PROMISSORY NOTE

PROMISSORY NOTE

FOR VALUE RECEIVED, The undersigned, Atlas oil and Gas, Inc. ("Maker") promises to pay to the order of John Peper the (the "Holder") whose address is P.O. Box 124 Waller TX 77484 the principal sum of Seventy Eight Thousand three hundred and seventy one dollars and No/100 Dollars ($11,746.80 ) in lawful money of the United States of America plus an interest payment as set forth below.

1.

Interest . Interest shall accrue at the rate of four (4%) percent per annum.

2.

Payment/Maturity Date . Payments in the amount of $500 per month shall be paid against the balance until paid in full. Payment shall commence 45 days from the date of exection.

3.

Default Interest and Attorney Fees . Upon declaration of a default hereunder, the balance of the principal remaining unpaid, interest payment, and all other costs, and fees shall bear interest at the rate of Ten percent (10%) per annum from the date of default, or the date of advance, as applicable. In the event of default, the Maker agrees to pay all costs of collection, including reasonable attorneys' fees.

4.

Prepayment . Maker may prepay the unpaid principal balance of this Note in whole or in part at any time or from time to time without penalty.

5.

Costs of Collection . Maker agrees that if, and as often as, this Note is placed in the hands of an attorney for collection or to defend or enforce any of Holder's rights hereunder or under any instrument securing payment of this Note, Maker shall pay to Holder its reasonable attorneys' fees and all court costs and other expenses incurred in connection therewith, regardless of whether a lawsuit is ever commenced or whether, if commenced, the same proceeds to judgment or not. Such costs and expenses shall include, without limitation, all costs, reasonable attorneys' fees, and expenses incurred by Holder in connection with any insolvency, bankruptcy, reorganization, foreclosure, deed in lieu of foreclosure Or similar proceedings involving Maker or any endorser, surety, guarantor, or other person liable for this Note which in any way affect the exercise by Holder of its rights and remedies under this Note, Or any other document Or instrument securing, evidencing, or relating to the indebtedness evidenced by this Note.

6.

Default . At the option of Holder, the unpaid principal balance of this Note and the interest, costs and fees shall become immediately due, payable, and collectible, without notice or  demand, upon the occurrence at any time of any of the following events, each of which shall be deemed to be an event of default hereunder:

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a.

Maker's failure to make any payment of principal, interest, or other charges on or before the date on which such payment becomes due and payable under this Note.

b.

Maker I s breach or violation of any agreement or covenant contained in this Note, or in any other document or instrument securing, evidencing, or relating to the indebtedness evidenced by this Note.

c.

The failure of Maker to generally pay its debts as they become due or if Maker shall file in any court pursuant to any statute, either of the United States Or of any state, a petition in bankruptcy or insolvency, or for reorganization, or for the appointment of a receiver or trustee of all or a substantial portion of Maker's property, or if Maker makes any assignment for or petitions for or enters into an arrangement for the benefit of creditors, or if a petition in bankruptcy is filed against Maker which is not discharged within sixty (60) days thereafter.

d.

Dissolution, liquidation or termination of Maker.

7.

Application of Payments . Any payment made against the indebtedness evidenced by this Note shall be applied against the following items in the following order: (1) costs of collection, including reasonable attorney's fees incurred or paid and all costs, expenses, default interest, late charges and other expenses incurred by Holder and reimbursable to Holder pursuant to this Note (as described herein) i (2) default interest accrued to the date of said payment; (3) ordinary interest accrued to the date of said payment; and (4) finally, outstanding principal.

8.

Assignment of Note . This Note may be assigned by Maker without .the express written consent of Holder.

9.

Non-Waiver . No delay or omission on the part of Holder in exercising any rights or remedy hereunder shall operate as a waiver of such right or remedy or of any other right or remedy under this Note. A waiver on anyone or more occasions shall not be construed as a bar to or waiver of any such right and/or remedy on any future occasion.

10.

Purpose of Loan . Maker certifies that the loan evidenced by this Note is obtained for business or commercial purposes pursuant to a settlement and release of a disputed obligation which settlement and release is incorporated herein by this reference.

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11.

Waiver of Presentment . Maker and the endorsers, sureties, guarantors and all persons who may become liable for all Or any part of this obligation shall be jointly and severally liable for such obligation and hereby jointly and severally waive presentment and demand for payment, notice of dishonor, protest and notice of protest, and any and all lack of diligence or delays in collection or enforcement hereof. Said parties consent to any modification or extension of time (whether one or more) of payment hereof, the release of all or any part of the security for the payment hereof, and the release of any party liable for payment of this obligation. Any modification, extension, or release may be without notice to any such party and shall not discharge said party's liability hereunder.

12.

Governing Law . As an additional consideration for the extension of credit, Maker and each endorser, surety, guarantor, and any other person who may become liable for all or any part of this obligation understand and agree that the loan evidenced by this Note is made in the State of North Carolina and the provisions hereof will be construed in accordance with the laws of the State of North Carolina, and such parties further agree that in the event of default this Note may be enforced in any court of competent jurisdiction in the State of North Carolina pursuant to separate settlement agreement, and they do hereby submit to the jurisdiction of such court regardless of their residence or where this Note or any endorsement hereof may be executed.

13.

Binding Effect . The term "Maker” as used herein shall include the original Maker of this Note and any party who may subsequently become liable for the payment hereof as an assumer with the consent of the Holder, provided that Holder may, at its option, consider the original Maker of this Note alone as Maker unless Holder has consented in writing to the substitution of another party as Maker. The term "Holder" as used herein shall mean Holder or, if this Note is transferred, the then Holder of this Note. This is a non-recourse note and the Holder has no direct recourse against any Maker and shall look solely to the collateral for payment in the event of default.

14.

Relationship of Parties . Nothing herein contained shall create or be deemed or construed to create a joint venture or partnership between Maker and Holder. Holder is acting hereunder as a lender only.

15.

Severability . Invalidation of any of the provisions of this Note or of any paragraph, sentence, clause, phrase, or word herein, or the application thereof in any given circumstance, shall not affect the validity of the remainder of this Note.

16.

Amendment . This Note may not be amended, modified, or changed, except only by an instrument in the parties.

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