Unit Purchase Agreement (2007)Full Document 

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UNIT PURCHASE AGREEMENT
BY AND AMONG
LINN ENERGY, LLC
AND
THE PURCHASERS NAMED HEREIN

 


 

UNIT PURCHASE AGREEMENT
     UNIT PURCHASE AGREEMENT, dated as of May 30, 2007 (this “Agreement”), by and among LINN ENERGY, LLC, a Delaware limited liability company (“Linn Energy”) and each of the purchasers named in Schedule 2.01 to this Agreement (each such purchaser a “Purchaser” and, collectively, the “Purchasers”).
     WHEREAS, Linn Energy desires to sell approximately $260,000,000.00 of Units to the Purchasers;
     WHEREAS, the Purchasers desire to purchase severally an aggregate of approximately $260,000,000.00 of Units from Linn Energy in accordance with the terms and provisions of this Agreement;
     WHEREAS, Linn Energy desires to reduce indebtedness outstanding under Linn Energy’s revolving credit facility out of the proceeds from Linn Energy’s sale of approximately $260,000,000.00 of Units to the Purchasers; and
     WHEREAS, Linn Energy has agreed to provide the Purchasers with certain registration rights with respect to the Purchased Units acquired pursuant to this Agreement.
     NOW THEREFORE, in consideration of the mutual covenants and agreements set forth herein and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Linn Energy and each of the Purchasers, severally and not jointly, hereby agree as follows:
ARTICLE I
DEFINITIONS
     Section 1.01. Definitions. As used in this Agreement, and unless the context requires a different meaning, the following terms have the meanings indicated:
     “8-K Filing” shall have the meaning specified in Section 5.04.
     “Action” against a Person means any lawsuit, action, proceeding, investigation or complaint before any Governmental Authority, mediator or arbitrator.
     “Affiliate” means, with respect to a specified Person, any other Person, whether now in existence or hereafter created, directly or indirectly controlling, controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, “control” (including, with correlative meanings, “controlling”, “controlled by” and “under common control with”) means the power to direct or cause the direction of the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise.
     “Agreement” shall have the meaning specified in the introductory paragraph.

 


 

     “Basic Documents” means, collectively, this Agreement, the Registration Rights Agreement and any and all other agreements or instruments executed and delivered by the Parties to evidence the execution, delivery and performance of this Agreement, and any amendments, supplements, continuations or modifications thereto.
     “Board of Directors” means the board of directors of Linn Energy.
     “Business Day” means any day other than a Saturday, a Sunday, or a legal holiday for commercial banks in Houston, Texas or New York, New York.
     “Buy-In” shall have the meaning specified in Section 9.08.
     “Buy-In Price” shall have the meaning specified in Section 9.08.
     “Closing” shall have the meaning specified in Section 2.02.
     “Closing Date” shall have the meaning specified in Section 2.02.
     “Code” means the Internal Revenue Code of 1986, as amended from time to time.
     “Commission” means the United States Securities and Exchange Commission.
     “Commitment Amount” means the dollar amount set forth opposite each Purchaser’s name on Schedule 2.01 to this Agreement under the heading “Gross Proceeds to Issuer.”
     “Delaware LLC Act” shall have the meaning specified in Section 3.02(a).
     “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, and the rules and regulations of the Commission promulgated thereunder.
     “GAAP” means generally accepted accounting principles in the United States of America in effect from time to time.
     “Governmental Authority” shall include the country, state, county, city and political subdivisions in which any Person or such Person’s Property is located or that exercises valid jurisdiction over any such Person or such Person’s Property, and any court, agency, department, commission, board, bureau or instrumentality of any of them and any monetary authorities that exercise valid jurisdiction over any such Person or such Person’s Property. Unless otherwise specified, all references to Governmental Authority herein shall mean a Governmental Authority having jurisdiction over, where applicable, Linn Energy, its Subsidiaries or any of their Property or any of the Purchasers.
     “Indemnified Party” shall have the meaning specified in Section 8.03.
     “Indemnifying Party” shall have the meaning specified in Section 8.03.
     “Law” means any federal, state, local or foreign order, writ, injunction, judgment, settlement, award, decree, statute, law, rule or regulation.

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     “Lien” means any interest in Property securing an obligation owed to, or a claim by, a Person other than the owner of the Property, whether such interest is based on the common law, statute or contract, and whether such obligation or claim is fixed or contingent, and including the lien or security interest arising from a mortgage, encumbrance, pledge, security agreement, conditional sale or trust receipt or a lease, consignment or bailment for security purposes.
     “Limited Liability Company Agreement” shall have the meaning specified in Section 2.01(a).
     “Linn Energy” shall have the meaning specified in the introductory paragraph.
     “Linn Energy Financial Statements” shall have the meaning specified in Section 3.03.
     “Linn Energy Material Adverse Effect” means any material and adverse effect on (i) the assets, liabilities, financial condition, business, operations, prospects or affairs of Linn Energy and its Subsidiaries, taken as a whole, measured against those assets, liabilities, financial condition, business, operations, prospects or affairs reflected in the Linn Energy SEC Documents, other than those occurring as a result of general economic or financial conditions or other developments that are not unique to and do not have a material disproportionate impact on Linn Energy and its Subsidiaries but also affect other Persons who participate in or are engaged in the lines of business of which Linn Energy and its Subsidiaries participate or are engaged, (ii) the ability of Linn Energy and its Subsidiaries, taken as a whole, to carry out their business as of the date of this Agreement or to meet their obligations under the Basic Documents on a timely basis or (iii) the ability of Linn Energy to consummate the transactions under any Basic Document.
     “Linn Energy Related Parties” shall have the meaning specified in Section 8.02.
     “Linn Energy SEC Documents” shall have the meaning specified in Section 3.03.
     “Lock-Up Date” means 60 days following the date that a registration statement under the Securities Act is declared effective by the Commission to permit resale of the Units (including the Units issued upon conversion of the Class B Units) sold in the October 24, 2006 private placement and the Units (including the Units issued upon conversion of the Class C Units) sold in the February 1, 2007 private placement.
     “Party” or “Parties” means Linn Energy and the Purchasers, individually or collectively, as the case may be.
     “Person” means any individual, corporation, company, voluntary association, partnership, joint venture, trust, limited liability company, unincorporated organization or government or any agency, instrumentality or political subdivision thereof, or any other form of entity.
     “Placement Agent Fees” means the fees that Linn Energy is obligated to pay to each of Citigroup Global Markets Inc., RBC Capital Markets Corporation, Lehman Brothers Inc. and Jefferies & Company, Inc. upon the closing of the transactions contemplated by this Agreement.

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     “Property” means any interest in any kind of property or asset, whether real, personal or mixed, or tangible or intangible.
     “Purchase Price” means the aggregate of each Purchaser’s Commitment Amount set forth opposite the Purchaser’s name on Schedule 2.01 to this Agreement under the heading “Gross Proceeds to Issuer.”
     “Purchased Units” means the Units to be issued and sold to the Purchasers pursuant to this Agreement.
     “Purchaser” shall have the meaning specified in the introductory paragraph.
     “Purchaser Material Adverse Effect” means any material and adverse effect on (i) the ability of a Purchaser to meet its obligations under the Basic Documents on a timely basis or (ii) the ability of a Purchaser to consummate the transactions under any Basic Document.
     “Purchaser Related Parties” shall have the meaning specified in Section 8.01.
     “Purchasers” shall have the meaning specified in the introductory paragraph.
     “Registration Rights Agreement” means the Registration Rights Agreement, substantially in the form attached to this Agreement as Exhibit C, to be entered into at the Closing, among Linn Energy and the Purchasers.
     “Representatives” of any Person means the officers, managers, directors, employees, agents and other representatives of such Person.
     “Securities Act” means the Securities Act of 1933, as amended from time to time, and the rules and regulations of the Commission promulgated thereunder.
     “Short Sales” means, without limitation, all “short sales” as defined in Rule 200 promulgated under Regulation SHO under the Exchange Act, whether or not against the box, and forward sale contracts, options, puts, calls, short sales, “put equivalent positions” (as defined in Rule 16a-1(h) under the Exchange Act) and similar arrangements, and sales and other transactions through non-U.S. broker dealers or foreign regulated brokers.
     “Subsidiary” means, as to any Person, any corporation or other entity of which a majority of the outstanding equity interest having by the terms thereof ordinary voting power to elect a majority of the board of directors of such corporation or other entity (irrespective of whether or not at the time any equity interest of any other class or classes of such corporation or other entity shall have or might have voting power by reason of the happening of any contingency) is at the time directly or indirectly owned or controlled by such Person or one or more of its Subsidiaries.
     “Transfer Agent” means Computershare Trust Company, N.A. in its capacity as transfer agent for the Units.
     “Unit Price” shall have the meaning specified in Section 2.01(c).

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     “Unitholders” means the Unitholders of Linn Energy (within the meaning of the Limited Liability Company Agreement).
     “Units” means the Units of Linn Energy representing limited liability company interests.
     Section 1.02. Accounting Procedures and Interpretation. Unless otherwise specified in this Agreement, all accounting terms used herein shall be interpreted, all determinations with respect to accounting matters under this Agreement shall be made, and all financial statements and certificates and reports as to financial matters required to be furnished to the Purchasers under this Agreement shall be prepared, in accordance with GAAP applied on a consistent basis during the periods involved (except, in the case of unaudited statements, as permitted by Form 10-Q promulgated by the Commission) and in compliance as to form in all material respects with applicable accounting requirements and with the published rules and regulations of the Commission with respect thereto.
ARTICLE II
SALE AND PURCHASE
     Section 2.01. Sale and Purchase. Subject to the terms and conditions of this Agreement, at the Closing, Linn Energy hereby agrees to issue and sell to each Purchaser, and each Purchaser hereby agrees, severally and not jointly, to purchase from Linn Energy, the number of Purchased Units set forth opposite its name on Schedule 2.01 hereto. Each Purchaser agrees to pay Linn Energy the Unit Price for each Purchased Unit as set forth in Section 2.01(b). The respective obligations of each Purchaser under this Agreement are several and not joint with the obligations of any other Purchaser, and no Purchaser shall be responsible in any way for the performance of the obligations of any other Purchaser under this Agreement. The failure or waiver of performance under this Agreement by any Purchaser, or on its behalf, does not excuse performance by any other Purchaser. Nothing contained herein or in any other Basic Document, and no action taken by any Purchaser pursuant thereto, shall be deemed to constitute the Purchasers as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Purchasers are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by any Basic Document. Except as otherwise provided in this Agreement or the other Basic Documents, each Purchaser shall be entitled to independently protect and enforce its rights, including the rights arising out of this Agreement or out of the other Basic Documents, and it shall not be necessary for any other Purchaser to be joined as an additional party in any proceeding for such purpose.
          (a) Units. The number of Purchased Units to be issued and sold to each Purchaser by Linn Energy is set forth opposite such Purchaser’s name on Schedule 2.01 hereto. The Purchased Units shall have those rights, preferences, privileges and restrictions governing the Units as set forth in the Second Amended and Restated Limited Liability Company Agreement of Linn Energy, dated as of January 19, 2006 (the “Limited Liability Company Agreement”), as amended.
          (b) Consideration. The amount per Unit each Purchaser will pay to Linn Energy to purchase the Purchased Units (the “Unit Price”) shall be $33.50.

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     Section 2.02. Closing. The execution and delivery of the Basic Documents (other than this Agreement), the delivery of certificates representing the Purchased Units (which may be delivered within 7 days following the Closing Date), the payment by each Purchaser of its respective Commitment Amount and execution and delivery of all other instruments, agreements and other documents required by this Agreement (the “Closing”) shall take place on June 1, 2007 (the “Closing Date”).
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF LINN ENERGY
     Linn Energy represents and warrants to the Purchasers, on and as of the date of this Agreement and on and as of the Closing Date, as follows:
     Section 3.01. Corporate Existence. Linn Energy: (i) is a limited liability company duly organized, validly existing and in good standing under the Laws of the State of Delaware; (ii) has all requisite limited liability company power, and has all material governmental licenses, authorizations, consents and approvals, necessary to own its Properties and carry on its business as its business is now being conducted as described in the Linn Energy SEC Documents, except where the failure to obtain such licenses, authorizations, consents and approvals would not reasonably be expected to have a Linn Energy Material Adverse Effect; and (iii) is qualified to do business in all jurisdictions in which the nature of the business conducted by it makes such qualifications necessary, except where failure so to qualify would not reasonably be expected to have a Linn Energy Material Adverse Effect.
     Section 3.02. Capitalization and Valid Issuance of Purchased Units.
          (a) As of the date of this Agreement, and prior to the issuance and sale of the Purchased Units, the issued and outstanding membership interests of Linn Energy consist of 57,806,071 Units. All of the outstanding Units have been duly authorized and validly issued in accordance with applicable Law and the Limited Liability Company Agreement and are fully paid (to the extent required under the Limited Liability Company Agreement) and non-assessable (except as such non-assessability may be affected by Section 18-607 of the Delaware Limited Liability Company Act (the “Delaware LLC Act”).
          (b) Other than Linn Energy’s existing (i) Long-Term Incentive Plan and (ii) Memorandum of Understanding Regarding Compensation Arrangements for Members of its Board of Directors, Linn Energy has no equity compensation plans that contemplate the issuance of Units (or securities convertible into or exchangeable for Units). Linn Energy has no outstanding indebtedness having the right to vote (or convertible into or exchangeable for securities having the right to vote) on any matters on which the Unitholders may vote. Except as set forth in the first sentence of this Section 3.02(b), as contemplated by this Agreement or as are contained in the Limited Liability Company Agreement, there are no outstanding or authorized (i) options, warrants, preemptive rights, subscriptions, calls or other rights, convertible securities, agreements, claims or commitments of any character obligating Linn Energy or any of its Subsidiaries to issue, transfer or sell any limited liability company interests or other equity interests in Linn Energy or any of its Subsidiaries or securities convertible into or exchangeable for such limited liability company interests or other equity interests, (ii) obligations of Linn

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Energy or any of its Subsidiaries to repurchase, redeem or otherwise acquire any limited liability company interests or other equity interests in Linn Energy or any of its Subsidiaries or any such securities or agreements listed in clause (i) of this sentence or (iii) voting trusts or similar agreements to which Linn Energy or any of its Subsidiaries is a party with respect to the voting of the equity interests of Linn Energy or any of its Subsidiaries.

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