EXHIBIT
      4.2

    


    EXHIBIT
      (A)

     

    FORM
      OF

     

    AMENDED
      AND RESTATED CERTIFICATE

     

    AND
      AGREEMENT OF LIMITED PARTNERSHIP 

     

    FOR

     

    ATLAS
      RESOURCES PUBLIC #17-2008(B) L.P.

     

    DATED
      MARCH 25, 2008


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    TABLE
      OF CONTENTS

    


    
      	 	 	 	 	
              Page
                #

            
	
              I.

            	 	
              FORMATION

            	 	 
	 	 	 	 	 
	 	
              1.01

            	
              Formation

            	 	
              1

            
	 	
              1.02

            	
              Certificate
                of Limited partnership

            	 	
              1

            
	 	
              1.03

            	
              Name,
                Principal Office and Residence

            	 	
              1

            
	 	
              1.04

            	
              Purpose

            	 	
              1

            
	 	 	 	 	 
	
              II.

            	 	
              DEFINITION
                OF TERMS

            	 	 
	 	 	 	 	 
	 	
              2.01

            	
              Definitions

            	 	
              2

            
	 	 	 	 	 
	
              III.

            	 	
              SUBSCRIPTIONS
                AND FURTHER CAPITAL CONTRIBUTIONS

            	 	 
	 	 	 	 	 
	 	
              3.01

            	
              Designation
                of Managing General Partner and Participants 

            	 	
              13

            
	 	
              3.02

            	
              Participants

            	 	
              13

            
	 	
              3.03

            	
              Subscriptions
                to the Partnership

            	 	
              14

            
	 	
              3.04

            	
              Capital
                Contributions of the Managing General Partner

            	 	
              16

            
	 	
              3.05

            	
              Payment
                of Subscriptions

            	 	
              17

            
	 	
              3.06

            	
              Partnership
                Funds

            	 	
              18

            
	 	 	 	 	 
	
              IV.

            	 	
              CONDUCT
                OF OPERATIONS

            	 	 
	 	 	 	 	 
	 	
              4.01

            	
              Acquisition
                of Leases

            	 	
              19

            
	 	
              4.02

            	
              Conduct
                of Operations

            	 	
              21

            
	 	
              4.03

            	
              General
                Rights and Obligations of the Participants and Restricted and Prohibited
                Transactions

            	 	
              26

            
	 	
              4.04

            	
              Designation,
                Compensation and Removal of Managing General Partner and Removal
                of
                Operator

            	 	
              39

            
	 	
              4.05

            	
              Indemnification
                and Exoneration

            	 	
              44

            
	 	
              4.06

            	
              Other
                Activities

            	 	
              47

            
	 	 	 	 	 
	
              V.

            	 	
              PARTICIPATION
                IN COSTS AND REVENUES, CAPITAL ACCOUNTS, ELECTIONS AND
                DISTRIBUTIONS

            	 	 
	 	 	 	 	 
	 	
              5.01

            	
              Participation
                in Costs and Revenues

            	 	
              48

            
	 	
              5.02

            	
              Capital
                Accounts and Allocations Thereto

            	 	
              52

            
	 	
              5.03

            	
              Allocation
                of Income, Deductions and Credits

            	 	
              54

            
	 	
              5.04

            	
              Elections

            	 	
              57

            
	 	
              5.05

            	
              Distributions

            	 	
              57

            


    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    
      	 	 	 	 	
              Page
                #

            
	
              VI.

            	 	
              TRANSFER
                OF UNITS

            	 	 
	 	 	 	 	 
	 	
              6.01

            	
              Transferability
                of Units

            	 	
              59

            
	 	
              6.02

            	
              Special
                Restrictions on Transfers of Units by Participants

            	 	
              60

            
	 	
              6.03

            	
              Presentment

            	 	
              62

            
	 	
              6.04

            	
              Redemption
                of Units from Non-citizen Assignees

            	 	
              64

            
	 	 	 	 	 
	
              VII.

            	 	
              DURATION,
                DISSOLUTION, AND WINDING UP

            	 	 
	 	 	 	 	 
	 	
              7.01

            	
              Duration

            	 	
              64

            
	 	
              7.02

            	
              Dissolution
                and Winding Up

            	 	
              64

            
	 	 	 	 	 
	
              VIII.

            	 	
              MISCELLANEOUS
                PROVISIONS

            	 	 
	 	 	 	 	 
	 	
              8.01

            	
              Notices

            	 	
              65

            
	 	
              8.02

            	
              Time

            	 	
              66

            
	 	
              8.03

            	
              Applicable
                Law

            	 	
              66

            
	 	
              8.04

            	
              Agreement
                in counterparts

            	 	
              66

            
	 	
              8.05

            	
              Amendment

            	 	
              67

            
	 	
              8.06

            	
              Additional
                Partners

            	 	
              67

            
	 	
              8.07

            	
              Legal
                Effect

            	 	
              67

            


    

    


    
      	
              EXHIBITS

            	 	 
	 	 	 	 	 
	 	
              EXHIBIT
                (I-A) 

            	
              Form
                of Managing General Partner Signature Page

            	 	 
	 	 	 	 	 
	 	
              EXHIBIT
                (I-B) 

            	
              Form
                of subscription Agreement

            	 	 
	 	 	 	 	 
	 	
              EXHIBIT
                (II) 

            	
              Form
                of Drilling and Operating Agreement for Atlas Resources Public #17-2008
                (B) L.P.

            	 	 


    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    AMENDED
      AND RESTATED CERTIFICATE AND AGREEMENT OF LIMITED 

    PARTNERSHIP
      FOR ATLAS RESOURCES PUBLIC #17-2008(B) L.P.

     

    THIS
      AMENDED AND RESTATED CERTIFICATE AND AGREEMENT OF LIMITED PARTNERSHIP
      (“AGREEMENT”), amending and restating the original Certificate of Limited
      Partnership, is made and entered into as of the date set forth below, by and
      among Atlas Resources, LLC, referred to as “Atlas” or the “Managing General
      Partner,” and the remaining parties from time to time signing a Subscription
      Agreement for Limited Partner Units, these parties sometimes referred to as
      “Limited Partners,” or for Investor General Partner Units, these parties
      sometimes referred to as “Investor General Partners.” 

     

    ARTICLE
      I

    FORMATION

     

    1.01. Formation.
      The
      parties have formed a limited partnership under the Delaware Revised Uniform
      Limited Partnership Act on the terms and conditions set forth in this
      Agreement.

     

    1.02. Certificate
      of Limited Partnership.
      This
      document is not only an agreement among the parties, but also is the Amended
      and
      Restated Certificate and Agreement of Limited Partnership of the Partnership.
      This document shall be filed or recorded in the public offices required under
      applicable law or deemed advisable in the discretion of the Managing General
      Partner. Amendments to the certificate of limited partnership shall be filed
      or
      recorded in the public offices required under applicable law or deemed advisable
      in the discretion of the Managing General Partner.

     

    1.03. Name,
      Principal Office and Residence. 

     

    1.03(a).
      Name.
      The name
      of the Partnership is Atlas Resources Public #17-2008(B) L.P. 

     

    1.03(b). Residence.
      The
      residence of the Managing General Partner is its principal place of business
      at
      Westpointe Corporate Center One, 1550 Coraopolis Heights Road, 2nd Floor, Moon
      Township, Pennsylvania 15108, which shall also serve as the principal place
      of
      business of the Partnership. 

     

    The
      residence of each Participant shall be as set forth on the Subscription
      Agreement executed by the Participant. 

     

    All
      addresses shall be subject to change on notice to the parties. 

     

    1.03(c).
      Agent
      for Service of Process.
      The name
      and address of the agent for service of process shall be Andrew M. Lubin at
      110
      S. Poplar Street, Suite 101, Wilmington, Delaware 19801.

     

    1.04.
      Purpose.
      The
      Partnership shall engage in all phases of the natural gas and oil business.
      This
      includes, without limitation, exploration for, development and production of
      natural gas and oil on the terms and conditions set forth below and any other
      proper purpose under the Delaware Revised Uniform Limited Partnership Act.
      

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    The
      Managing General Partner may not, without the affirmative vote of Participants
      whose Units equal a majority of the total Units, do the following:

     

    
      	 	
              (i)
                

            	
              change
                the investment and business purpose of the Partnership; or
                

            


    

     

    
      	 	
              (ii)
                

            	
              cause
                the Partnership to engage in activities outside the stated business
                purposes of the Partnership through joint ventures with other
                entities.

            


    

     

    ARTICLE
      II

    DEFINITION
      OF TERMS

     

    2.01.
      Definitions.
      As used
      in this Agreement, the following terms shall have the meanings set forth
      below:

     

    
      	 	
              1.

            	
              “Administrative
                Costs” means all customary and routine expenses incurred by the Sponsor
                for the conduct of Partnership administration, including: in-house
                legal,
                finance, in-house accounting, secretarial, travel, office rent, telephone,
                data processing and other items of a similar nature. Administrative
                Costs
                shall be limited as follows:

            


    

     

    
      	 	
              (i)
                

            	
              no
                Administrative Costs charged shall be duplicated under any other
                category
                of expense or cost; and

            


    

     

    
      	 	
              (ii)
                

            	
              no
                portion of the salaries, benefits, compensation or remuneration of
                controlling persons of the Managing General Partner shall be reimbursed
                by
                the Partnership as Administrative Costs. Controlling persons include
                directors, executive officers and those holding a 5% or more equity
                interest in the Managing General Partner or a person having power
                to
                direct or cause the direction of the Managing General Partner, whether
                through the ownership of voting securities, by contract, or otherwise.
                

            


    

     

    
      	 	
              2.

            	
              “Administrator”
                means the official or agency administering the securities laws of
                a
                state.

            


    

     

    
      	 	
              3.

            	
              “Affiliate”
                means with respect to a specific
                person:

            


    

     

    
      	 	
              (i)
                

            	
              any
                person directly or indirectly owning, controlling, or holding with
                power
                to vote 10% or more of the outstanding voting securities of the specified
                person; 

            


    

     

    
      	 	
              (ii)
                

            	
              any
                person 10% or more of whose outstanding voting securities are directly
                or
                indirectly owned, controlled, or held with power to vote, by the
                specified
                person; 

            


    

     

    
      	 	
              (iii)
                

            	
              any
                person directly or indirectly controlling, controlled by, or under
                common
                control with the specified person; 

            


    

     

    
      	 	
              (iv)
                

            	
              any
                officer, director, trustee or partner of the specified person; and
                

            


    

     

    
      	 	
              (v)
                

            	
              if
                the specified person is an officer, director, trustee or partner,
                any
                person for which the person acts in any such
                capacity.

            


    

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    
      	 	
              4.

            	
              “Agreement”
                means this Amended and Restated Certificate and Agreement of Limited
                Partnership, including all exhibits to this
                Agreement.

            


    

     

    
      	 	
              5.

            	
              “Anthem
                Securities” means Anthem Securities, Inc., whose principal executive
                offices are located at Westpointe Corporate Center One, 1550 Coraopolis
                Heights Road, 2nd Floor, P.O. Box 926, Moon Township, Pennsylvania
                15108-0926.

            


    

     

    
      	 	
              6.

            	
              “Assessments”
                means additional amounts of capital which may be mandatorily required
                of
                or paid voluntarily by a Participant beyond his subscription
                commitment.

            


    

     

    
      	 	
              7.

            	
              “Atlas”
                means Atlas Resources, LLC, a Pennsylvania limited liability company,
                whose principal executive offices are located at Westpointe Corporate
                Center One, 1550 Coraopolis Heights Road, 2nd Floor, Moon Township,
                Pennsylvania 15108, and any successor entity to Atlas Resources,
                LLC,
                whether by merger or any other form of reorganization, or the acquisition
                of all, or substantially all, of Atlas Resources, LLC’s
                assets.

            


    

     

    
      	 	
              8.

            	
              “Atlas
                Resources Public #17-2007 Program” means the offering of Units in a series
                of up to three limited partnerships entitled Atlas Resources Public
                #17-2007(A) L.P., Atlas Resources Public #17-2008(B) L.P. and Atlas
                Resources Public #17-2008(C) L.P.

            


    

     

    
      	 	
              9.

            	
              “Capital
                Account” or “account” means the account established for each party,
                maintained as provided in §5.02 and its subsections.
                

            


    

     

    
      	 	
              10.

            	
              “Capital
                Contribution” means the amount agreed to be contributed to the Partnership
                by a Partner pursuant to §§3.04 and 3.05 and their
                subsections.

            


    

     

    
      	 	
              11.

            	
              “Carried
                Interest” means an equity interest in the Partnership issued to a Person
                without consideration, in the form of cash or tangible property,
                in an
                amount proportionately equivalent to that received from the
                Participants.

            


    

     

    
      	 	
              12.

            	
              “Code”
                means the Internal Revenue Code of 1986, as
                amended.

            


    

     

    
      	 	
              13.

            	
              “Cost,”
                when used with respect to the sale or transfer of property to the
                Partnership, means:

            


    

     

    
      	 	
              (i)
                

            	
              the
                sum of the prices paid by the seller or transferor to an unaffiliated
                person for the property, including bonuses;


            


    

     

    
      	 	
              (ii)
                

            	
              title
                insurance or examination costs, brokers’ commissions, filing fees,
                recording costs, transfer taxes, if any, and like charges in connection
                with the acquisition of the property;


            


    

     

    
      	 	
              (iii)
                

            	
              a
                pro rata portion of the seller’s or transferor’s actual necessary and
                reasonable expenses for seismic and geophysical services; and
                

            


    

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (iv)
                

            	
              rentals
                and ad valorem taxes paid by the seller or transferor for the property
                to
                the date of its transfer to the buyer, interest and points actually
                incurred on funds used to acquire or maintain the property, and the
                portion of the seller’s or transferor’s reasonable, necessary and actual
                expenses for geological, geophysical, engineering, drafting, accounting,
                legal and other like services allocated to the property cost in conformity
                with generally accepted accounting principles and industry standards,
                except for expenses in connection with the past drilling of wells
                which
                are not producers of sufficient quantities of oil or gas to make
                commercially reasonable their continued operations, and provided
                that the
                expenses enumerated in this subsection (iv) shall have been incurred
                not
                more than 36 months before the sale or transfer to the Partnership.
                

            


    

     

    “Cost,”
      when used with respect to services, means the reasonable, necessary and actual
      expense incurred by the seller on behalf of the Partnership in providing the
      services, determined in accordance with generally accepted accounting
      principles.

     

    As
      used
      elsewhere, “Cost” means the price paid by the seller in an arm’s-length
      transaction.

     

    
      	 	
              14.

            	
              “Dealer-Manager”
                means Anthem Securities, Inc., an Affiliate of the Managing General
                Partner, the broker/dealer which will manage the offering and sale
                of the
                Units.

            


    

     

    
      	 	
              15.

            	
              “Development
                Well” means a well drilled within the proved area of a natural gas or oil
                reservoir to the depth of a stratigraphic Horizon known to be productive.
                

            


    

     

    
      	 	
              16.

            	
              “Direct
                Costs” means all actual and necessary costs directly incurred for the
                benefit of the Partnership and generally attributable to the goods
                and
                services provided to the Partnership by parties other than the Sponsor
                or
                its Affiliates. Direct Costs may not include any cost otherwise classified
                as Organization and Offering Costs, Administrative Costs, Intangible
                Drilling Costs, Tangible Costs, Operating Costs or costs related
                to the
                Leases, but may include the cost of services provided by the Sponsor
                or
                its Affiliates if the services are provided pursuant to written contracts
                and in compliance with §4.03(d)(7) or pursuant to the Managing General
                Partner’s role as Tax Matters
                Partner.

            


    

     

    
      	 	
              17.

            	
              “Distribution
                Interest” means an undivided interest in the Partnership’s assets after
                payments to the Partnership’s creditors or the creation of a reasonable
                reserve therefore, in the ratio the positive balance of a party’s Capital
                Account bears to the aggregate positive balance of the Capital Accounts
                of
                all of the parties determined after taking into account all Capital
                Account adjustments for the taxable year during which liquidation
                occurs
                (other than those made pursuant to liquidating distributions or
                restoration of deficit Capital Account balances). Provided, however,
                after
                the Capital Accounts of all of the parties have been reduced to zero,
                the
                interest in the remaining Partnership assets shall equal a party’s
                interest in the related Partnership revenues as set forth in §5.01 and its
                subsections.

            


    

     

    
      	 	
              18.

            	
              “Drilling
                and Operating Agreement” means the proposed Drilling and Operating
                Agreement between the Managing General Partner or an Affiliate as
                Operator, and the Partnership as Developer, a copy of the proposed
                form of
                which is attached to this Agreement as Exhibit (II).
                

            


    

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    
      	 	
              19.

            	
              “Exploratory
                Well” means a well drilled to: 

            


    

     

    
      	 	
              (i)
                

            	
              find
                commercially productive hydrocarbons in an unproved area;
                

            


    

     

    
      	 	
              (ii)
                

            	
              find
                a new commercially productive Horizon in a field previously found
                to be
                productive of hydrocarbons at another Horizon; or
                

            


    

     

    
      	 	
              (iii)
                

            	
              significantly
                extend a known prospect.

            


    

     

    
      	 	
              20.

            	
              “Farmout”
                means an agreement by the owner of the leasehold or Working Interest
                to
                assign his interest in certain acreage or well to the assignees,
                retaining
                some interest such as an Overriding Royalty Interest, an oil and
                gas
                payment, offset acreage or other type of interest, subject to the
                drilling
                of one or more specific wells or other performance as a condition
                of the
                assignment.

            


    

     

    
      	 	
              21.

            	
              “Final
                Terminating Event” means any one of the following:
                

            


    

     

    
      	 	
              (i)
                

            	
              the
                expiration of the Partnership’s fixed term;


            


    

     

    
      	 	
              (ii)
                

            	
              notice
                to the Participants by the Managing General Partner of its election
                to
                terminate the Partnership’s affairs;


            


    

     

    
      	 	
              (iii)
                

            	
              notice
                by the Participants to the Managing General Partner of their similar
                election through the affirmative vote of Participants whose Units
                equal a
                majority of the total Units; or 

            


    

     

    
      	 	
              (iv)
                

            	
              the
                termination of the Partnership under §708(b)(1)(A) of the Code or the
                Partnership ceases to be a going
                concern.

            


    

     

    
      	 	
              22.

            	
              “Horizon”
                means a zone of a particular formation; that part of a formation
                of
                sufficient porosity and permeability to form a petroleum
                reservoir.

            


    

     

    
      	 	
              23.

            	
              “Independent
                Expert” means a person with no material relationship to the Sponsor or its
                Affiliates who is qualified and in the business of rendering opinions
                regarding the value of natural gas and oil properties based on the
                evaluation of all pertinent economic, financial, geologic and engineering
                information available to the Sponsor or its
                Affiliates.

            


    

     

    
      	 	
              24.

            	
              “Initial
                Closing Date” means the date after the minimum amount of subscription
                proceeds has been received when subscription proceeds are first withdrawn
                from the escrow account.

            


    

     

    
      	 	
              25.

            	
              “Intangible
                Drilling Costs” or “Non-Capital Expenditures” means those expenditures
                associated with property acquisition and the drilling and completion
                of
                natural gas and oil wells that under present law are generally accepted
                as
                fully deductible currently for federal income tax purposes. This
                includes:
                

            


    

     

    
      	 	
              (i)
                

            	
              all
                expenditures made for any well before production in commercial quantities
                for wages, fuel, repairs, hauling, supplies and other costs and expenses
                incident to and necessary for drilling the well and preparing the
                well for
                production of natural gas or oil, that are currently deductible pursuant
                to Section 263(c) of the Code and Treasury Reg. Section 1.612-4,
                and are
                generally termed "intangible drilling and development costs";
                

            


    

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (ii)
                

            	
              the
                expense of plugging and abandoning any well before a completion attempt;
                and

            


    

     

    
      	 	
              (iii)
                

            	
              the
                costs (other than Tangible Costs and Lease acquisition costs) to
                re-enter
                and deepen an existing well, complete the well to deeper reservoirs,
                or
                plug and abandon the well if it is nonproductive from the targeted
                deeper
                reservoirs.

            


    

     

    
      	 	
              26.

            	
              “Interim
                Closing Date” means those date(s) after the Initial Closing Date, but
                before the Offering Termination Date, that the Managing General Partner,
                in its sole discretion, applies additional subscription proceeds
                to
                additional Partnership activities, including drilling
                activities.

            


    

     

    
      	 	
              27.

            	
              “Investor
                General Partners” means:

            


    

     

    
      	 	
              (i)

            	
              the
                Persons signing the Subscription Agreement as Investor General Partners;
                and 

            


    

     

    
      	 	
              (ii)

            	
              the
                Managing General Partner to the extent of any optional subscription
                as an
                Investor General Partner under §3.03(b)(1).


            


    

     

    All
      Investor General Partners shall be of the same class and have the same
      rights.

     

    
      	 	
              28.

            	
              “Landowner’s
                Royalty Interest” means an interest in production, or its proceeds, to be
                received free and clear of all costs of development, operation, or
                maintenance, reserved by a landowner on the creation of a
                Lease.

            


    

     

    
      	 	
              29.

            	
              “Leases”
                means full or partial interests in natural gas and oil leases, oil
                and
                natural gas mineral rights, fee rights, licenses, concessions, or
                other
                rights under which the holder is entitled to explore for and produce
                oil
                and/or natural gas, and includes any contractual rights to acquire
                any
                such interest.

            


    

     

    
      	 	
              30.

            	
              “Limited
                Partners” means:

            


    

     

    
      	 	
              (i)
                

            	
              the
                Persons signing the Subscription Agreement as Limited Partners;
                

            


    

     

    
      	 	
              (ii)
                

            	
              the
                Managing General Partner to the extent of any optional subscription
                as a
                Limited Partner under §3.03(b)(1); 

            


    

     

    
      	 	
              (iii)
                

            	
              the
                Investor General Partners on the conversion of their Investor General
                Partner Units to Limited Partner Units pursuant to §6.01(b); and
                

            


    

     

    
      	 	
              (iv)
                

            	
              any
                other Persons who are admitted to the Partnership as additional or
                substituted Limited Partners. 

            


    

     

    Except
      as
      provided in §3.05(b), with respect to the required additional Capital
      Contributions of Investor General Partners, all Limited Partners shall be of
      the
      same class and have the same rights.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    
      	 	
              31.

            	
              “Managing
                General Partner” means:

            


    

     

    
      	 	
              (i)
                

            	
              Atlas;
                or 

            


    

     

    
      	 	
              (ii)
                

            	
              any
                Person admitted to the Partnership as a general partner, other than
                as an
                Investor General Partner, who is designated to exclusively supervise
                and
                manage the operations of the
                Partnership.

            


    

     

    
      	 	
              32.

            	
              “Managing
                General Partner Signature Page” means an execution and subscription
                instrument in the form attached as Exhibit (I-A) to this Agreement,
                which
                is incorporated in this Agreement by
                reference.

            


    

     

    
      	 	
              33.

            	
              “Offering
                Termination Date” means the date after the minimum amount of subscription
                proceeds has been received on which the Managing General Partner
                determines, in its sole discretion that the Partnership’s subscription
                period is closed and the acceptance of subscriptions ceases, which
                may be
                any date up to and including December 31, 2008.


            


    

     

    Notwithstanding
      the above, the Offering Termination Date may not extend beyond the time that
      subscriptions for the maximum number of Units set forth in §3.03(c)(1) have been
      received and accepted by the Managing General Partner.

     

    
      	 	
              34.

            	
              “Operating
                Costs” means expenditures made and costs incurred in producing and
                marketing natural gas or oil from completed wells. These costs include,
                but are not limited to: 

            


    

     

    
      	 	
              (i)
                

            	
              labor,
                fuel, repairs, hauling, materials, supplies, utility charges and
                other
                costs incident to or related to producing and marketing natural gas
                and
                oil;

            


    

     

    
      	 	
              (ii)
                

            	
              ad
                valorem and severance taxes; 

            


    

     

    
      	 	
              (iii)
                

            	
              insurance
                and casualty loss expense; and 

            


    

     

    
      	 	
              (iv)
                

            	
              compensation
                to well operators or others for services rendered in conducting these
                operations. 

            


    

     

    Operating
      Costs also include reworking, workover, subsequent equipping, and similar
      expenses relating to any well, the Managing General Partner’s gathering fees set
      forth in §4.04(a)(2)(d) and the reimbursement of the Managing General Partner’s
      Administrative Costs set forth in §4.04(a)(2)(c); but do not include the costs
      to re-enter and deepen an existing well, complete the well to deeper formations
      or reservoirs, or plug and abandon the well if it is nonproductive from the
      targeted deeper formations or reservoirs.

     

    
      	 	
              35.

            	
              “Operator”
                means Atlas, as operator of Partnership Wells in Pennsylvania, and
                Atlas
                or an Affiliate as Operator of Partnership Wells in other areas of
                the
                United States.

            


    

     

    
      	 	
              36.

            	
              “Organization
                and Offering Costs” means all costs of organizing and selling the offering
                including, but not limited to:

            


    

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (i)
                

            	
              total
                underwriting and brokerage discounts and commissions, including fees
                of
                the underwriters’ attorneys, the Dealer-Manager fee, sales commissions and
                reimbursement for bona fide due diligence expenses;
                

            


    

     

    
      	 	
              (ii)
                

            	
              expenses
                for printing, engraving, mailing, salaries of employees while engaged
                in
                sales activities, charges of transfer agents, registrars, trustees,
                escrow
                holders, depositaries, engineers and other experts;
                

            


    

     

    
      	 	
              (iii)
                

            	
              expenses
                of qualification of the sale of the securities under federal and
                state
                law, including taxes and fees, accountants’ and attorneys’ fees; and
                

            


    

     

    
      	 	
              (iv)
                

            	
              other
                front-end fees.

