Document:

Exhibit 10.3

  

 

 BOND PURCHASE LOAN AGREEMENT
 This BOND PURCHASE LOAN AGREEMENT (this “Agreement”), dated as of July 1, 2013, is by and between the EFFINGHAM COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY (the “Issuer”), an instrumentality of the State of Georgia (the “State”) and a public corporation, created and existing under the laws of the State, and MEDIENT STUDIOS, INC., a Nevada corporation, in its capacity as the lessee (the “Company”) of the Project, referred to herein, and its successors and assigns as such lessee, and in its capacity as the purchaser (the “Purchaser”) of the hereinafter-described revenue bond of the Issuer.
 W I T N E S S E T H:
 WHEREAS, the Effingham County Industrial Development Authority (the “Issuer”) is an instrumentality of the State and a public corporation created by local amendment to the Georgia constitution, Ga. L. 1968, p. 1733, ratified by electors in 1968, and continued by Ga. L. 1986, p. 3886, as supplemented by Ga. L. 1986, p. 3873, Ga. L. 2001, p. 4139, and Ga. L. 2007, p. 3650 (the “Act”); and
 WHEREAS, the Act provides that the Issuer is created for the public purpose, among other purposes, of developing and promoting for the public good industry and trade within Effingham County (the “County”) and is authorized by the Act to issue its revenue bonds to acquire “projects” (as defined in the Act) to be located in the County; the Issuer’s revenue bonds are to be issued and validated under and in accordance with the applicable provisions of the Revenue Bond Law (O.C.G.A. § 36-82-60, et seq.); and
 WHEREAS, the Act further authorizes and empowers the Issuer: (i) to lease any such projects; (ii) to pledge, mortgage, convey, assign, hypothecate or otherwise encumber such projects and the revenues therefrom as security for the Issuer’s revenue bonds; and (iii) to do any and all acts and things necessary or convenient to accomplish the purpose and powers of the Issuer; and
 WHEREAS, the Issuer proposes to issue its revenue bond (the “Bond”) in a maximum principal amount of $300,000,000 (the “Maximum Principal Amount”), to be issued as a single Bond in the form of a draw-down instrument to be designated “Effingham County Industrial Development Authority Taxable Industrial Development Revenue Bond (Medient Studios, Inc. Project), Series 2013,” which shall mature on July 1, 2033 and shall bear interest at a rate per annum of six percent (6.00%), which interest shall be payable on July 1 of each year, commencing on the first July 1 following the issuance of the Bond and on each July 1 thereafter, with the final interest payment being due on the Maturity Date. The Bond is secured by that certain Deed to Secure Debt, Assignment of Rents and Leases and Security Agreement, of even date herewith, granted by the Issuer to the Purchaser (the “Security Document”). The Bond shall be in substantially the form set forth in Exhibit A to the Bond Resolution, with such variations, omissions, substitutions, legends and insertions as may be approved by the official of the Issuer who executes such Bond and by the Purchaser; and
 WHEREAS, the Bond is to be issued to acquire a project in the County consisting of land, improvements, and equipment installed and to be installed thereat (the “Project”), for use by the Company as a movie and video game production studio with related facilities, including DVD manufacturing; and
 WHEREAS, the Project shall be leased to the Company under a Lease Agreement (the “Lease”), under the terms of which the Company will pay Basic Rent payments and other payments at such times and in such amounts as will be required to pay debt service on the Bond as and when the same becomes due, subject to the terms and conditions of the Lease and the Bond Resolution permitting constructive payment of same; the Lease shall become effective upon the delivery thereof and its term is to end upon the final maturity of the Bond or, if sooner redeemed pursuant to the Bond Resolution or the Bond, the date of redemption, and in any event, subject to that certain Option Agreement between the Issuer and the Company dated of even date herewith; and
 WHEREAS, pursuant to the resolution adopted by the Issuer (the “Bond Resolution”) authorizing the issuance of the Bond and the execution of this Agreement and the other Issuer Documents (defined in the Bond Resolution) relating to the Bond, including without limitation, the Security Document, the Issuer is pledging, as security for the payment of the Bond, the Pledged Security therefor, including, but not limited to, the Project and any portions thereof acquired by the proceeds of the Bond, all of the Basic Rent payments and any termination payments to be received by the Issuer under the Lease, the Issuer’s interest in the Lease (except for certain Unassigned Rights), and the Net Proceeds of certain casualty insurance and eminent domain awards and other amounts to be held in the Project Fund and Sinking Fund created by the Bond Resolution for such Bond, and investment income and proceeds of the foregoing; and
 WHEREAS, all capitalized terms used herein and which are not defined herein shall be defined as set forth in the Bond Resolution and in the Exhibits thereto; and
 WHEREAS, the Purchaser desires to purchase the Bond and to advance funds or transfer items of property (including, without limitation, the Project) or other legal consideration to the Issuer hereunder, initially on the date of issuance of the Bond and thereafter from time to time until the Expiration Date (defined below).
 NOW, THEREFORE, in consideration of the premises, the parties hereto agree as follows:
 1.
 THE CREDIT FACILITY AND THE COMMITMENT AMOUNT: The Purchaser agrees to purchase the Bond and in connection therewith to provide to the Issuer a credit facility (the “Credit Facility”) of up to the Maximum Principal Amount of the Bond on the following terms and conditions.
 2.
 ADVANCES: Advances under the Credit Facility may be made only with respect to Costs of the Project and costs of issuance of the Bond. Such advances shall be made in cash or in property or both. An initial advance shall be made with respect to the Bond on the date the Bond is issued; all or some portion of such advance may be made in cash to pay or to reimburse issuance costs relating to the Bond. Thereafter, from time to time to, and including, the Expiration Date, the Issuer may make one or more requests for advances with respect to the Bond which shall, when aggregated with prior advances, not exceed the Maximum Principal Amount of the Bond. Costs incurred by the Purchaser for Costs of the Project shall be deemed to have been advanced by the Purchaser to the Issuer hereunder with respect to the Bond and immediately disbursed by the Issuer to reimburse the Purchaser for such costs. Any amounts advanced in cash under the Credit Facility with respect to the Bond shall be used to pay or to reimburse the Issuer or the Company, as applicable, for Costs of the Project and transaction costs of issuing the Bond. For purposes of the foregoing and all other purposes related to the Bond, “Costs of the Project,” “Purchaser’s cost of such items,” and “cost to the Company,” as mentioned in the attached form of Certificate and Requisition for Payment, shall have the meaning set forth in the Bond Resolution with respect to “Costs of the Project” and shall be determined based on be the Purchaser’s or the Company’s actual cost.
 Advances under the Credit Facility shall be made upon the written Request for Advance in the form attached hereto as Exhibit A, executed by an authorized representative of the Company, as agent of the Issuer, which shall be delivered to the Purchaser at its notice address by mail, courier, hand delivery or fax; such Request for Advance shall be accompanied by a copy of one or more requisitions (in the form provided at the end of Exhibit A hereto), submitted by the Company, as agent of the Issuer, which are in an aggregate amount equal to the amount of the advance being requested. It shall not be necessary for the Company to attach to said Request for Advance or requisitions evidence of Costs of the Project with respect to which the requested advance is made, but the Purchaser, at the written request of the Issuer, shall make such information available to the Issuer.
 Requests for Advances with respect to the Bond shall be promptly honored, provided that (i) the conditions precedent set forth in Section 7 below shall have been satisfied at the time of each advance, (ii) the gross amount requested in such Request for Advance, plus the aggregate gross amounts of all prior advances with respect to the Bond shall not exceed the Maximum Principal Amount of the Bond, and (iii) the Request for Advance is received on or before the Expiration Date. The Purchaser shall be entitled to rely upon any Request for Advance which the Purchaser reasonably believes in good faith to have been signed by the proper person. In addition, the Purchaser shall have no obligation to, but may if it so elects, fund any advance under the Credit Facility if an “Event of Default” (being an “Event of Default” as defined in the Bond Resolution or in any of the Issuer Documents or Company Documents) has occurred and is continuing on and as of such date.
 3.
 COMMENCEMENT DATE: The commencement date of the Credit Facility shall be the date of issuance of the Bond (the date set forth above being merely for purposes of reference).
 4.
 EXPIRATION DATE: The Expiration Date shall be the earliest of (i) the date the Maximum Principal Amount of the Bond has been advanced, (ii) the date the Bond is retired, or (iii) the date the Company delivers a written notice to the Issuer and the Purchaser that it will make no further request for advances hereunder. The Purchaser shall not make any further advances to the Issuer under the Credit Facility with respect to Requests for Advances received after the Expiration Date.
 5.
 UTILIZATION; THE BOND: All advances in cash or in other legal consideration under the Credit Facility shall be evidenced by the Bond, which shall be issued in the form of a draw-down instrument in substantially the form reviewed by the Purchaser and approved by the Bond Resolution, with such modifications, if any, as are acceptable to the Issuer and the Purchaser, the Issuer’s approval of such modifications, if any, to be conclusively presumed by the execution and delivery thereof, and the Purchaser’s acceptance of such modifications, if any, to be conclusively presumed by the Purchaser’s acceptance of the Bond. The Bond shall be registered in the name of the Purchaser.
 6.
 ISSUANCE FEE: The Issuer has agreed to waive its financing fee.
 7.
 CONDITIONS PRECEDENT: The Purchaser’s obligation to fund the initial advance hereunder with respect to the Bond shall be subject to its receipt from the Issuer of the duly executed Bond, together with an approving Bond Counsel opinion of Seyfarth Shaw LLP, which shall be in form and substance reasonably acceptable to the Purchaser.
 8.
 INVESTMENT: By acceptance hereof, the Purchaser understands, represents and agrees that: (i) the obligations of the Issuer under the Bond and under the related Issuer Documents, are special and limited obligations payable solely from the Pledged Security for the Bond; (ii) the obligations of the Issuer under the Bond and under the Issuer Documents, and the obligations of the Company under the Company Documents and any other obligations that would constitute “separate securities” relating to the Bond (collectively, herein called the “securities”) have not been registered under the Federal Securities Act of 1933, the Securities and Exchange Act of 1934, the Georgia Uniform Securities Act of 2008, or the securities laws, if applicable, of any other state, and applicable rules and regulations thereunder (collectively, the “Securities Acts”) and are unrated; (iii) no official statement or other offering document has been prepared in connection with the issuance of the Bond; (iv) the Purchaser shall have performed its own “due diligence” investigation as to the Issuer, the Project, the Company, and as to any of the sources of payment of debt service on the Bond and has not relied on any representations of the Issuer, its members, directors, officials, employees, agents or legal counsel as to any matters relating to the adequacy of the Pledged Security to provide for the payment of debt service on the Bond; (v) the Bond is being purchased by the Purchaser in a private placement for its own account and not with a view to resale or other distribution or transfer, except in a transaction in which the Purchaser also assigns its leasehold interest in the Project; (vi) the Bond may not be sold, transferred, pledged or hypothecated by the Purchaser or any subsequent holders except in accordance with the provisions of the Bond Resolution governing transfers of the Bond; and (vii) if any transfer of the Bond would subject the Issuer or the Company to any disclosure requirements under any of the Securities Acts, the Company shall, at its own expense and without cost to the Issuer, make such disclosure as to the Issuer, the Company, the Project, the Pledged Security and the Bond, as is required by the Securities Acts. The representations and agreements contained in this Section shall prevail over any inconsistent term or condition that may be contained in the Lease relating to the Project, in the Bond Resolution or in the Bond.
 9.
 GOVERNING LAW: This Agreement shall be governed by and construed under and in accordance with the internal laws of the State of Georgia (without giving effect to its conflicts of law principles).
 10.
 ASSIGNMENT: The Purchaser shall be entitled to assign the Bond and its rights under this Agreement in accordance with the terms and conditions of Section 8 above, the Bond, and Section 2.7 of the Bond Resolution.
 11.
 AMENDMENT: No amendment or modification of this Agreement shall be effective unless it is in writing and executed by the Issuer, the Company and the Purchaser.
 12.
 HEADINGS: All paragraphs or other headings used in this Agreement are for convenience of reference only and do not constitute a substantive part of this Agreement.
 13.
 REQUESTS FOR ADVANCES AND NOTICES: All Requests for Advances shall be delivered to the Purchaser at its address set forth below. All other requests, notices, demands, and other communications under this Agreement shall be given in writing or by fax and are to be deemed to have been duly given and to be effective upon delivery to the party to whom they are directed, to such party at its notice address set forth below, provided that any party may by written notice to the other parties designate a different address for receiving notices under this Agreement; provided, however, that no such change of address will be effective unless and until written notice thereof is actually received by the party to whom such change of address notice is sent.
 	 	
