been registered under the
Securities Act or any state securities law, and it cannot resell
its Units unless the sale is registered under the Securities Act
and applicable state law or an exemption from registration is
available.

 

Section
13.2 Representations
and Warranties of the Company.
The Company represents and warrants to each Member as
follows:

 

(a) The
Company is a limited liability company validly existing and in good
standing under the laws of the State of Delaware.

 

(b) There
is no legal proceeding pending or, to the knowledge of the Company,
threatened, against or involving the Company or any of its assets,
and there is no outstanding judgment, decree, injunction, or order
of any governmental authority applicable to the
Company.

 

 ARTICLE
XIV

TERMINATION AND LIQUIDATION OF THE
COMPANY

 

Section
14.1 Events
of Termination. The Company shall be dissolved and its affairs
wound up pursuant to Section 14.2 upon the first to occur of
any of the following (each, an “Event of
Termination”):

 

(a) the
unanimous vote or written consent of the Board and Member
Approval;

 

(b) the
sale or other disposition of substantially all of the assets of the
Company; or

 

(c) the
entry of a decree of dissolution pursuant to the LLC
Act.

 

Section
14.2 Winding-Up.
Upon the occurrence of an Event of Termination, the Company affairs
shall be wound up as follows:

 

(a) The
Board shall cause to be prepared a statement of the assets and
liabilities of the Company as of the date of
dissolution.

 

(b) The
assets and properties of the Company shall be liquidated as
promptly as possible, and receivables collected, all in an orderly
and business-like manner so as not to involve undue
sacrifice.

 

(c) The
proceeds of liquidation and all other assets and properties of the
Company shall be applied and distributed as follows in the
following order of priority:

 

(i) first,
to the payment of the debts and liabilities of the Company and the
expenses of liquidation;

 

(ii) second,
to establish any reserves as the Board, in accordance with sound
business judgment, deem reasonably necessary for any contingent or
unforeseen liabilities or obligations of the Company, which
reserves may be paid over to an escrow agent selected by it to be
held by such agent for the purpose of (A) distributing such
reserves in payment of the aforementioned contingencies and (B)
upon the expiration of such period as the Board may deem advisable,
distributing the balance thereof in the manner provided in this
Section 14.2(c); and

 

 

 

-19-

 

 

(iii) third,
to the Members in accordance with Section 8.1(a).

 

(d) Nothing
contained in this Section 14.2 shall be construed to limit the
ability of the Members to attempt to sell the Company’s
business and assets as a going concern following the occurrence of
an Event of Termination; provided
that the proceeds of such sale shall
be applied and distributed as provided in Section 14.2(c);
and provided,
further,
that if such a sale cannot be effected within six (6) months after
the occurrence of an Event of Termination (or such longer or
shorter period as the Members may agree) then the Board shall
promptly proceed to wind-up the affairs of the Company as provided
above in this Section 14.2.

 

(e) Upon
the winding-up of the Company, the Members shall look solely to the
assets of the Company for the return of their Capital
Contributions.

ARTICLE XV

COVENANTS

 

