Exhibit 10.1

 

PURCHASE AND SALE AGREEMENT

 

among

 

RIVERCREST CAPITAL PARTNERS LP,

 

KIMBELL ART FOUNDATION,

 

RIVERCREST ROYALTIES HOLDINGS II, LLC,

 

CUPOLA ROYALTY DIRECT, LLC,

 

KIMBELL ROYALTY PARTNERS, LP

 

and

 

KIMBELL ROYALTY OPERATING, LLC

 

Dated as of November 20, 2018

 

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TABLE OF CONTENTS

 

 

 

Page

 

 

ARTICLE 1 DEFINITIONS AND RULES OF CONSTRUCTION

1

1.1

Definitions

1

1.2

Rules of Construction

20

 

 

ARTICLE 2 PURCHASE AND SALE; CLOSING

21

2.1

Purchase and Sale of Acquired Assets and Acquired Equity Interests; Assumption
of Certain Liabilities

21

2.2

Adjustment of Purchase Price at Closing

22

2.3

Repayment of Seller Indebtedness; Payment of Transaction Expenses

23

2.4

Closing Statement

23

2.5

Title Review

24

2.6

Closing Payment and Transfer

32

2.7

Closing

34

2.8

Escrow

34

2.9

Post-Closing Adjustment

35

2.10

Purchase Price Allocation; Tax Treatment

37

2.11

Payments

38

 

 

ARTICLE 3 REPRESENTATIONS AND WARRANTIES RELATING TO ASSET SELLERS

39

3.1

Organization

39

3.2

Authorization; Enforceability

39

3.3

No Conflict; Consents

40

3.4

Litigation

41

3.5

Financial Statements

41

3.6

Taxes

41

3.7

Contracts

42

3.8

Environmental Matters

43

3.9

Compliance with Laws

44

3.10

Special Warranty

44

3.11

Consents and Preferential Rights

44

3.12

No Cost-Bearing Interests

44

3.13

Bankruptcy

45

3.14

Brokers’ Fees

45

3.15

Securities Law Compliance

45

3.16

ASSET SELLERS’ INDEPENDENT INVESTIGATION; DISCLAIMER

45

 

 

ARTICLE 4 REPRESENTATIONS AND WARRANTIES RELATING TO EQUITY SELLER

47

4.1

Organization

47

4.2

Authorization; Enforceability

47

 

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4.3

No Conflict; Consents

47

4.4

Consents

48

4.5

Litigation

48

4.6

Ownership of Acquired Equity Interests

48

4.7

Brokers’ Fees

49

4.8

Consents and Preferential Rights

49

4.9

Securities Law Compliance

49

4.10

EQUITY SELLER’S INDEPENDENT INVESTIGATION; DISCLAIMER

49

 

 

ARTICLE 5 REPRESENTATIONS AND WARRANTIES RELATING TO THE ACQUIRED ENTITY

51

5.1

Organization

51

5.2

No Conflict; Consents

51

5.3

Capitalization

51

5.4

Litigation

52

5.5

Financial Statements

52

5.6

Absence of Certain Changes

53

5.7

Taxes

53

5.8

Contracts

54

5.9

Environmental Matters

55

5.10

Compliance with Laws

55

5.11

Special Warranty

56

5.12

No Cost-Bearing Interests

56

5.13

Employees and Benefit Plans

56

5.14

Bank Accounts

57

5.15

Bankruptcy

57

 

 

ARTICLE 6 REPRESENTATIONS AND WARRANTIES RELATING TO BUYER PARTIES

57

6.1

Organization

57

6.2

Authorization; Enforceability

57

6.3

No Conflict; Consents

58

6.4

Capitalization

59

6.5

Litigation

60

6.6

Financial Statements

60

6.7

Independent Registered Public Accounting Firm

61

6.8

Controls and Procedures; Listing

61

6.9

Contracts

61

6.10

Absence of Certain Changes

62

6.11

Taxes

62

6.12

Environmental Matters

62

6.13

Form S-3 Eligibility

63

6.14

Brokers’ Fees

63

6.15

Distribution Restrictions

63

6.16

Securities Law Compliance

64

6.17

Exemptions from Securities Laws

64

 

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6.18

Sarbanes-Oxley

64

6.19

Investment Company Status

64

6.20

BUYER PARTIES’ INDEPENDENT INVESTIGATION; DISCLAIMER

64

 

 

ARTICLE 7 COVENANTS

66

7.1

Conduct of Each Seller’s Business

66

7.2

Conduct of Buyer Parties’ Business

68

7.3

Access

70

7.4

Books and Records

71

7.5

Insurance

71

7.6

Further Assurances

71

7.7

Publicity

71

7.8

Fees and Expenses; Transfer Taxes

72

7.9

Taxes

72

7.10

Confidentiality

75

7.11

Notices to Escrow Agent

75

7.12

Acquired Entity Indebtedness

75

7.13

Affiliate Contracts

76

7.14

Assistance with Financial Statements and Other Matters

76

7.15

No Shop

77

7.16

Lock-Up

78

7.17

Additional Listing Application

79

7.18

Several and Not Joint Obligations

79

7.19

Conflicts Committee

79

7.20

Pre-Closing Distributions of Certain Assets

79

7.21

Exchange Election

79

 

 

ARTICLE 8 CONDITIONS TO CLOSING

79

8.1

Conditions to Obligations of Buyer Parties to Closing

79

8.2

Conditions to the Obligations of Sellers to Closing

81

 

 

ARTICLE 9 TERMINATION

82

9.1

Termination

82

9.2

Effect of Termination

83

9.3

Remedies for Termination

83

 

 

ARTICLE 10 INDEMNIFICATION

84

10.1

Survival of Representations, Warranties and Covenants

84

10.2

Indemnification in Favor of Buyer Parties

84

10.3

Indemnification Obligations of Buyer Parties

85

10.4

Indemnification Procedure

86

10.5

Calculation, Timing, Manner and Characterization of Indemnification Payments;
Escrow

87

10.6

Limits of Liability

89

10.7

Sole and Exclusive Remedy

89

10.8

Compliance with Express Negligence Rule

90

 

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10.9

Insurance Proceeds

90

10.10

Tax Treatment of Indemnity Payments

90

10.11

Damages Waiver

90

10.12

No Duplication

90

 

 

ARTICLE 11 OTHER PROVISIONS

91

11.1

Notices

91

11.2

Assignment

92

11.3

Rights of Third Parties

92

11.4

Counterparts

92

11.5

Entire Agreement

92

11.6

Disclosure Schedules

93

11.7

Amendments

93

11.8

Severability

93

11.9

Specific Performance

93

11.10

Governing Law; Jurisdiction

94

11.11

No Recourse

94

11.12

Legal Representation

95

 

List of Exhibits:

 

Exhibit A

Asset Sellers

 

Exhibit B

Equity Seller

 

Exhibit C-1

Properties

 

Exhibit C-2

Wells

 

Exhibit D

Covered Counties/Parishes

 

Exhibit E

Form of Asset Assignment

 

Exhibit F

Form of Equity Assignment

 

Exhibit G

Form of Seller Officer’s Certificate

 

Exhibit H

Form of Buyer Officer’s Certificate

 

Exhibit I

Form of Registration Rights Agreement

 

Exhibit J

Form of Escrow Agreement

 

 

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PURCHASE AND SALE AGREEMENT

 

THIS PURCHASE AND SALE AGREEMENT (this “Agreement”), dated as of November 20,
2018 (the “Execution Date”), is among Rivercrest Capital Partners LP, a Delaware
limited partnership (“Rivercrest Capital”), Kimbell Art Foundation, a Texas
non-profit corporation (the “Foundation”), Cupola Royalty Direct, LLC, a
Delaware limited liability company (“Cupola” and, together with Rivercrest
Capital and the Foundation, the “Asset Sellers”), Rivercrest Royalties Holdings
II, LLC, a Delaware limited liability company (“Equity Seller” and, together
with the Asset Sellers, “Sellers”), Kimbell Royalty Partners, LP, a Delaware
limited partnership (“Buyer”), and Kimbell Royalty Operating, LLC, a Delaware
limited liability company (“Opco” and, together with Buyer, “Buyer Parties”).
Sellers and Buyer Parties are sometimes referred to herein individually as a
“Party” and collectively as the “Parties.”

 

RECITALS

 

WHEREAS, each Asset Seller directly owns the overriding royalty, royalty or
other mineral interests set forth opposite its name on Exhibit A hereto (such
assets, as more particularly described in the Asset Assignments, the “Acquired
Assets”);

 

WHEREAS, Equity Seller directly owns all of the issued and outstanding limited
liability company interests (the “Acquired Equity Interests”) of Rivercrest
Royalties II, LLC, a Delaware limited liability company (the “Acquired Entity”),
which owns the Acquired Entity Assets; and

 

WHEREAS, Buyer Parties desire to acquire from each Seller, and each Seller
desires to sell to Buyer Parties, on and subject to the terms and conditions of
this Agreement, its respective Acquired Assets or Acquired Equity Interests, as
applicable, in exchange for the consideration described in this Agreement.

 

NOW, THEREFORE, in consideration of the promises, agreements and covenants
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties agree as follows:

 

ARTICLE 1
Definitions and Rules of Construction

 

1.1                               Definitions.

 

Capitalized terms used throughout this Agreement and not defined in this
Section 1.1 have the meaning ascribed to them elsewhere in this Agreement. As
used herein, the following terms shall have the following meanings:

 

“Acquired Assets” is defined in the recitals of this Agreement.

 

“Acquired Entity” is defined in the recitals of this Agreement.

 

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“Acquired Entity Assets” means the assets, rights and interests owned by the
Acquired Entity, including any and all Oil and Gas Properties owned by such
entity and the Records (solely as applicable to the Acquired Entity), but
excluding the Excluded Entity Assets.

 

“Acquired Equity Interests” is defined in the recitals of this Agreement.

 

“Additional Listing Application” is defined in Section 7.17.

 

“Adjusted Purchase Price” is defined in Section 2.2(c).

 

“Affiliate” means, with respect to any Person, any other Person that, directly
or indirectly, controls, is controlled by or is under common control with such
specified Person through one or more intermediaries or otherwise. For the
purposes of this definition, “control” means, where used 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 such Person, whether through the
ownership of voting securities, by contract or otherwise, and the terms
“controlling” and “controlled” have correlative meanings; provided, however, for
the avoidance of doubt, (i) the Buyer Parties shall not be deemed to be
Affiliates of any Seller and (ii) no Seller shall be deemed to be an Affiliate
of the Buyer Parties.

 

“Agreement” is defined in the preamble to this Agreement.

 

“Allocated Value” means, with respect to a Property or Well, the portion of the
Unadjusted Purchase Price attributable to such Property as set forth on
Exhibit C-1 or such Well as set forth on Exhibit C-2.

 

“Allocation” is defined in Section 2.10(a).

 

“Assessment” is defined in Section 7.3(a).

 

“Asset Assignment” is defined in Section 2.6(b)(i).

 

“Asset Seller Material Contract” is defined in Section 3.7(a).

 

“Asset Sellers” is defined in the preamble to this Agreement.

 

“Asset Statements” is defined in Section 3.5(a).

 

“Asset Taxes” means production, severance, sales, use, occupation, ad valorem,
property, excise, real estate, personal property, state withholding, personal
property or similar Taxes based upon the acquisition, operation or ownership of
the Company Oil and Gas Properties, the production of Hydrocarbons or the
receipt of proceeds therefrom, but excluding Income Taxes and Transfer Taxes.

 

“Assumed Liabilities” means, other than the Retained Liabilities, all
liabilities of every kind and character of the Asset Sellers with respect to the
Acquired Assets or to the ownership, use, operation or other disposition
thereof, whether or not attributable to periods before or after

 

2

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the Effective Time, regardless of whether such obligations or conditions or
events giving rise to such obligations arose, occurred or accrued before or
after the Effective Time.

 

“Business Day” means any day that is not a Saturday, Sunday or legal holiday in
the State of Texas and that is not otherwise a federal holiday in the United
States.

 

“Buyer” is defined in the preamble to this Agreement.

 

“Buyer Assets” means the assets, rights and interests owned by Buyer, but
excluding the Acquired Assets, the Acquired Equity Interests and the Acquired
Entity Assets.

 

“Buyer Cap” means, with respect to claims for indemnification initiated by a
Seller or its respective Seller Indemnified Parties (a) prior to the General
Escrow First Release Date, an amount equal to ten percent (10%) of the
Unadjusted Purchase Price applicable to such Seller, (b) on or after the General
Escrow First Release Date and prior to the General Escrow Second Release Date,
an amount equal to the lower of (i) five percent (5%) of the Unadjusted Purchase
Price applicable to such Seller and (ii) the difference between an amount equal
to ten (10%) of the Unadjusted Purchase Price applicable to such Seller and the
aggregate amount, if any, which such Seller or its respective Seller Indemnified
Party has claimed pursuant to Article 10 (to the extent such claims, if any,
remain unresolved) and (c) thereafter, solely with respect to claims described
in clause (b)(ii) of this definition, the aggregate amount, if any, which such
Seller or its respective Seller Indemnified Party claimed as described in clause
(b)(ii) pursuant to Article 10 (to the extent such claims, if any, remain
unresolved).

 

“Buyer Credit Agreement” is defined in Section 6.15.

 

“Buyer Entitlements” is defined in Section 2.11(a).

 

“Buyer Financial Statements” is defined in Section 6.6.

 

“Buyer Fundamental Representations” means the representations and warranties of
Buyer set forth in Sections 6.1, 6.2, 6.4, 6.11 and 6.14.

 

“Buyer Indemnified Parties” is defined in Section 10.2(a).

 

“Buyer Losses” is defined in Section 10.2(b).

 

“Buyer Material Adverse Effect” means, with respect to Buyer Parties, any
circumstance, change or effect that is or would reasonably be expected to be
materially adverse to (i) the business, operations, results of operations or
financial condition of Buyer Parties and their subsidiaries taken as a whole or
(ii) the performance of Buyer Parties’ obligations and covenants hereunder that
are to be performed at Closing, but, solely with respect to clause (i) of this
definition, shall exclude any circumstance, change or effect resulting or
arising from: (a) any change in general conditions in the industries or markets
in which Buyer Parties and their subsidiaries operate, or any change in
financial or securities markets or the economy in general, or the imposition of
tariffs by any Governmental Authority; (b) any adverse change, event or effect
on the global, national or regional energy industry as a whole, including those
impacting the gathering, transportation, treatment or processing of oil and gas
or the value of oil and gas assets and properties, or any adverse change

 

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in energy prices; (c) national or international political conditions, including
any engagement in hostilities, whether or not pursuant to the declaration of a
national emergency or war, the occurrence of any military or terrorist attack, a
shutdown of the United States federal government or any default on the debt
obligations of any sovereign entity; (d) effects of weather, meteorological
events, natural disasters or other acts of God, other than any such effects that
involve the physical destruction of the oil and gas properties of Buyer Parties
and their subsidiaries; (e) changes in Law or GAAP, or the interpretation
thereof; (f) the entry into or announcement of this Agreement, actions taken or
omitted to be taken at the explicit request of Sellers holding at least a
Supermajority Interest or with the written consent of Sellers holding at least a
Supermajority Interest, or the consummation of the transactions contemplated
hereby (provided that this clause (f) shall not diminish the effect of, and
shall be disregarded for purposes of, the representations and warranties set
forth in Section 6.3); (g) any failure to meet internal or Third Party
projections or forecasts or revenue or earnings or reserve predictions (provided
that clause (g) shall not prevent a determination that any change, circumstance
or effect underlying such failure to meet projections or forecasts or revenue or
earnings or reserves predictions has resulted in a Buyer Material Adverse
Effect); (h) the insolvency, bankruptcy, placing into of receivership or similar
proceeding of any operator of any well associated with the oil and gas
properties of Buyer Parties and their subsidiaries; or (i) natural declines in
well performance or reclassification or recalculation of reserves in the
ordinary course of business; except to the extent such circumstance, change or
effect resulting or arising from clauses (c), (d) or (e) above materially and
disproportionately affects Buyer Parties and their subsidiaries relative to
other participants in the industries in which Buyer and its subsidiaries
participate.

 

“Buyer Obligations” is defined in Section 2.11(a).

 

“Buyer Parties” is defined in the preamble to this Agreement.

 

“Buyer Party Due Diligence Information” is defined in Section 3.16(b).

 

“Buyer Transaction Expenses” means any attorneys’, investment bankers’,
accountants’ or other advisors’ or consultants’ fees and expenses and other
similar transaction fees and expenses incurred by Buyer Parties or any of their
Affiliates in connection with the transactions contemplated by this Agreement,
including the fees and expenses identified as “Buyer Transaction Expenses” on
Schedule 1.1(a).

 

“Buyer’s Auditor” is defined in Section 7.14(a).

 

“Cash Amount” means, as of any given date, the amount of all cash on hand and
cash equivalents of the Acquired Entity in bank accounts, segregated accounts,
lock boxes or otherwise in the possession of the Acquired Entity as of 12:01
a.m. Central Time on such date, including any deposits with financial
institutions.

 

“Class B Contribution Amount” means, for each Seller, the product of (i) five
(5) cents times (ii) the number of Class B Units to be issued to such Seller
pursuant to Section 2.1.

 

“CERCLA” means the Comprehensive Environmental Response, Compensation and
Liability Act, 42 U.S.C. § 9601 et seq.

 

4

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“Class B Units” means Class B units representing limited partner interests in
Buyer.

 

“Closing” is defined in Section 2.7.

 

“Closing Date” is defined in Section 2.7.

 

“Closing Per Unit Value” means $16.63.

 

“Closing Statement” is defined in Section 2.4.

 

“Code” means the Internal Revenue Code of 1986, as amended.

 

“Commission” is defined in Section 6.6.

 

“Common Units” means common units representing limited partner interests in
Buyer, for the avoidance of doubt, excluding Class B Units.

 

“Company Oil and Gas Properties” means all of: (i) the Acquired Entity’s right,
title and interest in, to and under, or derived from, any Oil and Gas
Properties; and (ii) the Acquired Assets.

 

“Conflicts Committee” means the Conflicts Committee of the Board of Directors of
Kimbell Royalty GP, LLC.

 

“Consents” means any Third Party consents to assign or similar rights applicable
to the Acquired Assets or the Acquired Entity Interests that would be triggered
by the consummation of the transactions contemplated hereby.

 

“Constituents of Concern” means any material, substance, pollutant or waste
(whether solid, liquid or gaseous) as it is defined, listed or designated as a
hazardous substance, hazardous waste, special waste, petroleum or
petroleum-derived substance or waste, or any constituent or combination of any
such material, substance, pollutant or waste, the storage, manufacture,
generation, treatment, transportation, release, remediation, use, handling or
disposal of which is regulated by any applicable Environmental Law due to its
hazardous, toxic, dangerous or deleterious properties or characteristics.

 

“Contract” means any legally binding oral or written agreement, arrangement,
understanding, commitment or contract, except for Leases or any other
instruments creating or evidencing an interest in the Company Oil and Gas
Properties.

 

“Contribution” is defined in Section 2.10(b).

 

“Covered Counties/Parishes” means the counties and parishes described on
Exhibit D.

 

“Cupola” is defined in the preamble to this Agreement.

 

“Curable Property” is defined in Section 2.5(d)(i)(B).

 

“Cure Period” is defined in Section 2.5(d)(i)(B).

 

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“Customary Post-Closing Consents” means all rights to consent by, required
notices to, filings with or other actions by Governmental Authorities or any
other Person in connection with the sale, disposition, transfer or conveyance of
any Oil and Gas Properties, where the same are customarily obtained subsequent
to the assignment, disposition or transfer of such interests in leases.

 

“Defensible Title” means such right, title and interest of the Asset Sellers or
the Acquired Entity, as applicable, in and to the applicable Company Oil and Gas
Properties that is of record or title evidenced by legally enforceable
unrecorded instruments or any Contract or Lease listed on Schedule 1.1(b) that
would be successfully defended if challenged and which, subject to the Permitted
Encumbrances:

 

(a) with respect to each Well shown on Exhibit C-2, entitles the applicable
Asset Seller or Acquired Entity to receive not less than the Net Revenue
Interest for such Well shown on Exhibit C-2, whether in cash, in kind or
otherwise, except as a result of decreases due to the establishment or amendment
of pools or units established on or after the execution of this Agreement;

 

(b) with respect to each Property shown on Exhibit C-1, entitles the applicable
Asset Seller or Acquired Entity to receive not less than the Net Royalty Acres
for such Company Oil and Gas Property shown on Exhibit C-1, except as a result
of decreases due to the establishment or amendment of pools or units established
on or after the execution of this Agreement; and

 

(c) is free of Liens.

 

“Disclosure Schedules” means the disclosure schedules of Buyer Parties and
Sellers attached hereto.

 

“Distributed Interests” is defined in Section 7.20.

 

“DLLCA” means the Delaware Limited Liability Company Act, as amended.

 

“Dollars” and “$” mean the lawful currency of the United States.

 

“DRULPA” means the Delaware Revised Uniform Limited Partnership Act, as amended.

 

“Effective Time” means 12:01 a.m. Central Time on October 1, 2018.

 

“Employee Benefit Plan” means (a) any “employee benefit plan” (within the
meaning of Section 3(3) of ERISA) and (b) any other compensation or employee
benefit plans, programs and other agreements, whether or not subject to ERISA,
including cash or equity or equity-based, employment, retention, change of
control, health, medical, dental, disability, accident, life insurance,
vacation, severance, retirement, pension, savings, termination and other
employee benefit plans, programs or other agreements.

 

“Entity Statements” is defined in Section 5.5(a).

 

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“Environment” means ambient and indoor air, surface water, ground water, land
surface or subsurface strata and biological and natural resources.

 

“Environmental Laws” means all applicable Laws of any Governmental Authority
enacted and in effect on or prior to the Effective Time relating to the
protection of the Environment or otherwise relating to the emission, discharge,
release or threatened release of Constituents of Concern to the Environment or
impacts of such emission, discharge or release on human health or the
Environment, including such Laws regarding the release or disposal of hazardous
materials, hazardous substances or waste materials, including, without
limitation, the OPA90, CERCLA, the federal Resource Conservation and Recovery
Act, the federal Clean Water Act, the Toxic Substances Control Act, the
Hazardous Materials Transportation Act (49 USC § 5101 et seq.) and the
legally-binding federal, state and local rules, regulations, ordinances, orders
and governmental directives implementing such statutes.

 

“Equity Assignment” is defined in Section 2.6(c)(i).

 

“Equity Seller” is defined in the preamble to this Agreement.

 

“Equity Seller Material Contract” is defined in Section 5.8(a).

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended,
and the rules and regulations promulgated thereunder.

 

“ERISA Affiliate” means, with respect to any Person, any trade or business,
whether or not incorporated, that together with such Person is a single employer
for purpose of Section 414 of the Code or Section 4001(b)(1) of ERISA.

 

“Escrow Agent” means Citibank, N.A.

 

“Escrow Agreement” means the Escrow Agreement, dated as of the Closing Date, by
and among Buyer Partiers, Sellers and the Escrow Agent, substantially in the
form set forth in Exhibit H.

 

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

 

“Exchange Election” means (i) with respect to KRP Bakken I LLC, “Exchange
Election” as defined in the KRP Bakken I LLC Agreement and (ii) with respect to
KRP Marcellus I LLC, “Exchange Election” as defined in the KRP Marcellus I LLC
Agreement.

 

“Excluded Entity Assets” means the Excluded Records, the name “Rivercrest” and
other trademarks, service marks and trade names owned or held for use by Equity
Seller or its Affiliates and any derivation thereof.

 

“Excluded Records” is defined in the definition of “Records.”

 

“Execution Date” is defined in the preamble to this Agreement.

 

“Final Closing Statement” is defined in Section 2.9(b).

 

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“Final Determination” means (a) a decision, judgment, decree or other order by
any court of competent jurisdiction, which decision, judgment, decree or other
order has become final with respect to the applicable claim or applicable Buyer
Parties or Sellers (i.e., all allowable appeals have been exhausted by either
party to the action), (b) a decision rendered by the arbitrator in accordance
with Section 2.9 or (c) a closing agreement binding in respect of the claim has
been executed by Buyer Parties, on behalf of the Buyer Indemnified Parties, and
Sellers, on behalf of Seller Indemnified Parties, or, if applicable, an
administrative settlement has been made with, or final administrative decision
made by, the relevant Governmental Authority with respect to the applicable
claim or matter.

 

“Final Settlement Date” is defined in Section 2.9(a).

 

“Flow-Through Entity” is defined in Section 3.6(g).

 

“Foundation” is defined in the preamble to this Agreement.

 

“Fraud” means a Final Determination by a court of competent jurisdiction that a
Party, or its Affiliates, have committed actual, and not constructive fraud,
against the other Party with respect to the statements and information contained
in Article 3, Article 4, Article 5 or Article 6, as applicable, or any
certificate delivered by a Party pursuant to Section 2.6(d)(ii) or
2.6(e)(i) with the specific intent to deceive and mislead such other Party.

 

“GAAP” means generally accepted accounting principles of the United States,
consistently applied.

 

“General Escrow Account” means the escrow account created pursuant to the Escrow
Agreement with respect to the General Escrow Balance.

 

“General Escrow Balance” means the Indemnity Escrow Units and any distributions
thereon and interest or other amounts earned while such portion is held in the
General Escrow Account.

 

“General Escrow First Release Date” is defined in Section 10.5(c)(i).

 

“General Escrow Second Release Date” is defined in Section 10.5(c)(ii).

 

“Governmental Authority” means any federal, state, municipal, local or similar
governmental authority, legislature, court, regulatory or administrative agency
or arbitral body.

 

“Hedging Transaction” means any futures, swap, collar, put, call, floor, cap,
option or other contract that is intended to benefit from, related to or reduce
or eliminate the risk of fluctuations in the price of commodities, including
Hydrocarbons or securities, interest rates, currencies or securities.

 

“Hydrocarbons” means oil, gas, casinghead gas, natural gas liquids, condensate,
sulfur and other liquid or gaseous hydrocarbons, or any of them or any
combination thereof, together with all products extracted, separated or
processed therefrom, and all other minerals produced in association with these
substances.

 

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“Income Taxes” means income, franchise, business and occupation, business
license, commercial activity or similar Taxes based upon, measured by or
calculated with respect to net income, profits, gross revenues or receipts
(except for sales, transfer or similar Taxes based on gross receipts), capital
or similar measures (including any such Taxes with multiple bases, if one of the
aforementioned bases is among the bases on which such Tax is based, measured or
calculated), but excluding Asset Taxes and Transfer Taxes.

 

“Indebtedness for Borrowed Money” means, with respect to any Person, any
obligations consisting of (a) the outstanding principal amount of and accrued
and unpaid interest on, and other payment obligations for, borrowed money, or
payment obligations issued or incurred in substitution or exchange for payment
obligations for borrowed money, (b) amounts owing as deferred purchase price for
property or services, including “earn-out” payments, (c) payment obligations
evidenced by any promissory note, bond, debenture, mortgage or other debt
instrument or debt security, (d) commitments or obligations by which such Person
assures a creditor against loss, including contingent reimbursement obligations
with respect to letters of credit, (e) payment obligations secured by Lien,
other than a Permitted Encumbrance, on assets or properties of such Person,
(f) obligations to repay deposits or other amounts advanced by and therefore
owing to Third Parties, (g) obligations under capitalized leases,
(h) obligations under any interest rate, currency, commodity or other hedging
agreement or derivatives transaction, (i) guarantees, make-whole agreements,
hold harmless agreements or other similar arrangements with respect to any
amounts of a type described in clauses (a) through (h) above and (j) any change
of control payments or prepayment premiums, penalties, charges or equivalents
thereof with respect to any indebtedness, obligation or liability of a type
described in clauses (a) through (i) above that are required to be paid at the
time of, or the payment of which would become due and payable solely as a result
of, the execution of this Agreement or the consummation of the transactions
contemplated by this Agreement at such time, in each case determined in
accordance with GAAP; provided, however, that Indebtedness for Borrowed Money
shall not include accounts payable to trade creditors and accrued expenses
arising in the Ordinary Course and shall not include the endorsement of
negotiable instruments for collection in the Ordinary Course.

 

“Indemnified Party” is defined in Section 10.4(a).

 

“Indemnifying Party” is defined in Section 10.4(a).

 

“Indemnity Deductible” means, (i) with respect to Buyer Parties, an amount equal
to one percent (1%) of each Seller’s Unadjusted Purchase Price, and (ii) with
respect to each Seller, an amount equal to one percent (1%) of the Unadjusted
Purchase Price with respect to such Seller.

 

“Indemnity Escrow Units” means, with respect to each Seller, a number of Opco
Common Units and Class B Units equal to ten percent (10%) of the Opco Common
Units and Class B Units that would otherwise be issuable to such Seller, based
on the Unadjusted Purchase Price with respect to such Seller.

 

“Independent Accountant” is defined in Section 2.9(b).

 

“Independent Accountant’s Closing Statement” is defined in Section 2.9(b).

 

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“Interim Period” means the period from and including the Effective Time and
ending on 12:01 a.m. Central Time on the Closing Date.

 

“IRS” means Internal Revenue Service of the United States.

 

“Joint Instruction Letter” is defined in Section 2.8(c).

 

“Knowledge” means (a) as to Rivercrest Capital, the actual knowledge of Robert
Ravnaas, Davis Ravnaas, Brett Taylor and Matt Daly, (b) as to Cupola, the actual
knowledge of Robert Ravnaas, Davis Ravnaas, Brett Taylor and Matt Daly, (c) as
to the Foundation, the actual knowledge of Mark Rich and Ben Fortson, (d) as to
Equity Seller, the actual knowledge of Robert Ravnaas, Davis Ravnaas, Brett
Taylor, Matt Daly and Peter Alcorn, and (e) as to Buyer Parties, the actual
knowledge of Robert Ravnaas, Davis Ravnaas, Brett Taylor, Matt Daly and Jeff
McInnis, in each case without any requirement of investigation or inquiry.

 

“KRP Bakken I LLC Agreement” means that certain Limited Liability Company
Agreement of KRP Bakken I LLC, dated as of September 15, 2015.

 

“KRP Marcellus I LLC Agreement” means that certain Limited Liability Company
Agreement of KRP Marcellus I LLC, dated as of February 19, 2016.

 

“Law” means any applicable constitutional provision, statute, code, writ, law,
rule, regulation, ordinance, principle of common law, Order, judgment, decision,
holding, injunction, award, determination or decree of a Governmental Authority.

 

“Lease” is defined in Section 7.1(b)(ii)(L).

 

“Lien” means any lien, pledge, claim, charge, mortgage, security interest,
option or other similar right of any Person with respect to the applicable
property.

 

“Lock-Up Period” is defined in Section 7.16.

 

“Losses” is defined in Section 10.2(b).

 

“Mayer Brown” is defined in Section 11.12.

 

“Net Mineral Acres” means, for each Company Oil and Gas Property, (a) other than
with respect to an overriding royalty interest, (i) the number of gross surface
acres covered by such Company Oil and Gas Property, multiplied by (ii) the
Acquired Entity’s or Asset Seller’s undivided interest in and to the
Hydrocarbons in, under and which may be produced from such Company Oil and Gas
Property and (b) with respect to an overriding royalty interest, (i) the number
of gross surface acres of land covered by the oil and gas lease for such
overriding royalty interest, multiplied by (ii) the lessor’s undivided
percentage interest ownership in the mineral estate of such oil and gas lease,
multiplied by (iii) the aggregate undivided working interest in such oil and gas
lease owned by the lessee burdened by the applicable overriding royalty
interest.

 

“Net Revenue Interest” means, with respect to any Well, the interest in and to
all Hydrocarbons produced, saved and sold from or allocated to such Well, after
giving effect to all

 

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applicable royalties, overriding royalties, production payments, carried
interests, net profits interests, reversionary interests and other burdens upon,
measured by or payable out of production therefrom.

 

“Net Royalty Acre” means:

 

(a) for Company Oil and Gas Properties other than an overriding royalty
interest, (i) the number of Net Mineral Acres for such Company Oil and Gas
Property, multiplied by (ii) lessor’s royalty percentage under such lease,
expressed on an 8/8ths basis to such lease, divided by (iii) 1/8th; and

 

(b) for Company Oil and Gas Properties that are overriding royalty interests,
(i) the number of Net Mineral Acres covered by such oil and gas lease,
multiplied by (ii) the overriding royalty decimal in such oil and gas lease
expressed on an 8/8ths to the lease tract basis, divided by (iii) 1/8th.

 

By way of illustration: (i) if an Asset Seller or Acquired Entity owns a Company
Oil and Gas Property, other than an overriding royalty interest, that contains
ten (10) Net Mineral Acres, and (ii) the mineral interest in such Company Oil
and Gas Property provides for a twenty percent (20%) lessor royalty, then such
Asset Seller or Acquired Entity owns sixteen (16) Net Royalty Acres in such
Company Oil and Gas Property (10 x .2 / (1/8th)); and (i) if the Asset Seller or
Acquired Entity owns an overriding royalty interest in an oil and gas lease in
respect of a Company Oil and Gas Property that covers ten (10) Net Mineral
Acres, and (ii) the Acquired Entity have a five percent (5%) of 8/8ths
overriding royalty therein, then such Asset Seller or Acquired Entity owns four
(4) Net Royalty Acres in respect of such oil and gas lease (10 x .05 / (1/8th)).

 

“Non-Recourse Party” is defined in Section 11.11.

 

“Notice of Disagreement” is defined in Section 2.9(a).

 

“Notices” is defined in Section 11.1.

 

“Oil and Gas Properties” means all fee mineral interests, royalty interests,
overriding royalty interest, net profits interests, non-participating royalty
interests and all other mineral interests, whether or not relating to
Hydrocarbons, in and to the lands located in the Covered Counties/Parishes,
including the lands on which the Wells are located (each, a “Property” and
collectively, the “Properties”), together with the rights to receive production
payments, bonuses, rentals and all other profits or income attributable thereto,
including all the Acquired Entity’s executive rights and other rights and
interests associated therewith and incidental thereto.

 

“OPA90” means the Federal Oil Pollution Act of 1990.

 

“Opco” is defined in the preamble to this Agreement.

 

“Opco Agreement” means the First Amended and Restated Limited Liability Company
Agreement of Opco, dated as of September 23, 2018.

 

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“Opco Common Units” means common units representing limited liability company
interests in Opco.

 

“Operating Expenses” means all operating expenses of the Acquired Entity,
including those attributable to the Acquired Entity Assets and capital
expenditures incurred by the Acquired Entity in the ownership of the Acquired
Entity Assets in the ordinary course of business, including overhead costs of
the Acquired Entity charged to the Acquired Entity Assets as reflected in the
applicable Entity Statements, but excluding Taxes.

 

“Order” means any order, decision, holding, judgment, injunction, ruling,
sentence, subpoena, writ or award issued, made, entered or rendered by any
court, administrative agency or other Governmental Authority or by any
administrative law judge or arbitrator.

 

“Ordinary Course” means, with respect to any Person, the ordinary course of
business of such Person, consistent with past practice.

 

“Organizational Documents” means any charter, certificate of incorporation,
certificate of formation, articles of association, partnership agreements,
limited liability company agreements, bylaws or similar formation or governing
documents and instruments.

 

“Partnership Agreement” means the Third Amended and Restated Agreement of
Limited Partnership of Buyer, dated as of September 23, 2018.

 

“Party” and “Parties” are defined in the preamble to this Agreement.

 

“Payoff Amount” is defined in Section 7.12.

 

“Per Unit Value” means the arithmetic average of the daily VWAP of the Common
Units for the fifteen (15) consecutive trading days immediately prior to payment
of an amount of Indemnity Escrow Units hereunder.

 

“Permitted Encumbrances” means any of the following:

 

(a)                                 Liens for Taxes for which payment is not due
or which are being contested in good faith by appropriate proceedings by or on
behalf of a Seller or the Acquired Entity and for which adequate reserves have
been established in accordance with GAAP;

 

(b)                                 any Customary Post-Closing Consents;

 

(c)                                  any Consents and Preferential Rights, in
each case as shown on Schedule 3.11 or Schedule 4.8;

 

(d)                                 any consents from non-Governmental Authority
Third Parties, which shall be exclusively governed in accordance with
Section 2.5(b);

 

(e)                                  all defects or irregularities of title, if
any, affecting the Company Oil and Gas Properties which (i) would be accepted by
a reasonably prudent Person engaged in the business of owning mineral interests,
royalty interests or overriding royalty interests or (ii) do not

 

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reduce the Asset Seller’s or Acquired Entity’s Net Revenue Interest as to any
Well below that shown on Exhibit C-2 or reduce the Asset Seller’s or Acquired
Entity’s Net Royalty Acres as to any Property below that shown on Exhibit C-1;

 

(f)                                   the terms and conditions of any Contracts
or Leases, to the extent such terms and conditions do not reduce the Asset
Seller’s or Acquired Entity’s Net Revenue Interest as to any Well below that
shown on Exhibit C-2 or reduce the Asset Seller’s or Acquired Entity’s Net
Royalty Acres as to any Property below that shown on Exhibit C-1;

 

(g)                                  defects based solely on lack of information
in such Seller’s files;

 

(h)                                 defects based on a gap in such Seller’s
chain of title unless such gap is shown to exist after a review of the available
public and/or county or parish records and the Records, by an abstract of title,
title opinion or landman’s title chain (which documents or references thereto
shall be included in any Title Defect Notice);

 

(i)                                     defects based solely upon the failure to
record any overriding royalty interest in state Leases or federal leases
included in the Properties or any assignments of interests thereof in any
applicable records of the applicable State or federal agency, unless such
failure has or would result in a Third Party having a superior claim of title;

 

(j)                                    defects based solely on the failure to
record overriding royalty interests in federal or state Leases, or any
assignments thereof in the real property, conveyance or other records of the
county in which such Lease is located unless such failure has or may reasonably
result in a Third Party having a superior claim of title;

 

(k)                                 all defects or irregularities (i) arising
out of lack of corporate authorization or an immaterial variation in corporate
name, (ii) that have been cured or remedied by applicable statutes of limitation
or statutes for prescription, (iii) consisting of the failure to recite marital
status in documents or omissions of heirship Proceedings, or (iv) resulting from
lack of survey, unless a survey is expressly required by applicable Laws, or
failure to record releases of Liens that have expired by their own terms or the
enforcement of which are barred by applicable statutes of limitation, in each
case;

 

(l)                                     any Lien or encumbrance on or affecting
the Company Oil and Gas Properties which is released or discharged by a Seller
and no longer burdens the Company Oil and Gas Properties at or prior to Closing;

 

(m)                             defects waived in writing by Buyer Parties;

 

(n)                                 all Third Party royalties if the net
cumulative effect of such burdens do not, individually or in the aggregate,
reduce the Asset Seller’s or Acquired Entity’s Net Revenue Interest as to any
Well below that shown on Exhibit C-2 or reduce the Asset Seller’s or Acquired
Entity’s Net Royalty Acres as to any Property below that shown on Exhibit C-1;

 

(o)                                 any easement, right of way, covenant,
servitude, permit, surface lease, condition, restriction and other rights
burdening the Company Oil and Gas Properties for the purpose of surface or
subsurface operations, roads, alleys, highways, railways, pipelines,

 

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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, in each case, to the
extent recorded in the applicable Governmental Authority recording office as of
the Execution Date, insofar as such does not, individually or in the aggregate,
reduce the Asset Seller’s or Acquired Entity’s Net Revenue Interest as to any
Well below that shown on Exhibit C-2 or reduce the Asset Seller’s or Acquired
Entity’s Net Royalty Acres as to any Property below that shown on Exhibit C-1;

 

(p)                                 rights of any common owner of any interest
in any mineral interests or Leases as tenants in common or through common
ownership, insofar as such right does not reduce the Asset Seller’s or Acquired
Entity’s Net Revenue Interests as to any Well below that shown on Exhibit C-2 or
reduce the Asset Seller’s or Acquired Entity’s Net Royalty Acres as to any
Property below that shown on Exhibit C-1;

 

(q)                                 delay or failure of any Governmental
Authority to approve the assignment of any mineral interest to a Seller or any
predecessor in title to such Seller unless such approval has been expressly
denied or rejected in writing by such Governmental Authority;

 

(r)                                    lack of (i) Contracts or rights for the
transportation or processing of Hydrocarbons produced from the Company Oil and
Gas Properties or (ii) any rights of way for gathering or transportation
pipelines or facilities that do not constitute any of the Company Oil and Gas
Properties or (iii) in the case of a well or other operation that has not been
commenced as of the Closing Date, any permits, easements, rights of way, unit
designations, or production or drilling units not yet obtained, formed, or
created, insofar as each does not, individually or in the aggregate, reduce the
Asset Seller’s or Acquired Entity’s Net Revenue Interests as to any Well below
that shown on Exhibit C-2 or reduce the Asset Seller’s or Acquired Entity’s Net
Royalty Acres as to any Property below that shown on Exhibit C-1;

 

(s)                                   the terms and conditions of this Agreement
and any agreement or instrument that is required to be executed or delivered
hereunder;

 

(t)                                    as to any overriding royalty interests,
Liens created under deeds of trust, mortgages and similar instruments by the
lessor under a lease covering the lessor’s surface and mineral interests in the
land covered thereby to the extent (i) such mortgages, deeds of trust or similar
instruments do not contain express language that prohibits the lessors from
entering into an oil and gas lease or otherwise invalidates or repudiates an oil
and gas lease and (ii) no mortgagee or lienholder of any such deeds of trust,
mortgage, and similar instrument has, prior to the Closing Date, initiated
foreclosure or similar proceedings against the interest of lessor in such lease
nor has the Asset Seller or Acquired Entity received any written notice of
default under any such mortgage, deed of trust, or similar instrument;

 

(u)                                 lack of a division order covering any
Company Oil and Gas Property (including portions of an Company Oil and Gas
Property that were formerly within a unit but which have been excluded from the
unit as a result of a contraction of the unit), insofar as such does not,
individually or in the aggregate, reduce the Asset Seller’s or Acquired Entity’s
Net

 

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Revenue Interests as to any Well below that shown on Exhibit C-2 or reduce the
Asset Seller’s or Acquired Entity’s Net Royalty Acres as to any Property below
that shown on Exhibit C-1;

 

(v)                                 any defect or irregularity resulting from
Sellers’ conduct of business in compliance with this Agreement;

 

(w)                               any matters expressly shown on Exhibit C-1 or
Exhibit C-2;

 

(x)                                 any matters shown on Schedule 3.4 or
Schedule 5.4; and

 

(y)                                 all rights reserved to or vested in any
Governmental Authority by Law to control or regulate the Acquired Entity Assets
in any manner.

 

“Person” means any individual, firm, corporation, partnership, limited liability
company, incorporated or unincorporated association, joint venture, joint stock
company, Governmental Authority or other entity of any kind.

 

“Preferential Rights” means any Third Party preferential purchase rights, rights
of first refusal or similar rights applicable to the Acquired Assets or the
Acquired Entity Interests that would be triggered by the consummation of the
transactions contemplated hereby.

 

“Privileged Communications” is defined in Section 11.12.

 

“Prior Credit Agreement” means that certain Credit Agreement between the
Acquired Entity, as borrower, and Frost Bank, as lender, dated September 18,
2015, as the same may have been amended from time to time.

 

“Pro Rata Portion” means, with respect to a Seller, a percentage determined by
dividing the number of Opco Common Units payable to such Seller pursuant to
Sections 2.1(a) or 2.1(b), by the total number of Opco Common Units to be issued
to all Sellers pursuant to Sections 2.1(a) or 2.1(b), prior to giving effect to
any adjustments under this Agreement.

 

“Proceeding” means any civil, criminal, investigative, administrative or other
action, suit, litigation, arbitration, lawsuit, claim, proceeding, hearing,
enforcement action, audit, demand or dispute commenced, brought, conducted or
heard by or before, or otherwise involving, any Governmental Authority or any
arbitrator.

 

“Property” and “Properties” are defined in the definition of “Oil and Gas
Properties.”

 

“Purchase Price Adjustment” is defined in Section 2.2(c).

 

“Records” means all of the files, records and data (whether in hard copy or
electronic format) of the Asset Sellers and the Acquired Entity relating to the
Company Oil and Gas Properties, including lease files, reservoir and land files,
well files, division order files, abstracts, property ownership and title files
(including abstracts of title, title opinions and memoranda and title curative
documents), engineering and/or production files, prospect files, contract files
and records, maps, studies, plans, surveys and reports, check stubs, financial
and accounting records, Tax records and environmental records, in each case,
other than (a) Privileged Communications

 

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and any other items that may be subject to a valid legal privilege with a Seller
(other than title opinions) or to disclosure restrictions (provided, that such
Seller shall use commercially reasonable efforts to obtain a waiver of any such
disclosure restrictions), (b) items that are not transferable without payment by
the applicable Seller or Acquired Entity of additional consideration (and Buyer
Parties have not agreed in writing to pay such additional consideration),
(c) items relating to any Property that is transferred to a Seller or its
designated Affiliate in accordance with Section 2.5 and (d) all e-mails and
other electronic files (except to the extent the underlying files, records or
data are only available in electronic format) on the Sellers’, the Acquired
Entity’s or their respective Affiliates’ servers and networks relating to the
foregoing items (clauses (a) through (d) of this definition are referred to as
the “Excluded Records”).

 

“Registration Rights Agreement” is defined in Section 2.6(d)(iii).

 

“Release Letters” is defined in Section 7.12.

 

“Representatives” means a Person’s directors, officers, partners, members,
managers, employees, agents or advisors (including attorneys, accountants,
consultants, bankers, financial advisors, insurers and insurance brokers, and
any representatives of those advisors).

 

“Required Consent” with respect to a Company Oil and Gas Property, a Consent
that would be triggered by the consummation of the transactions contemplated by
this Agreement and in which the applicable agreement, Lease or Contract
expressly provides that the consummation of such transactions without such
Consent will result in (a) termination of the owner’s existing rights in
relation to such Company Oil and Gas Property, (b) the transfer being null and
void as to such Company Oil and Gas Property (whether automatically or at the
election of the holder thereof), or (c) the incurrence of liquidated damages in
excess of fifty thousand Dollars ($50,000).

 

“Retained Liabilities” means, with respect to each Asset Seller, all liabilities
and obligations of such Asset Seller arising out of, incident to or in
connection with the following: (a) any obligations or liabilities arising out of
any Liens or indebtedness incurred by, associated with or otherwise burdening
such Asset Seller; (b) any obligations or liabilities arising out of any Liens
incurred or created by, through or under such Asset Seller or its Affiliates,
burdening the Acquired Assets of such Asset Seller; (c) all obligations and
liabilities of such Asset Seller or any of its Affiliates, whether before or
after the Effective Time, in respect of any assets of such Asset Seller or of
its Affiliates that are not Acquired Assets (including, for the avoidance of
doubt, any assets that are excluded pursuant to the terms of any Asset
Assignment made by such Asset Seller); (d) any required reimbursements or
adjustments to revenue attributable to the Acquired Assets of such Asset Seller
received after the Effective Time based on overpayment prior to the Effective
Time; provided that, from and after the date that is three (3) years following
the Closing Date, all such liabilities and obligations arising out of this
clause (d) shall no longer be Retained Liabilities and shall be deemed Assumed
Liabilities; (e) except as otherwise provided for in this Agreement, any
liabilities or obligations of such Asset Seller arising from or incurred in
connection with the negotiation, preparation or execution of this Agreement or
the transactions this Agreement contemplates, including fees and expenses of
such Asset Seller’s counsel; (f) such Asset Seller’s portion of the Shared
Expenses;  (g) any obligations or liabilities for which such Asset Seller is
obligated to indemnify the Buyer Indemnified Parties pursuant to this Agreement
and (h) any

 

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obligations or liabilities arising out of the employment of employees or
provision of any compensation or benefits therefor by such Asset Seller or
Affiliate of such Asset Seller.

 

“Rivercrest Capital” is defined in the preamble to this Agreement.

 

“SEC Documents” is defined in Section 6.6.

 

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

 

“Seller” or “Sellers” is defined in the preamble to this Agreement.

 

“Seller Cap” means, with respect to a particular Seller, as of any given time of
determination, such Seller’s Pro Rata Portion of the amount of the General
Escrow Balance then outstanding.

 

“Seller Due Diligence Information” is defined in Section 6.20(b).

 

“Seller Entitlements” is defined in Section 2.11(a).

 

“Seller Fundamental Representations” means the representations and warranties of
Seller set forth in Sections 3.1, 3.2, 3.6, 3.10, 3.14, 4.1, 4.2, 4.6, 4.7, 5.1,
5.3, 5.7 and 5.11.

 

“Seller Indebtedness” means all (a) outstanding Indebtedness for Borrowed Money
of the Sellers or the Acquired Entity, including, with respect to Equity
Seller, Indebtedness for Borrowed Money under the Prior Credit Agreement, if
any, and (b) the Dollar value of any Liens that have been placed on the Acquired
Assets and the Acquired Entity Assets in respect of outstanding Indebtedness for
Borrowed Money, in each case contemporaneously with the Closing.

 

“Seller Indemnified Parties” is defined in Section 10.3(a).

 

“Seller Losses” is defined in Section 10.3(b).

