Exhibit 10.1

 

 

 

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JONES ENERGY HOLDINGS, LLC

 

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FOURTH AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT

 

Dated as of August 26, 2016

 

THE COMPANY INTERESTS REPRESENTED BY THIS FOURTH AMENDED AND RESTATED LIMITED
LIABILITY COMPANY AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY OTHER APPLICABLE SECURITIES
LAWS.  SUCH INTERESTS MAY NOT BE SOLD, ASSIGNED, PLEDGED OR OTHERWISE DISPOSED
OF AT ANY TIME WITHOUT EFFECTIVE REGISTRATION UNDER SUCH ACT AND LAWS OR
EXEMPTION THEREFROM AND COMPLIANCE WITH THE OTHER SUBSTANTIAL RESTRICTIONS ON
TRANSFERABILITY SET FORTH HEREIN.

 

THE COMPANY INTERESTS REPRESENTED BY THIS FOURTH AMENDED AND RESTATED LIMITED
LIABILITY COMPANY AGREEMENT ARE ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON
TRANSFER AND REPURCHASE OPTIONS SET FORTH IN THIS AGREEMENT.

 

 

 

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ARTICLE I DEFINITIONS

4

1.1

Definitions

4

1.2

Interpretative Matters

13

 

 

ARTICLE II ORGANIZATIONAL MATTERS

14

2.1

Formation of the Company

14

2.2

Fourth Amended and Restated Limited Liability Company Agreement

14

2.3

Name

14

2.4

Purpose; Powers

14

2.5

Principal Office; Registered Office

14

2.6

Term

15

2.7

Foreign Qualification

15

2.8

No State Law Partnership

15

 

 

ARTICLE III CAPITALIZATION; ADMISSION OF MEMBERS; CAPITAL ACCOUNTS

15

3.1

Capitalization

15

3.2

Admission of Members; Additional Members

18

3.3

Capital Accounts

18

3.4

Negative Capital Accounts

19

3.5

No Withdrawal

19

3.6

Loans From Unitholders

19

3.7

No Right of Partition

19

3.8

Non-Certification of Units; Legend; Units Are Securities

19

3.9

Rights of Holders of Series A Preferred Units

20

 

 

ARTICLE IV DISTRIBUTIONS

21

4.1

Distributions

21

4.2

Successors

22

4.3

Distributions In-Kind

22

4.4

Tax-Related Distributions

22

 

 

ARTICLE V ALLOCATIONS

23

5.1

Allocations

23

5.2

Special Allocations

23

5.3

Tax Allocations

25

5.4

Unitholders’ Tax Reporting

26

5.5

Indemnification and Reimbursement for Payments on Behalf of a Unitholder

26

 

 

ARTICLE VI RIGHTS AND DUTIES OF MEMBERS

27

6.1

Management

27

6.2

Liability of Unitholders

28

6.3

Investment Opportunities; Performance of Duties; Conflicts of Interest

28

6.4

Meetings

29

6.5

Actions Requiring Member Approval

29

 

 

ARTICLE VII OFFICERS

29

7.1

Officers

29

7.2

Chief Executive Officer

30

7.3

President

30

 

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7.4

Chief Financial Officer

30

7.5

Vice Presidents

31

7.6

Secretary

31

7.7

Further Delegation of Authority

31

7.8

Fiduciary Duties

31

7.9

Performance of Duties; Liability of Officers

31

7.10

Indemnification

32

 

 

ARTICLE VIII TAX MATTERS

33

8.1

Preparation of Tax Returns

33

8.2

Tax Elections

34

8.3

Tax Controversies

34

8.4

Tax Allocations

34

8.5

Fiscal Year; Taxable Year

34

 

 

ARTICLE IX TRANSFER OF UNITS; SUBSTITUTE MEMBERS

34

9.1

Restrictions on Transfers

34

9.2

Recognition of Transfer; Substituted and Additional Members

35

9.3

Expense of Transfer; Indemnification

36

9.4

Exchange Agreement

36

 

 

ARTICLE X DISSOLUTION AND LIQUIDATION

37

10.1

Dissolution

37

10.2

Liquidation and Termination

37

10.3

Complete Distribution

38

10.4

Cancellation of Certificate

38

10.5

Reasonable Time for Winding Up

38

10.6

Return of Capital

38

10.7

HSR Act

38

 

 

ARTICLE XI GENERAL PROVISIONS

38

11.1

Power of Attorney

38

11.2

Books and Records

39

11.3

Amendments

39

11.4

Remedies

39

11.5

Successors and Assigns

39

11.6

Severability

39

11.7

Counterparts

40

11.8

Applicable Law

40

11.9

Addresses and Notices

40

11.10

Creditors

40

11.11

Waiver

40

11.12

Further Action

40

11.13

Entire Agreement

40

11.14

Delivery by Facsimile or Email

40

11.15

Survival

41

11.16

Confidentiality

41

 

SCHEDULE A

Schedule of Members

 

 

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FOURTH AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
JONES ENERGY HOLDINGS, LLC,
A DELAWARE LIMITED LIABILITY COMPANY

 

This FOURTH AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT (this
“Agreement”) of Jones Energy Holdings, LLC, a Delaware limited liability company
(the “Company”), dated and effective as of August 26, 2016 (the “Effective
Date”), is adopted, executed and agreed to, for good and valuable consideration,
by and among the Company and each other Person who is or at any time becomes a
Member in accordance with the terms of this Agreement and the Act.  Any
reference in this Agreement to any Member shall include such Member’s Successors
in Interest to the extent such Successors in Interest have become Substituted
Members in accordance with the provisions of this Agreement.

 

RECITALS:

 

WHEREAS, the Company was formed by Jones Energy Drilling Fund, LP, a Texas
limited partnership (“JEDF”) and Jones Energy Equity Partners, LP, a Texas
limited partnership (“JEEP”) as a limited liability company under the Act by
filing a Certificate of Formation with the Secretary of State of the State of
Delaware on December 16, 2009 (the “Certificate”);

 

WHEREAS, JEDF and JEEP, as the Company’s initial members, entered into an
initial limited liability company agreement with the Company on December 16,
2009 (such agreement, the “Original Agreement”);

 

WHEREAS, the Original Agreement was amended and restated in its entirety by that
certain Amended and Restated Limited Liability Company Agreement of the Company,
dated as of December 31, 2009 (the “Restated LLC Agreement”);

 

WHEREAS, the Restated LLC Agreement was amended and restated in its entirety by
that certain Second Amended and Restated Limited Liability Company Agreement,
dated as of December 20, 2012 (the “Second Restated LLC Agreement”);

 

WHEREAS, in connection with the initial public offering of Jones Energy, Inc., a
Delaware corporation (“JEI”), the Second Restated LLC Agreement was amended and
restated in its entirety by that certain Third Amended and Restated Limited
Liability Company Agreement, dated as of July 26, 2013 (the “Third Restated LLC
Agreement”);

 

WHEREAS, the Company and JEI have entered into underwriting agreements with the
several underwriters named therein, providing for the offering of 21,000,000
shares of Class A Common Stock, par value $0.001 per share, of JEI (the
“August 2016 Common Stock Offering”) and 1,600,000 shares of 8% Series A
Perpetual Convertible Preferred Stock, par value $0.001 per share, of JEI (the
“August 2016 Preferred Stock Offering”);

 

WHEREAS, in connection with the August 2016 Common Stock Offering and the
August 2016 Preferred Stock Offering, it is contemplated that pursuant to this
Agreement (i) immediately after consummation of the August 2016 Common Stock
Offering, JEI will contribute the net proceeds thereof to the Company in
exchange for 21,000,000 Common Units, (ii) immediately after consummation of the
August 2016 Preferred Stock Offering, the Company will issue 1,600,000 Series A
Preferred Units to JEI in exchange for JEI’s commitment to contribute the net
proceeds of the August 2016 Preferred Stock

 

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Offering to the Company as more particularly described in Section 3.1(c) herein,
(iii) if and to the extent the underwriters exercise their overallotment option
to purchase additional shares of Class A Common Stock in connection with the
August 2016 Common Stock Offering, JEI will issue additional shares of Class A
Common Stock and use the net proceeds thereof to purchase an equal number of
Common Units from the Company, and (iv) if and to the extent the underwriters
exercise their overallotment option to purchase additional shares of Series A
Preferred Stock in connection with the August 2016 Preferred Stock Offering, the
Company will issue an equal number of Series A Preferred Units to JEI in
exchange for JEI’s commitment to contribute to the Company the net proceeds from
the exercise of such overallotment option, as more particularly described in
Section 3.1(c) herein (collectively, the “August 2016 Offering Transactions”);
and

 

WHEREAS, the Company and the Members set forth on Schedule A attached hereto now
wish to amend and restate the Third Restated LLC Agreement as set forth herein
to give effect to August 2016 Offering Transactions by, among other things,
creating the Series A Preferred Units (as defined below) as a new class of
Units, as more fully described herein.

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, the parties hereto, each intending to be legally bound, agree
as follows:

 

ARTICLE I
DEFINITIONS

 

1.1                               Definitions.  Unless the context otherwise
requires, the following terms shall have the following meanings for purposes of
this Agreement:

 

“Act” means the Delaware Limited Liability Company Act, 6 Del. L. Sections
18-101, et seq.

 

“Additional Member” means any Person that has been admitted to the Company as a
Member after the Effective Date pursuant to Section 3.2(b) by virtue of having
received its Membership Interest from the Company and not from any other Member
or Assignee.

 

“Adjusted Capital Account Deficit” means, with respect to any Person’s Capital
Account as of the end of any taxable year, the amount by which the balance in
such Capital Account is less than zero.  For this purpose, such Capital Account
balance shall be (i) reduced for any items described in Regulations
Section 1.704-1(b)(2)(ii)(d)(4), (5) and (6), and (ii) increased for any amount
such Person is obligated to contribute or is treated as being obligated to
contribute to the Company pursuant to Regulations Sections
1.704-1(b)(2)(ii)(c) (relating to partner liabilities to a partnership) or
1.704-2(g)(1) and 1.704-2(i) (relating to minimum gain).

 

“Affiliate” when used with reference to another Person means any Person,
directly or indirectly, through one or more intermediaries, controlling,
controlled by, or under common control with, such other Person.  In addition,
Affiliates of a Member shall include all its partners, officers, employees and
former partners in their capacities as such.

 

“Agreement” has the meaning set forth in the preamble.

 

“Assignee” means any Transferee to which a Member or another Assignee has
Transferred all or a portion of its interest in the Company in accordance with
the terms of this Agreement, but that is not a Member.

 

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“Assumed Tax Rate” means, for any taxable year, the highest marginal effective
rate of federal, state and local income tax applicable to an individual resident
in New York, New York (or, if higher, a corporation doing business in New York,
New York) determined by applying the rates applicable to ordinary income (in
cases where taxes are being determined on ordinary income allocated to a Member)
and capital gains (in cases where taxes are being determined on capital gains
allocated to a Member), and by assuming that state and local income taxes are
not deductible in computing a Unitholder’s liability for federal income tax. 
For purposes of the foregoing, it shall be assumed that taxes under Section 1411
of the Code are applicable and that the New York City unincorporated business
tax and New York Metropolitan Commuter Transportation Mobility tax are not
applicable.

 

“August 2016 Common Stock Offering” has the meaning set forth in the recitals.

 

“August 2016 Offering Transactions” has the meaning set forth in the recitals.

 

“August 2016 Preferred Stock Offering” has the meaning set forth in the
recitals.

 

“Bankruptcy” means, with respect to any Person, the occurrence of any of the
following events: (a) the filing of an application by such Person for, or a
consent to, the appointment of a trustee or custodian of such Person’s assets;
(b) the filing by such Person of a voluntary petition in Bankruptcy or the
seeking of relief under Title 11 of the United States Code, as now constituted
or hereafter amended, or the filing of a pleading in any court of record
admitting in writing such Person’s inability to pay its debts as they become
due; (c) the failure of such Person to pay its debts as such debts become due;
(d) the making by such Person of a general assignment for the benefit of
creditors; (e) the filing by such Person of an answer admitting the material
allegations of, or such Person’s consenting to, or defaulting in answering, a
Bankruptcy petition filed against him in any Bankruptcy proceeding or petition
seeking relief under Title 11 of the United States Code, as now constituted or
as hereafter amended; or (f) the entry of an order, judgment or decree by any
court of competent jurisdiction adjudicating such Person a bankrupt or insolvent
or for relief in respect of such Person or appointing a trustee or custodian of
such Person’s assets and the continuance of such order, judgment or decree
unstayed and in effect for a period of 60 consecutive calendar days.

 

“Business Day” means any calendar day other than a Saturday, Sunday or other day
on which commercial banks in New York, New York are authorized or required to
close.

 

“Capital Account” has the meaning set forth in Section 3.3(a).

 

“Capital Contributions” means any cash, cash equivalents or, at the consent of
the Managing Member, the Fair Market Value of other property that a Member
contributes to the Company with respect to any Unit or other Equity Securities
issued pursuant to Article III (net of liabilities assumed by the Company or to
which such property is subject).

 

“Certificate” has the meaning set forth in the preamble.

 

“Chief Executive Officer” has the meaning set forth in Section 7.2.

 

“Chief Financial Officer” has the meaning set forth in Section 7.4.

 

“Class A Common Stock” means the shares of Class A common stock, par value
$0.001 per share, of JEI.

 

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“Class B Common Stock” means the shares of Class B common stock, par value
$0.001 per share, of JEI.

 

“Code” means the United States Internal Revenue Code of 1986.

 

“Common Unit” has the meaning set forth in Section 3.1(a).

 

“Company” has the meaning set forth in the preamble.

 

“Company Minimum Gain” has the meaning set forth for the term “partnership
minimum gain” in Regulations Section 1.704-2(d).

 

“control” means, when used with reference to any Person, the power to direct the
management or policies of such Person, directly or indirectly, by or through
stock or other equity ownership, agency or otherwise, or pursuant to or in
connection with an agreement, arrangement or other understanding (written or
oral); and the terms “controlling” and “controlled” shall have meanings
correlative to the foregoing.

 

“Depreciation” has the meaning set forth in the definition of “Net Income” or
“Net Loss” under paragraph (e) therein.

 

“Distribution” means each distribution made by the Company to a Unitholder,
whether in cash, property or securities of the Company, pursuant to, or in
respect of, Article IV or Article X.

 

“Economic Interest” means the right to allocations of items of income, gain,
loss, deduction, credit or similar items and the right to Distributions of cash
and other property as provided in Section 3.9,  Article IV, Article V and
Article X of this Agreement and the Act, but shall not include any right to
participate in the management or affairs of the Company or any right to receive
information concerning the business and affairs of the Company, in each case,
except as expressly otherwise provided in this Agreement or required by the Act.

 

“Effective Date” has the meaning set forth in the preamble.

 

“Equity Securities” means, as applicable, (a) any capital stock, membership
interests or other share capital, (b) any securities directly or indirectly
convertible into or exchangeable for any capital stock, membership interests or
other share capital or containing any profit participation features, (c) any
rights or options directly or indirectly to subscribe for or to purchase any
capital stock, membership interests, other share capital or securities
containing any profit participation features or to subscribe for or to purchase
any securities directly or indirectly convertible into or exchangeable for any
capital stock, membership interests, other share capital or securities
containing any profit participation features, (d) any share appreciation rights,
phantom share rights or other similar rights, or (e) any Equity Securities
issued or issuable with respect to the securities referred to in clauses
(a) through (d) above in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization.

 

“Event of Withdrawal” means the death, retirement, resignation, expulsion,
Bankruptcy or dissolution of a Unitholder or the occurrence of any other event
that terminates the continued membership of a Member in the Company.

 

“Exchange Agreement” means the Exchange Agreement dated on or about the date
hereof between the Company, the Members and JEI.

 

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“Fair Market Value” means, with respect to any asset or securities, the fair
market value for such assets or securities as between a willing buyer and a
willing seller in an arm’s length transaction occurring on the date of
valuation, taking into account all relevant factors determinative of value, as
determined in good faith by the Managing Member.

 

“Family Group” means for any individual, such individual’s current or former
spouse, their respective parents, descendants of such parents (whether natural
or adopted) and the spouses of such descendants, and any trust, limited
partnership, corporation or limited liability company established solely for the
benefit of such individual or such individual’s current or former spouse, their
respective parents, descendants of such parents (whether natural or adopted) or
the spouses of such descendants.

 

“Fiscal Year” means the fiscal year of the Company and its Subsidiaries, ending
on December 31 of each calendar year.

 

“Governmental Entity” means the United States of America or any other nation,
any state or other political subdivision thereof, or any entity exercising
executive, legislative, judicial, regulatory or administrative functions of
government, including any court, in each case, having jurisdiction over the
Company or any of its Subsidiaries or any of the property or other assets of the
Company or any of its Subsidiaries.