	 If to the Issuer:
	 Effingham County Industrial Development Authority
520 W. Third Street 
Springfield, Georgia 31329 
Attn: Chief Executive Officer

	 with a copy to:
	 Carellas & Newberry, P.C.
440 Silverwood Centre Dr.
Rincon, Georgia 31326
Attn: Theodore T. Carellas, Esq.

	 and a copy to:
	 Seyfarth Shaw LLP
1075 Peachtree Street, N.E.
Suite 2500
Atlanta, Georgia 30309
Attn: Daniel M. McRae, Esq.

	 If to the Company/
 Purchaser:
	 Medient Studios, Inc.
1635 Old Rivers Road
Bloomingdale, Georgia 31302
Attn: Manu Kumaran, Chief Executive Officer and
        Graham Bradstreet, Executive Operations Officer

	 with a copy to:
	 Medient Studios, Inc.
3651 Peachtree Parkway – Suite E
Suwanee, Georgia 30024
Attn: Parth S. Munshi, Esq

 

 Any person designated in this Section 13 may, by notice given to the others, designate any additional or different addresses to which subsequent notices, certificates, or other communications shall be sent to it. 
 14.
 EFFECTIVE DATE: This Agreement may be executed prior to the delivery of the Bond to the Purchaser, but shall not become effective until a counterpart hereof executed by all parties hereto is delivered simultaneously with the issuance of the Bond. Upon execution and delivery hereof, as aforesaid, this Agreement and the terms and provisions of the Bond, the Bond Resolution and other documents approved by the Bond Resolution shall supersede the provisions of any commitment letter(s) heretofore issued by the Purchaser to the Issuer and the Company with respect to the Bond, the Credit Facility and the Maximum Principal Amount.
 15.
 COUNTERPARTS: This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which shall constitute one instrument.
 [SIGNATURES BEGIN ON FOLLOWING PAGE]
 

 

 15718177v.2
 

 

 

 IN WITNESS WHEREOF, each of the parties have caused this Agreement to be duly executed and delivered, under seal, by its respective duly authorized representatives.
 EFFINGHAM COUNTY INDUSTRIAL 

 DEVELOPMENT AUTHORITY

 By:

 Chairman
 
ATTEST:

 Secretary/Treasurer
 

[SEAL]
 [SIGNATURES CONTINUE ON FOLLOWING PAGE]
 

 [SIGNATURE PAGE TO BOND PURCHASE LOAN AGREEMENT]
 15718177v.2
 

 

 

 MEDIENT STUDIOS, INC., a Nevada corporation

 By:

 Manu Kumaran, Chief Executive Officer
 
[SEAL]
 

 

 [SIGNATURE PAGE TO BOND PURCHASE LOAN AGREEMENT]
 15718177v.2
 

 

 

 EXHIBIT A

REQUEST FOR ADVANCE UNDER BOND PURCHASE LOAN AGREEMENT,
BETWEEN THE
EFFINGHAM COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY, AS ISSUER,
AND
MEDIENT STUDIOS, INC.,
AS THE LESSEE AND AS PURCHASER,
RELATING TO THE
EFFINGHAM COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY
TAXABLE INDUSTRIAL DEVELOPMENT REVENUE BOND 
(MEDIENT STUDIOS, INC. PROJECT), SERIES 2013 
 TO: MEDIENT STUDIOS, INC., as Purchaser
 REQUEST FOR ADVANCE NO. ____
RELATING TO THE ABOVE-REFERENCED BOND
 AMOUNT OF ADVANCE REQUESTED: $___________________
 DATE OF REQUEST FOR ADVANCE: _______________________
 The undersigned, being an Authorized Company Representative of Medient Studios, Inc., as agent for the Effingham County Industrial Development Authority, hereby requests an advance in the amount indicated above to pay or to reimburse the Costs of the Project reflected on the accompanying Requisition(s).
 The undersigned hereby certifies that:
 1.
 The net amount of the requested advance is equal to the total amount requested in the attached Requisition(s) and the gross amount of the requested advance when added to the gross amount of previously requested advances does not exceed the Maximum Principal Amount;
 2.
 The date that this Request for Advance is being delivered is not later than the Expiration Date set forth in Section 4 of the Bond Purchase Loan Agreement, referred to above. 
 3.
 No “Event of Default” as defined in the Bond Purchase Loan Agreement has occurred and is continuing, except:
 ______ None
______ As described on the attached page.
 MEDIENT STUDIOS, INC.

 By:

 Authorized Company Representative
 

 15718177v.2
 

 

 

 SCHEDULE I
 CERTIFICATE AND REQUISITION FOR PAYMENT

Draw Request #____
RELATING TO THE 
EFFINGHAM COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY
TAXABLE INDUSTRIAL DEVELOPMENT REVENUE BOND 
(MEDIENT STUDIOS, INC. PROJECT), SERIES 2013
 Medient Studios, Inc. (the “Company”) hereby requests, pursuant to the Bond Purchase Loan Agreement and the Lease Agreement (the “Lease”) relating to the above-referenced Bond, both by and between the Effingham County Industrial Development Authority (the “Issuer”) and Medient Studios, Inc., as the Company and as the Purchaser (check one of the following):
 ______ the following amounts be disbursed in cash pursuant to the Bond Purchase Loan Agreement relating to the above-referenced Bond, in accordance with the following payment instructions to the following parties:

 	 	 	
	 Name of Payee
	 Nature of Cost of Project
	 Amount

	  
	  
	  

	  
	  
	  

	  
	  
	  

	 Payment Instructions:
	  
	  

	  
	  
	  

  or that:
 ______ the Company/Purchaser has incurred costs relating to the Project acquired by the proceeds of the above-referenced Bond in the amount of $________________, and directs that said amount be treated as an advance by the Purchaser to the Project Fund for such Bond, a purchase by the Issuer from the Purchaser of such property at such cost and a reimbursement to the Company for such costs.
 The Company does hereby certify to the Issuer and to the Purchaser that, as of the date hereof, (1) the representations and warranties of the Company in the Lease are hereby ratified and confirmed and (2) such costs are properly included within the definition “Costs of the Project” included within such Lease.
 MEDIENT STUDIOS, INC.

 By:

 Authorized Company Representative
 

 

 15718177v.2Exhibit 10.9

 

AMENDED AND RESTATED JOINT VENTURE AGREEMENT

 

2011
Mieka/Jefferson-Cattaraugus Oil & Gas Project A

  

(A TEXAS JOINT VENTURE)

 

THIS AMENDED AND RESTATED
JOINT VENTURE AGREEMENT is made and entered into effective as of December 9, 2011 by and among MIEKA CORPORATION (“Mieka”),
a Delaware corporation with offices and principal place of business located at 600 Parker Square, Suite 250, Flower Mound, Texas,
75028, as the Managing Venturer, and all of the parties admitted to the Joint Venture created hereby as Joint Venturers, as provided
herein. This Agreement amends and restates the terms of that certain Joint Venture Agreement dated November 30, 2011. All capitalized
terms used herein shall have the meaning assigned thereto in Section 1.7 hereof, unless otherwise defined elsewhere herein.

 

ARTICLE I

 

GENERAL

 

1.1:Formation
of Joint Venture. The parties hereby form a joint venture pursuant to the laws of the State of Texas, which shall be governed
by this Agreement and the provisions of the Texas Business Organizations Code.

 

1.2:Managing
Venturer. Mieka shall be the Managing Venturer of the Joint Venture, and the address of such Managing Venturer is the address
of Mieka as designated above.

 

1.3:Name.
The name of the Joint Venture shall be “2011 MIEKA/JEFFERSON-CATTARAUGUS OIL &
GAS PROJECT A.” The name of the Joint Venture may be changed at any time and from time to time, or the Joint Venture
may operate under different names in any jurisdiction in which the Joint Venture does business, as determined by Vote of the Venturers.

 

1.4:Principal
Business. The purposes for which the Joint Venture is organized are:

 

(a)To acquire a percentage
of the Working Interest in those certain oil and gas well prospects (hereinafter, the “Prospect Wells” or “Prospect”)
more fully described in the Memorandum (as defined herein), and relating to this Joint Venture;

 

(b)To acquire, drill
or otherwise explore for, discover, develop, and operate oil and gas wells and properties, or any interest therein, whether on
its own behalf or in association with others as joint venturer, partner or otherwise;

 

(c)To purchase, acquire,
sell, dispose, explore, operate and produce gas, minerals and properties and all things incident thereto including, but not limited
to the making of dry hole and bottom hole contributions, the granting or Farmout of all types of mineral interests, and with respect
to the business of the Joint Venture, the construction and operation, alone or with others, of any project or operation on any
Lease for the treatment or refining of oil, gas and minerals and for the construction of systems for the production, collection,
storage, treatment or delivery of the same or the products thereof; and

 

(d)To perform any
acts as the Joint Venture in its sole discretion determines to be necessary, desirable or convenient in accomplishing the foregoing
purposes.

 

1.5:Principal
Place of Business. The location of the principal place of business of the Joint Venture is 600 Parker Square, Suite 250, Flower
Mound, Texas, 75028 or such other place or places as the Joint Venture determines by the Managing Venturer. The place of residence
of each Venturer shall be as set forth on his or her Execution Page and Power of Attorney attached hereto as Annex “A.”
All such addresses shall be subject to change upon notice pursuant to Section 11.1 hereof.

 

1.6:Term.
The Joint Venture shall be effective from and after the date that first appears on this document. The Joint Venture shall terminate
on the earlier to occur of:

 

(a)December 31, 2041;

 

(b)A majority Vote
in favor of termination;

 

(c)The business of
the Venture has ceased; or

 

(d)Such date as is
required by Section 9.1 hereof.

 

    	1

    	 

    

 

1.7:Definitions.
For the purposes of this Agreement, the following terms shall have the meanings indicated:

 

“ADDITIONAL ASSESSMENT
CONTRIBUTIONS” means with respect to any Participating Venturer the sum of the Additional Assessments paid by such Participating
Venturer on his or her own behalf plus the Additional Assessments paid by such Participating Venturer on behalf of a Non-Participating
Venturer.

 

“ADDITIONAL ASSESSMENTS”
means assessments of Venturers requested by the Joint Venture to fund Subsequent Operations, the payment of which shall be wholly
voluntary.

 

“AFFILIATE”
with respect to the Managing Venturer means:

 

(a)any person directly
or indirectly owning, controlling or holding, with power to vote, 10% or more of the outstanding voting securities of the Managing
Venturer;

 

(b)any person, 10%
or more of whose outstanding voting securities are directly or indirectly owned, controlled, or held with power to vote, by the
Managing Venturer;

 

(c)any person directly
or indirectly controlling, controlled by or under common control of the Managing Venturer;

 

(d)any officer, director
or partner of the Managing Venturer; and

 

(e)if the Managing
Venturer is an officer, director or partner, any company for which the Managing Venturer acts in any such capacity.

 

For purposes of this
Agreement, any partnership of which Mieka is a general partner, or any joint venture in which Mieka is a joint venturer, is an
Affiliate of Mieka.

 

“AGREEMENT”
or “JOINT VENTURE AGREEMENT” means this Agreement between Mieka as the Managing Venturer, and the Venturers, together
with all amendments hereto.

 

“AMOUNT REALIZED”
means the amount realized by the Joint Venture for federal income tax purposes on a sale of a Joint Venture oil and gas property.

 

“CAPITAL ACCOUNTS”
of the Venturers shall be determined and maintained in accordance with the rules of Treasury Regulation section 1.704-1(b)(2)(iv)
and, to the extent consistent therewith, each Venturer’s Capital Account shall be increased by:

 

(a)the amount of
money contributed by such Venturer to the Joint Venture;

 

(b)the fair market
value of any property contributed by such Venturer to the Joint Venture (net of any liabilities securing such contributed property
that the Joint Venture is considered to assume or take subject to under Code section 752);

 

(c)allocations to
such Venturer of income or gain (including tax exempt income) pursuant to Article VIII but excluding any income or gain described
in Treasury Regulation section 1.704-1(b)(4)(i);

 

(d)the amount of
Joint Venture liabilities assumed by such Venturer or that are secured by any Joint Venture property distributed to such Venturer
other than the liabilities referred to in paragraph (f) below; and each Venturer’s Capital Account shall be decreased by:

 

(e)the amount of
any money distributed to such Venturer by the Joint Venture;

 

(f)the fair market
value of any property distributed to such Venturer by the Joint Venture (net of any liabilities securing such distributed property
that such Venturer is considered to assume or take subject to pursuant to Code section 752);

 

(g)the amount of
losses, costs and expenses allocated to such Venturer under Article VIII;

 

(h)the Venturer’s
allocable share of simulated depletion computed in accordance with Section 8.2;

 

(i)the Venturer’s
allocable share of expenditures of the Joint Venture described in Code section 705(a)(2)(B); and

 

 

    	2

    	 

    

 

(j)the amount of
any liabilities of such Venturer that are assumed by the Joint Venture or that are secured by any property such Venturer contributes
to the Joint Venture other than the liabilities referred to in paragraph (b) above.

