Document:

EXHIBIT 10.6 

THE INTERESTS IN THE LIMITED LIABILITY COMPANY THAT IS
REGULATED BY THESE REGULATIONS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR THE COLORADO SECURITIES AND INVESTOR PROTECTION
ACT, AND ARE BEING OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS FROM THE
REGISTRATION REQUIREMENTS OF SUCH ACTS.  THE INTERESTS MAY NOT BE SOLD,
TRANSFERRED, PLEDGED OR HYPOTHECATED WITHOUT REGISTRATION UNDER SUCH ACTS OR AN
OPINION OF COUNSEL THAT SUCH TRANSFER MAY BE LEGALLY AFFECTED WITHOUT SUCH
REGISTRATION.  ADDITIONAL RESTRICTIONS ON TRANSFER AND SALE ARE SET FORTH IN
THESE REGULATIONS.

________________________________________________________________________

OPERATING AGREEMENT

 

OF

 

T-REX Oil LLC #3

 

a Colorado Limited Liability Company

THIS OPERATING AGREEMENT is made effective
as of January 6, 2016 by and among the Members of the T-Rex Oil LLC#3,and the T-Rex
Oil LLC #3,  ("The LLC.").

ARTICLE I -
DEFINITIONS

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

"Additional Owner" shall mean any Person or Entity who is or which is
admitted to the Company as an Additional Owner pursuant to Title 7, Article 80,
Part 701 of the Colorado Revised Statutes.

"Affiliate" shall mean, with respect to any Person, (i) any Person directly or
indirectly controlling, controlled by or under common control with such Person,
(ii) any officer, director, shareholder, member or partner of such Person,
(iii) any person who is an officer, director, shareholder, member, partner,
trustee or employee of any Person described in clauses (i) and (ii) of this
sentence, or (iv) any child, grandchild (whether through marriage, adoption or
otherwise), parent, brother, sister or spouse of a Person.  For purposes of
this definition, the term "controls, is controlled by, or is under common
control with" shall mean the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract or otherwise.

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"Capital Account" means a capital account to be established for each
Owner, and including any transferee of an Owner, and maintained in accordance
with the rules of Code Section 704(b) and Code Regulations Section
1.704-1(b)(2)(iv), as amended from time to time.

In cases where Code Section 704(c) and Code
Regulations Section 1.704-3 apply to property of the Company, the Capital
Accounts of the Owners shall be adjusted in accordance with Code Regulations
Section 1.704-1(b)(2)(iv)(g) for allocations to such Owners of income, gain,
loss and deduction (including depreciation, depletion, amortization or other
cost recovery) as computed for book purposes with respect to the property. 
Adjustment to an Owner's Capital Account hereunder shall be made with reference
to the Federal tax treatment of the item giving rise to the adjustment at the
Company level without regard to any elective tax treatment of such item at the
Owner's level.

In the event any Owner transfers an Economic Interest
in the Company in accordance with the terms of this Operating Agreement, the
transferee shall succeed to the Capital Account of the transferor Owner to the
extent such Capital Account relates to such transferred Economic Interest.  In
determining the amount of any liability for purposes of this section, there
shall be taken into account Code Section 752(c) and any other applicable provisions
of the Code and Code Regulations promulgated thereunder.

"Capital Contribution" shall mean any contribution to the capital of the
Company in cash or property by an Owner whenever made.

 "Initial Capital
Contribution" shall mean the initial contribution to the capital of the
Company pursuant to this Operating Agreement, such value to be determined by
agreement between the parties, net of liabilities, assumed by the Company or to
which the contributed property is subject.  The Initial Capital Contribution of
each Owner is set forth opposite such Owner's name on the attached Exhibit
"A."  

"Additional Capital Contribution" shall mean
any additional capital contribution to the capital of the Company pursuant to
this Operating Agreement and that is included in and a part of Exhibit "B"
as amended from time to time.

"Code"
shall mean the Internal Revenue Code of 1986 or corresponding provisions of
subsequent superseding federal revenue laws.

"Company or LLC" shall refer
to this Colorado limited liability company.

"Distributable Cash" shall mean all cash, revenues and funds received by
the Company from the Company operations, less the sum of the following to the
extent paid or set aside by the Company:  (i) all principal and interest
payments on indebtedness of the Company and all other sums paid to lenders; 
(ii) all cash expenditures incurred incident to the normal operation of the
Company's business; and (iii) such cash reserves as the Manager(s) deem
reasonably necessary to the proper operation of the Company's business.

"Economic Interest" shall mean
a Member's or Economic Interest Owner's share of the Company's Net Profits, Net
Losses and distributions of the Company's assets pursuant to this Operating
Agreement and the Colorado Revised Statutes, but shall not, of itself, include
any right to vote on, consent to or otherwise participate in any decision of
the Members or Managers.  The Initial Economic Interests are set forth in Exhibit
"A" hereto.

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"Economic Interest Owner" Shall mean the owner of an Economic Interest who is a
Member. 

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

"Fiscal Year" shall mean the Company's
fiscal year, which shall be from January 1 to December 31.

"Colorado Statutes" shall mean the Colorado Revised Statutes Title 7
Article 80, as amended.

"Gross Asset Value" means, with respect to any asset of the Company, the
asset's adjusted basis for federal income tax purposes, except as follows:

(i)         The initial Gross Asset Value of any asset
contributed by an Owner to the Company shall be the gross fair market value of such
asset as determined by the contributing Owner and the Company;

(ii)        The Gross Asset Value of all Company
assets shall be adjusted to equal their respective gross fair market values
(taking into account Code Section 7701(g)) as determined by the Company, as of
the following times:

a)    The acquisition of an additional Economic Interest
in the Company by any new or existing Owner in exchange for more than a de
minimis Capital Contribution;

b)    The distribution by the Company to an Owner
(or an assignee of an Owner with respect to the Owner's Economic Interest in
the Company) of more than a de minimis amount of Company assets as
consideration for the disposition of an interest in the Company; and

c)    The liquidation of the Company within the
meaning of Code Regulations Section 1.704-1(b)(2)(ii)(g).

            Adjustments pursuant to subsections a) and b) above
shall be made only if the Manager(s) reasonably determine that such adjustments
are necessary or appropriate to reflect the relative Economic Interests of the Owners
in the Company;

(iii)       If the Gross Asset Value of an asset has
been determined or adjusted as provided in this definitional Section (other
than subparagraph (iv) below), Gross Asset Value of the respective asset
thereafter shall be adjusted by the Depreciation taken into account with
respect to the asset for purposes of computing Profit and Loss;

(iv)       The Gross Asset Value of any Company asset
distributed to any Owner shall be the gross fair market value of the
distributed asset, as determined by the Company, on the date of distribution;
and

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(v)        The Gross Asset Value of Company assets
shall be increased (or decreased) to reflect any adjustments to the adjusted
basis of the Company assets pursuant to Code Section 732(d), Code Section
734(b) or Code Section 743(b), but only to the extent that such adjustments are
taken into account in determining the Owner's Capital Account pursuant to Code
Regulations Section 1.704-1(b)(2)(iv)(m).  The Gross Asset Value of the Company
assets, however, shall not be adjusted under this subparagraph (v) to the
extent that the Manager(s) determine that an adjustment pursuant to
subparagraph (ii) is not necessary or appropriate in connection with a
transaction that otherwise would result in an adjustment pursuant to this subparagraph
(v).

"Interests"
shall mean the Economic Interests or Voting Interests of a Member, as the use
of such term may imply. For the purposes of a purchase or sale between Members
of their respective Interests in the Company, it shall mean both the Economic
Interests and the Voting Interests in the aggregate for the selling Member.

"Manager" shall mean T-Rex Oil Inc., a
Colorado corporation upon its resignation, or any other Person or Entity that
succeeds any of such persons or entities in that capacity.  References to the
Manager in the singular or as him, her, it, itself, or other like references
shall also, where the context so requires, be deemed to include the corporate
plural or the masculine or feminine reference, as the case may be.

"Member"
shall mean each of the parties who
executes a counterpart of this Operating Agreement as a Member and each of the
parties who may hereafter become Additional or Substitute Owners having voting
rights pursuant to the terms of this Agreement.  Each Member shall have the
right to vote his or her respective Voting Interests set forth in Exhibit
"B" hereto.

"Net Profits" shall mean, for each Fiscal
Year, the income and gains of the Company determined in accordance with the
accounting principals consistently applied from year to year, as reported,
separately or in the aggregate, as appropriate, on the Company's information
tax return filed for federal income tax purposes, plus any income described in
Code Section 705(a)(1)(B).

"Net Losses" shall mean, for each Fiscal Year, the losses and deductions of the
Company determined in accordance with accounting principals consistently
applied from year to year as reported separately or in the aggregate, as
appropriate, on the Company's information tax return filed for federal income
tax purposes, plus any expenditures described in Code Section 705(a)(2)(B).

"Operating Agreement" shall mean this Operating Agreement as originally
executed and as amended from time to time, and which shall constitute the
"Regulations" or "Operating Agreement" of the Company under Title 7, Article
80, Part 108 of the Colorado Revised Statutes.

"Organization Expenses" shall mean those expenses incurred in connection with
the formation of the Company.

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"Owners" shall
mean collectively the Members and the non-voting Economic Interest Owners of
this Company.

"Person"
shall mean any individual or Entity,
and the heirs, executors, administrators, legal representatives, successors,
and assigns of such "Person" where the context so admits.

