OPERATING AGREEMENT OF CHARLIE BROWN AIR II, LLC

Exhibit 10.35

OPERATING AGREEMENT

OF CHARLIE BROWN AIR II, LLC

THIS AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT is entered into as of the 26th day of June, 2008, by and among those persons who have executed this Agreement, and whose names and addresses are set forth in Schedule I, as Members.

NOW, THERFORE, the parties agree as follows:

ARTICLE 1

THE COMPANY

1.1 Formation . The Company was formed as a limited liability company pursuant to the Delaware Limited Liability Company Law (the “Law”).

1.2 Certificate of Formation . A Certificate of Formation under the Law (the “Certificate”) was filed in the office of the Delaware Secretary of State on June 30, 2008. The Company will execute further documents (including amendments to the Certificate) and take further action as is appropriate to comply with all requirements of law for the formation and operation of a limited liability company in the State of Delaware and all other counties and states where the Company may elect to do business.

1.3 Name . The name of the Company is Charlie Brown Air II, LLC, but the business of the Company may be conducted under any other name designated by the Members.

1.4 Character of Business . The sole and exclusive business of the Company is to acquire, own, and otherwise deal with the assets of the Company. The Company may engage in any activities that are reasonable, necessary or appropriate in connection with the assets to promote the interests of the Company or enhance the value of its property.

1.5 Principal Place of Business . The principal place of business of the Company is 1965 Waddle Road, State College, Pennsylvania 16803, State College, Pennsylvania, or at another location as may be selected by the Members. The Company may maintain other offices or agents as the Members deem advisable.

1.6 Registered Agent and Office . The registered office of the Company is 1209 Orange Street, Wilmington, Delaware. The Corporation Trust Company is the registered agent of the Company for service of process. At any time the Members may change the location of the Company’s registered office or registered agent as they may determine.

1.7 Fiscal Year . The fiscal year of the Company is the calendar year.

ARTICLE 2

DEFINITIONS

The following defined terms used in this Agreement have the respective meanings specified below.

2.1 Adjusted Book Value . “Adjusted Book Value” with respect to any Company property means the adjusted basis of such property for federal income tax purposes unless such property has been contributed to the Company in which event it shall mean the fair market value of such property at the date of contribution minus all Depreciation taken with respect to such property.

2.2 Bruce . “Bruce” means Bruce Heim.

2.3 Capital Account . “Capital Account” means the account to be maintained by the Company for each Member in accordance with the following provisions:

(a) a Member’s Capital Account will be increased by the Member’s Capital Contributions, the amount of any Company liabilities assumed by the Member (or that are secured by Company property distributed to the Member), the Member’s share of Profit and any item in the nature of income or gain specially allocated to the Member pursuant to the provisions of Article V; and

(b) a Member’s Capital Account will be decreased by the amount of money and the fair market value of any Company property distributed to the Member, the amount of any liabilities of the Member assumed by the Company (or that are secured by property contributed by the Member to the Company), the Member’s share of Loss and any item in the nature of expenses or losses specially allocated to the Member pursuant to the provisions of Article V.

2.4 Capital Contribution . “Capital Contribution” means the fair market value of any contribution by a Member to the capital of the Company in cash or property. Such property does not include the value of any promissory note for which the contributing Member also is the maker. If such promissory note is contributed, such Member’s capital account will be increased in accordance with Treasury Regulation Section 1.704-1(b)(2)(iv)(d)(2).

2.5 Cause . “Cause” shall mean fraud or willful misconduct in the performance of the Manager’s duties or willful breach of the provisions of this Agreement.

2.6 Code . “Code” means the Internal Revenue Code of 1986, as amended, or the corresponding provisions of any successor statute.

2.7 Company . “Company” means Charlie Brown Air II, LLC.

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2.8 Depreciation . “Depreciation” means, for each Fiscal Year or other period, an amount equal to the depreciation, amortization, or other cost recovery deduction allowable with respect to an asset for such year or other period, except that if the fair market value of property contributed to the Company differs from its adjusted basis for federal income tax purposes at the date of contribution, Depreciation shall be an amount which bears the same ratio to such beginning fair market value as the federal income tax depreciation, amortization, or other cost recovery deduction for such year or other periods bears to such beginning adjusted tax basis.

