Document:

Exhibit 10.1

 

 

 

 

 

AMENDED
AND RESTATED

 

LIMITED
LIABILITY COMPANY AGREEMENT

 

OF

 

CARBON
APPALACHIAN COMPANY, LLC

 

(A
Delaware limited liability company)

 

Dated as of August 15, 2017

 

 

 

 

 

 

 

THE INTERESTS
REPRESENTED BY THIS AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY OTHER APPLICABLE FEDERAL OR STATE SECURITIES LAWS. SUCH INTERESTS MAY NOT BE
SOLD, ASSIGNED, PLEDGED OR OTHERWISE TRANSFERRED AT ANY TIME WITHOUT EFFECTIVE REGISTRATION UNDER SUCH ACT AND LAWS OR EXEMPTION
THEREFROM, AND COMPLIANCE WITH THE OTHER RESTRICTIONS ON TRANSFER SET FORTH HEREIN. 

 

     

     

    

 

TABLE
OF CONTENTS

 

	 	Page
	 	 
	ARTICLE
    I  GENERAL	1
	 	 
	Section
    1.1   Formation and Organization	1
	Section
    1.2   Name	2
	Section
    1.3   Principal Office	2
	Section
    1.4   Registered Office and Registered Agent	2
	Section
    1.5   Term	2
	Section
    1.6   Purposes	2
	Section
    1.7   Qualification in Other Jurisdictions	2
	Section
    1.8   Title to Property	3
	Section
    1.9   Payments of Individual Obligations	3
	 	 
	ARTICLE
    II  MANAGEMENT	3
	 	 
	Section
    2.1   Management of the Company by the Board of Directors	3
	Section
    2.2   Election of Directors	5
	Section
    2.3   Duties of the Board of Directors	6
	Section
    2.4   Approval of the Board of Directors	7
	Section
    2.5   Services Agreement	11
	Section
    2.6   Performance of Duties; Liability of Manager and Officers	11
	Section
    2.7   Payment of Certain General and Administrative Expenses of Carbon	11
	Section
    2.8   Budget	12
	Section
    2.9   Conflict Activities	13
	Section
    2.10   Fair Market Value	14
	 	 
	ARTICLE
    III  MEMBERS	15
	 	 
	Section
    3.1   Members, Interests and Unit Classes; Voting Rights	15
	Section
    3.2   No Liability for Company Obligations	16
	Section
    3.3   Meeting of Members	17
	Section
    3.4   Duties of Directors and Members	18
	Section
    3.5   Other Investments of Member Related Parties; Waiver of Conflicts of Interest and Negation of Duties and
    Obligations	20
	Section
    3.6   Carbon Non-Compete	21
	Section
    3.7   No Resignation or Withdrawal by Members	22
	Section
    3.8   Certain Representations and Warranties of the Members	22
	 	 
	ARTICLE
    IV  CAPITAL	24
	 	 
	Section
    4.1   Capital Contributions	24
	Section
    4.2   Key Man Event	26
	Section
    4.3   Capital Accounts	27
	Section
    4.4   Preemptive Rights	28
	Section
    4.5   Unit Certificates	28
	Section
    4.6   Defaulting Members	29
	Section
    4.7   Optional Contribution	30
	Section
    4.8   No Return of Capital Contributions	30

 

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	 	Page
	 	 
	ARTICLE
    V  ALLOCATIONS; DISTRIBUTIONS	31
	 	 
	Section
    5.1   Allocations of Net Income or Net Loss	31
	Section
    5.2   Special Allocations	31
	Section
    5.3   Allocations of Taxable Income or Loss	33
	Section
    5.4   Distributions	34
	Section
    5.5   Tax Distributions	36
	Section
    5.6   Liability of Members; Return of Class A Distributions and Class C Distributions	36
	Section
    5.7   Return of Class B Distributions	37
	 	 
	ARTICLE
    VI  TRANSFER; WITHDRAWAL; SALE RIGHTS; EXIT EVENTS	37
	 	 
	Section
    6.1   Transfers	37
	Section
    6.2   Drag-Along Rights	38
	Section
    6.3   Tag-Along Rights	41
	Section
    6.4   Indirect Transfer	43
	Section
    6.5   Liquidity Event	45
	Section
    6.6   Buy/Sell Rights	48
	Section
    6.7   Assumption of Assignee	50
	Section
    6.8   Allocations to Member’s Transferee	51
	Section
    6.9   Internal Restructure	51
	Section
    6.10   Other Assignment Void	52
	Section
    6.11   Allocation and Distribution of Consideration	52
	Section
    6.12   Yorktown-Carbon Assignment	54
	 	 
	ARTICLE
    VII  DISSOLUTION; WINDING UP	54
	 	 
	Section
    7.1   Dissolution	54
	Section
    7.2   Winding Up	55
	Section
    7.3   Application and Distribution of Proceeds of Liquidation	55
	Section
    7.4   Certificate of Cancellation	55
	 	 
	ARTICLE
    VIII  LIABILITY AND INDEMNIFICATION	56
	 	 
	Section
    8.1   No Liability for Company Debts	56
	Section
    8.2   Indemnification	56
	Section
    8.3   Advance Payment and Appearance as a Witness	56
	Section
    8.4   Insurance	57
	Section
    8.5   Non-exclusivity of Rights; Company as Indemnitor of First Resort	57
	Section
    8.6   Savings Clause	57
	 	 
	ARTICLE
    IX  CERTAIN TAX MATTERS	58
	 	 
	Section
    9.1   Partnership Classification	58
	Section
    9.2   Tax Returns and Tax Information	58
	Section
    9.3   Tax Elections	58
	Section
    9.4   Election by Members	58
	Section
    9.5   Tax Matters Representative	58
	Section
    9.6   Withholding	59

 

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	 	Page
	 	 
	ARTICLE
    X  BOOKS AND RECORDS; REPORTS	59
	 	 
	Section
    10.1   Maintenance of and Access to Books and Records	59
	Section
    10.2   Bank Accounts	59
	Section
    10.3   Reports	60
	Section
    10.4   Fiscal Year	61
	 	 
	ARTICLE
    XI  DEFINITIONS	61
	 	 
	Section
    11.1   Definitions	61
	Section
    11.2   Other Defined Terms	74
	Section
    11.3   Construction	76
	 	 
	ARTICLE
    XII  MISCELLANEOUS	76
	 	 
	Section
    12.1   Notices	76
	Section
    12.2   Confidentiality	76
	Section
    12.3   Expenses	77
	Section
    12.4   Entire Agreement	77
	Section
    12.5   Waiver or Consent	78
	Section
    12.6   Amendment	78
	Section
    12.7   Choice of Law	78
	Section
    12.8   Public Announcement	78
	Section
    12.9   Availability of Equitable Relief	79
	Section
    12.10   Binding Agreement	79
	Section
    12.11   Benefit of Agreement	79
	Section
    12.12   Further Assurances	79
	Section
    12.13   Counterparts	79

 

EXHIBITS

 

	Exhibit A	–	Members	A-1
	Exhibit B	–	Board of Directors	B-1
	Exhibit C	–	Insurance	C-1
	Exhibit D	–	AMI	D-1
	Exhibit E	–	Initial Budget 	E-1

 

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AMENDED
AND RESTATED

 

LIMITED
LIABILITY COMPANY AGREEMENT

 

OF

 

CARBON
APPALACHIAN COMPANY, LLC

 

This
AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT (this “Agreement”) of Carbon Appalachian
Company, LLC (the “Company”), dated as of August 15, 2017 (the “Effective Date”),
is entered into by and among Carbon Natural Gas Company, a Delaware corporation (“Carbon”),
Yorktown Energy Partners XI, L.P., a Delaware limited partnership (“Yorktown”), Old Ironsides Fund II-A
Portfolio Holding Company, LLC, a Delaware limited liability company (“OIE Fund II-A”) and Old Ironsides
Fund II-B Portfolio Holding Company, LLC, a Delaware limited liability company (“OIE Fund II-B” and,
together with OIE Fund II-A, “Old Ironsides”). Capitalized terms used herein without definition shall
have the respective meanings assigned to such terms in Article XI.

 

W
I T N E S S E T H:

 

WHEREAS,
the Members entered into the Prior Agreement as of February 23, 2017;

 

WHEREAS,
the Members desire to amend and restate the Prior Agreement to reflect (i) $14,000,000 of additional Capital Contributions
by the Class A Members to the Company on the Effective Date, (ii) the adjustment of the Capital Commitments of the Class A Members,
(iii) the modification of certain other rights and obligations of the Class A Members and (iv) the other amendments
set forth in this Agreement.

 

NOW,
THEREFORE, in consideration of the foregoing, of the mutual promises of the Members, and of other good and valuable mutual consideration,
the receipt and sufficiency of which are hereby acknowledged, the Members agree on the following terms and conditions:

 

ARTICLE
I

GENERAL

 

Section
1.1Formation and Organization.

 

(a) The
Company has been formed as a Delaware limited liability company by the filing of the Certificate of Formation of the Company (the
“Certificate of Formation”) in the office of the Secretary of State of the State of Delaware under and
pursuant to the Act.

 

(b) The
Members hereby agree that during the term of the Company, the rights and obligations of the Members with respect to the Company
will be determined in accordance with the terms and provisions of this Agreement and, except where the Act provides that such
rights and obligations specified in the Act shall apply “unless otherwise provided in a limited liability company agreement”
or words of similar effect and such rights and obligations are set forth in this Agreement, the Act. Notwithstanding anything
herein to the contrary, Section 18-210 of the Act, entitled Contractual Appraisal Rights, shall not apply or be incorporated into
this Agreement.

 

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Section
1.2Name. The name of the Company shall be “Carbon Appalachian Company, LLC.” The business of the Company
shall be conducted under the name “Carbon Appalachian Company, LLC” or such other name or names as the Board may determine
from time to time.

 

Section
1.3Principal Office. The principal office of the Company shall be located at 1700 Broadway, Suite 1170, Denver, Colorado
80290, or such other place as the Board shall determine from time to time.

 

Section
1.4Registered Office and Registered Agent. The registered office of the Company required by law to be maintained in
the State of Delaware shall be the initial registered office named in the Certificate of Formation or such other office (which
need not be a place of business of the Company) as the Board may designate from time to time in the manner provided by law. The
registered agent of the Company in the State of Delaware shall be the initial registered agent named in the Certificate of Formation
or such other person or persons as the Board may designate from time to time.

 

Section
1.5Term. The existence of the Company commenced as of the date upon which the Certificate of Formation was filed in
the office of the Secretary of State of the State of Delaware, and the Company shall continue in existence until it is dissolved
in accordance with the provisions of this Agreement, and to the extent provided under the Act, until its affairs are wound up
and the Company is terminated in accordance with the provisions of this Agreement and the Act.

 

Section
1.6Purposes. The purposes of the Company, whether carried out in its own name or through its Subsidiaries, are as follows:

 

(a) to
engage in the evaluation, acquisition, exploration, drilling, development and production of or for oil, gas and other hydrocarbons
within the AMI;

 

(b) to
engage in all other necessary and appropriate activities incidental to the foregoing business that may be lawfully conducted by
a limited liability company under the Act; and

 

(c) to
engage in or perform any and all activities otherwise authorized by the Board in accordance with the terms of this Agreement.

 

Section
1.7Qualification in Other Jurisdictions. The Company shall execute and cause to be filed original or amended articles
and/or certificates and shall take any and all other actions as may be reasonably necessary to perfect and maintain the status
of the Company as a limited liability company or similar type of entity under the laws of any other jurisdictions in which the
Company engages in business. At the request of the Manager, each Member agrees to execute, acknowledge, swear to, and deliver
all certificates and other instruments conforming with this Agreement that are necessary or appropriate to qualify, continue,
and terminate the Company as a foreign limited liability company in all such jurisdictions in which the Company may conduct business.

 

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Section
1.8Title to Property. All property owned by the Company shall be owned by the Company as an entity or by its Subsidiaries
and no Member shall have any ownership interest in such property in its individual capacity, and each Member’s Interests
in the Company shall be personal property for all purposes. The Company shall hold title to all of its property in the name of
the Company or one or more of its Subsidiaries, not in the name of any Member.

 

Section
1.9Payments of Individual Obligations. The Company’s credit and assets shall be used solely for the benefit of
the Company, and no asset of the Company shall be Transferred or encumbered for, or in payment of, any individual obligation of
any Member.

 

ARTICLE
II

MANAGEMENT

 

Section
2.1Management of the Company by the Board of Directors.

 

(a) Management
by the Board of Directors. Subject to the terms hereof and except as the Manager and/or the other officers are permitted hereby,
the business, property and affairs of the Company shall be managed and all powers of the Company shall be exercised by or under
the direction of a board of directors (the “Board of Directors” or the “Board”).
The members of the Board of Directors as of the Effective Date shall be those Persons set forth on Exhibit B hereto.
Each member of the Board of Directors is referred to herein as a “Director.”

 

(b) Place
of Meetings. Meetings of the Board of Directors, regular or special, will be held at such places, either within or without
the State of Delaware, as may be specified by the person calling the meeting. In the absence of specific designation, meetings
of the Board of Directors shall be held at the principal office of the Company.

 

(c) Regular
Meetings. The Board of Directors shall meet on a quarterly basis at such times and places as may be fixed from time to time
by the Board and communicated to all Directors. Any and all business may be transacted at any regular meeting.

 

(d) Special
Meetings. Special meetings of the Board of Directors shall be held at any time upon the call of any Director or the Manager.
If the Manager desires to take or have authorized any action that requires approval of the Board, the Manager shall request that
the Board of Directors take action with respect thereto by so notifying the Board of Directors in writing and describing in such
notification (i) the nature of the transaction or business and (ii) the proposed course of action recommended by the Manager.
The Manager shall deliver the notification referred to above, together with any available information that is reasonably necessary
to enable the Board of Directors to consider the advisability of the proposed course of action, to the Board of Directors a reasonable
period of time prior to the dates by which action is to be taken as specified therein. Notice of any such special meeting shall
be in writing and shall be given personally or by facsimile or Electronic Transmission to each member of the Board of Directors
at least three Business Days prior to the date of the meeting.

 

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(e) Attendance
at and Notice of Meetings. Attendance at a meeting of the Board of Directors shall constitute a waiver of notice of such meeting,
except where a Director attends a meeting for the express purpose of objecting to the transaction of any business on the ground
that the meeting is not lawfully called or convened, not authorized by the Agreement or impermissible as a matter of Law.

 

(f) Quorum.
A quorum shall exist when a number of Directors representing at least a Majority of the Voting Power is present in person or by
proxy. If a quorum shall not be present at any meeting of the Board of Directors, the Directors present thereat may adjourn the
meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present. At any such
adjourned meeting any business may be transacted that might have been transacted at the meeting as originally convened.

 

(g) Voting.
For purposes of any vote, approval, consent or other action to be taken by the Board, each Director shall possess one (1) vote.
As used in this Agreement, a “Majority of the Voting Power” means the affirmative votes of those Directors
whose aggregate votes equal or exceed a majority of the number of Directors comprising the full Board. As used in this Agreement,
a “Supermajority of the Voting Power” means the affirmative votes of those Directors whose aggregate
votes equal or exceed a majority of the number of Directors comprising the full Board, provided that at least one (1) such vote
is the affirmative vote of a Carbon Designee for so long as Carbon is entitled to designate Directors and is not a Defaulting
Member.

 

(h) Proxy.
Each Director entitled to vote at a meeting of the Board of Directors may authorize another Director to act for such Director
by proxy, but no such proxy shall be voted or acted upon after 11 months from its date, unless the proxy provides for a longer
period. A duly executed proxy shall be irrevocable if it states that it is irrevocable and if, and only as long as, it is coupled
with an interest sufficient in law to support an irrevocable power. A proxy may be made irrevocable regardless of whether the
interest with which it is coupled is an interest in an Interest itself or an interest in the Company generally.

 

(i) Action
by the Board of Directors Without a Meeting. Action required or permitted to be taken at a meeting of Directors may be taken
without a meeting if the action is evidenced by one or more written consents describing the action taken, signed by at least a
Majority of the Voting Power (if the action requires approval of a Majority of the Voting Power) or signed by at least a Supermajority
of the Voting Power (if the action requires approval of a Supermajority of the Voting Power). Action taken under this Section 2.1(i)
is effective when the requisite number of Directors have signed the consent, unless the consent specifies a different effective
date. The Board of Directors shall promptly provide a copy of such adopted written consent to all Directors.

 

(j) Telephonic
Meetings. The Board of Directors may hold meetings by means of conference telephone or similar communications equipment by
means of which all of the Directors participating in the meeting can hear each other, and participation in such meeting shall
constitute attendance and presence in person at such meeting.

 

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(k) Minutes.
All decisions and resolutions of the Board of Directors shall be reported in the minutes of its meetings, which shall state the
date, time and place of the meeting (or the date of the written consent in the case of a consent executed in lieu of a meeting),
the persons present at the meeting, the resolutions put to a vote (or the subject of a written consent) and the results of such
voting (or written consent). The minutes of all meetings of the Board of Directors shall be circulated to all Directors as soon
as practical after each meeting and shall be kept at the principal office of the Company.

 

(l) Additional
Information. Upon request from time to time by any Director, the Manager or other officer shall promptly provide to such Director
any and all documents and information requested by such Director relating to the business, operations, prospects, properties,
liabilities, financial condition or results of operations of the Company, including (i) the Records of the Company, (ii) any contracts
or agreements to which the Company is a party and (iii) documents and information relating to or evidencing any claim or liability
to which the Company or its assets are subject.

 

Section
2.2Election of Directors.

 

(a) Qualifications.
Each Director shall be a natural person. A Director need not be a resident of the State of Delaware, a Member or an officer of
the Company.

 

(b) Number.
The Board of Directors shall be comprised of four (4) Directors and the Directors shall be the persons whose names are set forth
on Exhibit B attached hereto. Each Director shall hold office until a successor shall have been designated in accordance
with the terms of this Agreement. The number of Directors may be increased or decreased from time to time by a Supermajority of
the Voting Power. Upon the removal of any Director pursuant to Section 2.2(e) or mandatory resignation pursuant to Section
2.2(g), the number of Directors shall be automatically reduced.

 

(c) Designees.

 

(i) Old
Ironsides Designees. Old Ironsides shall be entitled to appoint three (3) persons to serve on the Board (each, an “Old
Ironsides Designee”). The current Old Ironsides Designees are identified on Exhibit B attached hereto.

 

(ii) Carbon
Designee. Carbon shall be entitled to appoint one (1) person to serve on the Board (“Carbon Designee”).
The current Carbon Designee is identified on Exhibit B attached hereto.

 

(iii) The
right of Old Ironsides to appoint Directors is transferable in whole (and not in part), and may be transferred by such Member
to any transferee of such Member’s Class A Units to the extent such Transfer of Class A Units is permitted pursuant to Section
6.1, provided such transferee (after giving effect to such Transfer) holds twenty percent (20%) or more of the outstanding
Class A Units. The right of Carbon to appoint Directors is not transferable.

 

(iv) If
Old Ironsides, or any Member to which such Member has transferred rights to appoint Directors, shall at any time own less than
twenty percent (20%) of the outstanding Class A Units, such Member shall no longer be entitled to appoint any Directors, all of
its appointed Directors shall be deemed to have concurrently resigned as a Director of the Company and all references and provisions
in this Agreement requiring the vote of or granting rights to any Directors appointed by such Member shall be inapplicable and
disregarded, in each case with no further action required by any such Director, the Company or any other Member.

 

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(d) Vacancies.
If any member of the Board of Directors appointed by a party (the “Designating Party”) pursuant to Section
2.2(c) (each, a “Board of Directors Designee”) shall cease to serve as a member of the Board of
Directors for any reason, the vacancy resulting thereby shall be filled by another individual to be appointed by the Designating
Party.

 

(e) Removal.
No members of the Board of Directors shall be removed from office without the consent of the applicable Designating Party; provided,
however, that if a party is no longer entitled to appoint a Board of Directors Designee or Designees pursuant to Section 2.2(c),
the members of the Board of Directors other than those appointed by such party shall be entitled to remove the Board of Directors
Designee or Designees appointed by such party with or without cause. Any member of the Board of Directors may be removed from
office at any time, with or without cause, if the Designating Party that appointed such Director delivers to the Board of Directors
a written notice requesting the removal of such member of the Board of Directors.

 

(f) Resignation.
A Director may resign from the Board of Directors at any time by giving written notice to the Company. Such resignation shall
take effect three Business Days following receipt of that notice or at such later time as shall be specified in the notice. Unless
otherwise specified in the notice, the acceptance of a resignation shall not be necessary to make it effective.

 

(g) Mandatory
Resignation. Unless otherwise approved by the Designating Party who appointed such Director, if any Director who is an Affiliate
of any Member ceases to be an Affiliate of such Member or such Member ceases to be a Member of the Company for any reason, such
Director shall be deemed to have immediately resigned as a Director and shall not be entitled to be re-appointed as a Director.

 

(h) Compensation.
No Director is entitled to remuneration for services rendered or goods provided to the Company in his or her capacity as a Director.

 

Section
2.3Duties of the Board of Directors.

 

(a) To
the fullest extent permitted by the Act, a person, in performing his duties and obligations as a Director under this Agreement,
shall be entitled to act or omit to act at the direction of the Member, if any, that designated such person to serve on the Board
of Directors, considering only such factors, including the separate interests of the Designating Party, as such Director or Designating
Party chooses to consider, and any action of such Person or failure to act, taken or omitted in good faith reliance on the foregoing
provisions shall not, as between the Company and any other Member, on the one hand, and such Person or Designating Party, on the
other hand, constitute a breach of any duty (including any fiduciary or other similar duty, to the extent such exist under the
Act or any other applicable Law) on the part of such Person or Member to the Company or any other Director or Member of the Company.

 

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(b) The
Members (in their own names and in the name and on behalf of the Company) hereby:

 

(i) agree
that (A) the terms of this Section 2.3, to the extent that they modify or limit a duty or other obligation, if any, that
a Director may have to the Company or any Member under the Act or other applicable Law, are reasonable in form, scope and content;
and (B) the terms of this Section 2.3 shall control to the fullest extent possible if it is in conflict with a duty, if
any, that a Director may have to the Company or any Member, under the Act or any other applicable Law; and

 

(ii) waive
to the fullest extent permitted by the Act, any duty (including any fiduciary duty) or other obligation, if any, that a Director
may have to the Company or a Member, pursuant to the Act or any other applicable law.

 

(c) Each
Member (in its own name and in the name and on behalf of the Company), acknowledges, affirms and agrees that (i) the Member would
not be willing to make an investment in the Company, and no person designated by such Member to serve on the Board of Directors
would be willing to so serve, in the absence of this Section 2.3, and (ii) it has reviewed and understands the provisions
of Section 18-1101(c) of the Act.

 

Section
2.4Approval of the Board of Directors. Except for those matters requiring approval of a Supermajority of the Voting
Power pursuant to Section 2.4(b), approval by a Majority of the Voting Power shall be the act and approval of the Board.

 

(a) Majority
of the Voting Power. Notwithstanding anything to the contrary contained in this Agreement, but subject to Section 2.4(b),
the Company shall not take (or, with respect to any Subsidiary of the Company, approve or cause to occur) any of the following
actions without the approval of the Majority of the Voting Power:

 

(i) establish
and maintain any Budget or amend a Budget in any material respect, which amendment for the purposes of this provision means (A)
the modification or reallocation of (I) the aggregate amount provided in the Budget by more than five percent (5%), or (II) any
particular line item of the Budget by more than ten percent (10%), or (B) making expenditures for any proposed Project not currently
in the Budget requiring capital expenditures in excess of $1,000,000 (any deviation from the Budget not in excess of the thresholds
described in the foregoing clauses (A) or (B), a “Permitted Variance”);

 

(ii) incur
any expenditure or series of related expenditures not otherwise a part of an approved Budget, except any expenditure or series
of related expenditures (x) as required under Section 2.7, (y) as permitted under Section 2.8 or (z) that
constitute a Permitted Variance;

 

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(iii) sell,
transfer, farm out or otherwise dispose of (directly or indirectly) any property or assets of the Company (including, without
limitation, any of its Subsidiaries) having a value in excess of $1,000,000;

 

(iv) except
in accordance with a hedge policy or guideline approved by a Majority of the Voting Power, enter into or become obligated under
any swap, collar, floor, cap or other derivative contract or any option, forward sale, exchange-traded contract or other hedging
contract with respect to interest rates or commodity prices or basis differentials;

 

(v) enter
into any marketing arrangements or commitments for midstream services, other than such agreements or commitments that have a term
of 180 days or less;

 

(vi) amend
or modify, or compromise or waive any rights under, or exercise any rights of the Company or any Subsidiary of the Company to
terminate, any operating agreement, development agreement, operator agreement or similar agreement to which the Company or any
of its Subsidiaries is a party or their assets are bound;

 

(vii) except
consistent with the then current Budget, elect or make a determination to consent to or elect to participate with respect to any
new well or any Drilling and Completion Activities or other material operation (including any re-entry, sidetracking or recompletion)
with respect to any well under the Participation Agreement, the Primary JOA, or any other operating, participation or similar
agreement to which the Company or any of its Subsidiaries is a party or their assets are bound;

 

(viii) elect
to exercise tag-along rights or preferential rights to purchase under any operating agreement, participation agreement or similar
agreement;

 

(ix) amend,
modify or supplement, or waive any rights under, or exercise any rights of the Company or any Subsidiary of the Company to terminate,
the Participation Agreement, the Primary JOA or the Contract Operating Agreement;

 

(x) reduce
the coverage or amount of coverage for insurance as reflected on Exhibit C;

 

(xi) authorize
the issuance of or issue any additional Units or other Interests of the Company (other than pursuant to the terms of this Agreement),
and any amendment to this Agreement to reflect the creation of such Units if of an additional or different classes or series of
Units;

 

(xii) subject
to Section 3.1(b) and Section 3.1(c), authorize the admission of any new Member to the Company;

 

(xiii) effect
any change (whether by conversion, recapitalization, Internal Restructure or otherwise) in the legal form of the Company from
a limited liability company to any other type of legal entity;

 

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(xiv) except
as provided for in a Budget, borrow any money or otherwise incur, guarantee or otherwise become liable for any Indebtedness;

 

(xv) mortgage,
pledge, assign in trust or otherwise encumber any property or assets of the Company or any of its Subsidiaries, or assign any
monies owed or to be owed to the Company or any of its Subsidiaries, except for customary Liens contained in or arising under
operating or similar agreements executed by or binding on the Company or any of its Subsidiaries or to secure Indebtedness;

 

(xvi) initiate,
compromise or settle any lawsuit, administrative matter or other dispute where the amount the Company or any Subsidiary of the
Company may recover or might be obligated to pay, as applicable, is in excess of $100,000, or to repair or replace property or
assets of the Company or any Subsidiary of the Company damaged or destroyed as a result of an accident or other occurrence when
the Company’s or such Subsidiary’s share of the costs of repair or replacement (either individually or in the aggregate,
but net of insurance proceeds) is in excess of $50,000;

 

(xvii) subject
to Section 4.2(c), exercise the rights of the Company under the Services Agreement to terminate the Services Agreement
or, at any time after the termination of the Services Agreement, to remove any Manager or designate any Person other than Carbon
as Manager;

 

(xviii) voluntarily
file a petition in bankruptcy for the Company, make an assignment for the benefit of creditors of the Company, file a petition
or answer seeking, consenting to or acquiescing in any reorganization, arrangement, readjustment, liquidation, dissolution or
similar relief with respect to the Company under any statute, law or regulation or take any action seeking, consenting to or acquiescing
in the appointment of a trustee, receiver or liquidator of the Company or any substantial part of the properties and assets of
the Company;

 

(xix) liquidate
or dissolve the Company or any of its Subsidiaries;

 

(xx) change
in the number of Directors comprising the full Board;

 

(xxi) approve
a Capital Call (or issue a Capital Call Notice);

 

(xxii) approve
of a Transfer of Interests by Carbon or Yorktown pursuant to Section 6.1(a)(i), other than a Yorktown-Carbon Assignment;

 

(xxiii) enter
into any contract providing for (or committing to provide for), or delegating authority to any Person (including any subcommittee
of the Board for) decisions on, any of the foregoing transactions or matters, or the delegation of authority to any Person to
approve any of the foregoing transactions or matters;

 

(xxiv) make
(A) any determination of Available Cash or (B) any distributions to the Members pursuant to Section 5.4 or Section 5.5;

 

    9

     

    

 

(xxv) select,
engage or dismiss the Company’s independent certified public accountants, which accounting firm as of the Effective Date
is EKS&H LLLP;

 

(xxvi) 
authorize or permit the Company to form any Subsidiary (other than OpCo);

 

(xxvii) approve
or consummate any acquisition of assets by the Company or any of its Subsidiaries or series of such acquisitions which individually
or in the aggregate exceeds $1,000,000 in any six-month period, or approve any investment in or acquisition of any ownership interest
in Restricted Interest offered by Carbon to the Company;

 

(xxviii) set
or adjust the compensation or benefits of any manager, officer or employee of the Company; or

 

(xxix) take
any action, authorize or approve, or enter into any binding agreement with respect to or otherwise commit to do any of the foregoing.

 

(b) Supermajority
of the Voting Power. Notwithstanding anything to the contrary contained in this Agreement, the Company shall not take (or,
with respect to any Subsidiary of the Company, approve or cause to occur) any of the following actions without the approval of
the Supermajority of the Voting Power:

 

(i) make
any distributions or other payments to the Members other than in accordance with the terms of this Agreement and the Services
Agreement;

 

(ii) redeem
or repurchase any Units or other Interest;

 

(iii) engage
in any activities or make any investment other than as permitted under Section 1.6(a) and Section 1.6(b), including
without limitation any activity authorized pursuant to Section 1.6(c), or otherwise take any action outside of the Company’s
purpose as set forth in Section 1.6(a) and Section 1.6(b);

 

(iv) increase
any Member’s Capital Commitment (subject to the consent of any Member whose Capital Commitment is increased);

 

(v) engage
in any transactions with any Member, Director, officer, employee or other Affiliate of the Company, or their respective Affiliates,
except (A) pursuant to a written employment agreement with such person, (B) this Agreement, (C) the Participation Agreement; (D)
the Management Services Agreement; (E) the Contract Operating Agreement, (F) for reimbursement of reasonable business
expenses of employees or contractors incurred in the ordinary course of the Company’s business, and (G) for payment of a
portion of Carbon’s general and administrative expenses in accordance with Section 2.7;

 

(vi) any
amendment to the Company’s organizational documents that adversely affects in any material respect the rights of Carbon
with respect to its Class A Units or Class C Units in a manner disproportionate to the rights of the other Class A Members or
Class C Members or adversely affects the economic rights of the Class B Units to receive distributions relative to the Class A
Units or Class C Units;

 

    10

     

    

 

(vii) except
in connection with a Liquidity Event approved as provided in Section 6.5 or a Third Party Sale pursuant to Section 6.6,
authorize or effect any Internal Restructure, Liquidity Event or other consolidation of the Company with another Person or any
merger of the Company with or into another Person;

 

(viii) except
in connection with a Liquidity Event approved as provided in Section 6.5, authorize or effect the sale of all or substantially
all of the Company’s assets in a single or series of related transactions, including in connection with a liquidation of
the Company; or

 

(ix) take
any action, authorize or approve, or enter into any binding agreement with respect to or otherwise commit to do any of the foregoing.

 

(c) The
Members acknowledge and agree, notwithstanding anything to the contrary in this Agreement or in the Act, that the matters described
in Section 2.4(a) and Section 2.4(b) require only the requisite Director approval contemplated therein
and that no separate or additional Member vote, consent or approval shall be required in order for the Company to undertake such
action. Any consolidation or merger of the Company approved by a Supermajority of the Voting Power in accordance with Section 2.4(b)(vii)
shall not be deemed to cause an assignment or other Transfer of the Interests under this Agreement.

 

Section
2.5Services Agreement. The Manager’s responsibilities may be performed in whole or in part pursuant to a master
services or similar contract (“Services Agreement”). On and effective as of February 23, 2017, the Company
has entered into the Management Services Agreement, which shall constitute the initial Services Agreement.

 

Section
2.6Performance of Duties; Liability of Manager and Officers. The Manager or any officer shall not be liable to the
Company or to any Member for any loss or damage sustained by the Company or any Member as a result of it carrying out its duties
as Manager or officer in good faith, unless the loss or damage shall have been the result of fraud, deceit, gross negligence,
reckless or intentional misconduct, or a knowing violation of Law by the Manager or officer.

 

Section
2.7Payment of Certain General and Administrative Expenses of Carbon. Until the Termination Date (as defined in the
Management Services Agreement):

 

(a) For
the period commencing on February 23, 2017 and ending on the day immediately prior to the Effective Date, the Company shall pay
or reimburse Carbon for a portion of its aggregate general and administrative expenses in the amount of $300,000 per year payable
in four (4) equal quarterly installments of $75,000.

 

(b) From
and after the Effective Date, the Company shall pay or reimburse to Carbon for each Fiscal Quarter an amount equal to (x) $1,000,000.00,
multiplied by (y) a fraction, (i) the numerator of which shall be the volume of oil and gas produced by the Company and its
Subsidiaries during such Fiscal Quarter and (ii) the denominator of which will be the sum of (A) the volume of oil and gas
produced by the Company and its Subsidiaries during such Fiscal Quarter plus (B) the volume of oil and gas produced by Carbon
and its Subsidiaries (other than the Company or its Subsidiaries) during such Fiscal Quarter in each of the following States:
Ohio, Kentucky, Tennessee, West Virginia and Virginia. Such volumes of oil and gas shall be calculated using the ratio of one
barrel of oil as an equivalent to six thousand cubic feet of natural gas.

 

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(c) Such
payments or reimbursements described in Section 2.7(a) and Section 2.7(b) shall be paid to Carbon within 30
days of the end of each Fiscal Quarter (or, in the case of the last Fiscal Quarter with respect to which payment or reimbursement
is due, within 30 days of the Termination Date (as defined in the Management Services Agreement). With respect to the first Fiscal
Quarter with respect to which payment or reimbursement is due, such payment or reimbursement shall be pro-rated by multiplying
the gross amount of the payment or reimbursement by a fraction, the numerator of which is the number of days from and after February
23, 2017 through the end of the Fiscal Quarter and the denominator of which is the number of days in the Fiscal Quarter. With
respect to the Fiscal Quarter ending September 30, 2017, such payment or reimbursement shall be an amount equal to (i) the gross
amount of the payment or reimbursement under clause (a) above (for a full Fiscal Quarter) multiplied by a fraction, the
numerator of which is the number of days from and after July 1, 2017 through the day immediately prior to the Effective Date and
the denominator of which is 92 days plus (ii) the gross amount of the payment or reimbursement under clause (b)
above (for a full Fiscal Quarter) multiplied by a fraction, the numerator of which is the number of days from and after the Effective
Date through September 30, 2017 and the denominator of which is 92 days. With respect to the last Fiscal Quarter with respect
to which payment or reimbursement is due, such payment or reimbursement shall be pro-rated by multiplying the gross amount
of the payment or reimbursement by a fraction, the numerator of which is the number of days from and after the first day of the
Fiscal Quarter through the Termination Date (as defined in the Management Services Agreement) and the denominator of which is
the number of days in the Fiscal Quarter.