 

“CAPITALIZATION
PERIOD” means the period of time during which Venturers shall be accepted and initial capitalization amounts will be received,
up to and including June 30, 2013, unless extended by the Managing Venturer for a period of not more than 90 days; provided, however,
that the Managing Venturer, in its sole and absolute discretion, may terminate the Capitalization Period at any time prior to such
date.

 

“CODE” means
the Internal Revenue Code of 1986, as from time to time amended and any federal legislation that may be substituted therefor.

 

“FARMOUT”
means an agreement whereby the Joint Venture would agree to assign its interest in a certain specific leasehold or a working interest
owned by it to other parties, while retaining some part of its original interest (such as an overriding royalty interest, oil and
gas payment, offset acreage, or other type of interest), subject to the drilling of one or more specified wells or other performance
by the other parties as a condition of the assignment.

 

“FEDERAL INCOME
TAX ITEMS” means Profits, Losses, Gain From Capital Transactions, and Loss From Capital Transactions.

 

“GAIN FROM CAPITAL
TRANSACTIONS” means income or gain of the Joint Venture as determined for federal income tax purposes as a result of the
sale, exchange, or refinancing of all or a portion of the Joint Venture’s property other than depletable property.

 

“HOLDER OF RECORD”
means the person in whose name any Unit is then registered on the books and records of the Joint Venture pursuant to Section 2.5
hereof.

 

“INITIAL OPERATIONS”
means any Joint Venture activity commenced in connection with the acquisition of the Venture’s interest in the Prospect Wells
including legal and accounting services, geological services, organizational activities and administrative activities, and the
drilling, testing and completion of the Prospect Wells and the production of oil and/or gas therefrom. Notwithstanding
the foregoing, the term “Initial Operations” does not include Subsequent Operations as defined herein or the installation
of any pumping equipment nor any actions to enhance production. 

 

“INITIAL OPERATIONS
ASSESSMENT” shall mean assessments of the Venturers requested by the Venture to fund Initial Operations on the Horizontal
Oil Wells (described in the Memorandum) requiring costs in excess of $5,500,000.

 

“LEASE” means
the oil, gas or mineral lease more specifically referred to in the Memorandum.

 

“LIQUIDATOR”
means the Liquidating Trustee(s) designated in Section 9.3 hereof to handle the liquidation of the Joint Venture.

 

“LOSSES”
means each item of loss, deduction and credit of the Joint Venture as determined for federal income tax purposes, but excluding
Loss From Capital Transactions.

 

“LOSS FROM CAPITAL
TRANSACTIONS” means any loss of the Joint Venture as determined for federal income tax purposes as a result of the sale,
exchange or refinancing of all or a portion of the Joint Venture’s property other than depletable property.

 

“MANAGING VENTURER”
means the person or entity appointed to act in the capacity of the managing joint venturer of the Joint Venture.

 

“MEMORANDUM”
means the Confidential Information Memorandum, dated November 30, 2011, to which a copy of this Agreement is annexed.

 

“NET CASH FLOW”
means monies available from the operation of the Joint Venture without deduction for depreciation but after deducting monies used
to pay or establish a reserve for all other expenses, debt payments, improvements and repairs related to the Operation and administration
of the Joint Venture.

 

“NET PROCEEDS”
means the amount realized by the Joint Venture on the disposition of a Joint Venture property, less all fees, costs or expenses
paid or to be paid with respect thereto and the amount of indebtedness (if any) of the Joint Venture paid or to be paid from such
monies.

 

“NON-PARTICIPATING
VENTURER” means any Venturer who fails to contribute Additional Assessments.

 

    	3

    	 

    

 

“OPERATIONS”
shall mean any Joint Venture activity related to (i) acquiring the Prospect Wells; (ii) drilling the Prospect Wells; (iii)
testing, completing, equipping, reworking, deepening, recompleting, capping or plugging the Prospect Wells; (iv) installing pumping,
production, processing, gathering and/or transporting facilities to produce, process, gather, and/or transport any oil or gas produced
from the Prospect Wells; (v) conducting any secondary recovery operation on or with respect to the Prospect; or (vi) conducting
any activity incident to the foregoing as may be deemed necessary by the Venturers in furtherance of a Joint Venture purpose.

 

“PARTIAL TURNKEY
CONTRACT” shall mean the agreement to be entered into by and between Mieka, in its individual capacity, and the Venture providing
for the obligation of the Managing Venturer to bear certain costs of drilling, testing and completing the Prospect Wells at a fixed
or Partial Turnkey Price as described in the Memorandum.

 

“PARTIAL TURNKEY
PRICE” shall mean the amount to be paid by the Venture to Mieka to perform the Partial Turnkey Contract.

 

“PARTICIPATING
VENTURER” means any Venturer, including the Managing Venturer, electing pursuant to the provisions of Sections 2.8, 2.9 or
2.14 to contribute assessments, and/or any additional Venturers admitted to the Joint Venture to contribute assessments on behalf
of a Non-Participating Venturer.

 

“PROFITS”
means each item of income and gain of the Joint Venture, as determined for federal income tax purposes, but excluding Gain From
Capital Transactions.

 

“SUBSEQUENT OPERATIONS”
means activities not part of Initial Operations that the Venturers deem necessary to further develop the Prospect Wells that are
deemed necessary subsequent to the drilling, testing and Completion of the Prospect Wells.

 

“SUBSTITUTE VENTURER”
means any person not previously a Venturer who purchases Units from a Venturer in accordance with the terms of this Agreement.
After admission, all Substitute Venturers shall have all of the rights of a Venturer.

 

“TBOC” means
the Texas Business Organizations Code, as from time to time amended.

 

“UNITS” means
interests in the Joint Venture initially authorized in accordance with the provisions of Article II hereof and allocated to the
Venturers as shown on the books and records of the Joint Venture on the date of the event for which such Units are to be computed.

 

“VENTURE”
or “JOINT VENTURE” means this Joint Venture formed under Texas law and governed by this Agreement and the Texas Business
Organizations Code. The Joint Venture will not commence Initial Operations until the Venture has reached minimum capitalization.

 

“VENTURERS”
means the Managing Venturer and all of the Venturers of the Joint Venture, unless the context requires a reference to all Venturers
other than the Managing Venturer (such as in sections concerning capital contributions). The term “VENTURER” refers
to any Venturer or to the Managing Venturer of the Joint Venture, as the context requires. Venturers are considered general partners
under the Texas Business Organizations Code.

 

“VOTE” refers
to the right of the Venturers, subject to all limitations set forth below and elsewhere in this Agreement, to decide any matter
that may be submitted for decision by the Venturers in accordance with the express written terms of this Agreement or under the
provisions of the TBOC. Each Venturer, including the Managing Venturer, shall be entitled to cast one vote for every Unit held
of record by him or her on the date when notice is given of the matter to be voted on or consented to by the Venturers. Except
as otherwise expressly provided in this Agreement, a Vote of the Venturers owning a simple majority of the Units shall be sufficient
to pass and approve any matter submitted to a Vote of the Venturers. Whenever a Vote of the Venturers is required or permitted,
a written consent to the action to be taken signed by the Venturers holding the required percentage may be used in lieu of holding
a formal meeting at which a Vote is taken. The rights of the Venturers to require or be permitted to vote on any matter shall be
subject to and conditioned upon the requirements set forth in Section 4.11 hereof.

 

ARTICLE II

 

VENTURERS, CAPITALIZATION AND ASSESSMENTS

 

2.1:Managing
Venturer. Although Mieka shall be the initial Managing Venturer of the Joint Venture, the Joint Venture and all of its affairs,
property, business, and Operations shall be managed and controlled by the Venturers. Subject to a contrary Vote, the Venturers
expressly delegate management of the day-to-day Operations of the Joint Venture to the Managing Venturer.

 

2.2:Venturers.
The Venturers of the Joint Venture shall be those persons participating in the Joint Venture as hereinafter authorized and provided,
and defined as Venturers herein.

 

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2.3:Participating
in Venture by Managing Venturer. The Managing Venturer shall participate in the Venture as described in Article VIII hereof,
and may also:

 

(a)acquire Units
pursuant to Section 2.4 hereof; or

 

(b)purchase Units
of selling Venturers pursuant to Article VI hereof.

 

2.4:Authorized
Units. The interests of the Venturers in the Joint Venture (other than the interest of the Managing Venturer (in its capacity
as such) as described in Article VIII hereof) shall be represented by Units, and there are hereby authorized a total of 35 Units
and such additional units as may in the discretion of the Managing Venturer be necessary to purchase additional Working Interests.

 

2.4.1:Applications
by Proposed Venturers. During the Capitalization Period, the Managing Venturer shall have the right to admit to the Joint Venture
as Venturers those persons who are acceptable to the Managing Venturer and who otherwise satisfy the requirements of this Agreement.
The Managing Venturer may, in its sole discretion, decline to admit any person or persons as a Venturer for any reason whatsoever.
All applications that are rejected shall be returned to the person submitting such funds together with all funds tendered, without
interest. Persons whose applications are accepted by the Managing Venturer will be admitted as Venturers in the order that their
applications are accepted and payment is received by the Managing Venturer until the initial capitalization is complete. Each Venturer,
upon signing this Agreement, hereby Votes to admit all initial Venturers whose applications have been so accepted. When the Joint
Venture begins Initial Operations, interest earned on application funds will be allocated in accordance with Article VIII
hereof.

 

2.4.2:Time of
Admission. A person shall be deemed to have been admitted as a Venturer:

 

(a)On the date
this Agreement is fully executed by the Managing Venturer and all Venturers; or

 

(b)If applicable,
on the first day of the calendar month after which a Venturer is accepted in accordance with Article VI herein.

 

2.4.3:Contribution
Per Unit. The amount contributed for each Unit or fraction thereof shall be $245,000 per whole Unit (excluding Initial Operations
Assessments). The amount so contributed by each Venturer shall be payable entirely in cash.

 

2.4.4:Execution
by Venturers. By executing the Application Agreement attached to the Memorandum, each Venturer agrees to contribute to the
capital of the Joint Venture the amount shown in his or her Application Agreement.

 

2.4.5:Minimum
Venturers’ Initial Capital. Applications to participate in Units will be accepted by the Managing Venturer, in its sole
discretion, during the Capitalization Period and will be segregated until applications for the minimum Venturers’ Initial
Capital of $980,000 have been received and accepted. In the event applications for the minimum Venturers’ Initial Capital
of $980,000 have not been received and accepted prior to the close of the Capitalization Period, all funds received by the Managing
Venturer will be returned in full without interest.

 

2.4.6:Contributions
to Capital by Managing Venturer. Upon the admission of all Venturers, the Managing Venturer shall contribute to the Venturer’s
capital an amount in cash equal to 1% of the total Joint Venture initial capitalization.

 

2.5:Registration.
Upon the admission of a person as a Venturer, such person shall be registered on the records of the Joint Venture as a Venturer
and a Holder of Record, together with his or her address and the Unit(s) representing his or her aggregate contribution to Joint
Venture capital. Upon the assignment of a Unit pursuant to the terms of Article VI hereof, the assignee of such Unit shall be registered
on the records of the Joint Venture as a Holder of Record, together with his or her address and the Unit(s) representing his or
her or his or her transferor’s aggregate contribution to Joint Venture capital.

 

2.6:Rights of
Holders of Record. A Holder of Record shall be entitled to all distributions and all allocations of Net Cash Flow, Net Proceeds,
Amount Realized and Federal Income Tax Items with respect to Unit(s) registered in his or her name in the manner specified in Section
8.6 until his or her rights in such Unit(s) have been transferred and the Managing Venturer has been notified as required herein.
The payment to the Holder of Record of any allocation or distribution with respect to such Unit(s) shall be sufficient to discharge
the Joint Venture’s obligation in respect thereto.

 

2.7:Initial
Capital Contributions. The Joint Venture shall have as its initial capitalization an amount equal to the Venturers’ Initial
Capital plus the Managing Venturer’s initial capital contribution (which shall equal 1% of the total Joint Venture initial
capitalization), plus interest earned on funds pending completion of the initial capitalization. Failure by a Venturer to pay all
of his or her agreed participation amount as reflected in the Application Agreement shall result in the forfeiture of such Venturer’s
interest in the Venture, without refund of amounts previously paid.

 

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2.8:Initial
Operations Assessments. If the Managing Venturer determines that the Joint Venture requires additional capital for the purpose
of funding an aspect of Initial Operations on the Horizontal Oil Wells requiring costs in excess of the Horizontal Oil Well Commitment
(described in the Memorandum), each Venturer shall, within seven business days contribute the additional funds, which, when paid,
shall be treated as Capital Contributions to the Joint Venture. Each Venturer shall contribute his pro rata share of the additional
capital based on the amount of initial capital contributed.