 

“Gross Asset Value” means, with respect to any asset, the asset’s adjusted basis
for federal income tax purposes, except as follows:

 

(a)                                 the initial Gross Asset Value of any asset
contributed by a Unitholder to the Company shall be the gross Fair Market Value
of such asset on the date of the contribution (which, in the case of the assets
contributed by JEDF pursuant to the Jones Contribution Agreement (net of any
liabilities securing such assets that the Company is considered to assume or
take subject to), was deemed to equal $45,000,000);

 

(b)                                 the Gross Asset Values of all Company assets
shall be adjusted to equal their respective gross Fair Market Values (after
taking into account any adjustments required by Regulations Sections
1.704-1(b)(2)(iv)(f)(1) and 1.704-1(b)(2)(iv)(h)(2)) as of the following times:

 

(i)                                     the acquisition of an additional
interest in the Company by a new or existing Unitholder in exchange for more
than a de minimis Capital Contribution (including any issuance/distribution of
Common Units to JEI in respect of the Series A Preferred Units pursuant to
Section 4.1(a)), if the Managing Member reasonably determines that such
adjustment is necessary or appropriate to reflect the relative Economic
Interests of the Unitholders in the Company;

 

(ii)                                  the grant of an interest in the Company
(other than a de minimis interest) as consideration for the provision of
services to or for the benefit of the Company or any of its Subsidiaries by an
existing or a new Member acting in a “partner capacity,” or in anticipation of
becoming a “partner” (in each case within the meaning of Regulations
Section 1.704-1(b)(2)(iv)(d)).

 

(iii)                               the Distribution by the Company to a
Unitholder of more than a de minimis amount of Company property as consideration
for an interest in the Company, if the Managing Member reasonably determines
that such adjustment is necessary or appropriate to reflect the relative
Economic Interests of the Unitholders in the Company;

 

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(iv)                              the liquidation of the Company within the
meaning of Regulations Section 1.704-1(b)(2)(ii)(g);

 

(v)                                 in accordance with Regulations
Section 1.704-1(b)(2)(iv)(s), immediately after the conversion of a Series A
Preferred Unit into Common Units in accordance with Section 3.9(c); and

 

(vi)                              such other times as the Managing Member shall
reasonably determine to be necessary or advisable in order to comply with
Regulations promulgated under Subchapter K of Chapter 1 of the Code;

 

(c)                                  the Gross Asset Value of any Company asset
distributed to a Unitholder shall be the gross Fair Market Value of such asset
on the date of Distribution;

 

(d)                                 the Gross Asset Values of Company assets
shall be increased (or decreased) to reflect any adjustments to the adjusted
basis of such assets pursuant to Code Section 734(b) or Code Section 743(b), but
only to the extent that such adjustments are taken into account in determining
Capital Accounts pursuant to Regulations Section 1.704-1(b)(2)(iv)(m); provided,
however, that Gross Asset Values shall not be adjusted pursuant to this
subparagraph (d) to the extent that the Managing Member determines that an
adjustment pursuant to subparagraph (b) of this definition of Gross Asset Value
is necessary or appropriate in connection with a transaction that would
otherwise result in an adjustment pursuant to this subparagraph (d);

 

(e)                                  with respect to any asset that has a Gross
Asset Value that differs from its adjusted tax basis, Gross Asset Value shall be
adjusted by the amount of Depreciation rather than any other depreciation,
amortization or other cost recovery method; and

 

(f)                                   The Gross Asset Value of any depletable
property held directly or indirectly by the Company shall be adjusted by
Simulated Depletion in lieu of any depletion otherwise allowable for federal
income tax purposes.

 

“HSR Act” has the meaning set forth in Section 10.7.

 

“Income” means individual items of Company income and gain determined in
accordance with the definitions of Net Income and Net Loss.

 

“JEDF” has the meaning set forth in the recitals.

 

“JEEP” has the meaning set forth in the recitals.

 

“JEI Excess Tax Distribution” has the meaning set forth in Section 4.4(b).

 

“Jones Built-in Gain” means the excess of the initial Gross Asset Value, over
the adjusted tax basis, of the assets contributed by JEDF to the Company
pursuant to the Jones Contribution Agreement.

 

“Jones Contribution Agreement” means that certain Contribution Agreement, dated
as of December 16, 2009, by and between the Company and JEDF.

 

“Loss” means individual items of Company loss and deduction determined in
accordance with the definitions of Net Income and Net Loss.

 

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“Managing Member” means JEI.

 

“Member” means each Person listed on Schedule A attached hereto and each other
Person who is hereafter admitted as a Member in accordance with the terms of
this Agreement and the Act.  The Members shall constitute the “members” (as such
term is defined in the Act) of the Company.  Except as otherwise set forth
herein or in the Act, the Members shall constitute a single class or group of
members of the Company for all purposes of the Act and this Agreement.

 

“Member Minimum Gain” means minimum gain attributable to Member Nonrecourse Debt
determined in accordance with Regulations Section 1.704-2(i).

 

“Member Nonrecourse Debt” has the meaning set forth for the term “partner
nonrecourse debt” in Regulations Section 1.704-2(b)(4).

 

“Membership Interest” means, with respect to each Member, such Member’s Economic
Interest and rights as a Member.

 

“Metalmark” means, collectively, MCP (C) II Jones Intermediate LLC, (ii) MCP II
Co-Investment Jones Intermediate LLC, (iii) MCP II Jones Intermediate LLC,
(iv) MCP II (TE) AIF Jones Intermediate LLC, (v) MCP II (Cayman) AIF Jones
Intermediate LLC and (vi) MCP II Executive Fund Jones Intermediate LLC.

 

“Net Income” or “Net Loss” means, for each Fiscal Year or other period, an
amount equal to the Company’s taxable income or loss for such Fiscal Year or
other period, determined in accordance with Code Section 703(a) (for this
purpose, all items of income, gain, loss or deduction required to be stated
separately pursuant to Code Section 703(a)(1) shall be included in such taxable
income or loss), with the following adjustments:

 

(a)                                 any income of the Company that is exempt
from federal income tax and not otherwise taken into account in computing Net
Income or Net Loss pursuant to this definition of Net Income or Net Loss shall
be added to such taxable income or loss;

 

(b)                                 any expenditures of the Company described in
Code Section 705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures
pursuant to Regulations Section 1.704-1(b)(2)(iv)(i), and not otherwise taken
into account in computing Net Income or Net Loss pursuant to this definition of
Net Income or Net Loss shall be subtracted from such taxable income or loss;

 

(c)                                  in the event the Gross Asset Value of any
Company asset is adjusted pursuant to subparagraph (b) or (c) of the definition
of Gross Asset Value, the amount of such adjustment shall be taken into account
as gain (if the adjustment increases the Gross Asset Value of the asset) or loss
(if the adjustment decreases the Gross Asset Value of the asset) from the
disposition of such asset for purposes of computing Net Income or Net Loss;

 

(d)                                 gain or loss resulting from any disposition
of property with respect to which gain or loss is recognized for federal income
tax purposes shall be computed by reference to the Gross Asset Value of the
property disposed of, notwithstanding that the adjusted tax basis of such
property differs from its Gross Asset Value;

 

(e)                                  in lieu of the depreciation, amortization,
and other cost recovery deductions taken into account in computing such taxable
income or loss, with respect to a Company asset having a

 

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Gross Asset Value that differs from its adjusted basis for tax purposes,
“Depreciation” with respect to such asset shall be computed by reference to the
asset’s Gross Asset Value in accordance with Regulations
Section 1.704-1(b)(2)(iv)(g);

 

(f)                                   to the extent an adjustment to the
adjusted tax basis of any Company asset pursuant to Code Section 734(b) or
743(b) is required pursuant to Regulations Section 1.704-1(b)(2)(iv)(m) to be
taken into account in determining Capital Accounts as a result of a Distribution
other than in liquidation of a Unitholder’s interest in the Company, the amount
of such adjustment shall be treated as an item of gain (if the adjustment
increases the basis of the asset) or loss (if the adjustment decreases the basis
of the asset) from the disposition of the asset and shall be taken into account
for purposes of computing Net Income or Net Loss;

 

(g)                                  For purposes of determining Net Income and
Net Loss, the allocation of depletable basis in, depletion allowances with
respect to, and taxable gain or loss from the sale, exchange or other
disposition of, the Company’s depletable properties provided for in
Section 613A(c)(7)(D) of the Code and/or otherwise computed for federal income
tax purposes shall be disregarded.  Instead, Net Income and Net Loss shall be
determined by taking into account Simulated Depletion and Simulated Gain or
Loss, as determined and defined in the following sentence.  For purposes of
determining Simulated Depletion and Simulated Gain or Loss, (i) the Company
shall determine its tax basis in its depletable properties (“Simulated Basis”)
without regard to the special rules set forth in Section 613A(c)(7)(D) of the
Code, (ii) the Company shall determine depletion allowances (“Simulated
Depletion”) with respect to such depletable properties by using either the cost
depletion method or the percentage depletion method (as determined by the
Managing Member on a property by property basis), (iii) the Company shall reduce
the Simulated Basis of such depletable properties by the Simulated Depletion
attributable to such depletable properties, and (iv) the Company shall compute
gain or loss on a sale, exchange, or other disposition of such depletable
properties by subtracting Simulated Basis from the amount realized by the
Company upon such disposition (“Simulated Gain or Loss”); and

 

(h)                                 Any Income or Loss that is allocated under
Section 5.2 shall be excluded for purposes of computing Net Income or Net Loss.

 

“Notice” has the meaning set forth in Section 3.1(g)(i).

 

“Officers” has the meaning set forth in Section 7.1.

 

“Original Agreement” has the meaning set forth in the recitals.

 

“Pending STACK/SCOOP Acquisition” means the pending acquisition by the Company
of certain oil and gas properties provided for in the STACK/SCOOP Purchase
Agreement.

 

“Percentage Interest” of each Member is set forth on Schedule A hereto, which
may be amended from time to time and which shall be equal to a fraction
(expressed as a percentage), the numerator of which is the number of Common
Units held by such Member and the denominator of which is the number of Common
Units held by all the Members (it being understood that if the Company hereafter
issues any Equity Securities other than the Common Units or Series A Preferred
Units, then this definition shall be changed pursuant to an amendment of this
Agreement in accordance with the terms hereof).

 

“Permitted Transferee” means, with respect to any Unitholder, (a) its Affiliates
(including, in the case of any Member that is an entity, any distribution by
such Member to its members, partners or shareholders (the “Member’s Owners”),
and any related distributions by the Member’s Owners to their

 

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respective members, partners or shareholders), and (b) in the case of an
individual, any member of its Family Group.

 

“Person” means an individual, a partnership (including a limited partnership), a
corporation, a limited liability company, an association, a joint stock company,
a trust, a joint venture, an unincorporated organization, association or other
entity or a Governmental Entity.

 

“President” has the meaning set forth in Section 7.3.

 

“Proceeding” means any action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of the
Company) involving an Indemnitee, by reason of the fact that the Indemnitee is
or was an Officer, or is or was serving at the request of the Company as a
manager, director, officer, employee, fiduciary or agent of another limited
liability company or of a corporation partnership, joint venture, trust or other
enterprise.

 

“Quarterly Estimated Tax Periods” means the two, three, and four calendar month
periods with respect to which Federal quarterly estimated tax payments are made.
The first such period begins on January 1 and ends on March 31. The second such
period begins on April 1 and ends on May 31. The third such period begins on
June 1 and ends on August 31. The fourth such period begins on September 1 and
ends on December 31.

 

“Regulations” means the regulations, including temporary regulations,
promulgated by the United States Treasury Department under the Code, as such
regulations may be amended from time to time (including corresponding provisions
of succeeding regulations).

 

“Regulatory Allocations” has the meaning set forth in Section 5.2(g).

 

“Restated LLC Agreement” has the meaning set forth in the recitals.

 

“Second Restated LLC Agreement” has the meaning set forth in the recitals.

 

“Secretary” has the meaning set forth in Section 7.6.

 

“Securities Act” means the United States Securities Act of 1933 and applicable
rules and regulations thereunder.  Any reference herein to a specific section,
rule or regulation of the Securities Act shall be deemed to include any
corresponding provisions of future law.

 

“Series A Preferred Stock” means the shares of 8% Series A perpetual convertible
preferred stock, par value $0.001 per share, of JEI.

 

“Series A Preferred Unit” has the meaning set forth in Section 3.1(a).

 

“Simulated Basis” has the meaning set forth in clause (g) of the definition of
“Net Income” and “Net Loss.”

 

“Simulated Depletion” has the meaning set forth in clause (g) of the definition
of “Net Income” and “Net Loss.”

 

“Simulated Gain or Loss” has the meaning set forth in clause (g) of the
definition of “Net Income” and “Net Loss.”

 

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“STACK/SCOOP Purchase Agreement” means that certain purchase and sale agreement,
dated August 18, 2016, between the Company and SCOOP Energy Company, LLC, an
Oklahoma limited liability company.

 

“Subsidiary” means, with respect to any Person, any corporation, limited
liability company, partnership, association or business entity of which (a) if a
corporation, a majority of the total voting power of shares of stock entitled
(without regard to the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time owned or controlled,
directly or indirectly, by that Person or one or more of the other Subsidiaries
of that Person or a combination thereof, or (b) if a limited liability company,
partnership, association or other business entity (other than a corporation), a
majority of partnership or other similar ownership interest thereof is at the
time owned or controlled, directly or indirectly, by any Person or one or more
Subsidiaries of that Person or a combination thereof.  For purposes hereof, a
Person or Persons shall be deemed to have a majority ownership interest in a
limited liability company, partnership, association or other business entity
(other than a corporation) if such Person or Persons shall be allocated a
majority of limited liability company, partnership, association or other
business entity gains or losses or shall be or control any managing member,
general partner or analogous controlling Person of such limited liability
company, partnership, association or other business entity.  For purposes
hereof, references to a “Subsidiary” of any Person shall be given effect only at
such times that such Person has one or more Subsidiaries and, unless otherwise
indicated, the term “Subsidiary” refers to a Subsidiary of the Company.

 

“Substituted Member” means any Person that has been admitted to the Company as a
Member pursuant to Section 9.2 by virtue of such Person receiving all or a
portion of a Membership Interest from a Member or its Assignee and not from the
Company.

 

“Successor in Interest” means any (a) trustee, custodian, receiver or other
Person acting in any Bankruptcy or reorganization proceeding with respect to,
(b) assignee for the benefit of the creditors of, (c) trustee or receiver, or
current or former officer, director or partner, or other fiduciary acting for or
with respect to the dissolution, liquidation or termination of, or (d) other
Transferee, executor, administrator, committee, legal representative or other
successor or assign of, any Unitholder, whether by operation of law or otherwise
(including any Person acquiring (whether by merger, consolidation, sale,
exchange or otherwise) all or substantially all of the assets or Equity
Securities of the Company and its Subsidiaries).

 

“Tax Distribution” has the meaning set forth in Section 10.7.

 

“Tax Matters Representative” has the meaning set forth in Section 8.3.

 

“Tax Receivable Agreement” means the Tax Receivable Agreement dated on or about
the date hereof between JEI, the Company and the current Members.

 

“Third Restated LLC Agreement” has the meaning set forth in the recitals.

 

“Transaction Documents” means, collectively, this Agreement, the Exchange
Agreement and the Tax Receivable Agreement.

 

“Transfer” means any sale, transfer, assignment, pledge, mortgage, exchange,
hypothecation, grant of a security interest or other direct or indirect
disposition or encumbrance of an interest (whether with or without
consideration, whether voluntarily or involuntarily or by operation of law). 
The terms “Transferee,” “Transferor,” “Transferred,” and other forms of the word
“Transfer” shall have the correlative meanings.

 

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“Unit” has the meaning set forth in Section 3.1(a).

 

“Unitholder” means a Member or Assignee that holds an Economic Interest in any
of the Units.

 

“Unpaid Excess Cash Amounts” shall mean the total amount of any unpaid excess
cash payment amounts excused from payment as a dividend on the Series A
Preferred Stock due to restrictions in credit facilities or other indebtedness
or legal requirements as set forth in Section 4(d) of the Certificate of
Designations related to the Series A Preferred Stock.

 

“Vice President” has the meaning set forth in Section 7.5.

