Unassociated Document


     

    LIMITED
      PARTNERSHIP AGREEMENT

     

    OF

     

    INDIGO
      ENERGY PARTNERS, LP

     

    a
      Delaware limited partnership

     

     

    Dated
      as of July 7, 2006

     


    
      
         

      

      
         

        
          

        

      

      
         

      

    


    


     

    INDIGO-ENERGY
      PARTNERS, LP

    LIMITED
      PARTNERSHIP AGREEMENT

    


    TABLE
      OF CONTENTS

    

      
        	 	 	 	
                Page

              
	 	 
	
                ARTICLE
                  I DEFINITIONS

              	
                1

              
	
                ARTICLE
                  II FORMATION, NAME, OFFICES AND PURPOSES

              	
                5

              
	 	
                Section
                  2.01.

              	
                Formation.

              	
                5

              
	 	
                Section
                  2.02.

              	
                Name.

              	
                5

              
	 	
                Section
                  2.03.

              	
                Offices.

              	
                5

              
	 	
                Section
                  2.04.

              	
                Character
                  of Business.

              	
                5

              
	
                ARTICLE
                  III CAPITAL

              	 	
                5

              
	 	
                Section
                  3.01.

              	
                Capital
                  Contributions.

              	
                5

              
	 	
                Section
                  3.02.

              	
                Withdrawals
                  from Capital Accounts.

              	
                6

              
	 	
                Section
                  3.03.

              	
                Capital
                  Accounts.

              	
                6

              
	 	
                Section
                  3.04.

              	
                Determination
                  of and Adjustments to Book Value and Capital Accounts.

              	
                7

              
	 	
                Section
                  3.05.

              	
                Additional
                  Capital Contributions.

              	
                8

              
	 	
                Section
                  3.06.

              	
                Partnership
                  Borrowings.

              	
                8

              
	 	
                Section
                  3.07.

              	
                Capital
                  Contribution of the Company.

              	
                8

              
	
                ARTICLE
                  IV PARTICIPATION IN PARTNERSHIP PROPERTY

              	
                8

              
	 	
                Section
                  4.01.

              	
                Ownership
                  by Partners of Partnership.

              	
                8

              
	 	
                Section
                  4.02.

              	
                Percentage
                  Interest in Partnership.

              	
                8

              
	 	
                Section
                  4.03.

              	
                Limitation
                  on Distributions.

              	
                8

              
	
                ARTICLE
                  V MANAGEMENT

              	
                9

              
	 	
                Section
                  5.01.

              	
                General
                  Management.

              	
                9

              
	 	
                Section
                  5.02.

              	
                Powers
                  of the Managing General Partner.

              	
                9

              
	 	
                Section
                  5.03.

              	
                Activity
                  of the Managing General Partner.

              	
                10

              
	 	
                Section
                  5.04.

              	
                Activities
                  of HUB.

              	
                10

              
	 	
                Section
                  5.05.

              	
                Transfer
                  of Assets and Other Acts Outside Ordinary Business of the
                  Partnership.

              	
                10

              
	 	
                Section
                  5.06.

              	
                Insurance
                  Coverage.

              	
                10

              
	 	
                Section
                  5.07.

              	
                Holding
                  of Property.

              	
                10

              
	 	
                Section
                  5.08.

              	
                Meetings
                  and Voting.

              	
                11

              
	 	
                Section
                  5.09.

              	
                No
                  Management Rights.

              	
                11

              
	 	
                Section
                  5.10.

              	
                Transactions
                  with the Partnership.

              	
                11

              
	
                ARTICLE
                  VI RIGHTS AND OBLIGATIONS OF PARTNERS

              	
                12

              
	 	
                Section
                  6.01.

              	
                Limitation
                  on Liability.

              	
                12

              
	 	
                Section
                  6.02.

              	
                Liability
                  of General Partners.

              	
                12

              
	 	
                Section
                  6.03.

              	
                Activity
                  of the Participant Partners.

              	
                12

              
	 	
                Section
                  6.04.

              	
                Certain
                  Rights.

              	
                12

              
	 	
                Section
                  6.05.

              	
                Examination
                  of Books and Records.

              	
                12

              
	 	
                Section
                  6.06.

              	
                Withdrawal
                  from Partnership.

              	
                12

              
	 	
                Section
                  6.07.

              	
                Rights
                  Under the Act.

              	
                13

              
	 	
                Section
                  6.08.

              	
                Remedies.

              	
                13

              
	
                ARTICLE
                  VII DISTRIBUTIONS OF PROFITS AND LOSSES

              	
                13

              
	 	
                Section
                  7.01.

              	
                Distribution
                  of Cash Flow.

              	
                13

              
	 	
                Section
                  7.02.

              	
                Definition
                  of Cash Flow.

              	
                13

              
	 	
                Section
                  7.03.

              	
                Determination
                  of Net Book Profit and Net Book Losses.

              	
                13

              
	 	
                Section
                  7.04.

              	
                Allocation
                  of Net Book Profits and Net Book Losses.

              	
                15

              
	 	
                Section
                  7.05.

              	
                Allocations
                  to Comply With Applicable Treasury Regulations.

              	
                15

              
	 	
                Section
                  7.06.

              	
                Federal
                  Income Tax Allocations.

              	
                17

              


      

    

     


    
      
         

      

      
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              Section
                7.07.

            	
              Allocation
                of Taxable Income and Loss and Tax Credits on the Transfer of a
                Partnership Interest.

            	
              17

            
	 	
              Section
                7.08.

            	
              Special
                Tax Audit Allocations.

            	
              17

            
	 	
              Section
                7.09.

            	
              Tax
                Elections; Tax Reports.

            	
              18

            
	 	
              Section
                7.10.

            	
              Right
                to Distributions.

            	
              18

            
	 	
              Section
                7.11.

            	
              Income
                Tax Effect.

            	
              18

            
	
              ARTICLE
                VIII LIABILITY; INDEMNIFICATION

            	
              18

            
	 	
              Section
                8.01.

            	
              Liability
                of General Partners.

            	
              18

            
	 	
              Section
                8.02.

            	
              Indemnification
                of Participant General Partners by Managing General
                Partner.

            	
              19

            
	 	
              Section
                8.03.

            	
              Limited
                Liability of Limited Partners.

            	
              19

            
	 	
              Section
                8.04.

            	
              Payment
                of Expenses.

            	
              19

            
	
              ARTICLE
                IX ACCOUNTING

            	
              19

            
	 	
              Section
                9.01.

            	
              Books
                and Records.

            	
              19

            
	 	
              Section
                9.02.

            	
              Fiscal
                Year.

            	
              20

            
	 	
              Section
                9.03.

            	
              Annual
                Financial Reports.

            	
              20

            
	 	
              Section
                9.04.

            	
              Regulatory
                Requirements.

            	
              20

            
	
              ARTICLE
                X TERM AND DISSOLUTION

            	
              21

            
	 	
              Section
                10.01.

            	
              Term.

            	
              21

            
	 	
              Section
                10.02.

            	
              Death
                or Incapacity of a Participant Partner.

            	
              21

            
	 	
              Section
                10.03.

            	
              Dissolution.

            	
              21

            
	 	
              Section
                10.04.

            	
              Continuation
                of Partnership Business.

            	
              21

            
	 	
              Section
                10.05.

            	
              Distribution
                on Liquidation.

            	
              22

            
	
              ARTICLE
                XI ASSIGNMENTS AND RESIGNATION

            	
              24

            
	 	
              Section
                11.01.

            	
              Transfer
                or Resignation by the Managing General Partner.

            	
              24

            
	 	
              Section
                11.02.

            	
              Transfers
                by Participant Partners.

            	
              24

            
	 	
              Section
                11.03.

            	
              Tax
                Effect of Transfers.

            	
              24

            
	 	
              Section
                11.04.

            	
              Certification
                by Participant Partners.

            	
              25

            
	
              ARTICLE
                XII PARTICIPANT GENERAL PARTNER CONVERSION OPTION

            	
              25

            
	 	
              Section
                12.01.

            	
              Conversion
                Option.

            	
              25

            
	 	
              Section
                12.02.

            	
              Documentation.

            	
              25

            
	
              ARTICLE
                XIII GENERAL PROVISIONS

            	
              25

            
	 	
              Section
                13.01.

            	
              Binding
                Effect and Benefit.

            	
              25

            
	 	
              Section
                13.02.

            	
              Certificates.
                etc.

            	
              25

            
	 	
              Section
                13.03.

            	
              Power
                of Attorney.

            	
              26

            
	 	
              Section
                13.04.

            	
              Partners,
                Relationships Inter Se.

            	
              26

            
	 	
              Section
                13.05.

            	
              Notices,
                Statements, etc.

            	
              26

            
	 	
              Section
                13.06.

            	
              Waiver
                of Right to Partition.

            	
              26

            
	 	
              Section
                13.07.

            	
              Integration.

            	
              26

            
	 	
              Section
                13.08.

            	
              Interpretation.

            	
              26

            
	 	
              Section
                13.09.

            	
              Governing
                Law: Invalidity.

            	
              26

            
	 	
              Section
                13.10.

            	
              Counterparts.

            	
              26

            
	 	
              Section
                13.11.

            	
              Nature
                of Interest of Partners.

            	
              27

            
	 	
              Section
                13.12.

            	
              Waivers.

            	
              27

            
	 	
              Section
                13.13.

            	
              Rights
                and Remedies Cumulative.

            	
              27

            
	 	
              Section
                13.14.

            	
              Participant
                Partner Representations and Warranties.

            	
              27

            


    

    


    


    
      
         

      

      
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    LIMITED
      PARTNERSHIP AGREEMENT

     

    OF

     

    INDIGO-ENERGY
      PARTNERS, LP

     

    A
      Delaware Limited Partnership

     

    This
      LIMITED PARTNERSHIP AGREEMENT (this “Agreement”) of INDIGO-ENERGY PARTNERS, LP,
      a Delaware limited partnership (the “Partnership”)
      is
      made as of this 7th
      day of
      July, 2006 by and among Indigo-Energy, Inc., a Nevada corporation, having a
      principal place of business at 13350 Random Hills Road, Suite 800, Fairfax
      Virginia 22030, as the managing general partner (the “Managing
      General Partner”)
      and
      those persons who have become parties to this Agreement by affixing their names
      hereto as limited partners (the “Limited Partners” each a “Limited Partner”) or
      general partners (the “General Partners” each a “General Partner”) and who
      elects to invest as a Limited Partner or General Partner.

     

    WITNESSETH:

     

    WHEREAS,
      the parties hereto desire to join together in partnership, pursuant and subject
      to the Delaware Uniform Limited Partnership Act (the “Act”) and upon the terms
      and conditions set forth herein;

     

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

     

    ARTICLE
      I 

    DEFINITIONS

     

    Certain
      terms used in this Agreement shall have the meanings set forth
      below:

     

    The
      term
Affiliate
      shall
      mean, with respect to the Managing General Partner hereunder, any Associate
      thereof except for the Partnership and any other Partner who is an Associate
      thereof solely by reason of his participation as a Partner in the
      Partnership.

     

    The
      term
Associate,
      as used
      herein, shall include with respect to any Partner hereunder, (i) the
      Partnership, (ii) any other Partner, (iii) any corporation or
      organization of which such Partner is, directly or indirectly, the beneficial
      owner of 50% or more of the equity securities thereof having voting control,
      (iv) any trust or other estate in which such Partner has a substantial
      beneficial interest or as to which such Partner serves as trustee or in a
      similar capacity having control, (v) any individual, corporation,
      organization, trust or other estate which is the beneficial owner of 50% or
      more
      of the equity securities of such Partner, (vi) any substantial beneficiary
      of such Partner, and (vii) any direct ancestor, brother, sister, natural or
      adopted descendant or spouse of such Partner, or any such relative of such
      Partner’s spouse.

     

    The
      term
Book
      Value
      shall
      mean, with respect to any Partnership asset, the asset’s book value as carried
      on the books and records of the Partnership, determined in compliance with
      the
      provisions of applicable Treasury Regulations, including Treasury Regulation
      Section 1.704-1(b)(2)(iv), and more particularly described in
      Article VII hereof.

     


    
      
         

      

      
        1

        
          

        

      

      
         

      

    


    


     

    The
      term
Capital
      Account
      shall
      mean the capital account established for each Partner and maintained pursuant
      to
      the terms of this Agreement in accordance with the provisions of applicable
      Treasury Regulations, including Treasury Regulation
      Section 1.704-1(b)(2)(iv). 

     

    The
      term
Capital
      Contribution
      shall
      mean, with respect to any Partner, the contribution made by that Partner to
      the
      capital of the Partnership in accordance with Article III hereof.


