Exhibit No. 10.12

    

SECOND AMENDED AND RESTATED

LIMITED LIABILITY COMPANY AGREEMENT

OF

PDC MOUNTAINEER, LLC

(A Delaware limited liability company)

Dated as of December 23, 2013

    

THE LIMITED LIABILITY COMPANY INTERESTS REPRESENTED BY THIS LIMITED LIABILITY
COMPANY AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES
ACT OF 1933, AS AMENDED, OR UNDER ANY OTHER APPLICABLE FEDERAL OR STATE
SECURITIES LAWS. SUCH INTERESTS MAY NOT BE SOLD, ASSIGNED, PLEDGED OR OTHERWISE
DISPOSED OF AT ANY TIME WITHOUT EFFECTIVE REGISTRATION UNDER SUCH ACT AND

 

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LAWS OR EXEMPTION THEREFROM, AND COMPLIANCE WITH THE OTHER RESTRICTIONS ON
TRANSFER SET FORTH HEREIN.

 

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TABLE OF CONTENTS

Page
ARTICLE I GENERAL    1
SECTION 1.1.    Formation and Organization    1
SECTION 1.2.    Name    2
SECTION 1.3.    Principal Office    2
SECTION 1.4.    Registered Office and Registered Agent    2
SECTION 1.5.    Term    2
SECTION 1.6.    Purposes    2
SECTION 1.7.    Powers    3
SECTION 1.8.    Qualification in Other Jurisdictions    4
SECTION 1.9.    Title to Property    4
SECTION 1.10.    Payments of Individual Obligations    4
ARTICLE II MANAGEMENT    4
SECTION 2.1.    Management of the Company by the Board of Managers    4
SECTION 2.2.    Election of Managers    6
SECTION 2.3.    Duties of the Board of Managers    7
SECTION 2.4.    Approval of the Board of Managers    8
SECTION 2.5.    Board Deadlock    8
SECTION 2.6.    Officers.    10
SECTION 2.7.    Chief Executive Officer.    11
SECTION 2.8.    Performance of Duties; Liability of Managers and Officers    11
ARTICLE III MEMBERS    11
SECTION 3.1.    Admission of Members    11
SECTION 3.2.    No Liability for Company Obligations    12
SECTION 3.3.    Area of Mutual Interest; Outside Activities of Members and
Their Affiliates    12
SECTION 3.4.    No Resignation or Withdrawal by Members    13
SECTION 3.5.    Representations and Warranties of Investor    13
SECTION 3.6.    Representations and Warranties of PDC    14
ARTICLE IV CAPITAL    15
SECTION 4.1.    Units    15
SECTION 4.2.    Sharing Percentages    19
SECTION 4.3.    Capital Contributions    19
SECTION 4.4.    Capital Accounts    22
SECTION 4.5.    Member Loans    22
SECTION 4.6.    No Return of Capital Contributions    22
SECTION 4.7.    Management Incentives    23
SECTION 4.8.    Call Option    24
SECTION 4.9.    Mandatory Redemption    26

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ARTICLE V ALLOCATIONS; DISTRIBUTIONS    26
SECTION 5.1.    Allocations of Net Income or Net Loss    26
SECTION 5.2.    Special Allocations    27
SECTION 5.3.    Other Allocation Rules    28
SECTION 5.4.    Allocations of Taxable Income or Loss    29
SECTION 5.5.    Redemption of Class C Units; Distributions    30
SECTION 5.6.    Tax Distributions    32
SECTION 5.7.    Special PDC Withdrawal    32
ARTICLE VI TRANSFER; WITHDRAWAL; SALE RIGHTS; EXIT EVENTS    33
SECTION 6.1.    Restrictions on Transfer    33
SECTION 6.2.    Involuntary Transfer    35
SECTION 6.3.    Assignees    35
SECTION 6.4.    Substitution    35
SECTION 6.5.    Transfers Initiated by a Class A Member    35
SECTION 6.6.    Transfers Initiated by Third Parties    38
SECTION 6.7.    Conditions to Tag-Along Sales and Drag‑Along Sales    39
SECTION 6.8.    Eastern OpCo Drag-Along; Option    41
ARTICLE VII DISSOLUTION; WINDING UP    41
SECTION 7.1.    Dissolution    41
SECTION 7.2.    Winding Up    42
SECTION 7.3.    Application and Distribution of Proceeds of Liquidation    42
SECTION 7.4.    Certificate of Cancellation    42
ARTICLE VIII LIABILITY AND INDEMNIFICATION    43
SECTION 8.1.    No Liability for Company Debts    43
SECTION 8.2.    Indemnification    43
SECTION 8.3.    Advance Payment and Appearance as a Witness    43
SECTION 8.4.    Insurance    43
SECTION 8.5.    Nonexclusivity of Rights    44
SECTION 8.6.    Savings Clause    44
SECTION 8.7.    Company Responsibility for Indemnification Obligations    44
ARTICLE IX CERTAIN TAX MATTERS    45
SECTION 9.1.    Partnership Classification    45
SECTION 9.2.    Tax Returns and Tax Information    45
SECTION 9.3.    Tax Elections    45
SECTION 9.4.    Tax Matters Partner    45
SECTION 9.5.    Withholding    46
SECTION 9.6.    Tax Terminations    46
ARTICLE X BOOKS AND RECORDS; REPORTS    46
SECTION 10.1.    Maintenance of and Access to Books and Records    46
SECTION 10.2.    Bank Accounts    47
SECTION 10.3.    Reports    47

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SECTION 10.4.    Fiscal Year    47
SECTION 10.5.    Schedule K-1    47
ARTICLE XI DEFINITIONS    48
SECTION 11.1.    Definitions    48
SECTION 11.2.    Other Defined Terms    58
SECTION 11.3.    Construction    60
ARTICLE XII MISCELLANEOUS    61
SECTION 12.1.    Notices    61
SECTION 12.2.    Confidentiality    61    
SECTION 12.3.    Expenses    62
SECTION 12.4.    Standstill    62
SECTION 12.5.    Non‑Solicitation    63
SECTION 12.6.    Entire Agreement    63
SECTION 12.7.    Waiver or Consent    63
SECTION 12.8.    Amendment    64
SECTION 12.9.    Choice of Law    64
SECTION 12.10.    Public Announcement    64
SECTION 12.11.    Specific Performance    64
SECTION 12.12.    Binding Agreement    65
SECTION 12.13.    Benefit of Agreement    65
SECTION 12.14.    Further Assurances    65
SECTION 12.15.    Legal Counsel    65
SECTION 12.16.    Counterparts    66

EXHIBITS

Exhibit A – Initial Development Plan and Budget
Exhibit B – Officers
Exhibit C – Members
Exhibit D – Area of Mutual Interest
Exhibit E – Payouts; Distribution Sharing Percentages

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SECOND AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT

OF

PDC MOUNTAINEER, LLC
This SECOND AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT OF PDC
MOUNTAINEER, LLC (the “Company”), dated and effective as of December 23, 2013
(this “Agreement”), is entered into by and between PDC Energy, Inc., a Nevada
corporation (“PDC”), LR-Mountaineer Holdings, L.P. a Delaware limited
partnership (“Investor”) and the individuals identified on Exhibit C as Class B
Members. Capitalized terms used herein without definition shall have the
respective meanings assigned to such terms in Article XI.
W I T N E S S E T H:
WHEREAS, on October 29, 2009, PDC and Investor entered into the Limited
Liability Company Agreement of PDC Mountaineer, LLC (the “Original Agreement”)
to evidence their admission as Members to the Company and to set forth their
agreement with regard to, among other things, the (i) regulation and management
of the business and affairs of the Company, (ii) making of Capital Contributions
to the Company, (iii) distribution of funds and other assets and the allocation
of Net Income and Net Loss and (iv) Transfers of Interests in the Company;
WHEREAS, on October 29, 2009, in connection with entering into the Original
Agreement, the Company entered into the Contribution Agreement and the Services
Agreement with PDC and certain of its Affiliates;
WHEREAS, on April 1, 2010, the parties to the Original Agreement entered into
the Amended and Restated Limited Liability Company Agreement (the “First
Amendment”) to provide for the issuance of profits interests or other equity
incentives to the executive management team of the Company, among other things;
and
WHEREAS, the parties to the First Amendment desire to amend and restate it to
provide for additional capital investments in the Company and the related
establishment of new classes of Units;
NOW, THEREFORE, in consideration of the premises, the terms and provisions set
forth herein, the mutual benefits to be gained from the performance thereof and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
GENERAL
SECTION 1.1.    Formation and Organization. The Company has been formed as a
Delaware limited liability company by the filing 9+6of the Certificate of
Formation of the Company

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(the “Certificate of Formation”) on October 26, 2009 in the office of the
Secretary of State of the State of Delaware under and pursuant to the Act. The
execution of the Certificate of Formation by Daniel W. Amidon, in his capacity
as an authorized person, is hereby ratified and confirmed by each of the
Members. Upon the filing of the Certificate of Formation with the Secretary of
State of the State of Delaware, such Daniel W. Amidon’s powers as an “authorized
person” within the meaning of the Act ceased. The Members hereby agree that
during the term of the Company, the rights and obligations of the Members with
respect to the Company will be determined in accordance with the terms and
provisions of this Agreement and the Act, except where the Act provides that
such rights and obligations specified in the Act shall apply “unless otherwise
provided in a limited liability company agreement” or words of similar effect
and such rights and obligations are set forth in this Agreement. Notwithstanding
anything herein to the contrary, Section 18-210 of the Act (entitled
“Contractual Appraisal Rights”) shall not apply or be incorporated into this
Agreement.
SECTION 1.2.    Name. The name of the Company is “PDC Mountaineer, LLC.” The
business of the Company shall be conducted under the name “PDC Mountaineer, LLC”
or such other name or names as the Board of Managers may determine from time to
time.
SECTION 1.3.    Principal Office. The principal office of the Company shall be
located at Bridgeport, West Virginia, or such other place as the Board of
Managers shall determine from time to time.
SECTION 1.4.    Registered Office and Registered Agent. The registered office of
the Company required by the Act to be maintained in the State of Delaware shall
be the initial registered office named in the Certificate of Formation or such
other office (which need not be a place of business of the Company) as the Board
of Managers may designate from time to time in the manner provided by Law. The
registered agent of the Company in the State of Delaware shall be the initial
registered agent named in the Certificate of Formation or such other Person or
Persons as the Board of Managers may designate from time to time.
SECTION 1.5.    Term. The existence of the Company commenced as of the date upon
which the Certificate of Formation was filed in the office of the Secretary of
State of the State of Delaware, and the Company shall continue in existence
until it is dissolved in accordance with the provisions of this Agreement, and
to the extent provided under the Act, until its affairs are wound up and the
Company is terminated in accordance with the provisions of this Agreement and
the Act.
SECTION 1.6.    Purposes. The purposes of the Company, whether carried out by it
or through its subsidiaries, are as follows:
(a)    to acquire, develop, operate, exploit and maintain oil and natural gas
properties in the areas of the Appalachian Basin described and shown on Schedule
1.1 to the Contribution Agreement (the “Area”); and
(b)    to engage in other necessary and appropriate activities incidental
thereto that may be lawfully conducted by a limited liability company under the
Act.

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SECTION 1.7.    Powers. Subject to the terms hereof, the Company shall have the
power to do any and all acts necessary, appropriate, proper, advisable,
incidental or convenient to, or in furtherance of, the purposes of the Company
set forth in Section 1.6 hereof, including the power to:
(a)    conduct its business, carry on its operations and have and exercise the
powers granted to a limited liability company by the Act;
(b)    acquire (by purchase, lease, contribution of property or otherwise), own,
hold, operate, maintain, improve, lease, sell, convey, finance, mortgage,
transfer or dispose of assets of the Company, including any working interests or
other interests in oil and gas properties and other real or personal property
that may be necessary, convenient or incidental to the accomplishment of the
purposes of the Company;
(c)    enter into the Contribution Agreement and the Services Agreement
(collectively, the “Transaction Agreements”) and perform and carry out its
obligations thereunder and exercise any rights available to it under or in
connection with the same;
(d)    enter into, perform and carry out other contracts and leases necessary,
convenient or incidental to the accomplishment of the purposes of the Company
and to extend, renew, terminate, modify, amend, waive, execute, acknowledge or
take any other action with respect to any such contracts or leases;
(e)    hire, appoint, manage and terminate employees and agents of the Company,
and define their duties and fix their compensation;
(f)    purchase, take, receive, subscribe for or otherwise acquire, own, hold,
vote, use, employ, sell, mortgage, lend, pledge, or otherwise dispose of, and
otherwise use and deal in and with, shares or other interests in or obligations
of corporations, associations, general or limited partnerships, trusts or
limited liability companies;
(g)    borrow money and issue evidences of Indebtedness, and to secure the same
by a mortgage, pledge or other lien on the real and personal property of the
Company;
(h)    lend money for any proper purpose, to invest and reinvest the funds of
the Company, and to take and hold real and personal property for the payment of
funds so loaned or invested;
(i)    enter into transactions, contracts, agreements or arrangements involving
hedge contracts, derivatives, forwards, swaps or similar contracts;
(j)    sue and be sued, complain and defend, and participate in administrative
or other proceedings, and to pay, collect, compromise, litigate, arbitrate or
otherwise adjust or settle any and all other claims or demands of or against the
Company;
(k)    indemnify any Person in accordance with and subject to applicable Law and
to obtain any and all types of insurance; and

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(l)    take all such other actions and to make, execute, acknowledge and file
any and all documents or instruments related to the exercise of any of the
foregoing powers or otherwise necessary, convenient or incidental to the
accomplishment of the purposes of the Company.
SECTION 1.8.    Qualification in Other Jurisdictions. The Company shall execute
and cause to be filed original or amended articles and/or certificates and shall
take any and all other actions as may be reasonably necessary to perfect and
maintain the status of the Company as a limited liability company or similar
type of entity under the laws of any other jurisdictions in which the Company
engages in business. At the request of the Board of Managers, each Member agrees
to execute, acknowledge, swear to, and deliver all certificates and other
instruments conforming with this Agreement that are necessary or appropriate to
qualify, continue, and terminate the Company as a foreign limited liability
company or similar type of entity in all such jurisdictions in which the Company
may conduct business.
SECTION 1.9.    Title to Property. All property owned by the Company shall be
owned by the Company as an entity, and no Member shall have any ownership
interest in such property in its individual capacity, and each Member’s
Interests in the Company shall be personal property for all purposes. The
Company shall hold title to all of its property in the name of the Company, not
in the name of any Member.
SECTION 1.10.    Payments of Individual Obligations. 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.
ARTICLE II    
MANAGEMENT
SECTION 2.1.    Management of the Company by the Board of Managers.
(a)    Management by the Board of Managers. Except for matters required by this
Agreement to be approved by the Members or as provided in nonwaivable provisions
of the Act, the business and affairs of the Company shall be managed and the
powers of the Company shall be exercised by or under the direction of a board of
managers (the “Board of Managers” or the “Board”). Each member of the Board of
Managers is referred to herein as a “Manager” and collectively as the
“Managers.”
(b)    Place of Meetings. Meetings of the Board of Managers, regular or special,
will be held at such places, either within or without the State of Delaware, as
may be specified by the Board of Managers or the Manager calling the meeting, as
the case may be. In the absence of specific designation, meetings of the Board
of Managers shall be held at the principal office of the Company.
(c)    Regular Meetings. The Board of Managers shall meet on a quarterly basis
at such times and places as may be fixed from time to time by the Board and
communicated to all Managers. Any and all business may be transacted at any
regular meeting.

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(d)    Special Meetings. Special meetings of the Board of Managers shall be held
at any time upon the call of any Manager. If a Manager desires the Company to
take or authorize any action that requires Approval of the Board of Managers,
the Manager shall request that the Board of Managers take action with respect
thereto by so notifying the Board of Managers and describing in such
notification (i) the nature of the transaction or business and (ii) the proposed
course of action recommended by the Manager. The Manager shall deliver the
notification referred to above, together with any available information that is
reasonably necessary to enable the Board of Managers to consider the
advisability of the proposed course of action, to the Board of Managers a
reasonable period of time prior to the date by which action is to be taken as
proposed therein. Notice of any such special meeting shall be in writing and
shall be given personally or by facsimile or Electronic Transmission to each
member of the Board of Managers at least three Business Days prior to the date
of the meeting.
(e)    Attendance at and Notice of Meetings. Attendance at a meeting of the
Board of Managers shall constitute a waiver of notice of such meeting, except
where a Manager attends a meeting for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened, not authorized by the Agreement or impermissible as a matter
of Law.
(f)    Quorum. At all meetings of the Board of Managers, the quorum required for
the transaction of any business shall consist of the presence, either in person
or by proxy, of at least a majority of Managers, including at least one Investor
Designee and at least one PDC Designee. A meeting at which a quorum is initially
present may continue to transact business, notwithstanding the withdrawal of
Managers; provided, that at least one Investor Designee and at least one PDC
Designee remains present.
(g)    Voting. Each Investor Designee will have one vote and each PDC Designee
will have one vote. All decisions will be made by a majority vote of all the
Managers, including at least one Investor Designee and at least one PDC
Designee, except that, notwithstanding anything to the contrary in this
Agreement, (i) with the exception of the Services Agreement, transactions and
any other matters between the Company and a Class A Member or an Affiliate of
such Class A Member shall require approval solely by the Managers designated by
the other Class A Member, and (ii) any other matters for which this Agreement
expressly provides for approval by the Managers designated by a single Class A
Member shall be approved by the Managers of such single Class A Member.
(h)    Proxy. Each Board of Managers Designee entitled to vote at a meeting of
the Board of Managers may authorize another Board of Managers Designee appointed
by the same Designating Party to act for such Board of Managers Designee by
proxy, but no such proxy shall be voted or acted upon after 11 months from its
date, unless the proxy provides for a longer period. A duly executed proxy shall
be irrevocable if it states that it is irrevocable and if, and only as long as,
it is coupled with an interest sufficient in Law to support an irrevocable
power. A proxy may be made irrevocable regardless of whether the interest with
which it is coupled is an interest in an Interest itself or an interest in the
Company generally.
(i)    Written Consent. Any action required or permitted to be taken at any
regular or special meeting of the Board of Managers may be taken without a
meeting, without prior notice,

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and without a vote, if a consent or consents in writing, setting forth the
action so taken, shall be signed by a majority of all of the Managers including
at least one Investor Designee and at least one PDC Designee.
(j)    Telephonic Meetings. The Board of Managers may hold meetings by means of
conference telephone or similar communications equipment by means of which all
of the Managers participating in the meeting can hear each other, and
participation in such meeting shall constitute attendance and presence in person
at such meeting.
(k)    Minutes. All decisions and resolutions of the Board of Managers shall be
reported in the minutes of its meetings, which shall state the date, time and
place of the meeting (or the date of the written consent in the case of a
consent executed in lieu of a meeting), the persons present at the meeting, the
resolutions put to a vote (or the subject of a written consent) and the results
of such voting (or written consent). The minutes of all meetings of the Board of
Managers shall be circulated to all Managers as soon as practical after each
meeting and shall be kept at the principal office of the Company.
(l)    Observers. Each Class A Member shall be entitled to designate one
observer (which may be the same or a different individual from meeting to
meeting) (an “Observer”) to attend meetings of the Board of Managers.
SECTION 2.2.    Election of Managers.
(a)    Qualifications. Each Manager shall be a natural person. A Manager need
not be a resident of the State of Delaware, a Member or an officer of the
Company.
(b)    Number. The Board of Managers shall be comprised of six members. Each
Manager shall hold office until a successor shall have been designated in
accordance with the terms of this Agreement.
(c)    Investor Designees. Investor shall be entitled to designate three persons
to serve on the Board (each, an “Investor Designee”).
(d)    PDC Designees. PDC shall be entitled to designate three persons to serve
on the Board (each, a “PDC Designee”).
(e)    Vacancies. If any member of the Board of Managers designated by Investor
or PDC (in such capacity, the “Designating Party”) pursuant to paragraph (c) or
(d) above (each, a “Board of Managers Designee”) shall cease to serve as a
member of the Board of Managers for any reason, the vacancy resulting thereby
shall be filled by another individual to be designated by that Designating
Party.
(f)    Removal. Each Board of Managers Designee may be removed and replaced,
with or without cause, at any time by his or her respective Designating Party in
such Designating Party’s sole discretion, but, may not be removed or replaced by
any other means. A Designating Party who removes one or more of its Board of
Managers Designees from the Board of Managers shall promptly notify the other
Designating Party as to the name of its replacement designee(s).

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(g)    Resignation. A Manager may resign from the Board of Managers at any time
by giving written notice to the Company and his or her Designating Party. Such
resignation shall take effect three Business Days following receipt of that
notice or at such later time as shall be specified in the notice. Unless
otherwise specified in the notice, the acceptance of a resignation shall not be
necessary to make it effective.
(h)    Compensation. Managers shall be entitled to reimbursement from the
Company for reasonable out-of-pocket expenses incurred in connection with
attending meetings of the Board of Managers and fulfilling their duties as
Managers, and the Observer designated by each Class A Member shall be entitled
to reimbursement from the Company for reasonable out-of-pocket expenses incurred
in connection with attending meetings of the Board of Managers, with all of the
foregoing subject to such limitations as may be established by the Board of
Managers. Otherwise, no Manager is entitled to remuneration for services
rendered or goods provided to the Company in his or her capacity as a Manager.
SECTION 2.3.    Duties of the Board of Managers.
(a)    To the fullest extent permitted by the Act, a Manager, in performing his
or her duties and obligations as a Manager under this Agreement, shall be
entitled to act or omit to act at the direction of his or her Designating Party,
considering only such factors, including the separate interests of the
Designating Party, as such Manager or Designating Party chooses to consider, and
any action of such Manager or failure to act, taken or omitted in good faith
reliance on the foregoing provisions shall not, as between the Company and any
other Member, on the one hand, and such Manager or Designating Party, on the
other hand, constitute a breach of any duty (including any fiduciary or other
similar duty, to the extent such exist under the Act or any other applicable
Law) on the part of such Manager or Member to the Company or any other Manager
or Member of the Company; provided that the implied contractual covenant of good
faith and fair dealing is not hereby eliminated.
(b)    The Members (in their own names and in the name and on behalf of the
Company) hereby: (i) agree that (A) the terms of this Section 2.3, to the extent
that they modify or limit a duty or other obligation, if any, that a Manager may
have to the Company or any Member under the Act or other applicable Law, are
reasonable in form, scope and content; and (B) the terms of this Section 2.3
shall control to the fullest extent possible if it is in conflict with a duty,
if any, that a Manager may have to the Company or any Member, under the Act or
any other applicable Law; and (ii) waive to the fullest extent permitted by the
Act, any duty (including any fiduciary or other similar duty, to the extent such
exist under the Act or any other applicable Law), if any, that a Member may have
to the Company or another Member, pursuant to the Act or any other applicable
Law; provided that contractual obligations specified in this Agreement are not
hereby waived and that the implied contractual covenant of good faith and fair
dealing is not hereby eliminated.
(c)    Each Member (in its own name and in the name and on behalf of the
Company), acknowledges, affirms and agrees that (i) the Member would not be
willing to make an investment in or contribution to the Company, and in the case
of the Class A Members, no Manager designated by such Member to serve on the
Board of Managers would be willing to so serve, in the absence of this Section
2.3, and (ii) it has reviewed and understands the provisions of Section
18-1101(c) of the Act.