            


    

     

    
      	 	
              37.

            	
              “Organization
                Costs” means all costs of organizing the offering including, but not
                limited to:

            


    

     

    
      	 	
              (i)

            	
              expenses
                for printing, engraving, mailing, salaries of employees while engaged
                in
                sales activities, charges of transfer agents, registrars, trustees,
                escrow
                holders, depositaries, engineers and other experts;
                

            


    

     

    
      	 	
              (ii)

            	
              expenses
                of qualification of the sale of the securities under federal and
                state
                law, including taxes and fees, accountants’ and attorneys’ fees; and
                

            


    

     

    
      	 	
              (iii)

            	
              other
                front-end fees.

            


    

     

    
      	 	
              38.

            	
              “Overriding
                Royalty Interest” means an interest in the natural gas and oil produced
                under a Lease, or the proceeds from the sale thereof, carved out
                of the
                Working Interest, to be received free and clear of all costs of
                development, operation, or
                maintenance.

            


    

     

    
      	 	
              39.

            	
              “Participants”
                means:

            


    

     

    
      	 	
              (i)
                

            	
              the
                Managing General Partner to the extent of its optional subscription
                under
                §3.03(b)(1); 

            


    

     

    
      	 	
              (ii)
                

            	
              the
                Limited Partners; and 

            


    

     

    
      	 	
              (iii)
                

            	
              the
                Investor General Partners.

            


    

     

    
      	 	
              40.

            	
              “Partners”
                means:

            


    

     

    
      	 	
              (i)
                

            	
              the
                Managing General Partner;

            


    

     

    
      	 	
              (ii)
                

            	
              the
                Investor General Partners; and 

            


    

     

    
      	 	
              (iii)
                

            	
              the
                Limited Partners.

            


    

     

    
      	 	
              41.

            	
              “Partnership”
                means Atlas Resources Public #17-2008(B)
                L.P.

            


    

     

    
      	 	
              42.

            	
              “Partnership
                Net Production Revenues” means gross revenues after deduction of the
                related Operating Costs, Direct Costs, Administrative Costs and all
                other
                Partnership costs not specifically
                allocated.

            


    

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    
      	 	
              43.

            	
              “Partnership
                Well” means a well, some portion of the revenues from which is received
                by
                the Partnership.

            


    

     

    
      	 	
              44.

            	
              “Person”
                means a natural person, partnership, corporation, association, trust
                or
                other legal entity.

            


    

     

    
      	 	
              45.

            	
              “Production
                Purchase” or “Income” Program means any program whose investment objective
                is to directly acquire, hold, operate, and/or dispose of producing
                oil and
                gas properties. Such a program may acquire any type of ownership
                interest
                in a producing property, including, but not limited to, working interests,
                royalties, or production payments. A program which spends at least
                90% of
                capital contributions and funds borrowed (excluding offering and
                organizational expenses) in the above described activities is presumed
                to
                be a production purchase or income
                program.

            


    

     

    
      	 	
              46.

            	
              “Program”
                means one or more limited or general partnerships or other investment
                vehicles formed, or to be formed, for the primary purpose
                of:

            


    

     

    
      	 	
              (i)
                

            	
              exploring
                for natural gas, oil and other hydrocarbon substances; or
                

            


    

     

    
      	 	
              (ii)
                

            	
              investing
                in or holding any property interests which permit the exploration
                for or
                production of hydrocarbons or the receipt of such production or its
                proceeds.

            


    

     

    
      	 	
              47.

            	
              “Prospect”
                means an area covering lands which are believed by the Managing General
                Partner to contain subsurface structural or stratigraphic conditions
                making it susceptible to the accumulations of hydrocarbons in commercially
                productive quantities at one or more Horizons. The area, which may
                be
                different for different Horizons, shall
                be:

            


    

     

    
      	 	
              (i)
                

            	
              designated
                by the Managing General Partner in writing before the conduct of
                Partnership operations; and 

            


    

     

    
      	 	
              (ii)
                

            	
              enlarged
                or contracted from time to time on the basis of subsequently acquired
                information to define the anticipated limits of the associated hydrocarbon
                reserves and to include all acreage encompassed therein.
                

            


    

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

     

    If
      the
      well to be drilled by the Partnership is to a Horizon containing Proved
      Reserves, then a “Prospect” for a particular Horizon may be limited to the
      minimum area permitted by state law or local practice, whichever is applicable,
      to protect against drainage from adjacent wells. Subject to the foregoing
      sentence, “Prospect” shall be deemed the drilling or spacing unit for the
      Clinton/Medina geological formation, the Mississippian and/or Upper Devonian
      Sandstone reservoirs and the Marcellus Shale reservoir in Ohio, Pennsylvania,
      and New York and the Mississippian Carbonate or the Devonian Shale reservoirs
      in
      Anderson, Campbell, Morgan, Roane and Scott Counties, Tennessee. 

     

    
      	 	
              48.

            	
              “Prospectus”
                means the Prospectus included in the Registration Statement on Form
                S-1
                relating to the offer and sale of the Units which has been filed
                with the
                Securities and Exchange Commission (the “Commission”) under the Securities
                Act of 1933, as amended (the “Act”). As used in this Agreement, the terms
                “Prospectus” and “Registration Statement” refer solely to the Prospectus
                and Registration Statement, as amended, described above, except
                that:

            


    

     

    
      	 	
              (i)

            	
              from
                and after the date on which any post-effective amendment to the
                Registration Statement is declared effective by the Commission, the
                term
                “Registration Statement” shall refer to the Registration Statement as
                amended by that post-effective amendment, and the term “Prospectus” shall
                refer to the Prospectus then forming a part of the Registration Statement;
                and

            


    

     

    
      	 	
              (ii)

            	
              if
                the Prospectus filed pursuant to Rule 424(b) or (c) promulgated by
                the
                Commission under the Act differs from the Prospectus on file with
                the
                Commission at the time the Registration Statement or any post-effective
                amendment thereto shall have become effective, the term “Prospectus” shall
                refer to the Prospectus filed pursuant thereto from and after the
                date on
                which it was filed. 

            


    

     

    
      	 	
              49.

            	
              “Proved
                Developed Oil and Gas Reserves” means reserves that can be expected to be
                recovered through existing wells with existing equipment and operating
                methods. Additional oil and gas expected to be obtained through the
                application of fluid injection or other improved recovery techniques
                for
                supplementing the natural forces and mechanisms of primary recovery
                should
                be included as “proved developed reserves” only after testing by a pilot
                project or after the operation of an installed program has confirmed
                through production response that increased recovery will be
                achieved.

            


    

     

    
      	 	
              50.

            	
              “Proved
                Reserves” means the estimated quantities of crude oil, natural gas, and
                natural gas liquids which geological and engineering data demonstrate
                with
                reasonable certainty to be recoverable in future years from known
                reservoirs under existing economic and operating conditions, i.e.,
                prices and costs as of the date the estimate is made. Prices include
                consideration of changes in existing prices provided only by contractual
                arrangements, but not on escalations based upon future
                conditions.

            


    

     

    
      	 	
              (i)
                

            	
              Reservoirs
                are considered proved if economic producibility is supported by either
                actual production or conclusive formation test. The area of a reservoir
                considered proved includes: 

            


    

     

    
      	 	
              (a)
                

            	
              that
                portion delineated by drilling and defined by gas-oil and/or oil-water
                contacts, if any; and 

            


    

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (b)
                

            	
              the
                immediately adjoining portions not yet drilled, but which can be
                reasonably judged as economically productive on the basis of available
                geological and engineering data. 

            


    

     

    In
      the
      absence of information on fluid contacts, the lowest known structural occurrence
      of hydrocarbons controls the lower proved limit of the reservoir.

     

    
      	 	
              (ii)
                

            	
              Reserves
                which can be produced economically through application of improved
                recovery techniques (such as fluid injection) are included in the
“proved”
                classification when successful testing by a pilot project, or the
                operation of an installed program in the reservoir, provides support
                for
                the engineering analysis on which the project or program was
                based.

            


    

     

    
      	 	
              (iii)
                

            	
              Estimates
                of proved reserves do not include the following:
                

            


    

     

    
      	 	
              (a)
                

            	
              oil
                that may become available from known reservoirs but is classified
                separately as “indicated additional reserves”;


            


    

     

    
      	 	
              (b)
                

            	
              crude
                oil, natural gas, and natural gas liquids, the recovery of which
                is
                subject to reasonable doubt because of uncertainty as to geology,
                reservoir characteristics, or economic factors;


            


    

     

    
      	 	
              (c)
                

            	
              crude
                oil, natural gas, and natural gas liquids, that may occur in undrilled
                prospects; and 

            


    

     

    
      	 	
              (d)
                

            	
              crude
                oil, natural gas, and natural gas liquids that may be recovered from
                oil
                shales, coal, gilsonite and other such
                sources.

            


    

     

    
      	 	
              51.

            	
              “Proved
                Undeveloped Reserves” means reserves that are expected to be recovered
                from either:

            


    

     

    
      	 	
              (i)
                

            	
              new
                wells on undrilled acreage; or 

            


    

     

    
      	 	
              (ii)
                

            	
              from
                existing wells where a relatively major expenditure is required for
                recompletion. 

            


    

     

    Reserves
      on undrilled acreage shall be limited to those drilling units offsetting
      productive units that are reasonably certain of production when drilled. Proved
      reserves for other undrilled units can be claimed only where it can be
      demonstrated with certainty that there is continuity of production from the
      existing productive formation or there is continuity of the reservoir. Under
      no
      circumstances should estimates for proved undeveloped reserves be attributable
      to any acreage for which an application of fluid injection or other improved
      recovery technique is contemplated, unless such techniques have been proved
      effective by actual tests in the area and in the same reservoir.

     

    
      	 	
              52.

            	
              “Roll-Up”
                means a transaction involving the acquisition, merger, conversion
                or
                consolidation, either directly or
                indirectly, of the Partnership and the issuance of securities of
                a Roll-Up
                Entity. The term does not include: 

            


    

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (i)
                

            	
              a
                transaction involving securities of the Partnership that have been
                listed
                for at least 12 months on a national exchange or traded through the
                National Association of Securities Dealers Automated Quotation National
                Market System; or

            


    

     

    
      	 	
              (ii)
                

            	
              a
                transaction involving the conversion to corporate, trust or association
                form of only the Partnership if, as a consequence of the transaction,
                there will be no significant adverse change in any of the following:
                

            


    

     

    
      	 	
              (a)
                

            	
              voting
                rights; 

            


    

     

    
      	 	
              (b)
                

            	
              the
                Partnership’s term of existence; 

            


    

     

    
      	 	
              (c)
                

            	
              the
                Managing General Partner’s compensation; and


            


    

     

    
      	 	
              (d)
                

            	
              the
                Partnership’s investment
                objectives.

            


    

     

    
      	 	
              53.

            	
              “Roll-Up
                Entity” means a partnership, trust, corporation or other entity that would
                be created or survive after the successful completion of a proposed
                roll-up transaction.

            


    

     

    
      	 	
              54.

            	
              “Sales
                Commissions” means all underwriting and brokerage discounts and
                commissions incurred in the sale of Units payable to registered
                broker/dealers, but excluding the
                following:

            


    

     

    
      	 	
              (i)

            	
              the
                2.5% Dealer-Manager fee; and

            


    

     

    
      	 	
              (ii)

            	
              the
                reimbursement for bona fide due diligence
                expenses.

            


    

     

    
      	 	
              55.

            	
              “Selling
                Agents” means the broker/dealers which are selected by the Dealer-Manager
                to participate in the offer and sale of the
                Units.

            


    

     

    
      	 	
              56.

            	
              “Sponsor”
                means any person directly or indirectly instrumental in organizing,
                wholly
                or in part, a program or any person who will manage or is entitled
                to
                manage or participate in the management or control of a
                program.
                The definition includes:

            


    

     

    
      	 	
              (i)
                

            	
              the
                managing and controlling general partner(s) and any other person
                who
                actually controls or selects the person who controls 25% or more
                of the
                exploratory, development or producing activities of the program,
                or any
                segment thereof, even if that person has not entered into a contract
                at
                the time of formation of the program;
                and

            


    

     

    
      	 	
              (ii)
                

            	
              whenever
                the context so requires, the term “sponsor” shall be deemed to include its
                affiliates.

            


    

     

    “Sponsor”
      does not include wholly independent third-parties such as attorneys,
      accountants, and underwriters whose only compensation is for professional
      services rendered in connection with the offering of units. 

     

    
      	 	
              57.

            	
              “Subscription
                Agreement” means an execution and subscription instrument in the form
                attached as Exhibit (I-B) to this Agreement,
                which is incorporated in this Agreement by
                reference.

            


    

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    
      	 	
              58.

            	
              “Tangible
                Costs” or “Capital Expenditures” means those costs associated with
                property acquisition and drilling and completing natural gas and
                oil wells
                which are generally accepted as capital expenditures under the Code.
                This
                includes all of the following: 

            


    

     

    
      	 	
              (i)

            	
              costs
                of equipment, parts and items of hardware used in drilling and completing
                a well; 

            


    

     

    
      	 	
              (ii)

            	
              the
                costs (other than Intangible Drilling Costs and Lease acquisition
                costs)
                to re-enter and deepen an existing well, complete the well to deeper
                reservoirs, or plug and abandon the well if it is nonproductive from
                the
                targeted deeper reservoirs; and 

            


    

     

    
      	 	
              (iii)

            	
              those
                items necessary to deliver acceptable natural gas and oil production
                to
                purchasers to the extent installed downstream
                from the wellhead of any well and which are required to be capitalized
                under the Code and its regulations.

            


    

     

    
      	 	
              59.

            	
              “Tax
                Matters Partner” means
                the Managing General Partner.

            


    

     

    
      	 	
              60.

            	
              “Units”
                or “Units of Participation” means up to 9.1 Limited Partner interests in
                the Partnership and up to 23,645 Investor General Partner interests
                in the
                Partnership, which will be converted to up to 23,645 Limited Partner
                Units
                as set forth in §6.01(b), purchased by Participants in the Partnership
                under the provisions of §3.03 and its subsections,
                including any rights to profits, losses, income, gain, credits,
                deductions, cash distributions or returns of capital or other attributes
                of the Units.

            


    

     

    
      	 	
              61.

            	
              “Working
                Interest” means an interest in a Lease which is subject to some portion of
                the cost of development, operation,
                or
                maintenance of the Lease.

            


    

     

    ARTICLE
      III

    SUBSCRIPTIONS
      AND FURTHER CAPITAL CONTRIBUTIONS

     

    3.01.
      Designation
      of Managing General Partner and Participants.
      Atlas
      shall serve as Managing General Partner of the Partnership. Atlas shall further
      serve as a Participant to the extent of any subscription made by it pursuant
      to
§3.03(b)(1). 

     

    Limited
      Partners and Investor General Partners, including the Managing General Partner
      and its Affiliates to the extent, if any, they purchase Units, shall serve
      as
      Participants. 

     

    3.02.
      Participants.

     

    3.02(a).
      Limited
      Partner at Formation.
      Atlas
      Energy Resources, LLC, as Original Limited Partner, has acquired one Unit and
      has made
      a
      Capital Contribution of $100. On the admission of one or more Limited
      Partners,
      the
      Partnership shall return to the Original Limited Partner its Capital
      Contribution and shall reacquire its Unit. The Original Limited Partner shall
      then cease to be a Limited Partner in the Partnership with respect to that
      Unit.


    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    3.02(b).
      Offering
      of Interests.
      The
      Partnership is authorized to admit to the Partnership at the Initial Closing
      Date, any Interim Closing Date(s), and the Offering Termination Date additional
      Participants whose Subscription Agreements are accepted by the Managing General
      Partner if, after the admission of the additional Participants, the total Units
      sold do not exceed the maximum number of Units set forth in §3.03(c)(1).


     

    3.02(c).
      Admission
      of Participants.
      No
      action or consent by the Participants shall be required for the admission of
      additional Participants pursuant to this Agreement. 

     

    All
      subscribers’ funds shall be held in an interest bearing account or accounts by
      an independent escrow holder and shall not be released to the Partnership until
      the receipt and acceptance of the minimum amount of subscription proceeds set
      forth in §3.03(c)(2). Thereafter, subscriptions may be paid directly to the
      Partnership account.

     

    3.03.
      Subscriptions
      to the Partnership.

     

    3.03(a).
      Subscriptions
      by Participants.

     

    3.03(a)(1).
      Subscription
      Price and Minimum Subscription.
      The
      subscription price of a Unit in the Partnership shall be $10,000, except as
      set
      forth below, and shall be designated on each Participant’s Subscription
      Agreement and payable as set forth in §3.05(b)(1). The minimum subscription per
      Participant shall be one Unit ($10,000). Larger subscriptions shall be accepted
      in $1,000 increments, beginning with $11,000, $12,000, etc.

     

    Notwithstanding
      the foregoing, the subscription price for: 

     

    
      	 	
              (i)
                

            	
              the
                Managing General Partner, its officers, directors, and Affiliates,
                and
                Participants who buy Units through the officers and directors of
                the
                Managing General Partner, shall be reduced by an amount equal to
                the 2.5%
                Dealer-Manager fee, the 7% Sales Commission and the .5% reimbursement
                of
                the Selling Agents’ bona fide due diligence expenses, which shall not be
                paid with respect to those sales; and


            


    

     

    
      	 	
              (ii)
                

            	
              Registered
                Investment Advisors and their clients, and Selling Agents and their
                registered representatives and principals, shall be reduced by an
                amount
                equal to the 7% Sales Commission, which shall not be paid with respect
                to
                those sales.

            


    

     

    No
      more
      than 5% of the total Units in the Partnership shall be sold with the discounts
      described above.

     

    3.03(a)(2).
      Effect
      of Subscription.
      Execution of a Subscription Agreement shall serve as an agreement by the
      Participant to be bound by each and every term of this Agreement.

     

    3.03(b).
      Optional
      Subscriptions for Units by Managing General Partner.

     

    3.03(b)(1).
      Managing
      General Partner’s Optional Subscriptions for Units.
      In
      addition to the Managing General Partner’s required Capital Contributions under
§3.04(a), on the Initial Closing Date the Managing General Partner may subscribe
      under the provisions of §3.03(a) and its subsections for up to 5% of the total
      Units sold in the Partnership as of the Initial Closing Date, which shall not
      be
      applied towards the minimum number of Units required to be sold under
§3.03(c)(2), and, subject to the limitations on voting rights set forth in
§4.03(c)(3), to that extent shall be deemed to be a Participant in the
      Partnership for all purposes under this Agreement.


    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    3.03(b)(2).
      Effect
      of and Evidencing Subscription.
      The
      Managing General Partner has executed a Managing General Partner Signature
      Page
      which:

     

    
      	 	
              (i)
                

            	
              evidences
                the Managing General Partner’s required Capital Contributions under
                §3.04(a); and

            


    

     

    
      	 	
              (ii)
                

            	
              may
                be amended, from time-to-time, to reflect the amount of any optional
                subscriptions for Units as a Participant under §3.03(b)(1).
                

            


    

     

    Execution
      of the Managing General Partner Signature Page serves as an agreement by the
      Managing General Partner to be bound by each and every term of this
      Agreement.

     

    3.03(c).
      Maximum
      and Minimum Number of Units.

     

    3.03(c)(1).
      Maximum
      Number of Units.
      The
      maximum number of Units may not exceed 23,654.1 Units, which is up to
      $236,541,000 of cash subscription proceeds, excluding the subscription discounts
      permitted under §3.03(a)(1). Notwithstanding the foregoing, the maximum number
      of Units in all of the partnerships in the Atlas Resources Public #17-2007
      Program, in the aggregate, shall not exceed 40,000 Units which is up to
      $400,000,000 of cash subscription proceeds excluding the subscription discounts
      permitted under §3.03(a)(1).

     

    3.03(c)(2).
      Minimum
      Number of Units.
      The
      minimum number of Units shall equal at least 200 Units, but in any event not
      less than the number of Units that provides the Partnership with cash
      subscription proceeds of $2,000,000, excluding the subscription discounts
      permitted under §3.03(a)(1). 

     

    If
      subscriptions for the minimum number of Units have not been received and
      accepted at the Offering Termination Date, then all monies deposited by
      subscribers shall be promptly returned to them. They shall receive interest
      earned on their subscription proceeds from the date the monies were deposited
      in
      escrow through the date of refund, without deduction for any fees.

     

    The
      partnership may break escrow and begin its drilling activities, in the Managing
      General Partner’s sole discretion, on receipt and acceptance of the minimum
      subscription proceeds.

     

    3.03(d).
      Acceptance
      of Subscriptions.
      

     

    3.03(d)(1).
      Discretion by the Managing General Partner.
      Acceptance of subscriptions is discretionary with the Managing General Partner.
      The Managing General Partner may reject any subscription for any reason it
      deems
      appropriate. 

     

    3.03(d)(2).
      Time Period in Which to Accept Subscriptions.
      Subscriptions shall be accepted or rejected by the Managing General Partner
      within 30 days of their receipt. If a subscription is rejected, then all of
      the
      subscriber’s funds shall be returned to the subscriber promptly, with interest
      earned and without deduction for any fees. 

     

    3.03(d)(3).
      Admission to the Partnership.
      The
      Participants shall be admitted to the Partnership as follows:

     

    
      	 	
              (i)
                

            	
              not
                later than 15 days after the release from the escrow account of
                Participants’ subscription proceeds to the Partnership;
                or

            


    

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (ii)
                

            	
              if
                a Participant’s subscription proceeds are received by the Partnership
                after the close of the escrow account, then not later than the last
                day of
                the calendar month in which his Subscription Agreement was accepted
                by the
                Managing General Partner.

            


    

     

    3.04.
      Capital
      Contributions of the Managing General Partner.

     

    3.04(a).
      Managing
      General Partner’s Required Capital Contributions.
      The
      Managing General Partner, as a general partner and not as a Participant, is
      required to pay the costs or make the other required Capital Contributions
      charged to it under this Agreement, including contributing to the Partnership
      the Leases which will be drilled by the Partnership on the terms set forth
      in
§4.01(a)(4), in an amount equal to not less than 25%, in the aggregate, of all
      Capital Contributions to the Partnership, at the time the costs are required
      to
      be paid by the Partnership, but no later than December 31, 2009.

     

    3.04(b).
      On
      Liquidation the Managing General Partner Must Contribute Deficit Balance in
      Its
      Capital Account.
      The
      Managing General Partner shall contribute to the Partnership any deficit balance
      in its Capital Account on the occurrence of either of the following
      events:

     

    
      	 	
              (i)
                

            	
              the
                liquidation of the Partnership; or

            


    

     

    
      	 	
              (ii)
                

            	
              the
                liquidation of the Managing General Partner’s interest in the
                Partnership.

            


    

     

    This
      shall be determined after taking into account all adjustments for the
      Partnership’s taxable year during which the liquidation occurs, other than
      adjustments made pursuant to this requirement, by the end of the taxable year
      in
      which the liquidation occurs or, if later, within 90 days after the date of
      the
      liquidation. 

     

    3.04(c).
      Managing
      General Partner’s Partnership Interest for Capital
      Contributions.
      The
      interest of the Managing General Partner, as Managing General Partner and not
      as
      a Participant, in the capital and profits of the Partnership is fully vested
      and
      nonforfeitable as of the date of the formation of the Partnership and is in
      consideration for, and is the only consideration for, it's required Capital
      Contributions to the Partnership. 

     

    3.04(d).
      Managing
      General Partner’s Right to Assign Its Partnership Interest.
      Subject
      to §5.01(b)(4)(a) regarding the Managing General Partner’s subordination
      obligation, the Managing General Partner has the right at any time, in its
      discretion, without the consent of the Participants, and without affecting
      the
      allocation of costs and revenues to the Participants or the Managing General
      Partner’s voting rights under this Agreement, to sell, contribute, exchange or
      otherwise transfer all or any portion of its interest as Managing General
      Partner or as a Participant (if it purchases Units) in the Partnership, or
      any
      interest therein to an Affiliate of the Managing General Partner. In that event,
      except as otherwise may be permitted under this Agreement, if the Affiliated
      transferee of the Managing General Partner’s transferred interest in the
      Partnership does not become a substituted Managing General Partner in the
      Partnership, the Affiliated transferee, as a partner in the Partnership for
      tax
      purposes only, shall have the right to receive the share of the Partnership’s
      profits, losses, income, gains, deductions, credits and depletion allowances,
      or
      items thereof, and cash distributions and returns of capital (including, but
      not
      limited to, cash distributions and returns of capital on dissolution and
      liquidation of the Partnership) to which the Managing General Partner would
      otherwise be entitled under this Agreement with respect to its transferred
      interest in the Partnership. 


    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    Subject
      to the foregoing, the transfer of the Managing General Partner’s interest in the
      Partnership to any of its Affiliates may be made on any terms and conditions
      as
      the Managing General Partner determines, in its discretion, and the Partnership
      and the Participants shall have no right to receive or otherwise share in any
      consideration received by the Managing General Partner from its Affiliates
      for
      the transfer of the Managing General Partner’s interest in the Partnership.


     

    No
      transfer of the Managing General Partner’s interest in the Partnership to its
      Affiliates under this §3.04(d) shall require an accounting by the Managing
      General Partner or the Partnership to the Participants.

