Document:

Exhibit
4.2

 

Execution Version

 

THIRD AMENDED AND RESTATED

LIMITED LIABILITY COMPANY AGREEMENT

OF

EAGLE ROCK ENERGY G&P, LLC

(a Delaware Limited Liability Company)

 

This
THIRD AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT (this “Agreement”) of Eagle Rock Energy
G&P, LLC, a Delaware limited liability company (the “Company”),
executed on July 30, 2010 (the “Effective Date”),
is adopted, executed and agreed to, by Eagle Rock Energy Partners, L.P., a
Delaware limited partnership (the “MLP”) and
Eagle Rock Energy G&P Holding, Inc., a Delaware corporation (“G&P Holding”), a Delaware
corporation, as the only Members of the Company.

 

RECITALS

 

WHEREAS,
on August 10, 2005, the Company was formed by Eagle Rock Holdings, L.P., a
Texas limited partnership (“Holdings”),
as a Texas limited liability company and the Limited Liability Company
Regulations of the Company was executed (the “Original
Agreement”).

 

WHEREAS,
on November 29, 2005, Eagle Rock Midstream Resources, L.P., a Texas
limited partnership (“Midstream”),
became the sole member of the Company and the Amended and Restated Regulations
of the Company was executed.

 

WHEREAS,
on May 25, 2006, the Company converted from a limited liability company
organized under the laws of the State of Texas to a limited liability company
organized under the laws of the State of Delaware and the Amended and Restated
Limited Liability Company Agreement of the Company was executed.

 

WHEREAS,
on October 26, 2006, in connection with the initial public offering (the “IPO”) of common units representing
limited partner interests of the MLP, Midstream was dissolved and Holdings
became the sole member of the Company and the Second Amended and Restated
Limited Liability Company Agreement of the Company (the “Existing
Agreement”) was executed.

 

WHEREAS,
on the date hereof in connection with the consummation of certain matters
contemplated by the Global Transaction Agreement and pursuant to the Assignment
and Assumption Agreement, (a) Holdings contributed 100% of the outstanding
limited liability company interests in the Company to the MLP, (b) the MLP
was admitted as the sole Member of the Company and continued the Company
without dissolution and (c) the MLP transferred a 0.5% Membership Interest
to G&P Holding.

 

WHEREAS,
the MLP and G&P Holding, as the only Members of the Company, deem it
advisable to amend and restate the Existing Agreement of the Company in its
entirety as set forth herein.

 

WHEREAS,
the Conflicts Committee, the Board of Directors and the Members have approved
all of the amendments and modifications of the Existing Agreement effected
hereby.

 

 

AGREEMENTS

 

For
and in consideration of the premises, the covenants and agreements set forth
herein and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the MLP and G&P Holding, as the only
Members of the Company, hereby amend and restate the Existing Agreement in its
entirety as follows:

 

ARTICLE 1

DEFINITIONS

 

Section 1.01                            Definitions.  Each capitalized term used herein shall have
the meaning given such term in Attachment I.

 

Section 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) references to Articles and Sections
refer to Articles and Sections of this Agreement; (c) 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; (d) references to money refer to legal currency of the
United States of America; (e) “including” means “including without
limitation” and is a term of illustration and not of limitation; (f) all
definitions set forth herein shall be deemed applicable whether the words
defined are used herein in the singular or the plural; and (g) neither
this Agreement nor any other agreement, document or instrument referred to
herein or executed and delivered in connection herewith shall be construed
against any Person as the principal draftsperson hereof or thereof.

 

ARTICLE 2

ORGANIZATION

 

Section 2.01                            Formation.  The Company was originally organized as a
Texas limited liability company by the filing of an Articles of Organization on
August 10, 2005 with the Secretary of State of the State of Texas under
and pursuant to the laws of the State of Texas. The Company converted to and
was organized as a Delaware limited liability company by the filing of a
Certificate of Conversion and a Certificate of Formation (“Organizational
Certificate”) on May 25, 2006 with the Secretary of State of the State of
Delaware under and pursuant to the Delaware Act. On the date hereof and
pursuant to the Assignment and Assumption Agreement, Holdings contributed its
Membership Interest in the Company to the MLP, the MLP was admitted as the sole
Member of the Company, the MLP transferred a 0.5% Membership Interest to
G&P Holding, G&P Holding was admitted as a Member of the Company, and
the MLP did, and the Members hereby do, continue the Company without
dissolution.

 

Section 2.02                            Name.             The name of the Company is “Eagle
Rock Energy G&P, LLC” and all Company business must be conducted in that
name or such other names that comply with Law as the Board of Directors may
select.

 

Section 2.03                            Registered
Office; Registered Agent; Principal Office; Other Offices.

 

(a)                                  The registered office of the
Company required by the Delaware Act to be maintained in the State of Delaware
shall be the office of the initial registered agent for service 

 

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of
process named in the Organizational Certificate or such other office (which
need not be a place of business of the Company) as the Board of Directors may
designate in the manner provided by Law. The registered agent for service of
process of the Company in the State of Delaware shall be the initial registered
agent for service of process named in the Organizational Certificate or such
other Person or Persons as the Board of Directors may designate in the manner provided
by Law.

 

(b)                                 The principal office of the
Company in the United States shall be at such a place as the Board of Directors
may from time to time designate, which need not be in the State of Delaware,
and the Company shall maintain records there and shall keep the street address
of such principal office at the registered office of the Company in the State
of Delaware.

 

(c)                                  The Company may have such
other offices as the Board of Directors may designate.

 

Section 2.04                            Purpose. The purpose
and nature of the business to be conducted by the Company shall be (a) to
act as general partner of MLP GP and (b) to engage in any business
activity that is approved by the Board and that lawfully may be conducted by a
company organized pursuant to the Delaware Act and, in connection therewith, to
exercise all of the rights and powers conferred upon the Company pursuant to
the agreements relating to such business activity; provided,
however, that the Board shall not cause the Company to engage,
directly or indirectly in any business activity that the Board determines would
cause the Company, MLP GP, or the MLP to be treated as an association taxable
as a corporation or otherwise taxable as an entity for federal income tax
purposes. To the fullest extent permitted by law, the Board shall have no duty
or obligation to propose or approve, and may decline to propose or approve, the
conduct by the Company of any business free of any fiduciary duty or obligation
whatsoever to the Company or any Member and, in declining to so propose or
approve, shall not be required to act in good faith or pursuant to any other
standard imposed by this Agreement, any other agreement contemplated hereby or
under the Delaware Act or any other law, rule or regulation at equity.

 

Section 2.05                            Powers. The Company
shall be empowered to do any and all acts and things necessary, appropriate,
proper, advisable, incidental to or convenient for the furtherance and
accomplishment of the purposes and business described in Section 2.04 and
for the protection and benefit of the Company.

 

Section 2.06                            Term. The period of
existence of the Company commenced on August 5, 2005 and shall end at such
time as a certificate of cancellation is filed in accordance with Section 9.02(c).

 

Section 2.07                            Title
to Company Assets. Title to Company assets, whether real,
personal or mixed and whether tangible or intangible, shall be deemed to be
owned by the Company as an entity, and no Member shall have any ownership
interest in such Company assets or any portion thereof. Title to any or all of
the Company assets may be held in the name of the Company or one or more third
party nominees as the Board of Directors may determine. The Board of Directors
hereby declares and warrants that any Company assets for which record title is
held in the name of one or more third party nominees shall be held by such
third party nominee for the 

 

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use
and benefit of the Company in accordance with the provisions of this Agreement;
provided, however, that the Board of
Directors shall use reasonable efforts to cause record title to such assets
(other than those assets in respect of which the Board determines that the
expense and difficulty of conveyancing makes transfer of record title to the
Company impracticable) to be vested in the Company as soon as reasonably
practicable. All Company assets shall be recorded as the property of the
Company in its books and records, irrespective of the name in which record
title to such Company assets is held.

 

Section 2.08                            No
State-Law Partnership; Withdrawal. It is the intent that the
Company shall be a limited liability company formed under the Laws of the State
of Delaware and shall not be a partnership (including a limited partnership) or
joint venture, and that the Members not be a partner or joint venturer of any
other party for any purposes other than federal and state tax purposes, and
this Agreement may not be construed to suggest otherwise. A Member does not
have the right to Withdraw from the Company; provided, however,
that a Member shall have the power to Withdraw at any time in violation of this
Agreement. If a Member exercises such power in violation of this Agreement, (a) such
Member shall be liable to the Company and its Affiliates for all monetary
damages suffered by them as a result of such Withdrawal; and (b) such
Member shall not have any rights under Section 18.604 of the Delaware Act.
In no event shall the Company have the right, through specific performance or
otherwise, to prevent a Member from Withdrawing in violation of this Agreement.

 

ARTICLE 3

MATTERS RELATING TO MEMBERS

 

Section 3.01                            Members. The MLP and
G&P Holding are hereby confirmed as having been admitted as the only
Members of the Company.

 

Section 3.02                            Creation
of Additional Membership Interest. The Company may issue
additional Membership Interests in the Company pursuant to this Section 3.02.
The terms of admission or issuance may provide for the creation of different
classes or groups of Members having different rights, powers, and duties. The
creation of any new class or group of Members approved as required herein may
be reflected in an amendment to this Agreement executed in accordance with Section 11.04
indicating the different rights, powers, and duties thereof. Any such admission
is effective only after the new Member has executed and delivered to the
Members an instrument containing the notice address of the new Member and the
new Member’s ratification of this Agreement and agreement to be bound by it.

 

Section 3.03                            Liability
to Third Parties. Except as required by the Delaware Act, no Member
or beneficial owner of any Membership Interest shall be liable for the
Liabilities of the Company.

 

ARTICLE 4

CAPITAL CONTRIBUTIONS AND CAPITAL ACCOUNTS

 

Section 4.01                            Capital
Contributions.

 

(a)                                  [Reserved].

 

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(b)                                 The amount of money and the
fair market value (as of the date of contribution) of any property (other than
money) contributed to the Company by a Member in respect of the issuance of a
Membership Interest to such Member shall constitute a “Capital
Contribution.” Any reference in this Agreement to the Capital
Contribution of a Member shall include a Capital Contribution of its
predecessors in interest.

 

Section 4.02                            Loans. If the
Company does not have sufficient cash to pay its obligations, any Member that
may agree to do so may advance all or part of the needed funds for such
obligation to or on behalf of the Company. An advance described in this Section 4.02
constitutes a loan from the Member to the Company, may bear interest at a rate
comparable to the rate the Company could obtain from third parties, and is not
a Capital Contribution.

 

Section 4.03                            Return
of Contributions. A Member is not entitled to the return of any part
of its Capital Contributions or to be paid interest in respect of its Capital
Contributions. An unrepaid Capital Contribution is not a liability of the
Company or of any Member. No Member will be required to contribute or to lend
any cash or property to the Company to enable the Company to return any Member’s
Capital Contributions.

 

Section 4.04                            Capital
Accounts.

 

(a)                                  A separate Capital Account
will be maintained for each Member.  Each
Member’s Capital Account will be increased by: (i) the amount of money
contributed by such Member to the Company; (ii) the Fair Market Value of
property contributed by such Member to the Company (net of liabilities secured
by such contributed property that the Company is considered to assume or take
subject to under Section 752 of the Code); (iii) allocations to such
Member of Profits and other items of income and gain pursuant to Section 5.02,
Section 5.03 and Section 5.04; and (iv) any other
increases allowed or required by Treasury Regulation Section 1.704-1(b)(2)(iv).  Each Member’s Capital Account will be
decreased by: (i) the amount of money distributed to such Member by the
Company; (ii) the Fair Market Value of property distributed to such Member
by the Company (net of liabilities secured by such distributed property that
such Member is considered to assume or take subject to under Section 752
of the Code); (iii) allocations to such Member of Losses and other items
of deduction and loss pursuant to Section 5.02, Section 5.03
and Section 5.04; and (iv) any other decreases allowed or required
by Treasury Regulation Section 1.704-1(b)(2)(iv).  The Capital Accounts shall also be increased
or decreased (i) to reflect a revaluation of Company property pursuant to
paragraph (b) of the definition of Book Value and (ii) upon the
exercise of any noncompensatory warrant pursuant to the requirements of
Proposed Treasury Regulation Sections 1.704-1(b)(2)(iv)(d)(4) and
1.704-1(b)(2)(iv)(s), as such Proposed Treasury Regulations may be amended or
modified, including upon the issuance of temporary or final Treasury
Regulations.

