Document:

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                                     WARRANT

THIS WARRANT AND THE SHARES OF COMMON STOCK PURCHASABLE HEREUNDER HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FILED UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS, UNLESS
THE HOLDER OF THIS WARRANT AND/OR SHARES DELIVERS TO THE COMPANY AN OPINION OF
COUNSEL ACCEPTABLE TO THE COMPANY THAT AN EXEMPTION FROM SUCH REGISTRATION IS
AVAILABLE.

                             BLUE RIDGE ENERGY, INC.
                          COMMON STOCK PURCHASE WARRANT
                           Expiring February 28, 2003

THIS CERTIFIES THAT, for value received, Blue Ridge Group, Inc. (the "Warrant
Holder"), at any time and from time to time on any Business Day on or prior to
5:00 p.m., Central Time, on February 28, 2003 (the "Expiration Date") is
entitled to subscribe for and purchase from BLUE RIDGE ENERGY, INC., a Nevada
corporation (the "Company"), 5,000,000 shares of Common Stock at a price per
share equal to the Exercise Price.

1. CERTAIN DEFINITIONS

The following terms, as used herein, have the following meanings:

     "Business Day" means any day except a Saturday, Sunday, or other day on
     which commercial banks in Bowling Green, Kentucky, are authorized by law to
     close.

     "Commission" means the Securities and Exchange Commission.

     "Common Stock" means the Company's currently authorized common stock, $.01
     par value, and stock of any other class or other consideration into which
     such currently authorized common stock may hereafter have been changed.

     "Exercise Price" means Five cents ($0.05) per share.

     "Securities Act" means the Securities Act of 1933, or any successor Federal
     statute, and the rules and regulations of the Commission thereunder, all as
     the same shall be in effect at the time.

     "Warrant Shares" means the 5,000,000 shares of Common Stock issued or
     issuable upon exercise for this Warrant.

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2. EXERCISE OF WARRANT

The Warrant Holder or its assignee may exercise this Warrant, in whole or in
part, at any time or from time to time on any Business Day prior to the
Expiration Date, by delivering to the Company a duly executed notice (a "Notice
of Exercise") in the form of Exhibit A hereto and by payment to the Company of
the Exercise Price per Warrant Share by cashier's check in an amount equal to
the product of (I) the Exercise Price time (ii) the number of Warrant Shares as
to which this warrant is being exercised.

As soon as reasonably practicable but not later than twenty Business Days after
the Company shall have received such Notice of Exercise and payment, the Company
shall execute and deliver certificates representing the number of shares of
common Stock specified in such Notice of Exercise, issued in the name of the
Warrant Holder. This Warrant shall be deemed to have been exercised and such
share certificate or certificates shall be deemed to have been issued, and such
Warrant Holder shall be deemed for all purposes to have become a holder of
record of shares of Common Stock, as of the first Business Day after the date
that such Notice of Exercise and payment shall has been received by the Company.

The Warrant Holder shall surrender this Warrant Certificate to the Company when
it delivers the Notice of Exercise, and in the event of a partial exercise of
the Warrant, the Company shall execute and deliver to the Warrant Holder, at the
time the Company delivers the share certificate or certificates issued pursuant
to such Notice of Exercise, a new Warrant Certificate for the unexercised
balance of the Warrant.

Each Certificate for Warrant Shares issued upon exercise of this Warrant, unless
at the time of exercise such Warrant Shares are registered under the Securities
Act, shall bear the following legend:

          THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
          1933 AND MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN
          THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FILED UNDER SAID
          ACT AND ANY APPLICABLE STATE SECURITIES LAWS, UNLESS THE HOLDER OF THE
          SHARES DELIVERS TO THE COMPANY AN OPINION OF COUNSEL ACCEPTABLE TO THE
          COMPANY THAT AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.

Any certificate for Warrant Shares issued at any time in exchange or
substitution for any certificate bearing such legend shall also bear such legend
unless, in the written opinion of counsel, which counsel and opinion shall be
reasonably accepted to the Company, the Warrant Shares represented thereby need
no longer be subject to restrictions on resale under the Securities Act.

The Company shall not be required to issue fractions of shares of common Stock
upon an exercise

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of the Warrant. If any fraction of a share would, but for this restriction, be
issuable upon an exercise of the Warrant, in lieu of delivering such fractional
share, the Company shall pay to the Warrant Holder, in cash, an amount equal to
the same fraction times the Closing Price on the trading day immediately prior
to the date of such exercise.

3. INVESTMENT REPRESENTATION

By accepting the Warrant, the Warrant Holder represents that he is acquiring the
Warrant for his own account for investment purposes and not with the view to any
sale or distribution, and that the Warrant Holder will not offer, sell or
otherwise dispose of the Warrant or the Warrant Shares except under
circumstances as will not result in a violation of applicable securities laws.

4. VALIDITY OF WARRANT AND ISSUANCE OF SHARES

The Company represents and warrants that this Warrant has been duly authorized
and is validly issued.

The Company further represents and warrants that on the date hereof it duly
authorized and reserved, and the Company hereby agrees that it will at all times
until the Expiration Date have duly authorized and reserved, such number of
shares of Common Stock as will be sufficient to permit the exercise in full of
the Warrant, and that all such shares are and will be duly authorized and, when
issued upon exercise of the Warrant, will be validly issued, fully paid and
non-assessable, and free and clear of all security interests, claims, liens,
equities and other encumbrances.

5. ADJUSTMENTS

The Exercise Price in effect at any time, and the number of Warrant Shares that
may be purchased upon any exercise of the Warrant, shall be subject to change or
adjustment as follows:

     (a) Common Stock Reorganization. If the Company shall subdivide its
     outstanding shares of Common Stock into a greater number of shares, by way
     of stock split, stock dividend or otherwise, or consolidate its outstanding
     shares of Common Stock into a smaller number of shares (any such event
     being herein call a "Common Stock Reorganization"), then (I) the Exercise
     Price shall be adjusted, effective immediately after the effective date of
     such Common Stock Reorganization, to a price determined by multiplying the
     Exercise Price in effect immediately prior to such effective date by a
     fraction, the numerator of which shall be the number of shares of Common
     Stock outstanding on such effective date before giving effect to such
     Common Stock Reorganization and the denominator of which shall be the
     number of shares of Common Stock outstanding after giving effect to such
     Common Stock Reorganization, and (ii) the number of shares of Common Stock
     subject to purchase upon exercise of this Warrant shall be adjusted,
     effective at such time, to a number determined by multiplying the number of
     shares of Common Stock subject

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     to purchase immediately before such Common Stock Reorganization by a
     fraction, the numerator of which shall be the number of shares outstanding
     after giving effect to such Common Stock Reorganization and the denominator
     of which shall be the number of shares of Common Stock outstanding
     immediately before giving effect to such Common Stock Reorganization.

     (b) Capital Reorganization. If there shall be any consolidation or merger
     to which the Company is a party, other than a consolidation or a merger of
     which the company is the surviving corporation and which does not result in
     any reclassification of, or change (other than a Common Stock
     Reorganization) in, outstanding shares of Common Stock, or any sale or
     conveyance of the property of the company as an entirety or substantially
     as an entirety, or any recapitalization of the Company (any such event
     being called a "Capital Reorganization"), then, effective upon the
     effective date of such Capital Reorganization, the Warrant holder shall no
     longer have the right to purchase Common Stock, but shall have instead the
     right to purchase, upon exercise of this Warrant, the kind and amount of
     shares of stock and other securities and property (including cash) which
     the Warrant Holder would have owned or have been entitled to receive
     pursuant to such Capital Reorganization if this Warrant had been exercised
     immediately prior to the effective date of such Capital Reorganization. As
     a condition to effecting any Capital Reorganization, the Company or the
     successor or surviving corporation, as the case may be, shall execute and
     deliver to the Warrant Holder an agreement as to the Warrant Holder's
     rights in accordance with this Section 5(b), providing, to the extent of
     any right to purchase equity securities hereunder, for subsequent
     adjustments as nearly equivalent as may be practicable to the adjustments
     provided for in this Section 5. The provisions of this Section 5 (b) shall
     similarly apply to successive Capital Reorganizations.

     (c) Notice of Adjustment. The Company shall give notice to the Warrant
     Holder of any event which requires an adjustment pursuant to this Section
     5, describing such event in reasonable detail and specifying the record
     date or effective date, as the case may be, and, if determinable, the
     required adjustment and computation thereof. If the required adjustment is
     not determinable as the time of such notice, the Company shall give notice
     to the Warrant Holder of such adjustment and computation as soon as
     reasonably practicable after such adjustment becomes determinable.

6. LOST, MUTILATED OR MISSING WARRANT CERTIFICATES

Upon receipt by the Company of evidence satisfactory to it of the loss, theft,
destruction or mutilation of any Warrant Certificate, and, in the case of loss,
theft or destruction, upon receipt of an indemnification or bond satisfactory to
the Company, or, in the case of mutilation, upon surrender and cancellation of
the mutilated Warrant Certificate, the Company shall execute and deliver a new
replacement Warrant Certificate of like tenor and representing the right to
purchase the same

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aggregate number of Warrant Shares. The recipient of any such Warrant
Certificate shall reimburse the Company for all reasonable expenses incidental
to the replacement of such missing or mutilated Warrant Certificate.

7. NOTICES

All notices, requests, demands and other communications under this Warrant must
be in writing and will be deemed duly given: (i) when personally delivered, (ii)
upon receipt of a facsimile transmission with a confirmed transmission answer
back, (iii) three (3) days after having been deposited in the United States
mail, certified or registered, return receipt requested, postage prepaid, or
(iv) one (1) business day after having been dispatched by a nationally
recognized overnight courier service, addressed to the parties as follows:

    If to the Company:        Blue Ridge Energy, Inc.
                              632 Adams Street, Suite 710
                              Bowling Green, Kentucky 42101

    If to the
    Warrant Holder:           Blue Ridge Group, Inc.
                              632 Adams Street, Suite 700
                              Bowling Green, Kentucky 42101

Any party may change its address for notice purposes by giving notice of such
change of address in accordance with the foregoing provisions.

8. MISCELLANEOUS

     (a) This Warrant shall not entitle the Warrant Holder, prior to the
     exercise of the Warrant, to any rights as a shareholder of the Company.

     (b) In case any one or more of the provisions contained in this Warrant
     shall be invalid, illegal or unenforceable in any respect, the validity,
     legality and unenforceable in any respect, the validity, legality and
     enforceability of the remaining provisions contained herein shall not in
     any way be affected or impaired thereby. The parties shall endeavor in good
     faith negotiations to replace the invalid, illegal or unenforceable
     provisions with valid provisions the economic effect of which comes as
     close as possible to that of the invalid, illegal or unenforceable
     provisions.

     (c) This Warrant is personal to the Warrant Holder and may not be assigned
     without the prior written consent of the Company and any attempt to assign
     without such written consent shall be null and void. All of the provisions
     of this Warrant by or for the benefit of the Company or the Warrant Holder
     bind and inure to the benefit

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     of their respective successors and permitted assigns.

     (d) This Warrant, the construction, interpretation and enforcement hereof
     and the rights of the parties hereto shall be determined under, governed by
     and construed in accordance with the laws of the State of Kentucky without
     regard to principles of conflicts of interest.

     (e) The section headings used herein are for convenience of reference only
     and shall not be construed in any way to affect the interpretation of any
     provisions of the Warrant.

     (f) This Warrant constitutes the entire agreement between the Company and
     the Warrant Holder regarding the subject matter hereof and supersedes all
     previous agreements. There are no verbal agreements, representations,
     warranties, undertakings or agreements among the parties. This Warrant may
     not be amended or modified in any respect, except by a written instrument
     signed by the Company and the Warrant Holder.

IN WITNESS WHEREOF, the Company and the Warrant Holder agree to the foregoing
terms and conditions and have executed this Warrant as of the day and year first
above written.

                                          COMPANY

                                          BLUE RIDGE ENERGY, INC.,
                                          a Nevada Corporation

                                           /s/ ROBERT D. BURR
                                          --------------------------------------
                                          By: Robert D. Burr, President and CEO

                                          BLUE RIDGE GROUP, INC.

                                           /s/ JAMES T. COOK, JR.
                                          --------------------------------------
                                          By: James T. Cook, Jr. Vice President-
                                              Finance

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                                    EXHIBIT A

                              COMMON STOCK WARRANT
                           FORM OF NOTICE OF EXERCISE

TO: BLUE RIDGE ENERGY, INC.

     Reference is made to the Common Stock Purchase Warrant dated February 28,
     1998 (the "Warrant"). Initially capitalized terms used herein have the
     meaning as defined in the Warrant.

     The undersigned, pursuant to the provisions set forth in the Warrant,
     hereby irrevocably elects and agrees to purchase 5,000,000 shares of Common
     Stock, and makes payment herewith in full therefor at the Exercise Price of
     Five cents ($0.05) by cash or check.