     

    3.05.
      Payment
      of Subscriptions.

     

    3.05(a).
      Managing
      General Partner’s Subscriptions.
      The
      Managing General Partner shall pay any optional subscription under §3.03(b)(1)
      as set forth in §3.05(b)(1).

     

    3.05(b).
      Participant
      Subscriptions and Additional Capital Contributions of the Investor General
      Partners. 

     

    3.05(b)(1).
      Payment
      of Subscription Agreements.
      A
      Participant shall pay the subscription amount designated on his Subscription
      Agreement 100% in cash at the time of subscribing. A Participant shall receive
      interest on the amount he pays from the time his subscription proceeds are
      deposited in the escrow account, or a Partnership account after the minimum
      number of Units have been received as provided in §3.06(b), until his
      subscription proceeds are paid by the Partnership to the Managing General
      Partner under the Drilling and Operating Agreement for use in the Partnership’s
      drilling activities. All interest distributions shall be in the ratio that
      the
      number of Units held by each Participant multiplied by the number of days the
      Participant’s subscription proceeds were held in the escrow account, or a
      Partnership account after the minimum number of Units have been received as
      provided in §3.06(b), bears to the sum of that calculation for all Participants
      whose subscription proceeds were paid to the Managing General Partner at the
      same time. 

     

    3.05(b)(2).
      Additional
      Required Capital Contributions of the Investor General
      Partners.
      Investor
      General Partners must make Capital Contributions to the Partnership when called
      by the Managing General Partner, in addition to their subscription amounts,
      for
      their pro rata share of any Partnership obligations and liabilities which are
      recourse to the Investor General Partners and are represented by their ownership
      of Units before the conversion of Investor General Units to Limited Partner
      Units under §6.01(b). 

     

    3.05(b)(3).
      Default
      Provisions.
      The
      failure of an Investor General Partner to timely make a required additional
      Capital Contribution under this section results in his personal liability to
      the
      other Investor General Partners for the amount in default. The remaining
      Investor General Partners, in proportion to their respective number of Units,
      must pay the defaulting Investor General Partner’s share of Partnership
      liabilities and obligations called for by the Managing General Partner. In
      that
      event, the remaining Investor General Partners:

     

    
      	 	
              (i)
                

            	
              shall
                have a first and preferred lien on the defaulting Investor General
                Partner’s interest in the Partnership to secure payment of the amount in
                default plus interest at the legal rate;


            


    

     

    
      	 	
              (ii)
                

            	
              shall
                be entitled to receive 100% of the defaulting Investor General Partner’s
                cash distributions, in proportion to their respective number of Units,
                until the amount in default is recovered in full plus interest at
                the
                legal rate; and 

            


    

     

    
      	 	
              (iii)
                

            	
              may
                commence legal action to collect the amount due plus interest at
                the legal
                rate.

            


    

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

    3.06.
      Partnership
      Funds.

     

    3.06(a).
      Fiduciary
      Duty.
      The
      Managing General Partner has a fiduciary responsibility for the safekeeping
      and
      use of all funds and assets of the Partnership, whether or not in the Managing
      General Partner’s possession or control. The Managing General Partner shall not
      employ, or permit another to employ, the funds and assets of the Partnership
      in
      any manner except for the exclusive benefit of the Partnership. 

     

    Neither
      this Agreement nor any other agreement between the Managing General Partner
      and
      the Partnership shall contractually limit any fiduciary duty owed to the
      Participants by the Managing General Partner under applicable law.

     

    3.06(b).
      Special
      Account After the Receipt of the Minimum Partnership
      Subscriptions.
      Following the receipt of the minimum number of Units and breaking escrow, the
      funds of the Partnership shall be held in a separate interest-bearing account
      maintained for the Partnership and shall not be commingled with funds of any
      other entity.

     

    3.06(c).
      Investment. 

     

    3.06(c)(1).
      Investments
      in Other Entities.
      Partnership funds shall not be invested in the securities of another person
      except in the following instances: 

     

    
      	 	
              (i)
                

            	
              investments
                in Working Interests or undivided Lease interests made in the ordinary
                course of the Partnership’s business;


            


    

     

    
      	 	
              (ii)
                

            	
              temporary
                investments made as set forth in §3.06(c)(2);


            


    

     

    
      	 	
              (iii)
                

            	
              multi-tier
                arrangements meeting the requirements of §4.03(d)(15);
                

            


    

     

    
      	 	
              (iv)
                

            	
              investments
                involving less than 5% of the Partnership’s subscription proceeds which
                are a necessary and incidental part of a property acquisition transaction;
                and 

            


    

     

    
      	 	
              (v)
                

            	
              investments
                in entities established solely to limit the Partnership’s liabilities
                associated with the ownership or operation of property or equipment,
                provided that duplicative fees and expenses shall be prohibited.
                

            


    

     

    3.06(c)(2).
      Permissible Investments Before Investment in Partnership
      Activities.
      After
      the Initial Closing Date and until proceeds from the offering are invested
      in
      the Partnership’s operations, the proceeds may be temporarily invested in income
      producing short-term, highly liquid investments, in which there is appropriate
      safety of principal, such as U.S. Treasury Bills.


    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      IV

    CONDUCT
      OF OPERATIONS

     

    4.01.
      Acquisition
      of Leases.

     

    4.01(a).
      Assignment
      to Partnership.

     

    4.01(a)(1).
      In General.
      The
      Managing General Partner shall select, acquire and assign or cause to have
      assigned to the Partnership full or partial interests in Leases, by any method
      customary in the natural gas and oil industry, subject to the terms and
      conditions set forth below. 

     

    The
      Partnership and the other partnerships in the Atlas Resources Public #17-2007
      Program may acquire and develop interests in Leases covering one or more of
      the
      same Prospects, in the Managing General Partner’s discretion.

     

    The
      Partnership shall acquire only Leases reasonably expected to meet the stated
      purposes of the Partnership. No Leases shall be acquired for the purpose of
      a
      subsequent sale, Farmout, or other disposition unless the acquisition is made
      after a well has been drilled to a depth sufficient to indicate that the
      acquisition would be in the Partnership’s best interest.

     

    4.01(a)(2).
      Federal
      and State Leases.
      The
      Partnership is authorized to acquire Leases on federal and state lands.


     

    4.01(a)(3).
      Managing
      General Partner’s Discretion as to Terms and Burdens of
      Acquisition.
      Subject
      to the provisions of §4.03(d) and its subsections, the acquisitions of Leases or
      other property may be made under any terms and obligations, including any
      limitations as to the Horizons to be assigned to the Partnership and subject
      to
      any burdens as the Managing General Partner deems necessary in its sole
      discretion. 

     

    4.01(a)(4).
      Cost
      of Leases.
      All
      Leases shall be:

     

    
      	 	
              (i)
                

            	
              contributed
                to the Partnership by the Managing General Partner or its Affiliates;
                and

            


    

     

    
      	 	
              (ii)
                

            	
              credited
                towards the Managing General Partner's required Capital Contribution
                set
                forth in §3.04(a) at the Cost of the Lease, unless the Managing General
                Partner has cause to believe that Cost is materially more than the
                fair
                market value of the property, in which case the credit for the
                contribution must be made at a price not in excess of the fair market
                value. Also, the Managing General Partner may average the cost of
                all of
                its Leases to arrive at an average Lease cost per Prospect as described
                in
                the Prospectus under “Compensation – Lease Costs,” which the Managing
                General Partner believes is less than fair market value. Notwithstanding,
                from time to time, the Managing General Partner’s Lease costs on a
                Prospect may be significantly higher than the amount set forth in
                the
                Prospectus under “Compensation – Lease Costs,” and in that event the
                Managing General Partner’s credit to its Capital Contribution to the
                Partnership and its Capital Account under this Agreement shall be
                the
                greater amount.

            


    

     

    A
      determination of fair market value must be supported by an appraisal from an
      Independent Expert.


    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

    4.01(a)(5).
      The
      Managing General Partner, Operator or Their Affiliates’ Rights in the Remainder
      Interests.
      Subject
      to the provisions of §4.03(d) and its subsections, to the extent the Partnership
      does not acquire a full interest in a Lease from the Managing General Partner
      or
      its Affiliates, the remainder of the interest in the Lease may be held by the
      Managing General Partner or its Affiliates. They may either:

     

    
      	 	
              (i)
                

            	
              retain
                and exploit the remaining interest for their own account; or
                

            


    

     

    
      	 	
              (ii)
                

            	
              sell
                or otherwise dispose of all or a part of the remaining interest.
                

            


    

     

    Profits
      from the
      exploitation and/or disposition of their retained interests in the Leases shall
      be for the benefit of the Managing General Partner
      or its
Affiliates
      to the
      exclusion of the Partnership and the Participants.

     

    4.01(a)(6).
      No
      Breach of Duty.
      Subject
      to the provisions of §4.03 and its subsections, acquisition of Leases from the
      Managing General Partner, the Operator or their Affiliates shall not be
      considered a breach of any obligation owed by them to the Partnership or the
      Participants.

     

    4.01(b).
      No
      Overriding Royalty Interests.
      Neither
      the Managing General Partner, the Operator nor any Affiliate shall retain any
      Overriding Royalty Interest on the Leases acquired by the
      Partnership.

     

    4.01(c).
      Title
      and Nominee Arrangements.

     

    4.01(c)(1).
      Legal
      Title.
      Legal
      title to all Leases acquired by the Partnership shall be held on a permanent
      basis in the name of the Partnership. However, Partnership properties may be
      held temporarily in the name of:

     

    
      	 	
              (i)
                

            	
              the
                Managing General Partner;

            


    

     

    
      	 	
              (ii)
                

            	
              the
                Operator; 

            


    

     

    
      	 	
              (iii)
                

            	
              their
                Affiliates; or 

            


    

     

    
      	 	
              (iv)
                

            	
              in
                the name of any nominee designated by the Managing General Partner
                to
                facilitate the acquisition of the
                properties.

            


    

     

    4.01(c)(2).
      Managing
      General Partner’s Discretion.
      The
      Managing General Partner shall take the steps which are necessary in its best
      judgment to render title to the Leases to be acquired by the Partnership
      acceptable for the purposes of the Partnership. The Managing General Partner
      shall be free, however, to use its own best judgment in waiving title
      requirements. 

     

    The
      Managing General Partner shall not be liable to the Partnership or to the other
      parties for any mistakes of judgment; nor shall the Managing
      General Partner be deemed to be making any warranties or representations,
      express or implied, as to the validity or
      merchantability of the title to the Leases assigned to the Partnership or the
      extent of the interest covered thereby except as otherwise provided in the
      Drilling and Operating Agreement.

     

    4.01(c)(3).
      Commencement
      of Operations.
      The
      Partnership shall not begin operations on its Leases unless the Managing General
      Partner is satisfied that necessary title requirements have been
      satisfied.


    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

    4.02.
Conduct
      of Operations.

     

    4.02(a).
      In
      General.
      The
      Managing General Partner shall establish a program of operations for the
      Partnership. Subject to the limitations contained in Article III of this
      Agreement concerning the maximum Capital Contribution which can be required
      of a
      Limited Partner, the Managing General Partner, the Limited Partners, and the
      Investor General Partners agree to participate in the program so established
      by
      the Managing General Partner.

     

    4.02(b).
      Management.
      Subject
      to any restrictions contained in this Agreement, the Managing General Partner
      shall exercise full control over all operations of the Partnership.

     

    4.02(c).
      General
      Powers of the Managing General Partner.

     

    4.02(c)(1).
      In
      General.
      Subject
      to the provisions of §4.03 and its subsections, and to any authority that may be
      granted the Operator under §4.02(c)(3)(b), the Managing General Partner shall
      have full authority to do all things deemed necessary or desirable by it in
      the
      conduct of the business of the Partnership. Without limiting the generality
      of
      the foregoing, the Managing General Partner is expressly authorized to engage
      in:

     

    
      	 	
              (i)
                

            	
              the
                making of all determinations of which Leases, wells and operations
                will be
                participated in by the Partnership, which
                includes:

            


    

     

    
      	 	
              (a)
                

            	
              which
                Leases are developed;

            


    

     

    
      	 	
              (b)
                

            	
              which
                Leases are abandoned; or 

            


    

     

    
      	 	
              (c)
                

            	
              which
                Leases are sold or assigned to other parties, including other investor
                ventures organized by the Managing General Partner, the Operator,
                or any
                of their Affiliates;

            


    

     

    
      	 	
              (ii)
                

            	
              the
                negotiation and execution on any terms deemed desirable in its sole
                discretion of any contracts, conveyances, or other instruments, considered
                useful to the conduct of the operations or the implementation of
                the
                powers granted it under this Agreement, including, without
                limitation:

            


    

     

    
      	 	
              (a)

            	
              the
                making of agreements for the conduct of operations, including agreements
                and financial instruments relating to hedging the Partnership’s natural
                gas and oil and in this regard, the partnership has confirmed its
                authorization to Atlas America and/or Atlas Energy Resources, LLC
                to enter
                into hedging agreements on its behalf, and has ratified all actions
                previously taken by Atlas America and/or Atlas Energy Resources,
                LLC in
                connection therewith;

            


    

     

    
      	 	
              (b)

            	
              the
                exercise of any options, elections, or decisions under any such
                agreements; and

            


    

     

    
      	 	
              (c)

            	
              the
                furnishing of equipment, facilities, supplies and material, services,
                and
                personnel; 

            


    

     

    
      	 	
              (iii)
                

            	
              the
                exercise, on behalf of the Partnership or the parties, as the Managing
                General Partner in its sole judgment deems best, of all rights, elections
                and options granted or imposed by any agreement, statute, rule,
                regulation, or order;

            


    

     

    
      	 	
              (iv)
                

            	
              the
                making of all decisions concerning the desirability of payment, and
                the
                payment or supervision of the payment, of all delay rentals and shut-in
                and minimum or advance royalty
                payments;

            


    

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (v)
                

            	
              the
                selection of full or part-time employees and outside consultants
                and
                contractors and the determination of their compensation and other
                terms of
                employment or hiring;

            


    

     

    
      	 	
              (vi)
                

            	
              the
                maintenance of insurance for the benefit of the Partnership and the
                parties as it deems necessary, but in no event less in amount or
                type than
                the following: 

            


    

     

    
      	 	
              (a)
                

            	
              worker’s
                compensation insurance in full compliance with the laws of the
                Commonwealth of Pennsylvania and any other applicable state laws;
                

            


    

     

    
      	 	
              (b)
                

            	
              liability
                insurance, including automobile, which has a $1,000,000 combined
                single
                limit for bodily injury and property damage in any one accident or
                occurrence and in the aggregate; and


            


    

     

    
      	 	
              (c)
                

            	
              liability
                and excess liability insurance as to bodily injury and property damage
                with combined limits of $50,000,000 during drilling operations and
                thereafter, per occurrence or accident and in the aggregate, which
                includes $1,000,000 of seepage, pollution and contamination insurance
                which protects and defends the insured against property damage or
                bodily
                injury claims from third-parties, other than a co-owner of the Working
                Interest, alleging seepage, pollution or contamination damage resulting
                from a pollution incident. The excess liability insurance, which
                is for
                general liability only, shall be in place and effective no later
                than the
                date drilling operations begin and, for purposes of satisfying this
                requirement, the Partnership shall have the benefit of the Managing
                General Partner’s $50,000,000 liability insurance on the same basis as the
                Managing General Partner and its other Affiliates, including the
                Managing
                General Partner’s other Programs;

            


    

     

    
      	 	
              (vii)

            	
              the
                use of the funds and revenues of the Partnership, and the borrowing
                on
                behalf of, and the loan of money to, the Partnership, on any terms
                it sees
                fit, for any purpose, including without
                limitation:

            


    

     

    
      	 	
              (a)
                

            	
              the
                conduct or financing, in whole or in part, of the drilling and other
                activities of the Partnership;

            


    

     

    
      	 	
              (b)
                

            	
              the
                conduct of additional operations; and


            


    

     

    
      	 	
              (c)
                

            	
              the
                repayment of any borrowings or loans used initially to finance these
                operations or activities;

            


    

     

    
      	 	
              (viii)

            	
              the
                disposition, hypothecation, sale, exchange, release, surrender,
                reassignment or abandonment of any or all assets of the Partnership,
                including without limitation, the Leases, wells, equipment and production
                therefrom, provided that the sale of all or substantially all of
                the
                assets of the Partnership shall only be made as provided in
                §4.03(d)(6);

            


    

     

    
      	 	
              (ix)

            	
              the
                formation of any further limited or general partnership, tax partnership,
                joint venture, or other relationship which it deems desirable with
                any
                parties who it, in its sole discretion, selects, including any of
                its
                Affiliates;

            


    

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (x)

            	
              the
                control of any matters affecting the rights and obligations of the
                Partnership, including:

            


    

     

    
      	 	
              (a)
                

            	
              the
                employment of attorneys to advise and otherwise represent the
                Partnership;

            


    

     

    
      	 	
              (b)
                

            	
              the
                conduct of litigation and incurring other legal expenses; and
                

            


    

     

    
      	 	
              (c)
                

            	
              the
                settlement of claims and
                litigation;

            


    

     

    
      	 	
              (xi)
                

            	
              the
                operation of producing wells drilled on the Leases or on a Prospect
                which
                includes any part of the Leases;

            


    

     

    
      	 	
              (xii)
                

            	
              the
                exercise of the rights granted to it under the power of attorney
                created
                under this Agreement; and

            


    

     

    
      	 	
              (xiii)
                

            	
              the
                incurring of all costs and the making of all expenditures in any
                way
                related to any of the foregoing. 

            


    

     

    4.02(c)(2).
      Scope
      of Powers.
      The
      Managing General Partner’s powers shall extend to any operation participated in
      by the Partnership or affecting its Leases, or other property or assets,
      irrespective of whether or not the Managing General Partner is designated
      operator of the operation by any outside persons participating
      therein.

     

    4.02(c)(3).
      Delegation
      of Authority.

     

    4.02(c)(3)(a).
      In
      General.
      The
      Managing General Partner may subcontract and delegate all or any part of its
      duties under this Agreement to any entity chosen by it, including an entity
      Affiliated with it, which party shall have the same powers in the conduct of
      the
      duties as would the Managing General Partner. The delegation, however, shall
      not
      relieve the Managing General Partner of its responsibilities under this
      Agreement.

     

    4.02(c)(3)(b).
      Delegation
      to Operator.
      The
      Managing General Partner is specifically authorized to delegate any or all
      of
      its duties to the Operator by executing the Drilling and Operating Agreement.
      This delegation shall not relieve the Managing General Partner of its
      responsibilities under this Agreement. 

     

    In
      no
      event shall any consideration received for operator services be in excess of
      competitive rates or duplicative of any consideration or reimbursements received
      under this Agreement. The Managing General Partner may not benefit by
      interpositioning itself between the Partnership and the actual provider of
      operator services.

     

    4.02(c)(4).
      Related
      Party Transactions.
      Subject
      to the provisions of §4.03 and its subsections, any transaction which the
      Managing General Partner is authorized to enter into on behalf of the
      Partnership under the authority granted in this section and its subsections,
      may
      be entered into by the Managing General Partner with itself or with any other
      general partner, the Operator, or any of their Affiliates.


    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

     

    4.02(d).
      Additional
      Powers.
      In
      addition to the powers granted the Managing General Partner under §4.02(c) and
      its subsections or elsewhere in this Agreement, the Managing General Partner,
      when specified, shall have the following additional express powers.

     

    4.02(d)(1).
      Drilling
      Contracts.
      All
      Partnership Wells shall be drilled
      under the Drilling and Operating Agreement
      for an
      amount equal to the sum of the following items: 

     

    
      	 	
              (i)
                

            	
              the
                Cost of permits, supplies, materials, equipment, and all other items
                used
                in the drilling and completion of a well provided by third-parties,
                or if
                the foregoing items are provided by Affiliates of the Managing General
                Partner, then those items will be charged at competitive rates;
                

            


    

     

    
      	 	
              (ii)
                

            	
              fees
                for third-party services; 

            


    

     

    
      	 	
              (iii)
                

            	
              fees
                for services provided by the Managing General Partner’s Affiliates, which
                will be charged at competitive rates;


            


    

     

    
      	 	
              (iv)
                

            	
              an
                administration and oversight fee of $15,000 per well, which is $60,000
                per
                well in the Marcellus Shale primary area in western Pennsylvania,
                which
                will be charged to the Participants as part of each well’s Intangible
                Drilling Costs and the portion of equipment costs paid by the
                Participants;
                and 

            


    

     

    
      	 	
              (v)
                

            	
              a
                mark-up in an amount equal to 15% of the sum of (i), (ii), (iii)
                and (iv),
                above, for the Managing General Partner’s services as general drilling
                contractor.
                

            


    

     

    Additionally,
      if the Managing General Partner drills a well for the Partnership that the
      Managing General Partner determines is not an average well in the area because
      of the well’s depth, complexity associated with either drilling or completing
      the well, or as otherwise determined by the Managing General Partner, the
      administration and oversight fee of the well described in §4.02(d)(1)(iv) may be
      increased to a competitive rate as determined by the Managing General
      Partner.

     

    The
      Managing General Partner or its Affiliates, as drilling contractor, may not
      receive a rate that is not competitive with the rates charged by unaffiliated
      contractors in the same geographic region, enter into a turnkey drilling
      contract with the Partnership, profit by drilling in contravention of its
      fiduciary obligations to the Partnership, or benefit by interpositioning itself
      between the Partnership and the actual provider of drilling contractor
      services.

     

    4.02(d)(2).
      Power
      of Attorney.

     

    4.02(d)(2)(a).
      In
      General.
      Each
      Participant appoints the Managing General Partner his true and lawful
      attorney-in-fact for him and in his name, place, and stead and for his use
      and
      benefit, from time to time:

     

    
      	 	
              (i)
                

            	
              to
                create, prepare, complete, execute, file, swear to, deliver, endorse,
                and
                record any and all documents, certificates, government reports, or
                other
                instruments as may be required by law, or are necessary to amend
                this
                Agreement as authorized under the terms of this Agreement, or to
                qualify
                the Partnership as a limited partnership or partnership in commendam
                and
                to conduct business under the laws of any jurisdiction in which the
                Managing General Partner elects to qualify the Partnership or conduct
                business; and

            


    

     

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (ii)
                

            	
              to
                create, prepare, complete, execute, file, swear to, deliver, endorse
                and
                record any and all instruments, assignments, security agreements,
                financing statements, certificates, and other documents as may be
                necessary from time to time to implement the borrowing powers granted
                under this Agreement.

            


    

     

    4.02(d)(2)(b).
      Further
      Action.
      Each
      Participant authorizes the attorney-in-fact to take any further action which
      the
      attorney-in-fact considers necessary or advisable in connection with any of
      the
      foregoing powers and rights granted the Managing General Partner under this
      section and its subsections. Each party acknowledges that the power of attorney
      granted under §4.02(d)(2)(a):

     

    
      	 	
              (i)
                

            	
              is
                a special power of attorney coupled with an interest and is irrevocable;
                and 

            


    

     

    
      	 	
              (ii)
                

            	
              shall
                survive the assignment by the Participant of the whole or a portion
                of his
                Units; except when the assignment is of all of the Participant’s Units and
                the purchaser, transferee, or assignee of the Units is admitted as
                a
                successor Participant, the power of attorney shall survive the delivery
                of
                the assignment for the sole purpose of enabling the attorney-in-fact
                to
                execute, acknowledge, and file any agreement, certificate, instrument
                or
                document necessary to effect the
                substitution.

            


    

     

    4.02(d)(2)(c).
      Power
      of Attorney to Operator.
      The
      Managing General Partner is hereby authorized to grant a Power of Attorney
      to
      the Operator on behalf of the Partnership.

     

    4.02(e).
      Borrowings
      and Use of Partnership Revenues.

     

    4.02(e)(1).
      Power
      to Borrow or Use Partnership Revenues. 

     

    4.02(e)(1)(a).
      In
      General.
      If
      additional funds over the Participants’ Capital Contributions are needed for
      Partnership operations, then the Managing General Partner may: 

     

    
      	 	
              (i)
                

            	
              use
                Partnership revenues for such purposes; or


            


    

     

    
      	 	
              (ii)
                

            	
              the
                Managing General Partner and its Affiliates may advance the necessary
                funds to the Partnership under §4.03(d)(8)(b), although they are not
                obligated to advance the funds to the
                Partnership.

            


    

     

    4.02(e)(1)(b).
      Limitation
      on Borrowing. Partnership
      borrowings, other than credit transactions on open account customary in the
      industry to obtain goods and services, shall be subject to the following
      limitations:

     

    
      	 	
              (i)
                

            	
              the
                borrowings must be without recourse to the Investor General Partners
                and
                the Limited Partners except as otherwise provided in this Agreement;
                and
                

            


    

     

    
      	 	
              (ii)
                

            	
              the
                amount that may be borrowed at any one time may not exceed an amount
                equal
                to 5% of the Partnership’s subscription proceeds.
                

            


    

     

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

     

    4.02(f).
      Tax
      Matters Partner. 

     

    4.02(f)(1).
      Designation
      of Tax Matters Partner.
      The
      Managing General Partner is hereby designated the Tax Matters Partner of the
      Partnership under Section 6231(a)(7) of the Code. The Managing General Partner
      is authorized to act in this capacity on behalf of the Partnership and the
      Participants and to take any action, including settlement or litigation, which
      it in its sole discretion deems to be in the best interest of the Partnership.
      