 

“Seller Material Adverse Effect” means, with respect to any Seller, the Acquired
Assets or the Acquired Entity, any circumstance, change or effect that is or
would reasonably be expected to be materially adverse to (i) the business,
operations, results of operations or financial condition of such assets, or such
Person or its assets, in each case taken as a whole, or (ii) the performance of
such Seller’s obligations and covenants hereunder that are to be performed at
Closing, but, solely with respect to clause (i) of this definition, shall
exclude any circumstance, change or effect resulting or arising from: (a) any
change in general conditions in the industries or markets in which the Acquired
Assets or the Acquired Entity operate, or any change in financial or securities
markets or the economy in general, or the imposition of tariffs by any
Governmental Authority; (b) any adverse change, event or effect on the global,
national or regional energy industry as a whole, including those impacting the
gathering, transportation, treatment or processing of oil and gas or the value
of oil and gas assets and properties, or any adverse change in energy prices;
(c) national or international political conditions, including any engagement in
hostilities, whether or not pursuant to the declaration of a national emergency
or war, the occurrence of any military or terrorist attack, a shutdown of the
United States federal government or any default on the debt obligations of any
sovereign entity; (d) effects of weather, meteorological events, natural
disasters

 

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or other acts of God, other than any such effects that involve the physical
destruction of the Acquired Assets or the Acquired Entity Assets; (e) changes in
Law or GAAP, or the interpretation thereof; (f) the entry into or announcement
of this Agreement, the identity of Buyer Parties as purchasers of the Acquired
Assets or the Acquired Equity Interests under this Agreement, actions taken or
omitted to be taken at the explicit request of Buyer Parties or with the written
consent of Buyer Parties, or the consummation of the transactions contemplated
hereby (provided that this clause (f) shall not diminish the effect of, and
shall be disregarded for purposes of, the representations and warranties set
forth in Sections 4.3 and 5.2); (g) any failure to meet internal or Third Party
projections or forecasts or revenue or earnings or reserve predictions (provided
that clause (g) shall not prevent a determination that any change, circumstance
or effect underlying such failure to meet projections or forecasts or revenue or
earnings or reserves predictions has resulted in a Seller Material Adverse
Effect); (h) the insolvency, bankruptcy, placing into of receivership or similar
proceeding of any operator of any Well associated with the Acquired Assets or
the Acquired Entity; or (i) natural declines in Well performance or
reclassification or recalculation of reserves in the ordinary course of
business; except to the extent such circumstance, change or effect resulting or
arising from clauses (c), (d) or (e) above materially and disproportionately
affects the Acquired Assets or the Acquired Entity relative to other
participants in the industries in which the Acquired Assets or the Acquired
Entity participate.

 

“Seller Obligations” is defined in Section 2.11(a).

 

“Seller Transaction Expenses” means any attorneys’, investment bankers’,
accountants’ or other advisors’ or consultants’ fees and expenses and other
similar transaction fees and expenses incurred by the Sellers or any of their
respective Affiliates in connection with the transactions contemplated by this
Agreement, other than the Shared Expenses.

 

“Shared Expenses” means the expenses identified as “Shared Expenses” on Schedule
1.1(c).

 

“Special Warranty of Title” is defined in Section 3.10.

 

“Straddle Period” means any tax period beginning before and ending after the
Effective Time.

 

“Supermajority Interest” means at least three of the Sellers.

 

“Tax Representations” means the representations and warranties set forth in
Sections 3.6, 5.7 and 6.11.

 

“Tax Returns” means any rendition, report, return, election, document, estimated
tax filing, declaration, claim for refund, information returns or other filing
provided to any Governmental Authority in connection with Taxes, including any
schedules or attachments thereto and any amendment thereof.

 

“Taxes” means (a) all taxes, assessments, charges, duties, fees, levies, imposts
or other similar charges imposed by a Governmental Authority, including all
income, franchise, profits, margins, capital gains, capital stock, transfer,
gross receipts, sales, use, transfer, service, occupation, ad valorem, real or
personal property, excise, severance, windfall profits, customs,

 

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premium, stamp, license, payroll, employment, social security, unemployment,
disability, environmental, alternative minimum, add-on, value-added, withholding
and other taxes, assessments, charges, duties, fees, levies, imposts or other
similar charges of any kind, and all estimated taxes, deficiency assessments,
additions to tax, penalties and interest with respect to taxes, whether disputed
or otherwise; (b) any liability for the payment of any item described in clause
(a) as a result of being a member of an affiliated, consolidated, combined,
unitary or aggregate group for any period, including pursuant to Treasury
Regulations Section 1.1502-6 or any analogous or similar state, local or foreign
Law; (c) any liability for the payment of any item described in clause (a) or
(b) as a result of any express obligation to indemnify any Person or as a result
of any obligations under any agreements or arrangements with any Person with
respect to such item; or (d) any successor or transferee liability for the
payment of any item described in clause (a), (b) or (c) of any Person, including
by reason of being a party to any merger, consolidation or conversion.

 

“Third Party” means any Person other than (a) a Seller or any of its Affiliates
or (b) Buyer Parties or any of their Affiliates.

 

“Third Party Acquisition” is defined in Section 7.15(c).

 

“Third-Party Claim” means a third-party claim asserted against an Indemnified
Party by a Person other than (a) an Affiliate of such Indemnified Party or
(b) any officer, director, member, partner, equityholder or employee of any such
Indemnified Party or its Affiliates.

 

“Title Benefit” means that the Asset Sellers’ or the Acquired Entity’s Net
Royalty Acres in any Property and/or Net Revenue Interest in any Well is greater
than that shown on Exhibit C-1 or Exhibit C-2, as applicable.

 

“Title Benefit Value” is defined in Section 2.5(e)(i).

 

“Title Claim Date” is defined in Section 2.5(d)(i)(A).

 

“Title Consultant” is defined in Section 2.5(d)(ii)(C).

 

“Title Defect” means any encumbrance or other defect, except for the Permitted
Encumbrances, that causes the Asset Seller or the Acquired Entity to not have
Defensible Title to a Company Oil and Gas Property as of the Closing Date.

 

“Title Defect Deductible” is defined in Section 2.5(d)(i)(D)(5).

 

“Title Defect Notice” is defined in Section 2.5(d)(i)(A).

 

“Title Defect Threshold” is defined in Section 2.5(d)(i)(D)(5).

 

“Title Defect Value” is defined in Section 2.5(d)(i)(D).

 

“Title Dispute” is defined in Section 2.5(d)(ii)(A).

 

“Title Dispute Notice” is defined in Section 2.5(d)(ii)(A).

 

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“Transaction Documents” means the Registration Rights Agreement, the Escrow
Agreement, the Asset Assignment, the Equity Assignment and the other agreements,
documents, instruments and certificates to be delivered by any Party at the
Closing, and any other agreements, documents, instruments and certificates to be
delivered by any Party in connection with this Agreement or the Closing.

 

“Transfer Taxes” is defined in Section 7.8(b).

 

“Unadjusted Purchase Price” means, for each Seller, the Dollar value identified
as “Unadjusted Purchase Price” as set forth on Exhibit A or Exhibit B (as
applicable) hereto.

 

“United States” means the United States of America.

 

“VWAP” per Common Unit on any trading day shall mean the per Common Unit
volume-weighted average price as displayed on Bloomberg page “VWAP” (or its
equivalent if such a page is not available) in respect of the period from 9:30
a.m. to 4:00 p.m., New York City time, on such trading day; or if such price is
not available, “VWAP” shall mean the market value per Common Unit on such
trading day as determined, using a volume-weighted average method, by a
nationally recognized independent investment banking firm retained by Seller for
this purpose.

 

“Walk-Right Amounts” means the sum of the adjustments to the aggregate
Unadjusted Purchase Price for all Sellers pursuant to Sections 2.5(b)(i),
2.5(b)(ii), 2.5(d)(i)(C) and 2.5(d)(ii)(B).

 

“Walk-Right Threshold” means an amount equal to twenty percent (20%) of the
aggregate Unadjusted Purchase Price for all Sellers.

 

“Wells” means any and all Hydrocarbon wells described on Exhibit C-2.

 

1.2                               Rules of Construction.

 

(a)                                 All article, section and exhibit references
used in this Agreement are to articles and sections of, and exhibits to, this
Agreement unless otherwise specified. The schedules and exhibits attached to
this Agreement constitute a part of this Agreement and are incorporated herein
for all purposes. All schedule references used in this Agreement are to the
applicable Disclosure Schedules, unless otherwise specified.

 

(b)                                 If a term is defined as one part of speech
(such as a noun), it shall have a corresponding meaning when used as another
part of speech (such as a verb). Terms defined in the singular have the
corresponding meanings in the plural, and vice versa. Unless the context of this
Agreement clearly requires otherwise, words importing the masculine gender shall
include the feminine and neutral genders and vice versa. The term “includes” or
“including” shall mean “including without limitation.” The words “hereof,”
“hereto,” “hereby,” “herein,” “hereunder” and words of similar import, when used
in this Agreement, shall refer to this Agreement as a whole and not to any
particular section or article in which such words appear.

 

(c)                                  The Parties acknowledge that each Party and
its attorneys have reviewed this Agreement and that any rule of construction to
the effect that any ambiguities are to be

 

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resolved against the drafting Party, or any similar rule operating against the
drafter of an agreement, shall not be applicable to the construction or
interpretation of this Agreement.

 

(d)                                 The captions in this Agreement are for
convenience only and shall not be considered a part of or affect the
construction or interpretation of any provision of this Agreement.

 

(e)                                  All references to currency herein shall be
to, and all payments required hereunder shall be paid in, Dollars.

 

(f)                                   The terms “day” and “days” mean and refer
to calendar day(s).

 

(g)                                  If any date on which any action is required
to be taken hereunder by any of the Parties is not a Business Day, such action
shall be required to be taken on the next succeeding day that is a Business Day.

 

ARTICLE 2
Purchase and Sale; Closing

 

2.1                               Purchase and Sale of Acquired Assets and
Acquired Equity Interests; Assumption of Certain Liabilities.

 

(a)                                 Asset Contributions. Upon the terms and
subject to the conditions set forth in this Agreement (including the Asset
Assignments), at the Closing, each Asset Seller (A) shall sell, assign, transfer
and convey to Opco (or its designee) all right, title and interest in and to the
Acquired Assets held by such Asset Seller as set forth opposite such Asset
Seller’s name on Exhibit A hereto, in each case free and clear of all Liens
(other than Permitted Encumbrances), in exchange for (i) the issuance by Opco of
a number of Opco Common Units, and (ii) the agreement by Opco (or its designee)
to assume and pay (or cause to be assumed and paid) the Assumed Liabilities, and
Opco (or its designee) shall receive, acquire and accept such Acquired Assets;
and (B) shall transfer the Class B Contribution Amount of such Asset Seller to
Buyer in exchange for the issuance by Buyer of the same number of Class B Units,
in each case as set forth on Exhibit A hereto.

 

(b)                                 Equity Contributions. Upon the terms and
subject to the conditions set forth in this Agreement (including the Equity
Assignment), at the Closing, the Equity Seller (A) shall sell, assign, transfer
and convey to Opco (or its designee) the Acquired Equity Interests free and
clear of all Liens (other than restrictions under applicable federal and state
securities Laws), in exchange for the issuance by Opco of a number of Opco
Common Units; and (B) shall transfer the Class B Contribution Amount of the
Equity Seller to Buyer in exchange for the issuance by Buyer of the same number
of Class B Units, in each case as set forth on Exhibit B hereto.

 

(c)                                  Assumption of Certain Liabilities. In
connection with the sale, assignment, transfer and conveyance of the Acquired
Assets, at the Closing, Opco (or its designee) shall assume and agree to duly
and timely pay, perform and discharge the Assumed Liabilities, to the full
extent that an Asset Seller has been heretofore or would have been in the
future, were it not for the execution and delivery of this Agreement, obligated
to pay, perform and discharge any such Assumed Liability; provided, however,
that said assumption and agreement to duly and timely pay, perform and discharge
the Assumed Liabilities shall not increase the obligation of Opco (or its

 

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designee) or any of its Affiliates with respect to the Assumed Liabilities
beyond that of the applicable Asset Seller, waive any valid defense that was
available to such Asset Seller with respect to any Assumed Liabilities or
enlarge the rights or remedies of any third party, if any, under any of the
Assumed Liabilities. For the avoidance of doubt, neither Opco (or its designee)
nor any of its Affiliates is hereby assuming, or shall be deemed to have assumed
or otherwise bear any responsibility for, any other liability or obligation of
any Asset Seller other than the Assumed Liabilities, and any such other
liability or obligation shall be retained by the applicable Asset Seller.

 

2.2                               Adjustment of Purchase Price at Closing.

 

The Parties agree that, for purposes of calculating the number of Opco Common
Units comprising each Seller’s Unadjusted Purchase Price, the Opco Common Units
were valued at the Closing Per Unit Value. The Parties acknowledge and agree
that each Seller’s Unadjusted Purchase Price was derived based on the aggregate
Allocated Values of the Acquired Entity Assets as set forth on Exhibit C-1 and
Exhibit C-2. At Closing, each Seller’s Unadjusted Purchase Price shall be
adjusted as follows:

 

(a)                                 Each Seller’s Unadjusted Purchase Price
shall be increased by the sum of the following (as applicable), without
duplication:

 

(i)                                     solely with respect to the Acquired
Entity, without limiting Section 2.2(b)(ii), the amount equal to the Cash Amount
as of the Closing Date;

 

(ii)                                  solely with respect to the Acquired
Entity, the amount equal to all Operating Expenses paid by the Equity Seller or
the Acquired Entity that are solely attributable to the Acquired Entity or the
Acquired Entity Assets from and after the Effective Time, whether paid before or
after the Effective Time;

 

(iii)                               the amount equal to the revenues, income,
proceeds, receipts and credits received by Buyer Parties or the Acquired Entity
attributable to the Acquired Assets or the Acquired Entity Assets (and not
otherwise distributed to such Seller) and attributable to the period before the
Effective Time (calculated in accordance with GAAP and without duplication of
any amounts attributable to the Cash Amount, if applicable), including on
account of any leasing activity (including lease extensions, lease bonuses and
delay rentals);

 

(iv)                              the amount of all Asset Taxes allocable to
Buyer Parties pursuant to Section 7.9(a) but paid or economically borne by such
Seller; and

 

(v)                                 any other amount otherwise explicitly agreed
upon in writing by Sellers and Buyer Parties, if any.

 

(b)                                 Each Seller’s Unadjusted Purchase Price
shall be decreased by the sum of the following (as applicable), without
duplication:

 

(i)                                     solely with respect to the Acquired
Entity, the amount equal to all Operating Expenses paid by Buyer Parties or the
Acquired Entity (to the extent the Acquired Entity has not paid such amounts
prior to Closing) that are solely attributable to the Acquired Entity or

 

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the Acquired Entity Assets prior to the Effective Time, whether paid before or
after the Effective Time;

 

(ii)                                  the amount equal to the revenues, income,
proceeds, receipts and credits received by such Seller attributable to the
Acquired Assets or the Acquired Entity Assets and attributable to the period on
or after the Effective Time (calculated in accordance with GAAP), including on
account of any leasing activity (including lease extensions, lease bonuses and
delay rentals);

 

(iii)                               the sum of the adjustments to the Unadjusted
Purchase Price pursuant to Sections 2.5(b)(i), 2.5(b)(ii), 2.5(d)(i)(C) and
2.5(d)(ii)(B) (subject to any offsets to such adjustments pursuant to
Section 2.5(e));

 

(iv)                              the amount of all Asset Taxes allocable to
such Seller pursuant to Section 7.9(a) but paid or economically borne by Buyer
Parties; and

 

(v)                                 any other amount otherwise agreed upon in
writing by Sellers and Buyer Parties, if any.

 

(c)                                  The net amount of the adjustments set forth
in Section 2.2(a) and Section 2.2(b) for each Seller shall be referred to as
such Seller’s “Purchase Price Adjustment.” Except with respect to the
adjustments set forth in Section 2.2(b)(iii) (which shall adjust the number of
Opco Common Units issuable by Opco), the net amount of the adjustments set forth
in Section 2.2(a) and Section 2.2(b) shall be payable by Buyer Parties or such
Seller, as applicable, in cash by wire transfer of immediately available funds
to the account designated by such applicable Party.  Each Seller’s Unadjusted
Purchase Price as adjusted by the applicable Purchase Price Adjustment shall be
referred to as such Seller’s “Adjusted Purchase Price.”

 

2.3                               Repayment of Seller Indebtedness; Payment of
Transaction Expenses.

 

(a)                                 Subject to the terms of this Section 2.3(a),
the Payoff Amounts, if any, shall be borne solely and entirely by the Equity
Seller. At the Closing, the Equity Seller shall cause the applicable portion of
the Payoff Amount, if any, to be paid to the applicable Persons pursuant to the
terms of the Release Letters.

 

(b)                                 The Buyer Transaction Expenses shall be
borne solely and entirely by Buyer Parties.

 

(c)                                  The Sellers agree that each Seller shall
bear and pay its Pro Rata Portion of the Shared Expenses. Except as set forth in
this Section 2.3(c), each Seller’s Seller Transaction Expenses shall be paid by
such Seller.

 

2.4                               Closing Statement.

 

Not later than five (5) Business Days prior to the Closing Date, Sellers shall
prepare and deliver to Buyer Parties a statement (the “Closing Statement”)
setting forth Sellers’ good faith estimate of each Seller’s Adjusted Purchase
Price calculated pursuant to Section 2.2, which statement shall include in
reasonable detail Equity Seller’s good faith estimate of the Cash Amount

 

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as of the Closing Date, the amounts described in Sections 2.2(a)(ii),
2.2(a)(iii), 2.2(b)(i), 2.2(b)(ii) and 2.2(b)(iii) (as applicable), the amount
of all Asset Taxes allocable to Buyer Parties pursuant to Section 7.9(a) but
paid or economically borne by a Seller (if any), and the amount of all Asset
Taxes allocable to a Seller pursuant to Section 7.9(a) but paid or economically
borne by Buyer Parties (if any). If Buyer Parties dispute any item in the
Closing Statement, Buyer Parties shall so notify Sellers within two (2) Business
Days prior to the Closing Date and Sellers and Buyer Parties shall use their
commercially reasonable efforts to agree on the Closing Statement; provided,
that if Sellers and Buyer Parties are not able to agree on the Closing Statement
prior to Closing, Closing shall not be delayed on account of such disagreement
and the Closing Statement delivered by Sellers will be used to adjust the
applicable Unadjusted Purchase Price at Closing absent manifest error. Any final
adjustments, if necessary, will be made pursuant to Section 2.9.

 

2.5                               Title Review.

 

(a)                                 To allow Buyer Parties to conduct due
diligence with respect to the Company Oil and Gas Properties, Sellers shall make
the Records available in accordance with Section 7.3 to Buyer Parties, and Buyer
Parties’ authorized Representatives, in a virtual data room and/or at such
Seller’s election, at such Seller’s applicable office(s), at mutually agreeable
times before Closing. With such Seller’s permission, Buyer Parties may photocopy
the Records at their sole expense.

 

(b)                                 Preferential Rights and Consents to Assign.

 

(i)                                     Notices to Holders. As soon as
reasonably practicable (and in any event, within ten (10) Business Days after
(A) the Execution Date or (B) the date on which such Consents (other than
Customary Post-Closing Consents) or Preferential Rights are uncovered during the
course of Buyer Parties’ due diligence investigation with respect to the Company
Oil and Gas Properties, as applicable), each Seller shall: (A) notify the
holders of the Preferential Rights and Consents identified on Schedule 3.11 or
Schedule 4.8 or the holders of any such additional Preferential Rights and
Consents identified during the course of Buyer Parties’ due diligence
investigation with respect to the Company Oil and Gas Properties, in each case
as applicable to such Seller, that such Seller intends to transfer the Acquired
Assets or Acquired Entity Assets, as applicable, to Buyer Parties; (B) provide
the holders of such Preferential Rights and Consents with any information about
the transfer of the applicable Acquired Assets or Acquired Entity Assets to
which they are entitled; (C) in the case of such Preferential Rights, request
from the holders of such Preferential Rights a waiver of their right to purchase
the affected Acquired Asset or Acquired Entity Asset; and (D) in the case of
such Consents, request the holders of such Consents to consent to the assignment
of the affected Acquired Asset or Acquired Entity Asset to Buyer Parties. 
Before Closing, each applicable Seller shall use commercially reasonable efforts
to obtain all Consents (other than Customary Post-Closing Consents) and waivers
of all Preferential Rights encumbering the conveyance of the Acquired Assets or
Acquired Entity Assets; provided that (x) Buyer Parties shall deliver prompt
written notice to the applicable Seller of any Consents or Preferential Rights
uncovered during the course of Buyer Parties’ due diligence investigation,
(y) any such Consents or Preferential Rights uncovered during the course of
Buyer Parties’ due diligence investigation shall be deemed to have been included
on Schedule 3.11 or Schedule 4.8, as applicable, as of the Execution Date, and
(z) no Party shall be required to incur any liability or pay any money to a
Third Party in order to obtain such Consents and waivers.

 

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Before Closing, Seller shall notify Buyer Parties whether: (1) any Preferential
Rights are exercised or waived; (2) any Consents are granted or denied or cannot
be obtained before Closing; or (3) the requisite time periods have elapsed and
any Preferential Rights are deemed waived or Consents deemed given by the lapse
of such requisite time periods under the applicable agreements.

 

(ii)                                  If any Preferential Rights are exercised
prior to Closing, the portion of the Acquired Assets or Acquired Entity Assets
burdened by the exercised Preferential Right shall be (A) retained by the
applicable Asset Seller or (B) assigned by the Acquired Entity to the Equity
Seller, and in each case shall be excluded from Closing, and the Unadjusted
Purchase Price with respect to such Seller shall be reduced by the Allocated
Value of the excluded portion of the Acquired Assets or Acquired Entity Assets.
If a Seller is unable to obtain a Required Consent or a waiver of a Preferential
Right, then, any Acquired Asset or Acquired Entity Asset subject to such
Preferential Right or Required Consent shall be (A) retained by such Asset
Seller or (B) assigned by the Acquired Entity to the Equity Seller, and in each
case shall be excluded from Closing, and the Unadjusted Purchase Price with
respect to such Seller shall be reduced by the Allocated Value of such Acquired
Asset or Acquired Entity Asset.

 

(iii)                               After Closing, such Seller shall use
commercially reasonable efforts to obtain any un-obtained Required Consents,
including Required Consents alleged by Third Parties or identified after
Closing, and waivers of any un-waived Preferential Rights, and Buyer Parties
shall provide commercially reasonable assistance to such Seller.  In the event
after Closing but before the Final Settlement Date such Seller is able to obtain
a Required Consent or waiver of a Preferential Right affecting an Acquired Asset
or Acquired Entity Asset that was excluded from Closing pursuant to this
Section 2.5(b), then within ten (10) days of Buyer Parties’ receipt of such
Required Consent or waiver of Preferential Right such Seller shall convey the
Acquired Asset or Acquired Entity Asset affected by any such Required Consent or
Preferential Right pursuant to a form of assignment that is mutually agreeable
to Buyer Parties and such Seller, and Buyer Parties shall pay such Seller the
amount by which the Unadjusted Purchase Price was reduced at Closing for such
Acquired Asset or Acquired Entity Asset.  Any such payment made pursuant to this
Section 2.5(b) shall be paid by the issuance of Opco Common Units (valuing such
units at the greater of the Per Unit Value and the Closing Per Unit Value), as
applicable.

 

(c)                                  General Disclaimer of Title Warranties and
Representations. Except for the Special Warranty of Title and the express
representations and warranties set forth in Section 3.12 and Section 5.12, and
without limiting Buyer Parties’ remedies for Title Defects set forth in this
Section 2.5(c) and Section 2.5(d) (or Buyer Parties’ remedies for a Seller’s
failure to obtain Consents or waivers of Preferential Rights as set forth in
Section 2.5(b)(ii)), each Seller makes no warranty or representation, express,
implied, statutory or otherwise, with respect to such Seller’s or the Acquired
Entity’s title to any of the Company Oil and Gas Properties, and Buyer Parties
hereby acknowledge and agree that they have not relied upon any such
representation or warranty. Buyer Parties hereby acknowledge and agree that,
without limiting Buyer Parties’ rights and remedies under Section 9.1(d), except
for the express representations and warranties set forth in Section 3.12 and
Section 5.12, Buyer Parties’ sole and exclusive remedy for (i) any failure by a
Seller to obtain Consents or waivers of Preferential Rights as contemplated by
Section 2.5(b)(ii) shall be as set forth in Section 2.5(b)(ii), and (ii) any
defect in title or any other title matter (including any Title Defect with
respect to any of the Company Oil and Gas Properties or otherwise) (A) before
the Title Claim Date, shall be as set forth in Section 2.5(d) and (B) after the

 

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Title Claim Date (subject to the limitations set forth in Section 10.1 and
Section 10.6), shall be pursuant to the Special Warranty of Title, and the
Special Warranty of Title shall be further limited to the Allocated Value of the
affected Company Oil and Gas Properties. Buyer Parties hereby expressly waive
any and all other rights or remedies with respect thereto. Buyer Parties are not
entitled to protection under the Special Warranty of Title for any matter
reported by Buyer Parties under Section 2.5(d).

 

(d)                                 Title Defects.

 

(i)                                     Notice of Title Defects; Defect
Adjustments.

 

(A)                               On or before ten (10) days before Closing (the
“Title Claim Date”) Buyer Parties will notify the applicable Seller in writing
of any Title Defect it discovers with respect to a Company Oil and Gas Property
(each a, “Title Defect Notice”). For all purposes of this Agreement and
notwithstanding anything herein to the contrary (except for the Special Warranty
of Title), Buyer Parties shall be deemed to have waived, and Sellers shall have
no liability for, title to any alleged Title Defect, that (i) Buyer Parties fail
to assert by a Title Defect Notice delivered to a Seller on or before the Title
Claim Date or (ii) for which Buyer Parties do not conduct title diligence prior
to delivering a Title Defect Notice therefor to such Seller, which diligence is
evidenced by documentation of the type described in clause (iv) of the following
sentence, to the extent used in connection with Buyer Parties’ assessment of
such alleged Title Defect. Such notice shall be in writing and shall include:
(i) a reasonably detailed description of the alleged Title Defect; (ii) the
Company Oil and Gas Property affected; (iii) the Allocated Value of the Company
Oil and Gas Property subject to the alleged Title Defect(s); (iv) supporting
documentation reasonably necessary for such Seller to verify the existence of
such Title Defect (including copies of any title opinions, title abstracts,
ownership reports, run sheets, deeds, leases or other document, reports or data,
to the extent available to Buyer Parties and used in connection with Buyer
Parties’ assessment of such alleged Title Defect(s)); and (v) the alleged Title
Defect Value of the affected Company Oil and Gas Property and the computations
and information upon which Buyer Parties’ belief is based. To give such Seller
an opportunity to commence reviewing and curing Title Defects but without
prejudice to Buyer Parties’ right to assert Title Defects, Buyer Parties agree
to use commercially reasonable efforts to give such Seller, on or before the end
of each calendar week prior to the Title Claim Date, written notice of all
alleged Title Defects discovered by Buyer Parties during the preceding calendar
week, which notice may be preliminary in nature and supplemented prior to the
Title Claim Date; provided that the failure to provide any such preliminary
notice shall not be deemed to waive or prejudice Buyer Parties’ right to assert
Title Defects at any time not later the Title Claim Date.

 

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(B)                               If any Title Defect affecting any Company Oil
and Gas Property is properly asserted by Buyer Parties in accordance with
Section 2.5(d)(i)(A) and not waived in writing by Buyer Parties or cured on or
before Closing, such applicable Seller may, for a period of ninety (90) days
following the Closing Date (such period, the “Cure Period”), elect to cure any
such Title Defect that such Seller in good faith believes can be cured during
the Cure Period. The election by such Seller to seek to cure such Title Defect
must be made by written notice delivered to Buyer Parties within three
(3) Business Days prior to the Closing Date. Any Company Oil and Gas Properties
for which such Seller has elected to cure a Title Defect under this paragraph
shall be referred to as a “Curable Property”.

 

(C)                               At the Closing, the Acquired Entity shall
retain, or Buyer Parties in the case of an Acquired Asset shall obtain, all
right, title and interest in and to the Curable Properties. The adjustments to
the applicable Seller’s Unadjusted Purchase Price under Section 2.2(b)(iii) will
include the Title Defect Values for all Title Defects affecting the Curable
Properties that have been properly asserted by Buyer Parties in accordance with
Section 2.5(d)(i)(A) and not waived in writing by Buyer Parties or cured on or
before Closing and Buyer Parties shall issue Opco Common Units and Class B Units
equal to the Title Defect Value associated with such Curable Properties (valuing
such units at the Closing Per Unit Value) to the Escrow Agent in accordance with
Section 2.8(b). If a Seller cures such Title Defect during the Cure Period, then
Buyer Parties and such Seller shall instruct the Escrow Agent to pay to such
Seller the amount that the Unadjusted Purchase Price was adjusted under
Section 2.2(b)(iii) (subject to any further adjustments under Section 2.2 in
respect of the applicable Company Oil and Gas Property) with respect to such
Curable Property on account of such Title Defect at the end of the Cure Period
to the extent such Title Defect is cured during the Cure Period. If a Title
Defect burdening a Curable Property is not cured on or before the end of the
Cure Period, then subject to Section 2.5(d)(i)(D)(5) and Section 2.5(d)(ii),
Buyer Parties and such Seller shall instruct the Escrow Agent to pay to Buyer
Parties the amount that the Unadjusted Purchase Price was adjusted under
Section 2.2(b)(iii) (subject to any further adjustments under Section 2.2 in
respect of the applicable Company Oil and Gas Property) with respect to such
Curable Property which was not cured on or before the end of the Cure Period.

 

(D)                               The “Title Defect Value” resulting from a
Title Defect shall be determined as follows:

 

(1)                                 if Buyer Parties and such applicable Seller
agree on the Title Defect Value, that amount shall be the Title Defect Value;

 

(2)                                 if the Title Defect is a Lien which 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 such

 

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applicable Seller’s interest in the affected Company Oil and Gas Property;

 

(3)                                 if the Title Defect represents a discrepancy
between the Asset Seller’s or the Acquired Entity’s actual Net Revenue Interest
for a Well and the Net Revenue Interest set forth on Exhibit C-2 for such Well,
then the Title Defect Value shall be an amount equal to the product of (A) the
Allocated Value of such Well and (B) one (1), minus a fraction, the numerator of
which is the Acquired Entity’s actual Net Revenue Interest for such Well and the
denominator of which is the Net Revenue Interest set forth for such Well on
Exhibit C-2;

 

(4)                                 if the Title Defect represents a discrepancy
between the Asset Seller’s or the Acquired Entity’s actual Net Royalty Acres for
a Property and the Net Royalty Acres set forth in Exhibit C-1 for such Property,
then the Title Defect Value shall be an amount equal to the product of (A) the
Allocated Value of such Property and (B) one (1) minus a fraction, the numerator
of which is the Acquired Entity’s actual Net Royalty Acres in such Property and
the denominator of which is the Net Royalty Acres set forth on Exhibit C-1 for
such Property; and

 

(5)                                 notwithstanding anything to the contrary in
this Section 2.5(d), Buyer Parties shall have no remedy hereunder for any Title
Defect unless: (A) the Title Defect Value for such Title Defect exceeds one
hundred thousand Dollars ($100,000) net to the Asset Seller’s or the Acquired
Entity’s interest in the relevant Company Oil and Gas Property (the “Title
Defect Threshold”), in which event the value of such defect will be taken into
account from first Dollar; and (B) the sum of the aggregate Title Defect Values
for Title Defects with Title Defect Values exceeding the Title Defect Threshold
exceeds one percent (1%) of such Seller’s Unadjusted Purchase Price, and then
only to the extent such amount exceeds one percent (1%) of such Seller’s
Unadjusted Purchase Price (the “Title Defect Deductible”).

 

(E)                                Notwithstanding anything to the contrary in
this Agreement, the aggregate adjustments to each Seller’s Unadjusted Purchase
Price attributable to the effects of all Title Defects, with respect to any
Company Oil and Gas Property, shall not exceed the Allocated Value of such
affected Company Oil and Gas Property.

 

(ii)                                  Title Defect Disputes.

 

(A)                               The applicable Seller and Buyer Parties shall
attempt to agree on all Title Defect Values (i) on or prior to the Closing Date
or (ii)

 

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with respect to disputes over the adequacy of such Seller’s post-Closing Date
curative work, the end of the Cure Period. If a disputed Title Defect or Title
Defect Value cannot be resolved (i) on or prior to Closing or (ii) with respect
to disputes over the adequacy of such Seller’s post-Closing Date curative work,
the end of the Cure Period, then in each case, any Party may submit any such
disputed Title Defects, cures and Title Defect Values to the Title Consultant in
accordance with the procedures set forth in Section 2.5(d)(ii)(C) by providing
notice to the other Party thereof (a “Title Dispute Notice”) no later than
thirty (30) days following the Closing Date or the end of the Cure Period, as
applicable (the “Title Dispute”). If a Party does not submit a Title Dispute
Notice to the other Party in accordance with this Section 2.5(d)(ii)(A), such
Party shall be deemed to have waived all such disputed matters, which shall be
deemed conclusively resolved in accordance with the applicable Title Defect
Notice or subsequent correspondence between the Parties.

 

(B)                               If a disputed Title Defect or Title Defect
Value cannot be resolved prior to Closing, except as otherwise provided herein,
the Acquired Entity shall retain, or Buyer Parties in the case of an Acquired
Asset shall obtain, all right, title and interest in and to the Company Oil and
Gas Property affected by such Title Defect, Buyer Parties shall issue Opco
Common Units and Class B Units equal to the Title Defect Value for such Company
Oil and Gas Property (valuing such units at the Closing Per Unit Value) to the
Escrow Agent in accordance with Section 2.8(b) and the adjustments to such
Seller’s Unadjusted Purchase Price under Section 2.2(b)(iii) shall include such
Title Defect Value.

 

(C)                               If a Party validly submits a Title Dispute
Notice under Section 2.5(d)(ii)(A), then the Parties shall each submit such
unresolved Title Dispute to a title attorney (the “Title Consultant”), pursuant
to this Section 2.5(d)(ii)(C).

 

(1)                                 The Parties hereby agree that: (i) Dick Watt
shall serve as the Title Consultant with respect to any Title Disputes that are
required to be resolved pursuant to this Section 2.5(d)(ii)(C)(1); (ii) if Dick
Watt is unable or unwilling to serve as the Title Consultant, then Allen D.
Cummings shall serve as the Title Consultant with respect to any Title Disputes
that are required to be resolved pursuant to this Section 2.5(d)(ii)(C)(1);
provided, further, that if both Dick Watt and Allen D. Cummings are unable or
unwilling to serve as the Title Consultant, then Jeff Weems shall serve as the
Title Consultant with respect to any Title Disputes that are required to be
resolved pursuant to this Section 2.5(d)(ii)(C)(1); or (iii) if Dick Watt, Allen
D. Cummings and Jeff Weems are unable or unwilling to serve as the Title
Consultant, then the provisions of Section 2.5(d)(ii)(C)(2) applicable to the
selection of the Title

 

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Consultant shall apply mutatis mutandis to the selection of the Title
Consultant.

 

(2)                                 The Title Consultant shall be a neutral
third party title attorney with at least ten (10) years’ experience in oil and
gas title opinions, as selected by Section 2.5(d)(ii)(C)(1). In the event that
Section 2.5(d)(ii)(C)(1)(iii) is applicable, the Parties shall each select a
third party title attorney and such title attorneys together shall select such
Title Consultant, and if any Party does not select a Title Consultant within ten
(10) days of written demand therefor by the other Party, then the title attorney
selected by the other Party shall be such Title Consultant. The Title Consultant
shall not have been employed by any Party or its Affiliates within the ten
(10) year period preceding the arbitration. The Title Consultant, once
appointed, shall have no ex parte communications with any of the Parties
concerning the determination required hereunder. All communications between any
Party or its Affiliates and the Title Consultant shall be conducted in writing,
with copies sent simultaneously to the other Party in the same manner, or at a
meeting or conference call to which the representatives of both Seller and Buyer
Parties have been invited and of which such Parties have been provided at least
five (5) days’ notice. Within ten (10) days of appointment of the Title
Consultant, (x) each of such applicable Seller and Buyer Parties shall present
the Title Consultant with its claim notice or its response, as applicable, and
(y) such Seller shall present the Title Consultant with all other supporting
information that it desires, and Buyer Parties shall present the Title
Consultant with all other supporting information that it desires that was
contained in the original Title Defect Notices, with a copy to the other Party.
The Title Consultant shall also be provided with a copy of this Agreement.
Within thirty (30) days after receipt of such materials and after receipt of any
additional information required by the Title Consultant, the Title Consultant
shall make its determination, which shall be final and binding upon all Parties,
without right of appeal, absent manifest error. In making his determination, the
Title Consultant shall be bound by the rules set forth in this
Section 2.5(d)(ii). The Title Consultant shall act as an expert for the limited
purpose of determining: (1) the existence of any timely asserted Title Defect in
dispute; (2) whether any disputed curative action has succeeded in curing a
Title Defect; and (3) specific disputed Title Defect Values submitted by either
Party. The Title Consultant may not award damages, interest or penalties to
either Party with respect to any matter. The applicable Seller and Buyer Parties
shall each bear its own legal fees and other costs of presenting its case. The
applicable Seller shall bear one-half (1/2) and Buyer Parties shall bear
one-half (1/2) of the costs and expenses of the Title Consultant.

 

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(e)                                  Title Benefits.

 

(i)                                     If a Seller discovers any Title Benefit
on or before the Title Claim Date, such Seller may, as soon as practicable but
in any case on or prior to the Title Claim Date, deliver a notice to Buyer
Parties, which shall include: (i) a detailed description of the alleged Title
Benefit; (ii) the specific Company Oil and Gas Property affected; (iii) the
Allocated Value of the Company Oil and Gas Property subject to the alleged Title
Benefit; (iv) supporting documentation reasonably necessary for Buyer Parties to
verify the existence of such Title Benefit (including copies of any title
opinions, title abstracts, ownership reports, run sheets, deeds, leases or other
document, reports or data, to the extent used in connection with such Seller’s
assessment of such alleged Title Benefit); and (v) the alleged Title Benefit
value of the affected Company Oil and Gas Property and the computations and
information upon which such Seller’s belief is based. With respect to each
Company Oil and Gas Property affected by a Title Benefit reported hereunder, an
amount (the “Title Benefit Value”) equal to the increase in the Allocated Value
for such Company Oil and Gas Property caused by such Title Benefit (calculated
in a similar manner as the determination of Title Defect Values in accordance
with the terms of Section 2.5(d)(i)(D), mutatis mutandis) will be determined and
agreed to by the Parties as soon as practicable. If, with respect to a Title
Benefit, the Parties have not agreed on the amount of the Title Benefit or have
not otherwise agreed on the validity of such Title Benefit, Buyer Parties and
Seller shall have the right to elect to have such Title Benefit Value determined
by a Title Consultant pursuant to and in accordance with the provisions
regarding a disputed Title Defect set forth in Section 2.5(d)(ii)(C). The Title
Benefit Value with respect to all Title Benefits shall be used solely to offset
any reductions to such Seller’s Unadjusted Purchase Price as a result of the
aggregate of all Title Defect Values. For the avoidance of doubt, Title Benefit
Value shall in no event increase a Seller’s Unadjusted Purchase Price.

 

(ii)                                  If Buyer Parties discover any Title
Benefit on or before the Title Claim Date, Buyer Parties shall, as soon as
practicable but in any case on or prior to the Title Claim Date, deliver to such
applicable Seller a notice meeting the requirements of Section 2.5(e)(i).

 

(f)                                   In the event a Party notifies the other
Parties of the intention to terminate this Agreement in accordance with
Section 9.1(e), Sellers or Buyer Parties may, prior to giving effect to
Section 9.1(e), as applicable, elect to submit all disputed Title Defects and
Title Defect Values to the Title Consultant in accordance with the procedures
set forth in Section 2.5(d)(ii)(C); provided, that notwithstanding anything to
the contrary in Section 2.5(d)(ii)(C), such proceeding shall be solely to
determine whether the aggregate adjustments pursuant to Section 2.2(b)(iii) in
respect of any disputed Title Defects and Title Defect Values asserted by Buyer
Parties in good faith would, when taken together with all other adjustments
pursuant to Section 2.2(b)(iii) for finally determined Title Defect Values and
all other adjustments pursuant to Section 2.2(b)(iii), trigger the termination
right under Section 9.1(e). For the avoidance of doubt, if a Seller or Buyer
Parties elect to submit to the Title Consultant in accordance with this
Section 2.5(f), such Party may not terminate this Agreement pursuant to
Section 9.1(e) until final resolution of such arbitration unless the termination
right under Section 9.1(e) would otherwise apply solely by virtue of any
undisputed Title Defect Values, together with the exclusion of any Company Oil
and Gas Property pursuant to Section 2.5(b) or Section 2.5(d).

 

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(g)                                  Acceptance of Title Condition. EXCEPT AS
OTHERWISE SET FORTH IN THIS AGREEMENT, BUYER PARTIES REPRESENT AND WARRANT THAT
THEY HAVE BEEN PROVIDED THE OPPORTUNITY TO CONFIRM THE ACQUIRED ENTITY’S AND
EACH ASSET SELLER’S DEFENSIBLE TITLE TO THE APPLICABLE COMPANY OIL AND GAS
PROPERTIES AND UPON CLOSING, BUYER WILL ACCEPT THE COMPANY OIL AND GAS
PROPERTIES AT CLOSING IN THE PRESENT CONDITION, “AS IS AND WHERE IS AND WITH ALL
FAULTS.” BUYER PARTIES ACKNOWLEDGE AND AGREE THAT, EXCEPT AS OTHERWISE SET FORTH
IN THIS AGREEMENT, SELLERS HAVE MADE NO REPRESENTATIONS OR WARRANTIES OF ANY
KIND, EXPRESS OR IMPLIED, WRITTEN, ORAL OR OTHERWISE, AS TO THE ACCURACY OR
COMPLETENESS OF THE BACKGROUND MATERIALS OR ANY OTHER INFORMATION RELATING TO
THE ACQUIRED ASSETS, THE ACQUIRED ENTITY OR THE ACQUIRED ENTITY ASSETS FURNISHED
BY OR ON BEHALF OF ANY SELLER OR TO BE FURNISHED TO BUYER PARTIES OR THEIR
REPRESENTATIVES, INCLUDING SELLERS’ INTERNAL APPRAISALS AND INTERPRETIVE DATA.

 

2.6                               Closing Payment and Transfer.

 

(a)                                 At Closing, Buyer Parties shall deliver or
cause to be delivered to the Sellers such Opco Common Units and Class B Units
equal to the Unadjusted Purchase Price (as adjusted for the adjustments set
forth in Section 2.2(b)(iii) and in accordance with Sections 2.1(a) and 2.1(b))
minus the Indemnity Escrow Units, which Indemnity Escrow Units shall be
delivered and held pursuant to Section 2.8(a) and the Escrow Agreement. In
addition, Buyer Parties or the applicable Seller (as applicable) shall pay to
the other applicable Party, in cash by wire transfer of immediately available
funds to the account designated by such applicable Party, the net amount of the
adjustments set forth in Section 2.2(a) and Section 2.2(b) (other than the
amount set forth in Section 2.2(b)(iii)).

 

(b)                                 At the Closing, each Asset Seller shall
deliver to Buyer Parties:

 

(i)                                     Assignments evidencing the transfer,
assignment and conveyance of each Asset Seller’s right, title and interest in
the Acquired Assets substantially in the form attached as Exhibit E hereto, duly
and validly executed by the applicable Asset Seller (the “Asset Assignments”);

 

(ii)                                  Executed and acknowledged recordable
releases or releases in a form reasonably acceptable to Buyer Parties, in
sufficient counterparts for recording in all applicable jurisdictions, of Liens,
in each case, securing Seller Indebtedness, if any, and affecting the Acquired
Assets; and

 

(iii)                               Such Asset Seller’s Class B Contribution
Amount.

 

(c)                                  At the Closing, the Equity Seller shall
deliver to Buyer Parties:

 

(i)                                     An assignment transferring the Acquired
Equity Interests, substantially in the form attached hereto as Exhibit F, duly
and validly executed by the Equity Seller (the “Equity Assignment”);

 

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(ii)                                  A mutual release of any and all claims
between the Acquired Entity, on the one hand, and Equity Seller (on its behalf
and on behalf of its Affiliates other than the Acquired Entity) and each officer
and director thereof, on the other hand;

 

(iii)                               Executed and acknowledged recordable
releases or releases in a form reasonably acceptable to Buyer Parties, in
sufficient counterparts for recording in all applicable jurisdictions, of Liens,
in each case, securing Seller Indebtedness, if any, and affecting the Acquired
Entity Assets;

 

(iv)                              Written resignations of the directors and
officers of the Acquired Entity that are identified on Schedule 2.6(b),
effective prior to or concurrently with the Closing; and

 

(v)                                 The Equity Seller’s Class B Contribution
Amount.

 

(d)                                 At the Closing, each Seller shall deliver to
Buyer Parties:

 

(i)                                     A certificate meeting the requirements
of U.S. Treasury Regulation Section 1.1445-2(b)(2) providing that Seller is not
a “foreign person” within the meaning of Section 1445 of the Code, in the form
and substance reasonably satisfactory to Buyer Parties, dated as of the Closing
Date and duly executed by Sellers;

 

(ii)                                  A certificate dated as of the Closing Date
duly executed by an officer of each Seller regarding the satisfaction of the
conditions set forth in Sections 8.1(a), 8.1(b), and 8.1(f) substantially in the
form attached hereto as Exhibit G;

 

(iii)                               The Registration Rights Agreement
substantially in the form attached hereto as Exhibit I (the “Registration Rights
Agreement”) duly executed by an officer of each Seller party thereto;

 

(iv)                              The Escrow Agreement duly executed by an
officer of each Seller party thereto; and

 

(v)                                 Such other documents, instruments and
writings as may be reasonably required to be delivered by Sellers to Buyer
Parties at Closing to effect the transactions contemplated by this Agreement.

 

(e)                                  At the Closing, Buyer Parties shall deliver
to Sellers:

 

(i)                                     A certificate dated as of the Closing
Date duly executed by an officer of each Buyer Party regarding the satisfaction
of the conditions set forth in Sections 8.2(a), 8.2(b) and 8.2(e), substantially
in the form attached hereto as Exhibit H;

 

(ii)                                  The Registration Rights Agreement duly
executed by an officer of Buyer;

 

(iii)                               The Escrow Agreement duly executed by an
officer of each Buyer Party; and

 

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(iv)                              Such other documents, instruments and writings
as may be reasonably required to be delivered by Buyer Parties to Sellers at
Closing to effect the transactions contemplated by this Agreement.

 

2.7                               Closing.

 

Subject to Section 9.1, the closing of the sale and transfer of the  Acquired
Assets and the Acquired Equity Interests to Buyer Parties as contemplated by
this Agreement (the “Closing”) shall take place at the offices of Baker Botts
L.L.P., 910 Louisiana St., Houston, Texas 77002, on the date that is the later
of (a) thirty (30) days from the Execution Date and (b) the third (3rd) Business
Day following the satisfaction or waiver of all conditions to the obligations of
the Parties set forth in Section 8.1 and Section 8.2 (excluding conditions that,
by their terms, cannot be satisfied until the Closing, but subject to
satisfaction at the Closing), or such other date as Buyer Parties and Sellers
may mutually determine (the date on which the Closing occurs is referred to
herein as the “Closing Date”).

 

2.8                         Escrow.

 

(a)                                 At Closing, Buyer Parties will deposit into
the General Escrow Account the Indemnity Escrow Units pursuant to the Escrow
Agreement. The Indemnity Escrow Units to be deposited into the General Escrow
Account will be issued in the names of the applicable Sellers, whether in
book-entry or certificated form.

 

(b)                                 At Closing, Buyer Parties will deposit into
the General Escrow Account any Title Defect Value related to Curable Properties
and disputed Title Defects or disputed Title Defect Values, pursuant to the
Escrow Agreement. No later than five (5) Business Days following the resolution
(including by resolution of the applicable Parties) of the cure of any Title
Defects affecting the Curable Properties pursuant to Section 2.5(d)(i)(B), Buyer
Parties and such applicable Seller shall within three (3) Business Days of such
resolution execute a Joint Instruction Letter instructing the Escrow Agent to
release from the General Escrow Account to such Seller, the Title Defect Value
with respect to such Curable Properties to the extent such Title Defect is cured
during the Cure Period. No later than five (5) Business Days following the
resolution (including by resolution of the applicable Parties) of any disputed
Title Defect or Title Defect Value pursuant to Section 2.5(d)(ii)(C), as
applicable, Buyer Parties and such applicable Seller shall within three
(3) Business Days of such resolution execute a Joint Instruction Letter
instructing the Escrow Agent to release from the General Escrow Account the
amounts so determined to be owed to either Party with respect to such disputed
matter. Only upon final resolution of all matters for which funds were deposited
into the General Escrow Account as a result of Title Defects, and the release to
such applicable Seller of all such amounts due to such Seller from the General
Escrow Account, then, such Seller and Buyer Parties shall execute a Joint
Instruction Letter instructing the Escrow Agent to release from the General
Escrow Account the then-remaining Title Defect Value(s), including any
attributable to a Curable Property which was not cured on or prior to the end of
the Cure Period, if any, to Buyer Parties.

 

(c)                                  Releases of any portion of the General
Escrow Balance shall be made only in accordance with (i) written instructions
that are jointly signed by the applicable Seller and Buyer Parties, which
instructions shall be in a form that complies with the requirements of the
Escrow

 

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Agreement (a “Joint Instruction Letter”), (ii) requirements in the Escrow
Agreement relating to a Final Determination (as defined in the Escrow
Agreement), and, in each case, Article 10, and shall specify the amount of the
General Escrow Balance to be released from the General Escrow Account and the
Person or Persons to whom such General Escrow Balance shall be released.