Section
15.1 Confidentiality.
Each Member agrees, as set forth below, with respect to any
information pertaining to the Company or its business or Affiliates
that is provided to such Member pursuant to this Agreement or
otherwise (collectively, “Confidential
Matters”), to treat as
confidential all such information, together with any analyses,
studies or other documents or records prepared by such Member, its
Affiliates, or any representative or other Person acting on behalf
of such Member (collectively, its “Authorized
Representatives”), which
contain or otherwise reflect or are generated from Confidential
Matters, and will not, and will not permit any of its Authorized
Representatives to, disclose any Confidential Matter, provided that
any Member (or its Authorized Representative) may disclose any such
information: (a) as has become generally available to the public;
(b) as may be required or appropriate in any report, statement or
testimony submitted to any governmental authority having or
claiming to have jurisdiction over such Member (or its Authorized
Representative) but only that portion of the data and information
which, in the written opinion of counsel for such Member or
Authorized Representative is required or would be required to be
furnished to avoid liability for contempt or the imposition of any
other material judicial or governmental penalty or censure; (c) as
may be required or appropriate in response to any summons or
subpoena or in connection with any litigation; or (d) as to which
the Board has consented in writing. Notwithstanding the foregoing,
the parties (and each employee, representative, or other agent of
the parties) may disclose to any and all persons, without
limitation of any kind, the tax treatment and any facts that may be
relevant to the tax structure of the transaction, provided,
however, that no party (and no employee, representative, or other
agent thereof) shall disclose any other information that is not
relevant to understanding the tax treatment and tax structure of
the transaction (including the identity of any party and any
information that could lead another to determine the identity of
any party), or any other information to the extent that such
disclosure could reasonably result in a violation of any applicable
securities law.

 

Section
15.2 Competition.
Excepting oil and natural gas
exploration, development, production and operation activities
within specific prospect areas in which the Company is operating,
in which all Members hereby agree they are prohibited from
participating for their own account, either directly or indirectly,
without the written Board Approval, any Member may engage in other
businesses, including businesses the nature of which are the same
as, similar to or competitive with the business of the Company
outside the specific prospect areas in which the Company is
operating, without any duty or obligation to offer any business
opportunity to the Company or any Member or to account to the
Company or any of the Members regarding the business opportunity or
the profits derived from such business
opportunity.

 

 

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ARTICLE XVI 

MISCELLANEOUS

 

Section
16.1 Notices.
All notices provided for in this Agreement shall be in writing,
duly signed by the party giving such notice, and shall be hand
delivered, faxed or mailed by registered or certified mail or
overnight courier service, if given to any Member, to the person
and at the address (and, if applicable, fax number) set forth
opposite its name on Schedule A, or at such other address (and, if
applicable, email address) as such Member may hereafter designate
by written notice to the Company. All such notices shall be deemed
to have been given when received. For notice purposes, the address
of the Company shall be 2458 167th
Street, Fairfield, IA 52556,
Attn: Jonathan Rudney, or to such other address as the Company
may hereafter designate by written notice to the Members. The email
address for Company shall be rudney@lisco.com

 

Section
16.2 Failure
to Pursue Remedies.
The failure of any party to seek redress for violation of, or to
insist upon the strict performance of, any provision of this
Agreement shall not prevent a subsequent act, which would have
originally constituted a violation, from having the effect of an
original violation.

 

Section
16.3 Binding
Effect; Specific Performances.

 

(a) This
Agreement constitutes a legal, valid and binding agreement of the
Members and the Company and is enforceable against the Members and
the Company in accordance with its terms. This Agreement shall be
binding upon and inure to the benefit of all of the parties and, to
the extent permitted by this Agreement, their successors, legal
representatives and assigns.

 

(b) The
parties recognize that irreparable injury will result from a breach
of any provision of this Agreement and that money damages will be
inadequate to fully remedy the injury. Accordingly, in the event of
a breach or threatened breach of one or more of the provisions of
this Agreement, any party who may be injured (in addition to any
other remedies which may be available to that party) shall be
entitled to one or more preliminary or permanent orders, without
being required to post a bond or other security (i) restraining and
enjoining any act which would constitute a breach or (ii)
compelling the performance of any obligation which, if not
performed, would constitute a breach.

 

Section
16.4 Interpretation.

(a) All
Article, Section, paragraph, clause, Exhibit or Schedule references
not attributed to a particular document shall be references to such
parts of this Agreement.

 

(b) Whenever
the words “include,” “includes” or
“including” are used in this Agreement, they shall be
deemed to be followed by the words “without
limitation.” The words “hereof,”
“herein” and “hereunder” and words of
similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this
Agreement.