     

    4.02(f)(2).
      Costs
      Incurred by Tax Matters Partner.
      Costs
      incurred by the Tax Matters Partner shall be considered a Direct Cost of the
      Partnership. 

     

    4.02(f)(3).
      Notice
      to Participants of IRS Proceedings.
      The Tax
      Matters Partner shall notify all of the Participants of any administrative
      or
      other legal proceedings involving the Partnership and the IRS or any other
      taxing authority, and thereafter shall furnish all of the Participants periodic
      reports at least quarterly on the status of the proceedings. 

     

    4.02(f)(4).
      Participant
      Restrictions.
      Each
      Participant agrees as follows: 

     

    
      	 	
              (i)
                

            	
              he
                will not file the statement described in Section 6224(c)(3)(B) of
                the Code
                prohibiting the Managing General Partner as the Tax Matters Partner
                for
                the Partnership from entering into a settlement on his behalf with
                respect
                to partnership items, as that term is defined in Section 6231(a)(3)
                of
                Code, of the Partnership; 

            


    

     

    
      	 	
              (ii)
                

            	
              he
                will not form or become and exercise any rights as a member of a
                group of
                Partners having a 5% or greater interest in the profits of the Partnership
                under Section 6223(b)(2) of the Code; and


            


    

     

    
      	 	
              (iii)
                

            	
              the
                Managing General Partner is authorized to file a copy of this Agreement,
                or pertinent portions of this Agreement, with the IRS under Section
                6224(b) of the Code if necessary to perfect the waiver of rights
                under
                this subsection.

            


    

     

    4.03.
      General
      Rights and Obligations of the Participants and Restricted and Prohibited
      Transactions.

     

    4.03(a)(1).
      Limited
      Liability of Limited Partners.
      Limited
      Partners shall not be bound by the obligations of the Partnership other than
      as
      provided under the Delaware Revised Uniform Limited Partnership Act. Limited
      Partners shall not be personally liable for any debts of the Partnership or
      any
      of the obligations or losses of the Partnership beyond the subscription amount
      designated on the Subscription Agreement executed by each respective Limited
      Partner unless:

     

    
      	 	
              (i)
                

            	
              they
                also subscribe to the Partnership as Investor General Partners;
                or

            


    

     

    
      	 	
              (ii)
                

            	
              in
                the case of the Managing General Partner, it purchases Limited Partner
                Units.

            


    

     

    4.03(a)(2).
      No
      Management Authority of Participants.
      Participants, other than the Managing General Partner if it buys Units, shall
      have no power over the conduct of the affairs of the Partnership. No
      Participant, other than the Managing General Partner if it buys Units, shall
      take part in the management of the business of the Partnership, or have the
      power to sign for or to bind the Partnership.

     

    4.03(b).
      Reports
      and Disclosures.

     

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

     

    4.03(b)(1).
      Annual
      Reports and Financial Statements.
      Beginning with the calendar year in which the Partnership had its Offering
      Termination Date, the Partnership shall provide each Participant an annual
      report within 120 days after the close of that calendar year, and beginning
      with
      the following calendar year, a report within 75 days after the end of the first
      six months of its calendar year, containing except as otherwise indicated,
      at
      least the information set forth below:

     

    
      	 	
              (i)
                

            	
              Audited
                financial statements of the Partnership, including a balance sheet
                and
                statements of income, cash flow, and Partners’ equity, which shall be
                prepared on an accrual basis in accordance with generally accepted
                accounting principles with a reconciliation with respect to information
                furnished for income tax purposes and accompanied by an auditor’s report
                containing an opinion of an independent public accountant selected
                by the
                Managing General Partner stating that his audit was made in accordance
                with generally accepted auditing standards and that in his opinion
                the
                financial statements present fairly the financial position, results
                of
                operations, partners’ equity, and cash flows in accordance with generally
                accepted accounting principles. Semiannual reports are not required
                to be
                audited.

            


    

     

    
      	 	
              (ii)
                

            	
              A
                summary itemization, by type and/or classification of the total fees
                and
                compensation, including any non-accountable, fixed payment reimbursements
                for Administrative Costs and Operating Costs, paid by, or on behalf
                of,
                the Partnership to the Managing General Partner, the Operator, and
                their
                Affiliates.

            


    

     

    Also,
      the
      independent certified public accountant shall provide written attestation
      annually, which will be included in the annual report, that the method used
      to
      make allocations of the Partnership’s Administrative Costs was consistent with
      the method described in §4.04(a)(2)(c) of this Agreement and that the total
      amount of Administrative Costs allocated did not materially exceed the amounts
      actually incurred by the Managing General Partner in providing administrative
      services to, or on behalf of, the Partnership as described in §4.04(a)(2)(c),
      including administrative services provided to the Partnership by the Managing
      General Partner’s Affiliates or independent third-parties at the sole expense of
      the Managing General Partner. If the Managing General Partner subsequently
      decides to allocate Administrative Costs in a manner different from that
      described in §4.04(a)(2)(c) of this Agreement, then the change must be reported
      to the Participants together with an explanation of the reason for the change
      and the basis used for determining the reasonableness of the new allocation
      method.

     

    
      	 	
              (iii)
                

            	
              A
                description of each Prospect in which the Partnership owns an interest,
                including:

            


    

     

    
      	 	
              (a)
                

            	
              the
                cost, location, and number of acres under Lease; and
                

            


    

     

    
      	 	
              (b)
                

            	
              the
                Working Interest owned in the Prospect by the Partnership.
                

            


    

     

    Succeeding
      reports, however, must only contain material changes, if any, regarding the
      Prospects. 

     

    
      	 	
              (iv)
                

            	
              A
                list of the wells drilled or abandoned by the Partnership during
                the
                period of the report, indicating: 

            


    

     

    
      	 	
              (a)
                

            	
              whether
                each of the wells has or has not been completed;
                

            


    

     

    
      	 	
              (b)
                

            	
              a
                statement of the cost of each well completed or abandoned; and
                

            


    

     

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (c)
                

            	
              justification
                for wells abandoned after production has
                begun.

            


    

     

    
      	 	
              (v)
                

            	
              A
                description of all Farmouts, farmins, and joint ventures, made during
                the
                period of the report, including:

            


    

     

    
      	 	
              (a)
                

            	
              the
                Managing General Partner’s justification for the arrangement; and
                

            


    

     

    
      	 	
              (b)
                

            	
              a
                description of the material terms. 

            


    

     

    
      	 	
              (vi)
                

            	
              A
                schedule reflecting:

            


    

     

    
      	 	
              (a)
                

            	
              the
                total Partnership costs;

            


    

     

    
      	 	
              (b)
                

            	
              the
                costs paid by the Managing General Partner and the costs paid by
                the
                Participants; 

            


    

     

    
      	 	
              (c)
                

            	
              the
                total Partnership revenues;

            


    

     

    
      	 	
              (d)
                

            	
              the
                revenues received or credited to the Managing General Partner and
                the
                revenues received and credited to the Participants;
                and

            


    

     

    
      	 	
              (e)
                

            	
              a
                reconciliation of the expenses and revenues in accordance with the
                provisions of Article V.

            


    

     

    Additionally,
      on request the Managing General Partner will provide the information specified
      by Form 10-Q (if such report is required to be filed with the SEC) within 45
      days after the close of each quarterly fiscal period.

     

    4.03(b)(2).
      Tax
      Information.
      The
      Partnership shall, by March 15 of each year, prepare, or supervise the
      preparation of, and transmit to each Participant the information needed for
      the
      Participant to file the following:

     

    
      	 	
              (i)
                

            	
              his
                federal income tax return;

            


    

     

    
      	 	
              (ii)
                

            	
              any
                required state income tax return; and


            


    

     

    
      	 	
              (iii)
                

            	
              any
                other reporting or filing requirements imposed by any governmental
                agency
                or authority.

            


    

     

    4.03(b)(3).
      Reserve
      Report.
      Beginning with the second calendar year after the Offering Termination Date
      and
      every year thereafter, the Partnership shall provide to each Participant the
      following:

     

    
      	 	
              (i)
                

            	
              a
                summary of the computation of the Partnership’s total natural gas and oil
                Proved Reserves; 

            


    

     

    
      	 	
              (ii)
                

            	
              a
                summary of the computation of the present worth of the reserves determined
                using: 

            


    

     

    
      	 	
              (a)

            	
              a
                discount rate of 10%; 

            


    

     

    
      	 	
              (b)

            	
              a
                constant price for the oil; and 

            


    

     

    
      	 	
              (c)

            	
              basing
                the price of natural gas on the existing natural gas
                contracts;

            


    

     

    
      	 	
              (iii)
                

            	
              a
                statement of each Participant’s interest in the reserves;
                and

            


    

     

    
      
        
        

      

      
        28

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (iv)
                

            	
              an
                estimate of the time required for the extraction of the reserves
                with a
                statement that because of the time period required to extract the
                reserves
                the present value of revenues to be obtained in the future is less
                than if
                immediately receivable.

            


    

     

    The
      reserve computations shall be based on engineering reports prepared by the
      Managing General Partner and reviewed by an Independent Expert. 

     

    Also,
      if
      any event reduces the Partnership’s Proved Reserves by 10% or more, excluding a
      reduction of reserves as a result of normal production, sales of reserves,
      or
      natural gas or oil price changes, then a computation and estimate of the amount
      of the reduction in reserves must be sent to each Participant within 90 days
      after the Managing General Partner determines that such a reduction in reserves
      has occurred.

     

    4.03(b)(4).
      Cost
      of Reports.
      The cost
      of all reports described in this §4.03(b) shall be paid by the Partnership as
      Direct Costs.

     

    4.03(b)(5).
      Participant
      Access to Records.
      The
      Participants and/or their representatives shall be permitted access to all
      Partnership records, provided that access to the list of Participants shall
      be
      subject to §4.03(b)(7) below. Subject to the foregoing, a Participant may
      inspect and copy any of the Partnership’s records after giving adequate notice
      to the Managing General Partner at any reasonable time. 

     

    Notwithstanding
      the foregoing, the Managing General Partner may keep logs, well reports, and
      other drilling and operating data confidential for reasonable periods of time.
      The Managing General Partner may release information concerning the operations
      of the Partnership to the sources that are customary in the industry or required
      by rule, regulation, or order of any regulatory body.

     

    4.03(b)(6).
      Required
      Length of Time to Hold Records.
      The
      Managing General Partner must maintain and preserve during the term of the
      Partnership and for six years thereafter all accounts, books and other relevant
      documents which include:

     

    
      	 	
              (i)
                

            	
              a
                record that a Participant meets the suitability standards established
                in
                connection with an investment in the Partnership; and
                

            


    

     

    
      	 	
              (ii)
                

            	
              any
                appraisal of the fair market value of the Leases as set forth in
                §4.01(a)(4), along with associated supporting information, or fair
                market
                value of any producing property as set forth in
                §4.03(d)(3).

            


    

     

    4.03(b)(7).
      Participant
      Lists.
      The
      following provisions apply regarding access to the list of Participants:


     

    
      	 	
              (i)
                

            	
              an
                alphabetical list of the names, addresses, and business telephone
                numbers
                of the Participants along with the number of Units held by each of
                them
                (the “Participant List”) must be maintained as a part of the Partnership’s
                books and records and be available for inspection by any Participant
                or
                his designated agent at the home office of the Partnership on the
                Participant’s request; 

            


    

     

    
      	 	
              (ii)
                

            	
              the
                Participant List must be updated at least quarterly to reflect changes
                in
                the information contained in the Participant List;
                

            


    

     

    
      
        
        

      

      
        29

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (iii)
                

            	
              a
                copy of the Participant List must be mailed to any Participant requesting
                the Participant List within 10 days of the written request, printed
                in
                alphabetical order on white paper, and in a readily readable type
                size in
                no event smaller than 10-point type and a reasonable charge for copy
                work
                will be charged by the Partnership;


            


    

     

    
      	 	
              (iv)
                

            	
              the
                purposes for which a Participant may request a copy of the Participant
                List include, without limitation, matters relating to Participant’s voting
                rights under this Agreement and the exercise of Participant’s rights under
                the federal proxy laws; and

            


    

     

    
      	 	
              (v)
                

            	
              if
                the Managing General Partner neglects or refuses to exhibit, produce,
                or
                mail a copy of the Participant List as requested, the Managing General
                Partner shall be liable to any Participant requesting the list for
                the
                costs, including attorneys fees, incurred by that Participant for
                compelling the production of the Participant List, and for actual
                damages
                suffered by any Participant by reason of the refusal or neglect.
                It shall
                be a defense that the actual purpose and reason for the request for
                inspection or for a copy of the Participant List is to secure the
                list of
                Participants or other information for the purpose of selling the
                list or
                information or copies of the list, or of using the same for a commercial
                purpose other than in the interest of the applicant as a Participant
                relative to the affairs of the Partnership. The Managing General
                Partner
                will require the Participant requesting the Participant List to represent
                in writing that the list was not requested for a commercial purpose
                unrelated to the Participant’s interest in the Partnership. The remedies
                provided under this subsection to Participants requesting copies
                of the
                Participant List are in addition to, and shall not in any way limit,
                other
                remedies available to Participants under federal law or the laws
                of any
                state.

            


    

     

    4.03(b)(8).
      State
      Filings.
      Concurrently with their transmittal to Participants, and as required, the
      Managing General Partner shall file a copy of each report provided for in this
      §4.03(b) with:

     

    
      	 	
              (i)
                

            	
              the
                California Commissioner of Corporations;


            


    

     

    
      	 	
              (ii)
                

            	
              the
                Arizona Corporation Commission; 

            


    

     

    
      	 	
              (iii)
                

            	
              the
                Alabama Securities Commission; and 

            


    

     

    
      	 	
              (iv)
                

            	
              the
                securities commissions of other states which request the
                report.

            


    

     

    4.03(c).
      Meetings
      of Participants. 

     

    4.03(c)(1).
      Procedure
      for a Participant Meeting. 

     

    4.03(c)(1)(a).
      Meetings
      May Be Called by Managing General Partner or Participants.
      Meetings
      of the Participants may be called as follows:

     

    
      	 	
              (i)
                

            	
              by
                the Managing General Partner; or

            


    

     

    
      	 	
              (ii)
                

            	
              by
                Participants who's Units equal 10% or more of the total Units for
                any
                matters on which Participants may vote.


            


    

     

    
      
        
        

      

      
        30

        
          

        

      

      
        
        

      

    

     

    The
      call
      for a meeting by the Participants as described above shall be deemed to have
      been made on receipt by the Managing General Partner of a written request from
      holders of the requisite percentage of Units stating the purpose(s) of the
      meeting. 

     

    4.03(c)(1)(b).
      Notice
      Requirement. The
      Managing General Partner shall deposit in the United States mail within 15
      days
      after the receipt of the request, written notice to all Participants of the
      meeting and the purpose of the meeting. The meeting shall be held on a date
      not
      less than 30 days or more than 60 days after the date of the mailing of the
      notice, at a reasonable time and place. 

     

    Notwithstanding
      the foregoing, the date for notice of the meeting may be extended for a period
      of up to 60 days if, in the opinion of the Managing General Partner, the
      additional time is necessary to permit preparation of proxy or information
      statements or other documents required to be delivered in connection with the
      meeting by the SEC or other regulatory authorities. 

     

    4.03(c)(1)(c).
      May
      Vote by Proxy.
      Participants shall have the right to vote at any Participant meeting
      either:

     

    
      	 	
              (i)
                

            	
              in
                person; or 

            


    

     

    
      	 	
              (ii)
                

            	
              by
                proxy.

            


    

     

    4.03(c)(2).
      Special
      Voting Rights.
      At the
      request of Participants who's Units equal 10% or more of the total Units, the
      Managing General Partner shall call for a vote by Participants. Each Unit is
      entitled to one vote on all matters, and each fractional Unit is entitled to
      that fraction of one vote equal to the fractional interest in the Unit.
      Participants whose Units equal a majority of the total Units may, without the
      concurrence of the Managing General Partner or its Affiliates, vote
      to:

     

    
      	 	
              (i)

            	
              dissolve
                the Partnership;

            


    

     

    
      	 	
              (ii)

            	
              remove
                the Managing General Partner and elect a new Managing General
                Partner;

            


    

     

    
      	 	
              (iii)

            	
              elect
                a new Managing General Partner if the Managing General Partner elects
                to
                withdraw from the Partnership;

            


    

     

    
      	 	
              (iv)

            	
              remove
                the Operator and elect a new
                Operator;

            


    

     

    
      	 	
              (v)

            	
              approve
                or disapprove the sale of all or substantially all of the assets
                of the
                Partnership; 

            


    

     

    
      	 	
              (vi)

            	
              cancel
                any contract for services with the Managing General Partner, the
                Operator,
                or their Affiliates without penalty on 60 days notice;
                and

            


    

     

    
      	 	
              (vii)

            	
              amend
                this Agreement; provided however:

            


    

     

    
      	 	
              (a)

            	
              any
                amendment may not increase the duties or liabilities of any Participant
                or
                the Managing General Partner or increase or decrease the profit or
                loss
                sharing or required Capital Contribution of any Participant or the
                Managing General Partner without the approval of the Participant
                or the
                Managing General Partner, respectively;
                and

            


    

     

    
      
        
        

      

      
        31

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (b)

            	
              any
                amendment may not affect the classification of Partnership income
                and loss
                for federal income tax purposes without the unanimous approval of
                all
                Participants.

            


    

     

    4.03(c)(3).
      Restrictions on Managing General Partner’s Voting Rights.
      With
      respect to Units owned by the Managing General Partner or its Affiliates, the
      Managing General Partner and its Affiliates may vote or consent on all matters
      other than the following:

     

    
      	 	
              (i)

            	
              the
                matters set forth in §4.03(c)(2)(ii) and (iv) above; or
                

            


    

     

    
      	 	
              (ii)

            	
              any
                transaction between the Partnership and the Managing General Partner
                or
                its Affiliates. 

            


    

     

    In
      determining the requisite percentage in interest of Units necessary to approve
      any Partnership matter on which the Managing General Partner and its Affiliates
      may not vote or consent, any Units owned by the Managing General Partner and
      its
      Affiliates shall not be included.

     

    4.03(c)(4).
      Restrictions
      on Limited Partner Voting Rights.
      The
      exercise by the Limited Partners of the rights granted Participants
      under §4.03(c), except for the special voting rights granted Participants under
§4.03(c)(2), shall be subject to the
      prior
      legal determination that the grant or exercise of the powers will not adversely
      affect the limited liability of Limited Partners. Notwithstanding the foregoing,
      if in the opinion of counsel to the Partnership the legal determination is
      not
      necessary under Delaware law to maintain the limited liability of the Limited
      Partners, then it shall not be required. A legal determination under this
      paragraph may be made either pursuant to:

     

    
      	 	
              (i)

            	
              an
                opinion of counsel, the counsel being independent of the Partnership
                and
                selected on the vote of Limited Partners whose Units equal a majority
                of
                the total Units held by Limited Partners; or


            


    

     

    
      	 	
              (ii)

            	
              a
                declaratory judgment issued by a court of competent jurisdiction.
                

            


    

     

    The
      Investor General Partners may exercise the rights granted to the Participants
      whether or not the Limited Partners can participate in the vote if the Investor
      General Partners represent the requisite percentage of Units necessary to take
      the action.

     

    4.03(d).
      Transactions
      with the Managing General Partner.

     

    4.03(d)(1).
      Transfer
      of Equal
      Proportionate Interest.
      When the
      Managing General Partner or an Affiliate (excluding another Program in which
      the
      interest of the Managing General Partner or its Affiliates is substantially
      similar to or less than their interest in the Partnership) sells, transfers
      or
      conveys any natural gas, oil or other mineral interests or property to the
      Partnership, it must, at the same time, sell, transfer or convey to the
      Partnership an equal proportionate interest in all its other property in the
      same Prospect. Notwithstanding, a Prospect shall be deemed to consist of the
      drilling or spacing unit on which the well will be drilled by the Partnership,
      which is the minimum area permitted by state law or local practice on which
      one
      well may be drilled, if the following two conditions are met: 

     

    
      	 	
              (i)
                

            	
              the
                geological feature to which the well will be drilled contains Proved
                Reserves; and 

            


    

     

    
      	 	
              (ii)
                

            	
              the
                drilling or spacing unit protects against drainage.
                

            


    

     

    
      
        
        

      

      
        32

        
          

        

      

      
        
        

      

    

     

    With
      respect to a Prospect located in Ohio, Pennsylvania and New York on which a
      well
      will be drilled by the Partnership to test the Clinton/Medina geological
      formation, the Mississippian and/or Upper Devonian Sandstone reservoirs or
      the
      Marcellus Shale reservoir, and with respect to a Prospect located in Anderson,
      Campbell, Morgan, Roane and Scott Counties, Tennessee on which a well will
      be
      drilled to test the Mississippian carbonate or Devonian Shale reservoirs, a
      Prospect shall be deemed to consist of the drilling and spacing unit if it
      meets
      the test in the preceding sentence. Additionally, for a period of five years
      after the drilling of the Partnership Well neither the Managing General Partner
      nor its Affiliates may drill any well: 

     

    
      	 	
              (i)
                

            	
              to
                the Clinton/Medina geological formation, if the well would be within
                1,650
                feet of an existing Partnership Well in Pennsylvania or within 1,000
                feet
                of an existing Partnership Well in Ohio; or


            


    

     

    
      	 	
              (ii)
                

            	
              to
                the Mississippian and/or Upper Devonian Sandstone reservoirs in Fayette,
                Greene and Westmoreland Counties, Pennsylvania, if the well would
                be
                within 1,000 feet from a producing Partnership Well, although the
                Partnership may drill a new well or re-enter an existing well which
                is
                closer than 1,000 feet to a plugged and abandoned well.
                

            


    

     

    If
      the
      Partnership abandons its interest in a well, then the restrictions described
      above shall continue for one year following the abandonment.

     

    If
      the
      area constituting the Partnership’s Prospect is subsequently enlarged to
      encompass any area in which the Managing General Partner or an Affiliate
      (excluding another Program in which the interest of the Managing General Partner
      or its Affiliates is substantially similar to or less than their interest in
      the
      Partnership) owns a separate property interest and the activities of the
      Partnership were material in establishing the existence of Proved Undeveloped
      Reserves that are attributable to the separate property interest, then the
      separate property interest or a portion thereof must be sold, transferred,
      or
      conveyed to the Partnership as set forth in this section and §§4.01(a)(4) and
      4.03(d)(2). 

     

    Notwithstanding
      the foregoing, Prospects drilled to the Clinton/Medina geological formation,
      the
      Mississippian and/or Upper Devonian Sandstone reservoirs, the Marcellus Shale
      reservoir, the Mississippian carbonate or Devonian Shale reservoirs, or any
      other formation or reservoir shall not be enlarged or contracted if the Prospect
      was limited to the drilling or spacing unit because the well was being drilled
      to Proved Reserves in the geological formation and the drilling or spacing
      unit
      protected against drainage.

     

    4.03(d)(2).
      Transfer
      of Less than the Managing General Partner’s and it's Affiliates’ Entire
      Interest.
      A sale,
      transfer or a conveyance
      to the Partnership of less than all of the ownership of the Managing General
      Partner or an Affiliate (excluding another
      Program
      in which the interest of the Managing General Partner or its Affiliates is
      substantially similar to or less than their interest in the Partnership) in
      any
      Prospect shall not be made unless:

     

    
      	 	
              (i)
                

            	
              the
                interest retained by the Managing General Partner or the Affiliate
                is a
                proportionate Working Interest;

            


    

     

    
      	 	
              (ii)
                

            	
              the
                respective obligations of the Managing General Partner or its Affiliates
                and the Partnership are substantially the same after the sale of
                the
                interest by the Managing General Partner or its Affiliates; and
                

            


    

     

    
      	 	
              (iii)
                

            	
              the
                Managing General Partner's interest in revenues does not exceed the
                amount
                proportionate to its retained Working Interest.


            


    

     

    
      
        
        

      

      
        33

        
          

        

      

      
        
        

      

    

     

    This
      section does not prevent the Managing General Partner or its Affiliates from
      subsequently dealing with their retained interest as they may choose with
      unaffiliated parties or Affiliated partnerships.

     

    4.03(d)(3).
      Limitations
      on Sale of Undeveloped and Developed Leases to the Managing General Partner.
      Other
      than another Program managed by the Managing General Partner and its Affiliates
      as set forth in §§4.03(d)(5) and 4.03(d)(9), the Managing General Partner and
      its Affiliates shall not receive a Farmout or purchase any undeveloped Leases
      from the Partnership other than at the higher of Cost or fair market
      value.

     

    The
      Managing General Partner and its Affiliates, other than an Affiliated Income
      Program, shall not purchase any producing natural gas or oil property from
      the
      Partnership unless:

     

    
      	 	
              (i)

            	
              the
                sale is in connection with the liquidation of the Partnership;
                or

            


    

     

    
      	 	
              (ii)

            	
              the
                Managing General Partner’s well supervision fees under the Drilling and
                Operating Agreement for the well have exceeded the net revenues of
                the
                well, determined without regard to the Managing General Partner’s well
                supervision fees for the well, for a period of at least three consecutive
                months.

            


    

     

    Under
      both (i) and (ii) above, the sale must be at fair market value supported by
      an
      appraisal of an Independent Expert selected by the Managing General Partner.
      