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SECTION 2.4.    Approval of the Board of Managers.
(a)    The Company (or officers or agents acting on its behalf), on its own
behalf or on behalf of any of its subsidiaries, shall not take any action
without the Approval of the Board of Managers; provided, that the Company (or
officers or agents acting on its behalf), on its own behalf or on behalf of any
of its subsidiaries, may, absent the specific Approval of the Board of Managers,
take those actions (i) which are approved by the Board of Managers in connection
with or as part of approving a Development Plan and Budget, (ii) which are in
accordance with the policies set forth by the Board of Managers or with
agreements of the Company or its subsidiaries approved by the Board of Managers,
or (iii) which are delegated to the officers or agents of the Company by the
Board of Managers.
(b)    Unless otherwise provided by the Board of Managers and as provided in
Section 2.4(c) below, the following actions are the only actions that require
approval of the Members, which approval shall be required only from the Class A
Members:
(i)    the taking of any action that would make it impossible to carry on the
ordinary business of the Company, including filing for bankruptcy protection;
and
(ii)    the dissolution the Company.
(c)    Neither the Company nor the Board will take the following actions without
the prior written consent of the holders of at least 66 2/3% of the outstanding
number of Class C Units:
(i)    Create or authorize the creation of or issue any other security
convertible into or exercisable for any equity security, having rights,
preferences, or privileges senior to or on parity with the Class C Units, or
increase the authorized number of Class C Units; or
(ii)    Purchase or redeem or make any Distribution on any Units prior to the
Class C Units, other than Units repurchased from former employees or consultants
in connection with the cessation of their employment or services, respectively.
(d)    Attached as Exhibit A is the initial development plan and budget for the
Company (the “Initial Development Plan and Budget”) covering the period from the
Closing Date through June 30, 2010. Thereafter, unless otherwise determined by
the Board of Managers, the Chief Executive Officer of the Company (the “CEO”)
shall propose a development plan and budget for the Company at least 60 days in
advance of the beginning of each such six-month period (each a “Development Plan
and Budget”).
SECTION 2.5.    Board Deadlock
(a)    Development Plans and Budgets.

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(i)    In the event that there is a tie vote of the Managers (a “Deadlock”)
prior to the earlier of the end of the Catch‑Up Period and December 31, 2011
(the “Initial Deadlock Period”) regarding approval of a Development Plan and
Budget that is applicable to the Initial Deadlock Period and that is not
resolved through negotiation by the Managers after a period of 60 days, Investor
shall be entitled to suspend the Company’s exploration and drilling activities
and all other cash expenditures of the Company, other than the minimum expenses
required for salaries and benefits of critical employees of the Company and to
maintain the existing operations of the Company (but not exploration, drilling,
workover or similar activities) (a “Suspension”), provided that there has not
been an Investor Default that remains uncured. In the event that there is a
Deadlock following the Initial Deadlock Period regarding approval of a
Development Plan and Budget that is not resolved through negotiation by the
Managers after a period of 60 days, either Class A Member shall be entitled to
effectuate a Suspension, provided that, in the case of a Suspension sought by
Investor, there has not been an Investor Default or other default on an
obligation to make a Capital Contribution that remains uncured, and in the case
of a Suspension sought by PDC, it has not defaulted on an obligation to make a
Capital Contribution that remains uncured. During the pendency of a Deadlock
with respect to a Development Plan and Budget, the most recently-approved
Development Plan and Budget shall apply for purposes of prudently maintaining
existing operations (but excluding suspended activities); provided, however,
that, unless the Board of Managers otherwise determines, in no event shall the
Company incur any expenses or pay funds in excess of the Company’s cash flow
during a Suspension.
(ii)    In the event that Suspensions have been in effect for four consecutive
six-month periods, then either Class A Member may (A) Transfer its Class A
Interest, subject to the provisions set forth in Section 6.5 or Section 6.6 or
(B) elect to dissolve the Company under Section 7.1(d), upon which the
non-electing Class A Member will designate the Liquidator, which designee may be
such non-electing Class A Member or an Affiliate thereof.
(iii)    To the extent a Suspension would cause the Company to lose its interest
in any lease, then (a) during the Initial Deadlock Period, PDC shall have, and
(b) following the Initial Deadlock Period, the non-suspending Class A Member
shall have, the right to require the Company to promptly distribute the
Company’s interest subject to expiration under such lease to such Class A Member
(and such interest in such lease shall thereafter be deemed excluded from the
AMI) so that it may independently continue such exploration and drilling
activities in order to maintain the expiring interest in such lease.
(iv)    In the event that Investor effectuates a Suspension during the Initial
Deadlock Period, PDC shall be entitled to make a Capital Contribution (and
receive in respect thereof a corresponding increase in its Class A Units and
Class A Sharing Percentage, without penalty to Investor other than the dilution
resulting from such increase) to fund the suspended activities, and any such
amounts shall be treated as

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having been contributed pursuant to an approved Development Plan and Budget;
provided, that PDC may not make Capital Contributions of more than $20 million
in the aggregate under this Section 2.5(a)(iv).
SECTION 2.6.    Officers.
(a)    Delegation to Officers. The Board of Managers may delegate to the
Company’s officers or employees any of its powers in any manner it desires.
(b)    Appointment of Officers. The officers of the Company shall consist of a
CEO, a Chief Operating Officer (“COO”) and a Secretary. In addition, the Board
of Managers shall have the authority to elect such other officers, including a
President, Vice Presidents and assistant officers, as it may from time to time
determine. The Board of Managers may appoint officers at any time. The officers
shall serve at the pleasure of the Board of Managers, subject to all rights, if
any, of an officer under any contract of employment. Any individual may hold any
number of offices. The initial officers of the Company are listed on Exhibit B.
(c)    Qualifications. Each officer of the Company shall be a natural person. An
officer need not be a resident of the State of Delaware, a Member or a Manager
of the Company.
(d)    Authority. Subject to the provisions of this Article II, all officers of
the Company shall have such powers and authority, subject to the direction and
control of the Board of Managers, and shall perform such duties in connection
with the management of the business and affairs of the Company as are provided
in this Agreement, or as may be determined from time to time by resolution of
the Board of Managers. In addition, except as otherwise expressly provided
herein, each officer shall have such powers and authority as would be incident
to his or her office if he or she served as a comparable officer of a Delaware
corporation.
(e)    Resignation. An officer of the Company may resign at any time by giving
written notice to the Board of Managers. Such resignation shall take effect upon
receipt of that notice or at such later time as shall be specified in the notice
and agreed to by the Board of Managers. Unless otherwise specified in the
notice, the acceptance of a resignation shall not be necessary to make it
effective.
(f)    Vacancies. Any vacancy occurring in an office may be filled by the Board
of Managers.
(g)    Removal. Any officer of the Company may be removed by the Board of
Managers in its sole discretion, but such removal shall be without prejudice to
the contract rights, if any, of the officer so removed. Election as an officer
of the Company shall not of itself create any contract rights.
(h)    Delegation of Authority. In the case of any absence of any officer of the
Company or for any other reason that the Board of Managers may deem sufficient,
the Board of Managers may delegate some or all of the powers or duties of such
officer to any other officer for whatever period of time as the Board of
Managers deems appropriate.

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SECTION 2.7.    Chief Executive Officer.
(a)    Appointment. Unless otherwise approved by the Board of Managers, from and
after 90 days following the Closing, the CEO shall be a full‑time employee of
the Company or its wholly-owned subsidiary and shall not be an officer or
Affiliate of either Class A Member.
(b)    Term. The CEO will hold office until his death, resignation or removal.
The CEO may be removed with or without cause by the Board of Managers.
(c)    Authority. Subject to the power and authority of the Board of Managers to
revoke or modify the following or to direct the actions of the CEO, the CEO has
responsibility and authority for:
(i)    operating and managing the day-to-day business and affairs of the Company
in a manner consistent with the Development Plans and Budgets and within such
parameters as may be established by the Board of Managers;
(ii)    proposing revisions to the Development Plans and Budgets for submission
to the Board of Managers for approval;
(iii)    implementing the Development Plans and Budgets as approved by the Board
of Managers and within such parameters as may be established by the Board of
Managers; and
(iv)    subject to Section 2.4(a), executing bonds, mortgages or other contracts
or instruments on behalf of the Company.
The CEO will keep the Board of Managers reasonably informed of his actions.
SECTION 2.8.    Performance of Duties; Liability of Managers and Officers. A
Manager or an officer shall not be liable to the Company or to any Member for
any loss or damage sustained by the Company or any Member as a result of his or
her carrying out his or her duties as a Manager or officer in good faith, unless
the loss or damage shall have been the result of fraud, intentional or willful
misconduct or a knowing violation of Law by the Manager or officer.
ARTICLE III    
MEMBERS
SECTION 3.1.    Admission of Members.
(a)    Each Person identified in Exhibit C is or has been admitted to the
Company as a Member.
(b)    Subject to Section 2.4(a) and Article VI, any Person to which Interests
are issued by the Company after the date hereof that executes a counterpart
agreeing to be bound by the terms of this Agreement shall be admitted to the
Company as a Member on the date of issuance of such Interests.

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(c)    Any Person to which Interests are Transferred as permitted by Article VI
shall be admitted to the Company as a Member on the date upon which such
Transfer has been effected and the requirements set forth in Section 6.4 have
been satisfied.
SECTION 3.2.    No Liability for Company Obligations. Without limiting the
generality of Article VIII, a Member is not liable for the debts, obligations
and liabilities of the Company, including under a judgment, decree or order of a
court.
SECTION 3.3.    Area of Mutual Interest; Outside Activities of Members and Their
Affiliates.
(a)    Each Class A Member hereby agrees to the provisions set forth in
Exhibit D hereto.
(b)    Except as otherwise provided in Exhibit D: (i) no Class A Member or any
of its present or future Affiliates or any of their respective shareholders,
partners, Class A Members, directors, managers, officers or employees (each, a
“Class A Member Related Party”) shall be expressly or impliedly restricted or
prohibited by virtue of this Agreement from engaging in other activities or
business ventures of any kind or character whatsoever; (ii) each Class A Member
and any Class A Member Related Party shall have the right to conduct, or to
possess a direct or indirect ownership interest in, activities and business
ventures of every type and description; (iii) no Class A Member or any Class A
Member Related Party shall be obligated by virtue of this Agreement to present
any particular business opportunity to the Company, and each Class A Member and
Class A Member Related Party shall have the right to take or pursue any such
opportunity for its own account (individually or as a partner, Class A Member,
shareholder, fiduciary or otherwise) or to present or recommend it to any third
party; and (iv) neither the Company nor any Member shall have any rights or
claims by virtue of this Agreement or the relationships created hereby in any
activities or business ventures of (A) in the instance of the Company, a Class A
Member or any Class A Member Related Party, or (B) in the instance of a Member,
a Class A Member or such Class A Member’s Class A Member Related Party (it being
expressly understood and agreed that any and all such rights and claims are
hereby irrevocably waived by each Member on its behalf and on behalf of the
Company).
(c)    The Members (in their own names and in the name and on behalf of the
Company) expressly: (i) waive any conflicts of interest or potential conflicts
of interest that may arise by virtue of (A) in the instance of each Class A
Member and its Affiliates, its or their respective activities outside of the
AMI, and (B) in the instance of PDC and its respective Affiliates, their
activities with respect to the Retained Assets, and agree that none of Investor,
or its present or future Affiliates or any of their respective shareholders,
partners, members, directors, managers, officers or employees (each, an
“Investor Related Party”), or PDC, or its present or future Affiliates or any of
their respective shareholders, partners, members, directors, managers, officers
or employees (each, a “PDC Related Party”) shall have any liability to any
Member, any Affiliate thereof, or the Company with respect to such conflicts of
interest or potential conflicts of interest; and (ii) acknowledge and agree that
none of (A) Investor or any Investor Related Party or (B) PDC or any PDC Related
Party will have any duty to disclose to the Company, any other Member or the
Board any business opportunities, whether or not the Company might be interested
in such business

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opportunity for itself, that are outside of the AMI and, in the instance of PDC
and a PDC Related Party, that pertain to the Retained Assets.
(d)    The Members (in their own names and in the name and on behalf of the
Company) hereby: (i) agree that (A) the terms of this Section 3.3 and Exhibit D,
to the extent that they modify or limit a duty or other obligation, if any, that
an Investor Related Party or a PDC Related Party may have to the Company or
another Member under the Act or other applicable Law, are reasonable in form,
scope and content; and (B) the terms of this Section 3.3 and Exhibit D shall
control to the fullest extent possible if it is in conflict with a duty, if any,
that an Investor Related Party or a PDC Related Party may have to the Company or
another Member, the Act or any other applicable Law; and (ii) waive any duty or
other obligation, if any, that an Investor Related Party or a PDC Related Party
may have to the Company or another Member, pursuant to the Act or any other
applicable Law, to the extent necessary to give effect to the terms of this
Section 3.3 and Exhibit D.
(e)    The Members (in their own names and in the name and on behalf of the
Company) acknowledge, affirm and agree that (i) the execution and delivery of
this Agreement by Investor and by PDC are of material benefit to the Company and
the Members, and that Investor and PDC would not be willing to (A) execute and
deliver this Agreement, and (B) make their agreed Capital Contributions to the
Company, without the benefit of this Section 3.3 and Exhibit D and the agreement
of the parties, thereto; and (ii) they have reviewed and understand the
provisions of Sections 18-1101(b) and (c) of the Act.
SECTION 3.4.    No Resignation or Withdrawal by Members. Except in connection
with a Transfer of all of its Interest as permitted under Article VI, no Member
shall be entitled to resign or withdraw from the Company as a Member.
SECTION 3.5.    Representations and Warranties of Investor. Investor represents
and warrants to PDC as follows:
(a)    Ownership of Investor. Lime Rock Partners GP V, L.P. is the sole general
partner of and controls Investor and is the sole general partner of Lime Rock
Partners V, L.P. LRP GP V, Inc. is the sole general partner of and controls Lime
Rock Partners GP V, L.P. Investor and Lime Rock Partners V, L.P. are limited
partnerships that are directly or indirectly managed and advised by Lime Rock
Management LP.
(b)    Organization and Good Standing. Investor is a limited partnership duly
organized, validly existing and in good standing under the laws of the State of
Delaware, with full partnership power and authority to perform all its
obligations under this Agreement. Investor is duly qualified to do business as a
foreign entity and is in good standing under the laws of each state or other
jurisdiction that is required by reason of (i) the ownership or use of the
properties owned or used by it, (ii) the nature of the activities conducted by
it or (iii) its participation in, including its satisfying its obligations to,
the Company. Neither Investor nor any of its Affiliates nor any Lime Rock
Resources Entity owns a Controlling interest in any other Person engaged in oil
or natural gas acquisition, development, operations or exploitation in the Area,
except for a single portfolio company in which an Affiliate of Investor
currently owns less than 25% of the outstanding equity

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interests and designates less than a majority of the members of the board of
directors (or equivalent governing body).
(c)    Authority; No Conflict.
(i)    Enforceability. This Agreement constitutes the legal, valid and binding
obligations of Investor, enforceable against Investor in accordance with their
respective terms, except as the same may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforcement
of creditors’ rights generally and general equitable principles, regardless of
whether enforceability is considered in a proceeding at law or in equity.
Investor has the right, power, authority and capacity to execute and deliver
this Agreement and to perform its obligations hereunder.
(ii)    No Conflict, etc. Neither the execution and delivery of this Agreement
nor the consummation or performance of any of the transactions contemplated
hereby will, directly or indirectly (with or without notice or lapse of time):
(A) contravene, conflict with, or result in a violation of any provision of the
organizational documents of Investor; (B) contravene, conflict with, or result
in a violation of, or give any Governmental Authority or other Person the right
to challenge any of the transactions contemplated by this Agreement or the
Transaction Agreements or to exercise any remedy or obtain any relief under any
Law to which Investor, the Company or its Members, may be subject;
(C) contravene, conflict with or result in a violation of any of the terms or
requirements of, or give any Governmental Authority the right to revoke,
withdraw, suspend, cancel, terminate or modify, any governmental authorization
that is held by Investor; or (D) contravene, conflict with or result in a
violation or breach of any provision of, or give any Person the right to declare
a default or exercise any remedy under, or to accelerate the maturity or
performance of, or to cancel, terminate or modify, any contract (1) under which
Investor has or may acquire any rights, (2) under which Investor has or may
become subject to any obligations or liability or (3) by which Investor or any
of the assets owned or used by it are bound.
(iii)    Consents and Notices. Investor is not required to give any notice to or
obtain any approval, consent, ratification, waiver or other authorization of any
Person (including any Governmental Authority) in connection with the execution
and delivery of this Agreement or the consummation or performance of any of the
transactions contemplated by this Agreement or the Transaction Agreements.
(d)    Availability of Funds. Investor will have immediately available funds in
cash to pay any amounts payable by it under this Agreement when due, including
the balance of the Minimum Funding Obligation, all without any third-party
consent or approval required.
SECTION 3.6.    Representations and Warranties of PDC. PDC represents and
warrants to Investor as follows:

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(a)    Organization and Good Standing. PDC is a corporation duly organized,
validly existing and in good standing under the laws of the State of Nevada,
with full corporate power and authority to perform all its obligations under
this Agreement. PDC is duly qualified to do business as a foreign entity and is
in good standing under the laws of each state or other jurisdiction that is
required by reason of (i) the ownership or use of the properties owned or used
by it, (ii) the nature of the activities conducted by it or (iii) its
participation in, including its satisfying its obligations to, the Company.
Except for the Drilling Partnerships, neither PDC nor any of its Affiliates owns
a Controlling interest in any other Person engaged in oil or natural gas
acquisition, development, operations or exploitation in the Area.
(b)    Enforceability. This Agreement constitutes the legal, valid and binding
obligations of PDC, enforceable against PDC in accordance with their respective
terms, except as the same may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors’ rights generally and general equitable principles, regardless of
whether enforceability is considered in a proceeding at law or in equity. PDC
has the right, power, authority and capacity to execute and deliver this
Agreement and to perform its obligations hereunder.
ARTICLE IV    
CAPITAL
SECTION 4.1.    Units.
(a)    The Company shall have four classes of Interests, consisting of (i) Class
A Interests, which shall be denominated and referred to herein as “Class A
Units,” (ii) Class B Interests, which shall be denominated and referred to
herein as “Class B Units,” (iii) Class C Interests, which shall be denominated
and referred to herein as “Class C Units” (for all purposes herein, “Class C
Units” shall include any and all PIK Class C Units), and (iv) Class D Interests,
which shall be denominated and referred to herein as “Class D Units”
(collectively, “Units.”). For the avoidance of doubt, the Class C Units have no
voting rights except as expressly provided herein.
(b)    The Units shall be uncertificated.
(c)    In connection with the Closing, the Company issued to PDC and Investor
the number of Class A Units set forth opposite their respective names on Exhibit
C (which were calculated at a deemed value of $1,000 per Unit). The Company is
authorized to, and shall, issue to Investor Class A Units at $1,000 per Unit for
Capital Contributions made by Investor at or following the Closing in respect of
the Minimum Funding Obligation and under Section 4.3(f).
(d)    The Company is authorized to issue a total of 5,000 Class B Units. In
connection with entering into the First Amendment, the Company issued to the
Class B Members the number of Class B Units set forth in their respective
Restricted Interest Agreements. The Company is authorized to issue Class B Units
to members of executive management of the Company as determined by the Board of
Managers. Any such issuance shall be reflected in and subject to the terms of a
Restricted Interest Agreement.

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(e)    The Company is authorized to, and shall, issue to PDC and Investor, Class
C Units at $1,000 per Class C Unit for Capital Contributions made by PDC and
Investor on the date hereof, and to each holder of Class C Units such PIK Class
C Units as may accrue and be payable hereunder as Class C Dividends.
(i)    [Reserved]
(ii)    Each holder of issued and outstanding Class C Units will be entitled to
receive, when, as, and if declared by the Board, for each Class C Unit then
held, the amount equal to eight percent (8%) per annum multiplied by the sum of
$1,000 plus all accrued and unpaid (unpaid either in cash or PIK Class C Units)
Class C Dividends on such Class C Unit (the “Class C Dividend”) payable (A) if
approved by the Board pursuant to Section 5.5(a), in cash, or (B) otherwise in
kind in additional Class C Units (the “PIK Class C Units”) in an amount of Class
C Units as shall equal the Class C Dividend divided by $1,000.
(iii)    The Class C Dividend will accrue and cumulate on each Class C Unit from
the date of issuance and will be payable annually in arrears on the last day of
each December, or, if such date is not a Business Day, the succeeding Business
Day (each such day, a “Dividend Payment Date”). The Class C Dividend accrued for
the initial period will not be payable until the last day of the first full
annual period, at which time the amount of the Class C Dividend payable shall
consist of the full annual Class C Dividend plus the Class C Dividend for the
initial partial year, which shall be computed on the basis of a 360-day year
consisting of twelve 30-day months. The amount of Class C Dividend payable for
any other period shorter or longer than a full year will be computed on the
basis of a 360-day year consisting of twelve 30-day months. The Class C Dividend
will be paid to the holders of record of Class C Units as they appear in the
records of the Company at the close of business on each December 15 or on such
other date designated by the Board for the payment of the Class C Dividend that
is not more than sixty (60) days or less than ten (10) days prior to such
Dividend Payment Date. Any payment of the Class C Dividend will first be
credited against the earliest accumulated but unpaid Class C Dividend due with
respect to such Class C Unit that remains payable.
(iv)    The Class C Dividend will accrue and cumulate whether or not the Company
has earnings or profits, whether or not there are funds legally available for
the payment of the Class C Dividend, and whether or not a Distribution with
respect to the Class C Dividend is declared. The Class C Dividend will
accumulate and compound annually at a rate of 8% per annum to the extent it is
not distributed on the Dividend Payment Date.
(v)    Each holder of Class C Units is entitled to convert, at any time and from
time to time prior to redemption, at the sole option of such holder, any or all
Class C Units (including PIK Class C Units) held by such holder into that number
of Class D Units determined by dividing (x) $1,000 plus all accrued and unpaid
Class C Dividends for each Class C Unit to be converted by such holder, as
adjusted for any Class C Unit dividends, splits, combinations, and similar
events, by (y) the

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Conversion Price in effect at the time of conversion. The “Conversion Price”
initially means the conversion price of $1,000, adjusted from time to time as
provided in Section 4.1(e)(v)(B) below.
(A)
In order to convert Class C Units into Class D Units, the holder of such Class C
Units must provide written notice (the “Conversion Notice”) to the Company that
the holder elects to convert all or such number of Class C Units as is specified
in such Conversion Notice. Except as provided in the following sentence, the
date on which the Company receives the Conversion Notice will be the date of
conversion for those Class C Units as are specified in the Conversion Notice. If
the Conversion Notice is being provided in connection with an exercise of the
Class C Units’ tag-along rights pursuant to Section 6.5 or Section 6.6, then, if
specified by the holder of such Class C Units, the conversion of those Class C
Units shall be conditioned upon the consummation of the proposed transaction
under Section 6.5 or Section 6.6, and the date of conversion for those Class C
Units shall be the date of consummation of the proposed transaction under
Section 6.5 or Section 6.6. From and after the date of conversion, the Class C
Dividend on the Class C Units so converted will cease to accrue, and such Class
C Units will no longer be deemed to be outstanding.

(B)
(I)    In the event that the Company issues additional Units (other than B
Units) for consideration per Unit less than the then existing Conversion Price
of the Class C Units, then the Conversion Price will be adjusted, effective at
the close of business on the date on which such additional Units are issued, in
accordance with the following formula:

CP2 = CP1 x (A+B) / (A+C)

CP2 = Conversion Price in effect immediately after new issue

CP1 = Conversion Price in effect immediately prior to new issue

A = Total number of Units deemed to be outstanding immediately prior to new
issue (including all Class A Units, Class B Units, Class C Units, and Class D
Units, and all outstanding options on an as-exercised basis)

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B = Aggregate consideration received by the Company with respect to the new
issue divided by CP1

C = Number of Units issued in the subject transaction

(II)    Consideration consisting of cash will be valued at the aggregate amount
of cash received by the Company. Consideration consisting of property other than
cash will be valued at the Fair Market Value thereof as of the date on which
such additional Units are issued.

(III)    If outstanding Units (other than Class B Units) are split into a
greater number of Units of the same class, or if outstanding Units (other than
Class B Units) are combined into a smaller number of Units of the same class,
the Conversion Price then in effect immediately before such split or combination
will be proportionately adjusted as appropriate to reflect the economic effect
of such split or combination. These adjustments will be effective at the close
of business on the date the split or combination becomes effective.

