Exhibit 10.4

 

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OPERATING AGREEMENT

OF

ATLAS PIPELINE MID-CONTINENT WESTTEX, LLC

 

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THE LIMITED LIABILITY COMPANY INTERESTS EVIDENCED BY THIS AGREEMENT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE
SECURITIES LAWS OF ANY STATE OR FOREIGN JURISDICTION. SUCH INTERESTS ARE SUBJECT
TO RESTRICTIONS ON TRANSFERABILITY AND RESALE, AND MAY NOT BE TRANSFERRED OR
RESOLD EXCEPT IN COMPLIANCE WITH THE SECURITIES ACT AND THE APPLICABLE STATE OR
FOREIGN SECURITIES LAWS, PURSUANT TO REGISTRATION THEREUNDER OR EXEMPTION
THEREFROM. IN ADDITION, TRANSFER OR OTHER DISPOSITION OF SUCH INTERESTS IS
FURTHER RESTRICTED AS PROVIDED IN THIS AGREEMENT. PURCHASERS OF INTERESTS SHOULD
BE AWARE THAT THEY WILL BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THEIR
INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.

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TABLE OF CONTENTS

 

ARTICLE I THE COMPANY

   1

1.1

   Formation    1

1.2

   Name    2

1.3

   Purpose; Powers    2

1.4

   Principal Place of Business    2

1.5

   Term    2

1.6

   Filings; Agent for Service of Process    2

1.7

   Title to Property    3

1.8

   Payments of Individual Obligations    3

1.9

   Independent Activities; Transactions with Affiliates    3

1.10

   Definitions    7

1.11

   Shares    24

1.12

   Other Terms    25

ARTICLE II MEMBERS’ CAPITAL CONTRIBUTIONS

   25

2.1

   Initial Capital Contributions    25

2.2

   Additional Capital Contributions    26

ARTICLE III ALLOCATIONS

   27

3.1

   Profits    27

3.2

   Losses    27

3.3

   Special Allocations    28

3.4

   Regulatory Allocations    30

3.5

   Other Allocation Rules    30

3.6

   Tax Allocations; Code Section 704(c)    30

ARTICLE IV DISTRIBUTIONS AND PAYMENTS

   31

4.1

   Amounts Distributed    31

4.2

   Amounts Withheld    33

4.3

   Limitations on Distributions    33

4.4

   Distributions and Payments to Members    33

ARTICLE V MANAGEMENT

   34

5.1

   Authority of the Managing Member    34

5.2

   Duties and Obligations of the Managing Member    34

5.3

   Compensation; Expenses    37

5.4

   Indemnification of the Managing Member    38

5.5

   Resignation, Removal    38

ARTICLE VI ROLE OF MEMBERS

   39

6.1

   Rights or Powers    39

6.2

   Voting Rights    39

6.3

   Meetings and Consents of the Members    39

6.4

   Procedure for Consent    40

6.5

   Withdrawal/Resignation    40

6.6

   Member Compensation    41

6.7

   Indemnification of Class A Member    41

6.8

   Members Liability    41

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6.9

   Partition    42

6.10

   Transactions Between a Member or Managing Member and the Company    42

6.11

   Other Instruments    42

ARTICLE VII REPRESENTATIONS AND WARRANTIES

   42

7.1

   In General    42

7.2

   Representations and Warranties    42

ARTICLE VIII ACCOUNTING, BOOKS, AND RECORDS

   44

8.1

   Accounting, Books, and Records    44

8.2

   Reports    45

8.3

   Tax Matters    48

ARTICLE IX AMENDMENTS

   51

9.1

   Amendments    51

ARTICLE X TRANSFERS

   51

10.1

   Restrictions on Transfers    51

10.2

   Permitted Transfers    51

10.3

   Conditions to Permitted Transfers    51

10.4

   Prohibited Transfers    52

10.5

   Rights of Unadmitted Assignees    52

10.6

   Admission of Substituted Members    53

10.7

   Distributions and Allocations in Respect of Transferred Member Interests   
53

10.8

   Redemption of Class A Member’s Interest in the Company    54

ARTICLE XI POWER OF ATTORNEY

   55

11.1

   Managing Member as Attorney In Fact    55

11.2

   Nature of Special Power    55

ARTICLE XII DISSOLUTION AND WINDING UP

   56

12.1

   Liquidating Events    56

12.2

   Winding Up    57

12.3

   Compliance With Certain Requirements of Regulations; Deficit Capital Accounts
   58

12.4

   Deemed Distribution and Recontribution    59

12.5

   Rights of Members    59

12.6

   Allocations and Distributions During Period of Liquidation    59

12.7

   Character of Liquidating Distributions    60

12.8

   The Liquidator    60

12.9

   Form of Liquidating Distributions    60

ARTICLE XIII NOTICE EVENTS

   61

13.1

   Notice Events    61

13.2

   Liquidation Notice    61

13.3

   Determination of Gross Asset Value    61

ARTICLE XIV MISCELLANEOUS

   63

14.1

   Notices    63

14.2

   Confidential Information    63

14.3

   Binding Effect    64

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14.4

   Construction    64

14.5

   Time    64

14.6

   Headings    65

14.7

   Severability    65

14.8

   Incorporation by Reference    65

14.9

   Governing Law    65

14.10

   Consent to Jurisdiction    65

14.11

   WAIVER OF JURY TRIAL    65

14.12

   Counterpart Execution    66

14.13

   Sole and Absolute Discretion    66

14.14

   Specific Performance    66

14.15

   No Material Impairment    66

14.16

   Entire Agreement    66

14.17

   No Third Party Beneficiaries    66

14.18

   Waiver    67

EXHIBIT A - Form of Share Certificate

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OPERATING AGREEMENT

OF

ATLAS PIPELINE MID-CONTINENT WESTTEX, LLC

This OPERATING AGREEMENT is entered into and shall be effective as of the 27th
day of July, 2007, by and between Atlas Pipeline Partners, L.P., a Delaware
limited partnership, as the Initial Class B Member and the Withdrawing Class B
Member, Atlas Midkiff, LLC, a Delaware limited liability company, as the Class B
Member, Managing Member and Tax Matters Member, Western Gas Resources, Inc., a
Delaware corporation, as the Initial Class A Member and the Withdrawing Class A
Member, and Anadarko Midkiff/Chaney Dell LLC, a Delaware limited liability
company, as the Class A Member, pursuant to the provisions of the Act, on the
following terms and conditions:

ARTICLE I

THE COMPANY

 

  1.1 Formation.

The Initial Class A Member and the Initial Class B Member hereby agree to form
the Company as a limited liability company under and pursuant to the provisions
of the Act and upon the terms and conditions set forth in this Agreement. The
fact that the Certificate is on file in the office of Secretary of State, State
of Delaware, will constitute notice that the Company is a limited liability
company. Simultaneous with the execution of this Agreement, the Initial Class A
Member and the Initial Class B Member shall be admitted as members of the
Company and the Initial Class B Member shall be admitted as the manager (within
the meaning of the Act) of the Company. Immediately following the execution of
this Agreement, (i) the Initial Class A Member, pursuant to its execution of
this Agreement, shall transfer its entire Interest in the Company to the Class A
Member, withdraw from the Company, and cease to be a member of the Company,
(ii) the Class A Member shall, upon its receipt of the Class A Member Interest
of the Initial Class A Member and execution of a counterpart signature page to
this Agreement, be admitted as a member of the Company, (iii) the Initial Class
B Member, pursuant to its execution of this Agreement, shall transfer its entire
Interest in the Company to the Class B Member, withdraw from the Company, and
cease to be a member of the Company, (iv) the Class B Member shall, upon its
receipt of the Class B Member Interest of the Initial Class B Member and
execution of a counterpart signature page to this Agreement, be admitted as a
member and the manager (within the meaning of the Act) of the Company, and
(v) the Company shall continue without dissolution. The rights and Liabilities
of the Members and Managing Member shall be as provided under the Act, the
Certificate, and this Agreement.

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  1.2 Name.

The name of the Company shall be Atlas Pipeline Mid-Continent WestTex, LLC and
all business of the Company shall be conducted in such name or, with the consent
of all of the Members, under any other name.

 

  1.3 Purpose; Powers.

(a) The purposes of the Company are (i) to acquire, manage, operate, protect,
conserve, and sell or otherwise dispose of (directly or indirectly) Permitted
Assets, (ii) to make such additional investments and engage in such additional
business endeavors as may be authorized pursuant to this Agreement or otherwise
as the Members may unanimously agree, and (iii) to engage in any and all
activities necessary or incidental to the foregoing purposes.

(b) The Company has the power to do any and all acts necessary, appropriate,
proper, advisable, incidental or convenient to and in furtherance of the
purposes of the Company set forth in this Section 1.3 and has, without
limitation, any and all powers that may be exercised on behalf of the Company by
the Managing Member pursuant to Article V.

 

  1.4 Principal Place of Business.

The principal place of business of the Company shall be at West Pointe Corporate
Center I, 1550 Coraopolis Heights Road, Second Floor, Moon Township, PA 15108.
The Managing Member may change the principal place of business of the Company to
any other place within or without the State of Texas with the consent of the
Members, which will not be unreasonably withheld, delayed or conditioned. The
registered office of the Company in the State of Delaware initially is located
at Corporation Trust Center, 1209 Orange Street, Wilmington, New Castle County,
Delaware 19801.

 

  1.5 Term.

The term of the Company will commence on the date the Certificate is filed in
the office of the Secretary of State of the State of Delaware in accordance with
the Act and will continue until the dissolution and the completion of the
winding up of the Company following a Liquidating Event, as provided in Article
XII.

 

  1.6 Filings; Agent for Service of Process.

(a) The Company was formed as a limited liability company pursuant to the
provisions of the Act by the filing of the Certificate for the Company with the
Secretary of State of the State of Delaware on July 3rd, 2007. The Members
hereby adopt, confirm and ratify said Certificate. The Managing Member shall
take any and all other actions reasonably necessary to perfect and maintain the
status of the Company as a limited liability company under the laws of the State
of Delaware, including the preparation, execution, and filing of such amendments
to the

 

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Certificate and such other assumed name certificates, documents, instruments,
and publications as may be required by law, including action to reflect:

 

  (i) A change in the Company name;

 

  (ii) A correction of false or erroneous statements in the Certificate or the
desire of the Members to make a change in any statement therein in order that it
shall accurately represent the agreement among the Members; or

 

  (iii) A change in the time for dissolution of the Company as stated in the
Certificate and in this Agreement.

(b) The Managing Member shall execute and cause to be filed original or amended
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.

(c) The registered agent for service of process on the Company in the State of
Delaware shall be The Corporation Trust Company or any successor as appointed by
the Members in accordance with the Act.

(d) Upon the dissolution and completion of the winding up of the Company in
accordance with Article XII, the Liquidator, as an authorized person within the
meaning of the Act, shall promptly execute and cause to be filed a Certificate
of Cancellation in accordance with the Act and the laws of any other
jurisdictions in which the Liquidator deems such filing or any similar filing to
be necessary or advisable.

 

  1.7 Title to Property.

All Property owned by the Company will be owned by the Company as an entity and
no Member will have any ownership interest in such Property in its individual
name, and each Member’s interest in the Company will be personal property for
all purposes. The Company will hold title to all of its Property in the name of
the Company and not in the name of any Member.

 

  1.8 Payments of Individual Obligations.

The Company’s credit and assets will be used solely for the benefit of the
Company, and no asset of the Company will be Transferred in satisfaction of or
encumbered for, or in payment of, any individual obligation of any Member.

 

  1.9 Independent Activities; Transactions with Affiliates.

(a) The Managing Member shall devote such time to the affairs of the Company as
it determines, in its sole discretion, may reasonably be necessary to manage and
operate the Company, and will be free to serve any other Person or enterprise in
any capacity that it may deem appropriate in its sole discretion.

 

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(b) Insofar as permitted by applicable law, neither this Agreement nor any
activity undertaken pursuant hereto will prevent any Member or its Affiliates
from engaging in whatever activities or pursuing whatever opportunities they
choose, whether the same are competitive with the Company or otherwise and any
such activities may be undertaken without having or incurring any obligation to
offer any interest in such activities to the Company or any Member, or require
any Member to permit the Company or any other Member or its Affiliates to
participate in any such activities, and as a material part of the consideration
for the execution of this Agreement by each Member, each Member hereby waives,
relinquishes, and renounces any such right or claim of participation.

(c) Related Party Transactions.

(i) To the extent permitted by applicable law and subject to the provisions of
this Agreement (including Section 1.9(c)(ii) and Article V), in furtherance of
the purposes of the Company set forth in Section 1.3, the Managing Member is
hereby authorized to cause the Company to purchase property (whether real,
personal, or mixed) from, sell Property to or otherwise deal with any Member,
acting on its own behalf, or any Affiliate of any Member (each such agreement, a
“Related Party Transaction”); provided that any such purchase, sale, or other
transaction shall be made on terms and conditions which are no less favorable to
the Company than those generally being provided to or available from an
independent third party.

(ii) Any transaction or series of related transactions that is a Related Party
Transaction between the Managing Member (or an Affiliate) and the Company that
involves aggregate payments in excess of $250,000, other than reimbursements to
the Managing Member for Reimbursable Company Expenses incurred in connection
with the Company’s business pursuant to Section 5.3(b), which will be reported
in accordance with Section 5.3(c) (each such transaction, an “Above Threshold
Related Party Transaction”), must have the prior approval of a majority of the
Company Conflicts Committee (as defined in Section 1.9(c)(iii) below).

(iii) The Class A Member and the Managing Member shall each designate two
(2) members to serve on a committee (the “Company Conflicts Committee”) whose
purpose is to act upon any Above Threshold Related Party Transaction submitted
to the Company Conflicts Committee pursuant to this Section 1.9(c)(iii).
Meetings of the Company Conflicts Committee may be called by the Managing Member
on not less than two (2) business days’ notice to each of the members of the
Company Conflicts Committee by telephone, facsimile, mail, electronic mail,
telegram or other means of communication, with such notice to specify the
relevant Above Threshold Related Party Transaction for consideration at such
meeting.

 

4

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(iv) Unless three of the four members of the Company Conflicts Committee vote to
approve any proposed Above Threshold Related Party Transaction, the Conflicts
Committee members designated by the Class A Member (the “Class A Member Conflict
Committee Members”) disputing the fairness of the Above Threshold Related Party
Transaction are required to submit a good faith proposal of terms and conditions
with respect to such Above Threshold Related Party Transaction that they
reasonably believe to be no less favorable to the Company than those generally
being provided to or available from an independent third party.

(v) If the Class A Conflict Committee Members and the two members of the Company
Conflicts Committee designated by the Managing Member (the “Managing Member
Conflict Committee Members”) are unable to resolve any dispute with respect to
approval of an Above Threshold Related Party Transaction through good faith
negotiation, then, within two (2) Business Days after such meeting, either the
Class A Member or the Managing Member (either such person, the “Initiating
Party”‘) may submit the Above Threshold Related Party Transaction Dispute to
arbitration in accordance with the following paragraphs (1)-(4).

(1) Location of Arbitration: Procedures. Any Initiating Party may cause the
filing (such filing, an “Arbitration Filing”) in Houston, Texas or such other
place as may be mutually acceptable to the Class A Member and the Managing
Member under the AAA Commercial Arbitration Rules with Expedited Procedures in
effect on the date hereof, as modified by Section 1.9(c)(v)(1)-(4).

(2) Selection of Arbitrator. The Class A Member and the Managing Member shall
meet within two (2) Business Days after the date of any dispute to agree upon a
neutral arbitrator with at least fifteen (15) years experience in a senior
management capacity in the operation of natural gas pipelines and processing
plants to resolve the dispute. If the Class A Member and the Managing Member are
unable to agree upon a neutral arbitrator within two (2) Business Days of such
meeting, then the AAA shall select from its Large Complex Case Panel one neutral
arbitrator with at least fifteen (15) years experience in a senior management
capacity in the operation of natural gas pipelines and processing plants.

 

5

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(3) Submissions. The Initiating Party shall submit to the arbitrator the dispute
to be decided and set forth matters with respect to the dispute as the
Initiating Party deems appropriate. Within five (5) days thereafter, the other
Person (such other person, the “Responding Party”) shall submit to the
arbitrator its response to the Arbitration Filing and set forth matters with
respect to the dispute as the Responding Party deems appropriate. The arbitrator
shall determine (a) whether an experienced and prudent operator of natural gas
pipelines and processing plants would consider the terms and conditions of the
transaction leading to the dispute to be no less favorable to the Company than
those generally being provided to or available from an independent third party,
and (b) if not, the terms and conditions that would generally be provided to or
available from an independent third party. The arbitrator’s decision on one or
both of these issues shall be set forth in writing.

(4) Effect of Determination: Costs. The determination(s) by the arbitrator
described in Article 1.9(c)(v)(3) above shall be final and binding upon the
Company Conflicts Committee. The cost of the arbitration (including fees of the
AAA and the arbitrator) shall be borne equally by the Class A Member and the
Managing Member.

(vi) On or before the 60th day following the end of each quarter, the Managing
Member shall furnish the Company Conflicts Committee a schedule of any
transaction or series of related transactions entered into during such preceding
quarter that constitute a Related Party Transaction by the Company with the
Managing Member or an Affiliate involving aggregate payments of less than
$250,000, other than reimbursements to the Managing Member for Reimbursable
Company Expenses incurred in connection with the Company’s business pursuant to
Section 5.3(b), which will be reported in accordance with Section 5.3(c) (each
such transaction, a “Below Threshold Related Party Transaction”). Any Class A
Member Conflicts Committee Member may, within seventy-five (75) days following
actual receipt by such Class A Conflicts Committee Member of the schedule
provided pursuant to this Section 1.9(c)(vi), dispute in writing any amount set
forth on the schedule with respect to any Below Threshold Related Party
Transaction on the ground that such amount was not fair and reasonable to the
Company. The Managing Member and the Class A Member Conflicts Committee Members
shall attempt to resolve such dispute, acting diligently and in good faith. If
the Managing Member and the Class A Member Conflicts Committee Members are
unable to resolve any such dispute within thirty (30) days, or such additional
time as may be reasonable under the circumstances, either the Managing Member or
any Class A Member Conflicts Committee Member may submit the dispute to
arbitration in accordance with paragraphs (1)-(4) of Section 1.9(c)(v).

 

6

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(d) In accordance with the provisions of Section 18-1101 of the Delaware Limited
Liability Company Act, to the extent that, at law or in equity, a Member of the
Company has duties (including fiduciary duties) to the Company or to another
Member or to another Person that is a party to or is otherwise bound by this
Agreement, all such duties (including fiduciary duties) of any such Member are
hereby waived and eliminated; provided, that the foregoing provision shall only
be given effect to the fullest extent permitted by applicable law and shall not
eliminate or waive the implied contractual covenant of good faith and fair
dealing.

 

  1.10 Definitions.

Unless otherwise specifically stated, the capitalized terms used in this
Agreement have the respective meanings set forth in this Section 1.10. Each
agreement referred to in this Section 1.10 shall mean such agreement as amended,
modified, or supplemented from time to time to the extent permitted by the
applicable provisions thereof and hereof.

“Above Threshold Related Party Transaction” has the meaning set forth in
Section 1.9(c)(ii).

“Act” means the Delaware Limited Liability Company Act, 6 Del. C. § 18 101, et
seq., as amended from time to time (or any corresponding provisions of
succeeding law).

“Additional Capital Contribution” has the meaning set forth in Section 2.2(a).

“Adjusted Allocated Retained Asset Value” has the meaning set forth in the
Master Formation Agreement.

“Adjusted Capital Account” means, with respect to any Member, the balance in
such Member’s Capital Account as of the end of the relevant Allocation Year,
after giving effect to the following adjustments:

(i) Credit to such Capital Account any amounts which such Member is deemed
obligated to restore pursuant to the penultimate sentences of Regulations
Sections 1.704-2(g)(1) and 1.704-2(i)(5); and

(ii) Debit to such Capital Account the items described in Regulations Sections
1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), and 1.704-1(b)(2)(ii)(d)(6).

The foregoing definition of Adjusted Capital Account is intended to comply with
the provisions of Regulations Section 1.704-1(b)(2)(ii)(d) and shall be
interpreted consistently therewith.

