** **

**Exhibit 2.1**

 

**Execution Version**

** **

**PURCHASE ANDSALE AGREEMENT**

** **

** **

** **

**BY AND BETWEEN**

** **

** **

** **

**LAMAMCO DRILLING COMPANY**

** **

**AS SELLER**

** **

** **

** **

** **

** **

**AND**

** **

** **

** **

**LINN ENERGY HOLDINGS, LLC**

** **

**AS BUYER**

** **

** **

** **

----

 

**TABLEOF CONTENTS**

 

 
|                                                | **Page**                                  |
|-----------------------------------------------------|-------------------------------------------|
|                                                |                                      |
| ARTICLE I PURCHASE AND SALE                         | 1                                         |
|                                                |
| 1.1                                                 | Purchase and Sale of Assets               | 1 |
| 1.2                                                 | Excluded Assets                           | 3 |
| 1.3                                                 | Purchase Price                            | 3 |
| 1.4                                                 | Adjusted Purchase Price                   | 3 |
| 1.5                                                 | Effective Date                            | 4 |
| 1.6                                                 | Treatment of Certain Assets               | 4 |
|                                                |                                      |
| ARTICLE II REPRESENTATIONS AND WARRANTIES OF SELLER | 4                                         |
|                                                |
| 2.1                                                 | General                                   | 4 |
| 2.2                                                 | Existence and Qualification               | 5 |
| 2.3                                                 | Power                                     | 5 |
| 2.4                                                 | Authorization and Enforceability          | 5 |
| 2.5                                                 | No Conflicts                              | 5 |
| 2.6                                                 | Liability for Brokers’ Fees          | 5 |
| 2.7                                                 | Litigation                                | 6 |
| 2.8                                                 | Tax Matters                               | 6 |
| 2.9                                                 | Commitments, Abandonments or Proposals    | 6 |
| 2.10                                                | Compliance with Laws                      | 7 |
| 2.11                                                | Environmental                             | 7 |
| 2.12                                                | Contracts                                 | 8 |
| 2.13                                                | Payments for Production                   | 8 |
| 2.14                                                | Imbalances                                | 8 |
| 2.15                                                | Consents and Preferential Purchase Rights | 8 |
| 2.16                                                | Equipment                                 | 8 |
| 2.17                                                | Payout Balances                           | 8 |
| 2.18                                                | Condemnation                              | 9 |
| 2.19                                                | Bankruptcy                                | 9 |
| 2.20                                                | Investment Company                        | 9 |
|                                                |                                      |
| ARTICLE III REPRESENTATIONS AND WARRANTIES OF BUYER | 10                                        |
|                                                |
| 3.1                                                 | Existence and Qualification               | 10 |
| 3.2                                                 | Power                                     | 11 |
| 3.3                                                 | Authorization and Enforceability          | 11 |
| 3.4                                                 | No Conflicts                              | 11 |
| 3.5                                                 | Consents, Approvals, or Waivers           | 11 |
| 3.6                                                 | Financing                                 | 11 |
| 3.7                                                 | Accredited Investor; Investment Intent    | 11 |
| 3.8                                                 | Liability for Brokers’ Fees          | 11 |
| 3.9                                                 | Litigation                                | 12 |
| 3.10                                                | Limitation                                | 12 |
| 3.11                                                | Bankruptcy                                | 12 |

 

 

 

i

----

 

 
| 3.12                                                                                      | Qualification                                                   | 12 |
|-------------------------------------------------------------------------------------------|-----------------------------------------------------------------|----|
|                                                                                      |                                                            |
| ARTICLE IV TITLE MATTERS                                                                  | 13                                                              |
|                                                                                      |
| 4.1                                                                                       | Access to Title Information                                     | 13 |
| 4.2                                                                                       | Title Warranty                                                  | 13 |
| 4.3                                                                                       | Title Defects                                                   | 14 |
| 4.4                                                                                       | Title Benefit                                                   | 15 |
| 4.5                                                                                       | Notice of and Remedies for Material Title Defects               | 15 |
| 4.6                                                                                       | Preferential Purchase Rights                                    | 16 |
| 4.7                                                                                       | Consents to Assign                                              | 17 |
|                                                                                      |                                                            |
| ARTICLE V BUYER’S INVESTIGATION OF PHYSICAL  CONDITIONS AND SELLER’S DISCLAIMER | 18                                                              |
|                                                                                      |
| 5.1                                                                                       | Inspection                                                      | 18 |
| 5.2                                                                                       | Investigation                                                   | 18 |
| 5.3                                                                                       | Disclaimer                                                      | 18 |
| 5.4                                                                                       | Indemnity Regarding Access                                      | 19 |
|                                                                                      |                                                            |
| ARTICLE VI BUYER’S INVESTIGATION OF ENVIRONMENTAL  CONDITIONS                        | 19                                                              |
|                                                                                      |
| 6.1                                                                                       | Inspection and Assessment of Environmental Condition(s)         | 19 |
| 6.2                                                                                       | Notice of and Remedies for Material Environmental  Condition(s) | 19 |
|                                                                                      |                                                            |
| ARTICLE VII INDEMNIFICATION AND LITIGATION                                                | 20                                                              |
|                                                                                      |
| 7.1                                                                                       | Assumption and Indemnification                                  | 20 |
| 7.2                                                                                       | Retained and Assumed Litigation                                 | 22 |
| 7.3                                                                                       | Seller Retained Liabilities                                     | 22 |
| 7.4                                                                                       | Survival of Provisions                                          | 22 |
| 7.5                                                                                       | Exclusive Remedy                                                | 23 |
| 7.6                                                                                       | Limitation on Seller’s Indemnity Obligations               | 23 |
| 7.7                                                                                       | Notification of Claim                                           | 24 |
|                                                                                      |                                                            |
| ARTICLE VIII ADDITIONAL COVENANTS OF THE PARTIES                                          | 24                                                              |
|                                                                                      |
| 8.1                                                                                       | Operations                                                      | 24 |
| 8.2                                                                                       | Successor Operator                                              | 25 |
| 8.3                                                                                       | Contract Operating, Marketing and Financial Services  Agreement | 25 |
| 8.4                                                                                       | Casualty Loss                                                   | 25 |
| 8.5                                                                                       | Right to Market Production                                      | 25 |
| 8.6                                                                                       | Hart-Scott-Rodino Act                                           | 26 |
| 8.7                                                                                       | Financial Statements                                            | 26 |
| 8.8                                                                                       | Transfer Taxes                                                  | 27 |
| 8.9                                                                                       | Other Taxes                                                     | 27 |
| 8.10                                                                                      | Cooperation                                                     | 28 |
| 8.11                                                                                      | Updated Exhibits and Schedules                                  | 28 |
| 8.12                                                                                      | Notification of Breaches                                        | 28 |
|                                                                                      |                                                            |
| ARTICLE IX DISPUTE RESOLUTION                                                             | 29                                                              |
|                                                                                      |
| 9.1                                                                                       | Arbitration                                                     | 29 |

 

 

 

ii

----

 
| 9.2                                                          | Waiver of Certain Damages                            | 29 |
|--------------------------------------------------------------|------------------------------------------------------|----|
|                                                         |                                                 |
| ARTICLE X PROCEEDS, ROYALTY OBLIGATIONS, EXPENSES  AND TAXES | 30                                                   |
|                                                         |
| 10.1                                                         | Accounting for Production and Proceeds of Production | 30 |
| 10.2                                                         | Royalty Obligations; Expenses                        | 30 |
| 10.3                                                         | Joint Billing Audits, Credits and Advances           | 30 |
| 10.4                                                         | Payments on Behalf of Others                         | 30 |
| 10.5                                                         | Filing of Tax Returns                                | 30 |
| 10.6                                                         | Holdco and Subco Formation and Assignment            | 31 |
|                                                         |                                                 |
| ARTICLE XI CONDITIONS OF CLOSING                             | 32                                                   |
|                                                         |
| 11.1                                                         | Representations                                      | 32 |
| 11.2                                                         | Performance                                          | 32 |
| 11.3                                                         | Pending Matters                                      | 32 |
| 11.4                                                         | Expiration of HSR Waiting Period                     | 32 |
| 11.5                                                         | Evidence of Bonding. Buyer shall deliver to Seller   | 33 |
| 11.6                                                         | Financial Statements                                 | 33 |
|                                                         |                                                 |
| ARTICLE XII CLOSING                                          | 33                                                   |
|                                                         |
| 12.1                                                         | Date and Place of Closing                            | 33 |
| 12.2                                                         | Closing Obligations                                  | 33 |
| 12.3                                                         | Files                                                | 34 |
|                                                         |                                                 |
| ARTICLE XIII TERMINATION OF AGREEMENT                        | 34                                                   |
|                                                         |
| 13.1                                                         | Grounds for Termination                              | 34 |
| 13.2                                                         | Effect of Termination                                | 35 |
|                                                         |                                                 |
| ARTICLE XIV CONTINUING OBLIGATIONS                           | 36                                                   |
|                                                         |
| 14.1                                                         | Post-Closing Settlement                              | 36 |
| 14.2                                                         | Further Assurances                                   | 37 |
| 14.3                                                         | Gas Imbalances                                       | 38 |
| 14.4                                                         | Recording                                            | 38 |
| 14.5                                                         | Confidentiality                                      | 38 |
| 14.6                                                         | Preservation of Books and Records                    | 38 |
| 14.7                                                         | Financial Statements                                 | 39 |
|                                                         |                                                 |
| ARTICLE XV EMPLOYEE MATTERS                                  | 39                                                   |
|                                                         |
| 15.1                                                         | Continuing Employees                                 | 39 |
| 15.2                                                         | No Obligation to Hire Seller Employees               | 39 |
| 15.3                                                         | Interview, Screening, and Offers to Seller Employees | 40 |
| 15.4                                                         | Employee Benefits                                    | 40 |
| 15.5                                                         | Control of Seller Employees                          | 41 |
| 15.6                                                         | Solicitation of Continuing Employees                 | 41 |
| 15.7                                                         | Waiver of Restrictions on Continuing Employees       | 42 |
| 15.8                                                         | No Third Party Beneficiaries                         | 42 |

 

 

 

 

iii

----

 
| ARTICLE XVI MISCELLANEOUS | 42                                       |
|---------------------------|------------------------------------------|
|                      |
| 16.1                      | Definitions                              | 42 |
| 16.2                      | Use of Seller’s Name                | 46 |
| 16.3                      | Integrations, Amendment and Modification | 46 |
| 16.4                      | Descriptive Headings                     | 46 |
| 16.5                      | Governing Law                            | 46 |
| 16.6                      | Binding Effect; Assignment               | 46 |
| 16.7                      | Notices                                  | 47 |
| 16.8                      | DTPA Waiver                              | 47 |
| 16.9                      | Waiver                                   | 47 |
| 16.10                     | References                               | 48 |
| 16.11                     | Conspicuousness                          | 48 |
| 16.12                     | Counterparts                             | 48 |
| 16.13                     | Invalid Provisions                       | 48 |
| 16.14                     | Complete Agreement                       | 48 |

 

 

 

iv

----

 

**PURCHASEAND SALE AGREEMENT**

 

THIS PURCHASE AND SALEAGREEMENT (this “Agreement”) is made as of this 20th day of December, 2007, byand between **LAMAMCO DRILLING COMPANY**,hereinafter referred to as “Seller,” and **LINN ENERGY HOLDINGS, LL**C,hereinafter referred to as “Buyer.”

 

**RECITALS**

** **

Buyer desires to purchaseand Seller desires to sell all of Seller’s right, title and interest in and tothe Assets defined herein pursuant to the terms and conditions of thisAgreement.

 

NOW, THEREFORE, inconsideration of the mutual agreements contained herein, the benefits to bederived by each party hereunder and other good and valuable consideration, thereceipt and sufficiency of which are hereby acknowledged, Buyer and Selleragree as follows:

 

# **ARTICLE I**

# ** **

# **PURCHASE AND SALE**

# ** **

1.1                                 Purchase andSale of Assets  Subject tothe terms and conditions of this Agreement, Seller shall sell and Buyer shallpurchase as of the Effective Date (as hereinafter defined) the followingdescribed properties, rights and interests, whether real or personal, recordedor unrecorded, movable or immovable, tangible or intangible (collectively, the “Assets”):

 

### (a)           Allright, title and interest of Seller in and to, or otherwise derived from, theoil and gas leases, oil, gas and mineral leases, subleases and otherleaseholds, carried interests, farmout rights, options and other properties andinterests described in Exhibit A (and any ratifications, extensions andamendments thereof, whether or not the same are described on Exhibit A),subject to such depth limitations and other restrictions as may be set forth onExhibit A (the “Leases”), together with all rights, title and interests ofSeller in and to the lands covered by the Leases or lands unitized or pooledcommunitized or consolidated therewith (the “Lands”);

###  

### (b)           Allright, title and interest of Seller in and to any and all oil, gas, water,carbon dioxide, or injection wells located on the Lands, whether producing,shut-in, or temporarily abandoned, including the interests in the wells shownon Exhibit A attached hereto (the “Wells”);

###  

### (c)           Allleasehold interests of Seller in or to any pools or units that include anyLands or all or a part of any Leases or include any Wells, including thosepools or units shown on Exhibit A (the “Units”; the Units, together withthe Leases, Lands and Wells, being hereinafter referred to as the “Properties”),and including all leasehold interests of Seller in production from any suchUnit, whether such Unit production comes from Wells located on or off of aLease, and all tenements and appurtenances belonging to the Leases and Units;

###  

###  

###  

### 1

### 

###  

### (d)           Allright, title and interest of Seller in all equipment, machinery, fixtures,facilities, and other tangible personal property and improvements located onthe Properties or used or held for use primarily in connection with theoperation of the Properties, including, but not limited to pumps, wellequipment (surface and subsurface), saltwater disposal wells, lines andfacilities, sulfur recovery facilities, compressors, compressor stations,dehydration facilities, treating facilities, pipeline gathering lines, flowlines, transportation lines (including long lines and laterals), valves,meters, separators, tanks, tank batteries, buildings, roads, and other fixtures(collectively, the “Equipment”);

###  

### (e)           Allright, title and interest of Seller in and to all oil, condensate, natural gas,natural gas liquids, and other minerals produced from or attributable to theProperties, from and after the Effective Date, including “line fill” andinventory below the pipeline connection in tanks;

###  

### (f)            Allright, title and interest of Seller in and to, or otherwise derived from, allcontracts and agreements related to the Properties including, but not limitedto, unit agreements, pooling agreements, areas of mutual interest, farmoutagreements, farmin agreements, saltwater disposal agreements, water injectionagreements, line well injection agreements, road use agreements, drillingcontracts, operating agreements, well service contracts, production salescontracts, gas balancing agreements, storage or warehouse agreements, suppliercontracts, service contracts, insurance contracts, construction agreements,division orders, and transfer orders, only insofar as such relate to theProperties, and only to the extent that such contracts are assignable,(collectively, the “Contracts”);

###  

### (g)           Allright, title and interest of Seller in and to, or otherwise derived from,surface use agreements, easements, rights of way, licenses, authorizations,permits, and similar rights and interests applicable to, or used in connectionwith the Properties (collectively, the “Surface Contracts”); provided, however,that Seller expressly retains a right to use such surface use agreements,easements, rights of way, licenses, authorizations, permits, and similar rightsand interests in the event and to the extent such rights relate to Propertiesin which Seller retains any rights or interests.

###  

### (h)           Allright, title, and interest of Seller in and to all lease files, land files,well files, gas and oil sales contract files, gas processing files, divisionorder files, abstracts, title opinions, land surveys, non-confidential logs,maps, engineering data and reports, reserve studies and evaluations (insofar asthey cover and exist within the boundaries of the Lands); and files and allother books, records, data, files, maps and accounting records relatedprimarily to the Assets, or used or held for use primarily in connection withthe maintenance or operation thereof, but excluding (i) any books,records, data, files, maps and accounting records to the extent disclosure ortransfer is restricted by third-party agreement or applicable law and thenecessary consents to transfer are not obtained, (ii) attorney-clientprivileged communications and work product of Seller’s legal counsel (otherthan title opinions) and (iii) records relating to the negotiation andconsummation of the sale of the Assets (subject to such exclusions, the “Records”),provided, however, that Seller may retain the originals of such files and otherrecords as Seller has determined may be required for litigation, Tax,accounting, and auditing purposes and provide Buyer with copies thereof.

###  

###  

###  

### 2

### 

###  

### (i)            Allright, title and interest of Seller in and to the real property described on Exhibit A.

###  

### (j)            Allright, title and interest of Seller in the vehicles, as currently outfitted,described on Schedule 1.1(j).

###  

1.2                                 Excluded Assets  Notwithstanding anything herein to thecontrary, the Properties, Records and Assets do not include, and there ishereby excepted and reserved unto Seller, (i) the items listed on Exhibit Band (ii) any and all geophysical, seismic and other technical data and interpretationswhose transfer is restricted by applicable Law or third party agreement(collectively, the “Excluded Assets”).

 

1.3                                 Purchase Price.

 

### (a)           PurchasePrice.  The aggregate purchase pricefor the Assets shall be $552,192,653.00 (“Purchase Price”), which shall besubject to adjustments as provided for herein. Buyer shall pay Seller fivepercent (5%) of the Purchase Price upon execution of this Agreement (the “PerformanceGuarantee Deposit”), with the balance of the Purchase Price to be paid at Closingas hereafter provided. If the transactions contemplated hereby are consummatedas provided in this Agreement, the Performance Guarantee Deposit shall beapplied to payment of the Purchase Price at Closing. If the transaction setforth in this Agreement is not consummated, the Performance Guarantee Depositshall be retained or returned by Seller as per Article XIII. For federalincome tax purposes, the interest earned on the Performance Guarantee Depositshall be reported by Buyer, if the Performance Guarantee Deposit is applied tothe Purchase Price or returned to Buyer, and by Seller, if the PerformanceGuarantee Deposit is retained by Seller in accordance with Article XIII.

