Common use of Capital Accounts, Books and Records Clause in Contracts

Capital Accounts, Books and Records. (a) The Company shall keep books of account for the Company in accordance with the terms of this Agreement. Such books shall be maintained at the principal office of the Company. (b) An individual capital account (the “Capital Account”) shall be maintained by the Company for each Member as provided below: (i) The Capital Account of each Member shall, except as otherwise provided herein, be increased by (A) the amount of cash and the fair market value of any property contributed to the Company by such Member (net of the Gross Liability Value of any Obligations secured by such contributed property that the Company is considered to assume or take subject to under Section 752 of the Internal Revenue Code), (B) such Member’s share of the Net Profits of the Company and special allocations of income or gain under Section 4.2, and (C) the Gross Liability Value of any Obligations assumed (or deemed assumed) by a Member from the Company that would not otherwise be taken into account under Section 7.1(b)(i)(D), and shall be decreased by (D) such Member’s share of the Net Losses of the Company and special allocations of deduction or loss under Section 4.2 and by the amount of cash or the fair market value of any property distributed to such Member (net of the Gross Liability Value of any Obligations secured by such distributed property that such Member is considered to assume or take subject to under Section 752 of the Internal Revenue Code or would be considered to have assumed or taken subject to for purposes of Section 752 of the Internal Revenue Code if such Obligation were a liability for purposes of Section 752 of the Internal Revenue Code) and (E) the Gross Liability Value of any Obligations assumed (or deemed assumed) by the Company from a Member that would not otherwise be taken into account under Section 7.1(b)(i)(A)). The Capital Accounts shall also be increased or decreased (I) to reflect a revaluation of Company property and Obligations pursuant to paragraphs (b) and (f) of the definition of Carrying Value and (II) upon the exercise of any noncompensatory warrant pursuant to the requirements of Treasury Regulation Sections 1.704-1(b)(2)(iv)(d)(4) and 1.704-1(b)(2)(iv)(s). (ii) Any adjustments of basis of Company property provided for under Sections 734 and 743 of the Internal Revenue Code and comparable provisions of state law (resulting from an election under Section 754 of the Internal Revenue Code or comparable provisions of state law) shall not affect the Capital Accounts of the Members (unless otherwise required by applicable Treasury Regulations), and the Members’ Capital Accounts shall be debited or credited pursuant to the terms of this Section 7.1 as if no such election had been made. (iii) Capital Accounts shall be adjusted, in a manner consistent with this Section 7.1, to reflect any adjustments in items of Company income, gain, loss or deduction (including Simulated Depletion, Simulated Gain and Simulated Loss) that result from amended returns filed by the Company or pursuant to an agreement by the Company with the Internal Revenue Service or a final court decision. (iv) The allocation of basis prescribed by Section 613A(c)(7)(D) of the Internal Revenue Code and provided for in Section 4.3(b) and each Member’s separately computed depletion deductions shall not reduce such Member’s Capital Account, but such Member’s Capital Account shall be decreased by its allocable share of Simulated Depletion. The Simulated Basis of each oil and gas property shall be allocated to each Member in accordance with such Member’s Capital Interest Percentage as of the time such oil and gas property is acquired by the Company (and any additions to such Simulated Basis resulting from expenditures required to be capitalized in such Simulated Basis shall be allocated among the Members in a manner designed to cause the Members’ proportionate shares of such Simulated Basis to be in accordance with their Capital Interest Percentages as determined at the time of any such additions), and shall be reallocated among the Members in accordance with the Members’ Capital Interest Percentages as determined immediately following the occurrence of an event giving rise to an adjustment to the Carrying Values of the Company’s oil and gas properties pursuant to clause (b) of the definition of Carrying Value. Simulated Depletion with respect to each separate oil and gas property shall be allocated to the Members in proportion to their respective shares of the Simulated Basis in the related property. No Member’s Capital Account shall be decreased, however, by Simulated Depletion deductions attributable to any oil and gas property to the extent such deductions exceed such Member’s allocable share of the Company’s remaining Simulated Basis in such property. Any Simulated Gain shall be allocated to the Members and shall increase their respective Capital Accounts in the same manner as an equal amount of gain would have been allocated pursuant to Section 4.1. Any Simulated Loss shall be allocated to the Members and shall reduce their respective Capital Accounts in the same percentages as the basis of the property sold was allocated up to an amount equal to each Member’s share of the Company’s Simulated Basis in such property at the time of such sale. (v) It is the intention of the Members that the Capital Accounts of each Member be kept in the manner required under Treasury Regulation Section 1.704-1(b)(2)(iv). To the extent any additional adjustment to the Capital Accounts is required by such regulation, the Board is hereby authorized to make such adjustment after notice to the Members. (vi) In accordance with the provisions of Treasury Regulation Section 1.704-1(b)(2)(iv)(f), upon a Member’s contribution to the Company of cash or properties in exchange for a Company Interest, the Capital Accounts of all Members and the Carrying Values of all Company properties and Obligations shall, immediately prior to such issuance, be adjusted upward or downward to reflect any Unrealized Gain or Unrealized Loss attributable to the Company properties and Obligations, as if such Unrealized Gain or Unrealized Loss had been recognized immediately prior to such contribution and had been allocated to the Members at such time pursuant to Section 4.1 and Section 4.2. (vii) Any Person who acquires a Company Interest directly from a Member, or whose Company Interest shall be increased by means of a Transfer to it of all or part of the Company Interest of another Member, shall have a Capital Account (including a credit for all Capital Contributions made by such Member Transferring such Company Interest) which includes the Capital Account balance of the Company Interest or portion thereof so acquired or Transferred.

Capital Accounts, Books and Records. (a) The Company shall keep books of account for the Company in accordance with the terms of this Agreement. Such books shall be maintained at the principal office of the Company. (b) An individual capital account (the “Capital Account”) shall be maintained by the Company for each Member as provided below: (i) The Capital Account of each Member shall, except as otherwise provided herein, be increased by (A) the amount of cash and the fair market value of any property contributed to the Company by such Member (net of the Gross Liability Value of any Obligations liabilities secured by such contributed property that the Company is considered to assume or take subject to under Section 752 of the Internal Revenue Code), (B) and by such Member’s share of the Net Profits of the Company and special allocations of income or gain under Section 4.2, and (C) the Gross Liability Value of any Obligations assumed (or deemed assumed) by a Member from the Company that would not otherwise be taken into account under Section 7.1(b)(i)(D), and shall be decreased by (D) such Member’s share of the Net Losses of the Company and special allocations of deduction or loss under Section 4.2 and by the amount of cash or the fair market value of any property distributed to such Member (net of the Gross Liability Value of any Obligations liabilities secured by such distributed property that such Member is considered to assume or take subject to under Section 752 of the Internal Revenue Code or would be considered to have assumed or taken subject to for purposes of Section 752 of the Internal Revenue Code if such Obligation were a liability for purposes of Section 752 of the Internal Revenue Code) and (E) the Gross Liability Value of any Obligations assumed (or deemed assumed) by the Company from a Member that would not otherwise be taken into account under Section 7.1(b)(i)(A)). The Capital Accounts shall also be increased or decreased (I) to reflect a revaluation of Company property and Obligations pursuant to paragraphs (b) and (f) of the definition of Carrying Value and (II) upon the exercise of any noncompensatory warrant pursuant to the requirements of Treasury Regulation Sections 1.704-1(b)(2)(iv)(d)(4) and 1.704-1(b)(2)(iv)(s). (ii) Any adjustments of basis of Company property provided for under Sections 734 and 743 of the Internal Revenue Code and comparable provisions of state law (resulting from an election under Section 754 of the Internal Revenue Code or comparable provisions of state law) shall not affect the Capital Accounts of the Members (unless otherwise required by applicable Treasury Regulations), and the Members’ Capital Accounts shall be debited or credited pursuant to the terms of this Section 7.1 as if no such election had been made. (iii) Capital Accounts shall be adjusted, in a manner consistent with this Section 7.1, to reflect any adjustments in items of Company income, gain, loss or deduction (including Simulated Depletion, Simulated Gain and Simulated Loss) that result from amended returns filed by the Company or pursuant to an agreement by the Company with the Internal Revenue Service or a final court decision. (iv) The allocation of basis prescribed by Section 613A(c)(7)(D) of the Internal Revenue Code and provided for in Section 4.3(b) and each Member’s separately computed depletion deductions shall not reduce such Member’s Capital Account, but such Member’s Capital Account shall be decreased by its allocable share of Simulated Depletion. The Simulated Basis of each oil and gas property shall be allocated to each Member in accordance with such Member’s Capital Interest Percentage as of the time such oil and gas property is acquired by the Company (and any additions to such Simulated Basis resulting from expenditures required to be capitalized in such Simulated Basis shall be allocated among the Members in a manner designed to cause the Members’ proportionate shares of such Simulated Basis to be in accordance with their Capital Interest Percentages as determined at the time of any such additions), and shall be reallocated among the Members in accordance with the Members’ Capital Interest Percentages as determined immediately following the occurrence of an event giving rise to an adjustment to the Carrying Values of the Company’s oil and gas properties pursuant to clause (b) of the definition of Carrying Value. Simulated Depletion with respect to each separate oil and gas property shall be allocated to the Members in proportion to their respective shares of the Simulated Basis in the related property. No Member’s Capital Account shall be decreased, however, by Simulated Depletion deductions attributable to any oil and gas property to the extent such deductions exceed such Member’s allocable share of the Company’s remaining Simulated Basis in such property. Any Simulated Gain shall be allocated to the Members and shall increase their respective Capital Accounts in the same manner as an equal amount of gain would have been allocated pursuant to Section 4.1. Any Simulated Loss shall be allocated to the Members and shall reduce their respective Capital Accounts in the same percentages as the basis of the property sold was allocated up to an amount equal to each Member’s share of the Company’s Simulated Basis in such property at the time of such sale. (v) It is the intention of the Members that the Capital Accounts of each Member be kept in the manner required under Treasury Regulation Section 1.704-1(b)(2)(iv). To the extent any additional adjustment to the Capital Accounts is required by such regulation, the Board is hereby authorized to make such adjustment after notice to the Members. (viv) In accordance with the provisions of Treasury Regulation Section 1.704-1(b)(2)(iv)(f), upon a Member’s contribution to the Company of cash or properties in exchange for a Company Interest, the Capital Accounts of all Members and the Carrying Values of all Company properties and Obligations shall, immediately prior to such issuance, be adjusted upward or downward to reflect any Unrealized Gain or Unrealized Loss attributable to the Company properties and Obligationsproperties, as if such Unrealized Gain or Unrealized Loss had been recognized on an actual Transfer of each such property immediately prior to such contribution for an amount equal to its fair market value and had been allocated to the Members at such time pursuant to Section Sections 4.1 and Section 4.2. (viivi) Any Person who acquires a Company Interest directly from a Member, or whose Company Interest shall be increased by means of a Transfer to it of all or part of the Company Interest of another Member, shall have a Capital Account (including a credit for all Capital Contributions made by such Member Transferring such Company Interest) which includes the Capital Account balance of the Company Interest or portion thereof so acquired or Transferred.