“Adjusted Capital Account Deficit” means, with respect to any Member, the
deficit balance, if any, in such Member’s Adjusted Capital Account as of the end
of the relevant Allocation Year.

 

7

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“Affiliate” with respect to a Person, shall mean any other Person controlling,
controlled by or under common control with such Person. As used in this
definition, the term “control,” including the correlative terms “controlling,”
“controlled by” and “under common control with,” shall mean the possession,
direct or indirect, of the power to direct or cause the direction of the
management or policies of a Person, whether through ownership of voting
securities, by contract or otherwise.

“Agreement” means this Operating Agreement of Atlas Pipeline Mid-Continent
WestTex, LLC, by and between Atlas Pipeline Partners, L.P., Atlas Midkiff, LLC,
Western Gas Resources, Inc., and Anadarko Midkiff/Chaney Dell LLC, as amended
from time to time, which shall constitute the limited liability company
agreement of the Company for all purposes of the Act.

“Allocated Value” has the meaning set forth in the Master Formation Agreement.

“Allocation Year” means (i) the period commencing on the Closing Date and ending
on December 31, 2007, (ii) any subsequent twelve (12) month period commencing on
January 1 and ending on December 31, or (iii) any portion of the period
described in clauses (i) or (ii) for which the Company is required to allocate
Profits, Losses and other items of Company income, gain, loss or deduction
pursuant to Article III.

“Anadarko Contributed Assets” has the same meaning as the term “Assets” as
defined in the Master Formation Agreement.

“APC” means Anadarko Petroleum Corporation, a Delaware corporation.

“APC Note” means the promissory note evidencing the loans made by the Company to
APC pursuant to the Note Agreement.

“APC Note Prepayments” means any amounts paid to the Company pursuant to
Section 4.3 of the Note Agreement.

“Applicable Day Count Fraction” means, with respect to any Distribution Period
(or portion thereof), the actual number of days in such Distribution Period (or
portion thereof) divided by 360.

“Appraised Asset Value” has the meaning set forth in Section 13.3(a)(i).

“Appraiser” has the meaning set forth in Section 13.3(a)(i).

“Arbitration Filing” has the meaning set forth in Section 1.9(c)(v)(1).

“Bankruptcy” means, with respect to any Person, a “Voluntary Bankruptcy” or an
“Involuntary Bankruptcy”. A “Voluntary Bankruptcy” means, with respect to any
Person (i) the inability of such Person generally to pay its debts as such debts
become due, or an admission in

 

8

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writing by such Person of its inability to pay its debts generally or a general
assignment by such Person for the benefit of creditors, (ii) the filing of any
petition or answer by such Person seeking to adjudicate itself as bankrupt or
insolvent, or seeking for itself any liquidation, winding up, reorganization,
arrangement, adjustment, protection, relief, or composition of such Person or
its debts under any law relating to bankruptcy, insolvency, or reorganization or
relief of debtors, or seeking, consenting to, or acquiescing in the entry of an
order for relief or the appointment of a receiver, trustee, custodian, or other
similar official for such Person or for any substantial part of its property, or
(iii) corporate action taken by such Person to authorize any of the actions set
forth above. An “Involuntary Bankruptcy” means, with respect to any Person,
without the consent or acquiescence of such Person, the entering of an order for
relief or approving a petition for relief or reorganization or any other
petition seeking any reorganization, arrangement, composition, readjustment,
liquidation, dissolution, or other similar relief under any present or future
bankruptcy, insolvency, or similar statute, law, or regulation, or the filing of
any such petition against such Person, which petition shall not be dismissed
within ninety (90) days, or without the consent or acquiescence of such Person,
the entering of an order appointing a trustee, custodian, receiver, or
liquidator of such Person or of all or any substantial part of the property of
such Person, which order shall not be dismissed within ninety (90) days. The
foregoing is intended to supersede and replace the events listed in Sections
18-304(a) and (b) of the Act.

“Below Threshold Related Party Transaction” has the meaning set forth in
Section 1.9(c)(vi).

“Business Day” means any day that is not a Saturday, a Sunday, or a day on which
banking institutions located in New York, New York, or Houston, Texas are
authorized or obligated by law to close.

“Capital Account” means, with respect to any Member of the Company, the Capital
Account maintained for such Member in accordance with the following provisions:

(i) To each Member’s Capital Account there shall be credited (A) such Member’s
Capital Contributions, (B) such Member’s distributive share of Profits and any
items in the nature of income or gain which are specially allocated to such
Interest pursuant to Section 3.3 or Section 3.4, and (C) the amount of any
Company Liabilities assumed by such Member or that are secured by any Property
distributed to such Member;

(ii) To each Member’s Capital Account there shall be debited (A) the amount of
money and the Gross Asset Value of any Property distributed to such Member
pursuant to any provision of this Agreement, (B) such Member’s distributive
share of Losses and any items in the nature of expenses or losses which are
specially allocated to such Interest pursuant to Section 3.3 or Section 3.4, and
(C) 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;

 

9

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(iii) In the event an Interest is Transferred in accordance with the terms of
this Agreement, the transferee shall succeed to the Capital Account of the
transferor to the extent it relates to the Transferred Interest; and

(iv) In determining the amount of any Liability for purposes of subparagraphs
(i) and (ii) above, there shall be taken into account Code Section 752(c) and
any other applicable provisions of the Code and Regulations.

The foregoing provisions and the other provisions of this Agreement relating to
the maintenance of Capital Accounts are intended to comply with Regulations
Section 1.704-1(b), and shall be interpreted and applied in a manner consistent
with such Regulations. In the event the Tax Matters Member shall determine that
it is prudent to modify the manner in which the Capital Accounts, or any debits
or credits thereto are computed in order to comply with such Regulations, the
Tax Matters Member may, subject to the last sentence hereof, make such
modification. The Tax Matters Member also shall, subject to the last sentence
hereof, (i) make any adjustments that are necessary or appropriate to maintain
equality between the aggregate Capital Accounts of the Members and the amount of
capital reflected on the Company’s balance sheet, as computed for book purposes,
in accordance with Regulations Section 1.704-1(b)(2)(iv)(q), and (ii) make any
appropriate modifications in the event unanticipated events might otherwise
cause this Agreement not to comply with Regulations Section 1.704-1(b). Prior to
effecting such adjustments or modifications, the Tax Matters Member shall
provide each Member with written notice describing the need for and the effects
on the Class A Member of any such adjustments or modifications and shall be
authorized to make the adjustment or modification described in such Notice upon
receipt of written approval from the Class A Member of any such adjustments or
modifications, which will not be unreasonably withheld, delayed or conditioned.

“Capital Contributions” means, with respect to any Member of the Company, the
amount of money and the initial Gross Asset Value of any Property (other than
money) contributed to the Company by such Member. For the avoidance of doubt,
amounts paid (as opposed to contributed) to the Company by any Member or its
Affiliates pursuant to Section 11.4(b) of the Master Formation Agreement shall
not be treated as Capital Contributions.

“Cash Available for Distribution” for any Distribution Period means the gross
cash proceeds of the Company (including interest payments on the APC Note but
excluding additional Capital Contributions for Expansion Capital Expenditures)
less the portion thereof used to pay Company expenses or establish any
reasonable reserves for future Company expenses or expenditures (including,
without limitation, Taxes and Maintenance Capital Expenditures but excluding
Expansion Capital Expenditures), all as determined by the Managing Member,
adjusted for any Cash Available for Distribution Variance with respect to the
previous quarter pursuant to Section 4.1(f). Cash Available for Distribution
shall not include (i) Cash From Sales, (ii) APC Note Prepayments, and
(iii) Special Managing Member Payments. Cash Available for Distribution will not
be reduced by depreciation, depletion, amortization, or similar allowances, and
Cash Available for Distribution will be increased by any reductions of reserves
previously established pursuant to the first sentence of this definition.

 

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“Cash Available for Distribution Variance” has the meaning set forth in
Section 4.1(f).

“Cash Equivalents” shall mean cash and any of the following: (i) readily
marketable direct obligations of the Government of the United States or any
agency or instrumentality thereof or obligations unconditionally guaranteed by
the full faith and credit of the Government of the United States, (ii) insured
certificates of deposit of or time or demand deposits with any commercial bank
that is a member of the Federal Reserve System, the parent of which issues
commercial paper rated at least P-1 (or the then equivalent grade) by Moody’s or
A1 (or the then equivalent grade) by S&P, is organized under the laws of the
United States or any State thereof, and the long term unsecured debt of which is
rated A2 or better by Moody’s and A or better by S&P; provided, however, that
all instruments described in this definition other than cash shall have a
maturity of not longer than ninety (90) days or (iii) money market funds at
least 95% of the assets of which constitute Cash Equivalents of the kinds
described in (i) and (ii) above.

“Cash From Sales” means the net cash proceeds from all sales and other
dispositions (other than in the ordinary course of business) of all or any
portion of the Anadarko Contributed Assets, less the portion thereof used to pay
Company expenses or establish any reasonable reserves for future Company
expenses or expenditures (including, without limitation, Taxes and Maintenance
Capital Expenditures, but excluding Expansion Capital Expenditures), all as
determined by the Managing Member, provided, however, “Cash From Sales” will be
increased by any reduction in reserves previously established with respect to
“Cash From Sales.” “Cash From Sales” will include all principal and interest
payments with respect to any note or other obligation received by the Company in
connection with sales and other dispositions (other than in the ordinary course
of business) of the Anadarko Contributed Assets.

“Cash Shortfall” has the meaning set forth in Section 2.2(b).

“Certificate” means the certificate of formation filed with the Secretary of
State of the State of Delaware pursuant to the Act to form the Company, as
originally executed and as amended, modified, supplemented or restated from time
to time, as the context requires.

“Certificate of Cancellation” means a certificate filed in accordance with 6
Del. C.§ 18 203.

“Class A Member” means any Person who (i) is referred to as such in the
introductory statement of this Agreement or has become a substituted or
additional Class A Member pursuant to the terms of this Agreement and (ii) has
not ceased to be a Class A Member.

“Class A Member Appraiser” has the meaning set forth in Section 13.3(a)(i).

 

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“Class A Member Conflicts Committee Members” has the meaning set forth in
Section 1.9(c)(iv).

“Class A Member Preferred Capital” means, with respect to the Class A Member for
any Distribution Period, (i) the Initial Capital Account of the Class A Member
adjusted by any decreases or increases in the initial Gross Asset Value of any
Property pursuant to subparagraph (i) of the definition of “Gross Asset Value”
that have been made on or before the first day of such Distribution Period plus
(ii) the Adjusted Allocated Retained Asset Value in respect of any Retained
Assets contributed to the Company pursuant to Section 2.2(c), minus (iii) the
initial Gross Asset Value of any interest in the APC Note distributed pursuant
to Section 4.1(c) on or prior to the first day of such Distribution Period.

“Class A Member Priority Return” means, with respect to the Class A Member,
cumulative payments for each Distribution Period or portion thereof during which
the Class A Member’s Interest is outstanding, determined by multiplying (A) the
Priority Return Rate for such Distribution Period or portion thereof times
(B) the Class A Member Preferred Capital times (C) the Applicable Day Count
Fraction for such Distribution Period or portion thereof. If the Class A Member
Priority Return accrued by any Distribution Date is not distributed in full on
such Distribution Date, any amount of accrued Class A Member Priority Return not
distributed shall accumulate, and “Class A Member Priority Return” shall include
additional payments for each succeeding Distribution Period or portion thereof
during which such accrued but undistributed Class A Member Priority Return shall
remain undistributed, in an amount determined by multiplying (A) the Priority
Return Rate referred to above, times (B) the amount of such accrued but
undistributed Class A Member Priority Return, times (C) the Applicable Day Count
Fraction for such Distribution Period or portion thereof.

“Class A Member Redemption Notice” has the meaning set forth in Section 10.8(a).

“Class B Member” means any Person who (i) is referred to as such in the
introductory statement of this Agreement or has become a substituted or
additional Class B Member pursuant to the terms of this Agreement and (ii) has
not ceased to be a Class B Member.

“Closing Date” means the Closing Date as defined in the Master Formation
Agreement.

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

“Company” means Atlas Pipeline Mid-Continent WestTex, LLC, a Delaware limited
liability company.

“Company Conflicts Committee” has the meaning set forth in Section 1.9(c)(iii).

“Company Minimum Gain” has the same meaning as “partnership minimum gain” set
forth in Regulations Sections 1.704-2(b)(2) and 1.704-2(d).

 

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“Confidential Information” means all confidential and proprietary information
(irrespective of the form of communication) obtained by or on behalf of a Member
from the Company or its Representatives), other than information which (a) was
or becomes generally available to the public other than as a result of a breach
of this Agreement by such Member, (b) was or becomes available to such Member on
a nonconfidential basis prior to disclosure to the Member by the Company or its
Representatives, (c) was or becomes available to the Member from a source other
than the Company and its Representatives, provided, that such source is not
known by such Member to be bound by a confidentiality agreement with the
Company, or (d) is independently developed by such Member without the use of any
such information received under this Agreement.

“Contribution Agreement” means the Contribution Agreement entered into pursuant
to the Master Formation Agreement.

“Damages” means, without duplication, claims, demands, damages, costs and
expenses (including reasonable fees and disbursements of counsel), Liabilities,
liens, losses, fines, penalties, charges and administrative, judicial and
arbitration awards, judgments, settlement payments and deficiencies or other
charges.

“Debt” means, with respect to any Person, (i) any indebtedness for borrowed
money or the deferred purchase price of property as evidenced by a note, bonds,
or other instruments, (ii) obligations as lessee under capital leases,
(iii) obligations secured by any mortgage, pledge, security interest,
encumbrance, lien, or charge of any kind existing on any asset owned or held by
such Person whether or not such Person has assumed or become liable for the
obligations secured thereby, (iv) any obligation under any interest rate swap
agreement, (v) accounts payable, and (vi) obligations under direct or indirect
guarantees of (including obligations (contingent or otherwise) to assure a
creditor against loss in respect of) indebtedness or obligations of the kinds
referred to in clauses (i), (ii), (iii), (iv), and (v) above, provided that Debt
shall not include obligations in respect of any accounts payable that are
incurred in the ordinary course of such Person’s business and are not delinquent
or are being contested in good faith by appropriate proceedings.

“Depreciation” means, for each Allocation Year, an amount equal to the
depreciation, amortization, or other cost recovery deduction allowable with
respect to a depreciable or amortizable asset for such Allocation Year for
federal income tax purposes, except that (i) with respect to any depreciable or
amortizable asset whose Gross Asset Value differs from its adjusted tax basis
for federal income tax purposes and which difference is being eliminated by use
of the “remedial allocation method” defined by Regulations Section 1.704-3(d),
Depreciation for such Allocation Year shall be the amount of book basis
recovered for such Allocation Year under the rules prescribed by Regulations
Section 1.704-3(d)(2), and (ii) with respect to any other depreciable or
amortizable asset whose Gross Asset Value differs from its adjusted basis for
federal income tax purposes at the beginning of such Allocation Year,
Depreciation shall be an amount that bears the same ratio to such beginning
Gross Asset Value as the federal income tax depreciation, amortization, or other
cost recovery deduction for such Allocation Year bears to

 

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such beginning adjusted tax basis; provided, however, that if the adjusted basis
for federal income tax purposes of a depreciable or amortizable asset at the
beginning of such Allocation Year is zero, Depreciation shall be determined with
reference to such beginning Gross Asset Value using any reasonable method
selected by the Tax Matters Member and approved by the Class A Member, which
approval shall not be unreasonably withheld, delayed or conditioned. If the
Gross Asset Value of a depreciable or amortizable asset is adjusted pursuant to
subparagraphs (ii) or (iv) of the definition of Gross Asset Value during an
Allocation Year, following such adjustment, Depreciation shall thereafter be
calculated under clause (i) or (ii) immediately above, whichever the case may
be, based upon such Gross Asset Value, as so adjusted.

“Distribution Date” has the meaning set forth in Section 4.1(a).

“Distribution Period” means the applicable period from (and including) the
Closing Date to (but excluding) the first Distribution Date occurring thereafter
or from (and including) a Distribution Date to (but excluding) the next
subsequent Distribution Date.

“Eurodollar Rate” means, for any Distribution Period, the Libor rate reported by
Bloomberg L.P. in its index of rates as shown on screen “BBAM” (or any successor
to or substitute for such index, providing rate quotations comparable to those
currently provided on such page of such index, as determined by the largest of
the Spread Reference Banks (based on asset value as shown on the most recently
available audited financials of such bank) from time to time for purposes of
providing quotations of interest rates applicable to Dollar deposits in the
London interbank market) at approximately 11:00 a.m., London time, two Business
Days prior to the commencement of such Distribution Period, as the Libor rate
for Dollar deposits with a maturity comparable to such Distribution Period. In
the event that such rate is not available at such time for any reason, then the
“Eurodollar Rate” for such Distribution Period shall be the rate at which Dollar
deposits of $5,000,000 and for a maturity comparable to such Distribution Period
are offered by the principal London office of the largest of the Spread
Reference Banks (based on the asset value as shown on the most recently
available audited financials for such bank) in immediately available funds in
the London interbank market at approximately 11:00 a.m., London time, two
Business Days prior to the commencement of such Distribution Period.

“Expansion Capital Expenditures” means capital expenditures made to expand or
increase the efficiency of the existing operating capacity of the Company’s
assets, including expenditures that facilitate an increase in volumes within the
Company’s operations, whether through construction or acquisition. Expenditures
that reduce the Company’s operating costs will be considered Expansion Capital
Expenditures only if the reduction in operating expenses exceeds cost reductions
typically resulting from routine maintenance.

“Expenses” means any and all costs, Liabilities, obligations, losses, damages,
penalties, interest, Taxes, claims (including, but not limited to negligence,
strict or absolute liability, Liability in tort and Liabilities arising out of
violation of laws or regulatory requirements of any kind), actions, suits,
costs, expenses, and disbursements (including reasonable legal fees and
expenses) of the Company.

 

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“Fiscal Quarter” means (i) the period commencing on (and including) the Closing
Date and ending on (and including) September 30, 2007, (ii) any subsequent
three-month period commencing on (and including) any January 1, April 1, July 1,
and October 1 and ending on (and including) the last day in March, June,
September, and December, respectively, and (iii) in the case of the final Fiscal
Quarter, the period commencing on (and including) the day after the last day of
the prior Fiscal Quarter of the immediately preceding March, June, September,
and December as the case may be, and ending on (and including) the date on which
all Property is distributed to the Members pursuant to Article XII.

“Fiscal Year” means (i) the period commencing on the Closing Date and ending on
December 31, 2007, (ii) any subsequent twelve-month period commencing on
January 1 and ending on December 31, and (iii) the period commencing on the
immediately preceding January 1 and ending on the date on which all Property is
distributed to the Members pursuant to Article XII.

“GAAP” means generally accepted accounting principles in effect in the United
States as amended from time to time.

“Governmental Authority” means the United States of America, any state, county,
city or local governmental authority, or any political subdivision, agency,
department, commission, board, agency or other instrumentality of any of the
foregoing.