     

    The
      term
Cash
      Flow
      shall
      have the meaning set forth in Section 7.02 hereof.

     

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

     

    The
      term
“Company”
shall
      mean Indigo-Energy, Inc., a Nevada corporation that is the Managing General
      Partner of the Partnership.

     

    The
      term
“Common
      Stock”
shall
      mean the common stock of the Company, par value $.001 per share.

     

    The
      term
“Company
      Capital Contribution
      shall
      have the meaning set forth in Section 3.07.

     

    The
      term
Conversion
      Option
      shall
      mean the right of the Managing General Partner to convert all of the interests
      of the Participant General Partners to that of Limited Partners, in accordance
      with the provisions of Article XII hereof.

     

    The
      term
Depreciation
      shall
      mean, for each fiscal year or other period, the depreciation, amortization
      or
      other cost recovery expense determined pursuant to Section 7.03
      hereof.

     

    The
      term
Drilling
      and Operating Agreement
      shall
      mean those certain Drilling and Operating Agreements, substantially in the
      form
      of Exhibit A attached hereto, to be entered into by the Partnership and the
      individual Operators named therein with HUB as advisor to the Partnership,
      relating to drilling and completion, operation and management of new wells
      developed by or existing wells acquired by the Partnership.

     

    The
      term
General
      Partner
      shall
      mean the Managing General Partner or any of the Participant General Partners.
      

     

    The
      term
General
      Partners
      shall
      mean the Managing General Partner and the Participant General Partners,
      collectively.

     

    The
      term
Gross
      Fair Market Value
      shall
      mean the agreed fair market value of an asset determined without taking into
      account any liabilities which are secured by such asset or which are otherwise
      associated with such an asset.

     

    The
      term
“HUB”
shall
      mean HUB Energy, LLC in its capacity as advisor to the Partnership.

     

    The
      term
Indigo
      shall
      mean Indigo-Energy, Inc., a Nevada corporation that is the Managing General
      Partner of the Partnership.

     

    The
      term
IDCs
      shall
      mean all expenditures made with respect to any well prior to the establishment
      of production in commercial quantities for wages, fuel, repairs, hauling,
      supplies and other costs and expenses incident to and necessary for the drilling
      or recompletion of such well and the preparation thereof for the production
      of
      oil and gas which are currently deductible pursuant to the Code, including
      the
      expense of plugging and abandoning any well prior to a completion
      attempt.

     


    
      
         

      

      
        2

        
          

        

      

      
         

      

    


    


     

    The
      term
Limited
      Partner
      shall
      mean (i) any party who has executed a Subscription Agreement and acquired Units
      of interest in the Partnership as a Limited Partner, (ii) any Participant
      General Partner whose interest as a Participant General Partner has been
      converted into an interest as a Limited Partner pursuant to Article XII hereof,
      and (iii) any substituted Limited Partner as provided in Article XI hereof.
      The term Limited
      Partners
      shall
      refer to the then Limited Partners, collectively.

     

    The
      term
Majority
      in Interest
      with
      respect to the Participant Partners shall refer to that number of Participant
      Partners who collectively hold over 50% of the outstanding Units; with respect
      to the Participant General Partners shall refer to that number of Participant
      General Partners who collectively hold over 50% of the outstanding Units of
      Participant General Partner interests in the Partnership; and with respect
      to
      Limited Partners shall refer to that number of Limited Partners who collectively
      hold over 50% of the outstanding Units of Limited Partner interests in the
      Partnership.

     

    The
      term
Managing
      General Partner
      shall
      mean Indigo-Energy, Inc., a Nevada corporation or any successor Managing General
      Partner as provided herein.

     

    The
      term
Minimum
      Gain
      shall
      mean the aggregate amount of gain (of whatever character), computed with respect
      to each property of the Partnership that secures a Third Party Nonrecourse
      Liability of the Partnership, that would be recognized by the Partnership if,
      in
      a taxable transaction, the Partnership were to dispose of such property in
      full
      satisfaction of such Third Party Nonrecourse Liability. The amount of Minimum
      Gain and the amount of any Partner’s share of Minimum Gain shall be determined
      in accordance with the provisions of applicable Treasury Regulations, including
      Treasury Regulation Section 1.704-2.

     

    The
      term
Net
      Book Losses and Net Book Profits
      shall
      have the meanings ascribed to such terms in Section 7.03
      hereof.

     

    The
      term
Net
      Fair Market Value
      shall
      mean, in connection with the contribution of an asset to the Partnership by
      a
      Partner and/or in connection with the distribution of an asset by the
      Partnership to a Partner, the Gross Fair Market Value of such asset reduced
      by
      any liabilities (i) assumed by such Partner or the Partnership, or
      (ii) subject to which such Partner or the Partnership takes such
      asset.

     

    The
      term
Nonrecourse
      Deduction
      shall
      mean an allocation of loss and/or expense (or item thereof) attributable to
      Third Party Nonrecourse Liabilities, determined in accordance with the
      provisions of applicable Treasury Regulations, including Treasury Regulation
      Section 1.704-2.

     

    The
      term
Operator(s)
      shall
      mean the operators under the Drilling and Operating Agreements.

     

    The
      term
Participant
      General Partner
      shall
      mean any party who has executed a Subscription Agreement and acquired an
      interest in the Partnership as a Participant General Partner and whose name
      and
      address is set forth on Schedule 1 attached hereto, and any substituted
      Participant General Partner as provided in Article XI
      hereof.


     

    The
      term
Participant
      General Partners
      shall
      refer to the Participant General Partners collectively and shall specifically
      exclude the Managing General Partner.

     


    
      
         

      

      
        3

        
          

        

      

      
         

      

    


    


     

    The
      term
Participant
      Partner
      shall
      mean any Participant General Partner. 

     

    The
      term
Participant
      Partners
      shall
      mean the then current Participant General Partners and Limited Partners,
      collectively.

     

    The
      term
Partners
      shall
      mean the General Partners and the Limited Partners, collectively.

     

    The
      term
Partner
      Nonrecourse Deduction
      shall
      mean an allocation of loss and/or expense (or item thereof) attributable to
      Partner Nonrecourse Liabilities, determined in accordance with the provisions
      of
      applicable Treasury Regulations, including Treasury Regulation
      Section 1.704-2.

     

    The
      term
Partner
      Nonrecourse Liabilities
      shall
      mean liabilities of the Partnership which are nonrecourse debt (as defined
      in
      applicable Treasury Regulations, including Treasury Regulation
      Section 1.704-2) but with respect to which one or more Partners (or the
      affiliate of any Partner) bears the economic risk of loss (as defined in
      applicable Treasury Regulations promulgated under Code
      Section 752).

     

    The
      term
Partner
      Nonrecourse Liability Minimum Gain
      shall
      mean the aggregate amount of gain (of whatever character), computed with respect
      to each property of the Partnership which secures a Partner Nonrecourse
      Liability of the Partnership, that would be recognized by the Partnership if,
      in
      a taxable transaction, the Partnership were to dispose of such property in
      full
      satisfaction of such Partner’s Nonrecourse Liability. The amount of Partner
      Nonrecourse Liability Minimum Gain and the amount of any Partner’s share of
      Partner Nonrecourse Liability Minimum Gain shall be determined in accordance
      with the provisions of applicable Treasury Regulations, including Treasury
      Regulation Section 1.704-2.

     

    The
      term
Percentage
      Interest
      shall
      mean, (a) with respect to a Participant Partner, the percentage obtained by
      dividing such Partner’s Capital Contribution by the sum of (a)
      such
      Participant’s Capital Contribution, divided by (b) the sum of (i)
      all
      Participant Capital Contributions, (ii) the Company Capital Contribution (as
      defined below), and (iii) the Company’s Common Stock reserved for exercise of
      the Warrants.
      The
      aggregate Percentage Interests of all Participants will depend on the final
      amount of the Company Capital Contribution.
      

     

    The
      term
Registered
      Office
      shall
      mean that office registered with the Pennsylvania Department of State selected
      and maintained by the Managing General Partner.

     

    The
      terms
Simulated
      Basis
      and
Simulated
      Depletion
      shall
      have the meanings ascribed thereto in Section 7.03(g) hereof.

     

    The
      term
Simulated
      Gain
      or
Simulated
      Loss
      shall
      have the meanings ascribed thereto in Section 7.03(g) hereof.

     

    The
      term
Subscription
      Agreement
      shall
      mean the Subscription Agreement pursuant to which a General Partner or a Limited
      Partner has acquired Units.

     

    The
      term
Subscription Documents
      shall
      mean the Prospective Purchaser Questionnaire, Purchaser Representative
      Questionnaire (if applicable), Subscription Agreement, Certificate of Limited
      Partnership Signature Page and the signature page to the Agreement.

     

    The
      terms
Tangible
      Drilling and Completion Costs
      or
TDCs
      shall
      mean all costs of equipment, parts and items of hardware used in drilling and
      completing a well, and those items necessary to deliver acceptable oil and
      gas
      production to purchasers to the extent installed downstream from the wellhead
      of
      any well and which are required to be capitalized pursuant to applicable
      provisions of the Code.

     


    
      
         

      

      
        4

        
          

        

      

      
         

      

    


    


     

    The
      term
Third
      Party Nonrecourse Liabilities
      shall
      mean liabilities of the Partnership which are nonrecourse debt (as defined
      in
      applicable Treasury Regulations, including Treasury Regulation
      Section 1.704-2) and which are not Partner Nonrecourse
      Liabilities.

     

    The
      term
Total
      Minimum Gain
      shall
      mean the aggregate of the Minimum Gain and the Partner Nonrecourse Liability
      Minimum Gain.

     

    The
      term
Treasury
      Regulations
      shall
      mean any applicable regulations promulgated under the Code.

     

    The
      term
Unit
      shall
      mean a partnership interest in the Partnership representing a Capital
      Contribution to the Partnership as set forth in Article III hereof.

     

    The
      term
Well
      shall
      mean, for the purpose of the Program, a shallow natural gas well drilled or
      Recompleted in the Upper Devonian sand formations in Pennsylvania, West
      Virginia, Kentucky and Illinois in a previously discovered field known or
      believed to be productive.

     

    The
      term
Warrant
      shall
      mean warrants issued by the Company to the Participant Partners exercisable
      for
      shares of the Company’s Common Stock.

     

    ARTICLE
      II 

    FORMATION,
      NAME, OFFICES AND PURPOSES

     

    Section
      2.01.  Formation.
      The
      parties hereto hereby form the Partnership under the Act, which Partnership
      shall take effect upon the filing of a Certificate of Limited Partnership with
      the Secretary of State of the State of Delaware.

     

    Section
      2.02.  Name.
      The
      name of the Partnership shall be INDIGO-ENERGY PARTNERS, LP. 

     

    Section
      2.03.  Offices.
      The
      principal office and Registered Office (as defined in the Act) of the
      Partnership shall be in care of the Managing General Partner, 13350 Random
      Hills
      Road, Suite 800, Fairfax Virginia 22030. The Partnership may have such
      additional offices as the Managing General Partner, in its sole discretion,
      shall deem advisable. The Managing General Partner may change the principal
      office of the Partnership and the Registered Office, in its sole discretion,
      in
      accordance with the Act.

     

    Section
      2.04.  Character
      of Business.
      The
      principal business of the Partnership shall be to acquire leasehold and other
      interests in gas properties located in Pennsylvania, West Virginia, Kentucky
      and
      Illinois to explore for and develop gas located in, on, or under such
      properties, to acquire existing gas wells, to produce and market any commercial
      quantities of gas so developed, and to engage in any and all phases of the
      oil
      and gas business including the doing of any and all acts and things incident
      thereto or connected therewith. 

     

    ARTICLE
      III 

    CAPITAL

    
       

      Section
        3.01.  Capital
        Contributions.
        This
        Agreement contemplates that the Partners will make substantial cash and other
        property contributions to the Partnership in exchange for their respective
        interests in the Partnership. The Partners shall contribute to the capital
        of
        the Partnership as their initial Capital Contribution the sums and property
        set
        forth on Schedule 1 to this Agreement. Pursuant to applicable Treasury
        Regulations, including Treasury Regulation Section 1.704-1(b)(2)(iv)(d),
        the Book Value of any property contributed to the Partnership by the Partners
        as
        all or a portion of their initial Capital Contribution shall reflect the
        agreed
        fair market value of such property on the date of its contribution to the
        Partnership. Each Partner’s contribution to the Partnership shall be reflected
        in such Partner’s respective Capital Account in the amount set forth next to
        such Partner’s name on Schedule 1 to this Agreement. 