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

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

(ii)        Any expenditures of the Company described
in Code Section 705(a)(2)(B) of the Code or treated as Code Section
705(a)(2)(B) expenditures pursuant to Code Regulations Section
1.704-1(b)(2)(iv)(i) and not otherwise taken into account in computing Profit
or Loss pursuant to this definition shall be subtracted from taxable income or
loss;

(iii)       In the event the Gross Asset Value of any
Company asset is adjusted pursuant to subparagraphs (ii) and (iv) of the
definition of "Gross Asset Value" hereinabove, the amount of such adjustment
shall be taken into account as gain or loss from the disposition of such asset
for purposes of computing Profit or Loss;

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

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

(vi)       To the extent an adjustment to the adjusted
tax basis of any Company asset pursuant to Code Section 734(b) or Code Section
743(b) is required pursuant to Code Regulations Section 1.704-1(b)(2)(iv)(m) to
be taken into account in determining Capital Accounts as a result of a
distribution other than in liquidation of an Owner's Economic Interest in the
Company, the amount of such adjustment shall be treated as an item of gain (if
the adjustment increases the basis of the asset) or loss (if the adjustment
decreases the basis of the asset) from the disposition of the asset and shall
be taken into account for purposes of computing Profit or Loss; and

(vii)      To the extent an adjustment to the adjusted
tax basis of any Company asset pursuant to Code Section 734(b) or Code Section
743(b) is required pursuant to Code Regulations Section 1l704-1(b)(2)(iv)(m) to
be taken into account in determining Capital Accounts as a result of a
distribution to an Owner in complete liquidation of his or her interest in the
Company, the amount of such adjustment to the Capital Accounts shall be treated
as an item of gain (if the adjustment increases such basis) or loss (if the
adjustment decreases such basis), and such gain or loss shall be specially
allocated to the Owners in accordance with  

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their Economic Interests in the
Company in the event that Code Regulations Section 1.704-1(b)(2)(iv)(m)(2)
applies, or the Owner to whom such distribution was made in the event that Code
Regulations Section 1.704-1(b)(2)(iv)(m)(4) applies.

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

"Substitute Owner" shall mean any Person or Entity who or which is
admitted to the Company as a Substitute Owner pursuant to Title 7 Article 80
Part 702(3) of the Colorado Revised Statutes. 

"Voting Interest" shall mean the percentage voting interest of a Member
in the Company as set forth in Exhibit "B" hereto, according to
its pro rata ownership interest.

ARTICLE II - FORMATION OF THE COMPANY

            2.1       Formation.
On January 6, 2016, the Company was organized as a Colorado Limited Liability
Company under and pursuant to the Colorado Limited Liability Company Act within
the Colorado Revised Statutes.  The Company is not a partnership (including a
limited partnership) or any other venture.  Except as provided by law, no
Member will be construed to be a partner in the Company or a partner of any
other Member or person, and the Articles, this Operating Agreement and the
relationships created thereby and arising therefrom will not be construed to
suggest otherwise.  The foregoing statement regarding partnership status does
not apply for purposes of classifying the Company as a partnership or its
Members as partners for income tax purposes under Section 301.7701-2 of the
Income Tax Regulations promulgated under the Code, as such regulations may be
amended from time to time.

            2.2       Name.  The
name of the Company is T-REX Oil LLC #3

            2.3       Principal Place of
Business.  The principal place of business is 520 Zang Street
Suite 250 Broomfield, CO 880021.  The Company may locate its places of business
and registered office at any other place or places as the Manager(s) may deem
advisable from time to time.

            2.4       Registered Office and
Registered Agent.  The Company's registered agent and its
registered office shall be at the offices of its registered agent W. Edward
Nichols 520 Zang Street Suite 250 Broomfield, CO 80021.

            2.5       Term.  The
term of the Company shall be for 20 years from the date of filing the Articles
of Organization with the Secretary of the State of Colorado, unless the Company
is earlier dissolved or continued in accordance with either the provisions of
the Articles of Organization, this Operating Agreement or the relevant Colorado
Statutes.

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ARTICLE III -
BUSINESS OF THE COMPANY

            3.1       Permitted Business. 
The business of the Company shall be:

(a)        To conduct a private offering of to
participate in oil and gas lease acquisition, exploration and production and
related activities through leases, farmouts or other forms of participation.  

(b)        To exercise all other powers necessary to
or reasonably connected with the Company's business which may be legally
exercised by limited liability companies under the Colorado Statutes; and

(c)        To engage in all activities necessary,
customary, convenient, or incident to any of the foregoing.

ARTICLE IV - NAMES
AND ADDRESSES OF OWNERS

            The
names and addresses of the Initial Owners are as set forth in Exhibit "B"
hereto which will be amended from time to time as additional members are
admitted.

ARTICLE V - RIGHTS AND DUTIES OF MANAGER(S)

            5.1       Management. 
The business and affairs of the Company shall be managed solely by its
designated Manager(s), which the Manager(s) need not be a Member.  The Members and
the Company and shall have the authority to bind the Company in all matters in
the ordinary course of business.  T-Rex Oil, Inc. is hereby designated as the
current Manager until the resignation or removal from office or until its
successor is elected and qualified.  The Manager(s) may, from time to time,
apportion and delegate responsibilities among the various Manager(s).  In the
event that there is only one Manager elected by the Members, it will
automatically become the Sole Manager. T-Rex Oil, Inc. shall serve as manager,
and shall have authority to bind the Company for any consulting service
obligation and for any LLC administrative function of banking or finance.

            5.2       Number, Tenure and
Qualifications.  The number of Managers of the Company shall be
fixed from time to time by the Members holding a super-majority of two-thirds
(2/3) of the Voting Interests in a duly constituted meeting of such.  By
signing this Operating Agreement, the Members confirm that the Manager is
currently T-Rex Oil, Inc.  Each Manager shall hold office until the next annual
meeting of Members or until its successor shall have been elected and
qualified.  Managers shall be elected by the Members holding a majority of the
Voting Interests in a duly constituted meeting of such.  A Manager need not be
a resident of the State of Colorado or a Member of the Company.

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            5.3       Certain Powers of the
Manager(s).  Without limiting the generalities of Section 5.1 hereof,
but subject to the express provisions of this Section 5.3, the Manager(s) shall
have full, complete and unilateral power to do any and all things, including
acting through a Manager or through any duly authorized manager or other agent,
except as otherwise provided herein, on behalf of the Company:

(a)        To
acquire oil and gas leases, farmouts, or other participation in the drilling,
completion and production of oil and gas.

(b)        To purchase liability and other insurance
to protect the Company's property and business;

(c)        To hold and own any Company real and/or
personal properties in the name of the Company;

(d)       To invest any Company funds temporarily (by
way of example but not limitation) in time deposits, short-term governmental
obligations, commercial paper and other investments;

(e)        Upon the affirmative vote of the Members
holding a super-majority of two-thirds (2/3) of the Voting Interests, to sell
or otherwise dispose of all or substantially all of the assets of the Company
as part of a single transaction or plan so long as such disposition is not in
violation of or a cause of a default under agreement to which to Company may be
bound;

(f)        To execute on behalf of the Company all
instruments and documents, including without limitation, checks, drafts, notes
and other negotiable instruments, or documents providing for the acquisition,
or disposition of the Company's property, assignment, bills of sale, and any
other instruments or documents necessary, in the sole and absolute opinion of
such Manager, to the business of the Company.

(g)        To employ accountants, legal counsel,
managing agents or other experts to perform services for the Company and to
compensate them from Company funds;

(h)        To enter into any and all other agreements
on behalf of the Company, with any other Person or Entity for any purpose, in
such forms as the Manager(s) may approve; and

(i)         To do and perform all other acts as may be
necessary or appropriate to the conduct of the Company's business.

(j)         To appoint a Secretary to act as an
officer of the Company, for administrative purposes only. 

            5.4       Specific Limitations on Manager(s). 
Notwithstanding anything to the contrary in this Operating Agreement or the
Colorado Statutes, without the prior approval of the Members of the specific
act in question, the Manager(s) shall have no right, power or authority to do
any of the following acts, each of which is considered outside of the ordinary
course of Company business:

(a)        Any act in contravention of
this Operating Agreement;

(b)        Change or reorganize the
Company into any other legal form;

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(d)       Reconstitute the
Company and continue its business following a dissolution of the Company;

(e)        Knowingly or willingly do any
act that would cause the Company to be classified as an association under Code
Section 7701 taxable as a corporation, except for such acts that are expressly
provided for herein; or

(f)        Knowingly perform any act that
would subject any Owner to liability as a general partner in any jurisdiction.

            Unless authorized to do so by this
Operating Agreement or by a Manager of the Company, no Member, agent or
employee of the Company shall have any power or authority to bind the Company
in any way, to pledge its credit or to render it liable pecuniary for any
purpose.  However, a Manager may act by a duly authorized attorney-in-fact.

            5.5       Liability for Certain Acts. 
Manager(s) shall exercise its business judgment in managing the business,
operations and affairs of the Company.  Unless fraud, deceit, gross negligence,
willful misconduct or a wrongful taking shall be proved by a nonappealable
court order, judgment, decree or decision, Manager shall not be liable or
obligated to the Owners for any mistake of fact or judgment or the doing of any
act or the failure to do any act by such Manager(s) in conducting the business,
operations and affairs of the Company, which may cause or result in any loss or
damage to the Company or its Owners.  Manager does not, in any way, guarantee
the return of the Owner's Capital Contributions or a profit for the Owners from
the operation of the Company.  No Manager shall be responsible to any Owner
because of a loss of his investments or a loss in operations, unless the loss
shall have been the result of fraud, deceit, gross negligence, willful
misconduct or a wrongful taking by such Owner proved as set forth in this
Section 5.5.  Manager shall incur no liability to the Company or to any Owner
as a result of engaging in any other business or venture.

            5.6       Manager Has  No Exclusive
Duty to Company.  Manager shall not be required to manage the
Company as its sole and exclusive function and it may have other business
interests and may engage in other activities in addition to those relating to
the Company.  Neither the Company nor any Owner shall have any right, by virtue
of this Operating Agreement, to share or participate in such other investments
or activities of a Manager or to the income or proceeds derived therefrom.

            5.7       Bank Accounts. 
Manager may from time to time open bank accounts in the name of the Company,
and Manager shall be a signatory thereon, unless the Manager determine otherwise.

            5.8       Indemnity of the
Manager(s).  Manager shall be indemnified by the Company under
the following circumstances and in the manner and to the extent indicated:

(a)        In any threatened, pending or completed
action, suit or proceeding to which a Manager was or is a party or is
threatened to be made a party by reason of the fact that it is or was a Manager
of the Company (other than an action by or in the right of the Company)
involving an alleged cause of action for damages arising from the performance
of his activities on behalf of the Company, the Company shall indemnify such
Manager against expenses, including  

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attorneys' fees, judgments and amounts paid
in settlement, actually and reasonably incurred by it in connection with such
action, suit or proceeding if a Manager acted in good faith and in a manner it
reasonably believed to be in or not opposed to the best interests of the
Company, and provided that its conduct has not been found by a nonappealable
court judgment, order, decree or decision to constitute gross negligence,
willful or wanton misconduct, or a breach of its fiduciary obligations to the
Owners.  The termination of any action, suit or proceeding by judgment, order,
or settlement shall not, of itself, create a presumption that such Manager did
not act in good faith and in a manner which it reasonably believed to be in or
not opposed to the best interests of the Company.