     

    4.03(d)(4).
      Limitations
      on Activities of the Managing General Partner and its Affiliates on Leases
      Acquired by the Partnership.
      During a
      period of five years after the Offering Termination Date of the Partnership,
      if
      the Managing General Partner or any of its Affiliates (excluding another Program
      in which the interest of the Managing General Partner or its Affiliates is
      substantially similar to or less than their interest in the Partnership)
      proposes to acquire an interest from an unaffiliated person in a Prospect in
      which the Partnership possesses an interest or in a Prospect in which the
      Partnership’s interest has been terminated without compensation within one year
      preceding the proposed acquisition, then the following conditions shall
      apply:

     

    
      	 	
              (i)
                

            	
              if
                the Managing General Partner or the Affiliate (excluding another
                Program
                in which the interest of the Managing General Partner or its Affiliates
                is
                substantially similar to or less than their interest in the Partnership)
                does not currently own property in the Prospect separately from the
                Partnership, then neither the Managing General Partner nor the Affiliate
                shall be permitted to purchase an interest in the Prospect;
                and

            


    

     

    
      	 	
              (ii)
                

            	
              if
                the Managing General Partner or the Affiliate (excluding another
                Program
                in which the interest of the Managing General Partner or its Affiliates
                is
                substantially similar to or less than their interest in the Partnership)
                currently owns a proportionate interest in the Prospect separately
                from
                the Partnership, then the interest to be acquired shall be divided
                between
                the Partnership and the Managing General Partner or the Affiliate
                in the
                same proportion as is the other property in the Prospect. Provided,
                however, if cash or financing is not available to the Partnership
                to
                enable it to complete a purchase of the additional interest to which
                it is
                entitled, then neither the Managing General Partner nor the Affiliate
                shall be permitted to purchase any additional interest in the
                Prospect.

            


    

     

    
      
        
        

      

      
        34

        
          

        

      

      
        
        

      

    

     

    4.03(d)(5).
      Transfer
      of Leases between Affiliated Limited Partnerships. The
      transfer of an undeveloped Lease from the Partnership to another drilling
      Program sponsored or managed by the Managing General Partner or its Affiliates
      must be made at fair market value if the undeveloped Lease has been held by
      the
      Partnership for more than two years. Otherwise, if the Managing General Partner
      deems it to be in the best interest of the Partnership, the transfer may be
      made
      at Cost.

     

    An
      Affiliated Income Program may purchase a producing natural gas and oil property
      from the Partnership at any time at: 

     

    
      	 	
              (i)

            	
              fair
                market value as supported by an appraisal from an Independent Expert
                if
                the property has been held by the Partnership for more than six months
                or
                the Partnership has made significant expenditures have been made
                in
                connection with the property; or 

            


    

     

    
      	 	
              (ii)

            	
              Cost,
                as adjusted for intervening operations, if the Managing General Partner
                deems it to be in the best interest of the
                Partnership.

            


    

     

    However,
      these prohibitions shall not apply to joint ventures or Farmouts among
      Affiliated partnerships, provided that:

     

    
      	 	
              (i)

            	
              the
                respective obligations and revenue sharing of all parties to the
                transaction are substantially the same; and


            


    

     

    
      	 	
              (ii)

            	
              the
                compensation arrangement or any other interest or right of either
                the
                Managing General Partner or its Affiliates is the same in each Affiliated
                partnership or if different, the aggregate compensation of the Managing
                General Partner or the Affiliate is reduced to reflect the lower
                compensation arrangement.

            


    

     

    4.03(d)(6).
      Sale
      of All Assets. The
      sale
      of all or substantially all of the assets of the Partnership, including without
      limitation, Leases, wells, equipment and production therefrom, shall be made
      only with the consent of Participants whose Units equal a majority of the total
      Units.

     

    4.03(d)(7).
      Services. 

     

    4.03(d)(7)(a).
      Competitive
      Rates.
      The
      Managing General Partner and any Affiliate shall not render to the Partnership
      any oil field, equipage, or other services nor sell or lease to the Partnership
      any equipment or related supplies unless: 

     

    
      	 	
              (i)
                

            	
              the
                person is engaged, independently of the Partnership and as an ordinary
                and
                ongoing business, in the business of rendering the services or selling
                or
                leasing the equipment and supplies to a substantial extent to other
                persons in the natural gas and oil industry in addition to the
                partnerships in which the Managing General Partner or an Affiliate
                has an
                interest; and 

            


    

     

    
      	 	
              (ii)
                

            	
              the
                compensation, price, or rental therefore is competitive with the
                compensation, price, or rental of other persons in the area engaged
                in the
                business of rendering comparable services or selling or leasing comparable
                equipment and supplies which could reasonably be made available to
                the
                Partnership. 

            


    

     

    
      
        
        

      

      
        35

        
          

        

      

      
        
        

      

    

     

    If
      the
      person is not engaged in such a business, then the compensation, price or rental
      shall be the Cost of the services, equipment or supplies to the person or the
      competitive rate which could be obtained in the area, whichever is less.


     

    4.03(d)(7)(b).
      If
      Not Disclosed in the Prospectus or This Agreement, Then Services by the Managing
      General Partner Must be Described in a Separate Contract and
      Cancelable.
      Any
      services for which the Managing General Partner or an Affiliate is to receive
      compensation, other than those described in this Agreement or the Prospectus,
      shall be set forth in a written contract which precisely describes the services
      to be rendered and all compensation to be paid. These contracts shall be
      cancelable without penalty on 60 days written notice by Participants whose
      Units
      equal a majority of the total Units.

     

    4.03(d)(8).
      Loans.

     

    4.03(d)(8)(a).
      No
      Loans from the Partnership.
      No loans
      or advances shall be made by the Partnership to the Managing General Partner
      or
      its Affiliates.

     

    4.03(d)(8)(b).
      Loans
      to the Partnership.
      Neither
      the Managing General Partner nor any Affiliate shall loan money to the
      Partnership if the interest to be charged exceeds either:

     

    
      	 	
              (i)
                

            	
              the
                Managing General Partner’s or the Affiliate’s interest cost; or
                

            


    

     

    
      	 	
              (ii)
                

            	
              that
                which would be charged to the Partnership, without reference to the
                Managing General Partner’s or the Affiliate’s financial abilities or
                guarantees, by unrelated lenders, on comparable loans for the same
                purpose. 

            


    

     

    Neither
      the Managing General Partner nor any Affiliate shall receive points or other
      financing charges or fees, regardless of the amount, although the actual amount
      of the charges incurred by them from third-party lenders may be reimbursed
      to
      the Managing General Partner or the Affiliate.

     

    4.03(d)(9).
      Farmouts.
      The
      Managing General Partner shall not enter into a Farmout to avoid its paying
      its
      share of costs related to drilling a well on an undeveloped Lease. The
      Partnership shall not Farmout an undeveloped Lease or well activity to the
      Managing General Partner or its Affiliates except as set forth in §4.03(d)(3).
      Notwithstanding, this restriction shall not apply to Farmouts between the
      Partnership and another partnership managed by the Managing General Partner
      or
      its Affiliates, either separately or jointly, provided that the respective
      obligations and revenue sharing of all parties to the transactions are
      substantially the same and the compensation arrangement or any other interest
      or
      right of the Managing General Partner or its Affiliates is the same in each
      partnership, or, if different, the aggregate compensation of the Managing
      General Partner and its Affiliates is reduced to reflect the lower compensation
      agreement. 

     

    The
      Partnership may Farmout an undeveloped lease or well activity only if the
      Managing General Partner, exercising the standard of a prudent operator,
      determines that:

     

    
      
        
        

      

      
        36

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (i)
                

            	
              the
                Partnership lacks the funds to complete the oil and gas operations
                on the
                Lease or well and cannot obtain suitable
                financing;

            


    

     

    
      	 	
              (ii)
                

            	
              drilling
                on the Lease or the intended well activity would concentrate excessive
                funds in one location, creating undue risks to the
                Partnership;

            


    

     

    
      	 	
              (iii)
                

            	
              the
                Leases or well activity have been downgraded by events occurring
                after
                assignment to the Partnership so that development of the Leases or
                well
                activity would not be desirable; or


            


    

     

    
      	 	
              (iv)
                

            	
              the
                best interests of the Partnership would be
                served.

            


    

     

    If
      the
      Partnership Farmouts a Lease or well activity, the Managing General Partner
      must
      retain on behalf of the Partnership the economic interests and concessions
      as a
      reasonably prudent oil and gas operator would or could retain under the
      circumstances prevailing at the time, consistent with industry practices.


     

    If
      the
      Partnership acquires an undeveloped Lease pursuant to a Farmout or joint venture
      from an Affiliated partnership, the Managing General Partner’s and its
      Affiliates’ aggregate compensation associated with the property and any direct
      and indirect ownership interest in the property may not exceed the lower of
      the
      compensation and ownership interest in the Managing General Partner and/or
      its
      Affiliates could receive if the property were separately owned or retained
      by
      either the Partnership or the Affiliated partnership.

     

    4.03(d)(10).
      No
      Compensating Balances.
      Neither
      the Managing General Partner nor any Affiliate shall use the Partnership’s funds
      as compensating balances for its own benefit.

     

    4.03(d)(11).
      Future
      Production.
      Neither
      the Managing General Partner nor any Affiliate shall commit the future
      production of a well developed by the Partnership exclusively for its own
      benefit.

     

    4.03(d)(12).
      Marketing
      Arrangements.
      Subject
      to §4.06(c), all benefits from marketing arrangements or other relationships
      affecting the property of the Managing General Partner or its Affiliates,
      including its Affiliated partnerships and the Partnership shall be fairly and
      equitably apportioned according to the respective interests of each in the
      property. In this regard, the benefits and liabilities of the hedging agreements
      shall be equitably allocated by Atlas America and/or Atlas Energy Resources,
      LLC
      and the Managing General Partner to the Partnership and the other partnerships
      sponsored by the Managing General Partner and its Affiliates pro rata based
      on
      actual production, consistent with past practice, and the Partnership and the
      other partnerships sponsored by the Managing General Partner and its Affiliates
      shall be severally liable for their respective allocated share thereof, but
      shall not be jointly and severally liable for the entire amount of the
      liabilities under the hedging agreements. Additionally, Atlas America and/or
      Atlas Energy Resources, LLC shall not be liable for any such liabilities, or
      be
      entitled to any such benefits, to the extent they are so allocated. Atlas
      America has transferred ownership of the Managing General Partner to Atlas
      Energy Resources, LLC and it is anticipated that Atlas Energy Resources, LLC
      or
      an affiliate, rather than Atlas America, will enter into future hedging
      agreements.

     

    4.03(d)(13).
      Advance
      Payments.
      Advance
      payments by the Partnership to the Managing General Partner and its Affiliates
      are prohibited except when advance payments are required to secure the tax
      benefits of prepaid Intangible Drilling Costs for a business purpose as set
      forth in the Drilling and Operating Agreement. 

     

    
      
        
        

      

      
        37

        
          

        

      

      
        
        

      

    

     

    4.03(d)(14).
      No
      Rebates. No
      rebates or give-ups may be received by the Managing General Partner or any
      Affiliate nor may the Managing General Partner or any Affiliate participate
      in
      any reciprocal business arrangements that would circumvent the provisions of
      this section.

     

    4.03(d)(15).
      Participation
      in Other Partnerships.
      If the
      Partnership participates in other partnerships or joint ventures (multi-tier
      arrangements), then the terms of any of these arrangements shall not result
      in
      the circumvention of any of the requirements or prohibitions contained in this
      Agreement, including the following: 

     

    
      	 	
              (i)
                

            	
              there
                shall be no duplication or increase in Organization and Offering
                Costs,
                the Managing General Partner’s compensation, Partnership expenses or other
                fees and costs; 

            


    

     

    
      	 	
              (ii)
                

            	
              there
                shall be no substantive alteration in the fiduciary and contractual
                relationship between the Managing General Partner and the Participants;
                and 

            


    

     

    
      	 	
              (iii)
                

            	
              there
                shall be no diminishment in the voting rights of the
                Participants.

            


    

     

    4.03(d)(16).
      Roll-Up
      Limitations. 

     

    4.03(d)(16)(a). Requirement
      for Appraisal and Its Assumptions.
      In
      connection with a proposed Roll-Up, an appraisal of all Partnership
      assets shall be obtained from a competent Independent Expert. If the appraisal
      will be included in a prospectus used
      to offer
      securities of a Roll-Up Entity, then the appraisal shall be filed with the
      SEC
      and the Administrator as an exhibit to the registration statement for the
      offering. Thus, an issuer using the appraisal shall be subject to liability
      for
      violation of Section 11 of the Securities Act of 1933 and comparable provisions
      under state law for any material misrepresentations or material omissions in
      the
      appraisal. 

     

    Partnership
      assets shall be appraised on a consistent basis. The appraisal shall be based
      on
      all relevant information, including current reserve estimates prepared as set
      forth in §4.03(b)(3), and shall indicate the value of the Partnership’s assets
      as of a date immediately before the announcement of the proposed Roll-Up
      transaction. The appraisal shall assume an orderly liquidation of the
      Partnership’s assets over a 12-month period. 

     

    The
      terms
      of the engagement of the Independent Expert shall clearly state that the
      engagement is for the benefit of the Partnership and the Participants. A summary
      of the independent appraisal, indicating all material assumptions underlying
      the
      appraisal, shall be included in a report to the Participants in connection
      with
      a proposed Roll-Up.

     

    4.03(d)(16)(b).
      Rights
      of Participants Who Vote Against Proposal.
      In
      connection with a proposed Roll-Up, Participants who vote “no” on the proposal
      shall be offered the choice of:

     

    
      	 	
              (i)

            	
              accepting
                the securities of the Roll-Up Entity offered in the proposed Roll-Up;
                or

            


    

     

    
      	 	
              (ii)

            	
              one
                of the following:

            


    

     

    
      	 	
              (a)

            	
              remaining
                as Participants in the Partnership and preserving their Units in
                the
                Partnership on the same terms and conditions as existed previously;
                or

            


    

     

    
      	 	
              (b)

            	
              receiving
                cash in an amount equal to the Participants’ pro rata share of the
                appraised value of the net assets of the Partnership based on their
                respective number of Units.

            


    

     

    
      
        
        

      

      
        38

        
          

        

      

      
        
        

      

    

     

    4.03(d)(16)(c).
      No
      Roll-Up If Diminishment of Voting Rights.
      The
      Partnership shall not participate in any proposed Roll-Up which, if approved,
      would result in the diminishment of any Participant’s voting rights under the
      Roll-Up Entity’s chartering agreement.
      In no event shall the democracy rights of Participants in the Roll-Up Entity
      be
      less than those provided for under§§4.03(c)(1)
      and 4.03(c)(2). If the Roll-Up Entity is a corporation, then the democracy
      rights of Participants shall correspond to the democracy rights provided for
      in
      this Agreement to the greatest extent possible.

     

    4.03(d)(16)(d).
      No
      Roll-Up If Accumulation of Shares Would be Impeded.
      The
      Partnership shall not participate in any proposed Roll-Up transaction which
      includes provisions that would operate to materially impede or frustrate the
      accumulation of shares by any purchaser of the securities of the Roll-Up Entity,
      except to the minimum extent necessary to preserve the tax status of the Roll-Up
      Entity. The Partnership shall not participate in any proposed Roll-Up
      transaction which would limit the ability of a Participant to exercise the
      voting rights of its securities of the Roll-Up Entity on the basis of the number
      of Units held by that Participant.

     

    4.03(d)(16)(e).
      No
      Roll-Up If Access to Records Would Be Limited. The
      Partnership shall not participate in a Roll-Up in which Participants’ rights of
      access to the records of the Roll-Up Entity would be less than those provided
      for under §§4.03(b)(5), 4.03(b)(6) and 4.03(b)(7).

     

    4.03(d)(16)(f).
      Cost
      of Roll-Up.
      The
      Partnership shall not participate in any proposed Roll-Up transaction in which
      any of the costs of the transaction would be borne by the Partnership if
      Participants whose Units equal a majority of the total Units do not vote to
      approve the proposed Roll-Up.

     

    4.03(d)(16)(g).
      Roll-Up
      Approval.
      The
      Partnership shall not participate in a Roll-Up transaction unless the Roll-Up
      transaction is approved by Participants whose Units equal a majority of the
      total Units.

     

    4.03(d)(17).
      Disclosure
      of Binding Agreements. Any
      agreement or arrangement which binds the Partnership must be disclosed in the
      Prospectus.

     

    4.03(d)(18).
      Transactions
      Must Be Fair
      and Reasonable.
      Neither
      the Managing General Partner nor any Affiliate shall sell, transfer, or convey
      any property to or purchase any property from the Partnership, directly or
      indirectly, except under transactions that are fair and reasonable, nor take
      any
      action with respect to the assets or property of the Partnership which does
      not
      primarily benefit the Partnership.

     

    4.04.
      Designation,
      Compensation and Removal of Managing General Partner and Removal of
      Operator.

     

    4.04(a).
      Managing
      General Partner.

     

    4.04(a)(1).
      Term
      of Service.
      Except
      as otherwise provided in this Agreement, Atlas shall serve as the Managing
      General Partner of the Partnership until either it:

     

    
      	 	
              (i)
                

            	
              is
                removed pursuant to §4.04(a)(3); or


            


    

     

    
      	 	
              (ii)
                

            	
              withdraws
                pursuant to §4.04(a)(3)(f).

            


    

     

    4.04(a)(2).
      Compensation
      of Managing General Partner.
      In
      addition to the compensation set forth in §§4.01(a)(4) and 4.02(d)(1), the
      Managing General Partner shall receive the compensation set forth in
§§4.04(a)(2)(b) through 4.04(a)(2)(g).

     

    
      
        
        

      

      
        39

        
          

        

      

      
        
        

      

    

     

    4.04(a)(2)(a).
      Charges
      Must Be Necessary and Reasonable.
      Charges
      by the Managing General Partner for goods and services must be fully supportable
      as to:

     

    
      	 	
              (i)
                

            	
              the
                necessity of the goods and services; and


            


    

     

    
      	 	
              (ii)
                

            	
              the
                reasonableness of the amount charged.


            


    

     

    All
      actual and necessary expenses incurred by the Partnership may be paid out of
      the
      Partnership’s subscription proceeds and revenues. 

     

    4.04(a)(2)(b).
      Direct
      Costs.
      The
      Managing General Partner and its Affiliates shall be reimbursed for all Direct
      Costs. Direct Costs, however, shall be billed directly to and paid by the
      Partnership to the extent practicable.

     

    4.04(a)(2)(c).
      Administrative
      Costs.
      The
      Managing General Partner shall receive a nonaccountable, fixed payment
      reimbursement for its Administrative Costs of $75 per well per month. The
      nonaccountable, fixed payment reimbursement of $75 per well per month shall
      be
      subject to the following:

     

    
      	 	
              (i)
                

            	
              it
                shall not be increased in amount during the term of the
                Partnership;

            


    

     

    
      	 	
              (ii)
                

            	
              it
                shall be proportionately reduced to the extent the Partnership acquires
                less than 100% of the Working Interest in the well;
                

            


    

     

    
      	 	
              (iii)
                

            	
              it
                shall be the entire payment to reimburse the Managing General Partner
                for
                the Partnership’s Administrative Costs;
                and

            


    

     

    
      	 	
              (iv)
                

            	
              it
                shall not be received for plugged or abandoned
                wells.

            


    

     

    4.04(a)(2)(d).
      Gas
      Gathering.
      The
      Managing General Partner, not acting as a Partner, shall be responsible for
      gathering and transporting the natural gas produced by the Partnership to
      interstate pipeline systems, local distribution companies, and/or end-users
      in
      the area (the “gathering services”). In providing the gathering services, the
      Managing General Partner may use the gathering system owned by Atlas Pipeline
      Partners, as described in the Prospectus, and gathering systems owned by
      independent third-parties and/or Affiliates of Atlas America other than Atlas
      Pipeline Partners.

     

    
      
        
        

      

      
        40

        
          

        

      

      
        
        

      

    

     

    The
      Partnership shall pay a gathering fee directly to the Managing General Partner
      at competitive rates for the gathering services. The gathering fee paid by
      the
      Partnership to the Managing General Partner may be increased from time-to-time
      by the Managing General Partner, in its sole discretion, but may not increase
      beyond competitive rates as determined by the Managing General Partner.
      Currently, the Managing General Partner has determined that the competitive
      rate
      is an amount equal to 13% of the gross sales price received by the Partnership
      for its natural gas in each of its primary or secondary areas as described
      in
      the Prospectus. Gross sales price means the price that is actually received,
      adjusted to take into account proceeds received or payments made pursuant to
      hedging arrangements. The payment of a competitive fee to the Managing General
      Partner for its gathering services shall be subject to the following
      conditions:

     

    
      	 	
              (i)

            	
              If
                the Partnership’s natural gas production is gathered and transported
                through the gathering system owned by Atlas Pipeline Partners, then
                the
                Managing General Partner shall apply its gathering fee towards the
                related
                gathering fee obligation of Atlas America, Inc., Resource Energy,
                LLC, and
                Viking Resources LLC (the “Atlas Entities”) under their agreement with
                Atlas Pipeline Partners as described in the Prospectus.
                

            


    

     

    
      	 	
              (ii)

            	
              If
                a third-party gathering system is used by the Partnership, then the
                Managing General Partner shall pay all of the gathering fee it receives
                from the Partnership to the third-party gathering the natural gas.
                The
                Managing General Partner shall not retain the excess of any gathering
                fees
                it receives from the Partnership over the payments it makes to third-party
                gas gatherers. If the third-party’s gathering system charges more than an
                amount equal to 13% of the gross sales price, then the Managing General
                Partner’s gathering fee charged to the Partnership shall be the actual
                transportation and compression fees charged by the third-party gathering
                system with respect to the Partnership’s natural gas in the area.
                

            


    

     

    
      	 	
              (iii)

            	
              If
                both a third-party gathering system and the Atlas Pipeline Partners
                gathering system (or a gas gathering system owned by an affiliate
                of Atlas
                America other than Atlas Pipeline Partners) are used by the Partnership,
                then the Managing General Partner shall receive an amount equal to
                13% of
                the gross sales price for the natural gas transported by the segment
                provided by the Atlas Pipeline Partners gathering system (or a gas
                gathering system owned by an affiliate of Atlas America other than
                Atlas
                Pipeline Partners), plus the amount charged by the third-party gathering
                system for the natural gas transported by the segment provided by
                the
                third-party. 

            


    

     

    With
      respect to the Knox project and natural gas produced from the Mississippian
      and
      Devonian Shale Reservoirs in Anderson, Campbell, Morgan, Roane and Scott
      Counties, Tennessee as described in the Prospectus, if the Coalfield Pipeline
      does not have sufficient capacity to compress and transport the natural gas
      produced from the Partnership’s wells as determined by Atlas America, then Atlas
      America or an Affiliate other than Atlas Pipeline Partners may construct an
      additional gathering system and/or enhancements to the Coalfield Pipeline.
      On
      completion of the construction, Atlas America will transfer its ownership in
      the
      additional gathering system and/or enhancements to the owners of Coalfield
      Pipeline, which will then pay Atlas America an amount equal to $.12 per mcf
      of
      natural gas transported through the newly constructed and/or enhanced gathering
      system. Coalfield Pipeline will pay this amount of $.12 per mcf to Atlas America
      from its gathering and compression fees charged to the Partnership.

     

    
      
        
        

      

      
        41

        
          

        

      

      
        
        

      

    

     

    4.04(a)(2)(e).
      Dealer-Manager
      Fee.
      Subject
      to §3.03(a)(1), the Dealer-Manager shall receive on each Unit sold to investors:
      

     

    
      	 	
              (i)
                

            	
              a
                2.5% Dealer-Manager fee; 

            


    

     

    
      	 	
              (ii)
                

            	
              a
                7% Sales Commission; and

            


    

     

    
      	 	
              (iii)
                

            	
              an
                up to .5% reimbursement of the Selling Agents’ bona fide due diligence
                expenses. 

            


    

     

    4.04(a)(2)(f).
      Drilling
      and Operating Agreement. The
      Managing General Partner and its Affiliates shall receive compensation as set
      forth in the Drilling and Operating Agreement.

     

    4.04(a)(2)(g).
      Other
      Transactions.
      The
      Managing General Partner and its Affiliates may enter into transactions pursuant
      to §4.03(d)(7) with the Partnership and shall be entitled to compensation under
      that section.

     

    4.04(a)(3).
      Removal
      of Managing General Partner. 

     

    4.04(a)(3)(a).
      Majority
      Vote Required to Remove the Managing General Partner.
      The
      Managing General Partner may be removed at any time on 60 days’ advance written
      notice to the outgoing Managing General Partner by the affirmative vote of
      Participants whose Units equal a majority of the total Units. 

     

    If
      the
      Participants vote to remove the Managing General Partner from the Partnership,
      then Participants must elect by an affirmative vote of Participants who's Units
      equal a majority of the total Units either to:

     

    
      	 	
              (i)
                

            	
              dissolve,
                wind-up, and terminate the Partnership; or


            


    

     

    
      	 	
              (ii)
                

            	
              continue
                as a successor limited partnership under all the terms of this Partnership
                Agreement as provided in §7.01(c). 

            


    

     

    If
      the
      Participants elect to continue as a successor limited partnership, then the
      Managing General Partner shall not be removed until a substituted Managing
      General Partner has been selected by an affirmative vote of Participants who's
      Units equal a majority of the total Units and installed as such.

