UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 2017
OR
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________ to _______________
Commission File Number: 000-51719
LINNLOGOA19.JPG
LINN ENERGY, INC.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation or organization)
81-5366183
(I.R.S. Employer
Identification No.)
600 Travis
Houston, Texas
(Address of principal executive offices)
77002
(Zip Code)
(281) 840-4000
(Registrant’s telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes   x     No   ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes   x     No   ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
¨
Accelerated filer
¨
Non-accelerated filer
¨
(Do not check if a smaller reporting company)
 
 
 
Smaller reporting company
x
 
 
Emerging growth company
¨





If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes   ¨     No   x
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes   x     No   ¨
As of July 31, 2017, there were 88,511,309 shares of Class A common stock, par value $0.001 per share, outstanding.
 



TABLE OF CONTENTS
 
 
Page
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

i

Table of Contents

GLOSSARY OF TERMS
As commonly used in the oil and natural gas industry and as used in this Quarterly Report on Form 10-Q, the following terms have the following meanings:
Bbl. One stock tank barrel or 42 United States gallons liquid volume.
Bcf. One billion cubic feet.
Bcfe. One billion cubic feet equivalent, determined using the ratio of six Mcf of natural gas to one Bbl of oil, condensate or natural gas liquids.
Btu. One British thermal unit, which is the heat required to raise the temperature of a one-pound mass of water from 58.5 degrees to 59.5 degrees Fahrenheit.
MBbls. One thousand barrels of oil or other liquid hydrocarbons.
MBbls/d. MBbls per day.
Mcf. One thousand cubic feet.
Mcfe. One thousand cubic feet equivalent, determined using the ratio of six Mcf of natural gas to one Bbl of oil, condensate or natural gas liquids.
MMBbls. One million barrels of oil or other liquid hydrocarbons.
MMBtu. One million British thermal units.
MMcf. One million cubic feet.
MMcf/d. MMcf per day.
MMcfe. One million cubic feet equivalent, determined using the ratio of six Mcf of natural gas to one Bbl of oil, condensate or natural gas liquids.
MMcfe/d. MMcfe per day.
MMMBtu. One billion British thermal units.
NGL. Natural gas liquids, which are the hydrocarbon liquids contained within natural gas.

ii

Table of Contents

PART I – FINANCIAL INFORMATION
Item 1.
Financial Statements
LINN ENERGY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
Successor
 
 
Predecessor
 
June 30,
2017
 
 
December 31,
2016
(in thousands, except share and unit amounts)
 
 
 
 
ASSETS
 
 
 
 
Current assets:
 
 
 
 
Cash and cash equivalents
$
16,903

 
 
$
694,857

Accounts receivable – trade, net
163,935

 
 
198,064

Derivative instruments
23,959

 
 

Restricted cash
98,616

 
 
1,602

Other current assets
71,836

 
 
105,310

Assets held for sale
236,421

 
 

Current assets of discontinued operations
235,643

 
 
701

Total current assets
847,313

 
 
1,000,534

 
 
 
 
 
Noncurrent assets:
 
 
 
 
Oil and natural gas properties (successful efforts method)
1,444,110

 
 
12,349,117

Less accumulated depletion and amortization
(37,572
)
 
 
(9,843,908
)
 
1,406,538

 
 
2,505,209

 
 
 
 
 
Other property and equipment
441,483

 
 
618,262

Less accumulated depreciation
(12,739
)
 
 
(217,724
)
 
428,744

 
 
400,538

 
 
 
 
 
Derivative instruments
12,759

 
 

Deferred income taxes
492,182

 
 

Other noncurrent assets
13,980

 
 
13,984

Noncurrent assets of discontinued operations

 
 
740,326

 
518,921

 
 
754,310

Total noncurrent assets
2,354,203

 
 
3,660,057

Total assets
$
3,201,516

 
 
$
4,660,591

 
 
 
 
 
LIABILITIES AND EQUITY (DEFICIT)
 
 
 
 
Current liabilities:
 
 
 
 
Accounts payable and accrued expenses
$
268,605

 
 
$
295,081

Derivative instruments
486

 
 
82,508

Current portion of long-term debt, net

 
 
1,937,729

Other accrued liabilities
135,416

 
 
25,979

Liabilities held for sale
36,387

 
 

Current liabilities of discontinued operations
28,218

 
 
321

Total current liabilities
469,112

 
 
2,341,618

 
 
 
 
 
Derivative instruments

 
 
11,349

Long-term debt
183,430

 
 

Other noncurrent liabilities
264,025

 
 
360,405

Noncurrent liabilities of discontinued operations

 
 
39,202

Liabilities subject to compromise

 
 
4,305,005

 
 
 
 
 

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Table of Contents
LINN ENERGY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS - Continued
(Unaudited)


 
Successor
 
 
Predecessor
 
June 30,
2017
 
 
December 31,
2016
(in thousands, except share and unit amounts)
 
 
 
 
Commitments and contingencies (Note 10)


 
 


Temporary equity:
 
 
 
 
Redeemable noncontrolling interests
28,132

 
 

Stockholders’/unitholders’ equity (deficit):
 
 
 
 
Predecessor units issued and outstanding (no units issued or outstanding at June 30, 2017; 352,792,474 units issued and outstanding at December 31, 2016)

 
 
5,386,885

Predecessor accumulated deficit

 
 
(7,783,873
)
Successor preferred stock ($0.001 par value, 30,000,000 shares authorized and no shares issued at June 30, 2017; no shares authorized or issued at December 31, 2016)

 
 

Successor Class A common stock ($0.001 par value, 270,000,000 shares authorized and 89,241,558 shares issued at June 30, 2017; no shares authorized or issued at December 31, 2016)
89

 
 

Successor additional paid-in capital
2,043,927

 
 

Successor retained earnings
212,801

 
 

Total stockholders’/unitholders’ equity (deficit)
2,256,817

 
 
(2,396,988
)
Total liabilities and equity (deficit)
$
3,201,516

 
 
$
4,660,591

The accompanying notes are an integral part of these condensed consolidated financial statements.

2

Table of Contents
LINN ENERGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)


 
Successor
 
 
Predecessor
 
Three Months Ended June 30, 2017
 
 
Three Months Ended June 30, 2016
(in thousands, except per share and per unit amounts)
 
 
 
 
Revenues and other:
 
 
 
 
Oil, natural gas and natural gas liquids sales
$
243,167

 
 
$
195,847

Gains (losses) on oil and natural gas derivatives
45,714

 
 
(183,794
)
Marketing revenues
12,547

 
 
8,551

Other revenues
6,391

 
 
23,641

 
307,819

 
 
44,245

Expenses:
 
 
 
 
Lease operating expenses
71,057

 
 
70,367

Transportation expenses
37,388

 
 
41,092

Marketing expenses
6,976

 
 
6,727

General and administrative expenses
34,458

 
 
52,169

Exploration costs
811

 
 
48

Depreciation, depletion and amortization
51,987

 
 
86,358

Taxes, other than income taxes
17,871

 
 
18,180

(Gains) losses on sale of assets and other, net
(306,969
)
 
 
2,517

 
(86,421
)
 
 
277,458

Other income and (expenses):
 
 
 
 
Interest expense, net of amounts capitalized
(7,551
)
 
 
(50,320
)
Other, net
(1,163
)
 
 
(1,226
)
 
(8,714
)
 
 
(51,546
)
Reorganization items, net
(3,377
)
 
 
485,798

Income from continuing operations before income taxes
382,149

 
 
201,039

Income tax expense (benefit)
158,770

 
 
(3,652
)
Income from continuing operations
223,379

 
 
204,691

Income (loss) from discontinued operations, net of income taxes
(3,322
)
 
 
3,801

Net income
$
220,057

 
 
$
208,492

 
 
 
 
 
Income from continuing operations per share/unit – Basic
$
2.49

 
 
$
0.58

Income from continuing operations per share/unit – Diluted
$
2.47

 
 
$
0.58

 
 
 
 
 
Income (loss) from discontinued operations per share/unit – Basic
$
(0.04
)
 
 
$
0.01

Income (loss) from discontinued operations per share/unit – Diluted
$
(0.04
)
 
 
$
0.01

 
 
 
 
 
Net income per share/unit – Basic
$
2.45

 
 
$
0.59

Net income per share/unit – Diluted
$
2.43

 
 
$
0.59

 
 
 
 
 
Weighted average shares/units outstanding – Basic
89,849

 
 
352,789

Weighted average shares/units outstanding – Diluted
90,484

 
 
352,789

The accompanying notes are an integral part of these condensed consolidated financial statements.


3

Table of Contents
LINN ENERGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - Continued
(Unaudited)


 
Successor
 
 
Predecessor
 
Four Months Ended June 30, 2017
 
 
Two Months Ended February 28, 2017
 
Six Months Ended June 30, 2016
(in thousands, except per share and per unit amounts)
 
 
 
 
 
 
Revenues and other:
 
 
 
 
 
 
Oil, natural gas and natural gas liquids sales
$
323,492

 
 
$
188,885

 
$
380,288

Gains (losses) on oil and natural gas derivatives
33,755

 
 
92,691

 
(74,341
)
Marketing revenues
15,461

 
 
6,636

 
17,612

Other revenues
8,419

 
 
9,915

 
51,947

 
381,127

 
 
298,127

 
375,506

Expenses:
 
 
 
 
 
 
Lease operating expenses
95,687

 
 
49,665

 
153,613

Transportation expenses
51,111

 
 
25,972

 
83,623

Marketing expenses
9,515

 
 
4,820

 
14,560

General and administrative expenses
44,869

 
 
71,745

 
135,889

Exploration costs
866

 
 
93

 
2,741

Depreciation, depletion and amortization
71,901

 
 
47,155

 
175,467

Impairment of long-lived assets

 
 

 
123,316

Taxes, other than income taxes
24,948

 
 
14,877

 
35,541

(Gains) losses on sale of assets and other, net
(306,524
)
 
 
672

 
3,786

 
(7,627
)
 
 
214,999

 
728,536

Other income and (expenses):
 
 
 
 
 
 
Interest expense, net of amounts capitalized
(11,751
)
 
 
(16,725
)
 
(134,193
)
Other, net
(1,551
)
 
 
(149
)
 
(1,158
)
 
(13,302
)
 
 
(16,874
)
 
(135,351
)
Reorganization items, net
(5,942
)
 
 
2,331,189

 
485,798

Income (loss) from continuing operations before income taxes
369,510

 
 
2,397,443

 
(2,583
)
Income tax expense (benefit)
153,455

 
 
(166
)
 
6,594

Income (loss) from continuing operations
216,055

 
 
2,397,609

 
(9,177
)
Loss from discontinued operations, net of income taxes
(3,254
)
 
 
(548
)
 
(1,130,077
)
Net income (loss)
$
212,801

 
 
$
2,397,061

 
$
(1,139,254
)
 
 
 
 
 
 
 
Income (loss) from continuing operations per share/unit – Basic
$
2.41

 
 
$
6.80

 
$
(0.02
)
Income (loss) from continuing operations per share/unit – Diluted
$
2.40

 
 
$
6.80

 
$
(0.02
)
 
 
 
 
 
 
 
Loss from discontinued operations per share/unit – Basic
$
(0.04
)
 
 
$
(0.01
)
 
$
(3.21
)
Loss from discontinued operations per share/unit – Diluted
$
(0.04
)
 
 
$
(0.01
)
 
$
(3.21
)
 
 
 
 
 
 
 
Net income (loss) per share/unit – Basic
$
2.37

 
 
$
6.79

 
$
(3.23
)
Net income (loss) per share/unit – Diluted
$
2.36

 
 
$
6.79

 
$
(3.23
)
 
 
 
 
 
 
 
Weighted average shares/units outstanding – Basic
89,849

 
 
352,792

 
352,511

Weighted average shares/units outstanding – Diluted
90,065

 
 
352,792

 
352,511

The accompanying notes are an integral part of these condensed consolidated financial statements.

4

Table of Contents

LINN ENERGY, INC.
CONDENSED CONSOLIDATED STATEMENT OF EQUITY (PREDECESSOR)
(Unaudited)
 
Units
 
Unitholders’ Capital
 
Accumulated Deficit
 
Total Unitholders’ Capital (Deficit)
 
(in thousands)
 
 
 
 
 
 
 
 
December 31, 2016 (Predecessor)
352,792

 
$
5,386,885

 
$
(7,783,873
)
 
$
(2,396,988
)
Net income
 
 

 
2,397,061

 
2,397,061

Other
 
 
(73
)
 

 
(73
)
February 28, 2017 (Predecessor)
352,792

 
5,386,812

 
(5,386,812
)
 

Cancellation of predecessor equity
(352,792
)
 
(5,386,812
)
 
5,386,812

 

February 28, 2017 (Predecessor)

 
$

 
$

 
$

CONDENSED CONSOLIDATED STATEMENT OF EQUITY (SUCCESSOR)
(Unaudited)
 
Class A Common Stock
 
Additional Paid-in Capital
 
Retained Earnings
 
Total Stockholders’ Equity
 
Shares
 
Amount
 
 
 
 
(in thousands)
 
 
 
 
 
 
 
 
 
 
Issuances of successor Class A common stock
89,230

 
$
89

 
$
2,021,142

 
$

 
$
2,021,231

Share-based compensation expenses
 
 

 
13,750

 

 
13,750

February 28, 2017 (Successor)
89,230

 
89

 
2,034,892

 

 
2,034,981

Net income
 
 

 

 
212,801

 
212,801

Issuances of successor Class A common stock
12

 

 

 

 

Repurchases of successor Class A common stock

 

 
(230
)
 

 
(230
)
Share-based compensation expenses
 
 

 
9,454

 

 
9,454

Other
 
 

 
(189
)
 

 
(189
)
June 30, 2017  (Successor)
89,242

 
$
89

 
$
2,043,927

 
$
212,801

 
$
2,256,817

The accompanying notes are an integral part of these condensed consolidated financial statements.

5

Table of Contents
LINN ENERGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)


 
Successor
 
 
Predecessor
 
Four Months Ended June 30, 2017
 
 
Two Months Ended February 28, 2017
 
Six Months Ended June 30, 2016
(in thousands)
 
 
 
 
 
 
Cash flow from operating activities:
 
 
 
 
 
 
Net income (loss)
$
212,801

 
 
$
2,397,061

 
$
(1,139,254
)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
 
 
 
 
 
 
Loss from discontinued operations
3,254

 
 
548

 
1,130,077

Depreciation, depletion and amortization
71,901

 
 
47,155

 
175,467

Impairment of long-lived assets

 
 

 
123,316

Deferred income taxes
131,055

 
 
(166
)
 
3,850

Noncash (gains) losses on oil and natural gas derivatives
(25,826
)
 
 
(104,263
)
 
931,251

Share-based compensation expenses
19,599

 
 
50,255

 
18,553

Amortization and write-off of deferred financing fees
82

 
 
1,338

 
9,227

(Gains) losses on sale of assets and other, net
(293,811
)
 
 
1,069

 
3,929

Reorganization items, net

 
 
(2,359,364
)
 
(498,954
)
Changes in assets and liabilities:
 
 
 
 
 
 
(Increase) decrease in accounts receivable – trade, net
27,212

 
 
(7,216
)
 
(12,046
)
(Increase) decrease in other assets
(1,245
)
 
 
402

 
(19,039
)
Increase in restricted cash

 
 
(80,164
)
 

Increase (decrease) in accounts payable and accrued expenses
(49,984
)
 
 
20,949

 
47,062

Increase in other liabilities
22,421

 
 
2,801

 
26,150

Net cash provided by (used in) operating activities – continuing operations
117,459

 
 
(29,595
)
 
799,589

Net cash provided by operating activities – discontinued operations
13,966

 
 
8,781

 
1,612

Net cash provided by (used in) operating activities
131,425

 
 
(20,814
)
 
801,201

 
 
 
 
 
 
 
Cash flow from investing activities:
 
 
 
 
 
 
Development of oil and natural gas properties
(61,534
)
 
 
(50,597
)
 
(80,909
)
Purchases of other property and equipment
(27,287
)
 
 
(7,409
)
 
(13,655
)
Proceeds from sale of properties and equipment and other
641,219

 
 
(166
)
 
(2,713
)
Net cash provided by (used in) investing activities – continuing operations
552,398

 
 
(58,172
)
 
(97,277
)
Net cash provided by (used in) investing activities – discontinued operations
(1,645
)
 
 
(584
)
 
26,166

Net cash provided by (used in) investing activities
550,753

 
 
(58,756
)
 
(71,111
)
 
 
 
 
 
 
 

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Table of Contents
LINN ENERGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - Continued
(Unaudited)

 
Successor
 
 
Predecessor
 
Four Months Ended June 30, 2017
 
 
Two Months Ended February 28, 2017
 
Six Months Ended June 30, 2016
(in thousands)
 
 
 
 
 
 
Cash flow from financing activities:
 
 
 
 
 
 
Proceeds from rights offerings, net

 
 
514,069

 

Proceeds from borrowings
160,000

 
 

 
978,500

Repayments of debt
(876,570
)
 
 
(1,038,986
)
 
(913,210
)
Debt issuance costs paid
(2,973
)
 
 

 
(623
)
Payment to holders of claims under the second lien notes

 
 
(30,000
)
 

Other
(87
)
 
 
(6,015
)
 
(20,687
)
Net cash provided by (used in) financing activities – continuing operations
(719,630
)
 
 
(560,932
)
 
43,980

Net cash used in financing activities – discontinued operations

 
 

 
(1,593
)
Net cash provided by (used in) financing activities
(719,630
)
 
 
(560,932
)
 
42,387

 
 
 
 
 
 
 
Net increase (decrease) in cash and cash equivalents
(37,452
)
 
 
(640,502
)
 
772,477

Cash and cash equivalents:
 
 
 
 
 
 
Beginning
54,355

 
 
694,857

 
2,168

Ending
16,903

 
 
54,355

 
774,645

Less cash and cash equivalents of discontinued operations at end of period

 
 

 
(15,008
)
Ending – continuing operations
$
16,903

 
 
$
54,355

 
$
759,637

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Table of Contents

LINN ENERGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1 – Basis of Presentation
When referring to Linn Energy, Inc. (formerly known as Linn Energy, LLC) (“Successor,” “LINN Energy” or the “Company”), the intent is to refer to LINN Energy, a newly formed Delaware corporation, and its consolidated subsidiaries as a whole or on an individual basis, depending on the context in which the statements are made. Linn Energy, Inc. is a successor issuer of Linn Energy, LLC pursuant to Rule 15d‑5 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). When referring to the “Predecessor” in reference to the period prior to the emergence from bankruptcy, the intent is to refer to Linn Energy, LLC, the predecessor that will be dissolved following the effective date of the Plan (as defined below) and resolution of all outstanding claims, and its consolidated subsidiaries as a whole or on an individual basis, depending on the context in which the statements are made.
The reference to “Berry” herein refers to Berry Petroleum Company, LLC, which was an indirect 100% wholly owned subsidiary of the Predecessor through February 28, 2017. Berry was deconsolidated effective December 3, 2016 (see Note 4). The reference to “LinnCo” herein refers to LinnCo, LLC, an affiliate of the Predecessor.
Nature of Business
LINN Energy is an independent oil and natural gas company that was formed in February 2017, in connection with the reorganization of the Predecessor. The Predecessor was publicly traded from January 2006 to February 2017. As discussed further in Note 2, on May 11, 2016 (the “Petition Date”), Linn Energy, LLC, certain of its direct and indirect subsidiaries, and LinnCo (collectively, the “LINN Debtors”) and Berry (collectively with the LINN Debtors, the “Debtors”), filed voluntary petitions (“Bankruptcy Petitions”) for relief under Chapter 11 of the U.S. Bankruptcy Code (“Bankruptcy Code”) in the U.S. Bankruptcy Court for the Southern District of Texas (“Bankruptcy Court”). The Debtors’ Chapter 11 cases were administered jointly under the caption In re Linn Energy, LLC, et al., Case No. 16-60040. During the pendency of the Chapter 11 proceedings, the Debtors operated their businesses as “debtors-in-possession” under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code. The Company emerged from bankruptcy effective February 28, 2017.
The Company’s properties are currently located in seven operating regions in the United States (“U.S.”), in the Rockies, the Hugoton Basin, the Mid-Continent, east Texas and north Louisiana (“TexLa”), the Permian Basin, Michigan/Illinois and south Texas. In July 2017, the Company divested all of its properties located in California.
Principles of Consolidation and Reporting
The information reported herein reflects all normal recurring adjustments that are, in the opinion of management, necessary for the fair presentation of the results for the interim periods. Certain information and note disclosures normally included in annual financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted under Securities and Exchange Commission (“SEC”) rules and regulations; as such, this report should be read in conjunction with the financial statements and notes in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016. The results reported in these unaudited condensed consolidated financial statements should not necessarily be taken as indicative of results that may be expected for the entire year.
The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany transactions and balances have been eliminated upon consolidation. Investments in noncontrolled entities over which the Company exercises significant influence are accounted for under the equity method. Redeemable noncontrolling interests on the condensed consolidated balance sheet as of June 30, 2017, relate to the noncontrolling Class B unitholders of the Company’s subsidiary, Linn Energy Holdco LLC (“Holdco”). See Note 12 and Note 17 for additional information.
The condensed consolidated financial statements for previous periods include certain reclassifications that were made to conform to current presentation. In addition, the Company has classified the assets and liabilities of its California properties, as

8

LINN ENERGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Continued
(Unaudited)

well as the results of operations and cash flows of its California properties and Berry, as discontinued operations on its condensed consolidated financial statements. Such reclassifications have no impact on previously reported net income (loss), stockholders’/unitholders’ equity (deficit) or cash flows. See Note 4 for additional information.
Bankruptcy Accounting
The condensed consolidated financial statements have been prepared as if the Company will continue as a going concern and reflect the application of Accounting Standards Codification 852 “Reorganizations” (“ASC 852”). ASC 852 requires that the financial statements, for periods subsequent to the Chapter 11 filing, distinguish transactions and events that are directly associated with the reorganization from the ongoing operations of the business. Accordingly, certain expenses, gains and losses that are realized or incurred in the bankruptcy proceedings are recorded in “reorganization items, net” on the Company’s condensed consolidated statements of operations. In addition, prepetition unsecured and under-secured obligations that may be impacted by the bankruptcy reorganization process have been classified as “liabilities subject to compromise” on the Company’s condensed consolidated balance sheet at December 31, 2016. These liabilities are reported at the amounts expected to be allowed as claims by the Bankruptcy Court, although they may be settled for less.
Upon emergence from bankruptcy on February 28, 2017, the Company adopted fresh start accounting which resulted in the Company becoming a new entity for financial reporting purposes. As a result of the application of fresh start accounting and the effects of the implementation of the plan of reorganization, the condensed consolidated financial statements on or after February 28, 2017, are not comparable with the condensed consolidated financial statements prior to that date. See Note 3 for additional information.
Use of Estimates
The preparation of the accompanying condensed consolidated financial statements in conformity with GAAP requires management of the Company to make estimates and assumptions about future events. These estimates and the underlying assumptions affect the amount of assets and liabilities reported, disclosures about contingent assets and liabilities, and reported amounts of revenues and expenses. The estimates that are particularly significant to the financial statements include estimates of the Company’s reserves of oil, natural gas and natural gas liquids (“NGL”), future cash flows from oil and natural gas properties, depreciation, depletion and amortization, asset retirement obligations, certain revenues and operating expenses, fair values of commodity derivatives and fair values of assets acquired and liabilities assumed. In addition, as part of fresh start accounting, the Company made estimates and assumptions related to its reorganization value, liabilities subject to compromise, the fair value of assets and liabilities recorded as a result of the adoption of fresh start accounting and income taxes.
As fair value is a market-based measurement, it is determined based on the assumptions that market participants would use. These estimates and assumptions are based on management’s best estimates and judgment. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, which management believes to be reasonable under the circumstances. Such estimates and assumptions are adjusted when facts and circumstances dictate. As future events and their effects cannot be determined with precision, actual results could differ from these estimates. Any changes in estimates resulting from continuing changes in the economic environment will be reflected in the financial statements in future periods.
Recently Issued Accounting Standards
In November 2016, the Financial Accounting Standards Board (“FASB”) issued an Accounting Standards Update (“ASU”) that is intended to address diversity in the classification and presentation of changes in restricted cash on the statement of cash flows. This ASU will be applied retrospectively as of the date of adoption and is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years (early adoption permitted). The Company is currently evaluating the impact of the adoption of this ASU on its financial statements and related disclosures. The adoption of this ASU is expected to result in the inclusion of restricted cash in the beginning and ending balances of cash on the statements of cash flows and disclosure reconciling cash and cash equivalents presented on the balance sheets to cash, cash equivalents and restricted cash on the statements of cash flows.

9

LINN ENERGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Continued
(Unaudited)

In March 2016, the FASB issued an ASU that is intended to simplify several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. The Company adopted this ASU on January 1, 2017. The adoption of this ASU had no impact on the Company’s historical financial statements or related disclosures. Upon adoption and subsequently this ASU will result in excess tax benefits, which were previously recorded in equity on the balance sheets and classified as financing activities on the statements of cash flows, being recorded in the statements of operations and classified as operating activities on the statements of cash flows. Additionally, the Company elected to begin accounting for forfeitures as they occur.
In February 2016, the FASB issued an ASU that is intended to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet. This ASU will be applied retrospectively as of the date of adoption and is effective for fiscal years beginning after December 15, 2018, and interim periods within those years (early adoption permitted). The Company is currently evaluating the impact of the adoption of this ASU on its financial statements and related disclosures. The Company expects the adoption of this ASU to impact its balance sheets resulting from an increase in both assets and liabilities related to the Company’s leasing activities.
In May 2014, the FASB issued an ASU that is intended to improve and converge the financial reporting requirements for revenue from contracts with customers. This ASU is effective for fiscal years beginning after December 15, 2017, and interim periods within those years (early adoption permitted for fiscal years beginning after December 15, 2016, including interim periods within that year). The Company does not plan to early adopt this ASU. The Company is currently evaluating the impact of the adoption of this ASU on its financial statements and related disclosures. The Company expects to use the cumulative-effect transition method, has completed an initial review of its contracts and is developing accounting policies to address the provisions of the ASU, but has not finalized any estimates of the potential impacts.
Note 2 – Emergence From Voluntary Reorganization Under Chapter 11
On the Petition Date, the Debtors filed Bankruptcy Petitions for relief under Chapter 11 of the Bankruptcy Code in the Bankruptcy Court. The Debtors’ Chapter 11 cases were administered jointly under the caption In re Linn Energy, LLC, et al., Case No. 16‑60040.
On December 3, 2016, the LINN Debtors filed the Amended Joint Chapter 11 Plan of Reorganization of Linn Energy, LLC and Its Debtor Affiliates Other Than Linn Acquisition Company, LLC (“LAC”) and Berry Petroleum Company, LLC (the “Plan”). The LINN Debtors subsequently filed amended versions of the Plan with the Bankruptcy Court.
On December 13, 2016, LAC and Berry filed the Amended Joint Chapter 11 Plan of Reorganization of Linn Acquisition Company, LLC and Berry Petroleum Company, LLC (the “Berry Plan” and together with the Plan, the “Plans”). LAC and Berry subsequently filed amended versions of the Berry Plan with the Bankruptcy Court.
On January 27, 2017, the Bankruptcy Court entered an order approving and confirming the Plans (the “Confirmation Order”). On February 28, 2017 (the “Effective Date”), the Debtors satisfied the conditions to effectiveness of the respective Plans, the Plans became effective in accordance with their respective terms and LINN Energy and Berry emerged from bankruptcy as stand-alone, unaffiliated entities.
Plan of Reorganization
In accordance with the Plan, on the Effective Date:
The Predecessor transferred all of its assets, including equity interests in its subsidiaries, other than LAC and Berry, to Linn Energy Holdco II LLC (“Holdco II”), a newly formed subsidiary of the Predecessor and the borrower under the Credit Agreement (as amended, the “Successor Credit Facility”) entered into in connection with the reorganization, in exchange for 100% of the equity of Holdco II and the issuance of interests in the Successor Credit Facility to certain of the Predecessor’s creditors in partial satisfaction of their claims (the “Contribution”). Immediately following the Contribution, the Predecessor transferred 100% of the equity interests in Holdco II to the Successor in exchange for approximately $530 million in cash and an amount of equity securities in the Successor not to exceed 49.90% of the

10

LINN ENERGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Continued
(Unaudited)

outstanding equity interests of the Successor, which the Predecessor distributed to certain of its creditors in satisfaction of their claims. Contemporaneously with the reorganization transactions and pursuant to the Plan, (i) LAC assigned all of its rights, title and interest in the membership interests of Berry to Berry Petroleum Corporation, (ii) all of the equity interests in LAC and the Predecessor were canceled and (iii) LAC and the Predecessor commenced liquidation, which is expected to be completed following the resolution of the respective companies’ outstanding claims.
The holders of claims under the Predecessor’s Sixth Amended and Restated Credit Agreement (“Predecessor Credit Facility”) received a full recovery, consisting of a cash paydown and their pro rata share of the $1.7 billion Successor Credit Facility. As a result, all outstanding obligations under the Predecessor Credit Facility were canceled.
Holdco II, as borrower, entered into the Successor Credit Facility with the holders of claims under the Predecessor Credit Facility, as lenders, and Wells Fargo Bank, National Association, as administrative agent, providing for a new reserve-based revolving loan with up to $1.4 billion in borrowing commitments and a new term loan in an original principal amount of $300 million . For additional information about the Successor Credit Facility, see Note 6.
The holders of the Company’s 12.00% senior secured second lien notes due December 2020 (the “Second Lien Notes”) received their pro rata share of (i)  17,678,889 shares of Class A common stock; (ii) certain rights to purchase shares of Class A common stock in the rights offerings, as described below; and (iii)  $30 million in cash. The holders of the Company’s 6.50% senior notes due May 2019, 6.25% senior notes due November 2019, 8.625% senior notes due 2020, 7.75% senior notes due February 2021 and 6.50% senior notes due September 2021 (collectively, the “Unsecured Notes”) received their pro rata share of (i)  26,724,396 shares of Class A common stock; and (ii) certain rights to purchase shares of Class A common stock in the rights offerings, as described below. As a result, all outstanding obligations under the Second Lien Notes and the Unsecured Notes and the indentures governing such obligations were canceled.
The holders of general unsecured claims (other than claims relating to the Second Lien Notes and the Unsecured Notes) against the LINN Debtors (the “LINN Unsecured Claims”) received their pro rata share of cash from two cash distribution pools totaling $40 million , as divided between a $2.3 million cash distribution pool for the payment in full of allowed LINN Unsecured Claims in an amount equal to $2,500 or less (and larger claims for which the holders irrevocably agreed to reduce such claims to $2,500 ), and a $37.7 million cash distribution pool for pro rata distributions to all remaining allowed general LINN Unsecured Claims. As a result, all outstanding LINN Unsecured Claims were fully satisfied, settled, released and discharged as of the Effective Date.
All units of the Predecessor that were issued and outstanding immediately prior to the Effective Date were extinguished without recovery. On the Effective Date, the Successor issued in the aggregate 89,229,892 shares of Class A common stock. No cash was raised from the issuance of the Class A common stock on account of claims held by the Predecessor’s creditors.
The Successor entered into a registration rights agreement with certain parties, pursuant to which the Company agreed to, among other things, file a registration statement with the SEC within 60 days of the Effective Date covering the offer and resale of “Registrable Securities” (as defined therein).
By operation of the Plan and the Confirmation Order, the terms of the Predecessor’s board of directors expired as of the Effective Date. The Successor formed a new board of directors, consisting of the Chief Executive Officer of the Predecessor, one director selected by the Successor and five directors selected by a six-person selection committee.
Rights Offerings
On October 25, 2016, the Company entered into a backstop commitment agreement (“Backstop Commitment Agreement”) with the parties thereto (collectively, the “Backstop Parties”). In accordance with the Plan, the Backstop Commitment Agreement and the rights offerings procedures filed in the Chapter 11 cases and approved by the Bankruptcy Court, the LINN Debtors offered eligible creditors the right to purchase Class A common stock upon emergence from the Chapter 11 cases for an aggregate purchase price of $530 million .

11

LINN ENERGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Continued
(Unaudited)

Under the Backstop Commitment Agreement, certain Backstop Parties agreed to purchase their pro rata share of the shares that were not duly subscribed to pursuant to the offerings at the discounted per share price set forth in the Backstop Commitment Agreement by parties other than Backstop Parties (the “Backstop Commitment”). Pursuant to the Backstop Commitment Agreement, the LINN Debtors agreed to pay the Backstop Parties on the Effective Date a commitment premium equal to 4.0% of the $530 million committed amount (the “Backstop Commitment Premium”), of which 3.0% was paid in cash and 1.0% was paid in the form of Class A common stock at the discounted per share price set forth in the Backstop Commitment Agreement.
On the Effective Date, all conditions to the rights offerings and the Backstop Commitment Agreement were met, and the LINN Debtors completed the rights offerings and the related issuances of Class A common stock.
Liabilities Subject to Compromise
The Predecessor’s condensed consolidated balance sheet as of December 31, 2016, includes amounts classified as “liabilities subject to compromise,” which represent prepetition liabilities that were allowed, or that the Company estimated would be allowed, as claims in its Chapter 11 cases. The following table summarizes the components of liabilities subject to compromise included on the condensed consolidated balance sheet:
 
Predecessor
 
December 31, 2016
 
(in thousands)
 
 
Accounts payable and accrued expenses
$
137,692

Accrued interest payable
144,184

Debt
4,023,129

Liabilities subject to compromise
$
4,305,005

Reorganization Items, Net
The Company incurred significant costs and recognized significant gains associated with the reorganization. Reorganization items represent costs and income directly associated with the Chapter 11 proceedings since the Petition Date, and also include adjustments to reflect the carrying value of certain liabilities subject to compromise at their estimated allowed claim amounts, as such adjustments were determined. The following tables summarize the components of reorganization items included on the condensed consolidated statements of operations:
 
Successor
 
 
Predecessor
 
Three Months Ended June 30, 2017
 
 
Three Months Ended June 30, 2016
(in thousands)
 
 
 
 
Legal and other professional advisory fees
$
(3,446
)
 
 
$
(13,451
)
Unamortized deferred financing fees, discounts and premiums

 
 
(52,045
)
Gain related to interest payable on Predecessor’s Second Lien Notes

 
 
551,000

Other
69

 
 
294

Reorganization items, net
$
(3,377
)
 
 
$
485,798




12

LINN ENERGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Continued
(Unaudited)

 
Successor
 
 
Predecessor
 
Four Months Ended June 30, 2017
 
 
Two Months Ended February 28, 2017
 
Six Months Ended June 30, 2016
(in thousands)
 
 
 
 
 
 
Gain on settlement of liabilities subject to compromise
$

 
 
$
3,724,750

 
$

Recognition of an additional claim for the Predecessor’s Second Lien Notes settlement

 
 
(1,000,000
)
 

Fresh start valuation adjustments

 
 
(591,525
)
 

Income tax benefit related to implementation of the Plan

 
 
264,889

 

Legal and other professional advisory fees
(6,016
)
 
 
(46,961
)
 
(13,451
)
Unamortized deferred financing fees, discounts and premiums

 
 

 
(52,045
)
Gain related to interest payable on Predecessor’s Second Lien Notes

 
 

 
551,000

Terminated contracts

 
 
(6,915
)
 

Other
74

 
 
(13,049
)
 
294

Reorganization items, net
$
(5,942
)
 
 
$
2,331,189

 
$
485,798


Note 3 – Fresh Start Accounting
Upon the Company’s emergence from Chapter 11 bankruptcy, it adopted fresh start accounting in accordance with the provisions of ASC 852 which resulted in the Company becoming a new entity for financial reporting purposes. In accordance with ASC 852, the Company was required to adopt fresh start accounting upon its emergence from Chapter 11 because (i) the holders of existing voting ownership interests of the Predecessor received less than 50% of the voting shares of the Successor and (ii) the reorganization value of the Company’s assets immediately prior to confirmation of the Plan was less than the total of all post-petition liabilities and allowed claims.
Upon adoption of fresh start accounting, the reorganization value derived from the enterprise value as disclosed in the Plan was allocated to the Company’s assets and liabilities based on their fair values (except for deferred income taxes) in accordance with ASC 805 “Business Combinations” (“ASC 805”). The amount of deferred income taxes recorded was determined in accordance with ASC 740 “Income Taxes” (“ASC 740”). The Effective Date fair values of the Company’s assets and liabilities differed materially from their recorded values as reflected on the historical balance sheet. The effects of the Plan and the application of fresh start accounting were reflected on the condensed consolidated balance sheet as of February 28, 2017, and the related adjustments thereto were recorded on the condensed consolidated statement of operations for the two months ended February 28, 2017.
As a result of the adoption of fresh start accounting and the effects of the implementation of the Plan, the Company’s condensed consolidated financial statements subsequent to February 28, 2017, are not comparable to its condensed consolidated financial statements prior to February 28, 2017. References to “Successor” relate to the financial position and results of operations of the reorganized Company as of and subsequent to February 28, 2017. References to “Predecessor” relate to the financial position of the Company prior to, and results of operations through and including, February 28, 2017.
The Company’s condensed consolidated financial statements and related footnotes are presented with a black line division, which delineates the lack of comparability between amounts presented after February 28, 2017, and amounts presented on or prior to February 28, 2017. The Company’s financial results for future periods following the application of fresh start accounting will be different from historical trends and the differences may be material.

13

LINN ENERGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Continued
(Unaudited)

Reorganization Value
Under ASC 852, the Successor determined a value to be assigned to the equity of the emerging entity as of the date of adoption of fresh start accounting. The Plan confirmed by the Bankruptcy Court estimated an enterprise value of $2.35 billion . The Plan enterprise value was prepared using an asset based methodology, as discussed further below. The enterprise value was then adjusted to determine the equity value of the Successor of approximately $2.03 billion . Adjustments to determine the equity value are presented below (in thousands):
Plan confirmed enterprise value
$
2,350,000

Fair value of debt
(900,000
)
Fair value of subsequently determined tax attributes
621,486

Fair value of vested Class B units
(36,505
)
Value of Successor’s stockholders’ equity
$
2,034,981

The subsequently determined tax attributes were primarily the result of the conversion from a limited liability company to a C corporation and differences in the accounting basis and tax basis of the Company’s oil and natural gas properties as of the Effective Date. The Class B units are incentive interest awards that were granted on the Effective Date by Holdco to certain members of its management (see Note 12), and the associated fair value was recorded as a liability of approximately $7 million in “other accrued liabilities” and temporary equity of approximately $29 million in “redeemable noncontrolling interests” on the condensed consolidated balance sheet at February 28, 2017.
The Company's principal assets are its oil and natural gas properties. The fair values of oil and natural gas properties were estimated using valuation techniques consistent with the income approach, converting future cash flows to a single discounted amount. Significant inputs used to determine the fair values of properties include estimates of: (i) reserves; (ii) future operating and development costs; (iii) future commodity prices; and (iv) a market-based weighted average cost of capital rate. These inputs require significant judgments and estimates by the Company’s management at the time of the valuation and are the most sensitive and subject to change. The underlying commodity prices embedded in the Company’s estimated cash flows are the product of a process that begins with New York Mercantile Exchange (“NYMEX”) forward curve pricing, adjusted for estimated location and quality differentials, as well as other factors that Company management believes will impact realizable prices.
See below under “Fresh Start Adjustments” for additional information regarding assumptions used in the valuation of the Company's various other significant assets and liabilities.
Condensed Consolidated Balance Sheet
The adjustments included in the following fresh start condensed consolidated balance sheet reflect the effects of the transactions contemplated by the Plan and executed by the Company on the Effective Date (reflected in the column “Reorganization Adjustments”) as well as fair value and other required accounting adjustments resulting from the adoption of fresh start accounting (reflected in the column “Fresh Start Adjustments”). The explanatory notes provide additional information with regard to the adjustments recorded, the methods used to determine the fair values and significant assumptions.


14

LINN ENERGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Continued
(Unaudited)

 
As of February 28, 2017
 
Predecessor
 
Reorganization Adjustments (1)
 
 
Fresh Start Adjustments
 
 
Successor
 
(in thousands)
ASSETS
 
 
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
734,166

 
$
(679,811
)
(2)  
 
$

 
 
$
54,355

Accounts receivable – trade, net
212,099

 

 
 
(7,808
)
(16)  
 
204,291

Derivative instruments
15,391

 

 
 

 
 
15,391

Restricted cash
1,602

 
80,164

(3)  
 

 
 
81,766

Other current assets
106,426

 
(15,983
)
(4)  
 
1,780

(17)  
 
92,223

Total current assets
1,069,684

 
(615,630
)
 
 
(6,028
)
 
 
448,026

 
 
 
 
 
 
 
 
 
 
Noncurrent assets:
 
 
 
 
 
 
 
 
 
Oil and natural gas properties (successful efforts method)
13,269,035

 

 
 
(11,082,258
)
(18)  
 
2,186,777

Less accumulated depletion and amortization
(10,044,240
)
 

 
 
10,044,240

(18)  
 

 
3,224,795

 

 
 
(1,038,018
)
 
 
2,186,777

 
 
 
 
 
 
 
 
 
 
Other property and equipment
641,586

 

 
 
(197,653
)
(19)  
 
443,933

Less accumulated depreciation
(230,952
)
 

 
 
230,952

(19)  
 

 
410,634

 

 
 
33,299

 
 
443,933

 
 
 
 
 
 
 
 
 
 
Derivative instruments
4,492

 

 
 

 
 
4,492

Deferred income taxes

 
264,889

(5)  
 
356,597

(5)  
 
621,486

Other noncurrent assets
15,003

 
151

(6)  
 
8,139

(20)  
 
23,293

 
19,495

 
265,040

 
 
364,736

 
 
649,271

Total noncurrent assets
3,654,924

 
265,040

 
 
(639,983
)
 
 
3,279,981

Total assets
$
4,724,608

 
$
(350,590
)
 
 
$
(646,011
)
 
 
$
3,728,007

 
 
 
 
 
 
 
 
 
 
LIABILITIES AND EQUITY (DEFICIT)
 
 
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
 
 
 
Accounts payable and accrued expenses
$
324,585

 
$
41,266

(7)  
 
$
(2,351
)
(21)  
 
$
363,500

Derivative instruments
7,361

 

 
 

 
 
7,361

Current portion of long-term debt, net
1,937,822

 
(1,912,822
)
(8)  
 

 
 
25,000

Other accrued liabilities
41,251

 
(1,026
)
(9)  
 
1,104

(22)  
 
41,329

Total current liabilities
2,311,019

 
(1,872,582
)
 
 
(1,247
)
 
 
437,190

 
 
 
 
 
 
 
 
 
 
Derivative instruments
2,116

 

 
 

 
 
2,116

Long-term debt

 
875,000

(10)  
 

 
 
875,000

Other noncurrent liabilities
402,776

 
(167
)
(11)  
 
(53,239
)
(23)  
 
349,370

Liabilities subject to compromise
4,301,912

 
(4,301,912
)
(12)  
 

 
 

 
 
 
 
 
 
 
 
 
 
Temporary equity:
 
 
 
 
 
 
 
 
 
Redeemable noncontrolling interests

 
29,350

(13)  
 

 
 
29,350


15

LINN ENERGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Continued
(Unaudited)

 
As of February 28, 2017
 
Predecessor
 
Reorganization Adjustments (1)
 
 
Fresh Start Adjustments
 
 
Successor
Stockholders’/unitholders’ equity (deficit):
 
 
 
 
 
 
 
 
 
Predecessor units issued and outstanding
5,386,812

 
(5,386,812
)
(14)  
 

 
 

Predecessor accumulated deficit
(7,680,027
)
 
2,884,740

(15)  
 
4,795,287

(24)  
 

Successor Class A common stock

 
89

(14)  
 

 
 
89

Successor additional paid-in capital

 
7,421,704

(14)  
 
(5,386,812
)
(24)  
 
2,034,892

Successor retained earnings

 

 
 

 
 

Total stockholders’/unitholders’ equity (deficit)
(2,293,215
)
 
4,919,721

 
 
(591,525
)
 
 
2,034,981

Total liabilities and equity (deficit)
$
4,724,608

 
$
(350,590
)
 
 
$
(646,011
)
 
 
$
3,728,007

Reorganization Adjustments:
1)
Represent amounts recorded as of the Effective Date for the implementation of the Plan, including, among other items, settlement of the Predecessor’s liabilities subject to compromise, repayment of certain of the Predecessor’s debt, cancellation of the Predecessor’s equity, issuances of the Successor’s Class A common stock, proceeds received from the Successor’s rights offerings and issuance of the Successor’s debt.
2)
Changes in cash and cash equivalents included the following:
(in thousands)
 
Borrowings under the Successor’s revolving loan
$
600,000

Borrowings under the Successor’s term loan
300,000

Proceeds from rights offerings
530,019

Removal of restriction on cash balance
1,602

Payment to holders of claims under the Predecessor Credit Facility
(1,947,357
)
Payment to holders of claims under the Second Lien Notes
(30,000
)
Payment of Berry’s ad valorem taxes
(23,366
)
Payment of the rights offerings backstop commitment premium
(15,900
)
Payment of professional fees
(13,043
)
Funding of the professional fees escrow account
(41,766
)
Funding of the general unsecured claims cash distribution pool
(40,000
)
Changes in cash and cash equivalents
$
(679,811
)
3)
Primarily reflects the transfer to restricted cash to fund the Predecessor’s professional fees escrow account and general unsecured claims cash distribution pool.
4)
Primarily reflects the write-off of the Predecessor’s deferred financing fees.
5)
Reflects deferred tax assets recorded as of the Effective Date as determined in accordance with ASC 740. The deferred tax assets were primarily the result of the conversion from a limited liability company to a C corporation and differences in the accounting basis and tax basis of the Company’s oil and natural gas properties as of the Effective Date.
6)
Reflects the capitalization of deferred financing fees related to the Successor’s revolving loan.

16

LINN ENERGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Continued
(Unaudited)

7)
Net increase in accounts payable and accrued expenses reflects:
(in thousands)
 
Recognition of payables for the professional fees escrow account
$
41,766

Recognition of payables for the general unsecured claims cash distribution pool
40,000

Payment of professional fees
(17,130
)
Payment of Berry’s ad valorem taxes
(23,366
)
Other
(4
)
Net increase in accounts payable and accrued expenses
$
41,266

8)
Reflects the settlement of the Predecessor Credit Facility through repayment of approximately $1.9 billion , net of the write-off of deferred financing fees and an increase of $25 million for the current portion of the Successor’s term loan.
9)
Reflects a decrease of approximately $8 million for the payment of accrued interest on the Predecessor Credit Facility partially offset by an increase of approximately $7 million related to noncash share-based compensation classified as a liability related to the incentive interest awards issued by Holdco to certain members of its management (see Note 12).
10)
Reflects borrowings of $900 million under the Successor Credit Facility, which includes a $600 million revolving loan and a $300 million term loan, net of $25 million for the current portion of the Successor’s term loan.
11)
Reflects a reduction in deferred tax liabilities as determined in accordance with ASC 740.
12)
Settlement of liabilities subject to compromise and the resulting net gain were determined as follows:
(in thousands)
 
Accounts payable and accrued expenses
$
134,599

Accrued interest payable
144,184

Debt
4,023,129

Total liabilities subject to compromise
4,301,912

Recognition of an additional claim for the Predecessor’s Second Lien Notes settlement
1,000,000

Funding of the general unsecured claims cash distribution pool
(40,000
)
Payment to holders of claims under the Second Lien Notes
(30,000
)
Issuance of Class A common stock to creditors
(1,507,162
)
Gain on settlement of liabilities subject to compromise
$
3,724,750

13)
Reflects redeemable noncontrolling interests classified as temporary equity related to the incentive interest awards issued by Holdco to certain members of its management. See Note 12 and Note 17 for additional information.

17

LINN ENERGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Continued
(Unaudited)

14)
Net increase in capital accounts reflects:
(in thousands)
 
Issuance of Class A common stock to creditors
$
1,507,162

Issuance of Class A common stock pursuant to the rights offerings
530,019

Payment of the rights offerings backstop commitment premium
(15,900
)
Payment of issuance costs
(50
)
Share-based compensation expenses
13,750

Cancellation of the Predecessor’s units issued and outstanding
5,386,812

Par value of Class A common stock
(89
)
Change in additional paid-in capital
7,421,704

Par value of Class A common stock
89

Predecessor’s units issued and outstanding
(5,386,812
)
Net increase in capital accounts
$
2,034,981

See Note 11 for additional information on the issuances of the Successor’s equity.
15)
Net decrease in accumulated deficit reflects:
(in thousands)
 
Recognition of gain on settlement of liabilities subject to compromise
$
3,724,750

Recognition of an additional claim for the Predecessor’s Second Lien Notes settlement
(1,000,000
)
Recognition of professional fees
(37,680
)
Write-off of deferred financing fees
(16,728
)
Recognition of deferred income taxes
264,889

Total reorganization items, net
2,935,231

Share-based compensation expenses
(50,255
)
Other
(236
)
Net decrease in accumulated deficit
$
2,884,740

Fresh Start Adjustments:
16)
Reflects a change in accounting policy from the entitlements method to the sales method for natural gas production imbalances.
17)
Reflects the recognition of intangible assets for the current portion of favorable leases, partially offset by decreases for well equipment inventory and the write-off of historical intangible assets.

18

LINN ENERGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Continued
(Unaudited)

18)
Reflects a decrease of oil and natural gas properties, based on the methodology discussed above, and the elimination of accumulated depletion and amortization. The following table summarizes the components of oil and natural gas properties as of the Effective Date:
 
Successor
 
 
Predecessor
 
Fair Value
 
 
Historical Book Value
(in thousands)
 
 
 
 
Proved properties
$
2,186,777

 
 
$
12,258,835

Unproved properties

 
 
1,010,200

 
2,186,777

 
 
13,269,035

Less accumulated depletion and amortization

 
 
(10,044,240
)
 
$
2,186,777

 
 
$
3,224,795

19)
Reflects a decrease of other property and equipment and the elimination of accumulated depreciation. The following table summarizes the components of other property and equipment as of the Effective Date:
 
Successor
 
 
Predecessor
 
Fair Value
 
 
Historical Book Value
(in thousands)
 
 
 
 
Natural gas plants and pipelines
$
342,924

 
 
$
426,914

Office equipment and furniture
39,211

 
 
106,059

Buildings and leasehold improvements
32,817

 
 
66,023

Vehicles
16,980

 
 
30,760

Land
7,747

 
 
3,727

Drilling and other equipment
4,254

 
 
8,103

 
443,933

 
 
641,586

Less accumulated depreciation

 
 
(230,952
)
 
$
443,933

 
 
$
410,634

In estimating the fair value of other property and equipment, the Company used a combination of cost and market approaches. A cost approach was used to value the Company’s natural gas plants and pipelines and other operating assets, based on current replacement costs of the assets less depreciation based on the estimated economic useful lives of the assets and age of the assets. A market approach was used to value the Company’s vehicles and land, using recent transactions of similar assets to determine the fair value from a market participant perspective.
20)
Reflects the recognition of intangible assets for the noncurrent portion of favorable leases, as well as increases in equity method investments and carbon credit allowances. Assets and liabilities for out-of-market contracts were valued based on market terms as of February 28, 2017, and will be amortized over the remaining life of the respective lease. The Company’s equity method investments were valued based on a market approach using a market EBITDA multiple. Carbon credit allowances were valued using a market approach based on trading prices for carbon credits on February 28, 2017.
21)
Primarily reflects the write-off of deferred rent partially offset by an increase in carbon emissions liabilities.
22)
Reflects an increase of the current portion of asset retirement obligations.
23)
Primarily reflects a decrease of approximately $49 million for asset retirement obligations and approximately $5 million for deferred rent, partially offset by an increase of approximately $1 million for carbon emissions liabilities. The fair value

19

LINN ENERGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Continued
(Unaudited)

of asset retirement obligations were estimated using valuation techniques that convert future cash flows to a single discounted amount. Significant inputs to the valuation include estimates of: (i) plug and abandon costs per well based on existing regulatory requirements; (ii) remaining life per well; (iii) future inflation factors; and (iv) a credit-adjusted risk-free interest rate. Carbon emissions liabilities were valued using a market approach based on trading prices for carbon credits on February 28, 2017.
24)
Reflects the cumulative impact of the fresh start accounting adjustments discussed above and the elimination of the Predecessor’s accumulated deficit.
Note 4 – Discontinued Operations, Other Divestitures and Joint Venture
Discontinued Operations
On July 31, 2017, the Company completed the sale of its interest in properties located in the San Joaquin Basin in California to Berry Petroleum Company, LLC (the “San Joaquin Basin Sale”) and received cash proceeds of approximately $257 million .
On July 21, 2017, the Company completed the sale of its interest in properties located in the Los Angeles Basin in California to Bridge Energy LLC (the “Los Angeles Basin Sale”) and received cash proceeds of approximately $94 million . The Company will receive an additional $7 million contingent payment if certain operational requirements are satisfied within one year.
As a result of the Company’s strategic exit from California (completed by the San Joaquin Basin Sale and Los Angeles Basin Sale), the Company classified the assets and liabilities, results of operations and cash flows of its California properties as discontinued operations on its condensed consolidated financial statements.
On December 3, 2016, LINN Energy filed an amended plan of reorganization that excluded Berry (see Note 2). As a result of its loss of control of Berry, LINN Energy concluded that it was appropriate to deconsolidate Berry effective on the aforementioned date and classified it as discontinued operations.
The following table presents carrying amounts of the assets and liabilities of the Company’s California properties classified as discontinued operations on the condensed consolidated balance sheets:
 
Successor
 
 
Predecessor
 
June 30, 2017
 
 
December 31, 2016
(in thousands)
 
 
 
 
Assets:
 
 
 
 
Oil and natural gas properties
$
213,442

 
 
$
728,190

Other property and equipment
11,339

 
 
11,402

Other
10,862

 
 
1,435

Total assets of discontinued operations
$
235,643

 
 
$
741,027

Liabilities:
 
 
 
 
Asset retirement obligations
$
26,774

 
 
$
38,042

Other
1,444

 
 
1,481

Total liabilities of discontinued operations
$
28,218

 
 
$
39,523

All balances of discontinued operations on the condensed consolidated balance sheets relate to the Company’s California properties, as Berry was deconsolidated effective December 3, 2016. At June 30, 2017 , the carrying values of the California properties were reduced to fair value less costs to sell, resulting in an impairment charge of approximately $13 million for the three months and four months ended June 30, 2017 . The impairment charge is included in “income (loss) from discontinued

20

LINN ENERGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Continued
(Unaudited)

operations, net of income taxes” on the condensed consolidated statements of operations. Other assets primarily include restricted cash and inventories, and other liabilities primarily include carbon emissions liabilities. All assets and liabilities related to the California properties were classified as current on the condensed consolidated balance sheet as of June 30, 2017 .
The following tables present summarized financial results of the Company’s California properties and Berry classified as discontinued operations on the condensed consolidated statements of operations:
 
Successor
 
 
Predecessor
 
Three Months Ended June 30, 2017
 
 
Three Months Ended June 30, 2016
(in thousands)
 
 
 
 
Revenues and other
$
20,511

 
 
$
129,245

Expenses
25,935

 
 
156,176

Other income and (expenses)
(2,074
)
 
 
(18,190
)
Reorganization items, net

 
 
49,086

Income (loss) from discontinued operations before income taxes
(7,498
)
 
 
3,965

Income tax expense (benefit)
(4,176
)
 
 
164

Income (loss) from discontinued operations, net of income taxes
$
(3,322
)
 
 
$
3,801


 
Successor
 
 
Predecessor
 
Four Months Ended June 30, 2017
 
 
Two Months Ended February 28, 2017
 
Six Months Ended June 30, 2016
(in thousands)
 
 
 
 
 
 
Revenues and other
$
27,636

 
 
$
14,891

 
$
235,949

Expenses
30,344

 
 
13,758

 
1,375,480

Other income and (expenses)
(2,791
)
 
 
(1,681
)
 
(39,470
)
Reorganization items, net

 
 

 
49,086

Loss from discontinued operations before income taxes
(5,499
)
 
 
(548
)
 
(1,129,915
)
Income tax expense (benefit)
(2,245
)
 
 

 
162

Loss from discontinued operations, net of income taxes
$
(3,254
)
 
 
$
(548
)
 
$
(1,130,077
)
Results of operations of Berry are only included in the three months and six months ended June 30, 2016 , as Berry was deconsolidated effective December 3, 2016. Other income and (expenses) include an allocation of interest expense for the California properties of approximately $2 million for each of the three months ended June 30, 2017 , and June 30, 2016 , and approximately $3 million , $2 million and $3 million for the four months ended June 30, 2017 , the two months ended February 28, 2017, and the six months ended June 30, 2016 , respectively, which represents interest on debt that was required to be repaid as a result of the sales.
Berry Transition Services and Separation Agreement
On the Effective Date, Berry entered into a Transition Services and Separation Agreement (the “TSSA”) with LINN Energy and certain of its subsidiaries to facilitate the separation of Berry’s operations from LINN Energy’s operations. Pursuant to the TSSA, LINN Energy continued to provide, or caused to be provided, certain administrative, management, operating, and other services and support to Berry during a transitional period following the Effective Date (the “Transition Services”).

21

LINN ENERGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Continued
(Unaudited)

Under the TSSA, Berry reimbursed LINN Energy for any and all reasonable, third-party out-of-pocket costs and expenses, without markup, actually incurred by LINN Energy, to the extent documented, in connection with providing the Transition Services. Additionally, Berry paid to LINN Energy a management fee of $6 million per month, prorated for partial months, during the period from the Effective Date through the last day of the second full calendar month after the Effective Date (the “Transition Period”) and paid $2.7 million per month, prorated for partial months, from the first day following the Transition Period through the last day of the second full calendar month thereafter (the “Accounting Period”). During the Accounting Period, the scope of the Transition Services was reduced to specified accounting and administrative functions. The Transition Period ended April 30, 2017, and the Accounting Period ended June 30, 2017 .
Other Divestitures
On June 30, 2017 , the Company completed the sale of its interest in properties located in the Salt Creek Field in Wyoming to Denbury Resources Inc. (the “Salt Creek Assets Sale”). Cash proceeds received from the sale of these properties were approximately $76 million and the Company recognized a net gain of approximately $22 million .
On May 31, 2017, the Company completed the sale of its interest in properties located in western Wyoming to Jonah Energy LLC (the “Jonah Assets Sale”). Cash proceeds received from the sale of these properties were approximately $560 million , net of costs to sell of approximately $6 million , and the Company recognized a net gain of approximately $279 million .
On May 9, 2017, the Company completed the sale of undeveloped acreage located in Ward County, Texas and received cash proceeds of approximately $4 million .
The three divestitures discussed above are not presented as discontinued operations because they do not represent a strategic shift that will have a major effect on the Company’s operations and financial results. The gains on these divestitures are included in “gains (losses) on sale of assets and other, net” on the condensed consolidated statements of operations.
Divestitures – Subsequent Events
On August 1, 2017, and July 31, 2017, the Company completed the sales of its interest in certain properties located in south Texas (the “South Texas Assets Sales”) related to definitive purchase and sale agreements entered into in June 2017 and received cash proceeds of approximately $9 million and approximately $23 million , respectively.
On July 28, 2017, the Company completed the sale of undeveloped acreage located in Lea and Eddy counties in New Mexico (the “Permian Acreage Sale”) related to a definitive purchase and sale agreement entered into in June 2017 and received cash proceeds of approximately $21 million .
Joint Venture – Pending
On June 27, 2017, the Company, through certain of its wholly owned subsidiaries, entered into an agreement with Citizen Energy II, LLC (“Citizen”) in which LINN Energy and Citizen will each contribute certain upstream assets located in Oklahoma to a newly formed company, Roan Resources LLC (“Roan”), focused on the accelerated development of the Merge/SCOOP/STACK play in the Mid-Continent region. In exchange for their respective contributions, LINN Energy and Citizen will equally split the equity interest in Roan. The transaction is anticipated to close in the third quarter of 2017, subject to closing conditions. There can be no assurance that all of the conditions to closing will be satisfied.
Assets and Liabilities Held For Sale
The assets and liabilities associated with the South Texas Assets Sales and the Permian Acreage Sale, as well as the properties to be contributed in the pending Roan joint venture, are classified as “held for sale” on the condensed consolidated balance sheet. At June 30, 2017, the Company’s condensed consolidated balance sheet included current assets of approximately $236 million included in “assets held for sale” and current liabilities of approximately $36 million included in “liabilities held for sale” related to these transactions.

22

LINN ENERGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Continued
(Unaudited)

The following table presents carrying amounts of the assets and liabilities of the Company’s properties classified as held for sale on the condensed consolidated balance sheet:
 
Successor
 
June 30, 2017
 
(in thousands)
 
 
Assets:
 
Oil and natural gas properties
$
224,918

Other property and equipment
11,070

Other
433

Total assets held for sale
$
236,421

Liabilities:
 
Asset retirement obligations
$
21,210

Other
15,177

Total liabilities held for sale
$
36,387

Other assets primarily include inventories and other liabilities primarily include accounts payable.
Note 5 – Oil and Natural Gas Properties
Oil and Natural Gas Capitalized Costs
As a result of the application of fresh start accounting, the Company recorded its oil and natural gas properties at fair value as of the Effective Date. The fair values of oil and natural gas properties are estimated using valuation techniques consistent with the income approach, converting future cash flows to a single discounted amount. Significant inputs used to determine the fair values of proved and unproved properties include estimates of: (i) reserves; (ii) future operating and development costs; (iii) future commodity prices; and (iv) a market-based weighted average cost of capital rate. These inputs require significant judgments and estimates by the Company’s management at the time of the valuation and are the most sensitive and subject to change. The fair value was estimated using inputs characteristic of a Level 3 fair value measurement. Aggregate capitalized costs related to oil, natural gas and NGL production activities with applicable accumulated depletion and amortization are presented below:
 
Successor
 
 
Predecessor
 
June 30, 2017
 
 
December 31, 2016
(in thousands)
 
 
 
 
Proved properties
$
1,443,916

 
 
$
11,350,257

Unproved properties
194

 
 
998,860

 
1,444,110

 
 
12,349,117

Less accumulated depletion and amortization
(37,572
)
 
 
(9,843,908
)
 
$
1,406,538

 
 
$
2,505,209

Impairment of Proved Properties
The Company evaluates the impairment of its proved oil and natural gas properties on a field-by-field basis whenever events or changes in circumstances indicate that the carrying value may not be recoverable. The carrying values of proved properties are reduced to fair value when the expected undiscounted future cash flows of proved and risk-adjusted probable and possible reserves are less than net book value.

23

LINN ENERGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Continued
(Unaudited)

Based on the analysis described above, for the six months ended June 30, 2016 , the Company recorded an impairment charge of approximately $123 million associated with proved oil and natural gas properties in the Mid-Continent region due to a decline in commodity prices, changes in expected capital development and a decline in the Company’s estimates of proved reserves. The carrying values of the impaired proved properties were reduced to fair value, estimated using inputs characteristic of a Level 3 fair value measurement. The impairment charges are included in “impairment of long-lived assets” on the condensed consolidated statement of operations. The Company recorded no impairment charges for the six months ended June 30, 2017 , or the three months ended June 30, 2016 .
Note 6 – Debt
The following summarizes the Company’s outstanding debt:
 
Successor
 
 
Predecessor
 
June 30, 2017
 
 
December 31, 2016
(in thousands, except percentages)
 
 
 
 
Successor revolving loan (1)
$
183,430

 
 
$

Predecessor credit facility (2)

 
 
1,654,745

Predecessor term loan (2)

 
 
284,241

6.50% senior notes due May 2019

 
 
562,234

6.25% senior notes due November 2019

 
 
581,402

8.625% senior notes due April 2020

 
 
718,596

12.00% senior secured second lien notes due December 2020

 
 
1,000,000

7.75% senior notes due February 2021

 
 
779,474

6.50% senior notes due September 2021

 
 
381,423

Net unamortized deferred financing fees

 
 
(1,257
)
Total debt, net
183,430

 
 
5,960,858

Less current portion, net (3)

 
 
(1,937,729
)
Less liabilities subject to compromise (4)

 
 
(4,023,129
)
Long-term debt
$
183,430

 
 
$

(1)  
Variable interest rate of 4.59% at June 30, 2017 .
(2)  
Variable interest rate of 5.50% at December 31, 2016 .
(3)  
Due to covenant violations, the Predecessor’s credit facility and term loan were classified as current at December 31, 2016 .
(4)  
The Predecessor’s senior notes and Second Lien Notes were classified as liabilities subject to compromise at December 31, 2016 . On the Effective Date, pursuant to the terms of the Plan, all outstanding amounts under these debt instruments were canceled.
Fair Value
The Company’s debt is recorded at the carrying amount on the condensed consolidated balance sheets. The carrying amounts of the credit facilities and term loans approximate fair value because the interest rates are variable and reflective of market rates. The Company used a market approach to determine the fair value of the Predecessor’s Second Lien Notes and senior notes using estimates based on prices quoted from third-party financial institutions, which is a Level 2 fair value measurement.

24

LINN ENERGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Continued
(Unaudited)

 
Predecessor
 
December 31, 2016
 
Carrying Value
 
Fair Value
 
(in thousands)
 
 
 
 
Senior secured second lien notes
$
1,000,000

 
$
863,750

Senior notes, net
3,023,129

 
1,179,224

Successor Credit Facility
On the Effective Date, pursuant to the terms of the Plan, the Company entered into the Successor Credit Facility with Holdco II as borrower and Wells Fargo Bank, National Association, as administrative agent, providing for: 1) a reserve-based revolving loan with an initial borrowing base of $1.4 billion and 2) a term loan in an original principal amount of $300 million .
On May 31, 2017, the Company entered into the First Amendment and Consent to Credit Agreement, pursuant to which among other modifications: 1) the term loan was paid in full and terminated using cash proceeds from the Jonah Assets Sale, and 2) the borrowing base for the revolving loan was reduced to $1 billion with additional agreed upon reductions for the Company’s other announced sales. As of June 30, 2017, total borrowings outstanding under the Successor Credit Facility were approximately $183 million and there was approximately $774 million of remaining available borrowing capacity (which includes a $7 million reduction for outstanding letters of credit). The maturity date is February 27, 2021.
Redetermination of the borrowing base under the Successor Credit Facility, based primarily on reserve reports using lender commodity price expectations at such time, occurs semi-annually, in April and October. The next scheduled borrowing base redetermination is to occur on October 1, 2017. At the Company’s election, interest on borrowings under the Successor Credit Facility is determined by reference to either the London Interbank Offered Rate (“LIBOR”) plus an applicable margin of 3.50% per annum or the alternate base rate (“ABR”) plus an applicable margin of 2.50% per annum. Interest is generally payable in arrears monthly for loans bearing interest based at the ABR and at the end of the applicable interest period for loans bearing interest at the LIBOR. The Company is required to pay a commitment fee to the lenders under the Successor Credit Facility, which accrues at a rate per annum of 0.50% on the average daily unused amount of the available revolving loan commitments of the lenders.
Holdco II has the right to prepay any borrowings under the Successor Credit Facility at any time without a prepayment penalty, other than customary “breakage” costs with respect to LIBOR loans.
The obligations under the Successor Credit Facility are secured by mortgages covering approximately 95% of the total value of the proved reserves of the oil and natural gas properties of the Company, and certain equipment and facilities associated therewith, along with liens on substantially all personal property of the Company and are guaranteed by the Company, Linn Energy Holdco LLC and Holdco II’s subsidiaries, subject to customary exceptions. Under the Successor Credit Facility, the Company is required to maintain certain financial covenants including the maintenance of (i) a reserve coverage ratio of at least 1.1 to 1.0 , tested on (a) the date of each scheduled borrowing base redetermination and (b) the date of each additional borrowing base redetermination done in conjunction with an asset sale, (ii) a maximum total net debt to last twelve months EBITDAX ratio of 4.0 to 1.0 beginning with the quarter ending September 30, 2017, and (iii) a minimum current ratio of 1.0 to 1.0 beginning with the quarter ending September 30, 2017.
The Successor Credit Facility also contains customary affirmative and negative covenants, including as to compliance with laws (including environmental laws, ERISA and anti-corruption laws), maintenance of required insurance, delivery of quarterly and annual financial statements, oil and natural gas engineering reports and budgets, maintenance and operation of property (including oil and natural gas properties), restrictions on the incurrence of liens and indebtedness, mergers, consolidations and sales of assets, transactions with affiliates and other customary covenants.

25

LINN ENERGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Continued
(Unaudited)

The Successor Credit Facility contains customary events of default and remedies for credit facilities of this nature. Failure to comply with the financial and other covenants in the Successor Credit Facility would allow the lenders, subject to customary cure rights, to require immediate payment of all amounts outstanding under the Successor Credit Facility.
Predecessor’s Credit Facility, Second Lien Notes and Senior Notes
On the Effective Date, pursuant to the terms of the Plan, all outstanding obligations under the Predecessor’s credit facility, Second Lien Notes and senior notes were canceled. See Note 2 for additional information.
Predecessor Covenant Violations
The Company’s filing of the Bankruptcy Petitions described in Note 2 constituted an event of default that accelerated the obligations under the Predecessor’s credit facility, Second Lien Notes and senior notes. For the two months ended February 28, 2017, contractual interest, which was not recorded, on the Second Lien Notes and senior notes was approximately $57 million . Under the Bankruptcy Code, the creditors under these debt agreements were stayed from taking any action against the Company as a result of an event of default.
Note 7 – Derivatives
Commodity Derivatives
Historically, the Company has hedged a portion of its forecasted production to reduce exposure to fluctuations in oil and natural gas prices and provide long-term cash flow predictability to manage its business. The current direct NGL hedging market is constrained in terms of price, volume, duration and number of counterparties, which limits the Company’s ability to effectively hedge its NGL production. The Company has also hedged its exposure to differentials in certain operating areas but does not currently hedge exposure to oil or natural gas differentials.
The Company has historically entered into commodity hedging transactions primarily in the form of swap contracts that are designed to provide a fixed price, collars and, from time to time, put options that are designed to provide a fixed price floor with the opportunity for upside. The Company enters into these transactions with respect to a portion of its projected production or consumption to provide an economic hedge of the risk related to the future commodity prices received or paid. The Company does not enter into derivative contracts for trading purposes. The Company did not designate any of its contracts as cash flow hedges; therefore, the changes in fair value of these instruments are recorded in current earnings. See Note 8 for fair value disclosures about oil and natural gas commodity derivatives.
The following table presents derivative positions for the periods indicated as of June 30, 2017 :
 
July 1  December 31, 2017
 
2018
 
2019
Natural gas positions:
 
 
 
 
 
Fixed price swaps (NYMEX Henry Hub):
 
 
 
 
 
Hedged volume (MMMBtu)
68,080

 
47,815

 
11,315

Average price ($/MMBtu)
$
3.17

 
$
3.01

 
$
2.97

Oil positions:
 
 
 
 
 
Fixed price swaps (NYMEX WTI):
 
 
 
 
 
Hedged volume (MBbls)
2,208

 
548

 

Average price ($/Bbl)
$
52.13

 
$
54.07

 
$

Collars (NYMEX WTI):
 
 
 
 
 
Hedged volume (MBbls)

 
1,825

 
1,825

Average floor price ($/Bbl)
$

 
$
50.00

 
$
50.00

Average ceiling price ($/Bbl)
$

 
$
55.50

 
$
55.50


26

LINN ENERGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Continued
(Unaudited)

During the four months ended June 30, 2017 , the Company entered into commodity derivative contracts consisting of oil swaps for January 2018 through December 2018 and natural gas swaps for January 2018 through December 2019. The Company did not enter into any commodity derivative contracts during the two months ended February 28, 2017, or the six months ended June 30, 2016 .
The natural gas derivatives are settled based on the closing price of NYMEX Henry Hub natural gas on the last trading day for the delivery month, which occurs on the third business day preceding the delivery month, or the relevant index prices of natural gas published in Inside FERC’s Gas Market Report on the first business day of the delivery month. The oil derivatives are settled based on the average closing price of NYMEX WTI crude oil for each day of the delivery month.
Balance Sheet Presentation
The Company’s commodity derivatives are presented on a net basis in “derivative instruments” on the condensed consolidated balance sheets. The following table summarizes the fair value of derivatives outstanding on a gross basis:
 
Successor
 
 
Predecessor
 
June 30, 2017
 
 
December 31, 2016
(in thousands)
 
 
 
 
Assets:
 
 
 
 
Commodity derivatives
$
55,058

 
 
$
19,369

Liabilities:
 
 
 
 
Commodity derivatives
$
18,826

 
 
$
113,226

By using derivative instruments to economically hedge exposures to changes in commodity prices, the Company exposes itself to credit risk and market risk. Credit risk is the failure of the counterparty to perform under the terms of the derivative contract. When the fair value of a derivative contract is positive, the counterparty owes the Company, which creates credit risk. The Company’s counterparties are participants in the Successor Credit Facility or were participants in the Predecessor Credit Facility. The Successor Credit Facility is secured by certain of the Company’s and its subsidiaries’ oil, natural gas and NGL reserves and personal property; therefore, the Company is not required to post any collateral. The Company does not receive collateral from its counterparties.
The maximum amount of loss due to credit risk that the Company would incur if its counterparties failed completely to perform according to the terms of the contracts, based on the gross fair value of financial instruments, was approximately $55 million at June 30, 2017 . The Company minimizes the credit risk in derivative instruments by: (i) limiting its exposure to any single counterparty; (ii) entering into derivative instruments only with counterparties that meet the Company’s minimum credit quality standard, or have a guarantee from an affiliate that meets the Company’s minimum credit quality standard; and (iii) monitoring the creditworthiness of the Company’s counterparties on an ongoing basis. In accordance with the Company’s standard practice, its commodity derivatives are subject to counterparty netting under agreements governing such derivatives and therefore the risk of loss due to counterparty nonperformance is somewhat mitigated.
Gains and Losses on Derivatives
Gains on derivatives were approximately $46 million and $34 million for the three months and four months ended June 30, 2017 , respectively, and approximately $93 million for the two months ended February 28, 2017. Losses on derivatives were approximately $184 million and $74 million for the three months and six months ended June 30, 2016 , respectively. Gains and losses on derivatives are reported on the condensed consolidated statements of operations in “gains (losses) on oil and natural gas derivatives.”
The Company received net cash settlements of approximately $2 million and $8 million for the three months and four months ended June 30, 2017 , respectively, and paid net cash settlements of approximately $12 million for the two months ended

27

LINN ENERGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Continued
(Unaudited)

February 28, 2017. The Company received net cash settlements of approximately $522 million and $856 million for the three months and six months ended June 30, 2016 , respectively.
Note 8 – Fair Value Measurements on a Recurring Basis
The Company accounts for its commodity derivatives at fair value (see Note 7) on a recurring basis. The Company determines the fair value of its oil and natural gas derivatives utilizing pricing models that use a variety of techniques, including market quotes and pricing analysis. Inputs to the pricing models include publicly available prices and forward price curves generated from a compilation of data gathered from third parties. Company management validates the data provided by third parties by understanding the pricing models used, obtaining market values from other pricing sources, analyzing pricing data in certain situations and confirming that those instruments trade in active markets. Assumed credit risk adjustments, based on published credit ratings and public bond yield spreads, are applied to the Company’s commodity derivatives.
Fair Value Hierarchy
In accordance with applicable accounting standards, the Company has categorized its financial instruments into a three-level fair value hierarchy based on the priority of inputs to the valuation technique. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3).
The following presents the fair value hierarchy for assets and liabilities measured at fair value on a recurring basis:
 
Successor
 
June 30, 2017
 
Level 2
 
Netting (1)
 
Total
 
(in thousands)
Assets:
 
 
 
 
 
Commodity derivatives
$
55,058

 
$
(18,340
)
 
$
36,718

Liabilities:
 
 
 
 
 
Commodity derivatives
$
18,826

 
$
(18,340
)
 
$
486

 
Predecessor
 
December 31, 2016
 
Level 2
 
Netting (1)
 
Total
 
(in thousands)
Assets:
 
 
 
 
 
Commodity derivatives
$
19,369

 
$
(19,369
)
 
$

Liabilities:
 
 
 
 
 
Commodity derivatives
$
113,226

 
$
(19,369
)
 
$
93,857

(1)  
Represents counterparty netting under agreements governing such derivatives.
Note 9 – Asset Retirement Obligations
The Company has the obligation to plug and abandon oil and natural gas wells and related equipment at the end of production operations. Estimated asset retirement costs are recognized as liabilities with an increase to the carrying amounts of the related long-lived assets when the obligation is incurred. The liabilities are included in “other accrued liabilities” and “other noncurrent liabilities” on the condensed consolidated balance sheets. Accretion expense is included in “depreciation, depletion and amortization” on the condensed consolidated statements of operations. The fair value of additions to the asset retirement obligations is estimated using valuation techniques that convert future cash flows to a single discounted amount. Significant

28

LINN ENERGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Continued
(Unaudited)

inputs to the valuation include estimates of: (i) plug and abandon costs per well based on existing regulatory requirements; (ii) remaining life per well; (iii) future inflation factors; and (iv) a credit-adjusted risk-free interest rate. These inputs require significant judgments and estimates by the Company’s management at the time of the valuation and are the most sensitive and subject to change.
The following table presents a reconciliation of the Company’s asset retirement obligations (in thousands):
Asset retirement obligations at December 31, 2016 (Predecessor)
$
402,162

Liabilities added from drilling
146

Accretion expense
4,024

Settlements
(618
)
Asset retirement obligations at February 28, 2017 (Predecessor)
$
405,714

Fresh start adjustment (1)
(48,317
)
Asset retirement obligations at February 28, 2017 (Successor)
$
357,397

Liabilities added from drilling
277

Liabilities associated with assets sold
(43,507
)
Liabilities associated with assets held for sale
(21,210
)
Liabilities associated with discontinued operations
(26,774
)
Accretion expense
7,107

Settlements
(3,172
)
Asset retirement obligations at June 30, 2017 (Successor)
$
270,118

(1)  
As a result of the application of fresh start accounting, the Successor recorded its asset retirement obligations at fair value as of the Effective Date.
Note 10 – Commitments and Contingencies
On May 11, 2016, the Debtors filed Bankruptcy Petitions for relief under Chapter 11 of the Bankruptcy Code in the Bankruptcy Court. The Debtors’ Chapter 11 cases were administered jointly under the caption In re Linn Energy, LLC, et al., Case No. 16‑60040. On January 27, 2017, the Bankruptcy Court entered the Confirmation Order. Consummation of the Plan was subject to certain conditions set forth in the Plan. On the Effective Date, all of the conditions were satisfied or waived and the Plan became effective and was implemented in accordance with its terms. The LINN Debtors Chapter 11 cases will remain pending until the final resolution of all outstanding claims.
The commencement of the Chapter 11 proceedings automatically stayed certain actions against the Company, including actions to collect prepetition liabilities or to exercise control over the property of the Company’s bankruptcy estates. For certain statewide class action royalty payment disputes, the Company filed notices advising that it had filed for bankruptcy protection and seeking a stay, which was granted. However, the Company is, and will continue to be until the final resolution of all claims, subject to certain contested matters and adversary proceedings stemming from the Chapter 11 proceedings.
In March 2017, Wells Fargo Bank, National Association (“Wells Fargo”), the administrative agent under the Predecessor Credit Facility, filed a motion in the Bankruptcy Court seeking payment of post-petition default interest of approximately $31 million . The Company has vigorously disputed that Wells Fargo is entitled to any default interest based on the plain language of the Plan and Confirmation Order. A hearing was held on April 27, 2017, and the parties are awaiting a ruling from the Bankruptcy Court on this matter.
The Company is not currently a party to any litigation or pending claims that it believes would have a material adverse effect on its overall business, financial position, results of operations or liquidity; however, cash flow could be significantly impacted in the reporting periods in which such matters are resolved.

29

LINN ENERGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Continued
(Unaudited)

During the six months ended June 30, 2017 , and the six months ended June 30, 2016 , the Company made no significant payments to settle any legal, environmental or tax proceedings. The Company regularly analyzes current information and accrues for probable liabilities on the disposition of certain matters as necessary. Liabilities for loss contingencies arising from claims, assessments, litigation or other sources are recorded when it is probable that a liability has been incurred and the amount can be reasonably estimated.
Note 11 – Equity (Deficit)
Cancellation of Units and Issuance of Class A Common Stock
In accordance with the Plan, on the Effective Date:
All units in the Predecessor that were issued and outstanding immediately prior to the Effective Date were extinguished without recovery;
17,678,889 shares of Class A common stock were issued pro rata to holders of the Second Lien Notes with claims allowed under the Plan;
26,724,396 shares of Class A common stock were issued pro rata to holders of Unsecured Notes with claims allowed under the Plan;
471,110 shares of Class A common stock were issued to commitment parties under the Backstop Commitment Agreement in respect of premium due thereunder;
2,995,691 shares of Class A common stock were issued to commitment parties under the Backstop Commitment Agreement in connection with their backstop obligation thereunder; and
41,359,806 shares of Class A common stock were issued to participants in the rights offerings extended by the Company to certain holders of claims arising under the Second Lien Notes and the Unsecured Notes (including, in each case, certain of the commitment parties party to the Backstop Commitment Agreement).
With the exception of shares of Class A common stock issued to commitment parties pursuant to their obligations under the Backstop Commitment Agreement, shares of Class A common stock were issued under the Plan pursuant to an exemption from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), under Section 1145 of the Bankruptcy Code. Shares of Class A common stock issued to commitment parties pursuant to their obligations under the Backstop Commitment Agreement were issued pursuant to an exemption from the registration requirements of the Securities Act provided by Section 4(a)(2) thereof.
As of the Effective Date, there were 89,229,892 shares of Class A common stock, par value $0.001 per share, issued and outstanding.
Share Repurchase Program
On June 1, 2017, the Company’s Board of Directors announced that it had authorized the repurchase of up to $75 million of the Company’s outstanding shares of Class A common stock. On June 28, 2017, the Company’s Board of Directors announced that it had authorized an increase in the previously announced share repurchase program to up to a total of $200 million of the Company’s outstanding shares of Class A common stock. In June 2017, the Company repurchased 7,540 shares of Class A common stock at an average price of $30.48 per share for a total cost of approximately $230,000 .
In addition, in July 2017, the Company repurchased 833,763 shares of Class A common stock at an average price of $32.43 per share for a total cost of approximately $27 million .

30

LINN ENERGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Continued
(Unaudited)

Dividends/Distributions
Under the Predecessor’s limited liability company agreement, unitholders were entitled to receive a distribution of available cash, which included cash on hand plus borrowings less any reserves established by the Predecessor’s Board of Directors to provide for the proper conduct of the Predecessor’s business (including reserves for future capital expenditures, acquisitions and anticipated future credit needs) or to fund distributions, if any, over the next four quarters. In October 2015, the Predecessor’s Board of Directors determined to suspend payment of the Predecessor’s distribution. The Successor currently has no intention of paying cash dividends and any future payment of cash dividends would be subject to the restrictions in the Successor Credit Facility.
Note 12 – Share-Based Compensation
The Company had no equity awards outstanding as of December 31, 2016. In accordance with the Plan, in February 2017, the Company implemented the Linn Energy, Inc. 2017 Omnibus Incentive Plan (the “Omnibus Incentive Plan”) pursuant to which employees and consultants of the Company and its affiliates are eligible to receive stock options, restricted stock, performance awards, other stock-based awards and other cash-based awards.
The Committee (as defined in the Omnibus Incentive Plan) has broad authority under the Omnibus Incentive Plan to, among other things: (i) select participants; (ii) determine the types of awards that participants receive and the number of shares that are subject to such awards; and (iii) establish the terms and conditions of awards, including the price (if any) to be paid for the shares or the award. As of the Effective Date, an aggregate of 6,444,381 shares of Class A common stock were reserved for issuance under the Omnibus Incentive Plan (the “Share Reserve”). Additional shares of Class A common stock may be issued in excess of the Share Reserve for the sole purpose of satisfying any conversion of Class B units or Class A‑2 units of Holdco, as applicable, into shares of Class A common stock pursuant to the Limited Liability Company Operating Agreement of Holdco (the “Holdco LLC Agreement”), and the conversion procedures set forth therein. If any stock option or other stock-based award granted under the Omnibus Incentive Plan expires, terminates or is canceled for any reason without having been exercised in full, the number of shares of Class A common stock underlying any unexercised award shall again be available for the purpose of awards under the Omnibus Incentive Plan. If any shares of restricted stock, performance awards or other stock-based awards denominated in shares of Class A common stock awarded under the Omnibus Incentive Plan are forfeited for any reason, the number of forfeited shares shall again be available for purposes of awards under the Omnibus Incentive Plan. Any award under the Omnibus Incentive Plan settled in cash shall not be counted against the maximum share limitation.
As is customary in incentive plans of this nature, each share limit and the number and kind of shares available under the Omnibus Incentive Plan and any outstanding awards, as well as the exercise or purchase prices of awards, and performance targets under certain types of performance-based awards, are subject to adjustment in the event of certain reorganizations, mergers, combinations, recapitalizations, stock splits, stock dividends or other similar events that change the number or kind of shares outstanding, and extraordinary dividends or distributions of property to the Company’s stockholders.
Restricted Stock Units
On the Effective Date, the Company granted to certain employees 2,478,606 restricted stock units (the “Emergence Awards”). The portion of the Share Reserve that does not constitute the Emergence Awards, plus any subsequent awards forfeited before vesting (the “Remaining Share Reserve”), will be fully granted within the 36-month period immediately following the Effective Date (with such 36-month anniversary, the “Final Allocation Date”). If a Change in Control (as defined in the Omnibus Incentive Plan) occurs before the Final Allocation Date, the Company will allocate the entire Remaining Share Reserve on a fully-vested basis to actively employed employees (pro-rata based upon each such employee’s relative awards) upon the consummation of the Change in Control. During the four months ended June 30, 2017 , the Company granted to certain employees 1,255,345 restricted stock units from the Remaining Share Reserve.
Upon a participant’s termination of employment and/or service (as applicable), the Company has the right (but not the obligation) to repurchase all or any portion of the shares of Class A common stock acquired pursuant to an award at a price equal to the fair market value (as determined under the Omnibus Incentive Plan) of the shares of Class A common stock to be repurchased, measured as of the date of the Company’s repurchase notice.

31

LINN ENERGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Continued
(Unaudited)

Holdco Incentive Interest Plan
On the Effective Date, Holdco granted incentive interest awards to certain members of its management in the form of 3,470,051 Class B units, which are intended to qualify as “profits interests” for U.S. income tax purposes. The Class B units vested 25% on the Effective Date and the remaining amount vest ratably over the following three years, subject to meeting a performance condition described in the agreements. Each Class B unit represents a non-voting equity interest in Holdco that entitles the holder to Holdco distributions, after an applicable hurdle amount is met, such that each Class B unit only participates in Holdco’s increase in value following the grant date. In accordance with the Holdco LLC Agreement, the requirements entitling Class B unitholders to Holdco distributions had not been met as of June 30, 2017 . Class B units can be converted at any time by the holder to Class A-2 units of Holdco or Class A common stock of the Company in accordance with the terms of the Holdco LLC Agreement.
Accounting for Share-Based Compensation
The Company recognizes expense for share-based compensation over the requisite service period in an amount equal to the fair value of share-based awards granted. The fair value of share-based awards, excluding liability awards, is computed at the date of grant and is not remeasured. The fair value of liability awards is remeasured at each reporting date through the settlement date with the change in fair value recognized as compensation expense over that period. The Company has made a policy decision to recognize compensation expense for service-based awards on a straight-line basis over the requisite service period for the entire award. Beginning in 2017, the Company accounts for forfeitures as they occur.
The Company’s restricted stock units are equity-classified and its incentive interest awards in the form of Class B units are liability-classified on the condensed consolidated balance sheet. The fair value of the Company’s restricted stock units was determined based on the fair value of the Company’s shares on the date of grant and the fair value of the incentive interest awards in the form of Class B units was determined based on the estimated amount to settle the awards.
Share-Based Compensation Expenses
A summary of share-based compensation expenses included on the condensed consolidated statements of operations is presented below:
 
Successor
 
 
Predecessor
 
Three Months Ended June 30, 2017
 
 
Three Months Ended June 30, 2016
(in thousands)
 
 
 
 
General and administrative expenses
$
15,422

 
 
$
4,946

Lease operating expenses

 
 
1,182

Total share-based compensation expenses
$
15,422

 
 
$
6,128

Income tax benefit
$
3,128

 
 
$
2,264


 
Successor
 
 
Predecessor
 
Four Months Ended June 30, 2017
 
 
Two Months Ended February 28, 2017
 
Six Months Ended June 30, 2016
(in thousands)
 
 
 
 
 
 
General and administrative expenses
$
19,599

 
 
$
50,255

 
$
14,406

Lease operating expenses

 
 

 
4,147

Total share-based compensation expenses
$
19,599

 
 
$
50,255

 
$
18,553

Income tax benefit
$
3,555

 
 
$
5,170

 
$
6,855


32

LINN ENERGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Continued
(Unaudited)

Note 13 – Earnings Per Share/Unit
Basic earnings per share/unit is computed by dividing net earnings attributable to stockholders/unitholders by the weighted average number of shares/units outstanding during the period. Diluted earnings per share/unit is computed by adjusting the average number of shares/units outstanding for the dilutive effect, if any, of potential common shares/units. The Company uses the treasury stock method to determine the dilutive effect of restricted stock units and the if-converted method to determine the dilutive effect of Class B units.
The following tables provide a reconciliation of the numerators and denominators of the basic and diluted per share/unit computations for net income (loss):
 
Successor
 
 
Predecessor
 
Three Months Ended June 30, 2017
 
 
Three Months Ended June 30, 2016
(in thousands, except per share/unit data)
 
 
 
 
Income from continuing operations
$
223,379

 
 
$
204,691

Allocated to participating securities

 
 
(1,617
)
 
223,379

 
 
203,074

Income (loss) from discontinued operations, net of income taxes
(3,322
)
 
 
3,801

 
$
220,057

 
 
$
206,875

 
 
 
 
 
Weighted average shares/units outstanding  – Basic
89,849

 
 
352,789

Dilutive effect of restricted stock units
635

 
 

Weighted average shares/units outstanding  – Diluted
90,484

 
 
352,789

 
 
 
 
 
Income from continuing operations per share/unit  – Basic
$
2.49

 
 
$
0.58

Income from continuing operations per share/unit  – Diluted
$
2.47

 
 
$
0.58

 
 
 
 
 
Income (loss) from discontinued operations per share/unit  – Basic
$
(0.04
)
 
 
$
0.01

Income (loss) from discontinued operations per share/unit  – Diluted
$
(0.04
)
 
 
$
0.01

 
 
 
 
 
Net income per share/unit  – Basic
$
2.45

 
 
$
0.59

Net income per share/unit  – Diluted
$
2.43

 
 
$
0.59


33

LINN ENERGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Continued
(Unaudited)

 
Successor
 
 
Predecessor
 
Four Months Ended June 30, 2017
 
 
Two Months Ended February 28, 2017
 
Six Months Ended June 30, 2016
(in thousands, except per share/unit data)
 
 
 
 
 
 
Income (loss) from continuing operations
$
216,055

 
 
$
2,397,609

 
$
(9,177
)
Allocated to participating securities

 
 

 

 
216,055

 
 
2,397,609

 
(9,177
)
Loss from discontinued operations, net of income taxes
(3,254
)
 
 
(548
)
 
(1,130,077
)
 
$
212,801

 
 
$
2,397,061

 
$
(1,139,254
)
 
 
 
 
 
 
 
Weighted average shares/units outstanding  – Basic
89,849

 
 
352,792

 
352,511

Dilutive effect of restricted stock units
216

 
 

 

Weighted average shares/units outstanding  – Diluted
90,065

 
 
352,792

 
352,511

 
 
 
 
 
 
 
Income (loss) from continuing operations per share/unit  – Basic
$
2.41

 
 
$
6.80

 
$
(0.02
)
Income (loss) from continuing operations per share/unit  – Diluted
$
2.40

 
 
$
6.80

 
$
(0.02
)
 
 
 
 
 
 
 
Loss from discontinued operations per share/unit  – Basic
$
(0.04
)
 
 
$
(0.01
)
 
$
(3.21
)
Loss from discontinued operations per share/unit  – Diluted
$
(0.04
)
 
 
$
(0.01
)
 
$
(3.21
)
 
 
 
 
 
 
 
Net income (loss) per share/unit  – Basic
$
2.37

 
 
$
6.79

 
$
(3.23
)
Net income (loss) per share/unit  – Diluted
$
2.36

 
 
$
6.79

 
$
(3.23
)
The 3,470,051 Class B units associated with management’s profits interests awards were not considered to be dilutive as the applicable hurdle rate had not been met as of June 30, 2017 , and, therefore, are excluded for the purpose of the diluted earnings per share calculation. The diluted earnings per unit calculation excludes approximately 1 million unit options and warrants that were anti-dilutive for each of the three months and six months ended June 30, 2016 . There were no potential common units outstanding during the two months ended February 28, 2017.
Note 14 – Income Taxes
Effective February 28, 2017, upon consummation of the Plan, the Successor became a C corporation subject to federal and state income taxes. Prior to the consummation of the Plan, the Predecessor was a limited liability company treated as a partnership for federal and state income tax purposes, with the exception of the state of Texas, in which income tax liabilities and/or benefits of the Company were passed through to its unitholders. Limited liability companies are subject to Texas margin tax. In addition, certain of the Predecessor’s subsidiaries were C corporations subject to federal and state income taxes. As such, with the exception of the state of Texas and certain subsidiaries, the Predecessor did not directly pay federal and state income taxes and recognition was not given to federal and state income taxes for the operations of the Predecessor.
The effective income tax rates were approximately 42% for each of the three months and four months ended June 30, 2017 , and zero for the two months ended February 28, 2017. The deferred tax effects of the Company’s change to a C corporation are included in income from continuing operations for the two months ended February 28, 2017. Amounts recognized as income taxes are included in “income tax expense (benefit),” as well as discontinued operations, on the condensed consolidated statements of operations.

34

LINN ENERGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Continued
(Unaudited)

Note 15 – Supplemental Disclosures to the Condensed Consolidated Balance Sheets and Condensed Consolidated Statements of Cash Flows
“Other current assets” reported on the condensed consolidated balance sheets include the following:
 
Successor
 
 
Predecessor
 
June 30, 2017
 
 
December 31, 2016
(in thousands)
 
 
 
 
Prepaid expenses
$
58,095

 
 
$
70,116

Inventories
10,984

 
 
15,097

Deferred financing fees

 
 
16,809

Other
2,757

 
 
3,288

Other current assets
$
71,836

 
 
$
105,310

“Other accrued liabilities” reported on the condensed consolidated balance sheets include the following:
 
Successor
 
 
Predecessor
 
June 30, 2017
 
 
December 31, 2016
(in thousands)
 
 
 
 
Accrued compensation
$
21,214

 
 
$
16,443

Share-based payment liability
18,517

 
 

Asset retirement obligations (current portion)
8,120

 
 
9,361

Deposits for pending divestitures
60,112

 
 

Other
27,453

 
 
175

Other accrued liabilities
$
135,416

 
 
$
25,979

Supplemental disclosures to the condensed consolidated statements of cash flows are presented below:
 
Successor
 
 
Predecessor
 
Four Months Ended June 30, 2017
 
 
Two Months Ended February 28, 2017
 
Six Months Ended June 30, 2016
(in thousands)
 
 
 
 
 
 
Cash payments for interest, net of amounts capitalized
$
14,436

 
 
$
17,651

 
$
92,192

Cash payments for income taxes
$
215

 
 
$

 
$
3,033

Cash payments for reorganization items, net
$
6,300

 
 
$
21,571

 
$

 
 
 
 
 
 
 
Noncash investing activities:
 
 
 
 
 
 
Accrued capital expenditures
$
34,547

 
 
$
22,191

 
$
20,124

For purposes of the condensed consolidated statements of cash flows, the Company considers all highly liquid short-term investments with original maturities of three months or less to be cash equivalents. At June 30, 2017 , “restricted cash” on the condensed consolidated balance sheet consists of approximately $42 million that will be used to settle certain claims and pay certain professional fees in accordance with the Plan (which is the remainder of approximately $80 million transferred to restricted cash in February 2017 to fund such items) and approximately $57 million related to deposits for pending divestitures. At December 31, 2016, “restricted cash” on the condensed consolidated balance sheet represents amounts restricted related to

35

LINN ENERGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Continued
(Unaudited)

utility services providers. In addition, restricted cash of approximately $8 million is included in “other noncurrent assets” on the condensed consolidated balance sheet at December 31, 2016, and represents cash deposited by the Company into a separate account designated for asset retirement obligations in accordance with contractual agreements.
At December 31, 2016, net outstanding checks of approximately $6 million were reclassified and included in “accounts payable and accrued expenses” on the condensed consolidated balance sheet. The change in net outstanding checks is presented as cash flows from financing activities and included in “other” on the condensed consolidated statements of cash flows.
Note 16 – Related Party Transactions
Berry Petroleum Company, LLC
Berry, a former subsidiary of the Predecessor, was deconsolidated effective December 3, 2016 (see Note 4). The employees of Linn Operating, Inc. (“LOI”), a subsidiary of the Predecessor, provided services and support to Berry in accordance with an agency agreement and power of attorney between Berry and LOI. Upon deconsolidation, transactions between the Predecessor and Berry were no longer eliminated in consolidation and were treated as related party transactions. These transactions include, but are not limited to, management fees paid to the Company by Berry. On the Effective Date, Berry emerged from bankruptcy as a stand-alone, unaffiliated entity.
For the two months ended February 28, 2017, and the three months and the six months ended June 30, 2016 , Berry incurred management fees of approximately $6 million , $18 million and $41 million , respectively, for services provided by LOI. The Predecessor also had accounts payable due to Berry of approximately $3 million included in “accounts payable and accrued expenses” on the condensed consolidated balance sheet at December 31, 2016. In addition, $25 million due to Berry was included in “liabilities subject to compromise” on the Predecessor’s condensed consolidated balance sheet at December 31, 2016.
LinnCo, LLC
LinnCo, an affiliate of the Predecessor, was formed on April 30, 2012. All of LinnCo’s common shares were held by the public. As of December 31, 2016, LinnCo had no significant assets or operations other than those related to its interest in the Predecessor and owned approximately 71% of the Predecessor’s then outstanding units. In accordance with the Plan, LinnCo will be dissolved following the resolution of all outstanding claims.
The Predecessor had agreed to provide to LinnCo, or to pay on LinnCo’s behalf, any financial, legal, accounting, tax advisory, financial advisory and engineering fees, and other administrative and out-of-pocket expenses incurred by LinnCo, along with any other expenses incurred in connection with any public offering of shares in LinnCo or incurred as a result of being a publicly traded entity. These expenses include costs associated with annual, quarterly and other reports to holders of LinnCo shares, tax return and Form 1099 preparation and distribution, NASDAQ listing fees, printing costs, independent auditor fees and expenses, legal counsel fees and expenses, limited liability company governance and compliance expenses and registrar and transfer agent fees. In addition, the Predecessor had agreed to indemnify LinnCo and its officers and directors for damages suffered or costs incurred (other than income taxes payable by LinnCo) in connection with carrying out LinnCo’s activities. All expenses and costs paid by the Predecessor on LinnCo’s behalf were expensed by the Predecessor.
For the two months ended February 28, 2017, LinnCo incurred total general and administrative expenses of approximately $287,000 , including approximately $240,000 related to services provided by the Predecessor. All of the expenses incurred during the two months ended February 28, 2017, had been paid by the Predecessor on LinnCo’s behalf as of February 28, 2017.
For the three months and six months ended June 30, 2016 , LinnCo incurred total general and administrative expenses, reorganization expenses and offering costs of approximately $2.5 million and $4.2 million , respectively, including approximately $603,000 and $1.2 million , respectively, related to services provided by the LINN Energy. Of the expenses and costs incurred during the six months ended June 30, 2016 , approximately $4.0 million had been paid by LINN Energy on LinnCo’s behalf as of June 30, 2016 .

36

LINN ENERGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Continued
(Unaudited)

Note 17 – Redeemable Noncontrolling Interests
Redeemable noncontrolling interests on the condensed consolidated balance sheet as of June 30, 2017 , relate to the noncontrolling Class B unitholders of Holdco. Class B units can be converted at any time by the holder to Class A-2 units of Holdco or Class A common stock of the Company in accordance with the terms of the Holdco LLC Agreement. As of June 30, 2017 , the redeemable noncontrolling interests of approximately $28 million presented as temporary equity on the condensed consolidated balance sheet consists solely of the noncash share-based compensation related to the vested portion of the incentive interest awards in the form of Class B units issued to certain members of management (see Note 12). In accordance with the Holdco LLC Agreement, the requirements entitling Class B unitholders to Holdco distributions had not been met as of June 30, 2017 , and, therefore, no allocation of net income (loss) was made to the redeemable noncontrolling interests for the four months ended June 30, 2017 .

37


Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis should be read in conjunction with the financial statements and related notes included in this Quarterly Report on Form 10-Q and in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016. The following discussion contains forward-looking statements based on expectations, estimates and assumptions. Actual results may differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, market prices for oil, natural gas and NGL, production volumes, estimates of proved reserves, capital expenditures, economic and competitive conditions, credit and capital market conditions, regulatory changes and other uncertainties, as well as those factors set forth in “Cautionary Statement Regarding Forward-Looking Statements” below and in Item 1A. “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016, and elsewhere in the Annual Report.
When referring to Linn Energy, Inc. (formerly known as Linn Energy, LLC) (“Successor,” “LINN Energy” or the “Company”), the intent is to refer to LINN Energy, a newly formed Delaware corporation, and its consolidated subsidiaries as a whole or on an individual basis, depending on the context in which the statements are made. Linn Energy, Inc. is a successor issuer of Linn Energy, LLC pursuant to Rule 15d-5 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). When referring to the “Predecessor” in reference to the period prior to the emergence from bankruptcy, the intent is to refer to Linn Energy, LLC, the predecessor that will be dissolved following the effective date of the Plan (as defined below) and resolution of all outstanding claims, and its consolidated subsidiaries as a whole or on an individual basis, depending on the context in which the statements are made.
The reference to “Berry” herein refers to Berry Petroleum Company, LLC, which was an indirect 100% wholly owned subsidiary of the Predecessor through February 28, 2017. Berry was deconsolidated effective December 3, 2016 (see below and Note 4). The reference to “LinnCo” herein refers to LinnCo, LLC, an affiliate of the Predecessor.
The reference to a “Note” herein refers to the accompanying Notes to Condensed Consolidated Financial Statements contained in Item 1. “Financial Statements.”
Executive Overview
LINN Energy is an independent oil and natural gas company that was formed in February 2017, in connection with the reorganization of the Predecessor. The Predecessor was publicly traded from January 2006 to February 2017. As discussed further below and in Note 2, on May 11, 2016 (the “Petition Date”), Linn Energy, LLC, certain of its direct and indirect subsidiaries, and LinnCo (collectively, the “LINN Debtors”) and Berry (collectively with the LINN Debtors, the “Debtors”), filed voluntary petitions (“Bankruptcy Petitions”) for relief under Chapter 11 of the U.S. Bankruptcy Code (“Bankruptcy Code”) in the U.S. Bankruptcy Court for the Southern District of Texas (“Bankruptcy Court”). The Debtors’ Chapter 11 cases were administered jointly under the caption In re Linn Energy, LLC, et al., Case No. 16‑60040. During the pendency of the Chapter 11 proceedings, the Debtors operated their businesses as “debtors-in-possession” under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code. The Company emerged from bankruptcy effective February 28, 2017.
On December 3, 2016, LINN Energy filed an amended plan of reorganization that excluded Berry. As a result of its loss of control of Berry, LINN Energy concluded that it was appropriate to deconsolidate Berry effective on the aforementioned date and classified it as discontinued operations.
The Company’s properties are currently located in seven operating regions in the United States (“U.S.”):
Rockies, which includes properties located in Wyoming (Washakie Basin), Utah (Uinta Basin) and North Dakota (Williston Basin);
Hugoton Basin, which includes properties located in Kansas, the Oklahoma Panhandle and the Shallow Texas Panhandle;
Mid-Continent, which includes Oklahoma properties located in the Anadarko and Arkoma basins, as well as waterfloods in the Central Oklahoma Platform;
TexLa, which includes properties located in east Texas and north Louisiana;
Permian Basin, which includes properties located in west Texas and southeast New Mexico;

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Michigan/Illinois, which includes properties located in the Antrim Shale formation in north Michigan and oil properties in south Illinois; and
South Texas.
In July 2017, the Company divested all of its properties located in California. See below and Note 4 for details of the Company’s divestitures.
The Company’s current focus is the upstream and midstream development of the Merge/SCOOP/STACK in Oklahoma. Additionally, the Company is pursuing emerging horizontal opportunities in the Mid-Continent, Rockies and TexLa regions while continuing to add value by efficiently operating and applying new technology to a diverse set of long-life producing assets.
For the three months ended June 30, 2017, the Company’s results included the following:
oil, natural gas and NGL sales of approximately $243 million compared to $196 million for the three months ended June 30, 2016;
average daily production of approximately 710 MMcfe/d compared to 802 MMcfe/d for the three months ended June 30, 2016;
net income of approximately $220 million compared to $208 million for the three months ended June 30, 2016;
capital expenditures of approximately $96 million compared to $23 million for the three months ended June 30, 2016; and
14 wells drilled (all successful) compared to 37 wells drilled (all successful) for the three months ended June 30, 2016.
For the six months ended June 30, 2017, the Company’s results included the following:
oil, natural gas and NGL sales of approximately $323 million and $189 million for the four months ended June 30, 2017, and the two months ended February 28, 2017, respectively, compared to $380 million for the six months ended June 30, 2016;
average daily production of approximately 722 MMcfe/d and 745 MMcfe/d for the four months ended June 30, 2017, and the two months ended February 28, 2017, respectively, compared to 813 MMcfe/d for the six months ended June 30, 2016;
net income of approximately $213 million and $2.4 billion for the four months ended June 30, 2017, and the two months ended February 28, 2017, respectively, compared to a net loss of approximately $1.1 billion for the six months ended June 30, 2016;
net cash provided by operating activities from continuing operations of approximately $117 million and net cash used in operating activities of approximately $30 million for the four months ended June 30, 2017, and the two months ended February 28, 2017, respectively, compared to net cash provided by operating activities of approximately $800 million for the six months ended June 30, 2016;
capital expenditures of approximately $114 million and $46 million for the four months ended June 30, 2017, and the two months ended February 28, 2017, respectively, compared to $53 million for the six months ended June 30, 2016; and
41 wells drilled (all successful) compared to 96 wells drilled (95 successful) for the six months ended June 30, 2016.
Predecessor and Successor Reporting
As a result of the application of fresh start accounting (see Note 3), the Company’s condensed consolidated financial statements and certain note presentations are separated into two distinct periods, the period before the Effective Date (labeled Predecessor) and the period after that date (labeled Successor), to indicate the application of a different basis of accounting between the periods presented. Despite this separate presentation, there was continuity of the Company’s operations.

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Chapter 11 Proceedings
On the Petition Date, the Debtors filed Bankruptcy Petitions for relief under Chapter 11 of the Bankruptcy Code in the Bankruptcy Court. The Debtors’ Chapter 11 cases were administered jointly under the caption In re Linn Energy, LLC, et al., Case No. 16‑60040.
On December 3, 2016, the LINN Debtors filed the Amended Joint Chapter 11 Plan of Reorganization of Linn Energy, LLC and Its Debtor Affiliates Other Than Linn Acquisition Company, LLC (“LAC”) and Berry Petroleum Company, LLC (the “Plan”). The LINN Debtors subsequently filed amended versions of the Plan with the Bankruptcy Court.
On December 13, 2016, LAC and Berry filed the Amended Joint Chapter 11 Plan of Reorganization of Linn Acquisition Company, LLC and Berry Petroleum Company, LLC (the “Berry Plan” and together with the Plan, the “Plans”). LAC and Berry subsequently filed amended versions of the Berry Plan with the Bankruptcy Court.
On January 27, 2017, the Bankruptcy Court entered an order approving and confirming the Plans (the “Confirmation Order”). On February 28, 2017 (the “Effective Date”), the Debtors satisfied the conditions to effectiveness of the respective Plans, the Plans became effective in accordance with their respective terms and LINN Energy and Berry emerged from bankruptcy as stand-alone, unaffiliated entities.
Plan of Reorganization
In accordance with the Plan, on the Effective Date:
The Predecessor transferred all of its assets, including equity interests in its subsidiaries, other than LAC and Berry, to Linn Energy Holdco II LLC (“Holdco II”), a newly formed subsidiary of the Predecessor and the borrower under the Credit Agreement (as amended, the “Successor Credit Facility”) entered into in connection with the reorganization, in exchange for 100% of the equity of Holdco II and the issuance of interests in the Successor Credit Facility to certain of the Predecessor’s creditors in partial satisfaction of their claims (the “Contribution”). Immediately following the Contribution, the Predecessor transferred 100% of the equity interests in Holdco II to the Successor in exchange for approximately $530 million in cash and an amount of equity securities in the Successor not to exceed 49.90% of the outstanding equity interests of the Successor, which the Predecessor distributed to certain of its creditors in satisfaction of their claims. Contemporaneously with the reorganization transactions and pursuant to the Plan, (i) LAC assigned all of its rights, title and interest in the membership interests of Berry to Berry Petroleum Corporation, (ii) all of the equity interests in LAC and the Predecessor were canceled and (iii) LAC and the Predecessor commenced liquidation, which is expected to be completed following the resolution of the respective companies’ outstanding claims.
The holders of claims under the Predecessor’s Sixth Amended and Restated Credit Agreement (“Predecessor Credit Facility”) received a full recovery, consisting of a cash paydown and their pro rata share of the $1.7 billion Successor Credit Facility. As a result, all outstanding obligations under the Predecessor Credit Facility were canceled.
Holdco II, as borrower, entered into the Successor Credit Facility with the holders of claims under the Predecessor Credit Facility, as lenders, and Wells Fargo Bank, National Association, as administrative agent, providing for a new reserve-based revolving loan with up to $1.4 billion in borrowing commitments and a new term loan in an original principal amount of $300 million. For additional information, see “Financing Activities” below.
The holders of the Company’s 12.00% senior secured second lien notes due December 2020 (the “Second Lien Notes”) received their pro rata share of (i) 17,678,889 shares of Class A common stock; (ii) certain rights to purchase shares of Class A common stock in the rights offerings, as described below; and (iii) $30 million in cash. The holders of the Company’s 6.50% senior notes due May 2019, 6.25% senior notes due November 2019, 8.625% senior notes due 2020, 7.75% senior notes due February 2021 and 6.50% senior notes due September 2021 (collectively, the “Unsecured Notes”) received their pro rata share of (i) 26,724,396 shares of Class A common stock; and (ii) certain rights to purchase shares of Class A common stock in the rights offerings, as described below. As a result, all outstanding obligations under the Second Lien Notes and the Unsecured Notes and the indentures governing such obligations were canceled.

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The holders of general unsecured claims (other than claims relating to the Second Lien Notes and the Unsecured Notes) against the LINN Debtors (the “LINN Unsecured Claims”) received their pro rata share of cash from two cash distribution pools totaling $40 million, as divided between a $2.3 million cash distribution pool for the payment in full of allowed LINN Unsecured Claims in an amount equal to $2,500 or less (and larger claims for which the holders irrevocably agreed to reduce such claims to $2,500), and a $37.7 million cash distribution pool for pro rata distributions to all remaining allowed general LINN Unsecured Claims. As a result, all outstanding LINN Unsecured Claims were fully satisfied, settled, released and discharged as of the Effective Date.
All units of the Predecessor that were issued and outstanding immediately prior to the Effective Date were extinguished without recovery. On the Effective Date, the Successor issued in the aggregate 89,229,892 shares of Class A common stock. No cash was raised from the issuance of the Class A common stock on account of claims held by the Predecessor’s creditors.
The Successor entered into a registration rights agreement with certain parties, pursuant to which the Company agreed to, among other things, file a registration statement with the Securities and Exchange Commission within 60 days of the Effective Date covering the offer and resale of “Registrable Securities” (as defined therein).
By operation of the Plan and the Confirmation Order, the terms of the Predecessor’s board of directors expired as of the Effective Date. The Successor formed a new board of directors, consisting of the Chief Executive Officer of the Predecessor, one director selected by the Successor and five directors selected by a six-person selection committee.
Rights Offerings
On October 25, 2016, the Company entered into a backstop commitment agreement (“Backstop Commitment Agreement”) with the parties thereto (collectively, the “Backstop Parties”). In accordance with the Plan, the Backstop Commitment Agreement and the rights offerings procedures filed in the Chapter 11 cases and approved by the Bankruptcy Court, the LINN Debtors offered eligible creditors the right to purchase Class A common stock upon emergence from the Chapter 11 cases for an aggregate purchase price of $530 million.
Under the Backstop Commitment Agreement, certain Backstop Parties agreed to purchase their pro rata share of the shares that were not duly subscribed to pursuant to the offerings at the discounted per share price set forth in the Backstop Commitment Agreement by parties other than Backstop Parties (the “Backstop Commitment”). Pursuant to the Backstop Commitment Agreement, the LINN Debtors agreed to pay the Backstop Parties on the Effective Date a commitment premium equal to 4.0% of the $530 million committed amount (the “Backstop Commitment Premium”), of which 3.0% was paid in cash and 1.0% was paid in the form of Class A common stock at the discounted per share price set forth in the Backstop Commitment Agreement.
On the Effective Date, all conditions to the rights offerings and the Backstop Commitment Agreement were met, and the LINN Debtors completed the rights offerings and the related issuances of Class A common stock.
Divestitures
Below are the Company’s divestitures in 2017:
The Company entered into two definitive purchase and sale agreements for the sales of its interest in certain properties located in south Texas. On August 1, 2017, and July 31, 2017, the Company completed the sales and received cash proceeds of approximately $9 million and approximately $23 million, respectively.
The Company entered into two definitive purchase and sale agreements for the sales of undeveloped acreage located in the Permian Basin. On July 28, 2017, the Company completed the sale of undeveloped acreage located in Lea and Eddy counties in New Mexico and received cash proceeds of approximately $21 million. On May 9, 2017, the Company completed the sale of undeveloped acreage located in Ward County, Texas and received cash proceeds of approximately $4 million.
On July 31, 2017, the Company completed the sale of its interest in properties located in the San Joaquin Basin in California to Berry Petroleum Company, LLC (the “San Joaquin Basin Sale”) and received cash proceeds of approximately $257 million.

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On July 21, 2017, the Company completed the sale of its interest in properties located in the Los Angeles Basin in California to Bridge Energy LLC (the “Los Angeles Basin Sale”) and received cash proceeds of approximately $94 million. The Company will receive an additional $7 million contingent payment if certain operational requirements are satisfied within one year.
On June 30, 2017, the Company completed the sale of its interest in properties located in the Salt Creek Field in Wyoming to Denbury Resources Inc. (the “Salt Creek Assets Sale”). Cash proceeds received from the sale of these properties were approximately $76 million and the Company recognized a net gain of approximately $22 million.
On May 31, 2017, the Company completed the sale of its interest in properties located in western Wyoming to Jonah Energy LLC (the “Jonah Assets Sale”). Cash proceeds received from the sale of these properties were approximately $560 million, net of costs to sell of approximately $6 million, and the Company recognized a net gain of approximately $279 million.
As a result of the Company’s strategic exit from California (completed by the San Joaquin Basin Sale and Los Angeles Basin Sale), the Company classified the assets and liabilities, results of operations and cash flows of its California properties as discontinued operations on its condensed consolidated financial statements.
The Company continues to market the previously announced non-core assets located in the Permian Basin, the Williston Basin and south Texas.
Joint Venture – Pending
On June 27, 2017, the Company, through certain of its wholly owned subsidiaries, entered into an agreement with Citizen Energy II, LLC (“Citizen”) in which LINN Energy and Citizen will each contribute certain upstream assets located in Oklahoma to a newly formed company, Roan Resources LLC (“Roan”), focused on the accelerated development of the Merge/SCOOP/STACK play in the Mid-Continent region. In exchange for their respective contributions, LINN Energy and Citizen will equally split the equity interest in Roan. The transaction is anticipated to close in the third quarter of 2017, subject to closing conditions. There can be no assurance that all of the conditions to closing will be satisfied.
Construction of Cryogenic Plant
In July 2017 the Company renamed its wholly owned subsidiary LINN Midstream, LLC to Blue Mountain Midstream LLC (“Blue Mountain”) and entered into a definitive agreement with BCCK Engineering, Inc. (“BCCK”) to construct the Chisholm Trail Cryogenic Gas Plant. Blue Mountain’s assets include the Chisholm Trail midstream business (“Chisholm Trail”) located in Oklahoma. Chisholm Trail is located in the Merge/SCOOP/STACK play in the Mid-Continent region and has approximately 30 miles of existing natural gas gathering pipeline and approximately 60 MMcf/d of current refrigeration capacity. Infrastructure expansions are underway to add 35 miles of low pressure gathering, increase compression throughput and construct a new cryogenic plant to improve liquids recoveries. Blue Mountain has entered into a definitive agreement with BCCK to construct a 225 MMcf/d cryogenic natural gas processing facility with a total capacity of 250 MMcf/d. Construction is underway and it is expected to be commissioned during the second quarter of 2018.
2017 Oil and Natural Gas Capital Budget
For 2017, the Company estimates its total capital expenditures, excluding acquisitions, will be approximately $338 million, including approximately $229 million related to its oil and natural gas capital program and approximately $100 million related to its plant and pipeline capital. This estimate is under continuous review and subject to ongoing adjustments.
Financing Activities
Successor Credit Facility
On the Effective Date, pursuant to the terms of the Plan, the Company entered into the Successor Credit Facility with Holdco II as borrower and Wells Fargo Bank, National Association, as administrative agent, providing for: 1) a reserve-based revolving loan with an initial borrowing base of $1.4 billion and 2) a term loan in an original principal amount of $300 million.

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On May 31, 2017, the Company entered into the First Amendment and Consent to Credit Agreement, pursuant to which among other modifications: 1) the term loan was paid in full and terminated using cash proceeds from the Jonah Assets Sale, and 2) the borrowing base for the revolving loan was reduced to $1 billion. As of June 30, 2017, total borrowings outstanding under the Successor Credit Facility were approximately $183 million and there was approximately $774 million of remaining available borrowing capacity (which includes a $7 million reduction for outstanding letters of credit). The maturity date is February 27, 2021.
Redetermination of the borrowing base under the Successor Credit Facility, based primarily on reserve reports using lender commodity price expectations at such time, occurs semi-annually, in April and October. The next scheduled borrowing base redetermination is to occur on October 1, 2017. At the Company’s election, interest on borrowings under the Successor Credit Facility is determined by reference to either the London Interbank Offered Rate (“LIBOR”) plus an applicable margin of 3.50% per annum or the alternate base rate (“ABR”) plus an applicable margin of 2.50% per annum. Interest is generally payable in arrears monthly for loans bearing interest based at the ABR and at the end of the applicable interest period for loans bearing interest at the LIBOR. The Company is required to pay a commitment fee to the lenders under the Successor Credit Facility, which accrues at a rate per annum of 0.50% on the average daily unused amount of the available revolving loan commitments of the lenders.
Holdco II has the right to prepay any borrowings under the Successor Credit Facility at any time without a prepayment penalty, other than customary “breakage” costs with respect to LIBOR loans.
The obligations under the Successor Credit Facility are secured by mortgages covering approximately 95% of the total value of the proved reserves of the oil and natural gas properties of the Company, and certain equipment and facilities associated therewith, along with liens on substantially all personal property of the Company and are guaranteed by the Company, Linn Energy Holdco LLC and Holdco II’s subsidiaries, subject to customary exceptions. Under the Successor Credit Facility, the Company is required to maintain certain financial covenants including the maintenance of (i) a reserve coverage ratio of at least 1.1 to 1.0, tested on (a) the date of each scheduled borrowing base redetermination and (b) the date of each additional borrowing base redetermination done in conjunction with an asset sale, (ii) a maximum total net debt to last twelve months EBITDAX ratio of 4.0 to 1.0 beginning with the quarter ending September 30, 2017, and (iii) a minimum current ratio of 1.0 to 1.0 beginning with the quarter ending September 30, 2017.
The Successor Credit Facility also contains customary affirmative and negative covenants, including as to compliance with laws (including environmental laws, ERISA and anti-corruption laws), maintenance of required insurance, delivery of quarterly and annual financial statements, oil and natural gas engineering reports and budgets, maintenance and operation of property (including oil and natural gas properties), restrictions on the incurrence of liens and indebtedness, mergers, consolidations and sales of assets, transactions with affiliates and other customary covenants.
The Successor Credit Facility contains customary events of default and remedies for credit facilities of this nature. Failure to comply with the financial and other covenants in the Successor Credit Facility would allow the lenders, subject to customary cure rights, to require immediate payment of all amounts outstanding under the Successor Credit Facility.
Share Repurchase Program
On June 1, 2017, the Company’s Board of Directors announced that it had authorized the repurchase of up to $75 million of the Company’s outstanding shares of Class A common stock. On June 28, 2017, the Company’s Board of Directors announced that it had authorized an increase in the previously announced share repurchase program to up to a total of $200 million of the Company’s outstanding shares of Class A common stock. In June 2017 and July 2017, the Company repurchased an aggregate of 841,303 shares of Class A common stock at an average price of $32.41 per share for a total cost of approximately $27 million.
Listing on the OTCQB Market
On the Effective Date, the Predecessor’s units were canceled and ceased to trade on the OTC Markets Group Inc.’s Pink marketplace. In April 2017, the Successor’s Class A common stock was approved for trading on the OTCQB market under the symbol “LNGG.”

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Results of Operations
Three Months Ended June 30, 2017, Compared to Three Months Ended June 30, 2016
 
Successor
 
 
Predecessor
 
 
 
Three Months Ended June 30,
2017
 
 
Three Months Ended June 30,
2016
 
Variance
(in thousands)
 
 
 
 
 
 
Revenues and other:
 
 
 
 
 
 
Natural gas sales
$
110,481

 
 
$
82,718

 
$
27,763

Oil sales
89,237

 
 
81,499

 
7,738

NGL sales
43,449

 
 
31,630

 
11,819

Total oil, natural gas and NGL sales
243,167

 
 
195,847

 
47,320

Gains (losses) on oil and natural gas derivatives
45,714

 
 
(183,794
)
 
229,508

Marketing and other revenues (1)
18,938

 
 
32,192

 
(13,254
)
 
307,819

 
 
44,245

 
263,574

Expenses:
 
 
 
 
 
 
Lease operating expenses
71,057

 
 
70,367

 
690

Transportation expenses
37,388

 
 
41,092

 
(3,704
)
Marketing expenses
6,976

 
 
6,727

 
249

General and administrative expenses (2)
34,458

 
 
52,169

 
(17,711
)
Exploration costs
811

 
 
48

 
763

Depreciation, depletion and amortization
51,987

 
 
86,358

 
(34,371
)
Taxes, other than income taxes
17,871

 
 
18,180

 
(309
)
(Gains) losses on sale of assets and other, net
(306,969
)
 
 
2,517

 
(309,486
)
 
(86,421
)
 
 
277,458

 
(363,879
)
Other income and (expenses)
(8,714
)
 
 
(51,546
)
 
42,832

Reorganization items, net
(3,377
)
 
 
485,798

 
(489,175
)
Income from continuing operations before income taxes
382,149

 
 
201,039

 
181,110

Income tax expense (benefit)
158,770

 
 
(3,652
)
 
162,422

Income from continuing operations
223,379

 
 
204,691

 
18,688

Income (loss) from discontinued operations, net of income taxes
(3,322
)
 
 
3,801

 
(7,123
)
Net income
$
220,057

 
 
$
208,492

 
$
11,565

(1)  
Marketing and other revenues for the three months ended June 30, 2016, include approximately $18 million of management fee revenues recognized by the Company from Berry. Management fee revenues are included in “other revenues” on the condensed consolidated statement of operations.
(2)  
General and administrative expenses for the three months ended June 30, 2017, and June 30, 2016, include approximately $15 million and $5 million, respectively, of noncash share-based compensation expenses. In addition, general and administrative expenses for the three months ended June 30, 2016, include expenses incurred by LINN Energy associated with the operations of Berry. On February 28, 2017, LINN Energy and Berry emerged from Bankruptcy as stand-alone, unaffiliated entities.

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Successor
 
 
Predecessor
 
 
 
Three Months Ended June 30,
2017
 
 
Three Months Ended June 30,
2016
 
Variance
Average daily production:
 
 
 
 
 
 
Natural gas (MMcf/d)
432

 
 
511

 
(15
)%
Oil (MBbls/d)
21.6

 
 
21.9

 
(1
)%
NGL (MBbls/d)
24.8

 
 
26.6

 
(7
)%
Total (MMcfe/d)
710

 
 
802

 
(11
)%
 
 
 
 
 
 
 
Weighted average prices: (1)
 
 
 
 
 
 
Natural gas (Mcf)
$
2.81

 
 
$
1.78

 
58
 %
Oil (Bbl)
$
45.42

 
 
$
40.96

 
11
 %
NGL (Bbl)
$
19.29

 
 
$
13.08

 
47
 %
 
 
 
 
 
 
 
Average NYMEX prices:
 
 
 
 
 
 
Natural gas (MMBtu)
$
3.18

 
 
$
1.95

 
63
 %
Oil (Bbl)
$
48.28

 
 
$
45.59

 
6
 %
 
 
 
 
 
 
 
Costs per Mcfe of production:
 
 
 
 
 
 
Lease operating expenses
$
1.10

 
 
$
0.96

 
15
 %
Transportation expenses
$
0.58

 
 
$
0.56

 
4
 %
General and administrative expenses (2)
$
0.53

 
 
$
0.71

 
(25
)%
Depreciation, depletion and amortization
$
0.80

 
 
$
1.18

 
(32
)%
Taxes, other than income taxes
$
0.28

 
 
$
0.25

 
12
 %
 
 
 
 
 
 
 
Average daily production – discontinued operations:
 
 
 
 
 
 
Total (MMcfe/d)
29

 
 
277

 


(1)  
Does not include the effect of gains (losses) on derivatives.
(2)  
General and administrative expenses for the three months ended June 30, 2017, and June 30, 2016, include approximately $15 million and $5 million, respectively, of noncash share-based compensation expenses. In addition, general and administrative expenses for the three months ended June 30, 2016, include expenses incurred by LINN Energy associated with the operations of Berry. On February 28, 2017, LINN Energy and Berry emerged from Bankruptcy as stand-alone, unaffiliated entities.

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Revenues and Other
Oil, Natural Gas and NGL Sales
Oil, natural gas and NGL sales increased by approximately $47 million or 24% to approximately $243 million for the three months ended June 30, 2017, from approximately $196 million for the three months ended June 30, 2016, due to higher natural gas, NGL and oil prices, partially offset by lower production volumes. Higher natural gas, NGL and oil prices resulted in an increase in revenues of approximately $40 million, $14 million and $9 million, respectively.
Average daily production volumes decreased to approximately 710 MMcfe/d for the three months ended June 30, 2017, from 802 MMcfe/d for the three months ended June 30, 2016. Lower natural gas, NGL and oil production volumes resulted in a decrease in revenues of approximately $13 million, $2 million and $1 million, respectively.
The following table sets forth average daily production by region:
 
Successor
 
 
Predecessor
 
 
 
 
 
Three Months Ended June 30,
2017
 
 
Three Months Ended June 30,
2016
 
Variance
Average daily production (MMcfe/d):
 
 
 
 
 
 
 
 
Rockies
244

 
 
330

 
(86
)
 
(26
)%
Hugoton Basin
165

 
 
181

 
(16
)
 
(9
)%
Mid-Continent
125

 
 
102

 
23

 
23
 %
TexLa
76

 
 
71

 
5

 
8
 %
Permian Basin
46

 
 
58

 
(12
)
 
(21
)%
Michigan/Illinois
29

 
 
31

 
(2
)
 
(6
)%
South Texas
25

 
 
29

 
(4
)
 
(13
)%
 
710

 
 
802

 
(92
)
 
(11
)%
The increases in average daily production volumes in the Mid-Continent and TexLa primarily reflect increased development capital spending in the regions. The decreases in average daily production volumes in the remaining regions primarily reflect lower production volumes as a result of reduced development capital spending throughout the Company’s various regions, as well as marginal well shut-ins, driven by continued low commodity prices. The decrease in average daily production volumes in the Rockies region also reflects lower production volumes as a result of the Jonah Assets Sale on May 31, 2017.
Gains (Losses) on Oil and Natural Gas Derivatives
Gains on oil and natural gas derivatives were approximately $46 million for the three months ended June 30, 2017, compared to losses of approximately $184 million for the three months ended June 30, 2016, representing a variance of approximately $230 million. Gains and losses on oil and natural gas derivatives were primarily due to changes in fair value of the derivative contracts. The fair value on unsettled derivative contracts changes as future commodity price expectations change compared to the contract prices on the derivatives. If the expected future commodity prices increase compared to the contract prices on the derivatives, losses are recognized; and if the expected future commodity prices decrease compared to the contract prices on the derivatives, gains are recognized.
The Company determines the fair value of its oil and natural gas derivatives utilizing pricing models that use a variety of techniques, including market quotes and pricing analysis. See Item 3. “Quantitative and Qualitative Disclosures About Market Risk” and Note 7 and Note 8 for additional details about the Company’s commodity derivatives. For information about the Company’s credit risk related to derivative contracts, see “Counterparty Credit Risk” under “Liquidity and Capital Resources” below.
Marketing and Other Revenues
Marketing revenues represent third-party activities associated with company-owned gathering systems, plants and facilities. Other revenues primarily include management fee revenues recognized by the Company from Berry (in the Predecessor period)

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Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations - Continued

and helium sales revenue. Marketing and other revenues decreased by approximately $13 million or 41% to approximately $19 million for the three months ended June 30, 2017, from approximately $32 million for the three months ended June 30, 2016. The decrease was primarily due to the management fee revenues from Berry included in the Predecessor period, partially offset by higher revenues generated by the Jayhawk natural gas processing plant in Kansas and higher helium sales revenue in the Hugoton Basin.
Expenses
Lease Operating Expenses
Lease operating expenses include expenses such as labor, field office, vehicle, supervision, maintenance, tools and supplies, and workover expenses. Lease operating expenses remained relatively consistent at approximately $71 million for the three months ended June 30, 2017, compared to approximately $70 million for the three months ended June 30, 2016. Lease operating expenses per Mcfe increased to $1.10 per Mcfe for the three months ended June 30, 2017, from $0.96 per Mcfe for the three months ended June 30, 2016.
Transportation Expenses
Transportation expenses decreased by approximately $4 million or 9% to approximately $37 million for the three months ended June 30, 2017, from approximately $41 million for the three months ended June 30, 2016. The decrease was primarily due to reduced costs as a result of lower production volumes and as a result of the properties sold in May 2017. Transportation expenses per Mcfe increased $0.58 per Mcfe for the three months ended June 30, 2017, from $0.56 per Mcfe for the three months ended June 30, 2016.
Marketing Expenses
Marketing expenses represent third-party activities associated with company-owned gathering systems, plants and facilities. Marketing expenses remained relatively consistent at approximately $7 million for each of the three months ended June 30, 2017, and June 30, 2016.
General and Administrative Expenses
General and administrative expenses are costs not directly associated with field operations and reflect the costs of employees including executive officers, related benefits, office leases and professional fees. In addition, general and administrative expenses in the Predecessor period includes expenses incurred by LINN Energy associated with the operations of Berry. General and administrative expenses decreased by approximately $18 million or 34% to approximately $34 million for the three months ended June 30, 2017, from approximately $52 million for the three months ended June 30, 2016. The decrease was primarily due to lower salaries and benefits related expenses, the costs associated with the operations of Berry in the Predecessor period and lower various other administrative expenses including insurance and rent, partially offset by higher noncash share-based compensation expenses and higher professional services expenses. General and administrative expenses per Mcfe also decreased to $0.53 per Mcfe for the three months ended June 30, 2017, from $0.71 per Mcfe for the three months ended June 30, 2016.
For the professional services expenses related to the Chapter 11 proceedings that were incurred since the Petition Date, see “Reorganization Items, Net.”
Exploration Costs
Exploration costs increased by approximately $763,000 to approximately $811,000 for the three months ended June 30, 2017, from approximately $48,000 for the three months ended June 30, 2016. The increase was primarily due to higher seismic data expenses.
Depreciation, Depletion and Amortization
Depreciation, depletion and amortization decreased by approximately $34 million or 40% to approximately $52 million for the three months ended June 30, 2017, from approximately $86 million for the three months ended June 30, 2016. The decrease was primarily due to lower rates as a result of the application of fresh start accounting, as well as lower total production volumes. Depreciation, depletion and amortization per Mcfe also decreased to $0.80 per Mcfe for the three months ended June 30, 2017, from $1.18 per Mcfe for the three months ended June 30, 2016.

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Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations - Continued

Taxes, Other Than Income Taxes
 
Successor
 
 
Predecessor
 
 
 
Three Months Ended June 30,
2017
 
 
Three Months Ended June 30,
2016
 
Variance
(in thousands)
 
 
 
 
 
 
Severance taxes
$
10,669

 
 
$
10,208

 
$
461

Ad valorem taxes
6,933

 
 
6,991

 
(58
)
Other
269

 
 
981

 
(712
)
 
$
17,871

 
 
$
18,180

 
$
(309
)
Taxes, other than income taxes decreased by approximately $309,000 or 2% for the three months ended June 30, 2017, compared to the three months ended June 30, 2016. Severance taxes, which are a function of revenues generated from production, increased primarily due to higher commodity prices partially offset by lower production volumes. Ad valorem taxes, which are based on the value of reserves and production equipment and vary by location, decreased primarily due to lower estimated valuations on certain of the Company’s properties.
(Gains) Losses on Sale of Assets and Other, Net
During the three months ended June 30, 2017, the Company recorded the following net gains on divestitures (see Note 4):
Net gain of approximately $22 million on the Salt Creek Assets Sale; and
Net gain of approximately $279 million, including costs to sell of approximately $6 million, on the Jonah Assets Sale.
Other Income and (Expenses)
 
Successor
 
 
Predecessor
 
 
 
Three Months Ended June 30,
2017
 
 
Three Months Ended June 30,
2016
 
Variance
(in thousands)
 
 
 
 
 
 
Interest expense, net of amounts capitalized
$
(7,551
)
 
 
$
(50,320
)
 
$
42,769

Other, net
(1,163
)
 
 
(1,226
)
 
63

 
$
(8,714
)
 
 
$
(51,546
)
 
$
42,832

Other income and (expenses) decreased by approximately $43 million or 83% for the three months ended June 30, 2017, compared to the three months ended June 30, 2016. Interest expense decreased primarily due to lower outstanding debt during the period. For the period from May 12, 2016 through June 30, 2016, contractual interest, which was not recorded, on the senior notes was approximately $31 million. See “Debt” under “Liquidity and Capital Resources” below for additional details.
The Second Lien Notes were accounted for as a troubled debt restructuring which requires that interest payments on the Second Lien Notes reduce the carrying value of the debt with no interest expense recognized. For the period from May 12, 2016 through June 30, 2016, contractual interest, which was not recorded, on the Second Lien Notes was approximately $16 million.
Reorganization Items, Net
The Company incurred significant costs and recognized significant gains associated with the reorganization. Reorganization items represent costs and income directly associated with the Chapter 11 proceedings since the Petition Date, and also include adjustments to reflect the carrying value of certain liabilities subject to compromise at their estimated allowed claim amounts,

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Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations - Continued

as such adjustments are determined. The following table summarizes the components of reorganization items included on the condensed consolidated statements of operations:
 
Successor
 
 
Predecessor
 
Three Months Ended June 30,
2017
 
 
Three Months Ended June 30,
2016
(in thousands)
 
 
 
 
Legal and other professional advisory fees
$
(3,446
)
 
 
$
(13,451
)
Unamortized deferred financing fees, discounts and premiums

 
 
(52,045
)
Gain related to interest payable on Predecessor’s Second Lien Notes

 
 
551,000

Other
69

 
 
294

Reorganization items, net
$
(3,377
)
 
 
$
485,798

Income Tax Expense (Benefit)
Effective February 28, 2017, upon the consummation of the Plan, the Successor became a C corporation. Prior to the consummation of the Plan, the Predecessor was a limited liability company treated as a partnership for federal and state income tax purposes, with the exception of the state of Texas, in which income tax liabilities and/or benefits were passed through to its unitholders. Limited liability companies are subject to Texas margin tax. In addition, certain of the Predecessor’s subsidiaries were C corporations subject to federal and state income taxes. The Company recognized income tax expense of approximately $159 million and an income tax benefit of approximately $4 million for the three months ended June 30, 2017, and June 30, 2016, respectively.
Income (Loss) from Discontinued Operations, Net of Income Taxes
As a result of the Company’s strategic exit from California (completed by the San Joaquin Basin Sale and Los Angeles Basin Sale) and the deconsolidation of Berry, the Company has classified the results of operations of its California properties and Berry as discontinued operations. Loss from discontinued operations, net of income taxes was approximately $3 million and income from discontinued operations was approximately $4 million for the three months ended June 30, 2017, and June 30, 2016, respectively. See Note 4 for additional information.
Net Income
Net income increased by approximately $12 million to approximately $220 million for the three months ended June 30, 2017, from approximately $208 million for the three months ended June 30, 2016. The increase was primarily due gains on sales of assets, gains compared to losses on commodity derivatives, lower expenses and higher production revenues partially offset by gains included in reorganization items during the three months ended June 30, 2016, income tax expense compared to income tax benefit and loss on discontinued operations compared to income. See discussion above for explanations of variances.

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Table of Contents
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations - Continued

Results of Operations
The following table reflects the Company’s results of operations for each of the Successor and Predecessor periods presented:
 
Successor
 
 
Predecessor
 
Four Months Ended June 30, 2017
 
 
Two Months Ended February 28, 2017
 
Six Months Ended June 30, 2016
(in thousands)
 
 
 
 
 
 
Revenues and other:
 
 
 
 
 
 
Natural gas sales
$
148,551

 
 
$
99,561

 
$
178,743

Oil sales
119,475

 
 
58,560

 
146,522

NGL sales
55,466

 
 
30,764

 
55,023

Total oil, natural gas and NGL sales
323,492

 
 
188,885

 
380,288

Gains (losses) on oil and natural gas derivatives
33,755

 
 
92,691

 
(74,341
)
Marketing and other revenues (1)
23,880

 
 
16,551

 
69,559

 
381,127

 
 
298,127

 
375,506

Expenses:
 
 
 
 
 
 
Lease operating expenses
95,687

 
 
49,665

 
153,613

Transportation expenses
51,111

 
 
25,972

 
83,623

Marketing expenses
9,515

 
 
4,820

 
14,560

General and administrative expenses (2)
44,869

 
 
71,745

 
135,889

Exploration costs
866

 
 
93

 
2,741

Depreciation, depletion and amortization
71,901

 
 
47,155

 
175,467

Impairment of long-lived assets

 
 

 
123,316

Taxes, other than income taxes
24,948

 
 
14,877

 
35,541

(Gains) losses on sale of assets and other, net
(306,524
)
 
 
672

 
3,786

 
(7,627
)
 
 
214,999

 
728,536

Other income and (expenses)
(13,302
)
 
 
(16,874
)
 
(135,351
)
Reorganization items, net
(5,942
)
 
 
2,331,189

 
485,798

Income (loss) from continuing operations before income taxes
369,510

 
 
2,397,443

 
(2,583
)
Income tax expense (benefit)
153,455

 
 
(166
)
 
6,594

Income (loss) from continuing operations
216,055

 
 
2,397,609

 
(9,177
)
Loss from discontinued operations, net of income taxes
(3,254
)
 
 
(548
)
 
(1,130,077
)
Net income (loss)
$
212,801

 
 
$
2,397,061

 
$
(1,139,254
)
(1)  
Marketing and other revenues for the two months ended February 28, 2017, and the six months ended June 30, 2016, include approximately $6 million and $41 million, respectively, of management fee revenues recognized by the Company from Berry. Management fee revenues are included in “other revenues” on the condensed consolidated statements of operations.
(2)  
General and administrative expenses for the four months ended June 30, 2017, the two months ended February 28, 2017, and the six months ended June 30, 2016, include approximately $20 million, $50 million and $14 million, respectively, of noncash share-based compensation expenses. In addition, general and administrative expenses for the two months ended February 28, 2017, and the six months ended June 30, 2016, include expenses incurred by LINN Energy associated with the operations of Berry. On February 28, 2017, LINN Energy and Berry emerged from bankruptcy as stand-alone, unaffiliated entities.

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Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations - Continued

 
Successor
 
 
Predecessor
 
Four Months Ended June 30, 2017
 
 
Two Months Ended February 28, 2017
 
Six Months Ended June 30, 2016
Average daily production:
 
 
 
 
 
 
Natural gas (MMcf/d)
448

 
 
495

 
523

Oil (MBbls/d)
21.4

 
 
20.2

 
22.9

NGL (MBbls/d)
24.3

 
 
21.4

 
25.4

Total (MMcfe/d)
722

 
 
745

 
813

 
 
 
 
 
 
 
Weighted average prices: (1)
 
 
 
 
 
 
Natural gas (Mcf)
$
2.72

 
 
$
3.41

 
$
1.88

Oil (Bbl)
$
45.79

 
 
$
49.16

 
$
35.18

NGL (Bbl)
$
18.68

 
 
$
24.37

 
$
11.89

 
 
 
 
 
 
 
Average NYMEX prices:
 
 
 
 
 
 
Natural gas (MMBtu)
$
3.05

 
 
$
3.66

 
$
2.02

Oil (Bbl)
$
48.63

 
 
$
53.04

 
$
39.52

 
 
 
 
 
 
 
Costs per Mcfe of production:
 
 
 
 
 
 
Lease operating expenses
$
1.09

 
 
$
1.13

 
$
1.04

Transportation expenses
$
0.58

 
 
$
0.59

 
$
0.57

General and administrative expenses (2)
$
0.51

 
 
$
1.63

 
$
0.92

Depreciation, depletion and amortization
$
0.82

 
 
$
1.07

 
$
1.19

Taxes, other than income taxes
$
0.28

 
 
$
0.34

 
$
0.24

 
 
 
 
 
 
 
Average daily production – discontinued operations:
 
 
 
 
 
 
Total (MMcfe/d)
29

 
 
30

 
283

(1)  
Does not include the effect of gains (losses) on derivatives.
(2)  
General and administrative expenses for the four months ended June 30, 2017, the two months ended February 28, 2017, and the six months ended June 30, 2016, include approximately $20 million, $50 million and $14 million, respectively, of noncash share-based compensation expenses. In addition, general and administrative expenses for the two months ended February 28, 2017, and the six months ended June 30, 2016, include expenses incurred by LINN Energy associated with the operations of Berry. On February 28, 2017, LINN Energy and Berry emerged from bankruptcy as stand-alone, unaffiliated entities.

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Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations - Continued

Revenues and Other
Oil, Natural Gas and NGL Sales
Oil, natural gas and NGL sales increased by approximately $132 million or 35% to approximately $323 million and $189 million for the four months ended June 30, 2017, and the two months ended February 28, 2017, respectively, from approximately $380 million for the six months ended June 30, 2016, due to higher natural gas, oil and NGL prices, partially offset by lower production volumes. Higher natural gas, oil and NGL prices resulted in an increase in revenues of approximately $91 million, $44 million and $36 million, respectively.
Average daily production volumes decreased to approximately 722 MMcfe/d and 745 MMcfe/d for the four months ended June 30, 2017, and the two months ended February 28, 2017, respectively, from approximately 813 MMcfe/d for the six months ended June 30, 2016. Lower natural gas, oil and NGL production volumes resulted in a decrease in revenues of approximately $21 million, $13 million and $5 million, respectively.
The following table sets forth average daily production by region:
 
Successor
 
 
Predecessor
 
Four Months Ended June 30, 2017
 
 
Two Months Ended February 28, 2017
 
Six Months Ended June 30, 2016
Average daily production (MMcfe/d):
 
 
 
 
 
 
Rockies
254

 
 
294

 
338

Hugoton Basin
166

 
 
159

 
185

Mid-Continent
125

 
 
109

 
99

TexLa
77

 
 
80

 
71

Permian Basin
46

 
 
49

 
60

Michigan/Illinois
29

 
 
29

 
31

South Texas
25

 
 
25

 
29

 
722

 
 
745

 
813

The increases in average daily production volumes in the Mid-Continent and TexLa primarily reflect increased development capital spending in the regions. The decreases in average daily production volumes in the remaining regions primarily reflect lower production volumes as a result of reduced development capital spending throughout the Company’s various regions, as well as marginal well shut-ins, driven by continued low commodity prices. The decrease in average daily production volumes in the Rockies region also reflects lower production volumes as a result of the Jonah Assets Sale on May 31, 2017.
Gains (Losses) on Oil and Natural Gas Derivatives
Gains on oil and natural gas derivatives were approximately $34 million and $93 million for the four months ended June 30, 2017, and the two months ended February 28, 2017, respectively, compared to losses on oil and natural gas derivatives of approximately $74 million for the six months ended June 30, 2016, representing a variance of approximately $201 million. Gains and losses on oil and natural gas derivatives were primarily due to changes in fair value of the derivative contracts. The fair value on unsettled derivative contracts changes as future commodity price expectations change compared to the contract prices on the derivatives. If the expected future commodity prices increase compared to the contract prices on the derivatives, losses are recognized; and if the expected future commodity prices decrease compared to the contract prices on the derivatives, gains are recognized.
The Company determines the fair value of its oil and natural gas derivatives utilizing pricing models that use a variety of techniques, including market quotes and pricing analysis. See Item 3. “Quantitative and Qualitative Disclosures About Market Risk” and Note 7 and Note 8 for additional details about the Company’s commodity derivatives. For information about the Company’s credit risk related to derivative contracts, see “Counterparty Credit Risk” under “Liquidity and Capital Resources” below.

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Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations - Continued

Marketing and Other Revenues
Marketing revenues represent third-party activities associated with company-owned gathering systems, plants and facilities. Other revenues primarily include management fee revenues recognized by the Company from Berry (in the Predecessor periods) and helium sales revenue. Marketing and other revenues decreased by approximately $29 million or 42% to approximately $24 million and $17 million for the four months ended June 30, 2017, and the two months ended February 28, 2017, respectively, from approximately $70 million for the six months ended June 30, 2016. The decrease was primarily due to the management fee revenues from Berry included in the Predecessor periods, partially offset by higher revenues generated by the Jayhawk natural gas processing plant in Kansas and higher helium sales revenue in the Hugoton Basin.
Expenses
Lease Operating Expenses
Lease operating expenses include expenses such as labor, field office, vehicle, supervision, maintenance, tools and supplies, and workover expenses. Lease operating expenses decreased by approximately $8 million or 5% to approximately $96 million and $50 million for the four months ended June 30, 2017, and the two months ended February 28, 2017, respectively, from approximately $154 million for the six months ended June 30, 2016. The decrease was primarily due to reduced labor costs for field operations as a result of cost savings initiatives. Lease operating expenses per Mcfe increased to $1.09 per Mcfe and $1.13 per Mcfe for the four months ended June 30, 2017, and the two months ended February 28, 2017, respectively, compared to $1.04 per Mcfe for the six months ended June 30, 2016.
Transportation Expenses
Transportation expenses decreased by approximately $7 million or 8% to approximately $51 million and $26 million for the four months ended June 30, 2017, and the two months ended February 28, 2017, respectively, from approximately $84 million for the six months ended June 30, 2016. The decrease was primarily due to reduced costs as a result of lower production volumes and as a result of the properties sold in May 2017. Transportation expenses per Mcfe increased to $0.58 per Mcfe and $0.59 per Mcfe for the four months ended June 30, 2017, and the two months ended February 28, 2017, respectively, compared to $0.57 per Mcfe for the six months ended June 30, 2016.
Marketing Expenses
Marketing expenses represent third-party activities associated with company-owned gathering systems, plants and facilities. Marketing expenses remained relatively consistent at approximately $10 million and $5 million for the four months ended June 30, 2017, and the two months ended February 28, 2017, respectively, compared to approximately $15 million for the six months ended June 30, 2016.
General and Administrative Expenses
General and administrative expenses are costs not directly associated with field operations and reflect the costs of employees including executive officers, related benefits, office leases and professional fees. In addition, general and administrative expenses in the Predecessor periods include expenses incurred by LINN Energy associated with the operations of Berry. General and administrative expenses decreased by approximately $19 million or 14% to approximately $45 million and $72 million for the four months ended June 30, 2017, and the two months ended February 28, 2017, respectively, from approximately $136 million for the six months ended June 30, 2016. The decrease was primarily due to lower salaries and benefits related expenses, the costs associated with the operations of Berry in the Predecessor periods, lower professional services expenses and lower various other administrative expenses including insurance and rent, partially offset by higher noncash share-based compensation expenses principally driven by the immediate vesting of certain awards on the Effective Date. General and administrative expenses per Mcfe were $0.51 per Mcfe and $1.63 per Mcfe for the four months ended June 30, 2017, and the two months ended February 28, 2017, respectively, compared to $0.92 per Mcfe for the six months ended June 30, 2016.
For professional services expenses related to the Chapter 11 proceedings that were incurred since the Petition Date, see “Reorganization Items, Net.”
Exploration Costs
Exploration costs decreased by approximately $2 million to approximately $866,000 and $93,000 for the four months ended June 30, 2017, and the two months ended February 28, 2017, respectively, from approximately $3 million for the six months ended June 30, 2016. The decrease was primarily due to lower seismic data expenses.