       


      
        
           

        

        
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      Section
        3.02.  Withdrawals
        from Capital Accounts.
        No
        Partner shall be entitled to receive interest on or to withdraw any amount
        from
        such Partner’s Capital Account other than as expressly provided
        herein.

       

      Section
        3.03.  Capital
        Accounts.
        A
        Capital Account shall be established and maintained for each Partner in
        compliance with the provisions of applicable Treasury Regulations, including
        Treasury Regulation Section 1.704-1(b)(2)(iv). In general, such Capital
        Accounts shall be maintained as follows:

       

      (a) General
        Rules.
        Each
        Partner’s Capital Account shall be (i) credited with the amount of money
        contributed by such Partner to the Partnership, (ii) credited or debited,
        as the case may be, with such Partner’s allocation of income, gain, loss and
        expense made to such Partner pursuant to the terms of this Agreement, and
        (iii) debited with the amount of cash and the Net Fair Market Value of such
        property distributed to such Partner pursuant to the terms of this
        Agreement.

       

      (b) Special
        Rules.
        If any
        Partner’s interest in the Partnership is sold, exchanged or liquidated, the
        following special rules shall apply when determining the Capital Account
        balances of any new or remaining Partners:

       

      (i) If
        such
        sale or exchange (together with such other sales or exchanges of interests
        in
        the Partnership as occur during any relevant time period) causes a termination
        of the Partnership within the meaning of Code Section 708(b)(1)(B), the
        Capital Accounts of the Partnership shall be redetermined in accordance with
        applicable Treasury Regulations, including Treasury Regulation
        Section 1.708-1(b)(1)(iv) and credited with the fair market value of
        property contributed by such Partner to the Partnership (net of liabilities
        secured by such contributed property that the Partnership is considered to
        assume or take subject to under Code Section 752).

       

      (ii) If
        such
        sale or exchange does not cause a termination of the Partnership within the
        meaning of Code Section 708(b)(1)(B) and if the Partnership has in effect
        at the time of such sale or exchange an election under Code Section 754,
        the Capital Account of the selling or exchanging Partner shall be carried
        over
        to the transferee Partner, and there shall not be made to the Capital Account
        of
        the Partner who receives the special tax basis adjustment under Code
        Section 743 a corresponding adjustment except to the extent such a special
        tax basis adjustment would be reflected in a Partner’s respective Capital
        Account pursuant to applicable Treasury Regulations, including Treasury
        Regulation Section 1.704-1(b)(2)(iv)(m).

       

      (iii) If
        such
        sale or exchange is not described in clause (i) or (ii) of this
        paragraph (b), the Capital Account of the selling or exchanging Partner
        shall be carried over to the transferee Partner.

       

      (iv) If
        a
        Partner’s interest in the Partnership is redeemed by the Partnership through a
        distribution in complete liquidation of such interest, except as provided
        in
        paragraph (a) of this Section, the Capital Accounts of the remaining
        Partners shall be adjusted only to the extent required by applicable Treasury
        Regulations, including Treasury Regulation
        Section 1.704-(1)(b)(2)(iv)(m).

       


      
        
           

        

        
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      Section
        3.04.  Determination
        of and Adjustments to Book Value and Capital Accounts.
        When
        determining the Book Value of the assets of the Partnership and the appropriate
        balances in each Partner’s respective Capital Account resulting from any
        adjustments to such Book Value, in accordance with the provisions of applicable
        Treasury Regulations, including Treasury Regulation
        Section 1.704-(1)(b)(2)(iv), the following accounting rules shall
        apply:

       

      (a) The
        initial Book Value of any asset contributed by a Partner to the Partnership
        shall be its Gross Fair Market Value on the date of contribution.

       

      (b) The
        Book
        Value of all Partnership assets may, in the sole discretion of the Managing
        General Partner, be adjusted to equal their respective Gross Fair Market
        Values,
        as of the following times:

       

      (i) the
        acquisition of an interest (including an additional interest) in the Partnership
        by any new or existing Partner in exchange for more than a de minimis
        capital
        contribution to the Partnership if the Managing General Partner determines
        that
        such adjustment is necessary or appropriate to reflect the relative economic
        interests of the Partners with respect to the Partnership.

       

      (ii) the
        distribution by the Partnership to a Partner of more than a de minimis
        amount
        of money or other Partnership property if the Managing General Partner
        determines that such adjustment is necessary or appropriate to reflect the
        relative economic interests of the Partners with respect to the
        Partnership.

       

      (iii) the
        liquidation of the Partnership within the meaning of applicable Treasury
        Regulations, including Treasury Regulation Section 1.704-1(b)(2)(ii)(g);
        or

       

      (iv) the
        occurrence of any other event (including, without limitation, a refinancing
        of
        any property of the Partnership) if the Managing General Partner determines
        that
        such adjustment is necessary or appropriate to reflect the economic interests
        of
        the Partners with respect to the Partnership and is not prevented by applicable
        Treasury Regulations.

       

      (c) The
        Book
        Value of any Partnership asset distributed to any Partner shall be adjusted
        to
        equal its Gross Fair Market Value on the date of such distribution.

       

      (d) The
        Book
        Value of Partnership assets shall not be increased or decreased to reflect
        any
        adjustments to the adjusted tax basis of such assets pursuant to Code
        Section 734(b) or Code Section 743(b), except to the extent that such
        adjustments are taken into account in determining and maintaining capital
        accounts pursuant to applicable Treasury Regulations, including Treasury
        Regulation Section 1.704-1(b)(2)(iv)(m); provided, however, that Book Value
        shall not be adjusted pursuant to this provision to the extent that such
        adjustment was previously reflected in the Book Value of the Partnership’s
        assets.

       

      (e) If
        the
        Book Value of an asset has been determined or adjusted pursuant to the foregoing
        provisions of this Section, such Book Value shall thereafter be reduced by
        the
        Depreciation taken into account with respect to such asset for purposes of
        computing the Net Book Profits and the Net Book Losses of the Partnership
        pursuant to the terms of this Agreement.

       


      
        
           

        

        
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      Section
        3.05.  Additional
        Capital Contributions.
        Except
        as specifically provided for in this Agreement, no Partner shall be obligated
        to
        make any additional capital contributions to the Partnership; and unless
        specifically consented to by the affected Partner, no Partner’s respective
        interest in the Partnership shall be diluted as the result of any additional
        capital contributions made to the Partnership by any other Partner.

       

      Section
        3.06.  Partnership
        Borrowings.
        In the
        event that at any time or from time to time during the term hereof, the Managing
        General Partner determines that the Partnership has need of additional funds
        in
        excess of the Capital Contributions to the Partnership, for the conduct of
        the
        business of the Partnership or the payment of any of its obligations, expenses,
        costs, liabilities or expenditures, including, but not limited to, operating
        deficits, the Managing General Partner may, in its sole discretion, borrow
        such
        funds for and on behalf of the Partnership, on such terms and conditions
        as the
        Managing General Partner shall decide, from commercial banks or other financial
        institutions or other persons including Partners; provided that the outstanding
        principal amount of any such borrowing(s) shall not exceed at any one time,
        in
        the aggregate, Five Hundred Thousand Dollars ($500,000.00). The Managing
        General
        Partner may secure the repayment of such borrowings by mortgage, hypothecation,
        pledge or other assignment of or arrangement of security interest in all
        or any
        part of the property then owned or thereafter acquired by the Partnership.
        Notwithstanding the foregoing, the Managing General Partner shall have no
        obligation to lend any funds to the Partnership, though nothing herein contained
        shall preclude the Managing General Partner from loaning or advancing funds
        to
        the Partnership. 

       

      Section
        3.07.  Capital
        Contribution of the Company.
        The
        Company will (i) pay, or provide for by in-kind contributions to the individual
        Operators on behalf of the Partnership, one hundred percent (100%) of the
        Tangible Drilling and Completion Costs, ranging from twenty-five percent
        (25%)
        to thirty percent (30%) of the cost of the turnkey price per well (any Tangible
        Drilling and Completion Costs in excess of such maximum will be paid for
        or
        provided by Operators); (ii) provide the leases for the wells, pay all leasehold
        acquisition costs, provide geologic and exploration services and advance
        funds
        to the Partnership as necessary as a result of working capital deficiencies,
        and
        (iii) make its contribution to the Program by direct payment to its vendors
        and
        subcontractors in its capacity as Managing General Partner (the “Company Capital
        Contribution”). The magnitude of the Company Capital Contribution will not be
        known in advance but will be determined by the final amount of the Tangible
        Drilling and Completion Costs. 

      


       

      ARTICLE
        IV 

      PARTICIPATION
        IN PARTNERSHIP PROPERTY

       

      Section
        4.01.  Ownership
        by Partners of Partnership.
        Each
        Partner shall have and own an undivided interest in the Partnership equal
        to his
        or her Percentage Interest in the Partnership in accordance with the terms
        hereof; provided, however, that no Partner shall have any right of partition
        with respect to any property or assets of the Partnership.

       

      Section
        4.02.  Percentage
        Interest in Partnership.
        Each
        Partner’s Percentage Interest in the Partnership will be set forth on
        Schedule 1 attached hereto, as may be amended from time to
        time.

       

      Section
        4.03.  Limitation
        on Distributions.
        Except
        as expressly provided herein, the Managing General Partner shall make no
        in-kind
        distribution of the property of the Partnership to any Partner with respect
        to
        his or her interest in the Partnership; and notwithstanding anything contained
        herein, the Managing General Partner shall make no distributions or take
        any
        other action in violation of the Act.


      
        
           

        

        
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      ARTICLE
        V 

      MANAGEMENT

       

      Section
        5.01.  General
        Management.
        Except
        as otherwise provided herein, the management and control of the day to day
        operation of the Partnership and the maintenance of the property of the
        Partnership shall rest exclusively with the Managing General Partner. The
        Partnership will pay the Managing General Partner a reasonable monthly fee
        per
        Developmental Gas Well for administrative and managerial services provided
        to or
        for the Partnership. Such fee will be set by the Managing General Partner
        at its
        sole judgment and discretion. Such fee is a net fee and the Partnership shall
        pay the usual and ordinary costs of the business expenses of the Partnership.
        The Partnership shall pay the Managing General Partner as additional
        compensation any amounts, which after payment of expenses, remain from the
        allocations to geological and consulting fees and brokerage fees. 

       

      Section
        5.02.  Powers
        of the Managing General Partner.
        The
        Managing General Partner is hereby authorized and empowered to carry out
        and
        implement any and all of the purposes of the Partnership; and, in that
        connection, the Managing General Partner, or its authorized agents, shall,
        except as otherwise expressly provided herein, have all the rights and powers
        and shall be subject to all the restrictions and liabilities of a partner
        in a
        general partnership. In that connection, the powers of the Managing General
        Partner shall include, but not be limited to, the following:

      (a) to
        engage
        personnel, attorneys, accountants or such other persons as it may deem necessary
        or advisable;

       

      (b) to
        amend
        this Agreement, subject to Section 6.04(b);

       

      (c) to
        open,
        maintain and close bank accounts and to draw checks and other orders for
        the
        payment of money;

       

      (d) to
        execute, on behalf of the Partnership, any and all documents or instruments
        of
        any kind required to be executed by the Partnership under this Agreement
        or
        which the Managing General Partner may deem appropriate in carrying out the
        purposes of the Partnership, including without limitation, instruments assigning
        or conveying leasehold and other interests in oil and gas properties (including
        existing wells) to the Partnership, the Drilling and Operating Agreement,
        the
        Operating Agreement, production sales contracts, hedging contracts and
        arrangements, applications and other documents relating to price determinations
        under applicable federal and state laws and regulations, and all other
        agreements, documents or instruments of any kind or character or amendments
        thereto;

       

      (e) to
        make,
        in its sole discretion, on behalf of the Partnership all decisions required to
        be made by the Partnership under the Drilling and Operating Agreement, the
        Operating Agreement and other agreements to which the Partnership is a
        party;

       

      (f) to
        make,
        in its sole discretion or on behalf of the Partnership, all decisions concerning
        the pricing and marketing of all oil and gas production owned by the
        Partnership;

       

      (g) to
        invest
        any funds of the Partnership not necessary for the operation of the business
        of
        the Partnership and not distributed to the Partners in United States Treasury
        Bills, money market funds, commercial paper, bank certificates of deposit,
        repurchase agreements and savings and loan certificates;

       


      
        
           

        

        
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      (h) to
        take
        such actions, incur such expenses and make such payments on behalf of the
        Partnership as may be necessary or advisable in connection with the conduct
        of
        the affairs of the Partnership;

       

      (i) to
        borrow
        funds in the name and on behalf of the Partnership, and pledge Partnership
        assets to secure the repayment thereof, as provided in Section 3.06
        hereof;

       

      (j) to
        execute any and all documents and agreements necessary or appropriate to
        accomplish the Conversion Option, including without limitation, any applicable
        amendments to this Partnership Agreement and the Certificate of Limited
        Partnership of the Partnership; and

       

      (k) to
        ratify
        and adopt, as acts of the Partnership, the acts of any nominee or designee
        made
        in furtherance of the interests of the Partnership.