2.9 Economic Interest . “Economic Interest” means a Person’s right to share in the Profits and Losses of, and the right to receive distributions and allocations from, the Company.

2.10 Economic Interest Percentage . “Economic Interest Percentage” means, as to a Member, the percentage interest in profits and losses set forth after the Member’s name on Schedule I , as amended from time to time, including, without limitation, to reflect changes in Economic Interest Percentage upon additional Capital Contributions and as to a Member who is not a Member, the Economic Interest Percentage of an unadmitted assign of a Member.

2.11 Fiscal Year . “Fiscal Year” means the calendar year.

2.12 Impasse . “Impasse” means the failure of all Members to consent to or approve any major decision after such action or consent has been proposed by any Member as a major decision. An Impasse shall be considered to have occurred if the Members cannot agree with respect to a major decision within ten (10) days after such action has been proposed by any Member as a major decision.

2.13 Member . “Member” means each Person who or which executes a counterpart of this Agreement as a Member and each Person who or which becomes a Member of the Company.

2.14 Membership Interest . “Membership Interest” means a Member’s aggregate rights in the Company, including, without limitation, the Company’s (i) Economic Interest and (ii) Voting Interest.

2.15 Person . “Person” means any person, corporation, governmental authority, limited liability company, partnership, trust, unincorporated association or other entity.

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

(a) Any income of the Company that is exempt from federal income tax and not otherwise taken into account in computing Profits and Losses will be added to taxable income or loss;

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

(c) Gain or loss resulting from any taxable disposition of Company property shall be computed by reference to the Adjusted Book Value of the property disposed of, notwithstanding the fact that the Adjusted Book Value differs from the adjusted basis of the property for federal income tax purposes; and

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

2.17 Rex . “Rex” shall mean Rex Energy Operating Corp.

2.18 SHG . “SHG” shall mean Shaner Hotel Group Limited Partnership.

2.19 Transfer . “Transfer” means, when used as a noun, any gift, sale, hypothecation, pledge, assignment, attachment, or other transfer, and, when used as a verb, give, sell, hypothecate, pledge, assign, or otherwise transfer.

2.20 Treasury Regulations . “Treasury Regulations” means all proposed, temporary and final Treasury Regulations promulgated under the Code as in effect from time to time.

2.21 Voting Interest . “Voting Interest” means a Member’s right to vote in matters coming before the Company and to participate in the management of the Company.

2.22 Voting Interest Percentage . “Voting Interest Percentage” means, with respect to a particular Member, that Member’s percentage of the total aggregate Voting Interests in the Company, as set forth after the Member’s name on Schedule I, as amended from time to time.

ARTICLE 3

CAPITAL CONTRIBUTIONS

3.1 Capital Contributions . Each Member will make an initial cash Capital Contribution to the Company in an amount set forth on Schedule I.

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3.2 Additional Contributions and Withdrawals . Except as set forth in Section 3.1, no Member will be required to make any Capital Contributions.

3.3 Negative Capital Accounts . A Member with a negative balance in his or her Capital Account at no time during the term of the Company or upon dissolution and liquidation of it, has any obligation to the Company or the other Members to restore that negative balance, except (i) as may be required by law, or (ii) in respect of any negative balance resulting from a withdrawal of capital or dissolution in contravention of this Agreement.

3.4 Withdrawal or Reduction of Capital Contributions . A Member may not receive from the Company any portion of a Capital Contribution until all indebtedness, liabilities of the Company, except any indebtedness, liabilities and obligations to Members on account of their Capital Contributions, has been paid or there remains property of the Company, in the sole discretion of a Member, sufficient to pay them.

ARTICLE 4

COSTS AND EXPENSES

4.1 Operating Costs . The Company will pay or cause to be paid all costs and expenses of the Company incurred by the Company in pursuing and conducting, or otherwise related to, the business of the Company.

4.2 Reimbursement the Members . The Company will reimburse the Members for any reasonable out-of-pocket costs and expenses incurred by them in pursuing and conducting, or otherwise related to, the business of the Company.