 

Section
2.8Budget.

 

(a) The
Budget for the period through December 31, 2017, as approved as of the date of this Agreement, is attached hereto as Exhibit E
(the “Initial Budget”), which is hereby approved for all purposes of this Agreement without
the need for further approval by the Board.

 

(b) The
Board shall review each Budget, including the Initial Budget, from time to time as requested by the Manager during the capital
year to which such Budget relates and the Budget shall be amended or modified to reflect any amendments or modifications thereto
approved by the Board and as so modified or amended shall thereafter constitute the Budget for the remainder of the calendar year
to which such Budget relates. Each Budget, including the Initial Budget, shall be divided into at least two sections as follows:
(i) a section setting forth expenditures which are fundamental to the operation of the Company and its Subsidiaries and continuing
and ongoing operation of their producing assets (the “Baseline Budget”) and (ii) a section setting forth
expenditures related to the development of and growth or development capital expenditures related to the assets of the Company
and its Subsidiaries (the “Development Budget”).

 

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(c) The
officers of the Company shall prepare or cause to be prepared and present to the Board not later than December 1 of each
calendar year (beginning December 1, 2017 (for calendar year 2018)) a draft Budget for the next succeeding calendar year
(the “Proposed Budget”) setting forth the anticipated revenues and expenses of the Company for such
calendar year in a format consistent with the Initial Budget, which shall include such information requested by the Board.

 

(d) Expenditures
in a Budget may extend over more than one calendar year because such expenditures represent activities or operations that require
commitments in excess of one calendar year. Once such expenditures have been approved by the Board as part of a Budget, unless
the Board determines otherwise in accordance with its review of a Budget pursuant to Section 2.8(b), such expenditures
shall not be required to be resubmitted for approval on an annual or other periodic basis, but instead all such items, until completed,
automatically shall be included in future Budgets (subject to limits and amounts as previously approved) as items which have already
been approved.

 

(e) If
the Board does not approve a Proposed Budget for a calendar year on or prior to the December 20 preceding January 1
of the calendar year to which such Proposed Budget relates, the officers shall use good faith efforts to prepare or to cause to
be prepared a revised Proposed Budget for approval by the Board. Each Proposed Budget approved hereunder by the Board in accordance
with Section 2.4(a)(i) shall be deemed a “Budget.”

 

(f) To
the extent that any Proposed Budget is not approved by the Board in accordance with Section 2.4(a)(i) by the first
day of the calendar year to which such Proposed Budget relates, then, until a Proposed Budget for such calendar year is approved
by the Board in accordance with Section 2.4(a)(i), the Baseline Budget for such calendar year shall be equal to the
Baseline Budget for the immediately preceding calendar year (excluding non-recurring items but including recurring maintenance
capital expenditures).

 

(g) The
Company shall not incur expenses or capital expenditures in excess of amounts set forth in the Budget without prior approval of
the Board in accordance with Section 2.4(a)(ii), except (i) Permitted Variances and (ii) as set forth in Section 2.8(h).

 

(h) Notwithstanding
anything to the contrary in this Agreement, the Company is expressly authorized to make Emergency Expenditures without prior authorization
or approval of the Board when necessary or advisable, in the judgment of the officers of the Company or the Manager, pursuant
to Prudent Industry Practices, to deal with emergencies, including explosions, fires, spills, or any other similar event, which
may endanger property, lives, or the environment. The officers of the Company or the Manager shall as soon as practicable report
to the Board the nature of any such emergency which arises, the measures he intends to take in respect of such emergency and the
estimated related expenditures.

 

Section
2.9Conflict Activities.

 

(a) Notwithstanding
anything to the contrary in this Agreement, any Conflict Activity shall be conducted by and under the direction of, and subject
to the sole approval by, the Directors that have been appointed by a Non-Conflicted Member and neither the Conflicted Member nor
the Directors appointed by the Conflicted Member shall have the right to vote or participate in any meeting of the Board regarding
such Conflict Activity or any approval in connection with any action by the Board in respect of such Conflict Activity and the
presence of any Directors appointed by the Conflicted Member shall not be required for purposes of determining the presence of
a quorum in connection with any such action.

 

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(b) No
officer of the Company that is also an officer, director, member, manager, stockholder, partner or employee of a Conflicted Member
(or one of its Affiliates) shall have any obligation to take or refrain from taking any action on behalf of the Company with respect
to such Conflict Activity except to provide information, documents and other related items reasonably requested by the Company
or the Board in connection with such Conflict Activity (provided that such Person shall not be required to provide such information,
documents or other items if doing so would require such Person to violate any applicable confidentiality restrictions (following
a request of the waiver thereof) or waive or violate any legal professional privilege or similar duty of confidentiality). Except
with respect to such Person’s failure to provide information, documents or other related items requested by the Company
in connection with such Conflict Activity in violation of the foregoing or to provide testimony, give evidence or otherwise participate
in any suit, litigation, arbitration or other dispute resolution proceeding involving the Conflicted Member, any such Person’s
failure or refusal to take or refrain from taking any such action shall not constitute (i) a breach of any duty, fiduciary or
otherwise, if any, owed by such Person to the Company or (ii) gross negligence or willful misconduct on the part of such Person.

 

(c) Notwithstanding
anything to the contrary in this Agreement, at any time that a Member is a Defaulting Member, this Section 2.9 shall not
apply for the benefit of such Member, the Directors that have been appointed by such Defaulting Member shall have no rights under
this Section 2.9 with respect to any Conflict Activity, and the Directors appointed by the Non-Defaulting Member shall
have authority to act on behalf of the Company with respect to such Conflict Activity.

 

Section
2.10Fair Market Value. All determinations of Fair Market Value and Company Sale Value required by this Agreement, other
than pursuant to Section 6.6, shall be made by a Supermajority of the Voting Power; provided, however, that if the
approval of a Supermajority of the Voting Power cannot be obtained in connection with any such determination, such disputed determination
shall be submitted to, and resolved by, Ernst & Young LLP or, if such Person is unable or unwilling to serve in such capacity,
by any replacement approved by a Supermajority of the Voting Power (the “Independent Appraiser”); provided,
however, that in the event a Supermajority of the Voting Power cannot agree on a replacement Independent Appraiser within
five (5) Business Days after any Director has proposed a replacement for approval, within seven (7) days after the end of such
five (5) Business Day period, each of the applicable Parties unable to agree on a replacement Independent Appraiser shall submit
the names of three (3) Qualified Appraisers, and each such Party shall be entitled to strike one (1) name from the other party’s
list of firms, and the Qualified Appraiser shall be selected by lot from the remaining firms. The Independent Appraiser shall
submit to the Board a written report within 30 days of its engagement setting forth such determination. The expenses of the Independent
Appraiser shall be borne by the Company. The determination of the Independent Appraiser as to Fair Market Value or Company Sale
Value shall be final and binding upon the Company, the Board and all Members. The matter dependent on such determination of Fair
Market Value or Company Sale Value with respect to which such determination is to be made by an Independent Appraiser pursuant
to this Section 2.10 shall be deferred until the determination pursuant to this Section 2.10.

 

    14

     

    

 

ARTICLE
III

MEMBERS

 

Section
3.1Members, Interests and Unit Classes; Voting Rights.

 

(a) The
Company shall have one or more Members with Interests designated as Units. Initially there shall be three classes of Units, designated
“Class A Units”, “Class B Units” and “Class C Units”.
The names, addresses and number and class of Units of each of the initial Members are set forth in Exhibit A attached
hereto. To the extent of their holdings of Class A Units, Members holding Class A Units shall be referred to as “Class
A Members” and to the extent of their holdings of Class B Units, Members holding Class B Units shall be referred
to as “Class B Members” and to the extent of their holdings of Class C Units, Members holding Class
C Units shall be referred to as “Class C Members.”

 

(b) Subject
to Section 2.4(a)(xi), Section 2.4(a)(xii) and Article VI, any Person to which Units are issued
by the Company after the Effective Date shall be admitted to the Company as a Member on the date of issuance of such Units.

 

(c) Any
Person to which Units are Transferred as permitted by Article VI shall be admitted to the Company as a Member with
respect to the Units acquired on the date upon which such Transfer has been effected and the requirements set forth in Section
6.1 and Section 6.7 have been satisfied.

 

(d) Class
A Units shall be issued from time to time as provided in this Article III and be the only Interests entitled to vote
and each Class A Member shall have a number of votes equal to the number of Class A Units it holds.

 

(e) Class
B Units.

 

(i) The
class of Units designated as Class B Units shall consist solely of one thousand (1,000) Class B Units, all of which currently
are issued and held by Carbon as the Class B Member.

 

(ii) The
Class B Member shall have no obligation to make any capital contributions to the Company in exchange for or on account of the
Class B Units.

 

(iii) Subject
to Section 12.6, the Class B Units shall have no voting rights on any matter, including amendments to this Agreement.

 

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(iv) The
Company and each Member agree to treat each Class B Unit as a separate “profits interest” within the meaning of Rev.
Proc. 93-27, 1993-2 C.B. 343. Notwithstanding anything herein to the contrary, distributions to each Class B Member pursuant to
Section 5.4 hereof (solely with respect to such Class B Units) shall be limited to the extent necessary so that each Class
B Unit qualifies as a “profits interest” under Rev. Proc. 93-27, and this Agreement shall be interpreted accordingly.
In the event that distributions to a Class B Member pursuant to Section 5.4 hereof are limited as a result of the preceding
sentence of this Section 3.1(e)(iv), the Manager is authorized to adjust future distributions to the Members in whatever
manner it deems appropriate so that, after such adjustments are made, each Member receives, to the maximum extent possible, an
amount of distributions equal to the amount of distributions such Member would have received were such sentence not part of this
Agreement; provided, that any such adjustment to distributions shall be consistent with the treatment of the Class B Units as
“profits interests.” Additionally, in accordance with Rev. Proc. 2001-43, 2001-2 C.B. 191, the Company shall treat
each Class B Member as the owner of a Class B Unit from the date it is granted, and shall file its IRS Form 1065, and issue appropriate
Schedule K-1s to such Class B Members, allocating to such Class B Members their distributive shares of all items of income, gain,
loss, deduction and credit associated with such Class B Units. Each Class B Member agrees to take into account such distributive
share in computing its U.S. federal income tax liability for the entire period during which it holds the Class B Unit. The Company
and each Member agree not to claim a deduction (as wages, compensation or otherwise) for the Fair Market Value of such Class B
Units issued to Class B Members at any time. The undertakings contained in this Section 3.1(e)(iv) shall be construed in
accordance with Section 4 of Rev. Proc. 2001-43. The provisions of this Section 3.1(e)(iv) shall apply regardless of whether
or not a Class B Member files an election pursuant to Section 83(b) of the Code.

 

(f) Class
C Units.

 

(i) The
class of Units designated as Class C Units shall consist solely of 121.21212 Class C Units, all of which currently are issued
and held by Carbon as the sole Class C Member.

 

(ii) Other
than the Class C Non-Cash Capital Contribution, the Class C Member shall have no right or obligation to make any capital contributions
to the Company in exchange for or on account of the Class C Units.

 

(iii) Subject
to Section 12.6, the Class C Units shall have no voting rights on any matter, including amendments to this Agreement.

 

(g) Old
Ironsides as Class A Member. Notwithstanding anything herein to the contrary, with respect to OIE Fund II-A and/or OIE
Fund II-B in its or their capacity as Class A Member, any right, approval, consent, vote or similar action of Old Ironsides
contemplated under this Agreement may be exercised by either OIE Fund II-A or OIE Fund II-B acting unilaterally or by OIE Fund
II-A and OIE Fund II-B acting jointly.

 

Section
3.2No Liability for Company Obligations. Without limiting the generality of Article VIII, a Member is not
liable for the debts, obligations and liabilities of the Company, including under a judgment, decree or order of a court.

 

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Section
3.3Meeting of Members.

 

(a) Place
of Meetings. Meetings of Members may be held at any such place within or without the State of Delaware as may be designated
by the Board of Directors.

 

(b) Meetings.
Meetings of the Members may be called from time to time by the Board of Directors or by the Manager. Only business within the
purpose or purposes described in the notice of meeting referred to in paragraph (c) below may be conducted at a meeting of Members.

 

(c) Notice
of Meeting. Written or printed notice of all meetings of the Members stating the place, date and time of the meeting and,
in the case of a special meeting, the purpose or purposes for which the meeting is called, shall be delivered personally or by
facsimile or Electronic Transmission not less than five (5) Business Days before the date of the meeting by or at the direction
of the Manager to each Member entitled to vote at such meeting.

 

(d) Quorum.
A quorum shall exist if Members are present holding at least a majority of the then outstanding Class A Units.

 

(e) Required
Vote. Unless otherwise expressly required by this Agreement, including Section 2.4, any matter brought before any meeting
of the Members shall be decided by a Majority Vote.

 

(f) Conduct
of Meetings of Members. At each meeting of the Members, the Person designated by the Manager or, in such Person’s absence,
a chairman chosen by a Majority Vote of the Members present in person or represented by proxy and entitled to vote thereat, shall
preside and act as chairman of the meeting. A Person appointed by the Manager, shall act as secretary of such meeting and keep
the minutes thereof. The Board of Directors may adopt such rules and regulations as it determines are reasonably necessary or
appropriate in connection with the organization and conduct of any meeting of the Members.

 

(g) Proxies.
Each Member entitled to vote at a meeting of the Members may authorize another person or persons to act for such Member by proxy,
but no such proxy shall be voted or acted upon after 11 months from its date, unless the proxy provides for a longer period. A
duly executed proxy shall be irrevocable if it states that it is irrevocable and if, and only as long as, it is coupled with an
interest sufficient in law to support an irrevocable power. A proxy may be made irrevocable regardless of whether the interest
with which it is coupled is an interest in an Interest itself or an interest in the Company generally.

 

(h) Written
Consent. Any action required or permitted to be taken at any meeting of Members 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, shall have been delivered
to each Member at least twenty-four hours prior to being executed and shall be signed by Members holding the minimum number of
Class A Units to take such action at a meeting of Members. Every written consent shall bear the date of signature of each Member
that signs the consent. Notice of any such action taken shall be provided to those Members who have not consented in writing promptly
following the taking of such action. Delivery shall be by hand or certified or registered mail, return receipt requested, to the
Company’s principal office and shall be addressed to the Board of Directors.

 

    17

     

    

 

(i) Telephonic
Meetings. Members may participate in and hold a meeting by means of conference telephone or similar communications equipment
by means of which all Members participating in the meeting can hear each other, and participation in such meeting shall constitute
attendance and presence in person at such meeting.

 

(j) Minutes.
All decisions and resolutions of the Members shall be reported in the minutes of the meetings, which shall state the date, time
and place of the meeting (or the date of the written consent in the case of a written consent in lieu of a meeting), the persons
present at the meeting, the resolutions put to a vote (or the subject of a written consent) and the results of such voting (or
written consent). The minutes of all meetings of the Members shall be circulated to all Members as soon as practical after each
meeting and shall be kept at the principal office of the Company.

 

Section
3.4Duties of Directors and Members.

 

(a) Except
as otherwise provided in Section 3.4(b), Section 3.4(c) and Section 3.6:

 

(i) no
Member or any of its present or future Affiliates or any of their respective stockholders, partners, members, directors, managers,
officers or employees (each a “Member Related Party”) shall be expressly or impliedly restricted or
prohibited by virtue of this Agreement or the relationships created hereby from engaging in other activities or business ventures
of any kind or character whatsoever;

 

(ii) each
Member and any Member Related Party shall have the right to conduct, or to possess a direct or indirect ownership interest in,
activities and business ventures of every type and description;

 

(iii) no
Member or any Member Related Party shall be obligated by virtue of this Agreement to present any particular business opportunity
to the Company;

 

(iv) each
Member and Member Related Party shall have the right to take or pursue any such opportunity for its own account (individually
or as a partner, member, stockholder, fiduciary or otherwise) or to present or recommend it to any third party; and

 

(v) neither
the Company nor any Member shall have any rights or claims by virtue of this Agreement or the relationships created hereby in
any activities or business ventures of (i) in the instance of the Company, a Member or any Member Related Party, or (ii) in the
instance of a Member, another Member or such other Member’s Member Related Party (it being expressly understood and agreed
that any and all such rights and claims are hereby irrevocably waived by each Member on its behalf and on behalf of the Company).

 

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(b) The
Members (in their own names and in the name and on behalf of the Company), subject to and except as provided in Section 3.6:

 

(i) agree
that (A) the terms of this Section 3.4, to the extent that they modify or limit a duty or other obligation, if any, that
a Member Related Party may have to the Company or any other Member under the Act or other applicable law are reasonable in form,
scope and content; (B) the terms of this Section 3.4 are expressly intended to restrict the duties, including any fiduciary
or similar duties, of a Member Related Party to the Company and the Members, as permitted by the Act and applicable law; and (C)
the terms of this Section 3.4 shall control to the fullest extent possible if it is in conflict with a duty, if any, that
a Member Related Party may have to the Company or another Member, under the Act or any other applicable law;

 

(ii) waive
to the fullest extent permitted by the Act and other applicable law, any duty or other obligation, if any, that a Member Related
Party may have to the Company or another Member, pursuant to the Act or any other applicable law; and

 

(iii) agree
that (A) the legal doctrines of “corporate opportunity,” “business opportunity”
and similar doctrines will not be applied to any ventures or activities of the Member Related Party (including those serving as
Director or an officer of the Company), (B) none of the Member Related Party (including those serving as Director) will have any
obligation to the Company or its other Members with respect to any opportunity to expand the Company’s business, whether
geographically, or otherwise, (C) the Company and each Member hereby renounces any interest or expectancy in any business opportunity,
transaction or other matter in which any Member Related Party (including those serving as Director or an officer of the Company)
participates or desires or seeks to participate (each, a “Business Opportunity”), (D) no Member Related
Party (including those serving as Director or an officer of the Company) shall have any obligation to communicate or offer any
Business Opportunity to the Company or any other Member, and each may pursue for itself or direct, sell, assign or transfer to
any other Person any such Business Opportunity and (E) each Member Related Party (including those serving as Director or an officer
of the Company) shall be entitled to and may have business interests and activities that are in direct competition with the Company
or a Member or that are enhanced by the activities of the Company, and neither the Company nor any Member shall have any rights
by virtue of this Agreement in any business venture of the Company or any Member.

 

(c) The
Members (in their own names and in the name and on behalf of the Company), acknowledge, affirm and agree that (i) no Member would
be willing to make an investment in the Company, and (ii) no Director appointed to serve on the Board or a Member Related Party
appointed as an officer of the Company or any Subsidiary of the Company would be willing to so serve, in the absence of this Section
3.4.

 

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Section
3.5Other Investments of Member Related Parties; Waiver of Conflicts of Interest and Negation of Duties and Obligations.

 

(a) Each
Member acknowledges and affirms that the Member Related Parties:

 

(i) (A)
have participated (directly or indirectly) and will continue to participate (directly or indirectly) in venture capital, private
equity and other direct investments in corporations, joint ventures, limited liability companies and other entities (the “Other
Investments”), including Other Investments engaged in various aspects of the United States “upstream,”
“downstream” and “midstream” oil and gas business that may, are or will be
competitive with the Company’s business or that could be suitable for the Company, (B) have interests in, participate with,
aid and maintain seats on the board of directors or similar governing bodies of, Other Investments, and (C) may develop or become
aware of business opportunities for Other Investments: and

 

(ii) may
or will, as a result of or arising from the matters referenced in clause (i) above, the nature of the Member Related Parties’
businesses and other factors, have conflicts of interest or potential conflicts of interest with the Company and/or other Members.

 

(b) The
Members (individually and on behalf of the Company), subject to and except as provided in Section 3.6, expressly (i) waive
any such conflicts of interest or potential conflicts of interest and agree that no Member Related Party or its respective representatives
shall have any liability to any Member or any Affiliate thereof, or the Company with respect to such conflicts of interest or
potential conflicts of interest and (ii) acknowledge and agree that the Member Related Parties and their respective representatives
will not have any duty to disclose to the Company, any other Member or the Board or any Directors any such business opportunities,
whether or not competitive with the Company’s business and whether or not the Company might be interested in such business
opportunity for itself. The Members (for themselves and on behalf of the Company) also acknowledge that the Member Related Parties
and their representatives have duties not to disclose confidential information of or related to the Other Investments. Notwithstanding
the foregoing, each Member agrees that it will disclose to the other Members if such Member or an Affiliate has an interest in
another entity that proposes to engage in a transaction with the Company, which disclosure shall be made as promptly as reasonably
possible after such Member becomes aware of the proposed transaction.

 

(c) The
Members (individually and on behalf of the Company) hereby:

 

(i) agree
that (A) the terms of this Section 3.5, to the extent that they modify or limit any duty of loyalty or other similar obligation,
if any, that a Member Related Party may have to the Company or another Member under the Act or other applicable law, are reasonable
in form, scope and content; and (B) the terms of this Section 3.5 shall control to the fullest extent possible if it is
in conflict with any duty of loyalty or similar obligation, if any, that a Member Related Party or its representatives may have
to the Company or another Member, under the Act or any other applicable law; and

 

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(ii) subject
to and except as provided in Section 3.6, waive any duty of loyalty or other fiduciary duty or similar obligation, if any,
that a Member Related Party or its representatives may have to the Company, any Director or another Member, pursuant to the Act
or any other applicable law.

 

(d) Whenever
in this Agreement a Member or any representative thereof (which shall include for purposes of this Agreement a Director appointed
by such Member or instructed to act by such Member) is permitted or required to make a decision (i) in its “sole discretion”
or “discretion” or under a grant of similar authority or latitude, the Member or the representative thereof, as the
case may be, shall be entitled to consider only such interests and factors as such Member or representative desires, including
such Member’s own interests, and shall have no duty or obligation to give any consideration to any interests of or factors
affecting the Company or any other Member, or (ii) in its “good faith” or under another expressed standard, a Member
or the representative thereof, as the case may be, shall act under such express standard and shall not be subject to any other
or different standard imposed by this Agreement or any other agreement contemplated herein or by relevant provisions of law or
in equity or otherwise; provided, however, that no Member or its appointed Director may disapprove of any proposed
asset acquisition or expenditure relating to any proposed asset acquisitions solely on the grounds that an Affiliate of such Member
(x) has made, or intends to make, a competing offering for the purchase of the assets which are the target of such proposed asset
acquisitions (the “Subject Assets”) or (y) is participating or intends to participate in any auction
or other sales process relating to the Subject Assets.

 

(e) The
Members (individually and on behalf of the Company) acknowledge, affirm and agree that (i) the execution and delivery of this
Agreement by the Members is of material benefit to the Company and the Members, and that the Members would not be willing to (x)
execute and deliver this Agreement, and (y) make their agreed Capital Contributions to the Company, without the benefit of this
Section 3.5 and the agreement of the parties, including the Members, thereto.

 

Section
3.6Carbon Non-Compete. Notwithstanding anything herein to the contrary:

 

(a) Prior
to Carbon or any of its Affiliates (excluding, for the avoidance of doubt, Yorktown and any of its Affiliates), or any of its
or their respective officers or directors (in their capacities as such), making any investment in, acquiring any ownership interest
in, or participating in the development of any oil and gas properties (e.g., working interests or royalty interests), operations
or prospects or any rights and interests therein or relating thereto (e.g., carried interests, profits interests or participations)
that are located in the AMI (including acquiring any interest in (i) any new oil and gas lease covering any unleased mineral
interest within the AMI, (ii) any interest in an existing oil and gas lease covering any lands within the AMI, (iii) the
right to acquire any oil and gas lease covering any lands within the AMI or (iv) any mineral interest, fee interest, royalty
interest, overriding royalty interest or other right or interest covering any lands or interests within the AMI), in each case
other than Existing Assets (any such investment, acquisition or participation, a “Restricted Interest”),
Carbon shall offer such proposed Restricted Interest to the Company by giving written notice to the Board of such Restricted Interest
and furnishing to the Board a reasonably detailed description of such Restricted Interest containing all material terms thereof,
including, to the extent applicable, a schedule of the oil and gas leases, lands and/or interests proposed to be acquired, copies
of any leases, agreements or other instruments proposed to be acquired or entered into in connection therewith, the price of the
interests to be acquired and/or any other relevant pricing information relating thereto, all diligence materials prepared by or
on behalf of Carbon relating thereto and any other documents necessary for the Board’s evaluation of the proposed Restricted
Interest. If an oil and gas lease or interest covers lands or interests both inside and outside of the AMI, only the portion inside
the AMI will be deemed a Restricted Interest. The Board shall have fifteen (15) days after receipt of such notice, together with
the supporting information and documentation required by the first sentence of this Section 3.6(a), within which to elect,
by written notice delivered by the Company to Carbon within such fifteen (15) day period, to cause the Company to undertake any
investment in or acquisition of any ownership interest in such Restricted Interest. If the Board elects to cause the Company to
undertake any investment in or acquisition of any ownership interest in a Restricted Interest, the Company and Carbon shall each
use their commercially reasonable efforts, including cooperating with one another vis-à-vis the applicable counterparties
involved in the Restricted Interest, to complete the investment in or acquisition of any ownership interest in such Restricted
Interest for the Company’s account on terms acceptable to the Company.

 

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(b) If
(i) the Board elects not to cause the Company to undertake an investment in or acquisition of any ownership interest in a Restricted
Interest or the Board fails to reply to Carbon within the applicable fifteen (15) day period for its response with respect to
a Restricted Interest offered by Carbon to the Company pursuant to Section 3.6(a) and (ii) the Board approves Carbon and
its Affiliates, or its or their respective officers or directors (in their capacities as such), as applicable, to undertake any
investment in or acquisition of any ownership interest in such Restricted Interest, such investment in or acquisition of
any ownership interest in such Restricted Interest (subject to any terms or conditions regarding such investment or acquisition
imposed by the Board) will be deemed a “Permitted Investment”.

 

(c) Carbon
agrees that neither it nor any of its Affiliates, nor any of its or their respective officers or directors (in their capacities
as such), shall make any investment in, acquire any ownership interest in, or participate in the development of any Restricted
Investment other than (i) Carbon’s investment in the Company, (ii) the Existing Assets and (iii) any Permitted Investments.

 

(d) Carbon
hereby represents and warrants to the Company and each other Member that, except for the Existing Assets, neither it nor any of
its Affiliates hold or have an investment or ownership interest in any oil and gas properties, operations or prospects or
any rights and interests therein or relating thereto in the AMI.

 

Section
3.7No Resignation or Withdrawal by Members. Except in connection with a Transfer of all of its Interest as permitted
under Article VI, no Member shall be entitled to resign or withdraw from the Company.

 

Section
3.8Certain Representations and Warranties of the Members. Each Member hereby represents and warrants to the Company
and each other Member as of the Effective Date and as of each date after the Effective Date such Member makes an additional Capital
Contribution in exchange for additional Units or other Interests that:

 

(a) such
Member has full power and authority to enter into this Agreement and to perform its obligations hereunder;

 

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(b) the
execution, delivery and performance of this Agreement do not conflict with any other agreement or arrangement to which such Member
is a party or by which it is or its assets are bound;

 

(c) all
property contributed to the Company by such Member, and any property thereafter to be contributed to the Company by such Member,
has been or will be duly and lawfully acquired and will be contributed to the Company without any liens or encumbrances (other
than statutory liens for taxes not yet due or owing);

 

(d) such
Member is and will be acquiring its interest in the Company for investment purposes only for his or its own account and not with
a view to the distribution, reoffer, resale, or other disposition not in compliance with the Securities Act and applicable state
securities laws;

 

(e) such
Member alone or together with his or its representatives, possesses such expertise, knowledge, and sophistication in financial
and business matters generally, and in the type of transactions in which the Company proposes to engage in particular, that such
Member is capable of evaluating the merits and economic risks of acquiring and holding an Interest, and that such Member is able
to bear all such economic risks now and in the future;

 

(f) such
Member has had access to all of the information with respect to his or its Interest that such Member deems necessary to make a
complete evaluation thereof;

 

(g) such
Member’s decision to acquire an Interest for investment has been based solely upon the evaluation made by such Member;

 

(h) such
Member is aware that he, she or it may have to bear the economic risk of such Member’s investment in the Company for an
indefinite period of time because Interests have not been registered under the Securities Act or under the securities laws of
any state, and, therefore, such Interests cannot be sold unless they are subsequently registered under the Securities Act and
any applicable state securities laws or an exemption from registration is available;

 

(i) such
Member is aware that only the Company can take action to register Interests in the Company and that the Company is under no such
obligation and does not propose or intend to attempt to do so other than pursuant to the terms of this Agreement;

 

(j) such
Member is aware that this Agreement provides restrictions on the ability of a Member to Transfer its Interests, and such Member
will not seek to effect any Transfer of his, her or its Interests other than in accordance with such restrictions;

 

(k) such
Member is an “accredited investor” within the meaning ascribed to such term under Regulation D of the Securities Act;
and

 

(l) such
Member is not a registered investment company under the Investment Company Act and is not required to register as an investment
company under the Investment Company Act.

 

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ARTICLE
IV

CAPITAL

 

Section
4.1Capital Contributions.

 

(a) As
of February 23, 2017, pursuant to and subject to the terms of the Participation Agreement, Nytis LLC assigned to OpCo 75% of Nytis
LLC’s undivided interest in the Tennessee Mining Tract properties. For purposes of this Agreement, a portion of such assignment
shall be deemed a Capital Contribution to the Company by Carbon of non-cash property (such Capital Contribution, the “Class
C Non-Cash Capital Contribution”) and the agreed Book Basis of such Class C Non-Cash Capital Contribution is $121,212.
In exchange for the Class C Non-Cash Capital Contribution, Carbon received the Class C Units reflected on Exhibit A.

 

(b) At
or before the closing of the CNX Acquisition, Carbon made a Capital Contribution of cash to the Company of $240,000.00 in exchange
for 240 Class A Units, Yorktown made a Capital Contribution of cash to the Company of $2,940,000.00 in exchange for 2,940 Class
A Units, OIE Fund II-A made a Capital Contribution of cash to the Company of $7,334,169.57 in exchange for 7,334.16957 Class A
Units, and OIE Fund II-B made a Capital Contribution of cash to the Company of $1,485,830.43 in exchange for 1,485.83043 Class
A Units (such Capital Contributions, the “Initial Contributions”); all amounts contributed by Carbon,
Yorktown, OIE Fund II-A and OIE Fund II-B pursuant to this Section 4.1(b) at or before the closing of the CNX Acquisition
as the Initial Contributions will be deemed contributed to the Company (regardless of the date actually contributed), including
for purposes of calculating the IRR and Priority Amounts of each holder of Class A Units, as of the date the first of such Initial
Contributions were made to the Company.

 

(c) Capital
Contributions in excess of each Class A Member’s Initial Class A Funding Percentage of the Initial Contribution shall be
made only upon delivery to the Class A Members of a written notice (each a “Capital Call Notice”) requesting
such Class A Members to make additional Capital Contributions (each a “Capital Call”); provided no Capital
Call Notice shall be issued (and no Capital Contributions shall be made) other than (i) to fund an approved Budget (and Permitted
Variances thereto), (ii) to fund a Capital Call for a matter approved by the Board of Directors or (iii) to pay Company Expenses.
Each Capital Call Notice shall state the purpose of the capital requested.

 

(d) Notwithstanding
anything to the contrary contained herein, no Capital Call Notice shall require (or permit) any Class A Member to contribute Capital
Contributions, in the aggregate together with all prior Capital Contributions of such Class A Member, in excess of the amount
set forth opposite the name of such Class A Member under the column headed “Capital Commitment”
on Exhibit A (the “Capital Commitment”).

 

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(e) Subject
to Section 4.1(d), each Class A Member’s share of any Capital Call shall be equal to (i) its Initial Class A Funding
Percentage of the aggregate amount called pursuant to a Capital Call Notice until the Commitment Release Point and (ii) after
the Commitment Release Point, each Class A Member’s then current Class A Sharing Percentage of the aggregate amount called
pursuant to a Capital Call Notice.

 

(f) Capital
Calls shall be due and payable within fifteen (15) Business Days of the date of receipt by a Class A Member of the Capital Call
Notice pertaining to such Capital Call. Upon the receipt of any Capital Contribution and in consideration of such additional Capital
Contribution made by any Member pursuant to this Section 4.1, there shall be issued to such Class A Member a number of
Class A Units equal to the quotient of (x) the amount of such Capital Contribution, divided by (y) the Class A Unit Price.

 

(g) In
the event that the Company has not received Capital Contributions from the Class A Members which in the aggregate are equal to
the Capital Commitments of the Class A Members on or before the earlier of February 23, 2022 and a Public Offering (the “Commitment
Reduction Date”), each Class A Member’s Capital Commitment may be permanently reduced to an amount not less
than the sum of such Class A Member’s Capital Contributions made to the Company prior to the Commitment Reduction Date plus
such Class A Member’s Initial Class A Funding Percentage Interest of the Capital Calls for which a Capital Call Notice shall
have been delivered pursuant to Section 4.1(c) prior to the Commitment Reduction Date.

 

(h) Each
Class A Member shall be required to contribute to the Company its Initial Class A Funding Percentage of each Capital Call amount
until the earlier of (i) the Commitment Reduction Date or (ii) an aggregate amount equal to $100,000,000 in cash has been
funded to the Company as Capital Contributions (including the Initial Contributions), subject to Section 4.6 (the earlier
of (i) and (ii), the “Commitment Release Point”).