 

(b)                                 In the event of a permitted
sale or exchange of a Membership Interest the Capital Account of the transferor
shall become the Capital Account of the transferee to the extent it relates to
the transferred Membership Interest in accordance with
Section 1.704-1(b)(2)(iv)(l) of the Treasury Regulations.

 

(c)                                  The manner in which Capital
Accounts are to be maintained pursuant to this Section 4.04 is
intended to comply with the requirements of Code Section 704(b) and
the 

 

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Treasury
Regulations promulgated thereunder.  If
the Board determines that the manner in which Capital Accounts are to be
maintained pursuant to the preceding provisions of this Section 4.04 should
be modified in order to comply with Code Section 704(b) and the
Treasury Regulations, then notwithstanding anything to the contrary contained
in the preceding provisions of this Section 4.04, the method in
which Capital Accounts are maintained shall be so modified; provided, however,
that any change in the manner of maintaining Capital Accounts shall not
materially alter the economic agreement between or among the Members as set
forth in this Agreement.

 

ARTICLE 5

DISTRIBUTIONS; ALLOCATIONS

 

Section 5.01                            Distributions. Subject to Section 9.02, the Board of Directors
shall have exclusive authority to declare distributions by the Company to its
Members.

 

Section 5.02                            Allocations
of Profits or Losses. 
After giving effect to the special allocations set forth in Section 5.03
and Section 5.04, Profits and Losses (and, to the extent necessary
to achieve the resulting Capital Account balances described below, any
allocable items of gross income, gain, loss and expense includible in the
computation of Profits and Losses) for any Allocation Period shall be allocated
to the Members pro rata in proportion to their respective Sharing Ratios.

 

Section 5.03                            Regulatory
Allocations.  The
following allocations (the “Regulatory Allocations”)
shall be made in the following order:

 

(a)                                  Nonrecourse Deductions shall
be allocated to the Members pro rata in proportion to their respective Sharing
Ratios.

 

(b)                                 Member Nonrecourse
Deductions attributable to Member Nonrecourse Debt shall be allocated to the
Members bearing the Economic Risk of Loss for such Member Nonrecourse Debt as
determined under Treasury Regulation Section 1.704-2(b)(4).  If more than one Member bears the Economic
Risk of Loss for such Member Nonrecourse Debt, the Member Nonrecourse
Deductions attributable to such Member Nonrecourse Debt shall be allocated
among the Members according to the ratio in which they bear the Economic Risk
of Loss.  This Section 5.03(b) is
intended to comply with the provisions of Treasury Regulation
Section 1.704-2(i) and shall be interpreted consistently therewith.

 

(c)                                  Notwithstanding any other
provision hereof to the contrary, if there is a net decrease in Minimum Gain
for an Allocation Period (or if there was a net decrease in Minimum Gain for a
prior Allocation Period and the Company did not have sufficient amounts of
income and gain during prior Allocation Periods to allocate among the Members
under this Section 5.03(c)), items of income and gain shall be
allocated to each Member in an amount equal to such Member’s share of the net
decrease in such Minimum Gain (as determined pursuant to Treasury Regulation
Section 1.704-2(g)(2)).  This Section 5.03(c) is
intended to constitute a minimum gain chargeback under Treasury Regulation
Section 1.704-2(f) and shall be interpreted consistently therewith.

 

6

 

(d)                                 Notwithstanding any
provision hereof to the contrary except Section 5.03(c) (dealing
with Minimum Gain), if there is a net decrease in Member Nonrecourse Debt
Minimum Gain for an Allocation Period or if there was a net decrease in Member
Nonrecourse Debt Minimum Gain for a prior Allocation Period and the Company did
not have sufficient amounts of income and gain during prior Allocation Periods
to allocate among the Members under this Section 5.03(d), items of
income and gain shall be allocated to each Member in an amount equal to such
Member’s share of the net decrease in Member Nonrecourse Debt Minimum Gain (as
determined pursuant to Treasury Regulation Section 1.704-2(i)(4)).  This Section 5.03(d) is
intended to constitute a partner nonrecourse debt minimum gain chargeback under
Treasury Regulation Section 1.704-2(i)(4) and shall be interpreted
consistently therewith.

 

(e)                                  Notwithstanding any
provision hereof to the contrary except Section 5.03(c) and Section 5.03(d) (dealing
with Minimum Gain and Member Nonrecourse Debt Minimum Gain, respectively), a
Member who unexpectedly receives an adjustment, allocation or distribution
described in Treasury Regulation Section 1.704-1(b)(2)(ii)(d)(4), (5) or
(6) shall be allocated items of income and gain (consisting of a pro rata
portion of each item of income, including gross income, and gain for the
Allocation Period) in an amount and manner sufficient to eliminate any deficit
balance in such Member’s Adjusted Capital Account as quickly as possible.  This Section 5.03(e) is
intended to constitute a qualified income offset under Treasury Regulation
Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently
therewith.

 

(f)                                    Notwithstanding Section 5.02,
no losses shall be allocated to any Member to the extent that such allocation
would cause such Member to have a deficit balance in its Adjusted Capital
Account (or increase any existing deficit balance in its Adjusted Capital
Account) at the end of such Allocation Period.  All Losses in excess of the limitation set
forth in this Section 5.03(f) shall be allocated to the
Members who do not have a deficit balance in their Adjusted Capital Accounts in
proportion to their relative positive Adjusted Capital Accounts but only to the
extent that such Losses do not cause any such Member to have a deficit in its
Adjusted Capital Account.

 

(g)                                 In the event that any Member
has a negative Adjusted Capital Account at the end of any Allocation Period,
such Member shall be allocated items of Company income and gain in the amount
of such deficit as quickly as possible; provided, however, that an allocation
pursuant to this Section 5.03(g) shall be made only if and to
the extent that such Member would have a negative Adjusted Capital Account after
all other allocations provided for in this Section 5.03 have been
tentatively made as if Section 5.03(e) and this Section 5.03(g) were
not in this Agreement.

 

(h)                                 To the extent an adjustment
to the adjusted tax basis of any Company properties pursuant to Code
Section 734(b) or Code Section 743(b) is required pursuant
to Treasury Regulation Section 1.704-1(b)(2)(iv)(m)(2) or
1.704-1(b)(2)(iv)(m)(4) to be taken into account in determining Capital
Accounts as the result of a distribution to any Member in complete liquidation
of such Member’s Membership Interest, 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 allocated to the Members in accordance with Treasury
Regulation Section 1.704-1(b)(2)(iv)(m)(2) if such 

 

7

 

Section applies,
or to the Member to whom such distribution was made if Treasury Regulation
Section 1.704-1(b)(2)(iv)(m)(4) applies.

 

Section 5.04                            Curative
Allocations.  The
Regulatory Allocations are intended to comply with certain requirements of
Treasury Regulation Sections 1.704-1(b) and 1.704-2.  The Regulatory Allocations may be
inconsistent with the manner in which the Members intend to divide Company
distributions.  Accordingly, the Board is
authorized to divide other allocations of Profits, Losses, and other items
among the Members, to the extent that they exist, so that the net amount of the
Regulatory Allocations and the Curative Allocations to each Member is zero
(0).  The Board will have discretion to
accomplish this result in any reasonable manner that is consistent with Code
Section 704 and the related Treasury Regulations.

 

Section 5.05                            Income
Tax Allocations.

 

(a)                                  All items of income, gain,
loss and deduction for Federal income tax purposes shall be allocated in the
same manner as the corresponding item of Profits and Losses is allocated,
except as otherwise provided in this Section 5.05.

 

(b)                                 In accordance with Code
Section 704(c) and the applicable Treasury Regulations thereunder,
income, gain, loss, and deduction with respect to any property contributed to
the Company shall, solely for tax purposes, be allocated among the Members so
as to take account of any variation between the adjusted basis of such property
to the Company for Federal income tax purposes and its initial Book Value.  In the event the Book Value of any property
is adjusted pursuant to clause (ii) or (iv) of the definition of Book
Value, subsequent allocations of income, gain, loss, and deduction with respect
to such property shall take account of any variation between the adjusted basis
of such property for Federal income tax purposes and its Book Value in the same
manner as under Code Section 704(c) and the applicable Regulations
thereunder.  For purposes of the
allocations pursuant to this Section 5.05(b), the Company shall
elect the remedial allocation method described in Treasury Regulation Section 1.704-3(d).

 

(c)                                  Any (i) recapture of
depreciation, depletion, intangible drilling costs or any other item of
deduction shall be allocated, in accordance with Treasury Regulation
Sections 1.1245-1(e) and 1.1254-5, to the Members who received the
benefit of such deductions (taking into account the effect of remedial
allocations), and (ii) recapture of credits shall be allocated to the
Members in accordance with applicable law.

 

(d)                                 Allocations pursuant to this
Section 5.05 are solely for purposes of Federal, state, and local taxes
and shall not affect, or in any way be taken into account in computing, any
Member’s Capital Account or share of Profits, Losses, other items or
distributions pursuant to any provision of this Agreement.

 

Section 5.06                            Other Allocation
Rules.

 

(a)                                  All items of income, gain,
loss, deduction and credit allocable to a Membership Interest in the Company
that may have been transferred shall be allocated between the transferor and
the transferee based on the portion of the calendar year during which each was
recognized as the owner of such Membership Interest, without regard to the
results of Company operations during any particular portion of that calendar
year and without regard to whether cash 

 

8

 

distributions
were made to the transferor or the transferee during that calendar year;
provided, however, that this allocation must be made in accordance with a
method permissible under Code Section 706 and the regulations thereunder.

 

(b)                                 The “excess nonrecourse
liabilities” of the Company, within the meaning of Treasury Regulation Section 1.752-3(a)(3),
shall be allocated to the Members pro rata in proportion to their respective
Sharing Ratios.

 

Section 5.07                            Withholding
Authorized.  The Company
is authorized to withhold from distributions to a Member, or with respect to
allocations to a Member, and to pay over to a foreign, Federal, state or local
government, any amounts required to be withheld pursuant to the Code or any
provisions of any other foreign, Federal, state or local law.  All amounts withheld with respect to any
payment or distribution to a Member shall be treated as amounts distributed to
that Member.

 

ARTICLE 6

MANAGEMENT

 

Section 6.01                            Management.

 

(a)                                  All management powers over
the business and affairs of the Company shall be exclusively vested in a Board
of Directors (“Board of Directors” or “Board”) and, subject to the
direction of the Board of Directors. The Directors shall each constitute a “manager”
of the Company within the meaning of the Delaware Act. Except as otherwise
specifically provided in this Agreement, no Member, by virtue of having the
status of a Member, shall have or attempt to exercise or assert any management
power over the business and affairs of the Company or shall have or attempt to
exercise or assert actual or apparent authority to enter into contracts on
behalf of, or to otherwise bind, the Company. Except as otherwise specifically
provided in this Agreement, the business and affairs of the Company shall be managed
under the direction of the Board of Directors, and the day-to-day activities of
the Company shall be conducted on the Company’s behalf by the Officers, who
shall be agents of the Company. Except as otherwise specifically provided in
this Agreement or in the MLP Partnership Agreement, the authority and functions
of the Board of Directors on the one hand and of the Officers on the other
shall be identical to the authority and functions of the board of directors and
officers, respectively, of a corporation organized under the Delaware General
Corporation Law.

 

(b)                                 In addition to the powers
that now or hereafter can be granted to managers under the Delaware Act and to
all other powers granted under any other provision of this Agreement, except as
otherwise provided in this Agreement, the Board of Directors and the Officers
shall have full power and authority to do all things as are not restricted by
this Agreement, the MLP GP Agreement, the MLP Partnership Agreement, the
Delaware Act or applicable Law, on such terms as they may deem necessary or
appropriate to conduct, or cause to be conducted, the business and affairs of
the Company.

 

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Section 6.02                            Board
of Directors.

 

(a)                                  Adoption of Sections 13.4(c) and
13.13 of the MLP Partnership Agreement.

 

(i)                                     The Members and the Company
hereby adopt as part of the terms of this Agreement, and agree to be bound by,
Sections 13.4(c) and 13.13 of the MLP Partnership Agreement as if such
sections were set forth in full herein. 
Among other things, the Directors shall be elected or appointed, as
applicable, and vacancies on the Board shall be filled, pursuant to Sections
13.4(c) and 13.13 of the MLP Partnership Agreement, and the Members hereby
delegate to the Limited Partners (including, as applicable, the NGP
Representative) the rights, including the rights to elect or appoint directors,
set forth in Sections 13.4(c) and 13.13 of the MLP Partnership Agreement.

 

(ii)                                  The Members and the Company
agree to use reasonable efforts to take such action as shall be necessary or
appropriate to give effect to and implement the provisions of Sections 13.4(c) and
13.13 of the MLP Partnership Agreement as adopted in this Article VI.