Capital Accounts, Books and Records. (a) The Company shall keep books of account for the Company in accordance with the terms of this Agreement. Such books shall be maintained at the principal office of the Company. (b) An individual capital account (the “Capital Account”) shall be maintained by the Company for each Member as provided below: (i) The Capital Account of each Member shall, except as otherwise provided herein, be increased by (A) the amount of cash and the fair market value of any property contributed to the Company by such Member (net of the Gross Liability Value of any Obligations liabilities secured by such contributed property that the Company is considered to assume or take subject to under Section 752 of the Internal Revenue Code), (B) and by such Member’s share of the Net Profits of the Company and special allocations of income or gain under Section 4.2, and (C) the Gross Liability Value of any Obligations assumed (or deemed assumed) by a Member from the Company that would not otherwise be taken into account under Section 7.1(b)(i)(D), and shall be decreased by (D) such Member’s share of the Net Losses of the Company and special allocations of deduction or loss under Section 4.2 and by the amount of cash or the fair market value of any property distributed to such Member (net of the Gross Liability Value of any Obligations liabilities secured by such distributed property that such Member is considered to assume or take subject to under Section 752 of the Internal Revenue Code or would be considered to have assumed or taken subject to for purposes of Section 752 of the Internal Revenue Code if such Obligation were a liability for purposes of Section 752 of the Internal Revenue Code) and (E) the Gross Liability Value of any Obligations assumed (or deemed assumed) by the Company from a Member that would not otherwise be taken into account under Section 7.1(b)(i)(A)). The Capital Accounts shall also be increased or decreased (I) to reflect a revaluation of Company property and Obligations pursuant to paragraphs paragraph (b) and (f) of the definition of Carrying Value and (II) upon the exercise of any noncompensatory warrant pursuant to the requirements of Treasury Regulation Sections 1.704-1(b)(2)(iv)(d)(4) and 1.704-1(b)(2)(iv)(s)Value. (ii) Any adjustments of basis of Company property provided for under Sections 734 and 743 of the Internal Revenue Code and comparable provisions of state law (resulting from an election under Section 754 of the Internal Revenue Code or comparable provisions of state law) shall not affect the Capital Accounts of the Members (unless otherwise required by applicable Treasury Regulations), and the Members’ Capital Accounts shall be debited or credited pursuant to the terms of this Section 7.1 as if no such election had been made. (iii) Capital Accounts shall be adjusted, in a manner consistent with this Section 7.1, to reflect any adjustments in items of Company income, gain, loss or deduction (including Simulated Depletion, Simulated Gain and Simulated Loss) that result from amended returns filed by the Company or pursuant to an agreement by the Company with the Internal Revenue Service or a final court decision. (iv) The allocation Immediately before the exercise of basis prescribed by Section 613A(c)(7)(D) an Incentive Option to acquire Units (the “Exercise”), the Capital Accounts of the Internal Revenue Code existing Members shall be adjusted by assuming that the assets of the Company were sold by the Company for cash at their respective fair market values as of the date of Exercise, and provided for in Section 4.3(b) and crediting or debiting each Member’s separately computed depletion deductions shall not reduce Capital Account with its respective share of the hypothetical gains and losses resulting from such assumed sales in the same manner as gains or losses on actual sales of such properties would be credited or debited to such Member’s Capital Account. Thereafter, but such Member’s Capital Account the Company shall be decreased by its allocable share of Simulated Depletion. The Simulated Basis of each oil and gas property shall be allocated deemed to each Member in accordance with such Member’s Capital Interest Percentage as of the time such oil and gas property is acquired by the Company (and any additions to such Simulated Basis resulting from expenditures required to be capitalized in such Simulated Basis shall be allocated among the Members in a manner designed to cause the Members’ proportionate shares of such Simulated Basis to be in accordance with their Capital Interest Percentages as determined at the time of any such additions), and shall be reallocated among the Members in accordance with the Members’ Capital Interest Percentages as determined immediately following the occurrence of an event giving rise to an adjustment have distributed to the Carrying Values of person exercising the Company’s oil and gas properties pursuant to clause option (bthe “Optionee”) of the definition of Carrying Value. Simulated Depletion with respect to each separate oil and gas property shall be allocated to the Members cash in proportion to their respective shares of the Simulated Basis in the related property. No Member’s Capital Account shall be decreased, however, by Simulated Depletion deductions attributable to any oil and gas property to the extent such deductions exceed such Member’s allocable share of the Company’s remaining Simulated Basis in such property. Any Simulated Gain shall be allocated to the Members and shall increase their respective Capital Accounts in the same manner as an equal amount of gain would have been allocated pursuant to Section 4.1. Any Simulated Loss shall be allocated to the Members and shall reduce their respective Capital Accounts in the same percentages as the basis of the property sold was allocated up to an amount equal to each Member’s share the Distributed Asset Amount (as defined below) and, thereafter, the Optionee shall be deemed to have contributed such cash and the Exercise price to the Company. “Distributed Asset Amount” shall be the excess of (a) the product of (x) the sum of the Company’s Simulated Basis in such property at Exercise price plus the time of such sale. (v) It is the intention fair market value of the Members that net assets of the Capital Accounts Company immediately before the Exercise, multiplied by (y) the percentage obtained by dividing the number of each Member be kept in the manner required under Treasury Regulation Section 1.704-1(b)(2)(iv). To the extent any additional adjustment Units issued to the Capital Accounts is required Optionee by such regulation, the Board is hereby authorized to make such adjustment after notice total number of Units outstanding (taking into account the Units issued to the Members. Optionee) over (vib) In accordance with the provisions of Treasury Regulation Section 1.704-1(b)(2)(iv)(f), upon a Member’s contribution to the Company of cash or properties in exchange for a Company Interest, the Exercise price. The initial Capital Accounts of all Members and the Carrying Values of all Company properties and Obligations shall, immediately prior to such issuance, be adjusted upward or downward to reflect any Unrealized Gain or Unrealized Loss Account attributable to the Company properties and Obligations, as if such Unrealized Gain or Unrealized Loss had been recognized immediately prior to such contribution and had been allocated Interest received by a Person exercising an Incentive Option shall be an amount equal to the Members portion of the Capital Accounts (which Capital Accounts shall at such time pursuant to Section 4.1 and Section 4.2. (viithat point already reflect the payment of the exercise price) Any Person who acquires a Company Interest directly from a Member, or whose Company Interest shall be increased by means of a Transfer to it of all or part Members that is equal to the ratio that the Sharing Ratio received by the Person exercising an Option bears to the Sharing Ratios of all of the Company Interest of another Member, shall have a Capital Account (including a credit for all Capital Contributions made by such Member Transferring such Company Interest) which includes Members immediately after the Capital Account balance of the Company Interest or portion thereof so acquired or TransferredIncentive Option exercise.

