Document:

OPTION EXCHANGE AGREEMENT

 

This agreement (the
“Agreement”) is entered into as of the date set forth on the signature pages below, between
Skinny Nutritional Corp., a Nevada corporation (the “Company”) and the undersigned holder of securities of
the Company whose name appears on the signature page annexed hereto (the “Securityholder”). The Company
and the Securityholders are referred to collectively herein as the “Parties”.

 

RECITALS:

 

WHEREAS, the Company has determined that
it is in the best interests of its shareholders that the Company offer to acquire certain outstanding options to purchase shares
of Common Stock of the Company held by certain of the Company’s employees from the holders thereof (the “Transaction”);
and

 

WHEREAS, the undersigned Securityholder
of the Company has determined it to be in his or her best interests to accept the Transaction upon the terms and conditions contained
herein.

 

NOW, THEREFORE, in consideration of the
premises and the mutual promises herein made, and in consideration of the representations, warranties, and covenants herein contained,
and other good and valuable consideration, the Parties agree as follows.

 

1.      Definitions

 

For purposes of this Agreement:

 

“Affiliate” of any specified
Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with
such specified Person.  For the purposes of this definition, “control”, when used with respect to any specified
Person, means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership
of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings
correlative to the foregoing.

 

“Confidential Information”
means any information which has been or is concurrently herewith provided to a Securityholder (i) in connection with this Agreement,
which is identified as, or should be reasonably understood to be, confidential to the Company, and/or (ii) as a result of the Securityholder’s
investment in or employment by the Company (whether as an employee or consultant or otherwise), including, but not limited to,
trade secrets and confidential information disclosed to the Securityholders or known by them as a consequence of their transactions
with the Company, whether or not pursuant to this Agreement, and not generally known in the industry, concerning the Company’s
business, finances, methods, operations, know-how, trade secrets, data, technical processes and formulas, source code, product
designs, sales, cost and other unpublished financial information, product and business plans, projections, marketing data, information,
research and development, customers, pricing and information relating to proposed expansion and this Agreement and all exhibits
hereto.

 

“Exchange Ratio” has
the meaning set forth in Section 2(a) herein.

 

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“Options” shall mean
those options to purchase shares of Common Stock of the Company beneficially owned by a Securityholder to be exchanged pursuant
to this Agreement and which are indicated on the signature page to this Agreement.

 

“Option Certificate”
shall mean a certificate representing the Options to purchase shares of Common Stock of the Company beneficially owned by a Securityholder.

 

“Person” means an individual,
a partnership, a corporation, a limited liability company or partnership, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization, or a governmental entity (or any department, agency, or political subdivision thereof).

 

“Shares” shall mean all
shares of Common Stock of the Company, par value $.001 per share.

 

“Transfer” A Person shall
be deemed to have effected a “Transfer” of a security if such person directly or indirectly: (i) sells, pledges, encumbers,
grants an option with respect to, transfers or disposes of such security or any interest in such security or (ii) enters into an
agreement or commitment providing for the sale of, pledge of, encumbrances of, grant of an option with respect to, transfer of
or disposition of such security or any interest therein.

 

2.      Offer to Exchange Options

 

(a)      Basic Transaction. Subject
to the terms and conditions of this Agreement, the Company hereby offers to purchase from the undersigned Securityholder the Options
beneficially owned by the undersigned, as set forth on the Securityholder’s signature page to this Agreement in exchange
for such number of Shares on a basis of 0.80 shares for each Option (the “Exchange Ratio”) as set forth in clause
2(d) hereof. All fractional Shares resulting from the Transaction shall be rounded up or down to the nearest whole share.

 

(b)      The Closing. The closing of the
Transaction contemplated by this Agreement (the “Closing”) shall be deemed to take place at the offices of
the Company, at 5:00 p.m. local time on the date that the holders of the Options entering into this Transaction have satisfied
the conditions to closing described below (the “Closing Date”).

 

(c)      Deliveries at the Closing.
At or the prior to the Closing, (i) the Securityholder will deliver to the Company the Option Certificates and other documents
as set forth below and (ii) the Company will deliver to the Securityholder the various certificates, instruments, and documents
as set forth below:

 

(i)      On or before 5:00
pm on the Closing Date, in order to accept this offer, the Securityholder shall deliver to the Company, an executed copy of this
Agreement and all original Option Certificates owned by Securityholder that are to be exchanged in this Transaction; and

 

(ii)      Within 10 business
days of receipt of the documents to be delivered by the Securityholder in clause (i) above, the Company shall deliver to the Securityholder
the Shares.

 

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IF YOU HAVE NEVER RECEIVED, OR HAVE MISPLACED, A PHYSICAL CERTIFICATE
FOR YOUR OPTIONS, PLEASE CHECK THE BOX ON THE SIGNATURE PAGE AND COMPLETE THE AFFIDAVIT ANNEXED TO THIS AGREEMENT AT APPENDIX B
(THE “AFFIDAVIT”).

 

(d)      Exchange of Options. Upon
delivery of the Securityholder’s Options to the Company (or, if appropriate, the Affidavit(s)) together with an executed
copy of this Agreement, subject to the Company’s acceptance thereof, the Options owned by Securityholder will be deemed converted
automatically into the right to receive that number of Shares determined according to the Exchange Ratio.

 

(e)      If any Shares are to be issued in
a name other than the name in which the Options surrendered in exchange therefor is registered, it will be a condition of the issuance
thereof that (i) the Options so surrendered will be properly endorsed and otherwise in proper form for transfer and accompanied
by all other documents required to evidence and effect such transfer and (ii) either (x) that the Person requesting such exchange
will have paid any transfer or other taxes required by reason of the issuance of a certificate for the Shares in a name other than
the name of the registered holder of the Options surrendered or (y) established to the satisfaction of the Company, or any agent
designated by the Company, that such tax has been paid or is not applicable.

 

(f)      The Company will be entitled to deduct
and withhold from the consideration otherwise payable pursuant to this Agreement to any holder of Options such amounts as the Company
(or any Affiliate thereof) shall determine in good faith they are required to deduct and withhold with respect to the making of
such payment under the Internal Revenue Code, or any provision of federal, state, local or foreign tax law. To the extent that
amounts are so withheld by the Company, such withheld amounts will be treated for all purposes of this Agreement as having been
paid to the holder of the Options in respect of whom such deduction and withholding were made by the Company.

 

(g)      Additional Documents. The Securityholder
hereby covenants and agrees to execute and deliver any additional documents necessary or desirable, in the reasonable opinion
of the Company, to carry out the intent of this Agreement.

 

3.      Reliance on Certain Reports Filed
Under the Securities Exchange Act of 1934 and Other Information. 

 

(a)      Annual Report on Form
10-K for the year ended December 31, 2010. On April 15, 2011, the Company filed its Annual Report on Form 10-K for the year
ended December 31, 2010 (the “2010 Annual Report”) with the United States Securities and Exchange Commission
(the “SEC”).

 

(b)      Quarterly Reports on Form
10-Q. During the 2011 calendar year, the Company filed with the SEC its Quarterly Report on Form 10-Q as follows: (i) on May
20, 2011, the Company filed its Quarterly Report on Form 10-Q for the quarter ended March 31, 2011; (ii) on August 15, 2011, the
Company filed its Quarterly Report on Form 10-Q for the quarter ended June 30, 2011; and (iii) on November 21, 2011, the Company
filed its Quarterly Report on Form 10-Q for the quarter ended September 30, 2011 (the “2011 Quarterly Reports”).

 

(c)      Current Reports on Form
8-K. The Company has filed Current Reports on Form 8-K (including amendments to Current Reports on Form 8-K/A) with the SEC
on the following dates during the fiscal year ending December 31, 2011 and up to the date of this Agreement: January 21, 2011,
February 28, 2011, March 16, 2011, June 22, 2011, July 20, 2011, November 18, 2011, December 6, 2011, January 13, 2012 and January
27, 2012 (excluding Current Reports on Form 8-K that have been furnished rather than filed with the SEC, the “Current
Reports”).

 

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(d)      Reliance on Information. The
Securityholder has read and understood the “Risk Factors” attached as Appendix A hereto (the “Risk Factors”).

 

(e)      Acknowledgement and Confirmation.
The undersigned hereby agrees and acknowledges that it has been advised that the Company has filed with the SEC the 2010 Annual
Report, the 2011 Quarterly Report and the Current Reports (collectively, the “SEC Reports”) and that it has
either obtained or has access to (through the public website of the SEC or otherwise) the SEC Reports and the Risk Factors. Each
Securityholder is urged to read the Risk Factors and the SEC Reports in their entirety. The undersigned further agrees that it
has taken the opportunity to review such SEC Reports and Risk Factors in their entirety, including the risk factors described
in such SEC Reports, and that it has considered all factors that it deems material in deciding on the advisability of investing
in the Company’s securities.

 

4.      Representations by the Company.

 

The Company hereby represents and warrants
to the Securityholders as of the date of this Agreement as follows:

 

(a)      The Company is duly organized,
validly existing and in good standing under the laws of its state of incorporation, with all requisite power and authority to own,
lease, license, and use its properties and assets and to carry out the business in which it is engaged, except where the failure
to have or be any of the foregoing may not be expected to have a material adverse effect on the Company’s presently conducted
businesses. The Company is not in violation of any of the provisions of its certificate of incorporation, bylaws or other organizational
or charter documents. The Company is duly qualified to transact the business in which it is engaged and is in good standing as
a foreign corporation in every jurisdiction in which its ownership, leasing, licensing or use of property or assets or the conduct
of its business make such qualification necessary, except where the failure to be so qualified or in good standing, as the case
may be, could not, individually or in the aggregate, have or reasonably be expected to result in (i) a material and adverse effect
on the legality, validity or enforceability of this Agreement, (ii) a material and adverse effect on the results of operations,
assets, prospects, business or condition (financial or otherwise) of the Company, taken as a whole, or (iii) an adverse impairment
to the Company’s ability to perform on a timely basis its obligations hereunder (any of (i), (ii) or (iii), a “Material
Adverse Effect”).

 

(b)      The Company has the requisite corporate power and
authority to enter into, deliver and consummate the transactions contemplated by this Agreement, to issue and sell the Shares,
to deliver the Shares and otherwise to carry out its obligations hereunder. The execution and delivery of this Agreement and the
consummation by it of the transactions contemplated thereby have been duly authorized by the Company and no further action is required
by the Company in connection therewith. When executed and delivered by the Company, this Agreement will constitute the legal, valid
and binding obligation of the Company, enforceable as to the Company in accordance with its terms, except as enforcement may be
limited by bankruptcy, insolvency, reorganization, arrangement, fraudulent conveyance or transfer, moratorium or other laws or
court decisions, now or hereinafter in effect, relating to or affecting the rights of creditors generally and as may be limited
by general principles of equity and the discretion of the court having jurisdiction in an enforcement action (regardless of whether
such enforceability is considered in a proceeding in equity or at law).

 

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(c)      The execution, delivery and performance of this Agreement
by the Company and the consummation by the Company of the transactions contemplated hereby do not and will not: (i) conflict with
or violate any provision of the Company’s certificate of incorporation or bylaws, or (ii) violate, conflict with, or constitute
a default or breach (or an event that with notice or lapse of time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement,
credit facility, debt or other instrument (evidencing a Company debt or otherwise) or other understanding to which the Company
is a party or by which any property or asset of the Company is bound or affected, or (iii) result in a violation of any law, rule,
regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Company
is subject (including federal and state securities laws and regulations), or by which any property or asset of the Company is bound
or affected; except in the case of each of clauses (ii) and (iii), such as could not, individually or in the aggregate, have or
reasonably be expected to result in a Material Adverse Effect.

 

(d)      The Shares have been duly authorized and, when issued
and paid for in accordance with this Agreement, will be duly and validly issued, fully paid and nonassessable, will not be issued
in violation of any preemptive or other rights of stockholders, and will be issued free and clear of all liens and encumbrances,
other than restrictions on transfer under applicable securities laws.

 

5.      Representations by the Securityholder.

 

The Securityholder represents and warrants
to the Company as of the date of this Agreement as follows.

 

(a)      Ownership; Authority. The
Securityholder is the beneficial owner of the Options indicated on the Securityholder signature page of this Agreement, free and
clear of any liens, claims, options, rights of first refusal, co-sale rights, charges or other encumbrances and has the full power
and authority to make, enter into and carry out the terms of this Agreement and this Agreement constitutes a valid and binding
obligation of the Securityholder.

 

(b)      Own Account. The Securityholder
understands that the Shares are “restricted securities” and have not been registered under the Securities Act of 1933,
as amended (the “Securities Act”) or any applicable state securities law and is acquiring the Shares as principal
for its own account and not with a view to or for distributing such Shares or any part thereof in violation of the Securities
Act or any applicable state securities law, has no present intention of distributing any of such Shares in violation of the Securities
Act or any applicable state securities law and has no direct or indirect arrangement or understandings with any other persons
to distribute or regarding the distribution of such Shares in violation of the Securities Act or any applicable state securities
law. The Securityholder is acquiring the Shares hereunder in the ordinary course of its business. The Securityholder does not
have any agreement or understanding, directly or indirectly, with any Person to distribute any of the Shares. The Securityholder
will not, directly or indirectly, offer, sell, pledge, transfer or otherwise dispose of (or solicit any offers to buy, purchase
or otherwise acquire or take a pledge of) any of the Shares, nor will the Securityholder engage in any short sale that results
in a disposition of any of the Shares by the Securityholder, except in compliance with the Securities Act and the rules and regulations
and any applicable state securities laws.

 

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(c)      General Solicitation.
The Securityholder is not purchasing the Shares as a result of any advertisement, article, notice or other communication regarding
the Shares published in any newspaper, magazine or similar media, broadcast over television or radio, disseminated over the Internet
or presented at any seminar or any other general solicitation or general advertisement. In entering into this Agreement and in
purchasing the Shares, the Securityholder further acknowledges that it has either a pre-existing personal or business relationship
with either the Company or any of its officers, directors or controlling person, of a nature and duration such as would enable
a reasonable prudent investor to be aware of the character, business acumen, and general business and financial circumstances
of the Company and an investment in the Shares.

 

(d)      Experience; Access to
Information. The Securityholder, either alone or together with its representative, has such knowledge, sophistication and
experience in business and financial matters so as to be capable of evaluating the merits and risks of the Transaction and an
investment in the Company’s Shares and have so evaluated the merits and risks of the Transaction. The Securityholder acknowledges
that it has received such information requested by it concerning the business, management and financial affairs of the Company
in order to evaluate the merits and risks of this investment and it has been afforded (i) the opportunity to ask such questions
as it has deemed necessary of, and to receive answers from, representatives of the Company concerning the terms and conditions
of the offering of the Shares and the merits and risks of investing in the Shares; (ii) access to information about the Company
and its financial condition, results of operations, business, properties, management and prospects sufficient to enable it to
evaluate its investment; and (iii) the opportunity to obtain such additional information that the Company possesses or can acquire
without unreasonable effort or expense that is necessary to make an informed investment decision with respect to the investment.
The Securityholder has either obtained copies of, or has access to (through the public website of the SEC or otherwise), the Company’s
SEC Reports. The Securityholder has carefully reviewed all information provided to it, has had the opportunity to review the Company’s
SEC Reports, and has carefully evaluated and understands the risks described therein related to the Company and an investment
in the Company, and has considered all factors that it deems material in deciding on the advisability of investing in the Company’s
securities.

 

(e)      Investment Risks.
The Securityholder acknowledges and agrees that investing in the Company’s securities involves risks and that the Company’s
operating results and financial condition have varied in the past and may in the future vary significantly depending on a number
of factors. The Securityholder acknowledges and agrees that it has evaluated and understands the risks regarding investing in the
Company’s securities, including the risks identified in this Agreement, including the Risk Factors, and the risk factors
described in the Company’s SEC Reports. The Securityholder agrees that the risks described herein and in such SEC Reports
are not the only risks facing the Company. The Securityholder agrees that these risks could have a material adverse effect on the
Company’s business, results of operations, financial condition or liquidity and cause its actual operating results to materially
differ from those contained in any forward-looking statements made in this Agreement, in the Company’s SEC Reports and elsewhere
by management. Before making an investment decision, each Securityholder acknowledges that it has been advised that it should carefully
review the SEC Reports and consider the risks described therein as well as other information contained or incorporated by reference
in this Agreement. Additional risks and uncertainties not currently known to the Company or that it currently deems to be immaterial
also may materially adversely affect the Company’s business, financial condition and/or operating results.

 

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(f)      No Other Warranties.
Except as set forth in this Agreement, no representation or warranty is made by the Company to induce the Securityholder to make
this investment, and any representation or warranty not made herein or therein is specifically disclaimed and no information furnished
to the Securityholder or the Securityholder's advisor(s) in connection with the sale were in any way inconsistent with the information
stated herein. The Securityholder further understands and acknowledges that no person has been authorized by the Company to make
any representations or warranties concerning the Company, including as to the accuracy or completeness of the information contained
in this Agreement. The Securityholder understands and has relied only on the information provided to it in writing by the Company
relating to this investment.

 

(g)      Independent Investment
Decision. Securityholder has independently evaluated the merits of its decision to purchase Shares pursuant to this Agreement,
such decision has been independently made by the Securityholder. Securityholder has not relied on the truth, accuracy or completeness
of the statements contained in any research report concerning the Company that was prepared by an investment banking firm. The
Securityholder further understands that nothing in this Agreement, any other agreement or any other materials presented to such
Securityholder in connection with the Transaction constitutes legal, tax or investment advice and such information may not be used,
for the purpose of (i) avoiding tax-related penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending
to another party any tax-related matters addressed herein. The Securityholder confirms that it has only relied on the advice of
its own tax advisors and business and/or legal counsel in making its decision to enter into this Agreement.

 

(h)      Restricted Securities.
The Securityholder understands that neither the Shares nor any interest therein may be resold by the Securityholder in the absence
of a registration under the Securities Act or an exemption from registration. The Securityholder acknowledges and understands:
(i) that the issuance of the Shares in connection with this Agreement will be exempt from registration under the Securities Act
of 1933, as amended, and applicable state securities laws; and (ii) that the Shares will be “restricted securities”,
as such term is defined in Rule 144 promulgated under the Securities Act, and they may not be sold pursuant to such rule unless
the conditions thereof are met. The Company has no obligation to register any securities purchased or issuable hereunder. The Securityholder
is aware that the offering of the Shares involves securities for which only a limited trading market exists, thereby requiring
any investment to be maintained for an indefinite period of time. The purchase of the Shares involves risks which the Securityholder
has evaluated, and the Securityholder is able to bear the economic risk of the purchase of such Shares and the loss of its entire
investment. The undersigned is able to bear the substantial economic risk of the investment for an indefinite period of time, has
no need for liquidity in such investment and can afford a complete loss of such investment. The Securityholder’s overall
commitment to investments that are not readily marketable is not, and his acquisition of the Shares will not cause such overall
commitment to become, disproportionate to his net worth and the Securityholder has adequate means of providing for its current
needs and contingencies. It never has been represented, guaranteed or warranted by the Company, any of the officers, directors,
stockholders, partners, employees or agents of the Company, or any other persons, whether expressly or by implication, that: (i)
the Company or the Securityholders will realize any given percentage of profits and/or amount or type of consideration, profit
or loss as a result of the Company’s activities or the Securityholder’s investment in the Company; or (ii) the past
performance or experience of the management of the Company, or of any other person, will in any way indicate the predictable results
of the ownership of the Shares or of the Company’s activities.

 

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(i)      Reliance. The
Securityholder acknowledges and agrees that (i) the offering and sale of the Shares are intended to be exempt from
registration under the Securities Act by virtue of Section 4(2) of the Securities Act and/or Regulation D promulgated
thereunder, (ii) the Shares have not been registered under the Securities Act and (iii) that the Company has represented to
the Securityholder (assuming the veracity of the representations of the Securityholder made herein) that the Shares have been
offered and sold by the Company in reliance upon an exemption from registration provided in Section 4(2) of the Securities
Act. Accordingly, the Securityholder acknowledges and understands that it has been advised that the Shares have not been
registered under the Securities Act and are being sold by the Company in reliance upon the veracity of the
Securityholder’s representations contained herein and that the availability of the exemption from the registration
requirements provided by the Securities Act and the securities laws of all applicable states is dependent in part upon the
accuracy and truthfulness of Securityholder’s representations. The Securityholder’s acquisition of the
Shares shall constitute a confirmation of the foregoing representation and warranty and understanding thereof and
Securityholder hereby consents to such reliance.

 

6.      Transfer Restrictions.

 

(a)      Transfer
Restrictions. The Shares may only be disposed of in compliance with state and federal
securities laws and the terms of this Agreement. In connection with any transfer of Shares other than pursuant to an effective
registration statement or Rule 144, the Company may require the transferor thereof to provide to the Company an opinion of counsel
selected by the transferor and reasonably acceptable to the Company, the form and substance of which opinion shall be reasonably
satisfactory to the Company, to the effect that such transfer does not require registration of such transferred Shares under the
Securities Act and is in compliance with this Agreement. As a condition of any permitted transfer, any such transferee shall provide
the Company with a form of agreement including investment representations of such transferee substantially similar to the representations
of the Securityholder contained herein. Any permitted transferee must also agree in writing to be bound by and comply with all
the provisions of this Agreement that impose ongoing obligations on the Securityholder. The Securityholder acknowledges and agrees
that the Company may at any time place a stop transfer order on its transfer books against the Shares. Such stop order will be
removed, and further transfer of the Shares will be permitted, upon an effective registration of the respective Shares, or the
receipt by the Company of an opinion of counsel satisfactory to the Company that such further transfer may be effected pursuant
to an applicable exemption from registration. 

 

(b)      The Securityholder agrees
to the imprinting of a legend on each certificate representing the Shares purchased hereunder in the following form:

 

THESE SECURITIES HAVE NOT BEEN
REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE
OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION
FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE
STATE SECURITIES LAWS AS EVIDENCED BY AN OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY
ACCEPTABLE TO THE COMPANY.

 

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7.      Tax Considerations

 

The Securityholder acknowledges and understands
the following discussion regarding the expected tax consequences of the Transaction.

 

The following is a discussion of certain
U.S. federal income tax consequences of the offer to U.S. holders (as defined below) of Options that are exchanged for the Shares
pursuant to this Agreement. The discussion is based on the Internal Revenue Code of 1986, as amended, referred to herein as the
“Code,” applicable Treasury Regulations and administrative and judicial interpretations thereof, each as in effect
as of the date of this offer, all of which may change, possibly with retroactive effect.  The discussion may not apply to
stockholders subject to special rules under the Code, including, without limitation, persons who acquired their Options as compensation,
financial institutions, brokers, dealers or traders in securities or commodities, insurance companies, partnerships or other entities
treated as partnerships or flow-through entities for U.S. federal income tax purposes, tax-exempt organizations, persons who are
subject to alternative minimum tax, among others. This discussion does not address the U.S. federal tax consequences to any Securityholder
who, for U.S. federal income tax purposes, is a non-resident alien individual, foreign corporation, foreign partnership or foreign
estate or trust, and does not address any state, local or foreign tax consequences of the offer.

 

BECAUSE INDIVIDUAL CIRCUMSTANCES MAY DIFFER,
EACH SECURITYHOLDER SHOULD CONSULT SUCH SECURITYHOLDER’S TAX ADVISOR REGARDING THE APPLICABILITY OF THE RULES DISCUSSED BELOW
TO SUCH SECURITYHOLDER AND THE PARTICULAR TAX EFFECTS TO SUCH SECURITYHOLDER OF THE OFFER, INCLUDING THE APPLICATION AND EFFECT
OF STATE, LOCAL, AND FOREIGN TAX LAWS.

 

For purposes of this discussion, a U.S.
holder is any beneficial owner of Options that is any of the following: (i) an individual who is a citizen or resident of the United
States; (ii) a corporation (or other entity treated as a corporation for U.S. federal income tax purposes) created or organized
under the laws of the United States, any state thereof or the District of Columbia; (iii) an estate the income of which is subject
to U.S. federal income taxation regardless of its source; or (iv) a trust (1) if a court within the United States is able to exercise
primary supervision over the administration of such trust and one or more U.S. persons have the authority to control all substantial
decisions of such trust or (2) that has a valid election in effect to be treated as a U.S. person for U.S. federal income tax purposes.

 

The receipt of the Shares by a U.S. holder
in exchange for the Options pursuant to the offer is expected to be a taxable transaction for U.S. federal income tax purposes. 
In general, a U.S. holder who exchanges Options pursuant to the offer will recognize gain or loss for U.S. federal income tax purposes
equal to the difference, if any, between the fair market value on the date of acceptance for exchange pursuant to the offer of
the Shares received and the holder’s adjusted tax basis in the Options exchanged pursuant to the offer.  Gain or loss
will be determined separately for each block of Options exchanged pursuant to the offer.  Any such gain or loss generally
will be long-term capital gain or loss if the stockholder has held the Options for more than one year on the date of acceptance
for exchange pursuant to the offer.  Long-term capital gain of noncorporate stockholders is generally taxable at preferential
rates.  Certain limitations apply to the use of capital losses.

 

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A U.S. holder’s tax basis in Shares
received pursuant to the offer will equal its fair market value on the date of acceptance for exchange pursuant to the offer. 
A holder’s holding period in the Shares received will begin the day following the date of acceptance for exchange pursuant
to the offer.

 

8.      Confidentiality

 

The undersigned Securityholder covenants
and agrees, on behalf of itself its affiliates, parent, subsidiaries, directors, officers, employees, agents, heirs, successors
and assigns, that it shall not, at any time during or after the termination of this Agreement, make use of or disclose to any person,
corporation, or other entity, for any purpose whatsoever, any trade secret or other Confidential Information and not to use any
such Confidential Information for any purpose other than the purpose for which it was originally disclosed to the receiving party.
The undersigned acknowledges that the Confidential Information is the property of the Company and that this section shall survive
termination of this Agreement and the consummation of the Transaction.

 

9.      Termination

 

The Company may terminate this Agreement
at any time prior to the consummation of the Transaction with or without notice to the Securityholders. If this Agreement is terminated,
all rights and obligations of the Parties hereunder shall terminate without any liability of any Party to any other Party.

 

10.      Miscellaneous

 

(a)
      Fees and Expenses. Each party shall pay the fees and expenses of its advisers,
counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation,
execution, delivery and performance of this Agreement. The Company shall pay all transfer agent fees, stamp taxes and other taxes
and duties levied in connection with the delivery of any Shares to the Purchaser.

 

(b)      No Third-Party Beneficiaries.
This Agreement shall not confer any rights or remedies upon any Person other than the Parties and their respective successors and
permitted assigns.

 

(c)      Entire Agreement. This
Agreement (including the documents referred to herein) constitutes the entire agreement among the Parties and supersedes any prior
understandings, agreements, or representations by or among the Parties, written or oral, to the extent they related in any way
to the subject matter hereof.

 

(d)      Succession and Assignment.
This Agreement shall be binding upon and inure to the benefit of the Parties named herein and their respective successors and permitted
assigns. No Party may assign either this Agreement or any of his or its rights, interests, or obligations hereunder without the
prior written approval of the Company.

 

(e)      Counterparts. This Agreement
may be executed in several counterparts, including by facsimile, each of which shall be deemed an original and all of which shall
constitute one and the same instrument, and shall become effective when counterparts have been signed by each of the parties and
delivered to the other parties; it being understood that all parties need not sign the same counterpart.

 

    	10

    	 

    

(f)      Headings.
The section headings contained in this Agreement are inserted for convenience only and shall not affect in any way the meaning
or interpretation of this Agreement.

 

(g)      Notices.
All notices, requests, demands, claims, and other communications hereunder will be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given if (i) (and then three business days after) it is sent by registered
or certified mail, return receipt requested, postage prepaid, or (ii) sent by overnight courier service, and addressed to the
intended recipient as follows: If the Company, to Skinny Nutritional Corp., 3 Bala Plaza East, Bala
Cynwyd, PA 19004 and if the Securityholders, at the addresses provided on the Securityholder signature page of this Agreement.
Any Party may send any notice, request, demand, claim, or other communication hereunder to the intended recipient at the address
set forth above using any other means (including personal delivery, expedited courier, messenger service, fax or ordinary mail),
but no such notice, request, demand, claim, or other communication shall be deemed to have been duly given unless and until it
actually is received by the intended recipient. Any Party may change the address to which notices, requests, demands, claims,
and other communications hereunder are to be delivered by giving the other Parties notice in the manner herein set forth.