 

1.2             Interpretative Matters.   In this Agreement, unless otherwise
specified or where the context otherwise requires:

 

(a)                                 the headings of particular provisions of
this Agreement are inserted for convenience only and will not be construed as a
part of this Agreement or serve as a limitation or expansion on the scope of any
term or provision of this Agreement;

 

(b)                                 words importing any gender shall include
other genders;

 

(c)                                  words importing the singular only shall
include the plural and vice versa;

 

(d)                                 the words “include,” “includes” or
“including” shall be deemed to be followed by the words “without limitation”;

 

(e)                                  the words “hereof,” “herein” and “herewith”
and words of similar import shall, unless otherwise stated, be construed to
refer to this Agreement as a whole and not to any particular provision of this
Agreement;

 

(f)                                   references to “Articles,” “Exhibits,”
“Sections” or “Schedules” shall be to Articles, Exhibits, Sections or Schedules
of or to this Agreement;

 

(g)                                  references to any Person include the
successors and permitted assigns of such Person;

 

(h)                                 the use of the words “or,” “either” and
“any” shall not be exclusive;

 

(i)                                     wherever a conflict exists between this
Agreement and any other agreement, this Agreement shall control but solely to
the extent of such conflict;

 

(j)                                    references to “$” or “dollars” means the
lawful currency of the United States of America;

 

(k)                                 references to any agreement, contract or
schedule, unless otherwise stated, are to such agreement, contract or schedule
as amended, modified or supplemented from time to time in accordance with the
terms hereof and thereof; and

 

(l)                                     the parties hereto have participated
jointly in the negotiation and drafting of this Agreement; accordingly, in the
event an ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by the parties hereto, and no
presumption or burden of proof shall arise favoring or disfavoring any party
hereto by virtue of the authorship of any provisions of this Agreement.

 

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ARTICLE II
ORGANIZATIONAL MATTERS

 

2.1             Formation of the Company.  The Company was formed on
December 16, 2009 as a Delaware limited liability company pursuant to the
provisions of the Act.

 

2.2             Fourth Amended and Restated Limited Liability Company
Agreement.  The Members agree to continue the Company as a limited liability
company under the Act, upon the terms and subject to the conditions set forth in
this Agreement.  This Agreement shall amend and restate the terms and conditions
of the Third Restated LLC Agreement in order to give effect to the August 2016
Offering Transactions.  During the term of the Company set forth in Section 2.6,
the rights, powers, duties, obligations and liabilities of the Unitholders shall
be determined pursuant to the Act and this Agreement.  To the extent that the
rights, powers, duties, obligations and liabilities of any Unitholders are
different by reason of any provision of this Agreement than they would be in the
absence of such provision, this Agreement shall, to the extent permitted by the
Act, control.

 

2.3             Name.  The name of the Company shall be “Jones Energy Holdings,
LLC.”  The Managing Member may change the name of the Company at any time and
from time to time.  Prompt notification of any such change shall be given to all
Members.  The Company’s business may be conducted under its name or any other
name or names deemed advisable by the Managing Member.

 

2.4             Purpose; Powers.

 

(a)                                 General Powers.  The nature of the business
or purposes to be conducted or promoted by the Company is to engage in any
lawful act or activity for which limited liability companies may be organized
under the Act.  The Company may engage in any and all activities necessary,
desirable or incidental to the accomplishment of the foregoing.  Notwithstanding
anything herein to the contrary, nothing set forth herein shall be construed as
authorizing the Company to possess any purpose or power, or to do any act or
thing, forbidden by law to a limited liability company organized under the laws
of the State of Delaware.

 

(b)                                 Company Action.  Subject to the provisions
of this Agreement and except as prohibited by applicable law, (i) the Company
may, with the approval of the Managing Member, enter into and perform any and
all documents, agreements and instruments, all without any further act, vote or
approval of any Member, and (ii) the Managing Member may authorize any Person
(including any Member or Officer) to enter into and perform any document,
agreement or instrument on behalf of the Company.

 

2.5             Principal Office; Registered Office.  The registered office of
the Company required by the Act to be maintained in the State of Delaware shall
be the office of the initial registered agent named in the Certificate or such
other office (which need not be a place of business of the Company) as the
Managing Member may designate from time to time in the manner provided by law. 
The initial principal office of the Company shall be located at 807 Las Cimas
Parkway, Suite 350, Austin, Texas, 78746, and may be any such other place as the
Managing Member may from time to time designate, which need not be in the State
of Delaware, and the Company shall maintain records at such place.  The Company
may maintain offices at such other place or places as the Managing Member deems
advisable.  Prompt notice of any change in the principal office shall be given
to all Members.

 

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2.6             Term.  The term of the Company commenced on December 16, 2009,
by filing the Certificate of Formation with the office of the Secretary of State
of the State of Delaware and shall continue in existence perpetually until
termination or dissolution in accordance with the provisions of Article X.

 

2.7             Foreign Qualification.  The Company shall comply, to the extent
procedures are available and those matters are reasonably within the control of
the Officers, with all requirements necessary to qualify the Company as a
foreign limited liability company in each jurisdiction where its assets or
operations require it to be so qualified.

 

2.8             No State Law Partnership.  The Unitholders intend that the
Company shall not be a partnership (including a limited partnership) or joint
venture, and that no Unitholder or Officer shall be a partner or joint venturer
of any other Unitholder or Officer by virtue of this Agreement, for any purposes
other than as is set forth in the last sentence of this Section 2.8, and this
Agreement shall not be construed to the contrary.  The Unitholders intend that
the Company shall be treated as a partnership for federal and, if applicable,
state or local income tax purposes, and each Unitholder and the Company shall
file all tax returns and shall otherwise take all tax and financial reporting
positions in a manner consistent with such treatment.

 

ARTICLE III
CAPITALIZATION; ADMISSION OF MEMBERS; CAPITAL ACCOUNTS

 

3.1             Capitalization.

 

(a)                                 Units; Capitalization.  Each Member’s
interest in the Company, including such Member’s interest, if any, in the
capital, income, gains, losses, deductions and expenses of the Company shall be
represented by units of limited liability company interest (each a “Unit”).  As
of the Effective Date, the Company shall have two authorized classes of Units,
consisting of units of limited liability company interest denominated as “Common
Units” and “Series A Preferred Units.”  All Common Units shall have identical
rights and privileges in all respects, and all Series A Preferred Units shall
have identical rights and privileges in all respects.  The Company shall have
the authority to issue an unlimited number of Units. The ownership by a
Unitholder of Units shall invest such Unitholder with the Economic Interest
therein (except to the extent Transferred to an Assignee).  For purposes of this
Agreement, Units held by the Company or any of its Subsidiaries shall be deemed
not to be outstanding.  The Company may issue fractional Units, and all Units
shall be rounded to the fourth decimal place.

 

(b)                                 Issuance of Common Units in August 2016
Offering Transactions.  Immediately after consummation of the August 2016 Common
Stock Offering, JEI will contribute the net proceeds thereof to the Company in
exchange for 21,000,000 Common Units, and, if and to the extent the underwriters
exercise their overallotment option to purchase additional shares of Class A
Common Stock in connection with the August 2016 Common Stock Offering, JEI will
issue additional shares of Class A Common Stock and use the net proceeds thereof
to purchase an equal number of Common Units from the Company.

 

(c)                                  Issuance of Series A Preferred Units in
August 2016 Offering Transactions.  Immediately after consummation of the
August 2016 Preferred Stock Offering, the Company will issue 1,600,000 Series A
Preferred Units to JEI in exchange for JEI’s commitment to contribute the net
proceeds of the August 2016 Preferred Stock Offering to the Company.  If and to
the extent the underwriters exercise their overallotment option to purchase
additional shares of Series A Preferred Stock in connection with the August 2016
Preferred Stock Offering,

 

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the Company will immediately thereafter issue an equal number of Series A
Preferred Units to JEI in exchange for JEI’s commitment to contribute to the
Company the net proceeds from the exercise of such overallotment option.  JEI
hereby agrees to satisfy the capital commitment obligations described in this
Section 3.1(c) by contributing to the Company 100% of the net proceeds received
by JEI in the August 2016 Preferred Stock Offering (and from the exercise of the
underwriters’ overallotment option in connection with the August 2016 Preferred
Stock Offering, if applicable), which contribution shall be made by JEI
immediately prior to the consummation of the Pending STACK/SCOOP Acquisition. 
If the STACK/SCOOP Purchase Agreement terminates in accordance with its terms
prior to the consummation of the transactions contemplated thereby and JEI
elects to redeem all of its Series A Preferred Stock, (i) all of the Series A
Preferred Units held by JEI, and JEI’s capital commitment obligation described
in this Section 3.1(c), shall be cancelled automatically (without any further
action by JEI or the Company) simultaneously with the redemption by JEI of the
Series A Preferred Stock (such transaction, the “STACK/SCOOP Termination
Redemption”) and (ii) to the extent that the amount of cash paid by JEI to the
holders of Series A Preferred Stock in such redemption exceeds the net proceeds
received by JEI in the August 2016 Preferred Stock Offering (and from the
exercise of the underwriters’ overallotment option in connection with the
August 2016 Preferred Stock Offering, if applicable), the Company will
distribute to JEI an amount of cash equal to such excess.  If the STACK/SCOOP
Purchase Agreement terminates in accordance with its terms prior to the
consummation of the transactions contemplated thereby and JEI determines that it
will not elect to redeem its Series A Preferred Stock, JEI shall promptly
satisfy the capital commitment obligations described in this Section 3.1(c) by
contributing to the Company 100% of the net proceeds received by JEI in the
August 2016 Preferred Stock Offering (and from the exercise of the underwriters’
overallotment option in connection with the August 2016 Preferred Stock
Offering, if applicable).

 

(d)                                 Issuance of Additional Units.  The Managing
Member shall have the right to cause the Company to issue and/or create and
issue at any time after the date hereof, and for such amount and form of
consideration as the Managing Member may determine, additional Units or other
Equity Securities of the Company (including creating classes or series thereof
having such powers, designations, preferences and rights as may be determined by
the Managing Member), subject to Section 11.3. The Managing Member shall have
the power to make such amendments to this Agreement in order to provide for such
powers, designations, preferences and rights as the Managing Member in its
discretion deems necessary or appropriate to give effect to such additional
authorization or issuance in accordance with the provisions of this
Section 3.1(d) and Section 11.3.

 

(i)                                     If, following the August 2016 Offering
Transactions, JEI issues shares of Class A Common Stock (other than an issuance
of the type covered by Section 3.1(d)(ii) or the last sentence of
Section 4.1(a)), JEI shall promptly contribute to the Company all the net
proceeds (if any) received by JEI with respect to such Class A Common Stock.
Upon the contribution by JEI to the Company of all of such net proceeds (if any)
so received by JEI, the Managing Member shall cause the Company to issue a
number of Common Units equal to the number of shares of Class A Common Stock
issued, registered in the name of JEI, such that, at all times, the number of
Common Units held by JEI equals the number of outstanding shares of Class A
Common Stock.

 

(ii)                                  At any time JEI issues one or more shares
of Class A Common Stock in connection with an equity incentive program, whether
such share or shares are issued upon exercise (including cashless exercise) of
an option, settlement of a restricted stock unit, as restricted stock or
otherwise, the Managing Member shall cause

 

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the Company to issue an equal number of Common Units, registered in the name of
JEI; provided that JEI shall be required to contribute all (but not less than
all) the net proceeds (if any) received by JEI from or otherwise in connection
with such issuance of one or more shares of Class A Common Stock, including the
exercise price of any option exercised, to the Company. If any such shares of
Class A Common Stock so issued by JEI in connection with an equity incentive
program are subject to vesting or forfeiture provisions, then the Common Units
that are issued by the Company to JEI in connection therewith in accordance with
the preceding provisions of this Section 3.1(d)(ii) shall be subject to vesting
or forfeiture on the same basis; if any of such shares of Class A Common Stock
vest or are forfeited, then an equal number of Common Units issued by the
Company in accordance with the preceding provisions of this
Section 3.1(d)(ii) shall automatically vest or be forfeited. Any cash or
property held by either JEI or the Company or on either’s behalf in respect of
dividends paid on restricted Class A Common Stock that fail to vest shall be
returned to the Company upon the forfeiture of such restricted Class A Common
Stock.

 

(iii)                               If, following the August 2016 Offering
Transactions, JEI issues additional shares of Series A Preferred Stock, JEI
shall promptly contribute to the Company all the net proceeds (if any) received
by JEI with respect to such Series A Preferred Stock. Upon the contribution by
JEI to the Company of all of such net proceeds (if any) so received by JEI, the
Managing Member shall cause the Company to issue a number of Series A Preferred
Units equal to the number of shares of Series A Preferred Stock issued,
registered in the name of JEI, such that, at all times, the number of Series A
Preferred Units held by JEI equals the number of outstanding shares of Series A
Preferred Stock.

 

(iv)                              For purposes of this Section 3.1(d), “net
proceeds” means gross proceeds to JEI from the issuance of Class A Common Stock
or other securities less all bona fide out-of-pocket expenses of JEI, the
Company and their respective Subsidiaries in connection with such issuance.

 

(e)                                  Repurchase or Redemption of Class A Common
Stock.  If, at any time, any shares of Class A Common Stock are repurchased or
redeemed (whether by exercise of a put or call, pursuant to an open market
purchase, automatically or by means of another arrangement) by JEI for cash and
subsequently cancelled, then the Managing Member shall cause the Company,
immediately prior to such repurchase or redemption of Class A Common Stock, to
redeem an equal number of Common Units held by JEI, at an aggregate redemption
price equal to the aggregate purchase or redemption price of the Class A Common
Stock being repurchased or redeemed by JEI (plus any expenses related thereto)
and upon such other terms as are the same for the Class A Common Stock being
repurchased or redeemed by JEI.

 

(f)                                   Changes in Class A Common Stock or
Series A Preferred Stock.  Any subdivision (by stock split, stock dividend,
reclassification, recapitalization or otherwise) or combination (by reverse
stock split, reclassification, recapitalization or otherwise) of Class A Common
Stock shall be accompanied by an identical subdivision or combination, as
applicable, of Common Units.  Any subdivision (by stock split, stock dividend,
reclassification, recapitalization or otherwise) or combination (by reverse
stock split, reclassification, recapitalization or otherwise) of Series A
Preferred Stock shall be accompanied by an identical subdivision or combination,
as applicable, of Series A Preferred Units.

 

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(g)                                  Safe Harbor Election.

 

(i)                                     By executing this Agreement, each Member
authorizes and directs the Company to elect to have the “safe harbor” described
in the proposed Revenue Procedure set forth in Internal Revenue Service Notice
2005-43 (the “Notice”) apply to any interest in the Company transferred to a
service provider by the Company on or after the effective date of such Revenue
Procedure in connection with services provided to the Company.  For purposes of
making such safe harbor election, the Tax Matters Representative is hereby
designated as the “partner who has responsibility for federal income tax
reporting” by the Company and, accordingly, for execution of a “safe harbor
election” in accordance with Section 3.03(1) of the Notice.  The Company and
each Member hereby agree to comply with all requirements of the safe harbor
described in the Notice, including the requirement that each Member shall
prepare and file all federal income tax returns reporting the income tax effects
of each safe harbor partnership interest issued by the Company in a manner
consistent with the requirements of the Notice.

 

(ii)                                  Each Member authorizes the Tax Matters
Representative to amend Section 3.1(g) of this Agreement to the extent necessary
to achieve substantially the same tax treatment with respect to any interest in
the Company transferred to a service provider by the Company in connection with
services provided to the Company as set forth in Section 4 of the Notice (e.g.,
to reflect changes from the rules set forth in the Notice in subsequent Internal
Revenue Service or Treasury Department guidance); provided that such amendment
is not materially adverse to any Member (as compared with the after-tax
consequences that would result if the provisions of the Notice applied to all
interests in the Company transferred to a service provider by the Company in
connection with services provided to the Company).

 

3.2             Admission of Members; Additional Members.

 

(a)                                 Schedule of Members.  The Company shall
maintain and keep at its principal executive office a schedule of Members
(attached hereto as Schedule A) on which it shall set forth the names and
address of each Member and the aggregate number of Units of each class.

 

(b)                                 Addition or Withdrawal of Members.  The
Managing Member shall cause Schedule A to be amended from time to time to
reflect the admission of any Additional Member, the withdrawal or termination of
any Member, receipt by the Company of notice of any change of address of a
Member or the occurrence of any other event requiring amendment of Schedule A.

 

3.3             Capital Accounts.

 

(a)                                 The Company shall maintain a separate
capital account for each Unitholder according to the rules of Regulations
Section 1.704-1(b)(2)(iv) (each a “Capital Account”).  The Capital Account of
each Unitholder shall be credited initially with an amount equal to such
Unitholder’s cash contributions and the initial Gross Asset Value of property
contributed to the Company by the Unitholder (net of any liabilities securing
such contributed property that the Company is considered to assume or take
subject to).

 

(b)                                 The Capital Account of each Unitholder shall
(i) be credited with all Income and Net Income allocated to such Unitholder
pursuant to Section 5.1 and Section 5.2, and with the amount of cash and the
initial Gross Asset Value of property subsequently contributed to

 

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the Company by the Unitholder (net of any liabilities securing such contributed
property that the Company is considered to assume or take subject to), and
(ii) be debited with all Loss and Net Loss allocated to such Unitholder pursuant
to Section 5.1 and Section 5.2, and with the amount of cash and the Gross Asset
Value of any property (net of liabilities assumed by such Unitholder and
liabilities to which such property is subject) distributed by the Company to
such Unitholder.