 

(iii)                               The Limited Partners shall
not be deemed to be Members or holders of Membership Interests as such terms
are defined in this Agreement or to be “members,” “managers” or holders of “limited
liability company interests” as such terms are defined in the Delaware Act. The
exercise by a Limited Partner of the right to elect or appoint Directors and
any other rights afforded to such Limited Partner hereunder and under Sections
13.4(c) and 13.13 of the MLP Partnership Agreement shall be solely in such
Limited Partner’s capacity as a limited partner of the Partnership, and no
Limited Partner shall be liable for any debts, obligations or liabilities of
the Company by reason of the foregoing.

 

(iv)                              The classes of Directors and
terms thereof are: (i) Class I, whose terms expire at the 2011 annual
meeting of the Limited Partners and on each third succeeding annual meeting
thereafter, (ii) Class II, whose terms expire at the 2012 annual
meeting of the Limited Partners and on each third succeeding annual meeting
thereafter, and (iii) Class III, whose terms expire at the 2013
annual meeting of the Limited Partners and on each third succeeding annual
meeting thereafter. As of the date hereof, the members of each class of
Directors of the Company are as set forth on Exhibit A hereto.

 

(v)                                 Notwithstanding anything to
the contrary in this Agreement, including Section 11.04, the foregoing
clauses in this Section 6.02(a) shall not be amended except upon the
requisite approval set forth in Sections 13.4(c)(vi) and 13.13(i) of
the MLP Partnership Agreement.

 

(b)                                 Resignation. Any Director
may resign at any time upon written notice to the Board, the Chairman of the
Board, the Chief Executive Officer or any other Officer. Such resignation shall
take effect at the time specified therein, and unless otherwise specified
therein no acceptance of such resignation shall be necessary to make it
effective.

 

(c)                                  Voting; Quorum. Unless
otherwise required by the Delaware Act, other Law or the provisions hereof,

 

(i)                                     each member of the Board of
Directors shall have one vote;

 

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(ii)                                  except for matters requiring
Special Approval, the presence at a meeting of a majority of the members of the
Board of Directors shall constitute a quorum at any such meeting for the
transaction of business; and

 

(iii)                               except for matters requiring
Special Approval, the act of a majority of the members of the Board of
Directors present at a meeting duly called in accordance with Section 6.02(d) at
which a quorum is present shall be deemed to constitute the act of the Board of
Directors.

 

(d)                                 Meetings. Regular
meetings of the Board of Directors shall be held at such times and places as
shall be designated from time to time by resolution of the Board of Directors.
Special meetings of the Board of Directors or meetings of any committee thereof
may be called by written request authorized by any member of the Board of
Directors or a committee thereof on at least 48 hours prior written notice to
the other members of such Board or committee. Any such notice, or waiver
thereof, need not state the purpose of such meeting, except as may otherwise be
required by law. Attendance of a Director at a meeting (including pursuant to
the last sentence of this Section 6.02(d)) shall constitute a waiver of
notice of such meeting, except where such Director 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. Any action required or
permitted to be taken at a meeting of the Board of Directors or any committee
thereof may be taken without a meeting, without prior notice and without a vote
if a consent or consents in writing, setting forth the action so taken, are
signed by at least as many members of the Board of Directors or committee
thereof as would have been required to take such action at a meeting of the
Board of Directors or such committee. Members of the Board of Directors or any
committee thereof may participate in and hold a 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, and
participation in such meetings shall constitute presence in person at the
meeting.

 

(e)                                  Committees.

 

(i)                                     Subject to compliance with
this Article 6, committees of the Board of Directors shall have and may
exercise such of the powers and authority of the Board of Directors with
respect to the management of the business and affairs of the Company as may be
provided in a resolution of the Board of Directors. Any committee designated
pursuant to this Section 6.02(e) shall choose its own chairman, shall
keep regular minutes of its proceedings and report the same to the Board of
Directors when requested, and, subject to Section 6.02(d), shall fix its
own rules or procedures and shall meet at such times and at such place or
places as may be provided by such rules or by resolution of such committee
or resolution of the Board of Directors. At every meeting of any such
committee, the presence of a majority of all the members thereof shall
constitute a quorum and the affirmative vote of a majority of the members
present shall be necessary for the adoption by it of any resolution (except for
obtaining Special Approval at meetings of the Conflicts Committee, which
requires the affirmative vote of a majority of the members of such committee).
The Board of Directors may designate one or more Directors as alternate members
of any committee who may replace any absent or disqualified member at any
meeting of such committee; provided, however,
that any such designated alternate of the Audit Committee or the Conflicts
Committee must meet the standards for an 

 

11

 

Independent
Director. In the absence or disqualification of a member of a committee, the
member or members present at any meeting and not disqualified from voting,
whether or not constituting a quorum, may unanimously appoint another member of
the Board of Directors to act at the meeting in the place of the absent or
disqualified member; provided, however,
that any such replacement member of the Audit Committee or the Conflicts
Committee must meet the standards for an Independent Director.

 

(ii)                                  In addition to any other
committees established by the Board of Directors pursuant to Section 6.02(e)(i),
the Board of Directors shall maintain a “Conflicts Committee,”
which shall be composed of at least two Independent Directors, each of whom
shall meet the requirements set forth in the MLP Partnership Agreement. The
Conflicts Committee shall be responsible for (A) approving or
disapproving, as the case may be, any matters regarding the business and
affairs of the Company, MLP GP or the MLP considered by, or submitted to, such
Conflicts Committee at the request of the Board of Directors pursuant to the
terms of the MLP GP Agreement or the MLP Partnership Agreement, (B) reviewing
and determining whether to recommend that the Member amend (1) the
definition of “Independent Director” or (2) this Section 6.02(e)(ii),
and (C) performing such other functions as the Board may assign from time
to time or as may be specified in a written charter of the Conflicts Committee.
In acting or otherwise voting on the matters referred to in this Section 6.02(e)(ii),
to the fullest extent permitted by law, including Section 18-1101(c) of
the Delaware Act and Section 17-1101(c) of the Delaware Revised
Uniform Limited Partnership Act, as amended from time to time, the Directors
constituting the Conflicts Committee shall consider only the interest of the
MLP, including its respective creditors.

 

(iii)                               In addition to any other
committees established by the Board of Directors pursuant to Section 6.02(e)(i),
the Board of Directors shall maintain an “Audit Committee,”
which shall be composed of at least three Independent Directors at all times.
The Audit Committee shall be responsible for (A) assisting the Board in
monitoring (1) the integrity of the MLP’s financial statements, (2) the
qualifications and independence of the MLP’s independent accountants, (3) the
performance of the internal audit function and independent accountants of the
Company, MLP GP and the MLP, and (4) the MLP’s compliance with legal and
regulatory requirements and (B) preparing the report required by the rules of
the SEC to be included in the MLP’s annual report on Form 10-K. The Audit
Committee shall perform such other functions as the Board may assign from time
to time or as may be specified in a written charter for the Audit Committee
adopted by the Board.

 

(iv)                              In addition to any other
committees established by the Board of Directors pursuant to Section 6.02(e)(i),
the Board of Directors shall maintain a “Compensation Committee,”
which shall be composed of at least one Independent Director. The Compensation
Committee shall be responsible for (A) setting the compensation for
officers of the Company as well as administering any incentive plans adopted by
the Company and (B) preparing the compensation committee report required
by the rules of the SEC to be included in the MLP’s annual report on Form 10-K.
The Compensation Committee shall perform such other functions as the Board may
assign from time to time or as may be specified in a written charter for the
Compensation Committee adopted by the Board.

 

12

 

Section 6.03                            Officers.

 

(a)                                  Generally. The Board of
Directors, as set forth below, shall appoint officers of the Company (“Officers”).
Unless provided otherwise by resolution of the Board of Directors, the Officers
shall have the titles, power, authority and duties described below in this Section 6.03.

 

(b)                                 Titles and Number. The Company
may appoint one or more officers including a Chairman of the Board (unless the
Board of Directors provides otherwise), a Chief Executive Officer, a President,
one or more Vice Presidents, a Secretary, the Chief Financial Officer, any
Treasurer and one or more Assistant Secretaries and Assistant Treasurers and a
General Counsel. Any person may hold more then one office.

 

(c)                                  Appointment and Term of
Office. The Officers shall be appointed by the Board of Directors at such
time and for such term as the Board of Directors shall determine. Any Officer
may be removed, with or without cause, only by the Board of Directors.
Vacancies in any office may be filled only by the Board of Directors.

 

(d)                                 Chairman of the Board. The Chairman
of the Board shall preside at all meetings of the Board of Directors and of the
unitholders of the MLP; and he shall have such other powers and duties as from
time to time may be assigned to him by the Board of Directors.

 

(e)                                  Chief Executive Officer. Subject to
the limitations imposed by this Agreement, any employment agreement, any
employee plan or any determination of the Board of Directors, the Chief
Executive Officer, subject to the direction of the Board of Directors, shall be
the chief executive officer of the Company and shall be responsible for the
management and direction of the day-to-day business and affairs of the Company,
its other Officers, employees and agents, shall supervise generally the affairs
of the Company and shall have full authority to execute all documents and take
all actions that the Company may legally take. In the absence of the Chairman
of the Board, the Chief Executive Officer shall preside at all meetings of the
unitholders of the MLP and at all meetings of the Board of Directors provided that he is a director of the Company. The Chief
Executive Officer shall exercise such other powers and perform such other
duties as may be assigned to him by this Agreement or the Board of Directors,
including any duties and powers provided for in any employment agreement
approved by the Board of Directors.

 

(f)                                    President. Subject to
the limitations imposed by this Agreement, any employment agreement, any
employee plan or any determination of the Board of Directors, the President,
subject to the direction of the Board of Directors, shall, in the absence of a
Chief Executive Officer, be the chief executive officer of the Company and
shall be responsible for the management and direction of the day-to-day
business and affairs of the Company, its other Officers, employees and agents,
shall supervise generally the affairs of the Company and shall have full
authority to execute all documents and take all actions that the Company may
legally take. In the absence of the Chairman of the Board and Chief Executive
Officer, the President shall preside at all meetings of the unitholders of the
MLP and at all meetings of the Board of Directors provided that he is a
director of the Company. The President shall exercise such other powers and
perform such other duties as may be assigned to him by this Agreement or the
Board of Directors, including any duties and powers provided for in any
employment agreement approved by the Board of Directors.

 

13

 

(g)                                 Vice Presidents. In the
absence of a Chief Executive Officer and the President, each Vice President
appointed by the Board of Directors shall have all of the powers and duties
conferred upon the President, including the same power as the President to
execute documents on behalf of the Company. Each such Vice President shall
perform such other duties and may exercise such other powers as may from time
to time be assigned to him by the Board of Directors or the President.

 

(h)                                 Secretary and Assistant
Secretaries. The Secretary shall record or cause to be recorded
in books provided for that purpose the minutes of the meetings or actions of
the Board of Directors, shall see that all notices are duly given in accordance
with the provisions of this Agreement and as required by law, shall be
custodian of all records (other than financial), shall see that the books,
reports, statements, certificates and all other documents and records required
by law are properly kept and filed, and, in general, shall perform all duties
incident to the office of Secretary and such other duties as may, from time to
time, be assigned to him by this Agreement, the Board of Directors or the
President. The Assistant Secretaries shall exercise the powers of the Secretary
during that Officer’s absence or inability or refusal to act.

 

(i)                                     Chief Financial Officer. The Chief
Financial Officer shall keep and maintain, or cause to be kept and maintained,
adequate and correct books and records of account of the Company and MLP GP. He
shall receive and deposit all moneys and other valuables belonging to the
Company in the name and to the credit of the Company and shall disburse the
same and only in such manner as the Board of Directors or the appropriate
Officer of the Company may from time to time determine. He shall receive and
deposit all moneys and other valuables belonging to MLP GP in the name and to
the credit of MLP GP and shall disburse the same and only in such manner as the
Board of Directors or the Chief Executive Officer may require. He shall render
to the Board of Directors and the Chief Executive Officer, whenever any of them
request it, an account of all his transactions as Chief Financial Officer and
of the financial condition of the Company, and shall perform such further
duties as the Board of Directors or the Chief Executive Officer may require.
The Chief Financial Officer shall have the same power as the Chief Executive
Officer to execute documents on behalf of the Company.