Capital Accounts, Books and Records. (a) The Company shall keep books of account for the Company in accordance with the terms of this Agreement. Such books shall be maintained at the principal office of the Company. (b) An individual capital account (the “Capital Account”) shall be maintained by the Company for each Member as provided below: (i) The Capital Account of each Member shall, except as otherwise provided herein, be increased by (A) the amount of cash and the fair market value of any property contributed to the Company by such Member (net of the Gross Liability Value of any Obligations liabilities secured by such contributed property that the Company is considered to assume or take subject to under Section 752 of the Internal Revenue Code), (B) and by such Member’s share of the Net Profits of the Company and special allocations of income or gain under Section 4.2, and (C) the Gross Liability Value of any Obligations assumed (or deemed assumed) by a Member from the Company that would not otherwise be taken into account under Section 7.1(b)(i)(D), and shall be decreased by (D) such Member’s share of the Net Losses of the Company and special allocations of deduction or loss under Section 4.2 and by the amount of cash or the fair market value of any property distributed to such Member (net of the Gross Liability Value of any Obligations liabilities secured by such distributed property that such Member is considered to assume or take subject to under Section 752 of the Internal Revenue Code or would be considered to have assumed or taken subject to for purposes of Section 752 of the Internal Revenue Code if such Obligation were a liability for purposes of Section 752 of the Internal Revenue Code) and (E) the Gross Liability Value of any Obligations assumed (or deemed assumed) by the Company from a Member that would not otherwise be taken into account under Section 7.1(b)(i)(A)). The Capital Accounts shall also be increased or decreased (IA) to reflect a revaluation of Company property and Obligations pursuant to paragraphs paragraph (b) and (f) of the definition of Carrying Value and (IIB) upon the exercise of any noncompensatory warrant pursuant to the requirements of Treasury Regulation Sections 1.704-1(b)(2)(iv)(d)(4) and 1.704-1(b)(2)(iv)(s). (ii) Any adjustments of basis of Company property provided for under Sections 734 and 743 of the Internal Revenue Code and comparable provisions of state law (resulting from an election under Section 754 of the Internal Revenue Code or comparable provisions of state law) shall not affect the Capital Accounts of the Members (unless otherwise required by applicable Treasury Regulations), and the Members’ Capital Accounts shall be debited or credited pursuant to the terms of this Section 7.1 as if no such election had been made. (iii) Capital Accounts shall be adjusted, in a manner consistent with this Section 7.1, to reflect any adjustments in items of Company income, gain, loss or deduction (including Simulated Depletion, Simulated Gain and Simulated Loss) that result from amended returns filed by the Company or pursuant to an agreement by the Company with the Internal Revenue Service or a final court decision. (iv) The allocation of basis prescribed by Section 613A(c)(7)(D) of the Internal Revenue Code and provided for in Section 4.3(b) and each Member’s separately computed depletion deductions shall not reduce such Member’s Capital Account, but such Member’s Capital Account shall be decreased by its allocable share of Simulated Depletion. The Simulated Basis of in each oil and gas property shall be allocated to each Member in accordance with such Member’s Capital Interest Percentage as of the time such oil and gas property is date of this Agreement or hereafter acquired by the Company (and any additions to such Simulated Basis resulting from expenditures required to be capitalized in such Simulated Basis shall be allocated among the Members in a manner designed proportion to cause the Members’ proportionate shares of such Simulated Basis to be in accordance with their Capital Interest Percentages as determined at the time of any such additions), and shall be reallocated among the Members in accordance with the Members’ Capital Interest Percentages as determined immediately following the occurrence of an event giving rise to an adjustment to the Carrying Values of the Company’s oil and gas properties pursuant to clause (b) of the definition of Carrying ValuePercentages. Simulated Depletion with respect to each separate oil and gas property shall be allocated to the Members in proportion to their respective shares of the Simulated Basis in the related property. No Member’s Capital Account shall be decreased, however, by Simulated Depletion deductions attributable to any oil and gas property to the extent such deductions exceed such Member’s allocable share of the Company’s remaining Simulated Basis in such property. Any Simulated Gain shall be allocated to the Members and shall increase their respective Capital Accounts in the same manner as an equal amount of gain would have been allocated pursuant to Section 4.1. Any Simulated Loss shall be allocated to the Members and shall reduce their respective Capital Accounts in the same percentages as the basis of the property sold was allocated up to an amount equal to each Member’s share of the Company’s Simulated Basis in such property at the time of such sale. (v) It is the intention of the Members that the Capital Accounts of each Member be kept in the manner required under Treasury Regulation Section 1.704-1(b)(2)(iv). To the extent any additional adjustment to the Capital Accounts is required by such regulation, the Board Manager is hereby authorized to make such adjustment after notice to the Members. (vi) In accordance with the provisions of Treasury Regulation Section 1.704-1(b)(2)(iv)(f), upon a Member’s contribution to the Company of cash or properties in exchange for a Company Interest, the Capital Accounts of all Members and the Carrying Values of all Company properties and Obligations shall, immediately prior to such issuance, be adjusted upward or downward to reflect any Unrealized Gain or Unrealized Loss attributable to the Company properties and Obligationsproperties, as if such Unrealized Gain or Unrealized Loss had been recognized on an actual Transfer of each such property immediately prior to such contribution for an amount equal to its fair market value and had been allocated to the Members at such time pursuant to Section 4.1 and Section 4.2. (vii) Any Person who acquires a Company Interest directly from a Member, or whose Company Interest shall be increased by means of a Transfer to it of all or part of the Company Interest of another Member, shall have a Capital Account (including a credit for all Capital Contributions made by such Member Transferring such Company Interest) which includes the Capital Account balance of the Company Interest or portion thereof so acquired or Transferred.

Capital Accounts, Books and Records. (a) The Company shall keep books of account for the Company in accordance with the terms of this Agreement. Such books shall be maintained at the principal office of the Company. (b) An individual capital account (the “Capital Account”) shall be maintained by the Company for each Member as provided below: (i) The Capital Account of each Member shall, except as otherwise provided herein, be increased by (A) the amount of cash and the fair market value Fair Market Value of any property contributed to the Company by such Member (net of the Gross Liability Value of any Obligations liabilities secured by such contributed property that the Company is considered to assume or take subject to under Section 752 of the Internal Revenue Code), (B) and by such Member’s share of the Net Profits of the Company and special allocations of income or gain under Section 4.2, and (C) the Gross Liability Value of any Obligations assumed (or deemed assumed) by a Member from the Company that would not otherwise be taken into account under Section 7.1(b)(i)(D), and shall be decreased by (D) such Member’s share of the Net Losses of the Company and special allocations of deduction or deductions of loss under Section 4.2 and by the amount of cash or the fair market value Fair Market Value of any property distributed to such Member (net of the Gross Liability Value of any Obligations liabilities secured by such distributed property that such Member is considered to assume or take subject to under Code Section 752 of the Internal Revenue Code or would be considered to have assumed or taken subject to for purposes of Section 752 of the Internal Revenue Code if such Obligation were a liability for purposes of Section 752 of the Internal Revenue Code) and (E) the Gross Liability Value of any Obligations assumed (or deemed assumed) by the Company from a Member that would not otherwise be taken into account under Section 7.1(b)(i)(A)752). The Capital Accounts shall also be increased or decreased (IA) to reflect a revaluation of Company property and Obligations pursuant to paragraphs paragraph (b) and (f) of the definition of Carrying Value and (IIB) upon the exercise of any noncompensatory non-compensatory warrant pursuant to the requirements of Treasury Regulation Regulations Sections 1.704-1(b)(2)(iv)(d)(4) and 1.704-1(b)(2)(iv)(s), as such Treasury Regulations may be amended or modified. (ii) Any adjustments of basis of Company property provided for under Code Sections 734 and 743 of the Internal Revenue Code and comparable provisions of state law (resulting from an election under Code Section 754 of the Internal Revenue Code or comparable provisions of state law) shall not affect the Capital Accounts of the Members (unless otherwise required by applicable Treasury Regulations), and the Members’ Capital Accounts shall be debited or credited pursuant to the terms of this Section 7.1 8.1 as if no such election had been made. (iii) Capital Accounts shall be adjusted, in a manner consistent with this Section 7.18.1, to reflect any adjustments in items of Company income, gain, loss or deduction (including Simulated Depletion, Simulated Gain and Simulated Loss) that result from amended returns filed by the Company or pursuant to an agreement by the Company with the Internal Revenue Service or a final court decision. (iv) The allocation of basis prescribed by Section 613A(c)(7)(D) of the Internal Revenue Code and provided for in Section 4.3(b) and each Member’s separately computed depletion deductions shall not reduce such Member’s Capital Account, but such Member’s Capital Account shall be decreased by its allocable share of Simulated Depletion. The Simulated Basis of each oil and gas property shall be allocated to each Member in accordance with such Member’s Capital Interest Percentage as of the time such oil and gas property is acquired by the Company (and any additions to such Simulated Basis resulting from expenditures required to be capitalized in such Simulated Basis shall be allocated among the Members in a manner designed to cause the Members’ proportionate shares of such Simulated Basis to be in accordance with their Capital Interest Percentages as determined at the time of any such additions), and shall be reallocated among the Members in accordance with the Members’ Capital Interest Percentages as determined immediately following the occurrence of an event giving rise to an adjustment to the Carrying Values of the Company’s oil and gas properties pursuant to clause (b) of the definition of Carrying Value. Simulated Depletion with respect to each separate oil and gas property shall be allocated to the Members in proportion to their respective shares of the Simulated Basis in the related property. No Member’s Capital Account shall be decreased, however, by Simulated Depletion deductions attributable to any oil and gas property to the extent such deductions exceed such Member’s allocable share of the Company’s remaining Simulated Basis in such property. Any Simulated Gain shall be allocated to the Members and shall increase their respective Capital Accounts in the same manner as an equal amount of gain would have been allocated pursuant to Section 4.1. Any Simulated Loss shall be allocated to the Members and shall reduce their respective Capital Accounts in the same percentages as the basis of the property sold was allocated up to an amount equal to each Member’s share of the Company’s Simulated Basis in such property at the time of such sale. (v) It is the intention of the Members that the Capital Accounts of each Member be kept in the manner required under Treasury Regulation Regulations Section 1.704-1(b)(2)(iv). To the extent any additional adjustment to the Capital Accounts is required by such regulation, the Board is hereby authorized to make such adjustment after notice to the Members. (viv) In accordance with The Board, by Super-Majority Board Approval, shall have the provisions discretion to adjust the Members’ Capital Accounts to reflect a revaluation of the Company’s properties on its books upon the occurrence of an event specified in Treasury Regulation Regulations Section 1.704-1(b)(2)(iv)(f). If the Board, upon by Super-Majority Board Approval, makes a Member’s contribution to the Company of cash or properties in exchange for a Company Interestdetermination that any such adjustment is appropriate, the Capital Accounts of all Members and the Carrying Values of all Company properties and Obligations shall, immediately prior to such issuanceevent, be adjusted upward or downward to reflect any Unrealized Gain or Unrealized Loss attributable to the Company properties and Obligationsproperties, as if such Unrealized Gain or Unrealized Loss had been recognized on an actual Transfer of each such property immediately prior to such contribution event for an amount equal to its Fair Market Value and had been allocated to the Members at such time pursuant to Section 4.1 and Section 4.2. (viivi) Any Person who acquires a Company Interest directly from a Member, or whose Company Interest shall be increased by means of a Transfer to it of all or part of the Company Interest of another Member, shall have a Capital Account (including a credit for all Capital Contributions made by such Member Transferring such Company Interest) which includes the Capital Account balance of the Company Interest or portion thereof so acquired or Transferred.