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Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations - Continued

Depreciation, Depletion and Amortization
Depreciation, depletion and amortization decreased by approximately $56 million or 32% to approximately $72 million and $47 million for the four months ended June 30, 2017, and the two months ended February 28, 2017, respectively, from approximately $175 million for the six months ended June 30, 2016. The decrease was primarily due to lower rates as a result of the application of fresh start accounting and impairments recorded in the first quarter of 2016, as well as lower total production volumes. Depreciation, depletion and amortization per Mcfe also decreased to $0.82 per Mcfe and $1.07 per Mcfe for the four months ended June 30, 2017, and the two months ended February 28, 2017, respectively, from $1.19 per Mcfe for the six months ended June 30, 2016.
Impairment of Long-Lived Assets
The Company recorded no impairment charges for the four months ended June 30, 2017, or the two months ended February 28, 2017. During the six months ended June 30, 2016, the Company recorded an impairment charge of approximately $123 million associated with proved oil and natural gas properties in the Mid-Continent region due to a decline in commodity prices, changes in expected capital development and a decline in the Company’s estimates of proved reserves.
Taxes, Other Than Income Taxes
 
Successor
 
 
Predecessor
 
Four Months Ended June 30, 2017
 
 
Two Months Ended February 28, 2017
 
Six Months Ended June 30, 2016
(in thousands)
 
 
 
 
 
 
Severance taxes
$
14,532

 
 
$
9,107

 
$
17,157

Ad valorem taxes
10,101

 
 
5,744

 
17,381

Other
315

 
 
26

 
1,003

 
$
24,948

 
 
$
14,877

 
$
35,541

Severance taxes, which are a function of revenues generated from production, increased primarily due to higher commodity prices partially offset by lower production volumes. Ad valorem taxes, which are based on the value of reserves and production equipment and vary by location, decreased primarily due to lower estimated valuations on certain of the Company’s properties.
(Gains) Losses on Sale of Assets and Other, Net
During the four months ended June 30, 2017, the Company recorded the following net gains on divestitures (see Note 4):
Net gain of approximately $22 million on the Salt Creek Assets Sale; and
Net gain of approximately $279 million, including costs to sell of approximately $6 million, on the Jonah Assets Sale.
Other Income and (Expenses)
 
Successor
 
 
Predecessor
 
Four Months Ended June 30, 2017
 
 
Two Months Ended February 28, 2017
 
Six Months Ended June 30, 2016
(in thousands)
 
 
 
 
 
 
Interest expense, net of amounts capitalized
$
(11,751
)
 
 
$
(16,725
)
 
$
(134,193
)
Other, net
(1,551
)
 
 
(149
)
 
(1,158
)
 
$
(13,302
)
 
 
$
(16,874
)
 
$
(135,351
)
Interest expense decreased primarily due to the Company’s discontinuation of interest expense recognition on the senior notes for the two months ended February 28, 2017, as a result of the Chapter 11 proceedings, lower outstanding debt and lower amortization of discounts and financing fees. For the two months ended February 28, 2017, and the period from May 12, 2016

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Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations - Continued

through June 30, 2016, contractual interest, which was not recorded, on the senior notes was approximately $37 million and $31 million, respectively. See “Debt” under “Liquidity and Capital Resources” below for additional details.
The Second Lien Notes were accounted for as a troubled debt restructuring which requires that interest payments on the Second Lien Notes reduce the carrying value of the debt with no interest expense recognized. For the two months ended February 28, 2017, and the period from May 12, 2016 through June 30, 2016, unrecorded contractual interest on the Second Lien Notes was $20 million and approximately $16 million, respectively.
Reorganization Items, Net
The Company incurred significant costs and recognized significant gains associated with the reorganization. Reorganization items represent costs and income directly associated with the Chapter 11 proceedings since the Petition Date, and also include adjustments to reflect the carrying value of certain liabilities subject to compromise at their estimated allowed claim amounts, as such adjustments were determined. The following table summarizes the components of reorganization items included on the condensed consolidated statements of operations:
 
Successor
 
 
Predecessor
 
Four Months Ended June 30, 2017
 
 
Two Months Ended February 28, 2017
 
Six Months Ended June 30, 2016
(in thousands)
 
 
 
 
 
 
Gain on settlement of liabilities subject to compromise
$

 
 
$
3,724,750

 
$

Recognition of an additional claim for the Predecessor’s Second Lien Notes settlement

 
 
(1,000,000
)
 

Fresh start valuation adjustments

 
 
(591,525
)
 

Income tax benefit related to implementation of the Plan

 
 
264,889

 

Legal and other professional advisory fees
(6,016
)
 
 
(46,961
)
 
(13,451
)
Unamortized deferred financing fees, discounts and premiums

 
 

 
(52,045
)
Gain related to interest payable on Predecessor’s Second Lien Notes

 
 

 
551,000

Terminated contracts

 
 
(6,915
)
 

Other
74

 
 
(13,049
)
 
294

Reorganization items, net
$
(5,942
)
 
 
$
2,331,189

 
$
485,798

Income Tax Expense (Benefit)
Effective February 28, 2017, upon the consummation of the Plan, the Successor became a C corporation. Prior to the consummation of the Plan, the Predecessor was a limited liability company treated as a partnership for federal and state income tax purposes, with the exception of the state of Texas, in which income tax liabilities and/or benefits were passed through to its unitholders. Limited liability companies are subject to Texas margin tax. In addition, certain of the Predecessor’s subsidiaries were C corporations subject to federal and state income taxes. The Company recognized income tax expense of approximately $153 million and an income tax benefit of approximately $166,000 for the four months ended June 30, 2017, and the two months ended February 28, 2017, respectively, compared to income tax expense of approximately $7 million for the six months ended June 30, 2016.
Loss from Discontinued Operations, Net of Income Taxes
As a result of the Company’s strategic exit from California (completed by the San Joaquin Basin Sale and Los Angeles Basin Sale) and the deconsolidation of Berry, the Company has classified the results of operations of its California properties and Berry as discontinued operations. Loss from discontinued operations, net of income taxes decreased to approximately $3 million and $548,000 for the four months ended June 30, 2017, and the two months ended February 28, 2017, respectively, from approximately $1.1 billion for the six months ended June 30, 2016. See Note 4 for additional information.

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Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations - Continued

Net Income (Loss)
Net income increased by approximately $3.7 billion to net income of approximately $213 million and $2.4 billion for the four months ended June 30, 2017, and the two months ended February 28, 2017, respectively, from a net loss of approximately $1.1 billion for the six months ended June 30, 2016. The increase was primarily due to higher gains included in reorganization items, lower losses from discontinued operations, gains on sales of assets, gains compared to losses on commodity derivatives, lower impairment charges, lower expenses and higher production revenues. See discussion above for explanations of variances.
Liquidity and Capital Resources
Since its emergence from Chapter 11 bankruptcy in February 2017, the Company’s sources of cash have primarily consisted of proceeds from its 2017 oil and natural gas properties divestitures and net cash provided by operating activities. As a result of divesting certain oil and natural gas properties, the Company received over $1 billion in cash proceeds and repaid all of its outstanding debt as of July 31, 2017. The Company has also used its cash to fund capital expenditures, principally for the development of its oil and natural gas properties, and plant and pipeline construction. The Company expects to fund the remaining 2017 capital program with excess cash from its divestitures and net cash provided by operating activities.
Prior to its emergence from bankruptcy, the Company utilized funds from debt and equity offerings, borrowings under its credit facilities and net cash provided by operating activities for liquidity and capital resources, and the primary use was for the development of oil and natural gas properties, as well as for acquisitions.
See below for details regarding capital expenditures for the periods presented:
 
Successor
 
 
Predecessor
 
Four Months Ended June 30, 2017
 
 
Two Months Ended February 28, 2017
 
Six Months Ended June 30, 2016
(in thousands)
 
 
 
 
 
 
Oil and natural gas
$
87,632

 
 
$
39,409

 
$
40,184

Plant and pipeline
22,724

 
 
4,990

 
7,729

Other
3,919

 
 
1,243

 
5,562

Capital expenditures, excluding acquisitions
$
114,275

 
 
$
45,642

 
$
53,475

Capital expenditures, excluding acquisitions – discontinued operations
$
1,790

 
 
$
436

 
$
12,806

The increase in capital expenditures was primarily due to oil and natural gas development activities in the Merge/SCOOP/STACK and plant and pipeline construction activities associated with the Chisholm Trail Cryogenic Gas Plant. For 2017, the Company estimates its total capital expenditures, excluding acquisitions, will be approximately $229 million, including approximately $338 million related to its oil and natural gas capital program and approximately $100 million related to its plant and pipeline capital. This estimate is under continuous review and subject to ongoing adjustments.

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Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations - Continued

Statements of Cash Flows
The following provides a comparative cash flow summary:
 
Successor
 
 
Predecessor
 
Four Months Ended June 30, 2017
 
 
Two Months Ended February 28, 2017
 
Six Months Ended June 30, 2016
(in thousands)
 
 
 
 
 
 
Net cash:
 
 
 
 
 
 
Provided by (used in) operating activities
$
131,425

 
 
$
(20,814
)
 
$
801,201

Provided by (used in) investing activities
550,753

 
 
(58,756
)
 
(71,111
)
Provided by (used in) financing activities
(719,630
)
 
 
(560,932
)
 
42,387

Net increase (decrease) in cash and cash equivalents
$
(37,452
)
 
 
$
(640,502
)
 
$
772,477

Operating Activities
Cash provided by operating activities was approximately $131 million and cash used in operating activities was approximately $21 million for the four months ended June 30, 2017, and the two months ended February 28, 2017, respectively, compared to cash provided by operating activities of approximately $801 million for the six months ended June 30, 2016. The decrease was primarily due to lower cash settlements on derivatives partially offset by higher production related revenues principally due to higher commodity prices. In addition, in February 2017, restricted cash increased by approximately $80 million in order to fund the settlement of certain claims and pay certain professional fees in accordance with the Plan.
Investing Activities
The following provides a comparative summary of cash flow from investing activities:
 
Successor
 
 
Predecessor
 
Four Months Ended June 30, 2017
 
 
Two Months Ended February 28, 2017
 
Six Months Ended June 30, 2016
(in thousands)
 
 
 
 
 
 
Cash flow from investing activities:
 
 
 
 
 
 
Capital expenditures
$
(88,821
)
 
 
$
(58,006
)
 
$
(94,564
)
Proceeds from sale of properties and equipment and other
641,219

 
 
(166
)
 
(2,713
)
Net cash provided by (used in) investing activities –
continuing operations
552,398

 
 
(58,172
)
 
(97,277
)
Net cash provided by (used in) investing activities – discontinued operations
(1,645
)
 
 
(584
)
 
26,166

Net cash provided by (used in) investing activities
$
550,753

 
 
$
(58,756
)
 
$
(71,111
)
The primary use of cash in investing activities is for the development of the Company’s oil and natural gas properties. Capital expenditures increased primarily due to higher spending on development activities in the Company’s Mid-Continent, Rockies and TexLa regions. The Company made no acquisitions of properties during the six months ended June 30, 2017, or June 30, 2016. The Company has classified the cash flows of its California properties and Berry as discontinued operations.
Proceeds from sale of properties and equipment and other for the four months ended June 30, 2017, include approximately $76 million in net cash proceeds received from the Salt Creek Assets Sale in June 2017 and approximately $555 million in net cash proceeds received from the Jonah Assets Sale in May 2017. An additional $5 million received from the Jonah Assets Sale remains in escrow and is currently classified as restricted cash. See Note 4 for additional details of divestitures.

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Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations - Continued

Financing Activities
Cash used in financing activities was approximately $720 million and $561 million for the four months ended June 30, 2017, and the two months ended February 28, 2017, respectively, compared to cash provided by financing activities of approximately $42 million for the six months ended June 30, 2016. On February 28, 2017, the Company canceled its obligations under the Predecessor Credit Facility and entered into the Successor Credit Facility (see Note 6), which was a net transaction and is reflected as such on the condensed consolidated statement of cash flows. During the six months ended June 30, 2016, the Company borrowed approximately $979 million under the Predecessor Credit Facility, including approximately $919 million in February 2016 which represented the remaining undrawn amount that was available. In addition, during the six months ended June 30, 2016, the Company repaid approximately $913 million under the Predecessor Credit Facility.
The following provides a comparative summary of proceeds from borrowings and repayments of debt:
 
Successor
 
 
Predecessor
 
Four Months Ended June 30, 2017
 
 
Two Months Ended February 28, 2017
 
Six Months Ended June 30, 2016
(in thousands)
 
 
 
 
 
 
Proceeds from borrowings:
 
 
 
 
 
 
Successor Credit Facility
$
160,000

 
 
$

 
$

Predecessor Credit Facility

 
 

 
978,500

 
$
160,000

 
 
$

 
$
978,500

Repayments of debt:
 
 
 
 
 
 
Successor Credit Facility
$
(576,570
)
 
 
$

 
$

Successor Term Loan
(300,000
)
 
 

 

Predecessor Credit Facility

 
 
(1,038,986
)
 
(814,299
)
Predecessor Term Loan

 
 

 
(98,911
)
 
$
(876,570
)
 
 
$
(1,038,986
)
 
$
(913,210
)
In addition, in February 2017, the Company made a $30 million payment to holders of claims under the Second Lien Notes. The Company also issued 41,359,806 shares of Class A common stock to participants in the rights offerings extended by the Company to certain holders of claims arising under the Second Lien Notes and the Unsecured Notes for net proceeds of approximately $514 million.

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Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations - Continued

Debt
The following summarizes the Company’s outstanding debt:
 
Successor
 
 
Predecessor
 
June 30, 2017
 
 
December 31, 2016
(in thousands, except percentages)
 
 
 
 
Successor revolving loan
$
183,430

 
 
$

Predecessor credit facility

 
 
1,654,745

Predecessor term loan

 
 
284,241

6.50% senior notes due May 2019

 
 
562,234

6.25% senior notes due November 2019

 
 
581,402

8.625% senior notes due April 2020

 
 
718,596

12.00% senior secured second lien notes due December 2020

 
 
1,000,000

7.75% senior notes due February 2021

 
 
779,474

6.50% senior notes due September 2021

 
 
381,423

Net unamortized deferred financing fees

 
 
(1,257
)
Total debt, net
183,430

 
 
5,960,858

Less current portion, net (1)

 
 
(1,937,729
)
Less liabilities subject to compromise (2)

 
 
(4,023,129
)
Long-term debt
$
183,430

 
 
$

(1)  
Due to covenant violations, the Predecessor’s credit facility and term loan were classified as current at December 31, 2016.
(2)  
The Predecessor’s senior notes and Second Lien Notes were classified as liabilities subject to compromise at December 31, 2016. On the Effective Date, pursuant to the terms of the Plan, all outstanding amounts under these debt instruments were canceled.
As of July 31, 2017, there were no borrowings outstanding under the Successor Credit Facility. Pursuant to the terms of the Plan, on the Effective Date, all obligations under the Predecessor’s credit facility, Second Lien Notes and senior notes were canceled.
For additional information related to the Company’s outstanding debt, see Note 6.
Share Repurchase Program
On June 1, 2017, the Company’s Board of Directors announced that it had authorized the repurchase of up to $75 million of the Company’s outstanding shares of Class A common stock. On June 28, 2017, the Company’s Board of Directors announced that it had authorized an increase in the previously announced share repurchase program to up to a total of $200 million of the Company’s outstanding shares of Class A common stock. In June 2017, the Company repurchased 7,540 shares of Class A common stock at an average price of $30.48 per share for a total cost of approximately $230,000.
Counterparty Credit Risk
The Company accounts for its commodity derivatives at fair value. The Company’s counterparties are participants in the Successor Credit Facility or were participants in the Predecessor Credit Facility. The Successor Credit Facility is secured by certain of the Company’s and its subsidiaries’ oil, natural gas and NGL reserves and personal property; therefore, the Company is not required to post any collateral. The Company does not receive collateral from its counterparties. The Company minimizes the credit risk in derivative instruments by: (i) limiting its exposure to any single counterparty; (ii) entering into derivative instruments only with counterparties that meet the Company’s minimum credit quality standard, or have a guarantee from an affiliate that meets the Company’s minimum credit quality standard; and (iii) monitoring the creditworthiness of the Company’s counterparties on an ongoing basis. In accordance with the Company’s standard practice, its commodity derivatives are subject to counterparty netting under agreements governing such derivatives and therefore the risk of loss due to counterparty nonperformance is somewhat mitigated.

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Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations - Continued

Dividends/Distributions
Under the Predecessor’s limited liability company agreement, unitholders were entitled to receive a distribution of available cash, which included cash on hand plus borrowings less any reserves established by the Predecessor’s Board of Directors to provide for the proper conduct of the Predecessor’s business (including reserves for future capital expenditures, acquisitions and anticipated future credit needs) or to fund distributions, if any, over the next four quarters. In October 2015, the Predecessor’s Board of Directors determined to suspend payment of the Predecessor’s distribution. The Successor currently has no intention of paying cash dividends and any future payment of cash dividends would be subject to the restrictions in the Successor Credit Facility.
Off-Balance Sheet Arrangements
The Company does not currently have any off-balance sheet arrangements.
Contingencies
See Part II. Item 1. “Legal Proceedings” for information regarding legal proceedings that the Company is party to and any contingencies related to these legal proceedings.
Commitments and Contractual Obligations
The Company has contractual obligations for long-term debt, operating leases and other long-term liabilities that were summarized in the table of contractual obligations in the March 31, 2017 Quarterly Report on Form 10-Q. During the three months ended June 30, 2017, the Company made approximately $650 million in net repayments of borrowings outstanding under the Successor Credit Facility. See Note 6 for additional information about the Successor Credit Facility. There have been no other significant changes to the Company’s contractual obligations since March 31, 2017.
Critical Accounting Policies and Estimates
The discussion and analysis of the Company’s financial condition and results of operations is based on the condensed consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these financial statements requires management of the Company to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. These estimates and assumptions are based on management’s best estimates and judgment. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors that are believed to be reasonable under the circumstances. Such estimates and assumptions are adjusted when facts and circumstances dictate. Actual results may differ from these estimates and assumptions used in the preparation of the financial statements.
Recently Issued Accounting Standards
For a discussion of recently issued accounting standards, see Note 1.
Cautionary Statement Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements that are subject to a number of risks and uncertainties, many of which are beyond the Company’s control. These statements may include discussions about the Company’s:
business strategy;
acquisition and disposition strategy;
financial strategy;
new capital structure and the adoption of fresh start accounting;
uncertainty of the Company’s ability to improve its financial results and profitability following emergence from bankruptcy and other risks and uncertainties related to the Company’s emergence from bankruptcy;

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Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations - Continued

inability to maintain relationships with suppliers, customers, employees and other third parties following emergence from bankruptcy;
failure to satisfy the Company’s short- or long-term liquidity needs, including its inability to generate sufficient cash flow from operations or to obtain adequate financing to fund its capital expenditures and meet working capital needs following emergence from bankruptcy;
large or multiple customer defaults on contractual obligations, including defaults resulting from actual or potential insolvencies;
ability to comply with covenants under the Successor Credit Facility;
effects of legal proceedings;
drilling locations;
oil, natural gas and NGL reserves;
realized oil, natural gas and NGL prices;
production volumes;
capital expenditures;
economic and competitive advantages;
credit and capital market conditions;
regulatory changes;
lease operating expenses, general and administrative expenses and development costs;
future operating results, including results of acquired properties;
plans, objectives, expectations and intentions; and
taxes.
All of these types of statements, other than statements of historical fact included in this Quarterly Report on Form 10-Q, are forward-looking statements. These forward-looking statements may be found in Item 2. In some cases, forward-looking statements can be identified by terminology such as “may,” “will,” “could,” “should,” “expect,” “plan,” “project,” “intend,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “pursue,” “target,” “continue,” the negative of such terms or other comparable terminology.
The forward-looking statements contained in this Quarterly Report on Form 10-Q are largely based on Company expectations, which reflect estimates and assumptions made by Company management. These estimates and assumptions reflect management’s best judgment based on currently known market conditions and other factors. Although the Company believes such estimates and assumptions to be reasonable, they are inherently uncertain and involve a number of risks and uncertainties beyond its control. In addition, management’s assumptions may prove to be inaccurate. The Company cautions that the forward-looking statements contained in this Quarterly Report on Form 10-Q are not guarantees of future performance, and it cannot assure any reader that such statements will be realized or the events will occur. Actual results may differ materially from those anticipated or implied in forward-looking statements due to factors set forth in Item 1A. “Risk Factors” in the Annual Report on Form 10-K for the year ended December 31, 2016, and elsewhere in the Annual Report. The forward-looking statements speak only as of the date made and, other than as required by law, the Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
The Company’s primary market risks are attributable to fluctuations in commodity prices and interest rates. These risks can affect the Company’s business, financial condition, operating results and cash flows. See below for quantitative and qualitative information about these risks.
The following should be read in conjunction with the financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and in the Company’s 2016 Annual Report on Form 10-K. The reference to a “Note” herein refers to the accompanying Notes to Condensed Consolidated Financial Statements contained in Item 1. “Financial Statements.”

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Item 3.    Quantitative and Qualitative Disclosures About Market Risk - Continued

Commodity Price Risk
The Company’s most significant market risk relates to prices of oil, natural gas and NGL. The Company expects commodity prices to remain volatile and unpredictable. As commodity prices decline or rise significantly, revenues and cash flows are likewise affected. In addition, future declines in commodity prices may result in noncash write-downs of the Company’s carrying amounts of its assets.
Historically, the Company has hedged a portion of its forecasted production to reduce exposure to fluctuations in oil and natural gas prices and provide long-term cash flow predictability to manage its business. The Company does not enter into derivative contracts for trading purposes. The appropriate level of production to be hedged is an ongoing consideration based on a variety of factors, including among other things, current and future expected commodity market prices, the Company’s overall risk profile, including leverage and size and scale considerations, as well as any requirements for or restrictions on levels of hedging contained in any credit facility or other debt instrument applicable at the time. In addition, when commodity prices are depressed and forward commodity price curves are flat or in backwardation, the Company may determine that the benefit of hedging its anticipated production at these levels is outweighed by its resultant inability to obtain higher revenues for its production if commodity prices recover during the duration of the contracts. As a result, the appropriate percentage of production volumes to be hedged may change over time.
At June 30, 2017, the fair value of fixed price swaps and collars was a net asset of approximately $33 million. A 10% increase in the index oil and natural gas prices above the June 30, 2017, prices would result in a net liability of approximately $30 million, which represents a decrease in the fair value of approximately $63 million; conversely, a 10% decrease in the index oil and natural gas prices below the June 30, 2017, prices would result in a net asset of approximately $95 million, which represents an increase in the fair value of approximately $62 million.
At December 31, 2016, the fair value of fixed price swaps and collars was a net liability of approximately $85 million. A 10% increase in the index oil and natural gas prices above the December 31, 2016, prices would result in a net liability of approximately $183 million, which represents a decrease in the fair value of approximately $98 million; conversely, a 10% decrease in the index oil and natural gas prices below the December 31, 2016, prices would result in a net asset of approximately $13 million, which represents an increase in the fair value of approximately $98 million.
The Company determines the fair value of its oil and natural gas derivatives utilizing pricing models that use a variety of techniques, including market quotes and pricing analysis. Inputs to the pricing models include publicly available prices and forward price curves generated from a compilation of data gathered from third parties. Company management validates the data provided by third parties by understanding the pricing models used, obtaining market values from other pricing sources, analyzing pricing data in certain situations and confirming that those instruments trade in active markets.
The prices of oil, natural gas and NGL have been extremely volatile, and the Company expects this volatility to continue. Prices for these commodities may fluctuate widely in response to relatively minor changes in the supply of and demand for such commodities, market uncertainty and a variety of additional factors that are beyond its control. Actual gains or losses recognized related to the Company’s derivative contracts depend exclusively on the price of the commodities on the specified settlement dates provided by the derivative contracts. Additionally, the Company cannot be assured that its counterparties will be able to perform under its derivative contracts. If a counterparty fails to perform and the derivative arrangement is terminated, the Company’s cash flows could be impacted.
Interest Rate Risk
At June 30, 2017, the Company had debt outstanding under the Successor Credit Facility of approximately $183 million which incurred interest at floating rates. A 1% increase in the respective market rates would result in an estimated $2 million increase in annual interest expense.
At December 31, 2016, the Company had debt outstanding under the Predecessor Credit Facility of approximately $1.9 billion which incurred interest at floating rates. A 1% increase in the respective market rates would result in an estimated $19 million increase in annual interest expense.

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Item 4.    Controls and Procedures
Evaluation of Disclosure Controls and Procedures
The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company’s reports under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including the Company’s Chief Executive Officer and Chief Financial Officer, and the Company’s Audit Committee of the Board of Directors, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
The Company carried out an evaluation under the supervision and with the participation of its management, including its Chief Executive Officer and Chief Financial Officer, of the effectiveness of its disclosure controls and procedures as of the end of the period covered by this report. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of June 30, 2017.
Changes in the Company’s Internal Control Over Financial Reporting
The Company’s management is also responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act. The Company’s internal controls were designed to provide reasonable assurance as to the reliability of its financial reporting and the preparation and presentation of the condensed consolidated financial statements for external purposes in accordance with accounting principles generally accepted in the United States.
Because of its inherent limitations, internal control over financial reporting may not detect or prevent misstatements. Projections of any evaluation of the effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
There were no changes in the Company’s internal control over financial reporting during the second quarter of 2017 that materially affected, or were reasonably likely to materially affect, the Company’s internal control over financial reporting.

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Part II – Other Information
Item 1.
Legal Proceedings
On May 11, 2016, the Debtors filed Bankruptcy Petitions for relief under Chapter 11 of the Bankruptcy Code in the Bankruptcy Court. The Debtors’ Chapter 11 cases were administered jointly under the caption In re Linn Energy, LLC, et al., Case No. 16‑60040. On January 27, 2017, the Bankruptcy Court entered the Confirmation Order. Consummation of the Plan was subject to certain conditions set forth in the Plan. On the Effective Date, all of the conditions were satisfied or waived and the Plan became effective and was implemented in accordance with its terms. The LINN Debtors Chapter 11 cases will remain pending until the final resolution of all outstanding claims.
The commencement of the Chapter 11 proceedings automatically stayed certain actions against the Company, including actions to collect prepetition liabilities or to exercise control over the property of the Company’s bankruptcy estates. For certain statewide class action royalty payment disputes, the Company filed notices advising that it had filed for bankruptcy protection and seeking a stay, which was granted. However, the Company is, and will continue to be until the final resolution of all claims, subject to certain contested matters and adversary proceedings stemming from the Chapter 11 proceedings.
In March 2017, Wells Fargo Bank, National Association (“Wells Fargo”), the administrative agent under the Predecessor Credit Facility, filed a motion in the Bankruptcy Court seeking payment of post-petition default interest of approximately $31 million. The Company has vigorously disputed that Wells Fargo is entitled to any default interest based on the plain language of the Plan and Confirmation Order. A hearing was held on April 27, 2017, and the parties are awaiting a ruling from the Bankruptcy Court on this matter.
The Company is not currently a party to any litigation or pending claims that it believes would have a material adverse effect on its overall business, financial position, results of operations or liquidity; however, cash flow could be significantly impacted in the reporting periods in which such matters are resolved.
Item 1A.
Risk Factors
Our business has many risks. Factors that could materially adversely affect our business, financial condition, operating results or liquidity and the trading price of our shares are described in Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2016. As of the date of this report, these risk factors have not changed materially. This information should be considered carefully, together with other information in this report and other reports and materials we file with the United States Securities and Exchange Commission.
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
Issuer Purchases of Equity Securities
The Company’s Board of Directors has authorized the repurchase of up to $200 million of the Company’s outstanding shares of Class A common stock. Purchases may be made from time to time in negotiated purchases or in the open market, including through Rule 10b5-1 prearranged stock trading plans designed to facilitate the repurchase of the Company's shares during times it would not otherwise be in the market due to self-imposed trading blackout periods or possible possession of material nonpublic information. The timing and amounts of any such repurchases of shares will be subject to market conditions and certain other factors, and will be in accordance with applicable securities laws and other legal requirements, including restrictions contained in the Company's then current credit facility. The repurchase plan does not obligate the Company to acquire any specific number of shares and may be discontinued at any time.

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Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds - Continued

The following sets forth information with respect to the Company’s repurchases of its shares of Class A common stock during the second quarter of 2017:
Period
 
Total Number of Shares Purchased
 
Average Price Paid Per Share
 
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
 
Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (1)
 
 
 
 
 
 
 
 
(in thousands)
 
 
 
 
 
 
 
 
 
April 1 – 30
 
 
$

 
 
$

May 1 – 31
 
 
$

 
 
$

June 1 – 30
 
7,540
 
$
30.48

 
7,540
 
$
199,770

(1)  
On June 1, 2017, the Company’s Board of Directors announced that it had authorized the repurchase of up to $75 million of the Company’s outstanding shares of Class A common stock. On June 28, 2017, the Company’s Board of Directors announced that it had authorized an increase in the previously announced share repurchase program to up to a total of $200 million of the Company’s outstanding shares of Class A common stock.
Item 3.
Defaults Upon Senior Securities
None
Item 4.
Mine Safety Disclosures
Not applicable
Item 5.
Other Information
None

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Item 6. Exhibits

Exhibit Number
 
Description
 
 
 
2.1
Purchase and Sale Agreement, dated April 30, 2017, by and between Linn Energy Holdings, LLC, Linn Operating, LLC and Jonah Energy LLC (incorporated by reference to Exhibit 2.1 to Current Report on Form 8-K filed on May 4, 2017)
2.2
Purchase and Sale Agreement, dated May 23, 2017, by and among Linn Energy Holdings, LLC, Linn Operating, LLC, Linn Midstream, LLC and Berry Petroleum Company, LLC (incorporated by reference to Exhibit 2.1 to Current Report on Form 8-K filed on May 30, 2017)
2.3*†
Purchase and Sale Agreement, dated May 25, 2017, by and between Linn Energy Holdings, LLC, Linn Operating, LLC and Denbury Onshore, LLC
2.4*†
First Amendment, dated June 30, 2017, to Purchase and Sale Agreement, dated May 25, 2017, by and between Linn Energy Holdings, LLC, Linn Operating, LLC and Denbury Onshore, LLC
2.5*†
Purchase and Sale Agreement, dated June 1, 2017, by and between Linn Energy Holdings, LLC, Linn Operating, LLC, Linn Midstream, LLC and Bridge Energy LLC
2.6*†
First Amendment, dated July 10, 2017, to Purchase and Sale Agreement, dated June 1, 2017, by and between Linn Energy Holdings, LLC, Linn Operating, LLC, Linn Midstream, LLC and Bridge Energy LLC
3.1
Amended and Restated Certificate of Incorporation of Linn Energy, Inc. (incorporated by reference to Exhibit 3.1 to Registration Statement on Form S-8 filed on February 28, 2017)
3.2
Bylaws of Linn Energy, Inc. (incorporated by reference to Exhibit 3.2 to Registration Statement on Form S-8 filed on February 28, 2017)
10.1*
First Amendment and Consent to Credit Agreement dated as of May 31, 2017, to Credit Agreement and Security Agreement dated as of February 28, 2017, among Linn Energy Holdco II LLC, as borrower, Linn Energy Holdco LLC, as parent, Linn Energy, Inc., the subsidiary guarantors party thereto, Wells Fargo Bank, National Association, as administrative agent and the lenders party thereto
10.2*
Engineering and Construction Agreement, dated June 13, 2017, between Linn Midstream, LLC (now known as Blue Mountain Midstream LLC) and BCCK Engineering Incorporated
10.3*
Equipment Supply Agreement, dated June 13, 2017, between Linn Midstream, LLC (now known as Blue Mountain Midstream LLC) and BCCK Engineering Incorporated
10.4*
Contribution Agreement, dated June 27, 2017, by and among Linn Energy Holdings, LLC, Linn Operating, LLC, Citizen Energy II, LLC and Roan Resources LLC
31.1*
Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer
31.2*
Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer
32.1*
Section 1350 Certification of Chief Executive Officer
32.2*
Section 1350 Certification of Chief Financial Officer
101.INS**
XBRL Instance Document
101.SCH**
XBRL Taxonomy Extension Schema Document
101.CAL**
XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF**
XBRL Taxonomy Extension Definition Linkbase Document
101.LAB**
XBRL Taxonomy Extension Label Linkbase Document
101.PRE**
XBRL Taxonomy Extension Presentation Linkbase Document
*
Filed herewith.
**
Furnished herewith.
Pursuant to Item 601(b)(2) of Regulation S-K, the schedules and exhibits to the PSA have not been filed herewith. The registrant agrees to furnish supplementally copies of any omitted schedules and exhibits to the Securities and Exchange Commission upon request.

66

Table of Contents

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
LINN ENERGY, INC.
 
(Registrant)
 
 
Date: August 3, 2017
/s/ Darren R. Schluter
 
Darren R. Schluter
 
Vice President and Controller
 
(Duly Authorized Officer and Principal Accounting Officer)
 
 
 
 
Date: August 3, 2017
/s/ David B. Rottino
 
David B. Rottino
 
Executive Vice President and Chief Financial Officer
 
(Principal Financial Officer)


67

Exhibit 2.3
Execution Version





PURCHASE AND SALE AGREEMENT
DATED MAY 25, 2017,
BY AND BETWEEN
LINN ENERGY HOLDINGS, LLC AND LINN OPERATING, LLC
AS SELLER,
AND
DENBURY ONSHORE, LLC
AS BUYER








TABLE OF CONTENTS
Table of Contents
Page
ARTICLE 1 DEFINITIONS
1
 
 
ARTICLE 2 SALE AND TRANSFER OF ASSETS; CLOSING
20
2.01
Assets
20
2.02
Purchase Price; Deposit
20
2.03
Closing; Preliminary Settlement Statement
20
2.04
Closing Obligations
21
2.05
Allocations and Adjustments
22
2.06
Assumption
25
2.07
Allocation of Purchase Price
27
2.08
Withholding
27
 
 
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF SELLER
28
3.01
Organization and Good Standing
28
3.02
Authority; No Conflict
28
3.03
Bankruptcy
29
3.04
Taxes
29
3.05
Legal Proceedings
29
3.06
Brokers
29
3.07
Compliance with Legal Requirements
30
3.08
Prepayments
30
3.09
Imbalances
30
3.10
Material Contracts
30
3.11
Consents and Preferential Purchase Rights
31
3.12
Current Commitments
31
3.13
Environmental Laws
31
3.14
Necessary Surface Rights
32
3.15
Royalties
32
3.16
Letters of Credit
32
3.17
Disclosures with Multiple Applicability; Materiality
32
 
 
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF BUYER
32
4.01
Organization and Good Standing
32
4.02
Authority; No Conflict
32
4.03
Certain Proceedings
33
4.04
Knowledgeable Investor
33
4.05
Qualification
34
4.06
Brokers
34
4.07
Financial Ability
34
4.08
Securities Laws
34

i



4.09
Due Diligence
35
4.10
Basis of Buyer’s Decision
35
4.11
Business Use, Bargaining Position
35
4.12
Bankruptcy
36
 
 
ARTICLE 5 COVENANTS OF SELLER
36
5.01
Access and Investigation
36
5.02
Ownership of the Assets
37
5.03
Insurance
38
5.04
Consent and Waivers
38
5.05
Amendment to Schedules
39
5.06
Affiliate Contracts
39
 
 
ARTICLE 6 OTHER COVENANTS
39
6.01
Notification and Cure
39
6.02
Satisfaction of Conditions
39
6.03
Replacement of Insurance, Bonds, Letters of Credit, and Guaranties
39
6.04
Governmental Reviews
40
6.05
HSR Act
40
 
 
ARTICLE 7 CONDITIONS PRECEDENT TO BUYER’S OBLIGATION TO CLOSE
40
7.01
Accuracy of Representations
40
7.02
Seller’s Performance
41
7.03
No Proceedings
41
7.04
No Orders
41
7.05
Necessary Consents and Approvals
41
7.06
HSR Act
41
7.07
Closing Deliverables
41
7.08
Title Defect Values, Environmental Defect Values, etc.
41
 
 
ARTICLE 8 CONDITIONS PRECEDENT TO SELLER’S OBLIGATION TO CLOSE
42
8.01
Accuracy of Representations
42
8.02
Buyer’s Performance
42
8.03
No Proceedings
42
8.04
No Orders
42
8.05
Necessary Consents and Approvals
42
8.06
HSR Act
42
8.07
Closing Deliverables
42
8.08
Title Defect Values, Environmental Defect Values, etc.
42
 
 
ARTICLE 9 TERMINATION
43
9.01
Termination Events
43
9.02
Effect of Termination; Distribution of the Deposit Amount
44
9.03
Return of Records Upon Termination
46
 
 
ARTICLE 10 INDEMNIFICATION; REMEDIES
46
10.01
Survival
46

ii



10.02
Indemnification and Payment of Damages by Seller
47
10.03
Indemnification and Payment of Damages by Buyer
47
10.04
Indemnity Net of Insurance
48
10.05
Limitations on Liability
48
10.06
Procedure for Indemnification‑‑Third Party Claims
49
10.07
Procedure for Indemnification – Other Claims
50
10.08
Indemnification of Group Members
50
10.09
Extent of Representations and Warranties
50
10.10
Compliance With Express Negligence Test
51
10.11
Limitations of Liability
52
10.12
No Duplication
52
10.13
Disclaimer of Application of Anti-Indemnity Statutes
52
10.14
Waiver of Right to Rescission
52
10.15
Joint and Several
52
 
 
ARTICLE 11 TITLE MATTERS AND ENVIRONMENTAL MATTERS; PREFERENTIAL PURCHASE RIGHTS; CONSENTS
52
11.01
Title Examination and Access
52
11.02
Preferential Purchase Rights
52
11.03
Consents
53
11.04
Title Defects
53
11.05
Title Defect Value
54
11.06
Seller’s Cure or Contest of Title Defects
54
11.07
Limitations on Adjustments for Title Defects
55
11.08
Title Benefits
56
11.09
Buyer’s Environmental Assessment
57
11.10
Environmental Defect Notice
58
11.11
Seller’s Exclusion, Cure or Contest of Environmental Defects
59
11.12
Limitations
59
11.13
Exclusive Remedies
60
11.14
Casualty Loss and Condemnation
60
11.15
Expert Proceedings
60
 
 
ARTICLE 12 GENERAL PROVISIONS
62
12.01
Records
62
12.02
Expenses and Taxes
62
12.03
Notices
64
12.04
Governing Law; Jurisdiction; Service of Process; Jury Waiver
66
12.05
Further Assurances
67
12.06
Waiver
67
12.07
Entire Agreement and Modification
67
12.08
Assignments, Successors, and No Third Party Rights
67
12.09
Severability
68
12.10
Article and Section Headings, Construction
68
12.11
Counterparts
68
12.12
Press Release
69
12.13
Confidentiality
69

iii



12.14
Name Change
69
12.15
Preparation of Agreement
70
12.16
Appendices, Exhibits and Schedules
70
12.17
Specific Performance
70
12.18
Non-Recourse
70



iv




EXHIBITS AND SCHEDULES
Exhibit A
Leases; Specified Area
Exhibit A-1
Easements and Surface Interests
Exhibit B
Wells
Exhibit B-1
SWD Wells
Exhibit C
[Intentionally Omitted]
Exhibit D
Form of Assignment and Bill of Sale
Exhibit E
Excluded Assets
Exhibit F
Form of Certificate
Exhibit G
Target Formations
 
 
 
 
Schedule 1.01
Permitted Encumbrance
Schedule 1.01(b)
Retained Liabilities
Schedule 2.07(a)
Allocation of Purchase Price
Schedule 3.02(b)
No Conflict
Schedule 3.04
Taxes
Schedule 3.07
Compliance with Legal Requirements
Schedule 3.08
Prepayments
Schedule 3.09
Imbalances
Schedule 3.10
Material Contracts
Schedule 3.11
Consents and Preferential Purchase Rights
Schedule 3.12
Current Commitments
Schedule 3.13
Environmental Laws
Schedule 3.15
Royalties
Schedule 3.17
Letters of Credit
Schedule 5.02
Certain Authorized Pre-Closing Actions
Schedule 5.03
Insurance
Schedule 6.03(a)
Replacement of Insurance, Bonds, Letters of Credit, and Guaranties



v



PURCHASE AND SALE AGREEMENT
This PURCHASE AND SALE AGREEMENT (this “ Agreement ”) is made as of May 25, 2017 (the “ Execution Date ”), by and between Linn Energy Holdings, LLC, a Delaware limited liability company (“ LEH ”), and Linn Operating, LLC, a Delaware limited liability company (“ LOL ” and together with LEH, the “ Seller ”), and Denbury Onshore, LLC, a Delaware limited liability company (“ Buyer ”). Seller and Buyer are sometimes hereinafter referred to individually as a “ Party ” and collectively as the “ Parties .”
RECITAL
Seller desires to sell, and Buyer desires to purchase, all of Seller’s right, title and interest in and to certain oil and gas properties and related assets and contracts, effective as of the Effective Time, for the consideration and on the terms set forth in this Agreement.
AGREEMENT
For and in consideration of the promises contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, agree as follows:
ARTICLE 1
DEFINITIONS
For purposes of this Agreement, in addition to other capitalized terms defined in this Agreement, the following terms have the meanings specified or referred to in this Article 1 when capitalized:
AAA ” – the American Arbitration Association.
Accounting Expert ” – as defined in Section 2.05(d) .
AFE ” – as defined in Section 3.12 .
Affiliate ” – with respect to a Party, any Person directly or indirectly controlled by, controlling, or under common control with, such Party, including any subsidiary of such Party and any “affiliate” of such Party within the meaning of Reg. §240.12b-2 of the Securities Exchange Act of 1934, as amended. As used in this definition, “control” means possession, directly or indirectly, of the power to direct or cause the direction of management, policies, or action through ownership of voting securities, contract, voting trust, or membership in management or in the group appointing or electing management or otherwise through formal or informal arrangements or business relationships. The terms “controlled by,” “controlling,” and other derivatives shall be construed accordingly.
Aggregate Defect Deductible ” – an amount equal to two percent (2%) of the unadjusted Purchase Price.
Aggregate Environmental Defect Value ” – as defined in Section 11.12 .

1



Aggregate Title Defect Value ” – as defined in Section 11.07 .
Allocated Values ” – the values assigned among the Assets as set forth on Schedule 2.07(a) .
Allocation Objections ” – as defined in Section 2.07(b) .
Applicable Contracts ” – all Contracts to which Seller is a party or is bound or are otherwise binding on the Assets that primarily relate, to any of the Assets and (in each case) that will be binding on Buyer after the Closing, including: communitization agreements; net profits agreements; production payment agreements; area of mutual interest agreements; joint venture agreements; confidentiality agreements; farmin and farmout agreements; bottom hole agreements; crude oil, condensate, and natural gas purchase and sale, gathering, transportation, and marketing agreements; hydrocarbon storage agreements; acreage contribution agreements; operating agreements; balancing agreements; pooling declarations or agreements; unitization agreements; processing agreements; saltwater disposal agreements; facilities or equipment leases; and other similar contracts and agreements, but exclusive of any master service agreements, Debt Contracts, Hedge Contracts and Contracts to the extent relating to the Excluded Assets.
“Asset Taxes ” – ad valorem, property, excise, severance, production, sales, real estate, use, personal property and similar Taxes based upon the operation or ownership of the Assets, the production of Hydrocarbons or the receipt of proceeds therefrom, but excluding, for the avoidance of doubt Income Taxes and Transfer Taxes.
Assets ” – all of Seller’s right, title, and interest in, to, and under the following, without duplication, except to the extent constituting Excluded Assets:
(a)      all of the oil and gas leases, subleases and other leaseholds located in the Specified Area (including the oil and gas leases, subleases and other leaseholds described in Exhibit A ), together with (i) any and all other right, title and interest of Seller in and to the leasehold estates created thereby subject to the terms, conditions, covenants and obligations set forth in such leases or Exhibit A (such interest in such leases, the “ Leases ”), (ii) all related rights and interests in the lands covered by the Leases and any lands pooled or unitized therewith (such lands, the “ Lands ”), (iii) all Royalties applicable to the Leases or the Lands, (iv) any amendments, extensions, acreage designations, ratifications, and/or partial releases affecting the Leases, (v) all rights, privileges, benefits and powers conferred upon the holder of the Leases with respect to the use and occupation of the Lands, and (vi) all tenements, hereditaments, and appurtenances belonging to such Leases and the Lands;
(b)      any and all oil, gas, water, observation, injection, CO2 and disposal wells located on any of the Lands (such interest in such wells, including the wells set forth in Exhibit B , the “ Wells ”), and all Hydrocarbons produced therefrom or allocated thereto from and after the Effective Time;
(c)      all rights and interests in, under or derived from all communitization, unitization and pooling agreements, declarations and orders in effect with respect to any of the Leases or Wells and the units (including the participating areas therein) created thereby (such units

2



(including the participating areas therein), the “ Units ”) (the Leases, the Lands, the Units and the Wells being collectively referred to hereinafter as the “ Properties ” or individually as a “ Property ”);
(d)      to the extent that they may be assigned, transferred or re-issued by Seller (with consent, if applicable, but without the payment of any fee unless Buyer agrees in writing to pay such fee; provided Seller shall use commercially reasonable efforts to cause the transfer of all such rights and interests to Buyer), all permits, licenses, allowances, water rights, registrations, consents, orders, approvals, variances, authorizations, servitudes, easements, rights-of-way, surface leases, surface fee interests, other surface interests and surface rights to the extent appurtenant to or primarily used or primarily held for use in connection with the Assets or otherwise primarily relating to the ownership, operation, production, gathering, treatment, processing, storing, sale or disposal of Hydrocarbons or produced water from the Properties or any of the Assets, including those described on Exhibit A-1 ;
(e)      all equipment, machinery, tools, inventory, fixtures, improvements and other personal, movable and mixed property located on any of the Properties or other Assets that is used or held for use in connection therewith, and including well equipment, casing, tubing, pumps, motors, machinery, platforms, rods, tanks, boilers, fixtures, compression equipment, flowlines, pipelines, gathering systems associated with the Wells, manifolds, processing and separation facilities, pads, structures, materials, and other items used or held for use in the operation thereof (collectively, the “ Personal Property ”);
(f)      all salt water disposal wells and evaporation pits that are located in the Specified Area, including those described on Exhibit B-1 ;
(g)      to the extent assignable (with consent, if applicable, but without the payment of any fee unless Buyer agrees in writing to pay such fee; provided Seller shall use commercially reasonable efforts to cause the transfer of all such rights and interests to Buyer), all Applicable Contracts and all rights thereunder insofar as and only to the extent relating to the Assets;
(h)      the Salt Creek EOR Participation Agreement by and between Howell Petroleum Corporation and LEH dated April 3, 2012;
(i)      all Imbalances relating to the Assets;
(j)      originals (if available, and otherwise copies) and copies in digital form (if available) of all of the books, files, records, information and data, whether written or electronically stored, primarily relating to the Assets maintained by Seller or its Affiliates or in Seller’s or its Affiliates’ possession, including: (i) land and title records (including division order files, prospect files, maps, lease records, abstracts of title, title opinions and title curative documents); (ii) Applicable Contract files; (iii) correspondence; (iv) operations, environmental, production, Asset Tax and accounting records; (v) facility and well records; and (vi) to the extent assignable (with consent, if applicable, but without the payment of any fee unless Buyer agrees in writing to pay such fee; provided Seller shall use commercially reasonable efforts to cause the transfer of all such rights and interests to Buyer), geological and seismic data (collectively, “ Records ”);

3



(k)      all Hydrocarbons in storage or existing in stock tanks, pipelines or plants (including inventory);
(l)      all radio equipment, SCADA and measurement technology, and other production related mobility devices (such as SCADA controllers), well communication devices, and any other information technology systems and licenses associated with the foregoing, in each case only to the extent such assets and licenses are (i) used or held for use solely in connection the Properties, (ii) assignable (with consent, if applicable, but without the payment of any fee unless Buyer agrees in writing to pay such fee; provided Seller shall use commercially reasonable efforts to cause the transfer of all such rights and interests to Buyer), and (iii) located on the Properties (the “ Production Related IT Equipment ”);
(m)      all (i) trade credits, accounts receivable, notes receivable, take-or-pay amounts receivable, and other receivables and general intangibles, attributable to the Assets with respect to periods of time from and after the Effective Time; and (ii) liens and security interests in favor of Seller or its Affiliates, whether choate or inchoate, under any Legal Requirement or Contract to the extent arising from, or relating to, the ownership, operation, or sale or other disposition on or after the Effective Time of any of the Assets or to the extent arising in favor of Seller or its Affiliates as to the operator or non-operator of any Asset;
(n)      all rights of Seller and its Affiliates to audit the records of any Person and to receive refunds or payments of any nature, and all amounts of money relating thereto, only to the extent related to the obligations assumed by Buyer pursuant to this Agreement or with respect to which Buyer has an obligation to indemnify Seller; and
(o)      all rights, claims, and causes of action (including warranty and similar claims, indemnity claims, and defenses) of Seller or any of its Affiliates whether arising before, on, or after the Effective Time, only to the extent such rights, claims, and causes of action relate to any of the Assumed Liabilities.
Assignment ” – the Assignment and Bill of Sale from Seller to Buyer, pertaining to the Assets, substantially in the form attached to this Agreement as Exhibit D .
Assumed Liabilities ” – as defined in Section 2.06 .
Bankruptcy Cases ” – the bankruptcy cases commenced by the filing by Seller (or its applicable predecessor or Affiliate) for voluntary petitions for relief under chapter 11 of title 11 of the United States Code in the Bankruptcy Court that were jointly administered under Case No. 16-60040.
Bankruptcy Court ” – the United States Bankruptcy Court for the Southern District of Texas, Houston Division.
Breach ” – a “Breach” of a representation, warranty, covenant, obligation, or other provision of this Agreement or any certificate delivered pursuant to Section 2.04(a)(iii) or Section 2.04(b)(iii) of this Agreement shall be deemed to have occurred if there is or has been any inaccuracy in or breach of, or any failure to perform or comply with, such representation, warranty, covenant, obligation, or other provision.

4



Business Day ” – any day other than a Saturday, Sunday, or any other day on which commercial banks in the State of Texas are authorized or required by law or executive order to close.
Buyer ” – as defined in the preamble to this Agreement.
Buyer’s Closing Documents ” – as defined in Section 4.02(a) .
Buyer Group ” – Buyer and its Affiliates, and their respective Representatives.
Casualty Loss ” – as defined in Section 11.14 .
Closing ” – the closing of the Contemplated Transactions.
Closing Date ” – as defined in Section 2.03 .
Code ” – the Internal Revenue Code of 1986, as amended.
Complete Remediation ” – with respect to an Environmental Defect, a remediation or cure of such Environmental Defect which is completed in accordance with the Lowest Cost Response.
Confidentiality Agreement ” – that certain confidentiality agreement dated as of March 29, 2017 by and between Buyer and LEH.
Consent ” – any approval, consent, ratification, waiver, or other authorization (including any Governmental Authorization) from any Person that is required to be obtained in connection with the execution or delivery of this Agreement or the consummation of the Contemplated Transactions.
Contemplated Transactions ” – all of the transactions contemplated by this Agreement, including:
(a)      the sale of the Assets by Seller to Buyer;
(b)      the performance by the Parties of their respective covenants and obligations under this Agreement; and
(c)      Buyer’s acquisition, ownership, and exercise of control over the Assets.
Contract ” – any written contract, agreement or any other legally binding arrangement, but excluding, however, any Lease, easement, right-of-way, permit or other instrument creating or evidencing an ownership interest in the Assets or any real or immovable property related to or used in connection with the operations of any Assets.
Cure ” – as defined in Section 11.06(a)(i) .
Cure Amounts ” – as defined in the Stipulation and Agreed Order.

5



Damages ” – any and all claims, demands, payments, charges, judgments, assessments, losses, liabilities, damages, Taxes, penalties, fines, expenses, costs, fees, settlements, and deficiencies, including any attorneys’ fees, legal, and other costs and expenses suffered or incurred therewith.
Debt Contract ” – any indenture, mortgage, loan, credit or similar agreement entered into by Seller or its Affiliates creating indebtedness on the part of Seller or its Affiliates for borrowed money or the deferred purchase price of property acquired by, or for services rendered to, Seller or its Affiliates.
De Minimis Environmental Defect Cost ” – Fifty Thousand Dollars ($50,000).
De Minimis Title Defect Cost ” – Fifty Thousand Dollars ($50,000).
Defect Notice Date ” – as defined in Section 11.04 .
Defensible Title ” – title of Seller with respect to the Wells and Leases that, as of the Closing Date and the Effective Date and subject to the Permitted Encumbrances, which is deducible of record or, with respect to any Lease with the Bureau of Land Management or the State of Wyoming, is evidenced by Seller having record title or operating rights in and to such Lease, and:
(a)      with respect to the Target Formation(s) set forth in Schedule 2.07 for each Unit (in each case, subject to any reservations, limitations or depth restrictions described in Schedule 2.07 ), entitles Seller to receive not less than the Net Revenue Interest set forth in Schedule 2.07 for such Unit, except for (i) decreases in connection with those operations in which Seller or its successors or assigns may from and after the Execution Date and in accordance with the terms of this Agreement elect to be a non-consenting co-owner, (ii) decreases resulting from the establishment or amendment from and after the Execution Date of pools or units in accordance with this Agreement, and (iii) decreases required to allow other Working Interest owners to make up past underproduction or pipelines to make up past under deliveries described in Schedule 3.09 ;
(b)      with respect to the Target Formation(s) set forth in Schedule 2.07 for each Unit (in each case, subject to any reservations, limitations or depth restrictions described in Schedule 2.07 ), obligates Seller to bear not more than the Working Interest set forth in Schedule 2.07 for such Target Formation(s) for such Unit, except (i) increases resulting from contribution requirements with respect to defaulting co-owners from and after the Execution Date under applicable operating agreements, or (ii) increases to the extent that such increases are accompanied by a proportionate increase in Seller’s Net Revenue Interest;
(c)      with respect to the Target Formation(s) set forth in Schedule 2.07 for each Unit (in each case, subject to any reservations, limitations or depth restrictions described in Schedule 2.07 ), entitles Seller to not less than the Net Acres set forth on Schedule 2.07 for such Unit in the applicable Target Formation(s); and
(d)
is free and clear of all Encumbrances.

6



Deposit Amount ” – Ten percent (10%) of the unadjusted Purchase Price (including any interest accrued thereon).
Dispute Notice ” – as defined in Section 2.05(d) .
Disputed Matter ” – as defined in Section 11.15(a) .
DOJ ” – the Antitrust Division of the U.S. Department of Justice.
Effective Time ” – March 1, 2017, at 12:01 a.m. local time at the location of the Assets.
Encumbrance ” – any burden, encumbrance, charge, equitable interest, privilege, lien, mortgage, deed of trust, production payment, option, pledge, collateral assignment, security interest, or other arrangement substantially equivalent to any of the foregoing.
Environmental Condition ” – any event occurring or condition existing on the Defect Notice Date with respect to the Leases, Wells or other Assets that causes a Lease, Well or other Asset to be subject to remediation under, or in violation of, an Environmental Law, or any provision of any Lease governing the Assets with respect to any Environmental Law, other than such event or condition to the extent caused by or relating to NORM.
Environmental Defect ” – an Environmental Condition discovered by Buyer or its Representatives as a result of any environmental diligence conducted by or on behalf of Buyer pursuant to Section 11.09 of this Agreement.
Environmental Defect Notice ” – as defined in Section 11.10 .
Environmental Defect Value ” – with respect to each Environmental Defect, the amount of the Lowest Cost Response for such Environmental Defect.
Environmental Law ” – any applicable Legal Requirement in effect as of the Execution Date relating to pollution or the protection of the environment, including those Legal Requirements relating to the storage, handling, and use of Hazardous Materials and those Legal Requirements relating to the generation, processing, treatment, storage, transportation, disposal or other management thereof. The term “Environmental Law” does not include good or desirable operating practices or standards that may be voluntarily employed or adopted by other oil and gas well operators or recommended, but not required, by a Governmental Body.
Environmental Liabilities ” – all costs, Damages, expenses, liabilities, obligations, and other responsibilities arising from or under either Environmental Laws or Third Party claims relating to the environment, and which relate to the Assets or the ownership or operation of the same.
Escrow Account ” – as defined in Section 2.02 .
Escrow Agent ” – JPMorgan Chase Bank, N.A.
Escrow Agreement ” – as defined in Section 2.02 .

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Excluded Assets ” – with respect to Seller, (a) all of Seller’s corporate minute books, financial records and other business records that relate to Seller’s business generally (including the ownership of the Assets but excluding any such records related to the Assets); (b) except to the extent related to any Assumed Liabilities, all trade credits, all accounts, all receivables of Seller and all other proceeds, income or revenues of Seller attributable to the Assets that are attributable to any period of time prior to the Effective Time (other than the Suspense Funds); (c) except to the extent related to any Assumed Liabilities, all claims and causes of action of Seller or its Affiliates that are attributable to periods of time prior to the Effective Time (including claims for adjustments or refunds); (d) except to the extent related to any Assumed Liabilities subject to Section 11.14 , all rights and interests of Seller (i) under any policy or agreement of insurance or indemnity, (ii) under any bond, or (iii) to any insurance or condemnation proceeds or awards arising, in each case, from acts, omissions or events or damage to or destruction of property; (e) except to the extent of an upward adjustment to the Purchase Price, Seller’s rights with respect to all Hydrocarbons produced and sold from the Assets with respect to all periods prior to the Effective Time; (f) all claims of Seller or any of its Affiliates for refunds of, rights to receive funds from any Governmental Body, or loss carry forwards or credits with respect to (i) Asset Taxes attributable to any period (or portion thereof) prior to the Effective Time, (ii) income Taxes paid by Seller or its Affiliates, or (iii) any Taxes attributable to the Excluded Assets; (g) all information technology assets, other than the Production Related IT Equipment, including desktop computers, laptop computers, servers, networking equipment and any associated peripherals and other computer hardware, computer software, all radio and telephone equipment, well communication devices, and any other information technology systems; (h) except to the extent related to any Assumed Liabilities, all rights, benefits and releases of Seller or its Affiliates under or with respect to any Contract that are attributable to periods of time prior to the Closing; (i) all of Seller’s proprietary computer software, patents, trade secrets, copyrights, names, trademarks, logos and other similar intellectual property; (j) all documents and instruments of Seller that may be protected by an attorney-client privilege or any attorney work product doctrine but excluding all title opinions and other such records related to the Assets; (k) all audit rights or obligations of Seller for which Seller bears responsibility arising under any of the Applicable Contracts or otherwise with respect to any period prior to the Effective Time or to any of the Excluded Assets, except for such rights or obligations related to any Assumed Liabilities or any Imbalances assumed by Buyer; (l) Seller’s interpretations of any geophysical or seismic data relating to the Assets; (m) documents prepared or received by Seller or its Affiliates with respect to (i) lists of prospective purchasers for such transactions compiled by Seller, (ii) bids submitted by other prospective purchasers of the Assets, (iii) analyses by Seller or its Affiliates of any bids submitted by any prospective purchaser, (iv) correspondence between or among Seller, its Representatives, and any prospective purchaser other than Buyer, and (v) correspondence between Seller or any of its Representatives with respect to any of the bids, the prospective purchasers or the transactions contemplated by this Agreement; (n) subject to Section 12.13 , a copy of all Records; (o) any Contracts that constitute master services agreements or similar contracts; (p) any Hedge Contracts; (q) any Debt Contracts; (r) any of Seller’s assets other than the Assets; and (s) any leases, rights and other assets specifically listed in Exhibit E .
Execution Date ” – as defined in the preamble to this Agreement.
Expert ” – as defined in Section 11.15(b) .

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Expert Decision ” – as defined in Section 11.15(d) .
Expert Proceeding Notice ” – as defined in Section 11.15(a) .
Final Amount ” – as defined in Section 2.05(d) .
Final Settlement Date ” – as defined in Section 2.05(d) .
Final Settlement Statement ” – as defined in Section 2.05(d) .
FTC ” – the Federal Trade Commission.
Fundamental Representations ” – those representations set forth in Sections 3.01 , 3.02 , and 3.06 .
Governmental Authorization ” – any approval, consent, license, permit, registration, variance, exemption, waiver, or other authorization issued, granted, given, or otherwise made available by or under the authority of any Governmental Body or pursuant to any Legal Requirement.
Governmental Body ” – any (a) nation, state, county, city, town, village, district, or other jurisdiction of any nature; (b) federal, state, local, municipal, foreign, or other government; (c) governmental or quasi-governmental authority of any nature (including any governmental agency, branch, department, official, or entity and any court or other tribunal); (d) multi-national organization or body; or (e) body or authority exercising, or entitled to exercise, any administrative, arbitration, executive, judicial, legislative, police, regulatory, or taxing authority or power of any nature.
Gross Products Tax property or ad valorem Asset Taxes assessed by the State of Wyoming that are measured by the production of Hydrocarbons.
Group ” – either Buyer Group or Seller Group, as applicable.
Hazardous Materials ” – any (a) chemical, constituent, material, pollutant, contaminant, substance, or waste that is regulated by any Governmental Body or may form the basis of liability under any Environmental Law; and (b) petroleum, Hydrocarbons or petroleum products.
Hedge Contract ” – any Contract to which Seller or any of its Affiliates is a party with respect to any swap, forward, put, call, floor, cap, collar option, future or derivative transaction or option or similar agreement, whether exchange traded, “over-the-counter” or otherwise, involving, or settled by reference to, one or more rates, currencies, commodities (including Hydrocarbons), equity or debt instruments or securities, or economic, financial or pricing indices or measures of economic, financial or pricing risk or value or any similar transaction or any combination of these transactions.
HSR Act ” – the Hart-Scott-Rodino-Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder.

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Hydrocarbons ” – oil and gas and other hydrocarbons (including condensate) produced or processed in association therewith (whether or not such item is in liquid or gaseous form), or any combination thereof, and any minerals produced in association therewith.
Imbalances ” – over-production or under-production or over-deliveries or under-deliveries with respect to Hydrocarbons produced from or allocated to the Assets, regardless of whether such over-production or under-production or over-deliveries or under-deliveries arise at the wellhead, pipeline, gathering system, transportation system, processing plant, or other location, including any imbalances under gas balancing or similar agreements, imbalances under production handling agreements, imbalances under processing agreements, imbalances under the Leases, and imbalances under gathering or transportation agreements.
Income Taxes income or franchise Taxes based upon, measured by, or calculated with respect to gross or net income, profits, capital, or similar measures (or multiple bases, including corporate, franchise, business and occupation, business license, or similar Taxes, if gross or net income, profits, capital, or a similar measure is one of the bases on which such Tax is based, measured, or calculated), but excluding ad valorem, property, excise, severance, production, sales, use, real or personal property transfer or other similar Taxes.
Individual Claim Threshold ” – as defined in Section 10.05 .
Instruments of Conveyance ” – the Assignment. Except for the special warranty of Defensible Title by, through and under Seller and its Affiliates contained therein, the foregoing Instruments of Conveyance shall be without warranty of title, whether express, implied, statutory, or otherwise, it being understood that Buyer shall have the right to conduct pre-Closing title due diligence as described below in Article 11 , and that the rights and remedies set forth in Article 11 shall be Buyer’s sole rights and remedies with respect to title.
Knowledge ” – an individual will be deemed to have “Knowledge” of a particular fact or other matter if such individual is actually aware of such fact or other matter, without any duty of inquiry. A Seller Party will be deemed to have “Knowledge” of a particular fact or other matter if any of the following individuals has Knowledge of such fact or other matter: Mark E. Ellis (President and Chief Executive Officer), David B. Rottino (Executive Vice President and Chief Financial Officer), Arden L. Walker, Jr. (Executive Vice President and Chief Operating Officer), Thomas Emmons (Senior Vice President, Corporate Services), Jamin McNeil (Senior Vice President, Houston Division Operations) and Scott Carrasco (Asset Manager). Buyer will be deemed to have “Knowledge” of a particular fact or other matter if John Kleckner (Director, Acquisitions and Divestitures) has Knowledge of such fact or other matter.
Lands ” – as set forth in the definition of “Assets”.
Leases ” – as set forth in the definition of “Assets”.
Legal Requirement ” – any federal, state, local, municipal, foreign, international, or multinational law, Order, constitution, ordinance, or rule, including rules of common law, regulation, statute, treaty, or other legally enforceable directive or requirement.

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Lowest Cost Response ” – the response required or allowed under Environmental Laws in effect as of the Defect Notice Date and under the Leases (if applicable and explicitly addressed therein), that addresses and resolves (for current and future use in the same manner as currently used) the identified Environmental Condition in the most cost-effective manner (considered as a whole and allowing for the continued use and operation of the Assets in the same manner currently used or operated) as compared to any other response that is required or allowed under Environmental Laws and the Leases. The Lowest Cost Response shall include taking no action, leaving the condition unaddressed, periodic monitoring or the recording of notices in lieu of remediation, if such responses are allowed under Environmental Laws and the Leases. The Lowest Cost Response shall not include any costs or expenses relating to the assessment, remediation, removal, abatement, transportation or disposal of any asbestos, asbestos-containing material or NORM unless such costs or expenses are incurred in connection with the removal from the Lands of equipment with NORM, asbestos or asbestos-containing material and such equipment has not been used during the twelve (12) months immediately preceding the Closing Date.
Material Contracts ” – as defined in Section 3.10 .
Midwest School Gas Leak ” – the presence, or release, migration or leak of Hazardous Materials or carbon dioxide that first exists or commences before the Closing Date from or in connection with the 24WC2NE25  and 40HWC2SE25 wells at or adjacent to the Midwest School in Midwest, Wyoming and all actions taken to remediate such presence, release, migration or leak, including investigation, sampling, monitoring, expansion or implementation of a water curtain, review of wells, off-gassing mitigation, installation, testing and operation of a sub slab mitigation system or ventilation system, plugging or re-plugging wells, vapor extraction, and relocation of Persons, including school occupants, residents and businesses.
Net Acre as computed separately with respect to each Unit identified on Schedule 2.07 , (a) the gross number of mineral acres in the lands covered by all Leases on Exhibit A for such Unit, multiplied by (b) the undivided fee simple mineral interest (expressed as a percentage) in the lands covered by such Leases for such Unit (as determined by aggregating the fee simple mineral interests owned by each lessor of that Lease in the lands covered by such Leases) as to the applicable Target Formation(s), multiplied by (c) Seller’s undivided percentage interest that is burdened with the obligation to bear and pay costs and expenses in such Leases for such Units; provided that if the items in (b) or (c) vary as to different tracts covered by such Leases, a separate calculation shall be done for each such tract.  For example, if a Lease in which Seller owns an undivided fifty percent (50%) working interest covers a 20-acre tract in which the lessors of such Lease own an undivided one-half (1/2) fee mineral interest as to the applicable Target Formation and a separate and distinct 40-acre tract in which the lessors of such Lease own an undivided one fourth (1/4) fee mineral interest as to the applicable Target Formation(s), then the Lease would cover ten (10) Net Acres (i.e., (20 × 0.5 × 0.5) + (40 × 0.25 × 0.5) = 10).
Net Revenue Interest ” – with respect to any Unit, the interest in and to all Hydrocarbons produced, saved and sold from or allocated to any Well drilled in such Unit, in each case, limited to the applicable Target Formation as described in the definition of “Defensible Title” and subject to any reservations, limitations or depth restrictions described in Schedule 2.07 , after satisfaction of all other Royalties.

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NORM ” – naturally occurring radioactive material.
Order ” – any award, decision, injunction, judgment, order, ruling, subpoena, or verdict entered, issued, made, or rendered by any court, administrative agency, or other Governmental Body or by any arbitrator.
Organizational Documents ” – (a) the articles or certificate of incorporation and the bylaws of a corporation; (b) the articles of organization and resolutions of a limited liability company; (c) the certificate of limited partnership and limited partnership agreement of a limited partnership; and (d) any amendment to any of the foregoing.
Outside Date ” – as defined in Section 9.01(b) .
Party ” or “ Parties ” – as defined in the preamble to this Agreement.
Party Affiliates ” – as defined in Section 12.18 .
Permitted Encumbrance ” – any of the following:
(a)      the terms and conditions of all Leases and Contracts if the net cumulative effect of such Leases and Contracts does not (i) materially interfere with the operation or use of any of the Assets (as currently operated and used) or the ability of a reasonably prudent operator to drill a well on a Lease, (ii) operate to reduce the Net Revenue Interest of Seller with respect to the Target Formation(s) set forth in Schedule 2.07 to an amount less than the Net Revenue Interest set forth in Schedule 2.07 for such Unit, (iii) obligate Seller to bear a Working Interest with respect to the Target Formation(s) set forth in Schedule 2.07 for any Unit in any amount greater than the Working Interest set forth in Schedule 2.07 for such Unit (unless the Net Revenue Interest for such Unit is greater than the Net Revenue Interest set forth in Schedule 2.07 for such Unit, in the same or greater proportion as any increase in such Working Interest), or (v) reduce the Net Acres of Seller with respect to any Unit to an amount less than the Net Acres set forth on Schedule 2.07 for the applicable Target Formation for such Unit;
(b)      any Preferential Purchase Rights, Consents and similar agreements;
(c)      excepting circumstances where such rights have already been triggered prior to the Effective Time, rights of reassignment arising upon final intention to abandon or release the Assets;
(d)      liens for Taxes not yet due or delinquent or, if delinquent, that are being contested in good faith by appropriate proceedings by or on behalf of Seller;
(e)      all rights to consent by, required notices to, filings with, or other actions by Governmental Bodies in connection with the conveyance of the Leases, if the same are customarily sought and received after the Closing;
(f)      all Legal Requirements and all rights reserved to or vested in any Governmental Body (i) to control or regulate any Asset in any manner; (ii) by the terms of any right, power, franchise, grant, license or permit, or by any provision of law, to terminate such right, power,

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franchise, grant, license or permit or to purchase, condemn, expropriate or recapture or to designate a purchaser of any of the Assets; (iii) to use such property in a manner which does not materially impair the use of such property for the purposes for which it is currently owned and operated; or (iv) to enforce any obligations or duties affecting the Assets to any Governmental Body with respect to any right, power, franchise, grant, license or permit;
(g)      rights of a common owner of any interest currently held by Seller and such common owner as tenants in common or through common ownership to the extent that the same does not (i) materially interfere with the use or operation of any of the Assets (as currently used and operated) or the ability of a reasonably prudent operator to drill a well on a Lease, (ii) operate to reduce the Net Revenue Interest of Seller with respect to the Target Formation(s) set forth in Schedule 2.07 or each currently producing formation, as applicable, for any Unit to an amount less than the Net Revenue Interest set forth in Schedule 2.07 for such Unit, (iii) obligate Seller to bear a Working Interest with respect to the Target Formation(s) set forth in Schedule 2.07 for any Unit in any amount greater than the Working Interest set forth in Schedule 2.07 for such Unit (unless the Net Revenue Interest for such Unit is greater than the Net Revenue Interest set forth in Schedule 2.07 for such Unit, in the same or greater proportion as any increase in such Working Interest), or (iv) reduce the Net Acres of Seller with respect to any Unit to an amount less than the Net Acres set forth on Schedule 2.07 for the applicable Target Formation in such Unit;
(h)      easements, servitudes, permits, rights-of-way, surface leases, and other rights in the Assets for the purpose of operations, facilities, roads, alleys, highways, railways, pipelines, transmission lines, transportation lines, distribution lines, power lines, telephone lines, removal of timber, grazing, logging operations, canals, ditches, reservoirs and other like purposes, or for the joint or common use of real estate, rights-of-way, facilities and equipment, which, in each case, do not (i) materially interfere with the operation or use of any of the Assets (as currently operated and used) or the ability of a reasonably prudent operator to drill a well on a Lease, (ii) operate to reduce the Net Revenue Interest of Seller with respect to the Target Formation(s) set forth in Schedule 2.07 or each currently producing formation, as applicable, for any Unit to an amount less than the Net Revenue Interest set forth in Schedule 2.07 for such Unit, (iii) obligate Seller to bear a Working Interest with respect to the Target Formation(s) set forth in Schedule 2.07 for any Unit in any amount greater than the Working Interest set forth in Schedule 2.07 for such Unit (unless the Net Revenue Interest for such Unit is greater than the Net Revenue Interest set forth in Schedule 2.07 for such Unit, in the same or greater proportion as any increase in such Working Interest), or (iv) reduce the Net Acres of Seller with respect to any Unit identified on Schedule 2.07 to an amount less than the Net Acres set forth on Schedule 2.07 for the applicable Target Formation for each Unit;
(i)      vendors, carriers, warehousemen’s, repairmen’s, mechanics’, workmen’s, materialmen’s, construction or other like liens arising by operation of law in the ordinary course of business or incident to the construction or improvement of any property in respect of obligations which are not yet due or which are being contested in good faith by appropriate proceedings by or on behalf of Seller, in each case (A) as set forth on Schedule 1.01 or (B) otherwise arising from and after the Execution Date;

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(j)      Encumbrances created under Leases or any joint operating agreements applicable to the Assets or by operation of law in respect of obligations that are not yet due or that are being contested in good faith by appropriate proceedings by or on behalf of Seller, in each case (A) as set forth on Schedule 1.01 or (B) otherwise arising from and after the Execution Date;
(k)      any Encumbrance affecting the Assets that is discharged by Seller or expressly waived in writing by Buyer pursuant to the terms of this Agreement at or prior to Closing;
(l)      defects based solely on assertions that Seller’s files lack information (including title opinions);
(m)      lessor’s royalties, overriding royalties, production payments, net profits interests, reversionary interests, and similar burdens if the net cumulative effect of such burdens (i) does not materially interfere with the operation or use of any of the Assets (as currently operated and used) or the ability of a reasonably prudent operator to drill a well on a Lease, (ii) does not reduce the Net Revenue Interest of Seller with respect to any Unit to an amount less than the Net Revenue Interest set forth in Schedule 2.07 for such Unit, (iii) does not obligate Seller to bear a Working Interest in any amount greater than the Working Interest set forth in Schedule 2.07 for any Unit (unless the Net Revenue Interest for such Unit is greater than the Net Revenue Interest set forth in Schedule 2.07 for such Unit, in the same or greater proportion as any increase in such Working Interest), and (iv) does not entitle Seller to less than the Net Acres set forth on Schedule 2.07 for the applicable Target Formation for any Unit;
(n)      defects or irregularities of title (i) as to which the relevant statute(s) of limitations or prescription would bar any attack or claim against Seller’s title; (ii) to the extent arising out of lack of evidence of, or other defects to the extent related to, authorization, execution, delivery, acknowledgment, or approval of any instrument in Seller’s chain of title absent reasonable evidence of an actual claim of superior title from a Third Party attributable to such matter; (iii) to the extent consisting of the failure to recite marital status or omissions of heirship proceedings in documents; (iv) resulting from lack of survey, unless a survey is expressly required by applicable Legal Requirements; (v) to the extent arising out of lack of entity authorization unless Buyer provides affirmative evidence that such entity action was not authorized and results in another Person’s actual and superior claim of title or (vi) that have been cured by prescription or limitations;
(o)      Imbalances set forth on Schedule 3.09 ;
(p)      calls on Hydrocarbon production under existing Contracts set forth on Schedule 3.10 ;
(q)      any matters referenced or set forth on Schedule 1.01 ;
(s)    mortgages on the lessor’s interest under a Lease, whether or not subordinate to such Lease, that have expired on their own terms or the enforcement of which are barred by applicable statute(s) of limitations or prescription; and

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(t)    the failure of Seller to have Record title (as that term is defined in 43 CFR § 3100.0 5(c)) to any Lease by the Bureau of Land Management if the Seller has the represented operating rights in such Lease.
Person ” – any individual, firm, corporation (including any non-profit corporation), general or limited partnership, limited liability company, joint venture, estate, trust, association, organization, labor union, or other entity or Governmental Body.
Personal Property ” – as set forth in the definition of “Assets”.
Phase I Environmental Site Assessment ” – a Phase I environmental property assessment of the Assets that satisfies the basic assessment requirements set forth under the current ASTM International Standard Practice for Environmental Site Assessments (Designation E1527-13) or any other visual site assessment or review of records, reports or documents, and any desktop evaluation of the Assets’ compliance with Environmental Laws.
Plan of Reorganization ” – the Amended Joint Chapter 11 Plan of Reorganization of Linn Energy, LLC and Its Debtor Affiliates Other than LINN Acquisition Company, LLC and Berry Petroleum Company, LLC, as confirmed in the Bankruptcy Cases by the Order Confirming (i) Amended Joint Chapter 11 Plan of Reorganization of Linn Energy, LLC and its Debtor Affiliates other than Linn Acquisition Company, LLC and Berry Petroleum Company, LLC and (ii) Amended Join Chapter 11 Plan of Reorganization of Linn Acquisition Company, LLC and Berry Petroleum Company, LLC [Docket No. 1629].
Post-Closing Date ” – as defined in Section 2.05(d) .
Post-Closing Gross Products Taxes ” – as defined in Section 12.02(c)(ii) .
Potential Discharged Claims ” – all Claims (as defined in 11 U.S.C. § 101(5)) that (i) were discharged in the Bankruptcy Cases and were treated in accordance with the Plan of Reorganization, or (ii) would have been discharged in the Bankruptcy Cases and treated in accordance with the Plan of Reorganization in the event the holder of such Claim had received proper notice of (a) the pendency of the Bankruptcy Cases, (b) the opportunity to timely file a Claim therein, and (c) the opportunity to timely object to the Plan of Reorganization.
Preferential Purchase Right ” – any right or agreement that enables any Person to purchase or acquire any Asset or any interest therein or portion thereof as a result of or in connection with the execution or delivery of this Agreement or the consummation of the Contemplated Transactions.
Preliminary Allocation ” – as defined in Section 2.07(a) .
Preliminary Amount ” – the Purchase Price, adjusted as provided in Section 2.03 , based upon the best information available at the time of the Closing.
Preliminary Settlement Statement ” – as defined in Section 2.03 .

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Proceeding ” – any proceeding, action, arbitration, audit, hearing, investigation, request for information, litigation, or suit (whether civil, criminal, administrative, investigative, or informal) commenced, brought, conducted, or heard by or before, or otherwise involving, any Governmental Body.
Production Related IT Equipment ” – as set forth in the definition of “Assets”.
Property ” or “ Properties ” – as set forth in the definition of “Assets”.
Property Costs ” – all operating expenses (including utilities, costs of insurance, rentals, and third party overhead costs) and, capital expenditures (including costs of acquiring equipment), respectively, incurred in the ordinary course of business attributable to the use, operation, and ownership of the Assets, but “Property Costs” shall not include and Seller shall be responsible for all costs, expenses and Damages attributable to (a) personal injury or death, property damage, torts, breach of contract, or violation of any Legal Requirement, (b) obligations relating to the abandonment or plugging of Wells, dismantling or decommissioning facilities, closing pits and restoring the surface around such Wells, facilities and pits prior to Closing, (c) Retained Liabilities, curing Title Defects, Environmental Defects or Breaches of this Agreement by Seller and the matters covered by the indemnities in Section 10.02 , (d) obligations with respect to Imbalances, (e) obligations to pay Royalties or other interest owners revenues or proceeds relating to the Assets but held in suspense, including Suspense Funds, (f) rentals, options, lease maintenance, broker fees and other property acquisition costs, (g) any of Seller’s or its Affiliates internal overhead or any general and administrative expenses, (h) insurance premiums attributable to policies directly entered into by Seller or its Affiliates, whether or not related to the Assets, and (i) claims for indemnification or reimbursement from any Third Party with respect to costs of the types described in the preceding clauses (a) through (h), whether such claims are made pursuant to contract or otherwise. Notwithstanding anything to the contrary in this Agreement, “Property Costs” shall not include any Asset Taxes, Income Taxes or Transfer Taxes.
Purchase Price ” – as defined in Section 2.02 .
Records ” – as set forth in the definition of “Assets”.
Representative ” – with respect to a particular Person, any director, officer, manager, employee, agent, consultant, advisor, or other representative of such Person, including legal counsel, accountants, and financial advisors.
Required Consent ” – any Consent with respect to which (a) there is a provision within the applicable instrument that such Consent may be withheld in the sole and absolute discretion of the holder or words of similar effect, or (b) there is provision within the applicable instrument expressly stating that an assignment in violation thereof (i) is void or voidable, (ii) triggers the payment of specified liquidated damages, or (iii) causes termination of or right of any counterparty to terminate the applicable Assets to be assigned, or words of similar effect.
Retained Assets ” – any rights, titles, interests, assets, and properties that are originally included in the Assets under the terms of this Agreement, but that are subsequently excluded from the Assets or sale under this Agreement pursuant to the terms of this Agreement.

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Retained Liabilities ” – Damages, liabilities and obligations attributable to, arising out of or in connection with, or based upon (a) the disposal or transportation prior to Closing of any Hazardous Materials generated or used by Seller and taken from the Assets to any location that is not an Asset; (b) personal injury (including death) claims attributable to Seller’s or its Affiliate’s ownership of the Assets prior to the Closing; (c) failure to properly and timely pay, in accordance with the terms of any Lease, Contract or applicable Legal Requirement, all Royalties and any other Working Interest amounts (in each case) with respect to the Assets that are due by Seller or any of its Affiliates and attributable to Seller’s ownership of the Assets prior to the Effective Time; (d) the matters identified in Schedule 1.01(b) solely to the extent Buyer does not receive indemnification therefore under either Title Indemnity Agreement; (e) the Midwest School Gas Leak; (f) any claim made by an employee of Seller or any Affiliate of Seller directly relating to such employment; (g) except to the extent the Purchase Price is reduced pursuant to Section 2.05 , any Property Costs attributable to Seller’s or its Affiliates’ ownership or operation of the Assets prior to the Effective Time; (h) the Potential Discharged Claims and any failure of Seller to take any action, or pursue or enforce any right, remedy or cause of action, to cause the discharge of or prevent the enforcement or collection of any Potential Discharged Claim; (i) except for clause (c) in the definition of Assumed Liabilities, any amounts payable to any Governmental Body in the future to satisfy claims of such Governmental Body that are expressly reserved or preserved under the Stipulation and Agreed Order and attributable to pre-Effective Time periods, including any Cure Amounts; and (j) any civil or administrative fines or penalties and criminal sanctions imposed on the Seller or its Affiliates in connection with any pre-Closing violation of, or failure to comply with Legal Requirements (excluding Environmental Laws); provided that, from and after the date that is twenty-four (24) months following the Closing Date, all Damages, liabilities and obligations arising out of clause (b), other than in connection with the Midwest School Gas Leak, and clause (c) shall no longer be Retained Liabilities and shall be deemed Assumed Liabilities.
Royalties ” – royalties, overriding royalties, production payments, carried interests, net profits interests, reversionary interests, options, back-in interests, contractual rights to production, and other burdens upon, measured by or payable out of production, excluding, for the avoidance of doubt, any Taxes.
Scheduled Closing Date ” – as defined in Section 2.03 .
Schedules ” – the aggregate of all schedules that set forth exceptions, disclosures, or otherwise relate to or are referenced in any of the representations, warranties or covenants set forth herein.
Seller ” – as defined in the preamble to this Agreement.
Seller Closing Documents ” – as defined in Section 3.02(a) .
Seller Group ” – Seller and its Affiliates, and their respective Representatives.
Seller Party ” – each of LEH and LOL individually.
Seller Taxes ” – (a) all Income Taxes imposed by any applicable laws on any Seller Party, any of its direct or indirect owners or Affiliates, or any combined, unitary, or consolidated

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group of which any of the foregoing is or was a member, (b) Asset Taxes allocable to Seller pursuant to Section 12.02(c) (taking into account, and without duplication of, such Asset Taxes effectively borne by Seller as a result of (i) the adjustments to the Purchase Price made pursuant to Section 2.03 , Section 2.05(c) or Section 2.05(d) , as applicable, and (ii) any payments made from one Party to the other in respect of Asset Taxes pursuant to Section 12.02(c)(iii) ), (c) any Taxes imposed on or with respect to the ownership or operation of the Excluded Assets or that are attributable to any asset or business of any Seller Party that is not part of the Assets, and (d) any and all Taxes (other than the Taxes described in clauses (a) , (b) or (c)  of this definition) imposed on or with respect to the ownership or operation of the Assets or the production of Hydrocarbons or the receipt of proceeds therefrom for any Tax period (or portion thereof) ending before the Effective Time.
Specified Area ” – the area inside the boundary of the Salt Creek Unit and Salt Creek South Unit as defined in the applicable unit agreements.
Stipulation and Agreed Order ” – the Stipulation and Agreed Order, dated April 27, 2017, executed by Seller (or its applicable predecessor or Affiliate) and the United States Department of the Interior and ordered by the Bankruptcy Court.
Straddle Period ” – any Tax period beginning before and ending after the Effective Time.
Suspense Funds ” – proceeds of production and associated penalties and interest in respect of any of the Wells that are payable to any Third Party and are being held in suspense by Seller as the operator of such Wells.
Target Formation ” – as set forth in Exhibit G .
Tax ” or “ Taxes ” – (a) any and all federal, state, provincial, local, foreign and other taxes, levies, fees, imposts, duties, assessments, unclaimed property and escheat obligations and other governmental charges imposed by any Governmental Body, including income, profits, franchise, alternative or add-on minimum, gross receipts, environmental (including taxes under Section 59A of the Code), registration, withholding, employment, social security (or similar), disability, occupation, ad valorem, property, value added, capital gains, sales, goods and services, use, real or personal property, capital stock, license, branch, payroll, estimated, unemployment, severance, compensation, utility, stamp, premium, windfall profits, transfer, gains, production and excise taxes, and customs duties, together with any interest, penalties, fines or additions thereto and (b) any successor or transferee liability or any liability that arises by reason of being a member of a consolidated, combined or unitary group, in each case, in respect of any items described in clause (a) above.
Tax Allocation ” – as defined in Section 2.07(b) .
Tax Returns ” – any and all reports, returns, declarations, claims for refund, elections, disclosures, estimates, information reports or returns or statements supplied or required to be supplied to a Governmental Body in connection with Taxes, including any schedule or attachment thereto or amendment thereof.
Third Party ” – any Person other than a Party or an Affiliate of a Party.

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Threatened ” – a claim, Proceeding, dispute, action, or other matter will be deemed to have been “Threatened” if any demand or statement has been made in writing to a Party or any of its officers, directors, or employees that would lead a prudent Person to conclude that such a claim, Proceeding, dispute, action, or other matter is likely to be asserted, commenced, taken, or otherwise pursued in the future.
Title Benefit ” – as defined in Section 11.08 .
Title Benefit Notice ” – as defined in Section 11.08 .
Title Benefit Properties ” – as defined in Section 11.08 .
Title Benefit Value ” – as defined in Section 11.08 .
Title Defect ” – any Encumbrance, defect or other matter that causes Seller not to have Defensible Title in and to the Wells or Leases in any Unit, without duplication; provided that the following shall not be considered Title Defects:
(a)    defects arising out of the lack of corporate or other entity authorization unless Buyer provides affirmative evidence that such corporate or other entity action was not authorized and results in (or could reasonably be expected to result in) another Person’s actual and superior claim of title to the relevant Assets;
(b)    defects based on a gap in Seller’s chain of title in the county or parish records, unless Buyer affirmatively shows such gap to exist in such records by an abstract of title, title opinion, landman’s title chain, run sheet or other document, which documents (if any) shall be included in a Title Defect Notice (for the avoidance of doubt, a non-certified, cursory or limited title chain will satisfy this requirement);
(c)    defects based upon the failure to record any federal or state Leases or any assignments of interests in such Leases or any assignments of interests in such Leases in any applicable public records; provided that failures to record any federal or state Lease or any assignments of interest in such Lease in the applicable public record may be defects if the failure to so record cannot be cured by filing the same after the Effective Date in the applicable public record;
(d)    defects arising from any change in any applicable Legal Requirement after the Execution Date; and
(f)    defects based solely on the lack of information in Seller’s files.
Title Defect Cure Period ” – as defined in Section 11.06(a) .
Title Defect Notice ” – as defined in Section 11.04 .
Title Defect Property ” – as defined in Section 11.04 .
Title Defect Value ” – as defined in Section 11.04 .

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Title Indemnity Agreements ” – collectively, (i) that certain Title Indemnity Agreement Salt Creek Unit by and between Howell Petroleum Corporation and Linn Energy Holdings, LLC dated April 1, 2012, and (ii) that certain Title Indemnity Agreement Salt Creek South Unit by and between Howell Petroleum Corporation and Linn Energy Holdings, LLC dated April 1, 2012.
Transfer Tax ” – all transfer, sales, use, stamp, registration and similar Taxes (but excluding (a) all related documentary, filing and recording fees and expenses and (b) Income Taxes) arising out of, or in connection with, the transactions contemplated by this Agreement.
Units ” – as set forth in the definition of “Assets”.
Wells ” – as set forth in the definition of “Assets”.
Working Interest ” – with respect to any Unit, the interest in and to such Unit, the interest in and to any well drilled in such Unit that is burdened with the obligation to bear and pay costs and expenses of maintenance, development and operations on or in connection with such Unit (in each case, limited to the applicable Target Formation(s) as described in the definition of “Defensible Title” and subject to any reservations, limitations or depth restrictions described in Schedule 2.07 ), but without regard to the effect of any Royalties or other burdens.
ARTICLE 2
SALE AND TRANSFER OF ASSETS; CLOSING
2.01      Assets. Subject to the terms and conditions of this Agreement, at the Closing, Seller shall sell and transfer (or shall cause to be sold and transferred) the Assets to Buyer, and Buyer shall purchase, pay for, and accept the Assets from Seller.
2.02      Purchase Price; Deposit. Subject to any adjustments that may be made under Section 2.05, the purchase price for the Assets will be Seventy-One Million Five Hundred Thousand Dollars ($71,500,000) (the “ Purchase Price ”). Within one (1) Business Day after the Execution Date, Buyer will deposit by wire transfer in same day funds into an escrow account (the “Escrow Account”) established pursuant to the terms of a mutually agreeable Escrow Agreement (the “Escrow Agreement”) an amount equal to the Deposit Amount. The Deposit Amount shall be held by the Escrow Agent, and if the Closing timely occurs, on or before the Closing Date, the Parties shall execute and deliver to the Escrow Agent a joint instruction letter directing the Escrow Agent to release the Deposit Amount to Seller at Closing, which Deposit Amount shall be applied as a credit toward the Preliminary Amount as provided in Section 2.05(a). If this Agreement is terminated prior to the Closing in accordance with Section 9.01, then the provisions of Section 9.02 shall apply and the distribution of the Deposit Amount shall be governed in accordance therewith.
2.03      Closing; Preliminary Settlement Statement. The Closing shall take place at the offices of Kirkland and Ellis LLP at 600 Travis Street, Suite 3300, Houston, Texas 77002 on or before June 30, 2017 (the “ Scheduled Closing Date ”), or if all conditions to Closing under Article 7 and Article 8 have not yet been satisfied or waived, within ten (10) Business Days after such conditions have been satisfied or waived, subject to such conditions being satisfied or waived at the Closing and subject to the provisions of Article 9 . The date on which Closing

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occurs shall be the “ Closing Date ”. Subject to the provisions of Articles 7 , 8 , and 9 , failure to consummate the purchase and sale provided for in this Agreement on the date and time and at the place determined pursuant to this Section 2.03 shall not result in the termination of this Agreement and shall not relieve either Party of any obligation under this Agreement. Not later than five (5) Business Days prior to the Closing Date, Seller will deliver to Buyer a statement setting forth in reasonable detail Seller’s reasonable good faith determination of the Preliminary Amount based upon the best information available at that time (the “ Preliminary Settlement Statement ”). Within two (2) Business Days after its receipt of the Preliminary Settlement Statement, Buyer may submit to Seller in writing any objections or proposed changes thereto and Seller shall consider all such objections and proposed changes in good faith. The estimate agreed to by Seller and Buyer, or, absent such agreement, delivered in the Preliminary Settlement Statement by Seller in accordance with this Section 2.03 , will, absent manifest error, be the Preliminary Amount to be paid by Buyer to Seller at the Closing.
2.04      Closing Obligations. At the Closing:
(a)
Each Seller Party shall deliver (and execute, as appropriate), or cause to be delivered (and executed, as appropriate), to Buyer:
(i)
the Instruments of Conveyance in the appropriate number for recording in the real property records where the Assets are located, together with any assignments, on appropriate forms, of state and of federal Leases comprising portions of the Assets, if any, in sufficient counterparts necessary to facilitate filing with the applicable Governmental Bodies;
(ii)
possession of the Assets (except the Suspense Funds, which shall be conveyed to Buyer by way of one or more adjustments to the Purchase Price as provided in Section 2.05(c)(ii)(E) );
(iii)
a certificate, in substantially the form set forth in Exhibit F executed by an officer of such Seller Party, certifying on behalf of such Seller Party that the conditions to Closing set forth in Sections 7.01 and 7.02 have been fulfilled;
(iv)
a Treasury Regulation Section 1.1445-2(b)(2) statement, certifying that such Seller Party (or its regarded owner, if such Seller Party is an entity disregarded as separate from its owner) is not a “foreign person” within the meaning of the Code;
(v)
an executed counterpart of the Preliminary Settlement Statement;
(vi)
a recordable release in a form reasonably acceptable to Buyer of any trust, mortgages, financing statements, fixture filings and security agreements, in each case, securing indebtedness for borrowed money made by such Seller Party or its Affiliates affecting the Assets; and
(vii)
such documents as Buyer or counsel for Buyer may reasonably request, including letters-in-lieu of transfer order to third party operators and purchasers of production from the Wells (which shall be prepared and provided by Buyer (with

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assistance from Seller) and reasonably satisfactory to Seller) and documents needed to transfer any Governmental Authorizations.
(b)
Buyer shall deliver (and execute, as appropriate) to Seller:
(i)
the Preliminary Amount (less the Deposit Amount) by wire transfer to the accounts specified by Seller in written notices given by Seller to Buyer at least two (2) Business Days prior to the Closing Date;
(ii)
the Instruments of Conveyance in the appropriate number for recording in the real property records where the Assets are located, together with any assignments, on appropriate forms, of state and of federal Leases comprising portions of the Assets, if any, in sufficient counterparts necessary to facilitate filing with the applicable Governmental Bodies;
(iii)
a certificate, in substantially the form set forth in Exhibit F executed by an officer of Buyer, certifying on behalf of Buyer that the conditions to Closing set forth in Sections 8.01 and 8.02 have been fulfilled;
(iv)
an executed counterpart of the Preliminary Settlement Statement;
(v)
evidence of replacement bonds, guarantees, and other sureties pursuant to Section 6.03(a) and evidence of such other authorizations and qualifications as may be necessary for Buyer to own the Assets; and
(vi)
such other documents as Seller or counsel for Seller may reasonably request, including letters-in-lieu of transfer order to purchasers of production from the Wells (which shall be prepared and provided by Buyer and reasonably satisfactory to Seller).
2.05      Allocations and Adjustments. If the Closing occurs:
(a)
Buyer shall be entitled to all production and products from or attributable to the Assets from and after the Effective Time and the proceeds thereof, and to all other income, proceeds, receipts, and credits earned with respect to the Assets on or after the Effective Time, and shall be responsible for (and entitled to any refunds with respect to) all Property Costs attributable to the Assets and incurred from and after the Effective Time. Seller shall be entitled to all production and products from or attributable to the Assets prior to the Effective Time and the proceeds thereof, and shall be responsible for (and entitled to any refunds with respect to) all Property Costs attributable to the Assets and incurred prior to the Effective Time. “Earned” and “incurred,” as used in this Agreement, shall be interpreted in accordance with generally accepted accounting principles and Council of Petroleum Accountants Society (COPAS) standards.
(b)
For purposes of allocating revenues, production, proceeds, income, accounts receivable, and products under this Section 2.05 , (A) liquid Hydrocarbons produced into storage facilities will be deemed to be “from or attributable to” the Wells when they pass through the pipeline connecting into the storage facilities into which they are run, and

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(B) gaseous Hydrocarbons and liquid Hydrocarbons produced into pipelines will be deemed to be “from or attributable to” the Wells when they pass through the receipt point sales meters on the pipelines through which they are transported. In order to accomplish the foregoing allocation of production, the Parties shall rely upon the gauging, metering, and strapping procedures which were conducted by Seller on or about the Effective Time and, unless demonstrated to be inaccurate, shall utilize reasonable interpolating procedures to arrive at an allocation of production when exact gauging, metering, and strapping data is not available on hand as of the Effective Time. Asset Taxes for 2017 shall be prorated in accordance with Section 12.02(b) . Seller shall provide to Buyer evidence of all meter readings and all gauging and strapping procedures conducted on or about the Effective Time in connection with the Assets, together with all data necessary to support any estimated allocation, for purposes of establishing the adjustment to the Purchase Price pursuant to Section 2.05(a) .
(c)
The Purchase Price shall be, without duplication,
(i)
increased by the following amounts:
(A)
the aggregate amount of (i) proceeds received by Buyer from the sale of Hydrocarbons produced from and attributable to the Assets during any period prior to the Effective Time to which Seller is entitled under Section 2.05(a) (net of any (x) Royalties and (y) third party gathering, processing, transportation and other similar midstream costs) and (ii) other proceeds received with respect to the Assets for which Seller would otherwise be entitled under Section 2.05(a) ;
(B)
the amount of all Asset Taxes allocable to Buyer pursuant to Section 12.02(b) but paid or economically borne by Seller (excluding, for the avoidance of doubt, any Asset Taxes that were withheld or deducted from the gross amount paid or payable to Seller in connection with a transaction to which Section 2.05(c)(ii)(A) applies, and therefore were taken into account in determining the “proceeds received” by Seller for purposes of applying Section 2.05(c)(ii)(A) with respect to such transaction);
(C)
the aggregate amount of all non-reimbursed Property Costs that have been paid by Seller that are attributable to the ownership of the Assets after the Effective Time (including the amount of any prepayments of Property Costs made by Seller (or its immediate predecessor in title) that are applied against operations conducted between the Effective Time and Closing, but excluding all other prepayments);
(D)
the amount of any prepayments of Property Costs made by Seller (or its immediate predecessor in title) to Buyer or its Affiliates for operations not completed prior to Closing and that are not reimbursed to Seller on or prior to the Closing;

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(E)
the amount of any other upward adjustment specifically provided for in this Agreement or mutually agreed upon by the Parties;
(F)
to the extent that proceeds for such volumes have not been received by Seller, an amount equal to the value of all Hydrocarbons attributable to the Assets in storage or existing in stock tanks, pipelines or plants (including inventory) above the load line as of the Effective Time; and
(ii)
decreased by the following amounts:
(A)
the aggregate amount of (i) proceeds received by Seller from the sale of Hydrocarbons produced from and attributable to the Assets from and after the Effective Time to which Buyer is entitled under Section 2.05(a) (net of any (x) Royalties and (y) third party gathering, processing, transportation and other similar midstream costs) and (ii) other proceeds received by Seller with respect to the Assets for which Buyer would otherwise be entitled under Section 2.05(a) ;
(B)
the amount of all Asset Taxes allocable to Seller pursuant to Section 12.02(b) but paid or economically borne by Buyer (excluding, for the avoidance of doubt, any Asset Taxes that were withheld or deducted from the gross amount paid or payable to Buyer in connection with a transaction to which Section 2.05(c)(i)(A) applies, and therefore were taken into account in determining the “proceeds received” by Buyer for purposes of applying Section 2.05(c)(i)(A) with respect to such transaction);
(C)
the aggregate amount of all downward adjustments pursuant to Article 11 ;
(D)
the aggregate amount of all non-reimbursed Property Costs that are attributable to the ownership of the Assets prior to the Effective Time (excluding prepayments with respect to any period after the Effective Time) and paid by Buyer;
(E)
the amount of the Suspense Funds; and
(F)
the amount of any other downward adjustment specifically provided for in this Agreement or mutually agreed upon by the Parties.
(d)
No earlier than sixty (60) days following the Closing Date and no later than ninety (90) days following the Closing Date, Seller shall prepare and submit to Buyer a statement (the “ Final Settlement Statement ”) setting forth each adjustment or payment which was not finally determined as of the Closing Date and showing the values used to determine such adjustments to reflect the final adjusted Purchase Price calculated in accordance with this Section 2.05 , together with all available documentation in reasonable detail to support any credit, charge, receipt or other item, including all such documentation used by Seller in the preparation of such statement. On or before thirty (30) days after receipt of the Final Settlement Statement, Buyer shall deliver to Seller a written report

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containing any changes that Buyer proposes be made to the Final Settlement Statement and an explanation of any such changes and the reasons therefor together with any supporting information (the “ Dispute Notice ”). During such thirty (30)-day period, Buyer shall be given reasonable access to Seller’s and its Affiliates’ books and records relating to the matters required to be accounted for in the Final Settlement Statement to allow Buyer to conduct an audit and review such items. Any changes not included in the Dispute Notice shall be deemed waived. If Buyer fails to timely deliver a Dispute Notice to Seller containing changes Buyer proposes to be made to the Final Settlement Statement, the Final Settlement Statement as delivered by Seller will be deemed to be mutually agreed upon by the Parties and will, without limiting Section 12.02(c)(iii) or Buyer’s right to indemnity under Section 10.02(c) for Seller Taxes, be final and binding on the Parties. Upon delivery of the Dispute Notice, the Parties shall undertake to agree with respect to any disputed amounts identified therein by the date that is one hundred twenty (120) days after the Closing Date (the “ Post-Closing Date ”). Except for Title Defect and Environmental Defect adjustments pursuant to Section  2.05(c)(ii)(B) , which shall be subject to the arbitration provisions of Section 11.15 , if the Parties are still unable to agree regarding any item set forth in the Dispute Notice as of the Post-Closing Date, then the Parties shall submit to a nationally-recognized independent accounting firm mutually agreed upon by the Parties (the “ Accounting Expert ”) a written notice of such dispute along with reasonable supporting detail for the position of Buyer and Seller, respectively, and the Accounting Expert shall finally determine such disputed item in accordance with the terms of this Agreement. If, within five (5) Business Days after delivery of a Dispute Notice, the Parties cannot mutually agree on an Accounting Expert, then the Parties shall utilize the same method to choose a nationally-recognized independent accounting firm to act as an accounting expert as set forth in Section 11.15(b) , with appropriate modifications to such provisions to reflect the selection of an accounting expert instead of an Expert. The Accounting Expert shall act as an expert and not an arbitrator. In determining the proper amount of any adjustment to the Purchase Price related to the disputed item, the Accounting Expert shall not increase the Purchase Price more than the increase proposed by Seller nor decrease the Purchase Price more than the decrease proposed by Buyer, as applicable. The decision of the Accounting Expert shall, without limiting Section 12.02(c)(iii) or Buyer’s right to indemnity under Section 10.02(c) for Seller Taxes, be binding on the Parties, and the fees and expenses of the Accounting Expert shall be borne one-half (1/2) by Seller and one-half (1/2) by Buyer. The date upon which all adjustments and amounts in the Final Settlement Statement are agreed to (or deemed agreed to) or fully and finally determined by the Accounting Expert as set forth in this Section 2.05(d) shall be called the “ Final Settlement Date ,” and the final adjusted Purchase Price shall be called the “ Final Amount .” If (a) the Final Amount is more than the Preliminary Amount, Buyer shall pay to Seller an amount equal to the Final Amount, minus the Preliminary Amount; or (b) the Final Amount is less than the Preliminary Amount, Seller shall pay to Buyer an amount equal to the Preliminary Amount, minus the Final Amount. Such payment shall be made within five (5) Business Days after the Final Settlement Date by wire transfer of immediately available funds to the accounts specified pursuant to wire instructions delivered in advance by Seller or Buyer, as applicable.

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2.06      Assumption. If the Closing occurs, from and after the Closing Date, Buyer shall assume, fulfill, perform, pay, and discharge the following liabilities (except to the extent any such liabilities were Potential Discharged Claims) arising from, based upon, related to, or associated with the Assets and only to the extent not constituting Retained Liabilities (collectively, the “ Assumed Liabilities ”) subject to Seller’s indemnity obligations under Section 10.02 (further subject to the limitations and restrictions in Article 10 ): any and all Damages and obligations, known or unknown, allocable to the Assets prior to, at, or after the Effective Time, including any and all Damages and obligations: (a) attributable to or resulting from the use, maintenance or ownership of the Assets, regardless whether arising before, at or after the Effective Time, except for Property Costs which shall have been accounted for as provided under Section 2.05 ; (b) imposed by any Legal Requirement or Governmental Body relating to the Assets, (c) for plugging, abandonment, decommissioning, and surface restoration of the Assets, including oil, gas, injection, water, or other wells and all surface facilities; (d) subject to Buyer’s rights and remedies set forth in Article 11 and the special warranty of Defensible Title set forth in the Instruments of Conveyance, attributable to or resulting from lack of Defensible Title to the Assets; (e) attributable to the surface manifestation of underground emissions directly from the Assets; (f) attributable to the Imbalances; (g) subject to Buyer’s rights and remedies set forth in Article 11 and attributable to or resulting from all Environmental Liabilities relating to the Assets; (h) related to the conveyance of the Assets to Buyer at Closing (including, subject to Section 11.02 and Section 11.03 , arising from the conveyance thereof without consent or in violation of a preferential purchase right or any maintenance of uniform interest provisions); (i) attributable to or resulting from Transfer Taxes; (j) attributable to or resulting from Asset Taxes to the extent attributable to periods (or portions thereof) from and after the Effective Time, pursuant to Section 12.02(c) (taking into account, and without duplication of, such Asset Taxes effectively borne by Buyer as a result of (i) the adjustments to the Purchase Price made pursuant to Section 2.03 , Section 2.05(c) or Section 2.05(d) , as applicable, and (ii) any payments made from one Party to the other in respect of Asset Taxes pursuant to Section 12.02(c)(iii) ); and (k) attributable to the Leases and the Applicable Contracts. Buyer acknowledges that: (i) the Assets have been used in connection with the exploration for, and the development, production, treatment, and transportation of, Hydrocarbons; (ii) spills of wastes, Hydrocarbons, produced water, Hazardous Materials, and other materials and substances may have occurred in the past or in connection with the Assets; (iii) there is a possibility that there are currently unknown, abandoned wells, plugged wells, pipelines, and other equipment on or underneath the property underlying the Assets; (iv) it is the intent of the Parties that, subject to the terms and conditions of this Agreement, all liability associated with the matters described in clauses (i) through (iii) above as well as any responsibility and liability to decommission, plug, or replug such wells (including the Wells) in accordance with all Legal Requirements and requirements of Governmental Bodies be passed to Buyer effective as of the Effective Time and that Buyer shall assume all responsibility and liability for such matters and all claims and demands related thereto; (v) the Assets may contain asbestos, Hazardous Materials, or NORM; (vi) NORM may affix or attach itself to the inside of wells, materials, and equipment as scale or in other forms; (vii) wells, materials, and equipment located on the Assets may contain NORM; and (viii) special procedures may be required for remediating, removing, transporting, and disposing of asbestos, NORM, Hazardous Materials, and other materials from the Assets. From and after the Closing, but effective as of the Effective Time, subject to Seller’s indemnity obligations under Section 10.02 (subject to the limitations and restrictions in Article 10 ), Buyer

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shall assume, with respect to the Assets, all responsibility and liability for any assessment, remediation, removal, transportation, and disposal of these materials and associated activities in accordance with all Legal Requirements and requirements of Governmental Bodies.
2.07      Allocation of Purchase Price.
(a)
Preliminary Allocation . The Purchase Price shall be allocated as set forth in Schedule 2.07(a) hereto (the “ Preliminary Allocation ”). Seller and Buyer agree to be bound by the values assigned among the Assets as set forth on the Preliminary Allocation for purposes of Article 11 hereof.
(b)
Within ninety (90) days following the Closing Date, Buyer shall deliver to the Seller a schedule allocating the Purchase Price (and all other amounts treated as consideration for federal income tax purposes), among the Assets (the “ Tax Allocation ”). The Tax Allocation shall be reasonable and prepared in accordance with Section 1060 of the Code and in a manner consistent with the Preliminary Allocation to the extent permitted by applicable Legal Requirements. The Tax Allocation shall be deemed final, and shall be conclusive and binding on all Parties, unless the Seller delivers to Buyer a written notice identifying each item reflected in the Tax Allocation to which the Seller takes exception within thirty (30) days after delivery of the Tax Allocation to the Seller (such items “ Allocation Objections ”) (it being understood that any amounts not disputed by the Seller shall be final and binding). Upon delivery of the Allocation Objections, if any, the Seller and Buyer shall negotiate in good faith to resolve such dispute; provided , however , that if the Seller and Buyer are unable to resolve any dispute with respect to the Tax Allocation within thirty (30) days after the delivery of any Allocation Objections, then the Seller and Buyer shall each be entitled to adopt their own positions regarding the allocation of the Purchase Price among the Assets for applicable Tax purposes. If the Parties agree on the Tax Allocation (or such schedule is deemed accepted), the Seller and Buyer agree to file their respective IRS Forms 8594 and all federal, state and local Tax Returns in accordance with the Tax Allocation, and shall file any additional information returns required to be filed to reflect any subsequent mutually agreed upon adjustments to the Tax Allocation; provided, however , that neither Party shall be unreasonably impeded in its ability and discretion to negotiate, compromise and/or settle any Tax audit, claim or similar proceedings in connection with such allocation.
2.08      Withholding. Buyer, the Escrow Agent and each of their respective Affiliates shall be entitled to deduct or withhold from the amounts payable under this Agreement such amounts as may be required to be deducted and withheld under the Code and any other applicable Tax laws. Any such amount withheld and paid over to the appropriate Tax authority shall be treated as though it had been paid to the Person in respect of which such withholding was required.

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ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLER
Each Seller Party represents and warrants to Buyer as of the Execution Date and the Closing Date, the following:
3.01      Organization and Good Standing. Such Seller Party is a Delaware limited liability company, and is duly organized, validly existing, and in good standing under the laws of the State of Delaware and, where required, is duly qualified to do business and is in good standing in each jurisdiction in which the Assets are located, with full limited liability company power and authority to conduct its business as it is now being conducted, and to own or use the properties and assets that it purports to own or use. Such Seller Party is not a “foreign person” for purposes of Section 1445 of the Code.
3.02      Authority; No Conflict.
(a)
The execution, delivery, and performance of this Agreement and the Contemplated Transactions have been duly and validly authorized by all necessary limited liability company action on the part of such Seller Party. This Agreement has been duly executed and delivered by such Seller Party and at the Closing, all instruments executed and delivered by such Seller Party at or in connection with the Closing shall have been duly executed and delivered by such Seller Party. This Agreement constitutes the legal, valid, and binding obligation of such Seller Party, enforceable against such Seller Party in accordance with its terms, except as such enforceability may be limited by a bankruptcy proceeding commenced after the date hereof or other similar laws affecting the rights and remedies of creditors generally and by general principles of equity (regardless of whether such enforceability is considered in a Proceeding in equity or at law). Upon execution and delivery by such Seller Party of the Instruments of Conveyance at the Closing, such Instruments of Conveyance shall constitute legal, valid and binding transfers and conveyances of the Assets. Upon the execution and delivery by such Seller Party of any other documents at the Closing (collectively with the Instruments of Conveyance, such Seller Party’s “ Seller Closing Documents ”), such Seller Closing Documents shall constitute the legal, valid, and binding obligations of such Seller Party, enforceable against such Seller Party in accordance with their terms, except as such enforceability may be limited by a bankruptcy proceeding commenced after the Closing or other similar laws affecting the rights and remedies of creditors generally and by general principles of equity (regardless of whether such enforceability is considered in a Proceeding in equity or at law).
(b)
Except as set forth in Schedule 3.02(b) , and assuming the receipt of all Consents and the waiver of all Preferential Purchase Rights (in each case) applicable to the Contemplated Transactions, and assuming compliance with the HSR Act, neither the execution and delivery of this Agreement by such Seller Party nor the consummation or performance of any of the Contemplated Transactions by such Seller Party shall, directly or indirectly (with or without notice or lapse of time):

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(i)
contravene, conflict with, or result in a violation of (A) any provision of the Organizational Documents of such Seller Party, or (B) any resolution adopted by the board of directors, managers or officers of such Seller Party;
(ii)
contravene, conflict with, or result in a violation of, or give any Governmental Body or other Person the right to challenge any of the Contemplated Transactions, to terminate, accelerate, or modify any terms of, or to exercise any remedy or obtain any relief under, any Contract or agreement or any Legal Requirement or Order to which such Seller Party, or any of the Assets, may be subject;
(iii)
contravene, conflict with, or result in a violation of any of the terms or requirements of, or give any Governmental Body the right to revoke, withdraw, suspend, cancel, terminate, or modify, any Governmental Authorization that relates to the Assets; or
(iv)
(A) result in a default, in any material respect, or the imposition, creation or continuance of any Encumbrance upon or with respect to any of the Assets or (B) give rise to any right of termination, cancellation or acceleration under, or require any consent under, any note, bond, mortgage or indenture to which such Seller Party is a party or by which the Assets are bound, in each case except for Permitted Encumbrances.
3.03      Bankruptcy. Except for claims or matters related to the Bankruptcy Cases commenced on May 11, 2016 where the Plan of Reorganization concluded on February 28, 2017, for which the United States Bankruptcy Court for the Southern District of Texas retains limited jurisdiction, there are no bankruptcy, reorganization, receivership, or arrangement proceedings pending or being contemplated by such Seller Party or, to such Seller Party’s Knowledge, Threatened, against such Seller Party.
3.04      Taxes. All material Tax Returns required to be filed by such Seller Party with respect to Asset Taxes have been timely filed and all such Tax Returns are correct and complete in all material respects. All material Asset Taxes that are or have become due have been timely paid in full, and such Seller Party is not delinquent in the payment of any such Asset Taxes. There is not currently in effect any extension or waiver of any statute of limitations of any jurisdiction regarding the assessment or collection of any Asset Taxes. There are no Encumbrances on any of the Assets attributable to Taxes other than Permitted Encumbrances. There are no administrative or judicial proceedings by any taxing authority pending against Seller relating to or in connection with any material Asset Taxes. All Tax withholding and deposit requirements imposed by applicable Legal Requirements with respect to any of the Assets have been satisfied in all material respects. Except as disclosed on Schedule 3.04 , no Asset is subject to any tax partnership agreement or is otherwise treated, or required to be treated, as held in an arrangement requiring a partnership income tax return to be filed under Subchapter K of Chapter 1 of Subtitle A of the Code or any similar state statute. Such Seller Party paid Wyoming sales and use tax on the original purchase of the Assets to the extent required under applicable Legal Requirements.


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3.05      Legal Proceedings. Such Seller Party has not been served with any Proceeding, and there is no pending or, to such Seller Party’s Knowledge, Threatened, Proceeding against such Seller Party or any of its Affiliates, in each case, that (a) relates to such Seller Party’s ownership of any of the Assets, or (b) challenges, or may have the effect of preventing, delaying, making illegal, or otherwise interfering with, any of the Contemplated Transactions. To such Seller Party’s Knowledge, there are no pending or Threatened Proceedings relating to the ownership or operation of the Assets to which neither such Seller Party nor any of its Affiliates is party.
3.06      Brokers. Neither such Seller Party nor its Affiliates have incurred any obligation or liability, contingent or otherwise, for broker’s or finder’s fees with respect to the Contemplated Transactions other than obligations that are and will remain the sole responsibility of such Seller Party and its Affiliates.
3.07      Compliance with Legal Requirements. Except as set forth in Schedule 3.07 , there is no uncured material violation by such Seller Party of any Legal Requirements (other than Environmental Laws) with respect to such Seller Party’s ownership or operation of the Assets. To such Seller Party’s Knowledge, all Assets operated by Third Parties have been operated in all material respects in compliance with all applicable Legal Requirements (other than Environmental Laws). Neither such Seller Party nor any of its Affiliates have received any written notice from any Governmental Body or Third Party of any material violation of or material default by such Seller Party with respect to any Legal Requirement that remains unresolved.
3.08      Prepayments. Except for any Imbalances or as otherwise set forth on Schedule 3.08 , such Seller Party has not received payment under any Contract for the sale of Hydrocarbons produced from the Assets which requires delivery in the future to any party of Hydrocarbons previously paid for and not yet delivered.
3.09      Imbalances . Except as set forth in Schedule 3.09 , there are no Imbalances with respect to such Seller Party’s obligations relating to the Wells as of the Effective Time.
3.10      Material Contracts. Schedule 3.10 sets forth all Applicable Contracts of the type described below as of the Execution Date (collectively, the “ Material Contracts ”):
(a)
any Applicable Contract that is a Hydrocarbon purchase and sale, transportation, gathering, treating, processing, compression, marketing or similar Applicable Contract that is not terminable by such Seller Party without penalty on sixty (60) days’ or less notice, including any Contract that includes an acreage dedication or minimum volume commitment;
(b)
any Applicable Contract that can reasonably be expected to result in aggregate payments or receipts of revenue by Seller of more than One Hundred Thousand Dollars ($100,000) net to Seller’s interest during the current or any subsequent fiscal year or more than One Million Dollars ($1,000,000) in the aggregate net to Seller’s interest over the term of such Applicable Contract (based on the terms thereof and contracted (or if none, current) quantities where applicable);

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(c)
any Applicable Contract that is an indenture, mortgage, deed of trust, loan, credit agreement, sale-leaseback, guaranty of any obligation, bond, letter of credit, security interest, hedging or similar financial Contract;
(d)
any Applicable Contract that constitutes a partnership agreement, joint venture agreement, area of mutual interest agreement, non-compete agreement, joint exploration agreement, joint development agreement, joint operating agreement, drilling contract, farmin or farmout agreement, carry agreement, net profits interest agreement, participation agreement, production sharing agreement, unit agreement, purchase and sale agreement, exchange agreement or similar Contract where any material obligation has not been completed prior to the Effective Time (in each case, excluding any tax partnership);
(e)
any Applicable Contract that provides for a call upon, option to purchase or similar right under any agreements with respect to the Hydrocarbons from the Assets;
(f)
any Applicable Contract that provides for an irrevocable power of attorney that will be in effect after the Closing Date;
(g)
any Applicable Contract that provides for, as its primary purpose, an indemnity; and
(h)
any Applicable Contract for the sale, lease or farmout, or exchange of such Seller Party’s interest in the Assets.
Except as set forth in Schedule 3.10 , each Material Contract set forth (or required to be set forth) in Schedule 3.10 is a legal, valid and binding obligation against such Seller Party and, to the Knowledge of such Seller Party, each other party thereto, is enforceable in accordance with its terms against such Seller Party and, to the Knowledge of such Seller Party, each other party thereto, and is in full force and effect, subject to any bankruptcy proceeding commenced after the date hereof or other Legal Requirements now or hereafter in effect. Neither such Seller Party, nor to the Knowledge of such Seller Party, any other party is in material breach of or in default under any Material Contract, and no event, occurrence, condition or act has occurred that, with the giving of notice, the lapse of time or the happening of any other event or condition, would become a material breach, default or event of default by such Seller Party or, to the Knowledge of such Seller Party, any other party thereto, in each case except as set forth in Schedule 3.10 . Except as set forth in Schedule 3.10 , such Seller Party has not received any notice from a Third Party alleging a violation or breach of any Material Contract by such Seller Party or any its Affiliates. Except as set forth in Schedule 3.10 , there are no Contracts with Affiliates of such Seller Party, Hedge Contracts or Debt Contracts that will be binding on the Assets after Closing. Prior to the Execution Date, such Seller Party has delivered to Buyer true and complete copies of each Material Contract and any and all amendments thereto.
3.11      Consents and Preferential Purchase Rights. Except as set forth in Schedule 3.11 , none of the Assets (and no portion of the Assets) is subject to any Preferential Purchase Rights or Consents required to be obtained by such Seller Party which may be applicable to the Contemplated Transactions, except for (a) Consents and approvals of Governmental Bodies that

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are customarily obtained after Closing and (b) Contracts that are terminable by the counterparty upon not greater than thirty (30) days’ notice, and (c) compliance with the HSR Act.
3.12      Current Commitments. Schedule 3.12 sets forth, as of the Execution Date, all approved authorizations for expenditures and other approved capital commitments, individually equal to or greater than One Hundred Thousand Dollars ($100,000) (net to Seller’s interest) (the “AFEs”) relating to the Assets and which are binding on the owner of the Assets following the Effective Time to drill or rework any Wells or for other capital expenditures for which all of the activities anticipated in such AFEs have not been completed by the Effective Time.
3.13      Environmental Laws. Except as disclosed on Schedule 3.13 , (a) there are no actions, suits or proceedings pending, or to such Seller Party’s Knowledge, threatened in writing, before any Governmental Body with respect to the Assets alleging material violations of, or material liabilities under, Environmental Laws, or claiming remediation obligations, and (b) such Seller Party has received no notice from any Governmental Body or other Person of any alleged or actual material violation or non-compliance with, or material liability under, any Environmental Law or of material non-compliance with the terms or conditions of any environmental permits, arising from, based upon, associated with or related to the Assets or the ownership or operation of any thereof and (c) to such Seller Party’s Knowledge, there is no uncured material violation (i) by such Seller Party of any Environmental Laws with respect to such Seller Party’s ownership of the Assets, or (ii) of any Environmental Laws with regard to operation of the Assets by Third Parties.
3.14      Necessary Surface Rights. The Properties include all of the material easements and other surface rights reasonably necessary to maintain normal operations in accordance with past practices.
3.15      Royalties. Except as set forth in Schedule 3.15 , such Seller Party has duly and properly paid, or caused to be duly and properly paid in all material respects, all Royalties due by such Seller Party during the period of such Seller Party’s ownership of the Assets; provided , however that no failure to comply with the foregoing that does not result in the termination of a Lease shall be considered a breach of this Section 3.15 .
3.16      Letters of Credit. Schedule 3.16 lists all material letters of credit held by such Seller Party or any its Affiliates (as applicable) that are required by applicable third Persons in order for such Seller Party to own the Properties.
3.17      Disclosures with Multiple Applicability; Materiality. If any fact, condition, or matter disclosed in Seller’s disclosure Schedules applies to more than one Section of this Article 3 , a single disclosure of such fact, condition, or matter on Seller’s disclosure Schedules shall constitute disclosure with respect to all sections of this Article 3 to which such fact, condition, or other matter applies to the extent reasonably apparent on the face of Seller’s disclosure Schedules, regardless of the section of Seller’s disclosure Schedules in which such fact, condition, or other matter is described. Inclusion of a matter on Seller’s disclosure Schedules with respect to a representation or warranty that is qualified by “material” or any variant thereof shall not necessarily be deemed an indication that such matter does, or may, be material. Matters may be disclosed on a Schedule to this Agreement for purposes of information only.

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ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller, as of the Execution Date and the Closing Date, the following:
4.01      Organization and Good Standing. Buyer is a limited liability company and duly organized, validly existing, and in good standing under the laws of Delaware and is duly qualified to do business and is in good standing in each jurisdiction in which the Assets are located.
4.02      Authority; No Conflict.
(a)
This Agreement constitutes the legal, valid, and binding obligation of Buyer, enforceable against Buyer in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy or other similar laws affecting the rights and remedies of creditors generally and by general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). Upon the execution and delivery by Buyer of the Instruments of Conveyance and any other documents executed and delivered by Buyer at the Closing (collectively, “ Buyer’s Closing Documents ”), Buyer’s Closing Documents shall constitute the legal, valid, and binding obligations of Buyer enforceable against Buyer in accordance with their respective terms, except as such enforceability may be limited by applicable bankruptcy or other similar laws affecting the rights and remedies of creditors generally and by general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). Buyer has the requisite right, power, authority, and capacity to execute and deliver this Agreement and Buyer’s Closing Documents, and to perform its obligations under this Agreement and Buyer’s Closing Documents.
(b)
Neither the execution and delivery of this Agreement by Buyer nor the consummation or performance of any of the Contemplated Transactions by Buyer shall give any Person the right to prevent, delay, or otherwise interfere with any of the Contemplated Transactions.
(c)
Neither the execution and delivery of this Agreement by Buyer nor the consummation or performance of any of the Contemplated Transactions by Buyer shall (i) contravene, conflict with, or result in a violation of any provision of the Organizational Documents of Buyer, (ii) contravene, conflict with, or result in a violation of any resolution adopted by the board of managers, or members of Buyer, or (iii) contravene, conflict with, or result in a violation of, or give any Governmental Body or other Person the right to challenge any of the Contemplated Transactions, to terminate, accelerate, or modify any terms of, or to exercise any remedy or obtain any relief under, any agreement or any Legal Requirement or Order to which Buyer may be subject.
(d)
Buyer is not and shall not be required to give any notice to or obtain any Consent from any Person in connection with the execution and delivery of this Agreement or the consummation or performance of any of the Contemplated Transactions.

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4.03      Certain Proceedings. There is no Proceeding pending against Buyer that challenges, or may have the effect of preventing, delaying, making illegal, or otherwise interfering with, any of the Contemplated Transactions. To Buyer’s Knowledge, no such Proceeding has been Threatened.
4.04      Knowledgeable Investor. Buyer is an experienced and knowledgeable investor in the oil and gas business. Prior to entering into this Agreement, Buyer was advised by its own legal, tax, and other professional counsel concerning this Agreement, the Contemplated Transactions, the Assets, and their value, and it has relied solely thereon and on the representations and obligations of Seller in this Agreement and the documents to be executed by Seller in connection with this Agreement at the Closing. Buyer is acquiring the Assets for its own account and not for sale or distribution in violation of the Securities Act of 1933, as amended, the rules and regulations thereunder, any applicable state blue sky laws, or any other applicable Legal Requirements.
4.05      Qualification. Buyer is an “accredited investor,” as such term is defined in Regulation D of the Securities Act of 1933, as amended. Buyer is not acquiring the Assets in connection with a distribution or resale thereof in violation of federal or state securities laws and the rules and regulations thereunder. Without limiting Section 6.02 , Buyer is, or as of the Closing will be, qualified under applicable Legal Requirements to hold leases, rights-of-way, and other rights issued or controlled by (or on behalf of) any applicable Governmental Body and will be qualified under applicable Legal Requirements to own the Assets. Buyer has, or as of the Closing will have, posted such bonds as may be required for the ownership or, where applicable, operatorship by Buyer of the Assets. To Buyer’s Knowledge, no fact or condition exists with respect to Buyer or the Assets which may cause any Governmental Body to withhold its approval of the Contemplated Transactions.
4.06      Brokers. Neither Buyer nor its Affiliates have incurred any obligation or liability, contingent or otherwise, for broker’s or finder’s fees with respect to the Contemplated Transactions other than obligations that are or will remain the sole responsibility of Buyer and its Affiliates.
4.07      Financial Ability. Buyer has sufficient cash, available lines of credit, or other sources of immediately available funds to enable it to (a) deliver the amounts due at the Closing, (b) take such actions as may be required to consummate the Contemplated Transactions, and (c) timely pay and perform Buyer’s obligations under this Agreement and Buyer’s Closing Documents. Buyer expressly acknowledges that the failure to have sufficient funds shall in no event be a condition to the performance of its obligations hereunder, and in no event shall the Buyer’s failure to perform its obligations hereunder be excused by failure to receive funds from any source.
4.08      Securities Laws. The solicitation of offers and the sale of the Assets by Seller have not been registered under any securities laws. At no time has Buyer been presented with or solicited by or through any public promotion or any form of advertising in connection with the Contemplated Transactions. Buyer is not acquiring the Assets with the intent of distributing fractional, undivided interests that would be subject to regulation by federal or state securities

34



laws, and that if it sells, transfers, or otherwise disposes of the Assets or fractional undivided interests therein, it shall do so in compliance with applicable federal and state securities laws.
4.09      Due Diligence. Without limiting or impairing any representation, warranty, covenant or agreement of Seller contained in this Agreement and the Seller Closing Documents, or Buyer’s right to rely thereon, subject to Buyer’s right to access the Assets to conduct a due diligence review in accordance with this Agreement, at Closing Buyer and its Representatives have (a) been permitted access to materials relating to the Assets, (b) been afforded the opportunity to ask all questions of Seller (or Seller’s Representatives) concerning the Assets, (c) been afforded the opportunity to investigate the condition of the Assets, and (d) had the opportunity to take such other actions and make such other independent investigations as Buyer deems necessary to evaluate the Assets and understand the merits and risks of an investment therein and to verify the truth, accuracy, and completeness of the materials, documents, and other information provided or made available to Buyer (whether by Seller or otherwise). WITHOUT LIMITING OR IMPAIRING ANY REPRESENTATION, WARRANTY, COVENANT OR AGREEMENT OF THE SELLER PARTIES CONTAINED IN THIS AGREEMENT AND THE SELLER’S CLOSING DOCUMENTS (INCLUDING THE SPECIAL WARRANTY OF DEFENSIBLE TITLE SET FORTH IN THE INSTRUMENTS OF CONVEYANCE), OR BUYER’S RIGHT TO RELY UPON EACH OF THE FOREGOING OR BUYER’S RIGHTS UNDER ARTICLE 11 , BUYER HEREBY WAIVES ANY CLAIMS ARISING OUT OF ANY MATERIALS, DOCUMENTS, OR OTHER INFORMATION PROVIDED OR MADE AVAILABLE TO BUYER (WHETHER BY SELLER OR OTHERWISE), WHETHER UNDER THIS AGREEMENT, AT COMMON LAW, BY STATUTE, OR OTHERWISE.
4.10      Basis of Buyer’s Decision. By reason of Buyer’s knowledge and experience in the evaluation, acquisition, and operation of oil and gas properties, Buyer has evaluated the merits and the risks of purchasing the Assets from Seller and has formed an opinion based solely on Buyer’s knowledge and experience, Buyer’s due diligence, and Seller’s representations, warranties, covenants, and agreements contained in this Agreement and the Seller Closing Documents, and not on any other representations or warranties by Seller. Buyer has not relied and shall not rely on any statements by Seller or its Representatives (other than those representations, warranties, covenants, and agreements of Seller contained in this Agreement and the Seller Closing Documents) in making its decision to enter into this Agreement or to close the Contemplated Transactions. BUYER UNDERSTANDS AND ACKNOWLEDGES THAT NEITHER THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER GOVERNMENTAL BODY HAS PASSED UPON THE ASSETS OR MADE ANY FINDING OR DETERMINATION AS TO THE FAIRNESS OF AN INVESTMENT IN THE ASSETS OR THE ACCURACY OR ADEQUACY OF THE DISCLOSURES MADE TO BUYER, AND, EXCEPT AS SET FORTH IN Article 9 , BUYER IS NOT ENTITLED TO CANCEL, TERMINATE, OR REVOKE THIS AGREEMENT, WHETHER DUE TO THE INABILITY OF BUYER TO OBTAIN FINANCING OR PAY THE PURCHASE PRICE, OR OTHERWISE.
4.11      Business Use, Bargaining Position. Buyer is purchasing the Assets for commercial or business use. Buyer has sufficient knowledge and experience in financial and business matters that enables it to evaluate the merits and the risks of transactions such as the Contemplated Transactions, and Buyer is not in a significantly disparate bargaining position with Seller. Buyer expressly acknowledges and recognizes that the price for which Seller has agreed to sell the Assets and perform its obligations under the terms of this Agreement has been predicated upon the inapplicability of the Texas Deceptive Trade Practices - Consumer

35



Protection Act, V.C.T.A. BUS & COMM ANN. § 17.41 et seq., to the extent applicable, or any similar Legal Requirement. BUYER FURTHER RECOGNIZES THAT SELLER, IN DETERMINING TO PROCEED WITH ENTERING INTO THIS AGREEMENT, HAS EXPRESSLY RELIED ON THE PROVISIONS OF THIS ARTICLE 4 .
4.12      Bankruptcy. There are no bankruptcy, reorganization, receivership, or arrangement proceedings pending or being contemplated by Buyer or, to Buyer’s Knowledge, Threatened against Buyer. Buyer is, and will be immediately after giving effect to the Contemplated Transactions, solvent.
ARTICLE 5
COVENANTS OF SELLER
5.01      Access and Investigation.
(a)
Between the Execution Date and the Closing Date, to the extent doing so would not violate applicable Legal Requirements, Seller’s obligations to any Third Party or other restrictions on Seller, Seller shall (a) afford Buyer and its Representatives access, at such times as Buyer may reasonably request during Seller’s regular hours of business, to reasonably appropriate Seller’s personnel, any contracts, books and Records, and other documents and data related to the Assets, except any such contracts, books and records, or other documents and data to the extent they are Excluded Assets, and (b) promptly furnish Buyer and its Representatives, at Buyer’s sole cost and expense, with electronic copies of all such Records, contracts, books and records, and other existing documents and data as Buyer and its Representatives may reasonably request, except for any such contracts, books and records, or other documents and data to the extent they are Excluded Assets (and upon Buyer’s request, Seller shall use reasonable efforts to obtain the consent of Third Party operators to give Buyer and its Representatives reasonable access to similar information with respect to Assets not operated by Seller or its Affiliates; provided that Seller shall not be required to make payments or undertake obligations in favor any Third parties in order to obtain such consent); PROVIDED THAT, EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT OR IN THE INSTRUMENTS OF CONVEYANCE, SELLER MAKES NO REPRESENTATION OR WARRANTY, AND EXPRESSLY DISCLAIMS ALL REPRESENTATIONS AND WARRANTIES AS TO THE ACCURACY OR COMPLETENESS OF THE DOCUMENTS, INFORMATION, BOOKS, RECORDS, FILES, AND OTHER DATA THAT IT MAY PROVIDE OR DISCLOSE TO BUYER .
(b)
Notwithstanding the provisions of Section 5.01(a) , (i) Buyer’s investigation shall be conducted in a manner that (to the extent practicable) minimizes interference with the field operations of the business of Seller and any applicable Third Parties, and (ii) subject to Section 11.09 , Buyer’s right of access shall not entitle Buyer to operate equipment or conduct subsurface or other invasive testing or sampling. Environmental review shall not exceed the review contemplated by a Phase I Environmental Site Assessment without Seller’s prior written permission, which may be withheld in Seller’s sole discretion.

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(c)
Buyer acknowledges that, pursuant to its right of access to the Records and the Assets, Buyer will become privy to confidential and other information of Seller and Seller’s Affiliates and the Assets and that such confidential information shall be held confidential by Buyer and Buyer’s Representatives in accordance with the terms of the Confidentiality Agreement. If the Closing should occur, the foregoing confidentiality restriction on Buyer, including the Confidentiality Agreement, shall terminate (except as to the Excluded Assets); provided that such termination of the Confidentiality Agreement shall not relieve any party thereto from any liability thereunder for the breach of such agreement prior to the Execution Date.
5.02      Ownership of the Assets. Except as set forth on Schedule 5.02 , or as required by applicable Legal Requirements, between the Execution Date and the Closing, Seller shall operate its business (including the sale of Hydrocarbons) with respect to its ownership of the Assets in the ordinary course as a reasonably prudent operator, and, without limiting the generality of the preceding, shall:
(a)
not transfer, sell, hypothecate, Encumber, or otherwise dispose of any of the Assets, except as required under any Leases or Contracts, and except for sales of Hydrocarbons, equipment and inventory in the ordinary course of business;
(b)
subject to clause (i) below, not abandon any Asset (except the abandonment or expiration of Leases in accordance with their terms, including with respect to leases not capable of producing in paying quantities after the expiration of their primary terms or for failure to pay delay rentals or shut-in royalties or similar types of lease maintenance payments);
(c)
not propose, or agree to participate in any single operation with respect to the Leases or Wells with an anticipated cost in excess of Fifty Thousand Dollars ($50,000) net to Seller’s interest, except for any emergency operations otherwise conducted in compliance with this Agreement;
(d)
not execute, terminate, cancel, extend, or materially amend or modify any Material Contract or Lease;
(e)
not make any election (or fail to make an election, the result of which is) to go non-consent with respect to any of the Assets;
(f)
unless Buyer fails to provide consent under clause (d), use commercially reasonable efforts to maintain in full force and effect each Lease, and timely and properly pay all Lease renewals and extensions that become due after the date of this Agreement but prior to Closing in accordance with the terms of the applicable Lease;
(g)
not waive, release, assign, settle or compromise any proceeding, material right or claim relating to the Assets, other than the Retained Liabilities or waivers, releases, assignments, settlements or compromises that involve only the payment of monetary damages not in excess of Fifty Thousand Dollars ($50,000) individually (excluding amounts to be paid under insurance policies);

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(h)
not take, nor permit any of their Affiliates (or authorize any investment banker, financial advisor, attorney, accountant or other Person retained by, acting for or on behalf of Seller or any such Affiliate) to take, directly or indirectly, any action to solicit, or negotiate, any offer from any Person concerning the direct or indirect acquisition of the Assets by any Person other than Buyer or its Affiliates except for sales of Hydrocarbons, equipment and inventory in the ordinary course of business;
(i)
pay (or cause to be paid) any and all Asset Taxes that could result in an Encumbrance with respect to the Assets that become due and payable on or prior to the Closing Date; and
(j)
not enter into any agreement with respect to any of the foregoing.
Buyer acknowledges that Seller owns undivided interests in certain of the properties comprising the Assets, and Buyer agrees that the acts or omissions of the other working interest owners who are not Seller or an Affiliate of Seller shall not constitute a Breach of the provisions of this Section 5.02 , nor shall any action required by a vote of working interest owners constitute such a Breach so long as Seller and any Affiliate of Seller owning an interest in the applicable Assets (or portion of the Assets) have voted its interest in a manner that complies with the provisions of this Section 5.02 . Further, no action or inaction of any Third Party operator with respect to any Asset shall constitute a Breach of this Section 5.02 to the extent Seller uses commercially reasonable efforts to cause such Third Party operator to operate such applicable Asset in a manner consistent with this Section 5.02 . Seller may seek Buyer’s approval to perform any action that would otherwise be restricted by this Section 5.02 , and Buyer’s approval of any such action shall not be unreasonably withheld, conditioned, or delayed, and shall be considered granted ten (10) days after delivery of notice from Seller to Buyer requesting such consent unless Buyer notifies Seller to the contrary during such ten (10)-day period. Notwithstanding the foregoing provisions of this Section 5.02 , in the event of an emergency involving imminent threat to property or life, Seller may take such action as reasonably necessary and shall notify Buyer of such action promptly thereafter. Any matter approved (or deemed approved) by Buyer pursuant to this Section 5.02 that would otherwise constitute a Breach of one of Seller’s representations and warranties in Article 3 shall be deemed to be an exclusion from all representations and warranties for which it is relevant.
5.03      Insurance. Seller shall maintain in force during the period from the Execution Date until the Closing, insurance policies (including qualified self-insurance) pertaining to the Assets with the minimum coverages as set forth on Schedule 5.03 .
5.04      Consent and Waivers. Seller shall use commercially reasonable efforts to obtain prior to the Closing written waivers of all Preferential Purchase Rights and all Consents necessary for the transfer of the Assets to Buyer; provided that in the event Seller is unable to obtain all such waivers of Preferential Purchase Rights and Consents after using such commercially reasonable efforts, such failure to satisfy shall not constitute a Breach of this Agreement. Seller shall not be required to make any payments to, or undertake any obligations for the benefit of, the holders of such rights in order to obtain the Required Consents. Buyer shall reasonably cooperate with Seller in seeking to obtain such Consents.

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5.05      Amendment to Schedules. Until the fifth (5th) Business Day before Closing, Seller shall have the right (but not the obligation) to supplement the Schedules with respect to any matters that first occur following the Execution Date. Except to the extent such updates are a direct result of actions taken with Buyer’s consent pursuant to Section 5.02 , prior to Closing, any such supplement shall not be considered for purposes of determining if Buyer’s Closing conditions have been met under Section 7.01 or for determining any remedies available under this Agreement.
5.06      Affiliate Contracts. Seller will terminate or cause its respective Affiliates to terminate, effective as of the Closing Date, any contracts or agreements between Seller and its Affiliates insofar and only insofar as such contracts or agreements relate to or bind the Assets.
ARTICLE 6
OTHER COVENANTS
6.01      Notification and Cure. Between the Execution Date and the Closing Date, Buyer shall promptly notify Seller in writing and Seller shall promptly notify Buyer in writing if Seller or Buyer, as applicable, obtain Knowledge following the Execution Date of any Breach in any material respect, of its or the other Party’s representations and warranties or covenants, in any material respect; provided that failure to provide such notice shall not limit a Party’s rights or remedies under this Agreement with respect to such Breach. If any of Buyer’s or Seller’s representations or warranties are untrue or shall become untrue in any material respect between the Execution Date and the Closing Date, or if any of Buyer’s or Seller’s covenants or agreements to be performed or observed prior to or on the Closing Date shall not have been so performed or observed in any material respect, and such Breach of representation, warranty, covenant or agreement shall (if curable) be cured by the Closing (or, if the Closing does not occur, prior to the termination of this Agreement in accordance with Section 9.01 ), then such Breach shall be considered not to have occurred for all purposes of this Agreement.
6.02      Satisfaction of Conditions. Between the Execution Date and the Closing Date (a) Seller shall use commercially reasonable efforts to cause the conditions in Article 7 to be satisfied, and (b) Buyer shall use commercially reasonable efforts to cause the conditions in Article 8 to be satisfied.
6.03      Replacement of Insurance, Bonds, Letters of Credit, and Guaranties.
(a)
The Parties understand that none of the insurance currently maintained by Seller or Seller’s Affiliates covering the Assets, nor any of the bonds, letters of credit, or guaranties, if any, posted by Seller or Seller’s Affiliates with Governmental Bodies or co-owners and relating to the Assets will be transferred to Buyer. On or before the Closing Date, Buyer shall use commercially reasonable efforts to obtain, and deliver to Seller evidence of, all replacement bonds, letters of credit, and guaranties, and evidence of such other authorizations, qualifications, and approvals, in each case, as set forth on Schedule 6.03(a) and necessary for Buyer to own the Assets.
(b)
Promptly (but in no event later than thirty (30) days) after Closing, Buyer shall, at its sole cost and expense, make all filings with Governmental Bodies necessary to assign

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and transfer the Assets and title thereto and to comply with applicable Legal Requirements, and Seller shall reasonably assist Buyer with such filings.
6.04      Governmental Reviews. Except for the HSR Act, Seller and Buyer shall (and shall cause their respective Affiliates to), in a timely manner, make all other required filings (if any) with, prepare applications to, and conduct negotiations with Governmental Bodies as required to consummate the Contemplated Transactions. Each Party shall, to the extent permitted pursuant to applicable Legal Requirements, cooperate with and use all reasonable efforts to assist the other with respect to such filings, applications and negotiations. Buyer shall bear the cost of all filing or application fees payable to any Governmental Body with respect to the Contemplated Transactions, regardless of whether Buyer, Seller, or any Affiliate of any of them is required to make the payment.
6.05      HSR Act. If applicable, within ten (10) Business Days following the execution by Buyer and Seller of this Agreement, Buyer and Seller will each prepare and simultaneously file with the DOJ and the FTC the notification and report form required for the transactions contemplated by this Agreement by the HSR Act and request early termination of the waiting period thereunder. Buyer and Seller agree to respond promptly to any inquiries or requests for information or documentary material from the DOJ or the FTC concerning such filings and to comply in all material respects with the filing requirements of the HSR Act. Buyer and Seller shall cooperate with each other and, subject to the terms of the Confidentiality Agreement, shall promptly furnish all information to the other Party that is necessary in connection with Buyer’s and Seller’s compliance with the HSR Act. Buyer and Seller shall keep each other fully advised with respect to any requests from or communications with the DOJ or FTC concerning such filings and shall consult with each other with respect to all responses thereto. Each of Seller and Buyer shall use its commercially reasonable efforts to take all actions reasonably necessary and appropriate in connection with any HSR Act filing to satisfy the conditions to the Closing and consummate Contemplated Transactions as promptly as practicable and in any event not later than the Outside Date, provided , however , nothing in this Agreement shall require Buyer or Seller to propose, negotiate, effect or agree to, the sale, divestiture, license or other disposition of any assets or businesses of Buyer or Seller (including the Assets) or otherwise take any action that limits the freedom of action with respect to, or its ability to retain or operate any of the businesses of the Buyer or Seller or the Assets. The filing fees associated with any such HSR Act filing shall be borne by Buyer. Notwithstanding any provision of this Section 6.05 , no Party shall be required to provide the other Party with information regarding the value of the transaction or subject to the attorney client privilege, work product doctrine or other similar privilege absent entering into a mutually acceptable joint defense agreement.
ARTICLE 7
CONDITIONS PRECEDENT TO BUYER’S OBLIGATION TO CLOSE
Buyer’s obligation to purchase the Assets and to take the other actions required to be taken by Buyer at the Closing is subject to the satisfaction, at or prior to the Closing, of each of the following conditions (any of which may be waived in writing by Buyer, in whole or in part):
7.01      Accuracy of Representations. All of Seller’s representations and warranties in this Agreement must have been true and correct in all material respects (or, with respect to

40



representations and warranties qualified by materiality, true and correct in all respects) as of the Execution Date, and must be true and correct in all material respects (or, with respect to representations and warranties qualified by materiality, true and correct in all respects) as of the Closing Date as if made on the Closing Date, other than any such representation and warranty that refers to a specified date, which need only be true and correct in all material respects (or, if qualified by materiality, true and correct in all respects) on and as of such specified date.
7.02      Seller’s Performance. All of the covenants and obligations that Seller is required to perform or to comply with pursuant to this Agreement at or prior to the Closing must have been duly performed and complied with in all material respects.
7.03      No Proceedings. Since the Execution Date, there must not have been commenced or Threatened against Seller, or against any of Seller’s Affiliates, any Proceeding (other than any matter initiated by Buyer or an Affiliate of Buyer) seeking to restrain, enjoin, or otherwise prohibit or make illegal, or seeking to recover material damages on account of, any of the Contemplated Transactions.
7.04      No Orders. On the Closing Date, there shall be no Order pending or remaining in force of any Governmental Body having appropriate jurisdiction that attempts to restrain, enjoin, or otherwise prohibit the consummation of the Contemplated Transactions, or that grants material damages in connection therewith.
7.05      Necessary Consents and Approvals. All Consents from Governmental Bodies and all approvals from Governmental Bodies required for the Contemplated Transactions, except Consents and approvals of assignments by Governmental Bodies that are customarily obtained after closing, shall have been granted, or the necessary waiting period shall have expired, or early termination of the waiting period shall have been granted.
7.06      HSR Act. Any waiting period applicable to the consummation of the Contemplated Transactions under the terms of this Agreement under the HSR Act shall have expired or been terminated.
7.07      Closing Deliverables. Seller shall have delivered (or be ready, willing and able to deliver at the Closing) to Buyer the documents and other items required to be delivered by Seller under Section 2.04(a) .
7.08      Title Defect Values, Environmental Defect Values, etc. The sum of (i) all Title Defect Values asserted by Buyer in good faith and without taking into account the Aggregate Defect Deductible (less the sum of all Title Benefit Values asserted by Seller in good faith), plus (ii) the Aggregate Environmental Defect Values asserted by Buyer in good faith and without taking into account the Aggregate Defect Deductible, plus (iii) the aggregate downward Purchase Price adjustments under Section 11.02 , plus (iv) the aggregate downward Purchase Price adjustments under Section 11.03 , plus (v) the aggregate downward Purchase Price adjustments under Section 11.11 , plus (vi) the aggregate amount of all Casualty Losses (as determined by Buyer acting in good faith) shall be less than or equal to twenty percent (20%) of the unadjusted Purchase Price.