(b)    To the extent a Manager has been successful on the
merits or otherwise in defense of any action, suit or proceeding referred to in
subparagraph 5.8(a) above, or in defense of any claim, issue or matter therein,
the Company shall indemnify such Manager against the expenses, including
attorneys' fees, actually and reasonably incurred by him in connection
therewith.

(c)        The indemnification set forth in this
paragraph shall in no way cause the Owners to incur any liability beyond their
total Capital Contributions plus their share of any undistributed profits of
the Company, nor shall it result in any liability of the Owners to any third
party.

            5.9       Resignation. 
Manager of the Company may resign at any time by giving written notice to the
Members of the Company.  The resignation of such a Manager shall take effect
upon receipt of the notice thereof or at such later time as shall be specified
in such notice; and unless otherwise specified therein, the acceptance of such
resignation shall not be necessary to make it effective.

            5.10     Removal.  At
a meeting called expressly for that purpose, a Manager,  may be removed at any
time, with or without cause, by the Members holding a super-majority of
two-thirds (2/3) of the Voting Interests in a duly constituted meeting of
such.  The removal of T-Rex Oil, Inc. as Manager will not effect its rights to
purchase the lease as provided herein nor its right to the revenue received
from the wells that have been completed or recompleted by T-Rex Oil, Inc.

            5.11    Vacancies. 
Any vacancy occurring for any reason in the number of Managers of the Company
shall be filled by the Members holding a super-majority of two-thirds (2/3) of
the Voting Interests in a duly constituted meeting of such.  Any Manager's
position to be filled by reason of an increase in the number of Managers shall
be filled by the affirmative vote of the Members holding a super-majority of
two-thirds (2/3) of the Voting Interests in a duly constituted meeting of
such.  A Manager elected to fill a vacancy shall be elected for the unexpired
term of his predecessor in office and shall hold office until the expiration of
such term and until his successor shall be elected and shall qualify, or until
his earlier death, resignation or removal.  A Manager chosen to fill a position
resulting from an increase in the number of Managers shall hold office until
the next annual meeting of Members and until his successor shall be elected and
qualify, or until his earlier death, resignation or removal.

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            5.12     Right of Manager T-Rex Oil
to purchase the Cole Creek property.  T-Rex Oil, Inc shall have the
right to purchase the Cole Creek property from the LLC on September 30, 2016
for a price of $1,464,000.00.  By executing this
agreement the member will be deemed to have consented to the sale. 

            5.13  Salaries.  In lieu
of salaries the Manager will have a right to all the income generated by the
leased properties from production of oil and gas. In addition T-Rex Oil, Inc.
shall have the right but not the obligation to complete and re-complete any
wells on the leased property.   

            5.14     Other Offices. 
The Manager may elect such other officers such as President, Vice President,
Secretary and Treasurer, as they deem appropriate and the Manager(s) shall set
the duties of such officers.

            5.15     Right to Rely on Officers. 
No Person or governmental body dealing with the Company shall be required to
inquire into, or to obtain any other documentation as to, the authority of any
officer acting on behalf of the Company.  Furthermore, any Person or
governmental body dealing with the Company may rely upon a certificate signed
by any officer of the Company as to the following:

(a)        The identity of the Manager(s) and Owners;

(b)        The existence or nonexistence of any fact
or facts that constitute a condition precedent to acts by the officer or that
are in any other manner directly or indirectly related to or otherwise involve
the affairs of the Company;

(c)        The Persons who are authorized to execute
and deliver any instrument or document of the Company; or

(d)       Any act or failure to act by the Company on
any other matter whatsoever involving the Company or any Owner.

ARTICLE VI - RIGHTS
AND OBLIGATIONS OF MEMBERS

            6.1       Limitation of Liability. 
Each Owner's liability shall be limited as set forth in the Colorado Statutes
and other applicable law.

            6.2       Company Debt Liability. 
An Owner will not personally be liable for any debts or losses of the Company
beyond his or her respective Capital Contributions, except as provided in
Section 6.6 herein or as otherwise required by law.

            6.3       List of Owners. 
Upon written request of any Owner, the Manager(s) shall provide a list showing
the names, addresses and interests of all Owners in the Company.

            6.4       Approval of Sale of Assets.  The Members holding a super-majority of two-thirds (2/3)
of the Voting Interests shall have the right, voting in a duly constituted
meeting of such, to approve the sale, exchange, or other disposition of all, or
substantially all, of the Company's assets provided however that the members
shall have been deemed to consent to the sale of the assets to T-Rex Oil Inc.
as provided herein.

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            6.5       Company Books. 
Manager shall maintain and preserve, during the term of the Company, and for
five (5) years thereafter, all accounts, books, and other relevant Company
documents.  Upon request, each Owner shall have the right, during ordinary
business hours, to inspect and copy such Company documents at the Owner's
expense.

            6.6       Priority and Return of
Capital.  No Owner shall have priority over any other Owner,
either as to the return of Capital Contributions or as to Net Profits, Net
Losses or distributions; provided that this Section shall not apply to loans
(as distinguished from Capital Contributions) which an Owner has made to the
Company.

ARTICLE VII -
MEETINGS OF MEMBERS

            7.1       Annual Meeting. 
The annual meeting of the Members shall be held at such time and place as shall
be determined by resolution of the Members, commencing with the year following
the year of this Agreement, for the purpose of the transaction of such business
as may come before the meeting.

            7.2       Special Meetings. 
Special meetings of the Members, for any purpose or purposes, unless otherwise
prescribed by statute, may be called by the Manager or the Manager(s) upon
written request of Members of record holding in the aggregate ten percent (10%)
or more of the Voting Interests entitled to vote, such written request to state
the purpose or purposes of the meeting and to be delivered to the Manager or
the Manager(s).

            7.3       Place of Meetings. 
The Manager or the Manager(s) may designate any place, either within or outside
the State of Colorado as the place of meeting or any meeting of the Members. 
If no designation is made, or if a special meeting be otherwise called, the
place of meeting shall be the principal office of the Company in the State of Colorado.

            7.4       Notice of Meetings. 
Except as provided in Section 7.5 hereof, written notice stating the place, day
and hour of the meeting and the purpose or purposes for which the meeting is
called shall be given by or at the direction of the Manager(s) or Members of
record holding in the aggregate ten percent (10%) or more of the Voting
Interests entitled to vote, not less than two (2) nor more than fifty (50) days
before the date fixed for such meeting; except if the Economic Interests are to
be affected in any manner, directly or indirectly, at least ten (10) days
notice shall be given. A waiver of such notice, in writing, signed by the Person
or Persons entitled to said notice, whether before or after the time stated
herein, shall be deemed equivalent to such notice.  Except as otherwise
required by statute, notice of any adjourned meeting of the Members shall not
be required.  If mailed, such notice shall be deemed to be delivered.

            7.5       Meeting of all Members. 
If all the Members shall meet at any time and place, either within or outside
the State of Colorado, and consent to the holding of a meeting at such time and
place, such meeting shall be valid without call or notice, and at such meeting
lawful action may be taken.

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            7.6       Record Date. 
For the purpose of determining Members entitled to notice of or to vote at any
meeting of Members or any adjournment thereof, or Members entitled to receive
payment of any distribution, or in order to make a determination of Members for
any other purpose, the date on which notice of the meeting is mailed or the
date on which the resolution declaring such distribution is adopted, as the
case may be, shall be the record date for such determination of Members.  When
a determination of Members entitled to vote at any meeting of Members has been
made as provided in this Section, such determination shall apply to any
adjournment thereof.

            7.7       Quorum. 
The majority of the Voting Interests represented in person or by proxy, shall
constitute a quorum at any meeting of Members.  In the absence of a quorum at
any such meeting, the Member so represented may adjourn the meeting from time
to time for a period not to exceed sixty (60) days without further notice. 
However, if the adjournment is for more than sixty (60) days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting may be given to Member or record entitled to vote at the
meeting.

            At such adjourned meeting at which a
quorum shall be present or represented, any business may be transacted which
might have been transacted at the meeting as originally noticed.  The Members
present at a duly organized meeting may continue to transact business until
adjournment, notwithstanding the withdrawal during such meeting of that number
of Voting Interests whose absence would cause less than a quorum.

            7.8       Voting. 
Except as may otherwise be provided by statute or this Operating Agreement,
Member shall at every meeting of the Members be entitled to vote that
percentage in Voting Interests, as shown on the attached Exhibit "B",
in person or by proxy, then held by such Member.  No proxy, however, shall be
voted on after eleven (11) months from its date, unless the proxy provides for
a longer period.

            7.9       Manner of Acting. 
If a quorum is present, the affirmative vote of a majority of the Voting
Interests represented at the meeting and entitled to vote on the subject matter
shall be the act of the Members, unless the vote of a greater or lesser
proportion or number is otherwise required by the Colorado Statutes, by the
Articles of Organization, or by this Operating Agreement.

            7.10     Proxies.  At
all meetings of Members, a Member may vote in person or by proxy executed in
writing by the Member or by a duly authorized attorney-in-fact.  Such proxy
shall be filed with the Manager(s) of the Company before or at such time of the
meeting.  No proxy shall be valid after eleven (11) months from the date of its
execution, unless otherwise provided in the proxy.

            7.11     Action by Members Without a
Meeting.  Action required or permitted to be taken at a meeting
of Members may be taken without a meeting if the action is evidenced by one or
more written consents describing the action taken, signed by Member entitled to
vote and delivered to the Manager of the Company for inclusion in the minutes
or for filing with the Company records.  Action taken under this Section 7.11
is effective when all Members entitled to vote have signed the consent, unless
the consent specifies a different effective date. The record date for
determining Members entitled to take action without a meeting shall be the date
that the first Member signs a written consent.

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            7.12     Waiver of Notice. 
When any notice is required to be given to any Member, a waiver therefore in
writing signed by the Person entitled to such notice, whether before, at, or
after the time stated therein, shall be equivalent to the giving of such
notice.