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

(i) The initial Gross Asset Value of any asset contributed by a Member to the
Company pursuant to the Contribution Agreement will be the Allocated Value of
such Property as determined under the Master Formation Agreement; provided,
however, that the Gross Asset Value of any such Property shall be (A) decreased
by any amount contributed to the Company with respect to such Property pursuant
to Section 5.2(c) of the Master Formation Agreement, (B) increased by the amount
of any Positive Section 11.4(b) Adjustment Amount with respect to such Property
pursuant to Section 11.4(b) of the Master Formation Agreement, and (C) decreased
by the amount of any Negative Section 11.4(b) Adjustment Amount with respect to
such Property pursuant to Section 11.4(b) of the Master Formation Agreement;
provided, further, that, with respect to any Retained Asset contributed to the
Company pursuant to Section 9.6(c) of the Master Formation Agreement, the
initial Gross Asset Value of such Retained Asset shall be deemed (for purposes
hereof) to be equal to the Adjusted Allocated Retained Asset Value of such
Retained Asset;

 

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(ii) The Gross Asset Values of all items of Property shall be adjusted to equal
their respective Mark-to-Market Values (taking Code Section 7701(g) into
account) as of the following times: (A) 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 other than an Additional Capital Contribution
made pursuant to Section 2.2(b), Section 2.2(c), the last sentence of
Section 10.8(b) or the last sentence of Section 12.9, (B) the distribution by
the Company to a Member of more than a de minimis amount of Property as
consideration for an Interest in the Company, and (C) the liquidation of the
Company within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g); provided
that the redemption of the Class A Member’s Interest pursuant to Section 10.8
shall in all events constitute a distribution described in clause
(B) irrespective of the amount, if any, distributed to the Class A Member, and
provided further that an adjustment described in clause (A) of this paragraph
shall be made only if the Tax Matters Member reasonably determines, with the
concurrence of the Class A Member, which shall not be unreasonably withheld,
delayed or conditioned, that such adjustment is necessary to reflect the
relative economic interests of the Members in the Company;

(iii) The Gross Asset Value of any item of Property distributed to any Member
(other than as consideration for an Interest in the Company as described in
clause (B) of subparagraph (ii) above) shall be adjusted to equal the
Mark-to-Market Value (taking Code Section 7701(g) into account) of such item on
the date of distribution; and

(iv) The Gross Asset Values of each item of Property shall be increased (or
decreased) to reflect any adjustments to the adjusted basis of such assets
pursuant to Code Section 734(b) or Code Section 743(b), but only to the extent
that such adjustments are taken into account in determining Capital Accounts
pursuant to Regulations Section 1.704-1(b)(2)(iv)(m) and subparagraph (vi) of
the definition of “Profits” and “Losses” or Section 3.3(g); provided, however,
that Gross Asset Values shall not be adjusted pursuant to this subparagraph
(iv) to the extent that an adjustment pursuant to subparagraph (ii) is required
in connection with a transaction that would otherwise result in an adjustment
pursuant to this subparagraph (iv).

If the Gross Asset Value of an asset has been determined or adjusted pursuant to
subparagraph (i), (ii), or (iv), such Gross Asset Value shall thereafter be
adjusted by the Depreciation taken into account with respect to such asset, for
purposes of computing Profits and Losses and allocations thereof pursuant to
Sections 3.3 and 3.4 hereof.

“Gross Liability Value” means with respect to any Liability of the Company
described in Regulations Section 1.752-7(b)(3)(i), the amount of cash that a
willing assignor would pay to a willing assignee to assume such Liability in an
arm’s-length transaction. The Gross Liability Value of each Liability of the
Company described in Regulations Section 1.752-7(b)(3)(i) shall be adjusted at
such times as provided in this Agreement for an adjustment to Gross Asset
Values.

 

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“HSR Act” mean the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended.

“Initial Capital Account” means, with respect to the Managing Member and the
Class A Member, the Capital Account balance of such Member as of the Closing
Date after giving effect to its initial Capital Contribution pursuant to
Section 2.1 and the Contribution Agreement and the transfer of the Initial
Class A Member’s Interest to the Class A Member and the transfer of the Initial
Class B Member’s Interest to the Managing Member.

“Initial Class A Member” or “Withdrawing Class A Member” means Western Gas
Resources, Inc.

“Initial Class B Member” or “Withdrawing Class B Member” means Atlas Pipeline
Partners, L.P.

“Initiating Party” has the meaning set forth in Section 1.9(c)(v).

“Interest” means any interest in the Company representing the Capital
Contributions made by a Member or its predecessors in interest, including any
and all benefits to which the holder of a limited liability company interest may
be entitled as provided in this Agreement, together with all obligations of such
Person to comply with the terms and provisions of this Agreement.

“Involuntary Bankruptcy” has the meaning set forth in the definition of
“Bankruptcy.”

“Liabilities” means any liabilities or obligations of any nature, whether
accrued, contingent or otherwise.

“Liquidating Event” has the meaning set forth in Section 12.1(a).

“Liquidation Notice” has the meaning set forth in Section 13.2.

“Liquidator” has the meaning set forth in Section 12.8(a).

“Maintenance Capital Expenditures” means capital expenditures employed to
replace partially or fully depreciated assets to maintain the existing operating
capacity of the Company’s assets and to extend their useful lives, or other
capital expenditures that are incurred in maintaining existing system volumes
and related cash flows.

“Managing Member” means Atlas Midkiff, LLC so long as it continues to serve in
such capacity and shall also refer to any Person that is admitted to the Company
as a successor Managing Member of the Company in accordance with this Agreement.

“Managing Member Appraiser” has the meaning set forth in Section 13.3(a)(i).

 

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“Managing Member Conflicts Committee Members” has the meaning set forth in
Section 1.9(c)(v)

“Managing Member Preferred Capital” means, with respect to the Managing Member
for any Distribution Period, the product of five percent (5%) times the excess,
if any, of (a) the aggregate Nonconsent Additional Capital Contributions made by
the Managing Member on or prior to the last day of such Distribution Period,
over (b) the aggregate distributions received by the Managing Member pursuant to
Section 4.1(a)(ii) on or prior to the first day of such Distribution Period.

“Managing Member Priority Return” means, with respect to the Managing Member,
cumulative payments for each Distribution Period or portion thereof during which
the Managing Member’s Interest is outstanding, determined by multiplying (A) the
Priority Return Rate for such Distribution Period or portion thereof times
(B) two (2) times (C) the average daily balance of the Managing Member Preferred
Capital during such Distribution Period or portion thereof times (D) the
Applicable Day Count Fraction for such Distribution Period or portion thereof.
If the Managing Member Priority Return accrued by any Distribution Date is not
distributed in full on such Distribution Date, any amount of accrued Managing
Member Priority Return not distributed shall accumulate, and “Managing Member
Priority Return” shall include additional payments for each succeeding
Distribution Period or portion thereof during which such accrued but
undistributed Managing Member Priority Return shall remain undistributed, in an
amount determined by multiplying (A) the Priority Return Rate referred to above,
times (B) two (2) times (C) the amount of such accrued but undistributed
Managing Member Priority Return, times (D) the Applicable Day Count Fraction for
such Distribution Period or portion.

“Managing Member Redemption Notice” has the meaning set forth in
Section 10.8(a).

“Mandatory Redemption” has the meaning set forth in Section 10.8(a).

“Mark-to-Market Balance Sheet” has the meaning set forth in Section 8.2(e)(i).

“Mark-to-Market Value” has the meaning set forth in Section 13.3.

“Master Formation Agreement” means the Master Formation Agreement by and among
Western Gas Resources, Inc., and Atlas Pipeline Partners, L.P., dated effective
as of July 1, 2007, as amended.

“Master Offset Agreement” means the Master Offset Agreement by and among APC,
Anadarko Midkiff/Chaney Dell LLC, and the Company, dated as of the Closing Date.

“Member” means any Person (A) who is referred to as such in the first paragraph
of this Agreement, or who has become a substituted or additional Member pursuant
to the terms of this Agreement, in its capacity as a member of the Company, and
(B) who has not ceased to be a Member.

 

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

“Member Nonrecourse Debt Minimum Gain” means an amount, with respect to each
Member Nonrecourse Debt, equal to the Company Minimum Gain that would result if
such Member Nonrecourse Debt were treated as a Nonrecourse Liability, determined
in accordance with Regulations Section 1.704-2(i)(3).

“Member Nonrecourse Deductions” has the same meaning as the term “partner
nonrecourse deductions” set forth in Regulations Sections 1.704-2(i)(1) and
1.704-2(i)(2).

“Moody’s” means Moody’s Investor Service, Inc. or any successor by merger or
consolidation of its business.

“Negative Section 11.4(b) Adjustment Amount” has the meaning set forth in the
Master Formation Agreement.

“Non-Managing Members” means Members other than the Managing Member.

“Nonconsent Additional Capital Contributions” means those Additional Capital
Contributions made by the Managing Member pursuant to Section 2.2(b)(ii), if
any, that funded 100% of the Cash Shortfall that was the subject of a cash call
made by the Managing Member.

“Nonrecourse Deductions” has the meaning set forth in Regulations Sections
1.704-2(b)(1) and 1.704-2(c).

“Nonrecourse Liability” has the meaning set forth in Regulations
Section 1.704-2(b)(3).

“Note Agreement” means the Note Agreement by and between APC and the Company,
dated as of the Closing Date.

“Notice Events” has the meaning set forth in Section 13.1.

“Officer” means any person designated as an officer of the Company as provided
in Section 5.1(b), but such term does not include any person who has ceased to
be an officer of the Company.

“Parent” has the meaning set forth in the definition of “Subsidiary.”

“Permitted Assets” means:

(i) The Anadarko Contributed Assets;

(ii) Any assets acquired in connection with any extension, improvement, or
expansion of the Anadarko Contributed Assets;

 

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(iii) The APC Note;

(iv) Any assets necessary or appropriate for the operation and maintenance of
the APC Contributed Assets;

(v) Cash and Cash Equivalents;

(vi) Receivables and other similar assets arising in the ordinary course of the
Company’s business;

(vii) Any leasehold interest related to acquiring office space for the Company,
office equipment, office supplies, and other similar items held or used in the
ordinary course of the Company’s business; and

(viii) Any other assets proposed to be a acquired by the Managing Member with
the consent of the Class A Member, whose consent shall not be unreasonably
withheld, delayed, or conditioned.

“Permitted Transfer” has the meaning set forth in Section 10.2.

“Person” means any individual, partnership (whether general or limited), limited
liability company, corporation, trust, estate, association, nominee, or other
entity.

“Positive Section 11.4(b) Adjustment Amount” has the meaning set forth in the
Master Formation Agreement.

“Priority Return Margin” means 0.45% for any Distribution Period or portion
thereof.

“Priority Return Rate” means, for any Distribution Period or portion thereof
during which the Priority Return is stated herein to accrue, a rate per annum
equal to the sum of (i) the Eurodollar Rate for such Distribution Period plus
(ii) the Priority Return Margin.

“Profits” and “Losses” mean, for each Allocation Year, an amount equal to the
Company’s taxable income or loss for such Allocation Year, determined in
accordance with Code Section 703(a) (for this purpose, all items of income,
gain, loss, or deduction required to be stated separately pursuant to Code
Section 703(a)(1) shall be included in taxable income or loss), with the
following adjustments (without duplication):

(i) Any income of the Company that is exempt from federal income tax and not
otherwise taken into account in computing Profits or Losses pursuant to this
definition of “Profits” and “Losses” shall be added to such taxable income or
loss;

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

(iii) In the event the Gross Asset Value of any item of Property is adjusted
pursuant to subparagraphs (ii) or (iii) of the definition of Gross Asset Value,
the amount of such adjustment shall be treated as an item of gain (if the
adjustment increases the Gross Asset Value of the item of Property) or an item
of loss (if the adjustment decreases the Gross Asset Value of the item of
Property) from the disposition of such item of Property and shall be taken into
account for purposes of computing Profits or Losses;

 

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(iv) In the event the Gross Liability Value of any Liability of the Company
described in Regulations Section 1.752-7(b)(3)(i) is adjusted as required by
this Agreement, the amount of such adjustment shall be treated as an item of
loss (if the adjustment increases the Gross Liability Value of such Liability of
the Company) or an item of gain (if the adjustment decreases the Gross Liability
Value of such Liability of the Company) and shall be taken into account for
purposes of computing Profits or Losses;

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

(vi) 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 Depreciation for such Allocation Year, computed in
accordance with the definition of “Depreciation”;

(vii) To the extent an adjustment to the adjusted tax basis of any item of
Property pursuant to Code Section 734(b) is required, pursuant to Regulations
Section 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
Interest, the amount of such adjustment shall be treated as an item of gain (if
the adjustment increases the basis of the item of Property) or loss (if the
adjustment decreases such basis) from the disposition of such item of Property
and shall be taken into account for purposes of computing Profits or Losses; and

(viii) Notwithstanding any other provision of this definition, any items that
are specially allocated pursuant to Section 3.3 or Section 3.4 shall not be
taken into account in computing Profits or Losses.

The amounts of the items of Company income, gain, loss, or deduction available
to be specially allocated pursuant to Sections 3.3 and 3.4 shall be determined
by applying rules analogous to those set forth in subparagraphs (i) through
(vii) above. Solely for purposes of

 

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clarification, the determination of “Profits” and “Losses” shall take into
account all items of loss and deduction attributable to payments by the Company
to, or for the benefit of, the Initial Class A Member (or any Affiliates of the
Initial Class A Member) pursuant to Section 13.4(c) of the Master Formation
Agreement.

“Property” means all real and personal property acquired by the Company,
including cash, the APC Note, and any improvements on real or personal property,
and shall include both tangible and intangible property.

“Quarterly Reimbursable Company Expense Report” has the meaning set forth in
Section 5.3(c).

“Reconstitution Period” has the meaning set forth in Section 12.1(b).

“Redemption Date” has the meaning set forth in Section 10.8(c).

“Redemption Notice” has the meaning set forth in Section 10.8(a).

“Redemption Option” has the meaning set forth in Section 10.8(a).

“Regulations” means the Income Tax Regulations, including Temporary Regulations,
promulgated under the Code, as such regulations are amended from time to time.

“Regulatory Allocations” has the meaning set forth in Section 3.4.

“Reimbursable Company Expenses” has the meaning set forth in Section 5.3(b).

“Related Party Transaction” has the meaning set forth in Section 1.9(c)(i).

“Representative” means, with respect to any Person, each stockholder, managing
member, general partner, manager, managing partner, director, officer, employee,
agent, consultant and advisor (including counsel and accountants) of such Person
and an Affiliate of such Person.

“Responding Party” has the meaning set forth in Section 1.9(c)(v)(3).

“Retained Asset” has the meaning set forth in the Master Formation Agreement.

“Securities Act” means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.

“S&P” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill
Companies, Inc., or any successor by merger or consolidation to its business.

“Special Class A Issue” has the meaning set forth in Section 8.3(b).

 

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“Special Managing Member Payments” means the amount of any interest required to
be paid by the Managing Member to the Company pursuant to Section 11.4(b) of the
Master Formation Agreement.

“Spread Reference Banks” has the meaning set forth in the Note Agreement.

“Subsidiary” with respect to any Person (such Person, the “Parent”), means any
other Person as to which more than fifty percent (50%) of the voting power or
value is owned, whether directly or indirectly through one or more Subsidiaries,
by such Parent.

“Taxes” means any and all taxes (including net income, gross income, franchise,
ad valorem, gross receipts, sales, use, property, and stamp taxes), levies,
imposts, duties, charges, assessments, or withholdings of any nature whatsoever,
general or special, ordinary or extraordinary, now existing or hereafter created
or adopted, together with any and all penalties, fines, additions to tax, and
interest thereon.

“Tax Matters Member” means (i) the Managing Member so long as it continues to
serve in such capacity, or (ii) any Person that is admitted to the Company as a
successor Tax Matters Member of the Company or any Member deemed to replace the
Tax Matters Member in accordance with this Agreement.

“TEFRA Election” has the meaning set forth in Section 8.3(c).

“Transfer” means, as a noun, any voluntary or involuntary transfer, sale, or
other disposition and, as a verb, voluntarily or involuntarily to transfer,
sell, or otherwise dispose of.

“Valuation Date” means the last day of the Fiscal Quarter immediately preceding
the Fiscal Quarter during which (i) in the case of a redemption of the Class A
Member’s Interest pursuant to Section 10.8, the Redemption Date occurs, or
(ii) in the case of the liquidation of the Company pursuant to Section 12.9, the
Liquidating Event occurs.

“Voluntary Bankruptcy” has the meaning set forth in the definition of
“Bankruptcy.”

“Wholly-Owned Affiliate” of any Person means an Affiliate of such Person (i) one
hundred percent (100%) of the voting stock or beneficial ownership of which is
owned directly by such Person, or by any Person who, directly or indirectly,
owns one hundred percent (100%) of the voting stock or beneficial ownership of
such Person, (ii) an Affiliate to such Person who, directly or indirectly, owns
one hundred percent (100%) of the voting stock or beneficial ownership of such
Person, and (iii) any Wholly-Owned Affiliate of any Affiliate described in
clause (i) or clause (ii).

 

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  1.11 Shares.

(a) The Company shall issue shares in respect of each of the Members’ Interest
with such rights attached thereto as may be provided in this Agreement. Such
shares shall be represented by certificates in the form attached as Exhibit A.
The Company shall not be authorized to issue any additional shares except as
such shares may be issued pursuant to Section 2.2.

(b) Each share issued by the Company shall be a security within the meaning of,
and governed by, (i) Article 8 of the Delaware Uniform Commercial Code as
provided by Section 8-103 of said code and (ii) Chapter 8 of the Texas Business
and Commerce Code as provided in Section 8.103 of said code and each certificate
representing shares of the Company shall bear the following legend:

“The shares represented by this certificate are securities within the meaning
of, and governed by, Article 8 of the Delaware Uniform Commercial Code and by
Chapter 8 of the Texas Business and Commerce Code.”

(c) Each certificate evidencing a Member’s Interest and each instrument issued
in exchange for or upon the Transfer of an Interest shall be stamped or
otherwise imprinted with a legend in substantially the following form:

THE LIMITED LIABILITY COMPANY INTERESTS EVIDENCED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), OR UNDER THE SECURITIES LAWS OF ANY STATE OR FOREIGN JURISDICTION. SUCH
INTERESTS ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE, AND MAY NOT
BE TRANSFERRED OR RESOLD EXCEPT IN COMPLIANCE WITH THE SECURITIES ACT AND THE
APPLICABLE STATE OR FOREIGN SECURITIES LAWS, PURSUANT TO REGISTRATION THEREUNDER
OR EXEMPTION THEREFROM. IN ADDITION, TRANSFER OR OTHER DISPOSITION OF SUCH
INTERESTS IS FURTHER RESTRICTED AS PROVIDED IN THE OPERATING AGREEMENT OF THE
COMPANY. PURCHASERS OF INTERESTS SHOULD BE AWARE THAT THEY WILL BE REQUIRED TO
BEAR THE FINANCIAL RISKS OF THEIR INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.

(d) The Company shall maintain books for the purpose of registering holders of
shares evidencing Interests and the Transfer of Interests. The Transfer of
Interests shall require delivery of an endorsed Certificate evidencing such
Interests. Upon any Transfer of Interests permitted by Article X, the transferor
Member and the transferee shall provide notice to the Company to register a
Transfer of Interests. Any such Permitted Transfer shall be effective upon
registration of such Transfer in the Company’s books maintained for such
purpose.

 

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  1.12 Other Terms.

Unless the context shall require otherwise:

(a) Words importing the singular number or plural number include the plural
number and singular number respectively;

(b) Words importing the masculine gender include the feminine and neuter genders
and vice versa;

(c) Reference to “include,” “includes,” and “including” are deemed to be
followed by the phrase “without limitation”; and

(d) Reference in this Agreement to “herein,” “hereby,” “hereof,” or “hereunder,”
or any similar formulation, are deemed to refer to this Agreement; provided that
such reference shall be deemed to include exhibits, schedules, annexes, or
appendices only as provided in Section 14.8.

(e) References in this Agreement to “Section” or “Sections” are deemed to refer
to sections of this Agreement unless otherwise noted.

ARTICLE II

MEMBERS’ CAPITAL CONTRIBUTIONS

 

  2.1 Initial Capital Contributions.

The name and address of each Member, as well as the aggregate initial Capital
Contribution made by each Member (or their predecessors in interest) pursuant to
this Agreement and, in the case of the Initial Class A Member, the Contribution
Agreement, and such Member’s Initial Capital Account, are as follows:

 

Name and Address

  

Initial
Capital Contribution

Initial Class B Member

West Pointe Corporate Center I

1550 Coraopolis Heights Road, Second Floor

Moon Township, PA 15108

   $760,342,717.00 in cash. The Initial Capital Account of the Initial Class B
Member is $760,342,717.00, which will be transferred to the Managing Member
immediately following the execution of this Agreement.

Initial Class A Member

1201 Lake Robbins Drive

The Woodlands, TX 77380

   The Anadarko Contributed Assets with an initial aggregate
Gross Asset Value of $760,342,717.00. The Initial Capital
Account of the Initial Class A Member is $760,342,717.00,
which will be transferred to the Class A Member immediately
following the execution of this Agreement.