 

(c)                                  The Company may, upon the occurrence of the
events specified in Regulations Sections 1.704-1(b)(2)(iv)(f) or (s), increase
or decrease the Capital Accounts of the Unitholders in accordance with the
rules of such Regulations and Regulations Section 1.704-1(b)(2)(iv)(g) to
reflect a revaluation of Company property.

 

(d)                                 For purposes of applying the rules in
paragraph (a), at the time JEI contributes the net proceeds from the August 2016
Offering Transactions to the Company pursuant to Section 3.1(b) or
Section 3.1(c), JEI shall be treated as making a capital contribution to the
Company in an amount equal to the gross proceeds received by JEI in the
August 2016 Offering Transactions, and the Company shall be treated as having
paid the underwriter’s fees and other costs of the August 2016 Offering
Transactions that are paid out of the proceeds of those offerings.  For purposes
of applying the rules in paragraphs (a) and (b), any issuance/distribution of
Common Units to JEI in respect of the Series A Preferred Units pursuant to
Section 4.1(a) shall be treated as (i) a distribution of cash in an amount equal
to the number of Common Units so distributed/issued, multiplied by the average
of the high and low trading prices of a share of Class A Common Stock on the
date of such distribution, followed immediately thereafter by (ii) a
contribution of the amount described in clause (i) to the Company in exchange
for the Common Units so issued.

 

3.4             Negative Capital Accounts.  No Unitholder shall be required to
pay to any other Unitholder or the Company any deficit or negative balance that
may exist from time to time in such Unitholder’s Capital Account (including upon
and after dissolution of the Company).

 

3.5             No Withdrawal.  No Person shall be entitled to withdraw any part
of such Person’s Capital Contributions or Capital Account or to receive any
Distribution from the Company, except as expressly provided herein.

 

3.6             Loans From Unitholders.  Loans by Unitholders to the Company
shall not be considered Capital Contributions.  If any Unitholder shall loan
funds to the Company, then the making of such loans shall not result in any
increase in the Capital Account balance of such Unitholder.  The amount of any
such loans shall be a debt of the Company to such Unitholder and shall be
payable or collectible in accordance with the terms and conditions upon which
such loans are made.

 

3.7             No Right of Partition.  No Unitholder shall have the right to
seek or obtain partition by court decree or operation of law of any property of
the Company or any of its Subsidiaries or the right to own or use particular or
individual assets of the Company or any of its Subsidiaries, or, except as
expressly contemplated by this Agreement, be entitled to Distributions of
specific assets of the Company or any of its Subsidiaries.

 

3.8             Non-Certification of Units; Legend; Units Are Securities.

 

(a)                                 Units shall be issued in non-certificated
form; provided that the Managing Member may cause the Company to issue
certificates to a Unitholder representing the

 

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Units held by such Unitholder.  If any Unit certificate is issued, then such
certificate shall bear a legend substantially in the following form:

 

This certificate evidences Units representing an interest in Jones Energy
Holdings, LLC and shall be a security within the meaning of Article 8 of the
Uniform Commercial Code.

 

The interest in Jones Energy Holdings, LLC represented by this certificate is
subject to restrictions on transfer set forth in that certain Fourth Amended and
Restated Limited Liability Company Agreement of Jones Energy Holdings, LLC,
dated as of August 26, 2016, by and among Jones Energy Holdings, LLC and each of
the members from time to time party thereto, as the same may be amended from
time to time.

 

(b)                                 The Company hereby irrevocably elects that
all Units will be deemed to be “securities” within the meaning of
Section 8-102(a)(15) and as provided by Section 8-103(c) of the Uniform
Commercial Code as in effect from time to time in the State of Delaware or
analogous provisions in the Uniform Commercial Code in effect in any other
jurisdiction.

 

3.9             Rights of Series A Preferred Units.  The Series A Preferred
Units shall have the following rights, preferences and privileges and shall be
subject to the following duties and obligations:

 

(a)                                 Distributions.  JEI shall be entitled to
receive liquidating distributions in respect of the Series A Preferred Units in
the manner set forth in Section 10.2(a)(ii)(x).   JEI shall be entitled to
receive distributions other than liquidating distributions in respect of the
Series A Preferred Units in the manner set forth in Section 4.1(a).

 

(b)                                 Voting Rights.  Except as provided in the
following sentence, the holders of the Series A Preferred Units shall not be
entitled to vote on any matters requiring the approval or vote of the holders of
Units, except as required by applicable law.  Notwithstanding any other
provision of this Agreement, in addition to all other requirements imposed by
the Act, and all other voting rights granted under this Agreement, the
affirmative vote of the holder of a majority of the outstanding Series A
Preferred Units, voting separately as a class based upon one vote per Series A
Preferred Unit, shall be necessary on any matter that (i) adversely affects any
of the rights, preferences and privileges of the Series A Preferred Units or
(ii) amends or modifies any of the terms of the Series A Preferred Units.

 

(c)                                  Conversion. Each time that a share of
Series A Preferred Stock is converted into shares of Class A Common Stock, an
equal number of Series A Preferred Units shall automatically convert (without
any further action of the Company or JEI) into Common Units at the same
conversion ratio as applied to the conversion of the Series A Preferred Stock
into Class A Common Stock.  For example, if 5,000 shares of Series A Preferred
Stock are converted into 45,000 shares of Class A Common Stock, then 5,000
Series A Preferred Units shall automatically convert into 45,000 Common Units.

 

(d)                                 Repurchase and Redemption.  Immediately
prior to the time that a share of Series A Preferred Stock is to be repurchased
or redeemed by JEI (other than a redemption that occurs pursuant to the
STACK/SCOOP Termination Redemption, the treatment of which is addressed in
Section 3.1(c)), the Company shall repurchase or redeem an equal number of
Series A Preferred Units in exchange for the same consideration that is to be
paid by JEI in the repurchase or redemption of the Series A Preferred Stock. 
For example, if 100,000 shares of

 

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Series A Preferred Stock are to be repurchased by JEI in exchange for $3,000,000
in cash and 400,000 shares of Class A Common Stock, then 100,000 Series A
Preferred Units shall be repurchased by the Company from JEI in exchange for
$3,000,000 in cash and 400,000 Common Units.

 

(e)                                  Exceptions.  Notwithstanding subsections
(c) and (d), no repurchase, redemption or conversion shall be effected to the
extent such repurchase, redemption or conversion would render the Company
insolvent or violate Applicable Law or any restrictions contained in any
Agreement to which the Company is a party.  For purposes of the foregoing
sentence, insolvency means the inability of the Company to meet its payment
obligations when due.  Notwithstanding subsection (d), no repurchase or
redemption of the Series A Preferred Units shall be required or effected if such
redemption would cause the Series A Preferred Units to be treated as
“disqualified stock,” “disqualified capital stock” or any equivalent term under
any credit agreement, loan agreement, indenture or other credit facility to
which the Company is a party at the time of the repurchase or redemption.

 

(f)                                   Tax Treatment.  It is intended that the
conversion right applicable to the Series A Preferred Units will be treated as a
noncompensatory option within the meaning of Regulations Section 1.721-2(f).
 Consistent with such intention, the Company shall comply with the allocation
provisions set forth in Regulations Sections 1.704-1(b)(2)(iv)(s) and
1.704-1(b)(4)(x) (including making any required “corrective” allocations in
accordance with those Regulations).

 

ARTICLE IV
DISTRIBUTIONS

 

4.1             Distributions.                        
(a)                                 Immediately prior to the time that any cash
dividends are to be paid by JEI in respect of the Series A Preferred Stock, the
Company shall make a cash distribution to JEI in respect of the Series A
Preferred Units in an amount equal to the amount of cash dividends to be paid by
JEI in respect of the Series A Preferred Stock.  At the time that any dividends
are to be paid in kind by JEI in respect of the Series A Preferred Stock through
the issuance of shares of Class A Common Stock, the Company shall
distribute/issue Common Units to JEI in respect of the Series A Preferred Units
in a number equal to the number of shares of Class A Common Stock then being
distributed by JEI in respect of the Series A Preferred Stock.

 

(b)                                 After making or providing for any
distributions under Section 3.1(c), Section 4.1(a) and Section 4.4,
distributions to the holders of Common Units may be declared by the Managing
Member out of funds legally available therefor in such amounts and on such terms
(including the payment dates of such distributions) as the Managing Member shall
determine using such record date as the Managing Member may designate; such
distributions shall be made to the holders of the Common Units as of the close
of business on such record date on a pro rata basis (except that repurchases or
redemptions made in accordance with Section 3.1(e) or payments made in
accordance with Section 7.10 need not be on a pro rata basis); in accordance
with the number of Common Units owned by each Member as of the close of business
on such record date; provided, however, that the Managing Member shall have the
obligation to make distributions as set forth in Sections 3.1(e), 4.4 and 7.10;

 

(c)                                  Notwithstanding any other provision herein
to the contrary, no distributions shall be made to any Member to the extent such
distribution would render the Company insolvent or violate Applicable Law or any
restrictions contained in any Agreement to which the Company is a party.  For
purposes of the foregoing sentence, insolvency means the

 

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inability of the Company to meet its payment obligations when due. Promptly
following the designation of a record date and the declaration of a distribution
pursuant to this Section 4.1, the Managing Member shall give notice to each
Member of the record date, the amount and the terms of the distribution and the
payment date thereof.

 

4.2             Successors.  For purposes of determining the amount of
Distributions, each Unitholder shall be treated as having made the Capital
Contributions and as having received the Distributions made to or received by
its predecessors in respect of any of such Unitholder’s Units.

 

4.3             Distributions In-Kind.  To the extent that the Company
distributes property in-kind to the Unitholders (other than distributions of
Common Units), the Company shall be treated as making a Distribution equal to
the Fair Market Value of such property for purposes of Section 4.1 and such
property shall be treated as if it were sold for an amount equal to its Fair
Market Value.  Any resulting gain or loss shall be allocated to the Unitholders’
Capital Accounts in accordance with Section 5.1 and Section 5.2.

 

4.4             Tax-Related Distributions.

 

(a)                                 Subject to the Act, to any restrictions
contained in any agreement to which the Company is bound and after making or
providing for the distributions set forth in Section 4.1(a), but prior to making
the distributions set forth in Section 4.1(b), no later than the tenth day
following the end of the Quarterly Estimated Tax Period in the case of the first
three Quarterly Estimated Tax Periods of each calendar year, and no later than
twenty days prior to the end of the Quarterly Estimated Tax Period in the case
of the last Quarterly Estimated Tax Period of each calendar year, the Company
shall, to the extent that the Company has cash available therefor, make a
Distribution in cash (each, a “Tax Distribution”) among the Unitholders, on a
pro rata basis in accordance with the number of Common Units owned by each
Unitholder, in an amount equal to the excess of (a) the product of (i) the
excess of the taxable income of the Company attributable to such Quarterly
Estimated Tax Period and all prior Quarterly Estimated Tax Periods in such
calendar year, over the portion thereof expected to be allocated to JEI in
respect of the Series A Preferred Units pursuant to Section 5.1(a), based upon
information available to the Company and adjusted to take into account good
faith projections by the Company of taxable income or loss for the remainder of
the calendar year, multiplied by (ii) the Assumed Tax Rate, over
(b) distributions made by the Company pursuant to this Section 4.4(a) with
respect to such calendar year; provided, however, that if the Tax Distributions
made during a calendar year are less than the product of (x) the actual taxable
income of the Company for the calendar year (calculated as described in the last
sentence of this Section 4.4(a)) multiplied by (y) the Assumed Tax Rate, the
Company shall, to the extent of available cash and borrowings of the Company,
make a “true up” Tax Distribution with respect to such calendar year equal to
such difference no later than March 15 of the following year.  For purposes of
clauses (a)(i) and (x) above, the taxable income of the Company shall be
determined by disregarding any adjustment to the taxable income of any Member
that arises under Section 743(b) of the Code and is attributable to the
acquisition by such Member of an interest in the Company in a transaction
described in Section 743(a) of the Code.

 

(b)                                 If the cumulative amount of actual federal,
state and local income tax liabilities payable by JEI, plus the cumulative
amount of payments made by JEI under the Tax Receivable Agreement, through the
end of any particular Quarterly Estimated Tax Period or calendar year exceeds
the sum of the cumulative amount of Tax Distributions, distributions under
Section 4.1(b) and JEI Excess Tax Distributions (as defined below) made to JEI
through the end of such Quarterly Estimated Tax Period or calendar year, the
Managing Member shall, to the

 

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extent permitted by Applicable Law, but subject to the Act and any restrictions
contained in any agreement to which the Company is bound, make additional tax
distributions to JEI in an amount equal to such excess (a “JEI Excess Tax
Distribution”).  Any such JEI Excess Tax Distribution shall be treated as an
advance against and, thus, shall reduce (without duplication), any future
distributions that would otherwise be made to JEI pursuant to Sections
4.1(b) and 4.4(a).

 

(c)                                  The Managing Member shall, to the extent
permitted by Applicable Law, but subject to the Act and any restrictions
contained in any agreement to which the Company is bound, make distributions to
the Members, pro rata in proportion to the number of Common Units owned by each
Member, in such amounts as shall (when combined with the distributions made to
JEI pursuant to Sections 4.1(b) and 4.4(a)) enable JEI to meet its obligations
pursuant to the Tax Receivable Agreement.

 

ARTICLE V
ALLOCATIONS

 

5.1             Allocations.                               
(a)                                 Following any allocation made pursuant to
Section 5.2 and prior to any allocation made pursuant to Section 5.1(b), items
of gross income and gain shall be allocated to JEI in respect of the Series A
Preferred Units until the cumulative amount of items of income and gain so
allocated to JEI for the current and prior fiscal years or other relevant
periods equals the sum of (i) the cumulative amount of distributions received by
JEI pursuant to Section 4.1(a) in respect of the Series A Preferred Units for
the current and all prior fiscal years or other relevant periods, plus (ii) the
sum of the accrued and unpaid dividends and Unpaid Excess Cash Amounts on all
the outstanding shares of Series A Preferred Stock as of the end of the current
fiscal year or other relevant period.  For purposes of clause (i), any
issuance/distribution of Common Units to JEI in respect of the Series A
Preferred Units pursuant to Section 4.1(a) shall be treated as (i) a
distribution of cash in an amount equal to the number of Common Units so
distributed/issued, multiplied by the average of the high and low trading prices
of a share of Class A Common Stock on the date of such distribution, followed
immediately thereafter by (ii) a contribution of the amount described in clause
(i) to the Company in exchange for the Common Units so issued.

 

(b)                                 Following any allocation made pursuant to
Section 5.1(a) and Section 5.2, Net Income and Net Loss (and, if necessary in
the Fiscal Year in which the Company commences liquidation and all subsequent
Fiscal Years, individual items of Income and Loss) shall be allocated annually
(and at such other times as the Managing Member determines) to the Unitholders
in such manner that the Capital Account balance of each Unitholder shall, to the
greatest extent possible, be equal to the amount, positive or negative, that
would be distributed to such Unitholder (in the case of a positive amount) or
for which such Unitholder would be liable to the Company under this Agreement
(in the case of a negative amount), if (a) the Company were to sell the assets
of the Company for their Gross Asset Values, (b) all Company liabilities were
satisfied (limited with respect to each nonrecourse liability to the Gross Asset
Values of the assets securing such liability), (c) the Company were to
distribute the proceeds of sale pursuant to Section 10.2 and (d) the Company
were to dissolve pursuant to Article X, minus such Unitholder’s share of Company
Minimum Gain or Member Minimum Gain, computed immediately prior to the
hypothetical sale of assets.

 

5.2             Special Allocations.

 

(a)                                 Loss attributable to Member Nonrecourse Debt
shall be allocated in the manner required by Regulations Section 1.704-2(i).  If
there is a net decrease during a taxable

 

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year in Member Minimum Gain, Income for such taxable year (and, if necessary,
for subsequent taxable years) shall be allocated to the Unitholders in the
amounts and of such character as is determined according to Regulations
Section 1.704-2(i)(4).  This Section 5.2(a) is intended to be a “partner
nonrecourse debt minimum gain chargeback” provision that complies with the
requirements of Regulations Section 1.704-2(i)(4), and shall be interpreted in a
manner consistent therewith.

 

(b)                                 Except as otherwise provided in
Section 5.2(a), if there is a net decrease in Company Minimum Gain during any
taxable year, each Unitholder shall be allocated Income for such taxable year
(and, if necessary, for subsequent taxable years) in the amounts and of such
character as is determined according to Regulations Section 1.704-2(f).  This
Section 5.2(b) is intended to be a “minimum gain chargeback” provision that
complies with the requirements of Regulations Section 1.704-2(f), and shall be
interpreted in a manner consistent therewith.

 

(c)                                  If any Unitholder that unexpectedly
receives an adjustment, allocation or distribution described in Regulations
Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6) has an Adjusted Capital Account
Deficit as of the end of any taxable year, computed after the application of
Section 5.2(a) and Section 5.2(b) but before the application of any other
provision of Section 5.1, Section 5.2 and Section 5.3, then Income for such
taxable year shall be allocated to such Unitholder in proportion to, and to the
extent of, such Adjusted Capital Account Deficit.  This Section 5.2(c) is
intended to be a “qualified income offset” provision as described in Regulations
Section 1.704-1(b)(2)(ii)(d) and shall be interpreted in a manner consistent
therewith.