Capital Accounts, Books and Records. (a) The Company shall keep books of account for the Company in accordance with the terms of this Agreement. Such books shall be maintained at the principal office of the Company. (b) An individual capital account (the “Capital Account”) shall be maintained by the Company for each Member as provided below: (i) The Capital Account of each Member shall, except as otherwise provided herein, be increased by (A) the amount of cash and the fair market value Fair Market Value of any property contributed to the Company by such Member (net of the Gross Liability Value of any Obligations liabilities secured by such contributed property that the Company is considered to assume or take subject to under Section 752 of the Internal Revenue Code), (B) and by such Member’s share of the Net Profits of the Company and special allocations of income or gain under Section 4.2, and (C) the Gross Liability Value of any Obligations assumed (or deemed assumed) by a Member from the Company that would not otherwise be taken into account under Section 7.1(b)(i)(D), and shall be decreased by (D) such Member’s share of the Net Losses of the Company and special allocations of deduction or deductions of loss under Section 4.2 and by the amount of cash or the fair market value Fair Market Value of any property distributed to such Member (net of the Gross Liability Value of any Obligations liabilities secured by such distributed property that such Member is considered to assume or take subject to under Code Section 752 of the Internal Revenue Code or would be considered to have assumed or taken subject to for purposes of Section 752 of the Internal Revenue Code if such Obligation were a liability for purposes of Section 752 of the Internal Revenue Code) and (E) the Gross Liability Value of any Obligations assumed (or deemed assumed) by the Company from a Member that would not otherwise be taken into account under Section 7.1(b)(i)(A)752). The Capital Accounts shall also be increased or decreased (IA) to reflect a revaluation of Company property and Obligations pursuant to paragraphs paragraph (b) and (f) of the definition of Carrying Value and (IIB) upon the exercise of any noncompensatory non-compensatory warrant pursuant to the requirements of Treasury Regulation Regulations Sections 1.704-1(b)(2)(iv)(d)(4) and 1.704-1(b)(2)(iv)(s), as such Treasury Regulations may be amended or modified. (ii) Any adjustments of basis of Company property provided for under Code Sections 734 and 743 of the Internal Revenue Code and comparable provisions of state law (resulting from an election under Code Section 754 of the Internal Revenue Code or comparable provisions of state law) shall not affect the Capital Accounts of the Members (unless otherwise required by applicable Treasury Regulations), and the Members’ Capital Accounts shall be debited or credited pursuant to the terms of this Section 7.1 8.1 as if no such election had been made. (iii) Capital Accounts shall be adjusted, in a manner consistent with this Section 7.18.1, to reflect any adjustments in items of Company income, gain, loss or deduction (including Simulated Depletion, Simulated Gain and Simulated Loss) that result from amended returns filed by the Company or pursuant to an agreement by the Company with the Internal Revenue Service or a final court decision. (iv) The allocation of basis prescribed by Section 613A(c)(7)(D) of the Internal Revenue Code and provided for in Section 4.3(b) and each Member’s separately computed depletion deductions shall not reduce such Member’s Capital Account, but such Member’s Capital Account shall be decreased by its allocable share of Simulated Depletion. The Simulated Basis of each oil and gas property shall be allocated to each Member in accordance with such Member’s Capital Interest Percentage as of the time such oil and gas property is acquired by the Company (and any additions to such Simulated Basis resulting from expenditures required to be capitalized in such Simulated Basis shall be allocated among the Members in a manner designed to cause the Members’ proportionate shares of such Simulated Basis to be in accordance with their Capital Interest Percentages as determined at the time of any such additions), and shall be reallocated among the Members in accordance with the Members’ Capital Interest Percentages as determined immediately following the occurrence of an event giving rise to an adjustment to the Carrying Values of the Company’s oil and gas properties pursuant to clause (b) of the definition of Carrying Value. Simulated Depletion with respect to each separate oil and gas property shall be allocated to the Members in proportion to their respective shares of the Simulated Basis in the related property. No Member’s Capital Account shall be decreased, however, by Simulated Depletion deductions attributable to any oil and gas property to the extent such deductions exceed such Member’s allocable share of the Company’s remaining Simulated Basis in such property. Any Simulated Gain shall be allocated to the Members and shall increase their respective Capital Accounts in the same manner as an equal amount of gain would have been allocated pursuant to Section 4.1. Any Simulated Loss shall be allocated to the Members and shall reduce their respective Capital Accounts in the same percentages as the basis of the property sold was allocated up to an amount equal to each Member’s share of the Company’s Simulated Basis in such property at the time of such sale. (v) It is the intention of the Members that the Capital Accounts of each Member be kept in the manner required under Treasury Regulation Regulations Section 1.704-1(b)(2)(iv). To the extent any additional adjustment to the Capital Accounts is required by such regulation, the Board is hereby authorized to make such adjustment after notice to the Members. (viv) In accordance with The Board shall have the provisions discretion to adjust the Members’ Capital Accounts to reflect a revaluation of the Company’s properties on its books upon the occurrence of an event specified in Treasury Regulation Regulations Section 1.704-1(b)(2)(iv)(f), upon . If the Board makes a Member’s contribution to the Company of cash or properties in exchange for a Company Interestdetermination that any such adjustment is appropriate, the Capital Accounts of all Members and the Carrying Values of all Company properties and Obligations shall, immediately prior to such issuanceevent, be adjusted upward or downward to reflect any Unrealized Gain or Unrealized Loss attributable to the Company properties and Obligationsproperties, as if such Unrealized Gain or Unrealized Loss had been recognized on an actual Transfer of each such property immediately prior to such contribution event for an amount equal to its Fair Market Value and had been allocated to the Members at such time pursuant to Section 4.1 and Section 4.2. (viivi) Any Person who acquires a Company Interest directly from a Member, or whose Company Interest shall be increased by means of a Transfer to it of all or part of the Company Interest of another Member, shall have a Capital Account (including a credit for all Capital Contributions made by such Member Transferring such Company Interest) which includes the Capital Account balance of the Company Interest or portion thereof so acquired or Transferred.

