Document:

EXHIBIT 10.20

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                               OPERATING AGREEMENT

                                       OF

                         MAVERICK BASIN EXPLORATION, LLC

                               DATED JUNE 23, 2004

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                               OPERATING AGREEMENT
                                       OF
                         MAVERICK BASIN EXPLORATION, LLC

         THIS OPERATING  AGREEMENT (this  "Agreement"),  dated June 23, 2004, is
entered  into  by  and  between  Touchstone  Resources  USA,  Inc.,  a  Delaware
corporation ("Touchstone Resources"), as a Member and Manager, and PHT Gas, LLC,
a Delaware limited liability company ("PHT Gas"), as a Member.

                                    RECITALS

         WHEREAS,  the Members desire to form a limited  liability company under
the Act to engage in any  lawful  act or  activity,  either  alone or with other
businesses or purposes,  for which limited liability  companies may be organized
under the Act; and

         WHEREAS,  the initial Members wish to provide for the administration of
the  business and affairs of the Company and the rights and  obligations  of the
Members with respect thereto;

         NOW,  THEREFORE,  the parties  hereto,  intending  to be legally  bound
hereby, mutually agree as follows:

                                   DEFINITIONS

         For the purposes of this Agreement,  the following terms shall have the
definitions ascribed to them herein:

"Act" shall mean the  Delaware  Limited  Liability  Company Act, Ch. 18, Tit. 6,
Sec. 18-101, et seq. (the "Act") and any successor statutes, as amended.

"Additional  Capital"  shall have the  meaning  ascribed to such term in Section
3.4(b).

"Additional Member" shall have the meaning ascribed to such term in Section 2.3.

"Capital  Account"  shall mean the dollar  amount of the  Member's  claim on the
capital of the Company (or, if the Member has a negative  Capital  Account,  the
Company's claim on the capital of the Member).

"Capital  Contributions" shall mean any contributions of cash, non-cash property
and services and the promises of cash,  non-cash property and services,  made to
the Company by a Member.

"Certificate" shall have the meaning ascribed to such term in Section 1.2.

"Class A Member" shall have the meaning ascribed to such term in Section 2.2.

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"Class  A  Percentage   Interest"  shall  mean  the  fraction  (expressed  as  a
percentage), the numerator of which is the Percentage Interest of the applicable
Class A Member and the denominator of which is the aggregate Percentage Interest
of all Class A Members on the applicable date of computation.

"Class B Member" shall have the meaning ascribed to such term in Section 2.2.

"Class  B  Percentage   Interest"  shall  mean  the  fraction  (expressed  as  a
percentage), the numerator of which is the Percentage Interest of the applicable
Class B Member and the denominator of which is the aggregate Percentage Interest
of all Class B Members on the applicable date of computation.

"Class C Member" shall have the meaning ascribed to such term in Section 2.2.

"Class  C  Percentage   Interest"  shall  mean  the  fraction  (expressed  as  a
percentage), the numerator of which is the Percentage Interest of the applicable
Class C Member and the denominator of which is the aggregate Percentage Interest
of all Class C Members on the applicable date of computation.

"Code" shall mean the Internal Revenue Code of 1986, as amended.

"Company"  shall mean  Maverick  Basin  Exploration,  LLC,  a  Delaware  limited
liability company.

"Confidential  Information" shall mean the terms of this Agreement,  information
that the Company maintains in confidence,  information that the Managers know to
be proprietary to the Company, financial information relating to the Company and
to the Managers,  information  relating to Company  marketing and business plans
and  strategies,  information  concerning the design and  manufacture of Company
products and concerning  methods of providing Company  services,  information in
Company  personnel  files and similar  files  relating to Company  Managers  and
employees,  information entrusted to the Company in confidence by third parties,
and   information   reasonably   designated  by  the  Managers  as  Confidential
Information

"Dissolution"  shall  mean  the  cessation  of  the  Company's  normal  business
activities  and the  beginning  of the  process of winding up its  business  and
internal affairs and of liquidating it.

"Distributable  Cash" shall mean amounts  determined  by the  Manager,  as being
available  out of all  cash  received  by  the  Company  from  all  sources  for
distribution to the Members after (1) all expenditures by the Company, including
capital expenditures,  are paid, (2) all current debt is paid, and (3) there are
made such  additions to the reserves of the Company for  contingencies,  working
capital or future expansion needs as the Manager may reasonably  determine to be
necessary.

"Distribution"  shall mean a transfer of  Distributable  Cash to a Member in the
Member's  capacity  as a  member  in  cash,  by  check  or  otherwise.  Payments
specifically  identified in this  Agreement as  compensation  to the Members for
services to or on behalf of the Company shall not be deemed to be  Distributions
within the meaning of this Agreement.

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"Effective Date" shall have the meaning ascribed to such term in Section 1.1.

"Incapacity"  shall mean: (i) with respect to a natural Person,  the bankruptcy,
death,  disability or incompetency of such Person,  and (ii) with respect to any
other Person,  the bankruptcy,  liquidation,  dissolution or termination of such
Person.

"Management  Rights"  shall mean all  rights of a Member as a member  except the
Member's  right to  receive  allocations  of  Company  Profits  and  Losses  and
Distributions of Company assets.

"Manager" or Managers"  means any Person or Persons  elected by the Members as a
manager of the Company as provided in this  Agreement  or  appointed  as such in
this Agreement, but does not include any Person who has ceased to be a Manager.

"Member"  means  any  Person  executing  this  Agreement  as of the date of this
Agreement  as a member  or  hereafter  admitted  to the  Company  as a member as
provided in this Agreement, but does not include any Person who has ceased to be
a member in the Company.

"Membership  Interest" shall mean a Member's share of the Company's  Profits and
Losses, and the Member's right to receive Distributions of the Company's assets.

"Membership Rights" shall have the meaning ascribed to such term in Section 2.5.

"Non-Contributing  Member"  shall  have the  meaning  ascribed  to such  term in
Section 3.4(b).

"Percentage Interest" means, with respect to any Member, the Percentage Interest
set forth opposite such Member's name on Schedule A attached hereto.

"Person"  means a natural  person,  partnership  (whether  general or  limited),
limited liability company, trust, estate, association,  corporation,  custodian,
nominee,  or any other  individual  or  entity in its own or any  representative
capacity.

"Proceeding" shall have the meaning ascribed to such term in Section 9.2.

"Profits" and "Losses" shall mean the taxable  income and losses,  respectively,
of the Company as determined for Federal income tax purposes in accordance  with
the accounting  method  followed by the Company for such  purposes,  adjusted as
follows:  (i) any expenditures of the Company described in Section  705(a)(2)(B)
of the Code, or treated as Code Section  705(a)(2)(B)  expenditures  pursuant to
Treasury  Regulation Section  1.704(b)(2)(iv)(i),  shall be subtracted from such
taxable income or losses,  and (ii) if property is reflected on the books of the
Company  at a book  value  that  differs  from the  adjusted  tax  basis of such
property,  depreciation,  amortization  and gain or loss  with  respect  to such
property shall be determined by reference to such book value.

"Substituted  Member" shall mean a transferee  of any economic and  non-economic
rights of an existing Member.

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"Unlawful  Distribution" shall have the meaning ascribed to such term in Section
4.5.

                                   SECTION 1
                             PRELIMINARY PROVISIONS

         1.1      Intentionally Omitted

         1.2      Acceptance of Certificate of Formation

         Each initial  Member hereby  acknowledges  that the initial  Member has
carefully   reviewed   the   Certificate   of  Formation  of  the  Company  (the
"Certificate")  and that each of its  provisions  is  acceptable  to the initial
Member.

         1.3      Amendment of Agreement and Certificate

         Except as otherwise expressly provided in this Agreement,  no amendment
of the Agreement or the  Certificate  shall be valid unless it is in writing and
signed by all of the Members.

         1.4      Formation

         On or promptly after the date of this  Agreement,  the initial  Members
shall cause the Certificate to be filed with the Secretary of State of the State
of Delaware.

         1.5      Entity Status

         Upon its  formation,  the Company shall be a legal entity  separate and
distinct from its Members.

         1.6      Name

         The name of the Company shall be "Maverick Basin Exploration, LLC."

         1.7      Principal Office

         The  principal   office  of  the  Company  shall  be  111  Presidential
Boulevard,  Suite 165, Bala Cynwyd,  Pennsylvania 19004, or such place or places
as the Managers may designate from time to time. The Company may have such other
offices and places of business as the Managers may designate from time to time.

         1.8      Registered Office; Registered Agent

         The  registered  office  of  the  Company  required  by  the  Act to be
maintained  in the  State  of  Delaware  shall  be  the  office  of the  initial
registered  agent named in the  Certificate or such other office (which need not

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be a place of business of the Company) as the Managers may  designate  from time
to time in the manner  provided by law. The  registered  agent of the Company in
the  State  of  Delaware  shall be the  initial  registered  agent  named in the
Certificate  or such other Person or Persons as the Managers may designate  from
time to time in the manner provided by law.

         1.9      Purpose

         The Company's principal purpose shall be to acquire, explore, drill and
develop  domestic  natural  gas and oil  properties,  and to engage in any other
business  activity  that  now  or  hereafter  may  be  necessary,   appropriate,
desirable,  incidental,  advisable or  convenient  to  accomplish  the foregoing
purpose (including obtaining financing  therefor),  and that is not forbidden by
the Act or the law of the jurisdiction in which the Company engages in business.

         1.10     Powers

         In pursuing its lawful  purposes,  the Company shall be empowered to do
all things that limited liability companies are permitted to do under the Act.

         1.11     Foreign Qualifications

         Prior to the Company conducting business in any jurisdiction other than
Delaware,  the  Managers  shall  cause the  Company  to  comply,  to the  extent
procedures are available and those matters are reasonably  within the control of
the  Managers,  with all  requirements  necessary  to qualify  the  Company as a
foreign limited  liability company in that  jurisdiction.  At the request of the
Managers,  each Member  shall  execute,  acknowledge,  swear to, and deliver all
certificates  and other  instruments  conforming  with this  Agreement  that are
necessary or  appropriate to qualify,  continue,  and terminate the Company as a
foreign limited liability company in all such jurisdictions in which the Company
may conduct business

         1.12     Management Structure

         The  management  of the business  and  internal  affairs of the Company
shall be reserved to one or more Managers.  Except as otherwise provided in this
Agreement, only the Managers may bind the Company and decide matters relating to
the  Company's  business and internal  affairs,  provided that the Members shall
have voting rights, information rights and dispute resolution rights provided in
this  Agreement  and by law. The Members may change the number of the  Company's
Managers at any time upon the affirmative  vote of Members holding a majority of
Member votes.

         1.13     Limited Liability of Members and Managers

         No Member or Manager shall be  personally  obligated to any third party
for any debt, obligation or liability of the Company solely by reason of being a
Member or  Manager.  Members  and  Managers  shall be liable for their  personal
conduct as  provided  by law.

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         1.14     Business Activities and Ventures of Members and Managers

         Each  Member,  Manager  and officer of the Company at any time and from
time to time may engage in and possess  interests in other  business  activities
and  ventures  of any and  every  type and  description,  independently  or with
others,  including ones in competition  with the Company,  with no obligation to
offer to the Company or any other  Member,  Managers  or  officers  the right to
participate therein,  and neither the Company nor the other Members,  Manager or
officers shall have any rights in such other  business  activities and ventures.
The Company may transact business with any Manager, Member, officer or affiliate
thereof,  provided the terms of those  transactions  are no less  favorable than
those the Company could obtain from unrelated third parties.

