berrypetroleum8k.htm - Generated by SEC Publisher for SEC Filing

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

February 20, 2013

Date of Report (Date of earliest event reported)

 

 

 

BERRY PETROLEUM COMPANY

(Exact name of registrant as specified in its charter)

 

Delaware

1-9735

77-0079387

(State or other jurisdiction of incorporation)

(Commission File Number)

(IRS Employer

Identification No.)

 

 

1999 Broadway, Suite 3700
Denver, Colorado



80202 

(Address of principal executive offices)

(Zip Code)

 

Registrant's telephone number, including area code: (303) 999-4400

 

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

[  ]   Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

[X]   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

[  ]   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

[  ]   Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 


 

 

ITEM 1.01  ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT

 

On February 20, 2013, Berry Petroleum Company (“Berry” or the “Company”) entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Linn Energy, LLC (“Linn Energy”), LinnCo, LLC (“LinnCo”), Linn Acquisition Company, LLC, a direct wholly owned subsidiary of LinnCo (“LinnCo Merger Sub”), Bacchus HoldCo, Inc., a direct wholly owned subsidiary of the Company (“HoldCo”), and Bacchus Merger Sub, Inc., a direct wholly owned subsidiary of HoldCo (“Bacchus Merger Sub”), pursuant to which LinnCo will acquire the Company in an all-stock transaction in which the Company’s stockholders would receive 1.25 shares (the “Exchange Ratio”) representing limited liability company interests in LinnCo (“LinnCo Shares”) for each share of the Company’s common stock.

 

The transaction will occur through multiple steps.  First, the Company will engage in a holding company merger (the “HoldCo Merger”) involving HoldCo and Bacchus Merger Sub.  In the HoldCo Merger, Bacchus Merger Sub will merge with and into the Company, with the Company surviving as a wholly owned subsidiary of HoldCo, and each issued and outstanding share of the Company’s Class A common stock and Class B common stock will convert into the right to receive one equivalent share of Class A common stock and one equivalent share of Class B common stock, respectively, of HoldCo.

 

Second, promptly after the HoldCo Merger, the Company will be converted into a limited liability company (the “Conversion”).  Third, promptly following the Conversion, HoldCo will be merged with and into LinnCo Merger Sub, with LinnCo Merger Sub surviving as the surviving company (the “LinnCo Merger” and together with the HoldCo Merger the “Mergers”).  In the LinnCo Merger, each share of Holdco’s Class A common stock and Class B common stock will be converted into 1.25 LinnCo Shares. 

 

Finally, promptly following the LinnCo Merger, LinnCo will contribute all of the outstanding equity interests in LinnCo Merger Sub (and therefore also its indirect ownership interest in the Company) to Linn (the “Contribution”) in exchange for the issuance to LinnCo (the “Issuance”) of newly issued Linn common units (the “Linn Units”).  The number of Linn Units to be issued to LinnCo in the Issuance will be equal to the greater of (i) the aggregate number of LinnCo Shares issued in the LinnCo Merger and (ii) the number of Linn Units required to cause LinnCo to own no less than one-third of all of the outstanding Linn Units following the Contribution.  In addition, for three years following the closing, Linn will pay to LinnCo additional cash distributions in the amount of $6 million per year.  

 

The HoldCo Merger, the Conversion, the LinnCo Merger, the Contribution and the Issuance are collectively referred to herein as the “Transactions.”  

  

In connection with the Transactions, each stock option outstanding under the Company’s equity plans immediately prior to the HoldCo Merger effective time will be converted into a stock option representing an option to acquire Linn Units with equivalent terms and conditions, as adjusted to reflect the Exchange Ratio and for differences in the trading prices of Linn Units and LinnCo common shares in the period prior to the closing of the LinnCo Merger.  Each unvested restricted stock unit outstanding under the Company’s equity plans immediately prior to the HoldCo Merger effective time (excluding any restricted stock unit held by a current or former non-employee director of the Company and any performance-based restricted stock unit) will be converted into a restricted stock unit in respect of Linn Units, as adjusted to reflect the Exchange Ratio and for differences in the trading prices of Linn Units and LinnCo Common Shares in the period prior to the closing of the LinnCo Merger.  Each performance-based restricted stock unit, each vested restricted stock unit and each restricted stock unit held by a current or former non-employee director of the Company, in each case outstanding under the Company’s equity plans immediately prior to the HoldCo Merger effective time, will be converted into LinnCo common shares, in an amount calculated based on the Exchange Ratio.

 

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The closing of the Transactions is conditioned on (1) adoption of the Merger Agreement by holders of a majority of the outstanding shares of the Company’s common stock, (2) approval of the issuance of LinnCo Shares by a majority of the votes cast by holders of LinnCo Shares at a meeting at which a quorum is present, (3) approval of certain amendments to LinnCo’s LLC agreement and the Contribution by holders of a majority of the outstanding LinnCo Shares, (4) approval of the Issuance by a majority of the votes cast by holders of Linn Units at a meeting at which a quorum is present, (5) receipt of certain opinions by the parties with respect to the tax-free nature of the Transactions, and (6) other customary conditions such as expiration of the waiting period under the Hart-Scott-Rodino Act.  

 

The board of directors of the Company has unanimously approved and adopted the Merger Agreement and has agreed to recommend that the Company’s stockholders approve and adopt the Merger Agreement, subject to certain exceptions set forth in the Merger Agreement.  The foregoing summary of the Merger Agreement and the transactions contemplated by the Merger Agreement does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Merger Agreement, which is filed as Exhibit 2.1 to this Form 8-K.

 

            The Merger Agreement and the above description have been included to provide investors and security holders with information regarding the terms of the Merger Agreement. They are not intended to provide any other factual information about the Company, Linn, LinnCo or their respective subsidiaries or affiliates or equityholders.  The representations, warranties and covenants contained in the Merger Agreement were made only for purposes of those agreements and as of specific dates; were solely for the benefit of the parties to the Merger Agreement; and may be subject to limitations agreed upon by the parties, including being qualified by confidential disclosures made by each contracting party to the other for the purposes of allocating contractual risk between them that differ from those applicable to investors.  Investors should be aware that the representations, warranties and covenants or any description thereof may not reflect the actual state of facts or condition of the Company, Linn, LinnCo or any of their respective subsidiaries, affiliates, businesses, or equityholders.  Moreover, information concerning the subject matter of the representations, warranties and covenants may change after the date of the Merger Agreement, which subsequent information may or may not be fully reflected in public disclosures by the Company, Linn or LinnCo.  Accordingly, investors should read the representations and warranties of the Company, Linn or LinnCo and their respective subsidiaries that the respective companies include in reports, statements and other filings they make with the U.S. Securities and Exchange Commission.

 

ITEM 7.01  REGULATION FD DISCLOSURE

 

On February 21, 2013, the Company, Linn Energy and LinnCo issued a joint press release announcing the execution of the Merger Agreement.  The press release is attached hereto as Exhibit 99.1 and is incorporated into this Item 7.01 by reference.

 

The information in Exhibit 99.1 shall not be deemed “filed” for purposes of Section 18 of the U.S. Securities Exchange Act of 1934, as amended, nor shall it be incorporated by reference in any filing under the U.S. Securities Act of 1933, as amended.

 

 

ITEM 9.01  FINANCIAL STATEMENTS AND EXHIBITS

 

 (d)      Exhibits

                                 

Exhibit Number

Description

 

2.1

Agreement and Plan of Merger, dated as of February 20, 2013, by and among Berry Petroleum Company, Bacchus HoldCo, Inc., Bacchus Merger Sub, Inc., LinnCo, LLC, Linn Acquisition Company, LLC and Linn Energy, LLC.

99.1

Joint press release, dated February 21, 2013 (solely furnished and not filed for purposes of Item 7.01).

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  Schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K.   The Company hereby undertakes to furnish supplementally copies of any of the omitted schedules upon request by the U.S. Securities and Exchange Commission.

 

IMPORTANT ADDITIONAL INFORMATION WILL BE FILED WITH THE SEC

In connection with the proposed transactions, LinnCo intends to file with the SEC a registration statement on Form S-4 that will include a joint proxy statement of LinnCo, LINN and Berry that also constitutes a prospectus of LinnCo.  Each of Berry, LINN and LinnCo also plan to file other relevant documents with the SEC regarding the proposed transactions. INVESTORS ARE URGED TO READ THE JOINT PROXY STATEMENT/PROSPECTUS AND OTHER RELEVANT DOCUMENTS FILED WITH THE SEC IF AND WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. You may obtain a free copy of the joint proxy statement/prospectus (if and when it becomes available) and other relevant documents filed by Berry, LINN and LinnCo with the SEC at the SEC’s website at www.sec.gov. You may also obtain these documents by contacting LINN’s and LinnCo’s Investor Relations department at (281) 840-4193 or via e-mail at ir@linnenergy.com or by contracting Berry’s Investor Relations department at (866) 472-8279 or via email at ir@bry.com

PARTICIPANTS IN THE SOLICITATION

Berry, LINN and LinnCo and their respective directors and executive officers and other members of management and employees may be deemed to be participants in the solicitation of proxies in respect of the proposed transactions. Information about LINN’s directors and executive officers is available in LINN’s proxy statement dated March 12, 2012, for its 2012 Annual Meeting of Unitholders.  Information about LinnCo’s directors and executive officers is available in LinnCo’s Registration Statement on Form S-1 dated June 25, 2012, as amended, with respect to its initial public offering of common shares. Information about Berry’s directors and executive officers is available in Berry’s proxy statement dated April 6, 2012, for its 2012 Annual Meeting of Stockholders.  Other information regarding the participants in the proxy solicitations and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the joint statement, LinnCo proxy statement/prospectus and other relevant materials to be filed with the SEC regarding the proposed transactions when they become available. Investors should read the joint proxy statement/prospectus carefully when it becomes available before making any voting or investment decisions. You may obtain free copies of these documents from Berry, LINN or LinnCo using the sources indicated above.

This document shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the U.S. Securities Act of 1933, as amended.

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SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS

This Current Report on Form 8-K and the press release included herewith contains forward-looking statements concerning the proposed transactions, its financial and business impact, management’s beliefs and objectives with respect thereto, and management’s current expectations for future operating and financial performance, based on assumptions currently believed to be valid. Forward-looking statements are all statements other than statements of historical facts. The words “anticipates,” “may,” “can,” “plans,” “believes,” “estimates,” “expects,” “projects,” “intends,” “likely,” “will,” “should,” “to be,” and any similar expressions or other words of similar meaning are intended to identify those assertions as forward-looking statements. It is uncertain whether the events anticipated will transpire, or if they do occur what impact they will have on the results of operations and financial condition of LINN, LinnCo, Berry or of the combined company. These forward-looking statements involve significant risks and uncertainties that could cause actual results to differ materially from those anticipated, including but not limited to the ability of the parties to satisfy the conditions precedent and consummate the proposed transactions, the timing of consummation of the proposed transactions, the ability of the parties to secure regulatory approvals in a timely manner or on the terms desired or anticipated, the ability of LINN to integrate the acquired operations, the ability to implement the anticipated business plans following closing and achieve anticipated benefits and savings, and the ability to realize opportunities for growth. Other important economic, political, regulatory, legal, technological, competitive and other uncertainties are identified in the documents filed with the Securities and Exchange Commission (the “SEC”) by Berry, LINN and LinnCo from time to time, including their respective Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K. The forward-looking statements including in this Current Report on Form 8-K and the press release are made only as of the date hereof. None of Berry, LINN nor LinnCo undertakes any obligation to update the forward-looking statements included in this Current Report on From 8-K or the press release to reflect subsequent events or circumstances.