###  

### (b)           PurchasePrice Allocation.  The parties heretoagree to (i) allocate the Adjusted Purchase Price in accordance with theallocation schedule attached as Exhibit C hereto, and (ii) treatand report the transactions contemplated by this Agreement in all respectsconsistent with Exhibit C for purposes of any Taxes unless otherwise requiredby applicable law. Seller and Buyer shall duly prepare and timely file suchreports and information as may be prescribed under Section 1060 of theCode, including Form 8594, and any similar returns or reports requiredunder other applicable law to report the allocation of the Adjusted PurchasePrice in accordance with Exhibit C. If, contrary to the intent of theparties hereto as expressed in this Section 1.3(b), any Taxing Authoritymakes or proposes an allocation different from the allocation determined underthis Section 1.3(b), Buyer and Seller shall cooperate with each other ingood faith to contest such Taxing Authority’s allocation (or proposedallocation), provided, however, that, after consultation with the partyadversely affected by such allocation (or proposed allocation), the other partyhereto may file such protective claims or Tax Returns as may be reasonablyrequired to protect its interests.

###  

###  

###  

### 3

### 

###  

1.4                                 AdjustedPurchase Price  The net pricethat the Buyer will pay for the Assets (“Adjusted Purchase Price”) shall be thePurchase Price as set forth in Section 1.3 above, adjusted in thefollowing manner:

###  

### (a)           Lessor plus, as applicable, any amounts determined to be a price adjustment pursuantto Article IV hereof for Material Title Defects or Material TitleBenefits;

###  

### (b)           Lessan amount equal to the Allocated Value of the Assets with respect to whichpreferential purchase rights have been exercised, as determined under Section 4.6hereof;

###  

### (c)           Lessan amount equal to the Allocated Value of the Assets with respect to whichrequired consents to assign were not obtained and a price adjustment isrequired under Section 4.7 hereof;

###  

### (d)           Lessan amount equal to any purchase price adjustment required under Article VIhereof;

###  

### (e)           Lessamounts attributable to Casualty Loss as set forth in Section 8.4, if any;

###  

### (f)            Less(if a negative amount) or plus (if a positive amount) the Hedge AdjustmentAmount;

###  

### (g)           Ifthe Closing Date is later than the Target Closing Date solely as a result ofthe failure of the Buyer to fulfill its obligations under Sections 11.1(b),11.2, and 11.5, plus the Closing Date Interest Amount; and

###  

### (h)           Lessor plus any other amounts mutually agreed upon by the parties hereto.

###  

1.5                                 Effective Date  Only in the event Closing occurs, theAssignment and Bill of Sale of the Assets shall be effective as of October 1,2007, 7:00 a.m. local time where the Assets are located (“Effective Date”).

 

1.6                                 Treatment ofCertain Assets  Any or allof the Contracts, Surface Contracts, and Equipment not directly associated withthe wellhead, related to the operation of Seller-Operated Assets (collectively “OperatingAssets”) may be assigned from Seller to any one of Buyer’s Affiliates,including Linn Operating, Inc., at Buyer’s option.

 

# **ARTICLE II**

# ** **

# **REPRESENTATIONS AND WARRANTIES OF SELLER**

# ** **

2.1           General.

 

### (a)           Anyrepresentation “to the knowledge of Seller” or “to Seller’s knowledge” islimited to matters within the actual knowledge of the individuals listed onSchedule 2.1(a) (“Seller Knowledge Individuals”).

###  

### (b)           Inclusionof a matter on a Schedule to a representation or warranty which addressesmatters having a Material Adverse Effect shall not be deemed an indication thatsuch 

###  

###  

###  

### 4

### 

###  

### matterdoes, or may, have a Material Adverse Effect. Matters may be disclosed on aSchedule to this Agreement for purposes of information only.

###  

### (c)           Subjectto the foregoing provisions of this Section 2.1, the disclaimers andwaivers contained in Section 5.3 and the other terms and conditions ofthis Agreement, Seller represents and warrants to Buyer the matters set out in Section 2.2through 2.22 are true and correct as of the date hereof.

###  

2.2                                 Existence andQualification  Seller is ageneral partnership duly organized, validly existing and in good standing underthe laws of the State of Oklahoma and is duly qualified to do business wherethe Assets are located, except where the failure to so qualify would not have aMaterial Adverse Effect.  All of thegeneral partners of Seller are listed on Schedule 2.2 and are referred toherein as the “General Partners.”

 

2.3                                 Power  Seller has the legal power to enter into andperform this Agreement and consummate the transactions contemplated by thisAgreement.

 

2.4                                 Authorizationand Enforceability  Theexecution, delivery and performance of this Agreement, and the performance ofthe transactions contemplated hereby, have been duly and validly authorized byall necessary partnership action on the part of Seller, including the consentof the General Partners. This Agreement has been duly executed and delivered bySeller (and all documents required hereunder to be executed and delivered bySeller at Closing will be duly executed and delivered by Seller) and thisAgreement constitutes, and at the Closing such documents will constitute, thevalid and binding obligations of Seller, enforceable in accordance with theirterms except as such enforceability may be limited by applicable bankruptcy orother similar laws affecting the rights and remedies of creditors generally aswell as to general principles of equity (regardless of whether suchenforceability is considered in a proceeding in equity or at law).

 

2.5                                 No Conflicts  The execution, delivery and performance ofthis Agreement by Seller, and the transactions contemplated by this Agreementwill not (i) violate any provision of the formation documents orpartnership agreement of Seller, (ii) result in default (with due noticeor lapse of time or both) or the creation of any lien or encumbrance or giverise to any right of termination, cancellation or acceleration under any of theterms, conditions or provisions of any note, bond, mortgage, indenture, licenseor agreement to which Seller is a party or which affect the Assets, (iii) violateany judgment, order, ruling, or decree applicable to Seller as a party ininterest, (iv) violate any Laws applicable to Seller or the Assets, exceptfor (a) rights to consent by, required notices to, and filings with or otheractions by any Governmental Authority where the same are not required prior tothe assignment of oil and gas interests, require any filing with, notificationof or consent, approval or authorization of any Governmental Authority and (b) anymatters described in clauses (ii), (iii) or (iv) above which wouldnot have a Material Adverse Effect.

 

2.6                                 Liability forBrokers’ Fees  Buyer shallnot directly or indirectly have any responsibility, liability or expense, as aresult of undertakings or agreements of Seller, for brokerage fees, finder’sfees, agent’s commissions or other similar forms of compensation in connectionwith this Agreement or any agreement or transaction contemplated hereby.

 

 

 

5

----

 

2.7                                 Litigation  Except as set forth on Schedule 2.7, noinvestigation, proceeding, action, suit, or other legal proceeding of any kindor nature before any Governmental Authority or arbitrator (including anytake-or-pay claims) is pending or threatened with respect to the Assets, Seller(with respect to any of the Assets), or either of them, or with respect to theownership, operation, development, maintenance, or use of any thereof.

 

2.8           TaxMatters.

 

### (a)           (1) All Tax Returns required to be filed on or beforethe date hereof by the Seller with respect to any of the Assets have been dulyand timely filed (within any applicable extension periods) with the appropriateTaxing Authority; (2) all such Tax Returns are true, correct and completein all material respects; (3) all Taxes shown to be due on such TaxReturns (and any other Taxes owed) have been paid in full or will be timelypaid in full by the due date thereof; (4) all Tax withholding and depositrequirements imposed on or with respect to any of the Assets have beensatisfied in full in all respects; (5) there are no liens on any of theAssets that arose in connection with any failure (or alleged failure) to payany Tax; (6) to Seller’s knowledge, there is no claim or examinationpending or threatened by any Taxing Authority in connection with any such Tax; (7) noneof such Tax Returns are now under audit or examination by any Taxing Authority;(8) the Assets are not subject to Taxes in any jurisdiction in whichSeller has not filed Tax Returns.

###  

### (b)           Allof the Assets that are subject to property tax have been properly listed anddescribed on the property tax rolls of the appropriate taxing jurisdiction forall periods prior to Closing and none of the Assets constitute omitted propertyfor property tax purposes.

###  

### (c)           Noneof the Assets is held in an arrangement or entity other than Seller that istreated as a partnership for income Tax purposes.

###  

### (d)           Thereare no joint operating agreements to which Seller is a party and for whichthere has not been made a valid election out of Subchapter K of the Code.

###  

### (e)           Withrespect to the Assets located in Texas, Seller represents and warrants that thetangible personal property being transferred to Buyer constitutes the entireoperating assets of a separate division, branch or identifiable segment ofSeller’s business.

###  

2.9                                 Commitments,Abandonments or Proposals Except as set forth on Schedule 2.9: (a) Seller has incurredno expenses, and has made no commitments to make expenditures in connectionwith the ownership or operation of the Assets after the Effective Date, otherthan routine expenses incurred in the normal operation of existing wells on theProperties in accordance with generally accepted practices in the oil and gasindustry; (b) Seller has not abandoned any wells (or removed any materialitems of equipment, except those replaced by items of materially equalsuitability and value) on the Properties since the Effective Date; and (c) noproposals are currently outstanding by Seller or other working interest ownersto drill additional wells, or to deepen, plug back, or rework existing wells,or to conduct other operations for which consent is required under theapplicable operating agreement, or to conduct any other operations other thannormal operation of existing wells on the Properties, or to abandon any wells,on the Properties.

 

 

 

6

----

 

2.10         Compliance with Laws  Except as disclosed on Schedule 2.10,the Seller-Operated Assets are, and Seller’s operation of the Seller-OperatedAssets has been and currently is and the other Assets are and the operation ofthe other Assets has been and currently is, in substantial compliance with theprovisions and requirements of all Laws of all Governmental Authorities havingjurisdiction with respect to the Assets, or the ownership, operation,development, maintenance, or use of any thereof, except where suchnon-compliance as would not, individually or in the aggregate, have a MaterialAdverse Effect.

 

2.11         Environmental.

 

### Exceptas set forth on Schedule 2.11:

###  

### (a)           Thereare no material violations of Environmental Laws that arise from eventsoccurring at or conditions existing on the Properties on or before the Closing,which have not been corrected or remediated, and for which all applicable finesor penalties have not been paid in full, in compliance with the requirements ofany Governmental Authority having jurisdiction.

###  

### (b)           Withinthe last five years, neither Seller nor any of its Affiliates has received anywritten notifications of any proceedings pending or threatened in writingagainst Seller or the Properties, alleging that Seller or the Properties are inviolation of, or otherwise subject to liability under, any Environmental Law,other than any such notifications that Seller has resolved in accordance withEnvironmental Laws.

###  

### (c)           Withinthe last five years, there has been no written claim against Seller assertingliability for exposure of any Person or property (such as livestock, cattle,horses, pigs, goats, sheep, and chickens, but not real property) to HazardousMaterials in connection with the Properties that Seller has not resolved.

###  

### (d)           Thereare no material Environmental Liabilities resulting from the breach ofEnvironmental Laws pertaining to use or operation of the Properties on or priorto Closing that Seller has not resolved.

###  

### (e)           Sellereither has made, or will, immediately after the execution of this Agreement,make available to Buyer all environmental assessment, investigatory, and auditreports, studies, analyses, and correspondence (other than correspondence thatexists solely in electronic form) relating to the Properties that are incontrol of Seller or any of its Affiliates and addressing releases orthreatened releases, remediations, Environmental Liabilities, EnvironmentalConditions, or violations of Environmental Laws.

###  

### (f)            Allmaterial Governmental Authorizations required under Environmental Laws that arenecessary to the operation of the Properties as currently operated by Sellerhave been obtained and are in full force and effect, and Seller has operatedthe Properties in material compliance with Environmental Laws and such GovernmentalAuthorizations.

###  

### (g)           Therepresentations set forth in this Section 2.11 shall be the sole andexclusive representations and warranties of this Agreement that address orrelate to compliance with, liabilities under or any factual or legal mattersrelated to or arising under Environmental Laws pertaining to the Properties andSection 2.10 shall not apply to any matter for which this Section 2.11could apply.

###  

###  

###  

### 7

### 

###  

2.12         Contracts  Seller has paid its share of all costs(including without limitation Property Costs) payable by it under the Leasesand Contracts, except those being contested in good faith.  Seller is not in default under any Contract.Schedule 2.12 sets forth all of the following contracts, agreements,and commitments (excluding Leases and Surface Contracts that are of record) towhich any of the Assets will be bound as of the Closing: (i) any agreementwith any Affiliate; (ii) any agreement or contract for the sale, exchange,or other disposition of Hydrocarbons produced from or attributable to Seller’sinterest in the Assets that is not cancelable without penalty or other materialpayment on not more than thirty (30) days prior written notice; and (iii) anyagreement of or binding upon Seller to sell, lease, farmout, or otherwisedispose of any interest in any of the Assets after the date hereof, other thanconventional rights of reassignment arising in connection with Seller’ssurrender or release of any of the Assets and (iv) any tax partnershipagreement of or binding upon Seller affecting any of the Assets other thanSeller.

 

2.13         Payments for Production  Except as set forth on Schedule 2.13, (a) allrentals, royalties, excess royalty, overriding royalty interests, productionpayments, and other payments and interest thereon due and/or payable by or onbehalf of Seller to mineral and royalty holders and other interest owners on orprior to the Effective Date under or with respect to the Assets and theHydrocarbons produced therefrom or attributable thereto, have been paid and (b) Selleris not obligated under any contract or agreement for the sale of gas from theAssets containing a take-or-pay, advance payment, prepayment, or similarprovision, or under any gathering, transmission, or any other contract oragreement with respect to any of the Assets to gather, deliver, process, ortransport any gas without then or thereafter receiving full payment therefor.

 

2.14         Imbalances  Except with respect to Properties and in theamounts set forth on Schedule 2.14, as of the dates set forth on suchSchedule, there are no Imbalances with respect to the Properties arising fromoverproduction or underproduction or overdeliveries or underdeliveries or otherimbalance arising at the wellhead, pipeline, gathering system, transportationsystem, processing plant or other location.

 

2.15         Consents and Preferential PurchaseRights  None of the Assets, or anyportion thereof, is subject to any preferential rights to purchase orrestrictions on assignment or required third-party consents to assignment,which may be applicable to the transactions contemplated by this Agreement,except for (i) governmental consents and approvals of assignments that arecustomarily obtained after Closing, (ii) preferential rights, consents andrestrictions contained in easements, rights-of-way or equipment leases and (iii) preferentialrights, consents and restrictions as are set forth on Schedule 2.15.

 

2.16         Equipment  The Equipment is adequate for normaloperation of the Assets consistent with current practices, ordinary wear andtear excepted.

 

2.17         Payout Balances  Schedule 2.17 contains a complete andaccurate list of the status of any “payout” balance, as of the Effective Date,for the Wells and Units subject to a reversion or other adjustment at somelevel of cost recovery or payout (or passage of time or other event other thantermination of a Lease by its terms).

 

 

 

8

----

 

2.18         Condemnation  There is no actual or threatened taking (whetherpermanent, temporary, whole or partial) of any part of the Properties by reasonof condemnation or the threat of condemnation.

 

2.19         Bankruptcy  There are no bankruptcy, reorganization, orsimilar arrangement proceedings pending, being contemplated by or, to Seller’sknowledge, threatened against Seller or any Affiliate.

 

2.20         Investment Company  Seller is not an investment company or acompany controlled by an investment company within the meaning of theInvestment Company Act of 1940, as amended.

 

2.21         Employee Benefits.

 

### (a)           No Seller Plan is a “multiemployerplan” within the meaning of section 4001(a)(3) of ERISA (“MultiemployerPlan”).  None of Seller or any of itsERISA Affiliates has, at any time during the six-year period preceding theEffective Date, contributed to or been obligated to contribute to anyMultiemployer Plan, and none of Seller or any of its ERISA Affiliates hasincurred any withdrawal liability under Part I of Subtitle E of Title IVof ERISA that has not been satisfied in full.

 

### (b)           There does not now exist, nor do anycircumstances exist that could result in, any “controlled group liability” ofSeller or any of its ERISA Affiliates that would be, or could become, aliability of the Buyer or any of its Affiliates or could result in theimposition of a lien against any of the Assets following the Closing.  As used in the preceding sentence, the term “controlledgroup liability” means any and all liabilities (i) under Title IV ofERISA, (ii) under section 302 of ERISA, (iii) under sections 412 and4971 of the Code, (iv) as a result of the failure to comply with thecontinuation of coverage requirements of section 601 et seq. of ERISA andsection 4980B of the Code, and (v) under corresponding or similarprovisions of foreign Laws.

 

2.22         Employment Matters

 

### (a)           Seller has no collective bargainingagreements or other labor agreement with any labor union or organizationconcerning employment or relating to the Assets.  No labor organization or group of Seller’semployees has made a demand for recognition or certification as a union orother labor organization with respect to any of Seller’s employees.  There are no representation or certificationproceedings or petitions seeking a representation proceeding presently pendingor threatened to be brought or filed with the National Labor Relations Board orany labor relations tribunal or authority with respect to any of Seller’semployees.  To Seller’s knowledge, thereare no organizing activities involving Seller’s employees.

 

### (b)           Seller has complied, and is incompliance, with all applicable laws regarding labor, employment and employmentpractices, terms and conditions of employment, immigration

 

 

 

9

----

 

compliance, occupationalsafety and health and wages and hours, including, without limitation, anybargaining or other obligations under the National Labor Relations Act.

 

### (c)           Except as disclosed on Schedule 2.7,there are no claims, lawsuits, petitions, charges, investigations, complaints,proceedings, suits, demands or actions which are pending against Seller beforeany court, administrative agency, other governmental entity or arbitrator, orwhich have been asserted or threatened against Seller, including withoutlimitation those for: (i) wages, salaries, commissions, bonuses, vacationpay, severance or termination pay, sick pay or other compensation; (ii) employeebenefits; (iii) alleged unlawful, unfair, wrongful or discriminatoryemployment or labor practices; (iv) alleged breach of contract or otherclaim arising under a collective bargaining or individual agreement or anyother employment covenant whether express or implied; (v) allegedviolation of any statute, ordinance, contract or regulation relating to minimumwages or maximum hours of work; (vi) alleged violation of occupationalsafety and health standards; or (vii) alleged violation of plant closing,mass layoff, immigration, workers’ compensation, disability, unemploymentcompensation, whistleblower laws, or other employment or labor relations laws;and to the knowledge of Seller no such basis therefore exists.

 

### (d)           Seller is not a party to anyagreements or arrangements or subject to any requirement that in any mannerrequires or may require Buyer to hire any of Seller’s employees, or that wouldrestrict Buyer from relocating, consolidating, merging or closing, in whole orin part, any portion of the Assets, subject to applicable law.

