Exhibit 10.5

 

Execution Version

 

 

 

CENTENNIAL RESOURCE PRODUCTION, LLC

 

FIFTH AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT

 

Dated as of October 11, 2016

 

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THE COMPANY INTERESTS REPRESENTED BY THIS FIFTH 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 COMPANY 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.

 

 

 

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TABLE OF CONTENTS

 

 

 

Page

 

 

 

Article I. DEFINITIONS

2

 

 

 

Article II. ORGANIZATIONAL MATTERS

14

Section 2.01

Formation of Company

14

Section 2.02

Fifth Amended and Restated Limited Liability Company Agreement

14

Section 2.03

Name

14

Section 2.04

Purpose

14

Section 2.05

Principal Office; Registered Office

14

Section 2.06

Term

15

Section 2.07

No State-Law Partnership

15

 

 

 

Article III. MEMBERS; UNITS; CAPITALIZATION

15

Section 3.01

Members

15

Section 3.02

Units

15

Section 3.03

Recapitalization; the Corporation’s Capital Contribution; the Corporation’s
Purchase of Common Units

16

Section 3.04

Authorization and Issuance of Additional Units

16

Section 3.05

Repurchases or Redemptions

18

Section 3.06

Certificates Representing Units; Lost, Stolen or Destroyed Certificates;
Registration and Transfer of Units

18

Section 3.07

Negative Capital Accounts

19

Section 3.08

No Withdrawal

19

Section 3.09

Loans From Members

19

Section 3.10

Tax Treatment of Corporate Stock Option Plans and Equity Plans

19

Section 3.11

Dividend Reinvestment Plan, Cash Option Purchase Plan, Stock Incentive Plan or
Other Plan

21

 

 

 

Article IV. DISTRIBUTIONS

21

Section 4.01

Distributions

21

Section 4.02

Restricted Distributions

22

 

 

 

Article V. CAPITAL ACCOUNTS; ALLOCATIONS; TAX MATTERS

22

Section 5.01

Capital Accounts

22

Section 5.02

Allocations

23

Section 5.03

Regulatory and Special Allocations

24

Section 5.04

Tax Allocations

25

Section 5.05

Withholding; Indemnification and Reimbursement for Payments on Behalf of a
Member

27

 

 

 

Article VI. MANAGEMENT

28

Section 6.01

Authority of Manager

28

Section 6.02

Actions of the Manager

29

Section 6.03

Resignation; No Removal

29

 

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Section 6.04

Vacancies

29

Section 6.05

Transactions Between Company and Manager

29

Section 6.06

Reimbursement for Expenses

29

Section 6.07

Delegation of Authority

30

Section 6.08

Limitation of Liability of Manager

30

Section 6.09

Investment Company Act

31

Section 6.10

Outside Activities of the Manager

31

Section 6.11

Standard of Care

31

 

 

 

Article VII. RIGHTS AND OBLIGATIONS OF MEMBERS

32

Section 7.01

Limitation of Liability and Duties of Members; Investment Opportunities

32

Section 7.02

Lack of Authority

33

Section 7.03

No Right of Partition

33

Section 7.04

Indemnification

33

Section 7.05

Members Right to Act

34

Section 7.06

Inspection Rights

35

 

 

 

Article VIII. BOOKS, RECORDS, ACCOUNTING AND REPORTS, AFFIRMATIVE COVENANTS

36

Section 8.01

Records and Accounting

36

Section 8.02

Fiscal Year

36

Section 8.03

Reports

36

 

 

 

Article IX. TAX MATTERS

36

Section 9.01

Preparation of Tax Returns

36

Section 9.02

Tax Elections

37

Section 9.03

Tax Controversies

37

 

 

 

Article X. RESTRICTIONS ON TRANSFER OF UNITS; PREEMPTIVE RIGHTS

38

Section 10.01

Transfers by Members

38

Section 10.02

Permitted Transfers

38

Section 10.03

Restricted Units Legend

39

Section 10.04

Transfer

39

Section 10.05

Assignee’s Rights

40

Section 10.06

Assignor’s Rights and Obligations

40

Section 10.07

Overriding Provisions

40

 

 

 

Article XI. REDEMPTION AND EXCHANGE RIGHTS

41

Section 11.01

Redemption Right of a Member

41

Section 11.02

Contribution of the Corporation

45

Section 11.03

Exchange Right of the Corporation

45

Section 11.04

Reservation of Shares of Class A Common Stock; Listing; Certificate of the
Corporation

46

Section 11.05

Effect of Exercise of Redemption or Exchange Right

46

Section 11.06

Tax Treatment

46

 

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Article XII. ADMISSION OF MEMBERS

47

Section 12.01

Substituted Members

47

Section 12.02

Additional Members

47

 

 

 

Article XIII. WITHDRAWAL AND RESIGNATION; TERMINATION OF RIGHTS

47

Section 13.01

Withdrawal and Resignation of Members

47

 

 

 

Article XIV. DISSOLUTION AND LIQUIDATION

47

Section 14.01

Dissolution

47

Section 14.02

Liquidation and Termination

48

Section 14.03

Deferment; Distribution in Kind

48

Section 14.04

Cancellation of Certificate

49

Section 14.05

Reasonable Time for Winding Up

49

Section 14.06

Return of Capital

49

 

 

 

Article XV. VALUATION

49

Section 15.01

Determination

49

Section 15.02

Dispute Resolution

49

 

 

 

Article XVI. GENERAL PROVISIONS

50

Section 16.01

Power of Attorney

50

Section 16.02

Confidentiality

51

Section 16.03

Amendments

51

Section 16.04

Title to Company Assets

52

Section 16.05

Addresses and Notices

52

Section 16.06

Binding Effect; Intended Beneficiaries

52

Section 16.07

Creditors

52

Section 16.08

Waiver

53

Section 16.09

Counterparts

53

Section 16.10

Applicable Law

53

Section 16.11

Severability

53

Section 16.12

Further Action

53

Section 16.13

Delivery by Electronic Transmission

53

Section 16.14

Right of Offset

53

Section 16.15

Effectiveness

54

Section 16.16

Entire Agreement

54

Section 16.17

Remedies

54

Section 16.18

Descriptive Headings; Interpretation

54

 

Schedules

 

 

 

 

 

Schedule 1

—

Initial Schedule of Members

 

 

 

Exhibits

 

 

 

 

 

Exhibit A

—

Form of Joinder Agreement

 

iv

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CENTENNIAL RESOURCE PRODUCTION, LLC

 

FIFTH AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT

 

This FIFTH AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT (this
“Agreement”), dated as of October 11, 2016, is entered into by and among
Centennial Resource Production, LLC, a Delaware limited liability company (the
“Company”), and its Members (as defined herein).

 

WHEREAS, the Company was formed as a limited liability company pursuant to and
in accordance with the Delaware Act (as defined herein) by the filing of the
Certificate (as defined herein) with the Secretary of State of the State of
Delaware pursuant to Section 18-201 of the Delaware Act on August 10, 2012;

 

WHEREAS, the Company entered into a Limited Liability Company Agreement of the
Company, dated as of August 30, 2012 (as amended, restated, amended and
restated, supplemented or otherwise modified from time to time to but excluding
December 17, 2012, together with all schedules, exhibits and annexes thereto,
the “Initial LLC Agreement”), with the members of the Company party thereto;

 

WHEREAS, the Company entered into an Amended and Restated Limited Liability
Company Agreement of the Company, dated as of December 17, 2012 (as amended,
restated, amended and restated, supplemented or otherwise modified from time to
time to but excluding May 16, 2013, together with all schedules, exhibits and
annexes thereto, the “First A&R LLC Agreement”), with the members of the Company
party thereto;

 

WHEREAS, the Company entered into a Second Amended and Restated Limited
Liability Company Agreement of the Company, dated as of May 16, 2013 (as
amended, restated, amended and restated, supplemented or otherwise modified from
time to time to but excluding October 15, 2014, together with all schedules,
exhibits and annexes thereto, the “Second A&R LLC Agreement”), with the members
of the Company party thereto;

 

WHEREAS, the Company entered into a Third Amended and Restated Limited Liability
Company Agreement of the Company, dated as of October 15, 2014 (as amended,
restated, amended and restated, supplemented or otherwise modified from time to
time to but excluding April 15, 2015, together with all schedules, exhibits and
annexes thereto, the “Third A&R LLC Agreement”), with the members of the Company
party thereto;

 

WHEREAS, the Company entered into a Fourth Amended and Restated Limited
Liability Company Agreement of the Company, dated as of April 15, 2015 (as
amended, restated, amended and restated, supplemented or otherwise modified from
time to time to but excluding the date hereof, together with all schedules,
exhibits and annexes thereto, the “Fourth A&R LLC Agreement”), with Centennial
Resource Development, LLC, a Delaware limited liability company (“CRD”), NGP
Centennial Follow-On LLC, a Delaware limited liability company

 

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(“NGP Follow-On”), and Celero Energy Company, LP, a Delaware limited partnership
(“Celero” and, together with CRD and NGP Follow-On, the “Original Members”), in
their respective capacity as members of the Company;

 

WHEREAS, immediately prior to the Effective Time, the Original Members held
Class A membership interests in the Company (the “Original Class A Interests”)
and Class B membership interests in the Company (the “Original Class B
Interests” and, together with the Original Class A Interests, the “Original
Interests”);

 

WHEREAS, the Company and the Original Members desire to amend and restate the
Fourth A&R LLC Agreement as of the Effective Time (as defined herein) to reflect
(a) the Recapitalization (as defined herein) and the consummation of the
transactions contemplated by the Contribution Agreement (as defined herein),
(b) the Common Unit Purchase (as defined herein) and the addition of Centennial
Resource Development, Inc. (f/k/a Silver Run Acquisition Corporation), a
Delaware corporation (the “Corporation”), as a Member, (c) the Corporation’s
designation as the Manager (as defined herein), and (d) the rights and
obligations of the Members that are enumerated and agreed upon in the terms of
this Agreement effective as of the Effective Time, at which time the Fourth A&R
LLC Agreement shall be superseded entirely by this Agreement; and

 

WHEREAS, in connection with the Recapitalization and as of the Effective Time,
the Original Interests of each Original Member will be canceled and Common Units
(as defined herein) will be issued as contemplated by this Agreement;

 

NOW, THEREFORE, in consideration of the mutual covenants contained herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Company and the Members, intending to be legally bound,
hereby agree as follows:

 

ARTICLE I.
DEFINITIONS

 

The following definitions shall be applied to the terms used in this Agreement
for all purposes, unless otherwise clearly indicated to the contrary.

 

“Additional Member” has the meaning set forth in Section 12.02.

 

“Adjusted Capital Account Deficit” means with respect to the Capital Account of
any Member 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 Member’s Capital
Account balance shall be:

 

(a)                                 reduced for any items described in Treasury
Regulations Section 1.704- 1(b)(2)(ii)(d)(4), (5), and (6); and

 

(b)                                 increased for any amount such Member is
obligated to contribute or is treated as being obligated to contribute to the
Company pursuant to Treasury Regulations Section 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).

 

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“Admission Date” has the meaning set forth in Section 10.06.

 

“Affiliate” (and, with a correlative meaning, “Affiliated”) means, with respect
to a specified Person, each other Person that directly, or indirectly through
one or more intermediaries, controls or is controlled by, or is under common
control with, the Person specified.  As used in this definition and the
definition of Majority Member, “control” (including with correlative meanings,
“controlled by” and “under common control with”) means possession, directly or
indirectly, of power to direct or cause the direction of management or policies
(whether through ownership of voting securities or by contract or other
agreement).

 

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

 

“Appraisers” has the meaning set forth in Section 15.02.

 

“Assignee” means a Person to whom a Company Interest has been transferred but
who has not become a Member pursuant to Article XII.

 

“Base Rate” means, on any date, a variable rate per annum equal to the rate of
interest most recently published by The Wall Street Journal as the “prime rate”
at large U.S. money center banks.

 

“Black-Out Period” means any “black-out” or similar period under the
Corporation’s policies covering trading in the Corporation’s securities to which
the applicable Redeemed Member is subject, which period restricts the ability of
such Redeemed Member to immediately resell shares of Class A Common Stock to be
delivered to such Redeemed Member in connection with a Share Settlement.

 

“Book Value” means, with respect to any Company property, the Company’s adjusted
basis for U.S. federal income tax purposes, adjusted from time to time to
reflect the adjustments required or permitted by Treasury Regulations Sections
1.704-1(b)(2)(iv)(d)-(g) and 1.704-1(b)(2)(iv)(s); provided, that if any
noncompensatory options (including the Warrants) are outstanding upon the
occurrence of any adjustment described herein, the Company shall adjust the Book
Values of its properties in accordance with Treasury Regulations Sections
1.704-1(b)(2)(iv)(f)(1) and 1.704-1(b)(2)(iv)(h)(2).

 

“Business Day” means any day other than a Saturday or a Sunday or a day on which
banks located in New York City, New York generally are authorized or required by
Law to close.

 

“Capital Account” means the capital account maintained for a Member in
accordance with Section 5.01.

 

“Capital Contribution” means, with respect to any Member, the amount of any
cash, cash equivalents, promissory obligations or the Fair Market Value of other
property that such Member contributes (or is deemed to contribute) to the
Company pursuant to Article III hereof.

 

“Cash Settlement” means immediately available funds in U.S. dollars in an amount
equal to the product of (a) the Share Settlement and (b) the Common Unit
Redemption Price.

 

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“Celero” has the meaning set forth in the recitals to this Agreement.

 

“Certificate” means the Company’s Certificate of Formation as filed with the
Secretary of State of Delaware.

 

“Change of Control Transaction” means (a) a sale of all or substantially all of
the Company’s assets determined on a consolidated basis, (b) a sale of a
majority of the Company’s outstanding Units (other than (i) to the Corporation
or (ii) in connection with a Redemption or Direct Exchange in accordance with
Article XI) or (c) a sale of a majority of the outstanding voting securities of
any Material Subsidiary of the Company; in any such case, whether by merger,
recapitalization, consolidation, reorganization, combination or otherwise;
provided, however, that neither (w) a transaction solely between the Company or
any of its Subsidiaries, on the one hand, and the Company or any of its
Subsidiaries, on the other hand, nor (x) a transaction solely for the purpose of
changing the jurisdiction of domicile of the Company, nor (y) a transaction
solely for the purpose of changing the form of entity of the Company, nor (z) a
sale of a majority of the outstanding shares of Class A Common Stock, whether by
merger, recapitalization, consolidation, reorganization, combination or
otherwise, shall in each case of clauses (w), (x), (y) and (z) constitute a
Change of Control Transaction.

 

“Class A Common Stock” means the Class A Common Stock, par value $0.0001 per
share, of the Corporation.

 

“Class A Warrants” has the meaning set forth in Section 3.03(b).

 

“Class B Common Stock” means the Class B Common Stock, par value $0.0001 per
share, of the Corporation.

 

“Class C Common Stock” means the Class C Common Stock, par value $0.0001 per
share, of the Corporation.

 

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

 

“Common Stock” means all classes and series of common stock of the Corporation,
including the Class A Common Stock and the Class C Common Stock.

 

“Common Unit” means a Unit representing a fractional part of the Company
Interests of the Members and having the rights and obligations specified with
respect to the Common Units in this Agreement.

 

“Common Unit Purchase” has the meaning set forth in Section 3.03(c).

 

“Common Unit Redemption Price” means the average of the volume-weighted closing
price for a share of Class A Common Stock on the principal U.S. securities
exchange or automated or electronic quotation system on which the Class A Common
Stock trades, as reported by Bloomberg, L.P., or its successor, for each of the
five (5) consecutive full Trading Days ending on and including the last full
Trading Day immediately prior to the Redemption Notice Date, subject to
appropriate and equitable adjustment for any stock splits, reverse splits, stock
dividends or similar events affecting the Class A Common Stock.  If the Class A
Common

 

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Stock no longer trades on a securities exchange or automated or electronic
quotation system, then the Common Unit Redemption Price shall be the fair market
value of one share of Class A Common Stock, as determined by a majority of the
Independent Directors in good faith, that would be obtained in an arms-length
transaction between an informed and willing buyer and an informed and willing
seller, with neither party having any compulsion to buy or sell, and without
regard to the particular circumstances of the buyer or seller.

 

“Company” has the meaning set forth in the preamble to this Agreement.

 

“Company Interest” means the interest of a Member in Profits, Losses and
Distributions.

 

“Company Minimum Gain” means “partnership minimum gain” determined pursuant to
Treasury Regulations Section 1.704-2(d).

 

“Contribution Agreement” means that certain Contribution Agreement, dated as of
July 6, 2016, by and among the Original Members, the Company and New Centennial
(as may be amended or supplemented from time to time).

 

“Contribution Closing” means the “Closing” as defined in Section 2.2 of the
Contribution Agreement.

 

“Corporate Board” means the Board of Directors of the Corporation.

 

“Corporation” has the meaning set forth in the recitals to this Agreement,
together with its successors and assigns.

 

“CRD” has the meaning set forth in the recitals to this Agreement.

 

“Credit Agreement” means that certain Amended and Restated Credit Agreement,
dated as of October 15, 2014, by and among the Company, as borrower, and
JPMorgan Chase Bank, N.A., as administrative agent, and the lenders party
thereto (as amended by the First Amendment to Amended and Restated Credit
Agreement, dated as of May 6, 2015, among the Company, as borrower, and JPMorgan
Chase Bank, N.A., as administrative agent, and the lenders and guarantors party
thereto, and the Second Amendment, dated as of October 11, 2016, among the
Company, as borrower, and JPMorgan Chase Bank, N.A., as administrative agent,
and the lenders and guarantors party thereto and as may be subsequently amended,
restated, supplemented or otherwise modified from time to time and including any
one or more refinancings or replacements thereof, in whole or in part, with any
other debt facility or debt obligation).

 

“Delaware Act” means the Delaware Limited Liability Company Act, 6 Del.L. §
18-101, et seq., as it may be amended from time to time, and any successor
thereto.

 

“Depletable Property” means each separate oil and gas property as defined in
Code Section 614.

 

“Depreciation” means, for each Taxable Year or other Fiscal Period, an amount
equal to the depreciation, amortization or other cost recovery deduction
(excluding depletion) allowable

 

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for U.S. federal income tax purposes with respect to property for such Taxable
Year or other Fiscal Period, except that (a) with respect to any such property
the Book Value of which differs from its adjusted tax basis for U.S. federal
income tax purposes and which difference is being eliminated by use of the
“remedial method” pursuant to Treasury Regulations Section 1.704-3(d),
Depreciation for such Taxable Year or other Fiscal Period shall be the amount of
book basis recovered for such Taxable Year or other Fiscal Period under the
rules prescribed by Treasury Regulations Section 1.704-3(d)(2), and (b) with
respect to any other such property, the Book Value of which differs from its
adjusted tax basis at the beginning of such Taxable Year or other Fiscal Period,
Depreciation shall be an amount which bears the same ratio to such beginning
Book Value as the U.S. federal income tax depreciation, amortization, or other
cost recovery deduction for such Taxable Year or other Fiscal Period bears to
such beginning adjusted tax basis; provided, however, that if the adjusted tax
basis of any property at the beginning of such Taxable Year or other Fiscal
Period is zero dollars ($0.00), Depreciation with respect to such property shall
be determined with reference to such beginning Book Value using any reasonable
method selected by the Manager.

 

“Direct Exchange” has the meaning set forth in Section 11.03(a).

 

“Discount” has the meaning set forth in Section 6.06.