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SIGNATURES

 

               Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

                                                                                             

                                                                             BERRY PETROLEUM COMPANY

 

 

Dated:  February 21, 2013                                   By:          /s/ Davis O. O’Connor                                                                          

                                                                                   Name:  Davis O. O’Connor

                                                                                   Title:    Corporate Secretary

 

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Exhibit Index

 

Exhibit Number

Description

 

2.1

Agreement and Plan of Merger, dated as of February 20, 2013, by and among Berry Petroleum Company, Bacchus HoldCo, Inc., Bacchus Merger Sub, Inc., LinnCo, LLC, Linn Acquisition Company, LLC and Linn Energy, LLC.

 

 

99.1

 

Joint press release, dated February 21, 2013 (solely furnished and not filed for purposes of Item 7.01).

  Schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K.  The Company hereby undertakes to furnish supplementally copies of any of the omitted schedules upon request by the U.S. Securities and Exchange Commission.

 

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exhibit2_1.htm - Generated by SEC Publisher for SEC Filing

EXHIBIT 2.1

   

 

 

 

 

 

Agreement and plan of merger

by and among

BERRY PETROLEUM COMPANY,

BACCHUS HOLDCO, INC.

BACCHUS MERGER SUB, INC.

LINNCO, LLC,

LINN ACQUISITION COMPANY, LLC

and

LINN ENERGY, LLC

Dated as of February 20, 2013

 

 

 

 

 

                                                                                         

                                                                                                                                                                                                                                                          

 


 

 

TABLE OF CONTENTS

ARTICLE I.

 

THE TRANSACTIONS

 

SECTION 1.1

 

The Mergers; The Conversion; The Contribution and Issuance

3

SECTION 1.2

Closing

5

SECTION 1.3

Effects of the Mergers

5

SECTION 1.4

Organizational Documents

5

SECTION 1.5

Directors

6

SECTION 1.6

Officers

6

 

 

 

ARTICLE II.

 

CONVERSION OF SHARES; EXCHANGE OF CERTIFICATES

 

SECTION 2.1

 

Effect on Capital Stock or Common Shares

 

6

SECTION 2.2

Exchange of Certificates

9

SECTION 2.3

Company Stock Options and Other Stock Awards

12

SECTION 2.4

Further Assurances

14

 

 

 

ARTICLE III.

 

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

 

SECTION 3.1

 

Qualification, Organization, Subsidiaries, etc.

 

14

SECTION 3.2

Capital Stock

15

SECTION 3.3

Corporate Authority Relative to this Agreement; No Violation

16

SECTION 3.4

Reports and Financial Statements

18

SECTION 3.5

Internal Controls and Procedures

18

SECTION 3.6

No Undisclosed Liabilities

19

SECTION 3.7

Compliance with Law; Permits

19

SECTION 3.8

Environmetnal Laws and Regulations

20

SECTION 3.9

Employee Benefit Plans

21

SECTION 3.10

Absence of Certain Changes or Events

23

SECTION 3.11

Investigations; Litigation

23

SECTION 3.12

Information Supplied

24

SECTION 3.13

Regulatory Matters

24

SECTION 3.14

Tax Matters

24

SECTION 3.15

Employment and Labor Matters

26

SECTION 3.16

Intellectual Property

26

SECTION 3.17

Properties

27

SECTION 3.18

Insurance

29

SECTION 3.19

Opinion of Financial Advisor

29

SECTION 3.20

Material Contracts

29

SECTION 3.21

Reserve Reports

32

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SECTION 3.22

Derivatives

32

SECTION 3.23

Finders or Brokers

32

SECTION 3.24

State Takeover Statutes

32

SECTION 3.25

No Prior Activities

32

SECTION 3.26

No Additional Representations

33

 

 

 

ARTICLE IV.

 

REPRESENTATION AND WARRANTIES OF THE LINN PARTIES

 

SECTION 4.1

 

Qualification, Organization, Subsidiaries, Capitalization

 

34

SECTION 4.2

Authority Relative to this Agreement; No Violation

36

SECTION 4.3

Reports and Financial Statements

37

SECTION 4.4

Internal Controls and Procedures

38

SECTION 4.5

Undisclosed Liabilities

38

SECTION 4.6

Compliance with Law; Permits

38

SECTION 4.7

Absence of Certain Changes or Events

39

SECTION 4.8

Environmental Laws and Regulations

39

SECTION 4.9

Investigations; Litigation

40

SECTION 4.10

Information Supplied

40

SECTION 4.11

Regulatory Matters

41

SECTION 4.12

Properties

41

SECTION 4.13

Insurance

43

SECTION 4.14

Opinion of Financial Advisor

43

SECTION 4.15

Material Contracts

44

SECTION 4.16

Reserve Reports

44

SECTION 4.17

Finders or Brokers

45

SECTION 4.18

Ownership of Company Common Stock

45

SECTION 4.19

Tax Matters

45

SECTION 4.20

Employee Benefit Plans

46

SECTION 4.21

Employment and Labor Matters

47

SECTION 4.22

No Additional Representations

48

 

 

 

ARTICLE V.

 

COVENANTS AND AGREEMENTS

 

SECTION 5.1

 

Conduct of Business by the Company

 

49

SECTION 5.2

Conduct of Business by the Linn Parties

54

SECTION 5.3

Mutual Access

56

SECTION 5.4

No Solicitation; Recommendation of the Board of Directors of the Company

56

SECTION 5.5

Recommendation of the Boards of Directors of the Linn Parties

60

SECTION 5.6

Filings; Other Actions

61

SECTION 5.7

Employee Matters

63

SECTION 5.8

Regulatory Approvals; Efforts

65

SECTION 5.9

Takeover Statutes

68

 

 

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SECTION 5.10

Public Announcements

68

SECTION 5.11

Indemnification and Insurance

68

SECTION 5.12

Control of Operations

70

SECTION 5.13

Section 16 Matters

71

SECTION 5.14

Transaction Litigation

71

SECTION 5.15

Certain Tax Matters

71

SECTION 5.16

NASDAQ Listing

71

SECTION 5.17

Derivative Transactions

72

SECTION 5.18

Approvals by the Cpmpany, HoldCo and LinnCo

72

SECTION 5.19

Certain Transfer Taxes

73

 

 

 

ARTICLE VI.

 

CONDITIONS TO THE PRINCIPAL TRANSACTIONS

 

SECTION 6.1

 

Conditions to Each Party’s Obligation to Effect the Principle Transactions

 

73

SECTION 6.2

Conditions to Obligation of the Company to Effect the Mergers and the Conversion

 

73

SECTION 6.3

Conditions to Obligation of LinnCo to Effect the LinnCo Merger

75

SECTION 6.4

Frustration of Closing Conditions

75

 

 

 

ARTICLE VII.

 

TERMINATION

 

SECTION 7.1

 

Termination or Abandonment

 

76

SECTION 7.2

Effect of Termination

77

SECTION 7.3

Termination Fees; Expenses

78

 

 

 

ARTICLE VIII.

 

MISCELLANEOUS

 

SECTION 8.1

 

No Survival

 

80

SECTION 8.2

Expenses

80

SECTION 8.3

Counterparts; Effectiveness

80

SECTION 8.4

Governing Law

81

SECTION 8.5

Jurisdiction; Specific Enforcement

81

SECTION 8.6

WAIVER OF JURY TRIAL

82

SECTION 8.7

Notices

82

SECTION 8.8

Assignment; Binding Effect

83

SECTION 8.9

Severability

83

SECTION 8.10

Entire Agreement

84

SECTION 8.11

Amendmentds; Waivers

84

SECTION 8.12

Headings

84

SECTION 8.13

No Third-Party Beneficiaries

84

 

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SECTION 8.14

Interpretation

84

SECTION 8.15

Definitions

85

 

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AGREEMENT AND PLAN OF MERGER

 

                        This AGREEMENT AND PLAN OF MERGER (this “Agreement”), dated as of February 20, 2013, is by and among Berry Petroleum Company, a Delaware corporation (the “Company”), Bacchus HoldCo, Inc., a Delaware corporation and a direct wholly owned subsidiary of the Company (“HoldCo”), Bacchus Merger Sub, Inc., a Delaware corporation and a direct wholly owned subsidiary of HoldCo (“Bacchus Merger Sub”), LinnCo, LLC, a Delaware limited liability company (“LinnCo), Linn Acquisition Company, LLC, a Delaware limited liability company and a direct wholly owned subsidiary of LinnCo (“LinnCo Merger Sub”), and Linn Energy, LLC, a Delaware limited liability company (“Linn”)

WITNESSETH

                        WHEREAS, the parties intend that (a) at the HoldCo Effective Time, Bacchus Merger Sub shall be merged with and into the Company pursuant to the HoldCo Merger, with (i) each outstanding share of Company Common Stock being converted into one share of HoldCo Common Stock and (ii) the Company surviving as a direct wholly owned subsidiary of HoldCo, and (b) after the HoldCo Merger and prior to the LinnCo Effective Time, the Company shall be converted from a Delaware corporation to a Delaware limited liability company pursuant to the Company Conversion, in each case as more fully described in this Agreement and on the terms and subject to the conditions set forth in this Agreement;  

                        WHEREAS, the parties further intend that, following the Conversion, (a) at the LinnCo Effective Time, HoldCo shall be merged with and into LinnCo Merger Sub pursuant to the LinnCo Merger, with (i) each outstanding share of HoldCo Common Stock being converted into the right to receive 1.25 newly issued LinnCo Common Shares and (ii) LinnCo Merger Sub surviving as a direct wholly owned subsidiary of LinnCo, and (b) after the LinnCo Merger, all of the outstanding limited liability company interests in LinnCo Merger Sub shall be contributed to Linn in exchange for newly issued Linn Units pursuant to the Contribution and Issuance, in each case as more fully described in this Agreement and on the terms and subject to the conditions set forth in this Agreement;  

                        WHEREAS, the Board of Directors of the Company has (a) unanimously determined that it is in the best interests of the Company and its stockholders, and declared it advisable, to enter into this Agreement, (b) approved the execution, delivery and performance of this Agreement and the consummation of the Transactions, including the HoldCo Merger, the Conversion and the LinnCo Merger and (c) resolved to recommend adoption of this Agreement by the stockholders of the Company;

                        WHEREAS, the respective Board of Directors of HoldCo and Bacchus Merger Sub have (a) unanimously determined that it is in the best interests of HoldCo and Bacchus Merger Sub, respectively, and their respective sole stockholders, and declared it advisable, to enter into this Agreement and (b) approved the execution, delivery and performance of this Agreement and the consummation of the Transactions, including the HoldCo Merger and the Conversion;

 

 


 

 

                        WHEREAS, the Board of Directors of LinnCo has (aunanimously determined that it is in the best interests of LinnCo and its shareholders, and declared it advisable, to enter into this Agreement, (b) approved the execution, delivery and performance of this Agreement and the consummation of the Transactions, including the LinnCo Merger and the Contribution and Issuance, (c) declared advisable the LinnCo Amendments and (d) resolved to recommend approval of the issuance of LinnCo Common Shares in the LinnCo Merger (the “LinnCo Issuance”) and the approval of the LinnCo Amendments and the Contribution by the shareholders of LinnCo

                        WHEREAS, LinnCo, as the sole member of LinnCo Merger Sub has (a) determined that it is in the best interests of LinnCo Merger Sub, and declared it advisable, to enter into this Agreement and (b) approved the execution, delivery and performance of this Agreement and the consummation of the Transactions, including the LinnCo Merger;

                        WHEREAS, the Board of Directors of Linn has (a) unanimously determined that it is in the best interests of Linn and its members, and declared it advisable, to enter into this Agreement, (b) approved the execution, delivery and performance of this Agreement and the consummation of the Transactions, including the Contribution and Issuance and (c) resolved to recommend approval of the Issuance by the members of Linn

                        WHEREAS, for U.S. federal income tax purposes, it is intended that (a) each of (i) the HoldCo Merger and the Company Conversion, taken together, and (ii) the LinnCo Merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”), and the Treasury Regulations promulgated thereunder, and this Agreement is intended to be and is adopted as a separate “plan of reorganization” for each Merger within the meaning of Treasury Regulation Section 1.368-2(g) for purposes of Sections 354 and 361 of the Code; and (b) the issuance of Linn Units to LinnCo pursuant to the Contribution and Issuance will qualify as an exchange to which Section 721(a) of the Code appliesand

                        WHEREAS, the Company, HoldCo and Bacchus Merger Sub (collectively, the “Company Parties”), on the one hand, and LinnCo, LinnCo Merger Sub and Linn (collectively, the “Linn Parties”), on the other hand, desire to make certain representations, warranties, covenants and agreements specified herein in connection with this Agreement.