     The undersigned hereby represents that it is exercising the Warrant for its
own account for investment purposes and not with the view to any sale or
distribution and that the Warrant Holder will not offer, sell or otherwise
dispose of the Warrant or any underlying Warrant Shares in violation of
applicable securities laws.

                                            ------------------------------------

                                            Printed Name: Blue Ridge Group, Inc.

                                            Date:
                                                 -------------------------------

                                        7<PAGE>   1

           ---------------------------------------------------------

                               LIMITED PARTNERSHIP

                                    AGREEMENT

                                       OF

                         HOME STAKE JOINT VENTURE, LTD.

           ---------------------------------------------------------

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                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
SECTION                                                                                                        PAGE

<S>                                                                                                            <C>
1.  The Joint Venture.............................................................................................1
     1.1  Definitions.............................................................................................1
     1.2  Organization............................................................................................5
     1.3  Joint Venture Name......................................................................................5
     1.4  Character of Business...................................................................................5
     1.5  Principal Place of Business.............................................................................5
     1.6  Term of Joint Venture...................................................................................5
     1.7  Filings ................................................................................................5
     1.8  Independent Activities..................................................................................6

2.  Capitalization................................................................................................6
     2.1  Capital Contributions of the Joint Venture Manager and Initial Limited Partner..........................6
     2.2  Capital Contributions of the Joint Venturers............................................................6
     2.3  Additional Capital Contributions........................................................................7
     2.4  No Interest on Capital Contributions, No Withdrawals....................................................7

3.  Capital Accounts and Allocations..............................................................................7
     3.1  Capital Accounts........................................................................................7
     3.2  Allocation of Profits and Losses........................................................................8
     3.3  Depletion..............................................................................................10
     3.4  Apportionment Among Joint Venturers....................................................................11

4.  Distributions................................................................................................11
     4.1  Time of Distribution...................................................................................11
     4.2  Distributions..........................................................................................11
     4.3  Capital Account Deficits...............................................................................11

5.  Activities...................................................................................................11
     5.1  Management.............................................................................................11
     5.2  Conduct of Operations..................................................................................11
     5.3  Acquisition and Sale of Leases.........................................................................12
     5.4  Title to Leases........................................................................................12
     5.5  Release, Abandonment, and Sale or Exchange of Properties...............................................12
     5.6  Certain Transactions With Joint Venture Manager or Affiliates..........................................12

6.  Joint Venture Manager........................................................................................13
     6.1  Joint Venture Manager..................................................................................13
     6.2  Authority of Joint Venture Manager.....................................................................13
     6.3  Certain Restrictions on Joint Venture Manager's Power and Authority....................................14
     6.4  Indemnification of Joint Venture Manager...............................................................15
     6.5  Withdrawal.............................................................................................15
     6.6  Management Fee.........................................................................................15
     6.7  Organization and Offering Fee..........................................................................15
     6.8  Tax Matters Partner....................................................................................16
</TABLE>

                                       -i-

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                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
SECTION                                                                                                        PAGE

<S>                                                                                                            <C>
7.  Joint Venturers..............................................................................................16
     7.1  Management.............................................................................................16
     7.2  Assignment of Units....................................................................................16
     7.3  Prohibited Transfers...................................................................................17
     7.4  Withdrawal by Joint Venturers..........................................................................17
     7.5  Calling of Meetings....................................................................................17
     7.6  Voting Rights..........................................................................................17
     7.7  Voting by Proxy........................................................................................18
     7.8  Conversion of Additional General Partner Interests into Limited Partner Interests .....................18
     7.9  Liability of Joint Venturers...........................................................................18

8.  Books and Records............................................................................................18
     8.1  Books and Records......................................................................................18
     8.2  Reports ...............................................................................................19
     8.3  Bank Accounts..........................................................................................19
     8.4  Federal Income Tax Elections...........................................................................19

9.  Dissolution; Winding-Up......................................................................................19
     9.1  Dissolution............................................................................................19
     9.2  Liquidation............................................................................................20
     9.3  Winding-Up.............................................................................................20

10.  Power of Attorney...........................................................................................21
     10.1  Joint Venture Manager as Attorney-in-Fact.............................................................21
     10.2  Nature as Special Power...............................................................................21

11.  Miscellaneous Provisions....................................................................................22
     11.1  Liability of Parties..................................................................................22
     11.2  Notices...............................................................................................22
     11.3  Paragraph Headings, Section References................................................................22
     11.4  Severability..........................................................................................22
     11.5  Sole Agreement........................................................................................22
     11.6  Applicable Law........................................................................................22
     11.7  Execution in Counterparts.............................................................................22
     11.8  Waiver of Action for Partition........................................................................22
     11.9  Amendments............................................................................................23
     11.10 Substitution of Signature Pages.......................................................................23
     11.11 Incorporation by Reference............................................................................23
</TABLE>

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                          LIMITED PARTNERSHIP AGREEMENT
                                       OF
                         HOME STAKE JOINT VENTURE, LTD.

     THIS LIMITED JOINT VENTURE AGREEMENT ("Agreement") is entered into and
effective as of the ___ day of ____________, 1997, by and between (i) BLUE RIDGE
ENERGY, INC., a Nevada corporation, as the Joint Venture Manager, (ii) ROBERT D.
BURR, as the Initial Limited Partner, and (iii) the Persons whose names are set
forth on Exhibit A attached hereto, as Additional General Partners or as Limited
Partners.

     RECITALS:

     A. The Joint Venture Manager and the Initial Limited Partner formed a
Kentucky limited partnership named Home Stake Joint Venture, Ltd. ("Joint
Venture") pursuant to the provisions of the Kentucky Revised Uniform Limited
Partnership Act.

     B. On the date hereof, the Additional General Partners and Limited Partners
have been admitted to the Joint Venture.

     C. The parties desire to enter into this Agreement to set forth their
mutual understandings.

     AGREEMENT:

     NOW, THEREFORE, the parties hereby agree as follows:

  1.  THE JOINT VENTURE.

          1.1 DEFINITIONS. Capitalized words and phrases used in this Agreement
     shall have the following meanings:

              (a) "Act" shall mean the Kentucky Revised Uniform Limited
Partnership Act, as amended from time to time (or any corresponding provisions
of succeeding law).

              (b) "Additional General Partner" shall mean an Joint Venturer who
purchases Units as an additional general partner, and such Additional General
Partner's transferees and assigns who are admitted as a Substitute Joint
Venturer. The term "Additional General Partners" shall not include such Joint
Venturer who converts such Joint Venturer's interest in the Joint Venture into a
Limited Partner interest pursuant to Section 7.8.

              (c) "Affiliate" of a specified Person shall mean (a) any Person
directly or indirectly owing, controlling, or holding with power to vote 10% or
more of the outstanding voting securities of such specified Person; (b) any
Person 10% or more of whose outstanding voting securities are directly or
indirectly owned, controlled, or held with power to vote, by such specified
Person; (c) any Person directly or indirectly controlling, controlled by, or
under common control with, such specified Person; (d) any officer, director,
trustee or partner of such specified Person, and (e) if such specified Person is
an officer, director, trustee or partner, any Person for which such Person acts
in any such capacity.

              (d) "Agreement" shall mean this Limited Partnership Agreement, as
amended from time to time.

              (e) "Capital Account" shall mean, with respect to any Joint
Venturer, the capital account maintained for such Joint Venturer pursuant to
Section 3.1.

              (f) "Capital Contribution" shall mean the total contributions made
by a Joint Venturer to the capital of the Joint Venture pursuant to Section 2.

              (g) "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time (or any corresponding provisions of succeeding law).

              (h) "Depreciation" shall mean, for each fiscal year or other
period, an amount equal to the depreciation, amortization, or other cost
recovery deduction allowable with respect to an asset for such year or other
period, except that

<PAGE>   5

if the Gross Asset Value of an asset differs from its adjusted basis for Federal
income tax purposes, Depreciation shall be an amount which bears the same ratio
to such beginning Gross Asset Value as the Federal income tax depreciation,
amortization, or other cost recovery deduction for such year or other period
bears to such beginning adjusted tax basis; provided, however, that if the
Federal income tax depreciation, amortization, or other cost recovery deduction
for such year is zero, Depreciation shall be determined with reference to such
beginning Gross Asset Value using any reasonable method selected by the Joint
Venture Manager.

              (i) "Distributable Cash" shall mean for any period the excess, if
any, of (A) the sum of (i) all gross receipts from any sources (including loan
proceeds) for such period, other than from Capital Contributions, plus (ii) any
funds released by the Joint Venture Manager from previously established reserves
(referred to in (B)(ii) below), over (B) the sum of (i) all cash expenditures of
the Joint Venture for such period not funded by Capital Contributions or paid
out of previously established reserves (referred to in (B)(ii) below), plus (ii)
a reasonable reserve for future expenditures as determined by the Joint Venture
Manager.

              (j) "General Partners" shall mean the Additional General Partners
and the Joint Venture Manager.

              (k) "Gross Asset Value" shall mean, with respect to any asset, the
asset's adjusted basis for Federal income tax purposes, except as follows:

                  (1) The initial Gross Asset Value of any asset contributed by
     a Joint Venturer to the Joint Venture shall be the gross fair market value
     of such asset, as determined by the contributing Joint Venturer and the
     Joint Venture;

                  (2) The Gross Asset Value of all Joint Venture assets shall be
     adjusted to equal their respective gross fair market values, as determined
     by the Joint Venture Manager, as of the following times: (a) the
     acquisition of an additional interest in the Joint Venture by any new or
     existing Joint Venturer in exchange for more than a de minimis Capital
     Contribution; (b) the distribution by the Joint Venture of property in
     consideration for an interest in the Joint Venture; and (c) the liquidation
     of the Joint Venture within the meaning of Treas. Reg. Section 1.704-
     1(b)(2)(ii)(g); provided, however, that the adjustments pursuant to clauses
     (a) and (b) above shall be made only if the Joint Venture Manager
     reasonably determines that such adjustments are necessary or appropriate to
     reflect the relative economic interests of the Joint Venturers in the Joint
     Venture;

                  (3) The Gross Asset Value of any Joint Venture asset
     distributed to any Joint Venturer shall be the gross fair market value of
     such asset on the date of distribution; and

                  (4) The Gross Asset Value of Joint Venture assets shall be
     increased (or decreased) to reflect any adjustments to the adjusted basis
     of such assets pursuant to Code Sections 734(b) or 743(b), but only to the
     extent that such adjustments are taken into account in determining Capital
     Accounts pursuant to Treas. Reg. Section 1.704-1(b)(2)(iv)(m) and Section
     3.3.2(g); provided, however, that Gross Asset Value shall not be adjusted
     pursuant to this Section 1.1.1(k)(4) to the extent the Joint Venture
     Manager determines that an adjustment pursuant to Section 1.1.1(k)(2) is
     necessary or appropriate in connection with a transaction that would
     otherwise result in an adjustment pursuant to this Section 1.1.1(k)(4).

     If the Gross Asset Value of an asset has been determined or adjusted
pursuant to Sections 1.1.1(k)(1), 1.1.1(k)(2), or 1.1.1(k)(4), such Gross Asset
Value shall thereafter be adjusted by the Depreciation taken into account with
respect to such asset for purposes of computing Profits and Losses.

              (l) "Initial Limited Partner" shall mean Robert D. Burr or any
successor to the Initial Limited Partner's interest in the Partnership.

              (m) "Joint Venture" shall mean the partnership formed by the Joint
Venturers pursuant to the Act and governed by this Agreement.

                                       A-2

<PAGE>   6

              (n) "Joint Venture Manager" shall mean Blue Ridge Energy, Inc. or
its successors, in their capacity as the Joint Venture Manager.

              (o) "Joint Venturer" shall mean any Person other than the Joint
Venture Manager and Initial Limited Partner (i) whose name is set forth on
Exhibit A attached hereto as an Additional General Partner or as a Limited
Partner, or who has been admitted as an additional or Substitute Joint Venturer
pursuant to the terms of this Agreement, and (ii) who is the owner of a Unit.

              (p) "Lease" shall mean full or partial interests in: (i)
undeveloped oil and gas leases; (ii) oil and gas mineral rights; (iii) licenses;
(iv) concessions; (v) contracts; (vi) fee rights; or (vii) other rights
authorizing the owner thereof to drill for, reduce to possession, and produce
oil and gas.

              (q) "Limited Partner" shall mean an Joint Venturer who purchases
Units as a Limited Partner, such Limited Partner's transferee or assignee who is
admitted as a Substitute Joint Venturer, and an Additional General Partner who
converts their interest to a Limited Partner interest pursuant to the provisions
of this Agreement.

              (r) "Management Fee" shall mean that fee to which the Joint
Venture Manager is entitled pursuant to Section 6.6.