       

      Section
        5.03.  Activity
        of the Managing General Partner.
        Although nothing contained herein shall require the Managing General Partner
        to
        devote its full time to the conduct of the affairs of the Partnership, the
        Managing General Partner shall use its best efforts in carrying out and
        implementing the purposes of the Partnership and shall devote to the conduct
        of
        the affairs of the Partnership such time and activity as shall be necessary
        therefor. Nothing in this Agreement shall preclude the Managing General Partner
        from engaging, directly or indirectly, as owner, operator or otherwise in
        other
        activities for profit, including any oil and gas business for its own account
        or
        the organization and management of other business entities formed for the
        purposes of oil and gas exploration and development, in the geographic area
        of
        the Partnership’s operations or elsewhere.


       

      Section
        5.04.  Activities
        of HUB. HUB
        will
        act as advisor to the Partnership and advise the Partnership on day to day
        operations including providing the Partnership with prospects, consisting
        of
        drill site acreage subject to any existing title or operating encumbrances
        or
        third party agreements affecting the prospects or to which HUB is a
        party.

      


      Section
        5.05.  Transfer
        of Assets and Other Acts Outside Ordinary Business of the
        Partnership.
        Except
        as provided under Section 3.06, the Managing General Partner shall not
        voluntarily sell, convey, exchange, mortgage, pledge, hypoth

      ecate
        or
        otherwise transfer a substantial part of the assets of the Partnership (more
        than 50%) unless it shall have first obtained the written consent of at least
        a
        Majority in Interest of the Participant Partners.

       

      Section
        5.06.  Insurance
        Coverage.
        In
        addition to the insurance coverage required of the Operator under the Operating
        Agreement and of the Driller under the Drilling and Operating Agreement,
        the
        Managing General Partne

      may
        maintain on behalf of the Partnership and the Participant General Partners
        such
        other insurance and in such amounts as it shall deem to be appropriate under
        the
        circumstances, including public liability, employment, fire, casualty, liability
        and property damage insurance; provided, however, that the Managing General
        Partner shall have no obligation to procure any such insurance. The Managing
        General Partner shall have no obligation to procure title insurance with
        respect
        to the Partnership’s oil and gas properties.

       


      
        
           

        

        
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      Section
        5.07.  Holding
        of Property.
        Property owned by the Partnership shall be held in the name of the Partnership.
        Subject to the provisions of this Article V and the other applicable
        provisions of this Agreement, the Managing General Partner shall, in its
        capacity as the Managing General Partner, have the right, power and authority,
        for and on behalf of the Partnership, to lease, sell, mortgage, convey,
        refinance, grant easements on or other rights with respect to any property
        of
        the Partnership. In no event shall any party dealing with the Managing General
        Partner with respect to any property of the Partnership, or to whom any such
        property, or any part thereof, shall be conveyed, contracted to be sold,
        leased,
        or mortgaged by the Managing General Partner for and on behalf of the
        Partnership, be obligated to see that the terms of this Agreement have been
        complied with, or be obligated to inquire into the necessity or expediency
        of
        any act or action of the Managing General Partner, or be obligated or privileged
        to inquire into any of the terms of this Agreement. Every contract, agreement,
        deed, mortgage, lease or other instrument or document executed by the Managing
        General Partner with respect to any property or activity of the Partnership
        shall be conclusive evidence in favor of any and every person relying thereon
        or
        claiming thereunder that (a) at the time or times of the execution and
        delivery thereof, the Partnership was in full force and effect, (b) such
        instrument or document was duly executed in accordance with the terms and
        provisions of this Agreement and is binding upon the Partnership and all
        of the
        Partners hereof; and (c) the Managing General Partner was duly authorized
        and empowered to execute and deliver any and every such instrument or document
        for and on behalf of the Partnership. The manner of holding title to any
        property of the Partnership, or any part thereof, shall be solely for the
        convenience of the Partnership; accordingly, no spouse, heir, legal
        representative, successor or assign of any Partner shall have any right,
        title
        or interest in and to any property of the Partnership by reason of the manner
        in
        which title shall be held; and all such property shall be treated as property
        of
        the Partnership subject to the terms of this Agreement. All Partnership funds
        and temporary investments shall be held in the name of the Partnership in
        bank
        or other appropriate accounts, and shall not be commingled with funds or
        other
        property of any Partner or other person or entity.

       

      Section
        5.08.  Meetings
        and Voting.
        The
        Managing General Partner or any Participant Partners holding not less than
        one-third of the Units then outstanding may call a meeting of the Partners
        for
        any reasonable time, upon at least five (5) days’ notice to the other Partners.
        Such meetings shall be for the purpose of receiving the reports of the Managing
        General Partner provided in Section 9.03 hereof, for taking any action
        required of the Participant Partners hereunder and for taking any other actions
        deemed appropriate by the Managing General Partner.

       

      Section
        5.09.  No
        Management Rights.
        No
        Participant Partner shall take part in the management of the business of
        the
        Partnership or transact any business for or on behalf of the Partnership.
        No
        Participant Partner shall have the power to sign for or to bind the
        Partnership.

       

      Section
        5.10.  Transactions
        with the Partnership.
        The
        Managing General Partner, without the written consent of a Majority in Interest
        of the Participant Partners, shall not:

       

      (a) cause
        or
        permit the Partnership to enter into any agreement with itself or any Affiliate
        which is not in the best interest of and for the benefit of the Partnership
        or
        which would be in contravention of the Managing General Partner’s fiduciary
        obligations to the Partnership, it being recognized, however, that the
        Partnership intends to enter into the Drilling and Operating Agreements with
        various Operators and HUB as advisor, and may enter into natural gas gathering
        and/or sales agreements with an Affiliate or Affiliates of the Managing General
        Partner, in each case on terms at least as favorable to the Partnership as
        those
        offered to third parties;

       

      (b) take
        any
        action with respect to the assets or property of the Partnership which does
        not
        benefit the Partnership, including utilization of Partnership funds as
        compensating balances; or

       

      (c) permit
        the Partnership to make loans to the Managing General Partner or its Affiliates,
        though the Managing General Partner may make short-term loans to the Partnership
        on commercially reasonable terms.

       


      
        
           

        

        
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      ARTICLE
        VI 

      RIGHTS
        AND OBLIGATIONS OF PARTNERS

       

      Section
        6.01.  Limitation
        on Liability.
        Except
        to the extent of his or her Capital Contribution, no Limited Partner shall
        be
        personally liable for any of the obligations or debts of the Partnership
        or any
        of the losses thereof. A Limited Partner may be liable to repay any wrongful
        distribution of profits to him and may be liable for distributions (with
        interest thereon) considered to be a return of capital if necessary to satisfy
        creditors of the Partnership and as otherwise provided in the Act.

       

      Section
        6.02.  Liability
        of General Partners.
        Except
        as expressly provided in this Agreement or in the Act, each General Partner
        shall be liable for the debts, liabilities and obligations of the Partnership,
        pro
        rata,
        in
        proportion to their respective Percentage Interests, assuming all General
        Partners have sufficient resources to satisfy their pro rata share of such
        liabilities. If not, the General Partners may be liable for Partnership
        obligations in excess of their Percentage Interests.

       

      Section
        6.03.  Activity
        of the Participant Partners.
        Except
        as expressly provided in this Agreement or in the Act, the Participant Partners
        shall take no part in the conduct or control of the Partnership and its business
        and shall have no right or authority to act for, or bind, the
        Partnership.

       

      Section
        6.04.  Certain
        Rights.
        Provided
        the following does not subject the Limited Partners to unlimited liability
        pursuant to state law, the Participant Partners shall have, by a vote or
        the
        written consent of a Majority in Interest of the Participant Partners and
        approval of the Managing General Partner, the following rights in addition
        to
        those granted elsewhere herein:

       

      (a) The
        right
        to approve, prior to sale, the sale of all or substantially all of the assets
        of
        the Partnership;

       

      (b) The
        right
        to amend this Agreement concerning matters affecting their respective interest
        in profits, losses, credits and property; and

       

      (c) The
        right
        to approve, prior to merger, any merger or consolidation of the
        Partnership.

       

      Section
        6.05.  Examination
        of Books and Records.
        A
        Participant Partner shall, upon giving at least five (5) days’ prior written
        notice to the Managing General Partner, have the right to examine the books
        and
        records of the Partnership during ordinary business hours, including the
        right
        to have such examination conducted, at its sole expense by any reasonable
        number
        of representatives. Books and records shall include, without limitation,
        true
        and full information regarding the financial condition of the Partnership
        and a
        copy of the federal, state and local income tax returns for each year of
        the
        Partnership. Notwithstanding the foregoing, the Managing General Partner
        may
        keep confidential logs, well reports, other drilling data and production
        information and any other information which the Managing General Partner
        in good
        faith believes requires confidentiality for a reasonable period of
        time.

       

      Section
        6.06.  Withdrawal
        from Partnership.
        Except
        as provided herein, no Partner may (a) withdraw from the Partnership prior
        to the dissolution and winding up of the Partnership without the consent
        of all
        of the other Partners, (b) demand or receive property other than cash in
        return for his or her Capital Contribution, or, (c) except as provided in
        the Act, have priority over any other Partner as to the return of his or
        her
        Capital Contribution or as to profits or distributions hereunder. If a General
        Partner attempts to withdraw from the Partnership, and such a withdrawal
        violates this Agreement, the Partnership shall have a cause of action against
        such General Partner, as provided in the Act, and such General Partner will
        not
        be entitled to any indemnification pursuant to Article VIII hereof. Except
        as otherwise provided herein, no Partner shall be entitled to receive the
        fair
        value of his interest in the Partnership prior to the dissolution and winding
        up
        of the Partnership.

       


      
        
           

        

        
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      Section
        6.07.  Rights
        Under the Act.
        To the
        extent not otherwise set forth herein and except as modified herein, each
        Limited Partner shall have all the rights and obligations of a limited partner
        under the Act.

       

      Section
        6.08.  Remedies.
        In the
        event any Partner breaches the provisions of this Agreement, the Managing
        General Partner, on behalf of the Partnership, shall be entitled: (a) to
        offset any amounts distributable to such Partner pursuant to this Agreement
        against any damages or expenses resulting from such breach; (b) to bring
        suit for damages and expenses; (c) require the Partner to reimburse the other
        Partners for any liabilities incurred as a result thereof; and, (d) if
        deemed by the Managing General Partner to be in the best interests of the
        Partnership or the Partners, to sell and convey the Units of such Partner
        to any
        individual or legal entity who agrees to assume such breaching Partner’s
        obligations under this Agreement and who pays a purchase price equal to at
        least
        the damages and expenses resulting from such breach in compliance with the
        conditions set forth in Article XI hereof.

       

      ARTICLE
        VII 

      DISTRIBUTIONS
        OF PROFITS AND LOSSES

       

      Section
        7.01.  Distribution
        of Cash Flow.
        It is
        the intention of the Managing General Partner to distribute the Partnership’s
        Cash Flow at least monthly among the Partners in accordance with the respective
        Percentage Interests in the Partnership then held by each of them; provided,
        however, that the Managing General Partner shall have the right, in its sole
        discretion, to retain such funds in the Partnership as it deems necessary
        to
        maintain a reserve fund for anticipated future capital or extraordinary
        expenditures of the Partnership, including, without limitation, well plugging
        costs.

       

      Section
        7.02.  Definition
        of Cash Flow.
        As used
        herein, the term “Cash Flow” with respect to any period shall mean all cash
        receipts of the Partnership less all cash disbursements thereof during such
        period as shown on the books of the Partnership and reduced by such amounts
        which may be withheld by the Managing General Partner for such anticipated
        expenditures as the Managing General Partner, in its sole discretion, shall
        deem
        to be reasonably necessary or appropriate in the conduct of the business
        of the
        Partnership; except, however, that such receipts and disbursements shall
        not
        include the following:

       

      (a) receipts
        and disbursements of Capital Contributions to the Partnership;

       

      (b) receipts
        and disbursements of proceeds of loans to the Partnership; and

       

      (c) distributions
        previously made to the Partners by the Partnership in accordance with
        Section 7.01 hereof; provided, however, that Cash Flow shall include any
        other funds, including without limitation any amounts previously withheld
        by the
        Managing General Partner, which are no longer regarded by the Managing General
        Partner, in its sole discretion, as reasonably necessary in the conduct of
        the
        business of the Partnership.