 

“Distributable Cash” shall mean, as of any relevant date on which a
determination is being made by the Manager regarding a potential distribution
pursuant to Section 4.01(a), the amount of cash that could be distributed by the
Company for such purposes in accordance with the Credit Agreement (and without
otherwise violating any applicable provisions of the Credit Agreement).

 

“Distribution” (and, with a correlative meaning, “Distribute”) means each
distribution made by the Company to a Member with respect to such Member’s
Units, whether in cash, property or securities of the Company and whether by
liquidating distribution or otherwise; provided, however, that none of the
following shall be a Distribution: (a) any recapitalization that does not result
in the distribution of cash or property to Members or any exchange of securities
of the Company, and any subdivision (by Unit split or otherwise) or any
combination (by reverse Unit split or otherwise) of any outstanding Units,
(b) any other payment made by the Company to a Member in redemption of all or a
portion of such Member’s Units or (c) any amounts payable pursuant to
Section 6.06.

 

“Effective Time” has the meaning set forth in Section 16.15.

 

“Equity Plan” means any stock or equity purchase plan, restricted stock or
equity plan or other similar equity compensation plan now or hereafter adopted
by the Company or the Corporation.

 

“Equity Securities” means (i) with respect to the Company or any of its
Subsidiaries, (a) Units or other equity interests in the Company or any
Subsidiary of the Company (including other classes or groups thereof having such
relative rights, powers and duties as may from time to time be established by
the Manager pursuant to the provisions of this Agreement, including rights,
powers and/or duties senior to existing classes and groups of Units and other
equity

 

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interests in the Company or any Subsidiary of the Company), (b) obligations,
evidences of indebtedness or other securities or interests convertible or
exchangeable into Units or other equity interests in the Company or any
Subsidiary of the Company, and (c) warrants, options or other rights to purchase
or otherwise acquire Units or other equity interests in the Company or any
Subsidiary of the Company and (ii) with respect to the Corporation, any and all
shares, interests, participation or other equivalents (however designated) of
corporate stock, including all common stock and preferred stock, or warrants,
options or other rights to acquire any of the foregoing, including any debt
instrument convertible or exchangeable into any of the foregoing.

 

“Event of Withdrawal” means the expulsion, bankruptcy or dissolution of a Member
or the occurrence of any other event that terminates the continued membership of
a Member in the Company.  “Event of Withdrawal” shall not include an event that
does not terminate the existence of such Member under applicable state law (or,
in the case of a trust that is a Member, does not terminate the trusteeship of
the fiduciaries under such trust with respect to all the Company Interests of
such trust that is a Member).

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

“Exchange Election Notice” has the meaning set forth in Section 11.03(b).

 

“Fair Market Value” means, with respect to any asset, its fair market value
determined according to Article XV.

 

“First A&R LLC Agreement” has the meaning set forth in the recitals to this
Agreement.

 

“Fiscal Period” means any interim accounting period within a Taxable Year
established by the Company and which is permitted or required by Section 706 of
the Code.

 

“Fiscal Year” means the Company’s annual accounting period established pursuant
to Section 8.02.

 

“Fourth A&R LLC Agreement” has the meaning set forth in the recitals to this
Agreement.

 

“Governmental Entity” means (a) the United States of America, (b) any other
sovereign nation, (c) any state, province, district, territory or other
political subdivision of (a) or (b) of this definition, including any county,
municipal or other local subdivision of the foregoing, or (d) any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of government on behalf of (a), (b) or (c) of this definition.

 

“Indemnified Person” has the meaning set forth in Section 7.04(a).

 

“Independent Directors” means the members of the Corporate Board who are
“independent” under the standards set forth in Rule 10A-3 promulgated under the
Securities Act and the corresponding rules of the applicable exchange on which
the Class A Common Stock is traded or quoted.

 

“Initial LLC Agreement” has the meaning set forth in the recitals to this
Agreement.

 

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“Investment Company Act” means the U.S. Investment Company Act of 1940, as
amended from time to time.

 

“Joinder” means a joinder to this Agreement, in form and substance substantially
similar to Exhibit A to this Agreement.

 

“Law” means all laws, statutes, ordinances, rules and regulations of the United
States, any foreign country and each state, commonwealth, city, county,
municipality, regulatory body, agency or other political subdivision thereof.

 

“LLC Employee” means an employee of, or other service provider to, the Company
or any Subsidiary, in each case acting in such capacity.

 

“Losses” means items of Company loss or deduction determined according to
Section 5.01(b).

 

“Majority Members” means the Members (which may include the Manager) holding a
majority of the Units then outstanding; provided that, if as of any date of
determination, a majority of the Units are then held by the Manager or any
Affiliates controlled by the Manager, then “Majority Members” shall mean the
Manager together with Members holding a majority of the Units (excluding Units
held by the Manager and its controlled Affiliates) then outstanding.

 

“Manager” has the meaning set forth in Section 6.01.

 

“Manager Change of Control” shall be deemed to have occurred if or upon:

 

(a)                                 both the stockholders of the Corporation and
the Corporate Board approve, in accordance with the Corporation’s certificate of
incorporation and applicable law, the sale, lease or transfer, in one or a
series of related transactions, of all or substantially all of the Corporation’s
assets (determined on a consolidated basis), including a sale of all of the
equity interests in the Company, to any Person or group (as such term is used in
Section 13(d)(3) of the Exchange Act), other than to any directly or indirectly
wholly owned subsidiary of the Corporation, and such sale, lease or transfer is
consummated;

 

(b)                                 both the stockholders of the Corporation and
the Corporate Board approve, in accordance with the Corporation’s certificate of
incorporation and applicable law, a merger or consolidation of the Corporation
with any other Person, other than a merger or consolidation which would result
in the Voting Securities of the Corporation outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by being
converted into Voting Securities of the surviving entity) at least 50.01% of the
total voting power represented by the Voting Securities of the Corporation or
such surviving entity outstanding immediately after such merger or
consolidation, and such merger or consolidation is consummated; or

 

(c)                                  the acquisition, directly or indirectly, by
any Person or group (as such term is used in Section 13(d)(3) of the Exchange
Act) (other than (a) a trustee or other

 

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fiduciary holding securities under an employee benefit plan of the Corporation,
or (b) a corporation or other entity owned, directly or indirectly, by all of
the stockholders of the Corporation in substantially the same proportions as
their ownership of stock of the Corporation) of beneficial ownership (as defined
in Rule 13d-3 under the Exchange Act) of at least 50.01% of the aggregate voting
power of the Voting Securities of the Corporation; provided, that the Corporate
Board recommends or otherwise approves or determines that such acquisition is in
the best interests of the Corporation and its stockholders.

 

“Market Price” means, with respect to a share of Class A Common Stock as of a
specified date, the last sale price per share of Class A Common Stock, regular
way, or if no such sale took place on such day, the average of the closing bid
and asked prices per share of Class A Common Stock, regular way, in either case
as reported in the principal consolidated transaction reporting system with
respect to securities listed or admitted to trading on the Stock Exchange or, if
the Class A Common Stock is not listed or admitted to trading on the Stock
Exchange, as reported on the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities exchange
on which the Class A Common Stock is listed or admitted to trading or, if the
Class A Common Stock is not listed or admitted to trading on any national
securities exchange, the last quoted price, or, if not so quoted, the average of
the high bid and low asked prices in the over-the-counter market, as reported by
the National Association of Securities Dealers, Inc. Automated Quotation System
or, if such system is no longer in use, the principal other automated quotation
system that may then be in use or, if the Class A Common Stock is not quoted by
any such organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the Class A Common
Stock selected by the Corporate Board or, in the event that no trading price is
available for the shares of Class A Common Stock, the fair market value of a
share of Class A Common Stock, as determined in good faith by the Corporate
Board.

 

“Material Subsidiary” means any direct or indirect Subsidiary of the Company
that, as of any date of determination, represents more than (a) 50% of the
consolidated net tangible assets of the Company or (b) 50% of the consolidated
net income of the Company before interest, taxes, depreciation and amortization
(calculated in a manner substantially consistent with the definition of
“Consolidated Net Income” and “EBITDAX” or similar definition(s) appearing in
the Credit Agreement, including such additional adjustments that are permitted
to be made to such measure as described in “EBITDAX” or a similar definition
appearing in the Credit Agreement).

 

“Member” means, as of any date of determination, (a) each of the members named
on the Schedule of Members and (b) any Person admitted to the Company as a
Substituted Member or Additional Member in accordance with Article XII, but in
each case only so long as such Person is shown on the Company’s books and
records as the owner of one or more Units.

 

“Member Minimum Gain” means “partner nonrecourse debt minimum gain” as defined
in Treasury Regulations Section 1.704-2(i)(3).

 

“New Centennial” means New Centennial, LLC, a Delaware limited liability
company.

 

“NGP Follow-On” has the meaning set forth in the recitals to this Agreement.

 

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“Officer” has the meaning set forth in Section 6.01(b).

 

“Optionee” means a Person to whom a stock option is granted under any Stock
Option Plan.

 

“Original Class A Interests” has the meaning set forth in the recitals to this
Agreement.

 

“Original Class B Interests” has the meaning set forth in the recitals to this
Agreement.

 

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

 

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

 

“Other Agreements” has the meaning set forth in Section 10.04.

 

“Other Business” has the meaning given to such term in Section 7.01(d)(ii).

 

“Partnership Representative” has the meaning set forth in Section 9.03(b).

 

“Percentage Interest” means, with respect to a Member at a particular time, such
Member’s percentage interest in the Company determined by dividing such Member’s
Units by the total Units of all Members at such time.  The Percentage Interest
of each member shall be calculated to the 4th decimal place.

 

“Permitted Transfer” has the meaning set forth in Section 10.02.

 

“Person” means an individual or any corporation, partnership, limited liability
company, trust, unincorporated organization, association, joint venture or any
other organization or entity, whether or not a legal entity.

 

“Pro rata,” “proportional,” “in proportion to,” and other similar terms, means,
with respect to the holder of Units, pro rata based upon the number of such
Units held by such holder as compared to the total number of Units outstanding.

 

“Profits” means items of Company income and gain determined according to
Section 5.01(b).

 

“Recapitalization” has the meaning set forth in Section 3.03(a).

 

“Reclassification Event” means any of the following: (i) any reclassification or
recapitalization of Common Stock (other than a change in par value, or from par
value to no par value, or from no par value to par value, or as a result of a
subdivision or combination or any transaction subject to Section 3.04), (ii) any
merger, consolidation or other combination involving the Corporation, or
(iii) any sale, conveyance, lease, or other disposal of all or substantially all
the properties and assets of the Corporation to any other Person, in each of
clauses (i), (ii) or (iii), as a result of which holders of Common Stock shall
be entitled to receive cash, securities or other property for their shares of
Common Stock.

 

“Redeemed Units” has the meaning set forth in Section 11.01(a).

 

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“Redeemed Member” has the meaning set forth in Section 11.01(a).

 

“Redemption” has the meaning set forth in Section 11.01(a).

 

“Redemption Date” has the meaning set forth in Section 11.01(a).

 

“Redemption Notice” has the meaning set forth in Section 11.01(a).

 

“Redemption Notice Date” has the meaning set forth in Section 11.01(a).

 

“Redemption Right” has the meaning set forth in Section 11.01(a).

 

“Registration Rights Agreement” means that certain Registration Rights
Agreement, dated as of the date hereof, by and among the Corporation, the
Original Members, Riverstone Centennial Holdings, L.P. and the other parties
named therein (together with any joinder thereto from time to time by any
successor or assign to any party to such Agreement).

 

“Related Person” has the meaning set forth in Section 7.01(c).

 

“Relative” means, with respect to any natural person: (a) such natural person’s
spouse; (b) any lineal descendant, parent, grandparent, great grandparent or
sibling or any lineal descendant of such sibling (in each case whether by blood
or legal adoption); and (c) the spouse of a natural person described in clause
(b) of this definition.

 

“Retraction Notice” has the meaning set forth in Section 11.01(b).

 

“Revised Partnership Audit Provisions” shall mean Section 1101 of Title XI
(Revenue Provisions Related to Tax Compliance) of the Bipartisan Budget Act of
2015, H.R. 1314, Public Law Number 114-74.

 

“Schedule of Members” has the meaning set forth in Section 3.01(b).

 

“SEC” means the U.S. Securities and Exchange Commission, including any
governmental body or agency succeeding to the functions thereof.

 

“Second A&R LLC Agreement” has the meaning set forth in the recitals to this
Agreement.

 

“Securities Act” means the U.S. Securities Act of 1933, as amended, and
applicable rules and regulations thereunder, and any successor to such statute,
rules or regulations.  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.

 

“Settlement Method Notice” has the meaning set forth in Section 11.01(b).

 

“Share Settlement” means a number of shares of Class A Common Stock equal to the
number of Redeemed Units.

 

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“Simulated Basis” means, with respect to each Depletable Property, the Book
Value of such property.  For purposes of such computation, the Simulated Basis
of each Depletable Property (including any additions to such Simulated Basis
resulting from expenditures required to be capitalized in such Simulated Basis)
shall be allocated to each Member in accordance with such Member’s relative
Percentage Interest as of the time such Depletable Property (or such addition to
such Simulated Basis resulting from expenditures required to be capitalized in
such Simulated Basis) is acquired (or expended) by the Company, and shall be
reallocated among the Members in accordance with the such Members’ Percentage
Interest as determined immediately following the occurrence of an event giving
rise to an adjustment to the Book Value of the Company’s Depletable Properties
pursuant to the definition of Book Value. Upon a transfer by a Member of any
Units, a portion of the Simulated Basis allocated to such Member shall be
reallocated to the transferee in accordance with the relative Percentage
Interest transferred.

 

“Simulated Depletion” means, with respect to each Depletable Property, a
depletion allowance computed in accordance with U.S. federal income tax
principles and in a manner specified in Treasury Regulations
Section 1.704-1(b)(2)(iv)(k)(2). For purposes of computing Simulated Depletion
with respect to any Depletable Property, in no event shall such allowance, in
the aggregate, exceed the Simulated Basis of such Depletable Property. If the
Book Value of a Depletable Property is adjusted pursuant to the definition of
Book Value during a Taxable Year or other Fiscal Period, following such
adjustment Simulated Depletion shall thereafter be calculated under the
foregoing provisions based upon such adjusted Book Value.

 

“Simulated Gain” means the excess, if any, of the amount realized from the sale
or other disposition of a Depletable Property over the Book Value of such
Depletable Property and determined pursuant to Treasury Regulations
Section 1.704-1(b)(2)(iv)(k)(2).

 

“Simulated Loss” means the excess, if any, of the Book Value of a Depletable
Property over the amount realized from the sale or other disposition of such
Depletable Property and determined pursuant to Treasury Regulations
Section 1.704-1(b)(2)(iv)(k)(2).

 

“Sponsor Person” has the meaning set forth in Section 7.04(d).

 

“Stock Exchange” means the NASDAQ Capital Market.

 

“Stock Option Plan” means any stock option plan now or hereafter adopted by the
Company or by the Corporation.

 

“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 the voting interests thereof are 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, references to a “Subsidiary” of
the Company shall be given effect only at such times that the

 

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Company has one or more Subsidiaries, and, unless otherwise indicated, the term
“Subsidiary” refers to a Subsidiary of the Company.

 

“Substituted Member” means a Person that is admitted as a Member to the Company
pursuant to Section 12.01.

 

“Tax Distribution Date” has the meaning set forth in Section 4.01(b)(i).

 

“Tax Distributions” has the meaning set forth in Section 4.01(b)(i).

 

“Tax Matters Partner” has the meaning set forth in Section 9.03(a).

 

“Taxable Year” means the Company’s accounting period for U.S. federal income tax
purposes determined pursuant to Section 9.02.

 

“Third A&R LLC Agreement” has the meaning set forth in the recitals to this
Agreement.

 

“Trading Day” means a day on which the Stock Exchange or such other principal
United States securities exchange on which the Class A Common Stock is listed or
admitted to trading is open for the transaction of business (unless such trading
shall have been suspended for the entire day).

 

“Transfer” (and, with a correlative meaning, “Transferring”) means any sale,
transfer, assignment, pledge, encumbrance or other disposition of (whether
directly or indirectly, whether with or without consideration and whether
voluntarily or involuntarily or by operation of Law) (a) any interest (legal or
beneficial) in any Equity Securities of the Company or (b) any equity or other
interest (legal or beneficial) in any Member if substantially all of the assets
of such Member consist solely of Units.

 

“Treasury Regulations” means the regulations promulgated under the Code and any
corresponding provisions of succeeding regulations.

 

“Unit” means a Company Interest of a Member or a permitted Assignee in the
Company representing a fractional part of the Company Interests of all Members
and Assignees as may be established by the Manager from time to time in
accordance with Section 3.02; provided, however, that any class or group of
Units issued shall have the relative rights, powers and duties set forth in this
Agreement, and the Company Interest represented by such class or group of Units
shall be determined in accordance with such relative rights, powers and duties.

 

“Unvested Corporate Shares” means shares of Class A Common Stock issued pursuant
to an Equity Plan that are not vested pursuant to the terms thereof or any award
or similar agreement relating thereto.

 

“Value” means (a) for any Stock Option Plan, the Market Price for the trading
day immediately preceding the date of exercise of a stock option under such
Stock Option Plan and (b) for any Equity Plan other than a Stock Option Plan,
the Market Price for the trading day immediately preceding the Vesting Date.

 

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“Vesting Date” has the meaning set forth in Section 3.10(c).

 

“Voting Securities” means any Equity Securities of the Corporation that are
entitled to vote generally in matters submitted for a vote of the Corporation’s
stockholders or generally in the election of the Corporate Board.

 

“Warrants” has the meaning set forth in Section 3.03(b).

 

ARTICLE II.
ORGANIZATIONAL MATTERS

 

Section 2.01                             Formation of Company.  The Company was
formed on August 10, 2012 pursuant to the provisions of the Delaware Act.

 

Section 2.02                             Fifth Amended and Restated Limited
Liability Company Agreement.  The Members hereby execute this Agreement for the
purpose of continuing the affairs of the Company and the conduct of its business
in accordance with the provisions of the Delaware Act.  The Members hereby agree
that during the term of the Company set forth in Section 2.06 the rights and
obligations of the Members with respect to the Company will be determined in
accordance with the terms and conditions of this Agreement and the Delaware
Act.  On any matter upon which this Agreement is silent, the Delaware Act shall
control.  No provision of this Agreement shall be in violation of the Delaware
Act and to the extent any provision of this Agreement is in violation of the
Delaware Act, such provision shall be void and of no effect to the extent of
such violation without affecting the validity of the other provisions of this
Agreement; provided, however, that where the Delaware Act provides that a
provision of the Delaware Act shall apply “unless otherwise provided in a
limited liability company agreement” or words of similar effect, the provisions
of this Agreement shall in each instance control; provided further, that
notwithstanding the foregoing, Section 18-210 of the Delaware Act shall not
apply or be incorporated into this Agreement.

 

Section 2.03                             Name.  The name of the Company shall be
“Centennial Resource Production, LLC.” The Manager in its sole discretion may
change the name of the Company at any time and from time to time.  Notification
of any such change shall be given to all of the Members and, to the extent
practicable, to all of the holders of any Equity Securities then outstanding. 
The Company’s business may be conducted under its name and/or any other name or
names deemed advisable by the Manager.

 

Section 2.04                             Purpose.  The primary business and
purpose of the Company shall be to engage in such activities as are permitted
under the Delaware Act and determined from time to time by the Manager in
accordance with the terms and conditions of this Agreement.