                        NOW, THEREFORE, in consideration of the foregoing and the representations, warranties, covenants and agreements contained herein, and intending to be legally bound hereby, the parties hereto agree as follows:

 

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Article I.

THE transactions

Section 1.1            The Mergers; The Conversion; The Contribution and Issuances.

(a)                The HoldCo Merger

(i)                 At the HoldCo Effective Time, upon the terms and subject to the conditions set forth in this Agreement and in accordance with the applicable provisions of the Delaware General Corporation Law (the “DGCL”), Bacchus Merger Sub shall be merged with and into the Company (the “HoldCo Merger”), whereupon the separate corporate existence of Bacchus Merger Sub shall cease, and the Company shall continue its existence under Delaware law as the surviving corporation in the HoldCo Merger and a direct wholly owned subsidiary of HoldCo.

(ii)               On the Closing Date, the Company and Bacchus Merger Sub shall file with the Secretary of State of the State of Delaware a certificate of merger (the “HoldCo Certificate of Merger”), executed in accordance with, and containing such information as is required by, the relevant provisions of the DGCL in order to effect the HoldCo Merger.  The HoldCo Merger shall become effective at such time as the HoldCo Certificate of Merger has been filed with the Secretary of State of the State of Delaware or at such other, later date and time as is agreed among the parties and specified in the HoldCo Certificate of Merger in accordance with the relevant provisions of the DGCL (such date and time is referred to herein as the “HoldCo Effective Time”). 

(b)               The Conversion

(i)                 On the Closing Date, following the HoldCo Effective Time and prior to the LinnCo Effective Time, upon the terms and subject to the conditions set forth in this Agreement and in accordance with the DGCL and the Delaware Limited Liability Company Act (the “DLLCA”), the Company shall be converted from a Delaware corporation to a Delaware limited liability company (the “Company Conversion”) and each corporate Subsidiary of the Company shall convert to a limited liability company (the “Subsidiary Conversions” and collectively with the Company Conversion, the “Conversion”). 

(ii)               On the Closing Date, the Company shall file with the Secretary of State of the State of Delaware one or more certificates of conversion (each, a “Certificate of Conversion”) and one or more certificates of formation (each, a “Certificate of Formation”), executed in accordance with, and containing such information as is required by, the relevant provisions of the DGCL and the DLLCA to effect the Conversion.  The Conversion shall become effective at such time as the applicable Certificate of Conversion and Certificate of Formation has been filed with the Secretary of State of the State of Delaware or at such other, later date and time as is agreed among the parties and specified in the Certificate of Conversion and Certificate of Formation in accordance with the relevant provisions of the DGCL and the DLLCA; provided  that such date and time

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must be after the HoldCo Effective Time and prior to the LinnCo Effective Time (such date and time is referred to herein as the “
Conversion Effective Time”).  

(c)                The LinnCo Merger

(i)                 On the Closing Date, following the Conversion Effective Time, upon the terms and subject to the conditions set forth in this Agreement and in accordance with the applicable provisions of the DGCL and DLLCA, HoldCo shall be merged with and into LinnCo Merger Sub (the “LinnCo Merger” and together with the HoldCo Merger, the “Mergers”), whereupon the separate corporate existence of HoldCo shall cease, and LinnCo Merger Sub  shall continue its existence under Delaware law as the surviving company in the LinnCo Merger.  LinnCo Merger Sub is sometimes referred to herein as the “Surviving Company”.  

(ii)               On the Closing Date, LinnCo and HoldCo shall file with the Secretary of State of the State of Delaware a certificate of merger (the “LinnCo Certificate of Merger” and together with the HoldCo Certificate of Merger, the “Certificates of Merger”), executed in accordance with, and containing such information as is required by, the relevant provisions of the DGCL and DLLCA in order to effect the LinnCo Merger.  The LinnCo Merger shall become effective at such time as the LinnCo Certificate of Merger has been filed with the Secretary of State of the State of Delaware or at such other, later date and time as is agreed among the parties and specified in the LinnCo Certificate of Merger in accordance with the relevant provisions of the DGCL and DLLCA; provided  that such date and time must be after the Conversion Effective Time (such date and time is referred to herein as the “LinnCo Effective Time”). 

(d)               The Contribution and Issuance

(i)                 On the Closing Date, following the LinnCo Effective Time, LinnCo shall contribute all of the outstanding equity interests in the Surviving Company to Linn (the “Contribution”) in exchange for the issuance by Linn to LinnCo of a number of newly issued Linn Units equal to the greater of (1) the aggregate number of LinnCo Common Shares issuable pursuant to Section 2.1(b)(i) (including the Excess Merger Shares sold pursuant to Section 2.1(e)) and Section 2.3(c) and (2) the number of Linn Units as is necessary to cause LinnCo to own no less than one-third (1/3rd) of all of the outstanding Linn Units following the Contribution (the “Issuance”).  As a result of the Contribution, the Company shall become an indirect wholly owned subsidiary of Linn. If, between the date of this Agreement  and the Issuance, thoutstanding shares of Company Common Stock, LinnCo Common Shares or Linn Units shall have  been changed into a different numbeof shares or units or a different class of shareor units b reason of anequity dividend or distribution, subdivision, reorganization, reclassification, recapitalization, equity split, reverse  equity split, combination or exchange  of shares or units, or ansimilaevent shall have  occurred, then the number of Linn Units to be issued in the Issuance pursuant to clause (1) of this Section 1.1(d)(i) shall  be  equitabl adjusted, without duplication, to proportionall reflect suc change; provided  that nothing in this Section 1.1(d)(i) shall be construe to permit any Company

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Party or any Linn Party to t
ake any action with respect to its securities that is prohibited bthe terms of this Agreement. 

(ii)               The Linn Parties shall cause the Contribution and Issuance to be consummated on the Closing Date after the LinnCo Effective Time by executing an assignment and assumption agreement or other instrument of transfer or conveyance (in each case, in form and substance reasonably acceptable to the parties hereto) to (A) sell, transfer and convey to Linn all of the outstanding equity interests in the Surviving Company and by issuing to LinnCo evidence of ownership of the Linn Units issued in the Issuance and (B) to assume all liabilities of HoldCo and the Company to which LinnCo or the Surviving Company succeeds.

Section 1.2            Closing

   The closing of the Transactions  (the “Closing”) shall take place at the offices of Latham & Watkins LLP, 811 Main Street Suite 3700, Houston, Texas at 10:00 a.m., local time, on the fifth business day after the satisfaction or waiver (to the extent permitted by applicable Law) of the conditions set forth in Article VI (other than those conditions that by their nature are to be satisfied at the Closing, but subject to the satisfaction or waiver of such conditions), or at such other place, date and time as the parties may agree in writingThe date on which the Closing actually occurs is referred to as the “Closing Date.” 

Section 1.3            Effects of the Mergers.

   The effects of the Merger shall be as provided in this Agreement and in the applicable provisions of the DGC and DLLCA.  Without limiting the generality of the foregoing, and subject thereto, (a) at the HoldCo Effective Time, all of the property, rights, privileges, powers and franchises of Bacchus Merger Sub shall vest in the Company as the surviving corporation in the HoldCo Merger, and all debts, liabilities and duties of Bacchus Merger Sub shall become the debts, liabilities and duties of the Company, as provided under the DGCL, and (b) at the LinnCo Effective Time, all of the property, rights, privileges, powers and franchises of HoldCo, including all of the outstanding equity interests in the Company, shall vest in the Surviving Company, and all debts, liabilities and duties of HoldCo shall become the debts, liabilities and duties of the Surviving Company, as provided under the DGCL and DLLCA.

Section 1.4            Organizational Documents. 

(a)                At the HoldCo Effective Time, the certificate of incorporation and bylaws of the Company shall be the certificate of incorporation and bylaws of the surviving corporation in the HoldCo Merger.

(b)               At the Conversion Effective Time, the certificate of formation and limited liability company agreement of the Company (the “Company LLC Agreement”) shall be as set forth in Annex A and Annex B, respectively, until thereafter amended in accordance with the provisions thereof and applicable Law.

(c)                At the LinnCo Effective Time, the certificate of formation of LinnCo Merger Sub shall be the certificate of formation of the Surviving Company, until thereafter amended in accordance with the provisions thereof and applicable Law.  At the LinnCo Effective Time, the limited liability company agreement of LinnCo Merger Sub shall be the limited

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l
iability company agreement of the Surviving Company, until thereafter amended in accordance with the provisions thereof and applicable Law.

(d)               In the event that the LinnCo Amendments shall have been approved by the LinnCo shareholders, at the LinnCo Effective Time, the limited liability company agreement of LinnCo shall be amended as set forth in Annex C

Section 1.5            Directors. 

(a)                Subject to applicable Law, (i) the directors of the Company immediately prior to the HoldCo Effective Time shall be, as of the Holdco Effective Time, the directors of the surviving corporation in the HoldCo Merger and shall hold office until their respective successors are duly elected and qualified, or their earlier death, resignation or removal and (ii) the directors of LinnCo immediately prior to the LinnCo Effective Time shall be, as of the LinnCo Effective Time, the directors of the Surviving Company and shall hold office until their respective successors are duly elected and qualified, or their earlier death, resignation or removal.

(b)               Subject to applicable Law, the Board of Directors of Linn shall take such actions as are necessary to appoint, effective as of the LinnCo Effective Time, at least one member of the Board of Directors of the Company prior to the HoldCo Effective Time to serve either on the Board of Directors of Linn or the Board of Directors of LinnCo.

Section 1.6            Officers.

The officers of the Company immediately prior to the HoldCo Effective Time shall be the officers of the surviving corporation in the HoldCo Merger and shall hold office until their respective successors are duly elected and qualified, or their earlier death, resignation or removalThe officers of LinnCo immediately prior to the LinnCo Effective Time shall be, as of the LinnCo Effective Time, the officers of the Surviving Company and shall hold office until their respective successors are duly elected and qualified, or their earlier death, resignation or removal

Article II.

CONVERSION OF SHARES; EXCHANGE OF CERTIFICATES

Section 2.1            Effecon Capital Stocor Common Shares.