 

(i) From
and after the Commitment Release Point, each Class A Member shall be entitled (but not required) to contribute its Class A Sharing
Percentage of each Capital Call amount (as provided in Section 4.1(c)). If any Class A Member (a “Shortfall
Member”) fails to timely contribute its full Class A Sharing Percentage of a Capital Call amount after the Commitment
Release Point and one or more other Class A Members timely contributes its full Class A Sharing Percentage of such Capital Call
amount (the “Non-Shortfall Member”), then the Company or the Non-Shortfall Member shall deliver a written
notice (a “Shortfall Notice”) to the Shortfall Member setting forth the amount such Shortfall Member
failed to timely fund. If the Shortfall Member’s full Class A Sharing Percentage of such Capital Call Amount is not received
by the Company from such Shortfall Member within ten (10) Business Days after delivery of the Shortfall Notice (the “Shortfall
Cure Period”), then the Non-Shortfall Member may, in its discretion, (x) fund all or a portion of the Shortfall
Member’s Unfunded Amount as a Capital Contribution or (y) by delivery of written notice to the Company and the Shortfall
Member within twenty (20) Business Days after the date the Shortfall Notice is delivered to the Shortfall Member, require the
Company to return to the Non-Shortfall Member up to 100% of the amount contributed by the Non-Shortfall Member to the Company
in connection with such Capital Call. A Shortfall Member’s failure to timely fund its Class A Sharing Percentage of any
Capital Call after the Commitment Release Point will result in proportionate dilution of the Class A Sharing Percentage of such
Shortfall Member and adjustment of the Class A Sharing Percentage of each Class A Member to equal an amount, expressed as a percentage,
equal to the number of Class A Units held by such Class A Member divided by the total number of Class A Units held by all Class
A Members after giving effect to such Capital Contribution and the issuance of additional Class A Units in respect of such Capital
Contribution. Notwithstanding anything in this Agreement to the contrary, the proportionate dilution provided for in this Section 4.1(i)
and the option of the Non-Shortfall Member to (x) fund all or a portion of the Shortfall Member’s Unfunded Amount as
a Capital Contribution or (y) receive the return of its funded portion of the applicable Capital Call shall be the sole remedies
for the failure of any Shortfall Member to timely contribute its full Class A Sharing Percentage of any Capital Call after the
Commitment Release Point, and neither the Company nor any Class A Member shall have any other rights or remedies against a Shortfall
Member with respect thereto.

 

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(j) No
Capital Contribution to the Company may be required or permitted from any Person other than in accordance with this Section
4.1 or Section 4.7, and no Person shall be issued or granted any Class A Units or any other Interest by the Company
other than as provided in this Section 4.1 or Section 4.7, in each case without prior approval of the Board pursuant
to Section 2.4(a)(xi).

 

(k) Exhibit A
shall be amended upon the occurrence of any additional Capital Contributions to reflect such additional Capital Contributions,
the issuance of Class A Units in exchange therefor and the Class A Sharing Percentage of each Class A Member after giving effect
to such additional Capital Contributions.

 

(l) If
a Capital Call relates to amounts above and below the Commitment Release Point (as determined under clause (ii) of Section
4.1(h)), such Capital Call shall be treated as two separate Capital Calls, one for the remaining amount required to be funded
to achieve the Commitment Release Point and one for the balance of the amount of such Capital Call.

 

Section
4.2Key Man Event. Notwithstanding anything herein to the contrary, in the event Patrick R. McDonald no longer serves
as Chief Executive Officer of the Company and/or Mark Pierce no longer serves as President of the Company for any reason (in each
case, whether due to resignation, termination, death, disability or otherwise) (the “Key Man Event”),
then:

 

(a) the
Company shall, as soon as reasonably practicable but in any event within three (3) Business Days following the Key Man Event,
deliver a written notice to the Members informing the Members of the Key Man Event;

 

(b) if
the Key Man Event involves the loss of the Chief Executive Officer, from and after the Key Man Event, no Class A Member shall
be required to make any additional Capital Contributions to the Company and no Class A Member shall be a Defaulting Member as
a result of failing to fund any additional Capital Contribution due on or after the Key Man Event, provided that any Defaulting
Member as of the Key Man Event shall continue to be a Defaulting Member from and after the Key Man Event; and

 

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(c) if
the Key Man Event involves the loss of the Chief Executive Officer and the President, from and after the Key Man Event, in addition
to the consequences provided in clause (b) above, Old Ironsides may replace Carbon (or cause Carbon to be replaced) as the Manager
and/or cause the Company to effect a Liquidity Event pursuant to Section 6.5.

 

Section
4.3Capital Accounts.

 

(a) A
separate Capital Account for each Member shall be established and maintained on the books of the Company in accordance with Treasury
Regulations Section 1.704-1(b)(2)(iv) and, to the extent not in conflict with such Treasury Regulations, the provisions of this
Agreement. Each Member shall have a single Capital Account that reflects all of its Interests, regardless of class or the time
or manner in which acquired. Upon a Transfer of all or part of any Units, the Capital Account, Capital Contributions, and Priority
Amount, if any, of the transferor attributable to the Transferred Units shall carryover to the transferee.

 

(b) There
will be credited to the Capital Account of each Member (i) the amount of cash and the initial Book Basis of any property contributed
by such Member to the Company, (ii) such Member’s share of Net Income (as determined in accordance with Section 5.1)
and any items of income or gain allocated to such Member pursuant to Section 5.2, and (iii) the amount of any liabilities
of the Company assumed by such Member or that are secured by any property distributed to such Member.

 

(c) There
will be debited to the Capital Account of each Member (i) the amount of any cash and the Book Basis of any property distributed
by the Company to such Member, (ii) such Member’s share of Net Loss (as determined in accordance with Section 5.1,
and any items of loss or deduction allocated to such Member pursuant to Section 5.2, and (iii) the amount of any liabilities
of such Member assumed by the Company or that are secured by any property contributed by such Member to the Company.

 

(d) Simulated
Basis shall be allocated among the Members in accordance with each Member’s Capital Interest Percentage as of the time such
Oil and Gas Property is contributed to or acquired by the Company (and any additions to such Simulated Basis resulting from expenditures
required to be capitalized in such Simulated Basis shall be allocated among the Members in a manner designed to cause the Members’
proportionate shares of such Simulated Basis to be in accordance with their Capital Interest Percentages as determined at the
time of any such additions), and shall be reallocated among the Members in accordance with the Members’ Capital Interest
Percentages as determined immediately following the occurrence of an event giving rise to an adjustment to the Book Basis of the
Company’s Oil and Gas Properties pursuant to clause (ii) of the definition of Book Basis.

 

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Section
4.4Preemptive Rights. At any time that the Company proposes to sell Interests to any Person other than Class A Units
issued in accordance with Section 4.1 or Section 4.7, each Member other than a Defaulting Member (each, a “Preemptive
Rights Member”) shall have the preemptive right to purchase its Class A Sharing Percentage share of the Interests.
Any participation pursuant to this Section 4.4 shall be on the same terms and conditions as applied to all offerees in
the respective offering. In the event of a proposed transaction or transactions giving rise to preemptive rights of Preemptive
Rights Members, the Company shall provide notice (“Preemptive Right Notice”) to the Preemptive Rights
Members, which Preemptive Rights Notice shall contain the price at which the Interests will be offered and the other material
terms of the offering and such Interests, no later than ten (10) Business Days prior to the expected consummation of such transaction
or transactions. Each Preemptive Rights Member shall provide notice of its election to exercise its preemptive rights within five
(5) Business Days after delivery of the Preemptive Right Notice from the Company (each Preemptive Rights Member electing to exercise
its preemptive right in such instances is referred to as an “Electing Party”). The failure of a Preemptive
Rights Member to respond to the Preemptive Right Notice and affirmatively exercise its preemptive right in accordance with the
terms of this Agreement shall be deemed as an election of the Preemptive Rights Member not to exercise its preemptive right in
connection with the proposed transaction. If a Preemptive Rights Member shall elect not to exercise its respective preemptive
right or fails to timely exercise, the Electing Parties who timely exercise shall have the right to purchase the Interests (a
“Subsequent Purchase”) as to which no such right was exercised (based on the ratio that the Class A
Sharing Percentage of each Electing Party desiring to purchase the additional Interests bears to the sum of the Class A Sharing
Percentages of all Electing Parties desiring to purchase the additional Interests) insofar as more than one such Electing Party
desires to so purchase additional Interests. In the event of a situation described in the preceding sentence in which a Preemptive
Rights Member does not exercise its preemptive right, the Company shall provide notice (the “Subsequent Notice”)
of such fact within three (3) Business Days following expiration of the deadline for submission of notices concerning such elections
from the parties possessing preemptive rights. Each Electing Party that desires to purchase the additional Interests shall respond
to the Subsequent Notice by sending a response notice with respect thereto within three (3) Business Days after delivery of the
Subsequent Notice. The failure of an Electing Party to respond to a Subsequent Notice and affirmatively exercise its preemptive
right in accordance with the terms of this Agreement shall be deemed an election not to exercise its preemptive right in connection
with the Subsequent Purchase. If the number of Interests proposed to be offered as described in the Preemptive Rights Notice exceeds
the sum of the Interests for which the Preemptive Rights Members timely elected to exercise their preemptive rights (including
with respect to any Subsequent Notice), the Company may offer and issue such excess Interests or any portion thereof (at a price
and on other terms and conditions not more favorable to any proposed offeree or purchaser of such Interests than those set forth
in the Preemptive Rights Notice) to any purchaser of such Interests within one-hundred-twenty (120) days after the date the Preemptive
Rights Notice (or, if applicable, the Subsequent Notice) was delivered. If such issuance is not made within such one-hundred twenty
(120) day period, the Company shall not thereafter issue or sell any of such Interests without first re-offering such securities
in the manner provided above; provided, that if such issuance or sale is subject to regulatory approval, such one-hundred-twenty
(120) day period shall be extended until the expiration of ten (10) Business Days after all such approvals have been received,
but in no event later than one-hundred-eighty (180) days from the date the Preemptive Rights Notice (or, if applicable, the Subsequent
Notice) was delivered.

 

Section
4.5Unit Certificates.

 

(a) The
Units initially shall be uncertificated, provided that the Board may, in its sole discretion, elect to cause the Company to evidence
ownership of Units by issuing a certificate (each, a “Unit Certificate”) executed by appropriate officers
of the Company certifying the number of Units owned by each Member.

 

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(b) Notwithstanding
anything to the contrary contained in this Agreement, in order to effect a valid Transfer of Units for which a Unit Certificate
has been issued, prior to the effectiveness of such Transfer, the transferring Member, as applicable, shall surrender the subject
Unit Certificate to the Company together with a transfer power duly executed by the transferring Member, as applicable, with the
transferring Member’s signature thereon guaranteed by a medallion stamp upon the Board’s request. Upon such compliance,
surrender and delivery, the Company shall execute and deliver a new Unit Certificate in the name of the assignee(s) and in the
denominations specified in the Transfer documentation, and shall issue to the transferring Member, as applicable, a new Unit Certificate
evidencing the portion of the surrendered Unit Certificate, if any, not so Transferred, and the surrendered Unit Certificate shall
promptly be cancelled.

 

(c) The
Company shall issue a new Unit Certificate in place of any Unit Certificate theretofore issued by it that is alleged to have been
lost, stolen or destroyed, provided that as a condition precedent thereto the Board may in its discretion require the Member that
is the record owner of any allegedly lost, stolen or destroyed Unit Certificate to deliver to the Company a duly executed affidavit
of loss and an agreement and/or a bond sufficient to indemnify the Company against any adverse claim in connection with the issue
of a new Unit Certificate.

 

(d) Notwithstanding
anything to the contrary contained in this Agreement, the Board and the Company shall be entitled to rely exclusively on record
ownership of Units for which a Unit Certificate has been issued as evidenced by outstanding Unit Certificates and the Company’s
records thereof. The Company shall treat the record owner of a Unit Certificate as the holder of the Units evidenced thereby unless
and until such Units have been Transferred in accordance with this Agreement.

 

Section
4.6Defaulting Members. If any Class A Member fails to timely contribute its full Initial Class A Funding Percentage
of a Capital Call that such Class A Member is required to contribute pursuant to Section 4.1(e)(i) and at least one
other Class A Member timely contributes its full Class A Sharing Percentage of such Capital Call amount (the “Non-Defaulting
Member”), then the Company or a Non-Defaulting Member shall deliver a written notice of default (a “Default
Notice”) to the Defaulting Member setting forth the amount such Defaulting Member failed to timely fund. If the
Defaulting Member’s full Initial Class A Funding Percentage of such Capital Call amount is not received by the Company from
such Class A Member within ten (10) Business Days after delivery of the Default Notice (the “Default Cure Period”),
then:

 

(a) such
Class A Member shall be deemed a “Defaulting Member” and

 

(i) if
the Defaulting Member is Carbon, then Supermajority of the Voting Power shall not require the affirmative vote of a Carbon Designee;
and

 

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(ii) if
the Defaulting Member is Old Ironsides, then a Majority of the Voting Power shall not require the affirmative vote of an Old Ironsides
Designee;

 

(b) the
Defaulting Member shall not be entitled to participate in any future Capital Calls pursuant to Section 4.1 or as a Preemptive
Rights Member pursuant to Section 4.4;

 

(c) each
Non-Defaulting Member shall have the option, exercisable in its sole and absolute discretion to either (A) fund all or a portion
of the Defaulting Member’s Unfunded Amount and to treat such funding of the Unfunded Amount as either an additional Capital
Contribution, subject to Section 4.7 (an “Optional Contribution”), or (B) by delivery of written
notice to the Company and the Defaulting Member within twenty (20) Business Days after the date the Default Notice is delivered
to the Defaulting Member, require the Company to return to the Non-Defaulting Member up to 100% of the amount contributed by the
Non-Defaulting Member to the Company in connection with such Capital Call;

 

(d) the
Non-Defaulting Member(s) may fund the Defaulting Member’s Initial Class A Funding Percentage of all subsequent Capital Call
amounts as Optional Contributions until the Defaulting Member’s Capital Commitment has been fully funded; and “Class
A Sharing Percentage” for purposes of Section 4.1(i) and Section 4.4 shall be calculated without giving effect
to Units held by the Defaulting Member; and

 

(e) if
more than one Non-Defaulting Member elects to fund the Unfunded Amount or the Defaulting Member’s Class A Sharing Percentage
of all subsequent Capital Call amounts, then each Non-Defaulting Member so electing shall be entitled to fund its portion of such
Unfunded Amount or the Defaulting Member’s Class A Sharing Percentage of all subsequent Capital Call amounts based on the
relative Class A Sharing Percentage of each such Non-Defaulting Member, unless otherwise agreed to among such Non-Defaulting Members.

 

Section
4.7Optional Contribution. If a contribution with respect to an Unfunded Amount is treated as an Optional Contribution
pursuant to Section 4.6, upon the receipt of any such Optional Contribution and in consideration of such additional Optional
Contribution made by any Member pursuant to Section 4.1, there shall be issued to such Member a number of Class A Units
equal to the quotient of (x) the amount of such Optional Contribution, divided by (y) the Class A Unit Price, and the Class A
Sharing Percentage of each Class A Member will be adjusted to equal an amount, expressed as a percentage, equal to the number
of Class A Units held by such Class A Member divided by the total number of Units held by all Class A Members after giving effect
to such Optional Contribution and the issuance of additional Class A Units in respect of such Optional Contribution.

 

Section
4.8No Return of Capital Contributions. Except as expressly provided in this Agreement, a Member shall not be entitled
to the return of any part of its Capital Contributions or to be paid any interest, salary or draw in respect of its Capital Contributions.
A Capital Contribution that has not been repaid is not a liability of the Company or any Member.

 

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ARTICLE
V

ALLOCATIONS; DISTRIBUTIONS

 

Section
5.1Allocations of Net Income or Net Loss. After giving effect to the allocation in Section 5.2 for purposes
of maintaining the Capital Accounts the Company’s items of Net Income and Net Loss shall be allocated among the Members
in a manner such that the Capital Account of each Member, immediately after making such allocations is, as nearly as possible,
equal (proportionately) to the distributions that would be made to such Member pursuant to Section 5.4 if the Company
and each of its Subsidiaries were dissolved, their respective affairs wound up and their respective assets sold for cash equal
to their Book Basis, all of the liabilities of the Company and its Subsidiaries were satisfied (limited with respect to each nonrecourse
liability to the Book Basis of the asset securing such liability), and the net assets of the Company were distributed in accordance
with Section 5.4 less (ii) the Member’s share of Company Minimum Gain, share of Member Nonrecourse Debt Minimum
Gain, and the amount, if any, which such Member is obligated to contribute to the capital of the Company.

 

Section
5.2Special Allocations. Notwithstanding Section 5.1, for each taxable year or other relevant period, the
following special allocations will be made in the following order and priority:

 

(a) Minimum
Gain Chargeback. If there is a net decrease in Company Minimum Gain for the taxable year or other relevant period, then, to
the extent required by the Treasury Regulations, items of income (determined in accordance with the provisions of Treasury Regulations
Section 1.704-2(f)(6)) shall be specially allocated to the Members in an amount equal to each Member’s share of the net
decrease in Company Minimum Gain (determined in accordance with the provisions of Treasury Regulations Section 1.704-2(g)). This
Section 5.2(a) shall be interpreted consistently with, and subject to the exceptions contained in, Treasury Regulations
Section 1.704-2(f).

 

(b) Member
Minimum Gain Chargeback. If there is a net decrease in Member Nonrecourse Debt Minimum Gain for the taxable year or other
relevant period, then, to the extent required by Treasury Regulations, items of income (determined in accordance with the provisions
of the Treasury Regulations Section 1.704-2(i)(4)) shall be specially allocated to the Members in an amount equal to each Member’s
share of the net decrease in Member Nonrecourse Debt Minimum Gain (determined in accordance with the provisions of Treasury Regulations
Section 1.704-2(i)(5)). This Section 5.2(b) shall be interpreted consistently with, and subject to the exceptions
contained in, Treasury Regulations Section 1.704-2(i)(4).

 

(c) Qualified
Income Offset. If any Member unexpectedly receives any adjustment, allocation or distribution described in Treasury Regulations
Sections 1.704-1(b)(2)(ii)(d)(4), (5) or (6), which causes or increases such Member’s Adjusted Capital Account Deficit,
such Member will be allocated items of income (including gross income), gain and Simulated Gain in an amount and manner sufficient
to eliminate, to the extent required by the Treasury Regulations, the Member’s Adjusted Capital Account Deficit as quickly
as possible; provided that an allocation pursuant to this Section 5.2(c) shall be made only to the extent that the
Member has an Adjusted Capital Account Deficit after all other allocations provided for in Section 5.1 and this Section 5.2
have been tentatively made as if this Section 5.2(c) was not in this Agreement.

 

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(d) Deficit
Capital Accounts Generally. If any Member has an Adjusted Capital Account Deficit at the end of any Fiscal Year, such member
will be allocated items of income (including gross income), gain and Simulated Gain in an amount and manner sufficient to eliminate
the Member’s Adjusted Capital Account Deficit as quickly as possible; provided that an allocation pursuant to this
Section 5.2(d) shall be made only to the extent that the Member has an Adjusted Capital Account Deficit after all other
allocations provided for in Section 5.1 and this Section 5.2 have been tentatively made as if Section 5.2(c)
and this Section 5.2(d) were not in this Agreement.

 

(e) Nonrecourse
Deductions. Nonrecourse Deductions shall be allocated among the Members pro rata in accordance with their A/C Sharing
Percentage.

 

(f) Member
Nonrecourse Deductions. Member Nonrecourse Deductions shall be specially allocated to the Members who bear the economic risk
of loss for the liability to which the deductions are attributable, determined in accordance with the principles of Treasury Regulations
Section 1.704-2(i).

 

(g) Section
754 Adjustment. To the extent an adjustment to the adjusted tax basis of any Company asset pursuant to Code Sections 734(b)
or 743(b) is required to be taken into account in determining Capital Accounts under Treasury Regulations Section 1.704-1(b)(2)(iv)(m),
the amount of the adjustment shall be included as an item of gain (if positive) or loss (if negative) and shall be specially allocated
to the Members consistent with the manner in which their Capital Accounts are required to be adjusted by such Treasury Regulation.

 

(h) The
Company’s “excess nonrecourse liabilities” (as defined in Treasury Regulations Section 1.752-3(a)(3)) for a
particular Fiscal Year shall be allocated among the Members pro rata in accordance with their A/C Sharing Percentage

 

(i) Simulated
Depletion Deductions and Simulated Loss with respect to each Oil and Gas Property shall be allocated in proportion to the manner
in which the Simulated Basis of such property is allocated between the Members pursuant to Section 4.3(d), provided,
however, if the percentage depletion method is used, any excess percentage depletion shall be allocated in accordance with
Treasury Regulations Section 1.704-1(b)(4)(iii). Simulated Gain shall be included in Net Income or Net Loss and allocated pursuant
to Section 5.1.

 

(j) For
purposes of Treasury Regulations Sections 1.704-1(b)(2)(iv)(k)(2) and 1.704-1(b)(4)(v), the amount realized on the disposition
of any Oil and Gas Property shall be allocated (i) first to the Members in an amount equal to the remaining Simulated Basis of
such property in the same proportions as the Simulated Basis of such property was allocated to the Members pursuant to Section 4.3(d),
and (ii) any remaining amount realized shall be allocated to the Members in the same ratio as the Simulated Gain.

 

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Section
5.3Allocations of Taxable Income or Loss.

 

(a) Except
as provided in Section 5.3(b), (c), or (d) or as otherwise required by the Code or Treasury Regulations,
solely for U.S. federal income tax purposes, items of Company taxable income, gain, loss and deduction for each Fiscal Year shall
be allocated among the Members in the same manner as each correlative item of income, gain, loss and deduction, as determined
for Capital Account purposes, is allocated pursuant to Section 5.1 and Section 5.2.

 

(b) If
property contributed to the Company by a Member has an adjusted U.S. federal income tax basis that differs from its initial Book
Basis on the date of contribution or if the Book Basis of property is adjusted upon the occurrence of a Revaluation Event, income,
gain, loss and deductions with respect to such property will, solely for tax purposes, be allocated among the Members so as to
take account of such difference. Such allocations will be made among the Members in the manner provided in Section 704(c) of the
Code, pursuant to the remedial allocation method described in Treasury Regulations Section 1.704-3(d), or such other reasonable
method determined by the Board of Directors.

 

(c) Depreciation,
depletion, intangible drilling cost, and amortization recapture amounts under Sections 1245, 1250 or 1254 of the Code and the
Treasury Regulations thereunder, if any, resulting from any sale or disposition of tangible or intangible depreciable, depletable
or amortizable property shall be allocated to the Members in the same proportions that the depreciation, depletion, intangible
drilling cost or amortization being recaptured was allocated.

 

(d) Pursuant
to Section 613A(c)(7)(D) of the Code and the Treasury Regulations promulgated thereunder, cost and percentage depletion deductions
with respect to any Oil and Gas Property shall be computed separately by the Members rather than the Company. For purposes of
such computations, the U.S. federal income tax basis of each Oil and Gas Property shall be allocated to each Member in accordance
with such Member’s Capital Interest Percentage as of the time such Oil and Gas Property is contributed to or acquired by
the Company (and any additions to such U.S. federal income tax basis resulting from expenditures required to be capitalized in
such basis shall be allocated among the Members in a manner designed to cause the Members’ proportionate shares of such
adjusted U.S. federal income tax basis to be in accordance with their respective Capital Interest Percentages as determined at
the time of any such additions), and shall be reallocated among the Members in accordance with the Members’ respective Capital
Interest Percentages as determined immediately following the occurrence of an event giving rise to an adjustment to the Book Basis
of the Company’s Oil and Gas Properties pursuant to clause (ii) of the definition of Book Basis. The Company shall include
in the information provided to each Member pursuant to this Agreement such Member’s allocable share of the U.S. federal
income tax basis of each Oil and Gas Property, any adjustment resulting from expenditures required to be capitalized in such basis,
and any reallocation of such basis as provided in the previous sentence. The allocations described in this Section 5.3
are intended to be applied in accordance with the Members’ “interests in partnership capital” under Section
613A(c)(7)(D) of the Code; provided that the Members may, in good faith, authorize special allocations of U.S. federal income
tax basis, income, gain, deduction or loss, as computed for U.S. federal income tax purposes, in order to eliminate differences
between Simulated Basis and adjusted U.S. federal income tax basis with respect to Oil and Gas Properties, in such manner as determined
consistent with the principles outlined in Section 5.3(b). The provisions of this Section 5.3 and the other provisions
of this Agreement relating to allocations under Section 613A(c)(7)(D) of the Code are intended to comply with Treasury Regulations
Section 1.704–1(b)(4)(v) and shall be interpreted and applied in a manner consistent with such Treasury Regulations. Each
Member, with the assistance of the Company, shall separately keep records of its share of the adjusted tax basis in each Oil and
Gas Property, adjust such share of the adjusted tax basis for any cost or percentage depletion allowable with respect to such
property and use such adjusted tax basis in the computation of its cost depletion or in the computation of its gain or loss on
the disposition of such property by the Company. Upon the request of the Company, each Member shall advise the Company of its
adjusted tax basis in each Oil and Gas Property and any depletion computed with respect thereto, both as computed in accordance
with the provisions of this subsection. The Company may rely on such information and, if it is not provided by the Member, may
make such reasonable assumptions as it shall determine with respect thereto. The Company shall provide each Member with information
reasonably requested by such Member to comply with this Section 5.3 and other tax reporting obligations.

 

    33

     

    

 

Section
5.4Distributions. Distributions from the Company will be made from Available Cash or pursuant to Section 5.4(d),
as provided in this Section 5.4:

 

(a) Distributions
of Available Cash and pursuant to Section 5.4(d) shall be made upon the occurrence of any of a Liquidity Event or
as otherwise determined by the Board from time to time, and all such distributions shall be allocated and distributed as follows:

 

(i) first,
until the Priority Amount of each Class A Unit has been reduced to zero, (A) an amount equal to the A/C Sharing Percentage of
the holder of Class C Units shall be allocated and distributed to the holder of Class C Units and (B) the remaining amount shall
be allocated to the holders of Class A Units and distributed to each such holder of Class A Units in proportion to the respective
aggregate Priority Amount of the Class A Units held by such holders of Class A Units;

 

(ii) thereafter
(subject to the following paragraph), (A) eighty percent (80%) shall be allocated among the holders of Class A Units and the holder
of Class C Units in proportion to their respective A/C Sharing Percentages at such time and (x) such amount allocated to the holders
of Class A Units shall be distributed to the holders of Class A Units in proportion to their respective Class A Sharing Percentage
at such time and (y) such amount allocated to the holder of Class C Units shall be distributed to such holder of Class C Units
and (B) twenty percent (20%) shall be allocated and distributed to the holder of Class B Units.

 

If,
after any distributions are made pursuant to this Section 5.4, additional Capital Contributions are made on account
of or in exchange for Class A Units, then (x) subsequent distributions under this Section 5.4 shall be made giving
effect to such additional Capital Contributions and the effect of such additional Capital Contributions on the distributions to
be made pursuant to Section 5.4 to each holder of Class A Units and the amount required to be distributed to each
holder of Class A Units pursuant to each of Section 5.4(a)(i) and (ii), and (y) any amount that otherwise would
be distributable to the holders of Class B Units on account of their Class B Units shall instead be paid to the holders of Class
A Units on account of their Class A Units until the holders of Class A Units shall have received on account of their Class A Units
the amount that they would have received on account of their Class A Units pursuant to this Agreement based on the total amount
that has been distributed by the Company.

 

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(b) All
distributions, including tax distributions treated as advances of such distributions pursuant to Section 5.4, shall
be credited towards or applied against the return calculations in clause (a) above. For the avoidance of doubt, no distributions
will be made under this Agreement other than distributions made pursuant to this Section 5.4 and Section 5.5.
In the event that a reassignment to Nytis LLC occurs pursuant to Section 2.4 of the Participation Agreement, such reassignment
amounts shall not be treated as a distribution under this Agreement.

 

(c) Prior
to the dissolution of the Company in accordance with Article VII, distributions pursuant to Section 5.4
may only be made of cash and Marketable Securities without the approval of a Supermajority of the Voting Power. In connection
with a dissolution of the Company in accordance with Article VII, the Company may distribute property other than cash
and Marketable Securities with the approval of a Majority of the Voting Power.

 

(d) Cash
and Non-Cash Distributions.

 

(i) Subject
to Section 5.4(d)(ii), if any distribution consists of both cash and non–cash property, then unless otherwise
determined by a Supermajority of Voting Power the cash and non–cash property shall be distributed on a pro rata basis such
that the total amount of property distributed on account of each Unit shall contain the same percentage of cash and the same percentage
of non–cash property (based on the Fair Market Value of such non–cash property), and, to the extent the non–cash
distributable property shall consist of more than one item of non–cash property, the Board shall, to the extent practicable,
allocate to each Unit receiving a distribution the same percentage (as a percentage of the total value of cash and non–cash
property distributed) of each item or type of non–cash property.

 

(ii) If
any distribution consists of both cash and non–cash property and such distribution is allocated among more than one class
of Units, then the cash and non–cash property shall be distributed on a pro rata basis such that the total amount of property
distributed to each class of Units receiving a distribution shall contain the same percentage of cash and the same percentage
of non–cash property (based on the Fair Market Value of such non–cash property), and, to the extent the non–cash
distributable property shall consist of more than one item of non–cash property, the Board shall, to the extent practicable,
allocate to each class of Units receiving a distribution the same percentage (as a percentage of the total value of cash and non–cash
property distributed) of each item or type of non–cash property.

 

(iii) The
amount of any non-cash property to be distributed in accordance with Section 5.4 shall be its Fair Market Value.

 

(e) Any
distributions pursuant to this Section 5.4 made in error or in violation of Section 18-607(a) of the Act, will, upon
demand by the Board, be returned to the Company.

 

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Section
5.5Tax Distributions. Subject to the Act, the Company may, to the extent of Available Cash and in proportion to their
respective allocations of taxable income of the Company for the taxable year, distribute to the Members an amount up to the aggregate
amount equal to the Tax Liability Deficiency. The distributions pursuant to this Section 5.5 shall be made in quarterly
installments on an estimated basis on or before the 10th day of each March, June, September and December. The amount to be distributed
to a Member pursuant to this Section 5.5 in respect of any taxable year shall be computed as if any distributions made
to such Member pursuant to Section 5.4 during such taxable year were a distribution under this Section 5.5 in respect
of such taxable year.

 

(a) All
distributions made to a Member pursuant to this Section 5.5 on account of the taxable income allocated to such Member shall
be treated as advance distributions under Section 5.4 and shall be taken into account in determining the amount of
future distributions to such Member, and for purposes of determining the amount of distributions to be made to the Members pursuant
to Section 5.4, distributions made pursuant to this Section 5.5 shall be taken into account at such time as
they are being made pursuant to this Section 5.4.

 

Section
5.6Liability of Members; Return of Class A Distributions and Class C Distributions.

 

(a) Except
as explicitly provided in the Act, no Member shall be liable for any debts, liabilities, contracts or obligations of the Company
whatsoever.

 

(b) (i)
Except as required by the Act, other applicable law or as otherwise expressly set forth herein, no Member shall be required to
repay to the Company, any Member or any creditor of the Company all or any part of the distributions made to such Member pursuant
hereto; provided, however, that, subject to the limitations set forth in Section 5.6(c) hereof, the Board may
require a Class A Member and a Class C Member to return distributions made to such Class A Member on account of their Class A
Units and Class C Member on account of its Class C Units for the purpose of meeting such Member’s pro rata share of any
Company Expenses (as determined by the Board based on distributions received from the Company by each Class A Member on account
of its Class A Units and Class C Member on account of its Class C Units relative to all distributions received from the Company
by all Class A Members on account of their Class A Units and Class C Member on account of its Class C Units); provided, however,
that in no event shall the Board require any Class A Member or Class C Member to return any distributions unless the Board requires
each Class A Member and the Class C Member to return a proportionate share (as determined on the same basis as above) of distributions.

 

(ii) If,
notwithstanding anything to the contrary contained herein, it is determined under applicable law that any Class A Member or Class
C Member has received a distribution which is required to be returned to or for the account of the Company or Company creditors,
then the obligation under applicable law of any Class A Member or Class C Member to return all or any part of a distribution made
to such Class A Member or Class C Member shall be the obligation of such Class A Member or Class C Member and not of any other
Class A Member or Class C Member.

 

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(iii) Any
amount returned by a Class A Member or Class C Member pursuant to this Section 5.6(b) shall be treated as a Capital Contribution
to the Company.

 

(c) The
obligation of a Class A Member and a Class C Member to return distributions pursuant to this Section 5.6 shall survive
the termination of the Company and this Agreement and be subject to the following limitations:

 

(i) no
Class A Member or Class C Member shall be required to return a distribution after the earlier to occur of (x) the third anniversary
of the date of termination of the Company, and (y) the third anniversary of the date of the applicable distribution; provided,
however, that if at such applicable anniversary, there are any legal proceedings then pending or any other liability (whether
contingent or otherwise) or claim then outstanding, then, the obligation of such Class A Member or Class C Member to return such
distribution for the purpose of meeting such Member’s pro rata share of any Company Expenses shall survive with respect
to each such legal proceeding, liability and claim set forth in such notice (or any related legal proceeding, liability or claim
based upon the same or a similar claim) until the date that such legal proceeding, liability or claim is ultimately resolved and
satisfied;

 

(ii) the
aggregate amount of distributions which a Class A Member or Class C Member may be required to return hereunder shall not exceed
an amount equal to the aggregate amount of distributions made to them on account of their Class A Units or Class C Units, as applicable
(net of taxes actually paid on account of such distributions by any such holder of Class A Units or Class C Units, its Affiliates
or direct or indirect members or equity owners).

 

Section
5.7Return of Class B Distributions. If, upon the dissolution by the Company pursuant to Article VII and
the final distribution of all assets of the Company pursuant to Section 5.4, the amount distributed on account of
the Class B Units exceeds the aggregate amount distributable on account of the Class B Units pursuant to Section 5.4 after
giving effect to all distributions pursuant to Section 5.4 and Section 5.5 (the amount of such excess, the
“Excess Class B Distribution Amount”) then the Class B Member shall return to the Company an amount
equal to the Excess Class B Distribution Amount, and the amount returned to the Company shall be allocated among and distributed
to the holders of Class A Units and Class C Units in accordance with Section 5.4 and Section 5.5, as applicable.

 

ARTICLE
VI

TRANSFER; WITHDRAWAL; SALE RIGHTS; EXIT EVENTS

 

Section
6.1Transfers.

 

(a) No
Transfer of all or part of a Member’s Interest may be made except (i) in the case of Yorktown or Carbon, with the approval
of a Majority of the Voting Power (provided that approval of a Majority of the Voting Power is not required for a Yorktown-Carbon
Assignment), (ii) to a Permitted Transferee of such Member, (iii) in accordance with Section 6.2, Section
6.3, Section 6.5, Section 6.6 or Section 6.9, or (iv) Transfers to or from a Subject Company
pursuant to Section 6.4, and then only if a counterpart of the instrument of Transfer, executed and acknowledged by or
on behalf of the parties thereto (provided if a holder of Units fails to execute any such instrument in breach of its obligations
under this Agreement, the signature of such Person shall not be required) is delivered to the Company. Notwithstanding the foregoing,
no Indirect Parent Transfer may be made without first obtaining approval of a Supermajority of the Voting Power. A permitted Transfer
will be effective as of the date specified in the instruments of assignment or conveyance, subject to applicable law, provided
that an assignee will not be admitted as a Member except in accordance with Section 6.7. Notwithstanding the foregoing,
the Class B Units and Class C Units shall not be Transferable except as expressly provided in this Article VI.