 

2.8.1:Amount of
Initial Operations Assessment. Initial Operations Assessments may be collected in amounts necessary to conduct the Initial
Operations on the Horizontal Oil Well.

 

2.8.2:Requests
in Writing. The request for Initial Operations Assessments shall be in writing and shall set forth the particulars with respect
to the estimated costs thereof.

 

2.8.3:Failure
to Contribute Initial Operations Assessments. The failure of a Venturer to contribute his proportionate share of an Initial
Operations Assessment within seven business days from delivery of a notice by mail, facsimile or overnight delivery (or within
48 hours if the rig that will effect such operations is on location) shall, in the Managing Venturer’s sole and absolute
discretion, (i) if approved by a Vote of the Venturers, be deemed a request that his interest in the Joint Venture be abandoned,
and he shall be effectively withdrawn as a participant in the Joint Venture, with no further benefits, rights or obligations with
respect to the sharing of income, gains and losses with respect to the Prospect Wells; (ii) the Venture may offset against any
distributions to which such Venturer would otherwise be entitled an amount equal to 500% of the amount which such Venturer failed
to contribute; or (iii) such Venturer’s interest in the Joint Venture may be reduced to reflect the non-payment. Assessments
made in regard to costs incident to actions taken to enhance production or in regard to the installation of pumping equipment,
pipelines or gas treatment facilities (among other things) are Special Assessments and not Initial Operations Assessments.

 

2.8.4:Contribution
by Managing Venturer. The Managing Venturer shall have the right to pay the Initial Operations Assessment of any Non-Participating
Venturer and succeed to all rights that the Non-Participating Venturer would otherwise abandon by virtue of failing to pay such
Initial Operations Assessment. Without limiting the foregoing, if the interest of the Non-Participating Venturer in the Joint Venture
is reduced to reflect non-payment of an Initial Operations Assessment, and if the Managing Venturer pays such assessment, the Managing
Venturer shall be deemed to have acquired Units having an additional interest in the Venture equal to the percentage that the Non-Participating
Venturer’s interest was reduced.

 

2.8.5:Contribution
by Other Venturers. If the Managing Venturer declines or is unable to pay all or any part of the Initial Operations Assessment
of a Non-Participating Venturer, the Venturers who have contributed their Initial Operations Assessment may contribute the Completion
Assessment of such Non-Participating Venturer pro rata or in such other proportion as may mutually be agreed upon by the Venturers
participating in the payment of the Initial Operations Assessment of such Non-Participating Venturer, and succeed to all rights
that the Non-Participating Venturer would otherwise abandon by virtue of failing to pay such Initial Operations Assessment. Without
limiting the foregoing, if the interest of the Non-Participating Venturer in the Joint Venture is reduced to reflect non-payment
of an Initial Operations Assessment, and Venturers pay such assessment, such Venturers shall be deemed to have acquired Units having
an additional interest in the Venture equal to the percentage that the Non-Participating Venturer’s interest was reduced.
The Venturers that pay all or a part of such Initial Operations Assessment shall succeed to rights of the Non-Participating Venturer
in such Units in the proportion in which they have paid the Initial Operations Assessment of such Non-Participating Venturer.

 

2.8.6:Sale of
Additional Units Representing Non-Participating Venturer Interest. If all Initial Operations Assessments are not paid by the
Managing Venturer or the Venturers, the Venturers shall be conclusively deemed to have consented to the sale by the Joint Venture
of additional Unit(s) or part(s) thereof having an additional interest in the Venture equal to the percentage that the Non-Participating
Venturer’s interest was reduced, and the admission of, persons as Venturers as may be necessary to provide the capital required
by the Joint Venture to fund the activity for which the Initial Operations Assessment was called.

 

2.8.7:Other Sources
of Funds. The Managing Venturer shall have the right but not the obligation to secure the necessary funds from other sources
including loans (subject to approval by a Vote of the Venturers) and if such funds are not obtainable, the Joint Venture may abandon
the Initial Operations to which such Initial Operations Assessment relates.

 

2.9:Additional
Assessments.

 

2.9.1:Assessment
by Joint Venture. The Joint Venture may request Additional Assessments if it determines that Subsequent Operations are desirable
in order to more fully develop the Prospect Well. A Venturer Votes for the Subsequent Operation by contributing his or her assessment.
The Managing Venturer's participation in Additional Assessments will be 1% of the total Additional Assessments received.

 

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2.9.2:Failure
to Contribute Assessments. A Venturer shall initially have no obligation to pay any of the requested Additional Assessments.
If a Venturer fails to contribute his or her entire proportionate share of an Additional Assessment called for by the Joint Venture
with respect to any particular Subsequent Operation, within the time specified in any request therefor, such Venturer shall be
deemed a Non-Participating Venturer with respect to such Subsequent Operation. In the event a Venturer agrees to contribute, or
contributes his or her proportionate share of an Additional Assessment for Subsequent Operations conducted on a Prospect Well subsequent
to completion thereof (thereby becoming a Participating Venturer) but fails to contribute the entire estimated costs of the Subsequent
Operation which may be called for in a subsequent notice (to be used for continued efforts relating to such Subsequent Operation),
such non-contributing Venturer shall, in the discretion of the Managing Venturer, be subject to a penalty of 500% of the amount
remaining unpaid, and in such event he or she shall be treated as a Non-Participating Venturer.

 

2.9.3:Notice of
Assessment. With respect to each Subsequent Operation, the Managing Venturer will give notice, in writing, to each Venturer
stating the nature and purpose of the proposed expenditure, and will attach an estimate of the complete cost of such Subsequent
Operation and such Venturer’s proportionate share of the total Additional Assessment. The Managing Venturer may request payment
in full of such amount or payment of any portion thereof. The estimate shall not constitute a limit as to the total Additional
Assessments with respect to such Subsequent Operation.

 

2.9.4:Election
to Participate by Venturers. Venturers become Participating Venturers with respect to any particular Subsequent Operation (and
Vote for an Other Subsequent Operation) for which the notice was sent by sending to the Managing Venturer, within seven business
days (or such other period of time not less than seven business days as the Managing Venturer may specify) (48 hours if the rig
is on location) after the mailing of such notice, payment in the amount of such Participating Venturer’s proportionate share
of the expenditure estimated by the Managing Venturer to be necessary to finance the Subsequent Operation. Any Venturer shall be
a Non-Participating Venturer if his or her payment is either:

 

(a)postmarked
later than seven business days (or such other period of time not less than seven business days as the Managing Venturer may specify)
(48 hours if the rig is on location) after the mailing of the notice of such Subsequent Operation; or

 

(b)received
by the Managing Venturer later than 20 days after the date of such notice.

 

Furthermore, the check in payment of the
Additional Assessment must “clear” the bank on which it is drawn on the first attempt to present such check for payment.
Failure of the check to “clear” or “be honored by” the bank on which it is drawn will result in the maker
of such check being deemed a Non-Participating Venturer.

 

2.9.5:[Reserved.]

 

2.9.6:Funds to
Replace Those of Non-Participating Venturers. If less than 100% of the Venturers pay the Additional Assessments for Subsequent
Operations, the Managing Venturer shall have the option, in the exercise of its sole and absolute discretion and subject to the
provisions of Section 2.9.4 hereof, to:

 

(a)Pay
the Non-Participating Venturer(s)’ unpaid portion of such Additional Assessment and be entitled to receive the Non-Participating
Venturer(s)’ allocable shares of Net Cash Flow, Net Proceeds, Federal Income Tax Items and Amount Realized attributable to
such Subsequent Operations pursuant to Section 8.3.2 below;

 

(b)Allow
any or all Participating Venturers to pay the Non-Participating Venturer(s)’ unpaid portion of such Additional Assessment
and therefore be entitled to receive the Non-Participating Venturer(s)’ allocable shares of Net Cash Flow, Net Proceeds,
Amount Realized and Federal Income Tax Items attributable to such Subsequent Operations pursuant to Section 8.3.2 below;

 

(c)Offer
Units of the Subsequent Operation to persons (other than the Venturers), who shall, upon payment of such assessment, be deemed
to be additional Venturers and Participating Venturers with respect to such Subsequent Operations; or

 

(d)Abandon
the Subsequent Operation for which such Additional Assessment was requested, refund the Additional Assessment proceeds previously
paid by the Venturers and sell or Farmout the Prospect or portions thereof upon approval of the Venturers as provided herein.

 

2.10:Return
of Capital. No Venturer has the right to require the return of all or any part of his or her capital contribution(s) or a distribution
of any property from the Joint Venture prior to its termination and dissolution as provided herein.

 

2.11:Interest
on Capital. No interest shall be payable on any capital contributions made to the Joint Venture or on any Capital Account.

 

2.12:Capital
Account. An individual Capital Account shall be maintained for each of the Venturers as provided herein.

 

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2.13:Liability
for Continuing Obligations. As joint venturers, each Venturer has all of the rights, obligations, and liabilities under the
TBOC, including joint and several liability for all of the debts, obligations, acts, omissions, risks and liabilities of the Joint
Venture. Certain assessments, subject to appropriate Vote, may be made to meet Joint Venture obligations, as herein described.
Upon the death, disability or other change in circumstances of a Venturer prior to completion of such Venturer’s obligations
to complete certain payments pursuant to this Section, such Venturer’s estate, legal representative or successor shall have
the status of the Venturer and of such Venturer’s rights and responsibilities.

 

ARTICLE III

 

MANAGING VENTURER

 

3.1:Rights and
Duties. The Joint Venture and all of its affairs, property, business, and Operations shall be managed and controlled collectively
by the Venturers. The Venturers expressly delegate management of the day-to-day Operations of the Joint Venture to the Managing
Venturer.

 

3.2:Reimbursement
and Compensation to the Managing Venturer. The Managing Venturer shall receive as compensation for its services as Managing
Venturer the following amounts:

 

3.2.1:Monthly
Reimbursement to Managing Venturer. The Managing Venturer shall receive, on a monthly basis, a reimbursement from the Joint
Venture for its General and Administrative Expenses (as defined in the Memorandum) allocable to the Joint Venture, in the amount
of $250 per well in which the Joint Venture owns an interest, directly or indirectly.

 

3.2.2:Management
Fee. In consideration of the supervision and management of the affairs of the Joint Venture during the drilling, testing and,
if advisable, the Completion period of Initial Operations, the excess, if any, of the Partial Turnkey Price over the costs of the
services to be provided thereunder, taking into account the agreements entered into by and between Mieka and the Operators, should
be considered a management fee paid to the Managing Venturer.

 

3.2.3:Participation
in Revenues. The Managing Venturer will be entitled to receive the allocations of Net Cash Flow and Net Proceeds as set forth
in Section 8.3.

 

3.3:Interest
of the Managing Venturer in Certain Transactions. The Managing Venturer shall not be deemed to have received commissions, fees
or other compensation paid to any firm, proprietorship, partnership or corporation that is an Affiliate, or in which the Managing
Venturer, or any partner, officer, director or employee thereof or any member of any such person’s respective immediate family,
owns a beneficial interest. Nothing contained in this Agreement shall be deemed to:

 

(a)Restrict
the right of the Managing Venturer or any Affiliate to be reimbursed for sums actually expended in conducting the business of the
Joint Venture;

 

(b)Restrict
the right of the Managing Venturer or any Affiliate to receive the income or distributions to which they would otherwise be entitled
as the Managing Venturer or a Venturer under the terms of this Agreement; or

 

(c)Prevent
or restrict the Managing Venturer or any Affiliate from obtaining or sharing in all or any part of any commissions or other sums
payable in connection with any property purchased or sold by the Joint Venture.