       

      Section
        7.03.  Determination
        of Net Book Profit and Net Book Losses.
        For
        purposes of computing the amount of any items of income, gain, loss or expense
        to be reflected in the Partners’ Capital Accounts (hereinafter the net of such
        items being referred to as the “Net Book Profits” or the “Net Book Losses” of
        the Partnership, the determination, recognition and classification of such
        items
        shall be the same as their determination, recognition and classification
        for
        Federal income tax purposes, with the following modifications:

       


      
        
           

        

        
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      (a) Any
        item
        of expense attributable to depreciation, amortization or other cost recovery
        with respect to any asset of the Partnership (hereinafter “Depreciation”) shall
        be in an amount which bears the same ratio to the Book Value of such asset
        at
        the beginning of the applicable period as the Federal income tax deduction
        for
        Depreciation with respect to such asset for such applicable period bears
        to the
        adjusted tax basis of such asset at the beginning of such period; provided
        that
        if the Federal income tax deduction attributable to Depreciation for such
        applicable period with respect to any asset is zero, the Depreciation with
        respect to such asset for such applicable period shall be determined with
        reference to the Book Value of such asset as of the beginning of such applicable
        period using any reasonable method selected by the Managing General
        Partner.

       

      (b) Any
        item
        of income, gain, loss or expense attributable to the taxable disposition
        of any
        property with an adjusted tax basis which is different from the Book Value
        of
        such property shall be determined as if the adjusted tax basis of such property
        as of the date of such disposition were equal in amount to the Book Value
        of
        such property.

       

      (c) All
        expenditures of the Partnership not deductible in computing its taxable income
        and not properly chargeable to capital account, and any otherwise nondeductible
        organization and syndication expenses of the Partnership (as described in
        Code
        Section 709) shall be treated as Partnership expenses.

       

      (d) Revenue
        of the Partnership which is exempt from Federal income tax shall be included
        in
        the Net Book Profits or the Net Book Losses of the Partnership without regard
        to
        the fact that such revenue is not includable in gross income for Federal
        income
        tax purposes.

       

      (e) Payments
        made to any Partner which are treated for Federal income tax purposes as
        guaranteed payments pursuant to Code Section 707(c) shall be treated as
        Partnership expenses; provided that such payments shall be treated as capital
        expenditures of the Partnership to the extent such payments are required
        to be
        capitalized under the Code and any applicable Treasury Regulations
        thereunder.

       

      (f) In
        the
        event the Book Value of any Partnership asset is adjusted pursuant to the
        terms
        of this Agreement, the amount of such adjustment shall be treated as gain
        or
        loss (as appropriate) from a sale of such asset.

       

      (g) The
        Partnership shall establish records of the aggregate adjusted depletable
        basis
        of all Partners in each oil and gas property (as defined in Code
        Section 614) at the time the property is acquired by the Partnership (the
“Simulated Basis”), and shall allocate to each Partner its proportionate share
        of such basis in accordance with Code Section 613A(c)(7)(D), and such Simulated
        Basis (as hereinafter defined) for each property shall be adjusted from time
        to
        time, in the same manner as if the Simulated Basis was the Partnership’s
        adjusted basis in such property, to reflect (1) additions to basis and
        (2) Simulated Depletion as provided in subparagraph (i) below, and the
        Simulated Basis, as adjusted, shall be utilized to determine simulated gain
        or
        simulated loss, as provided in subparagraph (ii) below:

       

      (i) The
        Partnership shall compute a depletion allowance (“Simulated Depletion”) for each
        taxable year based on the Simulated Basis, as theretofore adjusted, equal
        to
        either the (1) cost depletion or (2) percentage depletion at the rate
        specified in Code Section 613(A)(c) (but otherwise computed without regard
        to the limitations which theoretically could apply to less than all the
        Partners) attributable to each oil or gas property, with the method of
        depletion, cost or percentage, being determined on a property by property
        basis
        in the first Partnership taxable year for which it is relevant for the property,
        with such treatment being binding for all Partnership taxable years during
        which
        the oil and gas property is held by the Partnership, and such Simulated
        Depletion allowance with respect to each oil or gas property shall be treated
        as
        an expense of the Partnership, provided that in no event shall the Partnerships
        aggregate Simulated Depletion allowances with respect to an oil or gas property
        exceed the Partnership’s Simulated Basis of such property.

       


      
        
           

        

        
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      (ii) The
        Partnership shall compute gain or loss (“Simulated Gain” or “Simulated Loss”)
        attributable to the sale or other taxable disposition of an oil or gas property
        by the Partnership based on the difference between the amount realized from
        the
        disposition and the Simulated Basis of such property, as theretofore
        adjusted.

       

      Section
        7.04.  Allocation
        of Net Book Profits and Net Book Losses.
        

       

      (a) For
        purposes of maintaining the Capital Accounts of the Partners and determining
        the
        rights of the Partners among themselves with respect to the assets of the
        Partnership, the Net Book Profits or Net Book Loss of the Partnership for
        each
        applicable period shall be allocated among the Partners pro rata in proportion
        to each Partner’s respective Percentage Interest. Each item of such income,
        gain, loss or expense giving rise to such Net Book Profits or Net Book Losses
        of
        the Partnership for such period shall be allocated among the Partners in
        the
        same proportion that such Net Book Profits or Net Book Losses of the Partnership
        for such period are allocated among the Partners. 

       

      (b) Notwithstanding
        anything to the contrary in this Agreement, all IDCs shall be allocated 100%
        to
        all Participant General Partners and Limited Partners and all TDCs shall
        be
        allocated 100% to the Managing General Partner. The Partnership intends to
        elect
        to expense, rather than capitalize, all IDCs. 

       

      (c) Notwithstanding
        anything to the contrary contained in this Agreement, the Simulated Depletion
        for each oil and gas property for each taxable year shall be allocated to
        the
        Partners in the same proportion as such Partners were allocated the Simulated
        Basis of such property. Upon the taxable disposition of such property, the
        Simulated Gain shall be allocated to the Partners in proportion to such
        Partners’ respective Percentage Interests, and the Simulated Loss shall be
        allocated to the Partners in proportion to such Partners’ allocable share of the
        total amount realized that represents recovery of the Partnership’s Simulated
        Basis, in accordance with Treas. Reg. § 1.704-1 (b)(2)(iv)(k)(2).

       

      Section
        7.05.  Allocations
        to Comply With Applicable Treasury Regulations.
        In
        order to comply with the provisions of applicable Treasury Regulations,
        including Treasury Regulation Sections 1.704-1(b) and 1.704-2, the
        following special allocations of income, gain, loss and expense shall be
        made
        notwithstanding any other provision of this Agreement.

       

      (a) Deficit
        Capital Account Allocations.
        Subject
        to the remaining provisions of this Section, in accordance with applicable
        Treasury Regulations, including Treasury Regulation
        Section 1.704-1(b)(2)(ii)(d), no allocation of expenses or losses shall be
        made pursuant to the terms of this Agreement to the extent such allocation
        would
        cause or increase a net deficit balance in a Partner’s Capital Account as of the
        end of the period to which such allocation relates in excess of any dollar
        amount of such net deficit balance that such Partner is obligated to restore
        under this Agreement. Such expenses and losses shall instead be allocated
        among
        the other Partners not subject to this limitation in accordance with their
        relative Percentage Interests. For purposes of this paragraph (a), the
        following rules shall apply:

       

      (i) each
        Partner’s net deficit balance in such Partner’s respective Capital Account shall
        be determined by adding to such Capital Account balance the amount of such
        Partner’s share (as determined pursuant to Treasury Regulation
        Section 1.704-2) of the Total Minimum Gain of the Partnership as of the end
        of the period with respect to which such determination is being made;
        and

       


      
        
           

        

        
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      (ii) in
        determining whether an allocation of loss or expense would cause or increase
        a
        net deficit balance in a Partner’s respective Capital Account as of the end of
        the period to which such allocation relates, the initial balance in such
        Partner’s respective Capital Account shall be treated as if it reflected an
        amount equal to the excess of any distributions that, as of the end of such
        period, reasonably are expected to be made to such Partner in any future
        period
        over the Net Book Profits reasonably expected to be allocated to such Partner
        during (or prior to) the period in which such distributions are expected
        to be
        made.

       

      (b) Qualified
        Income Offset Provision.
        If a
        Partner unexpectedly receives an adjustment, allocation or distribution pursuant
        to this Agreement which causes or increases a net deficit balance in such
        Partner’s Capital Account as of the end of the period to which such adjustment,
        allocation or distribution relates in excess of any dollar amount of such
        net
        deficit balance that such Partner is obligated to restore pursuant to this
        Agreement, such Partner will be allocated items of gross income and gain
        in an
        amount and manner sufficient to eliminate such net deficit balance as quickly
        as
        possible. The rules set forth in subparagraph (a)(i) and (a)(ii) of this
        Section shall apply for purposes of determining whether any adjustment,
        allocation or distribution would cause or increase a net deficit balance
        in any
        Partner’s Capital Account.

       

      (c) Special
        Allocations of Nonrecourse Deductions.
        Notwithstanding any other provision in this Agreement, in compliance with
        applicable Treasury Regulations, including Treasury Regulation
        Section 1.704-2, allocations of Nonrecourse Deductions shall be made among
        the Partners in accordance with their Percentage Interests.

       

      (d) Minimum
        Gain Chargeback Provision.
        If
        there is a net decrease in the Minimum Gain of the Partnership (as determined
        pursuant to applicable Treasury Regulations, including Treasury Regulation
        Section 1.704-2) during any period, then each Partner shall be allocated
        items of gross income and gain in accordance with the provisions of applicable
        Treasury Regulations, including Treasury Regulation
        Section 1.704-2.

       

      (e) Special
        Allocations of Partner Nonrecourse Deductions.
        Notwithstanding any other provision in this Agreement, in compliance with
        applicable Treasury Regulations, including Treasury Regulation
        Section 1.704-2, allocations of Partner Nonrecourse Deductions shall be
        made among the Partners in accordance with the ratios in which the Partners
        (or
        the affiliates of any Partners) share the economic risk of loss with respect
        to
        the Partner Nonrecourse Liabilities to which such Partner Nonrecourse Deductions
        are attributable.

       

      (f) Partner
        Nonrecourse Liability Minimum Gain Chargeback Provision.
        If
        there is a net decrease in the Partner Nonrecourse Liabilities Minimum Gain
        (as
        determined pursuant to applicable Treasury Regulations, including Treasury
        Regulation Section 1.704-2) during any period, then each Partner shall be
        allocated items of income and gain in accordance with the provisions of
        applicable Treasury Regulations, including Treasury Regulation
        Section 1.704-2.

       

      (g) Subsequent
        Allocations.
        Any
        special allocations of items of income, gain, loss or expense made pursuant
        to
        this Section shall be taken into account in computing subsequent allocations
        of
        income, gain, loss and expense pursuant to this Agreement, so that the net
        income of any item of income, gain, loss and expense allocated to each Partner
        pursuant to this Agreement shall, to the extent possible, be equal to the
        amount
        of such items of income, gain, loss and expense that would have been allocated
        to such Partner pursuant to this Agreement if the special allocations of
        income,
        gain, loss or expense required by this Section had not been made.

       


      
        
           

        

        
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      (h) Interpretation.
        The
        provisions of this Section are intended to comply with the provisions of
        applicable Treasury Regulations, including Treasury Regulation
        Sections 1.704-1(b)(2) and 1.704-2, and shall be interpreted consistently
        therewith. If the allocations are not in compliance with the Treasury
        Regulations, the allocations of profits, losses and items thereof to the
        Partners shall be modified as deemed necessary by the Managing General Partner
        to comply with the Treasury Regulations.

       

      Section
        7.06.  Federal
        Income Tax Allocations.
        The
        allocations of income, gain, loss and expense made pursuant to the previous
        Sections are allocations of book income which are made for accounting purposes
        to determine the respective balances in the Capital Accounts of the Partners
        and
        to establish the rights of the Partners among themselves with respect to
        the
        assets of the Partnership. These allocations may be different from the
        allocations among the Partners of the income, gain, loss, deduction, tax
        preference and tax credits of the Partnership for Federal income tax purposes.
        Allocations of income, gain, loss, deduction, tax preference and tax credits
        of
        the Partnership for Federal income tax purposes for each taxable year shall
        be
        made among the Partners as follows:

       

      (a) General
        Rules Regarding Allocations of Income, Loss, Etc.
        In
        general, for Federal income tax purposes, all items of income, gain, loss,
        deduction, tax credit and tax preference of the Partnership for each taxable
        year shall be allocated among the Partners in the same manner as the items
        of
        income, gain, loss and expense which gave rise to such items of income, gain,
        loss, deduction, tax credit, and tax preference for Federal income tax purposes
        are allocated among the Partners pursuant to the terms of this
        Agreement.