ARTICLE VIII -
CONTRIBUTIONS TO THE COMPANY AND CAPITAL ACCOUNTS

            8.1       Managers Initial Capital
Contributions. 

T-Rex Oil Inc. will serve as Manager and may also make
a Capital Contribution to the LLC. 

            8.2        Capital Contributions. 
The joining members shall, make Capital Contributions of $50,000 per interest  (in accordance with the terms of this
Operating Agreement) to capitalize the business of the Company and its
investment.  Each member shall sign a Joinder Agreement as evidence of agreeing
to the terms hereof.

            8.3       Third Party Investors. 
If any of the total amount of a Capital Contribution required by the Company is
not collected by the Company within a reasonable amount of time after such
request is made of the Owners, then the Manager will be permitted to offer
Economic Interests to third parties upon terms no more favorable than those
offered previously to the Owners.  Any such sale of Economic Interests to third
parties must be made in accordance with the terms of this Operating Agreement,
including without limitation Article 13 hereof.

            8.4       Return of Capital
Contributions.  No Owner shall be entitled to withdraw or demand the
return of any part of his capital contribution except upon dissolution of the
Company and as specifically provided for in this Operating Agreement.

            8.5       Capital Accounts.

(a)        A separate Capital Account will be
maintained for each Owner.  Each Owner's Capital Account will be increased
by (1) the amount of money contributed by such Owner to the Company; (2) the
fair market value of property or other consideration contributed by such Owner
to the Company (net of liabilities secured by any contributed property that the
Company is considered to assume or take subject to under Code Section 752); and
(3) the amount of Net Profits allocated to such Owner.  Each Owner's Capital
Account will be decreased by (1) the amount of money distributed to such
Owner by the Company; (2) the fair market value of property distributed to such
Owner by the Company (net of liabilities secured by such distributed property
that such Owner is considered to assume or take subject to under Code Section
752); and (3) the amount of Net Losses allocated to such Owner.

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(b)        In the event of a permitted sale or
exchange of an Economic Interest, the Capital Account of the transferor shall
become the Capital Account of the transferee to the extent it relates to the
transferred interest.

(c)        The manner in which Capital Accounts are to
be maintained pursuant to this Section 8.5 is intended to comply with the
requirements of Code Section 704(b) and the Treasury Regulations promulgated
thereunder.

(d)       Upon liquidation of the Company (or any
Owner's Economic Interest), liquidating distributions will be made in
accordance with the positive Capital Account balances of the Owners, as
determined after taking in to account all Capital Account adjustments for the
Company's taxable year during which the liquidation occurs.  Liquidation proceeds
will be paid within sixty (60) days of the date of the end of the taxable year
(or, if later, within 90 days after the date of liquidation).

            8.6       Withdrawal or Reduction of
Owners' Contributions to Capital.  An Owner shall not receive
out of the Company's property any part of its contributions to capital until:

(a)        All liabilities of the Company, except
liabilities to Owners on account of their contribution to capital, have been
paid or sufficient property of the Company remains to pay them.

(b)        The consent of the Members holding a
super-majority of two-thirds (2/3) of the Voting Interests is had, unless the
return of the contribution to capital may be rightfully demanded as provided in
the Colorado Statutes.

(c)        The Articles of Organization are canceled
or so amended as to set out the withdrawal reduction.

ARTICLE IX -
ALLOCATIONS, INCOME TAX, ELECTIONS AND REPORTS

            9.1       Allocation of Profits.
 Profits for each fiscal year of the Company shall be allocated:

(a)        First, to any Owner previously allocated
losses under Section 9.2 hereof, to the extent of such losses (reduced by
allocations under this Section 9.1(a) for all prior years), ratably and in
inverse order to the manner in which such losses were allocated; and

(b)        The remainder, if any, to the Owners in
accordance with their respective Economic Interests.

9.2       Allocation of Loss.  Loss for
each fiscal year of the Company shall be allocated:

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(a)        First, to the Owners up to the positive
balance of their Capital Account, ratably in accordance with the positive
balances of their Capital Account; and

(b)        The remainder, if any, to the Owners in
accordance with their respective Economic Interests.

            9.3       Allocation of Recapture
Items.  If any gain on the sale or other disposition of
depreciable Company assets is recaptured as ordinary income, such ordinary
income shall be allocated among the Owners in the same ratio as the
depreciation deductions giving rise to such gains were allocated, but not in
excess of the amount of the gain otherwise allocable under this Article IX.

            9.4       Minimum Gain Chargeback. 
Except as otherwise provided in Code Regulations Section 1.704-2(f),
notwithstanding any other provision of this Article IX, if there is a net
decrease in Company Minimum Gain during any year, each Owner shall be specially
allocated items of income and gain for such year (and, if necessary, subsequent
years) in an amount equal to such Owner's share of the net decrease in Company
Minimum Gain, determined in accordance with Code Regulations Section 1.704-2(g). 
Allocations pursuant to the previous sentence shall be made in proportion to
the respective amounts required to be allocated to each Owner pursuant
thereto.  The items to be so allocated shall be determined in accordance with
Code Regulations Sections 1.704-2(f)(6) and 1.704-(j)(2).  This Section 10.4 is
intended to comply with the minimum gain chargeback requirement in Code
Regulations Section 1.704-2(f) and shall be interpreted consistently therewith.

            9.5       Code Section 704(c). 
If any Owner contributed any property to the Company that has Gross Asset Value
in excess or less than its adjusted basis for federal income tax purposes at
the time of such contribution, then all gain, loss and deduction with respect
to the contributed property, solely for federal income tax purposes, shall be
allocated among the Owners so as to take account of the variation between the
adjusted basis of such property and its initial Gross Asset Value as required
by Code Section 704(c) and the Code Regulations thereunder.

(a)        In accordance with Code Section 704(c) and
the Code Regulations thereunder, income, gain, loss and deduction with respect
to any property contributed to the capital of the Company, solely for tax
purposes, shall be allocated among the Owners so as to take account of any
variation between the adjusted basis of such property to the Company for
federal income tax purposes and its initial Gross Asset Value.

(b)        any elections or other decisions relating
to such allocations shall be made by the Manager(s) in any manner that
reasonably reflects the purpose and intention of this Operating Agreement.  The
Manager(s) may select any reasonable method or methods for making such
allocations, including, without limitation, any method described in Code
Regulation Sections 1.704-3(b), (c) or (d).  In the event that allocations
pursuant to this Section 9.5 with respect to an item of Company property are
limited by ceiling rule in any taxable year, and the Company elects to use
curative allocations pursuant to Code Regulations Section 1.704-3(c):

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(i)         The Company may make curative
allocations in subsequent taxable years over a reasonable period of time, such
as the economic life of such item of property, to offset the effective ceiling
rule to the extent permitted by Code Regulations Section 1.704(c)(ii); and

(ii)        The Company may make curative
allocations of gain from the sale or other taxable disposition of such property
to offset the effect of the ceiling rule on allocations of depreciation or
other cost recovery with respect to such property to the extent permitted by
Code Regulations Section 1.704-3(c)(3)(iii)(B).

            9.6       Company Asset Adjustments. 
In the event any of any other Company assets are adjusted pursuant to Article
I, under the definition of "Gross Asset Value," subsequent Company allocations
of income, gain, loss or deduction with respect to such asset shall take
account of any variation between the adjusted basis of such asset for federal
income tax purposes and its Gross Asset Value in the same manner as required
under the Code Section 704(c) and the Code Regulation thereunder.

            9.7       Adjustments by the Owners. 
Any elections or other decisions relating to Company tax allocations pursuant
to Sections 9.5 and 9.6 hereof shall be made by the Manager(s) in a manner that
reasonably reflects the purpose and intention of this Operating Agreement. 
Company tax allocations pursuant to Sections 9.5 and 9.6 hereof are solely for
purposes of federal, state and local taxes and shall not affect, or in any way
be taken into account in computing, any Owner's Capital Account or, other than
is provided in Sections 9.5 and 9.6 hereof, any Owner's share of the Profit or
Loss (or any item thereof), or Company distributions to any of the Owners under
these Regulations. 

            9.8       Other Allocation Rules.

(a)        For purposes of determining the Profit,
Loss or any other items allocable to any period, Profit, Loss and any such
other items shall be determined on a daily, monthly or other basis, as
determined by the Manager(s) using any permissible Method of Accounting under
Code Section 706 and the regulations thereunder.

(b)        The Owners are aware of the income tax
consequences of the tax allocations made under this Article X and hereby agree
to be bound by the provisions of this Article X in reporting their share of the
Company's income for federal income tax purposes.

(c)        Except as otherwise provided in these
Regulations, all Company income, gain, loss, deduction and any items thereof as
determined for federal income tax purposes shall be allocated among the Owners
in the same proportions as they share Profit or Loss, as the case may be, for the
fiscal year.

(d)       All Company Profits and Losses allocated to
the Owners shall be allocated among them in proportion to the Economic
Interests owned by each Owner.  In the event that any Owner is admitted to the
Company on different dates during any Company fiscal year, Company Profit and
Loss allocated to any Owner for each such fiscal year shall be allocated to
each Owner in proportion to the Economic Interest owned by each Owner from time
to time during such fiscal year in accordance with Code Section 706, using any
convention permitted by law and selected by the Manager(s).

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            9.9       Distributions. 
All distributions of cash or other property shall be made to the Owners
according to the manner in which Net Profits and Net Losses were allocated
pursuant to Section 10.1.  All distributions of Distributable Cash and property
shall be made at such time as determined by the Manager(s).  All amounts
withheld pursuant to the Code or any provisions of state or local tax law with
respect to any payment or distribution to the Owners from the Company shall be
treated as amounts distributed to the relevant Owner pursuant to this Section
9.9.

            9.10     Limitation Upon
Distributions.  No distribution shall be declared and paid,
unless, after the distribution is made, the assets of the Company are in excess
of all liabilities of the Company, except liabilities to Owners on account of
their contributions.

            9.11     Accounting Principles. 
The profits and losses of the Company shall be determined in accordance with
accounting principles applied on a consistent basis under the method of
accounting determined by the Manager(s) to be consistent with the business of
the Company.