 

(h)      Governing Law. All questions
concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by and construed and
enforced in accordance with the internal laws of the State of Pennsylvania, without regard to the principles of conflicts of law
thereof. Each party agrees that all proceedings concerning the interpretations, enforcement and defense of the transactions contemplated
by this Agreement (whether brought against a party hereto or its respective Affiliates, employees or agents) shall be commenced
exclusively in the state and federal courts sitting in the State of Pennsylvania (the “Pennsylvania Courts”).
Each party hereto hereby irrevocably submits to the exclusive jurisdiction of the Pennsylvania Courts for the adjudication of any
dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any proceeding, any claim that it is not personally subject to the jurisdiction of any Pennsylvania
Court, or that such proceeding has been commenced in an improper or inconvenient forum. Each party hereto hereby irrevocably waives
personal service of process and consents to process being served in any such proceeding by mailing a copy thereof via registered
or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under
this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing
contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. Each party hereto
hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any proceeding
arising out of or relating to this Agreement or the transactions contemplated hereby. If either party shall commence a proceeding
to enforce any provisions of this Agreement, then the prevailing party in such proceeding shall be reimbursed by the other party
for its reasonable attorney’s fees and other reasonable costs and expenses incurred with the investigation, preparation and
prosecution of such Proceeding.

 

(i)      Amendments
and Waivers. No amendment of any provision of this Agreement shall be valid unless the same shall be in writing and signed
by the Parties. No waiver by any Party of any default, misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent default, misrepresentation, or breach of warranty or
covenant hereunder or affect in any way any rights arising by virtue of any prior or subsequent such occurrence.

 

    	11

    	 

    

(j)      Severability.
Any term or provision of this Agreement that is invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or the validity or enforceability of the offending
term or provision in any other situation or in any other jurisdiction.

 

(k)      Construction. Any reference
to any federal, state, local, or foreign statute or law shall be deemed also to refer to all rules and regulations promulgated
thereunder, unless the context requires otherwise. The word "including" shall mean including without limitation. The
Parties intend that each representation, warranty, and covenant contained herein shall have independent significance. If any Party
has breached any representation, warranty, or covenant contained herein in any respect, the fact that there exists another representation,
warranty, or covenant relating to the same subject matter (regardless of the relative levels of specificity) which the Party has
not breached shall not detract from or mitigate the fact that the Party is in breach of the first representation, warranty, or
covenant.

 

(l)
      Legal Representation. This Agreement was negotiated by the parties with the benefit of legal representation and any rule
of construction or interpretation otherwise requiring this Agreement to be construed or interpreted against any party shall not
apply to any construction or interpretation thereof.

 

 

Signature pages follow.

 

    	12

    	 

    

SIGNATURE PAGE TO OPTION EXCHANGE AGREEMENT

IN WITNESS WHEREOF, the parties hereto have executed or caused this Agreement to be executed by their signature as natural
persons or by individuals by their duly authorized officers as of the date first written above.

 

THE COMPANY:

 

SKINNY NUTRITIONAL CORP.:

 

 

______________________________

Name:

Title: 

 

    	13

    	 

    

SECURITYHOLDER SIGNATURE PAGE

SECURITY EXCHANGE AGREEMENT

SKINNY NUTRITIONAL CORP.

 

I hereby agree to be bound by all the terms
and provisions of this Agreement and to perform all of my obligations thereunder with respect to the Shares to be acquired. Set
forth below is the name(s) in which Shares should be issued (if Shares are to be held by more than one owner, each tenant or other
person involved must sign this Signature Page).

 

PLEASE TYPE OR PRINT LEGIBLY

 

Name of Securityholder:                                                                                                                       

 

Street Address:                                                                                                                               

 

City, State, Zip Code:                                                                                                                           

 

Telephone Number: (         )                                                                                                                 

 

Taxpayer Identification Number:                                                                                                        

(Social Security number
for individuals)

 

 

	No. of Options to be Cancelled	 	Exercise Price of Options	 	No. of Shares to Issued upon Exchange
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 

 

		 ̈	CHECK HERE IF YOU HAVE NEVER RECEIVED YOUR OPTION CERTIFICATE(S)

 

 

The undersigned Security Holder has caused
this Agreement to be duly executed by the undersigned.

 

 

_______________________________

Signature

 

 

Date: ___________________, 2012

  

    	14

    	 

    

APPENDIX A

 

RISK FACTORS

 

Investing in the Company’s
Common Stock involves risks and our operating results and financial condition have varied in the past and may in the future vary
significantly depending on a number of factors. You should consider the following risk factors in evaluating whether to participate
in the Transaction and exchange your Options for Shares. However, the risks described below are not the only risks facing the Company.
In addition to these risk factors and other risks described elsewhere in this Agreement, you should carefully consider the risk
factors described in our SEC Reports, each of which has been filed with the Securities and Exchange Commission. These risks could
have a material adverse effect on our business, results of operations, financial condition or liquidity and cause our actual operating
results to materially differ from those contained in forward-looking statements made in this Agreement, in our SEC Reports and
elsewhere by management. Before making an investment decision, you should carefully consider these risks as well as other information
contained or incorporated by reference in this Agreement. Additional risks and uncertainties not currently known to us or that
we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

 

The Company has a history of operating losses. If it continues
to incur operating losses, it may have insufficient working capital to maintain operations and may require additional capital to
do so. 

 

    The
Company had a net loss of $6,914,269 for the fiscal year ended December 31, 2010, and an accumulated deficit of $37,827,090 as
of such date. The Company had a net loss of $7,305,831 for the fiscal year ended December 31, 2009 and an accumulated deficit of
$30,912,821 as of such date. For the years ended December 31, 2010 and 2009, the Company incurred a net loss from operations of
$6,711,210 and $7,233,640, respectively. For the three and nine months ended September 30, 2011, the Company had a net loss of
$2,471,892 and $5,867,902, respectively. The Company had an accumulated deficit at September 30, 2011 of $43,694,992. For the three
and nine months ended September 30, 2010, the Company had a net loss of $2,186,788 and $5,396,774, respectively. The Company had
an accumulated deficit at September 30, 2010 of $36,309,595 for the three and nine months ended September 30, 2011, the Company’s
loss from operations was $1,903,716 and $4,634,123, respectively. This compares to a loss from operations for the three and nine
months ended September 30, 2010 of $2,122,688 and $5,090,547, respectively.

 

The
Company generated revenues of $6,927,108 (net of billbacks of $1,129,007 and slotting fees of $349,490) for
the fiscal year ended December 31, 2010 as compared to revenues of $4,146,066 (net of billbacks of $612,822 and slotting
fees of $473,022) for the year ended December 31, 2009. For the three and nine months ended September 30, 2011, revenues (net of
billbacks and slotting fees) were $1,456,566 and $5,181,310, respectively, as compared to revenues (net of billbacks and slotting
fees) of $1,882,912 and $5,911,218 for the three and nine months ended September 30, 2010, respectively. If the Company is not
able to begin to earn an operating profit at some point in the future, it will eventually have insufficient working capital to
maintain its operations as it presently intends to conduct them. In light of the foregoing, the Company presently anticipates that
it will require additional funds in order to implement its business plan and sustain its operations.

 

The Company has relied on capital
raised from private placements of its securities to fund operations and its independent auditors have included a “going concern”
opinion in their report included in the Company’s Annual Report. 

 

    	15

    	 

    

The Company has been
substantially reliant on capital raised from private placements of its securities, in addition to a revolving line of credit, to
fund its operations. The Company has an immediate need for cash to fund its working capital requirements and business model objectives.
The Company, however, currently has no firm agreements with any third-parties for such transactions and no assurances can be given
that it will be successful in raising sufficient capital from any proposed financings. As of September 30, 2011, the Company had
a working capital deficiency of $2,248,988, an accumulated deficit of $43,694,992, stockholders’ deficit of $366,271 and
no cash on hand. As of November 18, 2011, the Company had borrowed, under its current line of credit arrangement with United Capital
Funding, $621,041 of its available $2,000,000 line. 

 

During 2011, the Company
has raised an approximately an additional $3,300,500, less offering costs of approximately $62,000, from the sale of securities
to accredited investors in private placements and other private stock purchase agreements. During the 2010 fiscal year, the Company
raised an aggregate amount of $2,635,750, less $289,862 in offering costs, from the sale of securities to accredited investors
in private placements. However, as the Company has experienced similar trends with respect to its rate of cash used in operations,
it will need to satisfy its cash requirements through the offer and sale of additional securities. In light of the Company’s
financial position, including the factors mentioned in this Agreement and in its SEC Reports, the Company expects the proceeds
of its recent financings to only last for a minimal period of time. Thereafter, the Company expects to require additional capital
which it would seek to raise from the sale of additional securities or through a debt financing arrangement. Any failure to raise
adequate capital in a timely manner would have a material adverse effect on our business, operating results, financial condition
and future growth prospects.

 

Our independent auditors
have included a “going concern” explanatory paragraph in their report to our financial statements for the years ended
December 31, 2010 and December 31, 2009, citing recurring losses from operations. Our capital needs in the future will depend upon
factors such as market acceptance of our products and any other new products we launch, the success of our independent distributors
and our production, marketing and sales costs. None of these factors can be predicted with certainty. The Company must satisfy
its future cash needs by further developing a market for its products, selling additional securities in private placements or by
negotiating for an extension of credit from third party lenders. The Company presently anticipates that it will require additional
funds in order to implement its business plan and sustain its operations.

 

If the Company is unable
to achieve sufficient levels of sales, it will need substantial additional debt or equity financing in the future and the Company
currently has no commitments or arrangements with respect to any additional financings. No assurances can be given that any additional
financing, if required, will be available or, even if it is available that it will be on acceptable terms. If the Company raises
additional funds by selling common stock or convertible securities, the ownership of our existing shareholders will be diluted.
If additional funds are raised though the issuance of equity or debt securities, such additional securities may have powers, designations,
preferences or rights senior to our currently outstanding securities. Any inability to obtain required financing on sufficiently
favorable terms could have a material adverse effect on our business, results of operations and financial condition. If the Company
is unsuccessful in raising additional capital and increasing revenues from operations, it will need to reduce costs and operations
substantially. Further, if expenditures required to achieve plans are greater than projected or if revenues are less than, or are
generated more slowly than, projected, the Company will need to raise a greater amount of funds than currently expected.  

   

    	16

    	 

    

The Shares which may be issued in the Transaction
are “restricted securities” and may not be transferred or resold absent registration or an exemption therefrom.

 

The
Shares which may be issued pursuant to this Agreement will be issued pursuant to an exemption from registration under the Securities
Act and therefore have not been and will not be registered under that act or any applicable state securities laws. Consequently,
the Shares may be sold, transferred, or otherwise disposed of by the Securityholders hereunder only if, among other things, the
Shares are registered or, in the opinion of counsel acceptable to us, registration is not required under the Securities Act or
any applicable state securities laws. Accordingly, Securityholders will need to rely on
exemptions to the registration requirements under the Securities Act and the “blue sky” laws in order to be able to
resell the Shares offered hereby.

 

Securityholders
must be aware of the long-term nature of their investment and be able to bear the economic risks of their investment for an indefinite
period of time. The Shares have not been registered under the Securities Act or the securities
or “blue sky” laws of any state. The right of any Securityholder to sell, transfer, pledge
or otherwise dispose of the Shares will be limited by the Securities Act and state securities laws and the regulations promulgated
thereunder. Accordingly, under the Securities Act, the Shares offered herein may not be resold unless a registration statement
is filed and becomes effective or an exemption from registration is available. The Company is not under any affirmative obligation
to file a registration statement covering the Shares and even if the Company did file a registration statement covering the Shares,
there can be no assurance that any such registration statement would be declared effective. Further, there can be no assurance
that a liquid market for our Common Stock will be sustained. Rule 144 promulgated under the Securities Act requires, among other
conditions, a holding period prior to the resale of securities acquired in a non-public offering without having to satisfy the
registration requirements of the Securities Act. There can be no assurance that we will fulfill in the future any reporting requirements
under the Exchange Act, or disseminate to the public any current financial or other information concerning the Company, as required
by Rule 144 as one of the conditions of its availability.

 

No independent counsel for Securityholders.

 

The Company has employed
its own legal counsel in connection with this Transaction. The Securityholders have not been represented by independent counsel
in connection with the preparation of this Agreement or the terms of the Transaction and no investigation of the merits or fairness
of this Transaction has been conducted on behalf of the Securityholders. Company counsel has not conducted due diligence on behalf
of the Securityholders. Securityholders are urged to consult with their own legal, tax and financial advisors with respect to this
Transaction.

 

Availability of Securities Act
exemption.

 

The Shares are being
offered pursuant to various available exemptions from registration from U.S. federal and state securities law registration requirements.
Compliance with such laws, which must be met in order for such exemptions to be available to us, is highly technical and to some
extent involves elements beyond our control. If the proper exemptions do not ultimately prove to be available, we could be subject
to the claims of all or only some of our shareholders for violations of federal or state securities laws, which could materially
adversely affect our profitability or operations or make an investment in the Shares worthless.

 

    	17

    	 

    

Our Common Stock is traded on the OTC Bulletin Board,
which may be detrimental to investors.

 

Our Common Stock is
currently traded on the OTC Bulletin Board. Stocks traded on the OTC Bulletin Board generally have limited trading volume and exhibit
a wide spread between the bid/ask quotations. We cannot predict whether a more active market for our Common Stock will develop
in the future. In the absence of an active trading market investors may have difficulty buying and selling our Common Stock or
obtaining market quotations; market visibility for our Common Stock may
be limited; and a lack of visibility for our Common Stock may have a depressive effect on the
market price for our Common Stock. 

 

Our Common Stock is subject to restrictions on sales
by broker-dealers and penny stock rules, which may be detrimental to investors.

 

Our
Common Stock is subject to Rules 15g-1 through 15g-9 under the Exchange Act, which imposes certain
sales practice requirements on broker-dealers who sell shares of our Common Stock to persons
other than established customers and “accredited investors” (as defined in Rule 501 of the Securities Act). For transactions
covered by this rule, a broker-dealer must make a special suitability determination for the purchaser and have received the purchaser’s
written consent to the transaction prior to the sale. This rule adversely affects the ability of broker-dealers to sell shares
of our Common Stock and purchasers of our Common Stock to sell
their shares of our Common Stock. 

 

Additionally,
our Common Stock is subject to SEC regulations applicable to “penny stocks.” Penny
stocks include any non-Nasdaq equity security that has a market price of less than $5.00 per share, subject to certain exceptions.
The regulations require that prior to any non-exempt buy/sell transaction in a penny stock, a disclosure schedule proscribed by
the SEC relating to the penny stock market must be delivered by a broker-dealer to the purchaser of such penny stock. This disclosure
must include the amount of commissions payable to both the broker-dealer and the registered representative and current price quotations
for our Common Stock. The regulations also require that monthly statements be sent to holders
of a penny stock that disclose recent price information for the penny stock and information of the limited market for penny stocks.
These requirements adversely affect the market liquidity of our Common Stock. 

 

There are outstanding a significant number of shares available
for future sales under Rule 144.

 

As of December 31,
2011, of the 584,633,291 issued and outstanding shares of our Common Stock, approximately 314,969,075 shares may be deemed “restricted
shares” and, in the future, may be sold in compliance with Rule 144 under the securities Act of 1933, as amended. In general,
under Rule 144 under the Securities Act, a person (or persons whose shares are aggregated) who is not deemed to have been
an affiliate of ours at any time during the three months preceding a sale, and who has beneficially owned restricted securities
within the meaning of Rule 144 for at least six months (including any period of consecutive ownership of preceding non-affiliated
holders) would be entitled to sell those shares, subject only to the availability of current public information about us. A non-affiliated
person who has beneficially owned restricted securities within the meaning of Rule 144 for at least one year would be entitled
to sell those shares without regard to the provisions of Rule 144. A person (or persons whose shares are aggregated) who is
deemed to be an affiliate of ours and who has beneficially owned restricted securities within the meaning of Rule 144 for
at least six months would be entitled to sell within any three-month period a number of shares that does not exceed the greater
of one percent of the then outstanding shares of our common stock or the average weekly trading volume of our common stock during
the four calendar weeks preceding such sale. Such sales are also subject to certain manner of sale provisions, notice requirements
and the availability of current public information about us. Possible or actual sales of our Common Stock by certain of our present
shareholders under Rule 144 may, in the future, have a depressive effect on the price of our Common Stock in any market which may
develop for such shares. Such sales at that time may have a depressive effect on the price of our Common Stock in the open market.

 

    	18

    	 

    

Preferred Stock as an anti-takeover device.

 

The Company is authorized
to issue 1,000,000 shares of preferred stock, $0.001 par value. Presently, the Company does not have any shares of preferred stock
outstanding. The preferred stock may be issued in series from time to time with such designation, voting and other rights, preferences
and limitations as our Board of Directors may determine by resolution. Unless the nature of a particular transaction and applicable
statutes require such approval, the Board of Directors has the authority to issue these shares without stockholder approval subject
to approval of the holders of our preferred stock. The issuance of preferred stock may have the effect of delaying or preventing
a change in control of the Company without any further action by our stockholders.

 

The receipt of the Shares in exchange for the Options
is expected to be a taxable transaction for U.S. federal income tax purposes.

 

A Securityholder who
exchanges Options for Shares pursuant to this Agreement will recognize gain or loss for U.S. federal income tax purposes equal
to the difference, if any, between the fair market value on the date of acceptance for exchange pursuant to the offer of the Shares
and the holder’s adjusted tax basis in the Options exchanged under this Agreement. Securityholders who recognize gain
for U.S. federal income tax purposes may need or desire to sell a portion of the Shares they receive in the offer to satisfy the
associated tax liability. Because tax matters are complicated, the Company urges you to contact your tax advisor to determine
the particular tax consequences to you of the offer.

 

Forward Looking Statements

 

This Agreement and
the exhibits annexed hereto contain certain forward looking information within the meaning of the Securities Act of 1933, as amended,
and the Securities Exchange Act of 1934, as amended. These statements relate to future events or future predictions, including
events or predictions relating to our future financial performance, and are generally identifiable by use of the use of forward-looking
terminology such as “believes”, “expects”, “may”, “will”, “should”,
“plan”, “intend”, or “anticipates” or the negative thereof or other variations thereon or comparable
terminology, or by discussion of strategy that involve risks an uncertainties. Management wishes to caution each Subscriber that
these forward-looking statements and other statements contained herein regarding matters that are not historical facts, are only
predictions and estimates regarding future events and circumstances and involve known and unknown risks, uncertainties and other
factors, including the risks described under “Risk Factors” that may cause the Company’s or its industry’s
actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity,
performance or achievements expressed or implied by such forward-looking statements. This information is based on various assumptions
by the management which may not prove to be correct.

 

    	19

    	 

    

In addition to the
risks described in Risk Factors, important factors to consider and evaluate in such forward-looking statements include: (i) changes
in the external competitive market factors which might impact the Company’s results of operations; (ii) unanticipated working
capital or other cash requirements including those created by the failure of the Company to adequately anticipate the costs associated
with clinical trials, manufacturing and other critical activities; (iii) changes in the Company’s business strategy or an
inability to execute its strategy due to the occurrence of unanticipated events; (iv) the inability or failure of the Company’s
management to devote sufficient time and energy to the Company’s business; and (v) the failure of the Company to complete
any or all of the transactions described herein on the terms currently contemplated. In light of these risks and uncertainties,
there can be no assurance that the forward-looking statements contained or incorporated by reference in this Agreement will in
fact transpire.

 

All of these assumptions
are inherently subject to significant uncertainties and contingencies, many of which are beyond the control of our Company. Although
the Company believes that the expectations reflected in the forward-looking statements are reasonable, the Company cannot guarantee
future results, levels of activity, performance or achievements. Accordingly, there can be no assurance that actual results will
meet expectations or will not be materially lower than the results contemplated in this Agreement. You are cautioned not to place
undue reliance on these forward-looking statements, which speak only as of the date of this document or, in the case of documents
referred to or incorporated by reference, the dates of those documents. The Company does not undertake any obligation to release
publicly any revisions to these forward-looking statements to reflect events or circumstances after the date of this document or
to reflect the occurrence of unanticipated events, except as may be required under applicable U.S. securities law.

 

THE FOREGOING
RISK FACTORS DO NOT PURPORT TO BE A COMPLETE EXPLANATION OF THE RISKS INVOLVED IN THIS TRANSACTION.   POTENTIAL
INVESTORS MUST READ THE ENTIRE AGREEMENT INCLUDING ALL ATTACHMENTS AND SHOULD CONSULT THEIR OWN LEGAL, TAX AND FINANCIAL
ADVISORS, BEFORE DECIDING TO INVEST IN THE COMPANY.

 

    	20Exhibit 10.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Final Execution Version

 

DHS 2 LLC

 

 

LIMITED LIABILITY COMPANY AGREEMENT

 

 

A Colorado Limited Liability Company

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    	 

    	 

    

 

 

DHS 2 LLC

LIMITED LIABILITY COMPANY AGREEMENT

A Colorado Limited Liability Company

 

TABLE OF CONTENTS

 

 

	 	 	Page
	 RECITALS  	 1
	ARTICLE I DEFINITIONS	1
	1.01	Definitions	1
	1.02	Construction	10
	1.03	Determination of Fair Market Value	10
	 	 
	ARTICLE II ORGANIZATION	10
	2.01	Formation	10
	2.02	Name	10
	2.03	Registered Office; Registered Agent; Principal Office in the United States; Other Offices	10
	2.04	Purposes	10
	2.05	Foreign Qualification	11
	2.06	Term	11
	2.07	No State-Law Partnership	11
	2.08	Certificates of Membership Interest; Applicability of Article 8 of UCC	11
	2.09	EWG Status and Market-Based Rate Authorization	11
	2.10	Credit Support Obligation	11
	 	 	 
	 	 
	ARTICLE III MEMBERSHIP; DISPOSITIONS OF INTERESTS	11
	3.01	Members, Contribution Percentages, Voting Ratio and Sharing Ratio	11
	3.02	Representations, Warranties and Covenants	11
	3.03	Dispositions of Membership Interests	13
	3.04	Options and Other Encumbrances	17
	3.05	Access to Information	17
	3.06	Confidential Information	17
	3.07	Liability to Third Parties	18
	3.08	Withdrawal	18
	 	 
	ARTICLE IV CAPITAL CONTRIBUTIONS	19
	4.01	Initial Funding Plan for DHS 2 and Initial Capital Contributions	19
	4.02	Funding of Contributions and Subsequent Capital Contributions	21
	4.03	Failure to Contribute	22
	4.04	Return of Contributions	24
	4.05	Loans and Guarantees	24
	4.06	Capital Accounts	25
	4.07	Mandatory Replacement of Higher Perpetual Contributed Assets	26
	4.08	Developer Fees	26
	 	 	 
	ARTICLE V DISTRIBUTIONS AND ALLOCATIONS	26
	5.01	Distributions	26
	5.02	Allocations	27
	5.03	Calculation of Flip Point	30
	5.04	Varying Interests	31

 

 

 

DHS 2 LLC Limited Liability Company Agreement

i

    	 

    	 

    

 

	ARTICLE VI MANAGEMENT	31
	6.01	Management by Members	31
	6.02	Management Committee	31
	6.03	Management of Company Affairs	33
	6.04	Standards of Performance and Conflicts of Interest	35
	6.05	Indemnification	36
	6.06	Officers; Day-to-Day Management	37
	6.07	Budgets	38
	6.08	Members Right to Act in Certain Circumstances	38
	6.09	HSSE Standards	39
	6.10	Construction Management	39
	6.11	Operations and Maintenance Agreement	39
	6.12	Project Administration and Development Services Agreement	39
	6.13	Employees	39
	 	 
	ARTICLE VII TAXES	39
	7.01	Tax Returns	39
	7.02	Tax Elections	39
	7.03	Tax Matters Member	40
	 	 
	ARTICLE VIII BOOKS, RECORDS, REPORTS, AND BANK ACCOUNTS	40
	8.01	Maintenance of Books	  40
	8.02	Reports	  40
	8.03	Bank Accounts	  40
	 	 
	ARTICLE IX DISSOLUTION, WINDING-UP AND TERMINATION	  41
	9.01	Dissolution	  41
	9.02	Winding-Up and Termination	  41
	9.03	Certificate of Cancellation	  41
	 	 
	ARTICLE X BUY-SELL PROVISIONS	  42
	10.01	Buy-Sell on Deadlock	  42
	10.02	Dispute Resolution of Buy-Sell on Deadlock	  43
	 	 
	ARTICLE XI GENERAL PROVISIONS	  43
	11.01	Member Marks	  43
	11.02	Notices	  43
	11.03	Entire Agreement; Superseding Effect	  43
	11.04	Effect of Waiver or Consent	43
	11.05	Amendment or Restatement	43
	11.06	Binding Effect	43
	11.07	Governing Law; Severability	44
	11.08	Further Assurances	44
	11.09	Waiver of Certain Rights	44
	11.10	Limitation of Liability	44
	11.11	Dispute Resolution Procedures	44
	11.12	Counterparts	44
	11.13	Third Party Rights	44
	SIGNATURE PAGE	45

 

 

EXHIBITS:

	A	Members and Contributions                                                                      	 E 	Officers
	B	Form of Certificate                                                                             	F	Default Notice
	C	Instrument of Transfer                                                                      	 G	IRS Safe Harbor Provisions
	D	Dispute Resolution Procedures	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 

 

DHS 2 LLC Limited Liability Company Agreement

ii

    	 

    	 

    

 

 

DHS 2 LLC

LIMITED LIABILITY AGREEMENT

A Colorado Limited Liability Company

 

This LIMITED LIABILITY COMPANY AGREEMENT (this
“Agreement”) of DHS 2 LLC (the “Company”), executed as of April 30, 2012 (the
“Effective Date”), is adopted, executed and agreed to by DHS 2 Members (the “DHSM”)
are sometimes collectively referred to herein as the “Parties.”

 

RECITALS

 

A.          DHS
2 LLC, (The “Company”) was formed on December 27, 2011 (the “Formation Date”)
by filing a Certificate of Formation (the “Colorado Certificate”) with the Colorado Secretary of State.
DHS 2 LLC is a subsidiary of GDT TEK, Inc., (GDTK) a Florida Corporation.

 

B.           The
purpose of the Company, as more fully set forth herein, is to sell Membership interest to raise up to Five Million Dollars ($5,000,000)
which will be used to develop, own, finance, refinance and operate or cause to be operated the HPC Unit (as defined herein) indirectly
through one or more subsidiaries that the Company plans to form (each, a “Sub”, and collectively, the
“Subs”).

 

C. The Subs will operate
various Energy Services Agreements (“ESA”) from which once developed will generate revenue, along with
Investment Tax Credits (“ITC”)

 

D.           Pursuant
to the Capital Contribution Agreement (as defined herein), Members have and or will in the near future, contribute cash and or
the cash equivalent which will be considered as Contributed Assets (as defined herein).

 

E.           Pursuant
to the Developer Agreement (as defined herein) of RTR Global Investments LLC (the “RTRG”) is to perform
certain services for the Company.

 

F.           The
Parties desire to enter into this Agreement to with respect to various matters relating to the Company.

 

NOW THEREFORE, in consideration
of the foregoing, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged,
the Parties hereby agree as follows.

 

ARTICLE I

 

DEFINITIONS

 

1.01           Definitions.
As used in this Agreement, the following terms have the respective meanings set forth below or set forth in the Sections referred
to below (and grammatical variations of such terms have correlative meanings):

 

Act – means the Colorado
Limited Liability Company Act.

 

Activities – has the meaning
set forth in Section 6.04(b).

 

Accrued Preferred
Return – means a return of plus ten percent (10%) per annum, compounded annually, paid on Capital Contributions made
by contributing Member to but excluding the date that such Capital Contribution is distributed to such Member, subject to adjustment
in accordance with this Agreement.

 

Adjusted Capital
Account – means, with respect to any Member for any period, such Member’s Capital Account as of the end of
such period, after giving effect to the following adjustments:

 

(a)           Increase
such Capital Account by any amounts that such Member is obligated to restore pursuant to any provision of this Agreement or is
deemed obligated to restore pursuant to Treasury Regulation Section 1.704-1(b)(2)(ii)(c) or the penultimate sentences of Treasury
Regulation Sections 1.704-2(g)(1) and 1.704-2(i)(5); and

 

(b)           Decrease
such Capital Account by the items described in Treasury Regulation Sections 1.704-1(b)(2)(ii)(d)(4),(5)
and (6).

.

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 The adjustments in this definition
of Adjusted Capital Account are intended to comply with the provisions of Treasury Regulation Section 1.704-1(b)(2)(ii)(d)
and shall be interpreted consistently therewith

 

Administrator
– means DHS2 or its Affiliate, as Administrator pursuant to the Project Administration and Development Services Agreement
and this Agreement, or such other Person as the Management Committee shall designate from time to time.