     

    4.04(a)(3)(b).
      Valuation
      of Managing General Partner’s Interest in the Partnership.
      If the
      Managing General Partner is removed, then its interest in the Partnership shall
      be determined by appraisal by a qualified Independent Expert. The Independent
      Expert shall be selected by mutual agreement between the removed Managing
      General Partner and the incoming Managing General Partner. The appraisal shall
      take into account an appropriate discount, to reflect the risk of recovering
      natural gas and oil reserves, which shall not be less than that used to
      calculate the presentment price in the most recent presentment offer under
      §6.03, if any. 

     

    The
      cost
      of the appraisal shall be borne equally by the removed Managing General Partner
      and the Partnership. 

     

    4.04(a)(3)(c).
      Incoming
      Managing General Partner’s Option to Purchase. The
      incoming Managing General Partner shall have the option to purchase 20% of
      the
      removed Managing General Partner’s interest in the Partnership as Managing
      General Partner, but not as a Participant, for the value determined by the
      Independent Expert.

     

    
      
        
        

      

      
        42

        
          

        

      

      
        
        

      

    

     

    4.04(a)(3)(d).
      Method
      of Payment.
      The
      method of payment for the removed Managing General Partner’s interest must be
      fair and protect the solvency and liquidity of the Partnership. The method
      of
      payment shall be as follows: 

     

    
      	 	
              (i)
                

            	
              when
                the termination is voluntary, the method of payment shall be a
                non-interest bearing unsecured promissory note with principal payable,
                if
                at all, from distributions which the Managing General Partner otherwise
                would have received under this Agreement had the Managing General
                Partner
                not been terminated; and

            


    

     

    
      	 	
              (ii)
                

            	
              when
                the termination is involuntary, the method of payment shall be an
                interest
                bearing unsecured promissory note coming due in no less than five
                years
                with equal installments each year. The interest rate shall be that
                charged
                on comparable loans. 

            


    

     

    4.04(a)(3)(e).
      Termination
      of Contracts.
      At the
      time of its removal, the removed Managing General Partner shall cause, to the
      extent it is legally possible to do so, its successor to be transferred or
      assigned all of its rights, obligations and interests as Managing General
      Partner of the Partnership in contracts entered into by it on behalf of the
      Partnership. In any event, the removed Managing General Partner shall cause
      all
      of its rights, obligations and interests as Managing General Partner of the
      Partnership in any such contract to terminate at the time of its removal.


     

    Notwithstanding
      any other provision in this Agreement, the Partnership or the successor Managing
      General Partner shall not:

     

    
      	 	
              (i)
                

            	
              be
                a party to any natural gas supply agreement that the Managing General
                Partner or its Affiliates enters into with a third-party;
                

            


    

     

    
      	 	
              (ii)
                

            	
              have
                any rights pursuant to such natural gas supply agreement; or
                

            


    

     

    
      	 	
              (iii)
                

            	
              receive
                any interest in the Managing General Partner’s and its Affiliates’
                pipeline or gathering system or compression facilities.
                

            


    

     

    4.04(a)(3)(f).
      The
      Managing General Partner’s Right to Voluntarily Withdraw.
      At any
      time beginning 10 years after the Offering Termination Date and the
      Partnership’s primary drilling activities, the Managing General Partner may
      voluntarily withdraw as Managing General Partner on giving 120 days’ written
      notice of withdrawal to the Participants. If the Managing General Partner
      withdraws, then the following conditions shall apply:

     

    
      	 	
              (i)
                

            	
              the
                Managing General Partner’s interest in the Partnership shall be determined
                as described in §4.04(a)(3)(b) above with respect to removal;
                and

            


    

     

    
      	 	
              (ii)
                

            	
              the
                interest shall be distributed to the Managing General Partner as
                described
                in §4.04(a)(3)(d)(i) above.

            


    

     

    Any
      successor Managing General Partner shall have the option to purchase 20% of
      the
      withdrawing Managing General Partner’s interest in the Partnership at the value
      determined as described above with respect to removal.

     

    4.04(a)(3)(g).
      Right
      of Managing General Partner to Hypothecate Its Interests.
      The
      Managing General Partner shall have the authority without the consent of the
      Participants and without affecting the allocation of costs and revenues received
      or incurred under this Agreement, to hypothecate, pledge, or otherwise encumber,
      on any terms it chooses for its own general purposes, either:

     

    
      
        
        

      

      
        43

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (i)

            	
              its
                Partnership interest; or 

            


    

     

    
      	 	
              (ii)

            	
              an
                undivided interest in the assets of the Partnership equal to or less
                than
                its respective interest as Managing General Partner in the revenues
                of the
                Partnership. 

            


    

     

    All
      repayments of these borrowings and costs, interest or other charges related
      to
      the borrowings shall be borne and paid separately by the Managing General
      Partner. In no event shall the repayments, costs, interest, or other charges
      related to the borrowing be charged to the account of the Participants.


     

    4.04(a)(3)(h).
      The
      Managing General Partner’s Right to Withdraw Property
      Interest.
      The
      Managing General Partner shall have the right to withdraw a property interest
      held by the Partnership in the form of a Working Interest in the Partnership’s
      Wells equal to or less than its respective interest as Managing General Partner
      in the revenues of the Partnership if: 

     

    
      	 	
              (i)

            	
              the
                withdrawal is necessary to satisfy the bona fide request of its creditors;
                or 

            


    

     

    
      	 	
              (ii)

            	
              the
                withdrawal is approved by Participants whose Units equal a majority
                of the
                total Units.

            


    

     

    If
      the
      Managing General Partner withdraws a property interest from the Partnership
      as
      described above, then the Managing General Partner shall:

     

    
      	 	
              (i)

            	
              pay
                the expenses of withdrawing; and

            


    

     

    
      	 	
              (ii)

            	
              fully
                indemnify the Partnership against any additional expenses which may
                result
                from the withdrawal of its property interest, including insuring
                that a
                greater amount of Direct Costs or Administrative Costs is not allocated
                to
                the Participants. 

            


    

     

    4.04(a)(4).
      Removal
      of Operator.
      The
      Operator may be removed and a new Operator may be substituted at any time on
      60
      days advance written notice to the outgoing Operator by the Managing General
      Partner acting on behalf of the Partnership on the affirmative vote of
      Participants whose Units equal a majority of the total Units. 

     

    The
      Operator shall not be removed until a substituted Operator has been selected
      by
      an affirmative vote of Participants whose Units equal a majority of the total
      Units and installed as such.

     

    4.05.
      Indemnification
      and Exoneration.

     

    4.05(a)(1).
      Standards
      for the Managing General Partner Not Incurring Liability to the Partnership
      or
      Participants.
      The
      Managing General Partner, the Operator, and their Affiliates shall not have
      any
      liability whatsoever to the Partnership, or to any Participant for any loss
      suffered by the Partnership or the Participants which arises out of any action
      or inaction of the Managing General Partner, the Operator, or their Affiliates
      if:

     

    
      	 	
              (i)
                

            	
              the
                Managing General Partner, the Operator, and their Affiliates determined
                in
                good faith that the course of conduct was in the best interest of
                the
                Partnership;

            


    

     

    
      	 	
              (ii)
                

            	
              the
                Managing General Partner, the Operator, and their Affiliates were
                acting
                on behalf of, or performing services for, the Partnership; and
                

            


    

     

    
      	 	
              (iii)
                

            	
              the
                course of conduct did not constitute negligence or misconduct of
                the
                Managing General Partner, the Operator, or their
                Affiliates.

            


    

     

    
      
        
        

      

      
        44

        
          

        

      

      
        
        

      

    

     

    4.05(a)(2).
      Standards
      for Managing General Partner Indemnification.
      The
      Managing General Partner, the Operator, and their Affiliates shall be
      indemnified by the Partnership against any losses, judgments, liabilities,
      expenses, and amounts paid in settlement of any claims sustained by them in
      connection with the Partnership, provided that: 

     

    
      	 	
              (i)
                

            	
              the
                Managing General Partner, the Operator, and their Affiliates determined
                in
                good faith that the course of conduct which caused the loss or liability
                was in the best interest of the
                Partnership;

            


    

     

    
      	 	
              (ii)
                

            	
              the
                Managing General Partner, the Operator, and their Affiliates were
                acting
                on behalf of, or performing services for, the Partnership; and
                

            


    

     

    
      	 	
              (iii)
                

            	
              the
                course of conduct was not the result of negligence or misconduct
                of the
                Managing General Partner, the Operator, or their
                Affiliates.

            


    

     

    Provided,
      however, payments arising from such indemnification or agreement to hold
      harmless are recoverable only out of the following:

     

    
      	 	
              (i)
                

            	
              the
                Partnership’s tangible net assets, which include its revenues;
                and

            


    

     

    
      	 	
              (ii)
                

            	
              any
                insurance proceeds from the types of insurance for which the Managing
                General Partner, the Operator and their Affiliates may be indemnified
                under this Agreement.

            


    

     

    4.05(a)(3).
      Standards
      for Securities Law Indemnification.
      Notwithstanding anything to the contrary contained in this section, the Managing
      General Partner, the Operator, and their Affiliates and any person acting as
      a
      broker/dealer with respect to the offer or sale of the Units, shall not be
      indemnified for any losses, liabilities or expenses arising from or out of
      an
      alleged violation of federal or state securities laws by such party
      unless:

     

    
      	 	
              (i)
                

            	
              there
                has been a successful adjudication on the merits of each count involving
                alleged securities law violations as to the particular indemnitee;
                

            


    

     

    
      	 	
              (ii)
                

            	
              the
                claims have been dismissed with prejudice on the merits by a court
                of
                competent jurisdiction as to the particular indemnitee; or
                

            


    

     

    
      	 	
              (iii)
                

            	
              a
                court of competent jurisdiction approves a settlement of the claims
                against a particular indemnitee and finds that indemnification of
                the
                settlement and the related costs should be made, and the court considering
                the request for indemnification has been advised of the position
                of the
                SEC, the Massachusetts Securities Division, and any state securities
                regulatory authority in which plaintiffs claim they were offered
                or sold
                Units with respect to the issue of indemnification for violation
                of
                securities laws.

            


    

     

    4.05(a)(4).
      Standards
      for Advancement of Funds to the Managing General Partner and
      Insurance.
      The
      advancement of Partnership funds to the Managing General Partner, the Operator,
      or their Affiliates for legal expenses and other costs incurred as a result
      of
      any legal action for which indemnification is being sought from the Partnership
      is permissible only if the Partnership has adequate funds available and the
      following conditions are satisfied: 

     

    
      
        
        

      

      
        45

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (i)
                

            	
              the
                legal action relates to acts or omissions with respect to the performance
                of duties or services on behalf of the Partnership;
                

            


    

     

    
      	 	
              (ii)
                

            	
              the
                legal action is initiated by a third-party who is not a Participant,
                or
                the legal action is initiated by a Participant and a court of competent
                jurisdiction specifically approves the advancement; and
                

            


    

     

    
      	 	
              (iii)
                

            	
              the
                Managing General Partner or its Affiliates undertake to repay the
                advanced
                funds to the Partnership, together with the applicable legal rate
                of
                interest thereon, in cases in which such party is found not to be
                entitled
                to indemnification.

            


    

     

    The
      Partnership shall not bear the cost of that portion of insurance which insures
      the Managing General Partner, the Operator, or their Affiliates for any
      liability for which they could not be indemnified pursuant to §§4.05(a)(1) and
      4.05(a)(2).

     

    4.05(b).
      Liability
      of Partners.
      Under
      the Delaware Revised Uniform Limited Partnership Act, the Investor General
      Partners are liable jointly and severally for all liabilities and obligations
      of
      the Partnership. Notwithstanding the foregoing, as among themselves, the
      Investor General Partners agree that each shall be solely and individually
      responsible only for his pro rata share of the liabilities and obligations
      of
      the Partnership based on his respective number of Units. 

     

    In
      addition, the Managing General Partner agrees to use its corporate assets to
      indemnify each of the Investor General Partners against all Partnership related
      liabilities which exceed the Investor General Partner’s interest in the
      undistributed net assets of the Partnership and insurance proceeds, if any.
      Further, the Managing General Partner agrees to indemnify each Investor General
      Partner against any personal liability as a result of the unauthorized acts
      of
      another Investor General Partner. 

     

    If
      the
      Managing General Partner provides indemnification, then each Investor General
      Partner who has been indemnified shall transfer and
      subrogate his rights for contribution from or against any other Investor General
      Partner to the Managing General Partner.

     

    4.05(c).
      Order
      of Payment of Claims. Claims
      shall be paid as follows:

     

    
      	 	
              (i)
                

            	
              first,
                out of any insurance proceeds;

            


    

     

    
      	 	
              (ii)
                

            	
              second,
                out of Partnership assets and revenues; and


            


    

     

    
      	 	
              (iii)
                

            	
              last,
                by the Managing General Partner as provided in §§3.05(b)(2) and (3) and
                4.05(b). 

            


    

     

    No
      Limited Partner shall be required to reimburse the Managing General Partner,
      the
      Operator, their Affiliates, or the Investor General Partners for any liability
      in excess of his agreed Capital Contribution, except:

     

    
      	 	
              (i)
                

            	
              for
                a liability resulting from the Limited Partner’s unauthorized
                participation in management of the Partnership; or
                

            


    

     

    
      
        
        

      

      
        46

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (ii)
                

            	
              from
                some other breach by the Limited Partner of this
                Agreement.

            


    

     

    4.05(d).
      Authorized
      Transactions Are Not Deemed to Be a Breach.
      No
      transaction entered into or action taken by the Partnership, or by the Managing
      General Partner, the Operator, or their Affiliates, which is authorized by
      this
      Agreement shall be deemed a breach of any obligation owed by the Managing
      General Partner, the Operator, or their Affiliates to the Partnership or the
      Participants.

     

    4.06.
      Other
      Activities. 

     

    4.06(a).
      The
      Managing General Partner May Pursue Other Natural Gas and Oil Activities for
      Its
      Own Account.
      The
      Managing General Partner, the Operator, and their Affiliates are now engaged,
      and will engage in the future, for their own account and for the account of
      others, including other investors, in all aspects of the natural gas and oil
      business. This includes without limitation, the evaluation,
      acquisition, and sale of producing and nonproducing Leases, and the exploration
      for and production of natural gas, oil and
      other
      minerals. 

     

    The
      Managing General Partner is required to devote only so much of its time to
      the
      Partnership as it determines in its sole discretion, but consistent with its
      fiduciary duties, is necessary to manage the affairs of the Partnership. Except
      as expressly provided to the contrary in this Agreement, and subject to
      fiduciary duties, the Managing General Partner, the Operator, and their
      Affiliates may do the following: 

     

    
      	 	
              (i)
                

            	
              continue
                their activities, or initiate further such activities, individually,
                jointly with others, or as a part of any other limited or general
                partnership, tax partnership, joint venture, or other entity or activity
                to which they are or may become a party, in any locale and in the
                same
                fields, areas of operation or prospects in which the Partnership
                may
                likewise be active; 

            


    

     

    
      	 	
              (ii)
                

            	
              reserve
                partial interests in Leases being assigned to the Partnership or
                any other
                interests not expressly prohibited by this Agreement;
                

            


    

     

    
      	 	
              (iii)
                

            	
              deal
                with the Partnership as independent parties or through any other
                entity in
                which they may be interested; 

            


    

     

    
      	 	
              (iv)
                

            	
              conduct
                business with the Partnership as set forth in this Agreement;
                and

            


    

     

    
      	 	
              (v)
                

            	
              participate
                in such other investor operations, as investors or
                otherwise.

            


    

     

    The
      Managing General Partner and its Affiliates shall not be required to permit
      the
      Partnership or the Participants to participate in
      or
      share in any profits or other benefits from any of the other operations in
      which
      the Managing General Partner and its Affiliates may be interested as permitted
      under this section. However, except as
      otherwise provided in this Agreement, the Managing General Partner and its
      Affiliates may pursue business opportunities that are consistent with the
      Partnership’s investment objectives for their own account only after they have
      determined that the opportunity either: 

     

    
      	 	
              (i)
                

            	
              cannot
                be pursued by the Partnership because of insufficient funds; or
                

            


    

     

    
      	 	
              (ii)
                

            	
              it
                is not appropriate for the Partnership under the existing
                circumstances.

            


    

     

    
      
        
        

      

      
        47

        
          

        

      

      
        
        

      

    

     

    4.06(b).
      Managing
      General Partner May Manage Multiple Partnerships.
      The
      Managing General Partner or its Affiliates may manage multiple Programs
      simultaneously. 

     

    4.06(c).
      Partnership
      Has No Interest in Natural Gas Contracts or Pipelines and Gathering
      Systems.
      Notwithstanding any other provision in this Agreement, the Partnership shall
      not:

     

    
      	 	
              (i)
                

            	
              be
                a party to any natural gas supply agreement that the Managing General
                Partner, the Operator, or their Affiliates enter into with a third-party
                or have any rights pursuant to such natural gas supply agreement;
                or

            


    

     

    
      	 	
              (ii)
                

            	
              receive
                any interest in the Managing General Partner’s, the Operator’s, and their
                Affiliates’ pipeline or gathering system or compression
                facilities.

            


    

     

    ARTICLE
      V

    PARTICIPATION
      IN COSTS AND REVENUES,

    CAPITAL
      ACCOUNTS, ELECTIONS AND DISTRIBUTIONS

     

    5.01.
      Participation
      in Costs and Revenues.
      Except
      as otherwise provided in this Agreement, costs and revenues of the Partnership
      shall be charged and credited to the Managing General Partner and the
      Participants as set forth in this section and its subsections.

     

    5.01(a).
      Costs.
      Costs
      shall be charged as set forth below.

     

    5.01(a)(1).
      Organization
      and Offering Costs.
      Organization and Offering Costs shall be charged 100% to the Managing General
      Partner. For purposes of sharing in revenues under §5.01(b)(4), the Managing
      General Partner shall be credited with Organization and Offering Costs paid
      by
      it and for services provided by it as Organization Costs up to an amount equal
      to 15% of the Partnership’s subscription proceeds. Any Organization and Offering
      Costs paid and/or provided in services by the Managing General Partner in excess
      of this amount shall not be credited towards the Managing General Partner’s
      required Capital Contribution or revenue share set forth in §5.01(b)(4). The
      Managing General Partner’s credit for services provided to the Partnership as
      Organization Costs shall be determined based on generally accepted accounting
      principles.

     

    5.01(a)(2).
      Intangible
      Drilling Costs.
      Ninety
      percent (90%) of the Partnership’s subscription proceeds received from the
      Participants shall be used to pay 100% of the Intangible Drilling
      Costs.

     

    5.01(a)(3).
      Tangible
      Costs.
      Ten
      percent (10%) of the Partnership’s subscription proceeds received from the
      Participants shall be used by the Partnership to pay Tangible Costs. All
      remaining Tangible Costs in excess of an amount equal to 10% of the
      Partnership’s subscription proceeds shall be charged 100% to the Managing
      General Partner.

     

    5.01(a)(4).
      Operating
      Costs, Direct Costs, Administrative Costs and All Other
      Costs.
      Operating Costs, Direct Costs, Administrative Costs, and all other Partnership
      costs not specifically allocated shall be charged to the parties in the same
      ratio as the related production revenues are being credited.

     

    
      
        
        

      

      
        48

        
          

        

      

      
        
        

      

    

     

    5.01(a)(5).
      Allocation of Intangible Drilling Costs and Tangible Costs at Partnership
      Closings.
      Intangible Drilling Costs and the Participants’ share of Tangible Costs of a
      well or wells to be drilled and completed with the proceeds of a Partnership
      closing shall be charged 100% to the Participants who are admitted to the
      Partnership in that closing and shall not be reallocated to take into account
      other Partnership closings. 

     

    Although
      the subscription proceeds received by the Partnership in each closing may be
      used to pay the costs of drilling different wells, 90% of each Participant’s
      subscription proceeds shall be applied to Intangible Drilling Costs and 10%
      of
      each Participant’s subscription proceeds shall be applied to Tangible Costs
      regardless of when the Participant subscribes for his Units or is admitted
      to
      the Partnership.

     

    5.01(a)(6).
      Lease
      Costs.
      The
      Leases shall be contributed to the Partnership by the Managing General Partner
      as set forth in §4.01(a)(4).

     

    5.01(b).
      Revenues.
      Revenues shall be credited as set forth below.

     

    5.01(b)(1).
      Allocation
      of Revenues on Disposition of Property.
      If the
      parties’ Capital Accounts are adjusted to reflect the simulated depletion of a
      natural gas or oil property of the Partnership, then the portion of the total
      amount realized by the Partnership on the taxable disposition of the property
      that represents recovery of its simulated tax basis in the property shall be
      allocated to the parties in the same proportion as the aggregate adjusted tax
      basis of the property was allocated to the parties or their predecessors in
      interest. If the parties’ Capital Accounts are adjusted to reflect the actual
      depletion of a natural gas or oil property of the Partnership, then the portion
      of the total amount realized by the Partnership on the taxable disposition
      of
      the property that equals the parties’ aggregate remaining adjusted tax basis in
      the property shall be allocated to the parties in proportion to their respective
      remaining adjusted tax bases in the property. Thereafter, any excess shall
      be
      allocated to the Managing General Partner in an amount equal to the difference
      between the fair market value of the Lease at the time it was contributed to
      the
      Partnership and its simulated or actual adjusted tax basis at that time.
      Finally, any excess shall be credited as provided in §5.01(b)(4), below.


     

    In
      the
      event of the Partnership’s sale of developed natural gas and oil properties with
      equipment on the properties, the Managing General Partner may make any
      reasonable allocation of the sales proceeds between the equipment and the
      Leases.

     

    5.01(b)(2).
      Interest.
      Interest
      earned on each Participant’s subscription proceeds under §3.05(b)(1) shall be
      credited to the accounts of the respective subscribers who paid the subscription
      proceeds to the Partnership. The interest shall be paid to the Participants
      not
      later than the Partnership’s first cash distribution from
      operations.

     

    After
      the
      Offering Termination Date and until proceeds from the offering are invested
      in
      the Partnership’s natural gas and oil operations, any interest income from
      temporary investments shall be allocated pro rata to the Participants providing
      the subscription proceeds. 

     

    All
      other
      interest income, including interest earned on the deposit of production
      revenues, shall be credited as provided in §5.01(b)(4), below.

     

    5.01(b)(3).
      Sale
      or Disposition of Equipment.
      Proceeds
      from the sale or disposition of equipment shall be credited to the parties
      charged with the costs of the equipment in the ratio in which the costs were
      charged.

     

    
      
        
        

      

      
        49

        
          

        

      

      
        
        

      

    

     

    5.01(b)(4).
      Other
      Revenues.
      Subject
      to §5.01(b)(4)(a), the Managing General Partner and the Participants shall share
      in all other Partnership revenues in the same percentage as their respective
      Capital Contribution bears to the Partnership’s total Capital Contributions,
      except that the Managing General Partner shall receive an additional 7% of
      Partnership revenues. However, the Managing General Partner’s total revenue
      share shall not exceed 40% of Partnership revenues. For example, if the Managing
      General Partner contributes 25% of the Partnership’s total Capital Contributions
      and the Participants contribute 75% of the Partnership’s total Capital
      Contributions, then the Managing General Partner would receive 32% of the
      Partnership revenues and the Participants would receive 68% of the Partnership
      revenues. On the other hand, if the Managing General Partner contributes 35%
      of
      the Partnership’s total Capital Contributions and the Participants contribute
      65% of the Partnership’s total Capital Contributions, then the Managing General
      Partner would receive 40% of the Partnership revenues, not 42%, because its
      revenue share cannot exceed 40% of Partnership revenues, and the Participants
      would receive 60% of Partnership revenues.

     

    5.01(b)(4)(a).
      Subordination.
      The
      Managing General Partner shall subordinate up to 50% of its share of Partnership
      Net Production Revenues to the receipt by Participants of cash distributions
      from the Partnership equal to $1,000 per Unit (which is 10% of $10,000 per
      Unit)
      regardless of the actual subscription price they paid for their Units, in each
      of the Partnership’s first five 12-month periods of operations as set forth
      below. In this regard: 

     

    
      	 	
              (i)

            	
              the
                aggregate 60-month subordination period shall begin with the first
                cash
                distribution from operations to the
                Participants;

            


    

     

    
      	 	
              (ii)

            	
              subsequent
                subordination distributions, if any, shall be determined and made
                at the
                time of each subsequent distribution of revenues to the Participants;
                and

            


    

     

    
      	 	
              (iii)

            	
              the
                Managing General Partner shall not subordinate more than 50% of its
                share
                of Partnership Net Production Revenues in any 12-month subordination
                period. 