(f)    The Company is authorized to, and shall, issue to the holder of any Class
C Units upon conversion into Class D Units, that number of Class D Units
determined pursuant to Section 4.1(e)(v) above. The Class D Units are
non-voting.
(g)    Exhibit C sets forth (i) the number of outstanding Class A Units owned by
each Class A Member, giving effect to the respective Class A Members’ Capital
Contributions, and (ii) the number of outstanding Class C Units owned as of the
date hereof by each Class C Member, giving effect to the respective Class C
Members’ Capital Contributions. The Restricted Interest Agreements set forth the
number of outstanding Class B Units owned by each Class B Member. The Board of
Managers shall amend Exhibit C or Exhibit E from time to time to reflect any
changes thereto resulting from any additional subscriptions, Transfers, or
admissions effected in accordance with this Agreement, including, without
limitation, upon any conversion of Class C Units into Class D Units.
(h)    Notwithstanding anything to the contrary in this Agreement (but without
duplication), unless the Board of Managers otherwise determines: (i) Class A
Units, Class C Units, and Class D Units shall have a designated value of $1,000
per Unit; (ii) property contributed in-kind as a Capital Contribution or
distributed in-kind shall have a deemed value that is mutually acceptable to the
Class A Member that makes such Capital Contribution or receives such
distribution, on the one hand, and the Managers that are not designees of such
Class A Member, on the other hand; and (iii) Class A Units shall be issued for
Capital Contributions, and redeemed and retired

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for distributions, by the Company to a Class A Member (including the Special PDC
Withdrawal) (other than distributions made in accordance with Section
2.5(a)(iii) (Board Deadlock), Section 5.5 (Distributions), Section 5.6 (Tax
Distributions), Section 7.3 (Application and Distribution of Proceeds of
Liquidation) and Section 9.5 (Withholding)), to the extent necessary to reflect
an appropriate change in the Class A Sharing Percentage of the Class A Member
that makes such Capital Contribution or receives such distribution.
(i)    It is the intent of the parties hereto that the Class D Units will have
the same rights and obligations as the Class A Units except with that the Class
D Units will not have any voting rights, will not have the right to drag-along
other Units (but will be subject to the drag-along rights of the Class A Units
pursuant to Section 6.5(c)), and will not have a right to repayment of an
Investor Preference Amount. Therefore, in the event of any modifications to the
rights or obligations of the Class A Units, the Class D Units will be
automatically and without further action modified on the same basis as the Class
A Units have been modified; provided, however, that the Class D Units will not
have any rights (i) to Board designees under Section 2.2, (ii) to an Investor
Preference Amount under Section 5.5(c)(i) or (ii), or (iii) under Article VI
except for the tag-along rights specifically provided for in Sections 6.5(b)(ii)
and 6.6(a)(ii).
SECTION 4.2.    Sharing Percentages. The “Class A Sharing Percentage” of each
Class A Member at any time shall equal the aggregate number of Class A Units
held by such Member at such time divided by the aggregate number of Class A
Units then outstanding. The “Class B Sharing Percentage” of each Class B Member
at any time shall equal the aggregate number of Class B Units held by such
Member at such time divided by the aggregate number of Class B Units then
outstanding. The “Class C Sharing Percentage” of each Class C Member at any time
shall equal the aggregate number of Class C Units held by such Member at such
time divided by the aggregate number of Class C Units then outstanding. The
“Class D Sharing Percentage” of each Class D Member at any time shall equal the
aggregate number of Class D Units held by such Member at such time divided by
the aggregate number of Class D Units then outstanding. The Class A Sharing
Percentage of each Class A Member is set forth opposite such Member’s name on
Exhibit C under the similarly titled column. The Class C Sharing Percentage of
each Class C Member is set forth opposite such Member’s name on Exhibit C under
the similarly titled column. In the event of a change in Class A Sharing
Percentages or Class C Sharing Percentages pursuant to the terms of this
Agreement, the Board of Managers shall revise Exhibit C to reflect such changes.
In the event of a change in the number of Class A Units, Class B Units, or Class
D Units outstanding pursuant to the terms of this Agreement, the Board of
Managers shall revise Exhibit E to reflect the resulting changes in the Class
Distribution Sharing Percentages.
SECTION 4.3.    Capital Contributions.
(a)    On the Closing Date, Investor contributed to the Company the amount in
cash set forth opposite its name on Exhibit C under the column “Initial Capital
Contributions” and PDC contributed the Contributed Assets to the Company in
accordance with and subject to the terms of the Contribution Agreement, which
were valued at the Agreed Value, which is set forth opposite PDC’s name on
Exhibit C under the column “Initial Capital Contributions.” The contributions
described in this paragraph (a) are referred to herein as “Initial Capital
Contributions.” In exchange for the Initial Capital Contributions, and taking
into account the Special PDC Withdrawal made

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pursuant to Section 5.7 in connection with the Closing, the Company has issued
to each of Investor and PDC Class A Units reflected in Exhibit C under the
column entitled “Class A Units.”
(b)    Notwithstanding any other provision of this Agreement, Investor hereby
agrees and commits to make 100% of any and all cash Capital Contributions
provided for herein (except for cash payments required from PDC pursuant to the
terms of the Contribution Agreement (e.g., as a result of Title Defects or
Environmental Defects (as defined in the Contribution Agreement) in the
Contributed Assets)) until the Minimum Funding Obligation is satisfied, and
hereby further agrees and commits to satisfy the Minimum Funding Obligation no
later than December 31, 2011. PDC shall have no obligation to make any Capital
Contributions to the Company until the Minimum Funding Obligation is satisfied
and except as required by the Contribution Agreement. After the Catch-Up Period,
additional Capital Contributions shall be funded by the Class A Members in cash
in proportion to their then-existing Class A Sharing Percentages, except as
otherwise expressly provided herein and except as required by the Contribution
Agreement.
(c)    Subject to Section 4.3(b), from time to time after the date hereof, the
Class A Members shall be required to make Capital Contributions to the Company
as capital calls (collectively, “Capital Calls”) to the extent approved by the
Board of Managers or pursuant to an approved Development Plan and Budget. With
respect to each Capital Call, the Board of Managers shall send a written notice
to each Class A Member that shall state (i) the amount of the Capital
Contribution required of each Class A Member, (ii) the payment date for such
Capital Contribution and (iii) the purposes for which the Capital Contribution
proceeds will be utilized by the Company. Unless otherwise specified by the
Board of Managers, within 20 Business Days after the date of the written notice
referred to in the preceding sentence, each Class A Member required to make a
Capital Contribution shall, subject to the provisions of this Section 4.3, be
required to pay the full amount of the Capital Contribution requested pursuant
to such Capital Call by wire transfer of funds in United States dollars. Class A
Members making additional Capital Contributions under this Section 4.3 will
receive in respect thereof a number of Class A Units equal to the amount of
their respective additional Capital Contributions divided by $1,000 or such
other price per Unit determined by the Board of Managers.
(d)    If Investor fails for any reason to make a required Capital Contribution
during the Catch‑Up Period or fails to satisfy timely the Minimum Funding
Obligation and such failure remains uncured by the later to occur of (x) 10
Business Days after the due date therefor and (y) 2 Business Days after the PDC
Designees have provided written notice of such failure to Investor (such
failure, an “Investor Default”), the Investor shall be in default under this
Agreement. Effective as of the occurrence of any Investor Default, PDC will have
the right which shall be exercisable for 10 Business Days after the occurrence
of such Investor Default (which shall not be exclusive of other available
remedies at law, including for breach of contract) to elect to (1) dissolve the
Company and wind up its affairs with a Liquidator appointed by PDC under Section
7.1, (2) advance to the Company the amount of Investor’s then-due Capital
Contribution, which advance shall be treated by the Company and the Members as a
loan from PDC to Investor (an “Investor Sideways Loan”) or (3) contribute to the
Company the amount of Investor’s then-due Capital Contribution (a “Substitute
Contribution”).

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(i)    If PDC elects to make an Investor Sideways Loan, such loan will be (A)
payable on demand and accrue interest at a rate of interest per annum equal to
the lesser of (1) the Prime Rate plus six percent and (2) the highest rate
permitted by applicable Law, and (B) secured by Investor’s Class A Interest in
the Company. Investor shall execute all documentation and take all action
reasonably requested by PDC to grant and perfect such security interest.
Investor will not be entitled to any Distributions until such Investor Sideways
Loan is fully repaid. The portion of distributions which would otherwise have
been distributed or paid to Investor under Article V and Article VII if Investor
had funded the amounts for which an Investor Sideways Loan was made shall
instead be paid directly to PDC, and shall be deemed to have been paid to the
Investor and subsequently paid by Investor to PDC, until the Investor Sideways
Loan is fully repaid.
(ii)    If PDC elects to make a Substitute Contribution, such contribution will
be treated by the Company and the Members as a PDC contribution of 110% of the
amount actually contributed by PDC for all purposes under this Agreement,
including the issuance of Class A Units to PDC in respect thereof (an
“Additional PDC Contribution”).
(e)    After the Catch-Up Period, if either Class A Member fails for any reason
to make a required Capital Contribution and such failure remains uncured by the
later to occur of (x) 10 Business Days after the due date therefor and (y) 2
Business Days after the designees on the Board of Managers of the other Class A
Member (the “Non‑Defaulting Member”) have provided written notice of such
failure to such Class A Member (such failure, a “Payment Default”), such Class A
Member shall be in default under this Agreement (a “Defaulting Member”).
Effective as of the occurrence of a Payment Default, the Non-Defaulting Member
will have the right which shall be exercisable for 10 Business Days after the
occurrence of such Payment Default (which shall not be exclusive of other
available remedies at law, including for breach of contract) to advance to the
Company the amount of the Defaulting Member’s then-due Capital Contribution,
which advance will be treated by the Company and the Members as a loan from the
Non-Defaulting Member to the Defaulting Member (a “Sideways Loan”).
(i)    A Sideways Loan shall be (A) payable on demand and accrue interest at a
rate of interest per annum equal to the lesser of (1) the Prime Rate plus four
percent and (2) the highest rate permitted by applicable Law, and (B) secured by
the Defaulting Member’s Class A Interest in the Company. The Defaulting Member
shall execute all documentation and take all action reasonably requested by the
Non-Defaulting Member to grant and perfect such security interest. The
Defaulting Member will not be entitled to any Distributions until such Sideways
Loan is fully repaid, and such loan shall be repayable from that portion of each
distribution or payment made to the Members pursuant to Article V and Article
VII that would have been distributed or paid to the Defaulting Member had it
made the Capital Contribution to the Company that was required of (but not made
by) it. For purposes of adjusting and maintaining the balances of the Defaulting
Member’s Capital Account, (A) the amount of any Sideways Loan made by the
Non-Defaulting Member to the Defaulting Member shall be deemed to have been
contributed to the

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Company by the Defaulting Member and shall increase the balance of the
Defaulting Member’s Capital Account, and (B) the amount of any distribution or
payment otherwise payable to the Defaulting Member that is paid to the
Non-Defaulting Member in repayment of a Sideways Loan shall be treated as if
such amount had actually been distributed or paid to the Defaulting Member
pursuant to Article V or Article VII, as the case may be.
(f)    In the event that PDC elects to take less than $11.5 million in the
Subsequent Special Withdrawal (including if it elects not to take any Subsequent
Special Withdrawal), Investor may elect to make an additional Capital
Contribution by March 31, 2011 in an amount equal to the difference between
$11.5 million and the amount, if any, taken in such Subsequent Special
Withdrawal.
SECTION 4.4.    Capital Accounts.
(a)    A separate Capital Account for each Member shall be established and
maintained on the books of the Company in accordance with Treasury Regulations §
1.704-1(b)(2)(iv) and, to the extent not in conflict with such Treasury
Regulations, the provisions of this Agreement. Each Member shall have a single
Capital Account that reflects all of its Interests, regardless of class or the
time or manner in which acquired. Upon a Transfer (or Transfer deemed to occur
for tax purposes) of all or part of any Interest, the Capital Account and
Capital Contributions of the transferor attributable to the transferred Interest
shall carry over to the transferee.
(b)    There will be credited to the Capital Account of each Member (i) the
amount of cash and the initial Book Basis of any property contributed by such
Member to the Company, (ii) such Member’s share of Net Income and any items of
income or gain allocated to such Member pursuant to Section 5.1 and Section 5.2,
and (iii) the amount of any liabilities of the Company assumed by such Member or
that are secured by any property distributed to such Member.
(c)    There will be debited to the Capital Account of each Member (i) the
amount of any cash and the Book Basis of any property distributed by the Company
to such Member, (ii) such Member’s share of Net Loss, and any items of loss or
deduction allocated to such Member pursuant to Section 5.1 and Section 5.2, and
(iii) the amount of any liabilities of such Member assumed by the Company or
that are secured by any property contributed by such Member to the Company.
SECTION 4.5.    Member Loans. Any Member may, with the Approval of the Board of
Managers, loan funds to the Company. Loans by a Member to the Company will not
be treated as Capital Contributions but will be treated as debt obligations
having such terms as are Approved by the Board of Managers.
SECTION 4.6.    No Return of Capital Contributions. Except as expressly provided
herein, a Member shall not be entitled to the return of any part of its Capital
Contributions or to be paid any interest, salary or draw in respect of its
Capital Contributions. A Capital Contribution that has not been repaid is not a
liability of the Company or any Member.

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SECTION 4.7.    Management Incentives. The Members hereby agree to grant
“profits interests” to the executive management team of the Company and its
subsidiaries in the form of Class B Units. The aggregate grant of profits
interests and other equity incentives to the executive management team of the
Company and its subsidiaries shall not exceed 5% of the fully-diluted Interests.
Class B Units granted to Class B Members shall be subject to the following terms
and conditions:
(a)    Each Class B Unit granted as of the date hereof and any additional Class
B Units, whenever granted, will be eligible to receive Distributions with
respect to such Unit to the extent provided in Section 5.5, subject to any
limitations and restrictions (including without limitation vesting and
forfeiture provisions) set forth below. The Class B Units have been granted in
exchange for services provided or to be provided to the Company and its
subsidiaries, and the intent of this Section 4.7 and Section 5.5 is to ensure
that all Class B Units issued qualify as “profits interests” under Revenue
Procedure 93-27, I.R.B. 1993-24, June 9, 1993 and Revenue Procedure 2001-43,
I.R.B. 2001-34, August 2, 2001, and this Agreement shall be interpreted and
applied consistently therewith. Each recipient of a Class B Unit (whether issued
on or after the date hereof) agrees to timely and properly make an election
under Section 83(b) of the Code with respect to each Class B Unit received and
to provide the Company with a copy of such election at the time of filing. The
Board of Managers is hereby authorized to cause the Company to make an election
to value any Class B Units issued to a Member as compensation for services to
the Company (the “Compensatory Interest”) at liquidation value (the “Safe Harbor
Election”), as the same may be permitted pursuant to or in accordance with the
finally promulgated successor rules to Proposed Regulations Section 1.83-3(l)
and IRS Notice 2005-43 (collectively, the “Proposed Rules”), provided that such
final successor rules are substantially similar to the Proposed Rules or the
Board of Managers decides, in its sole discretion, that such Safe Harbor
Election is appropriate. The Board of Managers shall cause the Company to make
any allocations of items of income, gain, deduction, loss or credit (including
forfeiture allocations and elections as to allocation periods) necessary or
appropriate to effectuate and maintain the Safe Harbor Election. The Board of
Managers is hereby authorized and empowered, without further vote or action of
the Members, to amend this Agreement as necessary to comply with the Proposed
Rules or any rule, in order to provide for a Safe Harbor Election and the
ability to maintain or revoke the same, and shall have the authority to execute
any such amendment by and on behalf of each Member. Any undertakings by the
Members necessary to enable or preserve a Safe Harbor Election may be reflected
in such amendments and to the extent so reflected shall be binding on each
Member; provided that such amendments are not reasonably likely to have a
material adverse effect on the rights and obligations of the Members. Each
Member agrees to cooperate with the Board of Managers to perfect and maintain
any Safe Harbor Election, and to timely execute and deliver any documentation
with respect thereto reasonably requested by the Board of Managers.
(b)    The Class B Units will share in the profits and losses of the Company and
be entitled to share in Distributions as provided in this Agreement. Except as
otherwise expressly provided herein, the Class B Units and the Class B Members
have no rights (including voting rights).
(c)    The Class B Units may be vested (the “Vested Class B Units”) or unvested
(the “Unvested Class B Units”). During a Class B Member’s employment with the
Company or any of its subsidiaries, the Class B Units will become eligible for
vesting and vest only upon

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satisfaction of the conditions provided in this Section 4.7(c). For the
avoidance of doubt, no Class B Units held by a Class B Member will be eligible
for vesting or vest upon or following the termination of such Class B Member’s
employment with the Company or one of its subsidiaries for any reason. The Class
B Units will vest on the schedule set forth in, and subject to the terms and
provisions of, the applicable Restricted Interest Agreement.
(i)    Unless otherwise expressly provided in a Restricted Interest Agreement,
upon the occurrence of the Equity Incentive Distribution Event, all of the
remaining Unvested Class B Units will vest and be considered Vested Class B
Units.
(d)    Unless otherwise expressly provided in a Restricted Interest Agreement,
the Class B Units shall be subject to forfeiture in the following circumstances:
(i)    Upon termination of the employment of a Class B Member with the Company
and its subsidiaries for any reason, all Unvested Class B Units held by that
Class B Member shall automatically and without any further action by any party
be forfeited, terminated and cancelled without payment of any consideration.
(ii)    Upon termination of the employment of a Class B Member (i) by the
Company or any of its subsidiaries for Cause or (ii) by a Class B Member at any
time in which the Company or any of its subsidiaries could terminate such Class
B Member for Cause, then in either such event, all Vested Class B Units that are
then held by the Class B Member shall automatically and without any further
action by any party be forfeited, terminated and cancelled without payment of
any consideration.
Any Class B Units forfeited in connection with any termination of a Class B
Member’s employment with the Company and its subsidiaries and any Class B Units
for which a Call Option (as defined below) is exercised pursuant to Section 4.8
shall reduce (in proportion to the reduction in the total number of outstanding
Class B Units that results from the forfeiture or the Call Option exercise) the
Class Distribution Sharing Percentages for the Class B Members, and the Class
Distribution Sharing Percentages for the Class A Members and Class D Members
shall be correspondingly increased. The provisions of Exhibit E shall be amended
to reflect such adjustments.
SECTION 4.8.    Call Option
(a)    Upon any termination of a Class B Member’s employment with the Company
and its subsidiaries, the Company shall have the right to purchase (to the
extent not forfeited as the result of such termination of employment) all of the
Vested Class B Units that are then held by such individual or originally issued
to such individual but held by one or more Class B Permitted Transferees of such
individual (such Units, collectively, the “Call Units”; the Class B Member and
such Class B Permitted Transferees, if any, collectively, the “Call Group”) at a
purchase price equal to the Fair Market Value of the Call Units calculated as of
the date of termination of employment (the “Call Option”); provided, however,
that in the event the Call Option is exercised following the Class B Member’s
voluntary termination of employment, the purchase price shall be 80% of the Fair
Market Value of the Call Units calculated as of the date of termination of
employment.

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(b)    Any Call Option may be exercised by delivery of written notice thereof
(the “Call Notice”) to the Call Group not later than the 180th day after the
effectiveness of the applicable termination of employment (the “Call Option
Exercise Period”). The Call Notice shall state that the Company has elected to
exercise the Call Option, set forth the number of Call Units with respect to
which the Call Option is being exercised and the Fair Market Value of such Call
Units as determined by the Board of Managers in its discretion.
(c)    The Company may pay the purchase price for the Call Units, at its sole
option, in (x) cash or (y) by delivery of an unsecured subordinated promissory
note (a “Call Unit Promissory Note”), in an aggregate principal amount equal to
the balance of such purchase price, that will:
(i)    be due and payable on the second anniversary of the date of issuance, or
such longer period as may be agreed between the Company and the Call Group;
(ii)    will accrue interest at a rate equal to the Prime Rate plus two percent
that is payable in cash annually in arrears;
(iii)    not be entitled to the payment of any principal or interest until the
payment in full of other notes, if any, that, prior to the issuance of such
note, were issued to any members of any other Call Group pursuant to this
Section 4.8;
(iv)    subject to the preceding clause (iii), permit the Company the right, but
not the obligation, to prepay without penalty, in whole or in part, at any time
or from time to time, all outstanding obligations under such note;
(v)    become due and payable in full upon the Equity Incentive Distribution
Event; and
(vi)    be subordinated in right of payment to all Senior Debt of the Company.
(d)    The closing of any purchase and sale of Call Units pursuant to this
Section 4.8 shall take place as soon as reasonably practicable and in no event
later than the later to occur of (i) thirty days after termination of the Call
Option Exercise Period and (ii) if relevant, the determination of the Fair
Market Value of such Call Units pursuant to Section 4.8(f), at the principal
office of the Company, or at such other time and location as the parties to such
purchase may mutually agree in writing.
(e)    At the closing of any purchase and sale of Call Units following the
exercise of any Call Option, the members of the Call Group shall deliver to the
Company (i) instruments of transfer satisfactory to the Company to evidence the
Transfer to the Company of such Call Units free and clear of any lien, charge,
claim or encumbrance, and the Company shall deliver to the Call Group the
purchase price for the Call Units in cash or a Call Unit Promissory Note
pursuant to Section 4.8(c) and (ii) a release of claims in a form satisfactory
to the Company. The delivery of the instruments representing the Transfer of the
Call Units pursuant to any Call Option shall include representations and
warranties by the applicable transferor that: (i) the transferor has full right,
title and interest in and to such Call Units; (ii) the transferor has all
necessary power and authority and

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has taken all necessary action to sell such Call Units as contemplated; (iii)
such Call Units are free and clear of any and all liens, charges, claims or
encumbrances; and (iv) there is no adverse claim with respect to such Call
Units.
(f)    If the Company exercises the Call Option and the Call Group, by written
notice to the Company received within 10 Business Days following delivery to the
Call Group of the Call Notice, disagrees with the Fair Market Value specified in
such Call Notice, then the Fair Market Value of the applicable Call Units will
be determined by an appraisal (an “Outside Appraisal”) made by one qualified
person (which can be an accounting firm or an investment banking firm) having
substantial experience in the valuation of similar equity interests in the
United States and that is mutually agreeable to the Company and the Call Group
(the “Appraiser”). The Company and the Call Group shall mutually agree on such
Appraiser within thirty days of the Company’s receipt of the Call Group’s
written notice provided for in the first sentence of this Section 4.8(f). The
Company shall bear 100% of the fees, costs and expenses of the Appraiser, unless
the Appraiser’s determination of the Fair Market Value of the Call Units is less
than or equal to 110% of the Fair Market Value set by the Board of Managers, in
which case 100% of the fees, costs and expenses of the Appraiser will be borne
by the Call Group. The Call Group will not be entitled to an Outside Appraisal
if the Fair Market Value of the Call Units specified in the Call Notice was
based on a determination by a third party having substantial experience in the
valuation of similar equity interests in the United States during the six months
preceding the date of termination of employment giving rise to the exercise of
the Call Option. If, on or before the 180th day following the closing of a
purchase and sale of Call Units following a termination of employment by the
Company or any of its subsidiaries for any reason other than Cause, the Equity
Incentive Distribution Event occurs and the consideration that would have been
paid in the Class B Hypothetical Payout is higher than the Class B Option Price,
then the Company shall pay the Class B Make-Whole amount to the Call Group
within 10 Business Days following the payments or distributions to the Class B
Members (who are employees at the time of the Equity Incentive Distribution
Event) in respect of the Equity Incentive Distribution Event. For the avoidance
of doubt, the Class B Make-Whole amount will not be paid in the event of a
voluntary termination of employment by the Class B Member or in the event of a
termination of the Class B Member’s employment due to death or disability.
SECTION 4.9.    Mandatory Redemption. Upon the occurrence of the Equity
Incentive Distribution Event as a result of (x) a sale of all the Class A
Interests in the Company to a Third Party Purchaser or a Third Party Offeror or
(y) a sale by a Class A Member of all of its Class A Interests to the other
Class A Member (each, a “Redemption Event”), the Company shall redeem the
outstanding Class B Units for cash in an amount equal to that which the Class B
Members would have received as a Distribution, if any, pursuant to Section
5.5(c) if the Company had (i) sold all of its assets for the fair market value
implied by the sales price for the Class A Interests in the Redemption Event and
(ii) liquidated pursuant to Article VII.
ARTICLE V    
ALLOCATIONS; DISTRIBUTIONS
SECTION 5.1.    Allocations of Net Income or Net Loss. After making the
allocations set forth in Section 5.2, for purposes of maintaining the Capital
Accounts, the Company’s items of Net Income and Net Loss (or items thereof) for
each Allocation Year shall be allocated among