              (s) "Nonrecourse Liability" shall have the meaning set forth in
Treas. Reg Sections 1.704-2(b)(3) and 1.752-1(a)(2).

              (t) "Oil and Gas Interest" shall mean any oil or gas royalty or
lease, or fractional interest therein, or certificate of interest or
participation or investment contract relative to such royalties, leases, or
fractional interests, or any other interest or right which permits the
exploration of, drilling for, or production of oil and gas or other related
hydrocarbons or the receipt of such production or the proceeds thereof.

              (u) "Operating Costs" shall mean expenditures made and costs
incurred in producing and marketing oil or gas from completed wells, including,
in addition to labor, fuel, repairs, hauling, materials, supplies, utility
charges, and other costs incident to or therefrom, ad valorem and severance
taxes, insurance and casualty loss expense, and compensation to well operators
or others for services rendered in conducting such operations.

              (v) "Organization and Offering Fee" shall mean the fee to which
the Joint Venture Manager is entitled pursuant to Section 6.7.

              (w) "Participant List" shall mean an alphabetical list of the
names, addresses and business telephone numbers of the Joint Venturers, along
with the number of Units held by each of them.

              (x) "Partner Minimum Gain" shall mean partner nonrecourse debt
minimum gain within the meaning of Treas. Reg Section 1.704-2(i)(3).

              (y) "Partner Nonrecourse Debt" shall have the meaning set forth
in Treas. Reg Section 1.704-2(b)(4).

              (z) "Partner Nonrecourse Deductions" shall have the meaning set
forth in Treas. Reg Section 1.704-2(i)(2).

              (aa) "Partners" shall mean the Joint Venture Manager, the Initial
Limited Partner, and the Joint Venturers.

              (bb) "Partnership Minimum Gain" shall have the meaning set forth
in Treas. Reg Section 1.704-2(b)(2).

              (cc) "Permitted Transfer" shall mean any transfer of Units
satisfying the provisions of Section 7.2.

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<PAGE>   7

              (dd) "Person" shall mean any individual, partnership, corporation,
limited liability company, trust, or other entity.

              (ee) "Placement Memorandum" shall mean that Private Placement
Memorandum pursuant to which the Units are being offered and sold.

              (ff) "Profits" and "Losses" shall mean, for each fiscal year or
other period, an amount equal to the Joint Venture's taxable income or loss for
such year or period, determined in accordance with Code Section 703(a) (for this
purpose, all items of income, gain, loss, or deduction required to be stated
separately pursuant to Code Section 703(a)(1) shall be included in taxable
income or loss), with the following adjustments:

                  (1) Any income of the Joint Venture that is exempt from
     Federal income tax and not otherwise taken into account in computing
     Profits or Losses pursuant to this Section 1.1.1(ff) shall be added to such
     taxable income or loss;

                  (2) Any expenditures of the Joint Venture described in Code
     Section 705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures
     pursuant to Treas. Reg Section 1.704-1(b)(2)(iv)(i), and not otherwise
     taken into account in computing Profits or Losses pursuant to this Section
     1.1.1(ff) shall be subtracted from such taxable income or loss;

                  (3) In the event the Gross Asset Value of any Joint Venture
     asset is adjusted pursuant to Sections 1.1.1(k)(2) or 1.1.1(k)(4), the
     amount of such adjustment shall be taken into account as gain or loss from
     the disposition of such asset for purpose of computing Profits or Losses;

                  (4) Gain or loss resulting from any disposition of Joint
     Venture property with respect to which gain or loss is recognized for
     Federal income tax purposes shall be computed by reference to the Gross
     Asset Value of the property disposed of notwithstanding that the adjusted
     tax basis of such property differs from its Gross Asset Value;

                  (5) In lieu of the depreciation, amortization, and other cost
     recovery deductions taken into account in computing such taxable income or
     loss, there shall be taken into account Depreciation for such fiscal year
     or other period, computed in accordance with Section 1.1.1(h); and

                  (6) Notwithstanding any other provisions of this Section
     1.1.1(ff), any items which are specially allocated pursuant to this
     Agreement shall not be taken into account in computing Profits or Losses.

              (gg) "Prospect" shall mean a contiguous Oil and Gas Interest, upon
which drilling operations may be conducted. In general, a Prospect is an area in
which the Joint Venture owns or intends to own one or more Oil and Gas Interests
which is geographically defined on the basis of geological data by the Joint
Venture Manager and which is reasonably anticipated by the Joint Venture Manager
to contain at least one reservoir. An area covering lands which are believed by
the Joint Venture Manager to contain subsurface structural or stratigraphic
conditions making it susceptible to the accumulations of hydrocarbons in
commercially productive quantities at one or more horizons. The area, which may
be different for different horizons, shall be designated by the Joint Venture
Manager in writing prior to the conduct of operations and shall be enlarged or
contracted from time to time on the basis of subsequently acquired information
to define the anticipated limits of the associated hydrocarbon reserves and to
include all acreage encompassed therein. A "prospect" with respect to a
particular horizon may be limited to the minimum area permitted by state law or
local practice, whichever is applicable, to protect against drainage from
adjacent wells if the well to be drilled by the Joint Venture is to a horizon
containing proved reserves.

              (hh) "Re-Entry Well" shall mean the Home Stake Prospect which
consists of approximately 160 acres of oil and gas leases in Lea County, New
Mexico, and the well to be re-entered and drilled thereon.

              (ii) "Subscription Agreement" shall mean the agreement attached to
the Placement Memorandum as Exhibit G, pursuant to which an investor subscribes
to Units in the Joint Venture.

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<PAGE>   8

              (jj) "Substitute Joint Venturer" shall mean any Person admitted to
the Joint Venture as an Joint Venturer pursuant to Section 7.7.2(c).

              (kk) "TMP" shall mean the tax matters partner of the Joint Venture
for purposes of Code Sections 6621 through 6233.

              (ll) "Unit" shall mean an interest of an Joint Venturer in the
Joint Venture, each Unit representing a commitment to make a Capital
Contribution of $17,100 to the Joint Venture.

              (mm) "Venture Well" shall mean the North Ennis Creek Prospect
which consists of approximately 490 acres of oil and gas leases in Scurry
County, Texas and the well to be drilled thereon.

              (nn) "Working Interest" shall mean an interest in an oil and gas
leasehold which is subject to some portion of the costs of development,
operation, or maintenance.

     1.2 ORGANIZATION. The Joint Venture Manager and the Initial Limited Partner
formed the Joint Venture pursuant to the provisions of the Act. The Joint
Venturers hereby agree to continue the Joint Venture as a limited partnership
pursuant to the provisions of the Act and upon the terms and conditions set
forth in this Agreement.

     1.3 JOINT VENTURE NAME. The name of the Joint Venture shall be Home Stake
Joint Venture, Ltd. and all business of the Joint Venture shall be conducted in
such name. The Joint Venture Manager may change the name of the Joint Venture
upon ten days notice to the Joint Venturers. The Joint Venture shall hold all of
its property in the name of the Joint Venture and not in the name of any Joint
Venturer.

     1.4 CHARACTER OF BUSINESS. The principal business of the Joint Venture
shall be to acquire Leases, drill sites, and other interests in oil and/or gas
properties and to drill for oil, gas, hydrocarbons, and other minerals located
in, on, or under such properties, to produce and sell oil, gas, hydrocarbons,
and other minerals from such properties, and to invest and generally engage in
any and all phases of the oil and gas business. Such business purpose shall
include, without limitation, the purchase, sale, acquisition, disposition,
exploration, development, operation, and production of oil and gas properties of
any character. Without limiting the foregoing, Joint Venture activities may be
undertaken as principal, agent, general partner, syndicate member, joint
venturer, participant, or otherwise.

     1.5 PRINCIPAL PLACE OF BUSINESS. The principal place of business of the
Joint Venture shall be at 632 Adams Street, Suite 710, Bowling Green, Kentucky
42101. The Joint Venture Manager may change the principal place of business of
the Joint Venture to any other place within the Commonwealth of Kentucky upon
ten days notice to the Joint Venturers.

     1.6 TERM OF JOINT VENTURE. The Joint Venture commenced upon the filing of
its Certificate of Limited Partnership, and shall continue until terminated as
provided in Section 9.1.

     1.7  FILINGS.

              (a) A Certificate of Limited Partnership has been filed in the
office of the Secretary of State of the Commonwealth of Kentucky in accordance
with the provisions of the Act. The Joint Venture Manager shall take any and all
other actions reasonably necessary to perfect and maintain the status of the
Joint Venture as a limited partnership under the laws of Kentucky. The Joint
Venture Manager shall cause amendments to the Certificate of Limited Partnership
to be filed whenever required by the Act.

              (b) The Joint Venture Manager shall execute and cause to be filed
all such documents and shall take any and all other actions as may be reasonably
necessary to perfect and maintain the status of the Joint Venture as a limited
partnership qualified to do business in any other states or jurisdictions in
which the Joint Venture engages in business.

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<PAGE>   9

              (c) Upon the dissolution of the Joint Venture, the Joint Venture
Manager shall promptly execute and cause to be filed a Certificate of
Cancellation in accordance with the Act and all such other documents as may be
necessary for the Joint Venture to withdraw from any other states or
jurisdictions in which the Joint Venture has qualified to do business.

     1.8 INDEPENDENT ACTIVITIES. Each General Partner and each Limited Partner
may, notwithstanding this Agreement, engage in whatever activities they choose,
whether the same are competitive with the Joint Venture or otherwise, without
having or incurring any obligation to offer any interest in such activities to
the Joint Venture or any Joint Venturer. Except as otherwise provided herein,
however, the Joint Venture Manager and its Affiliates may pursue business
opportunities that are consistent with the Joint Venture's investment objectives
for their own account only after they have determined that such opportunity
either cannot be pursued by the Joint Venture because of insufficient funds or
because it is not appropriate for the Joint Venture under the existing
circumstances. Neither this Agreement, nor any activity undertaken pursuant
hereto, shall prevent the Joint Venture Manager from engaging in such
activities, or require the Joint Venture Manager to permit the Joint Venture or
any Joint Venturer to participate in any such activities, and as a material part
of the consideration for the execution of this Agreement by the Joint Venture
Manager and the admission of each Joint Venturer, each Joint Venturer hereby
waives, relinquishes, and renounces any such right or claim of participation.
Notwithstanding the foregoing, the Joint Venture Manager still has a fiduciary
obligation to the Joint Venturers.

  2. CAPITALIZATION.

     2.1 CAPITAL CONTRIBUTIONS OF THE JOINT VENTURE MANAGER AND INITIAL LIMITED
PARTNER.

              (a) On or before the date hereof, the Joint Venture Manager shall
make a Capital Contribution in cash to the Joint Venture of an amount equal to
1% of the aggregate Capital Contributions of the Joint Venturers. In
consideration of making such Capital Contribution, becoming an Additional
General Partner, subjecting its assets to the liabilities of the Joint Venture,
and undertaking other obligations as herein set forth, the Joint Venture Manager
shall receive the interest in the Joint Venture provided herein.

              (b) On or before the date hereof, the Initial Limited Partner
shall contribute $100 in cash to the capital of the Joint Venture. Upon the
earlier to occur of (i) the conversion of an Additional General Partner's
interest into a Limited Partner interest, or (ii) the admission of another
Limited Partner to the Joint Venture, the Joint Venture shall redeem in full,
without interest or deduction, the Initial Limited Partner's Capital
Contribution, and the Initial Limited Partner shall cease to be a Joint
Venturer.

     2.2  CAPITAL CONTRIBUTIONS OF THE JOINT VENTURERS.

              (a) The interests of the Joint Venturers have been divided into 80
units ("Units"), each of which is for Seventeen Thousand One Hundred Dollars
($17,100). Upon execution of this Agreement, each initial Joint Venturer (whose
names and addresses and number of Units for which the Joint Venturer has
subscribed are set forth in Exhibit A) shall contribute to the capital of the
Joint Venture the sum of $10,000 for each Unit purchased. If the Joint Venture
Manager decides to complete the Re-Entry Well, the Joint Venture Manager shall
give notice to each of the Joint Venturers and each Joint Venturer shall
contribute an additional $4,275 per Unit to the capital of the Joint Venture
within seven days after receipt of such notice. If the Joint Venture Manager
decides to complete the Venture Well, the Joint Venture Manager shall give
notice to each of the Joint Venturers and each Joint Venturer shall contribute
an additional $2,825 per Unit to the capital of the Joint Venture within seven
days after receipt of such notice.

              (b) Except as provided in Section 4.3, any proceeds of the
offering of Units for sale pursuant to the Placement Memorandum not used,
committed for use, or reserved as operating capital in the Joint Venture's
operations within one year after the closing of such offering shall be
distributed pro rata to the Joint Venturers as a return of capital.