            9.12     Interest on and Return of
Capital Contributions.  No Owner shall be entitled to interest
on its Capital Contribution or to return of its Capital Contribution, except as
otherwise specifically provided for herein.

            9.13     Records and Reports. 
At the expense of the Company, the Manager(s) shall maintain records and
accounts of all operations and expenditures of the Company.  At a minimum the
Company shall keep at its principal place of business the following records:

(a)        A current list of the full name and last
known business, residence, or mailing address of each Owner and Manager, both
past and present;

(b)        A copy of the Articles of Organization of
the Company and all amendments thereto, together with executed copies of any
powers of attorney pursuant to which any amendment has been executed;

(c)        Copies of the Company's federal, state and
local income tax returns and reports, if any, for the three (3) most recent
years;

(d)       Copies of the Company's currently effective
written Operating Agreement, copies of any writings permitted or required with
respect to an Owner's obligation to contribute cash, property or services, and
copies of any financial statements of the Company for the three (3) most recent
years;

(e)        Minutes of every annual, special meeting
and court-ordered meeting;

(f)        Any written consents obtained from members
for actions taken by Members without a meeting.

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            9.14      Returns and Other
Elections.  The Manager(s) shall cause the preparation and
timely filing of all tax returns required to be filed by the Company pursuant
to the Code and all other tax returns deemed necessary and required in each
jurisdiction in which the Company does business.  Copies of such returns, or
pertinent information therefrom, shall be furnished to the Owners within a
reasonable time after the end of the Company's fiscal year.

            All elections permitted to be made by the
Company under federal or state laws shall be made by the Manager(s).

ARTICLE X - TRANSFER
RESTRICTIONS

            10.1     Permitted Transfer.

(a)        No Owner shall dispose of all or part of
his Economic Interest except in compliance with the terms and conditions of
this Operating Agreement.  Any other proposed disposition, whether voluntary or
involuntary, shall be void and shall not operate to transfer any interest or
title in any Interest.

(b)        Notwithstanding anything to the contrary in
this Operating Agreement:

            (i)         An individual Owner may at any
time and from time to time without compliance with Sections 10.2 to 10.7 hereof
make a gift of all or a part of his Economic Interest to one or more of his
Family Donees (as defined in Section 10.6 hereof) if each such Family Donee
upon acquisition of such interest becomes a party to this Operating Agreement;
provided, however, that the Family Donee shall not participate in the
management of the Company without the consent of the Members holding a majority
of the Voting Interests;

            (ii)        A Family Donee of an
individual Owner may at any time and from time to time without compliance with
Sections 10.2 to 10.7 hereof make a gift of all or any part of his Economic
Interest back to such Owner or to another Family Donee of the same Owner if
upon acquisition of such Interest the recipient Family Donee becomes a party to
this Operating Agreement; provided, however, that the recipient Family Donee
shall not participate in the management of the Company without the consent of
the Members holding a majority of the Voting Interests;

            (iii)       An Owner may at any time and
from time to time, without compliance with Section 10.2 hereof to one or more
Affiliates, transfer all or part of its Economic Interest to one or more
Affiliates if such Affiliate upon acquisition of such Economic Interest becomes
a party to this Operating Agreement and if permitted by the Colorado Statutes;
provided, however, that the Affiliate shall not participate in the management
of the Company without the consent of the Members holding a majority of the
Voting Interests;

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            (iv)       Dispositions of an Economic
Interest by an Owner, an Affiliate or a Family Donee to the Company or to an
Owner may be made without compliance with Sections 10.2 or 10.7 hereof.

            10.2     Company's Option to
Purchase Economic Interest.  An Owner (the "Offering
Interest Owner") who desires to dispose of any Economic Interest shall
give a notice ("Notice") signed by the Offering Interest Owner to the
Company and to each of the other Owners.  The Notice shall specify the Economic
Interest ("Offered Interest") the Offering Interest Owner intends to
dispose of, identify and give the address of the Person to whom the Offering
Interest Owner intends to dispose of the Offered Interest, and indicate the
price, terms and conditions of the proposed disposition.  In the event that an
Owner is not able to provide Notice of any proposed disposition of Economic
Interest, the legal representative, successor in interest or proposed
transferee of such Owner shall so notify the Company of such proposed
disposition.

(a)        In the case of a proposed sale to a bona
fide prospective purchaser who has offered in writing to purchase the Offered
Interest at a stated price, the Company shall have the irrevocable and
exclusive first option, but not the obligation, to purchase all or, subject to
Section 10.5 hereof, a part of the Offered Interest with payment to be made in
accordance with the provisions of Article XI hereof, provided that such
purchase by the Company shall be at the price and upon the terms and conditions
equal to those offered by such prospective purchaser (as evidenced by a copy of
such offer to purchase which shall accompany the Notice), and provided further
that the Company gives notice of its election to purchase to the Offering
Interest Owner within thirty (30) days after the Company receives the Notice.

(b)        In the case of any other proposed
disposition (including any involuntary disposition) of any Economic Interest,
the Company shall have the irrevocable and exclusive first option, but not the
obligation, to purchase all or part of the Economic Interest at a price per
percentage Economic Interest to be purchased equal to Fair Market Value (as
defined in Section 10.10 hereof) and with payment to be made in accordance with
the provisions of Article XI hereof.  The Company shall give notice of its
election to purchase the Economic Interest to the Offering Interest Owner (or
other party giving notice of the proposed disposition) within thirty (30) days
after the Company receives notice of such proposed disposition.

            10.3     Owners' Option to Purchase
Economic Interest.  If the Company does not elect, as provided
by Section 10.2 hereof, to purchase all of the Offered Interest covered by the
Notice, then, subject to Section 10.7 hereof, each Owner other than the
Offering Interest Owner shall have the irrevocable and exclusive option, but
not the obligation, to purchase from the Offering Economic Interest Owner that
part of the Offered Interest that the Company has not elected to purchase, pro
rata in the proportion that the Interest owned by such Owner on the date of the
Notice bears the aggregate Economic Interests owned by all Owners (exclusive of
the Offered Interest offered for sale or otherwise owned by the Offering
Interest Owner).

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(a)        In the case of a proposed sale to a bona
fide prospective purchaser who has offered in writing to purchase the Offered
Interest at a stated price, at the price and upon any terms and conditions
equal to those offered by such prospective purchaser (as evidenced by a copy of
such offer to purchase which shall accompany the Notice); and

(b)        In the case of any other proposed
disposition of any Economic Interest, at a price per percentage of Economic
Interest being purchased equal to Fair Market Value with payment to be made in
accordance with the provisions of Article XI hereof.

Each Owner that elects to purchase all or a part of
his pro rata portion of the Offered Interest shall give notice of such election
to the Offering Interest Owner and to the other Owners within thirty (30) days
after the receipt of the Notice by the Company.  Each such notice shall state
the percentage of Economic Interest which the Owner giving the notice elects to
purchase.  If any Owner fails to exercise his right to purchase his full pro
rata portion of the Offered Interest, each other Owner who has given notice of
election to purchase his full pro rata portion of the offered interest shall
have an additional ten (10) days after the expiration of such 30-day period in
which to give the Offering Interest Owner and to the other Owners further
notice (the "Further Notice") of his election to purchase all or a
part of the Remaining Interest (as defined below).  Each Further Notice shall
state the number of Remaining Interest which the Owner giving the Further
Notice elects to purchase.  The Remaining Interest shall be apportioned among
those Members who have given a Further Notice according to the procedures described
in Sections 10.3(c) and 10.3(d) hereof, or in such different portions as such
Owners may agree among themselves.

(c)        Each of the Participating Owners (as
defined below) shall be apportioned (i) that number of Remaining Interest that
such Participating Owner elected to purchase in his Further Notice and which
have not yet been apportioned to such Participating Owner pursuant to this
Section 10.3(c), or (ii) such Participating Owner's Pro Rata Portion of the
Unpurchased Interest (as defined below), whichever is less.

(d)       If the apportionment in Section 10.3(c)
hereof is followed and there remain at least one Participating Owner and any
Unpurchased Interest, the procedure described in Section 11.3(c) shall be
repeated.

(e)        For purposes of this Section 10.3, the
following definitions shall apply:

            (i) The "Remaining Interest" shall mean
the Offered Interest that the Company and Owners have not theretofore elected
to purchase.

            (ii)        A "Participating Owner" shall
mean an Owner who has given a Further Notice and who has not yet been
apportioned pursuant to Section 10.3(c) hereof that number of additional
Interest that such Interest Owner's elected to purchase in his Further Notice.

            (iii)       "Unpurchased Interest" shall
mean the Remaining Interest  that has not yet been apportioned to Participating
Owners pursuant to Section 10.3(c) hereof.

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            (iv)       A Participating Owner's "Pro
Rata Portion" of the Unpurchased Interests shall mean the number of Unpurchased
Interest multiplied by the fraction formed by dividing the percentage Economic
Interest that such Participating Owner held on the date the Company received
the Notice by the total percentage Economic Interest all of the Participating
Owners held on the date the Company received the Notice.

            10.4     Effect of an Election. 
The Company and each Owner giving notice of election to purchase pursuant to
Sections 10.2 and 10.3 hereof, respectively, shall be obligated severally and
not jointly to purchase from the Offering Interest Owner, and the Offering
Interest Owner, provided the Company or such other Owners, or a combination of
the Company and such other Owners elect to purchase all the Offered Interest,
shall be obligated to sell to the Company or such other Owners, or the Company
and such other Owners, as the case may be, the portion of Offered Interest
stated therein, at the price and on the conditions determined pursuant to
Sections 10.2 and 10.3 hereof and Article XI.