 

Advisors – has the meaning
set forth in Section 3.06(a)(i).

 

Affected HPC Site– has the
meaning set forth in Section 4.08.

 

Affiliate
– means, with respect to any Person, any other Person Controlling, and Controlled by, or under common Control with that first
Person. Notwithstanding the foregoing, neither the Company nor the Subs shall be considered an Affiliate of DHS2 for purposes of
this Agreement.

 

Aggregate Expected
Capacity – means until the determination of the Expected Capacity for all HPC Units in accordance with Section 4.07,
620 MWs, and after such determination, the aggregate amount of Expected Capacity so determined.

 

Agreement – has the meaning
set forth in the introductory paragraph.

 

Approved Budget
– means, for each HPC Site, the total capital budget, including any contingency set forth therein, or operating budget and
funding schedule for the payment of costs to develop, construct, startup and finance such HPC Site. Any Approved Budget may be
approved, amended, supplemented or modified by the Management Committee from time to time, and as so amended, may be deposited
in the records of the Company.

 

 Approved Operating Budget
– has the meaning set forth in Section 6.07.

 

Approved Project
Costs – means, for each HPC Site, the costs of the Company to develop, construct, startup, and finance such HPC Unit
as set forth in the Approved Budget for such HPC Site.

 

Assignee
– means any Person that acquires a Membership Interest or any portion thereof through a Disposition; provided, however, that,
an Assignee shall have no right to be admitted to the Company as a Member except in accordance with Section 3.03(f).

 

Assignment Documents – means
the following: (i) Assignment and Assumption Agreement, dated on or about the Effective Date, by and between the Assignor
and the Assignee.

 

Assumptions – has the meaning
set forth in Section 4.01(c).

 

 Bankruptcy
or Bankrupt – means, with respect to any Person, that (a) such Person (i) makes a general assignment
for the benefit of creditors; (ii) files a voluntary bankruptcy petition; (iii) becomes the subject of an order for relief
or is declared insolvent in any federal or state bankruptcy or insolvency proceedings; (iv) files a petition or answer seeking
for such Person a reorganization, arrangement, composition, readjustment, liquidation, dissolution, or similar relief under any
Law; (v) files an answer or other pleading admitting or failing to contest the material allegations of a petition filed against
such Person in a proceeding of the type described in subclauses (i) through (iv) of this clause (a);
or (vi) seeks, consents to, or acquiesces in the appointment of a trustee, receiver, or liquidator of such Person or of all
or any substantial part of such Person’s assets; or (b) against such Person, a proceeding seeking reorganization, arrangement,
composition, readjustment, liquidation, dissolution, or similar relief under any Law has been commenced and one hundred and
twenty (120) Days have expired without dismissal thereof or with respect to which, without such Person’s consent or acquiescence,
a trustee, receiver, or liquidator of such Person or of all or any substantial part of such Person’s assets has been appointed
and ninety (90) Days have expired without the appointment’s having been vacated or stayed, or ninety (90) Days
have expired after the date of expiration of a stay, if the appointment has not previously been vacated.

 

Business Day
– means any day other than a Saturday, a Sunday, or a holiday on which national banking associations in the States of New
York or California are required or permitted by Law to be closed.

 

BOP – means Balance of Plant
for any HPC Site.

 

Buyout PSA – has the meaning
set forth in Section 10.01(d).

 

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Buy/Sell Offer – has the
meaning set forth in Section 10.01(c).

 

Capital Account
– means the account to be maintained by the Company for each Member in accordance with Section 4.06.

 

Capital Call – means a written
request from the Administrator to a Member, in accordance with the Approved Budgets, or as approved by the Management Committee
pursuant to the terms of this Agreement, for the making of additional Capital Contributions, at such times and in such amounts
as are necessary for the timely payment of Cash Requirements.

 

Capital Contribution
– means, with respect to any Member, the amount of money and the value of any assets (other than money), as agreed by the
Members, contributed to the Company by the Member.

 

Capital Contribution Agreement
– means the Conveyance and Contribution Agreement dated on or about the Effective Date, among DHSM, and the Company.

 

Cash Equivalents
– means any of the following having a maturity of not greater than one year from the date of issuance thereof: (a) readily
marketable direct obligations of the government of the United States of America or any agency or instrumentality thereof or obligations
unconditionally guaranteed by the full faith and credit of the government of the United States of America, (b) insured certificates
of deposit of or time deposits with any commercial bank that is a member of the Federal Reserve System, issues (or the parent of
which issues) commercial paper rated as described in clause (c) below, is organized under the Laws of the United States
or any State thereof and has combined capital and surplus of at least one hundred thousand dollars ($100,000) or (c) commercial
paper issued by any corporation organized under the Laws of any State of the United States and rated at least “Prime-1”
(or the then equivalent grade) by Moody’s Investor Service, Inc. (or any successor thereto) or “B-1”
(or the then equivalent grade) by Standard & Poor’s Rating Group, a division of Standard & Poor’s Corporation
(or any successor thereto).

 

Cash Requirements
– means, as of the date of determination, cash required by the Company for (a) payment of Approved Project Costs then
due or to become due in the ordinary course in the following thirty (30) Days, or reimbursement of Approved Project Costs
previously incurred and not then paid, (b) other costs and expenses of constructing, financing, owning and operating the HPC
Unit then due or to become due in the ordinary course in the following thirty (30) Days, in accordance with the applicable Approved
Budget, or as otherwise approved by the Management Committee, and (c) additional Capital Contributions required in the applicable
Approved Budget in connection with the conversion of any construction financing to permanent financing to repay or prepay any amount
of the financing theretofore advanced for funding of costs of construction of the HPC Unit and other Approved Project Costs.

 

Certificates
– has the meaning set forth in Section 2.08.

 

Claim –
means any and all judgments, claims, causes of action, demands, lawsuits, suits, proceedings, Governmental investigations or audits,
losses, assessments, fines, penalties, administrative orders, obligations, costs, expenses, liabilities and damages (whether actual,
consequential or punitive), including interest, penalties, reasonable attorneys’ fees, disbursements and costs of investigations,
deficiencies, levies, duties and imposts.

 

Closing Date – means the
date upon which the conditions set forth in Section 4.01(d) shall have been satisfied or waived.

 

Code – means the Internal
Revenue Code of 1986, as amended.

 

Colorado Certificate –
has the meaning set forth in the Recitals.

 

Colorado Courts – has the
meaning set forth in Exhibit D.

 

Company – has the meaning
set forth in the introductory paragraph.

 

Company Minimum Gain – has
the meaning set forth with respect to the term “partnership minimum gain” in Treasury Regulation Sections 1.704-2(b)(2)
and 1.704-2(d).

 

Company Response Period –
has the meaning set forth in Section 3.03(b)(ii).

 

 

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Confidential Information
– means, collectively and individually (as may be required by context), (a) the terms
of the Transaction Documents, (b) information, data and results generated or acquired by or on behalf of the Company or the
Subs as a result of the Company or the Subs conducting its operations, business and affairs, including agreements and permits of
the Company and the Subs, (c) proceedings and documents related to the functioning of the Management Committee (including
minutes of meetings and decisions adopted by the committee), and (d) any data, information, materials and reports furnished
pursuant to this Agreement relating to the Company and the Subs and their respective business and affairs, whether furnished verbally,
in writing or in electronic form. Notwithstanding the foregoing, Confidential Information does not include any information that
the Member that wants to disclose such information can demonstrate, if required, (i) is publicly available as of the proposed
date of disclosure, or that later becomes publicly available, in each case through no action by such Member or its advisors in
violation of this Agreement or (ii) is lawfully received from any source other than the Company, the other Member, the other
Member’s Affiliates, and its and their advisors and not subject to an obligation of confidentiality.

 

Construction Management
Agreement – means, for each HPC Site, the Construction Management Agreement entered into between the Subs and Construction
Manager for the management of the construction of such HPC Site.

 

Construction Manager
– means DHS2 or its Affiliate, as Construction Manager pursuant to a Construction Management Agreement and this Agreement,
or such other Person as the Management Committee shall designate from time to time.

 

Contributing Member – has
the meaning set forth in Section 4.03(a).

 

Contribution Percentage
– means, (a) before the Flip Point, in the case of DHS2, the Contribution Percentage of DHSM may be up to 99% from the
date of this Agreement to the date the Flip Point occurs. After the Flip Point, all Members the Contribution Percentage will be
reduced to 5%.

 

Control, Controlling, or Controlled
– means the possession, directly or indirectly and whether acting alone or in conjunction with others, of the authority to
direct or cause the direction of the management or policies of a Person, whether through the ownership of voting securities, by
contract, or otherwise.

 

Credit Support
– means equity contribution agreements and letters of credit and other such guarantees, comfort letters, “keep
whole” agreements, bonds or other financial security arrangements or credit support arrangements as may be reasonably
acceptable to the applicable Member or its Affiliates, or in the case of any Credit Support to be delivered in connection
with a Financing contemplated by a Funding Plan, as determined by the Management Committee approval of such Financing.

 

Day –
means a calendar day; provided, however, that, if any period of Days referred to in this Agreement shall end on a Day that is not
a Business Day, then the expiration of such period shall be automatically extended until the end of the first succeeding Business
Day.

 

Deadlock – has the meaning
set forth in Section 10.01(a)(iii).

 

Default – has the meaning
set forth in Section 4.03(c).

 

Default Notice – has the
meaning set forth in Section 4.03(c).

 

Default Rate
– means a rate per annum equal to the lesser of (a) a varying rate per annum equal to the sum of (i) the prime
rate as published in The Wall Street Journal, with adjustments in that varying rate to be made on the same date as any change
in that rate is so published, plus (ii) three percent (3%) per annum, and (b) the maximum rate permitted by Law.

 

Defaulted Contribution –
has the meaning set forth in Section 4.03(c).

 

Defaulting Non-Contributing Members –
has the meaning set forth in Section 4.03(b). 

 

Developer Agreement – means
the Developer Agreement dated on or about the Effective Date entered into between RTRG and the Company.

 

Developer Fees – has the
meaning assigned to such term in the Developer Agreement.

 

 

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DHS2 – has the meaning set
forth in the introductory paragraph.

 

DHS2 Capital Contribution –
means the Capital Contribution made by or on behalf of DHS2, consisting of the DHS2 Contributed Assets having an agreed value as
set forth on Exhibit A hereto.

 

DHS2 Contributed Assets –
means the assets and properties contributed to the capital by or on behalf of DHS2 and described on Exhibit A.

 

DHS2 Disposition – has the
meaning set forth in Section 3.03(i).

 

Dispose, Disposing
or Disposition – means, with respect to any asset or any equity interest (including stock, share, partnership interest,
membership interest or any other equity interest (each an “equity interest”)) of any Person, a sale,
assignment, transfer, conveyance, gift, exchange or other disposition of such asset or equity interest, whether such disposition
be voluntary, involuntary or by operation of Law and a pledge of an equity interest (and any foreclosure thereof) including the
events described in Section 3.03(e).

 

Disposing Member – has the
meaning set forth in Section 3.03(b).

 

Disposition Notice – has
the meaning set forth in Section 3.03(b).

 

Dispute –
means any controversy, Claim or dispute that arises out of or in connection with this Agreement, including the construction, interpretation,
performance, breach, termination, enforceability or validity of this Agreement, whether the same is based on rights, privileges
or interests recognized by or based upon statute, contract, agreement (whether written or oral), tort, common law or other Law,
including Claims brought by the Members or Perpetual.

 

Dissolution Event – has
the meaning set forth in Section 9.01.

   

Distributable Cash
– means, as of any date, all cash, cash equivalents and liquid investments (excluding the proceeds of Capital Contributions
and loans made to the Company) held by the Company as of such date less all reasonable reserves that (a) were expressly included
in the Approved Budgets, (b) are necessary to prevent or mitigate an emergency situation, (c) are established with the
prior written consent of the Management Committee, or (d) are necessary to allow the Company to meet expenses that are clearly
identified and expected with reasonable certainty to become due within three (3) months from the date of determination, and which
are not included in the Approved Budgets.

 

Drag Along Notice – has
the meaning set forth in Section 3.03(d)(ii).

 

Drag Along Purchaser – has
the meaning set forth in Section 3.03(d)(i).

 

Drag Along Sale – has the
meaning set forth in Section 3.03(d)(i).

 

Drag Along Seller – has
the meaning set forth in Section 3.03(d)(i).

 

Effective Date – has the
meaning set forth in the introductory paragraph.

 

Emergency Loan – has the
meaning set forth in Section 4.05.

 

Encumber, Encumbering,
or Encumbrance – any lien (statutory or otherwise), mortgage, deed of trust, claim, option, right to purchase, right
to obtain, lease, easement, charge, pledge, security interest, hypothecation, assignment, use restriction or other encumbrance
of any kind or nature whatsoever, whether voluntary or involuntary, choate or inchoate (including any agreement to give any of
the foregoing, any conditional sale or other title retention agreement). 

 

Expected MWs –
means the number of megawatts of HPC generation facilities reasonably expected to be developed with the applicable power purchase
agreements or other offtake arrangements by the date that is 36 months after the Effective Date, which shall be the number of megawatts
indicated below until otherwise determined in accordance with Section 4.07(b):

 

 

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Financing – means debt incurred, debt
securities issued, or obligations incurred, by the Company as approved by the Management Committee, in each case the proceeds of
which shall be used by the Company for the financing, refinancing or hedging of all or a portion of Approved Project Costs or other
costs and expenses of construction, startup, financing, owning and operating the HPC Unit other than the Shareholder Loans.

 

 Financing Documents –
means the financing agreement, regardless of the form which may include, promissory note(s), deed of trust, security agreement,
and all other documents evidencing or securing any Financing and loans made in connection therewith or entered into in connection
therewith.

 

First Full Year – has the
meaning set forth in Section 6.07.

 

First Offer Price – has
the meaning set forth in Section 3.03(b)(i).

 

 Flip Point – means,
the first point at which both (i) DHS2 receives a return of all its Capital Contributions plus ten percent (10%) per annum,
compounded annually, on the average daily balance of DHS2’s Contributions and Other Capital Contributions and (ii) the
Shareholder Loans have been repaid in full.

 

 Formation Date – has
the meaning set forth in the recitals.

 

Funding Plan – means a plan
for the funding of the construction and startup and the permanent financing of a HPC Site that is determined by the Management
Committee.

 

GAAP –
means the United States generally accepted accounting principles and the International Financial Reporting Standards as set forth
by the International Accounts Standards Board in the version effective as of the date of this Agreement.

 

Governmental Authority
(or Governmental) – means a federal, state, local or foreign governmental authority (including any regulatory
authority); a state, province, commonwealth, territory or district thereof; a county or parish; a city, town, township, village
or other municipality; a district, ward or other subdivision of any of the foregoing; any executive, legislative or other governing
body of any of the foregoing; any agency, authority, board, department, system, service, office, commission, committee, council
or other administrative body of any of the foregoing; any court or other judicial body; and any officer, official or other representative
of any of the foregoing.

 

Guarantee – means a guarantee
by the Company in favor of DHS2 given in connection with the Shareholder Loans.

 

GDPIPD –
means the Gross Domestic Product Implicit Price Deflator, as published by the United States Department of Commerce, Bureau of Economic
Analysis immediately preceding the applicable date of adjustment, or such other index as determined by the Management Committee.

 

Heat to Power Conversion
Unit (HPC)-Means the HPC unit that captures “waste heat” and converts it to usable electricity.
The HPC unit captures heat from many forms including reciprocating engines, Refrigerant turbines, flares, boilers, steel mill stacks,
and refineries. Waste heat is used to boil a fluid in a hermetically sealed closed loop system where the evaporated fluid at low
pressure expands into our Refrigerant Engine which in turn drives an electric generator.

 

Hedging Agreement
– means any agreement with respect to any swap, cap, floor, collar, option, forward, cross right or obligation, or combination
thereof or similar transaction, with respect to interest rate, foreign exchange, currency, commodity, credit or equity risk.

 

 HPC- means
Heat to Power (electricity) Conversion Unit

 

HSSE – has the meaning set
forth in Section 6.09.

 

Independent Expert – has
the meaning set forth in Section 5.04(c).

 

Including and includes
– means including, without limitation

 

 

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Indemnified Person – has the
meaning set forth in Section 6.05(a).

 

Investment Company Act –
means the Investment Company Act of 1940.

 

.Law –
means any applicable constitutional provision, statute, act, code (including the Code), law, regulation, rule, ordinance, order,
decree, ruling, proclamation, resolution, judgment, decision, declaration, or interpretative or advisory opinion or letter of a
Governmental Authority having valid jurisdiction

 

Lending Member – has the
meaning set forth in Section 4.03(b).

 

Lien – means any lien, mortgage,
pledge, security interest, charge or encumbrance of any kind (including, without limitation, any conditional sale or other title
retention agreement, any lease in the nature thereof, and any agreement to give any lien or security interest).

 

Liquidator – has the meaning
set forth in Section 9.02.

 

MW – means megawatt.

 

Management Committee – has
the meaning set forth in Section 6.02.

 

Member – means each of DHS2,
and any other Person hereafter admitted to the Company as a Member as provided in this Agreement, but such term does not include
any Person who has ceased to be a Member of the Company.

 

Member Nonrecourse Debt –
has the meaning set forth with respect to the term “partner nonrecourse debt” in Treasury Regulation
Section 1.704-2(b)(4).

 

Member Nonrecourse Deductions
– has the meaning set forth with respect to the term “partner nonrecourse deductions” in Treasury
Regulation Sections 1.704-2(i)(1) and 1.704-2(i)(2).

 

Member Response Period –
has the meaning set forth in Section 3.03(b)(ii).

 

Membership Interest
– means, with respect to any Member, (a) that Member’s status as a Member; (b) that Member’s
share of the income, gain, loss, deductions and credits of, and the right to receive distributions from, the Company; (c) all
other rights, benefits and privileges enjoyed by that Member (under the Act, this Agreement or otherwise) in its capacity as a
Member, including that Member’s rights to vote, consent and approve and otherwise to participate in the management of the
Company, including through the Management Committee; and (d) all obligations, duties and liabilities imposed on that Member
(under the Act, this Agreement or otherwise) in its capacity as a Member, including any obligations to make Capital Contributions.
All references in this Agreement to a “Membership Interest” shall be construed as references to a “limited liability
company interest” within the meaning of the Act.

 

Minimum Gain Attributable to Member Nonrecourse
Debt – means that 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 the principles of
Treasury Regulation Section 1.704-2(i)(3). 

 

Non-Contributing Member –
has the meaning set forth in Section 4.03(a).

 

Nonrecourse Deduction –
has the meaning set forth in Treasury Regulation Sections 1.704-2(b)(1) and 1.704-2(c).

 

Nonrecourse Liability –
has the meaning set forth in Treasury Regulation Section 1.704-2(b)(3).

 

Notice of Default – has
the meaning set forth in Section 4.03(a).

 

Offered Interest – has the
meaning set forth in Section 3.03(b)(i).

 

Offeree – has the meaning
set forth in Section 10.01(c)

 

Offeror – has the meaning
set forth in Section 10.01(c)

 

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O&M Agreement
– means, for each HPC Site, an operations and maintenance agreement entered into by the Subs and the Operator pursuant to
which the Operator shall provide operations and maintenance services in respect of such HPC Site.

 

Operator
– means DHS2 or its Affiliate, as Operator pursuant to the O&M Agreement and this Agreement, or such other Person as
the Management Committee shall designate from time to time.

 

Other Capital Contributions–
means all Capital Contributions other than the DHS2 Capital Contribution,

 

Participating Seller – has
the meaning set forth in Section 3.03(c)(ii).

 

Parties – has the meaning
set forth in the introductory paragraph.

 

Performing Contribution Members –
has the meaning set forth in Section 4.03(c).

 

Permitted Disposition
– means the Disposition by a Member of all or any part of its Membership Interest to such Member’s Affiliate, or, if
an individual, to his or her spouse, natural or adoptive lineal ancestors or descendants, or a trust for his, her or their exclusive
benefit.

 

Permitted Encumbrances –
has the meaning assigned to such term in the Developer Agreement..

 

Person –
means any individual, corporation, company, voluntary association, partnership, joint venture, trust, unincorporated organization
or government or any agency, instrumentality or political subdivision thereof, or any other form of entity.

 

Power Purchase Agreements –
means, for each HPC Site, any agreement for the sale of energy, capacity, environmental attributes and/or ancillary services of
the HPC Sites.

 

Profits and
Losses - means, for each fiscal year or other period, an amount equal to the Company’s taxable income or loss
for such fiscal year or period, determined in accordance with Code Section 703(a) (for this purpose, all items of income, gain,
loss, or deduction required to be stated separately pursuant to Code Section 703(a)(1) and any guaranteed payments paid to a Member,
shall be included in taxable income or loss), with the following adjustments:

 

(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 hereto shall be added to such taxable income or loss; and

 

(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 the Treasury Regulations promulgated under the Code, and not otherwise taken into account in computing Profits or Losses pursuant
hereto, shall be subtracted from such taxable income or loss.

 

Project Administration
and Development Services Agreement – means, for each HPC Site, the Developer Agreement and Project Administration
and Development Services Agreements, as applicable, to be entered into between the Subs and the Administrator pursuant to which
the Administrator shall provide accounting, administrative and such other services as shall be set forth therein.

 

Project Financiers – means
lenders, tax equity and other investors experienced in the ownership of finances of a HPC power facilities.

 

PTC – means a renewable
electricity production tax credit within the meaning of Section 45 of the Code or any successor to such section.

 

PTC Period – means the period
in which PTCs are available in connection with the sale of electricity from any Wind Turbines included in the HPC Sites.

 

Regulatory Allocations –
has the meaning set forth in Section 5.03(d).

 

 

 

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 Representative – has the meaning set
forth in Section 6.02(b)(i).

 

Sale – has the meaning set
forth in Section 3.03(c)(i).

 

Sale Percentage – has the
meaning set forth in Section 3.03(c)(i)(A).

 

Screening Period – has the
meaning set forth in Section 4.07(b).

 

Securities Act – means the
Securities Act of 1933, as amended.

 

Securities Law Opinion –
has the meaning set forth in Section 3.03(g)(i)(C).

 

Shareholder Loan
Documents – means the Notes, deeds of trust, security agreements and pledge agreements and other collateral and documents
executed in connection with the Shareholder Loans in form satisfactory to DHS2.

 

Shareholder Loans – means
the Shareholder Loan as yet undetermined.

 

Sharing Ratio
– means, in the case of each Member, 50%, minus any net decrease or plus any net increase, as the case may be, in such Member’s
aggregate net Sharing Ratio Offset, subject to any further adjustment set forth in this Agreement.

 

Sharing Ratio Offset
– means, for each Member at any time, the aggregate net increase or decrease in the Sharing Ratio in accordance with Section
4.03(b) or Section 4.08 of such Member during the period from the Effective Date to such time.

 

Stub Year – has the meaning
set forth in Section 6.07.

 

Subs – has the meaning set
forth in the Recitals.

 

Tag Along Notice – has the
meaning set forth in Section 3.03(c)(i).

 

Tag Along Purchaser – has
the meaning set forth in Section 3.03(c)(i)(A).

 

Tax Matters Member – has
the meaning set forth in Section 7.03.

 

Term – has the meaning set
forth in Section 2.06.

  

Title Commitment – has the
meaning set forth in Section 4.01(d)(vii).

 

Transaction Documents
– means this Agreement, the O&M Agreement, the Project Administration and Development Services Agreement,
the Power Purchase Agreements, the Guarantee, the Developer Agreement, the Turbine Supply Agreements, the Capital Contribution
Agreement, the Assignment Documents and the Shareholder Loan Documents.

  

Uniform Commercial Code –
means the Uniform Commercial Code as in effect from time to time in the State of Colorado.

 

United States Person – has
the meaning set forth in Section 7701(a)(30) of the Code.

 

Vital Matter – has the meaning
set forth in Section 10.01(a)(i)(E).

 

Voting Ratio
– means, (a) before the Flip Point, in the case of DHS2, 51%, and in the case of the other members, 49% and (b) from
and after the Flip Point, in the case of each Member, 5%.

 

HPC Unit–
means one or more HPC Unit to be developed, owned, financed, refinanced and operated or caused to be operated, each in one or more
phases, by the Company and the Subs.

 

 

 

 

DHS 2 LLC Limited Liability Company Agreement
  

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Other terms defined herein have the meanings
so given them.

 

1.02         Construction.
Unless the context requires otherwise: (a) the gender (or lack of gender) of all words used in this Agreement includes the
masculine, feminine, and neuter; (b) words used or defined in the singular include the plural and vice versa; (c) references
to Articles and Sections refer to Articles and Sections of this Agreement; (d) references to an Exhibit refer to the Exhibit
attached to this Agreement, which is made a part hereof for all purposes; (e) references to Laws refer to such Laws as they
may be amended from time to time, and references to particular provisions of a Law include any corresponding provisions of any
succeeding Law; (f) terms defined in this Agreement are used throughout this Agreement and in any Exhibits hereto as so defined;
and (g) references to money or the sign “$” refer to legal currency of the United States of America

 

1.03         Determination
of Fair Market Value. Whenever required by this Agreement, unless otherwise determined by the Management Committee, fair
market value shall be determined by an independent third party appraiser mutually agreed upon by the Members. If the Members cannot
agree upon such third party appraiser, then each Member shall choose a third party appraiser, and such appraisers shall choose
an independent appraiser who shall determine the fair market value. Any determination of fair market value made in accordance with
this Section 1.03 shall be final and binding on the Members and the Company.

 

 

ARTICLE II

 

ORGANIZATION

 

2.01         Formation.
The Company was formed as a Colorado limited liability company on the Formation Date by the filing of the Colorado Certificate
with the Colorado Secretary of State.

 

2.02         Name.
The name of the Company is DHS 2 LLC, and all Company business must be conducted in that name or such other names that comply with
Law as the Members may select.

 

2.03         Registered
Office; Registered Agent; Principal Office in the United States; Other Offices. The registered office of the Company required
by the Act to be maintained in the State of Colorado shall be the office of the registered agent named in the Colorado Certificate
or such other office (which need not be a place of business of the Company) as the Management Committee may designate in the manner
provided by Law. The registered agent of the Company in the State of Colorado shall be the registered agent named in the Colorado
Certificate or such other Person or Persons as the Management Committee may designate in the manner provided by Law. The principal
office of the Company in the United States shall be at such place as the Management Committee may designate, which need not be
in the State of Colorado, and the Company shall maintain records there or such other place as the Management Committee shall designate
and shall keep the street address of such principal office at the registered office of the Company in the State of Colorado. The
Company may have such other offices as the Management Committee may designate. The Management Committee shall notify each Member
of any change in the registered office, the registered agent, or the street address of the principal office of the Company.

 

2.04         Purposes.
The purposes of the Company shall be and are limited to (a) engaging in the acquisition, construction, lease, ownership and
sale, and the operation, management, maintenance, financing and refinancing the HPC Unit for the purpose of generating a profit;
(b) entering into, complying with and performing the various agreements evidencing, necessitated by or arising in connection
with the HPC Unit including this Agreement, the Transaction Documents to which it may be a party, and all incidental, ancillary,
necessary or appropriate documents related thereto; (c) engaging in the purchase, ownership, use, transmission, marketing
and sale of any input, output, rights, credit, attribute or allowance associated therewith; (d) exercising any power and taking
any action as are considered necessary or desirable in connection with the administration of the Company’s affairs, the HPC
Sites, including the maintaining of records, the engagement of professional advisors and consultants, the establishment of bank
accounts, and prosecution or defense of legal actions; (e) managing the Subs; and (f) taking all actions incidental,
ancillary, necessary or appropriate to the foregoing that may be engaged in by a limited liability company formed under the Act.

 

 

 

 

 

 

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2.05         Foreign
Qualification. The Company shall qualify as a foreign limited liability company in California Prior to the Company’s
conducting business in any jurisdiction other than Colorado or California, the Company shall comply, to the extent procedures are
available and those matters are reasonably within the control of the Company, with all requirements necessary to qualify the Company
as a foreign limited liability company in that jurisdiction. At the request of the Company, each Member shall execute, acknowledge,
swear to, and deliver all certificates and other instruments conforming with this Agreement that are necessary or appropriate to
qualify, continue, and terminate the Company as a foreign limited liability company in all such jurisdictions in which the Company
may conduct business.

 

2.06         Term.
The period of existence of the Company (the “Term”) commenced on the Formation Date and shall end at
such time as a certificate of cancellation is filed with the Secretary of State of Colorado in accordance with Section 9.03.