 

(j)                                     Treasurer and Assistant
Treasurers. The Treasurer shall have such duties as may be
specified by the Chief Financial Officer in the performance of his duties. The
Assistant Treasurers shall exercise the power of the Treasurer during that
Officer’s absence or inability or refusal to act. Each of the Assistant
Treasurers shall possess the same power as the Treasurer to sign all
certificates, contracts, obligations and other instruments of the Company. If
no Treasurer or Assistant Treasurer is appointed and serving or in the absence
of the appointed Treasurer and Assistant Treasurer, any Vice President, or such
other Officer as the Board of Directors shall select, shall have the powers and
duties conferred upon the Treasurer.

 

(k)                                  General Counsel. The General
Counsel, subject to the discretion of the Board of Directors, shall be
responsible for the management and direction of the day-to-day legal affairs of
the Company. The General Counsel shall perform such other duties and may
exercise such other powers as may from time to time be assigned to him by the
Board of Directors or the President.

 

14

 

(l)                                     Powers of Attorney. The Company
may grant powers of attorney or other authority as appropriate to establish and
evidence the authority of the Officers and other persons.

 

(m)                               Delegation of Authority. Unless
otherwise provided by resolution of the Board of Directors, no Officer shall
have the power or authority to delegate to any person such Officer’s rights and
powers as an Officer to manage the business and affairs of the Company.

 

(n)                                 Tenure. The Board of
Directors shall appoint Officers of the Company to serve from the date hereof
until the death, resignation or removal by the Board of Directors with or
without cause of such Officer.

 

Section 6.04                            Duties
of Officers and Directors. Except as otherwise
specifically provided in this Agreement or in the MLP Partnership Agreement,
the duties and obligations owed to the Company and to the Board of Directors by
the Officers of the Company and by members of the Board of Directors of the
Company shall be the same as the respective duties and obligations owed to a
corporation organized under the Delaware General Corporation Law by its
officers and directors, respectively.

 

Section 6.05                            Compensation. The members
of the Board of Directors who are neither Officers nor employees of the Company
shall be entitled to compensation as directors and committee members as
approved by the Board and shall be reimbursed for out-of-pocket expenses
incurred in connection with attending meetings of the Board of Directors or
committees thereof.

 

Section 6.06                            Indemnification.

 

(a)                                  To the fullest extent
permitted by Law but subject to the limitations expressly provided in this
Agreement, each Indemnitee shall be indemnified and held harmless by the
Company from and against any and all losses, claims, damages, liabilities,
joint or several, expenses (including reasonable legal fees and expenses),
judgments, fines, penalties, interest, settlements and other amounts arising from
any and all claims, demands, actions, suits or proceedings, whether civil,
criminal, administrative or investigative, in which any such Indemnitee may be
involved, or is threatened to be involved, as a party or otherwise, by reason
of such person’s status as an Indemnitee; provided, however that the Indemnitee
shall not be indemnified and held harmless if there has been a final and
non-appealable judgment entered by a court of competent jurisdiction
determining that, in respect of the matter for which the Indemnitee is seeking
indemnification pursuant to this Section 6.06, the Indemnitee acted in bad
faith or engaged in fraud, willful misconduct, or in the case of a criminal
matter, acted with knowledge that the Indemnitee’s conduct was unlawful;
provided, further, no indemnification pursuant to this Section 6.06 shall
be available to Holdings or its Affiliates (other than the MLP and any Group
Member) with respect to its or their obligations incurred pursuant to the
Underwriting Agreement, the Omnibus Agreement or the Contribution Agreement.
The termination of any action, suit or proceeding by judgment, order,
settlement, conviction or upon a plea of nolo contendere,
or its equivalent, shall not create a presumption that the Indemnitee acted in
a manner contrary to that specified above. Any indemnification pursuant to this
Section 6.06 shall be made only out of the assets of the Company, it being
agreed that the Members shall 

 

15

 

not
be personally liable for such indemnification and shall have no obligation to
contribute or loan any monies or property to the Company to enable it to
effectuate such indemnification.

 

(b)                                 To the fullest extent
permitted by law, expenses (including reasonable legal fees and expenses)
incurred by an Indemnitee who is indemnified pursuant to Section 6.06(a) in
defending any claim, demand, action, suit or proceeding shall, from time to
time, be advanced by the Company prior to the final disposition of such claim,
demand, action, suit or proceeding upon receipt by the Company of an
undertaking by or on behalf of the Indemnitee to repay such amount if it shall
be determined that the Indemnitee is not entitled to be indemnified as
authorized in this Section 6.06.

 

(c)                                  The indemnification provided
by this Section 6.06 shall be in addition to any other rights to which an
Indemnitee may be entitled under any agreement, as a matter of law or
otherwise, both as to actions in the Indemnitee’s capacity as an Indemnitee and
as to actions in any other capacity, and shall continue as to an Indemnitee who
has ceased to serve in such capacity and shall inure to the benefit of the
heirs, successors, assigns and administrators of the Indemnitee.

 

(d)                                 The Company may purchase and
maintain insurance, on behalf of the members of the Board of Directors, the
Officers and such other persons as the Board of Directors shall determine,
against any liability that may be asserted against or expense that may be
incurred by such person in connection with the Company’s activities, regardless
of whether the Company would have the power to indemnify such person against
such liability under the provisions of this Agreement.

 

(e)                                  For purposes of this Section 6.06,
the Company shall be deemed to have requested an Indemnitee to serve as
fiduciary of an employee benefit plan whenever the performance by the
Indemnitee of such Indemnitee’s duties to the Company also imposes duties on,
or otherwise involves services by, the Indemnitee to the plan or participants
or beneficiaries of the plan; excise taxes assessed on an Indemnitee with
respect to an employee benefit plan pursuant to applicable law shall constitute
“fines” within the meaning of Section 6.06(a); and action taken or omitted
by the Indemnitee with respect to an employee benefit plan in the performance
of such Indemnitee’s duties for a purpose reasonably believed by such
Indemnitee to be in the interest of the participants and beneficiaries of the
plan shall be deemed to be for a purpose which is in, or not opposed to, the
best interests of the Company.

 

(f)                                    An Indemnitee shall not be
denied indemnification in whole or in part under this Section 6.06 because
the Indemnitee had an interest in the transaction with respect to which the
indemnification applies if the transaction was otherwise permitted by the terms
of this Agreement.

 

(g)                                 The provisions of this Section 6.06
are for the benefit of the Indemnitees, their heirs, successors, assigns and
administrators and shall not be deemed to create any rights for the benefit of
any other Persons.

 

(h)                                 No amendment, modification
or repeal of this Section 6.06 or any provision hereof shall in any manner
terminate, reduce or impair either the right of any past, 

 

16

 

present
or future Indemnitee to be indemnified by the Company or the obligation of the
Company to indemnify any such Indemnitee under and in accordance with the
provisions of this Section 6.06 as in effect immediately prior to such
amendment, modification or repeal with respect to claims arising from or
relating to matters occurring, in whole or in part, prior to such amendment,
modification or repeal, regardless of when such claims may arise or be
asserted, provided such Person became an Indemnitee hereunder prior to such amendment,
modification or repeal.

 

(i)                                     THE PROVISIONS OF THE
INDEMNIFICATION PROVIDED IN THIS SECTION 6.06 ARE INTENDED BY THE PARTIES
TO APPLY EVEN IF SUCH PROVISIONS HAVE THE EFFECT OF EXCULPATING THE INDEMNITEE
FROM LEGAL RESPONSIBILITY FOR THE CONSEQUENCES OF SUCH PERSON’S NEGLIGENCE,
FAULT OR OTHER CONDUCT.

 

Section 6.07                            Liability
of Indemnitees.

 

(a)                                  Notwithstanding anything to
the contrary set forth in this Agreement, no Indemnitee shall be liable for
monetary damages to the Company, the Members or any other Person for losses
sustained or liabilities incurred as a result of any act or omission of an
Indemnitee unless there has been a final and non-appealable judgment entered by
a court of competent jurisdiction determining that, in respect of the matter in
question, the Indemnitee acted in bad faith or engaged in fraud, willful
misconduct or, in the case of a criminal matter, acted with knowledge that the
Indemnitee’s conduct was criminal.

 

(b)                                 Subject to its obligations
and duties as set forth in this Article 6, the Board of Directors and any
committee thereof may exercise any of the powers granted to it by this
Agreement and perform any of the duties imposed upon it hereunder either
directly or by or through the Company’s Officers or agents, and neither the
Board of Directors nor any committee thereof shall be responsible for any
misconduct or negligence on the part of any such Officer or agent appointed by
the Board of Directors or any committee thereof in good faith.

 

(c)                                  To the extent that, at law
or in equity, an Indemnitee has duties (including fiduciary duties) and
liabilities relating thereto to the Partnership or to the Partners, the General
Partner and any other Indemnitee acting in connection with the Partnership’s
business or affairs shall not be liable to the Partnership or to any Partner
for any acts or omissions taken in good faith reliance on the provisions of
this Agreement.

 

(d)                                 Any amendment, modification
or repeal of this Section 6.07 or any provision hereof shall be
prospective only and shall not in any way affect the limitations on liability
under this Section 6.07 as in effect immediately prior to such amendment,
modification or repeal with respect to claims arising from or relating to
matters occurring, in whole or in part, prior to such amendment, modification
or repeal, regardless of when such claims may be asserted.

 

Section 6.08                            Outside
Activities.

 

(a)                                  Except as specifically
restricted by the provisions of the MLP GP Agreement or the MLP Partnership
Agreement, each Indemnitee, other than officers or 

 

17

 

employees
of the Company, shall have the right to engage in businesses of every type and
description and other activities for profit and to engage in and possess an
interest in other business ventures of any and every type or description,
whether in businesses engaged in or anticipated to be engaged in by the Company
or its Subsidiaries, independently or with others, including business interests
and activities in direct competition with the business and activities of the
Company or its Subsidiaries, and none of the same shall constitute a breach of
this Agreement or any duty expressed or implied by Law to the Company or its
Subsidiaries or any Member. Neither the Company or its Subsidiaries, any Member
nor any other Person shall have any rights by virtue of this Agreement, the MLP
GP Agreement or the MLP Partnership Agreement or the partnership relationship
established hereby or thereby in any business ventures of any Indemnitee.

 

(b)                                 Notwithstanding anything to
the contrary in this Agreement, (i) the engaging in competitive activities
by any Indemnitees, other than officers or employees of the Company, in
accordance with the provisions of this Section 6.08 is hereby approved by
the Company and all Members, (ii) it shall be deemed not to be a breach of
any fiduciary duty or any other obligation of any type whatsoever of any
Indemnitee, other than officers or employees of the Company, for such
Indemnitees to engage in such business interests and activities in preference
to or to the exclusion of the Company and (iii) the Indemnitees, other
than Officers or employees of the Company, shall have no obligation hereunder
or as a result of any duty expressed or implied by Law to present business
opportunities to the Company, MLP GP or the MLP.

 

(c)                                  Each Member and each of its
Affiliates may acquire additional Membership Interests and, except as otherwise
provided in this Agreement, shall be entitled to exercise, at their option, all
rights relating to such Membership Interests.

 

Section 6.09                            Resolution
of Conflicts of Interest; Standard of Conduct and Modification of Duties.

 

(a)                                  Unless otherwise expressly
provided in this Agreement, whenever a potential conflict of interest exists or
arises between the Company or any of its Affiliates (other than the MLP or any
Group Member), on the one hand, and the MLP or any Group Member (other than the
Company), on the other hand, any resolution or course of action by the Board of
Directors in respect of such conflict of interest shall be permitted and deemed
approved by all Members, and shall not constitute a breach of this Agreement or
of any agreement contemplated herein or therein, or of any duty stated or
implied by law or equity, if the resolution or course of action in respect of
such conflict of interest is (i) approved by Special Approval, (ii) approved
by the vote of a majority of the Units excluding Units owned by the Members and
their Affiliates, (iii) on terms no less favorable to the MLP or Group Member,
as the case may be, than those generally being provided to or available from
unrelated third parties or (iv) fair and reasonable to the MLP or Group
Member, as the case may be, taking into account the totality of the
relationships between the parties involved (including other transactions that
may be particularly favorable or advantageous to the MLP or Group Member, as
the case may be). The Board of Directors shall be authorized but not required
in connection with its resolution of such conflict of interest to seek Special
Approval of such resolution, and the Board of Directors may also adopt a
resolution or course of action that has not received Special Approval. If
Special Approval is not 

 

18

 

sought
and the Board of Directors determines that the resolution or course of action
taken with respect to a conflict of interest satisfies either of the standards
set forth in clauses (iii) or (iv) above, then it shall be presumed
that, in making its decision, the Board of Directors acted in good faith, and
in any proceeding brought by any Member or by or on behalf of such Member, the
MLP, any Group Member or any Limited Partner, as the case may be, challenging
such approval, the Person bringing or prosecuting such proceeding shall have
the burden of overcoming such presumption.