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the Members in a manner such that the Capital Account of each Member,
immediately after making such allocations is, as nearly as possible, equal
(proportionately) to (a) the amount of distributions that would be made to such
Member if the Company were dissolved, its affairs wound up and its assets sold
for cash equal to their Book Basis (assuming for this purpose only that the Book
Basis of an asset that secures a nonrecourse liability for purposes of Treasury
Regulations § 1.1001-2 is no less than the amount of such liability that is
allocated to such asset in accordance with Treasury Regulations § 1.704-2(d)(2))
in the Equity Incentive Distribution Event, all Company liabilities were
satisfied (limited with respect to each nonrecourse liability to the Book Basis
of the asset securing such liability), and the net assets of the Company were
distributed in accordance with Section 5.5(c) in connection with a liquidation
pursuant to Article VII, minus (b) the sum of such Member’s share of
“partnership minimum gain” (as defined in Treasury Regulations § 1.704-2(b)(2))
and “partner nonrecourse debt minimum gain” (as defined in Treasury Regulations
§ 1.704-2(i)(2)).
SECTION 5.2.    Special Allocations. Notwithstanding Section 5.1, for each
Allocation Year, the following items of income, gain, loss and deduction shall,
to the extent not previously reflected in the Capital Accounts of the Members,
be specially allocated to their Capital Accounts, in the following order and
priority:
(a)    If there is a net decrease in “partnership minimum gain” (as defined in
Treasury Regulations § 1.704-2(b)(2) and as computed under Treasury Regulations
§ 1.704-2(d)) for any Allocation Year, then, to the extent required by the
Treasury Regulations, items of income (determined in accordance with the
provisions of Treasury Regulations § 1.704-2(f)(6)) shall be specially allocated
to the Members in an amount equal to each Member’s share of the net decrease in
partnership minimum gain (determined in accordance with the provisions of
Treasury Regulations § 1.704-2(g)). This Section 5.2(a) shall be interpreted
consistently with, and subject to the exceptions contained in, Treasury
Regulations § 1.704-2(f).
(b)    If there is a net decrease in “partner nonrecourse debt minimum gain” (as
defined in Treasury Regulations § 1.704-2(i)(2)) for any Allocation Year, then,
to the extent required by Treasury Regulations, items of income (determined in
accordance with the provisions of the Treasury Regulations § 1.704-2(i)(4))
shall be specially allocated to the Members in an amount equal to each Member’s
share of the net decrease in partner nonrecourse debt minimum gain (determined
in accordance with the provisions of Treasury Regulations § 1.704-2(i)(5)). This
Section 5.2(b) shall be interpreted consistently with, and subject to the
exceptions contained in, Treasury Regulations § 1.704-2(i)(4).
(c)    If any Member unexpectedly receives any adjustment, allocation or
distribution described in Treasury Regulations §§ 1.704-1(b)(2)(ii)(d)(4), (5)
or (6), which causes or increases a deficit balance in such Member’s Adjusted
Capital Account, such Member will be allocated items of income (including gross
income) in an amount and manner sufficient to eliminate, to the extent required
by the Treasury Regulations, the deficit balance in the Member’s Adjusted
Capital Account as quickly as possible; provided that an allocation pursuant to
this Section 5.2(c)shall be made only to the extent that the Member has a
deficit balance in its Adjusted Capital Account after all other allocations
provided for in Section 5.1 and this Section 5.2 have been tentatively made as
if this Section 5.2(c) was not in this Agreement. This Section 5.2(c) is
intended to be a

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“qualified income offset” as that term is used in Treasury Regulations
§ 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.
(d)    “Nonrecourse deductions” (as defined in Treasury Regulations
§§1.704-2(b)(1) and (c)) for any Allocation Year shall be allocated among the
Class A Members in accordance with their Class A Sharing Percentages.
(e)    “Partner nonrecourse deductions” (as defined in Treasury Regulations
§1.704-2(i)(2)) shall be specially allocated to the Members who bear the
economic risk of loss with respect to the liability to which the deductions are
attributable, determined in accordance with the principles of Treasury
Regulations § 1.704-2(i)(l).
(f)    To the extent an adjustment to the adjusted tax basis of any Company
asset pursuant to Sections 734(b) or 743(b) of the Code is required to be taken
into account in determining Capital Accounts under Treasury Regulations §
1.704-1(b)(2)(iv)(m), the amount of the adjustment shall be included as an item
of gain (if positive) or loss (if negative) and shall be specially allocated to
the Members consistent with the manner in which their Capital Accounts are
required to be adjusted by such Treasury Regulation.
(g)    Simulated Depletion Deductions, Simulated Loss, and IDCs with respect to
each Oil and Gas Property shall be allocated among the Class A Members in
proportion to the manner in which the Simulated Basis of such property is
allocated between the Class A Members pursuant to Section 5.3(a), provided,
however, if the percentage depletion method is used, any excess percentage
depletion shall be allocated in accordance with Treasury Regulation Section
1.704-1(b)(4)(iii).
SECTION 5.3.    Other Allocation Rules.
(a)    For purposes of computing the Members’ Capital Accounts, the Simulated
Basis of each Oil and Gas Property will be allocated among the Class A Members
in proportion to their Class A Sharing Percentages. Upon an adjustment to the
Book Basis of an Oil and Gas Property pursuant to a Revaluation Event, the
Simulated Basis may be reallocated among the Class A Members, but only in a
manner consistent with the provisions of Treasury Regulations §
1.704-1(b)(2)(iv)(k), Section 613A(c)(7)(D) of the Code and the Treasury
Regulations thereunder.
(b)    Net Income, Net Loss, and any other items of income, gain, loss or
deduction (including Simulated Depletion Deductions, Simulated Loss, and
Simulated Gain) shall be allocated to the Members pursuant to this Article V as
of the last day of each Allocation Year; provided, that Net Income, Net Loss,
and such other items shall also be allocated at such times as the Book Basis of
the Company’s property are adjusted pursuant to the definition of Book Basis.
(c)    Solely for purposes of determining a Member’s proportionate share of
“excess nonrecourse liabilities” of the Company within the meaning of Treasury
Regulations § 1.752-3(a)(3), the Members’ interests in the Partnership’s profits
are in proportion to their Class A Sharing Percentages.

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SECTION 5.4.    Allocations of Taxable Income or Loss.
(a)    Except as provided in subsections (b)-(d) below or as otherwise required
by the Code or Treasury Regulations, solely for federal income tax purposes,
items of Company taxable income, gain, loss and deduction for each Allocation
Year shall be allocated among the Members in the same manner as each correlative
item of income, gain, loss and deduction, as determined for Capital Account
purposes, is allocated pursuant to Section 5.1 and 5.2.
(b)    For purposes of Treasury Regulations §§ 1.704-1(b)(2)(iv)(k)(2) and
1.704-1(b)(4)(v), the amount realized on the disposition of any Oil and Gas
Property shall be allocated (i) first to the Class A Members in an amount equal
to the remaining Simulated Basis of such property in the same proportions as the
Simulated Basis of such property was allocated to the Class A Members pursuant
to Section 5.3(a), and (ii) any remaining amount realized shall be allocated to
the Class A Members in the same ratio as the Simulated Gain.
(c)    If property contributed to the Company by a Member has an adjusted tax
basis that differs from its initial Book Basis on the date of contribution or if
the Book Basis of property is adjusted upon the occurrence of a Revaluation
Event, income, gain, loss and deductions with respect to such property will,
solely for tax purposes, be allocated among the Members so as to take account of
such difference. Such allocations will be made among the Members in the manner
provided in Section 704(c) of the Code, pursuant to the remedial allocation
method described in Treasury Regulation §1.704-3(d).
(d)    Depreciation, depletion, IDCs, and amortization recapture amounts under
Sections 1245, 1250 or 1254 of the Code, if any, resulting from any sale or
disposition of tangible or intangible depreciable, depletable or amortizable
property shall be allocated to the Class A Members in the same proportions that
the depreciation, depletion, IDCs or amortization being recaptured was
allocated.
(e)    The Members acknowledge that the U.S. federal income tax deduction for
cost or percentage depletion with respect to each separate Oil and Gas Property
owned by the Company must be computed separately by each Member in accordance
with Section 613A(c)(7)(D) of the Code, rather than by the Company. For purposes
of such computation, each Class A Member shall be allocated a share of the
adjusted basis in each Oil and Gas Property acquired during an Allocation Year
equal to its relative Capital Contributions at the end of such Allocation Year.
Each Class A Member shall separately keep records of its share of the adjusted
basis for any cost or percentage depletion allowable on such Oil and Gas
Property, and use such adjusted basis in the computation of its gain or loss on
the disposition of such Oil and Gas Property. Upon the request of the Company,
each Class A Member shall advise the Company of its adjusted basis in each Oil
and Gas Property as computed in accordance with the provisions of this Section
5.4(e). The amount of gain or loss to be recognized by a Class A Member for
income tax purposes as a result of the sale or other taxable disposition of an
Oil and Gas Property shall be equal to the difference between the amount
realized from such sale or disposition allocated to such Class A Member and such
Class A Member’s adjusted basis in such Oil and Gas Property.

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SECTION 5.5.    Redemption of Class C Units; Distributions.
(a)    Except as otherwise provided in Section 5.6 and Section 5.7, (and other
than in connection with a liquidation pursuant to Article VII), for so long as
any Class C Units remain outstanding, the Company shall apply all Available Cash
to the redemption of outstanding Class C Units prior to any Distributions to any
other Members or the repurchase or redemption of any other Units.
(i)    The Board of Managers shall determine at least quarterly (on or before
the fifteenth (15th) day of each April, July, October, and January) whether the
Company has any Available Cash, and, if there is Available Cash, shall promptly,
but in any event within five (5) Business Days of such determination, fix a
record date for the determination of Class C Units to be redeemed (each a
“Record Date”). Such Record Date shall be not less than three (3) but not more
than ten (10) Business Days prior to the Redemption Date.
(ii)    The Company shall deliver a notice of redemption (each a “Notice of
Redemption” not less than three (3) but not more than twenty (20) Business Days
prior to the date on which Class C Units are to be redeemed (the “Redemption
Date”), addressed to the holders of record of Class C Units as they appear in
the records of the Company. Each Notice of Redemption must state the following:
(A) the Record Date and the Redemption Date; (B) the Redemption Price as of the
Redemption Date; (C) the number of Redemption Units, provided, however, that if
the Notice of Redemption states that the number of Redemption Units will be less
than the total number of Class C Units then outstanding (a “Partial
Redemption”), then the number of Class C Units to be redeemed will be
recalculated as of the Redemption Date based on the total number of Class C
Units remaining outstanding as of the Redemption Date; (D) that all of such
holders’ Class C Units will be redeemed or, if there will be a Partial
Redemption, such holder’s Partial Redemption Class C Units, provided, however,
that in such event such holder’s Partial Redemption Class C Units will be
recalculated as of the Redemption Date based on the total number of Class C
Units remaining outstanding as of the Redemption Date; and (E) that dividends
will cease to accrue on such Redemption Date.
(iii)    The Company shall pay the Redemption Price to the holders of Class C
Units on the Redemption Date. All Class C Units so redeemed will be deemed no
longer outstanding, dividends on such Class C Units will cease to accrue, and
all rights of the holder thereof as a holder of Class C Units shall cease and
terminate with respect to such Class C Units. All Class C Units remaining
outstanding, if any, shall continue as Class C Units with all of the rights
provided for herein, including the continued accrual of dividends.
(iv)    Notwithstanding anything herein to the contrary, each holder of Class C
Units shall retain the right to convert any or all of such holder’s outstanding
Class C Units into Class D Units at time prior to a Redemption Date as provided
in Section 4.1(e)(v), in which event such holder will not be entitled to receive
the Redemption Price with respect to the Class C Units that have been converted.

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(b)    Except as otherwise provided in Section 5.6 and Section 5.7, (and other
than in connection with a liquidation pursuant to Article VII), Available Cash,
if any, remaining after compliance with Section 5.2(a) above, may be Distributed
to the Class A Members and Class D Members solely at such times and in such
amounts as the Board of Managers determines, and any such Distribution of
Available Cash will be allocated among the Class A Members and Class D Members
in accordance with their then-existing Class A Sharing Percentages and Class D
Sharing Percentages, respectively.
(c)    Distributions of cash in connection with (w) a liquidation pursuant to
Article VII, (x) a Final Exit Event, (y) a leveraged recapitalization, or (z) a
sale of assets of the Company having a value in excess of 15% of the enterprise
value of the Company shall be made to the Members in the following order of
priority:
(i)    first, to the redemption of outstanding Class C Units as provided in
Section 5.5(a) above;
(ii)    next, 100% to Investor until it has received cumulative distributions
under this Section 5.5(c)(ii) equal to the Investor Preference Amount;
(iii)    thereafter, 100% to PDC until it has received cumulative distributions
under this Section 5.5(c)(iii) equal to the Investor Preference Amount; and
(iv)    thereafter, to the Members in accordance with their then-existing
Distribution Sharing Percentages, calculated in accordance with Exhibit E.
Proceeds from sales of all the Class A Interests and/or Class D Interests in a
Final Exit Event or from Significant Interest Sales shall be allocated between
the Class A Members and/or Class D Interests, respectively, as if the Company
had received such proceeds in a sale of its assets and Distributed such proceeds
pursuant to clause (i) through (iv) of this Section 5.5(c), as applicable,
provided that if a Significant Interest Sale involves the sale of Class A Units
or Class D Units by one Class A Member or Class D Member disproportionately in
excess of its Class A Sharing Percentage or Class D Sharing Percentage at the
time, the proceeds in respect of such excess Class A Units or Class D Units
shall be allocated to such Class A Member or Class D Member separately and shall
not be subject to the priority set forth immediately above. Each Class A Member
and Class D Member agrees to pay to the other Class A Member or Class D Member
such amounts as necessary to give effect to the immediately preceding sentence
in connection with any sale of all of the Class A Interests or Class D Units in
a Final Exit or any Significant Interest Sale. Any such payment shall be treated
by the Class A Members and Class D Members as a reallocation of the sales price
with respect to such sales for federal income tax purposes.
(d)    Except as provided in Section 2.5(a) and Article VII, Distributions of
assets in kind may be made to the Members solely at such times and in such
amounts as the Board of Managers determines. If assets are distributed in kind
other than pursuant to Section 2.5(a)(iii), then the Board of Managers shall
determine the value of each distributed asset, and such distribution shall be
treated as a distribution of cash in an amount equal to such asset value and
such distribution shall be subject to Section 5.5 and Article VII, as
applicable.

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(e)    No Distribution may be made if prohibited by Section 18-607 of the Act or
other applicable Law.
SECTION 5.6.    Tax Distributions. To the extent of Available Cash, the Company
shall make aggregate distributions of cash (“Minimum Tax Distributions”) to each
Member in an amount, which when added to the cumulative amount of prior
distributions made to such Member (other than the Special PDC Withdrawal), will
at least equal the cumulative amount of federal, state and local income tax
payable solely by reason of such Member’s distributive share, within the meaning
of Section 704(b) of the Code, of the cumulative income, gain, loss and
deductions of the Company, assuming for such purposes that (i) any such income
and gain reduced by losses and deductions (including for this purpose, a
deduction equal to such Member’s share of Simulated Depletion Deductions)
attributable to the Member by reason of its interest in the Company is subject
to federal, state or local income tax at the Assumed Tax Rate and (ii) the
cumulative distributive share of any unused deductions and losses of the Company
allocated to a Member may be carried forward. The Board of Managers shall cause
the Company to make such Minimum Tax Distributions quarterly during each Fiscal
Year of the Company based upon estimated allocations of income, gain, loss and
deductions (including for this purpose, a deduction equal to such Member’s share
of Simulated Depletion Deductions) of the Company for such Fiscal Year, and
future Minimum Tax Distributions shall be adjusted to reflect any differences
between estimated and actual allocations of Company income, gain, loss and
deductions (including for this purpose, a deduction equal to such Member’s share
of Simulated Depletion Deductions). To the extent that such Minimum Tax
Distributions requirement increases the amount distributed beyond the amount to
which a Member would be entitled under Section 5.5 and Section 7.3 (ignoring
this Section 5.6), the excess portion shall be considered a prepayment of future
distributions allocable to such Member. Any amount distributed to a Member
pursuant to this Section 5.6 shall be treated as an advance of, and shall reduce
the amount which such Member is otherwise entitled to receive thereafter
pursuant to Section 5.5 and Section 7.3. If upon termination of a Member’s
Interest in the Company or upon the winding up and liquidation of the Company, a
Member shall have received distributions pursuant to this Section 5.6 in excess
of the amount of distributions to which such Member would be entitled under
Section 5.5 and Section 7.3 (ignoring this Section 5.6), such Member shall
promptly repay such excess to the Company.
SECTION 5.7.    Special PDC Withdrawal. On the Closing Date, the Company
distributed $45 million in cash to PDC (the “Initial Special Withdrawal”), which
distribution shall be treated by the Company and the Members as a return of
capital to PDC to the extent such Initial Special Withdrawal meets the
requirements of Treasury Regulations Section 1.707-4(d) and PDC provides to the
Company documentation adequate to support such treatment on or before the due
date for filing the Company’s partnership return to which the Initial Special
Withdrawal relates. To the extent that the Initial Special Withdrawal does not
meet the requirements of Treasury Regulations Section 1.707-4(d), the Initial
Special Withdrawal will be treated as consideration by the Company to PDC in
exchange for a portion of PDC’s Initial Capital Contribution. Following the
Closing Date and until December 31, 2010, at the election of PDC in its sole
discretion and without any other approval required, the Company shall distribute
promptly up to an additional $11.5 million to PDC (any such subsequent
distribution the “Subsequent Special Withdrawal,” and, together with the Initial
Special Withdrawal the “Special PDC Withdrawal”), which distribution shall be
treated as a return of capital to PDC to the extent such Subsequent Special

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Withdrawal meets the requirements of Treasury Regulations Section 1.707-4(d) and
PDC provides to the Company documentation adequate to support such treatment on
or before the due date for filing the Company’s partnership return to which the
Subsequent Special Withdrawal relates. To the extent that the Subsequent Special
Withdrawal does not meet the requirements of Treasury Regulations Section
1.707-4(d), the Subsequent Special Withdrawal will be treated as consideration
by the Company to PDC in exchange for a portion of PDC’s Initial Capital
Contribution. PDC’s Class A Units (and corresponding Class A Sharing Percentage)
will be reduced in proportion to the amount of any Subsequent Special
Withdrawal.
ARTICLE VI    
TRANSFER; WITHDRAWAL; SALE RIGHTS; EXIT EVENTS
SECTION 6.1.    Restrictions on Transfer.
(a)    No Transfer of Interests may be made, in whole or in part, other than in
accordance with this Article VI, and any Transfer or attempted Transfer of
Interest in violation of this Article VI or any provision of this Agreement
shall be void ab initio. In the case of any Transfer made in contravention of
this Article VI that cannot be treated as void under applicable Law, the
transferee shall have only such rights as it is required to have under
applicable Law, but shall not be admitted as a Member. The Members agree that a
breach of the provisions of the restrictions on Transfers set forth in this
Article VI may cause irreparable injury to the Company and the Members for which
monetary damages (or other remedy at law) are inadequate in view of (i) the
complexities and uncertainties in measuring the actual damages that would be
sustained by reason of the failure of a person to comply with such provisions,
and (ii) the uniqueness of the Company’s business and the relationship among the
Members. Accordingly, the Members agree that the restrictions on Transfers may
be enforced by specific performance.
(b)    During the period ending on the four-year anniversary of the Closing Date
(the “Restricted Period”), no Class A Member or its successor(s) may Transfer
its Class A Interest except (i) as approved by the Managers designated by the
Class A Member not seeking to Transfer its Interest, (ii) for a PDC Change of
Control or Permitted Pledge, (iii) an assignment by PDC to a wholly‑owned
subsidiary (for so long as the recipient remains a wholly-owned subsidiary of
PDC), (iv) an assignment by Investor to a Permitted Investor Transferee (for so
long as the recipient remains a Permitted Investor Transferee) or (v) a
distribution in-kind of Investor’s interests in the Company to “Accredited
Investors” (as such term is defined in section 501 of Regulation D promulgated
under the Securities Act of 1933), upon Investor’s liquidation or as may be
required under Investor’s charter documents (“Permitted Transfers”); provided
that Investor may not Transfer its rights to appoint and remove Investor
Designees or under Section 6.5, Section 6.6 or Section 6.8 in connection with
the preceding clause (iv) or (v) without the prior approval of the PDC Designees
unless such rights are Transferred as an entirety as part of, and together with,
a Transfer pursuant to clause (iv) or (v) of at least 35% of the
then-outstanding Units to a single Permitted Investor Transferee. For the
avoidance of doubt, Investor may assign its rights and obligations to make
Capital Contributions hereunder to Permitted Investor Transferees (for so long
as the recipient remains a Permitted Investor Transferee) without the consent of
PDC. Following the Restricted Period, Permitted Transfers provided for in this
Section 6.1(b) shall continue to be permitted, and other Transfers by either
Class A Member shall be subject to (and may be made only in accordance with)
Section 6.5 and Section

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6.6. No Class B Member or its successor(s) may Transfer its Class B Interest
unless approved by the Board of Managers; provided that the Board of Managers
will, at a Class B Member’s reasonable request, consider approving a Transfer of
Class B Interests for bona fide estate planning purposes by a Class B Member to
his issue, or to a trustee or trustees of a trust whose vested beneficiaries at
any time include only the Class B Member’s kindred, and such a proposed Transfer
shall be approved by the Board of Managers if the persons who would control the
Class B Interest and the proposed arrangements for the control of the Class B
Interest are reasonably satisfactory to the Board of Managers. Any such approved
transferee shall be referred to as a “Class B Permitted Transferee,” and shall
be bound by all terms and conditions of this Agreement, including the forfeiture
and call option provisions of Section 4.8, as if such Class B Interests were
still held by the original Class B Member.
(c)    If a PDC Change of Control occurs before the three-year anniversary of
the Closing Date, the Restricted Period shall end on the third anniversary of
the Closing Date and, until such third anniversary:
(i)    during the Catch-Up Period, approval of any Development Plan and Budget
(including any Capital Calls provided for therein) shall require only the
approval of the Investor Designees; and
(ii)    after the Catch-Up Period, approval of the portion of any Development
Plan and Budget funded by the debt (including existing debt and the incurrence
of additional debt on arms’ length terms) or cash flow of the Company shall
require only the approval of the Investor Designees, and any remaining portion
of any such Development Plan and Budget (including any Capital Calls provided
for therein) shall require the Approval of the Board of Managers.
If a PDC Change of Control occurs between the third anniversary and the fourth
anniversary of the Closing Date, the Restricted Period shall end upon the
occurrence of such PDC Change of Control.
(d)    Class C Units and Class D Units shall be freely transferable without any
restrictions hereunder, provided, however, that any such transfers shall be
subject to the provisions of Section 6.2, Section 6.3, Section 6.4, Section 6.5,
and Section 6.6.
(e)    [Reserved].
(f)    Any costs incurred by the Company in connection with any proposed or
actual Transfer by a Member of all or a part of its Interest shall be borne by
such Member, subject to Section 6.7(b).
(g)    Notwithstanding anything to the contrary in this Section 6.1, a Transfer
of an Interest shall be null and void ab initio if (i) following the proposed
Transfer, the Company would constitute a “publicly traded partnership” for
purposes of Section 7704 of the Code, (ii) such Transfer would result in the
violation of any applicable federal or state securities Laws, (iii) the
transferee is financially incapable of carrying out the transferee’s obligations
under the Agreement or (iv) such Transfer is described in Section 9.6, unless
consented to by the non-Transferring Class A Member.