 

ARTICLE IV

 

MANAGEMENT AND OPERATION

 

4.1:Management.
The Joint Venture and all of its affairs, property, business, and Operations shall be managed and controlled collectively by all
the Venturers; provided, however, that the Venturers expressly delegate management of the day-to-day Operations of the Joint Venture
to the Managing Venturer. With respect to the purposes for which this Joint Venture is organized and without limiting the generality
of its powers, and the definition of Operations hereunder, the Managing Venturer, unless expressly provided otherwise or subject
to a Vote of the Venturers, is hereby vested with the full and plenary power to:

 

(a)Investigate,
evaluate and, subject to an affirmative Vote of the Venturers, acquire on behalf of the Joint Venture oil, gas and mineral properties
or other interests or investment opportunities, upon such terms as it deems advisable;

 

(b)Interview,
and subject to an affirmative Vote of the Venturers, retain or act as operator and to cause such operator to drill, complete, equip,
test, rework, operate, and if necessary, plug and abandon wells of the Joint Venture;

 

(c)Conduct
seismographic surveys and other geological operations and services;

 

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(d)Execute
and deliver any and all contracts and agreements approved by the Joint Venture, including purchase, joint venture, Farmout and
operating agreements and turnkey contracts, binding the Joint Venture in furtherance of the business purposes of the Joint Venture;

 

(e)Execute
and deliver, and receive or pay the consideration for, all deeds and assignments of properties or other interests transferred or
acquired by the Joint Venture;

 

(f)Make
all elections or decisions, and bind the Joint Venture thereby, that may be necessary or permissible in connection with any purchase,
joint venture or Farmout agreement or other type of contract under which an interest in properties is to be acquired, operated,
sold or assigned (subject to Venturers’ approval) by the Joint Venture;

 

(g)Maintain
leases in force and effect (including paying delay rentals);

 

(h)Execute
and deliver all checks, drafts, or other orders for payment of funds belonging to the Joint Venture;

 

(i)Execute
and deliver division orders, transfer orders, pooling orders, and assignments;

 

(j)Investigate
and, subject to an affirmative Vote of the Venturers, enter into and bind the Joint Venture in the execution of dry hole letters,
bottom hole and acreage contribution agreements, and Farmouts, whether such agreements cover the assignment or transfer of properties
or funds to or from the Joint Venture;

 

(k)Execute
operating agreements whether or not the Joint Venture or the Managing Venturer may be designated as operator thereunder;

 

(l)Execute
powers of attorney, consents, waivers and other documents that may be necessary before any court, administrative board or agency
of any governmental authority, affecting the properties owned by the Joint Venture;

 

(m)Take
and hold title to property, execute evidences of indebtedness or other obligations or instruments in its name or the name of a
nominee all on behalf of the Joint Venture and with or without disclosing the true owner or party in interest thereto. The Joint
Venture shall be solely entitled to all rights, titles and interests held by the Managing Venturer or nominee on behalf of the
Joint Venture and solely liable for all expenses, costs and other obligations incurred in connection therewith. All such instruments
so executed may be transferred into the name of the Joint Venture by assignment or otherwise or held in the name of the Managing
Venturer or nominee as the Managing Venturer may determine; provided, always, that the Managing Venturer shall keep as part of
the books and records of the Joint Venture and properly account on its books for each such contract, deed, note or other instrument
indicating the nominal parties thereto, date thereof and general description of such document; and

 

(n)In general,
execute all instruments of any kind or character that may be necessary or appropriate in connection with the business of the Joint
Venture. In addition, while the Venture has, based on currently available geological and geophysical information, selected an oil
and gas leasehold interest for exploration and development, prior to the commencement of drilling activities, the Managing Venturer
may review additional geological and geophysical data from other potential acreage and determine, subject to a contrary Vote, to
explore and develop such other acreage in substitution for the drilling site described in supporting documents to the Memorandum.
In the event that the Managing Venturer selects an alternative drilling site, Venturers will be appropriately notified, and the
site will be located within the acreage designated on the geological map appended to the Memorandum, and the Managing Venturer
believes that the geological considerations will be substantially the same (or more favorable) than the drilling site previously
selected.

 

4.2:Third Parties.
No person dealing with the Managing Venturer shall be required to determine its authority to make any undertaking or to execute
any instrument on behalf of the Joint Venture, nor to determine any fact or circumstance bearing upon the existence of such authority,
and all such instruments or undertakings shall contain such provisions as the Managing Venturer deems expedient.

 

4.3:Obligations
of the Managing Venturer as Joint Venture Manager. The Managing Venturer shall manage the Joint Venture affairs in a prudent
and businesslike manner, and in accordance with good practices in the industry. The Managing Venturer at all times shall act in
the best interests of the Joint Venture in fulfillment of the purposes herein expressed and shall in all instances notify the Venturers
of any transaction entered into between the Joint Venture and Mieka or any Affiliate.

 

4.4:Insurance
Coverage. In order to protect Joint Venture assets, the Managing Venturer may procure or cause to be procured and maintain
or cause to be maintained in force, or contract with others to obtain and maintain in force, such insurance as in its best judgment
it deems prudent to serve as protection against liability for loss and damage that may be occasioned by the activities of the Joint
Venture. The cost of obtaining such insurance shall be charged to and borne by the Joint Venture. The Managing Venturer shall not
be liable to any Venturer for any loss that may be sustained by the Joint Venture because the Managing Venturer did not acquire
or cause to be acquired any particular type of insurance.

 

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4.5:Expenses.
The Managing Venturer may charge to the Joint Venture and be reimbursed or pay out of Joint Venture funds, as and when available,
all reasonable expenses incurred by the Managing Venturer in the operation of the Joint Venture including but not limited to expenses,
charges and fees relating to:

 

(a)the
acquisition, preservation, protection or perfection of title to the Joint Venture’s property, including insurance thereon,

 

(b)the
maintenance, operation or reworking of any Joint Venture property,

 

(c)travel
expenses, professional fees, attorneys’ fees and court costs,

 

(d)taxes
on real or personal property owned by the Joint Venture,

 

(e)interest
on any loan to the Joint Venture,

 

(f)normal
closing costs (in the event of a sale or transfer of all or any part of the Joint Venture’s property),

 

(g)expenses
incurred in connection with the negotiation for, or consummation of financing or renewing, rearranging or refinancing any indebtedness
on the Joint Venture’s property,

 

(h)Operating
Expenses (as defined in the Memorandum), and

 

(i)General
and Administrative Expenses (as defined in the Memorandum).

 

4.6:Interpretation.
If any provision of this Agreement is unclear or ambiguous in the opinion of the Managing Venturer, the Managing Venturer, in its
sole and absolute discretion, shall have the right and power to interpret such provision in accordance with the purposes, and in
the best interests of the Joint Venture and all the Venturers; provided that the Managing Venturer may not interpret the provisions
of Section 3.2 and Articles VIII and IX hereof so as to increase its compensation as set forth herein.

 

4.7:Reliance
Upon Experts. The Managing Venturer may employ or retain such counsel, accountants, engineers, geologists, landmen, appraisers
or other experts or advisors as it may reasonably deem appropriate for the purpose of discharging its duties hereunder, and shall
be entitled to pay the fees of any such persons from the funds of the Joint Venture. The Managing Venturer may act and shall be
protected in acting in good faith on the opinion or advice of, or information obtained from any such counsel, accountant, engineer,
geologist, appraiser or other expert or advisor, whether retained or employed by the Joint Venture, the Managing Venturer, or otherwise,
in relation to any matter connected with the administration or operation of the business and affairs of the Joint Venture.

 

4.8:Limitations
on Venturers’ Acts.

 

4.8.1:Prohibited
Acts. The Venturers, including the Managing Venturer, are expressly prohibited from entering into any contract or other transaction
that would:

 

(a)Result
in possession of Joint Venture property or assignment of any rights in specific Joint Venture property, other than for a Joint
Venture purpose; or

 

(b)Authorize
the lending of Joint Venture funds to any partnership or joint venture in which the Managing Venturer or an Affiliate is a general
partner or managing venturer.

 

4.8.2:Acts Requiring
Unanimous Approval. Except by the unanimous Vote of the Venturers, including the Managing Venturer, no Venturer has authority
to:

 

(a)Assign
the Joint Venture property in trust for creditors or on the assignee’s promise to pay the debts of the Joint Venture;

 

(b)Dispose
of the good will of the business;

 

(c)Do
any other act which would make it impossible to carry on the ordinary business of the Joint Venture;

 

(d)Confess
a judgment;

 

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(e)Contravene
this Agreement; or

 

(f)Submit
a Joint Venture claim or liability to arbitration or reference.

 

4.9:Other Permissible
Activities. No Venturer is prevented hereby from engaging in other activities for profit, whether in the oil and gas business
or otherwise. The Venturers, including the Managing Venturer and its Affiliates have and in the future may engage in other businesses
including the organization and management of additional partnerships, limited partnerships, joint ventures, or corporations for
the exploration of oil and gas and must necessarily divide their time between the business of the Joint Venture and their other
activities. The Venturers, including the Managing Venturer and its Affiliates are hereby authorized, during the life of the Joint
Venture, to acquire oil or gas interests or properties and not offer the same to the Joint Venture. Further, nothing herein shall
prevent another partnership organized by the Managing Venturer or any Affiliate from acquiring a prospect that is in the same geographical
reservoir as any Prospect owned by this Joint Venture.

 

4.10:Purchase
of Oil and Gas Equipment from the Managing Venturer and Affiliates. The Joint Venture may purchase or acquire equipment necessary
in the drilling, Completion, reworking and Operation of Joint Venture wells from the Managing Venturer, or an Affiliate, and such
equipment may be new or used.

 

4.11:Meetings.
The Venturers may develop such rules and procedures they deem necessary, desirable or convenient to provide for meetings of Venturers
to Vote, or to obtain the written Vote or consent of Venturers as to matters on which a Vote of the Venturers is sought. Such rules
and procedures shall be in writing and shall provide for call and notice of meeting and quorum requirements (which shall be based
on interests in the Joint Venture and shall require that holders of not less than 50% in interests (not in numbers) in the Joint
Venture be present in person or by proxy). A copy of such rules and procedures shall be available for inspection by any Venturer
at the principal place of business of the Joint Venture.

 

4.12:“Tax
Matters Partner.” The Managing Venturer shall be the “tax matters partner” for purposes of partnership and
joint venture proceedings as described in Subtitle F, Chapter 63, Subchapter C, of the Code.

 

ARTICLE V

 

RIGHTS AND OBLIGATIONS OF VENTURERS;
AMENDMENTS

 

5.1:Venturers’
Delegation of Powers. At no time during the term of the Joint Venture shall a Venturer, other than the Managing Venturer, have
the power to act on behalf of, sign for or bind the Joint Venture with respect to Operations of the Joint Venture.

 

5.1.1:Indemnity
by Venturer. Each Venturer shall indemnify, defend, and hold harmless the Joint Venture and all other Venturers (including
any person who is or was the Managing Venturer), their officers, directors, agents and attorneys, from and against any loss, claim,
cause of action, item of damage, expense, and cost (including attorneys’ fees and court costs), but only to the extent of
his or her total capital contributions to the Venture, arising directly or indirectly out of:

 

(a)Any
act of such Venturer that is inconsistent with the rights and authority delegated to the Managing Venturer; and

 

(b)Any
misrepresentation made by a Venturer in the Application Agreement or elsewhere, any breach by a Venturer of any of his or her warranties,
and any failure by him or her to fulfill any of his or her covenants or agreements set forth herein or elsewhere.

 

5.1.2:Indemnity
by Managing Venturer. The Managing Venturer shall indemnify, defend, and hold harmless the Joint Venture and all Venturers,
their officers, directors, agents and attorneys, from and against any loss, claim, cause of action, item of damage, expense, and
cost (including attorneys’ fees and court costs) arising directly or indirectly out of:

 

(a)Any
willful or grossly negligent act of the Managing Venturer that is inconsistent with the rights and authority delegated to the Managing
Venturer; and

 

(b)Any
willful or grossly negligent misrepresentation made by the Managing Venturer, and any willful or grossly negligent failure by it
to fulfill any of its covenants or agreements set forth herein or elsewhere.

 

5.1.3:Breach.
Any action of a Venturer that is inconsistent with Section 5.1 hereof, shall:

 

(a)Constitute
a breach of this Agreement on the part of the Venturer so acting;

 

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(b)Render
such Venturer subject to claims for damages asserted by the Joint Venture or the Venturers, as the case may be, to all rights of
indemnification in favor of the Joint Venture and all of the Venturers as set forth in this Agreement; and

 

(c)Constitute
grounds for the expulsion of such Venturer from the Joint Venture, in the discretion of the Managing Venturer or based upon a Vote.

 

5.2:Rights of
Venturers. A Venturer shall have all the rights and obligations granted to a general partner and joint venturer under the TBOC,
subject to the terms and provisions in this Agreement, except those matters set forth in Section 152.002 of the TBOC.

 

5.3:Proposal
of Amendments. Amendments to this Agreement may be proposed by either the Managing Venturer or, subject to Section 4.11 hereof,
by Venturers owning not less than 6% of all Units outstanding. Proposed amendments, subject to the conditions set forth in Section
5.5 hereof, may concern any Article of this Agreement.

 

5.4:Procedure
to be Followed. Following any proposal of an amendment pursuant to Section 5.3 hereof, the Managing Venturer shall, within
15 days after receipt thereof, submit to all Venturers a verbatim statement of the proposed amendment. All proposed amendments,
whether proposed by the Managing Venturer or by Venturers owning not less than 6% of the Units, shall be submitted to the Venturers
for a Vote, within 30 days after the date of mailing of such notice. For purposes of obtaining a written Vote, the Managing Venturer
may require response within a specified time. Any Venturer failing to notify the Managing Venturer of his or her support for or
opposition to the amendment within the specified time shall be conclusively deemed to have opposed the amendment.