 

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  2.2 Additional Capital Contributions.

(a) Except as otherwise provided in Sections 2.2(b), 2.2(c), 10.8(b) and 12.9,
no Member will be required to make additional Capital Contributions (“Additional
Capital Contributions”) to the Company.

(b) If the cash required by the Company to satisfy operating and maintenance
expenses or to engage in the extension, improvement, or expansion of the
Anadarko Contributed Assets exceeds its then available cash reserves (a “Cash
Shortfall”), then the Managing Member may make cash calls to cover such Cash
Shortfall. If the Managing Member makes such cash calls, then (i) if the Class A
Member so elects (within 30 days after notice of such cash call), the Class A
Member shall make Additional Capital Contributions of cash in an amount equal to
five percent (5%) of such Cash Shortfall, and (ii) the Managing Member shall
make Additional Capital Contributions of cash equal to the excess of the Cash
Shortfall over amounts elected to be contributed by the Class A Member under
clause (i) immediately preceding.

(c) The Managing Member, or the Withdrawing Class B Member, shall make any
Additional Capital Contributions required to be made pursuant to Sections 9.6(c)
and 11.4(b) of the Master Formation Agreement. The Class A Member, or the
Withdrawing Class A Member, shall make any Additional Capital Contributions
required to be made pursuant to Section 9.6(c) of the Master Formation
Agreement. Any Additional Contribution made by the Withdrawing Class A Member
pursuant to this Section 2.2(c) shall be treated for federal income tax purposes
as having been made by the Class A Member and any Interest issued by the Company
as a result of such Additional Contribution shall be issued to the Class A
Member. Any Additional Contribution made by the Withdrawing Class B Member
pursuant to this Section 2.2(c) shall be treated for federal income tax purposes
as having been made by the Managing Member and any Interest issued by the
Company as a result of such Additional Contribution shall be issued to the
Managing Member.

(d) The Members may make Additional Capital Contributions in addition to those
required to be made in Sections 2.2(b), 2.2(c), 10.8(b), and 12.9 only with
consent of all Members, in which event the Company shall issue to the
contributing Member additional Interests with such terms as may be unanimously
agreed to by the Members.

 

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ARTICLE III

ALLOCATIONS

 

  3.1 Profits.

After giving effect to the special allocations set forth in Section 3.3 and
Section 3.4, Profits for any Allocation Year will be allocated to the Members as
follows:

(a) First, 99% to the Class A Member and 1% to the Managing Member until the
Class A Member has been allocated an amount equal to the excess, if any, of
(i) its cumulative Class A Member Priority Return accrued from the Closing Date
through the last day of such Allocation Year, over (ii) the cumulative Profits
allocated to the Class A Member pursuant to this Section 3.1(a) for all prior
Allocation Years;

(b) Second, 100% to the Managing Member until the Managing Member has been
allocated an amount equal to the excess, if any, of (i) its cumulative Managing
Member Priority Return accrued from the Closing Date through the last day of
such Allocation Year, over (ii) the cumulative Profits allocated to the Managing
Member pursuant to this Section 3.1(b) for all prior Allocation Years;

(c) Third, 95% to the Managing Member and 5% to the Class A Member in an amount
equal to the excess, if any, of (i) the cumulative Losses allocated to the
Members pursuant to Section 3.2(c) for all prior Allocation Years, over (ii) the
cumulative Profits allocated to the Members pursuant to this Section 3.1(c) for
all prior Allocation Years;

(d) Fourth, to the Members in proportion to, and to the extent of, an amount
equal to the excess, if any, of (i) the cumulative Losses allocated to each such
Member pursuant to Section 3.2(b) for all prior Allocation Years, over (ii) the
cumulative Profits allocated to such Member pursuant to this Section 3.1(d) for
all prior Allocation Years; and

(e) Fifth, the balance, if any, 95% to the Managing Member and 5% to the Class A
Member.

 

  3.2 Losses.

After giving effect to the special allocations set forth in Section 3.3 and
Section 3.4, Losses for any Allocation Year will be allocated to the Members as
follows:

(a) First, 95% to the Managing Member and 5% to the Class A Member until the
Adjusted Capital Account of either Member is equal to zero;

(b) Second, 100% to any Member with a positive Adjusted Capital Account until
its Adjusted Capital Account is equal to zero; and

 

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(c) Third, the balance, if any, 95% to the Managing Member and 5% to the Class A
Member.

 

  3.3 Special Allocations.

The following special allocations shall be made in the following order:

(a) Minimum Gain Chargeback. Except as otherwise provided in Regulations
Section 1.704-2(f), notwithstanding any other provision of this Article III, if
there is a net decrease in Company Minimum Gain during any Allocation Year, each
Member shall be specially allocated items of Company income and gain for such
Allocation Year (and, if necessary, subsequent Allocation Years) in an amount
equal to such Member’s share of the net decrease in Company Minimum Gain,
determined in accordance with Regulations Section 1.704-2(g). Allocations
pursuant to the previous sentence shall be made in proportion to the respective
amounts required to be allocated to each Member pursuant thereto. The items to
be so allocated shall be determined in accordance with Regulations Sections
1.704-2(f)(6) and 1.704-2(j)(2). This Section 3.3(a) is intended to comply with
the minimum gain chargeback requirement in Regulations Section 1.704-2(f) and
shall be interpreted consistently therewith.

(b) Member Minimum Gain Chargeback. Except as otherwise provided in Regulations
Section 1.704-2(i)(4), notwithstanding any other provision of this Article III,
if there is a net decrease in Member Nonrecourse Debt Minimum Gain attributable
to a Member Nonrecourse Debt during any Allocation Year, each Member who has a
share of the Member Nonrecourse Debt Minimum Gain attributable to such Member
Nonrecourse Debt, determined in accordance with Regulations
Section 1.704-2(i)(5), shall be specially allocated items of Company income and
gain for such Allocation Year (and, if necessary, subsequent Allocation Years)
in an amount equal to such Member’s share of the net decrease in Member
Nonrecourse Debt Minimum Gain attributable to such Member Nonrecourse Debt,
determined in accordance with Regulations Section 1.704-2(i)(4). Allocations
pursuant to the previous sentence shall be made in proportion to the respective
amounts required to be allocated to each Member pursuant thereto. The items to
be so allocated shall be determined in accordance with Regulations Sections
1.704-2(i)(4) and 1.704-2(j)(2). This Section 3.3(b) is intended to comply with
the minimum gain chargeback requirement in Regulations Section 1.704-2(i)(4) and
shall be interpreted consistently therewith.

(c) Qualified Income Offset. In the event that any Member unexpectedly receives
any adjustments, allocations, or distributions described in Regulations Sections
1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) or 1.704-1(b)(2)(ii)(d)(6),
items of Company income and gain shall be allocated to such Member in an amount
and manner sufficient to eliminate, to the extent required by the Regulations,
the Adjusted Capital Account Deficit of such Member as quickly as possible;
provided that an allocation pursuant to this Section 3.3(c) shall be made only
if and to the extent that such Member would have an Adjusted Capital Account
Deficit after all other allocations provided for in this Article III have been
tentatively made as if this Section 3.3(c) were not in this Agreement.

 

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(d) Gross Income Allocation. In the event that any Member has an Adjusted
Capital Account Deficit at the end of any Allocation Year, each such Member
shall be allocated items of Company income and gain in the amount of such
deficit as quickly as possible; provided that an allocation pursuant to this
Section 3.3(d) shall be made only if and to the extent that such Member would
have an Adjusted Capital Account Deficit in excess of such sum after all other
allocations provided for in this Article III have been tentatively made as if
Section 3.3(c) and this Section 3.3(d) were not in this Agreement.

(e) Nonrecourse Deductions. Nonrecourse Deductions for any Allocation Year shall
be allocated 95% to the Managing Member and 5% to the Class A Member.

(f) Member Nonrecourse Deductions. Any Member Nonrecourse Deductions for any
Allocation Year shall be specially allocated to the Member who bears the
economic risk of loss with respect to the Member Nonrecourse Debt to which such
Member Nonrecourse Deductions are attributable in accordance with Regulations
Section 1.704-2(i)(1).

(g) Section 754 Adjustments. To the extent an adjustment to the adjusted tax
basis of any Company asset, pursuant to Code Sections 734(b) or 743(b) is
required, pursuant to Regulations Sections 1.704-1(b)(2)(iv)(m)(2) or
1.704-1(b)(2)(iv)(m)(4), to be taken into account in determining Capital
Accounts as the result of a distribution to a Member in complete liquidation of
such Member’s interest in the Company, the amount of such adjustment to Capital
Accounts shall be treated as an item of gain (if the adjustment increases the
basis of the asset) or loss (if the adjustment decreases such basis) and such
gain or loss shall be specially allocated to the Members in accordance with
their interests in the Company in the event Regulations
Section 1.704-1(b)(2)(iv)(m)(2) applies, or to the Member to whom such
distribution was made in the event Regulations Section 1.704-1(b)(2)(iv)(m)(4)
applies.

(h) APC Note Losses. Losses attributable to the APC Note will be allocated as
follows:

 

  (i) First, 95% to the Class A Member and 5% to the Managing Member until the
Adjusted Capital Account of either Member is equal to zero;

 

  (ii) Second, 100% to any Member with a positive Adjusted Capital Account until
its Adjusted Capital Account is equal to zero; and

 

  (iii) Third, the balance, if any, 95% to the Class A Member and 5% to the
Managing Member.

(i) APC Note Prepayments. Any interest income of the Company attributable to APC
Note Prepayments will be allocated 100% to the Managing Member.

(j) Special Managing Member Payments. Any income of the Company attributable to
Special Managing Member Payments will be allocated 100% to the Class A Member.

 

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  3.4 Regulatory Allocations.

The allocations set forth in Sections 3.3(a), 3.3(b), 3.3(c), 3.3(d), 3.3(e),
3.3(f) and 3.3(g) (the “Regulatory Allocations”) are intended to comply with
certain requirements of the Regulations. It is the intent of the Members that,
to the extent possible, the Regulatory Allocations shall be offset with special
allocations of other items of Company income, gain, loss, or deduction pursuant
to this Section 3.4. Therefore, notwithstanding any other provision of this
Article III (other than the Regulatory Allocations), the Tax Matters Member
shall, with the consent of the Class A Member, which consent will not be
unreasonably withheld, delayed or conditioned, make such offsetting special
allocations of Company income, gain, loss, or deduction in whatever manner it
determines appropriate so that, after such offsetting allocations are made, each
Member’s Capital Account balance is, to the extent possible, equal to the
Capital Account balance such Member would have had if the Regulatory Allocations
were not part of this Agreement and all Company items were allocated pursuant to
Section 3.1, Section 3.2, and Section 3.3 (other than the Regulatory
Allocations). In exercising its discretion under this Section 3.4, the Tax
Matters Member shall take into account future Regulatory Allocations under
Sections 3.3(a) and 3.3(b) that, although not yet made, are likely to offset
other Regulatory Allocations previously made under Sections 3.3(e) and 3.3(f).

 

  3.5 Other Allocation Rules.

(a) Profits, Losses, and any other items of income, gain, loss, or deduction
will be allocated to the Members pursuant to this Article III as of the last day
of each Fiscal Year; provided that Profits, Losses, and such other items shall
also be allocated at such times as the Gross Asset Values of Property are
adjusted pursuant to subparagraph (ii) of the definition of “Gross Asset Value”
in Section 1.10.

(b) For purposes of determining the Profits, Losses, or any other items
allocable to any period, Profits, Losses, and any such other items shall be
determined on a daily, monthly, or other basis, as determined by the Tax Matters
Member (except to the extent otherwise provided in Section 10.7) using any
permissible method under Code Section 706 and the Regulations thereunder.

(c) The Members are aware of the income tax consequences of the allocations made
by this Article III and hereby agree to be bound by the provisions of this
Article III in reporting their shares of Company income and loss for income tax
purposes, except as otherwise required by law.

 

  3.6 Tax Allocations; Code Section 704(c).

(a) Except as otherwise provided in this Section 3.6, each item of income, gain,
loss and deduction of the Company for federal income tax purposes shall be
allocated among the Members in the same manner as such items are allocated for
book purposes under this Article III.

 

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(b) In accordance with Code Section 704(c) and the Regulations thereunder,
income, gain, loss, and deduction with respect to any Property contributed to
the capital of the Company shall, solely for tax purposes, be allocated among
the Members so as to take account of any variation between the adjusted basis of
such Property to the Company for federal income tax purposes and its initial
Gross Asset Value (computed in accordance with the definition of Gross Asset
Value) using the “remedial allocation method” described in Treasury Regulations
Section 1.704-3(d). For purposes of applying Section 704(c) and the remedial
allocation method, to the extent that the Company is required under Code
Section 263A to capitalize into inventory costs depreciation allowances with
respect to the Anadarko Contributed Assets, the difference between gross income
derived from the business of operating the Anadarko Contributed Assets as
computed for Code Section 704(b) purposes and gross income derived from the
business of operating the Anadarko Contributed Assets as computed for tax
purposes will be treated as gain from the disposition of a contributed asset.

(c) In the event the Gross Asset Value of any Company asset is adjusted pursuant
to subparagraph (ii) of the definition of Gross Asset Value, subsequent
allocations of income, gain, loss, and deduction with respect to such asset
shall take account of any variation between the adjusted basis of such asset for
federal income tax purposes and its Gross Asset Value in the same manner as
under Code Section 704(c) and the Regulations thereunder applying the “remedial
allocation method” described in Treasury Regulations Section 1.704-3(d).

(d) Any elections or other decisions relating to such allocations shall be made
by the Tax Matters Member, with the consent of the Class A Member, which consent
will not be unreasonably withheld, delayed or conditioned, in any manner that
reasonably reflects the purpose and intention of this Agreement. Allocations
pursuant to this Section 3.6 are solely for purposes of federal, state, and
local taxes and shall not affect, or in any way be taken into account in
computing, any Member’s Capital Account or share of Profits, Losses, other
items, or distributions pursuant to any provision of this Agreement.

ARTICLE IV

DISTRIBUTIONS

 

  4.1 Amounts Distributed.

(a) Cash Available for Distribution. Except as otherwise provided in
Section 10.8 and Article XII, on the last Business Day of each calendar quarter
beginning September 30, 2007 (each such date, a “Distribution Date”), Cash
Available for Distribution shall be distributed to the Members in the following
order and priority:

 

  (i) First, 99% to the Class A Member and 1% to the Managing Member until the
Class A Member has been distributed an amount equal to the excess, if any, of
(A) its cumulative Class A Member Priority Return from the Closing Date through
such Distribution Date, over (B) all prior distributions to the Class A Member
pursuant to this Section 4.1(a)(i);

 

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  (ii) Second, 100% to the Managing Member in an amount equal to the excess, if
any, of (A) the aggregate amount of Nonconsent Additional Capital Contributions
made by the Managing Member pursuant to Section 2.2(b)(ii) as of (and including)
the day immediately preceding the Distribution Date, over (B) all prior
distributions made to the Managing Member pursuant to this Section 4.1(a)(ii);

 

  (iii) Third, 100% to the Managing Member until the Managing Member has been
distributed an amount equal to the excess, if any, of (A) its cumulative
Managing Member Priority Return from the Closing Date through such Distribution
Date, over (B) all prior distributions to the Managing Member pursuant to this
Section 4.1(a)(iii); and

 

  (iv) Fourth, the balance, if any, 95% to the Managing Member and 5% to the
Class A Member.

(b) Cash From Sales. Except as otherwise provided in Section 10.8 and Article
XII, Cash From Sales shall be distributed within thirty (30) Business Days of
the receipt thereof by the Company 95% to the Managing Member and 5% to the
Class A Member.

(c) Special Distributions of Interests in the APC Note. The Company shall, upon
a written request of the Class A Member given to the Managing Member within five
(5) Business Days of any distribution of Cash From Sales made pursuant to
Section 4.1(b), distribute a portion of the APC Note with a Mark-to-Market Value
equal to ninety percent (90%) of the Gross Asset Value of the Anadarko
Contributed Assets with respect to which such distribution under Section 4.1(b)
was made.

(d) APC Note Prepayments. The Company shall distribute 100% of all APC Note
Prepayments to the Managing Member within ten (10) Business Days following the
Company’s receipt thereof.

(e) Special Managing Member Payments. The Company shall distribute 100% of all
Special Managing Member Payments to the Class A Member within ten (10) Business
Days following the Company’s receipt thereof.

(f) Estimated Cash Available for Distribution; Reconciliation to Actual Cash
Available for Distribution. The amount of any Cash Available for Distribution
for any quarter to be distributed in accordance with Section 4.1 shall be based
on the Managing Member’s good faith estimate of the Cash Available for
Distribution with respect to that quarter, taking into account the estimated
gross cash proceeds, direct expenses and the estimated Reimbursable Company
Expenses of the Company with respect to that quarter. The variance between the

 

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estimated Cash Available for Distribution and the actual Cash Available for
Distribution for such quarter (the “Cash Available for Distribution Variance”)
shall increase or decrease, as applicable, the amount of Cash Available for
Distribution for the next quarter.

 

  4.2 Amounts Withheld.

All amounts withheld pursuant to the Code or any provision of any state, local,
or foreign tax law with respect to any payment, distribution, or allocation to
the Company or the Members will be treated as amounts paid or distributed, as
the case may be, to the Members with respect to which such amount was withheld
pursuant to this Section 4.2 for all purposes under this Agreement. The Company
is authorized to withhold from payments and distributions, or with respect to
allocations, to the Members, and to pay over to any federal, state, and local
government or any foreign government, any amounts required to be so withheld
pursuant to the Code or any provisions of any other federal, state, or local law
or any foreign law, and will allocate any such amounts to the Members with
respect to which such amount was withheld.

 

  4.3 Limitations on Distributions.

The Company shall make no distributions to the Members except (i) as provided in
this Article IV and Section 10.8 and Article XII, or (ii) as agreed to by all of
the Members.

 

  4.4 Distributions and Payments to Members.

It is the intent of the Members that no distribution or payment to any Member
(including distributions under Sections 4.1, 10.8 and 12.2) will be deemed a
return of money or other property in violation of the Act. The payment or
distribution of any such money or property to a Member will be deemed to be a
compromise within the meaning of Section 18-502(b) of the Act, and the Member
receiving any such money or property will not be required to return any such
money or property to the Company, any creditor of the Company or any other
Person. However, if any court of competent jurisdiction relating to such Member
holds pursuant to a final, nonappealable judgment that, notwithstanding the
provisions of this Agreement, any Member is obligated to return such money or
property, such obligation will be the obligation of such Member. The Members
agree that in no event will the obligation of any Member to return such money or
property be the obligation of the Company or any other Member irrespective of
whether or not such obligation arises out of a final, nonappealable judgment of
a court of competent jurisdiction. Any amounts required to be paid under such
obligation will be treated as a permitted Additional Capital Contribution
pursuant to Section 2.2.

 

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ARTICLE V

MANAGEMENT

 

  5.1 Authority of the Managing Member.

(a) The Members intend that the Company be managed by the Managing Member in
accordance with Section 18-402 of the Act and subject to any restrictions set
forth in the Certificate or this Agreement, including those set forth in
Section 1.3(a), Section 5.2, and Section 5.5(a) all powers to control and manage
the business and affairs of the Company and to bind the Company will be
exclusively vested in the Managing Member, and the Managing Member may exercise
all powers of the Company and do all such lawful acts as are not by statute, the
Certificate, or this Agreement directed or required to be exercised or done by
the Members and in so doing shall have the right and authority to take all
actions which the Managing Member deems necessary, useful, or appropriate for
the management and conduct of the Company’s business and affairs and in the
pursuit of the purposes of the Company, including delegating the right and
authority to take such actions to employees of the Managing Member as are
designated by the Managing Member. The Managing Member and each such employee
shall be an “authorized person” on behalf of the Company, as such term is used
in the Act.

(b) Without limiting Section 5.1(a), the Managing Member may delegate its power
and authority to conduct the business of the Company to Representatives of the
Managing Member, and the Managing Member may designate one or more persons to be
Officers of the Company. Such persons shall be “authorized persons” on behalf of
the Company, as such term is used in the Act. Each Officer so designated shall
have such title and, subject to the other provisions of this Agreement, have
such authority and perform such duties as the Managing Member may delegate to
such person. The Managing Member may remove any Officer at any time, with or
without cause.