 

(d)                                 In the event of a conflict between the
Escrow Agreement and this Agreement, this Agreement shall govern. If any Party
receives a release of any General Escrow Balance pursuant to the Escrow
Agreement to which it is not entitled pursuant to the terms of this Agreement,
such Party shall (i) if another Party is entitled to such General Escrow Balance
at that time, transfer such General Escrow Balance to such other Party, or
(ii) if no other Party is entitled to such General Escrow Balance at that time,
deposit such General Escrow Balance with the Escrow Agent to be held and
released pursuant to the Escrow Agreement.

 

2.9                               Post-Closing Adjustment.

 

(a)                                 Revised Closing Statement. On or before the
date that is ninety (90) days after the Closing Date, Buyer Parties shall
prepare and deliver to Sellers a revised Closing Statement setting forth its
assessment of (i) the final amounts described in Sections 2.2(a) and 2.2(b), in
each case as of or on the Closing Date, as applicable, (ii) the amount of all
Asset Taxes allocable to Buyer Parties pursuant to Section 7.9(a) but paid or
economically borne by a Seller (if any), (iii) the amount of all Asset Taxes
allocable to a Seller pursuant to Section 7.9(a) but paid or economically borne
by Buyer Parties (if any) and (iv) all Buyer Entitlements, Buyer Obligations,
Seller Entitlements and Seller Obligations then known to Buyer Parties. Buyer
Parties shall provide to Sellers such data and information as Sellers may
reasonably request supporting the amounts reflected on the revised Closing
Statement (and reasonable access to Buyer Parties’ personnel, including internal
accountants, during normal business hours) to permit each Seller to perform or
cause to be performed an audit of the revised Closing Statement, at such
Seller’s expense. The revised Closing Statement shall become final and binding
upon the Parties on the date (the “Final Settlement Date”) that is thirty (30)
days following receipt thereof by Sellers unless a Seller gives Notice of its
disagreement (“Notice of Disagreement”) with respect to such Seller’s Adjusted
Purchase Price, to Buyer Parties prior to the Final Settlement Date, it being
understood that the Notice of Disagreement shall not include matters
contemplated by Section 2.5.  For the avoidance of doubt, the Closing Statement
shall become final and binding upon any Seller that does not give a Notice of
Disagreement even if another Seller gives a Notice of Disagreement.  Any Notice
of Disagreement shall specify in reasonable detail the Dollar amount, nature,
and basis of any disagreement so asserted. If a Notice of Disagreement is
received by Buyer Parties by the Final Settlement Date, then the Closing
Statement (as revised in accordance with Section 2.9(b) below) shall become
final and binding on the Buyer Parties and the applicable Seller on, and the
Final Settlement Date shall be, the earlier of (i) the date upon which such
Seller and Buyer Parties agree in writing with respect to all matters specified
in the Notice of Disagreement and (ii) the date upon which the Independent
Accountant’s Closing Statement (as hereinafter defined) is issued by the
Independent Accountant (as hereinafter defined).

 

(b)                                 Final Closing Statement. During the thirty
(30) days following the date upon which Buyer Parties receive a Notice of
Disagreement, the applicable Seller and Buyer Parties shall use commercially
reasonable efforts to attempt to resolve in writing any differences that they
may have with respect to all matters specified in the Notice of Disagreement. If
at the end of such

 

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thirty (30) day period (or earlier by mutual agreement), Buyer Parties and such
Seller have not reached agreement on such matters, the matters that remain in
dispute (and only such matters) shall promptly be submitted to BDO USA, LLP (the
“Independent Accountant”) for review and final and binding resolution. If BDO
USA, LLP is unable or unwilling to serve as an arbitrator hereunder, then such
Seller and Buyer Parties shall, in good faith, mutually agree upon an
independent national accounting firm who has not represented either Party in any
material matter at any time during the two-year period of time immediately
preceding its designation hereunder, to serve as the Independent Accountant.
Buyer Parties and such Seller shall, not later than seven (7) days prior to the
hearing date set by the Independent Accountant, each submit a written brief to
the Independent Accountant (and a copy thereof to the other Party on the same
day) with proposed Dollar figures for settlement of the disputes as to the
amount of the Purchase Price Adjustment (together with a proposed Closing
Statement that reflects such figures) consistent with their respective
calculations delivered pursuant to Section 2.9(a). The hearing shall be
conducted on a confidential basis. The Independent Accountant shall consider
only those items or amounts in the Closing Statement which were identified in
the Notice of Disagreement and such written briefs and which remain in dispute
and the Independent Accountant’s decision resolving the matters in dispute shall
be based upon and be consistent with the terms and conditions in this Agreement.
In deciding any matter, the Independent Accountant (i) shall be bound by the
provisions of this Section 2.9 and the related definitions and (ii) may not
assign a value to any disputed item greater than the greatest value for such
item claimed by either such Seller or Buyer Parties or less than the smallest
value for such item claimed by such Seller or Buyer Parties in their respective
calculations delivered pursuant to Section 2.9(a). The Independent Accountant
shall render a decision resolving the matters in dispute (which decision shall
include a written statement of findings and conclusions) promptly after the
conclusion of the hearing, unless the Parties reach agreement prior thereto and
withdraw the dispute from arbitration. The Independent Accountant shall provide
to the Parties explanations in writing of the reasons for its decisions
regarding the Purchase Price Adjustment and shall issue the Final Closing
Statement (as defined below) reflecting such decision, which shall set forth the
Purchase Price Adjustment and the Adjusted Purchase Price as determined by the
Independent Accountant pursuant to this Section 2.9. The decision of the
Independent Accountant shall be (i) final and binding on the Parties and
(ii) final and non-appealable for all purposes hereunder; provided, however,
that such decision may be reviewed, corrected or set aside by a court of
competent jurisdiction, but only if and to the extent that the Independent
Accountant is found by such court of competent jurisdiction to have made
mathematical errors with respect to its decision or to have manifestly violated
the express terms of this Section 2.9 (including the related defined terms set
forth in Section 1.1). The cost of any arbitration (including the fees and
expenses of the Independent Accountant) under this Section 2.9(b) shall be borne
entirely by the Party awarded the smaller percentage of the disputed amount by
the Independent Accountant. The fees and disbursements of Buyer Parties’
independent auditors and other costs and expenses incurred in connection with
the services performed with respect to the Closing Statement shall be borne by
Buyer Parties and the fees and disbursements of such Seller’s independent
auditors and other costs and expenses incurred in connection with their
preparation of the Notice of Disagreement shall be borne by such Seller. As used
in this Agreement, the term “Final Closing Statement” shall mean the revised
Closing Statement described in Section 2.9(a), as prepared by Buyer Parties and
as may be subsequently adjusted to reflect any subsequent written agreement
between the Parties with respect thereto, or if submitted

 

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to the Independent Accountant, the Independent Accountant’s Closing Statement
(“Independent Accountant’s Closing Statement”) as described in this
Section 2.9(b).

 

(c)                                  Final Settlement. If a Seller’s Adjusted
Purchase Price set forth on the Closing Statement delivered pursuant to
Section 2.4 exceeds such Seller’s Adjusted Purchase Price set forth on the Final
Closing Statement or the Independent Accountant’s Closing Statement, as
applicable, then such Seller shall pay Buyer Parties such excess amount in cash,
together with interest thereon, from the Closing Date to (but not including) the
date on which such payment is paid, at the rate of three percent per annum
calculated and payable in accordance with Section 2.9(d). If a Seller’s Adjusted
Purchase Price set forth on the Final Closing Statement or the Independent
Accountant’s Closing Statement, as applicable, exceeds such Seller’s Adjusted
Purchase Price set forth on the Closing Statement delivered pursuant to
Section 2.4, then Buyer Parties shall pay such Seller such excess amount in
cash, together with interest thereon, from the Closing Date to (but not
including) the date on which such payment is paid, at the rate of three percent
per annum calculated and payable in accordance with Section 2.9(d).  Any
adjustments to the Adjusted Purchase Price made pursuant to this
Section 2.9(c) shall be paid by wire transfer of immediately available funds to
an account specified by the Party to whom such payment is owed within five
(5) Business Days after the Final Settlement Date.

 

(d)                                 Interest. All computations of interest with
respect to any payment due to a Person under this Agreement shall be based on
the applicable interest rate on the basis of a year of 365 days, in each case
for the actual number of days (including the first day, but excluding the last
day) occurring in the period for which such interest is payable. Whenever any
payment under this Agreement will be due on a day other than a Business Day,
such payment shall be made on the next succeeding Business Day, and such
extension of time shall be included in the computation of payment of interest.

 

2.10                        Purchase Price Allocation; Tax Treatment.

 

(a)                                 Each Seller shall prepare and deliver to
Buyer Parties, within sixty (60) days after the Final Settlement Date, an
allocation of the Unadjusted Purchase Price of such Seller, the assumed
obligations and any other items that are treated as consideration of such Seller
for U.S. federal Income Tax purposes among the Acquired Assets or Acquired
Entity Assets of such Seller, as applicable, in accordance with Section 1060 of
the Code and the Treasury Regulations promulgated thereunder (the “Allocation”).
Buyer Parties shall have twenty (20) days from the receipt of any Allocation or
any update thereto to review and comment on the Allocation. If Buyer Parties
dispute any items in any proposed Allocation, the applicable Seller and Buyer
Parties shall use commercially reasonable efforts to agree on such Allocation
within twenty (20) days after receipt of any written changes proposed by Buyer
Parties. If such Seller and Buyer Parties are unable to agree upon such
Allocation within such twenty-day period, then any disputed items in such
Allocation shall be resolved under the procedures described in Section 2.9(b).
Once Buyer and any Seller agree to the Allocation or the Allocation is
determined by the Independent Accountant, as applicable, such Seller and Buyer
Parties shall report consistently with such Allocation (as revised to take into
account subsequent adjustments to the Unadjusted Purchase Price) in all Tax
Returns, including IRS Form 8594, which such Seller and Buyer Parties shall
timely file with the IRS, and neither such Seller nor Buyer Parties shall take
any position in any

 

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return that is inconsistent with the Allocation, as adjusted, in each case,
unless required to do so by a final determination as defined in Section 1313 of
the Code.

 

(b)                                 Except as the Parties may agree otherwise,
cooperating in good faith, for U.S. federal Income Tax purposes (and for
purposes of state and local Income Taxes which incorporate the federal Income
Tax provisions referenced in this Section 2.10(b)), each Seller and Buyer
Parties agree that (A) each Asset Seller shall be treated as transferring the
Acquired Assets of such Asset Seller and any Purchase Price Adjustment due from
such Asset Seller to Opco in exchange for Opco Common Units and any Purchase
Price Adjustment due to such Asset Seller and (B) the Equity Seller shall be
treated as transferring the Acquired Entity Assets and any Purchase Price
Adjustment due from the Equity Seller to Opco in exchange for  Opco Common Units
and any Purchase Price Adjustment due to the Equity Seller, which, in each case,
shall be treated (a) as a contribution described in Section 721 of the Code,
with respect to the Opco Common Units and any other consideration that the Buyer
Parties and Sellers mutually determine in good faith qualifies for exceptions to
the “disguised sale” rules under Section 707 of the Code and its implementing
regulations (the “Contribution”) and (b) otherwise, as a taxable sale under
Section 707(a) of the Code and its implementing Treasury Regulations. Except as
the Parties may agree otherwise, cooperating in good faith, for U.S. federal
Income Tax purposes (and for purposes of state and local Income Taxes which
incorporate the federal Income Tax provisions referenced in this
Section 2.10(b)), each Seller and Buyer Parties agree that each Seller shall be
treated as transferring the Class B Contribution Amount of such Seller to Buyer
in exchange for Class B Units.  Except as otherwise required by applicable Law,
each of Sellers and Buyer Parties shall, and shall cause each of their
Affiliates to (y) report, act, and file all Tax Returns in all respects and for
all purposes consistent with the foregoing treatment, and (z) not take any
position for Tax purposes (whether in audits, Tax Returns or otherwise) that is
inconsistent with the foregoing treatment, unless required to do so by a final
determination as defined in Section 1313 of the Code.

 

(c)                                  Differences between the fair market value
and the basis of the Acquired Assets allocable to the Contributions shall be
taken into account by Opco in the manner required by Section 704(c) of the Code.
The method to be used under Treas. Reg. 1.704-3 shall be determined by Buyer
Parties. All other determinations regarding the application of Section 704(c),
the determination and maintenance of capital accounts and other tax matters
relating to the Contribution and the assets allocable thereto shall be made in
the discretion of the Buyer Parties in a manner consistent with the Opco
Agreement.

 

2.11                        Payments.

 

(a)                                 Buyer Parties shall be entitled to all
revenues, income, proceeds, receipts and credits attributable to production from
the Acquired Assets and Acquired Entity Assets from and after the Effective Time
(collectively, the “Buyer Entitlements”), and shall be responsible for (and
entitled to any refunds with respect to) all audit, legal, banking, reserves,
payroll, land system, general and administrative and other expenses incurred by
the Acquired Entity or attributable to the Acquired Asset and Acquired Entity
Assets from and after the Effective Time (the “Buyer Obligations”). For a period
of twelve (12) months from and after Closing, each Seller shall be entitled to
all revenues, income, proceeds, receipts and credits attributable to production
from its Acquired Assets or the Acquired Entity Assets, as applicable, prior to
the Effective Time (collectively, the “Seller Entitlements”), and shall be
responsible for (and entitled to any refunds

 

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with respect to) all audit, legal, banking, reserves, payroll, land system,
general and administrative and other expenses incurred by the Acquired Entity or
attributable to its Acquired Assets and Acquired Entity Assets, as applicable,
prior to the Effective Time (the “Seller Obligations”).

 

(b)                                 Without duplication of any item that is
accounted for in Sections 2.2, 2.3, 2.5 or 2.9, if: (i) a Seller or any of its
Affiliates receives any payment with respect to the Buyer Entitlements, such
Seller shall, or shall cause its applicable Affiliates to, promptly remit such
payment to Buyer Parties or their designated Affiliate; and (ii) a Seller
receives any invoices, bills or other requests for payment from any Third Party
in respect of the Buyer Obligations, such Seller shall send such requests for
payment to Buyer Parties and Buyer Parties shall promptly remit, or cause the
Acquired Entity to promptly remit, payment for such request to such Third Party.

 

(c)                                  For a period of twelve (12) months from and
after Closing, and without duplication of any item that is accounted for in
Sections 2.2, 2.3, 2.5 or 2.9, if: (i) Buyer Parties or any of their Affiliates
(including the Acquired Entity) receive any payment with respect to the Seller
Entitlements, Buyer Parties shall, or shall cause its applicable Affiliates to,
promptly remit such payment to the applicable Seller or its designated
Affiliate; and (ii) Buyer Parties receive any invoices, bills or other requests
for payment from any Third Party in respect of the Seller Obligations, Buyer
Parties shall send such requests for payment to the applicable Seller and such
Seller shall promptly remit, or cause its Affiliates to promptly remit, payment
for such request to such Third Party.

 

ARTICLE 3
Representations and Warranties Relating to Asset Sellers

 

Each Asset Seller, severally and not jointly, hereby represents and warrants to
Buyer Parties the following:

 

3.1                               Organization.

 

Such Asset Seller is a non-profit corporation, limited liability company or
limited partnership, as applicable, duly organized, validly existing and in good
standing under the Laws of the jurisdiction of its organization or formation and
has the requisite organizational power and authority to own the Acquired Assets
owned by such Asset Seller, as applicable, and to conduct its business as it is
now being conducted. Such Asset Seller is duly licensed or qualified in each
jurisdiction in which the ownership of the Acquired Assets owned by such Asset
Seller or the character of its activities is such as to require it to be so
licensed or qualified, except where the failure to be so licensed or qualified
would not, individually or in the aggregate, reasonably be expected to have a
Seller Material Adverse Effect. Such Asset Seller has made available to Buyer
Parties complete and correct copies of all of its Organizational Documents,
including any amendments thereto, and such Organizational Documents are in full
force and effect.

 

3.2                               Authorization; Enforceability.

 

Such Asset Seller has full capacity, power and authority to execute and deliver
this Agreement and the other Transaction Documents to which such Asset Seller is
a party, to perform its obligations hereunder and thereunder and to consummate
the transactions contemplated hereby and thereby. The execution, delivery and
performance of this Agreement and the other Transaction

 

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Documents to which such Asset Seller is a party, the performance of the
transactions contemplated hereby and thereby and the consummation of the
transactions contemplated hereby and thereby, have been duly and validly
authorized on the part of such Asset Seller, and no other proceeding on the part
of such Asset Seller is necessary to authorize this Agreement and the other
Transaction Documents to which Seller is a party or the performance of the
transactions contemplated hereby or thereby. This Agreement has been duly and
validly executed and delivered by such Asset Seller, and this Agreement
constitutes a valid and binding obligation of such Asset Seller, enforceable
against such Asset Seller in accordance with its terms, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
similar Laws affecting creditors’ rights generally and subject, as to
enforceability, to general principles of equity. Each other Transaction Document
to which such Asset Seller is a party has been or shall be duly and validly
executed and delivered by such Asset Seller, and each such other Transaction
Document constitutes or shall constitute a valid and binding obligation of such
Asset Seller, enforceable against such Asset Seller in accordance with its
terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar Laws affecting creditors’ rights
generally and subject, as to enforceability, to general principles of equity.

 

3.3                               No Conflict; Consents.

 

Except (i) as set forth in Schedule 3.3 or (ii) with respect to clauses (a),
(c), (d) and (e) below, as would not, individually or in the aggregate,
reasonably be expected to have a Seller Material Adverse Effect, the execution,
delivery and performance by such Asset Seller of this Agreement and the other
Transaction Documents to which such Asset Seller is a party and the consummation
of the transactions contemplated hereby and thereby do not and shall not:

 

(a)                                 violate any Law applicable to such Asset
Seller or require any filing with, consent, waiver, approval, order or
authorization of, or declaration, filing or registration with, or notice to, any
Governmental Authority, except for the Customary Post-Closing Consents;

 

(b)                                 conflict with or violate any Organizational
Document of such Asset Seller;

 

(c)                                  require any filing with, or the giving of
any notice to, any Person;

 

(d)                                 require any consent or approval of any
Person; or

 

(e)                                  conflict with or result in any violation
of, cause a breach of any provision of, or constitute a default (with or without
the giving of notice, the passage of time or both) under, or give rise (with or
without the giving of notice or the passage of time or both) to the termination,
amendment, cancellation or acceleration of any obligation (or the right of any
Person to so terminate, amend, cancel or accelerate) or the loss of a benefit or
in increased, additional, accelerated or guaranteed rights or entitlements of
any Person, or create any obligation to make a payment to any other Person, or
result in the creation of a Lien (other than Permitted Encumbrances) on any
Acquired Asset of such Asset Seller, in each case under the terms, conditions or
provisions of any Contract or Lease to which such Asset Seller is a party or by
which such Asset Seller or the Acquired Assets of such Asset Seller may be
bound.

 

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3.4                               Litigation.

 

Except as set forth in Schedule 3.4, as of the Execution Date, there are no
Proceedings pending or, to the Knowledge of such Asset Seller, threatened, in
which such Asset Seller is or may be a party affecting the execution and
delivery by such Asset Seller of this Agreement or the other Transaction
Documents to which such Asset Seller is a party or the consummation of the
transactions contemplated hereby or thereby. Except as set forth in Schedule
3.4, as of the Execution Date, no Acquired Asset (a) is subject to any
outstanding Order, (b) is the subject of a Proceeding or (c) to the Knowledge of
such Asset Seller, has been threatened in writing with any Proceeding.

 

3.5                               Financial Statements.

 

(a)                                 Schedule 3.5(a) sets forth true and complete
copies of the statements of revenues and direct operating expenses pertaining to
the Acquired Assets of such Asset Seller, including all notes and schedules
thereto, for the periods described therein (the “Asset Statements”). Except as
set forth on Schedule 3.5(a), such Asset Statements have been prepared from the
books and records of such Asset Seller in accordance with GAAP applied on a
consistent basis throughout the periods covered thereby (except as otherwise
stated in the footnotes or the audit opinions related thereto, to the extent
applicable to the relevant Asset Statement) and present fairly in accordance
with GAAP, in all material respects, the revenues and direct operating expenses
pertaining to such Acquired Assets for the periods described therein.

 

(b)                                 Since December 31, 2017, such Asset Seller
has not effected any change in any method of accounting or accounting practice,
except for any such change required because of a concurrent change in GAAP.

 

3.6                               Taxes.

 

(a)                                 (i) All material Tax Returns required to be
filed by such Asset Seller with respect to the Acquired Assets of such Asset
Seller prior to the Execution Date have been timely filed, and all such Tax
Returns are true, correct and complete in all material respects, (ii) all
material Taxes owed by such Asset Seller with respect to the Acquired Assets of
such Asset Seller prior to the Execution Date, whether or not shown or reported
on any Tax Return, have been timely paid, (iii) there are no Liens (other than
Permitted Encumbrances) on any of the Acquired Assets of such Asset Seller that
arose in connection with any failure by such Asset Seller to pay any Tax and
(iv) there is no material claim pending or threatened in writing by any
Governmental Authority in connection with any Tax or any Tax Return described in
clause (i) or (ii).

 

(b)                                 There is no audit, administrative, judicial
or other proceeding by any Governmental Authority with respect to Taxes with
respect to the Acquired Assets of such Asset Seller that has been commenced or
is presently pending.

 

(c)                                  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 Taxes with respect to the Acquired Assets of
such Asset Seller.

 

(d)                                 No claim has ever been made against such
Asset Seller by a taxing authority in a jurisdiction where such Asset Seller
does not file Tax Returns with respect to any Acquired

 

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Assets of such Asset Seller that such Asset Seller or such Acquired Assets are
or may be subject to Taxes assessed by such jurisdiction.

 

(e)                                  No private letter ruling, technical advice
memorandum, closing agreement or similar ruling, memorandum or agreement by or
with any Governmental Authority is binding on or has been requested with respect
to the Acquired Assets of such Asset Seller.

 

(f)                                   None of the Acquired Assets of such Asset
Seller is subject to any tax partnership agreement or other 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.

 

(g)                                  Such Asset Seller either (A) is not and
will not become, for U.S. federal income tax purposes, a partnership, Subchapter
S corporation, grantor trust, or any entity that is disregarded as separate from
any of the foregoing (each such entity, a “Flow-Through Entity”) or (B) if such
Asset Seller is or becomes a Flow-Through Entity, then it is not and will not be
a principal purpose of the arrangement involving the Flow-Through Entity’s
beneficial interest in any partnership interest in Opco to permit any entity to
satisfy the 100-partner limitation of Treasury Regulation section
1.7704-1(h)(1)(ii).

 

3.7                               Contracts.

 

(a)                                 As of the Execution Date, Schedule
3.7(a) includes a list of each Asset Seller Material Contract. “Asset Seller
Material Contract” means any of the following Contracts to which such Asset
Seller is a party by which it is bound in connection with the Acquired Assets or
by which any of its respective Acquired Assets are bound or subject:

 

(i)                                     Contracts involving obligations of, or
payments to or from, such Asset Seller after the Execution Date, individually or
in the aggregate, in excess of one hundred thousand Dollars ($100,000);

 

(ii)                                  Contracts restricting, in any material
respect, such Asset Seller from freely engaging in any business or competing
anywhere;

 

(iii)                               Contracts evidencing Indebtedness for
Borrowed Money;

 

(iv)                              Contracts guaranteeing any obligation of
another Person;

 

(v)                                 Contracts containing “tag-along” or similar
rights allowing a Third Party to participate in future sales of any of the
Acquired Assets of such Asset Seller;

 

(vi)                              Contracts for any Hedging Transactions that
will remain outstanding after Closing;

 

(vii)                           Any agreement of indemnification, surety or
guarantee by such Asset Seller on behalf of another Person or the assumption of
any Tax, environmental or other liability of any Person; and

 

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(viii)                        Contracts to sell, exchange or otherwise dispose
of all or any part of the Acquired Assets on or after the Effective Time.

 

(b)                                 Each Asset Seller Material Contract
constitutes the legal, valid and binding obligation of such Asset Seller, on the
one hand, and, to the Knowledge of such Asset Seller, the counterparties
thereto, on the other hand, and is enforceable in accordance with its terms,
subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar Laws affecting creditors’ rights
generally and subject, as to enforceability, to general principles of equity.
Such Asset Seller is not in material breach or default of its obligations under
any of the Asset Seller Material Contracts. To the Knowledge of such Asset
Seller, (i) no material breach or material default by any Third Party exists
under any Asset Seller Material Contract and (ii) no counterparty to any Asset
Seller Material Contract has canceled, terminated or modified, or threatened in
writing to cancel, terminate or modify, any Asset Seller Material Contract.
Prior to the execution of this Agreement, true, correct and complete copies of
all Asset Seller Material Contracts and all amendments thereto have been made
available to Buyer Parties.

 

3.8                               Environmental Matters.

 

(a)                                 To such Asset Seller’s Knowledge, the
operations of such Asset Seller in respect of its respective Acquired Assets are
in material compliance with applicable Environmental Laws, which compliance
includes the possession and maintenance of, and compliance with, all material
permits required under all Environmental Laws, and have been for the preceding
five (5) years or shorter period of ownership, as applicable.

 

(b)                                 To such Asset Seller’s Knowledge, there are
no environmental conditions that would reasonably be expected to form the basis
for the assertion of any material claim, material investigative, remedial or
corrective obligations or other material liabilities against any of its
respective Acquired Assets or related to such Asset Seller’s ownership of its
respective Acquired Assets under any Environmental Law, including OPA90, CERCLA
or any similar applicable Law with respect to any on-site or off-site location.

 

(c)                                  Neither such Asset Seller nor its
respective Acquired Assets have received any written notice from a Governmental
Authority or Third Party that remains unresolved alleging a material violation
of or material non-compliance with any Environmental Law or any material permit
issued pursuant to Environmental Law.

 

(d)                                 Neither such Asset Seller nor its respective
Acquired Assets are subject to any pending, or to the Knowledge of such Asset
Seller, threatened in writing Proceeding under or related to any Environmental
Law (including any such Proceeding related to designation as a potentially
responsible party under CERCLA or any similar local or state law).

 

(e)                                  All material permits, permit exemptions,
licenses or similar authorizations, if any, required to be obtained or filed by
such Asset Seller or its respective Acquired Assets, as applicable, under any
Environmental Law in connection with its current assets, operations and business
have been duly obtained or filed, to such Asset Seller’s Knowledge are valid and
currently in effect, and to such Asset Seller’s Knowledge, such Asset Seller and
its respective Acquired Assets are in material compliance with such
authorizations.

 

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(f)                                   To such Asset Seller’s Knowledge, there
has been no release of any Constituents of Concern into the Environment in, on
or under any of its respective Acquired Assets, that with notice or the passage
of time or both, would reasonably be expected to result in a material liability
pursuant to Environmental Law.

 

3.9                               Compliance with Laws.

 

To such Asset Seller’s Knowledge, such Asset Seller is, and has been for the
period of such Asset Seller’s applicable ownership of its respective Acquired
Assets, in compliance in all material respects with all applicable Laws. Such
Asset Seller has not received a written notice of a material violation of any
Law that is applicable to its respective Acquired Assets and that has not been
(or will be prior to Closing) corrected or settled. Notwithstanding any
provision in this Section 3.9 (or any other provision of this Agreement) to the
contrary, Section 3.6 and Section 3.8 shall be such Asset Seller’s exclusive
representations and warranties with respect to Taxes and environmental matters,
respectively, as well as to related matters, and such Asset Seller makes no
other representations or warranties with respect to such matters, including
under this Section 3.9.

 

3.10                        Special Warranty.

 

Except for Permitted Encumbrances, such Asset Seller represents and warrants
that such Asset Seller owns Defensible Title to its respective Acquired Assets
solely against any Person lawfully claiming or to claim the same or any part
thereof, by, through or under such Asset Seller or any of its respective
Affiliates, but not otherwise (the representation set forth in this
Section 3.10, together with the representation set forth in Section 5.11, the
“Special Warranty of Title”); provided that in no event shall the Special
Warranty of Title extend to any matter reported by Buyer Parties under
Section 2.5(d).

 

3.11                        Consents and Preferential Rights.

 

Except for Customary Post-Closing Consents or as set forth on Schedule 3.11,
(a) there are no Consents that are required to be obtained, made or complied
with in connection with the sale of the Acquired Assets by the applicable Asset
Seller and (b) there are no Preferential Rights applicable to the sale of the
Acquired Assets by the applicable Asset Seller.

 

3.12                        No Cost-Bearing Interests.

 

The Acquired Assets of such Asset Seller do not include any unleased mineral
interest where such Asset Seller has agreed to, or Buyer Parties will have to,
bear a share of drilling, operating or other costs as a participating mineral
owner from and after the Effective Time, other than instances where the Acquired
Assets of such Asset Seller have been forcepooled under applicable Law and such
Asset Seller’s share of drilling, operating or other costs as a participating
mineral owner in such pooled unit are set off against such Asset Seller’s share
of the proceeds of production attributable to such pooled unit.

 

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3.13                        Bankruptcy.

 

There are no bankruptcy, reorganization, receivership or arrangement proceedings
pending, being contemplated by or, to such Asset Seller’s Knowledge, threatened
against such Asset Seller.

 

3.14                        Brokers’ Fees.

 

Neither such Asset Seller nor any of its Affiliates has entered into any
Contract with any Person regarding any obligation or liability, contingent or
otherwise, for any broker’s fee, finder’s fee or other commission or similar fee
in connection with the transactions contemplated by this Agreement for which
Buyer Parties will have any responsibility whatsoever.

 

3.15                        Securities Law Compliance.

 

(a)                                 Such Asset Seller is an accredited investor
as defined in Regulation D under the Securities Act. Such Asset Seller (A) is
acquiring the Opco Common Units and the Class B Units for its own account and
not with a view to distribution, (B) has sufficient knowledge and experience in
financial and business matters so as to be able to evaluate the merits and risk
of an investment in the Opco Common Units and the Class B Units and is able
financially to bear the risks thereof, and (C) understands that the Opco Common
Units and the Class B Units will, upon issuance, be characterized as “restricted
securities” under state and federal securities Laws and that under such Laws and
applicable regulations the Opco Common Units and the Class B Units may be resold
without registration under such Laws only in certain limited circumstances.

 

(b)                                 Such Asset Seller has experience in
analyzing and investing in companies similar to each Buyer Party and is capable
of evaluating the merits and risks of its decisions with respect to such matters
and has the capacity to protect its own interests.

 

(c)                                  To the extent necessary, such Asset Seller
has retained and relied upon appropriate professional advice regarding the
investment, tax and legal merits and consequences of such matters.

 

(d)                                 Such Asset Seller has had an opportunity to
discuss the Buyer Parties’ business, management and financial affairs with the
members of the Buyer Parties’ management and has had an opportunity to ask
questions of the officers and other representatives of the Buyer Parties, which
questions were answered to its satisfaction.

 

3.16                        ASSET SELLERS’ INDEPENDENT INVESTIGATION;
DISCLAIMER.

 

SUCH ASSET SELLER AND ITS REPRESENTATIVES HAVE UNDERTAKEN AN INDEPENDENT
INVESTIGATION AND VERIFICATION OF THE BUYER PARTIES, AND THE BUSINESS,
OPERATIONS AND FINANCIAL CONDITION OF THE BUYER PARTIES. SUCH ASSET SELLER IS
(OR ITS ADVISORS ARE) EXPERIENCED AND KNOWLEDGEABLE IN THE OIL AND GAS BUSINESS
AND AWARE OF THE RISKS OF THAT BUSINESS. IN ENTERING INTO THIS AGREEMENT, SUCH
ASSET SELLER HAS RELIED UPON ITS OWN INVESTIGATION AND ANALYSIS AND THE SPECIFIC
REPRESENTATIONS AND WARRANTIES OF THE BUYER PARTIES SET FORTH IN ARTICLE 6 OF
THIS AGREEMENT, AND SUCH ASSET SELLER:

 

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(a)                                 ACKNOWLEDGES AND AGREES THAT IT HAS NOT BEEN
INDUCED BY AND HAS NOT RELIED UPON ANY REPRESENTATIONS, WARRANTIES OR
STATEMENTS, WHETHER EXPRESS OR IMPLIED, MADE BY THE BUYER PARTIES OR ANY OF
THEIR RESPECTIVE DIRECTORS, OFFICERS, EQUITY HOLDERS, EMPLOYEES, AFFILIATES,
CONTROLLING PERSONS, AGENTS, ADVISORS OR REPRESENTATIVES THAT ARE NOT EXPRESSLY
SET FORTH IN ARTICLE 6 OF THIS AGREEMENT, WHETHER OR NOT ANY SUCH
REPRESENTATIONS, WARRANTIES OR STATEMENTS WERE MADE IN WRITING OR ORALLY;

 

(b)                                 ACKNOWLEDGES AND AGREES THAT, EXCEPT FOR THE
REPRESENTATIONS AND WARRANTIES OF BUYER PARTIES SET FORTH IN ARTICLE 6 OF THIS
AGREEMENT, NONE OF THE BUYER PARTIES OR ANY OF THEIR RESPECTIVE DIRECTORS,
OFFICERS, EQUITY HOLDERS, EMPLOYEES, AFFILIATES, CONTROLLING PERSONS, AGENTS,
ADVISORS OR REPRESENTATIVES MAKES OR HAS MADE, AND EACH SUCH PERSON DISCLAIMS,
ANY REPRESENTATION OR WARRANTY, EITHER EXPRESS OR IMPLIED, AS TO THE ACCURACY OR
COMPLETENESS OF ANY OF THE INFORMATION PROVIDED OR MADE AVAILABLE TO SUCH ASSET
SELLER OR ITS DIRECTORS, OFFICERS, EMPLOYEES, AFFILIATES, CONTROLLING PERSONS,
AGENTS OR REPRESENTATIVES, INCLUDING ANY INFORMATION, DOCUMENT OR MATERIAL
PROVIDED OR MADE AVAILABLE, OR STATEMENTS MADE, TO SUCH ASSET SELLER (INCLUDING
ITS DIRECTORS, OFFICERS, EMPLOYEES, AFFILIATES, CONTROLLING PERSONS, ADVISORS,
AGENTS OR REPRESENTATIVES) IN DATA ROOMS, MANAGEMENT PRESENTATIONS OR
SUPPLEMENTAL DUE DILIGENCE INFORMATION PROVIDED TO SUCH ASSET SELLER (INCLUDING
ITS DIRECTORS, OFFICERS, EMPLOYEES, AFFILIATES, CONTROLLING PERSONS, ADVISORS,
AGENTS OR REPRESENTATIVES) IN CONNECTION WITH DISCUSSIONS OR ACCESS TO
MANAGEMENT OF THE BUYER PARTIES OR ANY OF THEIR RESPECTIVE AFFILIATES OR IN ANY
OTHER FORM IN EXPECTATION OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT
(COLLECTIVELY, “BUYER PARTY DUE DILIGENCE INFORMATION”). SUCH ASSET SELLER HAS
NOT RELIED ON THE BUYER PARTY DUE DILIGENCE INFORMATION FOR PURPOSES OF ENTERING
INTO THIS AGREEMENT AND THE BUYER PARTIES AND THEIR RESPECTIVE AFFILIATES SHALL
HAVE NO RESPONSIBILITY FOR ANY FAILURE OF SUCH BUYER PARTY DUE DILIGENCE
INFORMATION TO BE TRUE OR CORRECT; AND

 

(c)                                  ACKNOWLEDGES AND AGREES THAT (i) THE BUYER
PARTY DUE DILIGENCE INFORMATION INCLUDES CERTAIN PROJECTIONS, ESTIMATES AND
OTHER FORECASTS, AND CERTAIN BUSINESS PLAN INFORMATION, (ii) THERE ARE
UNCERTAINTIES INHERENT IN ATTEMPTING TO MAKE SUCH PROJECTIONS, ESTIMATES AND
OTHER FORECASTS AND PLANS AND SUCH ASSET SELLER IS FAMILIAR WITH SUCH
UNCERTAINTIES AND (iii) SUBJECT TO THE REPRESENTATIONS AND WARRANTIES OF THE
BUYER PARTIES SET FORTH HEREIN, SUCH ASSET SELLER IS TAKING FULL RESPONSIBILITY
FOR MAKING ITS OWN EVALUATION OF THE ADEQUACY AND ACCURACY OF ALL PROJECTIONS,
ESTIMATES AND OTHER FORECASTS AND PLANS SO FURNISHED TO IT AND ANY

 

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USE OF OR RELIANCE BY SUCH ASSET SELLER ON SUCH PROJECTIONS, ESTIMATES AND OTHER
FORECASTS AND PLANS SHALL BE AT ITS SOLE RISK.

 

ARTICLE 4
Representations and Warranties Relating to Equity Seller

 

Equity Seller hereby represents and warrants to Buyer Parties the following:

 

4.1                               Organization.

 

Equity Seller is duly formed, validly existing and in good standing under the
Laws of the jurisdiction of its organization or formation and has the requisite
organizational power and authority to own, lease and otherwise hold its assets
and to conduct its business as it is now being conducted.

 

4.2                               Authorization; Enforceability.

 

Equity Seller has full capacity, power and authority to execute and deliver this
Agreement and the other Transaction Documents to which Equity Seller is a party,
to perform its obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby. The execution, delivery and
performance of this Agreement and the other Transaction Documents to which
Equity Seller is a party, the performance of the transactions contemplated
hereby and thereby and the consummation of the transactions contemplated hereby
and thereby, have been duly and validly authorized on the part of Equity Seller,
and no other proceeding on the part of Equity Seller is necessary to authorize
this Agreement and the other Transaction Documents to which Seller is a party or
the performance of the transactions contemplated hereby or thereby. This
Agreement has been duly and validly executed and delivered by Equity Seller, and
this Agreement constitutes a valid and binding obligation of Equity Seller,
enforceable against Seller in accordance with its terms, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
similar Laws affecting creditors’ rights generally and subject, as to
enforceability, to general principles of equity. Each other Transaction Document
to which Equity Seller is a party has been or shall be duly and validly executed
and delivered by Equity Seller, and each such other Transaction Document
constitutes or shall constitute a valid and binding obligation of Equity Seller,
enforceable against Equity Seller in accordance with its terms, subject to
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar Laws affecting creditors’ rights generally and subject,
as to enforceability, to general principles of equity.

 

4.3                               No Conflict; Consents.

 

Except (i) as set forth in Schedule 4.3 or (ii) with respect to clauses (a) and
(c) below, as would not, individually or in the aggregate, reasonably be
expected to have a Seller Material Adverse Effect, the execution, delivery and
performance by Equity Seller of this Agreement and the other Transaction
Documents to which Equity Seller is a party and the consummation of the
transactions contemplated hereby and thereby do not and shall not:

 

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(a)                                 violate any Law applicable to Equity Seller
or require any filing with, consent, waiver, approval, order or authorization
of, or declaration, filing or registration with, or notice to, any Governmental
Authority, except for the Customary Post-Closing Consents;

 

(b)                                 conflict with or violate any Organizational
Document of Equity Seller; or

 

(c)                                  conflict with or result in any violation
of, cause a breach of any provision of or constitute a default (with or without
the giving of notice, the passage of time or both) under, or give rise (with or
without the giving of notice or the passage of time or both) to the termination,
amendment, cancellation or acceleration of any obligation (or the right of any
Person to so terminate, amend, cancel or accelerate) or the loss of a benefit or
in increased, additional, accelerated or guaranteed rights or entitlements of
any Person, or create any obligation to make a payment to any other Person, or
result in the creation of a Lien (other than Permitted Encumbrances) on the
Acquired Equity Interests, in each case under the terms, conditions or
provisions of any Contract to which Equity Seller is a party or by which Equity
Seller may be bound.

 

4.4                               Consents.

 

Except for the Customary Post-Closing Consents, no material consent, approval or
authorization of, or designation or filing with, any Governmental Authority or
any other Person is required on the part of Equity Seller or the Acquired Entity
in connection with the valid execution and delivery of this Agreement or the
Transaction Documents to which Equity Seller is a party or the consummation of
transactions contemplated hereby or thereby.

 

4.5                               Litigation.

 

As of the Execution Date, there are no Proceedings pending or, to the Knowledge
of Equity Seller, threatened, in which Equity Seller is or may be a party
affecting the execution and delivery by Equity Seller of this Agreement or the
other Transaction Documents to which Equity Seller is a party or the
consummation of the transactions contemplated hereby or thereby.

 

4.6                               Ownership of Acquired Equity Interests.

 

(a)                                 Equity Seller holds of record and owns
beneficially, and has good and valid title to, the Acquired Equity Interests,
free and clear of all Liens (other than (i) Liens arising under the Prior Credit
Agreement (all of which will be released at or prior to Closing) and
(ii) restrictions on transfer arising under state and federal securities Laws),
and upon consummation of the transactions contemplated hereby Buyer Parties will
acquire good and valid title to the Acquired Equity Interests.

 

(b)                                 Neither Equity Seller nor any of its
Affiliates is a party to any option, warrant, purchase right or other Contract
or commitment (other than this Agreement) that would require Equity Seller to
sell, transfer, provide notice to a Person or otherwise dispose of the Acquired
Equity Interests. Neither Equity Seller nor any of its Affiliates is a party to
any voting trust, proxy or other agreement or understanding with respect to the
voting of the Acquired Equity Interests.

 

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4.7                               Brokers’ Fees.

 

Neither Equity Seller nor any of its Affiliates has entered into any Contract
with any Person regarding any obligation or liability, contingent or otherwise,
for any broker’s fee, finder’s fee or other commission or similar fee in
connection with the transactions contemplated by this Agreement for which Buyer
Parties or, following the Closing, the Acquired Entity will have any
responsibility whatsoever.

 

4.8                               Consents and Preferential Rights.

 

Except for Customary Post-Closing Consents or as set forth on Schedule 4.8,
(a) there are no Consents that are required to be obtained, made or complied
with in connection with the sale of the Acquired Equity Interests by the Equity
Seller and (b) there are no Preferential Rights applicable to the sale of the
Acquired Equity Interests by the Equity Seller.

 

4.9                               Securities Law Compliance.

 

(a)                                 Equity Seller is an accredited investor as
defined in Regulation D under the Securities Act. Equity Seller (A) is acquiring
the Opco Common Units and the Class B Units for its own account and not with a
view to distribution, (B) has sufficient knowledge and experience in financial
and business matters so as to be able to evaluate the merits and risk of an
investment in the Opco Common Units and the Class B Units and is able
financially to bear the risks thereof, and (C) understands that the Opco Common
Units and the Class B Units will, upon issuance, be characterized as “restricted
securities” under state and federal securities Laws and that under such Laws and
applicable regulations the Opco Common Units and the Class B Units may be resold
without registration under such Laws only in certain limited circumstances.

 

(b)                                 Equity Seller has experience in analyzing
and investing in companies similar to Buyer Parties and is capable of evaluating
the merits and risks of its decisions with respect to such matters and has the
capacity to protect its own interests.

 

(c)                                  To the extent necessary, Equity Seller has
retained and relied upon appropriate professional advice regarding the
investment, tax and legal merits and consequences of such matters.

 

(d)                                 Equity Seller has had an opportunity to
discuss the Buyer Parties’ business, management and financial affairs with the
members of the Buyer Parties’ management and has had an opportunity to ask
questions of the officers and other representatives of Buyer Parties, which
questions were answered to its satisfaction.

 

4.10                        EQUITY SELLER’S INDEPENDENT INVESTIGATION;
DISCLAIMER.

 

EQUITY SELLER AND ITS REPRESENTATIVES HAVE UNDERTAKEN AN INDEPENDENT
INVESTIGATION AND VERIFICATION OF THE BUYER PARTIES, AND THE BUSINESS,
OPERATIONS AND FINANCIAL CONDITION OF THE BUYER PARTIES. EQUITY SELLER (OR ITS
ADVISORS ARE) EXPERIENCED AND KNOWLEDGEABLE IN THE OIL AND GAS BUSINESS AND
AWARE OF THE RISKS OF THAT BUSINESS. IN ENTERING INTO THIS AGREEMENT, EQUITY
SELLER HAS RELIED UPON ITS OWN

 

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INVESTIGATION AND ANALYSIS AND THE SPECIFIC REPRESENTATIONS AND WARRANTIES OF
THE BUYER PARTIES SET FORTH IN ARTICLE 6 OF THIS AGREEMENT, AND EQUITY SELLER:

 

(a)                                 ACKNOWLEDGES AND AGREES THAT IT HAS NOT BEEN
INDUCED BY AND HAS NOT RELIED UPON ANY REPRESENTATIONS, WARRANTIES OR
STATEMENTS, WHETHER EXPRESS OR IMPLIED, MADE BY THE BUYER PARTIES OR ANY OF
THEIR RESPECTIVE DIRECTORS, OFFICERS, EQUITY HOLDERS, EMPLOYEES, AFFILIATES,
CONTROLLING PERSONS, AGENTS, ADVISORS OR REPRESENTATIVES THAT ARE NOT EXPRESSLY
SET FORTH IN ARTICLE 6 OF THIS AGREEMENT, WHETHER OR NOT ANY SUCH
REPRESENTATIONS, WARRANTIES OR STATEMENTS WERE MADE IN WRITING OR ORALLY;

 

(b)                                 ACKNOWLEDGES AND AGREES THAT, EXCEPT FOR THE
REPRESENTATIONS AND WARRANTIES OF BUYER PARTIES SET FORTH IN ARTICLE 6 OF THIS
AGREEMENT, NONE OF THE BUYER PARTIES OR ANY OF THEIR RESPECTIVE DIRECTORS,
OFFICERS, EQUITY HOLDERS, EMPLOYEES, AFFILIATES, CONTROLLING PERSONS, AGENTS,
ADVISORS OR REPRESENTATIVES MAKES OR HAS MADE, AND EACH SUCH PERSON DISCLAIMS,
ANY REPRESENTATION OR WARRANTY, EITHER EXPRESS OR IMPLIED, AS TO THE ACCURACY OR
COMPLETENESS OF BUYER PARTY DUE DILIGENCE INFORMATION. EQUITY SELLER HAS NOT
RELIED ON THE BUYER DUE DILIGENCE INFORMATION FOR PURPOSES OF ENTERING INTO THIS
AGREEMENT AND THE BUYER PARTIES AND THEIR RESPECTIVE AFFILIATES SHALL HAVE NO
RESPONSIBILITY FOR ANY FAILURE OF SUCH BUYER PARTY DUE DILIGENCE INFORMATION TO
BE TRUE OR CORRECT; AND

 

(c)                                  ACKNOWLEDGES AND AGREES THAT (i) THE BUYER
PARTY DUE DILIGENCE INFORMATION INCLUDES CERTAIN PROJECTIONS, ESTIMATES AND
OTHER FORECASTS, AND CERTAIN BUSINESS PLAN INFORMATION, (ii) THERE ARE
UNCERTAINTIES INHERENT IN ATTEMPTING TO MAKE SUCH PROJECTIONS, ESTIMATES AND
OTHER FORECASTS AND PLANS AND EQUITY SELLER IS FAMILIAR WITH SUCH UNCERTAINTIES
AND (iii) SUBJECT TO THE REPRESENTATIONS AND WARRANTIES OF THE BUYER PARTIES SET
FORTH HEREIN, EQUITY SELLER IS TAKING FULL RESPONSIBILITY FOR MAKING ITS OWN
EVALUATION OF THE ADEQUACY AND ACCURACY OF ALL PROJECTIONS, ESTIMATES AND OTHER
FORECASTS AND PLANS SO FURNISHED TO IT AND ANY USE OF OR RELIANCE BY EQUITY
SELLER ON SUCH PROJECTIONS, ESTIMATES AND OTHER FORECASTS AND PLANS SHALL BE AT
ITS SOLE RISK.

 

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ARTICLE 5
Representations and Warranties Relating to the Acquired Entity

 

Equity Seller hereby represents and warrants to Buyer Parties the following:

 

5.1                               Organization.

 

The Acquired Entity is a limited liability company, duly organized, validly
existing and in good standing under the Laws of the jurisdiction of its
organization or formation and has the requisite organizational power and
authority to own the Acquired Entity Assets and to conduct its business as it is
now being conducted. The Acquired Entity is duly licensed or qualified in each
jurisdiction in which the ownership of the Acquired Entity Assets or the
character of its activities is such as to require it to be so licensed or
qualified, except where the failure to be so licensed or qualified would not,
individually or in the aggregate, reasonably be expected to have a Seller
Material Adverse Effect. Equity Seller has made available to Buyer Parties
complete and correct copies of the Organizational Documents of the Acquired
Entity, including any amendments thereto, and such Organizational Documents are
in full force and effect.

 

5.2                               No Conflict; Consents.

 

The Acquired Entity is in material compliance with the terms and conditions of
its Organizational Documents. Except (i) as set forth in Schedule 5.2 or
(ii) with respect to clauses (a), (c), (d) and (e) below, as would not,
individually or in the aggregate, reasonably be expected to have a Seller
Material Adverse Effect, the execution, delivery and performance by Equity
Seller of this Agreement and the other Transaction Documents to which Equity
Seller is a party and the consummation of the transactions contemplated hereby
and thereby do not and shall not:

 

(a)                                 violate any Law applicable to the Acquired
Entity or require any filing with, consent, waiver, approval, order or
authorization of, or declaration, filing or registration with, or notice to, any
Governmental Authority, except for the Customary Post-Closing Consents;

 

(b)                                 conflict with or violate the Organizational
Documents of the Acquired Entity;

 

(c)                                  require any filing with, or the giving of
any notice to, any Person;

 

(d)                                 require any consent or approval of any
Person; or

 

(e)                                  conflict with or result in any violation
of, cause a breach of any provision of, or constitute a default (with or without
the giving of notice, the passage of time or both) under, or give rise (with or
without the giving of notice or the passage of time or both) to the termination,
amendment, cancellation or acceleration of any obligation (or the right of any
Person to so terminate, amend, cancel or accelerate) or the loss of a benefit or
in increased, additional, accelerated or guaranteed rights or entitlements of
any Person, or create any obligation to make a payment to any other Person, or
result in the creation of a Lien (other than Permitted Encumbrances) on any
assets of the Acquired Entity, in each case under the terms, conditions or
provisions of any Contract or Lease to which the Acquired Entity is a party or
by which the Acquired Entity or the Acquired Entity Assets may be bound.