 

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(b) In
no event shall a Transfer be permitted if (i) such Transfer would cause interests in the Company to be traded on an established
securities market, secondary market or substantial equivalent thereof within the meaning of Treasury Regulations Sections 1.7704-1
or (ii) such Transfer would cause the Company to become subject to regulation under either the Investment Company Act or the Investment
Advisers Act.

 

Section
6.2Drag-Along Rights.

 

(a) In
the event Old Ironsides or its Permitted Transferees propose to Transfer all or any portion of its Interests other than to a Permitted
Transferee of such Member and such Interests constitute more than 50% of the outstanding Class A Units (a “Drag-Along
Sale”), Old Ironsides and its Permitted Transferees effecting such Transfer (collectively, the “Dragging
Member”) shall have the right to require each other Member (each, a “Drag-Along Member”)
to sell their Interests in such Drag-Along Sale by Transferring up to a proportion (based on the percentage of the Class A Units
being Transferred by the Dragging Member relative to the number of Class A Units owned by the Dragging Member) of the Class A
Units held by each Drag-Along Member at the purchase price and upon the other terms and subject to the conditions of the Drag-Along
Sale (all of which shall be set forth in the Drag-Along Notice).

 

(b) The
Dragging Member shall provide each Drag-Along Member written notice of the terms and conditions of such proposed Transfer (the
“Drag-Along Notice”) not later than 15 Business Days prior to the closing of the proposed Drag-Along
Sale. The Drag-Along Notice shall contain a true and complete copy of any and all available documents constituting the agreement
to transfer and, to the extent not set forth in the accompanying documents, the price offered for the Interests, all information
reasonably available to the Dragging Member regarding the acquirer, all other material terms and conditions of the proposed Drag-Along
Sale and, in the case of a proposed Drag-Along Sale in which the consideration payable for the Interests consists in whole or
in part of consideration other than cash, such information relating to such other consideration as is reasonably available to
the Dragging Member. Each Drag-Along Member shall be required to participate in the Drag-Along Sale on the terms and conditions
set forth in the Drag-Along Notice and this Section 6.2. No Member shall have any dissenters’ or appraisal rights
in connection with the Drag-Along Sale, and each Member hereby releases, and will execute such further instrument as the Company
reasonably requests to further evidence the waiver of, such rights.

 

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(c) Within
10 Business Days following receipt of the Drag-Along Notice (the “Drag-Along Notice Period”), each
Drag-Along Member must deliver to such Dragging Member (i) wire transfer instructions for payment of the purchase price for the
Interests to be sold in such Drag-Along Sale, and (ii) all other documents required to be executed in connection with such Drag-Along
Sale. Each Member makes, constitutes, and appoints the Manager (or its chief executive officer, in his official corporate capacity)
as its true and lawful attorney-in-fact for such person and in its name, place, and stead and for its use and benefit, to sign,
execute, certify, acknowledge, swear to, file, and record any instrument that is now or may hereafter be deemed necessary by the
Company in its reasonable discretion to carry out fully the provisions and the agreement, obligations, and covenants of such Member
in this Section 6.2 in the event that such Member is or becomes a Drag-Along Member pursuant to this Section 6.2.
Each Member hereby gives such attorney-in-fact full power and authority to do and perform each and every act or thing whatsoever
requisite or advisable to be done in connection with such Member’s obligations and agreements as a Drag-Along Member pursuant
to this Section 6.2 as fully as such Member might or could do personally, and hereby ratifies and confirms all that any
such attorney-in-fact shall lawfully do or cause to be done by virtue of the power of attorney granted hereby. The power of attorney
granted pursuant hereto is a special power of attorney, coupled with an interest, and is irrevocable, and shall survive the bankruptcy,
insolvency, dissolution or cessation of existence of the applicable Member.

 

(d) If,
at the end of the 90-day period after the date on which the Dragging Member gives the Drag-Along Notice (which 90-day period shall
be extended if any of the transactions contemplated by the Drag-Along Sale are subject to regulatory approval until the expiration
of five Business Days after all such approvals have been received, but in no event later than 120 days following the delivery
of the Drag-Along Notice), the Drag-Along Sale has not been completed on substantially the same terms and conditions set forth
in the Drag-Along Notice, the Drag-Along Members shall no longer be obligated to sell their Interests pursuant to such Drag-Along
Notice and the Dragging Member shall return to each Drag-Along Member any documents in the possession of the Dragging Member executed
by or on behalf of such Drag-Along Member in connection with the proposed Drag-Along Sale.

 

(e) Concurrently
with the consummation of the Drag-Along Sale, Dragging Member shall (i) notify the Drag-Along Members thereof, (ii) remit to the
Drag-Along Members the total consideration for the Interests of the Drag-Along Members Transferred pursuant thereto, and (iii)
promptly after the consummation of the Drag-Along Sale, furnish such other evidence of the completion and the date of completion
of such Transfer and the terms thereof as may be reasonably requested by the Drag-Along Members.

 

(f) Notwithstanding
anything contained in this Section 6.2, there shall be no liability on the part of the Dragging Member to the Drag-Along
Members if the Transfer of the Interests pursuant to this Section 6.2 is not consummated for whatever reason.

 

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(g) Notwithstanding
anything contained in this Section 6.2, the obligations of the Drag-Along Members to participate in a Drag-Along Sale
are subject to the following conditions:

 

(i) upon
consummation of such Drag-Along Sale, (A) all of the Members participating therein will receive the same form of consideration,
and (B) the aggregate consideration received by the Members will be paid to the Members subject to the allocation provisions set
forth in Section 5.4;

 

(ii) no
Drag-Along Member participating therein shall be obligated to pay any expenses incurred in connection with any unconsummated Drag-Along
Sale, and each Drag-Along Member shall be obligated to pay only its pro rata share (based on the amount of the purchase price
received) of expenses incurred in connection with a consummated Drag-Along Sale to the extent such expenses are incurred for the
benefit of all Members and are not otherwise paid by the Company or another person;

 

(iii) without
the written consent of a Drag-Along Member, such Drag-Along Member shall not be obligated with respect to (A) any representation
or warranty other than (I) a representation and warranty that relates solely to such Drag-Along Member’s title to its
Interest, and its authority and capacity to execute and deliver the subject purchase and sale agreement or (II) a representation
and warranty that relates to the Company and its operations which each Member is severally making to the buyer, or (B) any indemnity
obligation beyond a pro rata portion (based on and limited to the value of consideration received by such Drag-Along Member in
the Drag-Along Sale) of the indemnity obligations which obligate the Dragging Member and all Drag-Along Members and then, such
indemnity obligations shall be several and not joint, or (C) any other continuing obligation on such Drag-Along Member in favor
of any other person following the Disposition of such Drag-Along Member’s Interests (other than obligations relating to
representations and warranties that relate solely to such Drag-Along Member and not to any other Member or the indemnification
obligation provided for in clause (B) above);

 

(iv) no
Drag-Along Member shall be obligated to consummate such Drag-Along Sale contemplated by the Drag-Along Notice with respect to
its Interests unless the Dragging Member consummates such Drag-Along Sale with respect to all (but not less than all) of
their Interests on the terms and conditions contemplated by the Drag-Along Notice; and

 

(v) no
Drag-Along Member shall be obligated to participate in a Drag-Along Sale that is an Excluded Affiliate Transfer.

 

(h) If
a Member whose Class A Units are Transferred pursuant to this Section 6.2 also holds Class B Units or Class C Units
and all of such Member’s Class A Units are Transferred pursuant to this Section 6.2, then all Class B Units and all
Class C Units held by such Member shall be Transferred together with such Member’s Class A Units in the Drag-Along Sale.
If a Member whose Class A Units are Transferred pursuant to this Section 6.2 also holds Class B Units or Class C Units
and less than all of such Member’s Class A Units are Transferred pursuant to this Section 6.2, then all Class B Units
and all Class C Units held by such Member shall be retained by such Member and not included in the Drag-Along Sale.

 

(i) In
any Drag-Along Sale in which a Drag-Along Member participates pursuant to this Section 6.2, the aggregate consideration
to be paid by the acquiring party shall be allocated among each class of Units included in such Drag-Along Sale and the holders
of Class A Units (with respect to their Class A Units), the holders of Class B Units (with respect to their Class B Units) and
the holder of Class C Units (with respect to the Class C Units) included in the Drag-Along Sale as provided in Section 6.11.

 

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Section
6.3Tag-Along Rights.

 

(a) In
the event Old Ironsides or its Permitted Transferees propose to Transfer any of its Interests other than to a Permitted Transferee
of such Member and such Interests constitute more than 50% of the outstanding Class A Units, then Old Ironsides and its Permitted
Transferees effecting such Transfer (collectively, the “Tag-Along Transferring Member”) shall permit
Yorktown and Carbon (each, a “Tag-Along Participant”) to participate in such Transfer (a “Tag-Along
Sale”) by Transferring (at each Tag-Along Participant’s election) up to a proportion (based on the percentage
of the Class A Units being Transferred by the Tag-Along Transferring Member relative to the number of Class A Units owned by the
Tag-Along Transferring Member) of the Class A Units held by each Tag-Along Participant at the purchase price and upon the other
terms and subject to the conditions of the Tag-Along Sale (all of which shall be set forth in the Tag-Along Notice).

 

(b) At
least twenty (20) Business Days prior to the date on which the Tag-Along Transferring Member expects to consummate the Transfer,
the Tag-Along Transferring Member shall deliver a written notice (“Tag-Along Notice”) to the Tag-Along
Participants, which shall set forth all relevant information with respect to the proposed Transfer, including the identity of
the buyer, the proposed purchase price, the Interests that are the subject of the sale, the expected closing date of the Transfer,
and any other terms and conditions of the proposed Transfer (including copies of all available and relevant proposed purchase
and sale documents). Any Tag-Along Participant electing to participate in the Transfer shall provide the Tag-Along Transferring
Member with written notice thereof within ten (10) Business Days prior to the date on which the Tag-Along Transferring Member
expects to consummate the Transfer (or if the Tag-Along Transferring Member delivers an amended Tag-Along Notice, within 10 days
after the delivery of such amended Tag-Along Notice (and the closing of the Transfer shall not occur prior to the expiration of
10 days after such amended Tag-Along Notice has been delivered to each Tag-Along Participant)). Each Tag-Along Participant electing
to Transfer its Interests shall execute such documents, as are executed by the Tag-Along Transferring Member with respect to the
Transfer; provided, however, that any representations and warranties relating specifically to any Member shall only be
made by that Member and any indemnification provided by the Members shall be made on a several, not joint, basis (provided each
Tag-Along Transferring Member and Tag-Along Participant shall be required to provide proportionate (based on the amount of consideration
to be received) indemnification with respect to any representations and warranties related to the Company and its Subsidiaries);
provided further, however, that each Tag-Along Participant shall be required to represent and warrant with respect to the
Required Representations. In no event shall the amount of any indemnity obligation of any Tag-Along Participant exceed the amount
of cash and the Fair Market Value of any non-cash consideration received by such Tag-Along Participant in such Transfer, except
in the case of fraud by such Tag-Along Participant. Any indemnification or other obligation assumed or incurred in connection
with a Transfer shall be allocated among the Persons Transferring Units in connection with such Transfer in the same proportion
as the consideration received by such Persons in connection with such Transfer, in each case other than with respect to the Required
Representations.

 

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(c) After
the consummation of the Transfer pursuant to this Section 6.3, the Tag-Along Transferring Member shall give notice thereof
to the Tag-Along Participants, shall remit to each such Tag-Along Participant any funds due to such Tag-Along Participant and
held by the Tag-Along Transferring Member, and shall furnish such other evidence of the completion of such Transfer and the terms
thereof as may be reasonably requested by such Tag-Along Participant. If within ninety (90) days after the Tag-Along Transferring
Member gives the Tag-Along Notice (or the amended Tag-Along Notice, if applicable), which 90-day period shall be extended if any
of the transactions contemplated by the Tag-Along Sale are subject to regulatory approval until the expiration of five Business
Days after all such approvals have been received, but in no event later than 120 days following the delivery of the Tag-Along
Notice (or the amended Tag-Along Notice, if applicable), the Tag-Along Transferring Member has not completed the Transfer, it
shall return to each Tag-Along Participant any documents in possession of the Tag-Along Transferring Member executed by such Tag-Along
Participant in connection with such proposed Transfer.

 

(d) Each
Member selling any Units pursuant to any Transfer pursuant to this Section 6.3 in which less than all of the outstanding
Class A Units are sold (a “Tag-Along Partial Sale”) shall, prior to the consummation of such sale, notify
the Board of which Class A Units are being sold by such Member (including any Capital Contributions and distributions previously
made in respect of such Class A Units) pursuant to such Tag-Along Partial Sale. The transferee of such Class A Units shall succeed
to the portion of the Capital Account and characteristics associated with such Class A Units.

 

(e) If
a Tag-Along Participant also holds Class B Units or Class C Units and such Tag Along Participant is disposing of all of its Class
A Units in such Tag-Along Sale, then all Class B Units and all Class C Units held by such Tag-Along Participant shall be Transferred
in such Tag-Along Sale together with such Tag-Along Participant’s Class A Units. If a Tag-Along Participant also holds Class
B Units or Class C Units and such Tag Along Participant is disposing of less than all of its Class A Units in such Tag-Along Sale,
then all Class B Units and all Class C Units held by such Tag-Along Participant shall be retained by such Member and not included
in such Tag-Along Sale.

 

(f) In
any Tag-Along Sale in which a Tag-Along Participant participates pursuant to this Section 6.3, the aggregate consideration
to be paid by the acquiring party shall be allocated among each class of Units included in such Tag-Along Sale and among the holders
of Class A Units (with respect to their Class A Units), the holders of Class B Units (with respect to their Class B Units) and
the holder of Class C Units (with respect to the Class C Units) included in such Tag-Along Sale as provided in Section 6.11.

 

(g) For
purposes of this Section 6.3, “Old Ironsides” shall mean Old Ironsides and each transferee of Class A Units
from Old Ironsides and “Carbon” shall mean Carbon and each transferee of Class A Units from Carbon.

 

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Section
6.4Indirect Transfer.

 

(a) If
any holder of Class A Units or any Parent of a holder of Class A Units proposes to effect a transaction or series of transactions
that would result in a Change in Control of such holder of Class A Units or any such Parent (such transaction, an “Indirect
Parent Transfer”), then such holder of Class A Units (the “Subject Company”) or its Parent
shall give written notice to the other Class A Members (“IPT Notice”) at least twenty (20) days prior
to the consummation of such Indirect Parent Transfer (or such shorter period as is agreed by the relevant parties), stating the
desire of such holder of Class A Units or such Parent to effect such Indirect Parent Transfer, the identity of the other party
to such transaction (the “Offeror”), the interest to be Transferred, and all other material terms and
conditions of such transaction, including a description of purchase price allocation.

 

(b) Upon
an Indirect Parent Transfer consummated without the approval of the IPT Eligible Member, (i) each IPT Eligible Member shall have
the right to, each at its own option, purchase all, but not less than all, of the Units held by the Subject Company for an amount
in cash equal to the implied value per Unit allocated to such Units by the Offeror, or if no such allocation is made by the Offeror,
the fair market value of such Units (such implied value or fair market value per Unit the “IPT Transaction Value”)
(provided more than one IPT Eligible Member exercises its right to purchase, each exercising IPT Eligible Member will have the
right to purchase its pro rata portion of the Units being sold in the proportion that the relative Class A Sharing Percentage
of the exercising Members) or (ii) if the IPT Eligible Member does not exercise its rights under clause (i) above, then each IPT
Eligible Member, each at its own option, may sell to the Subject Company, and the Subject Company shall have the obligation to
purchase, all, but not less than all, of the Units held by each exercising IPT Eligible Member for an amount in cash equal to
the IPT Transaction Value of such Units. Such rights may be exercised by written notice to the Subject Company given within twenty
(20) days of receipt of the IPT Notice, or, if an IPT Notice is not delivered to a IPT Eligible Member in violation of this Section 6.4(b)
or an Indirect Parent Transfer otherwise occurs with respect to a IPT Eligible Member, then such right may be exercised by
the applicable IPT Eligible Member(s) providing written notice to the Subject Company within one hundred twenty (120) days after
such IPT Eligible Member obtains actual knowledge of such Indirect Parent Transfer (any such notice, and “IPT Exercise
Notice”). The failure of a recipient of an IPT Notice or any other IPT Eligible Member to notify the Subject Company
within such applicable time period provided above of any election under this Section 6.4(b) shall be deemed an election
by such IPT Eligible Member not to exercise its right to acquire or sell Units pursuant to this Section 6.4 in connection
with such Indirect Parent Transfer.

 

(c) For
purposes of this Section 6.4, the “fair market value” of any Units shall be the fair market value
of such Units, as agreed to by the Subject Company and the holders of each Class of Units electing to purchase or sell such Units
(such holders electing to purchase or sell Units, collectively as to each class of Units, the “Exercising Member”)
that collectively hold a majority of such class of Units held by all Exercising Members of such class of Units (as to each class
of Units, the “Primary Exercising Members”) or, in the event the Subject Company and the Primary Exercising
Member fail to agree within fifteen (15) days after the Exercising Member has delivered a IPT Exercise Notice to the Subject Company
in accordance with Section 6.4(b), the fair market value of such Units as determined by a Qualified Appraiser which
has not had any material engagement with the Subject Company or the Primary Exercising Members or any of their respective Affiliates
in the preceding two years selected by the Primary Exercising Member. Any such Qualified Appraiser so appointed shall be deemed
the “Initial Appraiser.”

 

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(d) In
the event that the Subject Company objects to the fair market value determination made by the Initial Appraiser, then the Subject
Company may, within thirty (30) days after receipt of the Initial Appraiser’s determination of fair market value, select
a Qualified Appraiser which has not had any material engagement with the Subject Company or the Primary Exercising Member or any
of their respective Affiliates in the preceding two years (the “Second Appraiser”). The Initial Appraiser
and the Second Appraiser shall thereupon select a third Qualified Appraiser (the “Neutral Appraiser”).
The Subject Company and the Exercising Member shall execute such engagement and indemnity agreements as the Neutral Appraiser
shall require as a condition to engagement and each shall be responsible for all fees and expenses of the investment bank selected
by it and for its one–half of all fees and expenses of the Neutral Appraiser. The Subject Company and the Exercising Member
shall, and shall cause their respective Affiliates to, make available to the other and the investment banks such information as
is reasonably necessary to reach a fair market value determination. Each of the Initial Appraiser, Second Appraiser, and Neutral
Appraiser shall independently determine its proposed fair market value of the Units, and “fair market value”
shall thereupon mean the average of the two such proposed fair market values that are nearest to one another. The following principle
shall apply generally to any determination of fair market value under this Section 6.4: fair market value shall mean the
cash price at which the Units would change hands between a willing buyer and a willing seller, neither being under any compulsion
and both having a reasonable knowledge of the relevant facts including the application of Section 5.4 and without reduction
based upon any lack of control, minority ownership, marketability or other similar discounts. If the Subject Company fails to
select the Second Appraiser within the 30 day period provided above, such Subject Company shall be deemed to have waived such
objection and the fair market determination by the Initial Appraiser shall be deemed final.

 

(e) Notwithstanding
anything in this Section 6.4, within fifteen (15) days after receipt of an IPT Exercise Notice by a Subject Company such
Subject Company may deliver written notice (a “Cure Notice”) to the Person who delivered such IPT Exercise
Notice that the Indirect Parent Transfer was inadvertent and such Subject Company may, during the thirty (30) days immediately
following delivery of a Cure Notice (the “Cure Period”), effect such actions to cause the Change in
Control giving rise to the Indirect Parent Transfer to cease to exist such that there shall no longer exist a Change in Control
of such Subject Company, and the time periods for actions to occur after delivery of an IPT Exercise Notice (other than the Cure
Period) shall be tolled during such Cure Period. If the Subject Company successfully takes such action within such Cure Period
to cause the Change in Control giving rise to such Indirect Parent Transfer to cease to exist such that there shall no longer
exist a Change in Control of the Subject Company upon the expiration of such Cure Period, then this Section 6.4 shall no
longer apply with respect to such previous Indirect Parent Transfer.

 

(f) Notwithstanding
anything in this Section 6.4, a Change in Control of the Ultimate Parent of Old Ironsides shall not constitute a Change
in Control of Old Ironsides or any Permitted Transferee of Old Ironsides, a Change in Control of the Ultimate Parent of Yorktown
shall not constitute a Change in Control of Yorktown or any Permitted Transferee of Yorktown, a Change in Control of the Ultimate
Parent of Carbon shall not constitute a Change in Control of Carbon or any Permitted Transferee of Carbon, and a Change in Control
of the Ultimate Parent of any other Member shall not constitute a Change in Control of such Member or any Permitted Transferee
of such Member for purposes of this Section 6.4.

 

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Section
6.5Liquidity Event.

 

(a) Notwithstanding
anything to the contrary set forth herein:

 

(i) So
long as the Company has not effected a Public Offering, at any time following February 23, 2024, Carbon (if Carbon is not a Defaulting
Member) and Old Ironsides (if Old Ironsides is not a Defaulting Member) shall each have the right, at each of their express direction
and in each of their sole discretion, to direct the Board to take such actions to effect a Liquidity Event upon delivering a written
notice thereof to the Board of such direction (a “Liquidity Event Notice”).

 

(ii) (A)
At any time Yorktown or Carbon is a Defaulting Member, (B) following a Key Man Event pursuant to Section 4.2(c) or
(C) if the Services Agreement is terminated, so long as the Company has not effected a Public Offering, Old Ironsides shall
have the right, at its express direction and in its sole discretion, to direct the Board to take such actions to effect a Liquidity
Event upon delivering a Liquidity Event Notice.

 

(b) Upon
receipt of a Liquidity Event Notice, the Company shall use commercially reasonable efforts to consummate a Liquidity Event as
soon as practicable and shall diligently pursue the consummation of a Liquidity Event in good faith and the Board shall manage
the business and affairs of the Company primarily with a view toward the consummation of such Liquidity Event as soon as reasonably
practicable following the exercise of such right, and the approval of a Liquidity Event by an Old Ironsides Designee or a Carbon
Designee shall be deemed approval of such Liquidity Event by the Board, subject to any approval required by Section 2.4(b)(v).
Each Member shall, and shall cause its Affiliates to, take all actions, including those set forth in Section 6.5(c), if
applicable, reasonably necessary or appropriate to (i) cooperate with the Company in working toward the consummation of a
Liquidity Event and (ii) cause its Board appointees to act in accordance with this Section 6.5 (including replacing
its Board appointees, if necessary).

 

(c) If
the Board approves (or is deemed to have approved) a Liquidity Event (an “Approved Exit”), each Member
shall raise no objections against such Approved Exit and, to the extent necessary to effect the consummation of such Approved
Exit, vote for and consent to such Approved Exit; provided, however, that any such vote, consent or approval by a Member
shall not constitute a waiver or otherwise affect any rights or obligations of any Member under this Section 6.5, or Section
6.6 of this Agreement with respect to such Approved Exit or any rights of a Member with respect to or arising as a result
of such Approved Exit under any agreement to which such Member is a party. If the Approved Exit is structured as a (i) merger,
consolidation or sale of assets, each Member shall waive any dissenters’ rights, appraisal rights or similar rights in connection
with such merger, consolidation or sale of assets or (ii) sale of Units, each Member shall agree to sell all of his, her or its
Units or rights to acquire Units on the terms and conditions approved by the Board (subject to Section 6.11). Each Member
shall take all necessary or desirable actions in connection with the consummation of the Approved Exit as reasonably requested
by the Board.

 

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(d) In
any Approved Exit, the consideration received by the Company shall be allocated and distributed to each Member in accordance with
Section 5.4 after all the liabilities of the Company have been satisfied in full or provided for.

 

(e) Members
shall bear their pro rata share (based upon the allocation set forth in Section 6.5(d)) of the costs of any sale of Interests
pursuant to an Approved Exit to the extent such costs are incurred for the benefit of all Members and are not otherwise paid by
the Company or the acquiring party. For purposes of this Section 6.5, costs incurred by Members in exercising reasonable
efforts to take all actions in connection with the consummation of an Approved Exit in accordance with this Section 6.5
shall be deemed to be for the benefit of all Members. Costs incurred by Members solely on their own behalf will not be considered
costs of the transaction hereunder.

 

(f) If
the Board determines that the Liquidity Event shall be a Public Offering:

 

(i) each
Member agrees that it will, and will cause its Affiliates and any Director appointed by such Member to, and the Company shall:

 

(A) if
the underwriters in any Public Offering request that all Members hold their Interest (or any equity securities of any Entity effecting
such Public Offering) for a period of time following the Public Offering, do so and enter into a customary lock-up agreement;

 

(B) complete
and execute all consents, questionnaires, powers of attorney, indemnities, underwriting agreements and other documents as may
reasonably be required or advisable in connection with a Public Offering; provided that no such Person shall be required to make
any representations or warranties in connection with a Public Offering other than representations and warranties regarding such
Person and, if applicable, such Person’s intended method of distribution;

 

(C) if
determined by the Board to be reasonably necessary or appropriate in connection with a Public Offering, do all things reasonably
necessary or advisable to effect any Internal Restructure in accordance with Section 6.9;

 

(D) consent
to certain additional restrictions on the Transfer of Interests (or any equity securities of any Entity effecting such Public
Offering) which the Board determines may be required in order to permit compliance with the Securities Act or other applicable
law;

 

    46

     

    

 

(E) use
commercially reasonable efforts to accommodate any such other reasonable actions required by the United States Securities and
Exchange Commission or similar governmental authority to effect the Public Offering; and

 

(F) make
modifications to this Agreement (or any other agreement then governing the rights and obligations of the Members with respect
to the Company or any successor to the Company) as are customary and appropriate for companies that conduct a Public Offering,
such modifications to be in form and substance reasonably satisfactory to Carbon and Old Ironsides.

 

(ii) The
Company shall be responsible for its own costs, fees and expenses in connection with a Public Offering and shall reimburse the
Members and their Affiliates for the reasonable out-of-pocket costs, fees and expenses (excluding underwriting discounts, selling
commissions and similar fees) incurred by them in connection with a Public Offering, including the reasonable costs, fees and
expenses of one outside counsel for each Member.

 

(iii) Each
of the Members shall be granted customary demand and piggyback registration rights effective from and after the Public Offering,
as well as the right to include their Interests (or any securities for which such Interests are exchanged or into which such Interests
are converted) in the Public Offering on a pro rata basis (based on the relative percentages of securities of this type to be
included in the Public Offering held by the Members immediately prior to the Public Offering); provided that if the managing underwriter
or the placement agent advises the Company or the Board that the inclusion of securities of the Members in the Company or any
Affiliate of the Company requested to be included for sale in a secondary offering in connection with the Public Offering would
materially and adversely affect the price, distribution or timing of the offering, then the Company shall have the right to exclude
all or any portion of such securities of the Company or any Affiliate of the Company from sale in connection with the Public Offering,
with such exclusions applied to the Members’ pro rata share of such securities (based on the relative percentages of securities
to be included in the Public Offering held by the Members immediately prior to the Public Offering).

 

(g) Notwithstanding
anything to the contrary contained herein, if a Liquidity Event is not consummated during the period beginning as of the date
a Liquidity Event Notice is delivered to the Board through the first anniversary of such date and a Member thereafter seeks to
Transfer of its Interests, Board approval for such Transfer shall not be required pursuant to Section 6.1.

 

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Section
6.6Buy/Sell Rights.

 

(a) If
a Liquidity Event is not consummated during the period beginning as of the date of Liquidity Event Notice is delivered to the
Board through the first anniversary of such date, either Carbon (if Carbon is not a Defaulting Member) or Old Ironsides (if Old
Ironsides is not a Defaulting Member) (the “Initiating Member”) may initiate the buy sell procedure
set forth in this Section 6.6 by delivering to the other (the “Non-Initiating Member”) written
notice specifying such Member’s determination of the Company Sale Value and the amount that would be distributable to each
holder of Units by applying Section 5.4 based on an amount equal to the Company Sale Value as determined by such Member
(giving effect to all distributions actually made pursuant to this Agreement through the date of the transaction for purposes
of allocations under Section 5.4) (such aggregate amount as would be distributable to each Member, the “Buy/Sell
Unit Price”), and the other terms and conditions pursuant to which the Initiating Member proposes to purchase all
of the Units held by the Non-Initiating Member (the “Offer”). If either Carbon or Old Ironsides has
transferred all or a portion of its Units then Carbon or Old Ironsides, as the case may be, and such transferee (whether or not
the transferee has been admitted as a Member or is only an assignee) will collectively be considered as Carbon or Old Ironsides,
respectively, for purposes of this Section 6.6 and all Units held by Carbon or Old Ironsides (including all such transferees),
as the case may be, shall be subject to purchase by the Initiating Member under the provisions of this Section 6.6.

 

(b) No
later than thirty (30) days following receipt of the Offer, the Non-Initiating Member must notify (a “Buy/Sell Election
Notice”) the Initiating Member of its election to either:

 

(i) sell
all Units held by the Non-Initiating Member and its Affiliates to the Initiating Member for a price equal to the applicable Buy/Sell
Unit Price and on such other terms specified in the Offer; or

 

(ii) purchase
all Units held by the Initiating Member and its Affiliates for a price equal to the applicable Buy/Sell Unit Price; provided that
if the Initiating Member has transferred all or a portion of its Units, then the Units held by the Initiating Member and such
transferees (whether or not the transferee has been admitted as a Member or is only an assignee) will collectively be considered
as held by the Initiating Member for purposes of this Section 6.6(b)(ii) and Section 6.6(c) and Section 6.6(d)
and the Units held by the Initiating Member (including all such transferees) shall be subject to purchase by the Non-Initiating
Member under this Section 6.6.

 

(c) If
the Non-Initiating Member fails to deliver a Buy/Sell Election Notice to the Initiating Member within the thirty (30) day period
(or fails to close the purchase in accordance with Section 6.6(d) within the time period set forth therein), then the Non-Initiating
Member will conclusively be deemed for all purposes to have elected to sell all Units held by the Non-Initiating Member as set
forth in Section 6.6(b)(i), and this deemed election will be treated as having occurred on the last day of the thirty (30)
day period (or ninety (90) day period under Section 6.6(d), if applicable).

 

(d) If
the Non-Initiating Member elects to purchase all Units held by the Initiating Member pursuant to Section 6.6(b)(ii), then
the closing of any sale under Section 6.6(b)(ii) to the Non-Initiating Member will be held at the principal office of the
Company, unless otherwise mutually agreed, on a mutually acceptable date not more than ninety (90) days after receipt by the Initiating
Member of the Non-Initiating Member’s Buy/Sell Election Notice electing to purchase the Units held by the Initiating Member.

 

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(e) If
the Non-Initiating Member elects to sell all of the Units held by the Non-Initiating Member pursuant to Section 6.6(b)(i)
or is deemed to have so elected pursuant to Section 6.6(c), then the Initiating Member may elect:

 

(i) to
purchase such Units for the applicable Buy/Sell Unit Price with the closing of any sale to be held at the principal office of
the Company unless otherwise mutually agreed, on a mutually acceptable date not more than ninety (90) days after receipt by the
Initiating Member of the Buy/Sell Election Notice; provided that the Initiating Member may elect to assign its rights to purchase
such Units to any one or more other Persons (which assignment shall not relieve the Initiating Member of its obligations under
this Section 6.6); or

 

(ii) The
Initiating Member may seek a third party purchaser for one hundred percent (100%) of the Units whether through an equity sale
or a sale in any other form or a sale of the assets of the Company and/or its Subsidiaries (“Third Party Sale”).

 

(f) The
Initiating Member must notify the Non-Initiating Member of its election of Section 6.6(e)(i) or Section 6.6(e)(ii)
within thirty (30) days after the Initiating Member’s receipt of the Buy/Sell Election Notice. If the Initiating Member
fails to timely notify the Non-Initiating Member of its election, then the Initiating Member shall be deemed to have made an election
of Section 6.6(e)(i).

 

(g) If
the Initiating Member pursues a Third Party Sale:

 

(i) The
Non-Initiating Member and the Company shall cooperate in the Initiating Member’s Third Party Sale process in any manner
reasonably requested by the Initiating Member. The Initiating Member will bear all costs and fees incurred in connection with
the Third Party Sale (including without limitation all reasonable and necessary third party costs and fees, including attorneys’
fees, incurred by the Non-Initiating Member in cooperating in such Third Party Sale process), except each Member will bear the
costs and fees of its own independent advisors.

 

(ii) The
Initiating Member will have the requisite authority to negotiate and approve the Third Party Sale (which Third Party Sale will
be conditioned on the consummation of the purchase or redemption of the Units of the Non-Initiating Member at the applicable Buy/Sell
Unit Price); and to this end the Initiating Member will have exclusive authority during this period to approve such a sale and
any related agreements without the necessity of obtaining the consent or approval of the Board or the other Member; provided,
however, that any representations and warranties relating specifically to any Member shall only be made by that Member and
any indemnification provided by the Members shall be made on a several, not joint, basis; provided further, however, that the
Non-Initiating Member shall be required to make only the Required Representations. In no event shall (A) the consideration to
be received by any Transferring Person in connection with a Third Party Sale consist of any form of non-cash consideration other
than freely tradable publicly traded securities (subject to any customary lockup not to exceed 90 days) or (B) the amount of any
indemnity obligation of any Transferring Person exceed the amount of cash and the fair market value of any non-cash consideration
received by such Transferring Person in such Third Party Sale, except in the case of fraud by such Transferring Person. Any indemnification
or other obligation assumed or incurred in connection with a Transfer shall be allocated among the Transferring Persons in the
same proportion as the consideration received by the Transferring Persons, in each case other than with respect to the Required
Representations.

 

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(iii) If
the Initiating Member successfully negotiates a Third Party Sale (other than as a sale of assets), then prior to or upon consummation
of the Third Party Sale, the Initiating Member will purchase the Units held by the other Members at the applicable Buy/Sell Unit
Price, or cause the purchaser in such Third Party Sale to purchase such Units at the applicable Buy/Sell Unit Price. The purchase
of such Units will be held at such time and place as will be elected by the Initiating Member but in any event not more than one
hundred twenty (120) days after the Initiating Member’s receipt of the Buy/Sell Election Notice, subject to extension for
such period of time (not to exceed thirty (30) days) as necessary to permit the Initiating Member or the third party purchaser
to obtain any required governmental approvals but in any event will occur no later than upon the consummation of the Third Party
Sale.