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SECTION 6.2.    Involuntary Transfer. To the fullest extent permitted by Law,
any Transfer of Interests in connection with any bankruptcy, insolvency or
similar proceedings involving a Member or pursuant to any judicial order, legal
process, execution or attachment and any other involuntary Transfer not
otherwise expressly provided for in this Agreement shall be subject to the
restrictions set forth in this Agreement.
SECTION 6.3.    Assignees. Unless an assignee of an Interest becomes a Member in
accordance with the provisions set forth below, such assignee shall not be
entitled to any of the rights granted to a Member hereunder in respect of such
Interest (including, with respect to Class A Interests, the power to designate
Managers), other than the right to receive allocations of income, gain, loss,
deduction, credit and similar items and distributions to which the assignor
would otherwise be entitled, to the extent such items are assigned.
SECTION 6.4.    Substitution.
(a)    An assignee of the Interest of a Member, or any portion thereof, may
become a Member entitled to all of the rights of a Member in respect of such
Interest if (i) the assignor gives the assignee such right in accordance with
the provisions of this Article VI, (ii) the Board of Managers consents in
writing to such substitution; and (iii) the assignee executes and delivers such
instruments, in form and substance reasonably satisfactory to the Board of
Managers, as the Board of Managers may deem reasonably necessary to effect such
substitution and to confirm the agreement of the assignee to be bound by all of
the terms and provisions of this Agreement.
(b)    Notwithstanding anything to the contrary contained herein, an assignee of
Class A Interests of a Class A Member constituting at least 35% of the
then-outstanding Class A Units shall automatically become a substitute Class A
Member entitled to all of the rights of a Class A Member in respect of such
Class A Interest if the assignment of such Class A Interest is pursuant to
Section 6.5 or Section 6.6.
SECTION 6.5.    Transfers Initiated by a Class A Member.
(a)    After the Restricted Period unless otherwise approved by the Board of
Managers, if either Class A Member desires to sell all or any portion of its
Class A Interest (the “Selling Member”), such Selling Member shall provide the
other Class A Member (the “Non-Selling Member”) a right of first offer to
acquire such Interest (the “Sale Interest”) by delivering a written notice (the
“Selling Member Notice”) to the Non-Selling Member stating the Selling Member’s
intentions and describing the Sale Interest. The Non-Selling Member shall have a
period of 30 days (the “Selling Member Notice Period”) from receipt of the
Selling Member Notice to deliver a written offer (the “Non-Selling Member
Offer”) to the Selling Member, which Non-Selling Member Offer shall include the
purchase price (payable in cash) at which it is willing to purchase the Sale
Interest and the proposed terms of sale. The Selling Member shall have a period
of 30 days from receipt of the Non‑Selling Member offer (the “Non-Selling Member
Offer Period”) to notify the Non-Selling Member that it accepts the Non-Selling
Member Offer. If the Selling Member accepts the Non‑Selling Member Offer prior
to the expiration of the Non-Selling Member Offer Period, the parties shall
effectuate such Transfer within 30 days after the end of the Non-Selling Member
Offer Period.

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(b)    (i)    If the Selling Member does not accept the Non-Selling Member Offer
prior to the expiration of the Non-Selling Member Offer Period, the Selling
Member for a period of 120 days thereafter may seek a bona fide offer for cash
to purchase the Sale Interest (a “Third Party Offer”) from a third party (the
“Third Party Purchaser”). If the Selling Member obtains a Third Party Offer that
it is willing to accept, the Selling Member shall deliver the Third Party Offer
to the Non-Selling Member, which Third Party Offer shall describe the Sale
Interest and the proposed purchase price (payable in cash) and terms of sale.
The delivery of the Third Party Offer to the Non-Selling Member shall constitute
a binding offer to sell the Sale Interest to the Non-Selling Member on the terms
set forth therein at a cash purchase price 8% higher than the Third Party Offer.
The Non-Selling Member shall have a period of 30 days (the “Third Party Offer
Period”) from receipt by it of the Third Party Offer to (A) notify the Selling
Member that it accepts the Third Party Offer and will pay a cash purchase price
for the Selling Member’s Class A Interest that is 8% higher than, but otherwise
on the same terms and conditions as, the Third Party Offer, (B) tag‑along and
participate in the proposed transaction, or (C) decline to participate in the
proposed transaction. If the Non-Selling Member fails to respond to a Third
Party Offer prior to the expiration of the Third Party Offer Period, then the
Non-Selling Member will be deemed to have declined to participate in the
proposed transaction.
(ii)    At the same time that the Selling Party delivers the Third Party Offer
to the Non-Selling Member pursuant to Section 6.5(b)(i), the Selling Member
shall also deliver the Third Party Offer to the Class C Members and Class D
Members, which Third Party Offer shall describe the Sale Interest and the
proposed purchase price (payable in cash) and terms of sale, and reference the
rights of the Class D Members to tag-along in the proposed transaction under
this Section 6.5(b)(ii) (a “Tag-Along Offer”). Each Class C Member and Class D
Member shall have a period of 15 days (the “Tag-Along Offer Period”) from
receipt by it of the Tag-Along Offer to notify the Selling Member and the
Non-Selling Member whether it (A) will tag‑along (with regards to Class C
Members, on an as converted basis) and participate in the proposed transaction
or (B) decline to participate in the proposed transaction. An election by a
Class C Member or Class D Member to participate in the proposed transaction
shall also constitute an election by such Member to participate in a sale to the
Non-Selling Member pursuant to Section 6.5(b)(i)(A). Any Class C Member who
desires to exercise its tag-along rights under this Section 6.5(b) must convert
its Class C Units into Class D Units on or prior to the closing of the proposed
transaction. Any Class C Member or Class D Member who fails to respond to a
Tag-Along Offer prior to the expiration of the Tag-Along Offer Period will be
deemed to have declined to participate in the proposed transaction.
(iii)    If the Non-Selling Member elects to purchase the Selling Member’s Class
A Interests pursuant to Section 6.5(b)(i)(A) prior to the expiration of the
Third Party Offer Period, then the Selling Member shall sell its Sale Interest
to the Non-Selling Member and the Class D Members (including Class C Members who
convert their Class C Units into Class D Units in connection with the proposed
transaction) who have validly exercised their tag-along rights under Section
6.5(b)(ii) shall sell their Class D Interests to the Non-Selling Member;
provided, however, that if the aggregate of the Class A Units and Class D Units
to be sold exceeds the maximum aggregate number of Units that the purchasing
party desires to purchase, then each of the Selling Member and the participating
Class D Members shall sell an amount of its Class A Interest and Class D
Interest, respectively, equal to such Member’s Tag-Along Sharing Percentage
multiplied

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by the Sale Interest to be sold in the contemplated Transfer. The parties shall
effectuate such Transfer within 30 days after the end of the Third Party Offer
Period.
(iv)    If the Non-Selling Member does not elect to purchase the Selling
Member’s Class A Interests pursuant to Section 6.5(b)(i)(A) but instead
exercises its tag‑along rights under Section 6.5(b)(i)(B) prior to the
expiration of the Third Party Offer Period, or any Class C Member (on an as
converted basis) or Class D Member exercises its tag-along rights under Section
6.5(b)(ii) prior to the expiration of the Tag-Along Offer Period, then the
Selling Member, Non-Selling Member, and each participating Class D Member
(including any Class C Member who converts its Class C Units into Class D Units
in connection with the proposed transaction) shall, subject to the proviso set
forth in Section 6.5(b)(iii), sell an amount of its Class A Interest or Class D
Interest equal to such Member’s Tag-Along Sharing Percentage multiplied by the
Sale Interest to be sold in the contemplated Transfer (the “Offered Tag-Along
Sale”).
(v)    If the Non-Selling Member, Class C Members, and Class D Members decline
to participate in the proposed transaction pursuant to their tag-along rights,
or fail to notify the Selling Member of their intent to exercise their tag-along
rights prior to the expiration of the Third Party Offer Period or Tag-Along
Offer Period, respectively, then the Selling Member may Transfer the Sale
Interest to the Third Party Purchaser on the terms and conditions of the Third
Party Offer. In the event that the Selling Member’s sale to the Third Party
Purchaser is not consummated within 90 days following the expiration of the
later of the Third Party Offer Period or Tag-Along Offer Period, the rights of
the Non-Selling Member, Class C Members, and Class D Members under this Section
6.5 with respect to the Sale Interest shall again become effective, and the
Selling Member shall not thereafter Transfer any of the Sale Interest without
first again complying with the provisions of this Section 6.5.
(c)    If the Selling Member has initiated the process provided for in this
Section 6.5 with respect to all of its Class A Interest and, following the
exercise or non-exercise by the other Members of their tag-along and purchase
rights under this Section 6.5 the proposed transaction would not result in the
sale of all of the outstanding Units to the purchaser (other than any Units
already owned by such purchaser), then the Selling Member may determine in its
sole discretion that it desires to sell all of the Class A Interests, Class C
Interests, and Class D Interests in the Company for cash, including the Class A
Interest of the Non-Selling Member, to the Third-Party Purchaser (a “Drag-Along
Sale”). If the Selling Member determines that it intends to cause a Drag-Along
Sale to be consummated, it shall give not less than 10 days’ prior written
notice of such intent to the Non-Selling Member and any other holders of the
Class C Units and Class D Units (the “Drag-Along Notice”). Upon receipt of such
Drag-Along Notice, the Non-Selling Member will be obligated to Transfer all of
its Class A Interest to the Third-Party Purchaser upon the same terms and
conditions as the Selling Member, and any holders of the Class C Units and Class
D Units will be obligated to Transfer all of their Class C Interest and Class D
Interest to the Third-Party Purchaser upon the same terms and conditions as the
Selling Member, except that each Class C Unit that is not converted at or prior
to the closing of the proposed transaction will be allocated an amount of the
purchase price equal to the Redemption Price of such Unit.

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(d)    Upon any Transfer to a Third Party Purchaser, the Selling Member shall
deliver to the Company and the Non-Selling Member a copy of the document
evidencing such Transfer.
(e)    Notwithstanding anything contained in this Section 6.5, there shall be no
liability on the part of the Selling Member to the Non-Selling Member or
participating Class C Members or Class D Members if the Offered Tag-Along Sale
or Drag‑Along Sale pursuant to this Section 6.5 is not consummated for whatever
reason. Whether to effect a transfer of Class A Interests by the Selling Member
is in the sole and absolute discretion of the Selling Member.
(f)    If Investor is the Non-Selling Member and PDC is the Selling Member of
all or a part of its Class A Interest under this Section 6.5, Investor’s rights
and obligations under this Section 6.5 may be assigned to and exercised through
(in addition to a Permitted Investor Transferee) a portfolio company Controlled
by Investor or a Permitted Investor Transferee.
SECTION 6.6.    Transfers Initiated by Third Parties.
(a)    (i)    After the Restricted Period, if either Class A Member (the
“Offered Member”) receives an unsolicited bona fide offer (an “Unsolicited Third
Party Offer”) from a third party (the “Third Party Offeror”) for the Transfer of
all or any portion of its Class A Interest (the “Offered Interest”) that the
Offered Member is willing to accept, the Offered Member shall provide the other
Class A Member (the “Non-Offered Member”) a right of first refusal and tag-along
rights, and the Class C Members and Class D Members tag-along rights, pursuant
to the procedures described in this Section 6.6. The Offered Member shall
deliver a written notice of the proposed terms of the Unsolicited Third Party
Offer (the “Offer Notice”) to the Non-Offered Member, which Offer Notice shall
include a description of the Offered Interest and the purchase price at which
the Third Party Offeror wishes to purchase the Offered Interest. The Non-Offered
Member shall have a period of 45 days (the “Offer Notice Period”) from receipt
of the Offer Notice to (A) elect to purchase the Offered Interest for cash on
the same terms and conditions as the Unsolicited Third Party Offer (except that
the Non-Offered Member shall pay cash in the amount of the Fair Market Value of
any non-cash consideration included in the Unsolicited Third Party Offer, (B)
tag-along and participate in the proposed transaction, or (C) decline to
participate in the proposed transaction and retain its Class A Interest. If the
Non-Offered Member fails to respond to an Unsolicited Third Party Offer prior to
the expiration of the Offer Notice Period, then the Non-Offered Member will be
deemed to have declined to participate in the proposed transaction.
(ii)    At the same time that the Offered Member delivers the Offer Notice to
the Non-Offered Member, the Offered Member shall also deliver to the Class C
Members and Class D Members a written notice of the proposed terms of the
Unsolicited Third Party Offer which notice shall include a description of the
Offered Interest and the purchase price at which the Third Party Offeror wishes
to purchase the Offered Interest, and reference the rights of the Class D
Members to tag-along in the proposed transaction under this Section 6.6(a)(ii)
(a “Non-Offered Tag-Along Offer”). Each Class C Member and Class D Member shall
have a period of 15 days (the “Non-Offered Tag-Along Offer Period”) from receipt
by it of the Non-Offered Tag-Along Offer to notify the Offered Member and the
Non-Offered Member whether it (A) will tag‑along (with regards to Class C
Members, on an as converted basis) and participate in the proposed transaction
or (B) decline to participate in the proposed transaction. An election by a
Class C Member or Class

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D Member to participate in the proposed transaction shall also constitute an
election by such Member to participate in a sale to the Non-Offered Member
pursuant to Section 6.6(a)(i)(A). Any Class C Member who desires to exercise its
tag-along rights under this Section 6.6(a) must convert its Class C Units into
Class D Units on or prior to the closing of the proposed transaction. Any Class
C Member or Class D Member who fails to respond to a Non-Offered Tag-Along Offer
prior to the expiration of the Non-Offered Tag-Along Offer Period will be deemed
to have declined to participate in the proposed transaction.
(iii)    If the Non-Offered Member exercises its rights under Section
6.6(a)(i)(A) prior to the expiration of the Offer Notice Period, then the
Offered Member shall sell its Offered Interest to the Non-Offered Member and the
Class D Members (including Class C Members who have converted their Class C
Units into Class D Units in connection with the proposed transaction) who have
validly exercised their tag-along rights under Section 6.6(a)(ii) shall sell
their Class D Units to the Non-Offered Member; provided, however, that if the
aggregate of the Class A Units and Class D Interests to be sold exceeds the
maximum aggregate number of Units that the purchasing party desires to purchase,
then each of the Offered Member and the participating Class D Members shall sell
an amount of its Class A Interest and Class D Interest, respectively, equal to
such Member’s Tag-Along Sharing Percentage multiplied by the Offered Interest to
be sold in the contemplated Transfer. The parties shall effectuate such Transfer
within 30 days after the end of the Third Party Offer Period.
(iv)    If the Non-Offered Member does not exercise its rights under Section
6.6(a)(i)(A) but instead exercises its tag‑along rights under Section
6.6(a)(i)(B) prior to the expiration of the Offer Notice Period, or any Class C
Member (on an as converted basis) or Class D Member exercises its tag-along
rights under Section 6.6(a)(ii) prior to the expiration of the Offer Notice
Period, then the Offered Member, Non-Offered Member, and each participating
Class D Member shall sell, subject to the proviso set forth in Section
6.6(a)(iii), an amount of its Class A Interest or Class D Interest equal to such
Member’s Tag-Along Sharing Percentage multiplied by the Offered Interest to be
sold in the contemplated Transfer (the “Non-Offered Tag-Along Sale”).
(b)    Upon any Transfer to a Third Party Offeror, the Offered Member shall
deliver to the Company and the Non-Offered Member a copy of the document
evidencing such Transfer.
(c)    Notwithstanding anything contained in this Section 6.6, there shall be no
liability on the part of the Offered Member to the Non-Offered Member or the
participating Class C Members or Class D Members if the Non‑Offered Tag-Along
Sale pursuant to this Section 6.6 is not consummated for whatever reason.
Whether to effect a transfer of Class A Interests by the Offered Member is in
the sole and absolute discretion of the Offered Member.
(d)    If Investor is the Non-Offered Member and PDC is the Offered Member of
all or a part of its Class A Interest under this Section 6.6, Investor’s rights
and obligations under this Section 6.6 may be assigned to and exercised through
(in addition to a Permitted Investor Transferee) a portfolio company Controlled
by Investor or a Permitted Investor Transferee.
SECTION 6.7.    Conditions to Tag-Along Sales and Drag‑Along Sales.
Notwithstanding anything contained in Section 6.5 or Section 6.6, the rights and
obligations of the other Class A Members to participate in a Drag‑Along Sale (it
being understood that the Class C Members and

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Class D Members do not have the right to initiate a Drag-Along Sale), and of the
other Class A Members, the Class C Members, and the Class D Members to
participate in Tag-Along Sale, are subject to the following conditions:
(a)    upon consummation of such Tag-Along Sale or Drag‑Along Sale, all of the
Class A Members, Class C Members, and Class D Members participating therein will
receive the same form of consideration;
(b)    the Non‑Selling Member, Non‑Offered Member, Class C Member, or Class D
Member participating therein shall not be obligated to pay any expenses incurred
in connection with any unconsummated Tag-Along Sale or Drag‑Along Sale (other
than such Non-Selling Member’s, Non-Offered Member’s, Class C Member’s, or Class
D Member’s own out-of-pocket expenses, for which such Non-Selling Member,
Non-Offered Member, Class C Member, or Class D Member shall bear sole
responsibility), and each such Class A Member, Class C Member, and Class D
Member shall be obligated to pay only its pro rata share (based on the amount of
the purchase price received) of expenses incurred in connection with a
consummated Tag-Along Sale or Drag‑Along Sale to the extent such expenses are
incurred for the benefit of all such Class A Members, Class C Members, or Class
D Members and are not otherwise paid by the Company or another person;
(c)    the Non-Selling Member, Non-Offered Member, Class C Member, or Class D
Member may not, without the written consent of such Non-Selling Member,
Non-Offered Member, Class C Member, or Class D Member, become obligated with
respect to (A) any representation or warranty other than (x) a representation
and warranty that relates solely to such Non-Selling Member’s, Non-Offered
Member’s, Class C Member’s, or Class D Member’s title to its Class A Interest,
Class C Interest, or Class D Interest, respectively, and its authority and
capacity to execute and deliver the subject purchase and sale agreement or (y) a
representation and warranty that relates to the Company and its operations which
each Class A Member, Class C Member, and Class D Member is severally making to
the purchaser, or (B) any indemnity obligation beyond a pro rata portion (based
on and limited to the value of consideration received by such Non-Selling
Member, Non-Offered Member, Class C Member, or Class D Member in the Tag-Along
Sale or Drag‑Along Sale) of the indemnity obligations which obligate the Selling
Member or Offered Member and the Non-Selling Member, Non-Offered Member, Class C
Member, or Class D Member and then, such indemnity obligations shall be several
and not joint, or (C) any other continuing obligation on such Non-Selling
Member, Non-Offered Member, Class C Member, or Class D Member in favor of any
other person following the Transfer of such Non-Selling Member’s, Non-Offered
Member’s, Class C Member’s, or Class D Member’s Class A Interests, Class C
Interests, or Class D Interests, respectively (other than obligations relating
to representations and warranties that relate solely to such Non-Selling Member,
Non-Offered Member, Class C Member, or Class D Member and not to any other
Member or the indemnification obligation provided for in clause (B) above);
(d)    the Non-Selling Member, Non-Offered Member, Class C Member, or Class D
Member shall not be obligated to consummate such Tag-Along Sale or Drag‑Along
Sale with respect to its Class A Interest, Class C Interest, or Class D Interest
unless the Selling Member or Offered Member consummates such Tag-Along Sale or
Drag‑Along Sale with respect to their Class

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A Interest on the terms and conditions contemplated by the Third Party Offer or
Unsolicited Third Party Offer; and
(e)    the Non-Selling Member, Non-Offered Member, Class C Member, or Class D
Member shall cooperate in good faith with and provide all reasonably necessary
information and documentation (excluding confidential, proprietary or
competitively-sensitive information and documentation) for, and generally take
all commercially reasonable action necessary to assist in, the consummation of a
Tag-Along Sale or Drag-Along Sale with respect to its Class A Interest, Class C
Interest, or Class D Interest.
SECTION 6.8.    Eastern OpCo Drag-Along; Option.
(a)    For so long as the Services Agreement remains in effect, at the election
of Investor, upon a Final Exit Event, PDC shall be obligated to transfer all of
the equity interests of Eastern OpCo to the Third Party Purchaser or Third Party
Offeror or acquirer.
(b)    The Company, at the option of the Investor Designees, shall have the
option to purchase all of the equity interests of Eastern OpCo from PDC for $1,
which option shall be exercisable immediately after the expiration of all
covenants and restrictions preventing the exercise of such option in the
Indenture. Upon exercise of such option, PDC shall deliver good and marketable
title to the equity interests of Eastern OpCo to the Company, free and clear of
all liens, charges, claims and encumbrances.
ARTICLE VII    
DISSOLUTION; WINDING UP
SECTION 7.1.    Dissolution. The Company shall be dissolved only upon the first
to occur of any of the following events (“Dissolution Events”):
(a)    the election of the Board of Managers;
(b)    the election to dissolve the Company at any time after the occurrence of
a Termination Event by the Class A Members not committing the breach or
violation of this Agreement that caused the Termination Event;
(c)    the election to dissolve the Company by either Investor or PDC following
a sale of substantially all of the Company’s assets;
(d)    the election to dissolve the Company by a Class A Member after a Deadlock
under Section 2.5(a);
(e)    the election to dissolve the Company by PDC after an Investor Default
under Section 4.3(d)(i); or
(f)    the entry of a decree of judicial dissolution under Section 18-802 of the
Act.
SECTION 7.2.    Winding Up. Upon the occurrence of a Dissolution Event, the
business of the Company shall be wound up and shall, except to the extent
consistent with such winding

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up, cease. The Board of Managers (or a Class A Member acting pursuant to Section
2.5(a) or Section 4.3(d)) shall act as liquidator unless it elects to appoint
one or more other Persons, who may or may not be Members, to act as Liquidator.
The Liquidator shall proceed diligently to wind up the business and affairs of
the Company and may determine all matters in connection with the winding up of
the Company, including any arrangements to be made with creditors, the amount or
necessity of reserves to cover contingent or unforeseen liabilities, and
whether, to what extent, for what consideration, and on what terms any or all of
the assets of the Company are to be sold. The Liquidator may in its discretion
retain any obligations due to the Company and distribute (or apply in
satisfaction of Company obligations) the proceeds thereof as collected. The
Liquidator may not engage in transactions with the assets of the Company from
which it receives a personal benefit; provided, however, that if the Liquidator
is a Class A Member, it shall not be precluded from bidding for and acquiring
Company assets in connection with a liquidation for consideration mutually
agreed by such Class A Member and the Board of Manager Designees of the other
Class A Member. The costs and expenses of the winding up and liquidation of the
Company shall be borne by the Company. Until final distribution, the Liquidator
shall continue to manage the Company’s affairs and, if the Liquidator is a
Person other than the Board of Managers, shall, to the extent consistent with
the Liquidator’s obligations, have all of the power and authority of the Board
of Managers and be entitled to indemnification and advance payment of expenses
in accordance with the provisions of this Agreement as if the Liquidator were
the Board of Managers. The Liquidator shall give or cause to be given all
notices to creditors required by applicable Law and, in addition to any reports
otherwise required by this Agreement to be given to the Members, shall cause a
proper accounting of the Company’s assets, liabilities and operations to be made
and furnished to the Members as of the date all assets of the Company are
finally distributed to the Members or applied in payment of Company liabilities.
SECTION 7.3.    Application and Distribution of Proceeds of Liquidation. During
or upon completion of the winding up of the Company, the assets of the Company
shall be applied and distributed by the Liquidator, in one or more installments,
in the following order and priority:
(a)    to the payment, or provision for payment, of the costs and expenses of
the winding up;
(b)    to the payment, or provision for payment, of creditors of the Company
(including Members, other than in respect of Distributions) in the order of
priority provided by Law;
(c)    to the establishment of any reserves deemed necessary or appropriate by
the Liquidator to provide for contingent or unforeseen liabilities of the
Company; and
(d)    the balance shall be distributed to the Members in accordance with
Section 5.5.
SECTION 7.4.    Certificate of Cancellation. On completion of the distribution
of Company assets as provided herein, the Liquidator (or such other Person or
Persons as the Act may require or permit) shall file a Certificate of
Cancellation with the Secretary of State of the State of Delaware, cancel any
other filings as necessary and take such other actions as may be necessary to
terminate the existence of the Company.