 

2.07         No
State-Law Partnership. The Members intend that the Company not be a partnership (including a limited partnership) or joint
venture, and that no Member is a partner or joint venturer of any other Member, for any purposes other than federal income, and
applicable state and local, tax purposes, and this Agreement may not be construed to suggest otherwise.

 

2.08        Certificates
of Membership Interest; Applicability of Article 8 of UCC. The Members hereby specify, acknowledge and agree that
the Membership Interests are securities governed by Article 8 and all other applicable provisions of the Uniform Commercial Code,
and, pursuant to the terms of Section 8-103(c) of the Uniform Commercial Code, all Membership Interests shall be “securities”
for all purposes under Article 8 and under all other applicable provisions of the Uniform Commercial Code. All Membership
Interests shall be represented by certificates (“Certificates”) substantially in the form attached hereto
as Exhibit C, shall be recorded in a register thereof maintained by the Company, and shall be subject to such rules
for the issuance thereof in compliance with this Agreement, as the Management Committee may from time to time determine.

 

2.09        EWG
Status and Market-Based Rate Authorization. No Party shall take any action, or refrain from taking any necessary action,
that would have the effect of preventing the Company from obtaining EWG status or preventing the Company from continuing to qualify
as an EWG, as that term is defined in Sections 32(a)-(d) of the Public Utility Holding Company Act of 1935 and pursuant to the
requirements of 18 C.F.R. § 366.7.

 

2.10         Credit
Support Obligation. Each Member shall, and shall cause its Affiliates to, provide such Credit Support and related
consents to assignments as shall be required by the Management Committee.

 

ARTICLE III

 

MEMBERSHIP; DISPOSITIONS OF INTERESTS

 

3.01         Members,
Contribution Percentages, Voting Ratio and Sharing Ratio.

 

(a)           As
of the Effective Date, Higher Perpetual and DHS2 are each hereby admitted as Members, and each is hereby accorded the following
respective Membership Interests. Each of the Contribution Percentages and Voting Ratios as of the Effective Date is forty-nine
percent (49%) to DHSM and fifty-one percent (51%) to DHS2.

 

(b)           Upon
the occurrence of the Flip Point, the Contribution Percentages, the Voting Ratio and the Sharing Ratio shall become five percent
(5%) to DHSM and ninety five percent (95%) to DHS2, subject to adjustment as set forth in the definitions of Contribution Percentages,
Voting Ratio and Sharing Ratio.

 

(c)           The
Contribution Percentages, Voting Ratios and Sharing Ratios of the Members shall also be adjusted as set forth in this Agreement.

 

3.02         Representations,
Warranties and Covenants. Each Member hereby represents, warrants and covenants to the Company and to each other Member
that the following statements are true and correct as of the Effective Date (and, in the case of Sections 3.02(e), (f)
and (g), shall remain true and correct for so long as it is a Member):

 

 

 

 

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 (a)           such
Member is duly formed, validly existing and (if applicable) in good standing under the Law of the jurisdiction of its formation
as described in the introductory paragraph; if required by applicable Law, that Member is duly qualified and in good standing in
the jurisdiction of its principal place of business, if different from its jurisdiction of incorporation, organization or formation;
and that Member has full power and authority to execute and deliver this Agreement and to perform its obligations hereunder, and
all necessary actions by the board of directors, shareholders, managers, members, partners, trustees, beneficiaries, or other applicable
Persons necessary for the due authorization, execution, delivery, and performance of this Agreement by that Member have been duly
taken;   

 

(b)           such
Member has duly executed and delivered this Agreement and the other documents contemplated herein, and they constitute the legal,
valid and binding obligation of that Member enforceable against it in accordance with their terms (except as may be limited by
Bankruptcy, insolvency or similar Laws of general application and by the effect of general principles of equity, regardless of
whether considered at law or in equity);

 

(c)           such
Member’s authorization, execution, delivery and performance of this Agreement do not (i) conflict with, or result in
a breach, default or violation of, (A) the organizational documents of such Member, (B) any contract or agreement to
which that Member is a party, or (C) any Law to which that Member is subject; or (ii) require any consent, approval or
authorization from, filing or registration with, or notice to, any Governmental Authority or any third party person, unless such
requirement has already been satisfied;

 

(d)           such
Member is not required to register as an “investment company” within the meaning of the Investment Company
Act;

 

(e)           such
Member is neither a foreign partner within the meaning of Section 1446 of the Code and the Treasury Regulations promulgated thereunder
nor a disregarded entity owned by such a foreign partner, and such Member therefore is not subject to withholding under Section
1446 of the Code;

 

(f)           such
Member understands that it may not sell or transfer its Membership Interest, except as specifically provided in this Agreement;

 

(g)           such
Member acknowledges that it has no right to require the Company to register or qualify the offering and sale of its Membership
Interest under the Securities Act or any applicable state securities Laws;

 

(h)           in
the case of any Member or a Person to which any such Member Disposes of any Membership Interest in accordance with the provisions
of this Agreement:

 

(i)           such
Member or Person is acquiring its Membership Interest for its own account and not with a view to the resale or distribution of
all or any part thereof in violation of applicable securities Laws; it understands that the Membership Interest being acquired
by it has not been registered under the Securities Act or applicable state securities Laws and, therefore, it will be necessary
for it to continue to hold the Membership Interest being acquired by it and continue to bear the economic risk of the investment
therein unless and until the offering and sale of such Membership Interest by it is registered or qualified under the Securities
Act and applicable state securities Laws or an exemption from registration or qualification is available;

 

(ii)           such
Member or Person has carefully reviewed this Agreement and any other relevant information furnished to it in writing by the Management
Committee, and it understands the risks of, and other considerations relating to, an investment in its Membership Interest;

 

(iii)           such
Member or Person has such knowledge and experience (based on actual participation) in financial and business matters that it is
capable of evaluating the merits and risks of an investment in the Membership Interest and of making an informed investment decision;

 

(iv)           such
Member or Person understands that any information furnished to it concerning the federal income tax consequences arising from an
investment in the Company is necessarily general in nature, and the specific tax consequences to it of an investment in the Company
will depend on its individual circumstances, and it affirms that it has been advised to seek appropriate legal counsel with respect
to such tax consequences; and

 

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(v)           such
Member or Person understands that the Members and the Company are relying on its representations and warranties in selling the
Membership Interest or recognizing its transfer without registration under the securities Laws.

 

3.03         Dispositions
of Membership Interests.

 

(a)           General
Prohibition on Dispositions. Neither a Member nor any permitted assignee of a Member shall make or suffer to be made
any Disposition or encumbrance of all or any part of its Membership Interest, whether now owned or hereafter acquired, except in
accordance with the terms of this Agreement and any purported Disposition or encumbrance not made in compliance with this Agreement
shall be void and of no force and effect. The restrictions on transfers in this Article III shall apply with equal force
to transfers between or among the Members. The Members agree that a breach or threatened breach of the provisions of this Section
3.03 may cause irreparable injury to the Company and to the other Members for which monetary damages (or other remedy at law)
are inadequate in view of (A) the complexities and uncertainties in measuring the actual damages that would be sustained by
reason of the failure of a Member to comply with such provision and (B) the uniqueness of the Company’s business and
the relationship among the Members. Accordingly, the Members agree that the Company and each other Member shall be entitled, in
addition to other remedies that may be available to them, to immediate injunctive relief from any breach of any of the provisions
of this Section 3.03 and specific performance without a requirement to post any bond or other financial assurance with respect
thereto.

 

(b)           Right
of First Offer

 

(i)           If
at any time after the Flip Point a Member desires to transfer any of its Membership Interest (other than a transfer which would
be considered a Permitted Disposition hereunder), such Member (the “Disposing Member”) shall first give
written notice (a “Disposition Notice”) to that effect to the Company and each other Member containing
(i) the Membership Interests proposed to be transferred (the “Offered Interest”), and (ii) the
purchase price and all other material terms (the “First Offer Price”) which the Disposing Member proposes
to be paid for the Offered Interest.

 

 

(ii)           The
Company shall have a period of fourteen (14) days following receipt of the Disposition Notice (the “Company Response
Period”) to accept the offer made in the Disposition Notice to purchase all or a portion of the Offered Interest
at the First Offer Price by delivering written notice of acceptance to the Disposing Member and each other Member. The Company’s
decision to accept or reject the offer to purchase all or a portion of the Offered Interest shall be made by the Management Committee,
without the participation of the Disposing Member. If the Company does not elect to purchase all of the Offered Interest within
the Company Response Period, the other Members shall have a period of seven (7) days immediately following the Company Response
Period (the “Members Response Period”) to accept, on a pro rata basis and by written notice to the Disposing
Member, the offer made in the Disposition Notice to purchase all or the remainder of the Offered Interest.

 

(iii)           If
the Company elects to purchase all or a portion of the Offered Interest, the closing of the sale of the Offered Interest (or the
relevant portion thereof) shall, subject to Section 3.03(b)(v), be held at the Company’s principal office on a date
to be specified by the Company which is not less than ten (10) days nor more than sixty (60) days after the end of the Company
Response Period. At the closing, the Company shall deliver the consideration in accordance with the terms of the offer set forth
in the Disposition Notice, and the Disposing Member shall transfer the Offered Interest (or the relevant portion thereof) to the
Company, free and clear of all liens, claims and encumbrances.

 

(iv)           If
any of the other Members elects to purchase all or the remaining portion of the Offered Interest, the closing of the sale of the
Offered Interest (or the relevant portion thereof) shall, subject to Section 3.03(b)(v), be held at the Company’s
principal office on a date to be agreed and specified by such other Members, which date shall not be less than ten (10) days nor
more than sixty (60) days after the end of the Members Response Period. At the closing, such other Members shall deliver the consideration
in accordance with the terms of the offer set forth in the Disposition Notice and the Disposing Member shall deliver the Offered
Interest (or the relevant portion thereof) to such other Members in accordance with their rights to share pro rata in such purchase,
duly endorsed for transfer, free and clear of all liens, claims and encumbrances.

 

 

 

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(v)           If,
at the end of the Members Response Period, the Company and Members together have not elected to purchase all of the Offered Interest,
then (i) the election of all parties pursuant to Section 3.03(b)(ii), 3.03(b)(iii), and 3.03(b)(iv) shall be
null and void, and (ii) subject to Sections 3.03(c) and 3.03(d), the Disposing Member shall be entitled for
a period of forty-five (45) days, beginning the day after the expiration of the Members Response Period, to enter into a definitive
agreement to sell all of the Offered Interest at a price not lower than the First Offer Price (or for noncash consideration with
a fair market value, as determined by the Management Committee in its reasonable discretion after consultation with the Disposing
Member, at least equal to, together with any cash consideration, the First Offer Price) and on terms not more favorable to the
transferee than were contained in the Disposition Notice, which sale shall be closed no later than ninety (90) days after the expiration
of the Members Response Period. Promptly after any sale pursuant to this Section 3.03(b), the Disposing Member shall notify
the Company of the consummation thereof and shall furnish such evidence of the completion of such sale and of the terms thereof
as the Company may request.

 

(vi)           If
the Disposing Member has not entered into a definitive agreement to sell the Offered Interests within forty-five (45) days following
the expiration of the Members Response Period or completed the sale of the Offered Interest within ninety (90) days following the
expiration of the Members Response Period, the Disposing Member shall no longer be permitted to sell any of such Offered Interest
without again fully complying with the provisions of this Section 3.03(b) and any other provision of this Agreement related
to the transfer of a Membership Interest.

 

(c)           Tag
Along.

 

(i)           If
at any time after the Flip Point and following compliance with Section 3.03(b), a Disposing Member desires to sell any of
its Membership Interests that, individually or when aggregated with other sales by the Disposing Member since the Effective Date
of this Agreement, represents ten percent (10%) or more of the aggregate outstanding Membership Interests of the Company, to any
Person (other than a sale which would be considered a Permitted Disposition hereunder), then at least forty-five (45) days prior
to the proposed date of consummation of such sale (a “Sale”), the Disposing Member shall provide written
notice (the “Tag Along Notice”) of the proposed Sale to the non-Disposing Members. The Tag Along Notice
shall include:

 

(A)           the
principal terms of the proposed Sale, including (A) the Membership Interest to be purchased from the Disposing Member, (B) the
class and series of such Membership Interest to be purchased, (C) the percentage such Membership Interest represents of the
total Membership Interest owned by the Disposing Member (the “Sale Percentage”), and (D) the purchase
price to be paid by and the name and address of the proposed purchaser (the “Tag Along Purchaser”); and

 

(B)           an
offer by the Disposing Member, in respect of each non-Disposing Member and on the same terms and conditions as the Disposing Member
proposes to sell its Membership Interest, to include in the Sale to the Tag Along Purchaser a percentage of the total Membership
Interest then held by each such non-Disposing Member not to exceed the Sale Percentage.

 

(ii)           Each
non-Disposing Member desiring to accept the offer contained in the Tag Along Notice (each a “Participating Seller”)
shall send a written commitment to the Disposing Member not later than thirty (30) days after the effective date of the Tag Along
Notice specifying, subject to Section 3.03(c)(i)(B), the Membership Interests that such Participating Seller desires to
have included in the Sale. Each non-Disposing Member who has not so accepted such offer shall be deemed to have waived all of its
rights with respect to the Sale, and the Disposing Member and the Participating Sellers, if any, shall thereafter be free to sell
to the Tag Along Purchaser at a price no greater than the purchase price set forth in the Tag Along Notice and otherwise on terms
not more favorable in any material respect to them than those set forth in the Tag Along Notice.

 

(iii)           The
acceptance of such offer by each Participating Seller shall be irrevocable except as hereinafter provided and each such Participating
Seller shall be bound and obligated to sell, concurrently with the sale by the Disposing Member and on the same terms and conditions
specified in the Tag Along Notice, the Membership Interests so agreed in the written commitment given pursuant to Section 3.03(c)(ii).
In the event the Disposing Member shall be unable to

arrange the sale of all the Membership Interests
which the Disposing Member and the Participating Sellers desire to have included in the Sale, the Membership Interests to be sold
in the Sale by the Disposing Member and the Participating Sellers shall be reduced on a pro rata basis.

 

 

 

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(iv)           If
at the end of the ninetieth (90th) day following the effective date of the Tag Along Notice the Disposing Member has not completed
the Sale as provided in the foregoing provisions of this Section 3.03(c), each Participating Seller shall be released from
its obligations under its written commitment given pursuant to Section 3.03(c)(ii), the Tag Along Notice shall be null and
void, and it shall be necessary for a new Tag Along Notice to be furnished and the provisions of this Section 3.03(c) separately
complied with in order to consummate any such Sale.

 

(d)           Drag
Along.

 

(i)           Each
Member hereby agrees, if requested after the Flip Point by one or more Members holding an aggregate percentage of the Company’s
total Membership Interests exceeding thirty-four percent (34%), or such percentage as agreed by all Members (whether one or more,
a “Drag Along Seller”), to participate in a bona fide, arm’s length sale for cash (a “Drag
Along Sale”) of 100% of the Membership Interests of the Company to any Person not an Affiliate of the Drag Along
Seller and with whom the Drag Along Seller has no familial relationship by blood or by marriage or any direct or indirect affiliation,
either through ownership entities (other than public companies) or otherwise (the “Drag Along Purchaser”)
in the manner and on the terms set forth in this Section 3.03(d).

 

(ii)           If
the Drag Along Seller elects to exercise its rights under this Section 3.03(d), a notice (the “Drag Along Notice”)
shall be furnished by the Drag Along Seller to the non-Disposing Members. The Drag Along Notice shall set forth the principal terms
of the Drag Along Sale, the purchase price, and the name and address of the Drag Along Purchaser. If the Drag Along Seller proceeds
with the Drag Along Purchaser to closing, the non-Disposing Members shall be bound and obligated to sell all of their respective
Membership Interests to the Drag Along Purchaser on the same terms and conditions as those under which the Drag Along Seller sold
its Membership Interest. If at the end of the sixtieth (60th) day following the effective date of the Drag Along Notice the Drag
Along Seller has not completed the Drag Along Sale, the non-Disposing Members shall be released from their obligations under the
Drag Along Notice, the Drag Along Notice shall be null and void, and it shall be necessary for a new Drag Along Notice to be furnished
and the provisions of this Section 3.03(d) separately complied with in order to consummate any such Drag Along Sale.

 

 

(e)           Indirect
Dispositions. The change in Control of any Member, other than a Member who is a natural person, shall be deemed a Disposition
of the Membership Interest owned by such Member. The sale, assignment or transfer by a Member of all or any part of the economic
interest associated with such Member’s Membership Interest (including the interest in the profits or capital appreciation
of the Company and the right to receive distributions from the Company), other than to such Member’s Affiliate, shall be
deemed a Disposition of the Membership Interest owned by such Member. In either such event, the Membership Interest owned by such
Member must be offered to the other non-transferring Members in accordance with Sections 3.03(b), 3.03(c), and 3.03(d).

 

(f)           Admission
of Assignee as a Member. An Assignee has the right to be admitted to the Company as a Member, with the Membership Interest
so transferred to such Assignee, only if (i) the Disposing Member making the Disposition has granted the Assignee all of the
Disposing Member’s Membership Interest and (ii) such Disposition is effected in strict compliance with this Section 3.03.

 

(g)           Requirements
Applicable to All Dispositions and Admissions. Any Disposition of any Membership Interest, including a Permitted Disposition,
and any admission of an Assignee as a Member shall be subject to the following requirements, and such Disposition (and admission,
if applicable) shall not be effective unless such requirements are complied with; provided, however, that the non-Disposing Members,
in their sole and absolute discretion, may waive any of the following requirements:

 

(i)           Disposition
Documents. The following documents must be delivered to the non-Disposing Members:

 

(A)       
Disposition Instrument. A copy of the instrument pursuant to which the Disposition is effected.

 

 

 

 

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(B)           Ratification
of this Agreement. An instrument, executed by the Disposing Member and its Assignee, containing the following information
and agreements, to the extent they are not contained in the instrument described in Section 3.03(g)(i)(A): (I) the
notice address of the Assignee; (II) the Assignee’s ratification of this Agreement and agreement to be bound by it,
and its affirmation that the representations and warranties in Section 3.02 are true and correct with respect to it;
and (III) representations and warranties by the Disposing Member and its Assignee that the Disposition and admission are being
made in accordance with all applicable Laws.

 

(C)           Securities
Law Opinion. To the extent required by this Section 3.03(g)(i)(C), a Securities Law Opinion (as defined below).
The Membership Interests governed by this Agreement have not been registered with the Securities and Exchange Commission under
the Securities Act of 1933, as amended, or the state securities laws of Colorado or any other state. Without such registration,
no Member may effect or suffer to occur a Disposition of all or any part of its Membership Interest (other than to an Affiliate
provided such transfer does not violate any applicable securities laws) without delivery to the Non-Disposing Members of an opinion
of counsel (“Securities Law Opinion”) satisfactory to the Non-Disposing Members that such registration
is not required for such transfer and/or submission to the Non-Disposing Members of such other evidence as may be reasonably satisfactory
to the Non-Disposing Members to the effect that any transfer will not be in violation of the Securities Act of 1933, as amended,
applicable state securities laws, or any rule or regulation promulgated thereunder.

 

(D)           Tax
Consequences. A favorable opinion of nationally recognized tax counsel to the effect that:

 

(I)           Termination.
Such Disposition would not result in the Company’s termination within the meaning of Section 708 of the
Code, provided, however, that an opinion under this Section 3.03(g)(i)(D)(I) shall not be required if the Disposing Member
indemnifies each other Member for any adverse tax consequences caused by the Disposition to such other Member, with such Credit
Support as reasonably acceptable to the non-Disposing Members.

 

(II)           Entity
Classification. Such Disposition will not cause the Company to be classified as an entity other than a partnership (including
a publicly traded partnership taxable as a corporation) for purposes of the Code.

 

(III)           PTCs.
If such Disposition would occur prior to the end of the PTC Period, such Disposition will not result in the disallowance or reduction
of PTCs with respect to income of the Company or Subs from sales of power thereafter accruing to the Company.

 

(ii)           Payment
of Expenses. The Disposing Member and its Assignee shall pay, or reimburse the Company for, all reasonable costs and expenses
incurred by the Company in connection with the Disposition and admission, including the reasonable legal fees incurred in connection
with the legal opinion referred to in Section 3.03(g)(i)(C), on or before the tenth (10th) Day after the receipt by
that Person of the Company’s invoice for the amount due.

 

(iii)           No
Release. No Disposition of a Membership Interest shall effect a release of the Disposing Member from any liabilities to
the Company or the other Members arising from events occurring prior to the Disposition.

 

(iv)           EWG.
No Disposition of a Membership Interest shall result in the HPC Unit ceasing to be an “exempt wholesale generator”
as defined in the Public Utility Holding Company Act of 2005.

 

(v)           No
Default Under Material Agreements. The Disposition shall not result in a default under, breach of any material obligation
contained in, or cause the failure of a material condition contained in, any material agreement (including any Financing Document)
to which the Company is a party, unless a consent to or waiver of such default, breach or failure of condition has been obtained
from the other party or parties to such agreement.

 

 

 

 

 

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(h)           Permitted
Dispositions. The provisions of this Section 3.03 (except for Section 3.03(g)) shall not apply to a
Permitted Disposition.

 

(i)           DHS2
Dispositions.

 

Notwithstanding anything
in this Agreement but subject to Section 6.03(c)(x), prior to the Flip Point, DHS2 shall have the exclusive right to (x) Dispose,
Encumber, or otherwise transfer or assign all or any part of its Membership Interest, directly or indirectly, and (y) to require
all other Members to participate in any Disposal, Encumbrance, transfer or assignment, directly or indirectly, (each a “DHS2
Disposition”) of all or any part of the Membership Interests of the Company to any Person not an Affiliate of DHS2
and with whom DHS2 has no familial relationship by blood or by marriage or any direct or indirect affiliation, either through ownership
entities (other than public companies) or otherwise. In the event of a DHS2 Disposition, all other Members shall be bound and obligated
to Dispose Encumber transfer or assign their respective Membership Interests (or indirect interests therein) in such DHS2 Disposition
on terms and conditions substantially no less favorable to such Person, taken as a whole, as those under which DHS2 Disposes, Encumbers,
transfers or assigns its Membership Interest.  Each Member and its Affiliates shall amend, restrict, restate or otherwise
modify the terms of the Transaction Documents in connection with or to facilitate such Disposal, Encumbrance, transfer or assignment.

 

(j)           The
provisions of Article III (except for this Section 3.03(i)) shall not apply to a DHS2 Disposition.

 

3.04      
  Options and Other Encumbrances. A Member shall not Encumber such Member’s Membership Interest and
shall not permit the creation of an Encumbrance on any equity interest of a Person that owns an equity interest, directly or indirectly,
in a Member, including any collateral assignment in favor of any lender (or agent therefor), in connection with a financing other
than a pledge by DHS2’s obligation to pay Developer Fees pursuant to Paragraph 3(a) of the Developer Agreement and obligation
pursuant to Paragraph 5(a) of the Developer Agreement. At any time Developer Fees are due to Higher Power but remain unpaid, Holdco
shall pay any distributions made in accordance with Section 5.01 or 9.02 payable to Higher Perpetual to Higher Power and Higher
Perpetual consents to such payment to Higher Power.

 

3.05         Access
to Information. Each Member shall be entitled to receive any information that it may reasonably request concerning the
Company or the Subs; provided, however, that this Section 3.05 shall not obligate the Company or any Member to create
any information that does not already exist at the time of such request (other than to convert existing information from one medium
to another, such as providing a printout of information that is stored in a computer database). Each Member shall also have the
right, upon reasonable notice, and at all times during usual business hours to inspect the assets of the Company and to audit,
examine and make copies of the books of account and other records of the Company. Such right may be exercised through any agent
or employee of such Member designated in writing by it or by an independent public accountant, attorney or other consultant so
designated. The Member making the request shall bear all costs and expenses incurred in any inspection, examination or audit made
on such Member’s behalf. Confidential Information obtained pursuant to this Section 3.05 shall be subject to
the provisions of Section 3.06.

 

3.06         Confidential
Information.

 

(a)           Each
Member shall keep the Confidential Information strictly confidential and not sell, trade, publish or otherwise disclose all or
part of the same to any Person in any manner whatsoever without the other Member’s prior written consent, except as expressly
permitted in this Agreement. Each Member shall have the right to disclose the Confidential Information without prior written consent
of the other Member:

 

(i)           to
its directors, officers, employees, advisors, counsel, public accountants, agents, and representatives (“advisors”)
and those of its Affiliates; provided that such Member guarantees their adherence to the terms of this Section 3.06;
and provided, further, that prior to making disclosure of Confidential Information to its advisors who are not directors, officers
or employees of such Member or its Affiliates, such Member shall obtain a written undertaking of confidentiality not less restrictive
than that set forth in this Section 3.06 from each such advisor (except in the case of outside legal counsel the Member
shall only be required to procure that such legal counsel is bound by a professional legal duty of confidentiality); and

 

 

 

 

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(ii)           to
the advisors and subcontractors of the Company or of such Member and its Affiliates when such Member is acting on behalf of the
Company pursuant to, and with the scope of, any Transaction Document or a decision of the Management Committee;

 

(iii)           to
the extent that (A) disclosure is required by any Law, including the rules and regulations of any stock exchange or (B) any
such Member or any Affiliate thereof or its and their advisors may have received a subpoena or other written demand under color
of legal right for such information, such Member or such Affiliate or advisor may disclose such information; provided that, in
each case, such Member shall first, as soon as practicable upon becoming aware of such requirement or receipt of such demand, furnish
a copy thereof to the other Members and, if practicable so long as such Member shall not be in violation of such requirement, subpoena
or demand or likely become liable to any penalty or sanctions thereunder, afford the other Members reasonable opportunity, at any
other Member’s cost and expense, to prevent or limit such disclosure or to obtain a protective order or other reasonably
satisfactory assurance of confidential treatment for the information required to be disclosed and reasonably cooperate with the
other Member in connection therewith; and provided, further, that, in any case, such Member or such Affiliate or advisor shall
only disclose that portion of the Confidential Information that, in the opinion of its legal counsel, is required to be disclosed
and shall use its commercially reasonable efforts to ensure further confidential treatment of the information so disclosed;

 

(iv)           to
lenders, potential lenders or other Persons providing financing to the Company or such Member or its Affiliates related to the
Company, the Subs or the HPC Unit if, prior to disclosure, such Persons have executed an undertaking of confidentiality not less
restrictive than that set forth in this Section 3.06;

 

(v)           to
bona fide potential purchasers of direct or indirect equity interests in the Company or such Member or its Affiliates if, prior
to disclosure, such Persons have executed an undertaking of confidentiality not less restrictive than that set forth in this Section 3.06;

 

(vi)           to
a nationally recognized credit rating agency; and

 

(vii)           to
a court of competent jurisdiction or an arbitrator to the extent necessary for the exercise of its rights and remedies under this
Agreement.

 

(b)           The
Members agree that no adequate remedy at law exists for a breach or threatened breach of any of the provisions of this Section 3.06,
the continuation of which unremedied will cause the Company and the other Members to suffer irreparable harm. Accordingly, the
Members agree that the Company and the other Members shall be entitled, in addition to other remedies that may be available to
them, to immediate injunctive relief from any breach of any of the provisions of this Section 3.06 and to specific
performance of their rights hereunder without a requirement to post any bond or other financial assurance with respect thereto,
as well as to any other remedies available at law or in equity.

 

(c)           The
obligations of the Members under this Section 3.06 shall terminate on the fifth anniversary of the end of the Term.

 

3.07         Liability
to Third Parties. No Member shall be personally liable for the debts, obligations or any other liabilities of the Company
of whatever nature, whether arising in contract, tort or otherwise, solely by reason of being a Member.

 

3.08         Withdrawal.
A Member does not have the right or power to resign from the Company as a Member. For purposes of this Section 3.08, “resign”
means an election to withdraw or resign as a Member of the Company which would compel the Company to liquidate the withdrawing
Member’s Membership Interest and distribute to such withdrawing Member the fair value thereof in accordance with Section 18-604
of the Act.