 

(c) All
terms defined in this Agreement shall have the defined meanings
when used in any certificate or other document made or delivered
pursuant hereto unless otherwise defined therein. The definitions
contained in this Agreement are applicable to the singular as well
as the plural forms of such terms and to the masculine as well as
to the feminine and neuter genders of such term.

 

(d) Any
agreement, instrument or statute defined or referred to herein or
in any agreement or instrument that is referred to herein means
such agreement, instrument or statute as from time to time amended,
modified or supplemented, including (in the case of agreements or
instruments) by waiver or consent in writing and (in the case of
statutes) by succession of comparable successor statutes and
references to all attachments thereto and instruments incorporated
therein. References to a Person are also to its permitted
successors and assigns.

 

 

-21-

 

 

Section
16.5 Severability.
Every provision of this Agreement is intended to be severable. If
any term or provision hereof is illegal, invalid or unenforceable
for any reason whatsoever, that term or provision will be enforced
to the maximum extent permissible so as to effect the intent of the
parties, and such illegality, invalidity or unenforceability shall
not affect the validity or legality of the remainder of this
Agreement. If necessary to effect the intent of the parties, the
Members will negotiate in good faith to amend this Agreement to
replace the unenforceable language with enforceable language which
as closely as possible reflects such intent.

 

Section
16.6 Counterparts.
This Agreement may be executed in any number of counterparts with
the same effect as if all parties hereto had signed the same
document. All counterparts shall be construed together and shall
constitute one instrument.

 

Section
16.7 Governing
Law.
This Agreement and the rights of the parties hereunder shall be
interpreted in accordance with the laws of the State of Delaware,
and all rights and remedies shall be governed by such laws without
regard to principles of conflict of laws that would result in the
application of the law of any other jurisdiction.

 

Section
16.8 Jurisdiction
and Venue.
Any suit involving any dispute or matter arising under this
Agreement may only be brought in the appropriate United States
District Court in Delaware or any Delaware State Court having
jurisdiction over the subject matter of the dispute or matter. All
Members hereby consent to the exercise of personal jurisdiction by
any such court with respect to any such proceeding.

 

Section
16.9 Waiver
of Jury Trial.
Each party hereto waives, to the fullest extent permitted by
applicable law, any right it may have to a trial by jury in respect
of any action, suit or proceeding arising out of or relating to
this Agreement.

 

Section
16.10 Amendments.
Subject to Section 6.6(a), any amendment to this Agreement
shall be adopted and be effective as an amendment hereto with Board
Approval and Member Approval; provided that:

 

(a) any
amendment that would change the rights or obligations of any holder
in its capacity as a holder of a specific class of Units in a
disproportionate and adverse manner (other than in a
de minimis
respect) as compared to other holders
holding the same class of Units shall also require the consent of
the holders of the Units so disproportionately and adversely
affected;

 

(b) other
than in connection with the creation or issuance of a new class of
Units, any amendment that would change the rights or obligations of
a particular class of Units in a manner that would be reasonably
likely to disproportionately and adversely affect the economic
rights of such class of Units as compared to the rights and
obligations specific to any other class of Units shall also require
the consent of the holders of at least a majority of the class of
Units so disproportionately and adversely effected;

 

(c) any
amendment that would increase a Member’s Required Capital
Contribution or, unless required by applicable law, impose a
material obligation on a Member shall also require the consent of
such Member; and

 

(d) any
amendment that would adversely affect a Member’s right to
designate any Manager or the ability of any such Manager to vote in
connection with such position shall require the consent of such
Member.

 

Section
16.11 Entire
Agreement.
This Agreement is the entire Agreement among the parties hereto, or
between any party hereto and the Company, with respect to the
matters covered hereby and supersedes all prior or concurrent
agreements regarding such matters, whether written or
oral.

 

Section
16.12 No
Third-Party Beneficiaries.
There shall be no third-party beneficiaries of this Agreement other
than as contemplated by Article XI.