 

5.3                               Capitalization.

 

(a)                                 The Acquired Equity Interests constitute all
of the issued and outstanding equity interests of the Acquired Entity. Equity
Seller is the sole member of the Acquired Entity. The Acquired Equity Interests
are duly authorized, validly issued, fully paid, non-assessable and

 

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free of preemptive rights. The Acquired Equity Interests were issued in
compliance with applicable Laws.

 

(b)                                 There are no (i) outstanding membership
interests or other equity interests of the Acquired Entity, other than the
Acquired Equity Interests, (ii) outstanding securities of the Acquired Entity
convertible into, exchangeable or exercisable for membership interests or other
equity interests of the Acquired Entity, (iii) authorized or outstanding
options, preemptive rights, redemption rights, repurchase rights, warrants or
other rights to purchase or acquire from the Acquired Entity, or obligations of
the Acquired Entity to issue or sell, any membership or other equity interests
or other securities, including securities convertible into or exchangeable for
membership or other equity interests or other securities of such entity,
(iv) equity equivalents, interests in the ownership or earnings or other similar
rights of or with respect to the Acquired Entity, (v) authorized or outstanding
bonds, debentures, notes or other indebtedness that entitle the holders to vote
(or convertible or exercisable for or exchangeable into securities that entitle
the holders to vote) with holders of the Acquired Equity Interests on any matter
or (vi) voting trust agreements or other Contracts restricting or otherwise
relating to voting, dividend rights or disposition of the Acquired Equity
Interests. The Acquired Equity Interests are not certificated.

 

(c)                                  The Acquired Entity does not own, directly
or indirectly, any capital stock or equity interests (excluding ownership of
marketable securities or similar investment accounts) of any other Person. The
Acquired Entity does not have a joint venture or other similar interests in any
Person or obligations, whether contingent or otherwise, to consummate any
material investment in any Person.

 

5.4                               Litigation.

 

Except as set forth on Schedule 5.4, as of the Execution Date, neither the
Acquired Entity nor the Acquired Entity Assets (a) is subject to any outstanding
Order, (b) is a party or subject to a Proceeding or (c) to the Knowledge of
Equity Seller, has been threatened in writing with any Proceeding.

 

5.5                               Financial Statements.

 

(a)                                 Schedule 5.5 sets forth true and complete
copies of the statements of revenues and direct operating expenses pertaining to
the Acquired Entity, including all notes and schedules thereto, for the periods
described therein (the “Entity Statements”). Except as set forth on Schedule
5.5(a), such Entity Statements have been prepared from the books and records of
such Equity Seller in accordance with GAAP applied on a consistent basis
throughout the periods covered thereby (except as otherwise stated in the
footnotes related thereto) and present fairly in accordance with GAAP, in all
material respects, the revenues and direct operating expenses of such Acquired
Entity for the periods described therein.

 

(b)                                 Since December 31, 2017, the Acquired Entity
has not effected any change in any method of accounting or accounting practice,
except for any such change required because of a concurrent change in GAAP.

 

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5.6                               Absence of Certain Changes.

 

Since December 31, 2017, (a) there has not been any circumstance, change or
effect that, individually or in the aggregate, has had, or would reasonably be
expected to have, a Seller Material Adverse Effect and (b) except as set forth
in Schedule 5.6, no Acquired Entity has taken or permitted to occur any of the
actions referred to in Section 7.1(b).

 

5.7                               Taxes.

 

(a)                                 (i) All material Tax Returns required to be
filed by the Acquired Entity or with respect to the Acquired Entity Assets prior
to the Execution Date have been timely filed, and all such Tax Returns are true,
correct and complete in all material respects, (ii) all material Taxes owed by
the Acquired Entity or with respect to the Acquired Entity Assets prior to the
Execution Date, whether or not shown or reported on any Tax Return, have been
timely paid, (iii) there are no Liens (other than Permitted Encumbrances) on any
of the Acquired Equity Interests or Acquired Entity Assets that arose in
connection with any failure by the Acquired Entity to pay any Tax and (iv) there
is no material claim pending or threatened in writing by any Governmental
Authority in connection with any Tax or any Tax Return described in clause
(i) or (ii).

 

(b)                                 There is no audit, administrative, judicial
or other proceeding by any Governmental Authority with respect to Taxes with
respect to the Acquired Equity Interests, the Acquired Entity or the Acquired
Entity Assets that has been commenced or is presently pending.

 

(c)                                  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 Taxes of the Acquired Entity.

 

(d)                                 No claim has ever been made against the
Acquired Entity by a taxing authority in a jurisdiction where the Acquired
Entity does not file Tax Returns that the Acquired Entity is or may be subject
to Taxes assessed by such jurisdiction.

 

(e)                                  No private letter ruling, technical advice
memorandum, closing agreement or similar ruling, memorandum or agreement by or
with any Governmental Authority is binding on or has been requested with respect
to the Acquired Entity or the Acquired Entity Assets.

 

(f)                                   At all times since its formation through
the Execution Date, the Acquired Entity has been treated as an entity
disregarded from its sole owner for U.S. federal Income Tax purposes and for
purposes of any applicable state and local Income Taxes that follow the U.S.
federal Income Tax treatment of disregarded entities.

 

(g)                                  Other than the limited liability company
agreement of the Equity Seller, none of the Acquired Entity Assets is subject to
any tax partnership agreement or other 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.

 

(h)                                 Equity Seller either (A) is not and will not
become, for U.S. federal income tax purposes, a Flow-Through Entity or (B) if
Equity Seller is or becomes a Flow-Through Entity, then it is not and will not
be a principal purpose of the arrangement involving the Flow-Through Entity’s
beneficial interest in any partnership interest in Opco to permit any entity to
satisfy the 100-partner limitation of Treasury Regulation section
1.7704-1(h)(1)(ii).

 

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5.8                               Contracts.

 

(a)                                 As of the Execution Date, Schedule
5.8(a) includes a list of each Equity Seller Material Contract. “Equity Seller
Material Contract” means any of the following Contracts to which the Acquired
Entity is a party or by which any of the Acquired Equity Interests or Acquired
Entity Assets are bound or subject:

 

(i)                                     Contracts involving obligations of, or
payments to or from, the Acquired Entity after the Execution Date, individually
or in the aggregate, in excess of one hundred thousand Dollar ($100,000);

 

(ii)                                  Contracts restricting, in any material
respect, the Acquired Entity (or, following the Closing, any Affiliate of the
Acquired Entity) from freely engaging in any business or competing anywhere;

 

(iii)                               Contracts evidencing Indebtedness for
Borrowed Money;

 

(iv)                              Contracts guaranteeing any obligation of
another Person;

 

(v)                                 Contracts between the Acquired Entity, on
the one hand, and any Affiliate of the Acquired Entity or any officer, director,
manager or employee of the Acquired Entity or Affiliate of the Acquired Entity
or any immediate family member of any such individual, on the other hand;

 

(vi)                              Contracts containing “tag-along” or similar
rights allowing a Third Party to participate in future sales of any of the
Acquired Entity Assets or the Acquired Equity Interests;

 

(vii)                           Contracts for any Hedging Transactions that will
remain outstanding after Closing;

 

(viii)                        Any agreement of indemnification, surety or
guarantee by the Acquired Entity on behalf of another Person or the assumption
of any Tax, environmental or other liability of any Person; and

 

(ix)                              Contracts to sell, exchange or otherwise
dispose of all or any part of the Acquired Entity Assets on or after the
Effective Time.

 

(b)                                 Each Equity Seller Material Contract
constitutes the legal, valid and binding obligation of Equity Seller and/or the
Acquired Entity, on the one hand, and, to the Knowledge of Equity Seller, the
counterparties thereto, on the other hand, and is enforceable in accordance with
its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar Laws affecting creditors’ rights
generally and subject, as to enforceability, to general principles of equity.
Neither Equity Seller nor the Acquired Entity, as applicable, is in material
breach or default of its obligations under any of the Equity Seller Material
Contracts. To the Knowledge of Equity Seller, (i) no material breach or material
default by any Third Party exists under any Equity Seller Material Contract and
(ii) no counterparty to any Equity Seller Material Contract has canceled,
terminated or modified, or threatened in writing to cancel, terminate or

 

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modify, any Equity Seller Material Contract. Prior to the execution of this
Agreement, true, correct and complete copies of all Equity Seller Material
Contracts and all amendments thereto have been made available to Buyer Parties.

 

5.9                               Environmental Matters.

 

(a)                                 To Equity Seller’s Knowledge, the Acquired
Entity and Equity Seller’s ownership of the Acquired Entity Assets are in
material compliance with applicable Environmental Laws, which compliance
includes the possession and maintenance of, and compliance with, all material
permits required under all Environmental Laws, and have been for the preceding
five (5) years or shorter period of ownership, as applicable.

 

(b)                                 To Equity Seller’s Knowledge, there are no
environmental conditions that would reasonably be expected to form the basis for
the assertion of any material claim, material investigative, remedial or
corrective obligations or other material liabilities against the Acquired Entity
or related to Equity Seller’s ownership of the Acquired Entity Assets under any
Environmental Law, including OPA90, CERCLA or any similar applicable Law with
respect to any on-site or off-site location.

 

(c)                                  Neither the Acquired Entity nor the
Acquired Entity Assets has received any written notice from a Governmental
Authority or Third Party that remains unresolved alleging a material violation
of or material non-compliance with any Environmental Law or any material permit
issued pursuant to Environmental Law.

 

(d)                                 Neither the Acquired Entity nor Acquired
Entity Assets is subject to any pending, or to the Knowledge of Equity Seller,
threatened in writing Proceeding under or related to any Environmental Law
(including any such Proceeding related to designation as a potentially
responsible party under CERCLA or any similar local or state law).

 

(e)                                  All material permits, permit exemptions,
licenses or similar authorizations, if any, required to be obtained or filed by
the Acquired Entity or Acquired Entity Assets, as applicable, under any
Environmental Law in connection with its current assets, operations and business
have been duly obtained or filed, to Equity Seller’s Knowledge are valid and
currently in effect, and to Equity Seller’s Knowledge each of the Acquired
Entity and Acquired Entity Assets are in material compliance with such
authorizations.

 

(f)                                   To Equity Seller’s Knowledge, there has
been no release of any Constituents of Concern into the Environment in, on or
under any Acquired Entity Asset by the Acquired Entity that, with notice or the
passage of time or both, would reasonably be expected to result in a material
liability pursuant to Environmental Law.

 

5.10                        Compliance with Laws.

 

To Equity Seller’s Knowledge, the Acquired Entity is and has been for the period
of the Acquired Entity’s ownership of the Acquired Entity Assets, in compliance
in all material respects with all applicable Laws. Neither Equity Seller nor the
Acquired Entity has received a written notice of a material violation of any Law
that is applicable to the Acquired Entity Assets and that has not been (or will
be prior to Closing) corrected or settled. Notwithstanding any provision in

 

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this Section 5.10 (or any other provision of this Agreement) to the contrary,
Section 5.7 and Section 5.9 shall be Equity Seller’s exclusive representations
and warranties with respect to Taxes and environmental matters, respectively, as
well as to related matters, and Equity Seller makes no other representations or
warranties with respect to such matters, including under this Section 5.10.

 

5.11                        Special Warranty.

 

Except for Permitted Encumbrances, the Equity Seller represents and warrants
that the Acquired Entity owns Defensible Title to the Acquired Entity Assets
solely against any Person lawfully claiming or to claim the same or any part
thereof, by, through or under the Acquired Entity or any of its Affiliates, but
not otherwise; provided that in no event shall the Special Warranty of Title
extend to any matter reported by Buyer Parties under Section 2.52.5(d).

 

5.12                        No Cost-Bearing Interests.

 

After giving effect to the distribution of the Distributed Interests pursuant to
Section 7.20, the Acquired Entity Assets do not include any unleased mineral
interest where Equity Seller or the Acquired Entity has agreed to, or Buyer
Parties will have to, bear a share of drilling, operating or other costs as a
participating mineral owner from and after the Effective Time, other than
instances where the Acquired Entity Assets have been forcepooled under
applicable Law and the Acquired Entity’s share of drilling, operating or other
costs as a participating mineral owner in such pooled unit are set off against
the Acquired Entity’s share of the proceeds of production attributable to such
pooled unit.

 

5.13                        Employees and Benefit Plans.

 

(a)                                 The Acquired Entity will have no employees
as of the Closing and, for the past three years, has been in compliance in all
material respects with all Laws relating to employment or the workplace. There
are no pending investigations or proceedings by or relating to current or former
employees or independent contractors of the Acquired Entity. For the past three
years, there has been no “mass layoff” or “plant closing” (as defined by the
Worker Adjustment and Retraining Notification Act, as amended) with respect to
the Acquired Entity.

 

(b)                                 The Acquired Entity does not, and has not
for the past three years, maintained, sponsored or contributed to, nor is it
required to contribute to, any Employee Benefit Plan. There does not exist now,
nor do any circumstances exist that reasonably could be expected to result in
any liability of the Acquired Entity with respect to any Employee Benefit Plan
now maintained or previously maintained by any ERISA Affiliate of the Acquired
Entity, other than reimbursements of costs as may be provided in intercompany
service agreements with Equity Seller or its Affiliates.  The Acquired Entity
and its ERISA Affiliates do not currently maintain and have never maintained,
and are not required currently and have never been required to contribute to or
otherwise participate in, any pension plan subject to Title IV of ERISA. 
Neither the Acquired Entity nor any ERISA Affiliate thereof participates
currently in or has ever participated in, and are not currently required to
contribute to or have ever been required to contribute to, any multiemployer
plan (as defined in Section 3(37) or 4001(a)(3) of ERISA).

 

(c)                                  Except for options granted under Equity
Seller’s incentive plan, the consummation of the transactions contemplated by
this Agreement will not, either alone or in

 

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combination with any other event, (i) entitle any current or former employee,
officer, director or independent contractor of the Acquired Entity to severance
pay, unemployment compensation or any other payment, (ii) accelerate the time of
payment or vesting, or increase the amount of any equity or compensation due any
such current or former employee, officer, director or independent contractor, or
(iii) accelerate the funding obligations under any benefit plan or agreement for
which the Acquired Entity may have any liability.  Neither the execution of this
Agreement nor the consummation of the transactions contemplated hereby will
result, either alone or in combination with another event, in “excess parachute
payments” within the meaning of Section 280G(b) of the Code.

 

5.14                        Bank Accounts.

 

Schedule 5.14 sets forth a complete and accurate list of all deposit, demand,
savings, passbook, lock box or similar accounts maintained by or on behalf of
the Acquired Entity with any bank or financial institution, the names and
addresses of the banks or financial institutions maintaining each such account
and the authorized signatories on each such account.

 

5.15                        Bankruptcy.

 

There are no bankruptcy, reorganization, receivership or arrangement proceedings
pending, being contemplated by or, to Equity Seller’s Knowledge, threatened
against the Acquired Entity.

 

ARTICLE 6
Representations and Warranties Relating to Buyer Parties

 

Buyer Parties hereby represent and warrant to Seller:

 

6.1                               Organization.

 

Each Buyer Party is a limited partnership or limited liability company, as
applicable, duly formed, validly existing, and in good standing under the Laws
of the jurisdiction of its formation and has the requisite organizational power
and authority to own the Buyer Assets and to conduct its business as it is now
being conducted. Each Buyer Party is duly licensed or qualified in each
jurisdiction in which the ownership of the Buyer Assets or the character of its
activities is such as to require it to be so licensed or qualified, except where
the failure to be so licensed or qualified would not, individually or in the
aggregate, reasonably be expected to have a Buyer Material Adverse Effect. Buyer
Parties have made available to Seller complete and correct copies of all
Organizational Documents of Buyer Parties, including any amendments thereto, and
such Organizational Documents are in full force and effect.

 

6.2                               Authorization; Enforceability.

 

Each Buyer Party has all requisite capacity, power and authority to execute and
deliver this Agreement and the other Transaction Documents to which such Buyer
Party is a party, to perform its obligations hereunder and thereunder and to
consummate the transactions contemplated hereby and thereby. The execution and
delivery of this Agreement and the other Transaction Documents to which each
Buyer Party is a party, the performance of the transactions contemplated hereby
and

 

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thereby and the consummation of the transactions contemplated hereby and thereby
have been duly and validly authorized on the part of each Buyer Party, and no
other proceeding on the part of each Buyer Party is necessary to authorize this
Agreement and the other Transaction Documents to which each Buyer Party is a
party or the performance of the transactions contemplated hereby or thereby.
This Agreement has been duly and validly executed and delivered by each Buyer
Party, and this Agreement constitutes a valid and binding obligation of each
Buyer Party, enforceable against each Buyer Party in accordance with its terms,
subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar Laws affecting creditors’ rights
generally and subject, as to enforceability, to general principles of equity.
Each other Transaction Document to which each Buyer Party is a party has been or
shall be duly and validly executed and delivered by each Buyer Party, and each
such other Transaction Document constitutes or shall constitute a valid and
binding obligation of each Buyer Party, enforceable against each Buyer Party in
accordance with its terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar Laws affecting
creditors’ rights generally and subject, as to enforceability, to general
principles of equity.

 

6.3                               No Conflict; Consents.

 

Each Buyer Party is in material compliance with the terms and conditions of its
Organizational Documents. Except as set forth in Schedule 6.3 or as would not,
individually or in the aggregate, reasonably be expected to have a Buyer
Material Adverse Effect, the execution and delivery by Buyer Parties of this
Agreement and the other Transaction Documents to which each Buyer Party is a
party and the consummation of the transactions contemplated hereby and thereby
by each Buyer Party do not and shall not:

 

(a)                                 violate any Law applicable to each Buyer
Party or require any filing with, consent, waiver, approval, order or
authorization of, or declaration, filing or registration with, or notice to, any
Governmental Authority;

 

(b)                                 conflict with or violate any Organizational
Document of each Buyer Party;

 

(c)                                  require any filing with, or the giving of
any notice to, any Person;

 

(d)                                 require any consent or approval of any
Person; or

 

(e)                                  conflict with or result in any violation
of, cause a breach of any provision of, or constitute a default (with or without
the giving of notice, the passage of time or both) under, or give rise (with or
without the giving of notice, the passage of time or both) to the termination,
amendment, cancellation or acceleration of any obligation (or the right of any
Person to so terminate, amend, cancel or accelerate) or the loss of a benefit or
in increased, additional, accelerated or guaranteed rights or entitlements of
any Person, or create any obligation to make a payment to any other Person, or
result in the creation of a Lien on any assets of Buyer, in each case under the
terms, conditions or provisions of any Contract to which each Buyer Party is a
party or by which each Buyer Party may be bound.

 

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6.4                               Capitalization.

 

(a)                                 As of the Execution Date, the issued and
outstanding partnership interests of Buyer consist of 17,336,204 Common Units,
12,953,258 Class B Units and 110,000 Series A Cumulative Convertible Preferred
Units representing limited partner interests in Buyer. All issued and
outstanding partnership interests of Buyer are duly authorized, validly issued,
and fully paid (to the extent required under the Partnership Agreement),
non-assessable (except as such non-assessability may be affected by Sections
17-303, 17-607 and 17-804 of the DRULPA) and free of preemptive rights (except
as set forth in the Partnership Agreement or disclosed in the Buyer’s SEC
Documents). All issued and outstanding partnership interests of Buyer were
issued in compliance with applicable Laws. Except as set forth in the
Partnership Agreement or disclosed in Buyer’s SEC Documents, Buyer does not have
outstanding unitholder purchase rights, a “poison pill” or any similar
arrangement in effect.

 

(b)                                 Schedule 6.4(b) sets forth with respect to
each subsidiary of Buyer, including in each instance Opco, (i) a complete
listing of all equity interests of each subsidiary of Buyer that are
outstanding, by par value, class and designated series, as applicable, (ii) the
number of equity interests of each subsidiary that are reserved for issuance
under any agreement, whether written or otherwise and (iii) the number of equity
interests held as treasury interests by each subsidiary. All issued and
outstanding equity interests of each subsidiary of Buyer are duly authorized,
validly issued, and fully paid (to the extent required by the applicable
Organizational Documents), non-assessable (except as such non-assessability may
be affected by Sections 17-303, 17-607 and 17-804 of the DRULPA or Sections
18-607 and 18-804 of the DLLCA) and free of preemptive rights (except as set
forth in the applicable Organizational Documents). Except as set forth in the
applicable Organizational Documents of such Person, no subsidiary of Buyer is
subject to any equityholder purchase rights, a poison pill or any similar
arrangement.

 

(c)                                  Except as disclosed in Buyer’s SEC
Documents, (i) there are no outstanding securities of Buyer convertible into,
exchangeable or exercisable for partnership interests or other equity interests
of Buyer, (ii) authorized or outstanding options, preemptive rights, redemption
rights, repurchase rights, warrants or other rights to purchase or acquire from
Buyer, or obligations of Buyer to issue or sell, any partnership interests or
other equity interests, including securities convertible into or exchangeable
for partnership interests or other equity interests of Buyer, (iii) equity
equivalents, interests in the ownership or earnings, or other similar rights of
or with respect to Buyer, (iv) authorized or outstanding bonds, debentures,
notes or other indebtedness that entitle the holders to vote (or convertible or
exercisable for or exchangeable into securities that entitle the holders to
vote) with holders of Common Units on any matter or (v) voting trust agreements
or other Contracts restricting or otherwise relating to voting, dividend rights
or disposition of the partnership interests or other equity interests of Buyer.

 

(d)                                 The Class B Units issued pursuant to this
Agreement will be duly authorized by Buyer prior to the Closing Date, and when
issued and delivered to each applicable Seller in accordance with the terms of
this Agreement, will be validly issued and fully paid (to the extent required
under the Partnership Agreement), non-assessable (except as such
non-assessability may be affected by Sections 17-303, 17-607 and 17-804 of the
DRULPA) and free of preemptive rights (except as set forth in the Partnership
Agreement or disclosed in the Buyer’s SEC Documents) and any and all Liens and
restrictions on transfer, other than restrictions on transfer disclosed in
Buyer’s SEC Documents, under this Agreement, the Partnership Agreement or
applicable state and federal securities Laws.

 

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(e)                                  The Opco Common Units issued pursuant to
this Agreement will be duly authorized by Opco prior to the Closing Date, and
when issued and delivered to each applicable Seller in accordance with the terms
of this Agreement, will be validly issued and fully paid (to the extent required
under the Opco Agreement), non-assessable (except as such non-assessability may
be affected by Sections 18-607 and 18-804 of the DLLCA) and free of preemptive
rights (except as set forth in the Opco Agreement or disclosed in the Buyer’s
SEC Documents) and any and all Liens and restrictions on transfer, other than
restrictions on transfer disclosed in Buyer’s SEC Documents, under this
Agreement, the Opco Agreement or applicable state and federal securities Laws.

 

6.5                               Litigation.

 

Except as set forth on Schedule 6.5, as of the Execution Date none of Buyer or
any Buyer Asset (a) is subject to any outstanding Order, (b) is a party or
subject to a Proceeding or (c) to the Knowledge of Buyer, has been threatened in
writing with any Proceeding.

 

6.6                               Financial Statements.

 

(a)                                 Buyer has timely filed or furnished with the
Securities and Exchange Commission (the “Commission”) all reports, schedules,
forms, statements, and other documents (including exhibits and other information
incorporated therein) required to be filed or furnished by it since February 7,
2017 under the Securities Act or the Exchange Act (all such documents,
collectively, the “SEC Documents”). The SEC Documents, including any audited or
unaudited financial statements and any notes thereto or schedules included
therein (the “Buyer Financial Statements”), at the time filed or furnished
(except to the extent amended or superseded by a subsequently filed or furnished
SEC Document filed or furnished prior to the Execution Date) (a) did not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein (in the light of the circumstances under which they were made) not
misleading, (b) complied in all material respects with the applicable
requirements of the Exchange Act and the Securities Act, as applicable and
(c) complied as to form in all material respects with applicable accounting
requirements and with the published rules and regulations of the Commission with
respect thereto. The Buyer Financial Statements were prepared from the books and
records of Buyer in accordance with GAAP applied on a consistent basis during
the periods covered thereby (except as may be indicated in the notes thereto or
the omission of notes to the extent permitted by Regulation S-K or, in the case
of unaudited statements, as permitted by Form 10-Q of the Commission) and
subject, in the case of interim financial statements, to normal year-end
adjustments, and present fairly in accordance with GAAP, in all material
respects, the financial position and the results of operations of Buyer as of,
and for the periods ended on, such applicable dates. The other financial
information of Buyer, including non-GAAP financial measures, if any, contained
or incorporated by reference in the SEC Documents has been derived from the
accounting records of Buyer, and fairly presents in all material respects the
information purported to be shown thereby. Nothing has come to the attention of
Buyer that has caused it to believe that the statistical and market-related data
included in the SEC Documents is not based on or derived from sources that are
reliable and accurate in all material respects as of the date on which the
applicable SEC Documents were filed. Based on an annual evaluation of disclosure
controls and procedures, Buyer is not aware of (i) any significant deficiency or
material weakness in the design or operation of internal controls over financial

 

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reporting that are likely to adversely affect its ability to record, process,
summarize and report financial data or (ii) any fraud, whether or not material,
that involves management or other employees who have a significant role in the
internal controls over financial reporting of Buyer. Buyer does not have any
liabilities of any kind, whether accrued, contingent, absolute, determined,
determinable or otherwise, that would be required to be reflected on a balance
sheet prepared in accordance with GAAP, other than: (A) liabilities adequately
provided for, reflected or reserved on the Buyer Financial Statements,
(B) liabilities that have arisen after September 30, 2018 in the Ordinary Course
or (C) liabilities that, individually or in the aggregate, have not had, or
would not reasonably be expected to have, a Buyer Material Adverse Effect.

 

6.7                               Independent Registered Public Accounting Firm.

 

Grant Thornton LLP, which has audited the financial statements of Buyer and its
consolidated subsidiaries and delivered its report with respect to the audited
consolidated financial statements contained or incorporated by reference in the
SEC Documents, is an independent registered public accounting firm with respect
to Buyer within the meaning of the Securities Act and the applicable rules and
regulations thereunder adopted by the Commission and the Public Company
Accounting Oversight Board (United States). Grant Thornton LLP has not resigned
or been dismissed as independent registered public accountants of Buyer as a
result of or in connection with any disagreement with Buyer on any matter of
accounting principles or practices, financial statement disclosure or auditing
scope or procedures.

 

6.8                               Controls and Procedures; Listing.

 

(a)                                 Buyer has established and maintains
disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange
Act) designed to give reasonable assurance that information relating to Buyer
required to be disclosed in the SEC Documents is recorded, summarized and
reported within the time periods specified by the Commission and that such
information is communicated to Buyer’s management.

 

(b)                                 The Common Units are listed on the New York
Stock Exchange, and Buyer has not received any notice of delisting. Buyer has
taken no action that is designed to terminate the registration of the Common
Units under the Exchange Act.

 

6.9                               Contracts.

 

Neither Buyer Party is a party to, and no Buyer Assets are bound by or subject
to, any Contract containing (a) any material restriction on any Buyer Party or
its Affiliates from freely engaging in any business or competing anywhere or
(b) any material standstill restriction or similar restriction on any Buyer
Party or its Affiliates from acquiring equity or voting securities of a Third
Party, in each case that is or will be binding upon the Sellers or any of their
respective Affiliates as a result of being Affiliated with any Buyer Party or by
virtue of owning the Opco Common Units or the Class B Units issued hereunder.

 

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6.10                        Absence of Certain Changes.

 

Since December 31, 2017, except as disclosed in the SEC Documents, there has not
been any circumstance, change or effect that, individually or in the aggregate,
has had, or would reasonably be expected to have, a Buyer Material Adverse
Effect.

 

6.11                        Taxes.

 

(a)                                 (i) All material Tax Returns required to be
filed by any of the Buyer Parties or any of their respective subsidiaries have
been timely filed, and all such Tax Returns are true, correct and complete in
all material respects, (ii) all material Taxes owed by any of the Buyer Parties
or any of their respective subsidiaries, whether or not shown or reported on any
Tax Return, have been timely paid, and (iii) there is no material claim pending
or threatened in writing by any Governmental Authority in connection with any
Tax or any Tax Return described in clause (i) or (ii).

 

(b)                                 There is no audit, administrative, judicial
or other proceeding by any Governmental Authority with respect to Taxes with
respect to any of the Buyer Parties or any of their respective subsidiaries that
has been commenced or is presently pending.

 

(c)                                  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 Taxes of any of the Buyer Parties or any of
their respective subsidiaries.

 

(d)                                 No claim has ever been made against any
Buyer Party by a taxing authority in a jurisdiction where Buyer or any of its
subsidiaries does not file Tax Returns that any of the Buyer Parties or any of
their respective subsidiaries is or may be subject to Taxes assessed by such
jurisdiction.

 

(e)                                  No private letter ruling, technical advice
memorandum, closing agreement or similar ruling, memorandum or agreement by or
with any Governmental Authority is binding on or has been requested with respect
to any of the Buyer Parties or any of their respective subsidiaries.

 

(f)                                   Opco is properly classified as a
partnership for U.S. federal Income Tax purposes, and has never been classified
as an association taxable as a corporation.

 

6.12                        Environmental Matters.

 

(a)                                 To Buyer Parties’ Knowledge, Buyer Parties
and Buyer Parties’ ownership of the Buyer Assets are in material compliance with
applicable Environmental Laws, which compliance includes the possession and
maintenance of, and compliance with, all material permits required under all
Environmental Laws, and have been for the preceding five (5) years or shorter
period of ownership, as applicable.

 

(b)                                 To Buyer Parties’ Knowledge, there are no
environmental conditions that would reasonably be expected to form the basis for
the assertion of any material claim, material investigative, remedial or
corrective obligations or other material liabilities against any Buyer Party or
any Buyer Asset under any Environmental Law, including OPA90, CERCLA or any
similar applicable Law with respect to any on-site or off-site location.

 

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(c)                                  Neither of the Buyer Parties have received
any written notice from a Governmental Authority or Third Party that remains
unresolved alleging a material violation of or material non-compliance with any
Environmental Law or any material permit issued pursuant to Environmental Law.

 

(d)                                 None of Buyer Parties or the Buyer Assets
are subject to any pending, or to the Knowledge of Buyer Parties, threatened in
writing Proceeding under or related to any Environmental Law (including any such
Proceeding related to designation as a potentially responsible party under
CERCLA or any similar local or state law).

 

(e)                                  All material permits, permit exemptions,
licenses or similar authorizations, if any, required to be obtained or filed by
any of Buyer Parties or the Buyer Assets, as applicable, under any Environmental
Law in connection with its current assets, operations and business have been
duly obtained or filed, to Buyer’s Knowledge are valid and currently in effect,
and to Buyer Parties’ Knowledge each of Buyer Parties and the Buyer Assets are
in material compliance with such authorizations.

 

(f)                                   To Buyer Parties’ Knowledge, there has
been no release of any Constituents of Concern into the Environment in, on or
under any Buyer Asset that, with notice or the passage of time or both, would
reasonably be expected to result in a material liability pursuant to
Environmental Law.

 

6.13                        Form S-3 Eligibility.

 

As of the Execution Date, Buyer is eligible to register for resale by Sellers
under Form S-3 promulgated under the Securities Act the Common Units issuable
upon exchange of the Opco Common Units and the Class B Units to be issued
hereunder.

 

6.14                        Brokers’ Fees.

 

Neither Buyer Party nor any of its respective Affiliates has entered into any
Contract with any Person that would require the payment by Sellers or their
respective Affiliates of any brokerage fee, finders’ fee, or other commission in
connection with the transactions contemplated by this Agreement.

 

6.15                        Distribution Restrictions.

 

Neither Buyer Party nor any of its respective subsidiaries is currently
prohibited, or as a result of the transactions contemplated by this Agreement,
will be prohibited, directly or indirectly, from making distributions with
respect to its equity securities, from repaying to a Buyer Party or any of its
respective subsidiaries any loans or advances or from transferring any property
or assets to a Buyer Party or any of its respective subsidiaries, except
(a) such prohibitions mandated by the laws of Buyer’s and each of its
subsidiaries’ state of formation and the terms of Buyer’s and each of its
subsidiaries’ Organizational Documents and prohibitions contained in the Credit
Agreement, dated as of January 11, 2017, among Buyer, the several lenders from
time to time parties thereto and Frost Bank, as administrative agent and sole
arranger, as amended by Amendment No. 1 thereto, dated as of July 12, 2018 (as
amended from time to time, the “Buyer Credit Agreement”),

 

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(b) where such prohibition would not have a Buyer Material Adverse Effect and
(c) as set forth in Schedule 6.15.

 

6.16                        Securities Law Compliance.

 

Buyer (a) is acquiring the Acquired Equity Interests for its own account and not
with a view to distribution, (b) has sufficient knowledge and experience in
financial and business matters so as to be able to evaluate the merits and risk
of an investment in the Acquired Equity Interests and is able financially to
bear the risks thereof and (c) understands that the Acquired Equity Interests
will, upon purchase, be characterized as “restricted securities” under state and
federal securities Laws and that under such Laws and applicable regulations the
Acquired Equity Interests may be resold without registration under such Laws
only in certain limited circumstances.

 

6.17                        Exemptions from Securities Laws.

 

Provided that the representations made by the Sellers in Section 3.15 and
Section 4.9 are true and accurate on the Closing Date, the issuance of Opco
Common Units and Class B Units to the Sellers in accordance with the terms of
this Agreement will be exempt from the registration requirements of the
Securities Act, and no document will be required to be filed, no proceeding will
be required to be taken and no permit, approval, consent or authorization will
be required to be obtained by Buyer Parties under the Securities Act in
connection with such issuance.

 

6.18                        Sarbanes-Oxley.

 

Buyer and, to Buyer’s Knowledge, the directors or officers of Buyer’s general
partner, in their capacities as such, are in compliance in all material respects
with all applicable provisions of the Sarbanes-Oxley Act of 2002 and the
rules and regulations promulgated in connection therewith.

 

6.19                        Investment Company Status.

 

Neither Buyer nor any of its subsidiaries is, and immediately after the purchase
of the Acquired Equity Interests hereunder, neither Buyer nor any of its
subsidiaries will be, an “investment company” or an entity “controlled” by an
“investment company,” as such terms are defined in the Investment Company Act of
1940, as amended.

 

6.20                        BUYER PARTIES’ INDEPENDENT INVESTIGATION;
DISCLAIMER.

 

THE BUYER PARTIES AND THEIR RESPECTIVE REPRESENTATIVES HAVE UNDERTAKEN AN
INDEPENDENT INVESTIGATION AND VERIFICATION OF THE ACQUIRED ASSETS AND THE
ACQUIRED ENTITY ASSETS AND THE BUSINESS, OPERATIONS AND FINANCIAL CONDITION OF
THE ACQUIRED ENTITY. THE BUYER PARTIES ARE (OR THEIR RESPECTIVE ADVISORS ARE)
EXPERIENCED AND KNOWLEDGEABLE IN THE OIL AND GAS BUSINESS AND AWARE OF THE RISKS
OF THAT BUSINESS. IN ENTERING INTO THIS AGREEMENT, BUYER PARTIES HAVE RELIED
UPON THEIR OWN INVESTIGATION AND ANALYSIS AND THE SPECIFIC REPRESENTATIONS AND
WARRANTIES OF SELLERS SET FORTH IN ARTICLE 3, ARTICLE 4 AND ARTICLE 5 OF THIS
AGREEMENT, AND BUYER PARTIES:

 

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(a)                                 ACKNOWLEDGE AND AGREE THAT THEY HAVE NOT
BEEN INDUCED BY AND HAVE NOT RELIED UPON ANY REPRESENTATIONS, WARRANTIES OR
STATEMENTS, WHETHER EXPRESS OR IMPLIED, MADE BY SELLERS, THE ACQUIRED ENTITY OR
ANY OF THEIR RESPECTIVE DIRECTORS, OFFICERS, EQUITY HOLDERS, EMPLOYEES,
AFFILIATES, CONTROLLING PERSONS, AGENTS, ADVISORS OR REPRESENTATIVES THAT ARE
NOT EXPRESSLY SET FORTH IN ARTICLE 3, ARTICLE 4 AND ARTICLE 5 OF THIS AGREEMENT,
WHETHER OR NOT ANY SUCH REPRESENTATIONS, WARRANTIES OR STATEMENTS WERE MADE IN
WRITING OR ORALLY;

 

(b)                                 ACKNOWLEDGE AND AGREE THAT, EXCEPT FOR THE
REPRESENTATIONS AND WARRANTIES OF SELLERS SET FORTH IN ARTICLE 3, ARTICLE 4 AND
ARTICLE 5 OF THIS AGREEMENT, NONE OF SELLERS, THE ACQUIRED ENTITY OR ANY OF
THEIR RESPECTIVE DIRECTORS, OFFICERS, EQUITY HOLDERS, EMPLOYEES, AFFILIATES,
CONTROLLING PERSONS, AGENTS, ADVISORS OR REPRESENTATIVES MAKES OR HAS MADE, AND
EACH SUCH PERSON DISCLAIMS, ANY REPRESENTATION OR WARRANTY, EITHER EXPRESS OR
IMPLIED, AS TO THE ACCURACY OR COMPLETENESS OF ANY OF THE INFORMATION PROVIDED
OR MADE AVAILABLE TO BUYER PARTIES OR THEIR RESPECTIVE DIRECTORS, OFFICERS,
EMPLOYEES, AFFILIATES, CONTROLLING PERSONS, AGENTS OR REPRESENTATIVES, INCLUDING
ANY INFORMATION, DOCUMENT OR MATERIAL PROVIDED OR MADE AVAILABLE, OR STATEMENTS
MADE, TO BUYER PARTIES (INCLUDING THEIR DIRECTORS, OFFICERS, EMPLOYEES,
AFFILIATES, CONTROLLING PERSONS, ADVISORS, AGENTS OR REPRESENTATIVES) IN DATA
ROOMS, MANAGEMENT PRESENTATIONS OR SUPPLEMENTAL DUE DILIGENCE INFORMATION
PROVIDED TO BUYER PARTIES (INCLUDING THEIR DIRECTORS, OFFICERS, EMPLOYEES,
AFFILIATES, CONTROLLING PERSONS, ADVISORS, AGENTS OR REPRESENTATIVES) IN
CONNECTION WITH DISCUSSIONS OR ACCESS TO MANAGEMENT OF SELLERS OR ANY OF THEIR
RESPECTIVE AFFILIATES OR IN ANY OTHER FORM IN EXPECTATION OF THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT (COLLECTIVELY, “SELLER DUE DILIGENCE
INFORMATION”). BUYER PARTIES HAVE NOT RELIED ON THE SELLER DUE DILIGENCE
INFORMATION FOR PURPOSES OF ENTERING INTO THIS AGREEMENT AND SELLERS AND THEIR
RESPECTIVE AFFILIATES SHALL HAVE NO RESPONSIBILITY FOR ANY FAILURE OF SUCH
SELLER DUE DILIGENCE INFORMATION TO BE TRUE OR CORRECT; AND

 

(c)                                  ACKNOWLEDGE AND AGREE THAT (i) THE SELLER
DUE DILIGENCE INFORMATION INCLUDES CERTAIN PROJECTIONS, ESTIMATES AND OTHER
FORECASTS, AND CERTAIN BUSINESS PLAN INFORMATION, (ii) THERE ARE UNCERTAINTIES
INHERENT IN ATTEMPTING TO MAKE SUCH PROJECTIONS, ESTIMATES AND OTHER FORECASTS
AND PLANS AND BUYER PARTIES ARE FAMILIAR WITH SUCH UNCERTAINTIES AND
(iii) SUBJECT TO THE REPRESENTATIONS AND WARRANTIES OF SELLERS SET FORTH HEREIN,
BUYER PARTIES ARE TAKING FULL RESPONSIBILITY FOR MAKING THEIR OWN EVALUATION OF
THE ADEQUACY AND ACCURACY OF ALL PROJECTIONS, ESTIMATES AND OTHER FORECASTS AND
PLANS SO FURNISHED TO THEM AND

 

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ANY USE OF OR RELIANCE BY BUYER PARTIES ON SUCH PROJECTIONS, ESTIMATES AND OTHER
FORECASTS AND PLANS SHALL BE AT THEIR SOLE RISK.

 

ARTICLE 7
Covenants

 

7.1                               Conduct of Each Seller’s Business.

 

(a)                                 Operations before Closing. Except (i) as
expressly provided in this Agreement, (ii) as set forth in Schedule 7.1 or
(iii) for any actions required to be taken by an Asset Seller or the Acquired
Entity pursuant to Law, between the Execution Date and the Closing, without the
prior written consent of Buyer Parties, in each case which shall not be
unreasonably withheld, conditioned, or delayed, each Asset Seller shall, and
Equity Seller shall cause the Acquired Entity to, (y) operate in the Ordinary
Course and (z) maintain the books of account and Records relating to the
business of the Acquired Assets and the Acquired Entity, as applicable, in the
usual, regular and ordinary manner and in accordance with the usual accounting
practices of each such Person.

 

(b)                                 Restricted Activities. Without the prior
written consent of Buyer Parties, which consent shall not be unreasonably
withheld, conditioned or delayed (provided, that if Buyer Parties fail to reject
in writing a request for consent from a Seller within five (5) Business Days of
such Seller’s Notice requesting such consent, Buyer Parties shall be deemed to
have provided such consent), between the Execution Date and the Closing,

 

(i)                                     no Asset Seller shall:

 

(A)                               offer, issue, deliver, grant, transfer, sell,
mortgage, pledge, hypothecate, grant any security interest in or otherwise
subject to any Lien, or authorize or propose to offer, issue, deliver, grant,
transfer, sell, mortgage, pledge, hypothecate, grant any security interest in or
otherwise subject to any Lien, any (A) Acquired Assets or (B) rights, warrants,
commitments or options to acquire any Acquired Assets;

 

(B)                               terminate (other than terminations based on
the expiration without any affirmative action by such Seller or that do not
result in any material liability to the Acquired Assets), cancel, materially
amend or modify any Asset Seller Material Contract; or

 

(C)                               agree, whether in writing or otherwise, to do
any of the foregoing.

 

(ii)                                  Equity Seller shall cause the Acquired
Entity not to:

 

(A)                               amend its Organizational Documents;

 

(B)                               adopt, enter into, authorize, recommend,
propose or announce an intention to adopt a plan of complete or partial
liquidation,

 

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dissolution, merger, consolidation, restructuring, recapitalization or other
reorganization;

 

(C)                               change its accounting methods, policies or
practices, except as required by applicable Law as concurred to by its
independent auditors and notice of which is given in writing by Equity Seller to
Buyer Parties;

 

(D)                               acquire by merger, consolidation, purchase or
otherwise any equity interests in any Person, purchase substantially all the
assets of or otherwise acquire any business or division of any Person, or make
any loan or advance to, or capital contribution or other investment in, any
other Person, including the formation of any joint ventures;

 

(E)                                except pursuant to Section 7.20, offer,
issue, deliver, grant, transfer, sell, mortgage, pledge, hypothecate, grant any
security interest in or otherwise subject to any Lien, or authorize or propose
to offer, issue, deliver, grant, transfer, sell, mortgage, pledge, hypothecate,
grant any security interest in or otherwise subject to any Lien, any
(A) Acquired Entity Assets or Acquired Equity Interest or other equity interest
in the Acquired Entity, (B) securities convertible into any Acquired Equity
Interest or other equity interests or (C) rights, warrants, commitments or
options to acquire any Acquired Entity Assets or Acquired Equity Interest or
other equity interests;

 

(F)                                 (x) declare, set aside or pay any dividends
(other than cash dividends payable and actually paid prior to the Closing) on,
or make any other distribution in respect of any Acquired Equity Interests
(whether in cash, stock, or property or any combination thereof, but other than
cash distributions made to Equity Seller prior to Closing), (y) adjust, split,
combine or reclassify any Acquired Equity Interests or other equity interests in
the Acquired Entity or (z) repurchase, redeem or otherwise acquire, or offer to
repurchase, redeem or otherwise acquire, any Acquired Equity Interests or other
equity interests in the Acquired Entity;

 

(G)                               enter into any derivative, option, hedge or
futures Contracts;

 

(H)                              enter into any new line of business;

 

(I)                                   incur any Indebtedness for Borrowed Money
or issue or sell any debt securities or options, warrants, calls or other rights
to acquire any debt securities of the Acquired Entity;

 

(J)                                   hire any employees;

 

(K)                               enter into any Contract (A) that would
constitute an Equity Seller Material Contract, (B) that restrains, limits or
impedes the Acquired Entity’s ability to compete with or conduct any business or
line of business, including geographic limitations on the Acquired Entity’s
activities or (C)

 

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with Equity Seller or an Affiliate of Equity Seller, in each case other than
Contracts with respect to Excluded Entity Assets or Contracts that will be
terminated prior to the Closing with no ongoing liability applicable to the
Acquired Entity;

 

(L)                                terminate (other than terminations based on
the expiration without any affirmative action by Equity Seller or that do not
result in any material liability to the Acquired Entity), cancel, materially
amend or modify any oil, gas or and mineral lease or any instrument creating or
evidencing an interest in Hydrocarbons (a “Lease”), or voluntarily waive or
release any material right with respect to any Leases;

 

(M)                            commence any Proceeding or settle or compromise
any Proceedings other than those that provide for a complete release of the
Acquired Entity from all claims subject to such dispute and do not provide for
any admission of liability by the Acquired Entity;

 

(N)                               enter into, execute or extend any Leases or
otherwise take any action that could result in the receipt of lease bonuses,
delay rentals or similar payments;

 

(O)                               make or change any material Tax elections with
respect to the Acquired Entity Assets or the Acquired Entity, except as required
by applicable Law; or

 

(P)                                 agree, whether in writing or otherwise, to
do any of the foregoing.

 

(c)                                  Notwithstanding the above provisions of
Section 7.1, prior to Closing, Equity Seller may, and may cause its Affiliates
to, (i) remove all cash and cash equivalents from the Acquired Entity in such
manner as Equity Seller shall determine, provided that such removal does not
impose any liability or obligation on the Acquired Entity that will survive the
Closing, or create any Lien on any Acquired Asset and (ii) take all necessary
actions to wind up or otherwise terminate any and all Hedging Transactions to
which the Acquired Entity is party.

 

7.2                               Conduct of Buyer Parties’ Business.

 

(a)                                 Operations before Closing. Except (i) as
expressly provided in this Agreement, (ii) as set forth in Schedule 7.2, or
(iii) for any actions required to be taken by the Buyer Parties pursuant to Law,
without the prior written consent of Sellers holding at least a Supermajority
Interest, in each case which shall not be unreasonably withheld, conditioned or
delayed, between the Execution Date and the Closing, the Buyer Parties shall
(y) operate in the Ordinary Course and (z) maintain the books of account and
Records relating to the business of the Buyer Parties in the usual, regular and
ordinary manner and in accordance with the usual accounting practices of Buyer
Parties.

 

(b)                                 Restricted Activities. Without the prior
written consent of Sellers holding at least a Supermajority Interest, which
consent shall not be unreasonably withheld, conditioned,

 

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or delayed (provided, that if such Sellers fail to reject in writing a request
for consent from a Buyer Party within five (5) Business Days of such Buyer
Party’s Notice requesting such consent, Sellers shall be deemed to have provided
such consent), and except as expressly contemplated in this Agreement, between
the Execution Date and the Closing, the Buyer Parties shall not:

 

(i)                                     amend their Organizational Documents in
a manner that would have an adverse effect on the rights, preferences or
privileges of the Common Units or the Opco Common Units;

 

(ii)                                  adopt, enter into, authorize, recommend,
propose or announce an intention to adopt a plan of complete or partial
liquidation, dissolution, merger, consolidation, restructuring, recapitalization
or other reorganization;

 

(iii)                               change their accounting methods, policies,
or practices, except as required by applicable Law as concurred to by its
independent auditors and notice of which is given in writing by Buyer Parties to
Sellers;

 

(iv)                              acquire by merger, consolidation, purchase or
otherwise any equity interests in any Person, purchase substantially all the
assets of or otherwise acquire any business or division of any Person, or make
any loan or advance to, or capital contribution or other investment in, any
other Person, including the formation of any joint ventures;

 

(v)                                 offer, issue, deliver, grant, transfer,
sell, mortgage, pledge, hypothecate, grant any security interest in, or
otherwise subject to any Lien, or authorize or propose to offer, issue, deliver,
grant, transfer, sell, mortgage, pledge, hypothecate, grant any security
interest in, or otherwise subject to any Lien, any (A) equity interests in, the
Buyer Parties or their subsidiaries, (B) securities convertible into any equity
interests in the Buyer Parties or their subsidiaries or (C) rights, warrants,
commitments or options to acquire any equity interests in, the Buyer Parties or
their subsidiaries, in each case other than in connection with the Buyer Credit
Agreement or among wholly owned subsidiaries of either Buyer Party;

 

(vi)                              (A) except in connection with the Buyer
Parties’ regularly scheduled quarterly cash distributions and other cash
dividends or distributions between Buyer and its subsidiaries in connection
therewith, declare, set aside or pay any dividends on, or make any other
distribution in respect of any of the Buyer Parties’ or their subsidiaries’
equity interests (whether in the form of stock or property or any combination
thereof), (B) adjust, split, combine or reclassify any equity interests in the
Buyer Parties or their subsidiaries or (C) repurchase, redeem or otherwise
acquire, or offer to repurchase, redeem or otherwise acquire, any equity
interests in the Buyer Parties or their subsidiaries;

 

(vii)                           enter into any new line of business;

 

(viii)                        incur any Indebtedness for Borrowed Money (other
than in the Ordinary Course and as otherwise permitted pursuant to the Buyer
Credit Agreement) or issue or sell any debt securities or options, warrants,
calls or other rights to acquire any debt securities of the Buyer Parties or
their subsidiaries’, in each case other than among wholly owned subsidiaries of
either Buyer Party;

 

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(ix)                              enter into or modify or permit any of its
subsidiaries to enter into or modify the terms of any transaction with an
Affiliate of a Buyer Party or its subsidiaries or terminate any such arrangement
(other than arrangements between a Buyer Party and any wholly owned subsidiaries
thereof);

 

(x)                                 make or change any material Tax elections
with respect to the assets of the Buyer Parties, except as required by
applicable Law; or

 

(xi)                              agree, whether in writing or otherwise, to do
any of the foregoing.