 

  5.2 Duties and Obligations of the Managing Member.

(a) The Managing Member shall take all actions which may be necessary or
appropriate for the (i) continuation of the Company’s valid existence as a
limited liability company under the laws of the State of Delaware and of each
other jurisdiction in which such existence is necessary to protect the limited
liability of the Members or to enable the Company to conduct the business in
which it is engaged and (ii) accomplishment of the Company’s purposes, including
the acquisition, development, maintenance, preservation, and operation of
Property subject to and in accordance with the provisions of this Agreement and
applicable laws and regulations.

 

  (b)    (i)

The Managing Member shall cause the Company to conduct its business and
operations separate and apart from that of any Member or any of its Affiliates,
including (i) segregating Company assets and not allowing funds or other assets
of the Company to be commingled with the funds or

 

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other assets of, held by, or registered in the name of, any Member or any of its
Affiliates, (ii) except as necessary to facilitate the inclusion of the
financial results of the Company’s operations in the consolidated financial
statements of Atlas Pipeline Partners GP, LLC and its Affiliates, maintaining
books and financial records of the Company separate from the books and financial
records of any Member and its Affiliates, and observing all Company procedures
and formalities, including maintaining minutes of Company meetings and acting on
behalf of the Company only pursuant to due authorization of the Members,
(iii) causing the Company to pay its Liabilities from assets of the Company, and
(iv) causing the Company to conduct its dealings with third parties in its own
name and as a separate and independent entity.

 

  (ii) The Managing Member and its Affiliates shall maintain policies of
insurance on the assets and business of the Company consistent with the levels
and types of insurance maintained from time to time on the assets and businesses
of the Managing Member and its Affiliates that are similarly situated to the
Company’s assets and businesses. Notwithstanding Section 5.2(b)(i), the Managing
Member and its Affiliates may maintain such insurance policies on a company-wide
basis.

(c) Notwithstanding any other provision of this Agreement, the Managing Member,
shall not, without the written consent of all of the Members, take any of the
following actions:

 

  (i) Any act that would, to the Managing Member’s knowledge, be in material
contravention of the Agreement or, if on behalf of the Company, inconsistent
with the purposes of the Company;

 

  (ii) Any act that would, to the Managing Member’s knowledge, make the Company
incapable of carrying on the normal business of the Company;

 

  (iii) Possess or assign rights in the Property for other than a Company
purpose;

 

  (iv) Perform any act that would, to the Managing Member’s knowledge, subject
any Member to Liability for the Debts or obligations of the Company, except as
otherwise expressly provided in the LLC Agreement;

 

  (v) Cause or permit the Company to directly or indirectly acquire any assets
other than Permitted Assets;

 

  (vi) File on behalf of the Company any voluntary petition in Bankruptcy;

 

  (vii) Cause the Company to distribute any asset to the Members or their
Affiliates other than as permitted by this Agreement;

 

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  (viii) Cause or permit the Company to merge or consolidate with any Person;

 

  (ix) Cause or permit the admission of any Member other than in accordance with
Section 10.6 hereof;

 

  (x) Enter into any transactions with the Managing Member or any of its
Affiliates, except as permitted pursuant to Section 1.9(c);

 

  (xi) Make any loans to or guarantee any obligations of the Managing Member or
its Affiliates or any of their respective officers, directors or employees;

 

  (xii) Incur any Debt on behalf of the Company other than in the ordinary
course of business (including, for the avoidance of doubt, in connection with
the expansion or acquisition of Permitted Assets), voluntarily incur any
contractual obligation to any party other than in the ordinary course of
engaging in permitted activities with respect to the Permitted Assets, or issue
any class of equity that is senior to the Class A Member’s Interest;

 

  (xiii) Make any disposition, exchange, transfer or sale of the APC Note except
as provided in Sections 4.1(c), 10.8(b) or 12.9;

 

  (xiv) Cause or permit the Company to enter into any hedging or derivative
transaction; or

 

  (xv) Cause the Company to engage in a disposition (including any exchange,
transfer or sale) of any Anadarko Contributed Assets prior to the first
anniversary of the Closing Date except as provided in Section 9.6(b) of the
Master Formation Agreement. Thereafter, the Managing Member may cause the
Company to dispose of Anadarko Contributed Assets without a vote of all of the
Members, so long as such disposition is not to the Managing Member or any
Affiliate of the Managing Member and the cumulative value of the Anadarko
Contributed Assets disposed of during any calendar year does not exceed more
than 20% of the initial Gross Asset Value of the Anadarko Contributed Assets (as
determined at the time of any such sale) plus the cumulative amount permitted to
be sold in any prior year that remains unsold.

(d) Notwithstanding any other provisions of this Agreement (including
Section 5.2(c)), the Company, and the Managing Member on behalf of the Company,
is hereby authorized to enter into, execute, deliver and perform the
Contribution Agreement, the Note Agreement, and all other documents or
instruments contemplated thereby or related thereto, all without any further
act, vote, or approval of any other Person.

 

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(e) The Managing Member shall cause the Company to loan to APC under the terms
of the Note Agreement any cash received by the Company as Additional
Contributions made by the Managing Member pursuant to Section 2.2(c).

 

  5.3 Compensation; Expenses.

(a) In General. Except as otherwise provided in this Section 5.3, Section 5.4,
and Section 6.7, no Member shall receive any salary, fee, or draw for services
rendered to or on behalf of the Company or otherwise in its capacity as the
Managing Member, Tax Matters Member or a Member, nor shall any Member be
reimbursed for any expenses incurred by such Member on behalf of the Company or
otherwise in its capacity as the Managing Member, Tax Matters Member or a
Member.

(b) Expenses. The Managing Member may charge the Company, and shall be
reimbursed, for reasonable expenses incurred in connection with the Company’s
business, including (i) expenses associated with the operation and maintenance
of the Permitted Assets, (ii) general and administrative expenses and
(iii) expenses attributable to policies of insurance at the agreed upon levels,
provided that each of items (ii) and (iii) will be allocated by the Managing
Member in a manner consistent with GAAP (all such expenses, “Reimbursable
Company Expenses”). Such reimbursement shall be treated as expenses of the
Company and shall not be deemed to constitute distributions to any Member of
Profit, Loss, or capital of the Company.

(c) Quarterly Reimbursable Company Expense Report. On or before the 60th day
following the end of each Fiscal Quarter, the Managing Member shall furnish the
Company Conflicts Committee a schedule (the “Quarterly Reimbursable Company
Expense Report”) of the Services provided to the Company during such fiscal
quarter, which schedule shall include, in reasonable detail all of the
Reimbursable Company Expenses charged by the Managing Member with respect to
such quarter.

(d) Disputed Amounts. Any Class A Conflicts Committee Member may, within 75 days
of actual receipt by such Class A Conflicts Committee Member of the Quarterly
Reimbursable Company Expense Report, dispute in writing any amount set forth on
the Quarterly Reimbursable Company Expense Report with respect to such fiscal
quarter on the ground that such amount was not fair and reasonable to the
Company. The Managing Member and the Class A Conflicts Committee Member shall
attempt to resolve such dispute, acting diligently and in good faith, using the
past practices of such parties and documentary evidence of costs as guidelines
for such resolution. If the Managing Member and the Class A Conflicts Committee
Member are unable to resolve any such dispute within 30 days, or such additional
time as may be reasonable under the circumstances, either the Managing Member or
Class A Conflicts Committee Member may submit the dispute to arbitration in
accordance with paragraphs (1)-(4) of Section 1.9(c)(v).

 

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  5.4 Indemnification of the Managing Member.

(a) Unless otherwise provided in Section 5.4(d), the Company, its receiver, or
its trustee (in the case of its receiver or trustee, to the extent of Property)
shall indemnify, save harmless, and pay all Expenses of the Managing Member, or
any officers or directors of the Managing Member relating to any Liability or
damage incurred by reason of any act performed or omitted to be performed by the
Managing Member or its officers or directors in connection with the business of
the Company, including attorneys’ fees incurred by the Managing Member or its
officers or directors in connection with the defense of any action based on any
such act or omission, which attorneys’ fees may be paid as incurred, including
all such Liabilities under federal and state securities laws (including the
Securities Act) as permitted by law.

(b) Unless otherwise provided in Section 5.4(d), in the event of any action by a
Member against the Managing Member, the Company shall indemnify, save harmless,
and pay all Expenses of the Managing Member, incurred in the defense of such
action, if the Managing Member is successful in such action.

(c) Unless otherwise provided in Section 5.4(d), the Company shall indemnify,
save harmless, and pay all Expenses of the Managing Member, if for the benefit
of the Company and in accordance with this Agreement the Managing Member makes
any deposit, acquires any option, or makes any other similar payment or assumes
any obligation in connection with any property proposed to be acquired by the
Company and suffers any financial loss as the result of such action.

(d) Sections 5.4(a), 5.4(b), and 5.4(c) will be enforced only to the maximum
extent permitted by law and the Managing Member will not be indemnified from any
Liability for fraud, bad faith (determined in a manner consistent with and
taking into account the provisions of Section 1.9(d)), intentional misconduct,
gross negligence, or a failure to perform in accordance with this Agreement or
the Master Formation Agreement.

(e) The indemnities provided for in this Section 5.4 will survive the Transfer
of any Interest in the Company and the liquidation of the Company.

(f) Notwithstanding anything to the contrary in this Agreement, in no event will
any indemnification obligation of the Company or a receiver or trustee to
indemnify, save harmless, or pay all Expenses set forth in this Section 5.4
subject any Member to personal liability for the obligations of the Company.

5.5 Resignation, Removal.

(a) Resignation of Managing Member. The Managing Member covenants that it will
not resign as the manager of the Company without the consent of the Non-Managing
Members.

 

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(b) Successor Managing Member. Upon the resignation of the Managing Member as
manager of the Company in accordance with Section 5.5(a), a successor manager
must be approved by all of the Members.

ARTICLE VI

ROLE OF MEMBERS

 

  6.1 Rights or Powers.

The Non-Managing Members, in their capacities as members of the Company, hereby
agree not to exercise any right or power to take part in the management or
control of the Company or its business and affairs or to act for or bind the
Company in any way. Notwithstanding the foregoing, the Non-Managing Members have
all of the rights and powers specifically set forth in this Agreement. To the
fullest extent permitted by law, the Members hereby waive any and all rights and
powers to take part in (or to consent to) the management or control of the
Company or its business and affairs, except those rights and powers reserved to
them by the express provisions of Section 5.2(c) of this Agreement.

 

  6.2 Voting Rights.

No Non-Managing Member has any voting right except with respect to those matters
specifically reserved for a Member vote as expressly provided for in this
Agreement. To the fullest extent permitted by law, the Members hereby waive any
and all rights and powers to vote (or to consent to) any matters except those
reserved to them by the express provisions of this Agreement.

 

  6.3 Meetings and Consents of the Members.

(a) Meetings of the Members may be called by the Managing Member and will be
called upon the written request of any Member. The call must state the nature of
the business to be transacted. Notice of any such meeting will be given to all
Members not less than ten (10) Business Days nor more than thirty (30) days
prior to the date of such meeting; provided that the Members may agree in
writing to a shorter notice period than ten (10) Business Days. Members may vote
in person, by proxy or by telephone at such meeting and may waive advance notice
of such meeting. Whenever the vote or consent of Members is permitted or
required under this Agreement, such vote or consent may be given at a meeting of
the Members or may be given in accordance with the procedure prescribed in
Section 6.4. Except as otherwise expressly provided in this Agreement, the
unanimous vote or consent of the Members is required to constitute the act of
the Members or the consent of the Members.

(b) For the purpose of determining the Members entitled to vote on, or to vote
at, any meeting of the Members or any adjournment thereof, the Managing Member
or the Member requesting such meeting may fix, in advance, a date as the record
date for any such determination. Such date may not be more than thirty (30) days
nor less than ten (10) Business Days before any such meeting.

 

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(c) Each Member may authorize any Person or Persons to act for it by proxy on
all matters in which a Member is entitled to participate, including waiving
notice of any meeting, or voting or participating at a meeting. Every proxy must
be signed by the Member or its attorney in fact. No proxy shall be valid after
the expiration of eleven (11) months from the date thereof unless otherwise
provided in the proxy. Every proxy will be revocable at the pleasure of the
Member executing it.

(d) Each meeting of Members must be conducted by the Managing Member or such
other individual Person as the Managing Member deems appropriate pursuant to
such rules for the conduct of the meeting as the Managing Member or such other
Person deems appropriate.

 

  6.4 Procedure for Consent.

In any circumstances requiring the agreement, approval, or consent of the
Members specified in this Agreement, such agreement, approval, or consent may,
except where a standard for such agreement, approval, or consent is provided for
expressly in this Agreement, be given or withheld in the sole and absolute
discretion of the Members, and each Member will be entitled to consider only
such factors and interests as it desires, including its own interests, and shall
have no duty or obligation to give any consideration to any interest of or
factors affecting the Company or any other Person. If the Managing Member or the
Tax Matters Member receives the necessary agreement, approval, or consent of the
Members to such action, the Managing Member or the Tax Matters Member will be
authorized and empowered to implement such action without further authorization
by the Members. Such agreement, approval, or consent must be obtained in writing
or may be obtained by electronic mail, telephone or facsimile, if such
electronic mail, telephone conversation or facsimile is followed by a written
summary of the electronic mail, telephone conversation or facsimile
communication sent by overnight courier, registered or certified mail, postage
and charges prepaid, addressed as described in Section 14.1, or to such other
address as such Person may from time to time specify by notice to the Members.

 

  6.5 Withdrawal/Resignation.

Except as otherwise provided in Articles IV, X, XII, and XIII hereof, no Member
may demand or receive a return on or of its Capital Contributions or withdraw or
resign from the Company without the consent of all Members. If any Member
resigns or withdraws from the Company in breach of this Section 6.5, such
resigning or withdrawing Member will not be entitled to receive any distribution
under this Agreement. Under circumstances requiring a return of any Capital
Contribution, no Member has the right to receive Property other than cash except
as may be specifically provided herein.

 

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  6.6 Member Compensation.

No Member may receive any interest, salary, or drawing with respect to its
Capital Contributions or its Capital Account or for services rendered on behalf
of the Company, or otherwise, in its capacity as a Member, except as otherwise
provided in this Agreement.

 

  6.7 Indemnification of Class A Member.

(a) Unless otherwise provided in Section 6.7(b), the Company, its receiver, or
its trustee (in the case of its receiver or trustee, to the extent of Property)
shall indemnify, save harmless, and pay all Expenses of the Class A Member, or
any officers or directors of the Class A Member, relating to any Liability or
damage incurred by reason of any act performed or omitted to be performed by the
Class A Member, officer, or director in connection with the business of the
Company following its formation, including attorneys’ fees incurred by the
Class A Member, officer, or director in connection with the defense of any
action based on any such act or omission, which attorneys’ fees may be paid as
incurred, including all such Liabilities under federal and state securities laws
(including the Securities Act) as permitted by law.

(b) Section 6.7(a) will be enforced only to the maximum extent permitted by law
and the Class A Member, or any officers or directors of the Class A Member, will
not be indemnified from any Liability for fraud, bad faith (determined in a
manner consistent with and taking into account the provisions of
Section 1.9(d)), intentional misconduct, gross negligence, or a failure to
perform in accordance with this Agreement or the Master Formation Agreement.

(c) The indemnities provided for in Section 6.7(a) will survive the Transfer of
any Interest in the Company and the liquidation of the Company.

(d) Notwithstanding anything to the contrary to this Agreement, in no event will
any indemnification obligation of the Company or a receiver or trustee to
indemnify, save harmless, or pay all Expenses set forth in this Section 6.7
subject any Member to personal liability for the obligations of the Company.

 

  6.8 Members Liability.

Except as otherwise required by 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 a Member shall not be
obligated personally for any such debt, obligation or Liability of the Company
solely by reason of being a member or manager of the Company. A Member shall be
liable only to make Capital Contribution pursuant to Article II and Sections
10.8(b) and 12.9 and shall not be required to restore a deficit balance in its
Capital Account or to lend any funds to the Company or, after its Capital
Contributions have been made pursuant to Article II and Sections 10.8(b) and
12.9, to make any additional contributions, assessments or payments to the
Company; provided that a Member may be required to repay distributions made to
it as provided in the Act subject to Section 4.4.

 

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  6.9 Partition.

While the Company remains in effect or is continued, each Member agrees not to
have any Property partitioned or file a complaint or institute any suit, action
or proceeding at law or in equity to have any Property partitioned, and each
Member, on behalf of itself, its successors, and its assigns hereby waives any
such right.

 

  6.10 Transactions Between a Member or Managing Member and the Company.

Any Member or Managing Member may, but shall not be obligated to, enter into the
transactions described in Section 1.9(c) and transact other business with the
Company and has the same rights and obligations when transacting such business
with the Company as a Person or entity who is not a Member. A Member, any
Affiliate thereof or an employee, stockholder, agent, director, or officer of a
Member or any Affiliate thereof, may also be an employee, officer or director or
be retained as an agent of the Company.

 

  6.11 Other Instruments.

Each Member hereby agrees to execute and deliver to the Company within five
(5) Business Days after receipt of a written request therefor, such other and
further documents and instruments, statements of interest and holdings,
designations, powers of attorney, and other instruments and to take such other
action as the Managing Member reasonably deems necessary, useful, or appropriate
to comply with any laws, rules, or regulations as may be necessary to enable the
Company to fulfill its responsibilities under this Agreement.

ARTICLE VII

REPRESENTATIONS AND WARRANTIES

 

  7.1 In General.

As of the Closing Date, each of the Members makes each of the representations
and warranties applicable to such Member as set forth in Section 7.2 hereof, and
such representations and warranties shall survive the execution of this
Agreement and the consummation of the transactions on the Closing Date, but
shall terminate on the termination of the Company in accordance with the Act.

 

  7.2 Representations and Warranties.

Each Member hereby represents and warrants that:

(a) Due Incorporation or Formation; Authorization of Agreement. Such Member is a
corporation, partnership or limited liability company duly organized or formed,
validly existing, and in good standing under the laws of the jurisdiction of its
incorporation or formation

 

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and has the corporate, partnership or company power and authority to own its
property and carry on its business as owned and carried on at the Closing Date
and as contemplated hereby. Such Member is duly licensed or qualified to do
business and, where applicable, in good standing in each of the jurisdictions in
which the failure to be so licensed or qualified would have a material adverse
effect on such Member. Such Member has the corporate, partnership, or company
power and authority to execute and deliver this Agreement and to perform its
obligations hereunder and the execution, delivery, and performance of this
Agreement has been duly authorized by all necessary corporate, partnership, or
company action. This Agreement constitutes the legal, valid, binding, and
enforceable obligation of such Member.

(b) No Conflict with Restrictions; No Default. Neither the execution, delivery,
and performance of this Agreement nor the consummation by such Member of the
transactions contemplated hereby (i) will conflict with, violate, or result in a
breach of any of the terms, conditions, or provisions of any law, regulation,
order, writ, injunction, decree, determination, or award of any court, any
Governmental Authority, domestic or foreign, or any arbitrator, applicable to
such Member, its Parent, or any of its Affiliates, (ii) will conflict with,
violate, result in a breach of, or constitute a default under any of the terms,
conditions, or provisions of the articles of incorporation, bylaws, partnership
agreement, or operating agreement of such Member, its Parent, or any of its
Affiliates or of any material agreement or instrument to which such Member, its
Parent, or any of its Affiliates is a party or by which such Member, its Parent,
or any of its Affiliates is or may be bound or to which any of its material
properties or assets is subject, (iii) will conflict with, violate, result in a
breach of, constitute a default under (whether with notice or lapse of time or
both), accelerate or permit the acceleration of the performance required by,
give to others any material interests or rights, or require any consent,
authorization, or approval under any indenture, mortgage, lease agreement, or
instrument to which such Member, its Parent, or any of its Affiliates is a party
or by which such Member, its Parent, or any of its Affiliates is or may be bound
and of which such consent, authorization or approval has not been obtained as of
date of this Agreement, or (iv) will result in the creation or imposition of any
lien, claim, or encumbrance upon any of the material properties or assets of
such Member (other than the Interest of the Managing Member, which may be
pledged or otherwise encumbered pursuant to Section 10.1), its Parent, or any of
its Affiliates.