ARTICLE 5

ALLOCATIONS AND DISTRIBUTIONS

5.1 Allocations .

(a) Allocation of Profits and Losses . Except as provided in subparagraphs (b) and (c) of this Section, all Profits and Losses for each Fiscal Year will be allocated to Members in accordance with their respective Economic Interest Percentages.

(b) Special Allocations . All capitalized terms used in this Section not otherwise defined in this Agreement have the meaning set forth in the Treasury Regulations promulgated pursuant to Code Section 704. The following special allocations will be made in the following order:

(i) Property Contributions . In accordance with Code Section 704(c) and the Treasury Regulations thereunder, income, gain, loss and deduction with respect to any property contributed to the capital of the Company solely for tax purposes, will be allocated among the Members so as to take account of any variation between the adjusted basis of that property to the Company for federal income tax purposes and its initial fair market value. Any elections or decisions relating to these allocations will be made by the Tax Matters Partner in any manner that reasonably reflects the purpose and intention of this Agreement.

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(ii) Minimum Gain Chargeback . Except as otherwise provided in Treasury Regulation Section 1.704-2(f), notwithstanding any other provision of this Section 5.1, if there is a net decrease in Partnership Minimum Gain during any Adjustment Period, each Member will be specially allocated items of Company income and gain for the period (and, if necessary, subsequent periods) in an amount equal to that Member’s share of the net decrease in Partnership Minimum Gain, determined in accordance with Treasury Regulation Section 1.704-2(g). Allocations pursuant to the previous sentence will be made in proportion to the respective amounts required to be allocated to each Member. The items to be so allocated will be determined in accordance with Treasury Regulation Section 1.704-2(f)(6) and 1.704-2(j)(2). This subsection is intended to comply with the minimum gain chargeback requirement in Treasury Regulation Section 1.704-2(f) and may be interpreted consistently with it.

(iii) Partner Minimum Gain Chargeback . Except as otherwise provided in Treasury Regulation Section 1.704-2(i)(4), notwithstanding any other provision of this Section, if there is a net decrease in Partner Nonrecourse Debt Minimum Gain attributable to a Partner Nonrecourse Debt during any period, each Member who has a share of the Partner Nonrecourse Debt Minimum Gain attributable to the Partner Nonrecourse Debt, determined in accordance with Treasury Regulation Section 1.704-2(i)(5), will be specially allocated items of Company income and gain for the Adjustment Period (and, if necessary, subsequent Adjustment Periods) in an amount equal to that Member’s share of the net decrease in Partner Nonrecourse Debt Minimum Gain attributable to the Partner Nonrecourse Debt, determined in accordance with Treasury Regulation Section 1.704-2(i)(4). Allocations pursuant to the previous sentence will be made in proportion to the respective amounts required to be allocated to each Member pursuant thereto. The items to be so allocated will be determined in accordance with Treasury Regulation Sections 1.704-2(i)(4) and 1.704-2(j)(2). This subsection is intended to comply with the minimum gain chargeback requirement in Treasury Regulation Section 1.704-2(i)(4) and must be interpreted consistently with it.

(iv) Qualified Income Offset . If any Member unexpectedly receives any adjustments, allocations, or distributions described in Treasury

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Regulation Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6), items of Company income and gain will be specially allocated to each such Member in an amount and manner sufficient to eliminate, to the extent required by the Treasury Regulations, the Capital Account deficit of that Member as quickly as possible, provided that an allocation pursuant to this subsection will be made only if and to the extent that Member would have a Capital Account deficit requiring elimination pursuant to the Treasury Regulations after all other allocations provided for in this Section 5.1 have been tentatively made as if this subsection were not in the Agreement.

(v) Nonrecourse Deductions . Nonrecourse Deductions for any period will be specially allocated among the Members in proportion to their Economic Interests.

(vi) Partner Nonrecourse Deductions . Any Partner Nonrecourse Deductions for any period will be specially allocated to the Member who bears the economic risk of loss with respect to the Partner Nonrecourse Debt to which the Partner Nonrecourse Deductions are attributable in accordance with Treasury Regulation Section 1.704-2(i)(1).

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

(viii) Compensation Income . If any Member is determined to recognize compensation income upon his or her receipt of an Economic Interest, that Member will be allocated all corresponding items of Company deduction.