 

5.5:Amendments
Not Allowable. No amendment shall change the contributions of the Venturers required herein or retroactively adversely affect
the rights and interests of any Venturer, including the Managing Venturer, including any change in the allocations set forth in
Articles VIII and IX hereof without affirmative written consent.

 

5.6:Meetings
of Venturers. Subject to the requirements of Section 4.11 hereof, meetings of the Venturers may be called by the Managing Venturer
and shall be called by it upon the written request of Venturers holding 6% or more of the Units. The call will state the nature
of the business to be transacted, and no other business will be considered. Venturers may Vote in person or by proxy at any such
meeting.

 

5.7:Removal
of Managing Venturer. Subject to the requirements of Section 4.11 hereof, a Vote of 60% in interest of the Venturers shall
have the right to remove the Managing Venturer and substitute a new managing venturer to carry on the day-to-day Operations of
the Joint Venture. The removal of the Managing Venturer shall not be retroactively effective.

 

5.8:Rights of
the Managing Venturer Upon Removal. In the event the Managing Venturer is removed in accordance with Section 5.7 hereof, or
the Managing Venturer withdraws or ceases to be a Venturer by operation of law, or otherwise, the removed Managing Venturer shall
select an independent engineering firm to value the removed Managing Venturer’s interest in the Joint Venture at its then
present fair market value. In determining the fair market value of the Managing Venturer’s interest, the independent engineer
will take into account appropriate discount factors in light of the risk of recovery of oil and gas reserves. The incoming managing
venturer or the Joint Venture may purchase for cash all or a portion of the interest of the removed Managing Venturer for the value
determined by the independent engineering appraisal if the removed Managing Venturer chooses to sell. The interest of the removed
Managing Venturer not purchased by the incoming Managing Venturer or the Joint Venture shall be assigned to the removed Managing
Venturer by the Joint Venture and the removed Managing Venturer shall thereafter have no further interest in the Joint Venture,
except as to the interest so assigned to it. Further, upon removal or withdrawal, the Managing Venturer shall be released and indemnified
from all liabilities arising after the Managing Venturer ceases to be Managing Venturer.

 

ARTICLE VI

 

TRANSFER AND ASSIGNMENT OF UNITS

 

6.1:By Managing
Venturer. The Managing Venturer may transfer its managing venturer’s interest to an Affiliate without the consent of
the Venturers and such Affiliate shall become the new managing venturer of the Venture, subject however to the right of the Venturers
under Section 5.7 to Vote to remove such new managing venturer. The Managing Venturer and any Affiliate, without the consent of
the Venturers, also may at any time sell, transfer or assign any Unit(s) then held by them as a Venturer, subject to this Article
VI. Purchasers of Units from the Managing Venturer or such Affiliates shall be admitted as Substitute Venturers.

 

6.2:By Venturers.
No Venturer (except a Venturer who sells his or her Units to the Managing Venturer or its Affiliates) may sell or transfer all
or any part of his or her Unit(s) until he or she shall first comply with the provisions of this Section; provided, however, that
any sale, assignment or other transfer to Venturer’s parents, spouse, siblings or children (either natural or adoptive) or
to any trust of which the primary beneficiaries are the Venturer, his or her parents, spouse, siblings or children shall not be
subject to the restrictions on transfer set forth in Sections 6.2.1 and 6.2.2, and, provided further, that the Managing Venturer
provides written consent for such transfer, in its discretion, which shall not be unreasonably withheld.

 

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6.2.1:Notice Required.
Such selling Venturer shall deliver to the Managing Venturer a written notice (the “Notice”) in which he or she shall:

 

(a)state
his or her intention to sell or dispose of his or her Unit(s) or a part thereof;

 

(b)state
the price and terms of the best bona fide offer he or she has received for the purchase of such Unit(s) and the name and address
of the offeror(s) making such offer; and

 

(c)offer
to sell such Unit(s) to the Managing Venturer on the same terms and conditions at any time within 20 days after the delivery of
such written notice.

 

6.2.2:Option.
At any time during the 20 day period after the delivery of the Notice, the Managing Venturer shall have the right and option to
purchase the Unit(s) so offered by the selling Venturer, and if the Managing Venturer shall decline such purchase, then the remaining
Venturers shall have such option for an additional 20 days, on the terms and for the price set forth in the Notice. If the option
is not exercised by the Managing Venturer or the remaining Venturers, the selling Venturer may within 30 days, subject to the other
provisions of this Agreement, sell the Unit(s) designated in the Notice but only in accordance with the terms stated in the Notice.
If the sale is not completed within such 30 day period, the Notice shall be deemed to have expired and a new Notice and option
shall be required before any sale or disposition is made of the Units of the selling Venturer.

 

6.2.3:Transfer
Conditions. No transfer pursuant to this section may occur unless:

 

(a)the
purchaser or transferee of such Unit(s) is a qualified purchaser or transferee and is approved as such by a Vote of the Venturers
and in accordance with the suitability standards originally applied by the Managing Venturer to initial Venturers;

 

(b)the
sale, transfer, assignment, and conveyance is expressly made subject to the provisions of this Agreement;

 

(c)the
purchaser or transferee assumes all of the obligations of the transferring Venturer under this Agreement (including the execution
of a power of attorney to the Managing Venturer); and

 

(d)the
transferring Venturer or purchaser delivers to the Managing Venturer the opinion referred to in Section 6.7.

 

6.2.4:Assignment
of Venturer’s Interest. Unless a Venturer is admitted as an additional Venturer, a conveyance by a Venturer of his or
her interest in the Joint Venture does not of itself require winding up of the Joint Venture, nor, as against the other Venturers,
entitle the assignee, during the continuance of the Joint Venture, to interfere in the management or administration of the Joint
Venture business or affairs. Such Conveyance merely entitles the assignee to receive in accordance with his or her contract the
profits to which the assigning Venturer would otherwise be entitled and, for any proper purpose, to require reasonable information
or account of Joint Venture transactions and to make reasonable inspection of the Joint Venture books.

 

6.2.5:Expenses.
The Joint Venture may charge and receive from the selling Venturer an amount not exceeding $500 plus its actual costs and expenses
of third parties, including attorneys’ and accountants’ fees, in effecting the transfer and registration on its books
of such Unit(s) thus sold.

 

6.2.6:Exercise
and Procedures. All rights and options provided in this Article VI may be exercised by the Managing Venturer and Venturers
entitled and electing to exercise such options in proportion to their interests in the Joint Venture or as they may mutually agree.
The Venturers by Vote may promulgate such rules as they may deem appropriate and desirable to enforce the limitations on transfer
of Units as set forth in this Article VI, establishing such policies, methods and procedures for effecting and evidencing such
transfers as are in accordance with the provisions hereof and as may seem necessary, reasonable or convenient.

 

6.3:Notice of
Assignment. Notwithstanding anything in the joint venture or partnership laws of the State of Texas to the contrary, no transfer
of any Unit(s), although otherwise valid under this Agreement and the TBOC, shall be recognized by the Joint Venture until the
transferor has given written notice thereof as provided herein and the transferee has become a Holder of Record.

 

6.4:Bankruptcy,
Death, Incapacity or Forfeiture.

 

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6.4.1:Continuation
Agreement; Waiver of Liquidation Rights. Upon the bankruptcy, insolvency, death, or legal incapacity of a Venturer or the abandonment
of Units by a Venturer (or, in the case of a Venturer that is a partnership, joint venture, association, corporation or trust,
its insolvency, dissolution or bankruptcy), or upon the occurrence of any other event that would otherwise give rise to the winding
up of the Joint Venture, the Joint Venture shall not be wound up or terminated. Instead, in consideration of their mutual covenants,
all of the Venturers specifically agree that in the event of the death, bankruptcy, insolvency, incapacity, or dissolution of any
Venturer, or upon the occurrence of any other event that would otherwise give rise to the winding up of the Joint Venture, the
Venturers, by executing this Agreement, hereby Vote in advance that the Joint Venture shall be continued; provided, however, that
the Venturers by unanimous Vote may rescind such Vote for continuation within 30 days after the event causing the winding up. Upon
continuation, the business affairs of the Joint Venture shall continue and not be liquidated, and each Venturer hereby specifically
waives his or her liquidation rights in such an event. Liquidation of the Joint Venture shall be caused or obtained only in the
manner set forth in Section 9.1 hereof. The continued joint venture shall assume all liabilities of the dissolved Joint Venture.

 

6.4.2:Status of
Successor In Interest. Except as otherwise provided in the TBOC, no assignee, transferee or successor in interest of a Venturer
shall be deemed a Substitute Venturer or entitled to exercise any rights, powers or benefits of a Venturer other than the right
to distribution and allocation of Net Cash Flow, Net Proceeds, Amount Realized and Federal Income Tax Items unless such assignee,
transferee or successor in interest has been approved and accepted by the Venturers in accordance with this Article VI. Such successor
in interest may transfer the Unit(s) of such Venturer only pursuant to the provisions of this Article VI.

 

6.5:Divorce.
Upon the divorce of any Venturer, all of the interest in the Joint Venture of such divorced Venturer shall be determined in accordance
with the TBOC.

 

6.6:Consent
of Venturers. No assignee or transferee shall be deemed to be a Substitute Venturer or entitled to exercise or receive any
rights, powers or benefits of a Venturer unless such assignee has been approved and accepted by the Venturers in accordance with
Section 6.2.2(a), (b), (c) and (d).

 

6.7:Opinion
Letter. Notwithstanding anything herein to the contrary, no Venturer may sell, transfer, assign, or gift any interest in the
Joint Venture without first presenting to the Managing Venturer a written opinion of counsel (in form and substance acceptable
to the Managing Venturer) to the effect that such sale, transfer, assignment or conveyance will not result in a termination of
the Joint Venture within the meaning of Code section 708(b) or otherwise result in a violation of applicable law.

 

6.8:Subdivided
Units Prohibited. Notwithstanding anything herein to the contrary, no Venturer other than the Managing Venturer shall be permitted
to further subdivide any portion of a Unit for the purpose of a sale, transfer, assignment, conveyance, gift, donation or bequest.

 

ARTICLE VII

 

ACCOUNTING, RECORDS AND REPORTS

 

7.1:Books, Records
and Reports. The Joint Venture shall maintain at the principal office of the Joint Venture or at such other place as it may
determine:

 

(a)the
books and records of the Joint Venture; and

 

(b)an
executed counterpart of this Agreement and all amendments thereto.

 

Such information, as is available pursuant
to applicable Texas law, shall be open to reasonable inspection and examination by any of the Venturers, assignees, their agents,
accountants, attorneys and other duly authorized representatives during regular business hours upon not less than 48 hours prior
written request. The Managing Venturer may condition the disclosure of Venture books, records and reports upon a showing of a proper
purpose and under such measures that the Managing Venturer reasonably believes are sufficient to maintain the confidential and
proprietary nature of the information contained in such documents.

 

7.2:Accounting
Method. The books and records of the Joint Venture shall be kept in accordance with the terms of this Agreement applied in
a consistent manner and may be kept on the cash basis if such method of accounting is permissible and the Managing Venturer deems
it in the best interest of the Venture. The accounting year of the Joint Venture shall be the calendar year.

 

7.3:Financial
Statements and Tax Returns. At the expense of the Joint Venture, the Managing Venturer shall engage a certified public accountant
to prepare the Joint Venture’s annual income tax return, the return required by Code section 6050K relating to sales and
exchanges of interests in the Joint Venture, and annual financial statements, which shall include:

 

(a)a
balance sheet as of the last day of the accounting year;

 

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(b)a
statement of income or loss for the full year;

 

(c)a
statement of changes in financial position;

 

(d)a
statement of cash flow and distributions for the full year;

 

(e)a
detailed statement of distributions to and changes in the Capital Accounts of all Venturers; and

 

(f)a
detailed statement of assessments and borrowings, if any.

 

Subject to a Vote to the contrary, such
financial statements shall be unaudited. Within a reasonable time after the close of each accounting year, the Managing Venturer
shall transmit to each person who was a Venturer (or assignee) during such accounting year, a copy of such financial statements
and a report (which may be in the form of Schedule K-1 to IRS Form 1065) indicating such persons’ respective share of Federal
Income Tax Items, Amount Realized, tax preference items and investment credits, if any, for such year.

 

7.4:Reports.
In addition to the financial information set forth in this Article VII, the Managing Venturer shall furnish to the Venturers annually
the following reports dealing with Joint Venture Operations:

 

7.4.1:Prospect
Status Reports. The Managing Venturer shall furnish reports in the form of drilling summaries indicating the status of each
Joint Venture well and a description of the Prospect Wells and costs incurred on such Prospect Wells to date.