Capital Accounts, Books and Records. (a) The Company shall keep books of account for the Company in accordance with the terms of this Agreement. Such books shall be maintained at the principal office of the Company. (b) An individual capital account (the “Capital Account”) shall be maintained by the Company for each Member as provided below: (i) The Capital Account of each Member shall, except as otherwise provided herein, be increased by (A) the amount of cash and the fair market value Fair Market Value of any property contributed to the Company by such Member (net of the Gross Liability Value of any Obligations liabilities secured by such contributed property that the Company is considered to assume or take subject to under Section 752 of the Internal Revenue Code), (B) and by such Member’s share of the Net Profits of the Company and special allocations of income or gain under Section 4.2, and (C) the Gross Liability Value of any Obligations assumed (or deemed assumed) by a Member from the Company that would not otherwise be taken into account under Section 7.1(b)(i)(D), and shall be decreased by (D) such Member’s share of the Net Losses of the Company and special allocations of deduction or deductions of loss under Section 4.2 and by the amount of cash or the fair market value Fair Market Value of any property distributed to such Member (net of the Gross Liability Value of any Obligations liabilities secured by such distributed property that such Member is considered to assume or take subject to under Code Section 752 of the Internal Revenue Code or would be considered to have assumed or taken subject to for purposes of Section 752 of the Internal Revenue Code if such Obligation were a liability for purposes of Section 752 of the Internal Revenue Code) and (E) the Gross Liability Value of any Obligations assumed (or deemed assumed) by the Company from a Member that would not otherwise be taken into account under Section 7.1(b)(i)(A)752). The Capital Accounts shall also be increased or decreased (IA) to reflect a revaluation of Company property and Obligations pursuant to paragraphs paragraph (b) and (f) of the definition of Carrying Value and (IIB) upon the exercise of any noncompensatory non-compensatory warrant pursuant to the requirements of Treasury Regulation Regulations Sections 1.704-1(b)(2)(iv)(d)(4) and 1.704-1(b)(2)(iv)(s), as such Treasury Regulations may be amended or modified. (ii) Any adjustments of basis of Company property provided for under Code Sections 734 and 743 of the Internal Revenue Code and comparable provisions of state law (resulting from an election under Code Section 754 of the Internal Revenue Code or comparable provisions of state law) shall not affect the Capital Accounts of the Members (unless otherwise required by applicable Treasury Regulations), and the Members’ Capital Accounts shall be debited or credited pursuant to the terms of this Section 7.1 8.1 as if no such election had been made. (iii) Capital Accounts shall be adjusted, in a manner consistent with this Section 7.18.1, to reflect any adjustments in items of Company income, gain, loss or deduction (including Simulated Depletion, Simulated Gain and Simulated Loss) that result from amended returns filed by the Company or pursuant to an agreement by the Company with the Internal Revenue Service or a final court decision. (iv) The allocation of basis prescribed by Section 613A(c)(7)(D) of the Internal Revenue Code and provided for in Section 4.3(b) and each Member’s separately computed depletion deductions shall not reduce such Member’s Capital Account, but such Member’s Capital Account shall be decreased by its allocable share of Simulated Depletion. The Simulated Basis of each oil and gas property shall be allocated to each Member in accordance with such Member’s Capital Interest Percentage as of the time such oil and gas property is acquired by the Company (and any additions to such Simulated Basis resulting from expenditures required to be capitalized in such Simulated Basis shall be allocated among the Members in a manner designed to cause the Members’ proportionate shares of such Simulated Basis to be in accordance with their Capital Interest Percentages as determined at the time of any such additions), and shall be reallocated among the Members in accordance with the Members’ Capital Interest Percentages as determined immediately following the occurrence of an event giving rise to an adjustment to the Carrying Values of the Company’s oil and gas properties pursuant to clause (b) of the definition of Carrying Value. Simulated Depletion with respect to each separate oil and gas property shall be allocated to the Members in proportion to their respective shares of the Simulated Basis in the related property. No Member’s Capital Account shall be decreased, however, by Simulated Depletion deductions attributable to any oil and gas property to the extent such deductions exceed such Member’s allocable share of the Company’s remaining Simulated Basis in such property. Any Simulated Gain shall be allocated to the Members and shall increase their respective Capital Accounts in the same manner as an equal amount of gain would have been allocated pursuant to Section 4.1. Any Simulated Loss shall be allocated to the Members and shall reduce their respective Capital Accounts in the same percentages as the basis of the property sold was allocated up to an amount equal to each Member’s share of the Company’s Simulated Basis in such property at the time of such sale. (v) It is the intention of the Members that the Capital Accounts of each Member be kept in the manner required under Treasury Regulation Regulations Section 1.704-1(b)(2)(iv). To the extent any additional adjustment to the Capital 50 Accounts is required by such regulation, the Board is hereby authorized to make such adjustment after notice to the Members. (viv) In accordance with The Board, by Super-Majority Board Approval, shall have the provisions discretion to adjust the Members’ Capital Accounts to reflect a revaluation of the Company’s properties on its books upon the occurrence of an event specified in Treasury Regulation Regulations Section 1.704-1(b)(2)(iv)(f). If the Board, upon by Super-Majority Board Approval, makes a Member’s contribution to the Company of cash or properties in exchange for a Company Interestdetermination that any such adjustment is appropriate, the Capital Accounts of all Members and the Carrying Values of all Company properties and Obligations shall, immediately prior to such issuanceevent, be adjusted upward or downward to reflect any Unrealized Gain or Unrealized Loss attributable to the Company properties and Obligationsproperties, as if such Unrealized Gain or Unrealized Loss had been recognized on an actual Transfer of each such property immediately prior to such contribution event for an amount equal to its Fair Market Value and had been allocated to the Members at such time pursuant to Section 4.1 and Section 4.2. (viivi) Any Person who acquires a Company Interest directly from a Member, or whose Company Interest shall be increased by means of a Transfer to it of all or part of the Company Interest of another Member, shall have a Capital Account (including a credit for all Capital Contributions made by such Member Transferring such Company Interest) which includes the Capital Account balance of the Company Interest or portion thereof so acquired or Transferred.

Capital Accounts, Books and Records. (a) The Company General Partner shall keep books of account for the Company Partnership in accordance with the terms of this Agreement. Such books shall be maintained at the principal office of the CompanyPartnership. (b) An individual capital account (the “Capital Account”) shall be maintained by the Company Partnership for each Member Partner as provided below: (i) The Capital Account capital account of each Member Partner shall, except as otherwise provided herein, be increased by (A) the amount of cash and credited by such Partner's Capital Contributions when made, (B) credited by the fair market value of any property contributed to the Company Partnership by such Member Partner (net of the Gross Liability Value of any Obligations liabilities secured by such contributed property that the Company Partnership is considered to assume or take subject to under Section 752 of the Internal Revenue Code), (BC) such Member’s share credited with the amount of any item of taxable income or gain and the Net Profits amount of the Company and special allocations any item of income or gain under exempt from tax (ii) The allocation of basis prescribed by Section 4.2, and (C613A(c)(7)(D) the Gross Liability Value of any Obligations assumed (or deemed assumed) by a Member from the Company that would not otherwise be taken into account under Section 7.1(b)(i)(D), and shall be decreased by (D) such Member’s share of the Net Losses of the Company and special allocations of deduction or loss under Section 4.2 and by the amount of cash or the fair market value of any property distributed to such Member (net of the Gross Liability Value of any Obligations secured by such distributed property that such Member is considered to assume or take subject to under Section 752 of the Internal Revenue Code or and provided for in Section 4.4(b) and each Partner's separately computed depletion deductions shall not reduce such Partner's capital account, but such Partner's capital account shall be decreased by an amount equal to the product of the depletion deductions that would otherwise be considered allocable to have assumed or taken subject to for purposes the Partnership in the absence of Section 752 613A(c)(7)(D) of the Internal Revenue Code if (computed without regard to any limitations which theoretically could apply to any Partner) times such Obligation were a liability for purposes of Section 752 Partner's percentage share of the Internal Revenue Code) and adjusted basis of the property (E) the Gross Liability Value of any Obligations assumed (or deemed assumed) by the Company from a Member that would not otherwise be taken into account determined under Section 7.1(b)(i)(A4.4(b)) with respect to which such depletion is claimed (herein called "Simulated Depletion"). The Capital Accounts Partnership's basis in any oil or gas property as adjusted from time to time for the Simulated Depletion allocable to all Partners (and where the context requires, each Partner's allocable share thereof, which share shall also be increased determined in the same manner as the allocation of basis prescribed in Section 4.4(b)) is herein called "Simulated Basis". No Partner's capital account shall be decreased, however, by Simulated Depletion deductions attributable to any depletable property to the extent such deductions exceed such Partner's allocable share of the Partnership's remaining Simulated Basis in such property. The Partnership shall compute simulated gain ("Simulated Gain") or decreased simulated loss (I"Simulated Loss") attributable to reflect the sale or other disposition of a revaluation depletable property based on the difference between the amount realized from such sale or other disposition and the Simulated Basis of Company property such property, as theretofore adjusted. Any Simulated Gain shall be allocated to the Partners and Obligations shall increase their respective capital accounts in the same manner as the amount realized from such sale or other disposition in excess of Simulated Basis shall have been allocated pursuant to paragraphs (b) Section 4.4(b). Any Simulated Loss shall be allocated to the Partners and (f) shall reduce their respective capital accounts in the same percentages as the costs of the definition property sold were allocated up to an amount equal to each Partner's share of Carrying Value and (II) upon the exercise Partnership's Simulated Basis in such property at the time of any noncompensatory warrant pursuant to the requirements of Treasury Regulation Sections 1.704-1(b)(2)(iv)(d)(4) and 1.704-1(b)(2)(iv)(s)such sale. (iiiii) Any adjustments of basis of Company Partnership property provided for under Sections 734 and 743 of the Internal Revenue Code and comparable provisions of state law (resulting from an election under Section 754 of the Internal Revenue Code or comparable provisions of state law) and any election by an individual Partner under Section 59(e)(4) of