41



ARTICLE 8
CONDITIONS PRECEDENT TO SELLER’S OBLIGATION TO CLOSE
Seller’s obligation to sell the Assets and to take the other actions required to be taken by Seller at the Closing is subject to the satisfaction, at or prior to the Closing, of each of the following conditions (any of which may be waived in writing by Seller, in whole or in part):
8.01      Accuracy of Representations. All of Buyer’s representations and warranties in this Agreement must have been true and correct in all material respects (or, with respect to representations and warranties qualified by materiality, true and correct in all respects) as of the Execution Date, and must be true and correct in all material respects (or, with respect to representations and warranties qualified by materiality, true and correct in all respects) as of the Closing Date as if made on the Closing Date, other than any such representation and warranty that refers to a specified date, which need only be true and correct in all material respects (or, if qualified by materiality, true and correct in all respects) on and as of such specified date.
8.02      Buyer’s Performance. All of the covenants and obligations that Buyer is required to perform or to comply with pursuant to this Agreement at or prior to the Closing must have been duly performed and complied with in all material respects.
8.03      No Proceedings. Since the Execution Date, there must not have been commenced or Threatened against Buyer or against any of its Affiliates, any Proceeding (other than any matter initiated by Seller or an Affiliate of Seller) seeking to restrain, enjoin, or otherwise prohibit or make illegal, or seeking to recover material damages on account of, any of the Contemplated Transaction.No Orders. On the Closing Date, there shall be no Order pending or remaining in force of any Governmental Body having appropriate jurisdiction that attempts to restrain, enjoin, or otherwise prohibit the consummation of the Contemplated Transactions, or that grants material damages in connection therewith.Necessary Consents and Approvals. All Consents from Governmental Bodies and all approvals from Governmental Bodies required for the Contemplated Transactions, except Consents and approvals of assignments by Governmental Bodies that are customarily obtained after closing, shall have been granted, or the necessary waiting period shall have expired, or early termination of the waiting period shall have been granted.
8.06      HSR Act. Any waiting period applicable to the consummation of the Contemplated Transactions under the HSR Act shall have expired or been terminated.
8.07      Closing Deliverables. Buyer shall have delivered (or be ready, willing and able to deliver at the Closing) to Seller the documents and other items required to be delivered by Buyer under Section 2.04(b) .
8.08      Title Defect Values, Environmental Defect Values, etc. The sum of (i) all Title Defect Values asserted by Buyer in good faith and without taking into account the Aggregate Defect Deductible (less the sum of all Title Benefit Values asserted by Seller in good faith), plus (ii) the Aggregate Environmental Defect Values asserted by Buyer in good faith and without taking into account the Aggregate Defect Deductible, plus (iii) the aggregate downward Purchase Price adjustments under Section 11.02 , plus (iv) the aggregate downward Purchase Price

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adjustments under Section 11.03 , plus (v) the aggregate downward Purchase Price adjustments under Section 11.11 , plus (vi) the aggregate amount of all Casualty Losses (as determined by Buyer acting in good faith) shall be less than or equal to twenty percent (20%) of the unadjusted Purchase Price.
ARTICLE 9
TERMINATION
9.01      Termination Events. This Agreement may, by written notice given prior to or at the Closing, be terminated:
(a)
by mutual written consent of Seller and Buyer;
(b)
by Buyer, if Seller has committed a material Breach of this Agreement and such Breach causes any of the conditions to Closing set forth in Article 7 not to be satisfied (or, if prior to Closing, such Breach is of such a magnitude or effect that it will not be possible for such condition to be satisfied); provided , however , that in the case of a Breach that is capable of being cured, Seller shall have a period of ten (10) Business Days following receipt of such notice to attempt to cure the Breach and the termination under this Section 9.01(b) shall not become effective unless Seller fails to cure such Breach prior to the end of such ten (10) Business Day period; provided , further , if (i) Seller’s conditions to Closing have been satisfied or waived (in writing) by Buyer in full on or after the Scheduled Closing Date, (ii) Buyer is not in material Breach of the terms of this Agreement and (iii) Seller refuses or willfully or negligently delays to timely close the Contemplated Transactions, then such refusal or delay shall constitute a material Breach of this Agreement;
(c)
by Seller, if Buyer has committed a material Breach of this Agreement and such breach causes any of the conditions to Closing set forth in Article 8 not to be satisfied (or, if prior to Closing, such Breach is of such a magnitude or effect that it will not be possible for such condition to be satisfied); provided , however , that in the case of a Breach that is capable of being cured, Buyer shall have a period of ten (10) Business Days following receipt of such notice to attempt to cure the Breach and the termination under this Section 9.01(b) shall not become effective unless Buyer fails to cure such Breach prior to the end of such ten (10) Business Day period; provided , further , if (i) Buyer’s conditions to Closing have been satisfied or waived (in writing) by Seller in full on or after the Scheduled Closing Date, (ii) Seller is not in material Breach of the terms of this Agreement and (iii) Buyer refuses or willfully or negligently delays to timely close the Contemplated Transactions, then such refusal or delay shall constitute a material Breach of this Agreement;
(d)
by either Seller or Buyer if the Closing has not occurred on or before August 1, 2017 (the “ Outside Date ”), or such later date as the Parties may agree upon in writing; provided that such failure does not result primarily from the terminating Party’s material Breach of this Agreement;

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(e)
by either Seller or Buyer if (i) any Legal Requirement has made the consummation of the Contemplated Transactions illegal or otherwise prohibited, or (ii) a Governmental Body has issued an Order, or taken any other action permanently restraining, enjoining, or otherwise prohibiting the consummation of the Contemplated Transactions, and such order, decree, ruling, or other action has become final and nonappealable; or
(f)
by Seller if the Closing condition in Section 8.08 is not satisfied (or not possible of being satisfied at Closing);
(g)
by Buyer if the Closing condition in Section 7.08 is not satisfied (or not possible of being satisfied at Closing); or
(h)
by Seller if Buyer fails to deposit the Deposit Amount into the Escrow Account on or before 5:00 p.m. (Central Time) on the first (1st) Business Day after the Execution Date.
9.02      Effect of Termination; Distribution of the Deposit Amount.
(a)
If this Agreement is terminated pursuant to Section 9.01 , all further obligations of the Parties under this Agreement shall terminate; provided that (a) such termination shall not impair nor restrict the rights of either Party against the other under Section 9.02(a) or Section 9.02(c) , and (b) the following provisions shall survive the termination: Article 1 , Sections 9.02 , 10.02(c) , 10.03(c) , 10.06 , 10.07 , 10.10 , 10.11 , 10.12 , Article 12 (other than Section 12.01 , Section 12.02(b) through (d) , Section 12.14 and Section 12.17 , which shall terminate) and any such terms as set forth in this Agreement that are necessary to give context to any of the foregoing surviving Sections.
(b)
Notwithstanding anything to the contrary in Section 9.02(a) :
(i)
If (A) Seller has the right to terminate this Agreement pursuant to Section 9.01(c) , (B) all of Buyer’s Closing conditions contained in Article 7 shall have been satisfied or waived (in writing) by Buyer, and (C) Seller has performed or is ready, willing and able to perform all of its agreements and covenants contained in this Agreement which are to be performed or observed at or prior to Closing and has provided Buyer with written notice of same, then Seller shall, as its sole recourse in such scenario, terminate this Agreement and receive the Deposit Amount as liquidated damages (and not as a penalty. If Seller terminates this Agreement pursuant to this Section 9.02(b)(i) and receives the Deposit Amount as liquidated damages, (x) the Parties shall, within two (2) Business Days of Seller’s election, execute and deliver to the Escrow Agent a joint instruction letter directing the Escrow Agent to release the Deposit Amount to Seller and (y) Seller shall be free to enjoy immediately all rights of ownership of the Assets and to sell, transfer, encumber, or otherwise dispose of the Assets to any Person without any restriction under this Agreement. The Parties recognize that the actual damages to Seller in the scenario described above in this Section 9.02(b)(i) would be difficult or impossible to ascertain with reasonable certainty and agree that the

44



Deposit Amount would be a reasonable liquidated damages amount for such material Breach.
(ii)
If (A) Buyer has the right to terminate this Agreement pursuant to Section 9.01(b) , (B) all of Seller’s Closing conditions contained in Article 8 shall have been satisfied or waived (in writing) by Seller, and (C) Buyer has performed or is ready, willing and able to perform all of its agreements and covenants contained in this Agreement which are to be performed or observed at or prior to Closing and has provided Seller with written notice of same, then, in either case, Buyer shall have the right, at its sole discretion, to either (1) enforce specific performance by Seller of this Agreement, without posting any bond or the necessity of proving the inadequacy as a remedy of monetary damages, in which event the Deposit Amount will be applied as called for herein, or (2) if Buyer does not seek and successfully enforce specific performance, terminate this Agreement and (in addition to receiving a return of the Deposit Amount) seek to recover damages from Seller in an amount up to, but not exceeding, an amount equal to the Deposit Amount. If Buyer elects to terminate this Agreement pursuant to this Section 9.02(b)(ii) and seek damages in an amount up to the Deposit Amount, the Parties shall, within two (2) Business Days of Buyer’s election, (x) execute and deliver to the Escrow Agent a joint instruction letter directing the Escrow Agent to release the Deposit Amount to Buyer and (y) Seller shall be free to enjoy immediately all rights of ownership of the Assets and to sell, transfer, encumber, or otherwise dispose of the Assets to any Person without any restriction under this Agreement.
(iii)
If this Agreement is terminated by Seller in accordance with Section 9.01(h) , then the Parties shall have no additional remedies against one another as a result of such termination, and Seller shall be free to enjoy immediately all rights of ownership of the Assets and to sell, transfer, encumber, or otherwise dispose of the Assets to any Person without any restriction under this Agreement.
(c)
If this Agreement is terminated by either Buyer or Seller pursuant to Section 9.01 for any reason other than as described in Section 9.02(a) , then, in any such case, the Parties shall, within two (2) Business Days of such termination, execute and deliver to the Escrow Agent a joint instruction letter directing the Escrow Agent to release the Deposit Amount to Buyer.
(d)
THE PARTIES FURTHER AGREE THAT, UNLESS AND UNTIL THE CLOSING OCCURS, THE SOLE AND EXCLUSIVE REMEDY OF SELLER AND ITS AFFILIATES AGAINST BUYER ARISING FROM OR RELATING TO THIS AGREEMENT AND THE CONTEMPLATED TRANSACTIONS, INCLUDING FOR ANY FAILURE OF BUYER TO EFFECT THE CLOSING OR OTHERWISE TO PERFORM ITS OBLIGATIONS UNDER THIS AGREEMENT (WHETHER WILLFULLY, INTENTIONALLY, UNINTENTIONALLY OR OTHERWISE), WHETHER IN CONTRACT, TORT OR OTHERWISE, SHALL BE THE RIGHTS AND REMEDIES AGAINST BUYER DESCRIBED IN THIS SECTION 9.02 . EXCEPT FOR THE RIGHTS AND REMEDIES AGAINST BUYER DESCRIBED IN

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THIS SECTION 9.02 , IN FURTHERANCE OF THE FOREGOING, (A) SELLER RELEASES BUYER, WAIVES ANY RIGHT OF RECOVERY FOR AND AGREES NOT TO SEEK ANY RECOVERY FOR ANY LOSS SUFFERED AS A RESULT OF ANY BREACH OF ANY COVENANT, OBLIGATION, REPRESENTATION OR WARRANTY IN THIS AGREEMENT OR THE FAILURE OF THE TRANSACTION TO BE CONSUMMATED, OR IN RESPECT OF ANY ORAL REPRESENTATION MADE OR ALLEGED TO HAVE BEEN MADE IN CONNECTION HEREWITH AND (B) THE MAXIMUM AGGREGATE MONETARY LIABILITY THAT BUYER SHALL HAVE IN CONNECTION WITH SUCH LOSS SHALL BE THE FORFEITURE OF THE DEPOSIT AMOUNT IN ACCORDANCE WITH THIS SECTION 9.02 .
9.03      Return of Records Upon Termination. Upon termination of this Agreement,
(a) Buyer shall promptly return to Seller or destroy all title, engineering, geological and geophysical data, environmental assessments and reports, maps, documents and other information furnished by Seller to Buyer in connection with its due diligence investigation of the Assets in accordance with the Confidentiality Agreement and (b) an officer of Buyer shall certify Buyer’s compliance with the preceding clause (a) to Seller in writing.
ARTICLE 10
INDEMNIFICATION; REMEDIES
10.01      Survival. The survival periods for the various representations, warranties, covenants and agreements contained herein shall be as follows: (a) Fundamental Representations shall survive indefinitely, (b) the representations and warranties in Section 3.04 shall survive for the applicable statute of limitations plus sixty (60) days, (c) the special warranty of Defensible Title set forth in the Instruments of Conveyance shall survive for twenty-four (24) months after Closing, (e) all covenants and agreements of Seller to be performed at or following the Closing shall survive until fully performed (f) all other representations and warranties and pre-closing covenants and agreements of Seller shall survive for twenty-four (24) months after Closing; provided that the covenants and agreements of Buyer and Seller set forth in Section 2.07(b) and Section 12.02 shall survive for the applicable statute of limitations plus sixty (60) days and (g) all other representations, warranties, covenants and agreements of Buyer shall survive indefinitely. Representations, warranties, covenants and agreements shall be of no further force and effect after the date of their expiration; provided that there shall be no termination of any bona fide claim asserted pursuant to this Agreement with respect to such a representation, warranty, covenant or agreement prior to its expiration date. The indemnities in Sections 10.02(a) , 10.02(b) , 10.03(a) and 10.03(b) shall terminate as of the termination date of each respective representation, warranty, covenant or agreement that is subject to indemnification thereunder, except in each case as to matters for which a specific written claim for indemnity has been delivered to the indemnifying person on or before such termination date. The indemnities in Section 10.02(c) with respect to the matters described in clause (a), clause (b), other than in connection with the Midwest School Gas Leak, and clause (c) of the definition of Retained Liabilities shall continue for twenty-four months following the Closing Date and the indemnities in Section 10.02(c) with respect to all Retained Liabilities other than the matters described in clause (a), clause (b), other than in connection with the Midwest School Gas Leak, and clause (c) of the definition of Retained Liabilities shall survive the Closing

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indefinitely. All other indemnities, and all other provisions of this Agreement, shall survive the Closing without time limit except as may otherwise be expressly provided herein.
10.02      Indemnification and Payment of Damages by Seller. Except as otherwise limited in this Article 10 , from and after the Closing, Seller shall defend, release, indemnify, and hold harmless Buyer Group from and against, and shall pay to the Buyer Group the amount of, any and all Damages, whether or not involving a Third Party claim or incurred in the investigation or defense of any of the same or in asserting, preserving, or enforcing any of their respective rights under this Agreement arising from, based upon, related to, or associated with:
(a)
any Breach of any representation or warranty made by Seller in this Agreement, or in any certificate delivered by Seller pursuant to this Agreement;
(b)
any Breach by Seller of any covenant, obligation, or agreement of Seller in this Agreement;
(c)
the Retained Liabilities;
(d)
the use or ownership of the Excluded Assets; and
(e)
the use or ownership of the Retained Assets.
Notwithstanding anything to the contrary contained in this Agreement, from and after the Closing, the remedies provided in this Article 10 , Article 11 and Section 12.17 , along with the special warranty of Defensible Title set forth in the Instruments of Conveyance, are Buyer Group’s exclusive legal remedies against Seller with respect to this Agreement and the Contemplated Transactions, including Breaches of the representations, warranties, covenants, obligations, and agreements of the Parties contained in this Agreement or the affirmations of such representations, warranties, covenants, obligations, and agreements contained in the certificate delivered by Seller at Closing pursuant to Section 2.04 , and, except for the remedies provided in this Article 10 , Article 11 and Section 12.17 , along with the special warranty of Defensible Title set forth in the Instruments of Conveyance, BUYER RELEASES SELLER GROUP FROM ANY AND ALL CLAIMS, CAUSES OF ACTION, PROCEEDINGS, OR OTHER LEGAL RIGHTS AND REMEDIES OF BUYER GROUP, KNOWN OR UNKNOWN, WHICH BUYER MIGHT NOW OR SUBSEQUENTLY HAVE, BASED ON, RELATING TO OR IN ANY WAY ARISING OUT OF THIS AGREEMENT, THE CONTEMPLATED TRANSACTIONS, THE OWNERSHIP, USE OR OPERATION OF THE ASSETS PRIOR TO THE CLOSING, OR THE CONDITION, QUALITY, STATUS, OR NATURE OF THE ASSETS PRIOR TO THE CLOSING, INCLUDING ANY AND ALL CLAIMS RELATED TO ENVIRONMENTAL MATTERS OR LIABILITY OR VIOLATIONS OF ENVIRONMENTAL LAWS AND INCLUDING RIGHTS TO CONTRIBUTION UNDER THE COMPREHENSIVE ENVIRONMENTAL RESPONSE, COMPENSATION, AND LIABILITY ACT OF 1980, AS AMENDED, BREACHES OF STATUTORY OR IMPLIED WARRANTIES, NUISANCE, OR OTHER TORT ACTIONS, RIGHTS TO PUNITIVE DAMAGES, COMMON LAW RIGHTS OF CONTRIBUTION, AND RIGHTS UNDER INSURANCE MAINTAINED BY SELLER OR ANY OF SELLER’S AFFILIATES . Nothing in this Agreement shall release or relieve Seller for actual fraud.
10.03      Indemnification and Payment of Damages by Buyer. Except as otherwise limited in this Article 10 and Article 11 , from and after the Closing, Buyer shall assume, be responsible

47



for, pay on a current basis, and shall defend, release, indemnify, and hold harmless Seller Group from and against, and shall pay to Seller Group the amount of any and all Damages, whether or not involving a Third Party claim or incurred in the investigation or defense of any of the same or in asserting, preserving, or enforcing any of their respective rights under this Agreement arising from, based upon, related to, or associated with:
(a)
any Breach of any representation or warranty made by Buyer in this Agreement or in any certificate delivered by Buyer pursuant to this Agreement;
(b)
any Breach by Buyer of any covenant, obligation, or agreement of Buyer in this Agreement;
(c)
any Damages arising out of or relating to Buyer’s and its representatives’ access to the Assets and contracts, books and records and other documents and data relating thereto prior to the Closing, including Buyer’s title and environmental inspections pursuant to Sections 11.01 and 11.10 , including Damages attributable to personal injury, illness or death, or property damage arising from such access; and
(d)
the Assumed Liabilities.
Notwithstanding anything to the contrary contained in this Agreement, from and after Closing, the remedies provided in this Article 10 and Section 12.17 are Seller Group’s exclusive legal remedies for Buyer’s Breaches, all other legal rights and remedies being expressly waived by Seller Group.
10.04      Indemnity Net of Insurance. The amount of any Damages for which an indemnified Party is entitled to indemnity under this Article 10 shall be reduced by the amount of insurance or indemnification proceeds actually received by the indemnified Party or its Affiliates with respect to such Damages (net of any collection costs, and excluding the proceeds of any insurance policy issued or underwritten, or indemnity granted, by the indemnified Party or its Affiliates).
10.05      Limitations on Liability.
(a)
Except with respect to the Fundamental Representations and the representations and warranties included in Section 3.04 , if the Closing occurs, Seller shall not have any liability for any indemnification under Section 10.02(a) : (i) for any Damages with respect to any occurrence, claim, award or judgment that do not individually exceed One Hundred Thousand Dollars ($100,000) net to Seller’s interest (the “ Individual Claim Threshold ”); or (ii) unless and until the aggregate Damages for which claim notices for claims meeting the Individual Claim Threshold are delivered by Buyer exceed two percent (2%) of the unadjusted Purchase Price, and then only to the extent such Damages exceed two percent (2%) of the unadjusted Purchase Price. Except with respect to the Fundamental Representations and the representations and warranties included in Section 3.04 , in no event will Seller be liable for Damages indemnified under Section 10.02(a) to the extent such damages, exceed twenty percent (20%) of the unadjusted Purchase Price. Notwithstanding anything herein to the contrary, in no event

48



will Seller’s aggregate liability under this Agreement exceed one hundred percent (100%) of the unadjusted Purchase Price.
(b)
Notwithstanding anything herein to the contrary, the obligations and rights of the Parties hereunder, and the Damages for which any Party is obligated to indemnify or entitled to indemnity under Section 11.02 or Section 11.03 shall be determined and calculated by excluding and without giving effect to any qualifiers as to materiality or other similar qualifiers set forth in any representation or warranty (including any bringdown of such representation or warranty in any certificate delivered pursuant to this Agreement).
(c)
Notwithstanding anything in this Agreement to the contrary, Seller shall not be required to indemnify Buyer under Section 10.02(a) for any Asset Tax (or portion thereof) allocable to Buyer under Section 12.02(c) as a result of a breach by Seller of any representation or warranty set forth in Section 3.04 , except to the extent the amount of such Asset Tax (or portion thereof) (i) exceeds the amount that would have been due absent such breach or (ii) was taken into account as an adjustment to the Purchase Price under Section 2.03 , Section 2.05(c) , Section 2.05(d) or Section 12.02(c)(iii) .
10.06      Procedure for Indemnification‑‑Third Party Claims.
(a)
Promptly after receipt by an indemnified party under Section 10.02 or 10.03 of a Third Party claim for Damages or notice of the commencement of any Proceeding against it, such indemnified party shall, if a claim is to be made against an indemnifying Party under such Section, give notice to the indemnifying Party of the commencement of such claim or Proceeding, together with a claim for indemnification pursuant to this Article 10 . The failure of any indemnified party to give notice of a Third Party claim or Proceeding as provided in this Section 10.06 shall not relieve the indemnifying Party of its obligations under this Article 10 except to the extent such failure results in insufficient time being available to permit the indemnifying Party to effectively defend against the Third Party claim or participate in the Proceeding or otherwise prejudices the indemnifying Party’s ability to defend against the Third Party claim or participate in the Proceeding.
(b)
If any Proceeding referred to in Section 10.06(a) is brought against an indemnified party and the indemnified party gives notice to the indemnifying Party of the commencement of such Proceeding, the indemnifying Party shall be entitled to participate in such Proceeding and, to the extent that it wishes (unless (i) the indemnifying Party is also a party to such Proceeding and the indemnified party determines in good faith that joint representation would be inappropriate, or (ii) the indemnifying Party fails to provide reasonable assurance to the indemnified party of its financial capacity to defend such Proceeding and provide indemnification with respect to such Proceeding), to assume the defense of such Proceeding with counsel reasonably satisfactory to the indemnified party, and, after notice from the indemnifying Party to the indemnified party of the indemnifying Party’s election to assume the defense of such Proceeding, the indemnifying Party shall not, as long as it diligently conducts such defense, be liable to the indemnified party under this Article 10 for any fees of other counsel or any other expenses with respect to the defense of such Proceeding, in each case subsequently

49



incurred by the indemnified party in connection with the defense of such Proceeding. Notwithstanding anything to the contrary in this Agreement, the indemnifying Party shall not be entitled to assume or continue control of the defense of any such Proceeding if (A) such Proceeding relates to or arises in connection with any criminal proceeding, (B) such Proceeding seeks an injunction or equitable relief against any indemnified Party, (C), in the case of an indemnification claim by Buyer pursuant to Section 10.02(a) (other than with respect to a Fundamental Representation) such Proceeding has or would reasonably be expected to result in Damages in excess of the amount set forth in Section 10.05 (i.e., twenty percent (20%) of the unadjusted Purchase Price), or (D) the indemnifying Party has failed or is failing to defend in good faith such Proceeding. If the indemnifying Party assumes the defense of a Proceeding, no compromise or settlement of such Third Party claims or Proceedings may be effected by the indemnifying Party without the indemnified party’s prior written consent unless (A) there is no finding or admission of any violation of Legal Requirements or any violation of the rights of any Person and no effect on any other Third Party claims that may be made against the indemnified party, and (B) the sole relief provided is monetary damages that are paid in full by the indemnifying Party, and (C) the indemnified party shall have no liability with respect to any compromise or settlement of such Third Party claims or Proceedings effected without its consent.
10.07      Procedure for Indemnification – Other Claims. A claim for indemnification for any matter not involving a Third Party claim may be asserted by notice to the Party from whom indemnification is sought.
10.08      Indemnification of Group Members. The indemnities in favor of Buyer and Seller provided in Section 10.08 and Section 10.03 , respectively, shall be for the benefit of and extend to such Party’s present and former Group members. Any claim for indemnity under this Article 10 by any Group member other than Buyer or Seller must be brought and administered by the relevant Party to this Agreement. No indemnified party other than Buyer and Seller shall have any rights against either Seller or Buyer under the terms of this Article 10 except as may be exercised on its behalf by Buyer or Seller, as applicable, pursuant to this Section 10.08 . Each of Seller and Buyer may elect to exercise or not exercise indemnification rights under this Section on behalf of the other indemnified party affiliated with it in its sole discretion and shall have no liability to any such other indemnified party for any action or inaction under this Section.
10.09      Extent of Representations and Warranties.
(a)
NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS AGREEMENT, EXCEPT AS AND TO THE EXTENT EXPRESSLY SET FORTH IN THIS AGREEMENT, THE CERTIFICATES DELIVERED BY SELLER AT CLOSING OR IN THE INSTRUMENTS OF CONVEYANCE, SELLER MAKES NO REPRESENTATIONS OR WARRANTIES WHATSOEVER, AND DISCLAIMS ALL LIABILITY AND RESPONSIBILITY FOR ANY REPRESENTATION, WARRANTY, STATEMENT, OR INFORMATION MADE OR COMMUNICATED (ORALLY OR IN WRITING) TO BUYER (INCLUDING ANY OPINION, INFORMATION, OR ADVICE THAT MAY HAVE BEEN PROVIDED TO BUYER OR ITS AFFILIATES OR REPRESENTATIVES BY ANY AFFILIATES OR REPRESENTATIVES OF SELLER OR BY ANY INVESTMENT BANK OR INVESTMENT BANKING FIRM, ANY PETROLEUM ENGINEER OR ENGINEERING FIRM, SELLER’S COUNSEL, OR ANY OTHER AGENT,

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CONSULTANT, OR REPRESENTATIVE OF SELLER). WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, EXCEPT AS AND TO THE EXTENT EXPRESSLY SET FORTH IN THIS AGREEMENT, THE CERTIFICATES DELIVERED BY SELLER AT CLOSING OR IN THE INSTRUMENTS OF CONVEYANCE, SELLER EXPRESSLY DISCLAIMS AND NEGATES ANY REPRESENTATION OR WARRANTY, EXPRESS, IMPLIED, AT COMMON LAW, BY STATUTE, OR OTHERWISE, RELATING TO (A) THE TITLE TO ANY OF THE ASSETS, (B) THE CONDITION OF THE ASSETS (INCLUDING ANY IMPLIED OR EXPRESS WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, OR CONFORMITY TO MODELS OR SAMPLES OF MATERIALS), IT BEING DISTINCTLY UNDERSTOOD THAT THE ASSETS ARE BEING SOLD “AS IS,” “WHERE IS,” AND “WITH ALL FAULTS AS TO ALL MATTERS,” (C) ANY INFRINGEMENT BY SELLER OF ANY PATENT OR PROPRIETARY RIGHT OF ANY THIRD PARTY, (D) ANY INFORMATION, DATA, OR OTHER MATERIALS (WRITTEN OR ORAL) FURNISHED TO BUYER BY OR ON BEHALF OF SELLER (INCLUDING THE EXISTENCE OR EXTENT OF HYDROCARBONS OR THE MINERAL RESERVES, THE RECOVERABILITY OF SUCH RESERVES, ANY PRODUCT PRICING ASSUMPTIONS, AND THE ABILITY TO SELL HYDROCARBON PRODUCTION AFTER THE CLOSING), AND (E) THE ENVIRONMENTAL CONDITION AND OTHER CONDITION OF THE ASSETS AND ANY POTENTIAL LIABILITY ARISING FROM OR RELATED TO THE ASSETS.
(b)
Buyer acknowledges and affirms that it has made and prior to Closing will make its own independent investigation, analysis, and evaluation of the Contemplated Transactions and the Assets (including Buyer’s own estimate and appraisal of the extent and value of Seller’s Hydrocarbon reserves attributable to the Assets and an independent assessment and appraisal of the environmental risks associated with the acquisition of the Assets). Buyer acknowledges that in entering into this Agreement, it has relied on the aforementioned investigation and the express representations and warranties of Seller contained in this Agreement and the Seller Closing Documents. Buyer hereby irrevocably covenants to refrain from, directly or indirectly, asserting any claim, or commencing, instituting, or causing to be commenced, any Proceeding of any kind against Seller or its Affiliates, alleging facts contrary to the foregoing acknowledgment and affirmation.
10.10      Compliance With Express Negligence Test . THE PARTIES AGREE THAT ANY INDEMNITY, DEFENSE, AND/OR RELEASE OBLIGATION ARISING UNDER THIS AGREEMENT SHALL APPLY WITHOUT REGARD TO THE NEGLIGENCE, STRICT LIABILITY, OR OTHER FAULT OF THE INDEMNIFIED PARTY, WHETHER ACTIVE, PASSIVE, JOINT, CONCURRENT, COMPARATIVE, CONTRIBUTORY OR SOLE, OR ANY PRE-EXISTING CONDITION, ANY BREACH OF CONTRACT OR BREACH OF WARRANTY, OR VIOLATION OF ANY LEGAL REQUIREMENT, EXCEPT TO THE EXTENT SUCH DAMAGES WERE OCCASIONED BY THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF THE INDEMNIFIED PARTY OR ANY GROUP MEMBER THEREOF, IT BEING THE PARTIES’ INTENTION THAT DAMAGES TO THE EXTENT ARISING FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF THE INDEMNIFIED PARTY OR ANY GROUP MEMBER THEREOF NOT BE COVERED BY THE RELEASE, DEFENSE, OR INDEMNITY OBLIGATIONS IN THIS AGREEMENT. The foregoing is a specifically bargained for allocation of risk among the Parties, which the Parties agree and acknowledge satisfies the express negligence rule and conspicuousness requirement under Texas law.

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10.11      Limitations of Liability. Notwithstanding anything to the contrary contained in this Agreement, IN NO EVENT SHALL SELLER OR BUYER EVER BE LIABLE FOR, AND EACH PARTY RELEASES THE OTHER FROM, ANY CONSEQUENTIAL, SPECIAL, INDIRECT, EXEMPLARY, OR PUNITIVE DAMAGES OR CLAIMS RELATING TO OR ARISING OUT OF THE CONTEMPLATED TRANSACTIONS OR THIS AGREEMENT ; provided, however , that any consequential, special, indirect, exemplary, or punitive damages recovered by a Third Party (including a Governmental Body, but excluding any Affiliate of any Group member) against a Person entitled to indemnity pursuant to this Article 10 shall be included in the Damages recoverable under such indemnity. Notwithstanding the foregoing, lost profits shall not be excluded by this provision as to recovery hereunder to the extent constituting direct Damages.
10.12      No Duplication. Any liability for indemnification hereunder shall be determined without duplication of recovery by reason of the state of facts giving rise to such liability constituting a Breach of more than one representation, warranty, covenant, obligation, or agreement herein. Neither Buyer nor Seller shall be liable for indemnification with respect to any Damages based on any sets of facts to the extent the Purchase Price is being or has been adjusted pursuant to Section 2.05 by reason of the same set of facts.
10.13      Disclaimer of Application of Anti-Indemnity Statutes. Seller and Buyer acknowledge and agree that the provisions of any anti-indemnity statute relating to oilfield services and associated activities shall not be applicable to this Agreement and/or the Contemplated Transactions.
10.14      Waiver of Right to Rescission. Seller and Buyer acknowledge that, following the Closing, the payment of money, as limited by the terms of this Agreement, shall be adequate compensation for Breach of any representation, warranty, covenant or agreement contained herein or for any other claim arising in connection with or with respect to the Contemplated Transactions. As the payment of money shall be adequate compensation, following Closing, Seller and Buyer waive any right to rescind this Agreement or any of the transactions contemplated hereby.
10.15      Joint and Several. Each Seller Party shall be jointly and severally liable for each representation, warranty, covenant, agreement, indemnification obligation and Breach of this Agreement and the Seller Closing Documents by each other Seller Party.
ARTICLE 11
TITLE MATTERS AND ENVIRONMENTAL MATTERS; PREFERENTIAL PURCHASE RIGHTS; CONSENTS
11.01      Title Examination and Access. Buyer may make or cause to be made at its expense such examination as it may desire of Seller’s title to the Assets. For such purposes, until the Closing, Seller shall give to Buyer and its Representatives access during Seller’s regular hours of business to originals or copies (including electronic copies if available) of all of the Records, files, records, contracts, correspondence, maps, data, reports, plats, abstracts of title, lease files, well files, unit files, division order files, production marketing files, title opinions, title files, title records, ownership maps, surveys, and any other information, data, records, and files that Seller or its Affiliates have relating in any way to the title to the Assets, the past or

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present operation thereof, and the marketing of production therefrom, in accordance with, and subject to the limitations in, Section 5.01 .
11.02      Preferential Purchase Rights. Seller shall, as promptly as practical but in no event later than ten (10) Business Days after the Execution Date, provide all notices necessary to comply with or obtain the waiver of all Preferential Purchase Rights which are applicable to the Contemplated Transactions prior to the Closing Date and in compliance with the contractual provisions applicable thereto. To the extent any such Preferential Purchase Rights are properly exercised by any holders thereof or the time period for exercising any Preferential Purchase Right has not expired and no notice of waiver has been received from the holder thereof, then the Asset(s) subject to any such Preferential Purchase Rights shall not be sold to Buyer and shall be excluded from the Assets and sale under this Agreement and shall be considered Retained Assets. The Purchase Price shall be adjusted downward by the Allocated Value of the Asset(s) so retained. If any holder of a Preferential Purchase Right initially elects to exercise that Preferential Purchase Right, but after the Closing Date, refuses to consummate the purchase of the affected Asset(s), or if the time period for exercising any Preferential Purchase Right expires after the Closing without exercise by the holder thereof (or if Seller receives a waiver of any Preferential Purchase Right after the Closing), then, in each case, subject to the Parties’ respective rights and remedies as to the obligation to consummate the Contemplated Transactions, Buyer shall purchase such Retained Asset(s) for the Allocated Value thereof (subject to the adjustments pursuant to Section 2.05 ), and the closing of such transaction shall take place on a date reasonably designated by Seller not more than one hundred eighty (180) days after the Closing Date.
11.03      Consents. Seller shall, as promptly as practical but in no event later than ten (10) Business Days after the Execution Date, provide all notices required to comply with or obtain all Consents in compliance with the contractual provisions applicable thereto required for the transfer of the Assets and in accordance with Section 5.04 .
(a)
If Seller fails to obtain any Consent necessary for the transfer of any Asset to Buyer, Seller’s failure shall be handled as follows:
(i)
If the Consent is not a Required Consent and has not been denied in writing, then the affected Assets shall nevertheless be conveyed at the Closing as part of the Assets. Any Damages that arise due to the failure to obtain such Consent shall be borne by Buyer.
(ii)
If the Consent is a Required Consent or a Consent that has been denied in writing, the Purchase Price shall be adjusted downward by the Allocated Value of the affected Assets (which affected Assets shall include all Leases and Wells affected by the Applicable Contract or Lease for which a Consent is refused), and the affected Assets shall be treated as Retained Assets.
(b)
Notwithstanding the provisions of Section 11.03(a) , if Seller obtains a Consent described in Section 11.03(a)(ii) within one hundred eighty (180) days after the Closing, then Seller shall promptly deliver conveyances of the affected Retained Asset(s) to Buyer and Buyer shall pay to Seller an amount equal to the Allocated Value of the

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affected Retained Asset(s) in accordance with wire transfer instructions provided by Seller (subject to the adjustments set forth in Section 2.05) .
11.04      Title Defects. Buyer shall notify Seller of Title Defects (“ Title Defect Notice(s) ”) promptly after the discovery thereof, but in no event later than 5:00 p.m. Central Time on June 26, 2017 (the “ Defect Notice Date ”). To be effective, each Title Defect Notice shall be in writing and include (a) a description of the alleged Title Defect and the Unit or portion thereof (including the Target Formation(s), as applicable) affected by such alleged Title Defect (each, a “ Title Defect Property ”), (b) the Allocated Value of each Title Defect Property, (c) supporting documents reasonably necessary for Seller to verify the existence of the alleged Title Defect and (d) the amount by which Buyer reasonably believes the Allocated Value of each Title Defect Property is reduced by such alleged Title Defect and the computations upon which Buyer’s belief is based (the “ Title Defect Value ”). To give Seller an opportunity to commence reviewing and curing Title Defects, Buyer agrees to use reasonable efforts to give Seller, on a weekly basis prior to the Defect Notice Date, written notice of all alleged Title Defects (as well as any claims that would be claims under the special warranty of Defensible Title set forth in the Instruments of Conveyance) discovered by Buyer during the preceding week; provided that the failure to provide any such preliminary notice shall not affect Buyer’s right to assert Title Defects at any time prior to the Defect Notice Date. Notwithstanding anything herein to the contrary, subject to Buyer’s rights under the Instruments of Conveyance, Buyer forever waives, and Seller shall have no liability for, Title Defects not asserted by a Title Defect Notice meeting substantially all of the requirements set forth in the preceding sentence by no later than 5:00 p.m. Central Time on the Defect Notice Date.
11.05      Title Defect Value. The Title Defect Value shall be determined pursuant to the following guidelines, where applicable:
(a)
if the Parties agree on the Title Defect Value, then that amount shall be the Title Defect Value;
(b)
if the Title Defect is an Encumbrance that is undisputed and liquidated in amount, then the Title Defect Value shall be the amount necessary to be paid to remove the Title Defect from the Title Defect Property;
(c)
if the Title Defect represents a discrepancy between (i) Seller’s Net Revenue Interest for the Title Defect Property and (ii) the Net Revenue Interest set forth for such Title Defect Property in Schedule 2.07 , then the Title Defect Value shall be the product of the Allocated Value of such Title Defect Property, multiplied by a fraction, the numerator of which is the Net Revenue Interest decrease and the denominator of which is the Net Revenue Interest set forth for such Title Defect Property in Schedule 2.07 ;
(d)
if the Title Defect represents an increase of (i) Seller’s Working Interest for any Title Defect Property over (ii) the Working Interest set forth for such Title Defect Property in Schedule 2.07 (in each case, except (A) increases resulting from contribution requirements with respect to defaulting co-owners from and after the Execution Date under applicable operating agreements, or (B) increases to the extent that such increases are accompanied by a proportionate increase in Seller’s Net Revenue Interest), then the

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Title Defect Value shall be determined by calculating the Net Revenue Interest that results from such larger Working Interest, determining what the Net Revenue Interest would be using such calculated Net Revenue Interest and the Working Interest set forth for such Well in Schedule 2.07 and then calculating the adjustment in the manner set forth in clause (c) above;
(e)
if the Title Defect with respect to a Unit results from a discrepancy where (i) the actual Net Acres for such Title Defect Property as to the Target Formation(s) is less than (ii) the Net Acres set forth on Schedule 2.07 for such Title Defect Property, then the Title Defect Value shall be calculated by multiplying the Net Acre deficiency for such Unit by the per-Net Acre Allocated Value of such Unit; and
(f)
if the Title Defect represents an obligation or Encumbrance upon or other defect in title to the Title Defect Property of a type not described above, then the Title Defect Value shall be determined by taking into account the Allocated Value of the Title Defect Property, the portion of the Title Defect Property affected by the Title Defect, the legal effect of the Title Defect, the potential economic effect of the Title Defect over the life of the Title Defect Property, the values placed upon the Title Defect by Buyer and Seller and such other reasonable factors as are necessary to make a proper evaluation.
In no event, however, shall the total of the Title Defect Values related to a particular Asset exceed the Allocated Value of such Asset. The Title Defect Value with respect to a Title Defect shall be determined without any duplication of any costs or losses included in any other Title Defect Value hereunder, or for which Buyer otherwise receives credit in the calculation of the Purchase Price.
11.06      Seller’s Cure or Contest of Title Defects.
Seller may contest any asserted Title Defect or Buyer’s good faith estimate of the Title Defect Value as described in Section 11.06(c) and may seek to cure any asserted Title Defect as described in Section 11.06(a) .
(a)
Seller shall have the right to cure any Title Defect on or before sixty (60) days after the Defect Notice Date (the “ Title Defect Cure Period ”) by giving written notice to Buyer of its election to cure prior to the Closing Date. If Seller elects prior to the Closing to cure and:
(i)
actually cures the Title Defect (“ Cure ”) prior to the Closing, then the Asset affected by such Title Defect shall be conveyed to Buyer at the Closing, and no Purchase Price adjustment will be made for such Title Defect; or
(ii)
does not actually cure the Title Defect prior to the Closing, then Seller shall:
(A)
convey the affected Asset to Buyer and Buyer shall pay the Title Defect Value attributable to the affected Asset to the Escrow Agent at the Closing; provided, however that if Seller is unable to Cure the Title Defect by the end of the Title Defect Cure Period, then (i) Seller shall include a downward adjustment in the Final Settlement Statement equal to the Title

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Defect Value for such Asset and (ii) the Parties shall issue joint written instructions to the Escrow Agent to release such Title Defect Value to Buyer; or
(B)
if and only if Buyer agrees to this remedy in its sole discretion, indemnify Buyer against all Damages (up to the Allocated Value of the applicable Title Defect Property) resulting from such Title Defect with respect to such Title Defect Property pursuant to an indemnity agreement prepared by Seller in a form and substance reasonably acceptable to Buyer.
(b)
If Seller does not elect prior to the Closing to cure the Title Defect, subject to Seller’s continuing right to dispute the Title Defect, Seller shall convey the affected Asset to Buyer at the Closing and the Purchase Price shall be adjusted in accordance with the terms of this Agreement.
(c)
Seller and Buyer shall attempt to agree on the existence and Title Defect Value for all Title Defects. Representatives of the Parties, knowledgeable in title matters, shall meet during the Title Defect Cure Period for this purpose. However, either Party may at any time prior to the final resolution of the applicable Title Defect hereunder submit any disputed Title Defect or the Title Defect Value to arbitration in accordance with the procedures set forth in Section 11.15 within ninety (90) days after the Closing. If a contested Title Defect cannot be resolved prior to Closing, except as otherwise provided herein, the Asset affected by such Title Defect shall nevertheless be conveyed to Buyer at the Closing, and the Purchase Price will be adjusted downward in an amount equal to the Title Defect Value as determined in good faith by Buyer for such Asset; provided, however , that if the Title Defect Value as finally decided between the Parties or by the Expert, as applicable, is less than the Title Defect Value used for the Purchase Price adjustment, then Seller shall include an upward adjustment in the Final Settlement Statement equal to the amount that the Title Defect Value (as of Closing) exceeds the Title Defect Value as finally determined.
11.07      Limitations on Adjustments for Title Defects.
(a)
Notwithstanding the provisions of Sections 11.04 , 11.05 and 11.06 , other than with respect to the special warranty of Defensible Title to be provided in the Instruments of Conveyance, Seller shall be obligated to adjust the Purchase Price to account for uncured Title Defects only to the extent that the sum of (x) the aggregate Title Defect Values of all uncured Title Defects (the “ Aggregate Title Defect Value ”) (after taking into account any offsetting Title Benefit Values) plus (y) the Aggregate Environmental Defect Value exceeds the Aggregate Defect Deductible. In addition, if the Title Defect Value(s) for any single Title Defect affecting a Title Defect Property or multiple Title Defect Properties (with all Title Defect Values of all affected Title Defect Properties attributable to a single Title Defect being aggregated for such calculation) is less than the De Minimis Title Defect Cost, such value shall not be considered in calculating the Aggregate Title Defect Value.

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(b)
Notwithstanding anything contained in Section 11.07(a) to the contrary, for any Title Defect that is identified in a Title Defect Notice delivered on or prior to the Defect Notice Date, if (1) such Title Defect would constitute a breach of the special warranty of Defensible Title if such special warranty of Defensible Title were in effect as of such time, then (2) such Title Defect shall not be subject to the De Minimis Title Defect Cost or the Aggregate Defect Deductible.
11.08      Title Benefits. If Seller discovers any right, circumstance or condition that operates (a) to increase the Net Revenue Interest for any Unit above that shown in Schedule 2.07 , to the extent the same does not cause a greater than proportionate increase in Seller’s Working Interest therein above that shown in Schedule 2.07 , (b) to decrease the Working Interest of Seller in any Unit below that shown in Schedule 2.07 , to the extent the same causes a decrease in Seller’s Working Interest that is proportionately greater than the decrease in Seller’s Net Revenue Interest therein below that shown in Schedule 2.07 , or (c) to increase the Net Acres for the Leases located in a Unit as to the applicable Target Formation(s) above the Net Acres set forth for such Unit on Schedule 2.07 (each, a “ Title Benefit ”), then Seller shall, from time to time and without limitation, have the right, but not the obligation, to give Buyer written notice of any such Title Benefits (a “ Title Benefit Notice ”), as soon as practicable but not later than 5:00 p.m. Central Time on the Defect Notice Date, stating with reasonable specificity the Assets affected (the “Title Benefit Properties”), the particular Title Benefit claimed, and Seller’s good faith estimate of the amount the additional interest increases the value of the affected Assets over and above that Asset’s Allocated Value (the “ Title Benefit Value ”). Buyer shall also promptly furnish Seller with written notice of any Title Benefit (including a description of such Title Benefit and the Title Benefit Properties with reasonable specificity) which is discovered by any of Buyer’s or any of its Affiliates’ Representatives, employees, title attorneys, landmen, or other title examiners. The Title Benefit Value of any Title Benefit shall be determined by the following methodology, terms and conditions (without duplication): (i) if the Parties agree on the Title Benefit Value, then that amount shall be the Title Benefit Value; (ii) if the Title Benefit represents a discrepancy between (A) Seller’s Net Revenue Interest for any Title Benefit Property and (B) the Net Revenue Interest set forth for such Title Benefit Property in Schedule 2.07 then the Title Benefit Value shall be the product of the Allocated Value of such Title Benefit Property multiplied by a fraction, the numerator of which is the Net Revenue Interest increase and the denominator of which is the Net Revenue Interest set forth for such Title Benefit Property in Schedule 2.07 ; (iii) if the Title Benefit represents a decrease of (A) Seller’s Working Interest for any Title Benefit Property below (B) the Working Interest set forth for such Title Benefit Property in Schedule 2.07 , then the Title Benefit Value shall be determined by calculating the Net Revenue Interest that results from such reduced Working Interest, determining what the Net Revenue Interest would be using such calculated Net Revenue Interest and the Working Interest set forth in Schedule 2.07 ; (iv) if the Title Benefit represents an increase in Net Acres for the Leases located in a Unit as to the applicable Target Formation(s), then the Title Benefit Amount shall be determined by multiplying the Net Acre increase with respect to such Unit by the per-Net Acre Allocated Value; and (v) if the Title Benefit is of a type not described above, then the Title Benefit Value shall be determined by taking into account the Allocated Value of the Title Benefit Property, the portion of such Title Benefit Property affected by such Title Benefit, the legal effect of the Title Benefit, the potential economic effect of the Title Benefit over the life of such Title Benefit Property, the values placed upon the Title Benefit

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by Buyer and Seller and such other reasonable factors as are necessary to make a proper evaluation.
Seller and Buyer shall attempt to agree on the existence and Title Benefit Value for all Title Benefits on before the end of the Title Defect Cure Period. If Buyer agrees with the existence of the Title Benefit and Seller’s good faith estimate of the Title Benefit Value, then the Aggregate Title Defect Value shall be offset by the amount of the Title Benefit Value. If the Parties cannot reach agreement by the end of the Title Defect Cure Period, the Title Benefit or the Title Benefit Value in dispute shall be submitted to arbitration in accordance with the procedures set forth in Section 11.15 within ninety (90) days after the end of the Title Defect Cure Period. Notwithstanding the foregoing, the Parties agree and acknowledge that there shall be no upward adjustment to the Purchase Price for any Title Benefit. If a contested Title Benefit cannot be resolved prior to the Closing, Seller shall convey the affected Asset to Buyer and Buyer shall pay for the Asset at the Closing in accordance with this Agreement as though there were no Title Benefits; provided, however , if the Title Benefit contest results in a determination that a Title Benefit exists, then the Aggregate Title Defect Value shall be offset by and adjusted downward by the Title Benefit Value as determined in such contest (which adjustment shall be made on the Final Settlement Statement).
11.09      Buyer’s Environmental Assessment. Beginning on the Execution Date and ending at 5:00 p.m. Central Time on the Defect Notice Date, Buyer shall have the right, at its sole cost, risk, liability, and expense, to conduct a Phase I Environmental Site Assessment of the Assets. During Seller’s regular hours of business and after providing Seller with written notice of any such activities no less than two (2) Business Days in advance (which written notice shall include the written permission of the operator (if other than Seller) and any applicable Third Party operator or other Third Party whose permission is legally required, which Seller shall reasonably cooperate with Buyer in securing), Buyer and its representatives shall be permitted to enter upon the Assets, inspect the same, review all of Seller’s files and records (other than those for which Seller has an attorney-client privilege) relating to the Assets, and generally conduct visual, non-invasive tests, examinations, and investigations. No sampling or other invasive inspections of the Assets may be conducted prior to Closing without Seller’s prior written consent. Buyer’s access shall be in accordance with, and subject to the limitations in, Section 5.01 .  
11.10      Environmental Defect Notice. Buyer shall notify Seller in writing of any Environmental Defect (an “ Environmental Defect Notice ”) promptly after the discovery thereof, but in no event later than 5:00 p.m. Central Time on the Defect Notice Date. To be effective, an Environmental Defect Notice shall include: (i) the Lease(s), Well(s) or Unit(s) affected; (ii) a reasonably detailed description of the alleged Environmental Defect and the basis for such assertion under the terms of this Agreement; (iii) Buyer’s good faith estimate of the Environmental Defect Value with respect to such Environmental Defect; and (iv) appropriate documentation reasonably necessary for Seller to substantiate Buyer’s claim and calculation of the Environmental Defect Value. Notwithstanding anything herein to the contrary, Buyer forever waives Environmental Defects not asserted by an Environmental Defect Notice meeting all of the requirements set forth in the preceding sentence no later than 5:00 p.m. Central Time on the Defect Notice Date.

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11.11      Seller’s Exclusion, Cure or Contest of Environmental Defects. Seller, in its sole discretion, (x) may elect to exclude at Closing any Asset (which will become a Retained Asset) affected by an asserted Environmental Defect if the Environmental Defect Value with respect to such Environmental Defect equals or exceeds the Allocated Value of the affected Asset(s) and reduce the Purchase Price by the Allocated Value(s) thereof, (y) may contest any asserted Environmental Defect or Buyer’s good faith estimate of the Environmental Defect Value as described in Section 11.11(b) and/or (z) may seek to remediate or cure any asserted Environmental Defect to the extent of the Lowest Cost Response as described in Section 11.11(a) .
(a)
Seller shall have the right to remediate or cure an Environmental Defect to the extent of the Lowest Cost Response on or before the Closing Date. If Seller elects to pursue remediation or cure as set forth in this clause (a), Seller shall implement such remediation or cure in a manner that is in compliance with all applicable Legal Requirements in a prompt and timely fashion for the type of remediation or cure. If Seller elects to pursue remediation or cure and:
(i)
completes a Complete Remediation of an Environmental Defect prior to the Closing Date, the affected Lease(s) or Well(s) shall be included in the Assets conveyed at Closing, and no Purchase Price adjustment will be made for such Environmental Defect;
(ii)
does not complete a Complete Remediation prior to the Closing, then Seller shall convey the affected Asset(s) to Buyer and the Purchase Price shall be reduced by an amount equal to the Environmental Defect Value for such Asset(s).  
(b)
Seller and Buyer shall attempt to agree on the existence and Environmental Defect Value of all Environmental Defects. Representatives of the Parties, knowledgeable in environmental matters, shall meet for this purpose. However, a Party may at any time prior to the final resolution of the applicable Environmental Defect hereunder elect to submit any disputed item to arbitration in accordance with the procedures set forth in Section 11.15 no later than ninety (90) days after the Closing. If a contested Environmental Defect cannot be resolved prior to the Closing, the affected Lease(s) or Well(s) (together with any other Assets appurtenant thereto) shall be included with the Assets conveyed to Buyer at Closing and the Purchase Price shall be reduced by the estimated Environmental Defect Value set forth in the Environmental Defect Notice for such contested Environmental Defect, and the final determination of the Environmental Defect and/or Environmental Defect Value shall be resolved pursuance to Section 11.15 .
11.12      Limitations. Notwithstanding the provisions of Sections 11.10 and 11.11 , no adjustment to the Purchase Price for Environmental Defect Values shall be made unless and until the sum of (x) the aggregate value of all Environmental Defect Values (the “ Aggregate Environmental Defect Value ”) plus (y) the Aggregate Title Defect Value (after taking into account any offsetting Title Benefit Values) exceeds the Aggregate Defect Deductible. If the Environmental Defect Value with respect to any single Environmental Defect is less than the De Minimis Environmental Defect Cost, such cost shall not be considered in calculating the Aggregate Environmental Defect Value.

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11.13      Exclusive Remedies. The rights and remedies granted to Buyer in this Agreement are the exclusive rights and remedies against Seller related to any Environmental Condition, or Damages related thereto. EXCEPT AS SET FORTH IN THIS AGREEMENT, BUYER EXPRESSLY WAIVES, AND RELEASES SELLER GROUP FROM, ANY AND ALL OTHER RIGHTS AND REMEDIES IT MAY HAVE UNDER ENVIRONMENTAL LAWS AGAINST SELLER REGARDING ENVIRONMENTAL CONDITIONS, WHETHER FOR CONTRIBUTION, INDEMNITY, OR OTHERWISE. The foregoing is a specifically bargained for allocation of risk among the Parties, which the Parties agree and acknowledge satisfies the express negligence rule and conspicuousness requirement under Texas law.
11.14      Casualty Loss and Condemnation. If, after the Execution Date but prior to Closing Date, any portion of the Assets is destroyed or damaged by fire or other casualty or is expropriated or taken in condemnation or under right of eminent domain (a “ Casualty Loss ”), subject to Section 7.08 and Section 8.08 , this Agreement shall remain in full force and effect, and Buyer shall nevertheless be required to close the Contemplated Transactions. In the event that the amount of the costs and expenses associated with repairing or restoring the Assets affected by such Casualty Loss exceeds Two Hundred Fifty Thousand Dollars ($250,000) net to Seller’s interest, (a) Seller must elect by written notice to Buyer prior to Closing either to (x) cause the Assets affected by such Casualty Loss to be repaired or restored, at Seller’s sole cost prior to the Closing Date or (y) reduce the Purchase Price by the amount of the Casualty Loss and (b) Seller shall retain all rights to insurance and other claims against Third Parties with respect to the applicable Casualty Loss except to the extent the Parties otherwise agree in writing. With respect to all other Casualty Losses, Seller shall assign and subrogate to Buyer all rights to insurance and other claims with respect to such Casualty Loss.
11.15      Expert Proceedings.
(a)
Each matter referred to this Section 11.15 (a “ Disputed Matter ”) shall be conducted in accordance with the Commercial Arbitration Rules of the AAA as supplemented to the extent necessary to determine any procedural appeal questions by the Federal Arbitration Act (Title 9 of the United States Code), but only to the extent that such rules do not conflict with the terms of this Section 11.15 . Any notice from one Party to the other referring a dispute to this Section 11.15 shall be referred to herein as an “ Expert Proceeding Notice ”.
(b)
The arbitration shall be held before a one member arbitration panel (the “ Expert ”), mutually agreed by the Parties. The Expert must (a) be a neutral party who has never been an officer, director or employee of or performed material work for a Party or any Party’s Affiliate within the preceding five (5)-year period and (b) agree in writing to keep strictly confidential the specifics and existence of the dispute as well as all proprietary records of the Parties reviewed by the Expert in the process of resolving such dispute. The Expert must have not less than fifteen (15) years’ experience as a lawyer in the State of Wyoming with experience in exploration and production title and/or environmental issues, as appropriate based on the nature of the dispute(s). If disputes exist with respect to both title and environmental matters, the Parties may mutually agree to conduct separate arbitration proceedings with the title disputes and environmental disputes being submitted to separate Experts. If, within five (5) Business

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Days after delivery of an Expert Proceeding Notice, the Parties cannot mutually agree on an Expert, then within seven (7) Business Days after delivery of such Expert Proceeding Notice, each Party shall provide the other with a list of three (3) acceptable, qualified experts, and within ten (10) Business Days after delivery of such Expert Proceeding Notice, the Parties shall each separately rank from one through six in order of preference each proposed expert on the combined lists, with a rank of one being the most preferred expert and the rank of six being the least preferred expert, and provide their respective rankings to the Dallas office of the AAA. Based on those rankings, the AAA will appoint the expert with the combined lowest numerical ranking to serve as the Expert for the Disputed Matters. If the rankings result in a tie or the AAA is otherwise unable to determine an Expert using the Parties’ rankings, the AAA will appoint an arbitrator from one of the Parties’ lists as soon as practicable upon receiving the Parties’ rankings. Each Party will be responsible for paying one-half (1/2) of the fees charged by the AAA for the services provided in connection with this Section 11.15(b) .
(c)
Within five (5) Business Days following the receipt by either Party of the Expert Proceeding Notice, the Parties will exchange their written description of the proposed resolution of the Disputed Matters. Provided that no resolution has been reached, within five (5) Business Days following the selection of the Expert, the Parties shall submit to the Expert the following: (i) this Agreement, with specific reference to this Section 11.15 and the other applicable provisions of this Article 11 , (ii) Buyer’s written description of the proposed resolution of the Disputed Matters, together with any relevant supporting materials, (iii) Seller’s written description of the proposed resolution of the Disputed Matters, together with any relevant supporting materials, and (iv) the Expert Proceeding Notice.
(d)
The Expert shall make its determination by written decision within fifteen (15) days following receipt of the materials described in Section 11.15(c) above (the “ Expert Decision ”). The Expert Decision with respect to the Disputed Matters shall be limited to the selection of the single proposal for the resolution of the aggregate Disputed Matters proposed by a Party that best reflects the terms and provisions of this Agreement, i.e. , the Expert must select either Buyer’s proposal or Seller’s proposal for resolution of the aggregate Disputed Matters.
(e)
The Expert Decision shall be final and binding upon the Parties, without right of appeal, absent manifest error. In making its determination, the Expert shall be bound by the rules set forth in this Article 11 . The Expert may consult with and engage disinterested Third Parties to advise the Expert, but shall disclose to the Parties the identities of such consultants. Any such consultant shall not have worked as an employee or consultant for either Party or its Affiliates during the five (5)-year period preceding the arbitration nor have any financial interest in the dispute.
(f)
The Expert shall act as an expert for the limited purpose of determining the specific matters submitted for resolution herein and shall not be empowered to award damages, interest, or penalties to either Party with respect to any matter. Each Party shall bear its own legal fees and other costs of preparing and presenting its case. All costs and

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expenses of the Expert shall be borne by the non-prevailing Party in any such arbitration proceeding.
ARTICLE 12
GENERAL PROVISIONS
12.01      Records. Seller, at Buyer’s cost and expense, shall deliver (a) all electronic Records to Buyer as soon as practical on or following the Closing Date (and shall use commercially reasonable efforts to deliver such electronic Records no later than three (3) Business Days following the Closing Date) and (b) originals (or copies where no original exists) of all other Records to Buyer (FOB Seller’s office) within thirty (30) days following the Closing Date; provided that Seller is entitled to retain the original Records related to accounting and Asset Taxes prior to the Effective Time and may provide Buyer with a copy in lieu of the original Record. With respect to any other original Records delivered to Buyer, subject to Section 12.13 , (a) Seller shall be entitled to retain copies of such Records, and (b) Buyer shall retain any such original Records for at least seven (7) years beyond the Closing Date, during which seven (7)-year period Seller shall be entitled to obtain access to such Records, at reasonable business hours and upon prior notice to Buyer, so that Seller may make copies of such original Records, at its own expense, as may be reasonable or necessary for tax purposes or in connection with any Proceeding or Threatened Proceeding against Seller.
12.02      Expenses and Taxes.
(a)
Except as otherwise expressly provided in this Agreement, each Party to this Agreement shall bear its respective expenses incurred in connection with the preparation, execution, and performance of this Agreement and the Contemplated Transactions, including all fees and expenses of agents, representatives, counsel, and accountants.
(b)
Transfer Taxes and Fees . All Transfer Taxes and all required documentary, filing and recording fees and expenses in connection with the filing and recording of the assignments, conveyances or other Instruments of Conveyance required to convey title to the Assets to Buyer shall be borne by Buyer.
(c)
Asset Taxes.
(i)
From and after the Closing, Seller shall be allocated and bear all Asset Taxes attributable to (A) any Tax period ending prior to the Effective Time, and (B) the portion of any Straddle Period ending immediately prior to the Effective Time. From and after the Closing, Buyer shall be allocated and bear all Asset Taxes attributable to (x) any Tax period beginning on or after the Effective Time, and (y) the portion of any Straddle Period beginning on the Effective Time.
(ii)
For purposes of determining the allocations described in Section 12.02(c)(i) , (A) Asset Taxes that are attributable to the severance or production of Hydrocarbons (other than such Asset Taxes described in clause (C), below) shall be allocated to the period in which the severance or production giving rise to such Asset Taxes occurred, (B) Asset Taxes that are based upon or related to sales or receipts or imposed on a transactional basis (other than such Asset Taxes described in clause

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(A) or (C)), shall be allocated to the period in which the transaction giving rise to such Asset Taxes occurred, and (C) Asset Taxes that are ad valorem, property or other Asset Taxes imposed on a periodic basis pertaining to a Straddle Period shall be allocated between the portion of such Straddle Period ending immediately prior to the Effective Time and the portion of such Straddle Period beginning on the Effective Time by prorating each such Asset Tax based on the number of days in the applicable Straddle Period that occur before the Effective Time, on the one hand, and the number of days in such Straddle Period that occur after the Effective Time, on the other hand. Notwithstanding anything in this Section 12.02(c)(ii) to the contrary, Gross Products Taxes shall be deemed attributable to the period during which the production giving rise to the Gross Products Taxes occurs, and liability therefor apportioned between the Parties in accordance with the production attributable to their relative ownership prior to or after the Effective Time, as applicable. For the avoidance of doubt, (x) Gross Products Taxes based on the value of production of Hydrocarbons that occurs prior to the Effective Time, shall be allocated entirely to Seller and (y) Gross Products Taxes based on the value of production of Hydrocarbons that occurs after the Effective Time and payable in 2018 and 2019 (“ Post-Closing Gross Products Taxes ”) shall be allocated entirely to Buyer.
(iii)
To the extent the actual amount of an Asset Tax is not known at the time an adjustment is to be made with respect to such Asset Tax pursuant to Section 2.03 , Section 2.05(c) or Section 2.05(d) , as applicable, the Parties shall utilize the most recent information available in estimating the amount of such Asset Tax for purposes of such adjustment. To the extent the actual amount of an Asset Tax (or the amount thereof paid or economically borne by a Party) is ultimately determined to be different than the amount (if any) that was taken into account in the Final Settlement Statement as finally determined pursuant to Section 2.05(d) , timely payments will be made from one Party to the other to the extent necessary to cause each Party to bear the amount of such Asset Tax that is allocable to such Party under this Section 12.02(c) .
(d)
Tax Returns and Payments . Except as required by applicable Legal Requirements:
(i)
Seller shall be responsible for timely paying, or withholding and remitting, as applicable, (A) all Asset Taxes that are based on production of Hydrocarbons occurring on or prior to the Closing Date (including, for the avoidance of doubt, all Gross Products Taxes attributable to production that occurs prior to January 1, 2017, and all 2017 Gross Products Taxes attributable to production that occurs from January 1, 2017 through and including the Closing Date), (B) all Asset Taxes (other than the Asset Taxes described in clause (A)) that are ad valorem or property Taxes imposed on a periodic basis relating to any Tax period that ends before or includes the Effective Time, and (C) all other Asset Taxes required to be paid on or prior to the Closing Date, and Seller shall file with the appropriate Governmental Body any and all Tax Returns required to be filed with respect to such Asset Taxes.

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(ii)
Buyer shall be responsible for timely paying, or withholding and remitting, as applicable, (A) all Asset Taxes that are based on production of Hydrocarbons occurring after the Closing Date through December 31, 2017 (including, for the avoidance of doubt, all 2017 Gross Products Taxes attributable to production that occurs after the Closing Date through December 31, 2017) and (B) all other Asset Taxes relating to any Tax period that ends before or includes the Effective Time that are required to be paid after the Closing Date (except, in each case, to the extent such Taxes are required to be paid, withheld or remitted by Seller in accordance with Section 12.02(d)(i) ), and Buyer shall file with the appropriate Governmental Body any and all Tax Returns required to be filed with respect to such Asset Taxes. Buyer shall prepare all such Tax Returns relating to any Tax period ending before or including the Effective Time on a basis consistent with past practice except to the extent otherwise required by applicable Legal Requirements. Buyer shall provide Seller with a copy of any such Tax Return for Seller’s review reasonably in advance of the due date for the filing of such Tax Return, and Buyer shall incorporate all reasonable comments of Seller provided to Buyer in advance of the due date for the filing of such Tax Return.
(e)
The Parties agree that (x) this Section 12.02(d) is intended to solely address the timing and manner in which certain Tax Returns relating to Asset Taxes are filed and the Asset Taxes shown thereon are paid to the applicable taxing authority, and (y) nothing in this Section 12.02(d) shall be interpreted as altering the manner in which Asset Taxes are allocated to and economically borne by the Parties.
(f)
Cooperation . Buyer and Seller agree to furnish or cause to be furnished to the other, upon request, as promptly as practicable, such information and assistance relating to the Assets, including access to books and records, as is reasonably necessary for the filing of all Tax Returns by Buyer or Seller, the making of any election relating to Taxes, the preparation for any audit by any taxing authority and the prosecution or defense of any claim, suit or proceeding relating to any Tax. The Parties agree to retain all books and records with respect to Tax matters pertinent to the Assets relating to any Tax period beginning before the Closing Date until sixty (60) days after the expiration of the statute of limitations of the respective Tax periods (taking into account any extensions thereof) and to abide by all record retention agreements entered into with any taxing authority.
(g)
Refunds . Seller shall be entitled to any and all refunds of Asset Taxes allocated to Seller pursuant to Section 12.02(c) , and Buyer shall be entitled to any and all refunds of Asset Taxes allocated to Buyer pursuant to Section 12.02(c) .  If a Party receives a refund of Asset Taxes to which the other Party is entitled pursuant to this Section 12.02(f) , the first Party shall promptly pay such amount to the other Party, net of any reasonable costs or expenses incurred by the first Party in procuring such refund.
12.03      Notices. All notices, consents, waivers, and other communications under this Agreement must be in writing and shall be deemed to have been duly given when (a) delivered by hand (with written confirmation of receipt), (b) sent by fax (with written confirmation of receipt), (c) sent by electronic mail with receipt acknowledged, with the receiving Party affirmatively obligated to promptly acknowledge receipt, or (d) when received by the addressee,

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if sent by a nationally recognized overnight delivery service (receipt requested), in each case to the appropriate recipients, addresses, and fax numbers set forth below (or to such other recipients, addresses, or fax numbers as a Party may from time to time designate by notice to the other Party):
NOTICES TO BUYER :
 
Denbury Onshore, LLC
5320 Legacy Dr.
Plano, TX 75024
Attention:
John Kleckner
 
James S. Matthews
Fax:  (972) 535-4708
E-mail:
john.kleckner@denbury.com
 
jim.matthews@denbury.com
 
With a copy (which shall not constitute notice) to:
 
Sidley Austin LLP
2021 McKinney Avenue, Suite 2000
Dallas, TX 75201
Attention:  Marc Rose
Fax: 214-981-3400
Email:  mrose@sidley.com
 
NOTICES TO SELLER:
 
c/o Linn Energy Holdings, LLC  
600 Travis Street, Suite 5100
Houston, Texas 77002  
Attention: Candice J. Wells, General Counsel
Fax: (832) 726-5955
E-mail: CWells@linnenergy.com
 
With a copy (which shall not constitute notice) to:
 
Kirkland & Ellis LLP
600 Travis Street, 33rd Floor
Houston, TX 77002
Attention:
Anthony Speier, P.C.
 
Rahul Vashi
Fax: (713) 835-3601
E-mail:
anthony.speier@kirkland.com
 
rahul.vashi@kirkland.com


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12.04      Governing Law; Jurisdiction; Service of Process; Jury Waiver. THIS AGREEMENT AND ANY CLAIM, CONTROVERSY OR DISPUTE ARISING UNDER OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THE RIGHTS, DUTIES AND THE LEGAL RELATIONS AMONG THE PARTIES HERETO AND THERETO SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, EXCLUDING ANY CONFLICTS OF LAW RULE OR PRINCIPLE THAT MIGHT REFER CONSTRUCTION OF SUCH PROVISIONS TO THE LAWS OF ANOTHER JURISDICTION; PROVIDED, HOWEVER, THAT ANY MATTERS RELATED TO REAL PROPERTY SHALL BE GOVERNED BY THE LAWS OF THE STATE OF WYOMING. WITHOUT LIMITING THE PARTIES’ AGREEMENT TO ARBITRATE IN SECTION 11.15 OR THE DISPUTE RESOLUTION PROCEDURE PROVIDED IN SECTION 2.05(D) WITH RESPECT TO DISPUTES ARISING THEREUNDER, THE PARTIES HERETO CONSENT TO THE EXERCISE OF JURISDICTION IN PERSONAM BY THE FEDERAL COURTS OF THE UNITED STATES LOCATED IN HOUSTON, TEXAS OR THE STATE COURTS LOCATED IN HOUSTON, TEXAS FOR ANY ACTION ARISING OUT OF THIS AGREEMENT, ANY TRANSACTION DOCUMENTS, OR ANY TRANSACTION CONTEMPLATED HEREBY OR THEREBY. ALL ACTIONS OR PROCEEDINGS WITH RESPECT TO, ARISING DIRECTLY OR INDIRECTLY IN CONNECTION WITH, OUT OF, RELATED TO, OR FROM THIS AGREEMENT, ANY TRANSACTION DOCUMENTS OR ANY TRANSACTION CONTEMPLATED HEREBY OR THEREBY SHALL BE EXCLUSIVELY LITIGATED IN SUCH COURTS DESCRIBED ABOVE HAVING SITES IN HOUSTON, TEXAS AND EACH PARTY IRREVOCABLY SUBMITS TO THE JURISDICTION OF SUCH COURTS SOLELY IN RESPECT OF ANY PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT. EACH PARTY HERETO VOLUNTARILY, INTENTIONALLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LEGAL REQUIREMENTS, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY ACTION, SUIT OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY TRANSACTION DOCUMENTS OR ANY TRANSACTION CONTEMPLATED HEREBY OR THEREBY. THE PARTIES FURTHER AGREE, TO THE EXTENT PERMITTED BY LAW, THAT A FINAL AND NONAPPEALABLE JUDGMENT AGAINST A PARTY IN ANY ACTION OR PROCEEDING CONTEMPLATED ABOVE SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN ANY OTHER JURISDICTION WITHIN OR OUTSIDE THE UNITED STATES BY SUIT ON THE JUDGMENT, A CERTIFIED OR EXEMPLIFIED COPY OF WHICH SHALL BE CONCLUSIVE EVIDENCE OF THE FACT AND AMOUNT OF SUCH JUDGMENT. TO THE EXTENT THAT A PARTY OR ANY OF ITS AFFILIATES HAS ACQUIRED, OR HEREAFTER MAY ACQUIRE, ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION, EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, SUCH PARTY (ON ITS OWN BEHALF AND ON BEHALF OF ITS AFFILIATES) HEREBY IRREVOCABLY (I) WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS

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WITH RESPECT TO THIS AGREEMENT AND (II) SUBMITS TO THE PERSONAL JURISDICTION OF ANY COURT DESCRIBED IN THIS SECTION 12.04 .
12.05      Further Assurances. Each Party agrees (a) to furnish upon request to each other such further information, (b) to execute, acknowledge, and deliver to each other such other documents, and (c) to do such other acts and things, all as the other Party may reasonably request for the purpose of carrying out the intent of this Agreement and the documents referred to in this Agreement.
12.06      Waiver. The rights and remedies of the Parties are cumulative and not alternative. Neither the failure nor any delay by either Party in exercising any right, power, or privilege under this Agreement or the documents referred to in this Agreement shall operate as a waiver of such right, power, or privilege, and no single or partial exercise of any such right, power, or privilege shall preclude any other or further exercise of such right, power, or privilege or the exercise of any other right, power, or privilege. To the maximum extent permitted by applicable Legal Requirement, (a) no claim or right arising out of this Agreement or the documents referred to in this Agreement can be discharged by one Party, in whole or in part, by a waiver or renunciation of the claim or right unless in writing signed by the other Party, (b) no waiver that may be given by a Party shall be applicable except in the specific instance for which it is given, and (c) no notice to or demand on one Party shall be deemed to be a waiver of any obligation of such Party or of the right of the Party giving such notice or demand to take further action without notice or demand as provided in this Agreement or the documents referred to in this Agreement.
12.07      Entire Agreement and Modification. Subject to Section 12.13 , this Agreement supersedes all prior discussions, communications, and agreements (whether oral or written) between the Parties with respect to its subject matter and constitutes (along with the documents referred to in this Agreement) a complete and exclusive statement of the terms of the agreement between the Parties with respect to its subject matter. This Agreement may not be amended or otherwise modified except by a written agreement executed by both Parties. No representation, promise, inducement, or statement of intention with respect to the subject matter of this Agreement has been made by either Party that is not embodied in this Agreement together with the documents, instruments, and writings that are delivered pursuant hereto, and neither Party shall be bound by or liable for any alleged representation, promise, inducement, or statement of intention not so set forth. In the event of a conflict between the terms and provisions of this Agreement and the terms and provisions of any Schedule or Exhibit hereto, the terms and provisions of this Agreement shall govern, control, and prevail.
12.08      Assignments, Successors, and No Third Party Rights. Neither Party may assign any of its rights, liabilities, covenants, or obligations under this Agreement without the prior written consent of the other Party (which consent may be granted or denied at the sole discretion of the other Party); provided that Buyer (without the consent of Seller) may assign all or part of its rights under this Agreement (including its rights to receive the Assets) to one or more Affiliates, and (a) any assignment (other than an assignment by Buyer to an Affiliate) made without such consent shall be void, and (b) in the event of such consent (or an assignment by Buyer to an Affiliate), such assignment nevertheless shall not relieve such assigning Party of any of its obligations under this Agreement without the prior written consent of the other Party. Subject to the preceding sentence, this Agreement shall apply to, be binding in all respects upon,

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and inure to the benefit of the successors and permitted assigns of the Parties. Nothing expressed or referred to in this Agreement or any other agreement contemplated herein shall be construed to give any Person other than the Parties and their permitted assignees (and Buyer Group and Seller Group who are entitled to indemnification under Article 10 ), any legal or equitable right, remedy, or claim under or with respect to this Agreement or any provision of this Agreement. Subject to the preceding sentence, this Agreement, any other agreement contemplated herein, and all provisions and conditions hereof and thereof, are for the sole and exclusive benefit of the Parties and such other agreements (and Buyer Group and Seller Group who are entitled to indemnification under Article 10 ), and their respective successors and permitted assigns.
12.09      Severability. If any provision of this Agreement is held invalid or unenforceable by any court of competent jurisdiction, the other provisions of this Agreement shall remain in full force and effect. Any provision of this Agreement held invalid or unenforceable only in part or degree shall remain in full force and effect to the extent not held invalid or unenforceable. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the extent possible.
12.10      Article and Section Headings, Construction. The headings of Sections, Articles, Exhibits, and Schedules in this Agreement are provided for convenience only and shall not affect its construction or interpretation. All references to “Section,” “Article,” “Exhibit,” or “Schedule” refer to the corresponding Section, Article, Exhibit, or Schedule of this Agreement. Unless expressly provided to the contrary, the words “hereunder,” “hereof,” “herein,” and words of similar import are references to this Agreement as a whole and not any particular Section, Article, Exhibit, Schedule, or other provision of this Agreement. Each definition of a defined term herein shall be equally applicable both to the singular and the plural forms of the term so defined. All words used in this Agreement shall be construed to be of such gender or number, as the circumstances require. Unless otherwise expressly provided, the word “including” does not limit the preceding words or terms and (in its various forms) means including without limitation. If the date specified in this Agreement for giving any notice or taking any action is not a Business Day (or if the period during which any notice is required to be given or any action taken expires on a date which is not a Business Day), then the date for giving such notice or taking such action (or the expiration date of such period during which notice is required to be given or action taken) shall be the next day which is a Business Day. Each Party has had substantial input into the drafting and preparation of this Agreement and has had the opportunity to exercise business discretion in relation to the negotiation of the details of the Contemplated Transactions. This Agreement is the result of arm’s-length negotiations from equal bargaining positions. This Agreement shall not be construed against either Party, and no consideration shall be given or presumption made on the basis of who drafted this Agreement or any particular provision hereof or who supplied the form of Agreement.
12.11      Counterparts. This Agreement may be executed and delivered (including by facsimile or e-mail transmission) in one or more counterparts, each of which shall be deemed to be an original copy of this Agreement and all of which, when taken together, shall be deemed to constitute one and the same agreement.

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12.12      Press Release. Subject to Section 12.13 , any Party wishes to make a press release or other public announcement respecting this Agreement or the Contemplated Transactions, such Party will provide the others with a draft of the press release or other public announcement for review at least one (1) Business Days prior to the time that such press release or other public announcement is to be made. The Parties will attempt in good faith to expeditiously reach agreement on such press release or other public announcement and the contents thereof; provided that failure to reach such agreement shall not prohibit a Party from (a) making a press release or public announcement that does not include the other Party’s name or (b) making any filings or disclosures required by Legal Requirements or any standards or rules of any stock exchange to which such Party or any of its Affiliates is subject. Failure to provide comments back to the other Party within two (2) Business Days of receipt of the draft release or announcement will be deemed consent to the public disclosure of such press release or other public announcement and the content thereof. Seller and Buyer shall each be liable for the compliance of their respective Affiliates with the terms of this Section 12.12 . Notwithstanding anything to the contrary in this Section 12.12 , no Party shall issue a press release or other public announcement that includes the name of a non-releasing Party or its Affiliates without the prior written consent of such non-releasing Party (which consent may be withheld in such non-releasing Party’s sole discretion).
12.13      Confidentiality. The Confidentiality Agreement shall terminate on the Closing Date and will thereafter be of no further force or effect. Each Party shall keep confidential, and cause its Affiliates and instruct its Representatives to keep confidential, all terms and provisions of this Agreement, except (a) as required by Legal Requirements or any standards or rules of any stock exchange to which such Party or any of its Affiliates is subject, (b) for information that is available to the public on the Closing Date, or thereafter becomes available to the public other than as a result of a breach of this Section 12.13 , (c) to the extent required to be disclosed in connection with complying with or obtaining a waiver of any Preferential Purchase Right or Consent, (d) to any Affiliate or Representative, (e) in the case of Buyer, to any potential purchase of (or joint venture partner with respect to) all or any portion of the Assets and any direct and/or indirect (current or potential) investor or lender, and (f) to the extent that such Party must disclose the same in any Proceeding brought or Threatened by or against it to enforce or defend its rights under this Agreement. This Section 12.13 shall not prevent either Party from recording the Instruments of Conveyance delivered at the Closing or from complying with any disclosure requirements of Governmental Bodies that are applicable to the transfer of the Assets. Additionally, from and after the Closing, Seller shall keep confidential and not use any of the Records other than for tax purposes or in connection with any Proceeding or Threatened Proceeding against Seller. The covenant set forth in this Section shall terminate two (2) years after the Closing Date.
12.14      Name Change. As promptly as practicable, but in any event within sixty (60) days after the Closing Date, Buyer shall eliminate, remove or paint over the use of the name “Linn” and variants thereof from the Assets, and, except with respect to such grace period for eliminating the existing usage, shall have no right to use any logos, trademarks, or trade names belonging to Seller or any of its Affiliates. Buyer shall be solely responsible for any direct or indirect costs or expenses resulting from the change in use of name and any resulting notification or approval requirements.

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12.15      Preparation of Agreement. Both Seller and Buyer and their respective counsel participated in the preparation of this Agreement. In the event of any ambiguity in this Agreement, no presumption shall arise based on the identity of the draftsman of this Agreement.
12.16      Appendices, Exhibits and Schedules. All of the Appendices, Exhibits and Schedules referred to in this Agreement are hereby incorporated into this Agreement by reference and constitute a part of this Agreement. Each Party to this Agreement and its counsel has received a complete set of Appendices, Exhibits and Schedules prior to and as of the execution of this Agreement.
12.17      Specific Performance. Each Party hereby acknowledges and agrees that the rights of each Party to consummate the Contemplated Transactions are special, unique and of extraordinary character and that, if before Closing, Seller, or after Closing, Buyer or Seller, violates or fails or refuses to perform any covenant or agreement made by it herein, the non-breaching Parties may be without an adequate remedy at Law. If before Closing, Seller, or after Closing, Buyer or Seller, violates or fails or refuses to perform any covenant or agreement made by such Party herein, the non-breaching Parties, subject to the terms hereof and in addition to any remedy at Law for damages or other relief permitted under this Agreement, may (at any time prior to the valid termination of this Agreement pursuant to Article 9) institute and prosecute an action in any court of competent jurisdiction to enforce specific performance of such covenant or agreement or seek any other equitable relief, without the necessity of proving actual damages or posting of a bond. For clarity, Seller shall only have the right to seek specific performance of Buyer’s covenants and agreements contained herein following the Closing.
12.18      Non-Recourse. This Agreement may only be enforced against, and any Damages based upon, arising out of, or related to this Agreement or the negotiation, execution or performance of this Agreement may only be brought against, the entities that are expressly named as Parties hereto and then only with respect to the specific obligations set forth herein or therein with respect to such Party.  For further clarity, no past, present or future director, manager, officer, employee, incorporator, member, partner, stockholder, Affiliate, agent, attorney or other representative (in each case, in their capacities as such) of any Party hereto or of any Affiliate of any Party hereto or any such past, present or future director, manager, officer, employee, incorporator, member, partner, stockholder, Affiliate, agent, attorney or other representative (in each case, in their capacities as such) (collectively, a “Party Affiliate”), or any of their successors or permitted assigns, shall have any liability for any obligations or liabilities of any Party hereto or thereto under this Agreement or for any Damages based on, in respect of or by reason of the transactions contemplated hereby or thereby.
[ Signature Page Follows ]


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IN WITNESS WHEREOF, the Parties have executed and delivered this Agreement as of the date first written above.

 
SELLER :
 
 
 
Linn Energy Holdings, LLC
 
 
 
 
 
By:
/s/ David B. Rottino
 
Name:
David B. Rottino
 
Title:
Executive Vice President and Chief Financial Officer
 
 
 
 
 
Linn Operating, LLC
 
 
 
 
 
By:
/s/ David B. Rottino
 
Name:
David B. Rottino
 
Title:
Executive Vice President and Chief Financial Officer
 
 

Signature Page to Purchase and Sale Agreement




 
BUYER :
 
 
 
Denbury Onshore, LLC
 
 
 
 
 
By:
/s/ Matthew Dahan
 
Name:
Matthew Dahan
 
Title:
Vice President – North Region Production Operations
 
 



Signature Page to Purchase and Sale Agreement


Exhibit 2.4
Execution Version

FIRST AMENDMENT TO
PURCHASE AND SALE AGREEMENT
This First Amendment to Purchase and Sale Agreement (this “ Amendment ”), dated as of June 30, 2017, is made and entered into by and among Linn Energy Holdings, LLC, a Delaware limited liability company, and Linn Operating, LLC, a Delaware limited liability company (collectively, “ Seller ”) and Denbury Onshore, LLC, a Delaware limited liability company (“ Buyer ”). Seller and Buyer are each referred to as a “ Party ” and collectively referred to as the “ Parties .” Capitalized terms used but not defined in this Amendment shall have the meanings given to such terms in the PSA (as hereinafter defined).
WHEREAS , Seller and Buyer are parties to that certain Purchase and Sale Agreement, dated as of May 25, 2017 (as amended by this Amendment and as further amended from time to time, the “ PSA ”); and
WHEREAS , the Parties desire to amend the PSA as more specifically set forth in this Amendment.
NOW, THEREFORE , in consideration of the closing of the transactions contemplated under the PSA, the mutual promises and covenants set forth herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:
1. Amendments to the PSA. Pursuant to Section 12.07 of the PSA and notwithstanding anything to the contrary in the PSA, the following amendments to the PSA are made effective as of the Execution Date:
(a)      Exhibit A to the PSA is hereby deleted in its entirety and replaced with Exhibit A attached hereto; and
(b)      Exhibit B to the PSA is hereby deleted in its entirety and replaced with Exhibit B attached hereto.
2.      Defect Notice Waiver . Buyer hereby waives all Title Defects asserted in that certain Title Defect Notice delivered by Buyer to Seller on June 26, 2017.
3.      Compliance with PSA . The Parties acknowledge that this Amendment complies with the requirements to alter or amend the PSA, as stated in Section 12.07 of the PSA. The PSA, as amended herein, is ratified and confirmed, and all other terms and conditions of the PSA not modified by this the Amendment shall remain in full force and effect. All references to the PSA shall be considered to be references to the PSA as modified by Amendment.
4.      Incorporation . The Parties acknowledge that this Amendment shall be governed by the terms of Article XII of the Purchase Agreement and such provisions shall be incorporated herein, mutatis mutandis .

1


5.      Counterparts . This Amendment may be executed and delivered (including by facsimile or e-mail transmission) in one or more counterparts, each of which shall be deemed to be an original copy of this Amendment and all of which, when taken together, shall be deemed to constitute one and the same agreement.
[ Signature pages follow .]


2



IN WITNESS WHEREOF, the Parties have executed and delivered this Amendment as of the date first written above.
 
SELLER :
 
 
 
Linn Energy Holdings, LLC
 
 
 
 
 
 
 
By:
/s/ Carlos A. De Ayala
 
 
 
Name: Carlos A. De Ayala
 
 
 
Title: Vice President, Business Development and Strategy Planning
 
 
 
 
 
 
 
Linn Operating, LLC
 
 
 
 
 
 
 
By:
/s/ Carlos A. De Ayala
 
 
 
Name: Carlos A. De Ayala
 
 
 
Title: Vice President, Business Development and Strategy Planning


[ Signature Page to First Amendment to Purchase and Sale Agreement ]




 
BUYER :
 
 
 
Denbury Onshore, LLC
 
 
 
 
 
By:
/s/ John Kleckner
 
 
 
Name: John Kleckner
 
 
 
Title: Director - Acquisitions and Divestitures


[ Signature Page to First Amendment to Purchase and Sale Agreement ]

Exhibit 2.5
Execution Version




PURCHASE AND SALE AGREEMENT
DATED JUNE 1, 2017,
BY AND BETWEEN
LINN ENERGY HOLDINGS, LLC, LINN OPERATING, LLC, AND LINN MIDSTREAM, LLC
AS SELLER,
AND
BRIDGE ENERGY LLC
AS BUYER




US-DOCS\87282901.7



TABLE OF CONTENTS
ARTICLE 1 DEFINITIONS
1
ARTICLE 2 SALE AND TRANSFER OF ASSETS; CLOSING
22
2.01
Assets
22
2.02
Purchase Price; Deposit
22
2.03
Closing; Preliminary Settlement Statement
22
2.04
Closing Obligations
23
2.05
Allocations and Adjustments
24
2.06
Assumption
28
2.07
Allocation of Purchase Price
29
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF SELLER
29
3.01
Organization and Good Standing
29
3.02
Authority; No Conflict
30
3.03
Bankruptcy
31
3.04
Taxes
31
3.05
Legal Proceedings
31
3.06
Brokers
31
3.07
Compliance with Legal Requirements
31
3.08
Prepayments
31
3.09
Imbalances
32
3.10
Material Contracts
32
3.11
Consents and Preferential Purchase Rights
33
3.12
Permits
33
3.13
Current Commitments
33
3.14
Environmental Laws
33
3.15
Wells
34
3.16
Non-Consent Operations
34
3.17
Condemnation and Eminent Domain
34
3.18
Payment of Royalties; Compliance with Leases
34
3.19
Bonds and Credit Support
34
3.20
Payout Status
34
3.21
Employee Benefits
35
3.22
Suspense Accounts
35
3.23
Drilling Obligations
35
3.24
Disclosures with Multiple Applicability; Materiality
35
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF BUYER
36
4.01
Organization and Good Standing
36
4.02
Authority; No Conflict
36
4.03
Certain Proceedings
37
4.04
Knowledgeable Investor
37
4.05
Qualification
37
4.06
Brokers
37
4.07
Financial Ability
37


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4.08
Securities Laws
37
4.09
Due Diligence
38
4.10
Basis of Buyer’s Decision
38
4.11
Business Use, Bargaining Position
38
4.12
Bankruptcy
39
ARTICLE 5 COVENANTS OF SELLER
39
5.01
Access and Investigation
39
5.02
Operation of the Assets
40
5.03
Insurance
42
5.04
Consent and Waivers
42
5.05
Amendment to Schedules
42
5.06
Successor Operator
42
ARTICLE 6 OTHER COVENANTS
43
6.01
Notification and Cure
43
6.02
Satisfaction of Conditions
43
6.03
Replacement of Insurance, Bonds, Letters of Credit, and Guaranties
43
6.04
Governmental Reviews
44
6.05
Financing Matters
44
6.06
HSR Act
46
6.07
Override Assignment
46
ARTICLE 7 CONDITIONS PRECEDENT TO BUYER’S OBLIGATION TO CLOSE
47
7.01
Accuracy of Representations
47
7.02
Seller’s Performance
47
7.03
No Proceedings
47
7.04
No Orders
47
7.05
Necessary Consents and Approvals
47
7.06
HSR Act
48
7.07
Closing Deliverables
48
ARTICLE 8 CONDITIONS PRECEDENT TO SELLER’S OBLIGATION TO CLOSE
48
8.01
Accuracy of Representations
48
8.02
Buyer’s Performance
48
8.03
No Proceedings
48
8.04
No Orders
48
8.05
Necessary Consents and Approvals
48
8.06
HSR Act
48
8.07
Closing Deliverables
49
ARTICLE 9 TERMINATION
49
9.01
Termination Events
49
9.02
Effect of Termination; Distribution of the Deposit Amount
50
9.03
Return of Records Upon Termination
52
ARTICLE 10 INDEMNIFICATION; REMEDIES
52

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10.01
Survival
52
10.02
Indemnification and Payment of Damages by Seller
53
10.03
Indemnification and Payment of Damages by Buyer
54
10.04
Indemnity Net of Insurance
54
10.05
Limitations on Liability
55
10.06
Procedure for Indemnification‑‑Third Party Claims
55
10.07
Procedure for Indemnification – Other Claims
56
10.08
Indemnification of Group Members
56
10.09
Extent of Representations and Warranties
56
10.10
Compliance With Express Negligence Test
57
10.11
Limitations of Liability
58
10.12
No Duplication
58
10.13
Disclaimer of Application of Anti-Indemnity Statutes
58
10.14
Waiver of Right to Rescission
58
10.15
Joint and Several
58
ARTICLE 11 TITLE MATTERS AND ENVIRONMENTAL MATTERS; PREFERENTIAL PURCHASE RIGHTS; CONSENTS
59
11.01
Title Examination and Access
59
11.02
Preferential Purchase Rights
59
11.03
Consents
59
11.04
Title Defects
60
11.05
Title Defect Value
61
11.06
Seller’s Cure or Contest of Title Defects
62
11.07
Limitations on Adjustments for Title Defects
63
11.08
Title Benefits
63
11.09
Buyer’s Environmental Assessment
64
11.10
Environmental Defect Notice
65
11.11
Seller’s Exclusion, Cure or Contest of Environmental Defects
65
11.12
Limitations
66
11.13
Exclusive Remedies
67
11.14
Casualty Loss and Condemnation
67
11.15
Expert Proceedings
67
ARTICLE 12 EMPLOYMENT MATTERS
69
12.01
Seller Benefit Plans
69
12.02
Pre-Employee Start Date Claims under Seller Benefit Plans
69
12.03
Available Employees’ Offers and Post-Employee Start Date Employment and Benefits
69
12.04
Savings Plans
71
12.05
Post-Employee Start Date Employment Claims
71
12.06
Buyer Welfare Plans
71
12.07
WARN Act
71
12.08
No Third Party Beneficiary Rights
72
12.09
Severance Obligation
72
ARTICLE 13 GENERAL PROVISIONS
72


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13.01
Records
72
13.02
Expenses
72
13.03
Notices
74
13.04
Governing Law; Jurisdiction; Service of Process; Jury Waiver
75
13.05
Further Assurances
77
13.06
Waiver
77
13.07
Entire Agreement and Modification
77
13.08
Assignments, Successors, and No Third Party Rights
77
13.09
Severability
78
13.10
Article and Section Headings, Construction
78
13.11
Counterparts
78
13.12
Press Release
79
13.13
Confidentiality
79
13.14
Name Change
79
13.15
Preparation of Agreement
80
13.16
Appendices, Exhibits and Schedules
80


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EXHIBITS AND SCHEDULES
Exhibit A
Leases
Exhibit A-1
Reserved
Exhibit A-2
Fee Minerals
Exhibit A-3
Easements and Surface Interests
Exhibit A-4
Field Offices and Other Real Property
Exhibit A-5
Pipeline and Gathering Systems
Exhibit A-6
Surface Deeds
Exhibit A-7
Vehicles
Exhibit B
Wells
Exhibit C
Personal Property
Exhibit D
Form of Assignment and Bill of Sale
Exhibit E
Excluded Assets
Exhibit F
Severance Plan
Exhibit G
Form of Deed
Exhibit H
Form of Certificate
Exhibit I
Reserved
Exhibit J
Available Employee Limits
Exhibit K
Transition Services Agreement
 
 
Schedule 1.1(a)
Carbon Credits
Schedule 2.02(b)
Operating Contingencies
Schedule 2.07(a)
Allocation of Purchase Price
Schedule 2.07(b)
Secondary Allocation of Purchase Price
Schedule 3.02(b)
No Conflict
Schedule 3.04
Taxes
Schedule 3.05
Assumed Litigation and Retained Litigation
Schedule 3.07
Compliance with Legal Requirements
Schedule 3.09
Imbalances
Schedule 3.10
Material Contracts
Schedule 3.11
Consents and Preferential Purchase Rights
Schedule 3.12
Permits
Schedule 3.13
Current Commitments
Schedule 3.14
Environmental Laws
Schedule 3.15
Wells
Schedule 3.18
Payment of Royalties; Compliance with Leases
Schedule 3.19
Bonds and Credit Support
Schedule 3.20
Payout Status
Schedule 3.21(a)
Employee Benefits
Schedule 3.22
Suspense Accounts
Schedule 5.02
Certain Authorized Pre-Closing Actions

v
US-DOCS\87282901.7



PURCHASE AND SALE AGREEMENT
This PURCHASE AND SALE AGREEMENT (this “ Agreement ”) is made as of June 1, 2017 (the “ Execution Date ”), by and between Linn Energy Holdings, LLC, a Delaware limited liability company (“ LEH ”), Linn Operating, LLC, a Delaware limited liability company (“ LOI ”), and Linn Midstream, LLC, a Delaware limited liability company, (“ LM ” and together with LEH and LOI the “ Seller ”), and Bridge Energy LLC a Delaware limited liability company, (“ Buyer ”). Seller and Buyer are sometimes hereinafter referred to individually as a “ Party ” and collectively as the “ Parties .”
RECITAL
Seller desires to sell, and Buyer desires to purchase, all of Seller’s right, title and interest in and to certain oil and gas properties and related assets and contracts, effective as of the Effective Time, for the consideration and on the terms set forth in this Agreement.
AGREEMENT
For and in consideration of the promises contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, agree as follows:
ARTICLE 1
DEFINITIONS
For purposes of this Agreement, in addition to other capitalized terms defined in this Agreement, the following terms have the meanings specified or referred to in this Article 1 when capitalized:
AAA ” – the American Arbitration Association.
Accounting Expert ” - as defined in Section 2.05(d) .
Aera Lease ” – that certain oil and gas lease entered into as of February 1, 2007 by and among Aera Energy, LLC, Linn Energy, LLC, Linn Energy Holdings, LLC, Linn Western Operating, Inc., and Blacksand Energy, LLC.
Aera Sinking Fund ” – that certain sinking fund account established pursuant to that certain Sinking Fund Trust Agreement effective as of February 1, 2007 by and among Linn Energy, LLC, Linn Energy Holdings, LLC, Linn Western Operating, Inc., Blacksand Energy, LLC and Aera Energy LLC, which is checking account number 2000035845843 and savings account number 2000035845898 in the name of Linn Operating, LLC at Well Fargo Bank, N.A.
AFE ” – as defined in Section 3.13 .
Affiliate ” – with respect to a Party, any Person directly or indirectly controlled by, controlling, or under common control with, such Party, including any subsidiary of such Party and any “affiliate” of such Party within the meaning of Reg. §240.12b-2 of the Securities

1

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Exchange Act of 1934, as amended. As used in this definition, “control” means possession, directly or indirectly, of the power to direct or cause the direction of management, policies, or action through ownership of voting securities, contract, voting trust, or membership in management or in the group appointing or electing management or otherwise through formal or informal arrangements or business relationships, provided however, that KKR & Co. L.P. and its affiliates, including any portfolio companies of investment funds controlled by affiliates of KKR & Co. L.P. (other than Buyer and any wholly-owned subsidiaries of Buyer) shall not be deemed to be an Affiliate of Buyer for purposes of this Agreement.  T he terms “controlled by,” “controlling,” and other derivatives shall be construed accordingly.
Aggregate Defect Deductible ” – an amount equal to two and one-half percent (2.5%) of the unadjusted Purchase Price.
Aggregate Environmental Defect Value ” – as defined in Section 11.12 .
Aggregate Title Defect Value ” – as defined in Section 11.07 .
Allocated Values ” – the values assigned among the Assets as set forth on Schedule 2.07(a) .
Alternative Financial Statement ” – as defined in Section 6.05(a)(ii) .
Annual Financial Statements ” – as defined in Section 6.05(b)(i) .
Applicable Contracts ” – all Contracts to which Seller is a party or is bound that primarily relate to any of the Assets and (in each case) that will be binding on Buyer after the Closing, including: communitization agreements; net profits agreements; production payment agreements; area of mutual interest agreements; joint venture agreements; confidentiality agreements; farmin and farmout agreements; bottom hole agreements; crude oil, condensate, and natural gas purchase and sale, gathering, transportation, and marketing agreements; hydrocarbon storage agreements; acreage contribution agreements; operating agreements; balancing agreements; pooling declarations or agreements; unitization agreements; processing agreements; saltwater disposal agreements; facilities or equipment leases; and other similar contracts and agreements, but exclusive of any master service agreements and Contracts to the extent relating to the Excluded Assets.
Asset Taxes ” – ad valorem, property, excise, severance, production, sales, real estate, use, personal property and similar Taxes (including any interest, fine, penalty or additions to tax imposed by Governmental Bodies in connection with such Taxes) based upon the operation or ownership of the Assets, the production of Hydrocarbons or the receipt of proceeds therefrom, but excluding, for the avoidance of doubt, income or franchise Taxes based upon, measured by, or calculated with respect to net income, profits, capital, or similar measures (or multiple bases, including corporate, franchise, business and occupation, business license, or similar Taxes, if net income, profits, capital, or a similar measure is one of the bases on which such Tax is based, measured, or calculated) and Transfer Taxes.
Assets ” – all of Seller’s right, title, and interest in, to, and under the following, without duplication, except to the extent constituting Excluded Assets:

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(a)    all of the oil and gas leases and subleases located in Orange County or Los Angeles County, California (including the oil and gas leases and subleases described in Exhibit A ), together with any and all other right, title and interest of Seller in and to the leasehold estates created thereby subject to the terms, conditions, covenants and obligations set forth in such leases or Exhibit A (such interest in such leases, the “ Leases ”), all related rights and interests in the lands covered by the Leases and any lands pooled or unitized therewith (such lands, the “ Lands ”), and all Royalties applicable to the Leases;
(b)    any and all oil, gas, water, CO2 and disposal wells located on any of the Lands or Fee Minerals (such interest in such wells, including the wells set forth in Exhibit B , the “ Wells ”), and all Hydrocarbons or water produced therefrom or allocated thereto from and after the Effective Time;
(c)    all fee mineral interests within Orange County or Los Angeles County, California, including those described in Exhibit A-2 (such interest, the “ Fee Minerals ”);
(d)    all rights and interests in, under or derived from all unitization and pooling agreements, declarations and orders in effect with respect to any of the Leases, Fee Minerals or Wells and the units created thereby (the “ Units ”);
(e)    to the extent that they may be assigned, transferred or re-issued by Seller (with consent, if applicable, but without the payment of any fee unless Buyer agrees in writing to pay such fee), all permits, licenses, allowances, water rights, registrations, consents, orders, approvals, variances, authorizations, servitudes, easements, rights-of-way, surface leases, other surface and subsurface interests and surface and subsurface rights to the extent appurtenant to or used primarily in connection with the ownership, operation, production, gathering, treatment, processing, storing, sale or disposal of Hydrocarbons or produced water from the Properties or any of the Assets, including those described on Exhibit A-3 (collectively, the “ Easements ”) (the Leases, the Lands, the Fee Minerals, the Units, the Easements and the Wells being collectively referred to hereinafter as the “ Properties ” or individually as a “ Property ”);
(f)    all equipment, machinery, fixtures and other personal, movable and mixed property located on any of the Properties or other Assets that is used primarily in connection therewith, including those items listed in Exhibit C , and including well equipment, casing, tubing, pumps, motors, machinery, platforms, rods, tanks, boilers, fixtures, compression equipment, flowlines, pipelines, gathering systems associated with the Wells, manifolds, processing and separation facilities, pads, structures, materials, and other items primarily used in the operation thereof (collectively, the “ Personal Property ”);
(g)    the real property described on Exhibit A-4 and any Personal Property located thereon;
(h)    all pipelines and gathering systems described on Exhibit A-5 ;
(i)    all surface deeds described on Exhibit A-6 ;
(j)    the vehicles described on Exhibit A-7 ;  

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(k)    all salt water disposal wells and evaporation pits that are located on the Lands;
(l)    to the extent assignable (with consent, if applicable, but without the payment of any fee unless Buyer agrees in writing to pay such fee), all Applicable Contracts and all rights thereunder insofar as and only to the extent relating to the Assets;
(m)    all Imbalances relating to the Assets;
(n)    the Suspense Funds;
(o)    the Specified Receivables;  
(p)    originals (if available, and otherwise copies) and copies in digital form (if available) of all of the books, files, records, information and data, whether written or electronically stored, primarily relating to the Assets in Seller’s possession, including: (i) land and title records (including prospect files, maps, lease records, abstracts of title, title opinions and title curative documents); (ii) Applicable Contract files; (iii) correspondence; (iv) operations, environmental, production, accounting and Asset Tax records (other than, for the avoidance of doubt, those relating to income Taxes or that relate to Seller’s businesses generally); (v) facility and well records; and (vi) to the extent assignable (with consent, if applicable, but without the payment of any fee unless Buyer agrees in writing to pay such fee), geological, geophysical, gravitational, seismic, engineering and technical data (excluding interpretive data) and all Well logs (collectively, “ Records ”);
(q)    all Hydrocarbons in storage or existing in stock tanks, pipelines or plants (including inventory and line fill);
(r)    the Aera Sinking Fund; provided the Aera Sinking Fund will not be assigned and will be treated as an Excluded Asset if the Aera Lease is treated as an Excluded Asset; provided further that the Area Lease will not be assigned and will be treated as an Excluded Asset if the Aera Sinking Fund is treated as an Excluded Asset.
(s)    the carbon dioxide allowances and offset credits described on Schedule 1.1(a) (the “ Carbon Credits ”), which does not include any Carbon Credits actually used by Seller prior to Closing to satisfy Emissions Fees actually imposed against Seller or with respect to the Assets prior to Closing;
(t)    all radio equipment, SCADA and measurement technology, and other production related mobility devices (such as SCADA controllers), well communication devices, and any other information technology systems and licenses associated with the foregoing, in each case only to the extent such assets and licenses are (i) used or held for use solely in connection with the operation of the Properties, (ii) assignable (with consent, if applicable, but without the payment of any fee unless Buyer agrees in writing to pay such fee; provided Seller shall use commercially reasonable efforts to cause the transfer of all such rights and interests to Buyer), and (iii) located on the Property (the “ Production Related IT Equipment ”);

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(u)    to the extent assignable (with consent, if applicable, but without the payment of any fee unless Buyer agrees in writing to pay such fee), all Permits and all rights thereunder insofar as and only to the extent relating to the Assets;
(v)    all Encumbrances securing payment for the sale or other disposition of Hydrocarbons produced from or allocated to the Properties, including the security interests granted under applicable Uniform Commercial Code provisions, but only to the extent that such Encumbrances relate to the period from and after the Effective Time; and
(w)    all rights, claims and causes of action to the extent, and only to the extent, that such rights, claims or causes of action are associated with the Assets as of the Closing Date and (A) relate to the period from and after the Effective Time or (B) relate to both the period prior to the Effective Time and the Assumed Liabilities for which Buyer is responsible, including, all rights of Seller under the Bankruptcy Order issued by the Bankruptcy Court to affirmatively file certain releases of Encumbrances affecting the Assets securing obligations related to periods prior to the Effective Time; provided that, at Buyer’s request, Seller shall use its reasonable efforts to enforce, for the benefit of Buyer, at Buyer’s cost and expense, any right, claim or cause of action that would otherwise be transferred hereunder but is not transferable.
Assignment ” – the Assignment and Bill of Sale from Seller to Buyer, pertaining to the Assets, substantially in the form attached to this Agreement as Exhibit D .
Assumed Liabilities ” – as defined in Section 2.06 .
Assumed Litigation ” – the litigation set forth in Schedule 3.05 Part A.
Available Employee ”– certain employees of Seller or its Affiliates identified in the Employee Letter to whom Buyer may, but shall not be obligated to, make an offer of employment; provided , however that Seller may not identify employees in the Employee Letter beyond the job titles indicated on Exhibit J without approval of the Buyer.
Bankruptcy Cases ” – the bankruptcy cases commenced by the filing by Seller (or its applicable predecessor or Affiliate) for voluntary petitions for relief under chapter 11 of title 11 of the United States Code in the Bankruptcy Court that were jointly administered under Case No. 16-60040.
Bankruptcy Court ” – the United States Bankruptcy Court for the Southern District of Texas, Houston Division.
Breach ” – a “Breach” of a representation, warranty, covenant, obligation, or other provision of this Agreement or any certificate delivered pursuant to Section 2.04(a)(iii) or Section 2.04(b)(iii) of this Agreement shall be deemed to have occurred if there is or has been any inaccuracy in or breach of, or any failure to perform or comply with, such representation, warranty, covenant, obligation, or other provision.
Business Day ” – any day other than a Saturday, Sunday, or any other day on which commercial banks in the State of Texas are authorized or required by law or executive order to close.

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Buyer ” – as defined in the preamble to this Agreement.
Buyer’s Auditor ” – as defined in Section 6.05(b)(i) .
Buyer’s Closing Documents ” – as defined in Section 4.02(a) .
Buyer Group ” – Buyer and its Affiliates, and their respective Representatives.
Buyer Related Parties ” – as defined in Section 9.02(e) .
Buyer Savings Plan ” – as defined in Section 12.04 .
Carbon Credits ” – as set forth in the definition of “Assets”.
Casualty Loss ” – as defined in Section 11.14 .
COBRA ” – as defined in Section 12.06 .
Closing ” – the closing of the Contemplated Transactions.
Closing Date ” – as defined in Section 2.03 .
Code ” – the Internal Revenue Code of 1986, as amended.
Complete Remediation ” – with respect to an Environmental Defect, a remediation or cure of such Environmental Defect which is completed in accordance with the Lowest Cost Response.
Confidentiality Agreement ” – that certain confidentiality agreement dated as of March 4, 2017 by and between Linn Energy Holdings, LLC and Pacific Coast Energy Company LP.
Consent ” – any approval, consent, ratification, waiver, or other authorization (including any Governmental Authorization) from any Person or obligation to provide advance notice to any Person that is required to be obtained in connection with the execution or delivery of this Agreement or the consummation of the Contemplated Transactions.
Contemplated Transactions ” – all of the transactions contemplated by this Agreement, including:
(a)    the sale of the Assets by Seller to Buyer;
(b)    the performance by the Parties of their respective covenants and obligations under this Agreement; and
(c)    Buyer’s acquisition, ownership, and exercise of control over the Assets.
Continuing Employees ” – as defined in Section 12.03(d) .

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Contract ” – any written or oral contract, agreement or any other legally binding arrangement, but excluding, however, any Lease, easement, right-of-way, permit or other instrument creating or evidencing an interest in the Assets or any real or immovable property related to or used in connection with the operations of any Assets.
Contingent Purchase Price ” – as defined in Section 2.02(b) .
Cure ” – as defined in Section 11.06 .
Damages ” – any and all claims, demands, payments, charges, judgments, assessments, losses, liabilities, damages, penalties, fines, expenses, costs, fees, settlements, and deficiencies, including any attorneys’ fees, legal, and other costs and expenses suffered or incurred therewith.
Debt Financing ” – the amendment or replacement by Buyer’s and its Affiliates of their reserve based credit facility and/or any other alternative debt financing incurred or intended to be incurred by Buyer and its Affiliates, in each case, in regards to financing the Contemplated Transactions.
De Minimis Environmental Defect Cost ” – Twenty Five Thousand Dollars ($25,000).
De Minimis Title Defect Cost ” – Twenty Five Thousand Dollars ($25,000).
Deed ” – the Deed from Seller to Buyer, pertaining to the applicable surface fee interests and Fee Minerals included in the Assets, substantially in the form attached to this Agreement as Exhibit G .
Defect Notice Date ” – as defined in Section 11.04 .
Defensible Title ” – record and beneficial title of Seller with respect to the Wells that, as of the Effective Time and Closing Date (for the entire productive life of such Wells) and subject to the Permitted Encumbrances, is deducible of record and/or evidenced by unrecorded instruments or elections, in each case, made or delivered pursuant to joint operating agreements, pooling agreements, unitization agreements or any other Contract, Fee Mineral or Lease and:
(a)    with respect to each currently producing formation set forth in Exhibit B for each Well (in each case, subject to any reservations, limitations or depth restrictions described in Exhibit B) , entitles Seller to receive not less than the Net Revenue Interest set forth in Exhibit B for such producing formation, except for (i) decreases in connection with those operations in which Seller or its successors or assigns may from and after the Execution Date and in accordance with the terms of this Agreement elect to be a non-consenting co-owner as permitted pursuant to this Agreement, (ii) decreases resulting from the establishment or amendment from and after the Execution Date of pools or units in accordance with this Agreement as permitted pursuant to this Agreement, and (iii) decreases required to allow other Working Interest owners to make up past underproduction or pipelines to make up past under deliveries;
(b)    with respect to each currently producing formation set forth in Exhibit B for each Well (in each case, subject to any reservations, limitations or depth restrictions described in Exhibit B ), obligates Seller to bear not more than the Working Interest set forth in Exhibit B for

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such producing formation, except (i) increases resulting from contribution requirements with respect to defaulting co-owners under from and after the Execution Date under applicable operating agreements, or (ii) increases to the extent that such increases are accompanied by a proportionate increase in Seller’s Net Revenue Interest; and
(c)    is free and clear of all Encumbrances.
Deposit Amount ” – Ten percent (10%) of the unadjusted Purchase Price (including any interest accrued thereon).
Discharged Claims ” – all Claims (as defined in 11 U.S.C. § 101(5)) that (i) were discharged in the Bankruptcy Cases and were treated in accordance with the Plan of Reorganization, or (ii) would have been discharged in the Bankruptcy Cases were discharged in the Bankruptcy Cases pursuant to the Plan of Reorganization or otherwise in the event the holder of such Claim had received proper notice of (a) the pendency of the Bankruptcy Cases, (b) the opportunity to timely file a Claim therein, and (c) the opportunity to timely object to the Plan of Reorganization.
Dispute Notice ” – as defined in Section 2.05(d) .
Disputed Matter ” – as defined in Section 11.15(a) .
DOJ ” – the Antitrust Division of the U.S. Department of Justice.
DTPA ” – as defined in Section 4.11 .
Easement ” or “ Easements ” – as set forth in the definition of “Assets”.
Effective Time ” – March 1, 2017, at 12:01 a.m. local time at the location of the Assets.
Emissions Fees” – any taxes, fees or similar payments imposed by any Governmental Body, the amount of which is calculated and/or determined based on emissions from the Assets.
Employee Letter ” – as defined in Section 12.03 .
Employee Start Date ” – with respect to each Continuing Employee (i) who is not on a leave of absence on the Transition Date, the Transition Date and (ii) who is on a Seller-approved leave of absence on the Transition Date, the date on which such employee reports to work at such employee’s work location, provided that such employee reports to work on or prior to the earlier to occur of the first Business Day following the end of the Seller-approved leave period or the twelve (12)-month anniversary of the Closing Date (or, if such anniversary falls on a weekend or holiday, the first Business Day following such anniversary).
Encumbrance ” – any charge, equitable interest, privilege, lien, mortgage, deed of trust, production payment, option, pledge, collateral assignment, security interest, or other arrangement substantially equivalent thereto.

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Environmental Condition ” – any event occurring or condition existing on the Execution Date or on or before the Defect Claim Date with respect to the Assets that causes an Asset (or Seller or its Affiliates with respect to such Asset) to be subject to remediation under, or in violation of, an Environmental Law, the Easements or the Leases or Fee Minerals, other than any such event or condition to the extent caused by or relating to NORM or that was disclosed pursuant to Schedule 3.14 .
Environmental Defect ” – an Environmental Condition discovered by Buyer or its Representatives as a result of any environmental diligence conducted by or on behalf of Buyer pursuant to Section 11.09 of this Agreement.
Environmental Defect Notice ” – as defined in Section 11.10 .
Environmental Defect Value ” – with respect to each Environmental Defect, the amount of the Lowest Cost Response for such Environmental Defect.
Environmental Law ” – any applicable Legal Requirement in effect as of the Execution Date relating to pollution or the protection of the environment, including those Legal Requirements relating to the storage, handling, and use of Hazardous Materials and those Legal Requirements relating to the generation, processing, treatment, storage, transportation, disposal or other management thereof. The term “Environmental Law” does not include (a) good or desirable operating practices or standards that may be voluntarily employed or adopted by other oil and gas well operators or recommended, but not required, by a Governmental Body or (b) the Occupational Safety and Health Act of 1970, 29 U.S.C. § 651 et seq. , as amended, or any other Legal Requirement governing worker safety or workplace conditions, except to the extent that such Legal Requirements expressly address matters related to pollution, the environment or Hazardous Materials.
Environmental Liabilities ” – all costs, Damages, expenses, liabilities, obligations, and other responsibilities arising from or under either Environmental Laws or Third Party claims relating to any Environmental Condition, and which relate to the Assets or the ownership or operation of the same.
ERISA ” – the Employee Retirement Security Act of 1974, as amended.
ERISA Affiliate ” – with respect to any entity, any other entity, trade or business that is a member of a group described in Section 414(b), (c), (m) or (o) of the Code or Section 4001(b)(1) of ERISA that includes such first entity, or that is a member of the same “controlled group” as such first entity pursuant to Section 4001(a)(14) of ERISA.
Escrow Account ” – as defined in Section 2.02 .
Escrow Agent ” – JPMorgan Chase Bank, N.A.
Escrow Agreement ” – as defined in Section 2.02 .
Excluded Assets ” – with respect to Seller, (a) all of Seller’s corporate minute books, financial records and other business records that relate to Seller’s business generally (including

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the ownership and operation of the Assets); (b) except to the extent related to any Assumed Liabilities and except for the Aera Sinking Fund, all trade credits, all accounts, all receivables of Seller and all other proceeds, income or revenues of Seller attributable to the Assets and attributable to any period of time prior to the Effective Time (other than the Suspense Funds and Specified Receivables); (c) except to the extent related to any Assumed Liabilities all claims and causes of action of Seller or its Affiliates that are attributable to periods of time prior to the Effective Time (including claims for adjustments or refunds); (d) except to the extent related to any Assumed Liabilities subject to Section 11.14 , all rights and interests of Seller (i) under any policy or agreement of insurance or indemnity, (ii) under any bond, or (iii) to any insurance or condemnation proceeds or awards arising, in each case, from acts, omissions or events or damage to or destruction of property; (e) Seller’s rights with respect to all Hydrocarbons produced and sold from the Assets with respect to all periods prior to the Effective Time; (f) all claims of Seller or any of its Affiliates for refunds of, rights to receive funds from any Governmental Body, or loss carry forwards or credits with respect to (i) Asset Taxes attributable to any period (or portion thereof) prior to the Effective Time, (ii) income Taxes paid by Seller or its Affiliates, or (iii) any Taxes attributable to the Excluded Assets; (g) all information technology assets, other than the Production Related IT Equipment, including all desktop computers, laptop computers, servers, networking equipment and any associated peripherals and other computer hardware, or computer software and telephone equipment; (h) except to the extent related to any Assumed Liabilities, all rights, benefits and releases of Seller or its Affiliates under or with respect to any Contract that are attributable to periods of time prior to Closing; (i) all of Seller’s proprietary computer software, patents, trade secrets, copyrights, names, trademarks, logos and other intellectual property; (j) except for any title opinions, surveys or other similar title documents and any environmental assessments, all documents and instruments of Seller that are protected by an attorney-client privilege or any attorney work product doctrine; (k) all data that cannot be disclosed to Buyer as a result of confidentiality arrangements under existing written agreements, provided that Seller shall use its commercially reasonable efforts (but without payment of any fee) to obtain a waiver of any such restrictions; (l) except to the extent related to any Assumed Liabilities, all audit rights or obligations of Seller for which Seller bears responsibility arising under any of the Applicable Contracts or otherwise with respect to any period prior to the Effective Time or to any of the Excluded Assets, except for any Imbalances assumed by Buyer; (m) Seller’s interpretations of any geophysical or other seismic and related technical data and information relating to the Assets; (n) documents prepared or received by Seller or its Affiliates with respect to (i) lists of prospective purchasers for such transactions compiled by Seller, (ii) bids submitted by other prospective purchasers of the Assets, (iii) analyses by Seller or its Affiliates of any bids submitted by any prospective purchaser, (iv) correspondence between or among Seller, its Representatives, and any prospective purchaser other than Buyer, and (v) correspondence between Seller or any of its Representatives with respect to any of the bids, the prospective purchasers or the transactions contemplated by this Agreement; (o) except for field offices described on Exhibit A-4 , any offices, office leases and any personal property located in or on such offices or office leases; (p) other than any tract of land described in the Surface Deeds listed on Exhibit A-6 , in any Easement listed in Exhibit A-3 or the Fee Minerals listed on Exhibit A-2 any fee simple surface estate; (q) any fee mineral interests that are not Fee Minerals, and any right to production revenues associated therewith; (r) a copy of all Records; (s) any Contracts that constitute master services agreements or similar contracts; (t) all Hedge Contracts, if any; (u) any debt

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instruments; (v) any of Seller’s assets other than the Assets; (w) all of Seller’s right, title and interest in and to any carbon dioxide allowances other than the Carbon Credits, together with any carbon dioxide allowances used by Seller prior to Closing to satisfy Emissions Fees imposed against Seller with respect to the Assets prior to Closing(x) any leases, rights and other assets specifically listed in Exhibit E ; and (y) that certain Tonner Canyon Prospect Agreement Covering Portions of Los Angeles and Orange Counties, California, dated effective August 1, 2006, by and between Glenn Gregory (d/b/a Gregory Geological Services) and Linn Western Operating, Inc.
Excluded Employee Liabilities ” means the following liabilities of Seller and/or any Affiliate of such Seller relating to any employee or any other current or former employee or other service provider of Seller or any Affiliate of Seller, or any spouse, dependent or beneficiary thereof: (i) any liabilities assumed by Seller pursuant to Article XII, (ii) any liabilities arising under the WARN Act with respect to any mass layoff, plant closing or other termination of employees, in any case, occurring on or prior to the Closing Date, (iii) any liabilities arising under COBRA with respect to an Available Employee who does not become a Continuing Employee, (iv) any liabilities that is or may be imposed on Seller or any Affiliate of Seller due to such entity’s status as an ERISA Affiliate of any other entity, and (v) any claim of an unfair labor practice, or any claim under any state unemployment compensation or worker’s compensation Legal Requirement or regulation or under any federal or state employment Legal Requirement or other Legal Requirement or regulation relating to employment, discrimination, classification or other matters relating to employees or other service providers, in any case, with respect to (A) any employee or other service provider of Seller or any Affiliate of Seller who does not become a Continuing Employee (or any dependent or beneficiary thereof), and (B) any Continuing Employee, to the extent arising on or prior to such employee’s Employee Start Date.
Execution Date ” – as defined in the preamble to this Agreement.
Expert ” – as defined in Section 11.15(b) .
Expert Decision ” – as defined in Section 11.15(d) .
Expert Proceeding Notice ” – as defined in Section 11.15(a) .
Fee Minerals ” – as set forth in the definition of “Assets”.
Final Amount ” – as defined in Section 2.05(d) .
Final Settlement Date ” – as defined in Section 2.05(d) .
Final Settlement Statement ” – as defined in Section 2.05(d) .
Financing Sources ” – any potential or actual lenders and investors for the Debt Financing, together with their Affiliates and their respective Representatives.
FTC ” – the Federal Trade Commission.

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Fundamental Representations ” – those representations set forth in Sections 3.01 , 3.02 , 3.03 and 3.06 .
GAAP ” – generally accepted accounting principles in the United States as interpreted as of the Execution Date.
Governmental Authorization ” – any approval, consent, license, permit, registration, variance, exemption, waiver, or other authorization issued, granted, given, or otherwise made available by or under the authority of any Governmental Body or pursuant to any Legal Requirement.
Governmental Body ” – any (a) nation, state, county, city, town, village, district, or other jurisdiction of any nature; (b) federal, state, local, municipal, foreign, tribal or other government; (c) governmental or quasi-governmental authority of any nature (including any governmental agency, branch, department, official, or entity and any court or other tribunal); (d) multi-national organization or body; or (e) body exercising, or entitled to exercise, any administrative, arbitration, executive, judicial, legislative, police, regulatory, or taxing authority or power of any nature.
Group ” – either Buyer Group or Seller Group, as applicable.
Hazardous Materials ” – any (a) chemical, constituent, material, pollutant, contaminant, substance, or waste that is regulated by any Governmental Body or may form the basis of liability under any Environmental Law; and (b) petroleum, Hydrocarbons, or petroleum products.
Hedge Contract ” – any Contract to which Seller or any of its Affiliates is a party with respect to any swap, forward, future or derivative transaction or option or similar agreement, whether exchange traded, “over-the-counter” or otherwise, involving, or settled by reference to, one or more rates, currencies, commodities, equity or debt instruments or securities, or economic, financial or pricing indices or measures of economic, financial or pricing risk or value or any similar transaction or any combination of these transactions.
HSR Act ” – the Hart-Scott-Rodino-Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder.
Hydrocarbons ” – oil and gas and other hydrocarbons (including condensate) produced or processed in association therewith (whether or not such item is in liquid or gaseous form), or any combination thereof, and any minerals produced in association therewith.
Imbalances ” – over-production or under-production or over-deliveries or under-deliveries with respect to Hydrocarbons produced from or allocated to the Assets, regardless of whether such over-production or under-production or over-deliveries or under-deliveries arise at the wellhead, pipeline, gathering system, transportation system, processing plant, or other location, including any imbalances under gas balancing or similar agreements, imbalances under production handling agreements, imbalances under processing agreements, imbalances under the Leases, and imbalances under gathering or transportation agreements.
Individual Claim Threshold ” – as defined in Section 10.05 .

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Instruments of Conveyance ” – the Assignment and Deed and any other assignment forms that may be required by any Governmental Body to transfer title to the Assets from Seller to Buyer. Except for the special warranty of Defensible Title by, through and under Seller and its Affiliates contained therein, the foregoing Instruments of Conveyance shall be without warranty of title, whether express, implied, statutory, or otherwise, it being understood that Buyer shall have the right to conduct pre-Closing title due diligence as described below in Article 11 , and that the rights and remedies set forth in Article 11 shall be Buyer’s sole rights and remedies with respect to title.
Interim Financial Statements ” – as defined in Section 6.05(b)(i) .
Knowledge ” – an individual will be deemed to have “Knowledge” of a particular fact or other matter if such individual is actually aware of such fact or other matter, without any duty of inquiry. A Seller Party will be deemed to have “Knowledge” of a particular fact or other matter if any of the following individuals has Knowledge of such fact or other matter: Mark E. Ellis, President and Chief Executive Officer, Arden L. Walker, Jr., Executive Vice President and Chief Operating Officer, David B. Rottino, Executive Vice President and Chief Operating Officer, and Thomas E. Emmons, Senior Vice President, Corporate Services. Buyer will be deemed to have “Knowledge” of a particular fact or other matter if any of the following individuals has Knowledge of such fact or other matter: Randall H. Breitenbach, Vice President - Acquisition Activities and Peter Singh, Vice President.
Lands ” – as set forth in the definition of “Assets”.
Leases ” – as set forth in the definition of “Assets”.
Legal Requirement ” – any federal, state, local, municipal, foreign, international, or multinational law, Order, constitution, ordinance, or rule, including rules of common law, regulation, statute, treaty, or other legally enforceable directive or requirement.
Lowest Cost Response ” – the response required under Environmental Laws in effect as of the Defect Notice Date that addresses and resolves (for current and future use in the same manner as currently used) the identified Environmental Condition in the most cost-effective manner (considered as a whole) as compared to any other response that is required under Environmental Laws. The Lowest Cost Response shall include taking no action, leaving the condition unaddressed, periodic monitoring or the recording of notices in lieu of remediation, if such responses are allowed under Environmental Laws. The Lowest Cost Response shall not include any costs or expenses relating to the assessment, remediation, removal, abatement, transportation and disposal of any asbestos, asbestos containing materials or NORM.
Material Adverse Effect ” – any change, inaccuracy, effect, event, result, occurrence, condition or fact (for the purposes of this definition, each, an “event”) (whether foreseeable or not and whether covered by insurance or not) that has had or would be reasonably likely to have, individually or in the aggregate with any other event or events, a material adverse effect on the ownership, operation or financial condition of the Assets, taken as a whole; provided, however , that the term “Material Adverse Effect” shall not include material adverse effects resulting from (i) entering into this Agreement or the announcement of the Contemplated Transactions; (ii)

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changes in Hydrocarbon prices; (iii) any action or omission of Seller taken in accordance with the terms of this Agreement or with the prior consent of Buyer; (iv) any effect resulting from general changes in industry, economic or political conditions in the United States; (v) civil unrest, any outbreak of disease or hostilities, terrorist activities or war or any similar disorder; (vi) acts or failures to act of any Governmental Body (including any new regulations related to the upstream industry), except to the extent arising from Seller’s action or inaction; (vii) acts of God, including hurricanes and storms; (viii) any reclassification or recalculation of reserves in the ordinary course of business; (ix) natural declines in well performance; (x) general changes in Legal Requirements, in regulatory policies, or in GAAP; (xi) changes in the stock price of Buyer; (xii) matters that are cured or no longer exist by the earlier of Closing and the termination of this Agreement; or (xiii) matters as to which an adjustment is provided for under Section 2.05(c) or Seller has indemnified Buyer hereunder.
Material Contracts ” – as defined in Section 3.10 .
Net Revenue Interest ” – with respect to any Well, the interest in and to all Hydrocarbons produced, saved and sold from or allocated to Well (in each case, limited to the applicable currently producing formation as described in the definition of “Defensible Title” and subject to any reservations, limitations or depth restrictions described in Exhibit B (for any Well)), after satisfaction of all other Royalties.
NORM ” – naturally occurring radioactive material.
Operating Contingencies ” mean the contingencies described on Schedule 2.02(b) .
Order ” – any award, decision, injunction, judgment, order, ruling, subpoena, or verdict entered, issued, made, or rendered by any court, administrative agency, or other Governmental Body or by any arbitrator.
Organizational Documents ” – (a) the articles or certificate of incorporation and the bylaws of a corporation; (b) the articles of organization and resolutions of a limited liability company; (c) the certificate of limited partnership and limited partnership agreement of a limited partnership; and (d) any amendment to any of the foregoing.
Outside Date ” – as defined in Section 9.01(d) .
Party ” or “ Parties ” – as defined in the preamble to this Agreement.
Permits ” – all environmental and other governmental (whether federal, state, local or tribal) certificates, consents, permits (including conditional use permits), licenses, orders, authorizations, franchises and related instruments or rights solely relating to the ownership, operation or use of the Assets.
Permitted Encumbrance ” – any of the following:
(a)    the terms and conditions of all Leases and Contracts if the net cumulative effect of such Leases and Contracts does not (i) materially interfere with the operation or use of any of the Assets (as currently operated and used), (ii) operate to reduce the Net Revenue Interest of Seller

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with respect to any Well to an amount less than the Net Revenue Interest set forth in Exhibit B for such Well, (iii) obligate Seller to bear a Working Interest with respect to any Well in any amount greater than the Working Interest set forth in Exhibit B for such Well (unless the Net Revenue Interest for such Well is greater than the Net Revenue Interest set forth in Exhibit B , in the same or greater proportion as any increase in such Working Interest); provided, however that any drilling obligations included in Leases will be considered Permitted Encumbrances so long as Seller is not in breach of such obligations;
(b)    any Preferential Purchase Rights, Consents and similar agreements;
(c)    excepting circumstances where such rights have already been triggered prior to the Effective Time, customary rights of reassignment arising upon final intention to abandon or release the Assets;
(d)    liens for Taxes not yet due or delinquent;
(e)    all rights to consent by, required notices to, filings with, or other actions by Governmental Bodies in connection with the conveyance of the Leases, if the same are customarily sought and received after the Closing;
(f)    except for claims under the special warranty of Defensible Title set forth in the Instruments of Conveyance, Encumbrances or defects that Buyer has waived or is deemed to have waived pursuant to the terms of this Agreement or Title Defects that were not properly asserted by Buyer prior to the Defect Notice Date;
(g)    all Legal Requirements and all rights reserved to or vested in any Governmental Body (i) to control or regulate any Asset in any manner; (ii) by the terms of any right, power, franchise, grant, license or permit, or by any provision of law, to terminate such right, power, franchise, grant, license or permit or to purchase, condemn, expropriate or recapture or to designate a purchaser of any of the Assets; (iii) to use such property in a manner which does not materially impair the use of such property for the purposes for which it is currently owned and operated; or (iv) to enforce any obligations or duties affecting the Assets to any Governmental Body with respect to any right, power, franchise, grant, license or permit;
(h)    rights of a common owner of any interest currently held by Seller and such common owner as tenants in common or through common ownership if the net cumulative effect does not (i) materially interfere with the operation or use of any of the Assets (as currently operated and used), (ii) operate to reduce the Net Revenue Interest of Seller with respect to any Well to an amount less than the Net Revenue Interest set forth in Exhibit B for such Well, (iii) obligate Seller to bear a Working Interest with respect to any Well in any amount greater than the Working Interest set forth in Exhibit B for such Well (unless the Net Revenue Interest for such Well is greater than the Net Revenue Interest set forth in Exhibit B , in the same or greater proportion as any increase in such Working Interest);
(i)    easements, conditions, covenants, restrictions, servitudes, permits, rights-of-way, surface leases, and other rights in the Assets for the purpose of operations, facilities, roads, alleys, highways, railways, pipelines, transmission lines, transportation lines, distribution lines, power lines, telephone lines, removal of timber, grazing, logging operations, canals, ditches,

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reservoirs and other like purposes, or for the joint or common use of real estate, rights-of-way, facilities and equipment, if the net cumulative effect does not (i) materially interfere with the operation or use of any of the Assets (as currently operated and used), (ii) operate to reduce the Net Revenue Interest of Seller with respect to any Well to an amount less than the Net Revenue Interest set forth in Exhibit B for such Well, (iii) obligate Seller to bear a Working Interest with respect to any Well in any amount greater than the Working Interest set forth in Exhibit B for such Well (unless the Net Revenue Interest for such Well is greater than the Net Revenue Interest set forth in Exhibit B , in the same or greater proportion as any increase in such Working Interest);
(j)    vendors, carriers, warehousemen’s, repairmen’s, mechanics’, workmen’s, materialmen’s, construction or other like liens arising by operation of law in the ordinary course of business or incident to the construction or improvement of any property in respect of obligations which are not yet due or which are being contested in good faith by appropriate proceedings which are set forth on Schedule 3.05 by or on behalf of Seller;
(k)    Encumbrances created under Leases or any joint operating agreements applicable to the Assets or by operation of law in respect of obligations that are not yet due if the net cumulative effect of such Encumbrances does not (i) materially interfere with the operation or use of any of the Assets (as currently operated and used), (ii) operate to reduce the Net Revenue Interest of Seller with respect to any Well to an amount less than the Net Revenue Interest set forth in Exhibit B for such Well, (iii) obligate Seller to bear a Working Interest with respect to any Well in any amount greater than the Working Interest set forth in Exhibit B for such Well (unless the Net Revenue Interest for such Well is greater than the Net Revenue Interest set forth in Exhibit B , in the same or greater proportion as any increase in such Working Interest);
(l)    any Encumbrance affecting the Assets that is discharged by Seller or expressly waived in writing by Buyer pursuant to the terms of this Agreement at or prior to Closing;
(m)    the Assumed Litigation;
(n)    defects based solely on assertions that Seller’s files lack information (including title opinions);
(o)    lessor’s royalties, overriding royalties, production payments, net profits interests, reversionary interests, and similar burdens if the net cumulative effect of such burdens (i) does not materially interfere with the operation or use of any of the Assets (as currently operated and used), (ii) does not reduce the Net Revenue Interest of Seller with respect to such Well to an amount less than the Net Revenue Interest set forth in Exhibit B for such Well, and (iii) does not obligate Seller to bear a Working Interest in any amount greater than the Working Interest set forth in Exhibit B for such Well (unless the Net Revenue Interest for such Well is greater than the Net Revenue Interest set forth in Exhibit B , in the same or greater proportion as any increase in such Working Interest);
(p)    defects or irregularities of title (i) arising out of lack of evidence of, or other defects with respect to, authorization, execution, delivery, acknowledgement, or approval of any instrument in Seller’s chain of title absent reasonable evidence of an actual claim of superior title

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from a Third Party attributable to such matter; (ii) consisting of the failure to recite marital status or omissions of heirship proceedings in documents (provided that such proceedings have actually occurred and can be verified); (iii) resulting from lack of survey, unless a survey is expressly required by applicable Legal Requirements; (iv) resulting from failure to record releases of liens, production payments, or mortgages that have expired by their own terms or the enforcement of which are barred by the applicable statute(s) of limitations or prescription; (v) arising out of lack of entity authorization unless Buyer provides affirmative evidence that such entity action could reasonably result in another Person’s actual and superior claim of title; (vi) resulting from or related to probate proceedings or the lack thereof that have been outstanding for ten (10) years or more; (vii) based on a gap in Seller’s chain of title to any Well or Lease (A) so long as such gap does not provide a Third Party with a reasonable claim of superior claim or (B) unless Buyer affirmatively shows such gap to exist in such records by an abstract of title, title opinion or landman’s title chain; or (viii) consisting of the lack of a lease amendment or consent authorizing pooling or unitization unless such Lease has been pooled in violation of the terms of such Lease;
(q)    Imbalances to the extent that the Purchase Price is adjusted accordingly;
(r)    future plugging and surface restoration obligations that have not been triggered as of the Execution Date, but only to the extent such obligations do not interfere in any material respect with the use or operation of any Assets (as currently used or operated);
(s)    calls on Hydrocarbon production under existing Contracts to the extent such Contracts are set forth on Schedule 3.10 ;
(t)    any matters referenced or set forth on Exhibit A or Exhibit B ;
(u)    mortgages on the lessor’s interest under a Lease, whether or not subordinate to such Lease, that have expired on their own terms or the enforcement of which are barred by applicable statute(s) of limitations or prescription;
(v)    any maintenance of uniform interest provision in an operating agreement if waived in writing with respect to the Contemplated Transactions by the party or parties having the right to enforce such provision or if the violation of such provision would not give rise to the unwinding of the sale of the affected Asset from Seller to Buyer or the potential claim against Buyer or Seller for material damages in connection therewith; and
(w)    any reductions in Net Revenue Interest due to the net profits interest held by Aera Energy LLC pursuant to the Aera Lease, if the net cumulative effect of such burdens does not reduce the Net Revenue Interest of Seller with respect to such Well to an amount less than the Net Revenue Interest set forth in Exhibit B or Schedule 3.20 for such Well.
Person ” – any individual, firm, corporation (including any non-profit corporation), general or limited partnership, limited liability company, joint venture, estate, trust, association, organization, labor union, or other entity or Governmental Body.
Personal Property ” – as set forth in the definition of “Assets”.

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Phase I Environmental Site Assessment ” – a Phase I environmental property assessment of the Assets that satisfies the basic assessment requirements set forth under the current ASTM International Standard Practice for Environmental Site Assessments (Designation E1527-13) or any other visual site assessment or review of records, reports or documents.
Plan of Reorganization ” – the Amended Joint Chapter 11 Plan of Reorganization of Linn Energy, LLC and Its Debtor Affiliates Other than LINN Acquisition Company, LLC and Berry Petroleum Company, LLC, as confirmed in the Bankruptcy Cases by the Order Confirming (i) Amended Joint Chapter 11 Plan of Reorganization of Linn Energy, LLC and its Debtor Affiliates other than Linn Acquisition Company, LLC and Berry Petroleum Company, LLC and (ii) Amended Joint Chapter 11 Plan of Reorganization of Linn Acquisition Company, LLC and Berry Petroleum Company, LLC Docket No. 1629.
Post-Closing Date ” – as defined in Section 2.05(d) .
Preferential Purchase Right ” – any right or agreement that enables any Person to purchase or acquire any Asset or any interest therein or portion thereof as a result of or in connection with the execution or delivery of this Agreement or the consummation of the Contemplated Transactions.
Preliminary Amount ” – the Purchase Price, adjusted as provided in Section 2.05(c) , Section 2.02(b) (if applicable), based upon the best information available at the time of the Closing.
Preliminary Settlement Statement ” – as defined in Section 2.03 .
Proceeding ” – any proceeding, action, arbitration, audit, hearing, investigation, request for information, litigation, or suit (whether civil, criminal, administrative, investigative, or informal) commenced, brought, conducted, or heard by or before, or otherwise involving, any Governmental Body or arbitrator.
Production Related IT Equipment ” – as set forth in the definition of “Assets”.
Property ” or “ Properties ” – as set forth in the definition of “Assets”.
Property Costs ” – all operating expenses (including utilities, payroll, costs of insurance, rentals, and overhead costs set forth in Section 2.05(b) ), capital expenditures (including rentals, options and other lease maintenance payments, broker fees and other property acquisition costs and costs of acquiring equipment), and Asset Taxes, respectively, incurred in the ordinary course of business attributable to the use, operation, and ownership of the Assets, but excluding Damages attributable to (a) personal injury or death, property damage, torts, breach of contract, or violation of any Legal Requirement, (b) obligations relating to the abandonment or plugging of Wells, dismantling or decommissioning facilities, closing pits and restoring the surface around such Wells, facilities and pits, (c) Environmental Liabilities, (d) obligations with respect to Imbalances, (e) obligations to pay Royalties or other interest owners revenues or proceeds relating to the Assets but held in suspense, including Suspense Funds, (f) Emissions Fees, and (g) claims for indemnification or reimbursement from any Third Party with respect to costs of the

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types described in the preceding clauses (a) through (g), whether such claims are made pursuant to contract or otherwise.
Purchase Price ” – as defined in Section 2.02 .
Records ” – as set forth in the definition of “Assets”.
Representative ” – with respect to a particular Person, any director, officer, manager, employee, agent, consultant, advisor, direct or indirect equity owner, or other representative of such Person, including legal counsel, accountants, and financial advisors.
Required Consent ” – any Consent with respect to which (a) there is a provision within the applicable instrument that such Consent may be withheld in the sole and absolute discretion of the holder, (b) there is provision within the applicable instrument expressly stating that an assignment in violation thereof (i) is void or voidable, (ii) triggers the payment of specified liquidated damages, or (iii) causes termination of the applicable Assets to be assigned, or (c) that is denied in writing by the applicable Third Party. For the avoidance of doubt, “Required Consent” does not include any Consent, which, by its terms, cannot be unreasonably withheld.
Retained Assets ” – any rights, titles, interests, assets, and properties that are originally included in the Assets under the terms of this Agreement, but that are subsequently excluded from the Assets or sale under this Agreement pursuant to the terms of this Agreement at any time before or after the Closing.
Retained Liabilities ” –Damages, liabilities and obligations arising out of or attributable to (a) the disposal or transportation prior to Closing of any Hazardous Materials generated or used by Seller and taken from the Assets to any location that is not an Asset; (b) property damage attributable to Seller’s or its Affiliate’s operation of the Assets prior to the Execution Date and illness and personal injury (including death) claims attributable to Seller’s or its Affiliate’s operation of the Assets prior to the Closing Date; (c) failure to properly and timely pay, in accordance with the terms of any Lease, Contract or applicable Legal Requirement, all Royalties and any other Working Interest amounts (in each case) with respect to the Assets that are due by Seller or any of its Affiliates and attributable to Seller’s ownership of the Assets prior to the Effective Time; (d) any Excluded Employee Liability; (e) the gross negligence or willful misconduct of Seller or any of its Affiliates in connection with its operations, prior to the Closing Date, of the Assets in its capacity as operator thereof; (f) all fines or penalties and criminal sanctions imposed on Seller or its Affiliates in connection with the ownership or operation of the Assets prior to the Closing; (g) the Discharged Claims; (h) any amounts payable to any Governmental Body in the future to satisfy claims of such Governmental Body that are expressly reserved or preserved under the Stipulation and Agreed Order and attributable to pre-Effective Time periods, including any cure amounts; (i) the Retained Litigation; and (j) any Tax of Seller or otherwise imposed on the Assets or with respect Seller’s business, including without limitation any liability of Seller for the Taxes of any other Person under Treasury Regulation Section 1.1502-6 (or any similar provision of state, local or foreign law), as a transferee or successor, by contract or otherwise, but excluding any Asset Taxes to the extent specifically allocated to Buyer pursuant to Section 13.02(b) .

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Retained Litigation ” – the litigation set forth in Schedule 3.05 Part B.
Royalties ” – royalties, overriding royalties, production payments, carried interests, net profits interests, reversionary interests, back-in interests and other burdens upon, measured by or payable out of production.
SEC Filings ” – as defined in Section 6.05(b)(i) .
Secondary Allocated Values ” – the values assigned among certain Wells as set forth on Schedule 2.07(b) which shall take into account the contingent nature of the Purchase Price associated therewith.
Secondary Title Defect Values ” – as defined in Section 11.05 .
Seller ” – as defined in the preamble to this Agreement.
Seller Closing Documents ” – as defined in Section 3.02(a) .
Seller Group ” – Seller and its Affiliates, and their respective Representatives.
Seller Party ” – each of LEH, LOI and LM, individually.
Severance Plan ” – the terms and conditions of that certain Severance Plan of Linn Energy, Inc., effective February 28, 2017, and attached as Exhibit F hereto.
Special Financial Statements ” – as defined in Section 6.05(b)(i) .
Specified Receivables ” – accounts receivable owed to Seller as operator of any Wells to satisfy previous overpayments by Seller to Third Parties, and the right to recoup same out of proceeds of production in respect of such Wells.
Straddle Period ” – any Tax period beginning before and ending after the Effective Time.
Suspense Funds ” – proceeds of production and associated penalties and interest in respect of any of the Wells that are payable to any Third Party and are being held in suspense by Seller as the operator of such Wells.
Tax ” or “ Taxes ” – (a) any and all federal, state, provincial, local, foreign and other taxes, levies, fees, imposts, duties, assessments, unclaimed property and escheat obligations and other governmental charges imposed by any Governmental Body, including income, profits, franchise, alternative or add-on minimum, gross receipts, environmental (including taxes under Section 59A of the Code), registration, withholding, employment, social security (or similar), disability, occupation, ad valorem, property, value added, capital gains, sales, goods and services, use, real or personal property, capital stock, license, branch, payroll, estimated, unemployment, severance, compensation, utility, stamp, premium, windfall profits, transfer, gains, production and excise taxes, and customs duties, together with any interest, penalties, fines or additions thereto and (b) any successor or transferee liability in respect of any items described in clause (a) above; provided, however , that such term shall not include any taxes, fees or similar

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payments the amount of which is calculated and/or determined based on emissions from the Assets.
Tax Allocation ” – as defined in Section 2.07 .
Tax Returns ” – any and all reports, returns, declarations, claims for refund, elections, disclosures, estimates, information reports or returns or statements supplied or required to be supplied to a Governmental Body in connection with Taxes, including any schedule or attachment thereto or amendment thereof.
Third Party ” – any Person other than a Party or an Affiliate of a Party.
Threatened ” – a claim, Proceeding, dispute, action, or other matter will be deemed to have been “Threatened” if any demand or statement has been made in writing to a Party or any of its officers, directors, or employees, that would lead a prudent Person to conclude that such a claim, Proceeding, dispute, action, or other matter is likely to be asserted, commenced, taken, or otherwise pursued in the future.
Title Benefit ” – as defined in Section 11.08 .
Title Benefit Notice ” – as defined in Section 11.08 .
Title Benefit Properties ” – as defined in Section 11.08 .
Title Benefit Value ” – as defined in Section 11.08 .
Title Defect ” – any Encumbrance, defect or other matter that causes Seller not to have Defensible Title in and to the Wells, without duplication; provided that, for the avoidance of doubt, that defects arising from any change in applicable Legal Requirement after the Execution Date shall not be considered Title Defects.
Title Defect Cure Period ” – as defined in Section 11.06(a) .
Title Defect Notice ” – as defined in Section 11.04 .
Title Defect Property ” – as defined in Section 11.04 .
Title Defect Value ” – as defined in Section 11.04 .
Tonner Canyon Prospect Agreement ” – Tonner Canyon Prospect Agreement Covering Portions of Los Angeles and Orange Counties, California, dated effective August 1, 2006, by and between Glenn Gregory (d/b/a Gregory Geological Services) and Linn Western Operating, Inc.
Transfer Tax ” – all transfer, documentary, sales, use, stamp, registration and similar Taxes (but excluding income Taxes) and fees arising out of, or in connection with, the transfer of the Assets.
Transition Date ” – the end of the Term under the Transition Services Agreement as the Term is defined therein.