            


    

     

    The
      Managing General Partner’s subordination obligation shall be determined
      by:

     

    
      	 	
              (i)
                

            	
              carrying
                forward to subsequent 12-month subordination periods the amount,
                if any,
                by which cumulative cash distributions to Participants, including
                any
                subordination payments, are less than:


            


    

     

    
      	
            	(a)	
              $1,000
                per Unit (10% of $10,000 per Unit) in the first 12-month
                period;

            


    

     

    
      	
            	(b)	
              $2,000
                per Unit (20% of $10,000 per Unit) in the second 12-month
                period;

            


    

     

    
      	
            	(c)	
              $3,000
                per Unit (30% of $10,000 per Unit) in the third 12-month period;
                or
                

            


    

     

    
      	
            	(d)	
              $4,000
                per Unit (40% of $10,000 per Unit) in the fourth 12-month period
                (no carry
                forward is required if the Participant’s cumulative cash distributions are
                less than $5,000 per Unit (50% of $10,000 per Unit) in the fifth
                12-month
                period, because the Managing General Partner’s subordination obligation
                terminates on the expiration of the fifth 12-month period); and
                

            


    

     

    
      
        
        

      

      
        50

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (ii)
                

            	
              reimbursing
                the Managing General Partner for any previous subordination payments
                to
                the extent cumulative cash distributions to Participants, including
                any
                subordination payments, would exceed:


            


    

     

    
      	 	
              (a)
                

            	
              $1,000
                per Unit (10% of $10,000 per Unit) in the first 12-month
                period;

            


    

     

    
      	 	
              (b)
                

            	
              $2,000
                per Unit (20% of $10,000 per Unit) in the second 12-month
                period;

            


    

     

    
      	 	
              (c)
                

            	
              $3,000
                per Unit (30% of $10,000 per Unit) in the third 12-month
                period;

            


    

     

    
      	 	
              (d)
                

            	
              $4,000
                per Unit (40% of $10,000 per Unit) in the fourth 12-month period;
                or
                

            


    

     

    
      	 	
              (e)
                

            	
              $5,000
                per Unit (50% of $10,000 per Unit) in the fifth 12-month period.
                

            


    

     

    The
      Managing General Partner’s subordination obligation also shall be subject to the
      following conditions:

     

    
      	 	
              (i)
                

            	
              the
                subordination obligation may be prorated in the Managing General
                Partner’s
                discretion (e.g. in the case of a monthly distribution, the Managing
                General Partner shall not have any subordination obligation if the
                cumulative monthly distributions to Participants equal $83.33 per
                Unit
                (8.333% of $1,000 per Unit) or more, assuming there are no subordination
                distributions owed for any preceding
                period);

            


    

     

    
      	 	
              (ii)
                

            	
              the
                Managing General Partner shall not be required to return Partnership
                distributions previously received by it, even though a subordination
                obligation arises after the
                distributions;

            


    

     

    
      	 	
              (iii)
                

            	
              subject
                to the foregoing provisions of this section, only Partnership revenues
                in
                the current distribution period shall be debited or credited to the
                Managing General Partner as may be necessary to provide, to the extent
                possible, subordination distributions to the Participants and
                reimbursements to the Managing General Partner;


            


    

     

    
      	 	
              (iv)
                

            	
              no
                subordination distributions to the Participants or reimbursements
                to the
                Managing General Partner shall be made after the expiration of the
                fifth
                12-month subordination period; and

            


    

     

    
      	 	
              (v)
                

            	
              subordination
                payments to the Participants shall be subject to any lien or priority
                granted by the Managing General Partner and/or its Affiliates to
                its
                lenders pursuant to agreements either entered into by the Managing
                General
                Partner and/or its Affiliates before the subordination obligation
                arose or
                entered into or renewed by the Managing General Partner and/or its
                Affiliates after the subordination obligation
                arose.

            


    

     

    5.01(b)(5).
      Commingling
      of Revenues From All Partnership Wells.
      The
      revenues from all Partnership wells shall be commingled, so regardless of when
      a
      Participant subscribes for Units or is admitted to the Partnership, he will
      share in the Partnership’s revenues from all of its wells on the same basis as
      the other Participants.

     

    
      
        
        

      

      
        51

        
          

        

      

      
        
        

      

    

     

    5.01(c).
      Allocations.

     

    5.01(c)(1).
      Allocations
      among Participants.
      Except
      as provided otherwise in this Agreement, costs (other than Intangible Drilling
      Costs and Tangible Costs) and revenues charged or credited to the Participants
      as a group, which includes all revenue credited to the Participants under
§5.01(b)(4), shall be allocated among the Participants, including the Managing
      General Partner to the extent of any optional subscription for Units under
      §3.03(b)(1), in the ratio of their respective Units based on $10,000 per Unit
      regardless of the actual subscription price paid by a Participant for his Units.
      

     

    Intangible
      Drilling Costs and Tangible Costs charged to the Participants as a group shall
      be allocated among the Participants, including the Managing General Partner
      to
      the extent of any optional subscription for Units under §3.03(b)(1), in the
      ratio of the subscription amount designated on their respective Subscription
      Agreements rather than the number of their respective Units.

     

    5.01(c)(2).
      Costs
      and Revenues Not Directly Allocable to a Partnership Well.
      Costs
      and revenues not directly allocable to a particular Partnership Well or
      additional operation shall be allocated among the Partnership Wells or
      additional operations in any manner the Managing General Partner in its
      reasonable discretion, shall select, and shall then be charged or credited
      in
      the same manner as costs or revenues directly applicable to the Partnership
      Well
      or additional operation are being charged or credited.

     

    5.01(c)(3).
      Managing
      General Partner’s Discretion
      in Making Allocations For Federal Income Tax Purposes.
      In
      determining the proper method of allocating charges or credits among the
      parties, allocating any item of income, gain, loss, deduction or credit pursuant
      to new laws or new IRS or judicial interpretations of existing law, allocating
      any other item that is not otherwise specifically allocated in this Agreement
      or
      is subsequently determined by the Managing General Partner to be clearly
      inconsistent with a party’s economic interest in the Partnership, or making any
      other allocations under this Agreement, the Managing General Partner may adopt
      any method of allocation that it selects, in its sole discretion, after
      consultation with the Partnership’s legal counsel or accountants. Any new
      allocation provisions shall be made in a manner that is consistent with the
      parties’ economic interests in the Partnership and will result in the most
      favorable aggregate consequences to the Participants that are, as nearly as
      possible, consistent with the original allocations described in this
      Agreement.

     

    5.02.
      Capital
      Accounts and Allocations Thereto.

     

    5.02(a).
      Capital
      Accounts for Each Party to this Agreement.
      A
      single, separate Capital Account shall be established for each party, regardless
      of the number of interests owned by the party, the class of the interests and
      the time or manner in which the interests were acquired.

     

    
      
        
        

      

      
        52

        
          

        

      

      
        
        

      

    

     

    5.02(b).
      Charges
      and Credits.

     

    5.02(b)(1).
      General
      Standard.
      Except
      as otherwise provided in this Agreement, the Capital Account of each party
      shall
      be determined and maintained in accordance with Treas. Reg. §1.704-l(b)(2)(iv)
      and shall be increased by: 

     

    
      	 	
              (i)
                

            	
              the
                amount of money contributed by him to the Partnership;
                

            


    

     

    
      	 	
              (ii)
                

            	
              the
                fair market value of property contributed by him to the Partnership,
                without regard to §7701(g) of the Code, net of liabilities secured by the
                contributed property that the Partnership is considered to assume
                or take
                subject to under §752 of the Code; and


            


    

     

    
      	 	
              (iii)
                

            	
              allocations
                to him of Partnership income and gain, or items thereof, including
                income
                and gain exempt from tax and income and gain described in Treas.
                Reg.
                §1.704-l(b)(2)(iv)(g), but excluding income and gain described in
                Treas.
                Reg. §1.704-l(b)(4)(i); 

            


    

     

    and
      shall
      be decreased by:

     

    
      	 	
              (iv)
                

            	
              the
                amount of money distributed to him by the Partnership;
                

            


    

     

    
      	 	
              (v)
                

            	
              the
                fair market value of property distributed to him by the Partnership,
                without regard to §7701(g) of the Code, net of liabilities secured by the
                distributed property that he is considered to assume or take subject
                to
                under §752 of the Code; 

            


    

     

    
      	 	
              (vi)
                

            	
              allocations
                to him of Partnership expenditures described in §705(a)(2)(B) of the Code;
                and 

            


    

     

    
      	 	
              (vii)
                

            	
              allocations
                to him of Partnership loss and deduction, or items thereof, including
                loss
                and deduction described in Treas. Reg. §1.704-l(b)(2)(iv)(g), but
                excluding items described in (vi) above, and loss or deduction described
                in Treas. Reg. §1.704-l(b)(4)(i) or (iii).


            


    

     

    5.02(b)(2).
      Exception.
      If
      Treas. Reg. §1.704-l(b)(2)(iv) fails to provide guidance, Capital Account
      adjustments shall be made in
      a manner
      that: 

     

    
      	 	
              (i)
                

            	
              maintains
                equality between the aggregate governing Capital Accounts of the
                parties
                and the amount of Partnership capital reflected on the Partnership’s
                balance sheet, as computed for book purposes;


            


    

     

    
      	 	
              (ii)
                

            	
              is
                consistent with the underlying economic arrangement of the parties;
                and
                

            


    

     

    
      	 	
              (iii)
                

            	
              is
                based, wherever practicable, on federal tax accounting
                principles.

            


    

     

    5.02(c).
      Payments
      to the Managing General Partner.
      The
      Capital Account of the Managing General Partner shall be reduced by payments
      to
      it pursuant to §4.04(a)(2) only to the extent of the Managing General Partner’s
      distributive share of any Partnership deduction, loss, or other downward Capital
      Account adjustment resulting from the payments. Also, in the event, and to
      the
      extent, that the Managing General Partner is treated under the Code as having
      been transferred an interest in the Partnership in connection with the
      performance of services for the Partnership (whether before or after the
      formation of the Partnership):

     

    
      
        
        

      

      
        53

        
          

        

      

      
        
        

      

    

    


     

    
      	 	
              (i)

            	
              any
                resulting compensation income shall be allocated 100% to the Managing
                General Partner;

            


    

     

    
      	 	
              (ii)

            	
              any
                associated increase in Capital Accounts shall be credited 100% to
                the
                Managing General Partner; and

            


    

     

    
      	 	
              (iii)

            	
              any
                associated deduction to which the Partnership is entitled shall be
                allocated 100% to the Managing General
                Partner.

            


    

     

    5.02(d).
      Discretion
      of Managing General Partner in the Method of Maintaining Capital
      Accounts.
      Notwithstanding any other provisions of this Agreement, the method of
      maintaining Capital Accounts may be changed from time to time, in the discretion
      of the Managing General Partner, to take into consideration §704 and other
      provisions of the Code and the related rules, regulations and interpretations
      as
      may exist from time to time.

     

    5.02(e).
      Revaluations
      of Property. In
      the
      discretion of the Managing General Partner the Capital Accounts of the parties
      may be increased or decreased to reflect a revaluation of Partnership property,
      including intangible assets such as goodwill, on a property-by-property basis
      except as otherwise permitted under §704(c) of the Code and the regulations
      thereunder, on the Partnership’s books, in accordance with Treas. Reg.
§1.704-l(b)(2)(iv)(f).

     

    5.02(f).
      Amount
      of Book Items.
      In cases
      where §704(c) of the Code or §5.02(e) applies, Capital Accounts shall be
      adjusted in accordance with Treas. Reg. §1.704-l(b)(2)(iv)(g) for allocations of
      depreciation, depletion, amortization and gain and loss, as computed for book
      purposes, with respect to the property.

     

    5.03.
      Allocation
      of Income, Deductions and Credits.

     

    5.03(a).
      In
      General. 

     

    5.03(a)(1).
      Deductions Are Allocated to Party Charged with Expenditure.
To
      the
      extent permitted by law and except as otherwise provided in this Agreement,
      all
      deductions and credits, including, but not limited to, intangible drilling
      and
      development costs and depreciation, shall be allocated to the party who has
      been
      charged with the expenditure giving rise to the deductions and credits; and
      to
      the extent permitted by law, these parties shall be entitled to the deductions
      and credits in computing taxable income or tax liabilities to the exclusion
      of
      any other party. Also, any Partnership deductions that would be nonrecourse
      deductions if they were not attributable to a loan made or guaranteed by the
      Managing General Partner or its Affiliates shall be allocated to the Managing
      General Partner to the extent required by law.

     

    5.03(a)(2).
      Income
      and Gain Allocated in Accordance With Revenues.
      Except
      as otherwise provided in this Agreement, all items of income and gain, including
      gain on disposition of assets, shall be allocated in accordance with the related
      revenue allocations set forth in §5.01(b) and its subsections.

     

    5.03(b).
      Tax
      Basis of Each Property.
      Subject
      to §704(c) of the Code, the tax basis of each oil and gas property for
      computation of cost depletion and gain or loss on disposition shall be allocated
      and reallocated when necessary based on the capital interest in the Partnership
      as to the property and the capital interest in the Partnership for this purpose
      as to each property shall be considered to be owned by the parties in the ratio
      in which the expenditure giving rise to the tax basis of the property has been
      charged as of the end of the year.

     

    
      
        
        

      

      
        54

        
          

        

      

      
        
        

      

    

     

     

    5.03(c).
      Gain
      or Loss on Oil and Gas Properties.
      Each
      party shall separately compute its gain or loss on the disposition of each
      natural gas and oil property in accordance with the provisions of §613A(c)(7)(D)
      of the Code, and the calculation of the gain or loss shall consider the party’s
      adjusted basis in his property interest computed as provided in §5.03(b) and the
      party’s allocable share of the amount realized from the disposition of the
      property.

     

    5.03(d).
      Gain
      on Depreciable Property.
      Gain
      from each sale or other disposition of depreciable property shall be allocated
      to each party whose share of the proceeds from the sale or other disposition
      exceeds its contribution to the adjusted basis of the property in the ratio
      that
      the excess bears to the sum of the excesses of all parties having an
      excess.

     

    5.03(e).
      Loss
      on Depreciable Property.
      Loss
      from each sale, abandonment or other disposition of depreciable property shall
      be allocated to each party whose contribution to the adjusted basis of the
      property exceeds its share of the proceeds from the sale, abandonment or other
      disposition in the proportion that the excess bears to the sum of the excesses
      of all parties having an excess.

     

    5.03(f).
      Allocation
      If Recapture
      Treated As Ordinary Income.
      Any
      recapture treated as an increase in ordinary income by reason of §§1245, 1250 or
      1254 of the Code shall be allocated to the parties in the amounts in which
      the
      recaptured items were previously allocated to them; provided that to the extent
      recapture allocated to any party is in excess of the party’s gain from the
      disposition of the property, the excess shall be allocated to the other parties
      but only to the extent of the other parties’ gain from the disposition of the
      property.

     

    5.03(g).
      Tax
      Credits.
      If a
      Partnership expenditure, whether or not deductible, that gives rise to a tax
      credit in a Partnership taxable year also gives rise to valid allocations of
      Partnership loss or deduction, or other downward Capital Account adjustments,
      for the year, then the parties’ interests in the Partnership with respect to the
      credit, or the cost giving rise thereto, shall be in the same proportion as
      the
      parties’ respective distributive shares of the loss or deduction, and
      adjustments. If Partnership receipts, whether or not taxable, that give rise
      to
      a tax credit, including a marginal well production credit under §45I of the
      Code, in a Partnership taxable year also give rise to valid allocations of
      Partnership income or gain, or other upward Capital Account adjustments, for
      the
      year, then the parties’ interests in the Partnership with respect to the credit,
      or the Partnership’s receipts or production of natural gas and oil production
      giving rise thereto, shall be in the same proportion as the parties’ respective
      shares of the Partnership’s production revenues from the sales of its natural
      gas and oil production as provided in §5.01(b)(4).

     

    5.03(h).
      Deficit
      Capital Accounts and Qualified Income Offset.
      Notwithstanding any provision of this Agreement to the contrary, an allocation
      of loss or deduction which would result in a party having a deficit Capital
      Account balance as of the end of the taxable year to which the allocation
      relates, if charged to the party, to the extent the Participant is not required
      to restore the deficit to the Partnership, taking into account: 

     

    
      	 	
              (i)
                

            	
              adjustments
                that, as of the end of the year, reasonably are expected to be made
                to the
                party’s Capital Account for depletion allowances with respect to the
                Partnership’s natural gas and oil properties;


            


    

     

    
      	 	
              (ii)
                

            	
              allocations
                of loss and deduction that, as of the end of the year, reasonably
                are
                expected to be made to the party under §§704(e)(2) and 706(d) of the Code
                and Treas. Reg. §1.751-1(b)(2)(ii); and


            


    

     

    
      
        
        

      

      
        55

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (iii)
                

            	
              distributions
                that, as of the end of the year, reasonably are expected to be made
                to the
                party to the extent they exceed offsetting increases to the party’s
                Capital Account, assuming for this purpose that the fair market value
                of
                Partnership property equals its adjusted tax basis, that reasonably
                are
                expected to occur during or prior to the Partnership taxable years
                in
                which the distributions reasonably are expected to be made;
                

            


    

     

    shall
      be
      charged to the Managing General Partner. Further, the Managing General Partner
      shall be credited with an additional amount of Partnership income or gain equal
      to the amount of the loss or deduction as quickly as possible to the extent
      that
      the chargeback does not cause or increase deficit balances in the parties’
Capital Accounts which are not required to be restored to the Partnership.
      

     

    Notwithstanding
      any provision of this Agreement to the contrary, if a party unexpectedly
      receives an adjustment, allocation, or distribution described in (i), (ii),
      or
      (iii) above, or any other distribution, which causes or increases a deficit
      balance in the party’s Capital Account which is not required to be restored to
      the Partnership, the party shall be allocated items of income and gain,
      consisting of a pro rata portion of each item of Partnership income, including
      gross income and gain for the year, in an amount and manner sufficient to
      eliminate the deficit balance as quickly as possible.

     

    5.03(i).
      Minimum
      Gain Chargeback.
      To the
      extent there is a net decrease during a Partnership taxable year in the minimum
      gain attributable to a Partner nonrecourse debt, then any Partner with a share
      of the minimum gain attributable to the debt at the beginning of the year shall
      be allocated items of Partnership income and gain in accordance with Treas.
      Reg.
§1.704-2(i).

     

    5.03(j).
      Partners’
      Allocable Shares.
      Except
      as otherwise provided in this Agreement, each party’s allocable share of
      Partnership income, gain, loss, deductions and credits shall be determined
      by
      using any method prescribed or permitted by the Secretary of the Treasury by
      regulations or other guidelines and selected by the Managing General Partner
      which takes into account the varying interests of the parties in the Partnership
      during the taxable year. In the absence of those regulations or guidelines,
      except as otherwise provided in this Agreement, the allocable share shall be
      based on actual income, gain, loss, deductions and credits economically accrued
      each day during the taxable year in proportion to each party’s varying interest
      in the Partnership on each day during the taxable year.

     

    5.03(k).
      Contingent
      Income.
      Subject
      to §5.04(d), if it is determined that any taxable income results to any party by
      reason of its entitlement to a share of capital of the Partnership, or a share
      of profits or revenues of the Partnership before the profit or revenue has
      been
      realized by the Partnership, the resulting deduction, as well as any resulting
      gain, shall not enter into Partnership net income or loss, but shall be
      separately allocated to that party.

     

    
      
        
        

      

      
        56

        
          

        

      

      
        
        

      

    


    5.04.
      Elections.

     

    5.04(a).
      Election
      to Deduct Intangible
      Costs.
      The
      Partnership’s federal income tax return shall be made in accordance with an
      election under the option granted by the Code to deduct intangible drilling
      and
      development costs.

     

    5.04(b).
      No
      Election Out of Subchapter K.
      No
      election shall be made by the Partnership, any Partner, or the Operator for
      the
      Partnership to be excluded from the application of the partnership provisions
      of
      the Code, including Subchapter K of Chapter 1 of Subtitle A of the
      Code.

     

    5.04(c).
      §754
      Election.
      In the
      event of the transfer of an interest in the Partnership, or on the death of
      an
      individual party hereto, or in the event of the distribution of property to
      any
      party, the Managing General Partner may choose for the Partnership to file
      an
      election in accordance with the applicable Treasury Regulations to cause the
      basis of the Partnership’s assets to be adjusted for federal income tax purposes
      as provided by §§734 and 743 of the Code.

     

    5.04(d).
      §83
      Election.
      The
      Partnership, the Managing General Partner and each Participant hereby agree
      to
      be legally bound by the provisions of this §5.04(d) and further agree that, in
      the Managing General Partner’s sole discretion, the Partnership and all of its
      Partners may elect a safe harbor under which the fair market value of a
      Partnership interest that is transferred in connection with the performance
      of
      services is treated as being equal to the liquidation value of that interest
      for
      transfers on or after the date final regulations providing the safe harbor
      are
      published in the Federal Register. If the Managing General Partner determines
      that the Partnership and all of its Partners will elect the safe harbor, which
      determination may be made solely in the best interests of the Managing General
      Partner, the Partnership, the Managing General Partner and each Participant
      further agree that:

     

    
      	 	
              (i)
                

            	
              the
                Partnership shall be authorized and directed to elect the safe
                harbor;

            


    

     

    
      	 	
              (ii)
                

            	
              the
                Partnership and each of its Partners (including any Person to whom
                a
                Partnership interest is transferred in connection with the performance
                of
                services) shall comply with all requirements of the safe harbor with
                respect to all Partnership interests transferred in connection with
                the
                performance of services while the election remains effective;
                and

            


    

     

    
      	 	
              (iii)
                

            	
              the
                Managing General Partner, in its sole discretion, may cause the
                Partnership to terminate the safe harbor election, which determination
                may
                be made in the sole interests of the Managing General
                Partner.

            


    

     

    5.05.
      Distributions.

     

    5.05(a).
      In
      General. 

     

    5.05(a)(1).
      Monthly
      Review of Accounts. The
      Managing General Partner shall review the accounts of the Partnership at least
      monthly to determine whether cash distributions are appropriate and the amount
      to be distributed, if any. 

     

    5.05(a)(2).
      Distributions.
      The
      Partnership shall distribute funds to the Managing General Partner and the
      Participants allocated to their respective accounts that the Managing General
      Partner deems unnecessary for the Partnership to retain. 

     

    
      
        
        

      

      
        57

        
          

        

      

      
        
        

      

    

     

    5.05(a)(3).
      No
      Borrowings.
      In no
      event shall funds be advanced or borrowed by the Partnership for distributions
      to the Managing General Partner and the Participants if the amount of the
      distributions would exceed the Partnership’s accrued and received revenues for
      the previous four quarters, less paid and accrued Operating Costs with respect
      to the revenues. The determination of revenues and costs shall be made in
      accordance with generally accepted accounting principles, consistently applied.
      

     

    5.05(a)(4).
      Distributions
      to the Managing General Partner.
      Cash
      distributions from the Partnership to the Managing General Partner shall only
      be
      made as follows: 

     

    
      	 	
              (i)
                

            	
              in
                conjunction with distributions to Participants; and
                

            


    

     

    
      	 	
              (ii)
                

            	
              out
                of funds properly allocated to the Managing General Partner’s
                account.

            


    

     

    5.05(a)(5).
      Reserve.
      At any
      time after one year from the date each Partnership Well is placed into
      production, the Managing General Partner shall have the right to deduct each
      month from the Partnership’s net sales proceeds from the sale of the natural gas
      and oil production from each of its productive wells up to $200 per well for
      the
      purpose of establishing a fund to cover the estimated costs of plugging and
      abandoning the well. All of these funds shall be deposited in a separate
      interest bearing account for the benefit of the Partnership, and the total
      amount so retained and deposited shall not exceed the Managing General Partner’s
      reasonable estimate of the costs to plug and abandon the well.

     

    5.05(b).
      Distribution
      of Uncommitted Subscription Proceeds.
      Any
      subscription proceeds not expended or committed for expenditure, as evidenced
      by
      a written agreement, by the Partnership within 12 months of the Offering
      Termination Date, except necessary operating capital, shall be distributed
      to
      the Participants in the ratio that the subscription amount designated on each
      Participant’s Subscription Agreement bears to the total subscription amounts
      designated on all of the Participants’ Subscription Agreements, as a return of
      capital. The Managing General Partner shall reimburse the Participants for
      the
selling
      or other offering expenses, if any, allocable to the return of capital.


     

    For
      purposes of this subsection, “committed for expenditure”
      shall
      mean contracted for, actually earmarked for or allocated by the Managing General
      Partner to the Partnership’s drilling operations, and “necessary operating
      capital” shall mean those funds which, in the opinion of the Managing General
      Partner, should remain on hand to assure continuing operation of the
      Partnership.

     

    5.05(c).
      Distributions
      on Winding Up.
      On the
      winding up of the Partnership distributions shall be made as provided in
§7.02.

     

    5.05(d).
      Interest
      and Return of Capital.
      No
      party shall under any circumstances be entitled to any interest on amounts
      retained by the Partnership. Each Participant shall look only to his share
      of
      distributions, if any, from the Partnership for a return of his Capital
      Contribution.

     

    
      
        
        

      

      
        58

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      VI

    TRANSFER
      OF UNITS

     

    6.01.
      Transferability
      of Units.
      A
      Participant’s transfer of a portion or all his Units, or any interest in his
      Units, is subject to all of the provisions of this Article VI. For purposes
      of
      this Article VI, the term “transfer” shall include any sale, exchange, gift,
      assignment, pledge, mortgage, hypothecation, redemption or other form of
      transfer of a Unit, or any interest in a Unit, by a Participant (which may
      include the Managing General Partner or its Affiliates, if they purchase Units)
      or by operation of law, including any transfers of Units which a Participant
      presents to the Managing General Partner for purchase under §6.03.

     

    6.01(a).
      Rights
      of Assignee.
      Unless a
      transferee of a Participant’s Unit becomes a substitute Participant with respect
      to that Unit in accordance with the provisions of §6.02(a)(3)(a), he shall not
      be entitled to any of the rights granted to a Participant under this Agreement,
      other than the right to receive all or part of the share of the profits, losses,
      income, gains, deductions, credits and depletion allowances, or items thereof,
      and cash distributions or returns of capital to which his transferor would
      otherwise be entitled under this Agreement.

     

    6.01(b).
      Conversion
      of Investor General Partner Units to Limited Partner Units. 