(c) Governmental Authorizations. Any registration, declaration, or filing with,
or consent, approval, license, permit, or other authorization or order by, any
Governmental Authority or regulatory authority, domestic or foreign, that is
required in connection with the valid execution, delivery, acceptance, and
performance by such Member under this Agreement or the consummation by such
Member of any transaction contemplated hereby, including the termination of any
waiting period under the HSR Act, has been completed, made, or obtained on or
before the Closing Date.

(d) Litigation. There are no actions, suits, proceedings, or investigations
pending or, to the knowledge of such Member or any of its Affiliates, threatened
against or affecting such Member or any of its Affiliates or any of their
properties, assets, or businesses in any court or

 

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before or by any Governmental Authority, domestic or foreign, or any arbitrator
which, based on the good faith evaluation of management of such Member or
Affiliate, are deemed to have merit and could, if adversely determined (or, in
the case of an investigation could lead to any action, suit, or proceeding,
which, based on the good faith evaluation of management of such Member or
Affiliate, would have merit and if adversely determined could) reasonably be
expected to materially impair such Member’s ability to perform its obligations
under this Agreement; and such Member or any of its Affiliates has not received
any currently effective notice of any default, and such Member or any of its
Affiliates is not in default, under any applicable order, writ, injunction,
decree, permit, determination, or award of any court, any Governmental
Authority, domestic or foreign, or any arbitrator which could reasonably be
expected to materially impair such Member’s ability to perform its obligations
under this Agreement.

(e) Investigation. Such Member is acquiring its Interest based upon its own
investigation, and the exercise by such Member of its rights and the performance
of its obligations under this Agreement will be based upon its own
investigation, analysis, and expertise, but assuming the accuracy of the
representations and warranties in the Contribution Agreement and in this
Agreement. Such Member’s acquisition of its Interest is being made for its own
account for investment, and not with a view to the sale or distribution thereof.
Such Member is a sophisticated investor possessing an expertise in analyzing the
benefits and risks associated with acquiring investments that are similar to the
acquisition of its Interest.

ARTICLE VIII

ACCOUNTING, BOOKS, AND RECORDS

 

  8.1 Accounting, Books, and Records.

(a) The Company shall keep on site at its principal place of business each of
the following:

 

  (i) Separate books of account for the Company which shall show a true and
accurate record in United States dollars of all costs and expenses incurred, all
charges made, all credits made and received, and all income derived in
connection with the conduct of the Company and the operation of its business in
accordance with GAAP;

 

  (ii) Separate books of account that reflect the Capital Accounts of the
Members as maintained pursuant to the provisions of this Agreement;

 

  (iii) A current list of the full name and last known business, residence, or
mailing address of each Member, both past and present;

 

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  (iv) A copy of the Certificate and all amendments thereto, together with
executed copies of any powers of attorney pursuant to which any amendment has
been executed;

 

  (v) A copy of the Company’s federal, state, and local income tax returns and
reports, if any, for the six most recent years;

 

  (vi) A copy of this Agreement;

 

  (vii) A copy of any writings permitted or required under Section 18-502 of the
Act regarding the obligation of a Member to perform any enforceable promise to
contribute cash or property or to perform services as consideration for such
Member’s Interest; and

 

  (viii) Any written consents obtained from Members pursuant to Section 18-302
of the Act regarding action taken by Members without a meeting.

(b) The Company shall use the accrual method of accounting in preparation of its
financial reports and for tax purposes and shall keep its books and records
accordingly.

(c) Any Member or its designated Representative has the right at its own cost
and expense, upon reasonable notice, to have access to and inspect and copy the
contents of the books or records of the Company, provided that such inspections
and information gathering be conducted (i) during normal business hours and
(ii) in a manner which will not unduly interfere with the Company’s operations.
The Company shall be reimbursed by such Member for reasonable costs incurred as
a result of such inspection.

 

  8.2 Reports.

(a) In General. The Managing Member shall be responsible for causing the
preparation of financial reports of the Company and the coordination of
financial matters of the Company with the Company’s accountants. Each report
delivered by the Company to the Members pursuant to this Article VIII shall be
accompanied by a representation of the Managing Member (signed by an officer on
behalf of the Managing Member familiar with the affairs of the Company) that
(x) such report has been prepared and fairly stated in all material respects in
accordance with GAAP or, to the extent inconsistent therewith, in accordance
with this Agreement, and (y) with respect to the reports described in Sections
8.2(b) and (c), no Liquidating Event or Notice Event or event which with notice
or lapse of time or both would constitute a Liquidating Event or Notice Event
(other than the Liquidating Event described in Section 12.1(a)(i)) has occurred
and is continuing or, if any such event has occurred and is continuing, the
action that the Managing Member has taken or proposes to take with respect
thereto.

 

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The Managing Member shall reasonably cooperate with the Class A Member and
provide its Representative reasonable access to such additional financial and
other information regarding the Company as the Class A Member may, from time to
time, reasonably request, and shall permit the Class A Member and its
Representative to make such inspections and conduct such interviews and
inquiries as the Class A Member may reasonably require in connection with the
Class A Member’s review of the financial and other information provided by the
Managing Member to the Class A Member, in each case to the extent reasonably
necessary to enable the Class A Member and its ultimate parent to comply with
its reporting and disclosure obligations under the Securities Exchange Act of
1934, as amended, or the Securities Act. The Class A Member’s Representative
shall conduct all such inspections and other information gathering described
above (i) during regular business hours and (ii) in a manner which will not
unduly interfere with the Managing Member’s operations.

(b) Annual Reports. Except as otherwise provided in Section 8.2(d), within
ninety (90) days after the end of each Fiscal Year, the Managing Member shall
cause to be prepared and each Member to be furnished with the following:

 

  (i) An unaudited balance sheet as of the last day of such Fiscal Year and an
unaudited income statement and statement of cash flows for the Company for such
Fiscal Year;

 

  (ii) A statement of the Members’ Capital Accounts and changes therein for such
Fiscal Year; and

 

  (iii) Notes to the financial statements provided pursuant to this
Section 8.2(b).

(c) Quarterly Reports. Except as otherwise provided in Section 8.2(d), within
forty-five (45) days after the close of each Fiscal Quarter of each Fiscal Year
beginning with the Fiscal Quarter during which the Closing Date occurs, the
Managing Member shall cause to be prepared and each Member shall be furnished
with unaudited financial statements consisting of a balance sheet as of the last
day of such Fiscal Quarter, an income statement for such Fiscal Quarter, and a
statement of the Members’ Capital Accounts as of the last day of such Fiscal
Quarter and changes therein for such Fiscal Quarter, with any notes the Managing
Member deems necessary to prevent such financial statements from being
misleading and disclose significant changes in the accounting policies,
business, or operations of the Company since the latest annual report furnished
pursuant to Section 8.2(b).

(d) Revised Financial Reporting Requirements. Should the Class A Member, its
ultimate parent or Affiliate become or expected to become subject to reporting
requirements pursuant to Rule 3-09 and/or Rule 4-08(g) of SEC Regulation S-X, in
each case as may be amended from time to time, or a similar SEC or GAAP
reporting requirement (“Revised Financial Reporting Requirements”), the Class A
Member shall notify the Managing Member in writing of the form and content of
financial information it requires to achieve material compliance with such
Revised Financial Reporting Requirements, including any requirement

 

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that such financial information be audited by an independent nationally
recognized accounting firm of certified public accountants. Such written
notification shall be provided by the Class A Member to the Managing Member not
less than ninety (90) days prior to the requested information being required to
be included in or filed with the financial statements of the Class A Member, its
ultimate parent or Affiliate. To the extent that the Revised Financial Reporting
Requirements are inconsistent with the reporting requirements set forth in
Section 8.2(c) or Section 8.2(b), the Revised Financial Reporting Requirements
shall apply to the extent necessary to avoid duplication.

(e) Redemption/Liquidation Date Reports. On the date on which final
distributions are made to the Members pursuant to Section 12.2, or on the date
on which a distribution is made pursuant to Section 10.8(b), in redemption of
the Class A Member’s Interest, the Liquidator (in the case of distributions
pursuant to Section 12.2) or the Managing Member (in the case of a redemption
distribution pursuant to Section 10.8), shall cause to be prepared and each
Member to be furnished with each of the following statements:

 

  (i) A balance sheet as of the date of such distribution setting forth the
assets, Liabilities, and equity of the Company, and setting forth as individual
line items the aggregate Mark-to-Market Values for each Property held directly
or indirectly by the Company and the Gross Liability Values for each Liability
of the Company (a “Mark-to-Market Balance Sheet”);

 

  (ii) A statement of the Members’ Capital Accounts as adjusted immediately
prior to such distribution pursuant to Section 12.2 (in the case of a
liquidation) or Section 10.8 (in the case of a redemption); and

 

  (iii) In the case of a redemption of the Class A Member’s Interest, a
Certificate of the Managing Member executed by an officer of the Managing Member
that, immediately prior to and after giving effect to such redemption, no
Liquidating Event or Notice Event shall have occurred and be continuing.

For purposes of this Section 8.2(e), the Members’ Capital Accounts shall be
determined as of the Distribution Date taking into account (x) the adjustments
to the Gross Asset Values of the Property that result from a determination of
the Mark-to-Market Value of the Property in accordance with Section 13.3 as of
the Valuation Date, (y) the adjustments to the Gross Liability Values of the
Liabilities of the Company described in Regulations Section 1.752-7(b)(3)(i)
that result from a determination of the Mark-to-Market Value of such Liabilities
in accordance with Section 13.3 as of the Distribution Date, and (z) the
allocation to the Members’ Capital Accounts that would result from an allocation
pursuant to Article III of the Profits, Losses, and other items of Company
income, gain, loss, or deduction for the period beginning on the first day of
the Allocation Year during which the Valuation Date occurs and ending on the
Distribution Date.

 

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  8.3 Tax Matters.

(a) Tax Matters Member. The Tax Matters Member shall be the “tax matters
partner” of the Company pursuant to Section 6231(a)(7) of the Code. The Tax
Matters Member shall take such action as may be necessary to cause each other
Member to become a “notice partner” within the meaning of Section 6223 of the
Code. The Tax Matters Member shall inform each other Member of all significant
matters that may come to its attention in its capacity as Tax Matters Member by
giving notice thereof within 10 Business Days after becoming aware thereof and,
within such time, shall forward to each other Member copies of all significant
written communications it may receive in such capacity. The Tax Matters Member
shall not extend the statute of limitations for the Company or bind the other
Members or the Company to a settlement agreement with the Secretary of the
Treasury with respect to any Company items, as defined in Section 6231(a)(3) of
the Code, whether in the course of any tax audits, appeals or otherwise without
obtaining the prior written consent of each Member, which consent shall not be
unreasonably withheld, delayed or conditioned. This Section 8.3 is not intended
to authorize the Tax Matters Member to take any action left to the determination
of an individual Member under Sections 6222 through 6231 of the Code.

(b) Special Class A Issues. Notwithstanding Section 8.3(a), to the extent that
any issue is raised concerning the proper federal income tax treatment of the
initial contribution of the Anadarko Contributed Assets and the resulting tax
consequences to the Company and its Members (a “Special Class A Issue”), the
Class A Member shall have special rights of control over any IRS audit and
subsequent controversy as provided below. With respect to any Special Class A
Issue, in any IRS audit or subsequent controversy resulting therefrom, the Tax
Matters Member (i) shall promptly notify the Class A Member of any IRS oral
inquiry about such issue and (unless otherwise authorized by such
Representative) refrain from responding to such inquiry until it has received
instructions from such Representative; (ii) shall promptly provide copies of any
written communication from the IRS to the Class A Member; (iii) shall use all
commercially reasonable efforts to permit the Class A Member and its
Representatives to participate in any meeting involving the IRS devoted to such
issue, or in the portions of any larger meeting related to such issue;
(iv) shall not settle or compromise such issue, or make any offer to do so,
except at the instruction of the Class A Member (provided, however, the Class A
Member shall not settle, compromise or offer to do either, or instruct the Tax
Matters Member to settle, compromise or offer to do so, a Special Class A Issue
in any manner that results in a materially adverse change in the federal, state
or local tax effects to the Managing Member of its investment in the Company
without the consent of the Managing Member, which consent shall not be
unreasonably withheld, delayed or conditioned); (v) shall submit written
materials provided by the Class A Member with respect to such issue in response
to any IRS inquiry or at such other times as the Class A Member may reasonably
request (provided, however, that the Class A Member shall provide a draft of any
such written materials to the Tax Matters Member reasonably in advance of the
response date or the requested submission date and shall consider in good faith
all requests and comments of the Tax Matters Member or its tax advisors, and
provided further that the Tax Matters Member may in its sole discretion disclose
to the IRS that

 

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such materials are being provided by the Class A Member); and (vi) shall, if so
instructed by the Class A Member or if directly asked by the IRS, disclose to
the IRS that it lacks the authority to settle or compromise such issues without
the approval of the Class A Member. Similarly, the Class A Member (i) shall
promptly notify the Tax Matters Member of any IRS oral inquiry (whether or not
about a Special Class A Issue) and (unless otherwise authorized by the Tax
Matters Member) refrain from responding to any such inquiry that does not relate
solely to a Special Class A Issue; (ii) shall promptly provide copies of any
written communication received from the IRS to the Tax Matters Member;
(iii) shall use all commercially reasonable efforts to permit the Tax Matters
Member and its Representatives to act as an observer in any meeting involving
the IRS devoted to a Special Class A Issue; (iv) shall not settle or compromise
such issue other than a Special Class A Issue, or make any offer to do so,
except at the instruction of the Tax Matters Member (provided however, the Tax
Matters Member shall not instruct the settlement or compromise of, or the making
of an offer to settle or compromise, an issue affecting the Company or the
Members other than a Special Class A Issue in any manner that results in a
materially adverse change in the federal, state or local tax effects to the
Class A Member of its (or its predecessors’) investment in the Company without
the consent of the Class A Member, which consent shall not be unreasonably
withheld, delayed or conditioned); and (v) shall consider in good faith all
requests and comments of the Tax Matters Member or its tax advisors concerning
the issues and matters within the authority of the Class A Member. The Class A
Member shall bear all expenses of its own participation in any audit or
subsequent controversy involving a Special Class A Issue. The Tax Matters
Member, the Managing Member, the Class A Member and the Company shall cooperate
with each other in good faith to the extent any audit or subsequent controversy
involves a Special Class A Issue.

(c) TEFRA Election. The Tax Matters Member shall cause the Company to make the
election (a “TEFRA Election”) provided for in Section 6231(a)(1)(B)(ii) of the
Code causing the Company to be subject to the unified audit and litigation
procedures as set forth in Sections 6221 through 6231 of the Code. The Members
will execute any forms necessary to effectuate the TEFRA Election.

(d) Tax Returns and Tax Information. The Tax Matters Member shall prepare (in
consultation with and subject to the prior written approval of the Class A
Member, which shall not be unreasonably withheld, delayed or conditioned) and
file all necessary federal, state and local income and franchise tax returns
(including all notices, disclosures, registrations, information statements,
etc., required in connection therewith) for the Company, shall make any and all
elections allowed or required for federal and state income tax purposes
including, without limitation, the election to adjust the tax basis of
properties owned by the Company pursuant to Section 754 of the Code and shall
prepare and file all other tax returns for the Company. Returns and other
reports referred to in this Section 8.3(d) shall be prepared, where applicable,
in accordance with the Code and Regulations. The Tax Matters Member shall file
the Company’s federal income tax return for each calendar year on or before the
due date, including extensions thereof. The Tax Matters Member shall provide to
each Member on a timely basis (but no later than 30 days after the end of each
of the first three quarters in each calendar year and by April 15

 

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following the end of each calendar year), a year-to-date estimate of all income,
gains, losses, deductions, credits, depletion and gain or loss for the Company
(the “Tax Return Items”). The Tax Matters Member agrees that it will, upon the
request of any Member, cooperate with that Member or its tax advisors upon
reasonable notice with regard to the timely compilation of the information
pertaining to that Member’s estimated income tax liability under the Code. The
Tax Matters Member shall be responsible for the maintenance of all tax
accounting records, including depreciation, cost recovery and amortization
records, and shall provide a copy of such records to any Member upon request.
The Tax Matters Member shall deliver to the Members copies of the federal, state
and local income and franchise tax returns and the Tax Return Items for all
calendar years on or before June 15 following the end of each such year.

(e) Partner Level Audits. Each Member shall retain complete control with respect
to any IRS audit of such Member (as opposed to the Company) and of any contest
resulting therefrom, but if an issue is raised in any such audit of a Member
that relates to the Company or to any Special Class A Issue, the affected Member
shall keep the other Members reasonably informed of the progress of any such
issue (including providing copies of any written communications with the IRS on
such issue, suitably redacted to remove references to unrelated matters).

(f) Cooperation of Class A Member. The Class A Member shall provide to the Tax
Matters Member such information as is reasonably required to allow the Tax
Matters Member to perform its obligations under this Section 8.3.

(g) Timely Tax Compliance; Replacement of Tax Matters Member. The Tax Matters
Member will perform its obligations under this Section 8.3 in a timely manner,
including but not limited to meeting any applicable federal, state or local tax
filing deadlines, or obtaining extensions of such deadlines from the relevant
taxing authority. In the event that the Tax Matters Member fails to perform its
obligations under this Section 8.3 in a timely manner (and to the extent that
such failure could reasonably be expected to cause a material adverse impact on
the Class A Member) and the Class A Member has complied with its obligations
under Section 8.3(f), the Class A Member may replace the Tax Matters Member by
delivering to the Tax Matters Member a notice of such election and upon delivery
of such notice, the Class A Member will become the successor Tax Matters Member;
provided, however, that the Managing Member will have the right to review
(i) all prospective tax returns prior to filing and (ii) any written
communications received from the IRS by the successor Tax Matters Member, and
the Managing Member may provide comments to the successor Tax Matters Member
with respect to these items, which the successor Tax Matters Member may take
into consideration.

 

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ARTICLE IX

AMENDMENTS

 

  9.1 Amendments.

Amendments to this Agreement may be proposed by any Member. Following such
proposal, the Managing Member shall submit to the Members a verbatim statement
of any proposed amendment, providing that counsel for the Company shall have
approved of the same in writing as to form, and the Managing Member shall
include in any such submission a recommendation as to the proposed amendment.
The Managing Member shall seek the written vote of the Non-Managing Members on
the proposed amendment or shall call a meeting to vote thereon and to transact
any other business that it may deem appropriate. A proposed amendment will be
adopted and be effective as an amendment hereto if it receives the affirmative
vote of all of the Members.

ARTICLE X

TRANSFERS

 

  10.1 Restrictions on Transfers.

Except as otherwise permitted by Section 10.2 of this Agreement, no Member may
Transfer (including pledging or otherwise encumbering) all or any portion of its
Interest without the consent of the other Members, which consent shall not be
unreasonably withheld, provided, however, that the Managing Member shall have
the right to pledge or otherwise encumber all or any portion of its Interest
without the consent of the other Members, provided, further, that upon any
foreclosure or other remedial action, the party holding a lien shall have no
rights greater than the Managing Member with respect to the Managing Member’s
Interest.

 

  10.2 Permitted Transfers.

Subject to the conditions and restrictions set forth in Section 10.3, a Member
may at any time (a) make a Transfer pursuant to Section 10.1 or (b) Transfer all
or any portion of its Interest to (i) any other Member or Affiliate of another
Member, (ii) any Wholly-Owned Affiliate of the transferor, or (iii) any
purchaser approved by all of the other Members (any such Transfer being referred
to in this Agreement as a “Permitted Transfer”).

 

  10.3 Conditions to Permitted Transfers.

A Transfer shall not be treated as a Permitted Transfer under Section 10.2
hereof unless and until the following conditions are satisfied:

(a) The transferor and transferee shall execute and deliver to the Company such
documents and instruments of conveyance as may be necessary or appropriate to
effectuate such Transfer and to confirm the agreement of the transferee to be
bound by the provisions of this Agreement and, to the extent the transferor is a
party to the Master Offset Agreement, the Master Offset Agreement.