(a)                Effect of HoldCo Effective Time.  At the HoldCo Effective Time, by virtue othe HoldCo Merger and without anaction on the part of the Company, HoldCo, Bacchus Merger Sub or the  holde of  an shares of Company Common Stock, shares of HoldCo Common Stock or shares of Bacchus Merger Sub Common Stock:

(i)                 Conversion of Bacchus Merger Sub Common Stock.  Each share of Bacchus Merger Sub common stock, par value $0.01 per share (“Bacchus Merger Sub Common Stock”), issued and outstanding immediately prior to the HoldCo Effective Time shall automaticallbconverted into and become one share of common stock of the Company as the surviving corporation in the Holdco Merger

 

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(ii)               Cancellation of Certain Company Common Stock.  Each shar of  Company Class A Common Stock, par value $0.01 per share (“Class A Common Stock”), and each share of Company Class B Common Stock, par value $0.01 per share (“Class B Common Stock” and together with the Class A Common Stock, “Company Common Stock”), that is owned or held  in treasur by the Company and  each shar of  Company Common Stock issued and outstanding immediatel prior  to the HoldCo Effective Time that is owned by LinnCo, Linn or anof their respective Subsidiaries shall no longebe outstanding and shall automaticallbe cancelled and shall ceasto exist  (the Cancelled Shares”)and no consideration shall be delivered in exchangtherefor

(iii)             Cancellation of Certain HoldCo Common Stock.  Each share of HoldCo Class A common stock, par value $0.01 per share (“HoldCo Class A Common Stock”), and each share of HoldCo Class B common stock, par value $0.01 per share (“HoldCo Class B Common Stock” and together with the HoldCo Class A Common Stock “HoldCo Common Stock”), that is owned or held by the Company shall no longer be outstanding and shall automatically be cancelled and shall cease to exist, and no consideration shall be delivered in exchange therefor.

(iv)             Conversion of Company Common Stock.  Each share of Class A Common Stock issued and outstanding immediately prior to the HoldCo Effective Time, othe than anCancelled Shares and other than any Dissenting Shares shall be converted automatically into the right to receive one share of HoldCo Class A Common Stock. Each share of Class B Common Stock issued and outstanding immediately prior to the HoldCo Effective Time, othethan anCancelled Shares and other than any Dissenting Sharesshall be converted automatically into the right to receive one share of HoldCo Class B Common Stock.

(v)               Effect of Conversion of Company Common Stock. All of the  shares o Company Common Stock converted into the shares of HoldCo Common Stock pursuant to this Article  I shall no longe be  outstandin and  shall automaticallbe cancelled and shall cease to exist as of the  HoldCo Effective Time, and uncertificated shares of Company Common Stock represented b book-entr form (“Company Book-Entry Shares”) and each certificate  that, immediatel prior to the HoldCo Effective Time, represented an such shares of Company Common Stock (a “Company Certificate”) shall thereafte represent onl the shares of HoldCo Common Stock into which the shares of Company Common Stock represented bsucCompany Book-Entry Shares or Company Certificate have been converted pursuant to this Section 2.1      

(b)               Effect of LinnCo Effective Time.  At the LinnCo Effective Time, by virtue othe LinnCo Merger and without anaction on the part of LinnCo Merger Sub, HoldCo or the holdeof any limited liability company interest in LinnCo Merger Sub or shares of HoldCo Common Stock: 

(i)                 Conversion of HoldCo Common Stock.  Subject to the other provisions of this Article II, each share of HoldCo Common Stock issued and outstanding immediately prior to the LinnCo Effective Time, other than any Dissenting Shares, shall

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be converted automatically into and shall thereafter represent the right to receive 1.25 (the “
Exchange Ratio”) newly issued LinnCo Common Shares (the “Merger Consideration”). 

(ii)               Effect of Conversion of HoldCo Common Stock. All of the shares of HoldCo Common Stock converted into the right to receiv the  Merger Consideration pursuant to this Article  II shall no longer be outstanding and shall automaticall be cancelled and shall cease to exist as of the LinnCo Effective Time, and uncertificated shares of HoldCo Common Stock represented by book-entry form (“HoldCo Book-Entry Shares” and together with Company Book-Entry Shares, “Book-Entry Shares”) and each certificate that, immediately prior to the LinnCo Effective Time, represented any such shares of HoldCo Common Stock (a “HoldCo Certificate” and together with a Company Certificate, a “Certificate”) shall thereafte represent onlthe  right to receivthe Merger Consideration and the Fractional Share Cash Amount into which the shares of HoldCo Common Stock represented bsuc HoldCo Book-EntrShares or HoldCo Certificates  hav been converted pursuant to this Section 2.1, as well as any Fractional Share Cash Amount payable in accordance with Section 2.1(e) and dividends or other distributions to which holders of Book-Entry Shares or Certificates become entitled in accordance with Section 2.2(e)

(c)                Shares of Dissentin Stockholders.  Notwithstanding anythinin this Agreement to the contrary anissue and outstanding shares of Company Common Stock or Holdco Common Stock held by person (Dissenting  Stockholderwho has not voted in favor of, or consented to, the adoption of this Agreement and has complied with all the provisions of the DGCconcerning the right of holders of shares of Company Common Stock to demand appraisal of their shares (the Appraisal Provisionsof  Company Common Stock or Holdco Common Stock, as applicable (such shares, the “Dissenting Shares”), to the extent the Appraisal Provisions arapplicable, shall not be converted into the right to receive shares of HoldCo Common Stock as set forth in Section 2.1(a)(iv) or the Merger Consideration as set forth in Section 2.1(b)(i), as applicable, but instead shall become the right to receive such consideration as mabe determined to be due to such Dissenting Stockholde pursuant to the procedures set forth in Section 262 of the  DGCLIsuch Dissentin Stockholdewithdraws its demand for appraisaor fails to perfect or otherwise loses its right of appraisal, in ancase pursuant to the DGCL, each of suc Dissenting  Stockholder’s shares of Company Common Stock or Holdco Common Stock, as the case may be, shall thereupon be deemed to have  been converted into and to have  become, as o the LinnCo Effective Time, the right to receive  shares of HoldCo Common Stock as set forth in Section 2.1(a)(iv) that were thereafter converted into the right to receive the Merger Consideration as set forth in Section 2.1(b)(i).  The Company shall  give LinnCo prompt noticof  any demands  for  appraisal of shares received b any Company Party, withdrawals of such demands and any othe instruments serve pursuant to Section 262 of the DGCand shall  giv LinnCo the opportunit to participate in all negotiations and proceedings with respect thereto.  No Company Party shall, without the prior written consent of LinnCo, make anpayment with respect to, or settle or offer to settle, ansuch demands. 

(d)               Certain Adjustments.   Ifbetween the date of this Agreement and the LinnCo Effective Time, thoutstanding shares of Company Common Stock or LinnCo Common Shares shall have been changed into a different numbeof shares or a different class of shareb  

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reason of an stock dividend, subdivision, reorganization, reclassification, recapitalization, stock split, reverse  stock split, combination or exchange  of shares, or an simila event shall have  occurred, then the Exchange  Ratio shall  be  equitabl adjusted, without duplication, to proportionall reflect suc change; provided  that nothing in this Section 2.1(d) shall be construe to permit any Company Party or any Linn Party to take  an action with respect to its securities that is prohibited b the  terms of this Agreement. 

(e)                No Fractional Shares.   No fractional LinnCo Common Shares shall be issued in connection with the LinnCo Merger, no certificates o scrip representing  fractional LinnCo Common Shares shall be delivered upon the conversion  of  HoldCo Common Stock pursuant to Section 2.1(b)(i), and  such fractional shar interests shall not entitle the owne thereof  to vote or  to an othe rights of holde of  LinnCo Common Shares.  Notwithstanding an othe provision of this Agreement,  each holde of  shares of HoldCo Common Stock converted pursuant to the LinnCo Merger who would otherwise  hav been entitled to receive  fraction of LinnCo Common Share (afte aggregatin all shares represented b the  Certificates and  Book-Entr Shares delivered b such holder shall receive from the Escrow Agent, in lieu thereof  and upon surrende thereof, a cash  payment (without interest)  in an amount representing such holder’s proportionate interest in the net proceeds from the sale by the Escrow Agent on behalf of all such holders of LinnCo Common Shares that would otherwise be issued (the “Excess Merger Shares”).  The sale of the Excess Merger Shares by the Escrow Agent shall be executed on a national securities exchange, including the NASDAQ Stock Market LLC (the “NASDAQ”).  Until the net proceeds of such sale or sales have been distributed to such holders of HoldCo Common Stock, the Escrow Agent shall hold such proceeds in trust for such holders (the “Fractional Share Trust”).  LinnCo shall pay all commissions, transfer taxes and other out-of-pocket transaction costs incurred in connection with such sale of the Excess Merger Shares.  The Escrow Agent shall determine the portion of the Fractional Share Trust to which each holder of HoldCo Common Stock shall be entitled, if any, by multiplying the amount of the aggregate net proceeds comprising the Fractional Share Trust by a fraction, the numerator of which is the amount of fractional interests to which such holder of HoldCo Common Stock is entitled and the denominator of which is the aggregate amount of fractional interests to which all holders of HoldCo Common Stock are entitled.  As soon as practicable after the determination of the amount of cash, if any, to be paid to holders of HoldCo Common Stock in lieu of fractional interests, the Escrow Agent shall make available such amounts to such holders of HoldCo Common Stock (the “Fractional Share Cash Amount”).  Any such sale shall be made within ten business days or such shorter period as may be required by applicable Law after the Effective Time.  No such holde shall be entitled to distributions, voting  rights or an othe rights in respect of any fractional LinnCo Common Share.

Section 2.2            Exchange  of Certificates.

(a)                Appointment of Exchange Agent.  LinnCo shall appoint a bank or trust company that is reasonably acceptable to the Company to act as exchange agent (the “Exchange Agent”) for the payment of the Merger Consideration and shall enter into an agreement relating to the Exchange Agent’s responsibilities under this Agreement.