 

(c)                                  Buyer Parties shall not be in breach of
Section 7.2(a) or (b) for any action taken without the prior affirmative
recommendation or approval of the Conflicts Committee.

 

7.3                               Access.

 

(a)                                 To the extent related to the Acquired
Assets, Acquired Entity Assets or the Acquired Entity, from and after the
Execution Date until the Closing Date (or earlier termination of this
Agreement), but subject to the other provisions of this Section 7.3 and
obtaining any required consents of Third Parties (which consents Sellers shall
use commercially reasonable efforts to obtain; provided, that Sellers shall not
be required to make any payments therefor), Sellers shall provide Buyer Parties
and Buyer Parties’ Representatives access to the Records that are in such
Seller’s or its Affiliate’s possession or control at such time (the
“Assessment”); provided, however, such access shall not materially interfere
with the Acquired Entity’s ownership of the Acquired Entity Assets or an Asset
Seller’s ownership of its Acquired Assets, in each case in the Ordinary Course.
Any Assessment conducted by Buyer Parties or on behalf of Buyer Parties
hereunder shall be conducted at Buyer Parties’ sole cost, risk and expense and
any conclusions resulting from any such Assessment shall be deemed to result
solely from Buyer Parties’ own independent review and judgment. Subject to the
express representations and warranties contained in Article 3 or Article 5,
Sellers shall not be deemed by Buyer Parties’ receipt of the Records in
connection with any Assessment to have made any representation or warranty,
express, implied or statutory, as to the Acquired Assets or the Acquired Entity
or the accuracy of such Records or the information contained therein.

 

(b)                                 All information obtained by and access
granted to Buyer Parties and their Representatives under this Section 7.3 shall
be subject to the terms of Section 7.10.

 

(c)                                  Contact with Business Relations. Prior to
the Closing, Buyer Parties and Buyer Parties’ Representatives shall contact and
communicate with the business relations of the Sellers and the Acquired Entity
and their Affiliates in connection with the transactions contemplated hereby
only with the prior written consent of the applicable Seller, such consent not
to be unreasonably withheld. Upon request by Buyer Parties, to the extent such
consent is granted, Sellers shall use commercially reasonable efforts to
facilitate communications between Buyer Parties and the employees, customers,
suppliers and other business relations of Sellers and the Acquired Entity.

 

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7.4                               Books and Records.

 

No later than thirty (30) days after Closing, Sellers shall deliver to Buyer
Parties all Records that are in possession of Sellers, except for the Excluded
Records. From and after the Closing Date, subject to Section 7.10, Sellers may
(at such Seller’s sole cost and expense) retain a copy of any or all of the
Seller Due Diligence Information and all other books and records relating to the
business or operations of the Acquired Assets or the Acquired Entity on or
before the Closing Date that are required by such Seller to comply with legal
obligations or that relate to the Excluded Entity Assets.

 

7.5                               Insurance.

 

Buyer Parties acknowledge and agree that, effective upon the Closing, the
insurance policies of Equity Seller and its Affiliates related to the Acquired
Entity shall be terminated or modified to exclude coverage of the Acquired
Entity, and, as a result, it shall be the obligation of Buyer Parties to obtain
at their sole cost and expense replacement insurance effective from and after
the Closing. Equity Seller shall pursue, and shall cause its Affiliates to
pursue, on behalf of and for the benefit of the Acquired Entity, any recovery
under any such insurance policy with respect to any event or occurrence during
the Interim Period; provided, that if such recovery occurs subsequent to the
Closing, Equity Seller shall pay to Buyer Parties the amount of such recovery
upon receipt thereof by Equity Seller or its Affiliates.

 

7.6                               Further Assurances.

 

Subject to the terms and conditions of this Agreement, each Party will use its
reasonable best efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all things necessary or desirable, under applicable Law or
otherwise, to consummate the transactions contemplated by this Agreement.
Following the Closing, Sellers agree to and Buyer Parties agree to, or to cause
the Acquired Entity to, execute and deliver such other documents, certificates,
agreements and other writings and to take such other actions as may be necessary
in order to consummate or implement expeditiously the transactions contemplated
by this Agreement in accordance with the terms hereof, including any instruments
of assignment, transfer, conveyance, endorsement, direction or authorization as
may be necessary to consummate and make effective the transactions contemplated
by this Agreement. If any of the Acquired Assets, Acquired Entity Assets or
Excluded Entity Assets (or exclusions thereto) are incorrectly or incompletely
described herein, in the Asset Assignment or in any other Transaction Documents,
the Parties agree to work together in good faith to correct such incorrect or
incomplete description.

 

7.7                               Publicity.

 

All press releases or other public communications of any nature whatsoever
relating to the transactions contemplated by this Agreement, and the method of
the release for publication thereof, shall be subject to the prior written
consent of Buyer Parties and Sellers; provided, however, that nothing herein
shall prevent a Party from publishing such press releases or other public
communications as is necessary to satisfy such Party’s obligations under
applicable securities or other Laws or under the rules of any stock or
commodities exchange after consultation with the other Party.

 

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7.8                               Fees and Expenses; Transfer Taxes.

 

(a)                                 Except as otherwise provided in this
Agreement, all fees and expenses, including fees and expenses of counsel,
financial advisors and accountants, incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the Party incurring
such fee or expense.

 

(b)                                 Buyer Parties shall be responsible for, and
shall indemnify and hold harmless Sellers against, any state or local transfer,
sales (including bulk sales), use, real property transfer, controlling interest
transfer, filing, value added, documentary, stamp, gross receipts, registration,
conveyance, excise, recording, licensing, stock transfer stamps or other similar
Taxes and fees arising out of or in connection with or attributable to the
transactions contemplated by this Agreement (the “Transfer Taxes”). All Tax
Returns with respect to Transfer Taxes incurred in connection with this
Agreement or otherwise in connection with the transactions contemplated
hereunder shall be timely filed by the Party responsible for such filing under
applicable law. Buyer Parties and Sellers shall reasonably cooperate to reduce
or eliminate any Transfer Taxes to the extent permitted by applicable Law.

 

(c)                                  To the extent that the transactions
contemplated under this Agreement are determined to involve a transfer of
tangible personal property, Buyer Parties and Sellers acknowledge and agree that
such transactions constitute a sale of an identifiable segment of a business for
purposes of Section 151.304 of the Texas Tax Code.

 

7.9                               Taxes.

 

(a)                                 Each Party shall be responsible for and bear
its own Income Taxes. Each Seller shall retain responsibility for, and shall
bear, all Asset Taxes with respect to the Acquired Assets, Acquired Entity and
Acquired Entity Assets of such Seller 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 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 Parties. For purposes of
allocation between the Parties of Asset Taxes for any Straddle Period, (A) Asset
Taxes that are attributable to the severance or production of Hydrocarbons
(including ad valorem or property taxes measured by or based on production)
shall be allocated based on severance or production occurring before the
Effective Time (which shall be the applicable Seller’s responsibility) and from
and after the Effective Time (which shall be Buyer Parties’ responsibility);
(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 (A))
shall be allocated based on transactions giving rise to such Asset Taxes
occurring before the Effective Time (which shall be the applicable Seller’s
responsibility) and from and after the Effective Time (which shall be Buyer
Parties’ responsibility); and (C) Asset Taxes that are ad valorem, property or
other Asset Taxes imposed on a periodic basis (other than Asset Taxes described
in clause (A)) shall be allocated pro rata per day between the portion of the
Straddle Period ending on and including the day immediately prior to the day on
which the Effective Time occurs (which shall be the applicable Seller’s
responsibility) and the portion of the Straddle Period beginning on the day on
which the Effective Time occurs (which shall be Buyer Parties’ 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 on and including the day
immediately prior to the day on which the Effective Time occurs and the portion
of the

 

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Straddle Period beginning on the day on which the Effective Time occurs. To the
extent the actual amount of any Asset Taxes described in this Section 7.9(a) is
not determinable on the Closing Date or the Final Settlement Date, Buyer Parties
and the applicable Seller shall utilize the most recent information available in
estimating the amount of such Asset Taxes for purposes of Section 2.9. 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 7.9(a).

 

(b)                                 Except as required by applicable Law, each
Seller shall prepare and file or cause to be prepared and filed all Tax Returns
with respect to Asset Taxes on the Acquired Assets or Acquired Entity Assets of
such Seller, and shall pay or cause to be paid all Asset Taxes with respect to
such Tax Returns, for all Tax periods that end before the Effective Time
(regardless of when due) and any Straddle Period (to the extent such Tax Returns
are required to be filed before the Closing Date). Buyer Parties shall prepare
and file or cause to be prepared and filed all Tax Returns with respect to Asset
Taxes, and shall pay or cause to be paid all Asset Taxes with respect to such
Tax Returns, for any Straddle Period (to the extent such Tax Returns are
required to be filed on or after the Closing Date). Each Party shall indemnify
and hold the other Parties harmless for any failure to file such Tax Returns and
to make such payments. Each Party 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 Law. Each Party shall provide the other
Party with a copy of any Tax Return relating to any Straddle Period for such
other Party’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 the filing Party
shall incorporate all reasonable comments of such other Party provided to such
filing Party in advance of the due date for the filing of such Tax Return. The
Parties agree that (x) this Section 7.9(b) is intended to solely address the
timing and manner in which certain Tax Returns relating to Asset Taxes are filed
and the Asset Taxes with respect thereto are paid to the applicable Governmental
Authority, and (y) nothing in this Section 7.9(b) shall be interpreted as
altering the manner in which Asset Taxes are allocated to and economically borne
by the Parties in accordance with Section 7.9(a).

 

(c)                                  Buyer Parties and each 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 Acquired Assets,
Acquired Entity and Acquired Entity Assets, including access to books and
records, as is reasonably necessary for the filing of all Tax Returns by Buyer
Parties or such 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
Acquired Assets, Acquired Entity and Acquired Entity 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.

 

(d)                                 Each Seller shall be entitled to any and all
refunds of Asset Taxes allocated to such Seller pursuant to Section 7.9(a), and
Buyer Parties shall be entitled to any and all refunds of Asset Taxes allocated
to Buyer Parties pursuant to Section 7.9(a). If a Party receives a refund

 

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of Asset Taxes to which the other Party is entitled pursuant to this
Section 7.9(d), 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.

 

(e)                                  Each Seller and Buyer Parties shall have
the right at any time prior to Closing to assign all or a portion of its rights
under this Agreement to a Qualified Intermediary (as that term is defined in
Section 1.1031(k)-1(g)(4)(iii) of the Treasury Regulations) or an Exchange
Accommodation Titleholder (as that term is defined in Rev. Proc. 2000-37, 2000-2
C.B. 308) in order to accomplish the transaction in a manner that will comply,
either in whole or in part, with the requirements of a like-kind exchange
pursuant to Section 1031 of the Code; provided, that (i) the Closing shall not
be delayed or affected by reason of such like-kind exchange or any actions taken
by either such Seller or Buyer Parties in connection with this Section 7.9(e),
(ii) an assignment under this Section 7.9(e) shall not release any Party from
its liabilities and obligations under this Agreement nor shall the consummation
or accomplishment of such like-kind exchange be a condition to the Parties’
obligations under this Agreement; (iii) the non-assigning Party’s rights under
this Agreement shall not be altered or diminished in any manner; (iv) the
assigning Party shall indemnify, defend, and hold the Party that is not
assigning harmless from all claims, damages, liabilities, costs and expenses
(including, but not limited to reasonable legal fees and any additional Taxes,
including Transfer Taxes) in connection with such like-kind exchange; and (v) no
Party represents to any other that any particular tax treatment will be given to
any Party as a result of any such assignment. In the event a Party assigns its
rights under this Agreement pursuant to this Section 7.9(e), such Party agrees
to notify the other Parties in writing of such assignment at or before Closing.
If a Seller assigns its rights under this Agreement for this purpose, Buyer
Parties agree to (A) consent to such Seller’s assignment of its rights in this
Agreement in the form reasonably requested by the Qualified Intermediary, and
(B) pay all or a portion of the Adjusted Purchase Price and any adjustments
thereto into a qualified escrow or qualified trust account at Closing as
directed in writing. If Buyer Parties assign their rights under this Agreement
for this purpose, each Seller agrees to (I) consent to Buyer Parties’ assignment
of their rights in this Agreement in the form reasonably requested by Buyer
Parties’ Qualified Intermediary or Exchange Accommodation Titleholder (but in no
event will an Asset Seller be required to transfer the Acquired Assets in any
form other than through a transfer of the Acquired Assets, or Entity Seller be
required to transfer the Acquired Entity Assets in any form other than through a
transfer of the Acquired Equity Interests, and in no event will a Seller be
required to transfer the Acquired Assets or Acquired Equity Interests to more
than one transferee (i.e., all of the Acquired Assets and Acquired Equity
Interests will be transferred to a single transferee)), (II) accept all or a
portion of the payments payable under this Agreement from the account designated
by Buyer Parties’ Qualified Intermediary or Exchange Accommodation Titleholder
at Closing, and (III) at Closing, subject to the limitations otherwise set forth
herein, convey and assign directly to Buyer Parties’ Qualified Intermediary or
Buyer Parties’ Exchange Accommodation Titleholder (as directed in writing) the
Acquired Equity Interests and Acquired Assets that are the subject of this
Agreement upon satisfaction of the other conditions to Closing and other terms
and conditions hereof.

 

(f)                                   Buyer Parties shall use their reasonable
best efforts to, after Closing, notify each operator of each Well associated
with the Acquired Assets or Acquired Entity Assets of the change of the employee
identification number associated with the Acquired Assets, Acquired Entity
Assets or Acquired Entity.

 

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7.10                        Confidentiality.

 

Subject to Section 7.7, for a period of one (1) year from and after the Closing
Date, each Seller shall, and shall cause its Affiliates to, not make disclosure
to Third Parties of any confidential or proprietary information relating to
Buyer Parties or their respective Affiliates (including the Acquired Entity),
except with the prior written consent of Buyer Parties or as required by, or
requested pursuant to, applicable Law, regulation or legal, judicial or
administrative process (including an audit or examination by a regulatory
authority or self-regulatory organization), except to the extent that such
information (i) is generally available to the public through no fault of such
Seller or any of its Affiliates committed following Closing or (ii) is lawfully
acquired by such Seller or any of its Affiliates from and after the Closing from
sources which are not known to such Seller to be prohibited from disclosing such
information by a legal, contractual or fiduciary obligation to Buyer Parties or
the Acquired Entity; provided, however, that (x) nothing shall prohibit such
Seller or its Affiliates from using their knowledge or mental impressions of
such information or their general knowledge of the industry or geographic area
in the conduct of their respective businesses following the Closing, (y) such
Seller and its Affiliates may discuss (on a confidential basis) the underlying
investment with respect to the Acquired Assets or the Acquired Entity, as
applicable, and the acquisition or disposition of the Acquired Assets or the
Acquired Entity, as applicable, in connection with legitimate fundraising
activities or fund performance reporting with current or prospective investors,
lenders, or partners.

 

7.11                        Notices to Escrow Agent.

 

Sellers and Buyer Parties shall provide the Escrow Agent with such notices,
directions and instructions (as are necessary for the Escrow Agent to fulfill
its obligations set forth in the Escrow Agreement) in accordance with the
provisions of this Agreement.

 

7.12                        Acquired Entity Indebtedness.

 

In connection with the Closing, Equity Seller shall obtain a release of Liens in
respect of the Acquired Entity under the Prior Credit Agreement and a release of
the Acquired Entity as borrower thereunder (the “Release Letters”). The Release
Letters shall (a) indicate the total amount required to be paid to fully satisfy
all principal, interest, prepayment premiums, penalties, breakage costs or
similar obligations (other than Ordinary Course and contingent indemnification
obligations) related to such Seller Indebtedness (the “Payoff Amount”),
(b) state that all Liens in connection therewith relating to the Acquired Entity
Assets shall be, upon the payment of the Payoff Amount on the Closing Date,
released and (c) authorize the Acquired Entity to file UCC-3 termination
statements and mortgage releases in all applicable jurisdictions to evidence the
release of the Seller Indebtedness. Equity Seller and the Acquired Entity shall
deliver all Notices and take all other actions necessary to facilitate the
termination of the obligations and commitments of the Acquired Entity under the
Seller Indebtedness, the repayment in full of all obligations then outstanding
thereunder, the elimination of the Acquired Entity from all agreements related
thereto and the release of all Liens applicable to the Acquired Entity Assets in
connection therewith, in each case, on the Closing Date.

 

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7.13                        Affiliate Contracts.

 

Prior to the Closing, Equity Seller shall cause the Acquired Entity to
terminate, without liability or continuing obligation to the Acquired Entity,
the Contracts listed on Schedule 7.13.

 

7.14                        Assistance with Financial Statements and Other
Matters.

 

(a)                                 From and after the Execution Date, each
Seller shall use reasonable best efforts to direct its consultants, accountants,
reserve engineers, employees, agents and representatives to, during customary
business hours and provided that such efforts do not unreasonably interfere with
the business operations of such Seller, cooperate with Buyer Parties and
independent auditors chosen by Buyer Parties (“Buyer’s Auditor”) in connection
with the Buyer Credit Agreement, any audit by Buyer’s Auditor of any financial
statements of the Acquired Assets or Acquired Entity or any reserve reports with
respect to the Company Oil and Gas Properties or other actions that Buyer
Parties or any of their Affiliates reasonably require to comply with the
requirements under state and federal securities Laws. Such cooperation will
include (i) reasonable access to each Seller’s and the Acquired Entity’s
officers, managers, employees, consultants, agents and representatives who were
responsible for preparing or maintaining the financial records and work papers
and other supporting documents used in the preparation of such financial
statements as may be required by Buyer’s Auditor to perform an audit or conduct
a review in accordance with generally accepted auditing standards or to
otherwise verify such financial statements, (ii) using commercially reasonable
efforts to obtain the consent of the independent auditor(s) and reserve
engineer(s) of such Seller or the Acquired Entity (as applicable) that conducted
any audit of such financial statements or prepared any reserve reports to be
named as an expert in (A) any filings that may be made by Buyer under the
Securities Act or required by the Commission under securities Laws applicable to
Buyer or any report required to be filed by Buyer under the Exchange Act in
connection with the transactions contemplated by this Agreement or (B) any
prospectus or offering memorandum for any equity or debt financing of Buyer,
(iii) providing information in connection with Buyer’s preparation of responses
to any inquiries by regulatory authorities relating to the foregoing financial
statements and/or reserve reports, (iv) providing information with respect to
property descriptions of the Acquired Assets or Acquired Entity Assets necessary
to execute and record a deed of trust for any financing activities (including
under the Buyer Credit Agreement), (v) executing and delivering and pledging any
security documents, definitive financing documents or other certificates or
documents or otherwise facilitate the pledging of collateral for delivery under
the Buyer Credit Agreement, as reasonably requested by Buyer, (vi) using
reasonable best efforts to provide, at least ten (10) Business Days prior to the
Closing, all documentation and other information about the Acquired Entity as is
reasonably requested by Buyer which relates to applicable “know your customer”
and anti-money laundering rules and regulations including without limitation the
USA PATRIOT ACT, (vii) delivery of one or more customary representation letters
from such Seller or the Acquired Entity (as applicable) to the auditor of the
Audited Financial Statements that are reasonably requested by Buyer to allow
such auditors to complete an audit (or review of any financial statements) and
to issue an opinion with respect to an audit of those financial statements
required pursuant to this Section 7.14(a) and (viii) using commercially
reasonable efforts to cause the independent auditor(s) or reserve engineer(s) of
Sellers or the Acquired Entity (as applicable) that conducted any audit of such
financial statements to provide customary “comfort letters” to any underwriter
or purchaser in connection with any equity or debt financing of Buyer.
Notwithstanding the foregoing, (x) nothing herein shall expand a Seller’s
representations, warranties, covenants or agreements set forth in this Agreement
or give Buyer Parties, its Affiliates, or any Third Party any

 

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rights to which it is not entitled hereunder, (y) nothing in this
Section 7.14(a) shall require travel or the obligation to incur any
out-of-pocket costs by any of the subject Persons in order to comply with the
terms of this Section 7.14(a) and (z) Buyer Parties will make reasonable efforts
to minimize any disruption associated with the cooperation contemplated by such
Persons hereby. In each case, such cooperation by each Seller pursuant to this
Section 7.14(a) shall be at Buyer Parties’ written request with reasonable prior
notice to such Seller, and no such cooperation by a Seller shall be required to
the extent it could cause any representation or warranty in this Agreement to be
breached, cause any condition to the Closing set forth in Article 8 to fail to
be satisfied or otherwise cause any breach of this Agreement. Nothing in this
Section 7.14 or any action or inaction taken hereunder, shall excuse or waive
Buyer Parties’ obligations to consummate the transactions in accordance with
this Agreement. Seller shall not have any liability or responsibility to Buyer
Parties or any of their respective equity or debt financing sources with respect
to the accuracy or completeness of any information delivered pursuant to this
Section 7.14(a).

 

(b)                                 Notwithstanding anything to the contrary
herein, it is understood and agreed that: (i) each Seller’s cooperation pursuant
to the provisions of this Section 7.14 shall be at Buyer Parties’ sole cost and
expense, and on the Closing Date or following the termination of this Agreement,
Buyer Parties shall promptly reimburse each Seller for all reasonable and
documented out-of-pocket costs and expenses incurred by such Seller or its
Affiliates in connection with such cooperation; (ii) Buyer Parties shall
indemnify and hold harmless each Seller and its Affiliates and their respective
directors, officers, employees and agents from and against any and all Losses by
any such Persons suffered or incurred in connection with any assistance or
activities provided in connection therewith other than to the extent such Losses
arise from gross negligence, willful misconduct or bad faith of such Seller, its
Affiliates and their respective directors, officers, employees and agents;
(iii) each Seller shall have the right (prior to Closing) to review any
presentations or other material written information prepared by Buyer Parties or
their Affiliates prior to the dissemination of such materials to potential
investors, lenders or other counterparties to any proposed financing transaction
(or filing with any Governmental Authority); (iv) except to the extent disclosed
to lenders (who shall hold such confidential information confidential), all
non-public or otherwise confidential information regarding a Seller or the
Acquired Assets or Acquired Entity obtained by Buyer Parties or their
representatives shall be kept confidential; (v) the assistance described in this
Section 7.14 shall not require a Seller to take any action that such Seller
reasonably believes could result in a violation of any material agreement or any
confidentiality arrangement or the loss of any legal or other applicable
privilege; and (vi) no Seller shall be required to provide any information to
Buyer Parties or any of their respective equity or debt financing sources or
that is not then in such Seller’s or its Affiliates’ possession.

 

7.15                        No Shop.

 

Until the earlier of the occurrence of Closing or the termination of this
Agreement pursuant to Article 9:

 

(a)                                 Each Seller and its Affiliates shall, and
shall direct each of their Representatives to, immediately cease any discussions
or negotiations with any Persons with respect to any Third Party Acquisition or
any proposal reasonably likely to lead to a Third Party Acquisition. From the
Execution Date until the Closing, each Seller shall not, and shall not

 

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authorize or permit any of its Affiliates or any of their respective
Representatives to, and shall not resolve or propose to, directly or indirectly,
encourage, solicit, participate in or initiate discussions, negotiations,
inquiries, proposals or offers (including any proposal or offer to their
shareholders) with or from or provide any non-public information to any Person
or group of Persons concerning any Third Party Acquisition or any inquiry,
proposal or offer reasonably likely to lead to a Third Party Acquisition.

 

(b)                                 Each Seller shall not, and shall cause its
subsidiaries not to, enter into any agreement, letter of intent, memorandum of
understanding, agreement in principle, acquisition agreement, merger agreement,
option agreement, joint venture agreement, partnership agreement or other
agreement constituting or directly related to, or which is reasonably likely to
lead to, a Third Party Acquisition or any proposal for a Third Party
Acquisition.

 

(c)                                  For the purposes of this Agreement, “Third
Party Acquisition” shall mean the occurrence of any acquisition, directly or
indirectly, in one or a series of related transactions, whether by sale, merger
or otherwise, of all or any part of the Acquired Equity Interests or any portion
of the Acquired Assets or Acquired Entity Assets.

 

7.16                        Lock-Up.

 

During the period beginning on the Closing Date and ending on the one hundred
twentieth (120th) day after the Closing Date (excluding the Closing Date for
purposes of calculating such date) (the “Lock-Up Period”), no Seller will lend,
offer, pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to
purchase, or otherwise transfer or dispose of, directly or indirectly, any Opco
Common Units issued hereunder to such Seller, whether any such transaction is to
be settled by delivery of Common Units or Opco Common Units or other securities,
in cash, or otherwise. In the interest of clarity, nothing in this Section 7.16
shall restrict any Seller from (x) utilizing customary hedging strategies that
may involve the pledge of Common Units as collateral until such time as the
Common Units are ultimately disposed on or after expiration of the Lock-Up
Period, (y) filing a registration statement with respect to the Common Units in
accordance with the Registration Rights Agreement and in compliance with the
Securities Act or (z) transferring any Common Units or Opco Common Units
pursuant to Section 2.9. Nothing in this Section 7.16 shall prohibit or limit
the ability of any Seller to effect any transfer of Common Units (a) as a bona
fide gift or gifts or any other similar transfer or distribution that does not
involve a sale or other disposition for value, (b) to such Seller’s partners,
members or stockholders as part of a dividend or distribution, (c) to any
corporation, partnership or other entity that is an Affiliate of such Person, in
each case of the foregoing clauses (a) through (c), so long as such transfer
does not occur until after such Seller’s Common Units are included in a
registration statement on Form S-3 that has been declared effective by the SEC
and the transferee agrees in writing to be bound by all the terms of this
Section 7.16, (d) pursuant to a bona fide third party tender offer, merger,
consolidation or other similar transaction made to all holders of Common Units
or (e) pursuant to an order of a court or regulatory agency.

 

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7.17                        Additional Listing Application.

 

As promptly as practicable after the Execution Date, but in any event after
taking into consideration the rules and regulations of the New York Stock
Exchange with respect to the timing of the Additional Listing Application (as
hereinafter defined) and the supporting documents required to accompany the
Additional Listing Application, Buyer shall submit to the New York Stock
Exchange an additional listing application relating to the Common Units issuable
upon exchange of the Opco Common Units and the Class B Units to be issued
hereunder (the “Additional Listing Application”) and shall use its commercially
reasonable efforts to secure the New York Stock Exchange’s approval of the
Additional Listing Application.

 

7.18                        Several and Not Joint Obligations.

 

Notwithstanding anything to the contrary in this Agreement, each of the
covenants of the Sellers contained herein are made severally as to such Seller
only, and are not made jointly.

 

7.19                        Conflicts Committee.

 

Unless otherwise expressly set forth in this Agreement, whenever a
determination, approval, consent, waiver or agreement of the Buyer Parties,
Kimbell Royalty GP, LLC or the Board of Directors of Kimbell Royalty GP, LLC is
permitted or required pursuant to this Agreement, such determination, approval,
consent, waiver or agreement must be approved, authorized or recommended by the
Conflicts Committee.

 

7.20                        Pre-Closing Distributions of Certain Assets.

 

Upon the terms and subject to the conditions set forth in this Agreement, prior
to the Closing, Equity Seller shall cause the Acquired Entity to distribute,
transfer, assign and convey (and undertake to record such assignment or
conveyance in the applicable county records) to Equity Seller certain royalty
interests and working interests and other assets and liabilities set forth on
Schedule 7.20 hereto (such royalty interests and working interests, the
“Distributed Interests”). For the avoidance of doubt, the Distributed Interests
shall not include any of the Acquired Equity Interests or the Acquired Entity
Assets.

 

7.21                        Exchange Election.

 

Prior to the Closing, the Foundation shall make an Exchange Election under each
of the KRP Bakken I LLC Agreement and the KRP Marcellus I LLC Agreement.  For
the avoidance of doubt, the assets received by the Foundation pursuant to such
Exchange Elections shall constitute Acquired Assets hereunder.

 

ARTICLE 8
Conditions to Closing

 

8.1                               Conditions to Obligations of Buyer Parties to
Closing.

 

The obligation of Buyer Parties to consummate the transactions contemplated by
this Agreement 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 whole
or in part in writing exclusively by Buyer Parties:

 

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(a)                                 Representations, Warranties, and Covenants.
(i) The representations and warranties of Sellers set forth in Sections 3.1,
3.2, 4.1, 4.2, 4.6, 5.1, and 5.3 will be true and correct in all respects (other
than de minimis inaccuracies) as of the Execution Date and as of the Closing
Date as if made on the Closing Date (except to the extent that such
representations and warranties expressly relate to an earlier date, in which
case such representations and warranties shall have been true and correct as of
such earlier date); and (ii) all other representations and warranties of Sellers
made in this Agreement (other than representations and warranties described in
clause (i) above) will be true and correct (disregarding all materiality and
Seller Material Adverse Effect qualifications contained herein) as of the
Execution Date and as of the Closing Date as if made on the Closing Date (except
to the extent that such representations and warranties expressly relate to an
earlier date, in which case such representations and warranties shall have been
true and correct as of such earlier date), except where all such breaches or
inaccuracies taken collectively (without giving effect to any limitation as to
materiality and Seller Material Adverse Effect qualifications contained herein)
would not, individually or in the aggregate, reasonably be expected to have a
Seller Material Adverse Effect.

 

(b)                                 Performance. Each Seller shall have
performed or complied with in all material respects all of the covenants and
agreements required by this Agreement to be performed or complied with by such
Person on or before the Closing.

 

(c)                                  No Injunction. On the Closing Date, no
provision of any applicable Law and no Order will be in effect that restrains,
enjoins, makes illegal or otherwise prohibits the consummation of the Closing.

 

(d)                                 Closing Deliverables. Buyer Parties shall
have received the documents and certificates required under Sections 2.6(b),
2.6(c) and 2.6(d).

 

(e)                                  Debt Payoff Letters. Each payee of Seller
Indebtedness shall have delivered a Release Letter to the Acquired Entity and
all indebtedness stated in each Release Letter so delivered, as well as all
accrued and unpaid interest, breakage costs and prepayment fees or penalties
that will be incurred in connection with the payment and discharge of such
Seller Indebtedness as stated in each such Release Letter, shall have been paid
in full at or prior to the Closing and all Liens associated therewith shall be
released at or prior to the Closing and Buyer Parties provided with UCC-3’s
necessary to effectuate such termination; provided, that the foregoing condition
shall be deemed satisfied if Buyer Parties receive evidence from such Seller at
or prior to the Closing that such Seller has repaid, or concurrently with
Closing will repay, such amounts pursuant to Section 2.3(a) and such Liens have
been or are released as of the Closing.

 

(f)                                   No Seller Material Adverse Effect. No
Seller Material Adverse Effect shall have occurred nor shall any event or events
have occurred that, individually or in the aggregate, with or without the lapse
of time, would reasonably be expected to result in a Seller Material Adverse
Effect.

 

(g)                                  No Walk Right. Subject to Section 2.5, the
Walk-Right Amounts shall not be, in the aggregate, more than the Walk-Right
Threshold.

 

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(h)                                 Pre-Closing Transactions.  Prior to the
Closing Date, (i) the Acquired Entity shall have assigned the Distributed
Interests to Equity Seller, and (ii) the Foundation shall have consummated the
Exchange Elections and shall have received an assignment of its applicable
undivided interest in the relevant assets pursuant to each of the KRP Bakken I
LLC Agreement and the KRP Marcellus I LLC Agreement.

 

8.2                               Conditions to the Obligations of Sellers to
Closing.

 

The obligation of each Seller to consummate the transactions contemplated by
this Agreement 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 whole
or in part in writing exclusively by Sellers holding at least a Supermajority
Interest:

 

(a)                                 Representations, Warranties, and Covenants.
(i) The representations and warranties of Buyer Parties set forth in Sections
6.1, 6.2 and 6.4 will be true and correct in all respects (other than de minimis
inaccuracies) as of the Execution Date and as of the Closing Date as if made on
the Closing Date (except to the extent that such representations and warranties
expressly relate to an earlier date, in which case such representations and
warranties shall have been true and correct as of such earlier date); and
(ii) all other representations and warranties of Buyer Parties made in this
Agreement (other than representations and warranties described in clause
(i) above) will be true and correct (disregarding all materiality and Buyer
Material Adverse Effect qualifications contained herein) as of the Execution
Date and as of the Closing Date as if made on the Closing Date (except to the
extent that such representations and warranties expressly relate to an earlier
date, in which case such representations and warranties shall have been true and
correct as of such earlier date), except where all such breaches or inaccuracies
taken collectively (without giving effect to any limitation as to materiality
and Buyer Material Adverse Effect qualifications contained herein) would not,
individually or in the aggregate, reasonably be expected to have a Buyer
Material Adverse Effect.

 

(b)                                 Performance. Buyer Parties shall have
performed or complied with in all material respects all of the covenants and
agreements required by this Agreement to be performed or complied with by Buyer
Parties on or before the Closing.

 

(c)                                  No Injunction. On the Closing Date, no
provision of any applicable Law and no Order will be in effect that restrains,
enjoins, makes illegal or otherwise prohibits the consummation of the Closing.

 

(d)                                 Closing Deliverables. Sellers shall have
received the documents and certificates required under Section 2.6(e).

 

(e)                                  No Buyer Material Adverse Effect. No Buyer
Material Adverse Effect shall have occurred nor shall any event or events have
occurred that, individually or in the aggregate, with or without the lapse of
time, would reasonably be expected to result in a Buyer Material Adverse Effect.

 

(f)                                   No Walk Right. Subject to Section 2.5, the
Walk-Right Amounts shall not be, in the aggregate, more than the Walk-Right
Threshold.

 

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(g)                                  NYSE Approval. The Additional Listing
Application shall have been approved and the Common Units issuable upon exchange
of Opco Common Units and the Class B Units to be issued hereunder shall have
been approved for listing on the New York Stock Exchange.

 

ARTICLE 9
Termination

 

9.1                               Termination.

 

Subject to Section 9.2, at any time prior to the Closing, this Agreement may be
terminated and the transactions contemplated hereby abandoned:

 

(a)                                 by the mutual written consent of Buyer
Parties and Sellers holding at least a Supermajority Interest;

 

(b)                                 by either Buyer Parties, on the one hand, or
Sellers holding at least a Supermajority Interest, on the other hand, upon
Notice to the other Party(ies), if the Closing has not been consummated by
January 31, 2019; provided, however, that neither Buyer Parties nor any Seller
will be entitled to terminate this Agreement pursuant to this Section 9.1(b) if
such Person’s breach of any representation, warranty or covenant set forth in
this Agreement has been the cause of the Closing failing to occur by such date;

 

(c)                                  by Buyer Parties, upon Notice to Sellers,
if (i) there has been a breach by a Seller of any representation, warranty or
covenant contained in this Agreement that would prevent the satisfaction of any
condition to the obligations of Buyer Parties set forth in Sections 8.1(a) or
8.1(b) and, if such breach is of a character that is capable of being cured,
such breach has not been cured by such Seller within thirty (30) days after
Notice thereof from Buyer Parties (ii) Buyer Parties are ready, willing and able
to perform all covenants to be performed by Buyer Parties at Closing and
(iii) Buyer Parties are not in breach of any representation, warranty or
covenant set forth in this Agreement that would prevent the satisfaction of any
condition to the obligations of a Seller set forth in Sections 8.2(a) or 8.2(b);

 

(d)                                 by Sellers holding at least a Supermajority
Interest, upon Notice to Buyer Parties, if (i)(A) there has been a breach by
Buyer Parties of any representation, warranty or covenant contained in this
Agreement that would prevent the satisfaction of any condition to the
obligations of Sellers set forth in Sections 8.2(a) or 8.2(b) and, if such
breach is of a character that is capable of being cured, such breach has not
been cured by Buyer Parties within thirty (30) days after Notice thereof from
such Sellers (B) such Sellers are ready, willing and able to perform all
covenants to be performed by such Person at Closing and (C) such Sellers are not
in breach of any representation, warranty or covenant set forth in this
Agreement that would prevent the satisfaction of any condition to the
obligations of Buyer Parties set forth in Sections 8.1(a) or 8.1(b) or
(ii) (x) Buyer Parties have failed to comply with their obligations to
consummate the Closing within two (2) Business Days after the date on which they
are obligated to consummate the Closing pursuant to Section 2.7, (y) all the
conditions set forth in Article 8, other than the conditions to be satisfied at
Closing, have been and continue to be satisfied or have been waived on the date
on which

 

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Closing was to have occurred pursuant to Section 2.7 and (z) such Sellers stood
ready, willing and able to consummate the Closing throughout such period;

 

(e)                                  subject to Section 2.5, by Sellers, on the
one hand, or Buyer Parties, on the other hand, if the Walk-Right Amounts exceed
the Walk-Right Threshold; or

 

(f)                                   by either Buyer Parties, on the one hand,
or Sellers, on the other hand, upon Notice to the other Parties, if any
Governmental Authority having competent jurisdiction has issued a final,
non-appealable Order, decree, ruling or injunction (other than a temporary
restraining order) or taken any other action permanently restraining, enjoining
or otherwise prohibiting the transactions contemplated by this Agreement and
such injunction or other action shall have become final and non-appealable.

 

9.2                               Effect of Termination.

 

If a Party terminates this Agreement under Section 9.1, then such Party shall
promptly give Notice to the other Parties specifying the provision hereof
pursuant to which such termination is made, and this Agreement shall become null
and void and have no effect, except that the agreements contained in Article 1,
this Article 9, Article 11, the provisions of Section 7.3, Section 7.7 and
Section 7.8 shall survive termination hereof. No termination of this Agreement
pursuant to Section 9.1 and nothing contained in this Section 9.2 shall relieve
any Party to this Agreement of liability for willful breach of this Agreement
occurring prior to any termination, or for willful breach of any provision of
this Agreement that specifically survives termination hereunder.

 

9.3                               Remedies for Termination.

 

(a)                                 If Sellers have the right to terminate this
Agreement pursuant to Section 9.1(d), then Sellers shall be entitled to either
(i) terminate this Agreement or (ii) in lieu of terminating this Agreement, seek
all remedies available at Law or in equity, including specific performance. In
the event Sellers seek specific performance in accordance with the preceding
sentence and specific performance is not granted, Sellers shall have the right
to terminate this Agreement and seek all remedies available at Law. If Sellers
terminate this Agreement as described in this Section 9.3(a), upon such
termination, Sellers shall be free immediately to enjoy all rights of ownership
of the Acquired Assets or the Acquired Equity Interests, as applicable, and to
sell, transfer, encumber or otherwise dispose of the Acquired Assets or the
Acquired Equity Interests, as applicable, to any Person without any restriction
under this Agreement. Buyer Parties waive any requirement for the posting of a
bond, or showing of irreparable injury, in connection with any equitable relief
hereunder in favor of Sellers and Buyer Parties agree not to challenge any such
equitable relief sought in accordance with this Section 9.3(a).

 

(b)                                 If Buyer Parties have the right to terminate
this Agreement pursuant to Section 9.1(c), then Buyer Parties shall be entitled
to (i) terminate this Agreement or (ii) in lieu of terminating this Agreement,
seek all remedies available at Law or in equity, including specific performance.
In the event Buyer Parties seek specific performance in accordance with the
preceding sentence and specific performance is not granted, Buyer Parties shall
have the right to terminate this Agreement and seek all remedies available at
Law. Each Seller waives any requirement for the posting of a bond, or showing of
irreparable injury, in connection with any

 

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equitable relief hereunder in favor of Buyer Parties and each Seller agrees not
to challenge any such equitable relief sought in accordance with this
Section 9.3(b).

 

(c)                                  If this Agreement terminates for reasons
other than those set forth in Sections 9.3(a) or 9.3(b), then (i) the Parties
shall have no liability or obligation hereunder as a result of such termination,
and (ii) Sellers shall be free immediately to enjoy all rights of ownership of
the Acquired Assets or the Acquired Equity Interests, as applicable, and to
sell, transfer, encumber or otherwise dispose of the Acquired Assets or the
Acquired Equity Interests, as applicable, to any Person without any restriction
under this Agreement.

 

(d)                                 Upon termination of this Agreement, (i) each
Party shall return to the other Party or destroy (at the receiving Party’s
option and expense) all confidential information furnished by or on behalf of a
Party in connection with its due diligence investigation of the Acquired Assets
or the Acquired Equity Interests, as applicable, or Buyer Parties (as
applicable) and (ii) an officer of the receiving Party shall promptly certify
the receiving Party’s compliance with preceding clause (i) to the disclosing
Party in writing.

 

ARTICLE 10
Indemnification

 

10.1                        Survival of Representations, Warranties and
Covenants.

 

All representations and warranties set forth in this Agreement (and in each case
the corresponding representations and warranties given in the certificates
delivered at Closing pursuant to this Agreement) shall survive the Closing until
the date that is one (1) year after the Closing Date. All covenants and
agreements of the Parties contained herein shall terminate (a) upon the Closing,
if performance is solely required prior to or concurrently with the Closing and
(b) upon the expiration by their terms of the obligations of the applicable
Party under such covenant or agreement, if performance is required in the period
from and after the Closing; provided, that the covenants contained in
Section 7.1 and Section 7.2 shall survive the Closing until the date that is 180
days after the Closing Date. Representations, warranties, covenants and
agreements shall terminate and be of no further force and effect after the
respective date of their expiration, after which time no claim may be asserted
thereunder by any Person, provided, that notwithstanding the limitations set
forth in the two preceding sentences, with respect to any specific claim for
indemnification hereunder delivered to the applicable Party in accordance with
the terms hereof on or before the expiration of such survival period, such claim
and the applicable Party’s obligation with respect thereto shall survive until
resolved pursuant to the terms hereof.

 

10.2                        Indemnification in Favor of Buyer Parties.

 

(a)                                 Subject to the other terms of this
Article 10, from and after the Closing Date, each Seller, severally and not
jointly, shall indemnify, defend and hold harmless each Buyer Party, its
Affiliates, including from and after the Closing the Acquired Entity, and its
and their respective officers, directors, employees, consultants, advisors,
representatives and agents (collectively, the “Buyer Indemnified Parties”),
from, against and in respect of any and all Losses suffered or incurred by any
of the Buyer Indemnified Parties or to which any of the Buyer Indemnified
Parties

 

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may otherwise become subject (regardless of whether or not such Losses related
to any Third-Party Claim) arising out of or resulting from:

 

(i)                                     any inaccuracy or breach of any
representation or warranty made by such Seller in Article 3, Article 4 or
Article 5, as applicable, or in the certificate delivered by such Seller
pursuant to Section 2.6(d)(ii);

 

(ii)                                  any failure or breach of any covenant,
agreement or undertaking made by such Seller in this Agreement;

 

(iii)                               Taxes allocable to such Seller under
Section 7.9(a) (taking into account, and without duplication of, any such Taxes
effectively borne by such Seller as a result of the adjustments under
Section 2.2);

 

(iv)                              with respect to the Equity Seller, the
ownership, use or operation of Equity Seller’s Excluded Entity Assets;

 

(v)                                 with respect to Equity Seller, any
Distributed Interest; and

 

(vi)                              with respect to each Asset Seller, any of the
Retained Liabilities.

 

(b)                                 “Losses” means, subject to Section 10.11,
any and all liabilities, damages, fines, penalties, losses, costs, expenses,
claims, awards or judgments actually incurred, involving or otherwise suffered
by any Indemnified Party arising out of or resulting from the indemnified
matter, including reasonable out of pocket fees and expenses of attorneys,
consultants, accountants or other agents and experts reasonably incident to
matters indemnified against, and the costs of investigation of such matters, and
the costs of enforcement of the indemnity.

 

(c)                                  The Losses of the Buyer Indemnified Parties
described in this Section 10.2 as to which the Buyer Indemnified Parties are
entitled to indemnification hereunder are hereinafter collectively referred to
as the “Buyer Losses.”

 

(d)                                 Notwithstanding anything in this Agreement
to the contrary, for purposes of this Section 10.2, the amount of Losses in
respect of any breach of a representation or warranty (excluding
Section 5.6(a) and any reference to “Material” in the term “Asset Seller
Material Contract” and “Equity Seller Material Contract”) shall be determined
without regard to any limitation or qualification as to materiality or Seller
Material Adverse Effect (which instead will be read as any adverse effect or
change) set forth in such representation or warranty.

 

10.3                        Indemnification Obligations of Buyer Parties.

 

(a)                                 Subject to the other terms of this
Article 10, from and after the Closing Date, the Buyer Parties shall indemnify,
defend and hold harmless Sellers, their Affiliates, and their respective
officers, directors, employees, consultants, advisors, representatives and
agents (collectively, the “Seller Indemnified Parties”) from, against and in
respect of any and all Losses suffered or incurred by any of the Seller
Indemnified Parties or to which any of the Seller Indemnified Parties may
otherwise become subject (regardless of whether or not such Losses related to
any Third-Party Claim) arising out of or resulting from:

 

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(i)                                     any inaccuracy or breach of any
representation or warranty made by the Buyer Parties in Article 6 or in the
certificate delivered by Buyer Parties pursuant to Section 2.6(e)(i);

 

(ii)                                  any failure or breach of any covenant,
agreement or undertaking made by the Buyer Parties in this Agreement;

 

(iii)                               Taxes allocable to Buyer Parties under
Section 7.9(a) (taking into account, and without duplication of, any such Taxes
effectively borne by Buyer Parties as a result of the adjustments under
Section 2.2); or

 

(iv)                              with respect to each Asset Seller, any of the
Assumed Liabilities.

 

(b)                                 The Losses of Seller Indemnified Parties
described in this Section 10.3 as to which the Seller Indemnified Parties are
entitled to indemnification hereunder are hereinafter collectively referred to
as “Seller Losses.”

 

(c)                                  Notwithstanding anything in this Agreement
to the contrary, for purposes of this Section 10.3, the amount of Losses in
respect of any breach of a representation or warranty (excluding Section 6.10)
shall be determined without regard to any limitation or qualification as to
materiality or Buyer Material Adverse Effect (which instead will be read as any
adverse effect or change) set forth in such representation or warranty.

 

10.4                        Indemnification Procedure.

 

(a)                                 Promptly after receipt by a Buyer
Indemnified Party or a Seller Indemnified Party (hereinafter collectively
referred to as an “Indemnified Party”) of notice by a Third Party (including any
Governmental Authority) of any claim for Losses or the commencement of a
Proceeding or audit with respect to which such Indemnified Party may be entitled
to receive payment hereunder for any Buyer Losses or any Seller Losses (as the
case may be), such Indemnified Party will notify Buyer Parties or such
applicable Seller, as the case may be (in such capacity, Buyer Parties or such
applicable Seller is hereinafter referred to as an “Indemnifying Party”) of such
claim, Proceeding or audit; provided, however, that the failure to so notify the
Indemnifying Party will not relieve the Indemnifying Party from liability under
this Agreement except to the extent, and only to the extent, that such failure
materially prejudices the Indemnifying Party. The Indemnifying Party will have
the right, at its sole expense, upon written notice delivered to the Indemnified
Party within fifteen (15) days after receiving such notice, to assume the
defense of such Proceeding with counsel selected by the Indemnifying Party and
reasonably satisfactory to the Indemnified Party. In the event, however, that
the Indemnifying Party declines or fails to (i) assume the defense of the
Proceeding on the terms provided above or to prosecute such defense in good
faith or (ii) employ counsel reasonably satisfactory to the Indemnified Party,
in any case within such fifteen (15) day period, then such Indemnified Party may
employ counsel to represent or defend it in any such Proceeding and the
Indemnifying Party will (subject to the other terms and provisions of this
Agreement) pay the reasonable fees and disbursements of such counsel as
incurred. In any Proceeding with respect to which indemnification is being
sought hereunder, the Indemnified Party or the Indemnifying Party, whichever is
not assuming the defense of such Proceeding, will have the right to participate
in such matter and to retain its own counsel at such

 

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Party’s own expense. The Indemnifying Party or the Indemnified Party, as the
case may be, will at all times use reasonable best efforts to (x) diligently
conduct the defense of any Proceeding for which it is maintaining the defense,
(y) keep the Indemnified Party or the Indemnifying Party, as the case may be,
reasonably apprised of the status of the defense of any Proceeding the defense
of which they are maintaining and (z) cooperate in good faith with each other
with respect to the defense of any such Proceeding; provided, that the
Indemnified Party shall not be required to bring counter-claims or cross-claims
against any Person.