the Internal Revenue Code to amortize such Partner's share of intangible drilling and development costs shall not affect the Capital Accounts capital accounts of the Members Partners (unless otherwise required by applicable Treasury Regulations), and the Members’ Capital Accounts Partners' capital accounts shall be debited or credited pursuant to the terms of this Section 7.1 as if no such election had been made. (iiiiv) Capital Accounts accounts shall be adjusted, in a manner consistent with this Section 7.1, to reflect any adjustments in items of Company Partnership income, gain, loss or deduction (including Simulated Depletion, Simulated Gain and Simulated Loss) that result from amended returns filed by the Company Partnership or pursuant to an agreement by the Company Partnership with the Internal Revenue Service or a final court decision. (ivv) The allocation In the case of basis prescribed property contributed to the Partnership by Section 613A(c)(7)(D) a Partner, and in the case of any revaluation of the Internal Revenue Code and provided for in Section 4.3(b) and each Member’s separately computed depletion deductions shall not reduce such Member’s Capital AccountPartners' capital accounts as required under applicable Treasury Regulations, but such Member’s Capital Account the Partners' capital accounts shall be decreased by its allocable share debited or credited for items of depreciation, cost recovery, Simulated Depletion. The Simulated Basis of each oil , amortization and gas property shall be allocated to each Member in accordance with such Member’s Capital Interest Percentage as of the time such oil and gas property is acquired by the Company (and any additions to such Simulated Basis resulting from expenditures required to be capitalized in such Simulated Basis shall be allocated among the Members in a manner designed to cause the Members’ proportionate shares of such Simulated Basis to be in accordance with their Capital Interest Percentages as determined at the time of any such additions), and shall be reallocated among the Members in accordance with the Members’ Capital Interest Percentages as determined immediately following the occurrence of an event giving rise to an adjustment to the Carrying Values of the Company’s oil and gas properties pursuant to clause (b) of the definition of Carrying Value. Simulated Depletion gain or loss with respect to each separate oil and gas any such contributed or revalued property shall be allocated to the Members in proportion to their respective shares of the Simulated Basis in the related property. No Member’s Capital Account shall be decreased, however, by Simulated Depletion deductions attributable to any oil and gas property to the extent such deductions exceed such Member’s allocable share of the Company’s remaining Simulated Basis in such property. Any Simulated Gain shall be allocated to the Members and shall increase their respective Capital Accounts computed in the same manner as an equal amount of gain such items would have been allocated pursuant to Section 4.1. Any Simulated Loss shall be allocated to computed if the Members and shall reduce their respective Capital Accounts in the same percentages as the adjusted tax basis of the such property sold was allocated up to an amount were equal to each Member’s share its fair market value on the date of its contribution or revaluation, in lieu of the Company’s Simulated Basis capital account adjustments provided above for such items, all in such property at the time of such saleaccordance with Treasury Regulation Section 1.704-1(b)(2)(iv)(g). (vvi) It is the intention of the Members Partners that the Capital Accounts capital accounts of each Member Partner be kept in the manner required under Treasury Regulation Section 1.704-1(b)(2)(iv). To the extent any additional adjustment to the Capital Accounts capital accounts is required by such regulation, the Board General Partner is hereby authorized to make such adjustment after notice to the MembersLimited Partners. (vi) In accordance with the provisions of Treasury Regulation Section 1.704-1(b)(2)(iv)(f), upon a Member’s contribution to the Company of cash or properties in exchange for a Company Interest, the Capital Accounts of all Members and the Carrying Values of all Company properties and Obligations shall, immediately prior to such issuance, be adjusted upward or downward to reflect any Unrealized Gain or Unrealized Loss attributable to the Company properties and Obligations, as if such Unrealized Gain or Unrealized Loss had been recognized immediately prior to such contribution and had been allocated to the Members at such time pursuant to Section 4.1 and Section 4.2. (vii) Any Person who acquires a Company Interest directly from a Member, or whose Company Interest shall be increased by means of a Transfer to it of all or part of the Company Interest of another Member, shall have a Capital Account (including a credit for all Capital Contributions made by such Member Transferring such Company Interest) which includes the Capital Account balance of the Company Interest or portion thereof so acquired or Transferred.

Capital Accounts, Books and Records. (a) The Company Except as may otherwise be required by this Agreement, the Manager shall keep books of account for the Company in accordance with generally accepted accounting principles consistently applied in accordance with the terms of this Agreement. Such books shall be maintained at the principal United States office of the CompanyCompany and shall be maintained by the Manager for review by the Members during the term of the Company and for a period of five years thereafter. The calendar year shall be selected as the accounting year of the Company and the books of account shall be maintained on an accrual basis. (b) An individual capital account (the “Capital Account”) shall be maintained by the Company for each Member as provided below: (i) The Capital Account capital account of each Member shall, except as otherwise provided herein, be increased by (A) the amount of cash and credited by such Member's Capital Contributions when made, (B) credited by the fair market value of any property contributed to the Company by such Member (net of the Gross Liability Value of any Obligations liabilities secured by such contributed property that the Company is considered to assume or take subject to under Section 752 of the Internal Revenue Code), (BC) such Member’s share credited with the amount of any item of taxable income or gain and the Net Profits amount of the Company and special allocations any item of income or gain under exempt from tax allocated to such Member, (D) credited with the Member's share of Simulated Gain as provided in paragraph (ii) of this Section 4.28.1(b), (E) debited by the amount of any item of tax deduction or loss allocated to such Member, (F) debited with the Member's share of Simulated Loss and Simulated Depletion as provided in paragraph (ii) of this Section 8.1(b), (G) debited by such Member's allocable share of expenditures of the Company not deductible in computing the Company's taxable income and not properly chargeable as capital expenditures, including any non-deductible book amortizations of capitalized costs, and (CH) the Gross Liability Value of any Obligations assumed (or deemed assumed) by a Member from the Company that would not otherwise be taken into account under Section 7.1(b)(i)(D), and shall be decreased by (D) such Member’s share of the Net Losses of the Company and special allocations of deduction or loss under Section 4.2 and debited by the amount of cash or the fair market value of any property distributed to such Member (net of the Gross Liability Value of any Obligations liabilities secured by such distributed property that such Member is considered to assume or take subject to under Section 752 of the Internal Revenue Code Code). Immediately prior to any distribution of assets by the Company that is not pursuant to a liquidation of the Company or all or any portion of a Member's interest therein, the Members' capital accounts shall be adjusted by (X) assuming that the distributed assets were sold by the Company for cash at their respective fair market values as of the date of distribution by the Company and (Y) crediting or debiting each Member's capital account with its respective share of the hypothetical gains or losses, including Simulated Gains and Simulated Losses, resulting from such assumed sales in the same manner as each such capital account would be considered debited or credited for gains or losses on actual sales of such assets. Notwithstanding the foregoing sentence, the Company shall not distribute any property in kind to have assumed or taken subject to for purposes any Member except as provided in Section 10.3. (ii) The allocation of basis prescribed by Section 752 613A(c)(7)(D) of the Internal Revenue Code if and provided for in Section 4.3(b) and each Member's separately computed depletion deductions shall not reduce such Obligation were a liability for purposes Member's capital account, but such Member's capital account shall be decreased by an amount equal to the product of the depletion deductions that would otherwise be allocable to the Company in the absence of Section 752 613A(c)(7)(D) of the Internal Revenue CodeCode (computed without regard to any limitations which theoretically could apply to any Member) and times such Member's percentage share of the adjusted basis of the property (E) the Gross Liability Value of any Obligations assumed (or deemed assumed) by the Company from a Member that would not otherwise be taken into account determined under Section 7.1(b)(i)(A4.3(b)) with respect to which such depletion is claimed (herein called "Simulated Depletion"). The Capital Accounts Company's basis in any Depletable Property as adjusted from time to time for the Simulated Depletion allocable to all Members (and where the context requires, each Member's allocable share thereof, which share shall also be increased determined in the same manner as the allocation of basis prescribed in Section 4.3(b)) is herein called "Simulated Basis". No Member's capital account shall be decreased, however, by Simulated Depletion deductions attributable to any Depletable Property to the extent such deductions exceed such Member's allocable share of the Company's remaining Simulated Basis in such property. The Company shall compute simulated gain ("Simulated Gain") or decreased simulated loss (I"Simulated Loss") attributable to reflect the sale or other disposition of a revaluation Depletable Property based on the difference between the amount realized from such sale or other disposition and the Simulated Basis of Company property such property, as theretofore adjusted. Any Simulated Gain shall be allocated to the Members and Obligations shall increase their respective capital accounts in the same manner as the amount realized from such sale or other disposition in excess of Simulated Basis shall have been allocated pursuant to paragraphs (b) Section 4.3(b). Any Simulated Loss shall be allocated to the Members and (f) shall reduce their respective capital accounts in the same percentages as the costs of the definition property sold were allocated up to an amount equal to each Member's share of Carrying Value and (II) upon the exercise Company's Simulated Basis in such property at the time of any noncompensatory warrant pursuant to the requirements of Treasury Regulation Sections 1.704-1(b)(2)(iv)(d)(4) and 1.704-1(b)(2)(iv)(s)such sale. (iiiii) Any adjustments of basis of Company property provided for under Sections 734 and 743 of the Internal Revenue Code and comparable provisions of state law (resulting from an election under Section 754 of the Internal Revenue Code or comparable provisions of state law) and any election by an individual Member under Section 59(e)(4) of the Internal Revenue Code to amortize such Member's share of intangible drilling and development costs shall not affect the Capital Accounts capital accounts of the Members (unless otherwise required by applicable Treasury Regulations), and the Members’ Capital Accounts ' capital accounts shall be debited or credited pursuant to the terms of this Section 7.1 8.1 as if no such election had been made. (iiiiv) Capital Accounts accounts shall be adjusted, in a manner consistent with this Section 7.18.1, to reflect