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ARTICLE VIII    
LIABILITY AND INDEMNIFICATION
SECTION 8.1.    No Liability for Company Debts. Except as expressly provided in
the Act, the debts, obligations and liabilities of the Company, whether arising
in contract, tort or otherwise, shall be solely the debts, obligations and
liabilities of the Company, and no Covered Person shall be liable for any such
debts, obligations or liabilities.
SECTION 8.2.    Indemnification. To the fullest extent permitted by Law, the
Company shall indemnify and defend each Covered Person from and against any and
all Covered Losses arising from any and all claims, demands, causes of action,
actions, suits or proceedings, whether civil, criminal, administrative or
investigative, in which such Covered Person may be involved, or is threatened to
be involved, as a party or otherwise, by reason of its status as such,
regardless of whether any of the foregoing arise from the sole, partial or
concurrent negligence of such Covered Person; provided, however, that the
Company shall not indemnify a Covered Person for Covered Losses arising directly
from fraud, intentional or willful misconduct or a knowing violation of the Law.
The termination of any action, suit or proceeding by judgment, order, settlement
or upon a plea of nolo contendere, or its equivalent shall not, of itself,
create a presumption that the Covered Person failed to meet the standards for
indemnification set forth in the immediately preceding sentence. Any
indemnification hereunder shall be satisfied solely out of the assets of the
Company. In no event may a Covered Person subject the Members to personal
liability by reason of these indemnification provisions. The indemnification
provided by this Section 8.2 shall be in addition to, but not duplicative of,
any other rights to which a Covered Person or any other Person may be entitled
under any agreement to which the Company is a party, pursuant to any vote of the
Class A Members, as a matter of Law or otherwise, and shall continue as to a
Covered Person who has ceased to serve in such capacity and shall inure to the
benefit of the heirs, successors, assigns and administrators of the Covered
Person.
SECTION 8.3.    Advance Payment and Appearance as a Witness. To the fullest
extent permitted by applicable Law, expenses (including legal fees) incurred by
a Covered Person in defending any claim, demand, cause of action, action, suit
or proceeding shall, from time to time, be advanced by the Company prior to the
final disposition of such claim, demand, cause of action, action, suit or
proceeding upon receipt by the Company of an undertaking by or on behalf of the
Covered Person to repay such amount if it shall be finally determined that the
Covered Person is not entitled to be indemnified as authorized in Section 8.2.
The Company shall pay or reimburse reasonable expenses incurred by a Person who
is or was a Member, Manager, officer or employee of the Company in connection
with their appearance as a witness or other participant in a proceeding at a
time when they are not a named defendant or respondent in the proceeding.
SECTION 8.4.    Insurance. The Company may procure and maintain insurance, to
the extent and in such amounts as Approved by the Board of Managers, in its sole
discretion, on behalf of Covered Persons and such other Persons as the Board of
Managers shall determine, against any liability that may be asserted against or
expenses that may be incurred by any such Person in connection with the
activities of the Company or such indemnities, regardless of whether the Company
would have the power to indemnify such Person against such liability under the
provisions of this Agreement. The Company may enter into indemnity contracts
with Covered

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Persons and adopt written procedures pursuant to which arrangements are made for
the advancement of expenses and the funding of obligations under Section 8.3 and
containing such other procedures regarding indemnification as are appropriate.
SECTION 8.5.    Nonexclusivity of Rights. The indemnification and advancement of
expenses provided by, or granted pursuant to, this Article VIII shall not be
deemed exclusive of, and shall not limit, any other rights or remedies to which
any Covered Person may be entitled or which may otherwise be available to any
Covered Person at Law or in equity.
SECTION 8.6.    Savings Clause. If all or any part of this Article VIII shall be
invalidated for any reason by any court of competent jurisdiction, the Company
shall nevertheless indemnify and hold harmless each Covered Person, and may
indemnify and hold harmless any other Person, for costs, charges, expenses
(including attorneys’ fees), judgments, fines and amounts paid in settlement, in
connection with any claim, to the fullest extent permitted by any portion of
this Article VIII not invalidated and to the fullest extent otherwise permitted
by applicable Law.
SECTION 8.7.    Company Responsibility for Indemnification Obligations.
Notwithstanding anything to the contrary in this Agreement, the Company and the
Members hereby acknowledge that a Covered Person may have rights to
indemnification, advancement of expenses and/or insurance pursuant to charter
documents or agreements with the employer of such Covered Person, a Member or a
direct or indirect parent or brother/sister Affiliate of the Covered Person or
Member (collectively, the “Last Resort Indemnitors”). On the other hand, a
Covered Person may also have rights to indemnification, advancement of expenses
and/or insurance provided by a subsidiary of the Company or pursuant to
agreements with third parties in which the Company or any subsidiary of the
foregoing has an interest (collectively, the “First Resort Indemnitors”).
Notwithstanding anything to the contrary in this Agreement, as to each Covered
Person’s rights to indemnification and advancement of expenses pursuant to this
Article VIII, the Company and the Members hereby agree that:
(a)    the First Resort Indemnitors, if any, are the indemnitors of first resort
(i.e., their indemnity obligations to such Covered Person are primary and any
obligation of the Company to advance expenses or to provide indemnification for
the Claims incurred by such Covered Person are secondary), and the First Resort
Indemnitors shall be obligated to indemnify such Covered Person for the full
amount of all Claims and expenses covered by this Article VIII, to the full
extent of their indemnity obligations to the Covered Person and to the extent of
the First Resort Indemnitors’ assets legally available to satisfy such
obligations, without regard to any rights the Covered Person may have against
the Company or the Last Resort Indemnitors;
(b)    the Company is the indemnitor of second resort (i.e., its indemnity and
advancement of expense obligations to such Covered Person are secondary to the
obligations of any First Resort Indemnitors, but precede any indemnity and
advancement of expense obligations of any Last Resort Indemnitors), and the
Company shall be liable for the full amount of all remaining Claims and expenses
covered by this Article VIII after the application of Section 8.7(a), to the
full extent of its obligations under the other subsections of this Article VIII
and to the extent of the Company’s assets legally available to satisfy such
obligations, without regard to any rights such Covered Person may have against
the Last Resort Indemnitors; and

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(c)    the Last Resort Indemnitors, if any, are the indemnitors of last resort
and shall be obligated to indemnify such Covered Person for any remaining Claims
and expenses covered by this Article VIII only after the application of Section
8.7(a) and Section 8.7(b).
The Company and the Members further agree that no advancement or payment by any
Last Resort Indemnitors on behalf of a Covered Person with respect to any Claim
or expense covered by the other sections of this Article VIII shall affect the
foregoing and such Last Resort Indemnitors shall have a right of contribution
and/or be subrogated to the extent of such advancement or payment to all of the
rights of recovery of such Covered Person against the Company. The Last Resort
Indemnitors, if any, are express third party beneficiaries of the terms of this
Section 8.7.
ARTICLE IX    
CERTAIN TAX MATTERS
SECTION 9.1.    Partnership Classification. Except with the prior written
consent of all Class A Members, Class C Members, and Class D Members, voting
together as a single class, the Company shall not (i) convert or reorganize into
any other legal form or take any action that would result in the Company no
longer being classified as a partnership for federal income tax purposes, (ii)
elect under Treasury Regulation § 301.7701-3 or otherwise to be classified other
than as a partnership, or (iii) elect to exclude the Company from the
application of the provisions of subchapter K of chapter 1 of subtitle A of the
Code or any similar provisions of applicable state Law and no Member shall take
any action inconsistent with such limitations.
SECTION 9.2.    Tax Returns and Tax Information. The CEO shall, subject to the
approval of the Board of Managers, cause the Company to maintain the Capital
Accounts of the Members in accordance with Section 4.4. The CEO shall cause all
required federal, state, local and foreign tax returns of the Company to be
prepared and timely filed. Each Member shall have the right to review the
Company’s United States federal income tax return prior to the filing of such
return. Each Member shall furnish to the Company all pertinent information in
its possession relating to the Company, its assets and operations necessary to
enable the Company’s tax returns to be prepared and timely filed.
SECTION 9.3.    Tax Elections. Except as provided otherwise in this Agreement,
the CEO shall, subject to the approval of the Board of Managers, have the
authority to make all tax elections permitted to be made by the Company;
provided, however, that no election shall be made to classify the Company as an
association taxable as a corporation without the consent of all the Class A
Members, Class C Members, and Class D Members. The CEO shall, at the request of
any Class A Member, cause the Company to make an election under Section 754 of
the Code.
SECTION 9.4.    Tax Matters Partner. PDC shall be the “tax matters partner” of
the Company within the meaning of Section 6231(a)(7) of the Code, and is
authorized to represent the Company in connection with any examination of the
Company’s affairs by any tax authority, including administrative and judicial
proceedings, and to expend Company funds for professional services and the costs
associated therewith. The tax matters partner shall take such action as may be
necessary to cause to the extent possible each other Member to become a “notice
partner” within the meaning of Section 6223 of the Code. Any Member may
participate at such Member’s expense in any such administrative or judicial
proceeding to the extent permitted by Law. The tax matters

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partner shall keep the other Members fully informed of all facts and
developments relating to any tax audits, exams, litigation, or other tax
proceedings and shall forward to each other Member copies of all significant
written communications it may receive in that capacity. The Company shall
reimburse PDC for all reasonable costs incurred by PDC in connection with PDC’s
duties and obligations as tax matters partner of the Company; provided, that to
the extent reasonably practicable, PDC shall not incur any such costs without
the prior approval of the Board of Managers, which approval shall not be
unreasonably withheld. The tax matters partner shall not bind any Member to a
settlement agreement without obtaining the consent of such Member.
SECTION 9.5.    Withholding. The Company may withhold and pay to any applicable
tax authority all amounts required by any Law to be withheld by the Company from
or with respect to Distributions to a Member or from or with respect to a
Member’s distributive share of Company taxable income or loss (or item thereof).
Each Member shall timely provide to the Company all information, forms and
certifications necessary or appropriate to enable the Company to comply with any
such withholding obligation and covenants to the Company that the information,
forms and certifications furnished by it shall be true and accurate in all
respects. Any amounts so withheld in respect of a Member shall be treated as a
distribution to such Member for all purposes of this Agreement.
SECTION 9.6.    Tax Terminations. If either PDC and its Controlled Affiliates
(the “PDC Group”) or Investor and its Controlled Affiliates (“Investor Group”),
Transfers, in the aggregate, a fifty percent (50%) interest in the capital and
profits of the Company within a twelve (12) month period, the Class A Member to
which such group relates, on the one hand, shall indemnify and hold harmless the
other Class A Members, on the other hand, for any deferral of depreciation
deductions allocable to the other Class A Members as a result of any Code
Section 708(b)(1)(B) termination caused by the Transfer, determined using an
annual discount rate of ten percent (10%) and the Assumed Tax Rate.
ARTICLE X    
BOOKS AND RECORDS; REPORTS
SECTION 10.1.    Maintenance of and Access to Books and Records. At all times
until the dissolution and termination of the Company, the Company shall maintain
separate books, records and accounts that accurately and fairly reflect in
reasonable detail the transactions and dispositions of the assets of the
Company. In addition, the Company shall keep and maintain at its principal
office all Records and information required to be kept and maintained in
accordance with the Act and shall make such information available to any Class A
Member or representative requesting the same within five days after receipt of a
written request by the Company. The Board of Managers shall permit each of the
Class A Members, from time to time and at reasonable intervals, (i) to examine,
audit and make copies of the Records of the Company as well as all such other
data and information in the possession or control of the Board of Managers
concerning the Company, Company properties and the ownership and operation
thereof, which Records shall be available to the Class A Members or their
representatives at all reasonable times at the principal office of the Company,
or at such other office where such information is maintained, upon the written
request of any Class A Member, and (ii) to discuss the business, financial
condition and results of operations of the Company with officers, accountants,
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Company. No Class B Member, in its capacity as such, shall be entitled to obtain
any information relating to the Company except as expressly provided for in this
Agreement or to the extent required by the Act.
SECTION 10.2.    Bank Accounts. The Board of Managers shall cause to be
established and maintained for and in the name of the Company one or more bank
or investment accounts or arrangements.
SECTION 10.3.    Reports. The Company shall furnish the following to the Class A
Members, Class C Members, and Class D Members:
(a)    Within 30 days after the end of each month: monthly financial statements
(which shall be prepared from the Company’s books and records and need not be
GAAP) and operational reports, including drilling reports and production
estimates for such month;
(b)    Within 45 days after the end of each Fiscal Quarter: (i) the unaudited
quarterly financial statements for such fiscal quarter; (ii) a report of the
activities during such fiscal quarter in the form reasonably satisfactory to
Investor; (iii) year-to-date figures compared to the Development Plan and
Budget, with variances delineated; (iv) a summary of hedging positions; and (v)
an updated land summary
(c)    Within 90 days after the end of each Fiscal Year (beginning with the 2009
Fiscal Year): (i) audited consolidated financial statements prepared in
accordance with GAAP by a nationally-recognized independent accounting firm
appointed by the Board of Managers (unless the Board decides otherwise),
together with a copy of the auditor’s letter to management; (ii) year-to-date
figures compared to the Development Plan and Budget, with variances delineated;
and (iii) an annual reserve report prepared by an independent engineer appointed
by the Board of Managers;
(d)    Within 45 days after the end of each Allocation Year, an estimated
Schedule K-1 and (ii) within 60 days after the end of each Allocation Year, a
draft Schedule K‑1;
(e)    Any known defaults under material contracts and material litigation
proceedings; and
(f)    Any other information or reports reasonably requested by any Class A
Member.
SECTION 10.4.    Fiscal Year. The fiscal year of the Company shall be the
calendar year (“Fiscal Year”).
SECTION 10.5.    Schedule K-1. Within 75 days after the end of each Allocation
Year, the Company shall furnish to each Member a final Schedule K-1, along with
copies of all other federal, state, or local income tax returns or reports filed
by the Company for the previous year as may be required as a result of the
operations of the Company.

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ARTICLE XI    
DEFINITIONS
SECTION 11.1.    Definitions. Except as otherwise required by the context, the
following terms shall have the following meanings:
“Act” means the Delaware Limited Liability Company Act, as amended from time to
time, or any successor statute thereto.
“Adjusted Capital Account” means, as of the end of each Allocation Year, the
balance in a Member’s Capital Account (a) increased by (i) any additional
Capital Contributions the Member makes or is obligated to make, or is treated as
obligated to make pursuant to the provisions of Treasury Regulations §
1.704-1(b)(2)(ii)(c), (ii) the amount such Member is deemed obligated to restore
pursuant to Treasury Regulations § 1.704-2(g) (1)), and (iii) the amount such
Member is deemed obligated to restore pursuant to Treasury Regulations §
1.704-2(i)(5)), and (b) decreased by any adjustments, allocations or
distributions described in Treasury Regulations §§ 1.704-1(b)(2)(ii)(d)(4), (5)
and (6). This definition shall be interpreted and applied consistently with the
provisions of Treasury Regulations § 1.704‑1(b)(2)(ii)(d).
“Affiliate” means, with respect to any Person, any other Person that directly,
or indirectly through one or more intermediaries, Controls, is Controlled by, or
is under common Control with, such Person.
“Agreed Value” means the value set forth opposite PDC’s name on Exhibit C under
the column “Initial Capital Contributions.”
“Allocation Year” means (a) the Company’s taxable year for U.S. federal income
tax purposes, or (b) any portion of the period described in clause (a) for which
the Company is required to allocate Net Income, Net Loss, and other items of
Company income, gain, loss or deduction for U.S. federal income tax purposes.
“AMI” has the meaning given such term in Exhibit D.
“Approval of the Board of Managers” means the approval or consent of a majority
of the Managers and the phrase “Approved by the Board of Managers” has a
correlative meaning.
“Assumed Tax Rate” means, as of the time of determination, the highest combined
marginal federal, state and local income tax rates that apply to an individual
residing in New York County, New York, taking into account rate differences that
may apply to the character of the income so allocated, without reduction for
deductions or credits not related to the activities of the Company.
“Available Cash” means that amount of cash on hand (including cash equivalents
and temporary investments of Company cash but excluding cash proceeds from
transactions in clauses (w) through (z) in Section 5.5(c)) from time to time
that the Board of Managers determines in its sole discretion is in excess of
amounts required to pay or provide for payment of existing and projected
obligations, capital expenditures and acquisitions, and to provide a reasonable
reserve for working capital and contingencies.

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“Bankruptcy Event” means the occurrence of any of the following events with
respect to a Class A Member: (i) voluntarily filing a petition in bankruptcy,
making an assignment for the benefit of the creditors of the Class A Member,
(ii) filing a petition or answer seeking, consenting to or acquiescing in any
reorganization, arrangement, readjustment, liquidation, dissolution or similar
relief with respect to the Class A Member under any statute, Law or regulation,
or (iii) taking any action seeking, consenting to or acquiescing in the
appointment of a trustee, receiver or liquidator of the Class A Member or any
substantial part of the properties and assets of the Class A Member.
“Book Basis” means, with respect to each Company asset, the adjusted basis of
the asset for federal income tax purposes, except that (a) the initial Book
Basis of an asset other than money contributed by a Member to the Company shall
be the fair market value of the asset on the date of contribution, as agreed by
the contributor and the Board of Managers (excluding designees of any Managers
appointed by the contributor), (b) upon the occurrence of a Revaluation Event,
the Book Basis of all Company assets (including intangibles) shall be adjusted
to their respective fair market values (taking Section 7701(g) of the Code into
account) on such date, as determined by the Board of Managers, (c) the Book
Basis of any Company asset distributed to any Member will be adjusted to equal
the fair market value (taking Section 7701(g) of the Code into account) of such
asset on the date of distribution as agreed by the Board of Managers (excluding
designees of any Managers appointed by the recipient) and the recipient, (d) the
Book Basis of Company assets shall be increased (or decreased) to reflect any
adjustments to the adjusted basis of such assets pursuant to Sections 734(b) or
743(b) of the Code, but only to the extent that such adjustments are taken into
account in determining Capital Accounts pursuant to Treasury Regulations Section
1.704-1(b)(2)(iv)(m) and Section 5.2(g); provided, however, that Book Basis
shall not be adjusted to the extent the Board of Managers determines that an
adjustment pursuant to clause (b) above is necessary or appropriate in
connection with a transaction that would otherwise result in an adjustment
pursuant to this clause (d), and (e) if the Book Basis of any Company asset has
been determined pursuant to the preceding subsections (b) or (d), the Book Basis
of the asset shall thereafter be adjusted by Simulated Depletion Deductions or
Book Depreciation in lieu of any depletion, depreciation, amortization or other
cost recovery deductions otherwise allowable for federal income tax purposes.
“Book Depreciation” means, with respect to any depreciable or amortizable
Company asset, an amount that bears the same ratio to the Book Basis of such
asset as the amount of depreciation, amortization or other cost recovery
deductions with respect to such asset, computed for federal income tax purposes,
bears to the adjusted tax basis of such asset; provided, however, that, if the
adjusted tax basis of the asset is zero, Book Depreciation shall be determined
under any reasonable method selected by the Board of Managers, and; provided,
further, if such asset is subject to adjustments under the remedial allocation
method of Treasury Regulations § 1.704-3(d), Book Depreciation shall be
determined under Treasury Regulation § 1.704-3(d)(2).
“Business Day” means a day, other than Saturday, Sunday or any other day on
which commercial banks in New York, New York are authorized or required by Law
to close.
“Capital Account” means the account established for each Member pursuant to
Section 4.4.
“Capital Contribution” means the amount of money and the initial Book Basis of
any asset other than money (net of liabilities secured thereby that the Company
is treated as having assumed

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or taken subject to pursuant to Section 752 of the Code) contributed by a Member
or a Member’s predecessors in interest to the capital of the Company.
“Catch-Up Period” means the period beginning on the Closing Date and ending when
Investor has satisfied the Minimum Funding Obligation.
“Cause” means a good faith determination of the Board of Managers that the
applicable employee (a) failed to substantially perform his duties with the
Company (other than a failure resulting from his incapacity due to physical or
mental illness) after a written demand for substantial performance has been
delivered to him by the Board of Managers, which demand specifically identifies
the manner in which the Board of Managers believes he has not substantially
performed his duties, and the Employee has failed to cure such deficiency within
thirty (30) days of the receipt of such notice, (b) has engaged in conduct the
consequences of which are materially adverse to the Company, monetarily or
otherwise, (c) has pleaded guilty to or been convicted of a felony or a crime
involving moral turpitude or dishonesty, (d) has engaged in conduct which
demonstrates gross unfitness to serve the Company in the capacity for which the
employee was employed by the Company (that is not remedied by the employee
within fourteen (14) days after receipt by him of written notice of such
unfitness from the Board of Managers) or (e) has materially breached the terms
of this Agreement, the Restricted Interest Agreement or any employment agreement
or restrictive covenant applicable to the employee’s employment by the Company
or its Affiliates. An employee shall not be deemed to have been terminated for
Cause under clauses (a), (d) or (e) of this definition unless there shall have
been delivered to the employee a letter setting forth the reasons for the
Company’s termination of the employee for Cause.
“Class A Members” shall mean PDC and Investor.
“Class B Member” shall mean any holder of a Class B Unit.
“Class B Hypothetical Payout” means the amount per Class B Unit that a
terminated Class B Member would have received in the applicable Equity Incentive
Distribution Event had such Class B Member remained employed by the Company and
his Class B Units remained outstanding through the occurrence of such Equity
Incentive Distribution Event.
“Class B Make-Whole Amount” means the product of (a) the number of applicable
Call Units purchased by the Company and (b) the amount by which the Class B
Hypothetical Payout exceeds the Class B Option Price.
“Class B Option Price” means the amount per Class B Unit that the Company paid
to purchase the applicable Call Units.
“Class C Member” means any holder of a Class C Unit.
“Class D Member” means any holder of a Class D Unit.
“Closing” means the closing of the transactions contemplated by this Agreement
and the Transaction Agreements.
“Closing Date” means October 29, 2009.

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“Code” means the Internal Revenue Code of 1986, as amended (including any
corresponding provisions of succeeding Law).
“Confidential Information” means any proprietary or confidential information of
or relating to the Company or, with respect to each Member, the other Members
who are Class Members, including any business information, intellectual
property, trade secrets or other information relating to the respective
businesses, operations, assets or liabilities of the Company or the Class A
Members; provided, however, that any information that is generally available to
the public (other than through a breach by the party disclosing the same of its
obligations under this Agreement) shall not be deemed “Confidential
Information”; and provided further that use of the name “Lime Rock” shall be
treated by PDC as Confidential Information.
“Continuing Director” means, as of any date of determination, any member of the
Board of Directors of PDC who (a) was a member of such Board of Directors on the
Closing Date or (b) was nominated for election or elected to such Board of
Directors with the approval of a majority of the Continuing Directors who were
members of such Board of Directors at the time of such nomination or election.
“Contributed Assets” means PDC’s interest in the properties and rights, together
with associated liabilities, obligations and encumbrances, excluding the
Retained Assets, to be contributed to the Company pursuant to the Contribution
Agreement, as more specifically described and provided therein.
“Contribution Agreement” means the Contribution Agreement, dated as of
October 29, 2009, by and between the Company and PDC.
“Control,” “Controlling” and “Controlled by” mean the ability (directly or
indirectly through one or more intermediaries) to direct or cause the direction
of the management or affairs of a Person, whether through the ownership of
voting interests, by contract or otherwise.
“Controlled Affiliate” means, (a) with respect to PDC or any other Person, all
of the Affiliates Controlled by PDC or such Person, as the case may be, and (b)
with respect to Investor or any Permitted Investor Transferee, any Affiliate
Controlled by any of Investor, Lime Rock Partners V, L.P., Lime Rock Partners GP
V, L.P., LRP GP V, Inc. or Lime Rock Management LP; provided, that no Lime Rock
Resources Entity shall be a Controlled Affiliate of any of the foregoing
entities.
“Covered Losses” means any and all losses, assessments, fines, penalties,
administrative orders, obligations, judgments, amounts paid in settlement,
costs, expenses, liabilities and damages (whether actual, consequential or
punitive), including interest, penalties, reasonable court costs and attorney’s
fees, disbursements and costs of investigations, deficiencies, levies, duties
and imposts.
“Covered Person” means (i) any Member, any Affiliate of a Class A Member or any
shareholder, partner, member, manager, director, officer, employee,
representative or agent of a Class A Member or any of its Affiliates, (ii) any
officer of the Company and (iii) any member of the Board of Managers, in each
case to the extent any such Person is acting in such capacity in connection with
the business of the Company.