 

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(b) Such Transfer will be exempt from all applicable registration requirements
and will not violate any applicable laws regulating the Transfer of securities,
and, except in the case of a Transfer of an Interest to another Member or to a
Wholly-Owned Affiliate of any Member, including the transferor, the transferor
shall provide an opinion of nationally recognized counsel to such effect.

(c) Such Transfer will not cause the Company to be deemed to be an “investment
company” under the Investment Company Act of 1940, as amended and the transferor
shall provide an opinion of nationally recognized counsel to such effect. The
Managing Member and the other Members shall provide to such counsel any
information available to the Managing Member or to such other Members, as the
case may be, and relevant to such opinion.

 

  10.4 Prohibited Transfers.

Any purported Transfer of an Interest that is not a Permitted Transfer shall, to
the fullest extent permitted by law, be null and void and of no force or effect
whatsoever; provided that, if the Company is required to recognize a Transfer
that is not a Permitted Transfer, the rights with respect to the Transferred
Interest shall be strictly limited to the transferor’s rights to allocations and
distributions as provided by this Agreement with respect to the Transferred
Interest, which allocations and distributions may be applied (without limiting
any other legal or equitable rights of the Company) to satisfy any debts,
obligations, or Liabilities for damages that the transferor or transferee of
such Interest may have to the Company.

In the case of a Transfer or attempted Transfer of an Interest that is not a
Permitted Transfer, the parties engaging or attempting to engage in such
Transfer shall be liable to indemnify and hold harmless the Company and the
other Members from all Liability and Damages that the Company or any of such
indemnified Members may incur (including incremental tax liabilities, lawyers’
fees and expenses) as a result of such Transfer or attempted Transfer and
efforts to enforce the indemnity granted hereby.

 

  10.5 Rights of Unadmitted Assignees.

A Person who acquires an Interest but who is not admitted as a substituted
Member pursuant to Section 10.6 shall be entitled only to allocations and
distributions with respect to such Interest in accordance with this Agreement,
and, to the fullest extent permitted by law, shall have no right to any
information or accounting of the affairs of the Company, shall not be entitled
to inspect the books or records of the Company, and shall not have any of the
rights of a Member under the Act or this Agreement.

 

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  10.6 Admission of Substituted Members.

Subject to the other provisions of this Article X, a transferee of an Interest
may be admitted to the Company as a substituted Member only upon satisfaction of
the conditions set forth in this Section 10.6:

(a) The Interest with respect to which the transferee is being admitted was
acquired by means of a Permitted Transfer;

(b) The transferee of an Interest (other than, with respect to clauses (i) and
(ii) below, a transferee that was a Member prior to the Transfer) shall, by
written instrument, (i) accept and adopt the terms and provisions of this
Agreement, including this Article X, and (ii) assume the obligations of the
transferor Member under this Agreement with respect to the Transferred Interest.
The transferor Member shall be released from all such assumed obligations except
(x) those obligations or Liabilities of the transferor Member arising out of a
breach of this Agreement by the transferor Member and (y) in the case of a
Transfer to any Person other than a Member, those obligations or Liabilities of
the transferor Member based on events occurring, arising, or maturing prior to
the date of Transfer; and

(c) The transferee and transferor shall each execute and deliver such other
instruments as the Managing Member reasonably deems necessary or appropriate to
effect, and as a condition to, such Transfer, including amendments to the
Certificate or any other instrument filed with the State of Delaware or any
other state or Governmental Authority.

 

  10.7 Distributions and Allocations in Respect of Transferred Member Interests.

If any Interest is Transferred during any Allocation Year in compliance with the
provisions of this Article X, Profits, Losses, each item thereof, and all other
items attributable to the Transferred Interest for such Allocation Year shall be
divided and allocated between the transferor and the transferee by taking into
account their varying Interests during the Fiscal Year in accordance with Code
Section 706(d), using any conventions permitted by law and agreed to by the
transferor and transferee. All distributions on or before the date of such
Transfer shall be made to the transferor, and all distributions thereafter shall
be made to the transferee. Solely for purposes of making such allocations and
distributions, the Company shall recognize such Transfer not later than the end
of the calendar month during which it is given notice of such Transfer; provided
that, if the Company is given notice of a Transfer at least ten (10) Business
Days prior to the Transfer, the Company shall recognize such Transfer as of the
date of such Transfer; and provided further that if the Company does not receive
a notice stating the date such Interest was Transferred and such other
information as the Managing Member may reasonably require within thirty
(30) days after the end of the Allocation Year during which the Transfer occurs,
then all such items shall be allocated, and all distributions shall be made, to
the Person who, according to the books and records of the Company, was the owner
of the Interest on the last day of such Allocation Year. To the fullest extent
permitted by law, neither the Company nor the Managing Member shall incur any
Liability for making allocations and distributions in accordance with the
provisions of this Section 10.7, whether or not the Managing Member or the
Company has knowledge of any Transfer of ownership of any Interest.

 

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  10.8 Redemption of Class A Member’s Interest in the Company.

(a) The Class A Member’s entire Interest is required to be redeemed by the
Company (a “Mandatory Redemption”) on the 30th anniversary of the Closing Date
(or the next Business Day if such date does not fall on a Business Day). In
addition, the Class A Member may, by delivery of a written notice to the
Managing Member (a “Class A Member Redemption Notice”) at any time after the
15th anniversary of the Closing Date, elect to cause the Company to redeem on
the last Business Day of any Fiscal Quarter, all (but not less than all) of the
Class A Member’s Interest. Finally, the Managing Member may, by delivery of a
written notice to the Class A Member (a “Managing Member Redemption Notice” and,
together with a Class A Member Redemption Notice, a “Redemption Notice”) prior
to the effectiveness of any Liquidation Notice delivered to the Managing Member
pursuant to Section 13.2, or at any time after the 15th anniversary of the
Closing Date, elect pursuant to a redemption option (the “Redemption Option”) to
have the Company redeem all of the Class A Member’s Interest.

(b) In the event that the Class A Member’s Interest in the Company is redeemed
pursuant to this Section 10.8, (i) the Mark-to-Market Value of the Property
shall be determined in accordance with Section 13.3 hereof and the Gross Asset
Values of all the Property shall be adjusted pursuant to subparagraph (ii) of
the definition of “Gross Asset Value” in Section 1.10 as of the Valuation Date,
and the Gross Liability Values of the Liabilities of the Company shall be
adjusted pursuant to the definition of “Gross Liability Value” in Section 1.10
as of the Redemption Date, and (ii) Profits, Losses, and other items of Company
income, gain, loss, or deduction for the period beginning on the first day of
the Allocation Year during which the Redemption Date occurs and ending on the
Redemption Date shall be allocated pursuant to Article III. On the Redemption
Date, if permitted by the Act and other applicable law, the Company shall
distribute to the Class A Member an amount of Cash or other property the
aggregate Gross Asset Values of which are equal to the balance in the Class A
Member’s Capital Account immediately after giving effect to the adjustments and
allocations required by the first sentence of this Section 10.8(b); provided
that, unless the Managing Member and the Class A Member otherwise consent, the
APC Note shall be distributed to the Class A Member in redemption of the Class A
Member’s Interest. If the Capital Account balance of the Class A Member exceeds
the Gross Asset Value of the APC Note, the Company shall also distribute cash in
an amount equal to such excess as part of the redemption distribution. If the
Gross Asset Value of the APC Note exceeds such Capital Account balance, the
Class A Member will be required to contribute cash equal to such excess to the
Company.

(c) In the event that the Class A Member’s Interest in the Company is being
redeemed pursuant to Section 10.8(a), distributions shall be made to such
Member, and its Interest in the Company shall be retired, at 9:00 a.m. on (the
“Redemption Date”) (i) in the case of a Mandatory Redemption, the 30th
anniversary of the Closing Date (or the next Business Day if such date does not
fall on a Business Day), or (ii) in the case of any other redemption, the date

 

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that is specified in the Redemption Notice, which date shall not be less than
five (5) Business Days or more than fifteen (15) Business Days after the date on
which the Redemption Notice was given pursuant to Section 10.8(a).

ARTICLE XI

POWER OF ATTORNEY

 

  11.1 Managing Member as Attorney In Fact.

Each Member hereby makes, constitutes, and appoints the Managing Member, each
successor Managing Member, and the Liquidator, severally, with full power of
substitution and resubstitution, its true and lawful attorney in fact for it and
in its name, place, and stead and for its use and benefit, to sign, execute,
certify, acknowledge, swear to, file, publish, and record (i) all certificates
of formation, amended name or similar certificates, and other certificates and
instruments (including counterparts of this Agreement) that the Managing Member
or Liquidator may deem necessary to be filed by the Company under the laws of
the State of Delaware or any other jurisdiction in which the Company is doing or
intends to do business; provided that such power does not extend to the signing
or execution of counterparts of this Agreement on behalf of the Class A Member;
(ii) any and all amendments, restatements, or changes to this Agreement and the
instruments described in clause (i), as now or hereafter amended, which the
Managing Member may deem necessary to effect a change or modification of the
Company in accordance with the terms of this Agreement, including amendments,
restatements, or changes to reflect (A) the exercise by the Managing Member of
any power granted to it under this Agreement, (B) the admission of any
additional or substituted Member, and (C) the disposition by any Member of its
Interest; provided that the Managing Member shall not, to the extent that any
amendment, modification, or change to this Agreement requires the consent of the
Class A Member, execute such amendment on behalf of the Class A Member without
the express written consent of the Class A Member; (iii) all certificates of
cancellation and other instruments which the Liquidator deems necessary or
appropriate to effect the dissolution and termination of the Company pursuant to
the terms of this Agreement, and (iv) any other instrument which is now or may
hereafter be required by law to be filed on behalf of the Company or is deemed
necessary by the Managing Member, or Liquidator to carry out fully the
provisions of this Agreement in accordance with its terms. Subject to the terms
of this Agreement, each Member authorizes each such attorney in fact to take any
further action which such attorney in fact shall consider necessary in
connection with any of the foregoing, hereby giving each such attorney in fact
full power and authority to do and perform each and every act or thing
whatsoever requisite to be done in connection with the foregoing as fully as
such Member might or could do personally, and hereby ratify and confirm all that
any such attorney in fact shall lawfully do, or cause to be done, by virtue
thereof or hereof.

 

  11.2 Nature of Special Power.

The power of attorney granted pursuant to this Article XI:

(a) Is a special power of attorney coupled with an interest and is irrevocable;
provided, however, that, with respect to the power of attorney granted to the
Managing Member, such power shall terminate upon the appointment of the
Liquidator;

 

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(b) Subject to Section 11.1(ii) hereof, may be exercised by such attorney in
fact by listing the Members executing any agreement, certificate, instrument, or
other document with the single signature of any such attorney in fact acting as
attorney in fact for such Members; and

(c) Shall survive and not be affected by the subsequent Bankruptcy, insolvency,
dissolution, or cessation of existence of a Member and shall survive the
delivery of an assignment by a Member of the whole or a portion of its Interest
(except that where the assignment is of such Member’s entire Interest and the
assignee, with the consent of the other Members, is admitted as a substituted
Member, the power of attorney shall survive the delivery of such assignment for
the sole purpose of enabling any such attorney in fact to effect such
substitution) and shall extend to such Member’s or assignee’s successors and
assigns.

ARTICLE XII

DISSOLUTION AND WINDING UP

 

  12.1 Liquidating Events.

(a) Liquidation. The Company shall dissolve and shall commence winding up and
liquidating upon the first to occur of any of the following (each a “Liquidating
Event”):

 

  (i) The date upon which a Liquidation Notice becomes effective to cause a
Notice Event to become a Liquidating Event;

 

  (ii) The Bankruptcy of any of the Company or any Member;

 

  (iii) The unanimous vote of the Members to dissolve, wind up, and liquidate
the Company;

 

  (iv) The happening of any other event which the Managing Member determines in
good faith and upon advice of counsel to the Company makes it unlawful,
impossible, or impractical to carry on the business of the Company;

 

  (v) The failure of the Managing Member to cause the Company to redeem the
Class A Member’s Interest in accordance with Section 10.8;

 

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

 

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  (vii) At any time there are no members of the Company unless the Company is
continued in accordance with the Act.

The Members hereby agree that, notwithstanding any provision of the Act, the
Company shall not dissolve prior to the occurrence of a Liquidating Event.

(b) Reconstitution. If it is determined, by a court of competent jurisdiction,
that the Company has dissolved prior to the occurrence of a Liquidating Event,
then within an additional ninety (90) days after such determination (the
“Reconstitution Period”), all of the Members may elect to reconstitute the
Company and continue its business on the same terms and conditions set forth in
this Agreement by forming a new limited liability company on terms identical to
those set forth in this Agreement. Unless such an election is made within the
Reconstitution Period, the Company shall wind up its affairs in accordance with
Section 12.2. If such an election is made within the Reconstitution Period,
then:

 

  (i) The reconstituted limited liability company shall continue until the
occurrence of a Liquidating Event as provided in Section 12.1(a);

 

  (ii) Unless otherwise agreed to by all of the Members, the Certificate and
this Agreement shall, subject to any requirement under the Act to file a new
certificate of formation, automatically constitute the Certificate and Agreement
of such new Company. All of the assets and liabilities of the dissolved Company
shall be deemed to have been automatically assigned, assumed, conveyed, and
transferred to the new Company. No bond, collateral, assumption, or release of
any Member’s or the Company’s liabilities shall be required;

provided that the right of the Members to select successor managers and to
reconstitute and continue the business of the Company shall not exist and may
not be exercised unless the Company has received an opinion of counsel that the
exercise of the right would not result in the loss of limited liability of any
Member and neither the Company nor the reconstituted limited liability company
would cease to be treated as a partnership for federal income tax purposes upon
the exercise of such right to continue.

 

  12.2 Winding Up.

Upon the occurrence of (i) a Liquidating Event or (ii) the determination by a
court of competent jurisdiction that the Company has dissolved prior to the
occurrence of a Liquidating Event (unless the Company is reconstituted pursuant
to Section 12.1(b) hereof), the Company shall continue solely for the purposes
of winding up its affairs in an orderly manner, liquidating its assets, and
satisfying the claims of its creditors and Members, and no Member shall take any
action that is inconsistent with, or not necessary to or appropriate for, the
winding up of the Company’s business and affairs; provided that, to the extent
not inconsistent with the foregoing, all covenants contained in this Agreement
and obligations provided for in this Agreement shall

 

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continue to be fully binding upon the Members until such time as the Property
has been distributed pursuant to this Section 12.2 and the Certificate has been
canceled pursuant to the Act. The Liquidator shall be responsible for overseeing
the winding up of the Company, which winding up shall be completed within ninety
(90) days of the occurrence of the Liquidating Event and within ninety (90) days
after the last day on which the Company may be reconstituted pursuant to
Section 12.1(b) hereof. The Liquidator shall take full account of the Company’s
liabilities and Property and shall cause the Property or the proceeds from the
sale thereof (as determined pursuant to Section 12.9 hereof), to the extent
sufficient therefor, to be applied and distributed, to the maximum extent
permitted by law, in the following order:

(a) First, to creditors (other than Members) in satisfaction of all of the
Company’s Debts and other Liabilities (whether by payment or the making of
reasonable provision for payment thereof to the extent required by
Section 18-804 of the Act);

(b) Second, to Members in their capacities as creditors of the Company in
satisfaction of all of the Company’s Debts and other Liabilities to the Members
(whether by payment or the making of reasonable provision for payment thereof to
the extent required by Section 18-804 of the Act), other than Liabilities for
distribution to Members under Sections 18-601 or 18-604 of the Act;

(c) Third, to Members and former Members of the Company in satisfaction of
liabilities for distribution under Sections 18-601 or 18-604 of the Act; and

(d) The balance, if any, to the Members in accordance with the positive balance
in their Capital Accounts, computed in accordance with Section 8.2(e) and after
giving effect to all contributions, distributions, and allocations for all
periods.

No Member shall receive additional compensation for any services performed
pursuant to this Article XII.

 

  12.3 Compliance With Certain Requirements of Regulations; Deficit Capital
Accounts.

In the event the Company is “liquidated” within the meaning of Regulations
Section 1.704-1(b)(2)(ii)(g), distributions shall be made pursuant to this
Article XII to the Members who have positive Capital Accounts in compliance with
Regulations Section 1.704-1(b)(2)(ii)(b)(2). If any Member has a deficit balance
in its Capital Account (after giving effect to all contributions, distributions,
and allocations for all Allocation Years, including the Allocation Year during
which such liquidation occurs), such Member shall have no obligation to make any
contribution to the capital of the Company with respect to such deficit, and
such deficit shall not be considered a debt owed to the Company or to any other
Person for any purpose whatsoever. In the discretion of the Liquidator, a pro
rata portion of the distributions that would otherwise be made to the Members
pursuant to this Article XII may be:

(a) Distributed to a trust established for the benefit of the Members for the
purposes of liquidating Company assets, collecting amounts owed to the Company,
and paying any contingent or unforeseen liabilities or obligations of the
Company. The assets of any such trust shall be distributed to the Members from
time to time, in the reasonable discretion of the Liquidator, in the same
proportions as the amount distributed to such trust by the Company would
otherwise have been distributed to the Members pursuant to Section 12.2; or

 

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(b) Withheld to provide a reasonable reserve for Company liabilities (contingent
or otherwise) and to reflect the unrealized portion of any installment
obligations owed to the Company; provided that such withheld amounts shall be
distributed to the Members as soon as practicable.

 

  12.4 Deemed Distribution and Recontribution.

Notwithstanding any other provision of this Article XII, in the event the
Company is liquidated within the meaning of Regulations
Section 1.704-1(b)(2)(ii)(g) but no Liquidating Event has occurred, the Property
shall not be liquidated, the Company’s Debts and other Liabilities shall not be
paid or discharged, and the Company’s affairs shall not be wound up. Instead,
solely for federal income tax purposes, the Company shall be deemed to have
contributed all its Property and Liabilities to a new limited liability company
in exchange for an interest in such new company and, immediately thereafter, the
Company will be deemed to liquidate by distributing interests in the new company
to the Members.

 

  12.5 Rights of Members.

Except as otherwise provided in this Agreement or the Master Offset Agreement,
each Member shall look solely to the Property for the return of its Capital
Contributions and has no right or power to demand or receive Property other than
cash from the Company. If the assets of the Company remaining after payment or
discharge of the Debts or Liabilities of the Company are insufficient to return
such Capital Contributions, the Members shall have no recourse against the
Company, the Managing Member or any other Member.

 

  12.6 Allocations and Distributions During Period of Liquidation.

During the period commencing on the first day of the Fiscal Year during which a
Liquidating Event occurs and ending on the date on which all of the assets of
the Company have been distributed to the Members pursuant to Section 12.2
hereof, the Members shall continue to share Profits, Losses, gain, loss, and
other items of Company income, gain, loss, or deduction in the manner provided
in Article III but no distributions shall be made pursuant to Article IV after
the day on which the Liquidating Event occurs.

 

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  12.7 Character of Liquidating Distributions.

All payments made in liquidation of the Interest of a Member in the Company
shall be made in exchange for the Interest of such Member in Property pursuant
to Section 736(b)(1) of the Code, including the interest of such Member in
Company goodwill.

 

  12.8 The Liquidator.

(a) Definition. The “Liquidator” shall be appointed by Managing Member (except
that if a Liquidation Event described in Section 12.1(a)(i), Section 12.1(a)(ii)
(in respect of the Bankruptcy of the Managing Member) or Section 12.1(a)(v) has
occurred, the “Liquidator” shall be appointed by the Class A Member) and shall
have the power of attorney granted to the Managing Member pursuant to Article
XI.

(b) Compensation. The Company is authorized to pay such reasonable compensation
to the Liquidator for its services performed pursuant to this Article XII as
shall be agreed upon by the Liquidator and the Managing Member, or, if a
Liquidation Event described in Section 12.1(a)(i), Section 12.1(a)(ii) (in
respect of the Bankruptcy of the Managing Member) or Section 12.1(a)(v) has
occurred, the Class A Member, to reimburse the Liquidator for its reasonable
costs and expenses incurred in performing those services.