 

(b)                                 No Indemnified Party may settle or
compromise any claim or Proceeding or consent to the entry of any judgment with
respect to which indemnification is being sought hereunder without the prior
written consent of the Indemnifying Party, unless such settlement, compromise or
consent (i) includes an unconditional release of the Indemnifying Party from all
liability arising out of such Proceeding, (ii) does not contain any admission or
statement of any wrongdoing or liability on behalf of the Indemnifying Party and
(iii) does not contain any equitable order, judgment or term that in any manner
affects, restrains or interferes with the business of the Indemnifying Party or
any of the Indemnifying Party’s Affiliates. An Indemnifying Party may not,
without the prior written consent of the Indemnified Party, settle or compromise
any Proceeding or consent to the entry of any judgment with respect to which
indemnification is being sought hereunder that (A) does not result in a final,
non-appealable, resolution of the Indemnified Party’s liability with respect to
the Proceeding (including, in the case of a settlement, an unconditional written
release of the Indemnified Party from all further liability in respect of such
Proceeding) or (B) may adversely affect the Indemnified Party (other than as a
result of money damages covered by the indemnity), which consent shall not be
unreasonably withheld, conditioned or delayed.

 

(c)                                  A claim for indemnification by an
Indemnified Party for any matter not involving a Proceeding by a Third Party may
be asserted by Buyer Parties (on behalf of the Buyer Indemnified Parties) or a
Seller (on behalf of the Seller Indemnified Parties), as applicable, by written
notice to the Indemnifying Party from whom indemnification is sought. Such
notice will specify with reasonable specificity the basis for such claim. The
Indemnifying Party shall have thirty (30) days from its receipt of the notice to
(i) cure the Losses complained of, (ii) admit its liability for such Losses or
(iii) dispute the claim for such Losses. If the Indemnifying Party does not
notify the Indemnified Party within such thirty (30) day period that it has
cured the Losses or that it disputes the claim for such Losses, the amount of
such Losses shall conclusively be deemed disputed by the Indemnifying Party
hereunder. If the Indemnifying Party notifies the Indemnified Party within such
thirty (30) day period that it disputes the claim for such Losses, then the
Indemnified Party may continue to seek remedies available to it on the terms and
subject to the provisions of this Agreement.

 

10.5                  Calculation, Timing, Manner and Characterization of
Indemnification Payments; Escrow.

 

(a)                                 Payments of all amounts owing by an
Indemnifying Party as a result of a Third-Party Claim shall be made as and when
Losses with respect thereto are incurred by the Indemnified Party and within
fifteen (15) Business Days after the Indemnified Party makes demand therefor to
the Indemnifying Party. Payments of all amounts owing by an Indemnifying Party
other than as a result of a Third-Party Claim shall be made within fifteen (15)
Business Days after the later of (i) the date the Indemnifying Party is deemed
liable therefor pursuant to this

 

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Article 10 (whether because the Indemnifying Party admits or acknowledges
liability or otherwise) or (ii) if disputed, the date of a Final Determination
of the Indemnifying Party’s liability to the Indemnified Party under this
Agreement.

 

(b)                                 Once a payment is owed and payable as set
forth in Section 10.5(a), in circumstances where amounts are owing to any Buyer
Indemnified Party from a Seller in accordance with this Agreement, then Buyer
Parties and such Seller shall execute a Joint Instruction Letter to instruct the
Escrow Agent to pay such amount to the Buyer Indemnified Party through Indemnity
Escrow Units with a total value equal to the amount to be so disbursed (valuing
such Indemnity Escrow Units at the Per Unit Value). Notwithstanding anything
herein to the contrary, no fractional Opco Common Units and Class B Units shall
be disbursed from the General Escrow Account, and, to the extent that any such
fractional units would be required to be so disbursed but for this sentence,
such fractional units shall be rounded up or down to the nearest whole number of
the applicable Opco Common Units and Class B Units.

 

(c)                                  Escrow Release.

 

(i)                                     On the date that is 180 days after the
Closing Date (such date, the “General Escrow First Release Date”), an amount
equal to one-half (1/2) of the balance of the General Escrow Balance, minus the
aggregate amount, if any, which any Buyer Indemnified Party has claimed under
this Article 10 with respect to a particular Seller, to the extent such amount
exceeds that amount of the General Escrow Balance to be released pursuant to
this Section 10.5(c)(i) (to the extent such claims, if any, remain unresolved),
shall be released to the applicable Sellers. Such applicable Sellers and Buyer
Parties shall promptly (but in any event within five (5) Business Days of the
General Escrow First Release Date) execute a Joint Instruction Letter to
instruct the Escrow Agent to transfer to such Sellers such amount to be released
under this Section (i)10.5(c)(i) through Indemnity Escrow Units with a total
value equal to the amount to be so released (valuing such Indemnity Escrow Units
at the Per Unit Value).

 

(ii)                                  On the one (1) year anniversary of the
Closing Date (such date, the “General Escrow Second Release Date”), an amount
equal to the balance of the General Escrow Balance, minus the aggregate amount,
if any, which any Buyer Indemnified Party has claimed under this Article 10 with
respect to a particular Seller (to the extent such claims, if any, remain
unresolved) shall be released to the applicable Sellers. Such applicable Sellers
and Buyer Parties shall promptly (but in any event within five (5) Business Days
of the General Escrow First Release Date) execute a Joint Instruction Letter to
instruct the Escrow Agent to transfer to such Sellers such amount to be released
under this Section 10.5(c)(ii) through Indemnity Escrow Units with a total value
equal to the amount to be so released (valuing such Indemnity Escrow Units at
the Per Unit Value).

 

(iii)                               Upon the resolution of all such outstanding
claims described in the first sentence of Section 10.5(c)(ii), each applicable
Seller and Buyer Parties shall promptly (but in any event within five
(5) Business Days of such resolution) execute a Joint Instruction Letter to
instruct the Escrow Agent to transfer to such Seller all Indemnity Escrow Units
then contained in the General Escrow Account attributable to such Seller (and
any cash amounts attributable thereto, by wire transfer of immediately available
funds) to an account or accounts designated by such Seller pursuant to the Joint
Instruction Letter.

 

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10.6                        Limits of Liability.

 

(a)                                 Notwithstanding anything to the contrary set
forth herein, Buyer Indemnified Parties shall not be entitled to recover on a
claim for indemnification under Section 10.2(a)(i), or for any individual Buyer
Loss or series of related Buyer Losses (i) unless the amount of each such Buyer
Loss or series of related Buyer Losses exceeds one hundred thousand Dollars
($100,000) (ii) then only to the extent that all such Buyer Losses or series of
related Buyer Losses that meet the requirements of the preceding clause (i) in
the aggregate (x) exceed the Indemnity Deductible and (y) do not exceed the
Seller Cap in the aggregate; provided, however, that the foregoing limitation
shall not apply to any Buyer Losses under Section 10.2(a)(iii) or any claim for
indemnification with respect to any inaccuracy or breach (or deemed inaccuracy
or breach) of the Seller Fundamental Representations, the applicable Tax
Representations or the Special Warranty of Title. In no event shall a Seller be
liable for any Buyer Losses (when taken together with all other Buyer Losses
indemnifiable in accordance with the terms of this Section 10.6) in excess of
such Seller’s Unadjusted Purchase Price.

 

(b)                                 Notwithstanding anything to the contrary set
forth herein with respect to a particular Seller or its Seller Indemnified
Parties, such Seller or its Seller Indemnified Parties shall not be entitled to
recover on a claim for indemnification under Section 10.3(a)(i), or for any
individual Seller Loss or series of related Seller Losses (i) unless the amount
of each such Seller Loss or series of related Seller Losses exceeds one hundred
thousand Dollars ($100,000) (ii) then only to the extent that all such Seller
Losses or series of related Seller Losses that meet the requirements of the
preceding clause (i) in the aggregate (x) exceed the Indemnity Deductible and
(y) do not exceed the Buyer Cap in the aggregate; provided, however, that the
foregoing limitation shall not apply to any Seller Losses under
Section 10.3(a)(iii) or any claim for indemnification with respect to any
inaccuracy or breach (or deemed inaccuracy or breach) of the Buyer Fundamental
Representations or the applicable Tax Representations. In no event shall Buyer
Parties be liable for any Seller Losses with respect to a particular Seller or
its Seller Indemnified Parties (when taken together with all other Seller Losses
indemnifiable in accordance with the terms of this Section 10.6) in excess of
such Seller’s Unadjusted Purchase Price.

 

10.7                        Sole and Exclusive Remedy.

 

(a)                                 From and after the Closing, the remedies set
forth in this Article 10 shall, except with respect to claims or causes of
action arising from Fraud, provide the sole and exclusive remedies arising out
of, in connection with, relating to or arising under this Agreement, any
certificate (including the certificates delivered at Closing by Buyer Parties
and Seller pursuant to Section 2.6(d)(ii) and Section 2.6(e)(i), respectively)
or instrument delivered pursuant hereto, including any and all liabilities or
obligations related to environmental matters or liabilities or violations of
Environmental Laws or releases of any Constituents of Concern, whether based on
contract, tort, strict liability, other laws or otherwise, including any breach
or alleged breach of any representation, warranty, covenant or agreement made
herein. The Parties acknowledge and agree that, except with respect to claims or
causes of action arising from Fraud, from and after the Closing the remedies
available in this Article 10 supersede (and each Party waives and releases) any
other remedies available at Law or in equity against the other Parties including
rights of rescission, rights of contribution and claims arising under applicable
statutes.

 

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(b)                                 Buyer Parties, on behalf of themselves and
all other Buyer Indemnified Parties, further acknowledge and agree that, after
the Closing, except with respect to claims or causes of action arising from
Fraud or as otherwise contemplated in Section 10.6(a), the General Escrow
Balance then held in the General Escrow Account pursuant to the Escrow Agreement
shall be the sole and exclusive source for satisfaction of any claims by or on
behalf of any Buyer Indemnified Party arising under this Article 10.

 

10.8                        Compliance with Express Negligence Rule.

 

ALL RELEASES, LIMITATIONS ON LIABILITY AND INDEMNITIES CONTAINED IN THIS
AGREEMENT, INCLUDING THOSE IN THIS ARTICLE 10, SHALL APPLY IN THE EVENT OF THE
SOLE, JOINT OR CONCURRENT NEGLIGENCE, STRICT LIABILITY OR OTHER FAULT OF THE
PARTY WHOSE LIABILITY IS RELEASED, DISCLAIMED, LIMITED OR INDEMNIFIED.

 

10.9                        Insurance Proceeds.

 

The Buyer Losses and Seller Losses giving rise to any claim hereunder shall be
reduced by any insurance proceeds or other payments actually received by the
Indemnified Party (less the amount of any deductible paid or costs incurred by
such Indemnified Party in connection therewith) in satisfaction of any Losses
giving rise to the claim. Buyer Parties shall use commercially reasonable
efforts to recover under insurance policies or under other rights of recovery
for Losses; provided, however, that Buyer Parties shall be entitled to seek
payment (including indemnification) under this Agreement pending resolution of
any such recovery efforts.

 

10.10                 Tax Treatment of Indemnity Payments.

 

For U.S. federal Income Tax purposes, the Parties agree to treat (and shall
cause each of their respective Affiliates to treat) any indemnity payment under
this Agreement as an adjustment to the Unadjusted Purchase Price unless a final
and non-appealable determination by an appropriate Governmental Authority (which
shall include the execution of an IRS Form 870-AD or successor form) provides
otherwise.

 

10.11                 Damages Waiver.

 

No Indemnifying Party shall have any liability under this Article 10 to any
Indemnified Party for indirect, consequential, punitive or exemplary damages or
damages for lost profits, loss of revenue or diminution of value, except to the
extent of reimbursement of such damages actually recovered by a Third Party from
such Indemnified Party.

 

10.12                 No Duplication.

 

Notwithstanding anything to the contrary in this Agreement, there shall be no
duplication among the Retained Liabilities, adjustments to the Purchase Price,
the rights and obligations of the Parties under Section 2.11, and Sellers’
obligations to indemnify the Buyer Indemnified Parties.

 

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ARTICLE 11
Other Provisions

 

11.1                        Notices.

 

All notices, requests, demands and other communications (“Notices”) required or
permitted under this Agreement shall be in writing addressed as indicated below,
and any communication or delivery hereunder shall be deemed to have been duly
delivered upon the earliest of: (a) actual receipt by the Party to be notified;
(b) if sent by U.S. certified mail, postage prepaid, return receipt requested,
then the date shown as received on the return notice; (c) if by email or
facsimile transmission, then upon the earlier of (i) a reply by the intended
recipient whether by email, facsimile or otherwise; provided that such intended
recipient shall have an affirmative duty to reply promptly upon receipt if
received during business hours; and provided further, that an automated response
from the email account or server of the intended recipient shall not constitute
an affirmative reply or (ii) on the first (1st) Business Day after transmission
(and sender shall bear the burden of proof of delivery); or (d) if by Federal
Express overnight delivery (or other reputable overnight delivery service), the
date shown on the notice of delivery. Addresses for all such Notices and
communication shall be as follows:

 

If to Buyer Parties, to:

 

(a)                                 Kimbell Royalty Partners, LP

 

777 Taylor Street, Suite 810

Fort Worth, TX 76102

Email: Robert@kimbellrp.com

Facsimile: (817) 877-3728

Attention: Robert D. Ravnaas

 

with a copy to:

 

Baker Botts L.L.P.

910 Louisiana Street

Houston, TX 77002

Email: jason.rocha@bakerbotts.com and joshua.davidson@bakerbotts.com

Facsimile: (713) 229-2858

Attention: Jason A. Rocha and Josh Davidson

 

and

 

(b)                                 Conflicts Committee of the Board of
Directors of

Kimbell Royalty GP, LLC

777 Taylor Street, Suite 810

Fort Worth, TX 76102

Email: badams.jabb@gmail.com

Attention: Bill Adams

 

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with a copy to:

 

Potter Anderson & Corroon, LLP

1313 N Market Street

Wilmington, DE 19801

Email: mmorton@potteranderson.com

Facsimile: (302) 658-1192

Attention: Mark A. Morton

 

If to a Seller, to the address set forth on Exhibit A or Exhibit B hereto.

 

with a copy to:

 

Mayer Brown LLP

700 Louisiana Street, Suite 3400

Houston, TX 77002

Email: jdobbs@mayerbrown.com

Facsimile: (713) 238-4697

Attention: Jeff M. Dobbs

 

or to such other address or addresses as the Parties may from time to time
designate in writing.

 

11.2                        Assignment.

 

No Party shall assign this Agreement or any part hereof without the prior
written consent of the other Parties. Subject to the foregoing, this Agreement
shall be binding upon and inure to the benefit of the Parties and their
respective permitted successors and assigns.

 

11.3                        Rights of Third Parties.

 

Subject to Sections 10.2, 10.3, and 11.11 and, nothing expressed or implied in
this Agreement is intended or shall be construed to confer upon or give any
Person, other than the Parties, any right or remedies under or by reason of this
Agreement.

 

11.4                        Counterparts.

 

This Agreement may be executed in two or more counterparts, each of which shall
be deemed an original, but all of which together shall constitute one and the
same instrument. Any facsimile electronic transmittal (PDF) copies hereof or
signature hereon shall, for all purposes, be deemed originals.

 

11.5                        Entire Agreement.

 

This Agreement (together with the Disclosure Schedules, the Transaction
Documents and exhibits to this Agreement) constitutes the entire agreement among
the Parties and supersedes any other agreements, whether written or oral, that
may have been made or entered into by or among any of the Parties or any of
their respective Affiliates relating to the transactions contemplated hereby. In
the event any provision of any other Transaction Document shall in any way
conflict

 

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with the provisions of this Agreement (except where a provision therein
expressly provides that it is intended to take precedence over this Agreement),
this Agreement shall control.

 

11.6                        Disclosure Schedules.

 

Unless the context otherwise requires, all capitalized terms used in the
Disclosure Schedules shall have the respective meanings assigned in this
Agreement. No reference to or disclosure of any item or other matter in the
Disclosure Schedules shall be construed as an admission or indication that such
item or other matter is material or that such item or other matter is required
to be referred to or disclosed in the Disclosure Schedules. No disclosure in the
Disclosure Schedules relating to any possible breach or violation of any
agreement or Law shall be construed as an admission or indication that any such
breach or violation exists or has actually occurred. The inclusion of any
information in the Disclosure Schedules shall not be deemed to be an admission
or acknowledgment by Sellers or Buyer Parties, as applicable, in and of itself,
that such information is material to or outside the Ordinary Course of any
Person or required to be disclosed on the Disclosure Schedules. Each disclosure
in the Disclosure Schedules shall be deemed to qualify the particular sections
or subsections of the representations and warranties expressly referenced, and
each other section or subsection of the representations and warranties where the
relevance of such disclosure is reasonably apparent.

 

11.7                        Amendments.

 

This Agreement may be amended or modified in whole or in part, and terms and
conditions may be waived, only by a duly authorized agreement in writing which
makes reference to this Agreement executed by each Party; provided, however,
that Buyer Parties shall not enter into any such amendment, modification or
waiver without the consent or approval of the Conflicts Committee.

 

11.8                        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. The Parties further agree that if any provision
contained herein is, to any extent, held invalid or unenforceable in any respect
under the Laws governing this Agreement, they shall take any actions necessary
to render the remaining provisions of this Agreement valid and enforceable to
the fullest extent permitted by Law and, to the extent necessary, shall amend or
otherwise modify this Agreement to replace any provision contained herein that
is held invalid or unenforceable with a valid and enforceable provision giving
effect to the intent of the Parties to the greatest extent legally permissible.

 

11.9                        Specific Performance.

 

The Parties acknowledge and agree (a) that each Party would be irreparably
harmed by a breach by the other Party of any of such other Party’s obligations
under this Agreement and that the Parties would not have any adequate remedy at
law if any of the provisions of this Agreement were not performed in accordance
with their specific terms or were otherwise breached and (b) that the
non-breaching Party shall be entitled to injunctive relief, specific
performance, and other equitable remedies against the breaching Party to enforce
the performance by the breaching Party

 

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of its obligations under this Agreement (this being in addition to any other
remedy to which the non-breaching Party may be entitled at law or in equity),
and the Parties hereby consent and agree to such injunctive relief, specific
performance, and other equitable remedies. Accordingly, each Party waives
(i) any defenses in any action for specific performance pursuant to this
Agreement that a remedy at law would be adequate and (ii) any requirement under
any Law to post a bond or other security as a prerequisite to obtaining
equitable relief.

 

11.10                 Governing Law; Jurisdiction.

 

(a)                                 Law. This Agreement shall be governed and
construed in accordance with the Laws of the State of Delaware, without regard
to the Laws that might be applicable under conflicts of laws principles that
would require the application of the Laws of another jurisdiction.

 

(b)                                 Forum. The Parties agree that the
appropriate, exclusive and convenient forum for any disputes between any of the
Parties hereto arising out of this Agreement or the transactions contemplated
hereby shall be the Court of Chancery of the State of Delaware or, if the Court
of Chancery of the State of Delaware declines to accept jurisdiction over such
matter, any state or federal court within the State of Delaware. Each of the
Parties hereto irrevocably submits to the personal jurisdiction of such courts
in respect of any legal proceeding arising out of or related to this Agreement
and agrees not to assert, as a defense in any proceeding arising out of or
related to this Agreement, that it is not subject to the jurisdiction of such
courts or that such proceeding is brought in an inconvenient forum. The Parties
further agree that the Parties shall not bring suit with respect to any disputes
arising out of this Agreement or the transactions contemplated hereby in any
court or jurisdiction other than the above-specified courts. The Parties further
agree, to the extent permitted by Law, that a final and non-appealable 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.

 

(c)                                  Jurisdiction. To the extent that any Party
hereto has 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, each such Party 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
Section 11.10(b).

 

(d)                                 JURY WAIVER. EACH OF THE PARTIES HERETO
HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED
BY LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, LEGAL PROCEEDING OR
CLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) DIRECTLY OR INDIRECTLY
ARISING OUT OF OR IN ANY WAY RELATING TO THIS AGREEMENT.

 

11.11                 No Recourse.

 

This Agreement may only be enforced against, and any claims or causes of action
that may be based upon, arise out of or relate to this Agreement, or the
negotiation, execution or

 

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performance of this Agreement may only be made against the entities that are
expressly identified as Parties hereto in their capacities as such and, except
to the extent otherwise provided herein, no former, current or future equity
holders, controlling Persons, directors, officers, employees, agents or
Affiliates of any Party hereto or any former, current or future, direct or
indirect, equity holder, controlling Person, director, officer, employee,
general or limited partner, member, manager, agent or Affiliate of any of the
foregoing (each, a “Non-Recourse Party”) shall have any liability for any
obligations or liabilities of the Parties to this Agreement or for any claim
(whether in tort, contract or otherwise) based on, in respect of, or by reason
of, the transactions contemplated hereby or in respect of any representations
made or alleged to be made in connection herewith. Without limiting the rights
of any Party against the other Parties hereto, in no event shall any Party or
any of its Affiliates seek to enforce this Agreement against, make any claims
for breach of this Agreement against, or seek to recover monetary damages from,
any Non-Recourse Party.

 

11.12                 Legal Representation.

 

Following the Closing, Mayer Brown LLP (“Mayer Brown”) may serve as counsel to
each Seller and its Non-Recourse Parties, in connection with any litigation,
claim or obligation arising out of or relating to this Agreement,
notwithstanding such representation or any continued representation of any other
Person, and each of the Parties (on behalf of itself and each of its
Non-Recourse Parties) consents thereto and waives any conflict of interest
arising therefrom. The decision to represent each Seller and its Non-Recourse
Parties shall be solely that of Mayer Brown. Any privilege attaching as a result
of Mayer Brown representing each Seller or any of its Affiliates (including the
Acquired Entity) in connection with this Agreement shall survive the Closing and
shall remain in effect; provided, that such privilege from and after the Closing
shall be assigned to and controlled by such Seller; provided, further, that in
the event that any dispute arises after the Closing between Buyer Parties or the
Acquired Entity, on the one hand, and any party other than the Parties or any of
their respective Non-Recourse Parties, on the other hand, then Buyer Parties and
the Acquired Entity may assert such privilege to prevent the disclosure of any
Privileged Communications by Mayer Brown to such third party. In furtherance of
the foregoing, each of the Parties agrees to take the steps necessary to ensure
that any privilege attaching as a result of Mayer Brown representing the
Acquired Entity in connection with this Agreement shall survive the Closing,
remain in effect and be assigned to and controlled by Equity Seller. As to any
privileged attorney client communications between Mayer Brown and the Acquired
Entity prior to the Closing Date (collectively, the “Privileged
Communications”), Buyer Parties, together with any of its Affiliates (including
after Closing, the Acquired Entity), successors or assigns, agree that no such
party may use or rely on any of the Privileged Communications in any action or
claim against or involving any of the Parties or any of their respective
Non-Recourse Parties after the Closing. Notwithstanding the foregoing, nothing
herein shall be construed as a waiver by the Acquired Entity of the
attorney-client privilege of the obligations of confidentiality owed by Mayer
Brown to the Acquired Entity with respect to matters not regarding this
Agreement.

 

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

 

95

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IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by each
of the Parties as of the date first above written.

 

 

BUYER PARTIES:

 

 

 

KIMBELL ROYALTY PARTNERS, LP

 

 

 

By: Kimbell Royalty GP, LLC

 

Its: General Partner

 

 

 

 

 

By:

/s/ Robert D. Ravnaas

 

Name: Robert D. Ravnaas

 

Title: Chief Executive Officer

 

 

 

 

 

KIMBELL ROYALTY OPERATING, LLC

 

 

 

 

 

By:

/s/ Robert D. Ravnaas

 

Name: Robert D. Ravnaas

 

Title: Chief Executive Officer

 

[Signature Page to the Purchase and Sale Agreement]

 

--------------------------------------------------------------------------------

 

 

SELLERS:

 

 

 

KIMBELL ART FOUNDATION

 

 

 

 

 

By:

/s/ Ben J. Fortson

 

Name: Ben J. Fortson

 

Title: EVP and Chief Investment Officer

 

 

 

 

 

RIVERCREST CAPITAL PARTNERS LP

 

 

 

By: Rivercrest Capital Management LLC, its manager

 

 

 

 

 

By:

/s/ R. Davis Ravnaas

 

Name: R. Davis Ravnaas

 

Title: Managing Member

 

 

 

 

 

RIVERCREST ROYALTIES HOLDINGS II, LLC

 

 

 

 

 

By:

/s/ R. Davis Ravnaas

 

Name: R. Davis Ravnaas

 

Title: Vice President and Chief Financial Officer

 

 

 

 

 

CUPOLA ROYALTY DIRECT, LLC

 

 

 

By: Rivercrest Cupola LLC, its manager

 

 

 

 

 

By:

/s/ Matthew S. Daly

 

Name: Matthew S. Daly

 

Title: Manager

 

[Signature Page to the Purchase and Sale Agreement]

 

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EXHIBIT E

 

FORM OF ASSET ASSIGNMENT

 

NOTICE OF CONFIDENTIALITY RIGHTS: IF YOU ARE A NATURAL PERSON, YOU MAY REMOVE OR
STRIKE ANY OR ALL OF THE FOLLOWING INFORMATION FROM ANY INSTRUMENT THAT
TRANSFERS AN INTEREST IN REAL PROPERTY BEFORE IT IS FILED FOR RECORD IN THE
PUBLIC RECORDS: YOUR SOCIAL SECURITY NUMBER OR YOUR DRIVER’S LICENSE NUMBER.

 

MINERAL, ROYALTY, AND/OR OVERRIDING ROYALTY INTEREST CONVEYANCE AND NOTICE OF
AGENT

 

STATE OF [·]

§

 

 

 

§

 

KNOW ALL MEN BY THESE PRESENTS:

COUNTY OF [·]

§

 

 

 

This Mineral, Royalty, and/or Overriding Royalty Interest Conveyance and Notice
of Agent (the “Conveyance”) from [·], a [State] [Type of Entity], whose address
is [·] (collectively, “Grantor”), to [·], a Delaware limited liability company,
whose address is 777 Taylor Street, Suite 810, Fort Worth, Texas 76102
(“Grantee”), is executed on the date set forth on the signature page hereof (the
“Execution Date”) but shall be effective as of the 1st day of October, 2018 (the
“Effective Date”).

 

[WHEREAS, reference is made to that certain [Assignment] dated effective as of
[·], from [·], as the [assignor/grantor] named therein, to [·], as the
[assignee/grantee] named therein, recorded as Document Number [·] in Volume [·],
Page [·] of the Official Public Records of [·] County, [b] (the “Prior
Assignment”);]

 

WHEREAS, by execution hereof, Grantee hereby provides notice of the appointment
of [·], a [·] limited liability company (“Agent”), for Grantee to act on the
behalf of Grantee as more particularly described below;

 

NOW, THEREFORE, in consideration of the agreements set forth herein and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties agree as follows:

 

Article 1

 

Notice of Appointment and Powers of Agent

 

Section 1.1.           Notice of Appointment of Agent.  Grantee hereby provides
notice of the appointment of Agent to act on behalf of Grantee with respect to
its interests in the Assets, under

 

E-1

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the terms and conditions of that certain Limited Power of Attorney, attached
hereto as Exhibit B (the “Agency Agreement”).

 

Section 1.2.           Termination or Change of Agency.  Grantee may terminate
the agency relationship between Grantee and Agent, or nominate a successor agent
to Agent, at any time in accordance with the Agency Agreement, including by
recording a Notice of Termination, or Notice of Change of Agent, as the case may
be, in the Official Public Records of the county and state in which the Assets
are situated (a copy of such recorded Notice of Termination or Change of Agent
will be furnished to the appropriate mineral lessees and/or production payors).

 

Article 2

 

Conveyance of Oil and Gas Interests

 

Section 2.1.           Conveyance:  Grantor, for and in consideration of the sum
of Ten Dollars ($10) cash and other good and valuable consideration, in hand
paid, the receipt and sufficiency of which is hereby acknowledged, hereby
grants, bargains, sells, and conveys unto Grantee all of Grantor’s right, title
and interest in and to the following property of Grantor (collectively the
“Assets”):

 

(a)           (i) all oil, gas, hydrocarbons, and other minerals of whatever
kind or nature in, on, and under and that may be produced, saved, marketed, or
extracted from lands granted under the Prior Assignment and (ii) the lands and
any associated royalty interests, overriding royalty interests, mineral fee
interests, payments out of production, carried interests, reversionary rights,
contractual rights to production, or other interest in oil, gas, hydrocarbons
and other minerals of whatever kind or nature granted under the Prior
Assignment, INSOFAR AND ONLY INSOFAR as described on Exhibit A (the
“Mineral/Royalty/Overriding Interest”);

 

(b)           All pooled, communitized or unitized acreage which includes all or
part of any Mineral/Royalty/Overriding Interest (the “Units”), and all
tenements, hereditaments and appurtenances belonging to any
Mineral/Royalty/Overriding Interest or Unit;

 

(c)           All currently existing contracts, agreements and instruments with
respect to the Mineral/Royalty/Overriding Interest and Units, to the extent
applicable to the Mineral/Royalty/Overriding Interest and Units including
operating agreements, unitization, pooling, communitization agreements,
stipulation of interests, declarations and orders, area of mutual interest
agreements, joint venture agreements, farmin and farmout agreements, exchange
agreements, transportation agreements, agreements for the sale and purchase of
oil and gas and processing agreements, but excluding any contracts, agreements
and instruments included within the definition of “Excluded Assets” (subject to
such exclusion, the “Contracts”);

 

(d)           All surface fee interests, easements, servitudes, rights-of-way,
surface leases and other surface rights appurtenant to, and used or held for use
solely in connection with, the Mineral/Royalty/Overriding Interest and Units,
which shall be sold in conjunction with and within a reasonable time from the
execution of this Conveyance;

 

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(e)           Subject to Section 2.1(f), below, all oil and gas produced from or
attributable to the Mineral/Royalty/Overriding Interest and Units (and all the
proceeds thereof) after the Effective Date, all oil, condensate and scrubber
liquids inventories and ethane, propane, iso-butane, nor-butane and gasoline
inventories attributable to the Mineral/Royalty/Overriding Interest and Units in
storage as of the Effective Date, and production, plant and transportation
imbalances as of the Effective Date;

 

(f)            Any and all rights of Grantor to payments, receipts, revenues,
interest and income of any kind from the Mineral/Royalty/Overriding Interest or
Units which are received by Grantor or Grantee and dated from and after the
Effective Date, regardless of whether any such amounts relate to periods of time
prior to the Effective Date, excluding however, any amounts received as part of
or in connection with any settlement or judgment pertaining to any dispute to
the extent such settlement or judgment is attributable to periods of time prior
to the Effective Date; and

 

(g)           The data, software and records of Grantor, to the extent relating
solely to those Assets conveyed in 2.1(a-f) (the “Records”), excluding, however,
in each case:

 

(i)            all corporate, financial, tax and legal data and records of
Grantor that relate to Grantor’s business generally (whether or not relating to
the Assets) or to such Grantor’s business and operations other than the
exploration and production of oil and gas;

 

(ii)           any data, software and records to the extent disclosure or
transfer is prohibited or subjected to payment of a fee or other consideration
by any license agreement or other agreement with a person other than Affiliates
of Grantor, or by applicable law, and for which no consent to transfer has been
received or for which Grantee has not agreed in writing to pay the fee or other
consideration, as applicable;

 

(iii)          all legal records and legal files of Grantor including all work
product of and attorney-client communications with any of Grantor’s legal
counsel (other than deeds, royalty agreements, leases, title opinions, Contracts
and Grantor’s working files for litigation of Grantor related to the Assets);

 

(Clauses (i) through (iii) shall hereinafter be referred to as the “Excluded
Records”).

 

EXCEPTING AND RESERVING to Grantor, however, the Excluded Assets (as defined
below),

 

TO HAVE AND TO HOLD the Assets unto Grantee, its successors and assigns,
forever, subject, however, to the terms and conditions of this Conveyance.

 

Section 2.2.           Excluded Assets:  Notwithstanding anything to the
contrary in Section 2.1 or elsewhere in this Conveyance, the “Assets” shall not
include any rights with respect to the Excluded Assets.  “Excluded Assets” shall
mean the following:

 

(h)           subject to Section 2.1(f), all of Grantor’s right, title and
interest in and to (and with respect to) all payments received for oil and gas
dated prior to the Effective Date which is attributable to the
Mineral/Royalty/Overriding Interest and Units;

 

E-3

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(i)            the Excluded Records;

 

(j)            contracts, agreements and instruments, whose change in ownership
in connection with a transfer is prohibited or subjected to payment of a fee or
other consideration by an agreement with a person other than an Affiliate of
Grantor, or by applicable law, and for which no consent to transfer has been
received or for which Grantee has not agreed in writing to pay the fee or other
consideration, as applicable;

 

(k)           all futures, swaps and other derivatives;

 

(l)            except to the extent such surface interests are
mineral-classified lands or lands that were relinquished pursuant to
Section 52.171 of the Texas Natural Resource Code, all of Grantor’s right, title
and interest in and to any surface fee interests, easements, servitudes,
rights-of-way, surface leases and other surface rights which are not held for
use in connection with the Mineral/Royalty/Overriding Interest; and

 

(m)          any reservation of depths or acreage specifically described and
reserved on Exhibit A.

 

Section 2.3.           “Affiliate:”  For purposes of this Conveyance, the term
“Affiliate” means, with respect to a person, a person that directly or
indirectly controls, is controlled by or is under common control with such
person, with control in such context meaning the ability to direct the
management or policies of a person through ownership of voting shares or other
securities, pursuant to a written agreement, or otherwise.

 

ARTICLE 3

 

Disclaimer of Warranty

 

(n)                           Section 3.1.           Special Warranty to Title: 
GRANTOR WARRANTS AND FOREVER SHALL DEFEND ALL AND SINGULAR TITLE TO THE ASSETS
UNTO GRANTEE AND GRANTEE’S RESPECTIVE SUCCESSORS AND ASSIGNS, AGAINST EVERY
PERSON WHOMSOEVER LAWFULLY CLAIMING OR TO CLAIM THE SAME OR ANY PART THEREOF BY,
THROUGH OR UNDER GRANTOR, BUT NOT OTHERWISE, SUBJECT TO PERMITTED ENCUMBRANCES
(AS SUCH TERM IS DEFINED IN THAT CERTAIN PURCHASE AND SALE AGREEMENT, DATED AS
OF NOVEMBER [20], 2018, BY AND AMONG GRANTOR, GRANTEE AND THE OTHER PARTIES
THERETO (THE “PURCHASE AGREEMENT”)).

 

Section 3.2.          Subrogation of Warranties and Indemnities. TO THE EXTENT
TRANSFERABLE, GRANTOR ASSIGNS AND GRANTS TO GRANTEE AND GRANTEE’S RESPECTIVE
SUCCESSORS AND ASSIGNS (AND GRANTOR WILL EXECUTE ANY DOCUMENTATION REASONABLY
NECESSARY TO EFFECT SUCH ASSIGNMENT AND GRANT), THE FULL POWER AND RIGHT OF
SUBSTITUTION AND SUBROGATION IN AND TO ALL COVENANTS AND WARRANTIES (INCLUDING
WARRANTIES OF TITLE) AND IN AND TO ALL RIGHTS TO INDEMNIFICATION (INCLUDING
ENVIRONMENTAL, INJURY TO PROPERTY OR PERSONS (INCLUDING DEATH AND

 

E-4

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DISABILITY)) GIVEN OR MADE WITH RESPECT TO THE ASSETS OR ANY PART THEREOF BY
PRECEDING OWNERS, VENDORS, CONTRACTORS OR OTHERS.

 

Section 3.3.           UTPCPL Waiver:  TO THE EXTENT APPLICABLE TO THE ASSETS OR
ANY PORTION THEREOF, GRANTEE HEREBY WAIVES THE PROVISIONS OF THE LOUISIANA
UNFAIR TRADE PRACTICES AND CONSUMER PROTECTION LAW (La. R.S. 51:1402 et. seq.). 
GRANTEE REPRESENTS AND CONSENTS THAT IT IS (OR ITS ADVISORS ARE) EXPERIENCED AND
KNOWLEDGEABLE IN THE OIL AND GAS BUSINESS GENERALLY AND WITH TRANSACTIONS OF
THIS TYPE SPECIFICALLY, THAT IT (OR THEY) POSSESS AMPLE KNOWLEDGE, EXPERIENCE
AND EXPERTISE TO EVALUATE INDEPENDENTLY THE MERITS AND RISKS OF THE TRANSACTIONS
DESCRIBED HEREIN AND THAT IT IS NOT IN A SIGNIFICANTLY DISPARATE BARGAINING
POSITION.  [NTD: This Section 3.3 only applicable when Louisiana assets are
involved.]

 

ARTICLE 4

 

Assumption of Obligations

 

Section 4.1.           Subject to Contracts:  Grantee is taking the Assets
subject to the terms of the Contracts, to the extent the Contracts are valid,
binding and enforceable on the date of this Conveyance, and hereby assumes and
agrees to fulfill, perform, pay and discharge Grantor’s obligations under such
Contracts from and after the Effective Date.

 

ARTICLE 5

 

Miscellaneous

 

Section 5.1.           Further Assurances:  After the Execution Date, Grantor,
without further consideration, will execute and deliver or cause to be executed
and delivered such good and sufficient instruments of conveyance and transfer,
and take such other action as may be reasonably required of Grantor to
effectively vest in Grantee beneficial and record title to the Assets conveyed
pursuant hereto and, if applicable, to put Grantee in actual possession of such
Assets.  After the date of this Conveyance, Grantee shall, without further
consideration, execute, deliver and (if applicable) file or record, or cause to
be executed, delivered and filed or recorded, all instruments, and take such
actions, as may be reasonably required of Grantee to accomplish the conveyance
and transfer of the Assets, and otherwise consummate the transactions
contemplated by this Conveyance, and shall send all required notices with
respect to the conveyance of the Assets.  With respect to interests in federal,
state or Indian leases that are included among the Assets and that require
filings with governmental or tribal agencies before they may be assigned,
Grantor and Grantee will each file the appropriate documents and take any other
steps necessary to obtain official approval of the assignments.  No federal,
state or Indian lease requiring consent of a governmental authority for transfer
shall be considered transferred by virtue of this Conveyance, even if
specifically described herein, unless and until that consent is obtained, and
once that consent is obtained, the transfer shall occur, effective as of the
Effective Date.

 

E-5

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Section 5.2.           Conveyance Subject to Purchase Agreement:  This
Conveyance is expressly subject to the terms and conditions of the Purchase
Agreement.  Capitalized terms used herein but not otherwise defined shall have
the meaning set forth in the Purchase Agreement.

 

Section 5.3.           Successors and Assigns:  This Conveyance shall bind and
inure to the benefit of the parties hereto and their respective successors and
assigns.

 

Section 5.4.           Titles and Captions:  All article or section titles or
captions in this Conveyance are for convenience only, shall not be deemed part
of this Conveyance and in no way define, limit, extend, or describe the scope or
intent of any provisions hereof.  Except to the extent otherwise stated in this
Conveyance, references to “Articles” and “Sections” are to Articles and Sections
of this Conveyance, and references to “Exhibits” are to Exhibits attached to
this Conveyance, which are made parts hereof for all purposes.

 

Section 5.5.           Governing Law:  Except to the extent the laws of another
jurisdiction will, under conflict of law principles, govern transfers of Assets
located in such other jurisdiction, this Conveyance and the rights of the
parties hereunder shall be governed by, and construed in accordance with, the
laws of the state of Texas.

 

Section 5.6.           Counterparts:

 

(a)         This Conveyance may be executed in any number of counterparts, and
by different parties in separate counterparts, and each counterpart hereof shall
be deemed to be an original instrument, but all such counterparts shall
constitute but one instrument.

 

(b)         To facilitate recordation, there may be omitted from the Exhibits to
this Conveyance in certain counterparts descriptions of property located in
recording jurisdictions other than the jurisdiction (county, parish,
state, Indian or federal agency) in which the particular counterpart is to be
filed or recorded.

 

THE PARTIES HERETO EXPRESSLY AGREE AND REQUEST THAT ANY AND ALL PAYMENTS TO
GRANTEE RELATED TO THE ASSETS, AND ALL OIL AND GAS LEASES AND DIVISION ORDERS
RELATED TO THE ASSETS, SHALL BE SENT DIRECTLY TO:

 

Kimbell Royalty Holdings, LLC

777 Taylor Street, Suite 810

Fort Worth, Texas 76102

 

[Signature Pages Follow]

 

E-6

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EXECUTED by Grantor and Grantee in the presence of the undersigned competent
witnesses as of the date(s) set forth in the respective acknowledgments below to
be effective for all purposes as of the Effective Date, set forth above.

 

 

Grantor: [·]

 

 

 

By:

 

 

[·]

 

[title]

 

ACKNOWLEDGMENT

 

STATE OF [·]

§

 

§

COUNTY OF [·]

§

 

BE IT REMEMBERED, that I, [·], a Notary Public duly qualified, commissioned,
sworn and acting in and for the County and State aforesaid, hereby certify that
on this [·] day of [·], 2018, there appeared before me [·], [·]of [·], a [·],
Authorized Agent of [Grantor], a [·] [·].

 

 

 

 

 

Notary Public in and for the State of Texas

 

My Commission Expires:

 

E-7

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Grantee: [·]

 

 

 

By: [·]

 

its Authorized Agent

 

 

 

 

 

By:

 

 

[·]

 

[title]

 

ACKNOWLEDGMENT

 

STATE OF [·]

§

 

§

COUNTY OF [·]

§

 

BE IT REMEMBERED, that I, [·], a Notary Public duly qualified, commissioned,
sworn and acting in and for the County and State aforesaid, hereby certify that
on this [·] day of [·], 2018, there appeared before me [·], [·]of [·], a [·],
Authorized Agent of [Grantor], a [·] [·].

 

 

 

 

 

Notary Public in and for the State of Texas

 

My Commission Expires:

 

E-8

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EXHIBIT A

 

Attached to and for all purposes made a part of that certain Mineral, Royalty
and/or Overriding Royalty Interest Conveyance and Notice of Agent dated
effective for all purposes as of [·], at 7:00 a.m. Central time, by [Grantor, et
al], as Grantor, to and for the benefit of [·], as Grantee

 

[Insert Legal Descriptions]

 

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EXHIBIT B

 

Attached to and for all purposes made a part of that certain Mineral, Royalty
and/or Overriding Royalty Interest Conveyance and Notice of Agent dated
effective for all purposes as of [·], at 7:00 a.m. Central time, by [Grantor, et
al], as Grantor, to and for the benefit of [·], as Grantee

 

[Attach Agency Agreement]

 

WHEN RECORDED, RETURN TO:

 

Brett G. Taylor

Taylor Companies Mineral Management, LLC

2777 Stemmons Fwy, Suite 1133

Dallas, TX  75207

 

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EXHIBIT F

 

EQUITY INTEREST ASSIGNMENT AGREEMENT

 

This Equity Interest Assignment Agreement (this “Assignment”) is made and
entered into effective as of 12:01 a.m., Houston, Texas time, on [·], 2018, by
and between Rivercrest Royalties Holdings II, LLC, a Delaware limited liability
company (“Assignor”), and Kimbell Royalty Partners, LP, a Delaware limited
partnership (“Assignee”). Assignor and Assignee are sometimes referred to herein
as a “Party” or the “Parties.” Capitalized terms used but not defined herein
shall have the meaning assigned to such term in the Purchase Agreement (as
defined below).

 

W I T N E S S E T H:

 

WHEREAS, Assignor owns all of the issued and outstanding membership interests
(the “Acquired Interests”) of Rivercrest Royalties II, LLC, a Delaware limited
liability company (the “Acquired Company”);

 

WHEREAS, pursuant to the Purchase and Sale Agreement, dated as of November 20,
2018 (the “Purchase Agreement”), among Assignor, Assignee, Rivercrest Capital
Partners LP, a Delaware limited partnership, Kimbell Art Foundation, a Texas
non-profit corporation, Cupola Royalty Direct, LLC, a Delaware limited liability
company, and Kimbell Royalty Operating, LLC, a Delaware limited liability
company, Assignor desires to sell to Assignee, and Assignee desires to acquire
from Assignor, all of the Acquired Interests, on and subject to the terms and
conditions contained in the Purchase Agreement; and

 

WHEREAS, Assignor desires to effect the sale, transfer, assignment, conveyance
and delivery of all of the Acquired Interests to Assignee as set forth above.

 

NOW, THEREFORE, in consideration of the promises, agreements and covenants
contained in the Purchase Agreement, and other good and valuable consideration,
the receipt and sufficiency of which are hereby and thereby acknowledged, the
Parties agree as follows:

 

1.                                      Assignment. Assignor irrevocably and
forever SELLS, TRANSFERS, ASSIGNS, CONVEYS AND DELIVERS to Assignee, its
successors and assigns, and Assignee PURCHASES, ASSUMES AND ACCEPTS, Assignor’s
entire right, title and interest in and to the Acquired Interests, free and
clear of all Liens (other than restrictions under applicable federal and state
securities Laws).

 

2.                                      Substitution as Member. From and after
the Closing, Assignee shall be substituted for Assignor as the sole member of
the Acquired Company with respect to the Acquired Interests and Assignor does
withdraw from the Acquired Company as a member, cease to be a member of the
Acquired Company and cease to have or exercise any right or power as a member of
the Acquired Company or in any regard with respect to the Acquired Interests.
The Parties agree that the assignment of the Acquired Interests, the admission
of Assignee as a member, and the cessation of Assignor as a member of the
Acquired Company shall not dissolve the Acquired Company, and the business of
the Acquired Company shall continue.

 

F-1

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3.                                      General Provisions.

 

(a)                                 Further Assurances. Assignor shall promptly
execute and deliver to Assignee any additional instrument or other document
which Assignee reasonably requests to evidence or better effect the assignment
contained herein.

 

(b)                                 Governing Law; Jurisdiction. The provisions
of Section 11.10 to the Purchase Agreement (Governing Law; Jurisdiction) are
hereby incorporated into this Assignment by reference, mutatis mutandis.

 

(c)                                  Counterparts. This Assignment may be
executed in two or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument. A signed
copy of this Assignment delivered by facsimile, e-mail or other means of
electronic transmission shall be deemed to have the same legal effect as
delivery of an original signed copy of this Assignment.

 

(d)                                 Assignment. Neither Party shall assign this
Assignment or any part hereof without the prior written consent of the other
Party. Subject to the foregoing, this Assignment shall be binding upon and inure
to the benefit of the Parties and their respective permitted successors and
assigns.

 

(e)                                  Conflict. This Assignment is made pursuant
to, and is subject to the terms of, the Purchase Agreement. Notwithstanding
anything to the contrary contained in this Assignment, nothing contained herein
is intended to or shall be deemed to limit, restrict, modify, alter, amend or
otherwise change in any manner the rights and obligations of the parties to the
Purchase Agreement under the Purchase Agreement, and in the event of any
conflict between the terms and provisions hereof and the terms and the
provisions of the Purchase Agreement, the terms and provisions of the Purchase
Agreement shall control.

 

(f)                                   Amendment or Supplement. This Assignment
may be amended or modified in whole or in part, and terms and conditions may be
waived, only by a duly authorized agreement in writing which makes reference to
this Assignment executed by each Party to this Assignment.

 

(g)                                  Severability. If any term or provision of
this Assignment is invalid, illegal or unenforceable in any jurisdiction, such
invalidity, illegality or unenforceability shall not affect any other term or
provision of this Assignment or invalidate or render unenforceable such term or
provision in any other jurisdiction. Upon such determination that any term or
other provision is invalid, illegal or unenforceable, the Parties hereto shall
negotiate in good faith to modify this Assignment so as to effect the original
intent of the Parties as closely as possible in a mutually acceptable manner in
order that the transactions contemplated hereby be consummated as originally
contemplated to the greatest extent possible.

 

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

 

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IN WITNESS WHEREOF, this Assignment has been duly executed by each of the
Parties as of the date and year first above written.

 

 

ASSIGNOR:

 

 

 

RIVERCREST ROYALTIES HOLDINGS II, LLC

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

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ASSIGNEE:

 

 

 

KIMBELL ROYALTY PARTNERS, LP

 

 

 

By:

Kimbell Royalty GP, LLC

 

Its:

General Partner

 

 

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

F-4

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EXHIBIT G

 

OFFICER’S CERTIFICATE

OF

[SELLER]

 

[·], 2018

 

The undersigned, [·], in his capacity as [·] of [Seller], a [·] (“Seller”), and
not in his individual capacity, and without personal liability, delivers this
officer’s certificate (this “Certificate”) to Kimbell Royalty Partners, LP, a
Delaware limited partnership, and Kimbell Royalty Operating, LLC, a Delaware
limited liability company (“Buyer Parties”), pursuant to Section 2.6(d)(ii) of
that certain Purchase and Sale Agreement, dated as of November 20, 2018, among
Buyer Parties, Seller, [Rivercrest Capital Partners LP, a Delaware limited
partnership, Kimbell Art Foundation, a Texas non-profit corporation, Cupola
Royalty Direct, LLC, a Delaware limited liability company, and Rivercrest
Royalties Holdings II, LLC, a Delaware limited liability company](1) (the
“Purchase Agreement”), and hereby certifies the following:

 

1.                                      (a) The representations and warranties
of Seller set forth in Sections 3.1, 3.2, 4.1, 4.2, 4.6, 5.1, and 5.3 of the
Purchase Agreement were true and correct in all respects (other than de minimis
inaccuracies) as of the date of the Purchase Agreement and are true and correct
in all respects (other than de minimis inaccuracies) as of the Closing Date as
if made on the Closing Date (except to the extent that such representations and
warranties expressly relate to an earlier date, in which case such
representations and warranties shall have been true and correct as of such
earlier date); and (b) all other representations and warranties of Sellers made
in the Purchase Agreement (other than representations and warranties described
in clause (a) above) were true and correct (disregarding all materiality and
Seller Material Adverse Effect qualifications contained in the Purchase
Agreement) as of the date of the Purchase Agreement and are true and correct
(disregarding all materiality and Seller Material Adverse Effect qualifications
contained the Purchase Agreement) as of the Closing Date as if made on the
Closing Date, except where all such breaches or inaccuracies taken collectively
(without giving effect to any limitation as to materiality and Seller Material
Adverse Effect qualifications contained herein) would not, individually or in
the aggregate, reasonably be expected to have a Seller Material Adverse Effect.