(b)               Deposit of Merger Consideration.  As of the LinnCo Effective Time, LinnCo shall deposit or cause to be deposited with the Exchange Agent, for the benefit of holders of

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Certificates or evidence of Book-Entry Shares, for exchange in accordance with this Article II evidenc of  LinnCo  Common Shares  in book-entr for (and/or certificates representin such LinnCo Common Shares, at LinnCo’s election)  representing the numbe of  LinnCo Common Shares sufficient to delive the  aggregat Merger  Consideration (including any Excess Merger Shares to be sold pursuant to Section 2.1(e)) (such certificates, togethe with an dividends or distributions with respect thereto, theExchange  Fund”)

(c)                Exchang ProceduresAs soon as reasonabl practicable  afte the LinnCo Effective Time and in an event within five business days of th Closing  Date, LinnCo and the Surviving Company shall cause  the  Exchang Agent to mail to each holde of  record of shares o Company Common Stock whose shares were converted pursuant to Section 2.1(a)(iv) into shares of HoldCo  Common Stock in the HoldCo Merger and whose shares of HoldCo Common Stock were subsequently converted pursuant to Section 2.1(b)(i) into the right to receive  th Merger Consideration (A)  lette of  transmittal (which shall specif that deliver shall be effected,  and risk of loss and title to th Certificates shall pass, onl upon deliver o the  Certificates to the Exchang Agent and shall be in such form and hav such othe provisions as the parties ma reasonabl agre upon prior  to the  LinnCo Effective Time (th Lette of Transmittal and (B) instructions for  use  in effecting  the  surrende of  Certificates or Book-Entry Shares in exchang fo the  Merge Consideration,  the  Fractional Shar Cash Amount and any dividends or othe distributions to which such holder of Certificates or Book-Entr Shares becomes  entitled in accordanc with Section 2.2(e)

(d)               Surrender of Certificates or Book-Entry Shares. Upon surrende of Certificates or Book-Entry Shares to the Exchange  Agent togethe with Lette of  Transmittal, dul completed and validl executed in accordanc with the instructions thereto, and such othe documents as ma customaril be  required b the  Exchang Agent, the holde of  such Certificates or Book-Entr Shares shall be entitled to receive  in exchang therefor the Merge Consideration deliverable in respect of the shares represented b such Certificates or Book-Entry Shares pursuant to this Agreement, togethe with the Fractional Share  Cash Amount and an dividends or othe distributions to which such holder of Certificate or  Book-Entry Shares becomes  entitled in accordanc with Section 2.2(e)In the event of a transfe of ownership of shares of Company Common Stock that is not registered in the transfe or  stock records of the Company or of HoldCo  Common Stock that is not registered in the transfer or stock records of HoldCo, any  cash to be paid upon, or LinnCo Common Shares to be issued upon, due surrende of  the  Certificate  or Book-Entr Shar formerl representing  such shares of Company Common Stock or HoldCo Common Stock ma be  paid or issued, as the case  ma be, to such a transfere if  such Certificate  or Book-Entr Share  is presented to the Exchang Agent, accompanied b all documents required to evidenc and effect such transfe and to evidenc that any  applicable  stock transfe or  othe simila Taxes have  been paid or ar not applicable.  No interest shall be paid or shall accrue  on the cash payable  upon surrende of any  Certificate  or Book-Entr Share. Until surrendered a contemplated by this Section 2.2, each Certificate  and Book-Entr Shar shall be deemed at an time  afte the  LinnCo Effective Time to represent onl the right to receive, with respect to Certificates and Book-Entry Shares, upon such surrender, the Merger Consideration deliverable in respect of the shares represented b such Certificates or Book-Entr Shares pursuant to this Agreement, togethe with the Fractional Shar Cash Amount and an dividends or other distributions to which such holder of Certificates or Book-Entry  Shares becomes  entitled in accordance with Section 2.2(e)

 

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(e)                Treatment of Unexchanged Shares.  No dividends  or  othe distributions, if any with a record dat afte the  LinnCo Effective Time with respect to LinnCo Common Shares, shall be paid to the holde of  an unsurrendered Book-Entry Shares or Certificate until such holde shall surrende such Book-Entry Shares or Certificates in accordanc with this Section 2.2.  Afte the  surrende in accordanc with this Section 2.2 of such Book-Entry Shares or Certificates, the holde thereof  shall be entitled to receiv (in addition to the Merge Consideration and the Fractional Shar Cash Amount payable to such holde pursuant to this Article  II an such dividends or othe distributions, without any interest thereon, which theretofor had become  payabl with respect to the LinnCo Common Shares to be issued in exchange for such Book-Entry Shares or Certificates

(f)                No Furthe Ownership Rights in Exchanged Shares.  The shares of HoldCo Common Stock delivered in accordance with the terms of this Article II upon conversion of any shares of Company Common Stock and the LinnCo Common Shares delivere in accordanc with the terms of this Article  II  upon  conversion of an shares of HoldCo  Common Stock, together with the payment of any Fractional Share Cash Amounts, shall be deemed to have  been delivered and  paid in full satisfaction of all rights pertainin to such shares of Company Common Stock and shares of HoldCo Common Stock, respectively.  From and  afte th LinnCo Effective Time, (i)  all holders of Certificates and Book-Entr Shares shall cease  to have  an rights as stockholders of the Company or HoldCo othe than the right to receiv the  Merge Consideration into which the shares represented b such Certificates or Book-Entr Shares have  bee converted pursuant to this Agreement upon the surrende of  such Certificate  or  Book-Entr Shar in accordanc with Section 2.2(d)  (together with the Fractional Shar Cash Amount and an dividends or othe distributions to which such Certificates or Book-Entr Shares becom entitle in accordanc with Section 2.2(e)), without interest, and (ii)  the  stoc transfe books of the Company shall be closed with respect to all shares of Company Common Stock outstanding  immediatel prior  to the HoldCo Effective Time and the stock transfer books of HoldCo shall be closed with respect to all shares of HoldCo Common Stock outstanding immediately prior to the LinnCo Effective TimeFrom  and afte the  LinnCo Effective Time the  stock transfe books  of  HoldCo  shall be closed, and ther shall be no furthe registration  of  transfers on the stock transfe books of the  Surviving  Company  of shares of HoldCo  Common Stock that wer outstanding  immediatel prior  to the LinnCo Effective Time.  If, afte the LinnCo Effective Time, an Certificates or Book-Entr Shares formerl representing shares of Company Common Stock or HoldCo Common Stock ar presented to the Surviving  Company or the Exchang Agent for  an reason, such Certificates or Book-Entr Shares shall be cancelled and exchanged as provided in this Article  II, subject to applicable  Law in the case  o Dissenting Shares. 

(g)               Termination of Exchang Fund.  An portion of th Exchange  Fund (including  an interest or othe amounts receive with respect thereto)  tha remains unclaimed by, or otherwise  undistributed to, the holders of Certificate and Book-Entr Shares for  180 days afte the LinnCo Effective Time shall be delivered to LinnCo, upon demand, and  an holde of Certificates or Book-Entr Shares who has not theretofor complied with this Article  I shall thereafte look onl to LinnCo (subject to abandoned property, escheat o othe simila Laws), a general creditor thereof, fo satisfaction of its claim for Merge Consideration, any Fractional Share Cash Amount and an dividends  and distributions which such holde has the right to receiv pursuant to this Article  II without an interest thereon. 

 

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(h)               No  Liability.  None o the parties or the Exchang Agent shall be liable  to an person in respect of an portion of the  Exchange  Fund or the Merge Consideration delivered to a public  official pursuant to an applicable  abandoned property, escheat or simila Law.   Notwithstanding an othe provision of this Agreement, any portion of the  Merge Consideration or the  Fractional Share Cash Amounts to be paid in accordanc with this Article  II that remains undistributed to the holders of Certificates and Book-Entr Share as of the  second anniversar o the LinnCo Effective Time (or  immediatel prior  to such earlie date  on which the Merger Consideration or such cash would otherwise  escheat to or becom the  propert o any Governmental Entity), shall, to the extent permitted b applicable  Law, become  the  propert of the Surviving  Company fre and clea of  all claims or interest of an person previousl entitled thereto. 

(i)                 Withholding  Rights.  LinnCo, the Surviving  Company  and the Exchang Agent (without duplication)  shall be entitled to deduct and withhold from the consideration otherwis payable  to an holde of  Certificate  o Book-Entr Shar pursuant to this Agreement such amounts as ma b required to be deducte and withheld with respect to the making  of  such payment  unde applicabl Ta Law.  An amounts so deducted, withheld and paid ove to the appropriate  Taxing  Authorit shall be treated fo all purposes of this Agreement as having been paid to the holde of  the  Certificat or  Book-Entr Shar in respect of whom such deduction or withholding was made

(j)                 Lost Certificates.   I an Certificate  shall hav been lost, stolen or destroyed, upon the making  of  an affidavit of tha fact b the  person  claiming  such Certificate  to be lost, stolen or destroyed and, if required b LinnCo  or  the  Exchange  Agent, the posting  by such person of bond in such amount as LinnCo or  the  Exchange  Agent  ma determine  is reasonabl necessar as indemnit against an claim that ma be  mad against it or the Surviving  Compan with respect to such Certificate, the Exchange  Agent  (or, if subsequent to the termination of the  Exchang Fund and subject to Section 2.2(g) the Surviving Company) shall deliver, in exchange  for  suc lost, stolen or destroyed Certificate, the Merge Consideration, any Fractional Share Cash Amount and any dividends and distributions deliverable  in respect thereof  pursuant to this Agreement. 

Section 2.3            Company  Stoc Option an Othe Stock Awards.

(a)                As part of the Transactions, each option to purchase shares of Company Common Stock (recognizing and taking into account that each share of Company Common Stock will, at the HoldCo Effective Time, be converted into a share of HoldCo Common Stock in accordance with Section 2.1 of this Agreement) granted pursuant to a Company Stock Plan that is outstanding immediately prior to the HoldCo Effective Time (each, a “Company Option”) shall, as of the LinnCo Effective Time, be converted into an option (an “Adjusted Option”) to purchase, on the same terms and conditions as were applicable to such Company Option immediately prior to the HoldCo Effective Time, (i) a number of units representing limited liability company interests in Linn (“Linn Common Units”) (rounded down to the nearest whole unit) equal to the product determined by multiplying (A) the number of shares of Company Common Stock subject to such Company Option immediately prior to the HoldCo Effective Time by (B) the Exchange Ratio and by (C) the LinnCo/Linn Exchange Ratio, (ii) at an exercise price per Linn Common Unit (rounded up to the nearest whole cent) equal to the quotient

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determined by dividing (A) the per share exercise price for the shares of Company Common Stock subject to such Company Option immediately prior to the HoldCo Effective Time by (B) the product determined by multiplying (1) the Exchange Ratio by (2) the LinnCo/Linn Exchange Ratio.  For purposes of this Agreement, the “
LinnCo/Linn Exchange Ratio” shall be equal to the average of the closing prices of one LinnCo Common Share on the NASDAQ Global Select Market on the last five full trading days prior to the Closing Date divided by the average of the closing prices of one Linn Common Unit on the NASDAQ Global Select Market on the last five full trading days prior to the Closing Date.  The terms of each Adjusted Option shall include the provisions set forth on Section 2.3(a) of the Company Disclosure Schedule.

(b)         As part of the Transactions, each award of restricted stock units in respect of shares of Company Common Stock (each, a “Company RSU Award”) (recognizing and taking into account that each share of Company Common Stock will, at the HoldCo Effective Time, be converted into a share of HoldCo Common Stock in accordance with Section 2.1 of this Agreement) granted under a Company Stock Plan (excluding any Company RSU Award held by a current or former non-employee director of the Company and excluding any performance-based Company RSU Award) that is outstanding and unvested as of the HoldCo Effective Time shall be converted as of the LinnCo Effective Time into a restricted unit award (an “Adjusted RSU Award”) in respect of the number of Linn Common Units (rounded to the nearest whole unit) equal to the product determined by multiplying (i) the number of shares of Company Common Stock subject to the Company RSU Award immediately prior to the HoldCo Effective Time by (ii) the Exchange Ratio and by (iii) the LinnCo/Linn Exchange Ratio, with each Adjusted RSU Award to continue to be subject to the same terms and conditions as were applicable to the related Company RSU Award immediately prior to the HoldCo Effective Time.  The terms of each Adjusted RSU Award shall include the provisions set forth on Section 2.3(b) of the Company Disclosure Schedule.