         1.15     Annual Accounting Period

         The Company's  fiscal year for financial and tax purposes  shall be the
calendar year.

         1.16     Method of Accounting

         The Company  shall use the accrual  method of accounting to compute its
taxable income.

         1.17     Business Asset Protection

         The Members intend that to the maximum extent  permitted by the Act and
by other  applicable  law,  the assets of the Company  shall be  unavailable  to
satisfy obligations incurred by the Members in their personal capacity.

                                    SECTION 2
                           MEMBERSHIP IN THE COMPANY;
                   TRANSFERS AND PLEDGES OF MEMBERSHIP RIGHTS;
                             MEMBERS' VOTING RIGHTS

         2.1      Identity of Initial Members

         The initial Members are as set forth on Schedule A attached hereto.

         2.2      Classes of Members

         The Company  shall have three (3)  classes of Members:  Class A Members
("Class A  Members"),  Class B Members  ("Class B Members")  and Class C Members
("Class C  Members").  The  initial  Class A Member and Class B Member  shall be
Touchstone  Resources.  The initial  Class C Member shall be PHT Gas.  Except as
otherwise expressly provided in this Agreement,  each Member shall have the same
rights, duties, privileges, authority and liabilities as each other Member.

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         2.3      Admission of Additional Members

         The  Members  shall  admit no  Person  as an  additional  Member of the
Company after the Company's  formation (an "Additional  Member") except upon the
affirmative vote of Members holding a majority of Member votes.

         2.4      Execution of This Agreement by Substituted Member

         No Person shall be admitted as an Additional or  Substituted  Member of
the Company until the Additional or Substituted  Member signs this Agreement (as
it may be amended from time to time before the  admission of the  Additional  or
Substituted Member).

         2.5      Membership Rights

         For purposes of this Agreement,  the membership rights of a Member (the
"Membership  Rights")  shall mean the totality of a Member's  rights as a member
under the  Agreement  and the Act,  including  both  economic  and  non-economic
rights.

         2.6      Lack of Authority

         No Member shall have any power or authority,  in his or her capacity as
a Member, to represent,  act for, sign for, or bind the Managers or the Company,
or to do any  act  that  would  be  binding  on the  Company,  or to  incur  any
expenditures  or obligations  on behalf of the Company.  Except when acting as a
Manager or an officer of the Company, or pursuant to separate service agreements
or other  agreements  or  contracts  between  the  Company  and a Member,  or as
otherwise specifically provided herein, the Members shall not participate in the
management or control of the Company  business,  nor shall the Members  transact
any business for the Company.  The Members hereby consent to the exercise by the
Managers of the powers conferred on the Managers by law and by this Agreement.

         2.7      Forum; Remedies

         Subject to any contrary  provisions  in Section 14, any claim against a
Member in the  Member's  capacity  as a member  shall be decided in  arbitration
under Section 14, and in any such  arbitration,  the  arbitrator  may impose any
legal or equitable remedy that the arbitrator determines to be reasonable in the
circumstances.

         2.8      Transfers or Pledges of Membership Rights to Substituted
                  Members

         Except with the consent of a majority of the  Managers,  which  consent
the Managers may not unreasonably  withhold, no Member shall transfer all or any
part of the Member's  rights as a member  (whether  these rights are economic or
non-economic) to any Substituted Member, including another Member, nor shall any
Member  pledge all or any part of such  Member's  rights to any  Person.  In the
event that any  Membership  Interests are  transferred  in  accordance  with the
provisions of this Agreement, the transferees of such Membership Interests shall
succeed to the  Percentage  Interest  of its  transferor  to the extent  that it
relates to the transferred Membership Interest.

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         2.9      Transfers and Pledges in Breach of This Agreement

         Transfers  and pledges of  Membership  Rights in breach of the terms of
this Agreement shall be void and of no effect.

         2.10     Right of First Refusal

         Except as otherwise provided in this Agreement, the Company may require
a Member to promptly sell all or any part of the Member's Membership Interest to
the  Company  or to the other  Members  for its then fair  value and upon  other
reasonable  purchase terms if the Member is  dissociated  from the Company under
Section 11, or an  arbitrator  orders such a sale under Section 14 on the ground
that it is fair and reasonable in the circumstances.

         2.11     Election Under Code Section 754

         Before any Member  transfers any Membership  rights to any Person,  the
Members  shall  negotiate  in good  faith and  shall  agree  whether  to file an
election  under Code  Section  754 to adjust the basis of  Company  property  in
connection with that transfer.

         2.12     Members' Voting Rights

                  Except as otherwise  expressly  provided herein or by law, the
Class A  Members  shall  have  the  exclusive  right  to vote on  those  matters
pertaining  to the Company with  respect to which  Members are entitled to vote,
either under this Agreement or by law, and each Class A Member shall be entitled
to cast  that  number  of  votes as  shall  equal  the  product  of the  Class A
Percentage  Interest of such Member (expressed as a fraction)  multiplied by one
hundred  (100).  Each matter voted on by the Class A Members shall be decided by
the  affirmative  vote of Class A Members  holding a majority  of Class A Member
votes.  Except as otherwise  expressly provided in this Agreement or by law, the
Class B Members and Class C Members  shall not be entitled to any voting  rights
on any matters pertaining to the Company.

         2.13     Procedures for Member Voting

         Members may vote on matters in person,  by phone,  by fax, by e-mail or
by any other reasonable means.  Each Member shall have a reasonable  opportunity
to be heard on each matter on which the Members  vote.  The  Managers  shall use
their best efforts to record each Member vote  accurately  and to circulate this
record among the Members  promptly after the vote,  provided that the failure of
the  Managers to  circulate  this  record with  respect to any vote shall not be
evidence  of the  invalidity  of the vote.  If the  chairman  of any  meeting of
Members appoints one or more inspectors for that meeting, those inspectors shall
perform the Managers' obligations under this Section 2.13.

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         2.14     Intentionally Omitted

         2.15     Meetings

                  (a) A quorum  shall be  present at a meeting of Members if the
holders of a majority of Member votes are  represented  at the meeting in person
or by proxy.  With  respect  to any  matter,  other  than a matter for which the
affirmative  vote  of the  holders  of a  specified  portion  of the  Membership
Interests  of  all  Members  entitled  to  vote  is  required  by the  Act,  the
affirmative  vote of a majority of Member votes at a meeting of Members at which
a quorum is present shall be the act of the Members.

                  (b) All meetings of the Members shall be held at the principal
place of business  of the  Company or at such other place  within or without the
State of  Pennsylvania  as shall be specified or fixed in the notices or waivers
of notice thereof,  provided that any or all Members may participate in any such
meeting by means of conference telephone or similar communications  equipment by
means of which all Persons participating in the meeting can hear each other.

                  (c) Notwithstanding the other provisions of the Certificate or
this  Agreement,  the  chairman  of the  meeting or the holders of a majority of
Member  votes shall have the power to adjourn  such  meeting  from time to time,
without any notice other than  announcement at the meeting of the time and place
of the holding of the  adjourned  meeting.  If such  meeting is adjourned by the
Members,  such time and place shall be  determined by a vote of the holders of a
majority of the Member votes. Upon the resumption of such adjourned meeting, any
business may be  transacted  that might have been  transacted  at the meeting as
originally called.

                  (d) Intentionally Omitted.

                  (e) Special  meetings of the Members for any proper purpose or
purposes  may be called at any time by the  Managers  or the holders of at least
ten  percent  (10%) of  Member  votes.  If not  otherwise  stated in or fixed in
accordance with the remaining provisions hereof, the record date for determining
Members  entitled to call a special  meeting is the date any Member  first signs
the  notice of that  meeting.  Only  business  within the  purpose  or  purposes
described in the notice (or waiver  thereof)  required by this  Agreement may be
conducted at a special meeting of the Members.

                  (f) Written or printed notice stating the place,  day and hour
of the meeting  and, in the case of a special  meeting,  the purpose or purposes
for which the meeting is called,  shall be delivered  not less than ten (10) nor
more than sixty (60) days before the date of the meeting,  either  personally or
by mail, by or at the  direction of the Managers or one or more Members  calling
the meeting,  to each Member.  If mailed,  any such notice shall be deemed to be
delivered  when  deposited in the United  States mail,  addressed to the Member,
with postage thereon prepaid.

                  (g) The date on which  notice of a meeting  of the  Members is
mailed  or the  date  on  which  the  resolution  of the  Managers  declaring  a
Distribution  is adopted,  as the case may be,  shall be the record date for the

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determination  of the Members  entitled to notice of or to vote at such meeting,
including  any  adjournment  thereof,  or the Members  entitled to receive  such
Distribution.

         (h) The  right of  Members  to  cumulative  voting in the  election  of
Managers is expressly prohibited.

         2.16     Voting List

         The Managers  shall make, at least ten (10) days before each meeting of
the Members,  a complete list of the Members entitled to vote at such meeting or
any adjournment thereof, arranged in alphabetical order, with the address of and
the Membership  Interests held by each,  which list shall be kept on file at the
registered  office or  principal  place of  business of the Company and shall be
subject to  inspection  by any Member at any time during usual  business  hours.
Such  list  shall  also be  produced  and kept open at the time and place of the
meeting and shall be subject to the  inspection  of any Member  during the whole
time of the  meeting.  The  original  membership  records  shall be  prima-facie
evidence  as to the  identity of the  Members  entitled to examine  such list or
transfer  records or to vote at any meeting of  Members.  Failure to comply with
the  requirements  of this  Section  shall not affect the validity of any action
taken at the meeting.

         2.17     Proxies

         A Member may vote  either in person or by proxy  executed in writing by
the Member. A telegram,  telex, cablegram or similar transmission by the Member,
or a photographic,  photostatic,  facsimile or similar reproduction of a writing
executed by the Member, shall be treated as an execution in writing for purposes
of this Section. Proxies for use at any meeting of Members or in connection with
the taking of any action by written  consent  shall be filed with the  Managers,
before or at the time of the meeting or execution of the written consent, as the
case may be. All proxies  shall be received  and taken charge of and all ballots
shall be received and canvassed by the Managers,  who shall decide all questions
touching upon the qualification of voters, the validity of the proxies,  and the
acceptance or rejection of votes,  unless an inspector or inspectors  shall have
been appointed by the chairman of the meeting,  in which event such inspector or
inspectors shall decide all such questions. No proxy shall be valid after twelve
(12)  months from the date of its  execution  unless  otherwise  provided in the
proxy.  A proxy shall be revocable  unless the proxy form  conspicuously  states
that the proxy is irrevocable and the proxy is coupled with an interest.  Should
a proxy designate two or more Persons to act as proxies,  unless that instrument
shall provide to the contrary, a majority of such Persons present at any meeting
at which their powers thereunder are to be exercised shall have and may exercise
all the powers of voting or giving consents thereby conferred, or if only one be
present,  then such powers may be  exercised  by that one; or, if an even number
attend and a majority do not agree on a particular  issue, the Company shall not
be required  to  recognize  such proxy with  respect to such issue if such proxy
does not specify how the Membership Interests that are the subject of such proxy
are to be voted with respect to such issue.