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“Development Plan and Budget” shall have the meaning provided in Section 2.4(d);
provided, however, that for first period after the Closing Date shall mean the
Initial Development Plan and Budget attached hereto as Exhibit A.
“Distributions” means any distributions from the Company made pursuant to
Section 5.5 or Section 7.3(d), whether from operations or a sale or other
disposition of assets and whether prior to or in connection with a liquidation
of the Company.
“Drilling Partnerships” means the partnerships referred to in Schedule 1.3 of
the Contribution Agreement.
“Eastern OpCo” has the meaning given to such term in the Services Agreement.
“Electronic Transmission” means a form of communication that (i) does not
directly involve the physical transmission of paper, (ii) creates a record that
may be retained, retrieved, and reviewed by the recipient, and (iii) may be
directly reproduced in paper form by the recipient through an automated process.
“Equity Incentive Distribution Event” means the earliest to occur of an arm’s
length merger, consolidation or sale of all of the assets of the Company with or
to a third party (or, if the Company is a holding company, then of the Company’s
subsidiaries) in one or a series of related transactions, a sale of all the
Class A Interests in the Company to a Third Party Purchaser or a Third Party
Offeror, a sale by a Class A Member of all of its Class A Interests to the other
Class A Member, or a liquidation of the Company pursuant to Article VII.
“Fair Market Value” means (a), if such offered consideration is a common equity
security traded on the New York Stock Exchange or NASDAQ Stock Exchange, the
average closing price of such security on such exchange for the 10 trading days
ending on the last trading day preceding the date of the Offer Notice or (b),
for all other non-cash consideration, the value determined by a nationally
recognized investment banking firm selected by the Offered Member from a list of
three such firms provided by Non‑Offered Member. Each Class A Member will bear
half of the fees and costs of such investment banking firm. Notwithstanding the
foregoing, for purposes of the Call Option described in Section 4.8, “Fair
Market Value” of a Call Unit means the fair market value of the Call Unit
(without consideration of any discount for minority interest or lack of
liquidity, if applicable) (i) as determined by the Board of Managers in its
discretion or (ii) if applicable, by an Appraiser as set forth in Section
4.8(f), with such Outside Appraisal being based on the value of a Call Unit in a
hypothetical liquidation of the Company pursuant to Article VII that follows an
arm’s length sale for cash to a third party of all of the Company’s assets for
their fair market value.
“Final Exit Event” means the earliest to occur of an arm’s length merger,
consolidation or sale of all or substantially all of the assets of the Company
with or to a third party (or, if the Company is a holding company, then of the
Company’s subsidiaries) in one or a series of related transactions or sale of
all the Class A Interests, Class C Interests, and Class D Interests in the
Company to a Third Party Purchaser or a Third Party Offeror.
“Fiscal Quarter” means any three-month period commencing on January 1, April 1,
July 1 and October 1 and ending on the last date before the next such date.

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“GAAP” means those generally accepted accounting principles and practices
consistently applied that are recognized in the United States of America as such
by the Financial Accounting Standards Board (or any generally recognized
successor thereto).
“Governmental Authority” means any nation or government, any state, city,
municipality or political subdivision thereof, any federal or state court and
any other agency, body, authority or entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government.
“IDCs” shall have the meaning assigned to the term “intangible drilling and
development costs” in Section 263(c) of the Code.
“Indebtedness” means, with respect to any Person, any indebtedness of such
Person in respect of borrowed money or evidenced by bonds, notes, debentures or
similar instruments or letters of credit (or reimbursement agreement in respect
thereof) or representing capital lease obligations or the balance deferred and
unpaid of the purchase price of any property (except any such balance that
constitutes an accrued expense or trade payable arising in the ordinary course
of business), if and to the extent any of the foregoing indebtedness would
appear as a liability upon a balance sheet of such Person prepared in accordance
with GAAP, as well as all indebtedness of others secured by a lien, security
interest or other encumbrance on any asset of such Person (whether or not such
indebtedness is assumed by such Person) and, to the extent not otherwise
included, the guarantee by such Person of any indebtedness of any other Person.
“Indenture” means the Indenture, dated as of February 8, 2008, between PDC and
The Bank of New York, as supplemented.
“Interest” means, (i) with respect to any Class A Member, the entire interest of
such Class A Member in the Company, including (A) the right of such Member to
share in the profits of the Company, (B) the right of such Member to
Distributions, (C) the right to vote under this Agreement pursuant to the terms
hereof, and (D) the right to designate Managers pursuant to the terms hereof;
(ii) with respect to any Class B Member, the entire interest of such Class B
Member in the Company, including (A) the right of such Member to share in the
profits of the Company, (B) the right of such Member to Distributions, and (C)
the other rights expressly granted hereunder in respect of such Interest; (iii)
with respect to any Class C Member, the entire interest of such Class C Member
in the Company, including (A) the right of such Member to Distributions, and (B)
the other rights expressly granted hereunder in respect of such Interest; and
(iv) with respect to any Class D Member, the entire interest of such Class D
Member in the Company, including (A) the right of such Member to share in the
profits of the Company, (B) the right of such Member to Distributions, and (C)
the other rights expressly granted hereunder in respect of such Interest.
“Investor Preference Amount” means (a) Investor’s aggregate Capital
Contributions to the Company, but not more than the sum of the Minimum Funding
Obligation and, if any, the amount of any Capital Contribution by Investor made
pursuant to Section 4.3(f), minus (b) the amount of any uncured Investor Default
if the Distribution of cash is being made in connection with a liquidation of
the Company initiated by PDC pursuant to Section 4.3(d). For the avoidance of
doubt, “Investor Preference Amount” shall not include Capital Contributions with
respect to Class C Units.

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“JV OpCo” has the meaning given such term in the Services Agreement.
“Law” means any applicable constitutional provision, statute, act, code
(including the Code), law, regulation, rule, ordinance, order, decree, ruling,
proclamation, resolution, judgment, decision, declaration, or interpretative or
advisory opinion or letter of a Governmental Authority having valid
jurisdiction.
“Lime Rock Resources Entity” means Lime Rock Resources II-A, L.P., Lime Rock
Resources II-C, L.P., Lime Rock Resources A, L.P., Lime Rock Resources B, L.P.,
Lime Rock Resources C, L.P., any future entity Controlled by the same Persons
who control the foregoing entities, and any subsidiary or portfolio company of
such entities.
“Liquidator” means a Person appointed as liquidator by the Board of Managers or
a Class A Member pursuant to the provisions hereof.
“Members” means any Person admitted as a member of the Company as of the date
hereof or at any time hereafter in accordance with this Agreement (but such term
does not include any Person who has ceased to be a member of the Company). Such
term includes the Class A Members, Class B Members, Class C Members, and Class D
Members.
“Minimum Funding Obligation” means (a) $158,500,000, plus (b) any Additional PDC
Contribution, minus (c) the Special PDC Withdrawal; provided, that in no event
shall the total exceed $102,000,000 without Investor’s consent. For the
avoidance of doubt, the definition of “Minimum Funding Obligations” excludes any
amount that Investor contributes pursuant to Section 4.3(f).
“Net Income” and “Net Loss” means, the taxable income or loss of the Company, as
the case may be, as determined in accordance with Section 703(a) of the Code
(but including in taxable income or loss, for this purpose, all items of income,
gain, loss or deduction required to be stated separately pursuant to Section
702(a) of the Code), for federal income tax purposes as of the close of each of
the Allocation Years of the Company, computed with the following adjustments:
(a)    tax-exempt income received by the Company will be included in gross
income;
(b)    expenditures described in Section 705(a)(2)(B) of the Code will be
treated as deductible expenses;
(c)    in lieu of the depreciation, amortization and other cost recovery
deductions taken into account in computing such taxable income or loss, there
shall be taken into account Book Depreciation for such Allocation Year;
(d)    gain or loss from the disposition of any Company asset that, because of
the application of the provisions of Treasury Regulations
§§ 1.704-1(b)(2)(iv)(d) or (f), has a Book Basis that differs from the asset’s
adjusted tax basis, will be computed based upon the Book Basis (rather than the
adjusted tax basis) of such asset in accordance with the provisions of Treasury
Regulations §§ 1.704(b)(2)(iv)(g) and 1.704-1(b)(4)(i);

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(e)    any increase or decrease to Book Basis resulting from a Revaluation Event
or from the distribution of any Company asset to a Member shall be taken into
account as gain or loss, respectively, in computing Net Income or Net Loss;
(f)    Simulated Gain shall be added to such taxable income or loss;
(g)    to the extent an adjustment to the adjusted tax basis of any Company
asset pursuant to Section 734 of the Code is required pursuant to Treasury
Regulations § 1.704-1(b)(2)(iv)(m)(4) to be taken into account in determining
Capital Accounts as a result of a distribution other than in liquidation of a
Member’s Units, the amount of such adjustment shall be treated either as an item
of gain (if the adjustment increases the basis of the asset) or an item of loss
(if the adjustment decreases the basis of the asset) from the disposition of the
asset and shall be taken into account for purposes of computing Net Income and
Net Loss; and
(h)    Any items of income, gain, loss, or deduction allocated pursuant to any
provision of Section 5.2 will be excluded from the computation of Net Income and
Net Loss for purposes of applying Section 5.1.
“Oil and Gas Property” shall have the meaning assigned to the term “property” in
Section 614 of the Code.
“Partial Redemption Class C Units” means for any holder of Class C Units, (i)
the number of Class C Units held by such holder, (ii) divided by the total
number of Class C Units then outstanding, (iii) multiplied by the number of
Redemption Units.
“PDC Change of Control” means (a) any “person” or “group” of related persons (as
such terms are used in Section 13(d) of the Securities Exchange Act of 1934, as
amended) is or becomes a beneficial owner (as such term is used in Rule 13d-3
and Rule 13d-5 of the Securities Exchange Act of 1934, as amended), directly or
indirectly, of more than 50% of PDC’s common stock or (b) the first day on which
a majority of the members of the Board of Directors of PDC are not Continuing
Directors.
“Permitted Investor Transferee” means any private equity fund managed or
Controlled by Lime Rock Management LP and the same Persons that, as of the
Closing Date, Controlled Lime Rock Management LP (which shall include any
Controlled Affiliates, but shall exclude any Lime Rock Resources Entities) and
that provides to PDC, prior to any contemplated Transfer, evidence of
capitalization sufficient to cover any remaining funding obligations of Investor
hereunder. For the avoidance of doubt, no operating portfolio company is a
Permitted Investor Transferee.
“Permitted Pledge” means any hypothecation, pledge, mortgage or other
encumbrance under or permitted by PDC revolving commercial lending agreements or
indentures; provided that any foreclosure on a pledged Interest shall not be a
Permitted Pledge.
“Person” has the meaning given to such term in the Act.
“Prime Rate” means, as of any date, the prime rate of interest most recently
determined and published in The Wall Street Journal as the “WSJ Prime Rate.”

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“Records” means all books, records and other documentation, both written and
electronic, customarily used to conduct an oil and gas exploration and
development business.
“Redemption Price” means the sum of $1,000 plus all accrued and unpaid Class C
Dividend on such Class C Unit, in each case as adjusted for any stock dividends,
splits, combinations, and similar events.
“Redemption Units” means the total number of Class C Units to be redeemed on the
relevant Redemption Date, which will be calculated by dividing the Available
Cash by the Redemption Price.
“Restricted Interest Agreement” means an agreement between the Company and a
Class B Member providing for, among other things, the number of Class B Units
issued to such Class B Member and the vesting schedule therefor.
“Retained Assets” has the meaning given to such term in the Contribution
Agreement.
“Revaluation Event” means, except as otherwise agreed by the Board of Managers
each of the following events: (i) the acquisition of an additional Interest in
the Company by any new or existing Member in exchange for more than a de minimis
Capital Contribution, (ii) the Distribution by the Company to a Member of more
than a de minimis amount of money or other property as consideration for an
Interest in the Company, (iii) the liquidation of the Company within the meaning
of Treasury Regulations § 1.704-1(b)(2)(ii)(g) and (iv) the grant of an Interest
as consideration for the provision of services to or for the benefit of the
Company by an existing Member acting in a Member capacity or by a new Member
acting in a Member capacity in anticipation of becoming a Member.
“Securities Act” means the Securities Act of 1933, as amended.
“Senior Debt” means (i) all indebtedness of the Company, whether currently
outstanding or hereafter created, incurred or assumed, unless, by the terms of
the instrument creating or evidencing such indebtedness or pursuant to which
such indebtedness is outstanding, it is provided that such indebtedness is not
superior in right of payment to the Call Unit Promissory Notes or to other
indebtedness which is pari passu with or subordinated to the Call Unit
Promissory Notes, and (ii) any modifications, refunding, deferrals, renewals or
extensions of any such indebtedness or any securities, notes or other evidences
of indebtedness issued in exchange for such indebtedness; provided that in no
event shall “Senior Debt” include (a) indebtedness evidenced by any of the Call
Unit Promissory Notes, (b) indebtedness of the Company owed or owing to any
subsidiary of the Company or any officer, director or employee of the Company or
any subsidiary of the Company, (c) indebtedness to trade creditors or (d) any
liability for taxes owed or owing by the Company.
“Services Agreement” means the Transition, Administrative and Marketing Services
Agreement, dated as of October 29, 2009, by and between the Company, Eastern
OpCo, JV OpCo, PDC and Riley Natural Gas Company.
“Significant Interest Sales” means a sale or series of related sales in which
both Class A Members participate by selling less than all of their Class A
Interests for aggregate proceeds in excess of 15% of the enterprise value of the
Company.

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“Simulated Basis” means the Book Basis of any Oil and Gas Property.
“Simulated Depletion Deductions” means the simulated depletion allowance
computed by the Company with respect to its Oil and Gas Properties pursuant to
Treasury Regulations § 1.704-1(b)(2)(iv)(k)(2). For purposes of computing
Simulated Depletion Deductions, the CEO, subject to the approval of the Board of
Managers, will apply on a property by property basis the simulated cost
depletion method or the simulated percentage depletion method (without regard to
the limitations in Section 613A of the Code) under Treasury Regulations
§ 1.704-1(b)(2)(iv)(k)(2), as determined by the CEO, subject to the approval of
the Board of Managers.
“Simulated Gain” or “Simulated Loss” means the simulated gain or simulated loss,
respectively, computed by the Company with respect to its Oil and Gas Properties
pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(k)(2).
“Super Majority Vote” means the affirmative vote of Class A Members whose
aggregate Class A Sharing Percentages exceed 60%.
“Tag-Along Sharing Percentage” for any Member means the quotient determined by
dividing (i) the total number of Class A Units, Class C Units, or Class D Units,
respectively, held by the Selling Member, Non-Selling Member, Class C Member, or
Class D Member, respectively, having elected to exercise its tag-along rights
pursuant to Section 6.5(b) or Section 6.6(a), by (ii) the total number of Class
A Units, Class C Units, and Class D Units held by the Selling Member and all
other Members having elected to exercise their tag-along rights pursuant to
Section 6.5(b) or Section 6.6(a), stated as a percentage.
“Termination Event” means either of the following events: (i) the good faith
determination by another Class A Member’s Board of Managers Designees that a
material breach or violation by a Class A Member of its obligations under this
Agreement has occurred, which breach or violation shall not have been cured
within 30 days or waived by the non-defaulting Class A Member(s) after notice
thereof shall have been given to the defaulting Class A Member or (ii) the
occurrence of a Bankruptcy Event.
“Transfer” means any sale, transfer, assignment, distribution, conveyance, gift,
abandonment, hypothecation, encumbrance, pledge, mortgage or any other
disposition whether voluntary, involuntarily or by operation of law, and whether
effected directly or indirectly; and “Transferring” means the act of making a
Transfer; and “Transferred” means the condition of a Transfer having occurred.
For so long as PDC’s securities are listed on a stock exchange, Transfers of
PDC’s securities that do not constitute a PDC Change of Control shall not be
deemed to be Transfers of PDC’s Interest.
“Treasury Regulations” means temporary and final regulations promulgated under
the Code by the United States Department of the Treasury, as amended (including
any corresponding provisions of succeeding regulations).

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SECTION 11.2.    Other Defined Terms. Each of the terms is defined in the
provision of the Agreement identified opposite such term in the following table:
Term
Provision
Additional PDC Contribution
Section 4.3(d)(ii)
Agreement
Preamble
Appraiser
Section 4.8(f)
Area
Section 1.6(a)
Baker Botts
Section 12.15
Board
Section 2.1(a)
Board of Managers
Section 2.1(a)
Board of Managers Designee
Section 2.2(e)
Call Group
Section 4.8(a)
Call Notice
Section 4.8(b)
Call Option
Section 4.8(a)
Call Option Exercise
Section 4.8(b)
Call Unit Promissory Note
Section 4.8(c)
Call Units
Section 4.8(a)
Capital Calls
Section 4.3(c)
CEO
Section 2.4(d)
Certificate of Formation
Section 1.1
Class A Member Related Party
Section 3.3(b)
Class A Sharing Percentage
Section 4.2
Class A Units
Section 4.1(a)
Class B Permitted Transferee
Section 6.1(b)
Class B Sharing Percentage
Section 4.2
Class B Units
Section 4.1(a)
Class C Dividend
Section 4.1(a)(ii)
Class D Sharing Percentage
Section 4.2
Class D Units
Section 4.1(a)
Company
Preamble
Compensatory Interest
Section 4.7(a)
Conversion Notice
Section 4.1(e)(v)
COO
Section 2.6(b)
Deadlock
Section 2.5(a)
Defaulting Member
Section 4.3(e)
Designating Party
Section 2.2(e)
Dissolution Events
Section 7.1
Dividend Payment Date
Section 4.1(e)(iii)
Drag‑Along Notice
Section 6.5(c)
Drag‑Along Sale
Section 6.5(c)
First Amendment
Recitals
First Resort Indemnitors
Section 8.7

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Term
Provision
Fiscal Year
Section 10.4
Fulbright
Section 12.15
Initial Capital Contributions
Section 4.3(a)
Initial Deadlock Period
Section 2.5(a)(i)
Initial Development Plan and Budget
Section 2.4(d)
Initial Special Withdrawal
Section 5.7
Investor
Preamble
Investor Default
Section 4.3(d)
Investor Designee
Section 2.2(c)
Investor Group
Section 9.6
Investor Related Party
Section 3.3(c)
Investor Sideways Loan
Section 4.3(d)
Last Resort Indemnitors
Section 8.7
Listed Securities
Section 12.4
Manager
Section 2.1(a)
Minimum Tax Distributions
Section 5.6
Non-Defaulting Member
Section 4.3(e)
Non-Offered Member
Section 6.6(a)
Non-Offered Tag-Along Offer
Section 6.6(a)(i)
Non-Offered Tag-Along Offer Period
Section 6.6(a)(i)
Non‑Offered Tag‑Along Sale
Section 6.6(a)(iii)
Non-Selling Member
Section 6.5(a)
Non-Selling Member Offer
Section 6.5(a)
Non-Selling Member Offer Period
Section 6.5(a)
Notice of Redemption
Section 5.5(a)(ii)
Observer
Section 2.1(l)
Offer Notice
Section 6.6(a)
Offer Notice Period
Section 6.6(a)
Offered Interest
Section 6.6(a)
Offered Member
Section 6.6(a)
Offered Tag-Along Sale
Section 6.5(b)
Original Agreement
Recitals
Outside Appraisal
Section 4.8(f)
Partial Redemption
Section 5.5(a)(ii)
Payment Default
Section 4.3(e)
PDC
Preamble
PDC Designee
Section 2.2(d)
PDC Group
Section 9.6
PDC Related Party
Section 3.3(c)
Permitted Transfers
Section 6.1(b)
PIK Class C Units
Section 4.1(e)(ii)
Proposed Rules
Section 4.7(a)

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Term
Provision
Pro Rata Offered Share
Section 6.6(a)
Pro Rata Sale Share
Section 6.5(b)
Record Date
Section 5.5(a)(i)
Redemption Date
Section 5.5(a)(ii)
Redemption Event
Section 4.9
Restricted Period
Section 6.1(b)
Safe Harbor Election
Section 4.7(a)
Sale Interest
Section 6.5(a)
Selling Member
Section 6.5(a)
Selling Member Notice
Section 6.5(a)
Selling Member Notice Period
Section 6.5(a)
Sideways Loan
Section 4.3(e)
Special PDC Withdrawal
Section 5.7
Subsequent Special Withdrawal
Section 5.7
Substitute Contribution
Section 4.3(d)
Suspension
Section 2.5(a)(i)
Tag-Along Offer
Section 6.5(b)(ii)
Tag-Along Offer Period
Section 6.5(b)(ii)
Tag-Along Sale
Section 6.6(a)
Third Party Offer
Section 6.5(b)
Third Party Offer Period
Section 6.5(b)
Third Party Offeror
Section 6.6(a)
Third Party Purchaser
Section 6.5(b)
Transaction Agreements
Section 1.7(c)
Transaction Expenses
Section 12.3(a)
Units
Section 4.1(a)
Unsolicited Third Party Offer
Section 6.6(a)
Unvested Class B Units
Section 4.7(c)
Vested Class B Units
Section 4.7(c)
 
 

SECTION 11.3.    Construction.
(a)    When required by the context, the gender of words in this Agreement
includes the masculine, feminine and neuter genders, and the singular includes
the plural (and vice versa). Unless otherwise specified, references in this
Agreement to (a) Articles and Sections are to Articles and Sections of this
Agreement, (b) Schedules, Exhibits or Annexes are to those attached hereto, each
of which is incorporated herein and made a part hereof for all purposes, (c)
Article and Section headings are for convenience only and shall not affect the
interpretation of this Agreement, (d) the terms “herein,” “hereof,”
“hereinafter” or similar derivations are to this Agreement as a whole and not to
any particular Article or Section, and (e) the terms “include,” “including” or
similar derivations are without limitation.