(c)                As part of the Transactions, each Company RSU Award (recognizing and taking into account that each share of Company Common Stock will, at the HoldCo Effective Time, be converted into a share of HoldCo Common Stock in accordance with Section 2.1 of this Agreement) granted under a Company Stock Plan that (i) is vested as of the Holdco Effective Time, (ii) is held by a current or former non-employee director (including any Company RSU Award outstanding under the Company Deferred Compensation Plan), or (iii) is a performance-based Company RSU Award shall be converted as of the LinnCo Effective Time into the right to receive a number of LinnCo Common Shares (rounded to the nearest whole share) equal to the product obtained by multiplying (A) the number of shares of Company Common Stock subject to the Company RSU Award immediately prior to the HoldCo Effective Time by (B) the Exchange Ratio.  LinnCo shall deliver the LinnCo Common Shares converted pursuant to the immediately preceding sentence no later than five business days following the LinnCo Effective Time. For purposes of this Section 2.3(c), each performance-based Company RSU Award that is outstanding immediately prior to the Holdco Effective Time shall be deemed to have been earned at the target level as specified in the applicable award agreement.  

(d)               Prior to the LinnCo Effective Time, the Company Board of Directors and/or the appropriate committee thereof shall adopt resolutions providing for the treatment of the Company Options and Company RSU Awards (collectively, the “Company Stock Awards”) as contemplated by this Section 2.3.  As of the LinnCo Effective Time, Linn shall file one or

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more appropriate registration statements (on Form S-3 or Form S-8, or any successor or other appropriate forms) with respect to Linn Common Units underlying Adjusted Options and Adjusted RSU Awards held by individuals who are employees or consultants of the Company and its subsidiaries immediately following the LinnCo Effective Time.

Section 2.4            Further Assurances.

   If at any time before or after the LinnCo Effective Time, any party reasonably believes or is advised that any further instruments, deeds, assignments or assurances are reasonably necessary or desirable to consummate the Mergers, the Conversion, the Contribution and the Issuance (collectively, the “Principal Transactions”) or any other transaction contemplated by this Agreement (together with the Principal Transactions, the “Transactions”) or to carry out the purposes and intent of this Agreement at or after the LinnCo Effective Time, then the parties and their respective officers and directors shall execute and deliver all such proper instruments, deeds, assignments or assurances and do all other things reasonably necessary or desirable to consummate the Transactions and to carry out the purposes and intent of this Agreement.  

Article III.

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

Except as disclosed in the Company SEC Documents filed prior to the date hereof (excluding any disclosures set forth in any such Company SEC Document in any risk factor section, any forward-looking disclosure in any section relating to forward-looking statements or any other statements that are non-specific, predictive or primarily cautionary in nature other than historical facts included therein), where the relevance of the information as an exception to (or disclosure for purposes of) a particular representation is reasonably apparent on the face of such disclosure, or in the disclosure schedule delivered by the Company to LinnCo immediately prior to the execution of this Agreement (the “Company Disclosure Schedule”) (each section of which qualifies the correspondingly numbered representation, warranty or covenant if specified therein and such other representations, warranties or covenants where its relevance as an exception to (or disclosure for purposes of) such other representation, warranty or covenant is reasonably apparent), the Companyrepresents and warrants to the Linn Parties as follows:

Section 3.1            Qualification, Organization, Subsidiaries, etc

(a)                The Company is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware and has all requisite corporate power and authority to own, lease and operate its properties and assets and to carry on its business as presently conducted.  Each of the Company’s Subsidiaries is a legal entity duly organized, validly existing and in good standing under the Laws of its respective jurisdiction of organization and has all requisite corporate or similar power and authority to own, lease and operate its properties and assets and to carry on its business as presently conducted, except where the failure to have such power or authority would not have, individually or in the aggregate, a Company Material Adverse Effect.  Each of the Company and its Subsidiaries is duly qualified or licensed, and has all necessary governmental approvals, to do business and is in good standing in each jurisdiction in which the property owned, leased or operated by it or the nature of the business conducted by it makes such approvals, qualification or licensing necessary, except where the

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failure to be so duly approved, qualified or licensed and in good standing would not have, individually or in the aggregate, a Company Material Adverse Effect. 

(b)               The Company has made available prior to the date of this Agreement a true and complete copy of the Company’s certificate of incorporation and bylaws (collectively, the “Company Organizational Documents”), and the certificate of incorporation, bylaws, limited partnership agreement, limited liability company agreement or comparable constituent or organizational documents for each Subsidiary of the Company, in each case, as amended through the date hereof.

Section 3.2            Capital Stock.   

(a)                The authorized capital stock of the Company consists of 100,000,000 shares of Company Class A Common Stock, 3,000,000 shares of Company Class B Common Stock and 2,000,000 shares of preferred stock, par value $0.01 per share (“Company Preferred Stock”).  As of February 15, 2013, (i) 52,546,120 shares of Company Class A Common Stock were issued and outstanding, (ii) 1,763,866 shares of Company Class B Common Stock were issued and outstanding, (iii) no shares of Company Class A Common Stock were held in treasury, (iv) no shares of Company Class B Common Stock were held in treasury, (v) no shares of Company Preferred Stock were issued or outstanding, and (vi) 3,900,000 shares of Company Class A Common Stock were reserved for issuance under the Company Stock Plans, of which amount (A) 1,204,464 shares of Company Class A Common Stock were subject to outstanding Company RSU Awards (determined based on the “target amount,” with respect to any Company RSU Awards that contain performance based vesting conditions) and (B) 1,387,592 shares of Company Class A Common Stock are issuable upon the exercise of outstanding Company Options.  All outstanding shares of Company Common Stock are, and shares of Company Common Stock reserved for issuance with respect to Company Stock Awards, when issued in accordance with the respective terms thereof, will be, duly authorized, validly issued, fully paid and nonassessable and free of preemptive rights.  

(b)               Except as set forth in Section 3.2(a) (and other than the shares of Company Common Stock issuable pursuant to the terms of outstanding Company Stock Awards), there are no outstanding subscriptions, options, warrants, calls, convertible securities, exchangeable securities or other similar rights, agreements or commitments to which the Company or any of its Subsidiaries is a party (i) obligating the Company or any of its Subsidiaries to (A) issue, transfer, exchange, sell or register for sale any shares of capital stock or other equity interests of the Company or any Subsidiary of the Company or securities convertible into or exchangeable for such shares or equity interests, (B) grant, extend or enter into any such subscription, option, warrant, call, convertible securities or other similar right, agreement or arrangement, (C) redeem or otherwise acquire any such shares of capital stock or other equity interests, (D) provide a material amount of funds to, or make any material investment (in the form of a loan, capital contribution or otherwise) in, any Subsidiary of the Company or (E) make any payment to any person the value of which is derived from or calculated based on the value of Company Common Stock or Company Preferred Stock, or (ii) granting any preemptive or antidilutive or similar rights with respect to any security issued by the Company or its Subsidiaries.  No Subsidiary of the Company owns any shares of capital stock of the Company. 

 

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(c)                Neither the Company nor any of its Subsidiaries has outstanding bonds, debentures, notes or other indebtedness, the holders of which have the right to vote (or which are convertible or exchangeable into or exercisable for securities having the right to vote) with the stockholders of the Company on any matter.

(d)               There are no voting trusts or other agreements or understandings to which the Company or any of its Subsidiaries is a party with respect to the voting or registration of the capital stock or other equity interest of the Company or any of its Subsidiaries.

(e)                The Company or a Subsidiary of the Company owns, directly or indirectly, all of the issued and outstanding shares of capital stock or other equity interests of each Subsidiary of the Company, free and clear of any preemptive rights and any Liens other than Permitted Liens, and all of such shares of capital stock or other equity interests are duly authorized, validly issued, fully paid and nonassessable and free of preemptive rights.  Except for equity interests in the Company’s Subsidiaries and for the interests described in Section 3.2(e) of the Company Disclosure Schedule, neither the Company nor any of its Subsidiaries owns, directly or indirectly, any equity interest in any person (or any security or other right, agreement or commitment convertible or exercisable into, or exchangeable for, any equity interest in any person).  Neither the Company nor any of its Subsidiaries has any obligation to acquire any equity interest in, any person.

Section 3.3            Corporate Authority Relative to this Agreement; No Violation. 

(a)                Each Company Party has the requisite corporate power and authority to execute and deliver this Agreement and each other document to be entered into by such Company Party in connection with the Transactions (together with this Agreement, the “Company Transaction Documents”) and, subject to the adoption of this Agreement and the approval of the Mergers by the holders of a majority of the shares of Company Common Stock entitled to vote thereon (the “Company Stockholder Approval”), the adoption of this Agreement by the Company as the sole stockholder of HoldCo and by HoldCo as the sole stockholder of Bacchus Merger Sub and the approval of the Conversion and the Company LLC Agreement by HoldCo as the sole stockholder of the Company following the HoldCo Effective Time, to consummate the Transactions.  The execution and delivery of this Agreement and the other Company Transaction Documents and the consummation of the Transactions have been duly and validly authorized by the Board of Directors of each Company Party and, except for the Company Stockholder Approval, the adoption of this Agreement by the Company as the sole stockholder of HoldCo and by HoldCo as the sole stockholder of Bacchus Merger Sub prior to the HoldCo Effective Time, and the approval of the Conversion and the Company LLC Agreement by HoldCo as the sole stockholder of the Company following the HoldCo Effective Time, no other corporate proceedings on the part of any Company Party or vote of any Company Party’s stockholders are necessary to authorize the consummation of the Transactions.  The Board of Directors of the Company has unanimously (i) resolved to recommend that the Company’s stockholders adopt this Agreement (the “Company Recommendation”), (ii) determined that this Agreement and the Mergers are advisable and fair to and in the best interests of the Company’s stockholders, (iii) approved this Agreement and the Mergers, and (iv) directed that the adoption of this Agreement be submitted to a vote at a meeting of the Company’s stockholders.  Each of the Company Transaction Documents has been duly and validly executed

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and delivered by the Company Parties that are party thereto and, assuming each such Company Transaction Document constitutes the legal, valid and binding agreement of the counterparty thereto, each of the Company Transaction Documents constitutes the legal, valid and binding agreement of each such Company Party and is enforceable against such Company Party in accordance with its terms, except as such enforcement may be subject to (A) the effect of bankruptcy, insolvency, reorganization, receivership, conservatorship, arrangement, moratorium or other Laws affecting or relating to creditors’ rights generally or (B) the rules governing the availability of specific performance, injunctive relief or other equitable remedies and general principles of equity, regardless of whether considered in a proceeding in equity or at law (the “
Remedies Exceptions”).  It is the Company’s understanding as of the date hereof that all directors and executive officers of the Company intend to vote in favor of the Company Approvals.

(b)               Other than in connection with or in compliance with (i) the filing of the Certificates of Merger, the Certificates of Conversion and the Certificates of Formation with the Secretary of State of the State of Delaware, (ii) the U.S. Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder (the “Exchange Act”), (iii) the U.S. Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder (the “Securities Act”), (iv) applicable state securities, takeover and “blue sky” Laws, (v) the rules and regulations of the New York Stock Exchange (“NYSE”), (vi) the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder (the “HSR Act”), and any antitrust, competition or similar Laws outside of the United States, and (vii) the approvals set forth in Section 3.3(b) of the Company Disclosure Schedule (collectively, the “Company Approvals”), and, subject to the accuracy of the representations and warranties of the Linn Parties in Section 4.2(b), no authorization, consent, order, license, permit or approval of, or registration, declaration, notice or filing with, any United States, state of the United States or foreign governmental or regulatory agency, commission, court, body, entity or authority (each, a “Governmental Entity”) is necessary, under applicable Law, for the consummation by the Company Parties of the Transactions, except for such authorizations, consents, orders, licenses, permits, approvals or filings that are not required to be obtained or made prior to consummation of the Transactions or that, if not obtained or made, would not have, individually or in the aggregate, a Company Material Adverse Effect.