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Transition Services Agreement ” – a Transition Services Agreement substantially in the form of Exhibit K attached hereto.
Units ” – as set forth in the definition of “Assets”.
Wells ” – as set forth in the definition of “Assets”.
Working Interest ” – with respect to any Well, the interest in and to such Well that is burdened with the obligation to bear and pay costs and expenses of maintenance, development and operations on or in connection with such Well (in each case, limited to the applicable currently producing formation as described in the definition of “Defensible Title” and subject to any reservations, limitations or depth restrictions described in Exhibit B) , but without regard to the effect of any Royalties or other burdens.
ARTICLE 2
SALE AND TRANSFER OF ASSETS; CLOSING
2.01     Assets . Subject to the terms and conditions of this Agreement, at the Closing, Seller shall sell and transfer (or shall cause to be sold and transferred) the Assets to Buyer, and Buyer shall purchase, pay for, and accept the Assets from Seller.
2.02     Purchase Price; Deposit .
(a)
Subject to any adjustments that may be made under Section 2.02(b) or Section 2.05 , the purchase price for the Assets will be One Hundred Million Dollars ($100,000,000) (the “ Purchase Price ”). Within one (1) Business Day after the Execution Date, Buyer or an Affiliate has deposited by wire transfer in same day funds into an escrow account (the “ Escrow Account ”) established pursuant to the terms of a mutually agreeable Escrow Agreement (the “ Escrow Agreement ”) an amount equal to the Deposit Amount. The Deposit Amount shall be held by the Escrow Agent, and if the Closing timely occurs, on or before the Closing Date, the Parties shall (or shall cause their Affiliate who is party to the Escrow Agreement to) execute and deliver to the Escrow Agent a joint instruction letter directing the Escrow Agent to release the Deposit Amount to Seller at Closing, which Deposit Amount shall be applied as a credit toward the Preliminary Amount as provided in Section 2.05(a) . If this Agreement is terminated prior to the Closing in accordance with Section 9.01 , then the provisions of Section 9.02 shall apply and the distribution of the Deposit Amount shall be governed in accordance therewith.
(b)
If the Operating Contingencies described on Schedule 2.02(b) are satisfied, then Buyer shall, within five (5) days, promptly pay an additional Seven Million Dollars ($7,000,000) in same day funds to Seller (the “Contingent Purchase Price ”) , less any Secondary Title Defect Values determined in accordance with Article 11 .
2.03     Closing; Preliminary Settlement Statement . The Closing shall take place at the offices of Kirkland and Ellis LLP at 600 Travis Street, Suite 3300, Houston, Texas 77002 on or before July 18, 2017 (the “ Scheduled Closing ”), or if all conditions to Closing under Article 7 and Article 8 have not yet been satisfied or waived, within ten (10) Business Days after such conditions have been satisfied or waived, subject to the provisions of Article 9 (the date on

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which the Closing actually occurs, the “ Closing Date ”). Subject to the provisions of Articles 7 , 8 , and 9 , failure to consummate the purchase and sale provided for in this Agreement on the date and time and at the place determined pursuant to this Section 2.03 shall not result in the termination of this Agreement and shall not relieve either Party of any obligation under this Agreement. Not later than five (5) Business Days prior to the Closing Date, Seller will deliver to Buyer a statement setting forth in reasonable detail Seller’s reasonable determination of the Preliminary Amount based upon the best information available at that time (the “ Preliminary Settlement Statement ”) with reasonable supporting documentation for same. As part of the Preliminary Settlement Statement, Buyer shall provide to Seller such data as is reasonably necessary to support any estimated allocation, for purposes of establishing the Preliminary Amount. Within two (2) Business Days after its receipt of the Preliminary Settlement Statement, Buyer may submit to Seller in writing any objections or proposed changes thereto and Seller shall consider all such objections and proposed changes in good faith. The estimate agreed to by Seller and Buyer, or, absent such agreement, in the Preliminary Settlement Statement delivered by Seller in good faith in accordance with this Section 2.03 , will be the Preliminary Amount to be paid by Buyer to Seller at the Closing.
Closing Obligations . At the Closing:
(a)
Each Seller Party shall deliver (and execute, as appropriate), or cause to be delivered (and executed, as appropriate), to Buyer:
(i)
the Instruments of Conveyance in the appropriate number for recording in the real property records where the Assets are located;
(ii)
possession of the Assets (except the Specified Receivables and the Suspense Funds, which shall be conveyed to Buyer by way of one or more adjustments to the Purchase Price as provided in Section 2.05(c)(ii)(E) );
(iii)
a certificate, in substantially the form set forth in Exhibit H executed by an officer of such Seller Party, certifying on behalf of such Seller Party that the conditions to Closing set forth in Sections 7.01 and 7.02 have been fulfilled;
(iv)
a Treasury Regulation Section 1.1445-2(b)(2) statement, certifying that such Seller Party is not a “foreign person” within the meaning of the Code;
(v)
an executed counterpart of the Preliminary Settlement Statement;
(vi)
for each Well operated by such Seller Party or its Affiliate on the Closing Date, such regulatory documentation on forms prepared by Seller (with assistance from Buyer) as is necessary to designate Buyer as operator of such Wells;
(vii)
a recordable release in a form reasonably acceptable to Buyer of any trust, mortgages, financing statements, fixture filings and security agreements, in each case, securing indebtedness for borrowed money made by such Seller Party or its Affiliates affecting the Assets;

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(viii)
all documentation, including signature cards, necessary to transfer ownership and control of the Aera Sinking Fund to Buyer;
(ix)
all vehicle titles and other documentation necessary to transfer the vehicles described on Exhibit A-7 to Buyer;
(x)
an executed counterpart of the Transition Services Agreement; and
(xi)
such documents as Buyer or counsel for Buyer may reasonably request that are reasonably necessary to effect the Contemplated Transactions, including letters-in-lieu of transfer order to purchasers of production from the Wells (which shall be prepared and provided by Buyer and reasonably satisfactory to Seller).
(b)
Buyer shall deliver (and execute, as appropriate) to Seller:
(i)
the Preliminary Amount (less the Deposit Amount and less any amounts deposited with the Escrow Agent pursuant to Section 11.06 ) by wire transfer to the accounts specified by Seller in written notices given by Seller to Buyer at least two (2) Business Days prior to the Closing Date;
(ii)
the Instruments of Conveyance in the appropriate number for recording in the real property records where the Assets are located;
(iii)
a certificate, in substantially the form set forth in Exhibit H executed by an officer of Buyer, certifying on behalf of Buyer that the conditions to Closing set forth in Sections 8.01 and 8.02 have been fulfilled;
(iv)
an executed counterpart of the Preliminary Settlement Statement;
(v)
for each Well operated by any Seller Party or its Affiliate on the Closing Date, such regulatory documentation as is necessary to designate Buyer as operator of such Wells and the other Assets;
(vi)
evidence of replacement bonds, guarantees, and other sureties pursuant to Section 6.03(a) and evidence of such other authorizations and qualifications as may be necessary for Buyer to own and operate the Assets;
(vii)
an executed counterpart of the Transition Services Agreement; and
(viii)
such other documents as Seller or counsel for Seller may request that are reasonably necessary to effect the Contemplated Transactions, including letters-in-lieu of transfer order to purchasers of production from the Wells (which shall be prepared and provided by Buyer and reasonably satisfactory to Seller).
2.05     Allocations and Adjustments . If the Closing occurs:
(a)
Buyer shall be entitled to all production and products from or attributable to the Assets from and after the Effective Time and the proceeds thereof, and to all other income,

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proceeds, receipts, and credits earned with respect to the Assets on or after the Effective Time, and shall be responsible for (and entitled to any refunds with respect to) all Property Costs attributable to the Assets and incurred from and after the Effective Time. Seller shall be entitled to all production and products from or attributable to the Assets prior to the Effective Time and the proceeds thereof, and shall be responsible for (and entitled to any refunds with respect to (but for the avoidance of doubt, not including any amounts associated with the Aera Sinking Fund)) all Property Costs attributable to the Assets and incurred prior to the Effective Time. “Earned” and “incurred,” as used in this Agreement, shall be interpreted in accordance with generally accepted accounting principles and Council of Petroleum Accountants Society (COPAS) standards.
(b)
Without limiting the allocation of costs and receipts set forth in Section 2.05(a) , for each Well operated by Seller or its Affiliate, in lieu of all COPAS charges and all other overhead amounts for the period between the Effective Time and the Closing Date (which shall be treated as proceeds attributable to the Assets that are allocated to Buyer pursuant to Section 2.05(a) or Section 2.05(c)(ii)(A) ), Seller or its Affiliate shall be entitled to deduct and retain as overhead charges an amount equal to $175,000 per month for the period between the Effective Time and the Closing Date. The charges and deductions under this Section 2.05(b) shall accrue from the Effective Time through the Closing; provided however , that the overhead charges for the month in which Closing occurs shall be prorated based upon the number of days in such month that Seller or its Affiliate operated such Wells (and for the number of days that the Well was in drilling or completion, or was in production, as applicable). For purposes of allocating revenues, production, proceeds, income, accounts receivable, and products under this Section 2.05 , (A) liquid Hydrocarbons produced into storage facilities will be deemed to be “from or attributable to” the Wells when they pass through the pipeline connecting into the storage facilities into which they are run, and (B) gaseous Hydrocarbons and liquid Hydrocarbons produced into pipelines will be deemed to be “from or attributable to” the Wells when they pass through the receipt point sales meters on the pipelines through which they are transported. In order to accomplish the foregoing allocation of production, the Parties shall rely upon the gauging, metering, and strapping procedures which were conducted by Seller on or about the Effective Time and, unless demonstrated to be inaccurate, shall utilize reasonable interpolating procedures to arrive at an allocation of production when exact gauging, metering, and strapping data is not available on hand as of the Effective Time. Asset Taxes for 2017 shall be prorated in accordance with Section 13.02(b) .
(c)
The Purchase Price shall be, without duplication,
(i)
increased by the following amounts:
(A)
the aggregate amount of (i) proceeds received by Buyer from the sale of Hydrocarbons produced from and attributable to the Assets during any period prior to the Effective Time to which Seller is entitled under Section 2.05(a) (net of any (x) Royalties and (y) gathering, processing, transportation and other midstream costs) and (ii) other proceeds received

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by Buyer with respect to the Assets for which Seller would otherwise be entitled under Section 2.05(a) ;
(B)
the amount of all Asset Taxes allocable to Buyer pursuant to Section 13.02(b) but paid or economically borne by Seller;
(C)
the aggregate amount of all non-reimbursed Property Costs (other than Asset Taxes) that have been paid by any Seller Party to Third Parties that are attributable to the ownership and operation of the Assets after the Effective Time (including prepayments with respect to any period after the Effective Time (but for the avoidance of doubt, not including any amounts associated with the Aera Sinking Fund));
(D)
the amount of any other upward adjustment specifically provided for in this Agreement or mutually agreed upon by the Parties;
(E)
to the extent that proceeds for such volumes have not been received by Seller, an amount equal to the value of all Hydrocarbons attributable to the Assets in storage or existing in stock tanks, pipelines or plants (including inventory and linefill) as of the Effective Time;
(F)
the amount of all Specified Receivables attributable to any period prior to the Effective Time and set forth on Schedule 3.22 ;
(G)
the amount of the Carbon Credits multiplied by Thirteen Dollars and Ninety-Five Cents ($13.95); and
(ii)
decreased by the following amounts:
(A)
the aggregate amount of (i) proceeds received by Seller from the sale of Hydrocarbons produced from and attributable to the Assets from and after the Effective Time to which Buyer is entitled under Section 2.05(a) (net of any (x) Royalties and (y) gathering, processing, transportation and other midstream costs) and (ii) other proceeds received by Seller with respect to the Assets for which Buyer would otherwise be entitled under Section 2.05(a) ;
(B)
the amount of all Asset Taxes allocable to Seller pursuant to Section 13.02(b) but paid or economically borne by Buyer;
(C)
the aggregate amount of all downward adjustments pursuant to Article 11 ;
(D)
the aggregate amount of all non-reimbursed Property Costs (other than Asset Taxes) that are attributable to the ownership or operation of the Assets prior to the Effective Time (excluding prepayments with respect to any period after the Effective Time) and paid by Buyer;
(E)
the amount of the Suspense Funds;

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(F)
the amount of any other downward adjustment specifically provided for in this Agreement or mutually agreed upon by the Parties; and
(G)
the amount of all carbon dioxide allowances and offset credits that will be required by Buyer post-Closing to satisfy Emissions Fees imposed with respect to the assets attributable to the ownership and operation thereof prior to the Effective Time multiplied by Thirteen Dollars and Ninety-Five Cents ($13.95).
(d)
No later than one hundred eighty (180) days following the Closing Date, Seller shall prepare and submit to Buyer a statement (the “ Final Settlement Statement ”) setting forth each adjustment or payment which was not finally determined as of the Closing Date and showing the values used to determine such adjustments to reflect the final adjusted Purchase Price and taking into account any applicable payments under the Transition Services Agreement. On or before thirty (30) days after receipt of the Final Settlement Statement, Buyer shall deliver to Seller a written report containing any changes that Buyer proposes be made to the Final Settlement Statement and an explanation of any such changes and the reasons therefor together with any supporting information (the “ Dispute Notice ”). During such thirty (30)-day period, Buyer shall be given reasonable access to Seller’s books and records relating to the matters required to be accounted for in the Final Settlement Statement. Any changes not included in the Dispute Notice shall be deemed waived. If Buyer fails to timely deliver a Dispute Notice to Seller containing changes Buyer proposes to be made to the Final Settlement Statement, the Final Settlement Statement as delivered by Seller will be deemed to be mutually agreed upon by the Parties and, subject to the rights of the Parties under Article 10 and the special warranty of Defensible Title in the Instruments of Conveyance, will be final and binding on the Parties. Upon delivery of the Dispute Notice, the Parties shall undertake to agree with respect to any disputed amounts identified therein by the date that is Two Hundred Ten (210) days after the Closing Date (the “ Post-Closing Date ”). Except for Title Defect and Environmental Defect adjustments pursuant to Section 2.05(c)(ii)(C) , which shall be subject to the arbitration provisions of Section 11.15 , if the Parties are still unable to agree regarding any item set forth in the Dispute Notice as of the Post-Closing Date, then the Parties shall submit to a nationally-recognized accounting form mutually agreed upon by the Parties (the “ Accounting Expert ”) a written notice of such dispute along with reasonable supporting detail for the position of Buyer and Seller, respectively, and the Accounting Expert shall finally determine such disputed item in accordance with the terms of this Agreement. The Accounting Expert shall act as an expert and not an arbitrator. In determining the proper amount of any adjustment to the Purchase Price related to the disputed item, the Accounting Expert shall not increase the Purchase Price more than the increase proposed by Seller nor decrease the Purchase Price more than the decrease proposed by Buyer, as applicable. The decision of such Accounting Expert shall be binding on the Parties, and the fees and expenses of such Accounting Expert shall be borne one-half (1/2) by Seller and one-half (1/2) by Buyer. The date upon which all adjustments and amounts in the Final Settlement Statement are agreed to (or deemed agreed to) or fully and finally determined by the Accounting Expert as set forth in this Section 2.05(d) shall be called the “ Final Settlement Date ,” and the final adjusted Purchase Price shall be called the “ Final Amount .” If (a) the Final Amount is more than

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the Preliminary Amount, Buyer shall pay to Seller an amount equal to the Final Amount, minus the Preliminary Amount; or (b) the Final Amount is less than the Preliminary Amount, Seller shall pay to Buyer an amount equal to the Preliminary Amount, minus the Final Amount. Such payment shall be made within five (5) Business Days after the Final Settlement Date by wire transfer of immediately available funds to the accounts specified pursuant to wire instructions delivered in advance by Seller or Buyer, as applicable.
2.06     Assumption . If the Closing occurs, from and after the Closing Date, Buyer shall assume, fulfill, perform, pay, and discharge the following liabilities (except to the extent any such liabilities are Discharged Claims) arising from, based upon, related to, or associated with the Assets and only to the extent not constituting Retained Liabilities (collectively, the “ Assumed Liabilities ”) subject to Seller’s indemnity obligations under Section 10.02 (further subject to the limitations and restrictions in Article 10 ): any and all Damages and obligations, known or unknown, allocable to the Assets prior to, at, or after the Effective Time, including any and all Damages and obligations: (a) attributable to or resulting from the use, maintenance, ownership, or operation of the Assets, regardless whether arising before, at or after the Effective Time, except for Property Costs and other amounts which shall have been accounted for as provided under Section 2.05 ; (b) imposed by any Legal Requirement or Governmental Body relating to the Assets, (c) for plugging, abandonment, decommissioning, and surface restoration of the Assets, including oil, gas, injection, water, or other wells and all surface facilities; (d) subject to Buyer’s rights and remedies set forth in Article 11 and the special warranty of Defensible Title set forth in the Instruments of Conveyance, attributable to or resulting from lack of Defensible Title to the Assets; (e) attributable to the Suspense Funds, to the extent actually received by Buyer (or for which a reduction to the Purchase Price was made); (f) attributable to the Imbalances to the extent actually received by Buyer (or for which a reduction to the Purchase Price was made); (g) subject to Buyer’s rights and remedies set forth in Article 11 , attributable to or resulting from all Environmental Liabilities relating to the Assets; (h) subject to Buyer’s rights and remedies set forth in Article 11 , related to the conveyance of the Assets to Buyer at Closing (including arising from the conveyance thereof without consent or in violation of a preferential purchase right or any maintenance of uniform interest provision); (i) subject to Buyer’s rights and remedies set forth in Article 11 , attributable to the Leases and the Applicable Contracts; (j) attributable to or resulting from Asset Taxes to the extent specifically allocated to Buyer pursuant to Section 13.02(b) ; (k) attributable to or resulting from Transfer Taxes, together with any interest, additions or penalties with respect thereto and any interest in respect of such additions or penalties, if any, to the extent specifically allocated to Buyer pursuant to Section 13.02(b); (l) attributable to Emissions Fees imposed during any period following the Closing; and (m) attributable to the Assumed Litigation. Buyer acknowledges that: (i) the Assets have been used in connection with the exploration for, and the development, production, treatment, and transportation of, Hydrocarbons; (ii) spills of wastes, Hydrocarbons, produced water, Hazardous Materials, and other materials and substances may have occurred in the past or in connection with the Assets; (iii) there is a possibility that there are currently unknown, abandoned wells, plugged wells, pipelines, and other equipment on or underneath the property underlying the Assets; (iv) it is the intent of the Parties that, subject to Buyer’s rights and remedies set forth in Article 10 and Article 11 and the special warranty of Defensible Title set forth in the Instruments of Conveyance all liability associated with the above matters as well as any responsibility and liability to decommission, plug, or replug such wells (including the Wells) in accordance with all Legal Requirements and requirements of Governmental Bodies be passed


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to Buyer effective as of the Effective Time and that Buyer shall assume all responsibility and liability for such matters and all claims and demands related thereto; (v) the Assets may contain asbestos, Hazardous Materials, or NORM; (vi) NORM may affix or attach itself to the inside of wells, materials, and equipment as scale or in other forms; (vii) wells, materials, and equipment located on the Assets may contain NORM; and (viii) special procedures may be required for remediating, removing, transporting, and disposing of asbestos, NORM, Hazardous Materials, and other materials from the Assets, subject however to Buyer’s rights and remedies set forth in Article 10 and Article 11 . From and after the Closing, but effective as of the Effective Time, subject to Seller’s indemnity obligations under Section 10.02 (subject to the limitations and restrictions in Article 10 ) and Article 11 , Buyer shall assume, with respect to the Assets, all responsibility and liability for any assessment, remediation, removal, transportation, and disposal of these materials and associated activities in accordance with all Legal Requirements and requirements of Governmental Bodies.
2.07     Allocation of Purchase Price . (a) The Purchase Price shall be allocated among the Assets as set forth in Schedule 2.07(a) hereto, and, (b) the Contingent Purchase Price shall be allocated among the Wells as set forth in Schedule 2.07(b) . Seller and Buyer agree to be bound by the Allocated Values set forth in Schedule 2.07 for purposes of Article 11 hereof. Seller and Buyer further agree that for the purpose of making the requisite filings under Section 1060 of the Code, and the regulations thereunder, the Purchase Price as adjusted, and other amounts treated for U.S. federal income Tax purposes as consideration for a sale transaction (to the extent known at such time) shall be allocated among the Assets in a manner consistent with the Allocated Values, as set forth on Schedule 2.07 (the “ Tax Allocation ”). Seller and Buyer each agree to report, and to cause their respective Affiliates to report, the federal, state, and local income and other Tax consequences of the Contemplated Transactions, and in particular to report the information required by Section 1060(b) of the Code, and to jointly prepare Form 8594 (Asset Acquisition Statement under Section 1060 of the Code) as promptly as possible following the Closing Date and in a manner consistent with the Tax Allocation as revised to take into account subsequent adjustments to the Purchase Price, including any adjustments pursuant to the Agreement to determine the Final Amount, and shall not take any position inconsistent therewith upon examination of any tax return, in any refund claim, in any litigation, investigation or otherwise, unless required to do so by any Legal Requirement after notice to and discussions with the other Party, or with such other Party’s prior consent.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLER
Each Seller Party represents and warrants to Buyer as of the Execution Date and the Closing Date, the following:
3.01     Organization and Good Standing . Such Seller Party is a Delaware limited liability company, and is duly organized, validly existing, and in good standing under the laws of the State of Delaware and, where required, is duly qualified to do business and is in good standing in each jurisdiction in which the Assets are located, with full limited liability company power and authority to conduct its business as it is now being conducted, and to own or use the properties and assets that it purports to own or use. Such Seller Party is not a “foreign person” for purposes of Section 1445 of the Code.

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3.02     Authority; No Conflict.
(a)
The execution, delivery, and performance of this Agreement and the Contemplated Transactions have been duly and validly authorized by all necessary limited liability company action on the part of such Seller Party. This Agreement has been duly executed and delivered by such Seller Party and at the Closing, all instruments executed and delivered by such Seller Party at or in connection with the Closing shall have been duly executed and delivered by such Seller Party. This Agreement constitutes the legal, valid, and binding obligation of such Seller Party, enforceable against such Seller Party in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy or other similar laws affecting the rights and remedies of creditors generally and by general principles of equity (regardless of whether such enforceability is considered in a Proceeding in equity or at law). Upon execution and delivery by such Seller Party of the Instruments of Conveyance at the Closing, such Instruments of Conveyance shall constitute legal, valid and binding transfers and conveyances of the Assets. Upon the execution and delivery by such Seller Party of any other documents at the Closing (collectively with the Instruments of Conveyance, such Seller Party’s “ Seller Closing Documents ”), such Seller Closing Documents shall constitute the legal, valid, and binding obligations of such Seller Party, enforceable against such Seller Party in accordance with their terms, except as such enforceability may be limited by applicable bankruptcy or other similar laws affecting the rights and remedies of creditors generally and by general principles of equity (regardless of whether such enforceability is considered in a Proceeding in equity or at law).
(b)
Except as set forth in Schedule 3.02(b) , and assuming the receipt of all Consents and the waiver of all Preferential Purchase Rights (in each case) applicable to the Contemplated Transactions, and assuming compliance with the HSR Act, neither the execution and delivery of this Agreement by such Seller Party nor the consummation or performance of any of the Contemplated Transactions by such Seller Party shall, directly or indirectly (with or without notice or lapse of time):
(i)
contravene, conflict with, or result in a violation of (A) any provision of the Organizational Documents of such Seller Party, or (B) any resolution adopted by the board of directors, managers or officers of such Seller Party;
(ii)
contravene, conflict with, or result in a violation of, or give any Governmental Body or other Person the right to challenge any of the Contemplated Transactions, to terminate, accelerate, or modify any terms of, or to exercise any remedy or obtain any relief under, any Lease, Fee Mineral or Contract or any Legal Requirement or Order to which such Seller Party, or any of the Assets, may be subject;
(iii)
contravene, conflict with, or result in a violation of any of the terms or requirements of, or give any Governmental Body the right to revoke, withdraw, suspend, cancel, terminate, or modify, any Governmental Authorization that relates to the Assets; or

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(iv)
result in the imposition or creation of any Encumbrance upon or with respect to any of the Assets, except for Permitted Encumbrances.
3.03     Bankruptcy . Except for claims or matters related to the Bankruptcy Case commenced on May 11, 2016 and concluded on February 28, 2017, for which the United States Bankruptcy Court for the Southern District of Texas retains jurisdiction, there are no bankruptcy, reorganization, receivership, or arrangement proceedings pending or being contemplated by such Seller Party or, to such Seller Party’s Knowledge, Threatened against such Seller Party or any of its Affiliates.
3.04     Taxes . Except as disclosed on Schedule 3.04 , all Tax Returns required to be filed by such Seller Party with respect to Asset Taxes have been timely filed and all such Tax Returns are correct and complete in all material respects. Except as disclosed on Schedule 3.04 , all Asset Taxes required to be paid by such Seller Party with respect to the Assets that are or have become due have been timely paid in full, and such Seller Party is not delinquent in the payment of any such Asset Taxes. There are no Encumbrances for Taxes on such Seller Party’s interest in the Assets, other than Permitted Encumbrances. Except as disclosed on Schedule 3.04 , there is not currently in effect any extension or waiver of any statute of limitations of any jurisdiction regarding the assessment or collection of any Asset Taxes relating to the Assets. There are no administrative or judicial proceedings by any Governmental Body pending against such Seller Party relating to the Assets with respect to Asset Taxes. All Tax withholding and deposit requirements imposed by applicable Legal Requirements with respect to any of the Assets have been satisfied in all material respects. Except as disclosed on Schedule 3.04 , no Asset is subject to any Tax partnership agreement or provisions requiring a partnership income Tax Return to be filed under Subchapter K of Chapter 1 of Subtitle A of the Code or any similar state statute.
3.05     Legal Proceedings . Other than the Assumed Litigation and Retained Litigation, such Seller Party has not been served with any Proceeding, and, to such Seller Party’s Knowledge, there is no pending or Threatened Proceeding (except for immaterial or frivolous claims) against such Seller Party or any of its Affiliates or any of the Assets, in each case, that (a) relates to such Seller Party’s ownership or operation of any of the Assets, or (b) challenges, or may have the effect of preventing, delaying, making illegal, or otherwise interfering with, any of the Contemplated Transactions.
3.06     Brokers . Neither such Seller Party nor its Affiliates have incurred any obligation or liability, contingent or otherwise, for broker’s or finder’s fees with respect to the Contemplated Transactions other than obligations that are and will remain the sole responsibility of such Seller Party and its Affiliates.
3.07     Compliance with Legal Requirements . Except as set forth in Schedule 3.07 , there is no material uncured violation by such Seller Party of any Legal Requirements (other than Environmental Laws) with respect to such Seller Party’s ownership or operation of the Assets.
3.08     Prepayments . Except for any Imbalances, such Seller Party has not received payment under any Contract for the sale of Hydrocarbons produced from the Assets which requires delivery in the future to any party of Hydrocarbons previously paid for and not yet delivered.

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3.09     Imbalances . Except as set forth in Schedule 3.09 , there are no Imbalances with respect to such Seller Party’s obligations relating to the Wells as of the Effective Time.
3.10     Material Contracts . Schedule 3.10 sets forth all Applicable Contracts with respect to such Seller Party of the type described below as of the Execution Date (collectively, the “ Material Contracts ”); provided that with respect to Applicable Contracts related solely to Assets that are not operated by any Seller Party, the entirety of this Section 3.10 is made to Seller Party’s Knowledge:
(a)
any Applicable Contract that is a Hydrocarbon purchase and sale, transportation, gathering, treating, compression, marketing, processing, or similar Applicable Contract that is not terminable without penalty on thirty-five (35) days’ or less notice;
(b)
any Applicable Contract that can reasonably be expected to result in aggregate payments by such Seller Party or revenues payable to Seller of more than Two Hundred Thousand Dollars ($200,000) net to such Seller Party’s interest during the current or any subsequent fiscal year or more than One Million Dollars ($1,000,000) net to such Seller Party’s interest in the aggregate over the term of such Applicable Contract (based on the terms thereof and contracted (or if none, current) quantities where applicable);
(c)
any Applicable Contract that is an indenture, mortgage, security interest, loan, credit agreement, sale-leaseback, guaranty of any obligation, bond, letter of credit, or similar financial Contract;
(d)
any Applicable Contract that constitutes a lease under which Seller or any Affiliate of Seller is the lessor or the lessee of any real or personal property (other than a Lease) which lease cannot be terminated by Seller without penalty upon 60 days or less notice;
(e)
any Applicable Contract that contains calls upon or options to purchase production, take-or-pay payments, production payments, advance payments or other similar payment, with respect to obligations to deliver Hydrocarbons, or proceeds from the sale thereof, attributable to the Assets at some future time without receiving payment therefor at or after the time of delivery or is a dedication of production or otherwise requires production to be transported, processed or sold in a particular fashion;
(f)
any Applicable Contract (executory or otherwise) to sell, lease, farmout, or otherwise dispose of or encumber any interest in any of the Assets after the Execution Date, other than conventional rights of reassignment arising in connection with Seller’s surrender or release of any of the Assets;
(g)
any Applicable Contract that constitutes a joint venture or unit operating agreement;
(h)
any Applicable Contract for which the primary purpose is to provide for the indemnification of another Person; and
(i)
any Applicable Contract that constitutes a partnership agreement, joint venture agreement, area of mutual interest agreement, joint development agreement, joint operating agreement, non-compete agreement, development agreement, participation

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agreement, farmin or farmout agreement, and any agreement that purports to restrict, limit or prohibit the manner in which, or the locations in which, Seller or any Affiliate of Seller conducts business or any similar Contract where the primary obligation has not been completed prior to the Effective Time (in each case, excluding any Tax partnership).
Neither such Seller Party, nor to the Knowledge of such Seller Party, any other party, is in default under any Material Contract (and to Seller’s Knowledge, no event has occurred that upon receipt of notice or lapse of time or both would constitute any default) except as set forth in Schedule 3.10 . Except as set forth in Schedule 3.10 , (i) there are no Contracts with Affiliates of such Seller Party that will be binding on the Assets after Closing, and (ii) Seller has not given nor received any unresolved written notice of default, amendment, waiver, price redetermination, market out, curtailment or termination with respect to any Material Contract. Prior to the execution of this Agreement, Seller has made available to Buyer true and complete copies of each Material Contract and all amendments thereto.
3.11     Consents and Preferential Purchase Rights . Except as set forth in Schedule 3.11 , none of the Assets is subject to any Preferential Purchase Rights or Consents required to be obtained by such Seller Party which may be applicable to the Contemplated Transactions, except for (a) Consents and approvals of Governmental Bodies that are customarily obtained after Closing, (b) Contracts that are terminable upon not greater than thirty (30) days’ notice without payment of any fee, and (c) compliance with the HSR Act.
3.12     Permits . To such Seller Party’s Knowledge, except as set forth in Schedule 3.12 , (a) with respect to Assets currently operated by such Seller Party or any of its Affiliates, such Seller Party or its Affiliate (as applicable) has acquired all Permits from appropriate Governmental Bodies to conduct operations on such Assets in material compliance with all applicable Legal Requirements; (b) all such Permits are in full force and effect and no Proceeding is pending or, to such Seller Party’s Knowledge, Threatened to suspend, revoke or terminate any such Permit or declare any such Permit invalid; and (c) such Seller Party is in compliance in all material respects with all such Permits.
3.13     Current Commitments. Schedule 3.13 sets forth, as of the Execution Date, all approved authorizations for expenditures and other approved capital commitments, individually equal to or greater than One Hundred Thousand Dollars ($100,000) (net to such Seller Party’s interest) (the “AFEs”) relating to the Assets to drill or rework any Wells or for other capital expenditures pursuant to any of the Material Contracts, Fee Minerals or Leases for which all of the activities anticipated in such AFEs have not been completed by the Effective Time.
3.14     Environmental Laws . Except as disclosed on Schedule 3.14 , (a) there are no actions, suits or proceedings pending, or, to such Seller Party’s Knowledge, Threatened in writing before any Governmental Body with respect to the Assets alleging material violations of, or material liabilities under, Environmental Laws, or claiming remediation obligations, (b) such Seller Party has not entered into nor is a party (directly or as successor in interest) to, any agreement with, plea, diversion agreement or consent, order, decree or judgment of any Governmental Authority that are uncured as of the Execution Date with respect to the Assets, and (c) such Seller Party has not received any written notice from (x) any Governmental Body or (y) within two (2) years prior to the Execution Date, any Person, of any alleged or actual material


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violation or non-compliance with, obligation to remediate, or material liability under, any Environmental Law or of material non-compliance with the terms or conditions of any environmental permits, arising from, based upon, associated with or related to the Assets or the ownership or operation of any thereof. As of the Execution Date, Seller has provided Buyer all material, non-privileged, written reports prepared by a Third Party on behalf of Seller within three (3) years of the Execution Date with respect to any of the Assets.
3.15     Wells. Except as disclosed on Schedule 3.15 (a) no Well is subject to material penalties on allowable production after the Effective Time because of any overproduction, and (b) there are no Wells that such Seller Party is obligated by applicable Law or contract to plug or abandon or that are currently subject to exceptions to a requirement to plug or abandon issued by a Governmental Body. All wells plugged and abandoned by Seller have been plugged and abandoned in accordance with applicable Legal Requirements, the Fee Minerals and the Leases.
3.16     Non-Consent Operations . Such Seller Party has neither elected nor been deemed to have elected to “non-consent”, nor failed to participate in, the drilling or reworking of a well, any seismic program or any other operation which would cause such Seller Party or Buyer to suffer a penalty or lose or forfeit any material interests in the Assets under any applicable operating agreement.
3.17     Condemnation and Eminent Domain . As of the Execution Date, no action for condemnation or taking under right of eminent domain is pending or, to such Seller Party’s Knowledge, Threatened with respect to any Asset or portion thereof.
3.18     Payment of Royalties; Compliance with Leases .
(a)
Except (a) for the Suspense Funds that are being held in compliance with applicable Legal Requirements and Leases and (b) as set forth in Schedule 3.18 and Schedule 3.05 , such Seller Party has duly and properly paid, or caused to be duly and properly paid in all material respects, all Royalties due by such Seller Party during the period of such Seller Party’s ownership of the Assets; provided , however that no failure to comply with the foregoing that does not result in the termination of a Lease shall be considered a breach of this Section 3.18 .
(b)
Since January 1, 2016, such Seller Party has not received any written notice from any lessor under any of the Leases seeking to terminate, cancel or rescind any Lease, and such Seller Party has not received any written notice from any lessor under any of the Leases alleging any unresolved material default under any Lease.
3.19     Bonds and Credit Support . Schedule 3.19 lists all material bonds, letters of credit and other similar credit support instruments maintained by Seller or any Affiliate of Seller with any Governmental Authority or other Third Party with respect to the Assets.
3.20     Payout Status . As of the Execution Date, except as set forth in Schedule 3.20 , such Seller Party has not elected (and was not deemed to have elected) not to participate in any operation or activity proposed with respect to the Assets. Schedule 3.20 contains a complete and accurate list of the status of any “payout” balance, as of the Effective Time, for the Linn operated

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Wells subject to a reversion or other adjustment at some level of cost recovery or payout (or passage of time or other event other than termination of a Lease by its terms).
3.21     Employee Benefits .
(a)
Schedule 3.21(a) contains a true and complete list of each “employee benefit plan,” as defined in Section 3(3) of ERISA, and all other retirement, pension, deferred compensation, bonus, incentive, severance, executive life insurance, medical, dental, vision, disability, cafeteria, flexible spending, leave of absence, vacation, stock purchase, stock option, phantom stock, equity, employment, profit sharing, retention, stay bonus, change of control and other compensation or benefit plans, programs, agreements or arrangements maintained, sponsored or contributed to by such Seller Party or any of its ERISA Affiliates for the benefit of any Available Employee (collectively, such Seller Party’s “ Seller Benefit Plans ”).
(b)
The Seller has not incurred nor could Seller incur any liability (whether fixed or contingent) under Title IV of ERISA which will result in any such liability to Buyer.
(c)
Each Seller Benefit Plan intended to qualify under Section 401(a) of the Code has either received a favorable determination letter or opinion letter from the Internal Revenue Service that it is so qualified and each related trust that is intended to be exempt from federal income taxation under Section 501(a) of the Code has received a determination letter or opinion letter from the Internal Revenue Service that it is so exempt, and, to the Knowledge of Sellers, no fact or event has occurred that could reasonably be expected to affect adversely the qualified status of any such Seller Plan or the exempt status of any such trust.
3.22     Suspense Accounts . Schedule 3.22 lists all Suspense Funds held in suspense by Seller and its Affiliates and all Specified Receivables as of the date set forth on Schedule 3.22 , a description of the source of the Suspense Funds or Specified Receivables and the reason they are being held in suspense and, if known, the name or names of the Persons claiming the Suspense Funds, to whom the Suspense Funds are owed or who owes such Specified Receivables.
3.23     Drilling Obligations . Seller does not have any unfulfilled drilling obligations (including offset drilling obligations) under any Lease or Fee Mineral or otherwise affecting the Leases or Fee Minerals by virtue of a Contract relating to the Assets or the ownership or operation thereof or any obligation to pay compensatory royalties resulting from any such drilling obligation.
3.24     Disclosures with Multiple Applicability; Materiality . If it is reasonably apparent on the face of any disclosure that such fact, condition, or matter disclosed in Seller’s disclosure Schedules applies to more than one Section of this Article 3 , a single disclosure of such fact, condition, or matter on Seller’s disclosure Schedules shall constitute disclosure with respect to all sections of this Article 3 to which such fact, condition, or other matter applies, regardless of the section of Seller’s disclosure Schedules in which such fact, condition, or other matter is described. Inclusion of a matter on Seller’s disclosure Schedules with respect to a representation or warranty that is qualified by “material” or “Material Adverse Effect” or any


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variant thereof shall not necessarily be deemed an indication that such matter does, or may, be material or have a Material Adverse Effect. Matters may be disclosed on a Schedule to this Agreement for purposes of information only.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller, as of the Execution Date and the Closing Date, the following:
4.01     Organization and Good Standing . Buyer is a limited liability company and duly organized, validly existing, and in good standing under the laws of Delaware and is duly qualified to do business and is in good standing in each jurisdiction in which the Assets are located.
4.02     Authority; No Conflict .
(a)
This Agreement constitutes the legal, valid, and binding obligation of Buyer, enforceable against Buyer in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy or other similar laws affecting the rights and remedies of creditors generally and by general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). Upon the execution and delivery by Buyer of the Instruments of Conveyance and any other documents executed and delivered by Buyer at the Closing (collectively, “ Buyer’s Closing Documents ”), Buyer’s Closing Documents shall constitute the legal, valid, and binding obligations of Buyer enforceable against Buyer in accordance with their respective terms, except as such enforceability may be limited by applicable bankruptcy or other similar laws affecting the rights and remedies of creditors generally and by general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). Buyer has the absolute and unrestricted right, power, authority, and capacity to execute and deliver this Agreement and Buyer’s Closing Documents, and to perform its obligations under this Agreement and Buyer’s Closing Documents.
(b)
Neither the execution and delivery of this Agreement by Buyer nor the consummation or performance of any of the Contemplated Transactions by Buyer shall give any Person the right to prevent, delay, or otherwise interfere with any of the Contemplated Transactions.
(c)
Neither the execution and delivery of this Agreement by Buyer nor the consummation or performance of any of the Contemplated Transactions by Buyer shall (i) contravene, conflict with, or result in a violation of any provision of the Organizational Documents of Buyer, (ii) contravene, conflict with, or result in a violation of any resolution adopted by the board of managers, or members of Buyer, or (iii) contravene, conflict with, or result in a violation of, or give any Governmental Body or other Person the right to challenge any of the Contemplated Transactions, to terminate, accelerate, or modify any terms of, or to exercise any remedy or obtain any relief under, any agreement or any Legal Requirement or Order to which Buyer may be subject.

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(d)
Buyer is not and shall not be required to give any notice to or obtain any Consent from any Person in connection with the execution and delivery of this Agreement or the consummation or performance of any of the Contemplated Transactions.
4.03     Certain Proceedings . There is no Proceeding pending against Buyer that challenges, or may have the effect of preventing, delaying, making illegal, or otherwise interfering with, any of the Contemplated Transactions. To Buyer’s Knowledge, no such Proceeding has been Threatened.
4.04     Knowledgeable Investor . Buyer is an experienced and knowledgeable investor in the oil and gas business. Prior to entering into this Agreement, Buyer was advised by its own legal, Tax, and other professional counsel concerning this Agreement, the Contemplated Transactions, the Assets, and their value, and it has relied solely thereon and on the representations and obligations of Seller in this Agreement and the documents to be executed by Seller in connection with this Agreement at the Closing. Buyer is acquiring the Assets for its own account and not for sale or distribution in violation of the Securities Act of 1933, as amended, the rules and regulations thereunder, any applicable state blue sky laws, or any other applicable Legal Requirements.
4.05     Qualification . Buyer is an “accredited investor,” as such term is defined in Regulation D of the Securities Act of 1933, as amended. Buyer is not acquiring the Assets in connection with a distribution or resale thereof in violation of federal or state securities laws and the rules and regulations thereunder. Without limiting Section 6.02 , Buyer is, or will be as of the Closing, qualified under applicable Legal Requirements to hold leases, rights-of-way, and other rights issued or controlled by (or on behalf of) any applicable Governmental Body and will be qualified under applicable Legal Requirements to own and operate the Assets. To Buyer’s Knowledge, no fact or condition exists with respect to Buyer or the Assets which may cause any Governmental Body to withhold its approval of the Contemplated Transactions.
4.06     Brokers . Neither Buyer nor its Affiliates have incurred any obligation or liability, contingent or otherwise, for broker’s or finder’s fees with respect to the Contemplated Transactions other than obligations that are or will remain the sole responsibility of Buyer and its Affiliates.
4.07     Financial Ability . Buyer will have, as of the Closing, sufficient cash, available lines of credit, or other sources of immediately available funds to enable it to (a) deliver the amounts due at the Closing, (b) take such actions as may be required to consummate the Contemplated Transactions (other than payment of the Assumed Liabilities), and (c) timely pay and perform Buyer’s obligations under this Agreement and Buyer’s Closing Documents. Buyer expressly acknowledges that the failure to have sufficient funds shall in no event be a condition to the performance of its obligations hereunder, and in no event shall the Buyer’s failure to perform its obligations hereunder be excused by failure to receive funds from any source.
4.08     Securities Laws . The solicitation of offers and the sale of the Assets by Seller have not been registered under any securities laws. At no time has Buyer been presented with or solicited by or through any public promotion or any form of advertising in connection with the Contemplated Transactions. Buyer is not acquiring the Assets with the intent of distributing


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fractional, undivided interests that would be subject to regulation by federal or state securities laws, and that if it sells, transfers, or otherwise disposes of the Assets or fractional undivided interests therein, it shall do so in compliance with applicable federal and state securities laws.
4.09     Due Diligence . Without limiting or impairing any representation, warranty, covenant or agreement of Seller contained in this Agreement and the Seller Closing Documents, or Buyer’s right to rely thereon, Buyer and its Representatives have (a) been permitted full and complete access to all materials relating to the Assets, (b) been afforded the opportunity to ask all questions of Seller (or Seller’s Representatives) concerning the Assets, (c) been afforded the opportunity to investigate the condition of the Assets, and (d) had the opportunity to take such other actions and make such other independent investigations as Buyer deems necessary to evaluate the Assets and understand the merits and risks of an investment therein and to verify the truth, accuracy, and completeness of the materials, documents, and other information provided or made available to Buyer (whether by Seller or otherwise). WITHOUT LIMITING ANY OF ITS EXPRESS REMEDIES IN THIS AGREEMENT OR ANY OF BUYER’S CLOSING DOCUMENTS OR SELLER’S CLOSING DOCUMENTS, BUYER HEREBY WAIVES ANY CLAIMS ARISING OUT OF ANY MATERIALS, DOCUMENTS, OR OTHER INFORMATION PROVIDED OR MADE AVAILABLE TO BUYER (WHETHER BY SELLER OR OTHERWISE), WHETHER UNDER THIS AGREEMENT, AT COMMON LAW, BY STATUTE, OR OTHERWISE.
4.10     Basis of Buyer’s Decision . By reason of Buyer’s knowledge and experience in the evaluation, acquisition, and operation of oil and gas properties, Buyer has evaluated the merits and the risks of purchasing the Assets from Seller and has formed an opinion based solely on Buyer’s knowledge and experience, Buyer’s due diligence, and Seller’s representations, warranties, covenants, and agreements contained in this Agreement and the Seller Closing Documents, and not on any other representations or warranties by Seller. Buyer has not relied and shall not rely on any statements by Seller or its Representatives (other than those representations, warranties, covenants, and agreements of Seller contained in this Agreement and the Seller Closing Documents) in making its decision to enter into this Agreement or to close the Contemplated Transactions. BUYER UNDERSTANDS AND ACKNOWLEDGES THAT NEITHER THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER GOVERNMENTAL BODY HAS PASSED UPON THE ASSETS OR MADE ANY FINDING OR DETERMINATION AS TO THE FAIRNESS OF AN INVESTMENT IN THE ASSETS OR THE ACCURACY OR ADEQUACY OF THE DISCLOSURES MADE TO BUYER, AND, EXCEPT AS SET FORTH IN ARTICLE 9 , BUYER IS NOT ENTITLED TO CANCEL, TERMINATE, OR REVOKE THIS AGREEMENT, WHETHER DUE TO THE INABILITY OF BUYER TO OBTAIN FINANCING OR PAY THE PURCHASE PRICE, OR OTHERWISE.
4.11     Business Use, Bargaining Position . Buyer is purchasing the Assets for commercial or business use. Buyer has sufficient knowledge and experience in financial and business matters that enables it to evaluate the merits and the risks of transactions such as the Contemplated Transactions, and Buyer is not in a significantly disparate bargaining position with Seller. Buyer expressly acknowledges and recognizes that the price for which Seller has agreed to sell the Assets and perform its obligations under the terms of this Agreement has been predicated upon the inapplicability of the Texas Deceptive Trade Practices - Consumer Protection Act, V.C.T.A. BUS & COMM ANN. § 17.41 et seq. (the “ DTPA ”), to the extent applicable, or any similar Legal Requirement, and the waiver of the DTPA, and any similar Legal Requirement, by Buyer contained in Section 13.04 . BUYER FURTHER RECOGNIZES THAT


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SELLER, IN DETERMINING TO PROCEED WITH ENTERING INTO THIS AGREEMENT, HAS EXPRESSLY RELIED ON THE PROVISIONS OF THIS ARTICLE 4 .
4.12     Bankruptcy . There are no bankruptcy, reorganization, receivership, or arrangement proceedings pending or being contemplated by Buyer or, to Buyer’s Knowledge, Threatened against Buyer. Buyer is, and will be immediately after giving effect to the Contemplated Transactions, solvent.
ARTICLE 5
COVENANTS OF SELLER
5.01     Access and Investigation .
(A)
Between the Execution Date and the Closing Date, to the extent doing so would not violate applicable Legal Requirements, Seller’s obligations to any Third Party or other restrictions on Seller (provided that Seller shall use its commercially reasonable efforts to obtain waivers of any such restriction upon request from Buyer), Seller shall afford Buyer and its Representatives access, by appointment only, during Seller’s regular hours of business to reasonably appropriate Seller’s personnel, any Seller operated Assets, Records, contracts, books and records, and other documents and data related to the Assets, except any such contracts, books and records, or other documents and data that are Excluded Assets or that cannot, without unreasonable effort or expense, be separated from any contracts, books and records, or other documents and data that are Excluded Assets (and upon Buyer’s request, Seller shall use reasonable efforts to obtain the consent of Third Party operators to give Buyer and its Representatives reasonable access to similar information with respect to Assets not operated by Seller or its Affiliates; provided that Seller shall not be required to make payments or undertake obligations in favor any Third parties in order to obtain such consent unless Buyer agrees to reimburse Seller therefor); PROVIDED THAT, EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT OR IN THE INSTRUMENTS OF CONVEYANCE, SELLER MAKES NO REPRESENTATION OR WARRANTY, AND EXPRESSLY DISCLAIMS ALL REPRESENTATIONS AND WARRANTIES AS TO THE ACCURACY OR COMPLETENESS OF THE DOCUMENTS, INFORMATION, BOOKS, RECORDS, FILES, AND OTHER DATA THAT IT MAY PROVIDE OR DISCLOSE TO BUYER .
(b)
Notwithstanding the provisions of Section 5.01(a) , (i) Buyer’s investigation shall be conducted in a manner that reasonably minimizes interference with the operation of the business of Seller and any applicable Third Parties, and (ii) Buyer’s right of access shall not entitle Buyer to operate equipment or conduct subsurface or other invasive testing or sampling. Environmental review shall not exceed the review contemplated by a Phase I Environmental Site Assessment without Seller’s prior written permission, which may be withheld in Seller’s sole discretion, subject to the provisions of Section 11.09 .
(c)
Buyer acknowledges that, pursuant to its right of access to the Records and the Assets, Buyer will become privy to confidential and other information of Seller and Seller’s Affiliates and the Assets and that such confidential information shall be held confidential by Buyer and Buyer’s Representatives in accordance with the terms of the Confidentiality Agreement. If the Closing should occur, the foregoing confidentiality restriction on

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Buyer, including the Confidentiality Agreement, shall terminate (except as to the Excluded Assets); provided that such termination of the Confidentiality Agreement shall not relieve any party thereto from any liability thereunder for the breach of such agreement prior to the Execution Date.
5.02     Operation of the Assets . Except as set forth on Schedule 5.02, or as required by applicable Legal Requirements, between the Execution Date and the Closing, Seller shall:
(a)
operate the Assets operated by Seller or its Affiliates, and use its reasonable efforts to cause the operation of the Assets operated by a Third Party to be operated, in each case (A) as would a reasonable and prudent operator, (B) in the ordinary course of business consistent with past practice, and (C) in accordance with all applicable Laws and the terms of the Leases, Fee Minerals and Applicable Contracts;
(b)
maintain, or use commercially reasonable efforts to cause the applicable Third Party operators to maintain, all Leases, Fee Minerals, Easements, Permits and Applicable Contracts in full force and effect and in accordance with the terms of the Leases, Permits, Fee Minerals and the Applicable Contracts relating thereto;
(c)
subject to Section 2.05(a) , pay all Property Costs, Royalties and other expenses incurred with respect to the Assets in the ordinary course of business;
(d)
maintain the books of account and records relating to the Assets in the ordinary course of business, in accordance with the usual accounting practices of each such Person;
(e)
give prompt notice to Buyer of any written notice received by Seller or any of its Affiliates of any material claim asserting any breach of Contract, tort or violation of Legal Requirement or any investigation, suit, action or litigation by or before a Governmental Body, that, in each case, relates to the Assets;
(f)
give prompt notice to Buyer of (A) any written notice of any material damage to or destruction of any of the Assets and (B) any written notice received by Seller or any of its Affiliates of any material claim asserting any breach of contract, tort or violation of Law or any investigation, suit, action or litigation by or before a Governmental Authority, that, in each case, relates to the Assets;
(g)
not transfer, sell, hypothecate, encumber, or otherwise dispose of any of the Assets, except as required under any Leases or Applicable Contracts, and except for sales of Hydrocarbons, equipment and inventory in the ordinary course of business;
(h)
not abandon any Asset (except the abandonment or expiration of Leases in accordance with their terms, including with respect to leases not capable of producing in paying quantities after the expiration of their primary terms or for failure to pay delay rentals or shut-in royalties or similar types of lease maintenance payments, which shall, in each case, be at Seller’s sole discretion);
(i)
not commence, propose, or agree to participate in any single operation with respect to the Wells, Fee Minerals or Leases with an anticipated cost in excess of One Hundred

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Thousand Dollars ($100,000) net to Seller’s interest, except for any emergency operations;
(A)    With respect to any AFE for an operation to be conducted in connection with the Assets that is anticipated to cost in excess of $100,000 per operation, upon receipt of such AFE from Seller, Buyer shall review and respond, within five (5) days of its receipt thereof, to Seller in writing with respect to whether it desires to consent or non-consent the operation covered by such AFE; provided that if Buyer does not timely respond with its election with respect to any such AFE within such five day period, then Buyer shall be deemed to have responded to approve such AFE; and
(B)    If Buyer affirmatively elects to non-consent to any such operation proposed by a Third Party that is anticipated to cost in excess of $100,000, Seller shall not be entitled to consent to such operation;
(j)
not execute, terminate, cancel, extend, or materially amend or modify any Lease, Fee Minerals, Material Contract or Contract that would have been a Material Contract on the Execution Date if in effect at such time other than the execution or extension of a Contract for the sale, exchange, transportation, gathering, treating, or processing of Hydrocarbons terminable without penalty on thirty-five (35) days’ or shorter notice;
(k)
not settle any suit or litigation or waive any claims or rights of value, in each case, attributable to the Assumed Liabilities;
(l)
not voluntarily relinquish its position as operator with respect to any Asset that Seller or its Affiliates operated as of the Execution Date;
(m)
except for any actions taken pursuant to Section 5.04 , not (i) make, change or revoke any Tax election; (ii) change an annual accounting period; (iii) adopt or change any accounting method with respect to Taxes; (iv) file any amended Tax Return; (v) enter into any closing agreement; settle or compromise any Tax claim or assessment; or (vi) consent to any extension or waiver of the limitation period applicable to any claim or assessment with respect to Taxes; in each case to the extent such action would materially and adversely affect the Assets;
(n)
not abandon any Well capable of commercial production, or release or abandon all or any part of the Assets capable of commercial production, or release or abandon all or any portion of the Leases or Fee Minerals;
(o)
not relinquish its position as operator of any Asset; and
(p)
not commit to do any of the foregoing.
Buyer acknowledges that Seller owns undivided interests in certain of the properties comprising the Assets, and Buyer agrees that the acts or omissions of the other working interest owners who are not Seller or an Affiliate of Seller shall not constitute a Breach of the provisions of this Section 5.02 , nor shall any action required by a vote of working interest owners constitute such a Breach so long as Seller or its Affiliate has voted its interest in a manner that complies with the


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provisions of this Section 5.02 . Further, no action or inaction of any Third Party operator with respect to any Asset shall constitute a Breach of this Section 5.02 to the extent Seller uses commercially reasonable efforts to cause such Third Party operator to operate such applicable Asset in a manner consistent with this Section 5.02 . Seller may seek Buyer’s approval to perform any action that would otherwise be restricted by this Section 5.02 , and Buyer’s approval of any such action shall not be unreasonably withheld, conditioned, or delayed, and shall be considered granted ten (10) days (unless a shorter time is reasonably required by the circumstances and such shorter time is specified in Seller’s notice) after delivery of notice from Seller to Buyer requesting such consent unless Buyer notifies Seller to the contrary during such ten (10)-day period. Notwithstanding the foregoing provisions of this Section 5.02 , in the event of an emergency, Seller may take such action as reasonably necessary to address any immediate threats of property damage, injury to Person, damage to the environment or violations of Legal Requirements and shall notify Buyer of such action promptly thereafter. Any matter approved (or deemed approved) by Buyer pursuant to this Section 5.02 that would otherwise constitute a Breach of one of Seller’s representations and warranties in Article 3 shall be deemed to be an exclusion from all representations and warranties for which it is relevant to the extent that such operation (i) is conducted in accordance with the proposal for consent submitted to Buyer pursuant to this Section 5.02 and (ii) is otherwise conducted in accordance with Section 5.02(a) .
5.03     Insurance . Seller shall maintain in force during the period from the Execution Date until the Closing, all of Seller’s insurance policies pertaining to the Assets in the amounts and with the coverages currently maintained by Seller. The daily pro-rated annual premiums for insurance that accrue after the Effective Time and are attributable to the insurance coverage for the period after the Effective Time until the Closing will constitute Property Costs.
5.04     Consent and Waivers . Seller shall use commercially reasonable efforts to obtain prior to the Closing written waivers of all Preferential Purchase Rights (and post-Closing with respect to any matters not resolved prior to Closing) and all Consents necessary for the transfer of the Assets to Buyer; provided that in the event Seller is unable to obtain all such waivers of Preferential Purchase Rights and Consents after using such commercially reasonable efforts, such failure to satisfy shall not constitute a Breach of this Agreement. Seller shall not be required to make any payments to, or undertake any obligations for the benefit of, the holders of such rights in order to obtain the Required Consents. Buyer shall reasonably cooperate with Seller in seeking to obtain such Consents, but Buyer shall not be required to make any payments to, or undertake any obligations for the benefit of, the holders of such rights in order to obtain the Required Consents.
5.05     Amendment to Schedules . Until the fifth (5th) Business Day before Closing, Seller shall have the right (but not the obligation) to supplement the Schedules relating to the representations and warranties set forth in Article 3 with respect to any matters occurring subsequent to the Execution Date. Except to the extent such updates are a direct result of actions taken with Buyer’s consent pursuant to Section 5.02 , prior to Closing, any such supplement shall not be considered for purposes of determining if Buyer’s Closing conditions have been met under Section 7.01 or for determining any remedies available under this Agreement.
5.06     Successor Operator . While Buyer acknowledges that it desires to succeed Seller (or its Affiliates) as operator of those Assets or portions thereof that Seller (or its Affiliates) may

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presently operate, Buyer acknowledges and agrees that Seller cannot and does not covenant or warrant that Buyer shall become successor operator of such Assets because the Assets or portions thereof may be subject to operating or other agreements that control the appointment of a successor operator. Seller agrees, however, that as to the Assets any Seller Party or its Affiliate operates, Seller shall use commercially reasonable efforts to support Buyer’s efforts to become successor operator of such Assets (to the extent permitted under any applicable operating agreement) effective as of the Closing (at Buyer’s sole cost and expense) and to designate or appoint, to the extent legally possible and permitted under any applicable operating agreement, Buyer as successor operator of such Assets effective as of Closing.
ARTICLE 6
OTHER COVENANTS
6.01     Notification and Cure . Between the Execution Date and the Closing Date, Buyer shall promptly notify Seller in writing and Seller shall promptly notify Buyer in writing if Seller or Buyer, as applicable, obtain Knowledge of any Breach, in any material respect, of the other Party’s representations and warranties or covenants as of the Execution Date, or of an occurrence after the Execution Date that would cause or constitute a Breach, in any material respect, of any such representation and warranty or covenant had such representation and warranty or covenants been made as of the time of occurrence or discovery of such fact or condition; provided that failure to provide such notice shall not limit a Party’s rights or remedies under this Agreement with respect to such Breach. If any of Buyer’s or Seller’s representations or warranties are untrue or shall become untrue in any material respect between the Execution Date and the Closing Date, or if any of Buyer’s or Seller’s covenants or agreements to be performed or observed prior to or on the Closing Date shall not have been so performed or observed in any material respect, and if such breach of representation, warranty, covenant or agreement shall (if curable) be cured by the Closing (or, if the Closing does not occur, by the date set forth in Section 9.01(d) ), then such Breach shall be considered not to have occurred for all purposes of this Agreement.
6.02     Satisfaction of Conditions . Between the Execution Date and the Closing Date (a) Seller shall use commercially reasonable efforts to cause the conditions in Article 7 to be satisfied, and (b) Buyer shall use commercially reasonable efforts to cause the conditions in Article 8 to be satisfied.
6.03     Replacement of Insurance, Bonds, Letters of Credit, and Guaranties .
(a)
The Parties understand that none of the insurance currently maintained by Seller or Seller’s Affiliates covering the Assets, nor any of the bonds, letters of credit, or guaranties, if any, posted by Seller or Seller’s Affiliates with Governmental Bodies or co-owners and relating to the Assets will be transferred to Buyer. On or before the Closing Date, Buyer shall use its commercially reasonable efforts to obtain, and deliver to Seller evidence of, all necessary replacement bonds, letters of credit, and guaranties, and evidence of such other authorizations, qualifications, and approvals as may be necessary for Buyer to own and, with respect to Assets currently operated by Seller or its Affiliates, operate the Assets. Promptly following the Closing, Buyer shall obtain or cause to be

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obtained in the name of Buyer, such insurance covering the Assets as would be obtained by a reasonably prudent operator in a similar situation.
(b)
Promptly (but in no event later than thirty (30) days) after Closing, Buyer shall, at its sole cost and expense, make all filings with Governmental Bodies necessary to assign and transfer the Assets and title thereto and to comply with applicable Legal Requirements, and Seller shall reasonably assist Buyer with such filings. Buyer shall indemnify, defend, and hold harmless Seller Group from and against all Damages arising out of Buyer’s holding of such title or operatorship of the Assets after the Closing and prior to the securing of any necessary replacement bonds, letters of credit, guaranties, Consents and approvals of the Contemplated Transactions from Governmental Bodies.
6.04     Governmental Reviews . Except for the HSR Act, Seller and Buyer shall (and shall cause their respective Affiliates to), in a timely manner, make all other required filings (if any) with, prepare applications to, and conduct negotiations with Governmental Bodies as required to consummate the Contemplated Transactions. Each Party shall, to the extent permitted pursuant to applicable Legal Requirements, cooperate with and use all reasonable efforts to assist the other with respect to such filings, applications and negotiations. Buyer shall bear the cost of all filing or application fees payable to any Governmental Body with respect to the Contemplated Transactions, regardless of whether Buyer, Seller, or any Affiliate of any of them is required to make the payment.
6.05     Financing Matters
(a)
Assistance with Financing. Prior to the Closing Date, Seller shall provide, and shall use its commercially reasonable efforts to cause its Affiliates and its and its Affiliates’ Representatives to provide, Buyer such cooperation as may be reasonably requested by Buyer with respect to the Debt Financing; provided, that such requested cooperation does not materially and adversely interfere with operations of Seller and the Assets and that any information requested by Buyer is reasonably available to Seller or any of its Affiliates or its or their Representatives. Such cooperation shall include using commercially reasonable efforts (i) to assist Buyer in Buyer’s preparation of disclosure schedules related to the Assets in connection with the Debt Financing and (ii) to facilitate Buyer’s preparation of the documentation necessary to pledge and mortgage the Assets that will be collateral under the Debt Financing; provided that Seller’s obligations under the foregoing clauses (i) and (ii) shall be limited to providing information and data in its current format in Seller’s records and not require that Seller generate new reports regarding the Assets.
(b)
Financial Information.
(i)
Seller shall use its commercially reasonable efforts to cooperate with Buyer and its independent auditor (“ Buyer’s Auditor ”) in Buyer’s preparation, at the sole cost and expense of Buyer, of the Special Financial Statements (as defined below), in such form that such statements and the notes thereto can be audited (in the case of the Annual Financial Statements (as defined below)) or reviewed (in the case of the Interim Financial Statements (as defined below)) by Buyer’s

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Auditor. The “ Special Financial Statements ” shall refer to (A) statements of revenues and direct operating expenses attributable to the Assets for the fiscal years ended December 31, 2016 and 2015 (the “ Annual Financial Statements ”) and (B) statements of revenues and direct operating expenses attributable to the Assets for the three months ended March 31, 2017 and 2016, or if the Closing shall occur on or after June 30, 2017, for the six months ended June 30, 2017 and 2016 (the “ Interim Financial Statements ”). The Special Financial Statements will be prepared in accordance with GAAP and any requirements of the Securities Act of 1933, as amended, and any rules or regulations promulgated thereunder. The Annual Financial Statements shall include the required oil and gas disclosures, including estimates of quantities of proved reserves as of, and a reconciliation of proved oil and gas reserves for, each of the fiscal years ended December 31, 2016 and 2015, and the standardized measure of discounted future net cash flows as of, and a reconciliation of the standardized measure of future discounted cash flows for, each of the fiscal years ended December 31, 2016 and 2015. Seller shall provide Buyer, its Representatives, and Buyer’s Auditor with reasonable access to Seller’s personnel, auditors and Affiliates, in each case reasonably requested by Buyer for the preparation of the Special Financial Statements. Seller agrees to provide, and will use its commercially reasonable efforts to cause its Affiliates to provide, at Buyer’s sole cost and expense, information from, and reasonable access to, its accounting records to the extent required to prepare any pro forma financial statements of Buyer that include pro forma adjustments with respect to Seller, which may be required in any reports, registration statements and other filings to be made by Buyer or any of its Affiliates with the SEC pursuant to the Securities Act and the rules and regulations thereunder or the Exchange Act and the rules and regulations thereunder (the “ SEC Filings ”).
(ii)
In the event the SEC requires financial statements in respect of the Assets that vary in form or content from, or in the periods covered by, the Special Financial Statements (“ Alternative Financial Statements ”), Seller shall, at the sole cost and expense of Buyer, use its commercially reasonable efforts to cooperate with Buyer in the preparation of such financial statements.
(iii)
Notwithstanding anything to the contrary, (A) Seller shall in no event be required to create new records relating to the Assets or Special Financial Statements, (B) the access to be provided to Buyer, its Representatives, and Buyer’s Auditor shall not interfere with Seller’s ability to prepare its own financial statements or its regular conduct of business and shall be made available during Seller’s normal business hours and (C) such cooperation shall not include any actions that Seller reasonably believes would result in a violation of any material agreement or any confidentiality arrangement or the loss of any legal or other applicable privilege. All non-public or otherwise confidential information regarding Seller obtained by Buyer, its Representatives, or Buyer’s Auditor shall be kept confidential for a period of one year from such disclosure in accordance with the terms of the Confidentiality Agreement as if the Confidentiality Agreement were still in effect.

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(c)
Costs and Expenses . Buyer shall promptly, upon request by Seller, reimburse Seller for all reasonable and documented out-of-pocket costs and expenses incurred by Seller in connection with its cooperation contemplated by this Section 6.05 . Except in the case of actual fraud, (i) all of the information provided by Seller pursuant to this Section 6.05 is given without any representation or warranty, express or implied, and (ii) in no event will Seller or its Affiliates or Representatives have any liability of any kind or nature to Buyer, its Financing Sources or any other Person arising or resulting from the cooperation provided in this Section 6.05 or any use of any information provided by Seller or its Affiliates or Representatives provided pursuant to this Section 6.05 . Without affecting Buyer’s rights under this Agreement, Buyer shall indemnify and hold harmless the Seller Group from and against any and all Damages suffered or incurred by any of them in connection with the arrangement of the Debt Financing and any information provided by Seller to Buyer pursuant to this Section 6.05 ; provided, however, that Buyer shall not be required to indemnify and hold harmless the Seller Group to the extent that such Damages arise from or are related to actual fraud by any member of the Seller Group.
6.06     HSR Act . If applicable, within ten (10) Business Days following the execution by Buyer and Seller of this Agreement, Buyer and Seller will each prepare and simultaneously file with the DOJ and the FTC the notification and report form required for the transactions contemplated by this Agreement by the HSR Act and request early termination of the waiting period thereunder. Buyer and Seller agree to respond promptly to any inquiries or requests for information or documentary material from the DOJ or the FTC concerning such filings and to comply in all material respects with the filing requirements of the HSR Act. Buyer and Seller shall cooperate with each other and, subject to the terms of the Confidentiality Agreement, shall promptly furnish all information to the other Party that is necessary in connection with Buyer’s and Seller’s compliance with the HSR Act. Buyer and Seller shall keep each other fully advised with respect to any requests from or communications with the DOJ or FTC concerning such filings and shall consult with each other with respect to all responses thereto. Each of Seller and Buyer shall use its commercially reasonable efforts to take all actions reasonably necessary and appropriate in connection with any HSR Act filing to satisfy the conditions to the Closing and consummate Contemplated Transactions as promptly as practicable and in any event not later than the Outside Date, provided , however , nothing in this Agreement shall require Buyer or Seller to propose, negotiate, effect or agree to, the sale, divestiture, license or other disposition of any assets or businesses of Buyer or Seller (including the Assets) or otherwise take any action that limits the freedom of action with respect to, or its ability to retain or operate any of the businesses of the Buyer or Seller or the Assets. The filing fees associated with any such HSR Act filing shall be borne by Buyer. Notwithstanding any provision of this Section 6.06 , no Party shall be required to provide the other Party with information regarding the value of the transaction or subject to the attorney client privilege, work product doctrine or other similar privilege absent entering into a mutually acceptable joint defense agreement.
6.07     Override Assignment . Between the Execution Date and the Closing Date, Seller shall use its commercially reasonable efforts to execute and deliver assignments of overriding royalty interests covering the Wells set forth on Annex I to Schedule 5.02 in a form substantially similar to that set forth on such Annex I but subject to the restrictions of Section 5.02 ; provided, however, that should Seller be unable to execute and deliver such assignments prior to the


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Closing Date, Buyer shall be obligated to execute and deliver assignments of overriding royalty interests covering the Wells set forth on Annex I to Schedule 5.02 (limited to the assignment of the percentage overriding royalty interests described on Annex I to Schedule 5.02 and the terms set forth in Paragraph 3 of that certain Tonner Canyon Prospect Agreement) upon such time as Glenn Gregory (d/b/a Gregory Geological Services) waives or settles all of his claims with respect to the proper calculation of overriding royalties for gas and assignment of certain overriding royalties, to the extent the foregoing relates to periods on or after the Effective Time, and otherwise pursuant to the Tonner Canyon Prospect Agreement.
ARTICLE 7
CONDITIONS PRECEDENT TO BUYER’S OBLIGATION TO CLOSE
Buyer’s obligation to purchase the Assets and to take the other actions required to be taken by Buyer at the Closing is subject to the satisfaction, at or prior to the Closing, of each of the following conditions (any of which may be waived by Buyer, in whole or in part):
7.01     Accuracy of Representations . All of Seller’s representations and warranties in this Agreement must have been true and correct in all material respects (or, with respect to representations and warranties qualified by materiality or Material Adverse Effect, true and correct in all respects) as of the Execution Date, and must be true and correct in all material respects (or, with respect to representations and warranties qualified by materiality or Material Adverse Effect, true and correct in all respects) as of the Closing Date as if made on the Closing Date, other than any such representation and warranty that refers to a specified date, which need only be true and correct in all material respects (or, if qualified by materiality or Material Adverse Effect, true and correct in all respects) on and as of such specified date.
7.02     Seller’s Performance . All of the covenants and obligations that Seller is required to perform or to comply with pursuant to this Agreement at or prior to the Closing must have been duly performed and complied with in all material respects.
7.03     No Proceedings . Since the Execution Date, there must not have been commenced or Threatened against Seller, or against any of Seller’s Affiliates, any Proceeding (other than any matter initiated by either Buyer or its Affiliates) seeking to restrain, enjoin, or otherwise prohibit or make illegal, or seeking to recover material damages on account of, any of the Contemplated Transactions.
7.04     No Orders . On the Closing Date, there shall be no Order pending or remaining in force of any Governmental Body having appropriate jurisdiction that attempts to restrain, enjoin, or otherwise prohibit the consummation of the Contemplated Transactions, or that grants material damages in connection therewith.
7.05     Necessary Consents and Approvals . All Consents from Governmental Bodies and all approvals from Governmental Bodies required for the Contemplated Transactions, except Consents and approvals of assignments by Governmental Bodies that are customarily obtained after closing, shall have been granted, or the necessary waiting period shall have expired, or early termination of the waiting period shall have been granted.

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7.06     HSR Act . Any waiting period applicable to the consummation of the Contemplated Transactions under the HSR Act shall have expired or been terminated.
7.07     Closing Deliverables . Seller shall have delivered (or be ready, willing and able to deliver at the Closing) to Buyer the documents and other items required to be delivered by Seller under Section 2.04(a).
ARTICLE 8
CONDITIONS PRECEDENT TO SELLER’S OBLIGATION TO CLOSE
Seller’s obligation to sell the Assets and to take the other actions required to be taken by Seller at the Closing is subject to the satisfaction, at or prior to the Closing, of each of the following conditions (any of which may be waived by Seller, in whole or in part):
8.01     Accuracy of Representations . All of Buyer’s representations and warranties in this Agreement must have been true and correct in all material respects (or, with respect to representations and warranties qualified by materiality or Material Adverse Effect, true and correct in all respects) as of the Execution Date, and must be true and correct in all material respects (or, with respect to representations and warranties qualified by materiality or Material Adverse Effect, true and correct in all respects) as of the Closing Date as if made on the Closing Date, other than any such representation and warranty that refers to a specified date, which need only be true and correct in all material respects (or, if qualified by materiality or Material Adverse Effect, true and correct in all respects) on and as of such specified date.
8.02     Buyer’s Performance . All of the covenants and obligations that Buyer is required to perform or to comply with pursuant to this Agreement at or prior to the Closing must have been duly performed and complied with in all material respects.
8.03     No Proceedings . Since the Execution Date, there must not have been commenced or Threatened against Buyer or against any of its Affiliates, any Proceeding (other than any matter initiated by Seller or an Affiliate of Seller) seeking to restrain, enjoin, or otherwise prohibit or make illegal, or seeking to recover material damages on account of, any of the Contemplated Transactions.
8.04     No Orders . On the Closing Date, there shall be no Order pending or remaining in force of any Governmental Body having appropriate jurisdiction that attempts to restrain, enjoin, or otherwise prohibit the consummation of the Contemplated Transactions, or that grants material damages in connection therewith.
8.05     Necessary Consents and Approvals . All Consents from Governmental Bodies and all approvals from Governmental Bodies required for the Contemplated Transactions, except Consents and approvals of assignments by Governmental Bodies that are customarily obtained after closing, shall have been granted, or the necessary waiting period shall have expired, or early termination of the waiting period shall have been granted.
8.06     HSR Act . Any waiting period applicable to the consummation of the Contemplated Transactions under the HSR Act shall have expired or been terminated.

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8.07     Closing Deliverables . Buyer shall have delivered (or be ready, willing and able to deliver at the Closing) to Seller the documents and other items required to be delivered by Buyer under Section 2.04(b).
ARTICLE 9
TERMINATION
9.01     Termination Events . This Agreement may, by written notice given prior to or at the Closing, be terminated:
(a)
by mutual written consent of Seller and Buyer;
(b)
by Buyer, if Seller has committed a material Breach of this Agreement and such Breach causes any of the conditions to Closing set forth in Article 7 not to be satisfied on or before the Outside Date (or, if prior to Closing, such Breach is of such a magnitude or effect that it will not be possible for such condition to be satisfied); provided , however , if (i) Seller’s conditions to Closing have been satisfied or waived in full on or before the Closing, (ii) Buyer is not in material Breach of the terms of this Agreement and (iii) all of Buyer’s conditions to Closing have been satisfied or waived, then the refusal or willful or negligent delay by Seller to timely close the Contemplated Transactions shall constitute a material Breach of this Agreement;
(c)
by Seller, if Buyer has committed a material Breach of this Agreement and such breach causes any of the conditions to Closing set forth in Article 8 not to be satisfied on or before the Outside Date (or, if prior to Closing, such Breach is of such a magnitude or effect that it will not be possible for such condition to be satisfied); provided , however , if (i) Buyer’s conditions to Closing have been satisfied or waived in full on or before the Closing, (ii) Seller is not in material Breach of the terms of this Agreement and (iii) all of Seller’s conditions to Closing have been satisfied or waived, then the refusal or willful or negligent delay by Buyer to timely close the Contemplated Transactions shall constitute a material Breach of this Agreement;
(d)
by either Seller or Buyer if the Closing has not occurred on or before July 30, 2017 (the “ Outside Date ”), or such later date as the Parties may agree upon in writing; provided that such failure does not result primarily from the terminating Party’s material Breach of this Agreement;
(e)
by either Seller or Buyer if (i) any Legal Requirement has made the consummation of the Contemplated Transactions illegal or otherwise prohibited, or (ii) a Governmental Body has issued an Order, or taken any other action permanently restraining, enjoining, or otherwise prohibiting the consummation of the Contemplated Transactions, and such order, decree, ruling, or other action has become final and nonappealable;
(f)
by Seller if the sum of (i) all Title Defect Values asserted by Buyer in good faith and without taking into account the Aggregate Defect Deductible ( less the sum of all Title Benefit Values), plus (ii) the Aggregate Environmental Defect Values asserted by Buyer in good faith and without taking into account the Aggregate Defect Deductible, plus (iii) the aggregate downward Purchase Price adjustments under Section 11.02 , plus (iv) the

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aggregate downward Purchase Price adjustments under Section 11.03 , plus (v) the aggregate Casualty Losses under Section 11.14 exceeds twenty-five percent (25%) of the unadjusted Purchase Price; or
(g)
by Buyer if the sum of (i) all Title Defect Values asserted by Buyer in good faith and without taking into account the Aggregate Defect Deductible ( less the sum of all Title Benefit Values), plus (ii) the Aggregate Environmental Defect Values asserted by Buyer in good faith and without taking into account the Aggregate Defect Deductible, plus (iii) the aggregate downward Purchase Price adjustments under Section 11.02 , plus (iv) the aggregate downward Purchase Price adjustments under Section 11.03 , plus (v) the aggregate Casualty Losses under Section 11.14 , exceeds twenty-five percent (25%) of the unadjusted Purchase Price;
(h)
by Seller if Buyer fails to deposit the Deposit Amount into the Escrow Account on or before 5:00 p.m. (Central Time) on the first (1st) Business Day after the Execution Date;
provided, that no Party shall have the ability to terminate this Agreement under Section 9.01(b) , Section 9.01(c) or Section 9.01(d) if such Party is also in Breach of any material obligations under this Agreement at such time.
9.02     Effect of Termination; Distribution of the Deposit Amount .
(a)
If this Agreement is terminated pursuant to Section 9.01 , all further obligations of the Parties under this Agreement shall terminate; provided that (a) such termination shall not impair nor restrict the rights of either Party against the other with respect to the Deposit Amount pursuant to Section 9.02(b) , and (b) the following provisions shall survive the termination: Article 1 , Sections 9.02 , 10.02(c) , 10.03(c) , 10.06 , 10.07 , 10.10 , 10.11 , 10.12 , Article 13 (other than Section 13.01 ) and any such terms as set forth in this Agreement that are necessary to give context to any of the foregoing surviving Sections.
(b)
Notwithstanding anything to the contrary in Section 9.02(a) :
(i)
If Seller has the right to terminate this Agreement (A) pursuant to Section 9.01(c) or (B) pursuant to Section 9.01(d) , if at such time Seller could have terminated this Agreement pursuant to Section 9.01(c) (without regard to any cure periods contemplated therein), then, in either case, Seller shall have the right to terminate this Agreement and receive the Deposit Amount as liquidated damages (and not as a penalty). If Seller elects to terminate this Agreement pursuant to this Section 9.02(b)(i) and receive the Deposit Amount as liquidated damages, (x) the Parties shall (or shall cause their Affiliate who is party to the Escrow Agreement), within two (2) Business Days of Seller’s election, execute and deliver to the Escrow Agent a joint instruction letter directing the Escrow Agent to release the Deposit Amount to Seller and (y) Seller shall be free to enjoy immediately all rights of ownership of the Assets and to sell, transfer, encumber, or otherwise dispose of the Assets to any Person without any restriction under this Agreement.
(ii)
If Buyer has the right to terminate this Agreement (A) pursuant to Section 9.01(b) or (B) pursuant to Section 9.01(d) , if at such time Seller could have terminated

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this Agreement pursuant to Section 9.01(b) (without regard to any cure periods contemplated therein), then, in either case, Buyer shall have the right, at its sole discretion, to either (1) enforce specific performance by Buyer of this Agreement, without posting any bond or the necessity of proving the inadequacy as a remedy of monetary damages, in which event the Deposit Amount will be applied as called for herein, or (2) if Buyer does not seek and successfully enforce specific performance, terminate this Agreement and (in addition to retention of the Deposit Amount) seek to recover damages from Seller in an amount up to, but not exceeding the Deposit Amount, as liquidated damages (and not as a penalty). If Buyer elects to terminate this Agreement pursuant to this Section 9.02(b)(ii) and seek damages in an amount up to the Deposit Amount as liquidated damages, the Parties shall (or shall cause their Affiliate who is party to the Escrow Agreement to), within two (2) Business Days of Buyer’s election, (x) execute and deliver to the Escrow Agent a joint instruction letter directing the Escrow Agent to release the Deposit Amount to Buyer and (y) Seller shall be free to enjoy immediately all rights of ownership of the Assets and to sell, transfer, encumber, or otherwise dispose of the Assets to any Person without any restriction under this Agreement.
(iii)
If this Agreement is terminated by Seller in accordance with Section 9.01(h) , then the Parties shall have no additional remedies against one another as a result of such termination, and Seller shall be free to enjoy immediately all rights of ownership of the Assets and to sell, transfer, encumber, or otherwise dispose of the Assets to any Person without any restriction under this Agreement.
(c)
The Parties recognize that the actual damages for a Party’s material Breach of this Agreement would be difficult or impossible to ascertain with reasonable certainty and agree that the Deposit Amount would be a reasonable liquidated damages amount for such material Breach. Section 9.02 and Section 9.03 are the Parties’ sole and exclusive rights with respect to any termination of this Agreement and, except as set forth therein, no Party shall have any obligations hereunder after any such termination.
(d)
If this Agreement is terminated by either Buyer or Seller pursuant to Section 9.01 for any reason other than as described in Section 9.02(b) , then, in any such case, the Parties shall (or shall cause their Affiliate who is party to the Escrow Agreement to), within two (2) Business Days of such termination, execute and deliver to the Escrow Agent a joint instruction letter directing the Escrow Agent to release the Deposit Amount to Buyer.
(e)
THE PARTIES FURTHER AGREE THAT, UNLESS AND UNTIL THE CLOSING OCCURS, THE SOLE AND EXCLUSIVE REMEDY OF SELLER AND ITS AFFILIATES AGAINST BUYER, ITS DEBT OR EQUITY FINANCING SOURCES, AND ANY OF THEIR RESPECTIVE FORMER, CURRENT OR FUTURE GENERAL OR LIMITED PARTNERS, EQUITY HOLDERS, CONTROLLING PERSONS, MANAGEMENT COMPANIES, REPRESENTATIVES, ASSIGNEES OR AFFILIATES AND ANY AND ALL FORMER, CURRENT OR FUTURE HEIRS, EXECUTORS, ADMINISTRATORS, TRUSTEES, SUCCESSORS OR ASSIGNS OF THE FOREGOING (COLLECTIVELY, THE “ BUYER RELATED PARTIES ”)

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ARISING FROM OR RELATING TO THIS AGREEMENT AND THE CONTEMPLATED TRANSACTIONS, INCLUDING FOR ANY FAILURE OF BUYER TO EFFECT THE CLOSING OR OTHERWISE TO PERFORM ITS OBLIGATIONS UNDER THIS AGREEMENT (WHETHER WILLFULLY, INTENTIONALLY, UNINTENTIONALLY OR OTHERWISE), WHETHER IN CONTRACT, TORT OR OTHERWISE, SHALL BE THE RIGHTS AND REMEDIES AGAINST BUYER DESCRIBED IN THIS SECTION 9.02 . EXCEPT FOR THE RIGHTS AND REMEDIES AGAINST BUYER DESCRIBED IN THIS SECTION 9.02 , IN FURTHERANCE OF THE FOREGOING, (A) SELLER RELEASES THE BUYER RELATED PARTIES, WAIVES ANY RIGHT OF RECOVERY FOR AND AGREES NOT TO SEEK ANY RECOVERY FOR ANY LOSS SUFFERED AS A RESULT OF ANY BREACH OF ANY COVENANT, OBLIGATION, REPRESENTATION OR WARRANTY IN THIS AGREEMENT OR THE FAILURE OF THE TRANSACTION TO BE CONSUMMATED, OR IN RESPECT OF ANY ORAL REPRESENTATION MADE OR ALLEGED TO HAVE BEEN MADE IN CONNECTION HEREWITH AND (B) THE MAXIMUM AGGREGATE MONETARY LIABILITY THAT THE BUYER RELATED PARTIES SHALL HAVE IN CONNECTION WITH SUCH LOSS SHALL BE THE FORFEITURE OF THE DEPOSIT AMOUNT IN ACCORDANCE WITH THIS SECTION 9.02 .
9.03     Return of Records Upon Termination . Upon termination of this Agreement, (a) Buyer shall promptly return to Seller or destroy (at Seller’s option) all title, engineering, geological and geophysical data, environmental assessments and reports, maps, documents and other information furnished by Seller to Buyer in connection with its due diligence investigation of the Assets other than customary electronic backup data and (b) an officer of Buyer shall certify Buyer’s compliance with the preceding clause (a) to Seller in writing.
ARTICLE 10
INDEMNIFICATION; REMEDIES
10.01     Survival . The survival periods for the various representations, warranties, covenants and agreements contained herein shall be as follows: (a) Fundamental Representations shall survive for thirty-six (36) months after Closing, (b) the representations and warranties in Section 3.04 shall survive for the applicable statute of limitations plus sixty (60) days, (c) the special warranty of Defensible Title set forth in the Instruments of Conveyance shall survive indefinitely, (d) all other representations, warranties, pre-Closing covenants and agreements of Seller shall survive for twelve (12) months after Closing, and (e) all other representations, warranties, covenants and agreements of Buyer and post-Closing covenants of Seller shall survive indefinitely. Representations, warranties, covenants and agreements shall be of no further force and effect after the date of their expiration; provided that there shall be no termination of any bona fide claim asserted pursuant to this Agreement with respect to such a representation, warranty, covenant or agreement prior to its expiration date. The indemnities in Sections 10.02(a) , 10.02(b) , 10.03(a) and 10.03(b) shall terminate as of the termination date of each respective representation, warranty, covenant or agreement that is subject to indemnification thereunder, except in each case as to matters for which a specific written claim for indemnity has been delivered to the indemnifying person on or before such termination date.

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The indemnities in Section 10.02(c) (with respect only to clauses (a), (b) and (c) in the definition of Retained Liabilities) shall terminate twenty-four (24) months following the Closing Date. The indemnities in Section 10.02(c) (with respect only to clause (i) in the definition of Retained Liabilities) shall survive for the applicable statute of limitations plus sixty (60) days. The indemnities in Section 10.02(c) (with respect to Retained Liabilities other than those described in clauses (a), (b), (c) and (i) in the definition of Retained Liabilities) shall continue indefinitely. All other indemnities, and all other provisions of this Agreement, shall survive the Closing without time limit except as may otherwise be expressly provided herein.
10.02     Indemnification and Payment of Damages by Seller . Except as otherwise limited in this Article 10 , from and after the Closing, Seller shall defend, release, indemnify, and hold harmless Buyer Group from and against, and shall pay to the Buyer Group the amount of, any and all Damages, whether or not involving a Third Party claim or incurred in the investigation or defense of any of the same or in asserting, preserving, or enforcing any of their respective rights under this Agreement arising from, based upon, related to, or associated with:
(a)
any Breach of any representation or warranty made by Seller in this Agreement, or in any certificate delivered by Seller pursuant to this Agreement;
(b)
any Breach by Seller of any covenant, obligation, or agreement of Seller in this Agreement;
(c)
the Retained Liabilities;
(d)
the use, ownership or operation of the Excluded Assets; and
(e)
the use, ownership or operation of the Retained Assets.
Notwithstanding anything to the contrary contained in this Agreement, after the Closing, the remedies provided in this Article 10 and Article 11 , along with the special warranty of Defensible Title set forth in the Instruments of Conveyance, are Buyer Group’s exclusive legal remedies against Seller with respect to this Agreement and the Contemplated Transactions, including breaches of the representations, warranties, covenants, obligations, and agreements of the Parties contained in this Agreement or the affirmations of such representations, warranties, covenants, obligations, and agreements contained in the certificate delivered by Seller at Closing pursuant to Section 2.04 , and except for the remedies provided in Article 10 and Article 11 , along with the special warranty of Defensible Title set forth in the Instruments of Conveyance, BUYER RELEASES SELLER GROUP FROM ANY AND ALL CLAIMS, CAUSES OF ACTION, PROCEEDINGS, OR OTHER LEGAL RIGHTS AND REMEDIES OF BUYER GROUP, KNOWN OR UNKNOWN, WHICH BUYER MIGHT NOW OR SUBSEQUENTLY HAVE, BASED ON, RELATING TO OR IN ANY WAY ARISING OUT OF THIS AGREEMENT, THE CONTEMPLATED TRANSACTIONS, THE OWNERSHIP, USE OR OPERATION OF THE ASSETS PRIOR TO THE CLOSING, OR THE CONDITION, QUALITY, STATUS, OR NATURE OF THE ASSETS PRIOR TO THE CLOSING, INCLUDING ANY AND ALL CLAIMS RELATED TO ENVIRONMENTAL MATTERS OR LIABILITY OR VIOLATIONS OF ENVIRONMENTAL LAWS AND INCLUDING RIGHTS TO CONTRIBUTION UNDER THE COMPREHENSIVE ENVIRONMENTAL RESPONSE, COMPENSATION, AND LIABILITY ACT OF 1980, AS AMENDED, BREACHES OF STATUTORY OR IMPLIED WARRANTIES, NUISANCE, OR OTHER TORT

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ACTIONS, RIGHTS TO PUNITIVE DAMAGES, COMMON LAW RIGHTS OF CONTRIBUTION, AND RIGHTS UNDER INSURANCE MAINTAINED BY SELLER OR ANY OF SELLER’S AFFILIATES . Nothing in this Agreement or otherwise shall release or relieve Seller for actual fraud.
10.03     Indemnification and Payment of Damages by Buyer . Except as otherwise limited in this Article 10 (including Seller’s indemnification obligations in Section 10.02 ) and Article 11 , from and after the Closing, Buyer shall assume, be responsible for, pay on a current basis, and shall defend, release, indemnify, and hold harmless Seller Group from and against, and shall pay to Seller Group the amount of any and all Damages, whether or not involving a Third Party claim or incurred in the investigation or defense of any of the same or in asserting, preserving, or enforcing any of their respective rights under this Agreement arising from, based upon, related to, or associated with:
(a)
any Breach of any representation or warranty made by Buyer in this Agreement or in any certificate delivered by Buyer pursuant to this Agreement;
(b)
any Breach by Buyer of any covenant, obligation, or agreement of Buyer in this Agreement;
(c)
any Damages arising out of or relating to access to the Assets and contracts, books and records and other documents and data relating thereto prior to the Closing, including Buyer’s title and environmental inspections pursuant to Sections 11.01 and 11.10 , including Damages attributable to personal injury, illness or death, or property damage; and
(d)
the Assumed Liabilities.
Notwithstanding anything to the contrary contained in this Agreement, after the Closing, the remedies provided in this Article 10 and Article 11 are Seller Group’s exclusive legal remedies against Buyer with respect to this Agreement and the Contemplated Transactions, including breaches of the representations, warranties, covenants, obligations, and agreements of the Parties contained in this Agreement or the affirmations of such representations, warranties, covenants, obligations, and agreements contained in the certificate delivered by Buyer at Closing pursuant to Section 2.04 , and except for the remedies provided in Article 10 and Article 11 , SELLER RELEASES BUYER GROUP FROM ANY AND ALL CLAIMS, CAUSES OF ACTION, PROCEEDINGS, OR OTHER LEGAL RIGHTS AND REMEDIES OF SELLER GROUP, KNOWN OR UNKNOWN, WHICH SELLER MIGHT NOW OR SUBSEQUENTLY HAVE, BASED ON, RELATING TO OR IN ANY WAY ARISING OUT OF THIS AGREEMENT, THE CONTEMPLATED TRANSACTIONS, THE OWNERSHIP, USE OR OPERATION OF THE ASSETS AFTER THE CLOSING, BREACHES OF STATUTORY OR IMPLIED WARRANTIES, NUISANCE, OR OTHER TORT ACTIONS, RIGHTS TO PUNITIVE DAMAGES, COMMON LAW RIGHTS OF CONTRIBUTION, AND RIGHTS UNDER INSURANCE MAINTAINED BY BUYER OR ANY OF BUYER’S AFFILIATES . Nothing in this Agreement or otherwise shall release or relieve Buyer for actual fraud.
10.04     Indemnity Net of Insurance . The amount of any Damages for which an indemnified Party is entitled to indemnity under this Article 10 shall be reduced by the amount of insurance or indemnification proceeds realized by the indemnified Party or its Affiliates with

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respect to such Damages (net of any collection costs, and excluding the proceeds of any insurance policy issued or underwritten, or indemnity granted, by the indemnified Party or its Affiliates).
10.05     Limitations on Liability .
(a)
Except with respect to the Fundamental Representations and the representations and warranties included in Section 3.04 , if the Closing occurs, Seller shall not have any liability for any indemnification under Section 10.02(a) : (a) for any Damages with respect to any occurrence, claim, award or judgment with respect to that do not individually exceed Seventy Five Thousand Dollars ($75,000) net to Seller’s interest (the “ Individual Claim Threshold ”); or (b) unless and until the aggregate Damages for which claim notices for claims meeting the Individual Claim Threshold are delivered by Buyer exceed two percent (2%) of the unadjusted Purchase Price, and then only to the extent such Damages exceed two percent (2%) of the unadjusted Purchase Price. Except with respect to the Fundamental Representations and the representations and warranties included in Section 3.04 , in no event will Seller be liable for Damages indemnified under Section 10.02(a) to the extent such damages, exceed twenty percent (20%) of the unadjusted Purchase Price. Notwithstanding anything herein to the contrary, in no event will Seller’s aggregate liability under this Agreement exceed one hundred percent (100%) of the unadjusted Purchase Price.
(b)
Notwithstanding anything herein to the contrary, the obligations and rights of the Parties hereunder, and the Damages for which any Party is obligated to indemnify or entitled to indemnity under Section 11.02 or Section 11.03 shall be determined and calculated by excluding and without giving effect to any qualifiers as to “Material Adverse Effect”, materiality or other similar qualifiers set forth in any representation or warranty (including any bringdown of such representation or warranty in any certificate delivered pursuant to this Agreement).
10.06     Procedure for Indemnification‑‑Third Party Claims .
(a)
Promptly after receipt by an indemnified party under Section 10.02 or 10.03 of a Third Party claim for Damages or notice of the commencement of any Proceeding against it, such indemnified party shall, if a claim is to be made against an indemnifying Party under such Section, give notice to the indemnifying Party of the commencement of such claim or Proceeding, together with a claim for indemnification pursuant to this Article 10 . The failure of any indemnified party to give notice of a Third Party claim or Proceeding as provided in this Section 10.06 shall not relieve the indemnifying Party of its obligations under this Article 10 except to the extent and then only to the extent such failure results in insufficient time being available to permit the indemnifying Party to effectively defend against the Third Party claim or participate in the Proceeding or otherwise prejudices the indemnifying Party’s ability to defend against the Third Party claim or participate in the Proceeding.
(b)
If any Proceeding referred to in Section 10.06(a) is brought against an indemnified party and the indemnified party gives notice to the indemnifying Party of the commencement

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of such Proceeding, the indemnifying Party shall be entitled to participate in such Proceeding and, to the extent that it wishes (unless (i) the indemnifying Party is also a party to such Proceeding and the indemnified party determines in good faith that joint representation would be inappropriate, or (ii) the indemnifying Party fails to provide reasonable assurance to the indemnified party of its financial capacity to defend such Proceeding and provide indemnification with respect to such Proceeding), to assume the defense of such Proceeding with counsel reasonably satisfactory to the indemnified party, and, after notice from the indemnifying Party to the indemnified party of the indemnifying Party’s election to assume the defense of such Proceeding, the indemnifying Party shall not, as long as it diligently conducts such defense, be liable to the indemnified party under this Article 10 for any fees of other counsel or any other expenses with respect to the defense of such Proceeding, in each case subsequently incurred by the indemnified party in connection with the defense of such Proceeding. Notwithstanding anything to the contrary in this Agreement, the indemnifying Party shall not be entitled to assume or continue control of the defense of any such Proceeding if (A) such Proceeding relates to or arises in connection with any criminal proceeding, (B) such Proceeding seeks an injunction or equitable relief against any indemnified Party, (C) such Proceeding has or would reasonably be expected to result in Damages in excess of the amount set forth in Section 10.05 (i.e., twenty percent (20%) of the unadjusted Purchase Price), or (D) the indemnifying Party has failed or is failing to defend in good faith such Proceeding. If the indemnifying Party assumes the defense of a Proceeding, no compromise or settlement of such Third Party claims or Proceedings may be effected by the indemnifying Party without the indemnified party’s prior written consent unless (A) there is no finding or admission of any violation of Legal Requirements or any violation of the rights of any Person and no effect on any other Third Party claims that may be made against the indemnified party, and (B) the sole relief provided is monetary damages that are paid in full by the indemnifying Party, and (C) the indemnified party shall have no liability with respect to any compromise or settlement of such Third Party claims or Proceedings effected without its consent.
10.07     Procedure for Indemnification – Other Claims . A claim for indemnification for any matter not involving a Third Party claim may be asserted by notice to the Party from whom indemnification is sought.
10.08     Indemnification of Group Members . The indemnities in favor of Buyer and Seller provided in Section 10.08 and Section 10.03 , respectively, shall be for the benefit of and extend to such Party’s present and former Group members. Any claim for indemnity under this Article 10 by any Group member other than Buyer or Seller must be brought and administered by the relevant Party to this Agreement. No indemnified party other than Buyer and Seller shall have any rights against either Seller or Buyer under the terms of this Article 10 except as may be exercised on its behalf by Buyer or Seller, as applicable, pursuant to this Section 10.08 . Each of Seller and Buyer may elect to exercise or not exercise indemnification rights under this Section on behalf of the other indemnified party affiliated with it in its sole discretion and shall have no liability to any such other indemnified party for any action or inaction under this Section.
10.09     Extent of Representations and Warranties .

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(a)
NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS AGREEMENT, EXCEPT AS AND TO THE EXTENT EXPRESSLY SET FORTH IN THIS AGREEMENT OR IN THE INSTRUMENTS OF CONVEYANCE, SELLER MAKES NO REPRESENTATIONS OR WARRANTIES WHATSOEVER, AND DISCLAIMS ALL LIABILITY AND RESPONSIBILITY FOR ANY REPRESENTATION, WARRANTY, STATEMENT, OR INFORMATION MADE OR COMMUNICATED (ORALLY OR IN WRITING) TO BUYER (INCLUDING ANY OPINION, INFORMATION, OR ADVICE THAT MAY HAVE BEEN PROVIDED TO BUYER OR ITS AFFILIATES OR REPRESENTATIVES BY ANY AFFILIATES OR REPRESENTATIVES OF SELLER OR BY ANY INVESTMENT BANK OR INVESTMENT BANKING FIRM, ANY PETROLEUM ENGINEER OR ENGINEERING FIRM, SELLER’S COUNSEL, OR ANY OTHER AGENT, CONSULTANT, OR REPRESENTATIVE OF SELLER). WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, EXCEPT AS AND TO THE EXTENT EXPRESSLY SET FORTH IN THIS AGREEMENT OR IN THE INSTRUMENTS OF CONVEYANCE, SELLER EXPRESSLY DISCLAIMS AND NEGATES ANY REPRESENTATION OR WARRANTY, EXPRESS, IMPLIED, AT COMMON LAW, BY STATUTE, OR OTHERWISE, RELATING TO (A) THE TITLE TO ANY OF THE ASSETS, (B) THE CONDITION OF THE ASSETS (INCLUDING ANY IMPLIED OR EXPRESS WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, OR CONFORMITY TO MODELS OR SAMPLES OF MATERIALS), IT BEING DISTINCTLY UNDERSTOOD THAT THE ASSETS ARE BEING SOLD “AS IS,” “WHERE IS,” AND “WITH ALL FAULTS AS TO ALL MATTERS,” (C) ANY INFRINGEMENT BY SELLER OF ANY PATENT OR PROPRIETARY RIGHT OF ANY THIRD PARTY, (D) ANY INFORMATION, DATA, OR OTHER MATERIALS (WRITTEN OR ORAL) FURNISHED TO BUYER BY OR ON BEHALF OF SELLER (INCLUDING THE EXISTENCE OR EXTENT OF HYDROCARBONS OR THE MINERAL RESERVES, THE RECOVERABILITY OF SUCH RESERVES, ANY PRODUCT PRICING ASSUMPTIONS, AND THE ABILITY TO SELL HYDROCARBON PRODUCTION AFTER THE CLOSING), AND (E) THE ENVIRONMENTAL CONDITION AND OTHER CONDITION OF THE ASSETS AND ANY POTENTIAL LIABILITY ARISING FROM OR RELATED TO THE ASSETS.
(b)
Buyer acknowledges and affirms that it has made its own independent investigation, analysis, and evaluation of the Contemplated Transactions and the Assets (including Buyer’s own estimate and appraisal of the extent and value of Seller’s Hydrocarbon reserves attributable to the Assets and an independent assessment and appraisal of the environmental risks associated with the acquisition of the Assets). Buyer acknowledges that in entering into this Agreement, it has relied on the aforementioned investigation and the express representations and warranties of Seller contained in this Agreement and the Seller Closing Documents. Buyer hereby irrevocably covenants to refrain from, directly or indirectly, asserting any claim, or commencing, instituting, or causing to be commenced, any Proceeding of any kind against Seller or its Affiliates, alleging facts contrary to the foregoing acknowledgment and affirmation.
10.10     Compliance With Express Negligence Test . THE PARTIES AGREE THAT ANY INDEMNITY, DEFENSE, AND/OR RELEASE OBLIGATION ARISING UNDER THIS AGREEMENT SHALL APPLY WITHOUT REGARD TO THE NEGLIGENCE, STRICT LIABILITY, OR OTHER FAULT OF THE INDEMNIFIED PARTY, WHETHER ACTIVE, PASSIVE, JOINT, CONCURRENT, COMPARATIVE, CONTRIBUTORY OR SOLE, OR ANY PRE-EXISTING CONDITION, ANY BREACH OF CONTRACT OR BREACH OF WARRANTY, OR VIOLATION OF ANY LEGAL REQUIREMENT EXCEPT TO THE EXTENT SUCH DAMAGES WERE OCCASIONED BY THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF

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THE INDEMNIFIED PARTY OR ANY GROUP MEMBER THEREOF, IT BEING THE PARTIES’ INTENTION THAT DAMAGES TO THE EXTENT ARISING FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF THE INDEMNIFIED PARTY OR ANY GROUP MEMBER THEREOF NOT BE COVERED BY THE RELEASE, DEFENSE, OR INDEMNITY OBLIGATIONS IN THIS AGREEMENT. The foregoing is a specifically bargained for allocation of risk among the Parties, which the Parties agree and acknowledge satisfies the express negligence rule and conspicuousness requirement under Texas law.
10.11     Limitations of Liability . Notwithstanding anything to the contrary contained in this Agreement, IN NO EVENT SHALL SELLER OR BUYER EVER BE LIABLE FOR, AND EACH PARTY RELEASES THE OTHER FROM, ANY CONSEQUENTIAL, SPECIAL, INDIRECT, EXEMPLARY, OR PUNITIVE DAMAGES OR CLAIMS RELATING TO OR ARISING OUT OF THE CONTEMPLATED TRANSACTIONS OR THIS AGREEMENT ; provided, however , that any consequential, special, indirect, exemplary, or punitive damages recovered by a Third Party (including a Governmental Body, but excluding any Affiliate of any Group member) against a Person entitled to indemnity pursuant to this Article 10 shall be included in the Damages recoverable under such indemnity. Notwithstanding the foregoing, lost profits shall not be excluded by this provision as to recovery hereunder to the extent constituting direct Damages.
10.12     No Duplication . Any liability for indemnification hereunder shall be determined without duplication of recovery by reason of the state of facts giving rise to such liability constituting a Breach of more than one representation, warranty, covenant, obligation, or agreement herein. Neither Buyer nor Seller shall be liable for indemnification with respect to any Damages based on any sets of facts to the extent the Purchase Price is being or has been adjusted pursuant to Section 2.05 by reason of the same set of facts.
10.13     Disclaimer of Application of Anti-Indemnity Statutes . Seller and Buyer acknowledge and agree that the provisions of any anti-indemnity statute relating to oilfield services and associated activities shall not be applicable to this Agreement and/or the Contemplated Transactions.
10.14     Waiver of Right to Rescission. Seller and Buyer acknowledge that, following the Closing, the payment of money, as limited by the terms of this Agreement, shall be adequate compensation for Breach of any representation, warranty, covenant or agreement contained herein or for any other claim arising in connection with or with respect to the Contemplated Transactions. As the payment of money shall be adequate compensation, following Closing, Seller and Buyer waive any right to rescind this Agreement or any of the transactions contemplated hereby.
10.15     Joint and Several. Each Seller shall be jointly and severally liable for each representation, warranty, covenant, agreement, indemnification obligation and Breach of this Agreement and the Seller Closing Documents by each other Seller.

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ARTICLE 11
TITLE MATTERS AND ENVIRONMENTAL MATTERS; PREFERENTIAL PURCHASE RIGHTS; CONSENTS
11.01     Title Examination and Access . Buyer may make or cause to be made at its expense such examination as it may desire of Seller’s title to the Assets. For such purposes, until the Closing, Seller shall give to Buyer and its Representatives access during Seller’s regular hours of business to originals or, in Seller’s sole discretion, copies (which copies may, at Seller’s sole discretion, be in electronic format), of all of the files, records, contracts, correspondence, maps, data, reports, plats, abstracts of title, lease files, well files, unit files, division order files, production marketing files, title opinions, title files, title records, ownership maps, surveys, and any other information, data, records, and files that Seller or its Affiliates relating in any way to the title to the Assets, the past or present operation thereof, and the marketing of production therefrom, in accordance with, and subject to the limitations in, Section 5.01 .
11.02     Preferential Purchase Rights . Seller shall, promptly after the Execution Date, provide all notices necessary to comply with or obtain the waiver of all Preferential Purchase Rights which are applicable to the Contemplated Transactions prior to the Closing Date and in accordance with Section 5.04 and the provisions of the underlying Lease, Fee Mineral or Contract giving rise to such Preferential Purchase Right. (i) To the extent any such Preferential Purchase Rights are exercised by any holders thereof, or (ii) if the time period for exercising any Preferential Purchase Right has not expired, but no notice of waiver (nor of the exercise of such Preferential Purchase Right) has been received from the holder thereof, then, in each case, the Asset(s) subject to such Preferential Purchase Rights shall not be sold to Buyer and shall be excluded from the Assets and sale under this Agreement and shall be considered Retained Assets and the Purchase Price shall be reduced by the Allocated Value thereof. The Purchase Price shall be adjusted downward by the Allocated Value of the Asset(s) so retained. If any holder of a Preferential Purchase Right initially elects to exercise that Preferential Purchase Right, but after the Closing Date, refuses to consummate the purchase of the affected Asset(s) or the right to so exercise expires, then, subject to the Parties’ respective rights and remedies as to the obligation to consummate the Contemplated Transactions, Buyer shall purchase such Asset(s) for the Allocated Value thereof (subject to the adjustments pursuant to Section 2.05 ), and the closing of such transaction shall take place on a date designated by Seller not more than one hundred eighty (180) days after the Closing Date. If such holder’s refusal to consummate the purchase of the affected Asset(s) occurs prior to the Closing Date, then, subject to the Parties’ respective rights and remedies as to the obligation to consummate the Contemplated Transactions, Buyer shall purchase the affected Asset(s) at the Closing in accordance with the terms of this Agreement.
11.03     Consents . Seller shall initiate all procedures required to comply with or obtain all Consents required for the transfer of the Assets in accordance with Section 5.04 and the provisions of the underlying Lease, Fee Mineral or Contract giving rise to such Consent.
(a)
If Seller fails to obtain any Consent necessary for the transfer of any Asset to Buyer, Seller’s failure shall be handled as follows:
(i)
If the Consent is a not a Required Consent, then the affected Assets shall nevertheless be conveyed at the Closing as part of the Assets. Any Damages that

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arise due to the failure to obtain such Consent shall be treated as Assumed Liabilities.
(ii)
Except as set forth in Section 11.03(a)(ii) below, if the Consent is a Required Consent, the Purchase Price shall be adjusted downward by the Allocated Value of the affected Assets (which affected Assets shall include all Leases, Fee Minerals and Wells affected by the Applicable Contract, Fee Mineral or Lease for which a Consent is refused), and the affected Assets shall be treated as Retained Assets and the Purchase Price shall be reduced by the Allocated Value thereof.
(iii)
If the Consent is pursuant to that certain License Agreement, dated September 9, 2003, by and between Aera Energy, LLC and BlackSand Partners, L.P., then the such Contract shall be treated as a Retained Asset (but no other Assets shall be excluded from Closing due to the failure to obtain such Consent, and the Purchase Price shall not be reduced due to the failure to obtain such Consent), Seller shall hold such Contract for the benefit of Buyer after Closing and provide Buyer with all rights and benefits of ownership thereof, including control thereof and the economic benefits, until such Consent is received, and Buyer shall be responsible for (and shall indemnify Seller Group for) all Assumed Liabilities arising from the ownership and operation thereof, as if such Contract had been assigned to Buyer at Closing (which Assumed Liabilities do not include any Damages associated with the failure to obtain such Consent).
(b)
Notwithstanding the provisions of Section 11.03(a) , if Seller obtains a Required Consent described in Section 11.03(a)(ii) or Section 11.03(a)(iii) within one hundred eighty (180) days after the Closing, then Seller shall promptly deliver conveyances of the affected Asset(s) to Buyer and, with respect to Required Consents described in Section 11.03(a)(ii) only, Buyer shall pay to Seller an amount equal to the Allocated Value of the affected Asset(s) in accordance with wire transfer instructions provided by Seller (subject to the adjustments set forth in Section 2.05) .
11.04     Title Defects . Buyer shall notify Seller of Title Defects (“ Title Defect Notice(s) ”) promptly after the discovery thereof, but in no event later than 5:00 p.m. Central Time on July 11, 2017 (the “ Defect Notice Date ”). To be effective, each Title Defect Notice shall be in writing and include (a) a description of the alleged Title Defect and the Well or portion thereof (including by the currently producing formation) affected by such alleged Title Defect (each, a “ Title Defect Property ”), (b) the Allocated Value of each Title Defect Property (including any Secondary Allocated Value, if applicable), (c) supporting documents reasonably necessary for Seller to verify the existence of the alleged Title Defect, (d) Buyer’s preferred manner of curing such Title Defect, and (e) the amount by which Buyer reasonably believes the Allocated Value (including any Secondary Allocated Value, if applicable) of each Title Defect Property is reduced by such alleged Title Defect and the computations upon which Buyer’s belief is based (the “ Title Defect Value ”). To give Seller an opportunity to commence reviewing and curing Title Defects, Buyer agrees to use reasonable efforts to give Seller, on a weekly basis prior to the Defect Notice Date, written notice of all alleged Title Defects (as well as any claims that would be claims under the special warranty of Defensible Title set forth in the Instruments of Conveyance) discovered by Buyer during the preceding week. Notwithstanding anything

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herein to the contrary including Buyer’s rights under Section 10.02 , and subject to Buyer’s rights under the Instruments of Conveyance, Buyer forever waives, and Seller shall have no liability for, Title Defects not asserted by 5:00 p.m. Central Time on the Defect Notice Date.
11.05     Title Defect Value . The Title Defect Value shall be determined pursuant to the following guidelines, where applicable:
(a)
if the Parties agree on the Title Defect Value, then that amount shall be the Title Defect Value;
(b)
if the Title Defect is an Encumbrance that is undisputed and liquidated in amount, then the Title Defect Value shall be the amount necessary to be paid to remove the Title Defect from the Title Defect Property;
(c)
if the Title Defect represents a discrepancy between (i) Seller’s Net Revenue Interest for the Title Defect Property and (ii) the Net Revenue Interest set forth for such Title Defect Property in Exhibit B , and there is a proportional decrease in Seller's Working Interest set forth for such Title Defect Property in Exhibit B , then the Title Defect Value shall be the product of the Allocated Value of such Title Defect Property, multiplied by a fraction, the numerator of which is the Net Revenue Interest decrease and the denominator of which is the Net Revenue Interest set forth for such Title Defect Property in Exhibit B ;
(d)
if the Title Defect represents an increase of (i) Seller’s Working Interest for any Title Defect Property over (ii) the Working Interest set forth for such Title Defect Property in Exhibit B (in each case, except (A) increases resulting from contribution requirements with respect to defaulting co-owners under applicable operating agreements, or (B) increases to the extent that such increases are accompanied by a proportionate increase in Seller’s Net Revenue Interest), then the Title Defect Value shall be determined by taking into account the Allocated Value of the Title Defect Property, the portion of the Title Defect Property affected by the Title Defect, the legal effect of the Title Defect, the potential economic effect of the Title Defect over the life of the Title Defect Property, the values placed upon the Title Defect by Buyer and Seller and such other reasonable factors as are necessary to make a proper evaluation; and
(e)
if the Title Defect represents an obligation or Encumbrance upon or other defect in title to the Title Defect Property of a type not described above, then the Title Defect Value shall be determined by taking into account the Allocated Value of the Title Defect Property, the portion of the Title Defect Property affected by the Title Defect, the legal effect of the Title Defect, the potential economic effect of the Title Defect over the life of the Title Defect Property, the values placed upon the Title Defect by Buyer and Seller and such other reasonable factors as are necessary to make a proper evaluation.
In no event, however, shall the total of the Title Defect Values related to a particular Asset exceed the Allocated Value of such Asset. The Title Defect Value with respect to a Title Defect shall be determined without any duplication of any costs or losses included in any other Title Defect Value hereunder, or for which Buyer otherwise receives credit in the calculation of the Purchase Price.

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The amount by which the Secondary Allocated Value of each applicable Title Defect Property is reduced by such alleged Title Defect shall be referred to herein as the “ Secondary Title Defect Value .” The Secondary Title Defect Value shall be calculated pursuant to the guidelines set forth above in this Section 11.05 , except that all references to Allocated Value shall be replaced with references to the Secondary Allocated Value, and all other provisions of Section 11.06 , 11.07 , 11.08 and 11.15 shall apply with respect to the Secondary Title Defect Values, mutatis mutandis . Subject to Seller’s right to cure or contest a Title Defect pursuant to Section 11.06 , the Contingent Purchase Price provided for in Section 2.02(b) will be reduced by the amount of any Secondary Title Defect Value.
11.06     Seller’s Cure or Contest of Title Defects .
Seller may contest any asserted Title Defect or Buyer’s good faith estimate of the Title Defect Value as described in Section 11.06(b) and may seek to cure any asserted Title Defect as described in Section 11.06(a) .
(a)
Seller shall have the right to cure any Title Defect on or before sixty (60) days after the Defect Notice Date or, if later, after the date of resolution of such Title Defect or the Title Defect Value by an Expert pursuant to Section 11.15 (the “ Title Defect Cure Period ”) by giving written notice to Buyer of its election to cure prior to the Closing Date or, if later, after the applicable Expert Decision date. If Seller elects:
(i)
to cure and actually cures the Title Defect (“ Cure ”), prior to the Closing, then the Asset affected by such Title Defect shall be conveyed to Buyer at the Closing, and no Purchase Price adjustment will be made for such Title Defect;
(ii)
to cure and does not cure the Title Defect prior to the Closing, then:
(A)
at Closing (x) Seller shall convey the affected Title Defect Property to Buyer and (y) the Purchase Price shall be reduced by the applicable Title Defect Value and Buyer or an Affiliate shall by wire transfer in same day funds (1) deposit the Title Defect Value attributable to the affected Asset into the Escrow Account and (2) pay the remaining Allocated Value of the affected Title Defect Property to Seller in accordance with Section 2.04(b) ; or
(B)
if Seller is unable to Cure the Title Defect by the end of the Title Defect Cure Period, then Seller shall include a downward adjustment in the Final Settlement Statement equal to the Title Defect Value for such Asset and the Parties shall (or shall cause their Affiliate who is party to the Escrow Agreement to) within five (5) Business Days issue joint written instructions to the Escrow Agent to release such Title Defect Value to Buyer; or
(C)
if Seller is able to Cure the Title Defect by the end of the Title Defect Cure Period, then Seller shall remove the downward adjustment in the Final Settlement Statement equal to the Title Defect Value for such Asset and then the Parties shall within five (5) Business Days issue joint written

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instructions to the Escrow Agent to release such Title Defect Value to Seller.
(iii)
not to cure the Title Defect, if and only if Buyer agrees to this remedy in its sole discretion, Seller shall indemnify Buyer against all Damages (up to the Allocated Value of the applicable Title Defect Property) resulting from such Title Defect with respect to such Title Defect Property pursuant to an indemnity agreement prepared by Seller in a form and substance reasonably acceptable to Buyer.
(iv)
not to cure the Title Defect, subject to Seller’s continuing right to dispute the Title Defect, Seller shall convey the affected Asset(s) to Buyer at the Closing and the Purchase Price shall be reduced by the applicable Title Defect Value in accordance with the terms of this Agreement.
(b)
Seller and Buyer shall attempt to agree on the existence, curative efforts and Title Defect Value for all Title Defects. Representatives of the Parties, knowledgeable in title matters, shall meet during the Title Defect Cure Period for this purpose. However, either Party may at any time prior to the final resolution of the applicable Title Defect hereunder submit any disputed Title Defect or the Title Defect Value to arbitration in accordance with the procedures set forth in Section 11.15 . If a contested Title Defect cannot be resolved prior to Closing, except as otherwise provided herein, the Asset affected by such Title Defect shall nevertheless be conveyed to Buyer at the Closing, and the Purchase Price will be adjusted downward in an amount equal to the Title Defect Value for such Asset; provided, however , that if the Title Defect Value as finally decided between the Parties or by the Expert, as applicable, is less than the Title Defect Value used for the Purchase Price adjustment, then Seller shall include an upward adjustment in the Final Settlement Statement equal to the amount that the Title Defect Value (as of Closing) exceeds the Title Defect Value as finally determined.
11.07     Limitations on Adjustments for Title Defects . Notwithstanding the provisions of Sections 11.04 , 11.05 and 11.06 , Seller shall be obligated to adjust the Purchase Price to account for uncured Title Defects only to the extent that the sum of (x) the aggregate Title Defect Values of all uncured Title Defects (the “ Aggregate Title Defect Value ”) (after taking into account any offsetting Title Benefit Values) plus (y) the Aggregate Environmental Defect Value exceeds the Aggregate Defect Deductible. In addition, if the Title Defect Value for any single Well is less than the De Minimis Title Defect Cost, such value shall not be considered in calculating the Aggregate Title Defect Value. The limitations in this Section 11.07 shall not apply to the special warranty of Defensible Title in the Instruments of Conveyance.
11.08     Title Benefits . If Seller discovers any right, circumstance or condition that operates to (a) increase the Net Revenue Interest above that shown in Exhibit B , to the extent the same does not cause a greater than proportionate increase in Seller’s Working Interest therein above that shown in Exhibit B , or (b) to decrease the Working Interest of Seller in any Well below that shown in Exhibit B , to the extent the same causes a decrease in Seller’s Working Interest that is proportionately greater than the decrease in Seller’s Net Revenue Interest therein below that shown in Exhibit B (each, a “ Title Benefit ”), then Seller shall, from time to time and without limitation, have the right, but not the obligation, to give Buyer written notice of any such

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Title Benefits (a “ Title Benefit Notice ”), as soon as practicable but not later than 5:00 p.m. Central Time on the Defect Notice Date, stating with reasonable specificity the Assets affected, the particular Title Benefit claimed, and Seller’s good faith estimate of the amount the additional interest increases the value of the affected Assets over and above that Asset’s Allocated Value (the “ Title Benefit Value ”). Buyer shall also promptly furnish Seller with written notice of any Title Benefit (including a description of such Title Benefit and the Assets affected thereby with reasonable specificity (the “ Title Benefit Properties ”)) which is discovered by any of Buyer’s or any of its Affiliates’ Representatives, employees, title attorneys, landmen, or other title examiners. The Title Benefit Value of any Title Benefit shall be determined by the following methodology, terms and conditions (without duplication): (i) if the Parties agree on the Title Benefit Value, then that amount shall be the Title Benefit Value; (ii) if the Title Benefit represents a discrepancy between (A) Seller’s Net Revenue Interest for any Title Benefit Property and (B) the Net Revenue Interest set forth for such Title Benefit Property in Exhibit B then the Title Benefit Value shall be the product of the Allocated Value of such Title Benefit Property multiplied by a fraction, the numerator of which is the Net Revenue Interest increase and the denominator of which is the Net Revenue Interest set forth for such Title Benefit Property in Exhibit B ; (iii) if the Title Benefit represents a decrease of (A) Seller’s Working Interest for any Title Benefit Property below (B) the Working Interest set forth for such Title Benefit Property in Exhibit B , then the Title Benefit Value shall be determined by calculating the Net Revenue Interest that results from such reduced Working Interest, determining what the Net Revenue Interest would be using such calculated Net Revenue Interest and the Working Interest set forth in Exhibit B , and then calculating the adjustment in the manner set forth in clause (ii) above; and (iv) if the Title Benefit is of a type not described above, then the Title Benefit Value shall be determined by taking into account the Allocated Value of the Title Benefit Property, the portion of such Title Benefit Property affected by such Title Benefit, the legal effect of the Title Benefit, the potential economic effect of the Title Benefit over the life of such Title Benefit Property, the values placed upon the Title Benefit by Buyer and Seller and such other reasonable factors as are necessary to make a proper evaluation.
Seller and Buyer shall attempt to agree on the existence and Title Benefit Value for all Title Benefits on before the end of the Title Defect Cure Period. If Buyer agrees with the existence of the Title Benefit and Seller’s good faith estimate of the Title Benefit Value, then the Aggregate Title Defect Value shall be offset by the amount of the Title Benefit Value. If the Parties cannot reach agreement by the end of the Title Defect Cure Period, the Title Benefit or the Title Benefit Value in dispute shall be submitted to arbitration in accordance with the procedures set forth in Section 11.15 . Notwithstanding the foregoing, the Parties agree and acknowledge that there shall be no upward adjustment to the Purchase Price for any Title Benefit. If a contested Title Benefit cannot be resolved prior to the Closing, Seller shall convey the affected Asset to Buyer and Buyer shall pay for the Asset at the Closing in accordance with this Agreement as though there were no Title Benefits; provided, however , if the Title Benefit contest results in a determination that a Title Benefit exists, then the Aggregate Title Defect Value shall be adjusted downward by the Title Benefit Value as determined in such contest (which adjustment shall be made on the Final Settlement Statement).
11.09     Buyer’s Environmental Assessment . Beginning on the Execution Date and ending at 5:00 p.m. Central Time on the Defect Notice Date, Buyer shall have the right, at its sole cost, risk, liability, and expense, to conduct a Phase I Environmental Site Assessment of the

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Assets. During Seller’s regular hours of business and after providing Seller with written notice of any such activities no less than two (2) Business Days in advance (which written notice shall include the written permission of the operator (if other than Seller) and any applicable Third Party operator or other Third Party whose permission is legally required, which Seller shall reasonably cooperate with Buyer in securing), Buyer and its representatives shall be permitted to enter upon the Assets, inspect the same, review all of Seller’s files and records relating to the Assets, and generally conduct visual, non-invasive tests, examinations, and investigations. No sampling or other invasive inspections of the Assets may be conducted prior to Closing without Seller’s prior written consent. Buyer’s access shall be in accordance with, and subject to the limitations in, Section 5.01 .
11.10     Environmental Defect Notice . Buyer shall notify Seller in writing of any Environmental Defect (an “ Environmental Defect Notice ”) promptly after the discovery thereof, but in no evet later than 5:00 p.m. Central Time on the Defect Notice Date. To be effective, an Environmental Defect Notice shall include: (i) the Asset(s) affected; (ii) a detailed description of the alleged Environmental Defect and the basis for such assertion under the terms of this Agreement; (iii) Buyer’s good faith estimate of the Environmental Defect Value with respect to such Environmental Defect; and (iv) appropriate documentation reasonably necessary for Seller to substantiate Buyer’s claim and calculation of the Environmental Defect Value. Notwithstanding anything herein to the contrary including Buyer’s rights under Section 10.02 , Buyer forever waives Environmental Defects not asserted by an Environmental Defect Notice meeting all of the requirements set forth in the preceding sentence no later than 5:00 p.m. Central Time on the Defect Notice Date.
11.11     Seller’s Exclusion, Cure or Contest of Environmental Defects .
(a)
Seller, in its sole discretion, (x) may contest any asserted Environmental Defect or Buyer’s good faith estimate of the Environmental Defect Value as described in Section 11.11 and/or (y) may seek to remediate or cure any asserted Environmental Defect to the extent of the Lowest Cost Response as described in Section 11.11(b) ; provided , if the Environmental Defect Value asserted in good faith by Buyer (I) equals or exceeds the De Minimis Environmental Defect Cost, and (II) is equal to or exceeds the lesser of (1) fifty percent (50%) of the Allocated Value of the affected Assets or (2) two million dollars ($2,000,000), then Buyer may elect to exclude such affected Assets, together with all associated Assets, and reduce the Purchase Price by the Allocated Value of such Assets (which will become Retained Assets). If Seller disputes Buyer’s good faith assertion and the final determination pursuant to Section 11.15 occurs following the Closing, Buyer or an Affiliate by wire transfer in same day funds shall deposit the Allocated Value attributable to the affected Asset into the Escrow Account and if the final determination pursuant to Section 11.15 (A) results in a determination of the Environmental Defect Value that is less than two million dollars ($2,000,000) and fifty percent (50%) of the Allocated Value of the affected Assets, then Seller shall assign such affected Assets to Buyer pursuant to an assignment in form and substance reasonably acceptable to the Parties and the Parties shall (or shall cause their Affiliate who is party to the Escrow Agreement to) within five (5) Business Days thereof issue joint written instructions to the Escrow Agent to release to Seller the Allocated Value of such Assets, less the applicable Environmental Defect Value, or (B) results in a determination of the Environmental

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Defect Value that is greater than or equal to the lesser of two million dollars ($2,000,000) and fifty percent (50%) of the Allocated Value of the affected Assets, such Asset shall remain a Retained Asset and the Parties shall (or shall cause their Affiliate who is party to the Escrow Agreement to) within five (5) Business Days thereof issue joint written instructions to the Escrow Agent to release to Buyer the Allocated Value of such Assets.
(b)
Seller shall have the right to remediate or cure an Environmental Defect to the extent of the Lowest Cost Response on or before the Closing Date by giving written notice to Buyer to that effect prior to the Closing Date. If Seller elects to pursue remediation or cure as set forth in this clause (a), Seller shall implement such remediation or cure in a manner that is in compliance with all applicable Legal Requirements in a prompt and timely fashion for the type of remediation or cure. If Seller elects to pursue remediation or cure and:
(i)
completes a Complete Remediation of an Environmental Defect prior to the Closing Date, the affected Well(s) shall be included in the Assets conveyed at Closing, and no Purchase Price adjustment will be made for such Environmental Defect;
(ii)
does not complete a Complete Remediation prior to the Closing, then unless Buyer elects to exclude such Asset(s) in accordance with its respective rights under Section 11.11 (a), Seller shall convey the affected Asset(s) to Buyer at Closing and the Purchase Price shall be reduced by the Environmental Defect Value of the affected Asset(s).
(c)
Seller and Buyer shall attempt to agree on the existence and Environmental Defect Value of all Environmental Defects. Representatives of the Parties, knowledgeable in environmental matters, shall meet for this purpose. However, a Party may at any time prior to the final resolution of the applicable Environmental Defect hereunder elect to submit any disputed item to arbitration in accordance with the procedures set forth in Section 11.15 . If a contested Environmental Defect cannot be resolved prior to the Closing, subject to the terms of this Section 11.11 the affected Assets(s) shall be excluded from the Assets conveyed to Buyer at Closing and the Purchase Price shall be reduced by the Allocated Value of the affected Asset(s), and Buyer or an Affiliate by wire transfer in same day funds shall deposit the Allocated Value attributable to the affected Asset into the Escrow Account and the final determination of the Environmental Defect and/or Environmental Defect Value shall be resolved pursuant to Section 11.15, subject to Seller’s and Buyer’s rights to elect to exclude such Asset(s) after the resolution of such dispute in accordance with this Section 11.11 .
11.12     Limitations . Notwithstanding the provisions of Sections 11.10 and 11.11 , no adjustment to the Purchase Price for Environmental Defect Values shall be made unless and until the sum of (x) the aggregate value of all Environmental Defect Values (the “ Aggregate Environmental Defect Value ”) plus (y) the Aggregate Title Defect Value (after taking into account any offsetting Title Benefit Values) exceeds the Aggregate Defect Deductible. If the Environmental Defect Value with respect to any single Environmental Defect is less than the De

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Minimis Environmental Defect Cost, such cost shall not be considered in calculating the Aggregate Environmental Defect Value.
11.13     Exclusive Remedies . The rights and remedies granted to Buyer in this Agreement are the exclusive rights and remedies against Seller related to any Environmental Condition, or Damages related thereto. Except for the remedies set forth in Article 10 or Article 11 or any Seller Closing Documents, BUYER EXPRESSLY WAIVES, AND RELEASES SELLER GROUP FROM, ANY AND ALL OTHER RIGHTS AND REMEDIES IT MAY HAVE UNDER ENVIRONMENTAL LAWS AGAINST SELLER REGARDING ENVIRONMENTAL CONDITIONS, WHETHER FOR CONTRIBUTION, INDEMNITY, OR OTHERWISE. The foregoing is a specifically bargained for allocation of risk among the Parties, which the Parties agree and acknowledge satisfies the express negligence rule and conspicuousness requirement under Texas law.
11.14     Casualty Loss and Condemnation . If, after the Execution Date but prior to Closing Date, any portion of the Assets is destroyed by fire or other casualty or is expropriated or taken in condemnation or under right of eminent domain (a “Casualty Loss”), this Agreement shall remain in full force and effect, and Buyer shall nevertheless be required to close the Contemplated Transactions. In the event that the amount of the costs and expenses associated with repairing or restoring the Assets affected by such Casualty Loss exceeds Three Hundred Thousand Dollars ($300,000) net to Seller’s interest, Seller must elect by written notice to Buyer prior to Closing either to (a) cause the Assets affected by such Casualty Loss to be repaired or restored, at Seller’s sole cost, as promptly as reasonably practicable (which work may extend after the Closing Date), or (b) reduce the Purchase Price by the amount of the Casualty Loss. In each case, Seller shall retain all rights to insurance and other claims against Third Parties with respect to the applicable Casualty Loss except to the extent the Parties otherwise agree in writing. Except as set forth in Article 10 , Seller shall have no other liability or responsibility to Buyer with respect to a condemnation or Casualty Loss, EVEN IF SUCH CASUALTY LOSS SHALL HAVE RESULTED FROM OR SHALL HAVE ARISEN OUT OF THE SOLE OR CONCURRENT NEGLIGENCE, FAULT, VIOLATION OF A LEGAL REQUIREMENT OF SELLER OR ANY MEMBER OF SELLER GROUP.
11.15     Expert Proceedings .
(a)
Each matter referred to this Section 11.15 (a “ Disputed Matter ”) shall be conducted in accordance with the Commercial Arbitration Rules of the AAA as supplemented to the extent necessary to determine any procedural appeal questions by the Federal Arbitration Act (Title 9 of the United States Code), but only to the extent that such rules do not conflict with the terms of this Section 11.15 . Any notice from one Party to the other referring a dispute to this Section 11.15 shall be referred to herein as an “ Expert Proceeding Notice ”.
(b)
The arbitration shall be held before a one member arbitration panel (the “ Expert ”), mutually agreed by the Parties. The Expert must (a) be a neutral party who has never been an officer, director or employee of or performed material work for a Party or any Party’s Affiliate within the preceding five (5)-year period and (b) agree in writing to keep strictly confidential the specifics and existence of the dispute as well as all proprietary records of the Parties reviewed by the Expert in the process of resolving such dispute.

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The Expert must have not less than ten (10) years’ experience as a lawyer in the State of California with experience in exploration and production issues. If disputes exist with respect to both title and environmental matters, the Parties may mutually agree to conduct separate arbitration proceedings with the title disputes and environmental disputes being submitted to separate Experts. If, within five (5) Business Days after delivery of an Expert Proceeding Notice, the Parties cannot mutually agree on an Expert, then within seven (7) Business Days after delivery of such Expert Proceeding Notice, each Party shall provide the other with a list of three (3) acceptable, qualified experts, and within ten (10) Business Days after delivery of such Expert Proceeding Notice, the Parties shall each separately rank from one through six in order of preference each proposed expert on the combined lists, with a rank of one being the most preferred expert and the rank of six being the least preferred expert, and provide their respective rankings to the Dallas office of the AAA. Based on those rankings, the AAA will appoint the expert with the combined lowest numerical ranking to serve as the Expert for the Disputed Matters. If the rankings result in a tie or the AAA is otherwise unable to determine an Expert using the Parties’ rankings, the AAA will appoint an arbitrator from one of the Parties’ lists as soon as practicable upon receiving the Parties’ rankings. Each Party will be responsible for paying one-half (1/2) of the fees charged by the AAA for the services provided in connection with this Section 11.15(b) .
(c)
Within five (5) Business Days following the receipt by either Party of the Expert Proceeding Notice, the Parties will exchange their written description of the proposed resolution of the Disputed Matters. Provided that no resolution has been reached, within five (5) Business Days following the selection of the Expert, the Parties shall submit to the Expert the following: (i) this Agreement, with specific reference to this Section 11.15 and the other applicable provisions of this Article 11 , (ii) Buyer’s written description of the proposed resolution of the Disputed Matters, together with any relevant supporting materials, (iii) Seller’s written description of the proposed resolution of the Disputed Matters, together with any relevant supporting materials, and (iv) the Expert Proceeding Notice.
(d)
The Expert shall make its determination by written decision within fifteen (15) days following receipt of the materials described in Section 11.15(c) above (the “ Expert Decision ”). For any Disputed Matter relating to a Title Defect if such defect or irregularity would customarily be waived by a reasonably prudent owner or operator of oil and gas properties in the same geographic area where the Assets are located, as determined by the Expert, then such Expert shall determine that such Disputed Matter is not a Title Defect. The Expert Decision with respect to the Disputed Matters shall be limited to the selection of the single proposal for the resolution of the aggregate Disputed Matters proposed by a Party that best reflects the terms and provisions of this Agreement, i.e. , the Expert must select either Buyer’s proposal or Seller’s proposal for resolution of the aggregate Disputed Matters.
(e)
The Expert Decision shall be final and binding upon the Parties, without right of appeal, absent manifest error. In making its determination, the Expert shall be bound by the rules set forth in this Article 11 . The Expert may consult with and engage disinterested Third Parties to advise the Expert, but shall disclose to the Parties the identities of such

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consultants. Any such consultant shall not have worked as an employee or consultant for either Party or its Affiliates during the five (5)-year period preceding the arbitration nor have any financial interest in the dispute.
(f)
The Expert shall act as an expert for the limited purpose of determining the specific matters submitted for resolution herein and shall not be empowered to award damages, interest, or penalties to either Party with respect to any matter. Each Party shall bear its own legal fees and other costs of preparing and presenting its case. All costs and expenses of the Expert shall be borne by the non-prevailing Party in any such arbitration proceeding.
ARTICLE 12
EMPLOYMENT MATTERS
12.01     Seller Benefit Plans . Effective as of the Employee Start Date, the Continuing Employees shall cease to accrue further benefits and shall cease to be active participants under the Seller Benefit Plans. Buyer shall not assume any of the Seller Benefits Plans. From and after the Employee Start Date, Seller and its ERISA Affiliates shall retain and shall be solely responsible for all obligations and liabilities under the Seller Benefit Plans, and neither Buyer nor its Affiliates shall have any obligation, liability or responsibility from and after the Employee Start Date to or under the Seller Benefit Plans, whether such obligation, liability or responsibility arose before, on or after the Employee Start Date.
12.02     Pre-Employee Start Date Claims under Seller Benefit Plans .
(a)    To the extent that an Available Employee was a participant in a Seller Benefit Plan, the Seller Benefit Plans shall be responsible for providing welfare benefits (including medical, hospital, dental, accidental death and dismemberment, life, disability and other similar benefits) to any participating Available Employees for all claims incurred prior to the Employee Start Date under and subject to the generally applicable terms and conditions of such plans. For purposes of this Section 12.02 , a claim is incurred with respect to (i) accidental death and dismemberment, disability, life and other similar benefits when the event giving rise to such claim occurred and (ii) medical, hospital, dental and other similar benefits when the services with respect to such claim are rendered.
12.03     Available Employees’ Offers and Post-Employee Start Date Employment and Benefits . Within one (1) Business Day of the Execution Date, Seller shall deliver to Buyer a schedule that includes a list of all Available Employees and a list of those employees described in Section 12.03(d)(ii) (the “ Employee Letter ”). The list shall include the following data: name, job title, salary or wage, bonus eligibility / target, long term incentive eligibility / target, whether such employee is on a leave of absence, current location, and start date. Buyer shall:
(a)    Within ten (10) Business Days of receiving the Employee Letter, make written offers of employment to each of the Available Employees to whom Buyer elects to make an offer of employment, with such offers to be no less than the Available Employee’s base salary or hourly wage rate as of the Execution Date, at a location within fifty (50) miles of the

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Available Employee’s current location, and providing such Available Employees at least ten (10) Business Days to either accept or reject such offers;
(b)    no later than the date that is three (3) Business Days prior to the anticipated Closing Date, Buyer shall notify Seller as to each Available Employee who has accepted employment with Buyer or any of its Affiliates, which acceptance shall be conditioned upon the occurrence of the Closing and effective as of the Employee Start Date and may be conditioned on other typical hiring policies, and each Available Employee who has rejected Buyer’s offer of employment;
(c)    indemnify and hold harmless Seller and its Affiliates with respect to all claims and liabilities relating to or arising out of Buyer’s employee selection and employment offer process described in this Section 12.03 with regards to any claim of discrimination or other breach of a Legal Requirement in such selection and offer process;
(d)    provide to each Available Employee who is actively at work as of the end of the Term under the Transition Services Agreement (as such term is defined therein) or is on a previously scheduled and approved (by Seller or its Affiliates) short-term disability, long-term disability, workers’ compensation or other approved leave of absence and accepts an offer of employment from Buyer (the “ Continuing Employees ”), during the twelve (12) month period immediately following the Closing Date, (i) base salary or hourly wage rate at least equal to the base salary or hourly wage rate provided to the Available Employee as of the Execution Date and (ii) reemployment or hiring, as applicable, to the Available Employees offered by Buyer but identified in the Employee Letter as “Inactive Available Employees” who are not actively at work as of the Closing Date due to short-term disability, workers’ compensation or other Seller-approved leave of absence, such reemployment or hiring to be effective as of the date, if any, each such Available Employee has been cleared for and returns to active employment and to be in a position comparable to that which such Available Employee has prior to the commencement of his or her absence from active employment, which in no event may be later than the twelve (12) month anniversary of the Closing Date; provided that nothing in the foregoing shall affect the right of Seller and its Affiliates to terminate the employment of an Available Employee for any reason or at any time;
(e)    use commercially reasonable efforts to cause each Continuing Employee and his or her eligible dependents (including all such employee’s dependents covered immediately prior to the Employee Start Date by a group health plan maintained by Seller or its Affiliates) to be covered under a group health plan maintained by Buyer or its Affiliate that (i) provides major medical and dental benefits coverage to the Continuing Employee and such eligible dependents effective immediately upon the Employee Start Date and (ii) credits or reimburses, at Buyer’s option, such Continuing Employee, for the year during which such coverage under such group health plan begins, with any deductibles incurred during such year under a group health plan maintained by Seller or its Affiliates; and
(f)    provide full service credit for all purposes (other than to the extent that such credit would result in duplication of benefits with respect to the same period of service, and excepting credit for Buyer’s long term equity compensation plan) under all vacation, incentive, compensation and employee benefit plans, policies and arrangements made available to

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Continuing Employees by Buyer or any of its Affiliates on or after the Employee Start Date to the same extent such Continuing Employee’s service was recognized under the corresponding type of benefit plans in which such Continuing Employee participated immediately prior to the Employee Start Date.
12.04     Savings Plans . Effective as of the Employee Start Date, Buyer shall establish or maintain a defined contribution pension plan (or plans) and trust (or trusts) intended to qualify under Sections 401(a) and 501(a) of the Code in which all Continuing Employees shall be eligible to participate (the “ Buyer Savings Plan ”) as of the Employee Start Date. Buyer shall cause the Buyer Savings Plan to accept the direct rollover of electing Continuing Employees’ benefits in cash and, if applicable, promissory notes from the Seller Savings Plan that constitutes an eligible rollover distribution pursuant to Code Section 402(c)(4).
12.05     Post-Employee Start Date Employment Claims . Buyer shall indemnify, defend and hold Seller and its Affiliates harmless from and against any and all liability of any kind or nature involving or related to the employment of the Continuing Employees by Buyer after the Employee Start Date, including any liability related to any employee benefit plan sponsored or maintained by Buyer or its ERISA Affiliates after the Employee Start Date.  Seller shall indemnify, defend and hold Buyer and its Affiliates harmless from and against any and all liability of any kind or nature or related to (a) the employment of any Available Employee who does not become a Continuing Employee, including any liability related to any Seller Benefit Plan and (b) the employment of the Continuing Employees by Seller before the Employee Start Date, including any liability related to any employee benefit plan sponsored or maintained by Seller or its ERISA Affiliates before the Employee Start Date.  Any Available Employee who rejects Buyer’s offer of employment in Section 12.03 will not be eligible for severance under Seller’s Severance Plan.
12.06     Buyer Welfare Plans . Buyer shall cause the waiver of all limitations as to pre-existing conditions, exclusions and waiting periods with respect to participation and coverage requirements applicable to the Continuing Employees. Buyer shall provide continuation health care coverage to Continuing Employees and their qualified beneficiaries who incur a qualifying event, in accordance with the continuation health care coverage requirements of Section 4980B of the Code and Title I, Subtitle B, Part 6 of ERISA (“ COBRA ”) or any similar provisions of state Legal Requirement, on or after the Employee Start Date. Buyer shall provide any required notice under COBRA or any similar provisions of any state Legal Requirement to Continuing Employees in respect of any qualifying event that occurs as a result of the transactions contemplated by this Agreement.
12.07     WARN Act . From the date of this Agreement until the Employee Start Date, Seller shall not and shall cause its Affiliates not to terminate the employment of any Available Employees such that a “plant closing” or “mass layoff” (as those terms are defined in the WARN Act or any similar state Legal Requirement) occurs prior to the Employee Start Date without complying with the WARN Act. Buyer agrees to provide any notice required under the WARN Act or any similar state Legal Requirement with respect to any “plant closing” or “mass layoff” affecting Continuing Employees that may occur after the Employee Start Date or arise, in whole or in part, as a result of the transactions contemplated by this Agreement. In addition, Buyer shall not effectuate a “plant closing” or “mass layoff” or any other similar triggering event under

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the WARN Act or any other applicable Legal Requirement for six (6) months after the Employee Start Date, affecting any Continuing Employee, except in compliance with the WARN Act or other applicable Legal Requirement.
12.08     No Third Party Beneficiary Rights . Nothing herein, expressed or implied, shall confer upon any Available Employees (or any of their beneficiaries or alternate payees) any rights or remedies (including any right to employment or continued employment, or any right to compensation or benefits for any period) of any nature or kind whatsoever, under or by reason of this Agreement or otherwise. In addition, the provisions of this Article 12 , are for the sole benefit of the Parties and are not for the benefit of any Third Party.
12.09     Severance Obligation . If any Available Employee is entitled to severance benefits under the Seller’s Severance Plan as a result of a Qualifying Termination caused by the failure of Buyer or its Affiliate to give an offer of employment to such Available Employee or the failure of Buyer to give an offer of employment to the Available Employee that would avoid a Qualifying Termination, Seller shall bear one hundred percent (100%) of the amount of severance benefits paid to such Available Employee; provided that if buyer or its Affiliate hires any such Available Employee on or before the date that is six (6) months after the Transition Date, Buyer shall promptly pay, or cause to be paid to, Seller the amount of any severance benefits paid to such Available Employee pursuant to Seller’s Severance Plan.
ARTICLE 13
GENERAL PROVISIONS
13.01     Records . Seller, at Buyer’s cost and expense, shall deliver originals of all Records to Buyer (FOB Seller’s office) within sixty (60) days after the Transition Date. With respect to any original Records delivered to Buyer, (a) Seller shall be entitled to retain copies of such Records, and (b) Buyer shall retain any such original Records for at least seven (7) years beyond the Closing Date, during which seven (7)-year period Seller shall be entitled to obtain access to such Records, at reasonable business hours and upon prior notice to Buyer, so that Seller may make copies of such original Records, at its own expense, as may be reasonable or necessary for Tax purposes or in connection with any Proceeding or Threatened Proceeding against Seller.
13.02     Expenses .
(a)
Except as otherwise expressly provided in this Agreement, each Party to this Agreement shall bear its respective expenses incurred in connection with the preparation, execution, and performance of this Agreement and the Contemplated Transactions, including all fees and expenses of agents, representatives, counsel, and accountants. However, the prevailing Party in any Proceeding brought under or to enforce this Agreement, excluding any expert proceeding pursuant to Section 11.15 or Section 2.05(d) , shall be entitled to recover court costs and arbitration costs, as applicable, and reasonable attorneys’ fees from the non-prevailing Party or Parties, in addition to any other relief to which such Party is entitled.

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(b)
All Transfer Taxes and all required documentary, filing and recording fees and expenses in connection with the filing and recording of the assignments, conveyances or other Instruments of Conveyance required to convey title to the Assets to Buyer shall be borne by Buyer. Seller shall retain responsibility for, and shall bear, all Asset Taxes assessed with respect to the Assets for (i) any period ending prior to the Effective Time and (ii) the portion of any Straddle Period ending immediately prior to the Effective Time. All Asset Taxes with respect to the Assets arising on or after the Effective Time (including the portion of any Straddle Period beginning at the Effective Time) shall be allocated to and borne by Buyer. For purposes of allocation between the Parties of Asset Taxes assessed with respect to the Assets for any Straddle Period, (A) Asset Taxes that are attributable to the severance or production of Hydrocarbons shall be allocated based on severance or production occurring before the Effective Time (which shall be Seller’s responsibility) and from and after the Effective Time (which shall be Buyer’s responsibility); (B) Asset Taxes that are based upon or related to income or receipts or imposed on a transactional basis (other than such Asset Taxes described in clause (A)) shall be allocated based on revenues from sales occurring before the Effective Time (which shall be Seller’s responsibility) and from and after the Effective Time (which shall be Buyer’s responsibility); and (C) Asset Taxes that are ad valorem, property or other Asset Taxes imposed on a periodic basis shall be allocated pro rata per day between the portion of the Straddle Period ending immediately prior to the Effective Time (which shall be Seller’s responsibility) and the portion of the Straddle Period beginning at the Effective Time (which shall be Buyer’s responsibility). For purposes of the preceding sentence, any exemption, deduction, credit or other item that is calculated on an annual basis shall be allocated pro rata per day between the portion of the Straddle Period ending immediately prior to the Effective Time and the portion of the Straddle Period beginning at the Effective Time. To the extent the actual amount of any Asset Taxes described in this Section 13.02(b) is not determinable at Closing, Buyer and Seller shall utilize the most recent information available in estimating the amount of such Asset Taxes for purposes of Section 2.05 . Upon determination of the actual amount of such Asset Taxes, timely payments will be made from one Party to the other to the extent necessary to cause each Party to bear the amount of such Asset Tax that is allocable to such Party under this Section 13.02(b) . Any allocation of Asset Taxes between the Parties shall be in accordance with this Section 13.02(b) .
(c)
Except as required by applicable Legal Requirements, in respect of Asset Taxes, (i) Seller shall be responsible for timely remitting all (A) Asset Taxes due (excluding ad valorem and property Taxes) with respect to the Assets for periods ending prior to the Closing Date, (B) ad valorem and property Taxes due with respect to the Assets for periods ending prior to the Effective Time (no matter when due), and (C) ad valorem and property Taxes due with respect to the Assets due prior to the Closing Date (subject, in each case, to Seller’s right to reimbursement by Buyer under Section 13.02(b) ), (ii) Buyer shall be responsible for timely remitting all (A) Asset Taxes (excluding ad valorem and property Taxes) with respect to the Assets for periods ending on or after the Closing Date, and (B) all ad valorem and property Taxes due on or after the Closing Date (subject, in each case, to Buyer’s right to reimbursement by Seller under Section 13.02(b) ), in each case, to the applicable taxing authority, (iii) Seller shall prepare and timely file any (A) Tax Return for Asset Taxes (excluding ad valorem and property

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Taxes) with respect to the Assets required to be filed for periods ending prior to the Closing Date, and (B) Tax Return for ad valorem and property Taxes with respect to the Assets due prior to the Closing Date, and (iv) Buyer shall prepare and timely file any (A) Tax Return for Asset Taxes (excluding ad valorem and property Taxes) with respect to the Assets required to be filed for periods ending on or after the Closing Date, and (B) Tax Return for ad valorem and property Taxes in respect to the Assets required to be filed on or after the Closing Date (including Tax Returns related to any Straddle Period).  Each Party shall indemnify and hold the other Party harmless for any failure to file such Tax Returns and to make such payments.  Buyer shall prepare all such Tax Returns relating to any Straddle Period on a basis consistent with past practice except to the extent otherwise required by applicable Legal Requirements.  Buyer shall provide Seller with a copy of any Tax Return relating to any Straddle Period for Seller’s review at least ten (10) days prior to the due date for the filing of such Tax Return (or within a commercially reasonable period after the end of the relevant Taxable period, if such Tax Return is required to be filed less than ten (10) days after the close of such Taxable period), and Buyer shall incorporate all reasonable comments of Seller provided to Buyer at least three (3) days prior to the due date for the filing of such Tax Return.
(d)
Buyer and Seller agree to furnish or cause to be furnished to the other, upon request, as promptly as practicable, such information and assistance relating to the Assets, including access to books and records, as is reasonably necessary for the filing of all Tax Returns by Buyer or Seller, the making of any election relating to taxes, the preparation for any audit by any Governmental Body and the prosecution or defense of any claim, suit or proceeding relating to any tax. The Parties agree to retain all books and records with respect to Tax matters pertinent to the Assets relating to any Tax period beginning before the Closing Date until sixty (60) days after the expiration of the statute of limitations of the respective Tax periods (taking into account any extensions thereof) and to abide by all record retention agreements entered into with any Governmental Body.
(e)
Any payments made to any Party pursuant to Article 10 or this Section 13.02 shall constitute an adjustment of the Purchase Price for Tax purposes and shall be treated as such by Buyer and Seller on their Tax Returns to the extent permitted by applicable Legal Requirements.
13.03     Notices . All notices, consents, waivers, and other communications under this Agreement must be in writing and shall be deemed to have been duly given when (a) delivered by hand (with written confirmation of receipt), (b) sent by fax (with written confirmation of receipt), (c) sent by electronic mail with receipt acknowledged, with the receiving Party affirmatively obligated to promptly acknowledge receipt, or (d) when received by the addressee, if sent by a nationally recognized overnight delivery service (receipt requested), in each case to the appropriate recipients, addresses, and fax numbers set forth below (or to such other recipients, addresses, or fax numbers as a Party may from time to time designate by notice to the other Party):
NOTICES TO BUYER :
 
Bridge Energy LLC

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707 Wilshire Boulevard, Suite 4600
Los Angeles, California 90017
Attention: Randall Breitenbach
Fax: (213) 225-5916
E-mail: rb@pceclp.com
 
With a copy (which shall not constitute notice) to:
 
EIGF Aggregator LLC
c/o Kohlberg, Kravis Roberts & Co.
600 Travis Street, Suite 7200
Houston, Texas 77002
Attention: Dash Lane
Fax: (713) 583-9430
Email: Dash.Lane@kkr.com
 
NOTICES TO SELLER:
 
c/o Linn Energy Holdings, LLC
600 Travis Street, Suite 5100
Houston, Texas 77002
Attention: Candice J. Wells, General Counsel
Fax: (832) 726-5955
E-mail: CWells@linnenergy.com
 
 
With a copy (which shall not constitute notice) to:
 
Kirkland & Ellis LLP
600 Travis Street, 33rd Floor
Houston, TX 77002
Attention:
Anthony Speier, P.C.
 
Rahul Vashi
Fax: (713) 835-3601
E-mail:
anthony.speier@kirkland.com
 
rahul.vashi@kirkland.com

13.04     Governing Law; Jurisdiction; Service of Process; Jury Waiver .
(A)
THIS AGREEMENT AND ANY CLAIM, CONTROVERSY OR DISPUTE ARISING UNDER OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THE RIGHTS, DUTIES AND THE LEGAL RELATIONS AMONG THE PARTIES HERETO AND THERETO SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, EXCLUDING ANY CONFLICTS OF LAW RULE OR PRINCIPLE THAT MIGHT REFER CONSTRUCTION OF SUCH PROVISIONS TO THE LAWS OF ANOTHER JURISDICTION; PROVIDED,

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HOWEVER , THAT ANY MATTER RELATED TO REAL PROPERTY SHALL BE GOVERNED BY THE LAWS OF THE STATE OF CALIFORNIA. WITHOUT LIMITING THE PARTIES’ AGREEMENT TO ARBITRATE IN SECTION 11.15 OR THE DISPUTE RESOLUTION PROCEDURE PROVIDED IN SECTION 2.05(D) WITH RESPECT TO DISPUTES ARISING THEREUNDER, THE PARTIES HERETO CONSENT TO THE EXERCISE OF JURISDICTION IN PERSONAM BY THE FEDERAL COURTS OF THE UNITED STATES LOCATED IN HOUSTON, TEXAS OR THE STATE COURTS LOCATED IN HOUSTON, TEXAS FOR ANY ACTION ARISING OUT OF THIS AGREEMENT, ANY TRANSACTION DOCUMENTS, OR ANY TRANSACTION CONTEMPLATED HEREBY OR THEREBY. ALL ACTIONS OR PROCEEDINGS WITH RESPECT TO, ARISING DIRECTLY OR INDIRECTLY IN CONNECTION WITH, OUT OF, RELATED TO, OR FROM THIS AGREEMENT, ANY TRANSACTION DOCUMENTS OR ANY TRANSACTION CONTEMPLATED HEREBY OR THEREBY SHALL BE EXCLUSIVELY LITIGATED IN SUCH COURTS DESCRIBED ABOVE HAVING SITES IN HOUSTON, TEXAS AND EACH PARTY IRREVOCABLY SUBMITS TO THE JURISDICTION OF SUCH COURTS SOLELY IN RESPECT OF ANY PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT. EACH PARTY HERETO VOLUNTARILY, INTENTIONALLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LEGAL REQUIREMENTS, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY ACTION, SUIT OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY TRANSACTION DOCUMENTS OR ANY TRANSACTION CONTEMPLATED HEREBY OR THEREBY. THE PARTIES FURTHER AGREE, TO THE EXTENT PERMITTED BY LAW, THAT A FINAL AND NONAPPEALABLE JUDGMENT AGAINST A PARTY IN ANY ACTION OR PROCEEDING CONTEMPLATED ABOVE SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN ANY OTHER JURISDICTION WITHIN OR OUTSIDE THE UNITED STATES BY SUIT ON THE JUDGMENT, A CERTIFIED OR EXEMPLIFIED COPY OF WHICH SHALL BE CONCLUSIVE EVIDENCE OF THE FACT AND AMOUNT OF SUCH JUDGMENT. TO THE EXTENT THAT A PARTY OR ANY OF ITS AFFILIATES HAS ACQUIRED, OR HEREAFTER MAY ACQUIRE, ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION, EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, SUCH PARTY (ON ITS OWN BEHALF AND ON BEHALF OF ITS AFFILIATES) HEREBY IRREVOCABLY (I) WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS WITH RESPECT TO THIS AGREEMENT AND (II) SUBMITS TO THE PERSONAL JURISDICTION OF ANY COURT DESCRIBED IN THIS SECTION 13.04 .
(B)
Notwithstanding anything herein to the contrary, each of the Parties agrees that it will not bring or support any action, cause of action, claim, cross-claim or third-Person claim of any kind or description, whether in law or in equity, whether in contract or in tort or

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otherwise, against the Financing Sources in any way relating to this Agreement or the Contemplated Transaction, including any Proceeding arising out of or relating in any way to the Debt Financing or the performance thereof, in any forum other than the Supreme Court of the State of New York, County of New York, or, if under applicable Legal Requirements exclusive jurisdiction is vested in the federal courts, the United States District Court for the Southern District of New York (and appellate courts thereof). Each of the Parties irrevocably agrees to waive trial by jury in any action, cause of action, claim, cross-claim or third-Person claim referred to in this paragraph.
13.05     Further Assurances . The Parties agree (a) to furnish upon request to each other such further information, (b) to execute, acknowledge, and deliver to each other such other documents, and (c) to do such other acts and things, all as the other Party may reasonably request for the purpose of carrying out the intent of this Agreement and the documents referred to in this Agreement.
13.06     Waiver . The rights and remedies of the Parties are cumulative and not alternative. Neither the failure nor any delay by either Party in exercising any right, power, or privilege under this Agreement or the documents referred to in this Agreement shall operate as a waiver of such right, power, or privilege, and no single or partial exercise of any such right, power, or privilege shall preclude any other or further exercise of such right, power, or privilege or the exercise of any other right, power, or privilege. To the maximum extent permitted by applicable Legal Requirement, (a) no claim or right arising out of this Agreement or the documents referred to in this Agreement can be discharged by one Party, in whole or in part, by a waiver or renunciation of the claim or right unless in writing signed by the other Party, (b) no waiver that may be given by a Party shall be applicable except in the specific instance for which it is given, and (c) no notice to or demand on one Party shall be deemed to be a waiver of any obligation of such Party or of the right of the Party giving such notice or demand to take further action without notice or demand as provided in this Agreement or the documents referred to in this Agreement.
13.07     Entire Agreement and Modification . This Agreement supersedes all prior discussions, communications, and agreements (whether oral or written) between the Parties with respect to its subject matter and constitutes (along with the documents referred to in this Agreement) a complete and exclusive statement of the terms of the agreement between the Parties with respect to its subject matter. This Agreement may not be amended or otherwise modified except by a written agreement executed by both Parties. No representation, promise, inducement, or statement of intention with respect to the subject matter of this Agreement has been made by either Party that is not embodied in this Agreement together with the documents, instruments, and writings that are delivered pursuant hereto, and neither Party shall be bound by or liable for any alleged representation, promise, inducement, or statement of intention not so set forth. In the event of a conflict between the terms and provisions of this Agreement and the terms and provisions of any Schedule or Exhibit hereto, the terms and provisions of this Agreement shall govern, control, and prevail.
13.08     Assignments, Successors, and No Third Party Rights . Neither Party may assign any of its rights, liabilities, covenants, or obligations under this Agreement without the prior written consent of the other Party (which consent may be granted or denied at the sole

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discretion of the other Party), and (a) any assignment made without such consent shall be void, and (b) in the event of such consent, such assignment nevertheless shall not relieve such assigning Party of any of its obligations under this Agreement without the prior written consent of the other Party. Subject to the preceding sentence, this Agreement shall apply to, be binding in all respects upon, and inure to the benefit of the successors and permitted assigns of the Parties. Nothing expressed or referred to in this Agreement shall be construed to give any Person other than the Parties or any other agreement contemplated herein (and Buyer Group and Seller Group who are entitled to indemnification under Article 10 ), any legal or equitable right, remedy, or claim under or with respect to this Agreement or any provision of this Agreement. Subject to the preceding sentence, this Agreement, any other agreement contemplated herein, and all provisions and conditions hereof and thereof, are for the sole and exclusive benefit of the Parties and such other agreements (and Buyer Group and Seller Group who are entitled to indemnification under Article 10 ), and their respective successors and permitted assigns. Notwithstanding the foregoing, the Financing Sources shall be deemed third-Person beneficiaries of Sections 9.02 , Section 13.04(b) and this Section 13.08 hereof, each of which shall be enforceable by each Financing Source and, to the extent enforced thereby, construed in accordance with, and governed by, the Laws of the State of New York without reference to the conflict of laws principles thereof, and none of which shall be amended or otherwise modified in any way that adversely affects the rights of any Financing Source without the prior written consent of the Financing Sources.
13.09     Severability . If any provision of this Agreement is held invalid or unenforceable by any court of competent jurisdiction, the other provisions of this Agreement shall remain in full force and effect. Any provision of this Agreement held invalid or unenforceable only in part or degree shall remain in full force and effect to the extent not held invalid or unenforceable.
13.10     Article and Section Headings, Construction . The headings of Sections, Articles, Exhibits, and Schedules in this Agreement are provided for convenience only and shall not affect its construction or interpretation. All references to “Section,” “Article,” “Exhibit,” or “Schedule” refer to the corresponding Section, Article, Exhibit, or Schedule of this Agreement. Unless expressly provided to the contrary, the words “hereunder,” “hereof,” “herein,” and words of similar import are references to this Agreement as a whole and not any particular Section, Article, Exhibit, Schedule, or other provision of this Agreement. Each definition of a defined term herein shall be equally applicable both to the singular and the plural forms of the term so defined. All words used in this Agreement shall be construed to be of such gender or number, as the circumstances require. Unless otherwise expressly provided, the word “including” does not limit the preceding words or terms and (in its various forms) means including without limitation. Each Party has had substantial input into the drafting and preparation of this Agreement and has had the opportunity to exercise business discretion in relation to the negotiation of the details of the Contemplated Transactions. This Agreement is the result of arm’s-length negotiations from equal bargaining positions. This Agreement shall not be construed against either Party, and no consideration shall be given or presumption made on the basis of who drafted this Agreement or any particular provision hereof or who supplied the form of Agreement.
13.11     Counterparts . This Agreement may be executed and delivered (including by facsimile or e-mail transmission) in one or more counterparts, each of which shall be deemed to

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be an original copy of this Agreement and all of which, when taken together, shall be deemed to constitute one and the same agreement.
13.12     Press Release . No Party shall make any press release or other public announcement respecting this Agreement or the Contemplated Transactions prior to the time that is twenty-four (24) hours following the execution and delivery of this Agreement by the Parties. Subject to Section 13.13 , if, prior to Closing, any Party wishes to make a press release or other public announcement respecting this Agreement or the Contemplated Transactions, such Party will provide the others with a draft of the press release or other public announcement for review at least twenty-four (24) hours prior to the time that such press release or other public announcement is to be made. The Parties will attempt in good faith to expeditiously reach agreement on such press release or other public announcement and the contents thereof; provided that failure to reach such agreement shall not prohibit a Party from making a press release or public announcement. Failure to provide comments back to the other Party within twenty-four (24) hours of receipt of the draft release or announcement will be deemed consent to the public disclosure of such press release or other public announcement and the content thereof. Seller and Buyer shall each be liable for the compliance of their respective Affiliates with the terms of this Section 13.12 . Notwithstanding anything to the contrary in this Section 13.12 , no Party shall issue a press release or other public announcement relating to the Contemplated Transactions that includes the name of a non-releasing Party or its Affiliates (or, in the case of Buyer, the name of KKR & Co. L.P. and its affiliates, including any portfolio companies of investment funds controlled by affiliates of KKR & Co. L.P.) without the prior written consent of such non-releasing Party (which consent may be withheld in such non-releasing Party’s sole discretion).
13.13     Confidentiality . The Confidentiality Agreement shall terminate on the Closing Date and will thereafter be of no further force or effect. Each Party shall keep confidential, and cause its Affiliates and instruct its Representatives to keep confidential, all terms and provisions of this Agreement, except (a) as required by Legal Requirements or any standards or rules of any stock exchange to which such Party or any of its Affiliates is subject, (b) for information that is available to the public on the Closing Date, or thereafter becomes available to the public other than as a result of a breach of this Section 13.13 , (c) to the extent required to be disclosed in connection with complying with or obtaining a waiver of any Preferential Purchase Right or Consent, and (d) to the extent that such Party must disclose the same in any Proceeding brought by it to enforce its rights under this Agreement. This Section 13.13 shall not prevent either Party from recording the Instruments of Conveyance delivered at the Closing or from complying with any disclosure requirements of Governmental Bodies that are applicable to the transfer of the Assets. The covenant set forth in this Section shall terminate two (2) years after the Closing Date.
13.14     Name Change . As promptly as practicable, but in any event within one hundred twenty (120) days after the Closing Date, Buyer shall eliminate, remove or paint over the use of the name “Linn” and variants thereof from the Assets, and, except with respect to such grace period for eliminating the existing usage, shall have no right to use any logos, trademarks, or trade names belonging to Seller or any of its Affiliates. Buyer shall be solely responsible for any direct or indirect costs or expenses resulting from the change in use of name and any resulting notification or approval requirements.