              (c) Until proceeds from the offering of Units are invested in the
Joint Venture's operations, such proceeds may be temporarily invested in income
producing short-term, highly liquid investments where there is appropriate
safety

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<PAGE>   10

of principal, such as U.S. Treasury obligations, certificate of deposits or
money market accounts. Any such income shall be allocated pro rata to the Joint
Venturers providing such Capital Contributions.

     2.3 ADDITIONAL CAPITAL CONTRIBUTIONS. After all Capital Contributions made
pursuant to Sections 2.1 and 2.2 have been expended, if the Joint Venture
Manager determines that additional capital is required for the Joint Venture's
business, the Joint Venture Manager shall give notice thereof to each of the
Joint Venturers, and each of the Joint Venturers shall be obligated to make an
additional Capital Contribution pro rata in accordance with the Capital
Contributions previously made by each of them; provided, however, that the total
additional Capital Contributions required to be made by the Joint Venturers
pursuant to this Section 2.3 shall not exceed the amount required to be
contributed by the Joint Venturers pursuant to Sections 2.1 and 2.2. Payment of
any such additional Capital Contribution shall be due within seven days of the
mailing of the notice by the Joint Venture Manager. If any Joint Venturer shall
fail to pay an additional Capital Contribution required to be made by such Joint
Venturer or that portion of the amount required to be contributed by the Joint
Venturers pursuant to Sections 2.1 and 2.2 upon completion of each well, within
seven days after the date due, such Joint Venturer shall be in default, and, in
addition to all rights and remedies available to the Joint Venture at law, in
equity or otherwise, the Joint Venture Manager shall have the right to set off
against any distributions otherwise due to such Joint Venturer an amount equal
to 300% of the amount which the Joint Venturer failed to contribute.

     2.4 NO INTEREST ON CAPITAL CONTRIBUTIONS, NO WITHDRAWALS. No interest shall
be paid on any Capital Contributions and, except as otherwise provided herein,
no Joint Venturer, other than the Initial Limited Partner as authorized herein,
may withdraw the Joint Venturer's Capital Contribution.

   3. CAPITAL ACCOUNTS AND ALLOCATIONS.

     3.1 CAPITAL ACCOUNTS.

              (a) A separate Capital Account shall be established and maintained
for each Joint Venturer on the books and records of the Joint Venture. A Joint
Venturer shall have a single Capital Account even though the Joint Venturer may
be both a General Partner and a Limited Partner. Capital Accounts shall be
maintained in accordance with Treas. Reg. Section 1.704-1(b) and any
inconsistency between the provisions of this Section 3.1 and such regulation
shall be resolved in favor of such regulation. In the event the Joint Venture
Manager shall determine that it is prudent to modify the manner in which the
Capital Accounts are computed in order to comply with such regulation, the Joint
Venture Manager may make such modification provided that it is not likely to
have a material effect on the amounts distributable to any Joint Venturer
pursuant to Section 9.3 upon the dissolution of the Joint Venture. The Joint
Venture Manager also shall (i) make any adjustments that are necessary or
appropriate to maintain equality between the Capital Accounts of the Joint
Venturers and the amount of Joint Venture capital reflected on the Joint
Venture's balance sheet, as computed for book purposes, in accordance with
Treas. Reg. Section 1.704-1(b)(2)(iv)(q), and (ii) make any appropriate
modifications in the event unanticipated events might otherwise cause this
Agreement not to comply with Treas. Reg. Section 1.704-1(b).

              (b) Each Joint Venturer's Capital Account shall be credited with
(i) the amount of money contributed by such Joint Venturer to the Joint Venture;
(ii) the amount of any Joint Venture liabilities that are assumed by such Joint
Venturer (within the meaning of Treas. Reg. Section 1.704-1(b)(2)(iv)(c)); (iii)
the Gross Asset Value of property contributed by such Joint Venturer to the
Joint Venture (net of liabilities secured by such contributed property that the
Joint Venture is considered to assume or take subject to under Code Section
752); and (iv) allocations to such Joint Venturer of Profits (or items thereof),
including income and gain exempt from tax and income and gain described in
Treas. Reg. Section 1.704-1(b)(2)(iv)(g) (relating to adjustments to reflect
book value).

              (c) Each Joint Venturer's Capital Account shall be debited with
(i) the amount of money distributed to such Joint Venturer by the Joint Venture;
(ii) the amount of such Joint Venturer's individual liabilities that are assumed
by the Joint Venture (other than liabilities described in Treas. Reg. Section
1.704-1(b)(2)(iv)(b)(2) that are assumed by the Joint Venture); (iii) the Gross
Asset Value of property distributed to such Joint Venturer by the Joint Venture
(net of liabilities secured by such distributed property that such Joint
Venturer is considered to assume or take subject to under Code Section 752);
(iv) allocations to such Joint Venturer of expenditures of the Joint Venture not
deductible in computing Joint Venture taxable

                                       A-7

<PAGE>   11

income and not properly chargeable to capital account (as described in Code
Section 705(a)(2)(B)), and (v) allocations to such Joint Venturer of Losses (or
item thereof), including Losses and deductions described in Treas. Reg. Section
1.704-1(b)(2)(iv)(g) (relating to adjustments to reflect book value), but
excluding items described in (iv) above and excluding Losses or deductions
described in Treas. Reg. Section 1.704-1(b)(4)(iii) (relating to excess
percentage depletion).

              (d) Solely for purposes of maintaining the Capital Accounts:

                  (1) Each year the Joint Venture shall compute (in accordance
     with Treas. Reg. Section 1.704-1(b)(2)(iv)(k)) a simulated depletion
     allowance for each Oil and Gas Interest using that method, as between the
     cost depletion method and the percentage depletion method (without regard
     to the limitations of Code Section 613A(c)(3) which theoretically could
     apply to any Joint Venturer), which results in the greatest simulated
     depletion allowance. The simulated depletion allowance with respect to each
     Oil and Gas Interest shall reduce the Joint Venturers' Capital Accounts in
     the same proportion as the Joint Venturers were allocated adjusted basis
     with respect to such Oil and Gas Interest under Section 3.3.3(a). In no
     event shall the Joint Venture's aggregate simulated depletion allowance
     with respect to an Oil and Gas Interest exceed the Joint Venture's adjusted
     basis in the Oil and Gas Interest (maintained solely for Capital Account
     purposes).

                  (2) Upon the taxable disposition of an Oil and Gas Interest by
     the Joint Venture, the Joint Venture shall determine the simulated
     (hypothetical) gain or loss with respect to such Oil and Gas Interest
     (solely for Capital Account purposes) by subtracting the Joint Venture's
     simulated adjusted basis for the Oil and Gas Interest sold (maintained
     solely for Capital Account purposes) from the amount realized by the Joint
     Venture upon such disposition. Simulated adjusted basis shall be determined
     by reducing the adjusted basis by the aggregate simulated depletion charged
     to the Capital Accounts of all Joint Venturers in accordance with Section
     3.3.1(d)(1). The Capital Accounts of the Joint Venturers shall be adjusted
     upward by the amount of any simulated gain on such disposition in
     proportion to such Joint Venturers' allocable share of the portion of total
     amount realized from the disposition of such Oil and Gas Interest that
     exceeds the Joint Venture's simulated adjusted basis in such Oil and Gas
     Interest. The Capital Accounts of the Joint Venturers shall be adjusted
     downward by the amount of any simulated loss in proportion to such Joint
     Venturers' allocable shares of the total amount realized from the
     disposition of such Oil and Gas Interest that represents recovery of the
     Joint Venture's simulated adjusted basis in such Oil and Gas Interest.

              (e) Except as otherwise provided in this Agreement, neither an
Joint Venturer nor the Initial Limited Partner shall be obligated to the Joint
Venture or to any other Joint Venturer to restore any negative balance in their
Capital Accounts. Upon liquidation of the Joint Venture, or the liquidation of
the interest of the Joint Venture Manager (in each case determined as provided
in Treas. Reg. Section 1.704-1(b)(2)(ii)(g), if the Joint Venture Manager has a
deficit balance in its Capital Account after crediting all Profit upon the sale
of the Joint Venture's assets which have been sold, and after making all
allocations provided for herein, then the Joint Venture Manager shall be
obligated to contribute to the Joint Venture, on or before the later to occur of
(i) the close of the Joint Venture's taxable year, or (ii) 90 days following
such liquidation, an amount equal to such deficit balance for distribution in
accordance with the terms of this Agreement.

     3.2 ALLOCATION OF PROFITS AND LOSSES.

              (a) Except as provided in this Section 3.2 or in Section 3.3, the
following shall apply:

                  (1) Profits and Losses of the Joint Venture (computed without
     regard to the items referred to in Sections 3.3.2(a)(2) and 3.3.2(a)(3))
     shall be allocated 99% to the Joint Venturers and 1% to the Joint Venture
     Manager.

                  (2) Operating Costs shall be allocated 80% to the Joint
     Venturers and 20% to the Joint Venture Manager.

                  (3) All items of revenue or income attributable to an Oil and
     Gas Interest shall be allocated 80% to the Joint Venturers and 20% to the
     Joint Venture Manager.

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<PAGE>   12

              (b) Notwithstanding anything to the contrary in Section 3.3.2(a),
no Joint Venturer shall be allocated any item to the extent that such allocation
would create or increase a deficit in such Joint Venturer's Capital Account. For
purposes of this Section 3.3.2(b), in determining whether an allocation would
create or increase a deficit in an Joint Venturer's Capital Account, such
Capital Account shall be reduced for those items described in Treas. Reg.
Sections 1.704-1(b)(2)(ii)(d)(4), (5), and (6) and shall be increased by any
amounts which such Joint Venturer is obligated to restore in accordance with
Treas. Reg. Section 1.704-1(b)(2)(ii)(c), or is deemed obligated to restore
pursuant to Treas. Reg. Sections 1.704-2(g)(1) and 1.704-2(i)(5). Any item, the
allocation of which to any Joint Venturer is prohibited by this Section
3.3.2(b), shall be reallocated to those Joint Venturers not having a deficit in
their Capital Accounts (as adjusted as provided in this Section 3.3.2(b)) in the
proportion that the positive balance of each such Joint Venturer's adjusted
Capital Account bears to the aggregate balance of all such Joint Venturers'
adjusted Capital Accounts, with any remaining losses or deductions being
allocated to the Joint Venture Manager. Notwithstanding the provisions of
Section 3.3.2(a), to the extent items are allocated to the Joint Venturers by
virtue of the preceding provisions of this Section 3.3.2(b), the Profits
thereafter recognized shall be allocated to such Joint Venturers (in proportion
to the items previously allocated to them pursuant to this Section 3.3.2(b))
until such time as the Profits allocated to them pursuant to this sentence
equals the items allocated to them pursuant to the preceding provisions of this
Section 3.3.2(b).

              (c) In the event any Joint Venturer unexpectedly receives any
adjustments, allocations, or distributions described in Treas. Reg. Section
1.704-1(b)(2)(ii)(d)(4), (5), or (6), items of Joint Venture income and gain
shall be specifically allocated to such Joint Venturer in an amount and manner
sufficient to eliminate (to the extent required by the regulations) the deficit
balance in such Joint Venturer's Capital Account (as adjusted in accordance with
the provisions of Section 3.3.2(b)) as quickly as possible; provided, however,
that an allocation pursuant to this Section 3.3.2(c) shall be made if and only
to the extent that such Joint Venturer would have a deficit Capital Account (as
adjusted in Section 3.3.2(b)) after all other allocations provided for in
Section 3 have been tentatively made as if this Section 3.3.2(c) were not in
this Agreement. It is the intention of the Joint Venturers that the provisions
of this Section 3.3.2(c) constitute a "qualified income offset" within the
meaning of Treas. Reg. Section 1.704-1(b)(2)(ii)(d), and such provisions shall
be so construed.

              (d) Notwithstanding any other provision of this Section 3.2, if
there is a net decrease in Partnership Minimum Gain during any taxable year, all
Joint Venturers shall be allocated items of Joint Venture income and gain for
that year equal to that Joint Venturer's share (within the meaning of Treas. Reg
Section 1.704-2(g)(2)) of the net decrease in Partnership Minimum Gain.
Notwithstanding the preceding sentence, no such chargeback shall be made to the
extent one or more of the exceptions and/or waivers provided for in Treas. Reg
Section 1.704-2(f) applies. This Section 3.3.2(d) is intended to comply with the
minimum gain chargeback requirement of Treas. Reg Section 1.704-2(f) and shall
be interpreted consistently therewith.

              (e) Notwithstanding any other provision of this Section 3.2, other
than Section 3.3.2(d), if there is a net decrease in Partner Minimum Gain
attributable to Partner Nonrecourse Debt during any Joint Venture fiscal year,
rules similar to those contained in Section 3.3.2(d) shall apply in a manner
consistent with Treas. Reg Section 1.704-2(i)(4). This Section 3.3.2(e) is
intended to comply with the minimum gain chargeback requirement of Treas. Reg
Section 1.704-2(i)(4) and shall be interpreted consistently therewith.