 

(iv) If
the Initiating Member is unsuccessful in completing a Third Party Sale or the redemption or purchase of the Units held by the
other Members is not consummated within the time period specified in Section 6.6(g)(iii), then Initiating Member will purchase
the Units held by the Non-Initiating Member pursuant to Section 6.6(e)(i) within thirty (30) days after the one hundred
twenty (120) day period set forth in Section 6.6(g)(iii).

 

(h) It
is expressly agreed that the remedy at law for breach of any of the obligations set forth in this Section 6.6 is inadequate
in view of (i) the complexities and uncertainties in measuring the actual damages that would be sustained by reason of the failure
of a Member to comply with each of said obligations, and (ii) the uniqueness of the Company’s business and the Company’s
relationship with the Members. Accordingly, each of the aforesaid obligations will be, and are hereby expressly made, enforceable
by specific performance.

 

(i) Notwithstanding
anything contained in this Section 6.6, each transferee of a Member’s Units or any interest therein shall be subject
to the terms of this Section 6.6 (whether or not such transferee has been admitted as a Member) but a Member who has transferred
its Units or any interest therein to any Person shall not be liable or responsible for any noncompliance or compliance, respectively,
with this Section 6.6, by any such transferee of such Member who is not an Affiliate of such Member.

 

Section
6.7Assumption of Assignee. Any Transfer of an Interest in the Company permitted under this Article VI must
be in writing, and the assignee must expressly, in a written joinder executed by the assignee, (a) agree to be bound by the
terms of this Agreement, (b) assume and agree to perform all of the Transferring Member’s agreements and obligations
existing or arising with respect to the assigned Interest after the Transfer and (c) make the representations and warranties set
forth in Section 3.8 to the Company and to the other Members effective as of the date of Transfer. Upon such Transfer and
joinder, (i) the Transferring Member will be relieved of its agreements and obligations arising under this Agreement after the
date of the Transfer (but not before) to the extent of the Interest assigned, and if one hundred percent (100%) of that Member’s
Interest is Transferred, such Member will be deemed to have withdrawn from the Company and (ii) the assignee shall be admitted
as a Member with respect to the Interests acquired upon consummation of such Transfer and compliance with this Section 6.7.
An executed copy of each assignment of an Interest in the Company and the assignee’s joinder must be delivered to each Member
and to the Company. Except as otherwise expressly provided herein, no permitted Transfer of any Interests will cause a termination
or winding-up of the Company.

 

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Section
6.8Allocations to Member’s Transferee. Upon the Transfer of all or any part of the Interest of a Member, the
profits, distributions, net losses, net gains and credits attributable to the Interest Transferred will be allocated, at the sole
cost and expense of the transferee and/or transferor, between the transferee and transferor as of the date set forth in the instrument
of transfer, based upon a manner that complies with Section 706 of the Code and the Treasury Regulations thereunder, as determined
by the Board of Directors.

 

Section
6.9Internal Restructure.

 

(a) Subject
to the consent of the Board of Directors in accordance with Article II, the Company may effect an Internal Restructure
on such terms as the Board of Directors in the exercise of its reasonable discretion deems advisable. Each Member agrees that
it will consent to and raise no objections to an Internal Restructure; provided that (i) the Internal Restructure is undertaken
in a manner that results in the Members continuing to have substantially the same direct or indirect ownership of the Company’s
assets in place prior to the Internal Restructure, (ii) the Internal Restructure preserves the relative economic interests, preferences,
priorities and designations of the Members in the Company or any entity that succeeds to the Company in such Internal Restructure
transaction, and (iii) such Member does not determine, based on written advice of counsel, that the Internal Restructure has a
reasonable risk of having an adverse legal, regulatory, tax or accounting effect on such Member. Each Member hereby agrees that
it will execute and deliver all agreements, instruments and documents as are required, in the reasonable judgment of the Board
of Directors to be executed by such Member in order to consummate the Internal Restructure while continuing in effect, to the
extent consistent with such Internal Restructure, the terms and provisions of this Agreement, including those provisions granting
the Board authority to manage the affairs of the Company, granting certain persons the right to nominate and cause the election
of Directors, governing Transfers of Interests in the Company or other equity securities and indemnification.

 

(b) The
Members acknowledge that an Internal Restructure may be undertaken in connection with other events, such as a public offering
of the Company or an acquisition of another business or entity and, if so determined by the Board of Directors, such Internal
Restructure shall be deemed completed immediately before any such event.

 

(c) The
Members acknowledge that, to engage in an initial public offering, it may be necessary or advisable for the Company to merge or
convert into a Delaware corporation (a “Conversion”). Accordingly, if the Board of Directors determines
it to be in the best interests of the Company to engage in an initial public offering and to effect a Conversion, the Members
agree that the Company’s capital structure shall be restructured in the manner described in this Section 6.9 and
the Members shall vote and take all other action necessary in order to effect such Conversion. In connection with a Conversion,
all Interests in the Company (the “Old Interests”) will be exchanged for common stock of the surviving
corporation (the “Conversion Consideration”). In determining the portion of the Conversion Consideration
to be exchanged for the Old Interests, the Company shall determine what portion of the Conversion Consideration would have been
distributed among all of the holders of the Old Interests if the Company’s sole asset consisted of the Conversion Consideration
and the Company distributed the Conversion Consideration in the same manner distributions would have been made in a complete liquidation
of the Company taking into account the various rights, preferences and designations governing the Old Interests (which rights,
preferences and designations are set forth in this Agreement, each as they may exist before the Conversion). Once the Company
determines the portion of the Conversion Consideration that would have been distributed to each class or series of Old Interests
if the Company had been liquidated immediately before the Conversion, the Board of Directors will then determine the exchange
ratio of the Old Interest into common shares of the surviving corporation.

 

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(d) Upon
the consummation of an Internal Restructure, the surviving entity or entities shall assume or succeed to all of the outstanding
debt and other liabilities and obligations of the Company. To the extent practicable, the governing instruments of the surviving
entity shall incorporate the governance provisions of this Agreement. All Members shall take such actions as may be reasonably
required and otherwise cooperate in good faith with the Company in connection with consummating an Internal Restructure including
a Conversion including voting for or consenting thereto.

 

Section
6.10Other Assignment Void. Any purported Transfer of an Interest in the Company not permitted by this Article VI
is null and void ab initio and of no effect whatsoever.

 

Section
6.11Allocation and Distribution of Consideration. Upon any Transfer of Units in which two or more holders of Units
Transfer Units pursuant to a Liquidity Event, Internal Restructure or pursuant to Section 6.2 or Section 6.3:

 

(a) The
Fair Market Value of any non-cash property included in the consideration for such Transfer shall be added to the aggregate cash
proceeds included in the consideration for such Transfer to determine the aggregate proceeds of such Transfer (the “Disposition
Proceeds”). Each holder of Units included in such Transfer shall receive such holder’s (i) proportionate share
of the aggregate non-cash consideration comprising the Disposition Proceeds and (ii) proportionate share of the aggregate cash
consideration comprising the Disposition Proceeds, in each case determined in accordance with Section 6.11(b) below.

 

(b) For
purposes of determining the proportionate share of the Disposition Proceeds to be delivered to each holder whose Units are included
in such Transfer, the following provisions shall apply:

 

(i) with
respect to a Transfer in which all outstanding Units are Transferred (A) the Company shall be deemed to have distributed pursuant
to Section 5.4 an amount equal to the Disposition Proceeds (giving effect to all prior distributions under Section 5.4
and Section 5.5) and (B) the amount that would be distributable to each holder of Units pursuant to the hypothetical
distribution in accordance with Section 6.11(b)(i)(A) on account of such holder’s Units shall be the amount
of such Disposition Proceeds to be paid to such holder;

 

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(ii) with
respect to any Drag-Along Sale or Tag-Along Sale that includes less than all outstanding Class A Units and in which Class B Units
are included pursuant to Section 6.2(h) or Section 6.3(e), (A) the Board shall determine a Company Sale Value
based on the purchase price offered for the Class A Units as set forth in the Tag-Along Notice, (B) the Board shall assume that
an amount of cash equal to such Company Sale Value was distributed pursuant to Section 5.4 (giving effect to all prior
distributions under Section 5.4 and Section 5.5 through the date of the Tag-Along Sale for purposes of determining
the appropriate distributions under Section 5.4), (C) each holder of Class B Units whose Class B Units are included in
such Tag-Along Sale shall be allocated a portion of the Disposition Proceeds with respect to such holder’s Class B Units
equal to the amount that would be distributable on account of such holders’ Class B Units by applying Section 5.4
to a distribution amount equal to such Company Sale Value in accordance with Section 6.11(b)(ii)(B), and (D) each holder
of Class A Units and each holder of Class C Units participating in such Tag-Along Sale shall be allocated, with respect to such
holder’s Class A Units and Class C Units included in such Tag-Along Sale, a portion of the balance of the Disposition Proceeds
remaining after giving effect to clause (C) above (the “Remaining Tag Balance”), equal to the Remaining
Tag Balance multiplied by a fraction, (x) the numerator of which is the amount that would be distributable to such holder in the
hypothetical distribution in accordance with Section 6.11(b)(ii)(B) on account of such holder’s Class A Units
and/or Class C Units being included in such Tag-Along Sale and (y) the denominator of which is the amount that would be distributable
to all holders of Class A Units and Class C Units participating in such Tag-Along Sale on account of such holders’ Class
A Units and Class C Units being included in such Tag-Along Sale by applying Section 5.4 to a distribution amount equal
to such Company Sale Value in accordance with Section 6.11(b)(ii)(B) (subject to any adjustment as necessary to give effect
to any different economic attributes of the Class A Units being Transferred if such Class A Units being Transferred by a holder
of Class A Units have different economic attributes relative to Class A Units being Transferred by other holders of Class A Units).

 

(iii) with
respect to any Drag-Along Sale or Tag-Along Sale that includes less than all outstanding Class A Units and in which Class B Units
are not included pursuant to Section 6.2(h) or Section 6.3(e), (A) the Company shall be deemed to have distributed
pursuant to Section 5.4 an amount equal to the Disposition Proceeds on account of the Class A Units and Class C Units
being Transferred in such Tag-Along Sale (giving effect to all prior distributions under Section 5.4 and Section 5.5
but assuming that no proceeds are distributable on account of the Class B Units) and (B) the amount that would be distributable
to each holder pursuant to the hypothetical distribution in accordance with Section 6.11(b)(iii)(A) on account of such
holder’s Class A Units and Class C Units being Transferred in such Tag-Along Sale shall be the amount of such Disposition
Proceeds to be paid to such holder (subject to any adjustment as necessary to give effect to any different economic attributes
of the Class A Units being Transferred if such Class A Units being Transferred by a holder of Class A Units have different economic
attributes relative to Class A Units being Transferred by other holders of Class A Units); and

 

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(iv) for
purposes of determining the amount of the Disposition Proceeds to be allocated among and/or delivered for the Class A Units, Class
B Units and Class C Units pursuant to an Internal Restructure or Transferred in a Liquidity Event, other than as described in
Section 6.11(b)(i), the methodology set forth in Section 6.11(b)(ii) and Section 6.11(b)(iii) shall apply,
mutatis mutandis.

 

Section
6.12Yorktown-Carbon Assignment.

 

(a) Yorktown
may assign all or any portion of its Interests to Carbon in exchange for shares of common stock of Carbon, subject to Section
6.1(b) and Section 6.7 (such assignment, the “Yorktown-Carbon Assignment“). Effective
upon any Yorktown-Carbon Transfer, Carbon shall succeed to the rights of Yorktown with respect to the Interests assigned by Yorktown
to Carbon. In the event that Yorktown assigns all of its Interests to Carbon pursuant to a Yorktown-Carbon Transfer, Yorktown
shall be deemed withdrawn as a Member of the Company and Carbon shall succeed to the rights and obligations of Yorktown under
this Agreement with respect to the Interests assigned by Yorktown to Carbon (including the right to appoint Board designees and
the obligation to make Capital Contributions under Article IV).

 

(b) If
the Yorktown-Carbon Assignment occurs, the terms agreed to by Yorktown and Carbon with respect to the Yorktown-Carbon Assignment
shall not be taken into account for purposes of Company Sale Value or otherwise with respect to the value of the Company or its
assets.

 

(c) If
the Yorktown-Carbon Assignment occurs, the Members will act in good faith to amend and restate the Agreement to give effect to
the Yorktown-Carbon Assignment and the purpose and intent of this Section 6.12.

 

ARTICLE
VII

DISSOLUTION; WINDING UP

 

Section
7.1Dissolution. The Company shall be dissolved only upon the first to occur of any of the following events (“Dissolution
Events”):

 

(a) the
election by the Supermajority of the Voting Power to dissolve the Company;

 

(b) February
23, 2027, unless extended upon Majority of the Voting Power for up to two successive one year terms; or

 

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

 

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Section
7.2Winding Up. Upon the occurrence of a Dissolution Event, the business of the Company shall be wound up and shall,
except to the extent consistent with such winding up, cease. The Board of Directors shall act as liquidator unless it elects to
appoint one or more other Persons, who may or may not be Members, to act as liquidator. The liquidator shall proceed diligently
to wind up the business and affairs of the Company and may determine all matters in connection with the winding up of the Company,
including any arrangements to be made with creditors, the amount or necessity of reserves to cover contingent or unforeseen liabilities,
and whether, to what extent, for what consideration, and on what terms any or all of the assets of the Company are to be sold.
The liquidator may in its discretion retain any obligations due to the Company and distribute (or apply in satisfaction of Company
obligations) the proceeds thereof as collected. The costs and expenses of the winding up and liquidation of the Company shall
be borne by the Company. Until final distribution, the liquidator shall continue to manage the Company’s affairs and, if
the liquidator is a Person other than the Board of Directors, shall, to the extent consistent with the liquidator’s obligations,
have all of the power and authority of the Board of Directors and be entitled to indemnification and advance payment of expenses
in accordance with the provisions of this Agreement as if the liquidator were the Board of Directors. The liquidator shall give
or cause to be given all notices to creditors required by applicable Law and, in addition to any reports otherwise required by
this Agreement to be given to the Members, shall cause a proper accounting of the Company’s assets, liabilities and operations
to be made and furnished to the Members as of the date all assets of the Company are finally distributed to the Members or applied
in payment of Company liabilities.

 

Section
7.3Application and Distribution of Proceeds of Liquidation. During or upon completion of the winding up of the Company,
the assets of the Company shall be applied and distributed by the liquidator, in one or more installments, in the following order
and priority:

 

(a) to
the payment, or provision for payment, of the costs and expenses of the winding up;

 

(b) to
the payment, or provision for payment, of creditors of the Company (including Members, other than in respect of Distributions)
in the order of priority provided by Law;

 

(c) to
the establishment of any reserves deemed necessary or appropriate by the liquidator to provide for contingent or unforeseen liabilities
of the Company; and

 

(d) the
balance shall be distributed to the Members in accordance with Section 5.4.

 

All
Distributions to the Members pursuant to Section 7.3(d) above shall be in the form of cash, unless the Board of Directors
otherwise determines.

 

Section
7.4Certificate of Cancellation. On completion of the distribution of Company assets as provided herein, the liquidator
(or such other Person or Persons as the Act may require or permit) shall file a Certificate of Cancellation with the Secretary
of State of the State of Delaware, cancel any other filings as necessary and take such other actions as may be necessary to terminate
the existence of the Company.

 

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ARTICLE
VIII

LIABILITY AND INDEMNIFICATION

 

Section
8.1No Liability for Company Debts. The debts, obligations and liabilities of the Company, whether arising in contract,
tort or otherwise, shall be solely the debts, obligations and liabilities of the Company, and no Covered Person shall be liable
for any such debts, obligations or liabilities. Additionally, except as otherwise expressly required by Law, no Member, in its
capacity as a Member, shall have any liability in excess of (a) the amount of its Capital Contributions, (b) its share of any
assets and undistributed profits of the Company, (c) its obligation to make other payments expressly provided for in this Agreement
and (d) the amount of any Distributions wrongfully distributed to it.

 

Section
8.2Indemnification. To the fullest extent permitted by Law, the Company shall indemnify each Covered Person from and
against any and all Covered Losses arising from any and all claims, demands, causes of action, actions, suits or proceedings,
whether civil, criminal, administrative or investigative, in which such Covered Person may be involved, or is threatened to be
involved, as a party or otherwise, by reason of its status as such, regardless of whether any of the foregoing arise from the
sole, partial or concurrent negligence of such Covered Person; provided, however, that the Company shall not indemnify
a Covered Person for Covered Losses arising directly from fraud, intentional or willful misconduct, gross negligence or a knowing
violation of the Law or a breach of the terms of any Transaction Agreement that is materially related to the claim giving rise
to the Covered Losses, for which the Covered Person is seeking indemnification. The termination of any action, suit or proceeding
by judgment, order, settlement or upon a plea of nolo contendere, or its equivalent shall not, of itself, create a presumption
that the Covered Person failed to meet the standards for indemnification set forth in the immediately preceding sentence. Any
indemnification hereunder shall be satisfied solely out of the assets of the Company (subject to Section 5.6(b)). In no
event may a Covered Person subject the Members to personal liability by reason of these indemnification provisions. The indemnification
provided by this Section 8.2 shall be in addition to, but not duplicative of, any other rights to which a Covered
Person or any other Person may be entitled under any agreement to which the Company is a party, pursuant to any vote of the Members,
as a matter of Law or otherwise, and shall continue as to a Covered Person who has ceased to serve in such capacity and shall
inure to the benefit of the heirs, successors, assigns and administrators of the Covered Person.

 

Section
8.3Advance Payment and Appearance as a Witness. To the fullest extent permitted by applicable Law, expenses (including
legal fees) incurred by a Covered Person in defending any claim, demand, cause of action, action, suit or proceeding shall, from
time to time, be advanced by the Company prior to the final disposition of such claim, demand, cause of action, action, suit or
proceeding upon receipt by the Company of an undertaking by or on behalf of the Covered Person to repay such amount if it shall
be determined that the Covered Person is not entitled to be indemnified as authorized in Section 8.2. The Company
shall pay or reimburse expenses incurred by a Person who is or was a Member, Manager, officer or employee of the Company in connection
with their appearance as a witness or other participant in a proceeding at a time when they are not a named defendant or respondent
in the proceeding.

 

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Section
8.4Insurance. The Company shall procure and maintain insurance, to the extent and in such amounts as approved by the
Board of Directors, in its sole discretion, on behalf of Covered Persons and such other Persons as the Board of Directors shall
determine, against any liability that may be asserted against or expenses that may be incurred by any such Person in connection
with the activities of the Company or such indemnities, regardless of whether the Company would have the power to indemnify such
Person against such liability under the provisions of this Agreement. The Company may enter into indemnity contracts with Covered
Persons and adopt written procedures pursuant to which arrangements are made for the advancement of expenses and the funding of
obligations under Section 8.3 and containing such other procedures regarding indemnification as are appropriate. The
insurance as in effect for the Company as of the Effective Date is set forth on Exhibit C, and any reduction in the amount
of insurance coverage from as set forth on Exhibit C shall require approval of a Supermajority of the Voting Power.

 

Section
8.5Non-exclusivity of Rights; Company as Indemnitor of First Resort. The indemnification and advancement of expenses
provided by, or granted pursuant to, this Article VIII shall not be deemed exclusive of, and shall not limit, any
other rights or remedies to which any Covered Person may be entitled or which may otherwise be available to any Covered Person
at Law or in equity. The Company hereby acknowledges that the Covered Persons may have certain rights to indemnification, advancement
of expenses and/or insurance provided by the Members and certain of their Affiliates (collectively, the “Member Indemnitors”).
The Company hereby agrees that (a) the Company is the indemnitor of first resort for matters covered by this Article VIII
(i.e., its obligations to the Covered Persons under Article VIII are primary and any obligation of the Member Indemnitors
to advance expenses or to provide indemnification for the same expenses or liabilities incurred by the Covered Persons are secondary),
(b) the Company shall be required to advance the full amount of expenses incurred by the Covered Persons and shall be liable for
all expenses, liabilities, judgments, penalties, fines and amounts paid in settlement to the extent legally permitted and as required
by the terms of Article VIII (or any other agreement between the Company and the Covered Persons), without regard to any
rights the Covered Persons may have against the Member Indemnitors, and (c) the Company irrevocably waives, relinquishes and releases
the Member Indemnitors from any and all claims against the Member Indemnitors for contribution, subrogation or any other recovery
of any kind in respect thereof. The Company further agrees that no advancement or payment by the Member Indemnitors on behalf
of a Covered Person with respect to any claim for which the Covered Person has sought indemnification from the Company pursuant
to Article VIII shall affect the foregoing and the Member Indemnitors shall have a right of contribution and/or be subrogated
to the extent of such advancement or payment to all of the rights of recovery of the Covered Persons against the Company. The
Company agrees that the Member Indemnitors who are not Members are express third party beneficiaries of the terms of this Section
8.5.

 

Section
8.6Savings Clause. If all or any part of this Article VIII shall be invalidated for any reason by any court
of competent jurisdiction, the Company shall nevertheless indemnify and hold harmless each Covered Person, and may indemnify and
hold harmless any other Person, for costs, charges, expenses (including attorneys’ fees), judgments, fines and amounts paid
in settlement, in connection with any claim, to the fullest extent permitted by any portion of this Article VIII not
invalidated and to the fullest extent otherwise permitted by applicable Law.

 

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ARTICLE
IX

CERTAIN TAX MATTERS

 

Section
9.1Partnership Classification. The Company will be treated as a partnership for U.S. federal (and applicable state
and local) income tax purposes and, except with the prior written consent of all Members shall not (i) convert or reorganize into
any other legal form or take any action that would result in the Company no longer being taxed as a partnership for U.S. federal
income tax purposes, (ii) elect under Treasury Regulations Section 301.7701-3 or otherwise to be taxed other than as a partnership,
or (iii) elect to exclude the Company from the application of the provisions of subchapter K of chapter 1 of subtitle A of the
Code or any similar provisions of applicable state law and no Member shall take any action inconsistent with such limitations.

 

Section
9.2Tax Returns and Tax Information. The Manager shall cause all required federal, state, local and foreign tax returns
of the Company to be prepared and timely filed. Each Member shall furnish to the Company all pertinent information in its possession
relating to the Company, its assets and operations necessary to enable the Company’s tax returns to be prepared and timely
filed.

 

Section
9.3Tax Elections. Except as provided otherwise in this Agreement, the Board of Directors shall have the authority to
make all tax elections required or permitted to be made by the Company; provided, however, that no election shall be made
to classify the Company as an association taxable as a corporation without the consent of all the Members. The Board of Directors
shall, at the request of any Member, cause the Company to make an election under Section 754 of the Code.

 

Section
9.4Election by Members. In the event any Member makes any tax election that requires the Company to furnish information
to such Member to enable such Member to compute its own tax liability, or requires the Company to file any tax return or report
with any tax authority, in either case that would not be required in the absence of such election made by such Member, the Manager
may, as a condition to furnishing such information or filing such return or report, require such Member to pay to the Company
any incremental expenses incurred in connection therewith.

 

Section
9.5Tax Matters Representative.

 

(a) Designation
of Tax Matters Representative. The Manager is hereby designated as the “tax matters partner”, “partnership
representative” or any similar role, as applicable within the meaning of the Code and applicable state, local or foreign
tax law, and shall have all of the rights, authority and power and shall be subject to all of the obligations associated therewith
to the extent provided in the Code, the Treasury Regulations and applicable state, local or foreign tax law (the “Tax
Matters Representative”). The Tax Matters Representative shall carry out the duties and responsibilities of such
status in good faith and to the extent that any such duties or responsibilities are not routine, ministerial functions, the Tax
Matters Representative shall obtain the consent of the Board of Directors before taking (or refraining from taking) any actions
or making any decisions in respect of such duties or responsibilities.

 

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(b) Expenses
of the Tax Matters Representative. Expenses incurred by the Tax Matters Representative or in a similar capacity as set forth
in this Section 9.5, shall be borne by the Company. Such expenses shall include, without limitation fees of attorneys and
other tax professionals, accountants, appraisers and experts, filing fees and reasonable out-of-pocket costs.

 

Section
9.6Withholding. The Company may withhold and shall timely remit to any applicable tax authority all amounts required
by any Law to be withheld by the Company from or with respect to Distributions to a Member or from or with respect to a Member’s
distributive share of Company taxable income or loss (or item thereof). Each Member shall timely provide to the Company upon request
all information, forms and certifications reasonably necessary or appropriate to enable the Company to comply with any such withholding
obligation, or to establish the Company’s legal entitlement to an exemption from, or reduction of, withholding or other
taxes or similar payments, including U.S. federal withholding tax under Sections 1471 and 1472 of the Code or the Treasury Regulations
thereunder. Further, each Member covenants to the Company that the information, forms and certifications furnished by it shall
be true and accurate in all respects. Each Member shall, upon demand by the Company, indemnify the Company for the indemnifying
Member’s share of any such withholding and all related costs and expenses of the Company. Any amounts so withheld in respect
of a Member shall be treated as a distribution to such Member for all purposes of this Agreement.

 

ARTICLE
X

BOOKS AND RECORDS; REPORTS

 

Section
10.1Maintenance of and Access to Books and Records. At all times until the dissolution and termination of the Company,
the Company shall maintain separate books of account that show a true and accurate record of all costs and expenses incurred,
all charges made, all credits made and received and all income derived in connection with the conduct of the business of the Company
in accordance with this Agreement. In addition, the Company shall keep and maintain at its principal office all Records and information
required to be kept and maintained in accordance with the Act and shall make such information available to any Member or representative
requesting the same within five (5) days after receipt of a written request by the Company. The Board of Directors shall permit
each of the Members, from time to time and at reasonable intervals, (i) to examine, audit and make copies of the Records of the
Company as well as all such other data and information in the possession or control of the Board of Directors concerning the Company,
Company properties and the ownership and operation thereof, which Records shall be available to the Members or their representatives
at all reasonable times at the principal office of the Company, or at such other office where such information is maintained,
upon the written request of any Member, and (ii) to discuss the business, financial condition and results of operations of the
Company with officers, accountants, and other representatives of the Company.

 

Section
10.2Bank Accounts. The Board of Directors shall cause to be established and maintained for and in the name of the Company
one or more bank or investment accounts or arrangements. All Company funds shall be deposited in such account(s) and shall not
be commingled with funds of any other Person. All deposits to and disbursements from such account(s) shall be made only for proper
Company purposes and shall be signed by one or more authorized signatories designated by the Board of Directors.

 

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Section
10.3Reports. The Company shall furnish the following to the Members:

 

(a) Within
45 days after the end of each calendar month: (i) a written report by the Company’s management describing the results of
operations of the Company, including any applicable qualitative analysis comparing the Company’s performance with prior
periods, for such calendar month; and (ii) a report of the Manager with respect to the operational status of the Company and each
of its Subsidiaries for such monthly period, including progress on capital projects included in the Budget for such calendar month,
and a Budget to actual variance analysis;

 

(b) Within
60 days after the end of each Fiscal Quarter: (i) an unaudited consolidated balance sheet as of the end of such Fiscal Quarter
and unaudited related statement of operations and statement of cash flows for such Fiscal Quarter including any footnotes thereto
(if any) prepared in accordance with GAAP, consistently applied; (ii) a written report by the Company’s management describing
the results of operations of the Company, including any applicable qualitative analysis comparing the Company’s performance
with prior periods, for such Fiscal Quarter; and (iii) a report of the Manager with respect to the operational status of the Company
and each of its Subsidiaries for such quarterly period, including progress on capital projects included in the Budget for such
calendar quarter, and a Budget to actual variance analysis;

 

(c) (i) Within
60 days after the end of each Fiscal Year, an estimated Schedule K-1, and (ii) within 90 days after the end of each Fiscal Year,
a final Schedule K-1;

 

(d) Within
90 days after the end of each Fiscal Year (beginning with the 2017 Fiscal Year) (i) an audited consolidated balance sheet as of
the end of such Fiscal Year and the related consolidated statement of operations, statement of members’ equity and statement
of cash flows for such Fiscal Year prepared in accordance with GAAP; (ii) a written report by the Company’s management describing
the results of operations of the Company, including any applicable qualitative analysis comparing the Company’s performance
with prior periods, for such Fiscal Year; and (iii) a report of the Manager with respect to the operational status of the Company
and each of its subsidiaries for such yearly period and a Budget to actual variance analysis;

 

(e) Upon
the written request of a Member and at such Member’s expense and provided it can be furnished upon exercise of reasonable
commercial efforts, such additional information necessary for the preparation of any state, local and foreign income tax return
that must be filed by such Member;

 

(f) Promptly
after the occurrence of any event that has, or could reasonably be expected to have, individually or in the aggregate, a material
adverse effect on the business, results of operations, condition, assets, liabilities, employees, prospects, financial condition
or capitalization of the Company, notice of such event together with a summary describing the nature of the event and its impact
on the Company;

 

(g) Within
90 days after the end of each Fiscal Year, the Company shall furnish to the Members an engineering report prepared by the independent
petroleum engineers of the Company, which report will set forth estimates of the proved, probable and possible oil and gas reserves
of the Company as of the preceding January 1 of such Fiscal Year and net revenues expected to be derived therefrom;

 

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(h) Within
five (5) days after delivery pursuant to a Credit Facility, copies of all reports, notices, certifications and other information
delivered to the agent, lenders or other counterparties to any Credit Facility; and

 

(i) With
reasonable promptness, the Board of Directors shall cause the Company to furnish to each of the Members such other information
and financial data concerning the Company and its business, operations, assets, liabilities, financial condition and results of
operations as any such Member may reasonably request.

 

Section
10.4Fiscal Year. The fiscal year of the Company shall be the calendar year (“Fiscal Year”).
The Company shall have the same Fiscal Year for U.S. federal income tax purposes and for accounting purposes.

 

ARTICLE
XI

DEFINITIONS

 

Section
11.1Definitions. Except as otherwise required by the context, the following terms shall have the following meanings:

 

“A/C
Sharing Percentage” means, (i) until an aggregate of $100,000,000 has been distributed by the Company pursuant to
Section 5.4 and Section 5.5 (x) 99% to the holders of Class A Units, as a class, and (y) 1% to the holder of Class
C Units and (ii) thereafter, (x) as to the holders of Class A Units, as a class, a fraction (expressed as a percentage), the numerator
of which is the total number of Class A Units outstanding and the denominator of which is the total number of Class A Units and
Class C Units outstanding and (y) as to the holder of Class C Units, a fraction (expressed as a percentage), the numerator of
which is the total number of Class C Units outstanding and the denominator of which is the total number of Class A Units and Class
C Units outstanding.

 

“Act”
means the Delaware Limited Liability Company Act, as amended from time to time, or any successor statute thereto.

 

“Adjusted
Capital Account” means, as of the end of each Fiscal Year, the balance in a Member’s Capital Account (i) increased
by (A) any additional Capital Contributions the Member makes or is obligated to make, or is treated as obligated to make pursuant
to the provisions of Treasury Regulations Section 1.704-1(b)(2)(ii)(c), (B) the amount of the Member’s share of any Company
Minimum Gain, and (C) the amount of the Member’s share of any Member Nonrecourse Debt Minimum Gain, and (ii) decreased by
any adjustments, allocations or distributions described in Treasury Regulations Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6).
This definition shall be interpreted and applied consistently with the provisions of Treasury Regulations Section 1.704-1(b)(2)(ii)(d).

 

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

 

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

 

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

 

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

 

“Administrative
Expenses” means Company Expenses as described in clause (i) and clause (ii) of the definition of Company Expenses.

 

“Affiliate”
means, with respect to any Person, any other Person that directly, or indirectly through one or more intermediaries, Controls,
is Controlled by, or is under common Control with, such Person.

 

“Available
Cash” means the sum of (i) gross cash proceeds from the operations of the Company or its Subsidiaries, as applicable
(including sales and dispositions of property whether or not in the ordinary course of business), (ii) any net cash proceeds from
any issuance of equity or refinancing of debt or new debt issuance or incurrence, and (iii) other cash on hand less amounts used
to pay or establish reserves for all expenses of the Company or its Subsidiaries, as applicable (including general and administrative
expenses, contract and marketing costs, debt payments, taxes, capital expenditures, replacements, future acquisitions and investments
and contingencies), all as reasonably determined on a periodic basis by the Board.

 

“Affiliate
Contract” means any contract between the Company, on the one hand, and any Member or any of its Affiliates, on the
other hand (excluding this Agreement).

 

“AMI”
means any lands depicted in Exhibit D attached hereto, provided that, if the Board of Directors approves the Company
conducting business outside of these lands, the AMI shall be automatically revised to include the lands underlying the area or
areas reasonably encompassed by the Board’s election.

 

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“Book
Basis” means, with respect to each Company asset, the adjusted basis of the asset for U.S. federal income tax purposes,
except that (i) the initial Book Basis of an asset other than money contributed by a Member to the Company shall be the fair market
value of the asset on the date of contribution, as agreed by the contributor and the Board of Directors, (ii) upon the occurrence
of a Revaluation Event, the Book Basis of all Company assets (including intangibles) shall be adjusted to their respective fair
market values on such date, as determined by the Board of Directors, (iii) the Book Basis of any Company asset distributed to
any Member will be adjusted to equal the fair market value of such asset on the date of distribution as agreed by the Board of
Directors and the recipient, (iv) the Book Basis of Company assets shall be increased (or decreased) to reflect any adjustments
to the adjusted basis of such assets pursuant to Code Section 734(b) or Code Section 743(b), but only to the extent that such
adjustments are taken into account in determining Capital Accounts pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(m)
and Section 5.2(f); provided, however, that Book Basis shall be adjusted pursuant to clause (ii) above only
if the Board of Directors determines such adjustments are necessary or appropriate, and (v) if the Book Basis of any Company asset
has been determined pursuant to the preceding subsections (i), (ii) or (iv), the Book Basis of the asset shall thereafter be adjusted
by Simulated Depletion Deductions or Book Depreciation in lieu of any depletion, depreciation, amortization or other cost recovery
deductions otherwise allowable for U.S. federal income tax purposes.