 

(d)                                 “Nonrecourse deductions” (as defined in
Regulations §§ 1.704-2(b)(l) and (c)) shall be allocated among the Unitholders
pro rata in accordance with the number of Common Units owned by each of them.

 

(e)                                  No Loss or Net Loss shall be allocated to a
Unitholder to the extent such allocation would cause or increase an Adjusted
Capital Account Deficit for such Unitholder.  Instead, such Loss or Net Loss
shall be allocated among the other Unitholders in the same ratios that such
other Unitholders are allocated Net Loss for such year under Section 5.1.

 

(f)                                   Income and Loss described in clause (d) of
the definition of Gross Asset Value shall be allocated in a manner consistent
with the manner that the adjustments to the Capital Accounts are required to be
made pursuant to Regulations Section 1.704-1(b)(2)(iv)(m).

 

(g)                                  The allocations set forth in
Section 5.2(a) through Section 5.2(f) inclusive (the “Regulatory Allocations”)
are intended to comply with certain requirements of Section 1.704-1(b) and
1.704-2 of the Regulations.  The Regulatory Allocations may not be consistent
with the manner in which the Unitholders intend to allocate Income and Loss of
the Company or to make Distributions.  Accordingly, notwithstanding the other
provisions of Section 5.1, Section 5.2 and Section 5.3, but subject to the
Regulatory Allocations, items of Income and Loss of the Company shall be
allocated among the Unitholders so as to eliminate the effect of the Regulatory
Allocations and thereby cause the respective Capital Account balances of the
Unitholders to be in the amounts (or as close thereto as possible) they would
have been if Income and Loss had been allocated without reference to the
Regulatory Allocations.  In general, the Unitholders anticipate that this shall
be accomplished by specially allocating other Income and Loss among the
Unitholders so that the net amount of Regulatory Allocations and such special
allocations to each such Unitholder is zero.

 

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(h)                                 In the case of a sale or other disposition
of depletable property, the portion of the amount realized on such sale or other
disposition that does not exceed the Company’s Simulated Basis in the depletable
property shall be allocated among the Unitholders in the same ratios that the
aggregate adjusted tax basis of the property was allocated under the last
sentence of Section 5.3(f).  The portion of the amount realized on the sale or
other disposition of each such depletable property that exceeds the Company’s
Simulated Basis in the property shall be allocated among the Unitholders in the
same manner that Net Income (i.e., Simulated Gain) is allocated pursuant to
Section 5.1.

 

5.3             Tax Allocations.

 

(a)                                 The income, gains, losses and deductions of
the Company shall be allocated for federal, state and local income tax purposes
among the Unitholders in accordance with the allocation of such income, gains,
losses and deductions among the Unitholders for purposes of computing their
Capital Accounts; except that if any such allocation is not permitted by the
Code or other applicable law, then the Company’s subsequent income, gains,
losses and deductions for tax purposes shall be allocated among the Unitholders
so as to reflect as nearly as possible the allocation set forth herein in
computing their Capital Accounts.

 

(b)                                 Items of Company taxable income, gain, loss
and deduction with respect to any property contributed to the capital of the
Company on or prior to July 26, 2013 shall be allocated among the Unitholders in
accordance with Code Section 704(c) so as to take account of any variation
between the adjusted basis of such property to the Company for federal income
tax purposes and its Gross Asset Value using the traditional method described in
Regulations Section 1.704-3(c); provided, that the Company shall use the
traditional method with curative allocations described in Regulations
Section 1.704-3(c) with respect to some or all of the Company’s properties to
the extent possible to maximize the allocation of Jones Built-in Gain to JEDF
(including through the allocation of depletable basis and deductions to
Metalmark) without allocating an overall tax loss to Metalmark (and the Company
shall use the traditional method described in Regulations
Section 1.704-3(b) with respect to any Company property for which the
traditional with curative allocations method is not utilized under the foregoing
provisions).  It is the intent of the parties to maximize, within permissible
allocation schemes, the tax burden of the Jones Built-in Gain allocable to JEDF
without increasing the aggregate amount of tax distributions to be made by the
Company.  Items of Company taxable income, gain, loss and deduction with respect
to any property contributed to the capital of the Company after  July 26, 2013
shall be allocated among the Unitholders in accordance with Code
Section 704(c) so as to take account of any variation between the adjusted basis
of such property to the Company for federal income tax purposes and its Gross
Asset Value using such method or methods described in Regulations
Section 1.704-3 as are selected by the Managing Member.

 

(c)                                  If the Gross Asset Value of any Company
asset is adjusted pursuant to the requirements of Regulations
Section 1.704-1(b)(2)(iv)(e), (f), or (s), subsequent allocations of items of
taxable income, gain, loss and deduction with respect to such asset shall take
account of any variation between the adjusted basis of such asset for federal
income tax purposes and its Gross Asset Value in the same manner as under Code
Section 704(c).  If the Gross Asset Value of any Company assets is adjusted on
or after July 26, 2013 pursuant to the requirements of Regulations
Section 1.704-1(b)(2)(iv)(e), (f), or (s), subsequent allocations of items of
taxable income, gain, loss and deduction with respect to such asset shall take
account of any variation between the adjusted basis of such asset for federal
income tax purposes and its Gross Asset Value using the traditional method with
curative allocations described in Regulations Section 1.704-3(c), but limited to
curative allocations of gain from the sale or other disposition of each

 

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such asset (and, for the avoidance of doubt, with no curative allocations for
depreciation, amortization, or depletion with respect to each such asset).

 

(d)                                 Tax credits, tax credit recapture and any
items related thereto shall be allocated to the Unitholders according to their
interests in such items as reasonably determined by the Managing Member taking
into account the principles of Regulations Section 1.704-1(b)(4)(ii).

 

(e)                                  Depreciation, depletion, intangible
drilling cost, and amortization recapture amounts under Sections 1245, 1250 or
1254 of the Code, if any, resulting from any sale or disposition of tangible or
intangible depreciable, depletable, or amortizable property shall be allocated
to the Unitholders in the same proportions that the depreciation, depletion,
intangible drilling cost, or amortization being recaptured was allocated.

 

(f)                                   Cost and percentage depletion deductions
with respect to, and any gain or loss on the sale or other disposition of, any
property the production from which is or would be (in the case of nonproducing
properties) subject to depletion shall be determined in a manner that is
consistent with Section 613A(c)(7)(D) of the Code.  For purposes of making such
determination, the Company’s adjusted tax basis in each depletable property
shall be allocated under Section 613A(c)(7)(D) of the Code among the Unitholders
in proportion to the number of Common Units held by each of them.

 

(g)                                  Allocations pursuant to this Section 5.3
are solely for the purposes of federal, state and local taxes and shall not
affect, or in any way be taken into account in computing, any Unitholder’s
Capital Account or share of Income, Loss, Distributions or other Company items
pursuant to any provision of this Agreement.

 

5.4             Unitholders’ Tax Reporting.  The Unitholders acknowledge and are
aware of the income tax consequences of the allocations made pursuant to this
Article V and, except as may otherwise be required by applicable law or
regulatory requirements, hereby agree to be bound by the provisions of this
Article V in reporting their shares of Company income, gain, loss, deduction and
credit for federal, state and local income tax purposes.

 

5.5             Indemnification and Reimbursement for Payments on Behalf of a
Unitholder.  If the Company is required by applicable law to make any payment to
a Governmental Entity that is specifically attributable to a Unitholder or a
Unitholder’s status as such (including (i) federal withholding taxes,
(ii) federal income taxes, interest and penalties pursuant Sections 6225, 6232
and 6233 of the Code as amended by Section 1101(c) of the Bipartisan Budget Act
of 2015, (iii) state or local personal property taxes and (iv) state or local
unincorporated business taxes), then such Unitholder shall indemnify the Company
in full for the entire amount paid (including interest, penalties and related
expenses).  The Managing Member may offset Distributions to which a Person is
otherwise entitled under this Agreement against such Person’s obligation to
indemnify the Company under this Section 5.5.  A Unitholder’s obligation to
indemnify the Company under this Section 5.5 shall survive termination,
dissolution, liquidation and winding up of the Company, and for purposes of this
Section 5.5, the Company shall be treated as continuing in existence.  The
Company may pursue and enforce all rights and remedies it may have against each
Unitholder under this Section 5.5, including instituting a lawsuit to collect
such indemnification, with interest calculated at a rate equal to 10 percentage
points per annum (but not in excess of the highest rate per annum permitted by
applicable law).

 

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ARTICLE VI
RIGHTS AND DUTIES OF MEMBERS

 

6.1             Management.

 

(a)                                 Management of the Company.  The business and
affairs of the Company shall be managed by the Managing Member consistent with
this Agreement, the Exchange Agreement and the JEI Amended and Restated
Certificate of Incorporation dated on or about the date hereof (the “JEI
Certificate”).  Subject to the express limitations contained in any provision of
this Agreement, including Section 6.5 and the requirement to conduct the affairs
and business of the Company in accordance with the terms of the Exchange
Agreement, the Managing Member shall have complete and absolute control of the
affairs and business of the Company, and shall possess all powers necessary,
convenient or appropriate to carrying out the purposes and business of the
Company, including, without limitation, doing all things and taking all actions
necessary to carry out the terms and provisions of this Agreement.  Subject to
the rights and powers of the Managing Member and the limitations thereon
contained herein and in the Exchange Agreement, the Managing Member may delegate
to any person any or all of its powers, rights and obligations under this
Agreement and may appoint, contract or otherwise deal with any person to perform
any acts or services for the Company as the Managing Member may reasonably
determine.  The Managing Member is specifically authorized to execute, sign,
seal and deliver in the name of and on behalf of the Company any and all
agreements, certificates, instruments or other documents requisite to carrying
out the intentions and purposes of this Agreement and of the Company.

 

(b)                                 Necessary Approvals.  Any action taken by
the Managing Member pursuant to this Agreement shall be subject to the necessary
approval of the board of directors of the Managing Member as and to the extent
required by this Agreement, the JEI Certificate and to the extent consistent
therewith, the bylaws of JEI.  All matters material to the affairs and business
of the Company shall be determined by the board of directors of the Managing
Member.

 

(c)                                  Fiduciary Duties.

 

(i)                                     Subject to, and as limited by the
provisions of this Agreement, the Managing Member shall owe the to the Company
and the Members duties of loyalty and due care of the type owed under the laws
of the State of Delaware by the board of the Managing Member to the Managing
Member and the stockholders of the Managing Member.  The provisions of this
Agreement, to the extent that they restrict the duties (including fiduciary
duties) and liabilities of the Managing Member otherwise existing at law or in
equity or by operation of the preceding sentence, are agreed by the Members to
replace such duties and liabilities of the Managing Member.

 

(ii)                                  Except as otherwise expressly provided in
this Agreement, nothing contained in this Agreement shall be deemed to
constitute any Member an agent or legal representative of any other Member or to
create any fiduciary relationship for any purpose whatsoever, apart from such
obligations between the members of a limited liability company as may be created
by the Act.  The Managing Member shall not have any authority to act for, or to
assume any obligation or responsibility on behalf of, any other Member.

 

(iii)                               In performing its duties, the Managing
Member shall be entitled to rely in good faith on the provisions of this
Agreement and on information, opinions,

 

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reports or statements (including financial statements and information, opinions,
reports or statements as to the value or amount of the assets, liabilities,
profits or losses of the Company and its Subsidiaries or any facts pertinent to
the existence and amount of assets from which Distributions to Unitholders might
properly be paid), of the following other Persons or groups: (A) one or more
Officers or employees of the Company or any of its Subsidiaries, (B) any
attorney, independent accountant or other Person employed or engaged by the
Company or any of its Subsidiaries, or (C) any other Person who has been
selected with reasonable care by or on behalf of the Company or any of its
Subsidiaries, in each case, as to matters which such relying Person reasonably
believes to be within such other Person’s professional or expert competence. 
The preceding sentence shall in no way limit any Person’s right to rely on
information to the extent provided in Section 18-406 of the Act.

 

(iv)                              No individual acting on behalf of the Managing
Member shall be personally liable under any judgment of a court, or in any other
manner, for any debt, obligation or liability of the Company, whether that
liability or obligation arises in contract, tort or otherwise solely by reason
of acting on behalf of the Managing Member.

 

6.2             Liability of Unitholders.

 

(a)                                 No Personal Liability.  Except as otherwise
required by applicable law or as expressly set forth in this Agreement
(including in Section 10.3), no Unitholder shall have any personal liability
whatsoever in such Unitholder’s capacity as a Unitholder, whether to the
Company, to any of the other Unitholders, to the creditors of the Company or to
any other third Person for the debts, obligations and liabilities of the
Company, whether arising in contract, tort or otherwise (including those arising
as a Unitholder or an equityholder, an owner or a shareholder of another
Person).  Each Unitholder shall be liable only to make such Unitholder’s Capital
Contribution to the Company, if applicable, and the other payments provided for
expressly herein.

 

(b)                                 Return of Distributions.  Under the Act, a
Unitholder of a limited liability company may, under certain circumstances, be
required to return amounts previously distributed to such Unitholder.  It is the
intent of the Unitholders that no Distribution to any Unitholder pursuant to
Article IV or Article X shall be deemed to constitute money or other property
paid or distributed in violation of the Act, and the Unitholders agree that each
such Distribution shall constitute a compromise of the Unitholders within the
meaning of Section 18-502(b) of the Act, and the Unitholder receiving such
Distribution shall not be required to return to any Person any such money or
property, except as otherwise expressly set forth herein.  If, however, any
court of competent jurisdiction holds that, notwithstanding the provisions of
this Agreement, any Unitholder is obligated to make any such payment, such
obligation shall be the obligation of such Unitholder and not of the other
Unitholders.

 

6.3             Investment Opportunities; Performance of Duties; Conflicts of
Interest.

 

(a)                                 To the fullest extent permitted by
applicable law, the doctrine of corporate opportunity, or any analogous
doctrine, shall not apply to Metalmark or Wells Fargo Central Pacific
Holdings, Inc., a Delaware corporation, and any of their respective affiliates
and any of their respective officers, directors, agents, shareholders, members,
partners, affiliates and subsidiaries (other than the Company and its
subsidiaries) (each, a “Business Opportunities Exempt Party”).  The Company
renounces any interest or expectancy of the Company in, or in being offered an
opportunity to participate in, business opportunities that are from time to time

 

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presented to any Business Opportunity Exempt Party.  No Business Opportunity
Exempt Party who acquires knowledge of a potential transaction, agreement,
arrangement or other matter that may be an opportunity for the Company shall
have any duty to communicate or offer such opportunity to the Company.  No
amendment or repeal of this Section 6.3 shall apply to or have any effect on the
liability or alleged liability of any Business Opportunities Exempt Party for or
with respect to any opportunities of which any such Business Opportunities
Exempt Party becomes aware prior to such amendment or repeal.  Any Person
purchasing or otherwise acquiring any interest in any shares of stock of JEI or
any Units shall be deemed to have notice of and consented to the provisions of
this Section 6.3.  Neither the alteration, amendment or repeal of this
Section 6.3, nor the adoption of any provision of this Amended and Restated
Certificate of Incorporation inconsistent with this Section 6.3, shall eliminate
or reduce the effect of this Section 6.3 in respect of any business opportunity
first identified or any other matter occurring, or any cause of action, suit or
claim that, but for this Section 6.3, would accrue or arise, prior to such
alteration, amendment, repeal or adoption. Notwithstanding the foregoing, a
Business Opportunity Exempt Party who is a director or officer of the Managing
Member and who is offered a business opportunity of the Managing Member
reasonably determined by the party receiving the opportunity to be expressly in
his or her capacity as a director or officer of the Managing Member shall be
obligated to communicate and offer such business opportunity to the Managing
Member and the Managing Member, and the Company do not renounce any such
opportunity. Nothing this Section 6.3 shall limit the confidentiality
obligations set forth in Section 11.16 or any fiduciary obligations of the
directors of the Managing Member.

 

(b)                                 In performing its, his or her duties, each
of the Members shall be entitled to rely in good faith on the provisions of this
Agreement and on information, opinions, reports or statements (including
financial statements and information, opinions, reports or statements as to the
value or amount of the assets, liabilities, profits or losses of the Company and
its Subsidiaries), of the following other Persons or groups: (i) one or more
officers or employees of such Member or the Company or any of its Subsidiaries,
(ii) any attorney, independent accountant or other Person employed or engaged by
such Member or the Company or any of its Subsidiaries, or (iii) any other Person
who has been selected with reasonable care by or on behalf of such Member or the
Company or any of its Subsidiaries, in each case, as to matters which such
relying Person reasonably believes to be within such other Person’s professional
or expert competence.  The preceding sentence shall in no way limit any Person’s
right to rely on information to the extent provided in Section 18-406 of the
Act.