 

Section 2.05                             Principal Office; Registered Office. 
The principal office of the Company shall be at 1000 Louisiana Street,
Suite 1450, Houston, TX 77002, or such other place as the Manager may from time
to time designate.  The address of the registered office of the Company in the
State of Delaware shall be 1209 Orange Street, Wilmington, County of New Castle,
DE 19801, and the registered agent for service of process on the Company in the
State of Delaware at such registered office shall be The Corporation Trust
Company.  The Manager may from time to time change the Company’s registered
agent and registered office in the State of Delaware.

 

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Section 2.06                             Term.  The term of the Company
commenced upon the filing of the Certificate in accordance with the Delaware Act
and shall continue in existence until termination and dissolution of the Company
in accordance with the provisions of Article XIV.

 

Section 2.07                             No State-Law Partnership.  The Members
intend that the Company not be a partnership (including a limited partnership)
or joint venture, and that no Member be a partner or joint venturer of any other
Member by virtue of this Agreement, for any purposes other than as set forth in
the last sentence of this Section 2.07, and neither this Agreement nor any other
document entered into by the Company or any Member relating to the subject
matter hereof shall be construed to suggest otherwise.  The Members intend that
the Company shall be treated as a partnership for U.S. federal (and applicable
state and local) income tax purposes, and that each Member 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.
MEMBERS; UNITS; CAPITALIZATION

 

Section 3.01                             Members.

 

(a)                                 Each Original Member previously was admitted
as a Member and shall remain a Member of the Company upon the Effective Time. 
At the Effective Time and concurrently with the Common Unit Purchase, the
Corporation shall be admitted to the Company as a Member.

 

(b)                                 The Company shall maintain a schedule
setting forth: (i) the name and address of each Member; (ii) the aggregate
number of outstanding Units and the number and class of Units held by each
Member; (iii) the aggregate amount of cash Capital Contributions that has been
made by the Members with respect to their Units; and (iv) the Fair Market Value
of any property other than cash contributed by the Members with respect to their
Units (including, if applicable, a description and the amount of any liability
assumed by the Company or to which contributed property is subject) (such
schedule, the “Schedule of Members”).  The applicable Schedule of Members in
effect as of the Effective Time (after giving effect to the Recapitalization and
the Common Unit Purchase) is set forth as Schedule 1 to this Agreement.  The
Schedule of Members shall be the definitive record of ownership of each Unit of
the Company and all relevant information with respect to each Member.  The
Company shall be entitled to recognize the exclusive right of a Person
registered on its records as the owner of Units for all purposes and shall not
be bound to recognize any equitable or other claim to or interest in Units on
the part of any other Person, whether or not it shall have express or other
notice thereof, except as otherwise provided by the Delaware Act.

 

(c)                                  No Member shall be required or, except as
approved by the Manager pursuant to Section 6.01 and in accordance with the
other provisions of this Agreement, permitted to loan any money or property to
the Company or borrow any money or property from the Company.

 

Section 3.02                             Units.  Interests in the Company shall
be represented by Units, or such other securities of the Company, in each case
as the Manager may establish in its discretion in accordance with the terms and
subject to the restrictions hereof.  Immediately after the Effective Time, the
Units will be comprised of a single class of Common Units.  To the extent
required

 

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pursuant to Section 3.04(a), the Manager may create one or more classes or
series of Common Units or preferred Units solely to the extent they are in the
aggregate substantially equivalent to a class of common stock of the Corporation
or class or series of preferred stock of the Corporation.

 

Section 3.03                             Recapitalization; Warrants; the
Corporation’s Capital Contribution; the Corporation’s Purchase of Common Units.

 

(a)                                 Recapitalization.  Pursuant to the
Contribution Agreement, at the Contribution Closing, the Original Members
received certain cash distributions from the Company in partial redemption of
certain Original Class A Interests and Original Class B Interests and all
remaining Original Class A Interests and Original Class B Interests that were
issued and outstanding and held by the Original Members prior to the execution
and effectiveness of this Agreement are hereby converted into the number of
Common Units set forth next to each Original Member’s name on Schedule 1, which
are hereby issued and outstanding as of the Effective Time (collectively, the
“Recapitalization”).

 

(b)                                 Warrants.  Immediately upon the
Recapitalization, and prior to giving effect to Section 3.04, the Company shall
issue to the Corporation a number of warrants exercisable for Units (the
“Warrants”) in an amount equal to the number of warrants exercisable for shares
of Class A Common Stock (the “Class A Warrants”) outstanding immediately prior
to such issuance of Warrants pursuant to this Section 3.03(b). For the avoidance
of doubt, each Warrant shall be treated as a “noncompensatory option” within the
meaning of Treasury Regulations Sections 1.721-2(f) and 1.761-3(b)(2) and not be
treated as a partnership interest pursuant to Treasury Regulations
Section 1.761-3(a).

 

(c)                                  The Corporation’s Common Unit Purchase. 
Pursuant to the Contribution Agreement, at the Contribution Closing, the
Corporation contributed to the Company cash in the aggregate amount of
$1,485,999,739.31 in exchange for 163,505,000 Common Units pursuant to the
Contribution Agreement (the “Common Unit Purchase”).  The parties hereto
acknowledge and agree that the Common Unit Purchase will result in a
“revaluation of partnership property” and corresponding adjustments to Capital
Account balances as described in Section 1.704-1(b)(2)(iv)(f) of the Treasury
Regulations.

 

Section 3.04                             Authorization and Issuance of
Additional Units.

 

(a)                                 If at any time the Corporation issues a
share of its Class A Common Stock or any other Equity Security of the
Corporation, (i) the Company shall issue to the Corporation one Common Unit (if
the Corporation issues a share of Class A Common Stock), or such other Equity
Security of the Company (if the Corporation issues Equity Securities other than
Class A Common Stock) corresponding to the Equity Securities issued by the
Corporation, and with substantially the same rights to dividends and
distributions (including distributions upon liquidation) and other economic
rights as those of such Equity Securities of the Corporation and (ii) the net
proceeds received by the Corporation with respect to the corresponding share of
Class A Common Stock or other Equity Security, if any, shall be concurrently
contributed by the Corporation to the Company as a Capital Contribution;
provided, that if the Corporation issues any shares of Class A Common Stock in
order to directly purchase from another Member (other than the Corporation) a
number of Common Units pursuant to Section 11.03(a) (and a

 

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corresponding number of shares of Class C Common Stock), then the Company shall
not issue any new Common Units in connection therewith and the Corporation shall
not be required to transfer such net proceeds to the Company (it being
understood that such net proceeds shall instead be transferred to such other
Member as consideration for such purchase). Notwithstanding the foregoing, this
Section 3.04(a) shall not apply to (i) (A) the issuance and distribution to
holders of shares of Class A Common Stock of rights to purchase Equity
Securities of the Corporation under a “poison pill” or similar shareholders
rights plan or (B) the issuance under the Corporation’s Equity Plans or Stock
Option Plans of any warrants, options, other rights to acquire Equity Securities
of the Corporation or rights or property that may be converted into or settled
in Equity Securities of the Corporation, but shall in each of the foregoing
cases apply to the issuance of Equity Securities of the Corporation in
connection with the exercise or settlement of such rights, warrants, options or
other rights or property or (ii) the issuance of Equity Securities pursuant to
any Equity Plan (other than a Stock Option Plan) that are restricted, subject to
forfeiture or otherwise unvested upon issuance, but shall apply on the
applicable Vesting Date with respect to such Equity Securities.  Except pursuant
to Article XI, (x) the Company may not issue any additional Common Units to the
Corporation or any of its Subsidiaries unless substantially simultaneously the
Corporation or such Subsidiary issues or sells an equal number of shares of the
Corporation’s Class A Common Stock to another Person, and (y) the Company may
not issue any other Equity Securities of the Company to the Corporation or any
of its Subsidiaries (other than the issuance of Warrants pursuant to
Section 3.03(b)) unless substantially simultaneously the Corporation or such
Subsidiary issues or sells, to another Person, an equal number of shares of a
new class or series of Equity Securities of the Corporation or such Subsidiary
with substantially the same rights to dividends and distributions (including
distributions upon liquidation) and other economic rights as those of such
Equity Securities of the Company.

 

(b)                                 The Company shall only be permitted to issue
additional Units or other Equity Securities in the Company to the Persons and on
the terms and conditions provided for in Section 3.02, this Section 3.04 and
Section 3.11.

 

(c)                                  The Company shall not in any manner effect
any subdivision (by equity split, equity distribution, reclassification,
recapitalization or otherwise) or combination (by reverse equity split,
reclassification, recapitalization or otherwise) of the outstanding Common Units
unless accompanied by an identical subdivision or combination, as applicable, of
the outstanding Common Stock, with corresponding changes made with respect to
any other exchangeable or convertible securities. The Corporation shall not in
any manner effect any subdivision (by stock split, stock dividend,
reclassification, recapitalization or otherwise) or combination (by reverse
stock split, reclassification, recapitalization or otherwise) of the outstanding
Common Stock unless accompanied by an identical subdivision or combination, as
applicable, of the outstanding Common Units, with corresponding changes made
with respect to any other exchangeable or convertible securities.  The Company
shall not in any manner effect any subdivision (by equity split, equity
distribution, reclassification, recapitalization or otherwise) or combination
(by reverse equity split, reclassification, recapitalization or otherwise) of
any outstanding Equity Securities of the Company (other than the Common Units)
unless accompanied by an identical subdivision or combination, as applicable, of
the corresponding Equity Securities of the Corporation, with corresponding
changes made with respect to any other exchangeable or convertible securities.
The Corporation shall not in any manner effect any subdivision (by stock

 

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split, stock dividend, reclassification, recapitalization or otherwise) or
combination (by reverse stock split, reclassification, recapitalization or
otherwise) of any outstanding Equity Securities of the Corporation (other than
the Common Stock) unless accompanied by an identical subdivision or combination,
as applicable, of the corresponding Equity Securities of the Company, with
corresponding changes made with respect to any other exchangeable or convertible
securities.

 

Section 3.05                             Repurchases or Redemptions.  The
Corporation or any of its Subsidiaries may not redeem, repurchase or otherwise
acquire (i) any shares of Class A Common Stock unless substantially
simultaneously the Company redeems, repurchases or otherwise acquires from the
Corporation an equal number of Common Units for the same price per security or
(ii) any other Equity Securities of the Corporation unless substantially
simultaneously the Company redeems, repurchases or otherwise acquires from the
Corporation an equal number of Equity Securities of the Company of a
corresponding class or series with substantially the same rights to dividends
and distributions (including distributions upon liquidation) and other economic
rights as those of such Equity Securities of the Corporation for the same price
per security. The Company may not redeem, repurchase or otherwise acquire
(A) any Common Units from the Corporation or any of its Subsidiaries unless
substantially simultaneously the Corporation or such Subsidiary redeems,
repurchases or otherwise acquires an equal number of shares of Class A Common
Stock for the same price per security from holders thereof, or (B) any other
Equity Securities of the Company from the Corporation or any of its Subsidiaries
unless substantially simultaneously the Corporation or such Subsidiary redeems,
repurchases or otherwise acquires for the same price per security an equal
number of Equity Securities of the Corporation of a corresponding class or
series with substantially the same rights to dividends and distributions
(including distribution upon liquidation) and other economic rights as those of
such Equity Securities of the Corporation. Notwithstanding the foregoing, to the
extent that any consideration payable by the Corporation in connection with the
redemption or repurchase of any shares of Class A Common Stock or other Equity
Securities of the Corporation or any of its Subsidiaries consists (in whole or
in part) of shares of Class A Common Stock or such other Equity Securities
(including, for the avoidance of doubt, in connection with the cashless exercise
of an option or warrant), then the redemption or repurchase of the corresponding
Common Units or other Equity Securities of the Company shall be effectuated in
an equivalent manner.

 

Section 3.06                             Certificates Representing Units; Lost,
Stolen or Destroyed Certificates; Registration and Transfer of Units.

 

(a)                                 Units shall not be certificated unless
otherwise determined by the Manager.  If the Manager determines that one or more
Units shall be certificated, each such certificate shall be signed by or in the
name of the Company, by the Chief Executive Officer and any other officer
designated by the Manager, representing the number of Units held by such
holder.  Such certificate shall be in such form (and shall contain such legends)
as the Manager may determine.  Any or all of such signatures on any certificate
representing one or more Units may be a facsimile, engraved or printed, to the
extent permitted by applicable Law.  The Manager agrees that it shall not elect
to treat any Unit as a “security” within the meaning of Article 8 of the Uniform
Commercial Code unless thereafter all Units then outstanding are represented by
one or more certificates.

 

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(b)                                 If Units are certificated, the Manager may
direct that a new certificate representing one or more Units be issued in place
of any certificate theretofore issued by the Company alleged to have been lost,
stolen or destroyed, upon delivery to the Manager of an affidavit of the owner
or owners of such certificate, setting forth such allegation.  The Manager may
require the owner of such lost, stolen or destroyed certificate, or such owner’s
legal representative, to give the Company a bond sufficient to indemnify it
against any claim that may be made against it on account of the alleged loss,
theft or destruction of any such certificate or the issuance of any such new
certificate.

 

(c)                                  Upon surrender to the Company or the
transfer agent of the Company, if any, of a certificate for one or more Units,
duly endorsed or accompanied by appropriate evidence of succession, assignment
or authority to transfer, in compliance with the provisions hereof, the Company
shall issue a new certificate representing one or more Units to the Person
entitled thereto, cancel the old certificate and record the transaction upon its
books.  Subject to the provisions of this Agreement, the Manager may prescribe
such additional rules and regulations as it may deem appropriate relating to the
issue, Transfer and registration of Units.

 

Section 3.07                             Negative Capital Accounts.  No Member
shall be required to pay to any other Member or the Company any deficit or
negative balance which may exist from time to time in such Member’s Capital
Account (including upon and after dissolution of the Company).

 

Section 3.08                             No Withdrawal.  No Person shall be
entitled to withdraw any part of such Person’s Capital Contribution or Capital
Account or to receive any Distribution from the Company, except as expressly
provided in this Agreement.

 

Section 3.09                             Loans From Members.  Loans by Members
to the Company shall not be considered Capital Contributions.  Subject to the
provisions of Section 3.01(c), the amount of any such advances shall be a debt
of the Company to such Member and shall be payable or collectible in accordance
with the terms and conditions upon which such advances are made.

 

Section 3.10                             Tax Treatment of Corporate Stock Option
Plans and Equity Plans.

 

(a)                                 Options Granted to Persons other than LLC
Employees.  If at any time or from time to time, in connection with any Stock
Option Plan, a stock option granted over shares of Class A Common Stock to a
Person other than an LLC Employee is duly exercised, notwithstanding the amount
of the Capital Contribution actually made pursuant to Section 3.04(a), solely
for U.S. federal (and applicable state and local) income tax purposes, the
Corporation shall be deemed to have contributed to the Company as a Capital
Contribution, in lieu of the Capital Contribution actually made and in
consideration of additional Common Units, an amount equal to the Value of a
share of Class A Common Stock as of the date of such exercise multiplied by the
number of shares of Class A Common Stock then being issued by the Corporation in
connection with the exercise of such stock option.

 

(b)                                 Options Granted to LLC Employees.  If at any
time or from time to time, in connection with any Stock Option Plan, a stock
option granted over shares of Class A Common Stock to an LLC Employee is duly
exercised, solely for U.S. federal (and applicable state and local) income tax
purposes, the following transactions shall be deemed to have occurred:

 

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(i)                                     The Corporation shall sell to the
Optionee, and the Optionee shall purchase from the Corporation, for a cash price
per share equal to the Value of a share of Class A Common Stock at the time of
the exercise, the number of shares of Class A Common Stock equal to the quotient
of (x) the exercise price payable by the Optionee in connection with the
exercise of such stock option divided by (y) the Value of a share of Class A
Common Stock at the time of such exercise.

 

(ii)                                  The Corporation shall sell to the Company
(or if the Optionee is an employee of, or other service provider to, a
Subsidiary, the Corporation shall sell to such Subsidiary), and the Company (or
such Subsidiary, as applicable) shall purchase from the Corporation, a number of
shares of Class A Common Stock equal to the excess of (x) the number of shares
of Class A Common Stock as to which such stock option is being exercised over
(y) the number of shares of Class A Common Stock sold pursuant to
Section 3.10(b)(i) hereof.  The purchase price per share of Class A Common Stock
for such sale of shares of Class A Common Stock to the Company (or such
Subsidiary) shall be the Value of a share of Class A Common Stock as of the date
of exercise of such stock option.

 

(iii)                               The Company shall transfer to the Optionee
(or if the Optionee is an employee of, or other service provider to, a
Subsidiary, the Subsidiary shall transfer to the Optionee) at no additional cost
to such LLC Employee and as additional compensation to such LLC Employee, the
number of shares of Class A Common Stock described in Section 3.10(b)(ii).

 

(iv)                              The Corporation shall be deemed to have
contributed any amounts received by the Corporation pursuant to
Section 3.10(b)(i) and any amount deemed to be received by the Company pursuant
to Section 3.10(b)(ii) in connection with the exercise of such stock option.

 

The transactions described in this Section 3.10(b) are intended to comply with
the provisions of Treasury Regulations Section 1.1032-3 and shall be interpreted
consistently therewith.

 

(c)                                  Restricted Stock Granted to LLC Employees. 
If at any time or from time to time, in connection with any Equity Plan (other
than a Stock Option Plan), any shares of Class A Common Stock are issued to an
LLC Employee (including any shares of Class A Common Stock that are subject to
forfeiture in the event such LLC Employee terminates his or her employment with
the Company or any Subsidiary) in consideration for services performed for the
Company or any Subsidiary, on the date (such date, the “Vesting Date”) that the
Value of such shares is includible in taxable income of such LLC Employee, the
following events will be deemed to have occurred solely for U.S. federal (and
applicable state and local) income tax purposes: (a) the Corporation shall be
deemed to have sold such shares of Class A Common Stock to the Company (or if
such LLC Employee is an employee of, or other service provider to, a Subsidiary,
to such Subsidiary) for a purchase price equal to the Value of such shares of
Class A Common Stock, (b) the Company (or such Subsidiary) shall be deemed to
have delivered such shares of Class A Common Stock to such LLC Employee, (c) the
Corporation shall be deemed to have contributed the purchase price for such
shares of Class A Common Stock to the Company as a Capital Contribution, and
(d) in the case where such LLC Employee is an employee of a

 

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Subsidiary, the Company shall be deemed to have contributed such amount to the
capital of the Subsidiary.

 

(d)                                 Future Stock Incentive Plans.  Nothing in
this Agreement shall be construed or applied to preclude or restrain the
Corporation from adopting, modifying or terminating stock incentive plans for
the benefit of employees, directors or other business associates of the
Corporation, the Company or any of their respective Affiliates.  The Members
acknowledge and agree that, in the event that any such plan is adopted, modified
or terminated by the Corporation, amendments to this Section 3.10 may become
necessary or advisable and that any approval or consent to any such amendments
requested by the Corporation shall be deemed granted by the Manager without the
requirement of any further consent or acknowledgement of any other Member.

 

(e)                                  Anti-dilution adjustments.  For all
purposes of this Section 3.10, the number of shares of Class A Common Stock and
the corresponding number of Common Units shall be determined after giving effect
to all anti-dilution or similar adjustments that are applicable, as of the date
of exercise or vesting, to the option, warrant, restricted stock or other equity
interest that is being exercised or becomes vested under the applicable Stock
Option Plan or other Equity Plan and applicable award or grant documentation.