 

 

 

 

-22-

 

 

IN
WITNESS WHEREOF, the undersigned, intending to be legally bound
hereby, have duly executed this Limited Liability Company Agreement
as of the date first set forth above.

 

  

 

HORIZON ENERGY ACQUISITION, LLC 

 

By: /s/ Jonathan B.
Rudney

      Jonathan B. Rudney

      Chief Executive
Officer

 

 

MEMBERS:

 

Petro River Oil Corporation 

 

By: /s/ Scot
Cohen

       Scot Cohen

       Executive
Chairman

   

 

 

 

-23-

 

 

SCHEDULE A

Members

 

 

	
 Name

	
   Capital Contribution               
Number of
Units                       
Percentage Interest

  

 

 

 

 

 

-24-

 

 

SCHEDULE B

Definitions

 

 

A.           Definitions.

 

When
used in this Agreement, the following terms not otherwise defined
herein have the following meanings:

 

“AFE” means an authority for expenditure,
approved by the Board, based on a detailed cost estimate prepared
for any oil and gas operation estimated to cost $50,000 or
greater.

 

“Affiliate”
means, with respect to any Person, any other Person directly or
indirectly Controlling or Controlled by or under direct or indirect
common Control with such Person.

 

“Available
Cash” means, with respect
to any fiscal period, the excess of all cash receipts of the
Company from operations, plus amounts released from reserves plus,
in the discretion of the Board, proceeds of sales, non-recourse
financings or re-financings, and any and all other sources, over
the sum of the following amounts:

 

(a)           cash
disbursements for other items which are customarily considered to
be “operating expenses” including insurance,
administration, legal expenses, utilities, equipment repairs and
maintenance, accounting, statistical or bookkeeping services and
any and all employee compensation and benefits, sales or brokerage
commissions, leasing commissions, management fees and expenses,
advertising and promotion;

 

(b)           payments
of interest, principal and premium under any indebtedness of the
Company, including amounts due any Member;

 

(c)           payments
made for capital construction, acquisitions, alterations or
improvements; and

 

(d)           reasonable
amounts set aside as reserves by the Board for working capital,
contingent liabilities, or any of the expenditures described in
clauses (a), (b) and (c) above.

 

“Bankruptcy”
with respect to any Person, means (a) making an assignment for the
benefit of creditors, (b) filing a voluntary petition in
bankruptcy, (c) becoming the subject of an order for relief or
being declared insolvent in any federal or state bankruptcy or
insolvency proceeding (unless such order is dismissed within ninety
(90) days following entry), (d) filing a petition or answer seeking
for itself any reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under any
statute, law or regulation, (e) filing an answer or other pleading
admitting or failing to contest the material allegation of a
petition filed against it in any proceeding similar in nature to
those described in the preceding clause (d), or otherwise failing
to obtain dismissal of such petition within one hundred twenty days
(120) following filing or (f) seeking, consenting to, or
acquiescing in, the appointment of a trustee, receiver or
liquidator of all or any substantial part of its
properties.

 

“Board
Approval” means the
affirmative vote of Managers having a majority of the votes present
by person at a meeting, with one Manager being Rudney or
Rudney’s successor.

 

“Capital
Contribution” means any
contribution by a Member to the capital of the Company in
accordance with this Agreement, which value shall be equal to the
sum of the amount of any cash so contributed.

 

“Code”
means the Internal Revenue Code of 1986, as
amended.

 

 

 

-25-

 

 

“Control”
means the possession, directly or indirectly, or the power to
direct or cause the direction of the management or policies of a
Person, whether through the ownership of voting securities or
general partnership or managing member interests, by contract or
otherwise. “Controlling” and “Controlled”
shall have correlative meanings. Without limiting the generality of
the foregoing, a Person shall be deemed to Control any other Person
in which it owns, directly or indirectly, a majority of the
ownership interests.