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13.15     Preparation of Agreement . Both Seller and Buyer and their respective counsel participated in the preparation of this Agreement. In the event of any ambiguity in this Agreement, no presumption shall arise based on the identity of the draftsman of this Agreement.
13.16     Appendices, Exhibits and Schedules . All of the Appendices, Exhibits and Schedules referred to in this Agreement are hereby incorporated into this Agreement by reference and constitute a part of this Agreement. Each Party to this Agreement and its counsel has received a complete set of Appendices, Exhibits and Schedules prior to and as of the execution of this Agreement.
[ Signature Page Follows ]


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IN WITNESS WHEREOF, the Parties have executed and delivered this Agreement as of the date first written above.

 
SELLER :
 
 
 
Linn Energy Holdings, LLC
 
 
 
 
 
By:
/s/ David B. Rottino
 
Name:
David B. Rottino
 
Title:
Executive Vice President and Chief Financial Officer
 
 
 
 
 
Linn Operating, LLC
 
 
 
 
 
By:
/s/ David B. Rottino
 
Name:
David B. Rottino
 
Title:
Executive Vice President and Chief Financial Officer
 
 
 
 
 
Linn Midstream, LLC
 
 
 
 
 
By:
/s/ David B. Rottino
 
Name:
David B. Rottino
 
Title:
Executive Vice President and Chief Financial Officer

Signature Page to Purchase and Sale Agreement



 
BUYER :
 
 
 
Bridge Energy LLC
 
 
 
 
 
By:
/s/ Randall H. Breitenbach
 
Name:
Randall H. Breitenbach
 
Title:
Vice President - Acquisition Activities


Signature Page to Purchase and Sale Agreement


Exhibit 2.6

FIRST AMENDMENT TO
PURCHASE AND SALE AGREEMENT
This First Amendment to Purchase and Sale Agreement (this “ Amendment ”) is made as of July 10, 2017, by and among Linn Energy Holdings, LLC, a Delaware limited liability company, Linn Operating, LLC, a Delaware limited liability company, and Linn Midstream, LLC, a Delaware limited liability company (collectively, “ Seller ”) and Bridge Energy LLC a Delaware limited liability company (“ Buyer ”). Seller and Buyer are sometimes hereinafter referred to individually as a “ Party ” and collectively as the “ Parties .” Capitalized terms used but not defined in this Amendment shall have the meanings given to such terms in the Purchase Agreement (as hereinafter defined).
WHEREAS , Seller and Buyer are parties to that certain Purchase and Sale Agreement dated as of June 1, 2017 (the “ Purchase Agreement ”); and
WHEREAS , the Parties desire to amend the Purchase Agreement and to memorialize certain mutual agreements relating to certain transactions contemplated by the Purchase Agreement, as more specifically set forth in this Amendment.
NOW, THEREFORE , in consideration of the premises and of the mutual promises, representations, warranties, covenants, conditions and agreements contained herein and in the Purchase Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
1. Amendment of Section 2.03. The first sentence of Section 2.03 of the Purchase Agreement is hereby deleted in its entirety and replaced with the following:
The Closing shall take place at the offices of Kirkland and Ellis LLP at 600 Travis Street, Suite 3300, Houston, Texas 77002 on or before July 21, 2017 (the “ Scheduled Closing ”), or if all conditions to Closing under Article 7 and Article 8 have not yet been satisfied or waived, within ten (10) Business Days after such conditions have been satisfied or waived, subject to the provisions of Article 9 (the date on which the Closing actually occurs, the “ Closing Date ”).
2.      Amendment of Section 11.03(a)(ii) . Section 11.03(a)(ii) of the Purchase Agreement is hereby deleted in its entirety and replaced with the following:
(ii)
Except as set forth in Section 11.03(a)(iii) below, if the Consent is a Required Consent, the Purchase Price shall be adjusted downward by the Allocated Value of the affected Assets (which affected Assets shall include all Leases, Fee Minerals and Wells affected by the Applicable Contract, Fee Mineral or Lease for which a Consent is refused), and the affected Assets shall be treated as Retained Assets.
3.      Amendment of Section 11.03(a)(iii) . Section 11.03(a)(iii) of the Purchase Agreement is hereby deleted in its entirety and replaced with the following:
(iii)
If the Consent is pursuant to that certain License Agreement, dated

1


September 9, 2003, by and between Aera Energy, LLC and BlackSand Partners, L.P. (but Seller has obtained the Consents pursuant to the Aera Lease and that certain Sinking Fund Trust Agreement effective as of February 1, 2007 by and among Linn Energy, LLC, Linn Energy Holdings, LLC, Linn Western Operating, Inc., Blacksand Energy, LLC and Aera Energy LLC), then such License Agreement shall be treated as a Retained Asset (but no other Assets shall be excluded from Closing due to the failure to obtain such Consent, and the Purchase Price shall not be reduced due to the failure to obtain such Consent), Seller shall hold such License Agreement for the benefit of Buyer after Closing and provide Buyer with all rights and benefits of ownership thereof, including control thereof and the economic benefits, until such Consent is received, and Buyer shall be responsible for (and shall indemnify Seller Group for) all Assumed Liabilities arising from the ownership and operation thereof, as if such License Agreement had been assigned to Buyer at Closing (which Assumed Liabilities do not include any Damages associated with the failure to obtain such Consent).
4.      Addition of Section 11.03(a)(iv). A new Section 11.03(a)(iv) is hereby added to the Purchase Agreement, as follows:
(iv)
If the Consent is pursuant to either (1) the Aera Lease or (2) that certain Sinking Fund Trust Agreement effective as of February 1, 2007 by and among Linn Energy, LLC, Linn Energy Holdings, LLC, Linn Western Operating, Inc., Blacksand Energy, LLC and Aera Energy LLC, then (A) the Purchase Price shall be adjusted downward by the Allocated Value of the Assets affected by the Aera Lease and such Sinking Fund Trust Agreement (which affected Assets shall include all Leases, Fee Minerals and Wells affected by the Aera Lease and such Sinking Fund Trust Agreement) and both the Aera Lease and such Sinking Fund Trust Agreement and such affected Assets shall be treated as Retained Assets, (B) for a period of up to 180 days, Buyer shall operate the Aera Lease and all Assets related thereto from and after the Closing Date (which operations shall be conducted in a manner substantially similar to operations immediately prior to the Closing Date) until such Consent is obtained, and Seller shall provide Buyer with reasonable access to such Retained Assets necessary for Buyer to perform such operations, (C) in the event that such Consent is not obtained within one hundred eighty (180) days after the Closing, Seller shall promptly reimburse and pay (and in any event, within 30 days following receipt of invoice thereof) Buyer an amount equal to $25 per barrel for each gross barrel of Hydrocarbons produced from the Aera Lease, (D) Buyer shall be responsible for (and shall indemnify Seller Group for) all Damages arising from Buyer’s operation of such Retained Assets to the extent (and only to the extent) caused by Buyer or its Affiliates’ gross negligence, fraud, or willful misconduct, and (E) subject to Buyer’s indemnity in clause (D) above, Seller shall be responsible for (and shall indemnify Buyer Group for) all

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other Damages arising from Buyer’s operation of such Retained Assets. Notwithstanding the foregoing, Seller shall have the right to assume operatorship of such Retained Assets by delivering thirty (30) days’ prior written notice to Buyer. Notwithstanding anything to the contrary in this Agreement, if Seller reasonably believes that Seller will be unable to obtain such Consent within one hundred eighty (180) days after the Closing, then Seller may, upon obtaining the written consent of Buyer, exercise its right to deliver quitclaims of all or a portion of such Retained Assets pursuant to Section 16 of the Aera Lease; provided that Buyer’s obligation to operate the Retained Assets pursuant to this Section 11.03(a)(iii) shall terminate as to such quitclaimed interests upon such quitclaim.
5.      Amendment of Section 11.03(b) . Section 11.03(b) of the Purchase Agreement is hereby deleted in its entirety and replaced with the following:
(b)
Notwithstanding the provisions of Section 11.03(a) , if Seller obtains a Required Consent described in Section 11.03(a)(ii) , Section 11.03(a)(iii) , or Section 11.03(a)(iv) within one hundred eighty (180) days after the Closing, then Seller shall promptly (and in any event, within 5 Business Days of Seller obtaining such Required Consent) deliver conveyances of the affected Asset(s) to Buyer and, with respect to Required Consents described in Section 11.03(a)(ii) or Section 11.03(a)(iv) only, Buyer shall pay to Seller an amount equal to the Allocated Value of the affected Asset(s) in accordance with wire transfer instructions provided by Seller (subject to the adjustments set forth in Section 2.05); provided that Buyer’s obligation to operate the Retained Assets pursuant to Section 11.03(a)(iii) shall terminate as to such conveyed interests upon such conveyance.
6.      Amendment of Section 11.04. The first sentence of Section 11.04 of the Purchase Agreement is hereby deleted in its entirety and replaced with the following:
Buyer shall notify Seller of Title Defects (“ Title Defect Notice(s) ”) promptly after the discovery thereof, but in no event later than 5:00 p.m. Central Time on July 14, 2017 (the “ Defect Notice Date ”).
7.      Compliance with Purchase Agreement . The Parties acknowledge that this Amendment complies with the requirements to alter or amend the Purchase Agreement, as stated in Section 13.07 of the Purchase Agreement. The Purchase Agreement, as amended herein, is ratified and confirmed, and all other terms and conditions of the Purchase Agreement not modified by this the Amendment shall remain in full force and effect. All references to the Purchase Agreement shall be considered to be references to the Purchase Agreement as modified by this Amendment.
8.      Incorporation . The Parties acknowledge that this Amendment shall be governed by the terms of Article XIII of the Purchase Agreement and such provisions shall be incorporated

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herein, mutatis mutandis .
9.      Counterparts . This Amendment may be executed and delivered (including by facsimile or e-mail transmission) in one or more counterparts, each of which shall be deemed to be an original copy of this Amendment and all of which, when taken together, shall be deemed to constitute one and the same agreement.
[ Signature pages follow .]


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IN WITNESS WHEREOF, the Parties have executed and delivered this Amendment as of the date first written above.
 
SELLER :
 
 
 
Linn Energy Holdings, LLC
 
 
 
 
 
By:
/s/ Carlos A. De Ayala
 
 
 
Name: Carlos A. De Ayala
 
 
 
Title: Vice President, Business Development and Strategy Planning
 
 
 
 
 
 
 
Linn Operating, LLC
 
 
 
 
 
 
 
 
 
By:
/s/ Carlos A. De Ayala
 
 
 
Name: Carlos A. De Ayala
 
 
 
Title: Vice President, Business Development and Strategy Planning
 
 
 
 
 
 
 
Linn Midstream, LLC
 
 
 
 
 
 
 
By:
/s/ Carlos A. De Ayala
 
 
 
Name: Carlos A. De Ayala
 
 
 
Title: Vice President, Business Development and Strategy Planning





 
BUYER :
 
 
 
Bridge Energy LLC
 
 
 
 
 
By:
/s/ Randall H. Breitenbach
 
 
 
Name: Randall H. Breitenbach
 
 
 
Title: Vice President - Acquisition Activities




EXHIBIT 10.1
EXECUTION COPY

FIRST AMENDMENT AND CONSENT
DATED AS OF MAY 31, 2017
TO
CREDIT AGREEMENT AND SECURITY AGREEMENT
DATED AS OF FEBRUARY 28, 2017
AMONG

LINN ENERGY HOLDCO II LLC,
AS BORROWER,
LINN ENERGY HOLDCO LLC,
AS PARENT,
LINN ENERGY, INC.,
AS HOLDINGS

AND EACH OF THE SUBSIDIARY GUARANTORS PARTY HERETO FROM TIME TO TIME,

WELLS FARGO BANK, NATIONAL ASSOCIATION,
AS ADMINISTRATIVE AGENT,
AND
THE LENDERS PARTY HERETO FROM TIME TO TIME






FIRST AMENDMENT AND CONSENT TO CREDIT AGREEMENT
THIS FIRST AMENDMENT AND CONSENT TO CREDIT AGREEMENT (this “ First Amendment ”), dated as of May 31, 2017, among Linn Energy Holdco II, LLC, a limited liability company duly formed and existing under the laws of the State of Delaware (the “ Borrower ”); Linn Energy Holdco LLC, a limited liability company duly formed and existing under the laws of the State of Delaware (" Parent "); Linn Energy, Inc., a corporation duly formed and existing under the laws of the State of Delaware (" Holdings ," and collectively and severally with Parent, each a " Parent Guarantor "); each of the Subsidiaries set forth on the Schedule of Guarantors attached as Annex I to the Credit Agreement, as defined below, or otherwise from time to time party hereto (each a " Subsidiary Guarantor ," and collectively, the " Subsidiary Guarantors "); each of the Lenders from time to time party hereto; and Wells Fargo Bank, National Association (in its individual capacity, " Wells Fargo "), as administrative agent for the Lenders (in such capacity, together with its successors in such capacity, the " Administrative Agent "). Each capitalized term used herein but not otherwise defined herein has the meaning given such term in the Credit Agreement, as amended by this First Amendment. Unless otherwise indicated, all section or article references in this First Amendment refer to sections or articles of the Credit Agreement or this First Amendment, as the context requires.
R E C I T A L S
A.     WHEREAS , the Borrower, Parent Guarantors, Subsidiary Guarantors, the Administrative Agent, and the Lenders entered into that Credit Agreement dated as of February 28, 2017 (the “ Credit Agreement ”), pursuant to which the Lenders have made certain credit and other financial accommodations available to and on behalf of the Borrower and its Subsidiaries.
B.     WHEREAS , the Borrower proposes to enter into a series of transactions comprised of (a) a Sale of certain assets located in Jonah, Wyoming, as more particularly set forth in the Initial Reserve Report, for a purchase price of $581,500,000 (the " Jonah Sale "), subject to customary purchase price adjustments and transaction costs, fees, and expenses set forth in the definitive documents governing the Jonah Sale, (b) voluntary payment in full of the Term Loan and voluntary partial payment of the Revolving Loan from the Net Cash Proceeds of the Jonah Sale, and (c) one or more transactions to which it would contribute, for equity to an unrestricted Subsidiary or joint venture, certain of the Scoop / Stack Assets, the Merge Assets, and the Contributed Midstream Assets (as each such term is defined in Section 1 herein) (collectively, each of (a), (b), and (c) of the foregoing, the " Proposed Transactions ").
C.     WHEREAS , in connection with the Proposed Transactions, the Borrower has requested, and the Administrative Agent and the Lenders have agreed (subject to satisfaction of the Conditions Precedent to First Amendment (as defined herein)), to amend certain provisions of the Credit Agreement.
D.     WHEREAS , the Obligors also plan to sell certain Oil and Gas Properties as more fully set forth in Section 3.2 of this First Amendment and propose that the Administrative Agent and the Lenders consent to and agree in advance of each such Sale to reductions to the Borrowing Base to be attributed to each such Sale, and the Administrative Agent and the Lenders

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are amenable to setting such reductions in advance on the terms and conditions as set forth herein.
E.     WHEREAS , the Obligors have informed the Administrative Agent and the Lenders that they require additional time to obtain certain of the Swap Agreements required by Section 8.16 of the Credit Agreement, and the Administrative Agent and the Majority Lenders are willing to consent to an extension on the terms and conditions as set forth herein.
F.     NOW, THEREFORE , to induce the Obligors, the Administrative Agent, and the Lenders to enter into this First Amendment and in consideration of the premises and the mutual covenants herein contained, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
Section 1.     Amendments to Credit Agreement .
1.1     Amendment to Section 1.02 .
(a)     Section 1.02 is hereby amended to delete the following defined terms: "Term Loan Notes."
(b)     Section 1.02 is hereby amended (a) with respect to each defined term below that is defined in Section 1.02 , deleting such defined term from such Section 1.02 and replacing it with the analogous term below and (b) with respect to each defined term below that is not in Section 1.02 , adding such defined term to such Section 1.02 in the appropriate alphabetical order thereto:
"" Agreement " means this Credit Agreement, as amended by the First Amendment and Consent to Credit Agreement, dated May 31, 2017 (" First Amendment "), as the same may from time to time be amended, restated, amended and restated, supplemented or otherwise modified."
"" Available Cash " means an aggregate amount equal to, calculated beginning as of April 1, 2017 and calculated without duplication, EBITDA for all periods ended after April 1, 2017 for which financial statements have been delivered pursuant to Section 8.01(a) or Section 8.01(b) hereunder, less interest paid for such periods less tax expense during such periods, including the aggregate amount of all Restricted Payments made pursuant to Section 9.04(a)(iii)(A) and Section 9.04(a)(iv) during such periods less any add-backs taken under clause (b)(vii) or clause (b)(viii) of the definition of EBITDA during such periods, in each case, to the extent added back to EBITDA, less the aggregate amount of all Investments made pursuant to Section 9.05(g)(v) in reliance on the basket available under Section 9.04(a)(vi), less the aggregate amount of all Restricted Payments made pursuant to Section 9.04(a)(vi) , without duplication of those made pursuant to Section 9.05(g)(v). For purposes of calculating Available Cash, EBITDA shall be determined as set forth in this Agreement and EBITDA and all adjustments discussed in this definition of Available Cash shall be calculated on a non-annualized basis utilizing only Financial Statements delivered to the Administrative Agent pursuant to

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Section 8.01(a) or Section 8.01(b), in each case, together with the certificate required by Section 8.01(c)."
"" Consolidated Net Income " means with respect to Holdings and its Consolidated Subsidiaries, for any period, the aggregate of the net income (or loss) of Holdings and the Consolidated Subsidiaries after allowances for taxes for such period determined on a consolidated basis in accordance with GAAP; provided , that there shall be excluded from such net income (to the extent otherwise included therein) the following (without duplication): (a) the net income of any Unrestricted Subsidiary, Permitted Joint Venture, or other Person in which Holdings or a Consolidated Subsidiary has an interest (which interest does not cause the net income of such other Person to be consolidated with the net income of Holdings and the Consolidated Subsidiaries in accordance with GAAP), except to the extent of the amount of dividends or distributions actually paid in cash during such period by such other Person to Holdings or to a Consolidated Subsidiary, as the case may be; (b) the net income (but not loss) during such period of any Consolidated Subsidiary to the extent that the declaration or payment of dividends or similar distributions or transfers or loans by that Consolidated Subsidiary is not at the time permitted by operation of the terms of its charter or any agreement, instrument, or Governmental Requirement applicable to such Consolidated Subsidiary or is otherwise restricted or prohibited, in each case determined in accordance with GAAP; (c) any extraordinary gains or losses during such period; (d) non-cash gains, losses, or adjustments under FASB Statement No. 133 as a result of changes in the fair market value of derivatives; (e) any gains or losses attributable to write-ups or write-downs of assets, including ceiling test write-downs; and (f) non-cash share-based payments under FASB Statement No. 123R; and provided , further , that if Holdings or any Consolidated Subsidiary shall acquire or dispose of any Property during such period, then Consolidated Net Income shall be calculated after giving pro forma effect to such acquisition or disposition, as if such acquisition or disposition had occurred on the first day of such period."
"" Consolidated Subsidiary " means each Restricted Subsidiary of Holdings (whether now existing or hereafter created or acquired) the financial statements of which are (or should be) consolidated with the financial statements of Holdings in accordance with GAAP; provided , that, for the avoidance of doubt, Unrestricted Subsidiaries and Permitted Joint Ventures are excluded from this definition of Consolidated Subsidiary."
"" Contributed Midstream Assets " means the Chisolm Trail Refrigeration Plant and other gathering, processing and compression facilities located in the Merge play in Central Oklahoma."  
"" Current Assets " means, as of any date of determination, without duplication, the sum of all amounts that would, in accordance with GAAP, be set forth opposite the caption "total current assets" (or any like caption) on a consolidated balance sheet of Holdings and its Consolidated Subsidiaries at such

3


date, plus the unused Commitments, but excluding all non-cash assets under FASB ASC Topic 815."
"" Current Liabilities " means, as of any date of determination, without duplication, the sum of all amounts that would, in accordance with GAAP, be set forth opposite the caption "total current liabilities" (or any like caption) on a consolidated balance sheet of Holdings and its Consolidated Subsidiaries on such date, but excluding (a) all non-cash obligations under FASB ASC Topic 815 and (b) the current portion of the Loans under this Agreement."
"" Current Ratio " means, with respect to Holdings and its Consolidated Subsidiaries for any date of determination, the ratio of (a) Current Assets as of the last day of the most recently ended Fiscal Quarter (which may be such date of determination) to (b) Current Liabilities on such day."
"" Domestic Subsidiary " means any Subsidiary (whether a Restricted Subsidiary or an Unrestricted Subsidiary) that is organized under the laws of the United States of America or any state thereof or the District of Columbia."
"" EBITDA " means, for any period, on a consolidated basis for Holdings and its Consolidated Subsidiaries, (a) Consolidated Net Income for such period plus (b) the following expenses or charges to the extent deducted in the calculation of Consolidated Net Income for such period: (i) exploration expenses, (ii) Interest Expense, (iii) income or franchise taxes, (iv) depreciation, depletion, amortization and other non-cash charges and losses, (v) documented and reasonable non-Affiliate third party fees, costs and expenses paid for attorneys, accountants, bankers and other advisors incurred in connection with (x) sales of Property or (y) issuance of Equity Stock by the Borrower, Parent, or Holdings, including without limitation thereof, an initial public offering, in each case to the extent such non-Affiliate third party fees, costs and expenses are fully paid from the gross proceeds of such (x) sales of Property or (y) issuance of Equity Stock by the Borrower, Parent, or Holdings; (vi) any losses from an early unwind of any Swap Agreement; (vii) costs, expenses and charges incurred in connection with the Permitted Transactions; and (viii) fees and expenses incurred during such period pursuant to the Chapter 11 plan of reorganization, and any restructuring, severance, termination and other costs, expenses or charges incurred in connection with the acquisition or disposition of any assets, entity or line of business permitted hereunder, the closure or consolidation of facilities, the termination or modification of contracts or any benefit or employee plans, minus (c) the following income or gains to the extent included in the calculation of Consolidated Net Income for such period: (i) all interest income, (ii) all non-cash income and gains, (iii) all cancellation of debt income and (iv) any gains from an early unwind of any Swap Agreement; provided , that aggregate amount of all add-backs described in clauses (vii) and (viii) above shall constitute no more than ten percent (10%) in the aggregate of EBITDA for any four quarter testing period and in each case shall have been incurred during such measurement period ending on or prior to March 31, 2018; provided , further , that, other than for purposes of

4


calculating Available Cash, if the Borrower or any Consolidated Subsidiary shall acquire or dispose of any Property (including Equity Interests of a Subsidiary or any Permitted Transaction) during such period, then, to the extent not reflected in the pro forma calculation of Consolidated Net Income, EBITDA shall be calculated after giving pro forma effect to such acquisition or disposition, as if such acquisition or disposition had occurred on the first day of such period; provided , further that no such pro forma calculation shall be required for acquisitions or dispositions, in the ordinary course of business that in the aggregate are less than the lesser of (x) $50,000,000 and (y) five percent (5%) of the Borrowing Base; provided , further , for the first three full fiscal quarters after the First Amendment Effective Date (other than for purposes of calculating Available Cash), EBITDA shall be calculated on an annualized basis as follows: (1) for fiscal quarter ending June 30, 2017, EBITDA shall be calculated as EBITDA for fiscal quarter ending June 30, 2017 times 4, (2) for fiscal quarter ending September 30, 2017, EBITDA shall be calculated as EBITDA for fiscal quarters ending June 30, 2017 and September 30, 2017 times 2 and (3) for fiscal quarter ending December 31, 2017, EBITDA shall be calculated as EBITDA for fiscal quarters ending June 30, 2017, September 30, 2017 and December 31, 2017 times four-thirds."
"" Financial Statements " means as of the date specified for delivery in accordance with Section 6.01 or Section 8.01, each of (a) the consolidated pro forma fresh start accounting balance sheet of Obligors, (b) the consolidated fresh start accounting balance sheet of the Obligors, (c) each consolidated and consolidating balance sheet and related statements of operations, cash flows, and as applicable, member's or shareholder's equity, as at the applicable reporting period end, in each case, as set forth in Sections 8.01(a) and (b) for Holdings and its Consolidated Subsidiaries."
"" First Amendment " means that certain First Amendment and Consent dated as of May 31, 2017."
"" First Amendment Effective Date " means May 31, 2017."
"" Foreign Subsidiary " means any Subsidiary (whether a Restricted Subsidiary or an Unrestricted Subsidiary) that is not a Domestic Subsidiary."
"" Leverage Ratio " means, on any date of determination, the ratio of (a) Total Net Debt as of such date to (b) EBITDA for the twelve month period ending on such date of determination or, if applicable, the annualized amount calculated in accordance with the definition of "EBITDA" for the first three quarters following the First Amendment Effective Date."
"" Merge Assets " means Oil and Gas Properties located in the Merge play in Central Oklahoma, primarily in southern Canadian and northern Grady counties."

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"" Non-Conforming Period Termination Date " means the First Amendment Effective Date."
"" Notes " means the Revolving Loan Notes."
"" Permitted Joint Venture " means a Joint Venture structured as a limited liability company or a corporation that (a) is not controlled by an Obligor, and (b) receives a contribution of all or a substantial part of the (i) the Merge Assets, (ii) the Scoop/Stack Assets, and/or (iii) Contributed Midstream Assets in a Permitted Transaction."
"" Permitted Transaction " means any transaction otherwise permitted by this Agreement occurring on or before April 1, 2018 whereby the applicable Obligor contributes to either (a) a Permitted Joint Venture or (b) pursuant to Section 9.18 any newly formed Unrestricted Subsidiary all or substantially all of any of (a) the Merge Assets, (b) the Scoop/Stack Assets and/or (c) the Contributed Midstream Assets; provided , however , that such contribution may be made only if, at the time of entering into the definitive documentation for such Permitted Transaction, there shall not exist, occur or be continuing any Default or Event of Default; provided , further , that the terms of such documentation shall not result in a Default or Event of Default."
"" Restricted Payment " means any dividend or other distribution (whether in cash, securities or other Property) with respect to any Equity Interests in the Obligors or their respective Subsidiaries, or any payment (whether in cash, securities or other Property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any such Equity Interests in the Obligors or their respective Subsidiaries or any option, warrant or other right to acquire any such Equity Interests in the Obligors or their respective Subsidiaries; or any Investment in an Unrestricted Subsidiary or Permitted Joint Venture, other than a Permitted Transaction."
"" Restricted Subsidiary " means any Subsidiary of the Borrower that is not an Unrestricted Subsidiary."
'" Scoop / Stack Assets " means Oil and Gas Properties located in the STACK play in North Western Oklahoma, north of the Merge, primarily in Blaine and Major counties."  
"" Subsidiary " of a Person means (a) a corporation, partnership, joint venture, limited liability company or other business entity of which Equity Interests representing more than 50% of the ordinary voting power to elect a majority of the board of directors, managers or other governing body (irrespective of whether or not at the time Equity Interests of any other class or classes of such Person shall have or might have voting power by reason of the happening of any contingency) are at the time owned or controlled by such Person or one or more

6


of its Subsidiaries or by such Person and one or more of its Subsidiaries, and (b) any partnership of which such Person or any of its Subsidiaries is a general partner. Unless otherwise indicated herein, each reference to the term "Subsidiary" means a Restricted Subsidiary or Foreign Subsidiary of the Obligors and does not include an Unrestricted Subsidiary.
"" Subsidiary Guarantor " means each direct and indirect subsidiary of Borrower that is a Restricted Subsidiary."
"" Term Lenders " as of the First Amendment Effective Date there are no Term Lenders."
"" Term Loan Commitment " as of the First Amendment Effective Date there are no Term Loan Commitments outstanding."
"" Term Loans " as of the First Amendment Effective Date there are no Term Loans outstanding."
"" Unrestricted Subsidiary " means any Subsidiary of the Borrower that is a limited liability company or a corporation designated as an Unrestricted Subsidiary from time to time in writing to the Administrative Agent to be an Unrestricted Subsidiary pursuant to Section 9.18 ."
1.2     Amendment to Articles VII, VIII, XI, and XII . To the extent not otherwise amended herein, each of Sections 7.06, 7.08, 7.09, 7.23 and 7.24, Sections 8.01(q), 8.02, 8.04, and 8.14, Article XI, Article XII (other than Sections 12.02, 12.08, 12.11, and 12.14) are hereby amended to change each reference to the respective "Subsidiary" or "Subsidiaries" of an Obligor to read as a "Subsidiary and Unrestricted Subsidiary" or "Subsidiaries and Unrestricted Subsidiaries," or "Subsidiary or Unrestricted Subsidiary" or "Subsidiaries or Unrestricted Subsidiaries," as the context requires.
1.3     Section 2.09 . Consistent with the indefeasible payment in full of the Term Loans, the text of Section 2.09 of the Credit Agreement is hereby deleted in its entirety and replaced with the following:
"2.09     Term Loans .
(a)     Funding of Term Loans . As of the First Amendment Effective Date, there are no Term Loan Lenders.
(b)     Loans and Borrowings . As of the First Amendment Effective Date, there are no Term Loans outstanding, all Term Loan Commitments have been terminated.
(c)     Requests for Borrowing . Requests for Term Loan Borrowings are not permitted from and after the First Amendment Effective Date. "

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1.4     Amendment to Section 7.14 . Section 7.14 is hereby amended by adding the following to the end of the first sentence thereof following the words "indirect Subsidiaries," ", Unrestricted Subsidiaries or Permitted Joint Ventures."
1.5     Amendment to Section 9.01 .
(a)     Section 9.01(b) is hereby amended by deleting such Section in its entirety and replacing it with:
"(b)     Maximum Leverage Ratio . Beginning with fiscal quarter ending September 30, 2017, the Obligors will not permit the Leverage Ratio for Holdings and its Consolidated Subsidiaries as at the last date of such applicable period then ended to exceed 4.00 to 1.00."
(b)    Section 9.01 is hereby further amended by adding a new subparagraph (c) as follows:

"(c)     Current Ratio . Beginning with the fiscal quarter ending September 30, 2017, the Obligors will maintain a Current Ratio for Holdings and its Consolidated Subsidiaries of not less than 1.00 to 1.00, to be measured as of the last day of any fiscal quarter for the trailing twelve month period then ended."

1.6     Amendment to Section 9.04 . Section 9.04(a) is hereby amended as follows:
(a)     Delete Section 9.04(a)(vi) in its entirety and replace it with the following:
"(vi)    so long as (A) no Borrowing Base Deficiency, Default or Event of Default has occurred and is continuing or would result therefrom, (B) on a pro forma basis after giving effect thereto, the Leverage Ratio shall be less than 2.50 to 1.00 and (C) on a pro forma basis after giving effect thereto, the amount available for borrowing under the Borrowing Base shall not be less than twenty percent (20%) of the Borrowing Base then in effect, the Borrower may (x) declare and pay dividends or distributions to Parent and each Parent Guarantor may declare and pay dividends or distributions ratably with respect to its Equity Interests and (y) make Investments pursuant to Section 9.05(g)(v) in an aggregate amount for all Investments pursuant to Section 9.04(a)(viii) and this Section 9.04(a)(vi) not to exceed $40,000,000 in the aggregate and amounts available for Restricted Payments under this Section 9.04(a)(vi) shall be reduced by the amount of such Investments; provided , that upon depletion of the amounts permitted for stock repurchases in clause (viii) of this Section 9.04(a), repurchases of Equity Interests shall be permitted subject to the same conditions and limitations set forth for dividends or distributions herein; provided , further , that any such Investments, Equity Interest repurchases, dividends or distributions shall only be paid, if

8


otherwise permitted, in an aggregate amount not to exceed Available Cash."

(b)    Add a new Section 9.04(a)(viii) as follows:

"(viii)    so long as no Event of Default has occurred and is continuing or would result therefrom, the Borrower or any Subsidiary may, in good faith, pay (or make Restricted Payments to allow any Obligor that is a direct or indirect parent thereof to pay or make Restricted Payments and each such Obligor that is a direct or indirect parent thereof may make such Restricted Payments) for (x) dividends or distributions ratably to all holders of Equity Interests, (y) the repurchase, retirement or other acquisition or retirement for value of Equity Interests of it or any direct or indirect parent thereof, or (z) to make an Investment permitted pursuant to Section 9.05(g)(v) , in an aggregate amount not-to-exceed $75,000,000 during the term of this Agreement; provided , that not more than $40,000,000 of such amount shall be used for Investments made pursuant to Section 9.05(g)(v) and amounts available for other Restricted Payments under this Section 9.04(a)(viii) shall be reduced by the amount of such Investments; provided , further , that the aggregate amount of all Investments pursuant to this Section 9.04(a)(viii) and Section 9.04(a)(vi) shall not exceed $40,000,000 in the aggregate; provided , further , that from and after May 31, 2018, any such Investments or Restricted Payments will only be permitted so long as (A) no Default or Event of Default has occurred and is continuing or would result therefrom, (B) on a pro forma basis after giving effect thereto, the Leverage Ratio shall be less than 2.50 to 1.00 and (C) on a pro forma basis after giving effect thereto, the amount available for borrowing under the Borrowing Base shall not be less than twenty percent (20%) of the Borrowing Base then in effect."

1.7     Amendment to Section 9.05 . Section 9.05 is hereby amended as follows:
(a)     Section 9.05(f) of the Credit Agreement is amended to delete the text "[ Reserved ]." and replace it with the following:
"(f)    Investments represented by Equity Interests received in a Permitted Transaction."
(b)     Section 9.05(g) is amended to delete the full text in such section in its entirety and replace it with the following:
"(g)    Investments (i) directly or indirectly by the Parent or Holdings in the Borrower or any Guarantor; (ii) made by the Borrower in or to any other Subsidiary Guarantor, (iii) made by any Subsidiary that is a Guarantor in or to any other Subsidiary that is a Guarantor, (iv) made by any Subsidiary that is not a Guarantor to any other Subsidiary that is not a Guarantor; and (v) made by the Borrower or any Guarantor in or to any

9


Unrestricted Subsidiaries or Permitted Joint Ventures which are not Guarantors which do not at any time exceed $40,000,000 in the aggregate; provided , that such Investment in Unrestricted Subsidiaries or Permitted Joint Ventures which are not Guarantors is funded solely from Available Cash from funds that would otherwise be permitted to be used for Restricted Payments pursuant to Section 9.04(a)(vi) or funds that would otherwise be permitted to be used for Restricted Payments pursuant to Section 9.04(a)(viii) ."
1.8     Amendment to Section 9.10 . Section 9.10 of the Credit Agreement is hereby amended to delete the word "and" appearing before sub-clause (e) and immediately following sub-clause (e) to insert ", and (f) Obligors and their Subsidiaries may engage in any Permitted Transaction."
1.9     Amendment to Section 9.11 . Section 9.11 of the Credit Agreement is hereby amended as follows:
(a)     Delete Section 9.11(d) in its entirety and replace with the following:
"(d)    Farm-outs of undeveloped acreage or acreage to which no Proved Reserves in which the Borrower or any Restricted Subsidiary has an interest are attributable and assignments in connection with such farm-outs (for purposes of this clause, farm-out means any contract whereby any Oil and Gas Property, or any interest therein, may be earned by one party, by the drilling or committing to drill one or more wells by that party, whether directly or indirectly);"
(b)     Delete Section 9.11(e) in its entirety and replace with the following:
"(e)    Any exchange or swap of assets; provided , that (A) such exchange or swap is for cash and Oil and Gas Property located in the United States and (B) such consideration received in respect of such exchange or swap is equal to or greater than the fair market value of the Property subject of such exchange or swap (as determined in good faith by a Financial Officer); provided , further , that if the Property exchanged or swapped constitutes Oil and Gas Property to which Proved Reserves are attributable, in addition to the foregoing requirements, such exchange or swap shall be subject to compliance with the applicable borrowing base redetermination and mandatory prepayment provisions of Section 2.07(g)(ii) and Section 3.04(c)(vi), in each case, to the same extent as those set forth with respect to Section 9.11(b)(iv) and, assuming for purposes of each Sale that is an exchange of Oil and Gas Properties to which Proved Reserves are attributable, that the Net Cash Proceeds received on account thereof equal the value assigned to the Oil and Gas Properties to which Proved Reserves are attributable that are being disposed of pursuant to such Sale (as determined in good faith by the Administrative Agent); and"

10


(c)    Add a new Section 9.11(f) immediately following Section 9.11(e) that reads in entirety as follows:
"(f)    Any Permitted Transaction."
1.10     Amendment to Section 9.18 . Section 9.18 of the Credit Agreement is hereby amended by deleting such section in its entirety and replacing it with the following:
" Section 9.18 Designation and Conversion of Restricted and Unrestricted Subsidiaries; Debt of Unrestricted Subsidiaries .
(a)     Unless designated as an Unrestricted Subsidiary in a writing delivered to the Administrative Agent in accordance with Section 12.01 in compliance with Section 9.18(b) , any Person that is a Subsidiary on the First Amendment Effective Date or becomes a Subsidiary of the Borrower or any of its Subsidiaries thereafter shall be classified as a Restricted Subsidiary and shall be or become an Obligor in accordance with Section 8.13 .
(b)     Except as otherwise provided herein, and subject to the requirements of this Section 9.18(b) , the Borrower may designate any newly formed or newly acquired Subsidiary as an Unrestricted Subsidiary in connection with a Permitted Transaction by written notification thereof delivered to the Administrative Agent prior to such formation or acquisition and certification by a Responsible Officer that the conditions of this Section 9.18(b) have been satisfied and upon the receipt by the Administrative Agent of such notice, such Subsidiary shall be an Unrestricted Subsidiary; provided , however , that such election may be made only if immediately prior to and after giving effect, to such designation, there shall not exist, occur or be continuing any Default or Event of Default and such designation is an Investment in an Unrestricted Subsidiary permitted to be made at the time of such designation under Section 9.05(f) or Section 9.05(g)(v) .
(c)     So long as (x) no Default or Event of Default is continuing or would be caused by the redesignation, and (y) no Borrowing Base Deficiency would result from the redesignation (unless such redesignation is accompanied by a repayment eliminating such Borrowing Base Deficiency), any Unrestricted Subsidiary may be redesignated as a Restricted Subsidiary at any time."
1.11     Amendment to Section 9.21 . Section 9.21 of the Credit Agreement is hereby amended by deleting such section in its entirety and replacing it with the following:

11


" Section 9.21 . Certain Restrictions with respect to Permitted Transactions, Unrestricted Subsidiaries and Permitted Joint Ventures .
(a)     Notwithstanding any other provision in this Agreement to the contrary, if an applicable Permitted Transaction has not occurred on or prior to December 31, 2017, then from January 1, 2018 through and including the earliest to occur of (x) April 1, 2018, (y) the date the applicable Permitted Transaction occurs and (z) the date the Borrower delivers a written notice to the Administrative Agent that such Permitted Transaction will not occur and is being abandoned (such earliest date, the " Option Termination Date "), the Obligors will not, and will not permit any of their respective Subsidiaries to invest or otherwise fund any operations, maintenance or other improvement of (a) the Merge Assets, (b) the Scoop/Stack Assets and/or (c) the Contributed Midstream Assets, using the proceeds of the Loans, cash constituting Collateral of the Lenders or proceeds of Collateral; provided , that until the Option Termination Date, so long as (A) no Borrowing Base Deficiency, Default or Event of Default has occurred and is continuing or would result therefrom, (B) on a pro forma basis after giving effect thereto, the Leverage Ratio shall be less than 2.50 to 1.00 and (C) on a pro forma basis after giving effect thereto, the amount available for borrowing under the Borrowing Base shall not be less than twenty percent (20%) of the Borrowing Base then in effect, the Borrower may fund any investment, operating or maintenance cost associated with such assets from such sources, in each case, subject to all other restrictions set forth in this Agreement and subject to the Collateral requirements herein and in the other Loan Documents.
(b)     Notwithstanding any other provision in this Agreement to the contrary, none of the Obligors shall make any Investment in any Unrestricted Subsidiary or Permitted Joint Venture; provided , that Obligors may make Investments in any Unrestricted Subsidiary or Permitted Joint Venture to the extent expressly permitted by Section 9.05(g)(v) utilizing proceeds permitted by Section 9.04(a)(vi) and Section 9.04(a)(viii) in an aggregate amount not to exceed $40,000,000.
(c)     Notwithstanding any other provision in this Agreement to the contrary, the Obligors:
(i)
will cause the management, business and affairs of its Unrestricted Subsidiaries to be conducted in such a manner, including, without limitation, by keeping separate books of account, furnishing separate financial statements of Unrestricted Subsidiaries or Permitted Joint Ventures to creditors and potential creditors thereof and shall not permit Properties of Obligors and their respective Restricted Subsidiaries to be commingled with Properties of Unrestricted Subsidiaries; in each case, so that each Unrestricted Subsidiary and Permitted Joint Venture that is a corporation will be

12


treated as a corporate entity separate and distinct from Obligors and their respective Restricted Subsidiaries;
(ii)
will not, and will not permit any of their Restricted Subsidiaries to, incur, assume, guarantee or be or become liable for any Debt of any of the Unrestricted Subsidiaries or Permitted Joint Ventures;
(iii)
will not permit any Unrestricted Subsidiary or Permitted Joint Venture to hold any Equity Interest in, or any Debt of, the Borrower or any other Obligor; and
(iv)
will not engage in any transactions with, or permit any of their respective Unrestricted Subsidiary or Permitted Joint Venture to engage in any transactions with any Obligor other than transactions that are entered into on an arm's length basis on terms no less favorable to the Obligors than would be obtained from or with another party that is not affiliated with the Obligors."
1.12     Amendment to Section 12.20(b) . Section 12.20(b) of the Credit Agreement is hereby amended by inserting “or pursuant to a Permitted Transaction” immediately following the parenthetical that reads “(other than any sale, transfer, conveyance, transfer of other disposition to the Borrower or another Guarantor)” and immediately before the “,”.
1.13     Amendment to Annex III . The body of Annex III is deleted in its entirety and replaced with the following: " As of the First Amendment Effective Date, there are no Term Loans outstanding, all Term Loan Commitments have been terminated and there are no Term Loan Lenders."
Section 2.     Conforming Amendments to Guaranty Agreement, Security Agreement and Pledge Agreement .
2.1     Security Agreement . The Security Agreement is hereby amended to add to the definition of "Excluded Property" following clause (e)(iii), "or (iv) the Equity Interests issued by, and the Property owned by, any Unrestricted Subsidiary or Permitted Joint Venture only in connection with a Permitted Transaction" and to delete the word "or" immediately prior to clause (iii).
2.2     Pledge Agreement . The Pledge Agreement is hereby amended to: add to the definition of "Excluded Property" following the word "Borrower" at the end of such definition, "or the Equity Interests issued by any Unrestricted Subsidiary or Permitted Joint Venture only in connection with a Permitted Transaction."
2.3     Guaranty Agreement . In the Guaranty Agreement, Section 17 is hereby amended to change each reference to the respective "Subsidiary" or "Subsidiaries" of an Obligor to read as a "Subsidiary and Unrestricted Subsidiary" or "Subsidiaries and Unrestricted Subsidiaries," as the context requires.

13


Section 3.     Consents .
3.1     Swap Agreements . The Administrative Agent and the Majority Lenders, hereby agree to extend the deadline set forth in Section 8.16 of the Credit Agreement for entering into natural gas Swap Agreements for calendar year 2019 from 120 days following the Effective Date to October 1, 2017; provided , that such extension shall only be operative so long as, the Borrower has entered into Swap Agreements which cover all other required volumes under Section 8.16. The Borrower and each other Obligor hereby represents and warrants that all other Swap Agreements required by Section 8.16 are in full force and effect on the First Amendment Effective Date.
3.2     Consent to Borrowing Base Adjustments .
(a)     The Oil and Gas Properties referenced in Sections 3.2(b)(1)-(6) below are those described in the public sales and marketing materials for the corresponding Sale of Oil and Gas Properties as previously disclosed in Holdings’ Form 8-K filing dated March 3, 2017, and those teaser marketing materials separately provided by the Borrower to the Administrative Agent in connection with this First Amendment (which such teaser marketing materials are available from the Administrative Agent on request.
(b)     The Borrowing Base reductions required pursuant to Section 2.07 of the Credit Agreement pursuant to a Sale of the Oil and Gas Properties set forth below shall be in the amount set forth for each such Oil and Gas Property below and shall be effective immediately upon closing of each such respective Sale. There shall be no further adjustment of the Borrowing Base in connection with each such Sale; provided , that each reduction set forth below shall only be effective with respect to Sales of the below listed Properties occurring prior to October 1, 2017, and thereafter any required adjustments shall be as set forth in the Credit Agreement. For the avoidance of doubt, the security interest in the below listed assets in favor of the Administrative Agent for the benefit of the Lenders and the Administrative Agent shall remain in full force and effect and shall not be released until the applicable Sale occurs and any applicable payments required pursuant to Section 3.04(c)(vi) of the Credit Agreement have been made contemporaneously with such Sale. The Borrowing Base adjustments for each respective Sale of Oil and Gas Properties set forth below shall be as follows:
(1)     South Texas assets: $30,000,000;
(2)     Brea Olinda Field, California assets: $95,000,000;
(3)     Kern County, California assets (the “Hill” assets): $110,000,000;
(4)     Salt Creek Field, Wyoming assets: $35,000,000;
(5)     Williston Basin, North Dakota assets: $110,000,000; and
(6)     Permian Basin, Texas assets: $90,000,000.

14


(c)     New Borrowing Base Notice . This Section 3.2 constitutes a New Borrowing Base Notice in accordance with Section 2.07 of the Credit Agreement with respect to each Borrowing Base adjustment made pursuant to a Sale of each of the Oil and Gas Properties set forth above in Sections 3.2(b)(1)-(6) to the extent such Sale occurs prior to October 1, 2017.
(d)     Consent to Borrowing Base Reduction . From and after the Non‑Conforming Period Termination Date until the next redetermination or adjustment pursuant to the Credit Agreement, the Non-Conforming Borrowing Base shall be terminated pursuant to the terms of Section 2.07(a) and each of the Administrative Agent, the Required Revolving Lenders and the Obligors hereby consent that the Borrowing Base shall be equal to $1,000,000,000. This Section 3.2 constitutes a New Borrowing Base Notice in accordance with Section 2.07 of the Credit Agreement with respect to such reduction.
(e)     Consent to early additional Borrowing Base Redetermination . The Borrower and each other Obligor hereby consents to a Borrowing Base Redetermination to occur on October 1, 2017. In connection with such Borrowing Base Redetermination, the Obligors covenant and agree that they will comply with Section 8.11, Section 8.12 and Section 8.13 in all respects as if such voluntary Borrowing Base Redetermination were a Scheduled Redetermination. In addition, the Borrower and the Obligors agree that upon request of the Required Revolving Lenders, if all of the Permitted Transactions have not occurred on or before October 1, 2017, the Administrative Agent may request an additional Borrowing Base Redetermination.
Section 4.     Representations and Warranties : To induce Administrative Agent and the Lenders to enter into this First Amendment, each Obligor hereby represents and warrants to the Administrative Agent and the Lenders as of the date hereof, after giving effect to the terms of this First Amendment:
4.1     that the execution, delivery and performance of this First Amendment has been duly authorized by all requisite corporate action on the part of each Obligor, and that this First Amendment has been duly executed and delivered by such Obligor and is enforceable in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally at law or by equitable principles relating to enforceability;
4.2     all of the representations and warranties contained in each Loan Document to which it is a party are true and correct in all material respects (except those which have a materiality qualifier, which shall be true and correct as so qualified), except to the extent any such representations and warranties are expressly limited to an earlier date, in which case, such representations and warranties shall continue to be true and correct as of such specified earlier date;
4.3     no Default or Event of Default has occurred and is continuing; and

15


4.4     no event or events have occurred which individually or in the aggregate could reasonably be expected to have a Material Adverse Effect.
Section 5.     Conditions Precedent to First Amendment . Notwithstanding anything to the contrary contained herein, the effective date of this First Amendment is subject to the satisfaction of the following conditions precedent (collectively, the " Conditions Precedent to First Amendment "), or waiver in accordance with Section 12.02 of the Credit Agreement, in each case, in form and substance satisfactory to the Administrative Agent:
5.1     Jonah Sale . The Borrower shall have provided evidence reasonably satisfactory to the Administrative Agent and the Lenders that the Jonah Sale has occurred.
5.2     Loan Payments . The Borrower shall have caused the Net Cash Proceeds of the Jonah Sale in an aggregate amount not less than $500 million: (a) to pay the outstanding principal and accrued but unpaid interest then due and payable on the Term Loan, until the Term Loan has been indefeasibly paid in full; and (b) to pay the outstanding principal and accrued but unpaid interest then due and payable on the Revolving Loan to the full extent of the remaining Net Cash Proceeds of the Jonah Sale.
5.3     Fees and Expenses . The Administrative Agent shall have received payment in full of (a) the fees set forth in the First Amendment Fee Letter (as defined in Section 6 below), together with all fees and other amounts associated with the transactions contemplated by this First Amendment; and (b) reimbursement or payment of all out-of-pocket expenses required to be reimbursed or paid by the Borrower in accordance with Section 12.03 of the Credit Agreement.
5.4     Solvency Certificate . The Administrative Agent shall have received a Solvency Certificate from a Financial Officer of the Borrower certifying that (a) the Borrower and (b) the Borrower and the other Obligors, taken as a whole, are Solvent.
5.5     Execution and Delivery . The Administrative Agent shall have received from Lenders constituting Required Revolving Lenders, the Borrower and the Guarantors, counterparts (in such number as may be requested by the Administrative Agent) of this First Amendment duly executed on behalf of each such Person.
The Administrative Agent is hereby authorized and directed to declare this First Amendment to be effective when it has received documents confirming or certifying, to the satisfaction of the Administrative Agent, compliance with the Conditions Precedent to First Amendment or the waiver of such conditions as permitted in Section 12.02 of the Credit Agreement. Such declaration shall be final, conclusive and binding upon all parties to the Credit Agreement for all purposes.
Section 6.     Miscellaneous .
6.1     Loan Document . This First Amendment is a Loan Document.
6.2     Payment of Amendment Fees and Expenses .

16


(a)     In addition to expenses described in subparagraph (b) to this Section 6.2 , the Borrower shall pay to the Administrative Agent the fees set forth in a fee letter dated as of even date with this First Amendment (" First Amendment Fee Letter "). Such fees shall be fully due and payable on the First Amendment Effective Date and shall be fully earned and non-reimbursable when paid.
(b)     In accordance with Section 12.03 of the Credit Agreement, the Borrower agrees to pay or reimburse the Administrative Agent for all of its reasonable out-of-pocket costs and reasonable expenses incurred in connection with this First Amendment, any other documents prepared in connection herewith and the transactions contemplated hereby, including, without limitation, the reasonable fees and disbursements of counsel to the Administrative Agent.
6.3     Ratification and Affirmation . Each of the Borrower and the Guarantors hereby (a) acknowledges the terms of this First Amendment; (b) ratifies and affirms (i) its obligations under, and acknowledges its continued liability under, each Loan Document to which it is a party and agrees that each Loan Document to which it is a party remains in full force and effect as expressly amended hereby, and (ii) that the Liens created by the Loan Documents to which it is a party are valid and continuing and secure the Indebtedness in accordance with the terms thereof, after giving effect to this First Amendment.
6.4     Release . Borrower and each other Obligor hereby releases and discharges Administrative Agent, Lenders and their respective directors, officers, employees, agents, advisors and each of their respective Affiliates (each a "Releasee" and collectively the " Releasees "), from any and all actual or potential claims of any kind whatsoever related to or arising out of the Credit Agreement, as amended hereby, the other Loan Documents, as amended hereby, or the transactions contemplated thereby, which any Borrower and/or any Obligor has had, now has or has made claim to have against any Releasee for or by reason of any act, omission, or thing whatsoever (each a " Claim " and collectively, " Claims ") arising at any point through and including the First Amendment Effective Date, other than any and all Claims, rights and defenses or causes of action relating to any lawsuits pending as of the First Amendment Effective Date, any Claims arising from actual fraud, gross negligence, or willful misconduct of such Releasee, and any Claims arising from any Releasee's obligations under this First Amendment.
6.5     The execution, delivery and effectiveness of this First Amendment shall not, except as expressly provided herein, operate as a waiver of any right, power or remedy of any Lender or the Administrative Agent under any of the Loan Documents, nor, except as expressly provided herein, constitute a waiver or amendment of any provision of any of the Loan Documents.
6.6     Construction . Section or paragraph headings or captions used in this First Amendment are for convenience only, and shall not affect the construction of any provision contained in this First Amendment. Rules of construction contained in Section 1.04 of the Credit Agreement are incorporated herein by reference.

17


6.7     Severability . Any provision of this First Amendment which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
6.8     Successors and Assigns . This First Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.
6.9     Confirmation . The provisions of the Credit Agreement, as amended by this First Amendment, shall remain in full force and effect following the effectiveness of this First Amendment. Upon and after the execution of this First Amendment by each of the parties hereto, each reference in the Credit Agreement to “this Agreement”, “hereunder”, “hereof” or words of like import referring to the Credit Agreement, and each reference in the other Loan Documents to “the Credit Agreement”, “thereunder”, “thereof” or words of like import referring to the Credit Agreement, shall mean and be a reference to the Credit Agreement as modified hereby.
6.10     Counterparts . This First Amendment may be executed by one or more of the parties hereto in any number of separate counterparts, and all of such counterparts taken together shall be deemed to constitute one and the same instrument. Delivery of this First Amendment by facsimile transmission or other electronic delivery shall be effective as delivery of a manually executed counterpart hereof.
6.11     NO ORAL AGREEMENT . THIS FIRST AMENDMENT, THE CREDIT AGREEMENT AND THE OTHER LOAN DOCUMENTS EXECUTED IN CONNECTION HEREWITH AND THEREWITH REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR UNWRITTEN ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO SUBSEQUENT ORAL AGREEMENTS AMONG THE PARTIES.
6.12     GOVERNING LAW . THIS FIRST AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS.

[Remainder of Page Intentionally Left Blank - Signature Pages Follow]


18


IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to be duly executed as of the date first written above.

BORROWER:
LINN ENERGY HOLDCO II LLC
 
 
 
 
 
By:
/s/ Candice J. Wells
 
 
Name: Candice J. Wells
 
 
Its: Senior Vice President, General Counsel and Corporate Secretary
 
 
PARENT GUARANTOR:
LINN ENERGY HOLDCO LLC
 
 
 
 
 
By:
/s/ Candice J. Wells
 
 
Name: Candice J. Wells
 
 
Its: Senior Vice President, General Counsel and Corporate Secretary
 
 
PARENT GUARANTOR:
LINN ENERGY, INC.
 
 
 
 
 
By:
/s/ Candice J. Wells
 
 
Name: Candice J. Wells
 
 
Its: Senior Vice President, General Counsel and Corporate Secretary
 
 
SUBSIDIARY GUARANTORS:
LINN OPERATING, LLC
 
 
 
 
 
By:
/s/ Candice J. Wells
 
 
Name: Candice J. Wells
 
 
Its: Senior Vice President, General Counsel and Corporate Secretary
 
 
 
LINN MIDSTREAM, LLC
 
 
 
 
 
By:
/s/ Candice J. Wells
 
 
Name: Candice J. Wells
 
 
Its: Senior Vice President, General Counsel and Corporate Secretary
 
 

[Signature Page to LINN First Amendment]



 
LINN ENERGY HOLDINGS, INC.
 
 
 
 
 
By:
/s/ Candice J. Wells
 
 
Name: Candice J. Wells
 
 
Its: Senior Vice President, General Counsel and Corporate Secretary
 
 
 
LINN MIDWEST ENERGY, LLC
 
 
 
 
 
By:
/s/ Candice J. Wells
 
 
Name: Candice J. Wells
 
 
Its: Senior Vice President, General Counsel and Corporate Secretary
 
 
 
LINN MARKETING, LLC
 
 
 
 
 
By:
/s/ Candice J. Wells
 
 
Name: Candice J. Wells
 
 
Its: Senior Vice President, General Counsel and Corporate Secretary
 
 


[Signature Page to LINN First Amendment]



 
Wells Fargo Bank, N.A.
 
 
 
 
 
By:
/s/ Patrick Fults
 
Name:
Patrick Fults
 
Title:
Director


[Signature Page to LINN First Amendment]



 
Whitney Bank
 
 
 
 
 
By:
/s/ Liana Tchernysheva
 
 
Liana Tchernysheva
 
 
Senior Vice President


[Signature Page to LINN First Amendment]



 
PNC Bank, N.A.
 
 
 
 
 
By:
/s/ John Ataman
 
Name:
John Ataman
 
Title
S.V.P.


[Signature Page to LINN First Amendment]



 
Societe Generale, as a Lender
 
 
 
 
 
By:
/s/ Max Sonnonstine
 
Name:
Max Sonnonstine
 
Title
Director


[Signature Page to LINN First Amendment]



 
AG Energy Funding, LLC
 
 
 
 
 
By:
/s/ Todd Dittmann
 
Name:
Todd Dittmann
 
Title
Authorized Person


[Signature Page to LINN First Amendment]



 
CITIZENS BANK, N.A.
 
 
 
 
 
By:
/s/ David W. Stack
 
Name:
David W. Stack
 
Title
Senior Vice President


[Signature Page to LINN First Amendment]



 
BSP Special Situations Master A LP,
 
By:
  Benefit Street Partners Special Situations GP L.P., its general partner
 
By:
  Benefit Street Partners Special Situations Ultimate GP L.L.C., its general partner
 
 
 
 
 
By:
/s/ Nina Baryski
 
Name:
Nina Baryski
 
Title
Authorized Signer


[Signature Page to LINN First Amendment]



 
SEI Energy Debt Fund, L.P,
By: Benefit Street Partners L.L.C., its Sub-Advisor
 
 
 
 
 
By:
/s/ Nina Baryski
 
Name:
Nina Baryski
 
Title
Authorized Signer


[Signature Page to LINN First Amendment]



 
Canadian Imperial Bank of Commerce,
New York Branch
 
 
 
 
 
By:
/s/ Charles D. Mulkeen
 
Name:
Charles D. Mulkeen
 
Title
Executive Director


[Signature Page to LINN First Amendment]



 
BP Energy Company
 
 
 
 
 
By:
/s/ Timothy Yee
 
Name:
Timothy Yee
 
Title
Attorney-in-Fact


[Signature Page to LINN First Amendment]



 
Associated Bank, NA
 
 
 
 
 
By:
/s/ Brett P. Stone
 
Name:
Brett P. Stone
 
Title
Senior Vice President


[Signature Page to LINN First Amendment]



 
Royal Bank of Canada
 
 
 
 
 
By:
/s/ Leslie P. Vowell
 
Name:
Leslie P. Vowell
 
Title
Attorney-in-Fact


[Signature Page to LINN First Amendment]



 
Morgan Stanley Bank, N.A.
 
 
 
 
 
By:
/s/ Dmitriy Barskiy
 
Name:
Dmitriy Barskiy
 
Title
Authorized Signatory


[Signature Page to LINN First Amendment]



 
Toronto Dominion (New York) LLC
 
 
 
 
 
By:
/s/ Annie Dorval
 
Name:
Annie Dorval
 
Title
Authorized Signatory


[Signature Page to LINN First Amendment]



 
KEYBANK NATIONAL ASSOCIATION
 
 
 
 
 
By:
/s/ John Dravenstott
 
Name:
John Dravenstott
 
Title
Vice President


[Signature Page to LINN First Amendment]



 
CARGILL, INCORPORATED
 
 
 
 
 
 
DocuSigned by:
 
By:
/s/ Tyler Smith
 
 
3DEB5F5BE904411
 
Name:
Tyler Smith
 
Title
Authorized Signer


[Signature Page to LINN First Amendment]



 
SUNTRUST BANK
 
 
 
 
 
By:
/s/ William S. Krueger
 
Name:
William S. Krueger
 
Title
First Vice President


[Signature Page to LINN First Amendment]



 
COMPASS BANK
 
 
 
 
 
By:
/s/ Rachel Festervand
 
Name:
Rachel Festervand
 
Title
Sr. Vice President


[Signature Page to LINN First Amendment]



 
Banc of America Credit Products, Inc
 
 
 
 
 
By:
/s/ Bryan Dodgins
 
Name:
Bryan Dodgins
 
Title
Officer


[Signature Page to LINN First Amendment]



 
Mizuho Bank Ltd.
 
 
 
 
 
By:
/s/ Leon Mo
 
Name:
Leon Mo
 
Title
Authorized Signatory


[Signature Page to LINN First Amendment]



 
Bank of America, N.A.
 
 
 
 
 
By:
/s/ Edna Aguilar Mitchell
 
Name:
Edna Aguilar Mitchell
 
Title
Director


[Signature Page to LINN First Amendment]



 
The Huntington National Bank
 
 
 
 
 
By:
/s/ Stephen Hoffman
 
Name:
Stephen Hoffman
 
Title
Managing Director


[Signature Page to LINN First Amendment]



 
Credit Agricole Corporate and Investment Bank
 
 
 
 
 
By:
/s/ Kathleen Sweeney
 
Name:
Kathleen Sweeney
 
Title
Managing Director
 
 
 
 
 
By:
/s/ Pierre-Alain Bennaim
 
Name:
Pierre-Alain Bennaim
 
Title
Managing Director


[Signature Page to LINN First Amendment]



 
NextEra Energy Marketing, LLC
 
 
 
 
 
By:
/s/ Craig Shapiro
 
Name:
Craig Shapiro
 
Title
Vice President


[Signature Page to LINN First Amendment]



 
Fifth Third Bank, an Ohio Banking Corporation
 
 
 
 
 
By:
/s/ David R. Garcia
 
Name:
David R. Garcia
 
Title
Vice President


[Signature Page to LINN First Amendment]



 
Apollo Credit Master Fund Ltd.
By: Apollo ST Fund Management LLC, as its Collateral Manager
 
 
 
 
 
By:
/s/ Joseph Glatt
 
Name:
Joseph Glatt
 
Title
Vice President


[Signature Page to LINN First Amendment]



 
ABN AMRO CAPITAL USA LLC
 
 
 
 
 
By:
/s/ Illegible
 
Name:
Illegible
 
Title
Executive Director
 
 
 
 
 
By:
/s/ Vincent E. Lisanti
 
Name:
Vincent E. Lisanti
 
Title
Managing Director


[Signature Page to LINN First Amendment]



 
DNB Capital LLC
 
 
 
 
 
By:
/s/ Byron Cooley
 
Name:
Byron Cooley
 
Title
Senior Vice President
 
 
 
 
 
By:
/s/ James Grubb
 
Name:
James Grubb
 
Title
Vice President


[Signature Page to LINN First Amendment]



 
Barclays Bank PLC
 
 
 
 
 
By:
/s/ Christopher Aitkin
 
Name:
Christopher Aitkin
 
Title
Assistant Vice President


[Signature Page to LINN First Amendment]



 
JPMorgan Chase Bank, N.A.
 
 
 
 
 
By:
/s/ Anson Williams
 
Name:
Anson Williams
 
Title
Authorized Officer


[Signature Page to LINN First Amendment]



 
CITIBANK, N.A.
 
 
 
 
 
By:
/s/ Paul Giarratano
 
Name:
Paul Giarratano
 
Title
5/24/17


[Signature Page to LINN First Amendment]



 
BANK OF MONTREAL
 
 
 
 
 
By:
/s/ James V. Ducote
 
Name:
James V. Ducote
 
Title
Managing Director


[Signature Page to LINN First Amendment]



 
UBS AG, Stamford Branch, as a Lender
 
 
 
 
 
By:
/s/ Kenneth Chin
 
Name:
Kenneth Chin
 
Title
Director
 
 
 
 
 
By:
/s/ Darlene Arias
 
Name:
Darlene Arias
 
Title
Director


[Signature Page to LINN First Amendment]



 
ING Capital LLC
 
 
 
 
 
By:
/s/ Juli Bieser
 
Name:
Juli Bieser
 
Title
Managing Director
 
 
 
 
 
By:
/s/ Josh Strong
 
Name:
Josh Strong
 
Title
Director


[Signature Page to LINN First Amendment]



 
BNP PARIBAS
 
 
 
 
 
By:
/s/ Vincent Trapet
 
Name:
Vincent Trapet
 
Title
Director
 
 
 
 
 
By:
/s/ Sriram Chandrasekaran
 
Name:
Sriram Chandrasekaran
 
Title
Director


[Signature Page to LINN First Amendment]



 
CAPITAL ONE, NATIONAL ASSOCIATION,
as a Lender
 
 
 
 
 
By:
/s/ Laurel Varney
 
Name:
Laurel Varney
 
Title
VP


[Signature Page to LINN First Amendment]



 
Macquarie Bank Limited
 
 
 
 
 
By:
/s/ Robert Trevena
 
Name:
Robert Trevena
 
Title
Division Director
 
 
 
 
 
By:
/s/ Nathan Booker
 
Name:
Nathan Booker
 
Title
Division Director


[Signature Page to LINN First Amendment]



 
The Bank of Nova Scotia
 
 
 
 
 
By:
/s/ Marc Graham
 
Name:
Marc Graham
 
Title
Director


[Signature Page to LINN First Amendment]



 
SUMITOMO MITSUI BANKING CORPORATION
 
 
 
 
 
By:
/s/ Toshitake Funaki
 
Name:
Toshitake Funaki
 
Title
Managing Director


[Signature Page to LINN First Amendment]



 
NZC Guggenheim Master Fund Limited
BY: Guggenheim Partners Investment Management, LLC as Manager
 
 
 
 
 
By:
/s/ Kaitlin Trinh
 
Name:
Kaitlin Trinh
 
Title
Authorized Person


[Signature Page to LINN First Amendment]



 
Guggenheim Energy & Income Fund
By: Guggenheim Partners Investment Management, LLC as Sub-Advisor
 
 
 
 
 
By:
/s/ Kaitlin Trinh
 
Name:
Kaitlin Trinh
 
Title
Authorized Person


[Signature Page to LINN First Amendment]



 
Maverick Enterprises, Inc.
By: Guggenheim Partners Investment Management, LLC as Investment Manager
 
 
 
 
 
By:
/s/ Kaitlin Trinh
 
Name:
Kaitlin Trinh
 
Title
Authorized Person


[Signature Page to LINN First Amendment]



 
Guggenheim Funds Trust – Guggenheim Macro Opportunities Fund
By: Guggenheim Partners Investment Management, LLC
 
 
 
 
 
By:
/s/ Kaitlin Trinh
 
Name:
Kaitlin Trinh
 
Title
Authorized Person


[Signature Page to LINN First Amendment]



 
DEUTSCHE BANK AG NEW YORK BRANCH
 
 
 
 
 
By:
/s/ Marcus Tarkington
 
Name:
Marcus Tarkington
 
Title
Director
 
 
 
 
 
By:
/s/ Dusan Lazarov
 
Name:
Dusan Lazarov
 
Title
Director


[Signature Page to LINN First Amendment]



 
U.S. Bank National Association
 
 
 
 
 
By:
/s/ James P. Cecil
 
Name:
James P. Cecil
 
Title
Vice President


[Signature Page to LINN First Amendment]



 
GOLDMAN SACHS LENDING PARTNERS LLC
 
 
 
 
 
By:
/s/ Meghan Sullivan
 
Name:
Meghan Sullivan
 
Title
Authorized Signatory


[Signature Page to LINN First Amendment]



 
Natixis, New York Branch
 
 
 
 
 
By:
/s/ Kenyatta Gibbs
 
Name:
Kenyatta Gibbs
 
Title
Director
 
 
 
 
 
By:
/s/ Brice Le Foyer
 
Name:
Brice Le Foyer
 
Title
Director


[Signature Page to LINN First Amendment]



 
[Comerica Bank]
 
 
 
 
 
By:
/s/ Chad Stephenson
 
Name:
Chad Stephenson
 
Title
Vice President


[Signature Page to LINN First Amendment]


Exhibit 10.2


LINN MIDSTREAM, LLC
LINN CHISHOLM TRAIL CRYOGENIC GAS PLANT
ENGINEERING AND CONSTRUCTION AGREEMENT #BK17056EC





BCCK ENGINEERING INCORPORATED
2500 North Big Spring
Midland, TX 79705
432-685-6095 ~ 432-685-7021 (fax)



LINN MIDSTREAM, LLC
14701 Hertz Quail Springs Parkway
Oklahoma City, OK 73134



June 13, 2017




Linn Chisholm Trail Cryogenic Gas Plant
Page 1
Engineering and Construction Agreement # BK17056EC
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LINN MIDSTREAM, LLC
LINN CHISHOLM TRAIL CRYOGENIC GAS PLANT
ENGINEERING AND CONSTRUCTION AGREEMENT #BK17056EC

Table of Contents

1
Definitions
4
2
Scope of Work
10
3
Compensation, Invoicing and Payment
17
4
Duration of Agreement
19
5
Inspection and Acceptance
20
6
Taxes
23
7
Maintenance and Repair
23
8
Care and Use
24
9
Insurance
24
10
Risk of Loss
27
11
Indemnities
27
12
Title; Personal Property; Encumbrances; Location
30
13
Licenses; Permits
31
14
Compliance with Law
31
15
Limitations of Liability and Liquidated Damages and Bonus
32
16
Assignment by BCCK
33
17
Assignment by Linn
33
18
Limited Warranty
33
19
Enforceability
35
20
Patents, Trade Secrets and Confidential Information
35
21
Changes in Scope
36
22
Delivery
37
23
Notices
39
24
Dispute Resolution
40
25
Termination
40
26
Assignment of Subcontracts upon Termination
43
27
Miscellaneous
43
28
Counterpart Execution
45



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Schedules
Schedule "A"
BCCK Scope of Supply
Schedule "B"
Standard Rate Sheet — North American Projects For BCCK and BCCK’s Affiliates
Schedule "C"
Responsibilities of Parties
Schedule "D"
Linn Chisholm Trail Cryogenic Gas Plant Performance Specification
Schedule "E"
Preliminary Project Schedule
Schedule "F"
Owner Deliverables
Schedule "G"
Conditional M&M Lien Waivers
Schedule "H"
Unconditional M&M Lien Waivers
Schedule "I"
All Bills Paid Affidavit



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LINN MIDSTREAM, LLC
LINN CHISHOLM TRAIL CRYOGENIC GAS PLANT
ENGINEERING AND CONSTRUCTION AGREEMENT #BK17056EC

This Linn Chisholm Trail Cryogenic Gas Plant Engineering and Construction Agreement (this “ Agreement ”) is entered into this 13 th day of June, 2017 (the “ Effective Date ”), between BCCK Engineering Incorporated, a Texas corporation (“ BCCK ”), and Linn Midstream, LLC a Delaware limited liability company (“ Linn ”), for the engineering and construction of a gas processing facility to be known as the Linn Chisholm Trail Cryogenic Gas Plant to be located in Grady County, Oklahoma.
Subject to the terms and conditions set forth herein, BCCK hereby agrees to engineer and construct for the benefit of Linn and Linn agrees to pay BCCK for the engineering, construction and other services described herein with respect to the Linn Chisholm Trail Cryogenic Gas Plant. In consideration of the mutual covenants set forth herein, and intending to be legally bound by this Agreement, Linn and BCCK hereby agree as follows:
1 Definitions
The following terms when capitalized and used in this Agreement will have the following meanings:
Adverse Weather Condition ” has the meaning set forth in Section 22.2 .
Agreement ” means this Linn Chisholm Trail Cryogenic Gas Plant Engineering and Construction Agreement including all Schedules attached hereto.
As-Built Drawings ” means final construction drawings showing the final as-built Linn Chisholm Trail Cryogenic Gas Plant prepared in accordance with Industry Standards, but shall include, but not be limited to all deviations from the construction drawings made during engineering and construction. As-Built Drawings are separate and different from the Record Drawings (See Section 2.3xvii ) which is a working set of the construction drawings marked to show changes.
BCCK ” means BCCK Engineering Incorporated and shall include the successors and/or authorized assigns of such party.
BCCK’s Affiliates ” means NG Resources Corporation, NG Field Construction, LLC and any other entity controlling, controlled by or under common control with BCCK.
BCCK’s Personnel ” means all employees, supervisors, representatives, agents and other persons to be provided by BCCK or its Subcontractors for the performance of the Work under this Agreement.
BCCK Work Product ” means the drawings, documents, engineering calculations and other data furnished by BCCK as further defined in Section 12 .
BTU ” means British Thermal Unit.



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Change Order ” means a document requested by either Linn or BCCK and signed by both Linn and BCCK that sets forth a change in scope of work, schedule, and/or the Contract Price, and, upon execution amends this Agreement.
Change Directive ” means a directive by Linn issued to BCCK to proceed with a change in the Work prior to the signing of a Change Order.
Commissioning ” means the process of assuring the Linn Chisholm Trail Cryogenic Gas Plant is complete and is tested to verify it functions according to its design objectives and specifications and is ready to initiate start-up and normal operation. The parties agree to reasonably cooperate with respect to Commissioning of discrete components of the Linn Chisholm Trail Cryogenic Gas Plant in phases upon their respective completion.
Construction Phase ” means the period from first delivery of any materials, equipment, supplies, and maintenance equipment (including temporary materials, equipment, and supplies) to the Job Site through Mechanical Completion.
Contract Price ” means the total amount of compensation in US Dollars to be paid to BCCK as defined in Section 3.1 of this Agreement or as modified by a Change Order for the Work to be performed by BCCK.
Day ” means a business day, excluding weekends and holidays and “ day ” means a calendar day.
Drawings, Plans, and Specifications ” means the final construction drawings, plans, and specifications for the Linn Chisholm Trail Cryogenic Gas Plant (including the BCCK Work Product and those in Schedule "A" and Schedule "C" ), understanding that there will be minor field changes captured in the As-Built Drawings.
Effective Date ” means the date of the execution of this Agreement as set forth in the initial paragraph of this Agreement.
Equipment List ” means a document prepared by BCCK and presented to Linn for prompt comments to be incorporated into the Equipment List as agreed to by both parties that identifies the major equipment to be supplied by BCCK pursuant to the Equipment Supply Agreement.
Equipment Supply Agreement ” means the Equipment Supply Agreement (#BK17056P) of even date herewith by and between Linn and BCCK.
Environmental Laws ” means any federal, state or local law, statute, guidance or policy statement, ordinance, code, rule, regulation, license, authorization, decision, order, injunction or decree, which pertains to health, safety or the environment (including, but not limited to, ground, air, water or noise pollution or contamination, and underground or aboveground tanks) and shall include without limitation, the Clean Water Act, 33 U.S.C. § 1251 Et Seq.; The Comprehensive Environmental Response, Compensation, And Liability Act, 42 U.S.C. § 9601 Et Seq.; The Resource Conservation And Recovery Act, 42 U.S.C. § 6901 Et Seq.; The Toxic Substance Control Act, 15 U.S.C. §§ 2601 Et Seq; and The Occupational Health and Safety Act; all as amended.


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Excusable Delay ” means the actual number of days in achieving the Mechanical Completion Date caused by (i) an event of Force Majeure, (ii) an Owner Delay, (iii) any pre-existing Hazardous Substances discovered at the Job Site, (iv) unknown conditions pursuant to Section 2.3v , or (v) any change in Legal Requirements that occurs after the Effective Date.
Force Majeure ” means any causes beyond the reasonable control of the party affected and without fault or negligence and is more fully defined in Section 22.2 “Force Majeure” of this Agreement.
Fuel Gas ” means residue gas from the Linn Chisholm Trail Cryogenic Gas Plant that is to be consumed as fuel in the Linn Chisholm Trail Cryogenic Gas Plant.
Geotechnical Report ” means that certain Geotechnical Engineering Report dated June 1, 2017, issued by Terracon Consultants.
GPM ” means A) gallons per minute, B) Gallons of NGL (ethane plus) per 1000 Standard Cubic Feet of Gas.
Gas ” or “ Natural Gas ” whether capitalized or not means natural gas or any mixture of hydrocarbon gases or of hydrocarbon gaseous and non-combustible gases, produced with oil or from gas or gas condensate wells.
Hazardous Substance ” means any substance, compound, material or waste, whether solid, liquid or gaseous: (1) the presence of which requires investigation, monitoring or remediation under any Environmental Law; (2) which is or becomes defined as a “hazardous substance”, “hazardous material”, “hazardous waste”, “extremely hazardous waste”, “solid waste”, “toxic substance”, “chemical substance”, “Regulated Substance”, “pollutant”, or “contaminant”, or is otherwise classified as hazardous or toxic, in or pursuant to any Environmental Law; (3) which is explosive, corrosive, flammable, radioactive, or otherwise hazardous and is or becomes regulated by any governmental authority, agency, department, commission, board, agency or instrumentality of the United States, the State of Oklahoma or any political subdivision thereof; (4) the presence of which on the Job Site causes or threatens to cause a nuisance upon the Job Site or to adjacent properties or poses or threatens to pose a hazard to the health or safety of persons on or about the Job Site; (5) that contains petroleum hydrocarbons, asbestos, radon, polychlorinated biphenyls, urea formaldehyde foam insulation, lead, or motor fuel or other volatile organic compounds; (6) which causes or poses a threat to cause a hazard to the environment or to the health, safety or welfare of persons on or about the Job Site, or (7) which is a sharp (e.g. needle) or an infectious, medical or radioactive waste.
HHV ” means the higher heating value of a gas stream in BTU per cubic foot as determined by the Gas Processors Association (GPA).
Industry Standards ” means design and installation codes, guidelines, and recommended practices generally accepted in the gas processing industry (including those with respect to operations and with respect to construction), which include relevant portions of the following:


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Code
Title
Edition
BCCK
BCCK Piping & Standard Specifications
 
GE GAP (GPSA Manual)
Oil and Chemical Plant Layout and Spacing
2007
ANSI B31.3
Chemical Plant and Petroleum Refinery Piping
2016
ANSI B31.8
Gas Transmission and Distribution Piping Systems (Pertains to the Slug Catcher only)
2016
ANSI B16.5
Pipe Flanges and Flanged Fittings
2013
ASME Sect VIII, Div 1
Boiler and Pressure Vessel Code
2010
AISC
Steel Construction Manual
2011
ASCE 7
Minimum Design Loads in Buildings and Other Structures
7-10
API RP 500
Recommended Practice for Classification of Locations for Electrical Installations at Petroleum Facilities Classified as Class1, Division 1 and Division 2
1997
API RP 520 Parts 1 &2
Recommended Practice for the Design and Installation of Pressure Relieving Systems in Refineries
2014
API RP 521
Guide for Pressure Relieving and Depressuring Systems
2014
API Std 526
Flanged Steel Pressure Relief Valves
2009
API Std 530
Recommended Practice for Calculating Heater Tube Thickness in Petroleum Refineries
2009
API RP 540; Table 4
Electrical Installations in Petroleum Processing Plants; Illuminances Currently Recommended
2004
TEMA
Tubular Exchanger Manufacturers Association (all)
2007
NFPA 780
Standard for Installation of Lightning Protection Systems
2014
NFPA 70
National Electrical Code
2017
NFPA 70E; Art. 130.5
Standard for Electrical Safety in the Workplace; Arc Flash Risk Assessment
2015
NACE MR0175/ISO 15156
Materials for use in H2S containing Environments in Oil and Gas Production
2009
ACI
Building Code Requirements for Structural Concrete
318-14
NFPA 87
Recommended Practice for Fluid Heaters
2011
NFPA 497
Recommended Practice for the Classification of Flammable Liquids, Gases, or Vapors and of Hazardous (Classified) Locations for Electrical Installations in Chemical Process Areas
2012

Instrument List ” means a document prepared by BCCK and presented to Linn for prompt comments to be incorporated into the Instrument List as agreed to by both parties that identifies the major tagged instruments supplied by BCCK pursuant to the Equipment Supply Agreement. Items of instrumentation will be assigned a unique identification number and so tagged on the P&IDs.
Job Book ” means a book (in electronic format), prepared in accordance with Industry Standards, of all equipment installed at the Project with relevant information so that each


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piece of equipment and portion thereof can be traced through its supplier to its original manufacturer.
Job Site ” means the area of land owned or leased by Linn and designated by Linn for use by BCCK for performance of the Work.
Legal Requirements ” means all applicable federal, state, and local statutes, laws, codes, ordinances, rules, regulations, orders, and decrees, including, without limitation, Environmental Laws.
Linn ” means Linn Midstream, LLC and shall include the successors and/or authorized assigns of such party.
Linn Chisholm Trail Cryogenic Gas Plant ” means the entire NGL extraction/fractionation and treating facility as designed, constructed, and installed as described in Schedule "A" , Schedule "C" , and Schedule "D" .
Linn’s Personnel ” means all employees, supervisors, representatives, agents and other persons or entities to be provided by Linn or its subcontractors in connection with the Project.
“Major Equipment ” means the flares, demethanizer, amine contactor and slug catchers for the Linn Chisholm Trail Cryogenic Gas Plant.
Major Subcontractor ” means (i) a Subcontractor that is selected and enters into a subcontract with BCCK or any Subcontractor for the performance of any part of the Work, and whose subcontract or subcontracts (in the aggregate) with BCCK, or any of its Subcontractors, require payments by BCCK (or such Subcontractor) of Two Hundred Fifty Thousand Dollars ($250,000) or more and (ii) each of BCCK’s Affiliates.
Maximum Liability Amount ” means $20,000,000.00.
Mechanical Completion ” means the satisfactory completion of all the conditions set forth in Section 5.1 of this Agreement.
Mechanical Completion Date ” means the date Mechanical Completion is confirmed as described in Section 5.1 .
Mechanical Integrity Testing ” means the performance of hydraulic or pneumatic pressure tests of equipment or piping to assure its mechanical integrity.
MMSCFD ” means million standard cubic feet per day.
Milestone ” means the completion of significant events as described in Section 3.1 of this Agreement that, when complete as agreed to by both parties, obligate Linn to make payment to BCCK as indicated.
Natural Gas Liquids ” or “ NGL ” means hydrocarbons extracted in liquid form from Natural Gas by the Linn Chisholm Trail Cryogenic Gas Plant in conformance with the Product Specifications in Schedule "D" of this Agreement.


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ODEQ ” means the Oklahoma Department of Environmental Quality.
Operating Manual ” means the electronic and paper manual supplied by BCCK that contains the operating instructions for the Linn Chisholm Trail Cryogenic Gas Plant.
Owner Delay ” means the actual number of days of delay in achieving the Mechanical Completion Date caused by the failure by Linn to timely perform its obligations under this Agreement including any failure or delay by Linn in providing the Owner Deliverables.
Owner Deliverables ” means those items and tasks to be provided or performed by Linn as set forth on Schedule "F" attached hereto.
P&ID’s ” means the Piping and Instrument Diagrams, to be supplied by BCCK and presented to Linn for prompt comments to be incorporated into the diagrams as agreed to by both parties prior to the start of the Process Hazards Analysis review of the Linn Chisholm Trail Cryogenic Gas Plant that will reflect the process placement of the equipment and instruments listed on the Equipment and Instrument Lists.
Prime Rate ” means the interest rate determined from time to time by the major US Banks and published in The Wall Street Journal on any given Day as the Prime Rate of interest.
Process Hazards Analysis ” means the safety review required by OSHA and performed by a third party of Linn’s choice at Linn’s expense.
Procured Equipment ” means the Equipment and materials to be supplied by BCCK to Linn pursuant to the Equipment Supply Agreement, including, without limitation, the equipment set forth on the Equipment List.
Project ” means the Linn Chisholm Trail Cryogenic Gas Plant engineered, constructed, and installed by BCCK (including the Procured Equipment plus any other improvements or equipment supplied and installed by Linn or others inside or adjacent to the Linn Chisholm Trail Cryogenic Gas Plant fence including related compression and dehydration).
PSIG ” means pounds per square inch gauge.
Record Drawings ” means the record drawings as defined in Section 2.3xvii .
RSV ” means Recycle Split Vapor process utilized as part of the Linn Chisholm Trail Cryogenic Gas Plant.
RVP ” means Reid Vapor Pressure.
Sales Gas ” or “ Sales Gas Stream ” means residue gas from the Linn Chisholm Trail Cryogenic Gas Plant that is to be sold as Natural Gas.


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Start-up Assistance ” means the assistance provided by BCCK to Linn for start-up of the Linn Chisholm Trail Cryogenic Gas Plant, once Commissioning activities are completed. Start-up Assistance will be provided per Schedule "C" of this Agreement.
Start-up Date ” means the date that the Linn Chisholm Trail Cryogenic Gas Plant is fully Commissioned and ready to process Gas to the specifications set forth in Schedule "D" .
Subcontractor ” means any party that enters into an agreement with BCCK and performs certain work or services in furtherance of BCCK’s obligations under this Agreement and all direct and indirect subcontractors of such party at all levels, including material men and suppliers.
Successful Achievement of the Performance Specifications ” means the satisfactory completion of all of the conditions set forth in Section 5.2 of this Agreement.
Target Completion Date is defined in Section 22.1 .
Termination for Cause ” is defined in Section 25.1 .
Work ” means all engineering and design (including preliminary engineering, designs and evaluations required in the development phase), installation of equipment (including the Procured Equipment), freight, delivery, storage, project management, fabrication, construction, supervision, administration of BCCK’s safety program, testing, preparation of documentation, Start-up Assistance and related services, equipment, and materials required to be performed by BCCK pursuant to this Agreement and all work reasonably inferable therefrom, but expressly excluding any work to be provided by Linn or others, if any, pursuant to the express provisions of this Agreement, to design and construct the Linn Chisholm Trail Cryogenic Gas Plant as described in Article 2 , Schedule "A" and Schedule "C" so that the Linn Chisholm Trail Cryogenic Gas Plant will be capable upon Successful Achievement of the Performance Specifications of processing gas to meet the Performance Specifications in Schedule "D" . Work includes labor, materials, equipment (other than the Procured Equipment), services, transportation, storage, and any other items to be used by BCCK or its Subcontractors or vendors in the performance of this Agreement. Work does not include (i) the supply of the Procured Equipment or (ii) the supply or provision of any equipment, materials, work or services expressly required by this Agreement to be provided by Linn or others.
2      Scope of Work
2.1      BCCK To Provide
BCCK shall in accordance with all applicable Legal Requirements provide all direct and indirect services (including engineering, design, and oversight), labor, material, transportation and storage of equipment (including the Procured Equipment), tools, and construction utilities (except utilities expressly required to be provided by Linn in this Agreement) necessary to engineer, construct and test in a safe manner the Linn Chisholm Trail Cryogenic Gas Plant, including, but not limited to, those set forth in Schedule "A" , Schedule "C" , and Schedule "D" of this Agreement, and complete the Work in a safe manner and in accordance with all Drawings, Plans, and Specifications therefor such that the Linn Chisholm Trail


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Cryogenic Gas Plant will, upon Successful Achievement of the Performance Specifications, meet the Performance Specifications set forth in Schedule "D" to process gas in accordance with all applicable Legal Requirements. BCCK shall hire and employ all persons and Subcontractors (in accordance with all applicable Legal Requirements (including, without limitation, The Immigration Reform and Control Act of 1986 set forth by Homeland Security guidelines to ensure and verify the eligibility and identity of all employees at the time of hire for all temporary employees, permanent employees and/or contract employees) and shall furnish and be responsible for all of the Work, including, tools, equipment and supervision necessary to satisfactorily engineer, design, fabricate, deliver, receive, off-load, store and install the equipment (including the Procured Equipment) and construct the Linn Chisholm Trail Cryogenic Gas Plant in accordance with the provisions of this Agreement and all applicable Legal Requirements. BCCK’s scope of supply and responsibilities include, without limitation, those items listed as BCCK’s responsibility in Schedule "C" of this Agreement. Specifically, BCCK shall be responsible for the following non-exclusive list:
i.
All engineering design for the Linn Chisholm Trail Cryogenic Gas Plant, including, but not limited to the preparation of the following:
a.
Equipment and Instrument Data Sheets;
b.
Process Simulations and Process Flow Diagrams;
c.
Piping and Instrument Diagrams;
d.
Detailed construction drawings including foundations, piping, electrical, structural and instrumentation;
e.
Purchase requisitions;
f.
Operating Manual, one electronic copy and one paper copy;
g.
Design the Control Building so that it can withstand a blast that creates a force of five (5) PSI or less.
h.
As-Built Drawings, one electronic copy and one paper copy; and
i.
Job Book, one electronic copy.
ii.
Completion of the Work in accordance with the Drawings, Plans, and Specifications, applicable Legal Requirements, and Industry Standards, including installation of all foundations, structures, and equipment to be incorporated or used in the performance of the Work; maintaining the Job Site in a safe condition free of debris, waste material and rubbish; clearing the Job Site of temporary structures, surplus material, equipment and tools; and restoring the Job Site to an orderly condition as found prior to construction upon Mechanical Completion.


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iii.
Arranging the complete handling of all materials, equipment and construction equipment, including (but not limited to) inspection, expediting, shipping, storing, unloading and receiving;
iv.
Designating a Project Manager who will have full responsibility for the completion of the Work and will act as a single point of contact in all major matters on behalf of BCCK and informing Linn in writing of the name and contact information of the Project Manager. The designated Project Manager may be changed only in Consultation with Linn. The initial Project Manager is Amy Ontiveroz. BCCK shall also designate and advise Linn of an on-site foreperson who will be at the Project Site full time and who will act as a single point of contact at the Job Site.
v.
Within ninety (90) days after the Mechanical Completion Date, assist with and witness a performance test conducted by Linn in accordance with Schedule "D" during a 24 hour interval of steady state operations. Gas and liquid samples shall be analyzed by a 3rd party laboratory at Linn’s expense.
2.2      Schedule "C"
In addition to other responsibilities set forth in this Agreement, Linn and BCCK shall be responsible for the items specified for each of them in Schedule "C" of this Agreement.
2.3      Other Responsibilities of BCCK
i.
BCCK represents to Linn that it is knowledgeable and skilled in performing projects similar to the Project. BCCK covenants with Linn to exercise skill and judgment consistent with Industry Standards in performing the Work.
ii.
BCCK shall perform the Work in accordance with (x) all applicable Legal Requirements, (y) the Drawings, Plans, and Specifications, and (z) the requirements, terms and conditions of this Agreement.
iii.
Subject to and without limiting BCCK’s rights under Section 2.3v below, BCCK has evaluated and satisfied itself (or prior to performing any portion of the Work shall evaluate and satisfy itself) as to the observable conditions and limitations under which the Work is to be performed, including, without limitation (1) the location, condition, layout and nature of the Job Site and surrounding areas (2) anticipated labor supply and costs, (3) availability and cost of materials, tools and equipment and (4) other similar issues. Subject to and without limiting BCCK’s rights under Section 2.3v below, Linn shall not be required to make any adjustment in either the Contract Price or Target Completion Date in connection with any failure by BCCK to comply with the requirements of this Section iii .


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iv.
Subject to and without limiting BCCK’s rights under Section 2.3v below, execution of this Agreement by BCCK is a representation that BCCK has visited the Job Site and become generally familiar with observable local conditions under which the Work is to be performed. BCCK has also investigated (or prior to performing any portion of the Work shall investigate) all physical aspects of the Job Site that are observable without additional subsurface investigation and has investigated the general suitability of conditions at the Job Site. BCCK accepts the Job Site in its “as is” condition. Any errors due to BCCK’s failure to so verify all such grades, elevations, locations or dimensions shall be promptly rectified by BCCK without any additional cost to Linn, except as specified in item v below.
v.
If BCCK encounters conditions at the Job Site that are not identified in or readily inferrable from the Geotechnical Report, but are (1) subsurface or otherwise concealed or not readily observable physical conditions, including, without limitation, any archaeologically significant materials or protected animals or wildlife or (2) unknown physical conditions of an unusual nature, that differ materially from those ordinarily found to exist and generally recognized as inherent in construction activities for projects similar to the Project, BCCK shall promptly provide notice to Linn before conditions are disturbed and in no event later than three (3) days after first observance of the conditions. If such conditions cause an increase or decrease in BCCK’s cost of, or time required for, performance of any part of the Work, BCCK (with respect to an increase) and Linn (with respect to a decrease) shall be entitled to an equitable adjustment in the Contract Price or Target Completion Date, or both. Upon receipt of notice from BCCK, Linn will promptly investigate such conditions and BCCK and Linn shall negotiate in good faith to determine whether an adjustment(s) is appropriate, and if so, the amount of such adjustment(s) and to execute a Change Order evidencing the adjustment(s).
vi.
BCCK shall supervise and direct the Work, using Industry Standards of care, skill and attention. BCCK shall be solely responsible for, and have control over, construction means, methods, techniques, sequences and procedures for safety precautions and programs (including fire prevention), and for coordinating all portions of the Work. In no event shall Linn have control over, be in charge of or have any responsibility for construction means, methods, techniques, sequences or procedures or for safety precautions and programs in connection with the Work. BCCK shall not be relieved of obligations to perform the Work in accordance with this Agreement and the Drawings, Plans, and Specifications on account of any tests, inspections or approvals required or performed by persons other than BCCK.
vii.
BCCK shall provide quality control services with respect to the Work.
viii.
Whenever equipment is specified in accordance with a Federal Specification, an ASTM Standard, an American National Standards


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Institute Specification, or other standard, BCCK shall use reasonable efforts to present evidence from the manufacturer, certifying that the product complies with the particular standards or specification.
ix.
BCCK shall enforce strict discipline and good order among the employees and other persons carrying out the Work. BCCK shall not permit employment of unfit persons or persons not properly skilled in the tasks assigned to them.
x.
BCCK shall verbally report to Linn (with a written notice within 48 hours) as soon as practicable all accidents or occurrences resulting in injury or illness to persons or damage to property arising out of or during the course of the Work. BCCK shall give Linn a copy of all reports made by or available to BCCK of such accidents and occurrences, as well as copies of all statements and investigative material. The notice required by this section shall be given to, in addition to the standard persons for notice:
Chris Haynes,
EHS Senior Representative
CHaynes@LinnEnergy.com
phone: 405-241-2245
xi.
BCCK’s Personnel will be subject to Linn’s policy prohibiting the use, possession, transportation, promotion or sale of alcohol, illegal drugs, contraband or weapons. BCCK’s Personnel may be required by Linn to (a) undergo drug or alcohol testing, including the submission of urine or blood samples and (b) undergo searches of their persons and/or vehicles, to the extent legally permissible. Upon request of Linn, BCCK agrees to provide to Linn a copy of BCCK’s drug testing program and evidence of compliance therewith.
xii.
BCCK shall not pay any commissions or fees or grant any rebates or other remuneration to any employee, agent or officer of Linn.
xiii.
BCCK and its Subcontractors shall not grant any rebates or other remuneration to each other in connection with any Work performed by BCCK for Linn on a time and materials basis, unless such rebate or remuneration is passed through to Linn.
xiv.
BCCK shall comply with and give all notices necessary and incidental to the due and lawful prosecution of the Work, including, without limitation, those required by applicable Legal Requirements.
xv.
BCCK, promptly after execution of this Agreement, shall prepare and submit for Linn’s review and approval a construction schedule for the Work. The schedule shall not exceed the Target Completion Date, shall be revised weekly, shall be related to the entire Project, and shall provide for diligent, expeditious and practicable execution of the Work. The schedule shall include, among other things, (i) the material activities and critical dates (including the Milestones) consistent with Industry


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Standards; (ii) the expected starting and completion dates for each trade, (iii) the dates of Mechanical Completion and Successful Achievement of the Performance Specifications, and (iv) the date upon which the Work will be ready for operation by Linn.
xvi.
BCCK shall prepare a weekly schedule summary report in a form and of sufficient detail and character as is consistent with Industry Standards. The report as a minimum shall specify whether the Project is on schedule, and if not, the reasons therefor and all steps BCCK is taking to recover its timely progress. BCCK shall hold weekly progress meetings (which shall be at the Job Site as necessary, but at least monthly, with other by video conference) or at such other time and frequency as are acceptable to Linn. Progress of the Work shall be reported in detail with reference to the construction schedule. Whenever it becomes apparent from the updated construction schedule (as adjusted for Excusable Delay) that any Milestone date may not be met, BCCK shall take any or all actions, including but not limited to the actions immediately following this paragraph, to return the Project to schedule, with no increase to the Contract Price or Target Completion Date. If BCCK fails to commence any of these actions within seventy-two (72) hours after receiving notice (excluding Saturdays and Sundays) from Linn, then Linn may (i) take action to attempt to return the Project to schedule and (ii) deduct the cost of such actions from the monies due or to become due to BCCK.
a.
Increase construction manpower to substantially eliminate the back-log of work and return the Project to schedule;
b.
Increase the number of working hours per shift, shifts per day or the amount of construction equipment or any combination of the foregoing which will substantially eliminate the back-log of work and return the Project to schedule; and/or
c.
Reschedule activities to concurrently accomplish activities, to the maximum degree practicable.
xvii.
BCCK shall maintain at the Job Site, and shall make available to Linn, one (1) record copy of the construction drawings (the “ Record Drawings ”) in good order. The Record Drawings shall be prepared and updated during the prosecution of the Work. BCCK shall maintain the Record Drawings in good condition and shall mark the Record Drawings in a legible manner to show: (1) deviations from the construction drawings made during construction; (2) details in the Work not previously shown; (3) changes to existing conditions or existing conditions found to differ from those shown on any existing drawings; and (4) the actual installed position of all components of the Work, including, without limitation, equipment, piping, conduits, electric fixtures, circuiting, ducts, duct banks, foundations, underground piping, junction boxes, access panels, valves, control valves, drains, openings, and stub-outs. At the completion of the Work, BCCK shall deliver all Record Drawings to Linn. Final payment


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and any retainage shall not be due and owing to BCCK until the final Record Drawings marked by BCCK as required above are delivered to Linn.
xviii.
BCCK shall ensure that the Work, at all times, is performed in a manner that affords reasonable access, both vehicular and pedestrian, to the Job Site and all adjacent areas. The Work shall be performed, to the fullest extent reasonably possible, in such a manner that public areas adjacent to the Job Site shall be free from all debris, building materials and equipment likely to cause hazardous conditions.
xix.
BCCK shall provide Linn with access to the Work in preparation and progress wherever located. Linn shall not unreasonably interfere with the progress or performance of the Work in the exercise of such access rights.
xx.
BCCK shall (a) comply with all Environmental Laws, (b) handle, store, and utilize all Hazardous Substances originated or brought to the Job Site by BCCK or BCCK’s Personnel or BCCK’s Subcontractors in accordance with all Legal Requirements, (c) prevent such Hazardous Substances from being released on or about the Job Site, and (d) immediately notify Linn of each release of any Hazardous Substance on or about the Job Site. In no event shall BCCK have any responsibility or liability to Linn or others for any Hazardous Substances located at the Job Site on or prior to the Effective Date or now or hereafter released at the Job Site by Linn or others, except for releases knowingly caused by BCCK, any of BCCK’s Personnel, or any of BCCK’s Subcontractors.
xxi.
BCCK will construct foundations based on the soil tests conducted by Linn and provided to BCCK. Based on such soil tests and the Geotechnical Report, BCCK shall design and construct foundations that are capable of supporting each portion of the Linn Chisholm Trail Cryogenic Gas Plant to be situated thereon, as applicable.
xxii.
Installation and connection of the inlet and residue compressors being purchased by Linn, as further described in Schedule "C" .
xxiii.
Installation, connection and testing of the high pressure and low pressure slug catchers, as further described in Schedule "C" .
xxiv.
Construct, equip, and test the control building and control system, as further described in Schedule "C" .
xxv.
Provide/obtain and pay for all utilities and utility connections used in connection with the Work, whether through temporary or permanent connections, including, without limitation, electric, gas, and other power, telecommunications (data and phone), water, waste water, and waste disposal, except that Linn will provide electric and water lines to the boundaries of the Job Site for use at the office trailers.


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xxvi.
Linn shall give BCCK reasonable prior notice of the date upon which Linn requests that BCCK start providing the Start-up Assistance.
xxvii.
BCCK will use good faith efforts in Subcontractor bidding and negotiations to obtain Start-up Assistance from Subcontractors, including material suppliers.
3      Compensation, Invoicing and Payment
3.1      Compensation
Linn shall pay BCCK for the performance of the Work and the purchase of the Linn Chisholm Trail Cryogenic Gas Plant the Contract Price as stated and in accordance with the schedule of payments as listed below in this Section 3.1 . Upon the occurrence of each of the Milestones as listed below, BCCK will invoice Linn and Linn will pay BCCK the amount indicated next to such Milestone in accordance with Section 3.2 of this Agreement. Linn shall have no additional payment obligations under this Agreement unless otherwise specifically set forth in this Agreement or otherwise agreed to in writing.
Payment No.
Milestone
Percent of Contract Price
Invoice Amount Due
Estimated Date
1
Contract Execution
10%

$3,111,404.52

6/12/2017
2
Mobilization to the Job Site with all construction trailers fully set up and inhabitable.
10%

$3,111,404.52

7/12/2017
3
Ordering pipe rack structural steel materials for pipe rack fabrication
10%

$3,111,404.52

8/12/2017
4
Completion of pouring Major Equipment and compressor foundations (excludes futures)
10%

$3,111,404.52

10/12/2017
5
Installation of 100% of main pipe racks (structural steel)
10%

$3,111,404.52

11/25/2017
6
Setting of all Major Equipment on foundations
10%

$3,111,404.52

1/25/2018
7
Installation of 100% of in-rack piping in main pipe racks
10%

$3,111,404.52

2/25/2018
8
Setting of PDC building at the Job Site
10%

$3,111,404.52

3/25/2018
9
Termination of 100% of medium voltage motors
10%

$3,111,404.52

4/25/2018
10
Mechanical Completion
10%

$3,111,404.52

5/12/2018
TOTAL
100%

$31,114,045.20

 
The parties agree that Milestone payment number one (1) shall be reduced by $750,000 to reflect the amount already paid to BCCK by Linn for certain Work performed prior to the Effective Date.


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3.2      Invoicing and Payment
BCCK will submit to Linn an invoice for each Milestone as it is achieved in accordance with Section 3.1 , but not more often than once per calendar month other than the retainage payment. Each invoice shall be accompanied by (i) certification by the Project Manager and an officer of BCCK that the Milestone described in the invoice has been achieved in accordance with this Agreement and the Drawings, Plans, and Specifications, (ii) conditional M&M lien waivers in the form attached to this Agreement as Schedule "G" from BCCK and each Major Subcontractor for the Work performed through such Milestone, (iii) unconditional M&M lien waivers in the form attached to this Agreement as Schedule "H" from BCCK and each Major Subcontractor for prior Work for which payment has been made by Linn, and (iv) with respect to prior Work for which payment has previously been made by Linn, an all paid bills affidavit with indemnity in form attached to this Agreement as Schedule "I" . Invoices shall be sent in accordance with the invoicing address instructions in Article 23 .
Linn shall pay BCCK the amount due as shown on the invoice less ten percent (10%) retainage. Payments shall be due within thirty (30) days of Linn’s receipt of the invoice (and all back-up and other information required to be submitted to Linn for payment of invoices), with the exception of (i) Milestone payment number one (1), which will be due at contract execution and (ii) Milestone payment number ten (10) which shall be due on the sixty-first (61 st ) day after BCCK gives Linn notice of Mechanical Completion of the Linn Chisholm Trail Cryogenic Gas Plant pursuant to Section 5.1iii , if Linn exercised its review extension right under Section 5.1iv and has not completed its inspection by such sixty-first (61 st ) day. Retainage shall be paid within thirty (30) days after completion of the Work including all punch-list items, and delivery of all drawings, manuals, warranties, and other materials required to be delivered by BCCK to Linn under this Agreement, as agreed to by the parties. Payment by Linn to BCCK may be made by direct deposit into BCCK’s designated bank account.
If Linn fails to pay any invoice or other sum when due to BCCK, Linn shall also pay to BCCK interest thereon from the due date of the payment to the date of payment at a rate equal to the then existing Prime Rate plus two percent (2%) per annum (not to exceed the maximum rate of interest allowed by applicable Legal Requirements).
If Linn fails to pay an invoice due to BCCK within fifteen (15) days of receipt of written notice from BCCK of late payment of an invoice, BCCK shall have the right to suspend any and all Work with regard to this Agreement until such invoice is paid. Should BCCK suspend work according to this Section 3.2 , any costs required to remobilize fabrication and/or construction will be charged as Extra Work at the rates provided in Schedule "B" .
Upon receipt by BCCK of the final retainage payment, BCCK shall (i) execute and deliver to Linn an unconditional release and waiver of M&M liens in form attached as Schedule "H" to release any right of BCCK to claim mechanical or


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material man liens and (ii) to the extent not previously delivered, deliver to Linn an unconditional release and waiver of M&M liens in form attached as Schedule "H" from all Major Subcontractors to release any right of a Major Subcontractor to claim mechanical or material man liens.
3.3      Extra Work and Change Orders
During the term of this Agreement Linn may request changes in the Work in accordance with Article 21 . The cost of changes will be invoiced in accordance with the procedures of Section 3.2 (X) fifty percent (50%) upon the signing of a Change Order or the issuance of a Change Directive and (Y) the remaining fifty percent (50%) upon completion of such extra work. All changes will be subject to the provisions of Article 21 “Changes in Scope” of this Agreement.
BCCK and its Subcontractors shall maintain a complete, true and correct set of detailed records pertaining to the Work and exercise such controls as may be necessary for proper financial management, using accounting and control systems in accordance with generally accepted accounting principles consistently applied. BCCK and its Subcontractors shall retain auditable books and records (including, but not limited to correspondence, receipts, subcontracts, purchase orders, vouchers, memoranda, invoices, and other data) for the Work for a period of not less than three (3) years after Successful Achievement of the Performance Specifications. During the three (3) year period, Linn and its representatives, consultants, and accountants may, from time to time upon request, review and audit any and all records and books of BCCK and any of its Subcontractors relating to any Work performed on a time and materials basis. BCCK and its Subcontractors shall respond in writing within sixty (60) days to all issues identified in any such review or audit by Linn or representatives of Linn. BCCK or its Subcontractors and Linn shall work to expeditiously resolve all identified issues. For avoidance of doubt, Linn shall have no right to audit or inspect any records of BCCK or its Subcontractors with respect to Work performed on a lump sum or fixed price basis.
4      Duration of Agreement
The term of this Agreement will begin with the Effective Date and end upon completion of the Work, BCCK’s completion of all other obligations required under this Agreement other than warranty obligations, and receipt by BCCK of full payment of all sums due BCCK from Linn, or when terminated by either party in accordance with other provisions of this Agreement, whichever shall first occur.
Certain designated provisions of this Agreement will survive the completion of the Agreement including, but not limited to Article 11 “Indemnities”, Article 12 “Title”, Article 18 “Limited Warranty”, and Article 20 “Patents, Trade Secrets, and Confidential Information”, whether the termination is due to completion of the Work or for other cause.


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5      Inspection and Acceptance
Linn and its authorized representative(s) shall have the right at all times during the progress of Work, but not the obligation, to examine, inspect, or witness any portion of or all Work and materials furnished by BCCK hereunder. If any portion of the Work or any materials furnished by BCCK are defective or do not conform to this Agreement or the Drawings, Plans, and Specifications, then BCCK shall, at BCCK’s expense, immediately repair or replace such defective portion of the Work or materials. However, no inspection and no expressed, implied or tacit approval by Linn’s authorized representative of BCCK’s performance or any portion of the Work shall constitute Mechanical Completion thereof by BCCK nor shall it constitute Successful Achievement of the Performance Specifications thereof by BCCK nor shall it relieve BCCK of its obligations under this Agreement, including its obligations under Article 18 entitled “Limited Warranty”. BCCK shall cooperate fully with Linn in all inspections under this Article 5 . Linn shall not unreasonably interfere with the progress or performance of the Work in the exercise of its rights under this Article 5 .
5.1      Mechanical Completion
Pursuant to clause iii below, BCCK shall give Linn written notice when BCCK believes that Mechanical Completion of the Linn Chisholm Trail Cryogenic Gas Plant is accomplished. Mechanical Completion of the Linn Chisholm Trail Cryogenic Gas Plant shall occur pursuant to the following procedures:
i.
BCCK has completed all construction and installation activities including the Mechanical Integrity Testing of the Linn Chisholm Trail Cryogenic Gas Plant. The construction of the Linn Chisholm Trail Cryogenic Gas Plant is complete in accordance with the Drawings, Plans, and Specifications, applicable Legal Requirements, and Industry Standards, the Operating Manuals have been issued, and the Linn Chisholm Trail Cryogenic Gas Plant is ready for operation.
ii.
All inspections required by state, federal or local regulatory agencies with respect to the Work shall have been performed. BCCK shall arrange and pay for such inspections (other than the Operational Permit from ODEQ which is to be obtained by Linn). Any required inspections shall be completed prior to BCCK issuing Notice of Mechanical Completion.
iii.
Upon completion of the activities described in Section 5.1i and ii , BCCK will issue a notice of Mechanical Completion stating that the Linn Chisholm Trail Cryogenic Gas Plant is complete and ready to begin final Commissioning activities.
iv.
Linn shall complete any physical inspections, if required, within ten (10) Days of receipt of BCCK’s Notice of Mechanical Completion, or the Linn Chisholm Trail Cryogenic Gas Plant shall be deemed to be Mechanical Complete on the eleventh (11th) Day after Linn’s receipt of such Notice; provided that Linn may notify BCCK that Linn needs additional time to complete its inspections and the ten (10) day period shall be extended as


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reasonably needed for Linn to complete the inspections and issue its response to BCCK. This date shall be known as the Mechanical Completion Date. If Linn advises BCCK of any Work to be completed or redone for any part of the Linn Chisholm Trail Cryogenic Gas Plant or that any other requirements for Mechanical Completion are insufficient, then, after the repairs (or other requirements) are complete, BCCK will again give a notice of Mechanical Completion under clause iii above and subject to Linn’s inspection rights under this clause iv..
Except as otherwise provided herein; Linn shall take possession of the Linn Chisholm Trail Cryogenic Gas Plant on the Mechanical Completion Date. At this point in time, BCCK shall no longer have responsibility for the care, custody, supervision and control of the Linn Chisholm Trail Cryogenic Gas Plant and any and all persons or property in the Linn Chisholm Trail Cryogenic Gas Plant, except for BCCK’s Personnel. However, BCCK shall keep its liability and worker’s compensation insurance in effect while BCCK’s Personnel are on the Job Site. Natural gas will not be introduced into the Linn Chisholm Trail Cryogenic Gas Plant for the purpose of initiating plant start-up (but can be introduced for initial Commissioning) until Mechanical Completion is achieved and Notice of Mechanical Completion has been issued by BCCK.
5.2      Successful Achievement of the Performance Specifications
Successful Achievement of the Performance Specifications of the Linn Chisholm Trail Cryogenic Gas Plant shall occur pursuant to the following procedures:
i.
The Mechanical Completion Date has occurred and all construction is complete except for minor punch-list items which BCCK shall complete within sixty (60) days after the date of Successful Achievement of the Performance Specifications.
ii.
BCCK shall have furnished to Linn (a) written notice that BCCK believes that the Linn Chisholm Trail Cryogenic Gas Plant is operating to the Schedule "D" Specifications, (b) an unconditional release and waiver of M&M liens in the form attached to this Agreement as Schedule "H" from BCCK for prior Work for which payment has been made by Linn, (c) an all bills paid affidavit in form attached to this Agreement as Schedule "I" with respect to BCCK’s Subcontractors, (d) a copy of all licenses and permits for the Work required to be obtained by BCCK, (e) a copy of all manufacturer’s warranties and manuals and other information for the equipment (including the Procured Equipment, but not the equipment otherwise provided by Linn) installed at the Linn Chisholm Trail Cryogenic Gas Plant, and (f) unless included on the punch-list, the Record Drawings, the As-Built Drawings, the Operating Manual, and the Job Book. If any Subcontractor connected with the Project refuses to furnish such release of liens, BCCK may furnish Linn with a bond duly issued by a bonding company authorized to do business in the State of Oklahoma in a form sufficient under Oklahoma law (or other security acceptable to Linn) indemnifying Linn against any such lien, which bond or other


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security shall remain in full force and effect until such lien is discharged of record or otherwise satisfied, or in the case of a mechanical lien can no longer be obtained.
iii.
After completion of the activities described in Section 5.2i and ii , Linn shall give BCCK written notice of whether the Linn Chisholm Trail Cryogenic Gas Plant is operating to the Schedule "D" Specifications. If Linn advises BCCK of any Work to be completed or redone for any part of the Linn Chisholm Trail Cryogenic Gas Plant or that any other requirements for the Linn Chisholm Trail Cryogenic Gas Plant to operate to the Schedule "D" Specifications are insufficient, then, after the repairs (or other requirements) are complete, BCCK will again give a notice of BCCK’s belief that the Linn Chisholm Trail Cryogenic Gas Plant is operating to the Schedule "D" Specifications under clause ii above subject to Linn’s inspection rights under this clause iii. BCCK shall have the right to have the Linn Chisholm Trail Cryogenic Gas Plant shut down for a reasonable amount of time to complete such repairs (or requirements).
iv.
In connection with Linn’s determination of whether Successful Achievement of the Performance Specifications has occurred, it shall prepare a punch-list of items that still need to be completed. Linn shall provide a copy of the punch-list to BCCK, which shall agree to complete the punch-list within sixty (60) days as a condition precedent to Successful Achievement of the Performance Specifications.
v.
If due to Owner Delay the Schedule "D" performance testing is not conducted within ninety (90) days after the Mechanical Completion Date, then, Successful Achievement of the Performance Specifications of the Linn Chisholm Trail Cryogenic Gas Plant shall be deemed to have occurred on the ninety-first (91 st ) day after the Mechanical Completion Date. Additionally, if due to Force Majeure the Schedule "D" performance testing is not conducted within one-hundred eighty (180) days after the Mechanical Completion Date, then, Successful Achievement of the Performance Specifications of the Linn Chisholm Trail Cryogenic Gas Plant shall be deemed to have occurred on the one-hundred eighty-first (181 st ) day after the Mechanical Completion Date.
vi.
Upon BCCKs completion of the punch-list work, BCCK shall (A) execute and deliver to Linn a conditional release and waiver of M&M liens in the form attached to this Agreement as Schedule "G" to release any right of BCCK to claim mechanical liens and (B) to the extent not previously delivered, deliver to Linn a conditional release and waiver of M&M liens in form attached as Schedule "G" from all Major Subcontractors to release any right of a Major Subcontractor to claim mechanical or material man liens.


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6      Taxes
Sales and other taxes have not been included in the Contract Price. Linn will be responsible for Oklahoma gross receipts, compensating, and property taxes reasonably related to and incurred by BCCK as a result of performance of the services described in this Agreement; subject to the requirements of this Article 6 . Linn shall not be responsible for federal or Oklahoma income or withholding tax assessed on BCCK or others or for Texas or other states’ taxes levied on the income of BCCK or others.
BCCK shall, and shall cause BCCK’s Affiliates to, use their respective re-seller’s certificate (or similar certificate) when purchasing any and all equipment, supplies, and other taxable items for the Linn Chisholm Trail Cryogenic Gas Plant, so that BCCK and BCCK’s Affiliates shall not pay any sales, use, or other similar tax for which Linn would be responsible to reimburse BCCK under this Agreement to the extent such re-seller’s certificate permits such equipment, supplies or other items to be exempt for sales or other taxes under applicable Legal Requirements. Linn has applied for and will provide to BCCK upon receipt a manufacturer’s certificate for Oklahoma, and BCCK shall not charge or invoice Linn for any taxes with respect to any equipment, supplies, or other items that are exempt from taxation under the manufacturer’s certificate. Subject to the previous provisions of this Article 6 Linn will reimburse BCCK, with each invoice, for any sales, use, and property taxes now or hereafter imposed by any governmental body or agency upon the Linn Chisholm Trail Cryogenic Gas Plant related to the possession, operation, use or purchases of equipment, supplies or materials hereunder that are paid by BCCK that are not subject to Linn’s manufacturer’s certificate or exempt from sales, use or other taxes by virtue of BCCK’s reseller’s certificate. BCCK will remit tax payments to the applicable governmental bodies or agencies having jurisdiction over such taxes on Linn’s behalf and reconcile the tax account at the end of the Project. Balancing of this account will be based on actual tax liability and any shortfalls in tax liability shall be paid by Linn. Any amounts Linn submits in excess of the tax liability BCCK pays to the applicable governmental bodies or agencies will be remitted to Linn by BCCK.
7      Maintenance and Repair
Except as otherwise provided herein to achieve Successful Achievement of the Performance Specifications, provide Start-up Assistance, and provide the Limited Warranty, BCCK shall not have any obligation after Mechanical Completion of the Linn Chisholm Trail Cryogenic Gas Plant to Linn to test, adjust, maintain, repair, or service the Linn Chisholm Trail Cryogenic Gas Plant under this Agreement, other than the assistance with performance testing pursuant to Schedule "D" . After such Mechanical Completion, Linn, at its own cost and expense will:
i.
Pay all charges in connection with the start-up, including third party technicians, other than Start-up Assistance provided by BCCK per Schedule "C" of this Agreement, and operation of the Linn Chisholm Trail Cryogenic Gas Plant;
ii.
Provide any required metering for custody transfer and any associated line taps, as may be required to deliver the NGL’s to market;


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iii.
Make all repairs and replacements necessary to maintain, preserve, and keep the Linn Chisholm Trail Cryogenic Gas Plant in good operating condition and working order and pay for ordinary maintenance and for consumable replacement parts as well as replace any equipment or parts which fail due to lack of maintenance or negligence of Linn;
iv.
If within the warranty period, secure the written consent of BCCK prior to making any alterations, additions, or improvements to the Linn Chisholm Trail Cryogenic Gas Plant that would reasonably be expected to have a material adverse effect as to performance of the Linn Chisholm Trail Cryogenic Gas Plant within the limited warranty period provided for in Article 18 of this Agreement. BCCK’s sole remedy for failure of Linn to secure such consent shall be termination of such limited warranty insofar only as any such alterations, additions or improvements have a material adverse effect on the performance of the Linn Chisholm Trail Cryogenic Gas Plant as built or thereafter modified by BCCK. Any request by Linn for such written consent shall be promptly considered by BCCK within five (5) days, and such written consent shall be withheld only if such proposed alterations, additions or improvements will have a material adverse effect on the performance or safe operation of the Linn Chisholm Trail Cryogenic Gas Plant as built or thereafter modified by BCCK within the warranty period. Failure by BCCK to notify Linn in writing whether consent is given or withheld within such five (5) day period, shall be deemed to be consent by BCCK.
8      Care and Use
During the Construction Phase, it shall be Linn’s responsibility to maintain all perimeter fencing and during non-construction hours security devices and security personnel as shall be necessary to restrict access to the Job Site and to prohibit non-authorized persons from having access to all or any portion of the Job Site. As agreed by the parties, it shall be BCCK’s responsibility for security personnel and to prohibit non-authorized persons from having access to all or any portion of the Job Site during construction hours. During the Construction Phase, BCCK shall be responsible for noise abatement, Project health and safety, and containment procedures as shall be necessary to prevent a nuisance, damage or injury to adjacent property owners, BCCK’s or Linn’s agents, employees, invitees or Subcontractors or any environmental hazard or pollution risk.
9      Insurance
9.1      Bonds
Within fourteen (14) days after the Effective Date, BCCK shall provide to Linn a payment and performance bond in an amount determined by Linn (and communicated to BCCK within seven (7) days after the Effective Date) guaranteeing to Linn the timely payment of all Subcontractors and the timely performance by BCCK of all of its obligations under this Agreement. The cost of this payment and performance bond is not included in the Contract Price and BCCK’s cost therefor will be added to the Contract Price by Change Order once


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the cost is determined. Notwithstanding anything to the contrary contained in this Agreement Linn’s obligation to pay BCCK is subject to the requirements, if any, of the bond and the bonding company with respect to payments.
9.2      Insurance by BCCK
BCCK shall at all times during the term in which this Agreement is in force and effect, maintain and pay for insurance, and shall require all Subcontractors who perform Work on the Job Site to maintain and pay for insurance, of the type and limits as set forth in this Section 9.1 . The insurance may be provided in one or more policies, primary and excess, including an umbrella or catastrophe form that may include the coverage, or layer thereof, of the insurance as required herein of not less than $20,000,000 in aggregate.
i.
Comprehensive General Liability Insurance providing coverage for BCCK, its Subcontractors, and their respective servants, agents or employees against damages arising from bodily injury (including death), and claims for property damage which may arise directly, or indirectly, out of the operations of BCCK, its Subcontractors, servants, agents or employees under this Agreement. Such insurance shall be for an amount that shall be not less than $1,000,000 per occurrence and $2,000,000 general aggregate.
ii.
This insurance shall cover all liability arising out of products, whether manufactured or supplied by BCCK or any of its Subcontractors for a period of twelve (12) months after the Mechanical Completion Date.
iii.
Automobile Liability Insurance on all licensed vehicles owned, hired by, or leased to, BCCK or any of its Subcontractors covering BCCK and its Subcontractors against damages arising from bodily injury (including death), including non-owned automobile liability and covering claims for property damage arising out of their use in the operations of BCCK, its Subcontractors, and their respective servants, agents or employees under this Agreement. Such insurance shall be for an amount that shall not be less than $1,000,000 combined single limit.
iv.
Workers Compensation Insurance as required by the statutory limits of the worker’s compensation laws of the State of Oklahoma (but even if not carrying workers compensation insurance is acceptable, it must be carried). Such coverage shall also include employers’ liability coverage for not less than $1,000,000 Each Bodily Injury by Accident / $1,000,000 Policy Limit for Bodily Injury by Disease / $1,000,000 Each Employee Bodily Injury by Disease.
v.
BCCK shall require all Subcontractors who employ Oklahoma residents and perform Work in Oklahoma to carry Workers Compensation Insurance as required by the statutory limits of the worker’s compensation laws of the State of Oklahoma. Such coverage shall also include employers’ liability coverage for not less than $1,000,000 combined single


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limit, and Excess Liability Insurance in the amount of $20,000,000. BCCK shall secure Certificates of Insurance from Subcontractors performing work and keep these certificates on file. BCCK shall have no further responsibility as to Subcontractors.
vi.
BCCK will provide Excess Liability Insurance in amount of $20,000,000 to provide additional liability in the excess of the underlying limits shown above in paragraph’s (i) through (v) above in this Section 9.2 .
All insurance which BCCK or a Subcontractor is required to carry pursuant to the terms of this Agreement shall name Linn as an additional insured with respect to liability arising out of BCCK’s performance under this Agreement, which additional insured endorsement shall not exclude or restrict coverage based upon any act or omission or alleged or actual negligence of the additional insured and shall provide that the coverage may not be canceled, lapsed, or materially changed in any way without the insurer giving at least thirty (30) days prior written notice to Linn. Within fourteen (14) days after the Effective Date and before commencing any Work, BCCK shall provide Linn with Certificates of Insurance evidencing the insurance required to be carried by BCCK under this Agreement.
Pursuant to the Equipment Supply Agreement BCCK shall insure for its full replacement cost, whether directly or through Subcontractors, all Procured Equipment (i.e., Linn Chisholm Trail Cryogenic Gas Plant) during fabrication and assembly by Subcontractors in designated fabrication yards and during their transport to the Job Site.
BCCK may take out additional insurance that BCCK considers necessary, or desirable. Such additional insurance shall be at no expense to Linn.
9.3      Builder’s All Risk Insurance
Linn shall provide and maintain Builder’s All Risk Insurance in the amount of not less than replacement cost, naming BCCK an additional insured, covering all claims for damages, equipment, construction materials and other property located at the Job Site at off-site storage, and in transit (except for the Procured Equipment during its fabrication and transportation to the Job Site which shall be insured by BCCK under the Equipment Supply Agreement), including without limitation, damages caused by Acts of God, theft, floods, (or other weather events), vandalism, and malicious mischief, occurring during the Construction Phase. Linn shall have responsibility for obtaining property insurance covering the Linn Chisholm Trail Cryogenic Gas Plant after Mechanical Completion.
9.4      Insurance by Linn
Linn agrees, at its own cost and expense, to provide and maintain comprehensive general liability insurance coverage providing coverage for Linn and its contractors (excluding BCCK and BCCK’s Subcontractors), servants, agents or employees against damages arising from bodily injury (including death), and claims for property damage which may arise directly, or indirectly, out of the operations of Linn, its contractors (excluding BCCK) servants, agents or


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employees at the Job Site in an amount of not less than ($10,000,000) in aggregate. The insurance policy shall name BCCK as an additional insured and shall provide that the coverage may not be canceled, lapsed, or materially changed in any way without the insurer giving at least thirty (30) days prior written notice to BCCK. Within fourteen (14) days after the Effective Date and before commencing any Work, Linn shall deliver to BCCK Certificates of Insurance evidencing the insurance required to be carried by Linn under this Agreement.
10      Risk of Loss
In the event of loss or damage to the Linn Chisholm Trail Cryogenic Gas Plant or any component thereof or to any other portion of the Work during the Construction Phase, BCCK shall pay the cost and expense of replacing the loss or repairing the damage, including, without limitation, all materials, equipment, supplies, and maintenance equipment (including temporary materials, equipment, and supplies) which are purchased for permanent installation in or for use during construction of the Linn Chisholm Trail Cryogenic Gas Plant and supplied or owned by BCCK or a BCCK Subcontractor. Unless otherwise provided in this Agreement, BCCK shall bear this responsibility during the Construction Phase or during any extended period of coverage if agreed in writing with Linn. If insurance proceeds are paid under BCCK’s policies or under the Builder’s Risk Policy to Linn and not to BCCK with respect to any such loss or damage, so long as BCCK is not in default under this Agreement, Linn shall arrange for such proceeds (except for those applicable to Linn’s equipment other than the Procured Equipment) to be paid to BCCK as repair or replacement work is performed by BCCK to the reasonable satisfaction of Linn. So long as BCCK is not in default under this Agreement, Linn shall pay the Builder’s Risk policy deductible to BCCK as repair or replacement work is performed by BCCK to the reasonable satisfaction of Linn.
11      Indemnities
11.1      Definitions
BCCK Indemnitees ” means BCCK, and its officers, directors, and BCCK’s Personnel including BCCK’s Personnel determined to be the borrowed or statutory employee of any member of the BCCK Indemnitees.
Claim ” or “ Claims ” means all claims, damages, liabilities, losses, demands, liens, encumbrances, fines, penalties, causes of action of any kind, obligations, costs, judgments, interest and awards (including payment of attorneys’ fees and costs of litigation and investigation costs) or amounts, of any kind or character including consequential damages but excepting punitive or exemplary damages, whether under judicial proceedings, administrative proceedings or otherwise arising in connection with this Agreement or the performance of the Work under this Agreement. This includes property damage, pollution, and personal injury of any kind, including bodily injury, personal injury, illness, disease, maintenance, cure, loss of parental or spousal consortium, wrongful death, loss of support, death, and wrongful termination of employment.


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Linn Indemnitees ” means Linn, its co-venturers, if any, and its and their officers, directors, and Linn’s Personnel.
Regardless of Fault ” means WITHOUT REGARD TO THE CAUSE OR CAUSES OF ANY CLAIM, INCLUDING A CLAIM CAUSED IN WHOLE OR IN PART BY THE NEGLIGENCE, GROSS NEGLIGENCE, WILLFUL MISCONDUCT, STRICT LIABILITY, OR OTHER FAULT OF LINN INDEMNITEES, BCCK INDEMNITEES, INVITEES, OR THIRD PARTIES, AND WHETHER CAUSED BY A PRE-EXISTING CONDITION OR BY THE INDEMNITEE’S OWN NEGLIGENCE.
Third Party Claimant means any individual or entity other than BCCK’s Personnel and Linn’s Personnel.
11.2      General
The indemnity obligations under this Agreement are effective to the maximum extent permitted by Legal Requirements. If a Legal Requirement is applied in a jurisdiction which prohibits or limits a party’s ability to indemnify the other, then that party’s liability shall exist to the full extent allowed by the Legal Requirements of the relevant jurisdiction.
In the event either party fails to furnish a defense and indemnity as provided for herein, the other party shall be entitled to receive from the offending party, in addition to its attorneys’ fees, costs, expenses and any amounts paid in judgment or settlement, all costs, expenses, and attorneys’ fees incurred in the enforcement of this Agreement under Article 27 “MISCELLANEOUS”.
Each party will promptly notify the other party after receipt of any Claim for which it may seek indemnification. Each party also shall immediately notify the other of any occurrence in which physical injury occurs and to complete and provide the other party with an accident report for each such occurrence.
11.3      Indemnities for Personnel
NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THE OTHER PROVISIONS OF THIS AGREEMENT, BCCK AGREES TO DEFEND, RELEASE, INDEMNIFY, AND HOLD HARMLESS THE LINN INDEMNITEES AGAINST CLAIMS ARISING IN CONNECTION WITH BODILY INJURY TO OR DEATH OF BCCK’S PERSONNEL ARISING IN CONNECTION WITH THIS AGREEMENT, REGARDLESS OF FAULT.
NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THE OTHER PROVISIONS OF THIS AGREEMENT, LINN AGREES TO DEFEND, RELEASE, INDEMNIFY, AND HOLD HARMLESS THE BCCK INDEMNITEES AGAINST CLAIMS ARISING IN CONNECTION WITH BODILY INJURY TO OR DEATH OF LINN’S PERSONNEL ARISING IN CONNECTION WITH THIS AGREEMENT, REGARDLESS OF FAULT.


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11.4      Indemnities for Third Parties
NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THE OTHER PROVISIONS OF THIS AGREEMENT, BCCK AGREES TO DEFEND, RELEASE, INDEMNIFY AND HOLD HARMLESS THE LINN INDEMNITEES FROM AND AGAINST CLAIMS BY OR IN FAVOR OF OR INCURRED BY OR SUSTAINED BY ANY THIRD PARTY CLAIMANT TO THE EXTENT SUCH CLAIM IS CAUSED BY THE NEGLIGENCE OR WILLFUL MISCONDUCT OF ANY OF BCCK’S PERSONNEL.
NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THE OTHER PROVISIONS OF THIS AGREEMENT, LINN AGREES TO DEFEND, RELEASE, INDEMNIFY AND HOLD HARMLESS THE BCCK INDEMNITEES FROM AND AGAINST CLAIMS BY OR IN FAVOR OF OR INCURRED BY OR SUSTAINED BY ANY THIRD PARTY CLAIMANT TO THE EXTENT SUCH CLAIM IS CAUSED BY THE NEGLIGENCE OR WILLFUL MISCONDUCT OF ANY OF LINN’S PERSONNEL.
11.5      Indemnities for Personal Property
NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THE OTHER PROVISIONS OF THIS AGREEMENT, BCCK AGREES TO DEFEND, RELEASE, INDEMNIFY, AND HOLD HARMLESS THE LINN INDEMNITEES AGAINST CLAIMS ARISING IN CONNECTION WITH DAMAGE TO PERSONAL PROPERTY TO THE EXTENT ARISING FROM THE NEGLIGENCE OR WILLFUL MISCONDUCT OF ANY OF BCCK’S PERSONNEL.
NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THE OTHER PROVISIONS OF THIS AGREEMENT, LINN AGREES TO DEFEND, RELEASE, INDEMNIFY, AND HOLD HARMLESS THE BCCK INDEMNITEES AGAINST CLAIMS ARISING IN CONNECTION WITH DAMAGE TO PERSONAL PROPERTY TO THE EXTENT ARISING FROM THE NEGLIGENCE OR WILLFUL MISCONDUCT OF ANY OF LINN’S PERSONNEL.
11.6      Intellectual Property Indemnity
NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THE OTHER PROVISIONS OF THIS AGREEMENT, BCCK AGREES TO DEFEND, RELEASE, INDEMNIFY AND HOLD HARMLESS THE LINN INDEMNITEES FROM CLAIMS OF ANY PERSON OR ENTITY ARISING FROM INFRINGEMENT OR ALLEGED INFRINGEMENT OF COPYRIGHTS, TRADE SECRETS, OR PATENTS, OR MISAPPROPRIATION OF TRADE SECRETS OR OTHER INTELLECTUAL PROPERTY RIGHTS ARISING UNDER ANY APPLICABLE LEGAL REQUIREMENTS WITH RESPECT TO THE


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WORK, SERVICES, EQUIPMENT, METHODS, OR PROCESSES FURNISHED OR DIRECTED BY BCCK’S PERSONNEL.
NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THE OTHER PROVISIONS OF THIS AGREEMENT, LINN AGREES TO DEFEND, RELEASE, INDEMNIFY AND HOLD HARMLESS THE BCCK INDEMNITEES FROM CLAIMS OF ANY PERSON OR ENTITY ARISING FROM INFRINGEMENT OR ALLEGED INFRINGEMENT OF COPYRIGHTS, TRADE SECRETS, OR PATENTS, OR MISAPPROPRIATION OF TRADE SECRETS OR OTHER INTELLECTUAL PROPERTY RIGHTS ARISING UNDER ANY APPLICABLE LEGAL REQUIREMENTS WITH RESPECT TO THE WORK, SERVICES, EQUIPMENT, METHODS, OR PROCESSES FURNISHED OR DIRECTED BY LINN’S PERSONNEL.
11.7      BCCK General Indemnity
SUBJECT TO SECTION 11.3, BCCK SHALL DEFEND, RELEASE, INDEMNIFY, AND HOLD HARMLESS THE LINN INDEMNITEES, FROM AND AGAINST ANY CLAIMS ARISING FROM THE FOLLOWING MATTERS, REGARDLESS OF FAULT:
i.
THE FAILURE OF BCCK OR ANY OF BCCK’S PERSONNEL TO FULLY COMPLY WITH ALL LEGAL REQUIREMENTS APPLICABLE TO (X) THE LINN CHISHOLM TRAIL CRYOGENIC GAS PLANT DURING THE CONSTRUCTION PHASE, (Y) THEIR PERFORMANCE UNDER THIS AGREEMENT, AND (Z) THE PROTECTION OF THE ENVIRONMENT;
ii.
THE PRESENCE OF HAZARDOUS SUBSTANCES AT, ON, IN, UNDER OR ABOUT THE JOB SITE AND THE LAY DOWN AREAS TO THE EXTENT THE SAME WERE BROUGHT THERETO BY BCCK OR BCCK’S PERSONNEL, AND THE RELEASE OF ANY HAZARDOUS SUBSTANCES KNOWINGLY CAUSED BY BCCK OR BCCK’S PERSONNEL.
12      Title; Personal Property; Encumbrances; Location
BCCK warrants good title to all materials, equipment, and supplies furnished by it, its Subcontractors, and/or vendors that become part of the Linn Chisholm Trail Cryogenic Gas Plant and that all such materials, equipment and supplies will be new. Title to the Procured Equipment shall transfer in accordance with the Equipment Supply Agreement. Title to all other materials, equipment and supplies shall be automatically transferred to Linn when Linn pays therefor or, if applicable, in the event of a Termination for Cause, whichever occurs first. BCCK shall retain care and custody of materials, equipment, and supplies for which title has not been transferred to Linn and exercise due care with respect thereto until transfer of title to Linn as provided in this Agreement. Said transfer of title shall in no way affect Linn’s rights or BCCK’s obligations as set forth in any


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other provision of this Agreement. BCCK shall sign over to Linn all certificates of title, manufacturer’s certificates, and other evidences of title promptly when title to each item (including the Procured Equipment) is transferred to Linn. Transfer of ownership (including the signing and filing as applicable by BCCK) for all prior materials, equipment, and supplies paid for by Linn shall be a condition precedent to all subsequent payments to BCCK.
BCCK is the owner of all drawings, documents, engineering calculations and other data furnished by BCCK or that BCCK causes to be furnished by others in performing the Work (“ BCCK Work Product ”). BCCK hereby grants and conveys to Linn a fully paid, perpetual, non-cancellable and non-terminable right and license to use all BCCK Work Product for use by Linn for any purpose relating to the Linn Chisholm Trail Cryogenic Gas Plant, including the operation, maintenance and repair thereof. Should Linn make physical alterations to the Linn Chisholm Trail Cryogenic Gas Plant other than normal operational set point changes and maintenance, without the prior written consent of BCCK, and if such alteration is determined to have a material adverse effect on the performance of the Linn Chisholm Trail Cryogenic Gas Plant, the warranty or guaranty provided by BCCK within this Agreement will be inapplicable to such adversely affected performance.
On the Mechanical Completion Date, Linn shall take complete possession and control of the Linn Chisholm Trail Cryogenic Gas Plant and assume responsibility for the daily operation of the Linn Chisholm Trail Cryogenic Gas Plant.
13      Licenses; Permits
BCCK and BCCK’s employees and Subcontractors shall remain licensed to perform all services hereunder for which a license is required and shall provide Linn with a copy of such licenses at Linn’s request or as otherwise required in this Agreement. Linn shall not be responsible for the costs of maintaining licensure. BCCK shall obtain all licenses and permits required for construction and Mechanical Integrity Testing of the Linn Chisholm Trail Cryogenic Gas Plant, including any transportation or road use permits. In some cases, these permits or licenses may be required to be in the name of Linn. In such circumstances, BCCK shall notify Linn and assist Linn in acquiring such license or permit. Notwithstanding the foregoing, BCCK is not responsible for any permit required by ODEQ.
14      Compliance with Law
Linn as operator of the Linn Chisholm Trail Cryogenic Gas Plant shall, at its sole expense, comply fully with all existing Legal Requirements applicable to Linn’s operation of the Linn Chisholm Trail Cryogenic Gas Plant and Linn’s performance under this Agreement, including the securing of all applicable permits and access easements as required for the operations of the Linn Chisholm Trail Cryogenic Gas Plant, except only those applicable to BCCK, its Subcontractors and BCCK’s Personnel or otherwise expressly identified as the responsibility of BCCK under this Agreement. BCCK shall comply with all Legal Requirements that may be applicable to BCCK’s profession and to the Work to be performed under this Agreement. Furthermore, while at Linn’s premises,


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BCCK shall ensure that its employees and those of its Subcontractors shall at all times comply with BCCK’s reasonable safety and security rules.
15      Limitations of Liability and Liquidated Damages and Bonus
IN NO EVENT SHALL A PARTY BE LIABLE TO THE OTHER PARTY FOR LOSS OF PRODUCT, LOSS OF REVENUES, PROFITS OR INCOME, OR FOR INCIDENTAL, INDIRECT, SPECIAL, CONSEQUENTIAL, EXEMPLARY OR PUNITIVE DAMAGES WHETHER SUCH DAMAGES ARE CLAIMED UNDER BREACH OF WARRANTY, BREACH OF CONTRACT, TORT, OR ANY OTHER CAUSE OF ACTION IN LAW OR IN EQUITY, EXCEPT IN THE EVENT OF THE FIRST PARTY’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT AND EXCEPT FOR LIQUIDATED DAMAGES AS SET FORTH IN THIS SECTION 15.
NOTWITHSTANDING ANY PROVISION OF THIS AGREEMENT TO THE CONTRARY, BUT EXCLUDING LIABILITY OF BCCK UNDER SECTIONS 11.3 AND 11.6 OF THIS AGREEMENT AND SECTION 9.3 OF THE EQUIPMENT SUPPLY AGREEMENT, BCCK’S MAXIMUM AGGREGATE LIABILITY TO LINN ARISING OUT OF OR RELATED TO THIS AGREEMENT AND THE EQUIPMENT SUPPLY AGREEMENT AND THE EQUIPMENT AND ANY WORK PROVIDED IN CONNECTION WITH THE JOB SITE OR THE PROJECT, AND THE PERFORMANCE, NONPERFORMANCE AND/OR DEFECTIVE PERFORMANCE HEREUNDER OR UNDER THE EQUIPMENT SUPPLY AGREEMENT WITH RESPECT THERETO SHALL NOT EXCEED THE MAXIMUM LIABILITY AMOUNT, INCLUDING, WITHOUT LIMITATION, LIABILITY FOR WARRANTY OBLIGATIONS, TORT (INCLUDING NEGLIGENCE AND STRICT LIABILITY), AND BREACH OF CONTRACT (INCLUDING ANY BREACH RESULTING IN TERMINATION), LEGAL COSTS AND ATTORNEY’S FEES, AND ANY AND ALL OTHER LIABILITIES BASED ON ANY LEGAL OR EQUITABLE THEORY OR BASIS OF RECOVERY.
Since actual delay damages would be difficult or impossible to calculate due to the nature and complexity of the Work, the Parties agree that if BCCK shall fail to cause the Mechanical Completion Date to occur on or before the Target Completion Date as adjusted for Excusable Delay pursuant to the terms of this Agreement, then BCCK shall pay Linn as liquidated damages (and not as a penalty) a sum as specified in the table below for each day after the Target Completion Date until the occurrence of the Mechanical Completion Date.
Number of Days Late
Per Diem Amount
of Liquidated Damages
1-10 calendar days late
$0 per day
11-30 calendar days late
$30,000 per day
31-60 calendar days late
$40,000 per day
61-90 calendar days late
$60,000 per day
91+ calendar days late
$75,000 per day


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BCCK shall be entitled to an increase in the Contract Price as specified in the table below for each day that BCCK causes the Mechanical Completion Date to occur prior to the Target Completion Date, as adjusted for Excusable Delay.
Number of Days Early
Per Diem Amount
of Bonus
1-10 calendar days early
$0 per day
11-30 calendar days early
$30,000 per day
31-60 calendar days early
$20,000 per day
61-90 calendar days early
$10,000 per day
Notwithstanding anything to the contrary set forth in this Agreement, Linn’s receipt of delay liquidated damages as set forth above is Linn’s sole and exclusive remedy on account of any unexcused delay by BCCK in achieving the Mechanical Completion Date and BCCK’s maximum aggregate liability hereunder for payment of delay liquidated damages shall not exceed Five Million, Five Hundred Thousand and No/100 Dollars ($5,500,000). For purposes of clarification, the liquidated damages set forth in this Section 15 is only for unexcused delay in achieving the Mechanical Completion Date and does not prohibit Linn from collecting, subject to any limitations on damages and liability expressly set forth in this Agreement, any other damages, whether for breach of contract, warranty or otherwise, in addition to such liquidated damages.
16      Assignment by BCCK
Neither this Agreement nor BCCK’s rights hereunder shall be assignable by BCCK prior to the expiration of the limited warranty period in Article 18 except with Linn’s prior written consent, which consent shall not be unreasonably withheld, conditioned, or delayed. The conditions hereof shall bind any permitted successors and assigns of BCCK.
17      Assignment by Linn
Prior to payment in full of the Contract Price by Linn, neither this Agreement nor Linn’s rights hereunder shall be assignable by Linn (except to an affiliate) without BCCK’s prior written consent, which consent shall not be unreasonably withheld, conditioned, or delayed. The conditions hereof shall bind any permitted successors and assigns of Linn.
18      Limited Warranty
BCCK represents and warrants:
i.
(1) That upon the Mechanical Completion Date, the Linn Chisholm Trail Cryogenic Gas Plant will be constructed in a good and workmanlike manner, in accordance with this Agreement and be in good working condition free from defects in materials and workmanship, except to the extent such defects are a result of (a) ordinary wear and tear, (b) normal corrosion, (c) operation or maintenance by Linn not in compliance with


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the Operating Manuals, (d) the gas flow exceeds 225 MMSCFD, (e) the quality of the processed gas is outside the parameters specified in the section “Quality of Gas to be Processed” in Schedule "D" , or (f) operating outside the Project Specifications set forth in Schedule "D" , and (2) that if during the eighteen (18) month period from the Mechanical Completion Date or twelve (12) months from the Start-up Date, whichever occurs first, all or any portion of the materials incorporated into the Work or equipment provided by or through BCCK (including the Procured Equipment) is found to be defective or improperly configured, and notice thereof is delivered to BCCK within a reasonable time period not to exceed thirty (30) Days after the defect is discovered (However, such failure to so notify shall not void the warranty, but BCCK shall not be responsible to the extent that it is prejudiced by such failure), BCCK will replace or repair such materials and equipment at BCCK’s sole cost and expense. After notice of a warranty claim, BCCK shall have the right to inspect the defect and the related operating data to determine the cause of the defect. Transportation fees associated with defective equipment and any and all labor, and associated costs, to install/replace equipment under this warranty will be the responsibility of BCCK. BCCK shall inspect each warranty claim within forty-eight (48) hours and promptly and diligently complete the warranty work. BCCK agrees to negotiate warranties with third party vendors that are consistent with Industry Standards. BCCK will communicate the details and terms of said third party vendor warranties to Linn within thirty (30) days of negotiation. In addition, after giving notice, which may be telephonic, to BCCK of a potential warranty claim, Linn shall have the right to use a third party to perform the repair/replacement work; provided that either (X) BCCK refers such third party to Linn when Linn notifies BCCK of the potential warranty claim or (Y) if no third party is referred to Linn, Linn reasonably believes that such third party is capable of handling the repair/replacement in a timely manner for a reasonable cost, and in either case BCCK shall reimburse Linn within ten (10) days after Linn’s reimbursement request, if the repair/replacement work is covered by BCCK’s warranty.
ii.
That it has all necessary rights to grant the licenses and perform the Work provided for herein.
iii.
BCCK will transfer all manufacturer and other warranties to Linn promptly upon the earlier of installation of the applicable equipment into the Linn Chisholm Trail Cryogenic Gas Plant or the payment for such equipment, and in any event as a condition precedent to the Mechanical Completion Date.
THERE ARE NO IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE IN CONNECTION WITH THE WORK OR THE LINN CHISHOLM TRAIL CRYOGENIC GAS PLANT, WHICH EXTEND BEYOND THE EXPRESSED WARRANTIES AS STATED IN THIS ARTICLE 18 “LIMITED WARRANTY” OF THIS AGREEMENT.


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19      Enforceability
If any part hereof is contrary to, prohibited by or deemed invalid under applicable Legal Requirements, such provision shall be inapplicable and deemed omitted but shall not invalidate the remaining provisions hereof. THIS AGREEMENT IS IRREVOCABLE FOR THE FULL TERM HEREOF, except as otherwise specifically provided herein.
20      Patents, Trade Secrets and Confidential Information
This Paragraph governs the disclosure of certain BCCK Confidential Information (defined below) to be submitted to Linn by BCCK relating to the Linn Chisholm Trail Cryogenic Gas Plant. BCCK possesses certain BCCK Confidential Information relating to the creation, forms of expression, authorship, conception, design, reduction to practice, use or sale of subject matter all of which Linn agrees not to use for its own benefit except as permitted under this Agreement, either singularly or collectively, and Linn further agrees not to disclose such BCCK Confidential Information to others (other than potential buyers, investors and its accountants, lawyers, consultants, and other professionals, agents, and employees) without receiving the express prior written permission of BCCK, except as to information that is:
i.
Otherwise legally acquired by Linn subsequent to the Effective Date of this Agreement, and then only as of the date of such acquisition; or
ii.
In the public domain as of the date of disclosure by Linn; or
iii.
Subsequently comes into the public domain, otherwise than through Linn’s violation of this Agreement, and then only after said later date; or
iv.
Is independently developed by or for Linn without resort to the BCCK Confidential Information provided hereunder.
As used herein, “ BCCK Confidential Information ” includes, by way of example and without limitation, and however disclosed, all financial, cost or pricing information, inventions, processes, diagrams, designs, formulae, methods, data, know-how, techniques, apparatus, listings, discs, diskettes, screens, graphic representations, and any improvements or derivations thereof, whether or not copyright, trademark or patent applications are filed or pending thereon, and all customer lists or other information, accounting and control procedures, business methods and the like.
All rights, title, and interest (in including, without limitation, all patents, trade secrets, trademarks, inventions, discoveries and copyrightable matter) relating to the BCCK Confidential Information and all improvements, enhancements and refinements thereto, (collectively, the “ IP Rights ”) developed by BCCK in performing the Work which relates to the Linn Chisholm Trail Cryogenic Gas Plant shall be the property of BCCK; provided that the IP Rights do not include any rights to any intellectual property based on or arising out of the ideas or efforts of Linn and provided further that the IP Rights are subject to the right and license to use the BCCK Work Product granted to Linn in Article 12 . Subject to Article 12 , BCCK shall enjoy full rights without obligation to Linn for the use of the IP Rights.