     

    6.01(b)(1).
      Automatic
      Conversion.
      After
      all of the Partnership Wells have been drilled and completed, as determined
      by
      the Managing General Partner, the Managing General Partner shall file an amended
      certificate of limited partnership with the Secretary of State of the State
      of
      Delaware for the purpose of converting the Investor General Partner Units to
      Limited Partner Units. In this regard, a well shall be deemed to be completed
      when production equipment is installed on a well, even though the well may
      not
      yet be connected to a pipeline for production of natural gas.

     

    6.01(b)(2).
      Investor
      General Partners Shall Have Contingent Liability.
      On
      conversion the Investor General Partners shall be Limited Partners entitled
      to
      limited liability; however, they shall remain liable to the Partnership for
      any
      additional Capital Contribution required for their proportionate share of any
      Partnership obligation or liability arising before the conversion of their
      Units
      as provided in §3.05(b)(2). 

     

    6.01(b)(3).
      Conversion
      Shall Not Affect Allocations.
      The
      conversion shall not affect the allocation to any Participant of any item of
      Partnership income, gain, loss, deduction or credit or other item of special
      tax
      significance other than Partnership liabilities, if any. Further, the conversion
      shall not affect any Participant’s interest in the Partnership’s natural gas and
      oil properties and unrealized receivables.

     

    
      
        
        

      

      
        59

        
          

        

      

      
        
        

      

    

     

    6.01(b)(4).
      Right
      to Convert if Reduction of Insurance.
      Notwithstanding the foregoing, the Managing General Partner shall notify all
      Participants at least 30 days before the effective date of any material adverse
      change in the Partnership’s insurance coverage. If the insurance coverage is to
      be materially reduced, then the Investor General Partners shall have the right
      to convert their Units into Limited Partner Units before the reduction by giving
      written notice to the Managing General Partner.

     

    6.02.
      Special
      Restrictions on Transfers of Units by Participants.

     

    6.02(a).
      In
      General.
      Transfers of Units by Participants are subject to the following general
      conditions:

     

    
      	 	
              (i)
                

            	
              except
                as provided by operation of law: 

            


    

     

    
      	 	
              (a)
                

            	
              only
                whole Units may be transferred unless the Participant owns less than
                a
                whole Unit, in which case his entire fractional interest must be
                transferred; and

            


    

     

    
      	 	
              (b)
                

            	
              Units
                may not be transferred to a person who is under the age of 18 or
                incompetent (unless an attorney-in-fact, guardian, custodian or
                conservator has been appointed to handle the affairs of that person)
                without the Managing General Partner’s consent;


            


    

     

    
      	 	
              (ii)
                

            	
              the
                costs and expenses associated with the transfer must be paid by the
                assignor Participant;

            


    

     

    
      	 	
              (iii)
                

            	
              the
                transfer documents must be in a form satisfactory to the Managing
                General
                Partner; and

            


    

     

    
      	 	
              (iv)
                

            	
              the
                terms of the transfer must not contravene those of this Agreement.
                

            


    

     

    Transfers
      of Units by Participants are subject to the following additional restrictions
      set forth in §§6.02(a)(1) and 6.02(a)(2).

     

    6.02(a)(1).
      Tax
      Law Restrictions.
      Subject
      to transfers permitted by §6.03 and transfers by operation of law, no transfer
      of a Unit by a Participant shall be made which, in the opinion of counsel to
      the
      Partnership, would result in the Partnership being either:

     

    
      	 	
              (i)

            	
              terminated
                for tax purposes under §708 of the Code;
                or

            


    

     

    
      	 	
              (ii)

            	
              treated
                as a “publicly-traded” partnership for purposes of §469(k) of the
                Code.

            


    

     

    6.02(a)(2).
      Securities
      Laws Restriction.
      Subject
      to transfers permitted by §6.03 and transfers by operation of law, no Unit shall
      be transferred by a Participant unless there is either:

     

    
      	 	
              (i)

            	
              an
                effective registration of the Unit under the Securities Act of 1933,
                as
                amended, and qualification under applicable state securities laws;
                or
                

            


    

     

    
      	 	
              (ii)

            	
              an
                opinion of counsel acceptable to the Managing General Partner that
                the
                registration and qualification of the Unit is not required, unless
                this
                requirement is waived by the Managing General Partner.
                

            


    

     

    Transfers
      of Units by Participants are also subject to any conditions contained in the
      Subscription Agreement and Exhibit (B) to the Prospectus.

     

    
      
        
        

      

      
        60

        
          

        

      

      
        
        

      

    

     

    6.02(a)(3).
      Substitute
      Participant. 

     

    6.02(a)(3)(a).
      Procedure
      to Become Substitute Participant.
      Subject
      to §§6.02(a)(1) and 6.02(a)(2), a transferee of a Participant’s Unit shall
      become a substitute Participant entitled to all the rights of a Participant
      if,
      and only if: 

     

    
      	 	
              (i)
                

            	
              the
                transferor gives the transferee the right;


            


    

     

    
      	 	
              (ii)
                

            	
              the
                transferee pays to the Partnership all costs and expenses incurred
                by the
                Partnership in connection with the substitution; and
                

            


    

     

    
      	 	
              (iii)
                

            	
              the
                transferee executes and delivers the instruments necessary to establish
                that a legal transfer has taken place and to confirm the agreement
                of the
                transferee to be bound by all of the terms of this Agreement, in
                a form
                acceptable to the Managing General Partner.


            


    

     

    6.02(a)(3)(b).
      Rights
      of Substitute Participant.
      A
      substitute Participant shall be entitled to all of the rights attributable
      to
      full ownership of the assigned Units including the right to vote.

     

    6.02(b).
      Effect
      of Transfer. 

     

    6.02(b)(1).
      Amendment
      of Records.
      The
      Partnership shall amend its records at least once each calendar quarter to
      effect the substitution of substitute Participants. 

     

    Any
      transfer of a Unit by a Participant which is permitted under this Article VI,
      when the transferee does not become a substitute Participant, shall be effective
      as follows:

     

    
      	 	
              (i)

            	
              midnight
                of the last day of the calendar month in which it is made;
                or

            


    

     

    
      	 	
              (ii)

            	
              at
                the Managing General Partner’s election, 7:00 A.M. of the following day.
                

            


    

     

    6.02(b)(2).
      A
      Transfer of Units Does Not Relieve the Transferor of Certain
      Costs.
      No
      transfer of a Unit by a Participant, including a transfer of less than all
      of a
      Participant’s Units or the transfer of a Participant’s Units to more than one
      party, shall relieve the transferor of its responsibility for its proportionate
      part of any expenses, obligations and liabilities under this Agreement related
      to the Units so transferred, whether arising before or after the transfer.
      

     

    6.02(b)(3).
      A
      Transfer of Units Does Not Require A Partnership
      Accounting.
      No
      transfer of a Unit by a Participant shall require an accounting of the
      Partnership. Also, no transfer of a Unit shall grant rights under this
      Agreement, including the exercise of any elections, as between the transferring
      Participant and the Partnership, the Managing General Partner and the remaining
      Participants to more than one Person unanimously designated by the transferee(s)
      of the Unit, and, if he has retained an interest in the transferred Unit, the
      transferor of the Unit.

     

    6.02(b)(4).
      Required
      Notice to Managing General Partner of Transfer of Units.
      Until
      the Managing General Partner receives from the transferring Participant a
      written notice in a form acceptable to the Managing General Partner that
      designates the transferee(s) of a Unit, the Managing General Partner shall
      continue to account only to the Person to whom it was furnishing notices
      pursuant to §8.01 and its subsections before the purported transfer of the Unit.
      This party shall continue to exercise all rights under this Agreement applicable
      to the Units owned by the purported transferor of the Unit.

     

    
      
        
        

      

      
        61

        
          

        

      

      
        
        

      

    

     

    6.03.
      Presentment.

     

    6.03(a).
      In
      General.
      Participants shall have the right to present their Units to the Managing General
      Partner for purchase subject to the conditions and limitations set forth in
      this
§6.03. A Participant, however, is not obligated to present his Units for
      purchase. 

     

    The
      Managing General Partner shall not be obligated to purchase more than 5% of
      the
      total outstanding Units in any calendar year and this 5% limit may not be
      waived. The Managing General Partner shall not purchase less than one Unit
      unless the lesser amount represents the Participant’s entire interest in the
      Partnership, however, the Managing General Partner may waive this limitation.
      

     

    A
      Participant may present his Units in writing to the Managing General Partner
      every year beginning with the fifth calendar year after the Offering Termination
      Date subject to the following conditions:

     

    
      	 	
              (i)
                

            	
              the
                presentment request must be made by the Participant within 120 days
                of the
                reserve report described in
§4.03(b)(3);

            


    

     

    
      	 	
              (ii)
                

            	
              in
                accordance with Treas. Reg. §1.7704-1(f), the purchase may not be made
                until at least 60 calendar days after the Participant notifies the
                Partnership in writing of the Participant’s intention to exercise the
                presentment right; and

            


    

     

    
      	 	
              (iii)
                

            	
              the
                purchase shall not be considered effective until the presentment
                price has
                been paid to the Participant in cash to the
                Participant.

            


    

     

    6.03(b).
      Requirement
      for Independent
      Petroleum Consultant.
      The
      amount of the presentment price attributable to Partnership reserves shall
      be
      determined based on the last reserve report of the Partnership prepared by
      the
      Managing General Partner and reviewed by an Independent Expert. The Managing
      General Partner shall estimate the present worth of future net revenues
      attributable to the Partnership’s interest in the Proved Reserves as described
      in §4.03(b)(3)(ii). The calculation of the presentment price shall be made as
      set forth in §6.03(c).

     

    6.03(c).
      Calculation
      of Presentment Price.
      The
      presentment price shall be based on the Partnership’s net assets and liabilities
      and shall be allocated pro rata to each Participant in the ratio that his number
      of Units bears to the total number of Units. Subject to the foregoing, the
      presentment price shall include the sum of the following Partnership
      items:

     

    
      	 	
              (i)
                

            	
              an
                amount based on 70% of the present worth of future net revenues from
                the
                Proved Reserves determined as described in
                §6.03(b);

            


    

     

    
      	 	
              (ii)
                

            	
              cash
                on hand;

            


    

     

    
      	 	
              (iii)
                

            	
              prepaid
                expenses and accounts receivable less a reasonable amount for doubtful
                accounts; and

            


    

     

    
      	 	
              (iv)
                

            	
              the
                estimated market value of all assets that are not separately specified
                above, determined in accordance with standard industry valuation
                procedures.

            


    

     

    There
      shall be deducted from the foregoing sum the following Partnership
      items:

     

    
      	 	
              (i)

            	
              an
                amount equal to all debts, obligations, and other liabilities, including
                accrued expenses; and

            


    

     

    
      
        
        

      

      
        62

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (ii)

            	
              any
                distributions made to the Participants between the date of the presentment
                request and the date the presentment price is paid to the selling
                Participant. However, if any amount of those cash distributions to
                the
                Participant by the Partnership was derived from the sale of natural
                gas,
                oil or other mineral production, or of a producing property owned
                by the
                Partnership, after the date of the presentment request, for purposes
                of
                determining the reduction of the presentment price the amount of
                those
                cash distributions shall be discounted using the same rate used to
                take
                into account the risk factors employed to determine the present worth
                of
                the Partnership’s Proved Reserves.

            


    

     

    6.03(d).
      Further
      Adjustment May Be Allowed.
      The
      presentment price may be further adjusted by the Managing General Partner for
      estimated changes therein from the date of the report to the date of payment
      of
      the presentment price to the Selling Participant because of the following:
      

     

    
      	 	
              (i)

            	
              the
                production or sales of, or additions to, reserves and lease and well
                equipment, sale or abandonment of Leases, and similar matters occurring
                before the date of the presentment request; and


            


    

     

    
      	 	
              (ii)

            	
              any
                of the following occurring before payment of the presentment price
                to the
                selling Participant: 

            


    

     

    
      	 	
              (a)
                

            	
              changes
                in well performance; 

            


    

     

    
      	 	
              (b)
                

            	
              increases
                or decreases in the market price of natural gas, oil or other
                minerals;

            


    

     

    
      	 	
              (c)
                

            	
              revisions
                to regulations relating to the importing of
                hydrocarbons;

            


    

     

    
      	 	
              (d)
                

            	
              changes
                in income, ad valorem, and other tax laws, such as material variations
                in
                the provisions for depletion; and

            


    

     

    
      	 	
              (e)
                

            	
              similar
                matters.

            


    

     

    6.03(e).
      Selection
      by Lot.
      If less
      than all of the Units presented at any time are to be purchased, then the
      Participants who's Units are to be purchased will be selected by lot.


     

    The
      Managing General Partner’s obligation to purchase Units presented may be
      discharged for its benefit by a third-party or an Affiliate. The Units of the
      selling Participant shall be transferred to the party who pays for it. A selling
      Participant shall be required to deliver an executed assignment of his Units,
      in
      a form satisfactory to the Managing General Partner, together with any other
      documentation as the Managing General Partner may reasonably
      request.

     

    6.03(f).
      No
      Obligation of the Managing General Partner to Establish a
      Reserve.
      The
      Managing General Partner shall have no obligation to establish any reserve
      to
      satisfy the presentment feature under this section.

     

    6.03(g).
      Suspension
      of Presentment Feature.
      The
      Managing General Partner may suspend this presentment feature by so notifying
      Participants at any time if it determines in its sole discretion that
      it:

     

    
      	 	
              (i)
                

            	
              does
                not have sufficient cash flow; or 

            


    

     

    
      	 	
              (ii)
                

            	
              is
                unable to borrow funds for this purpose on terms it deems reasonable.
                

            


    

     

    
      
        
        

      

      
        63

        
          

        

      

      
        
        

      

    

     

    In
      addition, the presentment feature may be conditioned, in the Managing General
      Partner’s sole discretion, on the Managing General Partner’s receipt of an
      opinion of counsel that the transfers will not cause the Partnership to be
      treated as a “publicly traded partnership” under the Code. 

     

    The
      Managing General Partner shall hold the purchased Units for its own account
      and
      not for resale.

     

    6.04. Redemption
      of Units from Non-Citizen Assignees.
      If the
      Partnership, the Managing General Partner or any of its Affiliates become
      subject to federal, state or local laws or regulations that, in the reasonable
      determination of the Managing General Partner, create a substantial risk of
      cancellation or forfeiture of any property that they have an interest in because
      of the nationality, citizenship or other related status of any Participant
      or
      assignee of a Participant’s Units, the Partnership may redeem, on 30 days’
advance notice to the Participant, the Participant’s Units or the Units held by
      the assignee of a Participant, at a reasonable redemption price per Unit as
      determined by the Managing General Partner in its sole discretion. 

     

    ARTICLE
      VII

    DURATION,
      DISSOLUTION, AND WINDING UP

     

    7.01.
      Duration.

     

    7.01(a).
      Fifty
      Year Term. The
      Partnership shall continue in existence for a term of 50 years from the
      effective date of this Agreement unless sooner terminated as set forth
      below.

     

    7.01(b).
      Termination.
      The
      Partnership shall terminate following the occurrence of:

     

    
      	 	
              (i)

            	
              a
                Final Terminating Event; or 

            


    

     

    
      	 	
              (ii)

            	
              any
                event that causes the dissolution of a limited partnership under
                the
                Delaware Revised Uniform Limited Partnership
                Act.

            


    

     

    7.01(c).
      Continuance
      of Partnership Except on Final Terminating Event.
      Other
      than the occurrence of a Final Terminating
      Event, the Partnership or any successor limited partnership shall not be wound
      up, but shall be continued by the parties and their respective successors as
      a
      successor limited partnership under all of the terms of this Agreement. The
      successor
      limited
      partnership shall succeed to all of the assets of the Partnership. As used
      throughout this Agreement, the term “Partnership” shall include the successor
      limited partnership and the parties to the successor limited
      partnership.

     

    7.02.
      Dissolution
      and Winding Up.

     

    7.02(a).
      Final Terminating Event. On
      the
      occurrence of a Final Terminating Event the affairs of the Partnership shall
      be
      wound up and there shall be distributed to each of the parties it's Distribution
      Interest in the remaining Partnership assets. 

     

    7.02(b).
      Time
      of Liquidating Distribution.
      To the
      extent practicable and in accordance with sound business practices in the
      judgment of the Managing General Partner, liquidating distributions shall be
      made by:

     

    
      	 	
              (i)
                

            	
              the
                end of the taxable year in which liquidation occurs, determined without
                regard to §706(c)(2)(A) of the Code;
                or

            


    

     

    
      	 	
              (ii)
                

            	
              if
                later, within 90 days after the date of the liquidation.
                

            


    

     

    
      
        
        

      

      
        64

        
          

        

      

      
        
        

      

    

     

    Notwithstanding,
      the following amounts are not required to be distributed within the foregoing
      time periods so long as the withheld amounts are distributed as soon as
      practical:

     

    
      	 	
              (i)

            	
              amounts
                withheld for reserves reasonably required for liabilities of the
                Partnership; and

            


    

     

    
      	 	
              (ii)

            	
              installment
                obligations owed to the
                Partnership.

            


    

     

    7.02(c).
      In-Kind
      Distributions.
      The
      Managing General Partner shall not be obligated to offer in-kind property
      distributions to the Participants, but may do so, in its discretion. Any in-kind
      property distributions to the Participants shall be made to a liquidating trust
      or similar entity for the benefit of the Participants, unless at the time of
      the
      distribution:

     

    
      	 	
              (i)
                

            	
              the
                Managing General Partner offers the individual Participants the election
                of receiving in-kind property distributions and the Participants
                accept
                the offer after being advised of the risks associated with direct
                ownership; or

            


    

     

    
      	 	
              (ii)
                

            	
              there
                are alternative arrangements in place which assure the Participants
                that
                they will not, at any time, be responsible for the operation or
                disposition of Partnership
                properties.

            


    

     

    If
      the
      Managing General Partner has not received a Participant’s consent within 30 days
      after the Managing General Partner mailed the request for consent, then it
      shall
      be presumed that the Participant has refused to give his consent.

     

    7.02(d).
      Sale
      If No Consent.
      Any
      Partnership asset which would otherwise be distributed in-kind to a Participant,
      except for the failure or refusal of the Participant to give his written consent
      to the distribution, may instead be sold by the Managing General Partner at
      the
      best price reasonably obtainable from an independent third-party, who is not
      an
      Affiliate of the Managing General Partner, or to the Managing General Partner
      itself or its Affiliates, including an Affiliated Income Program, at fair market
      value as determined by an Independent Expert selected by the Managing General
      Partner.

     

    ARTICLE
      VIII

    MISCELLANEOUS
      PROVISIONS

     

    8.01.
      Notices.

     

    8.01(a).
      Method.
      Any
      notice required under this Agreement shall be:

     

    
      	 	
              (i)
                

            	
              in
                writing; and 

            


    

     

    
      	 	
              (ii)
                

            	
              given
                by mail or delivered by an overnight delivery company (although one-day
                delivery is not required) addressed to the party to receive the notice
                at
                the address designated in §1.03. 

            


    

     

    If
      there
      is a transfer of Units under this Agreement, no notice to the transferee shall
      be required, nor shall the transferee have any rights under this Agreement,
      until notice of the transfer has been given to the Managing General
      Partner.

     

    Any
      transfer of Units under this Agreement shall not increase the Managing General
      Partner’s or the Partnership’s duty to give notice. If there is a transfer of
      Units under this Agreement to more than one party, then notice to any owner
      of
      any interest in the Units shall be notice to all of the owners of the
      Units.

     

    
      
        
        

      

      
        65

        
          

        

      

      
        
        

      

    

     

    8.01(b).
      Change
      in Address.
      The
      address of any party to this Agreement may be changed by notice as
      follows:

     

    
      	 	
              (i)

            	
              to
                the Participants, if there is a change of address by the Managing
                General
                Partner; or

            


    

     

    
      	 	
              (ii)

            	
              to
                the Managing General Partner, if there is a change of address by
                a
                Participant.

            


    

     

    8.01(c).
      Time
      Notice Deemed Given. If
      the
      notice is given by the Managing General Partner, then the notice shall be
      considered given, and any applicable time shall run, from the date the notice
      is
      placed in the mail or delivered to the overnight delivery company.

     

    If
      the
      notice is given by any Participant, then the notice shall be considered given
      and any applicable time shall run from the date the notice is
      received.

     

    8.01(d).
      Effectiveness
      of Notice.
      Any
      notice to a party other than the Managing General Partner, including a notice
      requiring concurrence or nonconcurrence, shall be effective, and any failure
      to
      respond binding, irrespective of the following:

     

    
      	 	
              (i)
                

            	
              whether
                or not the notice is
                actually received; or

            


    

     

    
      	 	
              (ii)
                

            	
              any
                disability or death on the part of the noticee, even if the disability
                or
                death is known to the party giving the
                notice.

            


    

     

    8.01(e).
      Failure
      to Respond.
      Except
      pursuant to §7.02(c) or when this Agreement expressly requires affirmative
      approval of a Participant, any Participant who fails to respond in writing
      within the time specified to a request by the Managing General Partner as set
      forth below, for approval of, or concurrence in, a proposed action shall be
      conclusively deemed to have approved the action. Except pursuant to §7.02(c),
      when this Agreement expressly requires affirmative approval of a Participant,
      the Managing General Partner shall send a first request and the time period
      for
      the Participant’s written response shall not be less than 15 business days from
      the date of mailing of the request. If the Participant does not respond in
      writing to the first request, then the Managing General Partner shall send
      a
      second request. If the Participant does not respond in writing to the second
      request within seven calendar days from the date of mailing the second request,
      then the Participant shall be conclusively deemed to have approved the
      action.

     

    8.02.
      Time.
      Time is
      of the essence of each part of this Agreement.

     

    8.03.
      Applicable
      Law.
      The
      terms and provisions of this Agreement shall be construed under the laws of
      the
      State of Delaware, other than its conflict of law provisions, however, this
      section shall not be deemed to limit causes of action for alleged violations
      of
      federal or state securities law to the laws of the State of Delaware. Neither
      this Agreement nor the Subscription Agreement shall require mandatory venue
      or
      mandatory arbitration of any or all claims by Participants against the
      Sponsor.

     

    8.04.
      Agreement
      in Counterparts.
      This
      Agreement may be executed in counterpart and shall be binding on all of the
      parties executing this or similar agreements from and after the date of
      execution by each party.

     

    
      
        
        

      

      
        66

        
          

        

      

      
        
        

      

    

     

    8.05.
      Amendment. 

     

    8.05(a).
      Procedure
      for Amendment. No
      changes in this Agreement shall be binding unless: 

     

    
      	 	
              (i)

            	
              proposed
                in writing by the Managing General Partner, and adopted with the
                consent
                of Participants whose Units equal a majority of the total Units;
                or
                

            


    

     

    
      	 	
              (ii)

            	
              proposed
                in writing by Participants who's Units equal 10% or more of the total
                Units and approved by an affirmative vote of Participants whose Units
                equal a majority of the total Units.


            


    

     

    8.05(b).
      Circumstances
      Under Which the Managing General Partner Alone May Amend.
      The
      Managing General Partner is authorized to amend this Agreement and its exhibits
      without the consent of Participants in any way deemed necessary or desirable
      by
      it to do any or all of the following: 

     

    
      	 	
              (i)
                

            	
              add,
                or substitute in the case of an assigning party, additional Participants;
                

            


    

     

    
      	 	
              (ii)
                

            	
              enhance
                the tax benefits of the Partnership to the parties and amend the
                allocation provisions of this Agreement as provided in §5.01(c)(3);
                

            


    

     

    
      	 	
              (iii)
                

            	
              satisfy
                any requirements, conditions, guidelines, options, or elections contained
                in any opinion, directive, order, ruling, or regulation of the SEC,
                the
                IRS, or any other federal or state agency, or in any federal or state
                statute, compliance with which it deems to be in the best interest
                of the
                Partnership; or

            


    

     

    
      	 	
              (iv)
                

            	
              cure
                any ambiguity, correct or supplement any provision of this Agreement
                that
                may be inconsistent with any other provision of this Agreement, or
                add any
                provision to this Agreement with respect to matters, events or issues
                arising under this Agreement that is not inconsistent with the other
                provisions of this Agreement.

            


    

     

    Notwithstanding
      the foregoing, no amendment materially and adversely affecting the interests
      or
      rights of Participants shall be made without the consent of the Participants
      whose interests or rights will be so affected.

     

    8.06.
      Additional
      Partners. Each
      Participant consents to the admission to the Partnership of additional
      Participants as the Managing General Partner, in its discretion, chooses to
      admit.

     

    8.07.
      Legal
      Effect.
      This
      Agreement shall be binding on and inure to the benefit of the parties, their
      heirs, devisees, personal representatives, successors and assigns, and shall
      run
      with the interests subject to this Agreement. The terms “Partnership,” “Limited
      Partner,” “Investor General Partner,” “Participant,” “Partner,” “Managing
      General Partner,” “Operator,” or “parties” shall equally apply to any successor
      limited partnership, and any heir, devisee, personal representative, successor
      or assign of a party.

     

    
      
        
        

      

      
        67

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF, the parties hereto set their hands as of the 25th day of March,
      2008.

     

    
      	
              ATLAS:

            	
              ATLAS
                RESOURCES, LLC

            
	 	
              Managing
                General Partner

            
	 	 
	 	
              By:/s/
                Frank P. Carolas

            
	 	
              Frank
                P. Carolas, Executive Vice
                President

            


    

     

    
      
        
        

      

      
        68