 

“Conversion
Event” means and includes
any of the following:

 

(a)           The
Company enters into an agreement with a Person to effect a
transaction and as a condition thereto such person requires that
the Company be a state law corporation or an entity that is taxed
as a corporation for federal income tax purposes;
or

 

(b)           a
change in federal or Delaware law, regulation or rules, or in the
application of those laws, regulations or rules, by a court or
regulatory agency to the Company, that materially limits the
ability of the Company to be taxed as a partnership for federal
income tax purposes.

 

“Covered
Person” means any Member,
Manager or officer of the Company.

 

“Damages”
means all damages, losses, liabilities, costs and expenses
(including reasonable attorneys’ fees and reasonable expenses
of investigating and defending any action, suit or
proceeding).

 

“Depreciation”
means, for each Fiscal Year or other period, an amount equal to the
federal income tax depreciation, amortization or other cost
recovery deduction allowable with respect to an asset for such year
or other period, except that if the Gross Asset Value of an asset
differs from its adjusted basis for federal income tax purposes at
the beginning of such year or other period, Depreciation shall be
an amount that bears the same ratio to such beginning Gross Asset
Value as the federal income tax depreciation, amortization or other
cost recovery deduction for such year or other period bears to such
beginning adjusted tax basis; provided, however, that (a) if the
federal income tax depreciation, amortization or other cost
recovery deduction for such year or other period is zero,
Depreciation shall be determined with reference to such beginning
Gross Asset Value using any reasonable method selected by the Board
and (b) for any asset with respect to which the Company uses the
“remedial allocation method” under Treasury Regulations
Section 1.704-3(d), Depreciation shall be determined in
accordance with Treasury Regulations
Section 1.704-3(d)(2).

 

“GAAP”
means United States generally accepted accounting principles in
effect from time to time.

 

“Gross Asset
Value” means, with
respect to any asset, the asset’s adjusted basis for federal
income tax purposes, except as follows:

 

(a)           The
Board shall cause the Gross Asset Value of Company assets and the
Members’ Capital Accounts to be adjusted in accordance with
Treasury Regulations Section 1.704-1(b)(2)(iv)(f) and
1.704­1(b)(2)(iv)(g) at such times as provided in Treasury
Regulations Section 1.704-1(b)(2)(iv)(f) or upon such other
time as the Board shall reasonably determine necessary or advisable
in order to comply with, or permitted by, the Treasury
Regulations.

 

(b)           The
Gross Asset Value of any Company asset distributed to a Member
shall be adjusted to equal the gross fair market value of such
asset on the date of distribution as determined by the
Board.

 

(c)           The
Gross Asset Values of Company assets shall be increased (or
decreased) to reflect any adjustments to the adjusted basis of such
assets pursuant to Code Section 734(b) or Code
Section 743(b), but only to the extent that such adjustments
are taken into account in determining Capital Accounts pursuant to
Treasury Regulations Section 1.704-1(b)(2)(iv)(m); provided,
however, that Gross Asset Values shall not be adjusted pursuant to
this Paragraph (d) to the extent that the Board reasonably
determines that an adjustment pursuant to Paragraph (b) above is
necessary or appropriate in connection with a transaction that
would otherwise result in an adjustment pursuant to this paragraph
(d).

 

 

 

-26-

 

 

(d)           The
Gross Asset Value of an asset shall be adjusted by the Depreciation
taken into account with respect to such asset, for purposes of
computing Profits and Losses.

 

“Lien”
means any lien, pledge, security interest, charge, claim or other
encumbrance of any nature whatsoever.

 

 “Liquidation
Event” means: (a) the
sale of all or substantially all of the assets of the Company on a
consolidated basis to an unrelated Person; or (b) the sale of all
of the outstanding equity interests in the Company to an unrelated
Person whether by Unit exchange or otherwise.

 

 “Manager”
means any manager elected to the Board from time to
time.

 

“Material
Contract” means a
contract or agreement, or a class thereof, valued at $250,000 or
greater.

 

“Member
Approval” means the
affirmative vote of the holders of a majority of the then issued
and outstanding Units.