 

2.                                      Seller has performed or complied with in
all material respects all of the covenants and agreements required by the
Purchase Agreement to be performed or complied with by Seller on or before the
Closing.

 

3.                                      No Seller Material Adverse Effect has
occurred nor any event or events that, individually or in the aggregate, with or
without the lapse of time, would reasonably be expected to result in a Seller
Material Adverse Effect.

 

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(1)  NTD: Seller will need to be deleted from this bracketed text, and proper
adjustments made as to the placement of “and”.

 

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Capitalized terms used but not defined in this Certificate shall have the
meanings given to such terms in the Purchase Agreement.

 

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

 

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The undersigned has executed this Certificate as of the date first set forth
above.

 

 

 

 

 

[·]

 

[·]

 

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EXHIBIT H

 

OFFICER’S CERTIFICATE

OF

KIMBELL ROYALTY GP, LLC

KIMBELL ROYALTY OPERATING, LLC

 

[·], 2018

 

The undersigned, [R. Davis Ravnaas], in his capacity as [President and Chief
Financial Officer] of Kimbell Royalty GP, LLC, a Delaware limited liability
company and the general partner of Kimbell Royalty Partners, LP, a Delaware
limited partnership, and of Kimbell Royalty Operating, LLC, a Delaware limited
liability company (“Buyer Parties”), and not in his individual capacity, and
without personal liability, delivers this officer’s certificate (this
“Certificate”) to Rivercrest Capital Partners LP, a Delaware limited
partnership, Kimbell Art Foundation, a Texas non-profit corporation, Cupola
Royalty Direct, LLC, a Delaware limited liability company, Rivercrest Royalties
Holdings II, LLC, a Delaware limited liability company (collectively, the
“Sellers”), pursuant to Section 2.6(e)(i) of that certain Purchase and Sale
Agreement, dated as of November 20, 2018, among Buyer Parties and Sellers (the
“Purchase Agreement”), and hereby certifies the following:

 

1.                                      (a) The representations and warranties
of Buyer Parties set forth in Sections 6.1, 6.2 and 6.4 of the Purchase
Agreement were true and correct in all respects (other than de minimis
inaccuracies) as of the date of the Purchase Agreement and are true and correct
in all respects (other than de minimis inaccuracies) as of the Closing Date as
if made on the Closing Date (except to the extent that such representations and
warranties expressly relate to an earlier date, in which case such
representations and warranties shall have been true and correct as of such
earlier date); and (b) all other representations and warranties of Buyer Parties
made in the Purchase Agreement (other than representations and warranties
described in clause (a) above) were true and correct (disregarding all
materiality and Buyer Material Adverse Effect qualifications contained in the
Purchase Agreement) as of the date of the Purchase Agreement and are true and
correct (disregarding all materiality and Buyer Material Adverse Effect
qualifications contained in the Purchase Agreement) as of the Closing Date as if
made on the Closing Date (except to the extent that such representations and
warranties expressly relate to an earlier date, in which case such
representations and warranties shall have been true and correct as of such
earlier date), except where all such breaches or inaccuracies taken collectively
(without giving effect to any limitation as to materiality and Buyer Material
Adverse Effect qualifications contained in the Purchase Agreement) would not,
individually or in the aggregate, reasonably be expected to have a Buyer
Material Adverse Effect.

 

2.                                      Buyer Parties have performed or complied
with in all material respects all of the covenants and agreements required by
the Purchase Agreement to be performed or complied with by Buyer Parties on or
before the Closing.

 

3.                                      No Buyer Material Adverse Effect has
occurred nor any event or events that, individually or in the aggregate, with or
without the lapse of time, would reasonably be expected to result in a Buyer
Material Adverse Effect.

 

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Capitalized terms used but not defined in this Certificate shall have the
meanings given to such terms in the Purchase Agreement.

 

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

 

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The undersigned has executed this Certificate as of the date first set forth
above.

 

 

 

 

 

[R. Davis Ravnaas

 

President and Chief Financial Officer]

 

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EXHIBIT I

 

REGISTRATION RIGHTS AGREEMENT

 

This REGISTRATION RIGHTS AGREEMENT, dated as of [·], 2018 (this “Agreement”), is
by and among Kimbell Royalty Partners, LP, a Delaware limited partnership (the
“Partnership”), Rivercrest Capital Partners LP, a Delaware limited partnership
(“Rivercrest Capital”), Kimbell Art Foundation, a Texas non-profit corporation
(the “Foundation”), Cupola Royalty Direct, LLC, a Delaware limited liability
company (“Cupola”), and Rivercrest Royalties Holdings II, LLC, a Delaware
limited liability company (“Rivercrest II” and, together with Rivercrest
Capital, the Foundation and Cupola, the “Sellers”).

 

RECITALS

 

WHEREAS, as of November 20, 2018, the Partnership and Kimbell Royalty Operating,
LLC, a Delaware limited liability company (“Opco”), entered into a Purchase and
Sale Agreement (the “Purchase Agreement”) with the Sellers, pursuant to which
the Sellers sold, assigned, transferred and conveyed  certain overriding
royalty, royalty or other mineral interest and certain limited liability company
interests, as applicable, to Opco (or its designee) in consideration for common
units representing limited liability company interests in Opco (the “Opco Common
Units”);

 

WHEREAS, subject to and in accordance with the terms set forth in the Opco
Agreement and the Partnership Agreement, Opco Common Units (together with an
equal number of Class B units representing limited partner interests in the
Partnership (the “Class B Units”)) are exchangeable for common units
representing limited partner interests in the Partnership (the “Common Units”);
and

 

WHEREAS, resales by the Holders of the Common Units may be required to be
registered under the Securities Act and applicable state securities laws,
depending upon the status of a Holder or the intended method of distribution of
the Common Units.

 

NOW, THEREFORE, in consideration of the premises, mutual covenants and
agreements hereinafter contained and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:

 

ARTICLE I

 

DEFINITIONS

 

1.1                               Definitions.

 

(a)                                 For purposes of this Agreement, the
following terms shall have the meanings specified in this Section 1.1.

 

“Affiliate” means, with respect to any Person, any Person who, directly or
indirectly through one or more intermediaries, controls, is controlled by or is
under common control with any Person.

 

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“Automatic Shelf Registration Statement” means an “Automatic Shelf Registration
Statement,” as defined in Rule 405 under the Securities Act.

 

“Business Day” means any day on which the NYSE is open for trading.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended, or any
similar federal statute, and the rules and regulations promulgated by the SEC
thereunder.

 

“Excluded Registration” means a registration under the Securities Act of
(i) securities registered on Form S-8 or any similar successor form and
(ii) securities registered to effect the acquisition of or combination with
another Person.

 

“Existing Holders” means any securityholder who has registration rights pursuant
to the Existing Registration Rights Agreements.

 

“Existing Registration Rights Agreements” means (i) that certain Contribution,
Conveyance, Assignment and Assumption Agreement dated as of December 20, 2016 by
and among the Partnership, Kimbell Intermediate Holdings, LLC, Kimbell Royalty
Holdings, LLC and each of the other parties listed on the Exhibit A thereto, as
may be amended from time to time, and (ii) that certain Registration Rights
Agreement, dated as of July 12, 2018, by and among the Partnership, Haymaker
Minerals & Royalties, LLC, EIGF Aggregator III LLC, TE Drilling Aggregator LLC,
Haymaker Management, LLC and the other parties thereto.

 

“General Partner” means Kimbell Royalty GP, LLC, a Delaware limited liability
company and the general partner of the Partnership.

 

“Holder” means (i) each Seller that holds Registrable Securities and (ii) any
holder of Registrable Securities to whom the registration rights conferred by
this Agreement have been transferred in compliance with Section 2.8.

 

“Initial Holder” means each Seller that holds Registrable Securities.

 

“NYSE” means the New York Stock Exchange.

 

“Opco Agreement” means the First Amended and Restated Limited Liability Company
Agreement of Opco.

 

“Overnight Underwritten Offering” means an underwritten offering that is
launched after the close of trading on one trading day and priced before the
open of trading on the next succeeding trading day.

 

“Partnership Agreement” means the Third Amended and Restated Agreement of
Limited Partnership of the Partnership, dated as of September 23, 2018, as
amended or restated from time to time.

 

“Person” or “person” means any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization or government or other agency or political
subdivision thereof.

 

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“Prospectus” means the prospectus (including any preliminary, final or summary
prospectus) included in any Registration Statement, all amendments and
supplements to such prospectus and all other material incorporated by reference
in such prospectus.

 

“register,” “registered” and “registration” refer to a registration effected by
preparing and filing a Registration Statement in compliance with the Securities
Act, and the declaration or ordering of the effectiveness of such Registration
Statement.

 

“Registrable Securities” means, at any time, Common Units issued or issuable to
the Holders upon the conversion of the Opco Common Units that were issued under
the Purchase Agreement (together with a corresponding number of Class B Units),
pursuant to the terms of the Opco Agreement and the Partnership Agreement,
including any other securities of the Partnership or any successor of the
Partnership issued or issuable with respect to such Common Units by way of a
unit dividend or unit split or in connection with a combination of units,
recapitalization, merger, consolidation or reorganization or similar event
involving a change in the capital structure of the
Partnership; provided, however, that Registrable Securities shall cease to be
Registrable Securities when (i) they have been distributed to the public
pursuant to an offering registered under the Securities Act, (ii) they have been
distributed to the public pursuant to Rule 144 (or any successor provision)
under the Securities Act, or (iii) they have been transferred or sold to any
Person to whom the rights under this Agreement are not assigned in accordance
with this Agreement.

 

“Registration Expenses” means all expenses (other than Selling Expenses) arising
from or incident to the Partnership’s performance of or compliance with this
Agreement, including, without limitation: (i) SEC, stock exchange, Financial
Industry Regulatory Authority, Inc. and other registration and filing fees;
(ii) all fees and expenses incurred in connection with complying with any
securities or blue sky laws (including, without limitation, fees, charges and
disbursements of counsel in connection with blue sky qualifications of the
Registrable Securities); (iii) all printing, messenger and delivery expenses;
(iv) the fees, charges and disbursements of counsel to the Partnership and of
its independent public accountants, reserve engineers, and any other accounting
and legal fees, charges and expenses incurred by the Partnership (including,
without limitation, any expenses arising from any special audits or “comfort”
letters required in connection with or incident to any registration); (v) the
fees and expenses incurred in connection with the listing of the Registrable
Securities on the NYSE (or NASDAQ or any other national securities exchange on
which the Common Units may then be listed) or the quotation of Registrable
Securities on any inter-dealer quotation system; (vi) the fees and expenses
incurred by the Partnership in connection with any road show for underwritten
offerings; and (vii) reasonable fees and expenses of counsel to the Holders in
connection with the filing or amendment of any Registration Statement or
Prospectus hereunder; provided, that, with respect to any offering, Registration
Expenses shall only include such fees and expenses of one counsel to the Holders
(which shall be chosen by the Holders of a majority of Registrable Securities to
be included in such offering).

 

“Registration Statement” means any registration statement of the Partnership
that covers the resale of any Registrable Securities pursuant to the provisions
of this Agreement filed with, or to be filed with, the SEC under the rules and
regulations promulgated under the Securities Act, including the related
Prospectus, amendments and supplements to such registration statement,

 

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including pre- and post-effective amendments, and all exhibits, financial
information and all other material incorporated by reference in such
registration statement or Prospectus.

 

“Required Holders” means Holders who then own beneficially more than 50% of the
Registrable Securities.

 

“Rule 144” means Rule 144 promulgated by the SEC pursuant to the Securities Act,
as such rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the SEC as a replacement thereto having substantially the
same effect as such rule.

 

“Same-Day Offering” means an underwritten offering that is launched before the
open of trading on one trading day and priced before the open of trading or
after the close of trading on such same trading day.

 

“SEC” means the Securities and Exchange Commission or any other federal agency
at the time administering the Securities Act.

 

“Securities Act” means the Securities Act of 1933, as amended, or any similar
federal statute, and the rules and regulations promulgated by the SEC
thereunder.

 

“Selling Expenses” means the underwriting fees, discounts and commissions,
placement fees of underwriters, broker commissions and any transfer taxes, in
each case, applicable to all Registrable Securities registered by the Holders
and any legal expenses not included in the definition of Registration Expenses.

 

“Shelf Registration Statement” means a “shelf” registration statement of the
Partnership that covers all the Registrable Securities (and may cover other
securities of the Partnership) on Form S-3 and under Rule 415 under the
Securities Act or, if the Partnership is not then eligible to file on Form S-3,
on Form S-1 or any other appropriate form under the Securities Act, or any
successor rule that may be adopted by the SEC, including without limitation any
such registration statement filed pursuant to Section 2.1, and all amendments
and supplements to such “shelf” registration statement, including post-effective
amendments, in each case, including the Prospectus contained therein, all
exhibits thereto and any document incorporated by reference therein.

 

“Testing-the-Waters Communication” means any oral or written communication with
potential investors undertaken in reliance on Section 5(d) of the Securities
Act.

 

“Written Testing-the-Waters Communication” means any Testing-the-Waters
Communication that is a written communication within the meaning of Rule 405
under the Securities Act.

 

(b)                                 For purposes of this Agreement, the
following terms have the meanings set forth in the sections indicated:

 

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Term

 

Section

Advice

 

2.5

Agreement

 

Introductory Paragraph

Blackout Period

 

2.4(s)

Class B Units

 

Recitals

Common Units

 

Recitals

Cupola

 

Introductory Paragraph

Foundation

 

Introductory Paragraph

Opco

 

Recitals

Opco Common Units

 

Recitals

Opt-Out Notice

 

2.2(c)

Partnership

 

Introductory Paragraph

Partnership Underwritten Offering

 

2.3

Piggyback Registration Notice

 

2.2(a)

Purchase Agreement

 

Recitals

Records

 

2.4(l)

Rivercrest II

 

Introductory Paragraph

Rivercrest Capital

 

Introductory Paragraph

Seller Affiliates

 

2.7

Sellers

 

Introductory Paragraph

Suspension Notice

 

2.5

Suspension Period

 

2.1(b)

 

1.2                               Other Definitional and Interpretive Matters.
Unless otherwise expressly provided or the context otherwise requires, for
purposes of this Agreement the following rules of interpretation apply.

 

(a)                                 When calculating the period of time before
which, within which or following which any act is to be done or step taken
pursuant to this Agreement, the date that is the reference date in calculating
such period is excluded. If the last day of such period is a non-Business Day,
the period in question ends on the next succeeding Business Day.

 

(b)                                 Any reference in this Agreement to $ means
U.S. dollars.

 

(c)                                  Any reference in this Agreement to gender
includes all genders, and words imparting the singular number also include the
plural and vice versa.

 

(d)                                 The provision of a Table of Contents, the
division of this Agreement into Articles, Sections and other subdivisions and
the insertion of headings are for convenience of reference only and do not
affect, and should not be utilized in, the construction or interpretation of
this Agreement.

 

(e)                                  All references in this Agreement to any
“Article” or “Section” are to the corresponding Article or Section of this
Agreement.

 

(f)                                   The words “herein,” “hereinafter,”
“hereof,” and “hereunder” refer to this Agreement as a whole and not merely to a
subdivision in which such words appear unless the context otherwise requires.

 

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(g)                                  The word “including” or any variation
thereof means “including, but not limited to,” and does not limit any general
statement that it follows to the specific or similar items or matters
immediately following it.

 

(h)                                 Any reference to Common Units shall apply to
any other securities of the Partnership or any successor of the Partnership
issued or issuable with respect to such Common Units by way of a unit dividend
or unit split or in connection with a combination of units, recapitalization,
merger, consolidation or reorganization or similar event involving a change in
the capital structure of the Partnership.

 

ARTICLE II

 

REGISTRATION RIGHTS

 

2.1                               Shelf Registration.

 

(a)                                 The Partnership will (i) within 30 days
following the date of this Agreement, prepare and file (to the extent not
previously filed) a Shelf Registration Statement (which Shelf Registration
Statement shall be an Automatic Shelf Registration Statement if the Partnership
is then eligible to file an Automatic Shelf Registration Statement with respect
to such registration), registering for resale under the Securities Act the
number of Registrable Securities requested in writing by such Holder, and
(ii) use its reasonable best efforts to cause such Shelf Registration Statement
to become effective as soon as reasonably practicable following such filing, but
in any event no later than the 180th day following the date of this Agreement.
The plan of distribution indicated in the Shelf Registration Statement will
include all such methods of sale as any Holder may reasonably request in writing
at least five Business Days prior to the filing of the Shelf Registration
Statement and that can be included in the Shelf Registration Statement under the
rules and regulations of the SEC and consistent with the terms of this
Agreement. Until all Registrable Securities cease to be Registrable Securities,
the Partnership shall use its reasonable best efforts to keep current and
effective such Shelf Registration Statement and file such supplements or
amendments to such Shelf Registration Statement (or file a new Shelf
Registration Statement (which Shelf Registration Statement shall be an Automatic
Shelf Registration Statement if the Partnership is then eligible to file an
Automatic Shelf Registration Statement) when such preceding Shelf Registration
Statement expires pursuant to the rules of the SEC) as may be necessary or
appropriate in order to keep such Shelf Registration Statement continuously
effective and useable for the resale of all Registrable Securities under the
Securities Act. Any Shelf Registration Statement when declared effective
(including the documents incorporated therein by reference) will comply in all
material respects as to form with all applicable requirements of the Securities
Act and the Exchange Act and will not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading.

 

(b)                                 Upon written notice to the Holders of
Registrable Securities, the Partnership shall be entitled to suspend, for a
period of time not to exceed the periods specified in Section 2.4(s) (each, a
“Suspension Period”), the use of any Registration Statement or

 

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Prospectus and shall not be required to amend or supplement the Registration
Statement, any related Prospectus or any document incorporated therein by
reference if (i) the Partnership receives any request by the SEC or any other
federal or state governmental authority for amendments or supplements to such
Registration Statement or Prospectus or for additional information that pertains
to such Holders as sellers of Registrable Securities; (ii) the SEC issues any
stop order suspending the effectiveness of the Registration Statement covering
any or all of the Registrable Securities or the initiation of any proceedings
for that purpose; (iii) the Partnership receives any notification with respect
to the suspension of the qualification or exemption from qualification of any of
the Registrable Securities for sale in any jurisdiction, or the initiation or
threatening of any proceeding for such purpose; and (iv) the board of directors,
chief executive officer or chief financial officer of the General Partner
determines in its or his or her reasonable good faith judgment that the
Registration Statement or any Prospectus may contain an untrue statement of a
material fact or may omit any fact necessary to make the statements in the
Registration Statement or Prospectus not misleading; provided, that the
Partnership shall use its good faith efforts to amend the Registration Statement
or Prospectus to correct such untrue statement or omission as promptly as
reasonably practicable, unless the Partnership determines in good faith that
such amendment would reasonably be expected to have a materially detrimental
effect on the Partnership.

 

(c)                                  Each of the Holders hereby agrees (a) to
cooperate with the Partnership and to furnish to the Partnership all such
information regarding such Holder, its ownership of Registrable Securities and
the disposition of such securities in connection with the preparation of the
Registration Statement and any filings with any state securities commission as
the Partnership may reasonably request, (b) to the extent required by the
Securities Act, to deliver or cause delivery of the Prospectus contained in the
Registration Statement, any amendment or supplement thereto, to any purchaser of
Registrable Securities covered by the Registration Statement from the Holder and
(c) if requested by the Partnership, to notify the Partnership of any sale of
Registrable Securities by such Holder.

 

2.2                               Piggyback Registrations.

 

(a)                                 Each time the Partnership proposes to
register any of its equity securities (other than pursuant to an Excluded
Registration) under the Securities Act for sale to the public and the form of
registration statement to be used (including a Shelf Registration Statement)
permits the registration of Registrable Securities, the Partnership shall give
prompt written notice (a “Piggyback Registration Notice”) to each Holder of
Registrable Securities (which notice shall be given not less than (i) five
Business Days prior to the anticipated filing date or (ii) three Business Days
in the case of an Overnight Underwritten Offering, Same-Day Offering or similar
“bought deal”), which notice shall offer each such Holder the opportunity to
include any or all of its or his Registrable Securities in such registration
statement, subject to the limitations contained in Section 2.2(b) hereof. Each
Holder who desires to have its or his Registrable Securities included in such
registration statement shall so advise the Partnership in writing (stating the
number of Registrable Securities desired to be registered) within three Business
Days (or one Business Day in the case of an Overnight Underwritten Offering,
Same-Day Offering or similar “bought deal”)

 

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after the date of such notice from the Partnership. Any Holder shall have the
right to withdraw such Holder’s request for inclusion of such Holder’s
Registrable Securities in any registration statement pursuant to
this Section 2.2(a) by giving written notice to the Partnership of such
withdrawal. Subject to Section 2.2(b) below, the Partnership shall include in
such registration statement all such Registrable Securities so requested to be
included therein; provided, however, that the Partnership may at any time
withdraw or cease proceeding with any such registration if it shall at the same
time withdraw or cease proceeding with the registration of all other equity
securities originally proposed to be registered.

 

(b)                                 With respect to any registration pursuant
to Section 2.2(a), if the managing underwriter(s) advise the Partnership that
the inclusion of the amount of securities (including Registrable Securities)
requested to be included in the Registration Statement will materially and
adversely affect the pricing of the offering, the Partnership shall so advise
all Holders of Registrable Securities and the Existing Holders which would
otherwise be underwritten pursuant hereto, and the amount of securities that may
be included in the Registration Statement shall be allocated: (i) in the case of
a registration for the account of the Partnership, (a) first, to include the
securities the Partnership proposes to register, (b) second, among the
participating Holders and participating Existing Holders as nearly as possible
on a pro rata basis based on the total amount of Registrable Securities
requested by such Holders and Registrable Securities (as defined in the Existing
Registration Rights Agreements) requested by such Existing Holders to be
included in such underwriting, and (c) third, among any other Persons pursuant
to contractual registration rights on as nearly as possible on a pro rata basis,
and (ii) in the case of a registration for the account of the Existing Holders
or any other Persons pursuant to contractual registration rights, (a) first,
among the participating Existing Holders as nearly as possible on a pro rata
basis based on the total amount of Registrable Securities (as defined in the
Existing Registration Rights Agreements) requested by such Existing Holders to
be included in such underwriting, (b) second, among the participating Holders as
nearly as possible on a pro rata basis based on the total amount of Registrable
Securities requested by such Holders to be included in such underwriting,
(c) third, to include the securities the Partnership proposes to register, if at
all, and (d) fourth, among any such other Persons pursuant to contractual
registration rights as nearly as possible on a pro rata basis. If, as a result
of the provisions of this Section 2.2(b), any Holder shall not be entitled to
include all Registrable Securities in a registration that such Holder has
requested to be so included, such Holder may withdraw such Holder’s request to
include Registrable Securities in such Registration Statement. No Person may
participate in any Registration Statement pursuant to Section 2.2(a) unless such
Person (i) agrees to sell such person’s Registrable Securities on the basis
provided in any underwriting arrangements approved by the Partnership and
(ii) completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents, each in customary form, reasonably
required under the terms of such underwriting arrangements; provided, however,
that no such Person shall be required to (A) make any representations or
warranties in connection with any such registration other than representations
and warranties as to (1) such Person’s ownership of his or its Registrable
Securities to be sold or transferred free and clear of all liens, claims and
encumbrances, (2) such Person’s power and authority to effect such transfer and
(3) such matters pertaining to compliance with securities laws as may be

 

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reasonably requested or (B) undertake any indemnification obligations to the
Partnership or the underwriters with respect thereto except as otherwise
provided in Section 2.7.

 

(c)                                  Any Holder of Registrable Securities may
deliver written notice (an “Opt-Out Notice”) to the Partnership requesting that
such Holder of Registrable Securities not receive from the Partnership any
Piggyback Registration Notice; provided, however, that such Holder of
Registrable Securities may later revoke any such Opt-Out Notice in writing. 
Following receipt of an Opt-Out Notice from a holder of Registrable Securities
(unless subsequently revoked), the Partnership shall not deliver any notice to
such Holder of Registrable Securities pursuant to Section 2.2(a) and such Holder
of Registrable Securities shall no longer be entitled to participate in any
registration or offering pursuant to Section 2.2(a).

 

2.3                               Holdback Agreement. Upon the request of the
Partnership, by electing to include Registrable Securities in a Partnership
registration statement pursuant to Section 2.1 or  Section 2.2, the Holder shall
agree not to effect any sale or distribution of securities of the Partnership of
the same or similar class or classes of the securities included in the
Partnership registration statement or any securities convertible into or
exchangeable or exercisable for such securities, including a sale pursuant to
Rule 144, during such periods as reasonably requested (but in no event for a
period longer than 45 days following the date of the applicable
Prospectus; provided each of the executive officers and directors of the
Partnership that hold  Common Units of the Partnership or securities convertible
into or exchangeable or exercisable for Common Units of the Partnership are
subject to the same restriction for the entire time period required of the
Holders hereunder) by the representatives of the underwriters, if an
underwritten offering by the Partnership (a “Partnership Underwritten
Offering”); provided, further, for the avoidance of doubt, that such
restrictions shall only apply if the Holders are able to sell Registrable
Securities in such a Partnership Underwritten Offering. The provisions of
this Section 2.3 will no longer apply to a Holder once such Holder ceases to
hold at least 1% of the Registrable Securities acquired as a result of the
transactions contemplated in the Purchase Agreements. The provisions of
this Section 2.3 shall not apply to (i) any transfer of Registrable Securities
by a Holder to (a) any stockholder, member, managing member, general or limited
partner of any Holder, or (b) any investment fund managed by any of such persons
or (c) any other Affiliate of any Holder, or to any other Affiliate of a Holder,
so long as such transfer is not for value and any such person agrees to and
remains to be bound hereby, (ii) the entry by any Holder of a bona fide pledge
of any Registrable Securities (and any foreclosure on any such pledge) and
(iii) any hedging transaction with respect to an index or basket of securities
where the equity securities of the Partnership constitute a de minimis amount.

 

2.4                               Registration Procedures. In connection with
the registration and sale of Registrable Securities pursuant to this Agreement,
the Partnership will use its reasonable best efforts to effect the registration
and the sale of such Registrable Securities in accordance with the intended
method of disposition thereof, and pursuant thereto the Partnership will:

 

(a)                                 if the Registration Statement is not
automatically effective upon filing, use reasonable best efforts to cause such
Registration Statement to become effective as promptly as reasonably
practicable;

 

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(b)                                 promptly notify each selling Holder,
promptly after the Partnership receives notice thereof, of the time when such
Registration Statement has been declared effective or a supplement to any
prospectus forming a part of such Registration Statement has been filed;

 

(c)                                  after the Registration Statement becomes
effective, promptly notify each selling Holder of any request by the SEC that
the Partnership amend or supplement such Registration Statement or Prospectus;

 

(d)                                 prepare and file with the SEC such
amendments and supplements to the Registration Statement and the Prospectus used
in connection therewith as may be reasonably necessary to keep the Registration
Statement effective during the period set forth in, and subject to the terms and
conditions of, this Agreement, and to comply with the provisions of the
Securities Act with respect to the disposition of all Registrable Securities
covered by the Registration Statement for the period required to effect the
distribution of the Registrable Securities as set forth in Section 2 hereof;

 

(e)                                  furnish to the selling Holders such numbers
of copies of such Registration Statement, each amendment and supplement thereto,
each Prospectus (including each preliminary Prospectus and Prospectus
supplement) and such other documents as the Holder and any underwriter(s) may
reasonably request in order to facilitate the disposition of the Registrable
Securities;

 

(f)                                   use its reasonable best efforts to
register and qualify the Registrable Securities under such other securities or
blue-sky laws of such jurisdictions as shall be reasonably requested by the
Holders and any underwriter(s) and do any and all other acts and things that may
be reasonably necessary or advisable to enable the Holders and any
underwriter(s) to consummate the disposition of the Registrable Securities in
such jurisdictions; provided, however, that the Partnership shall not be
required in connection therewith or as a condition thereto to qualify to do
business in or to file a general consent to service of process in any
jurisdiction, unless the Partnership is already subject to service in such
jurisdiction and except as may be required by the Securities Act, or subject
itself to taxation in any such jurisdiction, unless the Partnership is already
subject to taxation in such jurisdiction;

 

(g)                                  use its reasonable best efforts to cause
all such Registrable Securities to be listed on a national securities exchange
or trading system and each securities exchange and trading system (if any) on
which similar equity securities issued by the Partnership are then listed;

 

(h)                                 provide a transfer agent and registrar for
the Registrable Securities and provide a CUSIP number for all such Registrable
Securities, in each case not later than the effective date of the Registration
Statement;

 

(i)                                     use its reasonable best efforts to
furnish, on the date that shares of Registrable Securities are delivered to the
underwriters for sale, if such securities are being sold through underwriters,
(i) an opinion, dated as of such date, of the counsel representing

 

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the Partnership for the purposes of such registration, in form and substance as
is customarily given to underwriters by the Partnership in an underwritten
public offering, addressed to the underwriters, (ii) a letter dated as of such
date, from the independent public accountants of the Partnership, in form and
substance as is customarily given by independent public accountants to
underwriters in an underwritten public offering, addressed to the underwriters
and (iii) an engineers’ reserve report letter as of such date, from the
independent petroleum engineers of the Partnership, in form and substance as is
customarily given by independent petroleum engineers to underwriters in an
underwritten public offering, addressed to the underwriters;

 

(j)                                    if requested by the Holders, cooperate
with the Holders and the managing underwriter(s) (if any) to facilitate the
timely preparation and delivery of certificates (which shall not bear any
restrictive legends unless required under applicable law) representing
securities sold under the Registration Statement, and enable such securities to
be in such denominations and registered in such names as such Holders or the
managing underwriter (if any) may request and keep available and make available
to the Partnership’s transfer agent prior to the effectiveness of such
Registration Statement a supply of such certificates;

 

(k)                                 in the event of any underwritten public
offering, enter into and perform its obligations under an underwriting
agreement, in form and substance as is customarily given by the Partnership to
underwriters in an underwritten public offering, with the underwriter(s) of such
offering;

 

(l)                                     upon execution of confidentiality
agreements in form and substance reasonably satisfactory to the Partnership,
promptly make available for inspection by the selling Holders, any
underwriter(s) participating in any disposition pursuant to such Registration
Statement, and any attorney or accountant or other agent retained by any such
underwriter or selected by the selling Holders, all financial and other records,
pertinent corporate documents, and properties of the Partnership reasonably
requested (collectively, “Records”), and use reasonable best efforts to cause
the Partnership’s officers, directors, employees, and independent accountants to
supply all information reasonably requested by any such seller, underwriter,
attorney, accountant, or agent, in each case, as necessary or advisable to
verify the accuracy of the information in such Registration Statement and to
conduct appropriate due diligence in connection therewith; provided, that
Records that the Partnership determines, in good faith, to be confidential and
that it notifies the selling Holders are confidential shall not be disclosed by
the selling Holders unless the release of such Records is ordered pursuant to a
subpoena or other order from a court of competent jurisdiction or is otherwise
required by applicable law. Each Holder agrees that information obtained by it
as a result of such inspections shall be deemed confidential and shall not be
used by it or its affiliates (other than with respect to such Holders’ due
diligence) unless and until such information is made generally available to the
public, and further agrees that, upon learning that disclosure of such Records
is sought in a court of competent jurisdiction, to the extent permitted and to
the extent practicable it shall give notice to the Partnership and allow the
Partnership to undertake appropriate action to prevent disclosure of the Records
deemed confidential;

 

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(m)                             promptly notify the selling Holders and any
underwriter(s) of the notification to the Partnership by the SEC of its
initiation of any proceeding with respect to the issuance by the SEC of any stop
order suspending the effectiveness of the Registration Statement, and in the
event of the issuance of any stop order suspending the effectiveness of such
Registration Statement, or of any order suspending or preventing the use of any
related Prospectus or suspending the qualification of any Registrable Securities
included in such Registration Statement for sale in any jurisdiction, use its
reasonable best efforts to obtain promptly the withdrawal of such order;

 

(n)                                 promptly notify the selling Holders and any
underwriter(s) at any time when a Prospectus relating thereto is required to be
delivered under the Securities Act of the occurrence of any event as a result of
which the Prospectus included in the Registration Statement, as then in effect,
includes an untrue statement of a material fact or omits to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading in light of the circumstances under which they were made, and at
the request of any Holder promptly prepare and furnish to such Holder a
reasonable number of copies of a supplement to or an amendment of such
Prospectus, or a revised Prospectus, as may be necessary so that, as thereafter
delivered to the purchasers of such securities, such Prospectus shall not
include an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances under which they were made (following
receipt of any supplement or amendment to any Prospectus, the selling Holders
shall deliver such amended, supplemental or revised Prospectus in connection
with any offers or sales of Registrable Securities, and shall not deliver or use
any Prospectus not so supplemented, amended or revised);

 

(o)                                 promptly notify the selling Holders and any
underwriter(s) of the receipt by the Partnership of any notification with
respect to the suspension of the qualification of any Registrable Securities for
sale under the applicable securities or blue sky laws of any jurisdiction;

 

(p)                                 make available to each Holder (i) promptly
after the same is prepared and publicly distributed, filed with the SEC, or
received by the Partnership, one copy of each Registration Statement and any
amendment thereto, each preliminary Prospectus and Prospectus and each amendment
or supplement thereto, each letter written by or on behalf of the Partnership to
the SEC or the staff of the SEC (or other governmental agency or self-regulatory
body or other body having jurisdiction, including any domestic or foreign
securities exchange), and each item of correspondence from the SEC or the staff
of the SEC (or other governmental agency or self-regulatory body or other body
having jurisdiction, including any domestic or foreign securities exchange), in
each case relating to such Registration Statement, and (ii) such number of
copies of each Prospectus, including a preliminary Prospectus, and all
amendments and supplements thereto and such other documents as any Holder or any
underwriter may reasonably request in order to facilitate the disposition of the
Registrable Securities. The Partnership will promptly notify the Holders of the
effectiveness of each Registration Statement or any post-effective amendment or
the filing of any supplement or amendment to such Registration Statement or of
any Prospectus supplement. The Partnership will promptly respond to any and all

 

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comments received from the SEC, with a view towards causing each Registration
Statement or any amendment thereto to be declared effective by the SEC as soon
as practicable and shall file an acceleration request, if necessary, as soon as
practicable following the resolution or clearance of all SEC comments or, if
applicable, following notification by the SEC that any such Registration
Statement or any amendment thereto will not be subject to review;

 

(q)                                 take no direct or indirect action prohibited
by Regulation M under the Exchange Act; provided, that, to the extent that any
prohibition is applicable to the Partnership, the Partnership will take all
reasonable action to make any such prohibition inapplicable;

 

(r)                                    take such other actions as are reasonably
necessary in order to facilitate the disposition of such Registrable Securities;
and

 

(s)                                   notwithstanding any other provision of
this Agreement, the Partnership shall not be required to file a Registration
Statement (or any amendment thereto) (or, if the Partnership has filed a Shelf
Registration Statement and has included Registrable Securities therein, the
Partnership shall be entitled to suspend the offer and sale of Registrable
Securities pursuant to such Registration Statement) for a period of up to 60
days if (i) the board of directors of the General Partner determines that a
postponement is in the best interest of the Partnership and its unitholders
generally due to a proposed transaction involving the Partnership and determines
in good faith that the Partnership’s ability to pursue or consummate such a
transaction would be materially and adversely affected by any required
disclosure of such transaction in the Shelf Registration Statement, (ii) the
board of directors of the General Partner determines such registration would
render the Partnership unable to comply with applicable securities laws or
(iii) the board of directors of the General Partner determines such registration
would require disclosure of material information that the Partnership has a bona
fide business purpose for preserving as confidential (any such period, a
“Blackout Period”); provided, however, that in no event shall any Blackout
Period and/or Suspension Period collectively exceed an aggregate of 90 days in
any 12-month period.

 

2.5                               Suspension of Dispositions.

 

(a)                                 Each Holder agrees by acquisition of any
Registrable Securities that, upon receipt of any notice (a “Suspension Notice”)
from the Partnership of the occurrence of any event of the kind described
in Section 2.4(n) or Section 2.4(s), such Holder will forthwith discontinue
disposition of Registrable Securities pursuant to the Registration Statement
until such Holder’s receipt of the copies of the supplemented or amended
Prospectus, or until it is advised in writing (the “Advice”) by the Partnership
that the use of the Prospectus may be resumed, and has received copies of any
additional or supplemental filings which are incorporated by reference in the
Prospectus. The Partnership shall extend the period of time during which the
Partnership is required to maintain the Registration Statement effective
pursuant to this Agreement by the number of days during the period from and
including the date of the giving of such Suspension Notice to and including the
date such Holder either receives the supplemented or amended

 

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Prospectus or receives the Advice. If so directed by the Partnership, such
Holder will deliver to the Partnership all copies, other than permanent file
copies then in such Holder’s possession, of the Prospectus covering such
Registrable Securities current at the time of receipt of such notice. The
Partnership shall use its reasonable best efforts and take such actions as are
reasonably necessary to render the Advice as promptly as practicable.

 

2.6                               Registration Expenses. All Registration
Expenses shall be borne by the Partnership. In addition, for the avoidance of
doubt, the Partnership shall pay its internal expenses in connection with the
performance of or compliance with this Agreement (including, without limitation,
all salaries and expenses of its officers and employees performing legal or
accounting duties), the expense of any annual audit or quarterly review, the
expense of any liability insurance and the expenses and fees for listing the
securities to be registered on each securities exchange on which they are to be
listed. All Selling Expenses relating to Registrable Securities registered shall
be borne by the Holders of such Registrable Securities pro rata on the basis of
the number of Registrable Securities sold.

 

2.7                               Indemnification.

 

(a)                                 The Partnership agrees to indemnify and
reimburse, to the fullest extent permitted by law, each Holder that is a seller
of Registrable Securities, and each of its employees, advisors, agents,
representatives, partners, officers, and directors and each Person who controls
such Holder (within the meaning of the Securities Act or the Exchange Act)
(collectively, the “Seller Affiliates”) (i) against any and all losses, claims,
damages, liabilities and expenses, joint or several (including, without
limitation, attorneys’ fees and disbursements except as limited
by Section 2.7(c)) based upon, arising out of, related to or resulting from any
untrue or alleged untrue statement of a material fact contained in any
Registration Statement or Prospectus, any Written Testing-the-Waters
Communication,  or any amendment thereof or supplement thereto, or any omission
or alleged omission of a material fact required to be stated therein or
necessary to make the statements therein not misleading, (ii) against any and
all losses, liabilities, claims, damages and expenses whatsoever, as incurred,
to the extent of the aggregate amount paid in settlement of any litigation or
investigation or proceeding by any governmental agency or body, commenced or
threatened, or of any claim whatsoever based upon, arising out of, related to or
resulting from any such untrue statement or omission or alleged untrue statement
or omission, and (iii) against any and all costs and expenses (including
reasonable fees, charges and disbursements of counsel) as may be reasonably
incurred in investigating, preparing or defending against any litigation,
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon, arising out of, related to or
resulting from any such untrue statement or omission or alleged untrue statement
or omission, or such violation of the Securities Act or Exchange Act, to the
extent that any such expense or cost is not paid under subparagraph (i) or
(ii) above; except insofar as any such statements are made in reliance upon
information furnished to the Partnership in writing by such seller or any Seller
Affiliate expressly for use therein. The reimbursements required by
this Section 2.7(a) will be made by periodic payments during the course of the
investigation or defense, as and when bills are received or expenses incurred.

 

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(b)                                 In connection with any Registration
Statement in which a Holder that is a seller of Registrable Securities is
participating, each such Holder will furnish to the Partnership such information
and affidavits as the Partnership reasonably requests for use in connection with
any such Registration Statement or Prospectus or any Written Testing-the-Waters
Communication and, to the fullest extent permitted by law, each such seller will
indemnify the Partnership and its directors and officers and each Person who
controls the Partnership (within the meaning of the Securities Act or the
Exchange Act) against any and all losses, claims, damages, liabilities and
expenses (including, without limitation, reasonable attorneys’ fees and
disbursements except as limited by Section 2.7(c)) resulting from any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement, Prospectus or any amendment thereof or supplement
thereto or any omission or alleged omission of a material fact required to be
stated therein or necessary to make the statements therein not misleading, but
only to the extent that such untrue statement or alleged untrue statement or
omission or alleged omission is contained in any information or affidavit so
furnished by such seller or any of its Seller Affiliates in writing specifically
for inclusion in the Registration Statement; provided that the obligation to
indemnify will be several, not joint and several, among such sellers of
Registrable Securities, and the liability of each such seller of Registrable
Securities will be in proportion to the amount of Registrable Securities sold by
them, and, provided, further, that such liability will be limited to the net
amount received by such seller from the applicable sale of Registrable
Securities.

 

(c)                                  Any Person entitled to indemnification
hereunder will (i) give prompt written notice to the indemnifying party of any
claim with respect to which it seeks indemnification (provided that the failure
to give such notice shall not limit the rights of such Person) and (ii) unless
in such indemnified party’s reasonable judgment a conflict of interest between
such indemnified and indemnifying parties may exist with respect to such claim,
permit such indemnifying party to assume the defense of such claim with counsel
reasonably satisfactory to the indemnified party; provided, however, that any
Person entitled to indemnification hereunder shall have the right to employ
separate counsel and to participate in the defense of such claim, but the fees
and expenses of such counsel shall be at the expense of such Person unless
(A) the indemnifying party has agreed to pay such fees or expenses or (B) the
indemnifying party shall have failed to assume the defense of such claim and
employ counsel reasonably satisfactory to such Person. If such defense is not
assumed by the indemnifying party as permitted hereunder, the indemnifying party
will not be subject to any liability for any settlement made by the indemnified
party without its consent (but such consent will not be unreasonably withheld,
conditioned or delayed). If such defense is assumed by the indemnifying party
pursuant to the provisions hereof, such indemnifying party shall not settle or
otherwise compromise the applicable claim unless (i) such settlement or
compromise contains a full and unconditional release of the indemnified party or
(ii) the indemnified party otherwise consents in writing (which consent will not
be unreasonably withheld, conditioned or delayed). An indemnifying party who is
not entitled to, or elects not to, assume the defense of a claim will not be
obligated to pay the fees and expenses of more than one counsel for all parties
indemnified (which shall be chosen by the Holders of a majority of Registrable
Securities so indemnified) by such indemnifying party with respect to such
claim, unless in the reasonable judgment of any indemnified party, a conflict of
interest may exist between such indemnified party and

 

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any other of such indemnified parties with respect to such claim, in which event
the indemnifying party shall be obligated to pay the reasonable fees and
disbursements of such additional counsel or counsels.

 

(d)                                 Each party hereto agrees that, if for any
reason the indemnification provisions contemplated
by Section 2.7(a) or Section 2.7(b) are unavailable to or insufficient to hold
harmless an indemnified party in respect of any losses, claims, damages,
liabilities or expenses (or actions in respect thereof) referred to therein,
then each indemnifying party shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, liabilities or
expenses (or actions in respect thereof) in such proportion as is appropriate to
reflect the relative fault of the indemnifying party and the indemnified party
in connection with the actions which resulted in the losses, claims, damages,
liabilities or expenses as well as any other relevant equitable considerations.
The relative fault of such indemnifying party and indemnified party shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or omission or alleged omission to state a
material fact relates to information supplied by such indemnifying party or
indemnified party, and the parties’ relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 2.7(d) were determined by pro rata allocation (even if
the Holders or any underwriters or all of them were treated as one entity for
such purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to in this Section 2.7(d).The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages, liabilities or expenses (or actions in respect thereof) referred to
above shall be deemed to include any legal or other fees or expenses reasonably
incurred by such indemnified party in connection with investigating or, except
as provided in Section 2.7(c), defending any such action or claim.
Notwithstanding the provisions of this Section 2.7(d), no Holder shall be
required to contribute an amount greater than the dollar amount by which the net
proceeds received by such Holder with respect to the sale of any Registrable
Securities exceeds the amount of damages which such Holder has otherwise been
required to pay by reason of any and all untrue or alleged untrue statements of
material fact or omissions or alleged omissions of material fact made in any
Registration Statement or Prospectus or any amendment thereof or supplement
thereto related to such sale of Registrable Securities. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Holders’ obligations in
this Section 2.7(d) to contribute shall be several in proportion to the amount
of Registrable Securities registered by them and not joint.

 

If indemnification is available under this Section 2.7, the indemnifying parties
shall indemnify each indemnified party to the full extent provided
in Section 2.7(a) and Section 2.7(b) without regard to the relative fault of
said indemnifying party or indemnified party or any other equitable
consideration provided for in this Section 2.7(d) subject, in the case of the
Holders, to the limited dollar amounts set forth in Section 2.7(b).

 

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(e)                                  No indemnifying party shall be liable for
any settlement effected without its written consent (which consent may not be
unreasonably delayed or withheld). Each indemnifying party agrees that it will
not, without the indemnified party’s prior written consent, consent to entry of
any judgment or settle or compromise any pending or threatened claim, action or
proceeding in respect to which indemnification or contribution may be sought
hereunder unless the foregoing contains and unconditional release, in form and
substance reasonably satisfactory to the indemnified parties, of the indemnified
parties from all liability and obligation arising therefrom.

 

(f)                                   The indemnification and contribution
provided for under this Agreement will remain in full force and effect
regardless of any investigation made by or on behalf of the indemnified party or
any officer, director or controlling Person of such indemnified party and will
survive the transfer of securities.

 

2.8                               Transfer of Registration Rights. The
registration rights of a Holder under this Agreement with respect to any
Registrable Securities may not be transferred or assigned to any purchaser or
transferee of Registrable Securities without the prior written consent of the
Partnership. Notwithstanding anything in the forgoing to the contrary, the
registration rights of an Initial Holder under this Agreement with respect to
any Registrable Securities may be assigned without such consent (but only with
all such related obligations) with respect to such Registrable Securities (and
any Registrable Securities issued as a dividend or other distribution with
respect to, in exchange for or in replacement of such Registrable Securities) by
an Initial Holder to a transferee of such Registrable Securities that is a
partner, member or stockholder of such Initial Holder; provided, that, (i) such
Initial Holder shall give the Partnership written notice prior to the time of
such transfer stating the name and address of the transferee and identifying the
securities with respect to which the rights under this Agreement are being
transferred; (ii) such transferee shall agree in writing, in form and substance
reasonably satisfactory to the Partnership, to be bound as a Holder by the
provisions of this Agreement; and (iii) immediately following such transfer the
further disposition of such securities by such transferee shall be restricted to
the extent set forth under applicable law.

 

2.9                               Current Public Information. With a view to
making available to the Holders of Registrable Securities the benefits of
Rule 144 and Rule 144A promulgated under the Securities Act and other rules and
regulations of the SEC that may at any time permit a Holder of Registrable
Securities to sell securities of the Partnership to the public without
registration, the Partnership covenants that it will (i) for as long as the
Common Units are registered pursuant to Section 12(b), Section 12(g) or
Section 15(d) of the Exchange Act, use its reasonable best efforts to file in a
timely manner all reports and other documents required, if any, to be filed by
it under the Securities Act and the Exchange Act and the rules and regulations
adopted thereunder, (ii) if it is not required to file such reports, make
available information necessary to comply with Rule 144 and Rule 144A, if
available with respect to resales of the Registrable Securities under the
Securities Act, at all times, and (iii) take such further action as any holder
or holders of Registrable Securities may reasonably request, all to the extent
required from time to time to enable such Holder to sell Registrable Securities
without registration under the Securities Act within the limitation of the
exemptions provided by (x) Rule 144 and Rule 144A promulgated under the
Securities Act (if available with respect to resales of the Registrable
Securities), as such rules may be amended from time to time or (y) any other
rules or regulations now existing or hereafter adopted by the SEC.

 

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2.10        Partnership Obligations Regarding Transfers. In connection with any
sale or transfer of Registrable Securities by any Holder, including any sale or
transfer pursuant to Rule 144 and Rule 144A promulgated under the Securities Act
and other rules and regulations of the SEC that may at any time permit a Holder
of Registrable Securities to sell securities of the Partnership to the public
without registration, the Partnership shall, to the extent allowed by law, take
any and all action necessary or reasonably requested by such Holder in order to
permit or facilitate such sale or transfer, including, without limitation, at
the sole expense of the Partnership, by (i) issuing such directions to any
transfer agent, registrar or depositary, as applicable, (ii) delivering such
opinions to the transfer agent, registrar or depositary as are customary for the
transaction of this type and are reasonably requested by the same, and
(iii) taking or causing to be taken such other actions as are reasonably
necessary (in each case on a timely basis) in order to cause any legends,
notations or similar designations restricting transferability of the Registrable
Securities held by such Holder to be removed and to rescind any transfer
restrictions (other than as may apply pursuant to Section 2.3) with respect to
such Registrable Securities; provided, however, that such Holder shall deliver
to the Partnership, in form and substance reasonably satisfactory to the
Partnership, representation letters regarding such Holder’s compliance with
Rule 144 or Rule 144A, as may be applicable.