 

### (e)           Seller is solely responsible forproviding all notices, if applicable, that may be required under WARN Act withrespect to all of its employees who are affiliated with the Assets.  Seller recognizes that it is solelyresponsible for taking all remedial measures under the WARN Act with respect toits employees including without limitation, the payment of all amounts,penalties, liabilities, costs and expenses if required notices are notprovided, for a plant closing or mass layoff with respect to the termination ofany of its employees on or before the Closing Date.

 

# **ARTICLE III**

# ** **

# **REPRESENTATIONS AND WARRANTIES OF BUYER**

# ** **

Buyer represents andwarrants to Seller the following are true and correct as of the date hereof:

 

3.1           Existence and Qualification  Buyer is a corporation organized, validlyexisting and in good standing under the laws of the state of its incorporation;and Buyer is duly qualified to do business as a foreign corporation in everyjurisdiction in which it is required to qualify in order to conduct itsbusiness except where the failure to so qualify would not have a MaterialAdverse Effect on Buyer or its properties; and Buyer is duly qualified to dobusiness as a foreign corporation in the respective jurisdictions where theAssets to be transferred to it are located.

 

 

 

 

10

----

 

3.2           Power  Buyer has the corporate power to enter intoand perform this Agreement and consummate the transactions contemplated by thisAgreement.

 

3.3           Authorization and Enforceability  The execution, delivery and performance ofthis Agreement, and the performance of the transaction contemplated hereby,have been duly and validly authorized by all necessary corporate action on thepart of Buyer. This Agreement has been duly executed and delivered by Buyer(and all documents required hereunder to be executed and delivered by Buyer atClosing will be duly executed and delivered by Buyer) and this Agreementconstitutes, and at the Closing such documents will constitute, the valid andbinding obligations of Buyer enforceable in accordance with their terms exceptas such enforceability may be limited by applicable bankruptcy or other similarlaws affecting the rights and remedies of creditors generally as well as togeneral principles of equity (regardless of whether such enforceability isconsidered in a proceeding in equity or at law).

 

3.4           No Conflicts  The execution, delivery and performance ofthis Agreement by Buyer, and the transactions contemplated by this Agreementwill not (i) violate any provision of the certificate of incorporation orbylaws of Buyer, (ii) result in a material default (with due notice orlapse of time or both) or the creation of any lien or encumbrance or give riseto any right of termination, cancellation or acceleration under any of theterms, conditions or provisions of any note, bond, mortgage, indenture, licenseor agreement to which Buyer is a party, (iii) violate any judgment, order,ruling, or regulation applicable to Buyer as a party in interest, or (iv) violateany law, rule or decree applicable to Buyer or any of its assets, or (v) requireany filing with, notification of or consent, approval or authorization of anyGovernmental Authority, except any matters described in clauses (ii), (iii), (iv) or(v) above which would not have a Material Adverse Effect on Buyer.

 

3.5           Consents, Approvals, or Waivers  The execution, delivery, and performance ofthis Agreement by Buyer will not be subject to any consent, approval or waiverfrom any Governmental Authority or other third Person, except for the approvaland waiting period requirements under the Hart-Scott-Rodino Act.

 

3.6           Financing  Buyer has, and will have at Closing,sufficient cash, available lines of credit, or other sources of immediatelyavailable funds (in United States dollars) to enable it to pay the PurchasePrice to Seller at Closing.

 

3.7           Accredited Investor; InvestmentIntent  Buyer is an accreditedinvestor as defined in Regulation D under the Securities Act of 1933, asamended. Buyer is acquiring the Assets and, if applicable, any limitedliability membership interest acquired pursuant to Section 10.6 for itsown account and not with a view to their sale or distribution in violation ofthe Securities Act of 1933, as amended, the rules and regulationsthereunder, any applicable state blue sky Laws, or any other applicablesecurities Laws.

 

3.8           Liability for Brokers’ Fees  Seller shall not directly or indirectly haveany responsibility, liability or expense, as a result of undertakings oragreements of Buyer, for brokerage fees, finder’s fees, agent’s commissions orother similar forms of compensation in connection with this Agreement or anyagreement or transaction contemplated hereby.

 

 

 

11

----

 

3.9           Litigation  As of the date of the execution of thisAgreement, there are no actions, suits or proceedings pending, or to Buyer’sknowledge, threatened in writing before any Governmental Authority againstBuyer or any Affiliate of Buyer that are reasonably likely to impair materiallyBuyer’s ability to perform its obligations under this Agreement.

 

3.10         Limitation  Except for the representations and warrantiesexpressly made by Seller in Article 2 of this Agreement and the Assignmentand Bill of Sale, or in any certificate furnished or to be furnished to Buyerpursuant to this Agreement, Buyer represents and acknowledges that (i) thereare no representations or warranties, express, statutory or implied, as to theAssets or prospects thereof, and (ii) Buyer has not relied upon any oralor written information provided by Seller. Without limiting the generality ofthe foregoing, Buyer represents and acknowledges that Seller has made and willmake no representation or warranty regarding any matter or circumstancerelating to Environmental Laws, Environmental Liabilities, the release ofmaterials into the environment or protection of human health, safety, naturalresources or the environment or any other environmental condition of theAssets. Buyer further represents and acknowledges that it is knowledgeable ofthe oil and gas business and of the usual and customary practices of producerssuch as Seller and in making the decision to enter into this Agreement andconsummate the transactions contemplated hereby, Buyer has relied solely on thebasis of its own independent due diligence investigation of the Assets.

 

3.11         Bankruptcy  There are no bankruptcy, reorganization orreceivership proceedings pending against, being contemplated by, or to Buyer’sknowledge, threatened against Buyer.

 

3.12         Qualification.

 

### (a)           Buyeris now, and hereafter shall continue to be, qualified to own federal and stateoil, gas and mineral leases in all jurisdictions where the Assets to betransferred to it are located, and the consummation of the transactionscontemplated in this Agreement will not cause Buyer to be disqualified as suchan owner. To the extent required by the applicable state or federal government,Buyer currently has, and will continue to maintain, lease bonds, area widebonds or any other surety bonds as may be required by, and in accordance with,such state or federal regulations governing the ownership of such leases.

###  

### (b)           Buyer’sAffiliate, Linn Operating, Inc., is now, and hereafter shall continue tobe, qualified to assume operatorship of federal and state oil, gas and mineralleases in all jurisdictions where the Assets are located, and the consummationof the transactions contemplated in this Agreement will not cause such entityto be disqualified as such an operator. To the extent required by theapplicable state or federal government, Buyer shall cause Linn Operating, Inc.to obtain, and to continue to maintain, lease bonds, area wide bonds or anyother surety bonds as may be required by, and in accordance with, such state orfederal regulations governing operation of such leases.

 

 

 

12

----

# ** **

# **ARTICLE IV**

# ** **

# **TITLE MATTERS**

# ** **

4.1           Access to Title Information  After the date of this Agreement and untilClosing, Seller shall make the records and documents in Seller’s possessionaffecting Seller’s title to the Assets available to Buyer at Seller’s officelocated at 4444 E. 146th Street North, Skiatook, Oklahoma, 74070, or such otherplace as deemed appropriate by Seller, during Seller’s normal business hoursfor examination by Buyer. Seller shall not be obligated to perform anyadditional title work, and any additional abstracts and title opinions shallnot be made current by Seller. NO WARRANTY OF ANY KIND IS MADE BY SELLER AS TOTHE INFORMATION SO SUPPLIED, AND BUYER AGREES THAT ANY CONCLUSIONS DRAWNTHEREFROM SHALL BE THE RESULT OF ITS OWN INDEPENDENT REVIEW AND JUDGMENT.

 

4.2                                 Title Warranty.

 

### (a)           Theassignment and bill of sale to be delivered by Seller to Buyer (the “Assignmentand Bill of Sale”) shall be substantially in the form attached hereto as Exhibit Dand must contain a special warranty of title by, through and under Seller tothe Properties, but shall otherwise be without warranty of title, express,implied or statutory, except that such Assignment and Bill of Sale shalltransfer to Buyer all rights, actions or title warranties given or made bySeller’s predecessors (other than Affiliates of Seller), to the extent Sellermay legally transfer such rights.

###  

### (b)           Sellerrepresents and warrants to Buyer that Seller’s title to the Wells and Unitsshown on Exhibit A as of the Effective Date is Defensible Title as definedin Section 4.2(c).

###  

### (c)           Asused in this Agreement, the term “Defensible Title” means that record title ofSeller that:

###  

#### (i)            Entitles Seller to receive a shareof the oil, gas and other associated minerals produced, saved and marketed fromany Unit or Well throughout the duration of the productive life of such Unit orWell (after satisfaction of all royalties, overriding royalties,nonparticipating royalties, net profits interests or other similar burdens onor measured by production of oil and gas) (a “Net Revenue Interest”), of notless than the Net Revenue Interest share shown in Exhibit A for such Unitor Well, except decreases in connection with those operations in which Sellermay after the Effective Date be a non-consenting co-owner, decreases resultingfrom the establishment or amendment after the Effective Date of pools or units,and decreases required to allow other working interest owners to make up pastunderproduction or pipelines to make up past under deliveries and except as statedin such Exhibit A;

####  

#### (ii)           Obligates Seller to bear a percentageof the costs and expenses for the maintenance and development of, andoperations relating to, (i) any Unit or Well not greater than the “workinginterest” shown in Exhibit A without increase throughout the productivelife of such Unit or Well except as stated in Exhibit A and exceptincreases resulting from contribution requirements with respect to defaultingco-owners under applicable operating agreements and increases that areaccompanied by at least a proportionate increase in Seller’s Net RevenueInterest; and

####  

####  

####  

#### 13

#### 

####  

#### (iii)          Is free and clear of liens andsecurity interests other than (i) a lien for taxes which are not yetdelinquent or (ii) a mechanic’s or materialmen’s lien (or other similarlien), or a lien under an operating agreement or similar agreement, to theextent the same relates to expenses incurred which are not yet delinquent or (iii) lienswhich will be released at or before Closing listed on Schedule 4.2(c) (theliens described in (i), (ii) and (iii) of this Section 4.2(c) areherein called “Excluded Liens”).

####  

4.3           Title Defects.

 

### (a)           Theterm “Title Defect,” as used herein, means failure to have Defensible Title;provided, however, the following matters shall not constitute a Title Defect, abreach of any covenant, representation or warranty of Buyer or a failure tosatisfy a condition to Buyer’s obligation to close and shall not be asserted assuch:

###  

#### (i)            defects or irregularities arisingout of lack of corporate authorization or a variation in corporate name, unlessBuyer provides affirmative evidence that such corporate action was notauthorized and results in another person’s superior claim of title to therelevant Property;

####  

#### (ii)           defects or irregularities in thechain of title consisting of the failure to recite marital status in documents;

####  

#### (iii)          a gas imbalance (e.g., a situationwhere Seller and its predecessor in title to the Properties have taken more orless gas from a Well or Unit than ownership of the Properties would entitlethem to receive); any such gas imbalance shall be resolved pursuant to Section 14.3;or

####  

#### (iv)          conventional rights of reassignmentnormally actuated by an intent to abandon or release a lease and requiringnotice to the holders of such rights.

####  

### (b)           Buyermay assert a Title Defect for any Asset that (i) Buyer has allocated valueon Exhibit C, and (ii) Buyer reasonably believes is a Material TitleDefect, which means that the effect of such Title Defect on the Allocated Valueof such Asset would be equal to at least Twenty Five Thousand and No/100Dollars ($25,000.00) (“Material Title Defect”).

###  

### (c)           Ifthe total value of all Material Title Defects, in the aggregate, does not meetor exceed One-Percent (1%) of the Purchase Price, then there shall be noadjustment to the Purchase Price or any other remedy from or obligation ofSeller that shall be available to Buyer other than any warranty of titleprovided in the Assignment and Bill of Sale. Provided further, in the event theamount attributable to Material Title Defects, in the aggregate, satisfies thethreshold percentage set forth above and a reduction to the Purchase Price iswarranted, then the Purchase Price shall only be reduced to the extent theamount attributable to Material Title Defects, in the aggregate, exceeds thepercentage of the Purchase Price specified above, and all amounts attributableto Material Title Defects, in the aggregate, that are below such threshold percentageshall be borne solely by Buyer, and there shall be no adjustment to thePurchase Price therefor.

###  

###  

###  

### 14

### 

###  

4.4           Title Benefit.

 

### (a)           Theterm “Title Benefit,” as used herein, shall be limited any right, circumstanceor condition that operates to increase the Net Revenue Interest of Seller inany Property above that shown on Exhibit A, without causing a greater thanproportionate increase in Seller’s working interest above that shown in Exhibit A.

###  

### (b)           Eitherparty may assert a Title Benefit for any Asset that (i) Buyer hasallocated value to on Exhibit C, and (ii) is a Material TitleBenefit, which means that the effect of such Title Benefit on the AllocatedValue of such Asset would be equal to at least Twenty Five Thousand and No/100Dollars ($25,000.00) (“Material Title Benefit”).

###  

### (c)           Ifthe total value of all Material Title Benefits, in the aggregate, does not meetor exceed One-Percent (1%) of the Purchase Price, then there shall be noadjustment to the Purchase Price. Provided further, in the event the amountattributable to Material Title Benefits, in the aggregate, satisfies thethreshold percentage set forth above and an increase to the Purchase Price iswarranted, then the Purchase Price shall only be increased to the extent theamount attributable to Material Title Benefits, in the aggregate, exceeds thepercentage of the Purchase Price specified above, and all amounts attributableto Material Title Benefits, in the aggregate, that are below such thresholdpercentage shall be borne solely by Seller, and there shall be no adjustment tothe Purchase Price therefor.

###  

### (d)           Ifeither party discovers a Material Title Benefit that exceeds the thresholdrequirement stated in this Section 4.4, then no later than five (5) daysprior to Closing, such party shall notify the other, in writing, of the natureof the Material Title Benefit and provide (i) the basis for the assertionof such Material Title Benefit, (ii) the data in support of, such MaterialTitle Benefit and (iii) the proposed increase in the Purchase Priceattributable to such Material Title Benefit. If the parties cannot agree on theexistence of a Material Title Benefit or the amount in which the Purchase Priceshould be increased on account thereof, the issue will be resolved inaccordance with Section 9.1.

###  

4.5           Notice of and Remedies for Material Title Defects.

 

### (a)           Inthe event Buyer discovers a Material Title Defect that exceeds the thresholdrequirements stated above in Section 4.3, then up to five (5) daysprior to Closing, Buyer shall have the right to notify Seller, in writing, ofthe nature of the Material Title Defect. Along with the written notice, Buyershall furnish Seller with Buyer’s basis for the assertion of such MaterialTitle Defect and the data in support thereof, and shall also furnish Sellerwith the proposed reduction in the Purchase Price attributable to such MaterialTitle Defect.

###  

###  

###  

### 15

### 

###  

### (b)           IfSeller agrees with Buyer’s assertion of a Material Title Defect, then uponreceipt of such notice, Buyer and Seller shall choose one of the followingoptions, provided, however that if Buyer and Seller cannot agree on the option,option (ii) below shall be deemed to have been elected:

####  

#### (i)            cure the Material Title Defect atSeller’s expense prior to or within 90 days after Closing thereby eliminatingthe need for a reduction in Purchase Price; or

####  

#### (ii)           reduce the Purchase Price by theTitle Defect Amount, as determined by Section 4.5(c); or

####  

#### (iii)          exclude the affected Asset from thesale and reduce the Purchase Price by an amount equal to the Allocated Value ofthe excluded Asset; or

####  

#### (iv)          indemnify Buyer for the Material TitleDefect and the Purchase Price shall not be reduced.

####  

### (c)                                  The Title Defect Amount shall be determined as follows:

###  

#### (i)            If Buyer and Seller agree on theTitle Defect Amount, that amount shall be the Title Defect Amount;

####  

#### (ii)           if the Title Defect is a lien whichis undisputed and liquidated in amount, then the Title Defect Amount shall bethe amount necessary to be paid to remove the Material Title Defect from theaffected Asset; provided, however, if the Title Defect Amount exceeds theAllocated Value of the affected Asset, then Seller may choose to exclude theaffected Asset from the sale and reduce the Purchase Price by an amount equalto the Allocated Value of the excluded Asset;

####  

#### (iii)          if the Title Defect represents adiscrepancy between (a) the actual Net Revenue Interest for the affectedAsset and (b) the Net Revenue Interest or percentage stated on Exhibit C,then the Title Defect Amount shall be the product of the Allocated Value ofsuch affected Asset multiplied by a fraction, the numerator of which is the netrevenue interest or percentage ownership decrease and the denominator of whichis the net revenue interest or percentage ownership stated on Exhibit C.

####  

### (d)           IfSeller does not agree with Buyer’s assertion and/or valuation of a MaterialTitle Defect, then Buyer and Seller will resolve the existence and/or value ofsuch Material Title Defect pursuant to Section 9.1 of this Agreement.

###  

### (e)           AnyTitle Defect which is not disclosed to Seller by Buyer at least five (5) daysprior to Closing shall conclusively be deemed waived by Buyer for all purposesother than the warranty of title provided by Seller in the Assignment and Billof Sale .

###  

4.6           Preferential Purchase Rights.

 

### (a)           Sellerhas not heretofore sent letters to parties holding preferential purchase rightscovering the Assets requesting a waiver of such rights as they may apply to thetransactions set forth in this Agreement. Seller will provide Buyer anopportunity to review the form of preferential purchase notice and list ofparties holding preferential rights prior to issuing the notices. With respectto each preferential purchase right covering the Assets or any portion thereof,upon execution of this Agreement Seller shall identify and shall send to theholder of such right a notice offering to sell to such holder, in accordancewith the contractual provisions

###  

###  

###  

### 16

### 

###  

### applicableto such right, those Assets covered by such right on the same terms hereof andfor the Allocated Value of such Assets, subject to adjustments in the samemanner as the Purchase Price is adjusted pursuant to Section 1.4 of thisAgreement.