(c) Compliance with Treasury Regulations . The provisions of this Agreement, as amended, relating to the maintenance of Capital Accounts are intended to comply with Treasury Regulation Section 1.704-1(b), and must be interpreted and applied in a manner consistent with those Treasury Regulations. If the Tax Matters Partner determines that it is prudent to modify the manner in which the Capital Accounts, or any debits or credits thereto, are computed to comply with those Treasury Regulations, the Tax Matters Partner may make such modification, if it is not likely to have a material effect on the amounts distributable to any Member upon the dissolution of the Company.

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(d) Allocation to Transferred Interests . Profits, gains, losses, deductions and credits allocated to an Economic Interest assigned or reissued during a Fiscal Year of the Company will be allocated to the Person who was the holder of such Economic Interest during the Fiscal Year, in proportion to the number of days that each holder was recognized as the owner of the Economic Interest during such Fiscal Year or in any other proportion permitted by the Code and selected by the Members, without regard to results of Company operations during the period in which each holder was recognized as the owner of the Economic Interest during the Fiscal Year, and without regard to the date, amount or recipient of any distributions which may have been made with respect to that Economic Interest.

5.2 Distributions .

(a) Cash Distributions . From time to time (but at least once each calendar quarter) the Members will determine in their reasonable judgment to what extent (if any) the Company’s cash on hand exceeds its current and anticipated needs, including, without limitation, for operating expenses, debt service, and a reasonable contingency reserve. If an excess exists, the Members will cause the Company to distribute to the Members, in accordance with their Economic Interest Percentages, an amount in cash equal to that excess.

(b) Allocation of Distributions . Distributions to Members will be allocated among such Members in accordance with their respective Economic Interest Percentages as of the date of the distribution, without regard to the length of time the Member has held the Economic Interest.

(c) Distribution Upon Liquidation . All distributions by the Company upon its final liquidation and dissolution will be made to the Members, pro rata in accordance with the balance in the Members’ Capital Accounts, after adjustment to reflect all Profits and Losses (including unrealized appreciation and depreciation allocable in accordance with Section 5.3) for the Fiscal Year in which the liquidation occurs.

5.3 Distributions in Kind . If the Members determine that a portion of the Company’s assets should be distributed in kind to the Members, an independent appraisal of the fair market value of each of those assets shall be obtained as of a date reasonably close to the date of the distribution. Any unrealized appreciation or depreciation with respect to the asset will be allocated among the Members in proportion with each Member’s Economic Interest in the Company (assuming that the property is sold for the appraised value) and distribution of any of those assets in kind to a Member will be considered a distribution of an amount equal to the assets’ appraised fair market value for purposes of determining the Capital Account of the distributee.

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5.4 Credit . For all income tax purposes, credits of the Company claimed for a Fiscal Year will be allocated among the Members in the same manner as Losses are allocated among the Members pursuant to Section 5.1(a).

5.5 Offset . The Company may offset all amounts owing to the Company by a Member against any distribution to be made to the Member.

5.6 Limitation Upon Distributions . No distribution will be declared and paid unless, after the distribution is made, the assets of the Company are in excess of all liabilities of the Company.

ARTICLE 6

MANAGEMENT

6.1 Management . The powers of the Company will be exercised by or under the authority of, and the business and affairs of the Company will be managed under, the direction of three Managers. If any Manger dies, are judicially declared incompetent, resign or are removed and a successor is not appointed for this Manager pursuant to this Agreement, then the Company shall be dissolved. Any Person, other than a Member, dealing with the Company, may rely on the authority of the Managers in taking any action in the name of the Company without inquiry into the provisions of, or compliance with, this Agreement, regardless of whether that action is actually taken in accordance with the provisions of this Agreement. The Members agree that the initial Managers shall be a Person appointed by SHG, a Person appointed by Rex and a person appointed by Bruce, and they shall serve in that capacity until removed and their successors have been appointed and have qualified. However, and in any event, no Member may propose, appoint, select, or vote for a Manager who is not also a United States citizen.

6.2 Powers of the Managers .

(a) The Managers, by a Majority Vote of the Manager’s Voting Interest Percentages (which shall be equal to the Voting Interest Percentage of the Member that appointe