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         2.18     Conduct of Meetings

         All meetings of the Members  shall be presided  over by the chairman of
the meeting, who shall be a Manager (or representative  thereof) designated by a
majority of the Managers. The chairman of any meeting of Members shall determine
the  order  of  business  and  the  procedure  at the  meeting,  including  such
regulation  of the manner of voting and the conduct of discussion as seem to him
in order.

         2.19     Action by Written Consent or Telephone Conference.

                  (a) Any action required or permitted to be taken at any annual
or special  meeting of Members  may be taken  without a meeting,  without  prior
notice,  and without a vote, if a consent or consents in writing,  setting forth
the  action so taken,  shall be signed by the holder or holders of not less than
the minimum  number of Member  votes that would be necessary to take such action
at a meeting at which the  holders of all Member  votes  entitled to vote on the
action were  present and voted.  Every  written  consent  shall bear the date of
signature  of each Member who signs the  consent.  No written  consent  shall be
effective to take the action that is the subject to the consent  unless,  within
sixty (60) days after the date of the earliest  dated  consent  delivered to the
Company in the manner required by this Section,  a consent or consents signed by
the holder or holders of not less than the  minimum  Member  votes that would be
necessary to take the action that is the subject of the consent are delivered to
the  Company by  delivery  to its  registered  office,  its  principal  place of
business, or the Managers.  Delivery shall be by hand or certified or registered
mail,  return receipt  requested.  Delivery to the Company's  principal place of
business  shall be addressed to the Managers.  A telegram,  telex,  cablegram or
similar transmission by a Member, or a photographic,  photostatic,  facsimile or
similar  reproduction  of a writing  signed by a Member,  shall be  regarded  as
signed by the Member for purposes of this  Section.  Prompt notice of the taking
of any  action  by  Members  without a meeting  by less than  unanimous  written
consent  shall be given to those  Members  who did not consent in writing to the
action.

                  (b) The  record  date  for  determining  Members  entitled  to
consent to action in writing  without a meeting shall be the first date on which
a signed written  consent setting forth the action taken or proposed to be taken
is delivered to the Company by delivery to its registered  office, its principal
place of business, or the Managers. Delivery shall be by hand or by certified or
registered mail, return receipt requested.  Delivery to the Company's  principal
place of business shall be addressed to the Managers.

                  (c) If any action by Members is taken by written consent,  any
articles or documents filed with the Secretary of State of the State of Delaware
as a result of the taking of the action  shall state,  in lieu of any  statement
required by the Act  concerning  any vote of Members,  that written  consent has
been given in  accordance  with the  provisions  of the Act and that any written
notice required by the Act has been given.

                  (d) Members may  participate in and hold a meeting by means of
conference telephone or similar  communications  equipment by means of which all
Persons  participating in the meeting can hear each other, and  participation in
such meeting shall constitute attendance and presence in person at such meeting,
except  where a Person  participates  in the meeting for the express  purpose of
objecting to the  transaction  of any business on the ground that the meeting is
not lawfully called or convened.

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                                   SECTION 3
                     CAPITAL CONTRIBUTIONS; CAPITAL ACCOUNTS

         3.1      Initial Capital Contributions

         The initial  Members shall make initial  Capital  Contributions  to the
Company in the amounts and at the dates set forth on Schedule A attached  hereto
in exchange for their respective Membership Interests. Notwithstanding the dates
set forth on  Schedule A, the  Company  may  request  that the  Initial  Capital
Contribution  of a Member be made on an earlier date.  Any such request shall be
made by written notice to such Member.

         3.2      Establishment of Capital Accounts.

         An individual Capital Account shall be established for each Member. The
Capital Account of each Member shall consist of its initial Capital Contribution
and shall be increased  by: (i) any  additional  Capital  Contributions  by such
Member;  (ii) such Member's share of any income or gains,  including the Profits
allocated to such Member  pursuant to this  Agreement;  and (iii) such  Member's
share of any income or gain exempt from federal  income tax  (determined  in the
same manner as Profits are  allocated to such  Members),  and shall be decreased
by: (i) such Member's share of Losses  allocated to such Member pursuant to this
Agreement; (ii) any Distribution to such Member of cash or the fair market value
of any other property (net of liabilities assumed by such Member and liabilities
to  which  such  property  is  subject);   and  (iii)  such  Member's  share  of
expenditures of the Company described in Code Section  705(a)(2)(B)  (determined
in the same manner as Losses are allocated to such Members).

         3.3      Determination of Capital Accounts.

         The  Company  shall  compute  the  Capital  Account of each Member on a
reasonably  current  basis.  Except as otherwise  provided  herein,  the Capital
Account of a Member shall be determined in all events solely in accordance  with
the rules set forth in Treasury Regulation Section  1.704-1(b)(2)(iv)  and other
applicable Treasury Regulations as the same may be amended or revised hereafter.
To the extent that any  provision  of this  Agreement is  inconsistent  with the
requirements  of  Treasury   Regulation   Section   1.704(b)(2)(iv)  as  to  the
calculation  of a Member's  Capital  Account,  such  Treasury  Regulation  shall
control.  Any  references in this  Agreement to the Capital  Account of a Member
shall be deemed to refer to such Capital  Account as the same may be credited or
debited from time to time as set forth above.

         3.4      Additional Contributions

                  (a) Except as provided in this Agreement, no Member shall have
an obligation to make an additional Capital Contribution or loan to the Company.
If  additional  funds are  advanced to the Company by the Members as provided in
this Agreement, such funds shall be additional Capital Contributions.

                  (b) The  Company  may  request  that the  Members  provide the
Company with such additional  capital as the Managers may determine from time to
time in their sole discretion  ("Additional  Capital"). In the event the Company
requests  Additional  Capital from the Members,  the Additional Capital shall be

                                       12
<PAGE>

contributed 75% by the Class A Members and 25% by the Class B Members. The Class
C Members will in no event be required to provide Additional Capital.

         In the event the Company requests Additional Capital under this Section
3.4(b),  the Company  shall  notify the  applicable  Members of the need for the
Additional  Capital,  which notice must include a statement in reasonable detail
of the proposed uses of the Additional Capital and a date before which each such
Member's share of the Additional  Capital shall be delivered to the Company.  If
one or more of the Members fails to  contribute  all or any portion of its share
of  such  requested  Additional  Capital   ("Non-Contributing   Members"),   the
Percentage  Interests  of  all  Members  shall  be  recalculated  to  reflect  a
proportionate  reduction in the  Percentage  Interests  of the  Non-Contributing
Members and an increase in the Percentage Interests of those Members that timely
complied with this Section 3.4(b).

         3.5      Contributions and Compromises by Incapacitated Members

         Each Member and such Member's  representative or successor (as the case
may be) shall be  obligated  to  perform  any  promise  by the  Member to make a
Capital  Contribution  to the Company even if the Member is prevented from doing
so because of any Incapacity.

         3.6      Promises to Make Capital Contributions

         No promise by a Member to make a Capital  Contribution  to the  Company
shall be enforceable  unless set forth in this  Agreement or in another  writing
signed by the Member.  No promise by a Member to make a Capital  Contribution to
the Company shall be compromised  except by the  affirmative  vote of all of the
other Members.

         3.7      No Interest on Contributions

         The Members shall earn no interest on their Capital Contributions.

         3.8      Adequacy of the Company's Capital

         Each  Member  hereby  acknowledges  and  agrees  that  in the  Member's
considered  opinion,  the  contributions  provided  for in  this  Section  3 are
reasonably sufficient to meet the initial capital needs of the Company.

         3.9      Negative Capital Accounts.

         No Member  shall be required to pay to any other  Member any deficit or
negative  balance  which may exist  from time to time in such  Member's  Capital
Account.  No Member  shall be liable to the  Company or any other  Member or any
creditor of the Company solely because of the existence of a negative balance in
such Member's Capital Account.

                                       13
<PAGE>

         3.10     Reimbursement of Expenses

         If any Member or Manager  incurs a reasonable  expense on behalf of the
Company and reasonably  documents this expense to the Company, the Company shall
reimburse  the Member or Manager  for this  expense as  promptly  as  reasonably
possible after receiving this documentation.

         3.11     Member Representations and Warranties

         Each Member hereby  represents and warrants to and  acknowledges to the
Company that the Membership  Interests being acquired in connection herewith are
being  acquired for such Member's own account for  investment  purposes only and
not with a view to, or with any present intention of,  distributing or reselling
any of such Membership  Interests.  The Member  acknowledges and agrees that the
Membership  Interests have not been registered under the Securities Act or under
any  state  securities  laws,  and that  the  Membership  Interests  may not be,
directly  or  indirectly,   sold,   transferred,   offered  for  sale,  pledged,
hypothecated or otherwise disposed of without  registration under the Securities
Act and  applicable  state  securities  laws,  except  pursuant to an  available
exemption from such  registration.  The Member also acknowledges and agrees that
neither the SEC nor any securities  commission or other  governmental  authority
has (i)  approved  the  transfer of the  Membership  Interests or passed upon or
endorsed the merits of the transfer of the Membership Interests,  this Agreement
or the  transactions  contemplated  hereby;  or (ii)  confirmed the accuracy of,
determined  the adequacy  of, or reviewed  this  Agreement.  The Member has such
knowledge,  sophistication and experience in financial, tax and business matters
in general,  and investments in securities in particular,  that it is capable of
evaluating the merits and risks of this investment in the Membership  Interests,
and the Member  has made such  investigations  in  connection  herewith  as they
deemed  necessary  or desirable  so as to make an informed  investment  decision
without  relying  upon the  Company  for  legal or tax  advice  related  to this
investment.  The Member is an "accredited  investor"  within the meaning of Rule
501 promulgated under the Securities Act

                                   SECTION 4
                          ALLOCATIONS AND DISTRIBUTIONS

         4.1      Generally

         Subject to Section 10.7, the Managers shall have sole  discretion as to
the amounts and timing of Distributions to Members, subject to the retention of,
or payment  to,  third  parties of such  funds as it shall deem  necessary  with
respect to the reasonable business needs of the Company, which shall include the
payment  or the  making  of  provision  for  the  payment  when  due of  Company
obligations,  including the payment of any management or administrative fees and
expenses or any other obligations.

         4.2      Distributions

                  The Company shall make  Distributions  to the Members no later
than 60 days  after  the end of each  fiscal  year of the  Company  and may make
additional Distributions to the Members on such dates and in such amounts as the
Managers  shall  determine.  All  Distributions  shall be made in the  following
priority:

                                       14
<PAGE>

                  (a) as provided in Section 10.7;

                  (b)  then,   to  the  Class  A  Members  until  the  aggregate
Distributions  made  to the  Class  A  Members  under  this  Section  4.2  equal
$1,500,000;

                  (c) then,  75% to the  Class A Members  and 25% to the Class B
Members until the aggregate Distributions made to the Class A Members under this
Section 4.2 equal 100% of the Capital  Contribution made by the Class A Members;
and

                  (d) then, 63.75% to the Class A Members, 21.25% to the Class B
Members, and 15% to the Class C Members.