 

Section 3.11                             Dividend Reinvestment Plan, Cash Option
Purchase Plan, Stock Incentive Plan or Other Plan.  Except as may otherwise be
provided in this Article III, all amounts received or deemed received by the
Corporation in respect of any dividend reinvestment plan, cash option purchase
plan, stock incentive or other stock or subscription plan or agreement, either
(a) shall be utilized by the Corporation to effect open market purchases of
shares of Class A Common Stock, or (b) if the Corporation elects instead to
issue new shares of Class A Common Stock with respect to such amounts, shall be
contributed by the Corporation to the Company in exchange for additional Units. 
Upon such contribution, the Company will issue to the Corporation a number of
Units equal to the number of new shares of Class A Common Stock so issued.

 

ARTICLE IV.
DISTRIBUTIONS

 

Section 4.01                             Distributions.

 

(a)                                 Distributable Cash; Other Distributions.  To
the extent permitted by applicable Law and hereunder, Distributions to Members
may be declared by the Manager out of Distributable Cash or other funds or
property legally available therefor in such amounts and on such terms (including
the payment dates of such Distributions) as the Manager shall determine using
such record date as the Manager may designate; such Distributions (except, for
the avoidance of doubt, for the Distribution described in
Section 3.03(a) pursuant to the Contribution Agreement) shall be made to the
Members as of the close of business on such record date on a pro rata basis in
accordance with each Member’s Percentage Interest as of the close of business on
such record date; provided, however, that the Manager shall have the obligation
to make Distributions as set forth in Sections 4.01(b) and 14.02; and provided
further that, notwithstanding any other provision herein to the contrary, no
Distributions shall be made to any Member to the extent such Distribution would
violate Section 18-607 of the Delaware Act.

 

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Promptly following the designation of a record date and the declaration of a
Distribution pursuant to this Section 4.01(a), the Manager shall give notice to
each Member of the record date, the amount and the terms of the Distribution and
the payment date thereof.  In furtherance of the foregoing, it is intended that
the Manager shall, to the extent permitted by applicable Law and hereunder, have
the right in its sole discretion to make Distributions to the Members pursuant
to this Section 4.01(a) in such amounts as shall enable the Corporation to pay
dividends or to meet its obligations (to the extent such obligations are not
otherwise able to be satisfied as a result of Tax Distributions required to be
made pursuant to Section 4.01(b) or reimbursements required to be made pursuant
to Section 6.06).

 

(b)                                 Tax Distributions. The Company shall make
distributions to all Members pro rata, in accordance with each Member’s
Percentage Interest, at such times and in such amounts as necessary to enable
the Corporation to timely satisfy all of its U.S. federal, state and local and
non-U.S. tax liabilities.

 

Section 4.02                             Restricted Distributions. 
Notwithstanding any provision to the contrary contained in this Agreement, the
Company shall not make any Distribution to any Member on account of any Company
Interest if such Distribution would violate any applicable Law or the terms of
the Credit Agreement.

 

ARTICLE V.
CAPITAL ACCOUNTS; ALLOCATIONS; TAX MATTERS

 

Section 5.01                             Capital Accounts.

 

(a)                                 The Company shall maintain a separate
Capital Account for each Member according to the rules of Treasury Regulations
Section 1.704-1(b)(2)(iv).  For this purpose, the Company may (in the discretion
of the Manager), upon the occurrence of the events specified in Treasury
Regulations Section 1.704-1(b)(2)(iv)(f), increase or decrease the Capital
Accounts in accordance with the rules of such Treasury Regulations and Treasury
Regulations Section 1.704-1(b)(2)(iv)(g) to reflect a revaluation of Company
property. The Capital Account balance of each of the Members as of the date
hereof, as adjusted in accordance with Treasury Regulations
Section 1.704-1(b)(2)(iv)(f) and Section 3.03(c) of this Agreement, is its
respective “Contribution Closing Capital Account Balance” set forth on the
Schedule of Members.

 

(b)                                 For purposes of computing the amount of any
item of Company income, gain, loss or deduction to be allocated pursuant to this
Article V and to be reflected in the Capital Accounts of the Members, the
determination, recognition and classification of any such item shall be the same
as its determination, recognition and classification for U.S. federal income tax
purposes (including any method of depreciation, cost recovery or amortization
used for this purpose); provided, however, that:

 

(i)                                     The computation of all items of income,
gain, loss and deduction shall include those items described in Code
Section 705(a)(l)(B) or Code Section 705(a)(2)(B) and Treasury Regulations
Section 1.704-1(b)(2)(iv)(i), without regard to the fact that such items are not
includable in gross income or are not deductible for U.S. federal income tax
purposes.

 

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(ii)                                  If the Book Value of any Company property
is adjusted pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(e) or
(f), the amount of such adjustment shall be taken into account as gain or loss
from the disposition of such property.

 

(iii)                               Items of income, gain, loss or deduction
attributable to the disposition of Company property having a Book Value that
differs from its adjusted basis for tax purposes shall be computed by reference
to the Book Value of such property.

 

(iv)                              In lieu of the depreciation, amortization and
other cost recovery deductions taken into account in computing Profits or Losses
(excluding depletion with respect to a Depletable Property), there shall be
taken into account Depreciation for such Taxable Year or other Fiscal Period.

 

(v)                                 To the extent an adjustment to the adjusted
tax basis of any Company asset pursuant to Code Sections 732(d), 734(b) or
743(b) is required, pursuant to Treasury Regulations
Section 1.704-1(b)(2)(iv)(m), to be taken into account in determining Capital
Accounts, the amount of such adjustment to the Capital Accounts shall be treated
as an item of gain (if the adjustment increases the basis of the asset) or loss
(if the adjustment decreases such basis) .

 

(vi)                              Simulated Gains with respect to Depletable
Properties shall be taken into account in computing Profits and Losses in lieu
of actual gains on such Depletable Properties.

 

(vii)                           Items specifically allocated under Section 5.03
shall be excluded from the computation of Profits and Losses.

 

Section 5.02                             Allocations.  After giving effect to
the allocations under Section 5.03, and subject to Section 5.04, Profits and
Losses for any Taxable Year or other Fiscal Period shall be allocated among the
Capital Accounts of the Members pro rata in such a manner that, after giving
effect to the special allocations set forth in Section 5.03 and all other
distributions through the end of such Taxable Year or other Fiscal Period, the
Capital Account balance of each Member, immediately after making such
allocation, is as nearly as possible equal to (a) the amount such Member would
receive pursuant to Section 14.02(d) if all of the assets of the Company on hand
at the end of such Taxable Year or other Fiscal Period were sold for cash equal
to their Book Values, all liabilities of the Company were satisfied in cash in
accordance with their terms (limited with respect to each nonrecourse liability
to the Book Value of the assets securing such liability), and all remaining or
resulting cash were distributed, in accordance with Section 14.02(d), to the
Members immediately after making such allocation, minus (b) such Member’s share
of the Company Minimum Gain and Member Minimum Gain, computed immediately prior
to the hypothetical sale of assets, and the amount any such Member is treated as
obligated to contribute to the Company, computed immediately after the
hypothetical sale of assets.  Notwithstanding any contrary provision in this
Agreement, the Manager shall make appropriate adjustments to allocations of
Profits and Losses to (or, if necessary, allocate items of gross income, gain,
loss or deduction of the Company among) the Members such that, to the maximum
extent possible, the Capital Accounts of the Members are proportionate to their
Percentage Interests.  In each case, such adjustments or allocations shall
occur, to the maximum

 

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extent possible, in the Taxable Year or other Fiscal Period of the event
requiring such adjustments or allocations.

 

Section 5.03                             Regulatory and Special Allocations.

 

(a)                                 Losses attributable to partner nonrecourse
debt (as defined in Treasury Regulations Section 1.704-2(b)(4)) shall be
allocated in the manner required by Treasury Regulations Section 1.704-2(i).  If
there is a net decrease during a Taxable Year in Member Minimum Gain, Profits
for such Taxable Year (and, if necessary, for subsequent Taxable Years) shall be
allocated to the Members in the amounts and of such character as determined
according to Treasury Regulations Section 1.704-2(i)(4).

 

(b)                                 Nonrecourse deductions (as determined
according to Treasury Regulations Section 1.704-2(b)(1)) for any Taxable Year
shall be allocated pro rata among the Members in accordance with their
Percentage Interests.  Except as otherwise provided in Section 4.03(a), if there
is a net decrease in the Company Minimum Gain during any Taxable Year, each
Member shall be allocated Profits for such Taxable Year (and, if necessary, for
subsequent Taxable Years) in the amounts and of such character as determined
according to Treasury Regulations Section 1.704-2(f).  This Section 5.03(b) is
intended to be a minimum gain chargeback provision that complies with the
requirements of Treasury Regulations Section 1.704-2(f), and shall be
interpreted in a manner consistent therewith.

 

(c)                                  If any Member that unexpectedly receives an
adjustment, allocation or Distribution described in Treasury Regulations
Section 1.704-1(b)(2)(ii)(d)(4), (5) and (6) has an Adjusted Capital Account
Deficit as of the end of any Taxable Year, computed after the application of
Sections 5.03(a) and 5.03(b) but before the application of any other provision
of this Article V, then Profits for such Taxable Year shall be allocated to such
Member in proportion to, and to the extent of, such Adjusted Capital Account
Deficit.  This Section 5.03(c) is intended to be a qualified income offset
provision as described in Treasury Regulations Section 1.704-1(b)(2)(ii)(d) and
shall be interpreted in a manner consistent therewith.

 

(d)                                 If the allocation of Losses to a Member as
provided in Section 5.02 would create or increase an Adjusted Capital Account
Deficit, there shall be allocated to such Member only that amount of Losses as
will not create or increase an Adjusted Capital Account Deficit.  The Losses
that would, absent the application of the preceding sentence, otherwise be
allocated to such Member shall be allocated to the other Members in accordance
with their relative Percentage Interests, subject to this Section 5.03(d).

 

(e)                                  Profits and Losses described in
Section 5.01(b)(v) shall be allocated in a manner consistent with the manner
that the adjustments to the Capital Accounts are required to be made pursuant to
Treasury Regulations Section 1.704-1(b)(2)(iv)(j) and (m).

 

(f)                                   Simulated Depletion for each Depletable
Property and Simulated Loss upon the disposition of a Depletable Property shall
be allocated among the Members in proportion to their shares of the Simulated
Basis in such property.

 

(g)                                  The allocations set forth in
Section 5.03(a) through and including Section 5.03(d) (the “Regulatory
Allocations”) are intended to comply with certain requirements of Sections

 

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1.704-1(b) and 1.704-2 of the Treasury Regulations.  The Regulatory Allocations
may not be consistent with the manner in which the Members intend to allocate
Profit and Loss of the Company or make Distributions.  Accordingly,
notwithstanding the other provisions of this Article V, but subject to the
Regulatory Allocations, income, gain, deduction and loss shall be reallocated
among the Members so as to eliminate the effect of the Regulatory Allocations
and thereby cause the respective Capital Accounts of the Members to be in the
amounts (or as close thereto as possible) they would have been if Profit and
Loss (and such other items of income, gain, deduction and loss) had been
allocated without reference to the Regulatory Allocations.  In general, the
Members anticipate that this will be accomplished by specially allocating other
Profit and Loss (and such other items of income, gain, deduction and loss) among
the Members so that the net amount of the Regulatory Allocations and such
special allocations to each such Member is zero.  In addition, if in any Taxable
Year or other Fiscal Period there is a decrease in Company Minimum Gain, or in
Member Minimum Gain, and application of the minimum gain chargeback requirements
set forth in Section 5.03(a) or Section 5.03(b) would cause a distortion in the
economic arrangement among the Members, the Members may, if they do not expect
that the Company will have sufficient other income to correct such distortion,
request the Internal Revenue Service to waive either or both of such minimum
gain chargeback requirements.  If such request is granted, this Agreement shall
be applied in such instance as if it did not contain such minimum gain
chargeback requirement.

 

Section 5.04                             Tax Allocations.

 

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

 

(b)                                 Cost and percentage depletion deductions
with respect each Depletable Property shall be computed separately by the
Members rather than the Company.  For purposes of such computations, the U.S.
federal income tax basis of each Depletable Property shall be allocated to each
Member in accordance with such Member’s Percentage Interest as of the time such
Depletable Property is acquired by the Company, and shall be reallocated among
the Members in accordance with such Member’s Percentage Interest as determined
immediately following the occurrence of an event giving rise to an adjustment to
the Book Values of the Company’s Depletable Properties pursuant to the
definition of Book Value (or at the time of any material additions to the U.S.
federal income tax basis of such Depletable Property).  Such allocations are
intended to be applied in accordance with the “partners’ interests in
partnership capital” under Section 613A(c)(7)(D) of the Code; provided that the
Members understand and agree that the Manager may authorize special allocations
of tax basis, income, gain, deduction or loss, as computed for U.S. federal
income tax purposes, in order to eliminate differences between Simulated Basis
and adjusted U.S. federal income tax basis with respect to Depletable
Properties, in such manner as determined consistent with the principles of
Section 704(c) of the Code, the Treasury Regulations thereunder and the portions
of the Treasury Regulations under Section 704(b) that apply the principles of
Section 704(c).  For the purposes of applying the “remedial

 

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allocation method” to Depletable Properties (i) the amount by which any Member’s
Capital Account is adjusted for Simulated Depletion shall be treated as an
amount of book depletion allocated to such Member and (ii) the amount of cost
depletion computed by such Member under section 613A(c)(7)(D) of the Code shall
be treated as an amount of tax depletion allocated to such Member.

 

(c)                                  For purposes of the separate computation of
gain or loss by each Member on a taxable Disposition of Depletable Property, the
amount realized from such Disposition shall be allocated (i) first, to the
Members in an amount equal to the Simulated Basis in such Depletable Property
and in the same proportion as their shares thereof were allocated and
(ii) second, any remaining amount realized shall be allocated consistent with
the allocation of Simulated Gains; provided, however, that the Members
understand and agree that the Board of Managers may authorize special
allocations of tax basis, income, gain, deduction or loss, as computed for U.S.
federal income tax purposes, in order to eliminate differences between Simulated
Basis and adjusted U.S. federal income tax basis with respect to Depletable
Properties, in such manner as determined consistent with the principles of
Section 704(c) of the Code, the Treasury Regulations thereunder and the portions
of the Treasury Regulations under Section 704(b) that apply the principles of
Section 704(c).  The provisions of this Section 5.5(c) and the other provisions
of this Agreement relating to allocations under Section 613A(c)(7)(D) of the
Code are intended to comply with Treasury Regulations
Section 1.704-1(b)(4)(v) and shall be interpreted and applied in a manner
consistent with such Treasury Regulations.

 

(d)                                 Each Member shall, in a manner consistent
with this Article V, separately keep records of its share of the adjusted tax
basis in each Depletable Property, adjust such share of the adjusted tax basis
for any cost or percentage depletion allowable with respect to such property and
use such adjusted tax basis in the computation of its cost depletion or in the
computation of its gain or loss on the disposition of such property by the
Company.  Upon the request of the Company, each Member may advise the Company of
its adjusted tax basis in each Depletable Property and any depletion computed
with respect thereto, both as computed in accordance with the provisions of this
subsection.  The Company may rely on such information and, if it is not provided
by the Member, may make such reasonable assumptions as it shall determine with
respect thereto.

 

(e)                                  Items of Company taxable income, gain, loss
and deduction with respect to any property contributed to the capital of the
Company shall be allocated among the Members 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 U.S. federal income tax purposes and its
Book Value using the “remedial allocation method”, as described in Treasury
Regulations Section 1.704-3(d)(1).

 

(f)                                   If the Book Value of any Company asset is
adjusted pursuant to Section 5.01(b), 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 U.S. federal
income tax purposes and its Book Value in the same manner as under Code
Section 704(c) using the “remedial allocation method”, as described in Treasury
Regulations Section 1.704-3(d)(1).

 

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(g)                                  If, as a result of an exercise of a
noncompensatory option (including the Warrants) to acquire an interest in the
Company, a Capital Account reallocation is required under Treasury Regulations
Section 1.704-1(b)(2)(iv)(s)(3), the Company shall make corrective allocations
pursuant to Treasury Regulations Section 1.704-1(b)(4)(x).

 

(h)                                 Allocations of tax credits, tax credit
recapture, and any items related thereto shall be allocated to the Members pro
rata as determined by the Manager taking into account the principles of Treasury
Regulations Section 1.704-1(b)(4)(ii).

 

(i)                                     For purposes of determining a Member’s
pro rata share of the Company’s “excess nonrecourse liabilities” within the
meaning of Treasury Regulations Section 1.752-3(a)(3), each Member’s interest in
income and gain shall be in proportion to the Units held by such Member.

 

(j)                                    Allocations pursuant to this Section 5.05
are solely for purposes of U.S. federal (and applicable state and local) income
taxes and shall not affect, or in any way be taken into account in computing,
any Member’s Capital Account or share of Profits, Losses, Distributions or other
Company items pursuant to any provision of this Agreement.

 

Section 5.05                             Withholding; Indemnification and
Reimbursement for Payments on Behalf of a Member.  The Company and its
Subsidiaries may withhold from distributions, allocations or portions thereof if
it is required to do so by any applicable Law, and each Member hereby authorizes
the Company and its Subsidiaries to withhold or pay on behalf of or with respect
to such Member any amount of U.S. federal, state, or local or non-U.S. taxes
that the Manager determines, in good faith, that the Company or any of its
Subsidiaries is required to withhold or pay with respect to any amount
distributable or allocable to such Member pursuant to this Agreement.  In
addition, if the Company is obligated to pay any other amount to a Governmental
Entity (or otherwise makes a payment to a Governmental Entity) that is
specifically attributable to a Member (including U.S. federal income taxes as a
result of Company obligations pursuant to the Revised Partnership Audit
Provisions with respect to items of income, gain, loss deduction or credit
allocable or attributable to such Member, state personal property taxes and
state unincorporated business taxes, but excluding payments such as professional
association fees and the like made voluntarily by the Company on behalf of any
Member based upon such Member’s status as an employee of the Company), then such
tax shall be treated as an amount of taxes withheld or paid with respect to such
Member pursuant to this Section 5.06.  For all purposes under this Agreement,
any amounts withheld or paid with respect to a Member pursuant to this
Section 5.06 shall be treated as having been distributed to such Member at the
time such withholding or payment is made.  Further, to the extent that the
cumulative amount of such withholding or payment for any period exceeds the
distributions to which such Member is entitled for such period, such Member
shall indemnify the Company in full for the amount of such excess.  The Manager
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 5.06.  A Member’s obligation to indemnify the Company under this
Section 5.06 shall survive the termination, dissolution, liquidation and winding
up of the Company, and for purposes of this Section 5.06, the Company shall be
treated as continuing in existence.  The Company may pursue and enforce all
rights and remedies it may have against each Member under this Section 5.06,
including instituting a lawsuit to collect amounts owed under such indemnity
with interest accruing from the date such withholding or payment is made by the
Company at a rate per

 

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annum equal to the sum of the Base Rate (but not in excess of the highest rate
per annum permitted by Law).  Any income from such indemnity (and interest)
shall not be allocated to or distributed to the Member paying such indemnity
(and interest).  Each Member hereby agrees to furnish to the Company such
information and forms as required or reasonably requested in order to comply
with any laws and regulations governing withholding of tax or in order to claim
any reduced rate of, or exemption from, withholding to which the Member is
legally entitled.