            10.5     Consequences if Entire
Economic Interest is not to be Purchased.  If an Offering Interest
Owner gives notice and the Company and other Owners do not elect, pursuant to
Sections 10.2 and 10.3 hereof, to purchase all of the Offered Interest, the
Offering Interest Owner may elect to:

(a)        Sell to the Company if it has elected to
purchase part of the Offered Interest and to the Owners, if any, who have
elected to purchase part of the Offered Interest, the aggregate portion of such
Offered Interest which the Company and such Owners have elected to purchase at
the price and on the terms and conditions determined pursuant to Sections 10.2
and 10.3 hereof and Article XI, and at any time or times after the 30th day
following the date of the Notice but before the 60th day following the date of
the Notice ("Disposition Period"), such Offering Interest Owner may
dispose of all the remaining Offered Interest at the price and on any other
terms and conditions specified in the Notice to the Person or Persons
identified in the Notice; provided, however, that such Person or Persons shall
not participate in the management of the Company without the consent of the
Members holding a majority of the Voting Interests.  Each such Person acquiring
any of the Offered Interest must become a party to this Operating Agreement
upon such acquisition.  Any Economic Interest not so disposed of by such
Offering Interest Owner during the Disposition Period may not thereafter be
disposed of, except in compliance with the terms and conditions of this
Operating Agreement;

(b)        At any time or times during the Disposition
Period, dispose of all the Offered Interest to the Person or Persons, at the
price, and on any other terms and conditions specified in the Notice, provided
that each such Person acquiring any Economic Interest in any of the Offered
Interest becomes a party to this Operating Agreement upon such acquisition, and
any Economic Interest not so disposed of by such Offering Interest Owner during
the Disposition Period may not thereafter be disposed of, except in compliance
with the terms and conditions of this Operating Agreement; or

(c)        Withdraw the Notice and thereafter such
Economic Interest may not be disposed of, except in compliance with the terms
and conditions of this Operating Agreement.

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                        10.6     Family Donee. 
"Family Donee" with respect to an Owner shall mean:

(a)        Any parent, child, descendant, or sibling
of the Owner, the spouse of any of the foregoing, or the spouse of the Owner;

(b)        Any trust established by the Owner, or any
trustee, custodian, fiduciary, or foundation which will hold the interest for
charitable purposes or for the benefit of the Owner or any of the Persons
described in Section 10.6(a) above;

(c)        Committees, guardians, or other legal
representatives of the Interest Owner (whether alive or deceased) or of any of
the Persons described in Section 10.6(a) hereof.

            10.7       Substitute Owner. 
Assuming that the provisions of Section 10.1 hereof have been complied with and
said transfer duly approved, or assuming the provisions of Sections 10.2 to
10.7 hereof apply thereto, no assignee or transferee of the whole or any
portion of an Owner's Interest, including any trustee in bankruptcy, shall have
the right to become a Substitute Owner in place of the assignor unless all of
the following conditions are satisfied:

(a)        The fully executed and acknowledged written
instrument of assignment which has been filed with the Company setting forth
the intention of the assignor that the assignee become a Substitute Owner;

(b)        The assignor and assignee execute and
acknowledge such other instruments as the Manager(s) may deem necessary or
desirable to effect such admission, including the written acceptance and
adoption by the assignee of the provisions of this Operating Agreement and his
execution, acknowledgment and delivery to the Manager(s) of such documents as
the Manager(s) may require in their sole discretion, the form and content of
which shall be provided by the Manager(s);

(c)        The assignee pays a transfer fee to the
Company in an amount sufficient to cover all reasonable expenses connected with
the admission of the assignee as a Substituted Member; and

(d)       The other Members holding a majority of the
Voting Interests consent to the assignee becoming a Substitute Owner, which
consent may be withheld for any reason.

            10.8      Additional Conditions. 
The following additional conditions shall apply with respect to a transfer of
an Economic Interest:

(a)        The Manager(s) may not treat an assignee
who has not become a Substitute Owner as a Substitute Owner in the place of his
assignor.

(b)        The Manager(s) will be required to promptly
amend the Operating Agreement to reflect the substitution of Owners.  Until the
Operating Agreement is so amended, an assignee shall not become a Substitute
Owner for any purpose.

-23-

(c)        Upon the death or legal incompetency of an
individual Owner, his personal representative shall have all of the rights of
an Owner for the purpose of settling or managing his estate, and such power as
the decedent or incompetent possesses to constitute a successor as an assignee
of its Economic Interest in the Company and to join with such assignee in
making application to substitute such assignee as an Owner.  A trustee in
bankruptcy for any individual Owner shall have only those rights of an assignee
or general unsecured creditor of such Owner and shall not be entitled to be
substituted as an Owner or participate in the management of the Company except
as expressly provided herein.

(d)       Upon the bankruptcy, insolvency, dissolution
or other cessation to exist as a legal entity of an Owner not an individual,
the authorized representative of such entity shall have all the rights of an
Owner for purposes of effecting the orderly winding up and disposition of the
business of such entity an such power as such entity possessed to constitute a
successor as an assignee of its Economic Interest in the Company and to join
with such assignee in making application to substitute such assignee as an
Owner.

(e)        Anything in this Operating Agreement to the
contrary notwithstanding, no Owner or other Person who has become the holder of
Economic Interests in the Company shall transfer, assign or encumber all or any
portion of his Economic Interests in the Company during any fiscal year if such
transfer, assignment or encumbrance would (in the sole and unreviewable opinion
of the Manager(s)) result in the termination of the Company being taxed as a
partnership for the purpose of the then-applicable provisions of the Internal
Revenue Code of 1986, as amended.

(f)        In the event a vote of the Members shall be
taken pursuant to this Operating Agreement for any reason, a Member shall,
solely for the purpose of determining the percentage of Voting Interests held
by him in weighing his vote, be deemed the holder of any Voting Interest
assigned by him in respect of which the assignee has not become a Substitute
Owner having voting rights.

(g)        Anything in this Operating Agreement to the
contrary notwithstanding, no Owner or other Person who has become the holder of
an Economic Interest shall transfer, assign, or encumber all or any portion of
his Economic Interests in the Company without obtaining the prior written
consent of the Director of the appropriate state Securities Commission, if
required under the Commission's rules, or the opinion of counsel for the
Company that the transfer will not violate any federal or applicable state
securities laws; provided, however, that receipt of an opinion may be waived by
the Manager.

            10.9     Voluntary Withdrawal. 
In the event that an Owner wishes to withdraw from the Company, such Owner may
withdraw by making an assignment pursuant to Section 10.2 hereof and giving
thirty (30) days notice pursuant to this paragraph to all remaining Owners of
such Owner's intention to withdraw and of the assignment of such withdrawing
Owner's membership.  As a result of such voluntary withdrawal, such withdrawing
Owner shall forfeit all rights to his Capital Account and shall have no further
liability to the Company.

            10.10    Fair Market Value;
Appraisal Method.  (a) fair market value per percentage Economic
Interest shall be determined by dividing (i) the fair market value established
for the Company pursuant to the appraisal method outlined below by 100.  

-24-

(b)        Appraisal
Method. In the event that the fair market value per percentage Economic
Interest, or for the Company, as the case may be, cannot be agreed upon between
the Members, following (10) days after the determination by either party that
such fair market value cannot be determined by the Members (the "Event"), the
fair market value shall be determined by an appraiser familiar by experience
with similar companies agreed upon by the Members.  If they fail to agree upon
the appointment of an appraiser within twenty (20) days of the Event, then the
disposing Member shall name an appraiser and the purchasing Member shall name
an appraiser within ten (10) days after the expiration of such 20-day period by
sending notification of such selection to the other Member. Any party failing
to meet such deadline shall lose the right to name an appraiser.  If two
appraisers are selected in this manner, they shall, within ten (10) days after
appointment of the second appraiser, select a third appraiser.  The appraisers
so selected shall determine the fair market value of the Company by majority
vote. The valuation by the appraisers shall be made within thirty (30) days of
appointment of the last appraiser required to be appointed by this Section
5(a).  The fair market value of the Company determined pursuant to this Section
10.10(b) shall be final and binding on all parties. The cost of any valuation
undertaken pursuant to the terms of this Section 10.10(b) shall be paid by the
Company.

(c)        Unless otherwise
provided in the applicable Section, the closing shall be held within fifteen
(15) days after a determination of fair market value pursuant to Section
10.10(b) hereof.

(d)       If the disposing
Member fails at the closing to tender the transfer certificates representing
the Interests being transferred, the Company shall treat such transfer as
completed if the purchasing Member delivers to the Secretary of the Company,
for the benefit of the disposing Member, a certified check payable to the order
of the disposing Member in the amount of the purchase price payable at the
closing.  The Company shall deliver such check to the disposing Member at such
time as the appropriate Interest certificates have been delivered to the
Company for cancellation.  Upon completion of such transfer, the disposing
Member no longer shall have any right, title or interest in the Interests so
transferred.

ARTICLE XI - METHOD
OF PURCHASE

            11.1     Manner of Payment. 
The Company and each Owner, if any, purchasing an Economic Interest pursuant to
Article XI hereof shall pay for such Economic Interest as follows:

(a)        In the case of a proposed sale to a bona
fide purchaser who has offered in writing to purchase the Offered Interest at a
stated price, payment shall be made in the manner and upon any terms and
conditions set forth in the Notice or the offer attached thereto (if such
stated price includes any property other than case, such stated price shall be
deemed to be the amount of any cash included in the stated price plus the value
as determined by an independent appraiser selected by the remaining Members
holding a majority of the Voting Interests and approved by the Offering
Interest Owner, which approval shall not be unreasonably withheld, of such
other property included in such price, the fees and expenses of such appraiser
to be paid for pro rata by the Company and any Owners purchasing the Offered
Interest in proportion to the portion of Offered Interest purchased by each of
them); or

-25-

(b)        In the case of any other proposed
disposition of Economic Interest, payment shall be made in full, in cash or by
wire transfer or certified bank check.

11.2       Manner of Closing.

(a)        In the case of any purchase of an Economic
Interest by the Company and Owners pursuant to Sections 10.2 to 10.7 hereof,
the closing of such purchase shall take place at 10:00 a.m., Eastern Standard
Time, on the 15th business day after the date that the Company the Owner, as
the case may be, gives notice of its or his election to purchase pursuant to
the terms hereof, at the principal office of the Company, or at such different
date, different place, or both as the parties to such purchase agreement agree.

(b)        Certificates representing the Economic
Interest purchased shall be delivered by the selling Owner at the closing
against payment.  By delivering the Economic Interest at the closing, the
selling Owner shall be deemed to represent that the sale of the Economic
Interest has been duly authorized by all necessary corporate action on the part
of the selling Owner, the certificates evidencing the Economic Interest have
been duly and validly endorsed and delivered for transfer to the purchaser and
that the purchaser of such Interest will receive good title to such Interest,
free and clear of all liens, security interests, pledges, charges or
encumbrances other than those created by this Operating Agreement.