 

(b)                                 Whenever the Company makes a
determination or takes or declines to take any other action, or any of its
Affiliates causes it to do so, in its capacity as the general partner of the General
Partner of the MLP as opposed to in its individual capacity, whether under this
Agreement, or any other agreement contemplated hereby or otherwise, then unless
another express standard is provided for in this Agreement, the Company, or
such Affiliates causing it to do so, shall make such determination or take or
decline to take such other action in good faith and shall not be subject to any
other or different standards imposed by this Agreement, any other agreement
contemplated hereby or under the Delaware Act or any other law, rule or
regulation or at equity. In order for a determination or other action to be in “good
faith” for purposes of any action taken or delivered to be taken by the Company
in its capacity as the general partner of the General Partner of the MLP, the
Person or Persons making such determination or taking or declining to take such
other action must believe that the determination or other action is in the best
interests of the MLP.

 

(c)                                  Whenever the Company makes a
determination or takes or declines to take any other action, or any of its
Affiliates causes it to do so, in its individual capacity as opposed to in its
capacity as a general partner of the General Partner of the MLP, whether under
this Agreement or any other agreement contemplated hereby or otherwise, then
the Company, or such Affiliates causing it to do so, are entitled to make such
determination or to take or decline to take such other action free of any
fiduciary duty or obligation whatsoever to the MLP or any partner thereof, and
the Company, or such Affiliates causing it to do so, shall not be required to
act in good faith or pursuant to any other standard imposed by this Agreement,
any other agreement contemplated hereby or under the Delaware Act or any other
law, rule or regulation. By way of illustration and not of limitation,
whenever the phrase, “at the option of the Company,” or some variation of that
phrase, is used in this Agreement, it indicates that the Company is acting in
its individual capacity. For the avoidance of doubt, whenever the Company votes
or transfers its MLP Interests, or refrains from voting or transferring its MLP
Interests, it shall be acting in its individual capacity.

 

(d)                                 Notwithstanding anything to
the contrary in this Agreement, the Company and its Affiliates shall have no
duty or obligation, express or implied, to (i) sell or otherwise dispose
of any asset of the MLP or any Group Member or (ii) permit the MLP or any
Group Member to use any facilities or assets of the Company and its Affiliates,
except as may be provided in contracts entered into from time to time
specifically dealing with such use. Any determination by the Company or any of
its Affiliates to enter into such contracts shall be at its option.

 

(e)                                  Whenever a particular transaction,
arrangement or resolution of a conflict of interest is required under this
Agreement to be “fair and reasonable” to any Person, the fair 

 

19

 

and
reasonable nature of such transaction, arrangement or resolution shall be
considered in the context of all similar or related transactions.

 

ARTICLE 7

TAX MATTERS

 

Section 7.01                            Tax
Returns.

 

(a)                                  The Board of Directors shall
cause to be prepared and timely filed (on behalf of the Company) all federal,
state and local tax returns required to be filed by the Company, including
making all elections on such tax returns. The Company shall bear the costs of
the preparation and filing of its returns.

 

Section 7.02                            Tax
Partnership.  The Members
acknowledge that the Company shall be treated as a partnership for Federal
income tax purposes and will not otherwise characterize the Company for
purposes of any Federal tax returns, statements or reports filed by them or
their Affiliates.

 

Section 7.03                            Tax
Elections.  The Company
shall make the following elections on the appropriate tax returns:

 

(a)                                  to adopt, as the Company’s
fiscal year, the calendar year or such other fiscal period as the Tax Matters
Member designates;

 

(b)                                 to adopt the accrual method
of accounting and to keep the Company’s books and records on the GAAP basis
unless the cash method of accounting is available and the Tax Matters Member
designates the cash method of accounting for use by the Company;

 

(c)                                  if a distribution of the
Company’s property as described in Code Section 734 occurs or a Transfer
of Units as described in Code Section 743 occurs, on request by notice
from any Member, to elect, pursuant to Code Section 754, to adjust the
basis of Company’s properties;

 

(d)                                 to elect to amortize the
organizational expenses of the Company ratably over a period of 180 months as
permitted by Code Section 709(b);

 

(e)                                  any election that would
ensure that the Company will be treated as a partnership for Federal income tax
purposes; and

 

(f)                                    subject to Sections 5.6
and 10.2, any other election the Board may deem appropriate and in the
best interests of the Members.

 

Neither
the Company nor any Member may make an election for the Company to be excluded
from the application of the provisions of subchapter K of chapter 1 of subtitle
A of the Code or any similar provisions of applicable state Law and no
provision of this Agreement shall be construed to sanction or approve such an
election.

 

20

 

Section 7.04                            Tax
Matters Member.  The “tax
matters partner” of the Company pursuant to Section 6231(a)(7) of the
Code shall be the MLP, or such other Member designated as such by the Board
from time to time.  Any Member who is
designated as the “tax matters partner” is referred to herein as the “Tax Matters Member.”

 

ARTICLE 8

BOOKS, RECORDS, REPORTS, AND BANK ACCOUNTS

 

Section 8.01                            Maintenance
of Books.

 

(a)                                  The Board of Directors shall
keep or cause to be kept at the principal office of the Company or at such
other location approved by the Board of Directors 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 the Board of Directors 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 maintained on the basis of a fiscal year that is the calendar
year and on an accrual basis in accordance with United States generally
accepted accounting principles, consistently applied.

 

Section 8.02                            Reports. The Board of
Directors shall cause to be prepared and delivered to each Member such reports,
forecasts, studies, budgets and other information as the Members may reasonably
request from time to time.

 

Section 8.03                            Bank
Accounts. Funds of the Company shall be deposited in such
banks or other depositories as shall be designated from time to time by the
Board of Directors. All withdrawals from any such depository shall be made only
as authorized by the Board of Directors and shall be made only by check, wire
transfer, debit memorandum or other written instruction.

 

ARTICLE 9

DISSOLUTION, WINDING-UP AND TERMINATION

 

Section 9.01                            Dissolution.

 

(a)                                  Subject to compliance with Section 6.01(c),
the Company shall dissolve and its affairs shall be wound up on the first to
occur of the following events (each a “Dissolution Event”):

 

(i)                                     the unanimous consent of the
Board of Directors;

 

(ii)                                  the entry of a decree of
judicial dissolution of the Company under Section 18-802 of the Delaware
Act; and

 

(iii)                               at any time there are no
Members of the Company, unless the Company is continued in accordance with the
Delaware Act or this Agreement.

 

(b)                                 No other event shall cause a
dissolution of the Company.

 

21

 

(c)                                  Upon the occurrence of any
event that causes there to be no Members of the Company, to the fullest extent
permitted by law, the personal representative of the last remaining Member is
hereby authorized to, and shall, within 90 days after the occurrence of the
event that terminated the continued membership of such Member in the Company,
agree in writing (i) to continue the Company and (ii) to the
admission of the personal representative or its nominee or designee, as the
case may be, as a substitute Member of the Company, effective as of the
occurrence of the event that terminated the continued membership of such Member
in the Company.

 

(d)                                 Notwithstanding any other
provision of this Agreement, the Bankruptcy of a Member shall not cause such
Member to cease to be a member of the Company, and, upon the occurrence of such
an event, the Company shall continue without dissolution.

 

Section 9.02                            Winding-Up
and Termination.

 

(a)                                  On the occurrence of a
Dissolution Event, the Board of Directors shall select one or more Persons to
act as liquidator. The liquidator shall proceed diligently to wind up the
affairs of the Company and make final distributions as provided herein and in the
Delaware Act. The costs of winding up shall be borne as a Company expense.
Until final distribution, the liquidator shall continue to operate the Company
properties with all of the power and authority of the Board of Directors. 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 calendar day of the month in which the dissolution occurs or the final
winding up is completed, as applicable;

 

(ii)                                  the liquidator shall
discharge from Company funds all of the debts, liabilities and obligations of
the Company 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 Company property, including to Members; and

 

(B)                                Company property (including
cash) shall be distributed to the Members.

 

(b)                                 The distribution of cash or
property 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 share of all the Company’s property
and constitutes a compromise to which all Members have consented within the
meaning of Section 18-502(b) of the Delaware Act. No Member shall be
required to make any Capital 

 

22

 

Contribution
to the Company to enable the Company to make the distributions described in
this Section 9.02.

 

(c)                                  On completion of such final
distribution, the liquidator shall file a certificate of cancellation with the
Secretary of State of the State of Delaware and take such other actions as may
be necessary to terminate the existence of the Company.

 

(d)                                 The Members intend that the
allocations provided under Section 5.02, Section 5.03 and Section 5.04
will result in final Capital Account balances for each Member equal to the
liquidating distributions to be made to such Member.  If the allocations otherwise made under Section 5.02,
Section 5.03 and Section 5.04 would fail to produce such final
Capital Account balances, the Board shall cause the allocations made under Section 5.02
to be made in a manner that achieves the foregoing intent as close as possible.

 

ARTICLE 10

MERGER, CONSOLIDATION OR CONVERSION

 

Section 10.01                     Authority. Subject to
compliance with Section 6.01(c), the Company may merge or consolidate with
one or more corporations, limited liability companies, statutory trusts or
associations, real estate investment trusts, common law trusts or
unincorporated businesses, including a partnership (whether general or limited
(including a limited liability partnership)) or convert into any such entity,
whether such entity is formed under the laws of the State of Delaware or any
other state of the United States of America, pursuant to a written agreement of
merger or consolidation (“Merger Agreement”)
or a written plan of conversion (“Plan of Conversion”),
as the case may be, in accordance with this Article 10. The surviving
entity to any such merger, consolidation or conversion is referred to herein as
the “Surviving Business Entity.”

 

Section 10.02                     Procedure
for Merger, Consolidation or Conversion.

 

(a)                                  The merger, consolidation or
conversion of the Company pursuant to this Article 10 requires the prior
approval of a majority of the Board of Directors and compliance with Section 10.03.

 

(b)                                 If the Board of Directors
shall determine to consent to a merger or consolidation, the Board of Directors
shall approve the Merger Agreement, which shall set forth:

 

(i)                                     the names and jurisdictions
of formation or organization of each of the business entities proposing to
merge or consolidate;

 

(ii)                                  the name and jurisdiction of
formation or organization of the Surviving Business Entity that is to survive
the proposed merger or consolidation;

 

(iii)                               the terms and conditions of
the proposed merger or consolidation;

 

(iv)                              the manner and basis of
exchanging or converting the equity securities of each constituent business
entity for, or into, cash, property or interests, rights, securities or
obligations of the Surviving Business Entity; and (A) if any general or
limited 

 

23

 

partner
interests, securities or rights of any constituent business entity are not to
be exchanged or converted solely for, or into, cash, property or general or
limited partner interests, rights, securities or obligations of the Surviving Business
Entity, the cash, property or interests, rights, securities or obligations of
any general or limited partnership, corporation, trust, limited liability
company, unincorporated business or other entity (other than the Surviving
Business Entity) which the holders of such general or limited partner
interests, securities or rights are to receive in exchange for, or upon
conversion of their interests, securities or rights, and (B) in the case
of securities represented by certificates, upon the surrender of such
certificates, which cash, property or general or limited partner interests,
rights, securities or obligations of the Surviving Business Entity or any
general or limited partnership, corporation, trust, limited liability company,
unincorporated business or other entity (other than the Surviving Business
Entity), or evidences thereof, are to be delivered;

 

(v)                                 a statement of any changes
in the constituent documents or the adoption of new constituent documents (the
articles or certificate of incorporation, articles of trust, declaration of
trust, certificate or agreement of limited partnership, operating agreement or
other similar charter or governing document) of the Surviving Business Entity
to be effected by such merger or consolidation;

 

(vi)                              the effective time of the
merger, which may be the date of the filing of the certificate of merger
pursuant to Section 10.04 or a later date specified in or determinable in
accordance with the Merger Agreement (provided, that if the effective time of
the merger is to be later than the date of the filing of such certificate of
merger, the effective time shall be fixed at a date or time certain at or prior
to the time of the filing of such certificate of merger and stated therein);
and

 

(vii)                           such other provisions with
respect to the proposed merger or consolidation as are deemed necessary or
appropriate by the Board of Directors.

 

(c)                                  If the Board of Directors
shall determine to consent to the conversion, the Board of Directors shall
approve and adopt a Plan of Conversion containing such terms and conditions
that the Board of Directors determines to be necessary or appropriate.