 

 

 

 

 

 

 

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ARTICLE IV

 

CAPITAL CONTRIBUTIONS

 

4.01         Initial
Funding Plan for DHS 2 and Initial Capital Contributions.

 

(a)           Initial
Funding Plan for DHS2 the Management Committee shall establish the Approved Project Costs and shall make any further adjustments
thereafter, as necessary. The Funding Plan shall consist of the following:

 

(i)           at
DHS2’s option in its sole discretion, the DHSM Shareholder Loan or a Cash Equivalent Contribution that will be treated as
a Capital Contribution in the amount of the agreed to at the time of the investment; and

 

(ii)           the
portions of the DHS2 Capital Contribution and Capital Contribution that are allocable to DHSM, which shall be contributed by the
Company to the extent specified in the Capital Contribution Agreement; and

 

(iii)          an
additional amount of Capital Contributions that are allocable to DHS 2 as determined by DHS2 in its sole discretion to be contributed
by DHS2 to the Company in accordance with Section 4.02 and which, thereafter, shall be contributed by the Company to equity
in such Sub.

 

(b)           DHS2
Capital Contribution. As of the Effective Date, DHS2 has been credited with having made that portion of the DHS2 Capital
Contribution of DHS2 Contributed Assets in amounts specified in Exhibit A attached hereto. By the execution and delivery
of the Capital Contribution Agreement and such other transfer documents or instruments acceptable to the other Members and sufficient
to convey, assign and transfer the assets constituting such portion of the DHS2 Capital Contribution to the Company. DHS2 shall
be credited with additional Capital Contributions in respect of the DHS2 Contributed Assets as, when and to the extent such additional
Capital Contributions are made, and then in the amount of such Capital Contributions, it being agreed that DHS2 shall have no obligation
to make Capital Contributions after the Effective Date unless the Company and/or the Subs receive additional financing from sources
other than the existing Members and their affiliates on terms approved by the Management Committee and thereafter the Administrator
or the Management Committee shall issue a Capital Call for such Capital Contribution from DHS2.

 

(c)           Higher
Perpetual Capital Contribution. As of the Effective Date, Higher Perpetual has been credited with having made the Higher
Perpetual Capital Contribution of Higher Perpetual Contributed Assets by the execution and delivery of the Capital Contribution
Agreement and such other transfer documents or instruments acceptable to the other Members and sufficient to convey, assign and
transfer the assets constituting such Higher Perpetual Capital Contribution to the Company. The Parties agree that the value attributed
to the Higher Perpetual Contributed Assets assumes (1) that Higher Perpetual and Higher Power shall perform in full its obligations
under the Transaction Documents, including Higher Power’s obligations under Paragraph 11(c) of the Developer Agreement
without giving effect to the best efforts standard described therein, (2) that Perpetual shall perform for the Company on
behalf of Higher Perpetual its obligations under the Transaction Documents, including the following obligations, unless the Management
Committee shall otherwise direct and subject to the overall guidance and approval of the Management Committee, (3) that the
representations and warranties of Higher Perpetual, Higher Power and Perpetual contained in the Transaction Documents shall be
true and correct when made or deemed made, and (4) Perpetual shall pay the Developer Fees as they become due (the “Assumptions”):

 

(i)           Prepare,
submit, obtain all other permit applications required to design, construct and operate the HPC Sites;

  

(ii)          Obtain
FAA, applicable environmental and authority to construct permits;

 

(iii)         Obtain
favorable tax abatement and value limitation decisions under Colorado Tax Code Section 312 and 313 for not less than 7 years;

 

(iv)         Design
and obtain required approvals of any transmission and interconnect facilities and fully executed interconnection and transmission
agreements;

 

 

 

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(v)          Coordinate
with Federal Energy Regulatory Commission, and assure compliance with California or other applicable state, county and municipal
regulatory agencies;

 

(vi)         Develop
market opportunities for the sale of the electricity renewable energy credits and other environmental attributes to be produced
by the HPC Unit and offered for sale by the Subs and prepare and obtain binding letters of intent or term sheets and take or pay
Power Purchase Agreements for each HPC Site sufficient for Project Financiers to support financing;

 

(vii)        Develop
plan design, RTRG specifications, and RTRG contract negotiations and facilitate RTRG contract administration;

 

(viii)       Hiring
of owner’s engineer; and

 

(ix)          Preparing
the initial designs and specifications of and siting of equipment to achieve the budgets adopted by the Management Committee.

 

The responsibilities above
may be reduced, modified or terminated by the Management Committee in its discretion, agree to devote all appropriate time and
effort to diligently pursue development of the HPC Sites. To the extent the Company, any Sub or DHS2 incurs costs, losses or expenses
as a result of the inaccuracy of any of the Assumptions and such Person is not reimbursed therefor promptly by Capital Contribution
shall be reduced by the amount of such cost, loss or expense.

 

(d)           The
obligation of the Parties to make the initial Capital Contributions under Section 4.01 is subject to the satisfaction or
waiver in writing of the following conditions:

 

(i)           This
Agreement shall have been executed and delivered by each Party;

 

(ii)          Perpetual,
Higher Power, Higher Perpetual, the Company and DHS2 shall have executed and delivered the Developer Agreement;

 

(iii)         Each
of the Parties shall have received duly authorized, executed and delivered originals of

 

(A)        the
Developer Agreement, and the Capital Contribution Agreement and the Assignment Agreements contemplated thereby; and

 

(B)         a
certificate of the Secretary or other authorized representative of each Party, Higher Power and Perpetual, dated the Closing Date
and certifying (I) that attached thereto is a true and complete copy of the certificate of formation, articles of incorporation
or other formation documents, including all amendments thereto, of each Person, the limited liability company operating agreement
or bylaws of such Person, as in effect on the Closing Date and at all times since a date prior to the date of the resolutions described
in clause (B) below, (II) that attached thereto is a true and complete copy of resolutions duly adopted by the appropriate
governing entity or body of such Person, authorizing the execution, delivery and performance of the Transaction Documents to which
such Person is a party and that such resolutions have not been modified, rescinded or amended and are in full force and effect,
(III) as to the incumbency and specimen signature of each officer executing any Transaction Document or any other document
delivered in connection herewith on behalf of such Person and (IV) as to the absence of any pending proceeding for the dissolution
or liquidation of such Person or, to the knowledge of such Secretary or Assistant Secretary, threatening the existence of such
Person;

 

(iv)         If
DHS2 shall elect, DHS2,. shall have been granted on the Closing Date, first priority perfected Liens on the collateral contemplated
by the Shareholder Loan Documents to secure the Shareholder Loans;

 

(v)          Each
Party shall have received appropriately completed copies, which have been duly authorized for filing by the appropriate other Party,
of Financing Statements naming such other Party as a debtor and such Party as the secured party, as may be necessary to perfect
first-priority Liens on the collateral described in Section 4.03(g);

 

 

 

 

 

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(vi)         The
Company shall have received evidence that the Company or the Subs have obtained all real property and others interests and rights
necessary or desirable for the construction, interconnection and operation and maintenance of the Project, subject to no Encumbrances,
other than Permitted Encumbrances;

 

(vii)        Intentionally
Deleted;

 

(viii)       Intentionally
Deleted;

 

(ix)         Tax
abatement and value limitation proceedings under Colorado Tax Code Section 312 and 313 for DHS 2 shall have been duly and
timely filed;

 

(x)           No
action or proceeding has been instituted or threatened by any Governmental Authority whatsoever against the Company, any Party,
Members or any HPC Site or related asset or interest or that seeks to impair, restrain, prohibit or invalidate the transactions
contemplated by this Agreement, or which would reasonably be expected to have a material adverse effect on the Company or any Sub’s
ability to operate its HPC Site or the ability of such Persons, Perpetual or any Party to perform its obligations under the Transaction
Documents;

 

(xi)          The
representations and warranties of contained in the Transaction Documents executed on or prior to the Closing Date shall be true
and correct when made and on the Closing Date and no default or breach of the obligations of the parties thereunder has occurred
and is continuing; and

 

(xii)         Each
of DHS2 Members shall have provided a properly completed and executed Internal Revenue Service Form W-9 which is still valid.

 

(e)           Holdco
shall distribute to Higher Perpetual for reimbursement to Higher Power the funds described in Paragraph 5(b) of the Developer
Agreement subject to the terms and conditions of the Developer Agreement.

 

4.02           Funding
of Contributions and Subsequent Capital Contributions.

 

(a)           The
Administrator shall cause such proceeds as may be available from time to time from any Financing to be applied, to the fullest
extent permitted by the terms of the Financing Documents, to the payment of (i) Approved Project Costs (including any payment
thereof for the DHS2 Contributed Assets and Higher Perpetual Contributed Assets provided for in the initial Funding Plan and (ii) such
other costs and expenses of constructing, financing, owning and operating the HPC Unit as shall be permitted by the Financing Documents.

 

(b)           Cash
Requirements of the Company of the Subs for the calendar month in which the Effective Date occurs shall be determined in writing
by the Administrator as of the Effective Date. Not later than the 20th Day of each calendar month, commencing with the month in
which the Effective Date occurs, the Administrator shall determine the Cash Requirements of the Company and the Subs for the succeeding
month. To the extent that proceeds from any Financing are not then available for, or under the terms thereof may not then be applied
to, payment of Cash Requirements for any month so determined, the Administrator shall issue a Capital Call to the Members in accordance
with their Contribution Percentages (unless otherwise specified in Section 4.01(a)(iii) or Exhibit A) up to
the amounts set forth in Exhibit A. Notwithstanding anything to the contrary contained in this Agreement or the Transaction
Documents, DHS2 shall have no obligation to make Capital Contributions after the Effective Date unless the Company and/or the Subs
receive additional financing from sources other than the existing Members and their affiliates on terms approved by the Management
Committee and thereafter the Administrator or the Management Committee shall issue a Capital Call for such Capital Contribution
from DHS2.

 

(c)           Whenever,
pursuant to Section 4.02(b), the Administrator shall determine that additional Capital Contributions are necessary for the
timely payment of Cash Requirements, the Administrator shall promptly issue to the Members a Capital Call for such amounts; provided,
however, that prior to making a Capital Call for amounts that are not Approved Project Costs or other amounts not previously approved
by the Management Committee, the Administrator shall obtain the prior approval for such Capital Call from the Management Committee.
The Management Committee may also cause the Administrator from time to time to issue Capital Calls at such times and in such amounts
as the Management Committee shall determine are necessary for any purpose related to the Company and its business, including the
development of the HPC Unit or substitutions therefor in accordance with Sections 4.06 or 4.07. All additional
Capital Contributions shall be made in cash unless otherwise previously approved by the Management Committee. All

 

 

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amounts received by the Company from the Members
pursuant to this Section 4.02 shall be credited to the respective Member’s Capital Account as of the date such
amounts are received by the Company. Unless otherwise determined by the Management Committee, the Company shall promptly contribute
amounts and contributions received from any Equity Investor hereunder (net of any amounts which are to be used to pay costs and
expenses incurred, or to be incurred, in the Company) to one or more of the Subs by way of capital contribution.

 

(d)           Each
Capital Call issued pursuant to Section 4.02(b) shall contain the following information:

 

(i)           The
total amount of Capital Contributions requested from all Members, which amount shall not be less than the amount required to permit
the Company to pay timely the Cash Requirements;

 

(ii)          The
amount of Capital Contribution required from the Member to whom the request is addressed, such amount to be in accordance with
the Contribution Percentages of such Member;

 

(iii)         The
purpose for which the funds are to be applied in such reasonable detail as the Administrator shall determine, including the amounts
intended to be received by each HPC Site and Sub and how such funds shall be made available to such Sub;

 

(iv)         Whether
the Management Committee has approved the Capital Call, if necessary;

 

(v)          The
date on which payments of the Capital Contribution shall be made (which date shall be fourteen (14) Days following the date
the Capital Call is given, unless a different date is specified by the Administrator); and

 

(vi)         Copies
of reasonably requested supporting documentation, if any.

 

(e)           Each
Member agrees that it shall make payments of its respective additional Capital Contributions in accordance with Capital Calls issued
pursuant to Section 4.02(b).

 

(f)           Except
as provided in this Section 4.02, no Member shall have any obligation to make any additional Capital Contributions.

 

(g)           The
Members may agree to make, or cause to be made, additional Capital Contributions, upon such terms and conditions, including the
making of provision for allocation of items of gross income, as all of the Members shall agree in writing, and this Agreement shall
be amended by the Members in order to reflect any such terms and conditions prior to their effectiveness. Except as otherwise set
forth in this Agreement, no Member may make any additional Capital Contributions without the consent of the Management Committee.

 

(h)           The
value of any Capital Contributions of property after the Effective Date or other than cash shall be as agreed by the Members holding
at least 70% of the Membership Interests.

 

4.03           Failure
to Contribute.   If any Member fails to make or fund a Capital Contribution required pursuant to Section 4.01
or Section 4.02 (each, a “Non-Contributing Member”), and if such failure continues for more
than ten (10) Days after the date on which it is due, any Member that has contributed its Capital Contributions (each, a “Contributing
Member”) may (without limitation as to other remedies that may be available) elect to deliver a notice (a “Notice
of Default”) to the Non-Contributing Member. Upon delivery of such Notice of Default: (i) the Non-Contributing
Member shall lose all voting rights and all management approval rights under this Agreement, and (ii) all Representatives
of the Non-Contributing Member shall be removed from the Management Committee; provided that no Member shall be entitled to any
such ten-Day grace period for more than three failures to make or fund such a Capital Contribution.

 

(b)           In
addition, after the expiry of all grace periods applicable under Section 4.03(a) such Non-Contributing Member has not cured
such default (a “Defaulting Non-Contributing Member”) , the Contributing Member may elect (but is under
no obligation) to make an advance to the Company, acting as lender (the “Lending Member,”), equal to
the portion of the Defaulting Non-Contributing Member’s Capital Contribution that is in default to the Company, with the
following results:

 

 

 

 

 

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(i)           the
sum advanced is deemed to be a loan from the Lending Member to the Defaulting Non-Contributing Member;

 

(ii)           the
Capital Account of the Defaulting Non-Contributing Member is increased by the amount of the deemed loan from the Lending Member;

 

(iii)           the
principal balance of the loan and all accrued unpaid interest thereon is due and payable in whole on the tenth (10th) Day after
written demand therefor by the Lending Member to the Defaulting Non-Contributing Member;

 

(iv)           the
amount lent bears interest at the Default Rate from the Day that the advance is deemed made until but excluding the date that the
loan, together with all interest accrued on it, is repaid to the Lending Member;

 

(v)           all
distributions from the Company that otherwise would be made to any Defaulting Non-Contributing Member (whether before or after
dissolution of the Company) instead shall be paid to the Lending Member until the loan and all interest accrued on it have been
paid in full to the Lending Member (with payments being applied first to accrued and unpaid interest and then to principal) and
any such payment to the Lending Member pursuant to this Section 4.03(b)(v) shall be deemed for all purposes as if the cash
had first been distributed to the Defaulting Non-Contributing Member, who then paid such cash to the Lending Member as a payment
on the loan;

 

(vi)           the
payment of the loan and interest accrued on it is secured by a security interest in each Defaulting Non-Contributing Member’s
Membership Interest, as more fully set forth in Section 4.03(g); and

 

(vii)         the
Lending Member may, in addition to the other rights and remedies granted pursuant to this Agreement or available at Law or in equity,
take any action (including court proceedings) that such Lending Member may deem appropriate to obtain payment by the Defaulting
Non-Contributing Member of the loan and all accrued and unpaid interest on it, at the cost and expense of the Non-Contributing
Member.

 

(c)           In
addition to the remedies set forth in Sections 4.03(a) and 4.03(b), if the Defaulting Non-Contributing Member has
not cured its breach within twenty (20) days after the date on which the Capital Contribution was to be made (a “Default”),
then the Company (acting through the Representatives appointed by such Contributing Member) shall issue a notice of the Defaulting
Non-Contributing Member’s Default to all Members in the form attached hereto as Exhibit F (a “Default
Notice”). Such Contributing Member shall have the option (but no obligation) to have any contribution made pursuant
to Section 4.03(b) treated as a permanent Capital Contribution by the Contributing Member (and a reduction in the Capital
Account of the Non-Contributing Member to the extent such Member’s Capital Account was increased pursuant to Section 4.03(b)(ii)),
or, if no such contribution was made pursuant to Section 4.03(b), pay its pro rata share of the portion of the Capital Contribution
owed and unpaid by the Defaulting Non-Contributing Member and such contribution shall be treated as a Capital Contribution by the
Contributing Member (either contribution the “Defaulted Contribution”). In either event, the Contributing
Members that elect to fund the Defaulting Non-Contributing Member’s share (the “Performing Contribution Members”)
shall provide written notice of such election to all Members and upon making such Defaulted Contribution, the Defaulted Contribution
of each such Performing Contribution Member shall be treated as a Capital Contribution, and the Members’ Voting Ratios and
Sharing Ratios will be automatically adjusted in accordance with the following terms:

 

(i)           the
Voting Ratio and Sharing Ratio of each Performing Contribution Member shall, when expressed as a percentage, equal the sum of (i)
the sum of (A) an amount equal to the aggregate Capital Contributions previously made by such Performing Contribution Member, excluding
the Defaulted Contribution, reduced by the amount, if any, previously distributed to such Performing Contribution Member pursuant
to Section 4.01(e), and (B) an amount equal to two hundred percent (200%) of the Defaulted Contribution made by such Performing
Contribution Member, divided by (ii) the sum of (A) an amount equal to the aggregate Capital Contributions previously made by all
of the Members, excluding all Defaulted Contributions, reduced by the amount previously distributed pursuant to Section 4.01(e),
and (B) an amount equal to two hundred percent of the Defaulted Contributions made by all of the Members, and

 

 

 

 

 

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(ii)           The
Voting Ratio and Sharing Ratio of the Non-Contributing Member shall, when expressed as a percentage, be reduced by an amount equal
to the percentage increase in the Voting Ratio and Sharing Ratio, respectively, of the Performing Contribution Member that elected
to fund such Non-Contributing Member’s share of the Defaulted Contribution, as calculated pursuant to Section 4.03(c)(i).

 

(d)           If
the Non-Contributing Member’s failure to make its Capital Contribution has not been cured within thirty (30) Days from the
date of the Non-Contributing Member’s Default and if the Contributing Member notifies the Non-Contributing Member that the
Contributing Member will not elect the remedies set forth in Section 4.03(c) or otherwise fails to make such election within
the required time period for making such election, and does not elect to loan such Capital Contribution to the Non-Contribution
Member pursuant to Section 4.03(b), then the Contributing Member shall have the right (but not the obligation) to dissolve
the Company by issuing a dissolution notice to the Non-Contributing Member. Such dissolution notice may be given, and shall be
effective upon delivery, when given at any time after the thirty (30) Days cure period set forth above.

 

(e)           The
terms of this Section 4.03 seek to induce the Members to pay their respective Capital Contributions.

 

(f)           The
remedies set forth in this Section 4.03 shall be the exclusive remedies available under applicable Law for a Member’s
non-payment of its Capital Contributions.

 

(g)           Except
to the extent prohibited by a lender under the Financing Documents, each Member which is required pursuant to this Agreement to
make Capital Contributions hereby grants to the Company, and to each Lending Member with respect to any loans made by the Lending
Member to that Member as a Non-Contributing Member pursuant to Section 4.03(b), as security, equally and ratably, for
the payment of all Capital Contributions that such Member has agreed to make and the payment of all loans and interest accrued
thereon made by Lending Members to that Member as a Non-Contributing Member pursuant to Section 4.03(b), a security
interest in and a general lien upon its Membership Interest and the proceeds thereof, all under the Uniform Commercial Code of
the State of Colorado . On any default in the payment of a Capital Contribution or in the payment of such a loan or interest accrued
thereon, the Company or the Lending Member, as applicable, is entitled to all the rights and remedies of a secured party under
the Uniform Commercial Code of the State of Colorado with respect to the security interest granted in this Section 4.03(g).
Each such Member shall execute and deliver to the Company and the other Members all financing statements and other instruments
that the Lending Member may request to effectuate and carry out the preceding provisions of this Section 4.03(g). At
the option of a Lending Member, this Agreement or a carbon, photographic or other copy hereof may serve as a financing statement.

 

(h)           In
connection with this Section 4.03, each Member shall execute and deliver any additional documents and instruments and
perform any additional acts that may be necessary or appropriate to effectuate and perform the provisions of this Section 4.03.

 

4.04         Return
of Contributions. Except as expressly provided herein, a Member may not resign from the Company and is not entitled to
the return of any part of its Capital Contributions for any reason. Except as expressly provided herein, a Member is not entitled
to be paid interest or any other distribution in respect of its Capital Contributions. An unrepaid Capital Contribution is not
a liability of the Company or of any Member. A Member is not required to contribute or to lend any cash or assets to the Company
to enable the Company to return any Member’s Capital Contributions.

 

4.05         Loans
and Guarantees.

 

(a)           If
Lender elects to make DHS2 a Shareholder Loan, upon the applicable delivery of the notice to proceed under its agreement and shall
deliver to Lender a Note in the principal amount of ***                
      (the “Shareholder Loan”) to evidence its obligation to pay for the
applicable HPC Units. Such Note shall be secured by liens upon all assets of the Company and the other Subs shall execute the Guarantee,
which shall be secured by liens upon all assets of the according to the Shareholder Loan Documents.

 

(b)           Except
as set forth in Section 4.05(a), and Section 4.05(b) or with the consent of the Management Committee, no Member may
make any loans to a Sub. Except as set forth in Section 4.03, no Member may make any loans to the Company without the consent
of the Management Committee, provided, however, that DHS2 may make a loan (an “Emergency Loan”) to the
Company in order to allow the Company to meet costs and expenses arising from measures taken to deal with an emergency or imminent
threat to life or property of the Company or the Subs, after, to the extent practicable, the Administrator notifies each Representative.

 

 

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(d)           Notwithstanding
the foregoing, any loan pursuant to this Section 4.05 must satisfy the following requirements: (i) it must not subject
any Member to personal liability for its repayment (unless the Member expressly agrees to guarantee the loan); and (ii) its
terms (including the interest rate) must be no less favorable to the Company than the Company could have obtained from Persons
who are not Affiliated with the Members.

 

(e)           An
Emergency Loan shall bear interest at the Default Rate from the date of the advance until the date of payment and is not a Capital
Contribution. Any other loan described in this Section 4.05 shall bear interest at a rate determined by the Management
Committee from the date of the advance until the date of payment and is not a Capital Contribution.

 

4.06         Capital
Accounts.

 

(a)           A
Capital Account shall be established and maintained for each Member in accordance with the provisions of this Section 4.06:

 

(i)           Each
Member’s Capital Account shall be increased by (A) the amount of money contributed by that Member to the Company calculated
on the date of its Capital Contribution, (B) the fair market value of any other property contributed by that Member to the
Company by way of a Capital Contribution, (C) allocations to that Member of Company income and gain (or items thereof) allocated
pursuant to Section 5.03(a) or specially allocated pursuant to Section 5.03(c) or Section 5.03(d),
including income and gain exempt from tax and income and gain described in Treasury Regulation Section 1.704-1(b)(2)(iv)(g),
but excluding income and gain described in Treasury Regulation Section 1.704-1(b)(4)(i), and (D) the amount of any Company
liabilities assumed by such Member or that are secured by any property distributed to such Member, and

 

(ii)           Each
Member’s Capital Account shall be decreased by (A) the amount of money distributed to that Member by the Company, (B) the
fair market value of any other property distributed to that Member by the Company, (C) allocations to that Member of expenditures
of the Company described (or treated as described) in Section 705(a)(2)(B) of the Code, (D) allocations to that Member
of Company loss and deduction (or items thereof) allocated pursuant to Section 5.03(a) or specially allocated pursuant
to Section 5.03(c), Section 5.03(d), or Section 5.03(e), including loss and deduction described
in Treasury Regulation Section 1.704-1(b)(2)(iv)(g), but excluding items described in subparagraph (C) of this
paragraph (ii) and loss or deduction described in Treasury Regulation Section 1.704-1(b)(4)(i) or 1.704-1(b)(4)(iii), and
(E) 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.

 

(b)           To
the extent not otherwise inconsistent with the provisions of this Section 4.06, the Members’ Capital Accounts
shall be maintained and adjusted as required by the provisions of Treasury Regulation Sections 1.704-1(b)(2)(iv) and 1.704-1(b)(4)
including adjustments required by the provisions of Treasury Regulation Section 1.704-1(b)(2)(iv)(f) and adjustments
to reflect the allocations to the Members of depreciation, depletion, amortization, and gain or loss as computed for book purposes
rather than the allocation of the corresponding items as computed for tax purposes, as required by Treasury Regulation Section 1.704-1(b)(2)(iv)(g).

 

(c)           The
Members’ Capital Accounts shall be increased or decreased to reflect a revaluation of the Company’s property on its
books based on the fair market value of the Company’s property as of the following times: (i) the contribution of more
than a de minimis amount of money or other property to the Company by a new or existing Member as consideration for a new or additional
Membership Interest, (ii) the distribution of more than a de minimis amount of money or other property by the Company to a
Member as consideration for a Membership Interest, (iii) the grant of an interest in the Company (other than a de minimis
interest) as consideration for the provision of services to or for the benefit of the Company by an existing Member acting in a
Member capacity or a new Member acting in a Member capacity or in anticipation of being a Member, or (iv) the liquidation
of the Company within the meaning of Treasury Regulation Section 1.704-1(b)(2)(ii)(g), provided that any adjustment
described in subclauses (i), (ii) and (iii) shall be made only with notice to and the agreement of the Members.

 

(d)           Upon
the Disposition of all or a portion of a Member’s Membership Interest, the Capital Account of the Disposing Member that is
attributable to such Membership Interest shall carry over to the Assignee in accordance with the provisions of Treasury Regulation
Section 1.704-1(b)(2)(iv)(l).

 

 

 

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(e)           The
foregoing provisions of this Article and the other provisions of this Agreement relating to the maintenance of Capital Accounts
are intended to comply with Treasury Regulation Sections 1.704-1 and 1.704-2 and shall be interpreted and applied in a manner consistent
with such Treasury Regulations and any amendment or successor provision thereto.

 

4.07         Mandatory
Replacement of Contributed Assets.

 

(a)           On
the date hereof, the Contribution, the assets more particularly described in the Capital Contribution Agreement, free and clear
of all Encumbrances except for Permitted Encumbrances. From time to time after the date hereof, and without any further consideration,
the Member shall execute, acknowledge and deliver all such additional deeds, assignments, conveyances, instruments, notices, releases,
acquittances and other documents, and will do all such other acts and things, all in accordance with applicable law, as may be
necessary or appropriate (i) more fully to assure the Company, the Subs and their successors and assigns all of the properties,
rights, titles, interests, estates, remedies, powers and privileges required by this Agreement to be granted to the Company and
the Subs or intended so to be, and (ii) more fully and effectively to carry out the purposes and intent of this Agreement
and the Developer Agreement.

  

4.08         Developer
Fees.

 

DHS2 is primarily liable
to pay Developer Fees under Paragraph 3(a) of the Developer Agreement and shall pay such Developer Fees as they become due
and payable. In accordance with Paragraph 5(a) of the Developer Agreement, GDTK is obligated to pay such Developer Fees in the
event that DHS2 fails to pay such Developer Fees, DHS2 shall pay such amounts within 30 days of the due date therefor. In the event
that none of DHS2, GDTK or any other Person pays such amounts, the Company shall pay such amounts. In the event that the Company
pays any portion of the Developer Fees for any HPC Site (the “Affected HPC Site”), GDTK shall repay to
the Company such amounts, with interest accrued thereon at the rate of 15% per annum from the date of such payment to but excluding
the date of such payment. Any such payments by GDTK shall not be treated as Capital Contributions. The Company and DHS2 may exercise
any of their rights and remedies under applicable law, including any set-off rights.

 

 

ARTICLE V

DISTRIBUTIONS AND ALLOCATIONS

 

5.01         Distributions.
The Company shall not make any distributions to the Members before DHS2, Inc. receives payment of all obligations, both principal
and accrued interest, payable to DHS2, Inc. under all Shareholder Loans. After DHS2, Inc. receives payment of all such obligations,
both principal and accrued interest, payable to it under any Shareholder Loan, the Company shall distribute, within twenty (20)
Business Days after the end of each calendar month in which Distributable Cash shall have arisen and be on hand, any Distributable
Cash to the Members and its cash and other property from time to time as the Management Committee may determine, subject to this
Agreement and applicable law, based on the following priority:

 

(a)           first,
to the Members who have made loans to the Company pursuant to Section 4.05 in accordance with the total amount of outstanding
principal owed such Members under such loans, until such Members have received payment of all obligations, both principal and accrued
interest, due to them under such loans made to the Company pursuant to Section 4.05, and then

 

(b)           second,
to DHS2 up to the agreed value of its Contributions;

 

(c)           third,
to DHS2 up to the amount of its aggregate LP1 Contributions;

 

(d)           fourth,
to the Members up to the agreed value of the DHS2 Capital Contribution and the Capital Contribution (reduced by amounts distributed
pursuant to Section 4.01(e)) on Exhibit A, as adjusted in accordance with the provisions of this Agreement,
in proportion thereto;

  

(e)           fifth,
to DHS2 up to the amount of the Accrued Preferred Return on its LP1 Contributions;

 

(f)           sixth,
to the Members up to the aggregate amount of all Other Capital Contributions in proportion thereto;

 

(g)          seventh,
to each Member up to the aggregate amount of its Accrued Preferred Return (other than the Accrued Preferred Return on the LP1 Contributions)
in accordance with its proportion of all such Accrued Preferred Returns; and then

 

 

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(h)          eighth,
to the Members in accordance with their respective Sharing Ratios.