            11.3     Legend.  A
legend shall be placed on each certificate or other document, if any,
evidencing a Voting Interest in the Company stating the following:

The Interests represented by this Certificate have not
been registered under the Securities Act of 1933, as amended, or the securities
laws of any state.  These Interests have been acquired for investment and may
not be sold, transferred, pledged or hypothecated in the absence of any
effective registration statement for such Interests under the Securities Act of
1933, as amended, and any applicable state securities laws or an opinion of
counsel acceptable to counsel for the Company that registration is not required
under such laws.  In addition, the sale, transfer, pledge or hypothecation of
these Interests substantially restricted by that certain Operating Agreement by
and among the Company and its Owners, dated effective January 6 , 2016, a copy
of which is on file with the Company at its principal place of business.

ARTICLE XII - OWNERS'
COVENANTS

            12.1     Owner's Personal Debts. 
In order to protect the property and assets of the Company from any claim
against any Owner for personal debts owed by such Owner, each Owner shall
indemnify, defend, protect and hold the Company harmless from any claim that
might be made to the detriment of the Company by any personal creditor of such
Owner.

-26-

            12.2     Alienation of Economic
Interest.  No Owner shall, except as specifically provided in
this Operating Agreement, sell, assign, mortgage, or otherwise encumber such
Owner's Economic Interest in its capital assets or property; or enter into any
agreement of any kind that will result in any Person, firm, or other
organization becoming interested with such Owner in the Company; or do any act
detrimental to the best interests of the Company.

ARTICLE XIII -
ADDITIONAL OWNERS

13.1     Admission of Additional
Owners.  From January 6, 2016 and thereafter and with the
written consent of the Managers, any Person acceptable to such Managers may,
subject to the terms and conditions of this Operating Agreement:  (i) become an
Additional Owner in this Company by the sale of an Economic Interest for such
consideration pursuant to Section 8.2 hereof in this Operating Agreement or
(ii) become a Substitute Owner as a transferee of an Owner's Economic Interest
or any portion thereof in accordance with the provisions of Article X.

13.2     Allocations to Additional
Owners.  No Additional or
Substitute Owner shall be entitled to any retroactive allocation of income,
losses or deductions incurred by the Company.  The Manager may, at his option,
at the time an Additional or Substitute Owner is admitted, close the Company's
books (as though the Company's tax year had ended) or make pro rata allocations
of income, losses and deductions to an Additional or Substitute Owner for that
portion of the Company's tax year in which an Additional or Substitute Owner
for that portion of the Company's tax year in which an Additional or Substitute
Owner was admitted, in accordance with the provisions of Section 706(d) and the
Treasury Regulations promulgated thereunder.

13.3     Additional Members. Notwithstanding anything contained in this Agreement
to the contrary, an Additional Owner may become a Member with the written
consent of the Managers. Upon such approval, the Voting Interests shall be
reallocated among the existing Members and such additional Members in order to
equal one hundred percent (100%).

            13.4     Additional Voting
Members/Voting Interests.  Notwithstanding anything contained in this
Agreement to the contrary, an Economic Interest Owner may only become a voting
Member by the approval of the Members holding a super-majority of two-thirds
(2/3) of the then-existing Voting Interests.  Upon such approval, the Voting
Interests shall be reallocated among the existing voting Members and such
additional voting Member in order to equal one hundred percent (100%).

ARTICLE XIV -
DISSOLUTION AND TERMINATION

            14.1     Dissolution.

(a)        The Company shall be dissolved upon the
occurrence of any of the following events:

            (i)         when the period fixed for the
duration of the Company shall expire;

-27-

            (ii)        by the written consent of an
affirmative vote to dissolve the Company of Members holding the then existing
Voting Interests; or

           (iii)       upon the death, retirement,
resignation, expulsion, bankruptcy, dissolution of a Member or occurrence of
any other event which terminates the continued membership of a Member in the
Company (a "Withdrawal Event"), unless the business of the
Company is continued by the consent of the Members holding two thirds (2/3) of
the Voting Interests and there are at least two remaining Members; or

(b)        As soon as possible following the
occurrence of any of the events specified in this Section effecting the
dissolution of the Company, the appropriate representative of the Company shall
execute a statement of intent to dissolve in such form as shall be prescribed
by the Colorado Secretary of State and file same with the Colorado Secretary of
State's office.

            14.2     Effect of Filing of
Dissolving Statement.  Upon the filing with the Colorado
Secretary of State of a statement of intent to dissolve, the Company shall
cease to carry on its business, except insofar as may be necessary for the
winding up of its business, but its separate existence shall continue until a
certificate of dissolution has been issued by the Secretary of State or until a
decree dissolving the Company has been entered by a court of competent
jurisdiction.

            14.3     Distribution of Assets Upon
Dissolution.  In settling accounts after dissolution, the liabilities
of the Company shall be entitled to payment in the following order:

(a)        those to creditors, in the
order of priority as provided by law, except those to Owners of the Company on
account of their Capital Contributions;

(b)        those to Owners of the Company
with respect to their Capital Accounts in accordance with Section 9.4(d)
hereof; and

(c)        those to Owners in respect of
their shares of the profits and other compensation.

            14.4     Articles of Dissolution. 
When all debts, liabilities and obligations have been paid or discharged or
adequate provisions have been made therefore and all of the remaining property
and assets have been distributed to the Owners, articles of dissolution shall
be executed in duplicate and verified by the Person signing the articles, which
articles shall set forth the information by the Colorado Statutes.

            14.5     Filing of Articles of
Dissolution.

(a)        Duplicate originals of such
articles of dissolution shall be delivered to the Colorado Secretary of State.

(b)        Upon the issuance of the
certificate of dissolution, the existence of the Company shall cease, except
for the purpose of suits, other proceedings and appropriate action as provided
in the Colorado Statutes.  The Manager or Manager(s) in office at the time of
dissolution, or the survivors of them, or if none, the Members, shall
thereafter be trustee for the Owners and creditors of the Company and as such
shall have authority to distribute any Company property discovered after
dissolution, convey real estate and take such other action as may be necessary
on behalf of an in the name of the Company.

-28-

            14.6     Winding Up. 
Except as provided by law, upon dissolution, each Owner shall look solely to
the assets of the Company for the return of its Capital Contributions.  If the
Company property remaining after the payment or discharge of the debts and
liabilities of the Company is sufficient to return the Capital Contributions of
each Owner, such Owner shall have no recourse against any other Owner.  The
winding up of the affairs of the Company and the distribution of its assets
shall be conducted exclusively by the Manager(s), who are hereby authorized to
take all actions necessary to accomplish such distribution, including without
limitation, selling any Company assets the Manager(s) deem necessary or
appropriate to sell.

            14.7     Distributions in Kind. 
Any property distributed in kind in liquidation shall be valued and treated as
though the property were sold and the cash proceeds were distributed.  The
difference between the value of property distributed in kind and its book value
shall be treated as a gain or loss on sale of the property and shall be
credited or charged to the Owners in the manner set forth in Section 9.1
hereof.

ARTICLE XV -
MISCELLANEOUS PROVISIONS

            15.1     Notices.  Any
notice, demand, or communication required or permitted to be given by any
provision of this Operating Agreement shall be deemed to have been sufficiently
given or served for all purposes if delivered personally to the party or to an
executive officer of the party to whom the same is directed or, if sent by
registered or certified mail or reputable overnight courier, postage and
charges prepaid, addressed to the Owner's and/or Company's address as it
appears in the Company's records, as appropriate.  Except as otherwise provided
herein, any such notice shall be deemed to be given (a) three business days
after the date on which the same was deposited in a regularly maintained
receptacle for the deposit of United States mail, addressed and sent as
aforesaid or (b) one business day after the date on which the same was given to
a reputable overnight courier, and sent as aforesaid.

            15.2     Books of Account and
Records.  Proper and complete records and books of account shall
be kept or shall be caused to be kept by the Manager(s) in which shall be
entered fully and accurately all transactions and other matters relating to the
Company's business in such detail and completeness as is customary and usual
for businesses of the type engaged in by the Company.  Such books and records
shall be maintained in accordance with generally accepted accounting
principles.  The books and records shall at all times be maintained at the
principal executive office of the Company and shall be open to the reasonable
inspection and examination of the Owners of their duly authorized
representatives during business hours.

            15.3     Application of Colorado Law. 
This Operating Agreement and the application of interpretation hereof, shall be
governed exclusively by its terms and by the laws of the State of Colorado, and specifically the Colorado Statutes.

-29-

            15.4     Waiver of Action for
Partition.  Each Owner irrevocably waives during the term of the
Company any right that it may have to maintain any action for partition with
respect to the property of the Company.

            15.5     Amendments. 
Any amendment to this Operating Agreement may be proposed by any voting Member
of the Company.  A vote on an amendment to this Operating Agreement shall be
taken within thirty (30) days after notice thereof has been given to the
Members unless such period is otherwise extended by applicable law, regulations
or agreement of the Members.  This Operating Agreement may be amended at any
time by the Members holding a super-majority of two-thirds (2/3) of the Voting
Interests;

(a)        without the consent of the
Owner to be adversely affected by the amendment, this Operating Agreement may
not be amended as to (i) modify the limited liability of an Owner, or (ii)
alter the interest of any Owner in the Net Profits or Net Losses or in cash
distributions of the Company; and

(b)        in the case of any provision
hereof which requires the action, consent, or approval of a specified
percentage in Voting Interests of the Members, such provision may not be
amended without the consent of such specified percentage Voting Interests of
the Members.

            A copy of any amendment shall be promptly
mailed or delivered to each Owner at his or her last known address.

            15.6     Execution of Additional
Instruments.  Each Owner hereby agrees to execute such other and
further statements of interest and holdings, designations, powers of attorney
and other instruments necessary to comply with any laws, rules or regulations.            

            15.7     Construction. 
Whenever the singular number is used in this Operating Agreement and when
required by the context, the same shall include the plural, and the masculine
gender shall include the feminine and neuter genders and vice versa.

            15.8     Headings. 
The headings in this Operating Agreement are inserted for convenience only and
are in no way intended to describe, interpret, define, or limit the scope,
extent of this Operating Agreement or any provision hereof.