###  

### (b)           If,prior to Closing, any holder of a preferential purchase right notifies Sellerthat it intends to consummate the purchase of the Assets to which itspreferential purchase right applies, then those Assets shall be excluded fromthe Assets to be conveyed to Buyer, and the Purchase Price shall be reduced bythe Allocated Value of such Asset; provided however, that if the holder of suchpreferential purchase right fails to consummate the purchase of the Assetscovered by such right, then Seller shall so notify Buyer, and within fifteen(15) business days after Buyer’s receipt of such notice from Seller, Sellershall sell to Buyer, and Buyer shall purchase from Seller, for the AllocatedValue of such Asset upon the other terms of this Agreement the Assets to whichthe preferential purchase right is applied. Provided however, to the extentthat Seller and the holder of such preferential purchase right are in a disputeregarding the sale of the Assets covered by such right, then Buyer shall haveno obligation to purchase such Assets from Seller.

###  

### (c)           Unlessotherwise mutually agreed, all Assets for which a preferential purchase righthas not been asserted prior to Closing shall be sold to Buyer at Closingpursuant to the provisions of this Agreement. Seller shall identify allagreements and contracts that contain rights of first refusal or preferentialright to purchase provisions. Seller and Buyer agree that if a bona fide thirdparty owner or holder of such right(s), asserts said right(s) after theClosing Date, Buyer shall cooperate fully with Seller to reconcile and resolvesaid claims to the extent the interest conveyed to Buyer is affected. If Sellerand Buyer agree in good faith on the validity of such third party’s claim, thereconciliation or resolution with such third party shall include an assignment,as of the Effective Date, of the affected interest from Buyer to such thirdparty and a full reimbursement by Seller to Buyer of that portion of thePurchase Price allocable to the affected interest; and payment to such thirdparty by Buyer of all revenue and income attributable to such interest whichhas been collected and received by Buyer from and after the Effective Date,less all taxes and other expenses incurred by Buyer attributable to suchinterest, including but not limited to the costs and legal fees associated withconveying the effective interest from Buyer to such third party. Seller shall,at its sole cost and expense, negotiate terms with third party owners as necessaryto fully resolve any outstanding issues with such third party relating to thesale of the affected interest.

###  

4.7           Consents to Assign  After Closing, Seller shall identify and sendto each holder of a governmental consent or approval of assignment pertainingto the Assets and the transactions contemplated hereby and that are customarilyobtained after Closing a notice seeking such party’s consent to assign theAsset to Buyer or Buyer’s Affiliate, Linn Operating, Inc.  If prior to Closing Seller becomes aware of aholder of a right to consent to assignment pertaining to the Assets and thetransactions contemplated hereby (other than a governmental consent or approvalcustomarily obtained after Closing) and Seller fails to obtain such consentprior to the Closing Date and the failure to obtain such consent would (i) causethe assignment of such Asset to Buyer or Linn Operating, Inc. to be voidor voidable, (ii) trigger an express termination or right of terminationof the lease or document underlying the consent, or (iii) trigger anexpress monetary penalty, then, and only then, the Asset subject to such failedconsent shall be excluded from the sale and the Purchase Price shall be reducedby the Allocated Value of such Asset.

 

 

 

 

17

----

# ** **

# **ARTICLE V**

# ** **

# **BUYER’S INVESTIGATION OF PHYSICALCONDITIONS AND SELLER’S DISCLAIMER**

# ** **

5.1           Inspection  On or after the date this Agreement isexecuted, Buyer shall have the right to enter upon the Assets at its sole costand risk for the purpose of an inspection of the Physical Conditions of theAssets which are operated by Seller. “Physical Condition” as used herein meansthe condition of the Assets, including without limitation, equipment in itscurrent state of maintenance and repair, the presence of abandoned oil and gaswells, water wells, sumps and pipelines, whether known or unknown by Seller.Prior to such inspection, Buyer shall Schedule an appointment with theparty shown in Section 16.8. Provided, however, that at all times Buyer ispresent upon the Assets, Buyer shall be accompanied by an individual designatedby the party listed in Section 16.8.

 

5.2           Investigation  Buyer acknowledges that in making thedecision to enter into this Agreement and consummate the transactionscontemplated hereby, Buyer shall have relied solely on the basis of its ownindependent investigation, analysis and evaluation of the Assets and the publicrecords relating to the Assets, and upon the express representations, covenantsand disclaimers set forth in this Agreement.

 

5.3           Disclaimer  Except as expressly provided in thisAgreement and in the Assignment and Bill of Sale, Seller makes norepresentations or warranties whatsoever and disclaims all liability andresponsibility for any other representation, warranty, statement or informationmade or communicated (orally or in writing) to Buyer (including, but notlimited to, any information contained in the files or any opinions, informationor advice which may have been provided to Buyer by any officer, stockholder,director, employee, agent, consultant or representative of Seller). Buyeracknowledges that Seller has not made, AND SELLER HEREBY EXPRESSLY DISCLAIMSAND NEGATES ANY REPRESENTATION OR WARRANTY, EXPRESS, IMPLIED, AT COMMON LAW, BYSTATUTE, OR OTHERWISE RELATING TO (a) THE CONDITIONS OF THE ASSETS(INCLUDING, WITHOUT LIMITATION, ANY IMPLIED OR EXPRESS WARRANTY OFMERCHANTABILITY, OF FITNESS FOR A PARTICULAR PURPOSE, OR OF CONFORMITY TOMODELS OR SAMPLES OF MATERIALS), (b) ANY INFRINGEMENT BY SELLER OF ANYPATENT OR PROPRIETARY RIGHT OF ANY THIRD PARTY, AND (c) ANY INFORMATION,DATA OR OTHER MATERIALS (WRITTEN OR ORAL) FURNISHED TO BUYER BY OR ON BEHALF OFSELLER (INCLUDING WITHOUT LIMITATION, WITH RESPECT TO GEOLOGICAL DATA, THEEXISTENCE OR EXTENT OF OIL, GAS OR OTHER MINERAL RESERVES, THE RECOVERABILITYOF OR THE COST OF RECOVERING ANY SUCH RESERVES, THE VALUE OF SUCH RESERVES, ANYPRODUCT PRICING ASSUMPTIONS, AND THE ABILITY TO SELL OIL OR GAS PRODUCTIONAFTER CLOSING); provided, however, that the foregoing disclaimer and negationof representations and warranties shall not affect or impair therepresentations of Seller as set forth in Article II hereof or the specialwarranty of title in the Assignment and Bill of Sale. Other than as expresslyprovided in this Agreement or in the Assignment and Bill of Sale, THE SALE OFTHE WELLS, EQUIPMENT AND FACILITIES HEREUNDER SHALL BE “AS IS, WHERE IS, WITHALL FAULTS.”.

 

 

 

18

----

 

5.4           Indemnity Regarding Access  Buyer agrees to indemnify, defend and holdharmless Seller, its Affiliates, the other owners of interests in theProperties, and all such Persons’ directors, officers, employees, agents andrepresentatives from and against any and all claims, liabilities, losses, costsand expenses (including court costs and reasonable attorneys’ fees), includingclaims, liabilities, losses, costs and expenses attributable to personalinjury, death, or property damage, arising out of or relating to access to theAssets prior to the Closing by Buyer, its Affiliates, or its or theirdirectors, officers, employees, agents or representatives, **even ifcaused in whole or in part by the negligence (whether sole, joint orconcurrent), strict liability or other legal fault of any indemnified Person**.

 

# **ARTICLE VI**

# ** **

# **BUYER’S INVESTIGATION OF ENVIRONMENTALCONDITIONS**

# ** **

6.1           Inspection and Assessment ofEnvironmental Condition(s)  Subjectto the conditions set forth herein, Buyer shall have access to the Assets,Seller’s personnel, and the books, records and files of Seller (subject to theprovisions of Section 11.3 below) relating to the Assets until five (5) daysprior to Closing for the purpose of inspecting the Assets and conducting suchtests, examinations, investigations and assessments as may be necessary or appropriatein Buyer’s opinion to evaluate the Environmental Condition of the Assets;provided, however, that prior to conducting any tests on the Assets, Buyershall Schedule an appointment with the party shown in Section 16.8and Buyer shall be accompanied by a representative of Seller and suchrepresentative shall be available to Buyer during normal business hours and atother reasonable times. “Environmental Condition” as used herein means anycondition relating to the Assets that contaminates soil, sediment, air, wateror groundwater in a manner that violates any applicable law, regulation,ordinance, rule or order in effect and as interpreted and enforced beforethe Effective Date. Changes in, or changes in interpretation of, any law,regulation, ordinance, rule, order or permit on or after the Closing Date shallnot provide the basis for an Environmental Condition even if such changes aremade retroactive.

 

6.2           Notice of and Remedies for MaterialEnvironmental Condition(s).

 

### (a)           Upondiscovery of a Material Environmental Condition (as defined below), Buyer shallnotify Seller in writing of the nature of the Material Environmental Conditionand shall furnish Seller with Buyer’s basis for the assertion of such MaterialEnvironmental Condition and data in support thereof on or before five (5) daysprior to Closing. Failure to provide notice shall constitute a waiver andrelease of any Environmental Condition (including a Material EnvironmentalCondition). In the event the Buyer has properly notified Seller of a MaterialEnvironmental Condition, Seller and Buyer shall select one of the followingoptions:

###  

#### (i)            remedy the Material EnvironmentalCondition prior to Closing or as soon thereafter as practicable; or

####  

#### (ii)           reduce the Purchase Price by anamount mutually agreed upon; or

####  

#### (iii)          exclude the affected Asset from thesale, and reduce the Purchase Price by the Allocated Value of the excludedasset; or

####  

####  

####  

#### 19

#### 

####  

#### (iv)          indemnify Buyer for the MaterialEnvironmental Condition and the Purchase Price shall not be reduced.

####  

### (b)           Asingle Environmental Condition shall be deemed “material” for the purpose ofthis Section 6.2 only if the total probable cost of remediation plus thetotal probable liability from existing claims and assessed government penaltiesexceed, in the aggregate for that Environmental Condition, the amount of TwentyFive Thousand and No/100 Dollars ($25,000.00) (“Material EnvironmentalConditions”). Provided, however, if the total value of all Material EnvironmentalConditions, in the aggregate, do not meet or exceed One Percent (1%) of thePurchase Price as defined in Section 1.3, then there shall be noadjustment of the Purchase Price or any other remedy from or obligation ofSeller that shall be available to Buyer. Provided further, in the event thetotal value of all Material Environmental Conditions, in the aggregate, meetsor exceeds the percentage of the Purchase Price set forth immediately above,then the Purchase Price shall only be adjusted to the extent the total value ofall Material Environmental Conditions, in the aggregate, exceeds the percentageof the Purchase Price specified above, and all amounts attributable to suchMaterial Environmental Conditions, in the aggregate, that are below the percentageof the Purchase Price specified above shall be borne solely by Buyer, and noadjustment to the Purchase Price or any other remedy from or obligation ofSeller shall be available to Buyer therefor.

###  

### (c)           AnyMaterial Environmental Condition which is not disclosed by Buyer to Seller nolater than five (5) days prior to Closing, shall conclusively be deemedwaived by Buyer for all purposes. Environmental Conditions that are notconsidered Material Environmental Conditions shall be the sole responsibilityof Buyer, regardless of when the condition arose, and Buyer shall indemnify andhold Seller harmless from and against any and all such Environmental Conditionsin accordance with the provisions of Section 7.1 below.

###  

### (d)           Withrespect to each Asset as to which Buyer and Seller are unable to agree upon anoption under Section 6.2(a), the Asset shall be excluded from thetransaction contemplated hereby, or if such Asset participates in a Unit(s),such Asset along with the Unit(s) in which such Asset participates shallbe excluded from the transaction contemplated hereby, and the Purchase Pricewill be reduced by the Allocated Value attributed to such Asset plus theAllocated Value attributed to the Unit(s) in which such Assetparticipates.

###  

### (e)           IfSeller does not agree with Buyer’s assertion and/or valuation of a MaterialEnvironmental Condition, then Buyer and Seller will resolve the existenceand/or value of such Material Environmental Condition pursuant to Section 9.1of this Agreement.

###  

# **ARTICLE VII**

# ** **

# **INDEMNIFICATION AND LITIGATION**

# ** **

7.1           Assumption and Indemnification.

 

### (a)           Exceptas may be otherwise specifically provided for in this Agreement, on the ClosingDate Buyer shall assume and hereby agrees to fulfill, perform, pay anddischarge

###  

###  

###  

### 20

### 

###  

### (orcause to be fulfilled, performed, paid or discharged) all of the obligationsand liabilities of Seller and its Affiliates, known or unknown, with respect tothe Assets, regardless of whether such obligations or liabilities arose priorto, on or after the Effective Time (the “Assumed Seller Obligations”),including, but not limited to:

###  

#### (i)            Any condition relating to the assetsthat contaminates soil, sediment, air, water or groundwater in a manner thatviolates or is cause for remediation under any applicable law, regulation,ordinance, rule or order, regardless of when the events occurred thatcaused such condition to exist; or

####  

#### (ii)           NORM or asbestos on the Properties,regardless of when the events occurred that caused NORM or asbestos to exist;and

####  

#### (iii)          Plugging and abandonment of wells onthe Properties, including without limitation wells which were abandoned ortemporarily abandoned prior to the Effective Date, whether by Seller or a thirdparty.

####  

### (b)           Exceptas may be otherwise specifically provided for in this Agreement, Buyer agreesto protect, defend, indemnify and hold Seller, its ultimate parent and theirAffiliates, and their respective directors, shareholders, partners, members,managers, officers and employees (“Seller Indemnified Party”) free and harmlessfrom and against any and all costs, expenses, fines, penalties, claims, losses,liabilities, demands and causes of action of every kind and character (“Damages”),including but not limited to pollution and environmental claims, arising outof, incident to, or in connection with:

###  

#### (i)            the Assumed Seller Obligations, orother obligations and liabilities assumed pursuant to this Agreement;

####  

#### (ii)           the ownership, use or operation ofthe Assets, whether before or after the Effective Date;

####  

#### (iii)          any misrepresentation or breach of anywarranty, covenant or agreement of Buyer contained in this Agreement.

####  

Provided, however, thatBuyer does not assume any obligations or liabilities under (a) and (b) aboveto the extent that they are (Y) Seller Retained Litigation, or (Z) thecontinuing responsibility of the Seller for which Seller is required toindemnify Buyer under Section 7.3.

 

**THE FOREGOING ASSUMPTIONSAND INDEMNIFICATIONS OF BUYER SHALL APPLY WHETHER OR NOT SUCH DUTIES,OBLIGATIONS OR LIABILITIES, OR SUCH CLAIMS, ACTIONS, CAUSES OF ACTION,LIABILITIES, DAMAGES, LOSSES, COSTS OR EXPENSES ARISE OUT OF (i) NEGLIGENCE(INCLUDING SOLE NEGLIGENCE, SIMPLE NEGLIGENCE, CONCURRENT NEGLIGENCE, ACTIVE ORPASSIVE NEGLIGENCE) OF ANY SELLER INDEMNIFIED PARTY, (ii) STRICTLIABILITY, OR (iii) ANY VIOLATION OF ANY LAW, RULE, REGULATION OR ORDERRELATED TO THE OWNERSHIP OR OPERATION OF THE PROPERTIES, INCLUDING APPLICABLEENVIRONMENTAL LAWS.**

 

 

 

21

----

 

7.2           Retained and Assumed Litigation  Notwithstanding the provisions of Section 7.1above, unless otherwise agreed to in writing by the parties (for example, toreflect continuing joint responsibility), Seller agrees to be responsible for,at its sole cost and expense, the actions, claims, suits, litigation, andproceedings shown on Schedule 7.2 as being retained by Seller (the “SellerRetained Litigation”). Buyer shall assume and be solely responsible and liablefor, at its sole cost and expense, the actions, claims, suits, litigation andproceedings shown on said Schedule 7.2 as being assumed by Buyer. Providedthat, in no event shall Seller have any liability or obligation to Buyer forthe outcome of any matter identified in Schedule 7.2 that would nototherwise cause a breach of Seller’s warranties and representations in Article IIof this Agreement and in the Assignment and Bill of Sale.

 

7.3           Seller Retained Liabilities  Notwithstanding the provisions of Section 7.1above, and in addition to the liabilities retained by Seller elsewhere in thisAgreement, Seller shall be responsible and indemnify, defend and hold harmlessBuyer against and from Damages, arising out of, incident to, or in connectionwith:

 

### (a)           SellerTaxes;

###  

### (b)           TheSeller Retained Litigation;

###  

### (c)           TheExcluded Assets;

###  

### (d)           Anymisrepresentation or breach of any warranty, covenant or agreement of Sellercontained in this Agreement;

###  

### (e)           Anyliabilities associated with Imbalances related to the Assets that are notexpressly assumed by Buyer in Section 14.3(d); and

###  

### (f)            Anyliabilities of Seller or any of its Affiliates with regard to the Seller Plansor otherwise relating to any present or former employees of Seller or any ofits Affiliates (“Seller Employee Liabilities”).

###  

7.4           Survival of Provisions  All representations and warranties (and anyrelated indemnity) made herein by Seller or Buyer shall be continuing and shallbe true and correct on the date hereof and as of the date of Closing with thesame force and effect as if made at that time, and all of such representationsand warranties (and any related indemnity) shall, survive Closing and thedelivery of the Assignment and Bill of Sale for a period of one (1) yearunless notice of such breach is given to the breaching party prior to suchdate, except that the representations and warranties under Sections 2.2, 2.3,2.4, 2.8, 3.1, 3.2, and 3.3 shall survive until the expiration of theapplicable statute of limitations unless notice of such breach is given to thebreaching party prior to such date, and provided, however, the representationsand warranties of Seller set forth in Section 2.11 shall terminate atClosing and shall not survive Closing, unless notice of such breach is given tothe breaching party prior to such date, and provided, however, therepresentations and warranties of Seller set forth in Section 2.11(e) shallterminate on July 1, 2008, unless notice of such breach is given to thebreaching party prior to such date.  Allother provisions contained in this Agreement shall survive the Closingindefinitely, except for any provision that by its terms terminates as of aspecific date, or is only made for a specified period.  The provisions and obligations of the partiesunder Sections 1.3(a) and 5.3, 5.4 and Article 12 (to

 

 

 

22

----

 

the extent the same are, bymutual agreement, not performed at Closing), and Article 16 shall (subjectto any limitations set forth therein) survive the Closing and delivery of theAssignment and Bill of Sale indefinitely. The provisions and obligations of the parties set forth in Articles IV,VI and VII, subject to any additional limitations otherwise provided therein,shall also survive the Closing and the delivery of the Assignment and Bill ofSale.