 

6.4             Meetings.  No meetings of the Members are required to be held.

 

6.5             Actions Requiring Member Approval.  The prior written consent of
the Managing Member and Members holding a majority of the Common Units (other
than those held by the Managing Member) shall be required for the following:

 

(a)                                 any amendment to the Certificate; and

 

(b)                                 any amendment to this Agreement.

 

ARTICLE VII
OFFICERS

 

7.1             Officers.  The Company shall have individuals as officers (the
“Officers”), which may include a Chief Executive Officer, a President, a Chief
Financial Officer, one or more Vice Presidents and a Secretary, and unless
determined otherwise by the Managing Member or the

 

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Chief Executive Officer, each other officer of the Managing Member shall also be
an officer of the Company, with the same title. All officers shall be appointed
by the Managing Member (or by the Chief Executive Officer to the extent the
Managing Member delegates such authority to the Chief Executive Officer) and
shall hold office until their successors are appointed by the Managing Member
(or by the Chief Executive Officer to the extent the Managing Member delegates
such authority to the Chief Executive Officer). Two or more offices may be held
by the same individual. The officers of the Company may be removed by the
Managing Member (or by the Chief Executive Officer to the extent the Managing
Member delegates such authority to the Chief Executive Officer) at any time for
any reason or no reason.  Any Officer may resign his or her office at any time. 
The Managing Member may appoint such other officers and agents as it may deem
necessary or advisable, who shall hold their offices for such terms and shall
exercise such powers and perform such duties as shall be determined from time to
time by the Managing Member.

 

7.2             Chief Executive Officer.  The Chief Executive Officer of the
Company (the “Chief Executive Officer”) shall perform such duties as may be
assigned to him or her from time to time by the Managing Member.  Subject to the
direction of the Managing Member, he or she shall perform all duties incident to
the office of a president in a corporation organized under the Delaware General
Corporation Law.  The Chief Executive Officer shall see that all resolutions and
orders of the Managing Member are carried into effect, and in connection with
the foregoing, shall be authorized to delegate to the President, Chief Financial
Officer or a Vice President and the other Officers such of his or her powers and
such of his or her duties as the Managing Member may deem to be advisable.

 

7.3             President.  The president of the Company (the “President”) shall
perform such duties as may be assigned to him or her from time to time by the
Managing Member or the Chief Executive Officer.  Subject to the direction of the
Managing Member and the Chief Executive Officer, he or she shall have, and
exercise, direct charge of, and general supervision over, the business and
affairs of the Company.  He or she shall from time to time report to the
Managing Member and the Chief Executive Officer all matters within his or her
knowledge that the interest of the Company may require to be brought to its
notice, and shall also have such other powers and perform such other duties as
may be specifically assigned to him or her from time to time by the Managing
Member.  In case of the absence or disability of the Chief Executive Officer,
the duties of the office shall, if the Managing Member or the Chief Executive
Officer has so authorized, be performed by the President.  The President shall
see that all resolutions and orders of the Managing Member and all directives of
the Chief Executive Officer in accordance with such resolutions and orders are
carried into effect, and in connection with the foregoing, shall be authorized
to delegate to the Chief Financial Officer, a Vice President and the other
Officers such of his or her powers and such of his or her duties as the Managing
Member may deem to be advisable.

 

7.4             Chief Financial Officer.  The Chief Financial Officer (the
“Chief Financial Officer”) shall have the custody of the Company’s funds and
securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the Company and shall deposit all monies and
other valuable effects in the name and to the credit of the Company, in such
depositories as may be designated by the Managing Member or by any Officer
authorized by the Managing Member to make such designation.  The Chief Financial
Officer shall exercise such powers and perform such duties as generally pertain
or are necessarily incident to his or her office and shall perform such other
duties as may be specifically assigned to him or her from time to time by the
Managing Member the Chief Executive Officer or, the President.  In case of the
absence or disability of the Chief Executive Officer or the President, the
duties of the office of

 

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Chief Executive Officer shall, if the Managing Member or the President has so
authorized, be performed by the Chief Financial Officer.

 

7.5             Vice Presidents.  The Vice President of the Company (a “Vice
President”), or if there be more than one, the Vice Presidents, shall perform
such duties as may be assigned to them from time to time by the Managing Member
or as may be designated by the Chief Executive Officer or the President.  The
Managing Member, the Chief Executive Officer and the President may, from time to
time, designate any number of Vice Presidents as “Senior Vice Presidents,” and
that certain Vice Presidents report to such Senior Vice Presidents.

 

7.6             Secretary.  The secretary of the Company (the “Secretary”) shall
keep all documents described in Section 11.2 and such other documents as may be
required under the Act.  The Secretary shall perform such other duties and have
such other authority as may be prescribed elsewhere in this Agreement or from
time to time by the Chief Executive Officer or the Managing Member.  The
Secretary shall have the general duties, powers and responsibilities of a
secretary of a corporation.

 

7.7             Further Delegation of Authority.  The Managing Member may, from
time to time delegate to any Person (including any Member or Officer) such
authority and powers to act on behalf of the Company as it shall deem advisable
in its discretion.  Any delegation pursuant to this Section 7.7 may be revoked
at any time and for any reason or no reason by the Managing Member.

 

7.8             Fiduciary Duties.  Subject to, and as limited by the provisions
of this Agreement, the Officers, in the performance of their duties as such,
shall owe to the Company and the Members duties of loyalty and due care of the
type owed under the laws of the State of Delaware by the officers of the
Managing Member to the Managing Member and the stockholders of the Managing
Member.  The provisions of this Agreement, to the extent that they restrict the
duties (including fiduciary duties) and liabilities of an Officer otherwise
existing at law or in equity or by operation of the preceding sentence, are
agreed by the Members to replace such duties and liabilities of such Officer.

 

7.9             Performance of Duties; Liability of Officers.  In performing his
or her duties, each of the Officers shall be entitled to rely in good faith on
the provisions of this Agreement and on information, opinions, reports or
statements (including financial statements and information, opinions, reports or
statements as to the value or amount of the assets, liabilities, profits or
losses of the Company and its Subsidiaries or any facts pertinent to the
existence and amount of assets from which Distributions to Unitholders might
properly be paid), of the following other Persons or groups: (a) one or more
Officers or employees of the Company or any of its Subsidiaries, (b) any
attorney, independent accountant or other Person employed or engaged by the
Company or any of its Subsidiaries, or (c) any other Person who has been
selected with reasonable care by or on behalf of the Company or any of its
Subsidiaries, in each case, as to matters which such relying Person reasonably
believes to be within such other Person’s professional or expert competence. 
The preceding sentence shall in no way limit any Person’s right to rely on
information to the extent provided in Section 18-406 of the Act.  No individual
who is an Officer shall be personally liable under any judgment of a court, or
in any other manner, for any debt, obligation or liability of the Company,
whether that liability or obligation arises in contract, tort or otherwise
solely by reason of being an Officer.

 

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7.10      Indemnification.

 

(a)                                 Indemnification.  The Company shall
indemnify and advance expenses to any person who is or was a party or is
threatened to be made a party to any threatened, pending or completed action,
suit, proceeding or claim, whether civil, criminal, administrative or
investigative, by reason of the fact that such person is or was a director or
executive officer of the Company or the Managing Member or, while a director or
executive officer of the Company or the Managing Member, is or was serving at
the request of the Company or the Managing Member as a director or executive
officer of another corporation, partnership, joint venture, trust or other
enterprise, to the fullest extent permitted by the Act; provided that the
foregoing shall not require the Company to indemnify or advance expenses to any
person in connection with any action, suit, proceeding or claim initiated by or
on behalf of such person or any counterclaim against the Company or the Managing
Member initiated by or on behalf of such person. Such indemnification shall not
be exclusive of other indemnification rights arising under any bylaw, agreement,
vote of directors or stockholders or otherwise and shall inure to the benefit of
the heirs and legal representatives of such person.  Neither amendment nor
repeal of this Section 7.10 nor the adoption of any provision of this Agreement
inconsistent with this Section 7.10, nor, to the fullest extent permitted by the
Act, any modification of law, shall eliminate, reduce or otherwise adversely
affect any right or protection of any person granted pursuant hereto in respect
of any matter occurring, or any cause of action, suit or claim that, but for
this Section 7.10, would accrue or arise, prior to such amendment, repeal or
adoption of an inconsistent provision.

 

(b)                                 Rights Non-Exclusive.  The rights to
indemnification and the payment of expenses incurred in defending a Proceeding
in advance of its final disposition conferred in this Section 7.10, shall not be
exclusive of any other right which any person may have or hereafter acquire
under any statute, provision of this Agreement, any other agreement, any vote of
Members or otherwise.

 

(c)                                  Indemnification Agreements and Insurance. 
The Company may enter into agreements with the Managing Member or any Officer to
provide for indemnification consistent with the terms and conditions set forth
in this Section 7.10.  Unless otherwise agreed by the Managing Member, the
Company shall maintain insurance, at its expense, on its own behalf and on
behalf of the Indemnitees against any liability asserted against him or her and
incurred by him or her in any such capacity, whether or not the Company would
have the power to indemnify such person against such liability under this
Section 7.10.

 

(d)                                 Expenses.  Expenses incurred by an
Indemnitee in defending a Proceeding shall be paid by the Company in advance of
such Proceeding’s final disposition upon receipt of an undertaking by or on
behalf of the Indemnitee to repay such amount if it shall ultimately be
determined that he or she is not entitled to be indemnified by the Company. 
Such expenses incurred by other employees and agents may be so paid upon such
terms and conditions, if any, as the Managing Member deems appropriate.  The
indemnification and advancement of expenses set forth in this Section 7.10 shall
continue as to an Indemnitee who has ceased to be a named Indemnitee and shall
inure to the benefit of the heirs, executors, administrators, successors and
permitted assigns of such a Person.

 

(e)                                  Employees and Agents.  Persons who are not
covered by the foregoing provisions of this Section 7.10 and who are or were
Members, employees or agents of the Company, or who are or were serving at the
request of the Company as employees or agents of another limited liability
company, corporation, partnership, joint venture, trust or other enterprise,

 

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may be indemnified to the extent authorized at any time or from time to time by
the Managing Member.

 

(f)                                   Contract Rights.  The provisions of this
Section 7.10 shall be deemed to be a contract right between the Company and each
Officer who serves in such capacity at any time while this Section 7.10 and the
relevant provisions of the Act or other applicable law are in effect, and any
repeal or modification of this Section 7.10 or any such law shall not affect any
rights or obligations then existing with respect to any state of facts or
Proceeding then existing.  The indemnification and other rights provided for in
this Section 7.10 shall inure to the benefit of the heirs, executors and
administrators of any Indemnitee.  Except as provided in Section 7.10 or
Section 7.10, the Company shall indemnify any such Person seeking
indemnification in connection with a Proceeding initiated by such Person only if
such Proceeding was authorized by the Managing Member.

 

(g)                                  Merger or Consolidation; Other
Enterprises.  For purposes of this Section 7.10, references to “the Company”
shall include, in addition to the resulting company, any constituent company
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power and
authority to indemnify its managers, directors, officers, employees or agents,
so that any Person who is or was a manager, director, officer, employee or agent
of such constituent company, or is or was serving at the request of such
constituent company as a director, officer, employee or agent of another
company, partnership, joint venture, trust or other enterprise, shall stand in
the same position under this Section 7.10 with respect to the resulting or
surviving company as he or she would have with respect to such constituent
company if its separate existence had continued.  For purposes of this
Section 7.10, references to “other enterprises” shall include employee benefit
plans; references to “fines” shall include any excise taxes assessed on a Person
with respect to any employee benefit plan; and references to “serving at the
request of the Company” shall include any service as a manager, officer,
employee or agent of the Company that imposes duties on, or involves services
by, such manager, officer, employee or agent with respect to an employee benefit
plan, its participants or beneficiaries; and a Person who acted in good faith
and in a manner such Person reasonably believed to be in the interest of the
participants and beneficiaries of an employee benefit plan shall be deemed to
have acted in a manner “not opposed to the best interests of the Company” as
referred to in this Section 7.10.

 

(h)                                 No Member Recourse.  Anything herein to the
contrary notwithstanding, any indemnity by the Company relating to the matters
covered in this Section 7.10 shall be provided out of and to the extent of
Company assets only and no Member (unless such Member otherwise agrees in
writing or is found in a final decision of a court of competent jurisdiction to
have personal liability on account thereof) shall have personal liability on
account thereof or shall be required to make additional Capital Contributions to
help satisfy such indemnity of the Company.

 

ARTICLE VIII
TAX MATTERS

 

8.1             Preparation of Tax Returns.  The Tax Matters Representative
shall arrange for the preparation and timely filing of all returns required to
be filed by the Company.  Each Member will upon request supply to the Tax
Matters Representative (a) all pertinent information in its possession relating
to the operations of the Company necessary to enable the Company’s returns to be
prepared and filed and (b) information available to the Member regarding the
amount of depletion deductions claimed by, and adjusted tax basis of, such
Member (and to the

 

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extent applicable, direct and indirect owners of the Member) with respect to the
depletable properties of the Company and its Subsidiaries.

 

8.2             Tax Elections.  The taxable year shall be the Fiscal Year unless
the Managing Member shall determine otherwise in compliance with applicable
laws.  The Tax Matters Representative shall determine whether to make or revoke
any available election pursuant to the Code.  Each Member will upon request
supply any information necessary to give proper effect to such election.

 

8.3             Tax Controversies. The Managing Member is hereby designated as
the “tax matters partner” (within the meaning of Section 6231(a)(7) of the Code
prior to amendment by Section 1101(c) of the Bipartisan Budget Act of 2015) of
the Company (with respect to taxable years beginning prior to January 1, 2018),
and shall be the “partnership representative” (within the meaning of
Section 6223(a) of the Code as amended by Section 1101(c) of the Bipartisan
Budget Act of 2015), of the Company (with respect to taxable years beginning
after December 31, 2017) (in each such capacity, the “Tax Matters
Representative”).  The Tax Matters Representative is authorized and required to
represent the Company (at the Company’s expense) in connection with all
examinations of the Company’s affairs by tax authorities, including resulting
administrative and judicial proceedings, and to expend Company funds for
professional services reasonably incurred in connection therewith.  Each Member
agrees to cooperate reasonably with the Company and to do or refrain from doing
any or all things reasonably requested by the Company with respect to the
conduct of such proceedings.  The Tax Matters Representative shall keep the
Members reasonably informed of the progress of any examinations, audits or other
proceedings, and shall provide the Members with information on a full and timely
basis.

 

8.4             Tax Allocations.  All matters concerning allocations for United
States federal, state, and local and non-United States income tax purposes,
including accounting procedures, not expressly provided for by the term of this
Agreement shall be determined in good faith by the Managing Member.

 

8.5             Fiscal Year; Taxable Year.  Each of the Fiscal Year and the
taxable year of the Company shall end on December 31 of each calendar year;
provided that the taxable year of the Company shall end on a different date if
necessary to comply with Section 706 of the Code.

 

ARTICLE IX
TRANSFER OF UNITS; SUBSTITUTE MEMBERS

 

9.1             Restrictions on Transfers.

 

(a)                                 Transfer Restrictions.  Other than as
provided for below in this Section 9.1, no Member may sell, assign, transfer,
grant a participation in, pledge, hypothecate, encumber or otherwise dispose of
(such transaction being herein collectively called a “Transfer”) all or any
portion of its Membership Interest except with the written consent of the
Managing Member, which may be granted or withheld in its sole discretion.
Without the consent of the Managing Member (but otherwise in compliance with
Sections 9.1), a Member may, at any time, (a) Transfer any portion of such
Member’s Membership Interest pursuant to the Exchange Agreement, or (b) Transfer
any portion of such Member’s Membership Interest to a Permitted Transferee of
such Member. Any purported Transfer of all or a portion of a Member’s Membership
Interest not complying with this Section 9.1 shall be void ab initio and shall
not create any obligation on the part of the Company or the other Members to
recognize that

 

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purported Transfer or to recognize the Person to which the Transfer purportedly
was made as a Member. A Person acquiring a Member’s Membership Interest pursuant
to this Section 9.1 shall not be admitted as a substituted or Additional Member
except in accordance with the requirements of Section 9.2, but such Person
shall, to the extent of the Membership Interest transferred to it, be entitled
to such Member’s (i) share of distributions, (ii) share of profits and losses,
including Net Profits and Net Losses, and (iii) Capital Account in accordance
with Section 3.3. Notwithstanding anything in this Section 9.1 or elsewhere in
this Agreement to the contrary, if a Member Transfers all or any portion of its
Membership Interest after the designation of a record date and declaration of a
distribution pursuant to Section 4.1 and before the payment date of such
distribution, the transferring Member (and not the Person acquiring all or any
portion of its Membership Interest) shall be entitled to receive such
distribution in respect of such transferred Membership Interest.