            15.9     Waivers.  The
failure of any party to seek redress for violation of or to insist upon the
strict performance of any covenant or condition of this Operating Agreement
shall not prevent a subsequent act, which would have originally constituted a
violation, from having the effect of an original violation.

            15.10   Rights and Remedies
Cumulative.  The rights and remedies provided by this Operating
Agreement are cumulative and the use of any one right or remedy by any party
shall not preclude or waive the right to use any or all other remedies.  Said
rights and parties may have by law, statute, ordinance or otherwise.

-30-

            15.11   Severability. 
If any provision of this Operating Agreement or the application thereof to any
Person or circumstances shall be invalid, illegal or unenforceable to any
extent, the remainder of this Operating Agreement and the application thereof
shall not be affected and shall be enforceable to the fullest extent permitted
by law.

            15.12   Heirs, Successors and
Assigns.  Each and all of the covenants, terms, provisions and
agreements herein contained shall be binding upon the inure to the benefit of
the parties hereto and, to the extent permitted by this Operating Agreement,
their respective heirs, legal representatives, successors and assigns.

            15.13   Creditors. 
None of the provisions of this Operating Agreement shall be for the benefit of
or enforceable by any creditors of the Company.

            15.14   Execution in Counterparts.  For
the convenience of the parties, this Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which together shall constitute
one and the same document.  Telefacsimile transmissions or email of any
executed original and/or retransmission of any executed telefacsimile
transmission or email shall be deemed to be the same as the delivery of an
executed original.  At the request of any party hereto, the other parties
hereto shall confirm telefacsimile transmissions or email by executing
duplicate original documents and delivering the same to the requesting party or
parties.

IN WITNESS WHEREOF, the following initial
Owner has caused this Operating Agreement to be duly executed as of the date
first above written.

 

 MANAGER

 

T-REX OIL INC. 

By:/s/
Donald  L. Walford____________

Donald
L. Walford, Chief Executive Officer

-31-

Exhibit "A"

 

Initial Capital Contributions/Voting
Interests/Economic Interests

  

	
  Name
  

  	
  Address

  	
  Voting
  Interest %

  	
  Economic
  Interest %

  	
  Contribution

  	
  Date
  of Contribution

  
	
   	
   	
   	
   	
   	
   
	

  T-Rex Oil, Inc.

  	
  520
  Zang Street, Suite 250, Broomfield, CO 80021

  	
  100%

  	
  100%

  	
  $100,000

  	
  1/14/16

  
	

  	

  	

  	

  	

  	

  
	

  	

  	

  	

  	

  	

  

  

 

EXHIBIT "B"

Capital Contributions/Voting Interest/Economic
Interest

 

As of 

 

January 19, 2016

 

	T-REX OIL, LLC #3	 
	Capital Contributions/Voting
    Interests//Economic Interests	 
	January 19, 2016	 
	 	 	 	 	 	 	 	 	 	 	 
	
    Name	 	
    Address	 	
    Voting Interest %	 	
    Economic Interest %	 	
    Contribution	 	 
	 	 	 	 	 	 	 	 	 	 	 
	T-Rex Oil, Inc.	 	520 Zang St., Suite 250	 	16.67%	 	16.67%	 	200,000.00	 	4 Interests
	 	 	Broomfield, CO  80021	 	 	 	 	 	 	 	 
	Andrew Vander Ploeg	 	19 Foxtail Circle	 	83.33%	 	83.33%	 	1,000,000.00	 	20 Interests
	 	 	Cherry Hills Village, CO  80113	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 
	 	 	TOTAL	 	
    100.00%	 	
    100.00%	 	
    $1,200,000.00Exhibit 10.1 Stock Cancellation Agreement

HK BATTERY TECHNOLOGY, INC.

STOCK CANCELLATION AGREEMENT AND RELEASE

This STOCK CANCELLATION AGREEMENT (the “Cancellation Agreement”) is made and entered into as of the 15 day of March, 2016 (the “Effective Date”), by and between HK Battery Technology, Inc., a Delaware corporation (the “Company”), and Lianyungang HK New Energy Vehicle System Integration Corporation, a company organized under the laws of the People’s Republic of China (“Stockholder”).

WHEREAS, the Company and Stockholder previously entered into that certain Stock Purchase Agreement, dated as of August 21, 2015 and attached hereto as Exhibit A (the “Purchase Agreement”), pursuant to which the Company sold to Stockholder, and Stockholder purchased from the Company, one hundred thirty-two million (132,000,000) shares (the “Shares”) of the Company’s common stock, par value $0.001 per share (“Common Stock”), at a purchase price of $0.75 per share, for an aggregate purchase price of ninety-nine million United States dollars ($99,000,000.00), subject to the terms and conditions thereof; 

WHEREAS, the Company and Stockholder desire to cancel and terminate five million three hundred thirty-three thousand three hundred thirty-three (5,333,333) of the Shares (the “Cancelled Shares”) and any and all of Stockholder’s rights arising thereunder; 

WHEREAS, in exchange for Stockholder’s agreement to cancel and terminate Stockholder’s rights under or arising out of the Cancelled Shares, the Company agrees to pay to Stockholder the amount set forth herein; and

WHEREAS, the Board of Directors of the Company has approved the terms of this Cancellation Agreement.

NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the sufficiency of which are hereby acknowledged, the parties to this Cancellation Agreement mutually agree as follows:

1.

CANCELLATION OF COMMON STOCK

1.1

Cancellation of Common Stock. Effective as of the Effective Date, in exchange for the consideration provided in Section 1.2 hereof, Stockholder agrees to waive any rights under the terms of the Purchase Agreement with respect to the Cancelled Shares, which waiver Stockholder understands and acknowledges shall include, without limitation, cancellation of the Cancelled Shares.

1.2

Payment. In exchange for Stockholder’s agreement to cancel and terminate the Cancelled Shares as set forth in Section 1.1 hereof and the release of claims as set forth in Section 1.4 hereof, the Company hereby agrees to pay Stockholder an amount equal to four million United States dollars ($4,000,000) (the “Cancellation Price”), subject to withholding for applicable taxes. Payment will be made no later than ninety (90) days from the Effective Date.

1.3

Retained Shares. Nothing in this Cancellation Agreement shall affect the validity of the remaining 126,666,667 shares of Common Stock (the “Retained Shares”) issued pursuant to the Purchase Agreement, or any of Stockholder’s rights thereto.

1.4

Release. Stockholder, for Stockholder and Stockholder’s successors and assigns forever, does hereby unconditionally and irrevocably compromise, settle, remise, acquit and fully and forever release and discharge the Company and its successors, assigns, affiliates, members, officers, employees and agents (collectively, the “Released Parties”) from any and all claims, counterclaims, set-offs, debts, demands, choses in action, obligations, remedies, suits, damages and liabilities in connection with any rights arising under or in connection with the Cancelled Shares, whether now known or unknown or suspected or claimed, whether arising under common law, in equity or under statute, which Stockholder or Stockholder’s successors or assigns ever had, now have, or in the future may claim to have against the Released Parties and which may have arisen at any time on or prior to the date hereof.

1.5

Deliveries. On the Effective Date, Stockholder shall deliver to the Company the original stock certificate evidencing the Shares. The Company shall cancel and render such stock certificate void, and thereafter deliver to Stockholder a new stock certificate evidencing the Retained Shares.

1.6

Further Assurances. Each party to this Cancellation Agreement agrees that it will perform all such further acts and execute and deliver all such further documents as may be reasonably required in connection with the consummation of the transactions contemplated hereby in accordance with the terms of this Cancellation Agreement.

2.

MISCELLANEOUS

2.1

Captions. The captions used in this Cancellation Agreement are for reference purposes only, and shall not in any way affect the meaning or interpretation of this Cancellation Agreement.

2.2

Parties in Interest. This Cancellation Agreement shall be binding upon and shall inure to the benefit of the parties to this Cancellation Agreement and their respective heirs, executors, administrators, successors and assigns.

2.3

Acknowledgements. Stockholder acknowledges that Stockholder has been advised by the Company to consult with Stockholder’s tax advisor to determine the tax consequences with respect to Stockholder of the actions and agreements provided herein, and that the Company shall not be responsible for any taxes owed by Stockholder arising from the actions and agreements provided herein. 

2.4

Execution. This Cancellation Agreement may be executed in two or more counterparts, all of which taken together shall constitute one instrument. The exchange of copies of this Cancellation Agreement and of signature pages by facsimile transmission shall constitute effective execution and delivery of this Cancellation Agreement as to the parties and may be used in lieu of the original Cancellation Agreement for all purposes. Signatures of the parties transmitted by facsimile shall be deemed to be their original signatures for any purpose whatsoever.

2.5

Entire Agreement. This Cancellation Agreement contains the entire understanding of the parties to this Cancellation Agreement with respect to the subject matter contained herein. This Cancellation Agreement supersedes all prior agreements and understandings among the parties with respect to such subject matter. 

2.6

Governing Law. This Cancellation Agreement shall be governed and construed in accordance with the substantive laws of the State of California, without regard to its principles of conflict of laws. 

2.7

Jurisdiction and Venue. Any judicial proceedings brought by or against any party on any dispute arising out of this Cancellation Agreement or any matter related thereto shall be brought in the state or federal courts of California, and, by execution and delivery of this Cancellation Agreement, each of the parties accepts for itself the exclusive jurisdiction and venue of the aforesaid courts as trial courts, and irrevocably agrees to be bound by any judgment rendered thereby in connection with this Cancellation Agreement after exhaustion of all appeals taken (or by the appropriate appellate court if such appellate court renders judgment).

[Signature page follows]

- 2 -

IN WITNESS WHEREOF, the parties to this Cancellation Agreement have executed this Cancellation Agreement as of the Effective Date.

COMPANY:

HK BATTERY TECHNOLOGY, INC.,

a Delaware corporation 

By:

/s/ Jianguo Xu                                               

Jianguo Xu

Chief Executive Officer

STOCKHOLDER:

LIANYUNGANG HK NEW ENERGY VEHICLE SYSTEM INTEGRATION CORPORATION, 

a company organized under the laws of the People’s Republic of China

By: 

/s/ Zhenhua Chen                                         

Zhenhua Chen

Executive Manager

999 Huanghai Road

Lianyungang Economic and Technological Development Zone, Lianyungang, Jiangsu, China 

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