              (f) Any Partner Nonrecourse Deductions for any fiscal year or
other period shall be specially allocated to the Joint Venturer who bears the
economic risk of loss with respect to the Partner Nonrecourse Debt to which such
Partner Nonrecourse Deductions are attributable in accordance with Treas. Reg.
Section 1.704-2(i)(1).

              (g) To the extent an adjustment to the adjusted tax basis of any
Joint Venture asset pursuant to Code Sections 734(b) or 743(b) is required,
pursuant to Treas. Reg. Section 1.704-1(b)(2)(iv)(m), to be taken into account
in determining Capital Accounts, the amount of such adjustment to the Capital
Accounts shall be treated as an item of gain (if the adjustment increases the
basis of the asset) or loss (if the adjustment decreases such basis) and such
gain or loss shall be specially allocated to the Joint Venturers in a manner
consistent with the manner in which their Capital Accounts are required to be
adjusted pursuant to such regulation.

              (h) Notwithstanding anything in this Section 3.2, if as a result
of the regulatory allocations provided for in Sections 3.3.2(c) through 3.3.2(f)
the Joint Venture Manager determines that the Capital Accounts of the Joint
Venturers

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<PAGE>   13

do not reflect the economic agreement among the parties, the Joint Venture
Manager, in its discretion, may adjust the allocations provided for in Section
3.3.2(a) so that the Capital Accounts of the Joint Venturers will be equal to
the amount they would have been equal to had such regulatory allocations not
been a part of this Agreement.

              (i) The Joint Venturers are aware of the income tax consequences
of the allocations made by this Section 3.2 and hereby agree to be bound by the
provisions of this Section 3.2 in reporting their shares of Joint Venture income
and loss for income tax purposes.

              (j) For purposes of Code Section 752 and the regulations
thereunder, the excess nonrecourse liabilities of the Joint Venture (within the
meaning of Treas. Reg Section 1.752-3(a)(3)), if any, shall be allocated 99% to
the Joint Venturers and 1% to the Joint Venture Manager.

     3.3  DEPLETION.

              (a) The depletion deduction with respect to each Oil and Gas
Interest of the Joint Venture shall be computed separately by each Joint
Venturer in accordance with Code Section 613A(c)(7)(D) for Federal income tax
purposes. For purposes of such computation, the adjusted basis of each Oil and
Gas Interest shall be allocated in accordance with the Joint Venturers'
interests in the capital of the Joint Venture.

              (b) Upon the taxable disposition of an Oil or Gas Interest by the
Joint Venture, the amount realized therefrom shall be allocated among the Joint
Venturers (for purposes of calculating their individual gain or loss on such
disposition for Federal income tax purposes) as follows:

                  (1) The portion of the total amount realized upon the taxable
     disposition of such property that represents recovery of its simulated
     adjusted tax basis therein (as calculated pursuant to Section 3.1(d)) shall
     be allocated to the Joint Venturers in the same proportion as the aggregate
     adjusted basis of such property was allocated to such Joint Venturers (or
     their predecessors in interest) pursuant to Section 3.3.3(a); and

                  (2) The portion of the total amount realized upon the taxable
     disposition of such property that represents the excess over the simulated
     adjusted tax basis therein shall be allocated in accordance with the
     provisions of Section 3.3.1(d) as if such gain constituted an item of
     Profit.

     3.4  APPORTIONMENT AMONG JOINT VENTURERS.

              (a) Except as otherwise provided in this Agreement, all
allocations and distributions to the Joint Venturers shall be apportioned among
them pro rata based upon the number of Units held by each of the Joint
Venturers.

              (b) For purposes of Section 3.3.4(a), an Joint Venturer's pro rata
share in Units shall be calculated as of the end of the taxable year for which
such allocation has been made; provided, however, that if a transferee of a Unit
is admitted as an Joint Venturer during the course of the taxable year, the
apportionment of allocations and distributions between the transferor and
transferee of such Unit shall be made in the manner provided in Section
3.3.4(c).

              (c) If, during any taxable year of the Joint Venture, there is a
change in any Joint Venturer's interest in the Joint Venture, each Joint
Venturer's allocation of any item of income, gain, loss, deduction, or credit of
the Joint Venture for such taxable year shall be determined by taking into
account the varying interests of the Joint Venturers pursuant to such method as
is permitted by Code Section 706(d) and the regulations thereunder.

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<PAGE>   14

   4. DISTRIBUTIONS.

     4.1 TIME OF DISTRIBUTION. The Joint Venture Manager shall distribute the
Joint Venture's Distributable Cash at such time as it shall determine, but such
distributions shall be made not less frequently than quarterly.

     4.2 DISTRIBUTIONS. Except as provided in Section 4.3, all distributions
(other than those made in connection with the liquidation of the Joint Venture,
which distributions shall be made in accordance with Section 9.3) shall be made
in accordance with Section 3.3.2(a). In no event shall funds be advanced or
borrowed for purposes of distributions if the amount of such distributions would
exceed the Joint Venture's accrued and received revenues for the previous four
quarters, less paid and accrued operating costs with respect to such revenues.
The determination of such revenues and costs shall be made in accordance with
generally accepted accounting principles, consistently applied.

     4.3 CAPITAL ACCOUNT DEFICITS. No distributions shall be made to any Joint
Venturer to the extent such distribution would create or increase a deficit in
such Joint Venturer's Capital Account (as adjusted in Section 3.3.2(b)). If a
distribution is not made to an Joint Venturer by reason of the preceding
sentence, then the amount which would have been distributed to such Joint
Venturer shall be distributed to the other Joint Venturers in the proportion
that the positive Capital Account balance of each Joint Venturer bears to the
aggregate positive Capital Account balances of all of the Joint Venturers. Any
such amount remaining after reduction of all Capital Accounts to zero shall be
distributed to the Joint Venture Manager.

   5. ACTIVITIES.

     5.1 MANAGEMENT. The Joint Venture Manager shall conduct, direct, and
exercise full and exclusive control over all activities of the Joint Venture.
Joint Venturers shall have no power over the conduct of the affairs of the Joint
Venture or otherwise commit or bind the Joint Venture in any manner. The Joint
Venture Manager shall manage the affairs of the Joint Venture in a prudent and
businesslike fashion and shall use its best efforts to carry out the purposes
and character of the business of the Joint Venture.

     5.2 CONDUCT OF OPERATIONS.

              (a) The Joint Venturers agree to participate in the Joint
Venture's program of operations as established by the Joint Venture Manager;
provided, however, that no well drilled to the point of setting casing need be
completed if, in the Joint Venture Manager's opinion, such well is unlikely to
be productive of oil or gas in quantities sufficient to justify the expenditures
required for well completion. The Joint Venture may participate with others in
the drilling of wells and it may enter into joint ventures, partnerships, or
other such arrangements.

              (b) The Joint Venture shall not participate in any joint
operations on any co-owned Lease unless there has been acquired or reserved on
behalf of the Joint Venture the right to take in kind or separately dispose of
its proportionate share of the oil and gas produced from such Lease, exclusive
of production which may be used in development and production operations on the
Lease and production unavoidably lost, and, if the Joint Venture Manager is the
operator of such Lease, the Joint Venture Manager shall enter into written
agreements with every other person or entity owning any working or operating
interest reserving to such person or entity a similar right to take in-kind so
as not to result in the Joint Venture being treated as a member of an
association taxable as a corporation for Federal income tax purposes.

              (c) The relationship of the Joint Venture and the Joint Venture
Manager (or an Affiliate retaining or acquiring an interest) as co-owners in
Leases, except to the extent superseded by an operating agreement consistent
with the provisions of Section 5.5.2(c), and except to the extent inconsistent
with this Agreement, shall be governed by the AAPL Form 610 Model Operating
Agreement-1982, with a provision reserving the right to take production in-kind,
naming the Joint Venture Manager as operator and the Joint Venture as a
non-operator, and with the accounting procedure to govern as the accounting
procedures under such operating agreements.

              (d) The Joint Venture Manager is expected to act as the operator
of all Joint Venture wells, and the Joint Venture Manager may designate such
other persons as it deems appropriate to conduct the actual drilling and
producing operations of the Joint Venture.

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<PAGE>   15

              (e) As operator of Joint Venture wells, the Joint Venture Manager
or its Affiliates shall receive per-well charges for each producing well based
on the Working Interest acquired by the Joint Venture. These per-well charges
shall be subject to annual adjustment beginning January 1, 1998 as provided in
the accounting procedures of the operating agreements.

              (f) The Joint Venture shall enter into a turnkey drilling contract
with the Joint Venture Manager or its Affiliates as described in the Placement
Memorandum.

              (g) The funds of the Joint Venture shall not be commingled with
the funds of any other Person.

              (h) The Joint Venture Manager shall have a fiduciary
responsibility for the safekeeping and use of all funds and assets of the Joint
Venture, whether or not in the Joint Venture Manager's possession or control,
and shall not employ or permit another to employ such funds or assets in any
manner except for the exclusive benefit of the Joint Venture.

     5.3  ACQUISITION AND SALE OF LEASES.

              (a) To the extent the Joint Venture does not acquire a full
interest in a Lease from the Joint Venture Manager or its Affiliate, the
remainder of the interest in such Lease may be held by the Joint Venture Manager
or such Affiliate, as applicable, which may retain and exploit it for its own
account or sell or otherwise dispose of all or a part of such remaining
interest. Profits from such exploitation and/or disposition shall be for the
benefit of the Joint Venture Manager or its Affiliate to the exclusion of the
Joint Venture. Any Leases acquired by the Joint Venture from the Joint Venture
Manager or its Affiliate shall be acquired at the fair market value of such
property.

              (b) The Joint Venture shall acquire only Leases reasonably
expected to meet the stated purposes of the Joint Venture. No Leases shall be
acquired for the purpose of a subsequent sale or farmout unless the acquisition
is made after a well has been drilled to a depth sufficient to indicate that
such an acquisition would be in the Joint Venture's best interest.

     5.4  TITLE TO LEASES.

              (a) Record title to each Lease acquired by the Joint Venture may
be temporarily held in the name of the Joint Venture Manager, or in the name of
any nominee designated by the Joint Venture Manager, as agent for the Joint
Venture until a productive well is completed on a Lease. Thereafter, record
title to Leases shall be assigned to and placed in the name of the Joint
Venture.

              (b) The Joint Venture Manager shall take the necessary steps in
its best judgment to render title to the Leases to be assigned to the Joint
Venture acceptable for the purposes of the Joint Venture. No operation shall be
commenced on any Prospect acquired by the Joint Venture unless the Joint Venture
Manager is satisfied that the undertaking of such operation would be in the best
interest of Joint Venturers and the Joint Venture. The Joint Venture Manager
shall be free, however, to use its own best judgment in waiving title
requirements and shall not be liable to the Joint Venture or Joint Venturers for
any mistakes of judgment unless such mistakes were made in a manner not in
accordance with general industry standards in the geographic area. Neither the
Joint Venture Manager nor its Affiliates shall be deemed to be making any
warranties or representations, express or implied, as to the validity or
merchantability of the title to any Lease assigned to the Joint Venture or the
extent of the interest covered thereby.

     5.5 RELEASE, ABANDONMENT, AND SALE OR EXCHANGE OF PROPERTIES. Except as
provided elsewhere in Section 5 and in Section 6.3, the Joint Venture Manager
shall have full power to dispose of the production and other assets of the Joint
Venture, including the power to determine which Leases shall be released or
permitted to terminate, those wells to be abandoned, whether any Lease or well
shall be sold or exchanged, and the terms therefor.

     5.6 CERTAIN TRANSACTIONS WITH JOINT VENTURE MANAGER OR AFFILIATES. Any
services, equipment, or supplies which the Joint Venture Manager or an Affiliate
furnishes to the Joint Venture which is not specifically referred to herein
shall be furnished at a competitive rate which could be obtained in the
geographical area of operations. Any such services for which

                                      A-12

<PAGE>   16

the Joint Venture Manager or an Affiliate is to receive compensation shall be
embodied in a written contract which precisely describes the services to be
rendered and all compensation to be paid.

  6. JOINT VENTURE MANAGER.

     6.1 JOINT VENTURE MANAGER. The Joint Venture Manager shall have the sole
and exclusive right and power to manage and control the affairs of and to
operate the Joint Venture, to do all things necessary to carry on the business
of the Joint Venture for the purposes described in Section 1.4 and to conduct
the activities of the Joint Venture as set forth in Section 5. No financial
institution or any other person, firm, or corporation dealing with the Joint
Venture Manager shall be required to ascertain whether the Joint Venture Manager
is acting in accordance with this Agreement, but such financial institution or
such other person, firm, or corporation shall be protected in relying solely
upon the deed, transfer, or assurance of, and the execution of such instrument
or instruments by, the Joint Venture Manager. The Joint Venture Manager shall
devote so much of its time to the business of the Joint Venture as in its
judgment the conduct of the Joint Venture's business shall reasonably require
and shall not be obligated to do or perform any act or thing in connection with
the business of the Joint Venture not expressly set forth herein. The Joint
Venture Manager may engage in business ventures of any nature and description
independently or with others and neither the Joint Venture nor any of the Joint
Venturers shall have any rights in and to such independent ventures or the
income or profits derived therefrom.