(c)                The execution and delivery by the Company Parties of this Agreement do not, and (assuming the Company Approvals are obtained) the consummation of the Transactions and compliance with the provisions hereof will not (i) result in any loss, or suspension, limitation or impairment of any right of the Company or any of its Subsidiaries to own or use any assets required for the conduct of their business or result in any violation of, or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancellation, first offer, first refusal, modification or acceleration of any material obligation or to the loss of a benefit under any loan, guarantee of indebtedness or credit agreement, note, bond, mortgage, indenture, lease, agreement, contract (including any Oil and Gas Lease or Oil and Gas Contract), instrument, permit, concession, franchise, right or license binding upon the Company or any of its Subsidiaries or by which or to which any of their respective properties, rights or assets are bound or subject, or result in the creation of any liens, claims, mortgages, encumbrances, pledges, security interests, equities or charges of any kind (each, a “Lien”) other than Permitted Liens, in each case, upon any of the properties or assets of the Company or any of its

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Subsidiaries, (ii) conflict with or result in any violation of any provision of the certificate of incorporation or bylaws or other equivalent organizational document, in each case as amended or restated, of the Company or any of its Subsidiaries or (iii) conflict with or violate any applicable Laws, except in the case of clauses (i) and (iii) for such losses, suspensions, limitations, impairments, conflicts, violations, defaults, terminations, cancellation, accelerations, or Liens as would not have, individually or in the aggregate, a Company Material Adverse Effect. 

Section 3.4            Reports and Financial Statements. 

(a)                The Company and each of its Subsidiaries has filed or furnished all forms, documents and reports required to be filed or furnished prior to the date hereof by it with the U.S. Securities and Exchange Commission (the “SEC”) since January 1, 2011 (all such documents and reports filed or furnished by the Company or any of its Subsidiaries, the “Company SEC Documents”).  As of their respective dates or, if amended, as of the date of the last such amendment, the Company SEC Documents complied in all material respects with the requirements of the Securities Act, the Exchange Act and the Sarbanes-Oxley Act of 2002 and the applicable rules and regulations promulgated thereunder (the “Sarbanes-Oxley Act”), as the case may be, and none of the Company SEC Documents contained any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, except that information set forth in the Company SEC Documents as of a later date (but before the date of this Agreement) will be deemed to modify information as of an earlier date.   

(b)               The consolidated financial statements (including all related notes and schedules) of the Company included in the Company SEC Documents (the “Company Financial Statements”) (i) fairly present in all material respects the consolidated financial position of the Company and its consolidated Subsidiaries, as of the respective dates thereof, and the consolidated results of their operations and their consolidated cash flows for the respective periods then ended, (ii) were prepared in conformity with U.S. generally accepted accounting principles (“GAAP”) (except, in the case of the unaudited statements, subject to normal year-end audit adjustments and the absence of footnote disclosure) applied on a consistent basis during the periods involved (except as may be indicated therein or in the notes thereto), (iii) comply in all material respects with the applicable accounting requirements and with the rules and regulations of the SEC, the Exchange Act and the Securities Act. 

(c)                As of the date hereof, there are no outstanding or unresolved comments in any comment letters of the staff of the SEC received by the Company relating to the Company SEC Documents.  

Section 3.5            Internal Controls and Procedures.

   The Company has established and maintains disclosure controls and procedures and internal control over financial reporting (as such terms are defined in paragraphs (e) and (f), respectively, of Rule 13a-15 under the Exchange Act) as required by Rule 13a-15 under the Exchange Act.  The Company’s  disclosure controls and procedures are reasonably designed to ensure that all material information required to be disclosed by the Company in the reports that it files or furnishes under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and
forms of the SEC, and that all such material information is accumulated and communicated to
the Company’s management as appropriate to allow timely decisions regarding required disclosure and to make the certifications required pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act.  The Company’s management has completed an assessment of the effectiveness of the Company’s internal control over financial reporting in compliance with the requirements of Section 404 of the Sarbanes-Oxley Act for the year ended December 31, 2011,  and such assessment concluded that such controls were effective.  The Company’s management assessment of the effectiveness of the Company’s internal control over financial reporting for the year ended December 31, 2012 pursuant to the requirements of Section 404 of the Sarbanes-Oxley Act has not resulted in any conclusion on or prior to the date hereof that such controls were not effective.   

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Section 3.6            No Undisclosed Liabilities.

   There are no liabilities or obligations of the Company or any of its Subsidiaries, whether accrued, absolute, determined or contingent, that would be required by GAAP to be reflected on a consolidated balance sheet of the Company and its consolidated Subsidiaries (including the notes thereto) except for (i) liabilities or obligations disclosed and provided for in the balance sheets included in the Company Financial Statements (or in the notes thereto) filed and publicly available prior to the date of this Agreement, (ii) liabilities or obligations incurred in accordance with or in connection with this Agreement, (iii) liabilities or obligations incurred since September 30, 2012 in the ordinary course of business, (iv) liabilities or obligations that have been discharged or paid in full, and (v) liabilities or obligations that have  not had and would not have, individually or in the aggregate, a Company Material Adverse Effect.

Section 3.7            Compliance with Law; Permits. 

(a)                The Company and its Subsidiaries are in compliance with, and are not in default under or in violation of, any applicable federal, state, local or foreign law, statute, ordinance, rule, regulation, judgment, order, injunction, decree, settlement or agency requirement of any Governmental Entity (collectively, “Laws” and each, a “Law”), except where such non-compliance, default or violation have not had and would not have, individually or in the aggregate, a Company Material Adverse Effect.  Since January 1, 2011, neither the Company nor any of its Subsidiaries has received any written notice or, to the Company’s knowledge, other communication from any Governmental Entity regarding any actual or possible violation of, or failure to comply with, any Law, except as would not have, individually or in the aggregate, a Company Material Adverse Effect.

(b)               The Company and its Subsidiaries are in possession of all franchises, grants, authorizations, licenses, permits, easements, variances, exceptions, consents, certificates, approvals, clearances, permissions, qualifications and registrations and orders of all applicable Governmental Entities, and all rights under any Company Material Contract with all Governmental Entities, and have filed all tariffs, reports, notices and other documents with all Governmental Entities necessary for the Company and its Subsidiaries to own, lease and operate their properties and assets and to carry on their businesses as they are now being conducted (the “Company Permits”), except where the failure to have any of the Company Permits or to have filed such tariffs, reports, notices or other documents would not have, individually or in the aggregate, a Company Material Adverse Effect.  All Company Permits are valid and in full force

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and effect and are not subject to any administrative or judicial proceeding that could result in modification, termination or revocation thereof, except where the failure to be in full force and effect or any modification, termination or revocation thereof would not have, individually or in the aggregate, a Company Material Adverse Effect.  The Company and each of its Subsidiaries is in compliance with the terms and requirements of all Company Permits, except where the failure to be in compliance would not have, individually or in the aggregate, a Company Material Adverse Effect.

(c)                Each of the Company and its Subsidiaries and, to the knowledge of the Company, each third-party operator of any of the Oil and Gas Interests of the Company and its Subsidiaries (with respect to such interests) is, and since January 1, 2011 has been, in compliance with applicable Laws and Orders, except where the failure to be in compliance would not have, individually or in the aggregate, a Company Material Adverse Effect.

(d)               Except where the failure to be in compliance would not have, individually or in the aggregate, a Company Material Adverse Effect, since January 1, 2011, (i) none of the Company or any Subsidiary of the Company nor, to the knowledge of the Company, any director, officer, employee, auditor, accountant or representative of the Company or any Subsidiary of the Company, has received or otherwise had or obtained knowledge of any material complaint, allegation, assertion or claim, whether written or oral, regarding accounting, internal accounting controls or auditing practices, procedures, methodologies or methods of the Company or any Subsidiary of the Company or any material concerns from employees of the Company or any Subsidiary of the Company regarding questionable accounting or auditing matters with respect to the Company or any Subsidiary of the Company, and (ii) no attorney representing the Company or any Subsidiary of the Company, whether or not employed by the Company or any Subsidiary of the Company, has reported in writing evidence of a violation of securities Laws, breach of fiduciary duty or similar violation by the Company, any Subsidiary of the Company or any of their respective officers, directors, employees or agents to the Board of Directors of the Company or any committee thereof, or to the General Counsel or Chief Executive Officer of the Company.

Section 3.8            Environmental Laws and Regulations.

   Except as would not have, individually or in the aggregate, a Company Material Adverse Effect:  (i) there are no investigations, actions, suits or proceedings (whether administrative or judicial) pending, or to the knowledge of the Company, threatened against the Company or any of its Subsidiaries or any person or entity whose liability the Company or any of its Subsidiaries has retained or assumed either contractually or by operation of Law, alleging non-compliance with or other liability under any Environmental Law and, to the knowledge of the Company, there are no existing facts or circumstances that would reasonably be expected to give rise to any such action, suit or proceeding, (ii) the Company and its Subsidiaries and, to the knowledge of the Company, each third-party operator of any of the Oil and Gas Interests of the Company and its Subsidiaries (with respect to such interests) are, and except for matters that have been fully resolved with the applicable Governmental Entity, since January 1, 2010  have been, in compliance with all Environmental Laws (which compliance includes the possession by the Company and each of its Subsidiaries of all Company Permits required under applicable Environmental Laws to conduct their respective business and operations, and compliance with the terms and conditions thereof), (iii) there have been no Releases at any location of Hazardous Materials by the Company or any

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of its Subsidiaries, or to the knowledge of the Company, as a result of any operations or activities of their contractors or other third-party operators, that would reasonably be expected to give rise to any fine, penalty, remediation, investigation, obligation, injunction or liability of any kind to the Company or its Subsidiaries, (iv) none of the Company and its Subsidiaries and, to the knowledge of the Company, any third-party operator of any of the Oil and Gas Interests of the Company and its Subsidiaries (with respect to such interests) and any predecessor of any of them, is subject to any Order or any indemnity obligation (other than asset retirement obligations, plugging and abandonment obligations and other reserves of the Company set forth in the Company Reserve Reports that have been provided to LinnCo prior to the date of this Agreement) or other Contract with any other person that would reasonably be expected to result in obligations or liabilities under applicable Environmental Laws or concerning Hazardous Materials or Releases, and (v) none of the Company and its Subsidiaries has received any unresolved claim, notice, complaint or request for information or contribution from a Governmental Entity or any other person relating to actual or alleged noncompliance with or liability under applicable Environmental Laws (including any such liability or obligation arising under, retained or assumed by contract or by operation of Law).     

 

Section 3.9            Employee Benefit Plans.

(a)                Section 3.9(a) of the Company Disclosure Schedule sets forth a correct and complete list of each material Company Benefit Plan.  For purposes of this Agreement, “Company Benefit Plan” means each employee benefit plan, program, agreement or arrangement, including pension, retirement, profit-sharing, deferred compensation, stock option, change in control, retention, equity or equity-based compensation, stock purchase, employee stock ownership, severance pay, vacation, bonus or other incentive plans, medical, retiree medical, vision, dental or other health plans, life insurance plans, and each other employee benefit plan or fringe benefit plan, including any “employee benefit plan” as that term is defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), in each case, whether oral or written, funded or unfunded, or insured or self-insured, maintained by the Company or any Subsidiary, or to which the Company or any Subsidiary contributes or is obligated to contribute for the benefit of any current or former employees, directors, consultants or independent contractors of the Company or any of its Subsidiaries.