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Subject to the license granted to Linn with respect to the BCCK Work Product as set forth in Article 12 , Linn agrees that BCCK will retain all rights, title, and interest in and to all inventions, discoveries and copyrightable subject matter arising out of Work done by BCCK which relates to subject matter (i.e. Linn Chisholm Trail Cryogenic Gas Plant Process), other than anything arising from the ideas or efforts of Linn, all of which shall be owned by Linn.
This Paragraph also governs the disclosure of certain Linn Confidential Information. The Linn Confidential Information includes, but is not limited, to (a) the Natural Gas to be delivered to and processed by the Linn Chisholm Trail Cryogenic Gas Plant, including without limitation, the volumes and constituent parts thereof; (b) the wells and property from which such Natural Gas is produced; (c) the facilities by which such Natural Gas is produced and transported to the Linn Chisholm Trail Cryogenic Gas Plant; and (d) marketing of Natural Gas and Natural Gas Liquids, any of which may be disclosed to BCCK in connection with the design and construction of the Linn Chisholm Trail Cryogenic Gas Plant. BCCK agrees not to use such Linn Confidential Information for its own benefit except as permitted under this Agreement, either singularly or collectively, and further agrees not to disclose such Linn Confidential Information to others without receiving the express prior written permission of Linn, except as to information that is:
i.
Otherwise legally acquired by BCCK subsequent to the Effective Date of this Agreement, and then only as of the date of such acquisition; or
ii.
In the public domain as of the date of disclosure by Linn; or
iii.
Subsequently comes into the public domain, otherwise than through BCCK’s violation of this Agreement, and then only after said later date; or
iv.
Is fully documented as having been independently developed by or for BCCK without resort to the Linn Confidential Information provided hereunder.
However, nothing herein shall limit the right of either party to provide any information regarding the other party, or any of its Subcontractors and any vendors to any governmental authority having jurisdiction and asserting a right to such information or in any Court or arbitration proceeding taken in connection with this Agreement.
21      Changes in Scope
The parties anticipate that, from time to time, Linn may desire changes in the scope of Work as indicated in this Agreement. These changes may affect the cost of or the time required for completion of the Work. Such changes may include without limitation:
i.
Linn Chisholm Trail Cryogenic Gas Plant design changes above Industry Standards.
ii.
Increase in scope of Work to include work not originally included in this Agreement.
iii.
Decrease in scope of Work.


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If Linn desires a change in the scope of the Work, it shall identify the change and ask BCCK to determine the cost of the change. BCCK shall promptly upon receipt of the request determine the estimated cost of the material and amount of labor and the effect the change would have on the scheduled time to complete the Work and submit a proposal to Linn which identifies the estimated time and material cost and the change in schedule, if any, and may, if desired by BCCK, include a lump sum price proposal for such change. After discussion by BCCK and Linn, if both parties agree to the proposal, including BCCK’s lump sum proposal, if applicable, then BCCK shall prepare and sign a Change Order for Linn’s approval and signature.
If Linn and BCCK cannot agree on the estimated time and materials cost and change in schedule, or BCCK’s lump sum proposal, if applicable, then Linn may issue a directive (a “ Change Directive ”) to BCCK to proceed with the change on a time and materials basis, irrespective of their difference on the estimated cost and effect on the schedule. Once the change is complete, BCCK shall advise Linn of the actual time and materials cost and actual effect on the schedule, if any. BCCK shall then prepare and sign a Change Order for Linn’s approval and signature, subject to Linn’s audit rights.
No adjustment to the Contract Price shall be made, except by approval by both parties of a Change Order document. Each Change Order shall set forth the change in the scope of the Work, schedule and to the Contract Price. Each Change Order shall also set forth the basis on which BCCK will be compensated for the change to the amount due. Change Orders are not valid until signed by both Linn and BCCK. This Agreement shall be deemed to be amended by validly issued Change Orders once signed by both parties. BCCK will communicate to Linn all significant changes in the final design, from that set forth in this Agreement by revising the appropriate documents to reflect the change. BCCK’s standard rates for such work are set forth in Schedule "B" .
Notwithstanding anything to the contrary set forth in this Agreement, in the event of any Excusable Delay, BCCK shall be entitled to an adjustment in the Contract Price or Target Completion Date, or both, to the extent of the Excusable Delay or additional cost of the Work directly caused by the Excusable Delay. Such change in the Contract Price shall be on a time and materials basis in accordance with Schedule "B" . Upon receipt of notice from BCCK of any such Excusable Delay, BCCK and Linn shall negotiate in good faith to determine such adjustments and to execute a Change Order evidencing the same
22      Delivery
22.1      General Delivery
BCCK shall commence the prosecution of the Work as soon as reasonably possible following execution of this Agreement and shall diligently pursue the Work and use its best efforts to achieve the Linn Chisholm Trail Cryogenic Gas Plant Mechanical Completion within forty-eight (48) weeks after the Effective Date, subject to extensions as set forth in Change Orders and as expressly provided for under this Agreement (the “ Target Completion Date ”). Schedule "E" provides a preliminary Project implementation outline.


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22.2      Force Majeure
For the purposes hereof, Force Majeure will be any event, occurrence, happening or condition beyond the reasonable control of the party affected and that is not due to the fault or negligence of the party affected and for which the affected party is unable to prevent or protect against by the exercise of reasonable diligence, including, but not limited to, the following: acts of God or the public enemy; compliance with any order, rule, regulation, decree or request of any governmental authority or agency or person purporting to act therefore; acts of war, public disorder, rebellion, terrorism or sabotage; floods, hurricanes, tornados, named storms or other Adverse Weather Conditions (as defined below); strikes (other than by BCCK’s Personnel, or BCCK’s Subcontractors or their respective employees or third party contractors), labor disputes (other than with or involving BCCK’s Personnel or BCCK’s Subcontractors or their respective employees or third party contractors); inability to obtain equipment or materials or unforeseeable breakage of same or accidents involving same while in transit; or any other cause, whether or not of the class or kind specifically named or referred to herein, not within the reasonable control of the party affected. For the purposes hereof, Force Majeure will not include (i) financial distress of either party; (ii) Linn’s notifying BCCK to temporarily cease work because of a default by or on behalf of BCCK or for any other reason permitted under this Agreement; (iii) failure by Linn, its partners, agents or third party to provide the Linn Chisholm Trail Cryogenic Gas Plant with produced Gas of a reasonably sufficient quality and quantity for start-up of the Linn Chisholm Trail Cryogenic Gas Plant on or near the Mechanical Completion Date; or (iv) delays occasioned by Adverse Weather Conditions until the aggregate number of days of delays due to Adverse Weather Conditions exceeds twenty (20) days, it being understand that up to twenty (20) days of delay due to Adverse Weather Conditions have been included in determining the Target Completion Date. For purposes hereof, an “ Adverse Weather Condition ” means any weather condition which reasonably prevents BCCK from being able to perform on any day four (4) or more hours of Work on a critical path item in BCCK’s construction schedule).
A delay of either party will not constitute a default hereunder or be the basis for, or give rise to, any claim for damages, if and to the extent such delay is caused by Force Majeure and to the extent the other provisions of this Section 22.2 are satisfied.
In the event of Force Majeure, the time for performance of an obligation of Linn and the time for performance of an obligation of BCCK, including any specific date for completion of all or any part of the Work, will be extended for a period equal to the delay in obtaining Mechanical Completion occasioned by Force Majeure, except that the time for the obligation of Linn to pay for the cost of Work (or portion thereof that is due) will be made as soon as possible, but in no event later than fifteen (15) days after cessation of the event of Force Majeure.
As a condition to claiming a delay caused by Force Majeure, the party who is prevented from performing by Force Majeure (i) will be obligated, within a reasonable period not to exceed five (5) Days after the occurrence or detection of


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any such event, to give notice to the other party setting forth in reasonable detail the nature thereof and the anticipated extent of the delay, and (ii) will use all reasonable efforts to remedy such cause as soon as reasonably possible. If any Force Majeure event prevents, hinders, or delays performance by BCCK hereunder for more than one hundred twenty (120) consecutive days for reasons other than the following:
a.
Any and all delays lasting more than thirty (30) days caused by existing plant access beyond the control of BCCK which would limit construction access to the proposed area, including road and bridge access coming into the facility and any and all other plant, power or construction related issues as may delay completion of facility construction;
b.
Any and all delays lasting more than thirty (30) days caused by permitting issues or compliance with any order, rule, regulation, decree or request of any governmental authority or agency or person purporting to act therefore beyond the control of BCCK which would limit or stop the construction activities as required by the Agreement;
c.
Any and all delays lasting more than thirty (30) days caused by terrorism or sabotage beyond the control of BCCK which would limit or stop the construction activities as required by the Agreement;
d.
Any and all substantive delays caused by errors or omissions by Linn or Linn personnel which would limit or stop the construction activities as required by the Agreement and;
e.
Any event of Force Majeure that would also prevent a third party competitor of BCCK from completing the construction of the Linn Chisholm Trail Cryogenic Gas Plant pursuant to the terms of this Agreement;
then, Linn may elect to terminate this Agreement pursuant to Section 25.1 of this Agreement.
23      Notices
All amendments, invoices, and notices relating to this Agreement, except technical matters, shall be in writing and delivered by prepaid certified mail, overnight courier, or E-mail forwarded to:


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Linn Other Than Invoices:
Linn Midstream, LLC
14701 Hertz Quail Springs Parkway
Oklahoma City, OK 73134
BCCK:
BCCK Engineering Incorporated
2500 N. Big Spring, Suite 230
Midland, TX 79705
ATTN:
John Harrison
ATTN: J. Melinda Hall
 
JHarrison@linnenergy.com
mhall96@BCCK.com
 
 
With a copy to :
Linn Midstream, LLC
14701 Hertz Quail Springs Parkway
Oklahoma City, OK 73134
 
ATTN:
Bill Shanahan
 
 
BShanahan@linnenergy.com
 
 
 
Linn For Invoices:
Linn Midstream, LLC
14701 Hertz Quail Springs Parkway
Oklahoma City, OK 73134
ATTN: Bill Shanahan
BShanahan@LinnEnergy.com

With a copy of the invoice and certificate by e-mail to :
Invoice@linnenergy.com
TBeard@LinnEnergy.com  
 

Any such notices mailed to such addresses shall be sent certified mail, return receipt requested duly addressed and with postage prepaid. The notice shall be effective upon receipt of such notice or first attempted delivery if not accepted. Either party may change its address for notices by notice to the other party.
24      Dispute Resolution
BCCK and Linn shall attempt to resolve a controversy or claim, whether such claim sounds in contract, tort or otherwise, arising out of or relating to this Agreement, including amendments and related agreements or the breach thereof (a “ Dispute ”) by negotiation between the parties within fifteen (15) Days after the Dispute first arises. If the parties are unable to resolve the Dispute within the fifteen (15) Day period, BCCK and Linn may exercise their respective rights under this Agreement in any manner permitted by Legal Requirements.
25      Termination
25.1      Termination
i.
Linn may terminate this Agreement for any reason. If Linn elects to terminate this Agreement, it, shall notify BCCK in writing, and


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termination will become effective as of the date of such notice unless otherwise agreed by the parties hereto.
ii.
Following any termination by Linn pursuant to this Section 25.1 other than a Termination for Cause:
a.
The calculation of the Contract Price will be converted from a lump sum basis to a time and materials basis for the costs actually incurred and paid by BCCK between the Effective Date and the date notice is given of termination of this Agreement (including uncancellable commitments, man-hours charges, cancellation fees, demobilization of Subcontractors, overhead cost and expenses but only to the extent of increases in such costs and expenses caused by the termination of the Project, and any other charges directly related to the Linn Chisholm Trail Cryogenic Gas Plant), provided that BCCK shall provide Linn proof of such payment.
b.
Subject to the foregoing provisions of this Section 25.1 , the Contract Price shall be equal to the sum of:
1.
The cost for Work performed by BCCK and BCCK’s Affiliates shall be based on the applicable rate sheet set forth in Schedule "B" ;
2.
The cost for Work performed by persons and entities other than BCCK and BCCK’s Affiliates shall be the actual net cost (after deducting credits, rebates, refunds and other similar amounts) paid by BCCK for such Work plus the lesser of (X) seven and one-half percent (7.5%) of the costs under this item 2 and (Y) an amount equal to $500,000 plus $150,000 for each month after the fourth month following the Effective Date, e.g. if the Effective Date is June 15, 2017 and Linn terminates between November 15, 2017 and December14, 2017, then the amount under clause (Y) would be $800,000, being $500,000 plus two (2) times $150,000.
c.
BCCK may offset any part or the entire amount owed to BCCK by Linn as the result of any such early termination against any unused portion of Milestone payments received by BCCK, with the balance of such Milestone payments, if any, to be promptly refunded to Linn. If the unused portion of the Milestone payments is not sufficient to pay BCCK for the amount due, then the shortfall shall be promptly paid by Linn to BCCK. Further, title to equipment, materials, and supplies shall be promptly delivered to Linn or the amount paid by Linn for said equipment credited against the amount owed to BCCK.


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iii.
In the event of a Termination for Cause, Linn shall pay to (or receive from) BCCK the amount Linn is obligated to pay or receive by law, as applicable.
iv.
In the event of a termination of this Agreement, BCCK shall promptly after such termination, provide Linn with any and all back-up and support documentation to calculate the amount due under this Agreement, and Linn shall have audit rights as specified in Section 3.3 .
v.
The term “ Termination for Cause ” means a termination of this Agreement by Linn (a) pursuant to Section 25.2 below, (b) as a result of BCCK’s failure, within two (2) days after Linn’s request, to develop and implement a recovery plan (acceptable to Linn) to bring the prosecution of the Work back on schedule and to reasonably assure the occurrence of the Mechanical Completion Date on or before the Target Completion Date (as adjusted for Excusable Delay) and to thereafter diligently prosecute the Work and keep on schedule, (c) as a result of a breach by BCCK of any of its obligations under this Agreement, (d) as a result of BCCK’s repetitive failure to design or construct any portion of the Project in accordance with applicable Legal Requirements, the Drawings, Plans, and Specifications, or in a good and workmanlike manner with new materials and in accordance with Industry Standards, or (e) following the knowingly release of any Hazardous Substances at the Project Site by BCCK, its Subcontractors, or any of BCCK’s Personnel, which is reasonably believed by Linn to cost in excess of the Maximum Liability Amount to remediate in accordance with Legal Requirements.
25.2      Termination for Bankruptcy or Insolvency
Either party may terminate this Agreement immediately upon written notice given to the other party in the event of:
i.
The entry against such other party of a decree or unstayed order by a court of competent jurisdiction for relief under Title 11 of the United States Code or any other applicable federal or state bankruptcy, insolvency or other similar law, or the appointment of a receiver, liquidator, assignee, trustee, sequestrator or other similar official or the imposition of an order to wind up or liquidate affairs and the continuance of any such decree or order unstayed and in effect for a period of thirty (30) consecutive days; or
ii.
The filing by such other party under Title 11 of the United States Code or any other applicable Federal or State bankruptcy, insolvency or other similar law of a petition for relief, or the filing under Title 11 of the United States Code or any other applicable Federal or State bankruptcy, insolvency or other similar law of an involuntary petition which remains undismissed or unstayed for a period of thirty (30) consecutive days, or the consent by either party to the filing of such a petition or the appointment of a receiver, liquidator, assignee, trustee, sequestrator or similar official or the making of an assignment for the benefit of creditors,


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or either party generally not paying its debts as they become due, or the admission by either party in writing of its inability to pay its debts generally as they become due, or the taking of corporate action by either party in furtherance of any such action, or the suspension or discontinuance of operations of either party, whether or not in the normal course of business.
26      Assignment of Subcontracts upon Termination
In the event of any termination of this Agreement (other than a termination by BCCK due to a default by Linn), BCCK hereby irrevocably assigns to Linn all of BCCK’s interest (including BCCK’s right to any deposits or pre-payments) in any and all subcontracts and purchase orders now existing or hereinafter entered into by BCCK for performance of any part of the Work which assignment will be effective upon acceptance by Linn in writing and only as to those subcontracts and purchase orders which Linn designates in writing from time to time. BCCK shall use reasonable efforts to include provisions in all subcontracts and purchase orders which provide that such subcontracts and purchase orders are freely assignable by BCCK to Linn who shall only be liable for work done or materials supplied after the date that Linn notifies the applicable Subcontractor (including suppliers) of Linn’s acceptance of assignment thereof and agreement to assume all obligations of BCCK thereunder from and after the date of assignment.
27      Miscellaneous
a.
BCCK shall be an independent contractor with respect to all Work, and neither BCCK nor any of BCCK’s Personnel shall be deemed for any purpose to be the employee, agent, servant or representative of Linn. All responsibilities undertaken by BCCK in connection with the Work, including those concerning BCCK’s Personnel, shall be undertaken in the name of BCCK and not in the name or for the account of Linn. Furthermore, neither BCCK nor anyone used or employed by BCCK will have any authority to bind Linn to any third parties without specific written authority from Linn. Neither BCCK nor anyone used or employed by BCCK will have any right to any pension or welfare plans, including, without limitation, savings, retirement, medical, dental, insurance, or vacation plans sponsored by Linn.
b.
Neither BCCK nor any of BCCK’s Personnel shall, without the prior written consent of Linn: (a) make or issue any public announcement or statement with respect to the Work or the terms of this Agreement, (b) supply to the press or other news media any information, photographs, or data related to the Work or this Agreement, or (c) use Linn’s name, any Linn trademark, or any Linn logo in any BCCK materials, including without limitation, advertisements, websites, calendars, brochures or presentations.
c.
No covenant or condition of this Agreement can be changed except by the mutual written consent of Linn and BCCK. Except as otherwise expressly provided herein, the remedies afforded to the parties in this Agreement are not intended to be exclusive, and each remedy shall be cumulative and shall be in addition to all other remedies available to the parties at law or in equity. No delay or omission


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by either party in exercising any rights or remedies under this Agreement or applicable Legal Requirements shall impair such right or remedy or be construed as a waiver of any such right or remedy. Any single or partial exercise of a right or remedy shall not preclude further exercise of that right or remedy or the exercise of any other right or remedy. No waiver shall be valid unless in writing signed by the party to be bound.
d.
THIS AGREEMENT AND ANY ISSUES RELATED TO IT (INCLUDING, WITHOUT LIMITATION, THE VALIDITY, ENFORCEABILITY, INTERPRETATION, AND CONSTRUCTION OF THIS AGREEMENT AND ANY ISSUES RELATED TO IT) SHALL BE GOVERNED BY THE LAWS OF THE STATE OF TEXAS (WITHOUT REGARD TO CONFLICT OF LAW RULES) AND THE LAWS OF THE UNITED STATES APPLICABLE TO TRANSACTIONS IN TEXAS, EXCEPT THAT ANY ISSUES RELATING TO MECHANIC’S AND MATERIALMEN’S LIENS SHALL BE GOVERNED BY THE LAW OF OKLAHOMA.
e.
THE PARTIES AGREE THAT HARRIS COUNTY, TEXAS IS PROPER VENUE FOR ANY ACTION OR PROCEEDING BROUGHT BY EITHER PARTY UNDER, IN CONNECTION WITH, OR RELATING TO THIS AGREEMENT, WHETHER IN CONTRACT, TORT OR OTHERWISE. ANY ACTION OR PROCEEDING MUST BE BROUGHT IN ANY STATE OR FEDERAL COURT IN SUCH COUNTY TO THE EXTENT NOT PROHIBITED BY APPLICABLE LEGAL REQUIREMENTS. TO THE EXTENT PERMITTED BY APPLICABLE LEGAL REQUIREMENTS, THE PARTIES IRREVOCABLY (A) SUBMITS TO THE EXCLUSIVE JURISDICTION OF SUCH COURTS AND (B) WAIVES ALL OBJECTION AND DEFENSES HE MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT OR THAT ANY SUCH COURT IS AN INCONVENIENT FORUM.
f.
The agreements contained in this Agreement shall be binding upon and shall inure to the benefit of the parties to this Agreement and their respective heirs, legal representatives, successors, successors-in-interest, and permitted assigns.
g.
The parties acknowledge that each party and, if it so chooses, its counsel have reviewed and revised this Agreement and agree that this Agreement and any exhibits or schedules to this Agreement shall be given a fair and reasonable construction in accordance with the intentions of the parties to this Agreement without employing the rule of construction that any ambiguities are to be resolved against the drafting party.
h.      The captions, headings, and arrangement of the articles, sections, and paragraphs in this Agreement are for convenience only, do not in any way affect, limit, amplify, or modify the terms and provisions of this Agreement and shall not be taken into account in determining the meaning of any provisions of this Agreement. Whenever used herein, the singular number shall include the plural and the plural the singular, and the use of any gender shall be applicable to all genders.
i.
In any legal action, proceeding, or other dispute arising out of or related to this Agreement the Prevailing Party in any such action, proceeding, or dispute shall be


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entitled to recover from the non-Prevailing Party all reasonable attorneys’ fees, court costs, and other costs and expenses incurred by the Prevailing Party in connection with such action, proceeding, or dispute. The term “ Prevailing Party ” means the party whose position is selected, awarded, or successful (regardless of whether damages are awarded). In the case where both parties prevail on different claims, the Prevailing Party shall be the party that is more successful.
j.
This Agreement contains the full agreement between the Parties. Except as stated in this Agreement, no representation or promise has been made by either party to the other as an inducement to enter into this Agreement.
28      Counterpart Execution
This Agreement may be executed in one or more counterparts (including by means of telecopied signature pages or signature pages delivery by electronic transmission in portable document format (pdf), all of which taken together shall constitute one and the same instrument. This Agreement to the extent signed and delivered by means of a facsimile machine or electronic transmission in portable document format (pdf), shall be treated in all manner and respects as an original instrument and shall be considered to have the same binding legal effect as if it were the original signed version thereof delivered in person. At the request of any party hereto or to any such instrument, each other party shall re-execute original forms thereof and deliver them to all of the parties. No party hereto or to any such instrument shall raise the use of a facsimile machine or electronic transmission in portable document format (pdf) to deliver a signature or the fact that any signature or instrument was transmitted or communicated through the use of a facsimile machine or electronic transmission in portable document format (pdf) as a defense to the formation of a contract and each such party forever waives any such defense, except to the extent such defense relates to lack of authenticity.
Time is of the essence with respect to the dates and times set forth in this Agreement.
Executed this 13 th day of June, 2017.
LINN MIDSTREAM, LLC
BCCK ENGINEERING INCORPORATED
 
 
 
 
By:
/s/ Mark E. Ellis
By:
/s/ Gregory L. Hall
 
 
Printed Name: Mark Ellis

Title: Chief Executive Officer
Printed Name: Gregory L. Hall

Title: Executive VP
 
 
Address:
600 Travis, Suite 1400
Houston, TX 77002
Address:
2500 N. Big Spring
Midland, TX 79705



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Exhibit 10.3


LINN MIDSTREAM, LLC
LINN CHISHOLM TRAIL CRYOGENIC GAS PLANT
EQUIPMENT SUPPLY AGREEMENT #BK17056P


BCCK ENGINEERING, INCORPORATED
2500 North Big Spring
Midland, TX 79705
432-685-6095 ~ 432-685-7021 (fax)



LINN MIDSTREAM, LLC
14701 Hertz Quail Springs Parkway
Oklahoma City, OK 73134



June 13, 2017


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LINN MIDSTREAM, LLC
LINN CHISHOLM TRAIL CRYOGENIC GAS PLANT
EQUIPMENT SUPPLY AGREEMENT #BK17056P

Table of Contents
1.
Definitions
3
2.
Scope of Supply
5
3.
Compensation, Invoicing and Payment
5
4.
Duration of Agreement
7
5.
Inspection and Acceptance
7
6.
Taxes
8
7.
Maintenance and Repair
8
8.
Bonds
9
9.
Indemnities
9
10.
Title; Personal Property; Encumbrances; Location
10
11.
Permits
10
12.
Limitations of Liability and Liquidated Damages
11
13.
Assignment by BCCK
11
14.
Assignment by Linn
12
15.
Limited Warranty
12
16.
Enforceability
12
17.
Changes in Scope
12
18.
Delivery
13
19.
Notices
14
20.
Dispute Resolution
14
21.
Termination
15
22.
Assignment of Subcontracts
16
23.
Miscellaneous
17
24.
Counterpart Execution
19

Schedules
Schedule "A"    Description and Cost of Equipment for Linn Chisholm Trail Cryogenic Gas Plant



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LINN MIDSTREAM, LLC
LINN CHISHOLM TRAIL CRYOGENIC GAS PLANT
EQUIPMENT SUPPLY AGREEMENT #BK17056P
This Linn Chisholm Trail Cryogenic Gas Plant Equipment Supply Agreement (this “ Agreement ”) is entered into this 13 th day of June, 2017 (the “ Effective Date ”), between BCCK Engineering Incorporated, a Texas corporation (“ BCCK ”), and Linn Midstream, LLC a Delaware limited liability company (“ Linn ”), for the supply of equipment for a gas processing facility to be known as the Linn Chisholm Trail Cryogenic Gas Plant to be located in Grady County, Oklahoma.
Subject to the terms and conditions set forth herein, BCCK hereby agrees to fabricate or procure certain equipment for the benefit of Linn and Linn agrees to pay BCCK for such equipment for the Linn Chisholm Trail Cryogenic Gas Plant. In consideration of the mutual covenants set forth herein, and intending to be legally bound by this Agreement, Linn and BCCK hereby agree as follows:
1. Definitions
The following terms when capitalized and used in this Agreement will have the following meanings:
Agreement ” means this Linn Chisholm Trail Cryogenic Gas Plant Equipment Supply Agreement including all Schedules attached hereto.
BCCK ” means BCCK Engineering Incorporated and shall include the successors and/or authorized assigns of such party.
BCCK’s Affiliates ” shall have the meaning ascribed to it in the Engineering and Construction Agreement.
BCCK’s Personnel ” means all employees, supervisors, representatives, agents and other persons to be provided by BCCK or its Subcontractors for the supply of Equipment under this Agreement.
Change Order ” means a document requested by either Linn or BCCK and signed by both Linn and BCCK that sets forth a change in scope of Equipment, schedule, and/or the Contract Price, and, upon execution amends this Agreement.
Change Directive ” means a directive by Linn issued to BCCK to proceed with a change in the Equipment prior to the signing of a Change Order.
Contract Price ” means the total amount of compensation in US Dollars to be paid to BCCK as defined in Section 3.1 of this Agreement or as modified by a Change Order for the Equipment to be supplied by BCCK.
Day ” means a business day, excluding weekends and holidays and “day” means a calendar day.


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Effective Date ” means the date of the execution of this Agreement as set forth in the initial paragraph of this Agreement.
Engineering and Construction Agreement ” means the Engineering and Construction Agreement (#BK17056EC) of even date herewith by and between Linn and BCCK.
Equipment ” means the equipment, instruments, piping, valves, fittings and materials to be supplied to Linn by BCCK pursuant to this Agreement as more particularly described on Schedule "A" attached hereto.
Excusable Delay ” shall have the meaning ascribed to it in the Engineering and Construction Agreement
Force Majeure ” has the same meaning as in the Engineering and Construction Agreement
Industry Standards ” has the meaning ascribed to such term in the Engineering and Construction Agreement.
Job Site ” has the meaning ascribed to such term in the Engineering and Construction Agreement.
Legal Requirements ” means all applicable federal, state, and local statutes, laws, codes, ordinances, rules, regulations, orders, and decrees, including, without limitation, Environmental Laws.
Linn ” means Linn Midstream, LLC and shall include the successors and/or authorized assigns of such party.
Linn Chisholm Trail Cryogenic Gas Plant ” means the entire NGL extraction/fractionation and treating facility to be designed and constructed pursuant to the Engineering and Construction Agreement and into which the Equipment is to be installed and incorporated.
Linn’s Personnel ” means all employees, supervisors, representatives, agents and other persons or entities to be provided by Linn or its subcontractors in connection with the Project.
Major Subcontractor ” means (i) a Subcontractor that is selected and enters into a subcontract with BCCK or any Subcontractor for the performance of any part of the Work, and whose subcontract or subcontracts (in the aggregate) with BCCK, or any of its Subcontractors, require payments by BCCK (or such Subcontractor) of Five Hundred Thousand Dollars ($500,000) or more and (ii) each of BCCK’s Affiliates.
Mechanical Completion Date ” shall have the meaning ascribed to it in the Engineering and Construction Agreement.
Milestone ” means the completion of significant events as described in Section 3.1 of this Agreement that, when complete as agreed to by both parties, obligate Linn to make payment to BCCK as indicated.


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Prime Rate ” means the interest rate determined from time to time by the major US Banks and published in The Wall Street Journal on any given Day as the Prime Rate of interest.
Project ” means the Linn Chisholm Trail Cryogenic Gas Plant engineered, constructed, and installed by BCCK (including the Equipment plus any other improvements or equipment supplied and installed by Linn or others inside or adjacent to the Linn Chisholm Trail Cryogenic Gas Plant fence including related compression and dehydration).
Subcontractor ” means any party that enters into an agreement with BCCK and provides any Equipment or performs any work or services in furtherance of BCCK’s obligations under this Agreement and all direct and indirect subcontractors of such party at all levels, including material men and suppliers.
2.      Scope of Supply
BCCK shall fabricate or procure and supply to Linn the Equipment in a new unused condition and in accordance with this Agreement, Industry Standards and all applicable Legal Requirements.
3.      Compensation, Invoicing and Payment
3.1
Compensation
For the supply of the Equipment pursuant to this Agreement, Linn shall pay BCCK the Contract Price as stated and in accordance with the schedule of payments as listed below in this Section 3.1 . Upon the occurrence of each of the Milestones as listed below, BCCK will invoice Linn and Linn will pay BCCK the amount indicated next to such Milestone in accordance with Section 3.2 of this Agreement. Linn shall have no additional payment obligations under this Agreement unless otherwise specifically set forth in this Agreement or otherwise agreed to in writing.
Payment No.
Milestone
Percent of Contract Price
Invoice Amount Due
Estimated
Date
1
Contract Execution
20%

$11,556,645.34

6/12/2017
2
Issuing Purchase Orders for Amine, TEG and Inlet system
10%

$5,778,322.67

7/12/2017
3
Ordering medium voltage gear
15%

$8,667,484.01

8/12/2017
4
Ordering low voltage gear
10%

$5,778,322.67

9/12/2017
5
Ordering PLC panels
10%

$5,778,322.67

10/12/2017
6
100% Completion of de-methanizer
10%

$5,778,322.67

12/12/2017
7
100% Completion of turbo expander skid
15%

$8,667,484.01

1/12/2018
8
100% Completion of PDC buildings
10%

$5,778,322.67

2/12/2018
TOTAL
100%

$57,783,226.71

 


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3.2
Invoicing and Payment
BCCK will submit to Linn an invoice for each Milestone as it is achieved in accordance with Section 3.1 , but not more often than once per calendar month other than the retainage payment. Each invoice shall be accompanied by (i) a certification by the Project Manager and an officer of BCCK that the Milestone described in the invoice has been achieved, (ii) a conditional M&M Lien waiver from BCCK for the current Milestone payment and from each Major Subcontractor that has provided work or Equipment covered by such Milestone payment, and (iii) a full M&M Lien waiver from BCCK with respect to all prior Milestone payments and, if not previously provided, a full M&M Lien waiver from each Major Subcontractor that has provided work or Equipment covered by such prior Milestone payment. Invoices shall be sent in accordance with the invoicing address instructions in Article 19 .
Linn shall pay BCCK the amount due as shown on the invoice less 5% retainage. Payment by Linn shall be due and payable within thirty (30) days of its receipt of the invoice (and all back-up and other information required to be submitted to Linn for payment of invoices), with the exception of Milestone payment number 1, which will be due at contract execution. Retainage shall be paid at the same time that retainage is paid under the Engineering and Construction Agreement. Payment by Linn to BCCK may be made by direct deposit into BCCK’s designated bank account.
If Linn fails to pay any invoice or other sum when due to BCCK, Linn shall also pay to BCCK interest thereon from the due date of the payment to the date of payment at a rate equal to the then existing Prime Rate plus two percent (2%) per annum (not to exceed the maximum rate of interest allowed by applicable Legal Requirements).
If Linn fails to pay an invoice due to BCCK within fifteen (15) days of receipt of written notice from BCCK of late payment of an invoice, BCCK shall have the right to suspend BCCK’s performance with regard to this Agreement until such invoice is paid. Should BCCK suspend performance according to this Section 3.2 , any costs required to resume performance will be charged as extra work at the rates provided in Schedule “B” of the Engineering and Construction Agreement.
Upon receipt by BCCK of the final Milestone payment from Linn (including all retainage), BCCK shall (i) execute and deliver to Linn an unconditional release and waiver of M&M liens in the same form as provided for in the Engineering and Construction Agreement to release any right of BCCK to claim mechanical or material man liens and (ii) if not previously provided, deliver to Linn an unconditional release and waiver of M&M liens in the same form as provided for in the Engineering and Construction Agreement from all Major Subcontractors to release any right of a Major Subcontractor to claim mechanical or material man liens.


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3.3
Extra Work and Change Orders
During the term of this Agreement Linn may request changes in the scope of Equipment in accordance with Article 17 . The cost of changes will be invoiced in accordance with the procedures of Section 3.2 (X) fifty percent (50%) upon the signing of a Change Order or the issuance of a Change Directive and (Y) the remaining fifty percent (50%) upon completion of such extra work. All changes will be subject to the provisions of Article 17 of this Agreement.
BCCK and its Subcontractors shall maintain a complete, true and correct set of detailed records pertaining to BCCK’s performance of its obligations hereunder and exercise such controls as may be necessary for proper financial management, using accounting and control systems in accordance with generally accepted accounting principles consistently applied. BCCK and its Subcontractors shall retain auditable books and records (including, but not limited to correspondence, receipts, subcontracts, purchase orders, vouchers, memoranda, invoices, and other data) for the Equipment for a period of not less than three (3) years after Successful Achievement of the Performance Specifications (as defined in the Engineering and Construction Agreement). During the three (3) year period, Linn and its representatives, consultants, and accountants may, from time to time upon request, review and audit any and all records and books of BCCK and any of its Subcontractors relating to any extra work performed on a time and materials basis. BCCK and its Subcontractors shall respond in writing within sixty (60) days to all issues identified in any such review or audit by Linn or representatives of Linn. BCCK or its Subcontractors and Linn shall work to expeditiously resolve all identified issues. For avoidance of doubt, Linn shall have no right to audit or inspect any records of BCCK or its Subcontractors with respect to Equipment provided or extra work performed on a lump sum or fixed price basis.
4.      Duration of Agreement
The term of this Agreement will begin with the Effective Date and end upon achieving the final Milestone and receipt by BCCK of full payment of all sums due BCCK from Linn, or when terminated by either party in accordance with other provisions of this Agreement, whichever shall first occur.
Certain designated provisions of this Agreement will survive the completion of the Agreement including, but not limited to Article 9 “Indemnities”, Article 10 “Title; Personal Property; Encumbrances; Location”, and Article 15 “Limited Warranty”, whether the termination is due to completion of the supply of Equipment or for other cause.
5.      Inspection and Acceptance
While any of the Equipment is at BCCK’s facilities or the facilities of any of BCCK’s Affiliates, Linn and its authorized representative(s) shall have the right at reasonable times after reasonable prior notice to BCCK, but not the obligation, to examine, inspect, or witness any portion of or all Equipment furnished by BCCK hereunder. During any such inspection, Linn shall carry the liability insurance required of Linn under the


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Engineering and Construction Agreement. If any of the Equipment furnished by BCCK is defective or does not conform to this Agreement, then BCCK shall, at BCCK’s expense, immediately repair or replace such defective Equipment. However, no inspection and no expressed, implied or tacit approval by Linn’s authorized representative of BCCK’s performance or any portion of the Equipment shall relieve BCCK of its obligations under this Agreement or the Engineering and Construction Agreement. BCCK shall cooperate fully with Linn in all inspections under this Article 5 . Linn shall not unreasonably interfere with BCCK’s performance of its obligation under this Agreement in the exercise of its rights under this Article 5 .
6.      Taxes
Sales and other taxes have not been included in the Contract Price. Linn will be responsible for Oklahoma gross receipts, compensating, and property taxes for the Equipment or reasonably related to and incurred by BCCK as a result of BCCK’s performance of this Agreement; subject to the requirements of this Article 6 . Linn shall not be responsible for federal or Oklahoma income or withholding tax assessed on BCCK or others or for Texas or other states’ taxes levied on the income of BCCK or others.
BCCK shall, and shall cause its subsidiaries and affiliates (including BCCK’s Affiliates) to, use their respective re-seller’s certificate (or similar certificate) when purchasing any and all Equipment, supplies, and other taxable items for the Linn Chisholm Trail Cryogenic Gas Plant, so that BCCK and its subsidiaries and affiliates (including BCCK’s Affiliates) shall not pay any sales, use, or other similar tax for which Linn would be responsible to reimburse BCCK under this Agreement to the extent such re-seller’s certificate permits such equipment, supplies or other items to be exempt for sales or other taxes under applicable Legal Requirements. Linn has applied for and will provide to BCCK upon receipt a manufacturer’s certificate for Oklahoma, and BCCK shall not charge or invoice Linn for any taxes with respect to any Equipment, supplies, or other items that are exempt from taxation under the manufacturer’s certificate. Subject to the previous provisions of this Article 6 , Linn will reimburse BCCK, with each invoice, for any sales, use, and property taxes now or hereafter imposed by any governmental body or agency upon the Linn Chisholm Trail Cryogenic Gas Plant related to the possession, operation, use or purchases of Equipment, supplies or materials hereunder that are paid by BCCK that are not subject to Linn’s manufacturer’s certificate or exempt from sales, use or other taxes by virtue of BCCK’s reseller’s certificate. BCCK will remit tax payments to the applicable governmental bodies or agencies having jurisdiction over such taxes on Linn’s behalf and reconcile the tax account at the end of the Project. Balancing of this account will be based on actual tax liability and any shortfalls in tax liability shall be paid by Linn. Any amounts Linn submits in excess of the tax liability BCCK pays to the applicable governmental bodies or agencies will be remitted to Linn by BCCK.
7.      Maintenance and Repair
Except for warranty repair work, BCCK shall not have any obligation to test, adjust, maintain, repair, or service the Equipment or the Linn Chisholm Trail Cryogenic Gas Plant under this Agreement, it being understood than BCCK’s limited responsibilities in such respect are exclusively set forth in the Engineering and Construction Agreement.


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8.      Bonds
Within fourteen (14) days after the Effective Date, BCCK shall provide to Linn a payment and performance bond in an amount determined by Linn (and communicated to BCCK within seven (7) days after the Effective Date) guaranteeing to Linn the timely payment of all Subcontractors and the timely performance by BCCK of all of its obligations under this Agreement. The cost of this payment and performance bond is not included in the Contract Price and BCCK’s cost therefor will be added to the Contract Price by Change Order once the cost is determined. Notwithstanding anything to the contrary contained in this Agreement Linn’s obligation to pay BCCK is subject to the requirements, if any, of the bond and the bonding company with respect to payments.
9.      Indemnities
9.1
Definitions
Claim ” or “ Claims ” means all claims, damages, liabilities, losses, demands, liens, encumbrances, fines, penalties, causes of action of any kind, obligations, costs, judgments, interest and awards (including payment of attorneys’ fees and costs of litigation and investigation costs) or amounts, of any kind or character including consequential damages but excepting punitive or exemplary damages, whether under judicial proceedings, administrative proceedings or otherwise arising in connection with this Agreement or performance under this Agreement. This includes property damage, pollution, and personal injury of any kind, including bodily injury, personal injury, illness, disease, maintenance, cure, loss of parental or spousal consortium, wrongful death, loss of support, death, and wrongful termination of employment.
Linn Indemnitees ” means Linn, its co-venturers, if any, and its and their officers, directors, and Linn’s Personnel.
9.2
General
The indemnity obligations under this Agreement are effective to the maximum extent permitted by Legal Requirements. If a Legal Requirement is applied in a jurisdiction which prohibits or limits a party’s ability to indemnify the other, then that party’s liability shall exist to the full extent allowed by the Legal Requirements of the relevant jurisdiction.
In the event BCCK fails to furnish a defense and indemnity as provided for herein, Linn shall be entitled to receive from BCCK, in addition to its attorneys’ fees, costs, expenses and any amounts paid in judgment or settlement, all costs, expenses, and attorneys’ fees incurred in the enforcement of this Agreement under Article 23 “Miscellaneous”.
Linn will promptly notify BCCK after receipt of any Claim for which it may seek indemnification. Each party also shall immediately notify the other of any occurrence in which physical injury occurs and to complete and provide the other party with an accident report for each such occurrence.


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9.3
Intellectual Property Indemnity
Notwithstanding anything to the contrary in the other provisions of this Agreement, BCCK agrees to defend, release, indemnify and hold harmless the Linn Indemnitees from claims of any person or entity arising from infringement or alleged infringement of copyrights, trade secrets, or patents, or misappropriation of trade secrets or other intellectual property rights arising under any applicable Legal Requirements with respect to the Equipment.
9.4
BCCK General Indemnity
BCCK shall defend, release, indemnify, and hold harmless the Linn Indemnitees, from and against any claims arising from the following matters:
i.
The failure of BCCK or any of BCCK's Personnel to fully comply with all Legal Requirements applicable to (x) their performance under this agreement, and (y) the protection of the environment; and
ii.
The failure of the Equipment to meet all applicable Industry Standards.
10.      Title; Personal Property; Encumbrances; Location
BCCK warrants good title to all Equipment and that all Equipment will be new. Title to all Equipment shall be transferred to Linn in accordance with Chapter 2 of the Texas Uniform Commercial Code. BCCK shall retain care and custody of Equipment for which title has not been transferred to Linn and exercise due care with respect thereto until transfer of title to Linn as provided in this Agreement. Said transfer of title shall in no way affect Linn’s rights or BCCK’s obligations as set forth in any other provision of this Agreement. BCCK shall sign over to Linn all certificates of title, manufacturer’s certificates, and other evidences of title promptly when title to each item is transferred to Linn. Transfer of ownership (including the signing and filing as applicable by BCCK) for all prior Equipment supplied and paid for by Linn shall be a condition precedent to all subsequent payments to BCCK.
BCCK represents and warrants that BCCK or the Subcontractor that supplied each specific item of Equipment is the owner of, or has a valid license to prepare, use and transfer to Linn, all drawings, documents, engineering calculations and other data furnished in connection with the Equipment (“ Equipment Drawings and Specifications ”). BCCK has the authority to and hereby grants and conveys to Linn a fully paid, perpetual, non-cancellable and non-terminable right and license to use all Equipment Drawings and Specifications for use by Linn for any purpose relating to the Linn Chisholm Trail Cryogenic Gas Plant, including the operation, maintenance and repair thereof.
11.      Permits
BCCK’s Affiliates have American Society of Mechanical Engineers (“ ASME ”) licenses and are ASME licensed code shops. BCCK shall obtain from suppliers that are ASME licensed code shops all Equipment that generally accepted industry practices indicate should be manufactured/fabricated in an ASME licensed code shop.


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12.      Limitations of Liability and Liquidated Damages
IN NO EVENT SHALL A PARTY BE LIABLE TO THE OTHER PARTY FOR LOSS OF PRODUCT, LOSS OF REVENUES, PROFITS OR INCOME, OR FOR INCIDENTAL, INDIRECT, SPECIAL, CONSEQUENTIAL, EXEMPLARY OR PUNITIVE DAMAGES WHETHER SUCH DAMAGES ARE CLAIMED UNDER BREACH OF WARRANTY, BREACH OF CONTRACT, TORT, OR ANY OTHER CAUSE OF ACTION IN LAW OR IN EQUITY, EXCEPT IN THE EVENT OF THE FIRST PARTY’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.
BCCK shall have no liability under this Agreement for any delay in the supply of the Equipment, it being understood that Linn’s sole remedy for any such delays shall be the recovery of any applicable delay liquidated damages to which Linn may be entitled under the Engineering and Construction Agreement. Likewise, any delay by BCCK to supply the Equipment shall not cause a change in the Targeted Completion Date under the Engineering and Consulting Agreement, except to the extent of any delay in the Targeted Completion Date actually caused by Excusable Delay or suspension of BCCK’s performance under this Agreement for Linn’s failure to pay pursuant to Section 3.2 of this Agreement.
NOTWITHSTANDING ANY PROVISION OF THIS AGREEMENT TO THE CONTRARY, BUT EXCLUDING LIABILITY OF BCCK UNDER SECTION 9.3 OF THIS AGREEMENT AND SECTIONS 11.3 AND 11.6 OF THE ENGINEERING AND CONSTRUCTION AGREEMENT, BCCK’S MAXIMUM AGGREGATE LIABILITY TO LINN ARISING OUT OF OR RELATED TO THIS AGREEMENT AND THE ENGINEERING AND CONSTRUCTION AGREEMENT AND THE EQUIPMENT OR ANY WORK PROVIDED IN CONNECTION WITH THE JOB SITE OR THE PROJECT, AND THE PERFORMANCE, NONPERFORMANCE AND/OR DEFECTIVE PERFORMANCE HEREUNDER OR UNDER THE ENGINEERING AND CONSTRUCTION AGREEMENT WITH RESPECT THERETO SHALL NOT EXCEED THE MAXIMUM LIABILITY AMOUNT (AS DEFINED IN THE ENGINEERING AND CONSTRUCTION AGREEMENT), INCLUDING, WITHOUT LIMITATION, LIABILITY FOR WARRANTY OBLIGATIONS, TORT (INCLUDING NEGLIGENCE AND STRICT LIABILITY), AND BREACH OF CONTRACT (INCLUDING ANY BREACH RESULTING IN TERMINATION), LEGAL COSTS AND ATTORNEY’S FEES, AND ANY AND ALL OTHER LIABILITIES BASED ON ANY LEGAL OR EQUITABLE THEORY OR BASIS OF RECOVERY.
13.      Assignment by BCCK
Neither this Agreement nor BCCK’s rights hereunder shall be assignable by BCCK prior to the expiration of the limited warranty period in Article 18 of the Engineering and Construction Agreement except with Linn’s prior written consent, which consent shall not be unreasonably withheld, conditioned, or delayed. The conditions hereof shall bind any permitted successors and assigns of BCCK.


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14.      Assignment by Linn
Prior to payment in full of the Contract Price by Linn, neither this Agreement nor Linn’s rights hereunder shall be assignable by Linn (except to an affiliate and only in connection with an assignment of the Engineering and Construction Agreement to such affiliate) except with BCCK’s prior written consent, which consent shall not be unreasonably withheld, conditioned, or delayed. The conditions hereof shall bind any permitted successors and assigns of Linn.
15.      Limited Warranty
BCCK’s limited warranty obligations with respect to the Equipment are set forth in Article 18 of the Engineering and Construction Agreement.
THERE ARE NO IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE IN CONNECTION WITH THE EQUIPMENT OR THE LINN CHISHOLM TRAIL CRYOGENIC GAS PLANT, WHICH EXTEND BEYOND THE EXPRESSED WARRANTIES AS STATED IN ARTICLE 18 “LIMITED WARRANTY” OF THE ENGINEERING AND CONSTRUCTION AGREEMENT.
16.      Enforceability
If any part hereof is contrary to, prohibited by or deemed invalid under applicable Legal Requirements of any jurisdiction, such provision shall be inapplicable and deemed omitted but shall not invalidate the remaining provisions hereof. THIS AGREEMENT IS IRREVOCABLE FOR THE FULL TERM HEREOF, except as otherwise specifically provided herein.
17.      Changes in Scope
The parties anticipate that, from time to time, Linn may desire changes in the scope of Equipment to be supplied by BCCK pursuant to this Agreement. These changes may affect the cost of or the time required for the supply of the Equipment. Such changes may include without limitation:
i.
Linn Chisholm Trail Cryogenic Gas Plant design changes above Industry Standards.
ii.
Increase in scope of supplied Equipment to include equipment not originally included in this Agreement.
iii.
Decrease in scope of supplied Equipment.
If Linn desires a change in the scope of the Equipment, it shall identify the change and ask BCCK to determine the cost of the change. BCCK shall promptly upon receipt of the request determine the estimated cost of the change and the effect the change would have on the scheduled time to supply the Equipment and submit a proposal to Linn which identifies the estimated cost and change in the schedule, if any, and may, if desired by BCCK, include a lump sum price proposal for such change. After discussion by BCCK


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and Linn, if both parties agree to the proposal, including BCCK’s lump sum proposal, if applicable, then BCCK shall prepare and sign a Change Order for Linn’s approval and signature.
If Linn and BCCK cannot agree on the estimated time and materials cost and change in schedule, or BCCK’s lump sum proposal, if applicable, then Linn may issue a directive (a “ Change Directive ”) to BCCK to proceed with the change on a time and materials basis (including the designation of the supplier of the applicable Equipment), irrespective of their difference on the estimated cost and effect on the schedule. Once the change is complete, BCCK shall advise Linn of the actual cost and actual effect on the schedule, if any. BCCK shall then prepare and sign a Change Order for Linn’s approval and signature, subject to Linn’s audit rights.
No adjustment to the Contract Price shall be made, except by approval by both parties of a Change Order document. Each Change Order shall set forth the change in the scope of the Equipment, schedule and to the Contract Price. Each Change Order shall also set forth the basis on which BCCK will be compensated for the change to the amount due. Change Orders are not valid until signed by both Linn and BCCK. This Agreement shall be deemed to be amended by validly issued Change Orders once signed by both parties. BCCK’s and BCCK’s Affiliates standard rates for work associated with a change are set forth in Schedule “B” of the Engineering and Construction Agreement.
18.      Delivery
18.1
General Delivery
BCCK shall commence activities for the supply of the Equipment as soon as reasonably possible following execution of this Agreement and shall diligently pursue such activities and use its best efforts to provide the Equipment to the Job Site in order to achieve the Mechanical Completion Date for the Linn Chisholm Trail Cryogenic Gas Plant in accordance with the requirements of the Engineering and Construction Agreement. The Contract Price includes delivery of the Equipment to the Job Site, BCCK being responsible for (and having the risk of loss for) the Equipment under this Agreement until it is delivered to the Job Site, at which time BCCK and/or Linn shall be responsible for (and have the risk of loss for) the Equipment in accordance with the Engineering and Construction Agreement


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19.      Notices
All amendments, invoices, and notices relating to this Agreement, except technical matters, shall be in writing and delivered by prepaid certified mail, overnight courier, or E-mail forwarded to:
Linn Other Than Invoices:
Linn Midstream, LLC
14701 Hertz Quail Springs Parkway
Oklahoma City, OK 73134
BCCK:
BCCK Engineering Incorporated
2500 N. Big Spring, Suite 230
Midland, TX 79705
ATTN:
John Harrison  
JHarrison@linnenergy.com
ATTN: J. Melinda Hall
mhall96@BCCK.com
 
 
With a copy to :
Linn Midstream, LLC
14701 Hertz Quail Springs Parkway
Oklahoma City, OK 73134
 
ATTN:
Bill Shanahan
BShanahan@linnenergy.com
 
 
 
Linn For Invoices:
Linn Midstream, LLC
14701 Hertz Quail Springs Parkway
Oklahoma City, OK 73134
 
ATTN:
Bill Shanahan
BShanahan@linnenergy.com
 
 
 
With a copy of the invoice and certificate by e-mail to :
Invoice@linnenergy.com
TBeard@linnenergy.com
 
Any such notices mailed to such addresses shall be sent certified mail, return receipt requested duly addressed and with postage prepaid. The notice shall be effective upon receipt of such notice or first attempted delivery if not accepted. Either party may change its address for notices by notice to the other party.
20.      Dispute Resolution
BCCK and Linn shall attempt to resolve a controversy or claim, whether such claim sounds in contract, tort or otherwise, arising out of or relating to this Agreement, including amendments and related agreements or the breach thereof (a “ Dispute ”) by negotiation between the parties within fifteen (15) Days after the Dispute first arises. If the parties are unable to resolve the Dispute within the fifteen (15) Day period, BCCK and Linn may exercise their respective rights under this Agreement in any manner permitted by Legal Requirements.


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21.      Termination
21.1
Termination
i.
Linn may terminate this Agreement for any reason. If Linn elects to terminate this Agreement, it, shall notify BCCK in writing, and termination will become effective as of the date of such notice unless otherwise agreed by the parties hereto.
ii.
Following any termination by Linn pursuant to this Section 21.1 other than a Termination for Cause:
a.
The calculation of the Contract Price will be converted from a lump sum basis to a time and materials basis for the costs actually incurred and paid by BCCK between the Effective Date and the date notice is given of termination of this Agreement (including uncancellable commitments, man-hours charges, cancellation fees, demobilization of Subcontractors, overhead cost and expenses but only to the extent of increases in such costs and expenses caused by the termination of the Project, and any other charges directly related to the Linn Chisholm Trail Cryogenic Gas Plant), provided that BCCK shall provide Linn proof of such payment.
b.
Subject to the foregoing provisions of this Section 21.1 , the Contract Price shall be equal to the sum of:
1.
The cost for Work performed by BCCK and BCCK’s Affiliates shall be based on the applicable rate sheet set forth in Schedule “B” attached to the Engineering and Construction Agreement;
2.
The cost for Work performed by persons and entities other than BCCK and BCCK’s Affiliates shall be the actual net cost (after deducting credits, rebates, refunds and other similar amounts) paid by BCCK for such Work plus seven and one-half percent (7.5%) of the costs under this item 2.
c.
BCCK may offset any part or the entire amount owed to BCCK by Linn as the result of any such early termination against any unused portion of Milestone payments received by BCCK, with the balance of such Milestone payments, if any, to be promptly refunded to Linn. If the unused portion of the Milestone payments is not sufficient to pay BCCK for the amount due, then the shortfall shall be promptly paid by Linn to BCCK. Further, title to equipment, materials, and supplies shall be promptly delivered to Linn or the amount paid by Linn for said equipment credited against the amount owed to BCCK.
iii.
In the event of a Termination for Cause, Linn shall pay to (or receive from) BCCK the amount Linn is obligated to pay or receive by law, as applicable.


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iv.
In the event of a termination of this Agreement, BCCK shall promptly after such termination, provide Linn with any and all back-up and support documentation to calculate the amount due under this Agreement, and Linn shall have audit rights as specified in Section 3.3 .
v.
The term “ Termination for Cause ” means a termination of this Agreement by Linn (i) pursuant to Section 21.2 below, (ii) as a result of a breach by BCCK of any of its obligations under this Agreement, or (iii) a Termination for Cause of the Engineering and Construction Agreement (as defined therein).
21.2
Termination for Bankruptcy or Insolvency
Either party may terminate this Agreement immediately upon written notice given to the other party in the event of:
i.
The entry against such other party of a decree or unstayed order by a court of competent jurisdiction for relief under Title 11 of the United States Code or any other applicable federal or state bankruptcy, insolvency or other similar law, or the appointment of a receiver, liquidator, assignee, trustee, sequestrator or other similar official or the imposition of an order to wind up or liquidate affairs and the continuance of any such decree or order unstayed and in effect for a period of thirty (30) consecutive days; or
ii.
The filing by such other party under Title 11 of the United States Code or any other applicable Federal or State bankruptcy, insolvency or other similar law of a petition for relief, or the filing under Title 11 of the United States Code or any other applicable Federal or State bankruptcy, insolvency or other similar law of an involuntary petition which remains undismissed or unstayed for a period of thirty (30) consecutive days, or the consent by either party to the filing of such a petition or the appointment of a receiver, liquidator, assignee, trustee, sequestrator or similar official or the making of an assignment for the benefit of creditors, or either party generally not paying its debts as they become due, or the admission by either party in writing of its inability to pay its debts generally as they become due, or the taking of corporate action by either party in furtherance of any such action, or the suspension or discontinuance of operations of either party, whether or not in the normal course of business.
22.      Assignment of Subcontracts
In the event of any termination of this Agreement (other than a termination by BCCK due to a default by Linn), BCCK hereby irrevocably assigns to Linn all of BCCK’s interest (including BCCK’s right to any deposits or pre-payments) in any and all subcontracts and purchase orders now existing or hereinafter entered into by BCCK for manufacturing/fabrication/supply of any part of the Equipment or components thereof which assignment will be effective upon acceptance by Linn in writing and only as to those subcontracts and purchase orders which Linn designates in writing from time to


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time. BCCK shall use reasonable efforts to include provisions in all subcontracts and purchase orders which provide that such subcontracts and purchase orders are freely assignable by BCCK to Linn who shall only be liable for work done or materials supplied after the date that Linn notifies the applicable Subcontractor (including suppliers) of Linn’s acceptance of assignment thereof and agreement to assume all obligations of BCCK thereunder from and after the date of assignment.
23.      Miscellaneous
a.
BCCK shall be an independent contractor with respect to the supply of Equipment pursuant to this Agreement, and neither BCCK nor any of BCCK’s Personnel shall be deemed for any purpose to be the employee, agent, servant or representative of Linn. All responsibilities undertaken by BCCK in connection with the supply of the Equipment, including those concerning BCCK’s Personnel, shall be undertaken in the name of BCCK and not in the name or for the account of Linn. Furthermore, neither BCCK nor anyone used or employed by BCCK will have any authority to bind Linn to any third parties without specific written authority from Linn. Neither BCCK nor anyone used or employed by BCCK will have any right to any pension or welfare plans, including, without limitation, savings, retirement, medical, dental, insurance, or vacation plans sponsored by Linn.
b.
Neither BCCK nor any of BCCK’s Personnel shall, without the prior written consent of Linn: (a) make or issue any public announcement or statement with respect to the Project or the terms of this Agreement, (b) supply to the press or other news media any information, photographs, or data related to the Project or this Agreement, or (c) use Linn’s name, any Linn trademark, or any Linn logo in any BCCK materials, including without limitation, advertisements, websites, calendars, brochures or presentations.
c.
No covenant or condition of this Agreement can be changed except by the mutual written consent of Linn and BCCK. Except as otherwise expressly provided herein, the remedies afforded to the parties in this Agreement are not intended to be exclusive, and each remedy shall be cumulative and shall be in addition to all other remedies available to the parties at law or in equity. No delay or omission by either party in exercising any rights or remedies under this Agreement or applicable Legal Requirements shall impair such right or remedy or be construed as a waiver of any such right or remedy. Any single or partial exercise of a right or remedy shall not preclude further exercise of that right or remedy or the exercise of any other right or remedy. No waiver shall be valid unless in writing signed by the party to be bound.
d.
THIS AGREEMENT AND ANY ISSUES RELATED TO IT (INCLUDING, WITHOUT LIMITATION, THE VALIDITY, ENFORCEABILITY, INTERPRETATION, AND CONSTRUCTION OF THIS AGREEMENT AND ANY ISSUES RELATED TO IT) SHALL BE GOVERNED BY THE LAWS OF THE


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STATE OF TEXAS (WITHOUT REGARD TO CONFLICT OF LAW RULES) AND THE LAWS OF THE UNITED STATES APPLICABLE TO TRANSACTIONS IN TEXAS, EXCEPT THAT ANY ISSUES RELATING TO MECHANIC’S AND MATERIALMEN’S LIENS SHALL BE GOVERNED BY THE LAW OF OKLAHOMA.
e.
THE PARTIES AGREE THAT HARRIS COUNTY, TEXAS IS PROPER VENUE FOR ANY ACTION OR PROCEEDING BROUGHT BY EITHER PARTY UNDER, IN CONNECTION WITH, OR RELATING TO THIS AGREEMENT, WHETHER IN CONTRACT, TORT OR OTHERWISE. ANY ACTION OR PROCEEDING MUST BE BROUGHT IN ANY STATE OR FEDERAL COURT IN SUCH COUNTY TO THE EXTENT NOT PROHIBITED BY APPLICABLE LEGAL REQUIREMENTS. TO THE EXTENT PERMITTED BY APPLICABLE LEGAL REQUIREMENTS, THE PARTIES IRREVOCABLY (A) SUBMITS TO THE EXCLUSIVE JURISDICTION OF SUCH COURTS AND (B) WAIVES ALL OBJECTION AND DEFENSES HE MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT OR THAT ANY SUCH COURT IS AN INCONVENIENT FORUM.
f.
The agreements contained in this Agreement shall be binding upon and shall inure to the benefit of the parties to this Agreement and their respective heirs, legal representatives, successors, successors-in-interest, and permitted assigns.
g.
The parties acknowledge that each party and, if it so chooses, its counsel have reviewed and revised this Agreement and agree that this Agreement and any exhibits or schedules to this Agreement shall be given a fair and reasonable construction in accordance with the intentions of the parties to this Agreement without employing the rule of construction that any ambiguities are to be resolved against the drafting party.
h.
The captions, headings, and arrangement of the articles, sections, and paragraphs in this Agreement are for convenience only, do not in any way affect, limit, amplify, or modify the terms and provisions of this Agreement and shall not be taken into account in determining the meaning of any provisions of this Agreement. Whenever used herein, the singular number shall include the plural and the plural the singular, and the use of any gender shall be applicable to all genders.
i.
In any legal action, proceeding, or other dispute arising out of or related to this Agreement the Prevailing Party in any such action, proceeding, or dispute shall be entitled to recover from the non-Prevailing Party all reasonable attorneys’ fees, court costs, and other costs and expenses incurred by the Prevailing Party in connection with such action, proceeding, or dispute. The term “ Prevailing Party ” means the party whose position is selected, awarded, or successful (regardless of whether damages are awarded). In the case where both parties prevail on different claims, the Prevailing Party shall be the party that is more successful.


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j.
This Agreement contains the full agreement between the Parties. Except as stated in this Agreement, no representation or promise has been made by either party to the other as an inducement to enter into this Agreement.
24.      Counterpart Execution
This Agreement may be executed in one or more counterparts (including by means of telecopied signature pages or signature pages delivery by electronic transmission in portable document format (pdf), all of which taken together shall constitute one and the same instrument. This Agreement to the extent signed and delivered by means of a facsimile machine or electronic transmission in portable document format (pdf), shall be treated in all manner and respects as an original instrument and shall be considered to have the same binding legal effect as if it were the original signed version thereof delivered in person. At the request of any party hereto or to any such instrument, each other party shall re-execute original forms thereof and deliver them to all of the parties. No party hereto or to any such instrument shall raise the use of a facsimile machine or electronic transmission in portable document format (pdf) to deliver a signature or the fact that any signature or instrument was transmitted or communicated through the use of a facsimile machine or electronic transmission in portable document format (pdf) as a defense to the formation of a contract and each such party forever waives any such defense, except to the extent such defense relates to lack of authenticity.
Time is of the essence with respect to the dates and times set forth in this Agreement.
Executed this 13 th day of June, 2017.
LINN MIDSTREAM, LLC
BCCK ENGINEERING INCORPORATED
 
 
 
 
By:
/s/ Mark E. Ellis
By:
/s/ Gregory L. Hall
 
 
Printed Name: Mark Ellis

Title: Chief Executive Officer
Printed Name: Gregory L. Hall

Title: Executive VP
 
 
Address:
600 Travis, Suite 1400
Houston, TX 77002
Address:
2500 N. Big Spring
Midland, TX 79705



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Exhibit 10.4




CONTRIBUTION AGREEMENT
BY AND AMONG
LINN ENERGY HOLDINGS, LLC, LINN OPERATING, LLC,
CITIZEN ENERGY II, LLC
AND
ROAN RESOURCES LLC
DATED JUNE 27 , 2017




19368523.18
US-DOCS\83219354.25



TABLE OF CONTENTS
ARTICLE 1
DEFINITIONS AND INTERPRETATION
 
 
 
Section 1.1
Defined Terms
1
Section 1.2
References and Rules of Construction
1
 
ARTICLE 2
CONTRIBUTION
 
 
 
Section 2.1
Contribution
2
 
ARTICLE 3
CONSIDERATION
 
 
 
Section 3.1
Consideration
2
Section 3.2
Linn Adjustments
3
Section 3.3
Citizen Adjustments
7
Section 3.4
Allocated Values
12
Section 3.5
Resolution of Final Linn Adjustment Amount and Final Citizen Adjustment Amount
13
Section 3.6
Allocation of Costs and Revenues
13
 
ARTICLE 4
TITLE MATTERS
 
 
 
Section 4.1
General Disclaimer of Title Warranties and Representations
14
Section 4.2
Linn Title Defects and Linn Title Benefits
14
Section 4.3
Citizen Title Defects and Citizen Title Benefits
20
Section 4.4
Title Disputes
25
Section 4.5
Linn Preferential Purchase Rights; Linn Consents to Assign
26
Section 4.6
Citizen Preferential Purchase Rights; Citizen Consents to Assign
27
Section 4.7
Casualty Loss
29
 
ARTICLE 5
ENVIRONMENTAL MATTERS
 
 
 
Section 5.1
Notice of Linn Environmental Defects
29
Section 5.2
Notice of Citizen Environmental Defects
32
Section 5.3
Environmental Disputes
34
Section 5.4
NORM; Wastes and other Substances
35
 
ARTICLE 6
ACCESS; CERTAIN DISCLAIMERS
 
 
 
Section 6.1
Access to Assets
35
Section 6.2
Confidentiality
37

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Section 6.3
Certain Disclaimers
37
 
ARTICLE 7
REPRESENTATIONS AND WARRANTIES OF LINN
 
 
 
Section 7.1
Organization, Existence and Qualification
40
Section 7.2
Authority, Approval and Enforceability
40
Section 7.3
No Conflicts
40
Section 7.4
Bankruptcy
40
Section 7.5
Brokers’ Fees
41
Section 7.6
Litigation
41
Section 7.7
No Violation of Laws
41
Section 7.8
Taxes
41
Section 7.9
Accredited Investor
42
Section 7.10
Independent Evaluation
42
Section 7.11
Linn Consents
42
Section 7.12
Linn Preferential Purchase Rights
42
Section 7.13
Material Contracts
42
Section 7.14
Environmental Matters
44
Section 7.15
Non-Consent Elections
45
Section 7.16
Royalties
45
Section 7.17
Imbalances
45
Section 7.18
Current Commitments
45
Section 7.19
Wells
45
Section 7.20
No Prepayments; No Calls on Production
45
Section 7.21
Compliance with Permits
46
Section 7.22
Condemnation
46
Section 7.23
Certain Linn Employees
46
Section 7.24
Equipment; No Related Assets
46
Section 7.25
Bonds
47
Section 7.26
Midstream Dedications
47
Section 7.27
Area of Mutual Interest and Other Agreements
47
Section 7.28
Linn Casualty Loss
47
 
ARTICLE 8
REPRESENTATIONS AND WARRANTIES OF CITIZEN
 
 
 
Section 8.1
Organization, Existence and Qualification
47
Section 8.2
Authority, Approval and Enforceability
47
Section 8.3
No Conflicts
48
Section 8.4
Bankruptcy
48
Section 8.5
Brokers’ Fees
48
Section 8.6
Litigation
48
Section 8.7
No Violation of Laws
48
Section 8.8
Taxes
48
Section 8.9
Accredited Investor
49
Section 8.10
Independent Evaluation
49


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Section 8.11
Citizen Consents
49
Section 8.12
Citizen Preferential Purchase Rights
50
Section 8.13
Material Contracts
50
Section 8.14
Environmental Matters
51
Section 8.15
Non-Consent Elections
52
Section 8.16
Royalties
52
Section 8.17
Imbalances
53
Section 8.18
Current Commitments
53
Section 8.19
Wells
53
Section 8.20
No Prepayments; No Calls on Production
53
Section 8.21
Compliance with Permits
53
Section 8.22
Condemnation
53
Section 8.23
Certain Citizen Employees
53
Section 8.24
Equipment; No Related Assets
54
Section 8.25
Bonds
54
Section 8.26
Midstream Dedications
54
Section 8.27
Area of Mutual Interest and Other Agreements
54
Section 8.28
Citizen Casualty Loss
54
 
ARTICLE 9
REPRESENTATIONS AND WARRANTIES OF Company
 
 
 
Section 9.1
Organization, Existence and Qualification
55
Section 9.2
Authority, Approval and Enforceability
55
Section 9.3
No Conflicts
55
Section 9.4
Bankruptcy
55
Section 9.5
Brokers’ Fees
55
Section 9.6
Litigation
55
Section 9.7
Independent Evaluation
56
 
ARTICLE 10
COVENANTS OF THE PARTIES
 
 
 
Section 10.1
Linn Conduct of Business
56
Section 10.2
Citizen Conduct of Business
58
Section 10.3
Public Announcements; Confidentiality
60
Section 10.4
Further Assurances
61
Section 10.5
Linn and Citizen Bonds
61
Section 10.6
Amendment to Schedules
61
Section 10.7
Letters-in-Lieu; Change of Operator; Qualification of Company
62
Section 10.8
Rights Associated with Linn Waterflood Assets
62
Section 10.9
Reserve-Based Loan
62
Section 10.10
Certain Citizen Excluded Assets
62
 

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ARTICLE 11
LINN CONDITIONS TO CLOSING
 
 
 
Section 11.1
Citizen Representations
63
Section 11.2
Citizen Covenants
63
Section 11.3
No Legal Proceedings
63
Section 11.4
Citizen Title Defects and Citizen Environmental Defects
63
Section 11.5
Linn Title Defects and Linn Environmental Defects
63
Section 11.6
Citizen Closing Certificate
64
Section 11.7
Citizen Closing Deliverables
64
Section 11.8
Company Representations
64
Section 11.9
Company Covenants
64
Section 11.10
Company Closing Certificate
64
Section 11.11
Company Closing Deliverables
64
 
ARTICLE 12
CITIZEN CONDITIONS TO CLOSING
 
 
 
Section 12.1
Linn Representations
64
Section 12.2
Linn Covenants
65
Section 12.3
No Legal Proceedings
65
Section 12.4
Linn Title Defects and Linn Environmental Defects
65
Section 12.5
Citizen Title Defects and Citizen Environmental Defects
65
Section 12.6
Linn Closing Certificate
65
Section 12.7
Linn Closing Deliverables
65
Section 12.8
Company Representations
65
Section 12.9
Company Covenants
66
Section 12.10
Company Closing Certificate
66
Section 12.11
Company Closing Deliverables
66
 
ARTICLE 13
CLOSING
 
 
 
Section 13.1
Time and Place of Closing
66
Section 13.2
Obligations of Linn at Closing
66
Section 13.3
Obligations of Citizen at Closing
67
Section 13.4
Obligations of the Company at Closing
67
 
ARTICLE 14
TERMINATION; DEFAULT AND REMEDIES
 
 
 
Section 14.1
Right of Termination
68
Section 14.2
Effect of Termination
68
Section 14.3
Return of Documentation and Confidentiality
69
 

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ARTICLE 15
INDEMNIFICATION; ASSUMPTION OF LIABILITIES
 
 
 
Section 15.1
Indemnification by Linn
70
Section 15.2
Indemnification by Citizen
70
Section 15.3
Indemnification by the Company
71
Section 15.4
Exclusive Remedy
71
Section 15.5
Indemnification Rights
71
Section 15.6
Assumption of Liabilities
71
Section 15.7
Indemnification Actions
72
Section 15.8
Limitation on Actions.
74
 
ARTICLE 16
TAX MATTERS
 
 
 
Section 16.1
Allocation of Asset Taxes
77
Section 16.2
Tax Returns
77
Section 16.3
Tax Cooperation
78
Section 16.4
Transfer Taxes
78
Section 16.5
Tax Refunds
78
 
 
 
ARTICLE 17
MISCELLANEOUS
 
 
 
Section 17.1
Governing Law
78
Section 17.2
Conspicuous Language
79
Section 17.3
Dispute Resolution
79
Section 17.4
Counterparts
81
Section 17.5
Notices
81
Section 17.6
Expenses
84
Section 17.7
Waiver; Rights Cumulative
84
Section 17.8
Entire Agreement; Conflicts
84
Section 17.9
Amendment
85
Section 17.10
Parties in Interest
85
Section 17.11
Binding Effect
85
Section 17.12
Preparation of Agreement
85
Section 17.13
Severability
85
Section 17.14
Limitation on Damages
86
Section 17.15
Assignment
86
Section 17.16
Time is of the Essence
86
Section 17.17
Employee Issues
86
Section 17.18
Retained Litigation
87

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US-DOCS\83219354.25



APPENDICES:
 
 
 
 
 
Appendix A
-
Definitions
 
 
 
 
 
 
EXHIBITS:
 
 
 
 
 
Exhibit A-1 (Part I)
-
Linn Leases
Exhibit A-1 (Part II)
-
Citizen Leases
Exhibit A-2 (Part I)
-
Linn Wells
Exhibit A-2 (Part II)
-
Citizen Wells
Exhibit A-3 (Part I)
-
Linn Rights-of-Way
Exhibit A-3 (Part II)
-
Citizen Rights-of-Way
Exhibit A-4 (Part I)
-
Linn Equipment
Exhibit A-4 (Part II)
-
Citizen Equipment
Exhibit A-5-1
-
Linn Additional Leases
Exhibit A-5-2 (Part I)
-
Citizen Additional Leases (post 3-31-17)
Exhibit A-5-2 (Part II)
-
Citizen Additional Leases (pre 3-31-17)
Exhibit B (Part I)
-
Form of Linn Closing Certificate
Exhibit B (Part II)
-
Form of Citizen Closing Certificate
Exhibit B (Part III)
-
Form of Company Closing Certificate
Exhibit C (Part I)
-
Form of Linn Assignment
Exhibit C (Part II)
-
Form of Citizen Assignment
Exhibit D
-
Form of Company Certificate
Exhibit E (Part I)
-
Certain Linn Excluded Assets
Exhibit E (Part II)
-
Certain Citizen Excluded Assets
Exhibit F
-
Form of LLC Agreement
Exhibit G-1
-
Form of Linn Master Services Agreement
Exhibit G-2
-
Form of Citizen Master Services Agreement
Exhibit H
-
Zone Pricing
Exhibit I
-
Linn Waterflood Assets
 
 
 
SCHEDULES:
 
 
 
 
 
Schedule 3.4A
-
Allocated Values- Linn Sections and Citizen Sections
Schedule 3.4B (Part I)
-
Allocated Values- Linn Wells
Schedule 3.4B (Part II)
-
Allocated Values- Citizen Wells
Schedule 6.1(e)
-
Insurance Requirements
Schedule 7.6
-
Linn Litigation
Schedule 7.8
-
Certain Linn Tax Issues
Schedule 7.11
-
Linn Consents
Schedule 7.12
-
Linn Preferential Purchase Rights
Schedule 7.13(a)
-
Linn Material Contracts
Schedule 7.13(b)
-
Certain Issues Relating to Linn Material Contracts
Schedule 7.14
-
Linn Environmental Matters
Schedule 7.15
-
Linn Non-Consent Elections


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Schedule 7.16
-
Linn Royalty Issues
Schedule 7.17
-
Linn Imbalances
Schedule 7.18
-
Linn AFEs
Schedule 7.19
-
Linn Plugged Wells
Schedule 7.20
-
Linn Calls on Production
Schedule 7.25
-
Linn Bonds
Schedule 7.26
-
Dedications
Schedule 7.27
-
AMIs
Schedule 7.28
-
Casualty Losses
Schedule 8.6
-
Citizen Litigation
Schedule 8.8
-
Certain Citizen Tax Issues
Schedule 8.11
-
Citizen Consents
Schedule 8.12
-
Citizen Preferential Purchase Rights
Schedule 8.13(a)
-
Citizen Material Contracts
Schedule 8.13(b)
-
Certain Issues Relating to Citizen Material Contracts
Schedule 8.14
-
Citizen Environmental Matters
Schedule 8.15
-
Citizen Non-Consent Elections
Schedule 8.16
-
Citizen Royalty Issues
Schedule 8.17
-
Citizen Imbalances
Schedule 8.18
-
Citizen AFEs
Schedule 8.19
-
Citizen Plugged Wells
Schedule 8.20
-
Citizen Calls on Production
Schedule 8.25
-
Citizen Bonds
Schedule 8.26
-
Dedications
Schedule 8.27
-
AMIs
Schedule 8.28
-
Casualty Losses
Schedule 10.1(a)
-
Linn Interim Period Operations
Schedule 10.2(a)
-
Citizen Interim Period Operations



vii
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CONTRIBUTION AGREEMENT
THIS CONTRIBUTION AGREEMENT (as may be amended, restated, supplemented or otherwise modified from time to time, this “ Agreement ”) is dated as of June 27, 2017 (the “ Execution Date ”), by and among Linn Energy Holdings, LLC, a Delaware limited liability company (“ LEH ”), Linn Operating, LLC, a Delaware limited liability company (“ LOI ”, and together with LEH, “ Linn ”), Citizen Energy II, LLC, an Oklahoma limited liability company (“ Citizen ” and each of Linn and Citizen, a “ Transacting Party ” and collectively, the “ Transacting Parties ”) and Roan Resources LLC, a Delaware limited liability company (the “ Company ”, and each of the Company, Linn and Citizen, a “ Party ”, and collectively, the “ Parties ”).
RECITALS:
A.      WHEREAS, Linn owns certain interests in oil and gas properties, rights and related assets that are defined and described herein as the Linn Assets.
B.      WHEREAS, Citizen owns certain interests in oil and gas properties, rights and related assets that are defined and described herein as the Citizen Assets.
C.      WHEREAS, Linn and its Affiliates own and operate certain plants, gathering systems and related midstream infrastructure defined and described herein as “Linn Excluded Midstream Assets” that are not part of the Linn Assets and are to be treated as Linn Excluded Assets for all purposes of this Agreement.
D.      WHEREAS, on May 13, 2017, the Transacting Parties formed the Company.
E.      WHEREAS, at the Closing, Linn shall contribute to the Company the Linn Assets in exchange for the issuance by the Company to Linn of certain equity interests in the Company; and
F.      WHEREAS, at the Closing, Citizen shall contribute to the Company the Citizen Assets in exchange for the issuance by the Company to Citizen of certain equity interests in the Company.
NOW, THEREFORE, in consideration of the premises and of the mutual promises, representations, warranties, covenants, conditions and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound by the terms hereof, agree as follows:
ARTICLE 1
DEFINITIONS AND INTERPRETATION
Section 1.1      Defined Terms . Unless the context otherwise requires, the capitalized terms used herein and not otherwise defined shall have the meanings set forth in Appendix A .
Section 1.2      References and Rules of Construction . In this Agreement, except as otherwise expressly provided herein: (a) pronouns in the masculine, feminine and neuter genders

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shall be construed to include any other gender, and words in the singular form shall be construed to include the plural and vice versa; (b) the term “including” shall be construed to be expansive rather than limiting in nature and to mean “including, without limitation;” (c) references to Articles and Sections refer to Articles and Sections of this Agreement; (d) the words “this Agreement,” “herein,” “hereof,” “hereby,” “hereunder” and words of similar import refer to this Agreement as a whole, including the Appendix, Exhibits and Schedules attached to this Agreement, and not to any particular subdivision unless expressly so limited; (e) references in any Article or Section or definition to any clause means such clause of such Article, Section or definition; (f) references to the Appendix, Exhibits and Schedules are to the items attached hereto as the described Appendix, Exhibits or Schedules hereto, each of which is hereby incorporated herein and made a part of this Agreement for all purposes as if set forth in full herein; (g) references to dollars or money refer to the lawful currency of the United States; (h) references to “federal” or “Federal” mean U.S. federal or U.S. Federal, respectively; (i) references to the “IRS” or the “Internal Revenue Service” refer to the United States Internal Revenue Service; (j) references to “Revenue Procedures,” or “Revenue Rulings” refer to Revenue Procedures or Revenue Rulings, respectively, published by the Internal Revenue Service; (k) references to any agreement (including this Agreement), document or instrument means such agreement, document or instrument as amended or modified (including any waiver or consent) and in effect from time to time in accordance with the terms thereof; and (l) references to any Law means such Law as amended, modified, codified, reenacted or replaced and in effect from time to time. The Table of Contents and the Article and Section titles and headings in this Agreement are inserted for convenience of reference only and are not intended to be a part of, or to affect the meaning or interpretation of, this Agreement.
ARTICLE 2
CONTRIBUTION
Section 2.1      Contribution . At the Closing, subject to the terms and conditions of this Agreement: (a) Linn shall contribute to the Company the Linn Assets; and (b) Citizen shall contribute to the Company the Citizen Assets.
ARTICLE 3
CONSIDERATION
Section 3.1      Consideration .
(a)      Linn Consideration . Subject to the terms and conditions of this Agreement, the aggregate consideration for the contribution of the Linn Assets shall be the issuance by the Company to Linn at Closing of an aggregate of 1,500,000,000 Units of the Company having an agreed aggregate value as of Closing of $1,500,000,000 (the “ Initial Linn Agreed Value ”) and a per Unit value of $1.00, which aggregate value represents the value of the Linn Assets (the “ Linn Consideration Units ”, and together with the Citizen Consideration Units, the “ Total Consideration ”).
(b)      Citizen Consideration . Subject to the terms and conditions of this Agreement, the aggregate consideration for the contribution of the Citizen Assets shall be the issuance by the Company to Citizen at Closing of an aggregate of 1,500,000,000 Units of the

2
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Company having an agreed aggregate value as of Closing of $1,500,000,000 (the “ Initial Citizen Agreed Value ”) and a per Unit value of $1.00, which aggregate value represents the value of the Citizen Assets (the “ Citizen Consideration Units ”).
Section 3.2      Linn Adjustments .
(a)      Adjustments to Initial Linn Agreed Value .
(i)      The Linn Consideration Units shall be adjusted pursuant to Section 3.2(b) based on the following adjustments to the Initial Linn Agreed Value:
(A)      upward by an amount equal to the value (using the per MMBtu or per barrel value, as applicable, set forth in subparagraph (E) below) of all (I) Hydrocarbons attributable to the Linn Leases and/or Linn Wells in pipelines or in tanks above the pipeline sales connection, in each case, as of the Effective Time, plus (II) the unsold inventory of gas products attributable to the Linn Leases and/or Linn Wells as of the Effective Time, in each case such value to be based upon the arms-length contract price in effect as of the Effective Time (or if no such arms-length contract is in effect, the market value in the area as of the Effective Time), less (1) amounts payable as royalties, overriding royalties and other burdens upon, measured by or payable out of such production and (2) severance Taxes deducted by the purchaser of such production;
(B)      upward by an amount equal to all Property Expenses paid by Linn to Third Parties and those costs and expenses paid by Linn to Linn Midstream, LLC pursuant to that certain Amended and Restated Linn Midstream Agreement (excluding, however, those Liabilities set forth in items (a) through (j) in the definition of “Property Expenses”, and excluding any costs or expenses for which Linn is obligated to indemnify Citizen or the Company, and also excluding any of Linn’s costs and expenses related to the transactions contemplated in this Agreement, or to any legal fees, investment banker fees and consultant and advisor fees relating thereto, and also excluding any costs or expenses associated with any Linn Casualty Losses) that are attributable to the ownership or operation of the Linn Assets from and after the Effective Time (whether paid before or after the Effective Time);
(C)      upward by the amount of all Asset Taxes prorated to the Company in accordance with Article 16 but paid or payable by Linn;
(D)      upward in accordance with Section 4.2(e)(iv) ;
(E)      to the extent that Linn maintains an under produced Well Imbalance with respect to any Linn Well as of the Effective Time and the over produced parties are not Affiliates of Linn, upward by the sum of the product of the following for each such Linn Well: (A) the under produced volumes for such Linn Well as of the Effective Time times (B)

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$2.71/MMBtu for gaseous Hydrocarbons, and an amount equal to the product of (x) the under produced volumes times (y) $45.00/Bbl for oil, or $22.50/Bbl for natural gas liquids, as applicable;
(F)      to the extent that Linn maintains an under delivered Pipeline Imbalance with respect to any Linn Contract as of the Effective Time and none of the other parties to such Linn Contract are Affiliates of Linn, upward by the sum of the product of the following for each such Linn Contract: (A) the under delivered volumes for such Linn Contract as of the Effective Time times (B) $2.71/MMBtu for gaseous Hydrocarbons, and an amount equal to the product of (x) the under delivered volumes times (y) $45.00/Bbl for oil, or $22.50/Bbl for natural gas liquids, as applicable;
(G)      to the extent that Linn maintains an over produced Well Imbalance with respect to any Linn Well as of the Effective Time and the under produced parties are not Affiliates of Linn, downward by the sum of the product of the following for each such Linn Well: (A) the over produced volumes for such Linn Well as of the Effective Time times (B) $2.71/MMBtu for gaseous Hydrocarbons, and an amount equal to the product of (x) the over produced volumes times (y) $45.00/Bbl for oil, or $22.50/Bbl for natural gas liquids, as applicable;
(H)      to the extent that Linn maintains an over delivered Pipeline Imbalance with respect to any Linn Contract as of the Effective Time and none of the other parties to such Linn Contract are Affiliates of Linn, downward by the sum of the product of the following for each such Linn Contract: (A) the over delivered volumes for such Linn Contract as of the Effective Time times (B) $2.71/MMBtu for gaseous Hydrocarbons, and an amount equal to the product of (x) the over delivered volumes times (y) $45.00/Bbl for oil, or $22.50/Bbl for natural gas liquids, as applicable;
(I)      downward by an amount equal to the Linn Suspense Funds;
(J)      downward by an amount equal to all proceeds received by Linn attributable to the ownership or operation of the Linn Assets from and after the Effective Time, including the sale of Hydrocarbons produced from the Linn Assets or allocable thereto, net of any sales, excise or similar Taxes in connection therewith not reimbursed to Linn or its Affiliates, as applicable, by a Third Party purchaser;
(K)      downward by the amount of all Asset Taxes prorated to Linn in accordance with Article 16 but paid or payable by the Company;
(L)      downward in accordance with Section 4.2(d) (but subject always to Section 4.2(e) );
(M)      downward in accordance with Section 4.5(b) ;

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(N)      downward in accordance with Section 4.5(e) ;
(O)      downward in accordance with Section 4.7(b) ;
(P)      downward in accordance with Section 6.1(b); and
(Q)      as otherwise adjusted in accordance with any other provisions of this Agreement.
(ii)      No adjustment may be accounted for in more than one of Section 3.2(a)(i)(A) through Section 3.2(a)(i)(Q) .
(iii)      Not less than five (5) Business Days prior to Closing, Linn shall prepare and submit to Citizen for review a draft settlement statement (the “ Linn Closing Settlement Statement ”) calculating the adjustments (if any) to the Initial Linn Agreed Value determined by Linn in good faith in accordance with Section 3.2(a)(i) . Within three (3) Business Days after receipt of the Linn Closing Settlement Statement, Citizen has the right to deliver to Linn a written report containing all changes with the explanation therefor that Citizen proposes to be made to the Linn Closing Settlement Statement, and Linn shall consider such proposed changes in good faith. The Linn Closing Settlement Statement, as agreed upon by the Transacting Parties, will be used to adjust the Initial Linn Agreed Value at Closing; provided that if the Transacting Parties do not agree upon an adjustment set forth in the Linn Closing Settlement Statement, then the amount of such adjustment used to adjust the Initial Linn Agreed Value at Closing shall be that amount set forth in the draft Linn Closing Settlement Statement delivered by Linn to Citizen pursuant to this Section 3.2(a)(iii) . The aggregate dollar amount of the adjustments to the Initial Linn Agreed Value as set forth in the Linn Closing Settlement Statement is hereinafter referred to as the “ Preliminary Linn Adjustment Amount ”.
(b)      Adjustments to Linn Consideration Units .
(i)      If the Preliminary Linn Adjustment Amount is a positive amount (the “ Positive Linn Adjustment Amount ”), the number of Linn Consideration Units to be issued to Linn at Closing shall be increased by one Linn Consideration Unit for every $1.00 of Positive Linn Adjustment Amount. If the Preliminary Linn Adjustment Amount is a negative amount (the “ Negative Linn Adjustment Amount ”), the number of Linn Consideration Units to be issued to Linn at Closing shall be decreased by one Linn Consideration Unit for every $1.00 of Negative Linn Adjustment Amount. If the Preliminary Linn Adjustment Amount is zero dollars, the Linn Consideration Units shall not be adjusted pursuant to this Section 3.2(b)(i) . The number of Linn Consideration Units to be issued to Linn at Closing, as may be adjusted pursuant to this Section 3.2(b) , is hereinafter referred to as the “ Closing Linn Consideration Units .”
(ii)      As soon as reasonably practicable after the Closing but not later than the first (1 st ) Business Day following the expiration of one hundred fifty (150) days following the Closing, Citizen shall prepare and deliver to Linn a draft statement (the “ Post-Closing Citizen Statement ”) setting forth the final calculation of the proposed adjustment to the Preliminary Linn Adjustment Amount. As soon as reasonably practicable, but not later than the first (1 st ) Business Day following the expiration of thirty (30) days following receipt of the Post-Closing Citizen Statement, Linn shall deliver to Citizen a written report (a “ Linn Adjustment

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Notice ”) containing any changes that Linn proposes be made in such statement. Citizen shall be deemed to have accepted and agreed to all items and amounts in the Preliminary Linn Adjustment Amount (and the Linn Closing Settlement Statement) except to the extent Citizen timely delivers to Linn the Post-Closing Citizen Statement. Linn shall be deemed to have accepted and agreed to all items and amounts included in the Post-Closing Citizen Statement other than such matters and amounts that are proposed to be changed in the Linn Adjustment Notice timely delivered to Citizen.
(iii)      If Citizen fails to deliver timely to Linn the Post-Closing Citizen Statement, the Closing Linn Consideration Units shall not be subject to further adjustment under this Section 3.2 and the Preliminary Linn Adjustment Amount shall constitute the “ Final Linn Adjustment Amount ” and such Final Linn Adjustment Amount shall be conclusive and binding on the Parties. If Linn fails to deliver timely to Citizen the Linn Adjustment Notice, the final calculation of the proposed adjustment to the Preliminary Linn Adjustment Amount as set forth in the Post-Closing Citizen Statement shall constitute the “ Final Linn Adjustment Amount ” and such Final Linn Adjustment Amount shall be conclusive and binding on the Parties. Notwithstanding the foregoing provisions of this Section 3.2(b)(iii) , nothing in this Section 3.2 is a limitation on any other adjustment to the Closing Linn Consideration Units provided under the other provisions of this Agreement or the LLC Agreement.
(iv)      The Transacting Parties shall undertake to agree on the adjustments, if any, to the Preliminary Linn Adjustment Amount no later than ten (10) Business Days after Linn’s timely delivery of the Linn Adjustment Notice to Citizen. If the Transacting Parties mutually agree in writing within such ten (10) Business Days that (x) no adjustments shall be made to the Preliminary Linn Adjustment Amount or (y) they agree in writing to all adjustments to such amount within such ten (10) Business Days, the Preliminary Linn Adjustment Amount (as it may be so adjusted as provided in clause (y) ) shall constitute the “ Final Linn Adjustment Amount ” and such Final Linn Adjustment Amount shall be conclusive and binding on the Parties. If the Final Linn Adjustment Amount is not determined during such ten (10) Business Day period, then Deloitte (the “ Dispute Auditor ”) shall resolve any disagreements with respect thereto. Should Deloitte fail or refuse to agree to serve as Dispute Auditor within ten (10) Business Days after written request from either Transacting Party to serve, and the Transacting Parties fail to agree in writing on a replacement Dispute Auditor within five (5) Business Days after the end of that ten (10) Business Day period, or should no replacement Dispute Auditor agree to serve within fifteen (15) days after the original written request pursuant to this sentence, the Dispute Auditor shall be appointed by the Dallas, Texas office of the American Arbitration Association. In connection with the engagement of the Dispute Auditor, each of the Transacting Parties shall execute such engagement, indemnity and other agreements as the Dispute Auditor shall reasonably require as a condition to such engagement. The Dispute Auditor shall determine as promptly as practicable, but in any event within thirty (30) days after the selection of the Dispute Auditor, based solely on written submissions provided by the Transacting Parties to the Dispute Auditor (and without independent investigation on the part of the Dispute Auditor) within ten (10) Business Days following the Dispute Auditor's selection, whether and to what extent (if any) the Linn Adjustment Notice requires adjustment. In resolving any disputed item, the Dispute Auditor shall act as an expert and not an arbitrator, and shall resolve only the items set forth in the Linn Adjustment Notice that are still in dispute and may not assign a value to any item greater than the highest value for such item claimed by either Transacting Party or less than the lowest value for

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such item claimed by either Transacting Party. The fees and expenses of the Dispute Auditor shall be paid by 50% by Linn and 50% by Citizen. The determination by the Dispute Auditor of adjustments (if any) to the Preliminary Linn Adjustment Amount shall be final, conclusive and binding on the Parties. The Preliminary Linn Adjustment Amount, as it may be adjusted by the Dispute Auditor and as otherwise agreed in writing by the Transacting Parties, shall constitute the “ Final Linn Adjustment Amount ” and such Final Linn Adjustment Amount shall be conclusive and binding on the Parties.
(v)      The date on which the Final Linn Adjustment Amount is finally determined in accordance with this Section 3.2(b) is hereinafter referred to as the “ Final Linn Adjustment Determination Date .”
(vi)     
(A)      If the Final Linn Adjustment Amount is greater than the Preliminary Linn Adjustment Amount (the positive difference, the “ Increased Linn Amount ”), then the Company shall issue to Linn one additional Linn Consideration Unit (without the payment of any consideration therefor) for every $1.00 of Increased Linn Amount.
(B)      If the Preliminary Linn Adjustment Amount is greater than the Final Linn Adjustment Amount (the positive difference, the “ Decreased Linn Amount ”), then the number of Closing Linn Consideration Units shall be reduced one Linn Consideration Unit for every $1.00 of Decreased Linn Amount.
(C)      If the sum of the Initial Citizen Agreed Value and the Final Citizen Adjustment Amount (the “ Relevant Citizen Value ”) is greater than the sum of the Initial Linn Agreed Value and the Final Linn Adjustment Amount (the “ Relevant Linn Value ”) (such positive difference between the Relevant Citizen Value minus the Relevant Linn Value, the “ Linn Delta Value ”), then on or before ten (10) Business Days after the later to occur of the Final Linn Adjustment Determination Date or the Final Citizen Adjustment Determination Date, Linn shall have a one-time optional right (but not an obligation) to contribute to the Company an amount of cash and/or agreed value (through the contribution of Linn Additional Leases, which value shall be computed as described in Section 4.2(e)(vii) , and otherwise in accordance with the provisions of Section 4.2(e) below (to the extent Linn Additional Leases are used for this purpose, they are herein referred to as “ Linn True-Up Leases ”)) up to an amount equal to the Linn Delta Value, and the Company shall issue one additional Closing Linn Consideration Unit for every $1.00 so contributed to the Company by Linn pursuant to this Section 3.2(b)(vi)(C) . If the Relevant Citizen Value is less than the Relevant Linn Value, this Section shall not apply.
(vii)      Citizen shall assist Linn in the preparation of the Linn Adjustment Notice and reviewing and verifying the Post-Closing Citizen Statement by furnishing invoices, receipts, reasonable access to personnel and such other assistance as may be reasonably requested by Linn in connection therewith.
Section 3.3      Citizen Adjustments .

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(a)      Adjustments to Initial Citizen Agreed Value .
(i)      The Citizen Consideration Units shall be adjusted pursuant to Section 3.3(b) based on the following adjustments to the Initial Citizen Agreed Value:
(A)      upward by an amount equal to the value (using the per MMBtu or per barrel value, as applicable, set forth in subparagraph (E) below) of all (I) Hydrocarbons attributable to the Citizen Leases and/or Citizen Wells in pipelines or in tanks above the pipeline sales connection, in each case, as of the Effective Time, plus (II) the unsold inventory of gas products attributable to the Citizen Leases and/or Citizen Wells as of the Effective Time, in each case such value to be based upon the arms-length contract price in effect as of the Effective Time (or if no such arms-length contract is in effect, the market value in the area as of the Effective Time), less (1) amounts payable as royalties, overriding royalties and other burdens upon, measured by or payable out of such production and (2) severance Taxes deducted by the purchaser of such production;
(B)      upward by an amount equal to all Property Expenses paid by Citizen to Third Parties (excluding, however, those Liabilities set forth in items (a) through (j) in the definition of “Property Expenses”, and excluding any costs or expenses for which Citizen is obligated to indemnify Linn or the Company, and also excluding any of Citizen’s costs and expenses related to the transactions contemplated in this Agreement, or to any legal fees, investment banker fees and consultant and advisor fees relating thereto, and also excluding any costs or expenses associated with any Citizen Casualty Losses) that are attributable to the ownership or operation of the Citizen Assets from and after the Effective Time (whether paid before or after the Effective Time);
(C)      upward by the amount of all Asset Taxes prorated to the Company in accordance with Article 16 but paid or payable by Citizen;
(D)      upward in accordance with Section 4.3(e)(iv) ;
(E)      to the extent that Citizen maintains an under produced Well Imbalance with respect to any Citizen Well as of the Effective Time and the over produced parties are not Affiliates of Citizen, upward by the sum of the product of the following for each such Citizen Well: (A) the under produced volumes for such Citizen Well as of the Effective Time times (B) $2.71/MMBtu for gaseous Hydrocarbons, and an amount equal to the product of (x) the under produced volumes times (y) $45.00/Bbl for oil, or $22.50/Bbl for natural gas liquids, as applicable;
(F)      to the extent that Citizen maintains an under delivered Pipeline Imbalance with respect to any Citizen Contract as of the Effective Time and none of the other parties to such Citizen Contract are Affiliates

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of Citizen, upward by the sum of the product of the following for each such Citizen Contract: (A) the under delivered volumes for such Citizen Contract as of the Effective Time times (B) $2.71/MMBtu for gaseous Hydrocarbons, and an amount equal to the product of (x) the under delivered volumes times (y) $45.00/Bbl for oil, or $22.50/Bbl for natural gas liquids, as applicable;
(G)      to the extent that Citizen maintains an over produced Well Imbalance with respect to any Citizen Well as of the Effective Time and the under produced parties are not Affiliates of Citizen, downward by the sum of the product of the following for each such Citizen Well: (A) the over produced volumes for such Citizen Well as of the Effective Time times (B) $2.71/MMBtu for gaseous Hydrocarbons, and an amount equal to the product of (x) the over produced volumes times (y) $45.00/Bbl for oil, or $22.50/Bbl for natural gas liquids, as applicable;
(H)      to the extent that Citizen maintains an over delivered Pipeline Imbalance with respect to any Citizen Contract as of the Effective Time and none of the other parties to such Citizen Contract are Affiliates of Citizen, downward by the sum of the product of the following for each such Citizen Contract: (A) the over delivered volumes for such Citizen Contract as of the Effective Time times (B) $2.71/MMBtu for gaseous Hydrocarbons, and an amount equal to the product of (x) the over delivered volumes times (y) $45.00/Bbl for oil, or $22.50/Bbl for natural gas liquids, as applicable;
(I)      downward by an amount equal to the Citizen Suspense Funds;
(J)      downward by an amount equal to all proceeds received by Citizen attributable to the ownership or operation of the Citizen Assets from and after the Effective Time, including the sale of Hydrocarbons produced from the Citizen Assets or allocable thereto, net of any sales, excise or similar Taxes in connection therewith not reimbursed to Citizen or its Affiliates, as applicable, by a Third Party purchaser;
(K)      downward by the amount of all Asset Taxes prorated to Citizen in accordance with Article 16 but paid or payable by the Company;
(L)      downward in accordance with Section 4.3(d) (but subject always to Section 4.3(e) );
(M)      downward in accordance with Section 4.6(b) ;
(N)      downward in accordance with Section 4.6(e) ;
(O)      downward in accordance with Section 4.7(c) ;

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(P)      downward in accordance with Section 6.1(b) ; and
(Q)      as otherwise adjusted in accordance with any other provisions of this Agreement.
(ii)      No adjustment may be accounted for in more than one of Section 3.3(a)(i)(A) through Section 3.3(a)(i)(Q) .
(iii)      Not less than five (5) Business Days prior to Closing, Citizen shall prepare and submit to Linn for review a draft settlement statement (the “ Citizen Closing Settlement Statement ”) calculating the adjustments (if any) to the Initial Citizen Agreed Value determined by Citizen in good faith in accordance with Section 3.3(a)(i) . Within three (3) Business Days after receipt of the Citizen Closing Settlement Statement, Linn has the right to deliver to Citizen a written report containing all changes with the explanation therefor that Linn proposes to be made to the Citizen Closing Settlement Statement, and Citizen shall consider such proposed changes in good faith. The Citizen Closing Settlement Statement, as agreed upon by the Transacting Parties, will be used to adjust the Initial Citizen Agreed Value at Closing; provided that if the Transacting Parties do not agree upon an adjustment set forth in the Citizen Closing Settlement Statement, then the amount of such adjustment used to adjust the Initial Citizen Agreed Value at Closing shall be that amount set forth in the draft Citizen Closing Settlement Statement delivered by Citizen to Linn pursuant to this Section 3.3(a)(iii) . The aggregate dollar amount of the adjustments to the Initial Citizen Agreed Value as set forth in the Citizen Closing Settlement Statement is hereinafter referred to as the “ Preliminary Citizen Adjustment Amount ”.
(b)      Adjustments to Citizen Consideration Units .
(i)      If the Preliminary Citizen Adjustment Amount is a positive amount (the “ Positive Citizen Adjustment Amount ”), the number of Citizen Consideration Units to be issued to Citizen at Closing shall be increased by one Citizen Consideration Unit for every $1.00 of Positive Citizen Adjustment Amount. If the Preliminary Citizen Adjustment Amount is a negative amount (the “ Negative Citizen Adjustment Amount ”), the number of Citizen Consideration Units to be issued to Citizen at Closing shall be decreased by one Citizen Consideration Unit for every $1.00 of Negative Citizen Adjustment Amount. If the Preliminary Citizen Adjustment Amount is zero dollars, the Citizen Consideration Units shall not be adjusted pursuant to this Section 3.3(b)(i) . The number of Citizen Consideration Units to be issued to Citizen at Closing, as may be adjusted pursuant to this Section 3.3(b) , is hereinafter referred to as the “ Closing Citizen Consideration Units .”
(ii)      As soon as reasonably practicable after the Closing but not later than the first (1 st ) Business Day following the expiration of one hundred fifty (150) days following the Closing, Linn shall prepare and deliver to Citizen a draft statement (the “ Post-Closing Linn Statement ”) setting forth the final calculation of the proposed adjustment to the Preliminary Citizen Adjustment Amount. As soon as reasonably practicable, but not later than the first (1 st ) Business Day following the expiration of thirty (30) days following receipt of the Post-Closing Linn Statement, Citizen shall deliver to Linn a written report (a “ Citizen Adjustment Notice ”) containing any changes that Citizen proposes be made in such statement.

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Linn shall be deemed to have accepted and agreed to all items and amounts in the Preliminary Citizen Adjustment Amount (and the Citizen Closing Settlement Statement) except to the extent Linn timely delivers to Citizen the Post-Closing Linn Statement. Citizen shall be deemed to have accepted and agreed to all items and amounts included in the Post-Closing Linn Statement other than such matters and amounts that are proposed to be changed in the Citizen Adjustment Notice timely delivered to Linn.
(iii)      If Linn fails to deliver timely to Citizen the Post-Closing Linn Statement, the Closing Citizen Consideration Units shall not be subject to further adjustment under this Section 3.3 and the Preliminary Citizen Adjustment Amount shall constitute the “ Final Citizen Adjustment Amount ” and such Final Citizen Adjustment Amount shall be conclusive and binding on the Parties. If Citizen fails to deliver timely to Linn the Citizen Adjustment Notice, the final calculation of the proposed adjustment to the Preliminary Citizen Adjustment Amount as set forth in the Post-Closing Linn Statement shall constitute the “ Final Citizen Adjustment Amount ” and such Final Citizen Adjustment Amount shall be conclusive and binding on the Parties. Notwithstanding the foregoing provisions of this Section 3.3(b)(iii) , nothing in this Section 3.3 is a limitation on any other adjustment to the Closing Citizen Consideration Units provided under the other provisions of this Agreement or the LLC Agreement.
(iv)      The Transacting Parties shall undertake to agree on the adjustments, if any, to the Preliminary Citizen Adjustment Amount no later than ten (10) Business Days after Citizen’s timely delivery of the Citizen Adjustment Notice to Linn. If the Transacting Parties mutually agree in writing within such ten (10) Business Days that (x) no adjustments shall be made to the Preliminary Citizen Adjustment Amount or (y) they agree in writing to all adjustments to such amount within such ten (10) Business Days, the Preliminary Citizen Adjustment Amount (as it may be so adjusted as provided in clause (y) ) shall constitute the “ Final Citizen Adjustment Amount ” and such Final Citizen Adjustment Amount shall be conclusive and binding on the Parties. If the Final Citizen Adjustment Amount is not determined during such ten (10) Business Day period, then Deloitte, as the Dispute Auditor, shall resolve any disagreements with respect thereto. Should Deloitte fail or refuse to agree to serve as Dispute Auditor within ten (10) Business Days after written request from either Transacting Party to serve, and the Transacting Parties fail to agree in writing on a replacement Dispute Auditor within five (5) Business Days after the end of that ten (10) Business Day period, or should no replacement Dispute Auditor agree to serve within fifteen (15) days after the original written request pursuant to this sentence, the Dispute Auditor shall be appointed by the Dallas, Texas office of the American Arbitration Association. In connection with the engagement of the Dispute Auditor, each of the Transacting Parties shall execute such engagement, indemnity and other agreements as the Dispute Auditor shall reasonably require as a condition to such engagement. The Dispute Auditor shall determine as promptly as practicable, but in any event within thirty (30) days after the selection of the Dispute Auditor, based solely on written submissions provided by the Transacting Parties to the Dispute Auditor (and without independent investigation on the part of the Dispute Auditor) within ten (10) Business Days following the Dispute Auditor's selection, whether and to what extent (if any) the Citizen Adjustment Notice requires adjustment. In resolving any disputed item, the Dispute Auditor shall act as an expert and not an arbitrator, and shall resolve only the items set forth in the Citizen Adjustment Notice that are still in dispute and may not assign a value to any item greater than the highest value for such item claimed by either Transacting Party or less than

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the lowest value for such item claimed by either Transacting Party. The fees and expenses of the Dispute Auditor shall be paid by 50% by Citizen and 50% by Linn. The determination by the Dispute Auditor of adjustments (if any) to the Preliminary Citizen Adjustment Amount shall be final, conclusive and binding on the Parties. The Preliminary Citizen Adjustment Amount, as it may be adjusted by the Dispute Auditor and as otherwise agreed in writing by the Transacting Parties, shall constitute the “ Final Citizen Adjustment Amount ” and such Final Citizen Adjustment Amount shall be conclusive and binding on the Parties.
(v)      The date on which the Final Citizen Adjustment Amount is finally determined in accordance with this Section 3.3(b) is hereinafter referred to as the “ Final Citizen Adjustment Determination Date .”
(vi)     
(A)      If the Final Citizen Adjustment Amount is greater than the Preliminary Citizen Adjustment Amount (the positive difference, the “ Increased Citizen Amount ”), then the Company shall issue to Citizen one additional Citizen Consideration Unit (without the payment of any consideration therefor) for every $1.00 of Increased Citizen Amount.
(B)      If the Preliminary Citizen Adjustment Amount is greater than the Final Citizen Adjustment Amount (the positive difference, the “ Decreased Citizen Amount ”), then the number of Closing Citizen Consideration Units shall be reduced one Citizen Consideration Unit for every $1.00 of Decreased Citizen Amount.
(C)      If the Relevant Linn Value is greater than the Relevant Citizen Value (such positive difference between the Relevant Linn Value minus the Relevant Citizen Value, the “ Citizen Delta Value ”), then on or before ten (10) Business Days after the later to occur of the Final Citizen Adjustment Determination Date or the Final Linn Adjustment Determination Date, Citizen shall have a one-time optional right (but not an obligation) to contribute to the Company an amount of cash and/or agreed value (through the contribution of Citizen Additional Leases, which value shall be computed as described in Section 4.3(e)(vii) , and otherwise in accordance with the provisions of Section 4.3(e) below (to the extent Citizen Additional Leases are used for this purpose, they are herein referred to as “ Citizen True-Up Leases ”)) up to an amount equal to the Citizen Delta Value, and the Company shall issue one additional Closing Citizen Consideration Unit for every $1.00 so contributed to the Company by Citizen pursuant to this Section 3.3(b)(vi)(C) . If the Relevant Linn Value is less than the Relevant Citizen Value, this Section shall not apply.
(vii)      Linn shall assist Citizen in the preparation of the Citizen Adjustment Notice and reviewing and verifying the Post-Closing Linn Statement by furnishing invoices, receipts, reasonable access to personnel and such other assistance as may be reasonably requested by Citizen in connection therewith.
Section 3.4      Allocated Values .
(a)      The Total Consideration has been allocated by the Parties among the Linn Assets and the Citizen Assets as set forth on Schedule 3.4A , Schedule 3.4B (Part I) and Schedule 3.4B

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(Part II) (the “ Allocated Values ”). For the avoidance of doubt, in the event that any Linn Well or Citizen Well identified on Exhibit A-2 (Part I) or Exhibit A-2 (Part II), as applicable, is not allocated value in Schedule 3.4B (Part I) or Schedule 3.4B (Part II), such Linn Well or Citizen Well shall be deemed to have an Allocated Value of $0.

(b)      On or before the first (1 st ) Business Day following the expiration of thirty (30) days after the date on which all adjustments have been determined under Section 3.2 and Section 3.3 , the Company shall prepare and deliver to the Transacting Parties a schedule allocating the dollar value of the Total Consideration and any other amounts treated as consideration for U.S. federal income tax purposes, as adjusted, among the Linn Assets and the Citizen Assets consistent with the Allocated Values and in accordance with Section 1060 of the Code and the Treasury Regulations promulgated thereunder (and any similar provision of Law, as appropriate) (the “ Allocation Schedule ”). If the Transacting Parties agree to an Allocation Schedule, such Allocation Schedule shall be the “ Final Allocation Schedule .” If, within thirty (30) days after delivery of such Allocation Schedule in accordance with the first sentence of this Section 3.4(b) , the Transacting Parties fail to agree in writing upon a Final Allocation Schedule, the Transacting Parties shall submit the disputed matters to binding arbitration to be conducted in accordance with Section 3.2(b)(iv) , but subject to the further provisions of Article 4 as for title matters, to finally determine the proper allocation of value, and shall request that the Dispute Auditor issue a final allocation schedule (which shall then be the Final Allocation Schedule) within thirty (30) days of the submission of the dispute.
(c)      Each Party agrees that it will take no position inconsistent with, and will support the validity of, the allocations set forth on the Final Allocation Schedule on any applicable Tax Return, in any audit or proceeding before any Governmental Body related to Taxes, in any report made for Tax, financial accounting or any other purpose, except as otherwise required by Law or with the consent of the other Parties (not to be unreasonably withheld, conditioned or delayed); provided , however , that nothing contained herein shall prevent any Party from settling any proposed deficiency or adjustment by any Governmental Body based upon or arising out of the Final Allocation Schedule, and no Party shall be required to litigate before any court any proposed deficiency or adjustment by any Governmental Body challenging such Final Allocation Schedule. In the event that the Final Allocation Schedule described herein is disputed by any Governmental Body, the Party receiving notice of the dispute shall promptly notify the other Parties of the existence and nature of the dispute.
Section 3.5      Resolution of Final Linn Adjustment Amount and Final Citizen Adjustment Amount . The Transacting Parties will endeavor in good faith to contemporaneously finalize or otherwise resolve the Final Linn Adjustment Amount and the Final Citizen Adjustment Amount, to the extent reasonably practicable, but neither Transacting Party shall have any liability under this Section 3.5 to the extent the Final Linn Adjustment Amount and the Final Citizen Adjustment Amount are not so contemporaneously finalized or otherwise resolved.
Section 3.6      Allocation of Costs and Revenues . The term “incurred,” as used in this Agreement shall be interpreted in accordance with GAAP and COPAS standards, except as otherwise specified in this Agreement. For purposes of allocating production and proceeds

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received with respect thereto under Sections 3.2 and 3.3 , (a) liquid Hydrocarbons shall be deemed to be “from or attributable to” the Linn Assets or the Citizen Assets, as applicable, when they pass through the pipeline connecting into the storage facilities into which they are run and (b) gaseous Hydrocarbons shall be deemed to be “from or attributable to” the Linn Assets or the Citizen Assets, as applicable, when they pass through the royalty measurement meters, delivery point sales meters, or custody transfer meters on the gathering lines or pipelines through which they are transported (whichever meter is closest to the well). Linn and Citizen shall utilize reasonable interpolative procedures, consistent with industry practice, to arrive at an allocation of production from or attributable to the Linn Assets or the Citizen Assets, as applicable, when exact meter readings or gauging and strapping data are not available.
ARTICLE 4
TITLE MATTERS
Section 4.1      General Disclaimer of Title Warranties and Representations . Without limiting the remedies for (I) Linn Title Defects or Citizen Title Defects set forth in this Article 4 and (II) each Party’s rights to indemnity under Article 15 , and except for the special warranties of title set forth in the Assignments:
(a)      Linn makes no representation or warranty, express or implied, statutory or otherwise, with respect to title to any of the Linn Assets or the Linn Additional Assets, and the sole remedy for any Linn Title Defect with respect to any of the Linn Assets or the Linn Additional Assets shall be as set forth in this Article 4 ; and
(b)      Citizen makes no representation or warranty, express or implied, statutory or otherwise, with respect to title to any of the Citizen Assets or the Citizen Additional Assets, and the sole remedy for any Citizen Title Defect with respect to any of the Citizen Assets or the Citizen Additional Assets shall be as set forth in this Article 4 .
Section 4.2      Linn Title Defects and Linn Title Benefits .
(a)      Linn Title Defect Notices . On or prior to the last day of the Review Period, Citizen shall have the right to assert claims for Linn Title Defects against Linn in accordance with this Section 4.2(a) . To assert a Linn Title Defect, Citizen shall give written notice prior to the end of the Review Period to Linn via email or writing meeting the requirements of this Section 4.2(a) (each, a “ Linn Title Defect Notice ” and collectively, the “ Linn Title Defect Notices ”). Except for the special warranty of title in the Linn Assignment and without limiting any rights to indemnity pursuant to Article 15 , any matters that may otherwise constitute Linn Title Defects but that are not alleged in any Linn Title Defect Notice prior to the expiration of the Review Period shall be deemed to have been waived by Citizen. To be effective, each Linn Title Defect Notice shall be in writing or email, and shall include (i) a reasonable description of each alleged Linn Title Defect, (ii) the Linn Assets or portion thereof affected thereby (each, a “ Linn Title Defect Property ”), (iii) supporting documents reasonably necessary to verify the existence of the alleged Linn Title Defect(s), and (iv) Citizen’s good faith estimate of the Linn Title Defect Amount for such Linn Title Defect and the computations upon which Citizen’s estimate is based. Citizen will also use reasonable efforts (without any liability for failure to do so) to promptly furnish to Linn written notice during the Review Period of any

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Linn Title Benefit with respect to which Citizen acquired Knowledge during the Review Period, or discovered during the Review Period, to Citizen’s Knowledge, by any of its Affiliates, employees, title attorneys, landmen or other title examiners prior to the end of the Review Period.
(b)      Title Benefit Notices . On or prior to the last day of the Review Period, Linn shall have the right to assert Linn Title Benefits in accordance with this Section 4.2(b) . To assert a Linn Title Benefit, Linn shall give written notice prior to the end of the Review Period to Citizen via email (with hardcopy sent for delivery the day after the end of the Review Period) meeting the requirements of this Section 4.2(b) (each, a “ Linn Title Benefit Notice ” and collectively, the “ Linn Title Benefit Notices ”). To be effective, each Linn Title Benefit Notice shall include (i) a reasonable description of each alleged Linn Title Benefit, (ii) the Linn Assets or portion thereof affected thereby, (iii) supporting documents in Linn’s possession reasonably necessary for Citizen to verify the existence of the alleged Linn Title Benefit(s), and (iv) Linn’s good faith estimate of the Linn Title Benefit Amount for such Linn Title Benefit and the computations upon which Linn’s estimate is based. Any matters that may otherwise constitute Linn Title Benefits but that are not alleged in any Linn Title Benefit Notice prior to the expiration of the Review Period shall be deemed to have been waived by Linn.
(c)      Right to Cure; Right to Dispute .
(i)      Linn shall have the option, but not the obligation, to attempt to cure, or cause to be cured, at its sole cost and expense, any Linn Title Defects within ninety (90) days following the Closing (the “ Title Cure Period ”).
(ii)      Prior to the Scheduled Closing Date, Linn and Citizen shall attempt to agree on all disputes related to the existence of any Linn Title Defect or Linn Title Benefit or the applicable Linn Title Defect Amount or Linn Title Benefit Amount with respect thereto or the effect of any curative actions with respect to any Linn Title Defect. With regard to any Linn Asset that is subject to such an unresolved dispute as to a Linn Title Defect as of the Closing, and the alleged Title Defect Amount is less than or equal to 90% of the Allocated Value of the affected Linn Asset, then such Linn Asset shall nevertheless be conveyed at Closing without adjustment to the Initial Linn Agreed Value for such disputed Linn Title Defect. Upon resolution of such dispute under Section 4.4 , appropriate adjustments shall be made to the Initial Linn Agreed Value in accordance with Section 3.2 . With regard to any Linn Asset that is subject to such an unresolved dispute as to Linn Title Defects as of the Closing, and the alleged Title Defect Amount is greater than 90% of the Allocated Value of the affected Linn Asset, then such Linn Asset shall be retained at Closing, and treated as a Linn Excluded Asset hereunder. If it is ultimately determined pursuant to Section 4.4 that the actual Title Defect Amount burdening such Linn Asset is less than or equal to 90% of the Allocated Value of such Linn Asset, within five (5) Business Days of such determination, Linn shall convey such Linn Asset to the Company pursuant to a Linn Assignment and the Initial Linn Agreed Value shall be adjusted in accordance with Section 3.2 to reflect the contribution of such Linn Asset to the Company.


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(d)      Remedies for Linn Title Defects and Linn Title Benefits .
(i)      Subject to Sections 4.2(d)(ii) , 4.2(d)(iii) and 4.2(d)(iv) , upon the final determination of the existence of any uncured Linn Title Defect and Linn Title Defect Amount relating thereto (whether by written agreement between the Transacting Parties or under Section 4.4 ), the Initial Linn Agreed Value shall be reduced by such Linn Title Defect Amount (or if the Closing has already occurred as of such time, the number of Closing Linn Consideration Units shall be reduced by one Closing Linn Consideration Unit for every $1.00 of such Linn Title Defect Amount) in full satisfaction of such Linn Title Defect.
(ii)      Notwithstanding anything to the contrary herein, with respect to Linn Title Defects for which the Linn Title Defect Amount exceeds 90% of the Allocated Value of the affected Linn Title Defect Property, Linn or Citizen shall have the right but not the obligation to exclude the entirety of the Linn Title Defect Property, together with all Linn Assets associated with such Linn Title Defect Property, in which event the Initial Linn Agreed Value shall be reduced by the Allocated Value of such Linn Title Defect Property and associated Linn Assets in full satisfaction of such Linn Title Defect (except to the extent such Linn Title Defect pertains to other Linn Assets that are not so excluded), and such Linn Title Defect Property, together with all Linn Assets associated with such Linn Title Defect Property, shall be deemed Linn Excluded Assets hereunder for all purposes. Any such election must be made by a Transacting Party by notice to the other Transacting Party on or before the Closing, and failure of a Transacting Party to so make such an election shall be deemed a waiver by such Transacting Party of its rights under this Section 4.2(d)(ii) .
(iii)      Notwithstanding anything to the contrary in Section 4.2(d)(i) , in no event shall there be any adjustments to the Initial Linn Agreed Value or Closing Linn Consideration Units under Section 4.2(d)(i) in respect of Linn Title Defects, and Linn shall not be responsible for any Linn Title Defect Amounts unless the sum of (X) the aggregate Linn Title Defect Amounts of all such Linn Title Defects, after setting off all Linn Title Benefit Amounts and excluding any Linn Title Defect Amounts attributable to Linn Title Defects cured by Linn pursuant to Section 4.2(c)(ii) or Section 4.2(e) or Linn Title Defect Properties retained by Linn pursuant to Section 4.2(d)(ii) (it being acknowledged and agreed that the Initial Linn Agreed Value shall be reduced at Closing for the Allocated Value of the retained or excluded Linn Title Defect Properties) and (Y) the aggregate Remediation Amounts of all Linn Environmental Defects that exceed the Individual Environmental Threshold (excluding any Remediation Amounts attributable to Linn Environmental Defects cured by Linn pursuant to Section 5.1(b)(i) or (2) Linn Environmental Defect Properties retained by Linn pursuant to Section 5.1(c)(ii) ) (it being acknowledged and agreed that the Initial Linn Agreed Value shall be reduced at Closing for the Allocated Value of the retained or excluded Linn Environmental Defect Properties), exceeds 2.0% of the Initial Linn Agreed Value prior to any adjustments to the Initial Linn Agreed Value under this Agreement (the “ Linn Aggregate Deductible ”), in which case, the adjustments to the Initial Linn Agreed Value or Closing Linn Consideration Units under Section 4.2(d)(i) shall only be for the amount by which such total exceeds the Linn Aggregate Deductible.
(iv)      Notwithstanding the foregoing Sections 4.2(d)(i) and (iii) , the Linn Title Benefit Amount of any Linn Title Benefit shall serve only to reduce the aggregate Linn

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Title Defect Amount, and in no event shall any Linn Title Benefit Amount otherwise result in any adjustment to the Initial Linn Agreed Value or Closing Linn Consideration Units.
(e)      Linn Additional Assets; Cures with Linn Additional Leases; Adjustments to Initial Linn Agreed Value or Closing Linn Consideration Units for Linn Additional Assets .
(i)      Until the Closing, Linn may acquire Linn Additional Assets, and Linn may also acquire certain Linn Additional Leases after Closing until the expiration of the Title Cure Period (provided, however, that the post-Closing acquisitions shall only be allowed through permitted acreage trades, as further described in the definition of “Linn Additional Leases”). Linn shall use its best efforts to, within ten (10) Business Days after the acquisition of any Linn Additional Asset, notify Citizen of such acquisition, and shall provide Citizen with copies of the underlying instrument creating such Linn Additional Asset, the agreement(s) pursuant to which Linn acquired such Linn Additional Asset, the contract(s) burdening or affecting such Linn Additional Asset of which Linn has copies, the total Raw Net Acres for each acquired Linn Additional Lease, the Net Acres subject to each such Linn Additional Lease on a Governmental Section and Target Formation basis, the Linn Section Weighted Average NRI for each acquired Linn Additional Lease on a Governmental Section and Target Formation basis, the lease expiration date for each acquired Linn Additional Lease, the estimated Linn Cost Credited Asset Acquisition Costs for each acquisition, and any other information or materials in Linn’s possession related to such Linn Additional Asset. Linn Additional Assets will be subject to title review and environmental review by Citizen in accordance with the other applicable provisions of Article 4 (including Section 4.2(d)(iii) ) and Article 5 (including Section 5.1(c)(iii) ), except that the Review Period with respect thereto shall commence on the first (1 st ) Business Day after Citizen has received written notice from Linn identifying such Linn Additional Assets, together with all information to be delivered pursuant to the immediately preceding sentence (and no Review Period shall be deemed to have commenced to run unless and until Citizen has received all of such information), and shall end upon the later of the expiration of the Review Period and 11:59 p.m. Central Prevailing Time on the first (1 st ) Business Day that is 30 Business Days after Citizen has received such written notice from Linn. On or before five (5) Business Days after the latest to occur of (A) the expiration of the review period provided hereunder for each Linn Additional Asset, (B) the resolution of all Title Disputes and Environmental Disputes with regard to the Linn Additional Assets and (C) 30 days after Citizen has received a Linn Lease Designation Notice for such Linn Additional Assets, Linn shall contribute all such Linn Additional Assets to the Company (subject always to the other terms of Articles 4 and 5 ) pursuant to a conveyance in substantially the form of the Linn Assignment, and simultaneous therewith shall provide Citizen and the Company an officer’s certificate, dated as of the date of the execution of such conveyance, certifying that the representations and warranties of Linn in Article 7 are true and correct as to each such Linn Additional Asset on and as of such date (other than representations and warranties that refer to a specified date, which need only be true and correct on and as of such specified date) in all material respects, provided that in no event shall Linn be entitled to contribute any Linn Additional Asset to the Company for which Linn is unable to make such certification.
(ii)      To the extent Linn has acquired Linn Additional Assets and has not otherwise cured an asserted Linn Title Defect or completed the Remediation of an asserted Linn Environmental Defect, Linn may designate any Linn Additional Lease as either a Linn

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True-Up Lease or a Linn Substitute Lease, provided that Linn shall first (and prior to Linn’s ability to use such Linn Additional Assets under Section 3.2(b)(vi)(C) as Linn True-Up Leases or to designate them as Linn Cost Credited Leases) designate and use any such Additional Linn Lease as a Linn Substitute Lease. “ Linn Substitute Leases ” means any Linn Additional Leases utilized to cure (in whole or in part) any such Linn Title Defect or such Linn Environmental Defect properly asserted by Citizen with respect to any Linn Asset for which the Initial Linn Agreed Value is to be adjusted downward by designating one or more Linn Additional Leases (in whole or in part) to cure such Linn Title Defect or Linn Environmental Defect, in each case at no cost to the Company or such designee and without Linn receiving any additional Units or any other consideration therefor from the Company or such designee. Linn shall designate or otherwise identify any Linn Substitute Lease or Linn True-Up Lease by one or more written notices (each, a “ Linn Lease Designation Notice ”) to Citizen prior to the expiration of the Title Cure Period. Any Linn Lease Designation Notice in respect of Linn Substitute Leases shall also identify the Linn Title Defect Amounts associated with the relevant Linn Title Defects and the Remediation Amounts associated with the relevant Linn Environmental Defects that Linn believes have been reduced as a result of Linn’s cure of such Linn Title Defects and Linn Environmental Defects pursuant to this Section 4.2(e)(ii ). Each Linn Lease Designation Notice must provide the asserted Net Acres and Linn Section Weighted NRI for the designated Linn Additional Leases by Governmental Section and Target Formation. If Linn fails to timely provide the aforesaid notice with respect to any Linn Title Defect or Linn Environmental Defect, Linn shall not have the right to cure such Linn Title Defect or Linn Environmental Defect under this Section 4.2(e) . For all purposes of this Section 4.2 , the Allocated Value of Linn Substitute Leases shall be computed as described in Section 4.2(e)(vii) . If Linn designates Linn Additional Leases as Linn True-Up Leases, but the Allocated Values for such Linn Additional Leases exceed the Linn Delta Value, such Linn Additional Leases (to the extent the Allocated Value thereof) will not be considered Linn True-Up Leases and will instead be Linn Cost Credited Leases hereunder, subject to all of the provisions herein with respect to Linn Cost Credit Credited Leases.
(iii)      The reduction in the Linn Title Defect Amount associated with any Linn Title Defect that Linn cures under this Section 4.2(e) by designating one or more Linn Additional Leases (or portions thereof) as Linn Substitute Leases and is deemed to have successfully cured such Linn Title Defect under Section 4.2(e)(ii) shall be equal to the result of such Linn Title Defect Amount (and if the Linn Asset in question is being retained, then the Linn Title Defect Amount is the Allocated Value therefor) minus the Allocated Value of the applicable Linn Substitute Leases as computed as described in Section 4.2(e)(vii) .
(iv)      In the event less than the entirety of all of Linn Additional Leases are designated either as Linn Substitute Leases or Linn True-Up Leases (all such Linn Additional Leases to the extent not designated as Linn Substitute Leases or Linn True-Up Leases collectively, “ Linn Cost Credited Leases ”), all such Linn Cost Credited Leases (or remainder thereof not designated either as Linn Substitute Leases or Linn True-Up Leases) shall be sold and assigned to the Company by Linn on the second (2 nd ) Business Day after both the Final Linn Adjustment Determination Date and the Final Citizen Adjustment Determination Date have occurred for a cash purchase price equal to all Linn Cost Credited Asset Acquisition Costs for all of such Linn Cost Credited Leases and the associated Linn Additional Assets, in each case, adjusted in accordance with Section 3.2(a) as such adjustments may apply to such Linn Cost

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Credited Leases and associated Linn Additional Assets. Each member of the Company shall bear its respective Percentage Interest share (as of the time of such sale and purchase) of the purchase price for such Linn Additional Assets.
(v)      Interim Sales . Notwithstanding anything to the contrary in this Section 4.2 , and without limitation of Citizen’s right to indemnification under Article 15 for breach of Linn’s covenants in Section 10.1 , the Linn Aggregate Deductible shall not apply to any Linn Title Defect resulting from the sale, trade or other disposition prior to the Closing of Linn’s interest in any Linn Lease and/or Linn Well (or portion thereof).
(vi)      Linn Additional Leases .
(A)      Linn has identified on Exhibit A-5-1 those Linn Additional Leases that have been acquired by Linn from and after April 1, 2017 until the date that is five (5) Business Days prior to the Execution Date. Linn shall use its best efforts to supplement such Exhibit within ten (10) Business Days after the Execution Date to provide the total Raw Net Acres for each such acquired Linn Additional Lease, the Net Acres subject to each such Linn Additional Lease on a Governmental Section and Target Formation basis, the Linn Section Weighted Average NRI for each such acquired Linn Additional Lease on a Governmental Section and Target Formation basis, and the lease expiration date for each acquired Linn Additional Lease. In addition, within this same time period, Linn shall also use its best efforts to provide Citizen with the other information related to such Additional Linn Assets as is contemplated under Section 4.2(e)(i) above. With regard to Linn Additional Leases and Linn Additional Asset acquired, the date that is five (5) Business Days prior to the Execution Date, Linn shall use its best efforts to supplement such Exhibit within ten (10) Business Days (but for those acquired after Closing, no later than the expiration the Title Cure Period) after any such Linn Additional Asset acquisition, and provide to Citizen such other information as is contemplated under Section 4.2(e)(i) above within this same period.
(B)      To the extent less than 100% of the Linn Additional Leases acquired in a single acquisition are Linn Cost Credited Leases, Linn will further provide, with respect to any such acquisition, the Raw Net Acres included in the entire relevant acquisition as compared to the Raw Net Acres for the relevant Linn Cost Credited Leases, together with full consideration payable for the acquisition and full costs of Third Party expenses that constitute Linn Cost Credited Acquisition Costs (the Linn Gross Acquisition Cost ”). In such event, the Linn Cost Credited Acquisition Costs for such Linn Cost Credited Leases will be the (A) the Raw Net Acres included in the entire relevant acquisition divided by the Raw Net Acres for the relevant Linn Cost Credited Leases, multiplied by (B) the Linn Gross Acquisition Cost.
(vii)      The Allocated Value of any Linn Additional Leases (or portions thereof) utilized as Linn True-Up Leases or Linn Substitute Leases shall be calculated with respect to each applicable Governmental Section and each Target Formation within each such Governmental Section as follows, and the relevant Allocated Value for a Target Formation in a Governmental Section will be the product of (a) the actual aggregate Linn Section Net Acres subject to the Linn Additional Leases in such Target Formation in such Governmental Section, and (b) the sum of (i) the Zone Price for such Target Formation in such Governmental Section and (ii) the product of (A) the Zone NRI Value for such Target Formation in such Governmental Section, (B) the amount (whether positive, negative or zero) obtained by subtracting the Zone Average NRI for such Target Formation in such Governmental Section from the actual Linn

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Section Weighted Average NRI associated with the Linn Additional Leases in such Target Formation in such Governmental Section; and (C) 100.
Section 4.3      Citizen Title Defects and Citizen Title Benefits .
(a)      Citizen Title Defect Notices . On or prior to the last day of the Review Period, Linn shall have the right to assert claims for Citizen Title Defects against Citizen in accordance with this Section 4.3(a) . To assert a Citizen Title Defect, Linn shall give written notice prior to the end of the Review Period to Citizen via email or writing meeting the requirements of this Section 4.3(a) (each, a “ Citizen Title Defect Notice ” and collectively, the “ Citizen Title Defect Notices ”). Except for the special warranty of title in the Citizen Assignment and without limiting any rights to indemnity pursuant to Article 15 , any matters that may otherwise constitute Citizen Title Defects but that are not alleged in any Citizen Title Defect Notice prior to the expiration of the Review Period shall be deemed to have been waived by Linn. To be effective, each Citizen Title Defect Notice shall be in writing or email, and shall include (i) a reasonable description of each alleged Citizen Title Defect, (ii) the Citizen Assets or portion thereof affected thereby (each, a “ Citizen Title Defect Property ”), (iii) supporting documents reasonably necessary to verify the existence of the alleged Citizen Title Defect(s), and (iv) Linn’s good faith estimate of the Citizen Title Defect Amount for such Citizen Title Defect and the computations upon which Linn’s estimate is based. Linn will also use reasonable efforts (without any liability for failure to do so) to promptly furnish to Citizen written notice during the Review Period of any Citizen Title Benefit with respect to which Linn acquired Knowledge during the Review Period, or discovered during the Review Period, to Linn’s Knowledge, by any of its Affiliates, employees, title attorneys, landmen or other title examiners prior to the end of the Review Period.
(b)      Title Benefit Notices . On or prior to the last day of the Review Period, Citizen shall have the right to assert Citizen Title Benefits in accordance with this Section 4.3(b) . To assert a Citizen Title Benefit, Citizen shall give written notice prior to the end of the Review Period to Linn via email (with hardcopy sent for delivery the day after the end of the Review Period) meeting the requirements of this Section 4.3(b) (each, a “ Citizen Title Benefit Notice ” and collectively, the “ Citizen Title Benefit Notices ”). To be effective, each Citizen Title Benefit Notice shall include (i) a reasonable description of each alleged Citizen Title Benefit, (ii) the Citizen Assets or portion thereof affected thereby, (iii) supporting documents in Citizen’s possession reasonably necessary for Linn to verify the existence of the alleged Citizen Title Benefit(s), and (iv) Citizen’s good faith estimate of the Citizen Title Benefit Amount for such Citizen Title Benefit and the computations upon which Citizen’s estimate is based. Any matters that may otherwise constitute Citizen Title Benefits but that are not alleged in any Citizen Title Benefit Notice prior to the expiration of the Review Period shall be deemed to have been waived by Citizen.
(c)      Right to Cure; Right to Dispute .
(i)      Citizen shall have the option, but not the obligation, to attempt to cure, or cause to be cured, at its sole cost and expense, any Citizen Title Defects within the Title Cure Period.

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(ii)      Prior to the Scheduled Closing Date, Citizen and Linn shall attempt to agree on all disputes related to the existence of any Citizen Title Defect or Citizen Title Benefit or the applicable Citizen Title Defect Amount or Citizen Title Benefit Amount with respect thereto or the effect of any curative actions with respect to any Citizen Title Defect. With regard to any Citizen Asset that is subject to such an unresolved dispute as to a Citizen Title Defect as of the Closing, and the alleged Title Defect Amount is less than or equal to 90% of the Allocated Value of the affected Citizen Asset, then such Citizen Asset shall nevertheless be conveyed at Closing without adjustment to the Initial Citizen Agreed Value for such disputed Citizen Title Defect. Upon resolution of such dispute under Section 4.4 , appropriate adjustments shall be made to the Initial Citizen Agreed Value in accordance with Section 3.3 . With regard to any Citizen Asset that is subject to such an unresolved dispute as to Citizen Title Defects as of the Closing, and the alleged Title Defect Amount is greater than 90% of the Allocated Value of the affected Citizen Asset, then such Citizen Asset shall be retained at Closing, and treated as a Citizen Excluded Asset hereunder. If it is ultimately determined pursuant to Section 4.4 that the actual Title Defect Amount burdening such Citizen Asset is less than or equal to 90% of the Allocated Value of such Citizen Asset, within five (5) Business Days of such determination, Citizen shall convey such Citizen Asset to the Company pursuant to a Citizen Assignment and the Initial Citizen Agreed Value shall be adjusted in accordance with Section 3.3 to reflect the contribution of such Citizen Asset to the Company.
(d)      Remedies for Citizen Title Defects and Citizen Title Benefits .
(i)      Subject to Sections 4.3(d)(ii) , 4.3(d)(iii) and 4.3(d)(iv) , upon the final determination of the existence of any uncured Citizen Title Defect and Citizen Title Defect Amount relating thereto (whether by written agreement between the Transacting Parties or under Section 4.4 ), the Initial Citizen Agreed Value shall be reduced by such Citizen Title Defect Amount (or if the Closing has already occurred as of such time, the number of Closing Citizen Consideration Units shall be reduced by one Closing Citizen Consideration Unit for every $1.00 of such Citizen Title Defect Amount) in full satisfaction of such Citizen Title Defect.
(ii)      Notwithstanding anything to the contrary herein, with respect to Citizen Title Defects for which the Citizen Title Defect Amount exceeds 90% of the Allocated Value of the affected Citizen Title Defect Property, Citizen or Linn shall have the right but not the obligation to exclude the entirety of the Citizen Title Defect Property, together with all Citizen Assets associated with such Citizen Title Defect Property, in which event the Initial Citizen Agreed Value shall be reduced by the Allocated Value of such Citizen Title Defect Property and associated Citizen Assets in full satisfaction of such Citizen Title Defect (except to the extent such Citizen Title Defect pertains to other Citizen Assets that are not so excluded), and such Citizen Title Defect Property, together with all Citizen Assets associated with such Citizen Title Defect Property, shall be deemed Citizen Excluded Assets hereunder for all purposes. Any such election must be made by a Transacting Party by notice to the other Transacting Party on or before the Closing, and failure of a Transacting Party to so make such an election shall be deemed a waiver by such Transacting Party of its rights under this Section 4.3(d)(ii) .
(iii)      Notwithstanding anything to the contrary in Section 4.3(d)(i) , in no event shall there be any adjustments to the Initial Citizen Agreed Value or Closing Citizen Consideration Units under Section 4.3(d)(i) in respect of Citizen Title Defects, and Citizen shall

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not be responsible for any Citizen Title Defect Amounts unless the sum of (X) the aggregate Citizen Title Defect Amounts of all such Citizen Title Defects, after setting off all Citizen Title Benefit Amounts and excluding any Citizen Title Defect Amounts attributable to Citizen Title Defects cured by Citizen pursuant to Section 4.3(c)(ii) or Section 4.3(e) or Citizen Title Defect Properties retained by Citizen pursuant to Section 4.3(d)(ii) (it being acknowledged and agreed that the Initial Citizen Agreed Value shall be reduced at Closing for the Allocated Value of the retained or excluded Citizen Title Defect Properties) and (Y) the aggregate Remediation Amounts of all Citizen Environmental Defects that exceed the Individual Environmental Threshold (excluding any Remediation Amounts attributable to Citizen Environmental Defects cured by Citizen pursuant to Section 5.2(b)(i) or (2) Citizen Environmental Defect Properties retained by Citizen pursuant to Section 5.2(c)(ii) ) (it being acknowledged and agreed that the Initial Citizen Agreed Value shall be reduced at Closing for the Allocated Value of the retained or excluded Citizen Environmental Defect Properties), exceeds 2.0% of the Initial Citizen Agreed Value prior to any adjustments to the Initial Citizen Agreed Value under this Agreement (the “ Citizen Aggregate Deductible ”), in which case, the adjustments to the Initial Citizen Agreed Value or Closing Citizen Consideration Units under Section 4.2(d)(i) shall only be for the amount by which such total exceeds the Citizen Aggregate Deductible.
(iv)      Notwithstanding the foregoing Sections 4.3(d)(i) and (iii) , the Citizen Title Benefit Amount of any Citizen Title Benefit shall serve only to reduce the aggregate Citizen Title Defect Amount, and in no event shall any Citizen Title Benefit Amount otherwise result in any adjustment to the Initial Citizen Agreed Value or Closing Citizen Consideration Units.
(e)      Citizen Additional Assets; Cures with Citizen Additional Leases; Adjustments to Initial Citizen Agreed Value or Closing Citizen Consideration Units for Citizen Additional Assets .
(i)      Until the Closing, Citizen may acquire Citizen Additional Assets, and Citizen may also acquire certain Citizen Additional Leases after Closing until the expiration of the Title Cure Period (provided, however, that the post-Closing acquisitions shall only be allowed through permitted acreage trades, as further described in the definition of “Citizen Additional Leases”). Citizen shall use its best efforts to, within ten (10) Business Days after the acquisition of any Citizen Additional Asset, notify Linn of such acquisition, and shall provide Linn with copies of the underlying instrument creating such Citizen Additional Asset, the agreement(s) pursuant to which Citizen acquired such Citizen Additional Asset, the contract(s) burdening or affecting such Citizen Additional Asset of which Citizen has copies, the total Raw Net Acres for each acquired Linn Additional Lease, the Net Acres subject to each such Linn Additional Lease on a Governmental Section and Target Formation basis, the Linn Section Weighted Average NRI for each acquired Linn Additional Lease on a Governmental Section and Target Formation basis, the lease expiration date for each acquired Linn Additional Lease, the estimated Citizen Cost Credited Asset Acquisition Costs for each acquisition, and any other information or materials in Citizen’s possession related to such Citizen Additional Asset. Citizen Additional Assets will be subject to title review and environmental review by Linn in accordance with the other applicable provisions of Article 4 (including Section 4.3(d)(iii) ) and Article 5 (including Section 5.2(c)(iii) ), except that the Review Period with respect thereto shall commence on the first (1 st ) Business Day after Linn has received written notice from Citizen

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identifying such Citizen Additional Assets, together with all information to be delivered pursuant to the immediately preceding sentence (and no Review Period shall be deemed to have commenced to run unless and until Linn has received all of such information), and shall end upon the later of the expiration of the Review Period and 11:59 p.m. Central Prevailing Time on the first (1 st ) Business Day that is 30 Business Days after Linn has received such written notice from Citizen. On or before five (5) Business Days after the latest to occur of (A) the expiration of the review period provided hereunder for each Citizen Additional Asset, (B) the resolution of all Title Disputes and Environmental Disputes with regard to the Citizen Additional Assets, and (C) 30 days after Linn has received a Citizen Lease Designation Notice for such Citizen Additional Assets, Citizen shall contribute all such Citizen Additional Assets to the Company (subject always to the other terms of Articles 4 and 5 ) pursuant to a conveyance in substantially the form of the Citizen Assignment, and simultaneous therewith shall provide Linn and the Company an officer’s certificate, dated as of the date of the execution of such conveyance, certifying that the representations and warranties of Citizen in Article 8 are true and correct as to each such Citizen Additional Asset on and as of such date (other than representations and warranties that refer to a specified date, which need only be true and correct on and as of such specified date) in all material respects, provided that in no event shall Citizen be entitled to contribute any Citizen Additional Asset to the Company for which Citizen is unable to make such certification.
(ii)      To the extent Citizen has acquired Citizen Additional Assets and has not otherwise cured an asserted Citizen Title Defect or completed the Remediation of an asserted Citizen Environmental Defect, Citizen may designate any Citizen Additional Lease as either a Citizen True-Up Lease or a Citizen Substitute Lease, provided that Citizen shall first (and prior to Citizen’s ability to use such Citizen Additional Assets under Section 3.3(b)(vi)(C) as Citizen True-Up Leases or to designate them as Citizen Cost Credited Leases) designate and use any such Additional Citizen Lease as a Citizen Substitute Lease. “ Citizen Substitute Leases ” means any Citizen Additional Leases utilized to cure (in whole or in part) any such Citizen Title Defect or such Citizen Environmental Defect properly asserted by Linn with respect to any Citizen Asset for which the Initial Citizen Agreed Value is to be adjusted downward by designating one or more Citizen Additional Leases (in whole or in part) to cure such Citizen Title Defect or Citizen Environmental Defect, in each case at no cost to the Company or such designee and without Citizen receiving any additional Units or any other consideration therefor from the Company or such designee. Citizen shall designate or otherwise identify any Citizen Substitute Lease or Citizen True-Up Lease by one or more written notices (each, a “ Citizen Lease Designation Notice ”) to Linn prior to the expiration of the Title Cure Period. Any Citizen Lease Designation Notice in respect of Citizen Substitute Leases shall also identify the Citizen Title Defect Amounts associated with the relevant Citizen Title Defects and the Remediation Amounts associated with the relevant Citizen Environmental Defects that Citizen believes have been reduced as a result of Citizen’s cure of such Citizen Title Defects and Citizen Environmental Defects pursuant to this Section 4.3(e)(ii ). Each Citizen Lease Designation Notice must provide the asserted Net Acres and Citizen Section Weighted NRI for the designated Citizen Additional Leases by Governmental Section and Target Formation. If Citizen fails to timely provide the aforesaid notice with respect to any Citizen Title Defect or Citizen Environmental Defect, Citizen shall not have the right to cure such Citizen Title Defect or Citizen Environmental Defect under this Section 4.3(e) . For all purposes of this Section 4.3 , the Allocated Value of Citizen Substitute Leases shall be computed as described in Section 4.3(e)(vii) . If Citizen designates

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Citizen Additional Leases as Citizen True-Up Leases, but the Allocated Values for such Citizen Additional Leases exceed the Citizen Delta Value, such Citizen Additional Leases (to the extent the Allocated Value thereof) will not be considered Citizen True-Up Leases and will instead be Citizen Cost Credited Leases hereunder, subject to all of the provisions herein with respect to Citizen Cost Credit Credited Leases.
(iii)      The reduction in the Citizen Title Defect Amount associated with any Citizen Title Defect that Citizen cures under this Section 4.3(e) by designating one or more Citizen Additional Leases as a Citizen Substitute Lease and is deemed to have successfully cured such Citizen Title Defect under Section 4.3(e)(ii) shall be equal to the result of such Citizen Title Defect Amount (and if the Citizen Asset in question is being retained, then the Citizen Title Defect Amount is the Allocated Value therefor) minus the Allocated Value of the applicable Linn Substitute Leases as computed as described in Section 4.3(e)(vii) .
(iv)      In the event less than the entirety of all of Citizen Additional Leases are designated either as Citizen Substitute Leases or Citizen True-Up Leases (all such Citizen Additional Leases to the extent not designated as Citizen Substitute Leases or Citizen True-Up Leases collectively, “ Citizen Cost Credited Leases ”), all such Citizen Cost Credited Leases (or remainder thereof not designated either as Citizen Substitute Leases or Citizen True-Up Leases) shall be sold and assigned to the Company by Citizen on the second (2 nd ) Business Day after both the Final Citizen Adjustment Determination Date and the Final Linn Adjustment Determination Date have occurred for a cash purchase price equal to all Citizen Cost Credited Asset Acquisition Costs for all of such Citizen Cost Credited Leases and the associated Citizen Additional Assets, in each case, adjusted in accordance with Section 3.3(a) as such adjustments may apply to such Citizen Cost Credited Leases and associated Citizen Additional Assets. Each member of the Company shall bear its respective Percentage Interest share (as of the time of such sale and purchase) of the purchase price for such Citizen Additional Assets.
(v)      Interim Sales . Notwithstanding anything to the contrary in this Section 4.3 , and without limitation of Linn’s right to indemnification under Article 15 for breach of Citizen’s covenants in Section 10.2 , the Citizen Aggregate Deductible shall not apply to any Citizen Title Defect resulting from the sale, trade or other disposition prior to the Closing of Citizen’s interest in any Citizen Lease and/or Citizen Well (or portion thereof).
(vi)      Citizen Additional Leases .
(A)      Citizen has identified on Exhibit A-5-2 (Part I) those Citizen Additional Leases that have been acquired by Citizen from and after April 1, 2017 until the date that is five (5) Business Days prior to the Execution Date. Citizen shall use its best efforts to supplement such Exhibit and Exhibit A-5-2 (Part II) within ten (10) Business Days after the Execution Date to provide the total Raw Net Acres for each such acquired Citizen Additional Lease, the Net Acres subject to each such Citizen Additional Lease on a Governmental Section and Target Formation basis, the Citizen Section Weighted Average NRI for each such acquired Citizen Additional Lease on a Governmental Section and Target Formation basis, the lease expiration date for each acquired Citizen Additional Lease. In addition, within this same time period, Citizen shall also use its best efforts to provide Linn with the other information related to such Additional Citizen Assets as is contemplated under Section 4.3(e)(i) above. With regard to Citizen Additional Leases and Citizen Additional Asset acquired,

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the date that is five (5) Business Days prior to the Execution Date, Citizen shall use its best efforts to supplement such Exhibit within ten (10) Business Days (but for those acquired after Closing, no later than the expiration the Title Cure Period) after any such Citizen Additional Asset acquisition, and provide to Linn such other information as is contemplated under Section 4.3(e)(i) above within this same period.
(B)      To the extent less than 100% of the Citizen Additional Leases acquired in a single acquisition are Citizen Cost Credited Leases, Citizen will further provide, with respect to any such acquisition, the Raw Net Acres included in the entire relevant acquisition as compared to the Raw Net Acres for the relevant Citizen Cost Credited Leases, together with full consideration payable for the acquisition and full costs of Third Party expenses that constitute Citizen Cost Credited Acquisition Costs (the Citizen Gross Acquisition Cost ”). In such event, the Citizen Cost Credited Acquisition Costs for such Citizen Cost Credited Leases will be the (A) the Raw Net Acres included in the entire relevant acquisition divided by the Raw Net Acres for the relevant Citizen Cost Credited Leases, multiplied by (B) the Citizen Gross Acquisition Cost.
(vii)      The Allocated Value of any Citizen Additional Leases (or portions thereof) utilized as Citizen True-Up Leases or Citizen Substitute Leases shall be calculated with respect to each applicable Governmental Section and each Target Formation within each such Governmental Section as follows, and the relevant Allocated Value for a Target Formation in a Governmental Section will be the product of (a) the actual aggregate Citizen Section Net Acres subject to the Citizen Additional Leases in such Target Formation in such Governmental Section, and (b) the sum of (i) the Zone Price for such Target Formation in such Governmental Section and (ii) the product of (A) the Zone NRI Value for such Target Formation in such Governmental Section, (B) the amount (whether positive, negative or zero) obtained by subtracting the Zone Average NRI for such Target Formation in such Governmental Section from the actual Citizen Section Weighted Average NRI associated with the Citizen Additional Leases in such Target Formation in such Governmental Section; and (C) 100.
Section 4.4      Title Disputes . If Linn and Citizen fail to agree in writing on any dispute involving or relating to the existence of a Linn Title Defect (or whether such Linn Title Defect has been cured), Linn Title Benefit, Citizen Title Defect (or whether such Citizen Title Defect has been cured) or Citizen Title Benefit or the amount of a Linn Title Defect Amount, Linn Title Benefit Amount, Citizen Title Defect Amount or Citizen Title Benefit Amount (a “ Title Dispute ”), then such Title Dispute shall be exclusively and finally resolved pursuant to arbitration in accordance with this Section 4.4 . Linn and Citizen agree to pursue any such arbitration in good faith and with reasonable diligence, with the goal of concluding the arbitration as soon as practicable. There shall be a single arbitrator, who shall be a title attorney with at least ten (10) years’ experience in the oil and gas industry involving properties in the State of Oklahoma, as selected by mutual agreement of Linn and Citizen within ten (10) days after either Linn or Citizen have provided the other with a notice of dispute invoking this Section 4.4 , and absent such agreement, by the Dallas, Texas office of the American Arbitration Association (the “ Title Arbitrator ”). The arbitration proceeding shall be held in Oklahoma City, Oklahoma and shall be conducted in accordance with the Commercial Arbitration Rules of the American Arbitration Association, to the extent such rules do not conflict with the terms of this Section 4.4 , except that each Transacting Party shall make a proposal to the Title Arbitrator as to

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how to resolve each such Title Dispute, and the Title Arbitrator shall select the proposal of the Transacting Party that is more consistent with the terms of this Agreement than the proposal of the other Transacting Party. The Title Arbitrator’s determination shall be made within thirty (30) days after submission of a Title Dispute and shall be final and binding, without right of appeal. The Title Arbitrator shall act as an expert for the limited purpose of determining the specific Title Disputes presented to him or her pursuant to this Section 4.4 , and shall not consider, hear or decide any matters except the specific Title Disputes presented. In making his or her determination, the Title Arbitrator shall be bound by the rules set forth in this Section 4.4 and, subject to the foregoing, may consider such other matters as in the opinion of the Title Arbitrator are necessary to make a proper determination. The Title Arbitrator may not award damages, interest or penalties to any Transacting Party or other Person with respect to any matter. The Transacting Parties shall each bear their own legal fees and other costs of presenting its case. The Transacting Party whose Title Dispute proposal is not selected by the Title Arbitrator shall bear all of the costs and expenses of the Title Arbitrator that relate to such Title Dispute.
Section 4.5      Linn Preferential Purchase Rights; Linn Consents to Assign .
(a)      With respect to each Linn Preferential Purchase Right set forth on Schedule 7.12 , within ten (10) Business Days after the Execution Date, Linn shall send to the holder of each such Linn Preferential Purchase Right a notice in compliance with the contractual provisions applicable to such Linn Preferential Purchase Right requesting a waiver of such right. With respect to each Linn Preferential Purchase Right that is not set forth on Schedule 7.12 but is discovered by a Transacting Party prior to Closing, then as soon as reasonably practicable after discovery of any such Linn Preferential Purchase Right, Linn shall send to the holder of each such Linn Preferential Purchase Right a notice in compliance with the contractual provisions applicable to such Linn Preferential Purchase Right requesting a waiver of such right. Any Linn Preferential Purchase Right must be exercised subject to all terms and conditions set forth in this Agreement, and the consideration payable under this Agreement for the purposes of all Linn Preferential Purchase Right notices shall be the Allocated Value of the applicable Linn Asset (as adjusted herein).
(b)      If, prior to Closing, any holder of a Linn Preferential Purchase Right notifies Linn that it intends to consummate the acquisition of the Linn Assets to which its Linn Preferential Purchase Right applies or if the time for exercising such Linn Preferential Purchase Right has not expired (and the holder of such right has not waived such right), then the Linn Assets subject to such Linn Preferential Purchase Right shall be excluded from the Linn Assets to be assigned to the Company at Closing, and the Initial Linn Agreed Value shall be reduced for every $1.00 of the Allocated Value of the Linn Asset subject to such exercised Linn Preferential Purchase Right in full satisfaction of such exercised Linn Preferential Purchase Right. Linn shall be entitled to all consideration given by any Person exercising a Linn Preferential Purchase Right prior to Closing. If such holder of such Linn Preferential Purchase Right thereafter fails to consummate the acquisition of the Linn Assets (or portions thereof) covered by such Linn Preferential Purchase Right on or before ninety (90) days following the Closing Date or the time for exercising such Linn Preferential Purchase Right expires without exercise by the holder thereof, (i) Linn shall so notify the Company and (ii) Linn shall assign, on the tenth (10 th ) Business Day following termination of such right without consummation or exercise, such Linn Assets that were so excluded to the Company pursuant to an instrument in substantially the same

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form as the Linn Assignment, and Linn shall be entitled to the Closing Linn Consideration Units previously reduced as a result of such exercised Linn Preferential Purchase Right.
(c)      All Linn Assets for which any applicable Linn Preferential Purchase Right has been waived, or as to which the period to exercise the applicable Linn Preferential Purchase Right has expired (and such Linn Preferential Purchase Right has not been exercised), in each case, prior to Closing, shall be conveyed to the Company at Closing subject to the provisions of this Agreement.
(d)      Linn, within ten (10) Business Days after the Execution Date, shall send to each holder of a right to consent to assignment pertaining to the Linn Assets and the transactions contemplated hereby set forth in Schedule 7.11 , a notice seeking such holder’s consent to the transactions contemplated hereby.
(e)      If Linn fails to obtain a consent to the assignment of any Linn Asset(s) set forth in Schedule 7.11 prior to Closing and the failure to obtain any such consent would cause (i) the assignment of the Linn Asset(s) affected thereby to the Company to be void or voidable, (ii) the termination of (or the right of a lessor or counterparty to terminate) the underlying interest or contract under the express terms thereof, (iii) the triggering of a liquidated damages provision (each, a “ Linn Hard Consent ”), then, in each such case, the affected Linn Asset(s) shall be excluded from the Linn Assets to be conveyed to the Company at Closing hereunder, and the Initial Linn Agreed Value shall be reduced for every $1.00 of the Allocated Value of the Linn Asset affected by such Linn Hard Consent in full satisfaction of such unobtained Linn Hard Consent. In the event that a Linn Hard Consent (with respect to any applicable Linn Asset(s) excluded pursuant to this Section 4.5(e) ) that was not obtained prior to Closing is obtained within ninety (90) days following Closing, then (A) Linn shall so notify the Company and (B) Linn shall assign, on the tenth (10 th ) Business Day following the receipt of such Linn Hard Consent, such Linn Assets that were so excluded to the Company pursuant to an instrument in substantially the same form as the Linn Assignment, and Linn shall be entitled to the Closing Linn Consideration Units previously reduced as a result of such Linn Hard Consent.
Section 4.6      Citizen Preferential Purchase Rights; Citizen Consents to Assign .
(a)      With respect to each Citizen Preferential Purchase Right set forth on Schedule 8.12 , within ten (10) Business Days after the Execution Date, Citizen shall send to the holder of each such Citizen Preferential Purchase Right a notice in compliance with the contractual provisions applicable to such Citizen Preferential Purchase Right requesting a waiver of such right. With respect to each Citizen Preferential Purchase Right that is not set forth on Schedule 8.12 but is discovered by a Transacting Party prior to Closing, then as soon as reasonably practicable after discovery of any such Citizen Preferential Purchase Right, Citizen shall send to the holder of each such Citizen Preferential Purchase Right a notice in compliance with the contractual provisions applicable to such Citizen Preferential Purchase Right requesting a waiver of such right. Any Citizen Preferential Purchase Right must be exercised subject to all terms and conditions set forth in this Agreement, and the consideration payable under this Agreement for the purposes of all Citizen Preferential Purchase Right notices shall be the Allocated Value of the applicable Citizen Asset (as adjusted herein).