 

“Book
Depreciation” means, with respect to any depreciable or amortizable Company asset, an amount that bears the same
ratio to the Book Basis of such asset as the amount of depreciation, amortization or other cost recovery deductions with respect
to such asset, computed for U.S. federal income tax purposes, bears to the adjusted tax basis of such asset; provided, however,
that, if the adjusted tax basis of the asset is zero, Book Depreciation shall be determined under any reasonable method selected
by the Board of Directors, and; provided, further, if such asset is subject to adjustments under the remedial allocation method
of Treasury Regulations Section 1.704-3(d), Book Depreciation shall be determined under Treasury Regulations Section 1.704-3(d)(2).

 

“Budget”
means the annual capital and operating budget of the Company and each of its Subsidiaries as approved by the Board.

 

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

 

“Capital
Account” means the account established for each Member pursuant to Section 4.3.

 

“Capital
Contribution” means the amount of money and the initial Book Basis of any asset other than money (net of liabilities
secured thereby that the Company is treated as having assumed or taken subject to pursuant to Code Section 752) contributed by
a Member or a Member’s predecessors in interest to the capital of the Company, including Optional Contributions.

 

“Capital
Interest Percentage” means, at any time of determination and as to any Member, the percentage of the total distributions
that would be made to such Member if the assets of the Company were sold for their respective Book Basis, all liabilities of the
Company were paid in accordance with their terms (limited in the case of non-recourse liabilities to the Book Basis of the property
securing such liabilities), all items of Company income, gain, loss and deduction were allocated to the Members in accordance
with Section 5.1 and Section 5.2, and the resulting net proceeds were distributed to the Members in accordance with
Section 7.3; provided, however, that the Board may determine that the Members’ Capital Interest Percentages
should be determined based upon a hypothetical sale of the assets of the Company for their respective Fair Market Value (instead
of Book Basis) in order to ensure that such percentages correspond to the Members’ “proportionate interests in partnership
capital” as defined in Treasury Regulations Section 1.613A-3(e)(2)(ii). The foregoing definition of Capital Interest Percentage
is intended to result in a percentage for each Member that corresponds with the Member’s “proportionate interest in
partnership capital” as defined in Treasury Regulations Section 1.613A-3(e)(2)(ii), and Capital Interest Percentage shall
be interpreted consistently therewith.

 

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“Class
A Member” means a Member holding Class A Units, in its capacity as a holder of Class A Units.

 

“Class
A Sharing Percentage”, with respect to each holder of Class A Units, shall equal the aggregate Class A Units held
by such holder of Class A Units through the date of determination, divided by the aggregate Class A Units held by all holders
of Class A Units of the Company through the date of determination.

 

“Class
A Unit Price” means:

 

(i) One
Thousand Dollars ($1,000.00) per Class A Unit for each Class A Unit until the Commitment Release Point; and

 

(ii) thereafter,
an amount equal to the Fair Market Value of a Class A Unit immediately after giving effect to the Capital Contribution with respect
to which such Class A Unit is being issued.

 

“Class
B Member” means a Member holding Class B Units, in its capacity as a holder of Class B Units.

 

“Class
C Member” means a Member holding Class C Units, in its capacity as a holder of Class C Units.

 

“CNX
Acquisition” means the transactions contemplated by the CNX PSA.

 

“CNX
PSA” means that certain Purchase and Sale Agreement, dated February 17, 2017, by and between CNX Gas Company LLC
(as seller) and the Company (as buyer).

 

“Code”
means the Internal Revenue Code of 1986, as amended (including any corresponding provisions of succeeding law).

 

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“Company
Expenses” means all costs, expenses, liabilities and obligations relating to the Company’s activities, investments
and business (to the extent not borne or reimbursed by a Subsidiary of the Company), including (i) all costs, expenses, liabilities
and obligations attributable to the formation and organization of the Company and acquiring, holding and disposing of the Company’s
investments, (ii) legal, auditing, insurance (including directors and officers and errors and omissions liability insurance),
and accounting expenses, including expenses incurred in connection with the maintenance of the Company’s books of account
and other records and the preparation and distribution of audited or unaudited financial statements of the Company, the cost of
the preparation and distribution of tax returns and Schedule K-1s (included fees and expenses of independent auditors, accountants
and counsel) and other routine administrative expenses of the Company or its Subsidiaries, (iii) all expenses incurred in connection
with any indebtedness of the Company or other credit arrangement (including any line of credit, loan commitment or letter of credit)
for the Company or related to the Company’s investments, (iv) litigation and indemnification costs and expenses, judgments
and settlements, including indemnification obligations under Article III, (vi) consulting, financing, appraisal, filing
and other fees and expenses (including expenses associated with the preparation or distribution of the Company’s financial
statements, and (vii) any taxes, fees and other governmental charges levied against the Company.

 

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

 

“Company
Sale Value” means the amount that the Company would receive in an all cash sale of all of the Company’s assets
and businesses as a going concern (free and clear of all Liens and after use of proceeds for the payment of indebtedness for borrowed
money and other outstanding obligations) in an arm’s length transaction with an unaffiliated third-party consummated immediately
preceding the event giving rise to the determination of the Company Sale Value (assuming that all of the proceeds of such sale
were paid directly to the Company).

 

“Confidential
Information” means any proprietary or confidential information of or relating to the Company or, with respect to
each Member, the other Members, including any business information, intellectual property, trade secrets or other information
relating to the respective businesses, operations, assets or liabilities of the Company or the Members; provided, however,
that any information that is generally available to the public (other than through a breach by the party disclosing the same of
its obligations under this Agreement) shall not be deemed “Confidential Information.”

 

“Conflict
Activity” means (a) the negotiation and execution by the Company of any Affiliate Contract or any amendment to or
termination of any Affiliate Contract, (b) the waiver of any of the Company’s rights, or the granting of any consent or
approval by the Company, under this Agreement (as to any Member) or any Affiliate Contract, (c) the enforcement of any rights
of the Company under this Agreement (as to any Member) or with respect to any Affiliate Contract, including enforcing any rights
of the Company under this Agreement or any Affiliate Contract in connection with any breach or default (or alleged breach or default)
thereunder by the Conflicted Member (or its Affiliates) or for making or enforcing any claims by the Company or for indemnification
under this Agreement or any Affiliate Contract or in connection with any dispute with a Conflicted Member (or any of its Affiliates)
under any Affiliate Contract, (d) the enforcement of any rights of the Company or any Member under this Agreement or any Affiliate
Contract in connection with any bankruptcy, reorganization, liquidation or dissolution of the Conflicted Member or (e) the exercise
of discretionary rights by the Company under this Agreement (as to any Member) or any Affiliate Contract.

 

“Conflicted
Member” means a Member that is (or has an Affiliate that is): (i) the counterparty to the Company under an Affiliate
Contract or (ii) the adversary or counterparty opposite the Company on any other transaction or dispute giving rise to a Conflict
Activity.

 

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“Contract
Operating Agreement” means that certain Contract Operating Agreement, dated as of February 23, 2017, by and between
Nytis LLC and the Company.

 

“Control,”
“Controlling” and “Controlled by” mean the ability (directly or indirectly
through one or more intermediaries) to direct or cause the direction of the management or affairs of a Person, whether through
the ownership of voting interests, by contract or otherwise.

 

“Covered
Losses” means any and all losses, assessments, fines, penalties, administrative orders, obligations, judgments,
amounts paid in settlement, costs, expenses, liabilities and damages (whether actual, consequential or punitive), including interest,
penalties, reasonable court costs and attorneys’ fees, disbursements and costs of investigations, deficiencies, levies,
duties and imposts.

 

“Covered
Person” means (i) any Member, any Affiliate of a Member or any shareholder, partner, member, manager, director,
officer, employee, representative or agent of a Member or any of its Affiliates, (ii) any officer of the Company, (iii) the Manager,
and (iv) any member of the Board of Directors, in each case to the extent any such Person is acting in such capacity in connection
with the business of the Company.

 

“Credit
Agreement” means that certain Credit Agreement, dated as of February 23, 2017, by and among Carbon Tennessee Company,
LLC (as borrower), LegacyTexas Bank (as administrative agent, L/C issuer, sole lead arranger and sole book runner), and the lender
parties thereto, as may be amended, restated, modified or supplemented in accordance with its terms.

 

“Credit
Facility” means the Credit Agreement and any other agreement for indebtedness for borrowed money or commodity or
interests rate swap, collar or other hedging transactions to which the Company or any Subsidiary of the Company is a party.

 

“Current
Market Value” when used with reference to any capital stock or other security on any date means: (i) if the capital
stock or security is then listed or admitted to trading on a national securities exchange, is quoted on the OTC Bulletin Board
or is quoted on any other interdealer quotation system or regularly quoted by member firms of the Financial Industry Regulatory
Authority, the volume weighted average of the trading prices of such security on the date of determination (if a trading day)
and on each of the five (5) trading days immediately preceding, and on each of the five (5) trading days immediately following,
the date of the determination (any such capital stock or security so listed, traded or quoted being referred to as “Publicly
Traded”) or (ii) if the capital stock or security is not Publicly Traded, the Fair Market Value of such capital
stock or security.

 

“Drilling
and Completion Activities” shall have the meaning given such term in the Participation Agreement.

 

“Electronic
Transmission” means a form of communication that (i) does not directly involve the physical transmission of paper,
(ii) creates a record that may be retained, retrieved, and reviewed by the recipient, and (iii) may be directly reproduced in
paper form by the recipient through an automated process.

 

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“Emergency
Expenditures” means expenditures which are reasonably necessary to be expended in order to mitigate or remedy the
endangerment of property, the health or safety of any Person or the environment.

 

“Excluded
Affiliate Transfer” means (i) any Transfer of Units by a Member who is an individual to a member of such Member’s
family or to a trust or similar entity for estate planning purposes, but only if the Member retains the right to vote such Interest
following such Transfer; (ii) any Transfer occurring by operation of law upon the death or mental incapacity of a Member who is
an individual; (iii) any Transfer of Units by a Member which is a trust to the principal beneficiary of that trust; or (iv) any
Transfer of Units by a Member which is a partnership, limited partnership, limited liability company, corporation or other entity
organized, formed or incorporated to an Affiliate; provided that, in the case of any Transfer described in clauses (i)-(iv), such
transferee agrees to be bound by the terms of this Agreement and evidences same by executing a copy of this Agreement prior to
receiving the assignment of such Units.

 

“Existing
Assets” means Nytis LLC’s interest in the Tennessee Mining Tract and any other oil and gas assets in which
Carbon or any of its Affiliates have an interest as of February 23, 2017 that are not included in the Participation Assets.

 

“Fair
Market Value” means the fair market value as determined by the Board pursuant to Section 2.10. In determining
the Fair Market Value of any non-cash property, all factors which the Board determines might reasonably affect such value shall
be taken into account; provided, however, that (i) the Fair Market Value of any non-cash property that consists of Publicly
Traded securities or similar instruments shall be the Current Market Value thereof, determined by reference to a record date which
shall be fixed by the Board as of a date not less than five (5) trading days before and no more than ten (10) trading days before
the proposed action requiring a determination of Fair Market Value of any such non cash property and (ii) in no event shall any
non-cash property be valued at less than the price at which the Company can require a third Person to buy the non-cash property,
taking into account the creditworthiness of the Person with such purchase obligation, the availability of any collateral for the
obligation, and other factors that the Board deems appropriate. The Fair Market Value shall be determined without reduction based
upon any lack of control, minority ownership, marketability or other similar discounts.

 

“Fiscal
Quarter” means any three-month period commencing on January 1, April 1, July 1 and October 1
and ending on the last date before the next such date.

 

“GAAP”
means United States generally accepted accounting principles.

 

“Governmental
Authority” means any nation or government, any state, city, municipality or political subdivision thereof, any federal
or state court and any other agency, body, authority or entity exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.

 

“Indebtedness”
means (without duplication), with respect to any Person, any indebtedness of such Person in respect of borrowed money or evidenced
by bonds, notes, debentures or similar instruments or letters of credit (or reimbursement agreement in respect thereof) or representing
capital lease obligations or the balance deferred and unpaid of the purchase price of any property (except any such balance that
constitutes an accrued expense or trade payable arising in the ordinary course of business), if and to the extent any of the foregoing
indebtedness would appear as a liability upon a balance sheet of such Person prepared in accordance with GAAP, as well as all
indebtedness of others secured by a Lien on any asset of such Person (whether or not such indebtedness is assumed by such Person)
and, to the extent not otherwise included, the guarantee by such Person of any indebtedness of any other Person.

 

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“Initial
Class A Funding Percentage” means (i) as to Carbon, 26.5%, (ii) as to Yorktown, 0.0% and (iii) as to Old Ironsides,
73.5%.

 

“Internal
Rate of Return” means, with respect to each Class A Unit as of any distribution date, the annual percentage rate,
which when utilized to calculate the present value of all distributions (i.e., cash inflows) received by the holder of such Class
A Unit from the Company with respect to such Class A Unit shall cause such present value to equal the present value of all Capital
Contributions (i.e., cash outflows) made with respect to such Class A Unit. In order for a holder of a Class A Unit to receive
a positive Internal Rate of Return, a holder must receive an aggregate amount equal to (a) its aggregate Capital Contributions
made to the Company during the term of this Agreement on account of or in exchange for such Class A Unit, plus (b) a return thereon.
The Internal Rate of Return with respect to a Class A Unit, at any distribution date, shall be computed with annual compounding.
For purposes of computing such Internal Rate of Return, (i) each Capital Contribution made on account of or in exchange for such
Class A Unit shall be treated as a Capital Contribution made on the applicable date specified in a Capital Call Notice and (ii)
each distribution or payment of non-cash property received with respect to such Class A Unit at such distribution date shall be
treated as a distribution on such distribution date; provided, however, that for purposes of calculating the Internal Rate
of Return with respect to a Class A Unit, the holder of such Class A Unit shall be deemed to have received cash in an amount equal
to the Fair Market Value of all non-cash property distributed (or deemed distributed) with respect to such Class A Unit by the
Company.

 

“Internal
Restructure” means any re-formation, Conversion, transfer of assets, transfer of membership interests or other securities,
merger, incorporation, liquidation or other transaction of, or relating to, or affecting the Company, completed in compliance
with Section 6.9.

 

“Interest”
means, with respect to any Member, the entire interest of such Member in the Company, including (i) Units, (ii) the right of such
Member to share in the profits of the Company, (iii) the right of such Member to Distributions and (iv) the right of such Member,
if any, to participate in the management of the affairs of the Company.

 

“Investment
Advisers Act” means the Investment Advisers Act of 1940, as amended.

 

“Investment
Company Act” means the Investment Company Act of 1940, as amended.

 

“IPT
Eligible Member” means for purposes of Section 6.4(b)(i) and (ii), (A) if Old Ironsides is the Subject
Company, Carbon and its Permitted Transferees holding Class A Units, or (B) if Yorktown or Carbon is the Subject Company, Old
Ironsides and its Permitted Transferees holding Class A Units.

 

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“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 having
valid jurisdiction.

 

“Lien”
means any mortgage, lien (statutory or other), other security agreement, arrangement or interest, hypothecation, pledge or other
deposit arrangement, assignment, charge, levy, executory seizure, attachment, garnishment, encumbrance (including any easement,
exception, reservation or limitation, right of way, and the like), conditional sale, title retention, voting agreement or other
similar agreement, arrangement, device or restriction, preemptive or similar right, the filing of any financing statement under
the Uniform Commercial Code or comparable law of any jurisdiction, or restriction on sale, transfer, assignment, disposition or
other alienation, provided, however, that the term “Lien” shall not include any of the foregoing to the extent
created by this Agreement.

 

“Liquidity
Event” means any event wherein cash or cash equivalent proceeds to the Members on account of their respective Units
are generated outside the ordinary operation of the Company in conjunction with (i) a sale, in one or a series of transactions,
of all or substantially all of the assets of the Company, (ii) a sale by the Members of all of the equity of the Company (through
a sale, merger or similar transaction), or (iii) a Public Offering.

 

“Majority
Vote” means the affirmative vote of Members whose aggregate Class A Sharing Percentages exceed 50%; provided as
long as Old Ironsides owns any Class A Units the affirmative vote of Old Ironsides shall be required to constitute a Majority
Vote.

 

“Management
Services Agreement” means that certain Management Services Agreement, dated as of February 23, 2017, by and between
the Company and Carbon.

 

“Manager”
shall be the Person from time to time designated by the Board as “Manager” for purposes of this Agreement; Carbon
shall be the “Manager” unless otherwise determined by the Board pursuant to Section 2.4(a)(xvii).

 

“Marketable
Securities” means Securities (a) that are traded on an established U.S. or non-U.S. securities exchange, (b) that
are reported through an established U.S. or non-U.S. over-the-counter trading system or (c) that the Board reasonably believes
are eligible for immediate sale by any Member to which such Securities are distributed (assuming that such Member is not an Affiliate
of the issuer of such Securities), in each case that are not subject to any material restrictions on transfer (generally applicable
to the distributees thereof) under the Securities Act or other applicable securities laws or as a result of any applicable contractual
provisions.

 

“Member
Nonrecourse Deductions” shall have the same meaning as the term “partner nonrecourse deductions” set
forth in Treasury Regulations Section 1.704 2(i)(2).

 

“Member
Nonrecourse Debt Minimum Gain” shall have the same meaning as the term “partner nonrecourse debt minimum gain”
set forth in Treasury Regulations Section 1.704-2(i)(2).

 

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“Members”
means any Person admitted as a member of the Company as of the Effective Date or at any time after the Effective Date in accordance
with this Agreement (but such term does not include any Person who has ceased to be a member of the Company).

 

“Net
Income” and “Net Loss” means, the taxable income or loss of the Company, as the case may
be, as determined in accordance with Code Section 703(a) for U.S. federal income tax purposes as of the close of each of the Fiscal
Years of the Company, computed with the following adjustments:

 

(a) Any
income of the Company that is exempt from U.S. federal income tax and not otherwise taken into account in computing Net Income
or Net Losses pursuant to this definition of Net Income and Net Losses will increase the amount of such income and/or decrease
the amount of such loss;

 

(b) Expenditures
described in Section 705(a)(2)(B) of the Code or those treated as a Code Section 705(a)(2)(B) expenditure pursuant to Treasury
Regulations Section 1.704-1(b)(2)(iv)(i), and not otherwise taken into account in computing Net Income or Net Loss pursuant to
this definition will be treated as deductible expenses;

 

(c) In
lieu of the depreciation, amortization and other cost recovery deductions taken into account in computing such taxable income
or loss, there shall be taken into account Book Depreciation for such Fiscal Year or other period;

 

(d) Gain
or loss from the disposition of any Company asset that has a Book Basis that differs from the asset’s adjusted tax basis,
will be computed based upon the Book Basis (rather than the adjusted tax basis) of such asset;

 

(e) Any
increase or decrease to Book Basis resulting from a Revaluation Event or from the distribution of any Company asset to a Member
shall be included in the computation of Net Income or Net Loss;

 

(f) gain
resulting from any disposition of an Oil and Gas Property shall be treated as being equal to the corresponding Simulated Gain;
and

 

(g) Any
items of income, gain, loss, or deduction allocated pursuant to any provision of Section 5.2 will be excluded from
the computation of Net Income and Net Loss for purposes of applying Section 5.1.

 

“Non-Conflicted
Member” means, in the context of a Conflict Activity, a Member that is not the Conflicted Member.

 

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

 

“Nytis
LLC” means Nytis Exploration Company LLC.

 

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“Oil
and Gas Property” means each separate oil and gas property (as defined in Section 614 of the Code and the applicable
Treasury Regulations) held by the Company or any of its Subsidiaries.

 

“OpCo”
means Carbon Tennessee Mining Company, LLC, a Delaware limited liability company, which is a direct, wholly-owned Subsidiary of
the Company.

 

“Parent”
means, with respect to any legal entity, any other legal entity that Controls such first legal entity.

 

“Participation
Agreement” means that certain Participation Agreement, dated as of February 23, 2017, by and between Nytis LLC and
OpCo.

 

“Participation
Assets” means the right, title and interests of Carbon in all of the existing undeveloped leasehold, undrilled prospects,
rights in joint operating agreements and the like, related to Carbon’s Tennessee Mining Tract properties, that are the subject
of the Participation Agreement.

 

“Permitted
Transferee” means, as to any Member, any Affiliate of such Member or any other transferee of such Member in an Excluded
Affiliate Transfer.

 

“Person”
has the meaning given to such term in the Act.

 

“Primary
JOA” means the “Operating Agreement” as such term is defined in the Participation Agreement.

 

“Prior
Agreement” means that certain Limited Liability Company Agreement of the Company, dated as of February 23, 2017,
by and among the Members.

 

“Priority
Amount” means, at the time of any distribution pursuant to Section 5.4, with respect to each Class A
Unit, the amount that would be required to be distributed to the holder of such Class A Unit at such time to cause the cumulative
amount of distributions made pursuant to Section 5.4 and Section 5.5 (to the extent treated as an advanced
distribution under Section 5.4) on account of such Class A Unit to provide an Internal Rate of Return of ten percent
(10%) on the aggregate amount of all funded Capital Contributions made to the Company on account of or in exchange for such Class
A Unit, including a return of the aggregate amount of all funded Capital Contributions made to the Company on account of or in
exchange for such Class A Unit.

 

“Project”
means such projects as may be selected by the Manager for the acquisition, ownership, management, maintenance and operation of
oil and gas leases, lease options or other interests in oil and gas properties and seismic data and other rights of entitlement
that are acquired by the Company or any of its Subsidiaries.

 

“Prudent
Industry Practices” means, at a particular time, any of the practices, methods, standards of care, skill, safety
and diligence, as the same may change from time to time, but applied in light of the facts known at the time, that are consistent
with the general standards applied or utilized under comparable circumstances by a reasonably prudent operator, in a good and
workmanlike manner, with due diligence and dispatch, in accordance with good upstream industry practice.

 

    71

     

    

 

“Public
Offering” means the sale in a firm underwritten public offering registered under the Securities Act of any class
of equity securities of the Company (or any successor thereto).

 

“Qualified
Appraiser” means an investment bank or appraisal firm with experience in valuing businesses or non–public
securities in the upstream oil and gas industry.

 

“Records”
means all books, records and other documentation, both written and electronic, customarily used to conduct an oil and gas exploration
and development business.

 

“Required
Representations” means, with respect to any Member involved in a Transfer of its Interests, representations and
warranties by such Member with respect to its ownership of such Transferred Interests free and clear of all Liens and its authority
to sell such Transferred Interests.

 

“Revaluation
Event” means, except as otherwise agreed by the Board of Directors, (i) the acquisition of an additional Interest
in the Company by any new or existing Member in exchange for more than a de minimis Capital Contribution, (ii) the Distribution
by the Company to a Member of more than a de minimis amount of money or other property as consideration for an Interest
in the Company, (iii) the liquidation of the Company within the meaning of Treasury Regulations Section 1.704-1(b)(2)(ii)(g),
(iv) the grant of an Interest as consideration for the provision of services to or for the benefit of the Company by an existing
Member acting in a Member capacity or by a new Member acting in a Member capacity in anticipation of becoming a Member and (v)
at such other times as the Board may reasonably determine to be necessary or advisable in order to comply with Treasury Regulations
Sections 1.704–1(b) and 1.704–2.

 

“Securities
Act” means the Securities Act of 1933, as amended.

 

“Simulated
Basis” means the Book Basis of any Oil and Gas Property.

 

“Simulated
Depletion Deductions” means the simulated depletion allowance computed by the Company with respect to its Oil and
Gas Properties pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(k)(2). For purposes of computing Simulated Depletion
Deductions with respect to any Oil and Gas Property, the Simulated Basis of such property shall be deemed to be the Book Basis
of such property, and in no event shall such allowance, in the aggregate, exceed such Simulated Basis. For purposes of computing
Simulated Depletion Deductions, the Company will apply on a property by property basis the simulated cost depletion method or
the simulated percentage depletion method under Treasury Regulations Section 1.704-1(b)(2)(iv)(k)(2), as reasonably determined
by the Manager.

 

“Simulated
Gain” or “Simulated Loss” means the simulated gain or simulated loss computed by the Company
with respect to its Oil and Gas Properties pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(k)(2).

 

    72

     

    

 

“Subsidiary”
means, with respect to any Person, any corporation, limited liability company, partnership or other entity (i) of which equity
securities or other ownership interests having ordinary voting power to elect a majority of the board of directors or other similar
managing body of such corporation, limited liability company, partnership or other entity or having the right to more than 50%
of the distributions to be made by such corporation, limited liability company, partnership or other entity (either generally
or upon liquidation of such corporation, limited liability company, partnership or other entity) are at the time owned by such
Person or (ii) the management of which is otherwise Controlled by such Person.

 

“Tax
Liability Deficiency” means an amount equal to the product of (a) the highest combined U.S. federal, state and local
income tax rates (including for this purpose any tax under Code Section 1411 or similar provisions of law) applicable to an individual
or corporation (whichever is higher) resident in New York, New York, multiplied by (b) the amount of the Company’s U.S.
federal taxable income (net of current year federal taxable losses) for the current taxable year (and as estimated by the Board
for any period for which a federal information return has not been filed) allocated to the Members pursuant to this Agreement
(ignoring, for this purpose, any allocations pursuant to Code Section 704(c) and the Treasury Regulations thereunder).

 

“Tennessee
Mining Tract” means the property described in Exhibits A and B to the Participation Agreement.

 

“Transfer”
means to sell, or in any other way directly or indirectly transfer, assign, distribute, convey, gift, abandon, hypothecate, encumber,
pledge, mortgage or otherwise dispose of, either voluntarily or involuntarily or by operation of law; and “Transferring”
means the act of making a Transfer; and “Transferred” means the condition of a Transfer having occurred.

 

“Treasury
Regulations” means temporary and final regulations promulgated under the Code by the United States Department of
the Treasury, as amended (including any corresponding provisions of succeeding regulations).

 

“Ultimate
Parent” means (a) subject to clause (b), (i) with respect to Old Ironsides, Old Ironsides Energy Fund II GP,
LLC, (ii) with respect to Carbon, Carbon Natural Gas Company, (iii) with respect to Yorktown, Yorktown XI Associates LLC, and
(iv) with respect to any other Member, the Person designated by the Board reasonably and in good faith as the Person that ultimately
Controls such Member upon its admission as a Member and (b) upon a Change of Control of the Ultimate Parent of a holder of Units,
the Person that ultimately Controls such holder of Units following such Change in Control.

 

“Unfunded
Amount” means, as the context requires, (a) that portion of a Capital Call that a Defaulting Member was required
to contribute but failed to timely contribute (after giving effect to the Default Cure Period) or (b) that portion of a Capital
Call that a Shortfall Member was entitled to contribute but failed to timely contribute (after giving effect to the Shortfall
Cure Period).

 

“Units”
mean the Class A Units, the Class B Units and the Class C Units.

 

    73

     

    

 

Section
11.2Other Defined Terms. Each of the terms is defined in the provision of the Agreement identified opposite such term
in the following table:

 

	Term	 	Provision
	Agreement	 	Preamble
	Approved Exit	 	Section 6.5(c)
	Baseline Budget	 	Section 2.8(b)
	Board of Directors or Board	 	Section 2.1(a)
	Board of Directors Designee	 	Section 2.2(d)
	Business Opportunity	 	Section 3.4(b)(iii)
	Buy/Sell Election Notice	 	Section 6.6(b)
	Buy/Sell Unit Price	 	Section 6.6(a)
	Capital Call Notice	 	Section 4.1(c)
	Capital Calls	 	Section 4.1(c)
	Capital Commitment	 	Section 4.1(d)
	Carbon	 	Preamble
	Carbon Designee	 	Section 2.2(c)
	Certificate of Formation	 	Section 1.1(a)
	Class A Units	 	Section 3.1(a)
	Class B Units	 	Section 3.1(a)
	Class C Units	 	Section 3.1(a)
	Class C Non-Cash Capital Contribution	 	Section 4.1(a)
	Commitment Reduction Date	 	Section 4.1(g)
	Commitment Release Point	 	Section 4.1(h)
	Company	 	Preamble
	Conversion	 	Section 6.9(c)
	Conversion Consideration	 	Section 6.9(c)
	Cure Notice	 	Section 6.4(e)
	Cure Period	 	Section 6.4(e)
	Default Cure Period	 	Section 4.6
	Default Notice	 	Section 4.6
	Defaulting Member	 	Section 4.6(a)
	Designating Party	 	Section 2.2(d)
	Development Budget	 	Section 2.8(b)
	Director	 	Section 2.1(a)
	Disposition Proceeds	 	Section 6.11(a)
	Dissolution Events	 	Section 7.1
	Drag-Along Member	 	Section 6.2(a)
	Drag-Along Notice	 	Section 6.2(b)
	Drag-Along Notice Period	 	Section 6.2(c)
	Drag-Along Sale	 	Section 6.2(a)
	Dragging Member	 	Section 6.2(a)
	Effective Date	 	Preamble
	Electing Party	 	Section 4.4
	Excess Class B Distribution Amount	 	Section 5.7
	Exercising Member	 	Section 6.4(b)
	Fiscal Year	 	Section 10.4

 

    74

     

    

 

	Term	 	Provision
	Independent Appraiser	 	Section 2.10
	Indirect Parent Transfer	 	Section 6.4(a)
	Initial Appraiser	 	Section 6.4(c)
	Initial Budget	 	Section 2.8(a)
	Initial Contributions	 	Section 4.1(b)
	Initiating Member	 	Section 6.6(a)
	IPT Exercise Notice	 	Section 6.4(b)
	IPT Notice	 	Section 6.4(a)
	IPT Transaction Value	 	Section 6.4(b)
	Key Man Event	 	Section 4.2
	Liquidity Event Notice	 	Section 6.5(a)
	Member Indemnitors	 	Section 8.5
	Member Related Party	 	Section 3.4(a)(i)
	Neutral Appraiser	 	Section 6.4(d)
	Non-Defaulting Member	 	Section 4.6
	Non-Initiating Member	 	Section 6.6(a)
	Non-Shortfall Member	 	Section 4.1(i)
	Offer	 	Section 6.6(a)
	Offeror	 	Section 6.4(a)
	OIE Fund II-A	 	Preamble
	OIE Fund II-B	 	Preamble
	Old Interests	 	Section 6.9(c)
	Old Ironsides	 	Preamble
	Old Ironsides Designee	 	Section 2.2(c)
	Optional Contribution	 	Section 4.6(c)
	Other Investments	 	Section 3.5(a)(i)
	Permitted Investment	 	Section 3.6(b)
	Permitted Variance	 	Section 2.4(a)(i)
	Preemptive Rights Member	 	Section 4.4
	Preemptive Rights Notice	 	Section 4.4
	Primary Exercising Member	 	Section 6.4(c)
	Proposed Budget	 	Section 2.8(c)
	Remaining Tag Balance	 	Section 6.11(b)(ii)
	Restricted Interest	 	Section 3.6(a)
	Second Appraiser	 	Section 6.4(d)
	Services Agreement	 	Section 2.5
	Shortfall Member	 	Section 4.1(i)
	Shortfall Cure Period	 	Section 4.1(i)
	Subject Assets	 	Section 3.5(d)
	Subject Company	 	Section 6.4(a)
	Subsequent Notice	 	Section 4.4
	Subsequent Purchase	 	Section 4.4
	Tag-Along Notice	 	Section 6.3(b)
	Tag-Along Participant	 	Section 6.3(a)
	Tag-Along Partial Sale	 	Section 6.3(d)
	Tag-Along Sale	 	Section 6.3(a)
	Tag-Along Transferring Member	 	Section 6.3(a)
	Tax Matters Representative	 	Section 9.5
	Third Party Sale	 	Section 6.6(e)(ii)
	Transaction Expenses	 	Section 12.3(a)
	Unit Certificate	 	Section 4.5(a)
	Yorktown	 	Preamble
	Yorktown-Carbon Assignment	 	Section 6.12(a)

 

    75

     

    

 

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

 

ARTICLE
XII

MISCELLANEOUS

 

Section
12.1Notices. All notices and other communications under this Agreement or in connection herewith shall be in writing
and shall be given by delivery in person or by overnight courier, by registered or certified mail (return receipt requested and
with postage prepaid thereon) or by facsimile or Electronic Transmission to the parties at the respective addresses set forth
in Exhibit A (or at such other address as any party shall have furnished to the others in accordance with the terms
of this Section 12.1). All notices and other communications that are addressed as provided in or pursuant to this
Section 12.1 shall be deemed duly and validly given (a) if delivered in person or by overnight courier, upon delivery,
(b) if delivered by registered or certified mail (return receipt requested and with postage paid thereon), 72 hours after being
placed in a depository of the United States mails and (c) if delivered by facsimile or Electronic Transmission, upon transmission
thereof and receipt of the appropriate answerback.

 

Section
12.2Confidentiality. Each party hereto acknowledges the proprietary and confidential nature of the Confidential Information,
and agrees that it shall preserve the confidentiality of the Confidential Information and shall not use, publish, disseminate,
distribute or otherwise disclose all or any portion thereof without the prior written approval of the Board of Directors.

 

(a) In
the event that a Member receives either a request to disclose any Confidential Information under the terms of a subpoena or order
issued by a court or other Governmental Authority of competent jurisdiction or advice of legal counsel that disclosure is required
under applicable Law, such Member agrees that, prior to disclosing any Confidential Information, it shall (i) immediately notify
the Board of Directors of the existence and terms of, and the circumstances attendant to, such request or advice, (ii) consult
with the Board of Directors as to the advisability of taking legally available steps to resist or narrow any such request or to
otherwise eliminate the need for such disclosure and (iii) if disclosure is required, use commercially reasonable efforts to obtain
a protective order or other reliable assurance that confidential treatment will be accorded to such portion of the Confidential
Information as is required to be disclosed.

 

    76

     

    

 

(b) Notwithstanding
the above, a Member or a member of the Board of Directors may disclose Confidential Information (i) to the extent the disclosure
is necessary as a result of the due and proper performance of its duties to the Company pursuant to this Agreement, (ii) to the
extent necessary to enforce rights hereunder (provided, however, that the Member seeking to enforce its rights uses commercially
reasonable efforts to preserve the confidential nature of the Confidential Information and to limit the harm to the Company or
the other Members from the disclosure thereof) or (iii) in connection with disclosures of a general nature regarding general financial
information, return on investment and similar information, including in connection with communications to direct and indirect
beneficial owners of interests in the Member. The agreements contained in this Section 12.2 shall survive the withdrawal
of any Member and the termination of the Company.

 

Section
12.3Expenses.

 

(a) Except
as set forth in Section 12.3(b), unless approved by the Board of Directors as a Company Expense, each Member shall be responsible
for the payment of all reasonable fees and expenses incurred by such Member in connection with the negotiation and preparation
of this Agreement and all agreements and documents ancillary thereto (“Transaction Expenses”). Transaction
Expenses shall include all fees, costs, and expenses of legal counsel, accountants and all other third party consultants and advisors
engaged by such Member to assist with the due diligence reviews conducted by it or the negotiation or preparation of this Agreement
or other agreements and all direct out-of-pocket expenses for travel and similar matters.