     6.2 AUTHORITY OF JOINT VENTURE MANAGER. The Joint Venture Manager is
specifically authorized and empowered, on behalf of the Joint Venture, and by
consent of the Joint Venturers herein given, to do any act, execute any document
or enter into any contract or any agreement of any nature necessary or
desirable, in the opinion of the Joint Venture Manager, in pursuance of the
purposes of the Joint Venture. Without limiting the generality of the foregoing,
in addition to any and all other powers conferred upon the Joint Venture Manager
pursuant to this Agreement and the Act, and except as otherwise prohibited by
law or hereunder, the Joint Venture Manager shall have the power and authority
to:

          (a) Acquire Leases and other Oil and Gas Interests in furtherance of
the Joint Venture's business;

          (b) Enter into and execute pooling agreements, farm out agreements,
operating agreements, unitization agreements, dry and bottom hole and acreage
contribution letters, construction contracts, and any and all documents or
instruments customarily employed in the oil and gas industry in connection with
the acquisition, sale, exploration, development, or operation of Oil and Gas
Interests, and all other instruments deemed by the Joint Venture Manager to be
necessary or appropriate to the proper operation of Oil or Gas Interests or to
effectively and properly perform its duties or exercise its powers hereunder;

          (c) Make expenditures and incur any obligations it deems necessary to
implement the purposes of the Joint Venture, employ and retain such personnel as
it deems desirable for the conduct of the Joint Venture's activities, including
employees, consultants, and attorneys and exercise on behalf of the Joint
Venture, in such manner as the Joint Venture Manager, in its sole judgment,
deems best, all rights, elections, and obligations granted to or imposed upon
the Joint Venture;

          (d) Manage, operate, and develop any Joint Venture property, and enter
into operating agreements with respect to properties acquired by the Joint
Venture, including an operating agreement with the Joint Venture Manager as
described in the Placement Memorandum, which agreements may contain such terms,
provisions, and conditions as are usual and customary within the industry and as
the Joint Venture Manager shall approve;

          (e) Compromise, sue, or defend any and all claims in favor of or
against the Joint Venture;

          (f) Subject to the provisions of Section 8.4, make or revoke any
election permitted the Joint Venture by any taxing authority;

          (g) Perform any and all acts it deems necessary or appropriate for the
protection and preservation of Joint Venture assets;

                                      A-13
<PAGE>   17

          (h) Maintain, at the expense of the Joint Venture, such insurance
coverage for public liability, fire and casualty, and any and all other
insurance necessary or appropriate to the business of the Joint Venture in such
amounts and of such types as it shall determine from time to time;

          (i) Buy, sell, or lease property or assets on behalf of the Joint
Venture;

          (j) Enter into agreements to hire services of any kind or nature;

          (k) Assign interests in properties to the Joint Venture;

          (l) Borrow money on behalf of the Joint Venture from third parties or
the Joint Venture Manager or its Affiliates.

          (m) Enter into soliciting dealer agreements and perform all of the
Joint Venture's obligations thereunder, to issue and sell Units pursuant to the
terms and conditions of this Agreement, the Subscription Agreements, and the
Placement Memorandum, to accept and execute on behalf of the Joint Venture
Subscription Agreements, and to admit Joint Venturers and Substitute Joint
Venturers; and

          (n) Perform any and all acts, and execute any and all documents, it
deems necessary or appropriate to carry out the purposes of the Joint Venture.

     6.3 CERTAIN RESTRICTIONS ON JOINT VENTURE MANAGER'S POWER AND AUTHORITY.
Notwithstanding any other provisions of this Agreement to the contrary, neither
the Joint Venture Manager nor any of its Affiliates shall have the power or
authority to, and shall not, do, perform, or authorize any of the following:

          (a) Without having first received the prior consent of the holders of
a majority of the then outstanding Units entitled to vote,

               (1) sell all, or substantially all, of the assets of the Joint
     Venture (except upon liquidation of the Joint Venture pursuant to Section
     9), unless cash funds of the Joint Venture are insufficient to pay the
     obligations and other liabilities of the Joint Venture;

               (2) dispose of the good will of the Joint Venture; or

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

          (b) Bind or obligate the Joint Venture with respect to any matter
outside the scope of the Joint Venture business;

          (c) Use the Joint Venture name, credit, or property for other than
Joint Venture purposes;

          (d) Utilize Joint Venture funds to invest in the securities of another
Person except in the following instances:

               (1) investments in Working Interests or undivided Lease interests
     made in the ordinary course of the Joint Venture's business;

               (2) temporary investments made in compliance with Section
     2.2.2(c);

               (3) investments which are a necessary and incidental part of a
     property acquisition transaction; and

                                      A-14
<PAGE>   18

               (4) investments in entities established solely to limit the Joint
     Venture's liabilities associated with the ownership or operation of
     property or equipment; provided, however, that in such instances
     duplicative fees and expenses shall be prohibited.

          (e) Sell, transfer, or assign its interest (except for a collateral
assignment which may be granted to a bank or other financial institution) in the
Joint Venture, or any part thereof, or otherwise withdraw as Joint Venture
Manager without written notice to the Joint Venturers.

     6.4 INDEMNIFICATION OF JOINT VENTURE MANAGER. The Joint Venture Manager
shall have no liability to the Joint Venture or to any Joint Venturer for any
loss suffered by the Joint Venture which arises out of any action or inaction of
the Joint Venture Manager if the Joint Venture Manager, in good faith,
determined that such course of conduct was in the best interest of the Joint
Venture, that the Joint Venture Manager was acting on behalf of or performing
services for the Joint Venture, and that such course of conduct did not
constitute gross negligence or willful misconduct of the Joint Venture Manager.
The Joint Venture Manager shall be indemnified by the Joint Venture against any
losses, judgments, liabilities, expenses, and amounts paid in settlement of any
claims sustained by it in connection with the Joint Venture, provided that the
Joint Venture Manager has determined, in good faith, that the course of conduct
which caused the loss or liability was in the best interest of the Joint
Venture, that the Joint Venture Manager was acting on behalf of or performing
services for the Joint Venture, and that the same were not the result of gross
negligence or willful misconduct on the part of the Joint Venture Manager.
Indemnification of the Joint Venture Manager is recoverable only from the
tangible net assets of the Joint Venture, including the insurance proceeds from
the Joint Venture's insurance policies and the insurance and indemnification of
the Joint Venture's subcontractors, and is not recoverable from the Joint
Venturers.

     6.5 WITHDRAWAL.

          (a) Notwithstanding the limitations contained in Section 6.6.3(e), the
Joint Venture Manager shall have the right, by giving written notice to the
Joint Venturers, to substitute in its stead as Joint Venture Manager any
successor entity or any entity controlled by the Joint Venture Manager, and the
Joint Venturers, by execution of this Agreement, hereby expressly consent to
such a transfer unless it would adversely affect the status of the Joint Venture
as a partnership for Federal income tax purposes.

          (b) The Joint Venture Manager may voluntarily withdraw from the Joint
Venture after written notice to the Joint Venturers.

          (c) In the event a Joint Venture Manager withdraws and the Joint
Venturers elect to continue the Joint Venture, the withdrawing Joint Venture
Manager's interest in the assets of the Joint Venture shall be determined by
independent appraisal by a qualified independent petroleum engineering
consultant who shall be selected by mutual agreement of the Joint Venture
Manager and the successor Joint Venture Manager. Such appraisal will take into
account an appropriate discount to reflect the risk of recovery of oil and gas
reserves. The withdrawn Joint Venture Manager shall be paid for its interest
within ten days of the determination of the value of such interest.

     6.6 MANAGEMENT FEE. The Joint Venture shall pay the Joint Venture Manager,
on the date hereof, a one-time management fee equal to 4.9% of the total Capital
Contributions required to be made by the Joint Venturers pursuant to Section
2.2.2(a).

     6.7 ORGANIZATION AND OFFERING FEE. The Joint Venture shall pay the Joint
Venture Manager, on the date hereof, a one-time organization and offering fee
equal to 2.8% of the Capital Contributions required to be made by the Joint
Venturers pursuant to Section 2.2.2(a), to reimburse the Joint Venture Manager
for paying all costs of organizing and selling the Units including, but not
limited to, total underwriting and brokerage discounts and commissions
(including fees of the underwriters' attorneys), expenses for printing,
engraving, mailing, salaries of employees while engaged in sales activity,
charges of transfer agents, registrars, trustees, escrow holders, depositaries,
engineers and other experts, expenses of qualification of the sale of the
securities under Federal and state law, including taxes and fees, accountants'
and attorneys' fees and other front-end fees.

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<PAGE>   19

     6.8 TAX MATTERS PARTNER. The Joint Venture Manager shall serve as the Tax
Matters Partner for purposes of Code Sections 6221 through 6233. The Joint
Venture may engage its accountants and/or attorneys to assist the Tax Matters
Partner in discharging its duties hereunder.

  7. JOINT VENTURERS.

     7.1 MANAGEMENT. No Joint Venturer shall take part in the control or
management of the business or transact any business for the Joint Venture, and
no Joint Venturer shall have the power to sign for or bind the Joint Venture,
all of such authority having been given to the Joint Venture Manager in Section
6. Any action or conduct of Joint Venturers on behalf of the Joint Venture is
hereby expressly prohibited. Any Joint Venturer who violates the provisions of
this Section 7.1 shall be liable to the remaining Joint Venturers, the Joint
Venture Manager, and the Joint Venture for any damages, costs, or expenses any
of them may incur as a result of such violation. Joint Venturers shall have the
right to vote only with respect to those matters specifically provided for in
these Sections.

     7.2 ASSIGNMENT OF UNITS.

          (a) An Joint Venturer may transfer all or any portion of the Joint
Venturer's Units, subject to the following conditions:

               (1) Except in the case of a transfer of Units at death, as a
     result of adjudication of incompetency or insanity, or involuntarily by
     operation of law, the transferor and transferee shall execute and deliver
     to the Joint Venture such documents and instruments of conveyance as may be
     necessary or appropriate in the opinion of counsel to the Joint Venture to
     effect such transfer;

               (2) The transferor and transferee shall furnish the Joint Venture
     with the transferee's taxpayer identification number and sufficient
     information to determine the transferee's initial tax basis in the Units
     transferred; and

               (3) The Joint Venture is reimbursed by the transferor and/or
     transferee for all costs and expenses that it reasonably incurs in
     connection with such transfer.

               (4) If the transferor is an Additional General Partner, the Joint
     Venture Manager has consented to the transfer, which shall be in the sole
     discretion of the Joint Venture Manager.

          (b) A Person who acquires one or more Units but who is not admitted as
a Substitute Joint Venturer, shall only be entitled to allocations and
distributions with respect to such Units in accordance with this Agreement, but
shall have no right to any information or accounting of the affairs of the Joint
Venture, shall not be entitled to inspect the books or records of the Joint
Venture, and shall not have any of the rights of an Additional General Partner
or a Limited Partner under the Act or this Agreement.

          (c) Subject to the other provisions of Section 7, a transferee of
Units may be admitted to the Joint Venture as a Substitute Joint Venturer only
upon satisfaction of the following conditions:

               (1) The Joint Venture Manager consents to such admission, which
     consent can be withheld in its absolute discretion;

               (2) The Units with respect to which the transferee is being
     admitted were acquired by means of a Permitted Transfer;

               (3) The transferee becomes a party to this Agreement as a Joint
     Venturer and executes such documents and instruments as the Joint Venture
     Manager may reasonably request as may be necessary or appropriate to
     confirm

                                      A-16
<PAGE>   20

     such transferee as a Joint Venturer of the Joint Venture and such
     transferee's agreement to be bound by the terms and conditions hereof; and

               (4) If the transferee is not an individual of legal majority, the
     transferee provides the Joint Venture with evidence satisfactory to counsel
     for the Joint Venture of the authority of the transferee to become a Joint
     Venturer and to be bound by the terms and conditions of this Agreement.

          (d) In any calendar quarter in which a transfer of a Unit occurs, the
Joint Venture shall recognize the assignment not later than the last day of the
calendar month following receipt of notice of assignment and required
documentation.