 

ARTICLE VI.
MANAGEMENT

 

Section 6.01                             Authority of Manager.

 

(a)                                 Except for situations in which the approval
of any Member(s) is specifically required by this Agreement, (i) all management
powers over the business and affairs of the Company shall be exclusively vested
in the Corporation, as the sole managing member of the Company (the Corporation,
in such capacity, the “Manager”) and (ii) the Manager shall conduct, direct and
exercise full control over all activities of the Company.  The Manager shall be
the “manager” of the Company for the purposes of the Delaware Act.  Except as
otherwise expressly provided for herein and subject to the other provisions of
this Agreement, the Members hereby consent to the exercise by the Manager of all
such powers and rights conferred on the Members by the Delaware Act with respect
to the management and control of the Company.  Any vacancies in the position of
Manager shall be filled in accordance with Section 6.04.  Each of the Original
Members hereby terminates, as of the Effective Time, the “Board” previously
established in order to conduct the business of the Company pursuant to the
Second A&R LLC Agreement (as such term was previously defined in the Second A&R
LLC Agreement).

 

(b)                                 The day-to-day business and operations of
the Company shall be overseen and implemented by officers of the Company (each,
an “Officer” and collectively, the “Officers”), subject to the limitations
imposed by the Manager.  An Officer may, but need not, be a Member.  Each
Officer shall be appointed by the Manager and shall hold office until his or her
successor shall be duly designated and shall qualify or until his or her death
or until he shall resign or shall have been removed in the manner hereinafter
provided.  Any one Person may hold more than one office.  Subject to the other
provisions in this Agreement (including in Section 6.07 below), the salaries or
other compensation, if any, of the Officers of the Company shall be fixed from
time to time by the Manager.  The authority and responsibility of the Officers
shall include, but not be limited to, such duties as the Manager may, from time
to time, delegate to them and the carrying out of the Company’s business and
affairs on a day-to-day basis.  An Officer may also perform one or more roles as
an officer of the Manager.

 

(c)                                  The Manager shall have the power and
authority to effectuate the sale, lease, transfer, exchange or other disposition
of any, all or substantially all of the assets of the Company (including the
exercise or grant of any conversion, option, privilege or subscription right or
any other right available in connection with any assets at any time held by the
Company) or the merger, consolidation, reorganization or other combination of
the Company with or into another entity.

 

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Section 6.02                             Actions of the Manager.  The Manager
may act through any Officer or through any other Person or Persons to whom
authority and duties have been delegated pursuant to Section 6.07.

 

Section 6.03                             Resignation; No Removal.  The Manager
may resign at any time by giving written notice to the Members.  Unless
otherwise specified in the notice, the resignation shall take effect upon
receipt thereof by the Members, and the acceptance of the resignation shall not
be necessary to make it effective.  For the avoidance of doubt, the Members have
no right under this Agreement to remove or replace the Manager.

 

Section 6.04                             Vacancies.  Vacancies in the position
of Manager occurring for any reason shall be filled by the Corporation (or, if
the Corporation has ceased to exist without any successor or assign, then by the
holders of a majority in interest of the voting capital stock of the Corporation
immediately prior to such cessation).  For the avoidance of doubt, the Members
(other than the Corporation) have no right under this Agreement to fill any
vacancy in the position of Manager.

 

Section 6.05                             Transactions Between Company and
Manager.  The Manager may cause the Company to contract and deal with the
Manager, or any Affiliate of the Manager, provided such contracts and dealings
are on terms comparable to and competitive with those available to the Company
from others dealing at arm’s length or are approved by the Members holding a
majority of the Units (excluding Units held by the Manager and its controlled
Affiliates) then outstanding and otherwise are permitted by the Credit
Agreement.

 

Section 6.06                             Reimbursement for Expenses.  The
Manager shall not be compensated for its services as Manager of the Company
except as expressly provided in this Agreement.  The Members acknowledge and
agree that the Manager’s Class A Common Stock is and will continue to be
publicly traded and therefore the Manager will have access to the public capital
markets and that such status and the services performed by the Manager will
inure to the benefit of the Company and all Members; therefore, the Manager
shall be reimbursed by the Company for any reasonable out-of-pocket expenses
incurred on behalf of the Company, including all fees, expenses and costs of
being a public company (including public reporting obligations, proxy
statements, stockholder meetings, stock exchange fees, transfer agent fees, SEC
and FINRA filing fees and offering expenses) and maintaining its corporate
existence.  In the event that (i) shares of Class A Common Stock were sold to
underwriters in the initial public offering of the Corporation or are sold to
underwriters in any public offering after the Effective Time, in each case, at a
price per share that is lower than the price per share for which such shares of
Class A Common Stock are sold to the public in such public offering after taking
into account underwriters’ discounts or commissions and brokers’ fees or
commissions (including, for the avoidance of doubt, any deferred discounts or
commissions and brokers’ fees or commissions payable in connection with or as a
result of the Contribution Closing) (such difference, the “Discount”) and
(ii) the proceeds from such public offering are used to fund the Cash Settlement
for any Redeemed Units or otherwise contributed to the Company, the Company
shall reimburse the Manager for such Discount by treating such Discount as an
additional Capital Contribution made by the Manager to the Company, issuing
Common Units in respect of such deemed Capital Contribution in accordance with
Section 11.02, and increasing the Manager’s Capital Account by the amount of
such Discount. To the extent practicable, expenses incurred by the Manager on

 

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behalf of or for the benefit of the Company shall be billed directly to and paid
by the Company and, if and to the extent any reimbursements to the Manager or
any of its Affiliates by the Company pursuant to this Section 6.06 constitute
gross income to such Person (as opposed to the repayment of advances made by
such Person on behalf of the Company), such amounts shall be treated as
“guaranteed payments” within the meaning of Code Section 707(c) and shall not be
treated as distributions for purposes of computing the Members’ Capital
Accounts.

 

Section 6.07                             Delegation of Authority.  The Manager
(a) may, from time to time, delegate to one or more Persons such authority and
duties as the Manager may deem advisable, and (b) may assign titles (including
chief executive officer, president, chief executive officer, chief financial
officers, chief operating officer, vice president, secretary, assistant
secretary, treasurer or assistant treasurer) and delegate certain authority and
duties to such Persons as the same may be amended, restated or otherwise
modified from time to time.  Any number of titles may be held by the same
individual.  The salaries or other compensation, if any, of such agents of the
Company shall be fixed from time to time by the Manager, subject to the other
provisions in this Agreement.

 

Section 6.08                             Limitation of Liability of Manager.

 

(a)                                 Except as otherwise provided herein or in an
agreement entered into by such Person and the Company, neither the Manager nor
any of the Manager’s Affiliates shall be liable to the Company or to any Member
that is not the Manager for any act or omission performed or omitted by the
Manager in its capacity as the sole managing member of the Company pursuant to
authority granted to the Manager by this Agreement; provided, however, that,
except as otherwise provided herein, such limitation of liability shall not
apply to the extent the act or omission was attributable to the Manager’s bad
faith, willful misconduct or violation of Law in which the Manager acted with
knowledge that its conduct was unlawful, or for any present or future breaches
of any representations, warranties, covenants or obligations by the Manager or
its Affiliates contained herein or in the other agreements with the Company. 
The Manager may exercise any of the powers granted to it by this Agreement and
perform any of the duties imposed upon it hereunder either directly or by or
through its agents, and shall not be responsible for any misconduct or
negligence on the part of any such agent (so long as such agent was selected in
good faith and with reasonable care).  The Manager shall be entitled to rely
upon the advice of legal counsel, independent public accountants and other
experts, including financial advisors, and any act of or failure to act by the
Manager in good faith reliance on such advice shall in no event subject the
Manager to liability to the Company or any Member that is not the Manager.

 

(b)                                 Whenever this Agreement or any other
agreement contemplated herein provides that the Manager shall act in a manner
which is, or provide terms which are, “fair and reasonable” to the Company or
any Member that is not the Manager, the Manager shall determine such appropriate
action or provide such terms considering, in each case, the relative interests
of each party to such agreement, transaction or situation and the benefits and
burdens relating to such interests, any customary or accepted industry
practices, and any applicable United States generally accepted accounting
practices or principles.

 

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(c)                                  Whenever in this Agreement or any other
agreement contemplated herein, the Manager is permitted or required to take any
action or to make a decision in its “sole discretion” or “discretion,” with
“complete discretion” or under a grant of similar authority or latitude, the
Manager shall be entitled to consider such interests and factors as it desires,
including its own interests, and shall, to the fullest extent permitted by
applicable Law, have no duty or obligation to give any consideration to any
interest of or factors affecting the Company or other Members.

 

(d)                                 Whenever in this Agreement the Manager is
permitted or required to take any action or to make a decision in its “good
faith” or under another express standard, the Manager shall act under such
express standard and, to the fullest extent permitted by applicable Law, shall
not be subject to any other or different standards imposed by this Agreement or
any other agreement contemplated herein, and, notwithstanding anything contained
herein to the contrary, so long as the Manager acts in good faith, the
resolution, action or terms so made, taken or provided by the Manager shall not
constitute a breach of this Agreement or any other agreement contemplated herein
or impose liability upon the Manager or any of the Manager’s Affiliates.

 

Section 6.09                             Investment Company Act.  The Manager
shall use its best efforts to ensure that the Company shall not be subject to
registration as an investment company pursuant to the Investment Company Act.

 

Section 6.10                             Outside Activities of the Manager.  The
Manager shall not, directly or indirectly, enter into or conduct any business or
operations, other than in connection with (a) the ownership, acquisition and
disposition of Common Units, (b) the management of the business and affairs of
the Company and its Subsidiaries, (c) the operation of the Manager as a
reporting company with a class (or classes) of securities registered under
Section 12 of the Exchange Act and listed on a securities exchange, (d) the
offering, sale, syndication, private placement or public offering of stock,
bonds, securities or other interests, (e) financing or refinancing of any type
related to the Company, its Subsidiaries or their assets or activities, and
(f) such activities as are incidental to the foregoing; provided, however, that,
except as otherwise provided herein, the net proceeds of any sale of Equity
Securities of the Corporation pursuant to the preceding clauses (d) and
(e) shall be made available to the Company as Capital Contributions and the
proceeds of any other financing raised by the Manager pursuant to the preceding
clauses (d) and (e) shall be made available to the Company as loans or otherwise
as appropriate and, provided further, that the Manager may, in its sole and
absolute discretion, from time to time hold or acquire assets in its own name or
otherwise other than through the Company and its Subsidiaries so long as the
Manager takes all necessary measures to ensure that the economic benefits and
burdens of such assets are otherwise vested in the Company or its Subsidiaries,
through assignment, mortgage loan or otherwise.  Nothing contained herein shall
be deemed to prohibit the Manager from executing any guarantee of indebtedness
of the Company or its Subsidiaries.

 

Section 6.11                             Standard of Care.  Except to the extent
otherwise expressly set forth in this Agreement, the Manager shall, in
connection with the performance of its duties in its capacity as the Manager,
have the same fiduciary duties to the Company and the Members as would be owed
to a Delaware corporation and its stockholders by its directors, and shall be
entitled to the benefit of the same presumptions in carrying out such duties as
would be afforded to a director of a Delaware corporation (as such duties and
presumptions are defined, described and explained under the Laws of the State of
Delaware as in effect from time to time).  The provisions of this

 

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Agreement, to the extent that they restrict or eliminate the duties (including
fiduciary duties) and liabilities of the Manager otherwise existing at law or in
equity, are agreed by the Members to replace, to the fullest extent permitted by
applicable Law, such other duties and liabilities of the Manager.

 

ARTICLE VII.
RIGHTS AND OBLIGATIONS OF MEMBERS

 

Section 7.01                             Limitation of Liability and Duties of
Members; Investment Opportunities.

 

(a)                                 Except as provided in this Agreement or in
the Delaware Act, no Member (including the Manager) shall be obligated
personally for any debt, obligation or liability solely by reason of being a
Member or acting as the Manager of the Company; provided that, in the case of
the Manager, this sentence shall not in any manner limit the liability of the
Manager to the Company or any Member (other than the Manager) attributable to a
breach by the Manager of any obligations of the Manager under this Agreement. 
Notwithstanding anything contained herein to the contrary, the failure of the
Company to observe any formalities or requirements relating to the exercise of
its powers or management of its business and affairs under this Agreement or the
Delaware Act shall not be grounds for imposing personal liability on the Members
for liabilities of the Company.

 

(b)                                 In accordance with the Delaware Act and the
laws of the State of Delaware, a Member may, under certain circumstances, be
required to return amounts previously distributed to such Member.  It is the
intent of the Members that no Distribution to any Member pursuant to Article IV
shall be deemed a return of money or other property paid or distributed in
violation of the Delaware Act.  The payment of any such money or Distribution of
any such property to a Member shall be deemed to be a compromise within the
meaning of Section 18-502(b) of the Delaware Act, and, to the fullest extent
permitted by Law, any Member receiving any such money or property shall not be
required to return any such money or property to the Company or any other
Person.  However, if any court of competent jurisdiction holds that,
notwithstanding the provisions of this Agreement, any Member is obligated to
make any such payment, such obligation shall be the obligation of such Member
and not of any other Member.

 

(c)                                  Notwithstanding any other provision of this
Agreement (subject to Section 6.08 and except as set forth in Section 6.11, in
each case with respect to the Manager), to the extent that, at law or in equity,
any Member (or such Member’s Affiliate or any manager, managing member, general
partner, director, officer, employee, agent, fiduciary or trustee of such Member
or of any Affiliate of such Member (each Person described in this parenthetical,
a “Related Person”)) has duties (including fiduciary duties) to the Company, to
the Manager, to another Member, to any Person who acquires an interest in a
Company Interest or to any other Person bound by this Agreement, all such duties
(including fiduciary duties) are hereby eliminated, to the fullest extent
permitted by law, and replaced with the duties or standards expressly set forth
herein, if any.  The elimination of duties (including fiduciary duties) to the
Company, the Manager, each of the Members, each other Person who acquires an
interest in a Company Interest and each other Person bound by this Agreement and
replacement thereof with the duties or standards expressly set forth herein, if
any, are approved by the Company, the Manager, each

 

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of the Members, each other Person who acquires an interest in a Company Interest
and each other Person bound by this Agreement.

 

(d)                                 Notwithstanding any duty (including any
fiduciary duty) otherwise applicable at law or in equity, the doctrine of
corporate opportunity, or any analogous doctrine, will not apply to any Member
(including the Manager) or to any Related Person of such Member, and no Member
(or any Related Person of such Member) that acquires knowledge of a potential
transaction, agreement, arrangement or other matter that may be an opportunity
for the Company or the Members will have any duty to communicate or offer such
opportunity to the Company or the Members, or to develop any particular
investment, and such Person will not be liable to the Company or the Members for
breach of any fiduciary or other duty by reason of the fact that such Person
pursues or acquires for, or directs such opportunity to, another Person or does
not communicate such investment opportunity to the Members.  Notwithstanding any
duty (including any fiduciary duty) otherwise applicable at law or in equity,
neither the Company nor any Member has any rights or obligations by virtue of
this Agreement or the relationships created hereby in or to such independent
ventures or the income or profits or losses derived therefrom, and the pursuit
of any such ventures outside the Company, even if competitive with the
activities of the Company or the Members, will not be deemed wrongful or
improper.

 

Section 7.02                             Lack of Authority.  No Member, other
than the Manager or a duly appointed Officer, in each case in its capacity as
such, has the authority or power to act for or on behalf of the Company, to do
any act that would be binding on the Company or to make any expenditure on
behalf of the Company.  The Members hereby consent to the exercise by the
Manager of the powers conferred on them by Law and this Agreement.

 

Section 7.03                             No Right of Partition.  No Member,
other than the Manager, shall have the right to seek or obtain partition by
court decree or operation of Law of any Company property, or the right to own or
use particular or individual assets of the Company.

 

Section 7.04                             Indemnification.

 

(a)                                 Subject to Section 5.06, the Company hereby
agrees to indemnify and hold harmless any Person (each an “Indemnified Person”)
to the fullest extent permitted under the Delaware Act, as the same now exists
or may hereafter be amended, substituted or replaced (but, in the case of any
such amendment, substitution or replacement only to the extent that such
amendment, substitution or replacement permits the Company to provide broader
indemnification rights than the Company is providing immediately prior to such
amendment), against all expenses, liabilities and losses (including attorneys’
fees, judgments, fines, excise taxes or penalties) reasonably incurred or
suffered by such Person (or one or more of such Person’s Affiliates) by reason
of the fact that such Person is or was a Member or is or was serving as the
Manager, Officer, employee or other agent of the Company or is or was serving at
the request of the Company as a manager, officer, director, principal, member,
employee or agent of another corporation, partnership, joint venture, limited
liability company, trust or other enterprise; provided, however, that no
Indemnified Person shall be indemnified for any expenses, liabilities and losses
suffered that are attributable to such Indemnified Person’s or its Affiliates’
bad faith, willful misconduct or violation of Law in which the Manager acted
with knowledge that its conduct was unlawful, or for any present or future
breaches of any representations,

 

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warranties, covenants or obligations by such Indemnified Person or its
Affiliates contained herein or in the other agreements with the Company. 
Expenses, including attorneys’ fees, incurred by any such Indemnified Person in
defending a proceeding shall be paid by the Company in advance of the final
disposition of such proceeding, including any appeal therefrom, upon receipt of
an undertaking by or on behalf of such Indemnified Person to repay such amount
if it shall ultimately be determined that such Indemnified Person is not
entitled to be indemnified by the Company.

 

(b)                                 The right to indemnification and the
advancement of expenses conferred in this Section 7.04 shall not be exclusive of
any other right which any Person may have or hereafter acquire under any
statute, agreement, bylaw, action by the Manager or otherwise.

 

(c)                                  The Company shall maintain directors’ and
officers’ liability insurance, or substantially equivalent insurance, at its
expense, to protect any Indemnified Person (and the investment funds, if any,
they represent) against any expense, liability or loss described in
Section 7.04(a) whether or not the Company would have the power to indemnify
such Indemnified Person against such expense, liability or loss under the
provisions of this Section 7.04.  The Company shall use its commercially
reasonable efforts to purchase and maintain property, casualty and liability
insurance in types and at levels customary for companies of similar size engaged
in similar lines of business, as determined in good faith by the Manager.

 

(d)                                 Notwithstanding anything contained herein to
the contrary (including in this Section 7.04), the Company agrees that any
indemnification and advancement of expenses available to any current or former
Indemnified Person from any investment fund that is an Affiliate of the Company
who served as a director of the Company or as a Member of the Company by virtue
of such Person’s service as a member, director, partner or employee of any such
fund prior to or following the Effective Time (any such Person, a “Sponsor
Person”) shall be secondary to the indemnification and advancement of expenses
to be provided by the Company pursuant to this Section 7.04 which 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 by 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
and the Company (i) shall be the primary indemnitor of first resort for such
Sponsor Person pursuant to this Section 7.04 and (ii) shall be fully responsible
for the advancement of all expenses and the payment of all damages or
liabilities with respect to such Sponsor Person which are addressed by this
Section 7.04.

 

(e)                                  If this Section 7.04 or any portion hereof
shall be invalidated on any ground by any court of competent jurisdiction, then
the Company shall nevertheless indemnify and hold harmless each Indemnified
Person pursuant to this Section 7.04 to the fullest extent permitted by any
applicable portion of this Section 7.04 that shall not have been invalidated and
to the fullest extent permitted by applicable Law.