 

Section 10.03                     Approval
by Members of Merger or Consolidation.

 

(a)                                  The Board of Directors, upon
its approval of the Merger Agreement or Plan of Conversion, as the case may be,
shall direct that the Merger Agreement or the Plan of Conversion, as
applicable, be submitted to a vote of the Members, whether at a meeting or by
written consent. A copy or a summary of the Merger Agreement or the Plan of
Conversion, as applicable, shall be included in or enclosed with the notice of
a special meeting or the written consent.

 

(b)                                 The Merger Agreement or the
Plan of Conversion, as applicable, shall be approved upon receiving the
affirmative vote or consent of the holders of a majority of the Members.

 

(c)                                  After such approval by vote
or consent of the Limited Partners, and at any time prior to the filing of the
certificate of merger, consolidation or conversion pursuant to 

 

24

 

Section 10.04,
the merger, consolidation or conversion may be abandoned pursuant to provisions
therefor, if any, set forth in the Merger Agreement or the Plan of Conversion,
as the case may be.

 

Section 10.04                     Certificate
of Merger, Consolidation or Conversion.

 

(a)                                  Upon the required approval,
if any, by the Board of Directors and the Members of a Merger Agreement or a
Plan of Conversion, as the case may be, a certificate of merger, consolidation
or conversion, as applicable, shall be executed and filed with the Secretary of
State of the State of Delaware in conformity with the requirements of the
Delaware Act.

 

(b)                                 At the effective time of the
certificate of merger or consolidation:

 

(i)                                     all of the rights,
privileges and powers of each of the business entities that has merged or
consolidated, and all property, real, personal and mixed, and all debts due to
any of those business entities and all other things and causes of action
belonging to each of those business entities shall be vested in the Surviving
Business Entity and after the merger or consolidation shall be the property of
the Surviving Business Entity to the extent they were property of each
constituent business entity;

 

(ii)                                  the title to any real
property vested by deed or otherwise in any of those constituent business
entities shall not revert and is not in any way impaired because of the merger
or consolidation;

 

(iii)                               all rights of creditors and
all liens on or security interest in property of any of those constituent
business entities shall be preserved unimpaired; and

 

(iv)                              all debts, liabilities and
duties of those constituent business entities shall attach to the Surviving
Business Entity, and may be enforced against it to the same extent as if the
debts, liabilities and duties had been incurred or contracted by it.

 

(c)                                  At the effective time of the
certificate of conversion:

 

(i)                                     the Company shall continue
to exist, without interruption, but in the organizational form of the converted
entity rather than in its prior organizational form;

 

(ii)                                  all rights, title, and
interests to all real estate and other property owned by the Company shall
continue to be owned by the converted entity in its new organizational form
without reversion or impairment, without further act or deed, and without any
transfer or assignment having occurred, but subject to any existing liens or
other encumbrances thereon;

 

(iii)                               all liabilities and
obligations of the Company shall continue to be liabilities and obligations of
the converted entity in its new organizational form without impairment or
diminution by reason of the conversion;

 

(iv)                              all rights of creditors or
other parties with respect to or against the prior interest holders or other
owners of the Company in their capacities as such in existence as 

 

25

 

of
the effective time of the conversion will continue in existence as to those
liabilities and obligations and may be pursued by such creditors and obligees
as if the conversion did not occur;

 

(v)                                 a proceeding pending by or
against the Company or by or against any of the Members in their capacities as
such may be continued by or against the converted entity in its new
organizational form and by or against the prior members without any need for
substitution of parties; and

 

(vi)                              the Company securities that
are to be converted into partnership interests, shares, evidences of ownership,
or other securities in the converted entity as provided in the Plan of
Conversion or certificate of conversion shall be so converted, and the Members
shall be entitled only to the rights provided in the Plan of Conversion or
certificate of conversion.

 

(d)                                 A merger, consolidation or
conversion effected pursuant to this Article 10 shall not (i) be
deemed to result in a transfer or assignment of assets or liabilities from one
entity to another having occurred or (ii) require the Company (if it is
not the Surviving Business Entity) to wind up its affairs, pay its liabilities
or distribute its assets as required under Article 9 of this Agreement or
under the applicable provisions of the Delaware Act.

 

ARTICLE 11

GENERAL PROVISIONS

 

Section 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 and a notice, request or consent
given under this Agreement is effective on receipt by the Person to receive it;
provided, however, that a facsimile or other electronic transmission that is
transmitted after the normal business hours of the recipient 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
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 applicable Law, the Organizational
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. Whenever any notice is required
to be given by Law, the Organizational 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.

 

Section 11.02                     Entire
Agreement; Supersedure. This Agreement constitutes
the entire agreement of the Members and their respective Affiliates relating to
the subject matter hereof and supersedes all prior contracts or agreements with
respect to such subject matter, whether oral or written.

 

Section 11.03                     Effect
of Waiver or Consent. Except as provided in this Agreement, a
waiver or consent, express or implied, to or of any breach or default by any
Person in the performance by that Person of its obligations with respect to the
Company is not a consent or 

 

26

 

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

 

Section 11.04                     Amendment
or Restatement. This Agreement may be amended or restated only by
a written instrument executed by all Members; provided, however, that
notwithstanding anything to the contrary contained in this Agreement (1) the
definition of “Independent Director” or (2) Section 6.02(e)(ii),
shall not be amended without the prior approval of the Conflicts Committee;
provided further, however, that notwithstanding anything to the contrary
contained in this Agreement, Section 6.02(a) shall not be amended
except upon the requisite approval set forth in Sections 13.4(c)(vi) and
13.13(i) of the MLP Partnership Agreement.

 

Section 11.05                     Binding
Effect. This Agreement is binding on and shall inure to
the benefit of the Members and their respective heirs, legal representatives,
successors and assigns.

 

Section 11.06                     Governing
Law; Severability. THIS AGREEMENT IS GOVERNED BY AND SHALL BE
CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF DELAWARE, 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 (a) any
provision of the Organizational Certificate, or (b) any mandatory,
non-waivable provision of the Delaware Act, such provision of the
Organizational Certificate or the Delaware Act shall control. If any provision
of the Delaware Act provides that it may be varied or superseded in the 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 Person or circumstance is held invalid or
unenforceable to any extent, (a) the remainder of this Agreement and the
application of that provision to other Persons or circumstances is not affected
thereby and that provision shall be enforced to the greatest extent permitted
by Law, and (b) the Members or Directors (as the case may be) 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.

 

Section 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.

 

Section 11.08                     Offset. Whenever the
Company is to pay any sum to any Member, any amounts that a Member owes the
Company may be deducted from that sum before payment.

 

27

 

Section 11.09                     Counterparts. This
Agreement may be executed in any number of 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.

 

28

 

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

 

	
   

  	
  MEMBERS:

  
	
   

  	
   

  
	
   

  	
  EAGLE
  ROCK ENERGY PARTNERS, L.P.

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
  Eagle
  Rock Energy GP, L.P.,

  
	
   

  	
   

  	
  its
  general partner

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
  Eagle
  Rock Energy G&P, LLC,

  
	
   

  	
   

  	
  its
  general partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Joseph A. Mills

  
	
   

  	
   

  	
  Name:
  Joseph A. Mills

  
	
   

  	
   

  	
  Title:
  Chairman and Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EAGLE
  ROCK G&P HOLDING, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Joseph A. Mills

  
	
   

  	
   

  	
  Name:  Joseph A. Mills

  
	
   

  	
   

  	
  Title:  President and Chief Executive Officer

  

 

Signature Page to Third

Amended and Restated Limited Liability Agreement of

Eagle Rock Energy G&P, LLC

 

 

Attachment I

 

Defined Terms

 

Adjusted Capital Account means the
Capital Account maintained for each Member, (a) increased by any amounts
that such Member is obligated to restore (or is treated as obligated to restore
under Treasury Regulation Sections 1.704-1(b)(2)(ii)(c), 1.704-2(g)(1) and 1.704-2(i)(5)),
and (b) decreased by any amounts described in Treasury Regulation
Section 1.704-1(b)(2)(ii)(d)(4),
(5) or (6) with respect to such Member.

 

Affiliate, means, with respect to any
Person, each Person Controlling, Controlled by or under common Control with
such first Person.

 

Agreement means this Third Amended
and Restated Limited Liability Company Agreement of Eagle Rock Energy G&P,
as the same may be amended, modified, supplemented or restated from time to
time.

 

Allocation Period means a period
commencing on the first day of each fiscal year and on any day in which an
adjustment to the Book Value of the Company’s assets pursuant to clause (ii) of
the definition of Book Value occurs and the prior Allocation Period shall
terminate on the day immediately preceding the day of commencement of a new
Allocation Period.

 

Assignment and Assumption Agreement means the
Assignment and Assumption Agreement by and between Holdings and MLP, dated the
even date hereof.

 

Audit Committee has the meaning set forth
in Section 6.02(e)(iii) of this Agreement.

 

Bankruptcy or Bankrupt
means, with respect to any Person, that (a) such Person (i) makes an
assignment for the benefit of creditors; (ii) files a voluntary petition
in bankruptcy; (iii) is insolvent, or has entered against such Person an
order for relief in any bankruptcy or insolvency proceeding; (iv) files a
petition or answer seeking for such Person any 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 properties; or (b) 120 Days have passed after the
commencement of any proceeding seeking reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar relief under any
Law, if the proceeding has not been dismissed, or 90 Days have passed after the
appointment without such Person’s consent or acquiescence of a trustee,
receiver or liquidator of such Person or of all or any substantial part of such
Person’s properties, if the appointment is not vacated or stayed, or 90 Days
have passed after the date of expiration of any such stay, if the appointment
has not been vacated.

 

Board of Directors or Board has the meaning set forth in Section 6.01
of this Agreement.

 

Book Liability Value means with
respect to any liability of the Company described in Treasury Regulation Section 1.752-7(b)(3)(i),
the amount of cash that a willing assignor would 

 

 

pay
to a willing assignee to assume such liability in an arm’s-length
transaction.  The Book Liability Value of
each liability of the Company described in Treasury Regulation Section 1.752-7(b)(3)(i) shall
be adjusted at such times as provided in this Agreement for an adjustment to
Book Values.

 

Book Value means, with respect to any property of the
Company, such property’s adjusted basis for Federal income tax purposes, except
as follows:

 

(i)             The
initial Book Value of any property contributed by a Member to the Company shall
be the Fair Market Value of such property as of the date of such contribution;

 

(ii)            The
Book Values of all properties shall be adjusted to equal their respective Fair
Market Values in connection with (A) the acquisition of an additional
interest in the Company by any new or existing Member in exchange for more than
a de minimis Capital Contribution to the Company or as consideration for the
performance of services to or for the benefit of the Company, (B) the
distribution by the Company to a Member of more than a de minimis amount
of property as consideration for an interest in the Company, (C) the
liquidation of the Company within the meaning of Treasury Regulation
Section 1.704-1(b)(2)(ii)(g)(1) (other
than pursuant to Section 708(b)(1)(B) of the Code, (D) the
acquisition of an interest in the Company by any new or existing Member upon
the exercise of a noncompensatory warrant in accordance with Proposed Treasury
Regulation Section 1.704-1(b)(2)(iv)(s), as such Treasury Regulation may
be amended or modified, including upon the issuance of temporary or final
Treasury Regulations, or (E) any other event to the extent determined by
the Board to be necessary to properly reflect Book Values in accordance with
the standards set forth in Treasury Regulation Section 1.704-1(b)(2)(iv)(q);

 

(iii)           The
Book Value of property distributed to a Member shall be the Fair Market Value
of such property as of the date of such distribution;

 

(iv)          The
Book Value of all property shall be increased (or decreased) to reflect any
adjustments to the adjusted basis of such property pursuant to Code
Section 734(b) or Code Section 743(b), but only to the extent
that such adjustments are taken into account in determining Capital Accounts
pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(m) and clause (vii) of the
definition of Profits and Losses or Section 5.03(g); provided,
however, Book Value shall not be adjusted pursuant to this clause (v) to
the extent the Board reasonably determines that an adjustment pursuant to
clause (ii) hereof is necessary or appropriate in connection with the
transaction that would otherwise result in an adjustment pursuant to this
clause (iv); and

 

If
the Book Value of property has been determined or adjusted pursuant to clause
(i), (ii), or (iv) hereof, such Book Value shall thereafter be adjusted by
the Depreciation taken into account with respect to such property for purposes
of computing Profits and Losses and other items allocated pursuant to Section 5.02,
Section 5.03 and Section 5.04.