          (e) Each Joint Venturer hereby covenants and agrees with the Joint
Venture, for the benefit of the Joint Venture and all Joint Venturers, that (i)
the Joint Venturer is not currently making a market in Units and (ii) the Joint
Venturer will not transfer any Unit on an established securities market or a
secondary market (or the substantial equivalent thereof) within the meaning of
Code Section 7704(b) (and any regulations, proposed regulations, revenue
rulings, or other official pronouncements of the Internal Revenue Service that
may be promulgated or published thereunder). Each Joint Venturer further agrees
that the Joint Venturer will not transfer any Unit to any Person unless such
Person agrees to be bound by the provisions of this Section 7.2 and to transfer
such Units only to Persons who agree to be similarly bound.

     7.3 PROHIBITED TRANSFERS.

          (a) Any purported Transfer of Units that is not a Permitted Transfer
shall be null and void and of no effect whatever. If, however, the Joint Venture
is required by a court of competent jurisdiction to recognize a transfer that is
not a Permitted Transfer (or if the Joint Venture Manager, in its sole
discretion, elects to recognize a transfer that is not a Permitted Transfer),
the Joint Venture shall have the right (without limiting any other legal or
equitable rights of the Joint Venture) to withhold distributions to which such
transferee would otherwise be entitled and apply such distributions to satisfy
the debts, obligations, or liabilities for damages that the transferor or
transferee of such Units may have to the Joint Venture.

          (b) In the case of a transfer or attempted transfer of Units that is
not a Permitted Transfer, the parties engaging or attempting to engage in such
transfer shall be liable to indemnify and hold harmless the Joint Venture and
the other Joint Venturers from all cost, liability, and damage that any of such
indemnified Persons may incur (including, without limitation, incremental tax
liability and lawyers fees and expenses) as a result of such transfer or
attempted transfer and efforts to enforce the indemnity granted hereby.

     7.4 WITHDRAWAL BY JOINT VENTURERS. An Joint Venturer may not withdraw from
the Joint Venture, except as otherwise provided in this Agreement.

     7.5 CALLING OF MEETINGS. Joint Venturers owning 20% or more of the then
outstanding Units entitled to vote shall have the right to request that the
Joint Venture Manager call a meeting of the Joint Venturers. The Joint Venture
Manager shall call such a meeting and shall deposit in the United States mails
within 15 days after receipt of such request written notice to all Joint
Venturers of the meeting and the purpose of the meeting, which shall be held on
a date not less than 30, nor more than 60, days after the date of the mailing of
such notice, at a reasonable time and place. Joint Venturers shall have the
right to submit proposals to the Joint Venture Manager for inclusion in the
voting materials for the next meeting of Joint Venturers for consideration and
approval by the Joint Venturers. Joint Venturers shall have the right to vote in
person or by proxy.

     7.6 VOTING RIGHTS. Joint Venturers shall be entitled to all voting rights
granted to them under this Agreement and as specified by the Act. Each Unit is
entitled to one vote on all matters; each fractional Unit is entitled to that
fraction of one vote equal to the fractional interest in the Unit. Except as
otherwise provided herein, at any meeting of Joint Venturers, a vote of a
majority of Units represented at such meeting, in person or by proxy, with
respect to matters considered at the meeting at which a quorum is present shall
be required for approval of any such matters.

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<PAGE>   21

     7.7 VOTING BY PROXY. The Joint Venturers may vote either in person or by
proxy.

     7.8 CONVERSION OF ADDITIONAL GENERAL PARTNER INTERESTS INTO LIMITED PARTNER
INTERESTS.

          (a) As provided herein, Additional General Partners may elect to
convert, transfer, and exchange their Additional General Partner interests for
Limited Partner interests upon receipt by the Joint Venture Manager of written
notice of such election. An Additional General Partner may request conversion of
all, but not less than all, of such Additional General Partner's interest for a
Limited Partner interest at any time.

          (b) The Joint Venture Manager shall notify all Additional General
Partners at least 30 days prior to any material change in the amount of the
Joint Venture's insurance coverage.

          (c) The Joint Venture Manager shall cause the conversion of Additional
General Partner interests into Limited Partner interests to be effected as
promptly as possible as prudent business judgment dictates. Conversion of an
Additional General Partner interest to a Limited Partner interest shall be
conditioned upon a finding by the Joint Venture Manager that such conversion
will not cause a termination of the Joint Venture for Federal income tax
purposes, and will be effective upon the Joint Venture Manager's filing an
amendment to the Joint Venture's Certificate of Limited Partnership reflecting
such conversion. The Joint Venture Manager is obligated to file an amendment to
the Joint Venture's Certificate of Limited Partnership during the full calendar
month after receipt of the required notice from the Additional General Partner
and a determination by the Joint Venture Manager that the conversion will not
constitute a termination of the Joint Venture for Federal income tax purposes.
The effecting of the conversion is subject to the satisfaction of the condition
that the electing Additional General Partner provide written notice to the Joint
Venture Manager of such intent to convert. Upon such conversion, such Additional
General Partner shall become a Limited Partner, but such Additional General
Partner shall remain liable to the Joint Venture for any additional Capital
Contribution(s) required and such Additional General Partner's proportionate
share of any Joint Venture obligation or liability arising prior to the
conversion.

          (d) Limited Partners may not convert and/or exchange their interests
for Additional General Partner interests.

     7.9 LIABILITY OF JOINT VENTURERS. Except as otherwise provided in this
Agreement or the Act, each Additional General Partner shall be jointly and
severally liable for the debts and obligations of the Joint Venture. In
addition, each Additional General Partner shall be jointly and severally liable
for any wrongful acts or omissions of the Joint Venture Manager and/or the
misapplication of money or property of a third party by the Joint Venture
Manager acting within the scope of its apparent authority to the extent such
acts or omissions are chargeable to the Joint Venture.

  8. BOOKS AND RECORDS.

     8.1 BOOKS AND RECORDS.

          (a) For accounting and income tax purposes, the Joint Venture shall
operate on a calendar year.

          (b) The Joint Venture Manager shall keep just and true records and
books of account with respect to the operations of the Joint Venture and shall
maintain and preserve during the term of the Joint Venture and for four years
thereafter all such records, books of account, and other relevant Joint Venture
documents. The Joint Venture Manager shall maintain for at least six years all
records necessary to substantiate the fact that Units were sold only to
purchasers for whom such Units were suitable. Such books shall be maintained at
the principal place of business of the Joint Venture and shall be kept on the
accrual method of accounting.

          (c) The Joint Venture Manager shall keep or cause to be kept complete
and accurate books and records with respect to the Joint Venture's business,
which books and records shall at all times be kept at the principal office of
the Joint Venture. Any records maintained by the Joint Venture in the regular
course of its business, including the names and addresses of Joint Venturers,
books of account, and records of Joint Venture proceedings, may be kept on or be
in the form of RAM disks, magnetic tape, photographs, micrographies, or any
other information storage device; provided, however, that the records so kept
are convertible into clearly legible written form within a reasonable period of
time. The books and

                                      A-18
<PAGE>   22

records of the Joint Venture shall be made available for review by any Joint
Venturer or the Joint Venturer's representative at any reasonable time.

          (d) The Participant List shall be maintained as a part of the books
and records of the Joint Venture, shall be available for the inspection by any
Joint Venturer or such Joint Venturer's designated agent at the principal office
of the Joint Venture upon the request of any Joint Venturer and shall be updated
at least quarterly to reflect changes in the information contained therein.

     8.2 REPORTS. The Joint Venture Manager shall deliver to each Joint Venturer
the following financial statements and reports at the times indicated below:

          (a) Within 120 days after the end of each fiscal year, financial
statements, including a balance sheet and statements of income, Joint Venturers'
equity, and cash flows, all of which shall be prepared in accordance with
generally accepted accounting principles, and a reconciliation of such financial
statements with the information furnished to the Joint Venturers for Federal
income tax reporting purposes.

          (b) By March 15 of each year, a report containing such information as
to enable each Joint Venturer to prepare and file such Joint Venturer's Federal
income tax return.

          (c) Such other reports and financial statements as the Joint Venture
Manager shall determine from time to time.

     8.3 BANK ACCOUNTS. All funds of the Joint Venture shall be deposited in
such separate bank account or accounts, short term obligations of the U.S.
Government or its agencies, or other interest-bearing investments and money
market or liquid asset mutual funds as shall be determined by the Joint Venture
Manager. All withdrawals therefrom shall be made upon checks signed by the Joint
Venture Manager or any person authorized to do so by the Joint Venture Manager.

     8.4 FEDERAL INCOME TAX ELECTIONS.

          (a) Except as otherwise provided in this Section 8.4, all elections
required or permitted to be made by the Joint Venture under the Code shall be
made by the Joint Venture Manager in its sole discretion. Each Joint Venturer
agrees to provide the Joint Venture with all information necessary to give
effect to any election to be made by the Joint Venture.

          (b) The Joint Venture shall elect to currently deduct intangible
drilling and development costs as an expense for income tax purposes and shall
require any partnership, joint venture, or other arrangement in which it is a
party to make such an election.

  9. DISSOLUTION; WINDING-UP.

     9.1 DISSOLUTION.

          (a) Except as otherwise provided herein, the retirement, withdrawal,
removal, death, insanity, incapacity, dissolution, or bankruptcy of any Joint
Venturer shall not dissolve the Joint Venture. The successor to the rights of
such Joint Venturer shall have all the rights of an Joint Venturer for the
purpose of settling or administering the estate or affairs of such Joint
Venturer; provided, however, that no successor shall become a Substitute Joint
Venturer except in accordance with Section 7; and provided further that upon the
occurrence of any of the events referred to in the first sentence of this
Section 9.9.1(a) with respect to an Additional General Partner, the Joint
Venture shall be dissolved and wound up unless at that time there is at least
one other Additional General Partner, in which event the business of the Joint
Venture shall continue to be carried on. Neither the expulsion of any Joint
Venturer, nor the admission or substitution of an Joint Venturer, shall work a
dissolution of the Joint Venture. The estate of a deceased, insane, incompetent,
or bankrupt Joint Venturer shall be liable for all his liabilities as an Joint
Venturer.

                                      A-19
<PAGE>   23

          (b) Notwithstanding anything in the Act to the contrary, the Joint
Venture shall be dissolved upon, but not before, the earliest to occur of (i)
the written consent of the Joint Venture Manager and Joint Venturers owning a
majority of the then outstanding Units to dissolve and wind up the affairs of
the Joint Venture; (ii) subject to the provisions of Section 9.9.1(c), the
retirement, withdrawal, removal, death, adjudication of insanity or incapacity,
or bankruptcy (or, in the case of a corporate Joint Venture Manager, the
withdrawal, removal, filing of a certificate of dissolution, liquidation, or
bankruptcy) of the Joint Venture Manager; (iii) the sale, forfeiture, or
abandonment of all, or substantially all, of the Joint Venture's property and
the sale and/or collection of any evidences of indebtedness received in
connection therewith; (iv) December 31, 2047 or (v) a dissolution event
described in Section 9.9.1(a).

          (c) In the case of any event described in Section 9.9.1(b)(ii), if a
successor Joint Venture Manager is selected by Joint Venturers owning a majority
of the then outstanding Units within 90 days after such event, and if such Joint
Venturers agree within such 90 day period to continue the business of the Joint
Venture, then the Joint Venture shall not be dissolved.

          (d) If, notwithstanding the provisions of this Agreement, the
retirement, withdrawal, removal, death, insanity, incapacity, dissolution,
liquidation, or bankruptcy of any Joint Venturer, or the assignment of a Joint
Venturer's interest in the Joint Venture, or the substitution or admission of a
new Joint Venturer, shall be deemed under the Act to cause a dissolution of the
Joint Venture, then, except as provided in Section 9.9.1(c), the remaining Joint
Venturers may, in accordance with the Act, continue the Joint Venture business
as a new partnership and all such remaining Joint Venturers agree to be bound by
the provisions of this Agreement.

     9.2 LIQUIDATION. Upon a dissolution of the Joint Venture, the Joint Venture
Manager, or in the event there is no Joint Venture Manager, any other Person
selected by the Joint Venturers to act as the liquidator, shall cause the
affairs of the Joint Venture to be wound up and shall take account of the Joint
Venture's assets (including Capital Contributions, if any, of the Joint Venture
Manager pursuant to Section 3.3.1(e)) and, subject to the provisions of Section
9.9.3(b) shall be liquidated as promptly as is consistent with obtaining the
fair market value thereof (which dissolution and liquidation may be accomplished
over a period spanning one or more tax years in the sole discretion of the Joint
Venture Manager or the liquidator), and the proceeds therefrom, to the extent
sufficient therefor, shall be applied and distributed in accordance with Section
9.3.