       

      (b) Special
        Rules Where Tax Basis Differs From Book Value.
        If the
        Partnership’s adjusted tax basis for Federal income tax purposes of any of its
        property differs from the Book Value of such property at the beginning of
        any
        taxable year, in determining each Partner’s distributive share of the taxable
        income or loss (or items thereof) of the Partnership, each item of income,
        gain,
        loss or deduction with respect to such property shall be allocated among
        the
        Partners in such a manner as will take into account (as required by Code
        Section 704(c) and any applicable Treasury Regulations thereunder or by
        other applicable Treasury Regulations, including Treasury Regulation
        Section 1.704-1(b)(4)(i)) the difference between the adjusted tax basis for
        Federal income tax purposes of such property and its Book Value, all as of
        the
        beginning of such taxable year.

       

      Section
        7.07.  Allocation
        of Taxable Income and Loss and Tax Credits on the Transfer of a Partnership
        Interest.
        The
        items of income, gain, loss, expense, deduction, tax preference and/or tax
        credit allocable under the terms of this Agreement to any interest in the
        Partnership which may have been transferred during any period shall be allocated
        among the persons who were the holders of such interest during such period
        in a
        manner which takes into account the varying interests of the Partners in
        the
        Partnership during such period, all in accordance with any Treasury Regulations
        promulgated under Code Section 706(d); provided, that the allocation of
        gain or loss on the disposition of any property in which the Partnership
        has a
        direct or indirect interest shall, to the extent not prohibited under such
        regulations, be allocated among the Partners who are Partners in the Partnership
        on the date the event giving rise to such gain or loss occurs in accordance
        with
        the provisions of this Agreement otherwise dealing with Federal income tax
        allocations.

       

      Section
        7.08.  Special
        Tax Audit Allocations.
        Notwithstanding anything contained in this Agreement to the contrary, in
        the
        event that the taxable income of the Partnership for Federal income tax purposes
        (or any item thereof) is adjusted as the result of an audit by the Internal
        Revenue Service, the Partners’ Capital Accounts shall be adjusted in a manner
        which reflects such adjustments as though corresponding book adjustments
        had
        been originally reflected in the Net Book Profits or Net Book Losses of the
        Partnership determined pursuant to the terms of this Agreement.

       


      
        
           

        

        
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      Section
        7.09.  Tax
        Elections; Tax Reports.
        The
        Partnership shall make an election to deduct IDCs currently as an expense
        on its
        Federal income tax returns to the full extent permitted by the Code. In the
        event of the transfer of an interest in the Partnership, or in the event
        of the
        distribution of property to any Partner, the Partnership may (but is not
        required to) file the election contemplated by Section 754 of the Code to
        cause the basis of the Partnership’s assets to be adjusted for federal income
        tax purposes as provided by Sections 734 and 743 of the Code. The Managing
        General Partner shall be the “tax matters partner” as defined in
        Section 6231 of the Code. Should there be any question or controversy with
        the Internal Revenue Service or other taxing body involving the Partnership,
        the
        tax matters partner shall act as the agent of the Partnership to resolve
        such
        question or controversy and may, on behalf of the Partnership, incur any
        expenses it deems necessary or advisable in the interests of the Partnership
        in
        connection with any such question or controversy, including professional
        fees
        and the costs of any protest, litigation and/or appeals. The Managing General
        Partner shall cause the Partnership to deliver to the Partners, no later
        than
        ninety (90) days after the end of each fiscal year, K-1 statements necessary
        for
        such Partners to prepare their federal, state and local tax returns for such
        fiscal year.

       

      Section
        7.10.  Right
        to Distributions.
        A
        Partner entitled to receive a distribution from the Partnership shall not
        have
        the status of, and shall not be entitled to remedies available to, a creditor
        of
        the Partnership with respect to such distribution. The Managing General Partner
        may, but shall not be obligated to, establish from time to time a record
        date
        with respect to allocations and distributions by the Partnership.

       

      Section
        7.11.  Income
        Tax Effect.
        The
        Partners are aware of the income tax consequences of the allocations made
        by
        this Article VII and hereby agree to be bound by the provisions of this
        Article VII in reporting their shares of Partnership profits and losses for
        federal income tax purposes.

       

      ARTICLE
        VIII 

      LIABILITY;
        INDEMNIFICATION

       

      Section
        8.01.  Liability
        of General Partners.

       

      (a) The
        Managing General Partner shall be entitled to indemnification from the
        Partnership (excluding any obligation of the Managing General Partner to
        fund
        Tangible Drilling and Completion Costs), and shall not be liable to the
        Partnership or any Partner, for any cost, damage, liability or expense
        (including, without limitation, attorney’s fees) reasonably incurred by the
        Managing General Partner directly arising out of or in connection with the
        business of the Partnership or arising from any threatened, pending or completed
        action by or in the right of the Partnership provided that the Managing General
        Partner acted in good faith and in a manner reasonably believed to be in,
        and
        not opposed to, the best interests of the Partnership; except that the Managing
        General Partner shall be liable to the Partnership and no indemnification
        shall
        be made (i) in the event the conduct of the Managing General Partner, as
        determined by a court of competent jurisdiction, shall have constituted gross
        negligence, recklessness, intentional misconduct or criminal wrongdoing or
        (ii)
        for losses, liabilities or expenses arising from or out of a final determination
        of a material violation of federal or state securities laws by the Managing
        General Partner unless a court of competent jurisdiction finds that
        indemnification of the settlement and the related costs should be made, provided
        the court considering the request for indemnification has been advised of
        the
        position of the Securities and Exchange Commission and of the position of
        any
        applicable State securities regulatory authority.

       


      
        
           

        

        
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      (b) Each
        Participant General Partner shall be entitled to indemnification from the
        Partnership, and shall not be liable to the Partnership or any Partner, for
        any
        cost, damage, liability, or expense (including, without limitation, attorney’s
        fees) reasonably incurred by such Participant General Partner directly arising
        out of or in connection with the business of the Partnership or arising from
        any
        threatened, pending or completed action by or in the right of the Partnership
        provided that such Participant General Partner did not violate Sections 5.08
        or
        6.03 hereof and acted in good faith and in a manner reasonably believed to
        be
        in, and not opposed to, the best interests of the Partnership; except that
        a
        Participant General Partner shall be liable to the Partnership and no
        indemnification shall be made in the event the conduct of such Participant
        General Partner, as determined by a court of competent jurisdiction, shall
        have
        constituted gross negligence, recklessness or willful misconduct or a breach
        of
        Sections 5.08 or 6.03 hereof.

       

      (c) The
        Partnership’s indemnification of the General Partners shall be limited to and
        recoverable only out of the assets of the Partnership. Any liability of the
        Partnership shall first be satisfied out of the assets of the Partnership
        (including the proceeds of any liability insurance which the Partnership
        may
        recover therefor). If, however, the assets of the Partnership shall not be
        sufficient to satisfy any liability thereof, such liability shall be borne
        by
        the General Partners, except, however, that the General Partners shall have
        no
        liability with respect to any claim for which the creditor has agreed that
        no
        Partner has any obligation separate from that of the Partnership.

       

      Section
        8.02.  Indemnification
        of Participant General Partners by Managing General Partner.
        Each
        Participant General Partner shall be entitled to indemnification from the
        Partnership first, then the Managing General Partner for any costs, damages,
        liabilities or expenses (including but not limited to attorney’s fees)
        reasonably incurred by such Participant General Partner directly arising
        out of
        or in connection with the Partnership to the extent the aggregate of such
        costs,
        damages, liabilities or expenses exceed such Participant General Partner’s
        Capital Contribution; provided, however, that no Participant General Partner
        shall be entitled to indemnification for liabilities arising from the allocation
        of the Partnership’s losses and profits under Section 7.04 hereof or from
        conduct of such Participant General Partner determined by a court of competent
        jurisdiction to constitute negligence, recklessness or willful misconduct
        or
        breach of such Participant General Partner’s obligations under this Agreement
        (including that set forth in Section 5.08 hereof).

       

      Section
        8.03.  Limited
        Liability of Limited Partners.
        As
        provided in Section 6.01 hereof, the liability of each of the Limited Partners
        in all respects shall, except as provided in the Act, be limited to the Capital
        Contribution of such Limited Partner.

       

      Section
        8.04.  Payment
        of Expenses.
        To the
        extent provided under the Act and Section 8.01(c) hereof, expenses incurred
        by a
        General Partner in defending any action or proceeding against which
        indemnification may be made pursuant to Section 8.01 hereof will be paid
        by the
        Partnership in advance of the final disposition of such action or proceeding;
        provided, however, that such General Partner shall execute a written undertaking
        promising to repay such amounts advanced if it shall ultimately be determined
        that such General Partner is not entitled to indemnification by the
        Partnership.

       

      ARTICLE
        IX 

      ACCOUNTING

       

      Section
        9.01.  Books
        and Records.

       

      (a) The
        Managing General Partner shall keep true, exact and completed books of account
        in which shall be entered fully and accurately each and every transaction
        of the
        Partnership. The books of account shall be kept on the accrual method of
        accounting unless the Managing General Partner determines in its sole discretion
        that an alternative method of accounting is appropriate. Said books of account,
        together with all correspondence, papers and other documents, shall be kept
        at
        the principal office of the Partnership as the Managing General Partner shall
        designate and shall be open to examination by all or any of the Partners
        in
        accordance with the provisions of Section 6.05 above. All said accounts,
        books
        and other relevant Partnership documents shall be maintained and preserved
        during the term of the Partnership and for a period of seven years
        thereafter.

       


      
        
           

        

        
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      (b) Without
        limiting the generality of Section 9.01(a) above, the Managing General Partner
        shall maintain, at the principal office of the Partnership:

       

      (i) a
        current
        list of the name and last known business address of each Partner, separately
        identifying the General Partners (alphabetically) and the Limited Partners
        (alphabetically);

       

      (ii) a
        copy of
        the certificate of Limited Partnership and all certificates of amendment
        thereto;

       

      (iii) copies
        of
        Subscription Agreements executed by the Participant Partners;

       

      (iv) copies
        of
        the Partnership’s federal, state and local income tax returns;

       

      (v) a
        copy of
        the Partnership Agreement; and

       

      (vi) copies
        of
        financial statements of the Partnership for the three most recent
        years.

       

      (c) Any
        inspection of Partnership records by a Participant Partner shall be made
        in
        accordance with this Agreement and any copies of Partnership records made
        at the
        request of a Participant Partner shall be made at the expense of the Partner
        making such request.

       

      Section
        9.02.  Fiscal
        Year.
        The
        fiscal year and the taxable year of the Partnership shall be the calendar
        year.

       

      Section
        9.03.  Annual
        Financial Reports.
        Upon
        its receipt of a request from a Partner, the Managing General Partner shall
        prepare and transmit to such Partner an unaudited report, which, in the
        discretion of the Managing General Partner, may be reviewed by a firm of
        independent public accountants chosen by the Managing General Partner,
        containing (a) a statement of income of the Partnership showing the results
        of
        operations during such year; and (b) a cash-flow statement of the Partnership
        showing the cash receipts and disbursements of the Partnership during such
        year
        and the determination of the Cash Flow of the Partnership with respect to
        such
        year. The cash-flow statement shall show separately (i) cash disbursements
        of the Partnership, if any, other than for operating expenses of the
        Partnership; (ii) payments by the Partnership of principal, interest or other
        charges payable to the holder of any loan made to the Partnership; (iii)
        payments by the Partnership, if any, of taxes based upon or measured by income,
        and (iv) amounts, if any, reserved by the Managing General Partner.

       

      Section
        9.04.  Regulatory
        Requirements.
        The
        Managing General Partner shall prepare or cause to be prepared all such reports,
        certifications, maps, surveys and other documents as shall be necessary or
        desirable to satisfy any applicable state or federal regulatory requirements
        that may relate to the business of the Partnership, including but not limited
        to
        applications, reports, and other information relating to price determinations
        for oil and gas produced by the Partnership.

       


      
        
           

        

        
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      ARTICLE
        X 

      TERM
        AND DISSOLUTION

       

      Section
        10.01.  Term.
        The
        term of the Partnership shall commence on the date of this Agreement, or
        upon
        the filing of a Certificate of Limited Partnership therefor with the Secretary
        of State of the State of Delaware in accordance with the Act, whichever is
        later, and shall continue until July 31, 2016, or until prior dissolution
        as
        provided herein.