 

(b) Carbon
shall be responsible for the payment of all reasonable fees and expenses incurred by or on behalf of such Member in connection
with (i) due diligence relating to the CNX Acquisition and (ii) negotiation and preparation of the CNX PSA; provided,
however, that the Company shall reimburse Carbon (A) $300,000 for its efforts and expenditures related to its diligence
review of the CNX Acquisition and (B) Carbon’s actual out-of-pocket legal and other third party fees incurred in connection
with the CNX Acquisition and CNX PSA, promptly following request thereof by Carbon. The Company shall be responsible for the payment
or reimbursement of all Transaction Expenses incurred by Old Ironsides and by Yorktown in connection with the negotiation and
preparation of this Agreement and all agreements and documents ancillary thereto.

 

Section
12.4Entire Agreement. This Agreement constitutes the entire agreement among the parties with respect to the subject
matter hereof and supersedes all prior written or oral agreements and understandings and all contemporaneous oral agreements and
understandings among the parties or any of them with respect to the subject matter hereof, including the Prior Agreement. All
Exhibits and Schedules hereto are expressly made a part of this Agreement.

 

    77

     

    

 

Section
12.5Waiver or Consent. A waiver or consent, express or implied, to or of any breach or default by any Person in the
performance of its obligations with respect to the Company is not a consent or waiver to or of any other breach or default in
the performance by that Person of the same or any other obligations of that Person with respect to the Company. Failure on the
part of a Person to complain of any act or omission of any Person or to declare any Person in breach or default with respect to
an obligation, irrespective of how long that failure continues, shall not be construed as a waiver of the breach or default until
the applicable statute of limitations has run. No waiver of any obligation under this Agreement or the Act shall be effective
unless in writing signed by or on behalf of the Person or Persons to whom the obligation is owed.

 

Section
12.6Amendment. No amendment of this Agreement shall be effective (by merger, consolidation or otherwise) unless such
amendment is executed by all of the Class A Members; provided, however, that no Member approval shall be required for any
amendment made (x) to Exhibit A in accordance with the last sentence of this Section 12.6, (y) to reflect admission
of a new Member approved pursuant to Section 2.4(a)(xii) or effected pursuant to Section 6.7 or (z) in connection
with the creation and issuance of additional or different classes or series of Units approved pursuant to Section 2.4(a)(xi);
and, provided, further, that (i) the approval of the holder of the Class B Units shall be required for any amendment
that adversely affects the right of the Class B Units under Article V of this Agreement relative to the rights of the Class
A Units and Class C Units under this Agreement in any material respect, (ii) the approval of the holder of the Class C Units shall
be required for any amendment that adversely affects the right of the Class C Units under Article V of this Agreement relative
to the rights of the Class A Units and Class B Units under this Agreement in any material respect and (iii) at any time there
is a Defaulting Member, the approval of the Defaulting Member (in its capacity as a Class A Member) shall not be required for
any amendment of this Agreement provided that such amendment does not materially and adversely affect the rights of the Defaulting
Member in its capacity as a holder of Class A Units in a manner that is disproportionate to the other holders of Class A Units.
Neither the waiver by the Company or a Member of a breach of or a default under any of the provisions of this Agreement, nor the
failure of the Company or a Member, on one or more occasions, to enforce any of the provisions of this Agreement or to exercise
any right, remedy or privilege hereunder, shall thereafter be construed as a waiver of any subsequent breach or default of a similar
nature, or as a waiver of any such provisions, rights, remedies or privileges hereunder. Exhibit A shall be amended
from time to time to reflect any changes to the information contained therein without the necessity of any Board or Member approval.

 

Section
12.7Choice of Law. This Agreement shall be constructed, interpreted and enforced in accordance with, and the respective
rights and obligations of the parties shall be governed by, the laws of the State of Delaware without regard to principles of
conflicts of law.

 

Section
12.8Public Announcement. Except as otherwise required by applicable Law, no Member or its Affiliates shall make any
public announcement or filing with respect to the Company or its affairs or the transactions provided for herein without the prior
written consent of the other Member(s), which shall not be withheld unreasonably, except as may be required by law.

 

    78

     

    

 

Section
12.9Availability of Equitable Relief. Each of the parties hereto recognizes that irreparable injury may result from
a breach of any provision of this Agreement and that money damages may be inadequate to fully remedy the injury. In order to prevent
such irreparable injury, a party hereto may seek temporary injunctive relief from any court of competent jurisdiction.

 

Section
12.10Binding Agreement. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns (it being understood and agreed that, except as expressly provided herein and the rights of
Covered Persons and Member Indemnitors under Article VIII, nothing contained in this Agreement is intended to confer
any rights, benefits or remedies of any kind or character on any other Person under or by reason of this Agreement). It is expressly
understood and agreed that any attempted or purported Transfer by any party of this Agreement in violation of the provisions of
this Section 12.10 shall be null and void.

 

Section
12.11Benefit of Agreement. Nothing in this Agreement expressed or implied, shall be construed to give to any creditor
of the Company or of any Member any legal or equitable right, remedy or claim under or in respect of this Agreement.

 

Section
12.12Further Assurances. In connection with this Agreement and the transactions contemplated hereby, each Member agrees
to execute and deliver any additional documents and instruments and to perform any additional acts necessary or appropriate to
effectuate the provisions of this Agreement and those transactions.

 

Section
12.13Counterparts. This Agreement may be executed in any number of counterparts or counterpart signature pages, each
of which shall constitute an original and all of which shall constitute one and the same instrument.

 

 

 

[Remainder
of page intentionally left blank; Signature page follows]

 

    79

     

    

 

IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

 

	 	CLASS
    A MEMBERS:
	 	 
	 	CARBON
                                         NATURAL GAS COMPANY

	 	 
	 	By:	/s/
    Patrick R. McDonald
	 	Name:	Patrick
                                         R. McDonald

        

	 	Title:	Chief
    Executive Officer
	 	 	 
	 	YORKTOWN
    ENERGY PARTNERS XI, L.P.
	 	 
	 	By:	Yorktown
    XI Company LP, its general partner
	 	By:	Yorktown
    XI Associates LLC, its general partner
	 	 	 
	 	By:	/s/
    Peter A. Leidel
	 	Name:	Peter
    A. Leidel
	 	Title:	Member
	 	 	 
	 	OLD
    IRONSIDES FUND II-A PORTFOLIO HOLDING COMPANY, LLC
	 	 
	 	By:	/s/
    Christopher L. Stoeckle
	 	Name:	Christopher
    L. Stoeckle
	 	Title:	Director
	 	 	 
	 	OLD
    IRONSIDES FUND II-B PORTFOLIO HOLDING COMPANY, LLC
	 	 
	 	By:	/s/
    Christopher L. Stoeckle
	 	Name:	Christopher
    L. Stoeckle
	 	Title:	Director

 

Signature
Page to A&R LLC Agreement of Carbon Appalachian Company, LLC

 

     

     

    

 

	 	CLASS
    B MEMBER:
	 	 
	 	CARBON NATURAL GAS COMPANY

	 	 
	 	By:	/s/ Patrick
    R. McDonald
	 	Name:	Patrick
    R. McDonald
	 	Title:	Chief
    Executive Officer
	 	 	 
	 	CLASS
    C MEMBER:
	 	 	 
	 	CARBON NATURAL GAS COMPANY
	 	 
	 	By:	/s/ Patrick
R. McDonald
	 	Name:	Patrick
R. McDonald
	 	Title:	Chief
Executive Officer

 

Signature
Page to A&R LLC Agreement of Carbon Appalachian Company, LLC

 

     

     

    

 

Exhibit
A

AMENDED AND RESTATED

 

LIMITED
LIABILITY COMPANY AGREEMENT OF

CARBON APPALACHIAN COMPANY, LLC

 

This
Exhibit is dated as of August [●], 2017

 

	Members and Addresses	 	Aggregate
 Capital Contributions
 Made To-Date
 (Cash)	 	 	Capital Commitment
 (Cash)	 	 	Class A Units	 	 	Class A Sharing Percentage	 	 	Class B Units	 	 	Class C Units	 
	Carbon Natural Gas Company
 1700 Broadway, Suite 1170
 Denver, CO 80290	 	$	3,950,000.00	 	 	$	23,560,000.00	 	 	 	3,950.000	 	 	 	15.19	%	 	 	1,000	 	 	 	121.21212	1
	Yorktown Energy Partners XI, L.P.
 410 Park Avenue, 19th Floor
 New York, NY 10022	 	$	2,940,000.00	 	 	$	2,940,000.00	 	 	 	2,940.000	 	 	 	11.31	%	 	 	–	 	 	 	–	 
	Old Ironsides Fund II-A Portfolio
 Holding Company, LLC
 10 Saint James Avenue, 19th Floor
 Boston, MA 02116	 	$	15,890,700.57	 	 	$	61,118,079.75	 	 	 	15,890.70057	 	 	 	61.12	%	 	 	–	 	 	 	–	 
	Old Ironsides Fund II-B Portfolio
 Holding Company, LLC
 10 Saint James Avenue, 19th Floor
 Boston, MA 02116	 	$	3,219,299.43	 	 	$	12,381,920.25	 	 	 	3,219.29943	 	 	 	12.38	%	 	 	–	 	 	 	–	 
	Total	 	$	26,000,000.00	 	 	$	100,000,000.00	 	 	 	26,000	 	 	 	100.00	%	 	 	1,000	 	 	 	121.21212	 

 

 

1 The
Class C Units were issued to Carbon in exchange for the Class C Non-Cash Capital Contribution.

 

    A-1

     

    

 

Exhibit
B

Members of the Board of Directors

 

	Old
    Ironsides Designees:	Scott
    E. Carson
	 	Daniel
    A. Rioux
	 	Christopher
    L. Stoeckle
	 	 
	Carbon
    Designee:	Patrick
    R. McDonald

 

    B-1

     

    

 

Exhibit
C

INSURANCE

 

[See
Attached.]

 

 

    C-1

     

    

 

EXHIBIT
D

 

AMI

 

 

 

    D-1

     

    

 

ExHIBIT
E

INITIAL BUDGET

 

[See
Attached.]

 

 

E-1Exhibit

EXHIBIT 10.4

A. M. CASTLE & CO. 
2017 MANAGEMENT INCENTIVE PLAN
1.Purposes of the Plan.  The purposes of the Plan are to:   attract and retain the best available personnel for positions of substantial responsibility with the Company,  provide additional incentive to key Service Providers of the Company, and  promote the success of the Company’s business.  The Plan permits the grant of Notes, Incentive Stock Options, Non-statutory Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Units, Performance Shares, Other Stock-Based Awards, and short- or long-term Performance Cash Awards.
2.    Definition.  As used in this Plan, the following definitions shall apply:
(a)    “Administrator” means the Board or any of its Committees that shall be administering the Plan, in accordance with Section 4 of the Plan.
(b)    “Affiliate”  shall mean, with respect to any Person or entity, a Person that, directly or indirectly controls, is controlled by, or is under common control with such Person or entity.
(c)    “Applicable Laws” means the requirements relating to the administration of cash or equity-based awards or cash or equity compensation plans under U.S. federal and state corporate laws and regulations, U.S. federal and state securities laws and regulations, the Code, any stock exchange or quotation system on which the Common Stock is listed or quoted and the applicable laws and regulations of any foreign country or jurisdiction where Awards are, or shall be, granted under the Plan.
(d)    “Award” means, individually or collectively, a grant under the Plan of Notes, Options, SARs, Restricted Stock, Restricted Stock Units, Performance Units, Performance Shares, Other Stock-Based Awards, or Performance Cash Awards.
(e)    “Award Agreement” means the written or electronic agreement setting forth the terms and provisions applicable to each Award granted under the Plan.  The Award Agreement is subject to the terms and conditions of the Plan.
(f)    “Awarded Stock” means the Common Stock subject to an Award.
(g)    “Beneficial Owner” shall have the meaning ascribed to such term in Rule 13d-3 under the Exchange Act.
(h)    “Board” means the Board of Directors of the Company.
(i)    “Cause” shall have the meaning ascribed to such term, to the term “good cause,” or to a term of similar import in an employment agreement between the Participant and the Company.  If the Participant is not party to such an agreement containing such a definition, then (and only then) Cause means, with respect to a Participant, the occurrence of any of the following:

EX-1-

EXHIBIT 10.4

(i)    the Participant’s knowing and willful failure to substantially perform such Participant’s duties with the Company or any Affiliate as determined by the Administrator, such failure having continued for a period of ten (10) calendar days after written notice to the Participant describing such failure in reasonable detail;
(ii)    the Participant’s willful failure or refusal to perform specific directives of the Participant’s direct supervisor, which directives are lawful and consistent with the scope and nature of the Participant’s duties and responsibilities, or the Participant’s negligence or misconduct in the performance of those directives;
(iii)    the Participant’s conviction of, or entry of a plea of guilty or “nolo contendere” to, either (x) a felony or (y) any other crime that has, or could be reasonably expected to have, an adverse impact on the performance of the Participant’s duties to the Company or any Affiliate or otherwise result in injury to the reputation or business of the Company or any Affiliate;
(iv)    the Participant’s engaging in criminal misconduct involving moral turpitude if, as a result, in the reasonable judgement of the Committee, the Participant’s credibility and reputation no longer conform to the standard required of the Company’s employees;
(v)    a breach of the Participant’s duties to the Company or any Affiliate under Applicable Law or willful violation in the course of performing the Participant’s duties to the Company or any Affiliate of any policy, rule, or directive of the Company or any Affiliate, or of any law, rule or regulation (other than traffic violations or other minor offenses);
(vi)    the Participant’s fraud, embezzlement, theft, or other material dishonesty with respect to the Company or any Affiliate;
(vii)    the Participant’s use of alcohol or drugs that interferes with the performance of his duties; or
(viii)    the Participant’s breach of any restrictive covenant or any material written policy or terms and conditions of employment applicable to the Participant, including without limitation any covenants of nondisclosure, noncompetition, nonsolicitation, and nondisparagement to which the Participant is, or may become, subject.
No act or failure to act on the Participant’s part shall be considered willful unless done or omitted to be done in bad faith and without reasonable belief that the action or omission was in the best interest of the Company.
(j)    “Change in Control” shall have the meaning ascribed to such term or to a term of similar import in an employment agreement between the Participant and the Company.  If the Participant is not party to such an agreement containing such a definition, then (and only then) Change in Control means the occurrence of any of the following:
(1)any Person, other than any Designated Holder or Designated Holders acting as a group, is or becomes the Beneficial Owner, directly or indirectly, 

EX-2-

EXHIBIT 10.4

of securities of the Company (not including in the securities beneficially owned by such Person any securities acquired directly from the Company or its Affiliates) representing forty percent (40%) or more of the combined voting power of the Company’s then-outstanding voting securities entitled to vote generally in the election of Directors;
(2)members of the Incumbent Board cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a Director subsequent to the Effective Date whose election, or nomination for election by the Company’s stockholders, was approved by a vote of at least a majority of the Directors then constituting the Incumbent Board shall be considered a member of the Incumbent Board, unless such individual’s initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of Directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Incumbent Board (with the term “Incumbent Board” to mean the members of the Board as of immediately following the Effective Date); 
(3)approval by the stockholders of the Company of a complete dissolution or liquidation of the Company;
(4)any sale or disposition to a Person of all or substantially all of the assets of the Company (including by way of merger of any direct or indirect subsidiary of the Company with any other corporation or entity); and
(5)consummation of a merger or consolidation of the Company, other than (A) a merger or consolidation immediately following which the individuals who constitute the Incumbent Board immediately prior thereto constitute at least a majority of the Board, the board of directors (or similar governing body) of the entity surviving such merger or consolidation, or, if the Company or the entity surviving such merger or consolidation is then a subsidiary, the board of directors (or similar governing body) of the ultimate parent thereof, (B) a merger or consolidation (or similar transaction) following which no Person is or becomes a Beneficial Owner, directly or indirectly, of securities of the Company or the entity surviving such merger or consolidation (not including in the securities beneficially owned by such Person any securities acquired directly from the Company or its Affiliates) representing forty percent (40%) or more of the combined voting power of the then-outstanding securities of the Company or the entity surviving such merger or consolidation (other than a Person that was, prior to such merger or consolidation (or similar transaction) a Beneficial Owner, directly or indirectly, of securities of the Company representing forty percent (40%) or more of the combined voting power of the Company’s then-outstanding securities), or (C) a merger or consolidation (or similar transaction) following which the individuals and entities that were the Beneficial Owners of the outstanding voting securities of the Company remain direct or indirect Beneficial Owners of forty percent (40%) or more of the combined voting 

EX-3-

EXHIBIT 10.4

power of the then-outstanding securities of the Company or the entity surviving such merger or consolidation;
provided, however, that as applied to any 409A Award that is designated to be paid or settled upon a Change in Control, no transaction will constitute a Change in Control unless it constitutes a change in the ownership or effective control of the Company, or in the ownership of a substantial portion of its assets, in each case within meaning of Section 409A of the Code.
(k)    “Code” means the Internal Revenue Code of 1986, as amended, and the U.S. Treasury regulations promulgated thereunder.  Any reference to a section of the Code shall be a reference to any successor or amended section of the Code.
(l)    “Committee” means a committee of the Board or a committee of other individuals satisfying Applicable Laws appointed by the Board in accordance with Section 4 of the Plan.
(m)    “Common Stock” means the common stock, $0.01 par value per share, of the Company.
(n)    “Company” means A. M. Castle & Co., a Maryland corporation, and any successor thereto.
(o)    “Designated Holder” means any of the following, or any of their respective controlled Affiliates, or any fund or account managed, advised or controlled by any of the following or any of their respective controlled Affiliates:  Highbridge Capital Management, LLC, Wolverine Asset Management, LLC, Corre Partners Management, LLC, Whitebox Advisors LLC, and SGF, Inc.
(p)    “Director” means a member of the Board.
(q)    “Disability” shall have the meaning ascribed to such term, to the term “permanent disability” or “permanently disabled,” or to a term of similar import in an employment agreement between the Participant and the Company.  If the Participant is not party to such an agreement containing such a definition, then (and only then) Disability means, with respect to a Participant, (i) the inability of such Participant to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment for a period of at least ninety (90) consecutive days, or one hundred twenty (120) days in any twelve (12) month period, or (ii) the entitlement of such Participant to receive, by reason of any medically determinable physical or mental impairment, income replacement benefits for a period of not less than three (3) months under an accident and health plan covering Employees. 
(r)    “Dividend Equivalent” means a credit, made at the sole discretion of the Administrator, to the notional account to be established on the Company’s books in the name of a Participant in an amount equal to the value of dividends paid on one (1) Share for each Share represented by an Award held by such Participant.  Under no circumstances shall the payment of a Dividend Equivalent be made contingent on the exercise of an Option or Stock Appreciation Right.

EX-4-

EXHIBIT 10.4

(s)    “Effective Date” means the effective date of the Company’s Joint Prepackaged Chapter 11 Plan of Reorganization, dated as of May 15, 2017, Case 17-11330 (LSS) (Bankr. D. Del. May 18, 2017), as it may be amended, modified, or supplemented from time to time.
(t)    “Employee” means any Person, including officers, employed by the Company or any Parent or Subsidiary of the Company.  For the avoidance of doubt, neither service as a Director nor payment of any director’s fees by the Company shall be sufficient to constitute “employment” by the Company.
(u)    “Exchange Act” means the Securities Exchange Act of 1934, as amended, including the rules, regulations and other applicable authorities thereunder.
(v)    “Fair Market Value” means, as of any date, the value of a Share determined as follows:
(i)    If the need for a determination of Fair Market Value arises as a result of a Liquidity Event, Fair Market Value shall be the value ascribed to a Share in such Liquidity Event;
(ii)    If the Common Stock is listed on any established stock exchange or a national market system, including without limitation any OTC, NASDAQ, or NYSE market, the Fair Market Value shall be the closing sales price for such Common Stock (or the closing bid, if no sales were reported) as quoted on such exchange or system for the day of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable;
(iii)    If the Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, the Fair Market Value of a Share shall be the mean between the high bid and low asked prices for the Common Stock for the day of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable; or
(iv)    In the absence of a determination under (i), (ii) or (iii) above, Fair Market Value shall be determined in good faith by the Administrator.
(w)    “Incentive Stock Option” means an Option intended to qualify, and to receive favorable tax treatment, as an incentive stock option within the meaning of Section 422 of the Code, as designated in the applicable Award Agreement.
(x)    “Incumbent Board” means the members of the Board as of immediately following the Effective Date.
(y)    “Liquidity Event” means
(i)    a Change in Control in which (a) Participants receive cash and/or marketable securities as part of the consideration from such Change in Control directly from the purchaser sufficient to satisfy their withholding income tax obligations or (b) the Company receives cash and/or marketable securities as part of the consideration from such Change in Control and 

EX-5-

EXHIBIT 10.4

allocates and distributes an amount of the cash and/or marketable securities to the Participants sufficient to satisfy their withholding income tax obligations; or
(ii)    any other transaction in which the Participants may be involved that results in the Participants’ receiving cash and/or marketable securities sufficient to satisfy their withholding income tax obligations.
(z)    “Non-statutory Stock Option” means an Option that by its terms does not qualify or is not intended to qualify as an Incentive Stock Option.
(aa)    “Notes” means the Company’s 5.00% / 7.00% Convertible Senior Secured PIK Toggle Notes due 2022.
(bb)    “Option” means an option to purchase Common Stock granted pursuant to the Plan.
(cc)    “Other Stock-Based Awards” means any other awards not specifically described in the Plan that are valued in whole or in part by reference to, or are otherwise based on, Shares and are created by the Administrator pursuant to Section 13.
(dd)    “Parent” means a “parent corporation” with respect to the Company, whether now or hereafter existing, as defined in Section 424(e) of the Code.
(ee)    “Participant” means a Service Provider who has been granted an Award under the Plan.
(ff)    “Performance Cash Award” means a cash incentive Award subject to the satisfaction of Performance Goals and granted pursuant to Section 13 below.
(gg)    “Performance Goals” means goals that have been established by the Committee in connection with an Award and are based on one (1) or more of the following criteria, as determined by the Committee in its absolute and sole discretion:  net income; cash flow; cash flow on investment; pre-tax or post-tax profit levels or earnings; operating income or earnings; return on investment; earned value added; expense reduction levels; free cash flow; free cash flow per share; earnings per share; net earnings per share; net earnings from continuing operations; sales growth; sales volume; economic profit; expense reduction; controlled expenses; return on assets; return on net assets; return on equity; return on capital; return on sales; return on invested capital; organic revenue; growth in managed assets; total shareholder return; stock price; stock price appreciation; EBIT, adjusted EBIT, EBITA; adjusted EBITA; EBITDA; adjusted EBITDA; EBITDAR; adjusted EBITDAR; return in excess of cost of capital; operating profits; profit in excess of cost of capital; net operating profit after tax; operating margin; profit margin; adjusted revenue; revenue; net revenue; operating revenue; net cash provided by operating activities; net cash provided by operating activities per share; cash conversion percentage; new sales; net new sales; sales quote conversion percentage; inventory reduction; excess and/or obsolete inventory reduction; cancellations; gross margin; gross margin percentage; gross profit; gross profit percentage; revenue before deferral; regulatory body approval for commercialization of a product; implementation or 

EX-6-

EXHIBIT 10.4

completion of critical projects; research; in-licensing; out-licensing; product development; government relations; compliance; mergers and acquisitions; or sales of assets or subsidiaries.
(hh)    “Performance Period” means the time period during which the Performance Goals or performance objectives must be met.
(ii)    “Performance Shares” means Shares issued pursuant to a Performance Share Award under Section 10 of the Plan.
(jj)    “Performance Unit” means, pursuant to Section 10 of the Plan, an unfunded and unsecured promise to deliver Shares, cash or other securities equal to the value set forth in the Award Agreement.
(kk)    “Period of Restriction” means the period during which the transfer of Shares of Restricted Stock or Restricted Notes, as the case may be, are subject to restrictions and therefore remain subject to a substantial risk of forfeiture.  Such restrictions may be based on the passage of time, the achievement of Performance Goals or other target levels of performance, or the occurrence of other events as determined by the Administrator.
(ll)    “Person” shall have the meaning ascribed to such term in Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) of the Exchange Act.
(mm)    “Plan” means this 2017 Management Incentive Plan.
(nn)    “Plan Notes” means Notes in an aggregate original principal amount of $2,400,000 reserved for issuance under the Plan.
(oo)    “Reorganized Company” means the Company as reorganized pursuant to the Company’s Prepackaged Joint Plan of Reorganization, as amended, modified or supplemented, effective on the Effective Date.
(pp)    “Restricted Notes” means Plan Notes issued pursuant to a Tranche A Award under Section 12.
(qq)    “Restricted Stock” means Shares issued pursuant to a Restricted Stock Award under Section 8.
(rr)    “Restricted Stock Unit” means, pursuant to Section 11 of the Plan, an unfunded and unsecured promise to deliver Shares, cash or other securities equal in value to the Fair Market Value of one (1) Share on the date of vesting or settlement, or as otherwise set forth in the Award Agreement.
(ss)    “Rule 16b‐3” means Rule 16b‐3 of the Exchange Act or any successor to Rule 16b‐3, as in effect when discretion is being exercised with respect to the Plan.
(tt)    “Service Provider” means an Employee or a Director.

EX-7-

EXHIBIT 10.4

(uu)    “Share” means a share of Common Stock, as adjusted in accordance with Section 16 of the Plan.
(vv)    “Stock Appreciation Right” or “SAR” means, pursuant to Section 9 of the Plan, an unfunded and unsecured promise to deliver Shares, cash or other securities equal in value to the difference between the Fair Market Value of a Share as of the date such SAR is exercised/settled and the Fair Market Value of a Share as of the date such SAR was granted, or as otherwise set forth in the Award Agreement.
(ww)    “Subsidiary” means a “subsidiary corporation” with respect to the Company, whether now or hereafter existing, as defined in Section 424(f) of the Code.
3.    Securities Subject to the Plan.
(a)    Securities Subject to the Plan.  The securities subject to the Plan shall consist of Common Stock and the Plan Notes.  Common Stock subject to the Plan shall consist of (i) Shares reserved for issuance under the Plan and (ii) Shares issuable upon conversion of Plan Notes.
(b)    Notes Subject to the Plan.  Plan Notes may be subject only to Tranche A Awards under the Plan.  The maximum aggregate original principal amount of Plan Notes that may be subject to Awards under the Plan shall be $2,400,000.  By their terms, the Plan Notes are convertible into an aggregate of 636,877 Shares (such Shares, the “Shares Convertible from Plan Notes”).
(c)    Shares Subject to the Plan.  Subject to Section 16 of the Plan, the maximum aggregate number of Shares that may be subject to Awards under the Plan shall be 3,952,095, which amount (the “Gross Share Reserve”) consists of the sum of (i) the Shares Convertible from Plan Notes and (ii) 3,315,218 additional Shares (the “Net Share Reserve”).  The Gross Share Reserve, which is an amount equal to eight and three tenths percent (8.3%) of the Shares outstanding as of the Effective Date on a fully diluted basis, shall be divided into three grant pools:
(i)    Tranche A Award Pool.  On the Effective Date, Awards shall be granted in respect of an aggregate of 2,371,257 Shares, representing sixty percent (60%) of the Gross Share Reserve and consisting of (i) one hundred percent (100%) of the Plan Notes (i.e., $2,400,000 in aggregate original principal amount of Notes representing all of the Shares Convertible from Plan Notes) and (ii) the remainder in the form of Restricted Stock or Restricted Stock Units issued from the Net Share Reserve (i.e., a number of Shares from the Net Share Reserve that, when added to the number of Shares Convertible from Plan Notes, represents sixty percent (60%) of the Gross Share Reserve) (such Effective Date grants, the “Tranche A Award Pool”).  Each such Award (a “Tranche A Award”) shall consist of a prorated combination of Notes and Restricted Stock or Restricted Stock Units, and shall be granted to the Chief Executive Officer, the Executive Vice Presidents, and other Employees in senior management.  All Tranche A Awards shall vest on the third (3rd) anniversary of the Effective Date, subject to the Participant’s continued employment through such date, or on such earlier date as may be provided in any written employment agreement between the Company and the Participant and, if there is no written employment agreement between the Company and the Participant, in the Award Agreement for the Participant.

EX-8-

EXHIBIT 10.4

(ii)    Tranche B Award Pool.  An aggregate of 1,580,838 Shares, representing the forty percent (40%) of the Gross Share Reserve not included in the Tranche A Award Pool and consisting entirely of Shares issued from the Net Share Reserve plus any Notes, Restricted Stock or Restricted Stock Units originally granted as Tranche A Awards and thereafter added to the Lapsed Award Pool in accordance with Section 3(c)(iii) (the “Tranche B Award Pool”), shall be reserved for Awards to be granted from time to time after the Effective Date to Service Providers in the sole discretion of the Board.  Awards from the Tranche B Award Pool (the “Tranche B Awards”) may consist of Notes (to the extent originally granted as Tranche A Awards and thereafter added to the Lapsed Award Pool in accordance with Section 3(c)(iii)), Incentive Stock Options, Non-statutory Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Units, Performance Shares, or Other Stock-Based Awards and shall vest as may be provided in any written employment agreement between the Company and the Participant setting forth vesting provisions applicable to such Awards, or if there is no such written employment agreement between the Company and the Participant, in the Award Agreement for such Participant; provided, however, that if, at the time of a Change in Control, any Shares or Shares Convertible from Plan Notes in the Tranche B Award Pool remain unallocated (the “Unallocated Tranche B Shares”), the Awards in respect of the Unallocated Tranche B Shares shall be fully allocated and granted in the form(s), with such terms and conditions, and to one or more Service Providers as determined in the sole discretion of the Board; provided further that such Awards will vest immediately prior to, but subject to the consummation of, the Change in Control.  Prior to the first anniversary of the Effective Date, the non-Employee Directors of the Reorganized Company shall receive an Award from the Tranche B Award Pool (the “Initial Director Tranche B Award”) in the form and having terms to be determined by the Board, provided that no Initial Director Tranche B Award shall be granted to any Director in an amount in excess of $100,000 per year.  Following the first anniversary of the Effective Date, all Tranche B Awards granted to Directors shall be on terms that are consistent in all material respects with Tranche B Awards granted to other Employees who constitute senior management.
(iii)    Lapsed Award Grant Pool.  If any outstanding Award expires or is terminated or canceled without having been exercised or settled in full, or if Shares or Plan Notes acquired pursuant to an Award subject to forfeiture are forfeited, the Shares or Plan Notes allocable to the terminated portion of the Award or the forfeited Shares or Plan Notes shall revert to the Plan and shall be added to a lapsed Award grant pool (the “Lapsed Award Pool”), and shall again be available for grant under the Plan as determined by the Board in its sole discretion.
(d)    Allocations.  The allocation of the Awards made from the Tranche A Award Pool shall be thirty-five percent (35%) to the Chief Executive Officer of the Reorganized Company and sixty-five percent (65%) in the aggregate to the Executive Vice Presidents and other management of the Reorganized Company, with allocations to such Executive Vice Presidents and other management to be made at the discretion of the Chief Executive Officer with the approval of the Board (which approval shall not be unreasonably withheld).  The allocation of the Awards made from the Tranche B Award Pool and the Lapsed Award Pool shall be determined by the Board in its sole discretion.

