Common use of Capital Accounts and Allocations Clause in Contracts

Capital Accounts and Allocations. The tax consequences of an investment in the Fund to a Shareholder in the event of dissolution depend on the Shareholder's capital account and on the allocations of profits and losses to that account. The Fund's taxable profits or losses are allocated among the Shareholders as described below and profits or losses are added to or subtracted from the Shareholders' capital accounts. The amounts allocated to each Shareholder will generally not be equal to the distributions the Shareholder receives until final liquidating distributions are made to Shareholders. Each Shareholder will have a capital account, which will have an initial balance equal to the Shareholder's Capital Contribution. Capital accounts will be adjusted in accordance with Regulations under Code Section 704. The capital account balance will be increased by any additional Capital Contributions by the Shareholder and by profits allocated to the Shareholder; it will be decreased by the amount of distributions to the Shareholder, returns of capital and by losses allocated to the Shareholder. Contributions of property by a Shareholder, if any, or distributions of property to a Shareholder, if any, are valued at fair market value, net of liabilities. The Fund does not currently anticipate that any contributions or distributions of property will be made. Certain additional adjustments to capital accounts will be made if necessary to account for the effects of non-recourse debt incurred by the Fund, if any, or contributions of property, if any, to the Fund. See Tax Aspects - Allocations. For any year, profits and losses are allocated in accordance with Articles 4 and 7 of the LLC Agreement. In general, profits and losses in any year are allocated 85% to Investors and 15% to the Manager. The primary exception to this treatment is that all items of expense, loss, deduction and credit attributable to Capital Transactions (notably intangible drilling expense) are allocated 99% to Investors and 1% to the Manager.

Capital Accounts and Allocations. The tax consequences of an investment in the Fund to a Shareholder in the event of dissolution depend on the Shareholder's capital account and on the allocations of profits and losses to that account. The Fund's taxable profits or losses are allocated among the Shareholders as described below and profits or losses are added to or subtracted from the Shareholders' capital accounts. The amounts allocated to each Shareholder will generally not be equal to the distributions the Shareholder receives until final liquidating distributions are made to Shareholders. Each Shareholder will have a capital account, which will have an initial balance equal to the Shareholder's Capital Contribution. Capital accounts will be adjusted in accordance with Regulations under Code Section 704. The capital account balance will be increased by any additional Capital Contributions by the Shareholder and by profits allocated to the Shareholder; it will be decreased by the amount of distributions to the Shareholder, returns of capital and by losses allocated to the Shareholder. Contributions of property by a Shareholder, if any, or distributions of property to a Shareholder, if any, are valued at fair market value, net of liabilities. The Fund does not currently anticipate that any contributions or distributions of property will be made. Certain additional adjustments to capital accounts will be made if necessary to account for the effects of non-recourse debt incurred by the Fund, if any, or contributions of property, if any, to the Fund. See Tax Aspects - Allocations. For any year, profits and losses are allocated in accordance with Articles 4 and 7 of the LLC Agreement. In general, profits and losses in any year are allocated 85% to Investors and 15% to the Manager. The primary exception to this treatment is that all items of expense, loss, deduction and credit attributable to the expenditure of Investor's Capital Transactions (notably intangible drilling expense) Contributions are allocated 99% to Investors and 1% to the Manager.