 

Section 7.05                             Members Right to Act.  For matters that
require the approval of the Members, the Members shall act through meetings and
written consents as described in paragraphs (a) and (b) below:

 

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(a)                                 Except as otherwise expressly provided by
this Agreement, acts by the Members holding a majority of the outstanding Units,
voting together as a single class, shall be the acts of the Members.  Any Member
entitled to vote at a meeting of Members may authorize another person or persons
to act for it by proxy.  An electronic mail, telegram, telex, cablegram or
similar transmission by the Member, or a photographic, photostatic, facsimile or
similar reproduction of a writing executed by the Member shall (if stated
thereon) be treated as a proxy executed in writing for purposes of this
Section 7.05(a).  No proxy shall be voted or acted upon after eleven months from
the date thereof, unless the proxy provides for a longer period.  A proxy shall
be revocable unless the proxy form conspicuously states that the proxy is
irrevocable and that the proxy is coupled with an interest.  Should a proxy
designate two or more Persons to act as proxies, unless that instrument shall
provide to the contrary, a majority of such Persons present at any meeting at
which their powers thereunder are to be exercised shall have and may exercise
all the powers of voting or giving consents thereby conferred, or, if only one
be present, then such powers may be exercised by that one; or, if an even number
attend and a majority do not agree on any particular issue, the Company shall
not be required to recognize such proxy with respect to such issue if such proxy
does not specify how the votes that are the subject of such proxy are to be
voted with respect to such issue.

 

(b)                                 The actions by the Members permitted
hereunder may be taken at a meeting called by the Manager or by the Members
holding a majority of the Units entitled to vote on such matter on at least 48
hours’ prior written notice to the other Members entitled to vote, which notice
shall state the purpose or purposes for which such meeting is being called.  The
actions taken by the Members entitled to vote or consent at any meeting (as
opposed to by written consent), however called and noticed, shall be as valid as
though taken at a meeting duly held after regular call and notice if (but not
until), either before, at or after the meeting, the Members entitled to vote or
consent as to whom it was improperly held signs a written waiver of notice or a
consent to the holding of such meeting or an approval of the minutes thereof. 
The actions by the Members entitled to vote or consent may be taken by vote of
the Members entitled to vote or consent at a meeting or by written consent, so
long as such consent is signed by Members having not less than the minimum
number of Units that would be necessary to authorize or take such action at a
meeting at which all Members entitled to vote thereon were present and voted. 
Prompt notice of the action so taken, which shall state the purpose or purposes
for which such consent is required and may be delivered via email, without a
meeting shall be given to those Members entitled to vote or consent who have not
consented in writing; provided, however, that the failure to give any such
notice shall not affect the validity of the action taken by such written
consent.  Any action taken pursuant to such written consent of the Members shall
have the same force and effect as if taken by the Members at a meeting thereof.

 

Section 7.06                             Inspection Rights.  The Company shall
permit each Member and each of its designated representatives to (i) visit and
inspect any of the properties of the Company and its Subsidiaries, all at
reasonable times and upon reasonable notice, (ii) examine the corporate and
financial records of the Company or any of its Subsidiaries and make copies
thereof or extracts therefrom, (iii) consult with the managers, officers,
employees and independent accountants of the Company or any of its Subsidiaries
concerning the affairs, finances and accounts of the Company or any of its
Subsidiaries.  The presentation of an executed copy of this Agreement by any
Member to the Company’s independent accountants shall constitute the Company’s

 

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permission to its independent accountants to participate in discussions with
such Persons and their respective designated representatives.

 

ARTICLE VIII.
BOOKS, RECORDS, ACCOUNTING AND REPORTS, AFFIRMATIVE COVENANTS

 

Section 8.01                             Records and Accounting.  The Company
shall keep, or cause to be kept, appropriate books and records with respect to
the Company’s business, including all books and records necessary to provide any
information, lists and copies of documents required to be provided pursuant to
Section 8.03 or pursuant to applicable Laws.  All matters concerning (a) the
determination of the relative amount of allocations and Distributions among the
Members pursuant to Articles III and IV and (b) accounting procedures and
determinations, and other determinations not specifically and expressly provided
for by the terms of this Agreement, shall be determined by the Manager, whose
determination shall be final and conclusive as to all of the Members absent
manifest clerical error.

 

Section 8.02                             Fiscal Year.  The Fiscal Year of the
Company shall end on December 31 of each year or such other date as may be
established by the Manager; provided that the Company shall have the same Fiscal
Year for accounting purposes as its Taxable Year for U.S. federal income tax
purposes.

 

Section 8.03                             Reports.  The Company shall deliver or
cause to be delivered, within ninety (90) days after the end of each Fiscal
Year, to each Person who was a Member at any time during such Fiscal Year, all
information reasonably necessary for the preparation of such Person’s United
States federal and applicable state income tax returns.

 

ARTICLE IX.
TAX MATTERS

 

Section 9.01                             Preparation of Tax Returns.  The
Manager shall arrange, at the Company’s expense, for the preparation and timely
filing of all tax returns required to be filed by the Company.  On or before
March 15, June 15, September 15, and December 15 of each Taxable Year, the
Company shall send to each Person who was a Member at any time during the prior
quarter, an estimate of such Member’s state tax apportionment information and
allocations to the Members of taxable income, gains, losses, deductions and
credits for the prior quarter, which estimate shall have been reviewed by the
Company’s outside tax accountants.  In addition, no later than the later of
(i) March 15 following the end of the prior Taxable Year, and (ii) thirty (30)
Business Days after the issuance of the final financial statement report for a
Fiscal Year by the Company’s auditors, the Company shall send to each Person who
was a Member at any time during such Taxable Year, a statement showing such
Member’s (A) final state tax apportionment information, (B) allocations to the
Members of taxable income, gains, losses, deductions and credits for such
Taxable Year, (C) a completed IRS Schedule K-1 and (D) all other information
reasonably requested and necessary for the preparation of such Person’s U.S.
federal (and applicable state and local) income tax returns.  Each Member shall
notify the Company, and the Company shall take reasonable efforts to notify each
of the other Members, upon receipt of any notice of tax examination of the
Company by U.S. federal, state or local authorities.  Subject to the terms and
conditions of this Agreement, in its capacity as Tax Matters Partner or
Partnership

 

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Representative (as applicable), the Corporation shall have the authority to
prepare the tax returns of the Company using the elections set forth in
Section 9.02 and such other permissible methods and elections as it determines
in its reasonable discretion.

 

Section 9.02                             Tax Elections.  The Company and any
eligible Subsidiary shall make an election pursuant to Section 754 of the Code,
shall not thereafter revoke such election and shall make a new election pursuant
to Section 754 to the extent necessary following any “termination” of the
Company or the Subsidiary under Section 708 of the Code.  In addition, the
Company (and any eligible Subsidiary) shall make the following elections on the
appropriate forms or tax returns:

 

(a)                                 to adopt the calendar year as the Company’s
Taxable Year, if permitted under the Code;

 

(b)                                 to adopt the accrual method of accounting
for U.S. federal income tax purposes;

 

(c)                                  to elect to amortize the organizational
expenses of the Company as permitted by Code Section 709(b); and

 

(d)                                 to elect out of the application of the
company-level audit and adjustment rules of the Bipartisan Budget Act of 2015,
if applicable.

 

Each Member will upon request supply any information reasonably necessary to
give proper effect to any such elections.

 

Section 9.03                             Tax Controversies.

 

(a)                                 With respect to Tax Years beginning on or
before December 31, 2017, the Corporation is hereby designated the Tax Matters
Partner of the Company, within the meaning given to such term in Section 6231 of
the Code (the Corporation, in such capacity, the “Tax Matters Partner”) and 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 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 Partners shall keep
all Members fully advised on a current basis of any contacts by or discussions
with the tax authorities, and the Members shall have the right to observe and
participate through representatives of their own choosing (at their sole
expense) in any tax proceedings.  Notwithstanding the foregoing, the Tax Matters
Partners shall not settle or otherwise compromise any issue in any such
examination, audit or other proceeding without first obtaining approval of the
Manager.  Nothing herein shall diminish, limit or restrict the rights of any
Member under Subchapter C, Chapter 63, Subtitle F of the Code (Code Sections
6221 et seq.).

 

(b)                                 With respect to Tax Years beginning after
December 31, 2017, pursuant to the Revised Partnership Audit Provisions, the
Corporation shall be designated and may, on behalf of the Company, at any time,
and without further notice to or consent from any Member, act as the
“partnership representative” of the Company, within the meaning given to such
term in Section

 

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6223 of the Code (the Corporation, in such capacity, the “Partnership
Representative”) for purposes of the Code.  The Partnership Representative shall
have the right and obligation to take all actions authorized and required,
respectively, by the Code for the Partnership Representative, and 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 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 Partnership Representative shall keep all Members fully
advised on a current basis of any contacts by or discussions with the tax
authorities, and the Members shall have the right to observe and participate
through representatives of their own choosing (at their sole expense) in any tax
proceedings.  Nothing herein shall diminish, limit or restrict the rights of any
Member under the Revised Partnership Audit Provisions.

 

ARTICLE X.
RESTRICTIONS ON TRANSFER OF UNITS; PREEMPTIVE RIGHTS

 

Section 10.01                      Transfers by Members.  No holder of Units may
Transfer any interest in any Units, except Transfers (a) pursuant to and in
accordance with Section 10.02 or (b) approved in writing by the Manager. 
Notwithstanding the foregoing, “Transfer” shall not include an event that does
not terminate the existence of such Member under applicable state law (or, in
the case of a trust that is a Member, does not terminate the trusteeship of the
fiduciaries under such trust with respect to all the Company Interests of such
trust that is a Member).

 

Section 10.02                      Permitted Transfers.  The restrictions
contained in Section 10.01 shall not apply to any Transfer (each, a “Permitted
Transfer”) (i) by a Member to an Affiliate of such Member, (ii) by any Original
Member to the holders of equity interests in such Original Member in connection
with the dissolution of such Original Member, (iii) by NGP Follow-On to Carlyle
Partners VI Centennial Holdings, L.P., (iv) by any transferee pursuant to clause
(ii) of this sentence to any Affiliate of such transferee or any trust, family
partnership or family limited liability company, the sole beneficiaries,
partners or members of which are such transferee or Relatives of such
transferee, or (v) pursuant to a Redemption or Direct Exchange in accordance
with Article XI hereof; provided, however, that (A) the restrictions contained
in this Agreement will continue to apply to Units after any Permitted Transfer
of such Units and (B) in the case of the foregoing clauses (i), (ii) and (iii),
the transferees of the Units so Transferred shall agree in writing to be bound
by the provisions of this Agreement, and the transferor will deliver a written
notice to the Company and the Members, which notice will disclose in reasonable
detail the identity of the proposed transferee.  In the case of a Permitted
Transfer (other than a Redemption or Direct Exchange) by any Original Member of
Common Units to a transferee in accordance with this Section 10.02 (including by
NGP Follow-On pursuant to clause (iii)), such Member (or any subsequent
transferee of such Member) shall be required to also transfer a number of shares
of Class C Common Stock corresponding to the number of such Member’s (or
subsequent transferee’s) Common Units that were transferred in the transaction
to such transferee; and, in the case of a Redemption or Direct Exchange, a
number of shares of Class C Common Stock corresponding to the number of such
Member’s Common Units that were transferred in such

 

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Redemption or Direct Exchange shall be cancelled.  All Permitted Transfers are
subject to the additional limitations set forth in Section 10.07(b).

 

Section 10.03                      Restricted Units Legend.  The Units have not
been registered under the Securities Act and, therefore, in addition to the
other restrictions on Transfer contained in this Agreement, cannot be sold
unless subsequently registered under the Securities Act or an exemption from
such registration is then available.  To the extent such Units have been
certificated, each certificate evidencing Units and each certificate issued in
exchange for or upon the Transfer of any Units (if such securities remain Units
as defined herein after such Transfer) shall be stamped or otherwise imprinted
with a legend in substantially the following form:

 

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED ON
OCTOBER 11, 2016, AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE “ACT”), AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN EXEMPTION FROM REGISTRATION
THEREUNDER.  THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE ALSO SUBJECT TO
ADDITIONAL RESTRICTIONS ON TRANSFER SPECIFIED IN THE FIFTH AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT OF CENTENNIAL RESOURCE PRODUCTION, LLC, AS
MAY BE AMENDED AND MODIFIED FROM TIME TO TIME, AND CENTENNIAL RESOURCE
PRODUCTION, LLC RESERVES THE RIGHT TO REFUSE THE TRANSFER OF SUCH SECURITIES
UNTIL SUCH CONDITIONS HAVE BEEN FULFILLED WITH RESPECT TO ANY TRANSFER.  A COPY
OF SUCH CONDITIONS SHALL BE FURNISHED BY CENTENNIAL RESOURCE PRODUCTION, LLC TO
THE HOLDER HEREOF UPON WRITTEN REQUEST AND WITHOUT CHARGE.”

 

The Company shall imprint such legend on certificates (if any) evidencing
Units.  The legend set forth above shall be removed from the certificates (if
any) evidencing any units which cease to be Units in accordance with the
definition thereof.

 

Section 10.04                      Transfer.  Prior to Transferring any Units
(other than (i) in connection with a Redemption or Direct Exchange in accordance
with Article XI or (ii) pursuant to a Change of Control Transaction), the
Transferring holder of Units shall cause the prospective transferee to be bound
by this Agreement and any other agreements executed by the holders of Units and
relating to such Units in the aggregate (collectively, the “Other Agreements”),
and shall cause the prospective transferee to execute and deliver to the Company
and the other holders of Units a Joinder (or other counterpart to this Agreement
acceptable to the Manager) and counterparts of any applicable Other Agreements. 
Any Transfer or attempted Transfer of any Units in violation of any provision of
this Agreement (including any prohibited indirect Transfers) (a) shall be void,
and (b) the Company shall not record such Transfer on its books or treat any
purported transferee of such Units as the owner of such securities for any
purpose.

 

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Section 10.05                      Assignee’s Rights.

 

(a)                                 The Transfer of a Company Interest in
accordance with this Agreement shall be effective as of the date of its
assignment (assuming compliance with all of the conditions to such Transfer set
forth herein), and such Transfer shall be shown on the books and records of the
Company.  Profits, Losses and other Company items shall be allocated between the
transferor and the Assignee according to Code Section 706, using any permissible
method as determined in the reasonable discretion of the Manager.  Distributions
made before the effective date of such Transfer shall be paid to the transferor,
and Distributions made after such date shall be paid to the Assignee.

 

(b)                                 Unless and until an Assignee becomes a
Member pursuant to Article XII, the Assignee shall not be entitled to any of the
rights granted to a Member hereunder or under applicable Law, other than the
rights granted specifically to Assignees pursuant to this Agreement; provided,
however, that, without relieving the transferring Member from any such
limitations or obligations as more fully described in Section 10.06, such
Assignee shall be bound by any limitations and obligations of a Member contained
herein that a Member would be bound on account of the Assignee’s Company
Interest (including the obligation to make Capital Contributions on account of
such Company Interest).

 

Section 10.06                      Assignor’s Rights and Obligations.  Any
Member who shall Transfer any Company Interest in a manner in accordance with
this Agreement shall cease to be a Member with respect to such Units or other
interest and shall no longer have any rights or privileges, or, except as set
forth in this Section 10.06, duties, liabilities or obligations, of a Member
with respect to such Units or other interest (it being understood, however, that
the applicable provisions of Section 6.08, Section 7.01 and Section 7.04 shall
continue to inure to such Person’s benefit), except that unless and until the
Assignee (if not already a Member) is admitted as a Substituted Member in
accordance with the provisions of Article XII (the “Admission Date”), (i) such
assigning Member shall retain all of the duties, liabilities and obligations of
a Member with respect to such Units or other interest, and (ii) the Manager may,
in its sole discretion, reinstate all or any portion of the rights and
privileges of such Member with respect to such Units or other interest for any
period of time prior to the Admission Date.  Nothing contained herein shall
relieve any Member who Transfers any Units or other interest in the Company from
any liability of such Member to the Company with respect to such Company
Interest that may exist on the Admission Date or that is otherwise specified in
the Delaware Act and incorporated into this Agreement or for any liability to
the Company or any other Person for any materially false statement made by such
Member (in its capacity as such) or for any present or future breaches of any
representations, warranties or covenants by such Member (in its capacity as
such) contained herein or in the other agreements with the Company.

 

Section 10.07                      Overriding Provisions.

 

(a)                                 Any Transfer in violation of this Article X
shall be null and void ab initio, and the provisions of Sections 10.05 and 10.06
shall not apply to any such Transfers.  For the avoidance of doubt, any Person
to whom a Transfer is made or attempted in violation of this Article X shall not
become a Member, shall not be entitled to vote on any matters coming before the
Members and shall not have any other rights in or with respect to any rights of
a Member of the Company.

 

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The approval of any Transfer in any one or more instances shall not limit or
waive the requirement for such approval in any other or future instance.  The
Manager shall promptly amend the Schedule of Members to reflect any Permitted
Transfer pursuant to this Article X.

 

(b)                                 Notwithstanding anything contained herein to
the contrary (including, for the avoidance of doubt, the provisions of
Section 10.01 and Article XI and Article XII), in no event shall any Member
Transfer any Units to the extent such Transfer would:

 

(i)                                     result in the violation of the
Securities Act, or any other applicable U.S. federal or state or non-U.S. Laws;

 

(ii)                                  subject the Company to registration as an
investment company under the Investment Company Act;

 

(iii)                               in the reasonable determination of the
Manager, be a violation of or a default (or an event that, with notice or the
lapse of time or both, would constitute a default) under, or result in an
acceleration of any indebtedness under, any promissory note, mortgage, loan
agreement, indenture or similar instrument or agreement to which the Company or
the Manager is a party; provided that the payee or creditor to whom the Company
or the Manager owes such obligation is not an Affiliate of the Company or the
Manager;

 

(iv)                              cause the Company to lose its status as a
partnership for U.S. federal income tax purposes or, without limiting the
generality of the foregoing, cause the Company to be treated as a “publicly
traded partnership” or to be taxed as a corporation pursuant to Section 7704 of
the Code and any applicable Treasury Regulations issued thereunder, or any
successor provision of the Code;

 

(v)                                 be a Transfer to a Person who is not legally
competent or who has not achieved his or her majority under applicable Law
(excluding trusts for the benefit of minors); or

 

(vi)                              result in the Company having more than one
hundred (100) partners, within the meaning of Treasury Regulations
Section 1.7704-1(h)(1) (determined pursuant to the rules of Treasury Regulations
Section 1.7704-1(h)(3)).

 

ARTICLE XI.
REDEMPTION AND EXCHANGE RIGHTS

 

Section 11.01                      Redemption Right of a Member.