EX-9-

EXHIBIT 10.4

(e)    Share Counting.  Upon the granting of an Award, the number of Shares subject to the Award shall be counted against the Net Share Reserve; provided, however, that no Shares Convertible from Plan Notes shall be counted against the Net Share Reserve.
(f)    Share Reserve.  The Company, during the term of the Plan, shall at all times reserve and keep available such number of Shares as shall be sufficient to satisfy the requirements of the Plan.
4.    Administration of the Plan.  
(a)    Procedure.
(i)    Multiple Administrative Bodies.  Different Committees with respect to different groups of Service Providers may administer the Plan.  Other than as provided above, the Plan shall be administered by (%5) the Board or (%5) a Committee constituted to satisfy Applicable Laws.
(ii)    Rule 16b-3.  To the extent that any transaction contemplated under the Plan is subject to Rule 16b-3 of the Exchange Act and is intended to be exempt under Rule 16b-3, it shall be structured to satisfy the requirements for exemption under Rule 16b-3.
(iii)    Delegation of Authority for Day‐to‐Day Administration.  Except to the extent prohibited by Applicable Laws, the Administrator may delegate to one or more individuals the day-to-day administration of the Plan and any of the functions assigned to it in this Plan.  Such delegation may be revoked at any time.
(b)    Powers of the Administrator.  Subject to the provisions of the Plan, and in the case of a Committee, subject to the specific duties delegated by the Board to the Committee, the Administrator shall have the authority, in its discretion to:
(i)    determine the Fair Market Value of Awards;
(ii)    select the Service Providers to whom Awards may be granted under this Plan;
(iii)    determine the number of Shares and Plan Notes to be covered by each Award granted under this Plan;
(iv)    approve forms of Award Agreements for use under the Plan;
(v)    determine the terms and conditions, not inconsistent with the terms of the Plan, of any Award granted under this Plan, including but not limited to, the exercise price, the time or times when Awards may be exercised (which may be based on Performance Goals or other performance criteria), any vesting acceleration or waiver of forfeiture or repurchase restrictions, and any restriction or limitation regarding any Award or the Shares or Plan Notes relating thereto, based in each case on such factors as the Administrator, in its sole discretion, shall determine;

EX-10-

EXHIBIT 10.4

(vi)    construe and interpret the terms of the Plan and Awards granted pursuant to the Plan;
(vii)    amend the terms of any outstanding Award, including the discretionary authority to extend the post‐termination exercise period of Awards and accelerate the satisfaction of any vesting criteria or waiver of forfeiture or repurchase restrictions, provided that any amendment that would adversely affect the Participant’s rights under an outstanding Award shall not be made without the Participant’s written consent; provided, however, that except as otherwise provided in Section 16, the Administrator shall not, without prior approval of the Company’s stockholders (1) amend the exercise price of outstanding Options or SARs, (2) cancel and re-grant Options or SARs at a lower exercise price, or (3) substitute underwater Options for other securities (including buyouts through issuance of such cash or other means).  Notwithstanding the foregoing, an amendment shall not be treated as adversely affecting the rights of the Participant if the amendment causes an Incentive Stock Option to become a Non-statutory Stock Option or if the amendment is made to the minimum extent necessary to avoid the adverse tax consequences of Section 409A of the Code;
(viii)    allow Participants to satisfy withholding income tax obligations by (1) payment to the Company of the amount of such withholding obligation by cash, wire transfer, certified check or bank draft, (2) electing to have the Company withhold from the Shares or cash to be issued upon exercise or vesting of an Award that number of Shares or cash having a Fair Market Value equal to or less than the maximum statutory withholding rate for the applicable jurisdiction or (3) a combination of the above; provided, however, that Participants shall not be entitled to satisfy withholding income tax obligations by having Shares withheld pursuant to clause (2) above if the income tax withholding obligations arise in connection with a Liquidity Event or following an initial public offering of the Common Stock (or the securities that are subject to the Award following an adjustment pursuant to Section 16) to the extent that following the initial public offering there are not, at the time the income tax withholding is due, any legal or contractual restrictions on the ability of the Participants to sell such Shares in the public market as may be necessary to fund the required withholding income taxes.  The Fair Market Value of any Shares to be withheld shall be determined on the date that the amount of income tax to be withheld is to be determined, and all requests by a Participant to have Shares or cash withheld for this purpose shall be made in such form and under such conditions as the Administrator may deem necessary or advisable;
(ix)    authorize any Person to execute on behalf of the Company any instrument required to effect the grant of an Award previously approved by the Administrator;
(x)    allow a Participant to defer the receipt of the payment of cash or the delivery of Shares that would otherwise be due to the Participant pursuant to an Award;
(xi)    determine whether Awards shall be settled in Shares, with cash or in a combination of Shares and cash;
(xii)    create Other Stock-Based Awards or Performance Cash Awards for issuance under the Plan;

EX-11-

EXHIBIT 10.4

(xiii)    establish a program whereby Service Providers designated by the Administrator can reduce compensation otherwise payable in cash in exchange for Awards under the Plan; and
(xiv)    make all other determinations that the Administrator deems necessary or advisable for administering the Plan.
The express grant in the Plan of any specific power to the Administrator shall not be construed as limiting any power or authority of the Administrator.  However, the Administrator may not exercise any right or power reserved to the Board.
(c)    Effect of Administrator’s Decision.  The Administrator’s decisions, determinations, actions and interpretations shall be final, conclusive and binding on all Persons having an interest in the Plan.
(d)    Indemnification.  The Company shall defend and indemnify members of the Board, and officers and Employees of the Company or of a Parent or Subsidiary to whom authority to act for the Board, the Administrator or the Company is delegated (“Indemnitees”), to the maximum extent permitted by law against  all reasonable expenses, including reasonable attorneys’ fees incurred in connection with the defense of any claim, investigation, action, suit or proceeding, or in connection with any appeal therein (collectively, a “Claim”), to which any of them is a party by reason of any action taken or or any failure to act in connection with the Plan, or in connection with any Award granted under the Plan; and  all amounts required to be paid by them in settlement of the Claim (provided the settlement is approved by the Company) or required to be paid by them in satisfaction of a judgment in any Claim.  However, no Person shall be entitled to indemnification to the extent that he is determined in such Claim to be liable for gross negligence, bad faith or intentional misconduct.  In addition, to be entitled to indemnification, the Indemnitee must, within thirty (30) days after written notice of the Claim, offer the Company, in writing, the opportunity, at the Company’s expense, to defend the Claim.  The right to indemnification shall be in addition to all other rights of indemnification available to the Indemnitee from the Company, its insurers, or otherwise.
5.    Eligibility.  Non-statutory Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Units, Performance Shares, Other Stock-Based Awards, or Performance Cash Awards may be granted to Service Providers.  Incentive Stock Options may be granted to Employees only.
6.    $100,000 Limitation for Incentive Stock Options.  Each Option shall be designated in the Award Agreement as either an Incentive Stock Option or a Non-statutory Stock Option.  However, notwithstanding such designation, to the extent that the aggregate Fair Market Value of the Shares with respect to which Incentive Stock Options are exercisable for the first time by a Participant during any calendar year (under all plans of the Company and any Parent or Subsidiary) exceeds $100,000, such Options shall be treated as Non-statutory Stock Options.  For purposes of this Section 6, Incentive Stock Options shall be disqualified as such in the reverse order in which they were granted.  The Fair Market Value of the Shares shall be determined as of the time the Options with respect to such Shares are granted.

EX-12-

EXHIBIT 10.4

7.    Options.
(a)    Term of Option.  The term of each Option shall be stated in the Award Agreement.  In the case of an Incentive Stock Option, the term shall be ten (10) years from the date of grant or such shorter term as may be provided in the Award Agreement.  Moreover, in the case of an Incentive Stock Option granted to a Participant who, at the time the Incentive Stock Option is granted, owns stock representing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or any Parent or Subsidiary, the term of the Incentive Stock Option shall be five (5) years from the date of grant or such shorter term as may be provided in the Award Agreement.
(b)    Option Exercise Price and Consideration.
(i)    Exercise Price.  The per-Share exercise price for the Shares to be issued pursuant to exercise of an Option shall be determined by the Administrator, subject to the following: 
(1)    In the case of an Incentive Stock Option
(A)    granted to an Employee who, at the time the Incentive Stock Option is granted, owns stock representing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or any Parent or Subsidiary, the per-Share exercise price shall be no less than one hundred ten percent (110%) of the Fair Market Value per Share on the date of grant.
(B)    granted to any Employee other than an Employee described in paragraph (A) immediately above, the per-Share exercise price shall be no less than one hundred percent (100%) of the Fair Market Value per Share on the date of grant.
(2)    In the case of a Non-statutory Stock Option, the per-Share exercise price shall be determined by the Administrator, but shall not be less than Fair Market Value per Share on the date of grant.
(3)    Notwithstanding the foregoing, Incentive Stock Options may be granted with a per-Share exercise price of less than one hundred percent (100%) of the Fair Market Value per Share on the date of grant pursuant to a transaction described in, and in a manner consistent with, Section 424(a) of the Code.
(ii)    Waiting Period and Exercise Dates.  At the time an Option is granted, the Administrator shall fix the period within which the Option may be exercised and shall determine any conditions that must be satisfied before the Option may be exercised.  The Administrator, in its sole discretion, may accelerate the satisfaction of such conditions at any time.
(c)    Form of Consideration.  The Administrator shall determine the acceptable form of consideration for exercising an Option, including the method of payment.  In the case of 

EX-13-

EXHIBIT 10.4

an Incentive Stock Option, the Administrator shall determine the acceptable form of consideration at the time of grant, which, to the extent permitted by Applicable Laws, may consist entirely of:
(i)    cash;
(ii)    check;
(iii)    other Shares that meet the conditions established by the Administrator to avoid adverse accounting consequences (as determined by the Administrator);
(iv)    consideration received by the Company under a cashless exercise program implemented by the Company in connection with the Plan;
(v)    a reduction in the amount of any Company liability to the Participant, including any liability attributable to the Participant’s participation in any Company-sponsored deferred compensation program or arrangement;
(vi)    any combination of the foregoing methods of payment; or
(vii)    any other consideration and method of payment for the issuance of Shares.
(d)    Exercise of Option.
(i)    Procedure for Exercise; Rights as a Stockholder.  Any Option granted under this Plan shall be exercisable according to the terms of the Plan and at such times and under such conditions as determined by the Administrator and set forth in the Award Agreement.  An Option shall be deemed exercised when the Company receives:  (x) written or electronic notice of exercise (in accordance with the Award Agreement) from the Person entitled to exercise the Option, and (y) full payment for the Shares with respect to which the Option is exercised (including provision for any applicable tax withholding).  Full payment may consist of any consideration and method of payment authorized by the Administrator and permitted by the Award Agreement and the Plan.  Shares issued upon exercise of an Option shall be issued in the name of the Participant or, if requested by the Participant, in the name of the Participant and his spouse.  Until the Shares are issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a stockholder shall exist with respect to the Awarded Stock, notwithstanding the exercise of the Option.  The Company shall issue (or cause to be issued) such Shares promptly after the Option is exercised.  No adjustment shall be made for a dividend or other right for which the record date is prior to the date the Shares are issued, except as provided in Section 16 of the Plan or the applicable Award Agreement.  Exercising an Option in any manner shall decrease the number of Shares thereafter available for sale under the Option by the number of Shares as to which the Option is exercised.
(ii)    Termination of Relationship as a Service Provider.  If a Participant ceases to be a Service Provider, other than upon the Participant’s death or Disability, the Participant may exercise his Option, to the extent vested, within the time specified in the Award Agreement 

EX-14-

EXHIBIT 10.4

(but in no event later than the expiration of the term of such Option as set forth in the Award Agreement).  In the absence of a specified time in the Award Agreement, the Option shall remain exercisable for three (3) months following the Participant’s termination, after which the Option shall terminate, except if, at the time of a Participant’s termination of service, such Participant is under a Company-imposed blackout period restricting the Participant from exercising the Option or otherwise trading in Company securities, the Option shall remain exercisable for a period of three (3) months following the cessation of relevant blackout period, even if beyond the normal expiration of such Option, as determined by the Administrator.  Unless otherwise provided by the Award Agreement, if on the date of termination the Participant is not vested as to his entire Option, the Shares covered by the unvested portion of the Option shall revert to the Plan as provided in Section 3(c).  If the Participant does not exercise his Option as to all of the vested Shares within the time specified by the Award Agreement, the Option shall terminate, and the remaining Shares covered by the Option shall revert to the Plan as provided in Section 3(c).
(iii)    Disability of Participant.  If a Participant ceases to be a Service Provider as a result of his Disability, the Participant may exercise his Option, to the extent vested, within the time specified in the Award Agreement (but in no event later than the expiration of the term of the Option as set forth in the Award Agreement).  In the absence of a specified time in the Award Agreement, the Option shall remain exercisable for twelve (12) months following the Participant’s termination for Disability, after which the Option shall terminate, except if, at the time of a Participant’s termination of service as a result of Disability, such Participant is under a Company-imposed blackout period restricting the Participant from exercising the Option or otherwise trading in Company securities, the Option shall remain exercisable for a period of three (3) months following the cessation of relevant blackout period, even if beyond the normal expiration of such Option, as determined by the Administrator.  Unless otherwise provided by the Administrator, on the date of termination for Disability, the unvested portion of the Option shall revert to the Plan as provided in Section 3(c).  If after termination for Disability, the Participant does not exercise his Option as to all of the vested Shares within the time specified by the Award Agreement, the Option shall terminate and the remaining Shares covered by such Option shall revert to the Plan as provided in Section 3(c).
(iv)    Death of Participant.  If a Participant dies while a Service Provider, the Option, to the extent vested, may be exercised within the time specified in the Award Agreement (but in no event later than the expiration of the term of the Option as set forth in the Award Agreement) by the beneficiary designated by the Participant prior to his death, provided that such designation must be acceptable to the Administrator.  If no beneficiary has been designated by the Participant, then the Option may be exercised by the personal representative of the Participant’s estate, or by the Persons to whom the Option is transferred pursuant to the Participant’s will or in accordance with the laws of descent and distribution.  In the absence of a specified time in the Award Agreement, the Option shall remain exercisable for twelve (12) months following the Participant’s death, after which the Option shall terminate.  If the Option is not exercised as to all of the vested Shares within the time specified by the Administrator, the Option shall terminate, and the remaining Shares covered by such Option shall revert to the Plan as provided in Section 3(c).

EX-15-

EXHIBIT 10.4

8.    Restricted Stock.
(a)    Grant of Restricted Stock.  Subject to the terms and provisions of the Plan, the Administrator may, at any time and from time to time, grant Shares of Restricted Stock to Service Providers in such amounts as the Administrator, in its sole discretion, shall determine.
(b)    Restricted Stock Agreement.  Each Award of Restricted Stock shall be evidenced by an Award Agreement that shall specify the Period of Restriction, the number of Shares granted, and such other terms and conditions as the Administrator, in its sole discretion, shall determine.  Unless the Administrator determines otherwise, Shares of Restricted Stock shall be held by the Company as escrow agent until the restrictions on the Shares have lapsed.
(c)    Removal of Restrictions.  Except as otherwise provided in this Section 8, Shares of Restricted Stock covered by each Award made under the Plan shall be released from escrow as soon as practical after the last day of the Period of Restriction.  The Administrator, in its sole discretion, may accelerate the time at which any restrictions shall lapse or be removed.
(d)    Voting Rights.  During the Period of Restriction, Service Providers holding Shares of Restricted Stock may exercise full voting rights with respect to those Shares, unless the Award Agreement provides otherwise.
(e)    Dividends and Other Distributions.  During the Period of Restriction, Service Providers holding Shares of Restricted Stock shall be entitled to receive all dividends and other distributions paid with respect to such Shares unless otherwise provided in the Award Agreement.  If any dividends or distributions are paid in Shares, the Shares shall be subject to the same restrictions on transferability and forfeitability as the Shares of Restricted Stock with respect to which they were paid.
(f)    Return of Restricted Stock to Company.  If an Award Agreement for any Shares of Restricted Stock provides for a date on which such Shares of Restricted Stock shall be forfeited if the restrictions thereon have not theretofore lapsed, then on such date the Shares of Restricted Stock for which restrictions have not lapsed shall be forfeited and shall revert to the Plan as provided in Section 3(c).
9.    Stock Appreciation Rights
(a)    Grant of SARs.  Subject to the terms and conditions of the Plan, a SAR may be granted to Service Providers at any time and from time to time as shall be determined by the Administrator, in its sole discretion.  The Administrator shall have complete discretion to determine the number of SARs granted to any Service Provider.  Subject to the provisions of the Plan, the Administrator shall have complete discretion to determine the terms and conditions of SARs granted under the Plan, including the sole discretion to accelerate exercisability at any time.
(b)    SAR Agreement.  Each SAR grant shall be evidenced by an Award Agreement that shall specify the exercise price, the term, the conditions of exercise, and such other terms and conditions as the Administrator, in its sole discretion, shall determine.

EX-16-

EXHIBIT 10.4

(c)    Expiration of SARs.  A SAR granted under the Plan shall expire upon the date determined by the Administrator, in its sole discretion, as set forth in the Award Agreement.  Notwithstanding the foregoing, the rules of Sections 7(d)(ii), 7(d)(iii) and 7(d)(iv) shall also apply to SARs.
(d)    Payment of SAR Amount.  Upon exercise of a SAR, a Participant shall be entitled to receive payment from the Company in an amount determined by multiplying:
(i)    The difference between the Fair Market Value of a Share on the date of exercise over the exercise price; times
(ii)    The number of Shares with respect to which the SAR is exercised.
At the sole discretion of the Administrator, the payment upon the exercise of a SAR may be in cash, in Shares with equivalent Fair Market Value, or in some combination thereof, unless the Award Agreement provides otherwise.
10.    Performance Units and Performance Shares.
(a)    Grant of Performance Units and Performance Shares.  Subject to the terms and conditions of the Plan, Performance Units and Performance Shares may be granted to Service Providers at any time and from time to time, as shall be determined by the Administrator in its sole discretion.  The Administrator shall have complete discretion in determining the number of Performance Units and Performance Shares granted to each Service Provider.
(b)    Value of Performance Units and Performance Shares.  Each Performance Unit shall have an initial value established by the Administrator on or before the date of grant.  Each Performance Share shall have an initial value equal to the Fair Market Value of a Share on the date of grant.
(c)    Performance Objectives and Other Terms.  The Administrator shall set Performance Goals or other performance objectives in its sole discretion, which, depending on the extent to which they are met, shall determine the number or value of Performance Units and Performance Shares that shall be earned by the Participant.  Each award of Performance Units or Performance Shares shall be evidenced by an Award Agreement that shall specify the Performance Period and such other terms and conditions as the Administrator, in its sole discretion, shall determine.  The Administrator may set Performance Goals or performance objectives based upon the achievement of Company‐wide, divisional, or individual goals, applicable federal or state securities laws, or any other basis determined by the Administrator in its sole discretion.
(d)    Earning of Performance Units and Performance Shares.  After the applicable Performance Period has ended, the holder of Performance Units or Performance Shares shall be entitled to receive a payout of the number of Performance Units or Performance Shares earned by the Participant over the Performance Period, to be determined as a function of the extent to which the corresponding Performance Goals or performance objectives have been achieved.  After the 

EX-17-

EXHIBIT 10.4

grant of Performance Units or Performance Shares, the Administrator, in its sole discretion, may reduce or waive any performance objectives for the Performance Unit or Performance Share.
(e)    Form and Timing of Payment of Performance Units and Performance Shares.  Payment of earned Performance Units and Performance Shares shall be made after the expiration of the applicable Performance Period at the time determined by the Administrator.  The Administrator, in its sole discretion, may pay earned Performance Units and Performance Shares in the form of cash, in Shares (which have an aggregate Fair Market Value equal to the value of the earned Performance Units or Performance Shares, as applicable, at the close of the applicable Performance Period) or in a combination of cash and Shares.
(f)    Cancellation of Performance Units or Performance Shares.  On the date set forth in the Award Agreement, all unearned or unvested Performance Units and Performance Shares shall be forfeited, and the Shares subject to the Award shall revert to the Plan as provided in Section 3(c).
11.    Restricted Stock Units.  Restricted Stock Units shall represent the right of a Participant to receive a payment upon vesting of the Restricted Stock Unit (or on any later date specified by the Administrator and set forth in the Award Agreement at the time of grant) equal to the Fair Market Value of a Share as of the date the Restricted Stock Unit vests or such other date as determined by the Administrator at the time the Restricted Stock Unit was granted. The Administrator, in its sole discretion, may pay earned Restricted Stock Units in the form of cash, in Shares (which have an aggregate Fair Market Value equal to the payment to which the Participant has become entitled) or in a combination of cash and Shares. Upon the forfeiture or other termination of Restricted Stock Units without payment therefor, Shares subject to the Award shall revert to the Plan as provided in Section 3(c).
12.    Restricted Notes.
(a)    Grant of Restricted Notes.  Subject to the terms and provisions of the Plan, on the Effective Date, the Administrator shall grant Restricted Notes to Employees as part of the Tranche A Awards.
(b)    Restricted Notes Agreement.  Each Tranche A Award of Restricted Notes shall be evidenced by an Award Agreement that shall specify the Period of Restriction, the original principal amount of Notes granted, and such other terms and conditions as the Administrator, in its sole discretion, shall determine.  Unless the Administrator determines otherwise, Restricted Notes, and any Shares issued upon conversion thereof, shall be held by the Company as escrow agent until the restrictions on the Restricted Notes have lapsed.
(c)    Removal of Restrictions.  Except as otherwise provided in this Section 12, Restricted Notes covered by each Tranche A Award made under the Plan, and any Shares issued upon conversion thereof,  shall be released from escrow as soon as practical after the last day of the Period of Restriction.  The Administrator, in its sole discretion, may accelerate the time at which any restrictions shall lapse or be removed.

EX-18-

EXHIBIT 10.4

(d)    Consent and Conversion Rights.  During the Period of Restriction, Employees holding Restricted Notes may exercise full consent and conversion rights with respect to those Restricted Notes, unless the Award Agreement provides otherwise.
(e)    Interest and Other Distributions.  During the Period of Restriction, Employees holding Restricted Notes shall be entitled to receive all interest (including “payment in kind” interest) and other distributions paid with respect to such Restricted Notes unless otherwise provided in the Award Agreement.  If any interest or distributions are paid in Shares, the Shares shall be subject to the same restrictions on transferability and forfeitability as the Restricted Notes with respect to which they were paid.
(f)    Return of Restricted Notes to Company.  If an Award Agreement for any Restricted Notes provides for a date on which such Restricted Notes shall be forfeited if the restrictions thereon have not theretofore lapsed, then on such date the Restricted Notes for which restrictions have not lapsed shall be forfeited and shall revert to the Plan as provided in Section 3(c).
13.    Other Stock-Based Awards and Performance Cash Awards.  Other Stock-Based Awards or Performance Cash Awards may be granted either alone, in addition to, or in tandem with, other Awards granted under the Plan and/or cash awards made outside of the Plan.  The Administrator shall have authority to determine the Service Providers to whom, and the time or times at which, Other Stock-Based Awards or Performance Cash Awards shall be made, the amount of such Other Stock-Based Awards or Performance Cash Awards, and all other conditions of the Other Stock-Based Awards or Performance Cash Awards, including any dividend or voting rights and whether the Other Stock-Based Award should be paid in cash.
14.    Leaves of Absence.  In the sole discretion of the Administrator, vesting of Awards granted under this Plan may be suspended during any unpaid leave of absence exceeding thirty (30) days and shall resume on the date the Participant returns to work on a regular schedule as determined by the Company; provided, however, that no vesting credit shall be awarded for the time vesting has been suspended during such leave of absence.  A Service Provider shall not cease to be an Employee in the case of  any leave of absence approved by the Company as a leave of absence under this Section 14 or  transfers between locations of the Company or between the Company, its Parent, or any Subsidiary.  For purposes of Incentive Stock Options, no leave of absence may exceed ninety (90) days, unless reemployment upon expiration of such leave is guaranteed by statute or contract.  If reemployment upon expiration of a leave of absence approved by the Company is not guaranteed by statute or contract, then at the end of three (3) months following the expiration of the leave of absence, any Incentive Stock Option held by the Participant shall cease to be treated as an Incentive Stock Option and shall be treated for tax purposes as a Non-statutory Stock Option.
15.    Non-Transferability of Awards.  Unless determined otherwise by the Administrator, an Award may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by the laws of descent or distribution or pursuant to a qualifed domestic relations order, and may be exercised, during the lifetime of the Participant, only by the Participant or the Participant’s designated legal representative in the case of the Disability of the Participant.  If the 

EX-19-

EXHIBIT 10.4

Administrator makes an Award transferable, such Award shall contain such additional terms and conditions as the Administrator deems appropriate.
16.    Adjustments; Dissolution or Liquidation; Change in Control.
(a)    Adjustments.  In the event that (a) the outstanding Shares are changed into or exchanged for a different number or kind of shares of stock or other securities or other equity interests of the Company or another corporation or entity, whether through merger, consolidation, reorganization, recapitalization, stock dividend, stock split, reverse stock split, substitution, exchange or other similar corporate event or transaction or (b) there is an extraordinary dividend or distribution by the Company or an Affiliate in respect of its shares, an equitable adjustment shall be made in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan.  Such adjustment may include an adjustment to the maximum number and kind of shares of stock or other securities or other equity interests as to which Awards may be granted under the Plan, the number and kind of shares of stock or other securities or other equity interests subject to outstanding Awards and the exercise price thereof, if applicable, and the numerical limits in Section 3.  Notwithstanding the preceding, the number of Shares subject to any Award shall always be a whole number.
(b)    Dissolution or Liquidation.  In the event of the proposed dissolution or liquidation of the Company, the Administrator shall notify each Participant as soon as practical prior to the effective date of the proposed transaction.  The Administrator will provide for a Participant to have the right to exercise his Award, to the extent applicable, until ten (10) days prior to the transaction as to all of the Awarded Stock covered thereby, including Shares as to which the Award would not otherwise be exercisable.  In addition, the Administrator may provide that any Company repurchase option or forfeiture rights applicable to any Award shall fully lapse, and that any Award shall vest in full, provided that the proposed dissolution or liquidation takes place at the time and in the manner contemplated.  To the extent that it has not been previously exercised or vested, an Award shall terminate immediately prior to the consummation of such proposed action.
(c)    Change in Control.  This Section 16(c) shall apply except to the extent otherwise provided in the Award Agreement or the employment agreement between a Participant and the Company or a Subsidiary of the Company.
(i)    Stock Options and SARs.  Upon a Change in Control, each outstanding Option and SAR shall be assumed or an equivalent option or stock appreciation right shall be substituted by the successor corporation or a Parent or Subsidiary of the successor corporation.  Unless determined otherwise by the Administrator, if the successor corporation refuses to assume or substitute for the Option or SAR, such Option or SAR shall fully vest, and the Participant shall have the right to exercise the Option or SAR as to all of the Awarded Stock, including Shares as to which the Option or SAR would not otherwise be vested or exercisable.  If an Option or SAR is not assumed or substituted for upon the Change in Control, the Administrator shall notify the Participant in writing or electronically that the Option or SAR shall be exercisable for a period of at least ninety (90) days prior to the Change in Control (any such exercise being subject in all events to the consummation of such Change in Control), and the Option or SAR shall terminate upon the occurrence of the Change in Control.  For the purposes of this Section 16(c)(i), the Option or SAR 

EX-20-

EXHIBIT 10.4

shall be considered assumed or substituted for if, following the Change in Control, the replacement option or stock appreciation right confers the right to purchase or receive, for each Share of Awarded Stock subject to the Option or SAR immediately prior to the Change in Control, the consideration (whether securities, cash, or property) received in the Change in Control by holders of Common Stock for each Share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares).  However, if the consideration received in the Change in Control is not solely common stock of the successor corporation or its Parent or Subsidiary, the Administrator may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of the replacement option or stock appreciation right, for each share of Awarded Stock subject to the Option or SAR, to be solely common stock of the successor corporation or its Parent or Subsidiary equal in Fair Market Value (as of the date of such Change in Control) to the per-share consideration received by holders of Common Stock in the Change in Control.  Notwithstanding anything in this Plan to the contrary, an Award that vests, is earned, or is paid out upon the satisfaction of one or more performance objectives shall not be considered assumed if the Company or its successor modifies any of the performance objectives without the Participant’s consent; provided, however, that a modification to performance objectives solely to reflect the successor corporation’s post-Change in Control corporate structure shall not be deemed to invalidate an otherwise valid Award assumption.
(ii)    Restricted Stock, Performance Shares, Performance Units, Restricted Stock Units, Other Stock-Based Awards, and Performance Cash Awards.  Upon a Change in Control, each outstanding Award of Restricted Stock, Restricted Stock Unit, Performance Share, Performance Unit, Other Stock-Based Award, and Performance Cash Award shall be assumed or an equivalent Restricted Stock, Restricted Stock Unit, Performance Share, Performance Unit, Other Stock-Based Award, and Performance Cash Award shall be substituted by the successor corporation or a Parent or Subsidiary of the successor corporation.  Unless determined otherwise by the Administrator, if the successor corporation refuses to assume or substitute for the Award, the Participant shall fully vest in the Award, including as to Shares or Units that would not otherwise be vested, all applicable restrictions shall lapse, and all performance objectives and other vesting criteria shall be deemed achieved at targeted levels.  For purposes of this Section 16(c)(ii), an Award of Restricted Stock, Restricted Stock Units, Performance Shares, Performance Units, Other Stock-Based Awards, and Performance Cash Awards shall be considered assumed or substituted for if, following the Change in Control, the replacement award confers the right to purchase or receive, for each Share subject to the Award immediately prior to the Change in Control (and if a Restricted Stock Unit or Performance Unit, for each Share as determined based on the then current Fair Market Value), the consideration (whether stock, cash, or other securities or property) received in the Change in Control by holders of Common Stock for each Share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares).  However, if the consideration received in the Change in Control is not solely common stock of the successor corporation or its Parent or its Subsidiary, the Administrator may, with the consent of the successor corporation, provide for the consideration to be received upon the settlement of the replacement award, for each share of Awarded Stock subject to the Award, to be solely common stock of the successor corporation or its Parent or Subsidiary equal in Fair Market Value (as of the date of such Change in Control) to the per-share consideration 

EX-21-

EXHIBIT 10.4

received by holders of Common Stock in the Change in Control.  Notwithstanding anything in this Plan to the contrary, an Award that vests, is earned, or is paid out upon the satisfaction of one or more performance objectives shall not be considered assumed or substituted for if the Company or its successor modifies any of the performance objectives without the Participant’s consent; provided, however, a modification to the performance objectives solely to reflect the successor corporation’s post-Change in Control corporate structure, or any other equitable adjustment made pursuant to Section 16(a) above, shall not be deemed to invalidate an otherwise valid Award assumption or substitution.
17.    Date of Grant.  The date of grant of an Award shall be, for all purposes, the date on which the Administrator makes the determination granting such Award, or a later date as is determined by the Administrator.  Notice of the determination shall be provided to each Participant within a reasonable time after the date of such grant.
18.    Term of Plan.  The Plan became effective on the Effective Date and thereafter shall continue in effect for a term of ten (10) years unless terminated earlier under Section 19 of the Plan.
19.    Amendment and Termination of the Plan.
(a)    Amendment and Termination.  The Board may at any time amend, alter, suspend or terminate the Plan.  The Plan shall terminate upon the occurrence of a Change in Control and no Awards may be granted following a Change in Control.
(b)    Stockholder Approval.  The Company shall obtain stockholder approval of any Plan amendment to the extent necessary to comply with Applicable Laws.
(c)    Effect of Amendment or Termination.  No amendment, alteration, suspension, or termination of the Plan shall materially or adversely impair the rights of any Participant, unless otherwise mutually agreed upon by the Participant and the Administrator, which agreement must be in writing and signed by the Participant and the Company.  Termination of the Plan shall not affect the Administrator’s ability to exercise the powers granted to it under this Plan with respect to Awards granted under the Plan prior to the date of termination.
20.    Conditions upon issuance of shares.
(a)    Legal Compliance.  Shares shall not be issued pursuant to the exercise of an Award unless the exercise of the Award and the issuance and delivery of such Shares shall comply with Applicable Laws and shall be further subject to the approval of counsel for the Company with respect to such compliance.
(b)    Investment Representations.  As a condition to the exercise or receipt of an Award, the Company may require the Person exercising or receiving the Award to represent and warrant at the time of any such exercise or receipt that the Shares are being purchased only for investment and without any present intention to sell or distribute the Shares if, in the opinion of counsel for the Company, such a representation is required.

EX-22-

EXHIBIT 10.4

(c)    Taxes.  No Shares shall be delivered under the Plan to any Participant or other Person until the Participant or other Person has made arrangements acceptable to the Administrator for the satisfaction of any non‐U.S., U.S.‐federal, U.S.‐state, or local income and employment tax withholding obligations, including, without limitation, obligations incident to the receipt of Shares.  Upon exercise or vesting of an Award, the Company shall withhold or collect from the Participant an amount sufficient to satisfy such tax obligations, including, but not limited to, by surrender of a whole number of Shares covered by the Award sufficient to satisfy the applicable tax withholding obligations incident to the exercise or vesting of the Award.
21.    Severability.  Notwithstanding any provision of the Plan or an Award to the contrary, if any one or more of the provisions (or any part thereof) of this Plan or the Awards shall be held invalid, illegal, or unenforceable in any respect, such provision shall be modified so as to make it valid, legal, and enforceable, and the validity, legality, and enforceability of the remaining provisions (or any part thereof) of the Plan or Award, as applicable, shall not in any way be affected or impaired thereby.
22.    Inability to Obtain Authority.  The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any Shares hereunder, shall relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority shall not have been obtained.
23.    No Rights to Awards.  No eligible Service Provider or other Person shall have any claim to be granted any Award pursuant to the Plan, and neither the Company nor the Administrator shall be obligated to treat Participants or any other Person uniformly.
24.    No Stockholder Rights.  Except as otherwise provided herein or in an Award Agreement, a Participant shall have none of the rights of a stockholder with respect to Shares covered by an Award until the Participant becomes the owner of the Shares.
25.    Fractional Shares.  No fractional Shares shall be issued, and the Administrator shall determine, in its sole discretion, whether cash shall be paid to the holders of fractional Shares in lieu thereof or whether such fractional Shares shall be eliminated by rounding up as appropriate.
26.    Governing Law.  The Plan, all Award Agreements, and all related matters shall be governed by the laws of the State of Maryland, without regard to choice of law principles that direct the application of the laws of another state.  The jurisdiction and venue for any disputes arising under, or any action brought to enforce (or otherwise relating to), this Plan shall be exclusively in the courts in Baltimore, Maryland, including the Federal Courts located therein (should Federal jurisdiction exist).
27.    No Effect on Terms of Employment or Consulting Relationship.  The Plan shall not confer upon any Participant any right as a Service Provider, nor shall it interfere in any way with his right or the right of the Company or a Parent or Subsidiary to terminate the Participant’s service at any time, with or without cause, and with or without notice.  There is no obligation for uniformity of treatment of any Service Provider of the Company or any Participant.

EX-23-

EXHIBIT 10.4

28.    Unfunded Obligation.  Participants shall have the status of general unsecured creditors of the Company.  Any amounts payable to Participants pursuant to the Plan shall be unfunded and unsecured obligations for all purposes, including, without limitation, Title I of the Employee Retirement Income Security Act of 1974, as amended.  Neither the Company nor any Parent or Subsidiary shall be required to segregate any monies from its general funds, or to create any trusts, or to establish any special accounts with respect to such obligations.  The Company shall retain at all times beneficial ownership of any investments, including trust investments, that the Company may make to fulfill its payment obligations under this Plan.  Neither any investments nor the creation or maintenance of any trust for any Participant account shall create or constitute a trust or fiduciary relationship between the Administrator, the Company or any Parent or Subsidiary and a Participant, or otherwise create any vested or beneficial interest in any Participant or the Participant’s creditors in any assets of the Company or Parent or Subsidiary.  The Participants shall have no claim against the Company or any Parent or Subsidiary for any changes in the value of any assets that may be invested or reinvested by the Company with respect to the Plan.
29.    Section 409A.  It is the intention of the Company that no Award shall be “deferred compensation” subject to Section 409A of the Code, unless and to the extent that the Administrator specifically determines otherwise, and the Plan and the terms and conditions of all Awards shall be interpreted accordingly.  The following rules shall apply to Awards intended to be subject to Section 409A of the Code (“409A Awards”):
(a)    Any distribution of a 409A Award following a separation from service that would be subject to Section 409A(a)(2)(A)(i) of the Code as a distribution following a separation from service of a “specified employee” (as defined under Section 409A(a)(2)(B)(i) of the Code) shall occur no earlier than the expiration of the six (6) month period following such separation from service.
(b)    In the case of a 409A Award providing for distribution or settlement upon vesting or lapse of a risk of forfeiture, if the time of such distribution or settlement is not otherwise specified in the Plan or Award Agreement or other governing document, the distribution or settlement shall be made no later than March 15 of the calendar year following the calendar year in which such 409A Award vested or the risk of forfeiture lapsed.
(c)    In the case of any distribution of any other 409A Award, if the timing of such distribution is not otherwise specified in the Plan or Award Agreement or other governing document, the distribution shall be made not later than the end of the calendar year during which the settlement of the 409A Award is specified to occur.
30.    Construction.  Headings in this Plan are included for convenience and shall not be considered in the interpretation of the Plan.  References to sections are to Sections of this Plan unless otherwise indicated.  Pronouns shall be construed to include the masculine, feminine, neutral, singular or plural as the identity of the antecedent may require.  This Plan shall be construed according to its fair meaning and shall not be strictly construed against the Company.

EX-24-

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