any adjustments in items of Company income, gain, loss or deduction (including Simulated Depletion, Simulated Gain and Simulated Loss) that result from amended returns filed by the Company or pursuant to an agreement by the Company with the Internal Revenue Service or a final court decision. (ivv) The allocation In the case of basis prescribed property contributed to the Company by Section 613A(c)(7)(D) of a Member, the Internal Revenue Code and provided for in Section 4.3(b) and each Member’s separately computed depletion deductions shall not reduce such Member’s Capital Account, but such Member’s Capital Account Members' capital accounts shall be decreased by its allocable share debited or credited for items of depreciation, cost recovery, Simulated Depletion. The , amortization and gain or loss (including Simulated Basis of each oil and gas Gain or Simulated Loss) with respect to such property shall be allocated to each Member computed in accordance with such Member’s Capital Interest Percentage as of the time such oil and gas property is acquired by the Company (and any additions to such Simulated Basis resulting from expenditures required to be capitalized in such Simulated Basis shall be allocated among the Members in a manner designed to cause the Members’ proportionate shares of such Simulated Basis to be in accordance with their Capital Interest Percentages as determined at the time of any such additionsTreasury Regulation § 1.704-1(b)(2)(iv)(g), and shall be reallocated among the Members in accordance with the Members’ Capital Interest Percentages as determined immediately following the occurrence of an event giving rise to an adjustment to the Carrying Values of the Company’s oil and gas properties pursuant to clause (b) of the definition of Carrying Value. Simulated Depletion with respect to each separate oil and gas property shall be allocated to the Members in proportion to their respective shares of the Simulated Basis in the related property. No Member’s Capital Account shall be decreased, however, by Simulated Depletion deductions attributable to any oil and gas property to the extent such deductions exceed such Member’s allocable share of the Company’s remaining Simulated Basis in such property. Any Simulated Gain shall be allocated to the Members and shall increase their respective Capital Accounts in the same manner as an equal amount of gain would have been allocated pursuant to Section 4.1. Any Simulated Loss shall be allocated to the Members and shall reduce their respective Capital Accounts in the same percentages as the basis of the property sold was allocated up to an amount equal to each Member’s share of the Company’s Simulated Basis in such property at the time of such sale. (vvi) It is the intention of the Members that the Capital Accounts capital accounts of each Member be kept in the manner required under Treasury Regulation Section § 1.704-1(b)(2)(iv) and Treasury Regulation § 1.704-1(b)(4). To the extent any additional adjustment to the Capital Accounts capital accounts is required by such regulationregulations, the Board Manager is hereby authorized to make such adjustment after notice to the Members. (vi) In accordance with the provisions of Treasury Regulation Section 1.704-1(b)(2)(iv)(f), upon a Member’s contribution to the Company of cash or properties in exchange for a Company Interest, the Capital Accounts of all Members and the Carrying Values of all Company properties and Obligations shall, immediately prior to such issuance, be adjusted upward or downward to reflect any Unrealized Gain or Unrealized Loss attributable to the Company properties and Obligations, as if such Unrealized Gain or Unrealized Loss had been recognized immediately prior to such contribution and had been allocated to the Members at such time pursuant to Section 4.1 and Section 4.2. (vii) Any Person who acquires a Company Interest directly from a Member, or whose Company Interest shall be increased by means of a Transfer to it of all or part of the Company Interest of another Member, shall have a Capital Account (including a credit for all Capital Contributions made by such Member Transferring such Company Interest) which includes the Capital Account balance of the Company Interest or portion thereof so acquired or Transferred.

Capital Accounts, Books and Records. (a) The Company shall keep books of account for the Company in accordance with the terms of this Agreement. Such books shall be maintained at the principal office of the Company. (b) An individual capital account (the “Capital Account”) shall be maintained by the Company for each Member as provided below: (i) The Capital Account of each Member shall, except as otherwise provided herein, be increased by (A) the amount of cash and the fair market value of any property contributed to the Company by such Member (net of the Gross Liability Value of any Obligations liabilities secured by such contributed property that the Company is considered to assume or take subject to under Section 752 of the Internal Revenue Code), (B) and by such Member’s share of the Net Profits of the Company and special allocations of income or gain under Section 4.2, and (C) the Gross Liability Value of any Obligations assumed (or deemed assumed) by a Member from the Company that would not otherwise be taken into account under Section 7.1(b)(i)(D), and shall be decreased by (D) such Member’s share of the Net Losses of the Company and special allocations of deduction or loss under Section 4.2 and by the amount of cash or the fair market value of any property distributed to such Member (net of the Gross Liability Value of any Obligations liabilities secured by such distributed property that such Member is considered to assume or take subject to under Section 752 of the Internal Revenue Code or would be considered to have assumed or taken subject to for purposes of Section 752 of the Internal Revenue Code if such Obligation were a liability for purposes of Section 752 of the Internal Revenue Code) and (E) the Gross Liability Value of any Obligations assumed (or deemed assumed) by the Company from a Member that would not otherwise be taken into account under Section 7.1(b)(i)(A)). The Capital Accounts shall also be increased or decreased (IA) to reflect a revaluation of Company property and Obligations pursuant to paragraphs paragraph (b) and (f) of the definition of Carrying Value and (IIB) upon the exercise of any noncompensatory warrant pursuant to the requirements of Proposed Treasury Regulation Sections 1.704-1(b)(2)(iv)(d)(4) and 1.704-1(b)(2)(iv)(s), as such Proposed Treasury Regulations may be amended or modified, including upon the issuance of temporary or final Treasury Regulations. (ii) Any adjustments of basis of Company property provided for under Sections 734 and 743 of the Internal Revenue Code and comparable provisions of state law (resulting from an election under Section 754 of the Internal Revenue Code or comparable provisions of state law) shall not affect the Capital Accounts of the Members (unless otherwise required by applicable Treasury Regulations), and the Members’ Capital Accounts shall be debited or credited pursuant to the terms of this Section 7.1 as if no such election had been made. (iii) Capital Accounts shall be adjusted, in a manner consistent with this Section 7.1, to reflect any adjustments in items of Company income, gain, loss or deduction (including Simulated Depletion, Simulated Gain and Simulated Loss) that result from amended returns filed by the Company or pursuant to an agreement by the Company with the Internal Revenue Service or a final court decision. (iv) The allocation Immediately before the exercise of basis prescribed by Section 613A(c)(7)(D) an Incentive Option to acquire Units (the “Exercise”), the Capital Accounts of the Internal Revenue Code existing Members shall be adjusted by assuming that the assets of the Company were sold by the Company for cash at their respective fair market values as of the date of Exercise, and provided for in Section 4.3(b) and crediting or debiting each Member’s separately computed depletion deductions shall not reduce Capital Account with its respective share of the hypothetical gains and losses resulting from such assumed sales in the same manner as gains or losses on actual sales of such properties would be credited or debited to such Member’s Capital Account. Thereafter, but such Member’s Capital Account the Company shall be decreased by its allocable share of Simulated Depletion. The Simulated Basis of each oil and gas property shall be allocated deemed to each Member in accordance with such Member’s Capital Interest Percentage as of the time such oil and gas property is acquired by the Company (and any additions to such Simulated Basis resulting from expenditures required to be capitalized in such Simulated Basis shall be allocated among the Members in a manner designed to cause the Members’ proportionate shares of such Simulated Basis to be in accordance with their Capital Interest Percentages as determined at the time of any such additions), and shall be reallocated among the Members in accordance with the Members’ Capital Interest Percentages as determined immediately following the occurrence of an event giving rise to an adjustment have distributed to the Carrying Values of person exercising the Company’s oil and gas properties pursuant to clause option (bthe “Optionee”) of the definition of Carrying Value. Simulated Depletion with respect to each separate oil and gas property shall be allocated to the Members cash in proportion to their respective shares of the Simulated Basis in the related property. No Member’s Capital Account shall be decreased, however, by Simulated Depletion deductions attributable to any oil and gas property to the extent such deductions exceed such Member’s allocable share of the Company’s remaining Simulated Basis in such property. Any Simulated Gain shall be allocated to the Members and shall increase their respective Capital Accounts in the same manner as an equal amount of gain would have been allocated pursuant to Section 4.1. Any Simulated Loss shall be allocated to the Members and shall reduce their respective Capital Accounts in the same percentages as the basis of the property sold was allocated up to an amount equal to each Member’s share the Distributed Asset Amount (as defined below) and, thereafter, the Optionee shall be deemed to have contributed such cash and the Exercise price to the Company. “Distributed Asset Amount” shall be the excess of (a) the product of (x) the sum of the Company’s Simulated Basis in such property at Exercise price plus the time of such sale. (v) It is the intention fair market value of the Members that the Capital Accounts of each Member be kept in the manner required under Treasury Regulation Section 1.704-1(b)(2)(iv). To the extent any additional adjustment to the Capital Accounts is required by such regulation, the Board is hereby authorized to make such adjustment after notice to the Members. (vi) In accordance with the provisions of Treasury Regulation Section 1.704-1(b)(2)(iv)(f), upon a Member’s contribution to the Company of cash or properties in exchange for a Company Interest, the Capital Accounts of all Members and the Carrying Values of all Company properties and Obligations shall, immediately prior to such issuance, be adjusted upward or downward to reflect any Unrealized Gain or Unrealized Loss attributable to the Company properties and Obligations, as if such Unrealized Gain or Unrealized Loss had been recognized immediately prior to such contribution and had been allocated to the Members at such time pursuant to Section 4.1 and Section 4.2. (vii) Any Person who acquires a Company Interest directly from a Member, or whose Company Interest shall be increased by means of a Transfer to it of all or part net assets of the Company Interest immediately before the Exercise, multiplied by (y) the percentage obtained by dividing the number of another MemberUnits issued to the Optionee by the total number of Units outstanding (taking into account the Units issued to the Optionee), shall have a Capital Account over (including a credit for all Capital Contributions made by such Member Transferring such Company Interestb) which includes the Capital Account balance of the Company Interest or portion thereof so acquired or TransferredExercise price.