 

 

5.02        Allocations.

 

(a)           Allocations
of Profits.  Except as otherwise provided in Section 5.02(c), Profits of the Company shall be allocated
to the Members as follows:

 

(i)           First,
to the Members in accordance with their respective Sharing Ratios to the extent of the excess of (A) the amount of Losses
previously allocated to the Members pursuant to Section 5.02(b)(viii) over (B) the amount of Profits previously allocated
to the Members pursuant to this Section 5.02(a)(i);

 

(ii)          Second,
to DHS2 to the extent of the excess of (A) the amount of Losses previously allocated to DHS2 pursuant to Section 5.02(b)(vii)
over (B) the amount of Profits previously allocated to DHS2 pursuant to this Section 5.02(a)(ii);

 

(iii)         Third,
to DHS2 and Higher Perpetual in proportion to and to the extent of the excess of (A) the amount of Losses previously allocated
to the Members pursuant to Section 5.02(b)(vi) over (B) the amount of Profits previously allocated to the Members pursuant
to this Section 5.02(a)(iii);

 

(iv)         Fourth,
to DHS2 to the extent of the excess of (A) the amount of Losses previously allocated to DHS2 pursuant to Section 5.02(b)(v)
over (B) the amount of Profits previously allocated to DHS2 pursuant to this Section 5.02(a)(iv);

 

(v)          Fifth,
to the Members in proportion to and to the extent of the excess of (A) the amount of Losses previously allocated to the Members
pursuant to Section 5.02(b)(iv) over (B) the amount of Profits previously allocated to the Members pursuant to this
Section 5.02(a)(v);

 

(vi)         Sixth,
to DHS2, to the extent of the excess of (A) the aggregate Accrued Preferred Return for DHS2 in respect of Cash and or Cash
Equivalent Contribution over (B) the amount of Profits previously allocated to DHS2 pursuant to this Section 5.02(a)(vi);

 

(vii)        Seventh,
to each Member, in proportion to and to the extent of amounts equal to the Accrued Preferred Return (other than the Accrued Preferred
Return on the Contributions) of each Member, to the extent of the excess of (A) the aggregate of such Accrued Preferred Returns
for the Members over (B) the amount of Profits previously allocated to the Members pursuant to this Section 5.02(a)(vii);
and

 

(viii)        Finally,
to the Members in accordance with their respective Sharing Ratios.

 

(b)           Allocations
of Losses.  Except as otherwise provided in Section 5.02(d), Losses of the Company shall be allocated
to the Members as follows:

 

(i)           First,
to the Members in proportion to and to the extent of the excess of (A) the amount of Profits previously allocated to the Members
pursuant to Section 5.02(a)(viii), over (B) the amount of Losses previously allocated to the Members pursuant to this
Section 5.02(b)(i);

 

(ii)          Second,
to each Member, in proportion to and to the extent of the excess of (A) the amount of Profits previously allocated to the
Members pursuant to Section 5.02(a)(vii), over (B) the amount of Losses previously allocated to the Members pursuant
to this Section 5.02(b)(ii);

 

(iii)         Third,
to DHS2, to the extent of the excess of (A) the amount of Profits previously allocated to DHS2 pursuant to Section 5.02(a)(vi)
over (B) the amount of Losses previously allocated to DHS2 pursuant to this Section 5.02(b)(iii);

 

(iv)         Fourth,
to each Member, in proportion to and to the extent of the excess of (A) the aggregate amount of Other Capital Contributions
made by the Members over (B) the sum of (I) the amount of Distributable Cash

 

 

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previously distributed pursuant to
Section 5.01(f) and (II) the amount of Losses previously allocated to the Members pursuant to this Section 5.02(b)(iv);

 

(v)          Fifth,
to each Member in proportion to and to the extent of the excess of (A) the sum of (I) the value of the DHS2 Contributed Assets
as set forth on Exhibit A and (II) the value of the Contributed Assets as set forth on Exhibit A, over (B) the sum of (I) the amount
of Distributable Cash previously distributed pursuant to Section 5.01(d), (II) the amount distributed pursuant to Section
4.01(e) and (III) the amount of Losses previously allocated to the Members pursuant to this Section 5.02(b)(v);

 

(vi)         Sixth,
to DHS2 to the extent of the excess of (A) the aggregate Contributions over (B) the sum of (I) the amount of Distributable Cash
previously distributed pursuant to Section 5.01(c) and (II) the amount of Losses previously allocated to DHS2 pursuant to
this Section 5.02(b)(vi);

 

(vii)        Seventh,
to DHS2 to the extent of the excess of (A) the amount of any Contributions over (B) the sum of (I) the amount of
Distributable Cash previously distributed pursuant to Section 5.01(b) and (II) the amount of Losses previously allocated
to DHS2 pursuant to this Section 5.02(b)(vii); and

 

(viii)       Finally,
to the Members in accordance with their respective Sharing Ratios.

 

(c)           Special
Allocations.  The following special allocations shall be made in the following order:

 

(i)           Company
Minimum Gain Chargeback.  Notwithstanding the other provisions of this Section 5.02, except as provided
in Treasury Regulation Section 1.704-2(f), if there is a net decrease in Company Minimum Gain during any Company taxable period,
each Member shall be allocated items of Company income and gain for such period (and, if necessary subsequent periods) in the manner
and in the amounts provided in Treasury Regulation Sections 1.704-2(f)(6), 1.704-2(g)(2), 1.704-2(j)(2)(i) or any successor
provisions.  This Section 5.02(c)(i) is intended to comply with the minimum gain chargeback requirement in
Treasury Regulation Section 1.704-2(f) and shall be interpreted consistently therewith.  For purposes of this Section 5.02(c)(i),
each Member’s Adjusted Capital Account balance shall be determined, and the allocation of income or gain required hereunder
shall be effected, prior to the application of any other allocations pursuant to this Section 5.02.

 

(ii)          Chargeback
of Minimum Gain Attributable to Member Nonrecourse Debt.  Notwithstanding the other provisions of this Section 5.02,
except Section 5.02(c) and as provided in Treasury Regulation Section 1.704-2(i)(4), if there is a net decrease
in Minimum Gain Attributable to Member Nonrecourse Debt determined in accordance with Treasury Regulation Section 1.704-2(i)(5)
at the beginning of a taxable period, any Member with a share of Minimum Gain Attributable to Member Nonrecourse Debt at the beginning
of such taxable period shall be allocated items of Company income and gain for such period (and, if necessary, subsequent taxable
periods) in the manner and amounts provided in Treasury Regulation Sections 1.704-2(i)(4) and 1.704-2(j)(2)(ii), or any successor
provisions.  For purposes of this Section 5.02(c)(ii), each Member’s Adjusted Capital Account balance
shall be determined, and the allocation of income or gain required hereunder shall be effected, prior to the application of any
other allocations pursuant to this Section 5.02 with respect to such taxable period (other than an allocation pursuant
to Section 5.02(c)(i)).

 

(iii)         Qualified
Income Offset.  In the event any Member unexpectedly receives any adjustments, allocations or distributions described
in Treasury Regulations Sections 1.704-1(b)(2)(ii)(d)(4), (5) or (6), items of income and gain
(if any) shall be specially allocated to such Member in an amount and manner sufficient to eliminate, to the extent required by
Treasury Regulations, the deficit balance, if any, in such Member’s Adjusted Capital Account as quickly as possible, provided
that an allocation pursuant to this Section 5.02(c)(iii) shall be made only if and to the extent that such Member would
have a deficit balance in its Adjusted Capital Account after all other allocations provided for in this Section 5.03
have been tentatively made as if this Section 5.02(c)(iii) were not in this Agreement.

 

(iv)         Gross
Income Allocation.  In the event any Member has a deficit balance in its Adjusted Capital Account at the end
of any taxable period, each such Member shall be specially 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 5.02(c)(iv) shall be made only if and
to the extent that such Member would have a deficit balance in its Adjusted Capital Account in excess of such amount after all
other allocations provided for in this Article V have been made as if Section 5.02(c)(iii) and this Section 5.02(c)(iv)
were not in this Agreement.

 

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(v)          Nonrecourse
Deductions.  Any Nonrecourse Deduction for any tax period shall be allocated to the Members in accordance with
Section 5.02(a).

 

(vi)         Member
Nonrecourse Deductions.  Any Member Nonrecourse Deductions for any tax period shall be 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 Treasury Regulation Section 1.704-2(i)(1).

 

(vii)        Section 754
Adjustments.  To the extent an adjustment to the adjusted tax basis of any Company asset pursuant to Code Section 734(b)
or Section 743(b) is required pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(m)(2) or Section 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 Section 5.02(a), in the event Treasury Regulation Section 1.704-1(b)(2)(iv)(m)(2)
applies, or to the Member to whom such distribution was made in the event Treasury Regulation Section 1.704-1(b)(2)(iv)(m)(4)
applies.

 

(d)          Curative
Allocations.  The allocations set forth in Section 5.02(c)(i) through (c)(vii) hereof (the
“Regulatory Allocations”) are intended to comply with certain requirements of the Treasury Regulations.  Notwithstanding
any other provisions of this Section 5.02, the Regulatory Allocations shall be taken into account in allocating items
of income, gain, loss, deduction and credit among the Members such that, to the extent possible, the net amount of allocations
of such items and the Regulatory Allocations to each Member shall be equal to the net amount that would have been allocated to
each Member if the Regulatory Allocations had not occurred.

 

(e)          Loss
Limitations.  No allocation of items of loss or deduction pursuant to Section 5.02(a) shall be made
to a Member if such allocation would cause or increase a deficit in the balance of a Member’s Adjusted Capital Account.  In
the event some but not all of the Members would have a deficit in the balance of their Adjusted Capital Account as a consequence
of an allocation of items of loss or deduction pursuant to Section 5.02(a), the limitation set forth in this Section 5.02(e)
shall be applied on a Member by Member basis and items of loss or deduction not allocable to any Member as a result of such limitation
shall be allocated to the other Members in the manner otherwise required pursuant to Section 5.02(a) to the extent
such other Members have positive balances in their Capital Accounts so as to allocate the maximum permissible items of loss and
deduction to each Member under Treasury Regulation Section 1.704-1(b)(2)(ii)(d).

 

  (f)           Other
Allocation Rules.

 

(i)           In
the case of any Accrued Preferred Return for a Capital Contribution by Higher Perpetual that has become equal to $0 pursuant to
the last sentence of Section 4.08, notwithstanding anything to the contrary in Sections 5.02(a) and 5.02(b),
items of deduction shall be allocated to Higher Perpetual in an amount equal to such Accrued Preferred Return until the amount
of deductions allocated pursuant to this Section 5.02(f)(i) equals the excess of (A) the amount of Profits previously
allocated to Higher Perpetual pursuant to Section 5.02(a)(vii) with respect to such Accrued Preferred Return over (B) the
amount of Distributable Cash previously distributed to Higher Perpetual pursuant to Section 5.01(g) with respect to such
Accrued Preferred Return.

 

(ii)          For
purposes of determining the income or losses, or any other items allocable to any period, income, losses, and any such other items
shall be determined on a daily, monthly, or other basis, as determined by the Management Committee using any permissible method
under Code Section 706 and the Treasury Regulations thereunder.

 

(iii)         The
Members are aware of the income tax consequences of the allocations made by this Section 5.02 and hereby agree to be bound
by the provisions of this Section 5.02 in reporting their shares of Company income, gain, loss, deduction and credit for
income tax purposes.

 

(iv)         Solely
for purposes of determining a Member’s proportionate share of the “excess nonrecourse liabilities”
of the Company within the meaning of Treasury Regulation Section 1.752-3(a)(3), a Member’s interest in the Company profits
is in accordance with its proportionate allocation under Section 5.02(a).

 

 

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(v) To the extent
permitted by Treasury Regulation Section 1.704-2(h)(3), the Management Committee shall endeavor to treat distributions of
Distributable Cash as having been made from the proceeds of a Nonrecourse Liability or a Member Nonrecourse Debt only to the extent
that such distributions would cause or increase a deficit in the balance of a Member’s Adjusted Capital Account.

 

(g)          Income
Tax Allocations; Code Section 704(c).  For income tax purposes, each item of income, gain, loss, and deduction
shall be allocable in the same manner such items are allocated for book purposes pursuant to this Section 5.02; provided,
however, that income, gain, loss and deductions with respect to property contributed to the Company by a Member or revalued pursuant
to Treasury Regulation Section 1.704-1(b)(2)(iv)(f) shall be allocated among the Members in a manner that takes into account
the variation between the adjusted tax basis of such property and its book value, as required by Section 704(c) of the Code
and Treasury Regulation Section 1.704-1(b)(4)(i), using the traditional allocation method permitted by Treasury Regulation
Section 1.704-3(b).

 

5.03       Calculation
of Flip Point.

 

(a)           Monthly
Calculation; Liquidation Calculation.

 

(i)           If
a final determination that the Flip Point has occurred has not previously been made under this Section 5.03, then within
ten (10) Business Days after the end of each calendar month, the Administrator shall determine in good faith whether a calculation
as of the date of any distribution for such month is necessary in order for the Administrator to conclude whether the Flip Point
has occurred during such month.  If the Administrator (1) determines that no calculation is necessary, or (2) determines
after calculation in the manner described in this Section 5.04 that the Flip Point has not occurred during such month, then
distributions of Distributable Cash shall be made in accordance with Section 5.01 and allocations of tax attributes of the
Company shall be made in accordance with Section 5.03(a) and Section 5.03(b), as applicable.

 

(ii)           If
the Administrator calculates, in the manner provided in this Section 5.03, that the Flip Point has occurred during a calendar
month, then no less than ten (10) Business Days prior to making a distribution for such month, the Administrator shall provide
such calculation to the Members and prepared in accordance with the calculation rules and conventions of this Section 5.03,
specifying the Flip Point and the portion of the Distributable Cash which is to be distributed to each Member in accordance with
Section 5.01 and the portion of the tax attributes of the Company which are to be allocated under Section 5.02(a)
and Section 5.02(b), respectively.

 

(iii)           Prior
to making any liquidating distribution pursuant to Section 9.02 of this Agreement, the Administrator shall make a calculation,
in the manner described in this Section 5.03, as to whether the Flip Point will occur in connection with the liquidation
of the Company.  No less than ten (10) Business Days prior to making such distribution, the Administrator shall provide
such calculation to the Members and prepared in accordance with the calculation rules and conventions of this Section 5.03,
specifying the Flip Point (or stating that the Administrator has concluded that it will not occur) and the portion of the liquidation
proceeds which is to be distributed to each Member in accordance with Section 9.02, and the proportions in which the tax
attributes of the Company for the taxable period in which the liquidation occurs are to be allocated in accordance with Section 5.02(a)
and Section 5.02(b).  If the Administrator determines that the Flip Point has not so occurred pursuant to the two
immediately preceding sentences, then distributions of liquidation proceeds shall be made in accordance with Section 9.02,
and allocations of tax attributes of the Company shall be made in accordance with Section 5.02(a) and Section 5.02(b),
as applicable.

 

(iv)           In
the event that no objection to a calculation provided to the Members under Section 5.03(a)(ii) or Section 5.03(a)(iii)
is received by the Administrator from any Member immediately prior to the applicable date of distribution, then the Flip Point
shall be deemed to have occurred as specified in such calculation and the distribution of Distributable Cash or liquidation proceeds
and the allocation of tax attributes for the applicable taxable period, shall be made in the manner specified by such calculation.  In
the event that such an objection is received by the Administrator, then the determination of the Flip Point and the making of the
distribution (and all subsequent distributions of Distributable Cash or liquidation proceeds) shall be suspended until the Flip
Point and the allocation of distributions and allocations of tax attributor is finally determined under the dispute resolution
procedures set forth in Section 5.03(c).

 

(v) Requirements
of LLC/Partnership Flip Structure are attached hereto as Exhibit G IRS Safe Harbor Provisions

 

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(b)           Calculation
Rules and Conventions.  The Administrator shall employ the following calculation rules and conventions in determining
the Flip Point:

 

(i)           Intentionally
deleted.

 

(ii)           Continuity
of Ownership.  The Administrator shall treat ownership of the Membership Interests as being continuous from the
Effective Date to the distribution date as of which the calculation is being made without regard to any change in ownership of
any Membership Interests during such period, except as required under this Agreement.

 

(iii)           Finality
of Determination of Flip Point.  The Administrator’s determination that the Flip Point has occurred, subject
to the rights of the Members to dispute such determination in advance under the procedures set forth in Section 5.03(c),
shall become final on the date of distribution as of which such determination is made, in the absence of fraud or manifest mathematical
error.  The occurrence of the Flip Point shall not be affected by any other distribution or other event or circumstance
arising at any time after the date of distribution as of which the determination of the Flip Point is made.

 

(c)           Flip
Point Dispute Resolution.  Notwithstanding any other provision in this Agreement, if any Member shall dispute
any item or procedure or calculation of, or which affects, the Flip Point contained in any notice or report delivered to such Member,
such Member shall notify the Administrator within seven (7) Business Days following receipt of the notice or report disputed, setting
forth in reasonable detail such Member’s objections to such calculation, and the Parties shall attempt in good faith to resolve
promptly any differences as to the calculation so disputed.  If the Parties are unable to resolve any such differences
within seven (7) Business Days after the date of the disputing Member’s notice, then the actual calculation shall be finally
referred to a partner of a firm of independent public accountants selected by the Management Committee and acting as an independent
expert (the “Independent Expert”), designated by such firm upon the request of either the disputing Member
or the Administrator.  The disputing Member and the Administrator shall submit the related computation and all other
data necessary for the Independent Expert to make his determination, including any additional data requested by the Independent
Expert.  The Independent Expert shall keep confidential all information submitted to him in connection with his resolution
of the dispute(s) hereunder.  The Independent Expert shall be requested to render his determination as promptly as possible
after he receives all necessary data.  The determination of the Independent Expert resolving a dispute pursuant to this
Section 5.03(c) shall be final and binding upon the disputing parties, and such determination shall apply for all subsequent
periods to any item or procedure substantially similar to that determined hereunder.  The Company shall pay the fees
of the Independent Expert incurred for such determination.

 

5.04       Varying
Interests.  All items of income, gain, loss, deduction or credit shall be allocated, and all distributions shall
be made, to the Persons shown on the records of the Company to have been Members as of the last calendar day of the period for
which the allocation or distribution is to be made.  Notwithstanding the foregoing, if during any taxable year there
is a change in any Member’s Membership Interest, the Members agree that their allocable shares of such items for the taxable
year shall be determined by any method determined by the Management Committee to be permissible under Code Section 706 and the
related Treasury Regulations to take account of the Members’ varying number of Membership Interests.

 

ARTICLE VI

 

MANAGEMENT

 

6.01       Management
by Members.  Except as described below in Section 6.03, the management of the Company is fully vested
in the Members, acting exclusively in their membership capacities.  When the Company has only one Member, that Member
may exercise its management rights by written consent when necessary, and in the event of such action by written consent, reference
in this Agreement to the Management Committee shall, for purposes of such action, be a reference to the sole Member acting by such
written consent.  To facilitate the orderly and efficient management of the Company, except as otherwise expressly provided
in this Agreement, the Members shall act (a) collectively as a “committee of the whole” pursuant
to Section 6.02, and (b) through the delegation of certain responsibility and authority to any Member pursuant
to Section 6.03.  Decisions or actions taken in accordance with the provisions of this Agreement shall constitute
decisions or actions by the Company and shall be binding on each Member, Representative, officer and employee of the Company.

 

6.02       Management
Committee.  The Members shall act collectively through meetings as a “committee of the whole,”
which is hereby named the “Management Committee.”  The Management Committee shall conduct its
affairs in accordance with the following provisions and the other provisions of this Agreement:

 

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(a)           Powers
and Duties.  The Management Committee shall manage the business and affairs of the Company in accordance with
the provisions of this Agreement.

 

(b)           Representatives.

 

(i)           Designation.  To
facilitate the orderly and efficient conduct of Management Committee meetings, each Member shall notify the other Members, from
time to time, of the identity of two of its officers, employees or agents who will represent it at such meetings (each a “Representative”
and collectively “Representatives”).  The initial Representatives of each Member are set forth
on Exhibit A.  No Representative shall be entitled to any salary or similar compensation from the Company
for serving on the Management Committee.

 

(ii)           Authority.  Each
Representative shall have the full authority to act on behalf of the Member that designated such Representative; the action of
any one Representative at a meeting (or through a written consent) of the Management Committee shall bind the Member that designated
such Representative; and the other Members shall be entitled to rely upon such action without further inquiry or investigation
as to the actual authority (or lack thereof) of such Representative.

 

(iii)           DISCLAIMER
OF DUTIES; INDEMNIFICATION. EACH REPRESENTATIVE SHALL REPRESENT, AND OWE DUTIES TO, ONLY THE MEMBER THAT DESIGNATED SUCH
REPRESENTATIVE (THE NATURE AND EXTENT OF SUCH DUTIES BEING AN INTERNAL CORPORATE AFFAIR OF SUCH MEMBER), AND NOT TO THE COMPANY
OR TO THE SUBS, ANY OTHER MEMBER OR REPRESENTATIVE, OR ANY OFFICER OR EMPLOYEE OF THE COMPANY OR THE SUBS.  THE PROVISIONS
OF SECTION 6.05 SHALL ALSO INURE TO THE BENEFIT OF EACH MEMBER’S REPRESENTATIVES.  THE COMPANY SHALL
INDEMNIFY, PROTECT, DEFEND, RELEASE AND HOLD HARMLESS EACH REPRESENTATIVE FROM AND AGAINST ANY CLAIMS ASSERTED BY OR ON BEHALF
OF ANY PERSON (INCLUDING ANOTHER MEMBER OR THE SUBS), OTHER THAN THE MEMBER THAT DESIGNATED SUCH REPRESENTATIVE, THAT ARISE OUT
OF, RELATE TO OR ARE OTHERWISE ATTRIBUTABLE TO, DIRECTLY OR INDIRECTLY, SUCH REPRESENTATIVE’S SERVICE ON THE MANAGEMENT COMMITTEE,
OTHER THAN SUCH CLAIMS ARISING OUT OF THE FRAUD OR WILLFUL MISCONDUCT OF SUCH REPRESENTATIVE.

 

(iv)           Attendance.  Each
Member shall use all reasonable efforts to cause its Representatives to attend each meeting of the Management Committee, unless
any of its Representatives are unable to do so because of an event beyond their reasonable control, in which event such Member
shall use all reasonable efforts to cause such Representative to participate in the meeting by telephone pursuant to Section 6.02(b)(i).  Each
Representative shall have the right to bring such advisors to any meeting of the Management Committee which he or she is attending
as he or she deems appropriate.

 

(c)           Procedures.  The
Management Committee shall maintain written minutes of each of its meetings and may adopt such rules and procedures relating to
its activities as it may deem appropriate, provided that such rules and procedures shall not be inconsistent with or violate the
provisions of this Agreement or the Act.  The Secretary or a delegate of the Secretary shall circulate draft written
minutes of the applicable telephonic or physical meeting not later than ten (10) Business Days after each meeting to the Management
Committee for comment.   If no comments are received within fifteen (15) Business Days of such circulation, the
minutes shall be deemed approved once signed by the Secretary.  If comments are received for such minutes within the
aforementioned fifteen (15) Business Day period, the proposed minutes shall be reviewed for approval at the next meeting of the
Management Committee and, once approved, signed by the Secretary.  The failure of such Person to circulate such draft
minutes shall not invalidate any minutes of a meeting otherwise approved by the Management Committee in accordance with the terms
of this Agreement.

 

(d)           Time
and Place of Meetings.  The Management Committee shall meet quarterly, subject to more or less frequent meetings
upon approval of the Management Committee.  Notice of, and an agenda for, all Management Committee meetings shall be
provided to all Members at least ten (10) Business Days prior to the date of each meeting, together with any proposed minutes of
the previous Management Committee meeting (if such minutes have not been previously ratified).  Special meetings of the
Management Committee may be called at such times, and in such manner, as the Members deem necessary.  Any Member calling
for any such special meeting shall notify all Members of the date and agenda for such meeting at least five (5) Business Days prior
to the date of such meeting.  Such five (5) Business Day period may be shortened by the Management Committee.  The
location of each meeting of the Management Committee shall be as agreed by the Management Committee.  Attendance of a
Member at a meeting of the Management Committee shall constitute a waiver of notice of such meeting, except where such Member attends
the meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully
called or convened.

 

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(e)           Quorum.  The
presence of one Representative designated by each Member necessary to constitute a majority or all, as the case may be, of the
Membership Interests necessary to approval action taken at any meetings shall constitute a quorum for the transaction of business
at such meeting of the Management Committee.

 

(f)           Voting.  Except
as may be provided otherwise in this Agreement, the affirmative vote of Members holding Voting Ratios constituting a majority of
all Voting Ratios shall constitute the act of the Management Committee.

 

(g)           Action
by Written Consent.  Any action required or permitted to be taken at a meeting of the Management Committee may
be taken without a meeting, without prior notice, and without a vote in person if a consent or consents in writing, setting forth
the action so taken, is signed by Members that could have taken the action at a meeting of the Management Committee at which all
Members entitled to vote on the action were represented and voted. Failure of a Member to sign such written consent within thirty
(30) Days of receipt thereof shall constitute a vote against such action.

 

(h)           Meetings
by Telephone.  Members may participate in and hold such meeting by means of conference telephone, video conference
or similar communications equipment by means of which all persons participating in the meeting can hear each other.  Participation
in such a meeting shall constitute presence in person at such meeting, except where a Member participates in the meeting for the
express purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called or convened.

 

(i)           Subcommittees.  The
Management Committee may create such subcommittees, delegate to such subcommittees such authority and responsibility, and rescind
any such delegations, as it may deem appropriate.

 

 

6.03       Management
of Company Affairs.

 

(a)           The
Management Committee may delegate to one or more Members such authority and duties as the Management Committee may deem advisable,
including delegation to the Administrator in accordance with the Project Administration and Development Services Agreement, the
Construction Manager in accordance with the Construction Management Agreement, and the Operator in accordance with the O&M
Agreement; all as further subject to the terms of this Agreement.  While acting in such capacity, decisions or actions
taken by any such Member, or its Representative, officers, directors, employees, shareholders, agents and representatives (including
those of such Member’s Affiliates), on behalf of such Member in accordance with, and within the authority given to them under,
the provisions of this Agreement shall constitute decisions or actions by the Company and shall be binding on the Company and each
Member. Any delegation pursuant to this Section 6.03(a) may be revoked at any time by the Management Committee.  With
respect to duties discharged hereunder by a Member, such Member may discharge such duties through the personnel of an Affiliate
of such Member or third party. The Management Committee may also delegate to the Administrator such authority and duties with respect
to the business and affairs of the Company as may be specified in this Agreement, the Project Administration and Development Services
Agreement or any other such agreement approved by the Management Committee.

 

(b)           The
Management Committee may not, except with the approval of the Members after

 

(i)           the
Screening Period, change the order of development and construction or the nameplate rating in megawatts of the HPC Sites, which
order and nameplate rating shall be one (1) MW for the first HPC Site which is to be constructed HPC Site which is to be constructed
or Substitute; or

 

(ii)           amend
in any material respect the terms of the Agreements with DHS2, Inc.