 

7.5           Exclusive Remedy  The sole and exclusive remedy of Buyer andSeller with respect to the Assets and the transactions contemplated herebyshall be pursuant to the express provisions of this Agreement.

 

### (a)           Withoutlimitation of the foregoing, if the Closing occurs the sole and exclusiveremedy of Buyer and Seller, for any and all (a) claims relating to anyrepresentations, warranties, covenants and agreements that are contained inthis Agreement (other than the covenants in Sections 8.2, 8.3, 8.5, 8.8, 8.9,8.10, and Articles XIV and XV) or in any certificate delivered at Closing and (b) otherclaims pursuant to or in connection with this Agreement (other than claimsrelated to the covenants in Sections 8.2, 8.3, 8.5, 8.8, 8.9, 8.10, andArticles XIV and XV) shall be any right to indemnification from such claimsthat is expressly provided in this Agreement; provided, however that suchlimitation is not intended to, and does not, limit or affect the covenants,representations and warranties provided in the Bill of Sale(s) or thelimits on liability for matters specified in Sections 8.3 and 8.5, which dutiesand liabilities are solely governed by the COMFS.

###  

### (b)           IfClosing does not occur due to breach of Buyer or Seller, Buyer and Seller agreethat the remedy for such breach shall be an action for specific performance bythe non-breaching party.  Notwithstandingthe foregoing, in the event a court of law or an arbitration panel determinesthat specific performance is not available as a remedy as a matter of law, (i) in the case of a breach by the Seller, Buyer shall have the right to recover asliquidated damages an amount equal to five percent (5%) of the Purchase Price(in addition to return of the Deposit and interest earned thereon); and (ii) inthe case of a breach by the Buyer, Seller shall have the right to recover asliquidated damages, the Deposit and interest earned thereon.  Accordingly, Buyer and Seller waive all otherlegal and equitable remedies and claims related to a breach of this Agreement resultingin a failure to close the transactions contemplated in this Agreement, exceptas provided in this Section 7.5.

###  

7.6           Limitation on Seller’s IndemnityObligations  Seller shall not beobligated to Buyer (for indemnification or otherwise) under Section 7.3(d) exceptto the extent, if any, that the aggregate of all of claims for Damages arisingunder Section 7.3(d) exceeds one percent (1%) of the Purchase Price(the “Indemnification Deductible”), and then Seller shall be liable only forall such claims for Damages in excess of the Deductible up to a maximum amountof fifteen percent (15%) of the Purchase Price (the “Indemnification Cap”).  Notwithstanding the forgoing, Buyer shall notbe entitled to indemnification under Section 7.3(d) for, and Damages shallnot include, (i) loss of profits, whether actual or consequential, orother consequential damages suffered by Buyer or its Affiliates, or anypunitive damages (other than loss of profits, consequential damages or punitivedamages suffered by third persons for which responsibility is allocated betweenthe parties), (ii) any liability, loss, cost, expense, claim, award orjudgment to the extent resulting from or increased by the actions or omissionsof any indemnified party after the Closing Date or (iii) except withrespect to claims for any Retained Seller Litigation or Seller EmployeeLiabilities, any liability, loss, cost, expense, claim, award or judgment thatdoes not individually exceed $50,000.

 

 

 

 

23

----

 

7.7           Notification ofClaim  If indemnification pursuant toSection 7.1 is sought, the party seeking indemnification (the “Indemnitee”)shall give written notice to the indemnifying party of an event giving rise tothe obligation to indemnify within ninety (90) days of the President, ChiefExecutive Officer or Chief Operating Officer of Indemnitee first having actualknowledge of such event, such notice shall describe in reasonable detail thefactual basis for such claim, and shall allow the indemnifying party to assumeand conduct the defense of the claim or action with counsel reasonablysatisfactory to the Indemnitee, and cooperate with the indemnifying party inthe defense thereof.

 

# **ARTICLE VIII**

# ** **

# **ADDITIONAL COVENANTS OF THE PARTIES**

# ** **

8.1           Operations  From the date hereof until the date set forthin the agreement between Buyer and Seller as provided in Section 8.3below, Seller will (i) continue the routine operation of the Properties inthe ordinary course of business; and (ii) operate the Properties in materialcompliance with all applicable Laws and Environmental Laws and in materialcompliance with all Leases and Contracts. During such time, except as otherwiseprovided in Section 8.3, Seller will not, without Buyer’s prior consent inconnection with the Assets:

 

### (a)           expendany funds, or make any commitments to expend funds (including entering into newagreements which would obligate Seller to expend funds), or otherwise incur anyother obligations or liabilities, other than (i) for amounts less than$50,000.00, (ii) to pay expenses or to incur liabilities in connectionwith routine operation of the Properties after the Effective Date and (iii) exceptin the event of an emergency requiring immediate action to protect life orpreserve the Properties;

###  

### (b)           exceptwhere necessary to prevent the termination of a Lease or other materialagreement governing Seller’s interest in the Properties, propose the drillingof any additional wells, or propose the deepening, plugging back or reworkingof any existing Wells, or propose the conducting of any other operations whichrequire consent under the applicable operating agreement, or propose theconducting of any other operations other than the normal operation of theexisting Wells on the Properties, or propose the abandonment of any Wells onthe Properties; provided, however, it is expressly agreed that Seller shallnever have any liability to Buyer with respect to operation of a Propertygreater than that which it might have as the operator to a non-operator underthe applicable operating agreement (or in the absence of such an agreement,under the AAPL 610 (1989 Revision) Form Operating Agreement), IT BEINGRECOGNIZED THAT, UNDER SUCH AGREEMENTS AND SUCH FORM, THE OPERATOR IS NOTRESPONSIBLE FOR ITS OWN NEGLIGENCE, AND HAS NO RESPONSIBILITY OTHER THAN FORGROSS NEGLIGENCE OR WILLFUL MISCONDUCT;

###  

### (c)           sell,transfer or abandon any portion of the Assets other than items of materials,supplies, machinery, equipment, improvements or other personal property orfixtures

###  

###  

###  

### 24

### 

###  

### forminga part of the Assets (and then only if the same is replaced with an item ofsubstantially equal suitability, free of liens and security interests, whichreplacement item will then, for the purposes of this Agreement, become part ofthe Assets); or

###  

### (d)           release(or permit to terminate), or modify or reduce its rights under, any oil, gas ormineral lease forming a part of the Properties, or any other Lease or Contract,or enter into any new agreements related to the Assets, or modify any existingproduction sales contracts or enter into any new production sales contracts,except contracts terminable by Seller with notice of sixty (60) days or lesswithout monetary penalty.

###  

Buyer shall assume all riskand realize all benefits of any such change in condition of the Assets from theEffective Date to Closing, including but not limited to change in producedvolumes, equipment failure, and well completions, except to the extent anychange in condition is directly caused by the gross negligence or willfulmisconduct of Seller or is determined to be a Casualty Loss as described in Section 8.4below.

 

8.2           Successor Operator  While Buyer may represent that it desires tosucceed Seller as operator of the Assets or portions thereof which Seller maypresently operate, Buyer acknowledges and agrees that Seller cannot and doesnot covenant or warrant that Buyer shall become successor operator of same,since such Assets are covered by agreements which control the appointment orelection of a successor operator. However, Seller will assist Buyer or itsaffiliate, Linn Operating, Inc., in its efforts to succeed Seller asoperator of any Wells. Buyer or its affiliate, Linn Operating, Inc., shallpromptly, following Closing, file all appropriate forms, pit permit transfersand declarations or bonds with federal and state agencies relative to itsassumption of operatorship. For all Seller-Operated Assets, Seller shallexecute and deliver to Buyer or its affiliate, Linn Operating, Inc., andBuyer or its affiliate, Linn Operating, Inc., shall promptly file theappropriate forms with the applicable regulatory agency transferringoperatorship of such Assets to Buyer or its affiliate, Linn Operating, Inc.

 

8.3           Contract Operating, Marketing andFinancial Services Agreement  Selleragrees to continue to provide Buyer those services listed in the ContractOperating, Marketing and Financial Services Agreement (COMFS) that is attachedhereto as Exhibit E for the term as set forth in the COMFS.

 

8.4           Casualty Loss  If prior to the Closing Date any facility orequipment included within the Assets is damaged or destroyed by fire, flood,storm or other casualty (hereinafter called “Casualty Loss”), Seller shallimmediately notify Buyer and the Purchase Price shall be reduced by an amountestimated by Seller and as agreed to by Buyer, to be equal to the repair orreplacement costs of that Asset. In no event shall the reduction of PurchasePrice exceed the Allocated Value of such Asset. Any insurance proceeds payableto Seller with respect to the Casualty Loss shall be retained by Seller. In theevent Seller and Buyer are unable to agree upon the value of the estimateddamage, such value shall be determined pursuant to Section 9.1.

 

8.5           Right to Market Production  From and after the Effective Date andcontinuing during the term specified in the COMFS, Seller will, uponconsultation with Buyer, market the oil, gas and liquid hydrocarbon productionfrom the Assets as well as any pooled, communitized or unitized acreage derivedby virtue of Seller’s ownership of the Assets. This includes the right

 

 

 

25

----

 

to make any and allnecessary scheduling and/or nominations arrangements for such production toimplement marketing arrangements. The revenues realized from the sale ofproduction attributable to the Assets on and after the Effective Date shall behandled in accordance with Section 14.1 of this Agreement.

 

8.6           Hart-Scott-Rodino Act  As soon as practicable, but no later thantwenty (20) business days after the execution hereof, Seller and Buyer shalleach prepare and submit any necessary filings in connection with thetransactions contemplated by this Agreement under the Hart-Scott-Rodino Act (“HSRAct”) and the rules and regulations promulgated thereunder. Each partyshall request expedited treatment of such filing by the Federal TradeCommission, shall promptly make any appropriate or necessary subsequent orsupplemental filings, and shall furnish to the other party copies of allfilings made under the HSR Act at the same time they are filed with thegovernment.

 

8.7           Financial Statements.

 

### (a)           Sellershall use its commercially reasonable efforts to assist Buyer in preparing, assoon as practicable after the date of this Agreement, and at the sole cost andexpense of Buyer, statements of revenues and direct operating expenses for thebusiness and operations conducted by Seller with respect to the Assets (the “E&PBusiness”) for up to the most recent two (2) fiscal years ending prior tothe Closing Date and all notes and schedules related thereto (including afootnote satisfying the requirements of FAS 69) in accordance with the rules andregulations adopted by the Securities and Exchange Commission (the “SEC”), butonly to the extent that such statements and notes will be required of Buyer orany of its Affiliates in connection with any required Form 8-K filing withthe SEC pursuant to the Securities and Exchange Act of 1934 (the “Exchange Act”)related to the transactions contemplated by this Agreement, together with anyquarterly or interim period statement of revenues and direct operating expenses(in accordance with the rules and regulations adopted by the SEC) requiredin connection with such Form 8-K filing (collectively, the “Statements ofRevenues and Expenses”).  If requested byKPMG, Buyer’s external auditor (“Auditor”), Seller shall execute and deliver toAuditor such representation letters, in form and substance customary forrepresentation letters provided to external audit firms by management of thecompany whose financial statements are the subject of an audit or are thesubject of a review pursuant to Statement of Auditing Standards 100 (InterimFinancial Information), as may be reasonably requested by Auditor, with respectto the Statement of Revenue and Expenses, provided, however, thatBuyer shall provide customary indemnity for any officer of any Seller executingand delivering such representation letters to Auditor.  If requested by Auditor, Buyer shall executeand deliver to Auditor such representation letters, in form and substancecustomary for representation letters provided to external audit firms bymanagement of the company whose financial statements are the subject of anaudit or are the subject of a review pursuant to Statement of AuditingStandards 100 (Interim Financial Information), as may be reasonablyrequested by Auditor, with respect to the Statement of Revenue andExpenses.  Seller will provide suitableelectronic detail in the form of lease operating statements by propertyadequately supporting all statements provided.

###  

### (b)           Promptlyafter the date of this Agreement, Seller shall request Auditor, afterdiscussing specifications with Buyer, to (i) perform an audit of theStatements of Revenues

###  

###  

###  

### 26

### 

###  

### andExpenses (other than the quarterly or interim statements for 2007) on Buyer’sbehalf and to issue its opinion with respect to such Statements of Revenues andExpenses for the period(s) specified by Buyer (such Statements of Revenuesand Expenses and related audit opinions being hereinafter referred to as the “AuditedStatements of Revenue and Expenses”) and (ii) provide its written consentfor the use of its audit reports with respect to Statements of Revenues andExpenses in any registration statement, report or other document filed by LinnEnergy, LLC or any of its Affiliates with the SEC.  Buyer shall bear all fees charged by Auditorpursuant to such engagement.  Both Sellerand Buyer shall sign an engagement letter for Auditor and provide suchinformation as may be reasonably requested from time to time by Auditor.  Seller shall reasonably cooperate in thecompletion of such audit and delivery of the Audited Statements of Revenue andExpenses to Buyer or any of its Affiliates as soon as reasonably practicable.

###  

### (c)           Sellershall execute and deliver to Auditor representation letters (in form andsubstance customary for representation letters provided by management toexternal audit firms) related to the audited financial statements contemplatedin Section 8.7(a) and (b) as may be reasonably required byAuditor; provided, however, that Buyer shall provide customaryindemnity for any officer of any Seller executing and delivering such representationletters to Auditor.

###  

### (d)           Buyershall promptly reimburse Seller and its Affiliates for all internal andexternal expenses incurred by Seller and its Affiliates pursuant to this Section 8.7.

###  

### (e)           Promptlyafter the date of this Agreement, but no later than five (5) Business Daysprior to Closing, Seller, to the extent Seller has such information in itspossession, will provide Buyer with the following information for preparationof the Audited Statements of Revenue and Expenses:  (i) unaudited direct revenues andexpenses, (ii) data supporting the unaudited direct revenues and expenses,and (iii) reserve data (collectively the “Financial Data”).

###  

8.8           Transfer Taxes  The Buyer shall be responsible for thepayment of all state and local transfer, sales, use, stamp, registration orother similar Taxes (the “Transfer Taxes”) resulting from the transactionscontemplated by this Agreement. The Buyer and the Seller shall cooperate ingood faith to minimize, to the extent permissible under applicable law, the amountof any such Transfer Taxes. If at any time after the Closing, Seller or anyAffiliate shall become liable for Transfer Taxes for which Buyer is responsibleunder this paragraph, Buyer shall promptly reimburse Seller or such Affiliatefor such Taxes and related costs, including any penalties and interest thereonassessed by any Taxing Authority relating thereto. Buyer shall defend,indemnify and hold Seller harmless with respect to the payment of such TransferTaxes including any interest or penalties assessed thereon.

 

8.9           Other Taxes  All other taxes on the ownership or operationof the Assets, including real estate taxes other than transfer taxes, personalproperty taxes, ad valorem taxes and severance or production taxes (butexcluding income and franchise taxes), which are imposed for or with respect toperiods or portions of periods prior to the Effective Date shall be the burdenof Seller and all such taxes imposed for or with respect to periods or portionsof periods after the Effective Date shall be the burden of Buyer. Ad valoremtaxes shall be prorated between the parties as of the Effective Date. Any partywhich pays any such taxes which are the responsibility of the other party shallbe entitled to prompt reimbursement upon issuance to the responsible party ofevidence of such payment.

 

 

 

27

----

 

8.10         Cooperation  Buyer and Seller shall cooperate fully as andto the extent reasonably requested by the other party, in connection with thefiling of Tax Returns and any audit, litigation or other proceeding (each a “TaxProceeding”) with respect to Taxes imposed on or with respect to the Assets.Buyer and Seller agree to file such reports or returns as are reasonablyrequested by the other party or are required under state, local, foreign orother applicable law in order to reduce or eliminate any Taxes attributable tothe transactions contemplated by this Agreement.

 

8.11         Updated Exhibits and Schedules  Each Party shall, prior to Closing, notifythe other party in writing of any information that, if existing or known to iton the date of this Agreement, would have been required to have been includedin one or more Exhibits or Schedules to this Agreement and such informationshall be added to the Exhibits and Schedules, which shall be consideredupdated. For purposes of determining the satisfaction of any of the conditionsto the obligations of Buyer or Seller in Article XI and the liability ofBuyer and Seller following Closing for breaches of its representations,warranties, and covenants under this Agreement, the Exhibits and Schedules tothis Agreement shall be deemed to include only the information containedtherein on the date of this Agreement; provided, however, that, if, at Closing,Buyer has knowledge that any representation or warranty of Seller contained inthis Agreement is untrue or will be untrue in any respect as of the ClosingDate and Buyer fails to notify Seller prior to Closing, such representation orwarranty will be deemed waived by Buyer as a condition to close, and Buyerhereby waives any claim for breach of a representation or warranty or forindemnity related thereto.

 

8.12         Notification of Breaches.

 

### Untilthe Closing,

###  

### (a)           Buyershall notify Seller promptly after Buyer obtains actual knowledge that anyrepresentation or warranty of Seller contained in this Agreement is untrue inany material respect or will be untrue in any material respect as of theClosing Date or that any covenant or agreement to be performed or observed bySeller prior to or on the Closing Date has not been so performed or observed inany material respect; and

###  

### (b)           Sellershall notify Buyer promptly after Seller obtains actual knowledge that anyrepresentation or warranty of Seller contained in this Agreement is untrue inany material respect or will be untrue in any material respect as of theClosing Date or that any covenant or agreement to be performed or observed byBuyer prior to or on the Closing Date has not been so performed or observed inany material respect.

###  

If any of Buyer’s or Seller’srepresentations and warranties is untrue or shall become untrue in any materialrespect between the date of execution of this Agreement and the Closing Date,or if any of Buyer’s or Seller’s covenants or agreements to be performed orobserved prior to or on the Closing Date shall not have been so performed orobserved in any material respect and such breach of representation, warranty,covenant, or agreement shall (if curable) be cured by the Closing (or, if theClosing does not occur, by the date set forth in Section 13.1(f)), thensuch breach shall be considered not to have occurred for all purposes of thisAgreement.