(b)               With respect to the material Company Benefit Plans, each to the extent applicable, correct and complete copies of the following have been delivered or made available to LinnCo by the Company: (i) all material Company Benefit Plans (including all amendments and attachments thereto); (ii) written summaries of any material Company Benefit Plan not in writing; (iii) all related trust documents; (iv) all insurance contracts or other funding arrangements; (v) the two most recent annual reports (Form 5500) filed with the Internal Revenue Service (the “IRS”); (vi) the most recent determination letter from the IRS; (vii) the most recent summary plan description and any summary of material modifications thereto; and (viii) all material communications received from or sent to the IRS, the Pension Benefit Guaranty Corporation (the “PBGC”), the Department of Labor, or any other Governmental Entity since January 1, 2012.  Except as specifically provided in the foregoing documents delivered or made available to LinnCo, there are no material amendments to any material Company Benefit Plans that have been adopted or approved nor has the Company or any of its

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Subsidiaries undertaken to make any such material amendments or to adopt or approve any new material Company Benefit Plans. 

(c)                Except as would not have, individually or in the aggregate, a Company Material Adverse Effect, (i) each Company Benefit Plan has been established, operated and administered in accordance with its terms and the requirements of all applicable Laws, including ERISA and the Code, and (ii) all contributions required to be made to any Company Benefit Plan by applicable Law or by any plan document or other contractual undertaking, and all premiums due or payable with respect to insurance policies funding any Company Benefit Plan, have been timely made or paid in full or, to the extent not required to be made or paid on or before the date hereof, have been fully reflected on the books and records of the Company.   

(d)               Section 3.9(d) of the Company Disclosure Schedule identifies each Company Benefit Plan that is intended to be qualified under Section 401(a) of the Code (the “Qualified Plans”).  The IRS has issued a favorable determination letter with respect to each Qualified Plan and its related trust, such determination letter has not been revoked (nor, to the knowledge of the Company, has revocation been threatened), and there are no existing circumstances and no events have occurred that would reasonably be expected to adversely affect the qualified status of any Qualified Plan or the related trust or increase the costs relating thereto.  No trust funding any Company Benefit Plan is intended to meet the requirements of Code Section 501(c)(9).

(e)                None of the Company and its Subsidiaries nor any of their respective ERISA Affiliates has, at any time during the last six years, maintained, established, contributed to or been obligated to contribute to any employee benefit plan that is subject to Title IV or Section 302 of ERISA or Section 412, 430 or 4971 of the Code.

(f)                None of the Company and its Subsidiaries nor any of their respective ERISA Affiliates has, at any time during the last six years, maintained, established, contributed to or been obligated to contribute to any plan that is a “multiemployer plan” within the meaning of Section 4001(a)(3) of ERISA (a “Multiemployer Plan”) or a plan that has two or more contributing sponsors at least two of whom are not under common control, within the meaning of Section 4063 of ERISA (a “Multiple Employer Plan”), and, except as would not have, individually or in the aggregate, a Company Material Adverse Effect, none of the Company and its Subsidiaries nor any of their respective ERISA Affiliates has incurred any liability to a Multiemployer Plan or a Multiple Employer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan or Multiple Employer Plan.

(g)               Except as would not have, individually or in the aggregate, a Company Material Adverse Effect, there are no pending or, to the Company’s knowledge, threatened claims (other than claims for benefits in the ordinary course), lawsuits or arbitrations which have been asserted or instituted against the Company with respect to any Company Benefit Plan, the Company Benefit Plans, any fiduciaries thereof with respect to their duties to the Company Benefit Plans or the assets of any of the trusts under any of the Company Benefit Plans. 

(h)               Neither the Company nor any of its Subsidiaries, has sponsored or has any material obligation with respect to any employee benefit plan that provides for any post-

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employment or post-retirement medical or life insurance benefits for retired, former or current employees or beneficiaries or dependents thereof, except as required by applicable Law or pursuant to post-termination continuation provisions not in excess of three years set forth in employment agreements or severance arrangements that are Company Benefit Plans.

(i)                 The Company is not party to, or otherwise obligated under, any contract, agreement, plan or arrangement that provides for the gross-up of taxes imposed by Section 409A(a)(1)(B) of the Code.

(j)                 The consummation of the Transactions will not, either alone or in combination with another event, except as provided under this Agreement or as required by applicable Law (i) entitle any current or former employee, director, consultant or officer of the Company or any of its Subsidiaries to severance pay or accrued pension benefit or any other payment, (ii) accelerate the time of payment or vesting, or increase the amount of compensation due any such employee, director, consultant or officer, or (iii) trigger any funding obligation under any Company Benefit Plan or impose any restrictions or limitations on the Company’s rights to administer, amend or terminate any Company Benefit Plan.

(k)               The consummation of the Transactions will not, either alone or in combination with another event, result in any payment (whether in cash or property or the vesting of property) to any “disqualified individual” (as such term is defined in Treasury Regulation Section 1.280G-1) that would, individually or in combination with any other such payment, constitute an “excess parachute payment” (as defined in Section 280G(b)(1) of the Code).  No Company Benefit Plan provides for the gross-up or reimbursement of Taxes under Section 4999 of the Code or otherwise. 

Section 3.10        Absence of Certain Changes or Events.

(a)                From September 30, 2012 through the date of this Agreement, the businesses of the Company and its Subsidiaries have been conducted in all material respects in the ordinary course of business, and none of the Company or any Subsidiary of the Company have undertaken any action that would be prohibited by clauses (A), (B), (C), (D), (E), (F), (G), (H), (J), (K), (L), (M), (P) or (Q) of Section 5.1(b) of this Agreement if such section were in effect at all times since September 30, 2012.

(b)               Since September 30, 2012, there has not been any event, change, effect, development or occurrence that, individually or in the aggregate, has had a Company Material Adverse Effect.

Section 3.11        Investigations; Litigation.

   Except as would not have, individually or in the aggregate, a Company Material Adverse Effect, (a) there is no investigation or review pending (or, to the knowledge of the Company, threatened) by any Governmental Entity with respect to the Company or any of its Subsidiaries, (b) there are no actions, suits (or, to the knowledge of the Company, inquiries), investigations, proceedings, subpoenas, civil investigative demands or other requests for information by any Governmental Entity relating to potential violations of Law pending (or, to the knowledge of the Company, threatened) against or affecting the Company or any of its Subsidiaries, or any of their respective properties and (c)

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there are no orders, judgments or decrees of any Governmental Entity against the Company or any of its Subsidiaries.

Section 3.12        Information Supplied.

   The information supplied or to be supplied by the Company in writing expressly for inclusion in the registration statement on Form S-4 to be filed by LinnCo in connection with the issuance of LinnCo Common Shares in the LinnCo Merger (the “Form S-4”) shall not, at the time the Form S-4 is declared effective by the SEC, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading, except that no representation or warranty is made by the Company with respect to statements made or incorporated by reference therein based on information supplied by any Linn Party in writing expressly for inclusion therein.  The information supplied or to be supplied by the Company in writing expressly for inclusion in the joint proxy statement/prospectus (the “Joint Proxy Statement/Prospectus”) relating to the Company Stockholders’ Meeting, the LinnCo Shareholders’ Meeting and the Linn Members’ Meeting included in the Form S-4 will not, at the time the Joint Proxy Statement/Prospectus is first mailed to the stockholders of the Company, the shareholders of LinnCo or the members of Linn, as applicable, and at the time of any meeting of Company stockholders, LinnCo shareholders or Linn members to be held in connection with the Mergers and the Contribution and Issuance, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading, except that no representation or warranty is made by the Company with respect to statements made or incorporated by reference therein based on information supplied by the Linn Parties in writing expressly for inclusion therein.  The Form S-4 and the Joint Proxy Statement/Prospectus (solely with respect to the portion thereof based on information supplied or to be supplied by the Company in writing expressly for inclusion therein but excluding any portion thereof based on information supplied  by the Linn Parties in writing expressly for inclusion therein, with respect to which no representation or warranty is made by the Company) will comply as to form in all material respects with the provisions of the Securities Act and the Exchange Act

Section 3.13        Regulatory Matters.

(a)                The Company is not (i) an “investment company” or a company “controlled” by an “investment company” within the meaning of the U.S. Investment Company Act of 1940, as amended, and the rules and regulations promulgated thereunder or (ii) a “holding company,” a “subsidiary company” of a “holding company,” an affiliate of a “holding company,” a “public utility” or a “public-utility company,” as each such term is defined in the U.S. Public Utility Holding Company Act of 2005.

(b)               All natural gas pipeline Systems and related facilities constituting the Company’s and its Subsidiaries’ properties are (i) “gathering facilities” that are exempt from regulation by the U.S. Federal Energy Regulatory Commission under the Natural Gas Act of 1938, as amended, and (ii) not subject to rate regulation or comprehensive nondiscriminatory access regulation under the Laws of any state or other local jurisdiction.

Section 3.14        Tax Matters.

 

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(a)                Except as would not have, individually or in the aggregate, a Company Material Adverse Effect:

(i)                 (A) The Company and each of its Subsidiaries has timely filed all Tax Returns with the appropriate Taxing Authority required to be filed, taking into account any extensions of time within which to file such Tax Returns, and all such Tax Returns were complete and correct, and (B) all Taxes due and owing by the Company and each of its Subsidiaries (whether or not shown on such filed Tax Returns), including Taxes required to be collected or withheld from payments to employees, creditors, shareholders or other third parties, have been paid, except in each case of clause (A) and (B) for amounts being contested in good faith by appropriate proceedings or for which adequate reserves have been maintained in accordance with GAAP.

(ii)               (A) No deficiencies for Taxes with respect to the Company or any of its Subsidiaries have been claimed, proposed or assessed by any Taxing Authority that have not been settled and paid or adequately reserved in accordance with GAAP, (B) as of the date hereof, there are no pending or threatened audits, assessments or other actions for or relating to any liability in respect of Taxes of the Company or any of its Subsidiaries, and (C) neither the Company nor any of its Subsidiaries has waived any statute of limitations in respect of Taxes or agreed to any extension of time with respect to a Tax assessment or deficiency.

(iii)             There are no Liens for Taxes upon any property or assets of the Company or any of its Subsidiaries other than Permitted Liens.

(iv)             Neither the Company nor any of its Subsidiaries has participated in a “listed transaction” within the meaning of Treasury Regulation Section 1.6011-4(b).

(v)               No claim has been made by any Taxing Authority in a jurisdiction where the Company or any Subsidiary does not file Tax Returns that the Company or any Subsidiary is or may be subject to taxation by that jurisdiction, other than any such claims that have been resolved.

(vi)             Neither the Company nor any of its Subsidiaries is a party to any Tax allocation, sharing, indemnity, or reimbursement agreement or arrangement (excluding any such agreements pursuant to customary provisions in contracts not primarily related to Taxes).

(vii)           Neither the Company nor any of its Subsidiaries has been a member of an affiliated group within the meaning of Section 1504(a) of the Code (or any similar group defined under a similar provision of foreign, state or local Law), other than a group of which the Company or any Subsidiary is or was the common parent, and neither the Company nor any of its Subsidiaries has any liability for Taxes of any other person (other than Taxes of the Company or any Subsidiary) under Treasury Regulation Section 1.1502-6 (or any similar provision of foreign, state or local Law), as a transferee or successor, by contract or otherwise.

 

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(viii)         Within the last two years, neither the Company nor any of its Subsidiaries has been a party to any transaction intended to qualify under Section 355 of the Code.

(b)      &nbs