 

A-2

 

Business Day means any Day other than a
Saturday, a Sunday or a Day on which national banking associations in the State
of Texas are authorized or required by Law to close.

 

Capital Account means the
Capital Account established and maintained for each Member pursuant to Section 4.04.

 

Capital Contribution has the
meaning set forth in Section 4.01(b) of this Agreement.

 

Code means the
United States Internal Revenue Code of 1986, as amended from time to time.  All references herein to Sections of the Code
shall include any corresponding provision or provisions of succeeding Law.

 

Commitment means (a) options,
warrants, convertible securities, exchangeable securities, subscription rights,
conversion rights, exchange rights, or other contracts, agreements or
commitments that could require a Person to issue any of its Equity Interests or
to sell any Equity Interests it owns in another Person; (b) any other
securities convertible into, exchangeable or exercisable for, or representing
the right to subscribe for any Equity Interest of a Person or owned by a
Person; (c) statutory or contractual pre-emptive rights or pre-emptive
rights granted under a Person’s organizational or constitutive documents; and (d) stock
appreciation rights, phantom stock, profit participation, or other similar
rights with respect to a Person.

 

Company has the meaning set forth
in the initial paragraph of this Agreement.

 

Compensation Committee has the
meaning set forth in Section 6.02(e)(iv) of this Agreement.

 

Conflicts Committee has the
meaning set forth in Section 6.02(e)(ii) of this Agreement.

 

Contribution Agreement has the
meaning ascribed to such term in the MLP Partnership Agreement.

 

Control shall mean the possession,
directly or indirectly, of the power and authority to direct or cause the
direction of the management and policies of a Person, whether through ownership
or control of Voting Stock, by contract or otherwise.

 

Curative Allocations means the
allocations pursuant to Section 5.04 of this Agreement.

 

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.

 

Delaware Act means the Delaware Limited
Liability Company Act and any successor statute, as amended from time to time.

 

Delaware General Corporation Law means Title 8
of the Delaware Code, as amended from time to time.

 

A-3

 

Depreciation means, for each Allocation
Period, an amount equal to the depreciation, amortization or other cost
recovery deduction allowable for Federal income tax purposes with respect to
property for such Allocation Period, except that (i) with respect to any
property the Book Value of which differs from its adjusted tax basis for
Federal income tax purposes and which difference is being eliminated by use of
the “remedial method” pursuant to Treasury Regulation Section 1.704-3(d),
Depreciation for such Allocation Period shall be the amount of book basis
recovered for such Allocation Period under the rules prescribed by
Treasury Regulation Section 1.704-3(d)(2), and (ii) with respect to
any other property the Book Value of which differs from its adjusted tax basis
at the beginning of such Allocation Period, Depreciation shall be an amount
which bears the same ratio to such beginning Book Value as the Federal income
tax depreciation, amortization, or other cost recovery deduction for such
Allocation Period bears to such beginning adjusted tax basis; provided, however, that if the
adjusted tax basis of any property at the beginning of such Allocation Period is
zero, Depreciation with respect to such property shall be determined with
reference to such beginning value using any reasonable method selected by the
Board.

 

Director means each member of the
Board of Directors elected or appointed as provided in Section 6.02 of
this Agreement.

 

Dissolution Event has the
meaning set forth in Section 9.01(a) of this Agreement.

 

Economic Risk of Loss has the
meaning set forth in Treasury Regulation Section 1.752-2(a).

 

Effective Date has the meaning set forth
in the initial paragraph of this Agreement.

 

Equity Interest, (a) with respect to a
corporation, any and all shares of capital stock and any Commitments with
respect thereto, (b) with respect to a partnership, limited liability
company, trust or similar Person, any and all units, interests or other
partnership, limited liability company, trust or similar interests, and any
Commitments with respect thereto, and (c) any other direct or indirect
equity ownership or participation in a Person (including any incentive distribution
rights).

 

Existing Agreement has the
meaning set forth in the Recitals to this Agreement.

 

Fair Market Value means
(a) with respect to a particular security that is traded and reported in
the manner and period described in clauses (i), (ii), (iii) or (iv) below,
determined on any given day, (i) the last reported sale price regular way
or, in case no such reported sale takes place on such day, the average of the
last closing bid and asked prices regular way, in either case on the principal
national securities exchange on which the applicable securities are listed or
admitted to trading, or if not listed or admitted to trading on any national
securities exchange, (ii) the closing sale price for such day reported by
The Nasdaq Stock Market, if such security is traded over-the-counter and quoted
on The Nasdaq Stock Market, (iii) if such security is so traded, but not
so quoted, the average of the closing reported bid and asked prices of such
security as reported by The Nasdaq Stock Market or any comparable system,
(iv) if such security is not listed on The Nasdaq Stock Market or any
comparable system, the average of the closing bid and asked prices as furnished
by two members of the National Association of Securities 

 

A-4

 

Dealers, Inc.
selected from time to time by the Company for that purpose; provided, however,
that notwithstanding anything to the contrary in the foregoing provisions of
this clause (a), if the date for which the Fair Market Value is determined is
the first day when trading for such security is reported on The Nasdaq Stock
Market or on a national securities exchange, the Fair Market Value shall be the
“price to public” or equivalent set forth in the cover page for the final
prospectus relating to the initial public offering of such security or
(b) with respect to any property not described in clause (a), the fair
market value of such property determined by the Board, in good faith.

 

G&P Holding has the meaning set forth in
the Preamble to this Agreement.

 

Global Transaction Agreement  means that
certain Amended and Restated Securities Purchase and Global Transaction
Agreement, dated as of January 12, 2010, by and among MLP, MLP GP, the
Company, Holdings, Natural Gas Partners, VII, L.P., a Delaware limited
partnership, Natural Gas Partners VIII, L.P., a Delaware limited partnership,
Montierra Minerals & Production, L.P., a Texas limited partnership,
and Montierra Management LLC, a Texas limited liability company.

 

Group Member means any of the MLP and
its Subsidiaries.

 

Indemnitee means each of (a) the
Company and any Person who is or was an Affiliate of the Company, (b) any
Person who is or was a member, director, officer, fiduciary or trustee of the
Company, (c) any Person who is or was an officer, member, partner,
director, employee, agent or trustee of the General Partner or any Affiliate of
the General Partner, or any Affiliate of any such Person, and (d) any
Person who is or was serving at the request of the General Partner or any such
Affiliate as a director, officer, employee, member, partner, agent, fiduciary
or trustee of another Person; provided, that a Person shall not be an
Indemnitee by reason of providing, on a fee-for-services basis, trustee,
fiduciary or custodial services and (e) any Person the Company designates
as an “Indemnitee” for purposes of this Agreement.

 

Independent Director means a
Director who meets the independence, qualification and experience requirements
of the Nasdaq Global Market (and/or any other securities exchange on which MLP
Interests are listed or admitted for trading), the independence, qualification
and experience requirements of Section 10A(m)(3) of the Securities
Exchange Act of 1934 (or any successor Law), the rules and regulations of
the SEC and other applicable Law.

 

IPO has the meaning set forth
in the Recitals to this Agreement.

 

Law means any applicable
constitutional provision, statute, act, code, law, regulation, rule, ordinance,
order, decree, ruling, proclamation, resolution, judgment, decision, declaration
or interpretative or advisory opinion or letter of a governmental authority.

 

Liability means any liability or
obligation, whether known or unknown, asserted or unasserted, absolute or
contingent, matured or unmatured, conditional or unconditional, latent or
patent, accrued or unaccrued, liquidated or unliquidated, or due or to become
due.

 

Limited Partner and Limited
Partners have the meanings given to such terms in the MLP
Partnership Agreement.

 

A-5

 

Member means any Person executing
this Agreement as of the date of this Agreement as a member or 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 in the Company.

 

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

 

Member Nonrecourse Debt Minimum Gain  has the meaning assigned to the term “partner nonrecourse debt minimum
gain” set forth in Treasury Regulation Section 1.704-2(i)(2).

 

Member Nonrecourse Deduction  has the meaning assigned to the term “partner nonrecourse deduction” in
Treasury Regulation Section 1.704-2(i)(1).

 

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, deduction 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 Delaware Act, this
Agreement or otherwise) in its capacity as a Member; and (d) all
obligations, duties and liabilities imposed on that Member (under the Delaware
Act, this Agreement or otherwise) in its capacity as a Member, including any
obligations to make Capital Contributions.

 

Merger Agreement has the meaning set forth
in Section 10.01 of this Agreement.

 

Minimum Gain  has the meaning assigned to that term in Treasury Regulation
Section 1.704-2(d).

 

MLP has the meaning set forth
in the Preamble to this Agreement.

 

MLP GP means Eagle Rock Energy GP,
L.P. as the general partner of the MLP.

 

MLP GP Agreement means the Agreement of
Limited Partnership of Eagle Rock Energy GP, L.P., dated effective as of May 25,
2006, as amended, supplemented, amended and restated, or otherwise modified
from time to time.

 

MLP Interests means the limited partner
interests of the MLP, regardless of class or category of limited partner
interests.

 

MLP Partnership Agreement means the
Second Amended and Restated Agreement of Limited Partnership of the MLP, dated
as of May 24, 2010, as amended or restated from time to time.

 

NGP Representative  has the meaning ascribed to such term in the MLP Partnership Agreement.

 

Nonrecourse Deduction  has the meaning assigned to that term in Treasury Regulation
Section 1.704-2(b)(1).

 

A-6

 

Officers means any person elected as
an officer of the Company as provided in Section 6.03(a), but such term
does not include any person who has ceased to be an officer of the Company.

 

Omnibus Agreement has the
meaning ascribed to such term in the MLP Partnership Agreement.

 

Organizational Certificate has the
meaning set forth in Section 2.01 of this Agreement.

 

Person means a natural person,
partnership (whether general or limited), limited liability company,
governmental entity, trust, estate, association, corporation, venture,
custodian, nominee or any other individual or entity in its own or any
representative capacity.

 

Plan of Conversion has the
meaning set forth in Section 10.01 of this Agreement.

 

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

 

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

 

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

 

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

 

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

 

(v)           Gain
or loss resulting from any disposition of property with respect to which gain
or loss is recognized for Federal income tax purposes shall be computed by 

 

A-7

 

reference
to the Book Value of the property disposed of, notwithstanding that the
adjusted tax basis of such property differs from its Book Value;

 

(vi)          In
lieu of the depreciation, amortization, and other cost recovery deductions
taken into account in computing such taxable income or loss, there shall be
taken into account Depreciation for such Allocation Period;

 

(vii)         To
the extent an adjustment to the adjusted tax basis of any asset pursuant to
Code Section 734(b) is required, pursuant to Treasury Regulation
Section 1.704-1(b)(2)(iv)(m)(4), to be taken into account in determining
Capital Account balances as a result of a distribution other than in
liquidation of a Member’s interest in the Company, the amount of such
adjustment shall be treated as an item of gain (if the adjustment increases the
basis of the asset) or an item of loss (if the adjustment decreases such basis)
from the disposition of such asset and shall be taken into account for purposes
of computing Profits or Losses; and

 

(viii)        Any
items that are allocated pursuant to the Regulatory Allocations or the Curative
Allocations shall not be taken into account in computing Profits and Losses.

 

Regulatory Allocations has the meaning
set forth in Section 5.03 of this Agreement.

 

SEC means the United States
Securities and Exchange Commission.

 

Sharing Ratio means, 99.5% with respect
to the MLP and 0.5% with respect to G&P Holding

 

Special Approval means approval by a
majority of the members of the Conflicts Committee.

 

Subsidiary means, with respect to any
relevant Person, (a) a corporation of which more than 50% of the Voting
Stock is owned, directly or indirectly, at the date of determination, by such
relevant Person, by one or more Subsidiaries of such relevant Person or a
combination thereof, (b) a partnership (whether general or limited) in
which such relevant Person, one or more Subsidiaries of such relevant Person or
a combination thereof is, at the date of determination, a general or limited
partner of such partnership, but only if more than 50% of the partnership
interests of such partnership (considering all of the partnership interests of
the partnership as a single class) is owned, directly or indirectly, at the
date of determination, by such relevant Person, by one or more Subsidiaries of
such relevant Person, or a combination thereof, or (c) any other Person
(other than a corporation or a partnership) in which such relevant Person, one
or more Subsidiaries of such relevant Person, or a combination thereof,
directly or indirectly, at the date of determination, has (i) at least a
majority ownership interest or (ii) the power to elect or direct the
election of a majority of the directors or other governing body of such other
Person.

 

Surviving Business Entity has the
meaning set forth in Section 10.01 of this Agreement.