 

(c)           Neither
the Company nor any Member may do any of the following except with the approval of the Management Committee:

 

(i)           adopt
or approve any new capital or operating budgets of the Company or the Subs, including any amendments to, or deviation from the
total amount provided in, excluding any line item allocation, previously approved budgets including the Approved Budgets;

 

(ii)           enter
into any banking arrangements, including opening new accounts and providing signatories for such accounts of the Company or the
Subs;

 

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(iii)           incur
or assume any indebtedness for borrowed money by the Company or the Subs except for unsecured indebtedness in principal amount
not in excess of one hundred thousand dollars ($100,000), other than in accordance with a Funding Plan;

 

(iv)           encumber
any assets of the Company or the Subs or enter into any guaranty or cause the Subs to enter into any guaranty;

 

(v)           enter
into, or approve, amend, or terminate any contract or other obligation of the Company or the Subs, including the assumption of
any obligation, in excess of one hundred thousand dollars ($100,000);

 

(vi)           enter
into, amend or waive any material rights of the Company or the Subs under any material agreement between the Company and any Member
or any Affiliate of such Member, or between the Subs and any Member or any Affiliate of such Member including under the Transaction
Documents or under any Turbine Supply Agreements or balance of plant construction agreement;

 

(vii)          engage
or appoint certified public accountants, auditors, tax advisors, legal counsel, managing agents, investment bankers, or other such
experts for the Company or the Subs;

 

(viii)        settle
any claim of the Company or the Subs, including any claim against any Member or any Affiliate of the Member other than a claim
of less than one hundred thousand dollars ($100,000) in the aggregate, or settle any claim, including any claim by or against any
Member or any Affiliate of the Member against the Company or the Subs other than claims aggregating less than one hundred thousand
dollars ($100,000) per annum;

 

(ix)           engage
or permit the Subs to engage in any business other than as described in Section 2.04;

 

(x)           merge
or consolidate with or into another limited liability company or other business entity, Dispose of any membership interest in the
Subs, Dispose of the assets of the Company or the Subs in excess of one hundred thousand dollars ($100,000), convert the Company
or the Subs into another type of entity or enter into an agreement to do any of the foregoing; provided that if the fees due to
Higher Power under Paragraph 3(a) of the Developer Agreement with respect to such Sub or the related HPC Site remain unpaid
then the approval of each Member shall be required for a Disposition of all or substantially all of the assets or the Disposition
of the Capital Stock of the directly owning (assets substituted therefor pursuant to Section 4.07) unless the transferee
in such Disposition assumes the obligation to pay such fees relating to such HPC Site;

 

(xi)           sell,
or enter into, or permit the Subs to sell or enter into, any Power Purchase Agreement or any Hedging Agreement, to sell or manage
the risk of sale of, electricity to any Person;

 

(xii)          approve
or amend any Approved Budget or any Funding Plan;

 

(xiii)         hire
any employee of the Company or the Subs or cause the Company or the Subs to have, participate in, or make contributions to any
employee benefit plan;

 

(xiv)         incur
any liability or make or permit any expenditure or series of related expenditures in an amount exceeding the applicable Approved
Budget or permit the Subs to do the same;

 

(xv)          construct
or permit the Subs to construct any capital improvements, repairs, alterations or changes involving an amount in excess of the
applicable Approved Budget;

 

(xvi)         commence
any adversarial legal or administrative proceeding on behalf of the Company or the Subs;

 

(xvii)        enter
into, modify, amend or terminate any material Transaction Document or permit the Subs to do the same;

 

(xviii)       issue
any Capital Call other than pursuant to an Approved Budget;

 

(xix)         commence
a voluntary case in Bankruptcy or the same with respect to the Subs;

 

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(xx)           take
any action that would result in termination, liquidation, dissolution or winding up of the Company or the Subs, or omit to take
any actions to avoid such a result;

 

(xxi)         change
any material accounting methods or tax elections;

 

(xxii)        create
any subsidiary of the Company (other than the Subs) or purchase any equity rights or interests of any persons;

 

(xxiii)       waive
or amend the terms of this Agreement (other than any waivers by a Member, in its sole and absolute discretion, of such Member’s
rights under this Agreement);

 

(xxiv)       Intentionally
Deleted;

 

(xxv)        take
any action, or refrain from taking any necessary action, that would have the effect of preventing the Subs from obtaining status
as an EWG or preventing the Subs from continuing to qualify as an EWG, as that term is defined in Sections 32(a)-(d) of the Public
Utility Holding Company Act of 1935 and pursuant to the requirements of 18 C.F.R. § 366.7; or

 

(xxvi)       cause
or permit the Subs to take any of the actions in subsections (i) through (xxv) above.

 

(d)           Subject
to the other express provisions of this Agreement, all reasonable direct, out of pocket costs and expenses incurred by authorized
Persons in the Company’s business and owed to third parties in accordance with this Agreement shall be paid from Company
funds.

 

(e)           Except
as otherwise expressly provided herein, no Member (other than a Member to whom such authority has been delegated hereunder or in
accordance with this Agreement) has the authority or power to act for or on behalf of the Company, to do any act that would be
binding on the Company or to incur any liabilities or expenditures on behalf of the Company.

 

(f)           Any
Person dealing with the Company, other than a Member, may rely on the authority of the Members and the officers of the Company
in taking any action in the name of the Company without inquiry into the provisions of this Agreement or compliance with them,
regardless of whether that action actually is taken in accordance with the provisions of this Agreement.

 

6.04       Standards
of Performance and Conflicts of Interest.

 

(a)           EXCEPT
AS PROVIDED OTHERWISE IN THIS AGREEMENT, THE MEMBERS SHALL MANAGE THE BUSINESS AND AFFAIRS OF THE COMPANY AND OVERSEE THE DAY-TO-DAY
MANAGEMENT OF THE COMPANY BY THE OFFICERS OF THE COMPANY IN GOOD FAITH AND IN ACCORDANCE WITH PRUDENT INDUSTRY STANDARDS TOWARD
THE BEST INTERESTS OF THE COMPANY.  EACH MEMBER AND ITS AFFILIATES ARE LIABLE FOR ERRORS OR OMISSIONS IN PERFORMING THEIR
DUTIES WITH RESPECT TO THE COMPANY (TO THE EXTENT THERE ARE ANY) ONLY IN THE CASE OF GROSS NEGLIGENCE, WILLFUL MISCONDUCT, FRAUD
OR MATERIAL BREACH OF THIS AGREEMENT, BUT NOT OTHERWISE, IT BEING SPECIFICALLY AGREED THAT NO SUCH PERSON IS LIABLE FOR ITS OWN
SIMPLE, PARTIAL, OR CONCURRENT NEGLIGENCE.  TO THE FULLEST EXTENT PERMITTED BY LAW, NO MEMBER SHALL HAVE ANY FIDUCIARY
DUTIES TO THE COMPANY OR THE OTHER MEMBERS.  IN NO EVENT SHALL ANY MEMBER, ITS AFFILIATES, AND ITS AND THEIR DIRECTORS,
OFFICERS, EMPLOYEES, AGENTS AND REPRESENTATIVES AS WELL AS OFFICERS AND EMPLOYEES OF THE COMPANY BE LIABLE FOR ANY ACTION OR COURSE
OF CONDUCT APPROVED OR CONSENTED TO BY THE MEMBERS OR ANY ACTION OR COURSE OF CONDUCT BASED ON A DETERMINATION BY THE MEMBERS,
INCLUDING SPECIFICALLY MATTERS FOR WHICH A MEMBER WOULD BE LIABLE IN THE ABSENCE OF THIS SECTION 6.04, SUCH AS ITS
OWN SIMPLE, PARTIAL OR CONCURRENT NEGLIGENCE, ABSENT A MATERIAL MISSTATEMENT OR OMISSION OR FRAUD IN OBTAINING THE APPROVAL; PROVIDED,
THAT NOTWITHSTANDING THE EXISTENCE OF A MATERIAL MISSTATEMENT OR OMISSION, IN NO EVENT SHALL SUCH PERSON BE LIABLE FOR ANY SUCH
ACTION OR COURSE OF CONDUCT IF SUCH PERSON AT THE TIME OF THE MEMBERS’ CONSENT, APPROVAL OR DETERMINATION, DID NOT KNOW OF,
AND IN THE EXERCISE OF A STANDARD OF CARE NOT CONSTITUTING BAD FAITH, GROSS NEGLIGENCE, WILLFUL MISCONDUCT OR FRAUD COULD NOT HAVE

 

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KNOWN OF, THE MATERIAL MISSTATEMENT OR OMISSION.  THE
MEMBERS AND OFFICERS OF THE COMPANY SHALL DEVOTE TO THE MANAGEMENT OF THE COMPANY ONLY SUCH TIME AS MAY REASONABLY BE REQUIRED
TO CAUSE THE AFFAIRS OF THE COMPANY TO BE CONDUCTED IN AN EFFICIENT AND BUSINESSLIKE MANNER.  IN NO EVENT SHALL THE PROVISIONS
OF THIS SECTION 6.04 RELIEVE ANY MEMBER, ITS AFFILIATES, AND ITS AND THEIR DIRECTORS, OFFICERS, EMPLOYEES, AGENTS AND
REPRESENTATIVES FROM LIABILITY PURSUANT TO THE PROVISIONS OF ANY CONTRACT OR TRANSACTION THAT MAY BE ENTERED INTO HEREAFTER BETWEEN
THE COMPANY AND SUCH PERSON.

 

(b)           A
Member and its Affiliates may own, engage in, and possess interests in, other businesses, activities, ventures, enterprises and
investments of any and every type and description (collectively, “Activities”), independently or with
others, including Activities in competition with the Company and its subsidiaries, with no duty or obligation (express, implied,
fiduciary or otherwise) (i) to refrain from engaging in such Activities, (ii) to offer the right to participate in such
Activities to the Company, its subsidiaries, any other Member or any Affiliate of another Member, or (iii) to account to,
or to share the results or profits of such Activities with, the Company, its subsidiaries, any other Member or any Affiliate of
another Member; and any doctrines of non-competition, “company opportunity” or similar doctrines are
hereby expressly disclaimed.  Each Member hereby waives any and all rights and claims on the basis of such doctrines
which it may otherwise have against any Member and its officers, directors, shareholders, partners, members, managers, agents,
employees, and Affiliates as a result of any such Activities.

 

(c)           The
Company may, and may permit any direct or indirect subsidiary of the Company or other Person in which the Company owns, directly
or indirectly, an equity interest to, transact business with (including entering into or modifying any contractual arrangements
with) any Member or Affiliate of a Member, provided, that the terms of any such transactions with a Member or one of its Affiliates,
taken as a whole, are at fair market value.  Any transaction between the Company and a Member or its Affiliates that
has been approved by the Management Committee after full disclosure and is at fair market value as established by third party documentation
acceptable to the disinterested Members shall be deemed to have satisfied the standard set forth in the previous sentence.  A
Member or its Affiliate that transacts business with the Company owes no duty to the Company or the other Members to exercise or
to refrain from exercising in any particular manner its rights or powers as a participant in that transaction, including those
arising under any contract with the Company, and (subject to the proviso in the first sentence of this Section 6.04(c))
such Member or such Affiliate of a Member may realize profits from that transaction.

 

(d)           The
Members acknowledge and agree that the Members, officers, employees and Affiliates do not guarantee the performance of the Company.  IN
THE ABSENCE OF GROSS NEGLIGENCE, WILLFUL MISCONDUCT OR FRAUD BY A MEMBER IN PERFORMING ITS DUTIES HEREUNDER, NO MEMBER SHALL HAVE
ANY LIABILITY FOR THE ACTS, OMISSIONS OR COURSES OF CONDUCT OF THE COMPANY OR ANY OTHER MEMBER.  Nothing herein shall
prohibit a Member or the Company from asserting valid claims other than as provided in this Section 6.04.  In
no event shall the provisions of this Section 6.04(d) relieve any Member, any of its officers, employees or Affiliates
from liability pursuant to the provisions of any contract or transaction that may be entered into hereafter between the Company
and such Member or any of its officers, employees or Affiliates.

 

(e)           This
Section 6.04 constitutes a modification and disclaimer of duties and obligations (express, implied, fiduciary or otherwise)
with respect to the matters described in this Section 6.04, pursuant to Section 18-1101 of the Act.  The
Members agree that the provisions of this Section 6.04 are “express” and “conspicuous”
for all purposes of applicable Law.

 

6.05       Indemnification.

 

(a)           To
the fullest extent permitted by Law, the Company shall indemnify the officers, directors, employees, agents and Controlling Persons
of the Company and of each Member and its respective Affiliates (each, an “Indemnified Person”), on request
by the Indemnified Person, and hold each of them harmless from and against all losses, costs, liabilities, damages and expenses
(including reasonable costs of suit and attorney’s fees) any of them may incur in performing their obligations hereunder,
INCLUDING ANY MATTER ARISING OUT OF OR RESULTING FROM THE INDEMNIFIED PERSON’S OWN SIMPLE, PARTIAL, OR CONCURRENT NEGLIGENCE,
except for any such loss, cost, liability, damage or expense primarily attributable to the Indemnified Person’s breach or
reckless disregard of fiduciary duties, if any, gross negligence, willful misconduct, fraud or material breach of this Agreement.  If
an Indemnified Person becomes involved in any action, proceeding or investigation with respect to which indemnity may be available
under this Section 6.05, the Company may reimburse the Indemnified Person for its reasonable legal and other expenses
(including the cost of investigation and preparation) as they are incurred, provided, that the Indemnified Person shall promptly
repay to the Company the amount of any such expense paid if it is ultimately determined that the Indemnified Person was not entitled
to indemnification hereunder.  Any amounts payable in respect of indemnification hereunder shall be recoverable only
from the assets of the Company.

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(b)           Promptly
after receipt by an Indemnified Person of notice of any claim or the commencement of any action with respect to which indemnity
may be available under this Section 6.05, the Indemnified Person shall, if a claim in respect thereof is to be made
against the Company under this Section 6.05, notify the Company in writing of the claim or the commencement of the
action; provided, that the failure to notify the Company shall not relieve it from any liability which it may have to an Indemnified
Person other than under this Section 6.05 except to the extent that the Company is prejudiced thereby.  If
any such claim or action shall be brought against an Indemnified Person, and it shall notify the Company thereof, the Company shall
be entitled to participate therein, and, to the extent that it wishes and upon acknowledging in writing it shall indemnify the
Indemnified Person, to assume the defense thereof with counsel reasonably satisfactory to the Indemnified Person.  After
notice from the Company to the Indemnified Person of its election to assume the defense of such claim or action, the Company shall
not be liable to the Indemnified Person under this Section 6.05 for any legal or other expenses subsequently incurred
by the Indemnified Person in connection with the defense thereof other than reasonable costs of investigation; provided, that all
of the Indemnified Persons shall have the right to employ one counsel to represent them if, in the opinion of counsel to the Indemnified
Persons, there are available to them defenses not available to the Company and in that event the fees and expenses of such separate
counsel shall be paid by the Company.  In no event shall the Company be required to indemnify an Indemnified Person with
respect to amounts paid in settlement of a claim unless such claim was settled with the consent of the Company.

 

6.06       Officers; Day-to-Day
Management.

 

(a)           Officers.  The
officers of the Company shall be elected by the Management Committee and shall consist of a President, a Secretary and two (2)
Vice Presidents. The Management Committee, in their discretion, may also elect a Treasurer, one or more Assistant Secretaries and
Assistant Treasurers, and such other officers as the Management Committee may from time to time designate, all of whom shall, except
as otherwise provided herein, hold office until removed or their successors are elected and qualified. Any two or more offices
may be held by the same person. No officer of the Company shall be entitled to any salary or similar compensation from the Company
for serving as an officer of the Company, unless such officer enters into an employment relationship with the Company upon approval
by the Management Committee.  The initial officers of the Company are designated on Exhibit E hereto.

 

(b)           Vacancies.  Whenever
any vacancies shall occur in any office by death, resignation, increase in the number of officers of the Company, or otherwise,
the same may be filled by the Management Committee (voting to elect the President and the Secretary in the manner expressly provided
for herein), except for a vacancy in the Vice President which shall be filled by the Member responsible for electing such Vice
President, and the officer so elected shall hold office until he is removed, he resigns or his successor is chosen and qualified.

 

(c)           Removal.  Subject
to the provisions of this Section 6.06, any officer or agent elected or appointed by the Management Committee may be removed
by the Management Committee whenever in their judgment the best interests of the Company will be served thereby, but such removal
shall be without prejudice to the contract rights, if any, of the person so removed. Election or appointment of an officer or agent
shall not of itself create contract rights. An officer shall automatically cease to be an officer of the Company upon his ceasing
to be an employee or officer of one of the Members or their Affiliates.

 

(d)           President.  The
person holding the position of President as set forth on Exhibit E has been nominated by DHS2 and shall hold such office
for a term of two (2) years or until the Flip Point occurs, whichever is later, and thereafter the Management Committee shall appoint
as President a person nominated by GDTK, to hold office for a term of two (2) years, and thereafter the position of President shall
be held for two (2) year terms by nominees of the each of the Members in alternating succession.  The President shall,
subject to the control of the Management Committee in general, supervise all of the business and affairs of the Company.  The
President shall preside at all meetings of the Members and (if the President is a member of the Management Committee) of the Management
Committee. The President shall be the chief executive officer of the Company. The President may sign, and (if required by the Management
Committee) with the Secretary or any other proper officer of the Company thereunto authorized by the Management Committee, any
deeds, mortgages, bonds, contracts or other instruments which the Management Committee has authorized to be executed, except in
cases where the signing and execution thereof shall be expressly delegated by the Management Committee or by this Agreement to
some other officer or agent of the Company, or shall be required by law to be otherwise signed and executed, and in general shall
perform all duties incident to the office of President and such other duties as may be prescribed by the Management Committee from
time to time.

 

 

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(e)           Vice
Presidents.  Each Member shall nominate one Vice President to perform the usual and customary duties that pertain
to such office (but no unusual or extraordinary duties or powers conferred by the Management Committee upon the President) and,
under the direction and subject to the control of the Management Committee, such other duties as may be assigned to a Vice President.

 

(f)           Secretary.  The
Secretary shall be nominated by the Member which is, or whose Affiliate is, performing the duties of Administrator under the Project
Administration and Development Services Agreement and elected by the Management Committee. To the extent not performed or assigned
to the Administrator pursuant to such agreement, the Secretary shall have the following duties and responsibilities. The Secretary
shall attend all meetings of the Management Committee and record correctly the proceedings had at such meetings, and actions of
the Member, in a book suitable for that purpose. The Secretary shall give, or cause to be given, notice of all meetings of the
Management Committee and shall perform such other duties as may be prescribed by the Management Committee or President, under whose
supervision he or she shall serve. The Secretary shall see that all books, reports, statements, certificates and other documents
and records of the Company required by Law to be kept or filed are properly kept or filed, as the case may be. The person holding
the office of Secretary shall also perform, under the direction and subject to the control of the Management Committee, such other
duties as may be assigned to the Secretary. The duties of the Secretary may also be performed by any Assistant Secretary.

 

(g)           Treasurer.
To the extent not performed by the Administrator under the Project Administration and Development Services Agreement, the Treasurer,
if elected, shall have the following duties and responsibilities. The Treasurer shall keep such moneys of the Company as may be
entrusted to his or her keeping and account for the same. The Treasurer shall be prepared at all times to give information as to
the condition of the Company and shall make a detailed annual report of the entire business and financial condition of the Company.
The person holding the office of Treasurer shall also perform, under the direction and subject to the control of the Management
Committee, such other duties as may be assigned to the Treasurer. The duties of the Treasurer may also be performed by any Assistant
Treasurer.

 

(h)           Other
Officers. Assistant Secretaries, if any, and Assistant Treasurers, if any, shall have the duties set forth in Section
6.06(f) and (g), respectively. Any officer whose duties are not set forth in Section 6.06 shall have such duties
as the Management Committee or the President may prescribe.

 

(i)           Delegation
of Authority.  In the case of any absence of any officer of the Company or for any other reason that the Management
Committee may deem sufficient, the Management Committee may delegate some or all of the powers or duties of such officer to any
other officer or to any Member, manager, employee or agent for whatever period of time seems desirable.

 

6.07       Budgets.  Commencing
with the fiscal year after the Approved Budget for any HPC Site in which completion of the construction of such HPC Site is anticipated
to occur, the Management Committee shall prepare or cause to be prepared for each fiscal year of the Company an operating budget
setting forth the anticipated revenues and expenses of the Sub owning such HPC Site and the Company for such fiscal year, it being
understood that the operating budget for the year in which the construction of such HPC Site is completed may, in the Management
Committee’s discretion, contain the budget for the remaining months of such year (the “Stub Year”)
and the budget for the next succeeding calendar year (the “First Full Year”). The Management Committee
shall prepare or cause to be prepared, and approve, an operating budget for each HPC Site for the fiscal year immediately succeeding
the First Full Year (each budget as approved, an “Approved Operating Budget”) for such HPC Site.  If
the Management Committee is unable to agree upon a proposed operating budget for any HPC Site, the Approved Operating Budget from
the immediately preceding year (or, if none, the last Approved Operating Budget actually approved by the Management Committee hereunder)
increased in each line item (but not decreased) by a factor of one hundred percent (100%) of the percentage change in the GDPIPD
(if any) during the immediately preceding calendar year shall serve as an Approved Operating Budget for such year, until a more
current Approved Operating Budget is approved by the Management Committee in accordance herewith.

 

6.08       Members
Right to Act in Certain Circumstances.  Notwithstanding anything contained herein to the contrary including Section
6.03, if the Management Committee fails to enforce any rights of the Company or the Subs under any material contract, lease
or agreement with any Affiliate of a Member, including the Transaction Documents, the other Members, who shall have determined
in their reasonable commercial discretion that the enforcement of such rights are in the best interest of the Company or Subs (without
regard to the subject Member) shall cause the Company or the Subs to enforce such rights or may enforce such rights (including
the right to terminate such contract, lease or agreement) on behalf of the Company or the Subs if the Company or the Subs fail
to do so.

 

 

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6.09       HSSE
Standards.  All activities and work performed for or by the Company or for or by the Subs shall, at a minimum,
comply with all Health, Safety, Security, and Environmental (“HSSE”) policies, standards, and requirements
pursuant to an HSSE site plan as mutually agreed upon by the Members.

 

6.10       Construction
Management.  The Company shall cause the Subs to enter into the Construction Management Agreement with the Construction
Manager providing for construction management services for the construction of the HPC Sites.

 

6.11       Operations
and Maintenance Agreement.  The Company will cause the Subs to enter into the O&M Agreement for the providing
of operations management services for the HPC Sites. The Operator shall report to the Management Committee.

 

6.12       Project
Administration and Development Services Agreement.  The Company shall cause the Subs to enter into the Project
Administration and Development Services Agreement with the Administrator for the provision of administrative services to the Company
and the HPC Sites.

 

6.13       Employees.  Unless
otherwise determined by the Management Committee, the Company shall have no employees. Officers shall not be deemed to be employees
of the Company by virtue of holding their positions as officers.

 

ARTICLE VII

 

TAXES

 

7.01       Tax
Returns.  The Company shall prepare or cause to be prepared and timely file all tax returns required to be filed
by the Company and any of its subsidiaries pursuant to the Code and all other tax returns, including but not limited to any sales,
use, property, or excise tax returns, deemed necessary and required in each jurisdiction in which the Company or any of its subsidiaries
does business.  To facilitate the timely filing of tax returns, the Members shall cause the audit of the Company and
any subsidiary for the preceding fiscal year to be completed no later than ninety (90) days after the end of such fiscal year and
all draft tax returns for the Company and any subsidiary to be completed no later than one hundred twenty (120) days after the
end of such fiscal year.  The Company shall bear the costs of the preparation and filing of its returns.

 

7.02       Tax
Elections.  The Company shall make and maintain the following elections for tax purposes:

 

(a)           to
adopt the calendar year as the Company’s taxable year, unless otherwise required under the Code;

 

(b)           to
adopt the accrual method of accounting and to keep a set of the Company’s books and records on such method for income tax
purposes;

 

(c)           if
a transfer of Membership Interest as described in Code Section 743 occurs, on request by notice from the transferring Member, to
elect, at such Member’s cost, pursuant to Code Section 754, to adjust the basis of the Company’s properties;

 

(d)           to
elect to amortize the organizational expenses of the Company pursuant to Section 709(b) of the Code and to amortize the start-up
expenditures of the Company pursuant to Section 195 of the Code ratably over the shortest time period permitted by such sections;

 

(e)           to
adopt a permissible method of depreciation that allows for the most accelerated method of depreciating assets;

 

(f)           to
elect under Section 6231(a)(1)(B)(ii) to apply the provisions of Subchapter C of Chapter 63 (as contained in Subtitle A of the
Code) with respect to the Company and thereby be subject to the provisions of Sections 6221 through 6234 of the Code; and

 

(g)           any
other election the Members may deem appropriate and in the best interests of the Company and the Members; provided that the Company
is not permitted to elect to be classified as an association taxable as a corporation for any tax purpose.  The Members
shall take all reasonable actions, including the amendment of this Agreement and the execution of other documents, (i) as
may reasonably be required for the Company, in its capacity as a limited liability company, to qualify for and receive “partnership”
treatment for federal, state, local and foreign income tax purposes and (ii) to realize this intention including, but not
limited to, such actions as prescribed by Treasury Regulations Section 301.7701-3(c). 

 

DHS 2 LLC Limited Liability Company Agreement

39

    	 

    	 

    

 

 

7.03       Tax
Matters Member.  Until otherwise determined by the Management Committee, DHS2 shall be the “tax matters
partner” of the Company pursuant to Code Section 6231(a)(7) (the “Tax Matters Member”).  The
Tax Matters Member shall comply with the responsibilities outlined in Sections 6221 through 6233 of the Code (including any Treasury
Regulations promulgated thereunder).

 

(a)           The
Tax Matters Member shall keep each other Members informed as to the status of any audit or administrative or judicial proceeding
relating to the Company, including, without limitation, any dispute with the Internal Revenue Service or any state, local or foreign
tax authority, and shall promptly deliver to each other Member copies of any written communications or notices received by the
Tax Matters Member in connection with any such audit, dispute, or administrative or judicial proceeding.

 

(b)           The
Tax Matters Member shall not submit any written communications to the Internal Revenue Service or other taxing authority or to
any administrative body or governmental or judicial authority on behalf of the Company or the Subs without first providing such
communications to the Members for review and comment.  The Tax Matters Member shall give advance notice to the Members
of any hearings or proceedings relating to the Company and shall permit the Members to participate in any such hearings or proceedings.  Except
as otherwise required by law, the Tax Matters Member shall obtain the written consent of the Members prior to entering into any
settlement, making any filings (other than tax returns) with or entering into any agreements with the Internal Revenue service
or any state, local or foreign tax authority on behalf of the Company or the Subs, or making any filings with any court on behalf
of the Company or the Subs.  Any third party fees or other expenses reasonably incurred by the Tax Matters Member in
connection with its duties, including the preparation for or pursuance of administrative or judicial proceedings, shall be paid
by the Company.

 

(c)           The
Tax Matters Member is authorized to amend this Agreement, without the consent of any other Member, to comply with any safe harbor
finalized by the U.S. Department of the Treasury or the Internal Revenue Service relating to the tax treatment of a transfer of
an interest in the Company for services.  For example, this Section 7.03(c) shall apply to any safe harbor finalized
by Internal Revenue Service notice or Treasury Regulations as successor to the proposed safe harbor described in Internal Revenue
Service Notice 2005-43.  In the event any such safe harbor is finalized and elected by the Company, all Members agree
to comply with all the requirements of such safe harbor and any such amendments to this Agreement that the Tax Matters Member effects
pursuant to this Section 7.03(c).

 

ARTICLE VIII

 

BOOKS, RECORDS, REPORTS, AND BANK ACCOUNTS

 

8.01       Maintenance
of Books.

 

(a)           The
Company shall keep or cause to be kept at the principal office of the Company or at such other location the Company deems appropriate
complete and accurate books and records of the Company, supporting documentation of the transactions with respect to the conduct
of the Company’s business and minutes of the proceedings of its Members, and any other books and records that are required
to be maintained by applicable Law.

 

 

(b)           The
books of account of the Company shall be (i) maintained on the basis of a fiscal year that is the calendar year, (ii) maintained
on an accrual basis in accordance with GAAP, and (iii) audited by the auditor selected by the Management Committee, or if
the Management Committee cannot select an auditor in time for such auditor to commence and perform an annual audit of the financial
statements and accounting records of the Company, the Administrator shall select a nationally known accounting firm to perform
such audit.

 

8.02       Reports.  The
Administrator shall prepare or cause to be prepared and deliver or cause to be delivered to each Member such annual, quarterly
and monthly reports, including annual audited financial statements as are specified in the O&M Agreement.

 

8.03       Bank
Accounts.  Funds shall be deposited in the Company’s accounts maintained in such banks or other depositories
as shall be designated from time to time by the Company.  All withdrawals from any such depository shall be made only
as authorized by the Company.

 

 

DHS 2 LLC Limited Liability Company Agreement

40

    	 

    	 

    

 

 

ARTICLE IX

 

DISSOLUTION, WINDING-UP AND TERMINATION

 

9.01       Dissolution.  The
Company shall dissolve and its affairs shall be wound up on the first to occur of the following events (each a “Dissolution
Event”):

 

(a)           the
unanimous vote of the Members;

 

(b)           an
event that makes it unlawful for the business of the Company to be carried on;

 

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

 

(d)           by
a Contributing Member as provided for in Section 4.03(d).