 

“Members”
means a person identified as such on Schedule A and any Person
hereafter admitted as a Member pursuant to the provisions of this
Agreement.

 

“Percentage
Interest” means with
respect to each Member such Member’s percentage interest in
the Company, as those interests are set forth on Schedule
A.

 

“Person”
means any individual, corporation, partnership, joint venture,
limited liability company, limited liability partnership,
association, joint-stock company, trust, unincorporated
organization or other organization, whether or not a legal entity,
and any governmental authority.

 

 “Profits”
or “Losses”
means, for each Fiscal Year or portion thereof, an amount equal to
the Company’s taxable income or loss for such Fiscal Year or
portion thereof determined in accordance with Code
§ 703(a) (for this purpose, all items of income, gain,
loss or deduction required to be stated separately pursuant to Code
§ 703(a)(1) shall be included in taxable income or loss),
with the following adjustments:

 

(a)           Any
income of the Company that is exempt from federal income tax and
not otherwise taken into account in computing Profits or Losses
pursuant to this Paragraph shall be added to such taxable income or
loss;

 

(b)           Any
expenditure of the Company described in Code
§ 705(a)(2)(B) or treated as a Code
§ 705(a)(2)(B) expenditure pursuant to Treasury
Regulations Section 1.704-1(b)(2)(iv)(i), and not otherwise
taken into account in computing Profits or Losses pursuant to this
Paragraph, shall be subtracted from such taxable income or
loss;

 

(c)           Gain
or loss resulting from any disposition of company assets shall be
computed by reference to the Gross Asset Value of the company
assets disposed of, notwithstanding that the adjusted tax basis of
such company assets differs from its Gross Asset
Value;

 

(d)           In
lieu of the depreciation, amortization and other cost recovery
deductions taken into account in computing such taxable income or
loss, there shall be taken into account Depreciation for such
Fiscal Year or portion thereof;

 

(e)           To
the extent an adjustment to the adjusted tax basis of any asset
included in company assets pursuant to Code § 734(b) or
Code § 743(b) is required pursuant to Treasury
Regulations § 1.704-1(b)(2)(iv)(m)(4) to be taken into
account in determining Capital Accounts as a result of a
distribution other than in liquidation of a Member’s
interest, the amount of such adjustment shall be treated as an item
of gain (if the adjustment increases the basis of the asset) or
loss (if the adjustment decreases the basis of the asset) from the
disposition of the asset and shall be taken into account for the
purposes of computing Profits and Losses;

 

 

 

-27-

 

 

(f)           If
the Gross Asset Value of any company asset is adjusted in
accordance with Paragraphs (b) or (c) of the definition of Gross
Asset Value in this Agreement, the amount of such adjustment shall
be taken into account as gain or loss from the disposition of such
asset for purposes of computing Profits or
Losses.

 

“SEC” means the United States Securities and
Exchange Commission.

 

“Securities
Act” means the Securities
Act of 1933, as amended.

 

“Third Party
Transferee” means a
transferee that is not an Affiliate of a Member proposing to
Transfer its Units.

 

“Transfer”
means to sell, assign, make a gift of, pledge, hypothecate, grant
an option with respect to, or otherwise transfer, encumber or
subject to any claim or Lien, whether voluntarily or
involuntarily.

 

“Treasury
Regulations” means
temporary and final Treasury Regulations promulgated under the
Code, as such regulations may be amended from time to time
(including corresponding provisions of succeeding Treasury
Regulations).

 

“Units”
means Units of the Company having all the rights and preferences
ascribed to such Units as set forth in this
Agreement.

 

 

 

 

 

-28-

 

 

SCHEDULE C

Board of Managers

 

 

Name                                                       

Votes

 

 

 

 

-29-

 

SCHEDULE D

Initial Officers

 

 

Name                                                       

Position

 

 

	
 

	
 

 

 

 

-30-

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