       

      Section
        10.02.  Death
        or Incapacity of a Participant Partner.
        The
        Partnership shall not terminate and dissolve upon the death or legal incapacity
        of any Participant Partner. Rather, subject to and in accordance with the
        provisions of Sections 10.03 and 10.04 hereof, the heir, legal representative,
        successor or assign of such Participant Partner, as the case may be, shall
        become an assignee of such Participant Partner. Such assignee shall not have
        the
        rights of a substituted Participant Partner unless, with the approval of
        the
        Managing General Partner, such heir, legal representative, successor or assign
        shall execute an Addendum to this Agreement, agreeing to be bound by all
        the
        terms and conditions hereof and to assume all the obligations of the deceased
        or
        incapacitated Participant Partner hereunder.

       

      Section
        10.03.  Dissolution.
        The
        Partnership shall be dissolved upon the occurrence of any of the
        following:

       

      (a) The
        arrival of the termination date stipulated in Section 10.01 hereof;

       

      (b) The
        sale,
        abandonment, or disposal by the Partnership of all or substantially all of
        its
        assets;

       

      (c) The
        entry
        of a final judgment, order or decree of a court of competent jurisdiction
        adjudicating the Partnership to be a bankrupt, and the expiration of the
        period,
        if any, allowed by applicable law in which to appeal therefrom;

       

      (d) The
        dissolution, resignation or bankruptcy of the Managing General Partner. For
        purposes of this subsection (d), bankruptcy of the Managing General Partner
        shall be deemed to have occurred when (i) the Managing General Partner commences
        a voluntary proceeding seeking liquidation, reorganization or other relief
        under
        any bankruptcy, insolvency or similar law now or hereinafter in effect,
        (ii) a final and nonappealable order for relief is entered against the
        Managing General Partner under the federal bankruptcy laws as now or hereinafter
        in effect, or (iii) the Managing General Partner executes and delivers a
        general
        assignment for the benefit of its creditors.);

       

      (e) The
        affirmative vote or written consent of the Participant Partners holding at
        least
        two-thirds (2/3) of the outstanding Units authorizing the termination of
        the
        Partnership, subject to the consent of the Managing General Partner;
        or

       

      (f) the
        entry
        of any order of judicial dissolution, if permitted under the Act.

       

      Section
        10.04.  Continuation
        of Partnership Business.

       

      (a) If
        the
        Partnership is dissolved pursuant to Section 10.03(d) hereof, such dissolution
        shall terminate the business of the Partnership unless the Partnership acts
        to
        continue the Partnership as follows. For a period of 180 days from such
        dissolution, the remaining Partners shall have the right to elect, by a
        declaration in writing executed by a Majority in Interest of such remaining
        Partners, to reconstitute the Partnership and continue its business, the
        successor Managing General Partner of which will be the person or entity
        selected by a Majority in Interest of such remaining Partners. Notwithstanding
        anything herein to the contrary, the successor Managing General Partner shall,
        at all times, comply with Section 3.07 hereof.

       


      
        
           

        

        
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      (b) In
        the
        event of a reconstitution of the Partnership hereunder, the former Managing
        General Partner (if in existence) shall become a successor Limited Partner
        hereunder with the same Percentage Interest formerly held as Limited Partner
        (if
        any) and as General Partner hereunder, except for the interest (if any) assigned
        by the former Managing General Partner to the successor Managing General
        Partner
        pursuant to Section 10.04(a) hereof.

       

      (c) In
        the
        event of a reconstitution of the Partnership hereunder, the person or entity
        that becomes a successor Managing General Partner hereunder shall execute
        an
        addendum to this Agreement creating a new Partnership and agreeing to be
        bound
        by all the terms and provisions hereof and to assume all the obligations
        of a
        Managing General Partner hereunder; provided, however, that nothing contained
        herein will be interpreted or construed to require any such successor Managing
        General Partner to assume any liability arising prior to the date on which
        he,
        she or it becomes Managing General Partner hereunder or to require the
        predecessor Managing General Partner to assume any liability (other than
        as
        Limited Partner) arising subsequent to the dates on which he, she or it became
        a
        Limited Partner.

       

      (d) In
        the
        event of a continuation of the Partnership hereunder, the business of the
        Partnership shall continue and the dissolution shall have no effect
        thereon.

       

      Section
        10.05.  Distribution
        on Liquidation.

       

      (a) Upon
        the
        dissolution of the Partnership by the occurrence of any event described in
        Section 10.03 hereof without a continuation of the Partnership under Section
        10.04 hereof, a person (hereinafter called the “Liquidator”) will be designated
        within sixty (60) days of such event (in the case of an event described in
        Section 10.03(d) hereof, by a Majority in Interest of the Participant Partners
        or by a court of competent jurisdiction, and in the case of any other event
        described in Section 10.03 hereof, by the Managing General Partner, which
        can
        elect to serve as Liquidator), and the Liquidator shall take the following
        steps:

       

      (i) determine
        which Partnership assets should be distributed in kind and dispose of all
        other
        Partnership assets at the best price obtainable therefor;

       

      (ii) pay
        all
        Partnership debts and liabilities and the expenses of liquidation in the
        order
        of priority as provided by law, or otherwise make adequate provision therefor
        (including, without limitation, setting up a reserve therefor);

       

      (iii) determine
        by independent appraisal the fair market value of the Partnership assets
        to be
        distributed in kind and credit or charge to the Capital Account of each of
        the
        Partners receiving an in kind distribution the amount that would have been
        credited or charged to such Partner’s Capital Account if such assets had been
        sold at their fair market value and the proceeds distributed;

       

      (iv) credit
        or
        debit, as the case may be, each Partner’s Capital Account with his or her share
        of revenues, other income or proceeds and gain, and all costs, expenses and
        losses (determined in the manner set forth in Article VII), realized or incurred
        during the taxable year in which the dissolution and termination occurs up
        through, and including, the date of final distribution, net of all distributions
        made to such Partner during such taxable year up to, but not including, such
        date; and

       


      
        
           

        

        
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      (v) distribute
        to those Partners who then have positive balances in their Capital Accounts
        an
        amount of Partnership assets equivalent to their respective positive balances
        on
        the date of distribution or, if the remaining assets in the Partnership are
        insufficient to make such a distribution, then each such Partner shall receive
        a
        proportionate share of the Partnership’s assets equal to the balance of such
        Partner’s Capital Account divided by the aggregate balance of all Partners’
Capital Accounts.

       

      (b) All
        liquidating distributions shall be made, and all liabilities of the Partnership
        shall be discharged, no later than the latest of (i) the end of the taxable
        year
        of the Partnership during which the liquidation of the Partnership occurs,
        (ii)
        ninety (90) days after the date of such liquidation, or (iii) such longer
        period
        as may be permissible under Section 704(b) of the Code and the Regulations
        promulgated thereunder. Subject to the foregoing sentence, the Liquidator
        shall
        ensure that the liquidation of the assets of the Partnership and the discharge
        of its liabilities proceed in an orderly manner, so as to minimize any possible
        losses attendant upon the liquidation of the Partnership.

       

      (c) Upon
        the
        completion of the liquidation of the Partnership, the Liquidator will furnish
        each Partner with a report showing the information required under Section
        9.03
        hereof for the period from the date of the last annual report prepared under
        Section 9.03 hereof to the date of the final distribution of the proceeds
        of
        liquidation of the Partnership and the manner in which the proceeds of
        liquidation of the Partnership have been distributed.

       

      (d) In
        the
        event of liquidation hereunder, each Partner hereby makes, constitutes, and
        appoints the Liquidator, with full power of substitution, his or her true
        and
        lawful attorney for him or her and in his or her name, place, and stead and
        for
        his or her use and benefit, to have, with respect to the property and assets
        of
        the Partnership, all the powers of the Managing General Partner hereunder,
        including without limitation those powers set forth in Section 5.02 hereof.
        To
        evidence the appointment of the Liquidator as attorney-in-fact for the Partners
        hereunder, each Partner shall execute, acknowledge, and deliver such other
        power
        of attorney or instrument as shall be reasonably requested by the Liquidator.
        The foregoing grant of authority shall be irrevocable and shall constitute
        a
        power coupled with an interest surviving the death or incapacity of each
        Partner
        and binding upon the heirs, legal representatives, successors and assigns
        of
        each Partner.

       

      (e) No
        Partner will be liable to the Partnership or to any other Partner for any
        negative balance in his Capital Account as such Capital Account is constituted
        immediately prior to the liquidation of the Partnership, except as provided
        herein or to the extent that such negative balance is attributable to an
        erroneous overpayment to any Partner or attributable to the breach by such
        Partner of his obligations under the provisions hereof, or as required by
        the
        Act.

       

      (f) The
        Partnership will terminate when all property owned by the Partnership will
        have
        been disposed of and the net proceeds, after satisfaction of liabilities
        to
        creditors, will have been distributed among the Partners as aforesaid. The
        establishment of any reserves in accordance with the provisions of Section
        10.05(a) above shall not have the effect of extending the term of the
        Partnership.

       


      
        
           

        

        
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      ARTICLE
        XI 

      ASSIGNMENTS
        AND RESIGNATION

       

      Section
        11.01.  Transfer
        or Resignation by the Managing General Partner.
        Except
        as provided in this Section and subject to the provisions of Section 10.03(d)
        hereof, the Managing General Partner shall have no right to transfer its
        interest as Managing General Partner of the Partnership or, without the prior
        written consent of all Participant Partners, to resign as Managing General
        Partner hereunder during the term of the Partnership; provided, however,
        that
        the Managing General Partner shall have the right in connection with its
        present
        or future financing arrangements to assign, transfer, pledge or hypothecate
        its
        rights to receive any distribution or other amounts paid or to be paid the
        Managing General Partner hereunder.

       

      Section
        11.02.  Transfers
        by Participant Partners.

       

      (a) Except
        as
        provided in Section 11.02(b), no Partner may transfer any Units without the
        prior written consent of the Managing General Partner.

       

      (b) A
        Participant Partner may transfer his or her Units, in whole or in part, whether
        by will or intestacy, by inter
        vivos
        gift, by
        sale for consideration, by contribution to capital, by merger or consolidation,
        by distribution or liquidation or otherwise to any Associate thereof if said
        transfer meets the requirements of subsections (c), (d) and (e)
        below.

       

      (c) No
        inter
        vivos
        transfer
        of a Unit shall be made unless such transfer shall include all of the interest
        of the transferor in the Partnership or all of the interest of the transferor
        in
        at least one Unit.

       

      (d) No
        transfer shall be made to a minor or incompetent, except in trust or pursuant
        to
        the Uniform Gifts to Minors Act.

       

      (e) In
        the
        event of a permitted transfer pursuant to the provisions of this Agreement,
        any
        transferee shall become only an assignee of a Participant Partner and shall
        not
        have the rights of a substituted Participant Partner unless, with the approval
        of the Managing General Partner, such transferee shall execute an Addendum
        to
        this Agreement, agreeing to be bound by all the terms and conditions hereof,
        and
        to assume all the obligations of the transferor Participant Partner hereunder.
        All legal fees, filing costs and other costs and expenses incurred by the
        Partnership in connection with a proposed transfer shall be borne by the
        Participant Partner proposing same.

       

      Section
        11.03.  Tax
        Effect of Transfers.

       

      (a) In
        the
        case of the transfer of a Partner’s interest in the Partnership pursuant to any
        provisions hereof at any time other than the end of the fiscal year of the
        Partnership, the distributive shares of the various items of Partnership
        income,
        gains, losses, deductions and credits, as computed for federal income tax
        purposes, shall, subject to Section 7.07 hereof, be allocated between the
        transferor and the transferee in the ratio of the number of days in such
        year
        before and on and after such transfer; provided, however, that the provisions
        of
        this Section 11.03(a) shall not be applicable to the gain or loss from the
        sale
        or other disposition of all or any part of the property of the Partnership,
        any
        excess insurance or refinancing, or any partial condemnation or grants of
        easements, rights-of-way and the like which shall be allocated to either
        the
        transferor or the transferee on the basis of their ownership on the date
        thereof
        or of any distribution of proceeds with respect thereto or any agreement
        between
        them.

       


      
        
           

        

        
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      (b) In
        the
        case of the transfer of a Partner’s interest in the Partnership pursuant to any
        provision hereof, the Partnership may (but is not required to), if requested
        by
        the transferee who shall become a substituted Partner hereunder, file the
        election contemplated by Section 754 of the Code, or the corresponding section
        of any future tax law, and the regulations promulgated thereunder.