     9.3 WINDING-UP.

          (a) Upon the dissolution of the Joint Venture and winding up of its
affairs, the assets of the Joint Venture shall be distributed as follows:

               (1) all of the Joint Venture's debts and liabilities to Persons
     other than to Joint Venturers shall be paid and discharged;

               (2) to the establishment of any cash reserves which the Joint
     Venture Manager or liquidator determines to create in their sole discretion
     for unmatured and/or contingent liabilities or obligations of the Joint
     Venture; and

               (3) to the Joint Venturers, in accordance with their respective
     Capital Accounts; provided, however, that if the Joint Venture Manager or
     liquidator establishes any reserves in accordance with the provisions of
     Section 9.9.3(a)(2), then the distributions pursuant to this Section
     9.9.3(a)(3) (including distribution of any released reserves) shall be pro
     rata in accordance with the balances of the Joint Venturers' Capital
     Accounts.

          (b) Distributions pursuant to Section 9.3 shall be made in cash or in
kind to the Joint Venturers, at the election of the Joint Venture Manager.
Notwithstanding the provision of this Section 9.9.3(b), in no event shall the
Joint Venturers reserve the right to take in kind and separately dispose of
their share of production.

          (c) Any in kind property distributions to the Joint Venturers shall be
made to a liquidating trust or similar entity for the benefit of the Joint
Venturers, unless at the time of the distribution:

                                      A-20
<PAGE>   24

               (1) the Joint Venture Manager shall offer the individual Joint
     Venturers the election of receiving in kind property distributions and the
     Joint Venturers accept such offer after being advised of the risks
     associated with such direct ownership; or

               (2) there are alternative arrangements in place which assure the
     Joint Venturers that they will not, at any time, be responsible for the
     operation or disposition of Joint Venture properties.

  10. POWER OF ATTORNEY.

     10.1 JOINT VENTURE MANAGER AS ATTORNEY-IN-FACT. Each Joint Venturer makes,
constitutes, and appoints the Joint Venture Manager their true and lawful
attorney-in-fact, with full power of substitution, in the name, place, and stead
of the Joint Venturer, from time to time to make, execute, sign, acknowledge,
and file:

          (a) Any notices or certificates as may be required under the Act and
under the laws of any other state or jurisdiction in which the Joint Venture
shall engage, or seek to engage, to do business and to do such other acts as are
required to constitute the Joint Venture as a limited partnership under such
laws.

          (b) Any amendment to the Agreement pursuant to and which complies with
Section 11.9.

          (c) Such certificates, instruments, and documents as may be required
by, or may be appropriate under the laws of any state or other jurisdiction in
which the Joint Venture is doing or intends to do business.

          (d) Such certificates, instruments, and documents as may be required
by, or as may be appropriate for the Joint Venturer to comply with, the laws of
any state or other jurisdiction to reflect a change of name or address of the
Joint Venturer.

          (e) Such certificates, instruments, and documents as may be required
to be filed with the Department of Interior (including any bureau, office or
other unit thereof, whether in Washington, D.C. or in the field, or any officer
or employee thereof), as well as with any other federal or state agencies,
departments, bureaus, offices, or authorities and pertaining to (i) any and all
offers to lease, Leases (including amendments, modifications, supplements,
renewals, and exchanges thereof) of, or with respect to, any lands under the
jurisdiction of the United States or any state including, without limitation,
lands within the public domain, and acquired lands, and provides for the leasing
thereof, (ii) all statements of interest and holdings on behalf of the Joint
Venture or the Joint Venturer; (iii) any other statements, notices, or
communications required or permitted to be filed or which may hereafter be
required or permitted to be filed under any law, rule, or regulation of the
United States, or any state relating to the leasing of lands for oil or gas
exploration or development, (iv) any request for approval of assignments or
transfers of oil and gas Leases, any unitization or pooling agreements and any
other documents relating to lands under the jurisdiction of the United States or
any state; and (v) any other documents or instruments which said
attorney-in-fact, in its sole discretion, shall determine should be filed.

          (f) Any further document, including furnishing verified copies of this
Agreement and/or excerpts therefrom, which said attorney-in-fact shall consider
necessary or convenient in connection with any of the foregoing, hereby giving
said attorney-in-fact full power and authority to do and perform each and every
act and thing whatsoever requisite and necessary to be done in and about the
foregoing as fully as the undersigned might and could do if personally present,
and hereby ratifying and confirming all that said attorney-in-fact shall
lawfully do to cause to be done by virtue hereof.

     10.2 NATURE AS SPECIAL POWER. The foregoing grant of authority:

          (a) is a special power of attorney coupled with an interest, is
irrevocable, and shall survive the death or incompetency of the Joint Venturer
granting it;

          (b) shall survive the delivery of any assignment by the Joint Venturer
of the whole or any portion of the Joint Venturer's Units; except that where the
assignee thereof has been approved by the Joint Venture Manager for admission

                                      A-21
<PAGE>   25

to the Joint Venture as a Substitute Joint Venturer, the power of attorney shall
survive the delivery of such assignment for the sole purpose of enabling said
attorney-in-fact to execute, acknowledge, and file any instrument necessary to
effect such substitution; and

          (c) may be exercised by said attorney-in-fact by a listing of all of
the Joint Venturers executing any instrument with a single signature of said
attorney-in-fact.

  11. MISCELLANEOUS PROVISIONS.

     11.1 LIABILITY OF PARTIES. By entering into this Agreement, no party shall
become liable for any other party's obligations relating to any activities
beyond the scope of this Agreement, except as provided by the Act. If any party
suffers, or is held liable for, any loss or liability of the Joint Venture which
is in excess of that agreed upon herein, such party shall be indemnified by the
other parties, to the extent of their respective interests in the Joint Venture,
as provided herein.

     11.2 NOTICES. Any notice, payment, demand, or communication required or
permitted to be given by any provision of this Agreement shall be deemed to have
been sufficiently given or served for all purposes if delivered personally to
the party or to an officer of the party to whom the same is directed or sent by
registered or certified mail, postage and charges prepaid, addressed as follows
(or to such other address as the party shall have furnished in writing in
accordance with the provisions of this Section):

          (a) If to the Joint Venture Manager, 632 Adams Street, Suite 710,
Bowling Green, Kentucky 42101.

          (b) If to an Joint Venturer, at such Joint Venturer's address for
purposes of notice which is set forth on Exhibit A attached hereto. Unless
otherwise expressly set forth in this Agreement to the contrary, any such notice
shall be deemed to be given on the date on which the same was deposited in a
regularly maintained receptacle for the deposit of United States mail, addressed
and sent as aforesaid.

     11.3 PARAGRAPH HEADINGS, SECTION REFERENCES. The headings in the Agreement
are inserted for convenience and identification only and are in no way intended
to describe, interpret, define, or limit the scope, extent, or intent of this
Agreement or any provision hereof. All references herein to Sections shall refer
to Sections of this Agreement unless the context clearly requires otherwise.

     11.4 SEVERABILITY. Every portion of this Agreement is intended to be
severable. If any term or provision hereof is illegal or invalid for any reason
whatsoever, such illegality or invalidity shall not affect the validity of the
remainder of this Agreement.

     11.5 SOLE AGREEMENT. This Agreement constitutes the entire understanding of
the parties hereto with respect to the subject matter hereof and no amendment,
modification, or alteration of the terms hereof shall be binding unless the same
be in writing, dated subsequent to the date hereof and duly approved and
executed by the Joint Venture Manager and such percentage of Joint Venturers as
provided in Section 11.9.

     11.6 APPLICABLE LAW. This Agreement, shall be governed by, and construed in
accordance with, the laws of the Commonwealth of Kentucky without regard to its
conflict of law rules.

     11.7 EXECUTION IN COUNTERPARTS. This Agreement may be executed in any
number of counterparts with the same effect as if all parties hereto had all
signed the same document. All counterparts shall be construed together and shall
constitute one agreement.

     11.8 WAIVER OF ACTION FOR PARTITION. Each Joint Venturer irrevocably
waives, during the term of the Joint Venture, any right that such Joint Venturer
may have to maintain any action for partition with respect to the Joint Venture
and the property of the Joint Venture.

                                      A-22
<PAGE>   26

     11.9 AMENDMENTS.

          (a) Unless otherwise specifically herein provided, this Agreement
shall not be amended without the consent of Joint Venturers owning a majority of
the then outstanding Units entitled to vote.

          (b) The Joint Venture Manager may, without notice to, or consent of,
any Joint Venturer, amend any provisions of this Agreement, or consent to and
execute any amendment to this Agreement, to reflect:

               (1) A change in the name or location of the principal place of
     business of the Joint Venture;

               (2) The admission of Substitute Joint Venturers or additional
     Joint Venturers in accordance with this Agreement;

               (3) A reduction in, return of, or withdrawal of, all or a portion
     of any Joint Venturer's Capital Contribution;

               (4) A correction of any typographical error or omission;

               (5) A change which is necessary in order to qualify the Joint
     Venture as a limited partnership under the laws of any other state or which
     is necessary or advisable, in the opinion of the Joint Venture Manager, to
     ensure that the Joint Venture will be treated as a partnership and not as
     an association taxable as a corporation for Federal income tax purposes;

               (6) A change in the allocation provisions, in accordance with the
     provisions of Section 3.3.2(a), in a manner that, in the sole opinion of
     the Joint Venture Manager (which opinion shall be determinative), would
     result in the most favorable aggregate consequences to the Joint Venturers
     as nearly as possible consistent with the allocations contained herein, for
     such allocations to be recognized for Federal income tax purposes due to
     developments in the Federal income tax laws or otherwise; or

               (7) Any other amendment similar to the foregoing;

provided however, that the Joint Venture Manager shall have no authority, right,
or power under this Section 11.11.9(b) to amend the voting rights of the Joint
Venturers.

     11.10 SUBSTITUTION OF SIGNATURE PAGES. This Agreement has been executed in
duplicate by the Joint Venturers and one executed copy of the signature page is
attached to the Joint Venturer's copy of this Agreement. It is agreed that the
other executed copy of such signature page may be attached to an identical copy
of this Agreement together with the signature pages from counterpart Agreements
which may be executed by other Joint Venturers.

     11.11 INCORPORATION BY REFERENCE. Every exhibit, schedule, and other
appendix attached to this Agreement and referred to herein is hereby
incorporated in this Agreement by reference.

                                      A-23
<PAGE>   27

                         HOME STAKE JOINT VENTURE, LTD.

                     JOINT VENTURE AGREEMENT SIGNATURE PAGE

<TABLE>
<S>             <C>
                Number of Units of Limited Partnership interest
----------

                Number of Units of General Partnership interest
----------

                Cash Payment - $17,100 per Unit to be paid as follows:
----------      $10,000 payable upon subscription for the drilling and testing of the Re-Entry and Venture
                Wells (Payable to "SOUTH CENTRAL BANK, ESCROW AGENT FOR THE HOME STAKE JOINT VENTURE,
                LTD.") and

                $4,275 payable if and when the Joint Venture Manager decides to complete the Re-Entry Well
                (Payable to "HOME STAKE JOINT VENTURE, LTD.") and

                $2,825 payable if and when the Joint Venture Manager decides to
                complete the Venture Well (Payable to "HOME STAKE JOINT VENTURE,
                LTD.").
</TABLE>

                            REGISTRATION INFORMATION

--------------------------------------------------------------------------------
Print Name

--------------------------------------------------------------------------------
Social Security Number or Tax ID Number

X
--------------------------------------------------------------------------------
 Signature

Mailing Address:

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

Home Ph #:
--------------------------------------------------------------------------------

Work Ph #:
--------------------------------------------------------------------------------

               Check One:
        Individual                 IRA
----                         ----
        J/T/W/R/O/S                Keogh
----                         ----
        Partnership                TIC
----                         ----
        Trust Created              Corporation
----    on ________          ----
        Limited Liability          Community
----    Company              ----  Property

Check One:
[ ]  Accredited Investor
[ ]  Non-Accredited Investor

--------------------------------------------------------------------------------
Print Name of Joint Owner
(if applicable)

--------------------------------------------------------------------------------
Social Security Number or Tax ID Number

X
--------------------------------------------------------------------------------
  Signature of Joint Owner

                           DEALER MANAGER'S ACCEPTANCE

Ridgemont Securities, Inc., as Dealer Manager, herewith accepts the foregoing
subscription.

--------------------------------------------------------------------------------
Deborah Morones, President

Date:
      ----------------------

                           JOINT VENTURE'S ACCEPTANCE

Blue Ridge Energy, Inc., as Joint Venture Manager, herewith accepts the
foregoing subscription in the Home Stake Joint Venture.

--------------------------------------------------------------------------------
Robert D. Burr, President

Date:
      ----------------------

                                      A-24
<PAGE>   28

                                    EXHIBIT A
                                       TO
                        AGREEMENT OF LIMITED PARTNERSHIP
                                       OF
                         HOME STAKE JOINT VENTURE, LTD.

<TABLE>
<CAPTION>
Names and Addresses of Investors                     Nature of Interest                 Number of Units
--------------------------------                     ------------------                 ---------------
<S>                                                  <C>                                <C>

</TABLE>

                                      A-25

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