 

A-8

 

Treasury Regulations means the
regulations promulgated by the United States Department of the Treasury
pursuant to and in respect of provisions of the Code.  All references herein to Sections of the
Treasury Regulations shall include any corresponding provision or provisions of
succeeding, similar, substitute proposed or final Treasury Regulations.

 

Underwriting Agreement has the
meaning ascribed to such term in the MLP Partnership Agreement.

 

Units has the meaning ascribed to
such term in the MLP Partnership Agreement.

 

Voting Stock means, with respect to any
Person, Equity Interests in such Person, the holders of which are ordinarily,
in the absence of contingencies, entitled to vote for the election of, or
otherwise appoint, directors (or Persons with management authority performing
similar functions) of such Person.

 

Withdraw, Withdrawing
and Withdrawal means the withdrawal,
resignation or retirement of a Member from the Company as a Member.

 

A-9

 

Exhibit A

 

Current Directors

 

	
  Director

  	
   

  	
  Director Category (Class)

  
	
  Joseph
  A. Mills

  	
   

  	
  Management
  Director (Class I)

  
	
  Philip
  B. Smith

  	
   

  	
  Elected
  Director (Class III)

  
	
  William
  A. Smith

  	
   

  	
  Elected
  Director (Class II)

  
	
  William
  K. White

  	
   

  	
  Elected
  Director (Class I)

  
	
  Peggy
  A. Heeg

  	
   

  	
  Elected
  Director (Class III)

  
	
  Herbert
  C. Williamson, III

  	
   

  	
  Elected
  Director (Class II)

  
	
  Kenneth
  A. Hersh

  	
   

  	
  Appointed
  Director (Class I)

  
	
  William
  J. Quinn

  	
   

  	
  Appointed
  Director (Class II)

  
	
  John
  A. Weinzierl

  	
   

  	
  Appointed
  Director (Class III)Exhibit
10.1

 

Execution Version

 

ADMINISTRATIVE SERVICES AGREEMENT

 

BETWEEN

 

EAGLE ROCK ENERGY PARTNERS, L.P.

 

AND

 

EAGLE ROCK ENERGY G&P, LLC

 

 

ADMINISTRATIVE SERVICES AGREEMENT

 

THIS ADMINISTRATIVE SERVICES
AGREEMENT (this “Agreement”)
is entered into on, and effective as of, July 30, 2010, and is by and
between Eagle Rock Energy Partners, L.P., a Delaware limited partnership (the “MLP”), and Eagle
Rock Energy G&P, LLC, a Delaware limited liability company (“G&P”), the
general partner of Eagle Rock Energy GP, L.P., a Delaware limited partnership
and the MLP’s general partner (the “General
Partner”).  The
above-named entities are sometimes referred to in this Agreement each as a “Party” and
collectively as the “Parties.”

 

RECITALS:

 

WHEREAS, the MLP and its
Subsidiaries (as hereinafter defined) require certain administrative services
to conduct their business (the “Services,”
as hereinafter defined);

 

WHEREAS, the MLP desires
to engage G&P, a Subsidiary of the MLP, to provide the Services; and

 

WHEREAS, G&P is
willing to undertake such engagement, subject to the terms and conditions of
this Agreement.

 

In consideration of the
premises and the covenants, conditions, and agreements contained herein, 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

 

1.1 Definitions.

 

(a) Capitalized terms
used herein but not defined shall have the meanings given them in the MLP
Agreement.

 

(b) As used in this Agreement,
the following terms shall have the respective meanings set forth below:

 

“Agreement” means this
Administrative Services Agreement, as it may be amended, modified or
supplemented from time to time in accordance with the terms hereof.

 

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

 

“G&P” has the meaning given such term in
the introduction to this Agreement.

 

“General Partner” has the meaning given such
term in the introduction to this Agreement.

 

“MLP” has the meaning given such term in the
introduction to this Agreement.

 

“MLP Agreement” means the Second Amended and
Restated Agreement of Limited Partnership of the MLP, dated as of May 24,
2010, as amended from time to time, to which reference is hereby made for all
purposes of this Agreement.

 

“Partnership Group” means the MLP and any
Subsidiary of the MLP.

 

“Party” or “Parties” have the meaning given such terms in
the introduction to this Agreement.

 

“Person” means an individual, corporation,
partnership, joint venture, trust, limited liability company, unincorporated
organization or any other entity.

 

“Services”
has the meaning given such term in Section 2.1(a).

 

“Subsidiary”
has the meaning given such term in the MLP Agreement.

 

1

 

ARTICLE II

PROVISION OF SERVICES

 

2.1 Reimbursement for
Operating and General and Administrative Expenses.

 

(a)  G&P hereby
agrees to continue to provide, or cause to be provided, the Partnership Group
with general and administrative services, such as legal, accounting, treasury,
insurance administration and claims processing, risk management, health, safety
and environmental, information technology, human resources, credit, payroll,
internal audit, taxes and engineering, that are substantially identical in
nature and quality to the services of such type previously provided by G&P
in connection with its management and operation of the MLP’s assets and
properties during the one-year period prior to the date of this Agreement
(collectively, the “Services”).

 

(b) The MLP hereby
agrees to reimburse G&P for all expenses and expenditures it incurs or
payments it makes on behalf of the Partnership Group in connection with the
business and operations of the Partnership Group, including, but not limited to,
(i) salaries of operational personnel performing services on the
Partnership Group’s behalf and the cost of employee benefits for such
personnel, (ii) capital expenditures and (iii) maintenance and repair
costs.

 

(c) G&P shall be
entitled to allocate any such expenses and expenditures between the Partnership
Group (excluding G&P), on the one hand, and G&P, on the other hand, in
accordance with the foregoing provision on any reasonable basis.

 

2.2 Reimbursement for Insurance.

 

The MLP hereby agrees to
reimburse G&P for all expenses it incurs or payments it makes on behalf of
the Partnership Group for (i) insurance coverage with respect to the MLP’s
assets and properties, (ii) insurance coverage with respect to claims
related to fiduciary obligations of officers, directors and control persons of
the Partnership Group and (iii) insurance coverage with respect to claims
under federal and state securities laws related to any of the officers,
directors and control persons thereof.

 

2.3 Management
Fee.

 

In addition to the
reimbursement obligations described in Section 2.1 and Section 2.2 of this
Agreement, the MLP hereby agrees to pay to G&P an annual fee, payable in
arrears, for the performance of the Services equal to the greater of (i) $5.5
million or (ii) an “arm’s length markup,” based on the principles of Section
482 of the Internal Revenue Code, applied to the reimbursable costs for the
performance of any Services that require more than a cost-only reimbursement
during such year.  Such fee shall be
payable within 30 days following the completion of each year or at such other
time as may be agreed to by the MLP and G&P.

 

ARTICLE III

MISCELLANEOUS

 

3.1 Choice of Law; Submission to
Jurisdiction.

 

This Agreement shall be
subject to and governed by the laws of the State of Texas, excluding any
conflicts-of-law rule or principle that might refer the construction or
interpretation of this Agreement to the laws of another state.  Each Party hereby submits to the jurisdiction
of the state and federal courts in the State of Texas and to venue in Texas.

 

3.2 Notice.

 

All notices, requests or
consents provided for or permitted to be given pursuant to this Agreement must
be in writing and must be given by depositing same in the United States mail,
addressed to the Person to be notified, postpaid, and registered or certified
with return receipt requested or by delivering such notice in person or by
telecopier or telegram to such Party. 
Notice given by personal delivery or mail shall be effective upon actual
receipt.  Notice given by telegram or
telecopier shall be effective upon actual receipt if received during the
recipient’s normal business hours, or at the beginning of the recipient’s next
business day after receipt if not received during the recipient’s normal
business hours.  All notices to be sent
to a Party pursuant to this Agreement 

 

2

 

shall be sent to or made at
the address set forth below or at such other address as such Party may
stipulate to the other Parties in the manner provided in this Section 3.2.

 

	
  MLP:

  	
   

  	
  G&P:

  
	
  Eagle Rock Energy
  Partners, L.P.

  1415 Louisiana Street,
  Suite 2700

  Houston, Texas 77002

  Phone: (281) 408-1200

  Fax: (281) 408-1302

  Attention: Chief Executive
  Officer

  	
   

  	
  Eagle Rock Energy G&P,
  LLC

  1415 Louisiana Street,
  Suite 2700

  Houston, Texas 77002

  Phone: (281) 408-1200

  Fax: (281) 408-1302

  Attention: Chief Executive
  Officer

  

 

3.3 Entire Agreement.

 

This Agreement constitutes
the entire agreement of the Parties relating to the matters contained herein,
superseding all prior contracts or agreements, whether oral or written,
relating to the matters contained herein.

 

3.4 Termination.

 

Either Party hereto may
terminate this Agreement at any time by giving notice of such termination to
the other Party.  Any termination under
this Section 3.4 shall become effective 90 days after delivery of such
notice.

 

3.5 Effect of Waiver or Consent.

 

No waiver or consent,
express or implied, by any Party to or of any breach or default by any Person
in the performance by such Person of its obligations hereunder shall be deemed
or construed to be a consent or waiver to or of any other breach or default in
the performance by such Person of the same or any other obligations of such
Person hereunder.  Failure on the part of
a Party to complain of any act of any Person or to declare any Person in
default, irrespective of how long such failure continues, shall not constitute
a waiver by such Party of its rights hereunder until the applicable statute of
limitations period has run.

 

3.6 Amendment or Modification.

 

This Agreement may be
amended or modified from time to time only by the written agreement of all the
Parties.  Each such instrument shall be
reduced to writing and shall be designated on its face an “Amendment” or an “Addendum”
to this Agreement.

 

3.7 Assignment.

 

No Party shall have the
right to assign its rights or obligations under this Agreement without the
prior written consent of the other Parties.

 

3.8 Counterparts.

 

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

 

3.9 Severability.

 

If any provision of this
Agreement or the application thereof to any Person or circumstance shall be
held invalid or unenforceable to any extent, the remainder of this Agreement
and the application of such provision to other Persons or circumstances shall
not be affected thereby and shall be enforced to the greatest extent permitted
by law.

 

3

 

3.10 Gender, Parts, Articles and
Sections.

 

Whenever the context
requires, the gender of all words used in this Agreement shall include the
masculine, feminine and neuter, and the number of all words shall include the
singular and plural.  All references to Article numbers
and Section numbers refer to Articles and Sections of this Agreement.

 

3.11 Further Assurances.

 

In connection with this
Agreement and all transactions contemplated by this Agreement, each Party
agrees to execute and deliver such additional documents and instruments and to
perform such additional acts as may be necessary or appropriate to effectuate,
carry out and perform all of the terms, provisions and conditions of this
Agreement and all such transactions.

 

3.12 Withholding or Granting of Consent.

 

Each Party may, with respect
to any consent or approval that it is entitled to grant pursuant to this
Agreement, grant or withhold such consent or approval in its sole and
uncontrolled discretion, with or without cause, and subject to such conditions
as it shall deem appropriate.

 

3.13 Laws and Regulations.

 

Notwithstanding any
provision of this Agreement to the contrary, no Party shall be required to take
any act, or fail to take any act, under this Agreement if the effect thereof
would be to cause such Party to be in violation of any applicable law, statute,
rule or regulation.

 

3.14 Negation of Rights of Limited
Partners, Assignees and Third Parties.

 

The provisions of this
Agreement are enforceable solely by the Parties, and no limited partner,
member, or assignee of the MLP or other Person shall have the right, separate
and apart from the MLP, to enforce any provision of this Agreement or to compel
any Party to comply with the terms of this Agreement.

 

3.15 No Recourse Against Officers or
Directors.

 

For the avoidance of doubt,
the provisions of this Agreement shall not give rise to any right of recourse
against any officer or director of any Party.

 

4

 

IN WITNESS WHEREOF, the
Parties have executed this Agreement on, and effective as of, July 30,
2010.

 

 

	
   

  	
  EAGLE ROCK ENERGY PARTNERS,
  L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
  By its general partner,

  
	
   

  	
  Eagle Rock Energy GP, L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
  By its general partner,

  
	
   

  	
  Eagle Rock Energy G&P,
  LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jeffrey P. Wood

  
	
   

  	
   

  	
  Name: Jeffrey P. Wood

  
	
   

  	
   

  	
  Title:  Senior Vice President, Chief Financial
  Officer and Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  EAGLE ROCK ENERGY G&P, LLC

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Charles C. Boettcher

  
	
   

  	
   

  	
  Name: Charles C. Boettcher

  
	
   

  	
   

  	
  Title: Senior Vice
  President and General Counsel

  

 

[Signature
Page to Administrative Services Agreement]

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