       

      Section
        11.04.  Certification
        by Participant Partners. Each
        Participant Partner shall provide to the Managing General Partner, upon request,
        a properly completed and executed Internal Revenue Service Form W-9, Request
        for
        Taxpayer Identification Number and Certification (or successor form
        thereto)

       

      ARTICLE
        XII 

      PARTICIPANT
        GENERAL PARTNER CONVERSION OPTION

       

      Section
        12.01.  Conversion
        Option.
        The
        Managing General Partner is specifically authorized to convert, on behalf
        of the
        Partnership and each of the Participant General Partners, not less than all
        of
        the interests of the Participant General Partners into interests as Limited
        Partners, without the necessity of obtaining the consent of the Participant
        General Partners. Notwithstanding the foregoing, the Conversion Option shall
        not
        be effective prior to the completion of the drilling of all Wells and shall
        be
        effective as of the commencement of the next calendar year. A General Partner
        whose General Partner interest is converted into a Limited Partner interest
        shall be treated as a Limited Partner commencing on the effective date of
        the
        Conversion Option, which shall include, but shall not be limited to, limited
        liability as provided in the Act and referenced in Section 6.01 hereof. Such
        Partner will have the liability of a General Partner until the effective
        date of
        the Conversion Option. Upon the Managing General Partner’s exercising the
        Conversion Option, it shall provide notice thereof to the Participant General
        Partners, which notice shall include, at a minimum, the effective date of
        the
        Conversion, and the Managing General Partner shall be authorized to amend
        Schedule 1 to reflect such Conversion.

       

      Section
        12.02.  Documentation.
        Pursuant to the authority of the Managing General Partner set forth in Section
        5.02 of this Agreement, the Managing General Partner shall execute, file
        and
        deliver all documents and agreements, including, without limitation, applicable
        amendments to this Agreement and the Certificate of Limited Partnership of
        the
        Partnership, and shall take such other actions, as are necessary or appropriate
        to accomplish the Conversion, all such amendments to be effected and such
        other
        actions to be taken by the Managing General Partner without the prior approval
        or consent of the Participant Partners.

       

      ARTICLE
        XIII 

      GENERAL
        PROVISIONS

       

      Section
        13.01.  Binding
        Effect and Benefit.
        Subject
        to the provisions of Article XI hereof, this Agreement shall be binding upon,
        and shall inure to the benefit of, the parties hereto and their respective
        heirs, legal representatives, successors and permitted assigns.

       

      Section
        13.02.  Certificates.
        etc. At
        the
        expense of the Partnership, the Managing General Partner shall promptly have
        prepared and executed, and shall arrange for the proper publication and filing
        of, all legally required fictitious name or other applications, registrations,
        publications, certificates and affidavits for filing with the proper
        governmental authorities, including the Certificate of Limited Partnership
        referred to in Section 10.01 hereof, and any Amended Certificate of Limited
        Partnership necessitated as the result of any addendum to or amendment of
        this
        Agreement.

       


      
        
           

        

        
          25

          
            

          

        

        
           

        

      


      


       

      Section
        13.03.  Power
        of Attorney.
        Each
        Participant Partner hereby makes, constitutes and appoints the Managing General
        Partner (or successor Managing General Partner under Section 10.04(c)), with
        full power of substitution, his true and lawful attorney for him and in his
        name, place and stead and for his use and benefit, to sign, acknowledge,
        file
        and record the Certificate of Limited Partnership, and any amendments thereto,
        with the Secretary of State of the State of Delaware and to sign, execute,
        certify, acknowledge, file and record any other instruments referred to in
        Section 13.02 hereof or required of the Partnership or Partners by law in
        Delaware or any other jurisdiction (including the successor Managing General
        Partner’s execution of the addendum referred to in Section 10.04(c) hereof). The
        foregoing grant of authority, which shall be irrevocable and shall constitute
        a
        power coupled with an interest binding on the heirs, legal representatives,
        successors and assigns of each Participant Partner, may be exercised by any
        such
        attorney-in-fact by, among other methods, listing the name of any Participant
        Partner along with the names of all other Participant Partners for whom such
        attorney-in-fact is acting and executing such certificates or other instruments
        with the single signature of such attorney-in-fact acting for all the
        Participant Partners whose names are so listed. This power of attorney shall,
        be
        durable and shall not be affected by any Participant Partner’s subsequent
        disability or incapacity or during any period of uncertainty as to the death
        of
        any Participant Partner.

       

      Section
        13.04.  Partners,
        Relationships Inter Se. Except
        as
        expressly provided herein, nothing herein contained shall be construed to
        constitute any Partner the agent of any other Partner or in any manner to
        limit
        the Partners in the carrying on of their own respective business or
        activities.

       

      Section
        13.05.  Notices,
        Statements, etc. All
        notices, statements or other documents which are required or contemplated
        by
        this Agreement shall be in writing and shall be either personally served
        upon
        the person entitled thereto or mailed, postage prepaid, addressed to such
        person
        at his last known mailing address.

       

      Section
        13.06.  Waiver
        of Right to Partition.
        Each of
        the Partners irrevocably waives during the term of the Partnership any right
        that it may have to maintain any action for partition with respect to the
        property and assets of the Partnership.

       

      Section
        13.07.  Integration.
        This
        Agreement represents the entire understanding of the parties with respect
        to the
        subject matter hereof. 

       

      Section
        13.08.  Interpretation.
        As used
        in this Agreement, any gender shall include any other gender and the plural
        shall include the singular and the singular shall include the plural wherever
        appropriate. The titles of the Articles and Sections herein have been inserted
        as a matter of convenience of reference only and shall not control or affect
        the
        meaning or construction of any of the terms and provisions hereof.

       

      Section
        13.09.  Governing
        Law: Invalidity.
        This
        Agreement shall be interpreted and construed in accordance with the internal
        laws of the Commonwealth of Pennsylvania. The invalidity or unenforceability
        of
        any particular provision of this Agreement shall not affect the other provisions
        hereof, and the Agreement shall be construed in all respects as if such invalid
        or unenforceable provision were omitted.

       

      Section
        13.10.  Counterparts.
        The
        parties hereto may execute this Agreement, and any Subscription Agreement
        and
        Additional Signature Pages thereto, in any number of counterparts, each of
        which, when executed and delivered by the Managing General Partner and the
        Participant Partners holding all the Units, shall have the force and effect
        of
        an original; but all such counterparts shall constitute one and the same
        instrument.

       


      
        
           

        

        
          26

          
            

          

        

        
           

        

      


      


       

      Section
        13.11.  Nature
        of Interest of Partners.
        The
        interest of each Partner in the Partnership is personal property.

       

      Section
        13.12.  Waivers.
        The
        failure of any party hereto to insist, in any or more instances, on performance
        of any of the terms and conditions of this Agreement shall not be construed
        as a
        waiver or relinquishment by any such party of any rights granted hereunder
        or of
        the future performance of any such term, covenant or condition, but the
        obligations of all other parties hereto with respect thereto shall continue
        in
        full force and effect.

       

      Section
        13.13.  Rights
        and Remedies Cumulative.
        The
        rights and remedies provided by this Agreement are cumulative and the use
        of any
        one right or remedy by any Partner shall not preclude or waive his or her
        right
        to use any or all other remedies. Said rights and remedies are given in addition
        to any other rights such Partner may have by law, statute, ordinance or
        otherwise.

       

      Section
        13.14.  Participant
        Partner Representations and Warranties.
        Each
        Participant Partner represents and warrants to and covenants with the
        Partnership and each other Partner that he or she is acquiring his or her
        interest in the Partnership for investment and not with a view to the transfer,
        resale or distribution thereof and that his or her interest shall not be
        sold or
        disposed of in violation of the Securities Act of 1933 or the regulations
        promulgated by the Securities and Exchange Commission or of applicable state
        securities laws (which transfer may require, in order to avoid such violation,
        registering such securities with the Securities and Exchange Commission,
        and
        applicable state securities commissions, or the availability of a registration
        exemption thereto). All warranties and representations made by each Participant
        Partner in the Subscription Agreement executed in connection with the purchase
        of Units, and corresponding Purchaser Questionnaire, are incorporated herein
        as
        if set forth in full in this Agreement. Each Participant Partner shall indemnify
        the Partnership and the other Participant Partners against all liabilities,
        costs and expenses, including, without limitation, attorneys’ fees and court
        costs, arising as a result of any breach of any warranty or representation
        made
        in the Subscription Agreement by him or her or any disposition by him or
        her of
        his or her interest in the Partnership in violation hereof.

       

      [THE
        REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

       

       

       

      
        
           

        

        
          27

          
            

          

        

        
           

        

         

        THE
          SECURITIES OFFERED AND PURCHASED HEREBY HAVE NOT BEEN REGISTERED
          UNDER THE SECURITIES ACT OF 1933 (the “‘33 Act”). THE TRANSFERABILITY AND RESALE
          OF THE SECURITIES ARE RESTRICTED BY REGULATION D OF THE ‘33 ACT AND BY
          ADDITIONAL RESTRICTIONS SET FORTH IN THIS AGREEMENT.

         

      

      IN
        WITNESS WHEREOF, the Managing General Partner have executed this Agreement
        of
        Limited Partnership as of the day and year first above set forth; and the
        Participant Partners have executed their respective Subscription Agreements
        and
        Additional Signature Pages hereto. 

      
 

      
        	 	
                MANAGING
                  GENERAL PARTNER: 

              
	 	 
	 	
                Indigo-Energy,
                  Inc.,

              
	 	
                a
                  Nevada corporation

              
	 	 
	 	 
	 	
                By:
                  ______________________________

              
	 	
                Name:
                  David J. Larson

              
	 	
                Title:
                  President

              


      

      


      


      


      [ADDITIONAL
        SIGNATURE PAGES TO AGREEMENT OF LIMITED PARTNERSHIP TO
        FOLLOW]

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      ADDITIONAL
        SIGNATURE PAGE TO AGREEMENT OF LIMITED PARTNERSHIP 

      


      Indigo-Energy
        Partners, LP

      


      The
        undersigned hereby acknowledge(s) that the undersigned has read the
        Indigo-Energy Partners, LP Agreement of Limited Partnership (the “Agreement”),
        the form of which is attached to the Confidential Private Placement Memorandum
        dated July 31, 2006, to which this Additional Signature Page shall be attached
        and that, by executing this Additional Signature Page the undersigned has
        agreed
        to become a Partner of Indigo-Energy Partners, LP in accordance with the
        provisions thereof upon the acceptance hereof by the Managing General Partner
        herein below named. The execution of this Additional Signature Page by the
        undersigned shall constitute the execution of the Agreement by the undersigned
        as a party thereto.

      


      IN
        WITNESS WHEREOF, the undersigned has/have duly executed this Additional
        Signature Page under seal as of the date set forth below:

      

        
          	
                  Date:_________,
                    2006

                	 	 
	 	 	 
	
                  WITNESS:

                	 	
                  INDIVIDUAL
                    INVESTOR:

                
	 	 	 
	 	 	 
	
                  (Print
                    Name)

                	 	
                  (Print
                    Name)

                
	 	 	 
	 	 	 
	
                  (Signature)

                	 	
                  (Signature)

                
	 	 	 
	
                  WITNESS:

                	 	
                  CO-PURCHASER

                
	 	 	 
	 	 	
                   

                
	
                  (Print
                    Name)

                	 	
                  (Print
                    Name)

                
	 	 	 
	 	 	
                   

                
	
                  (Signature)

                	 	
                  (Signature)

                
	 	 	
                   

                
	 	 	 
	 	 	 
	
                   

                	
                  OR

                	 


        

        
          	 	 	 
	
                  ATTEST:

                	 	
                  PARTNERSHIP,
                    CORPORATION, TRUST, LIMITED LIABILITY COMPANY, OTHER
                    INVESTOR

                
	 	 	 
	 	 	 
	
                  (Print
                    Name)

                	 	
                  (Print
                    Name of Entity)

                
	 	 	 
	 	
                   

                	
                  By

                
	
                  (Signature)

                	
                   

                	
                  (Signature)

                
	 	 	 
	 	 	
                   

                
	 	 	
                  (Print
                    Name and Title)

                
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 


        



      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      SCHEDULE
        1

       

      SCHECULE
        OF PARTNERS 

      AND
        PARTNERSHIP INTERESTS

       

      
        	
                Name
                  and Address

              	
                Capital
                  Contribution

              	
                Units

              	
                Percentage
                  Interest

              	
                Partnership
                  Designation

              
	
                Indigo-Energy,
                  Inc.

                13350
                  Random Hills Road, 

                Suite
                  800,

                Fairfax
                  Virginia 22030

              	 	 	 	
                Managing
                  General Partner

              
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 


      

      


       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      Exhibit
        A

       

      Form
        of
        Drilling and Operating Agreement