                  Distributions made to Class A Members shall be allocated among
the Class A Members in  proportion to each Class A Member's  respective  Class A
Percentage  Interest,  Distributions  made to Class B Members shall be allocated
among the Class B Members in  proportion  to each  Class B  Member's  respective
Class B Percentage Interest,  and Distributions made to Class C Members shall be
allocated  among the Class C Members  in  proportion  to each  Class C  Member's
respective Class C Percentage Interest.

         4.3      Allocations of Profits and Losses

                  Profits  and Losses and all items of Company  income,  gain or
loss for any fiscal year shall be allocated among the Members in the same manner
as  Distributions  are allocated  among the Members under Section 4.2,  provided
that:

                  (a) if a  Member  makes a  Capital  Contribution  of  non-cash
property  to  the  Company,  the  Company  shall  allocate  its  income,  gains,
deductions,  losses and other tax items to the Member in respect of this Capital
Contribution in accordance with Code Section 704 (c) (1) (A) and the regulations
thereunder; and

                  (b) if the Company  allocates any of its Profits and Losses to
a  Member  in a  manner  that is  disproportionate  to the  Member's  respective
Percentage  Interest in the Company,  the Company shall make this  allocation in
compliance  with the  requirements  of Code Section  704(b) and the  regulations
thereunder.

For purposes of this  Agreement:  (i) an allocation of Profits to a Member shall
mean  an  apportionment  of  those  Profits  on the  books  of the  Company  for
distribution  to  the  Member  upon  the  satisfaction  of  the  conditions  for
Distributions set forth in this Agreement,  and (ii) Capital Contributions shall
(except as  otherwise  expressly  provided in this  Agreement)  include only the
value of Capital  Contributions  that the Company has actually received from the
Members and has not returned.

                                       15
<PAGE>

         4.4      Distributions in Kind

         If this  Agreement  or  applicable  law  requires the Company to make a
Distribution to any Member,  the Member may not require the Company to make this
Distribution except in the form of cash, and the Company may not compel a Member
to accept a Distribution except in the form of cash.

         4.5      Unlawful Distributions

         The Company shall not make any Unlawful  Distributions of its assets to
any Member.  Except as otherwise provided under the Act, a Distribution shall be
an "Unlawful  Distribution" within the meaning of this Agreement if, immediately
after the Distribution,  the aggregate value of the Company's  liabilities would
exceed  the  aggregate  value  of  its  assets,  or  if,  as  a  result  of  the
Distribution,  the  Company  would be unable to pay its  reasonably  foreseeable
obligations as they become due.

         4.6      Liability for Unlawful Distributions

         Members and Managers who vote to authorize  Unlawful  Distributions and
Members that receive these Distributions shall be liable as provided in the Act.

         4.7      Members as Creditors of the Company

         With respect to Profits allocated to a Member under this Agreement, the
Member shall have the status of a creditor.

                                   SECTION 5
                            MANAGEMENT OF THE COMPANY

         5.1      Qualifications; Initial Manager

         The  Managers  shall be  Members  of the  Company.  A Manager  may be a
natural person or a legal entity. Managers need not be residents of the State of
Delaware.  The Managers shall have such other  qualifications  as are determined
from time to time by the  affirmative  vote of  Members  holding a  majority  of
Member  votes.  The  following  Person is hereby  appointed  and  elected by the
Members as the initial  Manager,  to serve in  accordance  with this  Agreement,
until successors or additional Managers are appointed by the Members:

                         Touchstone Resources USA, Inc.

         5.2      Titles

         In performing  management  functions for the Company,  Managers may use
the title  "Manager" or such other title or titles as the Members may  determine
from time to time by  affirmative  vote of Members  holding a majority of Member
votes.

                                       16
<PAGE>

         5.3      Voting

         If there  are two or more  Managers,  the prior  affirmative  vote of a
majority of all of the  Managers  shall be required  for any action taken by any
one or more  Managers  on behalf  of, or with  respect  to,  the  Company or its
business or affairs.  Each Manager shall have one vote on each matter,  and each
matter shall be decided by the  affirmative  vote of a majority of the Managers.
Each Manager shall have a reasonable  opportunity  to be heard on each matter on
which the Managers vote.  Managers may vote in person, by telephone,  by e-mail,
by fax or by any other  reasonable  means. The Managers shall appoint one of the
Managers to make a written  record of each  Manager  vote and to  circulate  the
record among the Managers promptly after the vote,  provided that the failure of
that Manager to make or circulate such a record shall not affect the validity of
any Manager vote.

         5.4      Time Devoted By Managers

         Each Manager shall devote to the Company such time and effort as may be
necessary for the proper performance of his, her or its duties hereunder.

         5.5      General Responsibilities

         Except for  situations in which the approval of the Members is required
by this Agreement or by nonwaivable provisions of applicable law: (i) the powers
of the Company shall be exercised by or under the authority of, and the business
and  affairs  of the  Company  shall be  managed  under the  direction  of,  the
Managers;  and (ii) the Managers  shall make all  decisions and take all actions
regarding the business of the Company.

          5.6     Authority

         Without  limiting the generality of Section 5.5 above, the Managers are
hereby authorized to do any of the following on behalf of the Company:

                  (a)  execute  any and all  agreements,  contracts,  documents,
certifications  and  instruments  necessary or convenient in connection with the
management of the Company;

                  (b) engage in any kind of  activity  and perform and carry out
contracts of any kind  necessary  to, in  connection  with or  incidental to the
accomplishment  of the purposes of the Company as may be lawfully  carried on or
performed by a limited liability company under the laws of the State of Delaware
or of any other jurisdiction in which the Company conducts business;

                  (c) acquire by purchase,  lease, option,  capital contribution
or  otherwise,  any real,  personal or mixed  property or any interest  therein,
which may be necessary,  convenient,  or incidental to the accomplishment of the
purposes of the Company;

                  (d)  subject to  Section  12.12,  sell,  assign,  exchange  or
otherwise transfer all or part of the Company property;

                                       17
<PAGE>

                  (e)  subject  to  Section  2.3,  issue  or  sell  to  Members,
affiliates  of  Members,  or Persons  other than  Members or  affiliates  of any
Member: (i) additional  Membership  Interests (including other classes or series
of Membership Interests having different rights); (ii) obligations, evidences of
indebtedness or other  securities  convertible or  exchangeable  into Membership
Interests; and (iii) warrants,  options or other rights to purchase or otherwise
acquire Membership Interests,  and no Member shall have any preemptive rights in
any of the foregoing.

                  (f) borrow money  required for the business and affairs of the
Company,  and  issue  evidences  of  indebtedness  necessary,   convenient,   or
incidental to the accomplishment of the purposes of the Company,  and secure the
repayment  of such  borrowings  by executing  mortgages  or deeds of trust,  and
pledge or otherwise encumber or subject to security  interests,  all or any part
of the Company's property,  and in connection with any such borrowing to confess
judgment, or authorize the confession of judgment, against the Company;

                  (g) lend the Company's funds or make guarantees of obligations
of others upon such terms as the Managers shall determine;

                  (h)  invest  the  Capital  Contributions  of the  Members  and
reinvest the proceeds from the sale of any Company  property in such investments
and upon such terms as the Managers shall determine;

                  (i) dissolve the Company;

                  (j) prepay in whole or in part, refinance, increase, modify or
extend any  indebtedness or mortgage  affecting the Company's  property,  and in
connection  therewith to execute any extension or renewal of any indebtedness or
mortgage on any Company property;

                  (k)  place  record  title  to,  or the  right to use,  Company
property  in the  name or  names  of a  nominee  or  nominees  for  any  purpose
convenient or beneficial to the Company;

                  (l)  purchase  contracts  of  liability,  casualty,  and other
insurance deemed necessary, appropriate, or convenient for the protection of the
property or affairs of the Company or for any purpose  convenient  or beneficial
to the Company;

                  (m) employ,  engage and enter into  contracts  and  agreements
with Persons, firms or companies,  including entities in which any Member has an
interest,  in the  development,  operation,  and  management  of  the  Company's
property  and business on such terms and for such  compensation  as the Managers
may determine;

                  (n) retain counsel, accountants,  financial advisors and other
professional personnel;

                  (o) enter into,  make and perform such  contracts,  agreements
and  other  undertakings,  and do such  other  acts  as the  Managers  may  deem
necessary or advisable,  or as may be incidental to or necessary for the conduct
of the business of the Company;

                  (p) file Federal, state and local tax returns on behalf of the
Company and make such  elections  as are required or  permitted  under  Federal,
state, or local tax laws;

                                       18
<PAGE>

                  (q) designate the depository or depositories in which all bank
accounts  of the  Company  shall be kept and the  person or  persons  upon whose
signature or signatures withdrawals therefrom shall be made;

                  (r)  prosecute,   defend,  settle,  compromise  or  submit  to
arbitration,  any  suits,  actions,  or  claims at law or in equity to which the
Company  is a party or by which the  Company is  affected,  and  satisfy  out of
Company funds any judgment,  decree, or decision of any court, board, agency, or
authority having jurisdiction,  or any settlement of any suit, action, or claim;
and

                  (s)  engage in such  other  activities  and incur  such  other
expenses as may in the Managers'  judgment be necessary or  appropriate  for the
furtherance of the Company's purposes,  and to execute,  acknowledge and deliver
any and all instruments necessary to the foregoing.

         5.7      Actions by Managers; Committees; Delegation of Authority and
                  Duties

                  (a) In managing  the  business  and affairs of the Company and
exercising its powers, the Managers shall act: (i) collectively through meetings
and  written  consents  pursuant  to this  Section  5; (ii)  through  committees
pursuant to Section  5.7(b);  and (iii) through  Managers to whom  authority and
duties have been delegated pursuant to Section 5.7(c).

                  (b) The Managers may, from time to time, designate one or more
committees,  each of which shall be comprised of one or more Managers.  Any such
committee, to the extent provided in such resolution, in the Certificate or this
Agreement,  shall have and may exercise all of the authority of the Managers. At
every meeting of such committee,  the presence of a majority of all the Managers
that are Members thereof shall constitute a quorum,  and the affirmative vote of
a majority of the Managers  present  shall be necessary  for the adoption of any
resolution.  The  Managers  may  dissolve  any  committee  at any  time,  unless
otherwise provided in the Certificate or this Agreement.

                  (c) The Managers  may,  from time to time,  delegate to one or
more Managers such authority and duties as the Managers may deem  advisable.  In
addition,  the  Managers  may  assign  titles  (including,  without  limitation,
president,  vice  president,   secretary,  assistant  secretary,  treasurer  and
assistant  treasurer) to any such Managers and delegate to such Managers certain
authority and duties. Any number of titles may be held by the same Manager.  Any
delegation may be revoked at any time by the Managers,  and no delegation  shall
relieve the Managers of their management  responsibility under Section 5 of this
Agreement,  and any persons to whom the Managers  delegate  duties shall perform
them at the direction of the Managers.

         5.8      Tax Identification Number, Insurance, Bank Accounts

         Before or promptly  after the Company  begins its business  activities,
the  Managers  shall (i) obtain  for the  Company a federal  tax  identification
number  and any  necessary  state  tax  identification  numbers,  (ii)  open any
necessary bank accounts for the Company, (iii) obtain on commercially reasonable
terms insurance  policies covering all reasonably  foreseeable  Company business
risks,  and (iv) do all other things  necessary or useful in connection with the
commencement of the Company's business.