 

(a)                                 Each Member (other than the Corporation)
shall be entitled to cause the Company to redeem (a “Redemption”) all or any
portion of its Common Units (the “Redemption Right”) at any time.  A Member
desiring to exercise its Redemption Right (the “Redeemed Member”) shall exercise
such right by giving written notice (the “Redemption Notice”) to the Company
with a copy to the Corporation (the date of the delivery of such Redemption
Notice, the “Redemption Notice Date”).  The Redemption Notice shall specify the
number of Common Units (the “Redeemed Units”) that the Redeemed Member intends
to have the Company redeem. The

 

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Redemption shall be completed on the date that is three (3) Business Days
following delivery of the applicable Redemption Notice, unless the Company
elects to make the redemption payment by means of a Cash Settlement, in which
case the Redemption shall be completed as promptly as practicable following
delivery of the applicable Redemption Notice, but in any event, no more than ten
(10) Business Days after delivery of such Redemption Notice (unless and to the
extent that the Manager in its sole discretion agrees in writing to waive such
time periods) (the date of such completion, the “Redemption Date”); provided
that the Company, the Corporation and the Redeemed Member may change the number
of Redeemed Units and/or the Redemption Date specified in such Redemption Notice
to another number and/or date by mutual agreement signed in writing by each of
them; provided further that a Redemption Notice may be conditioned on the
closing of an underwritten distribution of the shares of Class A Common Stock
that may be issued in connection with such proposed Redemption.  Unless the
Redeemed Member timely has delivered a Retraction Notice as provided in
Section 11.01(b) or has delayed a Redemption as provided in Section 11.01(c) or
the Corporation has elected to effect a Direct Exchange as provided in
Section 11.03, on the Redemption Date (to be effective immediately prior to the
close of business on the Redemption Date) (i) the Redeemed Member shall transfer
and surrender the Redeemed Units to the Company and a corresponding number of
shares of Class C Common Stock to the Corporation, in each case free and clear
of all liens and encumbrances, (ii) the Company shall (x) cancel the Redeemed
Units, (y) transfer to the Redeemed Member the consideration to which the
Redeemed Member is entitled under Section 11.01(b), and (z) if the Units are
certificated, issue to the Redeemed Member a certificate for a number of Common
Units equal to the difference (if any) between the number of Common Units
evidenced by the certificate surrendered by the Redeemed Member pursuant to
clause (i) of this Section 11.01(a) and the Redeemed Units and (iii) the
Corporation shall cancel such shares of Class C Common Stock.

 

(b)                                 In exchange for its Redeemed Units, a
Redeemed Member shall be entitled to receive the Share Settlement or, at the
Company’s election, the Cash Settlement from the Company.  Within one
(1) Business Day of delivery of the Redemption Notice, the Company shall give
written notice (the “Settlement Method Notice”) to the Redeemed Member (with a
copy to the Corporation) of its intended settlement method; provided that if the
Company does not timely deliver a Settlement Method Notice, the Company shall be
deemed to have elected the Share Settlement method.  The Redeemed Member may
retract its Redemption Notice by giving written notice (the “Retraction Notice”)
to the Company (with a copy to the Corporation) at any time prior to 5:00 p.m.,
New York City time, on the Business Day after delivery of the Settlement Method
Notice.  The timely delivery of a Retraction Notice shall terminate all of the
Redeemed Member’s, the Company’s and the Corporation’ rights and obligations
under this Section 11.01 arising from the retracted Redemption Notice.

 

(c)                                  Notwithstanding anything to the contrary in
Section 11.01(b), in the event the Company elects a Share Settlement in
connection with a Redemption, a Redeemed Member shall be entitled, at any time
prior to the consummation of a Redemption, to revoke its Redemption Notice or
delay the consummation of a Redemption if any of the following conditions
exists: (i) any registration statement pursuant to which the resale of the
Class A Common Stock to be registered for such Redeemed Member at or immediately
following the consummation of the Redemption shall have ceased to be effective
pursuant to any action or inaction by the SEC or no such resale registration
statement has yet become effective; (ii) the Corporation shall have failed

 

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to cause any related prospectus to be supplemented by any required prospectus
supplement necessary to effect such Redemption; (iii) the Corporation shall have
exercised its right to defer, delay or suspend the filing or effectiveness of a
registration statement and such deferral, delay or suspension shall affect the
ability of such Redeemed Member to have the resale of its Class A Common Stock
registered at or immediately following the consummation of the Redemption;
(iv) the Corporation shall have disclosed to such Redeemed Member any material
non-public information concerning the Corporation, the receipt of which results
in such Redeemed Member being prohibited or restricted from selling Class A
Common Stock at or immediately following the Redemption without disclosure of
such information (and the Corporation does not permit disclosure); (v) any stop
order relating to the registration statement pursuant to which the Class A
Common Stock was to be registered by such Redeemed Member at or immediately
following the Redemption shall have been issued by the SEC; (vi) there shall
have occurred a material disruption in the securities markets generally or in
the market or markets in which the Class A Common Stock is then traded;
(vii) there shall be in effect an injunction, a restraining order or a decree of
any nature of any Governmental Entity that restrains or prohibits the
Redemption; (viii) the Corporation shall have failed to comply in all material
respects with its obligations under the Registration Rights Agreement, and such
failure shall have affected the ability of such Redeemed Member to consummate
the resale of Class A Common Stock to be received upon such redemption pursuant
to an effective registration statement; or (ix) the Redemption Date would occur
three (3) Business Days or less prior to, or during, a Black-Out Period;
provided further, that in no event shall the Redeemed Member seeking to delay
the consummation of such Redemption and relying on any of the matters
contemplated in clauses (i) through (ix) above have controlled or intentionally
materially influenced any facts, circumstances, or Persons in connection
therewith (except in the good faith performance of his or her duties as an
officer or director of the Corporation) in order to provide such Redeemed Member
with a basis for such delay or revocation.  If a Redeemed Member delays the
consummation of a Redemption pursuant to this Section 11.01(c), (A) the
Redemption Date shall occur on the third Business Day following the date on
which the conditions giving rise to such delay cease to exist (or such earlier
day as the Corporation, the Company and such Redeemed Member may agree in
writing) and (B) notwithstanding anything to the contrary in Section 7.01(b),
the Redeemed Member may retract its Redemption Notice by giving a Retraction
Notice to the Company (with a copy to the Corporation) at any time prior to 5:00
p.m., New York City time, on the second Business Day following the date on which
the conditions giving rise to such delay cease to exist.

 

(d)                                 The amount of the Share Settlement or the
Cash Settlement that a Redeemed Member is entitled to receive under
Section 11.01(b) shall not be adjusted on account of any Distributions
previously made with respect to the Redeemed Units or dividends previously paid
with respect to Class A Common Stock; provided, however, that if a Redeemed
Member causes the Company to redeem Redeemed Units and the Redemption Date
occurs subsequent to the record date for any Distribution with respect to the
Redeemed Units but prior to payment of such Distribution, the Redeemed Member
shall be entitled to receive such Distribution with respect to the Redeemed
Units on the date that it is made notwithstanding that the Redeemed Member
transferred and surrendered the Redeemed Units to the Company prior to such
date.

 

(e)                                  In the event of a distribution (by dividend
or otherwise) by the Corporation to all holders of Class A Common Stock of
evidences of its indebtedness, securities, or other assets (including Equity
Securities of the Corporation), but excluding any cash dividend or distribution

 

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of any such assets received by the Corporation in respect of its Units, then in
exchange for its Redeemed Units, a Redeemed Member shall be entitled to receive,
in addition to the consideration set forth in Section 11.01(b), the amount of
such security, securities or other property that the Redeemed Member would have
received if such Redemption Right had been exercised and the Redemption Date had
occurred immediately prior to the record date or effective time of any such
transaction, taking into account any adjustment as a result of any subdivision
(by any split, distribution or dividend, reclassification, reorganization,
recapitalization or otherwise) or combination (by reverse split,
reclassification, recapitalization or otherwise) of such security, securities or
other property that occurs after such record date or effective time.  For the
avoidance of doubt, subsequent to any such transaction, this Article XI shall
apply mutatis mutandis with respect to any such security, securities or other
property received by holders of Class A Common Stock in such transaction.

 

(f)                                   If a Reclassification Event occurs, the
Manager or its successor, as the case may be, shall, as and to the extent
necessary, amend this Agreement in compliance with Section 16.03, and enter into
any necessary supplementary or additional agreements, to ensure that, following
the effective date of the Reclassification Event: (i) the rights of holders of
Common Units (other than the Corporation) set forth in this Section 11.01
provide that each Common Unit is redeemable for the same amount and same type of
property, securities or cash (or combination thereof) that one share of Class A
Common Stock becomes exchangeable for or converted into as a result of the
Reclassification Event (taking into account any adjustment as a result of any
subdivision (by any split, distribution or dividend, reclassification,
reorganization, recapitalization or otherwise) or combination (by reverse split,
reclassification, recapitalization or otherwise) of such security, securities or
other property that occurs after the record date or effective time for such
Reclassification Event) and (ii) the Corporation or the successor to the
Corporation, as applicable, is obligated to deliver such property, securities or
cash upon such redemption. The Corporation shall not consummate or agree to
consummate any Reclassification Event unless the successor Person, if any,
becomes obligated to comply with the obligations of the Corporation (in whatever
capacity) under this Agreement.

 

(g)                                  In connection with a Manager Change of
Control, the Corporation shall have the right to require each Member (other than
the Corporation) to effect a Redemption of some or all of such Member’s Common
Units and a corresponding number of shares of Class C Common Stock.  Any
Redemption pursuant to this Section 11.01(g) shall be effective immediately
prior to the consummation of the Manager Change of Control (and, for the
avoidance of doubt, shall not be effective if such Manager Change of Control is
not consummated) (the “Change of Control Redemption Date”).  From and after the
Change of Control Redemption Date, (i) the Common Units and shares of Class C
Common Stock subject to such Redemption shall be deemed to be transferred to the
Corporation on the Change of Control Redemption Date and (ii) such Member shall
cease to have any rights with respect to the Common Units and shares of Class C
Common Stock subject to such Redemption (other than the right to receive shares
of Class A Common Stock pursuant to such Redemption).  The Corporation shall
provide written notice of an expected Manager Change of Control to all Members
within the earlier of (x) five (5) Business Days following the execution of the
agreement with respect to such Manager Change of Control and (y) ten
(10) Business Days before the proposed date upon which the contemplated Manager
Change of Control is to be effected, indicating in such notice such information
as may reasonably describe the Manager

 

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Change of Control transaction, subject to applicable law, including the date of
execution of such agreement or such proposed effective date, as applicable, the
amount and types of consideration to be paid for shares of Class A Common Stock
in the Manager Change of Control, any election with respect to types of
consideration that a holder of shares of Class A Common Stock, as applicable,
shall be entitled to make in connection with such Manager Change of Control, and
the number of Common Units and shares of Class C Common Stock held by such
Member that the Corporation intends to require to be subject to such
Redemption.  Following delivery of such notice and on or prior to the Change of
Control Redemption Date, the Members shall take all actions reasonably requested
by the Corporation to effect such Redemption, including taking any action and
delivering any document required pursuant to Section 11.01(a) to effect a
Redemption.

 

Section 11.02                      Contribution of the Corporation.  Subject to
Section 11.03, in connection with the exercise of a Redeemed Member’s Redemption
Rights under Section 11.01(a), the Corporation shall contribute to the Company
the consideration the Redeemed Member is entitled to receive under
Section 11.01(b).  Unless the Redeemed Member has timely delivered a Retraction
Notice as provided in Section 11.01(b) or has delayed a Redemption as provided
in Section 11.01(c), or the Corporation has elected to effect a Direct Exchange
as provided in Section 11.03, on the Redemption Date (to be effective
immediately prior to the close of business on the Redemption Date) (i) the
Corporation shall make its Capital Contribution to the Company (in the form of
the Share Settlement or the Cash Settlement) required under this Section 11.02,
and (ii) the Company shall issue to the Corporation a number of Common Units
equal to the number of Redeemed Units surrendered by the Redeemed Member. 
Notwithstanding any other provisions of this Agreement to the contrary, in the
event that the Company elects a Cash Settlement, the Corporation shall only be
obligated to contribute to the Company an amount in respect of such Cash
Settlement equal to the net proceeds (after deduction of any underwriters’
discounts or commissions and brokers’ fees or commissions) from the sale by the
Corporation of a number of shares of Class A Common Stock equal to the number of
Redeemed Units to be redeemed with such Cash Settlement; provided that the
Corporation’s Capital Account shall be increased by an amount equal to any such
discounts, commissions and fees relating to such sale of shares of Class A
Common Stock in accordance with Section 6.06.

 

Section 11.03                      Exchange Right of the Corporation.

 

(a)                                 Notwithstanding anything to the contrary in
this Article XI, the Corporation may, in its sole and absolute discretion, elect
to effect on the Redemption Date the exchange of Redeemed Units for the Share
Settlement or Cash Settlement, at the Corporation’s option, through a direct
exchange of such Redeemed Units and such consideration between the Redeemed
Member and the Corporation (a “Direct Exchange”).  Upon such Direct Exchange
pursuant to this Section 11.03, the Corporation shall acquire the Redeemed Units
and shall be treated for all purposes of this Agreement as the owner of such
Units.

 

(b)                                 The Corporation may, at any time prior to a
Redemption Date, deliver written notice (an “Exchange Election Notice”) to the
Company and the Redeemed Member setting forth its election to exercise its right
to consummate a Direct Exchange; provided that such election does not prejudice
the ability of the parties to consummate a Redemption or Direct

 

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Exchange on the Redemption Date.  An Exchange Election Notice may be revoked by
the Corporation at any time; provided that any such revocation does not
prejudice the ability of the parties to consummate a Redemption on the
Redemption Date.  The right to consummate a Direct Exchange in all events shall
be exercisable for all the Redeemed Units that would have otherwise been subject
to a Redemption.  Except as otherwise provided by this Section 11.03, a Direct
Exchange shall be consummated pursuant to the same timeframe and in the same
manner as the relevant Redemption would have been consummated if the Corporation
had not delivered an Exchange Election Notice.

 

Section 11.04                      Reservation of Shares of Class A Common
Stock; Listing; Certificate of the Corporation.  At all times the Corporation
shall reserve and keep available out of its authorized but unissued Class A
Common Stock, solely for the purpose of issuance upon a Redemption or Direct
Exchange, such number of shares of Class A Common Stock as shall be issuable
upon any such Redemption or Direct Exchange pursuant to Share Settlements;
provided that nothing contained herein shall be construed to preclude the
Corporation from satisfying its obligations in respect of any such Redemption or
Direct Exchange by delivery of purchased Class A Common Stock (which may or may
not be held in the treasury of the Corporation) or the delivery of cash pursuant
to a Cash Settlement.  The Corporation shall deliver Class A Common Stock that
has been registered under the Securities Act with respect to any Redemption or
Direct Exchange to the extent a registration statement is effective and
available for such shares.  The Corporation shall use its commercially
reasonable efforts to list the Class A Common Stock required to be delivered
upon any such Redemption or Direct Exchange prior to such delivery upon each
national securities exchange upon which the outstanding shares of Class A Common
Stock are listed at the time of such Redemption or Direct Exchange (it being
understood that any such shares may be subject to transfer restrictions under
applicable securities Laws).  The Corporation covenants that all Class A Common
Stock issued upon a Redemption or Direct Exchange will, upon issuance, be
validly issued, fully paid and non-assessable.  The provisions of this
Article XI shall be interpreted and applied in a manner consistent with the
corresponding provisions of the Corporation’s certificate of incorporation.

 

Section 11.05                      Effect of Exercise of Redemption or Exchange
Right.  This Agreement shall continue notwithstanding the consummation of a
Redemption or Direct Exchange and all governance or other rights set forth
herein shall be exercised by the remaining Members and the Redeemed Member (to
the extent of such Redeemed Member’s remaining interest in the Company).  No
Redemption or Direct Exchange shall relieve such Redeemed Member of any prior
breach of this Agreement.

 

Section 11.06                      Tax Treatment.  Unless otherwise required by
applicable Law, the parties hereto acknowledge and agree that a Redemption or a
Direct Exchange, as the case may be, shall be treated as a direct exchange
between the Corporation and the Redeemed Member for U.S. federal (and applicable
state and local) income tax purposes.  The issuance of shares of Class A Common
Stock or other securities upon a Redemption or Direct Exchange shall be made
without charge to the Redeemed Member for any stamp or other similar tax in
respect of such issuance.

 

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ARTICLE XII.
ADMISSION OF MEMBERS

 

Section 12.01                      Substituted Members.  Subject to the
provisions of Article X, in connection with the Permitted Transfer of a Company
Interest hereunder, the transferee shall become a substituted Member
(“Substituted Member”) on the effective date of such Transfer, which effective
date shall not be earlier than the date of compliance with the conditions to
such Transfer, and such admission shall be shown on the books and records of the
Company.

 

Section 12.02                      Additional Members.  Subject to the
provisions of Article III and Article X, any Person that is not an Original
Member or the Corporation may be admitted to the Company as an additional Member
(any such Person, an “Additional Member”) only upon furnishing to the Manager
(a) a Joinder (or other counterpart to this Agreement acceptable to the Manager)
and counterparts of any applicable Other Agreements and (b) such other documents
or instruments as may be reasonably necessary or appropriate to effect such
Person’s admission as a Member (including entering into such documents as the
Manager may deem appropriate in its reasonable discretion).  Such admission
shall become effective on the date on which the Manager determines in its
reasonable discretion that such conditions have been satisfied and when any such
admission is shown on the books and records of the Company.

 

ARTICLE XIII.
WITHDRAWAL AND RESIGNATION; TERMINATION OF RIGHTS

 

Section 13.01                      Withdrawal and Resignation of Members.  No
Member shall have the power or right to withdraw or otherwise resign as a Member
from the Company prior to the dissolution and winding up of the Company pursuant
to Article XIV.  Any Member, however, that attempts to withdraw or otherwise
resign as a Member from the Company without the prior written consent of the
Manager upon or following the dissolution and winding up of the Company pursuant
to Article XIV, but prior to such Member receiving the full amount of
Distributions from the Company to which such Member is entitled pursuant to
Article XIV, shall be liable to the Company for all damages (including all lost
profits and special, indirect and consequential damages) directly or indirectly
caused by the withdrawal or resignation of such Member.  Upon a Transfer of all
of a Member’s Units in a Transfer permitted by this Agreement, subject to the
provisions of Section 10.06, such Member shall cease to be a Member.

 

ARTICLE XIV.
DISSOLUTION AND LIQUIDATION

 

Section 14.01                      Dissolution.  The Company shall not be
dissolved by the admission of Additional Members or Substituted Members or the
attempted withdrawal or resignation of a Member.  The Company shall dissolve,
and its affairs shall be wound up, upon:

 

(a)                                 the unanimous decision of the Manager
together with all the Members to dissolve the Company;

 

(b)                                 a Change of Control Transaction that is not
approved by the Majority Members;

 

(c)                                  a dissolution of the Company under
Section 18-801(4) of the Delaware Act; or

 

47

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(d)                                 the entry of a decree of judicial
dissolution of the Company under Section 18-802 of the Delaware Act.

 

Except as otherwise set forth in this Article XIV, 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.

 

Section 14.02                      Liquidation and Termination.  On dissolution
of the Company, the Manager shall act as liquidator or may appoint one or more
Persons as liquidator.  The liquidators shall proceed diligently to wind up the
affairs of the Company and make final distributions as provided herein and in
the Delaware Act.  The costs of liquidation shall be borne as a Company
expense.  Until final distribution, the liquidators shall continue to operate
the Company properties with all of the power and authority of the Manager.  The
steps to be accomplished by the liquidators are as follows:

 

(a)                                 as promptly as possible after dissolution
and again after final liquidation, the liquidators shall cause a proper
accounting to be made by a recognized firm of certified public accountants of
the Company’s assets, liabilities and operations through the last day of the
calendar month in which the dissolution occurs or the final liquidation is
completed, as applicable;

 

(b)                                 the liquidators shall cause the notice
described in the Delaware Act to be mailed to each known creditor of and
claimant against the Company in the manner described thereunder;

 

(c)                                  the liquidators shall pay, satisfy or
discharge from Company funds, 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): first, all expenses incurred in liquidation; and second, all of the
debts, liabilities and obligations of the Company; and

 

(d)                                 all remaining assets of the Company shall be
distributed to the Members in accordance with Article IV by the end of the
Taxable Year during which the liquidation of the Company occurs (or, if later,
by ninety (90) days after the date of the liquidation).  The distribution of
cash and/or property to the Members in accordance with the provisions of this
Section 14.02 and Section 14.03 below constitutes a complete return to the
Members of their Capital Contributions, a complete distribution to the Members
of their interest in the Company and all the Company’s property and constitutes
a compromise to which all Members have consented within the meaning of the
Delaware Act.  To the extent that a Member returns funds to the Company, it has
no claim against any other Member for those funds.