 

2.11        No Conflict of Rights. The Partnership represents and warrants that
except for the Existing Registration Rights Agreements, it has not granted, and
is not subject to, any registration rights that are superior to, inconsistent
with or that in any way violate or subordinate the rights granted to the Holders
hereby. The Partnership shall not, prior to the termination of this Agreement,
grant any registration rights that are superior to, inconsistent with or that in
any way violate or subordinate the rights granted to the Holders hereby.

 

2.12        Free Writing Prospectuses. The Partnership shall not permit any
officer, director, underwriter, broker or any other person acting on behalf of
the Partnership to use any free writing prospectus (as defined in Rule 405 under
the Securities Act) in connection with any registration statement covering
Registrable Securities, without the prior written consent of each participating
Holder and any underwriter. No Holder shall, or permit any officer, manager,
underwriter, broker or any other person acting on behalf of such Holder to use
any free-writing prospectus in connection with any registration statement
covering Registrable Securities, without the prior written consent of the
Partnership.

 

2.13        Section 2(a)(11) Underwriter. The Partnership will not name a Holder
as an underwriter as defined in Section 2(a)(11) of the Securities Act in any
Shelf Registration Statement without such Holder’s consent. If the staff of the
SEC requires the Partnership to name any Holder as an underwriter as defined in
Section 2(a)(11) of the Securities Act, and such Holder does not consent
thereto, then such Holder’s Registrable Securities shall not be included on such
Shelf Registration Statement, such Holder shall no longer be entitled to receive
Liquidated Damages under this Agreement with respect to such Holder’s
Registrable Securities and the Partnership shall have no further obligations
hereunder with respect to Registrable Securities held by such Holder, unless
such Holder has not had an opportunity to conduct customary underwriter’s due
diligence (including receipt of comfort letters and opinions of counsel) with
respect to the Partnership at the time such Holder’s consent is sought.

 

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ARTICLE III

 

TERMINATION

 

3.1          Termination. The provisions of this Agreement shall terminate and
be of no further force and effect upon the date when there shall no longer be
any Registrable Securities outstanding.

 

ARTICLE IV

 

MISCELLANEOUS

 

4.1          Notices. Any notice or other communication required or permitted
hereunder shall be in writing and shall be delivered by hand, by facsimile
transmission or electronic mail transmission, or by certified or registered
mail, postage prepaid and return receipt requested. Notices shall be deemed to
have been given upon delivery, if delivered by hand, three days after mailing,
if mailed, and upon receipt of an appropriate electronic confirmation, if
delivered by facsimile or electronic mail transmission. Notices shall be
delivered to the parties at the addresses set forth below:

 

 If to the Partnership:

 

Kimbell Royalty Partners, LP
777 Taylor Street, Suite 810
Fort Worth, TX 76102
Email: Robert@kimbellrp.com
Facsimile: (817) 877-3728
Attention: Robert D. Ravnaas

 

 

 

 

 

and

Conflicts Committee of the Board of Directors of Kimbell Royalty Partners GP,
LLC
777 Taylor Street, Suite 810
Fort Worth, TX 76102
Email: badams.jabb@gmail.com
Attention: Bill Adams

 

 

 

With copies to (which shall not constitute notice):

 

Baker Botts L.L.P.
910 Louisiana Street
Houston, TX 77002
Email: jason.rocha@bakerbotts.com and joshua.davidson@bakerbotts.com
Facsimile: 713.229.2858
Attention: Jason A. Rocha and Josh Davidson

and

 

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Potter Anderson & Corroon, LLP
1313 N Market Street
Wilmington, DE 19801
Email: mmorton@potteranderson.com
Facsimile: (302) 658-1192
Attention: Mark A. Morton

 

If to any Holder, at its address listed on the signature pages hereof.

 

Any party may from time to time change its address or designee for notification
purposes by giving the other parties prior notice in the manner specified above
of the new address or the new designee and the subsequent date upon which the
change shall be effective.

 

4.2          Choice of Law; Exclusive Jurisdiction; Waiver of Jury Trial.

 

(a)           This Agreement shall be constructed, interpreted and enforced in
accordance with, and the respective rights and obligations of the parties shall
be governed by, the laws of the State of Delaware without regard to principles
of conflicts of law that would require the application of the laws of another
jurisdiction.

 

(b)           All actions and proceedings for the enforcement of or based on,
arising out of or relating to this Agreement shall be heard and determined
exclusively in any state or federal court in Harris County, Texas, and each of
the parties hereto hereby (i) irrevocably submits to the exclusive jurisdiction
of such courts (and, in the case of appeals, appropriate appellate courts
therefrom) in any such action or proceeding, (ii) irrevocably waives the defense
of an inconvenient forum to the maintenance of any such action or proceeding,
(iii) agrees that it shall not bring any such action in any court other than the
above-specified courts, and (iv) irrevocably consents to service of process by
first class certified mail, return receipt requested, postage prepaid, to the
address at which the Partnership or Holder, as the case may be, is to receive
notice in accordance with Section 4.1. The parties hereto agree that a final
judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by applicable law.

 

(c)           Each of the parties hereto hereby irrevocably waives any and all
rights to trial by jury in any legal proceeding arising out of or related to
this Agreement.

 

4.3          No Third-Party Beneficiaries. This Agreement is for the sole
benefit of the parties hereto and their respective successors and permitted
assigns and nothing herein, express or implied, is intended to or shall confer
upon any other Person any legal or equitable right, benefit or remedy of any
nature whatsoever, under or by reason of this Agreement; provided, however, the
parties hereto hereby acknowledge that the Persons set forth in Section 2.7 are
express third-party beneficiaries of the obligations of the parties hereto set
forth in Section 2.7.

 

4.4          Successors and Assigns. Except as otherwise expressly provided
herein, this Agreement shall be binding upon and benefit the Partnership, each
Holder and their respective successors and assigns. The Partnership shall not,
directly or indirectly, enter into any merger,

 

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consolidation or reorganization in which the Partnership shall not be the
surviving entity unless the surviving entity shall, prior to such merger,
consolidation or reorganization, agree in writing to assume the obligations of
the Partnership under this Agreement, and for that purpose references hereunder
to “Registrable Securities” shall be deemed to include the common equity
interests or other securities, if any, which the Holders would be entitled to
receive in exchange for Registrable Securities under any such merger,
consolidation or reorganization, provided that, to the extent the Holders
receive securities that are by their terms convertible into common equity
interests of the issuer thereof, then any such common equity interests as are
issued or issuable upon conversion of said convertible securities shall be
included within the definition of “Registrable Securities.”

 

4.5          Counterparts. This Agreement may be executed by the parties in
separate counterparts (including by means of executed counterparts delivered via
facsimile or other electronic means), each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument.

 

4.6          Severability. In case any provision in this Agreement shall be held
invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and the
remaining provisions shall not in any way be affected or impaired thereby.

 

4.7          No Waivers; Amendments.

 

(a)           No failure or delay on the part of the Partnership or any Holder
in exercising any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power or
remedy preclude any other or further exercise thereof or the exercise of any
other right, power or remedy. The remedies provided for herein are cumulative
and are not exclusive of any remedies that may be available to the Partnership
or any Holder at law or in equity or otherwise.

 

(b)           Any provision of this Agreement may be amended or waived if, but
only if, such amendment or waiver is in writing and is signed by the Partnership
and the Required Holders.

 

4.8          Entire Agreement. This Agreement and the other writings referred to
herein or therein or delivered pursuant hereto or thereto, contain the entire
agreement between the Holders and the Partnership with respect to the subject
matter hereof and supersede all prior and contemporaneous arrangements or
understandings with respect thereto.

 

4.9          Remedies; Specific Performance.

 

(a)           Each Holder shall have all rights and remedies reserved for such
Holder pursuant to this Agreement and all rights and remedies which such Holder
has been granted at any time under any other agreement or contract and all of
the rights which such Holder has under any law or equity. Any Person having any
rights under any provision of this Agreement will be entitled to enforce such
rights specifically, to recover damages by reason of any breach of any provision
of this Agreement and to exercise all other rights granted by law or equity.

 

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(b)           The parties hereto recognize and agree that money damages may be
insufficient to compensate the Holders of any Registrable Securities for
breaches by the Partnership of the terms hereof and, consequently, that the
equitable remedies of injunctive relief and of specific performance of the terms
hereof will be available in the event of any such breach, without the necessity
of posting bonds or other security. If any action should be brought in equity to
enforce any of the provisions of this Agreement, none of the parties hereto
shall raise the defense that there is an adequate remedy at law.

 

4.10        Negotiated Agreement. This Agreement was negotiated by the parties
with the benefit of legal representation, and any rule of construction or
interpretation otherwise requiring this Agreement to be construed or interpreted
against any party shall not apply to the construction or interpretation hereof.

 

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

 

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

 

 

KIMBELL ROYALTY PARTNERS, LP

 

 

 

By: Kimbell Royalty GP, LLC, its general partner

 

 

 

 

 

By:

 

 

Name: R. Davis Ravnaas

 

Title: President and Chief Financial Officer

 

[Signature Page to Registration Rights Agreement]

 

I-23

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CUPOLA ROYALTY DIRECT, LLC

 

 

 

By: Rivercrest Cupola LLC, its manager

 

 

 

By

 

 

Name: Matthew S. Daly

 

Title: Manager

 

 

 

Address:

 

 

 

Cupola Royalty Direct, LLC

 

777 Taylor Street, Suite 810

 

Fort Worth, TX 76102

 

Email: matt@rivercrestcap.com

 

Attention: Matthew S. Daly

 

 

 

With a copy to:

 

 

 

Mayer Brown LLP

 

700 Louisiana Street, Suite 3400

 

Houston, TX 77002

 

Email: jdobbs@mayerbrown.com

 

Facsimile: (713) 238-4697

 

Attention: Jeff M. Dobbs

 

[Signature Page to Registration Rights Agreement]

 

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KIMBELL ART FOUNDATION

 

 

 

 

 

By:

 

 

Name: Ben J. Fortson

 

Title: EVP and Chief Investment Officer

 

 

 

Address:

 

 

 

Kimbell Art Foundation

 

301 Commerce Street

 

Fort Worth, TX 76102

 

Email: kafinvest@kimbellmuseum.org

 

bcline@kimbellmuseum.org

 

mrich@kimbellmuseum.org

 

Attention: Ben J. Fortson

 

 

 

With a copy to:

 

 

 

Mayer Brown LLP

 

700 Louisiana Street, Suite 3400

 

Houston, TX 77002

 

Email: jdobbs@mayerbrown.com

 

Facsimile: (713) 238-4697

 

Attention: Jeff M. Dobbs

 

[Signature Page to Registration Rights Agreement]

 

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RIVERCREST CAPITAL PARTNERS LP

 

 

 

By: Rivercrest Capital Management LLC, its manager

 

 

 

By:

 

 

Name: R. Davis Ravnaas

 

Title: Managing Member

 

 

 

Address:

 

 

 

Rivercrest Capital Partners, LP

 

777 Taylor Street, Suite 810

 

Fort Worth, TX 76102

 

Email: davis@rivercrestcap.com

 

Attention: R. Davis Ravnaas

 

 

 

With a copy to:

 

 

 

Mayer Brown LLP

 

700 Louisiana Street, Suite 3400

 

Houston, TX 77002

 

Email: jdobbs@mayerbrown.com

 

Facsimile: (713) 238-4697

 

Attention: Jeff M. Dobbs

 

[Signature Page to Registration Rights Agreement]

 

I-26

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RIVERCREST ROYALTIES HOLDINGS II, LLC

 

 

 

 

 

By:

 

 

Name: R. Davis Ravnaas

 

Title: Vice President and Chief Financial Officer

 

 

 

Address:

 

 

 

Rivercrest Royalties II, LLC

 

777 Taylor Street, Suite 810

 

Fort Worth, TX 76102

 

Email: davis@rcroyalties.com

 

Attention: R. Davis Ravnaas

 

 

 

With a copy to:

 

 

 

Mayer Brown LLP

 

700 Louisiana Street, Suite 3400

 

Houston, TX 77002

 

Email: jdobbs@mayerbrown.com

 

Facsimile: (713) 238-4697

 

Attention: Jeff M. Dobbs

 

[Signature Page to Registration Rights Agreement]

 

I-27

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EXHIBIT J

 

ESCROW AGREEMENT

 

THIS ESCROW AGREEMENT (this “Agreement”) is made and entered into as of [·],
2018, among Kimbell Royalty Partners, LP, a Delaware limited partnership (the
“Partnership”), Kimbell Royalty Operating, LLC, a Delaware limited liability
company (“Opco” and, together with the Partnership, the “Buyer Parties”),
Rivercrest Capital Partners LP, a Delaware limited partnership (“Rivercrest
Capital”), Kimbell Art Foundation, a Texas non-profit corporation (the
“Foundation”), Cupola Royalty Direct, LLC, a Delaware limited liability company
(“Cupola”), Rivercrest Royalties Holdings II, LLC, a Delaware limited liability
company (“Rivercrest II” and, together with Rivercrest Capital, the Foundation
and Cupola, the “Sellers”), and Citibank, N.A., as escrow agent (the “Escrow
Agent”). The Buyer Parties and the Sellers are sometimes referred to
individually as a “Party” and collectively as the “Parties.”  Capitalized terms
not defined herein shall have the meanings assigned to them in that certain
Purchase and Sale Agreement, dated as of November 20, 2018, among the Buyer
Parties and the Sellers (as may be amended from time to time, the “Purchase
Agreement”).

 

RECITALS

 

WHEREAS, the Purchase Agreement provides that, upon the terms and subject to the
conditions set forth therein, the Sellers shall sell and the Buyer Parties shall
purchase the Acquired Assets and the Acquired Equity Interests;

 

WHEREAS, at the Closing, in order to provide a source of recovery with respect
to the Buyer Parties’ rights to indemnification, if any, as described in the
Purchase Agreement, the Buyer Parties shall deposit into the General Escrow
Account (as defined below) an aggregate amount of 650,000 Opco Common Units and
650,000 Class B Units (as each may be adjusted from time to time in the event of
a unit split, combination, re-classification, recapitalization or exchange, as
applicable, the “Indemnity Escrow Units”), which shall be allocated among the
Sellers in accordance with the Purchase Agreement and issued in the name of the
applicable Seller, in certificated form; and

 

WHEREAS, at the Closing, the Buyer Parties shall deposit into the General Escrow
Account an amount of Opco Common Units and Class B Units, as appropriate, equal
to the Title Defect Value related to any Curable Properties and disputed Title
Defects or disputed Title Defect Values of such Seller, if any (as each may be
adjusted from time to time in the event of a unit split, combination,
re-classification, recapitalization or exchange, as applicable, the “Defect
Units”) (the Defect Units, together with the Indemnity Escrow Units, the “Escrow
Assets”).

 

NOW THEREFORE, in consideration of the mutual covenants set forth herein and
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto agree as follows:

 

1.                                      Appointment.  The Parties hereby appoint
the Escrow Agent as their escrow agent for the purposes set forth herein, and
the Escrow Agent hereby accepts such appointment and agrees to act as escrow
agent in accordance with the terms and conditions set forth herein.

 

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2.                                      Escrow Assets.

 

(a)                                 At the Closing, the Buyer Parties shall
deposit the Indemnity Escrow Units and the Defect Units into one separate and
distinct account (the “General Escrow Account”).  The Escrow Agent shall
acknowledge receipt of the Indemnity Escrow Units and the Defect Units at the
Closing. The Parties wish each such deposit to be subject to the terms and
conditions set forth herein and in the Purchase Agreement.

 

(b)                                 The Escrow Agent agrees to accept delivery
of the Indemnity Escrow Units and the Defect Units into the General Escrow
Account, in certificated form, at Closing. The Parties acknowledge that the
Escrow Agent’s sole responsibility regarding the Indemnity Escrow Units and the
Defect Units is to hold and safeguard the Indemnity Escrow Units and the Defect
Units in its custody until it is instructed accordingly by a Joint Release
Instruction or Final Determination as provided in Section 4.

 

(c)                                  Each Seller shall maintain all voting
rights with respect to the Indemnity Escrow Units and Defect Units issued in the
name of such Seller while such units remain deposited with the Escrow Agent.

 

3.                                      Investment of Escrow Assets.

 

(a)                                 The Escrow Agent shall hold the Escrow
Assets in a non-interesting bearing account. The Escrow Assets shall at all
times remain available for distribution in accordance with Section 4 below.

 

(b)                                 The Escrow Agent shall send an account
statement to each of the Parties on a monthly basis reflecting activity in the
General Escrow Account for the preceding month.

 

4.                                      Disposition and Termination of the
Escrow Assets.

 

(a)                                 Escrow Assets.  The Parties, subject in all
respects, as solely between the Parties, to the terms and conditions of the
Purchase Agreement, shall act in accordance with, and the Escrow Agent shall
hold and release the Escrow Assets as provided in, this Section 4(a), as
follows:

 

(i)                                     Upon receipt of a Joint Release
Instruction (as defined below) with respect to the Escrow Assets, the Escrow
Agent shall promptly, but in any event within three (3) Business Days after
receipt of a Joint Release Instruction, disburse all or part of the Escrow
Assets in accordance with such Joint Release Instruction.

 

(ii)                                  If at any time any of the Sellers or the
Buyer Parties receives a Final Determination (as defined below), such Party
shall concurrently deliver to the Escrow Agent and the other Parties a copy of
such Final Determination, then upon receipt by the Escrow Agent of a copy of
such Final Determination from any of the applicable Sellers or the Buyer
Parties, the Escrow Agent shall (A) promptly deliver a courtesy copy of such
Final Determination to the other Parties; provided, however, that the Escrow
Agent shall incur no liability for failing to deliver any courtesy copy of such
Final Determination nor shall its delivery or failed delivery thereof give any
Party any additional rights or otherwise extend the payment timeframe, and
(B) on the fifth (5th) Business Day following receipt by the Escrow

 

J-2

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Agent of the Final Determination, disburse to the applicable Buyer Party and/or
the applicable Seller, as appropriate, part or all, as the case may be, of the
Escrow Assets (but only to the extent Escrow Assets are available in the General
Escrow Account) in accordance with such Final Determination.  Subject to the
terms of this Section 4(a), the Escrow Agent shall be entitled to act on such
Final Determination without further inquiry.

 

(iii)                               All disbursements of all or any part of the
Escrow Assets shall be made as set forth in the applicable Joint Release
Instruction or Final Determination, as applicable.

 

(iv)                              Any instructions setting forth, claiming,
containing, objecting to, or in any way related to the transfer or distribution
of any funds on deposit in the General Escrow Account under the terms of this
Agreement must be in writing, executed by the appropriate Party or Parties as
evidenced by the signatures of the person or persons set forth on Exhibit A-1,
Exhibit A-2, Exhibit A-3, Exhibit A-4 and/or Exhibit A-5, as applicable, and
delivered to the Escrow Agent either (i) by confirmed facsimile only at the fax
number set forth in Section 10 below or (ii) attached to an e-mail received on a
Business Day from an e-mail address set forth in Section 10 below. In the event
a Joint Release Instruction or Final Determination is delivered to the Escrow
Agent, whether in writing, by facsimile or otherwise, the Escrow Agent is
authorized to seek confirmation of such instruction from (A) with respect to a
Joint Release Instruction, the appropriate Party or Parties identified as having
executed such Joint Release Instruction, or (B) with respect to a Final
Determination, the prevailing Party that has certified such instruction and from
the Buyer Parties (if the Buyer Parties are not the prevailing Parties that has
certified such instruction), in each case by telephone call back to the person
or persons designated in Exhibit A-1, Exhibit A-2, Exhibit A-3, Exhibit A-4
and/or Exhibit A-5, as appropriate (the “Call Back Authorized Individuals”), and
the Escrow Agent may rely upon the confirmation of any Call Back Authorized
Individual. To assure accuracy of the instructions it receives, the Escrow Agent
may record such call backs.  If the Escrow Agent is unable to verify the
instructions, or is not satisfied with the verification it receives, it will not
execute the instruction until all such issues have been resolved, it being
understood that the Escrow Agent shall use its commercially reasonable efforts
to resolve all such issues.  The persons and telephone numbers for call backs
may be changed only in writing, executed by an authorized signer of applicable
Party set forth on Exhibit A-1, Exhibit A-2, Exhibit A-3, Exhibit A-4 or
Exhibit A-5, actually received and acknowledged by the Escrow Agent.

 

(b)                                 Certain Definitions.

 

(i)                                     “Business Day” means any day that is not
a Saturday, a Sunday or other day on which banks are not required or authorized
by law to be closed in New York, New York.

 

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(ii)                                  “Final Determination” means a final
non-appealable order of any court of competent jurisdiction which may be issued,
together with (A) a certificate executed by an authorized signer of the
prevailing Party set forth on Exhibit A-1, Exhibit A-2, Exhibit A-3, Exhibit A-4
or Exhibit A-5, to the effect that such order is final and non-appealable and
from a court of competent jurisdiction having proper authority and (B) the
written payment instructions executed by an authorized signer of the prevailing
Party set forth on Exhibit A-1, Exhibit A-2, Exhibit A-3, Exhibit A-4 or
Exhibit A-5, to effectuate such order.

 

(iii)                               “Joint Release Instruction” means a joint
written instruction of (A) the Buyer Parties and (B) each relevant Seller that
is identified in such joint written instruction as an executing party, which is
executed by an authorized representative of each of the Buyer Parties and any
such Seller that is identified in such joint written instruction as an executing
party, as set forth on Exhibit A-1, Exhibit A-2, Exhibit A-3, Exhibit A-4 and
Exhibit A-5, as applicable, and delivered to the Escrow Agent, directing the
Escrow Agent to disburse all or a portion of the Escrow Assets.  All Joint
Release Instructions shall set forth (1) the amount to be disbursed, (2) the
recipient of the disbursement and (3) the manner of disbursement and delivery
instructions.

 

(iv)                              “Person” means an individual, a partnership, a
corporation, a limited liability company, an association, a joint stock company,
a trust, a joint venture, an unincorporated organization, Governmental Authority
or other entity.

 

(v)                                 “SEC” means the Securities and Exchange
Commission.

 

5.                                      Escrow Agent.  The Escrow Agent
undertakes to perform only such duties as are expressly set forth herein, which
shall be deemed purely ministerial in nature, and no duties, including but not
limited to any fiduciary duties, shall be implied.  The Escrow Agent shall
neither be responsible for, nor chargeable with, knowledge of, nor have any
requirements to comply with, the terms and conditions of any other agreement,
instrument or document between the Parties, in connection herewith, if any,
including without limitation the Purchase Agreement, nor shall the Escrow Agent
be required to determine if any Person has complied with any such agreements,
nor shall any additional obligations of the Escrow Agent be inferred from the
terms of such agreements, even though reference thereto may be made in this
Agreement.  Notwithstanding the terms of any other agreement between the
Parties, the terms and conditions of this Agreement will control the actions of
the Escrow Agent.  The Escrow Agent may rely upon and shall not be liable for
acting or refraining from acting upon any Joint Release Instruction or Final
Determination furnished to it hereunder and believed by it to be genuine and to
have been signed and presented by an authorized signer of the proper Party or
Parties, except in the event of the Escrow Agent’s fraud, gross negligence or
willful misconduct.  Concurrent with the execution of this Agreement, the
Parties shall deliver to the Escrow Agent authorized signers’ forms in the form
of Exhibit A-1, Exhibit A-2, Exhibit A-3, Exhibit A-4 and Exhibit A-5 attached
hereto.  The Escrow Agent shall be under no duty to inquire into or investigate
the validity, accuracy or content of any such document, notice, instruction or
request.  The Escrow Agent shall have no duty to solicit any payments which may
be due it or the Escrow Assets.  In the event that the Escrow Agent, acting
reasonably, shall be uncertain as to its duties or rights hereunder or shall
receive instructions,

 

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claims or demands from any Party hereto which, in its opinion, conflict with any
of the provisions of this Agreement, it shall be entitled to refrain from taking
any action and its sole obligation shall be to keep safely all property held in
escrow until it shall be directed otherwise in a Joint Release Instruction or a
Final Determination.  The Escrow Agent may interplead all of the assets held
hereunder into a court of competent jurisdiction or may seek a declaratory
judgment with respect to certain circumstances, and thereafter be fully relieved
from any and all liability or obligation with respect to such interpleaded
assets or any action or non-action based on such declaratory judgment.  The
Escrow Agent may consult with legal counsel of its selection in the event of any
dispute or question as to the meaning or construction of any of the provisions
hereof or its duties hereunder.  The Escrow Agent will not be liable for any
action taken, suffered or omitted to be taken by it in good faith except to the
extent that  the Escrow Agent’s fraud, gross negligence or willful misconduct
was the cause of any direct loss to either Party. To the extent practicable, the
Parties agree to pursue any redress or recourse in connection with any dispute
(other than with respect to a dispute involving the Escrow Agent) without making
the Escrow Agent a party to the same.  Anything in this Agreement to the
contrary notwithstanding, in no event shall the Escrow Agent be liable for
special, indirect, punitive, incidental or consequential losses or damages of
any kind whatsoever (including but not limited to lost profits), even if the
Escrow Agent has been advised of the likelihood of such losses or damages and
regardless of the form of action.

 

6.                                      Resignation and Removal of the Escrow
Agent.  The Escrow Agent (a) may resign and be discharged from its duties or
obligations hereunder by giving thirty (30) calendar days advance notice in
writing of such resignation to the Parties specifying a date when such
resignation shall take effect or (b) may be removed, with or without cause, by
the Parties acting jointly at any time by providing written notice to the Escrow
Agent.  Any corporation or association into which the Escrow Agent may be merged
or converted or with which it may be consolidated, or any corporation or
association to which all or substantially all of the escrow business of the
Escrow Agent’s line of business may be transferred, shall be the Escrow Agent
under this Agreement without further act.  The Escrow Agent’s sole
responsibility after such thirty (30) calendar day notice period expires or
after receipt of written notice of removal shall be to hold and safeguard the
Escrow Assets (without any obligation to reinvest the same) and to deliver the
same (i) to a substitute or successor escrow agent pursuant to a joint written
designation from the Parties, (ii) as set forth in a Joint Release Instruction,
or (iii) in accordance with the directions of a Final Determination, at which
time of delivery the Escrow Agent’s obligations hereunder shall cease and
terminate.  In the event the Escrow Agent resigns, if the Parties have failed to
appoint a successor escrow agent prior to the expiration of thirty (30) calendar
days following receipt of the notice of resignation, the Escrow Agent may
petition any court of competent jurisdiction for the appointment of such a
successor escrow agent or for other appropriate relief, and any such resulting
appointment shall be binding upon all of the parties hereto.

 

7.                                      Fees and Expenses.  The Sellers shall
collectively (in equal portions as among the Sellers) bear one-half (1/2) and
the Buyer Parties shall collectively bear one-half (1/2) of all fees and
expenses of the Escrow Agent, which are described in Schedule 1 attached
hereto.  The fees agreed upon for the services to be rendered hereunder are
intended as full compensation for the Escrow Agent services as contemplated by
this Agreement.

 

8.                                      Indemnity.  Each of the Parties shall,
jointly and severally, indemnify, defend and hold harmless the Escrow Agent and
its affiliates and their respective successors, assigns,

 

J-5

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directors, officers, agents and employees (the “Escrow Indemnitees”) from and
against any and all losses, damages, claims, liabilities, penalties, judgments,
settlements, actions, suits, proceedings, litigation, investigations, costs or
expenses (including the reasonable fees and expenses of one outside counsel and
experts and their staffs and all expenses for document location, duplication and
shipment) (collectively “Escrow Agent Losses”) arising out of or in connection
with (a) the Escrow Agent’s execution and performance of this Agreement, the
enforcement of any rights or remedies under or in connection with this
Agreement, or as may arise by reason of any act, omission or error of the Escrow
Indemnitee, except to the extent that such Escrow Agent Losses, as adjudicated
by a court of competent jurisdiction, have been caused by the fraud, gross
negligence or willful misconduct of the Escrow Agent or any such Escrow
Indemnitee, or (b) its following any written instructions or other directions
from the Parties.  It is understood and agreed that the Escrow Agent does not
have a contractual right of set-off or a contractual security interest under
this Agreement; provided, however, that nothing herein shall be construed as a
waiver of any statutory or common law rights to which the Escrow Agent may
otherwise be entitled with respect thereto. Notwithstanding anything to the
contrary herein, the Parties agree, solely as between themselves, that any
obligation for indemnification under this Section 8 (or for reasonable fees and
expenses of the Escrow Agent described in Section 7) shall be borne by the party
or parties determined by a court of competent jurisdiction to be responsible for
causing the loss, damage, liability, cost or expense against which the Escrow
Agent is entitled to indemnification or, if no such determination is made, then
one-half (1/2) collectively by the Buyer Parties and one-half (1/2) collectively
(in equal portions as among the Sellers) by the Sellers.  The Parties
acknowledge that the foregoing indemnities shall survive the resignation or
removal of the Escrow Agent or the termination of this Agreement.

 

9.                                      Tax Matters.  The Escrow Agent, its
affiliates, and its employees are not in the business of providing tax or legal
advice to any taxpayer outside of Citigroup, Inc. and its affiliates.    Any
such taxpayer should seek advice based on the taxpayer’s particular
circumstances from an independent tax advisor.

 

10.                               Covenant of the Escrow Agent.  The Escrow
Agent hereby agrees and covenants with the Parties that it shall perform all of
its obligations under this Agreement and shall not deliver custody or possession
of any of the Escrow Assets to anyone except pursuant to the express terms of
this Agreement or as otherwise required by law.

 

11.                               Notices.  All notices, requests, demands and
other communications required under this Agreement shall be in writing, in
English, and shall be deemed to have been duly given if delivered:
(a) personally, (b) by facsimile transmission with written confirmation of
receipt, (c) on the day of transmission if sent by electronic mail (“e-mail”)
with a PDF attachment executed by an authorized signer of the Party or Parties
to the e-mail address given below, and written confirmation of receipt is
obtained promptly after completion of the transmission, (d) by overnight
delivery with a reputable national overnight delivery service, or (e) by mail or
by certified mail, return receipt requested, and postage prepaid. If any notice
is mailed, it shall be deemed given five (5) Business Days after the date such
notice is deposited with the United States Postal Service.  If notice is given
to a Party, it shall be given at the address for such Party set forth below. It
shall be the responsibility of the Parties to notify the Escrow Agent and the
other Parties in writing of any name or address changes.

 

J-6

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If to the Buyer Parties, then to:

 

Kimbell Royalty Partners, LP

777 Taylor Street, Suite 810

Fort Worth, TX 76102

Email: matt@kimbellrp.com

Attention: Matthew S. Daly

 

with a copy (which shall not constitute notice) to:

 

Baker Botts L.L.P.

910 Louisiana Street

Houston, TX 77002

Email: jason.rocha@bakerbotts.com

joshua.davidson@bakerbotts.com

Facsimile: (713) 229-2858

Attention: Jason A. Rocha and Josh Davidson

 

and to:

 

Conflicts Committee of the Board of Directors of

Kimbell Royalty GP, LLC

777 Taylor Street, Suite 810

Fort Worth, TX 76102

Email: badams.jabb@gmail.com

Attention: Bill Adams

 

with a copy (which shall not constitute notice) to:

 

Potter Anderson & Corroon, LLP

1313 N Market Street

Wilmington, DE 19801

Email: mmorton@potteranderson.com

Facsimile: (302) 658-1192

Attention: Mark A. Morton

 

If to a Seller, then to:

 

Rivercrest Capital Partners, LP

777 Taylor Street, Suite 810

Fort Worth, TX 76102

Email: davis@rivercrestcap.com

Attention: R. Davis Ravnaas

 

Kimbell Art Foundation

301 Commerce Street

 

J-7

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Fort Worth, TX 76102

Email: kafinvest@kimbellmuseum.org

bcline@kimbellmuseum.org

mrich@kimbellmuseum.org

Attention: Ben J. Fortson

 

Cupola Royalty Direct, LLC

777 Taylor Street, Suite 810

Fort Worth, TX 76102

Email: matt@rivercrestcap.com

Attention: Matthew S. Daly

 

Rivercrest Royalties Holdings II, LLC

777 Taylor Street, Suite 810

Fort Worth, TX 76102

Email: davis@rcroyalties.com

Attention: R. Davis Ravnaas

 

with a copy (which shall not constitute notice) to:

 

Mayer Brown LLP

700 Louisiana Street, Suite 3400

Houston, TX 77002

Email: jdobbs@mayerbrown.com

Facsimile: (713) 238-4697

Attention: Jeff M. Dobbs

 

or, if to the Escrow Agent, then to:

 

Citibank, N.A.

Citi Private Bank

388 Greenwich Street

Tower Building, 29th Floor

New York, NY 10013

Email: rola.tsengpappalardo@citi.com

Telephone: (212) 783-7030

Facsimile: (212) 783-7131

Attention: Rola Tseng-Pappalardo

 

Notwithstanding the above, in the case of communications delivered to the Escrow
Agent pursuant to the foregoing clauses (d) or (e) of this Section 11, such
communications shall be deemed to have been given on the date received by the
Escrow Agent.  In the event that the Escrow Agent, in its sole discretion, shall
determine that an emergency exists, the Escrow Agent may use such other means of
communication as the Escrow Agent deems appropriate.

 

12.                               Termination.  This Agreement shall terminate
on the first to occur of (a) the distribution of all of the Escrow Assets in
accordance with this Agreement or (b) delivery to the

 

J-8

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Escrow Agent of a written notice of termination executed jointly by the Parties
after which this Agreement shall be of no further force and effect except that
the provisions of Section 8 shall survive termination.

 

13.                               Miscellaneous.  The provisions of this
Agreement may be waived, altered, amended or supplemented, in whole or in part,
only by a writing signed by all of the parties hereto.  Neither this Agreement
nor any right or interest hereunder may be assigned in whole or in part by any
party hereto, except as provided in Sections 6 and 16, without the prior consent
of the other parties hereto.  This Agreement shall be governed by and construed
under the laws of the State of New York. Each party hereto irrevocably waives
any objection on the grounds of venue, forum non-conveniens or any similar
grounds and irrevocably consents to service of process by mail or in any other
manner permitted by applicable law and consents to the jurisdiction of the
courts located in the State of New York.  The parties hereto hereby waive any
right to a trial by jury with respect to any lawsuit or judicial proceeding
arising or relating to this Agreement.  This Agreement may be executed in
multiple counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.  All signatures of
the parties to this Agreement may be transmitted by facsimile or electronic
transmission in portable document format (.pdf), and such facsimile or .pdf
will, for all purposes, be deemed to be the original signature of such party
whose signature it reproduces, and will be binding upon such party.  If any
provision of this Agreement is determined to be prohibited or unenforceable by
reason of any applicable law of a jurisdiction, then such provision shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions thereof, and any
such prohibition or unenforceability in such jurisdiction shall not invalidate
or render unenforceable such provisions in any other jurisdiction.  The Parties
represent, warrant and covenant that each document, notice, instruction or
request provided by such Party to Escrow Agent shall comply with applicable laws
and regulations.  Where, however, the conflicting provisions of any such
applicable law may be waived, they are hereby irrevocably waived by the parties
hereto to the fullest extent permitted by law, to the end that this Agreement
shall be enforced as written.  Except as expressly provided in Sections 7 and 8,
nothing in this Agreement, whether express or implied, shall be construed to
give to any Person other than the Escrow Agent and the Parties any legal or
equitable right, remedy, interest or claim under or in respect of this Agreement
or any Escrow Assets.  As between the Parties, (a) nothing in this Agreement
waives or modifies any right or obligation under the Purchase Agreement, and
(b) in the event of any inconsistency between this Agreement and the Purchase
Agreement, the Purchase Agreement shall control.

 

14.                               Compliance with Court Orders.  In the event
that any Escrow Assets shall be attached, garnished or levied upon by any court
order, or the delivery thereof shall be stayed or enjoined by an order of a
court of competent jurisdiction, or any order, judgment or decree shall be made
or entered by any court order of a court of competent jurisdiction affecting the
property deposited under this Agreement, the Escrow Agent is hereby expressly
authorized, in its sole discretion, to obey and comply with all writs, orders or
decrees so entered or issued, which it is advised by legal counsel of its own
choosing is binding upon it, whether with or without jurisdiction, and in the
event that the Escrow Agent obeys or complies with any such writ, order or
decree it shall not be liable to any of the Parties or to any other Person, by
reason of such compliance notwithstanding such writ, order or decree be
subsequently reversed, modified, annulled, set aside or vacated.

 

J-9

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15.          Further Assurances.  Following the date hereof, each party shall
deliver to the other parties hereto such further information and documents and
shall execute and deliver to the other parties hereto such further instruments
and agreements as any other party hereto shall reasonably request to consummate
or confirm the transactions provided for herein, to accomplish the purpose
hereof or to assure to any other party hereto the benefits hereof.

 

16.          Assignment.  No Party shall assign any of its interests or rights
under this Agreement without the prior written consent of the other Parties
(such consent not to be unreasonably withheld), and no assignment of the
interests or rights of any Party shall be binding upon the Escrow Agent unless
and until written notice of such assignment shall be filed with and consented to
by the Escrow Agent (such consent not to be unreasonably withheld). To comply
with United States federal law including USA Patriot Act requirements, assignees
shall provide to the Escrow Agent the appropriate  IRS Form W-9 or W-8 (as
applicable) and such other forms and documentation that the Escrow Agent may
request to verify identification and authorization to act.  Any transfer or
assignment of the rights, interests or obligations hereunder in violation of the
terms hereof shall be void and of no force or effect.

 

17.          Force Majeure.  The Escrow Agent shall not incur any liability for
not performing any act or fulfilling any obligation hereunder by reason of any
occurrence beyond its control (including, but not limited to, any provision of
any present or future law or regulation or any act of any governmental
authority, any act of God or war or terrorism, or the unavailability of the
Federal Reserve Bank wire services or any electronic communication facility), it
being understood that the Escrow Agent shall use commercially reasonable efforts
which are consistent with accepted practices in the banking industry to resume
performance as soon as reasonably practicable under the circumstances.

 

18.          SEC Shareholder Disclosure Rule 14b-2.  SEC Rule 14b-2 directs us
to contact you to request authorization to provide your name, address and share
position with respect to the referenced account to requesting companies whose
stock you have voting authority over.  Under this SEC rule, we must make the
disclosures for accounts opened after December 28, 1986, if requested, unless
you specifically object to disclosure.  Hence, failure to respond will be deemed
consent to disclosure.  Thank you for assisting us in complying with this SEC
rule.

 

o            Yes, we are authorized to release your name, address and share
positions.

 

o            No, we are not authorized to release your name, address and share
positions.

 

20.          Compliance with Federal Law. To help the United States government
fight the funding of terrorism and money laundering activities and to comply
with United States federal law requiring financial institutions to obtain,
verify and record information on the source of funds deposited to an account,
the Parties agree to provide the Escrow Agent with the name, address, taxpayer
identification number, and remitting bank for all Parties depositing funds at
Citibank pursuant to the terms and conditions of this Agreement.  For a
non-individual Person such as a business entity, a charity, a trust or other
legal entity, the Escrow Agent will ask for documentation to verify its
formation and existence as a legal entity.  The Escrow Agent may also ask to see
financial statements, licenses, identification and authorization documents from
individuals claiming authority to represent the entity or other relevant
documentation.

 

J-10

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21.          Use of Citibank Name.  No publicly distributed printed or other
material in any language, including prospectuses, notices, reports, and
promotional material which mentions “Citibank” by name or the rights, powers, or
duties of the Escrow Agent under this Agreement shall be issued by any other
parties hereto, or on such party’s behalf, without the prior written consent of
the Escrow Agent.

 

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

 

J-11

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

 

BUYER PARTIES:

 

 

 

 

 

KIMBELL ROYALTY PARTNERS, LP

 

KIMBELL ROYALTY OPERATING, LLC

 

 

 

By: Kimbell Royalty GP, LLC

 

 

Its: General Partner

 

 

 

 

 

By:

 

 

By:

 

Name:

 

 

Name:

 

Its:

 

 

Its:

 

 

 

 

 

 

 

SELLERS:

 

 

 

 

 

RIVERCREST CAPITAL PARTNERS LP

 

KIMBELL ART FOUNDATION

 

 

 

By: Rivercrest Capital Management, LLC

 

 

Its: Manager

 

 

 

 

 

By:

 

 

By:

 

Name:

 

 

Name:

 

Its:

 

 

Its:

 

 

 

 

 

 

 

CUPOLA ROYALTY DIRECT, LLC

 

RIVERCREST ROYALTIES HOLDINGS II, LLC

 

 

 

By: Rivercrest Cupola LLC

 

 

Its: Manager

 

 

 

 

 

By:

 

 

By:

 

Name:

 

 

Name:

 

Its:

 

 

Its:

 

 

 

 

ESCROW AGENT:

 

 

 

 

 

CITIBANK, N.A.

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Its:

 

 

 

 

Signature Page to Escrow Agreement

 

J-12

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Schedule 1

 

ESCROW AGENT FEE SCHEDULE

Citibank, N.A., Escrow Agent

 

Acceptance Fee

 

To cover the acceptance of the Escrow Agency appointment, the study of the
Agreement, and supporting documents submitted in connection with the execution
and delivery thereof, and communication with other members of the working group:

 

Fee: WAIVED

 

Administration Fee

 

The annual administration fee covers maintenance of the General Escrow Account
including safekeeping of assets in the escrow account, normal administrative
functions of the Escrow Agent, including maintenance of the Escrow Agent’s
records, follow-up of the Agreement’s provisions, and any other safekeeping
duties required by the Escrow Agent under the terms of the Agreement. Fee is
based on the amount of Escrow Assets being deposited in an interest-bearing
transaction deposit account, FDIC insured to the applicable limits.

 

Fee: $5,000.00 per annum for custody/safekeeping of the Indemnity Escrow Units
and the Defect Units

 

Tax Preparation Fee

 

To cover preparation and mailing of Forms 1099-INT, if applicable for the escrow
parties for each calendar year:

 

Fee: WAIVED

 

Transaction Fees

 

To oversee all required disbursements or release of property from the escrow
account to any escrow party, including cash disbursements made via check and/or
wire transfer, fees associated with postage and overnight delivery charges
incurred by the Escrow Agent as required under the terms and conditions of the
Agreement:

 

Fee: WAIVED

 

 

TERMS AND CONDITIONS: The above schedule of fees does not include charges for
reasonable out-of-pocket expenses or for any services of an extraordinary nature
that we or our legal counsel may be called upon from time to time to perform in
either an agency or fiduciary capacity.  Our participation in the transactions
contemplated by the Agreement is subject to internal approval of the third party
depositing monies into the escrow account. 

 

J-13

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EXHIBIT A-1

Certificate as to the Buyer Parties’ Authorized Signatures

 

The specimen signatures shown below are the specimen signatures of the
individuals who have been designated as authorized representatives of the Buyer
Parties and are authorized to initiate and approve transactions of all types for
the escrow account or accounts established under this Escrow Agreement, on
behalf of the Buyer Parties.  The below listed persons (must list at least two
individuals) have also been designated Call Back Authorized Individuals and will
be notified by Citibank, N.A. upon the release of Escrow Assets from the General
Escrow Account unless an original “Standing or Predefined Instruction” letter is
on file with the Escrow Agent.

 

Name / Title / Telephone

 

Specimen Signature

 

 

 

 

 

 

Robert D. Ravnaas

 

 

Name

 

Signature

 

 

 

Chairman and Chief Executive Officer

 

 

Title

 

 

 

 

 

 

 

 

Telephone

 

Mobile Phone

 

 

 

 

 

 

Matthew S. Daly

 

 

Name

 

Signature

 

 

 

Chief Operating Officer

 

 

Title

 

 

 

 

 

 

 

 

Telephone

 

Mobile Phone

 

 

 

 

 

 

Jeff McInnis

 

 

Name

 

Signature

 

 

 

Chief Accounting Officer

 

 

Title

 

 

 

 

 

 

 

 

Telephone

 

Mobile Phone

 

NOTE: Actual signatures are required.  Electronic signatures, “Docusigned”
signatures and/or signature fonts are not acceptable.

 

J-14

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EXHIBIT A-2

Certificate as to Rivercrest Capital’s Authorized Signatures

 

The specimen signatures shown below are the specimen signatures of the
individuals who have been designated as authorized representatives of Rivercrest
Capital and are authorized to initiate and approve transactions of all types for
the escrow account or accounts established under this Escrow Agreement, on
behalf of Rivercrest Capital.  The below listed persons (must list at least two
individuals) have also been designated Call Back Authorized Individuals and will
be notified by Citibank, N.A. upon the release of Escrow Assets from the General
Escrow Account unless an original “Standing or Predefined Instruction” letter is
on file with the Escrow Agent.

 

Name / Title / Telephone

 

Specimen Signature

 

 

 

 

 

 

R. Davis Ravnaas

 

 

Name

 

Signature

 

 

 

Managing Member

 

 

Title

 

 

 

 

 

 

 

 

Telephone

 

Mobile Phone

 

 

 

 

 

 

Matthew S. Daly

 

 

Name

 

Signature

 

 

 

Managing Member

 

 

Title

 

 

 

 

 

 

 

 

Telephone

 

Mobile Phone

 

 

 

 

 

 

 

 

 

Name

 

Signature

 

 

 

 

 

 

 

 

 

Title

 

 

 

 

 

 

 

 

 

 

 

Telephone

 

Mobile Phone

 

NOTE: Actual signatures are required.  Electronic signatures, “Docusigned”
signatures and/or signature fonts are not acceptable.

 

J-15

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EXHIBIT A-3

Certificate as to the Foundation’s Authorized Signatures

 

The specimen signatures shown below are the specimen signatures of the
individuals who have been designated as authorized representatives of the
Foundation and are authorized to initiate and approve transactions of all types
for the escrow account or accounts established under this Escrow Agreement, on
behalf of the Foundation.  The below listed persons (must list at least two
individuals) have also been designated Call Back Authorized Individuals and will
be notified by Citibank, N.A. upon the release of Escrow Assets from the General
Escrow Account unless an original “Standing or Predefined Instruction” letter is
on file with the Escrow Agent.

 

Name / Title / Telephone

 

Specimen Signature

 

 

 

 

 

 

Brenda A. Cline

 

 

Name

 

Signature

 

 

 

CFO

 

 

Title

 

 

 

 

 

 

 

 

Telephone

 

Mobile Phone

 

 

 

 

 

 

Mark Rich

 

 

Name

 

Signature

 

 

 

Director of Investments

 

 

Title

 

 

 

 

 

 

 

 

Telephone

 

Mobile Phone

 

 

 

 

 

 

 

 

 

Name

 

Signature

 

 

 

 

 

 

 

 

 

Title

 

 

 

 

 

 

 

 

 

 

 

Telephone

 

Mobile Phone

 

NOTE: Actual signatures are required.  Electronic signatures, “Docusigned”
signatures and/or signature fonts are not acceptable.

 

J-16

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EXHIBIT A-4

Certificate as to Cupola’s Authorized Signatures

 

The specimen signatures shown below are the specimen signatures of the
individuals who have been designated as authorized representatives of Cupola and
are authorized to initiate and approve transactions of all types for the escrow
account or accounts established under this Escrow Agreement, on behalf of
Cupola.  The below listed persons (must list at least two individuals) have also
been designated Call Back Authorized Individuals and will be notified by
Citibank, N.A. upon the release of Escrow Assets from the General Escrow Account
unless an original “Standing or Predefined Instruction” letter is on file with
the Escrow Agent.

 

Name / Title / Telephone

 

Specimen Signature

 

 

 

 

 

 

R. Davis Ravnaas

 

 

Name

 

Signature

 

 

 

Manager

 

 

Title

 

 

 

 

 

 

 

 

Telephone

 

Mobile Phone

 

 

 

 

 

 

Matthew S. Daly

 

 

Name

 

Signature

 

 

 

Manager

 

 

Title

 

 

 

 

 

 

 

 

Telephone

 

Mobile Phone

 

 

 

 

 

 

 

 

 

Name

 

Signature

 

 

 

 

 

 

 

 

 

Title

 

 

 

 

 

 

 

 

 

 

 

Telephone

 

Mobile Phone

 

NOTE: Actual signatures are required.  Electronic signatures, “Docusigned”
signatures and/or signature fonts are not acceptable.

 

J-17

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EXHIBIT A-5

Certificate as to Rivercrest II’s Authorized Signatures

 

The specimen signatures shown below are the specimen signatures of the
individuals who have been designated as authorized representatives of Rivercrest
II and are authorized to initiate and approve transactions of all types for the
escrow account or accounts established under this Escrow Agreement, on behalf of
Rivercrest II.  The below listed persons (must list at least two individuals)
have also been designated Call Back Authorized Individuals and will be notified
by Citibank, N.A. upon the release of Escrow Assets from the General Escrow
Account unless an original “Standing or Predefined Instruction” letter is on
file with the Escrow Agent.

 

Name / Title / Telephone

 

Specimen Signature

 

 

 

 

 

 

R. Davis Ravnaas

 

 

Name

 

Signature

 

 

 

Vice President

 

 

Title

 

 

 

 

 

 

 

 

Telephone

 

Mobile Phone

 

 

 

 

 

 

T. Scott Martin

 

 

Name

 

Signature

 

 

 

President

 

 

Title

 

 

 

 

 

 

 

 

Telephone

 

Mobile Phone

 

 

 

 

 

 

 

 

 

Name

 

Signature

 

 

 

 

 

 

 

 

 

Title

 

 

 

 

 

 

 

 

 

 

 

Telephone

 

Mobile Phone

 

NOTE: Actual signatures are required.  Electronic signatures, “Docusigned”
signatures and/or signature fonts are not acceptable.

 

J-18

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