                                       19
<PAGE>

         5.9      Number

         The number of Managers of the Company shall be determined  from time to
time by resolution of Members  holding a majority of votes.  If the Members make
no such determination,  there shall be only one Manager. Each Manager shall hold
office until his successor  shall have been elected and qualified,  or until his
earlier death, resignation or removal.

         5.10     Vacancies; Removal; Resignation

                  (a) Any Manager position to be filled by reason of an increase
in the number of  Managers  or by other  reason may be filled by  election at an
annual or special  meeting of the  Members  called for that  purpose,  or by the
affirmative  vote of a majority  of the  remaining  Managers  though less than a
quorum of the Managers.

                  (b) The Members may,  without  liability,  remove a Manager at
any time with or without cause by affirmative vote of Members holding a majority
of Member votes.

                  (c) A Manager may resign as a manager upon giving  thirty (30)
days'  written  notice to each  Member.  Except as  otherwise  provided  in this
Agreement,  the Manager  shall have no  liability to the Company or to the other
Members for any such resignation,  provided, however, that the resignation shall
not absolve the Manager from any liabilities arising on or before effective date
of the  resignation.  The acceptance of a resignation  shall not be necessary to
make it effective, unless expressly so provided in the resignation.

         5.11     Meetings

                  (a) A majority of the total number of Managers  fixed by or as
provided in this  Agreement  shall  constitute a quorum for the  transaction  of
business of the Managers, and the act of a majority of the Managers present at a
meeting at which a quorum is present shall be the act of the Managers. A Manager
who is present  at a meeting  of the  Managers  at which  action on any  Company
matter is taken  shall be presumed  to have  assented  to the action  unless his
dissent  shall be entered in the  minutes of the meeting or unless he shall file
his written  dissent to such action with the Person acting as a secretary of the
meeting  before the  adjournment  thereof or shall  deliver  such dissent to the
Company immediately after the adjournment of the meeting.  Such right to dissent
shall not apply to a Manager who voted in favor of such action.

                  (b)  Meetings  of the  Managers  may be held at such  place or
places as shall be  determined  from time to time by resolution of the Managers.
At all meetings of the Managers,  business  shall be transacted in such order as
shall from time to time be determined by resolution of the Managers.  Attendance
of a Manager at a meeting  shall  constitute a waiver of notice of such meeting,
except where a Manager attends a meeting for the express purpose of objecting to
the  transaction  of any business on the ground that the meeting is not lawfully
called or convened.

                  (c) In connection  with any annual meeting of Members at which
Managers were elected, the Managers may, if a quorum is present,  hold its first
meeting for the transaction of business  immediately after and at the same place
as such annual  meeting of the Members.  Notice of such meeting at such time and
place shall not be required.

                                       20
<PAGE>

                  (d)  Regular  meetings of the  Managers  shall be held at such
times and places as shall be  designated  from time to time by resolution of the
Managers. Notice of such meetings shall not be required.

                  (e)  Special  meetings  of the  Managers  may be called by any
Manager on at least 24 hours' notice to each other Manager. Such notice need not
state the purpose or purposes  of, nor the  business to be  transacted  at, such
meeting,  except as may  otherwise  be required  by law or provided  for in this
Agreement.

         5.12     Approval or Ratification of Acts or Contracts by Members

         The  Managers in their  discretion  may submit any act or contract  for
approval or ratification at any annual meeting of the Members, or at any special
meeting of the  Members  called for the purpose of  considering  any such act or
contract,  and any act or  contract  that shall be  approved  or be  ratified by
Members  holding a  majority  of Class A Member  votes  shall be as valid and as
binding  upon the  Company  and upon all the  Members  as if it shall  have been
approved or ratified by every Member of the Company.

         5.13     Action by Written Consent or Telephone Conference

         Any action  permitted or required by the Act, the  Certificate  or this
Agreement to be taken at a meeting of the Managers or any  committee  designated
by the Managers may be taken without a meeting if a consent in writing,  setting
forth the action to be taken, is signed by a majority of the Managers or members
of such  committee,  as the case may be. Such consent  shall have the same force
and  effect as a  unanimous  vote at a meeting  and may be stated as such in any
document  or  instrument  filed  with the  Secretary  of  State of the  State of
Delaware,  and the  execution of such consent  shall  constitute  attendance  or
presence in person at a meeting of the  Managers or any such  committee,  as the
case may be.  Subject to the  requirements  of the Act, the  Certificate or this
Agreement  for  notice  of  meetings,   unless   otherwise   restricted  by  the
Certificate, Managers or members of any committee designated by the Managers may
participate  in and hold a meeting of the Managers or any committee of Managers,
as the case may be, by means of a conference telephone or similar communications
equipment  by means of which all Persons  participating  in the meeting can hear
each other, and  participation  in such meeting shall constitute  attendance and
presence in person at such meeting,  except where a Person  participates  in the
meeting for the express  purpose of objecting to the transaction of any business
on the ground that the meeting is not lawfully called or convened.

         5.14     Compensation and Expenses

         The  Managers  shall  receive  such  compensation,  if any,  for  their
services as may be designated from time to time by the Members. In addition, the
Managers shall be entitled to be reimbursed for out-of-pocket costs and expenses
incurred  in the course of their  service  hereunder,  including  the portion of
their overhead reasonably allocable to Company activities.

         5.15     Officers

                  (a) The Managers may, from time to time, designate one or more
Persons to be  officers  of the  Company.  No officer  need be a resident of the
State of Delaware,  a Member or a Manager. Any officers so designated shall have

                                       21
<PAGE>

such  authority  and perform such  ministerial  duties as the Managers may, from
time to time,  delegate  to  them,  subject  to the  authority  of the  Managers
provided in Section 5.7. The Managers may assign titles to particular  officers.
Each officer shall hold office until his successor  shall be duly designated and
shall  qualify  or until his death or until he shall  resign or shall  have been
removed in the manner hereinafter provided. Any number of offices may be held by
the same person. The salaries or other compensation, if any, of the officers and
agents of the Company shall be fixed from time to time by the Managers.

                  (b)  Any  officer  may  resign  as  such  at  any  time.  Such
resignation shall be made in writing and shall take effect at the time specified
therein, or if no time be specified, at the time of its receipt by the Managers.
The  acceptance  of a  resignation  shall not be necessary to make it effective,
unless expressly so provided in the  resignation.  Any officer may be removed as
such,  either with or without cause, by the Managers  whenever in their judgment
the best  interests of the Company will be served  thereby;  provided,  however,
that such removal shall be without  prejudice to the contract rights, if any, of
the Person so  removed.  Designation  of an officer  shall not of itself  create
contract  rights.  Any  vacancy  occurring  in any office of the  Company may be
filled by the Managers.

         5.16     Compliance with Laws and Regulations

         Before  the  Company  conducts  business  in this State or in any other
state and at all times while it is conducting this business,  the Managers shall
ensure that the Company is in compliance with all applicable federal,  state and
local laws,  regulations  and  ordinances,  including  federal and state tax and
securities  laws,  laws  governing  the  registration  and  taxation  of foreign
companies,   and  regulations   governing  specific   professions,   trades  and
businesses.  For purposes of this Agreement,  "state" shall include the District
of Columbia.

         5.17     Valuation of Capital Contributions

         Whenever the Company  admits a Person as a Member of the  Company,  the
Managers  shall   promptly   determine  in  dollars  a  value  for  the  Capital
Contribution of that Person in exchange for the Person's  Membership Interest or
that there was no Capital  Contribution,  shall record this determination in the
records of the Company,  and shall  promptly  notify all Members  concerning the
determination.  Thereafter,  in the absence of fraud, the determination shall be
conclusive  as to the value of the Capital  Contribution  or as to whether there
was a Capital Contribution.

         5.18     Third Party Claims Against the Company

         No Manager in the  Manager's  capacity as a Manager shall have personal
liability for any claim against the Company by any third party.

                                       22
<PAGE>

         5.19     Intentionally Omitted.

         5.20     Reliance on Company Information and Other Company Managers

         No Manager in the  Manager's  capacity as a Manager shall be personally
liable to the Company or to the Members if, to the extent that,  with respect to
the matter in  question,  the Manager  acted in  reasonable  reliance on Company
records,  other Company  Managers,  employees or officers of the Company,  other
Persons whom, at the time of the action, the Manager  reasonably  believed to be
competent in the matter in question, or any provision of this Agreement.

         5.21     Intentionally Omitted

         5.22     Intentionally Omitted

         5.23     Intentionally Omitted

         5.24     Execution of This Agreement

         As a  condition  to  becoming  Managers,  the  initial  Manager and all
subsequent  Managers shall sign this Agreement in their capacity as managers and
shall be bound by all provisions of the Agreement relating to managers.

                                   SECTION 6
                    MANAGERS' REPRESENTATIONS AND WARRANTIES

         6.1      Representations by All Managers

         Each  Manager  warrants  in the  Manager's  capacity  as a  Manager  as
follows:

                  (a) The Manager is legally  free to enter into this  Agreement
and to perform the Manager's obligations under this Agreement in accordance with
its  terms  and is not  prevented  from  doing so by order of any court or other
governmental  authority,  by any  agreement  with a third  party  (including  an
employment agreement,  non-competition  agreement or nondisclosure agreement) or
by any other reason.

                  (b) In  negotiating  and  entering  into this  Agreement,  the
Manager has acted fairly and in good faith.

                  (c) Before accepting the terms of this Agreement,  the Manager
has had every reasonable  opportunity to consider these terms and to review them
with the Manager's personal attorney.

                  (d) The  Manager  has  accepted  the  terms of this  Agreement
knowingly and freely.

                                       23
<PAGE>

         6.2      Representations by Corporate Manager

         If a Manager is an entity,  the Manager  represents  and  warrants,  in
addition to its  representations  and  warranties  under Section 6.1, that it is
duly formed,  organized and existing under its state of  incorporation,  and has
full  corporate  authority  and all necessary  authorization  to enter into this
Agreement and to perform its duties  hereunder in  accordance  with the terms of
this Agreement.

                                   SECTION 7
                     CONFIDENTIALITY OF COMPANY INFORMATION

         7.1      Confidentiality of Company Information

         The  Managers  shall  use  every   reasonable  means  to  maintain  the
confidentiality  of Confidential  Information.  Except as required in conducting
the business and internal affairs of the Company or by federal or state law, the
Managers  shall  not  disclose  Confidential  Information  to any  third  party.
Promptly after ceasing to be Managers,  the Managers shall return to the Company
all  documents  and other  media in their  possession  or control  that  contain
Confidential Information.

         7.2      Exceptions to Duty of Confidentiality

         For purposes of Section 7.1, the following  types of information do not
constitute "Confidential Information":

                  (a)  Information  lawfully  obtained by a Manager from another
source before receiving it from the Company.

                  (b)  Information  that is already in the public  domain at the
time of its disclosure to a Manager or that thereafter  enters the public domain
through no fault of the Manager.

                  (c) Information  whose  disclosure is permitted or required by
final order of a court of competent jurisdiction.

                  (d)  Information  whose  disclosure is made on a  confidential
basis to an arbitrator in an arbitration under Section 14; and

                  (e) Information the Company discloses  without  restriction to
any Person other than the Manager.