 

 

 

28

----

 

# **ARTICLE IX**

# ** **

# **DISPUTE RESOLUTION**

# ** **

9.1           Arbitration.

 

### (a)           Anyand all disputes or claims by either party arising from or related to thisAgreement (whether such claims sound in contract, tort, or otherwise) thatcannot be amicably settled, shall be determined solely and exclusively byarbitration in accordance with the Federal Arbitration Act and using the rules ofthe American Arbitration Association or any successor thereof when not inconflict with such Act.

###  

### (b)           Eachparty shall select one impartial arbitrator, and the two so designated shallselect a third impartial arbitrator. If either party shall fail to designate anarbitrator within fourteen (14) days after arbitration is requested, or if thetwo arbitrators shall fail to select a third arbitrator within thirty (30) daysafter arbitration is requested, then an arbitrator shall be selected by theSenior U.S. District Judge for the Northern District of Texas. Judgment upon anaward of the majority of the arbitrators shall be binding. In no event, may thearbitrators award any damages prohibited by this Agreement.

###  

### (c)           Discoveryshall be made pursuant to the Federal Rules of Civil Procedure andcompleted within forty five (45) days of selection of the third arbitrator.Final hearing on the matter shall be had within sixty (60) days of theselection of the third arbitrator and a final decision (which may include theaward of attorney’s fees and costs) with a written opinion stating the reasonstherefor shall be rendered within seventy five (75) days of said date.

###  

### (d)           Thearbitration process shall be kept confidential and such conduct, statements,promises, offers, views and opinions shall not be discoverable or admissible inany legal proceeding for any purpose, except to the extent reasonably necessaryto enforce the final decision of the arbitrators.

###  

9.2           Waiver of Certain Damages  EACH OF THE PARTIES HEREBY WAIVES, AND AGREESNOT TO SEEK, ANY CONSEQUENTIAL, SPECIAL, INDIRECT, EXEMPLARY OR PUNITIVEDAMAGES WITH RESPECT TO ANY CLAIM OR CONTROVERSY ARISING OUT OF OR RELATING TOTHIS AGREEMENT OR THE BREACH THEREOF (other than loss of profits, consequentialdamages or punitive damages suffered by third persons for which responsibilityis allocated between the parties). Notwithstanding the foregoing, neither partyhereto waives or shall be deemed to have otherwise waived any other rights,remedies or causes of action it may have under the provisions of thisAgreement, or otherwise.

 

 

 

 

29

----

# ** **

# **ARTICLEX**

# ** **

# **PROCEEDS,ROYALTY OBLIGATIONS, EXPENSES AND TAXES**

# ** **

10.1                           Accounting forProduction and Proceeds of Production  At Closing, ownership of all production fromthe Assets shall pass from Seller to Buyer as of the Effective Date; however,Seller shall retain ownership and be entitled to all proceeds from the sale ofany oil above the pipeline connections in tanks attributable to the Assets asof the Effective Date. If Seller should at any time subsequent to the ClosingDate receive from any purchaser of production any proceeds attributable to anysale of production from the Assets occurring after the Effective Date, Sellershall remit all such proceeds to Buyer in accordance with Section 14.1.Similarly, if Buyer should at any time after the Closing Date receive anyproceeds attributable to any such sale occurring prior to the Effective Date,Buyer shall promptly remit the same to Seller.

 

10.2                           RoyaltyObligations; Expenses Seller shall be responsible for the payment of all royalty obligations,operating expenses and capital expenses attributable to Seller’s interest inthe Assets prior to the Effective Date. Buyer shall be responsible for thepayment of all royalty obligations, operating expenses and capital expensesattributable to Buyer’s interest in the Assets on and after the Effective Date.Any party which pays any such royalties, operating expenses, or capitalexpenditures which are the responsibility of the other shall be entitled toprompt reimbursement upon issuance to the responsible party of evidence of suchpayment.

 

10.3                           Joint BillingAudits, Credits and Advances  Seller shall be responsible for the conductand settlement of all joint billing audits which relate to accounting periodsprior to the Effective Date. Buyer shall be responsible for the conduct andsettlement of all joint billing audits which relate to accounting periods afterthe Effective Date. Any credits or advances received by Buyer after theEffective Date attributable to expenses paid prior to the Effective Date shallbe reimbursed to Seller by Buyer. Any unapplied credits or advances received bySeller after the Effective Date attributable to expenses paid after theEffective Date shall be reimbursed to Buyer by Seller. The parties agree toprovide reasonable access to records in their possession and control duringnormal business hours for the purpose of conducting audits and to reasonablycooperate with such audit efforts; provided, however, that neither party shallhave the authority to extend the period for conducting any audit that affectsthe other parties period of ownership.

 

10.4                           Payments onBehalf of Others  In the eventSeller makes payments (including but not limited to payments of Taxes) onbehalf of royalty owners or joint interest owners after the Effective Date butprior to the Closing Date, Buyer shall reimburse Seller for all such paymentsin accordance with Section 14.1 and Buyer shall assume the risk ofcollection of the amount of any such payments from the appropriate party.

 

10.5                           Filing of TaxReturns  Buyer shall prepare or cause tobe prepared all Tax Returns with respect to the Assets required to be filedafter the Closing Date that relate to periods beginning prior to the ClosingDate and ending after the Closing Date. Buyer will cause such Tax Returns to be timely filed and will providecopies to Seller. Not later than five (5) days prior to the due date forpayment of Taxes with respect to any such Tax Return, Seller shall pay to Buyerthe amount of any Taxes that Seller is responsible for under Section 8.9with respect to 

 

30

----

 

such Tax Return.  Seller shall prepare or cause to be preparedall Tax Returns with respect to the Assets required to be filed before theClosing Date that relate to periods beginning prior to the Closing Date andcovering any period after the Effective Date. Seller will cause such Tax Returns to be timely filed and will providecopies to Buyer.  The parties will beresponsible for any Taxes reported on such Tax Returns in accordance with theprovisions of Section 8.9.

 

10.6                           Holdco and Subco Formation andAssignment.

 

### (a)           Priorto Closing, Seller shall form a single member subsidiary Delaware limitedliability company (“Holdco”) and a single member subsidiary Delaware limited liabilitycompany (“Subco”), both of which subsidiaries shall be disregarded entities forfederal tax purposes. Prior to Closing (which may be on the day of Closing),Seller shall assign and transfer to Subco as a capital contribution all theAssets. Seller will cause its membership interests in Subco to be contributedto Holdco.

###  

### (b)           Atthe Closing, in lieu of conveying the Assets to Buyer, Seller shall assign andtransfer to Buyer at Closing all the outstanding membership interests in Holdco(the “Holdco Interest”).

###  

### (c)           Theform of documents to effect the formation of Holdco and Subco shall be providedby Buyer and shall be reasonably acceptable to Seller.

###  

### (d)           Ator prior to the Closing, Seller and Buyer shall enter into any amendment ofthis Agreement necessary to reflect the provisions of this Section 10.6,including changes from a sale of Assets to a sale of the Holdco Interest.

###  

### (e)           Buyershall promptly reimburse Seller for, and indemnify, defend and hold harmlessSeller, its General Partners and its Affiliates from and against, any and allclaims, liabilities, losses, costs, expenses, and administrative fees incurredor suffered by Seller, its General Partners and its Affiliates caused by orarising out of or relating to the analysis, structuring and preparation ofdocuments for the matters described in this Section 10.6, the formation ofHoldco and Subco, the assignment of the Assets to Subco and Holdco, and theassignment of Holdco Interest, including Taxes and any loss of long-termcapital gains treatment, if any, (including any fines, penalty or otherliability arising from the assignment of the Assets to Subco and Holdco andtransfer of the Holdco Interest or from failure to withhold and remit any Taxrelated to such assignments and transfer) which would not have been incurred bySeller, its General Partners or its Affiliates if the Seller and Buyer hadengaged in a sale of the Assets as provided in this Agreement, in each case (i) whetherincurred or suffered before or after the Closing Date and (ii) regardlessof whether the Closing occurs.

###  

### (f)            Buyeragrees that any failure to have record title transferred from Seller to Subcoor Holdco shall not constitute a Title Defect or breach of any representationor warranty or obligation under this Agreement provided that the appropriateconveyances as described in Section 10.6(a) have been executed anddelivered to Subco and Holdco prior to the Closing. In addition, Buyer agreesthat any failure to have permits, licenses, or other appurtenances, or anyContracts or Records, in the name of Subco or Holdco instead of Seller shallnot constitute a breach of any representation or warranty or obligation underthis Agreement. Buyer agrees after 

###  

### 31

### 

###  

### Closingto make any additional filings required with any Governmental Authority withrespect to the transactions contemplated in this Section 10.6.

###  

### (g)           Notwithstandinganything to the contrary contained herein, Seller shall not effect thetransactions described in this Section 10.6 unless and until Buyerdelivers to Seller (i) a written request to effect the transactiondescribed in this Section 10.6 no less than ten (10) days prior tothe Closing and (ii) a written confirmation agreeing that all Buyer’sconditions to Closing set forth in Article XI (other than those conditionsrelated to delivery of documents by Seller to Buyer at Closing) have beensatisfied or irrevocably waived by Buyer.

###  

### (h)           Notwithstandinganything to the contrary contained herein, Buyer shall pay to Seller anyexpenses incurred by Seller to effect the transactions described in this Section 10.6.

###  

### (i)            Notwithstandinganything to the contrary contained herein, none of Seller’s representations andwarranties in Section 2.8 shall apply to Subco or Holdco.

###  

# **ARTICLE XI**

# ** **

# **CONDITIONS OF CLOSING**

# ** **

Buyer’s and Seller’sobligation to consummate the transactions provided for herein is subject to thesatisfaction or waiver by the other party of the following conditions:

 

11.1                           Representations.

 

### (a)           Therepresentations of Seller contained in Article II hereof shall be true andcorrect in all material respects and on the date of Closing as though made onand as of that date.

###  

### (b)           Therepresentations of Buyer contained in Article III hereof shall be true andcorrect in all material respects and on the date of Closing as though made onand as of that date

###  

11.2                           Performance.  Buyer and Seller shall have performed in allmaterial respects the obligations, covenants and agreements hereunder to beperformed by them at or prior to Closing. Seller shall have tendered to Buyerall documents contemplated by Section 12.2.

 

11.3                           PendingMatters.  Except asdisclosed herein, no suit, action or other proceeding by a third party or aGovernmental Authority shall be pending or threatened which seeks substantialdamages from Buyer or Seller in connection with the Assets, or seeks torestrain, enjoin or otherwise prohibit, the consummation of the transactionscontemplated by this Agreement. The Closing shall not violate any order ordecree of any Governmental Authority having competent jurisdiction.

 

11.4                           Expiration ofHSR Waiting Period.  Ifapplicable, the waiting period under the HSR Act shall have expired or beenterminated.

 

32

----

 

11.5                           Evidence of Bonding.  Buyershall deliver to Seller:

 

### (a)           Acopy of certificate from Secretary of State evidencing Buyer has the authorityto do business with the state(s) where the Assets are located; and

###  

### (b)           Eithera copy of Buyer’s existing blanket plugging or performance bond, or evidence ofBuyer’s compliance with applicable state or federal rules and regulations,if any, filed with the applicable conservation or regulatory agency.

###  

11.6                           Financial Statements

 

### (a)           Buyershall have received the Financial Data pursuant to Section 8.7(e); and

###  

### (b)           Buyerand KPMG shall be satisfied that they have the Financial Data required tocomplete the Audited Statements of Revenues and Expenses.

###  

# **ARTICLE XII**

# ** **

# **CLOSING**

# ** **

12.1                           Date and Placeof Closing  Consummationof the purchase and sale of the Assets as contemplated by this Agreement (the “Closing”)shall, unless otherwise agreed to in writing by Buyer and Seller, take place atthe offices of the Seller, at 10:00 a.m., local time, on January 31,2008 (the “Target Closing Date”), or if all conditions in Article XI to besatisfied prior to Closing have not yet been satisfied or waived, as soonthereafter as such conditions have been satisfied or waived, subject to thetermination provisions of Article XIII. The date on which the Closing occurs is referred to herein as the “ClosingDate.”

 

12.2                           ClosingObligations  At theClosing (except in the case of Section 12.2(l), which shall be deliveredfive (5) days prior to Closing) the following events shall occur, eachbeing a condition precedent to the others and each being deemed to haveoccurred simultaneously with the others:

 

### (a)           Sellershall execute, acknowledge and deliver to Buyer an Assignment and Bill of Saleof the Assets and such other instruments of transfer and assignment necessaryto convey to Buyer the Assets in the manner contemplated by this Agreement.

###  

### (b)           Sellershall execute and deliver assignments in form required by federal, state ortribal agencies for the assignment of any federal, state or tribal Propertiesin sufficient duplicate originals to allow recording in all appropriate offices

###  

### (c)           Sellershall deliver to Buyer exclusive possession of the Assets and Buyer shall takepossession of the Assets, as of the Closing Date.

###  

### (d)           Buyershall deliver to Seller the Purchase Price, as adjusted in accordance with Section 1.4hereof, including applicable Transfer Taxes, if any, by wire transfer to anaccount designated by Seller.

###  

### 33

### 

###  

### (e)           Sellerand Buyer shall execute, acknowledge, and deliver transfer orders or letters inlieu thereof directing all purchasers of production to make payments ofproceeds attributable to production from the Assets to Buyer.

###  

### (f)            Sellerand Buyer shall execute, acknowledge and deliver such other instruments andtake such other action as may be reasonably necessary to carry out theirrespective obligations under this Agreement.

###  

### (g)           Sellerand Buyer shall execute and deliver the Closing Statement that shall set forththe Purchase Price, any adjustment to the Purchase Price in accordance with Section 1.4hereof, and the calculations used to determine such adjustment, as set forth onExhibit F.

###  

### (h)           Sellerand Buyer shall each execute and deliver a certificate duly executed by theirrespective authorized corporate officers or partners, as applicable, dated asof Closing, certifying on behalf of Seller and Buyer that the conditions setforth in Article XI that apply to each have been fulfilled.

###  

### (i)            Sellershall deliver a certificate of non-foreign status of Seller that meets therequirements of Treasury Regulation Section 1.1445-2(b)(2).

###  

### (j)            Sellershall deliver evidence of the consent of the General Partners to thetransactions contemplated by this Agreement.

###  

### (k)           Sellershall deliver evidence of the authority of the Person(s) executed thisAgreement and the Assignment and Bill of Sale to execute such agreements onbehalf of Seller.

###  

### (l)            Sellershall deliver the Financial Data pursuant to Section 8.7(e) unlessBuyer has waived the condition in Section 11.6.

###  

12.3                           Files  Seller shall, at or within ten (10) daysClosing, provide Buyer with either paper or electronic copies or originals, ofthe Records, Leases, Contracts, Surface Contracts and amendments andcorrespondence related thereto. Seller shall retain at its option copies of alloriginal files and shall have no obligation to furnish Buyer any data orinformation that Seller cannot provide Buyer because of third-partyrestrictions on Seller or that does not directly pertain to the Assets.

 

# **ARTICLE XIII**

# ** **

# **TERMINATION OF AGREEMENT**

# ** **

13.1                           Grounds forTermination  ThisAgreement may be terminated at any time on or prior to the Closing Date by:

 

### (a)           Buyeror Seller, if consummation of the transactions contemplated hereby wouldviolate any non-appealable final order by any Governmental Authority havingcompetent jurisdiction;

###  

### 34

### 

###  

### (b)           Buyeror Seller, if after the date hereof, any legislation which would have theeffect of prohibiting or making unlawful the acquisition or ownership of theAssets by Buyer or the conveyance or sale of the Assets by Seller, has beenenacted into law;

###  

### (c)           Buyeror Seller, if any of the representations or warranties of the other partycontained in Article II or Article III above (as applicable) are notmaterially true and correct on and as of the Closing Date;

###  

### (d)           Buyeror Seller, if the Material Title Defect amount exceeds ten percent (10%) of thePurchase Price;

###  

### (e)           Buyeror Seller, if the Material Environmental Condition amount exceeds ten percent(10%) of the Purchase Price; or

###  

### (f)            Buyeror Seller, if Closing has not occurred on or before February 29, 2008;

###  

provided, however, that noParty shall be entitled to terminate this Agreement under Section 13.1(f) ifthe Closing has failed to occur because such Party negligently or willfullyfailed to perform or observe in any material respect its covenants andagreements hereunder.

 

13.2                           Effect of Termination.

 

### (a)           Ifthis Agreement is terminated pursuant to Section 13.1, this agreement willbecome void and will be of no further force or effect (except for theprovisions of Sections 2.6, 3.8, 5.4, 10.6(e), 13.2, 14.5, Article IX,Article XVI (but excluding Section 16.2) and of the ConfidentialityAgreement, all of which shall continue to be in full force and effect).  In the event this Agreement terminates under Section 13.1(f) andany party has willfully or negligently failed to perform or observe in anymaterial respect any of its agreements or covenants contained herein that areto be performed or observed at or prior to Closing, then the other Party shallonly be entitled to all remedies available as provided in Section 7.5.

###  

### (b)           IfClosing has not occurred by February 29, 2008, due to Buyer’s actions orinactions (including Buyer’s failure to perform pursuant to Section 12.2above) or should Buyer default under this Agreement in any material way,including, but not limited to, Buyer’s absence at the designated time forClosing, Seller shall have the right to terminate this Agreement and retain thePerformance Guarantee Deposit set forth in Section 1.3 above including anyaccrued interest, as liquidated damages and in addition such remedies asprovided in Section 7.5. Furthermore, Seller shall be free immediately toenjoy all rights of ownership of the Assets and to sell, transfer, encumber orotherwise dispose of the Assets to any party without any restriction under thisAgreement and Buyer shall be liable for all damages if it attempts to interferein any way with such enjoyment or action by Seller.

 

35

----

 

# ** **

# **ARTICLE XIV**

# ** **

# **CONTINUING OBLIGATIONS**

# ** **

14.1                           Post-ClosingSettlement  Within onehundred twenty (120) days after the Closing, a final settlement statement shallbe prepared by Seller and submitted to Buyer showing income and expenses forthe Assets between the Effective Date and Closing Date and other charges andcredits provided in this Agreement. However, neither party to this Agreementshall be absolved from liability should such accounting and adjustment not becompleted within said one hundred twenty (120) day period.