 

Section 14.03                      Deferment; Distribution in Kind. 
Notwithstanding the provisions of Section 14.02, but subject to the order of
priorities set forth therein, if upon dissolution of the Company the liquidators
determine that an immediate sale of part or all of the Company’s assets would be
impractical or would cause undue loss (or would otherwise not be beneficial) to
the Members, the liquidators may, in their sole discretion, defer for a
reasonable time the liquidation of any assets except those necessary to satisfy
Company liabilities (other than loans to the Company by Members) and reserves. 
Subject to the order of priorities set forth in Section 14.02,

 

48

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the liquidators may, in their sole discretion, distribute to the Members, in
lieu of cash, either (a) all or any portion of such remaining Company assets
in-kind in accordance with the provisions of Section 14.02(d), (b) as tenants in
common and in accordance with the provisions of Section 14.02(d), undivided
interests in all or any portion of such Company assets or (c) a combination of
the foregoing.  Any such Distributions in kind shall be subject to (x) such
conditions relating to the disposition and management of such assets as the
liquidators deem reasonable and equitable and (y) the terms and conditions of
any agreements governing such assets (or the operation thereof or the holders
thereof) at such time.  Any Company assets distributed in kind will first be
written up or down to their Fair Market Value, thus creating Profit or Loss (if
any), which shall be allocated in accordance with Article V.  The liquidators
shall determine the Fair Market Value of any property distributed in accordance
with the valuation procedures set forth in Article XV.

 

Section 14.04                      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
Manager (or such other Person or Persons as the Delaware Act may require or
permit) shall file a certificate of cancellation with the Secretary of 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 14.04.

 

Section 14.05                      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 Sections 14.02 and
14.03 in order to minimize any losses otherwise attendant upon such winding up.

 

Section 14.06                      Return of Capital.  The liquidators shall not
be personally liable for the return of Capital Contributions or any portion
thereof to the Members (it being understood that any such return shall be made
solely from Company assets).

 

ARTICLE XV.
VALUATION

 

Section 15.01                      Determination.  “Fair Market Value” of a
specific Company asset will mean the amount which the Company would receive in
an all-cash sale of such asset in an arms-length transaction with a willing
unaffiliated third party, with neither party having any compulsion to buy or
sell, consummated on the day immediately preceding the date on which the event
occurred which necessitated the determination of the Fair Market Value (and
after giving effect to any transfer taxes payable in connection with such sale),
as such amount is determined by the Manager (or, if pursuant to Section 14.02,
the liquidators) in its good faith judgment using all factors, information and
data it deems to be pertinent.

 

Section 15.02                      Dispute Resolution.  If any Member or Members
dispute the accuracy of any determination of Fair Market Value in accordance
with Section 15.01, and the Manager and such Member(s) are unable to agree on
the determination of the Fair Market Value of any asset of the Company, the
Manager and such Member(s) shall each select a nationally recognized

 

49

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investment banking firm experienced in valuing securities of closely-held
companies such as the Company in the Company’s industry (the “Appraisers”), who
shall each determine the Fair Market Value of the asset or the Company (as
applicable) in accordance with the provisions of Section 15.01.  The Appraisers
shall be instructed to give written notice of their determination of the Fair
Market Value of the asset or the Company (as applicable) within thirty (30) days
of their appointment as Appraisers.  If Fair Market Value as determined by an
Appraiser is higher than Fair Market Value as determined by the other Appraiser
by 10% or more, and the Manager and such Member(s) do not otherwise agree on a
Fair Market Value, the original Appraisers shall designate a third Appraiser
meeting the same criteria used to select the original two.  If Fair Market Value
as determined by an Appraiser is within 10% of the Fair Market Value as
determined by the other Appraiser (but not identical), and the Manager and such
Member(s) do not otherwise agree on a Fair Market Value, the Manager shall
select the Fair Market Value of one of the Appraisers.  The fees and expenses of
the Appraisers shall be borne by the Company.

 

ARTICLE XVI.
GENERAL PROVISIONS

 

Section 16.01                      Power of Attorney.

 

(a)                                 Each Member who is an individual hereby
constitutes and appoints the Manager (or the liquidator, if applicable) with
full power of substitution, as his or her true and lawful agent and
attorney-in-fact, with full power and authority in his, her or its name, place
and stead, to:

 

(i)                                     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 which the Manager
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 which the Manager 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 which the Manager deems 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) all instruments
relating to the admission, withdrawal or substitution of any Member pursuant to
Article XII or XIII; and

 

(ii)                                  sign, execute, swear to and acknowledge
all ballots, consents, approvals, waivers, certificates and other instruments
appropriate or necessary, in the reasonable judgment of the Manager, to
evidence, confirm or ratify any vote, consent, approval, agreement or other
action which is made or given by the Members hereunder or is consistent with the
terms of this Agreement, in the reasonable judgment of the Manager, to
effectuate the terms of this Agreement.

 

(b)                                 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 who is an individual and the transfer of all or any portion of his,
her or its

 

50

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Company Interest and shall extend to such Member’s heirs, successors, assigns
and personal representatives.

 

Section 16.02                      Confidentiality.  The Manager and each of the
Members agree to hold the Company’s Confidential Information in confidence and
may not use such information except in furtherance of the business of the
Company or as otherwise authorized separately in writing by the Manager. 
“Confidential Information” as used herein includes, but is not limited to,
ideas, financial product structuring, business strategies, innovations and
materials, all aspects of the Company’s business plan, proposed operation and
products, corporate structure, financial and organizational information,
analyses, proposed partners, software code and system and product designs,
employees and their identities, equity ownership, the methods and means by which
the Company plans to conduct its business, all trade secrets, trademarks,
tradenames and all intellectual property associated with the Company’s business,
in each case obtained by a Member from the Company or any of its Affiliates or
representatives.  With respect to the Manager and each Member, Confidential
Information does not include information or material that: (a) is rightfully in
the possession of the Manager or each Member at the time of disclosure by the
Company; (b) before or after it has been disclosed to the Manager or each Member
by the Company, becomes part of public knowledge, not as a result of any action
or inaction of the Manager or such Member, respectively, in violation of this
Agreement; (c) is approved for release by written authorization of the CEO of
the Company or of the Corporation; (d) is disclosed to the Manager or such
Member or their representatives by a third party not, to the knowledge of the
Manager or such Member, respectively, in violation of any obligation of
confidentiality owed to the Company with respect to such information; or (e) is
or becomes independently developed by the Manager or such Member or their
respective representatives without use or reference to the Confidential
Information.

 

Section 16.03                      Amendments.  This Agreement may be amended or
modified solely by the Manager, subject to the prior written consent of the
Majority Members; provided, that, solely for purposes of this Section 16.03, the
second reference to “a majority” in the definition of Majority Members shall be
deemed to be “thirty-three percent (33%) or more.”  Notwithstanding the
foregoing, no amendment or modification (a) to this Section 16.03 may be made
without the prior written consent of each of the Members, (b) that modifies the
limited liability of any Member, or increases the liabilities or obligations of
any Member, in each case, may be made without the consent of each such affected
Member, (c) that materially alters or changes any rights, preferences or
privileges of any Company Interests in a manner that is different or prejudicial
relative to any other Company Interests, may be made without the approval of a
majority in interest of the Members holding the Company Interests affected in
such a different or prejudicial manner, (d)  that materially alters or changes
any rights, preferences or privileges of a holder of any class of Company
Interests in a manner that is different or prejudicial relative to any other
holder of the same class of Company Interests, may be made without the approval
of the holder of Company Interests affected in such a different or prejudicial
manner and (e) to any of the terms and conditions of this Agreement which terms
and conditions expressly require the approval or action of certain Persons may
be made without obtaining the consent of the requisite number or specified
percentage of such Persons who are entitled to approve or take action on such
matter; provided, that the Manager, acting alone, may amend this Agreement to
reflect the issuance of additional Units or Equity Securities in accordance with
Section 3.04.

 

51

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Section 16.04                      Title to Company Assets.  Company assets
shall be deemed to be owned by the Company as an entity, and no Member,
individually or collectively, shall have any ownership interest in such Company
assets or any portion thereof.  The Company shall hold title to all of its
property in the name of the Company and not in the name of any Member.  All
Company assets shall be recorded as the property of the Company on its books and
records, irrespective of the name in which legal title to such Company assets is
held.  The Company’s credit and assets shall be used solely for the benefit of
the Company, and no asset of the Company shall be transferred or encumbered for,
or in payment of, any individual obligation of any Member.

 

Section 16.05                      Addresses and Notices.  Any notice provided
for in this Agreement will be in writing and will be either personally
delivered, or received by certified mail, return receipt requested, or sent by
reputable overnight courier service (charges prepaid) to the Company at the
address set forth below and to any other recipient and to any Member at such
address as indicated by the Company’s records, or at such address or to the
attention of such other person as the recipient party has specified by prior
written notice to the sending party.  Notices will be deemed to have been given
hereunder when delivered personally or sent by telecopier (provided confirmation
of transmission is received), three (3) days after deposit in the U.S. mail and
one (1) day after deposit with a reputable overnight courier service.  The
Company’s address is:

 

to the Company:

 

Centennial Resource Production, LLC
1401 17th Street, Suite 1000

Denver, Colorado 80202
Attn: Ward Polzin
E-mail: wpolzin@centennialresource.com

 

with a copy (which copy shall not constitute notice) to:

 

Latham & Watkins LLP

811 Main Street, Suite 3700

Houston, Texas 77002
Attn:              William N. Finnegan IV

Brett E. Braden

Debbie P. Yee

E-mail:              bill.finnegan@lw.com

brett.braden@lw.com

debbie.yee@lw.com

 

Section 16.06                      Binding Effect; Intended Beneficiaries.  This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their heirs, executors, administrators, successors, legal representatives
and permitted assigns.

 

Section 16.07                      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

 

52

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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.

 

Section 16.08                      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.

 

Section 16.09                      Counterparts.  This Agreement may be executed
in separate counterparts, each of which will be an original and all of which
together shall constitute one and the same agreement binding on all the parties
hereto.

 

Section 16.10                      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 the State of Delaware, and the parties agree to jurisdiction and venue
therein.

 

Section 16.11                      Severability.  Whenever possible, each
provision of this Agreement will 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 will not affect any other provision or the effectiveness or
validity of any provision in any other jurisdiction, and this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.

 

Section 16.12                      Further Action.  The parties shall execute
and deliver all documents, provide all information and take or refrain from
taking such actions as may be reasonably necessary or appropriate to achieve the
purposes of this Agreement.

 

Section 16.13                      Delivery by Electronic Transmission.  This
Agreement and any signed agreement or instrument entered into in connection with
this Agreement or contemplated hereby, and any amendments hereto or thereto, to
the extent signed and delivered by means of an electronic transmission,
including by a facsimile machine or via email, 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 electronic
transmission by a facsimile machine or via email to deliver a signature or the
fact that any signature or agreement or instrument was transmitted or
communicated through such electronic transmission as a defense to the formation
of a contract and each such party forever waives any such defense.

 

Section 16.14                      Right of Offset.  Whenever the Company is to
pay any sum (other than pursuant to Article IV) to any Member, any amounts that
such Member owes to the Company

 

53

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which are not the subject of a good faith dispute may be deducted from that sum
before payment.  For the avoidance of doubt, the distribution of Units to the
Corporation shall not be subject to this Section 16.14.

 

Section 16.15                      Effectiveness.  This Agreement shall be
effective immediately upon the Contribution Closing (the “Effective Time”).  The
Fourth A&R LLC Agreement shall govern the rights and obligations of the Company
and the other parties to this Agreement in their capacity as Members prior to
the Effective Time.

 

Section 16.16                      Entire Agreement.  This Agreement, those
documents expressly referred to herein (including the Registration Rights
Agreement), the Contribution Agreement, any indemnity agreements entered into in
connection with the Fourth A&R LLC Agreement with any member of the board of
managers at that time and other documents of even date herewith embody the
complete agreement and understanding among the parties and supersede and preempt
any prior understandings, agreements or representations by or among the parties,
written or oral, which may have related to the subject matter hereof in any
way.  For the avoidance of doubt, the Fourth A&R LLC Agreement is superseded by
this Agreement as of the Effective Time and shall be of no further force and
effect thereafter.

 

Section 16.17                      Remedies.  Each Member shall have all rights
and remedies set forth in this Agreement and all rights and remedies which such
Person has been granted at any time under any other agreement or contract and
all of the rights which such Person has under any 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 Law.

 

Section 16.18                      Descriptive Headings; Interpretation.  The
descriptive headings of this Agreement are inserted for convenience only and do
not constitute a substantive part of this Agreement.  Whenever required by the
context, any pronoun used in this Agreement shall include the corresponding
masculine, feminine or neuter forms, and the singular form of nouns, pronouns
and verbs shall include the plural and vice versa.  The use of the word
“including” in this Agreement shall be by way of example rather than by
limitation.  Reference to any agreement, document or instrument means such
agreement, document or instrument as amended or otherwise modified from time to
time in accordance with the terms thereof, and if applicable hereof.  Without
limiting the generality of the immediately preceding sentence, no amendment or
other modification to any agreement, document or instrument that requires the
consent of any Person pursuant to the terms of this Agreement or any other
agreement will be given effect hereunder unless such Person has consented in
writing to such amendment or modification.  Wherever required by the context,
references to a Fiscal Year shall refer to a portion thereof.  The use of the
words “or,” “either” and “any” shall not be exclusive.  The parties hereto have
participated jointly in the negotiation and drafting of this Agreement.  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 by
virtue of the authorship of any of the provisions of this Agreement.  Wherever a
conflict exists between this Agreement and any other agreement, this Agreement
shall control but solely to the extent of such conflict.

 

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[Signature Pages Follow]

 

55

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IN WITNESS WHEREOF, the undersigned have executed or caused to be executed on
their behalf this Fifth Amended and Restated Limited Liability Company Agreement
as of the date first written above.

 

 

COMPANY:

 

 

 

 

 

 

CENTENNIAL RESOURCE PRODUCTION, LLC

 

 

 

 

 

 

By:

/s/ Ward Polzin

 

 

Name:

Ward Polzin

 

 

Title:

Chief Executive Officer

 

[Signature Page to Fifth Amended and Restated Limited Liability Company
Agreement]

 

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

 

 

MEMBERS:

 

 

 

 

 

 

CENTENNIAL RESOURCE DEVELOPMENT, INC.

 

 

 

 

 

 

By:

/s/ Mark G. Papa

 

 

Name:

Mark G. Papa

 

 

Title:

Chief Executive Officer

 

[Signature Page to Fifth Amended and Restated Limited Liability Company
Agreement]

 

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

 

 

CENTENNIAL RESOURCE DEVELOPMENT, LLC

 

 

 

By:

/s/ Ward Polzin

 

Name:

Ward Polzin

 

Title:

Chief Executive Officer

 

[Signature Page to Fifth Amended and Restated Limited Liability Company
Agreement]

 

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

 

 

NGP CENTENNIAL FOLLOW-ON LLC

 

 

 

By: NGP X US Holdings, L.P., its managing member

 

 

 

By: NGP X Holdings GP, L.L.C., its general partner

 

 

 

 

By:

/s/ Tony R. Weber

 

Name:

Tony R. Weber

 

Title:

Authorized Person

 

[Signature Page to Fifth Amended and Restated Limited Liability Company
Agreement]

 

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

 

 

CELERO ENERGY COMPANY, LP

 

 

 

By: Celero Energy Management, LLC, its general partner

 

 

 

By:

/s/ Bruce Selkirk

 

Name:

Bruce Selkirk

 

Title:

Authorized Person

 

[Signature Page to Fifth Amended and Restated Limited Liability Company
Agreement]

 

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

 

SCHEDULE 1*

 

SCHEDULE OF MEMBERS

 

Member

 

Common
Units

 

Percentage
Interest

 

Contribution
Closing Capital
Account Balance

 

Additional Cash
Capital
Contributions

 

Additional Non-
Cash Capital
Contributions

 

Capital Accounts

 

Centennial Resource Development, Inc.

 

163,505,000

 

89.1

%

$

1,510,610,887.95

 

—

 

—

 

$

1,510,610,887.95

 

Centennial Resource Development, LLC

 

12,227,062

 

6.7

%

$

112,964,942.88

 

—

 

—

 

$

112,964,942.88

 

NGP Centennial Follow-On LLC

 

3,526,040

 

1.9

%

$

32,576,828.94

 

—

 

—

 

$

32,576,828.94

 

Celero Energy Company, LP

 

4,246,898

 

2.3

%

$

39,236,783.94

 

—

 

—

 

$

39,236,783.94

 

 

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* This Schedule of Members shall be updated from time to time to reflect any
adjustment with respect to any subdivision (by Unit split or otherwise) or any
combination (by reverse Unit split or otherwise) of any outstanding Common
Units, or to reflect any additional issuances of Common Units pursuant to this
Agreement.

 

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Exhibit A

 

FORM OF JOINDER AGREEMENT

 

This JOINDER AGREEMENT, dated as of                  , 20    (this “Joinder”),
is delivered pursuant to that certain Fifth Amended and Restated Limited
Liability Company Agreement, dated as of October 11, 2016 (as amended, restated,
amended and restated, supplemented or otherwise modified from time to time, the
“LLC Agreement”) by and among Centennial Resource Production, LLC, a Delaware
limited liability company (the “Company”), Centennial Resource Development, Inc.
(f/k/a Silver Run Acquisition Corporation), a Delaware corporation and the
managing member of the Company (the “Manager”), and each of the Members from
time to time party thereto.  Capitalized terms used but not otherwise defined
herein have the respective meanings set forth in the LLC Agreement.

 

1.              Joinder to the LLC Agreement.  Upon the execution of this
Joinder by the undersigned and delivery hereof to the Manager, the undersigned
hereby is and hereafter will be a Member under the LLC Agreement and a party
thereto, with all the rights, privileges and responsibilities of a Member
thereunder.  The undersigned hereby agrees that it shall comply with and be
fully bound by the terms of the LLC Agreement as if it had been a signatory
thereto as of the date thereof.

 

2.              Incorporation by Reference.  All terms and conditions of the LLC
Agreement are hereby incorporated by reference in this Joinder as if set forth
herein in full.

 

3.              Address.  All notices under the LLC Agreement to the undersigned
shall be direct to:

 

[Name]
[Address]
[City, State, Zip Code]
Attn:
Facsimile:
E-mail:

 

IN WITNESS WHEREOF, the undersigned has duly executed and delivered this Joinder
as of the day and year first above written.

 

 

[NAME OF NEW MEMBER]

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

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

 

Acknowledged and agreed
as of the date first set forth above:

 

CENTENNIAL RESOURCE PRODUCTION, LLC

 

By: CENTENNIAL RESOURCE DEVELOPMENT, INC.,

its Managing Member

 

By:

 

 

Name:

 

Title:

 

 

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