 

9.02       Winding-Up
and Termination.

 

(a)           On
the occurrence of a Dissolution Event, the Management Committee, or such Member or other Person as the Management Committee shall
designate (the “Liquidator”) shall proceed diligently to wind up the affairs of the Company (and any
Sub if such Sub is owned by the Company at the time) and make final distributions as provided herein and in the Act.  The
costs of winding up shall be borne as a Company expense.  Until final distribution, the Liquidator shall continue to
operate the Company’s assets with the same power and authority they had prior to the Dissolution Event.  The steps
to be accomplished by the Liquidator are as follows:

 

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

 

(ii)           the
Liquidator shall discharge from the Company’s funds all of the debts, liabilities and obligations of the Company (including
all expenses incurred in winding up and payment in full of all guarantees and loans described in Section 4.05) or otherwise
make adequate provision for payment and discharge thereof (including the establishment of a cash escrow fund for contingent liabilities
in such amount and for such term as the Liquidator may reasonably determine); and

 

(iii)           all
remaining assets of the Company shall be distributed to the Members as follows:

 

(A)           the
Liquidator may sell any or all the Company’s assets, including to Members; and

 

(B)           the
Company’s assets (including cash) shall be distributed in accordance with Section 5.01.

 

(b)           The
distribution of cash or other assets to a Member in accordance with the provisions of this Section 9.02 constitutes
a complete return to the Member of its Capital Contributions and a complete distribution to the Member of its Membership Interest
and all the Company’s assets and constitutes a compromise to which all Members have consented pursuant to Section 18-502(b)
of the Act.  To the extent that a Member returns funds to the Company, it has no claim against any other Member for those
funds.

 

9.03       Certificate
of Cancellation.  On completion of the distribution of Company assets as provided herein, the Members (or such
other Person or Persons as the Act may require or permit) shall file a certificate of cancellation with the Secretary of State
of Colorado, cancel any other filings made pursuant to Section 2.05, and take such other actions as may be necessary
to terminate the existence of the Company.  Upon the filing of such certificate of cancellation, the existence of the
Company shall terminate (and the Term shall end), except as may be otherwise provided by the Act or other applicable Law.

 

 

DHS 2 LLC Limited Liability Company Agreement

41

    	 

    	 

    

 

 

 

ARTICLE X

 

BUY-SELL PROVISIONS

 

10.01     Buy-Sell
on Deadlock

 

(a)           If
(i) (A) there has been put to a vote of the Management Committee at two consecutive meetings any of the following matters:

 

(I)           the
incurrence or assumption of any indebtedness by the Company or any Sub except for unsecured indebtedness of the Company in principal
amount not in excess of $5,000,000,

 

(II)           the
adoption or approval of any change order to the turbine supply agreement or balance of plant construction agreement for the HPC
Site,

 

(III)           the
expenditure of more than $2,000,000 in any year for the purpose of repairs of equipment of the Company or any Sub,

 

(IV)           the
making of capital expenditures in excess of $2,000,000 in any year, or

 

(V)           the
sale, or entry into an agreement to make a sale, of electricity to any Person, or any Hedging Arrangement related to electricity
commodity risk, or

 

(B)           there
has been put to a vote of the Members for two weeks any valuation to be agreed by the Members in connection with this Agreement
or a Disposition described in the proviso to Section 6.03(c)(x) requiring approval of all Members (each of clauses
(A)(I) through (A)(V) and (B), a “Vital Matter”),

 

(ii)           the
Vital Matter has not been approved by the Management Committee or all of the Members, as the case may be, and

 

(iii)           a
Member notifies the other Members in writing declaring that a deadlock exists as to such Vital Matter (a “Deadlock”),

 

then the Members will use all reasonable efforts
to reach a satisfactory solution by referring the Deadlock to senior management of each of the Members or their parent entities
in accordance with Clause 10.01(b).

 

(b)           In
the event that a Deadlock has been declared, senior management of the Members or their parent entities will meet as soon as possible,
on no less than seven (7) days’ written notice, unless specifically agreed otherwise.  Such senior management shall
examine any submissions by the Members, and shall, if the Deadlock cannot be resolved immediately, agree to convene for further
negotiations aimed at resolving the Deadlock.

 

(c)           Should
such senior management be unable to resolve the Deadlock within twenty-one (21) days, then either Member may within a period of
time not to exceed sixty (60) days following the end of such twenty-one (21) day period, offer (such offer, the “Buy/Sell
Offer” and such offering Member, the “Offeror”) to the other Member (such party, the “Offeree”)
either (x) to purchase all of the Membership Interests held by the Offeree or (y) to sell all of the Offeror’s
Membership Interests to the Offeree.

 

(d)           The
Buy/Sell Offer shall set forth any and all material terms and conditions of the offer to buy or sell in a form of a definitive
Purchase and Sale Agreement (“Buyout PSA”), including the cash price per Membership Interest for the
Membership Interests that will be bought and sold.  Further, the Buyout PSA for the purchase and sale transaction contemplated
by the Buy/Sell Offer shall include the requirement that the parties thereto consummate the transaction within sixty (60) days
(or such longer period of time as shall be necessary to obtain any required approval of a Governmental Authority) after the Offeree’s
acceptance of the Buy/Sell Offer (or its reverse (as set forth in (e) below) or the Offeree’s deemed acceptance of the Buy/Sell
Offer as set forth in (e) below.

 

DHS 2 LLC Limited Liability Company Agreement

42

    	 

    	 

    

 

 

(e)           The
Buy/Sell Offer shall be irrevocable for a period of sixty (60) days after the date the Offeree receives the Buy/Sell Offer.  Before
the expiry of the sixty-day period, as provided in the foregoing sentence, the Offeree shall provide the Offeror written notice
whereby (i) the Offeree accepts the Buy/Sell Offer and all terms and conditions of the Buyout PSA, or (ii) the Offeree
reverses the Buy/Sell Offer on exactly the same terms and conditions as set forth in the Buyout PSA and accepts all of the terms
and conditions of such Buyout PSA. If the Offeree fails to so respond in writing before such expiry of the ninety-day period, the
Offeree shall be deemed to have accepted the Buy/Sell Offer and the terms of the Buyout PSA as proposed to it by the Offeror.

 

(f)           Upon
the acceptance, or deemed acceptance of the Buy/Sell Offer, the Member which shall have accepted or been deemed to have accepted
such Buy/Sell offer shall purchase, and the other Member shall sell, the Membership Interests for the purchase price set forth
in the Buyout PSA within sixty (60) days (or such longer period of time as shall be necessary to obtain any required approval of
a Governmental Authority) following the acceptance of such Buy/Sell Offer.

 

10.02     Dispute
Resolution of Buy-Sell on Deadlock.  Any dispute regarding the provisions of this Article X may, notwithstanding
any other provision in this Agreement, be resolved in any court of competent jurisdiction in Denver, Colorado and either Party
is entitled to seek any remedies, at law or in equity (including specific performance) in connection with any such dispute.

 

ARTICLE XI

 

GENERAL PROVISIONS

 

11.01      Notices.  Except
as expressly set forth to the contrary in this Agreement, all notices, requests or consents provided for or permitted to be given
under this Agreement must be in writing and must be delivered to the recipient in person, by courier or mail or by facsimile or
other electronic transmission.  A notice, request or consent given under this Agreement is effective on receipt by the
Member to receive it; provided, however, that a facsimile or other electronic transmission that is transmitted to a Member after
5:00 pm the recipient’s time shall be deemed effective on the next Business Day.  All notices, requests and consents
to be sent to a Member must be sent to or made at the addresses given for that Member on Exhibit A, or such other address
as that Member may specify by notice to the other Members.  Any notice, request or consent to the Company must be given
to all of the Members.   Whenever any notice is required to be given by Law, the Colorado Certificate or this Agreement,
a written waiver thereof, signed by the Person entitled to notice, whether before or after the time stated therein, shall be deemed
equivalent to the giving of such notice.

 

11.02     Entire
Agreement; Superseding Effect.  This Agreement constitutes the entire agreement of the Members relating to the
Company and the transactions contemplated hereby and supersedes all provisions and concepts contained in all prior contracts or
agreements between the Members with respect to the Company and the transactions contemplated hereby, whether oral or written.

 

11.03     Effect
of Waiver or Consent.  Except as otherwise provided in this Agreement, a waiver or consent, express or implied,
to or of any breach or default by any Member in the performance by that Member of its obligations with respect to the Company is
not a consent or waiver to or of any other breach or default in the performance by that Member of the same or any other obligations
of that Member with respect to the Company.  Except as otherwise provided in this Agreement, failure on the part of a
Member to complain of any act of any Member or to declare any Member in default with respect to the Company, irrespective of how
long that failure continues, does not constitute a waiver by that Member of its rights with respect to that default until the applicable
statute-of-limitations period has run.

 

11.04     Amendment
or Restatement.  This Agreement or the Colorado Certificate may be amended or restated only by a written instrument
executed (or, in the case of the Colorado Certificate, approved) by all of the Members.

 

11.05     Binding
Effect.  Subject to the restrictions on Dispositions set forth in this Agreement, this Agreement is binding on
and shall inure to the benefit of the Members and their respective successors and permitted assigns.

 

11.06     Governing
Law; Severability.  This Agreement is governed by and shall be construed in accordance with the Law of the State
of Colorado, excluding any conflict-of-laws rule or principle that might refer the governance or the construction of this Agreement
to the Law of another jurisdiction.  In the event of a direct conflict between the provisions of this Agreement and any
mandatory, non-waivable provision of the Act, such provision of the Act shall control.  If any provision of the Act provides
that it may be varied or superseded in a limited liability company agreement (or otherwise by agreement of the members or managers
of a limited liability company), such provision shall be deemed superseded and waived in its entirety if this Agreement contains
a provision addressing the same issue or subject matter.  If any provision of this Agreement or the application thereof
to any Member or

 

DHS 2 LLC Limited Liability Company Agreement

43

    	 

    	 

    

 

 

circumstance is held invalid or unenforceable
to any extent, (a) the remainder of this Agreement and the application of that provision to other Members or circumstances
is not affected thereby, and (b) the Members shall negotiate in good faith to replace that provision with a new provision
that is valid and enforceable and that puts the Members in substantially the same economic, business and legal position as they
would have been in if the original provision had been valid and enforceable.

 

11.07     Further
Assurances.  In connection with this Agreement and the transactions contemplated hereby, each Member shall execute
and deliver any additional documents and instruments and perform any additional acts that may be necessary or appropriate to effectuate
and perform the provisions of this Agreement and those transactions.

 

11.08     Waiver
of Certain Rights.  Each Member irrevocably waives any right it may have to maintain any action for dissolution
of the Company or for partition of the assets of the Company.

 

11.09     Limitation
of Liability.  THE EXPRESS REMEDIES AND MEASURES OF DAMAGES PROVIDED FOR IN THIS AGREEMENT SHALL BE THE SOLE
AND EXCLUSIVE REMEDIES FOR A PARTY HEREUNDER AND ALL OTHER REMEDIES OR DAMAGES AT LAW OR IN EQUITY ARE WAIVED.  IF NO
REMEDY OR MEASURE OF DAMAGES IS EXPRESSLY HEREIN PROVIDED, A PARTY’S LIABILITY SHALL BE LIMITED TO ACTUAL DAMAGES ONLY, SUCH
ACTUAL DAMAGES SHALL BE THE SOLE AND EXCLUSIVE REMEDY AND ALL OTHER REMEDIES OR DAMAGES AT LAW OR IN EQUITY ARE WAIVED.  NEITHER
PARTY SHALL UNDER ANY CIRCUMSTANCES BE LIABLE FOR CONSEQUENTIAL, INCIDENTAL, PUNITIVE, EXEMPLARY OR INDIRECT DAMAGES, LOST PROFITS
OR OTHER BUSINESS INTERRUPTION DAMAGES, WHETHER BY STATUTE, IN TORT OR CONTRACT OR OTHERWISE.  THE LIMITATIONS IN THIS
SECTION IMPOSED ON REMEDIES AND THE MEASURE OF DAMAGES SHALL BE WITHOUT REGARD TO THE CAUSE OR CAUSES RELATED THERETO, INCLUDING
THE NEGLIGENCE OF ANY PARTY AND STRICT LIABILITY.  TO THE EXTENT ANY DAMAGES REQUIRED TO BE PAID HEREUNDER ARE LIQUIDATED,
THE PARTIES ACKNOWLEDGE THAT THE DAMAGES ARE DIFFICULT OR IMPOSSIBLE TO DETERMINE, OTHERWISE OBTAINING AN ADEQUATE REMEDY IS INCONVENIENT
AND THE LIQUIDATED DAMAGES CONSTITUTE A REASONABLE APPROXIMATION OF THE HARM OR LOSS.

 

11.10     Dispute
Resolution Procedures.  The Members agree that except as provided in Section 5.04(c) and Section 10.02,
all Disputes among them shall be resolved in accordance with the Dispute Resolution Procedures set forth in Exhibit D
hereto.

 

11.11     Counterparts.  This
Agreement may be executed in any number of identical counterparts with the same effect as if all signing parties had signed the
same document.  All counterparts shall be construed together and constitute the same instrument.

 

11.12     Third
Party Rights.  The provisions of this Agreement are intended solely to benefit the Members and, to the fullest
extent permitted by applicable Law, should not be construed as conferring any benefit upon any other Person.

 

[Rest of page left blank intentionally]

 

 

 

 

 

 

 

 

 

 

 

 

 

DHS 2 LLC Limited Liability Company Agreement

44

    	 

    	 

    

 

 

 

Signature
Page

to

DHS 2
LLC 

Limited
Liability Company Agreement

 

 

IN WITNESS WHEREOF, the Members have executed
this Agreement as of the date first set forth above.

 

	
        DHS2:

        DHS2, LLC

	 	 
	By:	/s/
	 	 
	 	Name:
	 	 
	 	Title:
	 	 
	Members
	 	 
	By:	/s/
	 	 
	 	Name:
	 	 
	 	Title:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

DHS 2 LLC Limited Liability Company Agreement

45

    	 

    	 

    

 

 

 

EXHIBIT A

to

DHS 2 LLC Limited Liability Company Agreement

Dated as of April 30, 2012

 

MEMBERS

 

Name, Address, Capital Contribution

DHS2:

 

	 	Name and address:	 	Capital or Stock Contribution	 	 Cash Equivalent  
	 	 	 	 	 	 
	 	 	 	 	 	 
	1.	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	2.	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	3.	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	4.	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	5.	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 

 

Exhibit A to

DHS 2 LLC Limited Liability Company Agreement

Page 1

    	 

    	 

    

 

 

  

EXHIBIT B

to

DHS 2 LLC Limited Liability Company Agreement

Dated as of April 30, 2012

 

 

 

FORM OF CERTIFICATE

 

THE MEMBERSHIP INTEREST
REPRESENTED BY THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”)
OR ANY STATE SECURITIES LAWS.  ACCORDINGLY, SUCH MEMBERSHIP INTEREST MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED
OF WITHOUT COMPLIANCE WITH SUCH ACT AND SUCH STATE SECURITIES LAWS, AND THE COMPANY MAY REQUIRE AN OPINION OF COUNSEL SATISFACTORY
TO IT THAT NO VIOLATION OF SUCH ACT AND SUCH STATE SECURITIES LAWS WILL RESULT FROM ANY PROPOSED SALE, TRANSFER, OR OTHER DISPOSITION
OF SUCH MEMBERSHIP INTEREST.

 

THIS CERTIFICATE EVIDENCES
A MEMBERSHIP INTEREST IN DHS 2 LLC (THE “COMPANY”) AND SHALL BE A SECURITY FOR THE PURPOSES
OF ARTICLE 8 OF THE UNIFORM COMMERCIAL CODE AS IN EFFECT IN THE STATE OF COLORADO . TRANSFER OR ENCUMBRANCE OF THE MEMBERSHIP
INTEREST REPRESENTED BY THIS CERTIFICATE IS RESTRICTED BY THE PROVISIONS OF THE LIMITED LIABILITY COMPANY AGREEMENT OF THE COMPANY,
A COPY OF WHICH MAY BE INSPECTED AT THE PRINCIPAL OFFICE OF THE COMPANY, AND ALL THE PROVISIONS OF WHICH ARE INCORPORATED BY REFERENCE
IN THIS CERTIFICATE.

 

 

	No.  [ ]	
        DHS 2 LLC

        a Limited Liability Company

        under the laws of the State of Colorado 

         

        Membership Interest Certificate
	 

 

This certifies that ______________
is the owner of _______________________________ Membership Interest in DHS 2 LLC (the “Company”)
shown above, which Membership Interest is subject to the terms of the Limited Liability Company Agreement of DHS 2 LLC, dated as
of April 30, 2012, as the same may be amended, restated, modified or supplemented from time to time in accordance with the terms
thereof (the “Limited Liability Company Agreement”). This Membership was paid with, Cash and/ or Common
Shares of GDT Tek, Inc., stock (attached), [valued at $.__ per share.]

 

 

This Membership Interest
Certificate may be transferred by the lawful holders hereof only in accordance with the provisions of the Limited Liability Company
Agreement.

 

IN WITNESS WHEREOF, the
said Company has caused this Membership Interest Certificate to be signed by its duly authorized Officer and accepted by its new
Member or this 14 day of May, 2012.

 

	DHS 2 LLC __________________________________ 
	 	 	 
	By: ____________________________________________	By:  __________________________________________	 
	Name: Bo Linton	Name:	 
	
        Title :President

         
	On Behalf of 	 

 

 

 

Exhibit B to

DHS 2 LLC Limited Liability Company Agreement

Page 1

    	 

    	 

    

 

 

EXHIBIT C

to

DHS 2 LLC Limited Liability Company Agreement

Dated as of April 30, 2012

 

 

 

INSTRUMENT OF TRANSFER OF MEMBERSHIP INTEREST
IN DHS 2 LLC

 

FOR VALUE RECEIVED, the undersigned does hereby
sell, assign and transfer unto ________________________________________________________

(print or type name of assignee)

 

the Membership Interest evidenced by and within
the Membership Interest Certificate herewith, and does hereby irrevocably constitute and appoint ___________________ as attorney
to transfer said interest on the books of DHS 2 LLC, with full power of substitution in the premises.

 

Dated as of:  _______________

 

	By:	 	 
	Name:	 	 
	Title:	 	 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exhibit C to

DHS 2 LLC Limited Liability Company Agreement

Page 1

    	 

    	 

    

 

EXHIBIT D

to

DHS 2 LLC Limited Liability Company Agreement

Dated as of April 30, 2012

 

DISPUTE RESOLUTION PROCEDURES

 

	1.0	Applicability

 

Unless stated otherwise herein, all Disputes
shall be resolved in accordance with the dispute resolution procedures set forth in this Exhibit D. Notwithstanding
the foregoing, (a) the Parties may at any time seek injunctive or equitable relief from a court of competent jurisdiction,
and (b) nothing herein shall prevent a Party from defending or pursuing any claim in a court or other proceeding against a
third party that has been initiated by such third party.

 

	2.0	Negotiations By Senior Management

 

2.1           In
the event of a Dispute between the Parties, the Parties will use all reasonable efforts to reach a satisfactory solution by referring
the Dispute to senior management of each of the Parties.

 

2.2           Senior
management of the Parties will meet as soon as possible, on no less than seven (7) Days’ written notice, unless specifically
agreed otherwise and shall negotiate in good faith.  Senior management of the Parties shall examine any submissions by
the Parties, and shall, if the Dispute cannot be resolved immediately, agree to convene for further negotiations aimed at resolving
the Dispute.

 

2.3           Should
senior management of the Parties be unable to resolve the Dispute within thirty (30) Days after commencement of negotiation by
such senior management, then the Parties shall be entitled to pursue any and all available remedies at law, equity or contract
in accordance with Section 3 of this Exhibit D below.

 

	3.0	Jurisdiction; Consent to Service of Process; Waiver of Jury Trial

 

3.1           Any
Dispute, which cannot be amicably resolved by the Parties hereto as provided above, shall be exclusively resolved in the Colorado
Courts in accordance with this Section 3 of this Exhibit D.

 

3.2           Each
of the Parties hereby irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of any
Colorado State court or federal court of the United States of America sitting in Denver, and any appellate court from any thereof
(collectively, the “Colorado Courts”), in any action or proceeding arising out of or relating to this
Agreement, or for recognition or enforcement of any judgment, and each of the Parties hereby irrevocably and unconditionally agrees
that all claims in respect of any such action or proceeding may be heard and determined in the Colorado Courts.  Each of the
Parties further irrevocably consents to the service of process in any action or proceeding in such courts by the mailing thereof
by any parties thereto by registered or certified mail, postage prepaid, to such Party at the address specified for such Party
in Section 11.01 of this Agreement.  Each of the Parties agrees that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by Law.

 

3.3           Each
of the Parties hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection
which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this
Agreement in any Colorado Court.  Each of the Parties hereby irrevocably waives, to the fullest extent permitted by Law, the
defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

 

 3.4           EACH
OF THE PARTIES HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT.  EACH PARTY HERETO (A) CERTIFIES
THAT IT IS RELYING ON THE WAIVER CONTAINED HEREIN AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED
TO ENTER INTO THIS AGREEMENT AND THE TRANSACTION DOCUMENTS, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION 3.4.

 

Exhibit D to

DHS 2 LLC Limited Liability Company Agreement

Page 1

    	 

    	 

    

 

 

 

EXHIBIT E

to

DHS 2 LLC Limited Liability Company Agreement

Dated as of April 30, 2012

 

OFFICERS

 

	President	________________
	 	 
	Secretary	________________

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exhibit E to

DHS 2 LLC Limited Liability Company Agreement

Page 1

    	 

    	 

    

 

 

 

EXHIBIT F

to

DHS 2 LLC Limited Liability Company Agreement

Dated as of April 30, 2012

 

DEFAULT NOTICE

 

[DHS 2 LLC Letterhead]

 

[Date]

 

VIA FEDERAL EXPRESS

 

[Contributing Member]

________________________

________________________

 

[Non-Contributing Member]

________________________

________________________

 

Re:  DHS 2 LLC Capital Contribution Default Notice

 

Dear Sir or Madame:

 

This letter is notice pursuant
to Section 4.03(c) of the under the Limited Liability Company Agreement of DHS 2 LLC (the “Company”), dated
_________ __, 2012 (the “Agreement”) that [Non-Contributing Member] (the “Non-Contributing Member”) is
in default of its obligations the Agreement to contribute capital to the Company.

 

The Administrator issued
a Capital Call to the Non-Contributing Member on [date] in the amount of $________.  The Company has provided all relevant
notices to the Non-Contributing Member and the Non-Contributing Member has not cured its failure within thirty (30) days after
the date on which the Capital Contribution was to be made.

 

The Contributing Member
has the option (without any obligation) to exercise the remedies available under Section 4.03 of the Agreement, including the right
to dilute the ownership interest of the Non-Contributing Member, receive priority with respect to certain distributions and voting
rights and acquire the ownership interest of the Non-Contributing Member, in accordance with, and subject to the terms of the Agreement.

 

	Sincerely,
	 
	DHS 2 LLC
	 	 
	By:	 
	Name:	 
	Title:	 

 

 

 

 

Exhibit F to

DHS 2 LLC Limited Liability Company Agreement

Page 1

    	 

    	 

    

 

 

EXHIBIT G

to

DHS 2 LLC Limited Liability Company Agreement

Dated as of April 30, 2012

 

IRS Safe Harbor Provisions

 

Given the strong language in the Revenue
Procedure noting that the IRS will “closely scrutinize” flip projects that do not comply with the Safe Harbor provisions,
stakeholders in all future projects, including those already in early stages of development, should take steps to make sure their
partnership agreements meet all the Safe Harbor requirements.

The partnership
flip model structure and agreement must comply with each of the following requirements:

		·	Developer’s Minimum Interest. Developers must maintain a minimum partnership interest
of at least 1 percent of the income, gain, loss deductions, and tax credits at all times. The ruling does not require the Developer
to contribute at least 1 percent of the capital to the company.

		·	Investor’s Minimum Interest. In addition, Investors must maintain a minimum partnership
interest equal to at least 5 percent of the Investor’s percentage of partnership interest in the year in which the Investor’s
percentage of partnership interest is the largest. For example, an equity investor owning 99 percent during the front end of a
project must be allocated at least 5 percent of the partnership income, gain, loss deductions, and tax credits after the flip.

		·	Investor’s Minimum Investment. The Investor is required to make and maintain a minimum
investment of at least 20 percent of the sum of the fixed capital contributions and reasonably anticipated contingent capital contributions
on or before the later of these two dates: (a) when the Heat to Power (electricity) Conversion Unit project achieves commercial
operation or (b) when the Investor acquires its membership interest. The Investor cannot be protected against loss of any portion
of its minimum investment by the Developer, other investors, the turbine supplier, or a power purchaser.

		·	Purchase Rights. The Developer, Investor, or any related party may not be given a right
to purchase any property in the Heat to Power (electricity) Conversion farm or interest in the partnership for less than fair market
value at the time the option is exercised. In determining fair market value, the parties may consider (a) contracts entered into
in the ordinary course of the Heat to Power (electricity) Conversion Unit project’s business and negotiated at arm’s
length with a party not related to the Project Company or the Investor and (b) a long-term power purchase agreement, if it was
entered into with a party unrelated to the Project Company.

		·	Five-Year Requirement. A Developer or related party may not be given the right to purchase
the Heat to Power (electricity) Conversion Unit farm or an interest in the partnership earlier than five years after the Heat to
Power (electricity) Conversion Unit project’s commercial operation date.

		·	Put Rights. The Project Company may not have contractual rights to cause any party to purchase
the project or any of its assets, except electricity from the company. In addition, the Investor may not have a contractual right
to cause any party to purchase its partnership interest.

		·	No Guarantee of PTCs. No person may guarantee the Investor the right to any allocation of
PTCs.

		·	Risks Related to Heat to Power (electricity) Resource. The Project Company must bear the
risk that the Heat to Power (electricity) Conversion Unit resource is not as great as anticipated. This requirement does not prohibit
a weather-derivative contract with an insurance company as long as the Investor or Project Company directly pays a premium for
the contract. Similarly, a long-term power purchase agreement with an unrelated party is allowed. However, a take-or-pay contract
between related parties is strictly prohibited. In take-or-pay contracts, the buyer pays for the electricity regardless of whether
the electricity is delivered.

		·	No Loans. The Developer or a related party may not lend any Investor funds to acquire any
part of the Investor’s interest in the Project Company or guarantee indebtedness incurred in connection with the acquisition
of the Investor’s interest in the Project Company.

		·	Allocation of the PTC. The PTCs must be allocated in a manner that complies with Code §1.704-1(b)(4)(ii).
This means the PTCs must be allocated in the same manner as sales of electricity from the Heat to Power (electricity) Conversion
Unit farm.

		·	Separate Activity for Purpose of §469. Under the passive activity loss rules, each
Heat to Power (electricity) Conversion Unit will be treated as a separate activity and may only be grouped with other qualifying
Heat to Power (electricity) Conversion Unit facilities. Thus, as a general rule, only entities subject to §469, not individuals,
will be able to offset non-project income with the PTCs.

 

Exhibit G  to

DHS 2 LLC Limited Liability Company Agreement

Page 1

    	 

    	 

    

 

 

EXHIBIT G 

Continued

to

DHS 2 LLC Limited Liability Company Agreement

Dated as of April 30, 2012

 

As shown in the examples the Revenue Procedure
provides, these requirements allow a traditional flip model that allocates 99 percent of the interest in the partnership to the
Investor in the first ten years. They also allow cash to be allocated differently than income. However, the IRS will closely scrutinize
an agreement that allocates less than 1 percent of the interest in the partnership to the Developer. In addition, if the Investor
was allocated a 99 percent interest in the first ten years of the project, after the project has reached its flip date, the Investor
must retain at least a 5 percent ongoing interest in the project’s income and losses.

 

Impact on Existing and Future Projects

 

The Safe Harbor provisions apply to all transactions
entered into on or after November 5, 2007. Existing projects that signed agreements prior to the IRS Revenue Procedure do not need
to reform their agreements to comply with these regulations. However, if prior agreements comply with the Safe Harbor provisions,
the IRS will not challenge their PTCs allocation as long as the allocations also follow the special allocation provisions in §704(b).

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exhibit G  to

DHS 2 LLC Limited Liability Company Agreement

Page 2

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