         7.3      Binding Effect; Termination

         This  Section 7 shall  bind each  recipient  even  after the  recipient
ceases to be a Manager,  and shall  terminate upon the  termination of the legal
existence of the Company.

                                       24
<PAGE>

                                   SECTION 8
                              COMPANY RECORDS, ETC.

         8.1      Information and Records Maintained by the Company

         The Company  shall  maintain  at its  principal  place of business  the
following types of records and information:

                  (a)  Promptly  after  they  become  available,  copies  of its
federal, state and local income tax returns for each year;

                  (b) A  current  list of the  name  and  last  known  business,
residence or mailing address of each Member;

                  (c) A copy of the  Certificate  and this  Agreement and of all
amendments  thereto,  together  with  executed  copies of any written  powers of
attorney pursuant to which the Certificate and this Agreement and all amendments
thereto have been executed;

                  (d) True and full information regarding the amount of cash and
a  description  and  statement  of the  agreed  value of any other  property  or
services  contributed  by each  Member to the  Company and which each Member has
agreed to contribute  in the future,  and the date on which each Member became a
Member; and

                  (e) True and full information regarding the amount of cash and
a  description  and  statement  of the  agreed  value of any other  property  or
services  contributed  by each  Member to the  Company and which each Member has
agreed to contribute  in the future,  and the date on which each Member became a
Member; and

                  (f)  Minutes  of every  annual  and  special  meeting  and any
written covenants for action taken by the Members or Managers without a meeting.

         8.2      Books of Account

         The Company shall maintain books of account concerning the business and
affairs of the Company that are accurate,  reasonably current, and in compliance
with  financial  and other  standards  normally  applicable  to the  records  of
business  organizations  generally  similar to the Company in size and  business
activities.

         8.3      Inspection of Records.

         During normal business hours and after reasonable  notice,  each Member
shall be entitled, for any purpose reasonably related to the Member's membership
in the Company,  to inspect and, at the Member's expense,  to copy any documents
and other media in the Company's possession or control,  including the documents
identified in Section 8.1, provided that all information available to the Member
under this  Section 8 shall be subject to the  provisions  of Section 7, and all
applicable federal and state laws and regulations, including laws concerning the
privacy of employee medical information.

                                       25
<PAGE>

                                   SECTION 9
                         EXCULPATION AND INDEMNIFICATION

         9.1      Exculpation

         No  Manager  shall be liable to any other  Manager,  any  Member or the
Company for any loss  suffered by the Company  unless such loss is caused by the
Manager's gross  negligence,  willful  misconduct,  violation of law or material
breach of this Agreement.  A Manager may consult with counsel and accountants in
respect of Company affairs and, provided the Manager acts in good faith reliance
upon the advice or opinion of such counsel or accountants, the Manager shall not
be liable for any loss suffered by the Company in reliance thereon.

         9.2      Indemnification

         Subject to the  limitations  and conditions as provided in this Section
9, each Person who was or is made a party to or is threatened to be made a party
to, or is involved  in any  threatened,  pending or  completed  action,  suit or
proceeding, whether civil, criminal, administrative,  arbitrative (hereinafter a
"Proceeding"),   or  any  appeal  in  such  a  Proceeding   or  any  inquiry  or
investigation  that could lead to such a Proceeding,  by reason of the fact that
he, she or it, or a Person of whom he, she or it is the legal representative, is
or was a Manager,  officer, employee or agent of the Company or while a Manager,
officer,  employee  or agent of the  Company is or was serving at the request of
the Company as a Manager,  director,  officer,  partner,  venturer,  proprietor,
trustee,  employee, agent, or similar functionary of another foreign or domestic
limited  liability  company,  corporation,   partnership,  joint  venture,  sole
proprietorship,  trust,  employee  benefit  plan or  other  enterprise  shall be
indemnified  by the Company to the fullest  extent  permitted by the Act, as the
same exist or may hereafter be amended (but, in the case of any such  amendment,
only to the extent that such  amendment  permits the Company to provide  broader
indemnification  rights than said law  permitted the Company to provide prior to
such amendment) against judgments, penalties (including excise and similar taxes
and punitive damages),  fines,  settlements and reasonable expenses  (including,
without  limitation,  attorneys'  fees)  actually  incurred  by such  Person  in
connection with such Proceeding,  and indemnification under this Section 9 shall
continue as to a Person who has ceased to serve in the capacity which  initially
entitled such Person to indemnity hereunder. The rights granted pursuant to this
Section 9 shall be deemed  contract  rights,  and no amendment,  modification or
repeal of this  Section 9 shall have the effect of  limiting or denying any such
rights  with  respect  to  actions  taken or  Proceedings  arising  prior to any
amendment,  modification  or  repeal.  It is  expressly  acknowledged  that  the
indemnification  provided in this Section 9 could  involve  indemnification  for
negligence or under theories of strict liability.

         9.3      Advance Payment

         The right to indemnification  conferred in this Section 9 shall include
the right to be paid or  reimbursed by the Company for the  reasonable  expenses
incurred by a Person of the type  entitled to be  indemnified  under Section 9.2
who was or is, or is threatened to be made, a named defendant or respondent in a
Proceeding in advance of the final disposition of the Proceeding and without any

                                       26
<PAGE>

determination  as to  the  Person's  ultimate  entitlement  to  indemnification;
provided, however, that the payment of such expenses incurred by any such Person
in  advance of the final  disposition  of a  Proceeding  shall be made only upon
delivery to the Company of a written  affirmation  by such Person of his, her or
its  good  faith  belief  that he,  she or it has met the  standard  of  conduct
necessary for indemnification under this Section 9 and a written undertaking, by
or on behalf  of such  Person,  to repay all  amounts  so  advanced  if it shall
ultimately  be  determined  that such  indemnified  Person is not entitled to be
indemnified under this Section 9 or otherwise.

         9.4      Appearance as a Witness

         Notwithstanding  any other provision of this Section 9, the Company may
pay or reimburse  expenses  incurred by a Manager or officer in connection  with
his  appearance  as a witness or other  participation  in a Proceeding at a time
when the  Manager or  officer  is not a named  defendant  or  respondent  in the
Proceeding.

         9.5      Insurance

         The Company may  purchase and maintain  insurance,  at its expense,  to
protect  itself and any Person who is or was serving as a Manager,  officer,  or
agent of the  Company or is or was  serving at the  request of the  Company as a
Manager, director,  officer, partner, venturer,  proprietor,  trustee, employee,
agent or similar  functionary of another foreign or domestic  limited  liability
company, corporation,  partnership,  joint venture, sole proprietorship,  trust,
employee  benefit plan or other  enterprise  against any  expense,  liability or
loss,  whether or not the Company would have the power to indemnify  such Person
against such expense, liability or loss under this Section 9.

         9.6      Nonexclusivity of Rights

         The  right  to  indemnification  and the  advancement  and  payment  of
expenses  conferred  in this Section 9 shall not be exclusive of any other right
which a Manager or other Person indemnified  pursuant to this Section 9 may have
or  hereafter  acquire  under any law (common or  statutory),  provision  of the
Certificate  or this  Agreement,  agreement,  vote of  Members or  Managers,  or
otherwise.

         9.7      Savings Clause

         If this  Section 9 or any portion  hereof shall be  invalidated  on any
ground  by  any  court  of  competent  jurisdiction,   then  the  Company  shall
nevertheless  indemnify  and hold  harmless  each  Manager  or any other  Person
indemnified  pursuant  to this  Section  9 as to  costs,  charges  and  expenses
(including  attorneys'  fees),  judgments,  fines and amounts paid in settlement
with  respect  to any  action,  suit or  proceeding,  whether  civil,  criminal,
administrative  or  investigative to the full extent permitted by any applicable
portion  of this  Section  9 that  shall not have  been  invalidated  and to the
fullest extent permitted by applicable law.

                                       27
<PAGE>

                                   SECTION 10
                           TAX PLANNING AND COMPLIANCE

         10.1     Taxation of the Company and Members

         Under federal tax law and to the maximum extent  possible under the tax
laws of each state and the  District  of  Columbia,  the Company and its Members
shall be  taxable as a  partnership  and as  partners.  The  provisions  of this
Agreement  shall be  construed  and  applied in such a manner as to ensure  full
compliance  with the  provisions  of the Code  applicable  to  partnerships  and
partners and with the regulations thereunder.

         10.2     Tax Management and Compliance

         The parties  acknowledge  the importance to the Company and the Members
of competent  tax  planning for the Company and for the Members as Members,  and
full  compliance  by the Company and by the Members  with  federal and state tax
requirements  applicable  to the Company  and the  Members in their  capacity as
such.

         10.3     Appointment and Replacement of Company Tax Adviser

         In connection with its formation and on a continuing basis  thereafter,
the  Manager  may  appoint a tax  adviser.  This  individual  or firm shall have
expertise in all areas of tax practice  relevant to the needs of the Company and
its  Members  in their  capacities  as such and in  particular  in the  field of
federal partnership taxation. The Managers may replace the Company's tax adviser
from time to time upon the affirmative vote of a majority of the Managers.

         10.4     Cooperation with Tax Adviser

         The parties shall cooperate with the Company's tax adviser,  if any, to
the maximum  extent  reasonable  to ensure  adequate  Company tax  planning  and
compliance.

         10.5     Tax Matters Partner

         The Members by affirmative vote of Members holding a majority of Member
votes may appoint a Manager to serve as the  Company's  tax matters  partner for
purposes of unified  administrative  and judicial federal tax proceedings  under
Code Section 6231 (a) (1).

         10.6     Planning of Individual Transactions

         Before  undertaking any major transaction  involving the Company or any
Member in the  Member's  capacity as a Member,  the  Company  and each  affected
Member shall consult with one or more partnership tax experts concerning the tax
implications of the transaction, and the Company and affected Members shall make
any tax elections and shall take any other actions  necessary or  appropriate in
the circumstances to ensure tax compliance and maximum lawful tax avoidance. The
issue of the fairness of the transaction to the Company and to the Members shall
be subject to arbitration under Section 14.

                                       28
<PAGE>

         10.7     Tax Distributions

        If any  Member  requires  a  Distribution  of all or any  portion of the
Member's share of Profits in order to pay the Member's federal or other taxes on
the Member's share of these Profits for any taxable year, the Company shall,  to
the  extent  that  its  financial  condition   reasonably  permits,   make  this
Distribution  to the Member on a timely basis,  provided that as a condition for
the   Distribution,   the  Company   may,   under   reasonable   conditions   of
confidentiality,  require the Member to disclose  to the  Company's  tax adviser
relevant information concerning the Member's tax and financial affairs.

         10.8     Tax Returns

         The Company shall  accurately  complete and file its federal tax return
and all applicable state returns on a timely basis each year.

         10.9     Provision of Tax Information to Members

         As soon as reasonably  possible  after the close of each of its taxable
years,  the Company shall provide each Member with  completed  federal and state
tax forms and with all other documents and  information  relevant to the federal
and state tax  liabilities  of the Member as a member of the  Company,  provided
that each Member shall have sole  responsibility for preparing and timely filing
the Member's  federal and state tax returns and for paying the  Member's  taxes,
and the Company shall have no  responsibility or liability with respect to these
matters.