 

7.4.2:Related
Party Transactions. A detailed statement of any transactions by the Joint Venture with the Managing Venturer or its Affiliates,
and of fees, commissions, compensation and other benefits paid or accrued to the Managing Venturer or its Affiliates for the period
completed.

 

7.5:Banks.
All funds of the Joint Venture shall be deposited in a separate bank account or accounts in the name of the Joint Venture as may
be determined from time to time by the Managing Venturer. Withdrawals from such account or accounts shall be made upon checks or
other withdrawal orders executed by a duly authorized representative of the Managing Venturer.

 

7.6:Confidentiality.
All information relating to the Joint Venture and the Joint Venturers is intended by all Joint Venturers to be confidential and
a trade secret of the Venture. Any disclosure of such information to anyone other than a Venturer or their duly designated representative,
or the use of any information regarding the Venture, its business or its Venturers is prohibited; provided, however, that nothing
herein shall prevent or restrict the disclosure of any such information for a proper Venture business purpose or as otherwise may
be required by law. The Venture and the Venturers acknowledge that any breach of the confidentiality provision herein contained
may not provide the non-breaching party with an adequate remedy at law and thus, the Venturers, Venture and the Managing Venture
acknowledge and agree to injunctive relief with respect to any such breach.

 

ARTICLE VIII

 

ALLOCATIONS

 

8.1:Allocation
of Basis of Depletable Properties.

 

8.1.1:Initial
Operations. For purposes of depletion, the Joint Venture shall allocate to the Managing Venturer and to each Venturer on or
before the date of acquisition of each oil and gas property acquired with respect to Initial Operations, a portion of the adjusted
basis of such property. Such basis shall be allocated 1% to the Managing Venturer and 99% to the Venturers (and to each Venturer
in the proportion that such Venturer’s Units bears to the total Units of all Venturers).

 

8.1.2:Additional
Property Acquired For Subsequent Operation. For purposes of depletion, the Joint Venture shall allocate to the Managing Venturer
and to each Participating Venturer in a Subsequent Operation on or before the date of acquisition of any oil and gas property acquired
for purposes of undertaking a Subsequent Operation, a portion of the adjusted basis of such property. Such basis shall be allocated
1% to the Managing Venturer and 99% to the Participating Venturers in such Subsequent Operation (and to each such Participating
Venturer in the proportion that the interest of such Participating Venturer in such Subsequent Operation bears to the total interests
of all such Participating Venturers in such Subsequent Operation).

 

8.1.3:Allocations
to Additional Venturers. On the admission pursuant to Subsection 2.9.6(c) of additional Venturers to participate in a Subsequent
Operation to be undertaken on a property the basis of which has previously been allocated pursuant to Subsections 8.1.1 or 8.1.2,
the Joint Venture shall reallocate to the Venturers participating in such Subsequent Operation, in the proportion specified in
Subsection 8.3.2, the adjusted basis of the portion of the property upon which the Subsequent Operation is to be undertaken.

 

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8.1.4:Records
and Adjustments. Each Venturer is solely responsible for and shall separately keep records of his or her share of the adjusted
basis in each oil and gas property of the Joint Venture, adjust such share of the adjusted basis for any depletion taken on such
property, and use such adjusted basis each year in computing his or her cost depletion (if applicable) or his or her gain or loss
on the disposition of such property by the Joint Venture. A Substitute Venturer shall succeed to the basis allocated to the transferor
of his or her Unit(s).

 

8.2:Allocations
with Respect to Oil and Gas Properties for Capital Accounts.

 

8.2.1:Simulated
Depletion. For purposes of maintaining Capital Accounts only, the Joint Venture shall compute a “simulated” depletion
allowance. The Joint Venture shall calculate this “simulated” depletion allowance on each property using the method,
cost or percentage, that produces the greatest allowance and without regard to limitations to which any individual Venturer may
be subject. The Joint Venture shall make its choice between the simulated cost depletion method and the simulated percentage depletion
method on a property-by-property basis.

 

8.2.2:Simulated
Adjusted Basis. The Joint Venture shall compute a simulated adjusted basis in each oil or gas property in the same manner as
it determines the adjusted tax basis in such properties, except that it shall take into account simulated depletion allowances
instead of actual depletion allowances.

 

8.2.3:Simulated
Gain. On the taxable disposition of an oil and gas property by the Joint Venture, the Joint Venture shall compute a simulated
gain or loss by subtracting its simulated adjusted basis in such property from the amount realized on the disposition of such property.

 

8.2.4:Capital
Account Adjustments For Simulated Depletion. The Joint Venture shall make downward adjustments to the Capital Accounts of the
Venturers for the simulated depletion allowance with respect to each oil and gas property of the Joint Venture, and allocate such
adjustments among the Venturers in the same proportion as such Venturers (or their predecessors in interest) were allocated the
adjusted tax basis of each such property pursuant to Section 8.1 hereof. The aggregate Capital Account adjustments for simulated
percentage depletion allowances with respect to an oil or gas property of the Joint Venture shall not exceed the aggregate adjusted
basis allocated to the Venturers with respect to such property pursuant to Section 8.1 hereof.

 

8.2.5:Capital
Account Adjustments For Simulated Gain and Simulated Loss. The Joint Venture shall make upward adjustments to the Capital Accounts
of the Venturers by the amount of any simulated gain in proportion to such Venturers’ allocable shares of the portion of
the total Amount Realized from the disposition of such property that exceeds the Joint Venture’s simulated adjusted basis
in such property as provided in Section 8.5(b) hereof. The Joint Venture shall make downward adjustments to the Capital Accounts
of the Venturers by the amount of any simulated loss in proportion to such Venturers’ allocable shares of the total Amount
Realized from the disposition of such property that represents recovery of the Joint Venture’s simulated adjusted basis in
the property in the manner provided in Section 8.5(a) hereof.

 

8.3:Allocations
of Net Cash Flow, Net Proceeds and Federal Income Tax Items.

 

8.3.1:Initial
Operations. All Net Cash Flow, Net Proceeds and Federal Income Tax Items as they relate to Initial Operations shall be shared
by or charged:

 

(a)99%
to the Venturers, other than the Managing Venturer, except to the extent that the Managing Venturer holds Units; and

 

(b)1%
to the Managing Venturer.

 

Each
Venturer (or other Holder of Record), other than the Managing Venturer, except to the extent the Managing Venturer holds Units,
shall share Net Cash Flow, Net Proceeds and Federal Income Tax Items attributable to Initial Operations and allocated to the Venturers
in the proportion that such Venturer’s Units bear to the total Units of all Venturers.

 

8.3.2:Subsequent
Operations. All Net Cash Flow, Net Proceeds and Federal Income Tax Items derived by and attributable to each Subsequent Operation
shall be shared by or charged:

 

(a)99%
to the Participating Venturers, other than the Managing Venturer, except to the extent the Managing Venturer holds Units in such
Subsequent Operation; and

 

(b)1%
to the Managing Venturer.

 

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Each
Participating Venturer, other than the Managing Venturer, except to the extent the Managing Venturer holds Units in such Subsequent
Operation, shall share Net Cash Flow, Net Proceeds and Federal Income Tax Items derived from and attributable to such Subsequent
Operation in the Proportion that such Participating Venturer’s Additional Assessment Contributions bear to the Additional
Assessment Contributions of all such Participating Venturers and in accordance with Article II of this Agreement.

 

8.4:Recapture.
All recapture of previously taken deductions or credits shall be allocated to the Venturers to whom such deductions or credits
were allocated and in the same manner.

 

8.5:Amount Realized.
Amount Realized shall be allocated among the Venturers as follows:

 

(a)to
the extent such Amount Realized represents recovery of the simulated adjusted basis in the property, such Amount Realized shall
be allocated among the Venturers in the proportion that under Section 8.1 hereof the Venturers were allocated adjusted basis in
the property sold; and

 

(b)any
such Amount Realized remaining after the allocation in paragraph (a) above shall be allocated among the Venturers in the manner
set forth in Section 8.3 hereof.

 

8.6:Allocations
to Holder of Record. All Federal Income Tax Items, Amount Realized, Net Cash Flow and Net Proceeds allocable to Venturers under
the terms of this Agreement shall be allocated to the Holders of Record on the basis of the number of days that such person or
entity was a Venturer during the accounting year of the Joint Venture in which such item accrued; provided, that:

 

(a)Amount
Realized, Gain From Capital Transactions and Loss From Capital Transactions recognized as a result of the sale or other disposition
of property during the accounting year of such transfer shall be allocated to the Holder of Record on the date of such sale or
other disposition; and

 

(b)To
the extent such Amount Realized, Gain From Capital Transactions and Loss From Capital Transactions is recognized by the Joint Venture
under the installment method of accounting, such items shall be allocated between the assignee and the assignor so that any gain
recognized by the Joint Venture on a particular date is allocated to the Holder of Record on the date of the sale or other disposition
giving rise to such gain.

 

8.7:Distributions.
Subject to a Vote to the contrary, the Managing Venturer may at any time or in its sole and absolute discretion, distribute Net
Cash Flow and Net Proceeds to the Venturers in the proportion to which they are entitled, as set forth in Section 8.3 hereof.

 

8.8:Distributions
in Kind. In no event shall a Venturer have the right to demand property other than cash with respect to any return of invested
capital. During the term of the Joint Venture, the Managing Venturer shall make no distribution of property in any form other than
in cash. On liquidation of the Joint Venture, the Managing Venturer may, in its sole and absolute discretion, distribute property
other than cash to any or all of the Venturers.

 

8.9:Tax Elections.
The Joint Venture shall exercise its option to deduct Intangible Costs pursuant to Code section 263(c). In addition, the Managing
Venturer, in its sole and absolute discretion (subject to a Vote to the contrary), may cause the Joint Venture to make or revoke
the election referred to in Code section 754 or any similar provision enacted in lieu thereof, and make or revoke any other election
or option that may be available to the Joint Venture under the Code.

 

8.10:Qualified
Income Offset. Notwithstanding any other provision of this Article VIII, if a Venturer unexpectedly receives an allocation,
adjustment or distribution described in Treasury Regulation section 1.704-1(b)(2)(ii)(d)(4), (5), or (6), that creates a deficit
balance in its Capital Account, such Venturer shall be allocated items of Profit or Gain From Capital Transactions of the Joint
Venture in an amount and manner sufficient to eliminate such deficit Capital Account balance as quickly as possible.

 

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ARTICLE IX

 

TERMINATION AND DISSOLUTION

 

9.1:Causes for
Termination and Dissolution. The Joint Venture shall be wound up and terminated on the date set forth in Section 1.6 hereof.
Otherwise, the Joint Venture shall be dissolved and terminated prior to such date only upon the happening of the events as specified
in the TBOC. Upon the bankruptcy, insolvency, death, or legal incapacity of a Venturer or the abandonment of Units by a Venturer
(or, in the case of a Venturer that is a partnership, joint venture, association, corporation or trust, its insolvency, dissolution
or bankruptcy), or upon the occurrence of any other event that would otherwise give rise to the winding up of the Joint Venture,
the Joint Venture shall be wound up but not terminated. Instead, in consideration of their mutual covenants, all of the Venturers
agree and Vote in advance that in the event of the death, bankruptcy, insolvency, incapacity, or dissolution of any Venturer, or
upon the occurrence of any other event that would otherwise give rise to the winding up and termination of the Joint Venture, the
Joint Venture shall be continued and the business affairs shall continue and not be liquidated, and each Venturer hereby specifically
waives his or her liquidation rights in such an event. However, the Venturers may rescind their Vote to continue the Joint Venture
by unanimous Vote within 30 days after the event causing the winding up. Termination of the Joint Venture shall be caused or obtained
only in the manner set forth in this Article IX. The continued joint venture shall assume all liabilities of the dissolved Joint
Venture.

 

9.2:Liquidation.
Upon winding up and termination of the Joint Venture as set forth in Section 9.1 hereof, if the Joint Venture is not continued,
the Joint Venture shall engage in no further business other than such business as may be necessary to wind up its affairs and to
distribute its assets.

 

9.3:Liquidator.
The Managing Venturer shall serve as Liquidator, unless a substitute is appointed by a Vote of the Venturers.

 

9.4:Disposition
of Assets. On the winding up and termination of the Joint Venture, the Liquidator shall, by the later of the end of the taxable
year in which the termination occurs or 90 days after the termination:

 

9.4.1:Determine
Assets and Capital Accounts. Determine the interest of the Joint Venture in each Joint Venture asset and determine the Capital
Account of each Venturer;

 

9.4.2:Pay Debts.
Pay all Joint Venture debts, or otherwise make adequate provision therefore;

 

9.4.3:Adjust Capital
Accounts For Depletable Properties. Sell or determine the fair market value of the Joint Venture’s depletable properties
using appraisal techniques it deems to be appropriate, taking into account the nature of the property interests held by the Joint
Venture. The Joint Venture depletable property (at appraised value) or Net Proceeds from the sale thereof shall be distributed
to each Venturer in the manner set forth in Section 8.5 hereof. With respect to depletable property not sold, the Liquidator shall,
prior to any distribution of such property, adjust the Capital Accounts of the Venturers to reflect:

 

(a)the
manner in which simulated gain or loss would have been allocated among the Venturers under section 8.2.4 as though all depletable
property had been sold for cash; and

 

(b)any
distributions under this Section.