Capital Accounts, Books and Records. (a) The Company shall keep books of account for the Company in accordance with the terms of this Agreement. Such books shall be maintained at the principal office of the Company. (b) An individual capital account (the “Capital Account”) shall be maintained by the Company for each Member as provided below: (i) The Capital Account of each Member shall, except as otherwise provided herein, be increased by (A) the amount of cash and the fair market value of any property contributed to the Company by such Member (net of the Gross Liability Value of any Obligations liabilities secured by such contributed property that the Company is considered to assume or take subject to under Section 752 of the Internal Revenue Code), (B) and by such Member’s share of the Net Profits of the Company and special allocations of income or gain under Section 4.24.1, Section 4.2 and (C) the Gross Liability Value of any Obligations assumed (or deemed assumed) by a Member from the Company that would not otherwise be taken into account under Section 7.1(b)(i)(D7.1(b)(v), and shall be decreased by (D) such Member’s share of the Net Losses of the Company and special allocations of deduction or loss under Section 4.1, Section 4.2 and Section 7.1(b)(v) and by the amount of cash or the fair market value of any property distributed to such Member (net of the Gross Liability Value of any Obligations liabilities secured by such distributed property that such Member is considered to assume or take subject to under Section 752 of the Internal Revenue Code or would be considered to have assumed or taken subject to for purposes of Section 752 of the Internal Revenue Code if such Obligation were a liability for purposes of Section 752 of the Internal Revenue Code) and (E) the Gross Liability Value of any Obligations assumed (or deemed assumed) by the Company from a Member that would not otherwise be taken into account under Section 7.1(b)(i)(A)). The Capital Accounts shall also be increased or decreased (IA) to reflect a revaluation of Company property and Obligations pursuant to paragraphs paragraph (b) and (f) of the definition of Carrying Value and (IIB) upon the exercise of any noncompensatory warrant pursuant to the requirements of Treasury Regulation Sections 1.704-1(b)(2)(iv)(d)(4) and 1.704-1(b)(2)(iv)(s). (ii) Any adjustments of basis of Company property provided for under Sections 734 and 743 of the Internal Revenue Code and comparable provisions of state law (resulting from an election under Section 754 of the Internal Revenue Code or comparable provisions of state law) shall not affect the Capital Accounts of the Members (unless otherwise required by applicable Treasury Regulations), Regulations or herein) and the Members’ Capital Accounts shall be debited or credited pursuant to the terms of this Section 7.1 as if no such election had been made. To the extent an adjustment to the adjusted tax basis of any Company asset pursuant to Section 734 of the Internal Revenue Code is required pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(m)(4) to be taken into account in determining Capital Accounts as a result of a distribution other than in liquidation of a Member’s Company Interest, the amount of such adjustment shall be treated either as an item of gain (if the adjustment increases the basis of the asset) or an item of loss (if the adjustment decreases the basis of the asset) from the disposition of the asset. (iii) Capital Accounts shall be adjusted, in a manner consistent with this Section 7.1, to reflect any adjustments in items of Company income, gain, loss or deduction (including Simulated Depletion, Simulated Gain and Simulated Loss) that result from amended returns filed by the Company or pursuant to an agreement by the Company with the Internal Revenue Service or a final court decision. (iv) The allocation Immediately before the exercise of basis prescribed by Section 613A(c)(7)(D) an Incentive Option to acquire Units (the “Exercise”), the Capital Accounts of the Internal Revenue Code existing Members shall be adjusted by assuming that the assets of the Company were sold by the Company for cash at their respective fair market values as of the date of Exercise, and provided for in Section 4.3(b) and crediting or debiting each Member’s separately computed depletion deductions shall not reduce Capital Account with its respective share of the hypothetical gains and losses resulting from such assumed sales in the same manner as gains or losses on actual sales of such properties would be credited or debited to such Member’s Capital Account. Thereafter, but such Member’s Capital Account the Company shall be decreased by its allocable share of Simulated Depletion. The Simulated Basis of each oil and gas property shall be allocated deemed to each Member in accordance with such Member’s Capital Interest Percentage as of the time such oil and gas property is acquired by the Company (and any additions to such Simulated Basis resulting from expenditures required to be capitalized in such Simulated Basis shall be allocated among the Members in a manner designed to cause the Members’ proportionate shares of such Simulated Basis to be in accordance with their Capital Interest Percentages as determined at the time of any such additions), and shall be reallocated among the Members in accordance with the Members’ Capital Interest Percentages as determined immediately following the occurrence of an event giving rise to an adjustment have distributed to the Carrying Values of person exercising the Company’s oil and gas properties pursuant to clause option (bthe “Optionee”) of the definition of Carrying Value. Simulated Depletion with respect to each separate oil and gas property shall be allocated to the Members cash in proportion to their respective shares of the Simulated Basis in the related property. No Member’s Capital Account shall be decreased, however, by Simulated Depletion deductions attributable to any oil and gas property to the extent such deductions exceed such Member’s allocable share of the Company’s remaining Simulated Basis in such property. Any Simulated Gain shall be allocated to the Members and shall increase their respective Capital Accounts in the same manner as an equal amount of gain would have been allocated pursuant to Section 4.1. Any Simulated Loss shall be allocated to the Members and shall reduce their respective Capital Accounts in the same percentages as the basis of the property sold was allocated up to an amount equal to each Member’s share the Distributed Asset Amount (as defined below) and, thereafter, the Optionee shall be deemed to have contributed such cash and the Exercise price to the Company. “Distributed Asset Amount” shall be the excess of (a) the product of (x) the sum of the Company’s Simulated Basis in such property at Exercise price plus the time of such sale. (v) It is the intention fair market value of the Members that the Capital Accounts of each Member be kept in the manner required under Treasury Regulation Section 1.704-1(b)(2)(iv). To the extent any additional adjustment to the Capital Accounts is required by such regulation, the Board is hereby authorized to make such adjustment after notice to the Members. (vi) In accordance with the provisions of Treasury Regulation Section 1.704-1(b)(2)(iv)(f), upon a Member’s contribution to the Company of cash or properties in exchange for a Company Interest, the Capital Accounts of all Members and the Carrying Values of all Company properties and Obligations shall, immediately prior to such issuance, be adjusted upward or downward to reflect any Unrealized Gain or Unrealized Loss attributable to the Company properties and Obligations, as if such Unrealized Gain or Unrealized Loss had been recognized immediately prior to such contribution and had been allocated to the Members at such time pursuant to Section 4.1 and Section 4.2. (vii) Any Person who acquires a Company Interest directly from a Member, or whose Company Interest shall be increased by means of a Transfer to it of all or part net assets of the Company Interest immediately before the Exercise, multiplied by (y) the percentage obtained by dividing the number of another MemberUnits issued to the Optionee by the total number of Units outstanding (taking into account the Units issued to the Optionee), shall have a Capital Account over (including a credit for all Capital Contributions made by such Member Transferring such Company Interestb) which includes the Capital Account balance of the Company Interest or portion thereof so acquired or TransferredExercise price.