 

### (a)           Sellershall be credited with:

###  

#### (i)            The value of all merchantable oilabove the pipeline connections in tanks at the Effective Date based on eitherthe operator’s gauge report, if available, or regulatory reports furnished bythe operator that is credited to Seller’s net revenue interest in the Assets,such value to be based on the net contract price in effect as of the EffectiveDate (or the market value at the wellhead, if there is no contract price ineffect as of such time), less any taxes withheld properly by the purchaser ofsuch.

####  

#### (ii)           The amount of all costs and expensespaid or incurred by Seller, including, without limitation, royalties, rentalsand other charges, ad valorem, and other taxes based upon or measured by theownership of property or the production of hydrocarbons or the receipt ofproceeds therefrom, expenses paid or incurred under applicable operatingagreements and, in the absence of an operating agreement, expenses of the sortcustomarily billed under such agreements, not including income taxes orfranchise taxes paid by Seller, in connection with the operation of the Assetssubsequent to the Effective Date.

####  

#### (iii)          An amount equal to all prepaidexpenses attributable to the Assets that are paid or incurred by or on behalfof Seller prior to the Closing Date and that are, in accordance with generallyaccepted accounting principles, attributable to the period after the EffectiveDate, including, without limitation, prepaid ad valorem, property, production,severance, and similar taxes (but not including income taxes) based upon ormeasured by the ownership of property or the production of hydrocarbons or thereceipt of proceeds therefrom. Any refund of such taxes attributable to theperiod before the Effective Date received by Buyer shall be credited to Seller.

####  

#### (iv)          The amount of any advances paid bySeller to, and held by, the operator of any property (exclusive of Seller) as aworking fund pursuant to the applicable joint operating agreements.

####  

### (b)           Buyershall be credited with:

###  

#### (i)            Proceeds received by Seller thatare, in accordance with generally accepted accounting principles, attributableto the Assets for the period of time after the Effective Date.

####  

#### (ii)           The amount of all costs and expensespaid by Buyer, including, 

####  

#### 36

#### 

####  

#### without limitation, royalties, rentals andother charges, ad valorem, property, production, excise, severance, and similartaxes based upon or measured by the ownership of property or the production ofhydrocarbons or the receipt of proceeds therefrom, expenses paid underapplicable operating agreements and, in the absence of an operating agreement,expenses of the sort customarily billed under such agreements, not includingincome taxes or franchise taxes paid by Buyer, in connection with the operationof the Assets prior to the Effective Date. Any refund of such taxes attributable to the period  after the Effective Date received by Sellershall be credited to Buyer.

####  

#### (iii)          Any unpaid amount attributable to anyreduction under Section 8.4 for a Casualty Loss which occurs subsequent tothe Effective Date and prior to the Closing Date.

####  

#### (iv)          All amounts held in suspense. Buyeragrees to indemnify, defend and hold Seller harmless from, and assume fullresponsibility for, the proper distribution of all suspense amounts deliveredto Buyer by Seller.

####  

#### (v)           The amount of any advances paid toSeller as Operator and held by Seller as Operator as a working fund pursuant tothe applicable joint operating agreements.

####  

### (c)           Inaddition to the matters mentioned above, the final settlement statement shallinclude any other debits and credits, either cash or accrued, but excludingincome and franchise taxes, which under generally accepted accountingprinciples would be attributable to the transfer of ownership of the Assets onthe Effective Date.

###  

### (d)           Buyershall have the right for a period of sixty (60) days from the date of the finalsettlement statement in which to audit the matters covered thereby and respondwith objections and proposed corrections to the final settlement statement.

###  

### (e)           Withinthirty (30) days after Seller’s receipt of Buyer’s modifications to the finalsettlement statement, Seller and Buyer may undertake to agree with respect tothe adjustments or payments and the amount due from Buyer or Seller, as thecase may be, shall be submitted to the other party. The final settlementstatement shall be deemed conclusive and not subject to further audit by eitherparty.

###  

### (f)            Inthe event Buyer and Seller are unable to mutually agree upon the amount of thesettlement statement, the dispute shall be resolved pursuant to Section 9.1above.

###  

14.2                           FurtherAssurances  AfterClosing, the parties agree to execute and deliver to each other all suchinstruments, notices, division or transfer orders, and other documents, and todo all such other acts not inconsistent with this Agreement as may reasonablybe necessary or advisable to carry out their obligations under thisAgreement.  Without limitation of theforgoing, but not as a representation or warranty, the Parties agree thatSeller intends to convey to Buyer, and Buyer intends to purchase, subject tothe terms and conditions of this Agreement, all mineral interests related tothe leases, units, wells and other property described in the reserve reportprepared by Albrecht & Associates, Inc. that was provided in theSeller’s data room.  To the extent Exhibit Aattached to this Agreement at the time of execution fails to describe all suchmineral interests, Seller and Buyer agree to revise Exhibit A to includeall such mineral interests 

 

37

----

 

that Seller owns (butexcluding fee surface acreage without minerals that do not relate to theoperation of the Properties as currently operated by Seller).

 

14.3                           Gas Imbalances  Seller and Buyer acknowledge and agree to thefollowing regarding possible gas imbalances on any of the Assets transferred bythis Agreement:

 

### (a)           GasBalance Status: Schedule 2.13 sets forth any Imbalances pertaining to theAssets.

###  

### (b)           GasUnderproduction: In the event Seller is under-produced as to any well(s) locatedon the Assets, Buyer agrees not to hold Seller liable for such underproduction,subject to Seller’s representation in Section 2.13.  Seller, however, agrees to assign to Buyerall of its rights to make up such underproduction.

###  

### (c)           GasOverproduction: In the event Seller is overproduced as to any well(s) locatedon the Assets, Buyer acknowledges and agrees that its share of gas from anysuch overproduced well(s) on the Assets may at some point be curtailed byunderproduced working interest owners. Seller shall not be liable to Buyer inthe event such curtailment occurs, subject to Seller’s representation in Section 2.13.

###  

### (d)           Sellerand Buyer agree that Buyer will assume the liability for the volumes ofImbalances shown on Schedule 2.13.

###  

### (e)           Theprovisions of this Section shall survive Closing.

###  

14.4                           Recording  As soon as practicable after Closing, Buyershall, at its own cost, (i) record the Assignment(s) and Bill(s) ofSale in the appropriate office of the state and county in which the landscovered by the Assignment(s) and Bill(s) of Sale are located, (ii) obtainthe approval of any federal, Indian tribal or state government agencies to the assignmentof the Assets, and (iii) file any state, federal or Indian tribal oil andgas leases in the appropriate governmental offices on a form required and incompliance with the applicable rules of the applicable governmentagencies. Buyer shall supply Seller with a true and accurate photocopy of allthe recorded and filed assignments within a reasonable period of time aftertheir recording and filing. Documentary tax stamps, if applicable, shall be theresponsibility of Seller.

 

14.5                           Confidentiality  In the event of the termination of thisAgreement, Seller and Buyer shall, to the extent permitted by law, keepconfidential and not use any confidential information obtained pursuant to thisAgreement, unless such information is readily ascertainable from public orpublished information or trade sources or is received by Buyer from a thirdparty having no obligation of confidentiality with respect to such information.Notwithstanding the above, Seller shall not be precluded from informing itsemployees of such details of the transaction as Seller deems necessary;provided, however, Seller shall be responsible for ensuring that such employeescomply with the provisions of this Section 14.5.

 

14.6                           Preservation ofBooks and Records  For a periodof seven (7) years following the Closing Date, the party in possession ofthe originals shall retain the original books, records and files relating tothe Assets and shall make such books, records and files available to the otherparty, upon reasonable notice, for review and copying (at the expense of theparty requesting to 

 

38

----

 

review and/or copy same) atthe headquarters of the party in possession (or at such other location in theUnited States as the party in possession may designate in writing to the otherparty) at reasonable times and during regular office hours. Buyer acknowledgesthat Seller may need to review and copy such books, records and files inconnection with litigation or other business purposes. Buyer’s obligation underthis Section 13.7 shall survive Closing and shall continue in the eventthe Assets or any portion thereof are sold or otherwise transferred to thirdparties.

 

14.7                           Financial Statements

 

### (a)           Sellershall fully cooperate with and assist Buyer in the completion of the AuditedStatements of Revenues and Expenses.

###  

### (b)           Buyershall use, and shall cause its Auditors to use, their reasonable best effortsto help Seller identify and to obtain from Seller, on or before January 17,2008, the Financial Data necessary to complete the Audited Statements ofRevenues and Expenses.  Buyer shallnotify Seller promptly after Buyer or its Auditors determine that any FinancialData provided by Seller needs to be supplemented, updated or is otherwiseinsufficient in any respect.  On orbefore January 17, 2008, Buyer shall provide Seller with either (i) aletter stating that Buyer has received the Financial Data pursuant to Section 8.7(e) andthe condition to Closing set forth in Section 11.6 has been satisfied orwaived, or (ii) a final report identifying all outstanding Financial Datathat Seller still needs to provide in order for Buyer to complete the AuditedStatements of Revenues and Expenses. Buyer shall be precluded from asserting that Section 8.7(e) andthe condition to Closing set forth in Section 11.6 were not met due toSeller’s failure to provide any Financial Data that was not specifically listedand requested in the final report.

###  

# **ARTICLE XV**

# ** **

# **EMPLOYEE MATTERS**

# ** **

15.1                           ContinuingEmployees.  From andafter the date hereof, and throughout the term of the COMFS **(**the “Transition Period”) Seller will assist Buyer or anAffiliate thereof in seeking to retain certain of Seller’s employees toeffectuate a smooth transition of the operation of the Assets to the Buyer.  Within 10 days from the date hereof, Sellerwill provide Buyer with a list of employees (the “Seller Employees”) availablefor employment with Buyer, which will include the following data: name, jobtitle, salary or wage, bonus eligibility, vacation eligibility, hire date, andservice date.  The Seller Employees thatBuyer hires are referred to as the “Continuing Employees”.

 

15.2                           No Obligationto Hire Seller Employees. Nothing in this Agreement shall require or be construed or interpretedas requiring the Buyer or any Affiliate thereof to offer employment to anyemployee of Seller or its Affiliates or to continue the employment of anyemployee of Seller or its Affiliates (including any Continuing Employees)following their respective Hire Date, or to prevent Buyer or an Affiliatethereof from changing the terms and conditions of employment (includingcompensation and benefits) of any of its employees (including any ContinuingEmployees) following their respective Hire Dates.  Seller and the Buyer hereby acknowledge andagree that any employment offered by Buyer or its Affiliate to a Continuing 

 

39

----

 

Employee will be “at will”and may be terminated by the relevant Buyer or Affiliate thereof or suchContinuing Employee at any time for any reason (subject to applicable Laws andto any specific written commitments made to the contrary by a Buyer or anAffiliate thereof or by such Continuing Employee).  Further, any such offer of employment shallbe on such terms and conditions as the Buyer or their Affiliates shalldetermine and may be conditioned upon the Seller Employee’s passage of theBuyer or its Affiliates’ pre-employment screening requirements.

 

15.3                           Interview, Screening, and Offers toSeller Employees.

 

### (a)           Sellershall notify the Seller Employees of Buyer or its Affiliates’ desire to hirethem.  Seller and Buyer shall assist oneanother in providing such employees the right to meet with representatives ofBuyer or its Affiliates to discuss the capacity in which such persons will beemployed by a Buyer or an Affiliate thereof and the terms and conditions underwhich such employment will be offered; provided, however, that no employee ofSeller shall be required to accept an offer of employment with Buyer orAffiliate thereof if such an offer is made. Seller shall retain all liability for all severance benefits owed to theemployees of Seller (including but not limited to any Seller Employees whoreceive but do not accept offers of employment from a Buyer or Affiliatethereof) under Seller’s employment agreements, offer letters, or severanceplans or policies, if any.  During theTransition Period, Buyer shall provide offers of employment to the SellerEmployees the Buyer or Affiliate thereof desires to hire, with each offerstipulating that the date for commencement of work is the termination date ofthe COMFS (the “Hire Date”).  Buyer shallprovide Seller with notice of the names of those Seller Employees to whom Buyeror an Affiliate thereof has made employment offers promptly after making suchoffers.

###  

### (b)           NoSeller Employee shall become a Continuing Employee unless he or she (i) acceptsBuyer’s or its Affiliate’s offer of employment under the terms provided inBuyer or its Affiliate’s offer, (ii) passes any required pre-employmentscreening required by Buyer or its Affiliate, and (iii) on the Hire Date,is actively at work, on sickness or disability leave, or an approved leave ofabsence.

###  

15.4                           Employee Benefits.

 

### (a)           TheBuyer or its Affiliate, as applicable, shall grant to the Continuing Employeescredit for their past service years as outlined in the data provided by Sellerto Buyer pursuant to Section 1.1 for the following: (i) vesting andeligibility purposes under any employee benefit programs maintained by theBuyer or its Affiliate in which they are available to participate and (ii) determiningthe duration and amount of their benefits under any sick pay or sick leavepolicy or vacation policy, maintained by the Buyer or its Affiliate in whichthey are eligible to participate.  Sellershall use commercially reasonable efforts to provide Buyer with all necessarytransition assistance, including any applicable service credit informationrelating to Continuing Employees, to enable Buyer to develop and implementcompensation and benefit plans and programs for any Continuing Employees.

###  

### (b)           Effectiveas of each Seller Employee’s respective Hire Date, such Seller Employee thatbecomes a Continuing Employee shall cease to actively participate or beeligible 

###  

### 40

### 

###  

### toactively participate in any Seller Plan. Neither Buyer nor its Affiliate shall assume any Seller Plan or beliable in any respect for the funding of, or contributions to, or liabilitiesunder any Seller Plan.  Until eachContinuing Employee’s respective Hire Date, such Continuing Employee shallremain the employee of Seller and Seller shall provide his or her wages andemployee benefits at Seller’s sole expense. Without limiting the foregoing, or Section 7.3(f) of thisAgreement for all periods prior to the Closing Date and from the Closing Dateuntil each Seller Employee’s respective Hire Date, under the COMFS, Sellershall be responsible for (i) the base salaries or wages and overtimepayments of the Seller Employees along with any bonuses to which such SellerEmployee may be entitled, (ii) the costs of the Seller Employees’participation in the retirement, medical, dental and other employee benefitplans sponsored by Seller, (iii) workers’ compensation coverage of theSeller Employees, (iv) vacation and leave pay for the Seller Employees, (v) theemployer’s portion of any health, life, disability or other insurance providedas a part of Seller’s employee benefit plans in effect after the Closing Date andin which the Seller Employees participate, (vi) all employee taxes(including Social Security, Medicare and unemployment taxes) and taxwithholdings, and (vii) all payroll processing, payroll deduction, taxwithholding and tax reporting services, employee benefit administration, claimsprocessing, personnel administration, and all such related human resourcesservices with respect to the Seller Employees.

###  

15.5                           Control ofSeller Employees.  Prior tothe Hire Date, if any, of a Seller Employee, Seller shall have the right tocontrol and direct the Seller Employees as to the performance of duties and asto the means by which such duties are performed, including the right toterminate the employment of any Seller Employee, provided that: (i) Buyershall not be liable for any costs, expense, liabilities, or severance benefits,if any, related to any such terminated Seller Employee; and (ii) Sellerand its Affiliates agree not to rehire any terminated Seller Employee whobecomes a Continuing Employee for a period of two years following any suchSeller Employee’s termination date. Seller shall fully and timely inform Buyer of and consult Buyer withrespect to, all employment, benefit workplace and performance matters relatingto Seller Employees prior to the Seller Employees’ respective Hire Dates that,in the reasonable judgment of Seller’s management, could have a material impacton Buyer prior to taking any actions or making any decisions with respect tosuch matters, subject to applicable law. Notwithstanding the foregoing, prior to each Seller Employee’srespective Hire Date, Seller shall have the right to direct such employee toperform reasonable administrative duties on behalf of Seller in connection withthe winding down of Seller’s services with respect to the Assets and thetermination of any Seller Plan.  Duringthe Transition Period, but prior to the Seller Employees’ respective HireDates, Seller will not permanently reassign, make compensation changes, promoteor relocate any Seller Employee, other than in the ordinary course of businessor as required by any Seller Plan or applicable law, without the writtenconsent of Buyer.  Seller shall beresponsible for complying with all safety, health and work-related laws,regulations and rules with respect to the Seller Employees employed bySeller during the Transition Period. Nothing herein is intended to affect Seller’s status as employer of eachSeller Employee while employed by Seller or Seller’s control over suchindividual until his or her respective Hire Date.

 

15.6                           Solicitation ofContinuing Employees.  For theperiod beginning on each Continuing Employee’s Hire Date and ending on the datethat is two (2) years after the Closing Date, neither Seller nor any ofits Affiliates will, unless acting in accordance with Buyer’s prior writtenconsent, solicit, encourage or otherwise induce such Continuing Employee toleave the

 

41

----

 

 

employment of Buyer or anyof its Affiliates or become an employee of Seller or any of itsAffiliates.  Notwithstanding theforegoing, neither Seller nor its Affiliates will be prohibited from hiring orcontracting for the services of a Continuing Employee who has terminated his orher employment relationship with Buyer without solicitation or inducement fromSeller or its Affiliates.  A generaladvertisement by Seller or its Affiliates for employment that is not targetedat any Continuing Employee or group of Continuing Employees shall notconstitute a breach of the obligations of Seller or its Affiliates under this Section 15.6.

 

15.7                           Waiver ofRestrictions on Continuing Employees.  On or before each Continuing Employee’s HireDate, if any, Seller shall take and shall cause its Affiliates to take anynecessary action to waive any covenants not to compete, confidentialityprovisions or similar restrictions under agreements between Seller and/or suchAffiliates and the Continuing Employee that may be applicable to any ContinuingEmployee, but only to the extent any of the foregoing would preclude aContinuing Employee from accepting employment with a Buyer party or anAffiliate thereof, and may not restrain such Continuing Employee in any way inperforming his services for the Buyer or their Affiliates.

 

15.8                           No Third PartyBeneficiaries. Notwithstanding any other provisions of this Agreement, the provisionsof this Article XV are not intended to and shall not create or confer anythird-party beneficiary rights respecting any Seller Employee or ContinuingEmployee.