 

(b)                                 Transfer of JEI’s Interest.  JEI may not
Transfer all or any portion of its Membership Interest, except with the written
consent of Members other than the Managing Member that, in the aggregate, own
more than 50% of the Percentage Interests owned by all such other Members.

 

9.2             Recognition of Transfer; Substituted and Additional Members.

 

(a)                                 Except for transfers made pursuant to the
Exchange Agreement, no direct or indirect Transfer of all or any portion of a
Member’s Membership Interest may be made, and no purchaser, assignee, transferee
or other recipient of all or any part of such Membership Interest shall be
admitted to the Company as a substituted or Additional Member hereunder, unless:

 

(i)                                     the provisions of this Article IX, as
applicable, shall have been complied with;

 

(ii)                                  in the case of a proposed Substituted or
Additional Member that is (i) a competitor or potential competitor of JEI, the
Company or their Subsidiaries, (ii) a Person with whom the JEI, the Company or
their Subsidiaries has had or is expected to have a material commercial or
financial relationship or (iii) likely to subject JEI, the Company or their
Subsidiaries to any material legal or regulatory requirement or obligation, or
materially increase the burden thereof, in each case as determined by the
Managing Member in its sole discretion, the admission of the purchaser,
assignee, transferee or other recipient as a Substituted or Additional Member
shall have been approved by the Managing Member;

 

(iii)                               the Managing Member shall have been
furnished with the documents effecting such Transfer, in form and substance
reasonably satisfactory to the Managing Member, executed and acknowledged by
both the seller, assignor or transferor and the purchaser, assignee, transferee
or other recipient, and the Managing Member shall have executed (and the
Managing Member hereby agrees to execute) any other documents on behalf of
itself and the Members required to effect the Transfer;

 

(iv)                              the Managing Member shall be reasonably
satisfied that such Transfer will not (A) result in a violation of the
Securities Act or any other applicable law; or (B) cause an assignment under the
Investment Company Act;

 

(v)                                 such Transfer would not cause the Company to
lose its status as a partnership for federal income tax purposes and, without
limiting the generality of the

 

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foregoing, such Transfer shall not be effected on or through an “established
securities market” or a “secondary market or the substantial equivalent
thereof,” as such terms are used in Regulations Section 1.7704-1;

 

(vi)                              the Managing Member shall have received the
opinion of counsel, if any, required by Section 9.2(c) in connection with such
Transfer; and

 

(vii)                           all necessary instruments reflecting such
Transfer and/or admission shall have been filed in each jurisdiction in which
such filing is necessary in order to qualify the Company to conduct business or
to preserve the limited liability of the Members.

 

(b)                                 Each Substituted Member and Additional
Member shall be bound by all of the provisions of this Agreement. Each
Substituted Member and Additional Member, as a condition to its admission as a
Member, shall execute and acknowledge such instruments (including a counterpart
of this Agreement or a joinder agreement in customary form), in form and
substance reasonably satisfactory to the Managing Member, as the Managing Member
reasonably deems necessary or desirable to effectuate such admission and to
confirm the agreement of such substituted or Additional Member to be bound by
all the terms and provisions of this Agreement with respect to the Membership
Interest acquired by such substituted or Additional Member. The admission of a
Substituted or Additional Member shall not require the consent of any Member
other than the Managing Member (if and to the extent such consent of the
Managing Member is expressly required by this Article IX). As promptly as
practicable after the admission of a Substituted or Additional Member, the books
and records of the Company and Schedule A shall be changed to reflect such
admission.

 

(c)                                  As a further condition to any Transfer of
all or any part of a Member’s Membership Interest, other than Transfers pursuant
to the Exchange Agreement, the Managing Member may, in its discretion, require a
written opinion of counsel to the transferring Member reasonably satisfactory to
the Managing Member, obtained at the sole expense of the transferring Member,
reasonably satisfactory in form and substance to the Managing Member, as to such
matters as are customary and appropriate in transactions of this type,
including, without limitation (or, in the case of any Transfer made to a
Permitted Transferee, limited to an opinion) to the effect that such Transfer
will not result in a violation of the registration or other requirements of the
Securities Act or any other federal or state securities laws. No such opinion,
however, shall be required in connection with a Transfer made pursuant to the
Exchange Agreement.

 

9.3             Expense of Transfer; Indemnification.  All reasonable costs and
expenses incurred by the Managing Member and the Company in connection with any
Transfer of a Member’s Membership Interest, including any filing and recording
costs and the reasonable fees and disbursements of counsel for the Company,
shall be paid by the transferring Member. In addition, the transferring Member
hereby indemnifies the Managing Member and the Company against any losses,
claims, damages or liabilities to which the Managing Member, the Company, or any
of their Affiliates may become subject arising out of or based upon any false
representation or warranty made by, or breach or failure to comply with any
covenant or agreement of, such transferring Member or such transferee in
connection with such Transfer.

 

9.4             Exchange Agreement.  In connection with any Transfer of any
portion of a Member’s Membership Interest pursuant to the Exchange Agreement,
the Managing Member shall cause the Company to take any action as may be
required under the Exchange Agreement or requested by any party thereto to
effect such Transfer promptly.

 

36

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ARTICLE X

DISSOLUTION AND LIQUIDATION

 

10.1      Dissolution.  The Company shall not be dissolved by the admission of
Additional Members or Substituted Members.  The Company shall be dissolved and
its affairs wound up upon the occurrence of any of the following events:

 

(a)                                 an election by the Managing Member to
dissolve, wind up or liquidate the Company;

 

(b)                                 the sale, disposition or transfer of all or
substantially all of the assets of the Company;

 

(c)                                  the entry of a decree of judicial
dissolution of the Company under Section 18-802 of the Act; or

 

(d)                                 at any time there are no members of the
Company, unless the Company is continued in accordance with the Act.

 

Except as otherwise set forth in this Section 10.1, the Company is intended to
have perpetual existence.  An Event of Withdrawal shall not cause a dissolution
of the Company, and the Company shall continue in existence subject to the terms
and conditions of this Agreement.

 

10.2      Liquidation and Termination.

 

(a)                                 On the dissolution of the Company, the
Managing Member shall act as liquidator or (in its sole discretion) may appoint
one (1) or more representatives, Members or other Persons as liquidator(s).  The
liquidators shall proceed diligently to wind up the affairs of the Company and
make final distributions as provided herein and in the Act.  The costs of
liquidation shall be borne as a Company expense.  Until final distribution, the
liquidators shall continue to operate the Company with all of the power and
authority of the Managing Member.  The steps to be accomplished by the
liquidators are as follows:

 

(i)                                     the liquidators shall pay, satisfy or
discharge from Company funds all of the debts, liabilities and obligations of
the Company (including all expenses incurred in liquidation) or otherwise make
adequate provision for payment and discharge thereof (including the
establishment of a cash fund for contingent liabilities in such amount and for
such term as the liquidators may reasonably determine); and

 

(ii)                                  after payment or provision for payment of
all of the Company’s liabilities has been made in accordance with Section 10.1,
all remaining assets of the Company shall be distributed (x) first, to JEI in
respect of the Series A Preferred Units, until JEI has received an amount equal
to the total amount that would then be required to distributed by JEI in respect
of all outstanding shares of Series A Preferred Stock if JEI were to then
liquidate, dissolve and/or wind up and (y) thereafter, in accordance with
Section 4.1(b) (including, if applicable, the provisions of Section 4.4).

 

(b)                                 A final allocation of all items of income,
gain, loss and expense shall be made for the taxable year in which liquidation
occurs (and, if necessary to achieve the result described in this sentence and
permissible under applicable tax law, for prior taxable years) in such a manner
that, immediately before distribution of such remaining assets, the balance of
each

 

37

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Unitholder’s Capital Account shall be equal to the respective net amounts that
would be distributed to such Unitholder under the provisions of
Section 10.2(a)(ii).

 

10.3      Complete Distribution.  The distribution to a Unitholder in accordance
with the provisions of Section 4.1 constitutes a complete return to the
Unitholder of its Capital Contributions and a complete distribution to the
Unitholder of its interest in the Company and all the Company’s property and
constitutes a compromise to which all Unitholders have consented within the
meaning of the Act.

 

10.4      Cancellation of Certificate.  On completion of the distribution of
Company assets as provided herein, the Company is terminated (and the Company
shall not be terminated prior to such time), and the Managing Member (or such
other Person or Persons as the Act may require or permit) shall file a
certificate of cancellation with the Secretary of State of the State of
Delaware, cancel any other filings made pursuant to this Agreement that are or
should be canceled and take such other actions as may be necessary to terminate
the Company.  The Company shall be deemed to continue in existence for all
purposes of this Agreement until it is terminated pursuant to this Section 10.4.

 

10.5      Reasonable Time for Winding Up.  A reasonable time shall be allowed
for the orderly winding up of the business and affairs of the Company and the
liquidation of its assets pursuant to Section 10.2 to minimize any losses
otherwise attendant upon such winding up.

 

10.6      Return of Capital.  The liquidators shall not be personally liable for
the return of Capital Contributions or any portion thereof to the Unitholders
(it being understood that any such return shall be made solely from Company
assets).

 

10.7      HSR Act.  Notwithstanding any other provision in this Agreement, in
the event that the Hart-Scott-Rodino Antitrust Improvements Act of l976 (the
“HSR Act”) is applicable to any Unitholder by reason of the fact that any assets
of the Company shall be distributed to such Unitholder in connection with the
dissolution of the Company, the dissolution of the Company shall not be
consummated until such time as the applicable waiting periods (and extensions
thereof) under the HSR Act have expired or otherwise been terminated with
respect to each such Unitholder.

 

ARTICLE XI
GENERAL PROVISIONS

 

11.1      Power of Attorney.  Each Member hereby constitutes and appoints the
Managing Member and the liquidators, with full power of substitution, as his,
her or its true and lawful agent and attorney-in-fact, with full power and
authority in his, her or its name, place and stead, to execute, swear to,
acknowledge, deliver, file and record in the appropriate public offices (a) this
Agreement, all certificates and other instruments and all amendments thereof in
accordance with the terms hereof that the Managing Member deems appropriate or
necessary to form, qualify, or continue the qualification of, the Company as a
limited liability company in the State of Delaware and in all other
jurisdictions in which the Company may conduct business or own property; (b) all
instruments that the Managing Member deems appropriate or necessary to reflect
any amendment, change, modification or restatement of this Agreement in
accordance with its terms; (c) all conveyances and other instruments or
documents that the Managing Member or the liquidators deem appropriate or
necessary to reflect the dissolution and liquidation of the Company pursuant to
the terms of this Agreement, including a certificate of cancellation; and (d)

 

38

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all instruments relating to the admission, withdrawal or substitution of any
Member pursuant to Article III or Article IV.  The foregoing power of attorney
is irrevocable and coupled with an interest, and shall survive the death,
disability, incapacity, dissolution, bankruptcy, insolvency or termination of
any Member and the Transfer of all or any portion of his, her or its Units and
shall extend to such Member’s heirs, successors, assigns and personal
representatives.

 

11.2      Books and Records.  Any Member holding at least five (5) percent of
the Units or any of their respective designated representatives, in person or by
attorney or other agent, shall, upon written demand stating the purpose thereof,
have the right during the usual hours for business to inspect for any proper
purpose any of the foregoing books or records; provided, that for purposes of
this sentence, a proper purpose shall mean any purpose reasonably related to
such Person’s interest as a Member.  In every instance where an attorney or
other agent shall be the Person who seeks the right to inspection, the demand
shall be accompanied by a power of attorney or such other writing that
authorizes the attorney or other agent to so act on behalf of the Member.  The
demand shall be directed to the Company at its registered office in the State of
Delaware or at its principal place of business.

 

11.3      Amendments.  Subject to Section 3.9(b), this Agreement may be amended,
modified, or waived only by the prior written consent of the Managing Member and
Members holding a majority of the Common Units (other than those held by the
Managing Member); provided, that if any such amendment, modification or waiver
would affect in any material and adverse way any Member disproportionately to
any other Member similarly situated, such amendment, modification or waiver
shall also require the written consent of the Members so materially and
adversely affected.  Notwithstanding the foregoing, any amendment that would
require any Unitholder to contribute or loan additional funds to the Company or
impose personal liability upon any Unitholder shall not be effective against
such Unitholder without its written consent.

 

11.4      Remedies.  Each Unitholder shall have all rights and remedies set
forth in this Agreement and all rights and remedies that such Person has been
granted at any time under any other agreement or contract and all of the rights
that such Person has under any applicable law.  Any Person having any rights
under any provision of this Agreement or any other agreements contemplated
hereby shall be entitled to enforce such rights specifically (without posting a
bond or other security) to recover damages by reason of any breach of any
provision of this Agreement and to exercise all other rights granted by
applicable law.

 

11.5      Successors and Assigns.  All covenants and agreements contained in
this Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective Successors in Interest; provided that no
Person claiming by, through or under a Member (whether as such Member’s
Successor in Interest or otherwise), as distinct from such Member itself, shall
have any rights as, or in respect to, a Member (including the right to approve
or vote on any matter or to notice thereof).

 

11.6      Severability.  Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision or any other jurisdiction, but this Agreement shall be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.

 

39

--------------------------------------------------------------------------------

 

11.7      Counterparts.  This Agreement may be executed simultaneously in two or
more separate counterparts, any one of which need not contain the signatures of
more than one party, but each of which shall be an original and all of which
together shall constitute one and the same agreement binding on all the parties
hereto.

 

11.8      Applicable Law.  This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware, without giving effect to any
choice of law or conflict of law rules or provisions (whether of the State of
Delaware or any other jurisdiction) that would cause the application of the laws
of any jurisdiction other than the State of Delaware.  Any dispute relating
hereto shall be heard in the state or federal courts of Delaware, and the
parties agree to jurisdiction and venue therein.

 

11.9      Addresses and Notices.  All notices, demands or other communications
to be given or delivered under or by reason of the provisions of this Agreement
shall be in writing and shall be deemed to have been given or made when
(a) delivered personally to the recipient, (b) sent by facsimile to the
recipient (with hard copy sent to the recipient by reputable overnight courier
service (charges prepaid) that same day) if sent by facsimile before 5:00
p.m. New York time on a Business Day, and otherwise on the next Business Day, or
(c) one Business Day after being sent to the recipient by reputable overnight
courier service (charges prepaid).  Such notices, demands and other
communications shall be sent to the address for such recipient set forth on
Schedule A attached hereto, or in the Company’s books and records, or to such
other address or to the attention of such other person as the recipient party
has specified by prior written notice to the sending party.  Any notice to the
Managing Member or the Company shall be deemed given if received by the Managing
Member at the principal office of the Company designated pursuant to
Section 2.5.

 

11.10                                               Creditors.  None of the
provisions of this Agreement shall be for the benefit of or enforceable by any
creditors of the Company or any of its Affiliates, and no creditor who makes a
loan to the Company or any of its Affiliates may have or acquire (except
pursuant to the terms of a separate agreement executed by the Company in favor
of such creditor) at any time as a result of making the loan any direct or
indirect interest in Company profits, losses, Distributions, capital or property
other than as a secured creditor.

 

11.11                                               Waiver.  No failure by any
party to insist upon the strict performance of any covenant, duty, agreement or
condition of this Agreement or to exercise any right or remedy consequent upon a
breach thereof shall constitute a waiver of any such breach or any other
covenant, duty, agreement or condition.

 

11.12                                               Further Action.  The parties
agree to execute and deliver all documents, provide all information and take or
refrain from taking such actions as may be necessary or appropriate to achieve
the purposes of this Agreement.

 

11.13                                               Entire Agreement.  This
Agreement, the other Transaction Documents and those documents expressly
referred to herein related to the subject matter hereof embody the complete
agreement and understanding among the parties hereto and supersede and preempt
any prior understandings, agreements or representations by or among the parties
hereto, written or oral, that may have related to the subject matter hereof in
any way.

 

11.14                                               Delivery by Facsimile or
Email.  This Agreement, the agreements referred to herein, and each other
agreement or instrument entered into in connection herewith or therewith or
contemplated hereby or thereby, and any amendments hereto or thereto, to the
extent

 

40

--------------------------------------------------------------------------------

 

signed and delivered by means of a facsimile machine or email with scan or
facsimile attachment, shall be treated in all manner and respects as an original
agreement or instrument and shall be considered to have the same binding legal
effect as if it were the original signed version thereof delivered in person. 
At the request of any party hereto or to any such agreement or instrument, each
other party hereto or thereto shall re-execute original forms thereof and
deliver them to all other parties.  No party hereto or to any such agreement or
instrument shall raise the use of a facsimile machine or email to deliver a
signature or the fact that any signature or agreement or instrument was
transmitted or communicated through the use of a facsimile machine or email as a
defense to the formation or enforceability of a contract, and each such party
forever waives any such defense.