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(b)      If, prior to Closing, any holder of a Citizen Preferential Purchase Right notifies Citizen that it intends to consummate the acquisition of the Citizen Assets to which its Citizen Preferential Purchase Right applies or if the time for exercising such Citizen Preferential Purchase Right has not expired (and the holder of such right has not waived such right), then the Citizen Assets subject to such Citizen Preferential Purchase Right shall be excluded from the Citizen Assets to be assigned to the Company at Closing, and the Initial Citizen Agreed Value shall be reduced for every $1.00 of the Allocated Value of the Citizen Asset subject to such exercised Citizen Preferential Purchase Right in full satisfaction of such exercised Citizen Preferential Purchase Right. Citizen shall be entitled to all consideration given by any Person exercising a Citizen Preferential Purchase Right prior to Closing. If such holder of such Citizen Preferential Purchase Right thereafter fails to consummate the acquisition of the Citizen Assets (or portions thereof) covered by such Citizen Preferential Purchase Right on or before ninety (90) days following the Closing Date or the time for exercising such Citizen Preferential Purchase Right expires without exercise by the holder thereof, (i) Citizen shall so notify the Company and (ii) Citizen shall assign, on the tenth (10 th ) Business Day following termination of such right without consummation or exercise, such Citizen Assets that were so excluded to the Company pursuant to an instrument in substantially the same form as the Citizen Assignment, and Citizen shall be entitled to the Closing Citizen Consideration Units previously reduced as a result of such exercised Citizen Preferential Purchase Right.
(c)      All Citizen Assets for which any applicable Citizen Preferential Purchase Right has been waived, or as to which the period to exercise the applicable Citizen Preferential Purchase Right has expired (and such Citizen Preferential Purchase Right has not been exercised), in each case, prior to Closing, shall be conveyed to the Company at Closing subject to the provisions of this Agreement.
(d)      Citizen, within ten (10) Business Days after the Execution Date, shall send to each holder of a right to consent to assignment pertaining to the Citizen Assets and the transactions contemplated hereby set forth in Schedule 8.11 , a notice seeking such holder’s consent to the transactions contemplated hereby.
(e)      If Citizen fails to obtain a consent to the assignment of any Citizen Asset(s) set forth in Schedule 8.11 prior to Closing and the failure to obtain any such consent would cause (i) the assignment of the Citizen Asset(s) affected thereby to the Company to be void or voidable, (ii) the termination of (or the right of a lessor or counterparty to terminate) the underlying interest or contract under the express terms thereof, (iii) the triggering of a liquidated damages provision (each, a “ Citizen Hard Consent ”), then, in each such case, the affected Citizen Asset(s) shall be excluded from the Citizen Assets to be conveyed to the Company at Closing hereunder, and the Initial Citizen Agreed Value shall be reduced for every $1.00 of the Allocated Value of the Citizen Asset affected by such Citizen Hard Consent in full satisfaction of such unobtained Citizen Hard Consent. In the event that a Citizen Hard Consent (with respect to any applicable Citizen Asset(s) excluded pursuant to this Section 4.6(e) ) that was not obtained prior to Closing is obtained within ninety (90) days following Closing, then (A) Citizen shall so notify the Company and (B) Citizen shall assign, on the tenth (10 th ) Business Day following the receipt of such Citizen Hard Consent, such Citizen Assets that were so excluded to the Company pursuant to an instrument in substantially the same form as the Citizen Assignment, and Citizen

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shall be entitled to the Closing Citizen Consideration Units previously reduced as a result of such Citizen Hard Consent.
Section 4.7      Casualty Loss .
(a)      Notwithstanding anything herein to the contrary, from and after the Effective Time, if Closing occurs, the Company shall assume all risk of loss with respect to production of Hydrocarbons through normal depletion (including watering out of any Linn Well or Citizen Well, collapsed casing or sand infiltration of any Linn Well or Citizen Well) and the depreciation of the Linn Wells and Citizen Wells and all personal property due to ordinary wear and tear, in each case, with respect to the Assets.
(b)      If, after the Execution Date but prior to the Closing Date, any portion of the Linn Assets is destroyed by fire or other act of God or is taken in condemnation or under right of eminent domain (each, a “ Linn Casualty Loss ”) for which the loss resulting from such Casualty Loss exceeds $150,000, the Initial Linn Agreed Value shall be adjusted downward by the amount of such loss, unless, at Citizen’s sole election, Linn pays to the Company all sums paid to Linn by Third Parties by reason of such Linn Casualty Loss, and (y) assigns, transfers and sets over unto the Company all of the right, title and interest of Linn in and to any unpaid awards or other payments, including insurance payments, from Third Parties arising out of such Linn Casualty Loss.
(c)      If, after the Execution Date but prior to the Closing Date, any portion of the Citizen Assets is destroyed by fire or other act of God or is taken in condemnation or under right of eminent domain (each, a “ Citizen Casualty Loss ”) for which the loss resulting from such Casualty Loss exceeds $150,000, the Initial Citizen Agreed Value shall be adjusted downward by the amount of such loss, unless, at Linn’s sole election, Citizen pays to the Company all sums paid to Citizen by Third Parties by reason of such Citizen Casualty Loss, and (y) assigns, transfers and sets over unto the Company all of the right, title and interest of Citizen in and to any unpaid awards or other payments, including insurance payments, from Third Parties arising out of such Citizen Casualty Loss.
ARTICLE 5
ENVIRONMENTAL MATTERS
Section 5.1      Notice of Linn Environmental Defects.
(a)      Linn Environmental Defect Notices . On or prior to the last day of the Review Period, Citizen shall have the right to assert claims for Linn Environmental Defects against Linn in accordance with this Section 5.1(a) . To assert a Linn Environmental Defect, Citizen shall give written notice prior to the end of the Review Period to Linn via email (with hardcopy sent for delivery the day after the end of the Review Period) meeting the requirements of this Section 5.1(a) (each, a “ Linn Environmental Defect Notice ” and collectively, the “ Linn Environmental Defect Notices ”). Without limiting any rights to indemnity pursuant to Article 15 , any matters that may otherwise constitute Linn Environmental Defects but that are not alleged in any Linn Environmental Defect Notice prior to the expiration of the Review Period shall be deemed to have been waived by Citizen. To be effective, each Linn Environmental

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Defect Notice shall be in writing, and shall include (i) a reasonable description of each alleged Linn Environmental Defect, (ii) the Linn Assets or portion thereof affected thereby (each, a “ Linn Environmental Defect Property ”), (iii) documentation, including any physical measurements or photographs, sufficient for Linn to verify the existence of the asserted Linn Environmental Defect(s), (iv) the Allocated Value of each Linn Environmental Defect Property, (v) the Remediation Amount (itemized in reasonable detail) that Citizen asserts is attributable to such Linn Environmental Defect and the computations and information upon which Citizen’s belief is based, and (vi) the specific Environmental Law that is applicable to the Environmental Defect. Citizen’s calculation of the Remediation Amount included in the Linn Environmental Defect Notice must describe in reasonable detail the Remediation proposed for the Environmental Condition that gives rise to the asserted Linn Environmental Defect and identify all assumptions used by Citizen in calculating the Remediation Amount, including the standards that Citizen asserts must be met to comply with Environmental Laws.
(b)      Right to Cure; Right to Dispute .
(i)      Linn shall have the option, but not the obligation, to attempt to cure, or cause to be cured, at its sole cost and expense, any Linn Environmental Defects prior to the Closing (the “ Environmental Cure Period ”).
(ii)      Prior to the Scheduled Closing Date, Linn and Citizen shall attempt to agree on all disputes related to the existence of any Linn Environmental Defect the applicable Remediation Amount with respect thereto or the effect of any curative actions with respect to any Linn Environmental Defect. With regard to any Linn Asset that is subject to such an unresolved dispute as to Linn Environmental Defects as of the Closing, and the alleged Linn Remediation Amount is less than or equal to 90% of the Allocated Value of the affected Linn Asset or less than $100,000, then such Linn Asset shall nevertheless be conveyed at Closing without adjustment to the Initial Linn Agreed Value for such disputed Linn Environmental Defect. Upon resolution of such dispute under Section 5.3 , appropriate adjustments shall be made to the Initial Linn Agreed Value in accordance with Section 3.2 . With regard to any Linn Asset that is subject to such an unresolved dispute as to Linn Environmental Defects as of the Closing, and the alleged Remediation Amount is (A) greater than 90% of the Allocated Value of the affected Linn Asset and (B) greater than $100,000, then such Linn Asset shall be retained at Closing, and treated as a Linn Excluded Asset hereunder. If it is ultimately determined pursuant to Section 5.3 that the actual Remediation Amount burdening such Linn Asset is less than or equal to 90% of the Allocated Value of such Linn Asset or less than or equal to $100,000, within five (5) Business Days of such determination, Linn shall convey such Linn Asset to the Company pursuant to a Linn Assignment and the Initial Linn Agreed Value shall be adjusted in accordance with Section 3.2 to reflect the contribution of such Linn Asset to the Company.
(c)      Remedies for Linn Environmental Defects .
(i)      Subject to Section 5.1(c)(ii) , upon the final determination of the existence of any uncured Linn Environmental Defect and Remediation Amount relating thereto (whether by written agreement between the Transacting Parties or under Section 5.3 ), the Initial Linn Agreed Value shall be reduced by such Remediation Amount in full satisfaction of such Linn Environmental Defect.

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(ii)      Notwithstanding anything to the contrary herein, with respect to Linn Environmental Defects for which the Linn Environmental Defect Amount exceeds (A) 90% of the Allocated Value of the affected Linn Environmental Defect Property and (B) $100,000, Linn shall have the right but not the obligation to exclude, and Citizen shall have the right to require Linn to retain, the entirety of any Linn Environmental Defect Property, together with all Linn Assets associated with such Linn Environmental Defect Property, in which event the Initial Linn Agreed Value shall be reduced by the Allocated Value of such Linn Environmental Defect Property in full satisfaction of such Linn Environmental Defect, and such Linn Environmental Defect Property, together with all Linn Assets associated with such Linn Environmental Defect Property, shall be deemed Linn Excluded Assets hereunder for all purposes. Any such election must be made by a Transacting Party by notice to the other Transacting Party on or before the Closing, and failure to so make such an election shall be deemed a waiver by such Transacting Party of its rights under this Section 5.1(c)(ii) .
(iii)      Notwithstanding anything to the contrary in Section 5.1(c)(i) , (A) in no event shall there be any adjustments to the Initial Linn Agreed Value or Closing Linn Consideration Units under Section 5.1(c)(i) in respect of Linn Environmental Defects, Citizen shall not have the right to require Linn to retain any Linn Environmental Defect Property pursuant to Section 5.1(c)(i) and Linn shall not be responsible for any individual Linn Environmental Defect, for which the Remediation Amount does not exceed $100,000 (the “ Individual Environmental Threshold ”), provided, however, that the Remediation Amount shall be deemed to meet the Individual Environmental Threshold in any of the following cases: (1) if any Asset is affected by more than one Linn Environmental Defect, and the aggregate sum of the Remediation Amounts for all Linn Environmental Defects affecting such Asset exceeds the Individual Environmental Threshold, or (2) in the case of multiple violations of the same requirement of an Environmental Law, whether or not affecting the same Asset, the aggregate sum of the Remediation Amounts for all such common Linn Environmental Defects exceeds the Individual Environmental Threshold, and (B) in no event shall there be any adjustments to the Initial Linn Agreed Value or Closing Linn Consideration Units under Section 5.1(c)(i) in respect of Linn Environmental Defects, and Linn shall not be responsible for any Remediation Amount that exceeds the Individual Environmental Threshold unless the sum of (X) the aggregate Linn Title Defect Amounts of all Linn Title Defects after setting off all Linn Title Benefit Amounts, and excluding any Linn Title Defect Amounts attributable to Linn Title Defects cured by Linn pursuant to Section 4.2(c)(ii) or Section 4.2(e) or Linn Title Defect Properties retained by Linn pursuant to Section 4.2(d)(ii) (it being acknowledged and agreed that the Initial Linn Agreed Value shall be reduced at Closing for the Allocated Value of the retained or excluded Linn Title Defect Properties) and (Y) the aggregate Remediation Amounts of all Linn Environmental Defects that exceed the Individual Environmental Threshold (excluding (1) any Remediation Amounts attributable to Linn Environmental Defects cured by Linn pursuant to Section 5.1(b)(i) or (2) Linn Environmental Defect Properties retained by Linn pursuant to Section 5.1(c)(ii) ) (it being acknowledged and agreed that the Initial Linn Agreed Value shall be reduced at Closing for the Allocated Value of the retained or excluded Linn Environmental Defect Properties), exceeds the Linn Aggregate Deductible, in which case, the adjustments to the Initial Linn Agreed Value or Closing Linn Consideration Units under Section 5.1(c)(i) shall only be for the amount by which such total exceeds the Linn Aggregate Deductible.


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(d)      Exclusive Remedy . Except as provided in Section 15.1 for a breach of Linn’s representations and warranties set forth in Section 7.14 (and the corresponding representations in the certificate to be delivered by Linn at the Closing pursuant to (i) Section 12.6 and (ii) Section 4.2(e)(i) with respect to Linn Additional Assets), and except with respect to Citizen’s and the Company’s right to indemnity under Section 15.1 , and without prejudice to certain rights of Citizen to exclude certain Linn Assets under Section 6.1 , the provisions set forth in Section 5.1(c) shall be the exclusive right and remedy of Citizen with respect to any Linn Environmental Defect with respect to any Linn Asset.
Section 5.2      Notice of Citizen Environmental Defects.
(a)      Citizen Environmental Defect Notices . On or prior to the last day of the Review Period, Linn shall have the right to assert claims for Citizen Environmental Defects against Citizen in accordance with this Section 5.2(a) . To assert a Citizen Environmental Defect, Linn shall give written notice prior to the end of the Review Period to Citizen via email (with hardcopy sent for delivery the day after the end of the Review Period) meeting the requirements of this Section 5.2(a) (each, a “ Citizen Environmental Defect Notice ” and collectively, the “ Citizen Environmental Defect Notices ”). Without limiting any rights to indemnity pursuant to Article 15 , any matters that may otherwise constitute Citizen Environmental Defects but that are not alleged in any Citizen Environmental Defect Notice prior to the expiration of the Review Period shall be deemed to have been waived by Linn. To be effective, each Citizen Environmental Defect Notice shall be in writing, and shall include (i) a reasonable description of each alleged Citizen Environmental Defect, (ii) the Citizen Assets or portion thereof affected thereby (each, a “ Citizen Environmental Defect Property ”), (iii) documentation, including any physical measurements or photographs, sufficient for Citizen to verify the existence of the asserted Citizen Environmental Defect(s), (iv) the Allocated Value of each Citizen Environmental Defect Property, (v) the Remediation Amount (itemized in reasonable detail) that Linn asserts is attributable to such Citizen Environmental Defect and the computations and information upon which Linn’s belief is based, and (vi) the specific Environmental Law that is applicable to the Environmental Defect. Linn’s calculation of the Remediation Amount included in the Citizen Environmental Defect Notice must describe in reasonable detail the Remediation proposed for the Environmental Condition that gives rise to the asserted Citizen Environmental Defect and identify all assumptions used by Linn in calculating the Remediation Amount, including the standards that Linn asserts must be met to comply with Environmental Laws.
(b)      Right to Cure; Right to Dispute .
(i)      Citizen shall have the option, but not the obligation, to attempt to cure, or cause to be cured, at its sole cost and expense, any Citizen Environmental Defects prior to the expiration of the Environmental Cure Period.
(ii)      Prior to the Scheduled Closing Date, Citizen and Linn shall attempt to agree on all disputes related to the existence of any Citizen Environmental Defect the applicable Remediation Amount with respect thereto or the effect of any curative actions with respect to any Citizen Environmental Defect. With regard to any Citizen Asset that is subject to such an unresolved dispute as to Citizen Environmental Defects as of the Closing, and the alleged Citizen Remediation Amount is less than or equal to 90% of the Allocated Value of the

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affected Citizen Asset or less than $100,000, then such Citizen Asset shall nevertheless be conveyed at Closing without adjustment to the Initial Citizen Agreed Value for such disputed Citizen Environmental Defect. Upon resolution of such dispute under Section 5.3 , appropriate adjustments shall be made to the Initial Citizen Agreed Value in accordance with Section 3.3 . With regard to any Citizen Asset that is subject to such an unresolved dispute as to Citizen Environmental Defects as of the Closing, and the alleged Remediation Amount is (A) greater than 90% of the Allocated Value of the affected Citizen Asset and (B) greater than $100,000, then such Citizen Asset shall be retained at Closing, and treated as a Citizen Excluded Asset hereunder. If it is ultimately determined pursuant to Section 5.3 that the actual Remediation Amount burdening such Citizen Asset is less than or equal to 90% of the Allocated Value of such Citizen Asset or less than or equal to $100,000, within five (5) Business Days of such determination, Citizen shall convey such Citizen Asset to the Company pursuant to a Citizen Assignment and the Initial Citizen Agreed Value shall be adjusted in accordance with Section 3.3 to reflect the contribution of such Citizen Asset to the Company.
(c)      Remedies for Citizen Environmental Defects .
(i)      Subject to Section 5.2(c)(ii) , upon the final determination of the existence of any uncured Citizen Environmental Defect and Remediation Amount relating thereto (whether by written agreement between the Transacting Parties or under Section 5.3 ), the Initial Citizen Agreed Value shall be reduced by such Remediation Amount in full satisfaction of such Citizen Environmental Defect.
(ii)      Notwithstanding anything to the contrary herein, with respect to Citizen Environmental Defects for which the Citizen Environmental Defect Amount exceeds (A) 90% of the Allocated Value of the affected Citizen Environmental Defect Property and (B) $100,000, Citizen shall have the right but not the obligation to exclude, and Linn shall have the right to require Citizen to retain, the entirety of any Citizen Environmental Defect Property, together with all Citizen Assets associated with such Citizen Environmental Defect Property, in which event the Initial Citizen Agreed Value shall be reduced by the Allocated Value of such Citizen Environmental Defect Property in full satisfaction of such Citizen Environmental Defect, and such Citizen Environmental Defect Property, together with all Citizen Assets associated with such Citizen Environmental Defect Property, shall be deemed Citizen Excluded Assets hereunder for all purposes. Any such election must be made by a Transacting Party by notice to the other Transacting Party on or before the Closing, and failure to so make such an election shall be deemed a waiver by such Transacting Party of its rights under this Section 5.2(c)(ii) .
(iii)      Notwithstanding anything to the contrary in Section 5.2(c)(i) , (A) in no event shall there be any adjustments to the Initial Citizen Agreed Value or Closing Citizen Consideration Units under Section 5.2(c)(i) in respect of Citizen Environmental Defects, Linn shall not have the right to require Citizen to retain any Citizen Environmental Defect Property pursuant to Section 5.2(c)(i) and Citizen shall not be responsible for any individual Citizen Environmental Defect, for which the Remediation Amount does not exceed the Individual Environmental Threshold, provided, however, that the Remediation Amount shall be deemed to meet the Individual Environmental Threshold in any of the following cases: (1) if any Asset is affected by more than one Citizen Environmental Defect, and the aggregate sum of the Remediation Amounts for all Citizen Environmental Defects affecting such Asset exceeds the

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Individual Environmental Threshold, or (2) in the case of multiple violations of the same requirement of an Environmental Law, whether or not affecting the same Asset, the aggregate sum of the Remediation Amounts for all such common Citizen Environmental Defects exceeds the Individual Environmental Threshold, and (B) in no event shall there be any adjustments to the Initial Citizen Agreed Value or Closing Citizen Consideration Units under Section 5.2(c)(i) in respect of Citizen Environmental Defects, and Citizen shall not be responsible for any Remediation Amount that exceeds the Individual Environmental Threshold unless the sum of (X) the aggregate Citizen Title Defect Amounts of all Citizen Title Defects after setting off all Citizen Title Benefit Amounts, and excluding any Citizen Title Defect Amounts attributable to Citizen Title Defects cured by Citizen pursuant to Section 4.3(c)(ii) or Section 4.3(e) or Citizen Title Defect Properties retained by Citizen pursuant to Section 4.3(d)(ii) (it being acknowledged and agreed that the Initial Citizen Agreed Value shall be reduced at Closing for the Allocated Value of the retained or excluded Citizen Title Defect Properties) and (Y) the aggregate Remediation Amounts of all Citizen Environmental Defects that exceed the Individual Environmental Threshold (excluding (1) any Remediation Amounts attributable to Citizen Environmental Defects cured by Citizen pursuant to Section 5.2(b)(i) or (2) Citizen Environmental Defect Properties retained by Citizen pursuant to Section 5.2(c)(ii) ) (it being acknowledged and agreed that the Initial Citizen Agreed Value shall be reduced at Closing for the Allocated Value of the retained or excluded Citizen Environmental Defect Properties), exceeds the Citizen Aggregate Deductible, in which case, the adjustments to the Initial Citizen Agreed Value or Closing Citizen Consideration Units under Section 5.2(c)(i) shall only be for the amount by which such total exceeds the Citizen Aggregate Deductible.
(d)      Exclusive Remedy . Except as provided in Section 15.1 for a breach of Citizen’s representations and warranties set forth in Section 8.14 (and the corresponding representations in the certificate to be delivered by Citizen at the Closing pursuant to (i) Section 11.6 and (ii) Section 4.3(e)(i) with respect to Citizen Additional Assets), and except with respect to Linn’s and the Company’s right to indemnity under Section 15.1 , and without prejudice to certain rights of Linn to exclude certain Citizen Assets under Section 6.1 , the provisions set forth in Section 5.2(c) shall be the exclusive right and remedy of Linn with respect to any Citizen Environmental Defect with respect to any Citizen Asset.
Section 5.3      Environmental Disputes . If Citizen and Linn fail to agree in writing on any dispute involving or relating to the existence of a Linn Environmental Defect or Citizen Environmental Defect or the Remediation Amount of a Linn Environmental Defect or a Citizen Environmental Defect (an “ Environmental Dispute ”), then such Environmental Dispute shall be exclusively and finally resolved pursuant to arbitration in accordance with this Section 5.3 . Citizen and Linn agree to pursue any such arbitration in good faith and with reasonable diligence, with the goal of concluding the arbitration as soon as practicable. There shall be a single arbitrator, who shall be an environmental attorney with at least ten (10) years’ experience in the oil and gas industry involving properties in the State of Oklahoma, as selected by mutual agreement of Citizen and Linn within ten (10) days after either Citizen or Linn have provided the other with a notice of dispute invoking this Section 5.3 , and absent such agreement, by the Dallas, Texas office of the American Arbitration Association (the “ Environmental Arbitrator ”). The arbitration proceeding shall be held in Oklahoma City, Oklahoma and shall be conducted in accordance with the Commercial Arbitration Rules of the American Arbitration Association, to the extent such rules do not conflict with the terms of this Section 5.3 , except that each

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Transacting Party shall make a proposal to the Environmental Arbitrator as to how to resolve each such Environmental Dispute, and the Environmental Arbitrator shall select the proposal of the Transacting Party that is more consistent with the terms of this Agreement than the proposal of the other Transacting Party. The Environmental Arbitrator’s determination shall be made within thirty (30) days after submission of an Environmental Dispute and shall be final and binding, without right of appeal. The Environmental Arbitrator shall act as an expert for the limited purpose of determining the specific Environmental Disputes presented to him or her pursuant to this Section 5.3 , and shall not consider, hear or decide any matters except the specific Environmental Disputes presented. In making his or her determination, the Environmental Arbitrator shall be bound by the rules set forth in this Section 5.3 and, subject to the foregoing, may consider such other matters as in the opinion of the Environmental Arbitrator are necessary to make a proper determination. The Environmental Arbitrator may not award damages, interest or penalties to any Transacting Party or other Person with respect to any matter. The Transacting Parties shall each bear their own legal fees and other costs of presenting its case. The Transacting Party whose Environmental Dispute proposal is not selected by the Environmental Arbitrator shall bear all of the costs and expenses of the Environmental Arbitrator that relate to such Environmental Dispute.
Section 5.4      NORM; Wastes and other Substances . Each Party acknowledges that each Transacting Party’s Assets have been used for exploration, development, production, gathering and transportation of oil and gas and there may be petroleum, produced water, wastes or other substances or materials located in, on or under such Assets or associated with such Assets. Equipment and sites included in the Assets may contain asbestos, NORM or other Hazardous Substances. NORM may affix or attach itself to the inside of wells, pipelines, materials and equipment as scale, or in other forms. The wells, materials and equipment located on the Assets or included in the Assets may contain NORM and other wastes or Hazardous Substances. NORM containing material and/or other wastes or Hazardous Substances may have come in contact with various environmental media, including, water, soils or sediment. Special procedures may be required for the assessment, remediation, removal, transportation or disposal of environmental media, wastes, asbestos, NORM and other Hazardous Substances from the Assets. For the avoidance of doubt (a) NORM shall not constitute the basis of a breach of Linn’s representations and warranties set forth in Section 7.14 or Citizen’s representations and warranties set forth in Section 8.14 , and (b) no Environmental Condition involving NORM shall constitute the basis of a Linn Environmental Defect or a Citizen Environmental Defect other than with respect to NORM on out-of-service equipment.
ARTICLE 6
ACCESS; CERTAIN DISCLAIMERS
Section 6.1      Access to Assets .
(a)      From and after the Execution Date and up to and including the Closing Date (or earlier termination of this Agreement), but subject to the other provisions of this Section 6.1 and obtaining any required consents of Third Parties, including Third Party operators of the Assets, each Contributing Party shall afford to the Other Party and its Representatives reasonable access, during normal business hours, to (i) such Contributing Party’s and its Affiliates’ employees, (ii) such Contributing Party’s Assets and (iii) all Records in such Contributing

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Party’s or any of its Affiliates’ possession. All investigations and due diligence conducted by the Other Party or its Representatives shall be conducted at such Other Party’s sole cost, risk and expense and any conclusions made from any examination done by such Other Party or such Other Party’s Representative shall result from such Other Party’s own independent review and judgment. To the extent that there are any consents of Third Parties, including Third Party operators of the Assets, which are required to be obtained in connection with the access described in this Section 6.1(a) , each Contributing Party shall use commercially reasonable efforts to obtain such consents, provided that the Contributing Party shall not be obligated to pay any fee or provide any other consideration to obtain any such consent.
(b)      Each Other Party shall be entitled to conduct a Phase I environmental property assessment and regulatory compliance review with respect to the Contributing Party’s Assets. Each Contributing Party or its designee shall have the right to accompany the Other Party and its Representatives whenever such Other Party and its Representatives are on site on such Contributing Party’s Assets. Notwithstanding anything herein to the contrary, neither an Other Party nor its Representatives shall have access to, and shall not be permitted to conduct, any environmental due diligence requiring physical inspection (including any Phase I environmental property assessments) with respect to any Assets owned by a Contributing Party where such Contributing Party does not have the authority to grant access for such due diligence. An Other Party shall not be entitled to conduct Phase II Environmental Site Assessments in accordance with the American Society for Testing and Materials (A.S.T.M.) Standard Practice Environmental Site Assessments: Phase II Environmental Site Assessment Process (Publication Designation: E1903-11) (“ Phase II ”), any sampling, boring, drilling or other invasive investigation activities on or with respect to any of the Assets of the Contributing Party without the prior written consent of such Contributing Party, which Contributing Party may withhold such consent in its sole discretion. In the event such Contributing Party withholds its consent for: (A) Phase II, if Other Party’s Phase I inspection revealed a Recognized Environmental Concern (as determined under A.S.T.M. Publication Designation: E1527-13), or (B) such other invasive activities described in the foregoing sentence, such Other Party shall be entitled to: (i) with respect to Assets operated by such Contributing Party only, exclude the affected Assets and reduce the applicable Initial Agreed Value by the Allocated Value of such Assets, or (ii) reserve its right to assert an Environmental Defect.
(c)      Each Other Party shall coordinate its environmental property assessments and physical inspections of the Assets of the Contributing Party with such Contributing Party and all Third Party operators to minimize any inconvenience to or interruption of the conduct of business by such Contributing Party or such Third Party operators. Each Other Party shall abide by the Contributing Party’s, and any Third Party operator’s, safety rules, regulations and operating policies while conducting its due diligence evaluation of the Contributing Party’s Assets, including any environmental or other inspection or assessment of such Assets. Each Other Party hereby defends, indemnifies and holds harmless each of the operators of the Assets and the Group of the Contributing Party from and against any and all Liabilities arising out of, resulting from or relating to any field visit, environmental property assessment, or other due diligence activity conducted by such Other Party or any of its Representatives with respect to the Contributing Party’s Assets, even if such Liabilities arise out of or result from, SOLELY OR IN PART, THE SOLE, ACTIVE, PASSIVE, CONCURRENT OR COMPARATIVE NEGLIGENCE, STRICT LIABILITY OR OTHER FAULT OR

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VIOLATION OF LAW OF OR BY A MEMBER OF THE CONTRIBUTING PARTY’S GROUP, EXCEPTING ONLY IN THE CASE OF THIS SECTION 6.1(C) (I) LIABILITIES TO THE EXTENT CAUSED BY THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF A MEMBER OF THE CONTRIBUTING PARTY’S GROUP AND (II) LIABILITIES THAT WERE EXISTING PRIOR TO SUCH INSPECTIONS.
(d)      Upon completion of an Other Party’s due diligence, such Other Party shall at its sole cost and expense and without any cost or expense to the Contributing Party or its Affiliates, (i) repair all damage done to the Contributing Party’s Assets in connection with such Other Party’s due diligence, (ii) restore the Contributing Party’s Assets to at least the approximate same or better condition than they were prior to commencement of such Other Party’s due diligence and (iii) remove all equipment, tools or other property brought onto the Contributing Party’s Assets in connection with such Other Party’s due diligence. Any disturbance to the Contributing Party’s Assets (including the leasehold associated therewith) resulting from the Other Party’s due diligence will be promptly corrected by such Other Party.
(e)      During all periods that an Other Party and/or any of its Representatives are on a Contributing Party’s Assets, such Other Party shall maintain, at its sole expense and with insurers reasonably satisfactory to the Contributing Party, policies of insurance of the types and in the amounts specified on Schedule 6.1(e) .
Section 6.2      Confidentiality . Each Party acknowledges that, pursuant to its right of access to the employees of the other Party or its Affiliates, the other Party’s Records and the other Party’s Assets, such Party will become privy to confidential and other information of the other Party, including the results of the due diligence conducted under this Agreement, and that such confidential information shall be held confidential by such Party and its Representatives in accordance with the terms of the Confidentiality Agreement. If Closing should occur, the foregoing confidentiality restriction on a Party, including the Confidentiality Agreement, shall terminate (except as to (a) such portion of the other Party’s Assets that are not conveyed to the Company pursuant to the provisions of this Agreement, (b) the other Party’s Excluded Assets and (c) information related to assets other than the other Party’s Assets).
Section 6.3      Certain Disclaimers .
(a)      EXCEPT AS AND TO THE LIMITED EXTENT EXPRESSLY SET FORTH IN, IN THE CASE OF LINN, ARTICLE 7, THE CERTIFICATE TO BE DELIVERED BY LINN AT THE CLOSING PURSUANT TO SECTION 12.6 OR WITH RESPECT TO THE LINN ADDITIONAL ASSETS PURSUANT TO SECTION 4.2(E)(I) AND THE SPECIAL WARRANTY OF TITLE IN THE LINN ASSIGNMENT, AND IN THE CASE OF CITIZEN, ARTICLE 8 , THE CERTIFICATE TO BE DELIVERED BY CITIZEN AT THE CLOSING PURSUANT TO SECTION 11.6 OR WITH RESPECT TO THE CITIZEN ADDITIONAL ASSETS PURSUANT TO SECTION 4.3(E)(I) AND THE SPECIAL WARRANTY OF TITLE IN THE CITIZEN ASSIGNMENT, (i) EACH PARTY MAKES NO REPRESENTATIONS OR WARRANTIES, EXPRESS, STATUTORY OR IMPLIED, AND (ii) SUCH PARTY EXPRESSLY DISCLAIMS ALL LIABILITY AND RESPONSIBILITY FOR ANY REPRESENTATION, WARRANTY, STATEMENT OR INFORMATION MADE OR COMMUNICATED (ORALLY OR IN WRITING) TO THE OTHER PARTIES’ GROUPS

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(INCLUDING, ANY OPINION, INFORMATION, PROJECTION OR ADVICE THAT MAY HAVE BEEN PROVIDED BY ANY OFFICER, DIRECTOR, EMPLOYEE, AGENT, CONSULTANT, REPRESENTATIVE OR ADVISOR OF ANY SUCH PERSONS).
(b)      EXCEPT AS AND TO THE LIMITED EXTENT EXPRESSLY SET FORTH IN, IN THE CASE OF LINN, ARTICLE 7 , THE CERTIFICATE TO BE DELIVERED BY LINN AT THE CLOSING PURSUANT TO SECTION 12.6 OR WITH RESPECT TO THE LINN ADDITIONAL ASSETS PURSUANT TO SECTION 4.2(E)(I) AND THE SPECIAL WARRANTY OF TITLE IN THE LINN ASSIGNMENT, AND IN THE CASE OF CITIZEN, ARTICLE 8 , THE CERTIFICATE TO BE DELIVERED BY CITIZEN AT THE CLOSING PURSUANT TO SECTION 11.6 OR WITH RESPECT TO THE CITIZEN ADDITIONAL ASSETS PURSUANT TO SECTION 4.3(E)(I) AND THE SPECIAL WARRANTY OF TITLE IN THE CITIZEN ASSIGNMENT, AND WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, EACH TRANSACTING PARTY EXPRESSLY DISCLAIMS ANY REPRESENTATION OR WARRANTY, EXPRESS, STATUTORY OR IMPLIED, AS TO (i) TITLE TO ANY OF ITS ASSETS, (ii) THE CONTENTS, CHARACTER OR NATURE OF ANY REPORT OF ANY PETROLEUM ENGINEERING CONSULTANT OR ANY ENGINEERING, GEOLOGICAL OR SEISMIC DATA OR INTERPRETATION, RELATING TO ITS ASSETS, (iii) THE QUANTITY, QUALITY OR RECOVERABILITY OF HYDROCARBONS IN OR FROM ITS ASSETS, (iv) ANY ESTIMATES OF THE VALUE OF ITS ASSETS OR FUTURE REVENUES GENERATED BY ITS ASSETS, (v) THE PRODUCTION OF HYDROCARBONS FROM ITS ASSETS, (vi) THE MAINTENANCE, REPAIR, CONDITION, QUALITY, SUITABILITY, DESIGN OR MARKETABILITY OF ITS ASSETS, (vii) THE CONTENT, CHARACTER OR NATURE OF ANY INFORMATION MEMORANDUM, REPORTS, BROCHURES, CHARTS OR STATEMENTS PREPARED BY SUCH PARTY OR THIRD PARTIES WITH RESPECT TO ITS ASSETS, (viii) ANY OTHER MATERIALS OR INFORMATION THAT MAY HAVE BEEN MADE AVAILABLE TO THE OTHER PARTIES’ GROUPS IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY DISCUSSION OR PRESENTATION RELATING THERETO AND (ix) ANY IMPLIED OR EXPRESS WARRANTY OF FREEDOM FROM PATENT OR TRADEMARK INFRINGEMENT. EXCEPT AS AND TO THE LIMITED EXTENT EXPRESSLY SET FORTH IN, IN THE CASE OF LINN, ARTICLE 7 , THE CERTIFICATE TO BE DELIVERED BY LINN AT THE CLOSING PURSUANT TO SECTION 12.6 OR WITH RESPECT TO THE LINN ADDITIONAL ASSETS PURSUANT TO SECTION 4.2(E)(I) AND THE SPECIAL WARRANTY OF TITLE IN THE LINN ASSIGNMENT, AND IN THE CASE OF CITIZEN, ARTICLE 8 , THE CERTIFICATE TO BE DELIVERED BY CITIZEN AT THE CLOSING PURSUANT TO SECTION 11.6 OR WITH RESPECT TO THE CITIZEN ADDITIONAL ASSETS PURSUANT TO SECTION 4.3(E)(I) AND THE SPECIAL WARRANTY OF TITLE IN THE CITIZEN ASSIGNMENT, EACH TRANSACTING PARTY FURTHER DISCLAIMS ANY REPRESENTATION OR WARRANTY, EXPRESS, STATUTORY OR IMPLIED, OF MERCHANTABILITY, FREEDOM FROM LATENT VICES OR DEFECTS, FITNESS FOR A PARTICULAR PURPOSE OR CONFORMITY TO MODELS OR SAMPLES OF MATERIALS OF ANY OF ITS ASSETS, RIGHTS OF A PURCHASER UNDER APPROPRIATE STATUTES TO CLAIM DIMINUTION OF CONSIDERATION OR RETURN OF THE CONSIDERATION. IT IS EXPRESSLY UNDERSTOOD AND AGREED BY THE PARTIES THAT EXCEPT AS AND TO THE LIMITED EXTENT EXPRESSLY SET FORTH IN, IN THE CASE OF LINN,

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ARTICLE 7 , THE CERTIFICATE TO BE DELIVERED BY LINN AT THE CLOSING PURSUANT TO SECTION 12.6 , AND ARTICLE 15 OR WITH RESPECT TO THE LINN ADDITIONAL ASSETS PURSUANT TO SECTION 4.2(E)(I) AND THE SPECIAL WARRANTY OF TITLE IN THE LINN ASSIGNMENT, AND IN THE CASE OF CITIZEN, ARTICLE 8 , THE CERTIFICATE TO BE DELIVERED BY CITIZEN AT THE CLOSING PURSUANT TO SECTION 11.6 , AND ARTICLE 15 OR WITH RESPECT TO THE CITIZEN ADDITIONAL ASSETS PURSUANT TO SECTION 4.3(E)(I) AND THE SPECIAL WARRANTY OF TITLE IN THE CITIZEN ASSIGNMENT, THE COMPANY SHALL BE DEEMED TO BE OBTAINING SUCH PARTY’S ASSETS IN THEIR PRESENT STATUS, CONDITION AND STATE OF REPAIR, “AS IS” AND “WHERE IS” WITH ALL FAULTS OR DEFECTS (KNOWN OR UNKNOWN, LATENT, DISCOVERABLE OR UNDISCOVERABLE), AND THAT THE OTHER PARTIES’ GROUPS HAVE MADE OR CAUSED TO BE MADE SUCH INSPECTIONS OF THE ASSETS AS SUCH PERSONS DEEM APPROPRIATE.
(c)      EXCEPT AS AND TO THE LIMITED EXTENT EXPRESSLY SET FORTH IN, IN THE CASE OF LINN, SECTION 7.14 AND THE CORRESPONDING REPRESENTATIONS IN THE CERTIFICATE TO BE DELIVERED BY LINN AT THE CLOSING PURSUANT TO SECTION 12.6 OR WITH RESPECT TO THE LINN ADDITIONAL ASSETS PURSUANT TO SECTION 4.2(E)(I) , AND IN THE CASE OF CITIZEN, SECTION 8.14 AND THE CORRESPONDING REPRESENTATION IN THE CERTIFICATE TO BE DELIVERED BY CITIZEN AT THE CLOSING PURSUANT TO SECTION 11.6 OR WITH RESPECT TO THE CITIZEN ADDITIONAL ASSETS PURSUANT TO SECTION 4.3(E)(I) , NO PARTY HAS AND WILL NOT MAKE ANY REPRESENTATION OR WARRANTY REGARDING ANY MATTER OR CIRCUMSTANCE RELATING TO ENVIRONMENTAL LAWS, THE RELEASE OF HAZARDOUS SUBSTANCES INTO THE ENVIRONMENT OR THE PROTECTION OF HUMAN HEALTH, SAFETY, NATURAL RESOURCES OR THE ENVIRONMENT, OR ANY OTHER ENVIRONMENTAL CONDITION OF ITS ASSETS, AND NOTHING IN THIS AGREEMENT OR OTHERWISE SHALL BE CONSTRUED AS SUCH A REPRESENTATION OR WARRANTY, AND SUBJECT TO THE OTHER PARTIES’ LIMITED RIGHTS AS EXPRESSLY SPECIFIED IN THIS AGREEMENT FOR A BREACH OF SUCH PARTY’S REPRESENTATION SET FORTH IN, IN THE CASE OF LINN, SECTION 7.14 , IN THE CORRESPONDING REPRESENTATIONS IN THE CERTIFICATE TO BE DELIVERED BY LINN AT THE CLOSING PURSUANT TO SECTION 12.6 , AND LINN’S RIGHT TO INDEMNIFICATION UNDER ARTICLE 15 , OR WITH RESPECT TO THE LINN ADDITIONAL ASSETS PURSUANT TO SECTION 4.2(E)(I) , AND IN THE CASE OF CITIZEN, SECTION 8.14 AND THE CORRESPONDING REPRESENTATION IN THE CERTIFICATE TO BE DELIVERED BY CITIZEN AT THE CLOSING PURSUANT TO SECTION 11.6 , AND CITIZEN’S RIGHT TO INDEMNIFICATION UNDER ARTICLE 15 , OR WITH RESPECT TO THE CITIZEN ADDITIONAL ASSETS PURSUANT TO SECTION 4.3(E)(I) , THE COMPANY SHALL BE DEEMED TO BE OBTAINING EACH TRANSACTING PARTY’S ASSETS “AS IS” AND “WHERE IS” WITH ALL FAULTS FOR PURPOSES OF THEIR ENVIRONMENTAL CONDITION AND THAT EACH PARTY HAS MADE OR CAUSED TO BE MADE SUCH ENVIRONMENTAL INSPECTIONS OF THE OTHER PARTY’S ASSETS AS SUCH PARTY DEEMS APPROPRIATE.

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ARTICLE 7
REPRESENTATIONS AND WARRANTIES OF LINN
On the Execution Date and on the Closing Date, Linn represents and warrants to Citizen and the Company as follows:
Section 7.1      Organization, Existence and Qualification . Each of LEH and LOI is a limited liability company, duly formed, validly existing and in good standing under the Laws of the State of Delaware and is duly qualified to do business in each jurisdiction in which the nature of its business as now conducted makes such qualification necessary.
Section 7.2      Authority, Approval and Enforceability . Linn has full power and authority to enter into and perform this Agreement, the Transaction Documents to which it is a party and the transactions contemplated herein and therein. The execution, delivery and performance by Linn of this Agreement and the Transaction Documents to which Linn is a party have been duly and validly authorized and approved by all necessary action on the part of Linn. This Agreement is, and the Transaction Documents to which Linn is a party, when executed and delivered by Linn, will be, the valid and binding obligations of Linn, and enforceable against it, in accordance with their respective terms, subject to the effects of bankruptcy, insolvency, reorganization, moratorium and similar Laws, as well as to principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).
Section 7.3      No Conflicts . Assuming the receipt of all applicable consents and approvals in connection with the transactions contemplated hereby and the waiver of, or compliance with, all Linn Preferential Purchase Rights applicable to the transactions contemplated hereby, the execution, delivery and performance by Linn of this Agreement, the Transaction Documents to which it is a party and the consummation of the transactions contemplated herein and therein will not (a) conflict with or result in a breach of any provisions of the organizational documents of Linn, (b) result in a default or the creation of any Encumbrance on the Linn Assets (other than a Linn Permitted Encumbrance) or give rise to any right of termination, cancellation or acceleration under any of the terms, conditions or provisions of any note, bond, mortgage, indenture, license or Linn Contract, or (c) violate any Law applicable to Linn or any of the Linn Assets, except, in the case of clause (b), where such default, termination, cancellation, or acceleration would not have a material adverse effect upon the Linn Assets or the ability of Linn to consummate the transactions contemplated by this Agreement.
Section 7.4      Bankruptcy . Other than resolution of claims proceedings under the Linn Energy, LLC (the predecessor to Linn’s parent company), Chapter 11 case in the U.S. Bankruptcy Court in the Southern District of Texas (Linn Energy, LLC, et al., Case No. 16-60040), there are no bankruptcy, reorganization or receivership proceedings pending, being contemplated by or, to such Linn’s Knowledge, threatened in writing against Linn.
Section 7.5      Brokers’ Fees . Linn has not incurred any liability, contingent or otherwise, for brokers’ or finders’ fees relating to the transactions contemplated by this Agreement for which the Company or Citizen shall have any responsibility.


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Section 7.6      Litigation . Except as set forth on Schedule 7.6 , as of the Execution Date, there is no suit, action or litigation by any Person by or before any Governmental Body, and no legal, administrative or arbitration proceeding (in each case) pending or, to Linn’s Knowledge, threatened in writing (a) against Linn or any Affiliate of Linn, (b) that relates to Linn’s ownership of the Linn Assets or otherwise relates to the Linn Assets, or (c) that would be reasonably likely to have a material adverse effect upon the ability of Linn to consummate the transactions contemplated by this Agreement.
Section 7.7      No Violation of Laws . As of the Execution Date and, subject to any changes acknowledged in the Linn Closing Certificate for matters occurring between the Execution Date and Closing only, as of the Closing, Linn is not in violation of any applicable material Laws with respect to its ownership and operation of the Linn Assets in any material respect. This Section 7.7 does not include any matters with respect to Tax Laws or Environmental Laws, Linn’s representations as to such matters being addressed exclusively in Section 7.8 and Section 7.14 , respectively. For purposes of this Section 7.7 , a Law is a “material Law” to the extent a breach of such Law would be likely to have material impact on Linn’s ability to own, operate or develop a Linn Asset affected by the breach of such Law.
Section 7.8      Taxes.
(a)      All Asset Taxes that have become due and payable with respect to the Linn Assets have been duly paid, and all Tax Returns relating to Asset Taxes required to be filed with respect to the Linn Assets have been duly and timely filed. All such Tax Returns are true, correct and complete in all material respects.
(b)      There are not currently in effect any extensions or waivers of any statute of limitations of any jurisdiction regarding the assessment or collection of any Asset Taxes of Linn and no request for such waiver or extension is pending.
(c)      There are no claims, assessments, demands, actions, suits, proceedings or audits asserted or now in progress, or to Linn’s Knowledge, threatened, against Linn with respect to Asset Taxes relating to the Linn Assets.
(d)      There are no liens on any of the Linn Assets attributable to Taxes except for liens for current period Taxes that are not yet due and payable.
(e)      Other than as set forth in Schedule 7.8 , none of the Linn Assets is subject to any tax partnership agreement or is otherwise treated, or required to be treated, as held in an arrangement requiring a partnership income Tax Return to be filed under Subchapter K of Chapter 1 of Subtitle A of the Code.
(f)      All of the Linn Assets that are subject to property Tax have been properly listed and described on the property Tax rolls for all periods prior to and including the Closing Date and no portion of such assets constitutes omitted property for property Tax purposes.
(g)      Linn is not a “foreign person” within the meaning of Section 1445 of the Code.

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Section 7.9      Accredited Investor . Linn is an “accredited investor,” as such term is defined in Regulation D of the Securities Act of 1933, as amended, and will acquire its portion of the equity interests in the Company for its own account and not with a view to a sale or distribution thereof in violation of the Securities Act of 1933, as amended, and the rules and regulations thereunder, any applicable state blue sky Laws or any other applicable securities Laws.
Section 7.10      Independent Evaluation . Linn is sophisticated in the evaluation, purchase, ownership and operation of oil and gas properties and related facilities, including equity interests of Persons operating such businesses. In making its decision to enter into this Agreement and to consummate the transactions contemplated hereby, Linn has relied or shall rely solely on the representations, warranties and covenants set forth herein and in the Transaction Documents and its own independent investigation and evaluation of the Citizen Assets and Units in the Company and the advice of its own legal, Tax, economic, environmental, engineering, geological and geophysical advisors and the express provisions of this Agreement and not on any comments, statements, projections or other materials made or given by any representatives or consultants or advisors of Citizen.
Section 7.11      Linn Consents . Except (a) as set forth on Schedule 7.11 , (b) for Customary Post-Closing Consents, and (c) for any Linn Preferential Purchase Rights, there are no prohibitions on assignment or requirements to obtain consents from Third Parties, in each case, that would be applicable in connection with the transfer of the Linn Assets to the Company or the consummation of the transactions contemplated by this Agreement by Linn.
Section 7.12      Linn Preferential Purchase Rights . Except as set forth on Schedule 7.12 , there are no preferential purchase rights, rights of first refusal or other similar rights that are applicable to the transfer of the Linn Assets to the Company in connection with the transactions contemplated hereby (each, a “ Linn Preferential Purchase Right ”).
Section 7.13      Material Contracts .
(a)      Schedule 7.13(a) describes the following Linn Contracts:
(i)      all Linn Contracts that constitute farmout, farmin, development agreements, joint venture and exploration agreements, participation agreements or similar agreements where (A) the primary obligation thereunder has not been fully performed or expired (and for purposes hereof, the term “ primary obligation ” shall mean and include any commitment to pay amounts (other than standard indemnification obligations related to actions or operations taken or conducted during the term of such agreement), any remaining period for any party thereto to elect or exercise options relating to earning, acquiring, assigning, or forfeiting interests in properties, any remaining right to participate in proposed operations, or any remaining right to alternate, assume or otherwise transfer operatorship) or (B) there are any remaining drilling or development obligations on the part of Linn (or after the Closing, the Company) for which the failure to fulfill such obligations will result in a breach of such Linn Contract or the reversion of or the obligation to transfer an interest in or operatorship of a Linn Well or Linn Lease to a counterparty under such Linn Contract;

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(ii)      all Linn Contracts that include non-competition restrictions or area of mutual interest provisions or other similar restrictions on doing business, in each case, that remain in effect as of the Execution Date;
(iii)      all Linn Contracts that are Hydrocarbon production sales or purchase, gathering, transportation, marketing, supply, exchange and processing agreements relating to the Linn Assets, other than such agreements that are terminable on upon not more than ninety (90) days’ notice without penalty;
(iv)      all Linn Contracts with any Affiliate of Linn that will not be terminated as of Closing;
(v)      all Linn Contracts burdening the Linn Assets that could reasonably be expected to obligate the Company to expend in excess of $500,000 in any calendar year;
(vi)      all Linn Contracts burdening the Linn Assets that could reasonably be expected to result in aggregate revenues to the Company in excess of $500,000 in any calendar year;
(vii)      all Linn Contracts providing for a call upon, option to purchase or similar right under any agreements with respect to the Hydrocarbons produced from the Linn Assets;
(viii)      all Linn Contracts under which Linn (or, after Closing, the Company) is or may be obligated to transfer, assign or convey any right, title or interest in any Linn Asset;
(ix)      any Linn Contract that is an indenture, mortgage, loan, credit or sale-leaseback or other similar Contract;
(x)      all Linn Contracts that constitute seismic or geophysical Contracts or commitment to acquire, generate or develop seismic data;
(xi)      all Linn Contracts for the sale of gas containing a take or pay, advance payments, prepayment or similar provision or requiring gas to be gathered, delivered, processed or transported without then or thereafter receiving full payment therefore;
(xii)      all term assignments covering Linn Leases, unless such interest is held past its primary term (provided that the primary term provided in such term assignment pursuant to which Linn or its predecessor-in-interest acquired such Linn Lease shall be deemed to be the primary term for purposes of this item (xii)); and
(xiii)      all Linn Contracts that are joint operating agreements or unit operating agreements applicable to the Linn Assets.
The Linn Contracts described in Sections 7.13(a)(i) through Section 7.13(a)(xiii) above are collectively referred to herein as the “ Linn Material Contracts ”.

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(b)      Except as disclosed in Schedule 7.13(b) , (i) Linn is not in material breach or default under any of the Linn Material Contracts, (ii) to Linn’s Knowledge, no other party to any such Linn Material Contract is in material breach or default under any such Linn Material Contract, and (iii) each Linn Material Contract is in full force and effect, in accordance with their stated terms (as such terms have been amended, to the extent the amendments are reflected Schedule 7.13(a) ).
(c)      There are no Hedge Contracts of Linn in existence as of the Closing Date that will be binding on the Linn Assets after Closing.
(d)      None of the joint operating agreements or unit operating agreements that are Linn Material Contracts: (i) cover more than 640 acres, (ii) contain or provide for any alternating operatorship or alternating designation of operator, (iii) provide for any drilling commitments or drilling obligations that have not been satisfied, other than those relating to an AFE identified on Schedule 7.18 , or (iv) provide for any disproportionate sharing of costs, revenues or share of production (other than to the extent relating to default provisions or non-consent elections).
Section 7.14      Environmental Matters . Except as set forth on Schedule 7.14 :
(a)      As of the Execution Date: (i) there is no pending notice or lawsuit, administrative action or other proceeding by a Governmental Body with respect to the Linn Assets which alleges a violation of or liability under any Environmental Laws, in each case, for which corrective actions have yet to be completed and/or any asserted fine or monetary damage has not been paid or otherwise finally resolved, and to Linn’s Knowledge, no such notice or lawsuit, administrative action or other proceeding has been threatened in writing; and (ii) there is no pending notice or lawsuit, administrative action or other proceeding by a Governmental Body asserting the need for investigation or remediation of an Environmental Condition or of any spill or release of Hazardous Substances or Hydrocarbons with respect to any of the Linn Assets, in each case, for which corrective actions have yet to be completed and/or any asserted fine or monetary damage has not been paid or otherwise finally resolved, and to Linn’s Knowledge, no such notice or lawsuit, administrative action or other proceeding has been threatened in writing. During the period between the day that is 18 months prior to the Execution Date and the Execution Date: (I) there has been no notice or lawsuit, administrative action, notice of intent to file a citizen suit or other proceeding initiated by a Person that is not a Governmental Body with respect to the Linn Assets which alleges a violation of or liability under any Environmental Laws, in each case, for which corrective actions have yet to be completed and/or any asserted fine or monetary damage has not been paid or otherwise finally resolved, and to Linn’s Knowledge, no such notice or lawsuit, administrative action, notice of intent to file a citizen suit or other proceeding has been threatened in writing; and (II) there has been no notice or lawsuit, administrative action, notice of intent to file a citizen suit or other proceeding by a Person that is not a Governmental Body asserting the need for investigation or remediation of an Environmental Condition or of any spill or release of Hazardous Substances or Hydrocarbons with respect to any of the Linn Assets, in each case, for which corrective actions have yet to be completed and/or any asserted fine or monetary damage has not been paid or otherwise finally resolved, and to Linn’s Knowledge, no such notice or lawsuit, administrative action, notice of intent to file a citizen suit or other proceeding has been threatened in writing.

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(b)      Linn has made available to Citizen complete and correct copies of all final Third Party reports and studies prepared with respect to the environmental condition of the Linn Assets since January 1, 2012.
Section 7.15      Non-Consent Elections . As of the Execution Date, except as set forth on Schedule 7.15 , Linn has not elected (and was not deemed to have elected) not to participate in any operation or activity proposed with respect to the Linn Assets. To Linn’s Knowledge, Schedule 7.15 contains a complete and accurate list of (i) the status of any “payout” balance, as of the Effective Time, for the Linn operated Linn Wells subject to a reversion or other adjustment at some level of cost recovery or payout (or passage of time or other event other than termination of a Linn Lease by its terms); and (ii) to the extent received by Linn from the applicable operator as of the Execution Date, the payout status of all Linn Wells which are not operated by Linn and are subject to a reversion or other adjustment at some level of cost recovery or payout.
Section 7.16      Royalties . Except for Burdens associated with Linn Suspense Funds, all Burdens with respect to the Linn Assets have been paid in all material respects, or if not paid, are being contested in good faith in the normal course of business. Schedule 7.16 sets forth all Burdens with respect to the Linn Assets that are being contested and all items that are being held in suspense as of the Effective Time.
Section 7.17      Imbalances . Schedule 7.17 sets forth all material Imbalances associated with the Linn Assets as of the dates set forth in such Schedule.
Section 7.18      Current Commitments . Schedule 7.18 sets forth, as of the date of this Agreement, all authorizations for expenditures (“ AFEs ”) in excess of $250,000 (net to Linn’s interest) relating to the Linn Assets to drill or rework wells or for other capital expenditures for which all of the activities anticipated in such AFEs or commitments have not been completed by the Closing Date.
Section 7.19      Wells . Except as set forth on Schedule 7.19 :
(a)      To Linn’s Knowledge, all of the Linn Wells have been drilled and completed in all material respects within the limits permitted by all applicable Linn Leases and Applicable Contracts.
(b)      To Linn’s Knowledge, there are not any Linn Wells that (i) Linn is currently obligated by any Laws or contract to currently plug, dismantle and/or abandon; or (ii) have been plugged, dismantled or abandoned in a manner that does not comply in all material respects with applicable Laws.
Section 7.20      No Prepayments; No Calls on Production . Linn is not obligated by virtue of any take-or-pay payment, advance payment or other similar payment (other than gas balancing arrangements) to deliver Hydrocarbons, or proceeds from the sale thereof, attributable to the Linn Assets at some future time without receiving payment therefor at or after the time of delivery. Except as expressly described on Schedule 7.20 , (i) Linn has not granted to any Third Party any calls on Hydrocarbons allocable to the Linn Assets, nor any optional rights to purchase

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the same, and (ii) Linn has no Knowledge of any other calls on Hydrocarbons allocable to the Linn Assets, nor any optional rights to purchase the same.
Section 7.21      Compliance with Permits.
(a)      Linn or an Affiliate of Linn has obtained and is maintaining all material Permits that are necessary or required for the ownership, development and operation of that portion of the Linn Assets that are operated by Linn or an Affiliate of Linn; and
(b)      To Linn’s Knowledge, all Third Party operators of the Linn Assets have obtained and are maintaining all material Permits that are necessary or required for the ownership, development and operation of that portion of the Linn Assets that are operated by Third Parties.
Section 7.22      Condemnation . As of the Execution Date, there is no actual or, to Linn’s Knowledge, threatened in writing taking (whether permanent, temporary, whole or partial) of any part the Linn Assets by reason of condemnation.
Section 7.23      Certain Linn Employees . Linn represents and warrants that, with respect to the Linn Employees providing technical, engineering, geoscience or land services with respect to the Linn Assets, (a) there are no labor agreements, collective bargaining agreements, or other labor contracts applicable to any such Linn Employees to which Linn or its Affiliate is a party or is bound; (b) no such Linn Employees are represented by any labor organization, union, or group of employees, and no labor organization or union; (c) there are no current or, to Linn’s Knowledge, threatened representational campaigns or other organizing activities by any union seeking to become the collective bargaining representative of any such Linn Employees, and there is no union or labor organization representation question or certification petition against Linn or its Affiliate pending or threatened before the NLRB or any similar Governmental Body; (d) neither Linn nor its Affiliate is currently experiencing, and has not in the previous four (4) years experienced, a labor strike, material labor dispute, work stoppage, work slowdown, lockout, or similar matter involving any Linn Employees providing technical, engineering, geoscience or land services with respect to the Linn Assets; and (e) neither Linn nor its Affiliate is currently engaged in any unfair labor practices regarding any such Linn Employees and there are no pending or threatened proceeding involving any unfair labor practices regarding such Linn Employees before the NLRB or any similar Governmental Body.
Section 7.24      Equipment; No Related Assets . With respect to the Linn Equipment, Hydrocarbon production and other personal property included in the Linn Assets, Linn’s title as of the Execution Date is, and as of the Closing Date shall be transferred to the Company free and clear of Encumbrances other than Permitted Encumbrances. Other than with regard to the Linn Excluded Assets and the Linn Assets, neither Linn, nor any Affiliate of Linn, owns, leases or holds any other real, personal or mixed property interests that have been primarily used or held for use with the Linn Assets or would be necessary for the Company to have in order for the Company to own, operate, develop and maintain the Linn Assets immediately after Closing in a manner consistent with the ownership, operation, development and maintenance of the Linn Assets by Linn (and its Affiliate predecessors in interest) during the period immediately prior to Closing.

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Section 7.25      Bonds . Schedule 7.25 is a complete and accurate list in all material respects of all cash deposits, guarantees, letters of credit, treasury securities, surety bonds and other forms of credit assurances or credit support provided by Linn or any Affiliate of Linn in support of the obligations of Linn or any Affiliate of Linn to any Governmental Body, contract counterparty or other Person by Linn or any Affiliate of Linn related to the ownership or operation of the Linn Assets.
Section 7.26      Midstream Dedications . Except as set forth in Schedule 7.26 , none of the Linn Assets is subject to a contract containing a dedication of acreage or minimum volume requirements.
Section 7.27      Area of Mutual Interest and Other Agreements . Except as set forth in Schedule 7.27 , no Linn Asset is subject to (or has related to it) any area of mutual interest agreements as of the Execution Date. Except as set forth in Schedule 7.27 , no Linn Asset is subject to (or has related to it) any farm-out or farm-in agreement under which any party thereto is entitled to receive assignments not yet made, or could earn additional assignments after the Effective Time.
Section 7.28      Linn Casualty Loss . Except as set forth in Schedule 7.28 , during the period commencing on the Effective Time and ending on the Execution Date, there has been no Linn Casualty Loss affecting any of the Linn Assets.
ARTICLE 8
REPRESENTATIONS AND WARRANTIES OF CITIZEN
On the Execution Date and on the Closing Date, Citizen represents and warrants to Linn and the Company as follows:
Section 8.1      Organization, Existence and Qualification . Citizen is a limited liability company, duly formed, validly existing and in good standing under the Laws of the State of Oklahoma and is duly qualified to do business in each jurisdiction in which the nature of its business as now conducted makes such qualification necessary.
Section 8.2      Authority, Approval and Enforceability . Citizen has full power and authority to enter into and perform this Agreement, the Transaction Documents to which it is a party and the transactions contemplated herein and therein. The execution, delivery and performance by Citizen of this Agreement and the Transaction Documents to which Citizen is a party have been duly and validly authorized and approved by all necessary action on the part of Citizen. This Agreement is, and the Transaction Documents to which Citizen is a party, when executed and delivered by Citizen, will be, the valid and binding obligations of Citizen, and enforceable against it, in accordance with their respective terms, subject to the effects of bankruptcy, insolvency, reorganization, moratorium and similar Laws, as well as to principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).
Section 8.3      No Conflicts . Assuming the receipt of all applicable consents and approvals in connection with the transactions contemplated hereby and the waiver of, or compliance with, all Citizen Preferential Purchase Rights applicable to the transactions

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contemplated hereby, the execution, delivery and performance by Citizen of this Agreement, the Transaction Documents to which it is a party and the consummation of the transactions contemplated herein and therein will not (a) conflict with or result in a breach of any provisions of the organizational documents of Citizen, (b) result in a default or the creation of any Encumbrance on the Citizen Assets (other than a Citizen Permitted Encumbrance) or give rise to any right of termination, cancellation or acceleration under any of the terms, conditions or provisions of any note, bond, mortgage, indenture, license or Citizen Contract, or (c) violate any Law applicable to Citizen or any of the Citizen Assets, except, in the case of clause (b), where such default, termination, cancellation, or acceleration would not have a material adverse effect upon the Citizen Assets or the ability of Citizen to consummate the transactions contemplated by this Agreement.
Section 8.4      Bankruptcy . There are no bankruptcy, reorganization or receivership proceedings pending, being contemplated by or, to such Citizen’s Knowledge, threatened in writing against Citizen.
Section 8.5      Brokers’ Fees . Citizen has not incurred any liability, contingent or otherwise, for brokers’ or finders’ fees relating to the transactions contemplated by this Agreement for which the Company or Linn shall have any responsibility.
Section 8.6      Litigation . Except as set forth on Schedule 8.6 , as of the Execution Date, there is no suit, action or litigation by any Person by or before any Governmental Body, and no legal, administrative or arbitration proceeding (in each case) pending or, to Citizen’s Knowledge, threatened in writing (a) against Citizen or any Affiliate of Citizen, (b) that relates to Citizen’s ownership of the Citizen Assets or otherwise relates to the Citizen Assets, or (c) that would be reasonably likely to have a material adverse effect upon the ability of Citizen to consummate the transactions contemplated by this Agreement.
Section 8.7      No Violation of Laws . As of the Execution Date and, subject to any changes acknowledged in the Citizen Closing Certificate for matters occurring between the Execution Date and Closing only, as of the Closing, Citizen is not in violation of any applicable material Laws with respect to its ownership and operation of the Citizen Assets in any material respect. This Section 8.7 does not include any matters with respect to Tax Laws or Environmental Laws, Citizen’s representations as to such matters being addressed exclusively in Section 8.8 and Section 8.14 , respectively. For purposes of this Section 8.7 , a Law is a “material Law” to the extent a breach of such Law would be likely to have material impact on Citizen’s ability to own, operate or develop a Citizen Asset affected by the breach of such Law.
Section 8.8      Taxes .
(a)      All Asset Taxes that have become due and payable with respect to the Citizen Assets have been duly paid, and all Tax Returns relating to Asset Taxes required to be filed with respect to the Citizen Assets have been duly and timely filed. All such Tax Returns are true, correct and complete in all material respects.

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(b)      There are not currently in effect any extensions or waivers of any statute of limitations of any jurisdiction regarding the assessment or collection of any Asset Taxes of Citizen and no request for such waiver or extension is pending.
(c)      There are no claims, assessments, demands, actions, suits, proceedings or audits asserted or now in progress, or to Citizen’s Knowledge, threatened, against Citizen with respect to Asset Taxes relating to the Citizen Assets.
(d)      There are no liens on any of the Citizen Assets attributable to Taxes except for liens for current period Taxes that are not yet due and payable.
(e)      Other than as set forth in Schedule 8.8 , none of the Citizen Assets is subject to any tax partnership agreement or is otherwise treated, or required to be treated, as held in an arrangement requiring a partnership income Tax Return to be filed under Subchapter K of Chapter 1 of Subtitle A of the Code.
(f)      All of the Citizen Assets that are subject to property Tax have been properly listed and described on the property Tax rolls for all periods prior to and including the Closing Date and no portion of such assets constitutes omitted property for property Tax purposes.
(g)      Citizen is not a “foreign person” within the meaning of Section 1445 of the Code.
Section 8.9      Accredited Investor . Citizen is an “accredited investor,” as such term is defined in Regulation D of the Securities Act of 1933, as amended, and will acquire its portion of the equity interests in the Company for its own account and not with a view to a sale or distribution thereof in violation of the Securities Act of 1933, as amended, and the rules and regulations thereunder, any applicable state blue sky Laws or any other applicable securities Laws.
Section 8.10      Independent Evaluation . Citizen is sophisticated in the evaluation, purchase, ownership and operation of oil and gas properties and related facilities, including equity interests of Persons operating such businesses. In making its decision to enter into this Agreement and to consummate the transactions contemplated hereby, Citizen has relied or shall rely solely on the representations, warranties and covenants set forth herein and in the Transaction Documents and its own independent investigation and evaluation of the Linn Assets and Units in the Company and the advice of its own legal, Tax, economic, environmental, engineering, geological and geophysical advisors and the express provisions of this Agreement and not on any comments, statements, projections or other materials made or given by any representatives or consultants or advisors of Linn.
Section 8.11      Citizen Consents . Except (a) as set forth on Schedule 8.11 , (b) for Customary Post-Closing Consents, and (c) for any Citizen Preferential Purchase Rights, there are no prohibitions on assignment or requirements to obtain consents from Third Parties, in each case, that would be applicable in connection with the transfer of the Citizen Assets to the Company or the consummation of the transactions contemplated by this Agreement by Citizen.

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Section 8.12      Citizen Preferential Purchase Rights . Except as set forth on Schedule 8.12 , there are no preferential purchase rights, rights of first refusal or other similar rights that are applicable to the transfer of the Citizen Assets to the Company in connection with the transactions contemplated hereby (each, a “ Citizen Preferential Purchase Right ”).
Section 8.13      Material Contracts .
(a)      Schedule 8.13(a) describes the following Citizen Contracts:
(i)      all Citizen Contracts that constitute farmout, farmin, development agreements, joint venture and exploration agreements, participation agreements or similar agreements where (A) the primary obligation thereunder has not been fully performed or expired (and for purposes hereof, the term “ primary obligation ” shall mean and include any commitment to pay amounts (other than standard indemnification obligations related to actions or operations taken or conducted during the term of such agreement), any remaining period for any party thereto to elect or exercise options relating to earning, acquiring, assigning, or forfeiting interests in properties, any remaining right to participate in proposed operations, or any remaining right to alternate, assume or otherwise transfer operatorship) or (B) there are any remaining drilling or development obligations on the part of Citizen (or after the Closing, the Company) for which the failure to fulfill such obligations will result in a breach of such Citizen Contract or the reversion of or the obligation to transfer an interest in or operatorship of a Citizen Well or Citizen Lease to a counterparty under such Citizen Contract;
(ii)      all Citizen Contracts that include non-competition restrictions or area of mutual interest provisions or other similar restrictions on doing business, in each case, that remain in effect as of the Execution Date;
(iii)      all Citizen Contracts that are Hydrocarbon production sales or purchase, gathering, transportation, marketing, supply, exchange and processing agreements relating to the Citizen Assets, other than such agreements that are terminable on upon not more than ninety (90) days’ notice without penalty;
(iv)      all Citizen Contracts with any Affiliate of Citizen that will not be terminated as of Closing;
(v)      all Citizen Contracts burdening the Citizen Assets that could reasonably be expected to obligate the Company to expend in excess of $500,000 in any calendar year;
(vi)      all Citizen Contracts burdening the Citizen Assets that could reasonably be expected to result in aggregate revenues to the Company in excess of $500,000 in any calendar year;
(vii)      all Citizen Contracts providing for a call upon, option to purchase or similar right under any agreements with respect to the Hydrocarbons produced from the Citizen Assets;

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(viii)      all Citizen Contracts under which Citizen (or, after Closing, the Company) is or may be obligated to transfer, assign or convey any right, title or interest in any Citizen Asset;
(ix)      any Citizen Contract that is an indenture, mortgage, loan, credit or sale-leaseback or other similar Contract;
(x)      all Citizen Contracts that constitute seismic or geophysical Contracts or commitment to acquire, generate or develop seismic data;
(xi)      all Citizen Contracts for the sale of gas containing a take or pay, advance payments, prepayment or similar provision or requiring gas to be gathered, delivered, processed or transported without then or thereafter receiving full payment therefore;
(xii)      all term assignments covering Citizen Leases, unless such interest is held past its primary term (provided that the primary term provided in such term assignment pursuant to which Citizen or its predecessor-in-interest acquired such Citizen Lease shall be deemed to be the primary term for purposes of this item (xii)); and
(xiii)      all Citizen Contracts that are joint operating agreements or unit operating agreements applicable to the Citizen Assets.
The Citizen Contracts described in Sections 8.13(a)(i) through Section 8.13(a)(xiii) above are collectively referred to herein as the “ Citizen Material Contracts ”.
(b)      Except as disclosed in Schedule 8.13(b) , (i) Citizen is not in material breach or default under any of the Citizen Material Contracts, (ii) to Citizen’s Knowledge, no other party to any such Citizen Material Contract is in material breach or default under any such Citizen Material Contract, and (iii) each Citizen Material Contract is in full force and effect, in accordance with their stated terms (as such terms have been amended, to the extent the amendments are reflected Schedule 7.13(a) ).
(c)      There are no Hedge Contracts of Citizen in existence as of the Closing Date that will be binding on the Citizen Assets after Closing.
(d)      None of the joint operating agreements or unit operating agreements that are Citizen Material Contracts: (i) cover more than 640 acres, (ii) contain or provide for any alternating operatorship or alternating designation of operator, (iii) provide for any drilling commitments or drilling obligations that have not been satisfied, other than those relating to an AFE identified on Schedule 8.18 , or (iv) provide for any disproportionate sharing of costs, revenues or share of production (other than to the extent relating to default provisions or non-consent elections).
Section 8.14      Environmental Matters . Except as set forth on Schedule 8.14 :
(a)      As of the Execution Date: (i) there is no pending notice or lawsuit, administrative action or other proceeding by a Governmental Body with respect to the Citizen Assets which alleges a violation of or liability under any Environmental Laws, in each case, for

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which corrective actions have yet to be completed and/or any asserted fine or monetary damage has not been paid or otherwise finally resolved, and to Citizen’s Knowledge, no such notice or lawsuit, administrative action or other proceeding has been threatened in writing; and (ii) there is no pending notice or lawsuit, administrative action or other proceeding by a Governmental Body asserting the need for investigation or remediation of an Environmental Condition or of any spill or release of Hazardous Substances or Hydrocarbons with respect to any of the Citizen Assets, in each case, for which corrective actions have yet to be completed and/or any asserted fine or monetary damage has not been paid or otherwise finally resolved, and to Citizen’s Knowledge, no such notice or lawsuit, administrative action or other proceeding has been threatened in writing. During the period between the day that is 18 months prior to the Execution Date and the Execution Date: (I) there has been no notice or lawsuit, administrative action, notice of intent to file a citizen suit or other proceeding initiated by a Person that is not a Governmental Body with respect to the Citizen Assets which alleges a violation of or liability under any Environmental Laws, in each case, for which corrective actions have yet to be completed and/or any asserted fine or monetary damage has not been paid or otherwise finally resolved, and to Citizen’s Knowledge, no such notice or lawsuit, administrative action, notice of intent to file a citizen suit or other proceeding has been threatened in writing; and (II) there has been no notice or lawsuit, administrative action, notice of intent to file a citizen suit or other proceeding by a Person that is not a Governmental Body asserting the need for investigation or remediation of an Environmental Condition or of any spill or release of Hazardous Substances or Hydrocarbons with respect to any of the Citizen Assets, in each case, for which corrective actions have yet to be completed and/or any asserted fine or monetary damage has not been paid or otherwise finally resolved, and to Citizen’s Knowledge, no such notice or lawsuit, administrative action, notice of intent to file a citizen suit or other proceeding has been threatened in writing.
(b)      Citizen has made available to Linn complete and correct copies of all final Third Party reports and studies prepared with respect to the environmental condition of the Citizen Assets since January 1, 2012.
Section 8.15      Non-Consent Elections . As of the Execution Date, except as set forth on Schedule 8.15 , Citizen has not elected (and was not deemed to have elected) not to participate in any operation or activity proposed with respect to the Citizen Assets. To Citizen’s Knowledge, Schedule 8.15 contains a complete and accurate list of (i) the status of any “payout” balance, as of the Effective Time, for the Citizen operated Citizen Wells subject to a reversion or other adjustment at some level of cost recovery or payout (or passage of time or other event other than termination of a Citizen Lease by its terms); and (ii) to the extent received by Citizen from the applicable operator as of the Execution Date, the payout status of all Citizen Wells which are not operated by Citizen and are subject to a reversion or other adjustment at some level of cost recovery or payout.
Section 8.16      Royalties . Except for Burdens associated with Citizen Suspense Funds, all Burdens with respect to the Citizen Assets have been paid in all material respects, or if not paid, are being contested in good faith in the normal course of business. Schedule 8.16 sets forth all Burdens with respect to the Citizen Assets that are being contested and all items that are being held in suspense as of the Effective Time.

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Section 8.17      Imbalances . Schedule 8.17 sets forth all material Imbalances associated with the Citizen Assets as of the dates set forth in such Schedule.
Section 8.18      Current Commitments . Schedule 8.18 sets forth, as of the date of this Agreement, all AFEs in excess of $250,000 (net to Citizen’s interest) relating to the Citizen Assets to drill or rework wells or for other capital expenditures for which all of the activities anticipated in such AFEs or commitments have not been completed by the Closing Date.
Section 8.19      Wells . Except as set forth on Schedule 8.19 :
(a)      To Citizen’s Knowledge, all of the Citizen Wells have been drilled and completed in all material respects within the limits permitted by all applicable Citizen Leases and Applicable Contracts.
(b)      To Citizen’s Knowledge, there are not any Citizen Wells that (i) Citizen is currently obligated by any Laws or contract to currently plug, dismantle and/or abandon; or (ii) have been plugged, dismantled or abandoned in a manner that does not comply in all material respects with applicable Laws.
Section 8.20      No Prepayments; No Calls on Production . Citizen is not obligated by virtue of any take-or-pay payment, advance payment or other similar payment (other than gas balancing arrangements) to deliver Hydrocarbons, or proceeds from the sale thereof, attributable to the Citizen Assets at some future time without receiving payment therefor at or after the time of delivery. Except as expressly described on Schedule 8.20 , (i) Citizen has not granted to any Third Party any calls on Hydrocarbons allocable to the Citizen Assets, nor any optional rights to purchase the same, and (ii) Citizen has no Knowledge of any other calls on Hydrocarbons allocable to the Citizen Assets, nor any optional rights to purchase the same.
Section 8.21      Compliance with Permits .
(a)      Citizen or an Affiliate of Citizen has obtained and is maintaining all material Permits that are necessary or required for the ownership, development and operation of that portion of the Citizen Assets that are operated by Citizen or an Affiliate of Citizen; and
(b)      To Citizen’s Knowledge, all Third Party operators of the Citizen Assets have obtained and are maintaining all material Permits that are necessary or required for the ownership, development and operation of that portion of the Citizen Assets that are operated by Third Parties.
Section 8.22      Condemnation . As of the Execution Date, there is no actual or, to Citizen’s Knowledge, threatened in writing taking (whether permanent, temporary, whole or partial) of any part the Citizen Assets by reason of condemnation.
Section 8.23      Certain Citizen Employees . Citizen represents and warrants that, with respect to the Citizen Employees providing technical, engineering, geoscience or land services with respect to the Citizen Assets, (a) there are no labor agreements, collective bargaining agreements, or other labor contracts applicable to any such Citizen Employees to which Citizen or its Affiliate is a party or is bound; (b) no such Citizen Employees are represented by any labor

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organization, union, or group of employees, and no labor organization or union; (c) there are no current or, to Citizen’s Knowledge, threatened representational campaigns or other organizing activities by any union seeking to become the collective bargaining representative of any such Citizen Employees, and there is no union or labor organization representation question or certification petition against Citizen or its Affiliate pending or threatened before the NLRB or any similar Governmental Body; (d) neither Citizen nor its Affiliate is currently experiencing, and has not in the previous four (4) years experienced, a labor strike, material labor dispute, work stoppage, work slowdown, lockout, or similar matter involving any Citizen Employees providing technical, engineering, geoscience or land services with respect to the Citizen Assets; and (e) neither Citizen nor its Affiliate is currently engaged in any unfair labor practices regarding any such Citizen Employees and there are no pending or threatened proceeding involving any unfair labor practices regarding such Citizen Employees before the NLRB or any similar Governmental Body.
Section 8.24      Equipment; No Related Assets . With respect to the Citizen Equipment, Hydrocarbon production and other personal property included in the Citizen Assets, Citizen’s title as of the Execution Date is, and as of the Closing Date shall be transferred to the Company free and clear of Encumbrances other than Permitted Encumbrances. Other than with regard to the Citizen Excluded Assets and the Citizen Assets, neither Citizen, nor any Affiliate of Citizen, owns, leases or holds any other real, personal or mixed property interests that have been primarily used or held for use with the Citizen Assets or would be necessary for the Company to have in order for the Company to own, operate, develop and maintain the Citizen Assets immediately after Closing in a manner consistent with the ownership, operation, development and maintenance of the Citizen Assets by Citizen (and its Affiliate predecessors in interest) during the period immediately prior to Closing.
Section 8.25      Bonds . Schedule 8.25 is a complete and accurate list in all material respects of all cash deposits, guarantees, letters of credit, treasury securities, surety bonds and other forms of credit assurances or credit support provided by Citizen or any Affiliate of Citizen in support of the obligations of Citizen or any Affiliate of Citizen to any Governmental Body, contract counterparty or other Person by Citizen or any Affiliate of Citizen related to the ownership or operation of the Citizen Assets.
Section 8.26      Midstream Dedications . Except as set forth in Schedule 8.26 , none of the Citizen Assets is subject to a contract containing a dedication of acreage or minimum volume requirements.
Section 8.27      Area of Mutual Interest and Other Agreements . Except as set forth in Schedule 8.27 , no Citizen Asset is subject to (or has related to it) any area of mutual interest agreements as of the Execution Date. Except as set forth in Schedule 8.27 , no Citizen Asset is subject to (or has related to it) any farm-out or farm-in agreement under which any party thereto is entitled to receive assignments not yet made, or could earn additional assignments after the Effective Time.
Section 8.28      Citizen Casualty Loss . Except as set forth in Schedule 8.28 , during the period commencing on the Effective Time and ending on the Execution Date, there has been no Citizen Casualty Loss affecting any of the Citizen Assets.

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ARTICLE 9
REPRESENTATIONS AND WARRANTIES OF Company
On the Execution Date and on the Closing Date, the Company represents and warrants to Linn and Citizen as follows:
Section 9.1      Organization, Existence and Qualification . The Company is a limited liability company, duly formed, validly existing and in good standing under the Laws of the State of Delaware and at Closing will be duly qualified to do business in each jurisdiction in which the nature of its business makes such qualification necessary.
Section 9.2      Authority, Approval and Enforceability . The Company has full power and authority to enter into and perform this Agreement, the Transaction Documents to which it is a party and the transactions contemplated herein and therein. The execution, delivery and performance by the Company of this Agreement and the Transaction Documents to which the Company is a party have been duly and validly authorized and approved by all necessary action on the part of the Company. This Agreement is, and the Transaction Documents to which the Company is a party, when executed and delivered by the Company, will be, the valid and binding obligations of the Company, and enforceable against it, in accordance with their respective terms, subject to the effects of bankruptcy, insolvency, reorganization, moratorium and similar Laws, as well as to principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).
Section 9.3      No Conflicts . Assuming the receipt of all applicable consents and approvals in connection with the transactions contemplated hereby, the execution, delivery and performance by the Company of this Agreement, the Transaction Documents to which it is a party and the consummation of the transactions contemplated herein and therein will not (a) conflict with or result in a breach of any provisions of the organizational documents of the Company, (b) result in a default or the creation of any Encumbrance on the Units (other than as specified herein or in the LLC Agreement), or (c) violate any Law applicable to the Company or the Units.
Section 9.4      Bankruptcy . There are no bankruptcy, reorganization or receivership proceedings pending, being contemplated by or, to the Company’s knowledge, threatened in writing against the Company.
Section 9.5      Brokers’ Fees . The Company has not incurred any liability, contingent or otherwise, for brokers’ or finders’ fees relating to the transactions contemplated by this Agreement for which Citizen or Linn shall have any responsibility.
Section 9.6      Litigation . As of the Execution Date, there is no suit, action or litigation by any Person by or before any Governmental Body, and no legal, administrative or arbitration proceeding (in each case) pending or, to the Company’s knowledge, threatened in writing (a) against the Company or (b) that would be reasonably likely to have a material adverse effect upon the ability of the Company to consummate the transactions contemplated by this Agreement.

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Section 9.7      Independent Evaluation . The Company is sophisticated in the evaluation, purchase, ownership and operation of oil and gas properties and related facilities. In making its decision to enter into this Agreement and to consummate the transactions contemplated hereby, the Company has relied or shall rely solely on the representations, warranties and covenants set forth herein and in the Transaction Documents to which it is a party and its own independent investigation and evaluation of the Assets and the advice of its own legal, Tax, economic, environmental, engineering, geological and geophysical advisors and the express provisions of this Agreement and not on any comments, statements, projections or other materials made or given by any representatives or consultants or advisors of Citizen or Linn.
ARTICLE 10
COVENANTS OF THE PARTIES
Section 10.1      Linn Conduct of Business .
(a)      Except (w) as set forth in Schedule 10.1(a) , (x) for the operations covered by the AFEs described in Schedule 7.18 or such operations required pursuant to any applicable Law, (y) as required in the event of an emergency to protect life, property or the environment, and (z) as expressly contemplated by this Agreement or as expressly consented to in writing by Citizen (which consent shall not be unreasonably delayed, withheld or conditioned), Linn shall, during the Interim Period:
(i)      subject to interruptions resulting from force majeure, mechanical breakdown and planned maintenance, in each case, operate or, in the case of those Linn Assets not operated by Linn, use its commercially reasonable efforts to cause to be operated, the Linn Assets in the usual, regular and ordinary manner consistent with past practice and as a reasonably prudent operator;
(ii)      maintain, or cause to be maintained, the books of account and Linn Records relating to the Linn Assets in the usual, regular and ordinary manner and in accordance with generally accepted accounting principles; and
(iii)      promptly notify Citizen in writing of any operations proposed after the Execution Date which would reasonably be estimated to require expenditures in excess of $250,000, as well as any amendments or supplements to any previously proposed operations which could reasonably be estimated to require expenditures in excess of $250,000, to the extent such operations could require the approval the co-interest owners of the Linn Assets or would result in any elections to participate or be deemed a non-consenting interest owner regarding the Linn Assets, and Linn shall consult with Citizen prior to (A) providing any such approval or consent, (B) allowing the election period to pass or (C) otherwise being deemed to be a non-consenting co-interest owner with regard to such proposed operation;
Except (w) as set forth in Schedule 10.1(a) , (x) for the operations covered by the AFEs described in Schedule 7.18 or such operations required pursuant to any applicable Law, (y) as required in the event of an emergency to protect life, property or the environment, and (z) as expressly contemplated by this Agreement or as expressly consented to in writing by Citizen

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(which consent shall not be unreasonably delayed, withheld or conditioned), Linn shall not, during the Interim Period:
(iv)      (A) enter into a Linn Contract that, if entered into on or prior to the Execution Date, would have been required to be listed on Schedule 7.13(a) , or (B) terminate (unless the term thereof expires pursuant to the provisions existing therein) or materially amend the terms of any Material Linn Contract;
(v)      enter into any Linn Contract that contains an area of mutual interest, a non-competition obligation, right of first refusal, a right of first offer, or any similar options or restrictions;
(vi)      terminate (unless the term thereof expires pursuant to the provisions existing therein), materially amend, extend or surrender any rights under any Linn Lease or Linn Right-of-Way;
(vii)      without limitation of Section 10.1(a)(iii) and subject to Section 10.1(e) , propose or approve any individual AFE or similar request under any Linn Contract which would reasonably be estimated to require expenditures in excess of $250,000.
(viii)      transfer, sell, mortgage, pledge or dispose of any material portion of the Linn Assets other than the (A) sale and/or disposal of Hydrocarbons in the ordinary course of business, (B) sales of equipment that is no longer necessary in the operation of the Linn Assets or for which replacement equipment has been obtained and (C) transfer of Linn Assets between LEH and LOI;
(ix)      (A) make, change or revoke any Tax election; (B) adopt or change any accounting method with respect to Asset Taxes; (C) file any amended Tax Return with respect to Asset Taxes that the Company is responsible for hereunder after Closing; (D) enter into any closing agreement with respect to Asset Taxes; (E) settle or compromise any Asset Tax claim or assessment that Company is responsible for hereunder after Closing; or (F) consent to any extension or waiver of the limitation period applicable to any claim or assessment with respect to Taxes related to or attributable to the Linn Assets that the Company will be responsible for after Closing; or
(x)      commit to do any of the foregoing.
(b)      Without expanding any obligations which Linn may have to Citizen or the Company, it is expressly agreed that Linn shall never have any liability to Citizen or the Company with respect to any breach or failure of Section 10.1(a)(i) greater than that which it might have as the operator to a non-operator under the applicable operating agreement (or, in the absence of such an agreement, under the AAPL 610 (1989 Revision) form Operating Agreement), IT BEING RECOGNIZED THAT, UNDER SUCH AGREEMENTS AND SUCH FORM, THE OPERATOR IS NOT RESPONSIBLE FOR ITS OWN NEGLIGENCE, AND HAS NO RESPONSIBILITY OTHER THAN FOR GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. Notwithstanding anything to the contrary herein, nothing in this Section 10.1(b) shall be construed to limit Linn’s liability for breaches of Section 10.1(a)(i) to the extent such breaches are not related to the physical operation of the Linn Assets, nor shall anything in

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this Section 10.1(b) be construed to limit Linn’s liability for breaches of any of the other provisions of Section 10.1(a) (other than as described above with regard to Section 10.1(a)(i)) .
(c)      Citizen acknowledges that Linn owns undivided interests in certain of the properties comprising the Linn Assets that it is not the operator thereof, and Citizen agrees that the acts or omissions of the other Working Interest owners (including the operators) who are not Linn or any of its Affiliates shall not constitute a breach of the provisions of this Section 10.1 , nor shall any action required by a vote of Working Interest owners constitute such a breach so long as Linn (or its Affiliate, as applicable) has voted its interest in a manner that complies with the provisions of this Section 10.1 and has provided Citizen notice of any actions or omissions of a Third Party operator which do not conform to any elections of Citizen under this Section 10.1 .
(d)      With respect to any AFE received by Linn that is estimated to cost in excess of $250,000 and for which the relevant activity is not described in Schedule 10.1(a) , Linn shall forward such AFE to Citizen as soon as is reasonably practicable and thereafter the Transacting Parties shall consult with each other regarding whether or not Linn should elect to participate in such operation. Citizen agrees that it will (i) respond as soon as is reasonably practicable to any written request for consent pursuant to this Section 10.1(d) and Section 10.1(a)(iii) , and (ii) consent to any written request for approval of any AFE or similar request unless Citizen reasonably considers such request not to be economically prudent. In the event the Transacting Parties are unable to agree within ten (10) Business Days (unless a shorter time, not to be less than 48 hours, is reasonably required by the circumstances and the applicable joint operating agreement and such shorter time is specified in Linn’s request for consent) of Citizen’s receipt of any consent request as to whether or not Linn should elect to participate in such operation, Linn’s decision shall control and such operation shall be deemed to have been consented to by Citizen.
Section 10.2      Citizen Conduct of Business .
(a)      Except (w) as set forth in Schedule 10.2(a) , (x) for the operations covered by the AFEs described in Schedule 8.18 or such operations required pursuant to any applicable Law, (y) as required in the event of an emergency to protect life, property or the environment, and (z) as expressly contemplated by this Agreement or as expressly consented to in writing by Linn (which consent shall not be unreasonably delayed, withheld or conditioned), Citizen shall, during the Interim Period:
(i)      subject to interruptions resulting from force majeure, mechanical breakdown and planned maintenance, in each case, operate or, in the case of those Citizen Assets not operated by Citizen, use its commercially reasonable efforts to cause to be operated, the Citizen Assets in the usual, regular and ordinary manner consistent with past practice and as a reasonably prudent operator;
(ii)      maintain, or cause to be maintained, the books of account and Citizen Records relating to the Citizen Assets in the usual, regular and ordinary manner and in accordance with generally accepted accounting principles; and

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(iii)      promptly notify Linn in writing of any operations proposed after the Execution Date which would reasonably be estimated to require expenditures in excess of $250,000, as well as any amendments or supplements to any previously proposed operations which could reasonably be estimated to require expenditures in excess of $250,000, to the extent such operations could require the approval the co-interest owners of the Citizen Assets or would result in any elections to participate or be deemed a non-consenting interest owner regarding the Citizen Assets, and Citizen shall consult with Linn prior to (A) providing any such approval or consent, (B) allowing the election period to pass or (C) otherwise being deemed to be a non-consenting co-interest owner with regard to such proposed operation;
Except (w) as set forth in Schedule 10.2(a) , (x) for the operations covered by the AFEs described in Schedule 8.18 or such operations required pursuant to any applicable Law, (y) as required in the event of an emergency to protect life, property or the environment, and (z) as expressly contemplated by this Agreement or as expressly consented to in writing by Linn (which consent shall not be unreasonably delayed, withheld or conditioned), Citizen shall not, during the Interim Period:
(iv)      (A) enter into a Citizen Contract that, if entered into on or prior to the Execution Date, would have been required to be listed on Schedule 8.13(a) , or (B) terminate (unless the term thereof expires pursuant to the provisions existing therein) or materially amend the terms of any Material Citizen Contract;
(v)      enter into any Citizen Contract that contains an area of mutual interest, a non-competition obligation, right of first refusal, a right of first offer, or any similar options or restrictions;
(vi)      terminate (unless the term thereof expires pursuant to the provisions existing therein), materially amend, extend or surrender any rights under any Citizen Lease or Citizen Right-of-Way;
(vii)      without limitation of Section 10.2(a)(iii) and subject to Section 10.2(e) , propose or approve any individual AFE or similar request under any Citizen Contract which would reasonably be estimated to require expenditures in excess of $250,000.
(viii)      transfer, sell, mortgage, pledge or dispose of any material portion of the Citizen Assets other than the (A) sale and/or disposal of Hydrocarbons in the ordinary course of business, and (B) sales of equipment that is no longer necessary in the operation of the Citizen Assets or for which replacement equipment has been obtained;
(ix)      (A) make, change or revoke any Tax election; (B) adopt or change any accounting method with respect to Asset Taxes; (C) file any amended Tax Return with respect to Asset Taxes that the Company is responsible for hereunder after Closing; (D) enter into any closing agreement with respect to Asset Taxes; (E) settle or compromise any Asset Tax claim or assessment that Company is responsible for hereunder after Closing; or (F) consent to any extension or waiver of the limitation period applicable to any claim or assessment with respect to Taxes related to or attributable to the Citizen Assets that the Company will be responsible for after Closing; or

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(x)      commit to do any of the foregoing.
(b)      Without expanding any obligations which Citizen may have to Linn or the Company, it is expressly agreed that Citizen shall never have any liability to Linn or the Company with respect to any breach or failure of Section 10.2(a)(i) greater than that which it might have as the operator to a non-operator under the applicable operating agreement (or, in the absence of such an agreement, under the AAPL 610 (1989 Revision) form Operating Agreement), IT BEING RECOGNIZED THAT, UNDER SUCH AGREEMENTS AND SUCH FORM, THE OPERATOR IS NOT RESPONSIBLE FOR ITS OWN NEGLIGENCE, AND HAS NO RESPONSIBILITY OTHER THAN FOR GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. Notwithstanding anything to the contrary herein, nothing in this Section 10.2(b) shall be construed to limit Citizen’s liability for breaches of Section 10.2(a)(i) to the extent such breaches are not related to the physical operation of the Citizen Assets, nor shall anything in this Section 10.2(b) be construed to limit Citizen’s liability for breaches of any of the other provisions of Section 10.2(a) (other than as described above with regard to Section 10.2(a)(i)) .
(c)      Linn acknowledges that Citizen owns undivided interests in certain of the properties comprising the Citizen Assets that it is not the operator thereof, and Linn agrees that the acts or omissions of the other Working Interest owners (including the operators) who are not Citizen or any of its Affiliates shall not constitute a breach of the provisions of this Section 10.2 , nor shall any action required by a vote of Working Interest owners constitute such a breach so long as Citizen (or its Affiliate, as applicable) has voted its interest in a manner that complies with the provisions of this Section 10.2 and has provided Linn notice of any actions or omissions of a Third Party operator which do not conform to any elections of Linn under this Section 10.2 .
(d)      With respect to any AFE received by Citizen that is estimated to cost in excess of $250,000 and for which the relevant activity is not described in Schedule 10.2(a) , Citizen shall forward such AFE to Linn as soon as is reasonably practicable and thereafter the Transacting Parties shall consult with each other regarding whether or not Citizen should elect to participate in such operation. Linn agrees that it will (i) respond as soon as is reasonably practicable to any written request for consent pursuant to this Section 10.2(d) and Section 10.2(a)(iii) , and (ii) consent to any written request for approval of any AFE or similar request unless Linn reasonably considers such request not to be economically prudent. In the event the Transacting Parties are unable to agree within ten (10) Business Days (unless a shorter time, not to be less than 48 hours, is reasonably required by the circumstances and the applicable joint operating agreement and such shorter time is specified in Citizen’s request for consent) of Linn’s receipt of any consent request as to whether or not Citizen should elect to participate in such operation, Citizen’s decision shall control and such operation shall be deemed to have been consented to by Linn.
Section 10.3      Public Announcements; Confidentiality . During the Interim Period, no Party shall make any press release or other public announcement regarding the existence of this Agreement, the contents hereof or the transactions contemplated hereby without the prior written consent of the other Parties (collectively, the “ Public Announcement Restrictions ”). The Public Announcement Restrictions shall not restrict disclosures to the extent (a) necessary for a Party to perform this Agreement (including disclosures to Governmental Bodies or Third Parties holding

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rights of consent, Linn Preferential Purchase Rights, Citizen Preferential Purchase Rights or other rights that may be applicable to the transaction contemplated by this Agreement, as reasonably necessary to provide notices, seek waivers, amendments or termination of such rights, or seek such consents) or (b) required (upon advice of counsel) by applicable securities or other Laws or regulations or the applicable rules of any stock exchange having jurisdiction over the Parties or their respective Affiliates. In the case of the disclosures described under clause (b) of this Section 10.3 , each Party shall provide the other Parties not less than one (1) Business Day to review and comment on the contents of any such release or announcement prior to making such release or announcement. Following the Interim Period, any restrictions on press releases or other public announcements shall be governed by the LLC Agreement.
Section 10.4      Further Assurances . After the Closing, each Party agrees to take such further actions and to execute, acknowledge and deliver all such further documents as are reasonably requested by the other Party for carrying out the purposes of this Agreement or of any document delivered pursuant to this Agreement.
Section 10.5      Linn and Citizen Bonds . The Parties acknowledge and agree that each of Linn and Citizen has the right to terminate any bonds, letters of credit and guarantees provided by it or its Affiliates for the benefit of Linn or Citizen, and the Company shall be responsible, at the Company’s sole cost and expense, to cause the same to be released and, if applicable, replaced, promptly after the Closing.
Section 10.6      Amendment to Schedules .
(a)      Linn shall have the continuing right until the Closing Date to add, supplement or amend the schedules to its representations and warranties attached hereto with respect to any matter hereafter arising or discovered which, if existing or known on the Execution Date or thereafter, would have been required to be set forth or described in such schedules. Notwithstanding the foregoing, for all purposes of this Agreement, including for purposes of determining whether the conditions set forth in Article 12 have been fulfilled and whether Linn owes Citizen any indemnity under Section 15.1 , the schedules to Linn’s representations and warranties contained in this Agreement shall be deemed to include only that information contained therein on the Execution Date and shall be deemed to exclude all information contained in any addition, supplement or amendment thereto; provided , however , that if Closing shall occur, then all matters disclosed pursuant to any such addition, supplement or amendment at or prior to the Closing Date that: (i) arose in the ordinary course of business and (ii) do not exceed $2,000,000 in aggregate value or liability shall be waived and Citizen shall not be entitled to make a claim with respect thereto pursuant to the terms of this Agreement or otherwise.
Citizen shall have the continuing right until the Closing Date to add, supplement or amend the schedules to its representations and warranties attached hereto with respect to any matter hereafter arising or discovered which, if existing or known on the Execution Date or thereafter, would have been required to be set forth or described in such schedules. Notwithstanding the foregoing, for all purposes of this Agreement, including for purposes of determining whether the conditions set forth in Article 11 have been fulfilled and whether Citizen owes Linn any indemnity under Section 15.2 , the schedules to Citizen’s representations

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and warranties contained in this Agreement shall be deemed to include only that information contained therein on the Execution Date and shall be deemed to exclude all information contained in any addition, supplement or amendment thereto; provided , however , that if Closing shall occur, then all matters disclosed pursuant to any such addition, supplement or amendment at or prior to the Closing Date that: (i) arose in the ordinary course of business and (ii) do not exceed $2,000,000 in aggregate value or liability shall be waived and Linn shall not be entitled to make a claim with respect thereto pursuant to the terms of this Agreement or otherwise.
Section 10.7      Letters-in-Lieu; Change of Operator; Qualification of Company . Upon the earlier of the termination or expiration of the Master Services Agreement or earlier if so provided in the Master Services Agreement, Linn and Citizen shall execute and deliver to the Company: (i) such letter-in-lieu of division or transfer orders, directing purchasers of production attributable to the Linn Assets and Citizen Assets to pay the Company for the same, in such form as are reasonably satisfactory to Company; (ii) change of operator forms as required to transfer operatorship of any Linn Assets and Citizen Assets to the Company or to Company’s designated operator, and (iii) all books, records, contracts, receipts for deposits and all other papers, documents, electronic data or files created and maintained by Linn or its Affiliate (or by Citizen or its Affiliate) after the Closing and prior to the termination of the Master Services Agreement (other than any such items subject to attorney-client privilege) in connection with performing the Services under the applicable Master Services Agreement. In addition, the Parties shall use their commercially reasonable efforts to cause the Company, as of the Closing (or as soon thereafter as is reasonably practicable), to be qualified as an operator with, and have the bonding and insurance in place that may be required from, the applicable Governmental Bodies sufficient to assume operations of the Linn Assets and the Citizen Assets upon the termination of the Master Service Agreement.
Section 10.8      Rights Associated with Linn Waterflood Assets . By written notice from Citizen to Linn at any time prior to the day that is ten Business Days after the Execution Date, Citizen may elect to cause all depths subject to those Linn Leases that include interests in the Linn Waterflood Assets that are not included in the Target Formations in such Linn Leases to be Linn Excluded Assets hereunder. Failure of Citizen to make such an election in accordance with the terms of the preceding sentence shall be deemed a waiver of the right to make such an election. In the event of such an election, the Parties shall amend the definition of “Linn Excluded Assets” and the Linn Assignment to effect such election.
Section 10.9      Reserve-Based Loan . In order to finance the operating and capital budgets of the Company, the Transacting Parties shall use their respective commercially reasonable efforts to cause the Company to secure, at or prior to the Closing, a reserve-based loan from a mutually-agreed lender on such terms and conditions as the Transacting Parties mutually agree. For the avoidance of doubt, securing such a reserve-based loan is not a condition to Closing.
Section 10.10      Certain Citizen Excluded Assets . Notwithstanding anything to the contrary herein, to the extent any oil and gas leases expressly identified on Exhibit E (Part II) are within the AMI, such oil and gas leases (but only to extent within the AMI) shall be deemed to be Citizen Leases, and shall not be Citizen Excluded Assets for any purpose hereunder.

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ARTICLE 11
LINN CONDITIONS TO CLOSING
The obligations of Linn to consummate the transactions provided for herein are subject, at the option of Linn, to the fulfillment by Citizen or waiver by Linn, on or prior to Closing, of each of the following conditions:
Section 11.1      Citizen Representations . The representations and warranties of Citizen set forth in Article 8 shall be true and correct on and as of the Closing Date, with the same force and without giving effect to any qualifiers as to materiality, as though such representations and warranties had been made or given on and as of the Closing Date (other than representations and warranties that refer to a specified date, which need only be true and correct on and as of such specified date), except for those breaches, if any, of such representations and warranties as would not have a Material Adverse Effect.
Section 11.2      Citizen Covenants . Citizen shall have performed or complied in all material respects with all obligations, agreements and covenants contained in this Agreement as to which performance or compliance by Citizen is required prior to or at the Closing Date.
Section 11.3      No Legal Proceedings . No material suit, action or other proceeding by any Third Party shall be pending before any Governmental Body (a) seeking to restrain, prohibit, enjoin or declare illegal, or (b) seeking substantial damages in connection with, the transactions contemplated by this Agreement.
Section 11.4      Citizen Title Defects and Citizen Environmental Defects . The sum of (a) all Citizen Title Defect Amounts, less the sum (i) of all Citizen Title Benefit Amounts and (ii) all Citizen Title Defect Amounts associated with Citizen Title Defects that Citizen has elected to cure, (b) all Citizen Remediation Amounts for Citizen Environmental Defects, (c) the alleged Citizen Title Defect Amounts of all Title Disputes regarding Citizen Assets and the alleged Remediation Amounts of all Environmental Disputes regarding Citizen Assets, (d) the Allocated Values of all Citizen Assets excluded from Closing in accordance with Article 4 and Article 5 , and (e) the amount of Liabilities associated with Citizen Casualty Losses, in each case, for which the Initial Citizen Agreed Value is adjusted downward pursuant to Section 3.3(a) shall be less than 20% of the Initial Citizen Agreed Value.
Section 11.5      Linn Title Defects and Linn Environmental Defects . The sum of (a) all Linn Title Defect Amounts, less the sum (i) of all Linn Title Benefit Amounts and (ii) all Linn Title Defect Amounts associated with Linn Title Defects that Linn has elected to cure, (b) all Remediation Amounts for Linn Environmental Defects, (c) the alleged Linn Title Defect Amounts of all Title Disputes regarding Linn Assets and the alleged Remediation Amounts of all Environmental Disputes regarding Linn Assets, (d) the Allocated Values of all Linn Assets excluded from Closing in accordance with Article 4 and Article 5 , and (e) the amount of Liabilities associated with Linn Casualty Losses, in each case, for which the Initial Linn Agreed Value is adjusted downward pursuant to Section 3.2(a) shall be less than 20% of the Initial Linn Agreed Value.

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Section 11.6      Citizen Closing Certificate . Citizen shall have executed and delivered to Linn an officer’s certificate, dated as of the Closing Date and substantially in the form of Exhibit B (Part II) , certifying that the conditions set forth in Section 11.1 and Section 11.2 have been fulfilled and, if applicable, any exceptions to such conditions that have been waived by Linn.
Section 11.7      Citizen Closing Deliverables . Citizen shall be ready, willing and able to deliver to Linn at the Closing the documents and items required to be delivered by Citizen under Section 13.3 .
Section 11.8      Company Representations . The representations and warranties of the Company set forth in Article 9 shall be true and correct on and as of the Closing Date, with the same force and without giving effect to any qualifiers as to materiality, as though such representations and warranties had been made or given on and as of the Closing Date (other than representations and warranties that refer to a specified date, which need only be true and correct on and as of such specified date), except for those breaches, if any, of such representations and warranties as would not have a Material Adverse Effect.
Section 11.9      Company Covenants . The Company shall have performed or complied in all material respects with all obligations, agreements and covenants contained in this Agreement as to which performance or compliance by the Company is required prior to or at the Closing Date.
Section 11.10      Company Closing Certificate . The Company shall have executed and delivered to Linn an officer’s certificate, dated as of the Closing Date and substantially in the form of Exhibit B (Part III), certifying that the conditions set forth in Section 11.8 and Section 11.9 have been fulfilled and, if applicable, any exceptions to such conditions that have been waived by Linn.
Section 11.11      Company Closing Deliverables . The Company shall be ready, willing and able to deliver to Linn at the Closing the documents and items required to be delivered by the Company under Section 13.4 .
ARTICLE 12
CITIZEN CONDITIONS TO CLOSING
The obligations of Citizen to consummate the transactions provided for herein are subject, at the option of Citizen, to the fulfillment by Linn or waiver by Citizen, on or prior to Closing, of each of the following conditions:
Section 12.1      Linn Representations . The representations and warranties of Linn set forth in Article 7 shall be true and correct on and as of the Closing Date, with the same force and without giving effect to any qualifiers as to materiality, as though such representations and warranties had been made or given on and as of the Closing Date (other than representations and warranties that refer to a specified date, which need only be true and correct on and as of such specified date), except for those breaches, if any, of such representations and warranties as would not have a Material Adverse Effect.

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Section 12.2      Linn Covenants . Linn shall have performed or complied in all material respects with all obligations, agreements and covenants contained in this Agreement as to which performance or compliance by Linn is required prior to or at the Closing Date.
Section 12.3      No Legal Proceedings . No material suit, action or other proceeding by any Third Party shall be pending before any Governmental Body (a) seeking to restrain, prohibit, enjoin or declare illegal, or (b) seeking substantial damages in connection with, the transactions contemplated by this Agreement.
Section 12.4      Linn Title Defects and Linn Environmental Defects . The sum of (a) all Linn Title Defect Amounts, less the sum (i) of all Linn Title Benefit Amounts and (ii) all Linn Title Defect Amounts associated with Linn Title Defects that Linn has elected to cure, (b) all Linn Remediation Amounts for Linn Environmental Defects, (c) the alleged Linn Title Defect Amounts of all Title Disputes regarding Linn Assets and the alleged Remediation Amounts of all Environmental Disputes regarding Linn Assets, (d) the Allocated Values of all Linn Assets excluded from Closing in accordance with Article 4 and Article 5 , and (e) the amount of Liabilities associated with Linn Casualty Losses, in each case, for which the Initial Linn Agreed Value is adjusted downward pursuant to Section 3.2(a) shall be less than 20% of the Initial Linn Agreed Value.
Section 12.5      Citizen Title Defects and Citizen Environmental Defects . The sum of (a) all Citizen Title Defect Amounts, less the sum (i) of all Citizen Title Benefit Amounts and (ii) all Citizen Title Defect Amounts associated with Citizen Title Defects that Citizen has elected to cure, (b) all Remediation Amounts for Citizen Environmental Defects, (c) the alleged Citizen Title Defect Amounts of all Title Disputes regarding Citizen Assets and the alleged Remediation Amounts of all Environmental Disputes regarding Citizen Assets, (d) the Allocated Values of all Citizen Assets excluded from Closing in accordance with Article 4 and Article 5 , and (e) the amount of Liabilities associated with Citizen Casualty Losses, in each case, for which the Initial Citizen Agreed Value is adjusted downward pursuant to Section 3.3(a) shall be less than 20% of the Initial Citizen Agreed Value.
Section 12.6      Linn Closing Certificate . Linn shall have executed and delivered to Citizen an officer’s certificate, dated as of the Closing Date and substantially in the form of Exhibit B (Part I) , certifying that the conditions set forth in Section 12.1 and Section 12.2 have been fulfilled and, if applicable, any exceptions to such conditions that have been waived by Citizen.
Section 12.7      Linn Closing Deliverables . Linn shall be ready, willing and able to deliver to Citizen at the Closing the documents and items required to be delivered by Linn under Section 13.2 .
Section 12.8      Company Representations . The representations and warranties of the Company set forth in Article 9 shall be true and correct on and as of the Closing Date, with the same force and without giving effect to any qualifiers as to materiality, as though such representations and warranties had been made or given on and as of the Closing Date (other than representations and warranties that refer to a specified date, which need only be true and correct

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on and as of such specified date), except for those breaches, if any, of such representations and warranties as would not have a Material Adverse Effect.
Section 12.9      Company Covenants . The Company shall have performed or complied in all material respects with all obligations, agreements and covenants contained in this Agreement as to which performance or compliance by the Company is required prior to or at the Closing Date.
Section 12.10      Company Closing Certificate . The Company shall have executed and delivered to Citizen an officer’s certificate, dated as of the Closing Date and substantially in the form of Exhibit B (Part III), certifying that the conditions set forth in Section 12.8 and Section 12.9 have been fulfilled and, if applicable, any exceptions to such conditions that have been waived by Citizen.
Section 12.11      Company Closing Deliverables . The Company shall be ready, willing and able to deliver to Citizen at the Closing the documents and items required to be delivered by the Company under Section 13.4 .
ARTICLE 13
CLOSING
Section 13.1      Time and Place of Closing . Subject to the conditions set forth in this Agreement, the consummation of the transactions contemplated by this Agreement (the “ Closing ”) shall occur at the offices of Latham & Watkins LLP located at 811 Main Street, Suite 3700, Houston, Texas 77002, on or before 9:00 a.m. (Central Prevailing Time) on August 31, 2017 (the “ Scheduled Closing Date ”), or such other date as the Transacting Parties may agree upon in writing; provided that if the conditions to Closing in Article 11 and Article 12 have not yet been satisfied or waived by the Scheduled Closing Date, then Closing shall occur five (5) Business Days after such conditions have been satisfied or waived. The date Closing actually occurs shall be the “ Closing Date ”.
Section 13.2      Obligations of Linn at Closing . At the Closing, subject to the terms and conditions of this Agreement, and subject to the simultaneous performance by Citizen of its obligations pursuant to Section 13.3 and the Company of its obligations in Section 13.4 , Linn shall deliver or cause to be delivered to Citizen and the Company the following:
(a)      counterparts of the Linn Assignment, duly executed by Linn;
(b)      counterparts of the LLC Agreement, duly executed by Linn;
(c)      counterparts of the Master Services Agreement, duly executed by Linn;
(d)      full releases of all liens granted by any member of the Linn Group that burden the Linn Assets (other than Linn Permitted Encumbrances) in form reasonably satisfactory to Citizen;

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(e)      assignments in the forms required by Governmental Bodies for the assignment of any federal, state or tribal Linn Assets, duly executed by Linn, in sufficient duplicate originals to allow recording in all appropriate offices; and
(f)      an executed statement described in Treasury Regulation Section 1.1445-2(b)(2) from Linn certifying that Linn is not a foreign person within the meaning of the Code.
Section 13.3      Obligations of Citizen at Closing . At the Closing, subject to the terms and conditions of this Agreement, and subject to the simultaneous performance by Linn of its obligations pursuant to Section 13.2 and the Company of its obligations in Section 13.4 , Citizen shall deliver or cause to be delivered to Linn and the Company the following:
(a)      evidence reasonably satisfactory to Linn that the Company has been formed by the filing of the Company Certificate and a certificate of name change changing the name of the Company to “Roan Resources LLC”;
(b)      counterparts of the Citizen Assignment, duly executed by Citizen;
(c)      counterparts of the LLC Agreement, duly executed by Citizen;
(d)      counterparts of the Master Services Agreement, duly executed by Citizen;
(e)      full releases of all liens granted by any member of the Citizen Group that burden the Citizen Assets (other than Citizen Permitted Encumbrances) in form reasonably satisfactory to Linn;
(f)      assignments in the forms required by Governmental Bodies for the assignment of any federal, state or tribal Citizen Assets, duly executed by Citizen, in sufficient duplicate originals to allow recording in all appropriate offices; and
(g)      an executed statement described in Treasury Regulation Section 1.1445-2(b)(2) from Citizen certifying that Citizen is not a foreign person within the meaning of the Code.
Section 13.4      Obligations of the Company at Closing . At the Closing, subject to the terms and conditions of this Agreement, and subject to the simultaneous performance by Linn of its obligations pursuant to Section 13.2 and Citizen of its obligations pursuant to Section 13.3 , the Company shall deliver or cause to be delivered to the Transacting Parties the following:
(a)      counterparts of the Linn Assignment, duly executed by the Company;
(b)      counterparts of the Citizen Assignment, duly executed by the Company;
(c)      counterparts of the LLC Agreement, duly executed by the Company; and
(d)      counterparts of the Master Services Agreement, duly executed by Company.

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ARTICLE 14
TERMINATION; DEFAULT AND REMEDIES
Section 14.1      Right of Termination . This Agreement and the transactions contemplated herein may be terminated at any time prior to Closing:
(a)      by the mutual written agreement of the Transacting Parties;
(b)      by delivery of written notice from Linn to Citizen if any of the conditions set forth in Article 11 (other than the conditions set forth in Section 11.3 , Section 11.4 or Section 11.5 ) have not been satisfied by Citizen or the Company, as applicable (or waived by Linn), by the Outside Date;
(c)      by delivery of written notice from Linn to Citizen if any of the conditions set forth in Section 11.4 or Section 11.5 have not been satisfied (or waived by Linn) by the Outside Date;
(d)      by delivery of written notice from Citizen to Linn if any of the conditions set forth in Article 12 (other than the conditions set forth in Section 12.3 , Section 12.4 or Section 12.5 ) have not been satisfied by Linn (or waived by Citizen) by the Outside Date;
(e)      by delivery of written notice from Citizen to Linn if any of the conditions set forth in Section 12.4 or Section 12.5 have not been satisfied (or waived by Citizen) by the Outside Date;
(f)      by either Transacting Party delivering written notice to the other Transacting Party if any of the conditions set forth in Section 11.3 or Section 12.3 are not satisfied or waived by the applicable Party on or before the Outside Date; or
(g)      by either Transacting Party delivering written notice to the other Transacting Party if Closing has not occurred on or before the Outside Date;
provided , however , that no Transacting Party shall have the right to terminate this Agreement pursuant to clause (b), (d) or (f) above if such Transacting Party or its Affiliates are at such time in material breach of any provision of this Agreement.
Section 14.2      Effect of Termination . If this Agreement is terminated pursuant to any provision of Section 14.1 , then, except as provided in this Section 14.2 and except for the provisions of Article 1 , Sections 6.1 (other than the access rights granted under Sections 6.1(a) and 6.1(b)) , 6.2 , 6.3 , 7.5 , 8.5 , 9.5 , 10.3 , 14.3 and Article 17 , this Agreement shall forthwith become void and of no further force or effect and the Parties shall have no liability or obligation hereunder.
(a)      If Linn has the right to terminate this Agreement pursuant to Section 14.1(b) because of the failure of Citizen to close the transactions contemplated by this Agreement in the instance where, as of the Outside Date, (i) all of the conditions in Article 12 (excluding conditions that, by their terms, cannot be satisfied until Closing) have been satisfied (or waived by Citizen), (ii) Linn is ready, willing and able to perform its obligations under

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Section 13.2 , and (iii) Citizen nevertheless elects not to close the transactions contemplated by this Agreement, then Linn, as Linn’s sole and exclusive remedy, shall be entitled to either: (A) terminate this Agreement pursuant to Section 14.1(b) , and within two (2) Business Days after such termination, Citizen shall deliver by wire transfer of immediately available funds to an account designated in writing by Linn an amount equal to 10% of the Initial Linn Agreed Value, or (B) seek the specific performance of Citizen hereunder. If Linn is entitled to make an election pursuant to the preceding sentence, Linn shall select the remedy in clause (A) or (B) above within five (5) Business Days after the Outside Date by written notice to Citizen and the Company. Failure to make such an election within such period shall be deemed to be an election by Linn to select clause (A) . Nothing herein shall be construed to preclude Linn from first seeking specific performance hereunder, and thereafter terminating this Agreement (and being entitled to the remedy described in clause (A) above).
(b)      If Citizen has the right to terminate this Agreement pursuant to Section 14.1(d) because of the failure of Linn to close the transactions contemplated by this Agreement in the instance where, as of the Outside Date, (i) all of the conditions in Article 11 (excluding conditions that, by their terms, cannot be satisfied until Closing) have been satisfied (or waived by Linn), (ii) Citizen is ready, willing and able to perform its obligations under Section 13.3 , and (iii) Linn nevertheless elects not to close the transactions contemplated by this Agreement, then Citizen, as Citizen’s sole and exclusive remedy, shall be entitled to either: (A) terminate this Agreement pursuant to Section 14.1(d) , and within two (2) Business Days after such termination, Linn shall deliver by wire transfer of immediately available funds to an account designated in writing by Citizen an amount equal to 10% of the Initial Citizen Agreed Value, or (B) seek the specific performance of Linn hereunder. If Citizen is entitled to make an election pursuant to the preceding sentence, Citizen shall select the remedy in clause (A) or (B) above within five (5) Business Days after the Outside Date by written notice to Linn and the Company. Failure to make such an election within such period shall be deemed to be an election to select clause (A) . Nothing herein shall be construed to preclude Citizen from first seeking specific performance hereunder, and thereafter terminating this Agreement (and being entitled to the remedy described in clause (A) above).
Section 14.3      Return of Documentation and Confidentiality . In addition to any obligations under the Confidentiality Agreement, upon termination of this Agreement, each Transacting Party shall promptly return to the other Transacting Party or destroy (and provide written certification of such destruction) all title, engineering, geological and geophysical data, environmental assessments and/or reports, maps, documents and other information furnished by such other Transacting Party to such Transacting Party or prepared by or on behalf of such Transacting Party in connection with its due diligence investigation of the other Transacting Party’s Assets and such Transacting Party shall not retain any copies, extracts or other reproductions in whole or in part of such documents and information; provided, however, any of the foregoing (a) found in drafts, notes, studies and other documents prepared by or for such Transacting Party, (b) found in presentation materials that are included in materials presented to the executive committee or board of directors of such Transacting Party (or its Affiliate) in connection with this Agreement, together with any notes or minutes from any such presentations, or (c) found in electronic format as part of such Transacting Party or its Affiliate’s off-site or on-site data storage/archival process system, will be held by such Transacting Party and kept

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confidential subject to the terms of the Confidentiality Agreement or destroyed at the retaining Transacting Party’s option.
ARTICLE 15
INDEMNIFICATION; ASSUMPTION OF LIABILITIES
Section 15.1      Indemnification by Linn . From and after Closing, Linn shall indemnify, defend and hold harmless the Citizen Group and the Company Group (and any member of either such Group) from and against all Liabilities suffered or incurred by the Citizen Group and/or the Company Group (and any member of either such Group) that are caused by or arise out of or result from:
(a)      the Linn Retained Liabilities;
(b)      any breach of any of Linn’s covenants or agreements under this Agreement; or
(c)      any breach of any representation or warranty made by Linn contained in this Agreement or any certification delivered in connection herewith; or
(d)      the Linn Indemnity Liabilities,
EVEN IF SUCH LIABILITIES ARE CAUSED IN WHOLE OR IN PART BY THE NEGLIGENCE (WHETHER SOLE, JOINT OR CONCURRENT), STRICT LIABILITY OR OTHER LEGAL FAULT OF A MEMBER OF THE LINN GROUP, OR THE CITIZEN GROUP, BUT NOT TO THE EXTENT OF THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF ANY OF THE CITIZEN GROUP.
Section 15.2      Indemnification by Citizen . From and after Closing, Citizen shall indemnify, defend and hold harmless the Linn Group and the Company Group (and any member of either such Group) from and against all Liabilities suffered or incurred by the Linn Group and/or the Company Group (and any member of either such Group) that are caused by or arise out of or result from:
(a)      the Citizen Retained Liabilities;
(b)      any breach of any of Citizen’s covenants or agreements under this Agreement;
(c)      any breach of any representation or warranty made by Citizen contained in this Agreement or any certification delivered in connection herewith; or
(d)      the Citizen Indemnity Liabilities,
EVEN IF SUCH LIABILITIES ARE CAUSED IN WHOLE OR IN PART BY THE NEGLIGENCE (WHETHER SOLE, JOINT OR CONCURRENT), STRICT LIABILITY OR OTHER LEGAL FAULT OF A MEMBER OF THE CITIZEN GROUP, OR THE LINN

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GROUP, BUT NOT TO THE EXTENT OF THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF ANY OF THE LINN GROUP.
Section 15.3      Indemnification by the Company . From and after Closing, the Company shall indemnify, defend and hold harmless the Linn Group and the Citizen Group (and any member of either such Group) from and against all Liabilities suffered or incurred by the Linn Group and/or the Citizen Group (and any member of either such Group) that are caused by or arise out of or result from:
(a)      the Company Assumed Obligations;
(b)      any breach of the Company’s covenants or agreements under this Agreement; or
(c)      any breach of any representation or warranty made by the Company contained in this Agreement or any certification delivered in connection herewith,
EVEN IF SUCH LIABILITIES ARE CAUSED IN WHOLE OR IN PART BY THE NEGLIGENCE (WHETHER SOLE, JOINT OR CONCURRENT), STRICT LIABILITY OR OTHER LEGAL FAULT OF A PERSON ENTITLED TO INDEMNITY HEREUNDER, BUT NOT TO THE EXTENT OF THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF ANY SUCH INDEMNIFIED PERSON.
Section 15.4      Exclusive Remedy . Notwithstanding anything to the contrary contained in this Agreement, except as provided in Section 3.5 , Article 6 and with respect to Fraud (or, for the avoidance of doubt, any special warranty of title in the Linn Assignment or the Citizen Assignment), this Article 15 contains the exclusive remedies of the Group of each Party against the other Parties after the Closing with respect to breaches of the representations, warranties, covenants and agreements of the Parties contained in this Agreement.
Section 15.5      Indemnification Rights . The indemnity of each Party provided in this Article 15 shall be for the benefit of and extend to each Person included in each of the Linn Group, the Citizen Group or the Company Group as applicable; provided , however , that any claim for indemnity under this Article 15 by any such Person must be brought and administered by a Party to this Agreement. No Indemnified Person (including any Person within the Linn Group, the Citizen Group or the Company Group) other than the Parties shall have any rights against another Party under the terms of this Article 15 except as may be exercised on its behalf by a Party pursuant to this Section 15.4 . Each Party may elect to exercise or not exercise indemnification rights under this Article 15 on behalf of the other Indemnified Persons affiliated with it in its sole discretion and shall have no liability to any such other Indemnified Person for any action or inaction under this Article 15 .
Section 15.6      Assumption of Liabilities . Without limiting the Company Group’s rights to indemnity under this Article 15 and except with respect to (1) the Linn Retained Liabilities or Citizen Retained Liabilities (it being acknowledged that no Linn Retained Liabilities or Citizen Retained Liabilities shall ever be deemed to be Company Assumed Obligations), or (2) the Linn Indemnity Liabilities that arise prior to the second anniversary of Closing and Citizen Indemnity Liabilities that arise prior to the second anniversary of Closing (it being acknowledged that no

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Linn Indemnity Liabilities that arise prior to the second anniversary of Closing or Citizen Indemnity Liabilities that arise prior to the second anniversary of Closing shall be deemed to be Company Assumed Obligations, provided, however, that if a Company Break-Up occurs prior to the second anniversary of Closing, then the Linn Indemnity Liabilities and Citizen Indemnity Liabilities shall remain with the respective Parties indefinitely, regardless of when they arise and shall never become Company Assumed Obligations), from and after Closing, the Company assumes and hereby agrees to fulfill, perform, pay and discharge (or cause to be fulfilled, performed, paid and discharged) all obligations and Liabilities, known or unknown, with respect to the Assets, regardless of whether such obligations or Liabilities arose prior to, on or after the Effective Time, including obligations and Liabilities relating in any manner to the use, ownership or operation of the Assets, including obligations and Liabilities (a) to furnish makeup gas and/or settle Imbalances according to the terms of applicable gas sales, processing, gathering or transportation Contracts included in the Assets, (b) to pay Working Interests, royalties, overriding royalties and other interests, owners’ revenues or proceeds attributable to sales of Hydrocarbons, including those held in suspense (including the Linn Suspense Funds and Citizen Suspense Funds) to the extent attributable to the Assets, (c) to properly plug and abandon any and all wells and pipelines, including future wells, inactive wells or temporarily abandoned wells, drilled on the Assets, (d) to re-plug any well, wellbore or previously plugged well on the Assets to the extent required or necessary under applicable Laws or under Contracts, (e) to dismantle or decommission and remove any personal property and other property of whatever kind located on the Assets related to or associated with operations and activities conducted by whomever on the Assets, (f) to clean up and/or remediate the Assets in accordance with any applicable Contracts and applicable Laws, including all Environmental Laws, (g) relating to assumption and defense of those matters identified on part II of Schedule 7.6 , and matters identified on part II of Schedule 8.6 , (h) to perform all obligations applicable to or imposed on the lessee, owner, or operator under the Leases and all applicable Contracts, or as required by applicable Laws, and (i) assuming no Company Break-Up has occurred prior to the second anniversary of the Closing, those relating to the Linn Indemnity Liabilities arising at and/or after the second anniversary of the Closing or the Citizen Indemnity Liabilities arising at and/or after the second anniversary of the Closing (all of said obligations and Liabilities herein being referred to as the “ Company Assumed Obligations ”); and for the sake of clarity, when used in this Section 15.6 in connection with the Linn Indemnity Liabilities or Citizen Indemnity Liabilities, the phrases “that arise” or “arising at and/or after” shall mean that such Liabilities have been asserted, alleged, or otherwise made the subject of a written notice, claim, action, judgment or charge directed at a Party, whether liquidated or unliquidated.
Section 15.7      Indemnification Actions . All claims for indemnification under Article 15 shall be asserted and resolved as follows:
(a)      For purposes hereof, (i) the term “ Indemnifying Person ” when used in connection with particular Liabilities shall mean the Party having an obligation to indemnify another Person or Persons with respect to such Liabilities pursuant to this Article 15 and (ii) the term “ Indemnified Person ” when used in connection with particular Liabilities shall mean the Person or Persons having the right to be indemnified with respect to such Liabilities by another Person or Persons pursuant to this Article 15 .

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(b)      To make a claim for indemnification under Article 15 , an Indemnified Person shall notify in writing the Indemnifying Person of its claim, including the specific details of and specific basis under this Agreement for its claim (the “ Claim Notice ”). In the event that the claim for indemnification is based upon a claim by a Third Party against the Indemnified Person (a “ Third Person Claim ”), the Party that is an Indemnified Person shall provide its Claim Notice promptly after such Indemnified Person has actual knowledge of the Third Person Claim and shall enclose a copy of all papers (if any) served with respect to the Third Person Claim; provided that the failure of any Party to give notice of a Third Person Claim as provided in this Section 15.7 shall not relieve the Indemnifying Person of its obligations under this Article 15 except to the extent such failure results in insufficient time being available to permit the Indemnifying Person to effectively defend against the Third Person Claim or otherwise materially prejudices the Indemnifying Person’s ability to defend against the Third Person Claim. In the event that the claim for indemnification is based upon an inaccuracy or breach of a representation, warranty, covenant or agreement, the Claim Notice shall specify the representation, warranty, covenant or agreement which was inaccurate or breached.
(c)      In the case of a claim for indemnification based upon a Third Person Claim, the putative Indemnifying Person shall have thirty (30) days from its receipt of the Claim Notice to notify the Party that is an Indemnified Person whether it admits or denies its obligation to defend such Indemnified Person against such Third Person Claim under this Article 15 . If the Indemnifying Person does not notify such Indemnified Person within such thirty (30)-day period whether the Indemnifying Person admits or denies its obligation to defend such Indemnified Person, it shall be conclusively deemed to have denied such indemnification obligation hereunder. The Indemnified Person (or its designee) is authorized, prior to and during such thirty (30)-day period, to file any motion, answer or other pleading that it shall deem necessary or appropriate to protect its interests or those of the Indemnifying Person and that is not materially prejudicial to the Indemnifying Person.
(d)      If the Indemnifying Person admits its obligation, it shall have the right and obligation to diligently defend, at its sole cost and expense, the Third Person Claim. Subject to the remainder of this Section 15.7(d) the Indemnifying Person shall have full control of such defense and proceedings, including any compromise or settlement thereof. If requested by the Indemnifying Person, the Indemnified Person agrees to cooperate in contesting any Third Person Claim which the Indemnifying Person elects to contest ( provided , however , that the Indemnified Person shall not be required to bring any counterclaim or cross-complaint against any Person). The Indemnified Person may at its own expense participate in, but not control, any defense or settlement of any Third Person Claim controlled by the Indemnifying Person pursuant to this Section 15.5 . An Indemnifying Person shall not, without the written consent of the Indemnified Person, settle any Third Person Claim or consent to the entry of any judgment with respect thereto unless such settlement or judgment (i) provides for the payment by the Indemnifying Person of money as sole relief for the claimant, (ii) involves no finding or admission of any violation of Law or breach of contract or the rights of any Indemnified Person, (iii) does not encumber any of the assets of any Indemnified Person or agree to any restriction or condition that would apply to or adversely affect any Indemnified Person or the conduct of any Indemnified Person’s business and (iv) includes a complete and unconditional release of each Indemnified Person subject thereto from any and all liabilities in respect of such Third Person Claim. Notwithstanding anything to the contrary herein, if the Third Person Claim (I) seeks

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injunctive or equitable relief as the primary remedy for such Third Person Claim, (II) arises in connection with a criminal proceeding, or (III) is reasonably anticipated by, in the case of Third Person Claims for which Linn is the Indemnifying Party, to cause aggregate Liabilities subject to the Linn Indemnity Cap (whether pursuant to the current Third Party Claim and/or other previous Third Party Claims) for which Linn has provided indemnity hereunder to be exceeded, or, in the case of Third Person Claims for which Citizen is the Indemnifying Party, to cause aggregate Liabilities subject to the Citizen Indemnity Cap (whether pursuant to the current Third Party Claim and/or other previous Third Party Claims) for which Citizen has provided indemnity hereunder to be exceeded, then, at the Indemnified Person’s election, such Indemnified Person shall have full control of such defense and proceedings, including any compromise or settlement thereof.
(e)      If the Indemnifying Person does not admit its obligation or admits its obligation but fails to diligently defend or settle the Third Person Claim, then the Indemnified Person shall have the right to defend against the Third Person Claim (at the sole cost and expense of the Indemnifying Person, if the Indemnified Person is entitled to indemnification hereunder), with counsel of the Indemnified Person’s choosing, subject to the right of the Indemnifying Person to admit its obligation and assume the defense of the Third Person Claim at any time prior to settlement or final determination thereof. If the Indemnifying Person has not yet admitted its obligation to provide indemnification with respect to a Third Person Claim, the Indemnified Person shall send written notice to the Indemnifying Person of any proposed settlement and the Indemnifying Person shall have the option for ten (10) Business Days following receipt of such notice to (i) admit in writing its obligation to provide indemnification with respect to the Third Person Claim and (ii) if its obligation is so admitted, reject, in its reasonable judgment, the proposed settlement. If the Indemnified Person settles any Third Person Claim over the objection of the Indemnifying Person after the Indemnifying Person has timely admitted its obligation in writing and assumed the defense of a Third Person Claim, the Indemnified Person shall be deemed to have waived any right to indemnity therefor.
(f)      In the case of a claim for indemnification not based upon a Third Person Claim, the Indemnifying Person shall have twenty (20) days from its receipt of the Claim Notice to (i) cure the Liabilities complained of, (ii) admit its obligation to provide indemnification with respect to such Liabilities, or (iii) dispute the claim for such indemnification. If the Indemnifying Person does not notify the Indemnified Person within such ten (10) day period that it has cured the Liabilities or that it disputes the claim for such indemnification, the Indemnifying Person shall be conclusively deemed to have denied its indemnification obligation hereunder.
Section 15.8      Limitation on Actions.
(a)      Subject to Section 15.8(c) the representations and warranties of the Transacting Parties in this Agreement and the covenants set forth in this Agreement that by their nature are to be performed at or prior to the Closing shall survive the Closing until the first anniversary of the Closing, except that:
(i)      the representations and warranties in Section 7.1 through Section 7.5 , Section 7.9 , Section 7.10 , Section 8.1 through Section 8.5 , Section 8.9 , and Section 8.10

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(such representations and warranties collectively, the “ Fundamental Representations ”) shall survive indefinitely; and
(ii)      the representation and warranties in Section 7.8 and Section 8.8 shall survive Closing until ninety (90) days after the expiration the applicable statute of limitations closes the taxable period to which the subject Taxes relate.
All of the remainder of this Agreement shall survive the Closing indefinitely, except (A) as may otherwise be expressly provided in this Agreement or (B) for the provisions of Article 16 , which shall survive Closing until ninety (90) days after the expiration of the applicable statute of limitations to which the subject Taxes relate. Representations, warranties, covenants and other agreements shall be of no further force and effect after the date of their expiration (if any), after which time no claim may be made thereunder, provided that there shall be no termination of any bona fide claim asserted in writing pursuant to this Agreement with respect to such a representation, warranty, covenant or other agreement prior to its expiration date.
(b)      The indemnity obligations in Section 15.1(b) , Section 15.1(c) , Section 15.2(b) and Section 15.2(c) shall terminate as of the termination date of each respective covenant, agreement, representation or warranty that is subject to indemnification thereunder, except in each case as to matters for which a specific written claim for indemnity has been delivered in good faith to the Indemnifying Person on or before such termination date. The indemnity obligations in Section 15.1(a) and Section 15.2(a) shall survive the Closing indefinitely. The indemnity obligations in Section 15.1(d) and Section 15.2(d) shall survive the Closing until the second (2nd) anniversary of the Closing Date. Notwithstanding anything stated in this Agreement to the contrary, any indemnifiable claims or Liabilities asserted prior to the expiration of any stated survival period shall remain (and the indemnity therefor shall continue to survive) until such claims and Liabilities are fully resolved.
(c)      Notwithstanding anything to the contrary in this Agreement (including the foregoing provisions of this Section 15.8 ), all indemnity obligations under Sections 15.1 and 15.2 of this Agreement shall terminate for all purposes (including in respect of indemnity obligations that have been previously asserted but not finally determined or satisfied) upon the occurrence of an IPO (as defined in the LLC Agreement); provided , however that this Section 15.8(c) shall not apply to indemnity obligations under (i) Section 15.1(a) or Section 15.2(a) or (ii) Section 15.1(b) and 15.2(b), or (iii) Section 15.1(c) or 15.2(c) of this Agreement for breach of either Transacting Party’s Fundamental Representations or the representations in Section 7.8 and Section 8.8 , respectively, or (iv) Section 15.1(d) or 15.2(d) .
(d)     
(i)      Linn shall not be required to indemnify Citizen and/or any other Person under Section 15.1(c) for Liabilities arising from a single event or series of related events unless the amount of such Liabilities exceeds $500,000 (the “ Individual Indemnity Threshold ”) and until and unless the aggregate amount of all such Liabilities exceeding the Linn Individual Indemnity Threshold exceeds 2.0% of the Initial Linn Agreed Value prior to any adjustments to the Initial Linn Agreed Value under this Agreement (the “ Linn Indemnity Deductible ”), and then only to the extent such Liabilities exceed the Linn Indemnity Deductible; provided that the

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Individual Indemnity Threshold and the Linn Indemnity Deductible shall not apply with respect to any Liabilities relating to or arising from breaches of the Fundamental Representations of Linn, Section 7.8 , breaches of Linn’s covenants, Linn’s indemnification obligations under Section 15.1(a) , Section 15.1(b) , or Section 15.1(c) (arising from breaches of the Fundamental Representations of Linn or for breaches of Section 7.8 ), or with respect to any Tax Claims, nor for Linn’s indemnification obligations under Section 15.1(d) .
(ii)      Citizen shall not be required to indemnify Linn or any other Person under Section 15.2(c) for Liabilities arising from a single event or series of related events unless the amount of such Liabilities exceeds the Individual Indemnity Threshold and until and unless the aggregate amount of all such Liabilities exceeding the Citizen Individual Indemnity Threshold exceeds 2.0% of the Initial Citizen Agreed Value prior to any adjustments to the Initial Citizen Agreed Value under this Agreement (the “ Citizen Indemnity Deductible ”), and then only to the extent such Liabilities exceed the Citizen Indemnity Deductible; provided that the Individual Indemnity Threshold and the Citizen Indemnity Deductible shall not apply with respect to any Liabilities relating to or arising from breaches of Fundamental Representations of Citizen, Section 8.8 , breaches of Citizen’s covenants, Citizen’s indemnification obligations under Section 15.2(a) , Section 15.2(b) , or Section 15.2(c) (arising from breaches of the Fundamental Representations of Citizen or for breaches of Section 8.8 ) or with respect to any Tax Claims, nor for Citizen’s indemnification obligations under Section 15.2(d) .
(e)     
(i)      Linn shall not be required to indemnify Citizen or any other Person under Section 15.1(c) for Liabilities in excess of $250,000,000 (the “ Linn Indemnity Cap ”) in the aggregate; provided that the Linn Indemnity Cap shall not apply with respect to any Liabilities relating to or arising from breaches of the Fundamental Representations of Linn or with respect to any Tax Claims. Notwithstanding anything to the contrary, in no event shall Linn’s maximum aggregate liability arising out of or relating to this Agreement other than its liability under Section 15.1(a) (and it is agreed that this Section does not limit the indemnity obligations or Liabilities under Section 15.1(a) ) exceed the Initial Linn Agreed Value prior to any adjustments to the Initial Linn Agreed Value under this Agreement.
(ii)      Citizen shall not be required to indemnify Linn and/or any other Person under Section 15.2(c) for Liabilities in excess of $250,000,000 (the “ Citizen Indemnity Cap ”) in the aggregate; provided that the Citizen Indemnity Cap shall not apply with respect to any Liabilities relating to or arising from breaches of the Fundamental Representations of Citizen or with respect to any Tax Claims. Notwithstanding anything to the contrary, in no event shall Citizen’s maximum aggregate liability arising out of or relating to this Agreement other than its liability under Section 15.2(a) (and it is agreed that this Section does not limit the indemnity obligations or Liabilities under Section 15.2(a) ) exceed the Initial Citizen Agreed Value prior to any adjustments to the Initial Citizen Agreed Value under this Agreement.
(f)      In no event shall any Indemnified Person be entitled to duplicate compensation with respect to the same Liabilities under more than one provision of this Agreement (and no Indemnified Person shall have the right to recover under this Article 15 with respect to any matter to the extent such Indemnified Person received appropriate adjustments to

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the Initial Linn Agreed Value under Section 3.2 or the Initial Citizen Agreed Value under Section 3.3 , as applicable, in satisfaction of such indemnifiable matter) and the various documents delivered in connection with the Closing.
ARTICLE 16
TAX MATTERS
Section 16.1      Allocation of Asset Taxes . Each of Linn and Citizen shall retain responsibility for all Asset Taxes assessed with respect to the ownership and operation of the Linn Assets or the Citizen Assets, as applicable, for (i) any period ending prior to the Effective Time, and (ii) the portion of any Straddle Period ending immediately prior to the Effective Time. All Asset Taxes with respect to the ownership or operation of the Assets arising on or after the Effective Time (including all Asset Taxes for any Straddle Period not apportioned to Linn or Citizen) shall be allocated to and borne by the Company. For purposes of determining whether and to what extent a liability for Asset Taxes for a Straddle Period is allocable to a taxable period (or portion thereof) ending before the Effective Time or from and after the Effective Time: (a) Asset Taxes imposed in connection with any sale or other transfer or assignment of property (real or personal, tangible or intangible) shall be allocated to the taxable period or portion thereof based on an interim closing of the books, (b) Asset Taxes that are attributable to the severance or production of Hydrocarbons shall be allocated to the period in which the severance or production giving rise to such Taxes occurred, and (c) Asset Taxes imposed on a periodic basis shall be allocated based on the number of days in the relevant taxable period that occur before the Effective Time, on the one hand, and the number of days in such taxable period that occur from and after the Effective Time, on the other hand.
Section 16.2      Tax Returns . Each of Linn or Citizen, as applicable, shall timely file any Tax Return with respect to Asset Taxes due on or before the Closing Date or that otherwise relates solely to periods before the Closing Date and shall pay any Asset Taxes shown due and owing on such Tax Return, subject to the Contributors’ right to adjustment of the Linn Consideration Units or the Citizen Consideration Units, as applicable, for any Asset Taxes for which the Company is responsible under Section 16.1 . From and after the Closing Date, the Company shall timely file any Tax Returns with respect to Asset Taxes required to be filed after the Closing Date, including such Tax Returns for any Straddle Period that are due after the Closing Date, and shall pay any Asset Taxes shown due and owing on such Tax Return, subject to the Company’s right to adjustment of the Linn Consideration Units or the Citizen Consideration Units, as applicable, for any Asset Taxes for which Linn or Citizen, as applicable, is responsible under Section 16.1 . To the extent the actual amount of an Asset Tax is not known at the time an adjustment is to be made with respect to such Asset Tax pursuant to Section 3.2 or Section 3.3 , as applicable, the Parties shall utilize the most recent information available in estimating the amount of such Asset Tax for purposes of such adjustment. To the extent the actual amount of an Asset Tax (or the amount thereof paid or economically borne by a Transacting Party) is ultimately determined to be different than the amount (if any) that was taken into account in determining the Final Linn Adjustment Amount or the Final Citizen Adjustment Amount, as applicable, the Linn Consideration Units or the Citizen Consideration Units, as applicable, shall be adjusted to the extent necessary to cause each Transacting Party to bear the amount of such Asset Tax that is allocable to such Transacting Party under Section 16.1 .