 

# **ARTICLE XVI**

# ** **

# **MISCELLANEOUS**

# ** **

16.1                           Definitions  Capitalized terms used herein shall have themeaning ascribed to them in this Agreement as such terms are identified and/ordefined in the following list:

 

### (a)           “Affiliate”with respect to any Person, means any person that directly or indirectlycontrols, is controlled by or is under common control with such Person.

###  

### (b)           “AgreedInterest Rate” shall mean the Wall Street Journal London Interbank Offered Rate(as defined below) plus one percentage point, with said rate to be adjusted toreflect any change in The Wall Street Journal London Interbank Offered Rate atthe time of any such change. As used herein, for any date, the “Wall StreetJournal London Interbank Offered Rate” shall mean the London Interbank OfferedRate (LIBOR) for one (1) month quoted in the most recently published issueof *The Wall Street Journal*(CentralEdition) in the “Money Rates” column. If the Wall Street Journal LondonInterbank Offered Rate ceases to be made available by the publisher, or anysuccessor to the publisher of *The Wall Street Journal*,(Central Edition) the interest rate will be determined by using a comparableindex. If more than one Wall Street Journal London Interbank Offered Rate forone (1) month is quoted, the higher rate shall apply.

###  

### (c)           “AllocatedValue” means the value allocated to each Asset on Exhibit C.

###  

### (d)           “BusinessDay” means each calendar day except Saturdays, Sundays, and Federal holidays.

###  

### 42

### 

###  

### (e)           “ClosingDate Interest Amount” means the amount of interest, computed at the AgreedInterest Rate, accrued on an amount equal to the Adjusted Purchase Price minusthe Performance Guarantee Deposit from the Target Closing Date to the ClosingDate.

###  

### (f)            “Code”means the Internal Revenue Code of 1986, as amended.

###  

### (g)           “ConfidentialityAgreement” means that letter agreement entered into between Albrecht &Associates, Inc and Linn Energy, LLC and dated September 5, 2007.

###  

### (h)           “EnvironmentalLaws” mean as the same may have been amended, the Comprehensive EnvironmentalResponse, Compensation and Liability Act, 42 U.S.C. § 9601 et seq. theResource Conservation and Recovery Act, 42 U.S.C. § 6901 et seq.; theFederal Water Pollution Control Act, 33 U.S.C. § 1251 et seq. (the “CleanWater Act”); the Clean Air Act, 42 U.S.C. § 7401 et seq. the HazardousMaterials Transportation Act, 49 U.S.C. § 1471 et seq.; the Toxic SubstancesControl Act, 15 U.S.C. §§ 2601 through 2629; the Oil Pollution Act, 33 U.S.C. §2701 et seq.; the Emergency Planning and Community Right-to-Know Act, 42 U.S.C.§ 11001 et seq.; the Safe Drinking Water Act, 42 U.S.C. §§ 300f through 300j;the Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. § 136 et seq.;the Occupational Safety and Health Act, 29 U.S.C. § 651 et seq.; the AtomicEnergy Act, 42 U.S.C. § 2011 et seq.; and all applicable related law, whetherlocal, state, territorial, or national, of any Governmental Body havingjurisdiction over the property in question addressing pollution or protectionof human health, safety, natural resources or the environment and allregulations implementing the foregoing.

###  

### (i)            “EnvironmentalLiabilities” means any and all environmental response costs (including costs ofremediation), damages, natural resource damages, settlements, consulting fees,expenses, penalties, fines, orphan share, prejudgment and post judgmentinterest, court costs, attorneys’ fees, and other liabilities incurred orimposed (i) pursuant to any order, notice of responsibility, directive(including requirements embodied in Environmental Laws), injunction, judgmentor similar act (including settlements) by any Governmental Authority or courtof competent jurisdiction to the extent arising out of any violation of, orremedial obligation under, any Environmental Laws which are attributable to theownership or operation of the Properties prior to the Effective Date or (ii) pursuantto any claim or cause of action by a Governmental Authority or other Person forpersonal injury, property damage, damage to natural resources, remediation orresponse costs to the extent arising out of any violation of, or anyremediation obligation under, any Environmental Laws which is attributable tothe ownership or operation of the Properties prior to the Effective Date. Theterm does not include good or desirable operating practices or standards thatmay be employed or adopted by other oil or gas well operators or recommended bya Governmental Authority.

###  

### (j)            “ERISA”means the Employee  Retirement IncomeSecurity Act of 1974, as amended.

###  

### (k)           “ERISAAffiliate” means, with respect to any entity, any entity, trade or businessthat is a under common control with such entity, within the meaning of Section 414(b),(c), (m) or (o) of the Code or Section 4001 of ERISA.

###  

### 43

### 

###  

### (l)            “GovernmentalAuthority” means any federal, state, local, municipal, or other governments;any governmental, regulatory or administrative agency, commission, body orother authority exercising or entitled to exercise any administrative,executive, judicial, legislative, police, regulatory or taxing authority orpower; and any court or governmental tribunal.

###  

### (m)          “GovernmentalAuthorization” shall mean any approval, consent, license, permit, registration,variance, exemption, waiver, or other authorization issued, granted, given, orotherwise made available by or under the authority of any GovernmentalAuthority or pursuant to any federal, state, local, or municipal law, Order,constitution, ordinance, or rule, including rules of common law,regulation, statute, treaty, or other legally enforceable directive orrequirement.

###  

### (n)           “HazardousMaterials” shall mean any (i) chemical, constituents, material, pollutant,contaminant, substance or waste that is regulated by any Governmental Body ormay form the basis of liability under any Environmental Law; (ii) asbestoscontaining material, lead-based paint, polychlorinated biphenyls, or radon; and(iii) petroleum, Hydrocarbons, or petroleum products.

###  

### (o)           “HedgeAdjustment Amount” shall mean the difference (positive or negative) between (i) theNet Mark-to-Market Hedge Value as of the close of trading on the business daybefore the date this Agreement is executed minus (ii) the NetMark-to-Market Hedge Value as of the close of trading on the earlier of (i) thebusiness day before the Closing Date or (ii) February 29, 2008.  Attached as Schedule 16.1(n) areexample calculations of the Hedge Adjustment Amount.

###  

### (p)           “Hydrocarbons”mean gas, condensate and other gaseous and liquid hydrocarbons or anycombination thereof and sulphur extracted from hydrocarbons.

###  

### (q)           “Imbalance”or “Imbalances” means over-production or under-production or over-deliveries orunder-deliveries with respect to oil or gas produced from or allocated to theAssets, regardless of whether such over-production or under-production orover-deliveries or under-deliveries arise at the platform, wellhead, pipeline,gathering system, transportation or other location.

###  

### (r)            “Laws”means all statutes, rules, regulations, ordinances, orders, and codes ofGovernmental Authorities.

###  

### (s)           “Mark-to-MarketHedge Value” means the mark-to-market value to Seller of each hedge transactionlisted on Schedule 16.1(r) (either positive or negative) ascalculated by the Seller in good faith as of the close of trading on thebusiness day before the relevant determination date.  If Seller is “in the money” with respect to ahedge transaction, the Mark-to-Market Value of that transaction will be apositive number.

###  

### (t)            “MaterialAdverse Effect” means any adverse effect on the ownership, operation or valueof the Assets, as currently operated, which exceeds ten percent of the PurchasePrice in value, provided, however, that “Material Adverse Effect” shall notinclude general changes in industry or economic conditions or changes in lawsor in regulatory policies.

###  

### 44

### 

###  

### (u)           “NetMark-to-Market Hedge Value” means the sum of the Mark-to-Market Hedge Values ofall hedge transactions listed on Schedule 16.1(r) as of the close oftrading on the business day before the relevant determination date.

###  

### (v)           “Person”means any individual, firm, corporation, partnership, limited liability company,joint venture, association, trust, unincorporated organization, government oragency or subdivision thereof or any other entity.

###  

### (w)          “PropertyCosts” mean all operating expenses (including without limitation costs ofinsurance and ad valorem, property, severance, production and similar Taxesbased upon or measured by the ownership or operation of the Assets or theproduction of Hydrocarbons therefrom, but excluding any other Taxes) andcapital expenditures incurred in the ownership and operation of the Assets inthe ordinary course of business and, where applicable, in accordance with therelevant operating or unit agreement, if any, and overhead costs charged to theAssets under the relevant operating agreement or unit agreement, if any, butexcluding without limitation liabilities, losses, costs, and expensesattributable to (i) claims for personal injury or death, property damageor violation of any Law, (ii) obligations to plug wells, dismantlefacilities, close pits and restore the surface around such wells, facilitiesand pits, (iii) obligations to remediate any contamination of groundwater,surface water, soil or Equipment under applicable Environmental Laws, (iv) obligationsto furnish make-up gas according to the terms of applicable gas sales, gatheringor transportation contracts, (v) gas balancing obligations and (vi) obligationsto pay working interests, royalties, overriding royalties or other interestsheld in suspense.

###  

### (x)            “SellerPlan” means any plan, program, policy, practice, contract, agreement or otherarrangement providing for compensation, severance, change-in-control,termination pay, deferred compensation, retirement or pension payments,bonuses, performance awards, retention payments, incentive compensation, stockor stock-related awards, fringe benefits or other employee benefits orremuneration of any kind, whether written or unwritten or otherwise, funded orunfunded, including without limitation, each “employee benefit plan,” withinthe meaning of Section 3(3) of ERISA and any plans that would be “employeebenefit plans” within the meaning of Section 3(3) of ERISA if theywere subject to ERISA (such as foreign plans and plans for directors) which, ineach case, is or ever has been sponsored, maintained, contributed to, or requiredto be contributed to, by the Seller or any ERISA Affiliate of the Seller(present or former) for the benefit of any present or former employee orofficer, consultant or similar representative of Seller or any of such ERISAAffiliates, and with respect to which the Seller or any of such ERISAAffiliates has or may have any liability or obligation on behalf of any of suchindividuals.

###  

### (y)           “Seller-OperatedAssets” mean Assets operated by Seller.

###  

### (z)            “SellerTaxes” means any and all Taxes imposed on the Seller or for which the Sellermay otherwise be liable other than Taxes for which the Buyer has assumedresponsibility under Section 8.8 and 8.9 hereof or as provided in Section 14.1and 10.5.

###  

### (aa)         “Tax”or “Taxes” means all federal, state, local, foreign and other net income,alternative or add-on minimum tax, gross income, gross receipts, sales, use, advalorem, 

###  

### 45

### 

###  

### transfer,franchise, profits, license, lease, service, service use, withholding, payroll,employment, excise, severance, stamp, occupation, premium, property, windfallprofits, customs, duties or other taxes, government fees, or other assessmentsor charges of any kind whatsoever imposed by any Governmental Authority,together with any interest and any penalties or additions to tax with respectthereto.

###  

### (bb)         “TaxReturn” means any return, declaration, report, claim for refund, or informationreturn or statement relating to Taxes, including any schedule orattachment thereto, and including any amendment thereof.

###  

### (cc)         “TaxingAuthority” means, with respect to any Tax, the governmental entity or politicalsubdivision thereof that imposes such Tax, and the agency (if any) charged withthe collection of such Tax for such entity or subdivision, including anygovernmental entity or agency that imposes, or is charged with collecting,social security or similar charges or premiums.

###  

### (dd)         “WARNAct” means the Worker Adjustment and Retraining Notification Act, 29 U.S.C. §2109 et seq. and the regulations promulgated thereunder.

###  

16.2                           Use of Seller’sName  As soon as practicable afterClosing in order to be in compliance with all applicable Laws, Buyer shallremove or cause to be removed the names and marks used by Seller and allvariations and derivations thereof and logos relating thereto from the Assetsand shall not thereafter make any use whatsoever of those names, marks andlogos.

 

16.3                           Integrations,Amendment and Modification.  Except as expressly set forth herein, none ofthe parties makes to the other any representation, whether expressed orimplied, of any kind whatsoever. This Agreement may not be modified,supplemented or changed in any respect except by a writing duly executed bySeller and Buyer.

 

16.4                           DescriptiveHeadings  The headingsof the paragraphs and subparagraphs of this Agreement are inserted forconvenience only and shall not be considered a part of or affect theconstruction or interpretation of any provision of this Agreement.

 

16.5                           Governing Law  THIS AGREEMENT SHALL BE GOVERNED BY ANDCONSTRUED IN ACCORDANCE WITH THE LAWS OF OKLAHOMA EXCEPT FOR MATTERS RELATINGTO TITLE TO PROPERTY, WHICH SHALL BE CONSTRUED IN ACCORDANCE WITH, AND GOVERNEDBY, THE LAWS OF THE JURISDICTION IN WHICH SUCH PROPERTY IS LOCATED.

 

16.6                           Binding Effect;Assignment  ThisAgreement shall be binding upon and shall inure to the benefit of and beenforceable by each of the parties, and their successors and permitted assigns.This Agreement and the rights and obligations hereunder shall not be assignedby Buyer, in whole or in part, without the prior written consent of Seller,provided however, Buyer may assign its rights and obligations under theAgreement to any affiliate without notice or consent from Seller.

 

46

----

 

16.7                           Notices

###  

### (a)           All notices, disclosures or othercommunications which are required or permitted hereunder shall be in writingand shall be delivered as follows:

 
| **If to  Buyer:**    | Charlene  A. Ripley                                   |
|----------------------|-------------------------------------------------------|
|                 | Senior  Vice President, General Counsel and Corporate |
|                 | Secretary  JP Morgan Chase Tower                      |
|                 | 600  Travis, Suite 5100                          |
|                 | Houston,  Texas 77002                                 |
|                 | Telephone:                                            | (281)  840-4119 |
|                 | Facsimile:                                            | (281)  840-4180 |
|                 |                                                  |
| **If to  Seller:**   | Curtis  J. Biram                                      |
|                 | General  Counsel                                      |
|                 | Post  Office Box 550                                  |
|                 | Skiatook,  Oklahoma 74070                             |
|                 | Telephone:                                            | (918)  396-3020 |
|                 | Facsimile:                                            | (918)  396-2521 |
|                 |                                                  |
| **With  a copy to:** | Arthur  J. Wright                                     |
|                 | Thompson &  Knight L.L.P.                    |
|                 | 1700  Pacific Avenue, Suite 3300                 |
|                 | Dallas,  TX 75201                                     |
|                 | Telephone:                                            | (214)  969-1303 |
|                 | Fax  No.:                                             | (214)  969-1751 |

###  

### (b)           Eitherparty may change its address for notice by notice to the other party in themanner set forth above. All notices will be deemed to have been duly given atthe time of receipt by the party to which such notice is addressed.

###  

16.8                           DTPA Waiver  To the extent applicable to the Assets or anyportion thereof, Buyer hereby waives the provisions of the Texas DeceptiveTrade Practices Act, Chapter 17, Subchapter E, Section 17.41 through 17.63inclusive (other than Section 17.555 which is not waived), Tex. Bus. &Com. Code. In order to evidence its ability to grant such waiver, Buyer herebyexpressly recognizes and represents to Seller that Buyer is not in asignificantly disparate bargaining position and Buyer is represented by legalcounsel in this transaction.

 

16.9                           Waiver  Any failure by and party or parties to complywith its or their obligations, agreements or conditions herein contained may bewaived in writing, but not in any other manner, by the party or parties to whomsuch compliance is owed. No waiver of, or consent to a change in, any of theprovisions of this Agreement shall be deemed or shall constitute a wavier of,or consent to a change in, other provisions hereof (whether or not similar),nor shall such waiver constitute a continuing waiver unless otherwise expresslyprovided.

 

47

----

 

16.10                     References.  In this Agreement:

 

### (a)           Referencesto the singular include the plural and vice versa;

###  

### (b)           Referencesto any Article or Section means an Article or Section ofthis Agreement;

###  

### (c)           Referencesto any Exhibit or Schedule means an Exhibit or Schedule tothis Agreement, all of which are incorporated and made a part of thisAgreement;

###  

### (d)           Unlessexpressly provided to the contrary, “hereunder”, “hereof’, “herein” and wordsof similar import are references to this Agreement as a whole and not to anyparticular Section or other provision of this Agreement; and

###  

### (e)           “Include”and “including” mean include or including without limiting the generality ofthe description preceding such term.

###  

16.11                     Conspicuousness  The parties agree that provisions in thisAgreement in all capital letters or “bold” type satisfy any requirements of the“express negligence rule” and any other requirements at law or in equity thatprovisions be conspicuously marked or highlighted.

 

16.12                     Counterparts  This Agreement may be executed in any numberof counterparts, and each such counterpart hereof shall be deemed to be anoriginal, and all of which together shall constitute one and the sameinstrument.

 

16.13                     InvalidProvisions  Should any ofthe provisions of this Agreement, or portions thereof, be found to be invalidor unenforceable by any court of competent jurisdiction, the remainder of thisAgreement shall nonetheless remain in full force and effect.

 

16.14                     CompleteAgreement  This Agreementtogether with the Exhibits and Schedules attached hereto and the agreements andinstruments referred to herein and therein set forth the entire agreement amongthe parties hereto, and further supersedes any and all prior agreements orunderstandings, whether oral or written, among the parties hereto pertaining tothe specific subject matter identified in this Agreement. The provisions hereofare contractual and not mere recitals. In signing this Agreement, none of theparties has relied upon any statement or representation which is not expresslycontained herein and is not relying upon any oral statement or representationpertaining to this matter made by any other party or by anyone in privity withor representing any party. By the signature set forth hereinbelow, the partiesto this Agreement acknowledge that they have read the same, they understand theterms and conditions set forth herein, and they shall abide by those terms andconditions.

 

48

----

 

IN WITNESS WHEREOF, theparties hereto have executed this Agreement as of the date hereof.

 
|  **SELLER’S TAX ID#:** | **SELLER:  Lamamco Drilling Company** |
|----------------------------------|---------------------------------------|
|                             |                                  |
|                             |                                  |
|                             |                                  |
|                             | By:                                   | /s/  Stanley J. Miller |   |
|                             |                                  | STANLEY  J. MILLER |
|                             |                                  | Title:  Partner |
|                             |                                  |
|                             |                                  |
| **BUYER’S  TAX ID#:**       | **BUYER:  Linn Energy Holdings, LLC** |
|                             |                                  |
|                             |                                  |
|                             |                                  |
|                             | By:                                   | /s/  Mark E. Ellis |   |
|                             | Name:                                 | Mark  E. Ellis |
|                             | Its:                                  | President &  COO |

 

----