         10.10    Computation and Recording of Members' Contributions

         The Company shall maintain current and accurate records concerning each
Member's Capital Contributions and adjusted tax basis in the Member's Membership
Interest in accordance with applicable U.S. Treasury Department regulations and,
promptly after the request of any Member,  shall make these records available to
the Member.

                                   SECTION 11
                              MEMBER DISSOCIATIONS

         11.1     Events of Dissociation

         A Member  shall be  dissociated  only if the  Member  dies (or,  if the
Member is an entity,  it incurs a dissolution or equivalent  event),  the Member
resigns in accordance with Section 11.4, the Member sells or otherwise transfers
all of the Member's Management Rights, or bankruptcy,  insolvency or liquidation
proceedings or other  proceedings for relief under any bankruptcy law or any law
for the relief of debtors shall be instituted by or against the Member.

         11.2     Certain Consequences of Dissociation

         Except as otherwise expressly provided in this Agreement,  a Member who
is  dissociated  from the Company  shall  immediately  lose all of the  Member's
Management Rights.

                                       29
<PAGE>

         11.3     No Distributions to Dissociated Members

         A Member's  dissociation  shall not  entitle  the Member to receive any
Distribution or to receive any payment for the Member's Membership Interest.

                                   SECTION 12
              DISSOLUTION; MERGERS, CONVERSIONS AND SALES OF ASSETS

         12.1     Dissolution

         The Company  shall be dissolved  upon the  affirmative  vote of Members
holding a majority of Member votes,  upon the expiration of the period fixed for
the duration of the Company set forth in the  Certificate,  upon the issuance of
an order of  dissolution by a court or by the Secretary of State of the State of
Delaware, or upon the issuance of an order of dissolution by an arbitrator under
Section 14.

         12.2     Liquidation and Termination.

         On  dissolution  of the Company,  the Managers shall act as liquidator.
The Managers shall proceed  diligently to wind up the affairs of the Company and
make  final  Distributions  as  provided  herein  and in the Act.  The  costs of
liquidation shall be borne as a Company expense.  Until final Distribution,  the
Managers shall continue to operate the Company  properties with all of the power
and authority of the Managers.  The steps to be accomplished by the Managers are
as follows:

                  (a) as promptly as possible after  dissolution and again after
final liquidation,  the Managers shall cause a proper accounting to be made by a
recognized  firm  of  certified  public  accountants  of the  Company's  assets,
liabilities,  and operations through the last day of the calendar month in which
the dissolution occurs or the final liquidation is completed, as applicable;

                  (b) the Managers  shall cause the notice  described in Section
18-203 of the Act to be mailed to each known  creditor of and  claimant  against
the Company in the manner described in such section;

                  (c) the Managers shall pay,  satisfy or discharge from Company
funds all of the debts,  liabilities and obligations of the Company  (including,
without  limitation,  all expenses  incurred in  liquidation)  or otherwise make
adequate  provision  for  payment  and  discharge  thereof  (including,  without
limitation,  the establishment of a cash escrow fund for contingent  liabilities
in such amount and for such term as the Managers may reasonably determine); and

                  (d) all remaining  assets of the Company shall be  distributed
to the Members as follows:

                           (i)  the   Managers  may  sell  any  or  all  Company
                  property, including to Members, and any resulting gain or loss
                  from each sale shall be computed and  allocated to the Capital
                  Accounts of the Members;

                                       30
<PAGE>

                           (ii) with  respect to all Company  property  that has
                  not been sold, the fair market value of that property shall be
                  determined  and the Capital  Accounts of the Members  shall be
                  adjusted to reflect the manner in which the unrealized income,
                  gain,  loss,  and deduction  inherent in property that has not
                  been  reflected in the Capital  Accounts  previously  would be
                  allocated   among  the   Members   if  there  were  a  taxable
                  disposition of that property for the fair market value of that
                  property on the date of Distribution; and

                           (iii) Company property shall be distributed among the
                  Members  in  accordance  with  the  positive  Capital  Account
                  balances  of the  Members,  as  determined  after  taking into
                  account all Capital  Account  adjustments for the taxable year
                  of the Company  during  which the  liquidation  of the Company
                  occurs (other than those made by reason of this clause (iii));
                  and  those  Distributions  shall  be  made  by the  end of the
                  taxable year of the Company  during which the  liquidation  of
                  the Company  occurs (or, if later,  ninety (90) days after the
                  date of the liquidation).

All  Distributions in kind to the Members shall be made subject to the liability
of each distributee for costs, expenses, and liabilities theretofore incurred or
for which the Company has committed  prior to the date of termination  and those
costs,  expenses, and liabilities shall be allocated to the distributee pursuant
to this Section 12.2. The  Distribution  of cash and/or  property to a Member in
accordance  with the  provisions  of this  Section 12.2  constitutes  a complete
return to the Member of its Capital Contributions and a complete Distribution to
the Member of its  interest in the Company and all the  Company's  property  and
constitutes a compromise to which all Members have consented  within the meaning
of the Act. To the extent that a Member returns funds to the Company,  it has no
claim against any other Member for those funds.

         12.3     Effective Date of Dissolution

         The dissolution of an Company by vote of the Members shall be effective
on the date  specified  in that vote or, if the  Members do not  specify a date,
then on the date of completion of the vote.

         12.4     Cessation of Company's Legal Existence

         Unless a court or administrative  authority duly and finally determines
otherwise,  on  completion  of the  Distribution  of Company  assets as provided
herein,  the Company is  terminated,  and the  Managers (or such other Person or
Persons  as  the  Act  may  require  or  permit)  shall  file a  certificate  of
cancellation  with the  Secretary of State of the State of Delaware,  cancel any
other  filings made pursuant to this  Agreement,  and take such other actions as
may be necessary to terminate the Company.

                                       31
<PAGE>

         12.5     Dissolution by Arbitrator

         Upon petition by any Member, an arbitrator under Section 14 shall issue
an order dissolving the Company on one or more of the following grounds:

                  (a) the Company obtained its Certificate through fraud;

                  (b) the  Company  exceeded or abused the  authority  conferred
upon it by law;

                  (c) the  Company  conducted  its  business  in a  persistently
fraudulent or illegal manner;

                  (d) the Company abused its power contrary to the public policy
of this State;

                  (e) A deadlock exists on a matter involving Company management
which the Members are unable to resolve and which is causing or which  threatens
to cause irreparable  injury to the Company or which prevents it from conducting
its business or affairs to its advantage; or

                  (f) The  dissolution  of the Company is reasonable and fair in
the circumstances.

         12.6     Exclusion of Certain Managers from Participation in Wind-Up
                  Process

         Any Member may petition an  arbitrator  under Section 14 to exclude one
or more Managers from participating in the process of winding up and liquidating
the Company on the ground that,  because of past wrongful conduct by the Manager
or  Managers in  question,  their  participation  would be likely to affect that
process adversely.

         12.7     Winding-Up of the Company

         After the Company is dissolved, the Managers responsible for winding up
the Company shall as expeditiously  as reasonably  possible wind up its business
and internal affairs, and cause its liquidation.  During the wind-up period, the
Company shall accept no new business  except to the extent  necessary to dispose
of existing inventory.

         12.8     Liquidating Distributions by the Company

         The Company shall make  Distributions  of its assets in connection with
its  liquidation  in accordance  with the provisions of Section 4, provided that
the Company shall make no  Distribution  to Members or others in connection with
its  liquidation  until it has complied with all applicable laws and regulations
of this State (including tax laws and  regulations)  relating to its dissolution
and liquidation.

         12.9     Deficit Capital Accounts.

         Notwithstanding  anything to the contrary  contained in this Agreement,
to the extent that the  deficit,  if any,  in the Capital  Account of any Member
results  from  or is  attributable  to  deductions  and  losses  of the  Company
(including  non-cash  items such as  depreciation),  or  Distributions  of money

                                       32
<PAGE>

pursuant to this  Agreement  to all Members in  proportion  to their  respective
Membership Interests,  upon dissolution of the Company such deficit shall not be
an asset of the Company and such Members  shall not be  obligated to  contribute
such amount to the Company to bring the balance of such Member's Capital Account
to zero.

         12.10    Disposition of Known and Unknown Claims Against Company

         Promptly after the  dissolution of the Company,  the Company shall take
all reasonable  measures under the laws of this State to dispose of (and, to the
extent reasonable, to bar) known and unknown claims against the Company.

         12.11    Duty to Consult Tax Adviser in Connection With Company
                  Dissolution

         Before the Members  begin the wind-up and  liquidation  of the Company,
the Company and the Members shall consult with their respective tax advisers and
shall  structure and implement  the  liquidation  in a manner that is as fair as
possible to each Member from a tax viewpoint.

         12.12    Mergers, Conversions and Sales of Assets

         Except as otherwise  provided in this Agreement,  the Company shall not
participate in a merger,  change its business  organization form, or sell all or
substantially  all of its assets outside the ordinary  course of business except
with the consent of a majority of Class A Member votes.

                                   SECTION 13
                        TERM AND TERMINATION OF AGREEMENT

         13.1     Term and Termination

         Subject to the  provision of Sections  13.2 and 13.3,  the term of this
Agreement  shall  begin  on the  date  of this  Agreement  and,  unless  earlier
terminated by the parties, shall terminate as follows:

                  (a) If the Company is  terminated  by vote of the Members,  it
shall  terminate on the effective date of the certificate of cancellation of the
Certificate.

                  (b)  If  the  Company  is  terminated  by  decree  of  a  duly
authorized  judicial or administrative  authority or by an arbitrator,  it shall
terminate on the date of termination of the Company's existence as determined by
that authority or arbitrator.

                  (c) If no clear date is established under Sections 13.1 (a) or
(b) and if the Members cannot agree on such a date, it shall  terminate upon the
determination of an arbitrator under Section 14.

                                       33
<PAGE>

         13.2     Survival of Accrued Rights

         Rights,  duties  and  liabilities  accrued  by the  parties  under this
Agreement  before its termination  shall continue in full force and effect after
its termination.

         13.3     Arbitration of Matters Relating to Company's Winding-Up, Etc.

         Notwithstanding the termination of this Agreement, any party may, after
that  termination,  initiate an  arbitration  under  Section 14 to determine and
enforce  rights and duties of the party  relating to matters  arising before and
during the Company's winding-up, the Company's liquidation,  and matters arising
after the cancellation of the Company's Certificate.

                                   SECTION 14
                         ARBITRATION OF COMPANY DISPUTES

         14.1     Mandatory Arbitration of Certain Disputed Matters

         Except as provided  herein,  any  dispute  between or among the parties
relating to arbitrable  matters  shall be  exclusively  and finally  resolved in
arbitration by a single arbitrator without recourse to any court.

         14.2     Intentionally Omitted

         14.3     Rules Governing Arbitration

         Except as otherwise  provided in this Section,  any  arbitration  under
this section  shall be governed by the Rules of  Commercial  Arbitration  of the
American Arbitration Association as in effect at the time of the arbitration.

         14.4     Notice of Arbitration

         Any Member may  initiate  an  arbitration  of any matter not subject to
arbitration  under  Section  14.2 above.  The  initiating  Member shall do so by
providing  written notice of the  arbitration  to the other Members.  The notice
shall bear a current  date,  shall state the name of the  initiating  Member and
shall briefly state the matter to be arbitrated.