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Section 16.3      Tax Cooperation . Each of the Company, Linn and Citizen agrees to furnish to each other, upon request, as promptly as practicable, such information and assistance relating to the Linn Assets and the Linn Additional Assets or the Citizen Assets and the Citizen Additional Assets, as applicable, as is reasonably necessary for the filing of all Tax Returns, and making of any election related to Taxes, the preparation for any audit by any Governmental Body, and the prosecution or defense of any action, suit or proceeding related to Taxes involving the Linn Assets and the Linn Additional Assets or the Citizen Assets and the Citizen Additional Assets, as applicable, and each shall execute and deliver such documents as are reasonably necessary to carry out the intent of this Section 16.3 . Linn and Citizen agree to retain all books and records with respect to Tax matters pertinent to the Linn Assets and the Linn Additional Assets or the Citizen Assets and the Citizen Additional Assets, as applicable, relating to any taxable period beginning on or before the Effective Time until the expiration of the statute of limitations of the respective taxable periods and to abide by all record retention agreements entered into with any Governmental Body.
Section 16.4      Transfer Taxes . In the event any Transfer Taxes are due as a result of the transfer by Linn of the Linn Assets and the Linn Additional Assets to the Company or by Citizen of the Citizen Assets and the Citizen Additional Assets to the Company, the Company shall be responsible for timely filing any Tax Return relating to such Transfer Taxes and paying such Transfer Taxes. The Parties shall reasonably cooperate in good faith to minimize, to the extent permissible under applicable Law, the amount of any such Transfer Taxes.
Section 16.5      Tax Refunds . The amount of any refunds of Asset Taxes of Linn or Citizen, as applicable, for any period prior to the Effective Time shall be for the account of Linn or Citizen, respectively. The amount of any refunds of Asset Taxes of Linn or Citizen, as applicable, for any Tax period beginning after the Effective Time shall be for the account of the Company. The amount of any refund of Asset Taxes for any Straddle Period shall be equitably apportioned between the Company and Linn or Citizen, respectively, in accordance with the principles set forth in Section 16.1 . Each Party shall forward, and shall cause its Affiliates to forward, to the Party entitled to receive a refund of Tax pursuant to this Section 16.5 the amount of such refund within thirty (30) days after such refund is received, net of any costs or expenses incurred by such Party or its Affiliates in procuring such refund.
ARTICLE 17
MISCELLANEOUS
Section 17.1      Governing Law . THIS AGREEMENT AND THE LEGAL RELATIONS AMONG THE PARTIES SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, EXCLUDING ANY CONFLICTS OF LAW RULE OR PRINCIPLE THAT MIGHT REFER CONSTRUCTION OF SUCH PROVISIONS TO THE LAWS OF ANOTHER JURISDICTION, EXCEPT TO THE EXTENT THAT THE LAW OF A STATE IN WHICH THE ASSETS ARE LOCATED NECESSARILY GOVERNS, IN WHICH EVENT OKLAHOMA LAW SHALL GOVERN. SUBJECT TO SECTION 17.3 , IN RESPECT OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, EACH OF THE PARTIES HERETO CONSENTS TO THE EXCLUSIVE JURISDICTION AND VENUE OF ANY FEDERAL OR STATE COURT LOCATED WITHIN HARRIS COUNTY, TEXAS, AND WAIVES ANY OBJECTION TO

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JURISDICTION OR VENUE OF, AND WAIVES ANY MOTION TO TRANSFER VENUE FROM, ANY OF THE AFORESAID COURTS. EACH PARTY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY DISPUTE.
Section 17.2      Conspicuous Language . THE PARTIES AGREE THAT, TO THE EXTENT REQUIRED BY LAW TO BE EFFECTIVE, THE PROVISIONS IN THIS AGREEMENT IN ALL CAPS ARE “CONSPICUOUS” FOR THE PURPOSE OF ANY LAW.
Section 17.3      Dispute Resolution . Except as provided in Articles 3 , 4 and 5 , all disputes and controversies, in each case, arising out of or relating to this Agreement, shall be determined and resolved in accordance with the following procedures:
(a)      Covered Disputes . Any Claim among the Parties or their respective Affiliates arising out of or relating to this Agreement, including the meaning of its provisions, or the proper performance of any of its terms, its breach, termination or invalidity (each, a “ Dispute ”) shall be resolved in accordance with the procedures specified in this Section 17.3 , which shall be the sole and exclusive procedure for the resolution of any such Dispute, except that any Party, without prejudice to the following procedures, may file a complaint to seek preliminary injunctive or other provisional judicial relief, if in its sole judgment, that action is necessary to avoid irreparable damage or to preserve the status quo. Despite that action the Parties will continue to participate in good faith in the procedures specified in this Section 17.3 .
(b)      Initial Mediation . In the event of a Dispute, and prior to proceeding to arbitration pursuant to Section 17.3 , the Parties must submit the Dispute to any mutually agreed mediation service for mediation by providing to the mediation service a joint, written request for mediation, setting forth the subject of the Dispute and the relief requested. The Dispute shall be mediated in Oklahoma City, Oklahoma within thirty (30) days from the date that a written request for mediation is made by any Party, and the mediation shall be conducted before a single mediator to be agreed upon by the Parties. If the Parties cannot agree on the mediator, each Party shall select a mediator and the mediators so selected shall together unanimously select a neutral mediator who will conduct the mediation. The Parties shall cooperate with the mediation service and with one another in scheduling the mediation proceedings. The Parties covenant that they will use commercially reasonable efforts in participating in the mediation. The Parties agree that the mediator’s fees and expenses and the costs incidental to the mediation will be shared equally by the Parties. The Parties further agree that all offers, promises, conduct, and statements, whether oral or written, made in the course of the mediation by any of the Parties, their agents, employees, experts, and attorneys, and by the mediator and any employees of the mediation service, are confidential, privileged, and inadmissible for any purpose, including impeachment, in any litigation, arbitration or other proceeding involving the Parties, provided that evidence that is otherwise admissible or discoverable shall not be rendered inadmissible or non-discoverable as a result of its use in the mediation. The decision of the mediator shall be non-binding on the Parties.
(c)      Arbitration as a Final Resort . Any Dispute that is not resolved by mediation pursuant to Section 17.3 must be resolved through the use of binding arbitration in accordance with the AAA Rules, as supplemented to the extent necessary to determine any

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procedural appeal question by the Federal Arbitration Act (Title IX of the United States Code). If there is any inconsistency between this Section 17.3 and the Commercial Arbitration Rules of the Federal Arbitration Act, the terms of this Section 17.3 shall control the rights and obligations of the Parties. Such arbitration shall be conducted as follows:
(i)      If there is more than one Dispute that involves the same facts and parties as the facts and parties with respect to which arbitration has been initiated pursuant to this Agreement, such Disputes shall be consolidated into the first arbitration initiated pursuant to this Agreement.
(ii)      Arbitration may be initiated by a Party (“ Claimant ”) serving written notice on another Party (“ Respondent ”) that the Claimant has referred the Dispute to binding arbitration pursuant to this Section 17.3(c) . Claimant’s notice initiating binding arbitration must describe in reasonable detail the nature of the Dispute and the facts and circumstances relating thereto and identify the arbitrator Claimant has appointed. Respondent shall respond to Claimant within thirty (30) days after receipt of Claimant’s notice, identifying the arbitrator Respondent has appointed. All arbitrators must be neutral parties who have never been officers, directors or employees of or performed material work for the Parties or any of their Affiliates within the preceding five (5) year period and must agree in writing to keep strictly confidential the specifics and existence of the dispute as well as all proprietary records of the Parties reviewed by the arbitrators in the process of resolving such dispute. Arbitrators must have a formal education or training in the area of dispute resolution and must have not less than seven (7) years of experience as a lawyer in the energy industry with experience in upstream or transactional issues. The two (2) arbitrators so chosen by the parties to the Dispute shall select a third arbitrator within thirty (30) days after the second arbitrator has been appointed. If either (A) the Respondent fails to name its party-appointed arbitrator within the time permitted, or (B) the two (2) arbitrators are unable to agree on a third arbitrator within thirty (30) days from the date the second arbitrator has been appointed, then, in either case, the missing arbitrator(s) shall be selected by the AAA with due regard given to the selection criteria above and input from the parties to the Dispute and other arbitrators. The AAA shall select the missing arbitrator(s) not later than ninety (90) days from initiation of arbitration. In the event the AAA should fail to select the third arbitrator within ninety (90) days from initiation of arbitration, then either party to the Dispute may petition the Chief United States District Judge for the Northern District of Oklahoma to select the third arbitrator. Due regard shall be given to the selection criteria above and input from the parties to the arbitrable Dispute and other arbitrators.
(iii)      Claimant and Respondent shall each pay one-half of the compensation and expenses of the AAA and the arbitrator(s).
(iv)      The hearing shall be conducted in Oklahoma City, Oklahoma and commence within sixty (60) days after the selection of the third arbitrator, unless delayed by order of the arbitrators. The hearing shall be based upon written position papers submitted by Claimant and Respondent within thirty (30) days after the selection of the third arbitrator, stating such Person’s proposed resolution of the dispute. The parties to the Dispute and the arbitrators shall proceed diligently and in good faith in order that the award may be made as promptly as possible. The arbitrators shall determine the Disputes and render a final award on or before thirty (30) days following the completion of the hearing. The arbitrators’ decision shall be in writing

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and set forth the reasons for the award. In rendering the award, the arbitrators shall abide by (A) the terms and conditions of this Agreement including, without limitation, any and all restrictions, prohibitions or limitations on damages or remedies set forth in this Agreement and (B) the Law of the State of Delaware. The arbitrators shall not have jurisdiction or authority to add to, detract from or alter in any way the provisions of this Agreement.
(v)      Notwithstanding any other provision of this Agreement, any party to the Dispute may, prior to the appointment of the third arbitrator, seek temporary injunctive relief from any court of competent jurisdiction; provided that the party seeking such relief shall (if arbitration has not already been commenced) simultaneously commence arbitration. Such court-ordered relief shall not continue more than ten (10) days after the appointment of the arbitrators and in no event for longer than ninety (90) days. In order to prevent irreparable harm, the arbitrators shall have the power to grant temporary or permanent injunctive or other equitable relief. Except as provided in the Federal Arbitration Act, the decision of the arbitrators shall be final, binding on and non-appealable by the parties to the Dispute. Each party to the Dispute agrees that any arbitration award against it may be enforced in any court of competent jurisdiction and that either party to the Dispute may authorize any such court to enter judgment on the arbitrators’ decisions. The arbitrators may not grant or award indirect, consequential, punitive or exemplary damages or damages for lost profits.
(vi)      In any Dispute under this Agreement, the prevailing party to the Dispute shall be entitled to recover arbitration and court costs and attorneys’ fees in addition to any other relief to which such Person is entitled.
(d)      Tolling and Performance . All applicable statutes of limitation and defenses based upon the passage of time shall be tolled while the procedures specified in Section 17.3(c) are pending. The Parties shall take any action required to effectuate that tolling. Each Party is required to continue to perform its obligations under this Agreement pending completion of the procedures set forth in Section 17.3(c) , unless to do so would be impossible or impracticable under the circumstances.
Section 17.4      Counterparts . This Agreement may be executed in any number of counterparts, and each such counterpart hereof shall be deemed to be an original instrument, but all of such counterparts shall constitute for all purposes one agreement. Any signature hereto delivered by a Party by facsimile or other electronic transmission shall be deemed an original signature hereto.
Section 17.5      Notices . All notices and communications required or permitted to be given hereunder, but excluding service of process shall be sufficient in all respects (a) if given in writing and delivered personally, (b) if sent by overnight courier, (c) if mailed by U.S. Express Mail or by certified or registered U.S. Mail with all postage fully prepaid, (d) sent by facsimile transmission ( provided any such facsimile transmission is confirmed either orally or by written confirmation), or (e) sent by electronic mail transmission ( provided any such electronic mail transmission is supplemented by a written notice delivered pursuant to one of the methods specified in items (a) through (d) above within two (2) Business Days after delivery of such electronic mail transmission; provided that electronic mail transmitted on or before any deadline regardless of whether such supplemental written notice is delivered prior to such deadline shall

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be deemed adequate notice hereunder) and, in each case, addressed to the appropriate Party at the address for such party shown below:
If to Linn:
 
Linn Operating, LLC
600 Travis Street, Suite 1400
Houston, Texas 77002
 
Attention:
David Rottino, Chief Financial Officer
 
Email:
DRottino@linnenergy.com
 
 
 
with a copy (which shall not constitute notice) to:
 
 
 
Linn Operating, LLC
600 Travis Street, Suite 1400
Houston, Texas 77002
 
Attention:
Candice Wells, General Counsel
 
 
 
 
Email:
CWells@linnenergy.com
 
 
 
and
 
 
 
Latham & Watkins LLP
811 Main Street, Suite 3700
Houston, Texas 77002
 
Attention:
Michael Dillard
 
Email:
michael.dillard@lw.com
 
 
If to Citizen:
 
 
 
Citizen Energy II, LLC
320 S. Boston Ave., Suite 1300
Tulsa, OK 74103
Attn: James Woods
Email: james@ce2ok.com
 
 
 
JVL Advisors, LLC
SPQR Energy, LP
Lobo Baya LLC
10000 Memorial Dr., Suite 550
Houston, TX 77024
Attn: John V. Lovoi; Paul Loyd
Email: jlovoi@jvladvisors.com and pbl@loydhouse.com
 
 
 
with a copy (which shall not constitute notice) to:
 
 
 
Thompson & Knight LLP
333 Clay Street, Suite 3300


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Houston, Texas 77002
 
Attention: Timothy L. Samson; Hunter White
 
 
 
Email: tim.samson@tklaw.com; hunter.white@tklaw.com
 
 
If to the Company:
 
 
 
Linn Operating, LLC
600 Travis Street, Suite 1400
Houston, Texas 77002
 
Attention:
David Rottino, Chief Financial Officer
 
Email:
DRottino@linnenergy.com
 
 
 
Citizen Energy II, LLC
320 S. Boston Ave., Suite 1300
Tulsa, OK 74103
Attn: James Woods
Email: james@ce2ok.com
 
 
 
JVL Advisors, LLC
SPQR Energy, LP
Lobo Baya LLC
10000 Memorial Dr., Suite 550
Houston, TX 77024
Attn: John V. Lovoi and Paul Loyd
Email: jlovoi@jvladvisors.com and pbl@loydhouse.com
 
 
 
with a copy (which shall not constitute notice) to:
 
 
 
Linn Operating, LLC
600 Travis Street, Suite 1400
Houston, Texas 77002
 
Attention:
Candice Wells, General Counsel
 
Email:
CWells@linnenergy.com
 
 
 
Latham & Watkins LLP
811 Main Street, Suite 3700
Houston, Texas 77002
 
Attention:
Michael Dillard
 
Email:
michael.dillard@lw.com
 
 


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and
 
 
 
Thompson & Knight LLP
333 Clay Street, Suite 3300
Houston, Texas 77002
Attention: Timothy T. Samson and Hunter White
Email: tim.samson@tklaw.com; hunter.white@tklaw.com

Any notice given in accordance herewith shall be deemed to have been given (i) when delivered to the addressee in person, or by courier, during normal business hours, or on the next Business Day if delivered after business hours, (ii) when received by the addressee via facsimile or electronic mail transmission during normal business hours, or on the next Business Day if received after business hours, or (iii) upon actual receipt by the addressee after such notice has either been delivered to an overnight courier or deposited in the U.S. Mail, as the case may be. The Parties may change the address, telephone number, facsimile number, electronic mail address and individuals to which such communications to be addressed by giving written notice to the other Parties in the manner provided in this Section 17.5 . Notwithstanding anything in this Section 17.5 to the contrary, documents and other information to be delivered to the Parties hereunder may be transmitted to such Parties by electronic means other than electronic mail transmission; provided confirmation of the delivery of such documents and other information is confirmed orally or by written confirmation (including by automated electronic means).
Section 17.6      Expenses . Except as otherwise specifically provided, all fees, costs and expenses incurred by the Parties in negotiating this Agreement shall be paid by the Party incurring the same, including legal and accounting fees, costs and expenses.
Section 17.7      Waiver; Rights Cumulative . Any of the terms, covenants, or conditions hereof may be waived only by a written instrument executed by or on behalf of the Party or Parties waiving compliance. No course of dealing on the part of any Party, or its respective officers, employees, agents, accountants, attorneys, investment bankers, consultants or other authorized representatives, nor any failure by a Party to exercise any of its rights under this Agreement shall operate as a waiver thereof or affect in any way the right of such Party at a later time to enforce the performance of such provision. No waiver by any Party of any condition, or any breach of any term or covenant contained in this Agreement, in any one or more instances, shall be deemed to be or construed as a further or continuing waiver of any such condition or breach or a waiver of any other condition or of any breach of any other term or covenant. The rights of the Parties under this Agreement shall be cumulative, and the exercise or partial exercise of any such right shall not preclude the exercise of any other right.
Section 17.8      Entire Agreement; Conflicts . THIS AGREEMENT AND EACH OTHER AGREEMENT EXECUTED BY THE PARTIES OR THEIR RESPECTIVE AFFILIATES IN CONNECTION HEREWITH (INCLUDING THE LLC AGREEMENT, THE CONFIDENTIALITY AGREEMENT AND THE MASTER SERVICES AGREEMENT), AND THE EXHIBITS AND APPENDICES HERETO AND THERETO, COLLECTIVELY CONSTITUTE THE ENTIRE AGREEMENT AMONG THE PARTIES PERTAINING TO THE SUBJECT MATTER HEREOF AND SUPERSEDE ALL PRIOR AGREEMENTS, UNDERSTANDINGS, NEGOTIATIONS AND DISCUSSIONS, WHETHER ORAL OR

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WRITTEN, OF SUCH PARTIES AND THEIR RESPECTIVE AFFILIATES PERTAINING TO THE SUBJECT MATTER OF THIS AGREEMENT. THERE ARE NO WARRANTIES, REPRESENTATIONS OR OTHER AGREEMENTS AMONG THE PARTIES OR THEIR RESPECTIVE AFFILIATES RELATING TO THE SUBJECT MATTER OF THIS AGREEMENT EXCEPT AS SPECIFICALLY SET FORTH IN THIS AGREEMENT or THE TRANSACTION DOCUMENTS, AND NO PARTY OR SUCH PARTY’S AFFILIATES SHALL BE BOUND BY OR LIABLE FOR ANY ALLEGED REPRESENTATION, PROMISE, INDUCEMENT OR STATEMENTS OF INTENTION NOT SO SET FORTH. IN THE EVENT OF A CONFLICT BETWEEN (A) THE TERMS AND PROVISIONS OF THIS AGREEMENT AND THE TERMS AND PROVISIONS OF ANY EXHIBIT OR APPENDIX HERETO, OR (B) THE TERMS AND PROVISIONS OF THIS AGREEMENT AND THE TERMS AND PROVISIONS OF ANY OTHER AGREEMENT EXECUTED IN CONNECTION HEREWITH, IN EACH CASE, THE TERMS AND PROVISIONS OF THIS AGREEMENT SHALL GOVERN AND CONTROL; PROVIDED , HOWEVER , THAT THE INCLUSION IN ANY OF THE EXHIBITS OR APPENDICES HERETO OR THE AGREEMENTS SET FORTH IN CLAUSE (B) ABOVE OF TERMS AND PROVISIONS NOT ADDRESSED IN THIS AGREEMENT SHALL NOT BE DEEMED A CONFLICT, AND ALL SUCH ADDITIONAL PROVISIONS SHALL BE GIVEN FULL FORCE AND EFFECT, SUBJECT TO THE PROVISIONS OF THIS SECTION 17.8 AND pROVIDED FURTHER THAT IN THE EVENT OF A CONFLICT BETWEEN THE TERMS AND PROVISIONS OF THIS AGREEMENT AND THE TERMS AND PROVISIONS OF THE LLC AGREEMENT, THE TERMS AND PROVISIONS OF THE LLC AGREEMENT SHALL GOVERN AND CONTROL.
Section 17.9      Amendment . This Agreement may be amended only by an instrument in writing executed by Linn and Citizen and expressly identified as an amendment or modification.
Section 17.10      Parties in Interest . Except as provided in Section 6.1(c) and Article 15 nothing in this Agreement, express or implied, shall entitle any Person other than the Parties or their respective successors and permitted assigns to any Claim, remedy or right of any kind.
Section 17.11      Binding Effect . The provisions of this Agreement shall be binding upon, and inure to the benefit of, the Parties and their respective successors and permitted assigns.
Section 17.12      Preparation of Agreement . Each of the Parties and their respective counsels participated in the preparation of this Agreement. In the event of any ambiguity in this Agreement, no presumption shall arise based on the identity of the draftsman of this Agreement.
Section 17.13      Severability . If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of Law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not materially affected in any manner adverse to any Party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the extent possible.

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Section 17.14      Limitation on Damages . NONE OF THE PARTIES SHALL BE ENTITLED TO RECOVER FROM ANY OTHER PARTY, OR ANY OTHER PARTY’S RESPECTIVE AFFILIATES, ANY INDIRECT, CONSEQUENTIAL, PUNITIVE, SPECIAL OR EXEMPLARY DAMAGES OR DAMAGES FOR LOST PROFITS OF ANY KIND, IN EACH CASE, ARISING UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, EXCEPT TO THE EXTENT ANY SUCH PARTY SUFFERS SUCH DAMAGES TO A THIRD PARTY, WHICH DAMAGES (INCLUDING COSTS OF DEFENSE AND REASONABLE ATTORNEYS’ FEES INCURRED IN CONNECTION WITH DEFENDING AGAINST SUCH DAMAGES) SHALL NOT BE EXCLUDED BY THIS PROVISION AS TO RECOVERY HEREUNDER. SUBJECT TO THE PRECEDING SENTENCE, EACH PARTY, ON BEHALF OF ITSELF AND EACH OF ITS AFFILIATES, WAIVES ANY RIGHT TO RECOVER ANY INDIRECT, CONSEQUENTIAL, PUNITIVE, SPECIAL OR EXEMPLARY DAMAGES OR DAMAGES FOR LOST PROFITS OF ANY KIND, IN EACH CASE, ARISING IN CONNECTION WITH OR WITH RESPECT TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
Section 17.15      Assignment . No Party shall assign all or any part of this Agreement, nor shall any Party assign or delegate any of its rights or duties hereunder, without the prior written consent of the other Parties (which consent may be withheld for any reason) and any assignment or delegation made without such consent shall be void. Subject to the foregoing, this Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and assigns.
Section 17.16      Time is of the Essence . This Agreement contains a number of dates and times by which performance or the exercise of rights is due, and the Parties intend that each and every such date and time be the firm and final date and time, as agreed. For this reason, each Party hereby waives and relinquishes any right it might otherwise have to challenge its failure to meet any performance or rights election date applicable to it on the basis that its late action constitutes substantial performance, to require the other Parties to show prejudice, or on any equitable grounds. Without limiting the foregoing, time is of the essence in this Agreement. If the date specified in this Agreement for giving any notice or taking any action is not a Business Day (or if the period during which any notice is required to be given or any action taken expires on a date which is not a Business Day), then the date for giving such notice or taking such action (and the expiration date of such period during which notice is required to be given or action taken) shall be the next day which is a Business Day.
Section 17.17      Employee Issues .
(a)      From and after Closing, each of Linn and Citizen shall use commercially reasonable efforts to cooperate with the Company to determine mutually acceptable methods of Linn and Citizen making available certain of their employees and their Affiliates’ employees for hire by the Company.
(b)      Subject to Section 17.17(a) , from and after the Execution Date until the nine month anniversary of Closing, unless Linn otherwise consents in writing, none of Citizen and its Affiliates and the Company and its Affiliates shall solicit, induce, or recruit any employee

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of Linn or its Affiliates (“ Linn Employees ”). The foregoing provision shall not prohibit the Company and its Affiliates from making offers of employment to the personnel made available by Linn for hire by the Company pursuant to Section 17.17(a) or who contact Citizen or its Affiliates or the Company or its Affiliates directly without solicitation, inducement or recruitment by the hiring party or its Affiliates, nor shall it prohibit solicitations by Citizen and its Affiliates and the Company and its Affiliates by general advertisement in periodicals or other advertisement media or through the use of search firms that are not directed specifically at Linn Employees.
(c)      Subject to Section 17.17(a) , from and after the Execution Date until the nine month anniversary of Closing, unless Citizen otherwise consents in writing, none of Linn and its Affiliates and the Company and its Affiliates shall solicit, induce, or recruit any employee of Citizen or its Affiliates (“ Citizen Employees ”). The foregoing provision shall not prohibit the Company and its Affiliates from making offers of employment to the personnel made available by Citizen for hire by the Company pursuant to Section 17.17(a) or who contact Linn or its Affiliates or the Company or its Affiliates directly without solicitation, inducement or recruitment by the hiring party or its Affiliates, nor shall it prohibit solicitations by Linn and its Affiliates and the Company and its Affiliates by general advertisement in periodicals or other advertisement media or through the use of search firms that are not directed specifically at Citizen Employees.
Section 17.18      Retained Litigation.
(a)      With regard to the matters set forth described in Part I of Schedule 7.6 , or any related royalty lawsuits regarding the Linn Assets, Linn may not settle or compromise such claims or lawsuit without the written consent of Company if any settlement or compromise (a) requires Company to admit (or is a deemed admission by Company of) fault or wrongdoing, or (b) or requires Company to part with any property right or interest, assume any obligation or make any payment for which Linn is not providing the Company indemnity hereunder.
(b)      With regard to the matters set forth described in Part I of Schedule 8.6 , or any related royalty lawsuits regarding the Citizen Assets, Citizen may not settle or compromise such claims or lawsuit without the written consent of Company if any settlement or compromise (a) requires Company to admit (or is a deemed admission by Company of) fault or wrongdoing, or (b) or requires Company to part with any property right or interest, assume any obligation or make any payment for which Citizen is not providing the Company indemnity hereunder.

[Signature Pages Follow]


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IN WITNESS WHEREOF , this Agreement has been signed by each of the Parties on the Execution Date.
 
PARTIES :
 
 
 
LINN ENERGY HOLDINGS, LLC
 
 
 
 
 
By:
/s/ Mark E. Ellis
 
Name:
Mark E. Ellis
 
Title:
President & CEO
 
 
 
LINN OPERATING, LLC
 
 
 
 
 
By:
/s/ Mark E. Ellis
 
Name:
Mark E. Ellis
 
Title:
President & CEO
 
 
 
CITIZEN ENERGY II, LLC
 
 
 
 
 
By:
 
 
Name:
 
 
Title:
 
 
 
 
ROAN RESOURCES LLC
 
 
 
By: CITIZEN ENERGY II, LLC
Its sole member
 
 
 
By:
 
 
Name:
 
 
Title:
 


[ Signature Page to Contribution Agreement ]
US-DOCS\83219354.25



 
CITIZEN ENERGY II, LLC
 
 
 
 
 
By:
/s/ Robbie Woodard
 
Name:
Robbie Woodard
 
Title:
Chief Operating Officer


SIGNATURE PAGE TO CONTRIBUTION AGREEMENT


US-DOCS\70625456.12
Error! Unknown document property name.

US-DOCS\83219354.25



 
ROAN RESOURCES LLC
 
 
 
By: Citizen Energy II, LLC, iIts sole member
 
 
 
By:
/s/ James R. Woods
 
Name:
James R. Woods
 
Title:
Manager


SIGNATURE PAGE TO CONTRIBUTION AGREEMENT


US-DOCS\70625456.12
Error! Unknown document property name.

US-DOCS\83219354.25



APPENDIX A
DEFINITIONS
AAA ” means the American Arbitration Association.
AAA Rules ” means the Commercial Arbitration Rules of the AAA.
AFE ” has the meaning set forth in Section 7.18 .
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; provided , however , after the Closing, the Company and its subsidiaries shall not, for purposes of this Agreement, constitute a current or former Affiliate of either Transacting Party or any of its Affiliates; and provided further , that Citizen’s “ Affiliates ” shall not include (a) JVL Advisors, L.L.C. (“ JVL ”), (b) any investment vehicles or investment funds for which JVL serves as adviser or manager, or (c) the portfolio investments of any such investment vehicle or investment fund (other than Citizen and its subsidiaries).
Agreement ” has the meaning set forth in Preamble of this Agreement.
Allocated Values ” has the meaning set forth in Section 3.4(a) .
Allocation Schedule ” has the meaning set forth in Section 3.4(b) .
Amended and Restated Linn Midstream Agreement ” means the Amended and Restated Gas Gathering and Processing Agreement by and between LEH and Linn Midstream, LLC, dated effective April 1, 2017.
Asset Taxes ” shall mean ad valorem, property, excise, severance, production, sales, use, or similar Taxes based upon or measured by the ownership or operation of the Assets or the production of Hydrocarbons or the receipt of proceeds therefrom, but excluding, for the avoidance of doubt, Income Taxes and Transfer Taxes.
Assets ” means, when used in reference to Linn, the Linn Assets and the Linn Additional Assets, and when used in reference to Citizen, the Citizen Assets and the Citizen Additional Assets.
Assignment ” means any Linn Assignment or Citizen Assignment executed pursuant to this Agreement, as applicable.
Burdens ” means any royalty, overriding royalty, production payment, carried interest, net profits interest, reversionary interest or other burden upon, measured by or payable out of production.
Business Day ” means a day (other than a Saturday or Sunday) on which commercial banks in Oklahoma, Texas and New York are generally open for business.

US-DOCS\83219354.25



Citizen ” has the meaning set forth in the Preamble.
Citizen Actual Section Value ” means, in the case of any Target Formation in any Governmental Section, the product of (a) the actual aggregate Citizen Section Net Acres subject to the Citizen Section Leases in such Target Formation in such Governmental Section, and (b) the sum of (i) the Zone Price for such Target Formation in such Governmental Section and (ii) the product of (A) the Zone NRI Value for such Target Formation in such Governmental Section, (B) the amount (whether positive, negative or zero) obtained by subtracting the Zone Average NRI for such Target Formation in such Governmental Section from the actual Citizen Section Weighted Average NRI associated with the Citizen Section Leases in such Target Formation in such Governmental Section; and (C) 100.
Citizen Additional Assets ” means the Citizen Additional Leases and any other items acquired by Citizen with the Citizen Additional Leases that would constitute “Citizen Assets” to the extent the Citizen Additional Leases were Citizen Leases.
Citizen Additional Leases ” means all oil and gas leases, oil, gas and mineral leases, subleases and other leaseholds, mineral interests, mineral fee interests, royalty interests, overriding royalty interests, net profit interests, payments out of production, carried interests, reversionary rights, contractual rights to production or other interests in Hydrocarbons acquired by Citizen either (i) after April 1, 2017 and prior to Closing, (ii) after April 1, 2017 and prior to the expiration of thirty (30) days after Closing as long as Citizen has entered into a definitive agreement to acquire such interest prior to the Closing (for which written notice of such definitive agreement and a list of the oil and gas leases covered thereby has been provided to Linn prior to Closing), (iii)  prior to April 1, 2017 (and are still  owned by Citizen as of the Execution Date) but which are not listed on Exhibit A-1 (Part II) and are listed on Exhibit A-5-2 (Part II) , or (iv) that are acquired by Citizen after Closing and prior to the expiration of the Title Cure Period, insofar and only insofar as such acquisitions under this subpart (iii) are made via acreage trades, pursuant to which Citizen has traded acreage that is outside of the areas identified in Exhibit H for such interests) and with regard to all acquisitions described in subparts (i)-(iv) above, insofar and only insofar that such acquired interests: (a) are within the areas identified in Exhibit H , (b) with respect to each oil and gas lease and oil, gas and mineral lease, subleases and other leaseholds, to the extent the same is not held beyond its primary term by production, the same has a remaining primary term that expires no less than two (2) years after the Effective Time (other than those described in Exhibit A-5-2 (Part II ), which to the extent the same is not held beyond its primary term by production or operations, the same has a primary term (whether such primary term relates to the primary term under such Citizen Lease or, if applicable and the Citizen Lease is subject to a term assignment, the primary term provided in such term assignment pursuant to which Citizen or its predecessor-in-interest acquired such Citizen Lease and such primary term identified in such term assignment shall be deemed to be the primary term of such Citizen Lease for purposes of this provision) that is not earlier than the primary term expiration date identified for such Citizen Lease in Exhibit A-5-2 (Part II) ), (c) includes Qualifying Depths of one or more of the applicable Section Target Formations, and (d) entitles Citizen (and following the assignment of such Citizen Additional Lease, the Company) to receive not less than a 75% Net Revenue Interest therein with respect to the applicable Target Formation(s). Notwithstanding anything to the contrary herein, any Hydrocarbon interest

Appendix A-2
US-DOCS\83219354.25



identified on Exhibit A-1 (Part II) as a Citizen Lease shall not be a Citizen Additional Lease for any purpose hereunder.
Citizen Adjustment Notice ” has the meaning set forth in Section 3.3(b)(ii) .
Citizen Aggregate Deductible ” has the meaning set forth in Section 4.3(d)(iii) .
Citizen Assets ” means all of Citizen’s right, title and interest in and to the following, less and except the Citizen Excluded Assets:
(a)      all oil and gas leases, oil, gas and mineral leases, subleases and other leaseholds,, overriding royalty interests, net profit interests, payments out of production, carried interests, reversionary rights, contractual rights to production or other interests in Hydrocarbons, in each case, described in Exhibit A-1 (Part II) , together with any and all other right, title and interest of Citizen in and to the leasehold estates or other rights and interests created by any of the foregoing, subject to the terms, conditions, covenants and obligations set forth in such interests and/or Exhibit A-1 (Part II) (all such interests, the “ Citizen Leases ”);
(b)      all oil and gas wells, water wells, carbon dioxide wells, salt water disposal wells, injection wells, observation wells, and other wells and wellbores located on or allocable to the Citizen Leases and Citizen Units, including those described on Exhibit A-2 (Part II) , whether producing, shut in, or abandoned (all such interests, the “ Citizen Wells ”);
(c)      all rights and interests in, under or derived from all unitization, communitization, and pooling agreements or compulsory pooling orders in effect with respect to any of the Citizen Leases, or Citizen Wells and the units created thereby (all such interests, the “ Citizen Units ”);
(d)      to the extent transferable after the exercise of commercially reasonable efforts (which shall not require the payment of a fee or the provision of any other consideration), all Contracts (i) to which Citizen is a party (or is a successor or assign of a party), (ii) that pertain primarily to any of the Citizen Assets and (iii) that will be binding on the Company after Closing, but exclusive of any master service agreements, blanket agreements or similar Contracts (all such contracts, “ Citizen Contracts ”);
(e)      all Rights-of-Way to the extent used in connection with the ownership or operation of any of the Citizen Leases, Citizen Wells, Citizen Units or other Citizen Assets, including the Rights-of-Way set forth in Exhibit A-3 (Part II) (all such interests, collectively, the “ Citizen Rights-of-Way ”);
(f)      all flowlines, pipelines and appurtenances thereto that are located on the Citizen Leases or Citizen Units or used, or held for use, in connection with the operation of the Citizen Wells, but excluding all Citizen Excluded Midstream Assets (all such interests (subject to such exclusions), the “ Citizen Gathering Systems ”, and together with the Citizen Leases, Citizen Units, and Citizen Wells, collectively, the “ Citizen Oil and Gas Properties ”);
(g)      all personal property, equipment, machinery, tools, compressors, meters, tanks, pumps, platforms, pulling machines, boilers, buildings, pipe yards, salt water disposal facilities, utility lines, computer and automation equipment, telecommunications equipment, field radio

Appendix A-3
US-DOCS\83219354.25



telemetry, and associated frequencies and licenses, pressure transmitters, central processing equipment, fixtures, improvements, facilities and other tangible personal property located on the Citizen Oil and Gas Properties, including such equipment described on Exhibit A-4 (Part II) (all such interests, the “ Citizen Equipment ”);
(h)      all of the files, records, information and data, whether written or electronically stored, primarily relating to the Citizen Assets and in the possession of Citizen or its Affiliates, including: (i) land and title records (including abstracts of title, title opinions and title curative documents); (ii) Citizen Contract files; (iii) correspondence; (iv) operations, environmental (including environmental assessments and studies), production and accounting records; (v) facility and well records; and (vi) to the extent transferable, seismic, geologic and technical data including logs and maps (all such interests, the “ Citizen Records ”);
(i)      all Hydrocarbons (or the proceeds from the sale of Hydrocarbons) (i) produced from or attributable to the Citizen Leases, Citizen Units, and Citizen Wells at and after the Effective Time, (ii) located in pipelines or in tanks above the pipeline sales connection attributable to the Citizen Leases, Citizen Units, and Citizen Wells at and after the Effective Time, or (iii) in storage or existing in stock tanks, pipelines and/or plants (including inventory) as of the Effective Time;
(j)      all claims and causes of action to the extent attributable to the Company Assumed Obligations;
(k)      to the extent that they may be assigned, all Permits that are primarily used in connection with the ownership or operation of the Citizen Assets;
(l)      all Imbalances relating to the other Citizen Assets;
(m)      to the extent transferable, all Seismic Contracts and Seismic Data and any related interpretive geophysical and geological data relating to the Citizen Oil and Gas Properties, but only to the extent such Seismic Contracts and Seismic Data may be assigned without payment of fees or other penalties to a Third Party;
(n)      any refunds, claims for refunds or rights to receive refunds from any Governmental Body with respect to Taxes attributable to the Citizen Assets and periods of time from and after the Effective Time; and
(o)      all radio equipment, SCADA and measurement technology, and other production related mobility devices (such as SCADA controllers), well communication devices, and any other information technology systems and licenses associated with the foregoing, in each case only to the extent such assets and licenses are (i) used or held for use solely in connection with the operation of the Citizen Oil and Gas Properties, and (ii) to the extent assignable (with consent, if applicable, but without the payment of any fee or the provision of any other consideration; provided Citizen shall use commercially reasonable efforts to cause the transfer of all such rights and interests to Company) (the “ Citizen Production-Related IT Equipment ”).
Citizen Assignment ” means an assignment to be executed and delivered by Citizen at the Closing in substantially the form of Exhibit C (Part II) attached hereto.

Appendix A-4
US-DOCS\83219354.25



Citizen Casualty Loss ” has the meaning set forth in Section 4.7(c) .
Citizen Closing Settlement Statement ” has the meaning set forth in Section 3.3(a)(iii) .
Citizen Consideration Units ” has the meaning set forth in Section 3.1(b) .
Citizen Cost Credited Asset Acquisition Costs ” means, in the case of any Citizen Cost Credited Lease and associated Citizen Additional Assets, the consideration payable in connection with the acquisition of such Citizen Cost Credited Lease and associated Citizen Additional Assets, together with any reasonable Third Party expenses, including reasonable attorneys’ fees, lease bonuses, broker fees, abstract costs, title opinion costs, title curative costs, and other reasonable Third Party costs of due diligence incurred by Citizen in acquiring such Citizen Cost Credited Lease and associated Citizen Additional Assets, provided that the Citizen Cost Credited Asset Acquisition Costs for any Citizen Cost Credited Lease and associated Citizen Additional Assets shall never exceed $7,000 per Net Acre subject to such Citizen Cost Credited Lease, provided , further , that any Citizen Cost Credited Leases that are acquired pursuant to a permitted acreage trade or similar transaction shall be deemed to have a Citizen Cost Credited Asset Acquisition Cost of $7,000 per Raw Net Acre.
Citizen Cost Credited Lease ” has the meaning set forth in Section 4.3(e)(iv) .
Citizen Contracts ” has the meaning set forth in the definition of “Citizen Assets”.
Citizen Delta Value ” has the meaning set forth in Section 3.3(b)(vi)(C) .
Citizen Defensible Title ” shall mean such title of Citizen Assets, as of the Effective Time and immediately prior to the expiration of the Review Period (but for purposes of the Citizen Assignment, it shall mean as of the Closing Date, and for purposes of the Citizen Assignment covering any Citizen Additional Assets as of the date that such Citizen Additional Assets are conveyed to the Company as permitted by this Agreement), subject to Citizen Permitted Encumbrances, that:
(a)      for each Citizen Well, entitles Citizen to receive during the entirety of the productive life of each Citizen Well (as applicable) not less than the Net Revenue Interest for such Citizen Well as set forth in Exhibit A-2 (Part II) and Schedule 3.4B (Part II) , except, in each case, (subject always to Section 10.2 ) for: (i) decreases in connection with those operations in which Citizen or its successors or assigns may from and after the Execution Date be a non-consenting co-owner, (ii) decreases resulting from the establishment or amendment from and after the Execution Date of pools or units to the extent such establishment or amendment is not restricted under Section 10.2 , (iii) decreases required to allow other Working Interest owners to make up past underproduction or pipelines to make up past under deliveries, and (iv) as otherwise expressly set forth in Exhibit A-2 (Part II) and/or Schedule 3.4B (Part II) , as applicable;
(b)      for each Citizen Section, entitles Citizen, to receive not less than the Citizen Section Weighted Average NRI for such Citizen Section for each Target Formation as set forth in Schedule 3.4A (free and clear of any reversionary interest or back-in interest, for the entirety of the productive life of each applicable Citizen Section Lease with regard to the applicable Net

Appendix A-5
US-DOCS\83219354.25



Revenue Interest for such Citizen Section Lease necessary for Citizen to retain not less than this Citizen Section Weighted Average NRI for such Citizen Section for each Target Formation as set forth in Schedule 3.4A ), except, in each case, for (subject always to Section 10.2 ): (i) decreases in connection with those operations in which Citizen or its successors or assigns may from and after the Execution Date be a non-consenting party, (ii) decreases resulting from the establishment or amendment from and after the Execution Date of pools or units to the extent such establishment or amendment is not restricted under Section 10.2 , (iii) decreases required to allow other Working Interests owners to make up past underproduction or pipelines to make us past underdeliveries, (iv) reversionary interests triggered by Citizen Lease expiration or termination occurring after Closing (and subject to the provisions of subpart (e) below, defaults occurring after Closing under the term of a Citizen Lease which results in a termination thereof, Pugh clauses that are triggered and implemented after Closing, continuous drilling clauses effective as of the expiration of a primary term or the drilling of a well which are triggered after Closing as a result of Company’s failure to continue such drilling operations), and (v) as otherwise expressly set forth in Exhibit A-1 (Part II) and/or Schedule 3.4A ;
(c)      for each Citizen Section, entitles Citizen to not less than the Citizen Section Net Acres for each Target Formation in such Governmental Section as set forth on Schedule 3.4A (free and clear of any reversionary interest or back-in interest, for the entirety of the productive life of each applicable Citizen Section Lease with regard to the applicable Net Acres allocable to such Citizen Section Lease necessary for Citizen to retain not less than the Citizen Section Net Acres for such Citizen Section for each Target Formation as set forth in Schedule 3.4A ), except for (subject always to Section 10.1 ): (i) decreases in connection with those operations in which Citizen or its successors or assigns may from and after the Execution Date be a non-consenting co-owner, (ii) decreases resulting from the establishment or amendment from and after the Execution Date of pools or units to the extent such establishment or amendment is not restricted under Section 10.2 , (iii) reversionary interests triggered by Citizen Lease expiration or termination occurring after Closing (and subject to the provisions of subpart (e) below, defaults occurring after Closing under the term of a Citizen Lease which results in a termination thereof, Pugh clauses that are triggered and implemented after Closing, continuous drilling clauses effective as of the expiration of a primary term or the drilling of a well which are triggered after Closing as a result of Company’s failure to continue such drilling operations), and (iv) as otherwise expressly set forth in Schedule 3.4A ;
(d)      obligates Citizen to bear during the entirety of the productive life of such Citizen Well not more than the Working Interest for such Citizen Well as set forth in Exhibit A-2 (Part II) and Schedule 3.4B (Part II) , except (subject always to Section 10.2 ) for: (i) increases resulting from contribution requirements with respect to defaulting co-owners under applicable operating agreements, (ii) increases to the extent that they are accompanied by a proportionate increase in Citizen’s Net Revenue Interest in such Citizen Well, (iii) increases resulting from the establishment or amendment from and after the Execution Date of pools or units to the extent such establishment or amendment is not restricted under Section 10.2 , and (iv) as otherwise expressly set forth in Exhibit A-2 (Part II) and/or Schedule 3.4B (Part II) ;
(e)      for each Citizen Lease, is either held by continuous production in paying quantities (as designated on Exhibit A-1 (Part II) by “HBP” or “hbp” (a “ Citizen HBP Lease ”) or has a primary term expiration date (whether such primary term relates to the primary term under

Appendix A-6
US-DOCS\83219354.25



such Citizen Lease or, if applicable and the Citizen Lease is subject to a term assignment, the primary term provided in such term assignment pursuant to which Citizen or its predecessor-in-interest acquired such Citizen Lease and such primary term identified in such term assignment shall be deemed to be the primary term of such Citizen Lease for purposes of this provision unless the primary term in such Citizen Lease is earlier than the primary term provided in such term assignment, in which case the primary term will be the primary term provided in such Citizen Lease) that is not earlier than the primary term expiration date identified for such Citizen Lease on Exhibit A-1 (Part II ), provided that if no primary term expiration date is provided for such Citizen Lease, such Citizen Lease will be deemed to be designated “HBP” on Exhibit A-1 (Part II) for all purposes hereof; and if the Citizen Lease is not a Citizen HBP Lease and the primary term expiration date thereof is a date that has expired prior to the Execution Date, then, for purposes hereof, such Citizen Lease shall be deemed to have terminated and Citizen shall be deemed to not have Citizen Defensible Title with regard thereto;
(f)      For Citizen Additional Leases acquired by Citizen in accordance with the terms of this Agreement, such Citizen Additional Leases meets all of the geographic location, minimum remaining primary term, inclusion of Qualifying Depths of the Target Formation, and minimum Net Revenue Interests requirements described in the definition for “Citizen Additional Leases”, and with regard to such Citizen Additional Leases that are designated as Citizen Substitute Leases or Citizen True-Up Leases, also entitles Citizen to not less than the Net Acres and Citizen Section Weighted Average NRIs for the applicable Governmental Sections and Target Formations set forth on Exhibit A-5-2 (Part I) and Exhibit A-5-2 (Part II) , as amended and supplemented in accordance with the terms hereof and any Citizen Lease Designation Notice; and
(g)      is free and clear of all Encumbrances.
Citizen Employees ” has the meaning set forth in Section 17.17(c) .
Citizen Environmental Defect ” shall mean any Environmental Condition with respect to a Citizen Asset or Citizen Additional Asset that is not set forth in Schedule 8.14 .
Citizen Environmental Defect Notice ” has the meaning set forth in Section 5.2(a) .
Citizen Environmental Defect Property ” has the meaning set forth in Section 5.2(a) .
Citizen Equipment ” has the meaning set forth in the definition of “Citizen Assets”.
Citizen Excluded Assets ” means:
(d)      all of Citizen’s corporate minute books, financial and Tax records and other business records that relate to Citizen’s and its Affiliates’ businesses generally (including the ownership and operation of the Citizen Assets);
(e)      all trade credits, all accounts, receivables and all other proceeds, income or revenues attributable to the Citizen Assets with respect to any period of time prior to the Effective Time;

Appendix A-7
US-DOCS\83219354.25



(f)      all claims and causes of action of Citizen arising under or with respect to any Citizen Contracts that are attributable to periods of time prior to the Effective Time (including claims for adjustments or refunds);
(g)      all rights and interests relating to the Citizen Assets (i) under any existing policy or agreement of insurance, (ii) under any bond or (iii) to any insurance or condemnation proceeds or awards arising, in each case, from acts, omissions or events, or damage to or destruction of property;
(h)      all Hydrocarbons produced and sold from the Citizen Assets with respect to all periods prior to the Effective Time, other than Hydrocarbons in storage or existing in stock tanks, pipelines and/or plants (including inventory) as of the Effective Time;
(i)      all claims of Citizen or its Affiliates for refunds of or loss carry forwards with respect to (i) Asset Taxes or any other Taxes paid by Citizen or its Affiliates attributable to any period prior to the Effective Time, (ii) income Taxes paid by Citizen or its Affiliates or (iii) any Taxes attributable to the Citizen Excluded Assets;
(j)      all information technology assets, other than the Citizen Production-Related IT Equipment, including all desktop computers, laptop computers, servers, networking equipment and any associated peripherals and other computer hardware, or computer software and telephone equipment;
(k)      all of Citizen’s proprietary computer software, patents, trade secrets, copyrights, names, trademarks, logos and other intellectual property;
(l)      all documents and instruments of Citizen that are reasonably believed to be protected by an attorney-client privilege (other than title opinions);
(m)      all data that cannot be disclosed to Citizen or the Company as a result of confidentiality arrangements under agreements with Third Parties which cannot be waived after the exercise of commercially reasonable efforts, provided that Citizen shall have no obligation to pay any fee or provide any other consideration to obtain any such required consent;
(n)      all audit rights arising under any of the (i) Citizen Contracts or otherwise with respect to any period prior to the Effective Time or (ii) Citizen Excluded Assets, except for any Imbalances;
(o)      all geophysical and other seismic and related technical data and information relating to the Citizen Assets to the extent that such geophysical and other seismic and related technical data and information is not transferable without payment of a fee or other penalty to any Third Party under any Citizen Contract (unless Linn or the Company has separately agreed in writing to pay such fee or other penalty);
(p)      documents prepared or received by Citizen or its Affiliates or their representatives with respect to (i) lists of prospective purchasers for the Citizen Assets, (ii) bids submitted by other prospective purchasers of the Citizen Assets, (iii) analyses by Citizen or its Affiliates of any bids submitted by any prospective purchaser, (iv) correspondence between or among Citizen,

Appendix A-8
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its representatives, and/or any prospective purchaser other than Linn, and (v) correspondence between Citizen and/or any of its respective representatives with respect to any of the bids, the prospective purchasers or the transactions contemplated by this Agreement;
(q)      any offices and office leases, office furniture or office supplies located in or on such offices excluded and/or office leases belonging to Citizen;
(r)      all vehicles and rolling stock;
(s)      any assets that are excluded pursuant to the provisions of Sections 4.6(b) and 4.6(e) ;
(t)      any master service agreements, blanket agreements or similar Contracts to which Citizen is a party;
(u)      any Hedge Contracts related to the Citizen Assets to which Citizen or any of its Affiliates is a party;
(v)      any loan agreement, credit agreement, promissory note, or other similar instrument for borrowed money, and any mortgage, deed of trust, pledge, security agreement, guaranty or similar instrument securing such obligations;
(w)      all overhead costs and expenses paid by Third Party non-operators to Citizen or any of its Affiliates pursuant to any applicable joint operating agreement regarding operations occurring prior to Closing;
(x)      [RESERVED]
(y)      [RESERVED]
(z)      the assets set forth on Exhibit E (Part II) ;
(aa)      any mineral fee interests and lessor royalty interests (and other rights and interests as a lessor) under oil, gas and mineral leases; and
(bb)      the litigation matters identified on part I of Schedule 8.6 , and all claims and causes of action of Citizen with respect thereto.
Citizen Gross Acquisition Cost ” has the meaning set forth in Section 4.3(e)(vi)(B) .
Citizen Group ” means Citizen, its Affiliates, and each of its and their respective officers, directors, members, managers, employees, agents, advisors, other representatives and current and former direct and indirect owners, and the permitted successors and assigns of all of the foregoing persons.
Citizen Hard Consent ” has the meaning set forth in Section 4.6(e) .

Appendix A-9
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Citizen HBP Lease ” has the meaning set forth in the definition of “Citizen Defensible Title”.
Citizen Indemnity Cap ” has the meaning set forth in Section 15.8(e)(ii) .
Citizen Indemnity Deductible ” has the meaning set forth in Section 15.8(d)(ii) .
Citizen Indemnity Liabilities ” means Liabilities, known or unknown, caused by, arising out of or resulting from: (a) the failure to pay, or the underpayment of, any Burdens owed with respect to production from the Citizen Leases or Citizen Wells prior to the Effective Time (other than with respect to the Citizen Suspense Funds, unless such Citizen Suspense Funds were unlawfully suspended; or (b) any Hazardous Substances related to or arising out of the ownership or operation of the Citizen Assets that, prior to the Closing Date, were transported and/or disposed of at off-site disposal facilities.
Citizen Lease Dedication Notice ” has the meaning set forth in Section 4.3(e)(ii) .
Citizen Leases ” has the meaning set forth in the definition of “Citizen Assets”.
Citizen Material Contracts ” has the meaning set forth in Section 8.13(a) .
Citizen Oil and Gas Properties ” has the meaning set forth in the definition of “Citizen Assets”.
Citizen Permitted Encumbrances ” means:
(d)      all Burdens upon, measured by or payable out of production if the net cumulative effect of such Burdens (i) does not operate to reduce the Net Revenue Interest of Citizen with respect to Citizen Well to an amount less than the Net Revenue Interest for such Citizen Well as set forth in Schedule 3.4B (Part II) , (ii) does not operate to reduce the Citizen Section Weighted Average NRI of Citizen with respect to the applicable Citizen Section and Target Formation to an amount less than the Citizen Section Weighted Average NRI for such Citizen Section and Target Formation as set forth in Schedule 3.4A , (iii) does not operate to reduce the Citizen Section Net Acres of Citizen in any Citizen Section and Target Formation to an amount less than the Citizen Section Net Acres for such Citizen Section and Target Formation as set forth in Schedule 3.4A , and (iii) does not obligate Citizen to bear a Working Interest in any Citizen Well (to the extent the same covers the Target Formation(s)) in any amount greater than the Working Interest for such Citizen Well as set forth in Schedule 3.4B (Part II) , as the case may be (unless, in the case of a Citizen Well, the Net Revenue Interest for such Citizen Well is greater than the Net Revenue Interest for such Citizen Well as set forth in Schedule 3.4B (Part II) in the same proportion as any increase in such Working Interest);
(e)      the terms and conditions of the Citizen Rights-of-Way included in the Citizen Assets to the extent they do not materially affect the development and operations of the Citizen Assets as the same are currently operated and being developed;

Appendix A-10
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(f)      preferential rights to purchase, consents to assignment and other similar restrictions to the extent same have been complied with both in connection with the prior sale, assignment or transfer of such Citizen Asset;
(g)      liens for Taxes or assessments not yet due or delinquent or, if delinquent, which are being contested in good faith;
(h)      Customary Post-Closing Consents and any required notices to, or filings with, Governmental Bodies in connection with the consummation of the transactions contemplated by this Agreement;
(i)      conventional rights of reassignment upon final intention to abandon or release any of the Citizen Assets;
(j)      such Citizen Title Defects as Linn may have waived (whether in writing or pursuant to Section 4.2(a) );
(k)      all applicable Citizen Permits and Laws and all rights reserved to or vested in any Governmental Body: (i) to control or regulate any Citizen Asset in any manner; (ii) by the terms of any right, power, franchise, grant, license or permit, or by any provision of Law, to terminate such right, power, franchise, grant, license or permit or to purchase, condemn, expropriate or recapture or to designate a purchaser of any of the Citizen Assets; (iii) to use such property in a manner which would not reasonably be expected to materially impair the use of such property for the purposes for which it is currently owned and operated; or (iv) to enforce any obligations or duties affecting the Citizen Assets to any Governmental Body with respect to any franchise, grant, license or permit;
(l)      easements, conditions, covenants, restrictions, servitudes, permits, rights-of-way, surface leases and other rights in the Citizen Assets for the purpose of operations, facilities, pipelines, transmission lines, transportation lines, distribution lines and other like purposes, or for the joint or common use of rights-of-way, facilities and equipment, to the extent, individually or in the aggregate, such rights would not reasonably be expected to materially impair the operation, development, value or use of any of the Citizen Assets as currently operated and used;
(m)      vendors, carriers, warehousemen’s, repairmen’s, mechanics’, workmen’s, materialmen’s, construction or other like Encumbrances arising by operation of Law in the ordinary course of business or incident to the construction or improvement of any property in respect of obligations which are not yet due or delinquent or, if delinquent, which are being contested in good faith;
(n)      any calls on production under existing Citizen Contracts, insofar as they provide for the payment of the then current applicable index-based market price for such production, and only insofar as they are described on Schedule 8.20 ;
(o)      Liens created under Citizen Leases, Citizen Units or Citizen Rights-of-Way included in the Citizen Assets and/or operating agreements or production sales contracts or by operation of Law in respect of obligations that are not yet due or delinquent or, if delinquent,

Appendix A-11
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which (i) are being contested in good faith and (ii) have been disclosed to Linn in the schedules attached to this Agreement;
(p)      any Encumbrance affecting the Citizen Assets that is discharged by Citizen at or prior to Closing;
(q)      any matters referenced in Exhibit A-1 (Part II) , Exhibit A-2 (Part II) , Schedule 3.4A or Schedule 3.4B (Part II) ;
(r)      failure of Citizen Leases to contain pooling provisions, unless a Citizen Well has been drilled thereon (and the unit for the same includes any pooled acreage), or a pooled unit has been formed for a Citizen Well which includes a portion of such Citizen Leases, and in either case, the consent of the lessor to permit pooling has not been obtained;
(s)      the litigation, suits and proceedings for all items of Part II of Schedule 8.6 ;
(t)      any liens, obligations, defects, irregularities or other Encumbrances affecting the Citizen Assets that would be customarily waived or accepted by an reasonable and prudent title examiner experienced in the review of title to oil and gas properties in Oklahoma;
(u)      the terms and conditions of the Citizen Material Contracts if the net cumulative effect of such Citizen Material Contracts (i) does not operate to reduce the Net Revenue Interest of Citizen with respect to Citizen Well to an amount less than the Net Revenue Interest for such Citizen Well as set forth in Schedule 3.4B (Part II) , (ii) does not operate to reduce the Citizen Section Weighted Average NRI of Citizen with respect to the applicable Citizen Section and Target Formation to an amount less than the Citizen Section Weighted Average NRI for such Citizen Section and Target Formation as set forth in Schedule 3.4A , (iii) does not operate to reduce the Citizen Section Net Acres of Citizen in any Citizen Section and Target Formation to an amount less than the Citizen Section Net Acres for such Citizen Section and Target Formation as set forth in Schedule 3.4A , and (iv) does not obligate Citizen to bear a Working Interest in any Citizen Well (to the extent the same covers the Target Formation(s)) in any amount greater than the Working Interest for such Citizen Well as set forth in Schedule 3.4B (Part II) , as the case may be (unless, in the case of a Citizen Well, the Net Revenue Interest for such Citizen Well is greater than the Net Revenue Interest for such Citizen Well as set forth in Schedule 3.4B (Part II) in the same proportion as any increase in such Working Interest); (v) does not operate to cause the primary term expiration date for a Citizen Lease to be earlier than the primary term expiration date identified for such Citizen Lease on Exhibit A-1 (Part II) ; (vi) does not grant or impose a lien or other Encumbrance (other than a Citizen Permitted Encumbrance) on any Citizen Assets, (vii) does not provide for any disproportionate sharing of costs, revenues or share of production (other than to the extent relating to default provisions or un-triggered non-consent elections or triggered non-consent elections for which the adjusted interests are identified on Schedule 3.4B (Part II) ), and (viii) does not contain or provide for any alternating operatorship or alternating designation of operator; and
(v)      the terms and conditions of this Agreement.
Citizen Preferential Purchase Right ” has the meaning set forth in Section 8.12 .

Appendix A-12
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Citizen Production-Related IT Equipment ” has the meaning set forth in the definition of “Citizen Assets”.
Citizen Records ” has the meaning set forth in the definition of “Citizen Assets”.
Citizen Retained Liabilities ” means Liabilities, known or unknown, caused by, arising out of or resulting from: (a) Citizen’s expenses related to the transactions contemplated by this Agreement; (b) any and all Citizen Taxes; (c) the matters set forth on Part I of Schedule 8.6 ,; (d) the employment relationship between Citizen or any of its Affiliates and any of Citizen’s or any of Citizen’s Affiliates’ present or former employees or the termination of any such employment relationship; (e) any Citizen Excluded Assets; (f) personal injury or death relating to the use, ownership or operation of the Linn Assets prior to the Closing; (g) any acts or omissions that arise to gross negligence or willful misconduct of any member of the Citizen Group related to or arising out of the ownership or operation of the Citizen Assets; (h) any fines or penalties imposed or assessed by a Governmental Body related to or arising out of the ownership or operation of the Citizen Assets prior to the Closing Date, and (i) Citizen’s obligations or Liabilities owed to an Affiliate of Citizen.
Citizen Rights-of-Way ” has the meaning set forth in the definition of “Citizen Assets”.
Citizen Section ” means each Governmental Section set forth on Schedule 3.4A .
“Citizen Section Leases ” means, with respect to a Governmental Section, those (or that portion of those) Citizen Leases covering lands that are located within the boundaries of such Governmental Section, but only to the extent such Citizen Leases (a) are included within the boundaries such Governmental Section, and (b) includes Qualifying Depths for at least one of the Target Formations.
Citizen Section Net Acres ” means, with regard to a Governmental Section, the aggregate Net Acres attributable to the Citizen Section Leases for such Governmental Section, such calculation being made separately as to each Target Formation. Notwithstanding the above, to the extent the term Citizen Section Net Acres is used in connection with a Citizen Additional Lease, this term shall mean the Net Acres for the relevant Citizen Additional Lease only, instead of the Citizen Section Leases.
Citizen Section Weighted Average NRI ” means, as to a Governmental Section, and calculated separately as to each Target Formation: (i) first, take Citizen’s Net Revenue Interest in and to each Citizen Section Lease for such Governmental Section, and then multiply the same by the Citizen Section Net Acres covered by such Citizen Section Lease for such Target Formation (again, limited solely to those Net Acres thereof that are both included within the applicable Governmental Section, and which includes Qualifying Depths of the Target Formation for such Target Formation), and not counting any Net Acres covered by such Citizen Section Lease that are located outside the boundaries of such Governmental Section, nor counting any Net Acres covering depths outside of a Target Formation for which Citizen’s Leases includes Qualifying Depths of the Target Formation; and (ii) then, the calculated product obtained for each Citizen Section Lease under subpart (i) above shall then be added together, and the sum thereof shall then be divided by the sum of the Citizen Section Net Acres covered by ALL of the Citizen

Appendix A-13
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Section Leases included within such Governmental Section, solely to the extent such Net Acres are included within the boundaries of such Governmental Section and include Qualifying Depths of the Target Formation for such Target Formation (the result of the calculation in this subpart (ii) shall be referred to as the “ Citizen Section Weighted Average NRI ” for such Governmental Section and Target Formation), and such calculation shall be made with regard to each Target Formation for the applicable Governmental Section. Notwithstanding the above, to the extent the term Citizen Section Weighted Average NRI is used in connection with a Citizen Additional Lease, this term shall mean the Net Revenue Interest for the relevant Citizen Additional Lease only, instead of the Citizen Section Leases.
Citizen Substitute Leases ” has the meaning set forth in Section 4.3(e)(ii) .
Citizen Suspense Funds ” means funds held in suspense (including funds held in suspense for unleased interests and penalties and interest) that are attributable to the Citizen Assets or Citizen Additional Assets or any interests pooled, unitized or communitized therewith.
Citizen Taxes ” means any Liability of Citizen, or otherwise imposed on the Citizen Assets or Citizen Additional Assets, in respect of any Tax, including without limitation any Liability of Citizen for the Taxes of any other Person under Treasury Regulation Section 1.1502-6 (or any similar provision of state, local or foreign law), as a transferee or successor, by contract or otherwise, but excluding any Asset Taxes to the extent specifically allocated to the Company pursuant to Section 16.1 .
Citizen Title Benefit ” means with respect to the Target Formation(s) for the Citizen Section Leases, Citizen Section Net Acres or Citizen Wells, any right, circumstance or condition existing as of the Effective Time and also immediately prior to the end of the Review Period that operates to (a) increase the Citizen Section Weighted Average NRI of Citizen with respect to a Citizen Section and Target Formation or the Net Revenue Interest of Citizen with respect to a Citizen Well above that shown for such Citizen Section or Citizen Well in Schedule 3.4A or Schedule 3.4B (Part II) , as applicable, to the extent the same does not, with respect to Citizen’s interest in any Citizen Well, cause an equal or greater than proportionate increase in Citizen’s Working Interest with respect to the Target Formation(s) in such Citizen Well above that shown in Schedule 3.4B (Part II) , as applicable, or (b) increase the Citizen Section Net Acres with respect to a Section and the Target Formation(s) in any Citizen Section and Target Formation above the Citizen Section Net Acres for such Citizen Section and Target Formation as shown in Schedule 3.4A .
Citizen Title Benefit Amount ” means, with respect to a Citizen Title Benefit:
(d)      if the Transacting Parties agree on the Citizen Title Benefit Amount, then that amount shall be the Title Benefit Amount;
(e)      if the Citizen Title Benefit represents a discrepancy between either or both:

(i) (1) Citizen’s actual Net Acres for any Target Formation in any Citizen Section, and (2) the Citizen Section Net Acres for such Target Formation in such Citizen Section as set forth in Schedule 3.4A , or

Appendix A-14
US-DOCS\83219354.25



(ii) (1) Citizen’s actual Citizen Section Weighted Average NRI in any Target Formation in any Citizen Section and (2) the Citizen Section Weighted Average NRI for such Target Formation in such Citizen Section as set forth in Schedule 3.4A ,
then the Citizen Title Benefit Amount for such Target Formation in such Governmental Section shall be the greater of zero and the amount obtained by subtracting the Allocated Value for such Target Formation in such Governmental Section from the Citizen Actual Section Value for such Target Formation in such Governmental Section.
(c)      if (i) the Citizen Title Benefit represents a discrepancy between (1) Citizen’s actual Net Revenue Interest for any Citizen Well, and (2) Citizen’s Net Revenue Interest for such Citizen Well as set forth in Schedule 3.4B (Part II) , and (ii) Citizen’s Working Interest in such Citizen Well is increased by less than the same proportion as such Net Revenue Interest increase, then the Citizen Title Benefit Amount shall be the product of (1) the Allocated Value of the affected Citizen Well multiplied by (2) a fraction, the numerator of which is the Net Revenue Interest increase in such Citizen Well, and the denominator of which is the Net Revenue Interest for such Citizen Well as set forth in Schedule 3.4B (Part II) ;
(d)      if the Citizen Title Benefit is of a type not described above, then the Citizen Title Benefit Amounts shall be determined by taking into account the Allocated Value of the Citizen Asset affected by such Citizen Title Benefit, the portion of such Citizen Asset affected by such Citizen Title Benefit, the legal effect of the Citizen Title Benefit, the potential economic effect of the Citizen Title Benefit over the life of such Asset, the values placed upon the Title Benefit by the Transacting Parties and such other reasonable factors as are necessary to make a proper evaluation.
Citizen Title Benefit Notice ” has the meaning set forth in Section 4.3(b) .
Citizen Title Defect ” shall mean any Encumbrance, defect or other condition or matter that causes Citizen not to have Citizen Defensible Title; provided that the following shall not be considered Citizen Title Defects:
(d)      defects arising out of lack of corporate or other entity authorization, unless Linn provides conclusive evidence that such corporate or other entity action was not authorized and has resulted in another Person’s superior claim of title to the relevant Citizen Asset;
(e)      defects arising from any prior oil and gas lease relating to the lands covered by the Citizen Leases or Citizen Units not being surrendered of record, unless Linn provides reasonable evidence that such prior oil and gas lease is still in effect and has resulted in another Person’s actual and superior claim of title to the relevant Citizen Lease or Citizen Well;
(f)      defects that affect only which Person has the right to receive royalty payments (rather than the amount of the proper payment of such royalty payment) and that do not affect the validity of or title to the underlying Citizen Lease;
(g)      defects based solely on: (i) lack of information in Citizen’s files; (ii) references to an unrecorded document to which neither Citizen nor any Affiliate of Citizen is a party and

Appendix A-15
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which document is dated earlier than January 1, 1960; or (iii) any Tax assessment, Tax payment or similar records or the absence of such activities or records;
(h)      any Encumbrance or loss of title resulting from Citizen’s conduct of business in compliance with this Agreement;
(i)      defects as a consequence of cessation of production, insufficient production or failure to conduct operations during any period after the completion of a well capable of production in paying quantities on any of the Citizen Leases held by production, or lands pooled or unitized therewith, except to the extent the cessation of production is shown to exist for a period that, under the terms of the Lease, would (or would reasonably be believed to) result in the termination or expiration of the underlying Citizen Lease, which documentation shall be provided by Linn to Citizen in support thereof;
(j)      liens arising from any Encumbrance created by a mineral owner which has not been subordinated to the applicable lessee’s interest, solely to the extent that the Citizen Lease in question does not have a Citizen Well on it, and no portion thereof has been included in a Citizen Unit;
(k)      all defects or irregularities that have been adjudicated to be cured or remedied by applicable statutes of limitation or statutes of prescription;
(l)      all defects or irregularities resulting from the failure to record releases of liens, production payments or mortgages that have expired on their own terms or the enforcement of which are barred by applicable statute of limitations;
(m)      all defects in the chain of title consisting of the failure to recite marital status in a document or omissions of successions of heirship or estate proceedings, unless Linn provides conclusive evidence that such failure results in another Person’s superior claim of title to the relevant Citizen Asset;
(n)      all defects arising from any change in Laws following the Execution Date;
(o)      any Encumbrance or loss of title affecting ownership interests in formations other than the Target Formation(s) for the relevant Citizen Asset (excluding any circumstances or conditions that have resulted in title or rights relative to ownership interests in the Citizen Assets (but expressly excluding the Citizen Excluded Assets) related to formations other than Target Formations being held by an Citizen Affiliate other than Citizen itself);
(p)      defects arising from failure to comply with any maintenance of uniform interest provision in any Citizen Lease or Citizen Contract; and
(q)      any Title Defect affecting a Citizen Well for which the Title Defect Amount does not exceed $25,000; provided, however, that the Title Defect Amount shall be deemed to meet such $25,000 threshold in any of the following cases: (1) if any Citizen Well is affected by more than one Citizen Title Defect, and the aggregate sum of the Title Defect Amounts for all Citizen Title Defects affecting such Citizen Well exceeds such $25,000 threshold, or (2) in the case of a failure to hold Citizen Defensible Title to multiple Citizen Wells due to the same specific set of

Appendix A-16
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facts, and aggregate sum of the Title Defect Amounts for such Citizen Title Defects affecting multiple Citizen Wells exceeds such $25,000 threshold.
Citizen Title Defect Amount ” means, with respect to a Citizen Title Defect:
(a)      if the Transacting Parties agree on the Citizen Title Defect Amount, then that amount shall be the Citizen Title Defect Amount;
(b)      if the Citizen Title Defect is an Encumbrance that is undisputed and liquidated in amount, then the Citizen Title Defect Amount shall be the amount necessary to be paid to remove the Citizen Title Defect from the Citizen Title Defect Property;
(c)      if the Citizen Title Defect represents a discrepancy between either or both:

(i) (1) Citizen’s actual Net Acres for any Target Formation in any Citizen Section, and (2) the Citizen Section Net Acres for such Target Formation in such Citizen Section as set forth in Schedule 3.4A , or
(ii) (1) Citizen’s actual Citizen Section Weighted Average NRI in any Target Formation in any Citizen Section and (2) the Citizen Section Weighted Average NRI for such Target Formation in such Citizen Section as set forth in Schedule 3.4A ,

and in each case, there is no intermediate reversionary interest prior to the end of the productive life of any relevant Citizen Section Lease, then the Citizen Title Defect Amount for such Target Formation in such Governmental Section shall be the greater of zero and the amount obtained by subtracting the Citizen Actual Section Value for such Target Formation in such Governmental Section from the Allocated Value for such Target Formation in such Governmental Section.
(d)      if (i) the Citizen Title Defect represents a discrepancy between (A) Citizen’s actual NRI in any Citizen Well and (B) Citizen’s Net Revenue Interest for such Citizen Well as set forth in Schedule 3.4B (Part II) and (ii) Citizen’s Working Interest in such Citizen Well is decreased in the same proportion as such Net Revenue Interest decrease, then the Citizen Title Defect Amount shall be the product of (A) the Allocated Value of such Citizen Well multiplied by (B) a fraction, the numerator of which is the Net Revenue Interest decrease in such Citizen Well, and the denominator of which is the Net Revenue Interest for such Citizen Well as set forth in Schedule 3.4B (Part II) ;
(e)      if the Citizen Title Defect results from failure of a Citizen Section Lease to possess Qualifying Depths for any Majority Target Formation in any Governmental Section and Citizen possesses less than or equal to 10% of applicable Target Formation for such Qualifying Depths in such Majority Target Formation in such Governmental Section, then the Citizen Title Defect Amount shall be calculated by first reducing the number of Net Acres allocable to such Citizen Section Lease to zero (0), and then calculating the associated Citizen Title Defect Amount as provided in clause (c) above;

Appendix A-17
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(f)      if the Citizen Title Defect results from failure of a Citizen Section Lease to possess Qualifying Depths as described in subpart (a) of that definition, then the Citizen Title Defect Amount shall be calculated by first reducing the number of Net Acres allocable to such Citizen Section Lease to zero (0), and then calculating the associated Citizen Title Defect Amount as provided in clause (c) above;
(g)      if the Citizen Title Defect results from failure of a Citizen Section Lease to possess Qualifying Depths for any Majority Target Formation in any Governmental Section and Citizen possesses more than 10% of such applicable Target Formation for such Qualifying Depths, then the Citizen Title Defect Amount shall be calculated by first reducing the number of Citizen Section Net Acres allocable to such Citizen Section Lease by the product of (i) the number of Net Acres that would have been allocable to Citizen Section Lease if it possessed the Qualifying Depths and (ii) the amount obtained by subtracting (A) (1.0 - (the product of (I) 2.5 and (II) the difference obtained by subtracting the percentage of the applicable Target Formation for such Qualifying Depths actually possessed by Citizen with regard to such Citizen Section Lease in such Majority Target Formation in such Governmental Section from 50.0%) from (B) 1.0, and then calculating the associated Citizen Title Defect Amount as provided in clause (c) above;
(h)      if the Citizen Title Defect represents an obligation, Encumbrance upon or other defect in title to the Citizen Title Defect Property of a type not described above, then the Citizen Title Defect Amount shall be determined by taking into account the Allocated Value of the Citizen Title Defect Property, the portion of the Citizen Title Defect Property affected by the Citizen Title Defect, the legal effect of the Citizen Title Defect, the potential economic effect of the Citizen Title Defect, the values placed upon the Citizen Title Defect by each Transacting Party and such other reasonable factors as are necessary to make a proper evaluation;
(i)      the Citizen Title Defect Amount with respect to a Citizen Title Defect Property shall be determined without duplication of any costs or losses included in another Citizen Title Defect Amount hereunder;
(j)      if a Citizen Title Defect does not affect a Citizen Title Defect Property throughout the entire remaining productive life of such Citizen Title Defect Property or across all Target Formations for such Citizen Title Defect Property, such fact shall be taken into account in determining the Citizen Title Defect Amount; and
(k)      notwithstanding anything to the contrary in this Agreement, the aggregate Citizen Title Defect Amounts attributable to the effects of all Citizen Title Defects upon any single Citizen Title Defect Property shall not exceed the Allocated Value of such Citizen Title Defect Property.
Citizen Title Defect Notice ” has the meaning set forth in Section 4.3(a) .
Citizen Title Defect Property ” has the meaning set forth in Section 4.3(a) .
Citizen True-Up Leases ” has the meaning set forth in Section 3.3(b)(vi)(C) .
Citizen Units ” has the meaning set forth in the definition of “Citizen Assets”.

Appendix A-18
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Citizen Wells ” has the meaning set forth in the definition of “Citizen Assets”.
Claim Notice ” has the meaning set forth in Section 15.7(b) .
Claimant ” has the meaning set forth in Section 17.3(c)(ii) .
Closing ” has the meaning set forth in Section 13.1 .
Closing Citizen Consideration Units ” has the meaning set forth in Section 3.3(b)(i) .
Closing Date ” has the meaning set forth in Section 13.1 .
Closing Linn Consideration Units ” has the meaning set forth in Section 3.2(b)(i) .
Code ” means the United States Internal Revenue Code of 1986, as amended.
Company ” has the meaning set forth in the Preamble.
Company Assumed Obligations ” has the meaning set forth in Section 15.6 .
“Company Break-Up” means Breakup, as defined in the LLC Agreement.
Company Certificate ” means a Certificate of Formation substantially in the form of Exhibit D attached hereto.
Company Group ” means the Company, its current subsidiaries and each of their respective officers, directors, members, managers, employees, agents, advisors, other representatives and current and former direct and indirect owners, and the permitted successors and assigns of all of the foregoing persons.
Confidentiality Agreement ” means that certain non-disclosure letter agreement between Linn Energy, Inc. and Citizen dated March 29, 2017.
Contract ” means any written or oral contract or agreement or other legally binding arrangement, but in each case specifically excluding, however, any Linn Lease, Citizen Lease, Linn Right-of-Way, Citizen Right-of-Way, Linn Permit, Citizen Permit. For the avoidance of doubt, term assignments of Linn Leases or Citizen Leases shall be considered Contracts hereunder, provided that the Linn Leases and Citizen Leases subject to such term assignments shall not be Contracts for any purpose hereunder, and any Linn Leases or Citizen Leases covered by a term assignment would be subject to the provisions of Article 4 , and the possibility of Linn Title Defects or Citizen Title Defects applicable thereto, and if the terms and provisions of a term assignment adversely impact the ability of Linn or Citizen to deliver Linn Defensible Title or Citizen Defensible Title to the Linn Leases or Citizen Leases covered thereby, then this also would be subject to the provisions of Article 4 , and the possibility of Linn Title Defects or Citizen Title Defects applicable thereto.
Contributing Party ” means, in the case of the Linn Assets and Linn Additional Assets, Linn, and in the case of the Citizen Assets and the Citizen Additional Assets, Citizen.

Appendix A-19
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Control ” and its derivatives mean, with respect to any Person, the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract or otherwise.
COPAS ” means the Council of Petroleum Accountants Societies.
Customary Post-Closing Consents ” shall mean the consents and approvals from Governmental Bodies for the assignment of the Assets to the Company that are customarily obtained after such assignment of properties similar to the Assets. It is acknowledged and agreed that any consents or approvals required to assign Native American oil and gas leases, rights-of-way, or other interests granted by or on behalf of any Native American tribes, regardless of whether the administration of such leases and interests is handled by the applicable tribe, itself, the Bureau of Indian Affairs, or other authority, shall be considered Customary Post-Closing Consents.
Decreased Citizen Amount ” has the meaning set forth in Section 3.3(b)(vi)(B) .
Decreased Linn Amount ” has the meaning set forth in Section 3.2(b)(vi)(B) .
Dispute ” has the meaning set forth in Section 17.3(a) .
Dispute Auditor ” has the meaning set forth in Section 3.2(b)(iv) .
Effective Time ” means 12:01 a.m. Central Prevailing Time on April 1, 2017.
Encumbrance ” shall mean any lien, deed of trust, mortgage, security interest, pledge, charge, defect, encumbrance, any financing lease having substantially the same economic effect as any of the foregoing, any assignment of the right to receive income, or any other type of preferential arrangement.
Environmental Arbitrator ” has the meaning set forth in Section 5.3 .
Environmental Condition ” means (a) a condition with respect to the air, soil, subsurface, surface waters, ground waters and/or sediments that causes Linn or Citizen with respect to any Linn Asset, Linn Additional Asset, Citizen Asset or Citizen Additional Asset, as applicable, not to be in compliance with any Environmental Law, or (b) the existence, with respect to the Linn Assets, Linn Additional Assets, Citizen Assets or Citizen Additional Assets, as applicable, or the operation thereof, of any environmental pollution, contamination or degradation where Remediation by Linn or Citizen, as applicable, is presently required (or, if known, would be presently required) under Environmental Laws. For the avoidance of doubt, (A) the fact that a Linn Well or Citizen Well, as applicable, is no longer capable of producing sufficient quantities of oil or gas to continue to be classified as a “producing well” or that such a Linn Well or Citizen Well, as applicable, should be temporarily abandoned or permanently plugged and abandoned shall not, in each case, form the basis of an Environmental Condition, (B) the fact that a pipe is temporarily not in use shall not form the basis of an Environmental Condition unless such fact requires Remediation other than removal or reuse of the pipe, and (C) except with respect to equipment (1) that causes or has caused any environmental pollution, contamination or degradation where Remediation is presently required (or, if known, would be

Appendix A-20
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presently required) under Environmental Laws or (2) the use or condition of which is a violation of Environmental Law, the physical condition of any surface or subsurface production equipment, including water or oil tanks, separators or other ancillary equipment, shall not form the basis of an Environmental Condition.
Environmental Cure Period ” has the meaning set forth in Section 5.1(b)(i) .
Environmental Dispute ” has the meaning set forth in Section 5.3 .
Environmental Laws ” means, as the same have been amended to the date hereof, the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. § 9601 et seq., the Resource Conservation and Recovery Act, 42 U.S.C. § 6901 et seq.; the Federal Water Pollution Control Act, 33 U.S.C. § 1251 et seq.; the Clean Air Act, 42 U.S.C. § 7401 et seq.; the Hazardous Materials Transportation Act, 49 U.S.C. § 1471 et seq.; the Toxic Substances Control Act, 15 U.S.C. §§ 2601 through 2629; the Oil Pollution Act, 33 U.S.C. § 2701 et seq.; the Emergency Planning and Community Right-to-Know Act, 42 U.S.C. § 11001 et seq.; and the Safe Drinking Water Act, 42 U.S.C. §§ 300f through 300j; state and local analogs to the aforementioned statutes; and all other Laws as of the date hereof of any Governmental Body having jurisdiction over the property in question addressing pollution or protection of the environment (including natural resources) and all regulations implementing the foregoing that are applicable to the operation and maintenance of the Assets.
Execution Date ” has the meaning set forth in Preamble of this Agreement.
Final Allocation Schedule ” has the meaning set forth in Section 3.4(b) .
Final Citizen Adjustment Amount ” has the meaning set forth in Section 3.3(b) .
Final Citizen Adjustment Determination Date ” has the meaning set forth in Section 3.3(b)(v) .
Final Linn Adjustment Amount ” has the meaning set forth in Section 3.2(b) .
Final Linn Adjustment Determination Date ” has the meaning set forth in Section 3.2(b)(v) .
Fraud ” means (and must include all of) the following: (1) a false statement of a material fact, (2) with the actual and present knowledge on the part of the Person making the statement that the statement is untrue, (3) actual and deliberate intent on the part of the Person making such statement to deceive the Person that is claiming fraud (4) justifiable reliance on the statement by the Person to whom such statement is made, and (5) injury to the Person to whom such statement is made as a direct result of such false statement.
Fundamental Representations ” has the meaning set forth in Section 15.8(a)(i) .
GAAP ” means generally accepted accounting principles, consistently applied.

Appendix A-21
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Governmental Body ” means any Federal, State, local, municipal, tribal or other government; any governmental, regulatory or administrative agency, commission, body or other authority exercising or entitled to exercise any administrative, executive, judicial, legislative, regulatory or taxing authority or power; and any court or governmental tribunal, including any tribal authority having or asserting jurisdiction.
Governmental Section ” shall mean the sections of land established by the Public Land Survey System of the United States as customarily referenced by Section, Township, and Range and consisting of 640 acres, more or less.
Group ” means, in the case of Linn, the Linn Group, and in the case of Citizen, the Citizen Group, and in the case of the Company, the Company Group.
Hazardous Substances ” means any pollutants, contaminants, toxic or hazardous substances, materials, wastes, constituents, compounds or chemicals that are regulated by, or may form the basis of liability under any Environmental Laws, including asbestos-containing materials.
Hedge Contract ” shall mean any swap, forward, future or derivatives transaction or option or other similar hedge Contract.
Hydrocarbons ” means oil, gas, condensate and other gaseous and liquid hydrocarbons or any combination thereof.
Imbalances ” means all Well Imbalances and Pipeline Imbalances.
Income Tax ” shall mean any income, franchise and similar Taxes.
Increased Citizen Amount ” has the meaning set forth in Section 3.3(b)(vi)(A) .
Increased Linn Amount ” has the meaning set forth in Section 3.2(b)(vi)(A) .
Indemnified Person ” has the meaning set forth in Section 15.7(a) .
Indemnifying Person ” has the meaning set forth in Section 15.7(a) .
Individual Environmental Threshold ” has the meaning set forth in Section 5.1(c)(iii) .
Individual Indemnity Threshold ” has the meaning set forth in Section 15.8(d)(i) .
Initial Citizen Agreed Value ” has the meaning set forth in Section 3.1(b) .
Initial Linn Agreed Value ” has the meaning set forth in Section 3.1(a) .
Interim Period ” means the period beginning upon the Execution Date and ending upon the Closing.
JVL ” has the meaning set forth in the definition of “Affiliate”.

Appendix A-22
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Knowledge ” means all information actually known to, in the case of Linn, Mark Ellis, David B. Rottino, Arden L. Walker, Jr., Don Davis, Justin Vick, or Thomas Emmons, and in the case of Citizen, Robbie Woodard, James Woods, Greg Augsburger and Mike Hofstrom, in each case without any duty of investigation or inquiry.
Law ” means any constitution, decree, resolution, law, statute, act, ordinance, rule, directive, order, treaty, code or regulation and any injunction or final non-appealable judgment or any interpretation of the foregoing, as enacted, issued or promulgated by any Governmental Body.
Lease ” means a Linn Lease or Citizen Lease, as applicable.
LEH ” has the meaning set forth in the Preamble.
Liabilities ” means any and all claims, payments, charges, judgments, assessments, liabilities, losses, damages, penalties, fines or costs and expenses, including any reasonable fees of attorneys, experts, consultants, accountants, and other professional representatives and legal or other expenses incurred in connection therewith and including liabilities, costs, losses and damages for personal injury, illness or death, property damage, Contract claims, torts or otherwise.
Linn ” has the meaning set forth in the Preamble.
Linn Actual Section Value ” means, in the case of any Target Formation in any Governmental Section, the product of (a) the actual aggregate Linn Section Net Acres subject to the Linn Section Leases in such Target Formation in such Governmental Section, and (b) the sum of (i) the Zone Price for such Target Formation in such Governmental Section and (ii) the product of (A) the Zone NRI Value for such Target Formation in such Governmental Section, (B) the amount (whether positive, negative or zero) obtained by subtracting the Zone Average NRI for such Target Formation in such Governmental Section from the actual Linn Section Weighted Average NRI associated with the Linn Section Leases in such Target Formation in such Governmental Section; and (C) 100.
Linn Additional Assets ” means the Linn Additional Leases and any other items acquired by Linn with the Linn Additional Leases that would constitute “Linn Assets” to the extent the Linn Additional Leases were Linn Leases.
Linn Additional Leases ” means all oil and gas leases, oil, gas and mineral leases, subleases and other leaseholds, mineral interests, mineral fee interests, royalty interests, overriding royalty interests, net profit interests, payments out of production, carried interests, reversionary rights, contractual rights to production or other interests in Hydrocarbons acquired by Linn either (i) after April 1, 2017 and prior to Closing, (ii) after April 1, 2017 and prior to the expiration of thirty (30) days after Closing as long as Linn has entered into a definitive agreement to acquire such interest prior to the Closing (for which written notice of such definitive agreement and a list of the oil and gas leases covered thereby has been provided to Citizen prior to Closing), (iii)  prior to April 1, 2017 (and are still  owned by Linn as of the Execution Date) but which are not listed on Exhibit A-1 (Part I) and are listed on Exhibit A-5

Appendix A-23
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(Part I) , or (iv) that are acquired by Linn after Closing and prior to the expiration of the Title Cure Period, insofar and only insofar as such acquisitions under this subpart (iv) are made via acreage trades, pursuant to which Linn has traded acreage that is outside of the areas identified in Exhibit H  for such interests) and with regard to all acquisitions described in subparts (i)-(iv) above, insofar and only insofar that such acquired interests: (a) are within the areas identified in Exhibit H , (b) with respect to each oil and gas lease and oil, gas and mineral lease, subleases and other leaseholds, to the extent the same is not held beyond its primary term by production, the same has a remaining primary term that expires no less than two (2) years after the Effective Time, (c) includes Qualifying Depths of one or more of the applicable Section Target Formations, and (d) entitles Linn (and following the assignment of such Linn Additional Lease, the Company) to receive not less than a 75% Net Revenue Interest therein with respect to the applicable Target Formation(s). Notwithstanding anything to the contrary herein, any Hydrocarbon interest identified on Exhibit A-1 (Part I) as a Linn Lease shall not be a Linn Additional Lease for any purpose hereunder.
Linn Adjustment Notice ” has the meaning set forth in Section 3.2(b)(ii) .
Linn Aggregate Deductible ” has the meaning set forth in Section 4.2(d)(iii) .
Linn Assets ” means all of Linn’s right, title and interest in and to the following, less and except the Linn Excluded Assets:
(d)      all oil and gas leases, oil, gas and mineral leases, subleases and other leaseholds,, overriding royalty interests, net profit interests, payments out of production, carried interests, reversionary rights, contractual rights to production or other interests in Hydrocarbons, in each case, described in Exhibit A-1 (Part I) , together with any and all other right, title and interest of Linn in and to the leasehold estates or other rights and interests created by any of the foregoing, subject to the terms, conditions, covenants and obligations set forth in such interests and/or Exhibit A-1 (Part I) (all such interests, the “ Linn Leases ”);
(e)      all oil and gas wells, water wells, carbon dioxide wells, salt water disposal wells, injection wells, observation wells, and other wells and wellbores located on or allocable to the Linn Leases and Linn Units, including those described on Exhibit A-2 (Part I) , whether producing, shut in, or abandoned (all such interests, the “ Linn Wells ”);
(f)      all rights and interests in, under or derived from all unitization, communitization, and pooling agreements or compulsory pooling orders in effect with respect to any of the Linn Leases, or Linn Wells and the units created thereby (all such interests, the “ Linn Units ”);
(g)      to the extent transferable after the exercise of commercially reasonable efforts (which shall not require the payment of a fee or the provision of any other consideration), all Contracts (i) to which Linn is a party (or is a successor or assign of a party), (ii) that pertain primarily to any of the Linn Assets and (iii) that will be binding on the Company after Closing, but exclusive of any master service agreements, blanket agreements or similar Contracts (all such contracts, “ Linn Contracts ”);

Appendix A-24
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(h)      all Rights-of-Way to the extent used in connection with the ownership or operation of any of the Linn Leases, Linn Wells, Linn Units or other Linn Assets, including the Rights-of-Way set forth in Exhibit A-3 (Part I) (all such interests, collectively, the “ Linn Rights-of-Way ”);
(i)      all flowlines, pipelines and appurtenances thereto that are located on the Linn Leases or Linn Units or used, or held for use, in connection with the operation of the Linn Wells, but excluding all Linn Excluded Midstream Assets (all such interests (subject to such exclusions) together with the Linn Leases, Linn Units, and Linn Wells, collectively, the “ Linn Oil and Gas Properties ”);
(j)      all personal property, equipment, machinery, tools, compressors, meters, tanks, pumps, platforms, pulling machines, boilers, buildings, pipe yards, salt water disposal facilities, utility lines, computer and automation equipment, telecommunications equipment, field radio telemetry, and associated frequencies and licenses, pressure transmitters, central processing equipment, fixtures, improvements, facilities and other tangible personal property located on the Linn Oil and Gas Properties, including such equipment described on Exhibit A-4 (Part I) (all such interests, the “ Linn Equipment ”);
(k)      all of the files, records, information and data, whether written or electronically stored, primarily relating to the Linn Assets and in the possession of Linn or its Affiliates, including: (i) land and title records (including abstracts of title, title opinions and title curative documents); (ii) Linn Contract files; (iii) correspondence; (iv) operations, environmental (including environmental assessments and studies), production and accounting records; (v) facility and well records; and (vi) to the extent transferable, seismic, geologic and technical data including logs and maps (all such interests, the “ Linn Records ”);
(l)      all Hydrocarbons (or the proceeds from the sale of Hydrocarbons) (i) produced from or attributable to the Linn Leases, Linn Units, and Linn Wells at and after the Effective Time, (ii) located in pipelines or in tanks above the pipeline sales connection attributable to the Linn Leases, Linn Units, and Linn Wells at and after the Effective Time, or (iii) in storage or existing in stock tanks, pipelines and/or plants (including inventory) as of the Effective Time;
(m)      all claims and causes of action to the extent attributable to the Company Assumed Obligations;
(n)      to the extent that they may be assigned, all Permits that are primarily used in connection with the ownership or operation of the Linn Assets;
(o)      all Imbalances relating to the other Linn Assets;
(p)      to the extent transferable, all Seismic Contracts and Seismic Data and any related interpretive geophysical and geological data relating to the Linn Oil and Gas Properties, but only to the extent such Seismic Contracts and Seismic Data may be assigned without payment of fees or other penalties to a Third Party;

Appendix A-25
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(q)      any refunds, claims for refunds or rights to receive refunds from any Governmental Body with respect to Taxes attributable to the Linn Assets and periods of time from and after the Effective Time; and
(r)      all radio equipment, SCADA and measurement technology, and other production related mobility devices (such as SCADA controllers), well communication devices, and any other information technology systems and licenses associated with the foregoing, in each case only to the extent such assets and licenses are (i) used or held for use solely in connection with the operation of the Linn Oil and Gas Properties, and (ii) to the extent assignable (with consent, if applicable, but without the payment of any fee or the provision of any other consideration; provided Linn shall use commercially reasonable efforts to cause the transfer of all such rights and interests to Company) (the “ Linn Production-Related IT Equipment ”).
Linn Assignment ” means an assignment to be executed and delivered by Linn at the Closing in substantially the form of Exhibit C (Part I) attached hereto.
Linn Casualty Loss ” has the meaning set forth in Section 4.7(b) .
Linn Closing Settlement Statement ” has the meaning set forth in Section 3.2(a)(iii) .
Linn Consideration Units ” has the meaning set forth in Section 3.1(a) .
Linn Contracts ” has the meaning set forth in the definition of “Linn Assets”.
Linn Cost Credited Asset Acquisition Costs ” means, in the case of any Linn Cost Credited Lease and associated Linn Additional Assets, the consideration payable in connection with the acquisition of such Linn Cost Credited Lease and associated Linn Additional Assets, together with any reasonable Third Party expenses, including reasonable attorneys’ fees, lease bonuses, broker fees, abstract costs, title opinion costs, title curative costs, and other reasonable Third Party costs of due diligence incurred by Linn in acquiring such Linn Cost Credited Lease and associated Linn Additional Assets, provided that the Linn Cost Credited Asset Acquisition Costs for any Linn Cost Credited Lease and associated Linn Additional Assets shall never exceed $7,000 per Net Acre subject to such Linn Cost Credited Lease, provided , further , that any Linn Cost Credited Leases that are acquired pursuant to a permitted acreage trade or similar transaction shall be deemed to have a Linn Cost Credited Asset Acquisition Cost of $7,000 per Raw Net Acre.
Linn Cost Credited Lease ” has the meaning set forth in Section 4.2(e)(iv) .
Linn Defensible Title ” shall mean such title of Linn Assets, as of the Effective Time and immediately prior to the expiration of the Review Period (but for purposes of the Linn Assignment, it shall mean as of the Closing Date, and for purposes of the Linn Assignment covering any Linn Additional Assets as of the date that such Linn Additional Assets are conveyed to the Company as permitted by this Agreement), subject to Linn Permitted Encumbrances, that:
(d)      for each Linn Well, entitles Linn to receive during the entirety of the productive life of each Linn Well (as applicable) not less than the Net Revenue Interest for such Linn Well

Appendix A-26
US-DOCS\83219354.25



as set forth in Exhibit A-2 (Part I) and Schedule 3.4B (Part I) , except, in each case, (subject always to Section 10.1 ) for: (i) decreases in connection with those operations in which Linn or its successors or assigns may from and after the Execution Date be a non-consenting co-owner, (ii) decreases resulting from the establishment or amendment from and after the Execution Date of pools or units to the extent such establishment or amendment is not restricted under Section 10.1 , (iii) decreases required to allow other Working Interest owners to make up past underproduction or pipelines to make up past under deliveries, and (iv) as otherwise expressly set forth in Exhibit A-2 (Part I) and/or Schedule 3.4B (Part I) , as applicable;
(e)      for each Linn Section, entitles Linn, to receive not less than the Linn Section Weighted Average NRI for such Linn Section for each Target Formation as set forth in Schedule 3.4A (free and clear of any reversionary interest or back-in interest, for the entirety of the productive life of each applicable Linn Section Lease with regard to the applicable Net Revenue Interest for such Linn Section Lease necessary for Linn to retain not less than this Linn Section Weighted Average NRI for such Linn Section for each Target Formation as set forth in Schedule 3.4A ), except, in each case, for (subject always to Section 10.1 ): (i) decreases in connection with those operations in which Linn or its successors or assigns may from and after the Execution Date be a non-consenting party, (ii) decreases resulting from the establishment or amendment from and after the Execution Date of pools or units to the extent such establishment or amendment is not restricted under Section 10.1 , (iii) decreases required to allow other Working Interests owners to make up past underproduction or pipelines to make us past underdeliveries, (iv) reversionary interests triggered by Linn Lease expiration or termination occurring after Closing (and subject to the provisions of subpart (e) below, defaults occurring after Closing under the term of a Linn Lease which results in a termination thereof, Pugh clauses that are triggered and implemented after Closing, continuous drilling clauses effective as of the expiration of a primary term or the drilling of a well which are triggered after Closing as a result of Company’s failure to continue such drilling operations), and (v) as otherwise expressly set forth in Exhibit A-1 (Part I) and/or Schedule 3.4A ;
(f)      for each Linn Section, entitles Linn to not less than the Linn Section Net Acres for each Target Formation in such Governmental Section as set forth on Schedule 3.4A (free and clear of any reversionary interest or back-in interest, for the entirety of the productive life of each applicable Linn Section Lease with regard to the applicable Net Acres allocable to such Linn Section Lease necessary for Linn to retain not less than the Linn Section Net Acres for such Linn Section for each Target Formation as set forth in Schedule 3.4A ), except for (subject always to Section 10.1 ): (i) decreases in connection with those operations in which Linn or its successors or assigns may from and after the Execution Date be a non-consenting co-owner, (ii) decreases resulting from the establishment or amendment from and after the Execution Date of pools or units to the extent such establishment or amendment is not restricted under Section 10.1 , (iii) reversionary interests triggered by Linn Lease expiration or termination occurring after Closing (and subject to the provisions of subpart (e) below, defaults occurring after Closing under the term of a Linn Lease which results in a termination thereof, Pugh clauses that are triggered and implemented after Closing, continuous drilling clauses effective as of the expiration of a primary term or the drilling of a well which are triggered after Closing as a result of Company’s failure to continue such drilling operations), and (iv) as otherwise expressly set forth in Schedule 3.4A ;

Appendix A-27
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(g)      obligates Linn to bear during the entirety of the productive life of such Linn Well not more than the Working Interest for such Linn Well as set forth in Exhibit A-2 (Part I) and Schedule 3.4B (Part I) , except (subject always to Section 10.1 ) for: (i) increases resulting from contribution requirements with respect to defaulting co-owners under applicable operating agreements, (ii) increases to the extent that they are accompanied by a proportionate increase in Linn’s Net Revenue Interest in such Linn Well, (iii) increases resulting from the establishment or amendment from and after the Execution Date of pools or units to the extent such establishment or amendment is not restricted under Section 10.1 , and (iv) as otherwise expressly set forth in Exhibit A-2 (Part I) and/or Schedule 3.4B (Part I) ;
(h)      for each Linn Lease, is either held by continuous production in paying quantities (as designated on Exhibit A-1 (Part I) by “HBP” or “hbp” (a “ Linn HBP Lease ”) or has a primary term expiration date (whether such primary term relates to the primary term under such Linn Lease or, if applicable and the Linn Lease is subject to a term assignment, the primary term provided in such term assignment pursuant to which Linn or its predecessor-in-interest acquired such Linn Lease and such primary term identified in such term assignment shall be deemed to be the primary term of such Linn Lease for purposes of this provision unless the primary term in such Linn Lease is earlier than the primary term provided in such term assignment, in which case the primary term will be the primary term provided in such Linn Lease) that is not earlier than the primary term expiration date identified for such Linn Lease on Exhibit A-1 (Part I ), provided that if no primary term expiration date is provided for such Linn Lease, such Linn Lease will be deemed to be designated “HBP” on Exhibit A-1 (Part I) for all purposes hereof; and if the Linn Lease is not a Linn HBP Lease and the primary term expiration date thereof is a date that has expired prior to the Execution Date, then, for purposes hereof, such Linn Lease shall be deemed to have terminated and Linn shall be deemed to not have Linn Defensible Title with regard thereto;
(i)      For Linn Additional Leases acquired by Linn in accordance with the terms of this Agreement, such Linn Additional Leases meets all of the geographic location, minimum remaining primary term, inclusion of Qualifying Depths of the Target Formation, and minimum Net Revenue Interests requirements described in the definition for “Linn Additional Leases”, and with regard to such Linn Additional Leases that are designated as Linn Substitute Leases or Linn True-Up Leases, also entitles Linn to not less than the Net Acres and Linn Section Weighted Average NRIs for the applicable Governmental Sections and Target Formations set forth on Exhibit A-5-1 , as amended and supplemented in accordance with the terms hereof and any Linn Lease Designation Notice; and
(j)      is free and clear of all Encumbrances.
Linn Delta Value ” has the meaning set forth in Section 3.2(b)(vi)(C) .
Linn Employees ” has the meaning set forth in Section 17.17(b) .
Linn Environmental Defect ” shall mean any Environmental Condition with respect to a Linn Asset or Linn Additional Asset that is not set forth in Schedule 7.14 .
Linn Environmental Defect Notice ” has the meaning set forth in Section 5.1(a) .

Appendix A-28
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Linn Environmental Defect Property ” has the meaning set forth in Section 5.1(a) .
Linn Equipment ” has the meaning set forth in the definition of “Linn Assets”.
Linn Excluded Assets ” means:
(d)      all of Linn’s corporate minute books, financial and Tax records and other business records that relate to Linn’s and its Affiliates’ businesses generally (including the ownership and operation of the Linn Assets);
(e)      all trade credits, all accounts, receivables and all other proceeds, income or revenues attributable to the Linn Assets with respect to any period of time prior to the Effective Time;
(f)      all claims and causes of action of Linn arising under or with respect to any Linn Contracts that are attributable to periods of time prior to the Effective Time (including claims for adjustments or refunds);
(g)      all rights and interests relating to the Linn Assets (i) under any existing policy or agreement of insurance, (ii) under any bond or (iii) to any insurance or condemnation proceeds or awards arising, in each case, from acts, omissions or events, or damage to or destruction of property;
(h)      all Hydrocarbons produced and sold from the Linn Assets with respect to all periods prior to the Effective Time, other than Hydrocarbons in storage or existing in stock tanks, pipelines and/or plants (including inventory) as of the Effective Time;
(i)      all claims of Linn or its Affiliates for refunds of or loss carry forwards with respect to (i) Asset Taxes or any other Taxes paid by Linn or its Affiliates attributable to any period prior to the Effective Time, (ii) income Taxes paid by Linn or its Affiliates or (iii) any Taxes attributable to the Linn Excluded Assets;
(j)      all information technology assets, other than the Linn Production-Related IT Equipment, including all desktop computers, laptop computers, servers, networking equipment and any associated peripherals and other computer hardware, or computer software and telephone equipment;
(k)      all of Linn’s proprietary computer software, patents, trade secrets, copyrights, names, trademarks, logos and other intellectual property;
(l)      all documents and instruments of Linn that are reasonably believed to be protected by an attorney-client privilege (other than title opinions);
(m)      all data that cannot be disclosed to Citizen or the Company as a result of confidentiality arrangements under agreements with Third Parties which cannot be waived after the exercise of commercially reasonable efforts, provided that Linn shall have no obligation to pay any fee or provide any other consideration to obtain any such required consent;

Appendix A-29
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(n)      all audit rights arising under any of the (i) Linn Contracts or otherwise with respect to any period prior to the Effective Time or (ii) Linn Excluded Assets, except for any Imbalances;
(o)      all geophysical and other seismic and related technical data and information relating to the Linn Assets to the extent that such geophysical and other seismic and related technical data and information is not transferable without payment of a fee or other penalty to any Third Party under any Linn Contract (unless Citizen or the Company has separately agreed in writing to pay such fee or other penalty);
(p)      documents prepared or received by Linn or its Affiliates or their representatives with respect to (i) lists of prospective purchasers for the Linn Assets, (ii) bids submitted by other prospective purchasers of the Linn Assets, (iii) analyses by Linn or its Affiliates of any bids submitted by any prospective purchaser, (iv) correspondence between or among Linn, its representatives, and/or any prospective purchaser other than Citizen, and (v) correspondence between Linn and/or any of its respective representatives with respect to any of the bids, the prospective purchasers or the transactions contemplated by this Agreement;
(q)      any offices and office leases, office furniture or office supplies located in or on such offices excluded and/or office leases belonging to Linn;
(r)      all vehicles and rolling stock;
(s)      any assets that are excluded pursuant to the provisions of Sections 4.5(b) and 4.5(e) ;
(t)      any master service agreements, blanket agreements or similar Contracts to which Linn is a party;
(u)      any Hedge Contracts related to the Linn Assets to which Linn or any of its Affiliates is a party;
(v)      any loan agreement, credit agreement, promissory note, or other similar instrument for borrowed money, and any mortgage, deed of trust, pledge, security agreement, guaranty or similar instrument securing such obligations;
(w)      all overhead costs and expenses paid by Third Party non-operators to Linn or any of its Affiliates pursuant to any applicable joint operating agreement regarding operations occurring prior to Closing;
(x)      the Linn Waterflood Assets;
(y)      the Linn Excluded Midstream Assets;
(z)      the assets set forth on Exhibit E (Part I) ;
(aa)      any mineral fee interests and lessor royalty interests (and other rights and interests as a lessor) under oil, gas and mineral leases; and

Appendix A-30
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(bb)      the litigation matters identified on part I of Schedule 7.6 , and all claims and causes of action of Linn with respect thereto.
Linn Excluded Midstream Assets ” means (a) assets generally considered “midstream” in nature in accordance with generally accepted U.S. oil and gas industry practices and customs, including facilities and other assets relating to (i) natural gas gathering, storage, treating, compression, processing, and fractionation, (ii) oil and natural gas liquids gathering, storage and transmission, (iii) water handling and disposal, and (iv) CO 2 gathering, transportation and sequestration; (b) contracts and other agreements related to or in respect of the assets described in clause (a) above, including transportation, gathering, processing and treating contracts, saltwater disposal agreements, water injection agreements, produced water gathering and treating agreements, surface use agreements, right of way agreements, easements, joint use surface agreements, operating agreements, licenses and permits; and (c) all real property interests used or held for use in connection with the assets described in clause (a) above or granted pursuant to a contract or other agreement described in clause (b) above.
Linn Gross Acquisition Cost ” has the meaning set forth in Section 4.2(e)(vi)(B) .
Linn Group ” means Linn, its Affiliates, and each of its and their respective officers, directors, members, managers, employees, agents, advisors, other representatives and current and former direct and indirect owners, and the permitted successors and assigns of all of the foregoing persons.
Linn Hard Consent ” has the meaning set forth in Section 4.5(e) .
Linn HBP Lease ” has the meaning set forth in the definition of “Linn Defensible Title”.
Linn Indemnity Cap ” has the meaning set forth in Section 15.8(e)(i) .
Linn Indemnity Deductible ” has the meaning set forth in Section 15.8(d)(i) .
Linn Indemnity Liabilities ” means Liabilities, known or unknown, caused by, arising out of or resulting from: (a) the failure to pay, or the underpayment of, any Burdens owed with respect to production from the Linn Leases or Linn Wells prior to the Effective Time (other than with respect to (i) the Linn Suspense Funds, unless such Linn Suspense Funds were unlawfully suspended, (ii) the claims and lawsuit described in Part I of Schedule 7.6 , and (iii) any claims or Liabilities asserted by royalty owners or other Burden beneficiaries who are similarly situated to the claimants in the lawsuit described in Part I of Schedule 7.6 with respect to such lawsuit); or (b) any Hazardous Substances related to or arising out of the ownership or operation of the Linn Assets that, prior to the Closing Date, were transported and/or disposed of at off-site disposal facilities.
Linn Lease Dedication Notice ” has the meaning set forth in Section 4.2(e)(ii) .
Linn Leases ” has the meaning set forth in definition of “Linn Assets”.
Linn Material Contracts ” has the meaning set forth in Section 7.13(a) .

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Linn Oil and Gas Properties ” has the meaning set forth in definition of “Linn Assets”.
Linn Permitted Encumbrances ” means:
(d)      all Burdens upon, measured by or payable out of production if the net cumulative effect of such Burdens (i) does not operate to reduce the Net Revenue Interest of Linn with respect to Linn Well to an amount less than the Net Revenue Interest for such Linn Well as set forth in Schedule 3.4B (Part I) , (ii) does not operate to reduce the Linn Section Weighted Average NRI of Linn with respect to the applicable Linn Section and Target Formation to an amount less than the Linn Section Weighted Average NRI for such Linn Section and Target Formation as set forth in Schedule 3.4A , (iii) does not operate to reduce the Linn Section Net Acres of Linn in any Linn Section and Target Formation to an amount less than the Linn Section Net Acres for such Linn Section and Target Formation as set forth in Schedule 3.4A , and (iii) does not obligate Linn to bear a Working Interest in any Linn Well (to the extent the same covers the Target Formation(s)) in any amount greater than the Working Interest for such Linn Well as set forth in Schedule 3.4B (Part I) , as the case may be (unless, in the case of a Linn Well, the Net Revenue Interest for such Linn Well is greater than the Net Revenue Interest for such Linn Well as set forth in Schedule 3.4B (Part I) in the same proportion as any increase in such Working Interest);
(e)      the terms and conditions of the Linn Rights-of-Way included in the Linn Assets to the extent they do not materially affect the development and operations of the Linn Assets as the same are currently operated and being developed;
(f)      preferential rights to purchase, consents to assignment and other similar restrictions to the extent same have been complied with both in connection with the prior sale, assignment or transfer of such Linn Asset;
(g)      liens for Taxes or assessments not yet due or delinquent or, if delinquent, which are being contested in good faith;
(h)      Customary Post-Closing Consents and any required notices to, or filings with, Governmental Bodies in connection with the consummation of the transactions contemplated by this Agreement;
(i)      conventional rights of reassignment upon final intention to abandon or release any of the Linn Assets;
(j)      such Linn Title Defects as Citizen may have waived (whether in writing or pursuant to Section 4.3(a) );
(k)      all applicable Linn Permits and Laws and all rights reserved to or vested in any Governmental Body: (i) to control or regulate any Linn Asset in any manner; (ii) by the terms of any right, power, franchise, grant, license or permit, or by any provision of Law, to terminate such right, power, franchise, grant, license or permit or to purchase, condemn, expropriate or recapture or to designate a purchaser of any of the Linn Assets; (iii) to use such property in a manner which would not reasonably be expected to materially impair the use of such property for the purposes for which it is currently owned and operated; or (iv) to enforce any obligations

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or duties affecting the Linn Assets to any Governmental Body with respect to any franchise, grant, license or permit;
(l)      easements, conditions, covenants, restrictions, servitudes, permits, rights-of-way, surface leases and other rights in the Linn Assets for the purpose of operations, facilities, pipelines, transmission lines, transportation lines, distribution lines and other like purposes, or for the joint or common use of rights-of-way, facilities and equipment, to the extent, individually or in the aggregate, such rights would not reasonably be expected to materially impair the operation, development, value or use of any of the Linn Assets as currently operated and used;
(m)      vendors, carriers, warehousemen’s, repairmen’s, mechanics’, workmen’s, materialmen’s, construction or other like Encumbrances arising by operation of Law in the ordinary course of business or incident to the construction or improvement of any property in respect of obligations which are not yet due or delinquent or, if delinquent, which are being contested in good faith;
(n)      any calls on production under existing Linn Contracts, insofar as they provide for the payment of the then current applicable index-based market price for such production, and only insofar as they are described on Schedule 7.20 ;
(o)      Liens created under Linn Leases, Linn Units or Linn Rights-of-Way included in the Linn Assets and/or operating agreements or production sales contracts or by operation of Law in respect of obligations that are not yet due or delinquent or, if delinquent, which (i) are being contested in good faith and (ii) have been disclosed to Citizen in the schedules attached to this Agreement;
(p)      any Encumbrance affecting the Linn Assets that is discharged by Linn at or prior to Closing;
(q)      any matters referenced in Exhibit A-1 (Part I) , Exhibit A-2 (Part I) , Schedule 3.4A or Schedule 3.4B (Part I) ;
(r)      failure of Linn Leases to contain pooling provisions, unless a Linn Well has been drilled thereon (and the unit for the same includes any pooled acreage), or a pooled unit has been formed for a Linn Well which includes a portion of such Linn Leases, and in either case, the consent of the lessor to permit pooling has not been obtained;
(s)      the litigation, suits and proceedings for all items of Part II of Schedule 7.6 ;
(t)      any liens, obligations, defects, irregularities or other Encumbrances affecting the Linn Assets that would be customarily waived or accepted by an reasonable and prudent title examiner experienced in the review of title to oil and gas properties in Oklahoma;
(u)      the terms and conditions of the Linn Material Contracts if the net cumulative effect of such Linn Material Contracts (i) does not operate to reduce the Net Revenue Interest of Linn with respect to Linn Well to an amount less than the Net Revenue Interest for such Linn Well as set forth in Schedule 3.4B (Part I) , (ii) does not operate to reduce the Linn Section Weighted Average NRI of Linn with respect to the applicable Linn Section and Target

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Formation to an amount less than the Linn Section Weighted Average NRI for such Linn Section and Target Formation as set forth in Schedule 3.4A , (iii) does not operate to reduce the Linn Section Net Acres of Linn in any Linn Section and Target Formation to an amount less than the Linn Section Net Acres for such Linn Section and Target Formation as set forth in Schedule 3.4A , and (iv) does not obligate Linn to bear a Working Interest in any Linn Well (to the extent the same covers the Target Formation(s)) in any amount greater than the Working Interest for such Linn Well as set forth in Schedule 3.4B (Part I) , as the case may be (unless, in the case of a Linn Well, the Net Revenue Interest for such Linn Well is greater than the Net Revenue Interest for such Linn Well as set forth in Schedule 3.4B (Part I) in the same proportion as any increase in such Working Interest); (v) does not operate to cause the primary term expiration date for a Linn Lease to be earlier than the primary term expiration date identified for such Linn Lease on Exhibit A-1 (Part I) ; (vi) does not grant or impose a lien or other Encumbrance (other than a Linn Permitted Encumbrance) on any Linn Assets, (vii) does not provide for any disproportionate sharing of costs, revenues or share of production (other than to the extent relating to default provisions or un-triggered non-consent elections or triggered non-consent elections for which the adjusted interests are identified on Schedule 3.4B (Part I) ), and (viii) does not contain or provide for any alternating operatorship or alternating designation of operator; and
(v)      the terms and conditions of this Agreement.
Linn Preferential Purchase Right ” has the meaning set forth in Section 7.12 .
Linn Production-Related IT Equipment ” has the meaning set forth in the definition of “Linn Assets”.
Linn Records ” has the meaning set forth in definition of “Linn Assets”.
Linn Retained Liabilities ” means Liabilities, known or unknown, caused by, arising out of or resulting from: (a) Linn’s expenses related to the transactions contemplated by this Agreement; (b) any and all Linn Taxes; (c) the matters set forth on Part I of Schedule 7.6 , and any claims or Liabilities asserted by royalty owners or other Burden beneficiaries who are similarly situated to the claimants in lawsuit described in Part I of Schedule 7.6 with respect to such lawsuit; (d) the employment relationship between Linn or any of its Affiliates and any of Linn’s or any of Linn’s Affiliates’ present or former employees or the termination of any such employment relationship; (e) any Linn Excluded Assets; (f) personal injury or death relating to the use, ownership or operation of the Linn Assets prior to the Closing; (g) any acts or omissions that arise to gross negligence or willful misconduct of any member of the Linn Group related to or arising out of the ownership or operation of the Linn Assets; (h) any fines or penalties imposed or assessed by a Governmental Body related to or arising out of the ownership or operation of the Linn Assets prior to the Closing Date, and (i) Linn’s obligations or Liabilities owed to an Affiliate of Linn (excluding those adjustments contemplated in Section 3.2(a)(i)(B) regarding certain payments to be made to Linn Midstream, LLC).
Linn Rights-of-Way ” has the meaning set forth in definition of “Linn Assets”.
Linn Section ” means each Section set forth on Schedule 3.4A .

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“Linn Section Leases ” means, with respect to a Governmental Section, those (or that portion of those) Linn Leases covering lands that are located within the boundaries of such Governmental Section, but only to the extent such Linn Leases (a) are included within the boundaries such Governmental Section, and (b) includes Qualifying Depths of the Target Formation for at least one of the Target Formations.
Linn Section Net Acres ” means with regard to a Governmental Section, the aggregate Net Acres attributable to the Linn Section Leases for such Governmental Section, such calculation being made separately as to each Target Formation. Notwithstanding the above, to the extent the term Linn Section Net Acres is used in connection with a Linn Additional Lease, this term shall mean the Net Acres for the relevant Linn Additional Lease only, instead of the Linn Section Leases.
“Linn Section Weighted Average NRI” means, as to a Governmental Section, and calculated separately as to each Target Formation: (i) first, take Linn’s Net Revenue Interest in and to each Linn Section Lease for such Governmental Section, and then multiply the same by the Linn Section Net Acres covered by such Linn Section Lease for such Target Formation (again, limited solely to those Net Acres thereof that are both included within the applicable Governmental Section, and which include Qualifying Depths of the Target Formation for such Target Formation), and not counting any Net Acres covered by such Linn Section Lease that are located outside the boundaries of such Governmental Section, nor counting any Net Acres covering depths outside of a Target Formation for which Linn’s Leases include Qualifying Depths of the Target Formation; and (ii) then, the calculated product obtained for each Linn Section Lease under subpart (i) above shall then be added together, and the sum thereof shall then be divided by the sum of the Linn Section Net Acres covered by ALL of the Linn Section Leases included within such Governmental Section, solely to the extent such Net Acres are included within the boundaries of such Governmental Section and include Qualifying Depths of the Target Formation for such Target Formation (the result of the calculation in this subpart (ii) shall be referred to as the “ Linn Section Weighted Average NRI ” for such Governmental Section and Target Formation), and such calculation shall be made with regard to each Target Formation for the applicable Governmental Section. Notwithstanding the above, to the extent the term Linn Section Weighted Average NRI is used in connection with a Linn Additional Lease, this term shall mean the Net Revenue Interest for the relevant Linn Additional Lease only, instead of the Linn Section Leases.
Linn Substitute Leases ” has the meaning set forth in Section 4.2(e)(ii) .
Linn Suspense Funds ” means funds held in suspense (including funds held in suspense for unleased interests and penalties and interest) that are attributable to the Linn Assets or Linn Additional Assets or any interests pooled, unitized or communitized therewith.
Linn Taxes ” means any Liability of Linn, or otherwise imposed on the Linn Assets or Linn Additional Assets, in respect of any Tax, including without limitation any Liability of Linn for the Taxes of any other Person under Treasury Regulation Section 1.1502-6 (or any similar provision of state, local or foreign law), as a transferee or successor, by contract or otherwise, but excluding any Asset Taxes to the extent specifically allocated to the Company pursuant to Section 16.1 .

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Linn Title Benefit ” means with respect to the Target Formation(s) for the Linn Section Leases, Linn Section Net Acres or Linn Wells, any right, circumstance or condition existing as of the Effective Time and also immediately prior to the end of the Review Period that operates to (a) increase the Linn Section Weighted Average NRI of Linn with respect to a Linn Section and Target Formation or the Net Revenue Interest of Linn with respect to a Linn Well above that shown for such Linn Section or Linn Well in Schedule 3.4A or Schedule 3.4B (Part I) , as applicable, to the extent the same does not, with respect to Linn’s interest in any Linn Well, cause an equal or greater than proportionate increase in Linn’s Working Interest with respect to the Target Formation(s) in such Linn Well above that shown in Schedule 3.4B (Part I) , as applicable, or (b) increase the Linn Section Net Acres with respect to a Section and the Target Formation(s) in any Linn Section and Target Formation above the Linn Section Net Acres for such Linn Section and Target Formation as shown in Schedule 3.4A .
Linn Title Benefit Amount ” means, with respect to a Linn Title Benefit:
(d)      if the Transacting Parties agree on the Linn Title Benefit Amount, then that amount shall be the Title Benefit Amount;
(e)      if the Linn Title Benefit represents a discrepancy between either or both:

(i) (1) Linn’s actual Net Acres for any Target Formation in any Linn Section, and (2) the Linn Section Net Acres for such Target Formation in such Linn Section as set forth in Schedule 3.4A , or
(ii) (1) Linn’s actual Linn Section Weighted Average NRI in any Target Formation in any Linn Section and (2) the Linn Section Weighted Average NRI for such Target Formation in such Linn Section as set forth in Schedule 3.4A ,
then the Linn Title Benefit Amount for such Target Formation in such Governmental Section shall be the greater of zero and the amount obtained by subtracting the Allocated Value for such Target Formation in such Governmental Section from the Linn Actual Section Value for such Target Formation in such Governmental Section.
(d)      if (i) the Linn Title Benefit represents a discrepancy between (1) Linn’s actual Net Revenue Interest for any Linn Well, and (2) Linn’s Net Revenue Interest for such Linn Well as set forth in Schedule 3.4B (Part I) , and (ii) Linn’s Working Interest in such Linn Well is increased by less than the same proportion as such Net Revenue Interest increase, then the Linn Title Benefit Amount shall be the product of (1) the Allocated Value of the affected Linn Well multiplied by (2) a fraction, the numerator of which is the Net Revenue Interest increase in such Linn Well, and the denominator of which is the Net Revenue Interest for such Linn Well as set forth in Schedule 3.4B (Part I) ;
(e)      if the Linn Title Benefit is of a type not described above, then the Linn Title Benefit Amounts shall be determined by taking into account the Allocated Value of the Linn Asset affected by such Linn Title Benefit, the portion of such Linn Asset affected by such Linn Title Benefit, the legal effect of the Linn Title Benefit, the potential economic effect of the Linn Title Benefit over the life of such Asset, the values placed upon the Title Benefit by the

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Transacting Parties and such other reasonable factors as are necessary to make a proper evaluation.
Linn Title Benefit Notice ” has the meaning set forth in Section 4.2(b) .
Linn Title Defect ” shall mean any Encumbrance, defect or other condition or matter that causes Linn not to have Linn Defensible Title; provided that the following shall not be considered Linn Title Defects:
(a)      defects arising out of lack of corporate or other entity authorization (other than any such defects relating to Linn or its Affiliates or any prior Affiliates of Linn, whether pre-bankruptcy or post-bankruptcy of Linn Energy, LLC) unless Citizen provides conclusive evidence that such corporate or other entity action was not authorized and has resulted in another Person’s superior claim of title to the relevant Linn Asset;
(b)      defects arising from any prior oil and gas lease relating to the lands covered by the Linn Leases or Linn Units not being surrendered of record, unless Citizen provides reasonable evidence that such prior oil and gas lease is still in effect and has resulted in another Person’s actual and superior claim of title to the relevant Linn Lease or Linn Well;
(c)      defects that affect only which Person has the right to receive royalty payments (rather than the amount of the proper payment of such royalty payment) and that do not affect the validity of or title to the underlying Linn Lease;
(d)      defects based solely on: (i) lack of information in Linn’s files; (ii) references to an unrecorded document to which neither Linn nor any Affiliate of Linn is a party and which document is dated earlier than January 1, 1960; or (iii) any Tax assessment, Tax payment or similar records or the absence of such activities or records;
(e)      any Encumbrance or loss of title resulting from Linn’s conduct of business in compliance with this Agreement;
(f)      defects as a consequence of cessation of production, insufficient production or failure to conduct operations during any period after the completion of a well capable of production in paying quantities on any of the Linn Leases held by production, or lands pooled or unitized therewith, except to the extent the cessation of production is shown to exist for a period that, under the terms of the Lease, would (or would reasonably be believed to) result in the termination or expiration of the underlying Linn Lease, which documentation shall be provided by Citizen to Linn in support thereof;
(g)      liens arising from any Encumbrance created by a mineral owner which has not been subordinated to the applicable lessee’s interest, solely to the extent that the Linn Lease in question does not have a Linn Well on it, and no portion thereof has been included in a Linn Unit;
(h)      all defects or irregularities that have been adjudicated to be cured or remedied by applicable statutes of limitation or statutes of prescription;

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(i)      all defects or irregularities resulting from the failure to record releases of liens, production payments or mortgages that have expired on their own terms or the enforcement of which are barred by applicable statute of limitations;
(j)      all defects in the chain of title consisting of the failure to recite marital status in a document or omissions of successions of heirship or estate proceedings, unless Citizen provides conclusive evidence that such failure results in another Person’s superior claim of title to the relevant Linn Asset;
(k)      all defects arising from any change in Laws following the Execution Date;
(l)      any Encumbrance or loss of title affecting ownership interests in formations other than the Target Formation(s) for the relevant Linn Asset (excluding any circumstances or conditions that have resulted in title or rights relative to ownership interests in the Linn Assets (but expressly excluding the Linn Excluded Assets) related to formations other than Target Formations being held by an Linn Affiliate other than Linn itself);
(m)      defects arising from failure to comply with any maintenance of uniform interest provision in any Linn Lease or Linn Contract; and
(n)      any Title Defect affecting a Linn Well for which the Title Defect Amount does not exceed $25,000; provided, however, that the Title Defect Amount shall be deemed to meet such $25,000 threshold in any of the following cases: (1) if any Linn Well is affected by more than one Linn Title Defect, and the aggregate sum of the Title Defect Amounts for all Linn Title Defects affecting such Linn Well exceeds such $25,000 threshold, or (2) in the case of a failure to hold Linn Defensible Title to multiple Linn Wells due to the same specific set of facts, and aggregate sum of the Title Defect Amounts for such Linn Title Defects affecting multiple Linn Wells exceeds such $25,000 threshold.
Linn Title Defect Amount ” means, with respect to a Linn Title Defect:
(a)      if the Transacting Parties agree on the Linn Title Defect Amount, then that amount shall be the Linn Title Defect Amount;
(b)      if the Linn Title Defect is an Encumbrance that is undisputed and liquidated in amount, then the Linn Title Defect Amount shall be the amount necessary to be paid to remove the Linn Title Defect from the Linn Title Defect Property;
(c)      if the Linn Title Defect represents a discrepancy between either or both:

(i) (1) Linn’s actual Net Acres for any Target Formation in any Linn Section, and (2) the Linn Section Net Acres for such Target Formation in such Linn Section as set forth in Schedule 3.4A , or
(ii) (1) Linn’s actual Linn Section Weighted Average NRI in any Target Formation in any Linn Section and (2) the Linn Section Weighted Average NRI for such Target Formation in such Linn Section as set forth in Schedule 3.4A ,

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and in each case, there is no intermediate reversionary interest prior to the end of the productive life of any relevant Linn Section Lease, then the Linn Title Defect Amount for such Target Formation in such Governmental Section shall be the greater of zero and the amount obtained by subtracting the Linn Actual Section Value for such Target Formation in such Governmental Section from the Allocated Value for such Target Formation in such Governmental Section.
(d)      if (i) the Linn Title Defect represents a discrepancy between (A) Linn’s actual NRI in any Linn Well and (B) Linn’s Net Revenue Interest for such Linn Well as set forth in Schedule 3.4B (Part I) and (ii) Linn’s Working Interest in such Linn Well is decreased in the same proportion as such Net Revenue Interest decrease, then the Linn Title Defect Amount shall be the product of (A) the Allocated Value of such Linn Well multiplied by (B) a fraction, the numerator of which is the Net Revenue Interest decrease in such Linn Well, and the denominator of which is the Net Revenue Interest for such Linn Well as set forth in Schedule 3.4B (Part I) ;
(e)      if the Linn Title Defect results from failure of a Linn Section Lease to possess Qualifying Depths for any Majority Target Formation in any Governmental Section and Linn possesses less than or equal to 10% of applicable Target Formation for such Qualifying Depths in such Majority Target Formation in such Governmental Section, then the Linn Title Defect Amount shall be calculated by first reducing the number of Net Acres allocable to such Linn Section Lease to zero (0), and then calculating the associated Linn Title Defect Amount as provided in clause (c) above;
(f)      if the Linn Title Defect results from failure of a Linn Section Lease to possess Qualifying Depths as described in subpart (a) of that definition, then the Linn Title Defect Amount shall be calculated by first reducing the number of Net Acres allocable to such Linn Section Lease to zero (0), and then calculating the associated Linn Title Defect Amount as provided in clause (c) above;
(g)      if the Linn Title Defect results from failure of a Linn Section Lease to possess Qualifying Depths for any Majority Target Formation in any Governmental Section and Linn possesses more than 10% of such applicable Target Formation for such Qualifying Depths, then the Linn Title Defect Amount shall be calculated by reducing the number of Linn Section Net Acres allocable to such Linn Section Lease by the product of (i) the number of Net Acres that would have been allocable to Linn Section Lease if it possessed the Qualifying Depths and (ii) the amount obtained by subtracting (A) (1.0 - (the product of (I) 2.5 and (II) the difference obtained by subtracting the percentage of the applicable Target Formation for such Qualifying Depths actually possessed by Linn with regard to such Linn Section Lease in such Majority Target Formation in such Governmental Section from 50.0%) from (B) 1.0, and then calculating the associated Linn Title Defect Amount as provided in clause (c) above;
(h)      if the Linn Title Defect represents an obligation, Encumbrance upon or other defect in title to the Linn Title Defect Property of a type not described above, then the Linn Title Defect Amount shall be determined by taking into account the Allocated Value of the Linn Title Defect Property, the portion of the Linn Title Defect Property affected by the Linn Title Defect, the legal effect of the Linn Title Defect, the potential economic effect of the Linn Title Defect,

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the values placed upon the Linn Title Defect by each Transacting Party and such other reasonable factors as are necessary to make a proper evaluation;
(i)      the Linn Title Defect Amount with respect to a Linn Title Defect Property shall be determined without duplication of any costs or losses included in another Linn Title Defect Amount hereunder;
(j)      if a Linn Title Defect does not affect a Linn Title Defect Property throughout the entire remaining productive life of such Linn Title Defect Property or across all Target Formations for such Linn Title Defect Property, such fact shall be taken into account in determining the Linn Title Defect Amount; and
(k)      notwithstanding anything to the contrary in this Agreement, the aggregate Linn Title Defect Amounts attributable to the effects of all Linn Title Defects upon any single Linn Title Defect Property shall not exceed the Allocated Value of such Linn Title Defect Property.
Linn Title Defect Notice ” has the meaning set forth in Section 4.2(a) .
Linn Title Defect Property ” has the meaning set forth in Section 4.2(a) .
Linn True-Up Leases ” has the meaning set forth in Section 3.2(b)(vi)(C) .
Linn Units ” has the meaning set forth in the definition of “Linn Assets”.
Linn Waterflood Assets ” means the waterflood assets described on Exhibit. I .
Linn Wells ” has the meaning set forth in the definition of “Linn Assets”.
LLC Agreement ” means the Amended and Restated Limited Liability Company Agreement of the Company in the form attached hereto as Exhibit F .
LOI ” has the meaning set forth in the Preamble.
Majority Target Formation ” means any of the Target Formations not located within the Merge Area.
Master Services Agreement ” means, collectively, the Master Services Agreements to be executed by and between Linn, Citizen and the Company in substantially the forms attached hereto as Exhibit G .
Material Adverse Effect ” means any change, inaccuracy, effect, event, result, occurrence, condition or fact (for the purposes of this definition, each, an “event”) that has had or would be reasonably likely to have, individually or in the aggregate with any other event or events, a material adverse effect on the ownership, operation or financial condition of the Assets, taken as a whole as currently operated as of the Execution Date; provided , however , that Material Adverse Effect shall not include such material adverse effects resulting from: (a) the announcement of the transactions contemplated by this Agreement; (b) changes in general market, economic, financial or political conditions (including changes in commodity prices, fuel

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supply or transportation markets, interest or rates) in the area in which the Assets are located, the United States or worldwide; provided that such changes do not disproportionately affect the area in which the Assets are located; (c) changes in conditions or developments generally applicable to the oil and gas industry in the area in which the Assets are located, the United States or worldwide; provided that such changes do not disproportionately affect the area in which the Assets are located; (d) acts of God, including hurricanes, storms or other naturally occurring events; (e) acts or failures to act of Governmental Bodies; (f) civil unrest, any outbreak of disease or hostilities, terrorist activities or war or any similar disorder; (g) matters that are cured or no longer exist by the earlier of Closing and the termination of this Agreement; (h) any reclassification or recalculation of reserves in the ordinary course of business; (i) changes in the prices of Hydrocarbons; and (j) natural declines in well performance.
Merge Area ” has the meaning set forth on Exhibit H.
Mississippian/Springer Formation ” means:
(a)      as to Leases within the Merge Area, means the interval from the stratigraphic equivalent of the top of the Mississippi Formation, as defined at 9,857’ measured depth on the Array Induction Shallow Focused Electric Log taken on July 11, 2002 in the Dominion Exploration and Production, Inc. Braum #3-17 well located in the S/2 SW NE SW of Section 17-10N-6W in Grady County, Oklahoma to the stratigraphic equivalent of the top of the Woodford Formation, as defined at 10,338’ measured depth on the same log. Furthermore, the “Sycamore”, determined as the valued formation, shall be defined as the interval from the stratigraphic equivalent of the top of the Sycamore Formation, as defined at 10,163’ measured depth to the stratigraphic equivalent of the top of the Woodford Formation, as defined at 10,338’ measured depth on the same log;
(b)      as to Leases within the STACK Area, means the interval from the stratigraphic equivalent of the top of the Mississippi Formation, as defined at 7,381’ measured depth on the Dual Induction Laterolog taken on June 5, 1973 in the Marlin Oil Corporation Zalabak #1 well located in the SW SW of Section 23-16N-7W in Kingfisher County, Oklahoma to the stratigraphic equivalent of the top of the Woodford Formation, as defined at 8,078’ measured depth on the same log. Furthermore the valued formation for such Target Formation shall be defined as the interval from the stratigraphic equivalent of the top of the Mississippi-Meramec Formation, as defined at 7,598’ measured depth to the base of the Mississippi-Osage Formation, as defined at 8,078’ measured depth on the same log; and
(c)      as to Leases within the SCOOP Area, means the interval from the stratigraphic equivalent of the top of the Springer Formation, as defined at 12,081’ measured depth on the Dual Induction Focused Log taken on August 21, 1981 in the Andover Oil Company Parnell #1-167 well located in the C NW of Section 16-7N-6W in Grady County, Oklahoma to the stratigraphic equivalent of the Base of the Goddard Formation, as defined at 12,296’ measured depth on the same log.
Negative Citizen Adjustment Amount ” has the meaning set forth in Section 3.3(b)(i) .
Negative Linn Adjustment Amount ” has the meaning set forth in Section 3.2(b)(i) .

Appendix A-41
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Net Acre ” means, as computed separately with respect to each Linn Lease or Citizen Lease, as applicable, and computed separately as to each Target Formation: (a) the number of gross acres of land covered by the Linn Lease or the Citizen Lease, as applicable, multiplied by (b) the undivided mineral fee percentage interest (stated as a decimal) in Hydrocarbons granted by such Linn Lease or Citizen Lease, as applicable, insofar and only insofar as such interest includes Qualifying Depths of the Target Formation for the Target Formation in question multiplied by (c) Linn’s or Citizen’s, as applicable, Working Interest in such Linn Lease or Citizen Lease; provided that if clauses (a) and/or (b) and/or (c) vary as to different areas , a separate calculation shall be done for each such area and depth.
Net Revenue Interest ” means: with respect to any Linn Lease or Linn Well, or any Citizen Lease or Citizen Well, as applicable, the percentage interest in and to all Hydrocarbons produced, saved and sold from or allocated to such Linn Lease, Linn Well, Citizen Lease or Citizen Well, after giving effect to all Burdens; provided that if any item above varies as to different areas (including tracts) or formations covered thereby, a separate calculation shall be done for each such area or formation as if it were a separate Linn Lease or Citizen Lease, as applicable, and separate calculations shall be made as to each Target Formation for which a Party’s interest in a Lease covers and includes Qualifying Depths of the Target Formation for such Target Formation.
NLRB ” means the National Labor Relations Board.
NORM ” means naturally occurring radioactive material.
Other Party ” means, in the case of the Linn Assets and Linn Additional Assets, Citizen, and in the case of the Citizen Assets and Citizen Additional Assets, Linn.
Outside Date ” means the date that is six (6) months after the Scheduled Closing Date.
Parties ” and “ Party ” have the meanings set forth in the Preamble.
Percentage Interest ” means, in the case of a Party as of such time, the “Percentage Interest” (which term has the meaning provided in the LLC Agreement) of such Party as of such time.
Permits ” means any permit, water right (including water withdrawal, storage, discharge, treatment, injection and disposal rights), license, registration, consent, order, approval, variance, exemption, waiver, franchise, right or other authorization required by or obtained from any Governmental Body.
Person ” means any individual, corporation, company, partnership, limited partnership, limited liability company, trust, estate, Governmental Body or any other entity.
Phase II ” has the meaning set forth in Section 6.1(b) .
Pipeline Imbalance ” shall mean any marketing imbalance between the quantity of Hydrocarbons attributable to the Linn Assets, Linn Additional Assets, Citizen Assets or Citizen Additional Assets required to be delivered by Linn or Citizen, as applicable, under any Linn

Appendix A-42
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Contract or Citizen Contract, as applicable, or Law relating to the purchase and sale, gathering, transportation, storage, processing or marketing of such Hydrocarbons and the quantity of Hydrocarbons attributable to the Linn Assets, Linn Additional Assets, Citizen Assets or Citizen Additional Assets actually delivered by Linn or Citizen, as applicable, pursuant to the relevant Linn Contract or Citizen Contract, as applicable, or at Law, together with any appurtenant rights and obligations concerning production balancing at the delivery point into the relevant sale, gathering, transportation, storage or processing facility.
Positive Citizen Adjustment Amount ” has the meaning set forth in Section 3.3(b)(i) .
Positive Linn Adjustment Amount ” has the meaning set forth in Section 3.2(b)(i) .
Post-Closing Citizen Statement ” has the meaning set forth in Section 3.2(b)(ii) .
Post-Closing Linn Statement ” has the meaning set forth in Section 3.3(b)(ii) .
Preliminary Citizen Adjustment Amount ” has the meaning set forth in Section 3.3(a)(iii) .
Preliminary Linn Adjustment Amount ” has the meaning set forth in Section 3.2(a)(iii) .
Property Expenses ” means, in the case of a Transacting Party’s Assets, all operating expenses (including all insurance premiums or any other costs of insurance attributable to such Transacting Party’s and/or its Affiliates’ insurance and to coverage periods from and after the Effective Time but excluding in all cases, Asset Taxes and all costs and expenses of bonds, letters of credit or other surety instruments) and capital expenditures incurred in the ownership and operation of such Assets in the ordinary course of business and, where applicable, in accordance with the relevant operating or unit agreement, if any, and overhead costs charged to such Assets under the relevant operating agreement or unit agreement, if any, including costs of title examination, costs of surface preparation for drilling and costs of drilling wells, but excluding Liabilities attributable to : (a) personal injury or death, property damage or violation of any Law, (b) obligations to plug wells and dismantle or decommission facilities, (c) the Remediation of any Environmental Condition under applicable Environmental Laws or the cure of any Linn Title Defect or Citizen Title Defect, (d) obligations with respect to Imbalances, (e) in the case of Linn, any Linn Retained Liability, and in the case of Citizen, any Citizen Retained Liability, (f) any expense or payment incurred in breach of this Agreement, (g) obligations to pay Working Interests, royalties, overriding royalties or other interest owners revenues or proceeds attributable to sales of Hydrocarbons relating to such Assets, including those held in suspense, (h) efforts to cure any asserted Linn Title Defects or Citizen Title Defects or Environmental Conditions, (i) any consideration payable in connection with the acquisition of any Linn Leases, Linn Additional Leases and associated Linn Additional Assets, Linn Leases and Citizen Additional Leases and associated Citizen Additional Assets, together with any reasonable Third Party expenses, including reasonable attorneys’ fees, lease bonuses, broker fees, abstract costs, title opinion costs, title curative costs, and other reasonable Third Party costs of due diligence incurred in connection with acquiring such Linn Leases, Linn Additional Leases and associated Linn Additional Assets, Linn Leases and Citizen Additional Leases and associated Citizen Additional Assets; or (j) Taxes.

Appendix A-43
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Public Announcement Restrictions ” has the meaning set forth in Section 10.3 .
Qualifying Depths ” means:
(a)      as to the Woodford Formation within the Merge Area, vertical subsurface depths of not less than 30 feet within such Target Formation;
(b)      as to the Woodford Formation within the SCOOP Area, more than 50% of the total vertical subsurface depths of such Target Formation;
(c)      as to the Mississippian/Springer Formation within the Merge Area, more than 50% of the total vertical subsurface depths of the “valued formation” (as defined in clause (a) of the definition of “Mississippian/Springer Formation”) of such Target Formation;
(d)      as to the Mississippian/Springer Formation within the STACK Area, more than 50% of the total vertical subsurface depths of the “valued formation” (as defined in clause (b) of the definition of “Mississippian/Springer Formation”) of such Target Formation; and
(e)      as to the Mississippian/Springer Formation within the SCOOP Area, more than 50% of the total vertical subsurface depths of such Target Formation.
Raw Net Acres ” means, as computed separately for each acquisition of Linn Additional Lease or Citizen Additional Lease: (a) the number of gross acres of land covered by the Linn Additional Lease or the Citizen Additional Lease, as applicable, within the AMI multiplied by (b) the undivided mineral fee percentage interest (stated as a decimal) in Hydrocarbons granted by such Linn Additional Lease or Citizen Additional Lease, as applicable, for the areas within the AMI multiplied by (c) Linn’s or Citizen’s, as applicable, Working Interest in such Linn Additional Lease or Citizen Additional Lease; provided that if clauses (a) and/or (b) and/or (c) vary as to different surface areas, a separate calculation shall be done for each such area (but only such areas within the AMI will be included; and provided further that any gross acres of land covered by a Linn Additional Lease does not include Qualifying Depths of at least one of the relevant Section Target Formations, such gross acres will not be included in clause (a). Separate calculations as to Target Formations will not be made for the purposes of Raw Net Acres.
Records ” means the Linn Records and the Citizen Records, as applicable.
Relevant Citizen Value ” has the meaning set forth in Section 3.2(b)(vi)(C) .
Relevant Linn Value ” has the meaning set forth in Section 3.2(b)(vi)(C) .
Remediation ” shall mean, with respect to an Environmental Condition, the response required or allowed under Environmental Laws that addresses and resolves (for current and future use in the same manner as being currently used) the identified Environmental Condition in its entirety in the most cost-effective manner (considered as a whole) as compared to any other response that is required or allowed under Environmental Laws. “ Remediation ” may consist of or include taking no action, leaving the condition unaddressed, periodic monitoring, the use of institutional controls or the recording of notices in lieu of remediation, in each case, if such

Appendix A-44
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response is allowed under Environmental Laws and completely addresses and resolves (for current and future use in the same manner as being currently used) the identified Environmental Condition in its entirety.
Remediation Amount ” shall mean, with respect to an Environmental Condition, the present value as of the Closing Date (using an annual discount rate of 10% for Remediation activities that cannot be completed within one year of the Closing Date) of the cost (net to the affected Transacting Party’s interest) of the Remediation of such Environmental Condition; provided , however , that “ Remediation Amount ” shall not include (a) the costs of the project manager of the Company while conducting the Remediation, (b) expenses for matters that are ordinary costs of doing business regardless of the presence of an Environmental Condition (e.g., those costs that would ordinarily be incurred in the day-to-day operations of the Assets or in connection with Permit renewal/amendment activities), (c) overhead costs of the Company, (d) costs and expenses that would not have been required under Environmental Laws as they exist on the Closing Date or, if prior to the Closing Date, the date on which the Remediation action is being undertaken, or (e) any costs or expenses relating to the assessment, remediation, removal, abatement, transportation and disposal of any asbestos, asbestos-containing materials or NORM unless required to address a violation of Environmental Law.
Representatives ” means, with respect to a given entity, its officers, directors, members, managers, employees, agents, advisors and other representatives.
Respondent ” has the meaning set forth in Section 17.3(c)(ii) .
Review Period ” means, except as expressly provided herein, the period commencing upon the Execution Date and ending at 11:59 p.m. Central Prevailing Time on the first (1 st ) Business Day that is sixty (60) days after the Execution Date.
Rights-of-Way ” shall mean all permits, licenses, servitudes, easements, fee surface, surface leases, surface use agreements and rights-of-way primarily used or held for use in connection with the ownership or operation of the Assets, other than Permits.
Scheduled Closing Date ” has the meaning set forth in Section 13.1 .
SCOOP Area ” has the meaning set forth on Exhibit H.
Section Target Formation ” means, with respect to a Governmental Section, the Target Formation or Target Formations described with respect to such Governmental Section in Exhibit H .
Seismic Contract ” means any contract or agreement related to the acquisition, licensing, sale, modification or other use or ownership of geological, geophysical or seismic data or records, whether or not proprietary and whether or not processed, re-processed, migrated, stacked or otherwise modified (“ Seismic Data ”), and any similar contract, including seismic data licenses or other contracts, providing for the exclusive or non-exclusive use, modification or disclosure of proprietary seismic data.
STACK Area ” has the meaning set forth on Exhibit H.

Appendix A-45
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Straddle Period ” means any taxable period beginning before and ending after the Effective Date.
Target Formation ” means the Mississippian/Springer Formation and Woodford Formation (and reference to a “Target Formation” shall mean any of them, applicable).
Tax ” or “ Taxes ” means any federal, state, local or foreign income, gross receipts, branch profits, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, escheat, environmental, customs duties, capital stock, franchise, profits, withholding, social security, unemployment, disability, real property, personal property, sales, use, transfer, registration, ad valorem, value added, alternative or add-on minimum or estimated tax or other charge in the nature of tax imposed by a Governmental Body, including any interest, penalty or addition thereto, whether disputed or not, and any liability in respect of any of the foregoing that arises by reason of a contract, assumption or transferee or successor liability.
Tax Claims ” means any claims under Section 15.1(a) for Linn Taxes, Section 15.1(b) for breach of Linn’s obligations under Article 16 , Section 15.1(c) for breach of the representations and warranties in Section 7.8 , Section 15.2(a) for Citizen Taxes, Section 15.2(b) for breach of Citizen’s obligations under Article 16 , or Section 15.2(c) for breach of the representations and warranties in Section 8.8 .
Tax Return ” means all returns, declarations, claims for refunds, reports, forms, estimates, information returns and statements required to be filed in respect of any Taxes to be supplied to a taxing authority in connection with any Taxes, including any schedule or attachment thereto, including any amendment thereof.
Third Party ” means any Person other than a Party to this Agreement or an Affiliate of a Party to this Agreement.
Third Person Claim ” has the meaning set forth in Section 15.7(b) .
Title Arbitrator ” has the meaning set forth in Section 4.4 .
Title Cure Period ” has the meaning set forth in Section 4.2(c)(i) .
Title Dispute ” has the meaning set forth in Section 4.4 .
Total Consideration ” has the meaning set forth in Section 3.1(a) .
Transacting Parties ” and “ Transacting Party ” have the meanings set forth in the Preamble.
Transaction Documents ” shall mean those documents executed and delivered pursuant to or in connection with this Agreement.
Transfer Tax ” means any sales, use, excise, real property transfer, registration, documentary, stamp, recording fees and similar Taxes or fees arising from the transactions contemplated by this Agreement.

Appendix A-46
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Treasury Regulations ” means the regulations promulgated by the United States Department of the Treasury pursuant to and in respect of provisions of the Code. All references herein to sections of Treasury Regulations shall include any corresponding provision or provisions of succeeding, similar, substitute, proposed or final Treasury Regulations.
Units ” has the meaning given to such term in the LLC Agreement.
Well Imbalance ” shall mean any imbalance at the wellhead between the amount of Hydrocarbons produced from a Linn Well or Citizen Well and allocable to the interests of Linn or Citizen, as applicable, therein and the shares of production from the relevant Linn Well or Citizen Well to which Linn or Citizen, as applicable, is entitled, together with any appurtenant rights and obligations concerning future in kind and/or cash balancing at the wellhead.
Woodford Formation ” means:
(a)      as to Leases within the Merge Area, means the interval from the stratigraphic equivalent of the top of the Woodford Formation, as defined at 10,338’ measured depth on the Array Induction Shallow Focused Electric Log taken on July 11, 2002 in the Dominion Exploration and Production, Inc. Braum #3-17 well located in the S/2 SW NE SW of Section 17-10N-6W in Grady County, Oklahoma to the stratigraphic equivalent of the base of the Woodford Formation, as defined at 10,486’ measured depth on the same log; and
(b)      as to Leases within the SCOOP Area, means the interval from the stratigraphic equivalent of the top of the Woodford Formation, as defined at 10,232’ measured depth on the Array Induction Shallow Focused Electric Log taken on September 29, 1998 in the Lance Ruffel Oil & Gas Simpson #1-14 well located in the E/2 W/2 NW of Section 14-5N-4W in McClain County, Oklahoma to the stratigraphic equivalent of the base of the Woodford Formation, as defined at 10,440’ measured depth on the same log.
Working Interest ” means, with respect to any (i) Linn Well (subject to any reservations, limitations or depth restrictions set forth on Schedule 3.4B (Part I) ) or Citizen Well (subject to any reservations, limitations or depth restrictions set forth on Schedule 3.4B (Part II) ), the percentage interest in and to such Linn Well (subject to any reservations, limitations or depth restrictions set forth on Schedule 3.4B (Part I) ) or Citizen Well (subject to any reservations, limitations or depth restrictions set forth on Schedule 3.4B (Part II) ), or (ii) any Linn Lease (subject to any reservations, limitations or depth restrictions set forth on Exhibit A-1 (Part I) and/or Schedule 3.4A ) or Citizen Lease (subject to any reservations, limitations or depth restrictions set forth on Exhibit A-1 (Part II) and/or Schedule 3.4A ), as applicable, that is burdened with the obligation to bear and pay costs and expenses of maintenance, development and operations on or in connection with such Linn Well or Citizen Well or Linn Lease or Citizen Lease, as applicable, but without regard to the effect of any Burdens.
Zone Average NRI ” means, in the case of any Target Formation in any Governmental Section, the Zone Average NRI for such Target Formation in such Governmental Section set forth on Exhibit H attached hereto.

Appendix A-47
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Zone NRI Value ” means, in the case of any Target Formation in any Governmental Section, the Zone NRI Value for such Target Formation in such Governmental Section set forth on Exhibit H attached hereto.
Zone Price ” means, in the case of any Governmental Section, the price per Net Acre for any Lease within such Governmental Section (on a Target Formation basis), in each case, as set forth on Exhibit H attached hereto.


Appendix A-48
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Exhibit 31.1
CERTIFICATION
I, Mark E. Ellis, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Linn Energy, Inc. (the “registrant”);
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):
(a)    All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)    Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: August 3, 2017
/s/ Mark E. Ellis
 
Mark E. Ellis
 
President and Chief Executive Officer
 




Exhibit 31.2
CERTIFICATION
I, David B. Rottino, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Linn Energy, Inc. (the “registrant”);
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):
(a)    All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)    Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: August 3, 2017
/s/ David B. Rottino
 
David B. Rottino
 
Executive Vice President and Chief Financial Officer
 




Exhibit 32.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Linn Energy, Inc. (the “Company”) on Form 10-Q for the quarter ended June 30, 2017, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Mark E. Ellis, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
1.
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: August 3, 2017
/s/ Mark E. Ellis
 
Mark E. Ellis
 
President and Chief Executive Officer




Exhibit 32.2
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Linn Energy, Inc. (the “Company”) on Form 10-Q for the quarter ended June 30, 2017, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, David B. Rottino, Executive Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
1.
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: August 3, 2017
/s/ David B. Rottino
 
David B. Rottino
 
Executive Vice President and Chief Financial Officer