 

11.15                                               Survival.  Sections 5.4,
5.5, 6.2, 7.10, 8.3, 11.14, 11.15, and 11.16 shall survive and continue in full
force in accordance with its terms, notwithstanding any termination of this
Agreement or the dissolution of the Company.

 

11.16                                               Confidentiality.

 

(a)                                 The Company shall not, nor shall it permit
any Subsidiary to, disclose any Member’s name or identity as an investor in the
Company in any press release or other public announcement or in any document or
material filed with any Governmental Entity, without the prior written consent
of such Member, which shall not be unreasonably withheld or delayed, unless such
disclosure is otherwise required by applicable law or by any regulatory or
self-regulatory organization having jurisdiction or by order of a court of
competent jurisdiction, in which case (except with respect to disclosure that is
required in connection with the filing of federal, state and local tax returns)
prior to making such disclosure the Company shall give written notice to such
Member describing in reasonable detail the proposed content of such disclosure
and shall permit such Member to review and comment upon the form and substance
of such disclosure and allow such Member to seek confidential treatment
therefor.

 

(b)                                 Each Member expressly agrees to maintain,
for so long as such Person is a Member and for two (2) years thereafter, the
confidentiality of, and not to disclose to any Person other than the Company
(and any successor of the Company or any Person acquiring (whether by merger,
consolidation, sale, exchange or otherwise) all or a material portion of the
assets or Equity Securities of the Company or any of its Subsidiaries), another
Member or a Person designated by the Company or any of their respective
financial planners, accountants, attorneys or other advisors, any information
relating to the business (current or proposed), financial structure, financial
position or financial results, clients or affairs of the Company or any of its
Subsidiaries that shall not be generally known to the public, except (i) as
otherwise required by applicable law or by any regulatory or self-regulatory
organization having jurisdiction or by order of a court of competent
jurisdiction, in which case (except with respect to disclosure that is required
in connection with the filing of federal, state and local tax returns or by any
regulatory or self-regulatory organization) prior to making such disclosure such
Member shall give written notice to the Company describing in reasonable detail
the proposed content of such disclosure and shall permit the Company to review
and comment upon the form and substance of such disclosure and allow the Company
to seek confidential treatment therefor, and (ii) in the case of any Member who
is employed by the Company or any of its Subsidiaries, in the ordinary course of
his or her duties to the Company or any of its Subsidiaries; provided, however,
that a Member may report to its stockholders, limited partners, members or other
owners, as the case may be, regarding the general status of its investment in
the Company (without disclosing specific confidential information). 
Notwithstanding the provisions of this Section 11.16 to the contrary, if any
Unitholder desires to undertake any Transfer of its Units permitted by this
Agreement, such

 

41

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holder may, upon the execution of a confidentiality agreement (in form
reasonably acceptable to the Company’s legal counsel) by any bona fide potential
Transferee, disclose to such potential Transferee information of the sort
otherwise restricted by this Section 11.16 if such holder reasonably believes
such disclosure is necessary for the purpose of Transferring such Units to the
bona fide potential Transferee.

 

[SIGNATURE PAGES FOLLOW]

 

42

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SIGNATURE PAGES TO
LIMITED LIABILITY COMPANY AGREEMENT

 

IN WITNESS WHEREOF, the undersigned have executed or caused to be executed on
their behalf this Agreement as of the date first written above.

 

 

JONES ENERGY HOLDINGS, LLC

 

 

 

 

 

By:

/s/ Jonny Jones

 

 

Jonny Jones

 

 

Chief Executive Officer

 

 

 

 

JONES ENERGY DRILLING FUND, LP

 

 

 

By:

Jones Energy Management, LLC, its

 

General Partner

 

 

 

 

By:

/s/ Jonny Jones

 

 

Jonny Jones

 

 

Manager

 

 

 

 

JONES ENERGY EQUITY PARTNERS, LP

 

 

 

 

By:

Jones Energy Management, LLC, its

 

General Partner

 

 

 

 

By:

/s/ Jonny Jones

 

 

Jonny Jones

 

 

Manager

 

 

 

 

JONES ENERGY EQUITY PARTNERS II, LP

 

 

 

 

By:

Jones Energy Management, LLC, its

 

General Partner

 

 

 

 

By:

/s/ Jonny Jones

 

 

Jonny Jones

 

 

Manager

 

Signature Page to

Fourth Amended and Restated LLC Agreement of

Jones Energy Holdings, LLC

 

--------------------------------------------------------------------------------

 

 

JONES ENERGY TEAM 3, LP

 

 

 

 

By:

JET 3 GP, LLC

 

Its:

General Partner

 

 

 

 

By:

Jon Rex Jones Jr. Trust V

 

Its:

Managing Member

 

 

 

 

By:

/s/ Jonny Jones

 

 

Jonny Jones

 

 

Trustee

 

 

 

 

JONES ENERGY, INC.

 

 

 

 

 

 

 

By:

/s/ Jonny Jones

 

 

Jonny Jones

 

 

Chief Executive Officer

 

Signature Page to

Fourth Amended and Restated LLC Agreement of

Jones Energy Holdings, LLC

 

--------------------------------------------------------------------------------

 

 

MCP (C) II JONES INTERMEDIATE LLC

 

 

 

By:

Metalmark Capital Partners II GP, L.P.

 

Its:

General Partner

 

 

 

 

By:

Metalmark Capital Holdings LLC

 

Its:

General Partner

 

 

 

 

 

 

 

By:

/s/ Gregory D. Myers

 

 

Name:

Gregory D. Myers

 

 

Title:

Managing Director

 

 

 

 

MCP II CO-INVESTMENT JONES INTERMEDIATE LLC

 

 

 

 

 

By:

/s/ Gregory D. Myers

 

 

Name:

Gregory D. Myers

 

 

Title:

Managing Director

 

 

 

 

MCP II JONES INTERMEDIATE LLC

 

 

 

 

 

By:

/s/ Gregory D. Myers

 

 

Name:

Gregory D. Myers

 

 

Title:

Managing Director

 

 

 

 

MCP II (TE) AIF JONES INTERMEDIATE LLC

 

 

 

 

 

By:

/s/ Gregory D. Myers

 

 

Name:

Gregory D. Myers

 

 

Title:

Managing Director

 

 

 

MCP II (CAYMAN) AIF JONES INTERMEDIATE LLC

 

 

 

By:

/s/ Gregory D. Myers

 

 

Name:

Gregory D. Myers

 

 

Title:

Managing Director

 

 

 

MCP II EXECUTIVE FUND JONES INTERMEDIATE LLC

 

 

 

By:

/s/ Gregory D. Myers

 

 

Name:

Gregory D. Myers

 

 

Title:

Managing Director

 

Signature Page to

Fourth Amended and Restated LLC Agreement of

Jones Energy Holdings, LLC

 

--------------------------------------------------------------------------------

 

SCHEDULE A

 

SCHEDULE OF MEMBERS

 

As of August 26, 2016

 

 

 

Number of

 

 

 

Number of Series A

 

Name and Address of Member

 

Common Units

 

Percentage Interest

 

Preferred Units

 

MCP (C) II Jones Intermediate LLC (DBA: Metalmark Capital

 

7,182,989

 

8.5827%

 

—

 

Partners (c) II LP)

 

 

 

 

 

 

 

c/o Metalmark Capital Holdings, LLC

 

 

 

 

 

 

 

1177 Avenue of the Americas, 40th Floor

 

 

 

 

 

 

 

New York, NY 10036

 

 

 

 

 

 

 

Attention: Gregory D. Myers

 

 

 

 

 

 

 

Fax No: (212) 823 1949

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

with a copy, which shall not constitute notice, to:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Kirkland & Ellis LLP

 

 

 

 

 

 

 

601 Lexington Avenue

 

 

 

 

 

 

 

New York, NY 10022

 

 

 

 

 

 

 

Attention: Frederick Tanne, P.C. and Joshua M. Kogan

 

 

 

 

 

 

 

Facsimile No.: (212) 446 6460

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

MCP II Co-Investment Jones Intermediate LLC (DBA: Metalmark

 

1,791,914

 

2.1411%

 

—

 

Capital Partners II Co-Investment LP)

 

 

 

 

 

 

 

c/o Metalmark Capital Holdings, LLC

 

 

 

 

 

 

 

1177 Avenue of the Americas, 40th Floor

 

 

 

 

 

 

 

New York, NY 10036

 

 

 

 

 

 

 

Attention: Gregory D. Myers

 

 

 

 

 

 

 

Fax No: (212) 823 1949

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

with a copy, which shall not constitute notice, to:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Kirkland & Ellis LLP

 

 

 

 

 

 

 

601 Lexington Avenue

 

 

 

 

 

 

 

New York, NY 10022

 

 

 

 

 

 

 

Attention: Frederick Tanne, P.C. and Joshua M. Kogan

 

 

 

 

 

 

 

Facsimile No.: (212) 446 6460

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

MCP II Jones Intermediate LLC (DBA: Metalmark Capital

 

3,357,483

 

4.0117%

 

—

 

Partners II LP)

 

 

 

 

 

 

 

c/o Metalmark Capital Holdings, LLC

 

 

 

 

 

 

 

1177 Avenue of the Americas, 40th Floor

 

 

 

 

 

 

 

New York, NY 10036

 

 

 

 

 

 

 

Attention: Gregory D. Myers

 

 

 

 

 

 

 

Fax No: (212) 823 1949

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

with a copy, which shall not constitute notice, to:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Kirkland & Ellis LLP

 

 

 

 

 

 

 

601 Lexington Avenue

 

 

 

 

 

 

 

New York, NY 10022

 

 

 

 

 

 

 

Attention: Frederick Tanne, P.C. and Joshua M. Kogan

 

 

 

 

 

 

 

Facsimile No.: (212) 446 6460

 

 

 

 

 

 

 

 

--------------------------------------------------------------------------------

 

 

 

Number of

 

 

 

Number of Series A

 

Name and Address of Member

 

Common Units

 

Percentage Interest

 

Preferred Units

 

MCP II (TE) AIF Jones Intermediate LLC (DBA: MCP II TE AIF LP)

 

2,570,033

 

3.0708%

 

—

 

c/o Metalmark Capital Holdings, LLC

 

 

 

 

 

 

 

1177 Avenue of the Americas, 40th Floor

 

 

 

 

 

 

 

New York, NY 10036

 

 

 

 

 

 

 

Attention: Gregory D. Myers

 

 

 

 

 

 

 

Fax No: (212) 823 1949

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

with a copy, which shall not constitute notice, to:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Kirkland & Ellis LLP

 

 

 

 

 

 

 

601 Lexington Avenue

 

 

 

 

 

 

 

New York, NY 10022

 

 

 

 

 

 

 

Attention: Frederick Tanne, P.C. and Joshua M. Kogan

 

 

 

 

 

 

 

Facsimile No.: (212) 446 6460

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

MCP II (Cayman) AIF Jones Intermediate LLC (DBA: MCP II Cayman AIF LP)

 

2,973,397

 

3.5528%

 

—

 

c/o Metalmark Capital Holdings, LLC

 

 

 

 

 

 

 

1177 Avenue of the Americas, 40th Floor

 

 

 

 

 

 

 

New York, NY 10036

 

 

 

 

 

 

 

Attention: Gregory D. Myers

 

 

 

 

 

 

 

Fax No: (212) 823 1949

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

with a copy, which shall not constitute notice, to:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Kirkland & Ellis LLP

 

 

 

 

 

 

 

601 Lexington Avenue

 

 

 

 

 

 

 

New York, NY 10022

 

 

 

 

 

 

 

Attention: Frederick Tanne, P.C. and Joshua M. Kogan

 

 

 

 

 

 

 

Facsimile No.: (212) 446 6460

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

MCP II Executive Fund Jones Intermediate LLC (DBA: Metalmark Capital Partners II
Executive Fund LP)

 

328,400

 

0.3924%

 

—

 

c/o Metalmark Capital Holdings, LLC

 

 

 

 

 

 

 

1177 Avenue of the Americas, 40th Floor

 

 

 

 

 

 

 

New York, NY 10036

 

 

 

 

 

 

 

Attention: Gregory D. Myers

 

 

 

 

 

 

 

Fax No: (212) 823 1949

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

with a copy, which shall not constitute notice, to:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Kirkland & Ellis LLP

 

 

 

 

 

 

 

601 Lexington Avenue

 

 

 

 

 

 

 

New York, NY 10022

 

 

 

 

 

 

 

Attention: Frederick Tanne, P.C. and Joshua M. Kogan

 

 

 

 

 

 

 

Facsimile No.: (212) 446 6460

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Jones Energy Drilling Fund, LP

 

5,479,437

 

6.5472%

 

—

 

807 Las Cimas Parkway, Suite 370

 

 

 

 

 

 

 

Austin, Texas 78746

 

 

 

 

 

 

 

Attention: Robin Picard

 

 

 

 

 

 

 

Facsimile No.: (512) 328 6971

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

with a copy, which shall not constitute notice, to:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Baker Botts LLP

 

 

 

 

 

 

 

1500 San Jacinto Center

 

 

 

 

 

 

 

Austin, Texas 78701

 

 

 

 

 

 

 

Attention: Mike Bengtson

 

 

 

 

 

 

 

Facsimile No.: (512) 322 8349

 

 

 

 

 

 

 

 

--------------------------------------------------------------------------------

 

 

 

Number of

 

 

 

Number of Series A

 

Name and Address of Member

 

Common Units

 

Percentage Interest

 

Preferred Units

 

Jones Energy Equity Partners, LP

 

1,788,076

 

2.1365%

 

—

 

807 Las Cimas Parkway, Suite 370

 

 

 

 

 

 

 

Austin, Texas 78746

 

 

 

 

 

 

 

Attention: Robin Picard

 

 

 

 

 

 

 

Facsimile No.: (512) 328 6971

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

with a copy, which shall not constitute notice, to:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Baker Botts LLP

 

 

 

 

 

 

 

1500 San Jacinto Center

 

 

 

 

 

 

 

Austin, Texas 78701

 

 

 

 

 

 

 

Attention: Mike Bengtson

 

 

 

 

 

 

 

Facsimile No.: (512) 322 8349

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Jones Energy Equity Partners II, LP

 

2,938,050

 

3.5106%

 

—

 

807 Las Cimas Parkway, Suite 370

 

 

 

 

 

 

 

Austin, Texas 78746

 

 

 

 

 

 

 

Attention: Robin Picard

 

 

 

 

 

 

 

Facsimile No.: (512) 328 6971

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

with a copy, which shall not constitute notice, to:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Baker Botts LLP

 

 

 

 

 

 

 

1500 San Jacinto Center

 

 

 

 

 

 

 

Austin, Texas 78701

 

 

 

 

 

 

 

Attention: Mike Bengtson

 

 

 

 

 

 

 

Facsimile No.: (512) 322 8349

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Jones Energy Team 3, LP

 

1,462,647

 

1.7477%

 

—

 

807 Las Cimas Parkway, Suite 370

 

 

 

 

 

 

 

Austin, Texas 78746

 

 

 

 

 

 

 

Attention: Robin Picard

 

 

 

 

 

 

 

Facsimile No.: (512) 328 6971

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

with a copy, which shall not constitute notice, to:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Baker Botts LLP

 

 

 

 

 

 

 

1500 San Jacinto Center

 

 

 

 

 

 

 

Austin, Texas 78701

 

 

 

 

 

 

 

Attention: Mike Bengtson

 

 

 

 

 

 

 

Facsimile No.: (512) 322 8349

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Jones Energy, Inc.

 

53,819,222(1)(2)(3)

 

64.3066%

 

1,600,000(3)

 

807 Las Cimas Parkway, Suite 350

 

 

 

 

 

 

 

Austin, Texas 78746

 

 

 

 

 

 

 

Attention: Robin Picard

 

 

 

 

 

 

 

Facsimile No.: (512) 328 6971

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

with a copy, which shall not constitute notice, to:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Baker Botts LLP

 

 

 

 

 

 

 

1500 San Jacinto Center

 

 

 

 

 

 

 

Austin, Texas 78701

 

 

 

 

 

 

 

Attention: Mike Bengtson

 

 

 

 

 

 

 

Facsimile No.: (512) 322 8349

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL

 

83,691,648

 

100.0%

 

1,600,000

 

 

--------------------------------------------------------------------------------

(1) 139,825 of the Units of the 53,819,222 correspond with restricted stock
shares of Jones Energy, Inc. granted on May 27, 2016 which vest on May 15, 2017.
Unless the recipient makes a valid IRC Sec. 83(b) election, such Units will not
be deemed outstanding for Jones Energy Holdings, LLC until the vesting date.

 

(2) Number of Units reflects selling through the Jones Energy, Inc. continuous
offering program (“ATM Program”) as of the most recent practicable date, and may
not reflect additional sales under the ATM Program since such date.

 

(3) Number of Units does not include Units issued pursuant to exercise of
underwriters’ overallotment options in the August 2016 Offering Transactions. 
This Exhibit will be updated if such option is exercised.

 

--------------------------------------------------------------------------------