 

9.4.4:Adjust Capital
Accounts For Other Property. Sell or determine the fair market value of the remaining Joint Venture assets using such appraisal
techniques it deems to be appropriate, taking into account the nature of the property interests. With respect to any properties
not sold, the Liquidator shall, prior to any distribution of such property by the Joint Venture, adjust the Capital Accounts of
all Venturers to reflect the manner in which the unrealized Federal Income Tax Items inherent in such assets (that have not been
reflected in the Capital Accounts previously) would be allocated among the Venturers, if there was taxable disposition of such
assets for their fair market value on the date of distribution.

 

9.4.5:Final Statement
of Account. As promptly as possible after dissolution, the liquidation shall cause a final statement of account to be prepared,
which shall show with respect to each Venturer, the status of such Venturer’s Capital Account and the amount, if any, owing
to the Joint Venture. Such statement of each Venturer’s Capital Account shall reflect all the allocations provided in Article
VIII hereof and the allocations to the Capital Accounts set forth in Sections 9.4.3 and 9.4.4 hereof.

 

9.4.6:Distribute
Assets. Subject to Section 9.4.7 below, the remaining Joint Venture assets (or cash realized from a sale thereof) shall be
distributed to the Venturers at their fair market values as determined above, in the following order: to the Venturers (including
the Managing Venturer to the extent it holds Units) 99% (and among the Venturers as provided in Section 8.3 hereof) and to the
Managing Venturer 1% for its interest as Managing Venturer.

 

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9.4.7:Withholding
to Pay Debts of Venturers. Notwithstanding the foregoing, if any Venturer is indebted to the Joint Venture, then until repayment
thereof by him or her, the Liquidator shall retain such Venturer’s distributive share of Joint Venture properties and apply
such properties and the income therefrom to the full discharge and payment of such indebtedness and the cost of the operation of
such properties during the period of such Liquidation; provided, however, if at the expiration of six months after the final statement
of account has been given to such Venturer, such amount has not been paid or otherwise settled in full, the Liquidator may sell
the interest of such Venturer at a public or private sale at the best price immediately obtainable, which shall be determined in
the sole and absolute judgment of the Liquidator. So much of the proceeds of such sale as shall be necessary shall be applied to
the payment of the amount then due under this Section, and the balance of such proceeds, if any, shall be delivered to such Venturer.

 

9.4.8:Other Requirements
of Law. The Liquidator shall comply with any requirements of the TBOC or other applicable law pertaining to the winding up
of a partnership at which time the Joint Venture shall stand terminated.

 

9.5:No Recourse.
Upon winding up or termination of the Joint Venture, each Venturer shall look solely to the assets of the Joint Venture for the
return of such Venturer’s investment. If the Joint Venture assets remaining after payment and discharge of debts and liabilities
of the Joint Venture, including any debts and liabilities owed to any one or more of the Venturers, is not sufficient to satisfy
the rights of each Venturer, such Venturer shall have no recourse or further right or claim against the Managing Venturer, any
Affiliate, any officer, director, employee, attorney or agent of the Managing Venturer or of any Affiliate, or the remaining Venturers.

 

9.6:Reserves.
In winding up the affairs of the Joint Venture and distributing its assets, the Liquidator shall set up a reserve to meet any contingent
or unforeseen liabilities or obligations, and shall deposit funds for such purpose, together with funds held by the Joint Venture
for distribution to Venturers which remain unclaimed after a reasonable period of time, with an escrow agent retained for the purpose
of disbursing such reserves and funds. At the expiration of such period as the Liquidator deems advisable, the escrow agent shall
be authorized and directed to distribute the balance thereafter remaining in the manner provided in Section 9.4 hereof.

 

9.7:Restoration
of Negative Capital Accounts. No Venturer with a deficit in his or her Capital Account shall be obligated to restore the amount
of such deficit to the Joint Venture.

 

ARTICLE X

 

INDEMNIFICATION

 

10.1:Indemnification.
The Joint Venture shall indemnify, protect, defend and hold harmless any person who is or was (i) a Managing Venturer of the Joint
Venture, (ii) a director, officer, agent or attorney of a person who is or was a Managing Venturer, and (iii) while a Venturer
of the Joint Venture, serving at the request of the Joint Venture as a partner, venturer, proprietor, trustee, employee, agent
or similar functionary of another foreign or domestic partnership, joint venture, sole proprietorship, trust, employee benefit
plan or other enterprise, against Losses (as defined below) incurred by them acting on behalf of the Venture or in furtherance
of the objectives of the Venture or arising out of or in connection with the Venture, except to the extent such losses are incurred
as a result of the willful misconduct or gross negligence of such Managing Venturer or its directors, officers, agents or attorneys.
“Losses” for these purposes means actual losses; liabilities; demands; causes of action; judgments; awards; damages;
contribution, fines; fees; penalties; and costs and expenses.

 

10.2:Successful
Defense. The Joint Venture shall indemnify each Venturer against reasonable expenses incurred by him or her in connection with
a proceeding in which he or she is a party because he or she is a Venturer if he or she has been wholly successful, on the merits
or otherwise, in the defense of the proceeding.

 

10.3:Scope of
Indemnification. A PERSON MAY BE INDEMNIFIED UNDER THIS ARTICLE X IN CONNECTION WITH SUCH PERSON’S NEGLIGENCE, STRICT
LIABILITY OR OTHER FAULT (SHORT OF GROSS NEGLIGENCE OR WILLFUL MISCONDUCT).

 

10.4:Expenses.
“Expenses” as used in this Article X means attorneys’ and experts’ fees and expenses, court and other litigation
costs, judgments, penalties (including excise and similar taxes), fines, settlements and other reasonable expenditures actually
incurred by the person in connection with the proceeding; provided, however, if the proceeding is brought by or in behalf of the
Joint Venture, the indemnification is limited to reasonable expenses actually incurred by the person in connection with the proceeding.
A determination of reasonableness of expenses shall be made by a Vote.

 

10.5:Advance
Reimbursement. Reasonable expenses incurred by a person described in Section 10.1 who was, is or is threatened to be named
a defendant or respondent in a proceeding may be paid or reimbursed by the Joint Venture in advance of the final disposition of
the proceeding after (i) the Joint Venture receives a written affirmation by the person of his or her good faith belief that
he or she has met the standard of conduct necessary for indemnification under this Article X, and (ii) a written undertaking
by or on behalf of the person to repay the amount paid or reimbursed if it is ultimately determined that he or she has not met
the requirements of this Article X.

 

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10.6:Appearance
as Witness or Otherwise. The Joint Venture shall pay or reimburse expenses incurred by a person referred to in Section 10.1
under this Article X in connection with his or her appearance as a witness or other participant in any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative, arbitrative, or investigative, any appeal in such action,
suit or proceeding, and any inquiry or investigation that could lead to such an action, suit or proceeding, at a time when such
person is not a named defendant or respondent in the proceeding.

 

ARTICLE XI

 

MISCELLANEOUS PROVISIONS

 

11.1:Notice.
Any notice, payment, demand or communication required or permitted to be given by any provision of this Agreement shall be deemed
to have been duly given and received for all purposes on the date delivered personally to the party or to an officer of the party
to whom the same is directed, or when deposited by registered or certified mail, postage and charges prepaid and addressed as follows:

 

11.1.1:Joint Venture
or Managing Venturer. If to the Joint Venture or to the Managing Venturer, then to the address of the principal place of business
of the Joint Venture set forth herein or as may be changed from time to time; and

 

11.1.2:Venturers.
If to a Venturer, then to the address of such Venturer as set forth in his or her Execution Page and Power of Attorney attached
hereto as Annex “A” executed by such Venturer or other agreement or instrument in which such Venturer has agreed to
be bound by the terms and conditions of this Agreement. Any party hereto may change his, her or its address to which notice shall
thereafter be given by furnishing written notice to all the Venturers and the Joint Venture in the manner set forth in this Section.

 

11.2:Integration.
This Agreement, together with the Questionnaire and the Application Agreement attached to the Memorandum as Exhibits, respectively,
constitute the entire understanding of the parties hereto with respect to the subject matter hereof. No amendment, modification,
or alteration of the terms of this Agreement shall be binding unless the same shall be in writing, dated subsequent to the date
hereof and duly adopted by the Venturers, as provided herein. In the event that any provision of this Agreement conflicts with
any statement made in the Confidential Information Memorandum, or in any Operating Agreement, or in any other document, the provisions
of this Agreement shall prevail over such other statement.

 

11.3:Severability.
If any term or provision hereof is illegal or invalid for any reason whatsoever, such illegality or invalidity shall not affect
the validity or enforceability of the remainder of this Agreement.

 

11.4:Applicable
Law. This Agreement and the application or interpretation hereof shall exclusively
be governed by and construed in accordance with the laws of the State of Texas. This Agreement shall be deemed to be performable
in and venue shall be mandatory in Dallas County, Texas. The Managing Venturer and each
Venturer hereby expressly consents and submits to the jurisdiction of the courts and to venue in Dallas County, Texas. The
prevailing party in any judicial proceeding relating to the Venture or this Agreement will be entitled to an award of attorneys’
fees, expert witness fees and all costs of the proceeding, which shall be paid by the non-prevailing party.

 

11.5:Execution
in Counterparts. This Agreement and any amendment hereto may be executed in any number of counterparts, either by the parties
hereto or their duly authorized attorney-in-fact, with the same effect as if all parties had signed the same document, or by the
execution of the Power of Attorney and Execution Page in the form attached hereto as Annex “A” and made a part hereof.
All counterparts (including such executed Power of Attorney and Execution Pages) shall be construed as and shall constitute one
and the same Agreement.

 

11.6:Descriptive
Headings. The captions included herein are for administrative convenience only and shall not be considered in interpreting
any of the terms or provisions of this Agreement.

 

11.7:Gender
and Number. Whenever the context shall so require, all words used herein in the male or neuter gender shall be deemed to include
the female or neuter gender; all singular words shall include the plural, and all plural shall include the singular, as the context
may require.

 

11.8:Limitation
of Damages and Liability. The Managing Venturer and its directors, officers, agents
and attorneys will not be liable to the Venture or Venturers for any act or omission, except to the extent of any willful misconduct
or gross negligence of the Managing Venturer or such persons; PROVIDED, HOWEVER, THAT THE FOREGOING PROVISION SHALL NOT BE CONSTRUED
TO ELIMINATE A VENTURER’S DUTY OF LOYALTY, DUTY OF CARE OR OBLIGATION OF GOOD FAITH TO THE VENTURE AND OTHER VENTURERS UNDER
THE ACT. NEITHER THE MANAGING VENTURER NOR ANY VENTURER SHALL BE LIABLE FOR CONSEQUENTIAL, INCIDENTAL, PUNITIVE, EXEMPLARY
OR INDIRECT DAMAGES, LOST REVENUES, LOST PROFITS OR OTHER BUSINESS INTERRUPTION DAMAGES, BY STATUTE, IN TORT OR CONTRACT, UNDER
ANY INDEMNITY PROVISION OR OTHERWISE. IT IS THE INTENT OF THE MANAGING VENTURER AND THE VENTURERS THAT THE LIMITATIONS HEREIN IMPOSED
ON REMEDIES AND THE MEASURE OF DAMAGES BE WITHOUT REGARD TO THE CAUSE OR CAUSES RELATED THERETO, INCLUDING THE NEGLIGENCE OF THE
MANAGING VENTURER OR ANY VENTURER, WHETHER SUCH NEGLIGENCE BE JOINT, SOLE, CONCURRENT, COMPARATIVE OR CONTRIBUTORY FAULT OR NEGLIGENCE,
FAULT IMPOSED BY LAW, STRICT LIABILITY, GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF THE MANAGING VENTURER OR ANY VENTURER, ITS DIRECTORS,
OFFICERS, AGENTS AND/OR ATTORNEYS.

 

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IN WITNESS WHEREOF,
this Agreement has been executed by the Managing Venturer as of December 9, 2011 and by each Venturer on the date indicated opposite
his or her signature hereto or the date of each such Partner’s execution of an Execution Page and Power of Attorney hereto,
each of which is hereby incorporated herein and made a part hereof.

 

MANAGING VENTURER:

 

MIEKA CORPORATION

 

 

 

By:                                                                                 

Anita G. Blankenship, President

 

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