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(b)    Each of the parties acknowledges that it has been represented, or has
been advised of its right to be represented, by independent counsel of its
choice throughout all negotiations that have preceded the execution of this
Agreement. Each party and its counsel cooperated in the drafting and preparation
of this Agreement and the documents referred to herein, and any and all drafts
relating thereto shall be deemed the work product of the parties and may not be
construed against any party by reason of its preparation. Accordingly, any rule
of Law or any legal decision that would require interpretation of any
ambiguities in this Agreement against any party that draft it is of no
application and is hereby expressly waived.
ARTICLE XII    
MISCELLANEOUS
SECTION 12.1.    Notices. All notices and other communications under this
Agreement or in connection herewith shall be in writing and shall be given by
delivery in person or by overnight courier, by registered or certified mail
(return receipt requested and with postage prepaid thereon) or by facsimile or
Electronic Transmission to the parties at the respective addresses set forth in
Exhibit C (or at such other address as any party shall have furnished to the
others in accordance with the terms of this Section 12.1). All notices and other
communications that are addressed as provided in or pursuant to this Section
12.1 shall be deemed duly and validly given (a) if delivered in person or by
overnight courier, upon delivery, (b) if delivered by registered or certified
mail (return receipt requested and with postage paid thereon), 72 hours after
being placed in a depository of the United States mails and (c) if delivered by
facsimile or Electronic Transmission, upon transmission thereof and receipt of
the appropriate answerback; provided, however, if such assumed date of notice
falls within a time which is not within the usual business hours of the
recipient, such notice shall be deemed to have been given upon the opening for
business on the next business day by the recipient.
SECTION 12.2.    Confidentiality. Each Member hereby agrees that:
(a)    Such Member has maintained and shall maintain the Confidential
Information strictly confidential and has not and will not, without the prior
written Approval of the Board of Managers, or the Class A Member to which the
Confidential Information relates, as the case may be, disclose such Confidential
Information in any manner whatsoever, in whole or in part. Moreover, such Member
shall take any and all reasonable steps necessary to prevent general disclosure
of the Confidential Information and, if it is a Class A Member, to transmit the
Confidential Information only to its representatives who need to know the
Confidential Information and, in the case of Investor, to its direct or indirect
investors in its ordinary course fund reporting process, who are informed of the
confidential nature of the Confidential Information and who agree to be bound by
the terms of this Section 12.2. Without limiting the foregoing, such Member
shall use at least the same degree of care to avoid unauthorized disclosure or
use of the Confidential Information as it employs with respect to its own
Confidential Information of like kind. Disclosure of Confidential Information by
a Member’s representatives shall constitute a breach of this Section 12.2 by
such Member.
(b)    To the extent legal counsel advises that disclosure is required by Law or
the rules or regulations of any stock exchange (and then only) such Member will
disclose only that portion of the Confidential Information which is required by
Law; provided, however, that in any

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such event the disclosing Member will provide the Board of Managers, or the
Class A Member to which the Confidential Information relates, as the case may
be, with reasonably prompt written notice prior to any such disclosure so that
the Company or the Class A Member may seek to obtain а protective order or other
confidential treatment for the Confidential Information, and if a protective
order or other remedy is not obtained, the disclosing Member will furnish only
that portion of the information which is required to be furnished and the
disclosing Member may conclusively rely on its legal counsel to determine the
information that it is required to disclose.
(c)    The agreements contained in this Section 12.2 shall survive the
withdrawal of any Member and the dissolution of the Company for a period of one
year after the date of such withdrawal (for the then‑withdrawing Member) or
dissolution (for all Members who are Members at the time of such termination).
SECTION 12.3.    Expenses.
(a)    At and after Closing, the Company shall pay directly or reimburse
Investor for the out-of-pocket fees and expenses Investor incurred prior to or
within six months after the Closing in connection with the transactions
contemplated by and negotiation and preparation of this Agreement and the other
Transaction Agreements (“Transaction Expenses”) and shall pay directly or
reimburse PDC’s Transaction Expenses up to the amount of Investor’s Transaction
Expenses. Transaction Expenses shall include all fees, costs, and expenses of
legal counsel, accountants and all other third party consultants and advisors
engaged by such Class A Member to assist with the transactions contemplated by
this Agreement and the other Transaction Agreements, the due diligence reviews
conducted by it and the negotiation or preparation of this Agreement and the
other Transaction Agreements and all direct out-of-pocket expenses for travel
and similar matters.
(b)    Investor shall not charge the Company any on-going management fees or
similar fees.
(c)    The Board of Managers shall be entitled to reimbursement from the Company
of reasonable out-of-pocket expenses in connection with attending meetings of
the Board of Managers and fulfilling Board duties, subject to such limitations
as may be established by the Board.
SECTION 12.4.    Standstill. Each Class A Member (other than PDC), Class C
Member, and Class D Member acknowledges and agrees, for a period from the
Closing Date and until six months after such Class A Member, Class C Member, or
Class D Member ceases to hold any Units, that neither it nor any of its
Controlled Affiliates shall, directly or indirectly, without the prior written
consent of PDC: (a) acquire or agree to acquire or make any proposal to acquire,
in any manner, any of PDC’s securities that are listed or quoted on an exchange
(“Listed Securities”); (b) act jointly or in concert with any third party to
acquire, in any manner, any Listed Securities of PDC or its Affiliates or
(c) solicit proxies of PDC’s securityholders, or form, join or in any way
participate in a proxy group which is doing so. The expiration of the standstill
period shall not in any way relieve a Class A Member, Class C Member, or Class D
Member from any prohibitions under federal securities laws on trading PDC’s
securities, to the extent such Class A Member, Class C Member, or Class D Member
knows material non-public information about PDC, and each Class A Member (other
than PDC), Class C Member and Class D Member agrees to comply with such

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federal securities laws. For avoidance of doubt, except to the extent portfolio
companies in which a Class A Member other than PDC holds investments have
received Confidential Information from such Class A Member, its Controlled
Affiliates or any Lime Rock Resources Entity, this Section 12.4 shall not apply
to such portfolio companies as Affiliates under this Section 12.4.
SECTION 12.5.    Non‑Solicitation. Each Class A Member covenants and agrees with
the other Class A Member that, from the Closing Date and until one year
following the earlier of the dissolution of the Company and the date that such
Class A Member Transfers all of its Class A Interest to an un-Affiliated third
party, such Class A Member will not, directly or indirectly, hire or retain or
attempt to hire or retain or influence the possible hiring or retaining by a
third party of any person who is a managerial-level employee of the other Class
A Member, the Company or Eastern OpCo, without first seeking and obtaining such
Class A Member’s prior written authorization, which may be arbitrarily withheld;
provided, however, that the foregoing provision will not prevent either Class A
Member from employing any such person who (a) has been terminated by the Company
(provided that such termination is not the result of any interference,
solicitation or other action by the Class A Member seeking to hire such
employee) or (b) responds to an advertisement or other general solicitation for
employment (which solicitations are not specifically targeted at the such other
Class A Member’s employees) through the use of media advertisements,
professional search firms or otherwise. With respect to each Class A Member, the
Company shall not, from the Closing Date and until one year following the
earlier of the dissolution of the Company and the date such Class A Member
Transfers all of its Class A Interest to an un-Affiliated third party, directly
or indirectly, hire or retain or attempt to hire or retain or influence the
possible hiring or retaining by a third party of any person who is a
managerial-level employee of a Class A Member (excluding, in the case of PDC,
employees of Eastern OpCo), without first seeking and obtaining such Class A
Member’s prior written authorization, which may be arbitrarily withheld;
provided, however, that the foregoing provision will not prevent the Company,
upon approval of the Board of Managers, from employing any such person who (a)
has been terminated by a Class A Member (provided that such termination is not
the result of any interference, solicitation or other action by the Company) or
(b) responds to an advertisement or other general solicitation for employment
(which solicitations are not specifically targeted at the such Class A Member’s
employees) through the use of media advertisements, professional search firms or
otherwise.
SECTION 12.6.    Entire Agreement. This Agreement and the Transaction Agreements
constitute the entire agreement among the parties with respect to the subject
matter hereof and supersede all prior written or oral agreements and
understandings and all contemporaneous oral agreements and understandings among
the parties or any of them with respect to the subject matter hereof. All
Exhibits and Schedules hereto are expressly made a part of this Agreement.
SECTION 12.7.    Waiver or Consent. A waiver or consent, express or implied, to
or of any breach or default by any Person in the performance of its obligations
with respect to the Company is not a consent or waiver to or of any other breach
or default in the performance by that Person of the same or any other
obligations of that Person with respect to the Company. Failure on the part of a
Person to complain of any act or omission of any Person or to declare any Person
in breach or default with respect to an obligation, irrespective of how long
that failure continues, shall not be construed as a waiver of the breach or
default until the applicable statute of limitations

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has run. No waiver of any obligation under this Agreement or the Act shall be
effective unless in writing signed by or on behalf of the Person or Persons to
whom the obligation is owed.
SECTION 12.8.    Amendment. Except as otherwise expressly provided herein, any
amendment to this Agreement shall become effective only upon the execution of a
written instrument executed by (i) both Class A Members, for so long as there
are two Class A Members, or (ii) a Super Majority Vote, if there are more than
two Class A Members, provided, however, that, (x) except as expressly provided
herein, any amendment to any of the economic terms or provisions applicable to a
Member or other rights adversely affecting a Member, including, but not limited
to, (a) decreasing a Member’s rights to receive distributions (including rights
under Section 7.3) or (b) removing or reducing a Member’s right to (i) designate
a Manager (in the case of a Class A Member), (ii) approve certain actions of the
Company (including through any Manager designated by a Class A Member),
including such actions with respect to its subsidiaries, and (iii) be
indemnified by the Company, shall be effective only upon the execution of a
written instrument by such Member, and (y) any amendment to this Agreement that
would be disproportionately adverse to the holders of the Class C Units shall be
effective only upon the written consent of the holders of at least 66 2/3% of
the outstanding number of Class C Units.
SECTION 12.9.    Choice of Law.
(a)     This Agreement shall be construed, interpreted and enforced in
accordance with, and the respective rights and obligations of the parties shall
be governed by, the laws of the State of Delaware without regard to principles
of conflicts of law. Any right to trial by jury with respect to any claim or
proceeding relating to or arising out of this Agreement, or any transaction or
conduct in connection herewith, is waived.
(b)    Each Member hereby consents to submit to the exclusive jurisdiction and
venue of the courts of Dallas County, Texas and of the United States of America
located in Dallas County, Texas for any actions, suits or proceedings arising
out of or relating to this Agreement.
(c)    In no event shall a Member be entitled to punitive damages, exemplary
damages, consequential damages, speculative damages or compensation for business
interruption, loss of profits, loss of opportunity or opportunity costs from
another Member in any action, suit or proceeding arising out of or related to
this Agreement.
SECTION 12.10.    Public Announcement. No Class A Member or its Affiliates shall
make any public announcement or filing with respect to the Company or its
affairs or the transactions provided for herein without the prior written
consent of the other Class A Member(s), which shall not be withheld
unreasonably, except as may be required by law. Further, any such public
announcement or filing shall not reference or otherwise identify Investor’s
Affiliates without prior written consent of Investor. No Class B Member, Class C
Member, or Class D Member shall make any public announcement or filing with
respect to the Company or its affairs or the transactions provided for herein
without the Approval of the Board of Managers.
SECTION 12.11.    Specific Performance. The Members agree that a breach of the
provisions of Article VI or Section 3.3, Section 12.2, Section 12.4 or Section
12.5 may cause irreparable injury to the Company or the Members for which
monetary damages (or other remedy

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at law) are inadequate in view of (i) the complexities and uncertainties in
measuring the actual damages that would be sustained by reason of the failure of
a person to comply with such provisions, and (ii) the uniqueness of the
Company’s business and the relationship among the Members. Accordingly, the
Members agree that a breach of Article VI or Section 3.3, Section 12.2, Section
12.4 or Section 12.5 may be enforced by a Member by specific performance, in
addition to any other remedy to which it is entitled at law or in equity. In
connection with any request for specific performance, the Members waive any
requirement for the security or posting of any bond in connection with such
remedy.
SECTION 12.12.    Binding Agreement. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns (it being understood and agreed that, except as expressly provided
herein, nothing contained in this Agreement is intended to confer any rights,
benefits or remedies of any kind or character on any other Person under or by
reason of this Agreement). It is expressly understood and agreed that any
attempted or purported assignment by any party of this Agreement in violation of
the provisions of this Section 12.12 shall be null and void.
SECTION 12.13.    Benefit of Agreement. Nothing in this Agreement expressed or
implied, shall be construed to give to any creditor of the Company or of any
Member any legal or equitable right, remedy or claim under or in respect of this
Agreement.
SECTION 12.14.    Further Assurances. In connection with this Agreement and the
transactions contemplated hereby, each Member agrees to execute and deliver any
additional documents and instruments and to perform any additional acts
necessary or appropriate to effectuate the provisions of this Agreement and
those transactions.
SECTION 12.15.    Legal Counsel. The Members acknowledge and agree that Baker
Botts L.L.P. (“Baker Botts”) (i) has represented PDC and certain of its
Affiliates in connection with the negotiation, execution and delivery of this
Agreement and all other agreements contemplated by this Agreement, (ii) other
than its representation of the Company in certain financing matters, has not
represented the Company or any Member other than PDC, and (iii) in no event
shall an attorney-client relationship be deemed to exist between Baker Botts, on
the one hand, and the Members (other than PDC) or any of their respective
Affiliates, or the Company (other than as specified in clause (ii)), on the
other hand, in respect of Baker Botts’ representation as described in
clauses (i) and (ii) above.
The Members acknowledge and agree that Fulbright & Jaworski L.L.P. (“Fulbright”)
(i) has represented Investor in connection with the negotiation, execution and
delivery of this Agreement and all other agreements contemplated by this
Agreement, (ii) has not represented the Company or any Member other than
Investor, and (iii) in no event shall an attorney-client relationship be deemed
to exist between Fulbright, on the one hand, and the Members (other than
Investor) or any of their respective Affiliates, or the Company, on the other
hand, in respect of Fulbright’s representation as described in clauses (i) and
(ii) above.

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SECTION 12.16.    Counterparts. This Agreement may be executed in any number of
counterparts or counterpart signature pages, each of which shall constitute an
original and all of which shall constitute one and the same instrument.
[Remainder of page intentionally left blank; Signature page follows]

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
CLASS A MEMBERS:
PDC ENERGY, INC.

By:        
    Gysle R. Shellum
    Chief Financial Officer
LR-MOUNTAINEER HOLDINGS, L.P.
By:
Lime Rock Partners GP V, L.P.,
    its General Partner

By:    LRP GP V, Inc., its General Partner

    By:         
        J. William Franklin, Jr.
        Managing Director
CLASS B MEMBERS:

        
Deward W. Gerdom

        
Charles M. Holm

        
James B. McPherson

        
Jason J. Wojciechowicz

 

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

CLASS C MEMBERS:
PDC ENERGY, INC.

By:        
    Gysle R. Shellum
    Chief Financial Officer
LR-MOUNTAINEER HOLDINGS, L.P.
By:
Lime Rock Partners GP V, L.P.,
    its General Partner

By:    LRP GP V, Inc., its General Partner

    By:         
        J. William Franklin, Jr.
        Managing Director

 

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

SPOUSAL AGREEMENT
The spouse of the Class B Member executing the Second Amended and Restated
Limited Liability Company Agreement of PDC Mountaineer, LLC dated as of December
23, 2013 (as the same may be amended), or a counterpart signature page thereto,
is aware of, understands and consents to the provisions of such Agreement and
its binding effect upon any community property interest or marital settlement
awards she may now or hereafter own or receive, and agrees that the termination
of her marital relationship with such Class B Member for any reason shall not
have the effect of removing any Class B Interests subject to such Agreement from
the coverage thereof and that her awareness, understanding, consent and
agreement is evidenced by her signature below.

    
Date:    December 23, 2013                              
Name:         

 

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

EXHIBIT A

INITIAL DEVELOPMENT PLAN AND BUDGET

    A-1

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

EXHIBIT B

OFFICERS OF PDC MOUNTAINEER, LLC
Deward W. Gerdom
CEO
Charles M. Holm
CFO and Treasurer
James B. McPherson
Vice President
Sue Sander
Secretary

    B-1

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

EXHIBIT C
LIMITED LIABILITY COMPANY AGREEMENT OF PDC MOUNTAINEER LLC
This Exhibit is dated as of December 23, 2013
Class A Members and Addresses
Initial Capital
Contributions for C Units
Follow-On Contributions for A Units
Class A Units
Class A
Sharing Percentage
Capital Contributions for C Units
Class C Units
Class C Sharing Percentage
PDC 

PDC Energy, Inc.
1775 Sherman Street, Suite 3000
Denver, Colorado 80203
Attention: Gysle R. Shellum
Phone: 303.860.5800
Fax: 303.831.3988
Agreed Value: $158,500,000

Initial Special
Withdrawal: ($45,000,000)

Total: $113,500,000

10/01/2011
$76,250,000

189,750

50.00%

$5,000,000

5000
50
%
with copies to:
 
 
 
PDC Energy, Inc.
1775 Sherman Street, Suite 3000
Denver, Colorado 80203
Attention: Daniel W. Amidon
Phone: 303.860.5800
Fax: 303.831.3988
 
 
 
and to:
 
 
 
Baker Botts L.L.P.
910 Louisiana
Houston, Texas 77002
Attention: Hugh Tucker 
      Paul F. Perea
Phone: 713.229.1234
Fax: 713.229.1522
 
 
 
Investor 

LR-Mountaineer Holdings, L.P.
274 Riverside Ave 3rd Floor
Westport, Connecticut 06880
Attention: Kris Agarwal
Phone: 203.293.2785
Fax: 203.429.2785
Agreed Value:

$55,000,000
04/01/2010
$28,000,000
11/01/2010
$7,000,000
01/01/2011
$7,000,000
03/01/2011
$5,000,000
10/01/2011
$11,500,000
10/01/2011
$76,250,000
189,750

50.00
%

$5,000,000

5000
50
%

    C-1

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

Class B Members and Addresses
Deward W. Gerdom
137 Ashmore Drive
Bridgeport, WV  26330
Charles M. Holm
67 Renwick Drive
Clarksburg, WV 26301
 
James B. McPherson
7 Berkshire Dr.
Morgantown, WV 26508
Jason J. Wojciechowicz
RR2 Box 331
Mount Clare, WV 26408
 

    C-2

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

EXHIBIT D

AREA OF MUTUAL INTEREST

Each Class A Member agrees that any investment in or acquisition of any
ownership interest in any oil and gas properties (e.g., working interests or
royalty interests), operations or prospects or any rights and interests therein
or relating thereto (e.g., carried interests, profits interests or
participations) that are located in the AMI made by it or its Controlled
Affiliates shall be offered by it (or that it shall cause its Controlled
Affiliate to offer) (the “Offeror”) within 15 days of the making of such
investment or acquisition to the Company on terms identical to those on which
the Offeror made such investment or acquisition. If the Managers who are not
designees of the Offeror fail to accept such offer on behalf of the Company
within 20 days of receipt thereof, the Offeror (or its Controlled Affiliate, as
the case may be) shall be free to retain the investment or acquisition for its
own account. Each Class A Member agrees that it will not, and will cause its
Controlled Affiliates not to, acquire, directly or indirectly, a Controlling
interest in any entity engaged in the acquisition, development, operation,
exploitation or maintenance of oil or natural gas properties within the AMI
without the prior written consent of the Managers designated by the other Class
A Member. In addition, if a Class A Member or its Controlled Affiliate makes an
acquisition or an investment in any oil and gas properties that, at the time of
the acquisition or investment are located outside the AMI, such properties shall
be excluded from the AMI if the AMI would otherwise apply to such properties as
a result of subsequent acquisitions or investments of the Company. Each Class A
Member further agrees that it will not, and will cause its Controlled Affiliates
not to, initiate or propose, or overtly encourage the initiation or proposal of,
an investment in or acquisition of ownership interests in oil and gas properties
in the AMI or a Controlling interest in any entity engaged in the acquisition,
development, operation, exploitation or maintenance of such properties within
the AMI by any entity in which such Class A Member or such Controlled Affiliates
have the power to designate members of the board of directors (or equivalent
governing body). Notwithstanding anything to the contrary in this Agreement, the
restrictions of this Exhibit D shall not apply to (i) investments or
acquisitions by Affiliates of Investor or PDC that are not their respective
Controlled Affiliates, (ii) acquisitions or investments by PDC or its Controlled
Affiliates of additional limited partner interests in the Drilling Partnerships;
provided that if PDC acquires 100% of a Drilling Partnership, ownership
interests in oil and gas properties held by such Drilling Partnership that are
within the AMI shall be required to be offered by PDC to the Company pursuant to
the first sentence of this paragraph and provided further that any investments
in or acquisitions of additional ownership interests in oil and gas properties
in the AMI by the Drilling Partnerships shall be subject to the first sentence
of this Exhibit D and (iii) the direct or indirect acquisition of a Controlling
interest in an entity engaged in the acquisition, development, operation,
exploitation or maintenance of oil or natural gas properties within the AMI,
provided such entity’s interests within the AMI do not exceed 12,500 net acres
at the time of such acquisition and provided further that any subsequent
investment in or acquisition of ownership interests in oil and gas properties
within the AMI by such entity shall be subject to the first sentence of this
Exhibit D. Upon the Transfer by a Class A Member of all of its Class A Interest
pursuant to Section 6.5 or Section 6.6, the transferor shall no longer be
subject to the AMI restrictions in this Exhibit D. For purposes of

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the obligations in this Exhibit D, a Person shall not be considered a
“Controlled Affiliate” of another Person if the other Person owns 34% or less of
the outstanding equity interests of that Person and does not have the ability to
appoint 50% or more of the members of the board of directors (or equivalent
governing body) of that Person.
“AMI” means the area consisting of (a) until the fourth anniversary of the
Closing Date, (i) the entirety of each county within the Area in which the
Company owns or leases 1,000 net acres or more and (ii) the ownership and
leasehold interests of the Company in the Area and surrounding five‑mile areas
(from the boundaries of such property interests) with respect to counties in the
Area in which the Company owns or leases less than 1,000 net acres; and
(b) following the fourth anniversary of the Closing Date, (i) the ownership and
leasehold interests of the Company in the Area and surrounding five‑mile areas
(from the boundaries of such property interests) and (ii) ownership or leasehold
interests and surrounding five‑mile areas (from the boundaries of such property
interests) acquired by the Company in the Area no later than six months after
the fourth anniversary of the Closing Date, if the potential acquisition of such
ownership or leasehold interests was being pursued with the approval of the
Board of Managers within the six-month period immediately preceding the fourth
anniversary of the Closing Date.

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EXHIBIT E

PAYOUTS; DISTRIBUTION SHARING PERCENTAGES
This Exhibit is dated as of December 23, 2013
For purpose of this Exhibit E and the Agreement:
“Distribution Sharing Percentage” means, with respect to any Member, at any time
of determination, the product of (a) the Class Distribution Sharing Percentage
(expressed in decimal form) for the class of Interests held by such Member with
respect to the applicable Payout Phase and (b) in the case of a Class A Member,
such Class A Member’s Class A Sharing Percentage, in the case of a Class B
Member, such Class B Member’s Class B Sharing Percentage, and in the case of a
Class D Member, such Class D Member’s Class D Sharing Percentage.
“Class Distribution Sharing Percentage” shall mean with respect to each class of
Interests, (a) in the case of any Distribution in connection with the Equity
Incentive Distribution Event, the percentage of distributions to which the Class
A Members, the Class B Members, and Class D Members, as the case may be, are
entitled at the applicable time of determination, which percentages, as of the
date of this Exhibit E, are set forth in Table 1 below, and (b) in the case of
any other Distributions, zero percent (0%) for the Class B Units and one hundred
percent (100%) for the Class A Units and Class D Units (participating
proportionately on a per-Unit basis).
Table 1 - Class Distribution Sharing Percentages
Payout Phase
Class A and D 
Members
Class B Members
Up to and until First Payout
100.000%
0.000%
Above First Payout and up to Second Payout
99.125%
0.875%
Above Second Payout and up to Third Payout
98.250%
1.750%
Above Third Payout
97.375%
2.625%

“Payout” shall mean the satisfaction of each of the following conditions
immediately following the occurrence of the Equity Incentive Distribution Event:
(a) the present value of the aggregate cash and fair market value (determined
under Section 5.5(b) of the Agreement) of property distributions which Investor
has actually received from the Company, when discounted using the applicable IRR
from the respective dates such distributions were received to the Closing Date,
equals or exceeds the present value of the aggregate Capital Contributions
actually made by Investor, when discounted using the applicable IRR from the
respective dates such Capital Contributions were made to the Closing Date; and
(b) the aggregate value of cash and fair market value (determined under Section
5.5(b) of the Agreement) of property distributions which the Class A Members and
Class D Members have actually received from the Company (excluding the Special
PDC Withdrawal) equals or exceeds the product of (i) the applicable ROI Factor
and (ii) the aggregate

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Capital Contributions actually made by the Class A Members and Class D Members
(net of the Special PDC Withdrawal). For purposes of this definition, each
distribution and Capital Contribution shall be deemed to have been made on the
last day of the month during which it was paid or received.
“Payout Phase” shall mean the phases up to and above the First Payout, the
Second Payout, or the Third Payout, as set forth in Table 1. In determining the
Payout Phase applicable to a Distribution, in the event the applicable
Distribution would exceed the amount necessary to meet a particular Payout, the
amount of Distribution in excess of such Payout shall be applied to the next
applicable Payout Phase, and the Distribution Sharing Percentages of the Members
shall be adjusted accordingly.
“First Payout” shall mean the occurrence of Payout utilizing the IRR and the ROI
Factor set forth opposite “First Payout” in Table 2 below.
“Second Payout” shall mean the occurrence of Payout utilizing the IRR and the
ROI Factor set forth opposite “Second Payout” in Table 2 below.
“Third Payout” shall mean the occurrence of Payout utilizing the IRR and the ROI
Factor set forth opposite “Third Payout” in Table 2 below.
“IRR” shall mean the internal rate of return rates set forth in Table 2 below.
“ROI Factor” shall mean the factors referenced in Table 2 below under the column
entitled “ROI Factors.”
Table 2 - IRR and ROI Factors
 
Payout
IRR
ROI Factor
First Payout
10% per annum compounded annually
Not applicable
Second Payout
10% per annum compounded annually
2.00
Third Payout
10% per annum compounded annually
3.00

    E-2