         14.5     Selection of Arbitrator

         If, within fifteen (15) business days after all the parties entitled to
notice of an arbitration have received that notice,  the Members have not agreed
among  themselves  as to the  identity  of the  arbitrator  or the  site  of the
arbitration, the Company shall immediately refer these matters for resolution by
the American Arbitration Association office located in the city of Philadelphia.
That  office  may  resolve  these  matters  without  liability  and in its  sole
discretion.

                                       34
<PAGE>

         14.6     No Appeal

         No Member  shall  appeal to any court an order of an  arbitrator  under
this Section 14. The Company or any Member may enter any such order in any court
of competent jurisdiction.

         14.7     Allocations of Costs and Fees

         The arbitrator may allocate among the Members the costs, fees and other
expenses  relating to an  arbitration  in any manner that the  arbitrator  shall
determine to be appropriate in his or her absolute discretion,  provided that if
the arbitrator  determines  that a party has initiated an arbitration  without a
reasonable  basis for doing so, the  arbitrator  shall assess against that party
the  costs of the other  parties  relating  to the  arbitration,  including  the
reasonable attorneys' fees.

                                   SECTION 15
                               GENERAL PROVISIONS

         15.1     Entire Agreement

         This  Agreement   contains  the  entire  agreement  among  the  parties
concerning  its subject  matter and  replaces all other  agreements  among them,
whether written or oral, concerning this subject matter.

         15.2     Conflicts between Agreement and Certificate

         If there is any conflict  between the  provisions of this Agreement and
those of the Certificate, then, in any dispute among the Members, the provisions
of this Agreement shall prevail.

         15.3     Effect of Act

         Except as otherwise  provided in this Agreement or by law, the business
and internal affairs of the Company shall be governed by the Act as in effect on
the date of this Agreement.

         15.4     Changes of Law

         If  mandatory  rules of the Act or other  applicable  law  change  in a
manner that  provides  material  advantages or  disadvantages  to any Member not
contemplated by this Agreement,  the Members shall equitably amend the Agreement
to minimize or eliminate these advantages and disadvantages.

         15.5     Incorporation of Schedules

         All schedules identified in the Agreement as schedules to the Agreement
are hereby incorporated into the Agreement and made integral parts of it.

                                       35
<PAGE>

         15.6     Governing Law

         This  Agreement  shall be governed by and construed in accordance  with
the  domestic  laws of the  State  of  Delaware  without  giving  effect  to any
choice-of-law  or  conflict-of-law  provision  or rule  (whether of the State of
Delaware or of any other  jurisdiction)  that would cause the application of the
laws of any jurisdiction other than the State of Delaware.

         15.7     Intentionally Omitted

         15.8     Intentionally Omitted

         15.9     Captions

         All captions in this  Agreement are for  convenience  only and shall be
deemed irrelevant in construing any provision of the Agreement.

         15.10    Notices

         Except as expressly  set forth to the contrary in this  Agreement,  all
notices,  requests, or consents provided for or permitted to be given under this
Agreement  must be in writing and must be given either by depositing the writing
in the United  States  mail,  addressed  to the  recipient,  postage  paid,  and
registered or certified  with return  receipt  requested or by  delivering  that
writing to the recipient in person,  by courier,  or by facsimile  transmission;
and a notice,  request,  or consent  given under this  Agreement is effective on
receipt by the Person to receive it. All notices,  requests,  and consents to be
sent to a Manager,  or the Company must be given to the Managers or the Company,
as applicable, at the following address:

                        Maverick Basin Exploration, LLC
                        111 Presidential Boulevard, Suite 165
                        Bala Cynwyd, Pennsylvania 19004

All  notices,  requests or consents to be sent to a Member must be given to such
Member to his,  her or its address as set forth on the  signature  page  hereto.
Whenever  any notice is required  to be given by law,  the  Certificate  or this
Agreement,  a written waiver  thereof,  signed by the Person entitled to notice,
whether before or after the time stated therein,  shall be deemed  equivalent to
the giving of such notice.

         15.11    Certain Meanings and Constructions

         The terms  "include" and similar terms as used in this Agreement  shall
denote  partial  definitions.  As the  context  shall  require,  the  use of the
singular in this Agreement  shall denote the plural and vice versa,  and the use
of a particular gender shall denote another gender.

                                       36
<PAGE>

         15.12    Waivers

         No delay of or omission by a party in the exercise of any right,  power
or remedy  accruing to the party as a result of any breach or default by another
party under this Agreement shall impair any such right, power or remedy accruing
to the party,  or shall be construed as a waiver of or acquiescence by the party
in any such  breach or default  or of any  similar  breach or default  occurring
later. No waiver by a party of any single breach or default under this Agreement
shall be  construed  as a waiver  by the party of any  other  breach or  default
occurring before or after that waiver.

         15.13    Separability of Provisions

         Each  provision of this  Agreement  shall be deemed  separable.  If any
provision or the  application  of any  provision  to any Person or  circumstance
shall be held invalid or unenforceable in any jurisdiction,  the provision shall
be ineffective only in that jurisdiction and only to the extent that it has been
expressly  held to be invalid or  unenforceable  in that  jurisdiction,  without
invalidating  any other  provision of this  Agreement or the  application of the
provision  itself to Persons or  circumstances  other than those to which it was
held invalid or unenforceable in the jurisdiction in question.

         15.14    Counterparts

         This  Agreement  may be executed in any number of  counterparts  and by
different  parties to this  Agreement  in separate  counterparts.  Each of these
counterparts  when so executed  shall be deemed to be an  original  and all such
counterparts taken together shall constitute one and the same agreement.

         15.15    Further Actions by the Parties

         Each party, upon reasonable  request by another party, shall furnish to
the other party any  information  reasonably  requested by the other party,  and
sign any  documents  and do any other  things  that the other  party  reasonably
requests for the purpose of carrying out the intent of this Agreement.

         15.16    Adequacy of Consideration

         Each party  acknowledges and agrees that upon the effectiveness of this
Agreement,  the party will be in receipt of valid and adequate consideration for
its undertakings under this Agreement.

         15.17    Notice of Provisions of this Agreement and Certificate

         By  executing  this  Agreement,  each Member  acknowledges  that it has
actual notice of all of the  provisions of this  Agreement,  including,  without
limitation  (i) the  restrictions  on transfer of the  Membership  Interests set

                                       37
<PAGE>

forth in Section 3.11, and (ii) all of the provisions of the Certificate.

                  [Remainder of page intentionally left blank]

                                       38
<PAGE>

         IN WITNESS  WHREOF,  the parties hereto have executed this Agreement as
of the day and year first above written.

                                   CLASS A MEMBER:

                                   TOUCHSTONE RESOURCES USA, INC.

                                   By: /s/ Stephen P. Harrington
                                      ------------------------------------------
                                           Steven P. Harrington
                                           President

                                   CLASS B MEMBER:

                                   TOUCHSTONE RESOURCES USA, INC.

                                   By: /s/ Stephen P. Harrington
                                      ------------------------------------------
                                           Steven P. Harrington
                                           President

                                   CLASS C MEMBER:

                                   PHT GAS, LLC

                                   By: RMS Advisors, Inc., Manager

                                   By: /s/ Howard M. Appel
                                      ------------------------------------------
                                           Howard M. Appel
                                           President

                                       39
<PAGE>

                                   SCHEDULE A

The Membership Interests of the initial Members are as follows:

<TABLE>
<CAPTION>
Name of Member                                  Capital Contribution          Percentage Interest
--------------                                  --------------------          -------------------
<S>                                            <C>                                  <C>
Initial Class A Member

       Touchstone Resources USA, Inc.             $2,500,000 on or
       111 Presidential Boulevard               before July 31, 2004

       Suite 165                                                                    74.25%
       Bala Cynwyd, PA 19004                   $1,500,000 on or before
                                                   August 31, 2004

Initial Class B Member

       Touchstone Resources, USA, Inc.
       111 Presidential Boulevard

       Suite 165                              $100,000 on July __, 2004             24.75%
       Bala Cynwyd, PA 19004

Initial Class C Member

       PHT Gas, LLC

       One Belmont Avenue Suite 417             $100 on July __, 2004                 1%
       Bala Cynwyd, PA 19004
</TABLE>EXHIBIT 10.21

                                AMENDMENT TO THE
                               OPERATING AGREEMENT
                                       OF
                         MAVERICK BASIN EXPLORATION, LLC

                               DATED JULY 14, 2004

                                  JULY 14, 2004

<PAGE>

                                AMENDMENT TO THE
                             OPERATING AGREEMENT OF
                         MAVERICK BASIN EXPLORATION, LLC

         THIS   AMENDMENT  to  the   Operating   Agreement  of  MAVERICK   BASIN
EXPLORATION,  LLC, a Delaware Limited Liability Company, ("Operating Agreement")
is  entered  into and  shall be  effective  this 14th day of July,  2004,  among
Touchstone Resources USA, Inc.  ("Touchstone") (The "Withdrawing Class A Member"
and the "Initial  Class B Member"),  PHT Gas, LLC ("PHT") (the "Initial  Class C
Member") and South Oil,  Inc.  ("South Oil") (the  "Additional  Class A Member")
(collectively the "Members").

                              W I T N E S S E T H:

         WHEREAS,  Touchstone,  prior to making any membership  contributions to
the Company, has withdrawn as a Class A Member; and

         WHEREAS,  South Oil has agreed to become an  Additional  Class A Member
and assume the capital contribution requirements of the Class A Member.

         NOW,  THEREFORE,  intending  to be legally  bound,  the Members  hereby
approve  the  amendment  to the  Operating  Agreement  to admit  South Oil as an
Additional Class A Member.  The Ownership interest of Maverick Basin Exploration
LLC shall be amended to reflect those percentages listed on Exhibit A, attached.

                                       WITHDRAWING CLASS A MEMBER:

                                       TOUCHSTONE RESOURCES USA, INC.

                                       By: /s/ Stephen P. Harrington
                                          --------------------------------------
                                           Steven P. Harrington, President

                                       ADDITIONAL CLASS A MEMBER:

                                       SOUTH OIL, INC.

                                       By: /s/ Mark A. Bush
                                          --------------------------------------
                                           Mark A. Bush, President

                                       [Signatures Continued on Following Page]

<PAGE>

                                       CLASS B MEMBER

                                       TOUCHSTONE RESOURCES USA, INC.

                                       By: /s/ Stephen P. Harrington
                                          --------------------------------------
                                           Steven P. Harrington, President

                                       CLASS C MEMBER

                                       PHT GAS, LCC
                                       By: RMS ADVISORS, INC., Manager

                                       By: /s/ Howard M. Appel
                                          --------------------------------------
                                           Howard M. Appel, President

<PAGE>

                         MAVERICK BASIN EXPLORATION, LLC
                                     MEMBERS
                               AS OF JULY 14, 2004

   NAME                                                     PERCENTAGE INTEREST
   ----                                                     -------------------

   Class A Member

   South Oil, Inc.
   5858 Westheimer Street, Suite 708                               74.25%
   Houston, TX 77057

   Class B Member

   Touchstone Resources, USA, Inc.
   111 Presidential Boulevard, Suite 165                           24.75%
   Bala Cynwyd, PA 19004

   Class C Member

   PHT Gas, LLC
   111 Presidential Boulevard, Suite 158                             1%
   Bala Cynwyd, PA 19004

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