(c) Indemnification. The Company shall, to the fullest extent permitted by law,
indemnify, save harmless, and pay all judgments and claims against the
Liquidator or any officers, directors, stockholders, agents, or employees of the
Liquidator relating to any Liability or damage incurred by reason of any act
performed or omitted to be performed by the Liquidator, or any officers,
directors, agents, or employees of the Liquidator in connection with the winding
up of the Company, including reasonable attorneys’ fees incurred by the
Liquidator, officer, director, agent, or employee in connection with the defense
of any action based on any such act or omission, which attorneys’ fees may be
paid as incurred, except to the extent such Liability or damage is caused by the
fraud, intentional misconduct of, or a knowing violation of the laws by the
Liquidator which was material to the cause of action.

 

  12.9 Form of Liquidating Distributions.

Except as provided in this Section 12.9, for purposes of making distributions
required by Section 12.2, the Liquidator may determine whether to distribute all
or any portion of the Property in kind or to sell all or any portion of the
Property and distribute the proceeds therefrom; provided that, if permitted by
the Act and other applicable law and unless the Class A Member and the Managing
Member otherwise consent, the APC Note shall be distributed to the Class A
Member in liquidation of the Class A Member’s Interest. If the Capital Account
balance of the Class A Member exceeds the Gross Asset Value of the APC Note, the
Company shall also distribute cash in an amount equal to such excess as part of
the liquidation distribution. The Liquidator shall not distribute Property other
than cash to a Class A Member without its consent, and the Liquidator shall be
required to reduce the Property to cash to the extent necessary to

 

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make distributions to a Class A Member pursuant to Section 12.2 in cash. If the
Gross Asset Value of the APC Note exceeds such Capital Account balance, the
Class A Member will be required to contribute cash equal to such excess to the
Company.

ARTICLE XIII

NOTICE EVENTS

 

  13.1 Notice Events.

In the event that any of the following events (“Notice Events”) shall occur, the
Members shall have the rights described in Section 13.2:

(a) The Managing Member fails to (i) be in substantial compliance with its
obligation to deal with the Company on an arm’s length basis and as a separate
entity or (ii) perform or observe any material term, covenant, or agreement, on
its part to be performed or observed (other than such terms, covenants, or
obligations as are described in (i) above) under this Agreement, but only if
such failure continues unabated for twenty (20) days following the Managing
Member obtaining notice from the Class A Member of such failure; or

(b) Any representation or warranty made or deemed made by the Managing Member
under or in connection with this Agreement shall prove to have been incorrect in
any material respect when made.

 

  13.2 Liquidation Notice.

At any time on or after the occurrence of a Notice Event, the Class A Member may
elect to cause such Notice Event to result in a Liquidating Event by delivering
to the Managing Member a notice (a “Liquidation Notice”) of such election;
provided that: (i) such Notice Event shall not result in a Liquidating Event
until the expiration of three (3) Business Days following such delivery,
(ii) the Class A Member may rescind such Liquidation Notice by delivering to the
Managing Member a notice prior to such third (3rd) Business Day, and (iii) a
Liquidation Notice automatically will be deemed rescinded upon the election
within such three (3) Business Day period by the Managing Member (or its
designee) pursuant to the Managing Member Redemption Option to redeem all of the
Class A Member’s Interest pursuant to Section 10.8.

 

  13.3 Determination of Gross Asset Value.

For purposes of determining the amount of any adjustment to (i) the Gross Asset
Value of any Property of the Company (including the APC Note) pursuant to
subparagraph (ii) or (iii) of the definition of Gross Asset Value in
Section 1.10, and (ii) the Gross Liability Value of any Company Liability
pursuant to the definition of Gross Liability Value in Section 1.10, the value
of such Property or Company Liability will be determined in accordance with this
Section 13.3 (such value being the “Mark-to-Market Value”).

 

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(a) In the case of any Property of the Company for which a Gross Asset Value is
required by this Agreement to be determined, the Managing Member and the Class A
Member shall negotiate in good faith the Mark-to-Market Value of the Property
taking into consideration the realizable gross fair market value of the
applicable Property on sale thereof to a willing, unrelated purchaser in an arms
length transaction (taking into consideration any liquidity or other appropriate
discounts). If the Managing Member and the Class A Member are unable to agree on
the Mark-to-Market Value of the applicable Property, the Mark-to-Market Value
will be determined as provided in (i)-(iv) below.

(i) The Managing Member and the Class A Member will each engage a nationally
recognized independent investment banking firm (the “Managing Member Appraiser”
and the “Class A Member Appraiser,” respectively) to determine the
Mark-to-Market Value of the applicable Property using customary investment
banking valuation techniques used to determine fair market value of similarly
situated assets (the “Appraised Asset Value”). The Managing Member Appraiser and
the Class A Member Appraiser will select a third nationally recognized
independent investment banking firm not affiliated with any Member (together
with the Managing Member Appraiser and the Class A Member Appraiser, the
“Appraisers”) to determine the Appraised Asset Value. In the event the Managing
Member Appraiser and the Class A Member Appraiser cannot agree upon the identity
of the third Appraiser, the Managing Member Appraiser and the Class A Member
Appraiser shall each provide a written list of three other nationally recognized
independent investment banking firms, listed in alphabetical order, and the
first commonly listed firm shall be selected as the third Appraiser.

(ii) The Company shall provide each Appraiser prompt access to such information
as the Appraiser may reasonably request to enable it to determine the Appraised
Asset Value. Each Appraiser shall work independently of each other Appraiser and
must agree in writing that all Confidential Information and all other
information obtained, analysis performed and conclusions reached in the
engagement shall be kept confidential by such Appraiser and shall not be
disclosed by such Appraiser to any other person (including any other Appraiser)
in any manner whatsoever (other than with respect to providing a final report to
the Company and the Members setting forth that Appraiser’s opinion on the
Appraised Asset Value) before the Appraiser will be provided access to any
Confidential Information.

(iii) Each Appraiser will determine the Appraised Asset Value within sixty
(60) days of its engagement and furnish the Managing Member and the Class A
Member its determination. Following receipt of all Appraised Asset Values for
the Property in question, the Managing Member and the Class A Member will adopt
the median Appraised Asset Value as the Mark-to-Market Value of the applicable
Property.

 

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(iv) The fees and expenses of the Appraisers will be divided equally between the
Managing Member and the Class A Member.

(b) In the case of any Liability of the Company for which a Gross Liability
Value is required by this Agreement to be determined, the Managing Member and
the Class A Member shall negotiate in good faith the Mark-to-Market Value of the
Company Liability taking into consideration the amount of cash that a willing
assignor would pay to a willing, unrelated assignee to assume such Liability in
an arm’s length transaction. If the Managing Member and the Class A Member are
unable to agree on the Mark-to-Market Value of the applicable Liability, the
Mark-to-Market Value will be determined in a manner corresponding to that set
forth in Section 13.3(a) hereof; provided, however, in the event that the
Mark-to-Market Value of an applicable Liability is being determined concurrently
with the determination of the Mark-to-Market Value of Property or other
Liabilities, all Market-to-Market Values shall be determined in the same process
set forth in Section 13.3(a).

ARTICLE XIV

MISCELLANEOUS

 

  14.1 Notices.

Any notice, payment, demand, or communication required or permitted to be given
by any provision of this Agreement shall be in writing and shall be deemed to
have been delivered, given, and received for all purposes (i) as of the date so
delivered, if delivered personally to the Person or to an officer of the Person
to whom the same is directed, or (ii) when the same is actually received, if
sent either by overnight courier, registered or certified mail, postage and
charges prepaid, or by facsimile, if such facsimile is followed by a hard copy
of the facsimile communication sent promptly thereafter by overnight courier,
charges prepaid and addressed as follows, or to such other address as such
Person may from time to time specify by notice to the Members:

(a) If to the Company, to the address set forth in Section 1.4 hereof;

(b) If to a Member, to the address set forth in Section 2.1 hereof.

 

  14.2 Confidential Information.

Each Class A Member agrees that all Confidential Information shall be kept
confidential by such Class A Member and shall not be disclosed by such Class A
Member in any manner whatsoever; provided, however, that (i) any of such
Confidential Information may be disclosed to such Class A Member’s Affiliates
and to partners, members, stockholders, prospective

 

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partners, members, and stockholders, managers, directors, officers, employees,
and authorized Representatives, each of which Representatives shall be bound by
the provisions of this Section 14.2 or substantially similar terms; (ii) any
disclosure may be made of the terms of a Class A Member’s investment in the
Company pursuant to this Agreement and the performance of that investment to the
extent required for compliance with applicable Law; (iii) Confidential
Information may be disclosed by a Class A Member or Representative to the extent
reasonably necessary in connection with such Class A Member’s enforcement of its
rights under this Agreement; and (iv) Confidential Information may be disclosed
by any Class A Member or Representative to the extent that the Class A Member or
Representative has received advice from its counsel that it is legally compelled
to do so, provided, that, prior to making such disclosure, the Class A Member or
Representative, as the case may be, uses reasonable efforts to preserve the
confidentiality of the Confidential Information, including consulting with the
Company regarding such disclosure and, if reasonably requested by the Company,
assisting the Company, at the Company’s expense, in seeking a protective order
to prevent the requested disclosure, and provided, further, that the Class A
Member or Representative, as the case may be, discloses only that portion of the
Confidential Information as is, based on the advice of its counsel, legally
required. The provisions of this Section 14.2 shall continue in full force and
effect with respect to any Person who has ceased to be a Class A Member of the
Company for two (2) years from the date such Person ceased to be a Class A
Member.

 

  14.3 Binding Effect.

Except as otherwise provided in this Agreement, every covenant, term, and
provision of this Agreement shall be binding upon and inure to the benefit of
the Members and their respective successors, transferees, and assigns.

 

  14.4 Construction.

(a) Every covenant, term, and provision of this Agreement shall be construed
simply according to its fair meaning and not strictly for or against any Member.
The terms of this Agreement are intended to embody the economic relationship
among the Members and shall not be subject to modification by, or be conformed
with, any actions by the Internal Revenue Service except as this Agreement may
be explicitly so amended and except as may relate specifically to the filing of
tax returns.

 

  14.5 Time.

In computing any period of time pursuant to this Agreement, the day of the act,
event, or default from which the designated period of time begins to run shall
be included, unless it is not a Business Day, in which event the period shall
begin on the next day which is a Business Day, and the last day of the period so
computed shall not be included.

 

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  14.6 Headings.

Section and other headings contained in this Agreement are for reference
purposes only and are not intended to describe, interpret, define, or limit the
scope, extent, or intent of this Agreement or any provision hereof.

 

  14.7 Severability.

Every provision of this Agreement is intended to be severable, and, if any term
or provision of this Agreement is illegal or invalid for any reason whatsoever,
such illegality or invalidity shall not affect the validity or legality of the
remainder of this Agreement.

 

  14.8 Incorporation by Reference.

No exhibit, schedule or other appendix attached to this Agreement and referred
to herein is incorporated in this Agreement by reference unless this Agreement
expressly otherwise provides.

 

  14.9 Governing Law.

The laws of the State of Delaware shall govern the validity of this Agreement,
the construction of its terms, and the interpretation of the rights and duties
arising hereunder, without regard to principles of conflicts of laws of the
State of Delaware.

 

  14.10 Consent to Jurisdiction.

Each Member (i) irrevocably submits to the non-exclusive jurisdiction of any
Texas state court or Federal court sitting in Houston, Texas in any action
arising out of this Agreement, (ii) agrees that all claims in such action may be
decided in such court, (iii) waives, to the fullest extent permitted by law, the
defense of an inconvenient forum, and (iv) to the fullest extent permitted by
law, consents to the service of process by mail in accordance with Section 14.1
hereof. A final judgment in any such action shall be conclusive and may be
enforced in other jurisdictions. Nothing herein shall affect the right of any
party to serve legal process in any manner permitted by law or affect its right
to bring any action in any other court.

 

  14.11 WAIVER OF JURY TRIAL.

EACH OF THE MEMBERS IRREVOCABLY WAIVES, TO THE EXTENT PERMITTED BY LAW, ALL
RIGHTS TO TRIAL BY JURY AND ALL RIGHTS TO IMMUNITY BY SOVEREIGNTY OR OTHERWISE
IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS
AGREEMENT.

 

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  14.12 Counterpart Execution.

This Agreement may be executed in any number of counterparts with the same
effect as if all of the Members had signed the same document. All counterparts
shall be construed together and shall constitute one agreement.

 

  14.13 Sole and Absolute Discretion.

Except as otherwise provided in this Agreement (including Article V), all
actions which the Managing Member may take and all determinations which the
Managing Member may make pursuant to this Agreement may be taken and made at the
sole and absolute discretion of the Managing Member.

 

  14.14 Specific Performance.

Each Member agrees with the other Members that the other Members would be
irreparably damaged if any of the provisions of this Agreement are not performed
in accordance with their specific terms and that monetary damages would not
provide an adequate remedy in such event. Accordingly, it is agreed that, in
addition to any other remedy to which the nonbreaching Members may be entitled,
at law or in equity, the nonbreaching Members shall be entitled to injunctive
relief to prevent breaches of the provisions of this Agreement and specifically
to enforce the terms and provisions hereof in any action instituted in any court
of the United States or any state thereof having subject matter jurisdiction
thereof.

 

  14.15 No Material Impairment.

No Member shall take any action that could impair materially such Member’s
ability to perform its duties and obligations under this Agreement.

 

  14.16 Entire Agreement.

This Agreement and any exhibits and schedules hereto and thereto constitute the
entire agreement among the parties hereto and their respective Affiliates and
contain all of the agreements among such parties with respect to the subject
matter hereof and thereof. This Agreement and the exhibits and schedules hereto
and thereto supersede any and all other agreements, either oral or written,
between such parties with respect to the subject matter hereof and thereof.

 

  14.17 No Third Party Beneficiaries.

Except as otherwise provided herein, no Person other than a party hereto shall
have any rights or remedies under this Agreement. Without limiting the
foregoing, any obligations of the Members to satisfy their respective
obligations to make Capital Contributions under this Agreement is an agreement
only among the Members and no other Person shall have any rights to enforce such
obligations.

 

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  14.18 Waiver.

Any term or provision of this Agreement may be waived, or the time for its
performance may be extended, by the party or parties entitled to the benefit
thereof. Any such waiver shall be validly and sufficiently authorized for the
purposes of this Agreement if, as to any party, it is authorized in writing by
an authorized Representative of such party. The failure of any party hereto to
enforce at any time any provision of this Agreement shall not be construed to be
a waiver of such provision, nor in any way to affect the validity of this
Agreement or any part hereof or the right of any party thereafter to enforce
each and every such provision. No waiver of any breach of this Agreement shall
be held to constitute a waiver of any other or subsequent breach.

[signatures follow on separate pages]

 

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first written above.

 

ATLAS MIDKIFF, LLC, as Managing Member, the
Class B Member and the Tax Matters Member By:      Name:   David D. Hall Title:
  Chief Financial Officer

THIS IS A SIGNATURE PAGE TO THE OPERATING AGREEMENT OF ATLAS PIPELINE
MID-CONTINENT WESTTEX, LLC

AND IS EXECUTED BY THE PARTY NAMED ABOVE IN ITS CAPACITY AS THE MANAGING MEMBER,

THE CLASS B MEMBER AND THE TAX MATTERS MEMBER

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

IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first written above.

 

ANADARKO MIDKIFF/CHANEY DELL LLC, as Class A Member By:  

Western Gas Resources, Inc.

Its Member

By:      Name: Albert L. Richey Title: Vice President

THIS IS A SIGNATURE PAGE TO THE OPERATING AGREEMENT OF ATLAS PIPELINE
MID-CONTINENT WESTTEX, LLC

AND IS EXECUTED BY THE PARTY NAMED ABOVE IN ITS CAPACITY AS THE CLASS A MEMBER

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

IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first written above.

 

WESTERN GAS RESOURCES, INC., as an Initial Class A Member and a Withdrawing
Class A Member By:      Name:   Albert L. Richey Title:   Vice President

THIS IS A SIGNATURE PAGE TO THE OPERATING AGREEMENT OF ATLAS PIPELINE
MID-CONTINENT WESTTEX, LLC

AND IS EXECUTED BY THE PARTY NAMED ABOVE IN ITS CAPACITY AS THE INITIAL CLASS A
MEMBER

AND THE WITHDRAWING CLASS A MEMBER

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

IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first written above.

 

ATLAS PIPELINE PARTNERS, L.P., as Initial Class B Member and Withdrawing Class B
Member By:  

Atlas Pipeline Partners GP, LLC

Its General Partner

By:      Name:   Matthew A. Jones Title:   Chief Financial Officer

THIS IS A SIGNATURE PAGE TO THE OPERATING AGREEMENT OF ATLAS PIPELINE
MID-CONTINENT WESTTEX, LLC

AND IS EXECUTED BY THE PARTY NAMED ABOVE IN ITS CAPACITY AS THE INITIAL CLASS B
MEMBER

AND THE WITHDRAWING CLASS B MEMBER

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

EXHIBIT A

CERTIFICATE FOR

ATLAS PIPELINE MID-CONTINENT WESTTEX, LLC

This security has not been registered under the Securities Act of 1933, as
amended (the “Securities Act”), and may not be offered or sold, unless it has
been registered under the Securities Act or unless an exemption from
registration is available (and, in such case, an opinion of counsel reasonably
satisfactory to Atlas Pipeline Mid-Continent WestTex, LLC (the “Company”) shall
have been delivered to the Company to the effect that such offer or sale is not
required to be registered under the Securities Act).

Certificate Number             

             of shares

The Company hereby certifies that                     (the “Holder”) is the
registered owner of                     shares of the limited liability company
interests in the Company (the “Interests”). THE LIMITED LIABILITY COMPANY
INTERESTS EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR UNDER THE
SECURITIES LAWS OF ANY STATE OR FOREIGN JURISDICTION. SUCH INTERESTS ARE SUBJECT
TO RESTRICTIONS ON TRANSFERABILITY AND RESALE, AND MAY NOT BE TRANSFERRED OR
RESOLD EXCEPT IN COMPLIANCE WITH THE SECURITIES ACT AND THE APPLICABLE STATE OR
FOREIGN SECURITIES LAWS, PURSUANT TO REGISTRATION THEREUNDER OR EXEMPTION
THEREFROM. IN ADDITION, TRANSFER OR OTHER DISPOSITION OF SUCH INTERESTS IS
FURTHER RESTRICTED AS PROVIDED IN THE OPERATING AGREEMENT OF THE COMPANY.
PURCHASERS OF INTEREST SHOULD BE AWARE THAT THEY WILL BE REQUIRED TO BEAR THE
FINANCIAL RISKS OF THEIR INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. By
acceptance of this Certificate, and as a condition to being entitled to any
rights and/or benefits with respect to the Interests evidenced hereby, the
Holder is deemed to have agreed to comply with and be bound by all the terms and
conditions of the Operating Agreement of the Company, dated as of
                    , 2007, as amended from time to time (the “Agreement”). The
Company will furnish a copy of the Agreement to the Holder without charge upon
written request to the Company at its principal place of business. The Company
maintains books for the purpose of registering the transfer of Interests.

The shares represented by this certificate are securities within the meaning of,
and governed by, Article 8 of the Delaware Uniform Commercial Code and by
Chapter 8 of the Texas Business Commerce Code. This Certificate shall be
governed by and construed in accordance with the laws of the State of Delaware
without regard to principles of conflicts or laws.

IN WITNESS WHEREOF, the Company has caused this Certificate to be executed by
[                    ] as of the date set forth below.

 

Dated: _____________________________             Name:     Title:

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

(REVERSE SIDE OF CERTIFICATE

FOR INTERESTS OF ATLAS PIPELINE MID-CONTINENT WESTTEX, LLC)

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
                                                                          
(print or typewrite name of Transferee),                                        
     (insert Social Security or other taxpayer identification number of
Transferee), the following specified percentage of Interests:               
                        (identify the percentage of Interests being
transferred), and irrevocably constitutes and appoints                         
                                       , as attorney-in-fact, to transfer the
same on the books and records of the Company, with full power of substitution in
the premises.

 

Dated:   ________________________________     Signature:             
(Transferor)       Address: