FIRST AMENDED AND RESTATED EMPLOYMENT AGREEMENT December 17, 2008
Exhibit
10.10
Execution
Copy
FIRST
AMENDED AND RESTATED
December
17, 2008
This
First Amended and Restated Employment Agreement (“Agreement”) replaces and
supersedes in its entirety the Employment Agreement that was executed on March
22, 2007, and is entered into by and between LINN OPERATING, INC., a
Delaware corporation (the “Company”), and XXXXXXXX X. XXXXXX (the “Employee”) as of the date
first set forth above (the “Effective Date”) on the terms
set forth herein. LINN ENERGY, LLC, a Delaware
limited liability company, and the one hundred percent (100%) parent of the
Company (“Linn
Energy”), is joining in this Agreement for the limited purposes of
reflecting its agreement to the matters set forth herein as to it, but such
joinder is not intended to make Linn Energy the employer of the Employee for any
purpose.
Accordingly,
the parties, intending to be legally bound, agree as follows:
1. Position
and Duties.
1.1 Employment; Titles;
Reporting. The Company agrees to continue to employ the Employee and the
Employee agrees to continue employment with the Company, upon the terms and
subject to the conditions provided under this Agreement. During the Employment
Term (as defined in Section 2 of this
Agreement), the Employee will serve each of the Company and Linn Energy as the
Senior Vice President & General Counsel, and Corporate Secretary. In such
capacity, the Employee will report to Linn Energy’s and the Company’s Chairman
of the Board and/or Chief Executive Officer and otherwise will be subject to the
direction and control of the Board of Directors of Linn Energy (including any
committee thereof, the “Board”), and the Employee will
have such duties, responsibilities and authorities as may be assigned to her by
the Company’s Chairman of the Board and/or Chief Executive Officer or the Board
from time to time and otherwise consistent with such position in a publicly
traded company comparable to Linn Energy which is engaged in natural gas and oil
acquisition, development and production.
1.2 Duties. During the
Employment Term, the Employee will devote substantially all of her full working
time to the business and affairs of the Company and Linn Energy, will use her
best efforts to promote the Company’s and Linn Energy’s interests and will
perform her duties and responsibilities faithfully, diligently and to the best
of her ability, consistent with sound business practices. The Employee may be
required by the Board to provide services to, or otherwise serve as an officer
or director of, any direct or indirect subsidiary of the Company or to Linn
Energy, as applicable. The Employee will comply with the Company’s and Linn
Energy’s policies, codes and procedures, as they may be in effect from time to
time, applicable to executive officers of the Company and Linn
Energy. Subject to the preceding sentence, the Employee may,
with the prior approval of the Board in each instance, engage in other business
and charitable activities, provided that such charitable and/or business
activities do not create a conflict of interest or the appearance of a conflict
of interest with the Company or Linn Energy
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or
materially interfere with the performance of her obligations to the Company or
Linn Energy under this Agreement.
1.3 Place of Employment.
The Employee will perform her duties under this Agreement at the Company’s
offices in Houston, Texas, with the likelihood of substantial business
travel.
2. Term
of Employment.
The term of the Employee’s employment
by the Company under this Agreement (the “Employment
Term”) commenced on the Effective Date and will continue until employment
is terminated by either party under Section 5 of
this Agreement. The date on which the Employee’s employment ends is referred to
in this Agreement as the “Termination
Date.” For the purpose
of Sections 5 and 6 of this Agreement, the Termination Date shall be the date
upon which the Employee incurs a “separation from service” as defined in Section
409A of the Internal Revenue Code of 1986, as amended (the “Code”) and
regulations issued thereunder.
3. Compensation.
3.1 Base Salary. During
the Employment Term, the Employee will be entitled to receive a base salary
(“Base
Salary”) at an annual rate of not less than $255,000 for services rendered to the
Company, Linn Energy and any of its direct or indirect subsidiaries, payable in
accordance with the Company’s regular payroll practices. The Employee’s Base
Salary will be reviewed annually by the Board and may be adjusted upward in the
Board’s sole discretion, but not downward.
3.2 Annual Bonus
Compensation. During the Employment Term, the Employee will be entitled
to receive incentive compensation in such amounts and at such times as the Board
may award to her in its sole discretion under any incentive compensation or
other bonus plan or arrangement as may be established by the Board from time to
time (collectively, the “Employee
Bonus Plan”). Under the Employee Bonus Plan, the Board may, in
its discretion, set, in advance, an annual target bonus for the Employee, which
is currently set as a percentage of Base Salary. For example, for
2008, the Employee’s target bonus was set at 65% of her Base
Salary. The percentage of the Employee’s Base Salary that the Board
designates for the Employee to receive as her annual target bonus under any
Employee Bonus Plan, as such percentage may be adjusted upward or downward from
time to time in the sole discretion of the Board, or replaced by another
methodology of determining Employee’s target bonus, is referred to herein as the
Employee’s “Bonus
Level Percentage.” The amount paid
to the Employee through application of the Bonus Level Percentage is the
Employee’s “Bonus
Level Amount.” The “Annual
Bonus” is the Bonus Level Amount paid to the Employee in any given
year.
3.3 Long-Term Incentive
Compensation. Awards of Unit options, Unit grants, restricted
Units and/or other forms of equity-based compensation to the Employee may be
made from time to time during the Employment Term by the Board in its sole
discretion, whose decision will be based upon performance and award guidelines
for executive officers of the Company and Linn Energy established periodically
by the Board in its sole discretion.
4. Expenses
and Other Benefits.
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4.1 Reimbursement of
Expenses. The Employee will be entitled to receive prompt reimbursement
for all reasonable expenses incurred by her during the Employment Term (in
accordance with the policies and practices presently followed by the Company or
as may be established by the Board from time to time for the Company’s and Linn
Energy’s senior executive officers) in performing services under this Agreement,
provided that the Employee properly accounts for such expenses in accordance
with the Company’s and Linn Energy’s policies as in effect from time to
time. Such reimbursement shall be paid on or before the end of the
calendar year following the calendar year in which any such reimbursable expense
was incurred, and the Company shall not be obligated to pay any such
reimbursement amount for which Employee fails to submit an invoice or other
documented reimbursement request at least 10 business days before the end of the
calendar year next following the calendar year in which the expense was
incurred. Business related expenses shall be reimbursable only to the
extent they were incurred during the term of the Agreement, but in no event
shall the time period extend beyond the later of the lifetime of Employee or, if
longer, 20 years. The amount of such reimbursements that the Company
is obligated to pay in any given calendar year shall not affect the amount the
Company is obligated to pay in any other calendar year. In addition,
the Employee may not liquidate or exchange the right to reimbursement of such
expenses for any other benefits.
4.2 Vacation. The
Employee will be entitled to paid vacation time each year during the Employment
Term that will accrue in accordance with the Company’s policies and procedures
now in force or as such policies and procedures may be modified with respect to
all senior executive officers of the Company.
4.3 Other Employee
Benefits. In addition to the foregoing, during the Employment Term, the
Employee will be entitled to participate in and to receive benefits as a senior
executive under all of the Company’s employee benefit plans, programs and
arrangements available to senior executives, subject to the eligibility criteria
and other terms and conditions thereof, as such plans, programs and arrangements
may be duly amended, terminated, approved or adopted by the Board from time to
time.
5. Termination
of Employment.
5.1 Death. The Employee’s
employment under this Agreement will terminate upon her death.
5.2 Termination by the
Company.
(a) Terminable at Will. The
Company may terminate the Employee’s employment under this Agreement at any time
with or without Cause (as defined below).
(b) Definition of Cause. For
purposes of this Agreement, the Company will have “Cause”
to terminate the Employee’s employment
under this Agreement by reason of any of the following:
(i) the
Employee’s conviction of, or plea of nolo contendere to, any
felony or to any crime or offense causing substantial harm to any of Linn
Energy
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or its
direct or indirect subsidiaries (whether or not for personal gain) or involving
acts of theft, fraud, embezzlement, moral turpitude or similar
conduct;
(ii) the
Employee’s repeated intoxication by alcohol or drugs during the performance of
her duties;
(iii) the
Employee’s willful and intentional misuse of any of the funds of Linn Energy or
its direct or indirect subsidiaries,
(iv) embezzlement
by the Employee;
(v) the
Employee’s willful and material misrepresentations or concealments on any
written reports submitted to any of Linn Energy or its direct or indirect
subsidiaries;
(vi) the
Employee’s willful and intentional material breach of this
Agreement;
(vii) the
Employee’s material failure to follow or comply with the reasonable and lawful
written directives of the Board; or
(viii) conduct
constituting a material breach by the Employee of the Company’s then current (A)
Code of Business Conduct and Ethics, and any other written policy referenced
therein, (B) the Code of Ethics for Chief Executive Officer and senior financial
officers, if applicable, provided that in each case the Employee knew or should
have known such conduct to be a breach.
(c) Notice and Cure Opportunity in
Certain Circumstances. The Employee may be afforded a
reasonable opportunity to cure any act or omission that would otherwise
constitute “Cause” hereunder according to the following terms: The
Board shall give the Employee written notice stating with reasonable specificity
the nature of the circumstances determined by the Board in its reasonable and
good faith judgment to constitute “Cause.” If, in the reasonable and
good faith judgment of the Board, the alleged breach is reasonably susceptible
to cure, the Employee will have thirty (30) days from her receipt of such notice
to effect the cure of such circumstances or such breach to the reasonable and
good faith satisfaction of the Board. The Board will state whether
the Employee will have such an opportunity to cure in the initial notice of
“Cause” referred to above. Prior to termination for Cause, in those
instances where the initial notice of Cause states that the Employee will have
an opportunity to cure, the Company shall provide an opportunity for the
Employee to be heard by the Board or a Board committee designated by the Board
to hear the Employee. The decision as to whether the Employee has
satisfactorily cured the alleged breach shall be made at such
meeting. If, in the reasonable and good faith judgment of the Board
the alleged breach is not reasonably susceptible to cure, or such circumstances
or breach have not been satisfactorily cured within such thirty (30) day cure
period, such breach will thereupon constitute “Cause” hereunder.
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5.3 Termination by the
Employee.
(a) Terminable
at Will. The Employee may terminate her employment under this Agreement at any
time with or without Good Reason (as defined below).
(b) Notice and Cure Opportunity.
If such termination is with Good Reason, the Employee will give the Company
written notice, which will identify with reasonable specificity the grounds for
the Employee’s resignation and provide the Company with fifteen (15) days from
the day such notice is given to cure the alleged grounds for resignation
contained in the notice. A termination will not be for Good Reason if such
notice is given by the Employee to the Company more than thirty (30) days after
the occurrence of the event that the Employee alleges is Good Reason for her
termination hereunder.
(c) Definition of Good Reason
Other Than Upon a Change of
Control. For purposes of this Agreement, other than in the
event of a Change of Control, “Good Reason” will mean any of
the following to which the Employee will not consent in writing: (i) a reduction
in the Employee’s then current Base Salary; (ii) failure by Company to pay in
full on a current basis (A) any of the compensation or benefits described in
this Agreement that are due and owing, or (B) any of the compensation or
benefits described in this Agreement or amounts that are due and owing to the
Employee under any long-term or short-term or other incentive compensation
plans, agreements or awards; (iii) material breach of any provision of this
Agreement by Company; (iv) any material reduction in the Employee’s title,
authority or responsibilities as Senior Vice President & General Counsel,
and Corporate Secretary; or (v) a relocation on or before March 22, 2009
of the Employee’s primary place of employment to a location more than fifty (50)
miles from the Company’s location in Houston, Texas at the Effective
Date.
(d) Definition of Good Reason For
Purposes of Change of Control. For purposes of a Change of Control,
“Good Reason” will mean
any of the following to which the Employee will not consent in writing, but only
if the Termination Date is within six (6) months before or two (2) years after a
Change of Control: (i) reduction in either the Employee’s then current Base
Salary or Bonus Level Percentage, or both (ii) failure by the Company to pay in
full on a current basis any of the compensation or benefits described in this
Agreement or amounts that are due and owing to the Employee under any long-term
or short-term or other incentive compensation plans, agreements or awards; (iii)
material breach of any provision of this Agreement by the Company; (iv) Senior
Vice President & General Counsel, and Corporate Secretary; or (v) a
relocation of the Employee’s primary place of employment to a location more than
fifty (50) miles from the Company’s location on the day immediately preceding
the Change of Control.
5.4 Notice of
Termination. Any termination of the Employee’s employment by
the Company or by the Employee during the Employment Term (other than
termination pursuant to Section 5.1 of this
Agreement) will be communicated by written Notice of Termination to the other
party hereto in accordance with Section 7 .7 of this
Agreement. For purposes of this Agreement, a “Notice
of Termination” means a written notice
that (a) indicates the specific termination provision in this Agreement relied
upon, (b) to the extent applicable, sets forth in
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reasonable
detail the facts and circumstances claimed to provide a basis for termination of
the Employee’s employment under the provision so indicated, and (c) if the
Termination Date (as defined herein) is other than the date of receipt of such
notice, specifies the Termination Date (which Termination Date will be not more
than thirty (30) days after the giving of such notice).
5.5 Disability. If
the Company determines in good faith that the Disability (as defined herein) of
the Employee has occurred during the Employment Term, it may, without breaching
this Agreement, give to the Employee written notice in accordance with Section 5.4 of this
Agreement of its intention to terminate the Employee’s employment. In such
event, the Employee’s employment with the Company will terminate effective on
the fifteenth (15th)
day after receipt
of such
notice by the
Employee, provided
that, within the fifteen (15) days after such receipt, the Employee will not
have returned to full-time performance of the Employee’s duties.
“Disability”
means the earlier of (a) written determination by a physician selected by the
Company and reasonably agreed to by the Employee that the Employee has been
unable to perform substantially the Employee’s usual and customary duties under
this Agreement for a period of at least one hundred twenty (120) consecutive
days or a non-consecutive period of one hundred eighty (180) days during any
twelve-month period as a result of incapacity due to mental or physical illness
or disease; and (b) “disability” as such term is defined in the Company’s
applicable long-term disability insurance plan.
At any
time and from time to time, upon reasonable request therefor by the Company, the
Employee will submit to reasonable medical examination for the purpose of
determining the existence, nature and extent of any such Disability. Any
physician selected by Company shall be Board Certified in the appropriate field,
shall have no actual or potential conflict of interest, and may not be a
physician who has been retained by the Company for any purpose within the prior
three (3) years.
6. Compensation
of the Employee upon Termination. Subject to the provisions of
Section 6.8, the Employee shall be entitled to receive the amount specified upon
the termination events designated below:
6.1 Death. If the
Employee’s employment under this Agreement is terminated by reason of her death,
the Company shall pay to the person or persons designated by the Employee for
that purpose in a notice filed with the Company, or, if no such person will have
been so designated, to her estate, in a lump sum within thirty (30) days
following the Termination Date, the amount of:
(a) the
Employee’s accrued but unpaid then current Base Salary through the Termination
Date, payable,
plus
(b) the
unpaid Bonus Level Amount, if any, with respect to the last full year during
which the Employee was employed by the Company determined as
follows:
(i) If
the Employee was employed for the entire previous year but the
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Termination
Date occurred prior to the Board finally determining the Bonus Level Amount for
the preceding year, then the Company’s performance will be deemed to have been
such that the Employee would have been awarded 100% of her Bonus Level
Percentage for that year (the “Deemed
Full Year Bonus Amount”);
or
(ii) If
the Employee was employed for the entire previous year and the Board had already
finally determined the Bonus Level Amount for the preceding year by the
Termination Date but the Company had not yet paid the Employee her Bonus Level
Amount, then the Bonus Level Amount will be that Bonus Level Amount determined
by the Board (the “Actual
Full Year Bonus Amount”);
plus
(iii) an
amount representing a deemed bonus for the fiscal year in which the Termination
Date occurs, which is equal to the Bonus Level Amount that would be received by
the Employee if the Company’s performance for the year is deemed to be at the
level entitling the Employee to 100% of her Bonus Level Percentage
and then multiplying the Bonus Level Amount resulting from applying 100% of her
Bonus Level Percentage by a fraction, the numerator of which is the number of
days from the first day of the fiscal year of the Company in which such
termination occurs through and including the Termination Date and the
denominator of which is 365 (“Deemed
Pro Rata Bonus Amount”);
plus
(c) any
other amounts that may be reimbursable by the Company to the Employee as
expressly provided under this Agreement.
Thereafter, the Company will have no
further obligation to the Employee under this Agreement, other than for payment
of any amounts accrued and vested under any employee benefit plans or programs
of the Company and any payments or benefits required to be made or provided
under applicable law.
6.2 Disability. In
the event of the Employee’s termination by reason of Disability pursuant to
Section 5.5, the Employee will continue to receive her Base Salary in effect
immediately prior to the Termination Date and participate in applicable employee
benefit plans or programs of the Company (on an equivalent basis to those
employee benefit plans or programs provided under Section 6.4(a)(iv) below)
through the Termination Date, subject to offset dollar-for-dollar by the amount
of any disability income payments provided to the Employee under any Company
disability policy or program funded by the Company, and the Company shall pay
the Employee the following amounts in a lump sum within thirty (30) days
following the Termination Date: the sum of (a) the Employee’s accrued
but unpaid then current Base Salary through the Termination
Date, plus
(b) either the (i) unpaid Actual Full Year Bonus Amount, if any, or (ii)
the Deemed Full Year Bonus Amount, if applicable, plus (c) the Employee’s
Deemed Pro Rata Bonus Amount, plus (d) any other amounts
that may be reimbursable by the Company to the Employee as expressly provided
under this Agreement, and
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the
Company thereafter will have no further obligation to the Employee under this
Agreement, other than for payment of any amounts accrued and vested under any
employee benefit plans or programs of the Company and any payments or benefits
required to be made or provided under applicable law.
6.3 By the Company for Cause or
the Employee Without Good Reason. If the Employee’s employment
is terminated by the Company for Cause, or if the Employee terminates her
employment other than for Good Reason, the Employee will receive (a) the
Employee’s accrued but unpaid then current Base Salary through the Termination
Date, payable in a lump sum within thirty (30) days following the Termination
Date, and (b) any other amounts that may be reimbursable by the Company to the
Employee as expressly provided under this Agreement, payable in a lump sum
within thirty (30) days following the Termination Date, and the Company
thereafter will have no further obligation to the Employee under this Agreement,
other than for payment of any amounts accrued and vested under any employee
benefit plans or programs of the Company, and any payments or benefits required
to be made or provided under applicable law. Notwithstanding anything in this
Agreement to the contrary, no bonus will be paid to the Employee for a
termination of her employment under this Section 6.3.
6.4 By the Employee for Good
Reason or the Company Without Cause.
(a) Severance Benefits on Non-Change of
Control Termination. Subject to the provisions of Section
6.4(b) and Section 6.4(d), if prior to the date that precedes a Change of
Control by at least six (6) months, or more than two (2) years after the
occurrence of a Change of Control (as defined below) the Company terminates the
Employee’s employment without Cause, or the Employee terminates his employment
for Good Reason, then the Employee will be entitled to the following benefits
(the “Severance
Benefits”) payable in a lump sum within thirty (30) days following the
Termination Date:
(i) an
amount equal to (A) the Employee’s accrued but unpaid then current Base Salary
through the Termination Date, plus (B) either (x) the
unpaid Actual Full Year Bonus Amount, if any, or (y) the Deemed Full Year Bonus
Amount, if applicable, plus (C) the Employee’s
Deemed Pro Rata Bonus Amount, if any, plus (D) any other amounts
that may be reimbursable by the Company to the Employee as expressly provided
under this Agreement;
plus
(ii) with
respect to any termination event described in this paragraph (a) of Section 6.4, a single
lump sum equal to two times the Employee’s annual Base Salary at the highest
rate in effect at any time during the thirty-six (36) month period immediately
preceding the Termination Date, payable within thirty (30) days of the
Termination Date.
(iii) In
addition, the Company will pay the “Company’s portion” (as set defined below) of
the Employee’s COBRA continuation coverage (the “COBRA Coverage”) for the
duration of the “maximum required period” as such period is
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set forth
under COBRA and the applicable regulations. Following such period,
the Company shall permit the Employee (including his spouse and dependents) to
(A) continue to participate in the Company’s group health plan if permitted
under such plan, (B) convert the Company’s group health plan to an individual
policy, or (C) obtain other similar coverage, in each case for up to an
additional six (6) months after the expiration of the “maximum required period”
by the Employee paying one-hundred percent of the premiums for medical, dental
and/or vision coverage on an after-tax basis (“Medical
Benefits”). Notwithstanding the foregoing, the benefits
described in this Section 6.4(a)(iii) may be discontinued by the Company prior
to the end of the period provided in this subsection (iii) to the extent, but
only to the extent, that the Employee receives substantially similar benefits
from a subsequent employer.
(iv) Following
the end of the COBRA “maximum required period” provided under the Company’s
group health plan (the “Benefit Measurement Date”),
the Company shall, as a separate obligation, reimburse the Employee for any
medical premium expenses incurred to purchase the Medical Benefits under the
preceding Section 6.4(a)(iii), but only to the extent such expenses constitute
the “Company’s portion” of the premiums for continued Medical Benefits (which
amount shall be referred to herein as the “Medical
Reimbursement”).
The “Company’s portion” of COBRA
Coverage and of premiums for any continuing Medical Benefits shall be the
difference between one hundred percent of the COBRA Coverage or Medical Benefits
premium, as the case may be, and the dollar amount of medical premium expenses
paid for the same type or types of Company medical benefits by a similarly
situated employee on the Termination Date.
The premiums available for Medical
Reimbursement under Section 6.4(a)(iv) in any calendar year will not be
increased or decreased to reflect the amount actually reimbursed in a prior or
subsequent calendar year, and all Medical Reimbursements under this paragraph
will be paid to the Employee within thirty (30) days following the Company’s
receipt of a premium payment for Medical Benefits.
(b) Change of Control Benefits.
Subject to the provisions of Section 6.4(d), if a
Change of Control has occurred and the Employee’s employment was terminated by
the Company without Cause, or by the Employee for Good Reason as defined in
Section 5.3(d), during the period beginning six (6) months prior to the Change
of Control and ending two (2) years following the Change of Control (an “Eligible
Termination”), then in lieu of the Severance Benefits under Section 6.4(a), the
Employee will be entitled to benefits (the “Change of Control Benefits”)
with respect to an Eligible Termination, as follows:
(i) Amounts
identical to those set forth in Sections 6.4(a)(i) and
(a)(ii) except that the amount described in Section 6.4(a)(ii) will be
equal to two times the sum of (A) the Employee’s annual Base Salary at the
highest rate in effect at
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any time
during the thirty-six (36) month period immediately preceding the Termination
Date plus (B) the
highest Annual Bonus that the Employee was paid in the thirty-six (36) months
immediately preceding the Change of Control, payable in a single lump sum within
thirty (30) days following the Termination Date; provided, however, that if the
Termination Date preceded the Change of Control, then the Change of Control
Benefits will be payable within the later of thirty (30) days following the
Termination Date and thirty (30) days following the Change of
Control;
(ii) The
Company will pay the same COBRA Coverage described in Section 6.4(a)(iii), and
the term of the Medical Benefits following the Benefit Measurement Date, with
respect to both the Employee’s right to participate in a health insurance policy
as set forth in Section 6.4(a)(iii) and the Company’s Medical Reimbursement
obligation as set forth in Section 6.4(a)(iv) shall be the
same. Notwithstanding the foregoing, the benefits described in this
Section 6.4(b)(ii) may be discontinued by the Company prior to the end of the
period provided in this subsection (ii) to the extent, but only to the extent,
that the Employee receives substantially similar benefits from a subsequent
employer.
The foregoing notwithstanding, if the
Termination Date preceded the Change of Control, the amount of Severance
Benefits to which the Employee will be entitled will be the difference between
the Severance Benefits already paid to the Employee, if any, under Section
6.4(a) and the Severance Benefits to be paid under this Section
6.4(b).
(c) Definition of Change of Control.
For purposes of this Agreement, a “Change
of Control” will mean the first to
occur of:
(i) The
acquisition by any individual, entity or group (within the meaning of Section
13(d) (3) or 14(d) (2) of the Securities Exchange Act of 1934, as amended (the
“Exchange
Act”) (a “Person”) of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange Act) of
thirty-five percent (35%) or more of either (A) the then-outstanding equity
interests of Linn Energy (the “Outstanding
Linn Energy Equity”) or (B) the combined
voting power of the then-outstanding voting securities of Linn Energy entitled
to vote generally in the election of directors (the “Outstanding
Linn Energy Voting Securities”); provided, however, that,
for purposes of this Section 6.4(c)(i),
the following acquisitions will not constitute a Change of Control: (1) any
acquisition directly from Linn Energy, (2) any acquisition by Linn Energy, (3)
any acquisition by any employee benefit plan (or related trust) sponsored or
maintained by Linn Energy or any affiliated company, or (4) any
acquisition by any corporation or other entity pursuant to a transaction that
complies with Section
6.4(c)(iii)(A), Section
6.4(c)(iii)(B) or Section
6.4(c)(iii)(C);
(ii) Any
time at which individuals who, as of the date hereof, constitute the Board (the
“Incumbent
Board’) cease for any reason to
constitute at least a majority of the Board; provided, however, that any
individual becoming a director subsequent to the date hereof whose election, or
nomination for election
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by Linn
Energy’s Unitholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board will be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the election
or removal of directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Incumbent
Board;
(iii) Consummation
of a reorganization, merger, statutory share exchange or consolidation or
similar corporate transaction involving Linn Energy or any of its subsidiaries,
a sale or other disposition of all or substantially all of the assets of Linn
Energy, or the acquisition of assets or equity interests of another entity by Linn Energy or any
of its subsidiaries (each,
a “Business Combination”), in each case unless, following
such Business
Combination, (A) all or substantially
all of the individuals and entities that were the beneficial owners of the
Outstanding Linn Energy Equity and the Outstanding Linn Energy Voting Securities
immediately prior to such Business Combination beneficially own, directly or
indirectly, more than fifty percent (50%) of the then-outstanding equity
interests and the combined voting power of the then-outstanding voting
securities entitled to vote generally in the election of directors, as the case
may be, of the corporation resulting from such Business Combination (including,
without limitation, a corporation or other entity that, as a result of such
transaction, owns Linn Energy or all or substantially all of Linn Energy’s
assets either directly or through one or more subsidiaries) in substantially the
same proportions as their ownership immediately prior to such Business
Combination of the Outstanding Linn Energy Equity and the Outstanding Linn
Energy Voting Securities, as the case may be, (B) no Person (excluding any
corporation resulting from such Business Combination or any employee benefit
plan (or related trust) of Linn Energy or such corporation or other entity
resulting from such Business Combination) beneficially owns, directly or
indirectly, thirty-five percent (35%) or more of, respectively, the then-
outstanding equity interests of the corporation or other entity resulting from
such Business Combination or the combined voting power of the then-outstanding
voting securities of such corporation or other entity, except to the extent that
such ownership existed prior to the Business Combination, and (C) at least a
majority of the members of the board of directors of the corporation or
equivalent body of any other entity resulting from such Business Combination
were members of the Incumbent Board at the time of the execution of the initial
agreement or of the action of the Board providing for such Business Combination;
or
(iv) Consummation
of a complete liquidation or dissolution of Linn Energy.
(d) Conditions to Receipt of Severance
Benefits.
(i) Release. As a condition to receiving
any Severance Benefits or Change of Control
Benefits to which the Employee may otherwise be entitled
040707, 000014, 102625786.2
11
under
Section 6.4(a)
or Section
6.4(b), the Employee will execute a release (the “Release”), which will include a
non-disparagement provision, in a form and substance satisfactory to the
Company, of any claims, whether arising under federal, state or local statute,
common law or otherwise, against the Company and its direct or indirect
subsidiaries which arise or may have arisen on or before the date of the
Release, other than any claims under this Agreement, any claim to vested
benefits under an employee benefit plan, any claim arising after the execution
of the Release, or any rights to indemnification from the Company and its direct
or indirect subsidiaries pursuant to any provisions of the Company’s (or any of
its subsidiaries’) organizational documents or any directors and officers
liability insurance policies maintained by the Company. The Company
will provide the Release to the Employee for signature within ten (10) days
after the Termination Date. If the Company has provided the Release
to the Employee for signature within ten (10) days after the Termination Date,
and if the Employee fails or otherwise refuses to execute the Release within a
reasonable time of not les than twenty-one (21) days after the Company has
provided the Release to the Employee, and in all events, no later than sixty
(60) days after the Termination Date and prior to the date on which such
benefits are to be first paid to her, the Employee will not be entitled to any
Severance Benefits or Change of Control Benefits, as the case may be, or any
other benefits provided under this Agreement and the Company will have no
further obligations with respect to the provision of those benefits except as
may be required by law.
6.5 Severance Benefits Not
Includable for Employee Benefits Purposes. Except to the extent the terms
of any applicable benefit plan, policy or program provide otherwise, any benefit
programs of the Company that take into account the Employee’s income will
exclude any and all Severance Benefits and Change of Control Benefits provided
under this Agreement.
6.6 Exclusive Severance
Benefits. The Severance Benefits payable under Section 6.4(a) or the Change
of Control Benefits payable under Section 6.4(b), if
they become applicable under the terms of this Agreement, will be in lieu of any
other severance or similar benefits that would otherwise be payable under any
other agreement, plan, program or policy of the Company.
6.7 Additional Payments by the
Company. Notwithstanding anything in this Agreement to the
contrary:
(a) if
any payment or benefit received or to be received by the Employee in connection
with a Change of Control or the termination of the Employee’s employment
(whether pursuant to the terms of this Agreement or any other plan, arrangement
or agreement with the Company, any other entity whose actions result in a Change
of Control or any entity affiliated with the Company) (all such payments and
benefits, including the Severance Payments, being hereinafter referred to as the
“Total Payments”) would
be subject (in whole or part), to the excise tax imposed under Section 4999 of
the Code (including any similar state or local tax and any related interest or
penalties, “Excise
Tax”), the Employee will be paid an additional payment in an amount such
that, after the Employee’s payment of all taxes on or otherwise as a result of
the additional
040707, 000014, 102625786.2
12
payment
(including any Excise Tax, income tax, related interest or penalties and effect
of any disallowed deductions), the Employee retains an amount of the additional
payment equal to the Excise Tax. All determinations required to be made under
this Section 6.7(a), including as to any underlying assumptions, will be made by
an accounting firm selected by the Company and reasonably acceptable to the
Employee. The accounting firm will provide the Employee and the Company with its
determination of the additional payment, if any, that is due with respect to any
payment or benefit (together with reasonably detailed supporting schedules)
within fifteen (15) business days after they receive notice from the Employee
that the payment has been made or benefit provided, or at such earlier time as
the Company may request. If the Employee reasonably requests and the accounting
firm determines that no Excise Tax is payable, the accounting firm will provide
the Employee with a written opinion, in form and substance reasonably
satisfactory to the Employee, that the Employee is not required to pay any
Excise Tax and the Employee’s not reporting any Excise Tax on her applicable
federal income tax return will not result in the imposition of a negligence or
similar penalty. The Company will bear all fees and expenses of the accounting
firm, including any costs of retaining experts; or
(b) in
the event that any benefits payable or otherwise provided under this Agreement
would be deemed to constitute non-qualified deferred compensation subject to
Section 409A of the Code, Linn Energy or the Company, as the case may be, will
have the discretion to adjust the terms of such payment or benefit as it deems
necessary to comply with the requirements of Section 409A to avoid the
imposition of any excise tax or other penalty with respect to such payment or
benefit under Section 409A of the Code.
Any payment or reimbursement of an
Excise Tax or other tax or penalty pursuant to this provision shall be made no
later than the end of the Employee’s taxable year next following the taxable
year in which the related Excise Tax or other tax or penalty is remitted to the
Internal Revenue Service or any other applicable taxing authority. If
Employee contests any such Excise Tax or other tax or penalty and receives a
refund of any amount paid by the Company hereunder, Employee shall promptly pay
such refund to the Company.
6.8 Timing of Payments by the
Company. Notwithstanding anything in this Agreement to the
contrary, in the event that the Employee is a “specified employee” (as
determined under Section 409A of the Code) at the time of the separation from
service triggering the payment or provision of benefits, any payment or benefit
under this Agreement which is determined to provide for a deferral of
compensation pursuant to Section 409A of the Code shall not commence being paid
or made available to the Employee until after six (6) months from the
Termination Date that constitutes a separation from service within the meaning
of Code Section 409A.
7. Miscellaneous.
7.1 Assignment; Successors;
Binding Agreement. This Agreement may not be assigned by either party,
whether by operation of law or otherwise, without the prior written consent of
the other party, except that any right, title or interest of the Company arising
out of this Agreement may be assigned to any corporation or entity controlling,
controlled by, or under
040707, 000014, 102625786.2
13
common
control with the Company, or succeeding to the business and substantially all of
the assets of the Company or any affiliates for which the Employee performs
substantial services. Subject to the foregoing, this Agreement will be binding
upon and will inure to the benefit of the parties and their respective heirs,
legatees, devisees, personal representatives, successors and
assigns. The Company shall obtain from any successor or other person
or entity acquiring a majority of the Company’s assets or Units a written
agreement to perform all terms of this Agreement.
7.2 Modification and
Waiver. Except as otherwise provided below, no provision of this
Agreement may be modified, waived, or discharged unless such waiver,
modification or discharge is duly approved by the Board and is agreed to in
writing by the Employee and such officer(s) as may be specifically authorized by
the Board to effect it. No waiver by any party of any breach by any other party
of, or of compliance with, any term or condition of this Agreement to be
performed by any other party, at any time, will constitute a waiver of similar
or dissimilar terms or conditions at that time or at any prior or subsequent
time.
7.3 Entire
Agreement. This Agreement together with any attendant or
ancillary documents, specifically including, but not limited to, (a) all
documents referenced in this Agreement, (b) the written policies and procedures
of the Company, (c) the Company’s Amended and Restated Long-Term Incentive Plan
or any successor plan (the “LTIP”), (d) each Company LTIP Executive Option
Agreement to which the Employee is party, (e) each Company LTIP Executive
Restricted Unit Agreement to which the Employee is party, and (f) the Second
Amended and Restated Limited Liability Company Agreement of Linn Energy, LLC, as
amended, embodies the entire understanding of the parties hereto, and, upon the
Effective Date, will supersede all other oral or written agreements or
understandings between them regarding the subject matter hereof; provided,
however, that if there is a conflict between any of the terms in this Agreement
and the terms in any LTIP Executive Option Agreement to which the Employee is
party, any LTIP Executive Restricted Unit Agreement to which the Employee is
party, or any other award agreement between the Company and the Employee
pursuant to the LTIP, the terms of this Agreement shall govern. No
agreement or representation, oral or otherwise, express or implied, with respect
to the subject matter of this Agreement, has been made by either party which is
not set forth expressly in this Agreement or the other documents referenced in
this Section 7.3.
7.4 Governing Law. The
validity, interpretation, construction and performance of this Agreement will be
governed by the laws of the State of Texas other than the conflict of laws
provision thereof.
7.5 Consent to Jurisdiction;
Service of Process; Waiver of Jury Trial.
(a) Disputes. In the
event of any dispute, controversy or claim between the Company and the Employee
arising out of or relating to the interpretation, application or enforcement of
the provisions of this Agreement, the Company and the Employee agree and consent
to the personal jurisdiction of the state and local courts of Xxxxxx County,
Texas and/or the United States District Court for the Southern District of
Texas, Houston Division for resolution of the dispute, controversy or claim, and
that those courts, and only those courts, shall have any jurisdiction to
determine any dispute, controversy or
040707, 000014, 102625786.2
14
claim
related to, arising under or in connection with this Agreement. The Company and
the Employee also agree that those courts are convenient forums for the parties
to any such dispute, controversy or claim and for any potential witnesses and
that process issued out of any such court or in accordance with the rules of
practice of that court may be served by mail or other forms of substituted
service to the Company at the address of its principal executive offices and to
the Employee at his last known address as reflected in the Company’s
records.
(b) Waiver of Right to Jury
Trial.
THE
COMPANY AND THE EMPLOYEE HEREBY VOLUNTARILY, KNOWINGLY AND
INTENTIONALLY WAIVE ANY AND ALL RIGHTS TO TRIAL BY JURY TO ALL CLAIMS ARISING
OUT OF OR RELATING TO THIS AGREEMENT, AS WELL AS TO ALL CLAIMS ARISING OUT OF
EMPLOYEE’S EMPLOYMENT WITH THE COMPANY OR TERMINATION THEREFROM INCLUDING, BUT
NOT LIMITED TO:
(i) Any
and all claims and causes of action arising under contract, tort or other common
law including, without limitation, breach of contract, fraud, estoppel,
misrepresentation, express or implied duties of good faith and fair dealing,
wrongful discharge, discrimination, retaliation, harassment, negligence, gross
negligence, false imprisonment, assault and battery, conspiracy, intentional or
negligent infliction of emotional distress, slander, libel, defamation and
invasion of privacy.
(ii) Any
and all claims and causes of action arising under any federal, state or local
law, regulation or ordinance, including, without limitation, claims arising
under Title VII of the Civil Rights Act of 1964, the Pregnancy Discrimination
Act, the Age Discrimination in Employment Act, the Americans with Disabilities
Act, the Family and Medical Leave Act, the Fair Labor Standards Act and all
corresponding state laws.
(iii) Any
and all claims and causes of action for wages, employee benefits, vacation pay,
severance pay, pension or profit sharing benefits, health or welfare benefits,
bonus compensation, commissions, deferred compensation or other remuneration,
employment benefits or compensation, past or future loss of pay or benefits or
expenses.
7.6 Withholding of Taxes.
The Company will withhold from any amounts payable under the Agreement all
federal, state, local or other taxes as legally will be required to be
withheld.
7.7 Notices. All notices,
consents, waivers, and other communications under this Agreement must be in
writing and will be deemed to have been duly given when (a) delivered by hand
(with written confirmation of receipt), (b) sent by facsimile (with written
confirmation of receipt), provided that a copy is mailed by registered mail,
return receipt requested, or (c) when received by the addressee, if sent by a
nationally recognized overnight delivery service (receipt requested), in each
case to the appropriate addresses and facsimile numbers set forth below (or
to
040707, 000014, 102625786.2
15
such
other addresses and facsimile numbers as a party may designate by notice to the
other parties).
to the Company:
Attn:
Chief Executive Officer
JPMorgan
Chase Tower
000
Xxxxxx, Xxxxx 0000
Xxxxxxx,
Xxxxx 00000
to the
Employee:
Xxxxxxxx
X. Xxxxxx
000
Xxxxxxxxx Xxxxx
Xxxxxxx,
XX 00000
Addresses
may be changed by written notice sent to the other party at the last recorded
address of that party.
7.8 Severability. The
invalidity or unenforceability of any provision or provisions of this Agreement
will not affect the validity or enforceability of any other provision of this
Agreement, which will remain in full force and effect.
7.9 Counterparts. This
Agreement may be executed in one or more counterparts, each of which will be
deemed to be an original but all of which together will constitute one and the
same instrument.
7.10 Headings. The
headings used in this Agreement are for convenience only, do not constitute a
part of the Agreement, and will not be deemed to limit, characterize, or affect
in any way the provisions of the Agreement, and all provisions of the Agreement
will be construed as if no headings had been used in the Agreement.
7.11 Construction. As used
in this Agreement, unless the context otherwise requires: (a) the terms defined
herein will have the meanings set forth herein for all purposes; (b) references
to “Section” are to a section hereof; (c) “include,” “includes” and “including”
are deemed to be followed by “without limitation” whether or not they are in
fact followed by such words or words of like import; (d) “writing,” “written”
and comparable terms refer to printing, typing, lithography and other means of
reproducing words in a visible form; (e) “hereof,” “herein,” “hereunder” and
comparable terms refer to the entirety of this Agreement and not to any
particular section or other subdivision hereof or attachment hereto; (f)
references to any gender include references to all genders; and (g) references
to any agreement or other instrument or statute or regulation are referred to as
amended or supplemented from time to time (and, in the case of a statute or
regulation, to any successor provision).
7.12 Capacity; No
Conflicts. The Employee represents and warrants to the Company that: (a)
she has full power, authority and capacity to execute and deliver this
Agreement, and to perform her obligations hereunder, (b) such execution,
delivery and performance will not (and
040707, 000014, 102625786.2
16
with the
giving of notice or lapse of time, or both, would not) result in the breach of
any agreement or other obligation to which she is a party or is otherwise bound,
and (c) this Agreement is her valid and binding obligation, enforceable in
accordance with its terms.
[Signature
page follows]
040707, 000014, 102625786.2
17
IN
WITNESS WHEREOF, the parties have duly executed this Agreement as of the date
first written above.
LINN
OPERATING, INC.
By: /s/ Xxxxxxx X. Xxxx
Name: Xxxxxxx
X. Xxxx
Title:
Chairman and Chief Executive
Officer
EMPLOYEE
/s/ Xxxxxxxx X. Xxxxxx
Xxxxxxxx
X. Xxxxxx
For
the limited purposes set forth herein:
By: /s/ Xxxxxxx X. Xxxx
Name: Xxxxxxx
X. Xxxx
Title: Chairman
and Chief Executive
Officer
040707, 000014, 102625786.2
18
